pre14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Soliciting Material Pursuant to Sec. 240.14a-12 |
GMO Trust
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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GMO Trust
GMO Benchmark-Free Allocation Fund
40 Rowes Wharf
Boston, Massachusetts 02110
[September 14, 2011]
Dear Shareholder:
A Special Meeting of the Shareholders of GMO Benchmark-Free Allocation Fund (the Fund), a
series of GMO Trust (the Trust), will be held on [October 17, 2011 at 9:00 a.m.], Boston time, at
the offices of Grantham, Mayo, Van Otterloo & Co. LLC (GMO), on the 2nd floor of 40 Rowes Wharf,
Boston, Massachusetts.
The Trusts Board of Trustees is seeking your vote to approve a new management contract
between the Trust, on behalf of the Fund, and GMO, the investment manager to the Fund.
We urge you to complete, sign and return the enclosed proxy card promptly. A postage-paid
envelope is enclosed for this purpose. Whether or not you plan to be present at the meeting, your
vote is important. To have your vote count, you must return a proxy card.
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 receiving your proxy so that your shares may be voted at the meeting.
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Sincerely,
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/s/ [Jason B. Harrison]
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[Jason B. Harrison |
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Clerk] |
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Important Notice Regarding Availability of Proxy Materials for the
Shareholder Meeting to be held on [October 17, 2011]:
This Proxy Statement is Available at http:// www.altmangroup.com/docs/gmo2011.
GMO TRUST
GMO Benchmark-Free Allocation Fund
40 Rowes Wharf
Boston, Massachusetts 02110
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Shareholders of GMO Benchmark-Free Allocation Fund:
Notice is hereby given that a special meeting of the shareholders of GMO Benchmark-Free
Allocation Fund (the Fund), a series of GMO Trust (the Trust), will be held on [October 17,
2011] at the offices of Grantham, Mayo, Van Otterloo & Co. LLC (GMO), on the 2nd Floor of 40
Rowes Wharf, Boston, Massachusetts, at 9:00 a.m., Boston time, and any postponement or adjournment
thereof (the Special Meeting), for the following purposes, which are more fully described in the
accompanying Proxy Statement:
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To approve a new management contract between the Trust, on behalf of the Fund,
and GMO, the investment manager to the Fund. |
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To transact such other business as may properly come before the Special Meeting
and any postponement or adjournment thereof. |
The Board of Trustees of the Trust unanimously recommends that you vote for the
approval of the new management contract between the Trust, on behalf of the Fund, and GMO. The
Board of Trustees of the Trust has fixed the close of business on [September 8, 2011] as the record
date (the Record Date) for the determination of shareholders entitled to notice of, and to vote
at, the Special Meeting or any postponement or adjournment thereof. Only those shareholders who
owned shares in the Fund at the close of business on the Record Date can vote at the Special
Meeting or any adjournments thereof. Copies of these proxy materials, including this notice of the
Special Meeting, the Proxy Statement, and the proxy card, also are available to you at
http://www.altmangroup.com/docs/gmo2011. Information on how to obtain directions to attend the
Special Meeting and vote in person can be obtained by calling [1-617-346-7520].
We urge you to mark, sign, date and mail the enclosed proxy in the postage-paid envelope
provided as soon as possible so that you will be represented at the Special Meeting. If you desire
to vote in person at the Special Meeting, you may revoke your proxy at any time before it is
exercised.
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By order of the Board of Trustees of the Trust, |
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/s/ Jason B. Harrison
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Jason B. Harrison |
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Clerk |
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[September 14, 2011]
TABLE OF CONTENTS
PROXY STATEMENT
GMO TRUST
GMO Benchmark-Free Allocation Fund
40 Rowes Wharf
Boston, Massachusetts 02110
INTRODUCTION
The enclosed proxy is solicited by the Trustees of GMO Trust (the Trust) for use at the
Special Meeting of Shareholders of GMO Benchmark-Free Allocation Fund, a series of the Trust (the
Fund), to be held on [October 17, 2011], at the offices of Grantham, Mayo, Van Otterloo & Co.
LLC, on the 2nd Floor of 40 Rowes Wharf, Boston, Massachusetts, at 9:00 a.m., Boston time, and any
postponement or adjournment thereof (the Special Meeting), for action upon the matters set forth
in the accompanying Notice of the Special Meeting of Shareholders (the Notice). Shareholders of
record at the close of business on [September 8, 2011] (the Record Date) are entitled to be
present and to vote at the Special Meeting or any postponed or adjourned session thereof. The
Notice, this Proxy Statement and the enclosed proxy card are first being mailed to shareholders [on
or around September 14, 2011].
The Trustees unanimously recommend that you vote for the approval of the new
management contract for the Fund.
The Trust is currently comprised of sixty-eight series, but only the Fund is the subject of
this proxy statement and only shareholders of the Fund are receiving the enclosed proxy. Each whole
share of the Fund is entitled to one vote as to any matter on which it is entitled to vote and each
fractional share is entitled to a proportionate fractional vote. Shares represented by your duly
represented proxy will be voted in accordance with your instructions. If no instructions are made
on a submitted proxy, the proxy will be voted for the approval of the new management
contract.
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PROPOSAL: APPROVAL OF AMENDED AND RESTATED MANAGEMENT CONTRACT FOR THE FUND
Overview. At the Special Meeting, shareholders of the Fund will consider the approval of an
amended and restated management contract (the New Management Contract) between the Trust, on
behalf of the Fund, and Grantham, Mayo, Van Otterloo & Co. LLC, the investment manager to the Fund
(GMO or the Manager). The New Management Contract provides that the Fund shall pay GMO an
annual management fee equal to 0.65% of the Funds average daily net assets (the Management Fee).
Pursuant to the New Management Contract, the Management Fee will be reduced or waived by an amount
equal to the net management fees that are paid to GMO and indirectly borne by the Fund as a result
of the Funds investment in other GMO Funds (underlying GMO Funds) (after any
waivers/reimbursements by GMO to those underlying GMO Funds). The New Management Contract and other
related changes to the Funds fee and expense structure are described in additional detail below
under Description of Management Contracts and Fee Structure Changes. The Board of Trustees of the
Trust (the Board or the Trustees), including a majority of the Trustees who are not interested
persons of the Trust within the meaning of the Investment Company Act of 1940, as amended (the
1940 Act) (such trustees, the Independent Trustees), considered and approved the New Management
Contract at an in-person meeting held on June 14, 2011, and recommends that shareholders of the
Fund vote for the approval of the New Management Contract.
Description of Management Contracts and Fee Structure Changes. GMO currently serves as the
investment manager to the Fund pursuant to a management contract between the Trust, on behalf of
the Fund, and GMO executed as of June 19, 2003 (the Current Management Contract). The Current
Management Contract was approved by the Funds initial shareholder on June 27, 2003, and provides
that it will terminate after an initial two-year term unless it is re-approved annually by the
Funds Board, including a majority of the Independent Trustees. The Board, including the
Independent Trustees, last approved the continuation of the Current Management Contract on May 31,
2011. Please see Exhibit A for a discussion of the Boards considerations in approving the
Current Management Contract.
Under the Current Management Contract, the Fund does not directly pay any management fees to
GMO for management services provided by GMO to the Fund. However, the Fund is a fund-of-funds
that indirectly bears management fees that GMO receives as a result of the Funds investments in
underlying GMO Funds.
As noted above, under the New Management Contract, the Fund would agree to pay GMO an annual
Management Fee equal to 0.65% of average daily net assets of the Fund (the Management Fee), and
GMOs Management Fee would be reduced or waived by an amount equal to the net management fees that
are paid to GMO and indirectly borne by the Fund as a result of the Funds investment in underlying
GMO Funds (after any waivers/reimbursements by GMO to those underlying GMO Funds). The form of New
Management Contract is included in Exhibit B.
If the New Management Contract is approved by shareholders, in addition to the management fee
changes discussed above, the Fund also will implement a new shareholder servicing fee arrangement
for each outstanding class of shares of the Fund pursuant to a separate servicing agreement between
the Trust and GMO (the New Shareholder Service Agreement).
-2-
Currently, the Fund does not directly pay any shareholder service fees to GMO. However, as a
fund-of-funds, the Fund indirectly bears shareholder service fees that GMO receives as a result
of the Funds investments in underlying GMO Funds.
Under the New Shareholder Service Agreement, Class III shares of the Fund will agree to pay
GMO an annual shareholder service fee of 0.15% of average daily net assets for such Class (the
Shareholder Service Fee), but the Shareholder Service Fee would be reduced or waived by an amount
equal to the shareholder service fees indirectly borne by the Fund and that are paid to GMO by the
underlying GMO Funds in which the Fund invests (after giving effect to any waivers or reductions of
such fees by GMO with respect to those underlying GMO Funds).
In addition, if the New Management Contract is approved, GMO will contractually agree to
reimburse the Fund for operating expenses other than Excluded Expenses (the Fund Expense
Reimbursement Agreement). For these purposes, Excluded Expenses are set forth in the Fund
Expense Reimbursement Agreement (a form of which is attached as Exhibit C) and include
management fees, shareholder service fees, underlying GMO Fund expenses, Independent Trustee
expenses, certain legal costs, investment-related costs (e.g., brokerage commissions and securities
lending fees), extraordinary expenses, and certain other operational expenses. The Fund Expense
Reimbursement Agreement will have an initial term of at least one year and may not be terminated
prior to such date without the consent of the Trusts Board of Trustees.
Exhibit D provides a comparison, as of February 28, 2011, of (a) the Funds current
fees and operating expenses under the Current Management Contract and current fee structure for
Class III shares of the Fund to (b) the fees and expenses under the proposed New Management
Contract Agreement and new fee structure described above.
Exhibit E provides a comparison of the management fees received by GMO under the
Current Management Contract for the fiscal year ended February 28, 2011 to the management fees that
GMO would have received if the New Management Contract had been in effect during that period.
Comparison of Other Key Terms of the Management Contracts. Other than the Management Fee
arrangement described above, the terms of the Current Management Contract and New Management
Contract (each a Contract) are substantially the same. Under each Contract, GMO, under the
supervision of the Board of Trustees, agrees to: (i) furnish continuously an investment program for
the Fund, make investment decisions on behalf of the Fund and place all orders for the purchase and
sale of its portfolio securities and (ii) furnish office space and equipment, provide bookkeeping
and clerical services (excluding determination of net asset value, shareholder accounting services
and the fund accounting services for the Fund being supplied by an administrator as the Fund may
engage from time to time) and pay all salaries, fees and expenses of officers and Trustees of the
Trust who are affiliated with GMO. GMO also is responsible for selecting brokers and dealers and
for negotiating brokerage commissions and dealer charges.
Each Contract provides that, after its initial two-year term, it continues in effect from year
to year, but only as long as such continuance is specifically approved at least annually (a) by the
vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the Board of Trustees, or by the vote of a majority of the
outstanding voting securities of the Fund. The Current Management Contract will terminate on July
1, 2012 unless its continuation is approved in the manner described above. If approved by
shareholders, the New Management Contract would terminate two
-3-
years after its effective date (currently expected to be [December 31], 2011) unless its
continuation is approved in the manner described above. Each Contract may be terminated at any
time, without the payment of any penalty, by the vote of a majority of the outstanding voting
securities of the Fund or by the Board of Trustees, in each case on 60 days written notice, or by
GMO on 60 days written notice. Each Contract terminates automatically in the event of its
assignment.
Each Contract provides that in the absence of willful misfeasance, bad faith or gross
negligence on the part of GMO, or reckless disregard of its obligations and duties hereunder, GMO
shall not be subject to any liability to the Trust, or to any shareholder of the Trust, for any act
or omission in the course of, or connected with, rendering services under the Contract.
Board Considerations of the New Management Contract. At a meeting of the Trusts Board of
Trustees held on June 3, 2011, the Trusts Independent Trustees considered the terms of the
proposed New Management Contract and determined to recommend its approval to the full Board of
Trustees. At an in-person meeting held on June 14, 2011, the Board of Trustees, including all of
the Independent Trustees, approved the New Management Contract and resolved to recommend approval
of the New Management Contract by the Funds shareholders.
In connection with its consideration of the New Management Contract, the Board of Trustees met
privately with its independent legal counsel and independent compliance consultant. In addition to
the information the Board took into account in connection with its approval of the Current
Management Contract on May 31, 2011, as described in Exhibit A, the Board also considered
the following factors, among others:
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That GMO is not currently being paid by the Fund for what the Trustees believe to be
valuable asset allocation services. |
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Under the New Management Contract, GMOs Management Fee would be reduced or waived by
an amount equal to the net management fees that are paid to GMO and indirectly borne by
the Fund as a result of the Funds investment in underlying GMO Funds (after any
waivers/reimbursements by GMO to those underlying GMO Funds). |
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The Funds Management Fee under the New Management Contract compares favorably with
the fees paid by GMOs institutional accounts for GMOs real return strategies. |
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The Funds current estimated total expenses under the New Management Contract would
remain below the median of leading competitors identified by GMO. |
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The total direct and indirect fees paid by the Fund to GMO for management services
under the New Management Contract will be at least 0.65% of the Funds average daily net
assets per annum and could be higher depending on the allocation of the Funds assets
among underlying GMO Funds. |
After considering these factors, among others, the Board of Trustees (including all of the
Independent Trustees) concluded that the approval of the New Management Contract was in the best
interests of the Fund. In reaching this conclusion the Board of Trustees did not give particular
weight to any single factor identified above.
Required Vote. Approval of the New Management Contract requires the affirmative vote of a
majority of the outstanding voting securities of the Fund, which means the lesser of: (a) 67% or
more of the Funds outstanding shares present at the meeting, in person or by proxy, if more than
50% of the Funds
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outstanding shares are present in person or by proxy, or (b) more than 50% of the Funds
outstanding shares. Additional information about voting is provided below. If the vote required to
approve the New Management Contract is not obtained, the Current Management Contract would remain
in effect, and the Board of Trustees would consider other actions it deems in the best interests of
the Fund.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE NEW
MANAGEMENT CONTRACT FOR THE FUND.
-5-
INFORMATION ABOUT GMO
GMO, 40 Rowes Wharf, Boston, Massachusetts 02110, provides management and shareholder services
to the Fund, other funds of the Trust, privately offered funds and separately managed accounts. GMO
is a private company, founded in 1977. As of May 31, 2011, GMO provided investment advisory
services on a worldwide basis to more than $100 billion of client assets, including the GMO Funds
and other investors, such as pension plans, endowments, and foundations.
Exhibit F sets forth information regarding GMOs directors and chief executive
officer.
Exhibit G sets forth Trustees and officers of the Trust who also hold positions with
GMO or its affiliates.
Exhibit H sets forth information about securities owned by the Trustees and officers
of the Trust who are not members of GMO in entities controlled by, or under common control with,
GMO.
GMO acts as investment adviser to another investment company having a similar investment
objective to the Fund (the Similar Fund). Exhibit I sets forth information regarding the
Similar Fund.
-6-
FURTHER INFORMATION ABOUT VOTING AND THE SPECIAL MEETING
Quorum and Methods of Tabulation. The shareholders of the Fund vote together as a single
class on the approval of the New Management Contract. Votes cast by proxy or in person at the
Special Meeting will be counted by persons appointed by the Trust as tellers (the Tellers) for
the Special Meeting. The presence at the meeting of 40% of the Funds outstanding shares entitled
to vote at the Special Meeting constitutes a quorum for the Special Meeting.
The Tellers will count the total number of votes cast for approval of the New Management
Contract 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. Abstentions and broker
non-votes will have the effect of a negative vote on the proposal.
A proxy purporting to be executed by or on behalf of a shareholder shall be deemed valid and
the burden of proving invalidity shall rest on a challenger. A proxy with respect to Fund shares
held in the name of two or more persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to the contrary from
any one of them.
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, they intend that
proxies that do not contain specific restrictions to the contrary be voted on such matters in
accordance with the judgment of the persons named in the proxy card.
Revocation of Proxies. Proxies may be revoked at any time before they are voted either (i)
by a written revocation received by the Clerk of the Trust, (ii) by a properly executed later-dated
proxy received by the Clerk of the Trust, or (iii) by an in-person vote at the Special Meeting.
Attendance at the Special Meeting will not in and of itself revoke a proxy. Shareholders may
revoke a proxy as often as they wish before the Special Meeting. Only the latest dated, properly
executed proxy card received prior to or at the Special Meeting will be counted.
Date for Receipt of Shareholders Proposals for Subsequent Meetings of Shareholders. The
Amended and Restated Agreement and Declaration of Trust does not provide for annual meetings of
shareholders, but the Trustees may from time to time schedule special meetings. Shareholder
proposals for inclusion in the Trusts proxy statement for any subsequent meeting must be received
by the Trust a reasonable period of time prior to any such meeting.
Adjournment. In the event that a quorum is not present and/or sufficient votes in favor of
the New Management Contract are not received by the time scheduled for the Special Meeting, the
persons named as proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to the approval of the New Management Contract. Any
such adjournments will require the affirmative vote of a majority of the votes cast on the question
in person or by proxy at the session of the Special Meeting to be adjourned, as required by the
Amended and Restated Agreement and Declaration of
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Trust and the Amended and Restated By-Laws. The persons named as proxies will vote in favor of
such adjournment those proxies that they are entitled to vote in favor of the New Management
Contract. They will vote against any such adjournment those proxies required to be voted against
the New Management Contract.
Financial Information. A copy of the Annual Report for the Fund for the most recent fiscal
year ended (i.e., February 28, 2011), including financial statements, has previously been mailed to
shareholders. Upon request, the Fund will furnish, without charge, to any of its shareholders, a
copy of the Annual Report of the Fund for its most recent fiscal year and a copy of its semiannual
report for any subsequent semiannual period. Requests may be made in writing to Grantham, Mayo,
Van Otterloo & Co. LLC, 40 Rowes Wharf, Boston, Massachusetts 02110, Attn: Shareholder Services or
made by telephone by calling collect 1-617-346-7646.
Additional Information. The costs of solicitation of proxies and expenses incurred in
connection with the preparation of proxy materials are being borne by GMO. In addition to
soliciting proxies by mail, the Trustees and employees of the Trust may solicit proxies in person
or by telephone. The Trust has engaged The Altman Group to provide shareholder meeting services,
including the distribution of this Proxy Statement and related materials to shareholders as well as
vote solicitation and tabulation. The costs of these services are expected be approximately
$2,000.
Only one copy of this Proxy Statement may be mailed to a shareholder holding shares in
multiple accounts within the Fund. Additionally, unless the Trust has received contrary
instructions, only one copy of this Proxy Statement will be mailed to a given address where two or
more shareholders share that address. Additional copies of the Proxy Statement will be delivered
promptly upon request. Requests may be sent to The Altman Group, 60 East 42nd Street, Suite 916,
New York, New York 10165 or made by telephone by calling collect 1-877-864-5051.
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FUND INFORMATION
General Information and Mailing Address. The Trust is an open-end registered management
investment company under the Investment Company Act of 1940, as amended (the 1940 Act), and is
organized as a Massachusetts business trust. The Fund is a series of the Trust. The mailing
address of the Trust and the Fund is 40 Rowes Wharf, Boston, Massachusetts 02110.
Manager. Grantham, Mayo, Van Otterloo & Co. LLC, 40 Rowes Wharf, Boston, Massachusetts 02110,
serves as the Trusts investment manager and administers the Trusts business affairs.
Distributor. Funds Distributor, LLC, 10 High Street, Suite 302, Boston, Massachusetts 02110,
serves as the Trusts distributor (the Distributor) on behalf of the Fund. The Distributor is not
affiliated with GMO.
Share Ownership. As of the date of this Proxy Statement, only Class III shares of the Fund
are outstanding. Please refer to Exhibit J for additional information about Class III
shares and a list of persons known by the Fund to own beneficially 5% or more of the outstanding
Class III shares the Fund as of June 30, 2011. Please refer to Exhibit K for additional
information about ownership of Fund shares by the Trustees and principal executive officers of the
Trust as of June 30, 2011. [As of June 30, 2011, the Trustees and officers of the Trust as a group
owned 1% or less of the outstanding shares of each class of shares of the Fund.]
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A QUORUM IS PRESENT AT
THE MEETING. A SELF-ADDRESSED, POSTAGE PREPAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
[September 14, 2011]
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EXHIBIT ABOARD CONSIDERATIONS IN APPROVING
CURRENT MANAGEMENT CONTRACT
GMO Benchmark-Free Allocation Fund
In determining to approve the renewal of the management agreement of the Fund (the Current
Management Contract) for an additional twelve month period commencing June 30, 2011, the Trustees,
all but one of whom is not an interested person of GMO Trust (the Trust), considered
information that they believed, in light of the legal advice furnished to them, to be relevant.
The Trustees considered separately the management agreement for each series of the Trust
(collectively, the funds) but also noted that the interests of the funds overlapped to a
considerable extent.
As discussed below, at meetings throughout the year, the Trustees considered information relevant
to renewal of the Current Management Contract. In addition, at a meeting held on April 29, 2011,
the full Board of Trustees met with representatives of Grantham, Mayo, Van Otterloo & Co. LLC (the
Manager) to discuss, among other things, the investment performance of the funds and various
methods for evaluating fund performance. At a separate meeting also held on April 29, 2011 and
attended only by the Trustees who are not interested persons of the Trust (the Independent
Trustees), their independent legal counsel and their independent compliance consultant, the
Independent Trustees discussed extensive materials provided by the Manager to the Trustees for
purposes of considering the renewal of the Current Management Contract. At the conclusion of those
meetings, the Independent Trustees instructed their independent legal counsel to request additional
information from the Manager, and the Manager provided that information prior to and at a meeting
of the Trustees on May 31, 2011. In addition, at the meeting of the Trustees on May 31, 2011,
representatives of the Manager met with the Trustees to answer questions.
The Trustees met over the course of the year with the Managers investment advisory personnel and
considered information provided by the Manager relating to the education, experience, and number of
investment professionals and other personnel providing services under the Current Management
Contract. The Trustees also considered information concerning the investment philosophy of, and
investment process applied by, the Manager in managing the Funds portfolio and the level of skill
required. In evaluating that information, the Trustees focused particularly on the Managers
internal resources and the time and attention devoted by the Managers senior management to the
Fund. The Trustees also considered the business reputation of the Manager and its professional
liability insurance coverage.
The Trustees considered that the Fund seeks a positive total return and does not seek to outperform
a particular securities market index or blend of market indices. The Trustees also considered the
Funds investment performance as compared to funds managed by other managers deemed by third-party
data services to have similar objectives. The Trustees reviewed the Funds performance, including
information as to performance in relation to risk, over various periods, including one-, three-,
five- and seven-year periods and for the life of the Fund, and information prepared by the
third-party data services, various other statistical measures of the Funds performance, and
factors identified by the Manager as contributing to the Funds performance. The Trustees observed
that the comparative data provided by the third-party data services was based on peer groups that
included funds with investment approaches that were substantially different from that of the Fund
and gave correspondingly less weight to that information. The Trustees also considered the
qualifications and experience of the personnel responsible for managing the Fund, the support
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those personnel received from the Manager, the investment techniques used by the Manager to manage
the Funds investments, and the overall competence of the Manager.
The Trustees also gave substantial consideration to the fact that the Fund does not pay a fee to
the Manager under the Current Management Contract or the Funds shareholder servicing agreement,
but that the Fund indirectly bears management and shareholder servicing fees paid to the Manager by
the other funds of the Trust in which the Fund invests. The Trustees also considered other
so-called fallout benefits to the Manager and also possible reputational value derived from
serving as investment manager to the Fund. The Trustees considered the ability of the funds of the
Trust to establish a public record of their performance also to be a potential fallout benefit to
the Manager because of the opportunity that record might create for the Manager to increase assets
under management by, for example, attracting new clients, entering into sub-advisory relationships
with other fund groups, and/or expanding existing client relationships. The Trustees reviewed
information provided by the Manager regarding the Managers standard fee rates for separately
managed accounts. The Trustees noted that they had approved renewal of the Managers management
agreements with the other funds of the Trust in which the Fund may invest and had concluded that
the advisory fees charged to those funds were reasonable, after considering, among other things:
possible economies of scale to the Manager in connection with its management of other funds; the
Managers profitability with respect to those other funds and the Trust as a whole; and information
prepared by a third-party data service concerning fees paid to managers of funds deemed by that
service to have similar objectives to those funds in which the Fund invests.
In assessing the nature and quality of the services provided by the Manager, the Trustees
considered a range of factors in addition to performance. The Trustees considered the rigor and
discipline with which the Manager manages the Fund and the extent and quality of the resources,
including human resources, brought to bear by the Manager. The Trustees also considered the extent
and quality of the non-investment advisory services provided by the Manager, including financial
reporting, legal, compliance and administrative services. The Trustees evaluated the Managers
record with respect to regulatory compliance and compliance with the investment policies of the
Fund and other funds of the Trust. The Trustees also evaluated the procedures of the Manager
designed to fulfill the Managers fiduciary duty to the Fund with respect to possible conflicts of
interest, including the Managers code of ethics (regulating the personal trading of its officers
and employees), the procedures by which the Manager allocates trades among its investment advisory
clients, the systems in place to ensure compliance with the foregoing, and the record of the
Manager in these matters. The Trustees also received information concerning the Managers
practices with respect to the execution of portfolio transactions. Finally, the Trustees also
considered the Managers practices and record with respect to the resolution of trading, net asset
value determination, and other errors.
The Trustees considered the scope of the services provided by the Manager to the Fund under the
Current Management Contract. The Trustees noted that the Trusts counsel had advised (and
independent legal counsel had confirmed) that, in their experience, the standard of care set forth
in the Current Management Contract was typical for mutual fund management agreements. The Trustees
noted that the scope of the Managers services to the Fund was consistent with the Funds
operational requirements, including, in addition to seeking to achieve the Funds investment
objective, compliance with the Funds investment restrictions, tax and reporting requirements, and
shareholder services. The Trustees considered the Managers oversight of non-advisory services
provided by persons other than the Manager, considering, among other things, the Funds total
expenses, the Managers reimbursement of certain expenses pursuant to its contractual expense
reimbursement arrangement in place with the Fund, and the reputation of the Funds other service
providers.
A-2
After reviewing these factors, among others, the Trustees concluded, within the context of their
overall conclusions regarding the agreement, that the nature, extent, and quality of services
provided supported the renewal of the Current Management Contract.
Following their review, on May 31, 2011, the Independent Trustees in their capacity as such, and
then all Trustees voting together, based on their evaluation of all factors that they deemed to be
material, including those factors described above, approved the renewal of the Current Management
Contract for an additional twelve-month period commencing June 30, 2011.
A-3
EXHIBIT BFORM OF NEW MANAGEMENT CONTRACT
AMENDED AND RESTATED MANAGEMENT CONTRACT
Amended and Restated Management Contract executed as of [_____], 2011 between GMO TRUST, a
Massachusetts business trust (the Trust) on behalf of its series GMO Benchmark-Free Allocation
Fund (the Fund), and GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC, a Massachusetts limited liability
company (the Manager).
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is agreed as follows:
|
|
SERVICES TO BE RENDERED BY MANAGER TO THE TRUST. |
(a) Subject always to the control of the Trustees of the Trust and to such policies as the
Trustees may determine, the Manager will, at its expense, (i) furnish continuously an investment
program for the Fund and will make investment decisions on behalf of the Fund and place all orders
for the purchase and sale of its portfolio securities and (ii) furnish office space and equipment,
provide bookkeeping and clerical services (excluding determination of net asset value, shareholder
accounting services and the fund accounting services for the Fund being supplied by State Street
Bank and Trust Company or such other administrator as the Fund may engage from time to time) and
pay all salaries, fees and expenses of officers and Trustees of the Trust who are affiliated with
the Manager. In the performance of its duties, the Manager will comply with the provisions of the
Agreement and Declaration of Trust and By-laws of the Trust and the Funds stated investment
objective, policies and restrictions.
(b) In placing orders for the portfolio transactions of the Fund, the Manager will seek the
best price and execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described below. In using its best
efforts to obtain for the Fund the most favorable price and execution available, the Manager shall
consider all factors it deems relevant, including, without limitation, the overall net economic
result to the Fund (involving price paid or received and any commissions and other costs paid), the
efficiency with which the transaction is effected, the ability to effect the transaction at all
where a large block is involved, availability of the broker to stand ready to execute possibly
difficult transactions in the future and financial strength and stability of the broker. Subject
to such policies as the Trustees may determine, the Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Contract or otherwise solely by reason of
its having caused a Fund to pay a broker or dealer that provides brokerage and research services to
the Manager an amount of commission for effecting a portfolio investment transaction in excess of
the amount of commission another broker or dealer would have charged for effecting that
transaction, if the Manager determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Managers overall
B-1
responsibilities with respect to the Trust and to other clients of the Manager as to which the
Manager exercises investment discretion.
(c) The Manager shall not be obligated under this agreement to pay any expenses of or for the
Trust or of or for the Fund not expressly assumed by the Manager pursuant to this Section 1 other
than as provided in Section 3.
OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and employees of the Trust
may be a partner, shareholder, director, officer or employee of, or be otherwise interested in, the
Manager, and in any person controlled by or under common control with the Manager, and that the
Manager and any person controlled by or under common control with the Manager may have an interest
in the Trust. It is also understood that the Manager and persons controlled by or under common
control with the Manager have and may have advisory, management service, distribution or other
contracts with other organizations and persons, and may have other interests and businesses.
COMPENSATION TO BE PAID BY THE TRUST TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Managers services rendered, for the
facilities furnished and for the expenses borne by the Manager pursuant to Section 1, a fee,
computed and paid monthly at the annual rate of 0.65% of the Funds average daily net asset value
(the Management Fee). Such average daily net asset value of the Fund shall be determined by
taking an average of all of the determinations of such net asset value during such month at the
close of business on each business day during such month while this Contract is in effect. Such
fee shall be payable for each month within five (5) business days after the end of such month. The
Management Fee will be reduced or waived by an amount equal to the net management fees that are
paid to the Manager and indirectly borne by the Fund as a result of the Funds investment in other
series of the Trust (after any waivers/reimbursements by the Manager to those other series of the
Trust).
In the event that expenses of the Fund for any fiscal year should exceed the expense
limitation on investment company expenses imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Trust are qualified for offer and sale, the compensation due
the Manager for such fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof. In the event that the expenses of the Fund exceed any expense limitation which the
Manager may, by written notice to the Trust, voluntarily declare to be effective with respect to
the Fund, subject to such terms and conditions as the Manager may prescribe in such notice, the
compensation due the Manager shall be reduced, and, if necessary, the Manager shall bear the Funds
expenses to the extent required by such expense limitation.
If the Manager shall serve for less than the whole of a month, the foregoing compensation
shall be prorated.
B-2
ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any penalty, in the event
of its assignment; and this Contract shall not be amended unless such amendment is approved at a
meeting by the affirmative vote of a majority of the outstanding shares of the Fund, and by the
vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority
of the Trustees of the Trust who are not interested persons of the Trust or of the Manager.
EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain in full force and
effect continuously thereafter (unless terminated automatically as set forth in Section 4) until
terminated as follows:
(a) Either party hereto may at any time terminate this Contract by not more than sixty days
written notice delivered or mailed by registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust or the shareholders by the affirmative vote of a majority
of the outstanding shares of the Fund, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager, by vote cast in person at a meeting called for
the purpose of voting on such approval, do not specifically approve at least annually the
continuance of this Contract, then this Contract shall automatically terminate at the close of
business on the second anniversary of its execution, or upon the expiration of one year from the
effective date of the last such continuance, whichever is later; provided, however, that if the
continuance of this Contract is submitted to the shareholders of the Fund for their approval and
such shareholders fail to approve such continuance of this Contract as provided herein, the Manager
may continue to serve hereunder in a manner consistent with the Investment Company Act of 1940 and
the rules and regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a majority of its
Trustees, or (ii) by the affirmative vote of a majority of the outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without the payment of any
penalty.
CERTAIN DEFINITIONS.
For the purposes of this Contract, the affirmative vote of a majority of the outstanding
shares of the Fund means the affirmative vote, at a duly called and held meeting of shareholders,
(a) of the holders of 67% or more of the shares of the Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Fund entitled to vote at such meeting, whichever is
less.
B-3
For the purposes of this Contract, the terms affiliated person, control, interested
person and assignment shall have their respective meanings defined in the Investment Company Act
of 1940 and the rules and regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act; and the phrase specifically
approve at least annually shall be construed in a manner consistent with the Investment Company
Act of 1940 and the rules and regulations thereunder.
NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the part of the
Manager, or reckless disregard of its obligations and duties hereunder, the Manager shall not be
subject to any liability to the Trust, or to any shareholder of the Trust, for any act or omission
in the course of, or connected with, rendering services hereunder.
INITIALS GMO.
The Manager owns the initials GMO which may be used by the Trust only with the consent of
the Manager. The Manager consents to the use by the Trust of the name GMO Trust or any other
name embodying the initials GMO, in such forms as the Manager shall in writing approve, but only
on condition and so long as (i) this Contract shall remain in full force and (ii) the Trust shall
fully perform, fulfill and comply with all provisions of this Contract expressed herein to be
performed, fulfilled or complied with by it. No such name shall be used by the Trust at any time
or in any place or for any purposes or under any conditions except as in this section provided.
The foregoing authorization by the Manager to the Trust to use said initials as part of a business
or name is not exclusive of the right of the Manager itself to use, or to authorize others to use,
the same; the Trust acknowledges and agrees that as between the Manager and the Trust, the Manager
has the exclusive right so to authorize others to use the same; the Trust acknowledges and agrees
that as between the Manager and the Trust, the Manager has the exclusive right so to use, or
authorize others to use, said initials and the Trust agrees to take such action as may reasonably
be requested by the Manager to give full effect to the provisions of this section (including,
without limitation, consenting to such use of said initials). Without limiting the generality of
the foregoing, the Trust agrees that, upon any termination of this Contract by either party or upon
the violation of any of its provisions by the Trust, the Trust will, at the request of the Manager
made within six months after the Manager has knowledge of such termination or violation, use its
best efforts to change the name of the Trust so as to eliminate all reference, if any, to the
initials GMO and will not thereafter transact any business in a name containing the initials
GMO in any form or combination whatsoever, or designate itself as the same entity as or successor
to an entity of such name, or otherwise use the initials GMO or any other reference to the
Manager. Such covenants on the part of the Trust shall be binding upon it, its trustees, officers,
stockholders, creditors and all other persons claiming under or through it.
LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
B-4
instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually
and that the obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property of the Fund.
B-5
IN WITNESS WHEREOF, GMO TRUST and GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC have each caused this
instrument to be signed in duplicate on its behalf by its duly authorized representative, all as of
the day and year first above written.
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GMO TRUST
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By |
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Name: |
Jason Harrison |
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Title: |
Clerk |
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GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
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By |
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Name: |
J.B. Kittredge |
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Title: |
General Counsel |
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B-6
EXHIBIT CFORM OF FUND EXPENSE REIMBURSEMENT AGREEMENT
GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
NOTIFICATION OF UNDERTAKING TO REIMBURSE
CERTAIN FUND EXPENSES
NOTIFICATION made [____], 2011 by GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC, a Massachusetts
limited liability company (the Advisor), to GMO TRUST, a Massachusetts business trust (the
Trust), on behalf of its series, GMO Benchmark-Free Allocation Fund (the Fund).
WITNESSETH:
WHEREAS, the Advisor has organized the Fund to serve primarily as an investment vehicle for
certain large institutional accounts; and
WHEREAS, the Advisor believes it would benefit from a high sales volume of shares of the Fund
in that such a volume would maximize the Advisors fee as investment adviser to the Fund; and
WHEREAS, the Advisor has agreed to reimburse the Fund for certain Fund expenses so as to
reduce or eliminate certain costs otherwise borne by shareholders of the Fund and to enhance the
returns generated by shareholders of the Fund.
NOW, THEREFORE, the Advisor hereby notifies the Trust that the Advisor shall, as set forth
below, reimburse a portion of the expenses of the Fund through the date designated by the Advisor
in this Notification (the Reimbursement Date) (and any subsequent periods as may be designated by
the Advisor by notice to the Trust).
The Advisor will be obligated to reimburse the Fund if the Funds total annual operating
expenses (excluding fees and expenses identified below (the Excluded Fund Fees and Expenses))
exceed 0.00% of the Funds average daily net assets.
As used in this Notification, Excluded Fund Fees and Expenses are: management fees,
shareholder service fees, expenses indirectly incurred by investment in other Funds of the Trust,
fees and expenses of the independent trustees of the Trust and their independent counsel, fees and
expenses for legal services the Advisor for the Trust has not undertaken to pay, compensation and
expenses of Trust officers and agents who are not affiliated with the Advisor, brokerage
commissions, securities lending fees and expenses, interest expense, transfer taxes, and other
investment-related costs (including expenses associated with investments in any company that is an
investment company (including an exchange-traded fund) or would be an investment company under the
Investment Company Act of 1940, as amended (the 1940 Act), but for the exceptions to the
definition of investment company provided in Sections 3(c)(1) and
C-1
3(c)(7) of the 1940 Act), hedging transaction fees, and extraordinary, non-recurring and
certain other unusual expenses (including taxes).
In addition, the Advisor shall reimburse the Fund for the amount of fees and expenses incurred
indirectly by the Fund through its direct or indirect investment in other GMO Funds, excluding
those Funds Excluded Fund Fees and Expenses as defined in those Funds Notifications of
Undertaking to Reimburse Certain Fund Expenses, if any, subject to a maximum total reimbursement to
the Fund of such fees and expenses, together with the Funds management fee waiver/reduction, equal
to 0.65% of the Funds average daily net assets.
The Reimbursement Date for the Fund is [___], 2012 and may be extended by the Manager at its
discretion.
In providing this Notification, the Advisor understands and acknowledges that the Trust
intends to rely on this Notification, including in connection with the preparation and printing of
the Trusts prospectuses and its daily calculation of the Funds or its class net asset value.
Please be advised that all previous notifications by the Advisor with respect to fee waivers
and/or expense limitations regarding the Fund shall hereafter be null and void and of no further
force and effect.
C-2
IN WITNESS WHEREOF, the Advisor has executed this Notification of Undertaking to Reimburse
Certain Fund Expenses on the day and year first above written.
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GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
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By: |
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Name: |
J.B. Kittredge |
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Title: |
General Counsel |
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C-3
EXHIBIT DPRO FORMA EXPENSE COMPARISON OF CURRENT AND PROPOSED FEES
As of February 28, 2011
Annual Operating Expenses
Shareholder Fees Class III
(fees paid directly from your investment)
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New Management Contract |
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Current Management |
|
and New Fee Structure if |
|
|
Contract and Current |
|
New Management Contract |
|
|
Fee Structure |
|
is Approved |
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|
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|
|
|
|
|
|
Purchase premium (as a percentage of amount invested) |
|
|
[0.09] |
%1 |
|
|
[0.09] |
%1 |
Redemption fee (as a percentage of amount redeemed) |
|
|
[0.09] |
%1 |
|
|
[0.09] |
%1 |
Annual Fund Operating Expenses Class III
(expenses that you pay each year as a percentage of the value of your investment)
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New Management Contract |
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|
Current Management |
|
and New Fee Structure if |
|
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Contract and Current |
|
New Management Contract |
|
|
Fee Structure |
|
is Approved |
|
|
|
|
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|
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|
Management fee |
|
|
0.00 |
% |
|
|
0.65 |
%4 |
Shareholder service fee |
|
|
0.00 |
% |
|
|
0.15 |
%4 |
Other expenses |
|
|
[0.02] |
% |
|
|
[0.02] |
% |
Acquired fund fees and expenses |
|
|
[0.57] |
%2 |
|
|
[0.57] |
%2 |
Total annual operating expenses |
|
|
[0.59] |
% |
|
|
[1.39] |
% |
Expense reimbursement |
|
|
([0.01] |
%)3 |
|
|
([0.50] |
%)4 |
Total annual operating expenses after expense reimbursement |
|
|
[0.58] |
% |
|
|
[0.89] |
% |
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|
[1 |
|
Purchase premiums and redemption fees for the Fund are typically reassessed
annually based on the weighted average of (i) the estimated transaction costs for directly held
assets and (ii) the purchase premiums and/or redemption fees, if any, imposed by the underlying GMO
Funds in which the Fund invests, provided that, if that weighted average is less than 0.05%, the
Fund usually does not charge a purchase premium or redemption fee.] |
|
[2 |
|
The amount has been restated to reflect current fees of the underlying GMO Funds.] |
|
[3 |
|
Subject to certain exclusions (Excluded Fund Fees and Expenses), GMO has
contractually agreed to reimburse the Fund to the extent the Funds total annual operating expenses
exceed 0.00% of the Funds average daily net assets. Excluded Fund Fees and Expenses include
underlying fund expenses, independent Trustee expenses, certain legal costs, investment-related
costs (e.g., brokerage commissions and securities lending fees), extraordinary expenses, and other
expenses described under the Funds Prospectus. This expense limitation will continue through at
least June 30, 2012, and may not be terminated prior to this date without the consent of the Funds
Board of Trustees.] |
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[4 |
|
Pursuant to the New Management Contract, the Funds management fee will be reduced or
waived by an amount equal to the net management fees that are paid to GMO and indirectly borne by
the Fund as a result of the Funds investment in underlying GMO Funds (after any
waivers/reimbursements by GMO to those underlying GMO Funds) (the management fee reduction). In
addition, the shareholder service fee set forth above for Class III shares of the Fund will be
reduced or waived by an amount equal to the shareholder service fees that are paid to GMO and
indirectly borne by Class III shares as a result of the Funds investment in underlying GMO Funds
(after giving effect to any waivers or reductions of such fees by GMO with respect to those
underlying |
D-1
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|
GMO Funds). In addition, subject to certain exclusions (Excluded Fund Fees and Expenses), GMO has
contractually agreed to reimburse the Fund to the extent the Funds total annual operating expenses
exceed 0.00% of the Funds average daily net assets (the Fund Expense Reimbursement Agreement).
Excluded Fund Fees and Expenses include management fees, shareholder service fees, underlying fund
expenses, independent Trustee expenses, certain legal costs, investment-related costs (e.g.,
brokerage commissions and securities lending fees), extraordinary expenses, and other expenses
described under the Funds Prospectus. Also pursuant to the Fund Expense Reimbursement Agreement,
GMO has contractually agreed to reimburse the Fund for the amount of fees and expenses incurred
indirectly by the Fund through its investment in other underlying GMO Funds (excluding those Funds
Excluded Fund Fees and Expenses as defined in those Funds expense reimbursement agreements, if
any), subject to a maximum total reimbursement to the Fund of such fees and expenses (together with
the Funds management fee reduction) equal to 0.65% of the Funds average daily net assets. The
Fund Expense Reimbursement Agreement will have an initial term of at least one year and may not be
terminated prior to this date without the consent of the Funds Board of Trustees.] |
Example under Current Management Contract and Current Fee Structure Compared to New
Management Contract and New Fee Structure if New Management Contract is Approved
This example is intended to help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund
for the time periods indicated. The example also assumes that your investment has a 5% return each
year and that the Funds operating expenses remain the same as those shown in the table. Although
your actual costs may be higher or lower, based on these assumptions your costs would be:
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If you sell your shares |
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If you do not sell your shares |
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1 Year* |
|
3 Years |
|
5 Years |
|
10 Years |
|
1 Year* |
|
3 Years |
|
5 Years |
|
10 Years |
|
|
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|
|
|
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|
Current Management
Contract and Fee
Structure Class
III |
|
$ |
[78] |
|
|
$ |
[252] |
|
|
$ |
[442] |
|
|
$ |
[991] |
|
|
$ |
[68] |
|
|
$ |
[272] |
|
|
$ |
[431] |
|
|
$ |
[977] |
|
|
|
|
|
|
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|
|
|
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|
|
|
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|
|
|
|
|
|
|
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|
New Management
Contract and
Proposed Fee
Structure Class
III |
|
$ |
[109] |
|
|
$ |
[454] |
|
|
$ |
[823] |
|
|
$ |
[1,860] |
|
|
$ |
[100] |
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|
$ |
[444] |
|
|
$ |
[812] |
|
|
$ |
[1,878] |
|
D-2
EXHIBIT EMANAGEMENT FEE COMPARISON
The table below provides a comparison, for the fiscal year ended February 28, 2011, of (a) the
management fees under the Current Management Contract (i) paid directly by the Fund to GMO and (ii)
indirectly borne by the Fund and paid to GMO as a result of the Funds investment in underlying GMO
Funds (after any waivers/reimbursements by GMO to those underlying GMO Funds) to (b) the management
fees that would have been paid to GMO (directly by the Fund and through the underlying GMO Funds)
if the New Management Contract had been in effect during that period.
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Management Fees Borne |
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|
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Management |
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Indirectly by the Fund and |
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|
|
Fees Paid |
|
Paid to GMO from Funds |
|
|
|
|
Directly by Fund |
|
Investment in underlying |
|
|
|
|
to GMO |
|
GMO Funds |
|
Total Management Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Management
Contract |
|
$ |
0 |
|
|
$ |
8,522,456 |
|
|
$ |
8,522,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Management
Contract |
|
$ |
4,809,757 |
* |
|
$ |
8,522,456 |
|
|
$ |
13,332,253 |
|
|
|
|
* |
|
After giving effect to the management fee reduction described above under Description of
Management Contracts and Fee Structure Changes. |
The percentage increase in Total Management Fees between the Current Management
Contract and New Management Contract would have been approximately 56%.
E-1
EXHIBIT FDIRECTORS AND CEO OF GMO
Information about the directors and chief executive officer of GMO is set forth below.
Information regarding members of GMO with 10% ownership in voting securities of GMO is also set
forth below. The address of each of them is c/o Grantham, Mayo, Van Otterloo & Co. LLC, 40 Rowes
Wharf, Boston, Massachusetts 02110.
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Name of Directors and Chief |
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|
Executive Officer |
|
Principal Occupation(s) |
|
|
|
R. Jeremy Grantham*
|
|
Chief Investment Strategist, Member of
the Board |
|
|
|
Eyk Van Otterloo*
|
|
Member of the Board |
|
|
|
John Rosenblum
|
|
Vice Chairman of the Board |
|
|
|
Christopher Darnell
|
|
Member of the Board |
|
|
|
Arjun Divecha
|
|
Chairman of the Board; Investment
Director Emerging Markets |
|
|
|
Ben Inker
|
|
Member of the Board; Investment
Director Asset Allocation |
|
|
|
Brad Hilsabeck
|
|
Member of the Board; Chief Executive
Officer |
|
|
|
Forrest Berkley
|
|
Member of the Board |
|
|
|
Myra Drucker
|
|
Member of the Board |
|
|
|
* |
|
R. Jeremy Grantham, Eyk Van Otterloo and Richard A. Mayo, a founding member of GMO, own 10% or
more of the voting securities of GMO. |
F-1
EXHIBIT GINTERESTED TRUSTEE AND OFFICER INFORMATION
The table below contains information concerning Trustees and officers of the Trust who hold
positions with GMO or its affiliates. The address of each of them is c/o GMO Trust, 40 Rowes
Wharf, Boston, Massachusetts 02110. Mr. Kittredge is a member of, and has a direct ownership
interest in, GMO. As a member of GMO, Mr. Kittredge will benefit from management, shareholder
servicing and any other fees paid to GMO and its affiliates by the Fund. None of the other
individuals listed below has an ownership or other material direct or indirect interest in GMO and
its affiliates.
|
|
|
|
|
|
|
|
|
Position(s) |
|
|
|
|
|
|
Held |
|
Length |
|
Principal Occupation(s) |
Name and Date of Birth |
|
with the Trust |
|
of Time Served |
|
During Past 5 Years2 |
|
|
|
|
|
|
|
Joseph B. Kittredge, Jr1
DOB: 08/22/1954
|
|
Interested Trustee;
President and Chief
Executive Officer
of the Trust
|
|
Trustee since March
2010; President and
Chief Executive
Officer of the
Trust since March
2009.
|
|
General Counsel, Grantham,
Mayo, Van Otterloo & Co. LLC
(October 2005-present);
Partner, Ropes & Gray LLP
(prior to October 2005). |
|
|
|
|
|
|
|
Sheppard N. Burnett
DOB: 10/24/1968
|
|
Treasurer and Chief
Financial Officer
|
|
Chief Financial
Officer since March
2007; Treasurer
since November
2006; Assistant
Treasurer,
September
2004-November 2006.
|
|
Head of Fund Administration
(December 2006-present), Fund
Administration Staff (June
2004-November 2006), Grantham,
Mayo, Van Otterloo & Co. LLC. |
|
|
|
|
|
|
|
John L. Nasrah
DOB: 05/27/1977
|
|
Assistant Treasurer
|
|
Since March 2007.
|
|
Fund Administrator, Grantham,
Mayo, Van Otterloo & Co. LLC
(September 2004-present). |
|
|
|
|
|
|
|
Mahmoodur Rahman
DOB: 11/30/1967
|
|
Assistant Treasurer
|
|
Since September
2007.
|
|
Fund Administrator, Grantham,
Mayo, Van Otterloo & Co. LLC
(April 2007-present); Vice
President and Senior Tax
Manager, Massachusetts
Financial Services Company
(January 2000-April 2007). |
|
|
|
|
|
|
|
Carolyn Haley
DOB: 07/12/1966
|
|
Assistant Treasurer
|
|
Since June 2009.
|
|
Fund Administrator, Grantham,
Mayo, Van Otterloo & Co. LLC
(May 2009-present); Treasurer
and Chief Compliance Officer,
Hambrecht & Quist Capital
Management LLC (April
2007-April 2009); Senior
Manager,
PricewaterhouseCoopers LLP
(2003-2007). |
|
|
|
|
|
|
|
John McGinty
DOB: 08/11/1962
|
|
Chief Compliance
Officer
|
|
Since February 2011.
|
|
Chief Compliance Officer,
Grantham, Mayo, Van Otterloo &
Co. LLC (July 2009-present);
Senior Vice President and
Deputy General Counsel
(January 2007-July 2009), Vice
President and Associate
General Counsel (February
2006-December 2006), Fidelity
Investments. |
G-1
|
|
|
|
|
|
|
|
|
Position(s) |
|
|
|
|
|
|
Held |
|
Length |
|
Principal Occupation(s) |
Name and Date of Birth |
|
with the Trust |
|
of Time Served |
|
During Past 5 Years2 |
|
|
|
|
|
|
|
Jason B. Harrison
DOB: 01/29/1977
|
|
Chief Legal
Officer, Vice
President-Law and
Clerk
|
|
Chief Legal Officer
since October 2010;
Vice President-Law
since October 2010;
Vice President
since November
2006; Clerk since
March 2006.
|
|
Legal Counsel, Grantham, Mayo,
Van Otterloo & Co. LLC (since
February 2006). |
|
|
|
|
|
|
|
David L. Bohan
DOB: 06/21/1964
|
|
Vice President and
Assistant Clerk
|
|
Vice President
since March 2005;
Assistant Clerk
since March 2006.
|
|
Legal Counsel, Grantham, Mayo,
Van Otterloo & Co. LLC. |
|
|
|
|
|
|
|
Gregory L. Pottle
DOB: 07/09/1971
|
|
Vice President and
Assistant Clerk
|
|
Since November 2006.
|
|
Legal Counsel, Grantham, Mayo,
Van Otterloo & Co. LLC. |
|
|
|
|
|
|
|
Anne K. Trinque
DOB: 04/15/1978
|
|
Vice President and
Assistant Clerk
|
|
Since September
2007.
|
|
Legal Counsel, Grantham, Mayo,
Van Otterloo & Co. LLC
(January 2007-present);
Attorney, Goodwin Procter LLP
(September 2003-January 2007). |
|
|
|
|
|
|
|
Heather Schirmer
DOB: 6/10/1974
|
|
Vice President and
Assistant Clerk
|
|
Since March 2011.
|
|
Legal Counsel, Grantham, Mayo,
Van Otterloo & Co. LLC. |
|
|
|
|
|
|
|
Cheryl Wakeham
DOB: 10/29/1958
|
|
Vice President and
Anti-Money
Laundering Officer
|
|
Since December 2004.
|
|
Manager, Client Service
Administration, Grantham,
Mayo, Van Otterloo & Co. LLC. |
|
|
|
1 |
|
Mr. Kittredge is an interested person of the Trust, as such term is used in the
1940 Act (an Interested Trustee), by virtue of his positions with the Trust and GMO indicated in
the table above. |
|
2 |
|
Each of Messrs. Burnett, Bohan and Pottle and Mses. Haley, Trinque and Schirmer
serves as an officer and/or director of certain pooled investment vehicles of which GMO or an
affiliate of GMO serves as the investment adviser. |
G-2
EXHIBIT HOWNERSHIP IN GMO RELATED COMPANIES
The table below sets forth information about securities owned by the Trustees and officers of
the Fund who are not members of GMO, as of June 30, 2011, of entities controlled by, or under
common control with, GMO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of |
|
|
|
|
|
|
|
|
|
|
Owner(s) and |
|
|
|
|
|
|
|
|
Name of |
|
Relationship |
|
|
|
Title of |
|
Value of |
|
|
Independent Trustee |
|
to Trustee |
|
Company |
|
Class |
|
Securities 2 |
|
% of Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald W. Glazer |
|
Self |
|
GMO Multi-Strategy
Fund (Offshore), a
private investment
company managed by GMO1 |
|
Limited partnership interest Class A |
|
$ |
1,107,987.60 |
|
|
|
0.030 |
% |
|
|
|
* |
|
As part of Mr. Glazers work as a consultant, he provides part-time consulting services to
Goodwin Procter LLP (Goodwin). Goodwin has provided legal services to Renewable Resources, LLC,
an affiliate of GMO; GMO, in connection with its relationship with Renewable Resources; and funds
managed by Renewable Resources. Mr. Glazer has represented that he has no financial interest in,
and is not involved in the provision of, such legal services. In the calendar years ended December
31, 2009 and December 31, 2010, these entities paid $397,491 and $1,238,183, respectively, in legal
fees and disbursements to Goodwin. In correspondence with the Staff of the SEC beginning in August
2006, the Independent Trustees legal counsel provided the Staff with information regarding Mr.
Glazers relationship with Goodwin and his other business activities. On September 11, 2007, based
on information that had been given to the Staff as of that date, the Staff provided oral no-action
assurance consistent with the opinion of the Independent Trustees legal counsel that Mr. Glazer is
not an interested person of the Trust. |
|
1 |
|
GMO may be deemed to control this fund by virtue of its serving as investment
manager of the fund and by virtue of its ownership of all the outstanding voting shares of the fund
as of June 30, 2011. |
|
2 |
|
As of June 30, 2011. |
None of the other Trustees and officers of the Fund who are not members of GMO owned
securities, of entities controlled by, or under common control with, GMO as of June 30, 2011.
H-1
EXHIBIT IINFORMATION REGARDING SIMILAR FUND
|
|
|
|
|
|
|
|
|
|
|
|
|
Has GMO waived, |
|
|
|
|
|
|
reduced or otherwise |
|
|
|
|
Current |
|
agreed to reduce |
|
|
|
|
management |
|
management/shareholder |
|
|
|
|
fee/shareholder |
|
service fees incurred |
|
|
|
|
service fee paid |
|
(directly or |
|
|
Net Assets as of |
|
by the Fund to |
|
indirectly) by |
Fund Name |
|
June 30, 2011 |
|
GMO |
|
the Fund? |
|
|
|
|
|
|
|
GMO Benchmark-Free
Fund
|
|
$939,981,851
|
|
None/None*
|
|
No |
|
|
|
* |
|
Bears indirectly management fees and shareholder services fees charged by the underlying GMO
funds in which the Fund invests. |
I-1
EXHIBIT JSHARES OUTSTANDING AND BENEFICIAL OWNERSHIP
As of the Record Date (i.e., September 8, 2011), there were [] shares outstanding for Class
III shares of the Fund.
The table below sets forth the names, addresses and percentage ownership of those shareholders
known by the Trust to own beneficially 5% or more of the outstanding Class III shares of the Fund
as of June 30, 2011.
|
|
|
|
|
|
|
|
|
|
|
CLASS |
|
NAME AND ADDRESS |
|
NUMBER OF SHARES |
|
PERCENT OWNERSHIP |
|
Class III |
|
JP Morgan Chase Bank as
Trustee for The Boeing
Company Employee
Retirement Plans Master
Trust
100 N. Riverside Plaza
Chicago, IL 60606-1596 |
|
|
12,911,354.994 |
|
|
|
12.46 |
% |
|
|
|
|
|
|
|
|
|
|
|
Class III |
|
Abbott Laboratories
Annuity Retirement Trust
200 Abbott Park Road
Abbott Park, IL
60064-3500 |
|
|
12,490,954.362 |
|
|
|
12.06 |
% |
|
|
|
|
|
|
|
|
|
|
|
Class III |
|
Screen Actors Guild
Producers Pension Plan
3601 West Olive Avenue,
2nd Floor Burbank, CA
91505-4662 |
|
|
11,005,033.515 |
|
|
|
10.62 |
% |
|
|
|
|
|
|
|
|
|
|
|
Class III |
|
Maine Public Employees
Retirement System
46 State House Station
Augusta, ME 04333 |
|
|
8,814,945.279 |
|
|
|
8.51 |
% |
|
|
|
|
|
|
|
|
|
|
|
Class III |
|
The Ministers and
Missionaries Benefit
Board of American
Baptist Churches
475 Riverside Drive,
Suite 1700 New York, NY
10115-0049 |
|
|
6,576,021.243 |
|
|
|
6.35 |
% |
|
|
|
|
|
|
|
|
|
|
|
Class III |
|
Wyoming Retirement System
6101 Yellowstone Road,
Suite 500 Cheyenne, WY
82002 |
|
|
5,895,259.565 |
|
|
|
5.69 |
% |
J-1
EXHIBIT KTRUSTEE AND EXECUTIVE OFFICER OWNERSHIP OF THE FUND
The following table sets forth the Trustees and executive officers of the Trust direct
beneficial share ownership in the Fund as of June 30, 2011. The address of each of them is c/o GMO
Trust, 40 Rowes Wharf, Boston, Massachusetts 02110.
|
|
|
|
|
Amount of Ownership in |
Name of Trustee/Officer |
|
the Fund* |
|
|
|
Donald W. Glazer
(Independent Trustee)
|
|
4,948.30 Class III shares |
|
|
|
Peter Tufano
(Independent Trustee)
|
|
None |
|
|
|
Paul Braverman
(Independent Trustee)
|
|
None |
|
|
|
Joseph B. Kittredge, Jr.
(Trustee; President and Chief Executive Officer
of the Trust)
|
|
None |
|
|
|
Sheppard N. Burnett
(Treasurer and Chief Financial Officer of the
Trust)
|
|
1,535.76 Class III shares |
|
|
|
* |
|
As of June 30, 2011, the Trustees and officers of the Trust as a group owned 1% or less
of the outstanding shares of each class of shares of the Fund. |
PROXY CARD
GMO TRUST
GMO BENCHMARK-FREE ALLOCATION FUND
Proxy for a meeting of shareholders to be held on [October 17, 2011]
The undersigned hereby appoints [Jason B. Harrison, David L. Bohan, and Gregory L. Pottle],
and each of them separately, as Proxies of the undersigned, with full power of substitution, and
hereby authorizes each of them to vote on behalf of the undersigned all shares of GMO
Benchmark-Free Allocation Fund (the Fund) that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the Fund to be held at [9:00 a.m., Eastern Time, on [October 17, 2011]
at the offices of Grantham, Mayo, Van Otterloo & Co. LLC, 40 Rowes Wharf, Boston, MA 02110 and at
any postponements or adjournments thereof, as fully as the undersigned would be entitled to vote if
personally present. This proxy will be governed by and construed in accordance with the laws of
The Commonwealth of Massachusetts and applicable federal securities laws. The execution of this
proxy is not intended to, and does not, revoke any prior proxies or powers of attorney other than
the revocation, in accordance with the laws of The Commonwealth of Massachusetts and applicable
federal securities laws, of any proxy previously granted specifically in connection with the voting
of the shares subject hereto. This proxy may be revoked at any time prior to the exercise of the
powers conferred thereby. This Proxy is solicited by the Board of Trustees of GMO Trust on behalf
of the Fund. The Board recommends that you vote FOR the proposal.
Please record your voting instructions on this card, sign it below, and return it promptly in the envelope provided. Your vote is important.
|
|
|
|
|
|
This proxy 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 the proposal.
Abstentions do not constitute a vote FOR and effectively result in a vote AGAINST the proposal. In
their discretion, the Proxies are authorized to vote upon such other matters as may properly come
before the meeting.
|
|
Signature(s) (Title(s), if applicable):
(Sign in the Box)
Please sign your name exactly as it appears on
this card. If you are a joint owner, any one of you may
sign. When signing as executor, administrator, attorney,
trustee, or guardian, or as custodian for a minor,
please give your full title as such. If you are signing
for a corporation, please sign the full corporate name
and indicate the signers office. If you are a partner,
sign in the partnership name. |
PLEASE FOLD HERE AND RETURN THE ENTIRE BALLOT DO NOT DETACH
DEAR SHAREHOLDER:
Your vote is important. Please help us to avoid the expense of follow-up mailings by signing and
returning this proxy card. A postage-paid envelope is enclosed for your convenience. Please refer
to the back of the proxy card for additional information regarding the proposal.
Please fill in a box as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS.
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. To approve a new
management contract
between GMO Trust, on
behalf of GMO
Benchmark-Free
Allocation Fund (the
Fund), and
Grantham, Mayo, Van
Otterloo & Co. LLC,
the investment
manager to the Fund.
|
|
|
FOR
approval of the new
management contract
o
|
|
|
AGAINST approval
of the new management
contract
o
|
|
|
|
|
2. To transact such other business as may properly come before the
Special Meeting and any postponement or adjournment thereof. |
|
|
|