EX-99.2 3 b55260voexv99w2.txt NOTIFICATION OF OBLIGATIONS TO REIMBURSE EXHIBIT 2 GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC Notification Of Obligation To Reimburse Certain Fund Expenses NOTIFICATION made May 25, 2005 by GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC, a Massachusetts limited liability company (the "Advisor"), to GMO TRUST, a Massachusetts business trust (the "Trust"). WITNESSETH: WHEREAS, the Advisor has organized the Trust 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 Trust in that such a volume would maximize the Advisor's fee as investment adviser to each series of the Trust constituting a separate investment portfolio set forth below (each a "Fund" and, collectively, the "Funds"); and WHEREAS, the Advisor has agreed to reimburse the Funds for certain Fund expenses so as to reduce or eliminate certain costs otherwise borne by shareholders of the Funds and to enhance the returns generated by shareholders of the Funds. NOW, THEREFORE, the Advisor hereby notifies the Trust that the Advisor shall, 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), reimburse each Fund listed below to the extent the Fund's total annual operating expenses (not including Shareholder Service Fees, expenses indirectly incurred by investment in other Funds of the Trust, fees and expenses (including legal fees) of the independent trustees of the Trust, compensation and expenses of the Trust's Chief Compliance Officer1 (excluding any employee benefits), brokerage commissions and other investment-related costs, hedging transaction fees, extraordinary, non-recurring and certain other unusual expenses (including taxes), securities lending fees and expenses, interest expense (except with respect to the Emerging Countries Fund), and transfer taxes; and, in the case of the Emerging Markets Fund, Emerging Markets Quality Fund, and Alpha Only Fund, also excluding custodial fees; and, in the case of Class M shares of any Fund, also excluding administrative service fees and Rule 12b-1 fees (collectively, ------------------ (1)Including a portion of the compensation of the Trust's interim Chief Compliance Officer for the period from October 5, 2004 through February 28, 2005 and all of the compensation and expenses (excluding any employee benefits) of the Trust's Chief Compliance Officer beginning March 1, 2005. "Excluded Fund Fees and Expenses")) exceed the percentage of that Fund's average daily net assets (the "Post-Reimbursement Expense Limitation") set forth in the table below:
FUND POST-REIMBURSEMENT EXPENSE LIMITATION ---------------------------------------- ------------------------------------- U.S. Core Fund 0.33% Tobacco-Free Core Fund 0.33% U.S. Quality Equity Fund 0.33% Value Fund 0.46% Intrinsic Value Fund 0.33% Growth Fund 0.33% Small Cap Value Fund 0.33% Small Cap Growth Fund 0.33% Real Estate Fund 0.54% Tax-Managed U.S. Equities Fund 0.33% Tax-Managed Small Companies Fund 0.55% Alternative Asset Opportunity Fund 0.45% International Disciplined Equity Fund 0.40% International Intrinsic Value Fund 0.54% International Growth Fund 0.54% Currency Hedged International Equity Fund 0.54% Developed World Stock Fund 0.47% Foreign Fund 0.60% Foreign Small Companies Fund 0.70% International Small Companies Fund 0.60% Emerging Markets Fund 0.81% Emerging Countries Fund 1.00% Emerging Markets Quality Fund 0.40% Tax-Managed International Equities Fund 0.54% Global Growth Fund 0.47% Domestic Bond Fund 0.10% Core Plus Bond Fund 0.25%
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FUND POST-REIMBURSEMENT EXPENSE LIMITATION --------------------------------------- ------------------------------------- International Bond Fund 0.25% Currency Hedged International Bond Fund 0.25% Global Bond Fund 0.19% Short-Duration Investment Fund 0.05% Alpha Only Fund 0.50% Inflation Indexed Bond Fund 0.10% Emerging Country Debt Share Fund 0.00% Benchmark-Free Allocation Fund 0.00% International Equity Allocation Fund 0.00% Global Balanced Asset Allocation Fund 0.00% Global (U.S.+) Equity Allocation Fund 0.00% U.S. Sector Fund 0.33% Global Equity Allocation Fund 0.00% U.S. Equity Allocation Fund 0.00% Special Purpose Holding Fund 0.00% International Core Plus Allocation Fund 0.00% Short-Duration Collateral Fund 0.00% World Opportunity Overlay Fund 0.00% Strategic Balanced Allocation Fund 0.00% World Opportunities Equity Allocation Fund 0.00%
In addition, with respect to each of the Currency Hedged International Equity Fund, U.S. Sector Fund and the Alpha Only Fund only, the Advisor shall reimburse each such Fund to the extent that the sum of (i) such Fund's total annual operating expenses (excluding Excluded Fund Fees and Expenses), plus (ii) the amount of fees and expenses incurred indirectly by the Fund through its investment in other GMO Funds (excluding these Funds' Excluded Fund Fees and Expenses), exceeds the Fund's Post-Reimbursement Expense Limitation, subject to a maximum total reimbursement to such Fund equal to the Fund's Post-Reimbursement Expense Limitation. In addition, with respect to each of the Core Plus Bond Fund, International Bond Fund, Currency Hedged International Bond Fund and Global Bond Fund, the Advisor shall reimburse each Fund to the extent that the sum of (a) the Fund's total annual operating expenses (excluding Excluded Fund Fees and Expenses), plus (b) the amount of fees and expenses incurred indirectly by the Fund through its investment in the Emerging Country Debt Fund (excluding Emerging -3- Country Debt Fund's fees and expenses (including legal fees) of the independent trustees of the Trust, compensation and expenses of the Trust's Chief Compliance Officer2 (excluding any employee benefits), and investment-related expenses such as brokerage commissions, hedging transaction fees, securities lending fees and expenses, interest expense and transfer taxes), exceeds the Fund's Post-Reimbursement Expense Limitation, subject to a maximum total reimbursement to such Fund equal to the Fund's Post-Reimbursement Expense Limitation. The Reimbursement Date for each Fund listed in the table above, except for GMO Developed World Stock Fund, GMO Strategic Balanced Allocation Fund and GMO World Opportunities Equity Allocation Fund, is June 30, 2005. The Reimbursement Date for GMO Developed World Stock Fund, GMO Strategic Balanced Allocation Fund, and GMO World Opportunities Equity Allocation Fund is June 30, 2006. 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 Trust's prospectuses and its daily calculation of each Fund's net asset value. Please be advised that all previous notifications by the Advisor with respect to fee waivers and/or expense limitations regarding any of the Funds shall hereafter be null and void and of no further force and effect. ------------------ (2)Including a portion of the compensation of the Trust's interim Chief Compliance Officer for the period from October 5, 2004 through February 28, 2005 and all of the compensation and expenses (excluding any employee benefits) of the Trust's Chief Compliance Officer beginning March 1, 2005. -4- IN WITNESS WHEREOF, the Advisor has executed this Notification of Obligation to Reimburse Certain Fund Expenses on the day and year first above written. GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC By: _____________________ Title: By: _____________________ Title: -5-