Filed pursuant to Rule 497(e)
File Nos. 002-98772 and 811-04347
GMO TRUST
Amended and Restated Supplement dated February 6, 2015 to the
GMO Trust Prospectus,
dated June 30, 2014, as revised September 15, 2014
GMO Foreign Fund
The section captioned Principal investment strategies on pages 45-46 of the Prospectus is replaced, in its entirety, with the following:
Principal investment strategies
Under normal circumstances, the Fund invests directly and indirectly (e.g., through underlying funds or derivatives) at least 80% of its assets in investments tied economically to countries other than the United States (see Name Policies), including both developed and emerging countries. The term equities refers to direct and indirect investments in common and preferred stocks and other stock-related securities, such as convertible securities, depository receipts, and exchange-traded equity real estate investment trusts (REITs) and income trusts.
GMO selects investments using value-based fundamental analysis that is informed by a disciplined quantitative screening process. GMO analyzes companies for financial, operational, and managerial strength and compares them to their global, regional, and industry peers. GMO also considers a companys accounting and governance practices. As part of the investment process, GMO frequently meets with management and/or visits companies.
The factors considered and investment methods used by GMO can change over time.
In pursuing its investment objective, the Fund may (but is not obligated to) use a wide variety of exchange-traded and over-the-counter (OTC) derivatives, including, without limitation, forward currency contracts, futures and options, as well as exchange-traded funds. The Funds foreign currency exposure may differ from the currency exposure of its equity investments. In addition, the Fund may lend its portfolio securities.
The Fund also may invest in U.S. Treasury Fund and money market funds that are unaffiliated with GMO.
GMO Foreign Small Companies Fund
The section captioned Principal investment strategies on pages 49-50 of the Prospectus is replaced, in its entirety, with the following:
Principal investment strategies
The Fund typically invests directly and indirectly (e.g., through underlying funds or derivatives) in equities of companies tied economically to countries other than the United States (including both developed and emerging countries) whose outstanding publicly traded equities are in the lowest 25% of publicly traded market capitalization (float) in a particular country (small companies). The term equities refers to direct and indirect investments in common and preferred stocks and other stock-related securities, such as convertible securities, depository receipts, and exchange-traded equity real estate investment trusts (REITs) and income trusts. Under normal circumstances, the Fund invests directly and indirectly at least 80% of its assets in securities of small companies that are tied economically to countries other than the United States (see Name Policies). The market capitalization range of companies whose equities are held by the Fund is generally within the market capitalization range of companies in the Funds benchmark, which represents the lowest 15% of publicly traded market capitalization (float) of the S&P Broad Market Index in each country. Depending on the country, as of May 31, 2014, the market capitalization of the outstanding common stock and other stock-related securities of the largest company in a particular country included in the S&P Developed ex-U.S. Small Cap Index ranged from approximately $638 million (New Zealand) to $14.0 billion (Germany) (based on exchange rates as of May 31, 2014). As of May 31, 2014, the publicly traded market capitalization of the largest small company (as defined by the Fund) ranged from approximately $504 million (Egypt) to $30.0 billion (Switzerland) (based on exchange rates as of May 31, 2014).
GMO selects investments using value-based fundamental analysis that is informed by a disciplined quantitative screening process. GMO analyzes companies for financial, operational, and managerial strength and compares them
to their global, regional, and industry peers. GMO also considers a companys accounting and governance practices. As part of the investment process, GMO frequently meets with management and/or visits companies.
The factors considered and investment methods used by GMO can change over time.
In pursuing its investment objective, the Fund may (but is not obligated to) use a wide variety of exchange-traded and over-the-counter (OTC) derivatives, including, without limitation, forward currency contracts, futures and options, as well as exchange-traded funds. The Funds foreign currency exposure may differ from the currency exposure of its equity investments. In addition, the Fund may lend its portfolio securities.
The Fund also may invest in U.S. Treasury Fund and money market funds that are unaffiliated with GMO.
GMO Benchmark-Free Bond Fund
The sections captioned Annual Fund operating expenses and Example on page 79 of the Prospectus are replaced with the following:
Annual Fund operating expenses
(expenses that you pay each year as a percentage of the value of your investment)
Class III | Class IV | Class V | Class VI | |||||
Management fee |
0.50%1 | 0.50%1 | 0.50%1 | 0.50%1 | ||||
Shareholder service fee |
0.15%1 | 0.10%1 | 0.085%1 | 0.055%1 | ||||
Other expenses |
1.39%2 | 1.39%2 | 1.39%2 | 1.39%2 | ||||
Acquired fund fees and expenses (underlying fund expenses) |
0.12%3 | 0.12%3 | 0.12%3 | 0.12%3 | ||||
Total annual operating expenses |
2.16%2 | 2.11%2 | 2.10%2 | 2.07%2 | ||||
Expense reimbursement/waiver |
(1.34%)1,2 | (1.34%)1,2 | (1.34%)1,2 | (1.34%)1,2 | ||||
Total annual operating expenses after expense reimbursement/waiver |
0.82%2 | 0.77%2 | 0.76%2 | 0.73%2 |
1 | Grantham, Mayo, Van Otterloo & Co. LLC (GMO) has contractually agreed to reimburse the Fund for the portion of its Specified Operating Expenses (as defined below) that exceeds 0.05% of the Funds average daily net assets. Specified Operating Expenses means only the following expenses: audit expenses, fund accounting expenses, pricing service expenses, expenses of non-investment related tax services, transfer agency expenses, expenses of non-investment related legal services provided to the Fund by or at the direction of GMO, federal securities law filing expenses, printing expenses, state and federal registration fees and custody expenses. GMO also has contractually agreed to waive or reduce the Funds management fees and shareholder service fees to the extent necessary to offset the management fees and shareholder service fees paid to GMO that are directly or indirectly borne by the Fund or a class of shares of the Fund as a result of the Funds direct or indirect investments in other series of GMO Trust (GMO Funds). Management fees and shareholder service fees will not be waived below zero. This reimbursement and waiver will continue through at least September 30, 2015, and may not be terminated prior to this date without the action or consent of the Funds Board of Trustees. |
2 | The amounts represent an annualized estimate of the Funds operating expenses for its initial fiscal year. |
3 | The amounts represent an annualized estimate of the Funds acquired fund fees and expenses for its initial fiscal year. These estimated indirect expenses include interest expense that may be incurred by certain underlying funds and also include, to the extent applicable, purchase premiums and redemption fees (transaction fees) charged by certain underlying funds. Net fees and expenses of underlying funds (before addition of interest expense and transaction fees), indirect interest expense, and indirect transaction fees are estimated to be approximately 0.06%, less than 0.01%, and 0.06%, respectively. |
Example
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, regardless of whether or not you redeem your shares at the end of such periods. 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:
1 Year | 3 Years | |||||||
Class III |
$ | 219 | $ | 676 | ||||
Class IV |
$ | 214 | $ | 661 | ||||
Class V |
$ | 213 | $ | 658 | ||||
Class VI |
$ | 210 | $ | 649 |
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Management of the Trust
The tables on pages 153-155 of the Prospectus that identify the different Investment Teams of Grantham, Mayo, Van Otterloo & Co. LLC (GMO) that are primarily responsible for the investment management of different Funds and the Senior Member(s) of GMOs Investment Teams who are primarily responsible for providing investment management services to the Funds, are replaced with the following:
Investment Team | Primary Responsibilities | |
Asset Allocation |
Asset Allocation Funds, Alpha Only Fund, and Special Opportunities Fund; Developed World Stock Fund, Tax-Managed International Equities Fund, International Equity Fund, International Large/Mid Cap Equity Fund, International Small Companies Fund, U.S. Equity Allocation Fund, and Resources Fund (asset class forecasts and high-level investment oversight) | |
Global Equity |
Developed World Stock Fund, Tax-Managed International Equities Fund, International Equity Fund, International Large/Mid Cap Equity Fund, International Small Companies Fund, U.S. Equity Allocation Fund, Quality Fund, Resources Fund, and Risk Premium Fund | |
International Active |
Global Focused Equity Fund, Foreign Fund, and Foreign Small Companies Fund | |
Emerging Markets |
Emerging Markets Fund, Emerging Countries Fund, Emerging Domestic Opportunities Fund, and Taiwan Fund | |
Developed Fixed Income |
Bond Funds (other than Emerging Country Debt Fund) | |
Emerging Country Debt |
Emerging Country Debt Fund |
Funds | Senior Member |
Title; Business Experience During Past 5 Years | ||
Asset Allocation Funds* and Alpha Only Fund; Developed World Stock Fund, Tax-Managed International Equities Fund, International Equity Fund, International Large/Mid Cap Equity Fund, International Small Companies Fund, U.S. Equity Allocation Fund, and Resources Fund (asset class forecasts and high-level investment oversight) | Ben Inker | Co-Head, Asset Allocation Team and Co-Head, Developed Fixed Income Team, GMO. Mr. Inker has been responsible for overseeing the portfolio management of GMOs asset allocation portfolios since 1996, and for overseeing the portfolio management of GMOs developed fixed income portfolios since 2014. | ||
Sam |
Co-Head, Asset Allocation Team and Co-Head, Developed Fixed Income Team, GMO. Mr. Wilderman has been responsible for overseeing the portfolio management of GMOs asset allocation portfolios since September 2012, and for overseeing the portfolio management of GMOs developed fixed income portfolios since 2014. Previously, Mr. Wilderman had been Co-Head of GMOs Global Equity Team since 2009. | |||
Developed World Stock Fund, Tax-Managed International Equities Fund, International Equity Fund, International Large/Mid Cap Equity Fund, International Small Companies Fund, U.S. Equity Allocation Fund, Quality Fund, Resources Fund, and Risk Premium Fund | Thomas Hancock |
Co-Head, Global Equity Team, GMO. Dr. Hancock has been responsible for overseeing the portfolio management of GMOs international developed market and global equity portfolios since 1998. | ||
David |
Co-Head, Global Equity Team, GMO. Mr. Cowan has provided research and portfolio management services to GMOs global equity portfolios since 2006 and has been the Co-Head of the Global Equity Team since September 2012. | |||
Global Focused Equity Fund | Drew Spangler |
Head, International Active Team, GMO. Mr. Spangler has been responsible for overseeing the portfolio management of GMOs international active equity portfolios since May 2011. Previously, Mr. Spangler provided portfolio and research services to GMOs international active equity portfolios since 1994. |
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Funds | Senior Member |
Title; Business Experience During Past 5 Years | ||
Greg Shell |
Portfolio Manager, International Active Team, GMO. Mr. Shell has been responsible for overseeing the portfolio management of GMOs international active equity portfolios since 2009. Previously, Mr. Shell was an analyst at Columbia Management. | |||
Foreign Fund Foreign Small Companies Fund |
Drew Spangler |
See above. | ||
Emerging Markets Fund Emerging Countries Fund Taiwan Fund |
Arjun Divecha |
Head, Emerging Markets Team, GMO. Mr. Divecha has been responsible for overseeing the portfolio management of GMOs emerging markets equity portfolios since 1993. | ||
Emerging Domestic Opportunities Fund | Arjun Divecha |
See above. | ||
Amit |
Member, Emerging Markets Team, GMO Singapore. Mr. Bhartia has been responsible for overseeing the portfolio management of GMOs emerging markets equity portfolios since 1995. | |||
Bond Funds (other than Debt Opportunities Fund and Emerging Country Debt Fund) | Ben Inker | See above. | ||
Sam |
See above. | |||
Michael |
Portfolio Manager, Developed Fixed Income Team, GMO. Mr. Emanuel has been responsible for providing portfolio management services to GMOs developed fixed income portfolios since 2014. Previously, Mr. Emanuel was a portfolio manager at Convexity Capital Management. | |||
Greg Jones |
Portfolio Manager, Developed Fixed Income Team, GMO. Mr. Jones has been responsible for providing portfolio management and research services to GMOs developed fixed income portfolios since 2008. | |||
Debt Opportunities Fund | Ben Inker | See above. | ||
Sam |
See above. | |||
Joe Auth |
Portfolio Manager, Developed Fixed Income Team, GMO. Mr. Auth has been responsible for providing portfolio management services to GMOs structured credit portfolios since 2014. Previously, Mr. Auth was a portfolio manager at Harvard Management Company. | |||
Emerging Country Debt Fund | Thomas Cooper |
Head, Emerging Country Debt Team, GMO. Mr. Cooper has been responsible for overseeing the portfolio management of GMOs emerging country debt portfolios since 1994. | ||
Special Opportunities Fund | Ben Inker | See above. | ||
Sam |
See above. | |||
Chris Hudson |
Portfolio Manager, Asset Allocation Team, GMO. Mr. Hudson has been responsible for overseeing the portfolio management of certain of GMOs asset allocation portfolios since 2009. |
* | In the case of Benchmark-Free Allocation Fund, a substantial portion of the Funds assets are typically invested in Implementation Fund (see Investment in Other GMO Funds GMO Implementation Fund on page 211 of this Prospectus), where allocations among asset classes are made by the Asset Allocation Team and specific security selection is primarily handled by other Teams in collaboration with the Asset Allocation Team. For example, the Global Equity Team selects equity securities within Implementation Fund. |
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In addition, the Investment Team, the individual(s) identified as Senior Members, and the Senior Members titles in the Management of the Fund section of each Funds Fund Summary in the Prospectus are amended to reflect the foregoing.
Determination of Net Asset Value
The following sentence is deleted from the section captioned Determination of Net Asset Value on page 157 of the Prospectus: Non-emerging market fixed income securities with a remaining maturity of 60 days or less may be valued at amortized cost, which approximates the market value, if the issuer is deemed to present minimal credit risk.
Distributions and Taxes
In the section captioned Distributions and Taxes, the eighteenth bullet, which appears on page 169 of the Prospectus, is replaced with the following two bullets:
| Withholding taxes may apply to certain categories of the U.S.-source income of the wholly-owned foreign subsidiaries (each, a Subsidiary) of a Fund, including Benchmark-Free Allocation Fund (through Implementation Fund) and Special Opportunities Fund, and of Systematic Global Macro Fund (each, a parent fund). It is expected that (i) all the net income and gain from the investments of each Subsidiary will be includible in its parent funds income at the end of the Subsidiarys taxable year as so-called subpart F income; and (ii) all such subpart F income will be treated as ordinary income in the hands of the Subsidiarys parent fund. A Subsidiarys distributions to its parent fund, including in redemption of Subsidiary shares, are generally tax-free to the extent of the Subsidiarys subpart F income previously included in its parent funds income. Each Subsidiary may be required to liquidate investments, including when it is not advantageous to do so, in order to make such distributions to its parent fund. Net losses a Subsidiary incurs during a taxable year will not flow through to its parent fund to offset income or gain generated by the latters other investments, or carry forward to subsequent taxable years; this will limit the benefit from those losses. |
| In general, in order to qualify as a RIC, a Fund must, among other things, derive at least 90% of its gross income from certain specified sources (qualifying income). Benchmark-Free Allocation Fund, Special Opportunities Fund, and Funds that invest in Systematic Global Macro Fund should generally be entitled to treat income that they recognize from their respective direct or indirect investments in wholly-owned subsidiaries as qualifying income. There is a risk, however, that the IRS could determine that some or all of the gross income derived from investments in one or more of these subsidiaries is not qualifying income, which might adversely affect a Funds ability to qualify as a regulated investment company under the Code. |
Investment in Other GMO Funds
In addition to the asset classes noted, GMO Implementation Fund may have exposure to commodities. The disclosure in the sub-section captioned GMO Implementation Fund in the section captioned Investment in Other GMO Funds on pages 211-212 of the Prospectus is amended to reflect the foregoing, and the following paragraph is added after the ninth paragraph in that sub-section:
To gain exposure to commodities and some other assets, Implementation Fund invests through a wholly-owned subsidiary. GMO serves as the investment manager to this subsidiary but does not receive any additional management or other fees for its services. The subsidiary invests primarily in commodity-related derivatives and fixed income securities, but also may invest in any other investments in which Implementation Fund may invest directly. References to Implementation Fund in this summary of Implementation Funds investment strategy may refer to actions undertaken by Implementation Fund or the subsidiary company. Implementation Fund does not invest directly in commodities and commodity-related derivatives.
In addition, as a result, GMO Implementation Fund is also subject to Commodities Risk.
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Filed pursuant to Rule 497(e)
File Nos. 002-98772 and 811-04347
GMO TRUST
Amended and Restated Supplement dated February 6, 2015 to the
GMO Trust Statement of Additional Information,
dated June 30, 2014, as revised September 15, 2014
Descriptions and Risk of Fund Investments
GMO Implementation Fund and GMO Systematic Global Macro Opportunity Fund (each, a series of GMO Trust offered through a separate private placement memorandum) may invest in wholly-owned subsidiaries to gain exposure to commodities. References to investments by GMO Implementation Fund or GMO Systematic Global Macro Opportunity Fund refer to investments made directly or indirectly through their wholly-owned subsidiaries.
The sub-section captioned Commodity Futures and Options on Commodity Futures in the section captioned Options and Futures on pages 24-25 of the Statement of Additional Information (SAI) is replaced with the following:
Commodity Futures and Options on Commodity Futures. Funds that invest in GMO Implementation Fund or GMO Systematic Global Macro Opportunity Fund (each, a series of the Trust offered through a separate private placement memorandum) may have exposure to futures contracts on various commodities or commodities indices (commodity futures) and options on commodity futures. A futures contract on a commodity is an agreement between two parties in which one party agrees to purchase a commodity, such as an energy, agricultural, or metal commodity, from the other party at a later date at a price and quantity agreed upon when the contract is made. Futures contracts on commodities indices operate in a manner similar to Index Futures. While commodity futures on individual commodities are physically settled, GMO intends to close out those futures contracts before the settlement date without the making or taking of delivery. See also Commodity-Related Investments below.
In addition, the last paragraph of the sub-section captioned Swap Contracts in the section captioned Swap Contracts and Other Two-Party Contracts on page 30 of the SAI is replaced with the following:
Some Funds, through their investments in GMO Implementation Fund or GMO Systematic Global Macro Opportunity Fund (each, a series of the Trust offered through a separate private placement memorandum) or otherwise, may have indirect exposure to commodity swaps on one or more broad-based commodities indices (e.g., the Dow Jones-UBS Commodity Index), as well as commodity swaps on individual commodities or baskets of commodities. See Commodity-Related Investments below for more discussion of the Funds use of commodity swap contracts and other related types of derivatives.
In addition, the sub-section captioned Contracts for Differences in the section captioned Swap Contracts and Other Two-Party Contracts on page 30 of the SAI is replaced with the following:
Contracts for Differences. Contracts for differences are swap arrangements in which the parties agree that their return (or loss) will be based on the relative performance of two different groups or baskets of securities. Often, one or both baskets will be an established securities index. The Funds return will be based on changes in value of theoretical long futures positions in the securities comprising one basket (with an aggregate face value equal to the notional amount of the contract for differences) and theoretical short futures positions in the securities comprising the other basket. A Fund also may use actual long and short futures positions and achieve similar market exposure by netting the payment obligations of the two contracts. A Fund will only enter into contracts for differences (and analogous futures positions) when GMO believes that the basket of securities constituting the long position will outperform the basket constituting the short position. If the short basket outperforms the long basket, the Fund will realize a loss even in circumstances when the securities in both the long and short baskets appreciate in value. In addition, GMO Implementation Fund and GMO Systematic Global Macro Opportunity Fund may use contracts for differences that are based on the relative performance of two different groups or baskets of commodities. Often, one or both baskets is a commodities index. Contracts for differences on commodities operate in a similar manner to contracts for differences on securities described above.
In addition, the section captioned Commodity-Related Investments on pages 56-57 is replaced with the following:
Commodity-Related Investments
Some Funds may gain exposure to commodity markets by investing in commodities or commodity-related instruments directly or indirectly, including through investments in GMO Implementation Fund or GMO Systematic Global Macro Opportunity Fund, each a series of the Trust offered through a separate private placement memorandum, or other GMO Funds.
Commodity prices can be extremely volatile and may be directly or indirectly affected by many factors, including changes in overall market movements, real or perceived inflationary trends, commodity index volatility, changes in interest rates or currency exchange rates, population growth and changing demographics, and factors affecting a particular industry or commodity, such as drought, floods, or other weather conditions, livestock disease, trade embargoes, competition from substitute products, transportation bottlenecks or shortages, fluctuations in supply and demand, tariffs, and international regulatory, political, and economic developments (e.g., regime changes and changes in economic activity levels). In addition, some commodities are subject to limited pricing flexibility because of supply and demand factors, and others are subject to broad price fluctuations as a result of the volatility of prices for certain raw materials and the instability of supplies of other materials.
Actions of and changes in governments, and political and economic instability, in commodity-producing and - exporting countries may affect the production and marketing of commodities. In addition, commodity-related industries throughout the world are subject to greater political, environmental, and other governmental regulation than many other industries. Changes in government policies and the need for regulatory approvals may adversely affect the products and services of companies in the commodities industries. For example, the exploration, development, and distribution of coal, oil, and gas in the United States are subject to significant federal and state regulation, which may affect rates of return on coal, oil, and gas and the kinds of services that the federal and state governments may offer to companies in those industries. In addition, compliance with environmental and other safety regulations has caused many companies in commodity-related industries to incur production delays and significant costs. Government regulation also may impede the development of new technologies. The effect of future regulations affecting commodity-related industries cannot be predicted.
The value of commodity-related derivatives fluctuates based on changes in the values of the underlying commodity, commodity index, futures contract, or other economic variable to which they are related. Additionally, economic leverage will increase the volatility of these instruments as they may increase or decrease in value more quickly than the underlying commodity or other relevant economic variable. See Options and Futures, Structured Notes, Swap Contracts and Other Two-Party Contracts, and Uses of Derivatives herein for more information on the Funds investments in derivatives, including commodity-related derivatives such as swap agreements, commodity futures contracts, and options on commodity futures contracts.
Funds that invest in GMO Systematic Global Macro Opportunity Fund should generally be entitled to treat the income that they recognize from GMO Systematic Global Macro Opportunity Funds investment in its wholly-owned subsidiary as qualifying income for purposes of qualifying as a regulated investment company under the Code. Similarly, Benchmark-Free Allocation Fund should generally be entitled to treat the income that it receives from GMO Implementation Funds investments in its wholly-owned subsidiary as qualifying income. There is a risk, however, that the Internal Revenue Service (IRS) could determine that some or all of the income derived from GMO Systematic Global Macro Opportunity Funds investment in its subsidiary is not qualifying income in the hands of its shareholders, or that some or all of the income derived from GMO Implementation Funds investment in its subsidiary is not qualified income in the hands of Benchmark-Free Allocation Fund, which might adversely affect such Funds ability to qualify as a regulated investment company. Each subsidiary of GMO Implementation Fund and GMO Systematic Global Macro Opportunity Fund is a controlled foreign corporation for U.S. federal tax purposes. See Taxes below.
A Funds direct investments in certain commodity-related instruments may be limited by the Funds intention to qualify as a regulated investment company under the Code, and may limit the Funds ability to so qualify. See Taxes below for more information.
In addition, the section captioned Investments in Wholly-Owned Subsidiaries on page 61 of the SAI is replaced with the following:
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Investments in Wholly-Owned Subsidiaries
Benchmark-Free Bond Fund, Emerging Domestic Opportunities Fund, Special Opportunities Fund and, through its or their respective investments in GMO Implementation Fund and GMO Systematic Global Macro Opportunity Fund, Benchmark-Free Allocation Fund and other Funds, may invest in one or more wholly-owned subsidiary companies (each, a Subsidiary), and, if so, will be indirectly exposed to the risks of any such Subsidiarys investments.
Future changes in the securities, corporate, tax or other applicable laws of the United States and/or the jurisdiction in which a Subsidiary is organized could result in the inability of Benchmark-Free Bond Fund, Emerging Domestic Opportunities Fund, Special Opportunities Fund, Benchmark-Free Allocation Fund, such other Funds, and/or their respective Subsidiaries to operate as described in the Prospectus or this SAI and could adversely affect each such Fund and its shareholders.
Taxes
The twenty-third paragraph of the section captioned Tax Implications of Certain Investments on pages 89-90 of the SAI is replaced with the following:
As discussed above, Benchmark-Free Allocation Fund may gain indirect exposure to commodity-linked instruments through GMO Implementation Fund, a disregarded entity of which it is the sole owner. In addition, some Funds may gain indirect exposure to commodity-linked instruments through GMO Systematic Global Macro Opportunity Fund, which is a partnership for U.S. federal tax purposes. Both GMO Implementation Fund and GMO Systematic Global Macro Opportunity Fund achieve indirect exposure to commodities through Subsidiaries, which, in turn, will invest in various commodity-related derivatives. The Subsidiaries are CFCs for U.S. federal income tax purposes. Benchmark-Free Allocation Fund and Funds that invest in GMO Systematic Global Macro Opportunity Fund should generally be entitled to treat all of the income that they recognize from GMO Implementation Funds and GMO Systematic Global Macro Opportunity Funds investments in Subsidiaries as qualifying income for purposes of qualifying as RICs. There is a risk, however, that the IRS could determine that some or all of the income derived from GMO Implementation Funds or GMO Systematic Global Macro Opportunity Funds investments in their Subsidiaries is not qualifying income in the hands of Benchmark-Free Allocation Fund or a Fund that invests in GMO Systematic Global Macro Opportunity Fund, which might adversely affect the ability of such Fund to qualify as a RIC. See Loss of RIC Status below.
In addition, the thirty-third paragraph of the section captioned Tax Implications of Certain Investments on page 93 of the SAI is replaced with the following:
Certain of the Asset Allocation Funds intend to gain exposure to commodities, precious metals or other assets, in whole or in part, through indirect investments in Subsidiaries, and Special Opportunities Fund intends to, and Benchmark-Free Bond Fund and Benchmark-Free Allocation Fund (through its investment in GMO Implementation Fund) may, gain exposure to commodities, precious metals or other assets, in whole or in part, through direct investments in Subsidiaries. In the past, the IRS issued private letter rulings to RICs to the effect that income a fund was deemed to earn from its Subsidiary was qualifying income to the fund for purposes of the 90% gross income requirement for RIC qualification without regard to whether such income was currently paid to the parent RIC in the form of a cash dividend (repatriated). In 2011, the IRS suspended the issuance of such rulings. It is unclear whether or when the IRS will release published guidance on the issue, and whether such guidance would be favorable to RICs, and, for example, eliminate the need for funds to seek their own rulings, or be unfavorable. In the absence of a private letter ruling to the effect described above or guidance issued by the IRS to the same or similar effect, the Funds will employ other means of ensuring that this requirement is satisfied, including but not limited to receiving a distribution from a Subsidiary out of the Subsidiarys earnings and profits at least once during every taxable year.
Management of the Trust
In the section captioned Officers, the table on pages 108-109 of the SAI that sets forth information about the officers of GMO Trust is replaced with the following:
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Name and Date of Birth |
Position(s) Held with the Trust |
Length of Time Served |
Principal Occupation(s) During Past 5 Years1 | |||
Joseph B. Kittredge, Jr. DOB: 08/22/1954 |
Trustee; President and Chief Executive Officer |
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 (1988-2005). | |||
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 Treasury and Tax (December 2006-present), Grantham, Mayo, Van Otterloo & Co. LLC. | |||
John L. Nasrah DOB: 05/27/1977 |
Assistant Treasurer and Chief Tax Officer | Since March 2007. | Fund Administrator, Grantham, Mayo, Van Otterloo & Co. LLC (September 2004-present). | |||
Carly Condron DOB: 03/04/1984 |
Assistant Treasurer and Chief Accounting Officer | Assistant Treasurer since September 2013; Chief Accounting Officer since May 2014 | Fund Administrator, Grantham, Mayo, Van Otterloo & Co. LLC (December 2009-present); Senior Accountant, Renaissance HealthCare (February 2009-December 2009); Auditor/Senior Auditor, Deloitte & Touche (September 2006-February 2009). | |||
Betty Chang DOB: 12/26/1972 |
Assistant Treasurer | Since September 2013. | Fund Administrator, Grantham, Mayo, Van Otterloo & Co. LLC (July 2010-present); Assistant Treasurer (June 2009-July 2010), Manager, Fund Administration and Regulatory Affairs (2006-2009), Hambrecht & Quist Capital Management LLC. | |||
Mahmoodur Rahman DOB: 11/30/1967 |
Assistant Treasurer | Since September 2007. | Fund Administrator, Grantham, Mayo, Van Otterloo & Co. LLC (April 2007-present). | |||
Brian Kadehjian DOB: 09/16/1974 |
Treasury Officer | Since September 2013. | Fund Administrator, Grantham, Mayo, Van Otterloo & Co. LLC (April 2002-present). | |||
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 (February 2006-present). | |||
Megan Bunting DOB: 03/24/1978 |
Vice President and Assistant Clerk | Since September 2013. | Legal Counsel, Grantham, Mayo, Van Otterloo & Co. LLC (September 2006-present). | |||
Meta S. David DOB: 09/15/1982 |
Vice President and Assistant Clerk | Since September 2013. | Legal Counsel, Grantham, Mayo, Van Otterloo & Co. LLC (August 2012-present). |
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Name and Date of Birth |
Position(s) Held with the Trust |
Length of Time Served |
Principal Occupation(s) During Past 5 Years1 | |||
Gregory L. Pottle DOB: 07/09/1971 |
Vice President and Assistant Clerk | Since November 2006. | Legal Counsel, Grantham, Mayo, Van Otterloo & Co. LLC (March 2000-present). | |||
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). | |||
John B. McGinty DOB: 08/11/1962 |
Chief Compliance Officer | Chief Compliance Officer since March 2011. | Chief Compliance Officer, Grantham, Mayo, Van Otterloo & Co. LLC (July 2009-present); Senior Vice President and Deputy General Counsel (January 2007-July 2009), Fidelity Investments. | |||
Kelly Hollister DOB: 03/29/1988 |
Anti-Money Laundering Officer | Anti-Money Laundering Officer since November 2014. | Compliance Associate, Grantham, Mayo, Van Otterloo & Co. LLC (May 2012-present). |
1 | Each of Messrs. Burnett, Kittredge, and Pottle and Ms. Trinque 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. Each officer listed in the table above, other than Mr. Kittredge, also serves as an officer of GMO Series Trust. |
Investment Advisory and Other Services
In the section captioned Portfolio Management, the tables on pages 124-125 of the SAI that set forth information about the accounts overseen or managed by the senior members are replaced with the following:
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Senior Member |
Registered investment companies managed (including non-GMO mutual fund subadvisory relationships) |
Other pooled investment vehicles managed (world-wide) |
Separate accounts managed (world-wide) | |||||||||
Number of
|
|
Number of
|
|
Number of
|
| |||||||
Joe Auth2 |
1 | $1,749,506,424 | 0 | $0 | 0 | $0 | ||||||
Amit Bhartia |
1 | $2,448,071,426 | 0 | $0 | 0 | $0 | ||||||
Thomas Cooper |
1 | $2,902,462,815 | 0 | $0 | 0 | $0 | ||||||
David Cowan |
14 | $43,329,616,870 | 6 | $2,779,405,196 | 27 | $5,963,813,849 | ||||||
Arjun Divecha |
4 | $9,977,893,012 | 2 | $640,849,321 | 6 | $2,647,432,833 | ||||||
Michael Emanuel2 |
7 | $4,649,872,827 | 0 | $0 | 0 | $0 | ||||||
Thomas Hancock |
14 | $43,329,616,870 | 6 | $2,779,405,196 | 27 | $5,963,813,849 | ||||||
Chris Hudson |
0 | $0 | 0 | $0 | 0 | $0 | ||||||
Ben Inker2 |
25 | $43,904,268,415 | 11 | $6,934,719,909 | 189 | $19,176,517,409 | ||||||
Greg Jones2 |
7 | $4,649,872,827 | 0 | $0 | 0 | $0 | ||||||
Greg Shell |
1 | $11,574,705 | 0 | $0 | 0 | $0 | ||||||
Drew Spangler |
3 | $1,529,285,805 | 1 | $1,847,066,741 | 5 | $3,468,767,767 | ||||||
Sam Wilderman2 |
25 | $43,904,268,415 | 11 | $6,934,719,909 | 189 | $19,176,517,409 |
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Senior Member |
Registered investment companies managed subadvisory relationships) |
Other pooled investment vehicles managed (world-wide) for which GMO |
Separate accounts managed (world-wide) | |||||||||
Number of accounts1 |
Total assets1 |
Number of accounts |
Total assets |
Number of accounts |
Total assets | |||||||
Joe Auth2 |
0 | $0 | 0 | $0 | 0 | $0 | ||||||
Amit Bhartia |
0 | $0 | 0 | $0 | 0 | $0 | ||||||
Thomas Cooper |
0 | $0 | 0 | $0 | 0 | $0 | ||||||
David Cowan |
0 | $0 | 2 | $1,254,390,609 | 5 | $798,442,974 | ||||||
Arjun Divecha |
0 | $0 | 0 | $0 | 2 | $828,513,059 | ||||||
Michael Emanuel2 |
0 | $0 | 0 | $0 | 0 | $0 | ||||||
Thomas Hancock |
0 | $0 | 2 | $1,254,390,609 | 5 | $798,442,974 | ||||||
Chris Hudson |
0 | $0 | 0 | $0 | 0 | $0 | ||||||
Ben Inker2 |
0 | $0 | 5 | $1,302,098,123 | 146 | $14,910,382,072 | ||||||
Greg Jones2 |
0 | $0 | 0 | $0 | 0 | $0 | ||||||
Greg Shell |
0 | $0 | 0 | $0 | 0 | $0 | ||||||
Drew Spangler |
0 | $0 | 0 | $0 | 3 | $2,615,579,648 | ||||||
Sam Wilderman2 |
0 | $0 | 5 | $1,302,098,123 | 146 | $14,910,382,072 |
1 | For some senior members, Total assets includes assets invested by other GMO Funds (including GMO Funds not offered through the Prospectus). |
2 | Information about the accounts overseen or managed by Messrs. Auth, Emanuel, Inker, Jones and Wilderman is provided as of December 31, 2014. |
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In addition, in the sub-section captioned Senior Member Fund Ownership in the section captioned Portfolio Management, the tables on pages 126-130 of the SAI that set forth the dollar range of each senior members direct and indirect beneficial share ownership are replaced with the following:
Name of Senior Member |
| |||
Joe Auth1 | Debt Opportunities Fund | None | ||
Amit Bhartia | Emerging Domestic Opportunities Fund | Over $1,000,000 | ||
Thomas Cooper | Emerging Country Debt Fund | None | ||
David Cowan | Developed World Stock Fund International Equity Fund International Large/Mid Cap Equity Fund International Small Companies Fund Quality Fund Resources Fund Risk Premium Fund Tax-Managed International Equities Fund U.S. Equity Allocation Fund |
None None None None None None None None None | ||
Arjun Divecha | Emerging Countries Fund Emerging Domestic Opportunities Fund Emerging Markets Fund Taiwan Fund |
None Over $1,000,000 Over $1,000,000 None | ||
Michael Emanuel1 | Asset Allocation Bond Fund Benchmark-Free Bond Fund Core Plus Bond Fund Currency Hedged International Bond Fund Global Bond Fund International Bond Fund U.S. Treasury Fund |
None None None None None None None | ||
Greg Shell | Global Focused Equity Fund | $10,001-$50,000 | ||
Thomas Hancock | Developed World Stock Fund International Equity Fund International Large/Mid Cap Equity Fund International Small Companies Fund Quality Fund Resources Fund Risk Premium Fund Tax-Managed International Equities Fund U.S. Equity Allocation Fund |
None None None None None Over $1,000,000 None Over $1,000,000 None | ||
Chris Hudson | Special Opportunities Fund | None |
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Name of Senior Member |
| |||
Ben Inker1 |
Alpha Only Fund Asset Allocation Bond Fund Benchmark-Free Allocation Fund Benchmark-Free Bond Fund Core Plus Bond Fund Currency Hedged International Bond Fund Debt Opportunities Fund Developed World Stock Fund Global Asset Allocation Fund Global Bond Fund Global Developed Equity Allocation Fund Global Equity Allocation Fund International Bond Fund International Developed Equity Allocation Fund International Equity Allocation Fund International Equity Fund International Large/Mid Cap Equity Fund International Small Companies Fund Resources Fund Special Opportunities Fund Strategic Opportunities Allocation Fund Tax-Managed International Equities Fund U.S. Equity Allocation Fund U.S. Treasury Fund |
None None Over $1,000,000 None None None None None None None None None None None None None None None $100,001-$500,000 None None $100,001-$500,000 None None | ||
Greg Jones1 | Asset Allocation Bond Fund Benchmark-Free Bond Fund Core Plus Bond Fund Currency Hedged International Bond Fund Global Bond Fund International Bond Fund U.S. Treasury Fund |
None None None None None None None | ||
Drew Spangler | Foreign Fund Foreign Small Companies Fund Global Focused Equity Fund |
$10,001-$50,000 None $100,001-$500,000 |
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Name of Senior |
| |||
Sam Wilderman1 | Alpha Only Fund Asset Allocation Bond Fund Benchmark-Free Allocation Fund Benchmark-Free Bond Fund Core Plus Bond Fund Currency Hedged International Bond Fund Debt Opportunities Fund Developed World Stock Fund Global Asset Allocation Fund Global Bond Fund Global Developed Equity Allocation Fund Global Equity Allocation Fund International Bond Fund International Developed Equity Allocation Fund International Equity Allocation Fund International Equity Fund International Large/Mid Cap Equity Fund International Small Companies Fund Resources Fund Special Opportunities Fund Strategic Opportunities Allocation Fund Tax-Managed International Equities Fund U.S. Equity Allocation Fund U.S. Treasury Fund |
None None Over $1,000,000 None None None None None None None None None None None None None None None None None None None None None |
1 | Information about the accounts overseen or managed by Messrs. Auth, Emanuel, Inker, Jones and Wilderman is provided as of December 31, 2014. |
Name of Senior |
| |||
Joe Auth1 | Debt Opportunities Fund | None | ||
Amit Bhartia | Emerging Domestic Opportunities Fund | None | ||
Thomas Cooper | Emerging Country Debt Fund | $50,001-$100,000 | ||
David Cowan | Developed World Stock Fund International Equity Fund International Large/Mid Cap Equity Fund International Small Companies Fund Quality Fund Resources Fund Risk Premium Fund Tax-Managed International Equities Fund U.S. Equity Allocation Fund |
None None None None None None None None None |
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Name of Senior |
| |||
Arjun Divecha | Emerging Countries Fund Emerging Domestic Opportunities Fund Emerging Markets Fund Taiwan Fund |
None None None None | ||
Michael Emanuel1 | Asset Allocation Bond Fund Benchmark-Free Bond Fund Core Plus Bond Fund Currency Hedged International Bond Fund Global Bond Fund International Bond Fund U.S. Treasury Fund |
None None None None None None None | ||
Greg Shell | Global Focused Equity Fund | None | ||
Thomas Hancock | Developed World Stock Fund International Equity Fund International Large/Mid Cap Equity Fund International Small Companies Fund Quality Fund Resources Fund Risk Premium Fund Tax-Managed International Equities Fund U.S. Equity Allocation Fund |
None None None None None None None None None | ||
Chris Hudson | Special Opportunities Fund | None | ||
Ben Inker1 | Alpha Only Fund Asset Allocation Bond Fund Benchmark-Free Allocation Fund Benchmark-Free Bond Fund Core Plus Bond Fund Currency Hedged International Bond Fund Debt Opportunities Fund Developed World Stock Fund Global Asset Allocation Fund Global Bond Fund Global Developed Equity Allocation Fund Global Equity Allocation Fund International Bond Fund International Developed Equity Allocation Fund International Equity Allocation Fund International Equity Fund International Large/Mid Cap Equity Fund International Small Companies Fund |
Over $1,000,000 None None None None None Over $1,000,000 None None None None None None None None None None None |
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Name of Senior Member |
| |||
Resources Fund Special Opportunities Fund Strategic Opportunities Allocation Fund Tax-Managed International Equities Fund U.S. Equity Allocation Fund U.S. Treasury Fund |
None $500,001-$1,000,000 None None None Over $1,000,000 | |||
Greg Jones1 | Asset Allocation Bond Fund Benchmark-Free Bond Fund Core Plus Bond Fund Currency Hedged International Bond Fund Global Bond Fund International Bond Fund U.S. Treasury Fund |
$1-$10,000 None None None None None $1-$10,000 | ||
Drew Spangler | Foreign Fund Foreign Small Companies Fund Global Focused Equity Fund |
None None None | ||
Sam Wilderman1 | Alpha Only Fund Asset Allocation Bond Fund Benchmark-Free Allocation Fund Benchmark-Free Bond Fund Core Plus Bond Fund Currency Hedged International Bond Fund Debt Opportunities Fund Developed World Stock Fund Global Asset Allocation Fund Global Bond Fund Global Developed Equity Allocation Fund Global Equity Allocation Fund International Bond Fund International Developed Equity Allocation Fund International Equity Allocation Fund International Equity Fund International Large/Mid Cap Equity Fund International Small Companies Fund Resources Fund Special Opportunities Fund Strategic Opportunities Allocation Fund Tax-Managed International Equities Fund U.S. Equity Allocation Fund U.S. Treasury Fund |
Over $1,000,000 None None None None None $500,001-$1,000,000 None None None None None None None None None None None None $500,001-$1,000,000 None None None $100,001-$500,000 |
1 | Information about the accounts overseen or managed by Messrs. Auth, Emanuel, Inker, Jones and Wilderman is provided as of December 31, 2014. |
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