CLASS ELIGIBILITY. Class eligibility is generally dependent on the size of the client's total account under the management of Grantham, Mayo, Van Otterloo & Co., the Trust's investment adviser (referred to herein as "GMO" or the "Adviser"), as described from time to time in the Prospectus. Eligibility for Class I, Class II and Class III Shares in dependent on the size of a client's minimum "Total Investment" with GMO. For clients that have accounts with GMO as of May 31, 1996, their initial Total Investment will equal the market value of all of their investments advised by GMO as of the close of business on May 31, 1996. For clients establishing a relationship with GMO on or after June 1, 1996, their Total Investment at any date is equal to the aggregate of all amounts contributed (and less amounts withdrawn) to any Fund on or after June 1, 1996, plus the market value of any non-mutual fund investment with GMO as of the month-end prior to the date that "Total Investment" is being computed. For purposes of class eligibility, market appreciation or depreciation of a Fund's account is not considered; the Total Investment of a client is impacted only by the amount of contributions to and withdrawals from Funds made by the client. It is assumed that any Fund redemptions or withdrawals made by a client are satisfied first from market appreciation in their shares, so that a redemption or withdrawal does not lower a client's Total Investment unless the redemption or withdrawal exceeds the value of market appreciation. Market value of non- mutual fund accounts at GMO will be considered, however. Eligibility for Class IV, Class V and Class VI Shares is dependent upon the client meeting either (i) a minimum "Total Fund Investment" requirement which includes only a client's total investment in the particular Fund, or (ii) a minimum "Total Investment" requirement (calculated as described above for Class I, II and III shares). A client's Total Fund Investment and Total Investment will be determined similarly to the determination of Total Investment for purposes of eligibility for Class I, Class II and Class III Shares, i.e., appreciation and depreciation of mutual fund shares is not considered but these two calculations do include the market value of all such accounts as of May 31, 1996, and the market value of non-mutual fund accounts as of the month-end prior to determination. CLASS CHARACTERISTICS The differences among the various classes of shares are solely (i) the level of shareholder service fee ("Shareholder Service Fee") borne by the class for client and shareholder service, reporting and other support, and (ii) whether GMO itself or the GMO Funds Division provides service and reporting to the shareholders. The multiple class structure reflects the fact that, as the size of the client relationship increases, the cost to service that relationship is expected to decrease as a percentage of the account. Thus, the Shareholder Service Fee is lower for classes for which eligibility criteria generally require greater assets under GMO's management. Certain Funds are subject to either an initial purchase premium, a redemption fee, or both. The initial purchase premium and redemption fee, if any, may, in some limited cases, be subject to reduction or waiver if the Adviser determines that there are minimal brokerage and/or transaction costs incurred as a result of the purchase or redemption, as set forth in the Prospectus in effect from time to time.1 ---------------------------- 1 All purchase premiums are paid to and retained by the relevant Fund and are intended to cover the brokerage and other costs associated with putting an investment to work in the relevant markets. All redemption fees are paid to and retained by the relevant Fund and are designed to allocate transaction costs caused by shareholder activity to the shareholder generating the activity. ALLOCATIONS TO EACH CLASS EXPENSE ALLOCATIONS Shareholder Service Fees payable by the Trust to the shareholder servicer of the Trust's shares (the "Shareholder Servicer") shall be allocated, to the extent practicable, on a class-by-class basis. Subject to the approval of the Trust's Board of Trustees, including a majority of the independent Trustees, the following "Class Expenses" may (if such expense is properly assessable at the class level) in the future be allocated on a class-by-class basis: (a) transfer agency costs attributable to each class, (b) printing and postage expenses related to preparing and distributing materials such as shareholder reports, prospectuses and proxy statements to current shareholders of a specific Class, (c) SEC registration fees incurred with respect to a specific class, (d) blue sky and foreign registration fees and expenses incurred with respect to a specific class, (e) the expenses of administrative personnel and services required to support shareholders of a specific class (including, but not limited to, maintaining telephone lines and personnel to answer shareholder inquiries about their accounts or about the Trust), (f) litigation and other legal expenses relating to a specific class of shares, (g) Trustees' fees or expenses incurred as a result of issues relating to a specific class of shares, (h) accounting and consulting expenses relating to a specific class of shares, (i) any fees imposed pursuant to a non-Rule 12b-1 shareholder service plan that relate to a specific class of shares, and (j) any additional expenses, not including advisory or custodial fees or other expenses related to the management of the Trust's assets, if these expenses are actually incurred in a different amount with respect to a class, or if services are provided with respect to a class, or if services are provided with respect to a class that are of a different kind or to a different degree than with respect to one or more other classes. All expenses not now or hereafter designated as Class Expenses ("Fund Expenses") will be allocated to each class on the basis of the net asset value of that class in relation to the net asset value of the relevant Fund. However, notwithstanding the above, a Fund may allocate all expenses other than Class Expenses on the basis of relative net assets (settled shares), as permitted by rule 18f-3(c)(2) under the Act. WAIVERS AND REIMBURSEMENTS The Adviser and the Shareholder Servicer may choose to waive or reimburse Shareholder Service Fees, or any other Class Expenses on a voluntary or temporary basis.
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CLASS ELIGIBILITY. Class eligibility is generally dependent on the size of the client's total account under the management of Grantham, Mayo, Van Otterloo & Co., the Trust's investment adviser (referred to herein as "GMO" or the "Adviser"), as described from time to time in the Prospectus. Eligibility for Class I, Class II and Class III Shares in dependent on the size of a client's minimum "Total Investment" with GMO. For clients that have accounts with GMO as of May 31, 1996, their initial Total Investment will equal the market value of all of their investments advised by GMO as of the close of business on May 31, 1996. For clients establishing a relationship with GMO on or after June 1, 1996, their Total Investment at any date is equal to the aggregate of all amounts contributed (and less amounts withdrawn) to any Fund on or after June 1, 1996, plus the market value of any non-mutual fund investment with GMO as of the month-end prior to the date that "Total Investment" is being computed. For purposes of class eligibility, market appreciation or depreciation of a Fund's account is not considered; the Total Investment of a client is impacted only by the amount of contributions to and withdrawals from Funds made by the client. It is assumed that any Fund redemptions or withdrawals made by a client are satisfied first from market appreciation in their shares, so that a redemption or withdrawal does not lower a client's Total Investment unless the redemption or withdrawal exceeds the value of market appreciation. Market value of non- mutual fund accounts at GMO will be considered, however. Eligibility for Class IV, Class V and Class VI Shares is dependent upon the client meeting either (i) a minimum "Total Fund Investment" requirement which includes only a client's total investment in the particular Fund, or (ii) a minimum "Total Investment" requirement (calculated as described above for Class I, II and III shares). A client's Total Fund Investment and Total Investment will be determined similarly to the determination of Total Investment for purposes of eligibility for Class I, Class II and Class III Shares, i.e., appreciation and depreciation of mutual fund shares is not considered but these two calculations do include the market value of all such accounts as of May 31, 1996, and the market value of non-mutual fund accounts as of the month-end prior to determination. CLASS CHARACTERISTICS The differences among the various classes of shares are solely (i) the level of shareholder service fee ("Shareholder Service Fee") borne by the class for client and shareholder service, reporting and other support, and (ii) whether GMO itself or the GMO Funds Division provides service and reporting to the shareholders. The multiple class structure reflects the fact that, as the size of the client relationship increases, the cost to service that relationship is expected to decrease as a percentage of the account. Thus, the Shareholder Service Fee is lower for classes for which eligibility criteria generally require greater assets under GMO's management. Certain Funds are subject to either an initial purchase premium, a redemption fee, or both. The initial purchase premium and redemption fee, if any, may, in some limited cases, be subject to reduction or waiver if the Adviser determines that there are minimal brokerage and/or transaction costs incurred as a result of the purchase or redemption, as set forth in the Prospectus in effect from time to time.1 ---------------------------- 1 All purchase premiums are paid to and retained by the relevant Fund and are intended to cover the brokerage and other costs associated with putting an investment to work in the relevant markets. All redemption fees are paid to and retained by the relevant Fund and are designed to allocate transaction costs caused by shareholder activity to the shareholder generating the activity. ALLOCATIONS TO EACH CLASS EXPENSE ALLOCATIONS Shareholder Service Fees payable by the Trust to the shareholder servicer of the Trust's shares (the "Shareholder Servicer") shall be allocated, to the extent practicable, on a class-by-class basis. Subject to the approval of the Trust's Board of Trustees, including a majority of the independent Trustees, the following "Class Expenses" may (if such expense is properly assessable at the class level) in the future be allocated on a class-by-class basis: (a) transfer agency costs attributable to each class, (b) printing and postage expenses related to preparing and distributing materials such as shareholder reports, prospectuses and proxy statements to current shareholders of a specific Class, (c) SEC registration fees incurred with respect to a specific class, (d) blue sky and foreign registration fees and expenses incurred with respect to a specific class, (e) the expenses of administrative personnel and services required to support shareholders of a specific class (including, but not limited to, maintaining telephone lines and personnel to answer shareholder inquiries about their accounts or about the Trust), (f) litigation and other legal expenses relating to a specific class of shares, (g) Trustees' fees or expenses incurred as a result of issues relating to a specific class of shares, (h) accounting and consulting expenses relating to a specific class of shares, (i) any fees imposed pursuant to a non-Rule 12b-1 shareholder service plan that relate to a specific class of shares, and (j) any additional expenses, not including advisory or custodial fees or other expenses related to the management of the Trust's assets, if these expenses are actually incurred in a different amount with respect to a class, or if services are provided with respect to a class, or if services are provided with respect to a class that are of a different kind or to a different degree than with respect to one or more other classes. All expenses not now or hereafter designated as Class Expenses ("Fund Expenses") will be allocated to each class on the basis of the net asset value of that class in relation to the net asset value of the relevant Fund. However, notwithstanding the above, a Fund may allocate all expenses other than Class Expenses on the basis of relative net assets (settled shares), as permitted by rule 18f-3(c)(2) under the Act. WAIVERS AND REIMBURSEMENTS The Adviser and the Shareholder Servicer may choose to waive or reimburse Shareholder Service Fees, or any other Class Expenses on a voluntary or temporary basis.
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CLASS ELIGIBILITY. Class eligibility is generally dependent on the size of the client's total account under the management of Grantham, Mayo, Van Otterloo & Co., the Trust's investment adviser (referred to herein as "GMO" or the "Adviser"), as described from time to time in the Prospectus. Eligibility for Class I, Class II and Class III Shares in dependent on the size of a client's minimum "Total Investment" with GMO. For clients that have accounts with GMO as of May 31, 1996, their initial Total Investment will equal the market value of all of their investments advised by GMO as of the close of business on May 31, 1996. For clients establishing a relationship with GMO on or after June 1, 1996, their Total Investment at any date is equal to the aggregate of all amounts contributed (and less amounts withdrawn) to any Fund on or after June 1, 1996, plus the market value of any non-mutual fund investment with GMO as of the month-end prior to the date that "Total Investment" is being computed. For purposes of class eligibility, market appreciation or depreciation of a Fund's account is not considered; the Total Investment of a client is impacted only by the amount of contributions to and withdrawals from Funds made by the client. It is assumed that any Fund redemptions or withdrawals made by a client are satisfied first from market appreciation in their shares, so that a redemption or withdrawal does not lower a client's Total Investment unless the redemption or withdrawal exceeds the value of market appreciation. Market value of non- mutual fund accounts at GMO will be considered, however. Eligibility for Class IV, Class V and Class VI Shares is dependent upon the client meeting either (i) a minimum "Total Fund Investment" requirement which includes only a client's total investment in the particular Fund, or (ii) a minimum "Total Investment" requirement (calculated as described above for Class I, II and III shares). A client's Total Fund Investment and Total Investment will be determined similarly to the determination of Total Investment for purposes of eligibility for Class I, Class II and Class III Shares, i.e., appreciation and depreciation of mutual fund shares is not considered but these two calculations do include the market value of all such accounts as of May 31, 1996, and the market value of non-mutual fund accounts as of the month-end prior to determination. CLASS CHARACTERISTICS The differences among the various classes of shares are solely (i) the level of shareholder service fee ("Shareholder Service Fee") borne by the class for client and shareholder service, reporting and other support, and (ii) whether GMO itself or the GMO Funds Division provides service and reporting to the shareholders. The multiple class structure reflects the fact that, as the size of the client relationship increases, the cost to service that relationship is expected to decrease as a percentage of the account. Thus, the Shareholder Service Fee is lower for classes for which eligibility criteria generally require greater assets under GMO's management. Certain Funds are subject to either an initial purchase premium, a redemption fee, or both. The initial purchase premium and redemption fee, if any, may, in some limited cases, be subject to reduction or waiver if the Adviser determines that there are minimal brokerage and/or transaction costs incurred as a result of the purchase or redemption, as set forth in the Prospectus in effect from time to time.1 ---------------------------- 1 All purchase premiums are paid to and retained by the relevant Fund and are intended to cover the brokerage and other costs associated with putting an investment to work in the relevant markets. All redemption fees are paid to and retained by the relevant Fund and are designed to allocate transaction costs caused by shareholder activity to the shareholder generating the activity. ALLOCATIONS TO EACH CLASS EXPENSE ALLOCATIONS Shareholder Service Fees payable by the Trust to the shareholder servicer of the Trust's shares (the "Shareholder Servicer") shall be allocated, to the extent practicable, on a class-by-class basis. Subject to the approval of the Trust's Board of Trustees, including a majority of the independent Trustees, the following "Class Expenses" may (if such expense is properly assessable at the class level) in the future be allocated on a class-by-class basis: (a) transfer agency costs attributable to each class, (b) printing and postage expenses related to preparing and distributing materials such as shareholder reports, prospectuses and proxy statements to current shareholders of a specific Class, (c) SEC registration fees incurred with respect to a specific class, (d) blue sky and foreign registration fees and expenses incurred with respect to a specific class, (e) the expenses of administrative personnel and services required to support shareholders of a specific class (including, but not limited to, maintaining telephone lines and personnel to answer shareholder inquiries about their accounts or about the Trust), (f) litigation and other legal expenses relating to a specific class of shares, (g) Trustees' fees or expenses incurred as a result of issues relating to a specific class of shares, (h) accounting and consulting expenses relating to a specific class of shares, (i) any fees imposed pursuant to a non-Rule 12b-1 shareholder service plan that relate to a specific class of shares, and (j) any additional expenses, not including advisory or custodial fees or other expenses related to the management of the Trust's assets, if these expenses are actually incurred in a different amount with respect to a class, or if services are provided with respect to a class, or if services are provided with respect to a class that are of a different kind or to a different degree than with respect to one or more other classes. All expenses not now or hereafter designated as Class Expenses ("Fund Expenses") will be allocated to each class on the basis of the net asset value of that class in relation to the net asset value of the relevant Fund. However, notwithstanding the above, a Fund may allocate all expenses other than Class Expenses on the basis of relative net assets (settled shares), as permitted by rule 18f-3(c)(2) under the Act. WAIVERS AND REIMBURSEMENTS The Adviser and the Shareholder Servicer may choose to waive or reimburse Shareholder Service Fees, or any other Class Expenses on a voluntary or temporary basis. INCOME, GAINS AND LOSSES Income and realized and unrealized capital gains and losses shall be allocated to each class on the basis of the net asset value of that class in relation to the net asset value of the relevant Fund. Each Fund may allocate income and realized and unrealized capital gains and losses to each share based on relative net assets (i.e. settled shares), as permitted by Rule 18f-3(c)(2) under the Act. CONVERSION AND EXCHANGE FEATURES On July 31 of each year (the "Conversion Date") each client's Total Investment, as previously defined and as described in the Prospectus, will be determined. Based on that determination, the client's shares will be automatically converted to the class of shares (Class I, Class II or Class III Shares) of such Fund with the lowest Shareholder Service Fee which the client would be eligible to purchase based on such Total Investment. Further, if a client makes an investment in a GMO Fund or other product that causes the client to be eligible for a new class of shares, such conversion will be effected within 15 days after the end of the month during which such investment was made. The rules for conversion to and among Class IV, Class V and Class VI Shares are the same, with determinations of a client's Total Fund Investment and Total Investment made according to the same schedule, as described in the Prospectus. Shares of one class will always convert into shares of another class on the basis of the relative net asset value of the two classes, without the imposition of any sales load, fee or other charge. The conversion of a client's investment from one class of shares to another is not a taxable event, and will not result in the realization of gain or loss that may exist in Fund shares held by the client. The client's tax basis in the new class of shares will equal their basis in the old class before conversion. The conversion of shares from one class to another class of shares may be suspended if the opinion of counsel obtained by the Trust that the conversion does not constitute a taxable event under current federal income tax law is no longer available. Certain special rules will be applied by the Adviser with respect to clients who owned shares of the Funds upon the creation of multiple classes on May 31, 1996. First, all clients existing on May 31, 1996 will receive Class III Shares on June 1, 1996 regardless of the size of their GMO investment. Second, the conversion of existing clients to any class of shares with a higher Shareholder Service Fee will not occur until July 31, 1997, based on the client's Total Investment as of such date. Further, existing clients whose Total Investment as of May 31, 1996 is equal to $7 million or more will be eligible to remain invested in Class III Shares (despite the normal $35 million minimum), provided such client makes no subsequent redemptions or withdrawals other than of amounts attributable to market appreciation of their account value as of June 1, 1996. Existing clients whose Total Investment as of May 31, 1996 is less than $7 million but greater than $0 will be eligible to convert to Class II Shares rather than Class I Shares on July 31, 1997, provided that such client makes no subsequent redemptions or withdrawals other than of amounts attributable to market appreciation of their account value as of June 1, 1996. Clients making additional investments prior to June 1, 1997, such that their Total Investment on June 1, 1997 is $35 million or more, will remain eligible for Class III Shares.
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