GMO Short-Duration Collateral Fund to merge, gets new share class

By Toni Weeks

San Luis Obispo, Calif., Feb. 13 - GMO Trust announced changes to the GMO Short-Duration Collateral Fund, according to a 497 filing with the Securities and Exchange Commission.

The fund has not pursued an active investment program recently and has been gradually liquidating its portfolio. As of Feb. 12, the fund, which is advised by Boston-based Grantham, Mayo, Van Otterloo & Co. LLC, or GMO, will begin to pursue a more active investment program. As a consequence it will designate all outstanding class VI shares and add a new class, class III.

In conjunction with the new share class, the adviser will implement annual shareholder service fees of 0.15% for class III and 0.055% for class VI shares. The adviser will also charge a purchase premium and redemption fee, each 0.4%. Total annual operating expenses are expected to be 0.4% for class III shares and 0.31% for class VI shares. Both include a management fee of 0.25%.

The board of GMO trust has also approved the merger of the GMO Debt Opportunities Fund into the fund, as the investment programs are essentially the same. Following the completion of the merger, the fund will change its name to GMO Debt Opportunities Fund.

The fund will invest primarily in debt investments without regard to credit rating. As of Feb. 7, the fund has invested substantially all of its assets in asset-backed securities, a substantial portion of which are rated below investment grade.

Thomas Cooper is the portfolio manager.

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