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SEC Staff Allows Offset of Master-Feeder Registration Fees

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  • Baker, John
    The staff of the Securities and Exchange Commission has issued a no-action letter allowing master funds in a master-feeder arrangement, when calculating
    Message 1 of 1 , May 28, 2012
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      The staff of the Securities and Exchange Commission has issued a no-action letter allowing master funds in a master-feeder arrangement, when calculating registration fees under the Securities Act of 1933, to offset the registration fees paid by feeder funds that act as a conduit for investment in the corresponding master fund. GMO Trust (May 24, 2012). As a result, it will not be necessary for registration fees to be paid twice for the same aggregate proceeds from investors in feeder funds, avoiding double-counting of the assets on which the registration fees are paid. In contrast, no offset is allowed for fund-of-funds arrangements, because the fund of funds does not act as a conduit for investments in the other funds.

      The no-action position allows GMO Trust (the master funds) to calculate and pay 1933 Act registration fees pursuant to Rule 24f-2 based on all of its sales and redemptions of securities during its previous fiscal year except for sales to and redemptions from the GMO Feeder Funds that issued securities on which registration fees were paid. The position is based particularly on the representations that:

      --GMO Trust and GMO Series Trust (the feeder funds) each are registered as open-end, management investment companies under the Investment Company Act of 1940;

      --Shares of each GMO Master Fund and shares of each GMO Feeder Fund are registered under the 1933 Act;

      --Each series of GMO Series Trust is a feeder fund in a master-feeder fund structure;

      --Each GMO Feeder Fund is a conduit for investment in the corresponding GMO Master Fund; and

      --Each GMO Feeder Fund invests substantially all of its assets in a corresponding series of GMO Trust. Under normal circumstances, each GMO Feeder Fund will invest at least 95% of its assets in shares of its corresponding GMO Master Fund with any remaining assets being held as cash.

      The GMO Trust no-action letter is available online at

      http://www.sec.gov/divisions/investment/noaction/2012/gmotrust052412-24f2.htm


      John M. Baker <JMB@...>
      Stradley Ronon Stevens & Young, LLP http://www.stradley.com
      1250 Connecticut Avenue, NW, Suite 500
      Washington, DC 20036
      202.419.8413
      202.822.0140 fax
      FundLaw Listowner http://groups.yahoo.com/group/fundlaw
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