EXHIBIT (H)(1)

                      TRANSFER AGENCY AND SERVICE AGREEMENT

     AGREEMENT made as of this lst day of August, 1991 by and among GMO TRUST, a
business trust established under the laws of the Commonwealth of Massachusetts
(the "Company") on behalf of the GMO Core Fund, GMO SAF Core Fund, GMO Value
Allocation Fund, GMO Growth Fund, GMO Short-Term Income Fund, GMO International
Core Fund, GMO Japan Fund and any other series of the Trust currently existing
or hereafter created, as shall be mutually agreed to by the parties hereto to be
subject to this Agreement in accordance with Article 17 (each such series
referred to herein as the "Fund" and collectively as the "Funds"), GRANTHAM,
MAYO, VAN OTTERLOO & CO., a Massachusetts General Partnership, (the "Manager")
and INVESTORS BANK & TRUST COMPANY, a Massachusetts trust company (the "Bank").

                                   WITNESSETH:

     WHEREAS, the Company desires to appoint the Bank as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and the Bank desires to accept such appointment;

     WHEREAS, the Bank is duly registered as a transfer agent as provided in
Section 17A(c) of the Securities Exchange Act of 1934, as amended;

     NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
the Company and the Bank agree as follows:

     Terms of Appointment; Duties of the Bank

     Subject to the terms and conditions set forth in this Agreement, the
Company hereby, employs and appoints the Bank to act as, and the Bank agrees to
act as transfer agent for the Company's authorized and issued shares of
beneficial interest ("Shares"), dividend disbursing agent and agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of the Company ("Shareholders") and set out in the currently
effective prospectus and statement of additional information of the Company (the
"Prospectus"), including without limitation any periodic investment plan or
periodic withdrawal program.

     The Bank agrees that it will perform the following services:

          In accordance with procedures established from time to time by
agreement between the Company and the Bank, the Bank shall:

          Receive for acceptance, orders for the purchase of Shares, and
     promptly deliver payment and appropriate documentation therefor to the
     Custodian of the Company appointed by the Trustees (the "Trustees") of the
     Company (the "Custodian");

          Pursuant to purchase orders, issue the appropriate number of Shares
     and hold such Shares in the appropriate Shareholder account;



          Receive for acceptance, redemption requests and redemption directions
     and deliver the appropriate documentation therefor to the Custodian;

          At the appropriate time as and when it receives monies paid to it by
     the Custodian with respect to any redemption, pay over or cause to be paid
     over in the appropriate manner such monies as instructed by the redeeming
     Shareholders;

          Effect transfers of Shares by the registered owners thereof upon
     receipt of appropriate instructions;

          Prepare and transmit payments for dividends and distributions declared
     by a Fund; and

          Create and maintain all necessary records including those specified in
     Article 10 hereof, in accordance with all applicable laws, rules and
     regulations, including but not limited to records required by Section 31(a)
     of the Investment Company Act of 1940 (the "1940 Act"), and those records
     pertaining to the various functions performed by it hereunder. All records
     shall be available for inspection and use by the Company. Where applicable,
     such records shall be maintained by the Bank for the periods and in the
     places required by Rule 3la-2 under the 1940 Act.

          Make available during regular business hours all records and other
     data created and maintained pursuant to this Agreement for reasonable audit
     and inspection by the Company, or any person retained by the Company. Upon
     reasonable notice by the Company, the Bank shall make available during
     regular business hours its facilities and premises employed in connection
     with its performance of this Agreement for reasonable visitation by the
     Company, or any person retained by the Company.

          At the expense of the Company, the Bank shall maintain an adequate
     supply of blank share certificates for each Fund providing for the issuance
     of certificates to meet the Bank's requirements therefor. Such share
     certificates shall be properly signed by facsimile. The Company agrees
     that, notwithstanding the death, resignation, or removal of any officer of
     the Company whose signature appears on such certificates, the Bank may
     continue to countersign certificates which bear such signatures until
     otherwise directed by the Company. Share certificates may be issued and
     accounted for entirely by the Bank and do not require any third party
     registrar or other endorsing party.

          Issue replacement share certificates in lieu of certificates which
     have been lost, stolen or destroyed, without any further action by the
     Trustees or any officer of the Company, upon receipt by the Bank of
     properly executed affidavits and lost certificate bonds, in form
     satisfactory to the Bank, with the Company and the Bank as obligees under
     the bond. At the discretion of the Bank, and at its sole risk, the Bank may
     issue replacement certificates without requiring the affidavits and lost
     certificate bonds described above and the Bank agrees to indemnify the
     Company against any and all losses or claims which may arise by reason of
     the issuance of such new certificates in the place of the ones allegedly
     lost, stolen or destroyed.



          Record the issuance of Shares of the Company and maintain pursuant to
     SEC Rule 17Ad-10(e) a record of the total number of Shares of the Company
     which are authorized, based upon data provided to it by the Company, and
     issued and outstanding. The Bank shall also provide the Company on a
     regular basis with the total number of Shares which are authorized and
     issued and outstanding and shall have no obligation, when recording the
     issuance of Shares, to monitor the issuance of such Shares or to take
     cognizance of any laws relating to the issue or sale of such Shares, which
     functions shall be the sole responsibility of the Company.

          In addition to and not in lieu of the services set forth in the above
paragraph (a) or in Schedule A hereto, if any, the Bank shall: (i) perform all
of the customary services of a transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic
withdrawal program); including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on all accounts, including non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmations
forms and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in Shareholder
accounts, responding to Shareholder telephone calls and Shareholder
correspondence, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable the Company to monitor the total number of Shares sold in each State. The
Company shall (i) identify to the Bank in writing those transactions and assets
to be treated as exempt from the blue sky reporting for each State and (ii)
verify the establishment of transactions for each state on the system prior to
activation and thereafter monitor the daily activity for each State. The
responsibility of the Bank for a Fund's blue sky State registration status is
solely limited to the initial establishment of transactions subject to blue sky
compliance by such Fund(s) and the reporting of such transactions to the Fund(s)
as provided above.

     Additionally, the Bank shall:

          Utilize a system to identify all share transactions which involve
     purchase and redemption orders that are processed at a time other than the
     time of the computation of net asset value per share next computed after
     receipt of such orders, and shall compute the net effect upon the Fund(s)
     of such transactions so identified on a daily and cumulative basis.

          If upon any day the cumulative net effect of such transactions upon
     the Fund(s) is negative and exceed a dollar amount equivalent to 1/2 of 1
     cent per share due to an error of the Bank, the Bank shall promptly make a
     payment to the Fund(s) in cash or through the use of a credit, in the
     manner described in paragraph (iv) below, in such amount as may be
     necessary to reduce the negative cumulative net effect to less than 1/2 of
     1 cent per share.



          If on the last business day of any month the cumulative net effect
     upon the Fund(s) (adjusted by. the amount of all prior payments and credits
     by the Bank and the Fund(s)) is negative, the Fund(s) shall be entitled to
     a reduction in the fee next payable under the Agreement by an equivalent
     amount, except as provided in paragraph (iv) below. If on the last business
     day in any month the cumulative net effect upon the Fund(s) (adjusted by
     the amount of all prior payments and credits by the Bank and the Fund(s))
     is positive, the Bank shall be entitled to recover certain past payments
     and reductions in fees, and to credit against all future payments and fee
     reductions that may be required under the Agreement as herein described in
     paragraph (iv) below.

          At the end of each month, any positive cumulative net effect upon the
     Fund(s) shall be deemed to be a credit to the Bank which shall first be
     applied to permit the Bank to recover any prior cash payments and fee
     reductions made by it to the Fund(s) under paragraphs (ii) and (iii) above
     during the calendar year, by increasing the amount of the monthly fee under
     the Agreement next payable in an amount equal to prior payments and fee
     reductions made by the Bank during such calendar year, but not exceeding
     the sum of that month's credit and credits arising in prior months during
     such calendar year to the extent such prior credits have not previously
     been utilized as contemplated by this paragraph. Any portion of a credit to
     the Bank not so used by it shall remain as a credit to be used as payment
     against the amount of any future negative cumulative net effects that would
     otherwise require a cash payment or fee reduction to be made to the Fund(s)
     pursuant to paragraphs (ii) or (iii) above (regardless of whether or not
     the credit or any portion thereof arose in the same calendar year as that
     in which the negative cumulative net effects or any portion thereof arose).

          The Bank shall supply to the Fund(s) from time to time, as mutually
     agreed upon, reports summarizing the transactions identified pursuant to
     paragraph (i) above, and the daily and cumulative net effects of such
     transactions, and shall advise the Fund(s) at the end of each month of the
     net cumulative effect at such time. The Bank shall promptly advise the
     Fund(s) if at any time the cumulative net effects exceeds a dollar amount
     equivalent to 112 of l cent per share.

          In the event that this Agreement is terminated for whatever cause, or
     this provision 1.02(c) is terminated pursuant to paragraph (vii) below, the
     Fund shall promptly pay to the Bank an amount in cash equal to the amount
     by which the cumulative net effect upon the Fund(s) is positive or, if the
     cumulative net effect upon the Fund(s) is negative, the Bank shall promptly
     pay to the Fund(s) an amount in cash equal to the amount of-such cumulative
     net effect.

          This provision 1.02(c) of the Agreement may be terminated by the Bank
     at any time without cause, effective as of the close of business on the
     date written notice (which may be by telex) is received by the Fund(s).



Sale of Company Shares

     Whenever the Company shall sell or cause to be sold any Shares of a Fund,
the Company shall deliver or cause to be delivered to the Bank a document duly
specifying: (i) the name of the Fund whose Shares were sold; (ii) the number of
Shares sold, trade date, and price; (iii) the amount of money to be delivered to
the Custodian for the sale of such Shares and specifically allocated to such
Fund; and (iv) in the case of a new account, a new account application or
sufficient information to establish an account.

     The Bank will, upon receipt by it of a check or other payment identified by
it as an investment in Shares of one of the Funds and drawn or endorsed to the
Bank as agent for, or identified as being for the account of, one of the Funds,
promptly deposit such check or other payment to the appropriate account postings
necessary to reflect the investment. The Bank will notify the Company, or its
designee, and the Custodian of all purchases and related account adjustments.

     Under procedures as established by mutual agreement between the Company and
the Bank, the Bank shall issue to the purchaser or his authorized agent such
Shares, computed to the nearest three decimal points, as he is entitled to
receive, based on the appropriate net asset value of the Funds' Shares,
determined in accordance with applicable Federal law or regulation. In issuing
Shares to a purchaser or his authorized agent, the Bank shall be entitled to
rely upon the latest directions, if any, previously received by the Bank from
the purchaser or his authorized agent concerning the delivery of such Shares.

     The Bank shall not be required to issue any Shares of the Company where it
has received a written instruction from the Company or written notification from
any appropriate Federal or state authority that the sale of the Shares of the
Fund(s) in question has been suspended or discontinued, and the Bank shall be
entitled to rely upon such written instructions or written notification,
provided however that this provision shall not imply any duty or obligation on
the part of the Bank to monitor federal or state laws with regard to the sale of
Shares.

     Upon the issuance of any Shares of any Fund(s) in accordance with the
foregoing provisions of this Section, the Bank shall not be responsible for the
payment of any original issue or other taxes required to be paid by the Company
in connection with such issuance.

     The Bank may establish such additional rules and regulations governing the
transfer or registration of Shares as it may deem advisable and consistent with
such rules and regulations generally adopted by transfer agents.

     Returned Checks. In the event that any check or other order for the
transfer of money is returned unpaid for any reason, the Bank will take such
steps as the Bank may, in its discretion, deem appropriate to protect the
Company from financial loss or as the Company or its designee may instruct.
Provided that the standard procedures, as agreed upon from time to time, between
the Company and the Bank, regarding purchases and redemptions of Shares, are
adhered to by the Bank, the Bank shall not be liable for any loss suffered by a
Fund as a result of returned or unpaid purchase or redemption



transactions. Legal or other expenses incurred to collect amounts owed to a Fund
as a consequence of returned or unpaid purchase or redemption transactions shall
be paid by the Manager or, if not so paid promptly, then by the relevant Fund.

     Redemptions. Shares of any Fund may be redeemed in accordance with the
procedures set forth in the Prospectus and the Bank will duly process all
redemption requests.

     Transfers and Exchanges. The Bank is authorized to review and process
transfers of Shares of each Fund, exchanges between Funds on the records of the
Funds maintained by the Bank, and exchanges between the Company and any other
entity, in each case as may be permitted by the Prospectus. If Shares to be
transferred are represented by outstanding certificates, the Bank will, upon
surrender to it of the certificates in proper form for transfer, and upon
cancellation thereof, countersign and issue new certificates for a like number
of Shares and deliver the same. If the Shares to be transferred are not
represented by outstanding certificates, the Bank will, upon an order therefor
by or on behalf of the registered holder thereof in proper form, credit the same
to the transferee on its books. If Shares are to be exchanged for Shares of
another Fund, the Bank will process such exchange in the same manner as a
redemption and sale of Shares, except that it may in its discretion waive
requirements for information and documentation.

     Right to Seek Assurances. The Bank reserves the right to refuse to transfer
or redeem Shares until it is satisfied that the requested transfer or redemption
is legally authorized, and it shall incur no liability for the refusal, in good
faith, to make transfer or redemptions which the Bank, in its judgment, deems
improper or unauthorized, or until it is satisfied that there is no basis for
any claims adverse to such transfer or redemption. The Bank may, in effecting
transfers, rely upon the provisions of the Uniform Act for the Simplification of
Fiduciary Security Transfers or the Uniform Commercial Code, as the same may be
amended from time to time, which in the opinion of legal counsel for the Company
or of its own legal counsel protect it in not requiring certain documents in
connection with the transfer or redemption of Shares of any Fund, and the Bank
shall be entitled to indemnification in accordance with Article 14 hereof for
any act done or omitted by it in reliance upon such laws or opinions of counsel
of the Company or of its own counsel.

Distributions

     The Company will promptly notify the Bank of *the declaration of any
dividend or distribution. The Company shall furnish to the Bank a resolution of
the Trustees of the Company certified by the Secretary: (i) authorizing the
declaration of dividends on a specified periodic basis and authorizing the Bank
to rely on oral instructions or a Certificate specifying the date of the
declaration of such dividend or distribution, the date of payment thereof, the
record date as of which Shareholders entitled to payment shall be determined and
the amount payable per share to Shareholders of record as of



the date and the total amount payable to the Bank on the payment date; or (ii)
setting forth the date of the declaration of any dividend or distribution by a
Fund, the date of payment thereof, the record date as of which Shareholders
entitled to payment shall be determined, and the amount payable per share to the
Shareholders of record as of that date and the total amount payable to the Bank
on the payment date.

     The Bank, on behalf of the Company, shall instruct the Custodian to place
in a dividend disbursing account funds equal to the cash amount of any dividend
or distribution to be paid out. The Bank will calculate, prepare and mail checks
to (at the address as it appears on the records of the Bank), or (where
appropriate) credit such dividend or distribution to the account of, Fund
Shareholders, and maintain and safeguard all underlying records.

     The Bank will replace lost checks at its discretion and in conformity with
regular business practices.

     The Bank will maintain all records necessary to reflect the crediting of
dividends which are reinvested in Shares of the Company, including without
limitation daily dividends.

     The Bank shall not be liable for any improper payments made in accordance
with a resolution of the Trustees of the Company.

     If the Bank shall not receive from the Custodian sufficient cash to make
payment to all Shareholders of the Company as of the record date, the Bank
shall, upon notifying the Company, withhold payment to all Shareholders of
record as of the record date until such sufficient cash is provided to the Bank.

     Other Duties. In addition to the duties expressly provided for herein, the
Bank shall perform such other duties and functions and shall be paid such
amounts therefore as may from time- to time be agreed in writing.

     Taxes. It is understood that the Bank shall file such appropriate
information returns concerning the payment of dividends and capital gain
distributions and tax withholding with the proper Federal, State and local
authorities as are required by law to be filed by the Company and shall withhold
such sums as are required to be withheld by applicable law.

Books and Records

     The Bank shall maintain records showing for each Shareholder's account the
following: (i) names, addresses and tax identification numbers; (ii) numbers of
Shares held; (iii) historical information regarding the account of each
Shareholder, including dividends paid and date and price of all transactions on
a Shareholder's account; (iv) any stop or restraining order placed against a
Shareholder's account; (v) information with respect to withholdings; (vi) any
capital gain or dividend reinvestment order, plan application, dividend address
and correspondence relating to the current maintenance of a



Shareholder's account; (vii) certificate numbers and denominations for any
Shareholders holding certificates; (viii) any information required in order for
the Bank to perform the calculations contemplated or required by this Agreement;
and (ix) such other information and data as may be required by applicable law.

     Any records required to be maintained by Rule 31a-1 under the 1940 Act will
be preserved for the periods prescribed in Rule 31a-2 under the 1940 Act. Such
records may be inspected by the Company at reasonable times. The Bank may, at
its option at any time, and shall forthwith upon the Company's demand, turn over
to the Company and cease to retain in the Bank's files, records and documents
created and maintained by the Bank in performance of its service or for its
protection. At the end of the six-year retention period, such periods and
documents will either be turned over to the Company, or destroyed in accordance
with the Company's authorization.

     Procedures applicable to the services to be performed hereunder may be
established from time to time by agreement between the Fund(s) and the Bank. The
Bank shall have the right to utilize any shareholder accounting and
recordkeeping systems which, in its opinion, qualifies to perform any services
to be performed hereunder.

Fees and Expenses

     For performance by the Bank pursuant to this Agreement, the Manager agrees
to pay the Bank an annual maintenance fee for each Shareholder account as set
out in the initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 11.02 below may be changed from
time to time subject to mutual written agreement between the Manager and the
Bank.

     In addition to the fee paid under Section 11.01 above, the Manager agrees
to reimburse the Bank for out-of-pocket expenses or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Fund(s) including, without limitation, any equipment or supplies specifically
ordered by the Company or required to be purchased by the Company, will be
reimbursed by the Manager.

     The Manager agrees to pay all fees and reimbursable expenses within five
days following the mailing of the respective billing notice. Postage for mailing
of dividends, proxies, Fund reports and other mailings to all shareholder
accounts shall be advanced to the Bank by the Manager at least seven (7) days
prior to the mailing date of such materials.

     Notwithstanding the foregoing, to the extent the Manager is not obligated
pursuant to an agreement with the Company to pay the fees and expenses of the
Bank hereunder, the Company shall be responsible for such obligations of the
Manager set forth in this Article 11.

Representations and Warranties of the Bank

     The Bank represents and warrants to the Company that:

     It is a banking association duly organized and existing and in good
standing under the laws of the United States of America.



     It is empowered under applicable laws and by its charter and By-laws to
enter into and perform this Agreement.

     All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.

     It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.

Representations and warranties of-the company and the Manager

     The Company represents and warrants to the Bank that:

     It is a business trust duly organized and existing and in good standing
under the laws of the state of its organization as set forth in the preamble
hereto.

     It is empowered under applicable laws and by its charter documents and
By-Laws to enter into and perform this Agreement.

     All proceedings required by said charter documents and By-Laws have been
taken to authorize it to enter into and perform this Agreement.

     It is an open-end, management investment company registered under the
Investment Company Act of 1940.

     A registration statement on Form N-1A (including a prospectus and statement
of additional information) under the Investment Company Act of 1940 is currently
effective and will remain effective, and appropriate state securities law
filings have been made and will continue to be made, with respect to all Shares
of the Company being offered for sale.

     When Shares are hereafter issued in accordance with the terms of the
Prospectus, such Shares shall be validly issued, fully paid and nonassessable by
the Company.

     The Manager represents and warrants to the Bank that:

     It is a Massachusetts general partnership, empowered under applicable laws
and by its agreement of partnership to enter into and perform this Agreement.

     All proceedings required by said agreement have been taken to authorize it
to enter into and perform this Agreement, and the partner executing this
Agreement on behalf of the partnership has full authority to do so on behalf of
the partnership.

Indemnification

     The Bank shall not be responsible for, and the Manager shall indemnify and
hold the Bank harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:

          All actions taken or omitted to be taken by the Bank or its agent or
subcontractors in good faith in reliance on, or, use by the Bank or its agents
or subcontractors of information, records and documents which (i) are received
by the Bank



or its agents or subcontractors and furnished to it by or on behalf of the
Fund(s), (ii) have been prepared and/or maintained by the Fund(s) or any other
person or firm on behalf of the Fund(s), or (iii) were received by the Bank or
its agents or subcontractors from a prior transfer agent.

          Any action taken or omitted to be taken in good faith by the Bank in
connection with its appointment hereunder, in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed.

          The Funds' refusal or failure to comply with the terms of this
Agreement, or which arise out of the Funds' lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund(s) hereunder.

          The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests, whether written or oral, of the
Fund(s).

          The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.

          Indemnification under this Agreement shall not apply to actions or
omissions of the Bank or its directors, officers, employees, agents or
subcontractors in cases of its own negligence, willful misconduct, bad faith, or
reckless disregard of its duties or their own duties hereunder.

     The Bank shall indemnify and hold the Fund(s) harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributed to any action or failure or omission to
act by the Bank as a result of the Bank's lack of good faith, negligence or
willful misconduct.

     At any time the Bank may apply to any officer of the Company for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Manager for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund(s), reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided the
Bank or its agents or subcontractors by machine readable input, telex, CRT data
entry or other similar means authorized by the Fund(s), and shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Fund(s). The Bank, its agents and subcontractors shall
also be protected and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile signatures of the
officer of the Company, and one proper countersignature of any former transfer
agent or registrar, or of a co-transfer agent or co-registrar.



     In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, interruption of
electrical power or other utilities, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable to the other for any damages resulting from such
failure to perform or otherwise from such causes.

     No party to this Agreement shall be liable to any other party for
consequential damages under any provision of this Agreement or for any act or
failure to act hereunder.

     Notwithstanding anything herein to the contrary, in the event that the Bank
is entitled to indemnification from the Manager pursuant to the terms hereof and
the Bank is not promptly or fully indemnified, the Company agrees that the
Company shall indemnify the Bank in accordance with the provisions hereof, and
all references to the Manager, in this Article 14 shall be deemed to refer to
the Company.

     In order that the indemnification provision contained in this Article 14
shall apply, however, it is understood that if in any case the Manager or the
Company may be asked to indemnify or save the Bank harmless, the Manager and the
Company shall be fully and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood that the Bank will use
all reasonable care to identify and notify the Manager and the Company promptly
concerning any situation which presents or appears likely to present the
probability of such claim for indemnification. The Manager or the Company, as
the case may be, shall have the option to defend the Bank against any claim
which may be the subject of this indemnification, and in the event that the
Manager or the Company so elects it will so notify the Bank and thereupon the
Manager or the Company as the case may be, shall take over the complete defense
of the claim, and the Bank shall in such situations incur no further legal or
other expenses in connection with such claim, provided however, if the
defendants in any such action include both (i) the Manager or the Company and
(ii) the Bank, and the Bank shall have reasonably concluded that there may be
legal defenses available to it which are different from or additional to those
available to the Manager or the Company, as the case may be, the Bank shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of the Bank with
such cost to be borne by the party hereto ultimately liable with respect to such
claim. The Bank shall in no case confess any claim or make any compromise in any
case in which the Manager or the Company will be asked to indemnify the Bank
except with the prior written consent of the Manager or the Company, as the case
may be, which consent shall not be unreasonably withheld. The Manager or the
Company, as the case may be, shall not settle any claim without the Bank's prior
written consent, provided however that the Bank shall not unreasonably withhold
its consent.

Covenants of the Company and the Bank

     The Company shall promptly furnish to the Bank the following:

          A certified copy of the resolution of Trustees of the Company
authorizing the appointment of Bank and the execution and delivery of this
Agreement.

          A copy of the charter documents and By-Laws of the Company and all
amendments thereto.



          Copies of each vote of the Trustees designating authorized persons to
give instructions to the Bank.

          Certificates as to any change in any officer or Trustee of the
Company.

          If applicable, a specimen of the certificate of Shares of each Fund of
the Company in the form approved by the Trustees, with a certificate of the
Secretary of the Company as to such approval.

          Specimens of all new certificates for Shares, accompanied by the
Trustees' resolutions approving such forms.

          All account application forms and other documents relating to
shareholder accounts or relating to any plan, program or service offered by the
Company.

          A list of Shareholders of the Fund(s) with the name, address and tax
identification number of each Shareholder, and the number of Shares of the
Fund(s) held by each, certificate numbers and denominations (if any certificates
have been issued), lists of any account against which stops have been placed,
together with the reasons for said stops, and the number of Shares redeemed by
the Fund(s).

          An opinion of counsel for the Company with respect to the validity of
the currently authorized Shares and the status of such Shares under the
Securities Act of 1933, which may be copies of previously issued opinions, and
an opinion of counsel for the Company with respect to newly authorized Shares
with respect to the validity of such Shares and the status of such Shares under
the Securities Act of 1933.

          Copies of the Fund(s) registration statement on Form N-lA as currently
in effect as of the date hereof and all post-effective amendments thereto filed
subsequent to the date hereof.

          Such other certificates, documents or opinions as may mutually be
deemed necessary or appropriate for the Bank in the proper performance of its
duties.

     The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Company for safekeeping of stock certificates,
check forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices.

     The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Company and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered to the Company on and in accordance with its request.

     The Bank and the Company agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.



     In case of any requests or demands for the inspection of the Shareholder
records of the Company, the Bank will endeavor to notify the Company and to
secure instructions from an authorized officer of the Company as to such
instruction. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.

Term of Agreement

     This Agreement shall become effective on the date hereof (the "Effective
Date") and shall continue in effect for twelve months from the Effective Date
(the "Initial Term") and from year to year thereafter with respect to each Fund,
provided that subsequent to the Initial Term, this Agreement may be terminated
by either the Company or the Bank at any time without payment of any penalty
upon ninety (90) days written notice to the other. In the event such notice is
given by the Company, it shall be accompanied by a resolution of the Trustees,
certified by the Secretary, electing to terminate this Agreement and designating
a successor transfer agent.

     Should the Company exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Manager, except as set forth in Article 11.04 hereof. Additionally, the Bank
reserves the right to charge for any other reasonable expenses associated with
such termination.

Additional Funds

     In the event that the Company establishes one or more series of Shares in
addition to the initial series listed by name in the preamble to this Agreement
with respect to which it desires to have the Bank render services as transfer
agent under the terms hereof, it shall so notify the Bank in writing, and if the
Bank agrees in writing to provide such services, such series of Shares shall
become a Fund hereunder.

Assignment

     Except as provided in Section 18.03 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by any party without the written
consent of the other parties.

     This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.

     The Bank, may without further consent on the part of the Company,
subcontract for the performance of services to be provided hereunder to third
parties, including any affiliate of the Bank, provided that the Bank shall
remain liable hereunder for any acts or omissions of any subcontractor as if
performed by the Bank.

Amendment

     This Agreement may be amended or modified by a written agreement executed
by each of the parties.



Massachusetts Law to Apply

     This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of The Commonwealth of Massachusetts.

Merger of Agreement

     This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.

                                        GMO TRUST


                                        By:
                                            ------------------------------------


ATTEST:


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                                        GRANTHAM, MAYO, VAN OTTERLOO & CO.


                                        By:
                                            ------------------------------------


ATTEST:


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                                        INVESTORS BANK & TRUST COMPANY


                                        By:
                                            ------------------------------------


ATTEST:


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