As filed with the Securities and Exchange Commission on November 22, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 ( X )
Post-Effective Amendment No. 58( X )
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 ( X )
Amendment No. 60( X )
GOLDMAN SACHS TRUST
(Exact name of registrant as specified in charter)
4900 Sears Tower
Chicago, Illinois 60606-6303
(Address of principal executive offices)
Michael J. Richman, Esq. Copies to:
Goldman, Sachs & Co. Jeffrey A. Dalke, Esq.
85 Broad Street - 12th Floor Drinker Biddle & Reath LLP
New York, New York 10004 One Logan Square
18th and Cherry Streets
(Name and address of agent for service) Philadelphia, PA 19103
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It is proposed that this filing will become effective (check appropriate box)
( ) Immediately upon filing pursuant to paragraph (b)
(X) On November 30, 1999 pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(1)
( ) On (date) pursuant to paragraph (a)(1)
( ) 75 days after filing pursuant to paragraph (a)(2)
( ) On (date) pursuant to paragraph (a)(2) of rule 485.
GOLDMAN SACHS DOMESTIC EQUITY FUNDS
Prospectus
Class A, B
and C Shares
November 30, 1999
.Goldman Sachs
Balanced Fund
.Goldman Sachs
Growth and
Income Fund
.Goldman Sachs
CORE SM Large
Cap Value Fund
.Goldman Sachs
CORE SM U.S.
Equity Fund
.Goldman Sachs
CORE SM Large
Cap Growth
Fund
.Goldman Sachs
CORE SM Small
Cap Equity
Fund
.Goldman Sachs
Capital Growth
Fund
.Goldman Sachs
Strategic
Growth Fund
.Goldman Sachs
Growth
Opportunities
Fund
.Goldman Sachs
Mid Cap Value
Fund (formerly
"Mid Cap
Equity")
.Goldman Sachs
Small Cap
Value Fund
.Goldman Sachs
Large Cap
Value Fund
[LOGO OF GOLDMAN SACHS]
THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A FUND IS NOT A BANK
DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN A FUND
INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
[ART]
NOT FDIC-INSURED May Lose Value No Bank Guarantee
General Investment Management Approach
Goldman Sachs Asset Management, a unit of the Investment Management Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser to the Balanced, Growth and Income, CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, Strategic Growth, Growth Opportunities, Mid Cap Value, Small Cap Value and Large Cap Value Funds. Goldman Sachs Funds Management, L.P. serves as investment adviser to the CORE U.S. Equity and Capital Growth Funds. Goldman Sachs Asset Management and Goldman Sachs Funds Management, L.P. are each referred to in this Prospectus as the "Investment Adviser."
VALUE STYLE FUNDS
Goldman Sachs' Value Investment Philosophy:
Through intensive, hands-on research our portfolio team seeks to identify:
1. Attractive valuation opportunities where:
.The intrinsic value of the business is not reflected in the stock price
.The stock price is overdiscounted due to a temporary event
2. Well-positioned businesses that have:
.Attractive returns on capital
.Sustainable earnings and cash flow
.Strong company management focused on long-term returns to shareholders
Business quality, conservative valuation, and thoughtful portfolio construc- tion are the key elements of our value approach.
GROWTH STYLE FUNDS
Goldman Sachs' Growth Investment Philosophy:
1. Invest as if buying the company/business, not simply trading its stock:
.Understand the business, management, products and competition.
.Perform intensive, hands-on fundamental research.
.Seek businesses with strategic competitive advantages.
.Over the long-term, expect each company's stock price ultimately to track the growth in the value of the business.
2. Buy high-quality growth businesses that possess strong business fran- chises, favorable long-term prospects and excellent management.
3. Purchase superior long-term growth companies at a favorable price--seek to purchase at a fair valuation, giving the investor the potential to fully capture returns from above-average growth rates.
Growth companies have earnings expectations that exceed those of the stock market as a whole.
QUANTITATIVE ("CORE") STYLE FUNDS
Goldman Sachs' CORE Investment Philosophy:
Goldman Sachs' quantitative style of funds--CORE--emphasizes the two build-
ing blocks of active management: stock selection and portfolio construction.
I. CORE Stock Selection
The CORE Funds use the Goldman Sachs' proprietary multifactor model
("Multifactor Model"), a rigorous computerized rating system, to forecast
the returns of securities held in each Fund's portfolio. The Multifactor
Model incorporates common variables covering measures of:
.Value (price-to-book, price-to-earnings, cash flow to enterprise value)
.Momentum (earnings momentum, price momentum, sustainable growth)
.Risk (market risk, company-specific risk, earnings risk)
.Research (fundamental research ratings of Goldman Sachs and other analysts)
All of the above factors are carefully evaluated within the Multifactor Model since each has demonstrated a significant impact on the performance of the securities and markets they were designed to forecast. Stock selection in this process combines both our quantitative and qualitative analysis.
II. CORE Portfolio Construction A proprietary computer optimizer calculates every security combination (at every possible weighting) to construct the most efficient risk/return port- folio given each CORE Fund benchmark. In this process, the Investment Adviser manages risk by limiting deviations from the benchmark, running size and sector neutral portfolios.
Goldman Sachs CORE Funds are fully invested, broadly diversified and offer consistent overall portfolio characteristics. They may serve as good founda- tions on which to build a portfolio.
Fund Investment Objectives and Strategies
Goldman Sachs
Balanced Fund
Objective: Long-term growth of capital and current income
Benchmarks: S&P 500 Index and Lehman Brothers Aggregate Bond Index
Investment Focus: Large capitalization U.S. stocks and fixed-income securi- ties
Investment Style: Asset Allocation, with growth and value (blend) equity components
INVESTMENT OBJECTIVE
The Fund seeks to provide long-term growth of capital and current income. The Fund seeks growth of capital primarily through investments in equity securities (stocks). The Fund seeks to provide current income through investment in fixed-income securities (bonds).
PRINCIPAL INVESTMENT STRATEGIES
Historically, stock and bond markets have often had different cycles, with one asset class rising when the other is falling. A balanced objective seeks to reduce the volatility associated with investing in a single market. There is no guarantee, however, that market cycles will move in opposition to one another or that a balanced investment program will successfully reduce vola- tility.
The percentage of the portfolio invested in equity and fixed-income securi- ties will vary from time to time as the Investment Adviser evaluates such securities' relative attractiveness based on market valuations, economic growth and inflation prospects. The allocation between equity and fixed- income securities is subject to the Fund's intention to pay regular quar- terly dividends. The amount of quarterly dividends can also be expected to fluctuate in accordance with factors such as prevailing interest rates and the percentage of the Fund's assets invested in fixed-income securities.
Equity Securities. The Fund invests, under normal circumstances, between 45% and 65% of its total assets in equity securities. Although the Fund's equity investments consist primarily of publicly traded U.S. securities, the Fund may invest up to 10% of its total assets in the equity securities of foreign issuers, including issuers in countries with emerging markets or economies ("emerging countries") and equity securities quoted in foreign currencies. A portion of the Fund's portfolio of equity securities may be selected primar- ily to provide current income (including interests in real estate investment trusts ("REITs"), convertible securities, preferred stocks, utility stocks, and interests in limited partnerships).
Fixed Income Securities. The Fund invests at least 25% of its total assets in fixed-income senior securities. The remainder of the Fund's assets are invested in other fixed-income securities and cash.
The Fund's fixed-income securities primarily include:
.Securities issued by the U.S. government, its agencies, instrumentalities
or sponsored enterprises
.Securities issued by corporations, banks and other issuers
.Mortgage-backed and asset-backed securities
The Fund may also invest up to 10% of its total assets in debt obligations (U.S. dollar and non-U.S.-dollar denominated) issued or guaranteed by one or more foreign governments or any of their political subdivisions, agencies or instrumentalities and foreign corporations or other entities. The issuers of these securities may be located in emerging countries.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Growth and Income Fund
Objective: Long-term growth of capital and growth of income
Benchmark: S&P 500 Index
Investment Focus: Large capitalization U.S. equity securities with an
emphasis on undervalued stocks
Investment Style: Value
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and growth of income.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 65% of its total assets in equity securities that the Investment Adviser considers to have favorable prospects for capital appreciation and/or divi- dend-paying ability. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in for- eign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations, that offer the potential to further the Fund's investment objective.
Goldman Sachs
CORE Large Cap Value Fund
Objective: Long-term growth of capital and dividend income
Benchmark: Russell 1000 Value Index
Investment Focus: Diversified portfolio of equity securities of large-cap
U.S. issuers selling at low to modest valuations
Investment Style: Quantitative, applied to large-cap value stocks
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and dividend income. The Fund seeks this objective through a broadly diversified portfolio of equity secu- rities of large-cap U.S. issuers that are selling at low to modest valua- tions relative to general market measures, such as earnings, book value and other fundamental accounting measures, and that are expected to have favora- ble prospects for capital appreciation and/or dividend-paying ability.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the Russell 1000 Value Index. The Fund seeks a portfolio comprised of companies with above average capitalizations and low to moderate valuations as measured by price/earnings ratios, book value and other fundamental accounting measures.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
CORE U.S. Equity Fund
Objective: Long-term growth of capital and dividend income
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities
Investment Style: Quantitative, applied to large-cap
growth and value (blend) stocks
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and dividend income. The Fund seeks this objective through a broadly diversified portfolio of large-cap and blue chip equity securities representing all major sectors of the U.S. economy.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the S&P 500 Index. The Fund seeks a broad repre- sentation in most major sectors of the U.S. economy and a portfolio com- prised of companies with average long-term earnings growth expectations and dividend yields.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
Goldman Sachs
CORE Large Cap Growth Fund
Objective: Long-term growth of capital; dividend income is a
secondary consideration
Benchmark: Russell 1000 Growth Index
Investment Focus: Large-cap, growth-oriented U.S. stocks
Investment Style: Quantitative, applied to large-cap growth stocks
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of large-cap U.S. issuers that are expected to have better prospects for earnings growth than the growth rate of the general domestic economy. Dividend income is a secondary consideration.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Investment Adviser emphasizes a company's growth prospects in analyzing equity securities to be purchased by the Fund. The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintain- ing risk, style, capitalization and industry characteristics similar to the Russell 1000 Growth Index. The Fund seeks a portfolio comprised of companies with above average capitalizations and earnings growth expectations and below average dividend yields.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
CORE Small Cap Equity Fund
Objective: Long-term growth of capital
Benchmark: Russell 2000 Index
Investment Focus: Stocks of small capitalization U.S. companies
Investment Style: Quantitative, applied to small-cap
growth and value (blend) stocks
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of U.S. issuers which are included in the Russell 2000 Index at the time of investment.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the Russell 2000 Index. The Fund seeks a portfo- lio comprised of companies with small market capitalizations, strong expected earnings growth and momentum, and better valuation and risk charac- teristics than the Russell 2000 Index. If the issuer of a portfolio security held by the Fund is no longer included in the Russell 2000 Index, the Fund may, but is not required to, sell the security.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
Goldman Sachs
Capital Growth Fund
Objective: Long-term growth of capital
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities that offer long-term
capital appreciation potential
Investment Style: Growth
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity secu- rities that are considered by the Investment Adviser to have long-term capi- tal appreciation potential. Although the Fund invests primarily in publicly traded U.S. securities, it may invest up to 10% of its total assets in for- eign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Strategic Growth Fund
Objective: Long-term growth of capital
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities that are considered to
be strategically positioned for consistent long-term
growth
Investment Style: Growth
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity secu- rities that are considered by the Investment Adviser to be strategically positioned for consistent long-term growth. Although the Fund invests pri- marily in publicly traded U.S. securities, it may invest up to 10% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Goldman Sachs
Growth Opportunities Fund
Objective: Long-term growth of capital
Benchmark: S&P Midcap 400 Index
Investment Focus: U.S. equity securities that offer long-term capital
appreciation with a primary focus on mid-capitalization
companies
Investment Style: Growth
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities with a primary focus on mid-cap companies. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity securities that are considered by the Investment Adviser to be strategically positioned for long-term growth. Although the Fund invests primarily in publicly traded U.S. securities, it may invest up to 10% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Mid Cap Value Fund
Objective: Long-term capital appreciation
Benchmark: Russell Midcap Value Index
Investment Focus: Mid-capitalization U.S. stocks that are believed
to be undervalued or undiscovered by the marketplace
Investment Style: Value
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INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all of its assets in equity securities and at least 65% of its total assets in equity securities of mid-cap companies with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constitut- ing the Russell Midcap Value Index at the time of investment (currently between $300 million and $15 billion). If the capitalization of an issuer decreases below $300 million or increases above $15 billion after purchase, the Fund may, but is not required to, sell the securities. Dividend income, if any, is an incidental consideration. Although the Fund will invest pri- marily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations.
Goldman Sachs
Small Cap Value Fund
Objective: Long-term growth of capital
Benchmark: Russell 2000 Value Index
Investment Focus: Small-capitalization U.S. stocks that are believed to be
undervalued or undiscovered by the marketplace
Investment Style: Value
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INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 65% of its total assets in equity securities of companies with public stock market capitalizations of $1 billion or less at the time of investment. Under normal circumstances, the Fund's investment horizon for ownership of stocks will be two to three years. Dividend income, if any, is an incidental consideration. If the market capitalization of a company held by the Fund increases above $1 billion, the Fund may, consistent with its investment objective, continue to hold the security.
The Fund invests in companies which the Investment Adviser believes are well- managed niche businesses that have the potential to achieve high or improving returns on capital and/or above average sustainable growth. The Fund may invest in securities of small market capitalization companies which may have experienced financial difficulties. Investments may also be made in companies that are in the early stages of their life and that the Investment Adviser believes have significant growth potential. The Investment Adviser believes that the companies in which the Fund may invest offer greater opportunity for growth of capital than larger, more mature, better known companies. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securi- ties, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may invest in the aggregate up to 35% of its total assets in companies with public stock market capitalizations in excess of $1 billion at the time of investment and in fixed-income securities, such as govern- ment, corporate and bank debt obligations.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Large Cap Value Fund
Objective: Long-term capital appreciation
Benchmark: Russell 1000 Value Index
Investment Focus: Large capitalization U.S. equity securities that are
believed to be undervalued
Investment Style: Value
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INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks its investment objective by investing in value opportunities that the Investment Adviser defines as companies with identifiable competitive advantages whose intrin- sic value is not reflected in the stock price. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securities, including securities quoted in foreign currencies.
Other. The Fund may invest up to 10% of its total assets in fixed-income securities, such as government, corporate and bank debt obligations.
Other Investment Practices and Securities
The table below identifies some of the investment techniques that may (but are
not required to) be used by the Funds in seeking to achieve their investment
objectives. The table also highlights the differences among the Funds in their
use of these techniques and other investment practices and investment securi-
ties. Numbers in this table show allowable usage only; for actual usage, con-
sult the Fund's annual/semi-annual reports. For more information see Appendix
A.
10Percent of total assets (italic type)
10Percent of net assets (roman type)
. No specific percentage limitation on usage;limited only by the objectives and strategies of the Fund
Growth CORE CORE
Balanced and Income Large Cap U.S. Equity
Fund Fund Value Fund Fund
------------------------------------------------------------------------------
Investment Practices
Borrowings 33 1/3 33 1/3 33 1/3 33 1/3
Credit, currency, index, interest
rate and mortgage swaps* 15 -- -- --
Cross Hedging of Currencies . -- -- --
Custodial receipts . . . .
Equity Swaps* 15 15 15 15
Foreign Currency Transactions** ./1/ . . .
Futures Contracts and Options on
Futures Contracts . . ./2/ ./3/
Interest rate caps, floors and
collars . -- -- --
Investment Company Securities
(including World Equity Benchmark
Shares and Standard & Poor's
Depository Receipts) 10 10 10 10
Loan Participations . -- -- --
Mortgage Dollar Rolls . -- -- --
Options on Foreign Currencies/4/ . . . .
Options on Securities and
Securities Indices/5/ . . . .
Repurchase Agreements . . . .
Reverse Repurchase Agreements (for
investment purposes) . -- -- --
Securities Lending 33 1/3 33 1/3 33 1/3 33 1/3
Short Sales Against the Box 25 25 -- --
Unseasoned Companies . . . .
Warrants and Stock Purchase Rights . . . .
When-Issued Securities and Forward
Commitments . . . .
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--Not permitted
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions.
** Limited by the amount the Fund invests in foreign securities.
1 The Balanced Fund may also enter into forward foreign currency exchange
contracts to seek to increase total return.
2 The CORE Large Cap Value, CORE Large Cap Growth and CORE Small Cap Equity
Funds may enter into futures transactions only with respect to a represen-
tative index.
3 The CORE U.S. Equity Fund may enter into futures transactions only with
respect to the S&P 500 Index.
4 The Funds may purchase and sell call and put options.
5 The Funds may sell covered call and put options and purchase call and put options.
OTHER INVESTMENT PRACTICES AND SECURITIES
CORE CORE Capital Strategic Growth Mid Cap Small Cap Large Cap
Large Cap Small Cap Growth Growth Opportunities Value Value Value
Growth Fund Equity Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------
33
1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
. . . . . . . .
15 15 15 15 15 15 15 15
. . . . . . . .
./2/ ./2/ . . . . . .
-- -- -- -- -- -- -- --
10 10 10 10 10 10 10 10
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
. . . . . . . .
. . . . . . . .
. . . . . . . .
-- -- -- -- -- -- -- --
33
1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3
-- -- 25 25 25 25 25 25
. . . . . . . .
. . . . . . . .
. . . . . . . .
---------------------------------------------------------------------------------------
|
10Percent of total assets (italic type)
10Percent of net assets (roman type)
. No specific percentage
limitation on usage;
limited only by the
objectives andstrategies
of the Fund
Growth CORE CORE
Balanced and Income Large Cap U.S. Equity
Fund Fund Value Fund Fund
------------------------------------------------------------------------------
Investment Securities
American, European and Global
Depository Receipts . . ./6/ ./6/
Asset-Backed and Mortgage-
Backed Securities/7/ . . -- --
Bank Obligations/7/ . . . .
Convertible Securities/8/ . . . .
Corporate Debt Obligations/7/ . . . /9/ . /9/
Equity Securities 45-65 65+ 90+ 90+
Emerging Country Securities 10/10/ 25/10/ -- --
Fixed Income Securities/11/ 35-45/17/ 35 10 /9/ 10 /9/
Foreign Securities 10/10/ 25/10/ . /13/ . /13/
Foreign Government
Securities/7/ . -- -- --
Municipal Securities . -- -- --
Non-Investment Grade Fixed
Income Securities 10/14/ 10/15/ -- --
Real Estate Investment Trusts . . . .
Stripped Mortgage Backed
Securities/7/ . -- -- --
Structured Securities* . . . .
Temporary Investments 100 100 35 35
U.S. Government Securities/7/ . . . .
Yield Curve Options and
Inverse Floating Rate
Securities . -- -- --
------------------------------------------------------------------------------
|
--Not permitted
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 6 The CORE Funds may not invest in European Depository Receipts.
7 Limited by the amount the Fund invests in fixed-income securities.
8 Convertible securities purchased by the Balanced Fund must be B or higher by Standard & Poor's Rating Group ("Standard & Poor's") or Moody's Investor's Service, Inc. ("Moody's"). The CORE Funds have no minimum rating criteria and all other Funds use the same rating criteria for convertible and non- convertible debt securities.
9 Cash equivalents only.
10 The Balanced, Growth and Income, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value and Small Cap Value Funds may invest in the aggregate up to 10%, 25%, 10%, 10%, 10%, 25% and 25%, respectively, of their total assets in foreign securities, including emerging country securities.
11 Except as noted under "Non-Investment Grade Fixed Income Securities," fixed- income securities must be investment grade (i.e., BBB or higher by Standard & Poor's or Baa or higher by Moody's).
12 The Small Cap Value Fund may invest in the aggregate up to 35% of its total assets in: (1) the equity securities of companies with public stock market capitalizations in excess of $1 billion at the time of investment; and (2) fixed-income securities.
13 Equity securities of foreign issuers must be traded in the United States.
14 Must be at least BB or B by Standard & Poor's or Ba or B by Moody's.
OTHER INVESTMENT PRACTICES AND SECURITIES
CORE CORE Capital Strategic Growth Mid Cap Small Cap Large Cap
Large Cap Small Cap Growth Growth Opportunities Value Value Value
Growth Fund Equity Fund Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------
. /6/ . /6/ . . . . . .
-- -- . . . . . .
. . . . . . . .
. . . . . . . .
. /9/ . /9/ . . . . . .
90+ 90+ 90+ 90+ 90+ 65+ 65+ 90+
-- -- 10/10/ 10/10/ 10/10/ 25/10/ 25/10/ --
10 /9/ 10 /9/ . . . 35 35/12/ 10
. /13/ . /13/ 10/10/ 10/10/ 10/10/ 25/10/ 25/10/ 25
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- 10/15/ 10/15/ 10/15/ 10/16/ 35/15/ 10/15/
. . . . . . . .
-- -- -- -- -- -- -- --
. . . . . . . .
35 35 100 100 100 100 100 100
. . . . . . . .
-- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------
|
15 Limited by the amount the Fund invests in fixed-income securities. May be BB or lower by Standard & Poor's or Ba or lower by Moody's.
16 Must be B or higher by Standard & Poor's or B or higher by Moody's.
17 The Balanced Fund invests at least 25% of its total assets in fixed-income senior securities; the remainder is invested in other fixed-income securi- ties and cash.
Principal Risks of the Funds
Loss of money is a risk of investing in each Fund. An investment in a Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The following summarizes important risks that apply to the Funds and may result in a loss of your investment. None of the Funds should be relied upon as a complete invest- ment program. There can be no assurance that a Fund will achieve its investment objective.
CORE CORE CORE
Growth Large CORE Large Small
and Cap U.S. Cap Cap
.Applicable Balanced Income Value Equity Growth Equity
--Not applicable Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------
Credit/Default . . . . . .
Foreign . . . . . .
Emerging Countries . . . . . .
Small Cap/REIT -- -- -- -- -- .
Stock . . . . . .
Derivatives . . . . . .
Interest Rate . . . . . .
Management . . . . . .
Market . . . . . .
Liquidity . . . . . .
Other . . . . . .
------------------------------------------------------------------------------------
|
PRINCIPAL RISKS OF THE FUNDS
Mid Small Large
Capital Strategic Growth Cap Cap Cap
Growth Growth Opportunities Value Value Value
Fund Fund Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------
. . . . . .
. . . . . .
. . . . . .
-- -- -- . . --
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
-----------------------------------------------------------------------------------------------
|
All Funds:
.Credit/Default Risk--The risk that an issuer of fixed-income securities held
by a Fund (which may have low credit ratings) may default on its obligation to
pay interest and repay principal.
.Foreign Risks--The risk that when a Fund invests in foreign securities, it
will be subject to risk of loss not typically associated with domestic
issuers. Loss may result because of less foreign government regulation, less
public information and less economic, political and social stability. Loss may
also result from the imposition of exchange controls, confiscations and other
government restrictions. A Fund will also be subject to the risk of negative
foreign currency rate fluctuations. Foreign risks will normally be greatest
when a Fund invests in issuers located in emerging countries.
.Emerging Countries Risk--The securities markets of Asian, Latin American,
Eastern European, African and other emerging countries are less liquid, are
especially subject to greater price volatility, have smaller market capital-
izations, have less government regulation and are not subject to as extensive
and frequent accounting, financial and other reporting requirements as the
securities markets of more developed countries. Further, investment in equity
securities of issuers located in Russia and certain other emerging countries
involves risk of loss resulting from problems in share registration and cus-
tody and substantial economic and political disruptions. These risks are not
normally associated with investments in more developed countries.
.Stock Risk--The risk that stock prices have historically risen and fallen in
periodic cycles. As of the date of this Prospectus, U.S. stock markets and
certain foreign stock markets were trading at or close to record high levels.
There is no guarantee that such levels will continue.
.Derivatives Risk--The risk that loss may result from a Fund's investments in
options, futures, swaps, structured securities and other derivative instru-
ments. These instruments may be leveraged so that small changes may produce
disproportionate losses to a Fund.
.Interest Rate Risk--The risk that when interest rates increase, fixed-income
securities held by a Fund will decline in value. Long-term fixed-income secu-
rities will normally have more price volatility because of this risk than
short-term securities.
.Management Risk--The risk that a strategy used by the Investment Adviser may
fail to produce the intended results.
.Market Risk--The risk that the value of the securities in which a Fund invests
may go up or down in response to the prospects of individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
PRINCIPAL RISKS OF THE FUNDS
.Liquidity Risk--The risk that a Fund will not be able to pay redemption pro-
ceeds within the time period stated in this Prospectus because of unusual mar-
ket conditions, an unusually high volume of redemption requests, or other rea-
sons. Funds that invest in non-investment grade fixed-income securities, small
capitalization stocks, REITs and emerging country issuers will be especially
subject to the risk that during certain periods the liquidity of particular
issuers or industries, or all securities within these investment categories,
will shrink or disappear suddenly and without warning as a result of adverse
economic, market or political events, or adverse investor perceptions whether
or not accurate. The Goldman Sachs Asset Allocation Portfolios (the "Asset
Allocation Portfolios") expect to invest a significant percentage of their
assets in the Funds and other funds for which Goldman Sachs now or in the
future acts as investment adviser or underwriter. Redemptions by an Asset
Allocation Portfolio of its position in a Fund may further increase liquidity
risk and may impact a Fund's net asset value ("NAV").
.Other Risks--Each Fund is subject to other risks, such as the risk that its
operations, or the value of its portfolio securities, will be disrupted by the
"Year 2000 Problem."
Specific Funds:
.Small Cap Stock and REIT Risk--The securities of small capitalization stocks and REITs involve greater risks than those associated with larger, more estab- lished companies and may be subject to more abrupt or erratic price movements. Securities of such issuers may lack sufficient market liquidity to enable a Fund to effect sales at an advantageous time or without a substantial drop in price.
More information about the Funds' portfolio securities and investment tech- niques, and their associated risks, is provided in Appendix A. You should con- sider the investment risks discussed in this section and in Appendix A. Both are important to your investment choice.
Fund Performance
HOW THE FUNDS HAVE PERFORMED
The bar chart and table below provide an indication of the risks of invest- ing in a Fund by showing: (a) changes in the performance of a Fund's Class A Shares from year to year; and (b) how the average annual returns of a Fund's Class A, B and C Shares compare to those of broad-based securities market indices. The bar chart and table assume reinvestment of dividends and dis- tributions. A Fund's past performance is not necessarily an indication of how the Fund will perform in the future. The average annual total return calculation reflects a maximum initial sales charge of 5.5% for Class A Shares, the assumed contingent deferred sales charge ("CDSC") for Class B Shares (5% maximum declining to 0% after six years), and the assumed CDSC for Class C Shares (1% if redeemed within 12 months of purchase). The bar chart does not reflect the sales loads applicable to Class A Shares. If the sales loads were reflected, returns would be less. Performance reflects expense limitations in effect. If expense limitations were not in place, a Fund's performance would have been reduced. The Large Cap Value Fund com- menced operations as of the date of this Prospectus. The CORE Large Cap Val- ue, Strategic Growth and Growth Opportunities Funds commenced operations on December 31, 1998, May 24, 1999 and May 24, 1999, respectively. Since these Funds have less than one calendar year's performance, no performance infor- mation is provided in this section.
Balanced Fund
FUND PERFORMANCE
TOTAL RETURN CALENDAR YEAR (CLASS A)
--------------------------------------------------------------------------------
The total
return for
Class A Shares
for the 9-month
period ended
September 30,
1999 was 0.64%.
Best Quarter
Q2 '97 +9.92%
Worst Quarter
Q3 '98 -8.71%
[BAR GRAPH APPEARS HERE]
1995 28.09%
1996 17.68%
1997 19.63%
1998 3.59%
AVERAGE ANNUAL TOTAL RETURN
|
For the period ended December 31, 1998 1 Year Since Inception ----------------------------------------------------------------- Class A (Inception 10/12/94) Including Sales Charges (2.10)% 14.13% S&P 500 Index* 28.57% 28.45% Lehman Brothers Aggregate Bond Index** 8.69% 9.52% ----------------------------------------------------------------- Class B (Inception 5/1/96) Including CDSC (2.32)% 11.77% S&P 500 Index* 28.57% 28.94% Lehman Brothers Aggregate Bond Index** 8.69% 9.18% ----------------------------------------------------------------- Class C (Inception 8/15/97) Including CDSC 1.77% 3.18% S&P 500 Index* 28.57% 24.80% Lehman Brothers Aggregate Bond Index** 8.69% 9.67% ----------------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses. ** The Lehman Brothers Aggregate Bond Index is an unmanaged index of bond prices. The Index figures do not reflect any fees or expenses.
Growth and Income Fund
TOTAL RETURN CALENDAR YEAR (CLASS A)
--------------------------------------------------------------------------------
The total
return for
Class A Shares
for the 9-month
period ended
September 30,
1999 was -
2.26%.
Best Quarter
Q2 '97 +15.18%
Worst Quarter
Q3 '98 -16.97%
[BAR GRAPH APPEARS HERE]
1994 5.91%
1995 33.49%
1996 25.98%
1997 27.89%
1998 -5.44%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year 5 Years Since Inception -------------------------------------------------------------- Class A (Inception 2/5/93) Including Sales Charges (10.65)% 15.27% 14.24% S&P 500 Index* 28.57% 24.05% 21.42% -------------------------------------------------------------- Class B (Inception 5/1/96) Including CDSC (10.74)% N/A 12.33% S&P 500 Index* 28.57% N/A 28.94% -------------------------------------------------------------- Class C (Inception 8/15/97) Including CDSC (7.11)% N/A (4.64)% S&P 500 Index* 28.57% N/A 24.80% -------------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
CORE U.S. Equity Fund
FUND PERFORMANCE
TOTAL RETURN CALENDAR YEAR (CLASS A)
--------------------------------------------------------------------------------
The total
return for
Class A Shares
for the 9-month
period ended
September 30,
1999 was 6.41%.
Best Quarter
Q4 '98 +21.44%
Worst Quarter
Q3 '98 -14.69%
[BAR GRAPH APPEARS HERE]
1992 -0.04%
1993 12.76%
1994 1.30%
1995 35.24%
1996 21.31%
1997 31.80%
1998 21.25%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year 5 Years Since Inception ------------------------------------------------------------ Class A (Inception 5/24/91) Including Sales Charges 14.58% 20.21% 16.07% S&P 500 Index* 28.57% 24.05% 19.72% ------------------------------------------------------------ Class B (Inception 5/1/96) Including CDSC 15.44% N/A 22.91% S&P 500 Index* 28.57% N/A 28.94% ------------------------------------------------------------ Class C (Inception 8/15/97) Including CDSC 19.52% N/A 18.16% S&P 500 Index* 28.57% N/A 24.80% ------------------------------------------------------------ |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
CORE Large Cap Growth Fund
TOTAL RETURN CALENDAR YEAR (CLASS A)
--------------------------------------------------------------------------------
The total
return for
Class A Shares
for the 9-month
period ended
September 30,
1999 was 9.20%.
Best Quarter
Q4 '98 +25.47%
Worst Quarter
Q3 '98 -13.95%
[BAR GRAPH APPEARS HERE]
1998 30.39%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ---------------------------------------------------- Class A (Inception 5/1/97) Including Sales Charges 23.26% 27.34% Russell 1000 Growth Index* 38.72% 36.81% ---------------------------------------------------- Class B (Inception 5/1/97) Including CDSC 24.39% 28.74% Russell 1000 Growth Index* 38.72% 36.81% ---------------------------------------------------- Class C (Inception 8/15/97) Including CDSC 28.39% 22.80% Russell 1000 Growth Index* 38.72% 29.91% ---------------------------------------------------- |
* The Russell 1000 Growth Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
CORE Small Cap Equity Fund
FUND PERFORMANCE
TOTAL RETURN CALENDAR YEAR (CLASS A)
--------------------------------------------------------------------------------
The total
return for
Class A Shares
for the 9-month
period ended
September 30,
1999 was 1.19%.
Best Quarter
Q4 '98 +14.49%
Worst Quarter
Q3 '98 -24.34%
[BAR GRAPH APPEARS HERE]
1998 -5.96%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ------------------------------------------------------ Class A (Inception 8/15/97) Including Sales Charges (11.17)% (2.93)% Russell 2000 Index* (2.55)% 2.84% ------------------------------------------------------ Class B (Inception 8/15/97) Including CDSC (11.29)% (2.53)% Russell 2000 Index* (2.55)% 2.84% ------------------------------------------------------ Class C (Inception 8/15/97) Including CDSC (7.47)% 0.47% Russell 2000 Index* (2.55)% 2.84% ------------------------------------------------------ |
* The Russell 2000 Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
Capital Growth Fund
TOTAL RETURN CALENDAR YEAR (CLASS A)
--------------------------------------------------------------------------------
The total
return for
Class A Shares
for the 9-month
period ended
September 30,
1999 was 5.56%.
Best Quarter
Q4 '98 +24.31%
Worst Quarter
Q3 '98 -11.44%
[BAR GRAPH APPEARS HERE]
1991 31.92%
1992 23.35%
1993 14.17%
1994 -1.10%
1995 25.75%
1996 21.32%
1997 35.31%
1998 33.88%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year 5 Years Since Inception ------------------------------------------------------------ Class A (Inception 4/20/90) Including Sales Charges 26.53% 20.89% 18.99% S&P 500 Index* 28.57% 24.05% 19.14% ------------------------------------------------------------ Class B (Inception 5/1/96) Including CDSC 27.79% N/A 28.66% S&P 500 Index* 28.57% N/A 28.94% ------------------------------------------------------------ Class C (Inception 8/15/97) Including CDSC 31.95% N/A 28.67% S&P 500 Index* 28.57% N/A 24.80% ------------------------------------------------------------ |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
Mid Cap Value Fund
FUND PERFORMANCE
TOTAL RETURN CALENDAR YEAR (CLASS A)
--------------------------------------------------------------------------------
The total
return for
Class A Shares
for the 9-month
period ended
September 30,
1999 was -
1.88%.
Best Quarter
Q1 '98 +11.64%
Worst Quarter
Q3 '98 -20.87%
|
[BAR GRAPH APPEARS HERE]
1998 -5.86%
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ------------------------------------------------------ Class A (Inception 8/15/97) Including Sales Charges (11.04)% (6.85)% Russell Midcap Value Index* 5.10% 11.33% Russell Midcap Index** 10.09% 12.52% ------------------------------------------------------ Class B (Inception 8/15/97) Including CDSC (11.18)% (6.34)% Russell Midcap Value Index* 5.10% 11.33% Russell Midcap Index** 10.09% 12.52% ------------------------------------------------------ Class C (Inception 8/15/97) Including CDSC (7.36)% (3.43)% Russell Midcap Value Index* 5.10% 11.33% Russell Midcap Index** 10.09% 12.52% ------------------------------------------------------ |
*The Russell Midcap Value Index, an unmanaged index of common stock prices,
is replacing the Russell Midcap Index as the Mid Cap Value Fund's perfor-
mance benchmark. The Russell Midcap Value Index includes more value-oriented
stocks and, therefore, is expected to be a better benchmark comparison for
the Fund's performance. The Index figures do not reflect any fees or
expenses.
**The Russell Midcap Index is an unmanaged index of common stock prices. The
Index figures do not reflect any fees or expenses.
Small Cap Value Fund
TOTAL RETURN CALENDAR YEAR (CLASS A)
--------------------------------------------------------------------------------
The total
return for
Class A Shares
for the 9-month
period ended
September 30,
1999 was -
0.05%.
Best Quarter
Q2 '96 +15.57%
Worst Quarter
Q3 '98 -32.23%
[BAR GRAPH APPEARS HERE]
1993 31.16%
1994 -14.82%
1995 8.62%
1996 21.77%
1997 30.18%
1998 -16.87%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year 5 Years Since Inception --------------------------------------------------------------- Class A (Inception 10/22/92) Including Sales Charges (21.44)% 2.89% 9.32% Russell 2000 Value Index* (6.44)% 13.12% 16.64% Russell 2000 Index** (2.55)% 11.89% 14.91% --------------------------------------------------------------- Class B (Inception 5/1/96) Including CDSC (21.64)% N/A 2.67% Russell 2000 Value Index* (6.44)% N/A 13.29% Russell 2000 Index** (2.55)% N/A 8.86% --------------------------------------------------------------- Class C (Inception 8/15/97) Including CDSC (18.26)% N/A (8.46)% Russell 2000 Value Index* (6.44)% N/A 2.50% Russell 2000 Index** (2.55)% N/A 2.84% --------------------------------------------------------------- |
*The Russell 2000 Value Index, an unmanaged index of common stock prices,
is replacing the Russell 2000 Index as the Small Cap Value Fund's perfor-
mance benchmark. The Russell 2000 Value Index includes more value-oriented
stocks and, therefore, is expected to be a better benchmark comparison for
the Fund's performance. The Index figures do not reflect any fees or
expenses.
**The Russell 2000 Index is an unmanaged index of common stock prices. The
Index figures do not reflect any fees or expenses.
[This page intentionally left blank]
Fund Fees and Expenses (Class A, B and C Shares)
This table describes the fees and expenses that you would pay if you buy and hold Class A, Class B, or Class C Shares of a Fund.
Balanced Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.65% 0.65% 0.65%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.42% 0.42% 0.42%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.32% 2.07% 2.07%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be termi- nated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without share- holder approval.
Balanced Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.65% 0.65% 0.65%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.20% 0.20% 0.20%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.10% 1.85% 1.85%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
Growth and Income Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.70% 0.70% 0.70%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.25% 0.25% 0.25%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.20% 1.95% 1.95%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Growth and Income Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.70% 0.70% 0.70%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.24% 0.24% 0.24%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.19% 1.94% 1.94%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
CORE Large Cap Value
Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.60% 0.60% 0.60%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.36% 0.36% 0.36%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.21% 1.96% 1.96%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
CORE Large Cap Value
Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.60% 0.60% 0.60%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.19% 0.19% 0.19%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.04% 1.79% 1.79%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
CORE U.S. Equity Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees7 0.75% 0.75% 0.75%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.24% 0.24% 0.24%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.24% 1.99% 1.99%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current waivers and expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The waivers and expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
CORE U.S. Equity Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees7 0.70% 0.70% 0.70%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.19% 0.19% 0.19%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current waivers
and expense limitations) 1.14% 1.89% 1.89%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
CORE Large Cap Growth
Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees7 0.75% 0.75% 0.75%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.26% 0.26% 0.26%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.26% 2.01% 2.01%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current waivers and expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The waivers and expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
CORE Large Cap Growth
Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees7 0.60% 0.60% 0.60%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.19% 0.19% 0.19%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current waivers
and expense limitations) 1.04% 1.79% 1.79%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
CORE Small Cap Equity
Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.85% 0.85% 0.85%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.57% 0.57% 0.57%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.67% 2.42% 2.42%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
CORE Small Cap Equity
Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.85% 0.85% 0.85%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.23% 0.23% 0.23%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.33% 2.08% 2.08%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
Capital Growth Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.22% 0.22% 0.22%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.47% 2.22% 2.22%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Capital Growth Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.19% 0.19% 0.19%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.44% 2.19% 2.19%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
Strategic Growth Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 2.56% 2.56% 2.56%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 3.81% 4.56% 4.56%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Strategic Growth Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.19% 0.19% 0.19%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.44% 2.19% 2.19%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
Growth Opportunities
Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 2.85% 2.85% 2.85%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 4.10% 4.85% 4.85%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Growth Opportunities
Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.19% 0.19% 0.19%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.44% 2.19% 2.19%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
Mid Cap Value Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.75% 0.75% 0.75%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.37% 0.37% 0.37%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.37% 2.12% 2.12%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Mid Cap Value Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.75% 0.75% 0.75%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.29% 0.29% 0.29%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.29% 2.04% 2.04%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
Small Cap Value Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.36% 0.36% 0.36%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 1.61% 2.36% 2.36%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Small Cap Value Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.25% 0.25% 0.25%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.50% 2.25% 2.25%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
Large Cap Value Fund
-----------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.75% 0.75% 0.75%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 1.16% 1.16% 1.16%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 2.16% 2.91% 2.91%
--------------------------------------------------------------------------
|
See page 46 for all other footnotes.
* As a result of the current waivers and expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The waivers and expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Large Cap Value Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.75% 0.75% 0.75%
Distribution and Service Fees 0.25% 1.00% 1.00%
Other Expenses8 0.25% 0.25% 0.25%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current waivers
and expense limitations) 1.25% 2.00% 2.00%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
/1/The maximum sales charge is a percentage of the offering price. A CDSC of
1% is imposed on certain redemptions (within 18 months of purchase) of
Class A Shares sold without an initial sales charge as part of an invest-
ment of $1 million or more.
/2/The maximum CDSC is a percentage of the lesser of the NAV at the time of
the redemption or the NAV when the shares were originally purchased.
/3/A CDSC is imposed upon Class B Shares redeemed within six years of pur-
chase at a rate of 5% in the first year, declining to 1% in the sixth
year, and eliminated thereafter.
/4/A CDSC of 1% is imposed on Class C Shares redeemed within 12 months of
purchase.
/5/A transaction fee of $7.50 may be charged for redemption proceeds paid by
wire. In addition to free reinvestments of dividends and distributions in
shares of other Goldman Sachs Funds or shares of the Goldman Sachs Insti-
tutional Liquid Assets Portfolios (the "ILA Portfolios") and free auto-
matic exchanges pursuant to the Automatic Exchange Program, six free
exchanges are permitted in each 12-month period. A fee of $12.50 may be
charged for each subsequent exchange during such period.
/6/The Fund's operating expenses for the current fiscal year have been annualized for the seven-month period (February 1, 1999 through August 31, 1999). The operating expenses for the Strategic Growth, Growth Opportuni- ties and Large Cap Value Funds are estimated for the current year. /7/The Investment Adviser has voluntarily agreed not to impose a portion of the management fee on the CORE U.S. Equity Fund and the CORE Large Cap Growth Fund equal to 0.05% and 0.15%, respectively, of such Funds' average daily net assets. As a result of fee waivers, the current management fees of the CORE U.S. Equity Fund and CORE Large Cap Growth Fund are 0.70% and 0.60%, respectively, of such Fund's average daily net assets. The waivers may be terminated at any time at the option of the Investment Adviser. /8/"Other Expenses" include transfer agency fees equal to 0.19% of the aver- age daily net assets of each Fund's Class A, B and C Shares, plus all other ordinary expenses not detailed above. The Investment Adviser has voluntarily agreed to reduce or limit "Other Expenses" (excluding manage- ment fees, distribution and service fees, transfer agency fees, taxes, interest and brokerage fees and litigation, indemnification and other extraordinary expenses) to the following percentages of each Fund's aver- age daily net assets:
Other
Fund Expenses
---------------------------
Balanced 0.01%
Growth and
Income 0.05%
CORE Large Cap
Value 0.00%
CORE U.S. Equity 0.00%
CORE Large Cap
Growth 0.00%
CORE Small Cap
Equity 0.04%
Capital Growth 0.00%
Strategic Growth 0.00%
Growth
Opportunities 0.00%
Mid Cap Value 0.10%
Small Cap Value 0.06%
Large Cap Value 0.06%
|
FUND FEES AND EXPENSES
Example
The following Example is intended to help you compare the cost of investing in
a Fund (without the waivers and expense limitations) with the cost of investing
in other mutual funds. The Example assumes that you invest $10,000 in Class A,
B or C Shares of a Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that a Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years --------------------------------------------------------- Balanced Class A Shares $677 $945 $1,234 $2,053 Class B Shares - Assuming complete redemption at end of period $710 $949 $1,314 $2,208 - Assuming no redemption $210 $649 $1,114 $2,208 Class C Shares - Assuming complete redemption at end of period $310 $649 $1,114 $2,400 - Assuming no redemption $210 $649 $1,114 $2,400 --------------------------------------------------------- Growth and Income Class A Shares $666 $910 $1,173 $1,925 Class B Shares - Assuming complete redemption at end of period $698 $912 $1,252 $2,080 - Assuming no redemption $198 $612 $1,052 $2,080 Class C Shares - Assuming complete redemption at end of period $298 $612 $1,052 $2,275 - Assuming no redemption $198 $612 $1,052 $2,275 --------------------------------------------------------- CORE Large Cap Value Class A Shares $667 $913 1,178 1,935 Class B Shares - Assuming complete redemption at end of period $699 $915 1,257 2,091 - Assuming no redemption $199 $615 1,057 2,091 Class C Shares - Assuming complete redemption at end of period $299 $615 1,057 2,285 - Assuming no redemption $199 $615 1,057 2,285 --------------------------------------------------------- |
Fund Fees and Expenses continued
Fund 1 Year 3 Years 5 Years 10 Years --------------------------------------------------------- CORE U.S. Equity Class A Shares $669 $ 922 $1,194 $1,967 Class B Shares - Assuming complete redemption at end of period $702 $ 924 $1,273 $2,123 - Assuming no redemption $202 $ 624 $1,073 $2,123 Class C Shares - Assuming complete redemption at end of period $302 $ 624 $1,073 $2,317 - Assuming no redemption $202 $ 624 $1,073 $2,317 --------------------------------------------------------- CORE Large Cap Growth Class A Shares $671 $ 928 $1,204 $1,989 Class B Shares - Assuming complete redemption at end of period $704 $ 930 $1,283 $2,144 - Assuming no redemption $204 $ 630 $1,083 $2,144 Class C Shares - Assuming complete redemption at end of period $304 $ 630 $1,083 $2,338 - Assuming no redemption $204 $ 630 $1,083 $2,338 --------------------------------------------------------- CORE Small Cap Equity Class A Shares $710 $1,048 $1,407 $2,417 Class B Shares - Assuming complete redemption at end of period $745 $1,055 $1,491 $2,571 - Assuming no redemption $245 $ 755 $1,291 $2,571 Class C Shares - Assuming complete redemption at end of period $345 $ 755 $1,291 $2,756 - Assuming no redemption $245 $ 755 $1,291 $2,756 --------------------------------------------------------- Capital Growth Class A Shares $691 $ 989 $1,309 $2,211 Class B Shares - Assuming complete redemption at end of period $725 $ 994 $1,390 $2,365 - Assuming no redemption $225 $ 694 $1,190 $2,365 Class C Shares - Assuming complete redemption at end of period $325 $ 694 $1,190 $2,554 - Assuming no redemption $225 $ 694 $1,190 $2,554 --------------------------------------------------------- Strategic Growth Class A Shares $912 $1,650 N/A N/A Class B Shares - Assuming complete redemption at end of period $957 $1,677 N/A N/A - Assuming no redemption $457 $1,377 N/A N/A Class C Shares - Assuming complete redemption at end of period $557 $1,377 N/A N/A - Assuming no redemption $457 $1,377 N/A N/A --------------------------------------------------------- |
FUND FEES AND EXPENSES
Fund 1 Year 3 Years 5 Years 10 Years --------------------------------------------------------- Growth Opportunities Class A Shares $930 $1,725 N/A N/A Class B Shares - Assuming complete redemption at end of period $985 $1,758 N/A N/A - Assuming no redemption $485 $1,458 N/A N/A Class C Shares - Assuming complete redemption at end of period $585 $1,458 N/A N/A - Assuming no redemption $485 $1,458 N/A N/A --------------------------------------------------------- Mid Cap Value Class A Shares $682 $ 960 $1,259 $2,106 Class B Shares - Assuming complete redemption at end of period $715 $ 964 $1,339 $2,261 - Assuming no redemption $215 $ 664 $1,139 $2,261 Class C Shares - Assuming complete redemption at end of period $315 $ 664 $1,139 $2,452 - Assuming no redemption $215 $ 664 $1,139 $2,452 --------------------------------------------------------- Small Cap Value Class A Shares $705 $1,030 $1,378 $2,356 Class B Shares - Assuming complete redemption at end of period $739 $1,036 $1,460 $2,510 - Assuming no redemption $239 $ 736 $1,260 $2,510 Class C Shares - Assuming complete redemption at end of period $339 $ 736 $1,260 $2,696 - Assuming no redemption $239 $ 736 $1,260 $2,696 --------------------------------------------------------- Large Cap Value Class A Shares $757 $1,189 N/A N/A Class B Shares - Assuming complete redemption at end of period $794 $1,201 N/A N/A - Assuming no redemption $294 $ 901 N/A N/A Class C Shares - Assuming complete redemption at end of period $394 $ 901 N/A N/A - Assuming no redemption $294 $ 901 N/A N/A --------------------------------------------------------- |
Fund Fees and Expenses continued
The hypothetical example assumes that a CDSC will not apply to redemptions of Class A Shares within the first 18 months. Class B Shares convert to Class A Shares eight years after purchase; therefore, Class A expenses are used in the hypothetical example after year eight.
Certain institutions that sell Fund shares and/or their salespersons may receive other compensation in connection with the sale and distribution of Class A, Class B and Class C Shares for services to their customers' accounts and/or the Funds. For additional information regarding such compensation, see "What Should I Know When I Purchase Shares Through An Authorized Dealer?"
Service Providers
INVESTMENT ADVISERS
Investment Adviser Fund
---------------------------------------------------------------------
Goldman Sachs Asset Management ("GSAM") Balanced
32 Old Slip Growth and Income
New York, New York 10005 CORE Large Cap Value
CORE Large Cap Growth
CORE Small Cap Equity
Strategic Growth
Growth Opportunities
Mid Cap Value
Small Cap Value
Large Cap Value
---------------------------------------------------------------------
Goldman Sachs Funds Management, L.P. ("GSFM") CORE U.S. Equity
32 Old Slip Capital Growth
New York, New York 10005
---------------------------------------------------------------------
|
As of September 1, 1999, the Investment Management Division ("IMD") was established as a new operating division of Goldman Sachs. This newly created entity includes GSAM and GSFM. Goldman Sachs registered as an investment adviser in 1981. GSFM, a registered investment adviser since 1990, is a Del- aware limited partnership which is an affiliate of Goldman Sachs. The Goldman Sachs Group, L.P., which controlled the Investment Advisers, merged into the Goldman Sachs Group, Inc. as a result of an initial public offer- ing. As of September 30, 1999, GSAM and GSFM, along with other units of IMD, have assets under management of $203 billion.
The Investment Adviser provides day-to-day advice regarding the Funds' port- folio transactions. The Investment Adviser makes the investment decisions for the Funds and places purchase and sale orders for the Funds' portfolio transactions in U.S. and foreign markets. As permitted by applicable law, these orders may be directed to any brokers, including Goldman Sachs and its affiliates. While the Investment Adviser is ultimately responsible for the management of the Funds, it is able to draw upon the research and expertise of its asset management affiliates for portfolio decisions and management with respect to certain portfolio securities. In addition, the Investment Adviser has access to the research and certain proprietary technical models developed by Goldman Sachs, and will apply quantitative and qualitative analysis in determining the appropriate allocations among categories of issuers and types of securities.
The Investment Adviser also performs the following additional services for
the Funds:
. Supervises all non-advisory operations of the Funds
. Provides personnel to perform necessary executive, administrative and
clerical services to the Funds
. Arranges for the preparation of all required tax returns, reports to
shareholders, prospectuses and statements of additional information and
other reports filed with the Securities and Exchange Commission (the
"SEC") and other regulatory authorities
. Maintains the records of each Fund
. Provides office space and all necessary office equipment and services
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the Investment Adviser is entitled to the following fees, computed daily and payable monthly, at the annual rates listed below (as a percentage of each respective Fund's average daily net assets):
Actual Rate
For the Fiscal
Period Ended
Contractual Rate August 31, 1999
---------------------------------------------------------
GSAM:
---------------------------------------------------------
Balanced 0.65% 0.65%
---------------------------------------------------------
Growth and Income 0.70% 0.70%
---------------------------------------------------------
CORE Large Cap Value 0.60% 0.60%
---------------------------------------------------------
CORE Large Cap Growth 0.75% 0.60%
---------------------------------------------------------
CORE Small Cap Equity 0.85% 0.85%
---------------------------------------------------------
Strategic Growth 1.00% 1.00%
---------------------------------------------------------
Growth Opportunities 1.00% 1.00%
---------------------------------------------------------
Mid Cap Value 0.75% 0.75%
---------------------------------------------------------
Small Cap Value 1.00% 1.00%
---------------------------------------------------------
Large Cap Value 0.75% N/A
---------------------------------------------------------
GSFM:
---------------------------------------------------------
CORE U.S. Equity 0.75% 0.70%
---------------------------------------------------------
Capital Growth 1.00% 1.00%
---------------------------------------------------------
|
The difference, if any, between the stated fees and the actual fees paid by the Funds reflects that the Investment Adviser did not charge the full amount of the fees to which it would have been entitled. The Investment Adviser may discontinue or modify any such voluntary limitations in the future at its discretion.
SERVICE PROVIDERS
FUND MANAGERS
M. Roch Hillenbrand, a Managing Director of Goldman Sachs since 1997, is the Head of Global Equities for GSAM, overseeing the United States, Europe, Japan, and non-Japan Asia. In this capacity, he is responsible for managing the group as it defines and implements global portfolio management processes that are consistent, reliable and predictable. Since 1981, Mr. Hillenbrand has been President of Commodities Corporation LLC, of which Goldman Sachs is the parent company. Over the course of his 19-year career at Commodities Corporation, Mr. Hillenbrand has had extensive experience in dealing with internal and external investment managers who have managed a range of futures and equities strategies across multiple markets, using a variety of styles.
Value Team
.Thirteen portfolio managers/analysts compose the Investment Adviser's value
investment team
.Multi-sector focus provides a balanced perspective
.Across all value products, the Investment Adviser leverages the industry
research expertise of its small, mid and large cap investment teams
Value Team
Years
Fund Primarily
Name and Title Responsibility Responsible Five Year Employment History
-------------------------------------------------------------------------------
Eileen A. Portfolio Since Ms. Aptman joined the Investment
Aptman Manager-- 1996 Adviser as a research analyst in
Vice President Mid Cap Value 1997 1993. She became a portfolio
Small Cap Value manager in 1996.
-------------------------------------------------------------------------------
Matthew B. Portfolio Since Mr. McLennan joined the
McLennan Manager-- 1996 Investment Adviser as a research
Vice President Small Cap Value 1998 analyst in 1995 and became a
Mid Cap Value portfolio manager in 1996. From
1994 to 1995, he worked in the
Investment Banking Division of
Goldman Sachs in Australia. From
1991 to 1994, Mr. McLennan
worked at Queensland Investment
Corporation in Australia.
-------------------------------------------------------------------------------
Eileen Rominger Senior Portfolio Since Ms. Rominger joined the
Managing Manager-- Growth 1999 Investment Adviser as a senior
Director and Income 1999 portfolio manager in 1999. From
Mid Cap Value 1999 1981 to 1999, she worked at
Small Cap Value 1999 Oppenheimer Capital, most
Large Cap Value 1999 recently as a senior portfolio
Balanced manager.
(Equity)
-------------------------------------------------------------------------------
|
Years
Fund Primarily
Name and Title Responsibility Responsible Five Year Employment History
---------------------------------------------------------------------------
Karma Wilson Portfolio Since Ms. Wilson joined the
Vice President Manager-- 1998 Investment Adviser as a
Balanced 1998 portfolio manager in 1994.
(Equity) 1998 Prior to 1994, she was an
Growth and 1999 investment analyst with
Income Bankers Trust Australia Ltd.
Mid Cap Value
Large Cap Value
---------------------------------------------------------------------------
|
Quantitative Equity Team
.A stable and growing team supported by an extensive internal staff
.Access to the research ideas of Goldman Sachs' renowned Global Investment
Research Department
.More than $23 billion in equities currently under management
Years
Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
------------------------------------------------------------------------------------------
Melissa Brown Senior Portfolio Manager-- Since Ms. Brown joined the
Vice President CORE Large Cap Value 1998 Investment Adviser as a
CORE U.S. Equity 1998 portfolio manager in
CORE Large Cap Growth 1998 1998. From
CORE Small Cap Equity 1998 1984 to 1998, she was
the
director of Quantitative
Equity Research and
served on the Investment
Policy Committee at
Prudential Securities.
------------------------------------------------------------------------------------------
Kent A. Clark Senior Portfolio Manager-- Since Mr. Clark joined the
Managing CORE U.S. Equity 1996 Investment Adviser as a
Director CORE Large Cap Growth 1997 portfolio manager in the
CORE Small Cap Equity 1997 quantitative equity
CORE Large Cap Value 1998 management team in 1992.
------------------------------------------------------------------------------------------
Robert C. Jones Senior Portfolio Manager-- Since Mr. Jones joined the
Managing CORE U.S. Equity 1991 Investment Adviser as a
Director CORE Large Cap Growth 1997 portfolio manager in
CORE Small Cap Equity 1997 1989.
CORE Large Cap Value 1998
------------------------------------------------------------------------------------------
Victor H. Senior Portfolio Manager-- Since Mr. Pinter joined the
Pinter CORE U.S. Equity 1996 Investment Adviser as a
Vice President CORE Large Cap Growth 1997 research analyst in
CORE Small Cap Equity 1997 1990. He became a
CORE Large Cap Value 1998 portfolio manager in
1992.
------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Growth Equity Investment Team
.18 year consistent investment style applied through diverse and complete
market cycles
.More than $12 billion in equities currently under management
.More than 250 client account relationships
.A portfolio management and analytical team with more than 150 years com-
bined investment experience
Growth Equity Investment Team
Years
Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
------------------------------------------------------------------------------------------
George D. Adler Senior Portfolio Manager-- Since Mr. Adler joined the
Vice President Balanced (Equity) 1997 Investment Adviser as a
Capital Growth 1997 portfolio manager in
Strategic Growth 1999 1997. From 1990 to 1997,
Growth Opportunities 1999 he was a portfolio
manager at Liberty
Investment Management,
Inc. ("Liberty").
------------------------------------------------------------------------------------------
Steve Barry Senior Portfolio Manager-- Since Mr. Barry joined the
Vice President Growth Opportunities 1999 Investment Adviser as a
portfolio manager in
1999. From 1988 to 1999,
he was a portfolio
manager at Alliance
Capital Management.
------------------------------------------------------------------------------------------
Robert G. Senior Portfolio Manager-- Since Mr. Collins joined the
Collins Capital Growth 1997 Investment Adviser as
Vice President Balanced (Equity) 1998 portfolio manager and
Strategic Growth 1999 Co-Chair of the Growth
Growth Opportunities 1999 Equity Investment
Committee in 1997. From
1991 to 1997, he was a
portfolio manager at
Liberty. His past
experience includes work
as a special situations
analyst with
Raymond James &
Associates for
five years.
------------------------------------------------------------------------------------------
Herbert E. Senior Portfolio Manager-- Since Mr. Ehlers joined the
Ehlers Capital Growth 1997 Investment Adviser as a
Managing Balanced (Equity) 1998 senior portfolio manager
Director Strategic Growth 1999 and Chief Investment
Growth Opportunities 1999 Officer of the Growth
Equity team in 1997.
From 1994 to 1997, he
was the Chief Investment
Officer and Chairman of
Liberty. He was a
portfolio manager and
President at Liberty's
predecessor firm, Eagle
Asset Management
("Eagle"), from 1984 to
1994.
------------------------------------------------------------------------------------------
|
Years
Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
------------------------------------------------------------------------------------------
Gregory H. Senior Portfolio Manager-- Since Mr. Ekizian joined the
Ekizian Capital Growth 1997 Investment Adviser as
Vice President Balanced (Equity) 1998 portfolio manager and
Strategic Growth 1999 Co-Chair of the Growth
Growth Opportunities 1999 Equity Investment
Committee in 1997. From
1990 to 1997, he was a
portfolio manager at
Liberty and its
predecessor firm, Eagle.
------------------------------------------------------------------------------------------
Scott Kolar Portfolio Manager--Capital Since Mr. Kolar joined the
Associate Growth 1999 Investment Adviser as an
Strategic Growth equity analyst in 1997
and became a portfolio
manager in 1999. From
1994 to 1997, he was an
equity analyst and
information systems
specialist at Liberty.
------------------------------------------------------------------------------------------
David G. Shell Senior Portfolio Manager-- Since Mr. Shell joined the
Vice President Capital Growth 1997 Investment Adviser as a
Balanced (Equity) 1998 portfolio manager in
Strategic Growth 1999 1997. From 1987 to 1997,
Growth Opportunities 1999 he was a portfolio
manager at Liberty and
its predecessor firm,
Eagle.
------------------------------------------------------------------------------------------
Ernest C. Senior Portfolio Manager-- Since Mr. Segundo joined the
Segundo, Jr. Capital Growth 1997 Investment Adviser as a
Vice President Balanced (Equity) 1998 portfolio manager in
Strategic Growth 1999 1997. From 1992 to 1997,
Growth Opportunities 1999 he was a portfolio
manager at Liberty.
------------------------------------------------------------------------------------------
|
Fixed-Income Portfolio Management Team
.Fixed-income portfolio management is comprised of a deep team of sector
specialists
.The team strives to maximize risk-adjusted returns by de-emphasizing inter-
est rate anticipation and focusing on security selection and sector alloca-
tion
.The team manages approximately $29 billion in fixed-income assets for retail, institutional and high net worth clients
Fixed-Income Portfolio Management Team
Years
Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
--------------------------------------------------------------------------------
Jonathan A. Senior Portfolio Since Mr. Beinner joined the
Beinner Manager-- 1994 Investment Adviser as a
Managing Balanced (Fixed- portfolio manager in 1990.
Director and Income)
Co-Head U.S.
Fixed Income
--------------------------------------------------------------------------------
C. Richard Lucy Senior Portfolio Since Mr. Lucy joined the Investment
Managing Manager-- 1994 Adviser as a portfolio manager
Director and Balanced (Fixed- in 1992.
Co-Head U.S. Income)
Fixed Income
--------------------------------------------------------------------------------
|
SERVICE PROVIDERS
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the exclusive distributor (the "Distributor") of each Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606-6372, also serves as the Funds' transfer agent (the "Transfer Agent") and, as such, performs various shareholder servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and hold shares of the Funds. Goldman Sachs reserves the right to redeem at any time some or all of the shares acquired for its own account.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS
The involvement of the Investment Adviser, Goldman Sachs and their affili- ates in the management of, or their interest in, other accounts and other activities of Goldman Sachs may present conflicts of interest with respect to a Fund or limit a Fund's investment activities. Goldman Sachs and its affiliates engage in proprietary trading and advise accounts and funds which have investment objectives similar to those of the Funds and/or which engage in and compete for transactions in the same types of securities, currencies and instruments as the Funds. Goldman Sachs and its affiliates will not have any obligation to make available any information regarding their proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of the Funds. The results of a Fund's investment activities, therefore, may differ from those of Goldman Sachs and its affiliates, and it is possible that a Fund could sustain losses during periods in which Goldman Sachs and its affili- ates and other accounts achieve significant profits on their trading for proprietary or other accounts. In addition, the Funds may, from time to time, enter into transactions in which other clients of Goldman Sachs have an adverse interest. A Fund's activities may be limited because of regula- tory restrictions applicable to Goldman Sachs and its affiliates, and/or their internal policies designed to comply with such restrictions.
YEAR 2000
Many computer systems were designed using only two digits to signify the year (for example, "98" for "1998"). On January 1, 2000, if these computer systems are not corrected, they may incorrectly interpret "00" as the year "1900" rather than the year "2000," leading to computer shutdowns or errors (commonly
known as the "Year 2000 Problem"). To the extent these systems conduct forward-looking calculations, these computer problems may occur prior to January 1, 2000. Like other investment companies and financial and business organizations, the Funds could be adversely affected in their ability to process securities trades, price securities, provide shareholder account services and otherwise conduct normal business operations if the Investment Adviser or other Fund service providers do not adequately address this prob- lem in a timely manner.
In order to address the Year 2000 Problem, the Investment Adviser has taken the following measures:
.The Investment Adviser has established a dedicated group which analyzed these issues and implemented system modifications to prepare for the Year 2000 Problem.
.The Investment Adviser has either tested with or received assurance from the Fund's other service providers to confirm that they are taking reason- able steps to avoid Year 2000 Problems, and the Investment Adviser contin- ues to monitor the situation.
.The Investment Adviser has developed broad and comprehensive contingency plans, as well as event management plans that will help manage the Fund through the date change by allowing the Investment Adviser to closely moni- tor and respond to Year 2000-related events as they unfold around the world.
Currently, the Investment Adviser does not anticipate that the transition to the 21st century will have any material impact on its ability to continue to service the Funds at current levels.
In addition, the Investment Adviser has undertaken measures to appropriately take into account available information concerning the Year 2000 prepared- ness of the issuers of securities held by the Funds. The Investment Adviser may obtain such Year 2000 information from various sources which the Invest- ment Adviser believes to be reliable, including the issuers' public regula- tory filings. However, the Investment Adviser is not in a position to verify the accuracy or completeness of such information.
At this time, however, no assurance can be given that the actions taken by the Investment Adviser and the Funds' other service providers will be suffi- cient to avoid any adverse effect on the Funds due to the Year 2000 Problem.
Dividends
Each Fund pays dividends from its net investment income and distributions from
net realized capital gains. You may choose to have dividends and distributions
paid in:
.Cash
.Additional shares of the same class of the same Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund. Spe-
cial restrictions may apply for certain ILA Portfolios. See the Additional
Statement.
You may indicate your election on your Account Application. Any changes may be submitted in writing to Goldman Sachs at any time before the record date for a particular dividend or distribution. If you do not indicate any choice, your dividends and distributions will be reinvested automatically in the applicable Fund.
The election to reinvest dividends and distributions in additional shares will not affect the tax treatment of such dividends and distributions, which will be treated as received by you and then used to purchase the shares.
Dividends from net investment income and distributions from net capital gains are declared and paid as follows:
Investment Capital Gains
Fund Income Dividends Distributions
-----------------------------------------------------
Balanced Quarterly Annually
-----------------------------------------------------
Growth and Income Quarterly Annually
-----------------------------------------------------
CORE Large Cap Value Quarterly Annually
-----------------------------------------------------
CORE U.S. Equity Annually Annually
-----------------------------------------------------
CORE Large Cap Growth Annually Annually
-----------------------------------------------------
CORE Small Cap Equity Annually Annually
-----------------------------------------------------
Capital Growth Annually Annually
-----------------------------------------------------
Strategic Growth Annually Annually
-----------------------------------------------------
Growth Opportunities Annually Annually
-----------------------------------------------------
Mid Cap Value Annually Annually
-----------------------------------------------------
Small Cap Value Annually Annually
-----------------------------------------------------
Large Cap Value Annually Annually
-----------------------------------------------------
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DIVIDENDS
From time to time a portion of a Fund's dividends may constitute a return of capital.
At the time of an investor's purchase of shares of a Fund, a portion of the NAV per share may be represented by undistributed income or undistributed realized appreciation of the Fund's portfolio securities. Therefore, subsequent distri- butions on such shares from such income or realized appreciation may be taxable to you even if the NAV of the shares is, as a result of the distributions, reduced below the cost of such shares and the distributions (or portions there- of) represent a return of a portion of the purchase price.
Shareholder Guide
The following section will provide you with answers to some of the most often asked questions regarding buying and selling the Funds' shares.
HOW TO BUY SHARES
How Can I Purchase Class A, Class B And Class C Shares Of The Funds? You may purchase shares of the Funds through:
. Goldman Sachs;
. Authorized Dealers; or
. Directly from Goldman Sachs Trust (the "Trust").
In order to make an initial investment in a Fund, you must furnish to the Fund, Goldman Sachs or your Authorized Dealer the information in the Account Application attached to this Prospectus.
To Open an Account:
. Complete the enclosed Account Application
. Mail your payment and Account Application to:
Your Authorized Dealer
- Purchases by check or Federal Reserve draft should be made payable to
your Authorized Dealer
- Your Authorized Dealer is responsible for forwarding payment promptly
(within three business days) to the Fund
or
Goldman Sachs Funds c/o National Financial Data Services, Inc. ("NFDS"),
P.O. Box 219711, Kansas City, MO 64121-9711
- Purchases by check or Federal Reserve draft should be made payable to
Goldman Sachs Funds - (Name of Fund and Class of Shares)
- NFDS will not accept a check drawn on a foreign bank, a third-party
check, cash, money orders, travelers checques or credit card checks
- Federal funds wire, Automated Clearing House Network ("ACH") transfer or
bank wires should be sent to State Street Bank and Trust Company ("State
Street") (each Fund's custodian). Please call the Funds at 1-800-526-
7384 to get detailed instructions on how to wire your money.
What Is My Minimum Investment In The Funds?
Initial Additional
------------------------------------------------------------------------------
Regular Accounts $1,000 $50
------------------------------------------------------------------------------
Tax-Sheltered Retirement Plans (excluding SIMPLE IRAs and
Education IRAs) $250 $50
------------------------------------------------------------------------------
Uniform Gift to Minors Act Accounts/Uniform Transfer to
Minors Act Accounts $250 $50
------------------------------------------------------------------------------
403(b) Plan Accounts $200 $50
------------------------------------------------------------------------------
SIMPLE IRAs and Education IRAs $50 $50
------------------------------------------------------------------------------
Automatic Investment Plan Accounts $50 $50
------------------------------------------------------------------------------
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What Alternative Sales Arrangements Are Available? The Funds offer three classes of shares through this Prospectus.
------------------------------------------------------------------------
Maximum Amount You Can Buy In The Class A No limit
Aggregate Across Funds
------------------------------------------------
Class B $250,000
------------------------------------------------
Class C $1,000,000
------------------------------------------------------------------------
Initial Sales Charge Class A Applies to purchases of less
than $1 million--varies by
size of investment with a
maximum of 5.5%
------------------------------------------------
Class B None
------------------------------------------------
Class C None
------------------------------------------------------------------------
CDSC Class A 1.00% on certain investments
of $1 million or more if you
sell within 18 months
------------------------------------------------
Class B 6 year declining CDSC with a
maximum of 5%
------------------------------------------------
Class C 1% if shares are redeemed
within 12 months of purchase
------------------------------------------------------------------------
Conversion Feature Class A None
------------------------------------------------
Class B Class B Shares convert to
Class A Shares after 8 years
------------------------------------------------
Class C None
------------------------------------------------------------------------
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What Else Should I Know About Share Purchases?
The Trust reserves the right to:
. Refuse to open an account if you fail to (i) provide a social security
number or other taxpayer identification number; or (ii) certify that such
number is correct (if required to do so under applicable law).
. Reject or restrict any purchase or exchange order by a particular pur-
chaser (or group of related purchasers). This may occur, for example, when
a pattern of
SHAREHOLDER GUIDE
frequent purchases, sales or exchanges of shares of a Fund is evident, or
if purchases, sales or exchanges are, or a subsequent abrupt redemption
might be, of a size that would disrupt management of a Fund.
. Modify or waive the minimum investment amounts.
. Modify the manner in which shares are offered.
. Modify the sales charge rates applicable to future purchases of shares.
The Funds may allow you to purchase shares with securities instead of cash if consistent with a Fund's investment policies and operations and if approved by the Fund's Investment Adviser.
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange shares is deter-
mined by a Fund's NAV and share class. Each class calculates its NAV as fol-
lows:
(Value of Assets of the Class)
- (Liabilities of the Class)
NAV = ________________________________________________
Number of Outstanding Shares of the Class
The Funds' investments are valued based on market quotations or if accurate quotations are not readily available, the fair value of the Fund's invest- ments may be determined in good faith under procedures established by the Trustees.
. NAV per share of each share class is calculated by the Fund's custodian on
each business day as of the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m. New York time). Fund shares will not be
priced on any day the New York Stock Exchange is closed.
. When you buy shares, you pay the NAV next calculated after the Funds
receive your order in proper form, plus any applicable sales charge.
. When you sell shares, you receive the NAV next calculated after the Funds
receive your order in proper form, less any applicable CDSC.
Note: The time at which transactions and shares are priced and the time by which orders must be received may be changed in case of an emergency or if regular trading on the New York Stock Exchange is stopped at a time other than 4:00 p.m. New York time.
Foreign securities may trade in their local markets on days a Fund is closed. As a result, the NAV of a Fund that holds foreign securities may be impacted on days when investors may not purchase or redeem Fund shares.
In addition, the impact of events that occur after the publication of market quotations used by a Fund to price its securities but before the close of regular trading on the New York Stock Exchange will normally not be reflected in a Fund's next
determined NAV unless the Trust, in its discretion, makes an adjustment in light of the nature and materiality of the event, its effect on Fund opera- tions and other relevant factors.
COMMON QUESTIONS ABOUT THE PURCHASE OF CLASS A SHARES
What Is The Offering Price Of Class A Shares? The offering price of Class A Shares of each Fund is the next determined NAV per share plus an initial sales charge paid to Goldman Sachs at the time of purchase of shares. The sales charge varies depending upon the amount you purchase. In some cases, described below, the initial sales charge may be eliminated altogether, and the offering price will be the NAV per share. The current sales charges and commissions paid to Authorized Dealers are as fol- lows:
Sales Charge Maximum Dealer
Sales Charge as as Percentage Allowance as
Amount of Purchase Percentage of of Net Amount Percentage of
(including sales charge, if any) Offering Price Invested Offering Price*
---------------------------------------------------------------------------------
Less than $50,000 5.50% 5.82% 5.00%
$50,000 up to (but less than)
$100,000 4.75 4.99 4.00
$100,000 up to (but less than)
$250,000 3.75 3.90 3.00
$250,000 up to (but less than)
$500,000 2.75 2.83 2.25
$500,000 up to (but less than)
$1 million 2.00 2.04 1.75
$1 million or more 0.00** 0.00** ***
---------------------------------------------------------------------------------
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* Dealer's allowance may be changed periodically. During special promo- tions, the entire sales charge may be allowed to Authorized Dealers. Authorized Dealers to whom substantially the entire sales charge is allowed may be deemed to be "underwriters" under the Securities Act of 1933. ** No sales charge is payable at the time of purchase of Class A Shares of $1 million or more, but a CDSC of 1% may be imposed in the event of certain redemptions within 18 months of purchase. *** The Distributor pays a one-time commission to Authorized Dealers who initiate or are responsible for purchases of $1 million or more of shares of the Funds equal to 1.00% of the amount under $3 million, 0.50% of the next $2 million, and 0.25% thereafter. The Distributor may also pay, with respect to all or a portion of the amount purchased, a commission in accordance with the foregoing schedule to Authorized Dealers who initiate or are responsible for purchases of $500,000 or more by certain pension and profit sharing plans, pension funds and other company-sponsored benefit plans investing in the Funds which sat- isfy the criteria set forth below in "When Are Class A Shares Not Sub- ject To A Sales Load?" or $1 million or more by certain "wrap" accounts. Purchases by such plans will be made at NAV with no initial sales charge, but if all of the shares held are redeemed within 18 months after the end of the calendar month in which such purchase was made, a CDSC of 1% may be imposed upon the plan sponsor or the third party administrator. In addition, Authorized Dealers will remit to the Distributor such payments received in connection with "wrap" accounts in the event that shares are redeemed within 18 months after the end of the calendar month in which the purchase was made.
SHAREHOLDER GUIDE
What Else Do I Need To Know About Class A Shares' CDSC? Purchases of $1 million or more of Class A Shares will be made at NAV with no initial sales charge. However, if you redeem shares within 18 months after the end of the calendar month in which the purchase was made, exclud- ing any period of time in which the shares were exchanged into and remained invested in an equivalent class of an ILA Portfolio, a CDSC of 1% may be imposed. The CDSC may not be imposed if your Authorized Dealer enters into an agreement with the Distributor to return all or an applicable prorated portion of its commission to the Distributor. The CDSC is waived on redemp- tions in certain circumstances. See "In What Situations May The CDSC On Class A, B Or C Shares Be Waived Or Reduced?" below.
When Are Class A Shares Not Subject To A Sales Load?
Class A Shares of the Funds may be sold at NAV without payment of any sales
charge to the following individuals and entities:
. Goldman Sachs, its affiliates or their respective officers, partners,
directors or employees (including retired employees and former partners),
any partnership of which Goldman Sachs is a general partner, any Trustee
or officer of the Trust and designated family members of any of these
individuals;
. Qualified retirement plans of Goldman Sachs;
. Trustees or directors of investment companies for which Goldman Sachs or
an affiliate acts as sponsor;
. Any employee or registered representative of any Authorized Dealer or
their respective spouses, children and parents;
. Banks, trust companies or other types of depository institutions investing
for their own account or investing for discretionary or non-discretionary
accounts;
. Any state, county or city, or any instrumentality, department, authority
or agency thereof, which is prohibited by applicable investment laws from
paying a sales charge or commission in connection with the purchase of
shares of a Fund;
. Pension and profit sharing plans, pension funds and other company-spon-
sored benefit plans that:
. Buy shares of Goldman Sachs Funds worth $500,000 or more; or
. Have 100 or more eligible employees at the time of purchase; or
. Certify that they expect to have annual plan purchases of shares of
Goldman Sachs Funds of $200,000 or more; or
. Are provided administrative services by certain third-party administra-
tors that have entered into a special service arrangement with Goldman
Sachs relating to such plans; or
. Have at the time of purchase aggregate assets of at least $2,000,000;
. "Wrap" accounts for the benefit of clients of broker-dealers, financial
institutions or financial planners, provided they have entered into an
agreement with GSAM specifying aggregate minimums and certain operating
policies and standards;
. Registered investment advisers investing for accounts for which they
receive asset-based fees;
. Accounts over which GSAM or its advisory affiliates have investment dis-
cretion; or
. Shareholders receiving distributions from a qualified retirement plan
invested in the Goldman Sachs Funds and reinvesting such proceeds in a
Goldman Sachs IRA.
You must certify eligibility for any of the above exemptions on your Account Application and notify the Fund if you no longer are eligible for the exemp- tion. The Fund will grant you an exemption subject to confirmation of your entitlement. You may be charged a fee if you effect your transactions through a broker or agent.
How Can The Sales Charge On Class A Shares Be Reduced?
. Right of Accumulation: When buying Class A Shares in Goldman Sachs Funds,
your current aggregate investment determines the initial sales load you
pay. You may qualify for reduced sales charges when the current market
value of holdings (shares at current offering price), plus new purchases,
reaches $50,000 or more. Class A Shares of any of the Goldman Sachs Funds
may be combined under the Right of Accumulation. To qualify for a reduced
sales load, you or your Authorized Dealer must notify the Funds' Transfer
Agent at the time of investment that a quantity discount is applicable.
Use of this service is subject to a check of appropriate records. The
Additional Statement has more information about the Right of Accumulation.
. Statement of Intention: You may obtain a reduced sales charge by means of
a written Statement of Intention which expresses your non-binding commit-
ment to invest in the aggregate $50,000 or more (not counting reinvest-
ments of dividends and distributions) within a period of 13 months in
Class A Shares of one or more Goldman Sachs Fund. Any investments you make
during the period will receive the discounted sales load based on the full
amount of your investment commitment. If the investment commitment of the
Statement of Intention is not met prior to the expiration of the 13-month
period, the entire amount will be subject to the higher applicable sales
charge. By signing the Statement of Intention, you authorize the Transfer
Agent to escrow and redeem Class A Shares in your account to pay this
additional charge. The Additional Statement has more information about the
Statement of Intention, which you should read carefully.
SHAREHOLDER GUIDE
COMMON QUESTIONS ABOUT THE PURCHASE OF CLASS B SHARES
What Is The Offering Price Of Class B Shares? You may purchase Class B Shares of the Funds at the next determined NAV without an initial sales charge. However, Class B Shares redeemed within six years of purchase will be subject to a CDSC at the rates shown in the table below based on how long you held your shares.
The CDSC schedule is as follows:
CDSC as a
Percentage of
Dollar Amount
Year Since Purchase Subject to CDSC
----------------------------------------
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter None
----------------------------------------
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Proceeds from the CDSC are payable to the Distributor and may be used in whole or in part to defray the Distributor's expenses related to providing distribution-related services to the Funds in connection with the sale of Class B Shares, including the payment of compensation to Authorized Dealers. A commission equal to 4% of the amount invested is paid to Authorized Deal- ers.
What Should I Know About The Automatic Conversion Of Class B Shares? Class B Shares of a Fund will automatically convert into Class A Shares of the same Fund at the end of the calendar quarter that is eight years after the purchase date.
If you acquire Class B Shares of a Fund by exchange from Class B Shares of another Goldman Sachs Fund, your Class B Shares will convert into Class A Shares of such Fund based on the date of the initial purchase and the CDSC schedule of that purchase.
If you acquire Class B Shares through reinvestment of distributions, your Class B Shares will convert into Class A Shares based on the date of the initial purchase of the shares on which the distribution was paid.
The conversion of Class B Shares to Class A Shares will not occur at any time the Funds are advised that such conversions may constitute taxable events for federal tax purposes, which the Funds believe is unlikely. If conversions do not occur as a
result of possible taxability, Class B Shares would continue to be subject to higher expenses than Class A Shares for an indeterminate period.
A COMMON QUESTION ABOUT THE PURCHASE OF CLASS C SHARES
What Is The Offering Price Of Class C Shares?
You may purchase Class C Shares of the Funds at the next determined NAV without paying an initial sales charge. However, if you redeem Class C Shares within 12 months of purchase, a CDSC of 1% will normally be deducted from the redemption proceeds; provided that in connection with purchases by pension and profit sharing plans, pension funds and other company-sponsored benefit plans, where all of the Class C Shares are redeemed within 12 months of purchase, a CDSC of 1% may be imposed upon the plan sponsor or third party administrator.
Proceeds from the CDSC are payable to the Distributor and may be used in whole or in part to defray the Distributor's expenses related to providing distribution-related services to the Funds in connection with the sale of Class C Shares, including the payment of compensation to Authorized Dealers. An amount equal to 1% of the amount invested is normally paid by the Dis- tributor to Authorized Dealers.
COMMON QUESTIONS APPLICABLE TO THE PURCHASE OF CLASS A, B
AND C SHARES
What Else Do I Need To Know About The CDSC On Class A, B Or C Shares?
. The CDSC is based on the lesser of the NAV of the shares at the time of
redemption or the original offering price (which is the original NAV).
. No CDSC is charged on shares acquired from reinvested dividends or capi-
tal gains distributions.
. No CDSC is charged on the per share appreciation of your account over
the initial purchase price.
. When counting the number of months since a purchase of Class B or Class
C Shares was made, all payments made during a month will be combined and
considered to have been made on the first day of that month.
. To keep your CDSC as low as possible, each time you place a request to
sell shares, the Funds will first sell any shares in your account that do
not carry a CDSC and then the shares in your account that have been held
the longest.
SHAREHOLDER GUIDE
In What Situations May The CDSC On Class A, B Or C Shares Be Waived Or
Reduced?
The CDSC on Class A, Class B and Class C Shares that are subject to a CDSC
may be waived or reduced if the redemption relates to:
. Retirement distributions or loans to participants or beneficiaries from
pension and profit sharing plans, pension funds and other company-spon-
sored benefit plans (each a "Retirement Plan");
. The death or disability (as defined in Section 72(m)(7) of the Internal
Revenue Code of 1986, as amended (the "Code")) of a participant or benefi-
ciary in a Retirement Plan;
. Hardship withdrawals by a participant or beneficiary in a Retirement Plan;
. Satisfying the minimum distribution requirements of the Code;
. Establishing "substantially equal periodic payments" as described under
Section 72(t)(2) of the Code;
. The separation from service by a participant or beneficiary in a Retire-
ment Plan;
. The death or disability (as defined in Section 72(m)(7) of the Code) of a
shareholder if the redemption is made within one year of the event;
. Excess contributions distributed from a Retirement Plan;
. Distributions from a qualified Retirement Plan invested in the Goldman
Sachs Funds which are being rolled over to a Goldman Sachs IRA; or
. Redemption proceeds which are to be reinvested in accounts or non-regis-
tered products over which GSAM or its advisory affiliates have investment
discretion.
In addition, Class A, B and C Shares subject to a systematic withdrawal plan may be redeemed without a CDSC. The Funds reserve the right to limit such redemptions, on an annual basis, to 12% each of the value of your Class B and C Shares and 10% of the value of your Class A Shares.
How Do I Decide Whether To Buy Class A, B Or C Shares? The decision as to which Class to purchase depends on the amount you invest, the intended length of the investment and your personal situation.
. Class A Shares. If you are making an investment of $50,000 or more that
qualifies for a reduced sales charge, you should consider purchasing Class
A Shares.
. Class B Shares. If you plan to hold your investment for at least six years
and would prefer not to pay an initial sales charge, you might consider
purchasing Class B Shares. By not paying a front-end sales charge, your
entire investment in Class B Shares is available to work for you from the
time you make your initial investment. However, the distribution and serv-
ice fee paid by Class B
Shares will cause your Class B Shares (until conversion to Class A Shares)
to have a higher expense ratio, and thus lower performance and lower divi-
dend payments (to the extent dividends are paid) than Class A Shares. A
maximum purchase limitation of $250,000 in the aggregate normally applies
to Class B Shares.
. Class C Shares. If you are unsure of the length of your investment or plan
to hold your investment for less than six years and would prefer not to
pay an initial sales charge, you may prefer Class C Shares. By not paying
a front-end sales charge, your entire investment in Class C Shares is
available to work for you from the time you make your initial investment.
However, the distribution and service fee paid by Class C Shares will
cause your Class C Shares to have a higher expense ratio, and thus lower
performance and lower dividend payments (to the extent dividends are paid)
than Class A Shares (or Class B Shares after conversion to Class A
Shares).
Although Class C Shares are subject to a CDSC for only 12 months, Class C
Shares do not have the conversion feature applicable to Class B Shares and
your investment will therefore pay higher distribution fees indefinitely.
A maximum purchase limitation of $1,000,000 in the aggregate normally
applies to purchases of Class C Shares.
Note: Authorized Dealers may receive different compensation for selling Class A, Class B or Class C Shares.
In addition to Class A, Class B and Class C Shares, each Fund also offers other classes of shares to investors. These other share classes are subject to different fees and expenses (which affect performance), have different minimum investment requirements and are entitled to different services. Information regarding these other share classes may be obtained from your sales representative or from Goldman Sachs by calling the number on the back cover of this Prospectus.
HOW TO SELL SHARES
How Can I Sell Class A, Class B And Class C Shares Of The Funds? You may arrange to take money out of your account by selling (redeeming) some or all of your shares. Each Fund will redeem its shares upon request on any business day at the NAV next determined after receipt of such request in proper form, subject to any applicable CDSC. You may request that redemption proceeds be sent to you by check or by wire (if the wire instructions are on record). Redemptions may be requested in writing or by telephone.
SHAREHOLDER GUIDE
Instructions For Redemptions:
--------------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund name and Class of Shares
.The dollar amount you want to sell
.How and where to send the proceeds
.Obtain a signature guarantee (see details below)
.Mail your request to:
Goldman Sachs Funds
c/o NFDS
P.O. Box 219711
Kansas City, MO 64121-9711
--------------------------------------------------------------------
By Telephone: If you have not declined the telephone redemption
privilege on your Account Application:
.1-800-526-7384
(8:00 a.m. to 4:00 p.m. New York time)
.You may redeem up to $50,000 of your shares
within any 7 calendar day period
.Proceeds which are sent directly to a Goldman
Sachs brokerage account are not subject to the
$50,000 limit
--------------------------------------------------------------------
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When Do I Need A Signature Guarantee To Redeem Shares?
A signature guarantee is required if:
. You are requesting in writing to redeem shares in an amount over $50,000;
. You would like the redemption proceeds sent to an address that is not your
address of record; or
. You would like to change the bank designated on your Account Application.
A signature guarantee is designed to protect you, the Funds and Goldman Sachs from fraud. You may obtain a signature guarantee from a bank, securi- ties broker or dealer, credit union having the authority to issue signature guarantees, savings and loan association, building and loan association, cooperative bank, federal savings bank or association, national securities exchange, registered securities association or clearing agency, provided that such institution satisfies the standards established by Goldman Sachs. Additional documentation may be required for executors, trustees or corpora- tions or when deemed appropriate by the Transfer Agent.
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor and the Transfer Agent will not be liable for any loss you may incur in the event that the Trust accepts unauthorized tele- phone redemption requests that the Trust reasonably believes to be genuine. The Trust may accept telephone redemption instructions from any person iden- tifying himself
or herself as the owner of an account or the owner's registered representa- tive where the owner has not declined in writing to use this service. Thus, you risk possible losses if a telephone redemption is not authorized by you.
In an effort to prevent unauthorized or fraudulent redemption and exchange
requests by telephone, Goldman Sachs and NFDS each employ reasonable proce-
dures specified by the Trust to confirm that such instructions are genuine.
If reasonable procedures are not employed, the Trust may be liable for any
loss due to unauthorized or fraudulent transactions. The following general
policies are currently in effect:
. All telephone requests are recorded.
. Proceeds of telephone redemption requests will be sent only to your
address of record or authorized bank account designated in the Account
Application (unless you provide written instructions and a signature guar-
antee, indicating another address or account) and exchanges of shares nor-
mally will be made only to an identically registered account.
. Telephone redemptions will not be accepted during the 30-day period fol-
lowing any change in your address of record.
. The telephone redemption option does not apply to shares held in a "street
name" account. "Street name" accounts are accounts maintained and serviced
by your Authorized Dealer. If your account is held in "street name," you
should contact your registered representative of record, who may make tel-
ephone redemptions on your behalf.
. The telephone redemption option may be modified or terminated at any time.
Note: It may be difficult to make telephone redemptions in times of drastic economic or market conditions.
How Are Redemption Proceeds Paid?
By Wire: You may arrange for your redemption proceeds to be wired as federal
funds to the bank account designated in your Account Application. The fol-
lowing general policies govern wiring redemption proceeds:
. Redemption proceeds will normally be wired on the next business day in
federal funds (for a total of one business day delay), but may be paid up
to three business days following receipt of a properly executed wire
transfer redemption request. If you are selling shares you recently paid
for by check, the Fund will pay you when your check has cleared, which may
take up to 15 days. If the Federal Reserve Bank is closed on the day that
the redemption proceeds would ordinarily be wired, wiring the redemption
proceeds may be delayed one additional business day.
. A transaction fee of $7.50 may be charged for payments of redemption pro-
ceeds by wire. Your bank may also charge wiring fees. You should contact
your bank directly to learn whether it charges such fees.
SHAREHOLDER GUIDE
. To change the bank designated on your Account Application, you must send written instructions (with your signature guaranteed) to the Transfer Agent.
. Neither the Trust, Goldman Sachs nor any Authorized Dealer assumes any responsibility for the performance of your bank or any intermediaries in the transfer process. If a problem with such performance arises, you should deal directly with your bank or any such intermediaries. By Check: You may elect to receive your redemption proceeds by check. Redemption proceeds paid by check will normally be mailed to the address of record within three business days of a properly executed redemption request. If you are selling shares you recently paid for by check, the Fund will pay you when your check has cleared, which may take up to 15 days.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
. Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
The Trust reserves the right to:
. Redeem your shares if your account balance is less than $50 as a result of
a redemption. The Funds will not redeem your shares on this basis if the
value of your account falls below the minimum account balance solely as a
result of market conditions. The Funds will give you 60 days' prior writ-
ten notice to allow you to purchase sufficient additional shares of the
Fund in order to avoid such redemption.
. Redeem your shares in other circumstances determined by the Board of
Trustees to be in the best interests of the Trust.
. Pay redemptions by a distribution in-kind of securities (instead of cash).
If you receive redemption proceeds in-kind, you should expect to incur
transaction costs upon the disposition of those securities.
Can I Reinvest Redemption Proceeds In The Same Or Another Goldman Sachs
Fund?
You may redeem shares of a Fund and reinvest a portion or all of the redemp-
tion proceeds (plus any additional amounts needed to round off purchases to
the nearest full share) at NAV. To be eligible for this privilege, you must
hold the shares you want to redeem for at least 30 days and you must rein-
vest the share proceeds within 90 days after you redeem. You may reinvest as
follows:
. Class A or B Shares--Class A Shares of the same Fund or any other Goldman
Sachs Fund
. Class C Shares--Class C Shares of the same Fund or any other Goldman Sachs
Fund
. You should obtain and read the applicable prospectuses before investing in
any other Funds.
. If you pay a CDSC upon redemption of Class A or Class C Shares and then
reinvest in Class A or Class C Shares as described above, your account
will be credited with the amount of the CDSC you paid. The reinvested
shares will, however, continue to be subject to a CDSC. The holding period
of the shares acquired through reinvestment will include the holding
period of the redeemed shares for purposes of computing the CDSC payable
upon a subsequent redemption. For Class B Shares, you may reinvest the
redemption proceeds in Class A Shares at NAV but the amount of the CDSC
paid upon redemption of the Class B Shares will not be credited to your
account.
. The reinvestment privilege may be exercised at any time in connection with
transactions in which the proceeds are reinvested at NAV in a tax-shel-
tered retirement plan. In other cases, the reinvestment privilege may be
exercised once per year upon receipt of a written request.
. You may be subject to tax as a result of a redemption. You should consult
your tax adviser concerning the tax consequences of a redemption and rein-
vestment.
Can I Exchange My Investment From One Fund To Another? You may exchange shares of a Fund at NAV without the imposition of an ini- tial sales charge or CDSC at the time of exchange for shares of the same class or an equivalent class of any other Goldman Sachs Fund. The exchange privilege may be materially modified or withdrawn at any time upon 60 days' written notice to you.
Instructions For Exchanging Shares:
-------------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund names and Class of Shares
.The dollar amount you want to exchange
.Obtain a signature guarantee (see details above)
.Mail the request to:
Goldman Sachs Funds
c/o NFDS
P.O. Box 219711
Kansas City, MO 64121-9711
or for overnight delivery -
Goldman Sachs Funds
c/o NFDS
330 West 9th St.
Poindexter Bldg., 1st Floor
Kansas City, MO 64105
-------------------------------------------------------------------
By Telephone: If you have not declined the telephone exchange
privilege on your Account Application:
.1-800-526-7384 (8:00 a.m. to 4:00 p.m.
New York time)
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|
SHAREHOLDER GUIDE
You should keep in mind the following factors when making or considering an
exchange:
. You should obtain and carefully read the prospectus of the Fund you are
acquiring before making an exchange.
. Six free exchanges are allowed in each 12 month period.
. A $12.50 fee may be charged for each subsequent exchange.
. There is no charge for exchanges made pursuant to the Automatic Exchange
Program.
. The exchanged shares may later be exchanged for shares of the same class
(or an equivalent class) of the original Fund at the next determined NAV
without the imposition of an initial sales charge or CDSC if the amount in
the Fund resulting from such exchanges is less than the largest amount on
which you have previously paid the applicable sales charge.
. When you exchange shares subject to a CDSC, no CDSC will be charged at
that time. The exchanged shares will be subject to the CDSC of the shares
originally held. For purposes of determining the amount of the applicable
CDSC, the length of time you have owned the shares will be measured from
the date you acquired the original shares subject to a CDSC and will not
be affected by a subsequent exchange.
. Eligible investors may exchange certain classes of shares for another
class of shares of the same Fund. For further information, call Goldman
Sachs Funds at 1-800-526-7384.
. All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirements of that Fund.
. Exchanges are available only in states where exchanges may be legally
made.
. It may be difficult to make telephone exchanges in times of drastic eco-
nomic or market conditions.
. Goldman Sachs and NFDS may use reasonable procedures described under "What
Do I Need to Know About Telephone Redemption Requests?" in an effort to
prevent unauthorized or fraudulent telephone exchange requests.
. Telephone exchanges normally will be made only to an identically regis-
tered account. Shares may be exchanged among accounts with different
names, addresses and social security or other taxpayer identification num-
bers only if the exchange instructions are in writing and accompanied by a
signature guarantee.
For federal income tax purposes, an exchange is treated as a redemption of the shares surrendered in the exchange, on which you may be subject to tax, followed by a purchase of shares received in the exchange. You should con- sult your tax adviser concerning the tax consequences of an exchange.
SHAREHOLDER SERVICES
Can I Arrange To Have Automatic Investments Made On A Regular Basis? You may be able to make systematic cash investments through your bank via ACH transfer or your checking account via bank draft each month. Forms for this option are available from Goldman Sachs, your Authorized Dealer or you may check the appropriate box on the Account Application.
Can My Dividends And Distributions From A Fund Be Invested In Other Funds?
You may elect to cross-reinvest dividends and capital gain distributions
paid by a Fund in shares of the same class or an equivalent class of any
other Goldman Sachs Fund.
. Shares will be purchased at NAV.
. No initial sales charge or CDSC will be imposed.
. You may elect cross-reinvestment into an identically registered account or
an account registered in a different name or with a different address,
social security number or taxpayer identification number provided that the
account has been properly established, appropriate signature guarantees
obtained and the minimum initial investment has been satisfied.
Can I Arrange To Have Automatic Exchanges Made On A Regular Basis?
You may elect to exchange automatically a specified dollar amount of shares
of a Fund for shares of the same class or an equivalent class of any other
Goldman Sachs Fund.
. Shares will be purchased at NAV.
. No initial sales charge is imposed.
. Shares subject to a CDSC acquired under this program may be subject to a
CDSC at the time of redemption from the Fund into which the exchange is
made depending upon the date and value of your original purchase.
. Automatic exchanges are made monthly on the 15th day of each month or the
first business day thereafter.
. Minimum dollar amount: $50 per month.
What Else Should I Know About Cross-Reinvestments And Automatic Exchanges?
Cross-reinvestments and automatic exchanges are subject to the following
conditions:
. You must hold $5,000 or more in the Fund which is paying the dividend or
from which the exchange is being made.
SHAREHOLDER GUIDE
. You must invest an amount in the Fund into which cross-reinvestments or
automatic exchanges are being made that is equal to that Fund's minimum
initial investment or continue to cross-reinvest or to make automatic
exchanges until such minimum initial investment is met.
. You should obtain and read the prospectus of the Fund into which dividends
are invested or automatic exchanges are made.
Can I Have Automatic Withdrawals Made On A Regular Basis?
You may draw on your account systematically via check or ACH transfer in any
amount of $50 or more.
. It is normally undesirable to maintain a systematic withdrawal plan at the
same time that you are purchasing additional Class A, Class B or Class C
Shares because of the sales charge imposed on your purchases of Class A
Shares or the imposition of a CDSC on your redemptions of Class A, Class B
or Class C Shares.
. You must have a minimum balance of $5,000 in a Fund.
. Checks are mailed on or about the 25th day of each month.
. Each systematic withdrawal is a redemption and therefore a taxable trans-
action.
. The CDSC applicable to Class A, Class B or Class C Shares redeemed under
the systematic withdrawal plan may be waived.
What Types of Reports Will I Be Sent Regarding My Investment?
You will be provided with a printed confirmation of each transaction in your account and an individual quarterly account statement. A year-to-date state- ment for your account will be provided upon request made to Goldman Sachs. If your account is held in "street name" you may receive your statement and confirmations on a different schedule.
You will also receive an annual shareholder report containing audited finan- cial statements and a semi-annual shareholder report. If you have consented to the delivery of a single copy of shareholder reports, prospectuses and other information to all shareholders who share the same mailing address with your account, you may revoke your consent at any time by contacting Goldman Sachs Funds by phone at 1-800-526-7384 or by mail at Goldman Sachs Funds, 4900 Sears Tower--60th Floor, Chicago, IL 60606-6372. The Funds will begin sending individual copies to you within 30 days after receipt of your revocation.
The Funds do not generally provide sub-accounting services.
What Should I Know When I Purchase Shares Through An Authorized Dealer? Authorized Dealers and other financial intermediaries may provide varying arrangements for their clients to purchase and redeem Fund shares. They may charge additional fees not described in this Prospectus to their customers for such services.
If shares of a Fund are held in a "street name" account with an Authorized Dealer, all recordkeeping, transaction processing and payments of distribu- tions relating to your account will be performed by the Authorized Dealer, and not by the Fund and its Transfer Agent. Since the Funds will have no record of your transactions, you should contact the Authorized Dealer to purchase, redeem or exchange shares, to make changes in or give instructions concerning the account or to obtain information about your account. The transfer of shares in a "street name" account to an account with another dealer or to an account directly with the Fund involves special procedures and will require you to obtain historical purchase information about the shares in the account from the Authorized Dealer.
Authorized Dealers and other financial intermediaries may be authorized to
accept, on behalf of the Trust, purchase, redemption and exchange orders
placed by or on behalf of their customers, and if approved by the Trust, to
designate other intermediaries to accept such orders. In these cases:
. A Fund will be deemed to have received an order that is in proper form
when the order is accepted by an Authorized Dealer or intermediary on a
business day, and the order will be priced at the Fund's NAV per share
(adjusted for any applicable sales charge) next determined after such
acceptance.
. Authorized Dealers and intermediaries are responsible for transmitting
accepted orders to the Funds within the time period agreed upon by them.
You should contact your Authorized Dealer or intermediary to learn whether it is authorized to accept orders for the Trust.
The Investment Adviser, Distributor and/or their affiliates may pay addi- tional compensation from time to time, out of their assets and not as an additional charge to the Funds, to selected Authorized Dealers and other persons in connection with the sale, distribution and/or servicing of shares of the Funds and other Goldman Sachs Funds. Additional compensation based on sales may, but is currently not expected to, exceed 0.50% (annualized) of the amount invested.
DISTRIBUTION SERVICES AND FEES
What Are The Different Distribution And Service Fees Paid By Class A, B and
C Shares?
The Trust has adopted distribution and service plans (each a "Plan") under
which Class A, Class B and Class C Shares bear distribution and service fees
paid to Authorized Dealers and Goldman Sachs. If the fees received by
Goldman Sachs pursuant to the Plans exceed its expenses, Goldman Sachs may
realize a profit from their arrangements. Goldman Sachs pays the distribu-
tion and service fees on a quarterly basis.
SHAREHOLDER GUIDE
Under the Plans, Goldman Sachs is entitled to a monthly fee from each Fund for distribution services equal, on an annual basis, to 0.25%, 0.75% and 0.75%, respectively, of a Fund's average daily net assets attributed to Class A, Class B and Class C Shares. Because these fees are paid out of the Fund's assets on an ongoing basis, over time, these fees will increase the cost of your investment and may cost you more than paying other types of such charges.
The distribution fees are subject to the requirements of Rule 12b-1 under
the Act, and may be used (among other things) for:
. Compensation paid to and expenses incurred by Authorized Dealers, Goldman
Sachs and their respective officers, employees and sales representatives;
. Commissions paid to Authorized Dealers;
. Allocable overhead;
. Telephone and travel expenses;
. Interest and other costs associated with the financing of such compensa-
tion and expenses;
. Printing of prospectuses for prospective shareholders;
. Preparation and distribution of sales literature or advertising of any
type; and
. All other expenses incurred in connection with activities primarily
intended to result in the sale of Class A, Class B and Class C Shares.
In connection with the sale of Class C Shares, Goldman Sachs normally begins paying the 0.75% distribution fee as an ongoing commission to Authorized Dealers after the shares have been held for one year.
PERSONAL ACCOUNT MAINTENANCE SERVICES AND FEES
Under the Plans, Goldman Sachs is also entitled to receive a separate fee equal on an annual basis to 0.25% of each Fund's average daily net assets attributed to Class B or Class C Shares. This fee is for personal and account maintenance services, and may be used to make payments to Goldman Sachs, Authorized Dealers and their officers, sales representatives and employees for responding to inquiries of, and furnishing assistance to, shareholders regarding ownership of their shares or their accounts or simi- lar services not otherwise provided on behalf of the Funds. If the fees received by Goldman Sachs pursuant to the Plans exceed its expenses, Goldman Sachs may realize a profit from this arrangement.
In connection with the sale of Class C Shares, Goldman Sachs normally begins paying the 0.25% ongoing service fee to Authorized Dealers after the shares have been held for one year.
Taxation
TAXABILITY OF DISTRIBUTIONS
As with any investment, you should consider how your investment in the Funds will be taxed. The tax information below is provided as general information. More tax information is available in the Additional Statement. You should consult your tax adviser about the federal, state, local or foreign tax con- sequences of your investment in the Funds.
Unless your investment is an IRA or other tax-advantaged account, you should consider the possible tax consequences of Fund distributions and the sale of your Fund shares.
TAXES ON DISTRIBUTIONS
Distributions you receive from the Funds are generally subject to federal income tax, and may also be subject to state or local taxes. This is true whether you reinvest your distributions in additional Fund shares or receive them in cash. For federal tax purposes, the Funds' income dividend distribu- tions and short-term capital gain distributions are taxable to you as ordi- nary income. Any long-term capital gain distributions are taxable as long- term capital gains, no matter how long you have owned your Fund shares.
Although distributions are generally treated as taxable to you in the year they are paid, distributions declared in October, November or December but paid in January are taxable as if they were paid in December. A percentage of the Funds' dividends paid to corporate shareholders may be eligible for the corporate dividends-received deduction. The Funds will inform sharehold- ers of the source and tax status of all distributions promptly after the close of each calendar year.
Each Fund may be subject to foreign withholding or other foreign taxes on income or gain from certain foreign securities. In general, the Funds may deduct these taxes in computing their taxable income.
If you buy shares of a Fund before it makes a distribution, the distribution will be taxable to you even though it may actually be a return of a portion of your investment. This is known as "buying a dividend."
TAXATION
TAXES ON SALES
Your sale of Fund shares is a taxable transaction for federal income tax purposes, and may also be subject to state and local taxes. For tax purpos- es, the exchange of your Fund shares for shares of a different Goldman Sachs Fund is the same as a sale. When you sell your shares, you will generally recognize a capital gain or loss in an amount equal to the difference between your adjusted tax basis in the shares and the amount received. Gen- erally, this gain or loss is long-term or short-term depending on whether your holding period exceeds twelve months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.
OTHER INFORMATION
When you open your account, you should provide your social security or tax identification number on your Account Application. By law, each Fund must withhold 31% of your taxable distributions and any redemption proceeds if you do not provide your correct taxpayer identification number, or certify that it is correct, or if the IRS instructs the Fund to do so. Non-U.S. investors may be subject to U.S. withholding and estate tax.
Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks
The Funds will be subject to the risks associated with equity securities. "Equity securities" include common stocks, preferred stocks, interests in real estate investment trusts, convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures, limited liability companies and similar enterprises, warrants and stock pur- chase rights. In general, stock values fluctuate in response to the activi- ties of individual companies and in response to general market and economic conditions. Accordingly, the value of the stocks that a Fund holds may decline over short or extended periods. The stock markets tend to be cycli- cal, with periods when stock prices generally rise and periods when prices generally decline. The volatility of equity securities means that the value of your investment in the Funds may increase or decrease. As of the date of this Prospectus, certain stock markets were trading at or close to record high levels and there can be no guarantee that such levels will continue.
To the extent that a Fund invests in fixed-income securities, that Fund will also be subject to the risks associated with its fixed-income securities. These risks include interest rate risk, credit risk and call/extension risk. In general, interest rate risk involves the risk that when interest rates decline, the market value of fixed-income securities tends to increase (al- though many mortgage related securities will have less potential than other debt securities for capital appreciation during periods of declining rates). Conversely, when interest rates increase, the market value of fixed-income securities tends to decline. Credit risk involves the risk that an issuer could default on its obligations, and a Fund will not recover its invest- ment. Call risk and extension risk are normally present in mortgage-backed securities and asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (call risk) or lengthen (exten- sion risk). In general, if interest rates on new mortgage loans fall suffi- ciently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to invest- ors.
The Investment Adviser will not consider the portfolio turnover rate a lim- iting factor in making investment decisions for a Fund. A high rate of port- folio turn-
APPENDIX A
over (100% or more) involves correspondingly greater expenses which must be borne by a Fund and its shareholders. The portfolio turnover rate is calcu- lated by dividing the lesser of the dollar amount of sales or purchases of portfolio securities by the average monthly value of a Fund's portfolio securities, excluding securities having a maturity at the date of purchase of one year or less. See "Financial Highlights" in Appendix B for a state- ment of the Funds' historical portfolio turnover rates.
The following sections provide further information on certain types of secu- rities and investment techniques that may be used by the Funds, including their associated risks. Additional information is provided in the Additional Statement, which is available upon request. Among other things, the Addi- tional Statement describes certain fundamental investment restrictions that cannot be changed without shareholder approval. You should note, however, that all investment objectives and policies not specifically designated as fundamental are non-fundamental and may be changed without shareholder approval. If there is a change in a Fund's investment objective, you should consider whether that Fund remains an appropriate investment in light of your then current financial position and needs.
B. Other Portfolio Risks
Risks of Investing in Small Capitalization Companies and REITs. Each Fund may invest in small capitalization companies and REITs. Investments in small capitalization companies and REITs involve greater risk and portfolio price volatility than investments in larger capitalization stocks. Among the rea- sons for the greater price volatility of these investments are the less cer- tain growth prospects of smaller firms and the lower degree of liquidity in the markets for such securities. Small capitalization companies and REITs may be thinly traded and may have to be sold at a discount from current mar- ket prices or in small lots over an extended period of time. In addition, these securities are subject to the risk that during certain periods the liquidity of particular issuers or industries, or all securities in these investment categories, will shrink or disappear suddenly and without warning as a result of adverse economic or market conditions, or adverse investor perceptions whether or not accurate. Because of the lack of sufficient mar- ket liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Small capitalization companies and REITs include "unseasoned" issuers that do not have an established financial history; often have limited prod- uct lines, markets or financial resources; may depend on or use a few key personnel for management; and may be susceptible to losses and risks of bankruptcy. Transaction costs for these investments are often higher than those of larger capitalization companies. Investments
in small capitalization companies and REITs may be more difficult to price precisely than other types of securities because of their characteristics and lower trading volumes.
Risks of Foreign Investments. Certain Funds may invest in foreign invest- ments. Foreign investments involve special risks that are not typically associated with U.S. dollar denominated or quoted securities of U.S. issuers. Foreign investments may be affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such invest- ments and changes in exchange control regulations (e.g., currency blockage). A decline in the exchange rate of the currency (i.e., weakening of the cur- rency against the U.S. dollar) in which a portfolio security is quoted or denominated relative to the U.S. dollar would reduce the value of the port- folio security. In addition, if the currency in which a Fund receives divi- dends, interest or other payments declines in value against the U.S. dollar before such income is distributed as dividends to shareholders or converted to U.S. dollars, the Fund may have to sell portfolio securities to obtain sufficient cash to pay such dividends.
The introduction of a single currency, the euro, on January 1, 1999 for par- ticipating nations in the European Economic and Monetary Union presents unique uncertainties, including the legal treatment of certain outstanding financial contracts after January 1, 1999 that refer to existing currencies rather than the euro; the establishment and maintenance of exchange rates for currencies being converted into the euro; the fluctuation of the euro relative to non-euro currencies during the transition period from January 1, 1999 to December 31, 2001 and beyond; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union ("EU"), may have an impact on the euro. These or other factors, including political and economic risks, could cause market disruptions, and could adversely affect the value of securities held by the Funds. Because of the number of countries using this single currency, a significant portion of the assets held by the Funds may be denominated in the euro.
Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such proce- dures have been unable to keep pace with the volume of securities transac- tions, thus making it difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. issuers. There may
APPENDIX A
be less publicly available information about a foreign issuer than about a
U.S. issuer. In addition, there is generally less government regulation of
foreign markets, companies and securities dealers than in the United States.
Foreign securities markets may have substantially less volume than U.S.
securities markets and secu-
rities of many foreign issuers are less liquid and more volatile than secu-
rities of comparable domestic issuers. Efforts in foreign countries to reme-
diate potential Year 2000 problems are not as extensive as those in the
United States. As a result, the operations of foreign markets, foreign
issuers and foreign governments may be disrupted by the Year 2000 Problem,
and the investment portfolio of a Fund may be adversely affected. Further-
more, with respect to certain foreign countries, there is a possibility of
nationalization, expropriation or confiscatory taxation, imposition of with-
holding or other taxes on dividend or interest payments (or, in some cases,
capital gains), limitations on the removal of funds or other assets of the
Funds, and political or social instability or diplomatic developments which
could affect investments in those countries.
Concentration of a Fund's assets in one or a few countries and currencies will subject a Fund to greater risks than if a Fund's assets were not geo- graphically concentrated.
Investment in sovereign debt obligations by certain Funds involves risks not present in debt obligations of corporate issuers. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and a Fund may have limited recourse to compel payment in the event of a default. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt, and in turn a Fund's NAV, to a greater extent than the volatility inherent in debt obliga- tions of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the avail- ability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sov- ereign debtor's policy toward international lenders, and the political constraints to which a sovereign debtor may be subject.
Investments in foreign securities may take the form of sponsored and unsponsored American Depository Receipts ("ADRs") and Global Depository Receipts ("GDRs"). Certain Funds may also invest in European Depository Receipts ("EDRs") or other similar instruments representing securities of foreign issuers. ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. Prices of ADRs are quoted in U.S. dollars, and ADRs are traded in the United States. EDRs and GDRs are receipts
evidencing an arrangement with a non-U.S. bank. EDRs and GDRs are not neces- sarily quoted in the same currency as the underlying security.
Risks of Emerging Countries. Certain Funds may invest in securities of issuers located in emerging countries. The risks of foreign investment are heightened when the issuer is located in an emerging country. Emerging coun- tries are generally located in the Asia-Pacific region, Eastern Europe, Latin and South America and Africa. A Fund's purchase and sale of portfolio securities in certain emerging countries may be constrained by limitations as to daily changes in the prices of listed securities, periodic trading or settlement volume and/or limitations on aggregate holdings of foreign investors. Such limitations may be computed based on the aggregate trading volume by or holdings of a Fund, the Investment Adviser, its affiliates and their respective clients and other service providers. A Fund may not be able to sell securities in circumstances where price, trading or settlement vol- ume limitations have been reached.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees which may limit investment in such countries or increase the administrative costs of such investments. For example, certain Asian countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer's outstanding securities or a spe- cific class of securities which may have less advantageous terms (including price) than securities of the issuer available for purchase by nationals. In addition, certain countries may restrict or prohibit investment opportuni- ties in issuers or industries deemed important to national interests. Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by a Fund. The repatriation of both investment income and capital from certain emerging countries is subject to restrictions such as the need for governmental consents. Due to restrictions on direct invest- ment in equity securities in certain Asian countries, it is anticipated that a Fund may invest in such countries through other investment funds in such countries.
Many emerging countries have experienced currency devaluations and substan- tial (and, in some cases, extremely high) rates of inflation, which have had a negative effect on the economies and securities markets of such emerging countries. Economies in emerging countries generally are dependent heavily upon commodity prices and international trade and, accordingly, have been and may continue to be affected adversely by the economies of their trading partners, trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade.
APPENDIX A
Many emerging countries are subject to a substantial degree of economic, political and social instability. Governments of some emerging countries are authoritarian in nature or have been installed or removed as a result of military coups, while governments in other emerging countries have periodi- cally used force to suppress civil dissent. Disparities of wealth, the pace and success of democratization, and ethnic, religious and racial disaffec- tion, among other factors, have also led to social unrest, violence and/or labor unrest in some emerging countries. Unanticipated political or social developments may result in sudden and significant investment losses. Invest- ing in emerging countries involves greater risk of loss due to expropria- tion, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested.
A Fund's investment in emerging countries may also be subject to withholding or other taxes, which may be significant and may reduce the return from an investment in such country to the Fund.
Settlement procedures in emerging countries are frequently less developed and reliable than those in the United States and often may involve a Fund's delivery of securities before receipt of payment for their sale. In addi- tion, significant delays are common in certain markets in registering the transfer of securities. Settlement or registration problems may make it more difficult for a Fund to value its portfolio securities and could cause the Fund to miss attractive investment opportunities, to have a portion of its assets uninvested or to incur losses due to the failure of a counterparty to pay for securities the Fund has delivered or the Fund's inability to com- plete its contractual obligations. The creditworthiness of the local securi- ties firms used by the Fund in emerging countries may not be as sound as the creditworthiness of firms used in more developed countries. As a result, the Fund may be subject to a greater risk of loss if a securities firm defaults in the performance of its responsibilities.
The small size and inexperience of the securities markets in certain emerg- ing countries and the limited volume of trading in securities in those coun- tries may make a Fund's investments in such countries less liquid and more volatile than investments in countries with more developed securities mar- kets (such as the United States, Japan and most Western European countries). A Fund's investments in emerging countries are subject to the risk that the liquidity of a particular investment, or investments generally, in such countries will shrink or disappear suddenly and without warning as a result of adverse economic, market or political conditions or adverse investor per- ceptions, whether or not accurate. Because of the lack of sufficient market liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Invest-
ments in emerging countries may be more difficult to price precisely because of the characteristics discussed above and lower trading volumes.
A Fund's use of foreign currency management techniques in emerging countries may be limited. Due to the limited market for these instruments in emerging countries, the Investment Adviser does not currently anticipate that a sig- nificant portion of the Funds' currency exposure in emerging countries, if any, will be covered by such instruments.
Risks of Derivative Investments. A Fund's transactions, if any, in options, futures, options on futures, swaps, interest rate caps, floors and collars, structured securities and currency transactions involve additional risk of loss. Loss can result from a lack of correlation between changes in the value of derivative instruments and the portfolio assets (if any) being hedged, the potential illiquidity of the markets for derivative instruments, or the risks arising from margin requirements and related leverage factors associated with such transactions. The use of these management techniques also involves the risk of loss if the Investment Adviser is incorrect in its expectation of fluctuations in securities prices, interest rates or currency prices. Each Fund may also invest in derivative investments for non-hedging purposes (that is, to seek to increase total return). Investing for non- hedging purposes is considered a speculative practice and presents even greater risk of loss.
Risks of Illiquid Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities which cannot be disposed of in seven days in
the ordinary course of business at fair value. Illiquid securities include:
.Both domestic and foreign securities that are not readily marketable
.Certain stripped mortgage-backed securities
.Repurchase agreements and time deposits with a notice or demand period of
more than seven days
.Certain over-the-counter options
.Certain structured securities and all swap transactions
.Certain restricted securities, unless it is determined, based upon a review of the trading markets for a specific restricted security, that such restricted security is eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("144A Securities") and, therefore, is liquid.
Investing in 144A Securities may decrease the liquidity of a Fund's portfo- lio to the extent that qualified institutional buyers become for a time uninterested in purchasing these restricted securities. The purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of com- parable securities for which a liquid market exists.
APPENDIX A
Credit Risks. Debt securities purchased by the Funds may include securities (including zero coupon bonds) issued by the U.S. government (and its agen- cies, instrumentalities and sponsored enterprises), foreign governments, domestic and foreign corporations, banks and other issuers. Further informa- tion is provided in the Additional Statement.
Debt securities rated BBB or higher by Standard & Poor's or Baa or higher by Moody's are considered "investment grade." Securities rated BBB or Baa are considered medium-grade obligations with speculative characteristics, and adverse economic conditions or changing circumstances may weaken their issuers' capacity to pay interest and repay principal. A security will be deemed to have met a rating requirement if it receives the minimum required rating from at least one such rating organization even though it has been rated below the minimum rating by one or more other rating organizations, or if unrated by such rating organizations, determined by the Investment Adviser to be of comparable credit quality.
Certain Funds may invest in fixed-income securities rated BB or Ba or below (or comparable unrated securities) which are commonly referred to as "junk bonds." Junk bonds are considered predominantly speculative and may be ques- tionable as to principal and interest payments.
In some cases, junk bonds may be highly speculative, have poor prospects for reaching investment grade standing and be in default. As a result, invest- ment in such bonds will present greater speculative risks than those associ- ated with investment in investment grade bonds. Also, to the extent that the rating assigned to a security in a Fund's portfolio is downgraded by a rat- ing organization, the market price and liquidity of such security may be adversely affected.
Temporary Investment Risks. Each Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. government securities
.Commercial paper rated at least A-2 by Standard & Poor's or P-2 by Moody's
.Certificates of deposit
.Bankers' acceptances
.Repurchase agreements
.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year
When a Fund's assets are invested in such instruments, the Fund may not be achieving its investment objective.
C. Portfolio Securities and Techniques
This section provides further information on certain types of securities and investment techniques that may be used by the Funds, including their associ- ated risks. Further information is provided in the Additional Statement, which is available upon request.
Convertible Securities. Each Fund may invest in convertible securities. Con- vertible securities are preferred stock or debt obligations that are con- vertible into common stock. Convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar qual- ity. Convertible securities in which a Fund invests are subject to the same rating criteria as its other investments in fixed-income securities. Con- vertible securities have both equity and fixed-income risk characteristics. Like all fixed-income securities, the value of convertible securities is susceptible to the risk of market losses attributable to changes in interest rates. Generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. However, when the market price of the common stock underlying a convertible security exceeds the conversion price of the convertible secu- rity, the convertible security tends to reflect the market price of the underlying common stock. As the market price of the underlying common stock declines, the convertible security, like a fixed-income security, tends to trade increasingly on a yield basis, and thus may not decline in price to the same extent as the underlying common stock.
Foreign Currency Transactions. A Fund may, to the extent consistent with its investment policies, purchase or sell foreign currencies on a cash basis or through forward contracts. A forward contract involves an obligation to pur- chase or sell a specific currency at a future date at a price set at the time of the contract. A Fund may engage in foreign currency transactions for hedging purposes and to seek to protect against anticipated changes in future foreign currency exchange rates. In addition, certain Funds may also enter into such transactions to seek to increase total return, which is con- sidered a speculative practice.
Some Funds may also engage in cross-hedging by using forward contracts in a currency different from that in which the hedged security is denominated or quoted if the Investment Adviser determines that there is a pattern of cor- relation between the two currencies. A Fund may hold foreign currency received in connection with investments in foreign securities when, in the judgment of the Investment Adviser, it would be beneficial to convert such currency into U.S. dollars at a later date (e.g., the Investment Adviser may anticipate the foreign currency to appreciate against the U.S. dollar).
APPENDIX A
Currency exchange rates may fluctuate significantly over short periods of time, causing, along with other factors, a Fund's NAV to fluctuate (when the Fund's NAV fluctuates, the value of your shares may go up or down). Currency exchange rates also can be affected unpredictably by the intervention of U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the United States or abroad.
The market in forward foreign currency exchange contracts, currency swaps and other privately negotiated currency instruments offers less protection against defaults by the other party to such instruments than is available for currency instruments traded on an exchange. Such contracts are subject to the risk that the counterparty to the contract will default on its obli- gations. Since these contracts are not guaranteed by an exchange or clear- inghouse, a default on a contract would deprive a Fund of unrealized prof- its, transaction costs or the benefits of a currency hedge or could force the Fund to cover its purchase or sale commitments, if any, at the current market price.
Structured Securities. Each Fund may invest in structured securities. Struc- tured securities are securities whose value is determined by reference to changes in the value of specific currencies, interest rates, commodities, indices or other financial indicators (the "Reference") or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Structured securities may be posi- tively or negatively indexed, so that appreciation of the Reference may pro- duce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rates or the value of the security at maturity may be a multiple of changes in the value of the Refer- ence. Consequently, structured securities may present a greater degree of market risk than other types of fixed-income securities and may be more vol- atile, less liquid and more difficult to price accurately than less complex securities.
REITs. Each Fund may invest in REITS. REITS are pooled investment vehicles that invest primarily in either real estate or real estate related loans. The value of a REIT is affected by changes in the value of the properties owned by the REIT or securing mortgage loans held by the REIT. REITs are dependent upon the ability of the REITs' managers, and are subject to heavy cash flow dependency, default by borrowers and the qualification of the REITs under applicable regulatory requirements for favorable income tax treatment. REITs are also subject to risks generally associated with invest- ments in real estate including possible declines in the value of real estate, general and local economic conditions, environmental problems and changes in interest rates. To the extent that assets underlying a REIT are concentrated geographically, by property type or in certain other
respects, these risks may be heightened. A Fund will indirectly bear its proportionate share of any expenses, including management fees, paid by a REIT in which it invests.
Options on Securities, Securities Indices and Foreign Currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) of the option the obligation to buy, the underlying instrument dur-
ing the option period. A call option gives the purchaser of the option the
right to buy, and the writer (seller) of the option the obligation to sell,
the underlying instrument during the option period. Each Fund may write
(sell) covered call and put options and purchase put and call options on any
securities in which they may invest or on any securities index comprised of
securities in which they may invest. A Fund may also, to the extent that it
invests in foreign securities, purchase and sell (write) put and call
options on foreign currencies.
The writing and purchase of options is a highly specialized activity which involves special investment risks. Options may be used for either hedging or cross-hedging purposes, or to seek to increase total return (which is con- sidered a speculative activity). The successful use of options depends in part on the ability of the Investment Adviser to manage future price fluctu- ations and the degree of correlation between the options and securities (or currency) markets. If the Investment Adviser is incorrect in its expectation of changes in market prices or determination of the correlation between the instruments or indices on which options are written and purchased and the instruments in a Fund's investment portfolio, the Fund may incur losses that it would not otherwise incur. The use of options can also increase a Fund's transaction costs. Options written or purchased by the Funds may be traded on either U.S. or foreign exchanges or over-the-counter. Foreign and over- the-counter options will present greater possibility of loss because of their greater illiquidity and credit risks.
Futures Contracts and Options on Futures Contracts. Futures contracts are standardized, exchange-traded contracts that provide for the sale or pur- chase of a specified financial instrument or currency at a future time at a specified price. An option on a futures contract gives the purchaser the right (and the writer of the option the obligation) to assume a position in a futures contract at a specified exercise price within a specified period of time. A futures contract may be based on various securities (such as U.S. government securities), foreign currencies, securities indices and other financial instruments and indices. The Funds may engage in futures transac- tions on both U.S. and foreign exchanges.
Each Fund may purchase and sell futures contracts, and purchase and write call and put options on futures contracts, in order to seek to increase total return or to hedge against changes in interest rates, securities prices or, to the extent a Fund
APPENDIX A
invests in foreign securities, currency exchange rates, or to otherwise man- age their term structures, sector selection and durations in accordance with their investment objectives and policies. Each Fund may also enter into closing purchase and sale transactions with respect to such contracts and options. A Fund will engage in futures and related options transactions for bona fide hedging purposes as defined in regulations of the Commodity Futures Trading Commission or to seek to increase total return to the extent permitted by such regulations. A Fund may not purchase or sell futures con- tracts or purchase or sell related options to seek to increase total return, except for closing purchase or sale transactions, if immediately thereafter the sum of the amount of initial margin deposits and premiums paid on the Fund's outstanding positions in futures and related options entered into for the purpose of seeking to increase total return would exceed 5% of the mar- ket value of the Fund's net assets.
Futures contracts and related options present the following risks:
.While a Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency
exchange rates may result in poorer overall performance than if the Fund
had not entered into any futures contracts or options transactions.
.Because perfect correlation between a futures position and portfolio posi-
tion that is intended to be protected is impossible to achieve, the desired
protection may not be obtained and a Fund may be exposed to additional risk
of loss.
.The loss incurred by a Fund in entering into futures contracts and in writ-
ing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
.Futures markets are highly volatile and the use of futures may increase the
volatility of a Fund's NAV.
.As a result of the low margin deposits normally required in futures trad-
ing, a relatively small price movement in a futures contract may result in
substantial losses to a Fund.
.Futures contracts and options on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
.Foreign exchanges may not provide the same protection as U.S. exchanges.
Equity Swaps. Each Fund may invest in equity swaps. Equity swaps allow the parties to a swap agreement to exchange the dividend income or other compo- nents of return on an equity investment (for example, a group of equity securities or an index) for a component of return on another non-equity or equity investment.
An equity swap may be used by a Fund to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment may be restricted for legal reasons or is otherwise impractical. Equity swaps are
derivatives and their value can be very volatile. To the extent that the Investment Adviser does not accurately analyze and predict the potential relative fluctuation of the components swapped with another party, a Fund may suffer a loss. The value of some components of an equity swap (such as the dividends on a common stock) may also be sensitive to changes in inter- est rates. Furthermore, a Fund may suffer a loss if the counterparty defaults.
When-Issued Securities and Forward Commitments. Each Fund may purchase when- issued securities and make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time. When-issued securities are securities that have been authorized, but not yet issued. When-issued securities are purchased in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. A forward commitment involves the entering into a con- tract to purchase or sell securities for a fixed price at a future date beyond the customary settlement period.
The purchase of securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines before the settlement date. Conversely, the sale of securities on a forward commitment basis involves the risk that the value of the securities sold may increase before the settlement date. Although a Fund will generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring the securities for its portfolio, a Fund may dispose of when-issued securities or forward commitments prior to settlement if the Investment Adviser deems it appropriate.
Repurchase Agreements. Repurchase agreements involve the purchase of securi- ties subject to the seller's agreement to repurchase them at a mutually agreed upon date and price. Each Fund may enter into repurchase agreements with dealers in U.S. government securities and member banks of the Federal Reserve System which furnish collateral at least equal in value or market price to the amount of their repurchase obligation.
If the other party or "seller" defaults, a Fund might suffer a loss to the extent that the proceeds from the sale of the underlying securities and other collateral held by the Fund are less than the repurchase price and the Fund's costs associated with delay and enforcement of the repurchase agree- ment. In addition, in the event of bankruptcy of the seller, a Fund could suffer additional losses if a court determines that the Fund's interest in the collateral is not enforceable.
In evaluating whether to enter into a repurchase agreement, the Investment Adviser will carefully consider the creditworthiness of the seller. Certain Funds, together with other registered investment companies having advisory agreements with the Investment Adviser or any of its affiliates, may trans- fer uninvested cash
APPENDIX A
balances into a single joint account, the daily aggregate balance of which will be invested in one or more repurchase agreements.
Lending of Portfolio Securities. Each Fund may engage in securities lending. Securities lending involves the lending of securities owned by a Fund to financial institutions such as certain broker-dealers. The borrowers are required to secure their loan continuously with cash, cash equivalents, U.S. government securities or letters of credit in an amount at least equal to the market value of the securities loaned. Cash collateral may be invested in cash equivalents. To the extent that cash collateral is invested in other investment securities, such collateral will be subject to market deprecia- tion or appreciation, and a Fund will be responsible for any loss that might result from its investment of the borrowers' collateral. If the Investment Adviser determines to make securities loans, the value of the securities loaned may not exceed 33 1/3% of the value of the total assets of a Fund (including the loan collateral).
A Fund may lend its securities to increase its income. A Fund may, however, experience delay in the recovery of its securities if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund.
Short Sales Against-the-Box. Certain Funds may make short sales against-the- box. A short sale against-the-box means that at all times when a short posi- tion is open the Fund will own an equal amount of securities sold short, or securities convertible into or exchangeable for, without payment of any fur- ther consideration, an equal amount of the securities of the same issuer as the securities sold short.
Preferred Stock, Warrants and Rights. Each Fund may invest in preferred stock, warrants and rights. Preferred stocks are securities that represent an ownership interest providing the holder with claims on the issuer's earn- ings and assets before common stock owners but after bond owners. Unlike debt securities, the obligations of an issuer of preferred stock, including dividend and other payment obligations, may not typically be accelerated by the holders of such preferred stock on the occurrence of an event of default or other non-compliance by the issuer of the preferred stock.
Warrants and other rights are options to buy a stated number of shares of common stock at a specified price at any time during the life of the warrant or right. The holders of warrants and rights have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.
Other Investment Companies. Each Fund may invest in securities of other investment companies (including SPDRs and WEBs, as defined below) subject to statutory limitations prescribed by the Act. These limitations include a prohibition on
any Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of a Fund's total assets in securities of any one investment company or more than 10% of its total assets in securities of all investment companies. A Fund will indi- rectly bear its proportionate share of any management fees and other expenses paid by such other investment companies. Such other investment com- panies will have investment objectives, policies and restrictions substan- tially similar to those of the acquiring Fund and will be subject to sub- stantially the same risks.
.Standard & Poor's Depository Receipts. The Funds may, consistent with their investment policies, purchase Standard & Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on the American Stock Exchange ("AMEX") that represent ownership in the SPDR Trust, a trust which has been established to accumulate and hold a portfolio of common stocks that is intended to track the price performance and dividend yield of the S&P 500. The SPDR Trust is sponsored by a subsidiary of the AMEX. SPDRs may be used for several reasons, including, but not limited to, facilitating the han- dling of cash flows or trading, or reducing transaction costs. The price movement of SPDRs may not perfectly parallel the price action of the S&P 500.
.World Equity Benchmark Shares. World Equity Benchmark Shares ("WEBS") are shares of an investment company that invests substantially all of its assets in securities included in the MSCI indices for specified countries. WEBS are listed on the AMEX and were initially offered to the public in 1996. The market prices of WEBS are expected to fluctuate in accordance with both changes in the NAVs of their underlying indices and supply and demand of WEBS on the AMEX. To date, WEBS have traded at relatively modest discounts and premiums to their NAVs. However, WEBS have a limited operat- ing history and information is lacking regarding the actual performance and trading liquidity of WEBS for extended periods or over complete market cycles. In addition, there is no assurance that the requirements of the AMEX necessary to maintain the listing of WEBS will continue to be met or will remain unchanged. In the event substantial market or other disruptions affecting WEBS should occur in the future, the liquidity and value of a Fund's shares could also be substantially and adversely affected. If such disruptions were to occur, a Fund could be required to reconsider the use of WEBS as part of its investment strategy.
Unseasoned Companies. Each Fund may invest in companies (including predeces- sors) which have operated less than three years. The securities of such com- panies may have limited liquidity, which can result in their being priced higher or lower than might otherwise be the case. In addition, investments in unseasoned compa -
APPENDIX A
nies are more speculative and entail greater risk than do investments in companies with an established operating record.
Corporate Debt Obligations. Corporate debt obligations include bonds, notes, debentures, commercial paper and other obligations of corporations to pay interest and repay principal, and include securities issued by banks and other financial institutions. Each Fund may invest in corporate debt obliga- tions issued by U.S. and certain non-U.S. issuers which issue securities denominated in the U.S. dollar (including Yankee and Euro obligations). In addition to obligations of corporations, corporate debt obligations include securities issued by banks and other financial institutions and suprana- tional entities (i.e., the World Bank, the International Monetary Fund, etc.).
Bank Obligations. Each Fund may invest in obligations issued or guaranteed by U.S. or foreign banks. Bank obligations, including without limitations, time deposits, bankers' acceptances and certificates of deposit, may be gen- eral obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulations. Banks are subject to extensive but different governmental regulations which may limit both the amount and types of loans which may be made and interest rates which may be charged. In addition, the profitability of the banking industry is largely dependent upon the availability and cost of funds for the purpose of financing lending operations under prevailing money market conditions. General economic conditions as well as exposure to credit losses arising from possible financial difficulties of borrowers play an important part in the operation of this industry.
U.S. Government Securities and Related Custodial Receipts. Each Fund may invest in U.S. government securities and related custodial receipts. U.S. government securities include U.S. Treasury obligations and obligations issued or guaranteed by U.S. government agencies, instrumentalities or spon- sored enterprises. U.S. government securities may be supported by (a) the full faith and credit of the U.S. Treasury (such as the Government National Mortgage Association ("Ginnie Mae")); (b) the right of the issuer to borrow from the U.S. Treasury (such as securities of the Student Loan Marketing Association); (c) the discretionary authority of the U.S. government to pur- chase certain obligations of the issuer (such as the Federal National Mort- gage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac")); or (d) only the credit of the issuer. U.S. government securities also include Treasury receipts, zero coupon bonds and other stripped U.S. government securities, where the interest and principal compo- nents of stripped U.S. government securities are traded independently.
Interests in U.S. government securities may be purchased in the form of cus- todial receipts that evidence ownership of future interest payments, princi- pal payments
or both on certain notes or bonds issued or guaranteed as to principal and interest by the U.S. government, its agencies, instrumentalities, political subdivisions or authorities. For certain securities law purposes, custodial receipts are not considered obligations of the U.S. government.
Mortgage-Backed Securities. Certain Funds may invest in mortgage-backed securities. Mortgage-backed securities represent direct or indirect partici- pations in, or are collateralized by and payable from, mortgage loans secured by real property. Mortgage-backed securities can be backed by either fixed rate mortgage loans or adjustable rate mortgage loans, and may be issued by either a governmental or non-governmental entity. Privately issued mortgage-backed securities are normally structured with one or more types of "credit enhancement." However, these mortgage-backed securities typically do not have the same credit standing as U.S. government guaranteed mortgage- backed securities.
Mortgage-backed securities may include multiple class securities, including collateralized mortgage obligations ("CMOs") and Real Estate Mortgage Investment Conduit ("REMIC") pass-through or participation certificates. CMOs provide an investor with a specified interest in the cash flow from a pool of underlying mortgages or of other mortgage-backed securities. CMOs are issued in multiple classes. In many cases, payments of principal are applied to the CMO classes in the order of their respective stated maturi- ties, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. A REMIC is a CMO that qualifies for special tax treatment and invests in cer- tain mortgages principally secured by interests in real property and other permitted investments.
Mortgaged-backed securities also include stripped mortgage-backed securities ("SMBS"), which are derivative multiple class mortgage-backed securities. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments and the other that receives sub- stantially all of the principal payments from a pool of mortgage loans. The market value of SMBS consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on SMBS that receive all or most of the interest from mortgage loans are gener- ally higher than prevailing market yields on other mortgage-backed securi- ties because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
Asset-Backed Securities. Certain Funds may invest in asset-backed securi- ties. Asset-backed securities are securities whose principal and interest payments are collateralized by pools of assets such as auto loans, credit card receivables, leases, installment contracts and personal property. Asset-backed securities are often sub-
APPENDIX A
ject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the under- lying loans. During periods of declining interest rates, prepayment of loans underlying asset-backed securities can be expected to accelerate. According- ly, a Fund's ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is subject to generally prevailing interest rates at that time. Asset-backed securities present credit risks that are not presented by mortgage-backed securities. This is because asset-backed securities gener- ally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. There is the possibility that, in some cases, recoveries on repossessed collateral may not be available to support pay- ments on these securities. In the event of a default, a Fund may suffer a loss if it cannot sell collateral quickly and receive the amount it is owed.
Borrowings. Each Fund can borrow money from banks and other financial insti- tutions in amounts not exceeding one-third of its total assets for temporary or emergency purposes. A Fund may not make additional investments if borrowings exceed 5% of its total assets.
Mortgage Dollar Rolls. Certain Funds may enter into mortgage dollar rolls. A mortgage dollar roll involves the sale by a Fund of securities for delivery in the current month. The Fund simultaneously contracts with the same counterparty to repurchase substantially similar (same type, coupon and maturity) but not identical securities on a specified future date. During the roll period, the Fund loses the right to receive principal and interest paid on the securities sold. However, the Fund benefits to the extent of any difference between (a) the price received for the securities sold and (b) the lower forward price for the future purchase and/or fee income plus the interest earned on the cash proceeds of the securities sold. Unless the ben- efits of a mortgage dollar roll exceed the income, capital appreciation and gain or loss due to mortgage prepayments that would have been realized on the securities sold as part of the roll, the use of this technique will diminish the Fund's performance.
Successful use of mortgage dollar rolls depends upon the Investment Advis- er's ability to predict correctly interest rates and mortgage prepayments. If the Investment Adviser is incorrect in its prediction, a Fund may experi- ence a loss. For financial reporting and tax purposes, the Funds treat mort- gage dollar rolls as two separate transactions: one involving the purchase of a security and a separate transaction involving a sale. The Funds do not currently intend to enter into mortgage dollar rolls that are accounted for as a financing and do not treat them as borrowings.
Yield Curve Options. Certain Funds may enter into options on the yield "spread" or differential between two securities. Such transactions are referred to as "yield curve" options. In contrast to other types of options, a yield curve option is based on the difference between the yields of desig- nated securities, rather than the prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is prof- itable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put), regardless of whether the yields of the underlying securities increase or decrease.
The trading of yield curve options is subject to all of the risks associated with the trading of other types of options. In addition, such options pres- ent a risk of loss even if the yield of one of the underlying securities remains constant, or if the spread moves in a direction or to an extent which was not anticipated.
Reverse Repurchase Agreements. Certain Funds may enter into reverse repur- chase agreements. Reverse repurchase agreements involve the sale of securi- ties held by a Fund subject to the Fund's agreement to repurchase them at a mutually agreed upon date and price (including interest). These transactions may be entered into as a temporary measure for emergency purposes or to meet redemption requests. Reverse repurchase agreements may also be entered into when the Investment Adviser expects that the interest income to be earned from the investment of the transaction proceeds will be greater than the related interest expense. Reverse repurchase agreements involve leveraging. If the securities held by a Fund decline in value while these transactions are outstanding, the NAV of the Fund's outstanding shares will decline in value by proportionately more than the decline in value of the securities. In addition, reverse repurchase agreements involve the risk that the inter- est income earned by a Fund (from the investment of the proceeds) will be less than the interest expense of the transaction, that the market value of the securities sold by a Fund will decline below the price the Fund is obli- gated to pay to repurchase the securities, and that the securities may not be returned to the Fund.
Municipal Securities. Certain Funds may invest in securities and instruments issued by state and local government issuers. Municipal securities in which a Fund may invest consist of bonds, notes, commercial paper and other instruments (including participating interests in such securities) issued by or on behalf of states, territories and possessions of the United States (including the District of Columbia) and their political subdivisions, agen- cies or instrumentalities. Such securities may pay fixed, variable or float- ing rates of interest. Municipal securities are often issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as bridges, highways, housing, hospitals, mass trans- portation, schools, streets and water and sewer works. Other public
APPENDIX A
purposes for which municipal securities may be issued include refunding out- standing obligations, obtaining funds for general operating expenses, and obtaining funds to lend to other public institutions and facilities. Munici- pal securities in which a Fund may invest include private activity bonds, municipal leases, certificates of participation, pre-funded municipal secu- rities and auction rate securities.
Interest Rate Swaps, Mortgage Swaps, Credit Swaps, Currency Swaps and Inter- est Rate Caps, Floors and Collars. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed-rate payments for floating rate payments. Mortgage swaps are similar to interest rate swaps in that they represent commitments to pay and receive interest. The notional princi- pal amount, however, is tied to a reference pool or pools of mortgages. Credit swaps involve the receipt of floating or fixed rate payments in exchange for assuming potential credit losses of an underlying security. Credit swaps give one party to a transaction the right to dispose of or acquire an asset (or group of assets), or the right to receive or make a payment from the other party, upon the occurrence of specified credit events. Currency swaps involve the exchange of the parties' respective rights to make or receive payments in specified currencies. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor. An interest rate collar is the combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates.
Certain Funds may enter into swap transactions for hedging purposes or to seek to increase total return. The use of interest rate, mortgage, credit and currency swaps, as well as interest rate caps, floors and collars, is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transac- tions. If the Investment Adviser is incorrect in its forecasts of market value, interest rates and currency exchange rates, the investment perfor- mance of a Fund would be less favorable than it would have been if these investment techniques were not used.
Loan Participations. Certain Funds may invest in loan participations. A loan participation is an interest in a loan to a U.S. or foreign company or other borrower which is administered and sold by a financial intermediary. A Fund may only invest in loans to issuers in whose obligations it may otherwise invest. Loan participation interests may take the form of a direct or co- lending relationship with the
corporate borrower, an assignment of an interest in the loan by a co-lender or another participant, or a participation in the seller's share of the loan. When a Fund acts as co-lender in connection with a participation interest or when it acquires certain participation interests, the Fund will have direct recourse against the borrower if the borrower fails to pay scheduled principal and interest. In cases where the Fund lacks direct recourse, it will look to the agent bank to enforce appropriate credit reme- dies against the borrower. In these cases, the Fund may be subject to delays, expenses and risks that are greater than those that would have been involved if the Fund had purchased a direct obligation (such as commercial paper) of such borrower. Moreover, under the terms of the loan participa- tion, the Fund may be regarded as a creditor of the agent bank (rather than of the underlying corporate borrower), so that the Fund may also be subject to the risk that the agent bank may become insolvent.
Inverse Floaters. Certain Funds may invest in inverse floating rate debt securities ("inverse floaters"). The interest rate on inverse floaters resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. The higher the degree of leverage of an inverse floater, the greater the vola- tility of its market value.
[This page intentionally left blank]
Appendix B
Financial Highlights
The financial highlights tables are intended to help you understand a Fund's financial performance for the past five years (or less if the Fund has not been in operation for less than five years). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned or lost on an invest- ment in a Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Arthur Andersen LLP, whose report, along with a Fund's financial statements, is included in the Fund's annual report (available upon request). No financial highlights are included for the Large Cap Value Fund because it had no operating history prior to the date of this prospectus.
BALANCED FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period income gain (loss)
----------------------------------------------------------------------------
For The Seven-Month Period Ended August
31,
1999 - Class A Shares $20.48 $0.32 $(0.19)
1999 - Class B Shares 20.37 0.22 (0.18)
1999 - Class C Shares 20.34 0.23 (0.19)
1999 - Institutional Shares 20.48 0.53 (0.35)
1999 - Service Shares 20.47 1.22 (1.14)
----------------------------------------------------------------------------
For The Years Ended January 31,
1999 - Class A Shares 20.29 0.58 0.20
1999 - Class B Shares 20.20 0.41 0.21
1999 - Class C Shares 20.17 0.41 0.21
1999 - Institutional Shares 20.29 0.64 0.20
1999 - Service Shares 20.28 0.53 0.21
----------------------------------------------------------------------------
1998 - Class A Shares 18.78 0.57 2.66
1998 - Class B Shares 18.73 0.50 2.57
1998 - Class C Shares (commenced August
15, 1997) 21.10 0.25 0.24
1998 - Institutional Shares (commenced
August 15, 1997) 21.18 0.26 0.32
1998 - Service Shares (commenced August
15, 1997) 21.18 0.22 0.32
----------------------------------------------------------------------------
1997 - Class A Shares 17.31 0.66 2.47
1997 - Class B Shares (commenced May 1,
1996) 17.46 0.42 2.34
----------------------------------------------------------------------------
1996 - Class A Shares 14.22 0.51 3.43
----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
APPENDIX B
Ratios assuming
no voluntary waiver
of fees or expense limitations
------------------------------
Ratio of Ratio of
Net assets Ratio of net investment Ratio of net investment
Net asset at end of net expenses income to expenses to income to Portfolio
value, end Total period to average average net average average net turnover
of period returnb (in 000s) net assets assets net assets assets ratee
-------------------------------------------------------------------------------------------------------------------
$20.38 0.62%d $169,395 1.10%c 2.58%c 1.32%c 2.36%c 90.41%d
20.26 0.20d 40,515 1.85c 1.83c 2.07c 1.61c 90.41d
20.23 0.18d 11,284 1.85c 1.84c 2.07c 1.62c 90.41d
20.39 0.86d 2,361 0.70c 2.96c 0.92c 2.74c 90.41d
20.37 0.39d 15 1.20c 2.46c 1.42c 2.24c 90.41d
-------------------------------------------------------------------------------------------------------------------
20.48 3.94 192,453 1.04 2.90 1.45 2.49 175.06
20.37 3.15 43,926 1.80 2.16 2.02 1.94 175.06
20.34 3.14 14,286 1.80 2.17 2.02 1.95 175.06
20.48 4.25 8,010 0.73 3.22 0.95 3.00 175.06
20.47 3.80 490 1.23 2.77 1.45 2.55 175.06
-------------------------------------------------------------------------------------------------------------------
20.29 17.54 163,636 1.00 2.94 1.57 2.37 190.43
20.20 16.71 23,639 1.76 2.14 2.07 1.83 190.43
20.17 2.49d 8,850 1.77c 2.13c 2.08c 1.82c 190.43
20.29 2.93d 8,367 0.76c 3.13c 1.07c 2.82c 190.43
20.28 2.66d 16 1.26c 2.58c 1.57c 2.27c 190.43
-------------------------------------------------------------------------------------------------------------------
18.78 18.59 81,410 1.00 3.76 1.77 2.99 208.11
18.73 16.22d 2,110 1.75c 2.59c 2.27c 2.07c 208.11
-------------------------------------------------------------------------------------------------------------------
17.31 28.10 50,928 1.00 3.65 1.90 2.75 197.10
-------------------------------------------------------------------------------------------------------------------
|
BALANCED FUND (continued)
Ratios assuming
no voluntary waiver
of fees or expense limitations
------------------------------
Ratio of Ratio of
net investment Ratio of net investment
income to expenses to income to Portfolio
average net average average net turnover
assets net assets assets rate/e/
-----------------------------------------------------------------------------------------------
For The Seven-Month
Period Ended August 31,
1999 - Class A Shares 2.58%c 1.32%c 2.36%c 90.41%d
1999 - Class B Shares 1.83c 2.07c 1.61c 90.41d
1999 - Class C Shares 1.84c 2.07c 1.62c 90.41d
1999 - Institutional
Shares 2.96c 0.92c 2.74c 90.41d
1999 - Service Shares 2.46c 1.42c 2.24c 90.41d
-----------------------------------------------------------------------------------------------
For The Years Ended
January 31,
1999 - Class A Shares 2.90 1.45 2.49 175.06
1999 - Class B Shares 2.16 2.02 1.94 175.06
1999 - Class C Shares 2.17 2.02 1.95 175.06
1999 - Institutional
Shares 3.22 0.95 3.00 175.06
1999 - Service Shares 2.77 1.45 2.55 175.06
-----------------------------------------------------------------------------------------------
1998 - Class A Shares 2.94 1.57 2.37 190.43
1998 - Class B Shares 2.14 2.07 1.83 190.43
1998 - Class C Shares
(commenced August 15,
1997) 2.13c 2.08c 1.82c 190.43
1998 - Institutional
Shares (commenced August
15, 1997) 3.13c 1.07c 2.82c 190.43
1998 - Service Shares
(commenced August 15,
1997) 2.58c 1.57c 2.27c 190.43
-----------------------------------------------------------------------------------------------
1997 - Class A Shares 3.76 1.77 2.99 208.11
1997 - Class B Shares
(commenced May 1, 1996) 2.59c 2.27c 2.07c 208.11
-----------------------------------------------------------------------------------------------
1996 - Class A Shares 3.65 1.90 2.75 197.10
-----------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
GROWTH AND INCOME FUND
Income from
investment operations/a/ Distributions to shareholders
------------------------ ------------------------------
Net
realized
Net asset and In excess
value, Net unrealized From net of net From net
beginning investment gain investment investment realized
of period income (loss) (loss) income income gains
-------------------------------------------------------------------------------------------
For The Seven-Month
Period Ended August 31,
1999 - Class A Shares $24.33 $ 0.19 $0.31 $(0.15) $ -- $ --
1999 - Class B Shares 24.13 0.08 0.31 (0.06) -- --
1999 - Class C Shares 24.08 0.08 0.30 (0.05) -- --
1999 - Institutional
Shares 24.35 0.34 0.23 (0.20) -- --
1999 - Service Shares 24.33 0.17 0.32 (0.14) -- --
-------------------------------------------------------------------------------------------
For The Years Ended
January 31,
1999 - Class A Shares 25.93 0.20 (1.60) (0.19) (0.01) --
1999 - Class B Shares 25.73 0.02 (1.58) (0.04) -- --
1999 - Class C Shares 25.70 0.02 (1.59) (0.05) -- --
1999 - Institutional
Shares 25.95 0.29 (1.58) (0.30) (0.01) --
1999 - Service Shares 25.92 0.17 (1.58) (0.17) (0.01) --
-------------------------------------------------------------------------------------------
1998 - Class A Shares 23.18 0.11 5.27 (0.11) -- (2.52)
1998 - Class B Shares 23.10 0.04 5.14 -- (0.03) (2.52)
1998 - Class C Shares
(commenced August 15,
1997) 28.20 (0.01) 0.06 -- (0.03) (2.52)
1998 - Institutional
Shares 23.19 0.27 5.23 (0.22) -- (2.52)
1998 - Service Shares 23.17 0.14 5.23 (0.06) (0.04) (2.52)
-------------------------------------------------------------------------------------------
1997 - Class A Shares 19.98 0.35 5.18 (0.35) (0.01) (1.97)
1997 - Class B Shares
(commenced May 1, 1996) 20.82 0.17 4.31 (0.17) (0.06) (1.97)
1997 - Institutional
Shares
(commenced June 3,
1996) 21.25 0.29 3.96 (0.30) (0.04) (1.97)
1997 - Service Shares
(commenced March 6,
1996) 20.71 0.28 4.50 (0.28) (0.07) (1.97)
-------------------------------------------------------------------------------------------
1996 - Class A Shares 15.80 0.33 4.75 (0.30) -- (0.60)
-------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Ratio of
Net increase Net assets Ratio of net investment
(decrease) Net asset at end of net expenses income (loss)
in net value, end Total period to average to average net
asset value of period return/b/ (in 000s) net assets assets
-------------------------------------------------------------------------
$ 0.35 $24.68 2.05%d $ 855,174 1.19%c 1.26%c
0.33 24.46 1.60d 271,912 1.94c 0.51c
0.33 24.41 1.58d 31,328 1.94c 0.51c
0.37 24.72 2.32d 32,181 0.79c 1.72c
0.35 24.68 2.01d 10,008 1.29c 1.16c
-------------------------------------------------------------------------
(1.60) 24.33 (5.40) 1,122,157 1.22 0.78
(1.60) 24.13 (6.07) 349,662 1.92 0.09
(1.62) 24.08 (6.12) 48,146 1.92 0.10
(1.60) 24.35 (5.00) 173,696 0.80 1.25
(1.59) 24.33 (5.44) 11,943 1.30 0.72
-------------------------------------------------------------------------
2.75 25.93 23.71 1,216,582 1.25 0.43
2.63 25.73 22.87 307,815 1.94 (0.35)
(2.50) 25.70 0.51d 31,686 1.99c (0.48)c
2.76 25.95 24.24 36,225 0.83 0.76
2.75 25.92 23.63 8,893 1.32 0.32
-------------------------------------------------------------------------
3.20 23.18 28.42 615,103 1.22 1.60
2.28 23.10 22.23d 17,346 1.93c 0.15c
1.94 23.19 20.77d 193 0.82c 1.36c
2.46 23.17 23.87d 3,174 1.32c 0.94c
-------------------------------------------------------------------------
4.18 19.98 32.45 436,757 1.20 1.67
-------------------------------------------------------------------------
|
GROWTH AND INCOME FUND (continued)
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of Ratio of
expenses to net investment Portfolio
average net income (loss) to turnover
assets average net assets rate
-------------------------------------------------------------------------------------
For The Seven-Month
Period Ended
August 31,
1999 - Class A Shares 1.20%c 1.25%c 55.43%d
1999 - Class B Shares 1.95c 0.50c 55.43d
1999 - Class C Shares 1.95c 0.50c 55.43d
1999 - Institutional
Shares 0.80c 1.71c 55.43d
1999 - Service Shares 1.30c 1.15c 55.43d
-------------------------------------------------------------------------------------
For The Years Ended
January 31,
1999 - Class A Shares 1.32 0.68 125.79
1999 - Class B Shares 1.92 0.09 125.79
1999 - Class C Shares 1.92 0.10 125.79
1999 - Institutional
Shares 0.80 1.25 125.79
1999 - Service Shares 1.30 0.72 125.79
-------------------------------------------------------------------------------------
1998 - Class A Shares 1.42 0.26 61.95
1998 - Class B Shares 1.94 (0.35) 61.95
1998 - Class C Shares
(commenced August 15,
1997) 1.99c (0.48)c 61.95
1998 - Institutional
Shares 0.83 0.76 61.95
1998 - Service Shares 1.32 0.32 61.95
-------------------------------------------------------------------------------------
1997 - Class A Shares 1.43 1.39 53.03
1997 - Class B Shares
(commenced May 1, 1996) 1.93c 0.15c 53.03
1997 - Institutional
Shares
(commenced June 3,
1996) 0.82c 1.36c 53.03
1997 - Service Shares
(commenced March 6,
1996) 1.32c 0.94c 53.03
-------------------------------------------------------------------------------------
1996 - Class A Shares 1.45 1.42 57.93
-------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE LARGE CAP VALUE FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period income gain
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $10.15 $0.04 $0.40
1999 - Class B Shares 10.15 0.01 0.36
1999 - Class C Shares 10.15 0.01 0.37
1999 - Institutional Shares 10.16 0.06 0.38
1999 - Service Shares 10.16 0.02 0.40
------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced December
31, 1998) 10.00 0.01 0.14
1999 - Class B Shares (commenced December
31, 1998) 10.00 -- 0.15
1999 - Class C Shares (commenced December
31, 1998) 10.00 -- 0.15
1999 - Institutional Shares (commenced
December 31, 1998) 10.00 0.01 0.15
1999 - Service Shares (commenced December
31, 1998) 10.00 0.02 0.14
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
shareholders
----------------------------
Net assets
From net Net increase Net asset at end of Ratio of
investment From net in net asset value, end Total period net expenses to
income realized gains value of period return/b/,/d/ (in 000s) average net assets/c/
----------------------------------------------------------------------------------------------------
$(0.04) $ -- $0.40 $10.55 4.31% 91,072 1.04%
(0.02) -- 0.35 10.50 3.68 14,464 1.79
(0.02) -- 0.36 10.51 3.73 8,032 1.79
(0.05) -- 0.39 10.55 4.35 189,540 0.64
(0.03) -- 0.39 10.55 4.11 13 1.14
----------------------------------------------------------------------------------------------------
-- -- 0.15 10.15 1.50 6,665 1.08
-- -- 0.15 10.15 1.50 340 1.82
-- -- 0.15 10.15 1.50 268 1.83
-- -- 0.16 10.16 1.60 53,396 0.66
-- -- 0.16 10.16 1.60 2 1.16
----------------------------------------------------------------------------------------------------
|
CORE LARGE CAP VALUE FUND (continued)
Ratios assuming
no voluntary waiver
of fees or expense limitations
------------------------------------
Ratio of Ratio of
net investment Ratio of net investment
income to expenses to income to Portfolio
average net average net average net turnover
assets/c/ assets/c/ assets/c/ rate/d/
----------------------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares 0.87% 1.21% 0.70% 36.10%
1999 - Class B Shares 0.05 1.96 (0.12) 36.10
1999 - Class C Shares 0.09 1.96 (0.08) 36.10
1999 - Institutional
Shares 1.29 0.81 1.12 36.10
1999 - Service Shares 0.72 1.31 0.55 36.10
----------------------------------------------------------------------------------------------
For the Period Ended
January 31,
1999 - Class A
Shares(commenced December
31, 1998) 1.45 8.03 (5.50) 0.00
1999 - Class B
Shares(commenced December
31, 1998) 0.84 8.77 (6.11) 0.00
1999 - Class C
Shares(commenced December
31, 1998) 0.70 8.78 (6.25) 0.00
1999 - Institutional
Shares(commenced December
31, 1998) 1.97 7.61 (4.98) 0.00
1999 - Service
Shares(commenced December
31, 1998) 2.17 8.11 (4.78) 0.00
----------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE U.S. EQUITY FUND
Income from
investment operations/a/
--------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
-----------------------------------------------------------------------------
For The Seven-Month Period Ended August
31,
1999 - Class A Shares $32.98 $ 0.03 $1.20
1999 - Class B Shares 32.50 (0.11) 1.17
1999 - Class C Shares 32.40 (0.10) 1.16
1999 - Institutional Shares 33.29 0.11 1.21
1999 - Service Shares 32.85 0.01 1.19
-----------------------------------------------------------------------------
For The Years Ended January 31,
1999 - Class A Shares 26.59 0.04 7.02
1999 - Class B Shares 26.32 (0.10) 6.91
1999 - Class C Shares 26.24 (0.10) 6.89
1999 - Institutional Shares 26.79 0.20 7.11
1999 - Service Shares 26.53 0.06 7.01
-----------------------------------------------------------------------------
1998 - Class A Shares 23.32 0.11 5.63
1998 - Class B Shares 23.18 0.11 5.44
1998 - Class C Shares (commenced August
15, 1997) 27.48 0.03 1.22
1998 - Institutional Shares 23.44 0.30 5.65
1998 - Service Shares 23.27 0.19 5.57
-----------------------------------------------------------------------------
1997 - Class A Shares 19.66 0.16 4.46
1997 - Class B Shares (commenced May 1,
1996) 20.44 0.04 3.70
1997 - Institutional Shares 19.71 0.30 4.51
1997 - Service Shares (commenced June 7,
1996) 21.02 0.13 3.15
-----------------------------------------------------------------------------
1996 - Class A Shares 14.61 0.19 5.43
1996 - Institutional Shares (commenced
June 15, 1995) 16.97 0.16 3.23
-----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to shareholders
-------------------------------------
Ratio of
In excess Net increase Net assets Ratio of net investment
From net of net (decrease) Net asset at end of net expenses income (loss)
investment investment From net in net asset value, end Total period to average to average
income income realized gains value of period return/b/ (in 000s) net assets net assets
-------------------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 1.23 $34.21 3.73%d $614,310 1.14%c 0.15%c
-- -- -- 1.06 33.56 3.26d 214,087 1.89c (0.60)c
-- -- -- 1.06 33.46 3.27d 43,361 1.89c (0.61)c
-- -- -- 1.32 34.61 3.97d 335,465 0.74c 0.54c
-- -- -- 1.20 34.05 3.65d 11,204 1.24c 0.06c
-------------------------------------------------------------------------------------------------------------
(0.03) (0.01) (0.63) 6.39 32.98 26.89 605,566 1.23 0.15
-- -- (0.63) 6.18 32.50 26.19 152,347 1.85 (0.50)
-- -- (0.63) 6.16 32.40 26.19 26,912 1.87 (0.53)
(0.15) (0.03) (0.63) 6.50 33.29 27.65 307,200 0.69 0.69
(0.10) (0.02) (0.63) 6.32 32.85 27.00 11,600 1.19 0.19
-------------------------------------------------------------------------------------------------------------
(0.12) -- (2.35) 3.27 26.59 24.96 398,393 1.28 0.51
-- (0.06) (2.35) 3.14 26.32 24.28 59,208 1.79 (0.05)
-- (0.14) (2.35) (1.24) 26.24 4.85d 6,267 1.78c (0.21)c
(0.24) (0.01) (2.35) 3.35 26.79 25.76 202,893 0.65 1.16
(0.07) (0.08) (2.35) 3.26 26.53 25.11 7,841 1.15 0.62
-------------------------------------------------------------------------------------------------------------
(0.16) -- (0.80) 3.66 23.32 23.75 225,968 1.29 0.91
(0.04) (0.16) (0.80) 2.74 23.18 18.59d 17,258 1.83c 0.06c
(0.28) -- (0.80) 3.73 23.44 24.63 148,942 0.65 1.52
(0.13) (0.10) (0.80) 2.25 23.27 15.92d 3,666 1.15c 0.69c
-------------------------------------------------------------------------------------------------------------
(0.16) -- (0.41) 5.05 19.66 38.63 129,045 1.25 1.01
(0.24) -- (0.41) 2.74 19.71 20.14d 64,829 0.65c 1.49c
-------------------------------------------------------------------------------------------------------------
|
CORE U.S. EQUITY FUND (continued)
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of
Ratio of net investment
expenses to income (loss) to Portfolio
average net average turnover
assets net assets rate
---------------------------------------------------------------------------------
For The Seven-Month
Period Ended August 31,
1999 - Class A Shares 1.24%c 0.05%c 41.84%d
1999 - Class B Shares 1.99c (0.70)c 41.84d
1999 - Class C Shares 1.99c (0.71)c 41.84d
1999 - Institutional
Shares 0.84c 0.44c 41.84d
1999 - Service Shares 1.34c (0.04)c 41.84d
---------------------------------------------------------------------------------
For The Years Ended
January 31,
1999 - Class A Shares 1.36 0.02 63.79
1999 - Class B Shares 1.98 (0.63) 63.79
1999 - Class C Shares 2.00 (0.66) 63.79
1999 - Institutional
Shares 0.82 0.56 63.79
1999 - Service Shares 1.32 0.06 63.79
---------------------------------------------------------------------------------
1998 - Class A Shares 1.47 0.32 65.89
1998 - Class B Shares 1.96 (0.22) 65.89
1998 - Class C Shares
(commenced August 15,
1997) 1.95c (0.38)c 65.89
1998 - Institutional
Shares 0.82 0.99 65.89
1998 - Service Shares 1.32 0.45 65.89
---------------------------------------------------------------------------------
1997 - Class A Shares 1.53 0.67 37.28
1997 - Class B Shares
(commenced May 1, 1996) 2.00c (0.11)c 37.28
1997 - Institutional
Shares 0.85 1.32 37.28
1997 - Service Shares
(commenced June 7, 1996) 1.35c 0.49c 37.28
---------------------------------------------------------------------------------
1996 - Class A Shares 1.55 0.71 39.35
1996 - Institutional
Shares (commenced June
15, 1995) 0.96c 1.18c 39.35
---------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE LARGE CAP GROWTH FUND
Income from
investment operations/a/
---------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain
-------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $16.17 $(0.01) $0.86
1999 - Class B Shares 15.98 (0.07) 0.84
1999 - Class C Shares 15.99 (0.07) 0.83
1999 - Institutional Shares 16.21 0.03 0.86
1999 - Service Shares 16.11 (0.02) 0.86
-------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 11.97 0.01 4.19
1999 - Class B Shares 11.92 (0.06) 4.12
1999 - Class C Shares 11.93 (0.05) 4.11
1999 - Institutional Shares 11.97 0.02 4.23
1999 - Service Shares 11.95 (0.01) 4.17
-------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced May 1,
1997) 10.00 0.01 2.35
1998 - Class B Shares (commenced May 1,
1997) 10.00 (0.03) 2.33
1998 - Class C Shares (commenced August
15, 1997) 11.80 (0.02) 0.54
1998 - Institutional Shares (commenced May
1, 1997) 10.00 0.01 2.35
1998 - Service Shares (commenced May 1,
1997) 10.00 (0.02) 2.35
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
Shareholders
---------------------------------
From In excess Net Net asset Net assets Ratio of
Net of net From net increase value, at end of net expenses
Investment investment realized in net end of Total period to average
Income income gains asset value period return/b/ (in 000s) net assets
-------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.85 $17.02 5.26%d $300,684 1.04%c
-- -- -- 0.77 16.75 4.82d 181,626 1.79c
-- -- -- 0.76 16.75 4.75d 75,502 1.79c
-- -- -- 0.89 17.10 5.49d 310,704 0.64c
-- -- -- 0.84 16.95 5.21d 2,510 1.14c
-------------------------------------------------------------------------------------------
-- -- -- 4.20 16.17 35.10 175,510 0.97
-- -- -- 4.06 15.98 34.07 93,711 1.74
-- -- -- 4.06 15.99 34.04 37,081 1.74
-- (0.01) -- 4.24 16.21 35.54 295,734 0.65
-- -- -- 4.16 16.11 34.85 1,663 1.15
-------------------------------------------------------------------------------------------
(0.01) -- (0.38) 1.97 11.97 23.79d 53,786 0.91c
-- -- (0.38) 1.92 11.92 23.26d 13,857 1.67c
-- (0.01) (0.38) 0.13 11.93 4.56d 4,132 1.68c
(0.01) -- (0.38) 1.97 11.97 23.89d 4,656 0.72c
-- -- (0.38) 1.95 11.95 23.56d 115 1.17c
-------------------------------------------------------------------------------------------
|
CORE LARGE CAP GROWTH FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
------------------------
Ratio of Ratio of net
net investment Ratio of investment
income (loss) to expenses to (loss) to Portfolio
average net average net average net turnover
assets assets assets rate
-------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares (0.11)%c 1.26%c (0.33)%c 32.74%d
1999 - Class B Shares (0.87)c 2.01c (1.09)c 32.74d
1999 - Class C Shares (0.87)c 2.01c (1.09)c 32.74d
1999 - Institutional
Shares 0.31c 0.86c 0.09c 32.74d
1999 - Service Shares (0.21)c 1.36c (0.43)c 32.74d
-------------------------------------------------------------------------------
For the Year Ended January
31,
1999 - Class A Shares 0.05 1.46 (0.44) 63.15
1999 - Class B Shares (0.73) 2.11 (1.10) 63.15
1999 - Class C Shares (0.74) 2.11 (1.11) 63.15
1999 - Institutional
Shares 0.35 1.02 (0.02) 63.15
1999 - Service Shares (0.16) 1.52 (0.53) 63.15
-------------------------------------------------------------------------------
For the Period Ended
January 31,
1998 - Class A Shares
(commenced May 1, 1997) 0.12 c 2.40c (1.37)c 74.97d
1998 - Class B Shares
(commenced May 1, 1997) (0.72)c 2.91c (1.96)c 74.97d
1998 - Class C Shares
(commenced August 15,
1997) (0.76)c 2.92c (2.00)c 74.97d
1998 - Institutional
Shares (commenced May 1,
1997) 0.42 c 1.96c (0.82)c 74.97d
1998 - Service Shares
(commenced May 1, 1997) (0.21)c 2.41c (1.45)c 74.97d
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE SMALL CAP EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net Net
value, investment realized and
beginning income unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $10.16 $(0.01) $0.08
1999 - Class B Shares 10.07 (0.05) 0.07
1999 - Class C Shares 10.08 (0.05) 0.07
1999 - Institutional Shares 10.20 0.02 0.08
1999 - Service Shares 10.16 (0.01) 0.07
------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 10.59 0.01 (0.43)
1999 - Class B Shares 10.56 (0.05) (0.44)
1999 - Class C Shares 10.57 (0.04) (0.45)
1999 - Institutional Shares 10.61 0.04 (0.43)
1999 - Service Shares 10.60 0.01 (0.44)
------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced August 15,
1997) 10.00 (0.01) 0.65
1998 - Class B Shares (commenced August 15,
1997) 10.00 (0.03) 0.64
1998 - Class C Shares (commenced August 15,
1997) 10.00 (0.02) 0.64
1998 - Institutional Shares (commenced
August 15, 1997) 10.00 0.01 0.65
1998 - Service Shares (commenced August 15,
1997) 10.00 0.01 0.64
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
Shareholders
----------------------------
From Net Net asset Net assets Ratio of
net increase value, at end of net expenses
investment From net in net end of Total period to average
income realized gains asset value period return/b/ (in 000s) net assets
--------------------------------------------------------------------------------------
$ -- $ -- $0.07 $10.23 0.69%d $52,660 1.33%c
-- -- 0.02 10.09 0.20d 13,711 2.08c
-- -- 0.02 10.10 0.20d 6,274 2.08c
-- -- 0.10 10.30 0.98d 62,633 0.93c
-- -- 0.06 10.22 0.59d 64 1.43c
--------------------------------------------------------------------------------------
(0.01) -- (0.43) 10.16 (3.97) 64,087 1.31
-- -- (0.49) 10.07 (4.64) 15,406 2.00
-- -- (0.49) 10.08 (4.64) 6,559 2.01
(0.02) -- (0.41) 10.20 (3.64) 62,763 0.94
(0.01) -- (0.44) 10.16 (4.07) 54 1.44
--------------------------------------------------------------------------------------
-- (0.05) 0.59 10.59 6.37d 11,118 1.25c
-- (0.05) 0.56 10.56 6.07d 9,957 1.95c
-- (0.05) 0.57 10.57 6.17d 2,557 1.95c
-- (0.05) 0.61 10.61 6.57d 9,026 0.95c
-- (0.05) 0.60 10.60 6.47d 2 1.45c
--------------------------------------------------------------------------------------
|
CORE SMALL CAP EQUITY FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
------------------------
Ratio of net Ratio of net
investment Ratio of investment
income (loss) expenses to loss Portfolio
to average average net to average turnover
net assets assets net assets rate
------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares (0.12)%c 1.67%c (0.46)%c 52.03%d
1999 - Class B Shares (0.86)c 2.42c (1.20)c 52.03d
1999 - Class C Shares (0.86)c 2.42c (1.20)c 52.03d
1999 - Institutional Shares 0.28c 1.27c (0.06)c 52.03d
1999 - Service Shares (0.22)c 1.77c (0.56)c 52.03d
------------------------------------------------------------------------------
For the Year Ended January
31,
1999 - Class A Shares 0.08 2.00 (0.61) 75.38
1999 - Class B Shares (0.55) 2.62 (1.17) 75.38
1999 - Class C Shares (0.56) 2.63 (1.18) 75.38
1999 - Institutional Shares 0.60 1.56 (0.02) 75.38
1999 - Service Shares 0.01 2.06 (0.61) 75.38
------------------------------------------------------------------------------
For the Period Ended January
31,
1998 - Class A Shares
(commenced August 15, 1997) (0.36)c 3.92c (3.03)c 37.65d
1998 - Class B Shares
(commenced August 15, 1997) (1.04)c 4.37c (3.46)c 37.65d
1998 - Class C Shares
(commenced August 15, 1997) (1.07)c 4.37c (3.49)c 37.65d
1998 - Institutional Shares
(commenced August 15, 1997) 0.15c 3.37c (2.27)c 37.65d
1998 - Service Shares
(commenced August 15, 1997) 0.40c 3.87c (2.02)c 37.65d
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CAPITAL GROWTH FUND
Income from
investment operations/a/
---------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
----------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $24.03 $(0.08) $1.01
1999 - Class B Shares 23.57 (0.17) 0.97
1999 - Class C Shares 23.52 (0.16) 0.97
1999 - Institutional Shares 24.07 (0.02) 1.01
1999 - Service Shares 23.96 (0.08) 1.00
----------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 18.48 (0.03) 6.35
1999 - Class B Shares 18.27 (0.12) 6.19
1999 - Class C Shares 18.24 (0.10) 6.15
1999 - Institutional Shares 18.45 0.01 6.38
1999 - Service Shares 18.46 (0.04) 6.31
----------------------------------------------------------------------------
1998 - Class A Shares 16.73 0.02 4.78
1998 - Class B Shares 16.67 0.02 4.61
1998 - Class C Shares (commenced August
15, 1997) 19.73 (0.02) 1.60
1998 - Institutional Shares (commenced
August 15, 1997) 19.88 0.02 1.66
1998 - Service Shares (commenced August
15, 1997) 19.88 (0.01) 1.66
----------------------------------------------------------------------------
1997 - Class A Shares 14.91 0.10 3.56
1997 - Class B Shares (commenced May 1,
1996) 15.67 0.01 2.81
----------------------------------------------------------------------------
1996 - Class A Shares 13.67 0.12 3.93
----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
shareholders
--------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net value, end Total period to average
income income realized gain asset value of period return/b/ (in 000s) net assets
--------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.93 $24.96 3.87%d $1,971,097 1.44%c
-- -- -- 0.80 24.37 3.39d 329,870 2.19c
-- -- -- 0.81 24.33 3.44d 87,284 2.19c
-- -- -- 0.99 25.06 4.11d 255,210 1.04c
-- -- -- 0.92 24.88 3.84d 6,466 1.54c
--------------------------------------------------------------------------------------------------
-- -- (0.77) 5.55 24.03 34.58 1,992,716 1.42
-- -- (0.77) 5.30 23.57 33.60 236,369 2.19
-- -- (0.77) 5.28 23.52 33.55 60,234 2.19
-- -- (0.77) 5.62 24.07 35.02 41,817 1.07
-- -- (0.77) 5.50 23.96 34.34 3,085 1.57
--------------------------------------------------------------------------------------------------
(0.01) (0.01) (3.03) 1.75 18.48 29.71 1,256,595 1.40
-- -- (3.03) 1.60 18.27 28.73 40,827 2.18
-- (0.04) (3.03) (1.49) 18.24 8.83d 5,395 2.21c
(0.01) (0.07) (3.03) (1.43) 18.45 9.31d 7,262 1.16c
-- (0.04) (3.03) (1.42) 18.46 9.18d 2 1.50c
--------------------------------------------------------------------------------------------------
(0.10) (0.02) (1.72) 1.82 16.73 25.97 920,646 1.40
(0.01) (0.09) (1.72) 1.00 16.67 19.39d 3,221 2.15c
--------------------------------------------------------------------------------------------------
(0.12) -- (2.69) 1.24 14.91 30.45 881,056 1.36
--------------------------------------------------------------------------------------------------
|
CAPITAL GROWTH FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
--------------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) expenses to income (loss) Portfolio
to average average net to average turnover
net assets assets net assets rate
---------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares (0.53)%c 1.47%c (0.56)%c 18.16%d
1999 - Class B Shares (1.29)c 2.22c (1.32)c 18.16d
1999 - Class C Shares (1.29)c 2.22c (1.32)c 18.16d
1999 - Institutional
Shares (0.20)c 1.07c (0.23)c 18.16d
1999 - Service Shares (0.65)c 1.57c (0.68)c 18.16d
---------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares (0.18) 1.58 (0.34) 30.17
1999 - Class B Shares (0.98) 2.21 (1.00) 30.17
1999 - Class C Shares (1.00) 2.21 (1.02) 30.17
1999 - Institutional
Shares 0.11 1.09 0.09 30.17
1999 - Service Shares (0.37) 1.59 (0.39) 30.17
---------------------------------------------------------------------------------
1998 - Class A Shares 0.08 1.65 (0.17) 61.50
1998 - Class B Shares (0.77) 2.18 (0.77) 61.50
1998 - Class C Shares
(commenced August 15,
1997) (0.86)c 2.21c (0.86)c 61.50
1998 - Institutional
Shares (commenced August
15, 1997) 0.18c 1.16c 0.18c 61.50
1998 - Service Shares
(commenced August 15, 1997) (0.16)c 1.50c (0.16)c 61.50
---------------------------------------------------------------------------------
1997 - Class A Shares 0.62 1.65 0.37 52.92
1997 - Class B Shares
(commenced May 1, 1996) (0.39)c 2.15c (0.39)c 52.92
---------------------------------------------------------------------------------
1996 - Class A Shares 0.65 1.61 0.40 63.90
---------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
STRATEGIC GROWTH FUND
Income from
investment operations/a/
----------------------------
Net asset Net
value, investment
beginning income Net realized and
of period (loss) unrealized gain
-------------------------------------------------------------------------------
For The Period Ended August 31,
1999 - Class A Shares (commenced May 24) $10.00 $ -- $0.06
1999 - Class B Shares (commenced May 24) 10.00 (0.03)e 0.07e
1999 - Class C Shares (commenced May 24) 10.00 (0.03)e 0.08e
1999 - Institutional Shares (commenced
May 24) 10.00 0.01 0.06
1999 - Service Shares (commenced May 24) 10.00 (0.01) 0.07
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
APPENDIX B
Distributions to shareholders
--------------------------------------
In excess Net assets
From net of net Net increase Net asset at end of Ratio of
investment investment From net in net asset value, end Total period net expenses to
income income realized gains value of period returnb (in 000s) average net assets
------------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.06 $10.06 0.60%d $10,371 1.44%c
-- -- -- 0.04 10.04 0.40d 3,393 2.19c
-- -- -- 0.05 10.05 0.50d 2,388 2.19c
-- -- -- 0.07 10.07 0.70d 5,981 1.04c
-- -- -- 0.06 10.06 0.60d 2 1.54c
------------------------------------------------------------------------------------------------------
|
STRATEGIC GROWTH FUND (continued)
Ratios assuming no
voluntary waiver of
fees or expense
limitations
--------------------
Ratio of
net Ratio of Ratio of
investment expenses net
income to investment
(loss) to average loss to Portfolio
average net average turnover
net assets assets net assets rate
-----------------------------------------------------------------------------
For The Period Ended August 31,
1999 - Class A Shares (commenced
May 24) (0.17)%c 11.70%c (10.43)%c 6.98%d
1999 - Class B Shares (commenced
May 24) (0.97)c 12.45c (11.23)c 6.98d
1999 - Class C Shares (commenced
May 24) (0.99)c 12.45c (11.25)c 6.98d
1999 - Institutional Shares
(commenced May 24) 0.24c 11.30c (10.02)c 6.98d
1999 - Service Shares (commenced
May 24) (0.24)c 11.80c (10.50)c 6.98d
-----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
[This page intentionally left blank]
GROWTH OPPORTUNITIES FUND
Income from
investment operations/a/
---------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain
-------------------------------------------------------------------------------
For the Period Ended August 31,
1999 - Class A Shares (commenced May 24) $10.00 $(0.01)e $0.14e
1999 - Class B Shares (commenced May 24) 10.00 (0.03)e 0.21e
1999 - Class C Shares (commenced May 24) 10.00 (0.03)e 0.13e
1999 - Institutional Shares (commenced May
24) 10.00 0.01 0.12
1999 - Service Shares (commenced May 24) 10.00 -- 0.12
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
APPENDIX B
Distributions to shareholders
---------------------------------------
In excess Net assets Ratio of
From net of net Net increase Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period returnb (in 000s) net assets
-------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.13 $10.13 1.30%d $8,204 1.44%c
-- -- -- 0.18 10.18 1.80d 520 2.19c
-- -- -- 0.10 10.10 1.00d 256 2.19c
-- -- -- 0.13 10.13 1.30d 5,223 1.04c
-- -- -- 0.12 10.12 1.20d 2 1.54c
-------------------------------------------------------------------------------------------------
|
GROWTH OPPORTUNITIES FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
----------------------------
Ratio Ratio
of net of net
investment Ratio of investment
income (loss) expenses to loss to Portfolio
to average average net average turnover
net assets assets net assets rate
-------------------------------------------------------------------------------------
For the Period Ended August 31,
1999 - Class A Shares
(commenced May 24) (0.27)%c 14.15%c (12.98)%c 26.53%d
1999 - Class B Shares
(commenced May 24) (1.04)c 14.90c (13.75)c 26.53d
1999 - Class C Shares
(commenced May 24) (1.12)c 14.90c (13.83)c 26.53d
1999 - Institutional
Shares (commenced May
24) 0.39c 13.75c (12.32)c 26.53d
1999 - Service Shares
(commenced May 24) 0.03c 14.25c (12.68)c 26.53d
-------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
[This page intentionally left blank]
MID CAP VALUE FUND
Income from
investment operations/a/
---------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $18.38 $0.06 $1.71
1999 - Class B Shares 18.29 (0.04) 1.71
1999 - Class C Shares 18.30 (0.04) 1.71
1999 - Institutional Shares 18.37 0.09 1.72
1999 - Service Shares 18.29 0.05 1.70
------------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 21.61 0.10 (2.38)
1999 - Class B Shares 21.57 (0.05) (2.35)
1999 - Class C Shares 21.59 (0.05) (2.34)
1999 - Institutional Shares 21.65 0.19 (2.38)
1999 - Service Shares 21.62 0.03 (2.31)
------------------------------------------------------------------------------
1998 - Class A Shares (commenced August
15, 1997) 23.63 0.09 0.76
1998 - Class B Shares (commenced August
15, 1997) 23.63 0.06 0.74
1998 - Class C Shares (commenced August
15, 1997) 23.63 0.06 0.76
1998 - Institutional Shares 18.73 0.16 5.66
1998 - Service Shares (commenced July 18,
1997) 23.01 0.09 1.40
------------------------------------------------------------------------------
1997 - Institutional Shares 15.91 0.24 3.77
------------------------------------------------------------------------------
For the Period Ended January 31,
1996 - Institutional Shares (commenced
August 1, 1995) 15.00 0.13 0.90
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to shareholders
--------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
---------------------------------------------------------------------------------------------------
$ -- $ -- $(1.73) $ 0.04 $18.42 9.04%d $49,081 1.29%c
-- -- (1.73) (0.06) 18.23 8.53d 31,824 2.04c
-- -- (1.73) (0.06) 18.24 8.52d 9,807 2.04c
-- -- (1.73) 0.08 18.45 9.26d 190,549 0.89c
-- -- (1.73) 0.02 18.31 8.97d 190 1.39c
---------------------------------------------------------------------------------------------------
(0.07) -- (0.88) (3.23) 18.38 (10.48) 70,578 1.33
-- -- (0.88) (3.28) 18.29 (11.07) 37,821 1.93
(0.02) -- (0.88) (3.29) 18.30 (11.03) 10,800 1.93
(0.21) -- (0.88) (3.28) 18.37 (10.07) 196,512 0.87
(0.17) -- (0.88) (3.33) 18.29 (10.48) 289 1.37
---------------------------------------------------------------------------------------------------
(0.06) (0.04) (2.77) (2.02) 21.61 3.42d 90,588 1.35c
(0.09) -- (2.77) (2.06) 21.57 3.17d 28,743 1.85c
(0.09) -- (2.77) (2.04) 21.59 3.27d 6,445 1.85c
(0.13) -- (2.77) 2.92 21.65 30.86 236,440 0.85
(0.11) -- (2.77) (1.39) 21.62 6.30d 8 1.35c
---------------------------------------------------------------------------------------------------
(0.24) (0.93) (0.02) 2.82 18.73 25.63 145,253 0.85
---------------------------------------------------------------------------------------------------
(0.12) -- -- 0.91 15.91 6.89d 135,671 0.85c
---------------------------------------------------------------------------------------------------
|
MID CAP VALUE FUND (continued)
Ratios assuming no
expense limitations
--------------------------
Ratio of
net
investment Ratio of
income Ratio of net investment
(loss) to expenses to income (loss) Portfolio
average net average net to average net turnover
assets assets assets rate
------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares 0.43%c 1.37%c 0.35%c 68.84%d
1999 - Class B Shares (0.33)c 2.12c (0.41)c 68.84d
1999 - Class C Shares (0.34)c 2.12c (0.42)c 68.84d
1999 - Institutional Shares 0.79c 0.97c 0.71c 68.84d
1999 - Service Shares 0.38c 1.47c 0.30c 68.84d
------------------------------------------------------------------------------
For the Years Ended January
31,
1999 - Class A Shares 0.38 1.41 0.30 92.18
1999 - Class B Shares (0.22) 2.01 (0.30) 92.18
1999 - Class C Shares (0.22) 2.01 (0.30) 92.18
1999 - Institutional Shares 0.83 0.95 0.75 92.18
1999 - Service Shares 0.32 1.45 0.24 92.18
------------------------------------------------------------------------------
1998 - Class A Shares
(commenced August 15, 1997) 0.33c 1.47c 0.21c 62.60
1998 - Class B Shares
(commenced August 15, 1997) (0.20)c 1.97c (0.32)c 62.60
1998 - Class C Shares
(commenced August 15, 1997) (0.23)c 1.97c (0.35)c 62.60
1998 - Institutional Shares 0.78 0.97 0.66 62.60
1998 - Service Shares
(commenced July 18, 1997) 0.63c 1.43c 0.51c 62.60
------------------------------------------------------------------------------
1997 - Institutional Shares 1.35 0.91 1.29 74.03
------------------------------------------------------------------------------
For the Period Ended January
31,
1996 - Institutional Shares
(commenced August 1, 1995) 1.67c 0.98c 1.54c 58.77d
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
SMALL CAP VALUE FUND
Income (loss) from
investment operations/a/
--------------------------------
Net asset
value, Net Net realized and
beginning investment unrealized
of period income (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended
August 31,
1999 - Class A Shares $18.51 $(0.05) $1.34
1999 - Class B Shares 18.10 (0.12) 1.29
1999 - Class C Shares 18.12 (0.11) 1.27
1999 - Institutional Shares 18.62 -- 1.33
1999 - Service Shares 18.50 (0.13) 1.39
------------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 24.05 (0.06) (4.48)
1999 - Class B Shares 23.73 (0.21) (4.42)
1999 - Class C Shares 23.73 (0.18) (4.43)
1999 - Institutional Shares 24.09 0.03 (4.50)
1999 - Service Shares 24.05 (0.04) (4.51)
------------------------------------------------------------------------------
1998 - Class A Shares 20.91 0.14 5.33
1998 - Class B Shares 20.80 (0.01) 5.27
1998 - Class C Shares (commenced
August 15, 1997) 24.69 (0.06) 1.43
1998 - Institutional Shares
(commenced August 15, 1997) 24.91 0.03 1.48
1998 - Service Shares (commenced
August 15, 1997) 24.91 (0.01) 1.48
------------------------------------------------------------------------------
1997 - Class A Shares 17.29 (0.21) 4.92
1997 - Class B Shares (commenced May
1, 1996) 20.79 (0.11) 1.21
------------------------------------------------------------------------------
1996 - Class A Shares 16.14 (0.23) 1.39
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
shareholders
----------------------------
In excess Net increase Net asset Net assets Ratio of
of net (decrease) value, at end of net expenses
investment From net in net asset end of Total period to average
income realized gains value period return/b/ (in 000s) net assets
----------------------------------------------------------------------------------------
$ -- $ -- $1.29 $19.80 6.97%d $210,500 1.50%c
-- -- 1.17 19.27 6.46d 37,386 2.25c
-- -- 1.16 19.28 6.40d 8,079 2.25c
-- -- 1.33 19.95 7.14d 27,023 1.10c
-- -- 1.26 19.76 6.81d 57 1.60c
----------------------------------------------------------------------------------------
-- (1.00) (5.54) 18.51 (17.37) 261,661 1.50
-- (1.00) (5.63) 18.10 (18.00) 42,879 2.25
-- (1.00) (5.61) 18.12 (17.91) 8,212 2.25
-- (1.00) (5.47) 18.62 (17.04) 15,351 1.13
-- (1.00) (5.55) 18.50 (17.41) 261 1.62
----------------------------------------------------------------------------------------
-- (2.33) 3.14 24.05 26.17 370,246 1.54
-- (2.33) 2.93 23.73 25.29 42,677 2.29
(0.34) (1.99) (0.96) 23.73 5.51d 5,604 2.09c
(0.28) (2.05) (0.82) 24.09 6.08d 14,626 1.16c
(0.31) (2.02) (0.86) 24.05 5.91d 2 1.45c
----------------------------------------------------------------------------------------
-- (1.09) 3.62 20.91 27.28 212,061 1.60
-- (1.09) 0.01 20.80 5.39d 3,674 2.35c
----------------------------------------------------------------------------------------
-- (0.01) 1.15 17.29 7.20 204,994 1.41
----------------------------------------------------------------------------------------
|
SMALL CAP VALUE FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
-----------------------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) to expenses to income (loss) Portfolio
average net average net to average net turnover
assets assets assets rate
-----------------------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares (0.35)%c 1.61%c (0.46)%c 46.95%d
1999 - Class B Shares (1.10)c 2.36c (1.21)c 46.95d
1999 - Class C Shares (1.10)c 2.36c (1.21)c 46.95d
1999 - Institutional
Shares 0.05c 1.21c (0.06)c 46.95d
1999 - Service Shares (0.41)c 1.71c (0.52)c 46.95d
-----------------------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares (0.24) 1.74 (0.48) 98.46
1999 - Class B Shares (0.99) 2.29 (1.03) 98.46
1999 - Class C Shares (0.99) 2.29 (1.03) 98.46
1999 - Institutional
Shares 0.13 1.17 0.09 98.46
1999 - Service Shares (0.47) 1.66 (0.51) 98.46
-----------------------------------------------------------------------------------------------
1998 - Class A Shares (0.28) 1.76 (0.50) 84.81
1998 - Class B Shares (0.92) 2.29 (0.92) 84.81
1998 - Class C Shares
(commenced August
15, 1997) (0.79)c 2.09c (0.79)c 84.81
1998 - Institutional
Shares (commenced
August 15, 1997) 0.27c 1.16c 0.27c 84.81
1998 - Service Shares
(commenced August 15,
1997) (0.07)c 1.45c (0.07)c 84.81
-----------------------------------------------------------------------------------------------
1997 - Class A Shares (0.72) 1.85 (0.97) 99.46
1997 - Class B Shares
(commenced May 1, 1996) (1.63)c 2.35c (1.63)c 99.46
-----------------------------------------------------------------------------------------------
1996 - Class A Shares (0.59) 1.66 (0.84) 57.58
-----------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
Appendix C
Prior Performance of Similarly Advised Accounts of the Investment Adviser
CORE LARGE CAP VALUE FUND
The following table sets forth the Investment Adviser's composite perfor- mance data relating to the historical performance of all discretionary pri- vate accounts managed by the Investment Adviser that have investment objec- tives, policies, and strategies substantially similar to the CORE Large Cap Value Fund. The information is provided to illustrate the past performance of the Investment Adviser in managing substantially similar accounts as mea- sured against the Russell 1000 Value Index and does not represent the per- formance of the CORE Large Cap Value Fund. Investors should not consider this performance data as a substitute for the performance of the CORE Large Cap Value Fund nor should investors consider this data as an indication of future performance of the CORE Large Cap Value Fund or of the Investment Adviser. The Russell 1000 Value Index is unmanaged and investors cannot invest directly in the Index.
Private Account Private Account Private Account Private Account
Net Composite Net Composite Net Composite Net Composite Russell
Performance Performance Performance Performance 1000
(including Class A (including Class B (including Class C (excluding Value
sales charge) sales charge) sales charge) sales charges) Index
-----------------------------------------------------------------------------------------------------
1998 5.27% 6.40% 10.40% 11.40% 15.64%
1997 25.30% 27.59% 31.59% 32.59% 35.18%
1996 19.46% 21.41% 25.41% 26.41% 21.64%
1995 30.34% 32.92% 36.92% 37.92% 38.35%
1994 (7.55)% (7.06)% (3.14)% (2.17)% (2.01)%
1993 10.48% 11.90% 15.90% 16.90% 18.12%
8/1/92 - 12/31/92 (0.41)% 0.39% 4.39% 5.39% 4.01%
-----------------------------------------------------------------------------------------------------
|
Average Annual Total Return for
the
Period Ended 12/31/98
Since
Inception
1 Year 3 Years 5 Years (8/1/92)
-----------------------------------------------------------------------------
Private Account Net Composite Performance
(including Class A sales charge) 5.27% 20.82% 18.92% 18.67%
Private Account Net Composite Performance
(including Class B sales charge) 6.40% 22.61% 20.11% 19.30%
Private Account Net Composite Performance
(including Class C sales charge) 10.40% 23.13% 20.30% 19.30%
Private Account Net Composite Performance
(excluding sales charges) 11.40% 23.13% 20.30% 19.30%
Russell 1000 Value Index 15.64% 23.88% 20.85% 19.68%
-----------------------------------------------------------------------------
|
The Investment Adviser's composite performance information was calculated on a time-weighted and asset-weighted total return basis which includes real- ized and unrealized gains and losses plus income, as recommended by the Association for Investment Management and Research ("AIMR"). The composite performance is net of applicable investment management fees, brokerage com- missions, execution costs and custodial fees, without provision for federal and state taxes, if any. Total return performance of the CORE Large Cap Value Fund will be calculated in accordance with the regulations of the SEC. The SEC standardized average annualized total return is neither time- weighted nor asset-weighted and is determined for specified periods by com- puting the annualized percentage change in the value of an initial amount that is invested in a share class of the Fund at the maximum public offering price. Investors should be aware that the differences in methodology between AIMR and SEC requirements could result in different performance data for identical time periods.
Performance reflects the deduction of the maximum 5.5% front-end sales charge with respect to Class A Shares and the maximum CDSC with respect to Class B (5%) and Class C Shares (1%). All returns presented reflect the reinvestment of dividends and other earnings. The weighted-average expenses of the private accounts used in calculating the Investment Adviser's net composite performance data were 0.59% annualized, which are lower than the estimated expenses of Class A, Class B and Class C Shares of the CORE Large Cap Value Fund stated under "Fund Fees and Expenses" above. The performance of the private accounts
APPENDIX C
would have been lower if they had been subject to the expenses of the CORE Large Cap Value Fund. In addition, the private accounts are not subject to the same diversification requirements, specific tax restrictions and invest- ment limitations imposed on the CORE Large Cap Value Fund by the Act and Subchapter M of the Code. Consequently, the performance results of the Investment Adviser's composite could have been adversely affected if the private accounts had been regulated as investment companies under the fed- eral securities laws.
Appendix D
Prior Performance of Similarly Advised Accounts of the Investment Adviser
STRATEGIC GROWTH FUND
The following table sets forth the Investment Adviser's composite perfor- mance data relating to the historical performance of all discretionary pri- vate accounts managed by the Investment Adviser that have investment objec- tives, policies, and strategies substantially similar to the Strategic Growth Fund. The information is provided to illustrate the past performance of the Investment Adviser in managing substantially similar accounts as mea- sured against the S&P 500 Index and does not represent the performance of the Strategic Growth Fund. Investors should not consider this performance data as a substitute for the performance of the Strategic Growth Fund nor should investors consider this data as an indication of future performance of the Strategic Growth Fund or of the Investment Adviser. The S&P 500 Index is unmanaged and investors cannot invest directly in the Index.
Private Account Private Account Private Account Private Account
Net Composite Net Composite Net Composite Net Composite
Performance Performance Performance Performance
(including Class A (including Class B (including Class C (excluding S&P 500
sales charge) sales charge) sales charge) sales charges) Index
----------------------------------------------------------------------------------------
1998 27.91% 30.35% 34.35% 35.35% 28.57%
1997 33.37% 36.14% 40.14% 41.14% 33.37%
1996 15.12% 16.79% 20.79% 21.79% 22.95%
1995 21.02% 23.07% 27.07% 28.07% 37.58%
1994 -7.11% -6.69% -2.69% -1.69% 1.32%
1993 10.66% 12.10% 16.10% 17.10% 10.08%
1992 3.21% 4.22% 8.22% 9.22% 7.62%
1991 29.88% 32.44% 36.44% 37.44% 30.47%
1990 -14.31% -14.32% -10.32% -9.32% -3.05%
1989 26.46% 28.82% 32.82% 33.82% 31.70%
1988 16.83v% 18.63% 22.63% 23.63% 16.61%
1987 -0.45% 0.34% 4.34% 5.34% 5.25%
1986 12.44% 13.99% 17.99% 18.99% 18.67%
1985 30.39% 32.98% 36.98% 37.98% 31.73%
1984 2.55v% 3.52% 7.52% 8.52% 6.19%
1983 27.02% 29.41% 33.41% 34.41% 22.56%
1982 27.04% 29.43% 33.43% 34.43% 21.55%
1981 -4.54% -3.98% 0.02% 1.02% -4.97%
----------------------------------------------------------------------------------------
|
APPENDIX D
Average Annual Total Return for the
Period Ended 12/31/98
Since
Inception
1 Year 3 Years 5 Years 10 Years (1/1/81)
----------------------------------------------------------------------------
Private Account Net Composite
Performance
(including Class A sales
charge) 27.91% 30.01% 22.56% 19.43% 19.57%
Private Account Net Composite
Performance
(including Class B sales
charge) 30.35% 32.07% 23.37% 20.11% 19.96%
Private Account Net Composite
Performance
(including Class C sales
charge) 34.35% 32.51% 23.98% 20.11% 19.96%
Private Account Net Composite
Performance
(excluding sales charges) 35.35% 32.51% 23.98% 20.11% 19.96%
S&P 500 Index 28.57% 28.23% 24.06% 19.22% 16.94%
----------------------------------------------------------------------------
|
The Investment Adviser's composite performance information was calculated on a time-weighted and asset-weighted total return basis which includes real- ized and unrealized gains and losses plus income, as recommended by the Association for Investment Management and Research ("AIMR"). The composite performance is net of applicable investment management fees, brokerage com- missions, execution costs and custodial fees, without provision for federal and state taxes, if any. Total return performance of the Strategic Growth Fund will be calculated in accordance with the regulations of the SEC. The SEC standardized average annual total return is neither time-weighted nor asset-weighted and is determined for specified periods by computing the annualized percentage change in the value of an initial amount that is invested in a share class of the Fund at the maximum public offering price. Investors should be aware that the differences in methodology between AIMR and SEC requirements could result in different performance data for identi- cal time periods.
Performance reflects the deduction of the maximum 5.5% front-end sales charge with respect to Class A Shares and the maximum CDSC with respect to Class B (5%) and Class C Shares (1%). All returns presented reflect the reinvestment of dividends and other earnings. The weighted-average expenses of the private accounts used in calculating the Investment Adviser's net composite performance data were 0.76% annualized, which are lower than the estimated expenses of Class A, Class B and Class C Shares of the Strategic Growth Fund stated under "Fund Fees and Expenses" above. The performance of the private accounts
would have been lower if they had been subject to the expenses of the Stra- tegic Growth Fund. In addition, the private accounts are not subject to the same diversification requirements, specific tax restrictions and investment limitations imposed on the Strategic Growth Fund by the Act and Subchapter M of the Code. Consequently, the performance results of the Investment Advis- er's composite could have been adversely affected if the private accounts had been regulated as investment companies under the federal securities laws.
Index
1 General Investment
Management Approach
3 Fund Investment Objectives
and Strategies
3 Goldman Sachs Balanced
Fund
5 Goldman Sachs Growth and
Income Fund
6 Goldman Sachs CORE Large
Cap Value Fund
7 Goldman Sachs CORE U.S.
Equity Fund
8 Goldman Sachs CORE Large
Cap Growth Fund
9 Goldman Sachs CORE Small
Cap Equity Fund
10 Goldman Sachs Capital
Growth Fund
11 Goldman Sachs Strategic
Growth Fund
12 Goldman Sachs Growth
Opportunities Fund
13 Goldman Sachs Mid Cap
Value Fund
14 Goldman Sachs Small Cap
Value Fund
15 Goldman Sachs Large Cap Value Fund
|
16 Other Investment
Practices and
Securities
20 Principal Risks of the
Funds
24 Fund Performance
34 Fund Fees and Expenses
51 Service Providers
59 Dividends
61 Shareholder Guide
61 How To Buy Shares
70 How To Sell Shares
80 Taxation
82 Appendix A
Additional Information
on Portfolio Risks,
Securities and
Techniques
104 Appendix B
Financial Highlights
147 Appendix C
CORE Large Cap Value
Fund-Prior Performance
of Similarly Advised
Accounts of the
Investment Adviser
150 Appendix D
Strategic Growth Fund-
Prior Performance of
Similarly Advised
Accounts of the
Investment Adviser
|
Domestic Equity Funds
Prospectus (Class A, B and C Shares)
FOR MORE INFORMATION
Annual/Semi-annual Report
Additional information about the Funds' investments is available in the Funds' annual and semi-annual reports to shareholders. In the Funds' annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the last fiscal year.
Statement of Additional Information
Additional information about the Funds and their policies is also available
in the Funds' Additional Statement. The Additional Statement is incorporated
by reference into this Prospectus (is legally considered part of this Pro-
spectus).
The Funds' annual and semi-annual reports, and the Additional Statement, are available free upon request by calling Goldman Sachs at 1-800-526-7384.
To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-526-7384
By mail - Goldman Sachs Funds, 4900 Sears Tower - 60th Floor, Chicago, IL
60606-6372
By e-mail - gs-funds@gs.com
On the Internet - Text-only versions of the Funds' documents are located
online and may be downloaded from:
SEC EDGAR database - http://www.sec.gov Goldman Sachs - http://www.gs.com (Prospectus Only)
You may review and obtain copies of Fund documents by visiting the SEC's
Public Reference Room in Washington, D.C. You may also obtain copies of Fund
documents, after paying a duplicating fee, by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102 or by electronic request to:
publicinfo@sec.gov. Information on the operation of the public reference
room may be obtained by calling the SEC at (202) 942-8090.
[LOGO OF GOLDMAN SACHS APPEARS HERE]
The Funds' investment company registration number is 811-5349.
CORE/SM/ is a service mark of Goldman, Sachs & Co.
511044
EQDOMPROABC
Prospectus
GOLDMAN SACHS DOMESTIC EQUITY FUNDS
Institutional
Shares
November 30, 1999
.Goldman Sachs
Balanced Fund
.Goldman Sachs
Growth and
Income Fund
.Goldman Sachs
CORE SM
Large Cap Value
Fund
.Goldman Sachs
CORE SM U.S.
Equity Fund
.Goldman Sachs
CORE SM Large
Cap Growth
Fund
.Goldman Sachs
CORE SM Small
Cap Equity
Fund
.Goldman Sachs
Capital Growth
Fund
.Goldman Sachs
Strategic
Growth Fund
.Goldman Sachs
Growth
Opportunities
Fund
.Goldman Sachs
Mid Cap Value
Fund (formerly
Mid
Cap Equity)
.Goldman Sachs
Small Cap
Value Fund
.Goldman Sachs
Large Cap
Value Fund
[LOGO OF GOLDMAN SACHS]
THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A FUND IS NOT A BANK
DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN A FUND
INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
[ART]
NOT FDIC-INSURED May Lose Value No Bank Guarantee
General Investment Management Approach
Goldman Sachs Asset Management, a unit of the Investment Management Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser to the Balanced, Growth and Income, CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, Strategic Growth, Growth Opportunities, Mid Cap Value, Small Cap Value and Large Cap Value Funds. Goldman Sachs Funds Management, L.P. serves as investment adviser to the CORE U.S. Equity and Capital Growth Funds. Goldman Sachs Asset Management and Goldman Sachs Funds Management, L.P. are each referred to in this Prospectus as the "Investment Adviser."
VALUE STYLE FUNDS
Goldman Sachs' Value Investment Philosophy:
Through intensive, hands-on research our portfolio team seeks to identify:
1. Attractive valuation opportunities where:
.The intrinsic value of the business is not reflected in the stock price
.The stock price is overdiscounted due to a temporary event
2. Well-positioned businesses that have:
.Attractive returns on capital
.Sustainable earnings and cash flow
.Strong company management focused on long-term returns to shareholders
Business quality, conservative valuation, and thoughtful portfolio construc- tion are the key elements of our value approach.
GROWTH STYLE FUNDS
Goldman Sachs' Growth Investment Philosophy:
1. Invest as if buying the company/business, not simply trading its stock:
.Understand the business, management, products and competition.
.Perform intensive, hands-on fundamental research.
.Seek businesses with strategic competitive advantages.
.Over the long-term, expect each company's stock price ultimately to track the growth in the value of the business.
2. Buy high-quality growth businesses that possess strong business fran- chises, favorable long-term prospects and excellent management.
3. Purchase superior long-term growth companies at a favorable price--seek to purchase at a fair valuation, giving the investor the potential to fully capture returns from above-average growth rates.
Growth companies have earnings expectations that exceed those of the stock market as a whole.
QUANTITATIVE ("CORE") STYLE FUNDS
Goldman Sachs' CORE Investment Philosophy:
Goldman Sachs' quantitative style of funds--CORE--emphasizes the two build-
ing blocks of active management: stock selection and portfolio construction.
I. CORE Stock Selection
The CORE Funds use the Goldman Sachs' proprietary multifactor model
("Multifactor Model"), a rigorous computerized rating system, to forecast
the returns of securities held in each Fund's portfolio. The Multifactor
Model incorporates common variables covering measures of:
.Value (price-to-book, price-to-earnings, cash flow to enterprise value)
.Momentum (earnings momentum, price momentum, sustainable growth)
.Risk (market risk, company-specific risk, earnings risk)
.Research (fundamental research ratings of Goldman Sachs and other analysts)
All of the above factors are carefully evaluated within the Multifactor Model since each has demonstrated a significant impact on the performance of the securities and markets they were designed to forecast. Stock selection in this process combines both our quantitative and qualitative analysis.
II. CORE Portfolio Construction A proprietary computer optimizer calculates every security combination (at every possible weighting) to construct the most efficient risk/return port- folio given each CORE Fund benchmark. In this process, the Investment Adviser manages risk by limiting deviations from the benchmark, running size and sector neutral portfolios.
Goldman Sachs CORE Funds are fully invested, broadly diversified and offer consistent overall portfolio characteristics. They may serve as good founda- tions on which to build a portfolio.
Fund Investment Objectives and Strategies
Goldman Sachs
Balanced Fund
Objective: Long-term growth of capital and current income
Benchmarks: S&P 500 Index and Lehman Brothers Aggregate Bond Index
Investment Focus: Large capitalization U.S. stocks and fixed-income securi- ties
Investment Style: Asset Allocation, with growth and value (blend) equity components
INVESTMENT OBJECTIVE
The Fund seeks to provide long-term growth of capital and current income. The Fund seeks growth of capital primarily through investments in equity securities (stocks). The Fund seeks to provide current income through investment in fixed-income securities (bonds).
PRINCIPAL INVESTMENT STRATEGIES
Historically, stock and bond markets have often had different cycles, with one asset class rising when the other is falling. A balanced objective seeks to reduce the volatility associated with investing in a single market. There is no guarantee, however, that market cycles will move in opposition to one another or that a balanced investment program will successfully reduce vola- tility.
The percentage of the portfolio invested in equity and fixed-income securi- ties will vary from time to time as the Investment Adviser evaluates such securities' relative attractiveness based on market valuations, economic growth and inflation prospects. The allocation between equity and fixed- income securities is subject to the Fund's intention to pay regular quar- terly dividends. The amount of quarterly dividends can also be expected to fluctuate in accordance with factors such as prevailing interest rates and the percentage of the Fund's assets invested in fixed-income securities.
Equity Securities. The Fund invests, under normal circumstances, between 45% and 65% of its total assets in equity securities. Although the Fund's equity investments consist primarily of publicly traded U.S. securities, the Fund may invest up to 10% of its total assets in the equity securities of foreign issuers, including issuers in countries with emerging markets or economies ("emerging countries") and equity securities quoted in foreign currencies. A portion of the Fund's portfolio of equity securities may be selected primar- ily to provide current income (including interests in real estate investment trusts ("REITs"), convertible securities, preferred stocks, utility stocks, and interests in limited partnerships).
Fixed Income Securities. The Fund invests at least 25% of its total assets in fixed-income senior securities. The remainder of the Fund's assets are invested in other fixed-income securities and cash.
The Fund's fixed-income securities primarily include:
.Securities issued by the U.S. government, its agencies, instrumentalities
or sponsored enterprises
.Securities issued by corporations, banks and other issuers
.Mortgage-backed and asset-backed securities
The Fund may also invest up to 10% of its total assets in debt obligations (U.S. dollar and non-U.S.-dollar denominated) issued or guaranteed by one or more foreign governments or any of their political subdivisions, agencies or instrumentalities and foreign corporations or other entities. The issuers of these securities may be located in emerging countries.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Growth and Income Fund
Objective: Long-term growth of capital and growth of income
Benchmark: S&P 500 Index
Investment Focus: Large capitalization U.S. equity securities with an
emphasis on undervalued stocks
Investment Style: Value
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and growth of income.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 65% of its total assets in equity securities that the Investment Adviser considers to have favorable prospects for capital appreciation and/or divi- dend-paying ability. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in for- eign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations, that offer the potential to further the Fund's investment objective.
Goldman Sachs
CORE Large Cap Value Fund
Objective: Long-term growth of capital and dividend income
Benchmark: Russell 1000 Value Index
Investment Focus: Diversified portfolio of equity securities of large-cap
U.S. issuers selling at low to modest valuations
Investment Style: Quantitative, applied to large-cap value stocks
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and dividend income. The Fund seeks this objective through a broadly diversified portfolio of equity secu- rities of large-cap U.S. issuers that are selling at low to modest valua- tions relative to general market measures, such as earnings, book value and other fundamental accounting measures, and that are expected to have favora- ble prospects for capital appreciation and/or dividend-paying ability.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the Russell 1000 Value Index. The Fund seeks a portfolio comprised of companies with above average capitalizations and low to moderate valuations as measured by price/earnings ratios, book value and other fundamental accounting measures.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
CORE U.S. Equity Fund
Objective: Long-term growth of capital and dividend income
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities
Investment Style: Quantitative, applied to large-cap
growth and value (blend) stocks
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and dividend income. The Fund seeks this objective through a broadly diversified portfolio of large-cap and blue chip equity securities representing all major sectors of the U.S. economy.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the S&P 500 Index. The Fund seeks a broad repre- sentation in most major sectors of the U.S. economy and a portfolio com- prised of companies with average long-term earnings growth expectations and dividend yields.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
Goldman Sachs
CORE Large Cap Growth Fund
Objective: Long-term growth of capital; dividend income is a
secondary consideration
Benchmark: Russell 1000 Growth Index
Investment Focus: Large-cap, growth-oriented U.S. stocks
Investment Style: Quantitative, applied to large-cap growth stocks
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of large-cap U.S. issuers that are expected to have better prospects for earnings growth than the growth rate of the general domestic economy. Dividend income is a secondary consideration.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Investment Adviser emphasizes a company's growth prospects in analyzing equity securities to be purchased by the Fund. The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintain- ing risk, style, capitalization and industry characteristics similar to the Russell 1000 Growth Index. The Fund seeks a portfolio comprised of companies with above average capitalizations and earnings growth expectations and below average dividend yields.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
CORE Small Cap Equity Fund
Objective: Long-term growth of capital
Benchmark: Russell 2000 Index
Investment Focus: Stocks of small capitalization U.S. companies
Investment Style: Quantitative, applied to small-cap
growth and value (blend) stocks
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of U.S. issuers which are included in the Russell 2000 Index at the time of investment.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the Russell 2000 Index. The Fund seeks a portfo- lio comprised of companies with small market capitalizations, strong expected earnings growth and momentum, and better valuation and risk charac- teristics than the Russell 2000 Index. If the issuer of a portfolio security held by the Fund is no longer included in the Russell 2000 Index, the Fund may, but is not required to, sell the security.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
Goldman Sachs
Capital Growth Fund
Objective: Long-term growth of capital
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities that offer long-term
capital appreciation potential
Investment Style: Growth
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity secu- rities that are considered by the Investment Adviser to have long-term capi- tal appreciation potential. Although the Fund invests primarily in publicly traded U.S. securities, it may invest up to 10% of its total assets in for- eign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Strategic Growth Fund
Objective: Long-term growth of capital
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities that are considered to
be strategically positioned for consistent long-term
growth
Investment Style: Growth
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity secu- rities that are considered by the Investment Adviser to be strategically positioned for consistent long-term growth. Although the Fund invests pri- marily in publicly traded U.S. securities, it may invest up to 10% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Goldman Sachs
Growth Opportunities Fund
Objective: Long-term growth of capital
Benchmark: S&P Midcap 400 Index
Investment Focus: U.S. equity securities that offer long-term capital
appreciation with a primary focus on mid-capitalization
companies
Investment Style: Growth
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities with a primary focus on mid-cap companies. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity securities that are considered by the Investment Adviser to be strategically positioned for long-term growth. Although the Fund invests primarily in publicly traded U.S. securities, it may invest up to 10% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Mid Cap Value Fund
Objective: Long-term capital appreciation
Benchmark: Russell Midcap Value Index
Investment Focus: Mid-capitalization U.S. stocks that are believed
to be undervalued or undiscovered by the marketplace
Investment Style: Value
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all of its assets in equity securities and at least 65% of its total assets in equity securities of mid-cap companies with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constitut- ing the Russell Midcap Value Index at the time of investment (currently between $300 million and $15 billion). If the capitalization of an issuer decreases below $300 million or increases above $15 billion after purchase, the Fund may, but is not required to, sell the securities. Dividend income, if any, is an incidental consideration. Although the Fund will invest pri- marily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations.
Goldman Sachs
Small Cap Value Fund
Objective: Long-term growth of capital
Benchmark: Russell 2000 Value Index
Investment Focus: Small-capitalization U.S. stocks that are believed to be
undervalued or undiscovered by the marketplace
Investment Style: Value
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 65% of its total assets in equity securities of companies with public stock market capitalizations of $1 billion or less at the time of investment. Under normal circumstances, the Fund's investment horizon for ownership of stocks will be two to three years. Dividend income, if any, is an incidental consideration. If the market capitalization of a company held by the Fund increases above $1 billion, the Fund may, consistent with its investment objective, continue to hold the security.
The Fund invests in companies which the Investment Adviser believes are well- managed niche businesses that have the potential to achieve high or improving returns on capital and/or above average sustainable growth. The Fund may invest in securities of small market capitalization companies which may have experienced financial difficulties. Investments may also be made in companies that are in the early stages of their life and that the Investment Adviser believes have significant growth potential. The Investment Adviser believes that the companies in which the Fund may invest offer greater opportunity for growth of capital than larger, more mature, better known companies. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securi- ties, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may invest in the aggregate up to 35% of its total assets in companies with public stock market capitalizations in excess of $1 billion at the time of investment and in fixed-income securities, such as govern- ment, corporate and bank debt obligations.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Large Cap Value Fund
Objective: Long-term capital appreciation
Benchmark: Russell 1000 Value Index
Investment Focus: Large capitalization U.S. equity securities that are
believed to be undervalued
Investment Style: Value
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks its investment objective by investing in value opportunities that the Investment Adviser defines as companies with identifiable competitive advantages whose intrin- sic value is not reflected in the stock price. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securities, including securities quoted in foreign currencies.
Other. The Fund may invest up to 10% of its total assets in fixed-income securities, such as government, corporate and bank debt obligations.
Other Investment Practices and Securities
The table below identifies some of the investment techniques that may (but are
not required to) be used by the Funds in seeking to achieve their investment
objectives. The table also highlights the differences among the Funds in their
use of these techniques and other investment practices and investment securi-
ties. Numbers in this table show allowable usage only; for actual usage, con-
sult the Fund's annual/semi-annual reports. For more information see Appendix
A.
10Percent of total assets (italic type)
10Percent of net assets (roman type)
. No specific percentage limitation on usage;limited only by the objectives and strategies of the Fund
Growth CORE CORE
Balanced and Income Large Cap U.S. Equity
Fund Fund Value Fund Fund
------------------------------------------------------------------------------
Investment Practices
Borrowings 33 1/3 33 1/3 33 1/3 33 1/3
Credit, currency, index, interest
rate and mortgage swaps* 15 -- -- --
Cross Hedging of Currencies . -- -- --
Custodial receipts . . . .
Equity Swaps* 15 15 15 15
Foreign Currency Transactions** ./1/ . . .
Futures Contracts and Options on
Futures Contracts . . ./2/ ./3/
Interest rate caps, floors and
collars . -- -- --
Investment Company Securities
(including World Equity Benchmark
Shares and Standard & Poor's
Depository Receipts) 10 10 10 10
Loan Participations . -- -- --
Mortgage Dollar Rolls . -- -- --
Options on Foreign Currencies/4/ . . . .
Options on Securities and
Securities Indices/5/ . . . .
Repurchase Agreements . . . .
Reverse Repurchase Agreements (for
investment purposes) . -- -- --
Securities Lending 33 1/3 33 1/3 33 1/3 33 1/3
Short Sales Against the Box 25 25 -- --
Unseasoned Companies . . . .
Warrants and Stock Purchase Rights . . . .
When-Issued Securities and Forward
Commitments . . . .
------------------------------------------------------------------------------
|
--Not permitted
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions.
** Limited by the amount the Fund invests in foreign securities.
1 The Balanced Fund may also enter into forward foreign currency exchange
contracts to seek to increase total return.
2 The CORE Large Cap Value, CORE Large Cap Growth and CORE Small Cap Equity
Funds may enter into futures transactions only with respect to a represen-
tative index.
3 The CORE U.S. Equity Fund may enter into futures transactions only with
respect to the S&P 500 Index.
4 The Funds may purchase and sell call and put options.
5 The Funds may sell covered call and put options and purchase call and put options.
OTHER INVESTMENT PRACTICES AND SECURITIES
CORE CORE Capital Strategic Growth Mid Cap Small Cap Large Cap
Large Cap Small Cap Growth Growth Opportunities Value Value Value
Growth Fund Equity Fund Fund Fund Fund Fund Fund Fund
---------------------------------------------------------------------------------------
33
1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
. . . . . . . .
15 15 15 15 15 15 15 15
. . . . . . . .
./2/ ./2/ . . . . . .
-- -- -- -- -- -- -- --
10 10 10 10 10 10 10 10
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
. . . . . . . .
. . . . . . . .
. . . . . . . .
-- -- -- -- -- -- -- --
33
1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3
-- -- 25 25 25 25 25 25
. . . . . . . .
. . . . . . . .
. . . . . . . .
---------------------------------------------------------------------------------------
|
10 Percent of total assets (italic type) 10 Percent of net assets (roman type) . No specific percentage limitation on usage; limited only by the objectives and strategies Growth CORE CORE of the Fund Balanced and Income Large Cap U.S. Equity -- Not permitted Fund Fund Value Fund Fund ------------------------------------------------------------------------------ Investment Securities American, European and Global Depository Receipts . . ./6/ ./6/ Asset-Backed and Mortgage- Backed Securities/7/ . . -- -- Bank Obligations/7/ . . . . Convertible Securities/8/ . . . . Corporate Debt Obligations/7/ . . . /9/ . /9/ Equity Securities 45-65 65+ 90+ 90+ Emerging Country Securities 10/10/ 25/10/ -- -- Fixed Income Securities/11/ 35-45/17/ 35 10 /9/ 10 /9/ Foreign Securities 10/10/ 25/10/ . /13/ . /13/ Foreign Government Securities/7/ . -- -- -- Municipal Securities . -- -- -- Non-Investment Grade Fixed Income Securities 10/14/ 10/15/ -- -- Real Estate Investment Trusts . . . . Stripped Mortgage Backed Securities/7/ . -- -- -- Structured Securities* . . . . Temporary Investments 100 100 35 35 U.S. Government Securities/7/ . . . . Yield Curve Options and Inverse Floating Rate Securities . -- -- -- ------------------------------------------------------------------------------ |
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 6 The CORE Funds may not invest in European Depository Receipts.
7 Limited by the amount the Fund invests in fixed-income securities.
8 Convertible securities purchased by the Balanced Fund must be B or higher by Standard & Poor's Rating Group ("Standard & Poor's") or Moody's Investor's Service, Inc. ("Moody's"). The CORE Funds have no minimum rating criteria and all other Funds use the same rating criteria for convertible and non- convertible debt securities.
9 Cash equivalents only.
10 The Balanced, Growth and Income, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value and Small Cap Value Funds may invest in the aggregate up to 10%, 25%, 10%, 10%, 10%, 25% and 25%, respectively, of their total assets in foreign securities, including emerging country securities.
11 Except as noted under "Non-Investment Grade Fixed Income Securities," fixed- income securities must be investment grade (i.e., BBB or higher by Standard & Poor's or Baa or higher by Moody's).
12 The Small Cap Value Fund may invest in the aggregate up to 35% of its total assets in: (1) the equity securities of companies with public stock market capitalizations in excess of $1 billion at the time of investment; and (2) fixed-income securities.
13 Equity securities of foreign issuers must be traded in the United States.
14 Must be at least BB or B by Standard & Poor's or Ba or B by Moody's.
OTHER INVESTMENT PRACTICES AND SECURITIES
CORE CORE Capital Strategic Growth Mid Cap Small Cap Large Cap
Large Cap Small Cap Growth Growth Opportunities Value Value Value
Growth Fund Equity Fund Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------
. /6/ . /6/ . . . . . .
-- -- . . . . . .
. . . . . . . .
. . . . . . . .
. /9/ . /9/ . . . . . .
90+ 90+ 90+ 90+ 90+ 65+ 65+ 90+
-- -- 10/10/ 10/10/ 10/10/ 25/10/ 25/10/ --
10 /9/ 10 /9/ . . . 35 35/12/ 10
. /13/ . /13/ 10/10/ 10/10/ 10/10/ 25/10/ 25/10/ 25
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- 10/15/ 10/15/ 10/15/ 10/16/ 35/15/ 10/15/
. . . . . . . .
-- -- -- -- -- -- -- --
. . . . . . . .
35 35 100 100 100 100 100 100
. . . . . . . .
-- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------
|
15 Limited by the amount the Fund invests in fixed-income securities. May be BB or lower by Standard & Poor's or Ba or lower by Moody's.
16 Must be B or higher by Standard & Poor's or B or higher by Moody's.
17 The Balanced Fund invests at least 25% of its total assets in fixed-income senior securities; the remainder is invested in other fixed-income securi- ties and cash.
Principal Risks of the Funds
Loss of money is a risk of investing in each Fund. An investment in a Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The following summarizes important risks that apply to the Funds and may result in a loss of your investment. None of the Funds should be relied upon as a complete invest- ment program. There can be no assurance that a Fund will achieve its investment objective.
CORE CORE CORE
Growth Large CORE Large Small
and Cap U.S. Cap Cap
.Applicable Balanced Income Value Equity Growth Equity
--Not applicable Fund Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------
Credit/Default . . . . . .
Foreign . . . . . .
Emerging Countries . . . . . .
Small Cap/REIT -- -- -- -- -- .
Stock . . . . . .
Derivatives . . . . . .
Interest Rate . . . . . .
Management . . . . . .
Market . . . . . .
Liquidity . . . . . .
Other . . . . . .
------------------------------------------------------------------------------------
|
PRINCIPAL RISKS OF THE FUNDS
Mid Small Large
Capital Strategic Growth Cap Cap Cap
Growth Growth Opportunities Value Value Value
Fund Fund Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------
. . . . . .
. . . . . .
. . . . . .
-- -- -- . . --
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
-----------------------------------------------------------------------------------------------
|
All Funds:
.Credit/Default Risk--The risk that an issuer of fixed-income securities held
by a Fund (which may have low credit ratings) may default on its obligation to
pay interest and repay principal.
.Foreign Risks--The risk that when a Fund invests in foreign securities, it
will be subject to risk of loss not typically associated with domestic
issuers. Loss may result because of less foreign government regulation, less
public information and less economic, political and social stability. Loss may
also result from the imposition of exchange controls, confiscations and other
government restrictions. A Fund will also be subject to the risk of negative
foreign currency rate fluctuations. Foreign risks will normally be greatest
when a Fund invests in issuers located in emerging countries.
.Emerging Countries Risk--The securities markets of Asian, Latin American,
Eastern European, African and other emerging countries are less liquid, are
especially subject to greater price volatility, have smaller market capital-
izations, have less government regulation and are not subject to as extensive
and frequent accounting, financial and other reporting requirements as the
securities markets of more developed countries. Further, investment in equity
securities of issuers located in Russia and certain other emerging countries
involves risk of loss resulting from problems in share registration and cus-
tody and substantial economic and political disruptions. These risks are not
normally associated with investments in more developed countries.
.Stock Risk--The risk that stock prices have historically risen and fallen in
periodic cycles. As of the date of this Prospectus, U.S. stock markets and
certain foreign stock markets were trading at or close to record high levels.
There is no guarantee that such levels will continue.
.Derivatives Risk--The risk that loss may result from a Fund's investments in
options, futures, swaps, structured securities and other derivative instru-
ments. These instruments may be leveraged so that small changes may produce
disproportionate losses to a Fund.
.Interest Rate Risk--The risk that when interest rates increase, fixed-income
securities held by a Fund will decline in value. Long-term fixed-income secu-
rities will normally have more price volatility because of this risk than
short-term securities.
.Management Risk--The risk that a strategy used by the Investment Adviser may
fail to produce the intended results.
.Market Risk--The risk that the value of the securities in which a Fund invests
may go up or down in response to the prospects of individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
PRINCIPAL RISKS OF THE FUNDS
.Liquidity Risk--The risk that a Fund will not be able to pay redemption pro-
ceeds within the time period stated in this Prospectus because of unusual mar-
ket conditions, an unusually high volume of redemption requests, or other rea-
sons. Funds that invest in non-investment grade fixed-income securities, small
capitalization stocks, REITs and emerging country issuers will be especially
subject to the risk that during certain periods the liquidity of particular
issuers or industries, or all securities within these investment categories,
will shrink or disappear suddenly and without warning as a result of adverse
economic, market or political events, or adverse investor perceptions whether
or not accurate. The Goldman Sachs Asset Allocation Portfolios (the "Asset
Allocation Portfolios") expect to invest a significant percentage of their
assets in the Funds and other funds for which Goldman Sachs now or in the
future acts as investment adviser or underwriter. Redemptions by an Asset
Allocation Portfolio of its position in a Fund may further increase liquidity
risk and may impact a Fund's net asset value ("NAV").
.Other Risks--Each Fund is subject to other risks, such as the risk that its
operations, or the value of its portfolio securities, will be disrupted by the
"Year 2000 Problem."
Specific Funds:
.Small Cap Stock and REIT Risk--The securities of small capitalization stocks and REITs involve greater risks than those associated with larger, more estab- lished companies and may be subject to more abrupt or erratic price movements. Securities of such issuers may lack sufficient market liquidity to enable a Fund to effect sales at an advantageous time or without a substantial drop in price.
More information about the Funds' portfolio securities and investment tech- niques, and their associated risks, is provided in Appendix A. You should con- sider the investment risks discussed in this section and in Appendix A. Both are important to your investment choice.
Fund Performance
HOW THE FUNDS HAVE PERFORMED
The bar chart and table below provide an indication of the risks of invest- ing in a Fund by showing: (a) changes in the performance of a Fund's Insti- tutional Shares from year to year; and (b) how the average annual returns of a Fund's Institutional Shares compare to those of broad-based securities market indices. The bar chart and table assume reinvestment of dividends and distributions. A Fund's past performance is not necessarily an indication of how the Fund will perform in the future. Performance reflects expense limi- tations in effect. If expense limitations were not in place, a Fund's per- formance would have been reduced. The Large Cap Value Fund commenced opera- tions as of the date of this Prospectus. The CORE Large Cap Value, Strategic Growth and Growth Opportunities Funds commenced operations on December 31, 1998, May 24, 1999 and May 24, 1999, respectively. Since these Funds have less than one calendar year's performance, no performance information is provided in this section.
FUND PERFORMANCE
Balanced Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September
30, 1999 was
0.94%.
Best Quarter
Q4 "98 +8.12%
Worst Quarter
Q3 "98 -8.69%
[BAR GRAPH APPEARS HERE]
1998
----
3.90%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ----------------------------------------------------------------- Institutional Shares (Inception 8/15/97) 3.90% 4.23% S&P 500 Index* 28.57% 24.80% Lehman Brothers Aggregate Bond Index** 8.69% 9.67% ----------------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses. ** The Lehman Brothers Aggregate Bond Index is an unmanaged index of bond prices. The Index figures do not reflect any fees or expenses.
Growth and Income Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September
30, 1999 was -
2.00%.
Best Quarter
Q2 '97 +15.24%
Worst Quarter
Q3 '98 -16.86%
[BAR GRAPH APPEARS HERE]
1997 1998
----- -----
28.44% 3.90%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ----------------------------------------------------------------- Institutional Shares (Inception 6/3/96) (4.98)% 14.35% S&P 500 Index* 28.57% 28.82% ----------------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
CORE U.S. Equity Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September
30, 1999 was
6.73%.
Best Quarter
Q4 "98 +21.60%
Worst Quarter
Q3 "98 -14.57%
[BAR GRAPH APPEARS HERE]
1996 1997 1998
----- ----- -----
22.09% 32.67% 21.95%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ----------------------------------------------------------------- Institutional Shares (Inception 6/15/95) 21.95% 26.23% S&P 500 Index* 28.57% 28.75% ----------------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
CORE Large Cap Growth Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September
30, 1999 was
9.58%.
Best Quarter
Q4 "98 +25.61%
Worst Quarter
Q3 "98 -13.87%
[BAR GRAPH APPEARS HERE]
1998
-----
30.64%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ---------------------------------------------------------------- Institutional Shares (Inception 5/1/97) 30.64% 31.98% Russell 1000 Growth Index* 38.72% 36.81% ---------------------------------------------------------------- |
* The Russell 1000 Growth Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
CORE Small Cap Equity Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September
30, 1999 was
1.58%.
Best Quarter
Q4 "98 +14.48%
Worst Quarter
Q3 "98 -24.25%
[BAR GRAPH APPEARS HERE]
1998
-----
-5.63%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ------------------------------------------------------------------ Institutional Shares (Inception 8/15/97) (5.63)% 1.44% Russell 2000 Index* (2.55)% 2.84% ------------------------------------------------------------------ |
* The Russell 2000 Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
Capital Growth Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September
30, 1999 was
5.89%.
Best Quarter
Q4 '98 +24.46%
Worst Quarter
Q3 '98 -11.40%
[BAR GRAPH APPEARS HERE]
1998
-----
34.34%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ----------------------------------------------------------------- Institutional Shares (Inception 8/15/97) 34.34% 30.00% S&P 500 Index* 28.57% 24.80% ----------------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
Mid Cap Value Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September
30, 1999 was -
1.61%.
Best Quarter
Q2 '97 +19.64%
Worst Quarter
Q3 '98 -20.78%
[BAR GRAPH APPEARS HERE]
1996 1997 1998
----- ----- -----
21.34% 36.04% -5.43%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ----------------------------------------------------------------- Institutional Shares (Inception 8/1/95) (5.43)% 15.53% Russell Midcap Value Index* 5.10% 19.73% Russell Midcap Index** 10.09% 18.95% ----------------------------------------------------------------- |
* The Russell Midcap Value Index, an unmanaged index of common stock prices, is replacing the Russell Midcap Index as the Mid Cap Value Fund's perfor- mance benchmark. The Russell Midcap Value Index includes more value-ori- ented stocks and, therefore, is expected to be a better benchmark compari- son for the Fund's performance. The Index figures do not reflect any fees or expenses.
** The Russell Midcap Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
Small Cap Value Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September
30, 1999 was
0.21%.
Best Quarter
Q4 '98 +13.43%
Worst Quarter
Q3 '98 -32.16%
[BAR GRAPH APPEARS HERE]
1998
-----
-16.56%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ------------------------------------------------------------------- Institutional Shares (Inception 8/15/97) (16.56)% (7.50)% Russell 2000 Value Index * (6.44)% 2.50% Russell 2000 Index ** (2.55)% 2.84% ------------------------------------------------------------------- |
* The Russell 2000 Value Index, an unmanaged index of common stock prices, is replacing the Russell 2000 Index as the Small Cap Value Fund's performance benchmark. The Russell 2000 Value Index includes more value-oriented stocks and, therefore, is expected to be a better benchmark comparison for the Fund's performance. The Index figures do not reflect any fees or expenses.
** The Russell 2000 Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
[This page intentionally left blank]
Fund Fees and Expenses (Institutional Shares)
This table describes the fees and expenses that you would pay if you buy and hold Institutional Shares of a Fund.
CORE
Growth and Large Cap CORE
Balanced Income Value U.S. Equity
Fund Fund Fund Fund
-----------------------------------------------------------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases None None None None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None None None None
Redemption Fees None None None None
Exchange Fees None None None None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets):1
Management Fees2 0.65% 0.70% 0.60% 0.75%
Distribution and Service Fees None None None None
Other Expenses3 0.27% 0.10% 0.21% 0.09%
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses* 0.92% 0.80% 0.81% 0.84%
-----------------------------------------------------------------------------------------------------------------------------------
|
See page 36 for all other footnotes.
* As a result of current waivers and expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Funds which are actually incurred are as set forth below. The waivers and expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
CORE
Growth and Large Cap CORE
Balanced Income Value U.S. Equity
Fund Fund Fund Fund
----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (expenses that are deducted from Fund assets):1
Management Fees2 0.65% 0.70% 0.60% 0.70%
Distribution and Services Fees None None None None
Other Expenses3 0.05% 0.09% 0.04% 0.04%
----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (after current waivers and expense limitations) 0.70% 0.79% 0.64% 0.74%
----------------------------------------------------------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
CORE CORE
Large Cap Small Cap Capital Strategic Growth Mid Cap Small Cap Large Cap
Growth Equity Growth Growth Opportunities Value Value Value
Fund Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------
None None None None None None None None
None None None None None None None None
None None None None None None None None
None None None None None None None None
0.75% 0.85% 1.00% 1.00% 1.00% 0.75% 1.00% 0.75%
None None None None None None None None
0.11% 0.42% 0.07% 2.41% 2.70% 0.22% 0.21% 1.01%
--------------------------------------------------------------------------------------------------
0.86% 1.27% 1.07% 3.41% 3.70% 0.97% 1.21% 1.76%
--------------------------------------------------------------------------------------------------
|
CORE CORE
Large Cap Small Cap Capital Strategic Growth Mid Cap Small Cap Large Cap
Growth Equity Growth Growth Opportunities Value Value Value
Fund Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------
0.60% 0.85% 1.00% 1.00% 1.00% 0.75% 1.00% 0.75%
None None None None None None None None
0.04% 0.08% 0.04% 0.04% 0.04% 0.14% 0.10% 0.10%
--------------------------------------------------------------------------------------------------
0.64% 0.93% 1.04% 1.04% 1.04% 0.89% 1.10% 0.85%
--------------------------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
/1/The Fund's operating expenses for the current fiscal year have been
annualized for the seven-month period (February 1, 1999 through August 31,
1999). The operating expenses for the Strategic Growth, Growth Opportunities
and Large Cap Value Funds are estimated for the current year.
/2/The Investment Adviser has voluntarily agreed not to impose a portion of the
management fee on the CORE U.S. Equity Fund and the CORE Large Cap Growth Fund
equal to 0.05% and 0.15%, respectively, of such Funds' average daily net
assets. As a result of fee waivers, the current management fees of the CORE
U.S. Equity Fund and CORE Large Cap Growth Fund are 0.70% and 0.60%, respec-
tively, of such Funds' average daily net assets. The waivers may be terminated
at any time at the option of the Investment Adviser.
/3/"Other Expenses" include transfer agency fees equal to 0.04% of the average
daily net assets of each Fund's Institutional Shares plus all other ordinary
expenses not detailed above. The Investment Adviser has voluntarily agreed to
reduce or limit "Other Expenses"(excluding management fees, transfer agency
fees, taxes, interest and brokerage fees and litigation, indemnification and
other extraordinary expenses) to the following percentages of each Fund's aver-
age daily net assets:
Other
Fund Expenses
--------------------------
Balanced 0.01%
Growth and
Income 0.05%
CORE Large Cap
Value 0.00%
CORE U.S. Equity 0.00%
CORE Large Cap
Growth 0.00%
CORE Small Cap
Equity 0.04%
Capital Growth 0.00%
Strategic Growth 0.00%
Growth
Opportunities 0.00%
Mid Cap Value 0.10%
Small Cap Value 0.06%
Large Cap Value 0.06%
|
FUND FEES AND EXPENSES
Example
The following Example is intended to help you compare the cost of investing in a Fund (without the waivers and expense limitations) with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in Institu- tional Shares of a Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that a Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years ------------------------------------------------------ Balanced $ 94 $ 293 $509 $1,131 ------------------------------------------------------ Growth and Income $ 82 $ 255 $444 $ 990 ------------------------------------------------------ CORE Large Cap Value $ 83 $ 259 $450 $1,002 ------------------------------------------------------ CORE U.S. Equity $ 86 $ 268 $466 $1,037 ------------------------------------------------------ CORE Large Cap Growth $ 88 $ 274 $477 $1,061 ------------------------------------------------------ CORE Small Cap Equity $129 $ 403 $697 $1,534 ------------------------------------------------------ Capital Growth $109 $ 340 $590 $1,306 ------------------------------------------------------ Strategic Growth $344 $1,048 N/A N/A ------------------------------------------------------ Growth Opportunities $372 $1,132 N/A N/A ------------------------------------------------------ Mid Cap Value $ 99 $ 309 $536 $1,190 ------------------------------------------------------ Small Cap Value $123 $ 384 $665 $1,466 ------------------------------------------------------ Large Cap Value $179 $ 554 N/A N/A ------------------------------------------------------ |
Institutions that invest in Institutional Shares on behalf of their customers may charge other fees directly to their customer accounts in connection with their investments. You should contact your institution for information regard- ing such charges. Such fees, if any, may affect the return such customers real- ize with respect to their investments.
Certain institutions that invest in Institutional Shares may receive other com- pensation in connection with the sale and distribution of Institutional Shares or for services to their customers' accounts and/or the Funds. For additional information regarding such compensation, see "Shareholder Guide" in the Pro- spectus and "Other Information" in the Statement of Additional Information ("Additional Statement").
Service Providers
INVESTMENT ADVISERS
Investment Adviser Fund
---------------------------------------------------------------------
Goldman Sachs Asset Management ("GSAM") Balanced
32 Old Slip Growth and Income
New York, New York 10005 CORE Large Cap Value
CORE Large Cap Growth
CORE Small Cap Equity
Strategic Growth
Growth Opportunities
Mid Cap Value
Small Cap Value
Large Cap Value
---------------------------------------------------------------------
Goldman Sachs Funds Management, L.P. ("GSFM") CORE U.S. Equity
32 Old Slip Capital Growth
New York, New York 10005
---------------------------------------------------------------------
|
As of September 1, 1999, the Investment Management Division ("IMD") was established as a new operating division of Goldman Sachs. This newly created entity includes GSAM and GSFM. Goldman Sachs registered as an investment adviser in 1981. GSFM, a registered investment adviser since 1990, is a Del- aware limited partnership which is an affiliate of Goldman Sachs. The Goldman Sachs Group, L.P., which controlled the Investment Advisers, merged into the Goldman Sachs Group, Inc. as a result of an initial public offer- ing. As of September 30, 1999, GSAM and GSFM, along with other units of IMD, have assets under management of $203 billion.
The Investment Adviser provides day-to-day advice regarding the Funds' port- folio transactions. The Investment Adviser makes the investment decisions for the Funds and places purchase and sale orders for the Funds' portfolio transactions in U.S. and foreign markets. As permitted by applicable law, these orders may be directed to any brokers, including Goldman Sachs and its affiliates. While the Investment Adviser is ultimately responsible for the management of the Funds, it is able to draw upon the research and expertise of its asset management affiliates for portfolio decisions and management with respect to certain portfolio securities. In addition, the Investment Adviser has access to the research and certain proprietary technical models developed by Goldman Sachs, and will apply quantitative and qualitative analysis in determining the appropriate allocations among categories of issuers and types of securities.
SERVICE PROVIDERS
The Investment Adviser also performs the following additional services for
the Funds:
. Supervises all non-advisory operations of the Funds
. Provides personnel to perform necessary executive, administrative and
clerical services to the Funds
. Arranges for the preparation of all required tax returns, reports to
shareholders, prospectuses and statements of additional information and
other reports filed with the Securities and Exchange Commission (the
"SEC") and other regulatory authorities
. Maintains the records of each Fund
. Provides office space and all necessary office equipment and services
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the Investment Adviser is entitled to the following fees, computed daily and payable monthly, at the annual rates listed below (as a percentage of each respective Fund's average daily net assets):
Actual Rate
For the Fiscal
Period Ended
Contractual Rate August 31, 1999
---------------------------------------------------------
GSAM:
---------------------------------------------------------
Balanced 0.65% 0.65%
---------------------------------------------------------
Growth and Income 0.70% 0.70%
---------------------------------------------------------
CORE Large Cap Value 0.60% 0.60%
---------------------------------------------------------
CORE Large Cap Growth 0.75% 0.60%
---------------------------------------------------------
CORE Small Cap Equity 0.85% 0.85%
---------------------------------------------------------
Strategic Growth 1.00% 1.00%
---------------------------------------------------------
Growth Opportunities 1.00% 1.00%
---------------------------------------------------------
Mid Cap Value 0.75% 0.75%
---------------------------------------------------------
Small Cap Value 1.00% 1.00%
---------------------------------------------------------
Large Cap Value 0.75% N/A
---------------------------------------------------------
GSFM:
---------------------------------------------------------
CORE U.S. Equity 0.75% 0.70%
---------------------------------------------------------
Capital Growth 1.00% 1.00%
---------------------------------------------------------
|
The difference, if any, between the stated fees and the actual fees paid by the Funds reflects that the Investment Adviser did not charge the full amount of the fees to which it would have been entitled. The Investment Adviser may discontinue or modify any such voluntary limitations in the future at its discretion.
FUND MANAGERS
M. Roch Hillenbrand, a Managing Director of Goldman Sachs since 1997, is the Head of Global Equities for GSAM, overseeing the United States, Europe, Japan, and non-Japan Asia. In this capacity, he is responsible for managing the group as it defines and implements global portfolio management processes that are consistent, reliable and predictable. Since 1981, Mr. Hillenbrand has been President of Commodities Corporation LLC, of which Goldman Sachs is the parent company. Over the course of his 19-year career at Commodities Corporation, Mr. Hillenbrand has had extensive experience in dealing with internal and external investment managers who have managed a range of futures and equities strategies across multiple markets, using a variety of styles.
Value Team
.Thirteen portfolio managers/analysts compose the Investment Adviser's value
investment team
.Multi-sector focus provides a balanced perspective
.Across all value products, the Investment Adviser leverages the industry
research expertise of its small, mid and large cap investment teams
Value Team
Years
Fund Primarily
Name and Title Responsibility Responsible Five Year Employment History
-------------------------------------------------------------------------------
Eileen A. Portfolio Since Ms. Aptman joined the Investment
Aptman Manager-- 1996 Adviser as a research analyst in
Vice President Mid Cap Value 1997 1993. She became a portfolio
Small Cap Value manager in 1996.
-------------------------------------------------------------------------------
Matthew B. Portfolio Since Mr. McLennan joined the
McLennan Manager-- 1996 Investment Adviser as a research
Vice President Small Cap Value 1998 analyst in 1995 and became a
Mid Cap Value portfolio manager in 1996. From
1994 to 1995, he worked in the
Investment Banking Division of
Goldman Sachs in Australia. From
1991 to 1994, Mr. McLennan
worked at Queensland Investment
Corporation in Australia.
-------------------------------------------------------------------------------
Eileen Rominger Senior Portfolio Since Ms. Rominger joined the
Managing Manager-- Growth 1999 Investment Adviser as a senior
Director and Income 1999 portfolio manager in 1999. From
Mid Cap Value 1999 1981 to 1999, she worked at
Small Cap Value 1999 Oppenheimer Capital, most
Large Cap Value 1999 recently as a senior portfolio
Balanced manager.
(Equity)
-------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Years
Fund Primarily
Name and Title Responsibility Responsible Five Year Employment History
---------------------------------------------------------------------------
Karma Wilson Portfolio Since Ms. Wilson joined the
Vice President Manager-- 1998 Investment Adviser as a
Balanced 1998 portfolio manager in 1994.
(Equity) 1998 Prior to 1994, she was an
Growth and 1999 investment analyst with
Income Bankers Trust Australia Ltd.
Mid Cap Value
Large Cap Value
---------------------------------------------------------------------------
|
Quantitative Equity Team
.A stable and growing team supported by an extensive internal staff
.Access to the research ideas of Goldman Sachs' renowned Global Investment
Research Department
.More than $23 billion in equities currently under management
Years
Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
------------------------------------------------------------------------------------------
Melissa Brown Senior Portfolio Manager-- Since Ms. Brown joined the
Vice President CORE Large Cap Value 1998 Investment Adviser as a
CORE U.S. Equity 1998 portfolio manager in
CORE Large Cap Growth 1998 1998. From
CORE Small Cap Equity 1998 1984 to 1998, she was
the
director of Quantitative
Equity Research and
served on the Investment
Policy Committee at
Prudential Securities.
------------------------------------------------------------------------------------------
Kent A. Clark Senior Portfolio Manager-- Since Mr. Clark joined the
Managing CORE U.S. Equity 1996 Investment Adviser as a
Director CORE Large Cap Growth 1997 portfolio manager in the
CORE Small Cap Equity 1997 quantitative equity
CORE Large Cap Value 1998 management team in 1992.
------------------------------------------------------------------------------------------
Robert C. Jones Senior Portfolio Manager-- Since Mr. Jones joined the
Managing CORE U.S. Equity 1991 Investment Adviser as a
Director CORE Large Cap Growth 1997 portfolio manager in
CORE Small Cap Equity 1997 1989.
CORE Large Cap Value 1998
------------------------------------------------------------------------------------------
Victor H. Senior Portfolio Manager-- Since Mr. Pinter joined the
Pinter CORE U.S. Equity 1996 Investment Adviser as a
Vice President CORE Large Cap Growth 1997 research analyst in
CORE Small Cap Equity 1997 1990. He became a
CORE Large Cap Value 1998 portfolio manager in
1992.
------------------------------------------------------------------------------------------
|
Growth Equity Investment Team
.18 year consistent investment style applied through diverse and complete
market cycles
.More than $12 billion in equities currently under management
.More than 250 client account relationships
.A portfolio management and analytical team with more than 150 years com-
bined investment experience
Growth Equity Investment Team
Years
Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
------------------------------------------------------------------------------------------
George D. Adler Senior Portfolio Manager-- Since Mr. Adler joined the
Vice President Balanced (Equity) 1997 Investment Adviser as a
Capital Growth 1997 portfolio manager in
Strategic Growth 1999 1997. From 1990 to 1997,
Growth Opportunities 1999 he was a portfolio
manager at Liberty
Investment Management,
Inc. ("Liberty").
------------------------------------------------------------------------------------------
Steve Barry Senior Portfolio Manager-- Since Mr. Barry joined the
Vice President Growth Opportunities 1999 Investment Adviser as a
portfolio manager in
1999. From 1988 to 1999,
he was a portfolio
manager at Alliance
Capital Management.
------------------------------------------------------------------------------------------
Robert G. Senior Portfolio Manager-- Since Mr. Collins joined the
Collins Capital Growth 1997 Investment Adviser as
Vice President Balanced (Equity) 1998 portfolio manager and
Strategic Growth 1999 Co-Chair of the Growth
Growth Opportunities 1999 Equity Investment
Committee in 1997. From
1991 to 1997, he was a
portfolio manager at
Liberty. His past
experience includes work
as a special situations
analyst with
Raymond James &
Associates for
five years.
------------------------------------------------------------------------------------------
Herbert E. Senior Portfolio Manager-- Since Mr. Ehlers joined the
Ehlers Capital Growth 1997 Investment Adviser as a
Managing Balanced (Equity) 1998 senior portfolio manager
Director Strategic Growth 1999 and Chief Investment
Growth Opportunities 1999 Officer of the Growth
Equity team in 1997.
From 1994 to 1997, he
was the Chief Investment
Officer and Chairman of
Liberty. He was a
portfolio manager and
President at Liberty's
predecessor firm, Eagle
Asset Management
("Eagle"), from 1984 to
1994.
------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Years
Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
------------------------------------------------------------------------------------------
Gregory H. Senior Portfolio Manager-- Since Mr. Ekizian joined the
Ekizian Capital Growth 1997 Investment Adviser as
Vice President Balanced (Equity) 1998 portfolio manager and
Strategic Growth 1999 Co-Chair of the Growth
Growth Opportunities 1999 Equity Investment
Committee in 1997. From
1990 to 1997, he was a
portfolio manager at
Liberty and its
predecessor firm, Eagle.
------------------------------------------------------------------------------------------
Scott Kolar Portfolio Manager-- Since Mr. Kolar joined the
Associate Capital Growth 1999 Investment Adviser as an
Strategic Growth 1999 equity analyst in 1997
and became a portfolio
manager in 1999. From
1994 to 1997, he was an
equity analyst and
information systems
specialist at Liberty.
------------------------------------------------------------------------------------------
David G. Shell Senior Portfolio Manager-- Since Mr. Shell joined the
Vice President Capital Growth 1997 Investment Adviser as a
Balanced (Equity) 1998 portfolio manager in
Strategic Growth 1999 1997. From 1987 to 1997,
Growth Opportunities 1999 he was a portfolio
manager at Liberty and
its predecessor firm,
Eagle.
------------------------------------------------------------------------------------------
Ernest C. Senior Portfolio Manager-- Since Mr. Segundo joined the
Segundo, Jr. Capital Growth 1997 Investment Adviser as a
Vice President Balanced (Equity) 1998 portfolio manager in
Strategic Growth 1999 1997. From 1992 to 1997,
Growth Opportunities 1999 he was a portfolio
manager at Liberty.
------------------------------------------------------------------------------------------
|
Fixed-Income Portfolio Management Team
.Fixed-income portfolio management is comprised of a deep team of sector
specialists
.The team strives to maximize risk-adjusted returns by de-emphasizing inter-
est rate anticipation and focusing on security selection and sector alloca-
tion
.The team manages approximately $29 billion in fixed-income assets for retail, institutional and high net worth clients
Fixed-Income Portfolio Management Team
Years
Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
--------------------------------------------------------------------------------
Jonathan A. Senior Portfolio Since Mr. Beinner joined the
Beinner Manager-- 1994 Investment Adviser as a
Managing Balanced (Fixed- portfolio manager in 1990.
Director and Income)
Co-Head U.S.
Fixed Income
--------------------------------------------------------------------------------
C. Richard Lucy Senior Portfolio Since Mr. Lucy joined the Investment
Managing Manager-- 1994 Adviser as a portfolio manager
Director and Balanced (Fixed- in 1992.
Co-Head U.S. Income)
Fixed Income
--------------------------------------------------------------------------------
|
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the exclusive distributor (the "Distributor") of each Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606-6372, also serves as the Funds' transfer agent (the "Transfer Agent") and, as such, performs various shareholder servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and hold shares of the Funds. Goldman Sachs reserves the right to redeem at any time some or all of the shares acquired for its own account.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS
The involvement of the Investment Adviser, Goldman Sachs and their affili- ates in the management of, or their interest in, other accounts and other activities of Goldman Sachs may present conflicts of interest with respect to a Fund or limit a Fund's investment activities. Goldman Sachs and its affiliates engage in proprietary trading and advise accounts and funds which have investment objectives similar to those of the Funds and/or which engage in and compete for transactions in the same types of securities, currencies and instruments as the Funds. Goldman Sachs and its affiliates will not have any obligation to make available any information regarding their proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of the Funds. The results of a Fund's investment activities, therefore, may differ from those of Goldman Sachs and its affiliates, and it is possible that a Fund could sustain losses during periods in which Goldman Sachs and its affili- ates and other accounts achieve significant profits on their trading for proprietary or other accounts. In addition, the Funds may, from time to time, enter into transactions in which other clients of Goldman Sachs have an adverse interest. A Fund's activities may be limited because of regula- tory restrictions applicable to Goldman Sachs and its affiliates, and/or their internal policies designed to comply with such restrictions.
YEAR 2000
Many computer systems were designed using only two digits to signify the year (for example, "98" for "1998"). On January 1, 2000, if these computer systems are not corrected, they may incorrectly interpret "00" as the year "1900" rather than the year "2000," leading to computer shutdowns or errors (commonly
SERVICE PROVIDERS
known as the "Year 2000 Problem"). To the extent these systems conduct forward-looking calculations, these computer problems may occur prior to January 1, 2000. Like other investment companies and financial and business organizations, the Funds could be adversely affected in their ability to process securities trades, price securities, provide shareholder account services and otherwise conduct normal business operations if the Investment Adviser or other Fund service providers do not adequately address this prob- lem in a timely manner.
In order to address the Year 2000 Problem, the Investment Adviser has taken the following measures:
.The Investment Adviser has established a dedicated group which analyzed these issues and implemented system modifications to prepare for the Year 2000 Problem.
.The Investment Adviser has either tested with or received assurance from the Fund's other service providers to confirm that they are taking reason- able steps to avoid Year 2000 Problems, and the Investment Adviser contin- ues to monitor the situation.
.The Investment Adviser has developed broad and comprehensive contingency plans, as well as event management plans that will help manage the Fund through the date change by allowing the Investment Adviser to closely moni- tor and respond to Year 2000-related events as they unfold around the world.
Currently, the Investment Adviser does not anticipate that the transition to the 21st century will have any material impact on its ability to continue to service the Funds at current levels.
In addition, the Investment Adviser has undertaken measures to appropriately take into account available information concerning the Year 2000 prepared- ness of the issuers of securities held by the Funds. The Investment Adviser may obtain such Year 2000 information from various sources which the Invest- ment Adviser believes to be reliable, including the issuers' public regula- tory filings. However, the Investment Adviser is not in a position to verify the accuracy or completeness of such information.
At this time, however, no assurance can be given that the actions taken by the Investment Adviser and the Funds' other service providers will be suffi- cient to avoid any adverse effect on the Funds due to the Year 2000 Problem.
Dividends
Each Fund pays dividends from its net investment income and distributions from
net realized capital gains. You may choose to have dividends and distributions
paid in:
.Cash
.Additional shares of the same class of the same Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund. Spe-
cial restrictions may apply for certain ILA Portfolios. See the Additional
Statement.
You may indicate your election on your Account Application. Any changes may be submitted in writing to Goldman Sachs at any time before the record date for a particular dividend or distribution. If you do not indicate any choice, your dividends and distributions will be reinvested automatically in the applicable Fund.
The election to reinvest dividends and distributions in additional shares will not affect the tax treatment of such dividends and distributions, which will be treated as received by you and then used to purchase the shares.
Dividends from net investment income and distributions from net capital gains are declared and paid as follows:
Investment Capital Gains
Fund Income Dividends Distributions
-----------------------------------------------------
Balanced Quarterly Annually
-----------------------------------------------------
Growth and Income Quarterly Annually
-----------------------------------------------------
CORE Large Cap Value Quarterly Annually
-----------------------------------------------------
CORE U.S. Equity Annually Annually
-----------------------------------------------------
CORE Large Cap Growth Annually Annually
-----------------------------------------------------
CORE Small Cap Equity Annually Annually
-----------------------------------------------------
Capital Growth Annually Annually
-----------------------------------------------------
Strategic Growth Annually Annually
-----------------------------------------------------
Growth Opportunities Annually Annually
-----------------------------------------------------
Mid Cap Value Annually Annually
-----------------------------------------------------
Small Cap Value Annually Annually
-----------------------------------------------------
Large Cap Value Annually Annually
-----------------------------------------------------
|
DIVIDENDS
From time to time a portion of a Fund's dividends may constitute a return of capital.
At the time of an investor's purchase of shares of a Fund, a portion of the NAV per share may be represented by undistributed income or undistributed realized appreciation of the Fund's portfolio securities. Therefore, subsequent distri- butions on such shares from such income or realized appreciation may be taxable to you even if the NAV of the shares is, as a result of the distributions, reduced below the cost of such shares and the distributions (or portions there- of) represent a return of a portion of the purchase price.
Shareholder Guide
The following section will provide you with answers to some of the most often asked questions regarding buying and selling the Funds' Institutional Shares.
HOW TO BUY SHARES
How Can I Purchase Institutional Shares Of The Funds?
You may purchase Institutional Shares on any business day at their NAV next
determined after receipt of an order. No sales load is charged. You should
place an order with Goldman Sachs at 1-800-621-2550 and either:
.Wire federal funds to The Northern Trust Company ("Northern"), as
subcustodian for State Street Bank and Trust Company ("State Street") (each
Fund's custodian) on the next business day; or
.Send a check or Federal Reserve draft payable to Goldman Sachs Funds--(Name of Fund and Class of Shares), 4900 Sears Tower--60th Floor, Chicago, IL 60606-6372. The Fund will not accept a check drawn on a foreign bank or a third-party check.
In order to make an initial investment in a Fund, you must furnish to the Fund or Goldman Sachs the Account Application attached to this Prospectus. Purchases of Institutional Shares must be settled within three business days of receipt of a complete purchase order.
How Do I Purchase Shares Through A Financial Institution?
Certain institutions (including banks, trust companies, brokers and invest-
ment advisers) that provide recordkeeping, reporting and processing services
to their customers may be authorized to accept, on behalf of Goldman Sachs
Trust (the "Trust"), purchase, redemption and exchange orders placed by or
on behalf of their customers, and may designate other intermediaries to
accept such orders, if approved by the Trust. In these cases:
.A Fund will be deemed to have received an order in proper form when the
order is accepted by the authorized institution or intermediary on a busi-
ness day, and the order will be priced at the Fund's NAV next determined
after such acceptance.
.Authorized institutions and intermediaries will be responsible for trans-
mitting accepted orders and payments to the Trust within the time period
agreed upon by them.
SHAREHOLDER GUIDE
You should contact your institution or intermediary to learn whether it is authorized to accept orders for the Trust.
These institutions may receive payments from the Funds or Goldman Sachs for the services provided by them with respect to the Funds' Institutional Shares. These payments may be in addition to other payments borne by the Funds.
The Investment Adviser, Distributor and/or their affiliates may pay addi- tional compensation from time to time, out of their assets and not as an additional charge to the Funds, to certain institutions and other persons in connection with the sale, distribution and/or servicing of shares of the Funds and other Goldman Sachs Funds. Additional compensation based on sales may, but is currently not expected to, exceed 0.50% (annualized) of the amount invested.
In addition to Institutional Shares, each Fund also offers other classes of shares to investors. These other share classes are subject to different fees and expenses (which affect performance), have different minimum investment requirements and are entitled to different services than Institutional Shares. Information regarding these other share classes may be obtained from your sales representative or from Goldman Sachs by calling the number on the back cover of this Prospectus.
What is My Minimum Investment in the Funds?
Type of Investor Minimum Investment ------------------------------------------------------------------------------- .Banks, trust companies or $1,000,000 in Institutional Shares of a Fund other depository alone or in combination with other assets institutions investing for under the management of GSAM and its affiliates their own account or on behalf of clients .Pension and profit sharing plans, pension funds and other company-sponsored benefit plans .State, county, city or any instrumentality, department, authority or agency thereof .Corporations with at least $100 million in assets or in outstanding publicly traded securities ."Wrap" account sponsors (provided they have an agreement covering the arrangement with GSAM) .Registered investment advisers investing for accounts for which they receive asset-based fees ------------------------------------------------------------------------------- .Individual investors $10,000,000 .Qualified non-profit organizations, charitable trusts, foundations and endowments .Accounts over which GSAM or its advisory affiliates have investment discretion ------------------------------------------------------------------------------- |
The minimum investment requirement may be waived for current and former officers, partners, directors or employees of Goldman Sachs or any of its affiliates or for other investors at the discretion of the Trust's officers. No minimum amount is required for subsequent investments.
What Else Should I Know About Share Purchases?
The Trust reserves the right to:
.Modify or waive the minimum investment amounts.
.Reject or restrict any purchase or exchange orders by a particular pur-
chaser (or group of related purchasers). This may occur, for example, when
a pattern of frequent purchases, sales or exchanges of Institutional Shares
of a Fund is evident, or if purchases, sales or exchanges are, or a subse-
quent abrupt redemption might be, of a size that would disrupt the manage-
ment of a Fund.
SHAREHOLDER GUIDE
The Funds may allow you to purchase shares with securities instead of cash if consistent with a Fund's investment policies and operations and if approved by the Fund's Investment Adviser.
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange Institutional
Shares is determined by a Fund's NAV. The Funds calculate NAV as follows:
The Funds' investments are valued based on market quotations or, if accurate
quotations are not readily available, the fair value of the Fund's invest-
ments may be determined in good faith under procedures established by the
Trustees.
.NAV per share of each class is calculated by State Street on each business
day as of the close of regular trading on the New York Stock Exchange (nor-
mally 4:00 p.m. New York time). Fund shares will not be priced on any day
the New York Stock Exchange is closed.
.When you buy shares, you pay the NAV next calculated after the Funds
receive your order in proper form.
.When you sell shares, you receive the NAV next calculated after the Funds
receive your order in proper form.
Note: The time at which transactions and shares are priced and the time by which orders must be received may be changed in case of an emergency or if regular trading on the New York Stock Exchange is stopped at a time other than 4:00 p.m. New York time.
Foreign securities may trade in their local markets on days a Fund is closed. As a result, the NAV of a Fund that holds foreign securities may be impacted on days when investors may not purchase or redeem Fund shares.
In addition, the impact of events that occur after the publication of market quotations used by a Fund to price its securities but before the close of regular trading on the New York Stock Exchange will normally not be reflected in a Fund's next determined NAV unless the Trust, in its discre- tion, makes an adjustment in light of the nature and materiality of the event, its effect on Fund operations and other relevant factors.
HOW TO SELL SHARES
How Can I Sell Institutional Shares Of The Funds? You may arrange to take money out of your account by selling (redeeming) some or all of your shares. Generally, each Fund will redeem its Institu- tional Shares upon request on any business day at their NAV next determined after receipt of such request in proper form. You may request that redemp- tion proceeds be sent to you by check or by wire (if the wire instructions are on record). Redemptions may be requested in writing or by telephone.
Instructions For Redemptions:
-----------------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund name and Class of Shares
.The dollar amount you want to sell
.How and where to send the proceeds
.Mail your request to:
Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
-----------------------------------------------------------------------
By Telephone: If you have elected the telephone
redemption privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
-----------------------------------------------------------------------
|
Certain institutions and intermediaries are authorized to accept redemption requests on behalf of the Funds as described under "How Do I Purchase Shares Through A Financial Institution?"
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor and the Transfer Agent will not be liable for any
loss you may incur in the event that the Trust accepts unauthorized tele-
phone redemption requests that the Trust reasonably believes to be genuine.
In an effort to prevent unauthorized or fraudulent redemption and exchange
requests by telephone, Goldman Sachs employs reasonable procedures specified
by the Trust to confirm that such instructions are genuine. If reasonable
procedures are not employed, the Trust may be liable for any loss due to
unauthorized or fraudulent transactions. The following general policies are
currently in effect:
.All telephone requests are recorded.
.Any redemption request that requires money to go to an account or address
other than that designated on the Account Application must be in writing
and signed by an authorized person designated on the Account Application.
The
SHAREHOLDER GUIDE
written request may be confirmed by telephone with both the requesting
party and the designated bank account to verify instructions.
.The telephone redemption option may be modified or terminated at any time.
Note: It may be difficult to make telephone redemptions in times of drastic economic or market conditions.
How Are Redemption Proceeds Paid?
By Wire: You may arrange for your redemption proceeds to be wired as federal
funds to the bank account designated in your Account Application. The fol-
lowing general policies govern wiring redemption proceeds:
.Redemption proceeds will normally be wired on the next business day in fed-
eral funds (for a total of one business day delay), but may be paid up to
three business days following receipt of a properly executed wire transfer
redemption request. If you are selling shares you recently paid for by
check, the Fund will pay you when your check has cleared, which may take up
to 15 days. If the Federal Reserve Bank is closed on the day that the
redemption proceeds would ordinarily be wired, wiring the redemption pro-
ceeds may be delayed one additional business day.
.To change the bank designated on your Account Application, you must send
written instructions signed by an authorized person designated on the
account application to the Transfer Agent.
.Neither the Trust, Goldman Sachs nor any other institution assumes any responsibility for the performance of your bank or any intermediaries in the transfer process. If a problem with such performance arises, you should deal directly with your bank or any such intermediaries.
By Check: You may elect in writing to receive your redemption proceeds by check. Redemption proceeds paid by check will normally be mailed to the address of record within three business days of a properly executed redemp- tion request. If you are selling shares you recently paid for by check, the Fund will pay you when your check has cleared, which may take up to 15 days.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
.Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
.Institutions (including banks, trust companies, brokers and investment
advisers) are responsible for the timely transmittal of redemption requests
by their customers to the Transfer Agent. In order to facilitate the timely
transmittal of redemption requests, these institutions may set times by
which they must receive
redemption requests. These institutions may also require additional docu- mentation from you.
The Trust reserves the right to:
.Redeem your shares if your account balance falls below $50 as a result of
earlier redemptions. The Funds will not redeem your shares on this basis if
the value of your account falls below the minimum account balance solely as
a result of market conditions. The Fund will give you 60 days' prior writ-
ten notice to allow you to purchase sufficient additional shares of the
Fund in order to avoid such redemption.
.Redeem your shares in other circumstances determined by the Board of Trust-
ees to be in the best interest of the Trust.
.Pay redemptions by a distribution in-kind of securities (instead of cash).
If you receive redemption proceeds in-kind, you should expect to incur
transaction costs upon the disposition of those securities.
Can I Exchange My Investment From One Fund To Another? You may exchange Institutional Shares of a Fund at NAV for Institutional Shares of any other Goldman Sachs Fund. The exchange privilege may be mate- rially modified or withdrawn at any time upon 60 days' written notice to you.
Instructions For Exchanging Shares:
-------------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund names and Class of Shares
.The dollar amount to be exchanged
.Mail the request to:
Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
-------------------------------------------------------------------
By Telephone: If you have elected the telephone exchange
privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
-------------------------------------------------------------------
|
You should keep in mind the following factors when making or considering an
exchange:
.You should obtain and carefully read the prospectus of the Fund you are
acquiring before making an exchange.
.All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirements of that Fund, except that this
requirement may be waived at the discretion of the Trust.
SHAREHOLDER GUIDE
.Telephone exchanges normally will be made only to an identically registered
account.
.Shares may be exchanged among accounts with different names, addresses and
social security or other taxpayer identification numbers only if the
exchange instructions are in writing and are signed by an authorized person
designated on the Account Application.
.Exchanges are available only in states where exchanges may be legally made.
.It may be difficult to make telephone exchanges in times of drastic eco-
nomic or market conditions.
.Goldman Sachs may use reasonable procedures described under "What Do I Need
To Know About Telephone Redemption Requests?" in an effort to prevent unau-
thorized or fraudulent telephone exchange requests.
For federal income tax purposes, an exchange is treated as a redemption of the shares surrendered in the exchange, on which you may be subject to tax, followed by a purchase of shares received in the exchange. You should con- sult your tax adviser concerning the tax consequences of an exchange.
What Types of Reports Will I Be Sent Regarding Investments In Institutional Shares?
You will receive an annual report containing audited financial statements and a semi-annual report. To eliminate unnecessary duplication, only one copy of such reports will be sent to shareholders with the same mailing address. If you would like a duplicate copy to be mailed to you, please con- tact Goldman Sachs Funds at 1-800-621-2550. You will also be provided with a printed confirmation for each transaction in your account and a monthly account statement. The Funds do not generally provide sub-accounting servic- es.
Taxation
TAXABILITY OF DISTRIBUTIONS
As with any investment, you should consider how your investment in the Funds will be taxed. The tax information below is provided as general information. More tax information is available in the Additional Statement. You should consult your tax adviser about the federal, state, local or foreign tax con- sequences of your investment in the Funds.
Unless your investment is an IRA or other tax-advantaged account, you should consider the possible tax consequences of Fund distributions and the sale of your Fund shares.
TAXES ON DISTRIBUTIONS
Distributions you receive from the Funds are generally subject to federal income tax, and may also be subject to state or local taxes. This is true whether you reinvest your distributions in additional Fund shares or receive them in cash. For federal tax purposes, the Funds' income dividend distribu- tions and short-term capital gain distributions are taxable to you as ordi- nary income. Any long-term capital gain distributions are taxable as long- term capital gains, no matter how long you have owned your Fund shares.
Although distributions are generally treated as taxable to you in the year they are paid, distributions declared in October, November or December but paid in January are taxable as if they were paid in December. A percentage of the Funds' dividends paid to corporate shareholders may be eligible for the corporate dividends-received deduction. The Funds will inform sharehold- ers of the source and tax status of all distributions promptly after the close of each calendar year.
Each Fund may be subject to foreign withholding or other foreign taxes on income or gain from certain foreign securities. In general, the Funds may deduct these taxes in computing their taxable income.
If you buy shares of a Fund before it makes a distribution, the distribution will be taxable to you even though it may actually be a return of a portion of your investment. This is known as "buying a dividend."
TAXATION
TAXES ON SALES
Your sale of Fund shares is a taxable transaction for federal income tax purposes, and may also be subject to state and local taxes. For tax purpos- es, the exchange of your Fund shares for shares of a different Goldman Sachs Fund is the same as a sale. When you sell your shares, you will generally recognize a capital gain or loss in an amount equal to the difference between your adjusted tax basis in the shares and the amount received. Gen- erally, this gain or loss is long-term or short-term depending on whether your holding period exceeds twelve months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.
OTHER INFORMATION
When you open your account, you should provide your social security or tax identification number on your Account Application. By law, each Fund must withhold 31% of your taxable distributions and any redemption proceeds if you do not provide your correct taxpayer identification number, or certify that it is correct, or if the IRS instructs the Fund to do so. Non-U.S. investors may be subject to U.S. withholding and estate tax.
Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks
The Funds will be subject to the risks associated with equity securities. "Equity securities" include common stocks, preferred stocks, interests in real estate investment trusts, convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures, limited liability companies and similar enterprises, warrants and stock pur- chase rights. In general, stock values fluctuate in response to the activi- ties of individual companies and in response to general market and economic conditions. Accordingly, the value of the stocks that a Fund holds may decline over short or extended periods. The stock markets tend to be cycli- cal, with periods when stock prices generally rise and periods when prices generally decline. The volatility of equity securities means that the value of your investment in the Funds may increase or decrease. As of the date of this Prospectus, certain stock markets were trading at or close to record high levels and there can be no guarantee that such levels will continue.
To the extent that a Fund invests in fixed-income securities, that Fund will also be subject to the risks associated with its fixed-income securities. These risks include interest rate risk, credit risk and call/extension risk. In general, interest rate risk involves the risk that when interest rates decline, the market value of fixed-income securities tends to increase (al- though many mortgage related securities will have less potential than other debt securities for capital appreciation during periods of declining rates). Conversely, when interest rates increase, the market value of fixed-income securities tends to decline. Credit risk involves the risk that an issuer could default on its obligations, and a Fund will not recover its invest- ment. Call risk and extension risk are normally present in mortgage-backed securities and asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (call risk) or lengthen (exten- sion risk). In general, if interest rates on new mortgage loans fall suffi- ciently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to invest- ors.
The Investment Adviser will not consider the portfolio turnover rate a lim- iting factor in making investment decisions for a Fund. A high rate of port- folio turn-
APPENDIX A
over (100% or more) involves correspondingly greater expenses which must be borne by a Fund and its shareholders. The portfolio turnover rate is calcu- lated by dividing the lesser of the dollar amount of sales or purchases of portfolio securities by the average monthly value of a Fund's portfolio securities, excluding securities having a maturity at the date of purchase of one year or less. See "Financial Highlights" in Appendix B for a state- ment of the Funds' historical portfolio turnover rates.
The following sections provide further information on certain types of secu- rities and investment techniques that may be used by the Funds, including their associated risks. Additional information is provided in the Additional Statement, which is available upon request. Among other things, the Addi- tional Statement describes certain fundamental investment restrictions that cannot be changed without shareholder approval. You should note, however, that all investment objectives and policies not specifically designated as fundamental are non-fundamental and may be changed without shareholder approval. If there is a change in a Fund's investment objective, you should consider whether that Fund remains an appropriate investment in light of your then current financial position and needs.
B. Other Portfolio Risks
Risks of Investing in Small Capitalization Companies and REITs. Each Fund may invest in small capitalization companies and REITs. Investments in small capitalization companies and REITs involve greater risk and portfolio price volatility than investments in larger capitalization stocks. Among the rea- sons for the greater price volatility of these investments are the less cer- tain growth prospects of smaller firms and the lower degree of liquidity in the markets for such securities. Small capitalization companies and REITs may be thinly traded and may have to be sold at a discount from current mar- ket prices or in small lots over an extended period of time. In addition, these securities are subject to the risk that during certain periods the liquidity of particular issuers or industries, or all securities in these investment categories, will shrink or disappear suddenly and without warning as a result of adverse economic or market conditions, or adverse investor perceptions whether or not accurate. Because of the lack of sufficient mar- ket liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Small capitalization companies and REITs include "unseasoned" issuers that do not have an established financial history; often have limited prod- uct lines, markets or financial resources; may depend on or use a few key personnel for management; and may be susceptible to losses and risks of bankruptcy. Transaction costs for these investments are often higher than those of larger capitalization companies. Investments
in small capitalization companies and REITs may be more difficult to price precisely than other types of securities because of their characteristics and lower trading volumes.
Risks of Foreign Investments. Certain Funds may invest in foreign invest- ments. Foreign investments involve special risks that are not typically associated with U.S. dollar denominated or quoted securities of U.S. issuers. Foreign investments may be affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such invest- ments and changes in exchange control regulations (e.g., currency blockage). A decline in the exchange rate of the currency (i.e., weakening of the cur- rency against the U.S. dollar) in which a portfolio security is quoted or denominated relative to the U.S. dollar would reduce the value of the port- folio security. In addition, if the currency in which a Fund receives divi- dends, interest or other payments declines in value against the U.S. dollar before such income is distributed as dividends to shareholders or converted to U.S. dollars, the Fund may have to sell portfolio securities to obtain sufficient cash to pay such dividends.
The introduction of a single currency, the euro, on January 1, 1999 for par- ticipating nations in the European Economic and Monetary Union presents unique uncertainties, including the legal treatment of certain outstanding financial contracts after January 1, 1999 that refer to existing currencies rather than the euro; the establishment and maintenance of exchange rates for currencies being converted into the euro; the fluctuation of the euro relative to non-euro currencies during the transition period from January 1, 1999 to December 31, 2001 and beyond; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union ("EU"), may have an impact on the euro. These or other factors, including political and economic risks, could cause market disruptions, and could adversely affect the value of securities held by the Funds. Because of the number of countries using this single currency, a significant portion of the assets held by the Funds may be denominated in the euro.
Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such proce- dures have been unable to keep pace with the volume of securities transac- tions, thus making it difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. issuers. There may
APPENDIX A
be less publicly available information about a foreign issuer than about a
U.S. issuer. In addition, there is generally less government regulation of
foreign markets, companies and securities dealers than in the United States.
Foreign securities markets may have substantially less volume than U.S.
securities markets and secu-
rities of many foreign issuers are less liquid and more volatile than secu-
rities of comparable domestic issuers. Efforts in foreign countries to reme-
diate potential Year 2000 problems are not as extensive as those in the
United States. As a result, the operations of foreign markets, foreign
issuers and foreign governments may be disrupted by the Year 2000 Problem,
and the investment portfolio of a Fund may be adversely affected. Further-
more, with respect to certain foreign countries, there is a possibility of
nationalization, expropriation or confiscatory taxation, imposition of with-
holding or other taxes on dividend or interest payments (or, in some cases,
capital gains), limitations on the removal of funds or other assets of the
Funds, and political or social instability or diplomatic developments which
could affect investments in those countries.
Concentration of a Fund's assets in one or a few countries and currencies will subject a Fund to greater risks than if a Fund's assets were not geo- graphically concentrated.
Investment in sovereign debt obligations by certain Funds involves risks not present in debt obligations of corporate issuers. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and a Fund may have limited recourse to compel payment in the event of a default. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt, and in turn a Fund's NAV, to a greater extent than the volatility inherent in debt obliga- tions of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the avail- ability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sov- ereign debtor's policy toward international lenders, and the political constraints to which a sovereign debtor may be subject.
Investments in foreign securities may take the form of sponsored and unsponsored American Depository Receipts ("ADRs") and Global Depository Receipts ("GDRs"). Certain Funds may also invest in European Depository Receipts ("EDRs") or other similar instruments representing securities of foreign issuers. ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. Prices of ADRs are quoted in U.S. dollars, and ADRs are traded in the United States. EDRs and GDRs are receipts
evidencing an arrangement with a non-U.S. bank. EDRs and GDRs are not neces- sarily quoted in the same currency as the underlying security.
Risks of Emerging Countries. Certain Funds may invest in securities of issuers located in emerging countries. The risks of foreign investment are heightened when the issuer is located in an emerging country. Emerging coun- tries are generally located in the Asia-Pacific region, Eastern Europe, Latin and South America and Africa. A Fund's purchase and sale of portfolio securities in certain emerging countries may be constrained by limitations as to daily changes in the prices of listed securities, periodic trading or settlement volume and/or limitations on aggregate holdings of foreign investors. Such limitations may be computed based on the aggregate trading volume by or holdings of a Fund, the Investment Adviser, its affiliates and their respective clients and other service providers. A Fund may not be able to sell securities in circumstances where price, trading or settlement vol- ume limitations have been reached.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees which may limit investment in such countries or increase the administrative costs of such investments. For example, certain Asian countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer's outstanding securities or a spe- cific class of securities which may have less advantageous terms (including price) than securities of the issuer available for purchase by nationals. In addition, certain countries may restrict or prohibit investment opportuni- ties in issuers or industries deemed important to national interests. Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by a Fund. The repatriation of both investment income and capital from certain emerging countries is subject to restrictions such as the need for governmental consents. Due to restrictions on direct invest- ment in equity securities in certain Asian countries, it is anticipated that a Fund may invest in such countries through other investment funds in such countries.
Many emerging countries have experienced currency devaluations and substan- tial (and, in some cases, extremely high) rates of inflation, which have had a negative effect on the economies and securities markets of such emerging countries. Economies in emerging countries generally are dependent heavily upon commodity prices and international trade and, accordingly, have been and may continue to be affected adversely by the economies of their trading partners, trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade.
APPENDIX A
Many emerging countries are subject to a substantial degree of economic, political and social instability. Governments of some emerging countries are authoritarian in nature or have been installed or removed as a result of military coups, while governments in other emerging countries have periodi- cally used force to suppress civil dissent. Disparities of wealth, the pace and success of democratization, and ethnic, religious and racial disaffec- tion, among other factors, have also led to social unrest, violence and/or labor unrest in some emerging countries. Unanticipated political or social developments may result in sudden and significant investment losses. Invest- ing in emerging countries involves greater risk of loss due to expropria- tion, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested.
A Fund's investment in emerging countries may also be subject to withholding or other taxes, which may be significant and may reduce the return from an investment in such country to the Fund.
Settlement procedures in emerging countries are frequently less developed and reliable than those in the United States and often may involve a Fund's delivery of securities before receipt of payment for their sale. In addi- tion, significant delays are common in certain markets in registering the transfer of securities. Settlement or registration problems may make it more difficult for a Fund to value its portfolio securities and could cause the Fund to miss attractive investment opportunities, to have a portion of its assets uninvested or to incur losses due to the failure of a counterparty to pay for securities the Fund has delivered or the Fund's inability to com- plete its contractual obligations. The creditworthiness of the local securi- ties firms used by the Fund in emerging countries may not be as sound as the creditworthiness of firms used in more developed countries. As a result, the Fund may be subject to a greater risk of loss if a securities firm defaults in the performance of its responsibilities.
The small size and inexperience of the securities markets in certain emerg- ing countries and the limited volume of trading in securities in those coun- tries may make a Fund's investments in such countries less liquid and more volatile than investments in countries with more developed securities mar- kets (such as the United States, Japan and most Western European countries). A Fund's investments in emerging countries are subject to the risk that the liquidity of a particular investment, or investments generally, in such countries will shrink or disappear suddenly and without warning as a result of adverse economic, market or political conditions or adverse investor per- ceptions, whether or not accurate. Because of the lack of sufficient market liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Invest-
ments in emerging countries may be more difficult to price precisely because of the characteristics discussed above and lower trading volumes.
A Fund's use of foreign currency management techniques in emerging countries may be limited. Due to the limited market for these instruments in emerging countries, the Investment Adviser does not currently anticipate that a sig- nificant portion of the Funds' currency exposure in emerging countries, if any, will be covered by such instruments.
Risks of Derivative Investments. A Fund's transactions, if any, in options, futures, options on futures, swaps, interest rate caps, floors and collars, structured securities and currency transactions involve additional risk of loss. Loss can result from a lack of correlation between changes in the value of derivative instruments and the portfolio assets (if any) being hedged, the potential illiquidity of the markets for derivative instruments, or the risks arising from margin requirements and related leverage factors associated with such transactions. The use of these management techniques also involves the risk of loss if the Investment Adviser is incorrect in its expectation of fluctuations in securities prices, interest rates or currency prices. Each Fund may also invest in derivative investments for non-hedging purposes (that is, to seek to increase total return). Investing for non- hedging purposes is considered a speculative practice and presents even greater risk of loss.
Risks of Illiquid Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities which cannot be disposed of in seven days in
the ordinary course of business at fair value. Illiquid securities include:
.Both domestic and foreign securities that are not readily marketable
.Certain stripped mortgage-backed securities
.Repurchase agreements and time deposits with a notice or demand period of
more than seven days
.Certain over-the-counter options
.Certain structured securities and all swap transactions
.Certain restricted securities, unless it is determined, based upon a review of the trading markets for a specific restricted security, that such restricted security is eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("144A Securities") and, therefore, is liquid.
Investing in 144A Securities may decrease the liquidity of a Fund's portfo- lio to the extent that qualified institutional buyers become for a time uninterested in purchasing these restricted securities. The purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of com- parable securities for which a liquid market exists.
APPENDIX A
Credit Risks. Debt securities purchased by the Funds may include securities (including zero coupon bonds) issued by the U.S. government (and its agen- cies, instrumentalities and sponsored enterprises), foreign governments, domestic and foreign corporations, banks and other issuers. Further informa- tion is provided in the Additional Statement.
Debt securities rated BBB or higher by Standard & Poor's or Baa or higher by Moody's are considered "investment grade." Securities rated BBB or Baa are considered medium-grade obligations with speculative characteristics, and adverse economic conditions or changing circumstances may weaken their issuers' capacity to pay interest and repay principal. A security will be deemed to have met a rating requirement if it receives the minimum required rating from at least one such rating organization even though it has been rated below the minimum rating by one or more other rating organizations, or if unrated by such rating organizations, determined by the Investment Adviser to be of comparable credit quality.
Certain Funds may invest in fixed-income securities rated BB or Ba or below (or comparable unrated securities) which are commonly referred to as "junk bonds." Junk bonds are considered predominantly speculative and may be ques- tionable as to principal and interest payments.
In some cases, junk bonds may be highly speculative, have poor prospects for reaching investment grade standing and be in default. As a result, invest- ment in such bonds will present greater speculative risks than those associ- ated with investment in investment grade bonds. Also, to the extent that the rating assigned to a security in a Fund's portfolio is downgraded by a rat- ing organization, the market price and liquidity of such security may be adversely affected.
Temporary Investment Risks. Each Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. government securities
.Commercial paper rated at least A-2 by Standard & Poor's or P-2 by Moody's
.Certificates of deposit
.Bankers' acceptances
.Repurchase agreements
.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year
When a Fund's assets are invested in such instruments, the Fund may not be achieving its investment objective.
C. Portfolio Securities and Techniques
This section provides further information on certain types of securities and investment techniques that may be used by the Funds, including their associ- ated risks. Further information is provided in the Additional Statement, which is available upon request.
Convertible Securities. Each Fund may invest in convertible securities. Con- vertible securities are preferred stock or debt obligations that are con- vertible into common stock. Convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar qual- ity. Convertible securities in which a Fund invests are subject to the same rating criteria as its other investments in fixed-income securities. Con- vertible securities have both equity and fixed-income risk characteristics. Like all fixed-income securities, the value of convertible securities is susceptible to the risk of market losses attributable to changes in interest rates. Generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. However, when the market price of the common stock underlying a convertible security exceeds the conversion price of the convertible secu- rity, the convertible security tends to reflect the market price of the underlying common stock. As the market price of the underlying common stock declines, the convertible security, like a fixed-income security, tends to trade increasingly on a yield basis, and thus may not decline in price to the same extent as the underlying common stock.
Foreign Currency Transactions. A Fund may, to the extent consistent with its investment policies, purchase or sell foreign currencies on a cash basis or through forward contracts. A forward contract involves an obligation to pur- chase or sell a specific currency at a future date at a price set at the time of the contract. A Fund may engage in foreign currency transactions for hedging purposes and to seek to protect against anticipated changes in future foreign currency exchange rates. In addition, certain Funds may also enter into such transactions to seek to increase total return, which is con- sidered a speculative practice.
Some Funds may also engage in cross-hedging by using forward contracts in a currency different from that in which the hedged security is denominated or quoted if the Investment Adviser determines that there is a pattern of cor- relation between the two currencies. A Fund may hold foreign currency received in connection with investments in foreign securities when, in the judgment of the Investment Adviser, it would be beneficial to convert such currency into U.S. dollars at a later date (e.g., the Investment Adviser may anticipate the foreign currency to appreciate against the U.S. dollar).
APPENDIX A
Currency exchange rates may fluctuate significantly over short periods of time, causing, along with other factors, a Fund's NAV to fluctuate (when the Fund's NAV fluctuates, the value of your shares may go up or down). Currency exchange rates also can be affected unpredictably by the intervention of U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the United States or abroad.
The market in forward foreign currency exchange contracts, currency swaps and other privately negotiated currency instruments offers less protection against defaults by the other party to such instruments than is available for currency instruments traded on an exchange. Such contracts are subject to the risk that the counterparty to the contract will default on its obli- gations. Since these contracts are not guaranteed by an exchange or clear- inghouse, a default on a contract would deprive a Fund of unrealized prof- its, transaction costs or the benefits of a currency hedge or could force the Fund to cover its purchase or sale commitments, if any, at the current market price.
Structured Securities. Each Fund may invest in structured securities. Struc- tured securities are securities whose value is determined by reference to changes in the value of specific currencies, interest rates, commodities, indices or other financial indicators (the "Reference") or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Structured securities may be posi- tively or negatively indexed, so that appreciation of the Reference may pro- duce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rates or the value of the security at maturity may be a multiple of changes in the value of the Refer- ence. Consequently, structured securities may present a greater degree of market risk than other types of fixed-income securities and may be more vol- atile, less liquid and more difficult to price accurately than less complex securities.
REITs. Each Fund may invest in REITS. REITS are pooled investment vehicles that invest primarily in either real estate or real estate related loans. The value of a REIT is affected by changes in the value of the properties owned by the REIT or securing mortgage loans held by the REIT. REITs are dependent upon the ability of the REITs' managers, and are subject to heavy cash flow dependency, default by borrowers and the qualification of the REITs under applicable regulatory requirements for favorable income tax treatment. REITs are also subject to risks generally associated with invest- ments in real estate including possible declines in the value of real estate, general and local economic conditions, environmental problems and changes in interest rates. To the extent that assets underlying a REIT are concentrated geographically, by property type or in certain other
respects, these risks may be heightened. A Fund will indirectly bear its proportionate share of any expenses, including management fees, paid by a REIT in which it invests.
Options on Securities, Securities Indices and Foreign Currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) of the option the obligation to buy, the underlying instrument dur-
ing the option period. A call option gives the purchaser of the option the
right to buy, and the writer (seller) of the option the obligation to sell,
the underlying instrument during the option period. Each Fund may write
(sell) covered call and put options and purchase put and call options on any
securities in which they may invest or on any securities index comprised of
securities in which they may invest. A Fund may also, to the extent that it
invests in foreign securities, purchase and sell (write) put and call
options on foreign currencies.
The writing and purchase of options is a highly specialized activity which involves special investment risks. Options may be used for either hedging or cross-hedging purposes, or to seek to increase total return (which is con- sidered a speculative activity). The successful use of options depends in part on the ability of the Investment Adviser to manage future price fluctu- ations and the degree of correlation between the options and securities (or currency) markets. If the Investment Adviser is incorrect in its expectation of changes in market prices or determination of the correlation between the instruments or indices on which options are written and purchased and the instruments in a Fund's investment portfolio, the Fund may incur losses that it would not otherwise incur. The use of options can also increase a Fund's transaction costs. Options written or purchased by the Funds may be traded on either U.S. or foreign exchanges or over-the-counter. Foreign and over- the-counter options will present greater possibility of loss because of their greater illiquidity and credit risks.
Futures Contracts and Options on Futures Contracts. Futures contracts are standardized, exchange-traded contracts that provide for the sale or pur- chase of a specified financial instrument or currency at a future time at a specified price. An option on a futures contract gives the purchaser the right (and the writer of the option the obligation) to assume a position in a futures contract at a specified exercise price within a specified period of time. A futures contract may be based on various securities (such as U.S. government securities), foreign currencies, securities indices and other financial instruments and indices. The Funds may engage in futures transac- tions on both U.S. and foreign exchanges.
Each Fund may purchase and sell futures contracts, and purchase and write call and put options on futures contracts, in order to seek to increase total return or to hedge against changes in interest rates, securities prices or, to the extent a Fund
APPENDIX A
invests in foreign securities, currency exchange rates, or to otherwise man- age their term structures, sector selection and durations in accordance with their investment objectives and policies. Each Fund may also enter into closing purchase and sale transactions with respect to such contracts and options. A Fund will engage in futures and related options transactions for bona fide hedging purposes as defined in regulations of the Commodity Futures Trading Commission or to seek to increase total return to the extent permitted by such regulations. A Fund may not purchase or sell futures con- tracts or purchase or sell related options to seek to increase total return, except for closing purchase or sale transactions, if immediately thereafter the sum of the amount of initial margin deposits and premiums paid on the Fund's outstanding positions in futures and related options entered into for the purpose of seeking to increase total return would exceed 5% of the mar- ket value of the Fund's net assets.
Futures contracts and related options present the following risks:
.While a Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency
exchange rates may result in poorer overall performance than if the Fund
had not entered into any futures contracts or options transactions.
.Because perfect correlation between a futures position and portfolio posi-
tion that is intended to be protected is impossible to achieve, the desired
protection may not be obtained and a Fund may be exposed to additional risk
of loss.
.The loss incurred by a Fund in entering into futures contracts and in writ-
ing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
.Futures markets are highly volatile and the use of futures may increase the
volatility of a Fund's NAV.
.As a result of the low margin deposits normally required in futures trad-
ing, a relatively small price movement in a futures contract may result in
substantial losses to a Fund.
.Futures contracts and options on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
.Foreign exchanges may not provide the same protection as U.S. exchanges.
Equity Swaps. Each Fund may invest in equity swaps. Equity swaps allow the parties to a swap agreement to exchange the dividend income or other compo- nents of return on an equity investment (for example, a group of equity securities or an index) for a component of return on another non-equity or equity investment.
An equity swap may be used by a Fund to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment may be restricted for legal reasons or is otherwise impractical. Equity swaps are
derivatives and their value can be very volatile. To the extent that the Investment Adviser does not accurately analyze and predict the potential relative fluctuation of the components swapped with another party, a Fund may suffer a loss. The value of some components of an equity swap (such as the dividends on a common stock) may also be sensitive to changes in inter- est rates. Furthermore, a Fund may suffer a loss if the counterparty defaults.
When-Issued Securities and Forward Commitments. Each Fund may purchase when- issued securities and make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time. When-issued securities are securities that have been authorized, but not yet issued. When-issued securities are purchased in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. A forward commitment involves the entering into a con- tract to purchase or sell securities for a fixed price at a future date beyond the customary settlement period.
The purchase of securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines before the settlement date. Conversely, the sale of securities on a forward commitment basis involves the risk that the value of the securities sold may increase before the settlement date. Although a Fund will generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring the securities for its portfolio, a Fund may dispose of when-issued securities or forward commitments prior to settlement if the Investment Adviser deems it appropriate.
Repurchase Agreements. Repurchase agreements involve the purchase of securi- ties subject to the seller's agreement to repurchase them at a mutually agreed upon date and price. Each Fund may enter into repurchase agreements with dealers in U.S. government securities and member banks of the Federal Reserve System which furnish collateral at least equal in value or market price to the amount of their repurchase obligation.
If the other party or "seller" defaults, a Fund might suffer a loss to the extent that the proceeds from the sale of the underlying securities and other collateral held by the Fund are less than the repurchase price and the Fund's costs associated with delay and enforcement of the repurchase agree- ment. In addition, in the event of bankruptcy of the seller, a Fund could suffer additional losses if a court determines that the Fund's interest in the collateral is not enforceable.
In evaluating whether to enter into a repurchase agreement, the Investment Adviser will carefully consider the creditworthiness of the seller. Certain Funds, together with other registered investment companies having advisory agreements with the Investment Adviser or any of its affiliates, may trans- fer uninvested cash
APPENDIX A
balances into a single joint account, the daily aggregate balance of which will be invested in one or more repurchase agreements.
Lending of Portfolio Securities. Each Fund may engage in securities lending. Securities lending involves the lending of securities owned by a Fund to financial institutions such as certain broker-dealers. The borrowers are required to secure their loan continuously with cash, cash equivalents, U.S. government securities or letters of credit in an amount at least equal to the market value of the securities loaned. Cash collateral may be invested in cash equivalents. To the extent that cash collateral is invested in other investment securities, such collateral will be subject to market deprecia- tion or appreciation, and a Fund will be responsible for any loss that might result from its investment of the borrowers' collateral. If the Investment Adviser determines to make securities loans, the value of the securities loaned may not exceed 33 1/3% of the value of the total assets of a Fund (including the loan collateral).
A Fund may lend its securities to increase its income. A Fund may, however, experience delay in the recovery of its securities if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund.
Short Sales Against-the-Box. Certain Funds may make short sales against-the- box. A short sale against-the-box means that at all times when a short posi- tion is open the Fund will own an equal amount of securities sold short, or securities convertible into or exchangeable for, without payment of any fur- ther consideration, an equal amount of the securities of the same issuer as the securities sold short.
Preferred Stock, Warrants and Rights. Each Fund may invest in preferred stock, warrants and rights. Preferred stocks are securities that represent an ownership interest providing the holder with claims on the issuer's earn- ings and assets before common stock owners but after bond owners. Unlike debt securities, the obligations of an issuer of preferred stock, including dividend and other payment obligations, may not typically be accelerated by the holders of such preferred stock on the occurrence of an event of default or other non-compliance by the issuer of the preferred stock.
Warrants and other rights are options to buy a stated number of shares of common stock at a specified price at any time during the life of the warrant or right. The holders of warrants and rights have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.
Other Investment Companies. Each Fund may invest in securities of other investment companies (including SPDRs and WEBs, as defined below) subject to statutory limitations prescribed by the Act. These limitations include a prohibition on
any Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of a Fund's total assets in securities of any one investment company or more than 10% of its total assets in securities of all investment companies. A Fund will indi- rectly bear its proportionate share of any management fees and other expenses paid by such other investment companies. Such other investment com- panies will have investment objectives, policies and restrictions substan- tially similar to those of the acquiring Fund and will be subject to sub- stantially the same risks.
.Standard & Poor's Depository Receipts. The Funds may, consistent with their investment policies, purchase Standard & Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on the American Stock Exchange ("AMEX") that represent ownership in the SPDR Trust, a trust which has been established to accumulate and hold a portfolio of common stocks that is intended to track the price performance and dividend yield of the S&P 500. The SPDR Trust is sponsored by a subsidiary of the AMEX. SPDRs may be used for several reasons, including, but not limited to, facilitating the han- dling of cash flows or trading, or reducing transaction costs. The price movement of SPDRs may not perfectly parallel the price action of the S&P 500.
.World Equity Benchmark Shares. World Equity Benchmark Shares ("WEBS") are shares of an investment company that invests substantially all of its assets in securities included in the MSCI indices for specified countries. WEBS are listed on the AMEX and were initially offered to the public in 1996. The market prices of WEBS are expected to fluctuate in accordance with both changes in the NAVs of their underlying indices and supply and demand of WEBS on the AMEX. To date, WEBS have traded at relatively modest discounts and premiums to their NAVs. However, WEBS have a limited operat- ing history and information is lacking regarding the actual performance and trading liquidity of WEBS for extended periods or over complete market cycles. In addition, there is no assurance that the requirements of the AMEX necessary to maintain the listing of WEBS will continue to be met or will remain unchanged. In the event substantial market or other disruptions affecting WEBS should occur in the future, the liquidity and value of a Fund's shares could also be substantially and adversely affected. If such disruptions were to occur, a Fund could be required to reconsider the use of WEBS as part of its investment strategy.
Unseasoned Companies. Each Fund may invest in companies (including predeces- sors) which have operated less than three years. The securities of such com- panies may have limited liquidity, which can result in their being priced higher or lower than might otherwise be the case. In addition, investments in unseasoned compa -
APPENDIX A
nies are more speculative and entail greater risk than do investments in companies with an established operating record.
Corporate Debt Obligations. Corporate debt obligations include bonds, notes, debentures, commercial paper and other obligations of corporations to pay interest and repay principal, and include securities issued by banks and other financial institutions. Each Fund may invest in corporate debt obliga- tions issued by U.S. and certain non-U.S. issuers which issue securities denominated in the U.S. dollar (including Yankee and Euro obligations). In addition to obligations of corporations, corporate debt obligations include securities issued by banks and other financial institutions and suprana- tional entities (i.e., the World Bank, the International Monetary Fund, etc.).
Bank Obligations. Each Fund may invest in obligations issued or guaranteed by U.S. or foreign banks. Bank obligations, including without limitations, time deposits, bankers' acceptances and certificates of deposit, may be gen- eral obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulations. Banks are subject to extensive but different governmental regulations which may limit both the amount and types of loans which may be made and interest rates which may be charged. In addition, the profitability of the banking industry is largely dependent upon the availability and cost of funds for the purpose of financing lending operations under prevailing money market conditions. General economic conditions as well as exposure to credit losses arising from possible financial difficulties of borrowers play an important part in the operation of this industry.
U.S. Government Securities and Related Custodial Receipts. Each Fund may invest in U.S. government securities and related custodial receipts. U.S. government securities include U.S. Treasury obligations and obligations issued or guaranteed by U.S. government agencies, instrumentalities or spon- sored enterprises. U.S. government securities may be supported by (a) the full faith and credit of the U.S. Treasury (such as the Government National Mortgage Association ("Ginnie Mae")); (b) the right of the issuer to borrow from the U.S. Treasury (such as securities of the Student Loan Marketing Association); (c) the discretionary authority of the U.S. government to pur- chase certain obligations of the issuer (such as the Federal National Mort- gage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac")); or (d) only the credit of the issuer. U.S. government securities also include Treasury receipts, zero coupon bonds and other stripped U.S. government securities, where the interest and principal compo- nents of stripped U.S. government securities are traded independently.
Interests in U.S. government securities may be purchased in the form of cus- todial receipts that evidence ownership of future interest payments, princi- pal payments
or both on certain notes or bonds issued or guaranteed as to principal and interest by the U.S. government, its agencies, instrumentalities, political subdivisions or authorities. For certain securities law purposes, custodial receipts are not considered obligations of the U.S. government.
Mortgage-Backed Securities. Certain Funds may invest in mortgage-backed securities. Mortgage-backed securities represent direct or indirect partici- pations in, or are collateralized by and payable from, mortgage loans secured by real property. Mortgage-backed securities can be backed by either fixed rate mortgage loans or adjustable rate mortgage loans, and may be issued by either a governmental or non-governmental entity. Privately issued mortgage-backed securities are normally structured with one or more types of "credit enhancement." However, these mortgage-backed securities typically do not have the same credit standing as U.S. government guaranteed mortgage- backed securities.
Mortgage-backed securities may include multiple class securities, including collateralized mortgage obligations ("CMOs") and Real Estate Mortgage Investment Conduit ("REMIC") pass-through or participation certificates. CMOs provide an investor with a specified interest in the cash flow from a pool of underlying mortgages or of other mortgage-backed securities. CMOs are issued in multiple classes. In many cases, payments of principal are applied to the CMO classes in the order of their respective stated maturi- ties, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. A REMIC is a CMO that qualifies for special tax treatment and invests in cer- tain mortgages principally secured by interests in real property and other permitted investments.
Mortgaged-backed securities also include stripped mortgage-backed securities ("SMBS"), which are derivative multiple class mortgage-backed securities. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments and the other that receives sub- stantially all of the principal payments from a pool of mortgage loans. The market value of SMBS consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on SMBS that receive all or most of the interest from mortgage loans are gener- ally higher than prevailing market yields on other mortgage-backed securi- ties because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
Asset-Backed Securities. Certain Funds may invest in asset-backed securi- ties. Asset-backed securities are securities whose principal and interest payments are collateralized by pools of assets such as auto loans, credit card receivables, leases, installment contracts and personal property. Asset-backed securities are often sub-
APPENDIX A
ject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the under- lying loans. During periods of declining interest rates, prepayment of loans underlying asset-backed securities can be expected to accelerate. According- ly, a Fund's ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is subject to generally prevailing interest rates at that time. Asset-backed securities present credit risks that are not presented by mortgage-backed securities. This is because asset-backed securities gener- ally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. There is the possibility that, in some cases, recoveries on repossessed collateral may not be available to support pay- ments on these securities. In the event of a default, a Fund may suffer a loss if it cannot sell collateral quickly and receive the amount it is owed.
Borrowings. Each Fund can borrow money from banks and other financial insti- tutions in amounts not exceeding one-third of its total assets for temporary or emergency purposes. A Fund may not make additional investments if borrowings exceed 5% of its total assets.
Mortgage Dollar Rolls. Certain Funds may enter into mortgage dollar rolls. A mortgage dollar roll involves the sale by a Fund of securities for delivery in the current month. The Fund simultaneously contracts with the same counterparty to repurchase substantially similar (same type, coupon and maturity) but not identical securities on a specified future date. During the roll period, the Fund loses the right to receive principal and interest paid on the securities sold. However, the Fund benefits to the extent of any difference between (a) the price received for the securities sold and (b) the lower forward price for the future purchase and/or fee income plus the interest earned on the cash proceeds of the securities sold. Unless the ben- efits of a mortgage dollar roll exceed the income, capital appreciation and gain or loss due to mortgage prepayments that would have been realized on the securities sold as part of the roll, the use of this technique will diminish the Fund's performance.
Successful use of mortgage dollar rolls depends upon the Investment Advis- er's ability to predict correctly interest rates and mortgage prepayments. If the Investment Adviser is incorrect in its prediction, a Fund may experi- ence a loss. For financial reporting and tax purposes, the Funds treat mort- gage dollar rolls as two separate transactions: one involving the purchase of a security and a separate transaction involving a sale. The Funds do not currently intend to enter into mortgage dollar rolls that are accounted for as a financing and do not treat them as borrowings.
Yield Curve Options. Certain Funds may enter into options on the yield "spread" or differential between two securities. Such transactions are referred to as "yield curve" options. In contrast to other types of options, a yield curve option is based on the difference between the yields of desig- nated securities, rather than the prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is prof- itable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put), regardless of whether the yields of the underlying securities increase or decrease.
The trading of yield curve options is subject to all of the risks associated with the trading of other types of options. In addition, such options pres- ent a risk of loss even if the yield of one of the underlying securities remains constant, or if the spread moves in a direction or to an extent which was not anticipated.
Reverse Repurchase Agreements. Certain Funds may enter into reverse repur- chase agreements. Reverse repurchase agreements involve the sale of securi- ties held by a Fund subject to the Fund's agreement to repurchase them at a mutually agreed upon date and price (including interest). These transactions may be entered into as a temporary measure for emergency purposes or to meet redemption requests. Reverse repurchase agreements may also be entered into when the Investment Adviser expects that the interest income to be earned from the investment of the transaction proceeds will be greater than the related interest expense. Reverse repurchase agreements involve leveraging. If the securities held by a Fund decline in value while these transactions are outstanding, the NAV of the Fund's outstanding shares will decline in value by proportionately more than the decline in value of the securities. In addition, reverse repurchase agreements involve the risk that the inter- est income earned by a Fund (from the investment of the proceeds) will be less than the interest expense of the transaction, that the market value of the securities sold by a Fund will decline below the price the Fund is obli- gated to pay to repurchase the securities, and that the securities may not be returned to the Fund.
Municipal Securities. Certain Funds may invest in securities and instruments issued by state and local government issuers. Municipal securities in which a Fund may invest consist of bonds, notes, commercial paper and other instruments (including participating interests in such securities) issued by or on behalf of states, territories and possessions of the United States (including the District of Columbia) and their political subdivisions, agen- cies or instrumentalities. Such securities may pay fixed, variable or float- ing rates of interest. Municipal securities are often issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as bridges, highways, housing, hospitals, mass trans- portation, schools, streets and water and sewer works. Other public
APPENDIX A
purposes for which municipal securities may be issued include refunding out- standing obligations, obtaining funds for general operating expenses, and obtaining funds to lend to other public institutions and facilities. Munici- pal securities in which a Fund may invest include private activity bonds, municipal leases, certificates of participation, pre-funded municipal secu- rities and auction rate securities.
Interest Rate Swaps, Mortgage Swaps, Credit Swaps, Currency Swaps and Inter- est Rate Caps, Floors and Collars. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed-rate payments for floating rate payments. Mortgage swaps are similar to interest rate swaps in that they represent commitments to pay and receive interest. The notional princi- pal amount, however, is tied to a reference pool or pools of mortgages. Credit swaps involve the receipt of floating or fixed rate payments in exchange for assuming potential credit losses of an underlying security. Credit swaps give one party to a transaction the right to dispose of or acquire an asset (or group of assets), or the right to receive or make a payment from the other party, upon the occurrence of specified credit events. Currency swaps involve the exchange of the parties' respective rights to make or receive payments in specified currencies. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor. An interest rate collar is the combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates.
Certain Funds may enter into swap transactions for hedging purposes or to seek to increase total return. The use of interest rate, mortgage, credit and currency swaps, as well as interest rate caps, floors and collars, is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transac- tions. If the Investment Adviser is incorrect in its forecasts of market value, interest rates and currency exchange rates, the investment perfor- mance of a Fund would be less favorable than it would have been if these investment techniques were not used.
Loan Participations. Certain Funds may invest in loan participations. A loan participation is an interest in a loan to a U.S. or foreign company or other borrower which is administered and sold by a financial intermediary. A Fund may only invest in loans to issuers in whose obligations it may otherwise invest. Loan participation interests may take the form of a direct or co- lending relationship with the
corporate borrower, an assignment of an interest in the loan by a co-lender or another participant, or a participation in the seller's share of the loan. When a Fund acts as co-lender in connection with a participation interest or when it acquires certain participation interests, the Fund will have direct recourse against the borrower if the borrower fails to pay scheduled principal and interest. In cases where the Fund lacks direct recourse, it will look to the agent bank to enforce appropriate credit reme- dies against the borrower. In these cases, the Fund may be subject to delays, expenses and risks that are greater than those that would have been involved if the Fund had purchased a direct obligation (such as commercial paper) of such borrower. Moreover, under the terms of the loan participa- tion, the Fund may be regarded as a creditor of the agent bank (rather than of the underlying corporate borrower), so that the Fund may also be subject to the risk that the agent bank may become insolvent.
Inverse Floaters. Certain Funds may invest in inverse floating rate debt securities ("inverse floaters"). The interest rate on inverse floaters resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. The higher the degree of leverage of an inverse floater, the greater the vola- tility of its market value.
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Appendix B
Financial Highlights
The financial highlights tables are intended to help you understand a Fund's financial performance for the past five years (or less if the Fund has not been in operation for less than five years). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned or lost on an invest- ment in a Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Arthur Andersen LLP, whose report, along with a Fund's financial statements, is included in the Fund's annual report (available upon request). No financial highlights are included for the Large Cap Value Fund because it had no operating history prior to the date of this prospectus.
BALANCED FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period income gain (loss)
----------------------------------------------------------------------------
For The Seven-Month Period Ended August
31,
1999 - Class A Shares $20.48 $0.32 $(0.19)
1999 - Class B Shares 20.37 0.22 (0.18)
1999 - Class C Shares 20.34 0.23 (0.19)
1999 - Institutional Shares 20.48 0.53 (0.35)
1999 - Service Shares 20.47 1.22 (1.14)
----------------------------------------------------------------------------
For The Years Ended January 31,
1999 - Class A Shares 20.29 0.58 0.20
1999 - Class B Shares 20.20 0.41 0.21
1999 - Class C Shares 20.17 0.41 0.21
1999 - Institutional Shares 20.29 0.64 0.20
1999 - Service Shares 20.28 0.53 0.21
----------------------------------------------------------------------------
1998 - Class A Shares 18.78 0.57 2.66
1998 - Class B Shares 18.73 0.50 2.57
1998 - Class C Shares (commenced August
15, 1997) 21.10 0.25 0.24
1998 - Institutional Shares (commenced
August 15, 1997) 21.18 0.26 0.32
1998 - Service Shares (commenced August
15, 1997) 21.18 0.22 0.32
----------------------------------------------------------------------------
1997 - Class A Shares 17.31 0.66 2.47
1997 - Class B Shares (commenced May 1,
1996) 17.46 0.42 2.34
----------------------------------------------------------------------------
1996 - Class A Shares 14.22 0.51 3.43
----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
APPENDIX B
Distributions to shareholders
-------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period returnb (in 000s) net assets
----------------------------------------------------------------------------------------------
$(0.23) $ -- $ -- $(0.10) $20.38 0.62%d $169,395 1.10%c
(0.15) -- -- (0.11) 20.26 0.20d 40,515 1.85c
(0.15) -- -- (0.11) 20.23 0.18d 11,284 1.85c
(0.27) -- -- (0.09) 20.39 0.86d 2,361 0.70c
(0.18) -- -- (0.10) 20.37 0.39d 15 1.20c
----------------------------------------------------------------------------------------------
(0.59) -- -- 0.19 20.48 3.94 192,453 1.04
(0.45) -- -- 0.17 20.37 3.15 43,926 1.80
(0.45) -- -- 0.17 20.34 3.14 14,286 1.80
(0.65) -- -- 0.19 20.48 4.25 8,010 0.73
(0.55) -- -- 0.19 20.47 3.80 490 1.23
----------------------------------------------------------------------------------------------
(0.56) -- (1.16) 1.51 20.29 17.54 163,636 1.00
(0.42) (0.02) (1.16) 1.47 20.20 16.71 23,639 1.76
(0.22) (0.04) (1.16) (0.93) 20.17 2.49d 8,850 1.77c
(0.23) (0.08) (1.16) (0.89) 20.29 2.93d 8,367 0.76c
(0.22) (0.06) (1.16) (0.90) 20.28 2.66d 16 1.26c
----------------------------------------------------------------------------------------------
(0.66) -- (1.00) 1.47 18.78 18.59 81,410 1.00
(0.42) (0.07) (1.00) 1.27 18.73 16.22d 2,110 1.75c
----------------------------------------------------------------------------------------------
(0.50) -- (0.35) 3.09 17.31 28.10 50,928 1.00
----------------------------------------------------------------------------------------------
|
c Annualized.
d Not annualized.
e Includes the effect of mortgage dollar roll transactions.
BALANCED FUND (continued)
Ratios assuming
no voluntary waiver
of fees or expense limitations
------------------------------
Ratio of Ratio of
net investment Ratio of net investment
income to expenses to income to Portfolio
average net average average net turnover
assets net assets assets ratee
-----------------------------------------------------------------------------------------------
For The Seven-Month
Period Ended August 31,
1999 - Class A Shares 2.58%c 1.32%c 2.36%c 90.41%d
1999 - Class B Shares 1.83c 2.07c 1.61c 90.41d
1999 - Class C Shares 1.84c 2.07c 1.62c 90.41d
1999 - Institutional
Shares 2.96c 0.92c 2.74c 90.41d
1999 - Service Shares 2.46c 1.42c 2.24c 90.41d
-----------------------------------------------------------------------------------------------
For The Years Ended
January 31,
1999 - Class A Shares 2.90 1.45 2.49 175.06
1999 - Class B Shares 2.16 2.02 1.94 175.06
1999 - Class C Shares 2.17 2.02 1.95 175.06
1999 - Institutional
Shares 3.22 0.95 3.00 175.06
1999 - Service Shares 2.77 1.45 2.55 175.06
-----------------------------------------------------------------------------------------------
1998 - Class A Shares 2.94 1.57 2.37 190.43
1998 - Class B Shares 2.14 2.07 1.83 190.43
1998 - Class C Shares
(commenced August 15,
1997) 2.13c 2.08c 1.82c 190.43
1998 - Institutional
Shares (commenced August
15, 1997) 3.13c 1.07c 2.82c 190.43
1998 - Service Shares
(commenced August 15,
1997) 2.58c 1.57c 2.27c 190.43
-----------------------------------------------------------------------------------------------
1997 - Class A Shares 3.76 1.77 2.99 208.11
1997 - Class B Shares
(commenced May 1, 1996) 2.59c 2.27c 2.07c 208.11
-----------------------------------------------------------------------------------------------
1996 - Class A Shares 3.65 1.90 2.75 197.10
-----------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
GROWTH AND INCOME FUND
Income from
investment operationsa Distributions to shareholders
------------------------ ------------------------------
Net
realized
Net asset and In excess
value, Net unrealized From net of net From net
beginning investment gain investment investment realized
of period income (loss) (loss) income income gains
-------------------------------------------------------------------------------------------
For The Seven-Month
Period Ended August 31,
1999 - Class A Shares $24.33 $ 0.19 $0.31 $(0.15) $ -- $ --
1999 - Class B Shares 24.13 0.08 0.31 (0.06) -- --
1999 - Class C Shares 24.08 0.08 0.30 (0.05) -- --
1999 - Institutional
Shares 24.35 0.34 0.23 (0.20) -- --
1999 - Service Shares 24.33 0.17 0.32 (0.14) -- --
-------------------------------------------------------------------------------------------
For The Years Ended
January 31,
1999 - Class A Shares 25.93 0.20 (1.60) (0.19) (0.01) --
1999 - Class B Shares 25.73 0.02 (1.58) (0.04) -- --
1999 - Class C Shares 25.70 0.02 (1.59) (0.05) -- --
1999 - Institutional
Shares 25.95 0.29 (1.58) (0.30) (0.01) --
1999 - Service Shares 25.92 0.17 (1.58) (0.17) (0.01) --
-------------------------------------------------------------------------------------------
1998 - Class A Shares 23.18 0.11 5.27 (0.11) -- (2.52)
1998 - Class B Shares 23.10 0.04 5.14 -- (0.03) (2.52)
1998 - Class C Shares
(commenced August 15,
1997) 28.20 (0.01) 0.06 -- (0.03) (2.52)
1998 - Institutional
Shares 23.19 0.27 5.23 (0.22) -- (2.52)
1998 - Service Shares 23.17 0.14 5.23 (0.06) (0.04) (2.52)
-------------------------------------------------------------------------------------------
1997 - Class A Shares 19.98 0.35 5.18 (0.35) (0.01) (1.97)
1997 - Class B Shares
(commenced May 1, 1996) 20.82 0.17 4.31 (0.17) (0.06) (1.97)
1997 - Institutional
Shares
(commenced June 3,
1996) 21.25 0.29 3.96 (0.30) (0.04) (1.97)
1997 - Service Shares
(commenced March 6,
1996) 20.71 0.28 4.50 (0.28) (0.07) (1.97)
-------------------------------------------------------------------------------------------
1996 - Class A Shares 15.80 0.33 4.75 (0.30) -- (0.60)
-------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Ratio of
Net increase Net assets Ratio of net investment
(decrease) Net asset at end of net expenses income (loss)
in net value, end Total period to average to average net
asset value of period returnb (in 000s) net assets assets
-------------------------------------------------------------------------
$ 0.35 $24.68 2.05%d $ 855,174 1.19%c 1.26%c
0.33 24.46 1.60d 271,912 1.94c 0.51c
0.33 24.41 1.58d 31,328 1.94c 0.51c
0.37 24.72 2.32d 32,181 0.79c 1.72c
0.35 24.68 2.01d 10,008 1.29c 1.16c
-------------------------------------------------------------------------
(1.60) 24.33 (5.40) 1,122,157 1.22 0.78
(1.60) 24.13 (6.07) 349,662 1.92 0.09
(1.62) 24.08 (6.12) 48,146 1.92 0.10
(1.60) 24.35 (5.00) 173,696 0.80 1.25
(1.59) 24.33 (5.44) 11,943 1.30 0.72
-------------------------------------------------------------------------
2.75 25.93 23.71 1,216,582 1.25 0.43
2.63 25.73 22.87 307,815 1.94 (0.35)
(2.50) 25.70 0.51d 31,686 1.99c (0.48)c
2.76 25.95 24.24 36,225 0.83 0.76
2.75 25.92 23.63 8,893 1.32 0.32
-------------------------------------------------------------------------
3.20 23.18 28.42 615,103 1.22 1.60
2.28 23.10 22.23d 17,346 1.93c 0.15c
1.94 23.19 20.77d 193 0.82c 1.36c
2.46 23.17 23.87d 3,174 1.32c 0.94c
-------------------------------------------------------------------------
4.18 19.98 32.45 436,757 1.20 1.67
-------------------------------------------------------------------------
|
GROWTH AND INCOME FUND (continued)
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of Ratio of
expenses to net investment Portfolio
average net income (loss) to turnover
assets average net assets rate
-------------------------------------------------------------------------------------
For The Seven-Month
Period Ended
August 31,
1999 - Class A Shares 1.20%c 1.25%c 55.43%d
1999 - Class B Shares 1.95c 0.50c 55.43d
1999 - Class C Shares 1.95c 0.50c 55.43d
1999 - Institutional
Shares 0.80c 1.71c 55.43d
1999 - Service Shares 1.30c 1.15c 55.43d
-------------------------------------------------------------------------------------
For The Years Ended
January 31,
1999 - Class A Shares 1.32 0.68 125.79
1999 - Class B Shares 1.92 0.09 125.79
1999 - Class C Shares 1.92 0.10 125.79
1999 - Institutional
Shares 0.80 1.25 125.79
1999 - Service Shares 1.30 0.72 125.79
-------------------------------------------------------------------------------------
1998 - Class A Shares 1.42 0.26 61.95
1998 - Class B Shares 1.94 (0.35) 61.95
1998 - Class C Shares
(commenced August 15,
1997) 1.99c (0.48)c 61.95
1998 - Institutional
Shares 0.83 0.76 61.95
1998 - Service Shares 1.32 0.32 61.95
-------------------------------------------------------------------------------------
1997 - Class A Shares 1.43 1.39 53.03
1997 - Class B Shares
(commenced May 1, 1996) 1.93c 0.15c 53.03
1997 - Institutional
Shares
(commenced June 3,
1996) 0.82c 1.36c 53.03
1997 - Service Shares
(commenced March 6,
1996) 1.32c 0.94c 53.03
-------------------------------------------------------------------------------------
1996 - Class A Shares 1.45 1.42 57.93
-------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE LARGE CAP VALUE FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period income gain
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $10.15 $0.04 $0.40
1999 - Class B Shares 10.15 0.01 0.36
1999 - Class C Shares 10.15 0.01 0.37
1999 - Institutional Shares 10.16 0.06 0.38
1999 - Service Shares 10.16 0.02 0.40
------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced December
31, 1998) 10.00 0.01 0.14
1999 - Class B Shares (commenced December
31, 1998) 10.00 -- 0.15
1999 - Class C Shares (commenced December
31, 1998) 10.00 -- 0.15
1999 - Institutional Shares (commenced
December 31, 1998) 10.00 0.01 0.15
1999 - Service Shares (commenced December
31, 1998) 10.00 0.02 0.14
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
shareholders
----------------------------
Net assets
From net Net increase Net asset at end of Ratio of
investment From net in net asset value, end Total period net expenses to
income realized gains value of period return/b/,/d/ (in 000s) average net assets/c/
----------------------------------------------------------------------------------------------------
$(0.04) $ -- $0.40 $10.55 4.31% $ 91,072 1.04%
(0.02) -- 0.35 10.50 3.68 14,464 1.79
(0.02) -- 0.36 10.51 3.73 8,032 1.79
(0.05) -- 0.39 10.55 4.35 189,540 0.64
(0.03) -- 0.39 10.55 4.11 13 1.14
----------------------------------------------------------------------------------------------------
-- -- 0.15 10.15 1.50 6,665 1.08
-- -- 0.15 10.15 1.50 340 1.82
-- -- 0.15 10.15 1.50 268 1.83
-- -- 0.16 10.16 1.60 53,396 0.66
-- -- 0.16 10.16 1.60 2 1.16
----------------------------------------------------------------------------------------------------
|
CORE LARGE CAP VALUE FUND (continued)
Ratios assuming
no voluntary waiver
of fees or expense limitations
------------------------------------
Ratio of Ratio of
net investment Ratio of net investment
income to expenses to income to Portfolio
average net average net average net turnover
assets/c/ assets/c/ assets/c/ rate/d/
----------------------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares 0.87% 1.21% 0.70% 36.10%
1999 - Class B Shares 0.05 1.96 (0.12) 36.10
1999 - Class C Shares 0.09 1.96 (0.08) 36.10
1999 - Institutional
Shares 1.29 0.81 1.12 36.10
1999 - Service Shares 0.72 1.31 0.55 36.10
----------------------------------------------------------------------------------------------
For the Period Ended
January 31,
1999 - Class A
Shares(commenced December
31, 1998) 1.45 8.03 (5.50) 0.00
1999 - Class B
Shares(commenced December
31, 1998) 0.84 8.77 (6.11) 0.00
1999 - Class C
Shares(commenced December
31, 1998) 0.70 8.78 (6.25) 0.00
1999 - Institutional
Shares(commenced December
31, 1998) 1.97 7.61 (4.98) 0.00
1999 - Service
Shares(commenced December
31, 1998) 2.17 8.11 (4.78) 0.00
----------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE U.S. EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
-----------------------------------------------------------------------------
For The Seven-Month Period Ended August
31,
1999 - Class A Shares $32.98 $ 0.03 $1.20
1999 - Class B Shares 32.50 (0.11) 1.17
1999 - Class C Shares 32.40 (0.10) 1.16
1999 - Institutional Shares 33.29 0.11 1.21
1999 - Service Shares 32.85 0.01 1.19
-----------------------------------------------------------------------------
For The Years Ended January 31,
1999 - Class A Shares 26.59 0.04 7.02
1999 - Class B Shares 26.32 (0.10) 6.91
1999 - Class C Shares 26.24 (0.10) 6.89
1999 - Institutional Shares 26.79 0.20 7.11
1999 - Service Shares 26.53 0.06 7.01
-----------------------------------------------------------------------------
1998 - Class A Shares 23.32 0.11 5.63
1998 - Class B Shares 23.18 0.11 5.44
1998 - Class C Shares (commenced August
15, 1997) 27.48 0.03 1.22
1998 - Institutional Shares 23.44 0.30 5.65
1998 - Service Shares 23.27 0.19 5.57
-----------------------------------------------------------------------------
1997 - Class A Shares 19.66 0.16 4.46
1997 - Class B Shares (commenced May 1,
1996) 20.44 0.04 3.70
1997 - Institutional Shares 19.71 0.30 4.51
1997 - Service Shares (commenced June 7,
1996) 21.02 0.13 3.15
-----------------------------------------------------------------------------
1996 - Class A Shares 14.61 0.19 5.43
1996 - Institutional Shares (commenced
June 15, 1995) 16.97 0.16 3.23
-----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to shareholders
-------------------------------------
Ratio of
In excess Net increase Net assets Ratio of net investment
From net of net (decrease) Net asset at end of net expenses income (loss)
investment investment From net in net asset value, end Total period to average to average
income income realized gains value of period return/b/ (in 000s) net assets net assets
---------------------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 1.23 $34.21 3.73%d $614,310 1.14%c 0.15%c
-- -- -- 1.06 33.56 3.26d 214,087 1.89c (0.60)c
-- -- -- 1.06 33.46 3.27d 43,361 1.89c (0.61)c
-- -- -- 1.32 34.61 3.97d 335,465 0.74c 0.54c
-- -- -- 1.20 34.05 3.65d 11,204 1.24c 0.06c
---------------------------------------------------------------------------------------------------------------
(0.03) (0.01) (0.63) 6.39 32.98 26.89 605,566 1.23 0.15
-- -- (0.63) 6.18 32.50 26.19 152,347 1.85 (0.50)
-- -- (0.63) 6.16 32.40 26.19 26,912 1.87 (0.53)
(0.15) (0.03) (0.63) 6.50 33.29 27.65 307,200 0.69 0.69
(0.10) (0.02) (0.63) 6.32 32.85 27.00 11,600 1.19 0.19
---------------------------------------------------------------------------------------------------------------
(0.12) -- (2.35) 3.27 26.59 24.96 398,393 1.28 0.51
-- (0.06) (2.35) 3.14 26.32 24.28 59,208 1.79 (0.05)
-- (0.14) (2.35) (1.24) 26.24 4.85d 6,267 1.78c (0.21)c
(0.24) (0.01) (2.35) 3.35 26.79 25.76 202,893 0.65 1.16
(0.07) (0.08) (2.35) 3.26 26.53 25.11 7,841 1.15 0.62
---------------------------------------------------------------------------------------------------------------
(0.16) -- (0.80) 3.66 23.32 23.75 225,968 1.29 0.91
(0.04) (0.16) (0.80) 2.74 23.18 18.59d 17,258 1.83c 0.06c
(0.28) -- (0.80) 3.73 23.44 24.63 148,942 0.65 1.52
(0.13) (0.10) (0.80) 2.25 23.27 15.92d 3,666 1.15c 0.69c
---------------------------------------------------------------------------------------------------------------
(0.16) -- (0.41) 5.05 19.66 38.63 129,045 1.25 1.01
(0.24) -- (0.41) 2.74 19.71 20.14d 64,829 0.65c 1.49c
---------------------------------------------------------------------------------------------------------------
|
CORE U.S. EQUITY FUND (continued)
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of
Ratio of net investment
expenses to income (loss) to Portfolio
average net average turnover
assets net assets rate
---------------------------------------------------------------------------------
For The Seven-Month
Period Ended August 31,
1999 - Class A Shares 1.24%c 0.05%c 41.84%d
1999 - Class B Shares 1.99c (0.70)c 41.84d
1999 - Class C Shares 1.99c (0.71)c 41.84d
1999 - Institutional
Shares 0.84c 0.44c 41.84d
1999 - Service Shares 1.34c (0.04)c 41.84d
---------------------------------------------------------------------------------
For The Years Ended
January 31,
1999 - Class A Shares 1.36 0.02 63.79
1999 - Class B Shares 1.98 (0.63) 63.79
1999 - Class C Shares 2.00 (0.66) 63.79
1999 - Institutional
Shares 0.82 0.56 63.79
1999 - Service Shares 1.32 0.06 63.79
---------------------------------------------------------------------------------
1998 - Class A Shares 1.47 0.32 65.89
1998 - Class B Shares 1.96 (0.22) 65.89
1998 - Class C Shares
(commenced August 15,
1997) 1.95c (0.38)c 65.89
1998 - Institutional
Shares 0.82 0.99 65.89
1998 - Service Shares 1.32 0.45 65.89
---------------------------------------------------------------------------------
1997 - Class A Shares 1.53 0.67 37.28
1997 - Class B Shares
(commenced May 1, 1996) 2.00c (0.11)c 37.28
1997 - Institutional
Shares 0.85 1.32 37.28
1997 - Service Shares
(commenced June 7, 1996) 1.35c 0.49c 37.28
---------------------------------------------------------------------------------
1996 - Class A Shares 1.55 0.71 39.35
1996 - Institutional
Shares (commenced June
15, 1995) 0.96c 1.18c 39.35
---------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE LARGE CAP GROWTH FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain
-------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $16.17 $(0.01) $0.86
1999 - Class B Shares 15.98 (0.07) 0.84
1999 - Class C Shares 15.99 (0.07) 0.83
1999 - Institutional Shares 16.21 0.03 0.86
1999 - Service Shares 16.11 (0.02) 0.86
-------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 11.97 0.01 4.19
1999 - Class B Shares 11.92 (0.06) 4.12
1999 - Class C Shares 11.93 (0.05) 4.11
1999 - Institutional Shares 11.97 0.02 4.23
1999 - Service Shares 11.95 (0.01) 4.17
-------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced May 1,
1997) 10.00 0.01 2.35
1998 - Class B Shares (commenced May 1,
1997) 10.00 (0.03) 2.33
1998 - Class C Shares (commenced August
15, 1997) 11.80 (0.02) 0.54
1998 - Institutional Shares (commenced May
1, 1997) 10.00 0.01 2.35
1998 - Service Shares (commenced May 1,
1997) 10.00 (0.02) 2.35
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
Shareholders
---------------------------------
From In excess Net Net asset Net assets Ratio of
Net of net From net increase value, at end of net expenses
Investment investment realized in net end of Total period to average
Income income gains asset value period return/b/ (in 000s) net assets
-------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.85 $17.02 5.26%d $300,684 1.04%c
-- -- -- 0.77 16.75 4.82d 181,626 1.79c
-- -- -- 0.76 16.75 4.75d 75,502 1.79c
-- -- -- 0.89 17.10 5.49d 310,704 0.64c
-- -- -- 0.84 16.95 5.21d 2,510 1.14c
-------------------------------------------------------------------------------------------
-- -- -- 4.20 16.17 35.10 175,510 0.97
-- -- -- 4.06 15.98 34.07 93,711 1.74
-- -- -- 4.06 15.99 34.04 37,081 1.74
-- (0.01) -- 4.24 16.21 35.54 295,734 0.65
-- -- -- 4.16 16.11 34.85 1,663 1.15
-------------------------------------------------------------------------------------------
(0.01) -- (0.38) 1.97 11.97 23.79d 53,786 0.91c
-- -- (0.38) 1.92 11.92 23.26d 13,857 1.67c
-- (0.01) (0.38) 0.13 11.93 4.56d 4,132 1.68c
(0.01) -- (0.38) 1.97 11.97 23.89d 4,656 0.72c
-- -- (0.38) 1.95 11.95 23.56d 115 1.17c
-------------------------------------------------------------------------------------------
|
CORE LARGE CAP GROWTH FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
------------------------
Ratio of Ratio of net
net investment Ratio of investment
income (loss) to expenses to (loss) to Portfolio
average net average net average net turnover
assets assets assets rate
-------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares (0.11)%c 1.26%c (0.33)%c 32.74%d
1999 - Class B Shares (0.87)c 2.01c (1.09)c 32.74d
1999 - Class C Shares (0.87)c 2.01c (1.09)c 32.74d
1999 - Institutional
Shares 0.31c 0.86c 0.09c 32.74d
1999 - Service Shares (0.21)c 1.36c (0.43)c 32.74d
-------------------------------------------------------------------------------
For the Year Ended January
31,
1999 - Class A Shares 0.05 1.46 (0.44) 63.15
1999 - Class B Shares (0.73) 2.11 (1.10) 63.15
1999 - Class C Shares (0.74) 2.11 (1.11) 63.15
1999 - Institutional
Shares 0.35 1.02 (0.02) 63.15
1999 - Service Shares (0.16) 1.52 (0.53) 63.15
-------------------------------------------------------------------------------
For the Period Ended
January 31,
1998 - Class A Shares
(commenced May 1, 1997) 0.12 c 2.40c (1.37)c 74.97d
1998 - Class B Shares
(commenced May 1, 1997) (0.72)c 2.91c (1.96)c 74.97d
1998 - Class C Shares
(commenced August 15,
1997) (0.76)c 2.92c (2.00)c 74.97d
1998 - Institutional
Shares (commenced May 1,
1997) 0.42 c 1.96c (0.82)c 74.97d
1998 - Service Shares
(commenced May 1, 1997) (0.21)c 2.41c (1.45)c 74.97d
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE SMALL CAP EQUITY FUND
Income from
investment operations/a/
-----------------------
Net asset Net Net
value, investment realized and
beginning income unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $10.16 $(0.01) $0.08
1999 - Class B Shares 10.07 (0.05) 0.07
1999 - Class C Shares 10.08 (0.05) 0.07
1999 - Institutional Shares 10.20 0.02 0.08
1999 - Service Shares 10.16 (0.01) 0.07
------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 10.59 0.01 (0.43)
1999 - Class B Shares 10.56 (0.05) (0.44)
1999 - Class C Shares 10.57 (0.04) (0.45)
1999 - Institutional Shares 10.61 0.04 (0.43)
1999 - Service Shares 10.60 0.01 (0.44)
------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced August 15,
1997) 10.00 (0.01) 0.65
1998 - Class B Shares (commenced August 15,
1997) 10.00 (0.03) 0.64
1998 - Class C Shares (commenced August 15,
1997) 10.00 (0.02) 0.64
1998 - Institutional Shares (commenced
August 15, 1997) 10.00 0.01 0.65
1998 - Service Shares (commenced August 15,
1997) 10.00 0.01 0.64
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
Shareholders
----------------------------
From Net Net asset Net assets Ratio of
net increase value, at end of net expenses
investment From net in net end of Total period to average
income realized gains asset value period return/b/ (in 000s) net assets
------------------------------------------------------------------------------------
$ -- $ -- $0.07 $10.23 0.69%d $52,660 1.33%c
-- -- 0.02 10.09 0.20d 13,711 2.08c
-- -- 0.02 10.10 0.20d 6,274 2.08c
-- -- 0.10 10.30 0.98d 62,633 0.93c
-- -- 0.06 10.22 0.59d 64 1.43c
------------------------------------------------------------------------------------
(0.01) -- (0.43) 10.16 (3.97) 64,087 1.31
-- -- (0.49) 10.07 (4.64) 15,406 2.00
-- -- (0.49) 10.08 (4.64) 6,559 2.01
(0.02) -- (0.41) 10.20 (3.64) 62,763 0.94
(0.01) -- (0.44) 10.16 (4.07) 54 1.44
------------------------------------------------------------------------------------
-- (0.05) 0.59 10.59 6.37d 11,118 1.25c
-- (0.05) 0.56 10.56 6.07d 9,957 1.95c
-- (0.05) 0.57 10.57 6.17d 2,557 1.95c
-- (0.05) 0.61 10.61 6.57d 9,026 0.95c
-- (0.05) 0.60 10.60 6.47d 2 1.45c
------------------------------------------------------------------------------------
|
CORE SMALL CAP EQUITY FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
------------------------
Ratio of net Ratio of net
investment Ratio of investment
income (loss) expenses to loss Portfolio
to average average net to average turnover
net assets assets net assets rate
------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares (0.12)%c 1.67%c (0.46)%c 52.03%d
1999 - Class B Shares (0.86)c 2.42c (1.20)c 52.03d
1999 - Class C Shares (0.86)c 2.42c (1.20)c 52.03d
1999 - Institutional Shares 0.28c 1.27c (0.06)c 52.03d
1999 - Service Shares (0.22)c 1.77c (0.56)c 52.03d
------------------------------------------------------------------------------
For the Year Ended January
31,
1999 - Class A Shares 0.08 2.00 (0.61) 75.38
1999 - Class B Shares (0.55) 2.62 (1.17) 75.38
1999 - Class C Shares (0.56) 2.63 (1.18) 75.38
1999 - Institutional Shares 0.60 1.56 (0.02) 75.38
1999 - Service Shares 0.01 2.06 (0.61) 75.38
------------------------------------------------------------------------------
For the Period Ended January
31,
1998 - Class A Shares
(commenced August 15, 1997) (0.36)c 3.92c (3.03)c 37.65d
1998 - Class B Shares
(commenced August 15, 1997) (1.04)c 4.37c (3.46)c 37.65d
1998 - Class C Shares
(commenced August 15, 1997) (1.07)c 4.37c (3.49)c 37.65d
1998 - Institutional Shares
(commenced August 15, 1997) 0.15c 3.37c (2.27)c 37.65d
1998 - Service Shares
(commenced August 15, 1997) 0.40c 3.87c (2.02)c 37.65d
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CAPITAL GROWTH FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
----------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $24.03 $(0.08) $1.01
1999 - Class B Shares 23.57 (0.17) 0.97
1999 - Class C Shares 23.52 (0.16) 0.97
1999 - Institutional Shares 24.07 (0.02) 1.01
1999 - Service Shares 23.96 (0.08) 1.00
----------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 18.48 (0.03) 6.35
1999 - Class B Shares 18.27 (0.12) 6.19
1999 - Class C Shares 18.24 (0.10) 6.15
1999 - Institutional Shares 18.45 0.01 6.38
1999 - Service Shares 18.46 (0.04) 6.31
----------------------------------------------------------------------------
1998 - Class A Shares 16.73 0.02 4.78
1998 - Class B Shares 16.67 0.02 4.61
1998 - Class C Shares (commenced August
15, 1997) 19.73 (0.02) 1.60
1998 - Institutional Shares (commenced
August 15, 1997) 19.88 0.02 1.66
1998 - Service Shares (commenced August
15, 1997) 19.88 (0.01) 1.66
----------------------------------------------------------------------------
1997 - Class A Shares 14.91 0.10 3.56
1997 - Class B Shares (commenced May 1,
1996) 15.67 0.01 2.81
----------------------------------------------------------------------------
1996 - Class A Shares 13.67 0.12 3.93
----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
shareholders
--------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net value, end Total period to average
income income realized gain asset value of period return/b/ (in 000s) net assets
----------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 0.93 $24.96 3.87%d $1,971,097 1.44%c
-- -- -- 0.80 24.37 3.39d 329,870 2.19c
-- -- -- 0.81 24.33 3.44d 87,284 2.19c
-- -- -- 0.99 25.06 4.11d 255,210 1.04c
-- -- -- 0.92 24.88 3.84d 6,466 1.54c
----------------------------------------------------------------------------------------------------
-- -- (0.77) 5.55 24.03 34.58 1,992,716 1.42
-- -- (0.77) 5.30 23.57 33.60 236,369 2.19
-- -- (0.77) 5.28 23.52 33.55 60,234 2.19
-- -- (0.77) 5.62 24.07 35.02 41,817 1.07
-- -- (0.77) 5.50 23.96 34.34 3,085 1.57
----------------------------------------------------------------------------------------------------
(0.01) (0.01) (3.03) 1.75 18.48 29.71 1,256,595 1.40
-- -- (3.03) 1.60 18.27 28.73 40,827 2.18
-- (0.04) (3.03) (1.49) 18.24 8.83d 5,395 2.21c
(0.01) (0.07) (3.03) (1.43) 18.45 9.31d 7,262 1.16c
-- (0.04) (3.03) (1.42) 18.46 9.18d 2 1.50c
----------------------------------------------------------------------------------------------------
(0.10) (0.02) (1.72) 1.82 16.73 25.97 920,646 1.40
(0.01) (0.09) (1.72) 1.00 16.67 19.39d 3,221 2.15c
----------------------------------------------------------------------------------------------------
(0.12) -- (2.69) 1.24 14.91 30.45 881,056 1.36
----------------------------------------------------------------------------------------------------
|
CAPITAL GROWTH FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
--------------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) expenses to income (loss) Portfolio
to average average net to average turnover
net assets assets net assets rate
---------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares (0.53)%c 1.47%c (0.56)%c 18.16%d
1999 - Class B Shares (1.29)c 2.22c (1.32)c 18.16d
1999 - Class C Shares (1.29)c 2.22c (1.32)c 18.16d
1999 - Institutional
Shares (0.20)c 1.07c (0.23)c 18.16d
1999 - Service Shares (0.65)c 1.57c (0.68)c 18.16d
---------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares (0.18) 1.58 (0.34) 30.17
1999 - Class B Shares (0.98) 2.21 (1.00) 30.17
1999 - Class C Shares (1.00) 2.21 (1.02) 30.17
1999 - Institutional
Shares 0.11 1.09 0.09 30.17
1999 - Service Shares (0.37) 1.59 (0.39) 30.17
---------------------------------------------------------------------------------
1998 - Class A Shares 0.08 1.65 (0.17) 61.50
1998 - Class B Shares (0.77) 2.18 (0.77) 61.50
1998 - Class C Shares
(commenced August 15,
1997) (0.86)c 2.21c (0.86)c 61.50
1998 - Institutional
Shares (commenced August
15, 1997) 0.18c 1.16c 0.18c 61.50
1998 - Service Shares
(commenced August 15, 1997) (0.16)c 1.50c (0.16)c 61.50
---------------------------------------------------------------------------------
1997 - Class A Shares 0.62 1.65 0.37 52.92
1997 - Class B Shares
(commenced May 1, 1996) (0.39)c 2.15c (0.39)c 52.92
---------------------------------------------------------------------------------
1996 - Class A Shares 0.65 1.61 0.40 63.90
---------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
STRATEGIC GROWTH FUND
Income from
investment operations/a/
---------------------------
Net asset Net
value, investment
beginning income Net realized and
of period (loss) unrealized gain
-------------------------------------------------------------------------------
For The Period Ended August 31,
1999 - Class A Shares (commenced May 24) $10.00 $ -- $0.06
1999 - Class B Shares (commenced May 24) 10.00 (0.03)e 0.07e
1999 - Class C Shares (commenced May 24) 10.00 (0.03)e 0.08e
1999 - Institutional Shares (commenced
May 24) 10.00 0.01 0.06
1999 - Service Shares (commenced May 24) 10.00 (0.01) 0.07
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
APPENDIX B
Distributions to shareholders
--------------------------------------
In excess Net assets
From net of net Net increase Net asset at end of Ratio of
investment investment From net in net asset value, end Total period net expenses to
income income realized gains value of period return/b/ (in 000s) average net assets
------------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.06 $10.06 0.60%d $10,371 1.44%c
-- -- -- 0.04 10.04 0.40d 3,393 2.19c
-- -- -- 0.05 10.05 0.50d 2,388 2.19c
-- -- -- 0.07 10.07 0.70d 5,981 1.04c
-- -- -- 0.06 10.06 0.60d 2 1.54c
------------------------------------------------------------------------------------------------------
|
STRATEGIC GROWTH FUND (continued)
Ratios assuming no
voluntary waiver of
fees or expense
limitations
--------------------
Ratio of
net Ratio of Ratio of
investment expenses net
income to investment
(loss) to average loss to Portfolio
average net average turnover
net assets assets net assets rate
-----------------------------------------------------------------------------
For The Period Ended August 31,
1999 - Class A Shares (commenced
May 24) (0.17)%c 11.70%c (10.43)%c 6.98%d
1999 - Class B Shares (commenced
May 24) (0.97)c 12.45c (11.23)c 6.98d
1999 - Class C Shares (commenced
May 24) (0.99)c 12.45c (11.25)c 6.98d
1999 - Institutional Shares
(commenced May 24) 0.24c 11.30c (10.02)c 6.98d
1999 - Service Shares (commenced
May 24) (0.24)c 11.80c (10.50)c 6.98d
-----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
[This page intentionally left blank]
GROWTH OPPORTUNITIES FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain
-------------------------------------------------------------------------------
For the Period Ended August 31,
1999 - Class A Shares (commenced May 24) $10.00 $(0.01)e $0.14e
1999 - Class B Shares (commenced May 24) 10.00 (0.03)e 0.21e
1999 - Class C Shares (commenced May 24) 10.00 (0.03)e 0.13e
1999 - Institutional Shares (commenced May
24) 10.00 0.01 0.12
1999 - Service Shares (commenced May 24) 10.00 -- 0.12
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
APPENDIX B
Distributions to shareholders
---------------------------------------
In excess Net assets Ratio of
From net of net Net increase Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
-------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.13 $10.13 1.30%d $8,204 1.44%c
-- -- -- 0.18 10.18 1.80d 520 2.19c
-- -- -- 0.10 10.10 1.00d 256 2.19c
-- -- -- 0.13 10.13 1.30d 5,223 1.04c
-- -- -- 0.12 10.12 1.20d 2 1.54c
-------------------------------------------------------------------------------------------------
|
GROWTH OPPORTUNITIES FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
----------------------------
Ratio Ratio
of net of net
investment Ratio of investment
income (loss) expenses to loss to Portfolio
to average average net average turnover
net assets assets net assets rate
-------------------------------------------------------------------------------------
For the Period Ended August 31,
1999 - Class A Shares
(commenced May 24) (0.27)%c 14.15%c (12.98)%c 26.53%d
1999 - Class B Shares
(commenced May 24) (1.04)c 14.90c (13.75)c 26.53d
1999 - Class C Shares
(commenced May 24) (1.12)c 14.90c (13.83)c 26.53d
1999 - Institutional
Shares (commenced May
24) 0.39c 13.75c (12.32)c 26.53d
1999 - Service Shares
(commenced May 24) 0.03c 14.25c (12.68)c 26.53d
-------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
[This page intentionally left blank]
MID CAP VALUE FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
-------------------------------------------------------------------------------
For the Seven-Month Period Ended
August 31,
1999 - Class A Shares $18.38 $ 0.06 $ 1.71
1999 - Class B Shares 18.29 (0.04) 1.71
1999 - Class C Shares 18.30 (0.04) 1.71
1999 - Institutional Shares 18.37 0.09 1.72
1999 - Service Shares 18.29 0.05 1.70
-------------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 21.61 0.10 (2.38)
1999 - Class B Shares 21.57 (0.05) (2.35)
1999 - Class C Shares 21.59 (0.05) (2.34)
1999 - Institutional Shares 21.65 0.19 (2.38)
1999 - Service Shares 21.62 0.03 (2.31)
-------------------------------------------------------------------------------
1998 - Class A Shares (commenced
August 15, 1997) 23.63 0.09 0.76
1998 - Class B Shares (commenced
August 15, 1997) 23.63 0.06 0.74
1998 - Class C Shares (commenced
August 15, 1997) 23.63 0.06 0.76
1998 - Institutional Shares 18.73 0.16 5.66
1998 - Service Shares (commenced July
18, 1997) 23.01 0.09 1.40
-------------------------------------------------------------------------------
1997 - Institutional Shares 15.91 0.24 3.77
-------------------------------------------------------------------------------
For the Period Ended January 31,
1996 - Institutional Shares (commenced
August 1, 1995) 15.00 0.13 0.90
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to shareholders
--------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
-------------------------------------------------------------------------------------------------
$ -- $ -- $(1.73) $ 0.04 $18.42 9.04%d $ 49,081 1.29%c
-- -- (1.73) (0.06) 18.23 8.53d 31,824 2.04c
-- -- (1.73) (0.06) 18.24 8.52d 9,807 2.04c
-- -- (1.73) 0.08 18.45 9.26d 190,549 0.89c
-- -- (1.73) 0.02 18.31 8.97d 190 1.39c
-------------------------------------------------------------------------------------------------
(0.07) -- (0.88) (3.23) 18.38 (10.48) 70,578 1.33
-- -- (0.88) (3.28) 18.29 (11.07) 37,821 1.93
(0.02) -- (0.88) (3.29) 18.30 (11.03) 10,800 1.93
(0.21) -- (0.88) (3.28) 18.37 (10.07) 196,512 0.87
(0.17) -- (0.88) (3.33) 18.29 (10.48) 289 1.37
-------------------------------------------------------------------------------------------------
(0.06) (0.04) (2.77) (2.02) 21.61 3.42d 90,588 1.35c
(0.09) -- (2.77) (2.06) 21.57 3.17d 28,743 1.85c
(0.09) -- (2.77) (2.04) 21.59 3.27d 6,445 1.85c
(0.13) -- (2.77) 2.92 21.65 30.86 236,440 0.85
(0.11) -- (2.77) (1.39) 21.62 6.30d 8 1.35c
-------------------------------------------------------------------------------------------------
(0.24) (0.93) (0.02) 2.82 18.73 25.63 145,253 0.85
-------------------------------------------------------------------------------------------------
(0.12) -- -- 0.91 15.91 6.89d 135,671 0.85c
-------------------------------------------------------------------------------------------------
|
MID CAP VALUE FUND (continued)
Ratios assuming no
expense limitations
--------------------------
Ratio of
net
investment Ratio of
income Ratio of net investment
(loss) to expenses to income (loss) Portfolio
average net average net to average net turnover
assets assets assets rate
------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares 0.43%c 1.37%c 0.35%c 68.84%d
1999 - Class B Shares (0.33)c 2.12c (0.41)c 68.84d
1999 - Class C Shares (0.34)c 2.12c (0.42)c 68.84d
1999 - Institutional Shares 0.79c 0.97c 0.71c 68.84d
1999 - Service Shares 0.38c 1.47c 0.30c 68.84d
------------------------------------------------------------------------------
For the Years Ended January
31,
1999 - Class A Shares 0.38 1.41 0.30 92.18
1999 - Class B Shares (0.22) 2.01 (0.30) 92.18
1999 - Class C Shares (0.22) 2.01 (0.30) 92.18
1999 - Institutional Shares 0.83 0.95 0.75 92.18
1999 - Service Shares 0.32 1.45 0.24 92.18
------------------------------------------------------------------------------
1998 - Class A Shares
(commenced August 15, 1997) 0.33c 1.47c 0.21c 62.60
1998 - Class B Shares
(commenced August 15, 1997) (0.20)c 1.97c (0.32)c 62.60
1998 - Class C Shares
(commenced August 15, 1997) (0.23)c 1.97c (0.35)c 62.60
1998 - Institutional Shares 0.78 0.97 0.66 62.60
1998 - Service Shares
(commenced July 18, 1997) 0.63c 1.43c 0.51c 62.60
------------------------------------------------------------------------------
1997 - Institutional Shares 1.35 0.91 1.29 74.03
------------------------------------------------------------------------------
For the Period Ended January
31,
1996 - Institutional Shares
(commenced August 1, 1995) 1.67c 0.98c 1.54c 58.77d
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
SMALL CAP VALUE FUND
Income (loss) from
investment operations/a/
------------------------------
Net asset
value, Net Net realized and
beginning investment unrealized
of period income (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended
August 31,
1999 - Class A Shares $18.51 $(0.05) $ 1.34
1999 - Class B Shares 18.10 (0.12) 1.29
1999 - Class C Shares 18.12 (0.11) 1.27
1999 - Institutional Shares 18.62 -- 1.33
1999 - Service Shares 18.50 (0.13) 1.39
------------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 24.05 (0.06) (4.48)
1999 - Class B Shares 23.73 (0.21) (4.42)
1999 - Class C Shares 23.73 (0.18) (4.43)
1999 - Institutional Shares 24.09 0.03 (4.50)
1999 - Service Shares 24.05 (0.04) (4.51)
------------------------------------------------------------------------------
1998 - Class A Shares 20.91 0.14 5.33
1998 - Class B Shares 20.80 (0.01) 5.27
1998 - Class C Shares (commenced
August 15, 1997) 24.69 (0.06) 1.43
1998 - Institutional Shares
(commenced August 15, 1997) 24.91 0.03 1.48
1998 - Service Shares (commenced
August 15, 1997) 24.91 (0.01) 1.48
------------------------------------------------------------------------------
1997 - Class A Shares 17.29 (0.21) 4.92
1997 - Class B Shares (commenced May
1, 1996) 20.79 (0.11) 1.21
------------------------------------------------------------------------------
1996 - Class A Shares 16.14 (0.23) 1.39
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
Distributions to
shareholders
----------------------------
In excess Net increase Net asset Net assets Ratio of
of net (decrease) value, at end of net expenses
investment From net in net asset end of Total period to average
income realized gains value period return/b/ (in 000s) net assets
--------------------------------------------------------------------------------------
$ -- $ -- $ 1.29 $19.80 6.97%d $210,500 1.50%c
-- -- 1.17 19.27 6.46d 37,386 2.25c
-- -- 1.16 19.28 6.40d 8,079 2.25c
-- -- 1.33 19.95 7.14d 27,023 1.10c
-- -- 1.26 19.76 6.81d 57 1.60c
--------------------------------------------------------------------------------------
-- (1.00) (5.54) 18.51 (17.37) 261,661 1.50
-- (1.00) (5.63) 18.10 (18.00) 42,879 2.25
-- (1.00) (5.61) 18.12 (17.91) 8,212 2.25
-- (1.00) (5.47) 18.62 (17.04) 15,351 1.13
-- (1.00) (5.55) 18.50 (17.41) 261 1.62
--------------------------------------------------------------------------------------
-- (2.33) 3.14 24.05 26.17 370,246 1.54
-- (2.33) 2.93 23.73 25.29 42,677 2.29
(0.34) (1.99) (0.96) 23.73 5.51d 5,604 2.09c
(0.28) (2.05) (0.82) 24.09 6.08d 14,626 1.16c
(0.31) (2.02) (0.86) 24.05 5.91d 2 1.45c
--------------------------------------------------------------------------------------
-- (1.09) 3.62 20.91 27.28 212,061 1.60
-- (1.09) 0.01 20.80 5.39d 3,674 2.35c
--------------------------------------------------------------------------------------
-- (0.01) 1.15 17.29 7.20 204,994 1.41
--------------------------------------------------------------------------------------
|
SMALL CAP VALUE FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
-----------------------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) to expenses to income (loss) Portfolio
average net average net to average net turnover
assets assets assets rate
-----------------------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares (0.35)%c 1.61%c (0.46)%c 46.95%d
1999 - Class B Shares (1.10)c 2.36c (1.21)c 46.95d
1999 - Class C Shares (1.10)c 2.36c (1.21)c 46.95d
1999 - Institutional
Shares 0.05c 1.21c (0.06)c 46.95d
1999 - Service Shares (0.41)c 1.71c (0.52)c 46.95d
-----------------------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares (0.24) 1.74 (0.48) 98.46
1999 - Class B Shares (0.99) 2.29 (1.03) 98.46
1999 - Class C Shares (0.99) 2.29 (1.03) 98.46
1999 - Institutional
Shares 0.13 1.17 0.09 98.46
1999 - Service Shares (0.47) 1.66 (0.51) 98.46
-----------------------------------------------------------------------------------------------
1998 - Class A Shares (0.28) 1.76 (0.50) 84.81
1998 - Class B Shares (0.92) 2.29 (0.92) 84.81
1998 - Class C Shares
(commenced August
15, 1997) (0.79)c 2.09c (0.79)c 84.81
1998 - Institutional
Shares (commenced
August 15, 1997) 0.27c 1.16c 0.27c 84.81
1998 - Service Shares
(commenced August 15,
1997) (0.07)c 1.45c (0.07)c 84.81
-----------------------------------------------------------------------------------------------
1997 - Class A Shares (0.72) 1.85 (0.97) 99.46
1997 - Class B Shares
(commenced May 1, 1996) (1.63)c 2.35c (1.63)c 99.46
-----------------------------------------------------------------------------------------------
1996 - Class A Shares (0.59) 1.66 (0.84) 57.58
-----------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
Appendix C
Prior Performance of Similarly Advised Accounts of the Investment Adviser
CORE LARGE CAP VALUE FUND
The following table sets forth the Investment Adviser's composite perfor- mance data relating to the historical performance of all discretionary pri- vate accounts managed by the Investment Adviser that have investment objec- tives, policies, and strategies substantially similar to the CORE Large Cap Value Fund. The information is provided to illustrate the past performance of the Investment Adviser in managing substantially similar accounts as mea- sured against the Russell 1000 Value Index and does not represent the per- formance of the CORE Large Cap Value Fund. Investors should not consider this performance data as a substitute for the performance of the CORE Large Cap Value Fund nor should investors consider this data as an indication of future performance of the CORE Large Cap Value Fund or of the Investment Adviser. The Russell 1000 Value Index is unmanaged and investors cannot invest directly in the Index.
Private
Account Net
Composite Russell 1000
Performance Value Index
-------------------------------------------
1998 11.40 % 15.64 %
1997 32.59 % 35.18 %
1996 26.41 % 21.64 %
1995 37.92 % 38.35 %
1994 (2.17)% (2.01)%
1993 16.90 % 18.12 %
8/1/92-12/31/92 5.39 % 4.01 %
-------------------------------------------
|
Average Annual
Total Return for the Period
Ended 12/31/98
Since
3 5 Inception
1 Year Years Years (8/1/92)
---------------------------------------------------------------------------
Private Account Net Composite Performance 11.40% 23.13% 20.30% 19.30%
Russell 1000 Value Index 15.64% 23.88% 20.85% 19.68%
---------------------------------------------------------------------------
|
The Investment Adviser's composite performance information was calculated on a time-weighted and asset-weighted total return basis which includes real- ized and unrealized gains and losses plus income, as recommended by the Association for Investment Management and Research ("AIMR"). The composite performance is
net of applicable investment management fees, brokerage commissions, execu- tion costs and custodial fees, without provision for federal and state tax- es, if any. Total return performance of the CORE Large Cap Value Fund will be calculated in accordance with the regulations of the SEC. The SEC stan- dardized average annual total return is neither time-weighted nor asset- weighted and is determined for specified periods by computing the annualized percentage change in the value of an initial amount that is invested in a share class of the Fund at the maximum public offering price. Investors should be aware that the differences in methodology between AIMR and SEC requirements could result in different performance data for identical time periods.
All returns presented reflect the reinvestment of dividends and other earn- ings. The weighted-average expenses of the private accounts used in calcu- lating the Investment Adviser's net composite performance data were 0.59% annualized, which are lower than the estimated expenses of Institutional Shares of the CORE Large Cap Value Fund stated under "Fund Fees and Expenses" above. The performance of the private accounts would have been lower if they had been subject to the expenses of the CORE Large Cap Value Fund. In addition, the private accounts are not subject to the same diversi- fication requirements, specific tax restrictions and investment limitations imposed on the CORE Large Cap Value Fund by the Act and Subchapter M of the Code. Consequently, the performance results of the Investment Adviser's com- posite could have been adversely affected if the private accounts had been regulated as investment companies under the federal securities laws.
Appendix D
Prior Performance of Similarly Advised Accounts of the Investment Adviser
STRATEGIC GROWTH FUND
The following table sets forth the Investment Adviser's composite perfor- mance data relating to the historical performance of all discretionary pri- vate accounts managed by the Investment Adviser that have investment objec- tives, policies, and strategies substantially similar to the Strategic Growth Fund. The information is provided to illustrate the past performance of the Investment Adviser in managing substantially similar accounts as mea- sured against the S&P 500 Index and does not represent the performance of the Strategic Growth Fund. Investors should not consider this performance data as a substitute for the performance of the Strategic Growth Fund nor should investors consider this data as an indication of future performance of the Strategic Growth Fund or of the Investment Adviser. The S&P 500 Index is unmanaged and investors cannot invest directly in the Index.
Private Account
Net Composite S&P 500
Performance Index
-------------------------------
1998 35.35% 28.57%
1997 41.14% 33.37%
1996 21.79% 22.95%
1995 28.07% 37.58%
1994 -1.69% 1.32%
1993 17.10% 10.08%
1992 9.22% 7.62%
1991 37.44% 30.47%
1990 -9.32% -3.05%
1989 33.82% 31.70%
1988 23.63% 16.61%
1987 5.34% 5.25%
1986 18.99% 18.67%
1985 37.98% 31.73%
1984 8.52% 6.19%
1983 34.41% 22.56%
1982 34.43% 21.55%
1981 1.02% -4.97%
-------------------------------
|
Average Annual
Total Return for the Period Ended
12/31/98
Since
Inception
1 Year 3 Years 5 Years 10 Years (1/1/81)
-------------------------------------------------------------------------
Private Account Net Composite
Performance 35.35% 32.51% 23.98% 20.11% 19.46%
S&P 500 Index 28.57% 28.23% 24.06% 19.22% 16.94%
-------------------------------------------------------------------------
|
The Investment Adviser's composite performance information was calculated on a time-weighted and asset-weighted total return basis which includes real- ized and unrealized gains and losses plus income, as recommended by the Association for Investment Management and Research ("AIMR"). The composite performance is net of applicable investment management fees, brokerage com- missions, execution costs and custodial fees, without provision for federal and state taxes, if any. Total return performance of the Strategic Growth Fund will be calculated in accordance with the regulations of the SEC. The SEC standardized average annual total return is neither time-weighted nor asset-weighted and is determined for specified periods by computing the annualized percentage change in the value of an initial amount that is invested in a share class of the Fund at the maximum public offering price. Investors should be aware that the differences in methodology between AIMR and SEC requirements could result in different performance data for identi- cal time periods.
All returns presented reflect the reinvestment of dividends and other earn- ings. The weighted-average expenses of the private accounts used in calcu- lating the Investment Adviser's net composite performance data were 0.76% annualized, which are lower than the estimated expenses of Institutional Shares of the Strategic Growth Fund stated under "Fund Fees and Expenses" above. The performance of the private accounts would have been lower if they had been subject to the expenses of the Strategic Growth Fund. In addition, the private accounts are not subject to the same diversification require- ments, specific tax restrictions and investment limitations imposed on the Strategic Growth Fund by the Act and Subchapter M of the Code. Consequently, the performance results of the Investment Adviser's composite could have been adversely affected if the private accounts had been regulated as investment companies under the federal securities laws.
Index
1 General Investment
Management Approach
3 Fund Investment Objectives
and Strategies
3 Goldman Sachs Balanced
Fund
5 Goldman Sachs Growth and
Income Fund
6 Goldman Sachs CORE Large
Cap Value Fund
7 Goldman Sachs CORE U.S.
Equity Fund
8 Goldman Sachs CORE Large
Cap Growth Fund
9 Goldman Sachs CORE Small
Cap Equity Fund
10 Goldman Sachs Capital
Growth Fund
11 Goldman Sachs Strategic
Growth Fund
12 Goldman Sachs Growth
Opportunities Fund
13 Goldman Sachs Mid Cap
Value Fund
14 Goldman Sachs Small Cap
Value Fund
15 Goldman Sachs Large Cap Value Fund
16 Other Investment
Practices and
Securities
20 Principal Risks of the
Funds
24 Fund Performance
34 Fund Fees and Expenses
38 Service Providers
46 Dividends
48 Shareholder Guide
48 How To Buy Shares
52 How To Sell Shares
56 Taxation
58 Appendix A
Additional Information
on Portfolio Risks,
Securities and
Techniques
80 Appendix B
Financial Highlights
123 Appendix C
CORE Large Cap Value
Fund-Prior Performance
of Similarly Advised
Accounts of the
Investment Adviser
125 Appendix D
Strategic Growth Fund-
Prior Performance of
Similarly Advised
Accounts of the
Investment Adviser
|
Domestic Equity Funds
Prospectus (Institutional Shares)
FOR MORE INFORMATION
Annual/Semi-annual Report
Additional information about the Funds' investments is available in the Funds' annual and semi-annual reports to shareholders. In the Funds' annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the last fiscal year.
Statement of Additional Information
Additional information about the Funds and their policies is also available
in the Funds' Additional Statement. The Additional Statement is incorporated
by reference into this Prospectus (is legally considered part of this Pro-
spectus).
The Funds' annual and semi-annual reports, and the Additional Statement, are available free upon request by calling Goldman Sachs at 1-800-621-2550.
To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-621-2550
By mail - Goldman Sachs Funds, 4900 Sears Tower - 60th Floor, Chicago, IL
60606-6372
By e-mail - gs-funds@gs.com
On the Internet - Text-only versions of the Funds' documents are located
online and may be downloaded from:
SEC EDGAR database - http://www.sec.gov
You may review and obtain copies of Fund documents by visiting the SEC's
Public Reference Room in Washington, D.C. You may also obtain copies of Fund
documents, after paying a duplicating fee, by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102 or by electronic request to:
publicinfo@sec.gov. Information on the operation of the public reference
room may be obtained by calling the SEC at (202) 942-8090.
[LOGO OF GOLDMAN SACHS]
The Funds' investment company registration number is 811-5349.
CORE/SM/ is a service mark of Goldman, Sachs & Co.
EQDOMPROINST
Prospectus
GOLDMAN SACHS DOMESTIC EQUITY FUNDS
SERVICE
SHARES
November 30, 1999
. Goldman Sachs Balanced Fund
. Goldman Sachs Growth and Income Fund
. Goldman Sachs CORE SM Large Cap Value Fund
. Goldman Sachs CORE SM U.S. Equity Fund
. Goldman Sachs CORE SM Large Cap Growth Fund
. Goldman Sachs CORE SM Small Cap Equity Fund
. Goldman Sachs Capital Growth Fund
. Goldman Sachs Strategic Growth Fund
. Goldman Sachs Growth Opportunities Fund
. Goldman Sachs Mid Cap Value Fund (formerly Mid Cap Equity)
. Goldman Sachs Small Cap Value Fund
. Goldman Sachs Large Cap Value Fund
[LOGO OF GOLDMAN SACHS]
THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A FUND IS NOT A BANK
DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN A FUND
INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
[ART]
NOT FDIC-INSURED MAY LOSE VALUE NO BANK GUARANTEE
General Investment Management Approach
Goldman Sachs Asset Management, a unit of the Investment Management Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser to the Balanced, Growth and Income, CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, Strategic Growth, Growth Opportunities, Mid Cap Value, Small Cap Value and Large Cap Value Funds. Goldman Sachs Funds Management, L.P. serves as investment adviser to the CORE U.S. Equity and Capital Growth Funds. Goldman Sachs Asset Management and Goldman Sachs Funds Management, L.P. are each referred to in this Prospectus as the "Investment Adviser."
VALUE STYLE FUNDS
Goldman Sachs' Value Investment Philosophy:
THROUGH INTENSIVE, HANDS-ON RESEARCH OUR PORTFOLIO TEAM SEEKS TO IDENTIFY:
1. ATTRACTIVE VALUATION OPPORTUNITIES WHERE:
.The intrinsic value of the business is not reflected in the stock price
.The stock price is overdiscounted due to a temporary event
2. WELL-POSITIONED BUSINESSES THAT HAVE:
.Attractive returns on capital
.Sustainable earnings and cash flow
.Strong company management focused on long-term returns to shareholders
Business quality, conservative valuation, and thoughtful portfolio construc- tion are the key elements of our value approach.
GROWTH STYLE FUNDS
Goldman Sachs' Growth Investment Philosophy:
1. INVEST AS IF BUYING THE COMPANY/BUSINESS, NOT SIMPLY TRADING ITS STOCK:
.Understand the business, management, products and competition.
.Perform intensive, hands-on fundamental research.
.Seek businesses with strategic competitive advantages.
.Over the long-term, expect each company's stock price ultimately to track the growth in the value of the business.
2. BUY HIGH-QUALITY GROWTH BUSINESSES THAT POSSESS STRONG BUSINESS FRAN- CHISES, FAVORABLE LONG-TERM PROSPECTS AND EXCELLENT MANAGEMENT.
3. PURCHASE SUPERIOR LONG-TERM GROWTH COMPANIES AT A FAVORABLE PRICE--SEEK TO PURCHASE AT A FAIR VALUATION, GIVING THE INVESTOR THE POTENTIAL TO FULLY CAPTURE RETURNS FROM ABOVE-AVERAGE GROWTH RATES.
Growth companies have earnings expectations that exceed those of the stock market as a whole.
QUANTITATIVE ("CORE") STYLE FUNDS
Goldman Sachs' CORE Investment Philosophy:
Goldman Sachs' quantitative style of funds--CORE--emphasizes the two build-
ing blocks of active management: STOCK SELECTION and PORTFOLIO CONSTRUCTION.
I. CORE Stock Selection
The CORE Funds use the Goldman Sachs' proprietary multifactor model
("Multifactor Model"), a rigorous computerized rating system, to forecast
the returns of securities held in each Fund's portfolio. The Multifactor
Model incorporates common variables covering measures of:
.VALUE (price-to-book, price-to-earnings, cash flow to enterprise value)
.MOMENTUM (earnings momentum, price momentum, sustainable growth)
.RISK (market risk, company-specific risk, earnings risk)
.RESEARCH (fundamental research ratings of Goldman Sachs and other analysts)
ALL OF THE ABOVE FACTORS ARE CAREFULLY EVALUATED WITHIN THE MULTIFACTOR
MODEL SINCE EACH HAS DEMONSTRATED A SIGNIFICANT IMPACT ON THE PERFORMANCE OF THE SECURITIES AND MARKETS THEY WERE DESIGNED TO FORECAST. STOCK SELECTION IN THIS PROCESS COMBINES BOTH OUR QUANTITATIVE AND QUALITATIVE ANALYSIS.
II. CORE Portfolio Construction A proprietary COMPUTER OPTIMIZER calculates every security combination (at every possible weighting) to CONSTRUCT THE MOST EFFICIENT RISK/RETURN PORT- FOLIO given each CORE Fund benchmark. In this process, the Investment Adviser manages risk by limiting deviations from the benchmark, running size and sector neutral portfolios.
Goldman Sachs CORE Funds are fully invested, broadly diversified and offer consistent overall portfolio characteristics. They may serve as good founda- tions on which to build a portfolio.
Fund Investment Objectives and Strategies
Goldman Sachs
Balanced Fund
Objective: Long-term growth of capital and current income
Benchmarks: S&P 500 Index and Lehman Brothers Aggregate Bond Index
Investment Focus: Large capitalization U.S. stocks and fixed-income securi- ties
Investment Style: Asset Allocation, with growth and value (blend) equity components
INVESTMENT OBJECTIVE
The Fund seeks to provide long-term growth of capital and current income. The Fund seeks growth of capital primarily through investments in equity securities (stocks). The Fund seeks to provide current income through investment in fixed-income securities (bonds).
PRINCIPAL INVESTMENT STRATEGIES
Historically, stock and bond markets have often had different cycles, with one asset class rising when the other is falling. A balanced objective seeks to reduce the volatility associated with investing in a single market. There is no guarantee, however, that market cycles will move in opposition to one another or that a balanced investment program will successfully reduce vola- tility.
The percentage of the portfolio invested in equity and fixed-income securi- ties will vary from time to time as the Investment Adviser evaluates such securities' relative attractiveness based on market valuations, economic growth and inflation prospects. The allocation between equity and fixed- income securities is subject to the Fund's intention to pay regular quar- terly dividends. The amount of quarterly dividends can also be expected to fluctuate in accordance with factors such as prevailing interest rates and the percentage of the Fund's assets invested in fixed-income securities.
Equity Securities. The Fund invests, under normal circumstances, between 45% and 65% of its total assets in equity securities. Although the Fund's equity investments consist primarily of publicly traded U.S. securities, the Fund may invest up to 10% of its total assets in the equity securities of foreign issuers, including issuers in countries with emerging markets or economies ("emerging countries") and equity securities quoted in foreign currencies. A portion of the Fund's portfolio of equity securities may be selected primar- ily to provide current income (including interests in real estate investment trusts ("REITs"), convertible securities, preferred stocks, utility stocks, and interests in limited partnerships).
Fixed Income Securities. The Fund invests at least 25% of its total assets in fixed-income senior securities. The remainder of the Fund's assets are invested in other fixed-income securities and cash.
The Fund's fixed-income securities primarily include:
.Securities issued by the U.S. government, its agencies, instrumentalities
or sponsored enterprises
.Securities issued by corporations, banks and other issuers
.Mortgage-backed and asset-backed securities
The Fund may also invest up to 10% of its total assets in debt obligations (U.S. dollar and non-U.S.-dollar denominated) issued or guaranteed by one or more foreign governments or any of their political subdivisions, agencies or instrumentalities and foreign corporations or other entities. The issuers of these securities may be located in emerging countries.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Growth and Income Fund
Objective: Long-term growth of capital and growth of income
Benchmark: S&P 500 Index
Investment Focus: Large capitalization U.S. equity securities with an
emphasis on undervalued stocks
Investment Style: Value
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and growth of income.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 65% of its total assets in equity securities that the Investment Adviser considers to have favorable prospects for capital appreciation and/or divi- dend-paying ability. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in for- eign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations, that offer the potential to further the Fund's investment objective.
Goldman Sachs
CORE Large Cap Value Fund
Objective: Long-term growth of capital and dividend income
Benchmark: Russell 1000 Value Index
Investment Focus: Diversified portfolio of equity securities of large-cap
U.S. issuers selling at low to modest valuations
Investment Style: Quantitative, applied to large-cap value stocks
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and dividend income. The Fund seeks this objective through a broadly diversified portfolio of equity secu- rities of large-cap U.S. issuers that are selling at low to modest valua- tions relative to general market measures, such as earnings, book value and other fundamental accounting measures, and that are expected to have favora- ble prospects for capital appreciation and/or dividend-paying ability.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the Russell 1000 Value Index. The Fund seeks a portfolio comprised of companies with above average capitalizations and low to moderate valuations as measured by price/earnings ratios, book value and other fundamental accounting measures.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
CORE U.S. Equity Fund
Objective: Long-term growth of capital and dividend income
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities
Investment Style: Quantitative, applied to large-cap
growth and value (blend) stocks
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital and dividend income. The Fund seeks this objective through a broadly diversified portfolio of large-cap and blue chip equity securities representing all major sectors of the U.S. economy.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the S&P 500 Index. The Fund seeks a broad repre- sentation in most major sectors of the U.S. economy and a portfolio com- prised of companies with average long-term earnings growth expectations and dividend yields.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
Goldman Sachs
CORE Large Cap Growth Fund
Objective: Long-term growth of capital; dividend income is a
secondary consideration
Benchmark: Russell 1000 Growth Index
Investment Focus: Large-cap, growth-oriented U.S. stocks
Investment Style: Quantitative, applied to large-cap growth stocks
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of large-cap U.S. issuers that are expected to have better prospects for earnings growth than the growth rate of the general domestic economy. Dividend income is a secondary consideration.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Investment Adviser emphasizes a company's growth prospects in analyzing equity securities to be purchased by the Fund. The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintain- ing risk, style, capitalization and industry characteristics similar to the Russell 1000 Growth Index. The Fund seeks a portfolio comprised of companies with above average capitalizations and earnings growth expectations and below average dividend yields.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
CORE Small Cap Equity Fund
Objective: Long-term growth of capital
Benchmark: Russell 2000 Index
Investment Focus: Stocks of small capitalization U.S. companies
Investment Style: Quantitative, applied to small-cap
growth and value (blend) stocks
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of U.S. issuers which are included in the Russell 2000 Index at the time of investment.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of U.S. issuers, including for- eign issuers that are traded in the United States.
The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintaining risk, style, capitalization and industry characteristics similar to the Russell 2000 Index. The Fund seeks a portfo- lio comprised of companies with small market capitalizations, strong expected earnings growth and momentum, and better valuation and risk charac- teristics than the Russell 2000 Index. If the issuer of a portfolio security held by the Fund is no longer included in the Russell 2000 Index, the Fund may, but is not required to, sell the security.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered cash equivalents.
Goldman Sachs
Capital Growth Fund
Objective: Long-term growth of capital
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities that offer long-term
capital appreciation potential
Investment Style: Growth
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity secu- rities that are considered by the Investment Adviser to have long-term capi- tal appreciation potential. Although the Fund invests primarily in publicly traded U.S. securities, it may invest up to 10% of its total assets in for- eign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Strategic Growth Fund
Objective: Long-term growth of capital
Benchmark: S&P 500 Index
Investment Focus: Large-cap U.S. equity securities that are considered to
be strategically positioned for consistent long-term
growth
Investment Style: Growth
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity secu- rities that are considered by the Investment Adviser to be strategically positioned for consistent long-term growth. Although the Fund invests pri- marily in publicly traded U.S. securities, it may invest up to 10% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Goldman Sachs
Growth Opportunities Fund
Objective: Long-term growth of capital
Benchmark: S&P Midcap 400 Index
Investment Focus: U.S. equity securities that offer long-term capital
appreciation with a primary focus on mid-capitalization
companies
Investment Style: Growth
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities with a primary focus on mid-cap companies. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity securities that are considered by the Investment Adviser to be strategically positioned for long-term growth. Although the Fund invests primarily in publicly traded U.S. securities, it may invest up to 10% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Mid Cap Value Fund
Objective: Long-term capital appreciation
Benchmark:
Russell Midcap Value Index
Investment Focus: Mid-capitalization U.S. stocks that are believed
to be undervalued or undiscovered by the marketplace
Investment Style: Value
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all of its assets in equity securities and at least 65% of its total assets in equity securities of mid-cap companies with public stock market capitalizations (based upon shares available for trading on an unrestricted basis) within the range of the market capitalization of companies constitut- ing the Russell Midcap Value Index at the time of investment (currently between $300 million and $15 billion). If the capitalization of an issuer decreases below $300 million or increases above $15 billion after purchase, the Fund may, but is not required to, sell the securities. Dividend income, if any, is an incidental consideration. Although the Fund will invest pri- marily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securities, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations.
Goldman Sachs
Small Cap Value Fund
Objective: Long-term growth of capital
Benchmark:
Russell 2000 Value Index
Investment Focus: Small-capitalization U.S. stocks that are believed to be
undervalued or undiscovered by the marketplace
Investment Style: Value
|
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 65% of its total assets in equity securities of companies with public stock market capitalizations of $1 billion or less at the time of investment. Under normal circumstances, the Fund's investment horizon for ownership of stocks will be two to three years. Dividend income, if any, is an incidental consideration. If the market capitalization of a company held by the Fund increases above $1 billion, the Fund may, consistent with its investment objective, continue to hold the security.
The Fund invests in companies which the Investment Adviser believes are well- managed niche businesses that have the potential to achieve high or improving returns on capital and/or above average sustainable growth. The Fund may invest in securities of small market capitalization companies which may have experienced financial difficulties. Investments may also be made in companies that are in the early stages of their life and that the Investment Adviser believes have significant growth potential. The Investment Adviser believes that the companies in which the Fund may invest offer greater opportunity for growth of capital than larger, more mature, better known companies. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securi- ties, including securities of issuers in emerging countries and securities quoted in foreign currencies.
Other. The Fund may invest in the aggregate up to 35% of its total assets in companies with public stock market capitalizations in excess of $1 billion at the time of investment and in fixed-income securities, such as govern- ment, corporate and bank debt obligations.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs
Large Cap Value Fund
Objective: Long-term capital appreciation
Benchmark: Russell 1000 Value Index
Investment Focus: Large capitalization U.S. equity securities that are
believed to be undervalued
Investment Style: Value
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities. The Fund seeks its investment objective by investing in value opportunities that the Investment Adviser defines as companies with identifiable competitive advantages whose intrin- sic value is not reflected in the stock price. Although the Fund will invest primarily in publicly traded U.S. securities, it may invest up to 25% of its total assets in foreign securities, including securities quoted in foreign currencies.
Other. The Fund may invest up to 10% of its total assets in fixed-income securities, such as government, corporate and bank debt obligations.
Other Investment Practices and Securities
The table below identifies some of the investment techniques that may (but are
not required to) be used by the Funds in seeking to achieve their investment
objectives. The table also highlights the differences among the Funds in their
use of these techniques and other investment practices and investment securi-
ties. Numbers in this table show allowable usage only; for actual usage, con-
sult the Fund's annual/semi-annual reports. For more information see Appendix
A.
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage limitation on usage;limited only by the objectives
and strategies of the Fund
-- Not permitted
GROWTH CORE CORE
BALANCED AND INCOME LARGE CAP U.S. EQUITY
FUND FUND VALUE FUND FUND
------------------------------------------------------------------------------
Investment Practices
Borrowings 33 1/3 33 1/3 33 1/3 33 1/3
Credit, currency, index, interest
rate and mortgage swaps* 15 -- -- --
Cross Hedging of Currencies . -- -- --
Custodial receipts . . . .
Equity Swaps* 15 15 15 15
Foreign Currency Transactions** ./1/ . . .
Futures Contracts and Options on
Futures Contracts . . ./2/ ./3/
Interest rate caps, floors and
collars . -- -- --
Investment Company Securities
(including World Equity Benchmark
Shares and Standard & Poor's
Depository Receipts) 10 10 10 10
Loan Participations . -- -- --
Mortgage Dollar Rolls . -- -- --
Options on Foreign Currencies/4/ . . . .
Options on Securities and
Securities Indices/5/ . . . .
Repurchase Agreements . . . .
Reverse Repurchase Agreements (for
investment purposes) . -- -- --
Securities Lending 33 1/3 33 1/3 33 1/3 33 1/3
Short Sales Against the Box 25 25 -- --
Unseasoned Companies . . . .
Warrants and Stock Purchase Rights . . . .
When-Issued Securities and Forward
Commitments . . . .
------------------------------------------------------------------------------
|
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions.
** Limited by the amount the Fund invests in foreign securities.
1 The Balanced Fund may also enter into forward foreign currency exchange
contracts to seek to increase total return.
2 The CORE Large Cap Value, CORE Large Cap Growth and CORE Small Cap Equity
Funds may enter into futures transactions only with respect to a represen-
tative index.
3 The CORE U.S. Equity Fund may enter into futures transactions only with
respect to the S&P 500 Index.
4 The Funds may purchase and sell call and put options.
5 The Funds may sell covered call and put options and purchase call and put options.
OTHER INVESTMENT PRACTICES AND SECURITIES
CORE CORE CAPITAL STRATEGIC GROWTH MID CAP SMALL CAP LARGE CAP
LARGE CAP SMALL CAP GROWTH GROWTH OPPORTUNITIES VALUE VALUE VALUE
GROWTH FUND EQUITY FUND FUND FUND FUND FUND FUND FUND
---------------------------------------------------------------------------------------
33
1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
. . . . . . . .
15 15 15 15 15 15 15 15
. . . . . . . .
./2/ ./2/ . . . . . .
-- -- -- -- -- -- -- --
10 10 10 10 10 10 10 10
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
. . . . . . . .
. . . . . . . .
. . . . . . . .
-- -- -- -- -- -- -- --
33
1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3
-- -- 25 25 25 25 25 25
. . . . . . . .
. . . . . . . .
. . . . . . . .
---------------------------------------------------------------------------------------
|
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage limitation on usage; limited only by the objectives
andstrategies of the Fund
-- Not permitted
GROWTH CORE CORE
BALANCED AND INCOME LARGE CAP U.S. EQUITY
FUND FUND VALUE FUND FUND
------------------------------------------------------------------------------
Investment Securities
American, European and Global
Depository Receipts . . ./6/ ./6/
Asset-Backed and Mortgage-
Backed Securities/7/ . . -- --
Bank Obligations/7/ . . . .
Convertible Securities/8/ . . . .
Corporate Debt Obligations/7/ . . . /9/ . /9/
Equity Securities 45-65 65+ 90+ 90+
Emerging Country Securities 10/10/ 25/10/ -- --
Fixed Income Securities/11/ 35-45/17/ 35 10 /9/ 10 /9/
Foreign Securities 10/10/ 25/10/ . /13/ . /13/
Foreign Government
Securities/7/ . -- -- --
Municipal Securities . -- -- --
Non-Investment Grade Fixed
Income Securities 10/14/ 10/15/ -- --
Real Estate Investment Trusts . . . .
Stripped Mortgage Backed
Securities/7/ . -- -- --
Structured Securities* . . . .
Temporary Investments 100 100 35 35
U.S. Government Securities/7/ . . . .
Yield Curve Options and
Inverse Floating Rate
Securities . -- -- --
------------------------------------------------------------------------------
|
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 6 The CORE Funds may not invest in European Depository Receipts.
7 Limited by the amount the Fund invests in fixed-income securities.
8 Convertible securities purchased by the Balanced Fund must be B or higher by Standard & Poor's Rating Group ("Standard & Poor's") or Moody's Investor's Service, Inc. ("Moody's"). The CORE Funds have no minimum rating criteria and all other Funds use the same rating criteria for convertible and non- convertible debt securities.
9 Cash equivalents only.
10 The Balanced, Growth and Income, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value and Small Cap Value Funds may invest in the aggregate up to 10%, 25%, 10%, 10%, 10%, 25% and 25%, respectively, of their total assets in foreign securities, including emerging country securities.
11 Except as noted under "Non-Investment Grade Fixed Income Securities," fixed- income securities must be investment grade (i.e., BBB or higher by Standard & Poor's or Baa or higher by Moody's).
12 The Small Cap Value Fund may invest in the aggregate up to 35% of its total assets in: (1) the equity securities of companies with public stock market capitalizations in excess of $1 billion at the time of investment; and (2) fixed-income securities.
13 Equity securities of foreign issuers must be traded in the United States.
14 Must be at least BB or B by Standard & Poor's or Ba or B by Moody's.
OTHER INVESTMENT PRACTICES AND SECURITIES
CORE CORE CAPITAL STRATEGIC GROWTH MID CAP SMALL CAP LARGE CAP
LARGE CAP SMALL CAP GROWTH GROWTH OPPORTUNITIES VALUE VALUE VALUE
GROWTH FUND EQUITY FUND FUND FUND FUND FUND FUND FUND
------------------------------------------------------------------------------------------
. /6/ . /6/ . . . . . .
-- -- . . . . . .
. . . . . . . .
. . . . . . . .
. /9/ . /9/ . . . . . .
90+ 90+ 90+ 90+ 90+ 65+ 65+ 90+
-- -- 10/10/ 10/10/ 10/10/ 25/10/ 25/10/ --
10 /9/ 10 /9/ . . . 35 35/12/ 10
. /13/ . /13/ 10/10/ 10/10/ 10/10/ 25/10/ 25/10/ 25
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- 10/15/ 10/15/ 10/15/ 10/16/ 35/15/ 10/15/
. . . . . . . .
-- -- -- -- -- -- -- --
. . . . . . . .
35 35 100 100 100 100 100 100
. . . . . . . .
-- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------
|
15 Limited by the amount the Fund invests in fixed-income securities. May be BB or lower by Standard & Poor's or Ba or lower by Moody's.
16 Must be B or higher by Standard & Poor's or B or higher by Moody's.
17 The Balanced Fund invests at least 25% of its total assets in fixed-income senior securities; the remainder is invested in other fixed-income securi- ties and cash.
Principal Risks of the Funds
Loss of money is a risk of investing in each Fund. An investment in a Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The following summarizes important risks that apply to the Funds and may result in a loss of your investment. None of the Funds should be relied upon as a complete invest- ment program. There can be no assurance that a Fund will achieve its investment objective.
CORE CORE CORE
GROWTH LARGE CORE LARGE SMALL
AND CAP U.S. CAP CAP
.APPLICABLE BALANCED INCOME VALUE EQUITY GROWTH EQUITY
--NOT APPLICABLE FUND FUND FUND FUND FUND FUND
------------------------------------------------------------------------------------
Credit/Default . . . . . .
Foreign . . . . . .
Emerging Countries . . . . . .
Small Cap/REIT -- -- -- -- -- .
Stock . . . . . .
Derivatives . . . . . .
Interest Rate . . . . . .
Management . . . . . .
Market . . . . . .
Liquidity . . . . . .
Other . . . . . .
------------------------------------------------------------------------------------
|
PRINCIPAL RISKS OF THE FUNDS
MID SMALL LARGE
CAPITAL STRATEGIC GROWTH CAP CAP CAP
GROWTH GROWTH OPPORTUNITIES VALUE VALUE VALUE
FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------
. . . . . .
. . . . . .
. . . . . .
-- -- -- . . --
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .
-----------------------------------------------------------------------------------------------
|
All Funds:
.CREDIT/DEFAULT RISK--The risk that an issuer of fixed-income securities held
by a Fund (which may have low credit ratings) may default on its obligation to
pay interest and repay principal.
.FOREIGN RISKS--The risk that when a Fund invests in foreign securities, it
will be subject to risk of loss not typically associated with domestic
issuers. Loss may result because of less foreign government regulation, less
public information and less economic, political and social stability. Loss may
also result from the imposition of exchange controls, confiscations and other
government restrictions. A Fund will also be subject to the risk of negative
foreign currency rate fluctuations. Foreign risks will normally be greatest
when a Fund invests in issuers located in emerging countries.
.EMERGING COUNTRIES RISK--The securities markets of Asian, Latin American,
Eastern European, African and other emerging countries are less liquid, are
especially subject to greater price volatility, have smaller market capital-
izations, have less government regulation and are not subject to as extensive
and frequent accounting, financial and other reporting requirements as the
securities markets of more developed countries. Further, investment in equity
securities of issuers located in Russia and certain other emerging countries
involves risk of loss resulting from problems in share registration and cus-
tody and substantial economic and political disruptions. These risks are not
normally associated with investments in more developed countries.
.STOCK RISK--The risk that stock prices have historically risen and fallen in
periodic cycles. As of the date of this Prospectus, U.S. stock markets and
certain foreign stock markets were trading at or close to record high levels.
There is no guarantee that such levels will continue.
.DERIVATIVES RISK--The risk that loss may result from a Fund's investments in
options, futures, swaps, structured securities and other derivative instru-
ments. These instruments may be leveraged so that small changes may produce
disproportionate losses to a Fund.
.INTEREST RATE RISK--The risk that when interest rates increase, fixed-income
securities held by a Fund will decline in value. Long-term fixed-income secu-
rities will normally have more price volatility because of this risk than
short-term securities.
.MANAGEMENT RISK--The risk that a strategy used by the Investment Adviser may
fail to produce the intended results.
.MARKET RISK--The risk that the value of the securities in which a Fund invests
may go up or down in response to the prospects of individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
PRINCIPAL RISKS OF THE FUNDS
.LIQUIDITY RISK--The risk that a Fund will not be able to pay redemption pro-
ceeds within the time period stated in this Prospectus because of unusual mar-
ket conditions, an unusually high volume of redemption requests, or other rea-
sons. Funds that invest in non-investment grade fixed-income securities, small
capitalization stocks, REITs and emerging country issuers will be especially
subject to the risk that during certain periods the liquidity of particular
issuers or industries, or all securities within these investment categories,
will shrink or disappear suddenly and without warning as a result of adverse
economic, market or political events, or adverse investor perceptions whether
or not accurate. The Goldman Sachs Asset Allocation Portfolios (the "Asset
Allocation Portfolios") expect to invest a significant percentage of their
assets in the Funds and other funds for which Goldman Sachs now or in the
future acts as investment adviser or underwriter. Redemptions by an Asset
Allocation Portfolio of its position in a Fund may further increase liquidity
risk and may impact a Fund's net asset value ("NAV").
.OTHER RISKS--Each Fund is subject to other risks, such as the risk that its
operations, or the value of its portfolio securities, will be disrupted by the
"Year 2000 Problem."
Specific Funds:
.SMALL CAP STOCK AND REIT RISK--The securities of small capitalization stocks and REITs involve greater risks than those associated with larger, more estab- lished companies and may be subject to more abrupt or erratic price movements. Securities of such issuers may lack sufficient market liquidity to enable a Fund to effect sales at an advantageous time or without a substantial drop in price.
More information about the Funds' portfolio securities and investment tech- niques, and their associated risks, is provided in Appendix A. You should con- sider the investment risks discussed in this section and in Appendix A. Both are important to your investment choice.
Fund Performance
HOW THE FUNDS HAVE PERFORMED
The bar chart and table below provide an indication of the risks of invest- ing in a Fund by showing: (a) changes in the performance of a Fund's Service Shares from year to year; and (b) how the average annual returns of a Fund's Service Shares compare to those of broad-based securities market indices. The bar chart and table assume reinvestment of dividends and distributions. A Fund's past performance is not necessarily an indication of how the Fund will perform in the future. Performance reflects expense limitations in effect. If expense limitations were not in place, a Fund's performance would have been reduced. The Large Cap Value Fund commenced operations as of the date of this Prospectus. The CORE Large Cap Value, Strategic Growth and Growth Opportunities Funds commenced operations on December 31, 1998, May 24, 1999 and May 24, 1999, respectively. Since these Funds have less than one calendar year's performance, no performance information is provided in this section.
FUND PERFORMANCE
Balanced Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended
September 30,
1999 was
0.38%.
Best Quarter
Q4 '98 +7.99%
Worst Quarter
Q3 '98 -8.76%
[BAR GRAPH APPEARS HERE]
1998 3.40%
AVERAGE ANNUAL TOTAL RETURN
|
FOR THE PERIOD ENDED DECEMBER 31, 1998 1 YEAR SINCE INCEPTION ---------------------------------------------------------------- SERVICE SHARES (Inception 8/15/97) 3.40% 3.74% S&P 500 Index* 28.57% 24.80% Lehman Brothers Aggregate Bond Index** 8.69% 9.67% ---------------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses. ** The Lehman Brothers Aggregate Bond Index is an unmanaged index of bond prices. The Index figures do not reflect any fees or expenses.
Growth and Income Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended
September 30,
1999 was
-2.36 %.
Best Quarter
Q2 '97 +15.16%
Worst Quarter
Q3 '98 -16.98%
[BAR GRAPH APPEARS HERE]
|
1997 27.87% 1998 -5.45%
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED DECEMBER 31, 1998 1 YEAR SINCE INCEPTION ------------------------------------------------------------ SERVICE SHARES (Inception 3/6/96) (5.45)% 13.69% S&P 500 Index* 28.57% 28.08% ------------------------------------------------------------ |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
CORE U.S. Equity Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended
September 30,
1999 was
6.30%.
Best Quarter
Q4 '98 +21.46%
Worst Quarter
Q3 '98 -14.68%
[BAR GRAPH APPEARS HERE]
|
1997 32.02% 1998 21.32%
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED DECEMBER 31, 1998 1 YEAR SINCE INCEPTION ----------------------------------------------------------- SERVICE SHARES (Inception 6/7/96) 21.32% 24.39% S&P 500 Index* 28.57% 28.72% ----------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
CORE Large Cap Growth Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended
September 30,
1999 was
9.17%.
Best Quarter
Q4 '98 +25.52%
Worst Quarter
Q3 '98 -14.00%
[BAR GRAPH APPEARS HERE]
1998 30.13%
|
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED DECEMBER 31, 1998 1 YEAR SINCE INCEPTION ----------------------------------------------------------- SERVICE SHARES (Inception 5/1/97) 30.13% 31.40% Russell 1000 Growth Index* 38.72% 36.81% ----------------------------------------------------------- |
* The Russell 1000 Growth Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
CORE Small Cap Equity Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended
September 30,
1999 was
1.19%.
Best Quarter
Q4 '98 +14.37%
Worst Quarter
Q3 '98 -24.34%
[BAR GRAPH APPEARS HERE]
1998 -6.06%
|
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED DECEMBER 31, 1998 1 YEAR SINCE INCEPTION ------------------------------------------------------------ SERVICE SHARES (Inception 8/15/97) (6.06)% 1.04% Russell 2000 Index* (2.55)% 2.84% ------------------------------------------------------------ |
* The Russell 2000 Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
Capital Growth Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended
September 30,
1999 was
5.48%.
Best Quarter
Q4 '98 +24.32%
Worst Quarter
Q3 '98 -11.51%
[BAR GRAPH APPEARS HERE]
1998 33.69%
|
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED DECEMBER 31, 1998 1 YEAR SINCE INCEPTION ----------------------------------------------------------- SERVICE SHARES (Inception 8/15/97) 33.69% 29.49% S&P 500 Index* 28.57% 24.80% ----------------------------------------------------------- |
* The S&P 500 Index is the Standard & Poor's Composite Index of 500 stocks, an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
Mid Cap Value Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended
September 30,
1999 was
-2.00%.
Best Quarter
Q1 '98 +11.59%
Worst Quarter
Q3 '98 -20.81%
[BAR GRAPH APPEARS HERE]
1998 -5.90%
|
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED DECEMBER 31, 1998 1 YEAR SINCE INCEPTION ------------------------------------------------------------ SERVICE SHARES (Inception 7/18/97) (5.90)% (0.93)% Russell Midcap Value Index* 5.10% 12.23% Russell Midcap Index** 10.09% 13.00% ------------------------------------------------------------ |
* The Russell Midcap Value Index, an unmanaged index of common stock prices, is replacing the Russell Midcap Index as the Mid Cap Value Fund's perfor- mance benchmark. The Russell Midcap Value Index includes more value-ori- ented stocks and, therefore, is expected to be a better benchmark compari- son for the Fund's performance. The Index figures do not reflect any fees or expenses.
** The Russell Midcap Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
Small Cap Value Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended
September 30,
1999 was
-0.21%.
Best Quarter
Q4 '98 +13.32%
Worst Quarter
Q3 '98 -32.23%
[BAR GRAPH APPEARS HERE]
1998 -16.92%
|
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED DECEMBER 31, 1998 1 YEAR SINCE INCEPTION ------------------------------------------------------------- SERVICE SHARES (Inception 8/15/97) (16.92)% (7.86)% Russell 2000 Value Index* (6.44)% 2.50% Russell 2000 Index** (2.55)% 2.84% ------------------------------------------------------------- |
* The Russell 2000 Value Index, an unmanaged index of common stock prices, is replacing the Russell 2000 Index as the Small Cap Value Fund's performance benchmark. The Russell 2000 Value Index includes more value-oriented stocks and, therefore, is expected to be a better benchmark comparison for the Fund's performance. The Index figures do not reflect any fees or expenses.
** The Russell 2000 Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses.
[This page intentionally left blank]
Fund Fees and Expenses (Service Shares)
This table describes the fees and expenses that you would pay if you buy and hold Service Shares of a Fund.
GROWTH CORE CORE
AND LARGE CAP U.S.
BALANCED INCOME VALUE EQUITY
FUND FUND FUND FUND
----------------------------------------------------------------------------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT):
Maximum Sales Charge (Load) Imposed
on Purchases None None None None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None None None None
Redemption Fees None None None None
Exchange Fees None None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS):1
Management Fees2 0.65% 0.70% 0.60% 0.75%
Service Fees3 0.50% 0.50% 0.50% 0.50%
Other Expenses4 0.27% 0.10% 0.21% 0.09%
----------------------------------------------------------------------------
Total Fund Operating Expenses* 1.42% 1.30% 1.31% 1.34%
----------------------------------------------------------------------------
|
See page 36 for all other footnotes.
* As a result of current waivers and expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Funds which are actually incurred are as set forth below. The waivers and expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
GROWTH CORE CORE
AND LARGE CAP U.S.
BALANCED INCOME VALUE EQUITY
FUND FUND FUND FUND
----------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund
assets):1
Management Fees2 0.65% 0.70% 0.60% 0.70%
Service Fees3 0.50% 0.50% 0.50% 0.50%
Other Expenses4 0.05% 0.09% 0.04% 0.04%
----------------------------------------------------------------------------
Total Fund Operating Expenses (after
current waivers and expense limitations) 1.20% 1.29% 1.14% 1.24%
----------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
CORE CORE
LARGE CAP SMALL CAP CAPITAL STRATEGIC GROWTH MID CAP SMALL CAP LARGE CAP
GROWTH EQUITY GROWTH GROWTH OPPORTUNITIES VALUE VALUE VALUE
FUND FUND FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------
None None None None None None None None
None None None None None None None None
None None None None None None None None
None None None None None None None None
0.75% 0.85% 1.00% 1.00% 1.00% 0.75% 1.00% 0.75%
0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
0.11% 0.42% 0.07% 2.41% 2.70% 0.22% 0.21% 1.01%
-----------------------------------------------------------------------------------
1.36% 1.77% 1.57% 3.91% 4.20% 1.47% 1.71% 2.26%
-----------------------------------------------------------------------------------
|
CORE CORE
LARGE CAP SMALL CAP CAPITAL STRATEGIC GROWTH MID CAP SMALL CAP LARGE CAP
GROWTH EQUITY GROWTH GROWTH OPPORTUNITIES VALUE VALUE VALUE
FUND FUND FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------
0.60% 0.85% 1.00% 1.00% 1.00% 0.75% 1.00% 0.75%
0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
0.04% 0.08% 0.04% 0.04% 0.04% 0.14% 0.10% 0.10%
-----------------------------------------------------------------------------------
1.14% 1.43% 1.54% 1.54% 1.54% 1.39% 1.60% 1.35%
-----------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
/1/The Fund's operating expenses for the current fiscal year have been
annualized for the seven-month period (February 1, 1999 through August 31,
1999). The operating expenses for the Strategic Growth, Growth Opportunities
and Large Cap Value Funds are estimated for the current year.
/2/The Investment Adviser has voluntarily agreed not to impose a portion of the
management fee on the CORE U.S. Equity Fund and the CORE Large Cap Growth
Fund equal to 0.05% and 0.15%, respectively, of such Funds' average daily net
assets. AS A RESULT OF FEE WAIVERS, THE CURRENT MANAGEMENT FEES OF THE CORE
U.S. EQUITY FUND AND CORE LARGE CAP GROWTH FUND ARE 0.70% AND 0.60%, RESPEC-
TIVELY, OF SUCH FUNDS' AVERAGE DAILY NET ASSETS. THE WAIVERS MAY BE TERMI-
NATED AT ANY TIME AT THE OPTION OF THE INVESTMENT ADVISER.
/3/Service Organizations may charge other fees to their customers who are bene-
ficial owners of Service Shares in connection with their customers' accounts.
Such fees may affect the return customers realize with respect to their
investments.
/4/"Other Expenses" include transfer agency fees equal to 0.04% of the average
daily net assets of each Fund's Service Shares, plus all other ordinary
expenses not detailed above. The Investment Adviser has voluntarily agreed to
reduce or limit "Other Expenses" (excluding management fees, transfer agency
fees, service fees, taxes, interest and brokerage fees and litigation, indem-
nification and other extraordinary expenses) to the following percentages of
each Fund's average daily net assets:
OTHER
FUND EXPENSES
-----------------------
Balanced 0.01%
Growth and
Income 0.05%
CORE Large Cap
Value 0.00%
CORE U.S. Equity 0.00%
CORE Large Cap
Growth 0.00%
CORE Small Cap
Equity 0.04%
Capital Growth 0.00%
Strategic Growth 0.00%
Growth
Opportunities 0.00%
Mid Cap Value 0.10%
Small Cap Value 0.06%
Large Cap Value 0.06%
|
FUND FEES AND EXPENSES
Example
The following Example is intended to help you compare the cost of investing in a Fund (without the waivers and expense limitations) with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in Service Shares of a Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your invest- ment has a 5% return each year and that a Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assump- tions your costs would be:
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS ----------------------------------------------------------------------------- BALANCED $145 $449 $776 $1,702 ----------------------------------------------------------------------------- GROWTH AND INCOME $132 $412 $713 $1,568 ----------------------------------------------------------------------------- CORE LARGE CAP VALUE $133 $415 $718 $1,579 ----------------------------------------------------------------------------- CORE U.S. EQUITY $136 $425 $734 $1,613 ----------------------------------------------------------------------------- CORE LARGE CAP GROWTH $138 $431 $745 $1,635 ----------------------------------------------------------------------------- CORE SMALL CAP EQUITY $180 $557 $959 $2,084 ----------------------------------------------------------------------------- CAPITAL GROWTH $160 $496 $855 $1,867 ----------------------------------------------------------------------------- STRATEGIC GROWTH $393 $1,192 N/A N/A ----------------------------------------------------------------------------- GROWTH OPPORTUNITIES $422 $1,275 N/A N/A ----------------------------------------------------------------------------- MID CAP VALUE $150 $465 $803 $1,757 ----------------------------------------------------------------------------- SMALL CAP VALUE $174 $539 $928 $2,019 ----------------------------------------------------------------------------- LARGE CAP VALUE $229 $706 N/A N/A ----------------------------------------------------------------------------- |
Service Organizations that invest in Service Shares on behalf of their custom- ers may charge other fees directly to their customer accounts in connection with their investments. You should contact your Service Organization for infor- mation regarding such charges. Such fees, if any, may affect the return such customers realize with respect to their investments.
Certain Service Organizations that invest in Service Shares may receive other compensation in connection with the sale and distribution of Service Shares or for services to their customers' accounts and/or the Funds. For additional information regarding such compensation, see "Shareholder Guide" in the Pro- spectus and "Other Information" in the Statement of Additional Information ("Additional Statement").
Service Providers
INVESTMENT ADVISERS
INVESTMENT ADVISER FUND
---------------------------------------------------------------------
Goldman Sachs Asset Management ("GSAM") Balanced
32 Old Slip Growth and Income
New York, New York 10005 CORE Large Cap Value
CORE Large Cap Growth
CORE Small Cap Equity
Strategic Growth
Growth Opportunities
Mid Cap Value
Small Cap Value
Large Cap Value
---------------------------------------------------------------------
Goldman Sachs Funds Management, L.P. ("GSFM") CORE U.S. Equity
32 Old Slip Capital Growth
New York, New York 10005
---------------------------------------------------------------------
|
As of September 1, 1999, the Investment Management Division ("IMD") was established as a new operating division of Goldman Sachs. This newly created entity includes GSAM and GSFM. Goldman Sachs registered as an investment adviser in 1981. GSFM, a registered investment adviser since 1990, is a Del- aware limited partnership which is an affiliate of Goldman Sachs. The Goldman Sachs Group, L.P., which controlled the Investment Advisers, merged into the Goldman Sachs Group, Inc. as a result of an initial public offer- ing. As of September 30, 1999, GSAM and GSFM, along with other units of IMD, have assets under management of $203 billion.
The Investment Adviser provides day-to-day advice regarding the Funds' port- folio transactions. The Investment Adviser makes the investment decisions for the Funds and places purchase and sale orders for the Funds' portfolio transactions in U.S. and foreign markets. As permitted by applicable law, these orders may be directed to any brokers, including Goldman Sachs and its affiliates. While the Investment Adviser is ultimately responsible for the management of the Funds, it is able to draw upon the research and expertise of its asset management affiliates for portfolio decisions and management with respect to certain portfolio securities. In addition, the Investment Adviser has access to the research and certain proprietary technical models developed by Goldman Sachs, and will apply quantitative and qualitative analysis in determining the appropriate allocations among categories of issuers and types of securities.
SERVICE PROVIDERS
The Investment Adviser also performs the following additional services for
the Funds:
. Supervises all non-advisory operations of the Funds
. Provides personnel to perform necessary executive, administrative and
clerical services to the Funds
. Arranges for the preparation of all required tax returns, reports to
shareholders, prospectuses and statements of additional information and
other reports filed with the Securities and Exchange Commission (the
"SEC") and other regulatory authorities
. Maintains the records of each Fund
. Provides office space and all necessary office equipment and services
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the Investment Adviser is entitled to the following fees, computed daily and payable monthly, at the annual rates listed below (as a percentage of each respective Fund's average daily net assets):
ACTUAL RATE
FOR THE FISCAL
PERIOD ENDED
CONTRACTUAL RATE AUGUST 31, 1999
-------------------------------------------------------------------------------
GSAM:
-------------------------------------------------------------------------------
Balanced 0.65% 0.65%
-------------------------------------------------------------------------------
Growth and Income 0.70% 0.70%
-------------------------------------------------------------------------------
CORE Large Cap Value 0.60% 0.60%
-------------------------------------------------------------------------------
CORE Large Cap Growth 0.75% 0.60%
-------------------------------------------------------------------------------
CORE Small Cap Equity 0.85% 0.85%
-------------------------------------------------------------------------------
Strategic Growth 1.00% 1.00%
-------------------------------------------------------------------------------
Growth Opportunities 1.00% 1.00%
-------------------------------------------------------------------------------
Mid Cap Value 0.75% 0.75%
-------------------------------------------------------------------------------
Small Cap Value 1.00% 1.00%
-------------------------------------------------------------------------------
Large Cap Value 0.75% N/A
-------------------------------------------------------------------------------
GSFM:
-------------------------------------------------------------------------------
CORE U.S. Equity 0.75% 0.70%
-------------------------------------------------------------------------------
Capital Growth 1.00% 1.00%
-------------------------------------------------------------------------------
|
The difference, if any, between the stated fees and the actual fees paid by the Funds reflects that the Investment Adviser did not charge the full amount of the fees to which it would have been entitled. The Investment Adviser may discontinue or modify any such voluntary limitations in the future at its discretion.
FUND MANAGERS
M. Roch Hillenbrand, a Managing Director of Goldman Sachs since 1997, is the Head of Global Equities for GSAM, overseeing the United States, Europe, Japan, and non-Japan Asia. In this capacity, he is responsible for managing the group as it defines and implements global portfolio management processes that are consistent, reliable and predictable. Since 1981, Mr. Hillenbrand has been President of Commodities Corporation LLC, of which Goldman Sachs is the parent company. Over the course of his 19-year career at Commodities Corporation, Mr. Hillenbrand has had extensive experience in dealing with internal and external investment managers who have managed a range of futures and equities strategies across multiple markets, using a variety of styles.
Value Team
.Thirteen portfolio managers/analysts compose the Investment Adviser's value
investment team
.Multi-sector focus provides a balanced perspective
.Across all value products, the Investment Adviser leverages the industry
research expertise of its small, mid and large cap investment teams
Value Team
YEARS
FUND PRIMARILY
NAME AND TITLE RESPONSIBILITY RESPONSIBLE FIVE YEAR EMPLOYMENT HISTORY
-------------------------------------------------------------------------------
Eileen A. PORTFOLIO SINCE MS. APTMAN JOINED THE INVESTMENT
Aptman MANAGER-- 1996 ADVISER AS A RESEARCH ANALYST IN
VICE PRESIDENT MID CAP VALUE 1997 1993. SHE BECAME A PORTFOLIO
SMALL CAP VALUE MANAGER IN 1996.
-------------------------------------------------------------------------------
Matthew B. PORTFOLIO SINCE MR. MCLENNAN JOINED THE
McLennan MANAGER-- 1996 INVESTMENT ADVISER AS A RESEARCH
VICE PRESIDENT SMALL CAP VALUE 1998 ANALYST IN 1995 AND BECAME A
MID CAP VALUE PORTFOLIO MANAGER IN 1996. FROM
1994 TO 1995, HE WORKED IN THE
INVESTMENT BANKING DIVISION OF
GOLDMAN SACHS IN AUSTRALIA. FROM
1991 TO 1994, MR. MCLENNAN
WORKED AT QUEENSLAND INVESTMENT
CORPORATION IN AUSTRALIA.
-------------------------------------------------------------------------------
Eileen Rominger SENIOR PORTFOLIO SINCE MS. ROMINGER JOINED THE
MANAGING MANAGER-- GROWTH 1999 INVESTMENT ADVISER AS A SENIOR
DIRECTOR AND INCOME 1999 PORTFOLIO MANAGER IN 1999. FROM
MID CAP VALUE 1999 1981 TO 1999, SHE WORKED AT
SMALL CAP VALUE 1999 OPPENHEIMER CAPITAL, MOST
LARGE CAP VALUE 1999 RECENTLY AS A SENIOR PORTFOLIO
BALANCED MANAGER.
(EQUITY)
-------------------------------------------------------------------------------
|
SERVICE PROVIDERS
YEARS
FUND PRIMARILY
NAME AND TITLE RESPONSIBILITY RESPONSIBLE FIVE YEAR EMPLOYMENT HISTORY
---------------------------------------------------------------------------
Karma Wilson PORTFOLIO SINCE MS. WILSON JOINED THE
VICE PRESIDENT MANAGER-- 1998 INVESTMENT ADVISER AS A
BALANCED 1998 PORTFOLIO MANAGER IN 1994.
(EQUITY) 1998 PRIOR TO 1994, SHE WAS AN
GROWTH AND 1999 INVESTMENT ANALYST WITH
INCOME BANKERS TRUST AUSTRALIA LTD.
MID CAP VALUE
LARGE CAP VALUE
---------------------------------------------------------------------------
|
Quantitative Equity Team
.A stable and growing team supported by an extensive internal staff
.Access to the research ideas of Goldman Sachs' renowned Global Investment
Research Department
.More than $23 billion in equities currently under management
YEARS
PRIMARILY
NAME AND TITLE FUND RESPONSIBILITY RESPONSIBLE FIVE YEAR EMPLOYMENT HISTORY
------------------------------------------------------------------------------------------
Melissa Brown SENIOR PORTFOLIO MANAGER-- SINCE MS. BROWN JOINED THE
VICE PRESIDENT CORE LARGE CAP VALUE 1998 INVESTMENT ADVISER AS A
CORE U.S. EQUITY 1998 PORTFOLIO MANAGER IN
CORE LARGE CAP GROWTH 1998 1998. FROM
CORE SMALL CAP EQUITY 1998 1984 TO 1998, SHE WAS
THE
DIRECTOR OF QUANTITATIVE
EQUITY RESEARCH AND
SERVED ON THE INVESTMENT
POLICY COMMITTEE AT
PRUDENTIAL SECURITIES.
------------------------------------------------------------------------------------------
Kent A. Clark SENIOR PORTFOLIO MANAGER-- SINCE MR. CLARK JOINED THE
MANAGING CORE U.S. EQUITY 1996 INVESTMENT ADVISER AS A
DIRECTOR CORE LARGE CAP GROWTH 1997 PORTFOLIO MANAGER IN THE
CORE SMALL CAP EQUITY 1997 QUANTITATIVE EQUITY
CORE LARGE CAP VALUE 1998 MANAGEMENT TEAM IN 1992.
------------------------------------------------------------------------------------------
Robert C. Jones SENIOR PORTFOLIO MANAGER-- SINCE MR. JONES JOINED THE
MANAGING CORE U.S. EQUITY 1991 INVESTMENT ADVISER AS A
DIRECTOR CORE LARGE CAP GROWTH 1997 PORTFOLIO MANAGER IN
CORE SMALL CAP EQUITY 1997 1989.
CORE LARGE CAP VALUE 1998
------------------------------------------------------------------------------------------
Victor H. SENIOR PORTFOLIO MANAGER-- SINCE MR. PINTER JOINED THE
Pinter CORE U.S. EQUITY 1996 INVESTMENT ADVISER AS A
VICE PRESIDENT CORE LARGE CAP GROWTH 1997 RESEARCH ANALYST IN
CORE SMALL CAP EQUITY 1997 1990. HE BECAME A
CORE LARGE CAP VALUE 1998 PORTFOLIO MANAGER IN
1992.
------------------------------------------------------------------------------------------
|
Growth Equity Investment Team
.18 year consistent investment style applied through diverse and complete
market cycles
.More than $12 billion in equities currently under management
.More than 250 client account relationships
.A portfolio management and analytical team with more than 150 years com-
bined investment experience
Growth Equity Investment Team
YEARS
PRIMARILY
NAME AND TITLE FUND RESPONSIBILITY RESPONSIBLE FIVE YEAR EMPLOYMENT HISTORY
------------------------------------------------------------------------------------------
George D. Adler SENIOR PORTFOLIO MANAGER-- SINCE MR. ADLER JOINED THE
VICE PRESIDENT BALANCED (EQUITY) 1997 INVESTMENT ADVISER AS A
CAPITAL GROWTH 1997 PORTFOLIO MANAGER IN
STRATEGIC GROWTH 1999 1997. FROM 1990 TO 1997,
GROWTH OPPORTUNITIES 1999 HE WAS A PORTFOLIO
MANAGER AT LIBERTY
INVESTMENT MANAGEMENT,
INC. ("LIBERTY").
------------------------------------------------------------------------------------------
Steve Barry SENIOR PORTFOLIO MANAGER-- SINCE MR. BARRY JOINED THE
VICE PRESIDENT GROWTH OPPORTUNITIES 1999 INVESTMENT ADVISER AS A
PORTFOLIO MANAGER IN
1999. FROM 1988 TO 1999,
HE WAS A PORTFOLIO
MANAGER AT ALLIANCE
CAPITAL MANAGEMENT.
------------------------------------------------------------------------------------------
Robert G. SENIOR PORTFOLIO MANAGER-- SINCE MR. COLLINS JOINED THE
Collins CAPITAL GROWTH 1997 INVESTMENT ADVISER AS
VICE PRESIDENT BALANCED (EQUITY) 1998 PORTFOLIO MANAGER AND
STRATEGIC GROWTH 1999 CO-CHAIR OF THE GROWTH
GROWTH OPPORTUNITIES 1999 EQUITY INVESTMENT
COMMITTEE IN 1997. FROM
1991 TO 1997, HE WAS A
PORTFOLIO MANAGER AT
LIBERTY. HIS PAST
EXPERIENCE INCLUDES WORK
AS A SPECIAL SITUATIONS
ANALYST WITH
RAYMOND JAMES &
ASSOCIATES FOR
FIVE YEARS.
------------------------------------------------------------------------------------------
Herbert E. SENIOR PORTFOLIO MANAGER-- SINCE MR. EHLERS JOINED THE
Ehlers CAPITAL GROWTH 1997 INVESTMENT ADVISER AS A
MANAGING BALANCED (EQUITY) 1998 SENIOR PORTFOLIO MANAGER
DIRECTOR STRATEGIC GROWTH 1999 AND CHIEF INVESTMENT
GROWTH OPPORTUNITIES 1999 OFFICER OF THE GROWTH
EQUITY TEAM IN 1997.
FROM 1994 TO 1997, HE
WAS THE CHIEF INVESTMENT
OFFICER AND CHAIRMAN OF
LIBERTY. HE WAS A
PORTFOLIO MANAGER AND
PRESIDENT AT LIBERTY'S
PREDECESSOR FIRM, EAGLE
ASSET MANAGEMENT
("EAGLE"), FROM 1984 TO
1994.
------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
YEARS
PRIMARILY
NAME AND TITLE FUND RESPONSIBILITY RESPONSIBLE FIVE YEAR EMPLOYMENT HISTORY
--------------------------------------------------------------------------------------------
Gregory H. SENIOR PORTFOLIO MANAGER-- SINCE MR. EKIZIAN JOINED THE
Ekizian CAPITAL GROWTH 1997 INVESTMENT ADVISER AS
VICE PRESIDENT BALANCED (EQUITY) 1998 PORTFOLIO MANAGER AND
STRATEGIC GROWTH 1999 CO-CHAIR OF THE GROWTH
GROWTH OPPORTUNITIES 1999 EQUITY INVESTMENT
COMMITTEE IN 1997. FROM
1990 TO 1997, HE WAS A
PORTFOLIO MANAGER AT
LIBERTY AND ITS
PREDECESSOR FIRM, EAGLE.
--------------------------------------------------------------------------------------------
Scott Kolar PORTFOLIO MANAGER-- SINCE MR. KOLAR JOINED THE
ASSOCIATE CAPITAL GROWTH 1999 INVESTMENT ADVISER AS AN
STRATEGIC GROWTH EQUITY ANALYST IN 1997
AND BECAME A PORTFOLIO
MANAGER IN 1999. FROM
1994 TO 1997, HE WAS AN
EQUITY ANALYST AND
INFORMATION SYSTEMS
SPECIALIST AT LIBERTY.
--------------------------------------------------------------------------------------------
David G. Shell SENIOR PORTFOLIO MANAGER-- SINCE MR. SHELL JOINED THE
VICE PRESIDENT CAPITAL GROWTH 1997 INVESTMENT ADVISER AS A
BALANCED (EQUITY) 1998 PORTFOLIO MANAGER IN
STRATEGIC GROWTH 1999 1997. FROM 1987 TO 1997,
GROWTH OPPORTUNITIES 1999 HE WAS A PORTFOLIO
MANAGER AT LIBERTY AND
ITS PREDECESSOR FIRM,
EAGLE.
--------------------------------------------------------------------------------------------
Ernest C. SENIOR PORTFOLIO MANAGER-- SINCE MR. SEGUNDO JOINED THE
Segundo, Jr. CAPITAL GROWTH 1997 INVESTMENT ADVISER AS A
VICE PRESIDENT BALANCED (EQUITY) 1998 PORTFOLIO MANAGER IN
STRATEGIC GROWTH 1999 1997. FROM 1992 TO 1997,
GROWTH OPPORTUNITIES 1999 HE WAS A PORTFOLIO
MANAGER AT LIBERTY.
--------------------------------------------------------------------------------------------
|
Fixed-Income Portfolio Management Team
.Fixed-income portfolio management is comprised of a deep team of sector
specialists
.The team strives to maximize risk-adjusted returns by de-emphasizing inter-
est rate anticipation and focusing on security selection and sector alloca-
tion
.The team manages approximately $29 billion in fixed-income assets for retail, institutional and high net worth clients
Fixed-Income Portfolio Management Team
YEARS
PRIMARILY
NAME AND TITLE FUND RESPONSIBILITY RESPONSIBLE FIVE YEAR EMPLOYMENT HISTORY
--------------------------------------------------------------------------------
Jonathan A. SENIOR PORTFOLIO SINCE MR. BEINNER JOINED THE
Beinner MANAGER-- 1994 INVESTMENT ADVISER AS A
MANAGING BALANCED (FIXED- PORTFOLIO MANAGER IN 1990.
DIRECTOR AND INCOME)
CO-HEAD U.S.
FIXED INCOME
--------------------------------------------------------------------------------
C. Richard Lucy SENIOR PORTFOLIO SINCE MR. LUCY JOINED THE INVESTMENT
MANAGING MANAGER-- 1994 ADVISER AS A PORTFOLIO MANAGER
DIRECTOR AND BALANCED (FIXED- IN 1992.
CO-HEAD U.S. INCOME)
FIXED INCOME
--------------------------------------------------------------------------------
|
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the exclusive distributor (the "Distributor") of each Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606-6372, also serves as the Funds' transfer agent (the "Transfer Agent") and, as such, performs various shareholder servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and hold shares of the Funds. Goldman Sachs reserves the right to redeem at any time some or all of the shares acquired for its own account.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS
The involvement of the Investment Adviser, Goldman Sachs and their affili- ates in the management of, or their interest in, other accounts and other activities of Goldman Sachs may present conflicts of interest with respect to a Fund or limit a Fund's investment activities. Goldman Sachs and its affiliates engage in proprietary trading and advise accounts and funds which have investment objectives similar to those of the Funds and/or which engage in and compete for transactions in the same types of securities, currencies and instruments as the Funds. Goldman Sachs and its affiliates will not have any obligation to make available any information regarding their proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of the Funds. The results of a Fund's investment activities, therefore, may differ from those of Goldman Sachs and its affiliates, and it is possible that a Fund could sustain losses during periods in which Goldman Sachs and its affili- ates and other accounts achieve significant profits on their trading for proprietary or other accounts. In addition, the Funds may, from time to time, enter into transactions in which other clients of Goldman Sachs have an adverse interest. A Fund's activities may be limited because of regula- tory restrictions applicable to Goldman Sachs and its affiliates, and/or their internal policies designed to comply with such restrictions.
YEAR 2000
Many computer systems were designed using only two digits to signify the year (for example, "98" for "1998"). On January 1, 2000, if these computer systems are not corrected, they may incorrectly interpret "00" as the year "1900" rather than the year "2000," leading to computer shutdowns or errors (commonly
SERVICE PROVIDERS
known as the "Year 2000 Problem"). To the extent these systems conduct forward-looking calculations, these computer problems may occur prior to January 1, 2000. Like other investment companies and financial and business organizations, the Funds could be adversely affected in their ability to process securities trades, price securities, provide shareholder account services and otherwise conduct normal business operations if the Investment Adviser or other Fund service providers do not adequately address this prob- lem in a timely manner.
In order to address the Year 2000 Problem, the Investment Adviser has taken the following measures:
.The Investment Adviser has established a dedicated group which analyzed these issues and implemented system modifications to prepare for the Year 2000 Problem.
.The Investment Adviser has either tested with or received assurance from the Fund's other service providers to confirm that they are taking reason- able steps to avoid Year 2000 Problems, and the Investment Adviser contin- ues to monitor the situation.
.The Investment Adviser has developed broad and comprehensive contingency plans, as well as event management plans that will help manage the Fund through the date change by allowing the Investment Adviser to closely moni- tor and respond to Year 2000-related events as they unfold around the world.
Currently, the Investment Adviser does not anticipate that the transition to the 21st century will have any material impact on its ability to continue to service the Funds at current levels.
In addition, the Investment Adviser has undertaken measures to appropriately take into account available information concerning the Year 2000 prepared- ness of the issuers of securities held by the Funds. The Investment Adviser may obtain such Year 2000 information from various sources which the Invest- ment Adviser believes to be reliable, including the issuers' public regula- tory filings. However, the Investment Adviser is not in a position to verify the accuracy or completeness of such information.
At this time, however, no assurance can be given that the actions taken by the Investment Adviser and the Funds' other service providers will be suffi- cient to avoid any adverse effect on the Funds due to the Year 2000 Problem.
Dividends
Each Fund pays dividends from its net investment income and distributions from
net realized capital gains. You may choose to have dividends and distributions
paid in:
.Cash
.Additional shares of the same class of the same Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund. Spe-
cial restrictions may apply for certain ILA Portfolios. See the Additional
Statement.
You may indicate your election on your Account Application. Any changes may be submitted in writing to Goldman Sachs at any time before the record date for a particular dividend or distribution. If you do not indicate any choice, your dividends and distributions will be reinvested automatically in the applicable Fund.
The election to reinvest dividends and distributions in additional shares will not affect the tax treatment of such dividends and distributions, which will be treated as received by you and then used to purchase the shares.
Dividends from net investment income and distributions from net capital gains are declared and paid as follows:
INVESTMENT CAPITAL GAINS
FUND INCOME DIVIDENDS DISTRIBUTIONS
-------------------------------------------------------------------------------
Balanced QUARTERLY ANNUALLY
-------------------------------------------------------------------------------
Growth and Income QUARTERLY ANNUALLY
-------------------------------------------------------------------------------
CORE Large Cap Value QUARTERLY ANNUALLY
-------------------------------------------------------------------------------
CORE U.S. Equity ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
CORE Large Cap Growth ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
CORE Small Cap Equity ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
Capital Growth ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
Strategic Growth ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
Growth Opportunities ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
Mid Cap Value ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
Small Cap Value ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
Large Cap Value ANNUALLY ANNUALLY
-------------------------------------------------------------------------------
|
DIVIDENDS
From time to time a portion of a Fund's dividends may constitute a return of capital.
At the time of an investor's purchase of shares of a Fund, a portion of the NAV per share may be represented by undistributed income or undistributed realized appreciation of the Fund's portfolio securities. Therefore, subsequent distri- butions on such shares from such income or realized appreciation may be taxable to you even if the NAV of the shares is, as a result of the distributions, reduced below the cost of such shares and the distributions (or portions there- of) represent a return of a portion of the purchase price.
Shareholder Guide
The following section will provide you with answers to some of the most often asked questions regarding buying and selling the Funds' Service Shares.
HOW TO BUY SHARES
How Can I Purchase Service Shares Of The Funds?
Generally, Service Shares may be purchased only through institutions that have agreed to provide account administration and personal and account main- tenance services to their customers who are the beneficial owners of Service Shares. These institutions are called "Service Organizations." Customers of a Service Organization will normally give their purchase instructions to the Service Organization, and the Service Organization will, in turn, place pur- chase orders with Goldman Sachs. Service Organizations will set times by which purchase orders and payments must be received by them from their cus- tomers. Generally, Service Shares may be purchased from the Funds on any business day at their NAV next determined after receipt of an order by Goldman Sachs from a Service Organization. No sales load is charged. Pur- chases of Service Shares must be settled within three business days of receipt of a complete purchase order.
Service Organizations are responsible for transmitting purchase orders and
payments to Goldman Sachs in a timely fashion. Service Organizations should
place an order with Goldman Sachs at 1-800-621-2550 and either:
.Wire federal funds to The Northern Trust Company ("Northern"), as
subcustodian for State Street Bank and Trust Company ("State Street") (each
Fund's custodian) on the next business day; OR
.Send a check or Federal Reserve draft payable to Goldman Sachs Funds--(Name of Fund and Class of Shares), 4900 Sears Tower--60th Floor, Chicago, IL 60606-6372. The Fund will not accept a check drawn on a foreign bank or a third-party check.
What Do I Need To Know About Service Organizations?
Service Organizations may provide the following services in connection with
their customers' investments in Service Shares:
.Acting, directly or through an agent, as the sole shareholder of record
.Maintaining account records for customers
SHAREHOLDER GUIDE
.Processing orders to purchase, redeem or exchange shares for customers .Responding to inquiries from prospective and existing shareholders .Assisting customers with investment procedures
In addition, some (but not all) Service Organizations are authorized to
accept, on behalf of Goldman Sachs Trust (the "Trust"), purchase, redemption
and exchange orders placed by or on behalf of their customers, and may des-
ignate other intermediaries to accept such orders, if approved by the Trust.
In these cases:
.A Fund will be deemed to have received an order in proper form when the
order is accepted by the authorized Service Organization or intermediary on
a business day, and the order will be priced at the Fund's NAV next deter-
mined after such acceptance.
.Service Organizations or intermediaries will be responsible for transmit-
ting accepted orders and payments to the Trust within the time period
agreed upon by them.
You should contact your Service Organization directly to learn whether it is authorized to accept orders for the Trust.
Pursuant to a service plan adopted by the Trust's Board of Trustees, Service Organizations are entitled to receive payment for their services from the Trust of up to 0.50% (on an annualized basis) of the average daily net assets of the Service Shares of the Funds, which are attributable to or held in the name of the Service Organization for its customers.
The Investment Adviser, Distributor and/or their affiliates may pay addi- tional compensation from time to time, out of their assets and not as an additional charge to the Funds, to selected Service Organizations and other persons in connection with the sale, distribution and/or servicing of shares of the Funds and other Goldman Sachs Funds. Additional compensation based on sales may, but is currently not expected to, exceed 0.50% (annualized) of the amount invested.
In addition to Service Shares, each Fund also offers other classes of shares
to investors. These other share classes are subject to different fees and
expenses (which affect performance), have different minimum investment
requirements and
are entitled to different services than Service Shares. Information regard-
ing these other share classes may be obtained from your sales representative
or from Goldman Sachs by calling the number on the back cover of this Pro-
spectus.
What Is My Minimum Investment In The Funds? The Funds do not have any minimum purchase or account requirements with respect to Service Shares. A Service Organization may, however, impose a mini-
mum amount for initial and subsequent investments in Service Shares, and may establish other requirements such as a minimum account balance. A Service Organization may redeem Service Shares held by non-complying accounts, and may impose a charge for any special services.
What Else Should I Know About Share Purchases?
The Trust reserves the right to:
.Reject or restrict any purchase or exchange orders by a particular pur-
chaser (or group of related purchasers). This may occur, for example, when
a pattern of frequent purchases, sales or exchanges of Service Shares of a
Fund is evident, or if purchases, sales or exchanges are, or a subsequent
abrupt redemption might be, of a size that would disrupt the management of
a Fund.
The Funds may allow Service Organizations to purchase shares with securities instead of cash if consistent with a Fund's investment policies and opera- tions and if approved by the Fund's Investment Adviser.
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange Service Shares
is determined by a Fund's NAV. The Funds calculate NAV as follows:
The Funds' investments are valued based on market quotations or, if accurate
quotations are not readily available, the fair value of the Fund's invest-
ments may be determined in good faith under procedures established by the
Trustees.
.NAV per share of each class is calculated by State Street on each business
day as of the close of regular trading on the New York Stock Exchange (nor-
mally 4:00 p.m. New York time). Fund shares will not be priced on any day
the New York Stock Exchange is closed.
.When you buy shares, you pay the NAV next calculated after the Funds
receive your order in proper form.
.When you sell shares, you receive the NAV next calculated after the Funds
receive your order in proper form.
NOTE: THE TIME AT WHICH TRANSACTIONS AND SHARES ARE PRICED AND THE TIME BY WHICH ORDERS MUST BE RECEIVED MAY BE CHANGED IN CASE OF AN EMERGENCY OR IF REGULAR TRADING ON THE NEW YORK STOCK EXCHANGE IS STOPPED AT A TIME OTHER THAN 4:00 P.M. NEW YORK TIME.
SHAREHOLDER GUIDE
Foreign securities may trade in their local markets on days a Fund is closed. As a result, the NAV of a Fund that holds foreign securities may be impacted on days when investors may not purchase or redeem Fund shares.
In addition, the impact of events that occur after the publication of market quotations used by a Fund to price its securities but before the close of regular trading on the New York Stock Exchange will normally not be reflected in a Fund's next determined NAV unless the Trust, in its discre- tion, makes an adjustment in light of the nature and materiality of the event, its effect on Fund operations and other relevant factors.
HOW TO SELL SHARES
How Can I Sell Service Shares Of The Funds? Generally, Service Shares may be sold (redeemed) only through Service Orga- nizations. Customers of a Service Organization will normally give their redemption instructions to the Service Organization, and the Service Organi- zation will, in turn, place redemption orders with the Funds. GENERALLY, EACH FUND WILL REDEEM ITS SERVICE SHARES UPON REQUEST ON ANY BUSINESS DAY AT THEIR NAV NEXT DETERMINED AFTER RECEIPT OF SUCH REQUEST IN PROPER FORM. Redemption proceeds may be sent to recordholders by check or by wire (if the wire instructions are on record).
A Service Organization may request redemptions in writing or by telephone if the optional telephone redemption privilege is elected on the Account Application.
------------------------------------------------
BY WRITING: Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
------------------------------------------------
BY TELEPHONE: 1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York
time)
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|
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor and the Transfer Agent will not be liable for any loss you may incur in the event that the Trust accepts unauthorized tele- phone redemption requests that the Trust reasonably believes to be genuine. In an effort to prevent unauthorized or fraudulent redemption and exchange requests by telephone, Goldman Sachs employs reasonable procedures specified by the Trust to confirm that such instructions are genuine. If reasonable procedures are not employed, the Trust may be liable for any loss due to unauthorized or fraudulent transactions. The following general policies are currently in effect:
.All telephone requests are recorded.
.Any redemption request that requires money to go to an account or address
other than that designated on the Account Application must be in writing
and signed by an authorized person designated on the Account Application.
The written request may be confirmed by telephone with both the requesting
party and the designated bank account to verify instructions.
.The telephone redemption option may be modified or terminated at any time.
NOTE: IT MAY BE DIFFICULT TO MAKE TELEPHONE REDEMPTIONS IN TIMES OF DRASTIC
ECONOMIC OR MARKET CONDITIONS.
How Are Redemption Proceeds Paid?
BY WIRE: The Funds will arrange for redemption proceeds to be wired as fed-
eral funds to the bank account designated in the recordholder's Account
Application. The following general policies govern wiring redemption pro-
ceeds:
.Redemption proceeds will normally be wired on the next business day in fed-
eral funds (for a total of one business day delay), but may be paid up to
three business days following receipt of a properly executed wire transfer
redemption request. If the shares to be sold were recently paid for by
check, the Fund will pay the redemption proceeds when the check has
cleared, which may take up to 15 days. If the Federal Reserve Bank is
closed on the day that the redemption proceeds would ordinarily be wired,
wiring the redemption proceeds may be delayed one additional business day.
.To change the bank designated on your Account Application, you must send
written instructions signed by an authorized person designated on the
Account Application to the Service Organization.
.Neither the Trust nor Goldman Sachs assumes any responsibility for the per- formance of intermediaries or your Service Organization in the transfer process. If a problem with such performance arises, you should deal directly with such intermediaries or Service Organization.
BY CHECK: A recordholder may elect in writing to receive redemption proceeds by check. Redemption proceeds paid by check will normally be mailed to the address of record within three business days of receipt of a properly exe- cuted redemption request. If the shares to be sold were recently paid for by check, the Fund will pay the redemption proceeds when the check has cleared, which may take up to 15 days.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
. Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
SHAREHOLDER GUIDE
. Service Organizations are responsible for the timely transmittal of redemption requests by their customers to the Transfer Agent. In order to facilitate the timely transmittal of redemption requests, Service Organi- zations may set times by which they must receive redemption requests. Service Organizations may also require additional documentation from you.
The Trust reserves the right to:
. Redeem the Service Shares of any Service Organization whose account bal-
ance falls below $50 as a result of a redemption. The Funds will not
redeem Service Shares on this basis if the value of the account falls
below the minimum account balance solely as a result of market conditions.
The Fund will give 60 days' prior written notice to allow a Service Organ-
ization to purchase sufficient additional shares of the Fund in order to
avoid such redemption.
. Redeem the shares in other circumstances determined by the Board of Trust-
ees to be in the best interest of the Trust.
. Pay redemptions by a distribution in-kind of securities (instead of cash).
If you receive redemption proceeds in-kind, you should expect to incur
transaction costs upon the disposition of those securities.
Can I Exchange My Investment From One Fund To Another? A Service Organization may exchange Service Shares of a Fund at NAV for Service Shares of any other Goldman Sachs Fund. The exchange privilege may be materially modified or withdrawn at any time upon 60 days' written notice.
INSTRUCTIONS FOR EXCHANGING SHARES:
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BY WRITING: .Write a letter of instruction that includes:
.The recordholder name(s) and signature(s)
.The account number
.The Fund names and Class of Shares
.The dollar amount to be exchanged
.Mail the request to:
Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
-------------------------------------------------------------------
BY TELEPHONE: If you have elected the telephone exchange
privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
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You should keep in mind the following factors when making or considering an
exchange:
.You should obtain and carefully read the prospectus of the Fund you are
acquiring before making an exchange.
.All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirement of that Fund, except that this
requirement may be waived at the discretion of the Trust.
.Telephone exchanges normally will be made only to an identically registered
account.
.Shares may be exchanged among accounts with different names, addresses and
social security or other taxpayer identification numbers only if the
exchange instructions are in writing and are signed by an authorized person
designated on the Account Application.
.Exchanges are available only in states where exchanges may be legally made.
.It may be difficult to make telephone exchanges in times of drastic eco-
nomic or market conditions.
.Goldman Sachs may use reasonable procedures described under "What Do I Need
To Know About Telephone Redemption Requests?" in an effort to prevent unau-
thorized or fraudulent telephone exchange requests.
For federal income tax purposes, an exchange is treated as a redemption of the shares surrendered in the exchange, on which you may be subject to tax, followed by a purchase of shares received in the exchange. You should con- sult your tax adviser concerning the tax consequences of an exchange.
What Types Of Reports Will Be Sent Regarding Investments In Service Shares?
Service Organizations will receive from the Funds annual reports containing audited financial statements and semi-annual reports. Service Organizations will also be provided with a printed confirmation for each transaction in their account and a monthly account statement. Service Organizations are responsible for providing these or other reports to their customers who are the beneficial owners of Service Shares in accordance with the rules that apply to their accounts with the Service Organizations.
Taxation
TAXABILITY OF DISTRIBUTIONS
As with any investment, you should consider how your investment in the Funds will be taxed. The tax information below is provided as general information. More tax information is available in the Additional Statement. You should consult your tax adviser about the federal, state, local or foreign tax con- sequences of your investment in the Funds.
Unless your investment is an IRA or other tax-advantaged account, you should consider the possible tax consequences of Fund distributions and the sale of your Fund shares.
TAXES ON DISTRIBUTIONS
Distributions you receive from the Funds are generally subject to federal income tax, and may also be subject to state or local taxes. This is true whether you reinvest your distributions in additional Fund shares or receive them in cash. For federal tax purposes, the Funds' income dividend distribu- tions and short-term capital gain distributions are taxable to you as ordi- nary income. Any long-term capital gain distributions are taxable as long- term capital gains, no matter how long you have owned your Fund shares.
Although distributions are generally treated as taxable to you in the year they are paid, distributions declared in October, November or December but paid in January are taxable as if they were paid in December. A percentage of the Funds' dividends paid to corporate shareholders may be eligible for the corporate dividends-received deduction. The Funds will inform sharehold- ers of the source and tax status of all distributions promptly after the close of each calendar year.
Each Fund may be subject to foreign withholding or other foreign taxes on income or gain from certain foreign securities. In general, the Funds may deduct these taxes in computing their taxable income.
If you buy shares of a Fund before it makes a distribution, the distribution will be taxable to you even though it may actually be a return of a portion of your investment. This is known as "buying a dividend."
TAXES ON SALES
Your sale of Fund shares is a taxable transaction for federal income tax purposes, and may also be subject to state and local taxes. For tax purpos- es, the exchange of your Fund shares for shares of a different Goldman Sachs Fund is the same as a sale. When you sell your shares, you will generally recognize a capital gain or loss in an amount equal to the difference between your adjusted tax basis in the shares and the amount received. Gen- erally, this gain or loss is long-term or short-term depending on whether your holding period exceeds twelve months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.
OTHER INFORMATION
When you open your account, you should provide your social security or tax identification number on your Account Application. By law, each Fund must withhold 31% of your taxable distributions and any redemption proceeds if you do not provide your correct taxpayer identification number, or certify that it is correct, or if the IRS instructs the Fund to do so. Non-U.S. investors may be subject to U.S. withholding and estate tax.
Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks
The Funds will be subject to the risks associated with equity securities. "Equity securities" include common stocks, preferred stocks, interests in real estate investment trusts, convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures, limited liability companies and similar enterprises, warrants and stock pur- chase rights. In general, stock values fluctuate in response to the activi- ties of individual companies and in response to general market and economic conditions. Accordingly, the value of the stocks that a Fund holds may decline over short or extended periods. The stock markets tend to be cycli- cal, with periods when stock prices generally rise and periods when prices generally decline. The volatility of equity securities means that the value of your investment in the Funds may increase or decrease. As of the date of this Prospectus, certain stock markets were trading at or close to record high levels and there can be no guarantee that such levels will continue.
To the extent that a Fund invests in fixed-income securities, that Fund will also be subject to the risks associated with its fixed-income securities. These risks include interest rate risk, credit risk and call/extension risk. In general, interest rate risk involves the risk that when interest rates decline, the market value of fixed-income securities tends to increase (al- though many mortgage related securities will have less potential than other debt securities for capital appreciation during periods of declining rates). Conversely, when interest rates increase, the market value of fixed-income securities tends to decline. Credit risk involves the risk that an issuer could default on its obligations, and a Fund will not recover its invest- ment. Call risk and extension risk are normally present in mortgage-backed securities and asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (call risk) or lengthen (exten- sion risk). In general, if interest rates on new mortgage loans fall suffi- ciently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to invest- ors.
The Investment Adviser will not consider the portfolio turnover rate a lim- iting factor in making investment decisions for a Fund. A high rate of port- folio turn-
over (100% or more) involves correspondingly greater expenses which must be borne by a Fund and its shareholders. The portfolio turnover rate is calcu- lated by dividing the lesser of the dollar amount of sales or purchases of portfolio securities by the average monthly value of a Fund's portfolio securities, excluding securities having a maturity at the date of purchase of one year or less. See "Financial Highlights" in Appendix B for a state- ment of the Funds' historical portfolio turnover rates.
The following sections provide further information on certain types of secu- rities and investment techniques that may be used by the Funds, including their associated risks. Additional information is provided in the Additional Statement, which is available upon request. Among other things, the Addi- tional Statement describes certain fundamental investment restrictions that cannot be changed without shareholder approval. You should note, however, that all investment objectives and policies not specifically designated as fundamental are non-fundamental and may be changed without shareholder approval. If there is a change in a Fund's investment objective, you should consider whether that Fund remains an appropriate investment in light of your then current financial position and needs.
B. Other Portfolio Risks
RISKS OF INVESTING IN SMALL CAPITALIZATION COMPANIES AND REITS. Each Fund may invest in small capitalization companies and REITs. Investments in small capitalization companies and REITs involve greater risk and portfolio price volatility than investments in larger capitalization stocks. Among the rea- sons for the greater price volatility of these investments are the less cer- tain growth prospects of smaller firms and the lower degree of liquidity in the markets for such securities. Small capitalization companies and REITs may be thinly traded and may have to be sold at a discount from current mar- ket prices or in small lots over an extended period of time. In addition, these securities are subject to the risk that during certain periods the liquidity of particular issuers or industries, or all securities in these investment categories, will shrink or disappear suddenly and without warning as a result of adverse economic or market conditions, or adverse investor perceptions whether or not accurate. Because of the lack of sufficient mar- ket liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Small capitalization companies and REITs include "unseasoned" issuers that do not have an established financial history; often have limited prod- uct lines, markets or financial resources; may depend on or use a few key personnel for management; and may be susceptible to losses and risks of bankruptcy. Transaction costs for these investments are often higher than those of larger capitalization companies. Investments
APPENDIX A
in small capitalization companies and REITs may be more difficult to price precisely than other types of securities because of their characteristics and lower trading volumes.
RISKS OF FOREIGN INVESTMENTS. Certain Funds may invest in foreign invest- ments. Foreign investments involve special risks that are not typically associated with U.S. dollar denominated or quoted securities of U.S. issuers. Foreign investments may be affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such invest- ments and changes in exchange control regulations (e.g., currency blockage). A decline in the exchange rate of the currency (i.e., weakening of the cur- rency against the U.S. dollar) in which a portfolio security is quoted or denominated relative to the U.S. dollar would reduce the value of the port- folio security. In addition, if the currency in which a Fund receives divi- dends, interest or other payments declines in value against the U.S. dollar before such income is distributed as dividends to shareholders or converted to U.S. dollars, the Fund may have to sell portfolio securities to obtain sufficient cash to pay such dividends.
The introduction of a single currency, the euro, on January 1, 1999 for par- ticipating nations in the European Economic and Monetary Union presents unique uncertainties, including the legal treatment of certain outstanding financial contracts after January 1, 1999 that refer to existing currencies rather than the euro; the establishment and maintenance of exchange rates for currencies being converted into the euro; the fluctuation of the euro relative to non-euro currencies during the transition period from January 1, 1999 to December 31, 2001 and beyond; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union ("EU"), may have an impact on the euro. These or other factors, including political and economic risks, could cause market disruptions, and could adversely affect the value of securities held by the Funds. Because of the number of countries using this single currency, a significant portion of the assets held by the Funds may be denominated in the euro.
Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such proce- dures have been unable to keep pace with the volume of securities transac- tions, thus making it difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. issuers. There may
be less publicly available information about a foreign issuer than about a
U.S. issuer. In addition, there is generally less government regulation of
foreign markets, companies and securities dealers than in the United States.
Foreign securities markets may have substantially less volume than U.S.
securities markets and secu-
rities of many foreign issuers are less liquid and more volatile than secu-
rities of comparable domestic issuers. Efforts in foreign countries to reme-
diate potential Year 2000 problems are not as extensive as those in the
United States. As a result, the operations of foreign markets, foreign
issuers and foreign governments may be disrupted by the Year 2000 Problem,
and the investment portfolio of a Fund may be adversely affected. Further-
more, with respect to certain foreign countries, there is a possibility of
nationalization, expropriation or confiscatory taxation, imposition of with-
holding or other taxes on dividend or interest payments (or, in some cases,
capital gains), limitations on the removal of funds or other assets of the
Funds, and political or social instability or diplomatic developments which
could affect investments in those countries.
Concentration of a Fund's assets in one or a few countries and currencies will subject a Fund to greater risks than if a Fund's assets were not geo- graphically concentrated.
Investment in sovereign debt obligations by certain Funds involves risks not present in debt obligations of corporate issuers. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and a Fund may have limited recourse to compel payment in the event of a default. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt, and in turn a Fund's NAV, to a greater extent than the volatility inherent in debt obliga- tions of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the avail- ability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sov- ereign debtor's policy toward international lenders, and the political constraints to which a sovereign debtor may be subject.
Investments in foreign securities may take the form of sponsored and unsponsored American Depository Receipts ("ADRs") and Global Depository Receipts ("GDRs"). Certain Funds may also invest in European Depository Receipts ("EDRs") or other similar instruments representing securities of foreign issuers. ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. Prices of ADRs are quoted in U.S. dollars, and ADRs are traded in the United States. EDRs and GDRs are receipts
APPENDIX A
evidencing an arrangement with a non-U.S. bank. EDRs and GDRs are not neces- sarily quoted in the same currency as the underlying security.
RISKS OF EMERGING COUNTRIES. Certain Funds may invest in securities of issuers located in emerging countries. The risks of foreign investment are heightened when the issuer is located in an emerging country. Emerging coun- tries are generally located in the Asia-Pacific region, Eastern Europe, Latin and South America and Africa. A Fund's purchase and sale of portfolio securities in certain emerging countries may be constrained by limitations as to daily changes in the prices of listed securities, periodic trading or settlement volume and/or limitations on aggregate holdings of foreign investors. Such limitations may be computed based on the aggregate trading volume by or holdings of a Fund, the Investment Adviser, its affiliates and their respective clients and other service providers. A Fund may not be able to sell securities in circumstances where price, trading or settlement vol- ume limitations have been reached.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees which may limit investment in such countries or increase the administrative costs of such investments. For example, certain Asian countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer's outstanding securities or a spe- cific class of securities which may have less advantageous terms (including price) than securities of the issuer available for purchase by nationals. In addition, certain countries may restrict or prohibit investment opportuni- ties in issuers or industries deemed important to national interests. Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by a Fund. The repatriation of both investment income and capital from certain emerging countries is subject to restrictions such as the need for governmental consents. Due to restrictions on direct invest- ment in equity securities in certain Asian countries, it is anticipated that a Fund may invest in such countries through other investment funds in such countries.
Many emerging countries have experienced currency devaluations and substan- tial (and, in some cases, extremely high) rates of inflation, which have had a negative effect on the economies and securities markets of such emerging countries. Economies in emerging countries generally are dependent heavily upon commodity prices and international trade and, accordingly, have been and may continue to be affected adversely by the economies of their trading partners, trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade.
Many emerging countries are subject to a substantial degree of economic, political and social instability. Governments of some emerging countries are authoritarian in nature or have been installed or removed as a result of military coups, while governments in other emerging countries have periodi- cally used force to suppress civil dissent. Disparities of wealth, the pace and success of democratization, and ethnic, religious and racial disaffec- tion, among other factors, have also led to social unrest, violence and/or labor unrest in some emerging countries. Unanticipated political or social developments may result in sudden and significant investment losses. Invest- ing in emerging countries involves greater risk of loss due to expropria- tion, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested.
A Fund's investment in emerging countries may also be subject to withholding or other taxes, which may be significant and may reduce the return from an investment in such country to the Fund.
Settlement procedures in emerging countries are frequently less developed and reliable than those in the United States and often may involve a Fund's delivery of securities before receipt of payment for their sale. In addi- tion, significant delays are common in certain markets in registering the transfer of securities. Settlement or registration problems may make it more difficult for a Fund to value its portfolio securities and could cause the Fund to miss attractive investment opportunities, to have a portion of its assets uninvested or to incur losses due to the failure of a counterparty to pay for securities the Fund has delivered or the Fund's inability to com- plete its contractual obligations. The creditworthiness of the local securi- ties firms used by the Fund in emerging countries may not be as sound as the creditworthiness of firms used in more developed countries. As a result, the Fund may be subject to a greater risk of loss if a securities firm defaults in the performance of its responsibilities.
The small size and inexperience of the securities markets in certain emerg- ing countries and the limited volume of trading in securities in those coun- tries may make a Fund's investments in such countries less liquid and more volatile than investments in countries with more developed securities mar- kets (such as the United States, Japan and most Western European countries). A Fund's investments in emerging countries are subject to the risk that the liquidity of a particular investment, or investments generally, in such countries will shrink or disappear suddenly and without warning as a result of adverse economic, market or political conditions or adverse investor per- ceptions, whether or not accurate. Because of the lack of sufficient market liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Invest-
APPENDIX A
ments in emerging countries may be more difficult to price precisely because of the characteristics discussed above and lower trading volumes.
A Fund's use of foreign currency management techniques in emerging countries may be limited. Due to the limited market for these instruments in emerging countries, the Investment Adviser does not currently anticipate that a sig- nificant portion of the Funds' currency exposure in emerging countries, if any, will be covered by such instruments.
RISKS OF DERIVATIVE INVESTMENTS. A Fund's transactions, if any, in options, futures, options on futures, swaps, interest rate caps, floors and collars, structured securities and currency transactions involve additional risk of loss. Loss can result from a lack of correlation between changes in the value of derivative instruments and the portfolio assets (if any) being hedged, the potential illiquidity of the markets for derivative instruments, or the risks arising from margin requirements and related leverage factors associated with such transactions. The use of these management techniques also involves the risk of loss if the Investment Adviser is incorrect in its expectation of fluctuations in securities prices, interest rates or currency prices. Each Fund may also invest in derivative investments for non-hedging purposes (that is, to seek to increase total return). Investing for non- hedging purposes is considered a speculative practice and presents even greater risk of loss.
RISKS OF ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net
assets in illiquid securities which cannot be disposed of in seven days in
the ordinary course of business at fair value. Illiquid securities include:
.Both domestic and foreign securities that are not readily marketable
.Certain stripped mortgage-backed securities
.Repurchase agreements and time deposits with a notice or demand period of
more than seven days
.Certain over-the-counter options
.Certain structured securities and all swap transactions
.Certain restricted securities, unless it is determined, based upon a review of the trading markets for a specific restricted security, that such restricted security is eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("144A Securities") and, therefore, is liquid.
Investing in 144A Securities may decrease the liquidity of a Fund's portfo- lio to the extent that qualified institutional buyers become for a time uninterested in purchasing these restricted securities. The purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of com- parable securities for which a liquid market exists.
CREDIT RISKS. Debt securities purchased by the Funds may include securities (including zero coupon bonds) issued by the U.S. government (and its agen- cies, instrumentalities and sponsored enterprises), foreign governments, domestic and foreign corporations, banks and other issuers. Further informa- tion is provided in the Additional Statement.
Debt securities rated BBB or higher by Standard & Poor's or Baa or higher by Moody's are considered "investment grade." Securities rated BBB or Baa are considered medium-grade obligations with speculative characteristics, and adverse economic conditions or changing circumstances may weaken their issuers' capacity to pay interest and repay principal. A security will be deemed to have met a rating requirement if it receives the minimum required rating from at least one such rating organization even though it has been rated below the minimum rating by one or more other rating organizations, or if unrated by such rating organizations, determined by the Investment Adviser to be of comparable credit quality.
Certain Funds may invest in fixed-income securities rated BB or Ba or below (or comparable unrated securities) which are commonly referred to as "junk bonds." Junk bonds are considered predominantly speculative and may be ques- tionable as to principal and interest payments.
In some cases, junk bonds may be highly speculative, have poor prospects for reaching investment grade standing and be in default. As a result, invest- ment in such bonds will present greater speculative risks than those associ- ated with investment in investment grade bonds. Also, to the extent that the rating assigned to a security in a Fund's portfolio is downgraded by a rat- ing organization, the market price and liquidity of such security may be adversely affected.
TEMPORARY INVESTMENT RISKS. Each Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. government securities
.Commercial paper rated at least A-2 by Standard & Poor's or P-2 by Moody's
.Certificates of deposit
.Bankers' acceptances
.Repurchase agreements
.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year
When a Fund's assets are invested in such instruments, the Fund may not be achieving its investment objective.
APPENDIX A
C. Portfolio Securities and Techniques
This section provides further information on certain types of securities and investment techniques that may be used by the Funds, including their associ- ated risks. Further information is provided in the Additional Statement, which is available upon request.
CONVERTIBLE SECURITIES. Each Fund may invest in convertible securities. Con- vertible securities are preferred stock or debt obligations that are con- vertible into common stock. Convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar qual- ity. Convertible securities in which a Fund invests are subject to the same rating criteria as its other investments in fixed-income securities. Con- vertible securities have both equity and fixed-income risk characteristics. Like all fixed-income securities, the value of convertible securities is susceptible to the risk of market losses attributable to changes in interest rates. Generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. However, when the market price of the common stock underlying a convertible security exceeds the conversion price of the convertible secu- rity, the convertible security tends to reflect the market price of the underlying common stock. As the market price of the underlying common stock declines, the convertible security, like a fixed-income security, tends to trade increasingly on a yield basis, and thus may not decline in price to the same extent as the underlying common stock.
FOREIGN CURRENCY TRANSACTIONS. A Fund may, to the extent consistent with its investment policies, purchase or sell foreign currencies on a cash basis or through forward contracts. A forward contract involves an obligation to pur- chase or sell a specific currency at a future date at a price set at the time of the contract. A Fund may engage in foreign currency transactions for hedging purposes and to seek to protect against anticipated changes in future foreign currency exchange rates. In addition, certain Funds may also enter into such transactions to seek to increase total return, which is con- sidered a speculative practice.
Some Funds may also engage in cross-hedging by using forward contracts in a currency different from that in which the hedged security is denominated or quoted if the Investment Adviser determines that there is a pattern of cor- relation between the two currencies. A Fund may hold foreign currency received in connection with investments in foreign securities when, in the judgment of the Investment Adviser, it would be beneficial to convert such currency into U.S. dollars at a later date (e.g., the Investment Adviser may anticipate the foreign currency to appreciate against the U.S. dollar).
Currency exchange rates may fluctuate significantly over short periods of time, causing, along with other factors, a Fund's NAV to fluctuate (when the Fund's NAV fluctuates, the value of your shares may go up or down). Currency exchange rates also can be affected unpredictably by the intervention of U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the United States or abroad.
The market in forward foreign currency exchange contracts, currency swaps and other privately negotiated currency instruments offers less protection against defaults by the other party to such instruments than is available for currency instruments traded on an exchange. Such contracts are subject to the risk that the counterparty to the contract will default on its obli- gations. Since these contracts are not guaranteed by an exchange or clear- inghouse, a default on a contract would deprive a Fund of unrealized prof- its, transaction costs or the benefits of a currency hedge or could force the Fund to cover its purchase or sale commitments, if any, at the current market price.
STRUCTURED SECURITIES. Each Fund may invest in structured securities. Struc- tured securities are securities whose value is determined by reference to changes in the value of specific currencies, interest rates, commodities, indices or other financial indicators (the "Reference") or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Structured securities may be posi- tively or negatively indexed, so that appreciation of the Reference may pro- duce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rates or the value of the security at maturity may be a multiple of changes in the value of the Refer- ence. Consequently, structured securities may present a greater degree of market risk than other types of fixed-income securities and may be more vol- atile, less liquid and more difficult to price accurately than less complex securities.
REITS. Each Fund may invest in REITS. REITS are pooled investment vehicles that invest primarily in either real estate or real estate related loans. The value of a REIT is affected by changes in the value of the properties owned by the REIT or securing mortgage loans held by the REIT. REITs are dependent upon the ability of the REITs' managers, and are subject to heavy cash flow dependency, default by borrowers and the qualification of the REITs under applicable regulatory requirements for favorable income tax treatment. REITs are also subject to risks generally associated with invest- ments in real estate including possible declines in the value of real estate, general and local economic conditions, environmental problems and changes in interest rates. To the extent that assets underlying a REIT are concentrated geographically, by property type or in certain other
APPENDIX A
respects, these risks may be heightened. A Fund will indirectly bear its proportionate share of any expenses, including management fees, paid by a REIT in which it invests.
OPTIONS ON SECURITIES, SECURITIES INDICES AND FOREIGN CURRENCIES. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) of the option the obligation to buy, the underlying instrument dur-
ing the option period. A call option gives the purchaser of the option the
right to buy, and the writer (seller) of the option the obligation to sell,
the underlying instrument during the option period. Each Fund may write
(sell) covered call and put options and purchase put and call options on any
securities in which they may invest or on any securities index comprised of
securities in which they may invest. A Fund may also, to the extent that it
invests in foreign securities, purchase and sell (write) put and call
options on foreign currencies.
The writing and purchase of options is a highly specialized activity which involves special investment risks. Options may be used for either hedging or cross-hedging purposes, or to seek to increase total return (which is con- sidered a speculative activity). The successful use of options depends in part on the ability of the Investment Adviser to manage future price fluctu- ations and the degree of correlation between the options and securities (or currency) markets. If the Investment Adviser is incorrect in its expectation of changes in market prices or determination of the correlation between the instruments or indices on which options are written and purchased and the instruments in a Fund's investment portfolio, the Fund may incur losses that it would not otherwise incur. The use of options can also increase a Fund's transaction costs. Options written or purchased by the Funds may be traded on either U.S. or foreign exchanges or over-the-counter. Foreign and over- the-counter options will present greater possibility of loss because of their greater illiquidity and credit risks.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Futures contracts are standardized, exchange-traded contracts that provide for the sale or pur- chase of a specified financial instrument or currency at a future time at a specified price. An option on a futures contract gives the purchaser the right (and the writer of the option the obligation) to assume a position in a futures contract at a specified exercise price within a specified period of time. A futures contract may be based on various securities (such as U.S. government securities), foreign currencies, securities indices and other financial instruments and indices. The Funds may engage in futures transac- tions on both U.S. and foreign exchanges.
Each Fund may purchase and sell futures contracts, and purchase and write call and put options on futures contracts, in order to seek to increase total return or to hedge against changes in interest rates, securities prices or, to the extent a Fund
invests in foreign securities, currency exchange rates, or to otherwise man- age their term structures, sector selection and durations in accordance with their investment objectives and policies. Each Fund may also enter into closing purchase and sale transactions with respect to such contracts and options. A Fund will engage in futures and related options transactions for bona fide hedging purposes as defined in regulations of the Commodity Futures Trading Commission or to seek to increase total return to the extent permitted by such regulations. A Fund may not purchase or sell futures con- tracts or purchase or sell related options to seek to increase total return, except for closing purchase or sale transactions, if immediately thereafter the sum of the amount of initial margin deposits and premiums paid on the Fund's outstanding positions in futures and related options entered into for the purpose of seeking to increase total return would exceed 5% of the mar- ket value of the Fund's net assets.
Futures contracts and related options present the following risks:
.While a Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency
exchange rates may result in poorer overall performance than if the Fund
had not entered into any futures contracts or options transactions.
.Because perfect correlation between a futures position and portfolio posi-
tion that is intended to be protected is impossible to achieve, the desired
protection may not be obtained and a Fund may be exposed to additional risk
of loss.
.The loss incurred by a Fund in entering into futures contracts and in writ-
ing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
.Futures markets are highly volatile and the use of futures may increase the
volatility of a Fund's NAV.
.As a result of the low margin deposits normally required in futures trad-
ing, a relatively small price movement in a futures contract may result in
substantial losses to a Fund.
.Futures contracts and options on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
.Foreign exchanges may not provide the same protection as U.S. exchanges.
EQUITY SWAPS. Each Fund may invest in equity swaps. Equity swaps allow the parties to a swap agreement to exchange the dividend income or other compo- nents of return on an equity investment (for example, a group of equity securities or an index) for a component of return on another non-equity or equity investment.
An equity swap may be used by a Fund to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment may be restricted for legal reasons or is otherwise impractical. Equity swaps are
APPENDIX A
derivatives and their value can be very volatile. To the extent that the Investment Adviser does not accurately analyze and predict the potential relative fluctuation of the components swapped with another party, a Fund may suffer a loss. The value of some components of an equity swap (such as the dividends on a common stock) may also be sensitive to changes in inter- est rates. Furthermore, a Fund may suffer a loss if the counterparty defaults.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. Each Fund may purchase when- issued securities and make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time. When-issued securities are securities that have been authorized, but not yet issued. When-issued securities are purchased in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. A forward commitment involves the entering into a con- tract to purchase or sell securities for a fixed price at a future date beyond the customary settlement period.
The purchase of securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines before the settlement date. Conversely, the sale of securities on a forward commitment basis involves the risk that the value of the securities sold may increase before the settlement date. Although a Fund will generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring the securities for its portfolio, a Fund may dispose of when-issued securities or forward commitments prior to settlement if the Investment Adviser deems it appropriate.
REPURCHASE AGREEMENTS. Repurchase agreements involve the purchase of securi- ties subject to the seller's agreement to repurchase them at a mutually agreed upon date and price. Each Fund may enter into repurchase agreements with dealers in U.S. government securities and member banks of the Federal Reserve System which furnish collateral at least equal in value or market price to the amount of their repurchase obligation.
If the other party or "seller" defaults, a Fund might suffer a loss to the extent that the proceeds from the sale of the underlying securities and other collateral held by the Fund are less than the repurchase price and the Fund's costs associated with delay and enforcement of the repurchase agree- ment. In addition, in the event of bankruptcy of the seller, a Fund could suffer additional losses if a court determines that the Fund's interest in the collateral is not enforceable.
In evaluating whether to enter into a repurchase agreement, the Investment Adviser will carefully consider the creditworthiness of the seller. Certain Funds, together with other registered investment companies having advisory agreements with the Investment Adviser or any of its affiliates, may trans- fer uninvested cash
balances into a single joint account, the daily aggregate balance of which will be invested in one or more repurchase agreements.
LENDING OF PORTFOLIO SECURITIES. Each Fund may engage in securities lending. Securities lending involves the lending of securities owned by a Fund to financial institutions such as certain broker-dealers. The borrowers are required to secure their loan continuously with cash, cash equivalents, U.S. government securities or letters of credit in an amount at least equal to the market value of the securities loaned. Cash collateral may be invested in cash equivalents. To the extent that cash collateral is invested in other investment securities, such collateral will be subject to market deprecia- tion or appreciation, and a Fund will be responsible for any loss that might result from its investment of the borrowers' collateral. If the Investment Adviser determines to make securities loans, the value of the securities loaned may not exceed 33 1/3% of the value of the total assets of a Fund (including the loan collateral).
A Fund may lend its securities to increase its income. A Fund may, however, experience delay in the recovery of its securities if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund.
SHORT SALES AGAINST-THE-BOX. Certain Funds may make short sales against-the- box. A short sale against-the-box means that at all times when a short posi- tion is open the Fund will own an equal amount of securities sold short, or securities convertible into or exchangeable for, without payment of any fur- ther consideration, an equal amount of the securities of the same issuer as the securities sold short.
PREFERRED STOCK, WARRANTS AND RIGHTS. Each Fund may invest in preferred stock, warrants and rights. Preferred stocks are securities that represent an ownership interest providing the holder with claims on the issuer's earn- ings and assets before common stock owners but after bond owners. Unlike debt securities, the obligations of an issuer of preferred stock, including dividend and other payment obligations, may not typically be accelerated by the holders of such preferred stock on the occurrence of an event of default or other non-compliance by the issuer of the preferred stock.
Warrants and other rights are options to buy a stated number of shares of common stock at a specified price at any time during the life of the warrant or right. The holders of warrants and rights have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.
OTHER INVESTMENT COMPANIES. Each Fund may invest in securities of other investment companies (including SPDRs and WEBs, as defined below) subject to statutory limitations prescribed by the Act. These limitations include a prohibition on
APPENDIX A
any Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of a Fund's total assets in securities of any one investment company or more than 10% of its total assets in securities of all investment companies. A Fund will indi- rectly bear its proportionate share of any management fees and other expenses paid by such other investment companies. Such other investment com- panies will have investment objectives, policies and restrictions substan- tially similar to those of the acquiring Fund and will be subject to sub- stantially the same risks.
.STANDARD & POOR'S DEPOSITORY RECEIPTS. The Funds may, consistent with their investment policies, purchase Standard & Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on the American Stock Exchange ("AMEX") that represent ownership in the SPDR Trust, a trust which has been established to accumulate and hold a portfolio of common stocks that is intended to track the price performance and dividend yield of the S&P 500. The SPDR Trust is sponsored by a subsidiary of the AMEX. SPDRs may be used for several reasons, including, but not limited to, facilitating the han- dling of cash flows or trading, or reducing transaction costs. The price movement of SPDRs may not perfectly parallel the price action of the S&P 500.
.WORLD EQUITY BENCHMARK SHARES. World Equity Benchmark Shares ("WEBS") are shares of an investment company that invests substantially all of its assets in securities included in the MSCI indices for specified countries. WEBS are listed on the AMEX and were initially offered to the public in 1996. The market prices of WEBS are expected to fluctuate in accordance with both changes in the NAVs of their underlying indices and supply and demand of WEBS on the AMEX. To date, WEBS have traded at relatively modest discounts and premiums to their NAVs. However, WEBS have a limited operat- ing history and information is lacking regarding the actual performance and trading liquidity of WEBS for extended periods or over complete market cycles. In addition, there is no assurance that the requirements of the AMEX necessary to maintain the listing of WEBS will continue to be met or will remain unchanged. In the event substantial market or other disruptions affecting WEBS should occur in the future, the liquidity and value of a Fund's shares could also be substantially and adversely affected. If such disruptions were to occur, a Fund could be required to reconsider the use of WEBS as part of its investment strategy.
UNSEASONED COMPANIES. Each Fund may invest in companies (including predeces- sors) which have operated less than three years. The securities of such com- panies may have limited liquidity, which can result in their being priced higher or lower than might otherwise be the case. In addition, investments in unseasoned compa -
nies are more speculative and entail greater risk than do investments in companies with an established operating record.
CORPORATE DEBT OBLIGATIONS. Corporate debt obligations include bonds, notes, debentures, commercial paper and other obligations of corporations to pay interest and repay principal, and include securities issued by banks and other financial institutions. Each Fund may invest in corporate debt obliga- tions issued by U.S. and certain non-U.S. issuers which issue securities denominated in the U.S. dollar (including Yankee and Euro obligations). In addition to obligations of corporations, corporate debt obligations include securities issued by banks and other financial institutions and suprana- tional entities (i.e., the World Bank, the International Monetary Fund, etc.).
BANK OBLIGATIONS. Each Fund may invest in obligations issued or guaranteed by U.S. or foreign banks. Bank obligations, including without limitations, time deposits, bankers' acceptances and certificates of deposit, may be gen- eral obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulations. Banks are subject to extensive but different governmental regulations which may limit both the amount and types of loans which may be made and interest rates which may be charged. In addition, the profitability of the banking industry is largely dependent upon the availability and cost of funds for the purpose of financing lending operations under prevailing money market conditions. General economic conditions as well as exposure to credit losses arising from possible financial difficulties of borrowers play an important part in the operation of this industry.
U.S. GOVERNMENT SECURITIES AND RELATED CUSTODIAL RECEIPTS. Each Fund may invest in U.S. government securities and related custodial receipts. U.S. government securities include U.S. Treasury obligations and obligations issued or guaranteed by U.S. government agencies, instrumentalities or spon- sored enterprises. U.S. government securities may be supported by (a) the full faith and credit of the U.S. Treasury (such as the Government National Mortgage Association ("Ginnie Mae")); (b) the right of the issuer to borrow from the U.S. Treasury (such as securities of the Student Loan Marketing Association); (c) the discretionary authority of the U.S. government to pur- chase certain obligations of the issuer (such as the Federal National Mort- gage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac")); or (d) only the credit of the issuer. U.S. government securities also include Treasury receipts, zero coupon bonds and other stripped U.S. government securities, where the interest and principal compo- nents of stripped U.S. government securities are traded independently.
Interests in U.S. government securities may be purchased in the form of cus- todial receipts that evidence ownership of future interest payments, princi- pal payments
APPENDIX A
or both on certain notes or bonds issued or guaranteed as to principal and interest by the U.S. government, its agencies, instrumentalities, political subdivisions or authorities. For certain securities law purposes, custodial receipts are not considered obligations of the U.S. government.
MORTGAGE-BACKED SECURITIES. Certain Funds may invest in mortgage-backed securities. Mortgage-backed securities represent direct or indirect partici- pations in, or are collateralized by and payable from, mortgage loans secured by real property. Mortgage-backed securities can be backed by either fixed rate mortgage loans or adjustable rate mortgage loans, and may be issued by either a governmental or non-governmental entity. Privately issued mortgage-backed securities are normally structured with one or more types of "credit enhancement." However, these mortgage-backed securities typically do not have the same credit standing as U.S. government guaranteed mortgage- backed securities.
Mortgage-backed securities may include multiple class securities, including collateralized mortgage obligations ("CMOs") and Real Estate Mortgage Investment Conduit ("REMIC") pass-through or participation certificates. CMOs provide an investor with a specified interest in the cash flow from a pool of underlying mortgages or of other mortgage-backed securities. CMOs are issued in multiple classes. In many cases, payments of principal are applied to the CMO classes in the order of their respective stated maturi- ties, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. A REMIC is a CMO that qualifies for special tax treatment and invests in cer- tain mortgages principally secured by interests in real property and other permitted investments.
Mortgaged-backed securities also include stripped mortgage-backed securities ("SMBS"), which are derivative multiple class mortgage-backed securities. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments and the other that receives sub- stantially all of the principal payments from a pool of mortgage loans. The market value of SMBS consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on SMBS that receive all or most of the interest from mortgage loans are gener- ally higher than prevailing market yields on other mortgage-backed securi- ties because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
ASSET-BACKED SECURITIES. Certain Funds may invest in asset-backed securi- ties. Asset-backed securities are securities whose principal and interest payments are collateralized by pools of assets such as auto loans, credit card receivables, leases, installment contracts and personal property. Asset-backed securities are often sub-
ject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the under- lying loans. During periods of declining interest rates, prepayment of loans underlying asset-backed securities can be expected to accelerate. According- ly, a Fund's ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is subject to generally prevailing interest rates at that time. Asset-backed securities present credit risks that are not presented by mortgage-backed securities. This is because asset-backed securities gener- ally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. There is the possibility that, in some cases, recoveries on repossessed collateral may not be available to support pay- ments on these securities. In the event of a default, a Fund may suffer a loss if it cannot sell collateral quickly and receive the amount it is owed.
BORROWINGS. Each Fund can borrow money from banks and other financial insti- tutions in amounts not exceeding one-third of its total assets for temporary or emergency purposes. A Fund may not make additional investments if borrowings exceed 5% of its total assets.
MORTGAGE DOLLAR ROLLS. Certain Funds may enter into mortgage dollar rolls. A mortgage dollar roll involves the sale by a Fund of securities for delivery in the current month. The Fund simultaneously contracts with the same counterparty to repurchase substantially similar (same type, coupon and maturity) but not identical securities on a specified future date. During the roll period, the Fund loses the right to receive principal and interest paid on the securities sold. However, the Fund benefits to the extent of any difference between (a) the price received for the securities sold and (b) the lower forward price for the future purchase and/or fee income plus the interest earned on the cash proceeds of the securities sold. Unless the ben- efits of a mortgage dollar roll exceed the income, capital appreciation and gain or loss due to mortgage prepayments that would have been realized on the securities sold as part of the roll, the use of this technique will diminish the Fund's performance.
Successful use of mortgage dollar rolls depends upon the Investment Advis- er's ability to predict correctly interest rates and mortgage prepayments. If the Investment Adviser is incorrect in its prediction, a Fund may experi- ence a loss. For financial reporting and tax purposes, the Funds treat mort- gage dollar rolls as two separate transactions: one involving the purchase of a security and a separate transaction involving a sale. The Funds do not currently intend to enter into mortgage dollar rolls that are accounted for as a financing and do not treat them as borrowings.
APPENDIX A
YIELD CURVE OPTIONS. Certain Funds may enter into options on the yield "spread" or differential between two securities. Such transactions are referred to as "yield curve" options. In contrast to other types of options, a yield curve option is based on the difference between the yields of desig- nated securities, rather than the prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is prof- itable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put), regardless of whether the yields of the underlying securities increase or decrease.
The trading of yield curve options is subject to all of the risks associated with the trading of other types of options. In addition, such options pres- ent a risk of loss even if the yield of one of the underlying securities remains constant, or if the spread moves in a direction or to an extent which was not anticipated.
REVERSE REPURCHASE AGREEMENTS. Certain Funds may enter into reverse repur- chase agreements. Reverse repurchase agreements involve the sale of securi- ties held by a Fund subject to the Fund's agreement to repurchase them at a mutually agreed upon date and price (including interest). These transactions may be entered into as a temporary measure for emergency purposes or to meet redemption requests. Reverse repurchase agreements may also be entered into when the Investment Adviser expects that the interest income to be earned from the investment of the transaction proceeds will be greater than the related interest expense. Reverse repurchase agreements involve leveraging. If the securities held by a Fund decline in value while these transactions are outstanding, the NAV of the Fund's outstanding shares will decline in value by proportionately more than the decline in value of the securities. In addition, reverse repurchase agreements involve the risk that the inter- est income earned by a Fund (from the investment of the proceeds) will be less than the interest expense of the transaction, that the market value of the securities sold by a Fund will decline below the price the Fund is obli- gated to pay to repurchase the securities, and that the securities may not be returned to the Fund.
MUNICIPAL SECURITIES. Certain Funds may invest in securities and instruments issued by state and local government issuers. Municipal securities in which a Fund may invest consist of bonds, notes, commercial paper and other instruments (including participating interests in such securities) issued by or on behalf of states, territories and possessions of the United States (including the District of Columbia) and their political subdivisions, agen- cies or instrumentalities. Such securities may pay fixed, variable or float- ing rates of interest. Municipal securities are often issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as bridges, highways, housing, hospitals, mass trans- portation, schools, streets and water and sewer works. Other public
purposes for which municipal securities may be issued include refunding out- standing obligations, obtaining funds for general operating expenses, and obtaining funds to lend to other public institutions and facilities. Munici- pal securities in which a Fund may invest include private activity bonds, municipal leases, certificates of participation, pre-funded municipal secu- rities and auction rate securities.
INTEREST RATE SWAPS, MORTGAGE SWAPS, CREDIT SWAPS, CURRENCY SWAPS AND INTER- EST RATE CAPS, FLOORS AND COLLARS. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed-rate payments for floating rate payments. Mortgage swaps are similar to interest rate swaps in that they represent commitments to pay and receive interest. The notional princi- pal amount, however, is tied to a reference pool or pools of mortgages. Credit swaps involve the receipt of floating or fixed rate payments in exchange for assuming potential credit losses of an underlying security. Credit swaps give one party to a transaction the right to dispose of or acquire an asset (or group of assets), or the right to receive or make a payment from the other party, upon the occurrence of specified credit events. Currency swaps involve the exchange of the parties' respective rights to make or receive payments in specified currencies. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor. An interest rate collar is the combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates.
Certain Funds may enter into swap transactions for hedging purposes or to seek to increase total return. The use of interest rate, mortgage, credit and currency swaps, as well as interest rate caps, floors and collars, is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transac- tions. If the Investment Adviser is incorrect in its forecasts of market value, interest rates and currency exchange rates, the investment perfor- mance of a Fund would be less favorable than it would have been if these investment techniques were not used.
LOAN PARTICIPATIONS. Certain Funds may invest in loan participations. A loan participation is an interest in a loan to a U.S. or foreign company or other borrower which is administered and sold by a financial intermediary. A Fund may only invest in loans to issuers in whose obligations it may otherwise invest. Loan participation interests may take the form of a direct or co- lending relationship with the
APPENDIX A
corporate borrower, an assignment of an interest in the loan by a co-lender or another participant, or a participation in the seller's share of the loan. When a Fund acts as co-lender in connection with a participation interest or when it acquires certain participation interests, the Fund will have direct recourse against the borrower if the borrower fails to pay scheduled principal and interest. In cases where the Fund lacks direct recourse, it will look to the agent bank to enforce appropriate credit reme- dies against the borrower. In these cases, the Fund may be subject to delays, expenses and risks that are greater than those that would have been involved if the Fund had purchased a direct obligation (such as commercial paper) of such borrower. Moreover, under the terms of the loan participa- tion, the Fund may be regarded as a creditor of the agent bank (rather than of the underlying corporate borrower), so that the Fund may also be subject to the risk that the agent bank may become insolvent.
INVERSE FLOATERS. Certain Funds may invest in inverse floating rate debt securities ("inverse floaters"). The interest rate on inverse floaters resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. The higher the degree of leverage of an inverse floater, the greater the vola- tility of its market value.
Appendix B
Financial Highlights
The financial highlights tables are intended to help you understand a Fund's financial performance for the past five years (or less if the Fund has not been in operation for less than five years). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned or lost on an invest- ment in a Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Arthur Andersen LLP, whose report, along with a Fund's financial statements, is included in the Fund's annual report (available upon request). No financial highlights are included for the Large Cap Value Fund because it had no operating history prior to the date of this prospectus.
BALANCED FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
-------------------------
NET ASSET
VALUE, NET NET REALIZED
BEGINNING INVESTMENT AND UNREALIZED
OF PERIOD INCOME GAIN (LOSS)
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FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $20.48 $0.32 $(0.19)
1999 - Class B Shares 20.37 0.22 (0.18)
1999 - Class C Shares 20.34 0.23 (0.19)
1999 - Institutional Shares 20.48 0.53 (0.35)
1999 - Service Shares 20.47 1.22 (1.14)
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FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 20.29 0.58 0.20
1999 - Class B Shares 20.20 0.41 0.21
1999 - Class C Shares 20.17 0.41 0.21
1999 - Institutional Shares 20.29 0.64 0.20
1999 - Service Shares 20.28 0.53 0.21
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1998 - Class A Shares 18.78 0.57 2.66
1998 - Class B Shares 18.73 0.50 2.57
1998 - Class C Shares (commenced August
15, 1997) 21.10 0.25 0.24
1998 - Institutional Shares (commenced
August 15, 1997) 21.18 0.26 0.32
1998 - Service Shares (commenced August
15, 1997) 21.18 0.22 0.32
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1997 - Class A Shares 17.31 0.66 2.47
1997 - Class B Shares (commenced May 1,
1996) 17.46 0.42 2.34
----------------------------------------------------------------------------
1996 - Class A Shares 14.22 0.51 3.43
----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
APPENDIX B
DISTRIBUTIONS TO SHAREHOLDERS
---------------------------------------
IN EXCESS NET INCREASE NET ASSETS RATIO OF
FROM NET OF NET (DECREASE) NET ASSET AT END OF NET EXPENSES
INVESTMENT INVESTMENT FROM NET IN NET ASSET VALUE, END TOTAL PERIOD TO AVERAGE
INCOME INCOME REALIZED GAINS VALUE OF PERIOD RETURNB (IN 000S) NET ASSETS
-------------------------------------------------------------------------------------------------
$(0.23) $ -- $ -- $(0.10) $20.38 0.62%d $169,395 1.10%c
(0.15) -- -- (0.11) 20.26 0.20d 40,515 1.85c
(0.15) -- -- (0.11) 20.23 0.18d 11,284 1.85c
(0.27) -- -- (0.09) 20.39 0.86d 2,361 0.70c
(0.18) -- -- (0.10) 20.37 0.39d 15 1.20c
-------------------------------------------------------------------------------------------------
(0.59) -- -- 0.19 20.48 3.94 192,453 1.04
(0.45) -- -- 0.17 20.37 3.15 43,926 1.80
(0.45) -- -- 0.17 20.34 3.14 14,286 1.80
(0.65) -- -- 0.19 20.48 4.25 8,010 0.73
(0.55) -- -- 0.19 20.47 3.80 490 1.23
-------------------------------------------------------------------------------------------------
(0.56) -- (1.16) 1.51 20.29 17.54 163,636 1.00
(0.42) (0.02) (1.16) 1.47 20.20 16.71 23,639 1.76
(0.22) (0.04) (1.16) (0.93) 20.17 2.49d 8,850 1.77c
(0.23) (0.08) (1.16) (0.89) 20.29 2.93d 8,367 0.76c
(0.22) (0.06) (1.16) (0.90) 20.28 2.66d 16 1.26c
-------------------------------------------------------------------------------------------------
(0.66) -- (1.00) 1.47 18.78 18.59 81,410 1.00
(0.42) (0.07) (1.00) 1.27 18.73 16.22d 2,110 1.75c
-------------------------------------------------------------------------------------------------
(0.50) -- (0.35) 3.09 17.31 28.10 50,928 1.00
-------------------------------------------------------------------------------------------------
|
c Annualized.
d Not annualized.
e Includes the effect of mortgage dollar roll transactions.
BALANCED FUND (continued)
RATIOS ASSUMING
NO VOLUNTARY WAIVER
OF FEES OR EXPENSE LIMITATIONS
------------------------------
RATIO OF RATIO OF
NET INVESTMENT RATIO OF NET INVESTMENT
INCOME TO EXPENSES TO INCOME TO PORTFOLIO
AVERAGE NET AVERAGE AVERAGE NET TURNOVER
ASSETS NET ASSETS ASSETS RATEE
-----------------------------------------------------------------------------------------------
FOR THE SEVEN-MONTH
PERIOD ENDED AUGUST 31,
1999 - Class A Shares 2.58%c 1.32%c 2.36%c 90.41%d
1999 - Class B Shares 1.83c 2.07c 1.61c 90.41d
1999 - Class C Shares 1.84c 2.07c 1.62c 90.41d
1999 - Institutional
Shares 2.96c 0.92c 2.74c 90.41d
1999 - Service Shares 2.46c 1.42c 2.24c 90.41d
-----------------------------------------------------------------------------------------------
FOR THE YEARS ENDED
JANUARY 31,
1999 - Class A Shares 2.90 1.45 2.49 175.06
1999 - Class B Shares 2.16 2.02 1.94 175.06
1999 - Class C Shares 2.17 2.02 1.95 175.06
1999 - Institutional
Shares 3.22 0.95 3.00 175.06
1999 - Service Shares 2.77 1.45 2.55 175.06
-----------------------------------------------------------------------------------------------
1998 - Class A Shares 2.94 1.57 2.37 190.43
1998 - Class B Shares 2.14 2.07 1.83 190.43
1998 - Class C Shares
(commenced
August 15, 1997) 2.13c 2.08c 1.82c 190.43
1998 - Institutional Shares
(commenced August
15, 1997) 3.13c 1.07c 2.82c 190.43
1998 - Service Shares
(commenced August
15, 1997) 2.58c 1.57c 2.27c 190.43
-----------------------------------------------------------------------------------------------
1997 - Class A Shares 3.76 1.77 2.99 208.11
1997 - Class B Shares
(commenced May
1, 1996) 2.59c 2.27c 2.07c 208.11
-----------------------------------------------------------------------------------------------
1996 - Class A Shares 3.65 1.90 2.75 197.10
-----------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
GROWTH AND INCOME FUND
INCOME FROM
INVESTMENT OPERATIONS/A/ DISTRIBUTIONS TO SHAREHOLDERS
------------------------- ------------------------------
NET
REALIZED
NET ASSET AND IN EXCESS
VALUE, NET UNREALIZED FROM NET OF NET FROM NET
BEGINNING INVESTMENT GAIN INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME (LOSS) (LOSS) INCOME INCOME GAINS
-------------------------------------------------------------------------------------------
FOR THE SEVEN-MONTH
PERIOD ENDED AUGUST 31,
1999 - Class A Shares $24.33 $ 0.19 $0.31 $(0.15) $ -- $ --
1999 - Class B Shares 24.13 0.08 0.31 (0.06) -- --
1999 - Class C Shares 24.08 0.08 0.30 (0.05) -- --
1999 - Institutional
Shares 24.35 0.34 0.23 (0.20) -- --
1999 - Service Shares 24.33 0.17 0.32 (0.14) -- --
-------------------------------------------------------------------------------------------
FOR THE YEARS ENDED
JANUARY 31,
1999 - Class A Shares 25.93 0.20 (1.60) (0.19) (0.01) --
1999 - Class B Shares 25.73 0.02 (1.58) (0.04) -- --
1999 - Class C Shares 25.70 0.02 (1.59) (0.05) -- --
1999 - Institutional
Shares 25.95 0.29 (1.58) (0.30) (0.01) --
1999 - Service Shares 25.92 0.17 (1.58) (0.17) (0.01) --
-------------------------------------------------------------------------------------------
1998 - Class A Shares 23.18 0.11 5.27 (0.11) -- (2.52)
1998 - Class B Shares 23.10 0.04 5.14 -- (0.03) (2.52)
1998 - Class C Shares
(commenced August 15,
1997) 28.20 (0.01) 0.06 -- (0.03) (2.52)
1998 - Institutional
Shares 23.19 0.27 5.23 (0.22) -- (2.52)
1998 - Service Shares 23.17 0.14 5.23 (0.06) (0.04) (2.52)
-------------------------------------------------------------------------------------------
1997 - Class A Shares 19.98 0.35 5.18 (0.35) (0.01) (1.97)
1997 - Class B Shares
(commenced May 1, 1996) 20.82 0.17 4.31 (0.17) (0.06) (1.97)
1997 - Institutional
Shares
(commenced June 3,
1996) 21.25 0.29 3.96 (0.30) (0.04) (1.97)
1997 - Service Shares
(commenced March 6,
1996) 20.71 0.28 4.50 (0.28) (0.07) (1.97)
-------------------------------------------------------------------------------------------
1996 - Class A Shares 15.80 0.33 4.75 (0.30) -- (0.60)
-------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
RATIO OF
NET INCREASE NET ASSETS RATIO OF NET INVESTMENT
(DECREASE) NET ASSET AT END OF NET EXPENSES INCOME (LOSS)
IN NET VALUE, END TOTAL PERIOD TO AVERAGE TO AVERAGE NET
ASSET VALUE OF PERIOD RETURN/B/ (IN 000S) NET ASSETS ASSETS
-------------------------------------------------------------------------
$ 0.35 $24.68 2.05%d $ 855,174 1.19%c 1.26%c
0.33 24.46 1.60d 271,912 1.94c 0.51c
0.33 24.41 1.58d 31,328 1.94c 0.51c
0.37 24.72 2.32d 32,181 0.79c 1.72c
0.35 24.68 2.01d 10,008 1.29c 1.16c
-------------------------------------------------------------------------
(1.60) 24.33 (5.40) 1,122,157 1.22 0.78
(1.60) 24.13 (6.07) 349,662 1.92 0.09
(1.62) 24.08 (6.12) 48,146 1.92 0.10
(1.60) 24.35 (5.00) 173,696 0.80 1.25
(1.59) 24.33 (5.44) 11,943 1.30 0.72
-------------------------------------------------------------------------
2.75 25.93 23.71 1,216,582 1.25 0.43
2.63 25.73 22.87 307,815 1.94 (0.35)
(2.50) 25.70 0.51d 31,686 1.99c (0.48)c
2.76 25.95 24.24 36,225 0.83 0.76
2.75 25.92 23.63 8,893 1.32 0.32
-------------------------------------------------------------------------
3.20 23.18 28.42 615,103 1.22 1.60
2.28 23.10 22.23d 17,346 1.93c 0.15c
1.94 23.19 20.77d 193 0.82c 1.36c
2.46 23.17 23.87d 3,174 1.32c 0.94c
-------------------------------------------------------------------------
4.18 19.98 32.45 436,757 1.20 1.67
-------------------------------------------------------------------------
|
GROWTH AND INCOME FUND (continued)
RATIOS ASSUMING NO VOLUNTARY WAIVER
OF FEES OR EXPENSE LIMITATIONS
-----------------------------------
RATIO OF RATIO OF
EXPENSES TO NET INVESTMENT PORTFOLIO
AVERAGE NET INCOME (LOSS) TO TURNOVER
ASSETS AVERAGE NET ASSETS RATE
-------------------------------------------------------------------------------------
FOR THE SEVEN-MONTH
PERIOD ENDED
AUGUST 31,
1999 - Class A Shares 1.20%c 1.25%c 55.43%d
1999 - Class B Shares 1.95c 0.50c 55.43d
1999 - Class C Shares 1.95c 0.50c 55.43d
1999 - Institutional
Shares 0.80c 1.71c 55.43d
1999 - Service Shares 1.30c 1.15c 55.43d
-------------------------------------------------------------------------------------
FOR THE YEARS ENDED
JANUARY 31,
1999 - Class A Shares 1.32 0.68 125.79
1999 - Class B Shares 1.92 0.09 125.79
1999 - Class C Shares 1.92 0.10 125.79
1999 - Institutional
Shares 0.80 1.25 125.79
1999 - Service Shares 1.30 0.72 125.79
-------------------------------------------------------------------------------------
1998 - Class A Shares 1.42 0.26 61.95
1998 - Class B Shares 1.94 (0.35) 61.95
1998 - Class C Shares
(commenced August 15,
1997) 1.99c (0.48)c 61.95
1998 - Institutional
Shares 0.83 0.76 61.95
1998 - Service Shares 1.32 0.32 61.95
-------------------------------------------------------------------------------------
1997 - Class A Shares 1.43 1.39 53.03
1997 - Class B Shares
(commenced May 1, 1996) 1.93c 0.15c 53.03
1997 - Institutional
Shares
(commenced June 3,
1996) 0.82c 1.36c 53.03
1997 - Service Shares
(commenced March 6,
1996) 1.32c 0.94c 53.03
-------------------------------------------------------------------------------------
1996 - Class A Shares 1.45 1.42 57.93
-------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE LARGE CAP VALUE FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
-------------------------
NET ASSET
VALUE, NET NET REALIZED
BEGINNING INVESTMENT AND UNREALIZED
OF PERIOD INCOME GAIN
------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST
31,
1999 - Class A Shares $10.15 $0.04 $0.40
1999 - Class B Shares 10.15 0.01 0.36
1999 - Class C Shares 10.15 0.01 0.37
1999 - Institutional Shares 10.16 0.06 0.38
1999 - Service Shares 10.16 0.02 0.40
------------------------------------------------------------------------------
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares (commenced December
31, 1998) 10.00 0.01 0.14
1999 - Class B Shares (commenced December
31, 1998) 10.00 -- 0.15
1999 - Class C Shares (commenced December
31, 1998) 10.00 -- 0.15
1999 - Institutional Shares (commenced
December 31, 1998) 10.00 0.01 0.15
1999 - Service Shares (commenced December
31, 1998) 10.00 0.02 0.14
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
DISTRIBUTIONS TO
SHAREHOLDERS
----------------------------
NET ASSETS
FROM NET NET INCREASE NET ASSET AT END OF RATIO OF
INVESTMENT FROM NET IN NET ASSET VALUE, END TOTAL PERIOD NET EXPENSES TO
INCOME REALIZED GAINS VALUE OF PERIOD RETURN/B/,/D/ (IN 000S) AVERAGE NET ASSETS/C/
------------------------------------------------------------------------------------------------------
$(0.04) $ -- $0.40 $10.55 4.31% 91,072 1.04%
(0.02) -- 0.35 10.50 3.68 14,464 1.79
(0.02) -- 0.36 10.51 3.73 8,032 1.79
(0.05) -- 0.39 10.55 4.35 189,540 0.64
(0.03) -- 0.39 10.55 4.11 13 1.14
------------------------------------------------------------------------------------------------------
-- -- 0.15 10.15 1.50 6,665 1.08
-- -- 0.15 10.15 1.50 340 1.82
-- -- 0.15 10.15 1.50 268 1.83
-- -- 0.16 10.16 1.60 53,396 0.66
-- -- 0.16 10.16 1.60 2 1.16
------------------------------------------------------------------------------------------------------
|
CORE LARGE CAP VALUE FUND (continued)
RATIOS ASSUMING
NO VOLUNTARY WAIVER
OF FEES OR EXPENSE LIMITATIONS
------------------------------------
RATIO OF RATIO OF
NET INVESTMENT RATIO OF NET INVESTMENT
INCOME TO EXPENSES TO INCOME TO PORTFOLIO
AVERAGE NET AVERAGE NET AVERAGE NET TURNOVER
ASSETS/C/ ASSETS/C/ ASSETS/C/ RATE/D/
----------------------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD
ENDED AUGUST 31,
1999 - Class A Shares 0.87% 1.21% 0.70% 36.10%
1999 - Class B Shares 0.05 1.96 (0.12) 36.10
1999 - Class C Shares 0.09 1.96 (0.08) 36.10
1999 - Institutional
Shares 1.29 0.81 1.12 36.10
1999 - Service Shares 0.72 1.31 0.55 36.10
----------------------------------------------------------------------------------------------
FOR THE PERIOD ENDED
JANUARY 31,
1999 - Class A
Shares(commenced December
31, 1998) 1.45 8.03 (5.50) 0.00
1999 - Class B
Shares(commenced December
31, 1998) 0.84 8.77 (6.11) 0.00
1999 - Class C
Shares(commenced December
31, 1998) 0.70 8.78 (6.25) 0.00
1999 - Institutional
Shares(commenced December
31, 1998) 1.97 7.61 (4.98) 0.00
1999 - Service
Shares(commenced December
31, 1998) 2.17 8.11 (4.78) 0.00
----------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE U.S. EQUITY FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
-------------------------
NET ASSET NET
VALUE, INVESTMENT NET REALIZED
BEGINNING INCOME AND UNREALIZED
OF PERIOD (LOSS) GAIN (LOSS)
-----------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST
31,
1999 - Class A Shares $32.98 $ 0.03 $1.20
1999 - Class B Shares 32.50 (0.11) 1.17
1999 - Class C Shares 32.40 (0.10) 1.16
1999 - Institutional Shares 33.29 0.11 1.21
1999 - Service Shares 32.85 0.01 1.19
-----------------------------------------------------------------------------
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 26.59 0.04 7.02
1999 - Class B Shares 26.32 (0.10) 6.91
1999 - Class C Shares 26.24 (0.10) 6.89
1999 - Institutional Shares 26.79 0.20 7.11
1999 - Service Shares 26.53 0.06 7.01
-----------------------------------------------------------------------------
1998 - Class A Shares 23.32 0.11 5.63
1998 - Class B Shares 23.18 0.11 5.44
1998 - Class C Shares (commenced August
15, 1997) 27.48 0.03 1.22
1998 - Institutional Shares 23.44 0.30 5.65
1998 - Service Shares 23.27 0.19 5.57
-----------------------------------------------------------------------------
1997 - Class A Shares 19.66 0.16 4.46
1997 - Class B Shares (commenced May 1,
1996) 20.44 0.04 3.70
1997 - Institutional Shares 19.71 0.30 4.51
1997 - Service Shares (commenced June 7,
1996) 21.02 0.13 3.15
-----------------------------------------------------------------------------
1996 - Class A Shares 14.61 0.19 5.43
1996 - Institutional Shares (commenced
June 15, 1995) 16.97 0.16 3.23
-----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
DISTRIBUTIONS TO SHAREHOLDERS
-------------------------------------
RATIO OF
IN EXCESS NET INCREASE NET ASSETS RATIO OF NET INVESTMENT
FROM NET OF NET (DECREASE) NET ASSET AT END OF NET EXPENSES INCOME (LOSS)
INVESTMENT INVESTMENT FROM NET IN NET ASSET VALUE, END TOTAL PERIOD TO AVERAGE TO AVERAGE
INCOME INCOME REALIZED GAINS VALUE OF PERIOD RETURN/B/ (IN 000S) NET ASSETS NET ASSETS
----------------------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 1.23 $34.21 3.73%d $614,310 1.14%c 0.15%c
-- -- -- 1.06 33.56 3.26d 214,087 1.89c (0.60)c
-- -- -- 1.06 33.46 3.27d 43,361 1.89c (0.61)c
-- -- -- 1.32 34.61 3.97d 335,465 0.74c 0.54c
-- -- -- 1.20 34.05 3.65d 11,204 1.24c 0.06c
----------------------------------------------------------------------------------------------------------------
(0.03) (0.01) (0.63) 6.39 32.98 26.89 605,566 1.23 0.15
-- -- (0.63) 6.18 32.50 26.19 152,347 1.85 (0.50)
-- -- (0.63) 6.16 32.40 26.19 26,912 1.87 (0.53)
(0.15) (0.03) (0.63) 6.50 33.29 27.65 307,200 0.69 0.69
(0.10) (0.02) (0.63) 6.32 32.85 27.00 11,600 1.19 0.19
----------------------------------------------------------------------------------------------------------------
(0.12) -- (2.35) 3.27 26.59 24.96 398,393 1.28 0.51
-- (0.06) (2.35) 3.14 26.32 24.28 59,208 1.79 (0.05)
-- (0.14) (2.35) (1.24) 26.24 4.85d 6,267 1.78c (0.21)c
(0.24) (0.01) (2.35) 3.35 26.79 25.76 202,893 0.65 1.16
(0.07) (0.08) (2.35) 3.26 26.53 25.11 7,841 1.15 0.62
----------------------------------------------------------------------------------------------------------------
(0.16) -- (0.80) 3.66 23.32 23.75 225,968 1.29 0.91
(0.04) (0.16) (0.80) 2.74 23.18 18.59d 17,258 1.83c 0.06c
(0.28) -- (0.80) 3.73 23.44 24.63 148,942 0.65 1.52
(0.13) (0.10) (0.80) 2.25 23.27 15.92d 3,666 1.15c 0.69c
----------------------------------------------------------------------------------------------------------------
(0.16) -- (0.41) 5.05 19.66 38.63 129,045 1.25 1.01
(0.24) -- (0.41) 2.74 19.71 20.14d 64,829 0.65c 1.49c
----------------------------------------------------------------------------------------------------------------
|
CORE U.S. EQUITY FUND (continued)
RATIOS ASSUMING NO VOLUNTARY WAIVER
OF FEES OR EXPENSE LIMITATIONS
-----------------------------------
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES TO INCOME (LOSS) TO PORTFOLIO
AVERAGE NET AVERAGE TURNOVER
ASSETS NET ASSETS RATE
---------------------------------------------------------------------------------
FOR THE SEVEN-MONTH
PERIOD ENDED AUGUST 31,
1999 - Class A Shares 1.24%c 0.05%c 41.84%d
1999 - Class B Shares 1.99c (0.70)c 41.84d
1999 - Class C Shares 1.99c (0.71)c 41.84d
1999 - Institutional
Shares 0.84c 0.44c 41.84d
1999 - Service Shares 1.34c (0.04)c 41.84d
---------------------------------------------------------------------------------
FOR THE YEARS ENDED
JANUARY 31,
1999 - Class A Shares 1.36 0.02 63.79
1999 - Class B Shares 1.98 (0.63) 63.79
1999 - Class C Shares 2.00 (0.66) 63.79
1999 - Institutional
Shares 0.82 0.56 63.79
1999 - Service Shares 1.32 0.06 63.79
---------------------------------------------------------------------------------
1998 - Class A Shares 1.47 0.32 65.89
1998 - Class B Shares 1.96 (0.22) 65.89
1998 - Class C Shares
(commenced August 15,
1997) 1.95c (0.38)c 65.89
1998 - Institutional
Shares 0.82 0.99 65.89
1998 - Service Shares 1.32 0.45 65.89
---------------------------------------------------------------------------------
1997 - Class A Shares 1.53 0.67 37.28
1997 - Class B Shares
(commenced May 1, 1996) 2.00c (0.11)c 37.28
1997 - Institutional
Shares 0.85 1.32 37.28
1997 - Service Shares
(commenced June 7, 1996) 1.35c 0.49c 37.28
---------------------------------------------------------------------------------
1996 - Class A Shares 1.55 0.71 39.35
1996 - Institutional
Shares (commenced June
15, 1995) 0.96c 1.18c 39.35
---------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE LARGE CAP GROWTH FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
-------------------------
NET ASSET NET
VALUE, INVESTMENT NET REALIZED
BEGINNING INCOME AND UNREALIZED
OF PERIOD (LOSS) GAIN
-------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST
31,
1999 - Class A Shares $16.17 $(0.01) $0.86
1999 - Class B Shares 15.98 (0.07) 0.84
1999 - Class C Shares 15.99 (0.07) 0.83
1999 - Institutional Shares 16.21 0.03 0.86
1999 - Service Shares 16.11 (0.02) 0.86
-------------------------------------------------------------------------------
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares 11.97 0.01 4.19
1999 - Class B Shares 11.92 (0.06) 4.12
1999 - Class C Shares 11.93 (0.05) 4.11
1999 - Institutional Shares 11.97 0.02 4.23
1999 - Service Shares 11.95 (0.01) 4.17
-------------------------------------------------------------------------------
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares (commenced May 1,
1997) 10.00 0.01 2.35
1998 - Class B Shares (commenced May 1,
1997) 10.00 (0.03) 2.33
1998 - Class C Shares (commenced August
15, 1997) 11.80 (0.02) 0.54
1998 - Institutional Shares (commenced May
1, 1997) 10.00 0.01 2.35
1998 - Service Shares (commenced May 1,
1997) 10.00 (0.02) 2.35
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
DISTRIBUTIONS TO
SHAREHOLDERS
---------------------------------
FROM IN EXCESS NET NET ASSET NET ASSETS RATIO OF
NET OF NET FROM NET INCREASE VALUE, AT END OF NET EXPENSES
INVESTMENT INVESTMENT REALIZED IN NET END OF TOTAL PERIOD TO AVERAGE
INCOME INCOME GAINS ASSET VALUE PERIOD RETURN/B/ (IN 000S) NET ASSETS
--------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.85 $17.02 5.26%d $300,684 1.04%c
-- -- -- 0.77 16.75 4.82d 181,626 1.79c
-- -- -- 0.76 16.75 4.75d 75,502 1.79c
-- -- -- 0.89 17.10 5.49d 310,704 0.64c
-- -- -- 0.84 16.95 5.21d 2,510 1.14c
--------------------------------------------------------------------------------------------
-- -- -- 4.20 16.17 35.10 175,510 0.97
-- -- -- 4.06 15.98 34.07 93,711 1.74
-- -- -- 4.06 15.99 34.04 37,081 1.74
-- (0.01) -- 4.24 16.21 35.54 295,734 0.65
-- -- -- 4.16 16.11 34.85 1,663 1.15
--------------------------------------------------------------------------------------------
(0.01) -- (0.38) 1.97 11.97 23.79d 53,786 0.91c
-- -- (0.38) 1.92 11.92 23.26d 13,857 1.67c
-- (0.01) (0.38) 0.13 11.93 4.56d 4,132 1.68c
(0.01) -- (0.38) 1.97 11.97 23.89d 4,656 0.72c
-- -- (0.38) 1.95 11.95 23.56d 115 1.17c
--------------------------------------------------------------------------------------------
|
CORE LARGE CAP GROWTH FUND (continued)
RATIOS ASSUMING NO
VOLUNTARY WAIVER OF FEES
OR EXPENSE LIMITATIONS
------------------------
RATIO OF RATIO OF NET
NET INVESTMENT RATIO OF INVESTMENT
INCOME (LOSS) TO EXPENSES TO (LOSS) TO PORTFOLIO
AVERAGE NET AVERAGE NET AVERAGE NET TURNOVER
ASSETS ASSETS ASSETS RATE
-------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD
ENDED AUGUST 31,
1999 - Class A Shares (0.11)%c 1.26%c (0.33)%c 32.74%d
1999 - Class B Shares (0.87)c 2.01c (1.09)c 32.74d
1999 - Class C Shares (0.87)c 2.01c (1.09)c 32.74d
1999 - Institutional
Shares 0.31c 0.86c 0.09c 32.74d
1999 - Service Shares (0.21)c 1.36c (0.43)c 32.74d
-------------------------------------------------------------------------------
FOR THE YEAR ENDED JANUARY
31,
1999 - Class A Shares 0.05 1.46 (0.44) 63.15
1999 - Class B Shares (0.73) 2.11 (1.10) 63.15
1999 - Class C Shares (0.74) 2.11 (1.11) 63.15
1999 - Institutional
Shares 0.35 1.02 (0.02) 63.15
1999 - Service Shares (0.16) 1.52 (0.53) 63.15
-------------------------------------------------------------------------------
FOR THE PERIOD ENDED
JANUARY 31,
1998 - Class A Shares
(commenced May 1, 1997) 0.12 c 2.40c (1.37)c 74.97d
1998 - Class B Shares
(commenced May 1, 1997) (0.72)c 2.91c (1.96)c 74.97d
1998 - Class C Shares
(commenced August 15,
1997) (0.76)c 2.92c (2.00)c 74.97d
1998 - Institutional
Shares (commenced May 1,
1997) 0.42 c 1.96c (0.82)c 74.97d
1998 - Service Shares
(commenced May 1, 1997) (0.21)c 2.41c (1.45)c 74.97d
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CORE SMALL CAP EQUITY FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
-----------------------
NET ASSET NET NET
VALUE, INVESTMENT REALIZED AND
BEGINNING INCOME UNREALIZED
OF PERIOD (LOSS) GAIN (LOSS)
------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $10.16 $(0.01) $0.08
1999 - Class B Shares 10.07 (0.05) 0.07
1999 - Class C Shares 10.08 (0.05) 0.07
1999 - Institutional Shares 10.20 0.02 0.08
1999 - Service Shares 10.16 (0.01) 0.07
------------------------------------------------------------------------------
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares 10.59 0.01 (0.43)
1999 - Class B Shares 10.56 (0.05) (0.44)
1999 - Class C Shares 10.57 (0.04) (0.45)
1999 - Institutional Shares 10.61 0.04 (0.43)
1999 - Service Shares 10.60 0.01 (0.44)
------------------------------------------------------------------------------
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares (commenced August 15,
1997) 10.00 (0.01) 0.65
1998 - Class B Shares (commenced August 15,
1997) 10.00 (0.03) 0.64
1998 - Class C Shares (commenced August 15,
1997) 10.00 (0.02) 0.64
1998 - Institutional Shares (commenced
August 15, 1997) 10.00 0.01 0.65
1998 - Service Shares (commenced August 15,
1997) 10.00 0.01 0.64
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
DISTRIBUTIONS TO
SHAREHOLDERS
----------------------------
FROM NET NET ASSET NET ASSETS RATIO OF
NET INCREASE VALUE, AT END OF NET EXPENSES
INVESTMENT FROM NET IN NET END OF TOTAL PERIOD TO AVERAGE
INCOME REALIZED GAINS ASSET VALUE PERIOD RETURN/B/ (IN 000S) NET ASSETS
--------------------------------------------------------------------------------------
$ -- $ -- $0.07 $10.23 0.69%d $52,660 1.33%c
-- -- 0.02 10.09 0.20d 13,711 2.08c
-- -- 0.02 10.10 0.20d 6,274 2.08c
-- -- 0.10 10.30 0.98d 62,633 0.93c
-- -- 0.06 10.22 0.59d 64 1.43c
--------------------------------------------------------------------------------------
(0.01) -- (0.43) 10.16 (3.97) 64,087 1.31
-- -- (0.49) 10.07 (4.64) 15,406 2.00
-- -- (0.49) 10.08 (4.64) 6,559 2.01
(0.02) -- (0.41) 10.20 (3.64) 62,763 0.94
(0.01) -- (0.44) 10.16 (4.07) 54 1.44
--------------------------------------------------------------------------------------
-- (0.05) 0.59 10.59 6.37d 11,118 1.25c
-- (0.05) 0.56 10.56 6.07d 9,957 1.95c
-- (0.05) 0.57 10.57 6.17d 2,557 1.95c
-- (0.05) 0.61 10.61 6.57d 9,026 0.95c
-- (0.05) 0.60 10.60 6.47d 2 1.45c
--------------------------------------------------------------------------------------
|
CORE SMALL CAP EQUITY FUND (continued)
RATIOS ASSUMING NO
VOLUNTARY WAIVER OF FEES
OR EXPENSE LIMITATIONS
------------------------
RATIO OF NET RATIO OF NET
INVESTMENT RATIO OF INVESTMENT
INCOME (LOSS) EXPENSES TO LOSS PORTFOLIO
TO AVERAGE AVERAGE NET TO AVERAGE TURNOVER
NET ASSETS ASSETS NET ASSETS RATE
------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD
ENDED AUGUST 31,
1999 - Class A Shares (0.12)%c 1.67%c (0.46)%c 52.03%d
1999 - Class B Shares (0.86)c 2.42c (1.20)c 52.03d
1999 - Class C Shares (0.86)c 2.42c (1.20)c 52.03d
1999 - Institutional Shares 0.28c 1.27c (0.06)c 52.03d
1999 - Service Shares (0.22)c 1.77c (0.56)c 52.03d
------------------------------------------------------------------------------
FOR THE YEAR ENDED JANUARY
31,
1999 - Class A Shares 0.08 2.00 (0.61) 75.38
1999 - Class B Shares (0.55) 2.62 (1.17) 75.38
1999 - Class C Shares (0.56) 2.63 (1.18) 75.38
1999 - Institutional Shares 0.60 1.56 (0.02) 75.38
1999 - Service Shares 0.01 2.06 (0.61) 75.38
------------------------------------------------------------------------------
FOR THE PERIOD ENDED JANUARY
31,
1998 - Class A Shares
(commenced August 15, 1997) (0.36)c 3.92c (3.03)c 37.65d
1998 - Class B Shares
(commenced August 15, 1997) (1.04)c 4.37c (3.46)c 37.65d
1998 - Class C Shares
(commenced August 15, 1997) (1.07)c 4.37c (3.49)c 37.65d
1998 - Institutional Shares
(commenced August 15, 1997) 0.15c 3.37c (2.27)c 37.65d
1998 - Service Shares
(commenced August 15, 1997) 0.40c 3.87c (2.02)c 37.65d
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
CAPITAL GROWTH FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
-------------------------
NET ASSET NET
VALUE, INVESTMENT NET REALIZED
BEGINNING INCOME AND UNREALIZED
OF PERIOD (LOSS) GAIN (LOSS)
----------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST
31,
1999 - Class A Shares $24.03 $(0.08) $1.01
1999 - Class B Shares 23.57 (0.17) 0.97
1999 - Class C Shares 23.52 (0.16) 0.97
1999 - Institutional Shares 24.07 (0.02) 1.01
1999 - Service Shares 23.96 (0.08) 1.00
----------------------------------------------------------------------------
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 18.48 (0.03) 6.35
1999 - Class B Shares 18.27 (0.12) 6.19
1999 - Class C Shares 18.24 (0.10) 6.15
1999 - Institutional Shares 18.45 0.01 6.38
1999 - Service Shares 18.46 (0.04) 6.31
----------------------------------------------------------------------------
1998 - Class A Shares 16.73 0.02 4.78
1998 - Class B Shares 16.67 0.02 4.61
1998 - Class C Shares (commenced August
15, 1997) 19.73 (0.02) 1.60
1998 - Institutional Shares (commenced
August 15, 1997) 19.88 0.02 1.66
1998 - Service Shares (commenced August
15, 1997) 19.88 (0.01) 1.66
----------------------------------------------------------------------------
1997 - Class A Shares 14.91 0.10 3.56
1997 - Class B Shares (commenced May 1,
1996) 15.67 0.01 2.81
----------------------------------------------------------------------------
1996 - Class A Shares 13.67 0.12 3.93
----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
DISTRIBUTIONS TO
SHAREHOLDERS
--------------------------------------
IN EXCESS NET INCREASE NET ASSETS RATIO OF
FROM NET OF NET (DECREASE) NET ASSET AT END OF NET EXPENSES
INVESTMENT INVESTMENT FROM NET IN NET VALUE, END TOTAL PERIOD TO AVERAGE
INCOME INCOME REALIZED GAIN ASSET VALUE OF PERIOD RETURN/B/ (IN 000S) NET ASSETS
--------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.93 $24.96 3.87%d $1,971,097 1.44%c
-- -- -- 0.80 24.37 3.39d 329,870 2.19c
-- -- -- 0.81 24.33 3.44d 87,284 2.19c
-- -- -- 0.99 25.06 4.11d 255,210 1.04c
-- -- -- 0.92 24.88 3.84d 6,466 1.54c
--------------------------------------------------------------------------------------------------
-- -- (0.77) 5.55 24.03 34.58 1,992,716 1.42
-- -- (0.77) 5.30 23.57 33.60 236,369 2.19
-- -- (0.77) 5.28 23.52 33.55 60,234 2.19
-- -- (0.77) 5.62 24.07 35.02 41,817 1.07
-- -- (0.77) 5.50 23.96 34.34 3,085 1.57
--------------------------------------------------------------------------------------------------
(0.01) (0.01) (3.03) 1.75 18.48 29.71 1,256,595 1.40
-- -- (3.03) 1.60 18.27 28.73 40,827 2.18
-- (0.04) (3.03) (1.49) 18.24 8.83d 5,395 2.21c
(0.01) (0.07) (3.03) (1.43) 18.45 9.31d 7,262 1.16c
-- (0.04) (3.03) (1.42) 18.46 9.18d 2 1.50c
--------------------------------------------------------------------------------------------------
(0.10) (0.02) (1.72) 1.82 16.73 25.97 920,646 1.40
(0.01) (0.09) (1.72) 1.00 16.67 19.39d 3,221 2.15c
--------------------------------------------------------------------------------------------------
(0.12) -- (2.69) 1.24 14.91 30.45 881,056 1.36
--------------------------------------------------------------------------------------------------
|
CAPITAL GROWTH FUND (continued)
RATIOS ASSUMING NO
VOLUNTARY WAIVER OF FEES
OR EXPENSE LIMITATIONS
--------------------------
RATIO OF RATIO OF
NET INVESTMENT RATIO OF NET INVESTMENT
INCOME (LOSS) EXPENSES TO INCOME (LOSS) PORTFOLIO
TO AVERAGE AVERAGE NET TO AVERAGE TURNOVER
NET ASSETS ASSETS NET ASSETS RATE
---------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD
ENDED AUGUST 31,
1999 - Class A Shares (0.53)%c 1.47%c (0.56)%c 18.16%d
1999 - Class B Shares (1.29)c 2.22c (1.32)c 18.16d
1999 - Class C Shares (1.29)c 2.22c (1.32)c 18.16d
1999 - Institutional
Shares (0.20)c 1.07c (0.23)c 18.16d
1999 - Service Shares (0.65)c 1.57c (0.68)c 18.16d
---------------------------------------------------------------------------------
FOR THE YEARS ENDED
JANUARY 31,
1999 - Class A Shares (0.18) 1.58 (0.34) 30.17
1999 - Class B Shares (0.98) 2.21 (1.00) 30.17
1999 - Class C Shares (1.00) 2.21 (1.02) 30.17
1999 - Institutional
Shares 0.11 1.09 0.09 30.17
1999 - Service Shares (0.37) 1.59 (0.39) 30.17
---------------------------------------------------------------------------------
1998 - Class A Shares 0.08 1.65 (0.17) 61.50
1998 - Class B Shares (0.77) 2.18 (0.77) 61.50
1998 - Class C Shares
(commenced August 15,
1997) (0.86)c 2.21c (0.86)c 61.50
1998 - Institutional
Shares (commenced August
15, 1997) 0.18c 1.16c 0.18c 61.50
1998 - Service Shares
(commenced August 15, 1997) (0.16)c 1.50c (0.16)c 61.50
---------------------------------------------------------------------------------
1997 - Class A Shares 0.62 1.65 0.37 52.92
1997 - Class B Shares
(commenced May 1, 1996) (0.39)c 2.15c (0.39)c 52.92
---------------------------------------------------------------------------------
1996 - Class A Shares 0.65 1.61 0.40 63.90
---------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
STRATEGIC GROWTH FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
---------------------------
NET ASSET NET
VALUE, INVESTMENT
BEGINNING INCOME NET REALIZED AND
OF PERIOD (LOSS) UNREALIZED GAIN
-------------------------------------------------------------------------------
FOR THE PERIOD ENDED AUGUST 31,
1999 - Class A Shares (commenced May 24) $10.00 $ -- $0.06
1999 - Class B Shares (commenced May 24) 10.00 (0.03)e 0.07e
1999 - Class C Shares (commenced May 24) 10.00 (0.03)e 0.08e
1999 - Institutional Shares (commenced
May 24) 10.00 0.01 0.06
1999 - Service Shares (commenced May 24) 10.00 (0.01) 0.07
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
APPENDIX B
DISTRIBUTIONS TO SHAREHOLDERS
--------------------------------------
IN EXCESS NET ASSETS
FROM NET OF NET NET INCREASE NET ASSET AT END OF RATIO OF
INVESTMENT INVESTMENT FROM NET IN NET ASSET VALUE, END TOTAL PERIOD NET EXPENSES TO
INCOME INCOME REALIZED GAINS VALUE OF PERIOD RETURN/B/ (IN 000S) AVERAGE NET ASSETS
--------------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.06 $10.06 0.60%d $10,371 1.44%c
-- -- -- 0.04 10.04 0.40d 3,393 2.19c
-- -- -- 0.05 10.05 0.50d 2,388 2.19c
-- -- -- 0.07 10.07 0.70d 5,981 1.04c
-- -- -- 0.06 10.06 0.60d 2 1.54c
--------------------------------------------------------------------------------------------------------
|
STRATEGIC GROWTH FUND (continued)
RATIOS ASSUMING NO
VOLUNTARY WAIVER OF
FEES OR EXPENSE
LIMITATIONS
--------------------
RATIO OF
NET RATIO OF RATIO OF
INVESTMENT EXPENSES NET
INCOME TO INVESTMENT
(LOSS) TO AVERAGE LOSS TO PORTFOLIO
AVERAGE NET AVERAGE TURNOVER
NET ASSETS ASSETS NET ASSETS RATE
-----------------------------------------------------------------------------
FOR THE PERIOD ENDED AUGUST 31,
1999 - Class A Shares (commenced
May 24) (0.17)%c 11.70%c (10.43)%c 6.98%d
1999 - Class B Shares (commenced
May 24) (0.97)c 12.45c (11.23)c 6.98d
1999 - Class C Shares (commenced
May 24) (0.99)c 12.45c (11.25)c 6.98d
1999 - Institutional Shares
(commenced May 24) 0.24c 11.30c (10.02)c 6.98d
1999 - Service Shares (commenced
May 24) (0.24)c 11.80c (10.50)c 6.98d
-----------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
[This page intentionally left blank]
GROWTH OPPORTUNITIES FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
-------------------------
NET ASSET NET
VALUE, INVESTMENT NET REALIZED
BEGINNING INCOME AND UNREALIZED
OF PERIOD (LOSS) GAIN
-------------------------------------------------------------------------------
FOR THE PERIOD ENDED AUGUST 31,
1999 - Class A Shares (commenced May 24) $10.00 $(0.01)e $0.14e
1999 - Class B Shares (commenced May 24) 10.00 (0.03)e 0.21e
1999 - Class C Shares (commenced May 24) 10.00 (0.03)e 0.13e
1999 - Institutional Shares (commenced May
24) 10.00 0.01 0.12
1999 - Service Shares (commenced May 24) 10.00 -- 0.12
-------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
APPENDIX B
DISTRIBUTIONS TO SHAREHOLDERS
---------------------------------------
IN EXCESS NET ASSETS RATIO OF
FROM NET OF NET NET INCREASE NET ASSET AT END OF NET EXPENSES
INVESTMENT INVESTMENT FROM NET IN NET ASSET VALUE, END TOTAL PERIOD TO AVERAGE
INCOME INCOME REALIZED GAINS VALUE OF PERIOD RETURN/B/ (IN 000S) NET ASSETS
----------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $0.13 $10.13 1.30%d $8,204 1.44%c
-- -- -- 0.18 10.18 1.80d 520 2.19c
-- -- -- 0.10 10.10 1.00d 256 2.19c
-- -- -- 0.13 10.13 1.30d 5,223 1.04c
-- -- -- 0.12 10.12 1.20d 2 1.54c
----------------------------------------------------------------------------------------------------
|
GROWTH OPPORTUNITIES FUND (continued)
RATIOS ASSUMING NO VOLUNTARY
WAIVER OF FEES OR
EXPENSE LIMITATIONS
----------------------------
RATIO RATIO
OF NET OF NET
INVESTMENT RATIO OF INVESTMENT
INCOME (LOSS) EXPENSES TO LOSS TO PORTFOLIO
TO AVERAGE AVERAGE NET AVERAGE TURNOVER
NET ASSETS ASSETS NET ASSETS RATE
-------------------------------------------------------------------------------------
FOR THE PERIOD ENDED AUGUST 31,
1999 - Class A Shares
(commenced May 24) (0.27)%c 14.15%c (12.98)%c 26.53%d
1999 - Class B Shares
(commenced May 24) (1.04)c 14.90c (13.75)c 26.53d
1999 - Class C Shares
(commenced May 24) (1.12)c 14.90c (13.83)c 26.53d
1999 - Institutional
Shares (commenced May
24) 0.39c 13.75c (12.32)c 26.53d
1999 - Service Shares
(commenced May 24) 0.03c 14.25c (12.68)c 26.53d
-------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares outstanding methodology.
[This page intentionally left blank]
MID CAP VALUE FUND
INCOME FROM
INVESTMENT OPERATIONS/A/
-------------------------
NET ASSET NET
VALUE, INVESTMENT NET REALIZED
BEGINNING INCOME AND UNREALIZED
OF PERIOD (LOSS) GAIN (LOSS)
------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST
31,
1999 - Class A Shares $18.38 $0.06 $1.71
1999 - Class B Shares 18.29 (0.04) 1.71
1999 - Class C Shares 18.30 (0.04) 1.71
1999 - Institutional Shares 18.37 0.09 1.72
1999 - Service Shares 18.29 0.05 1.70
------------------------------------------------------------------------------
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 21.61 0.10 (2.38)
1999 - Class B Shares 21.57 (0.05) (2.35)
1999 - Class C Shares 21.59 (0.05) (2.34)
1999 - Institutional Shares 21.65 0.19 (2.38)
1999 - Service Shares 21.62 0.03 (2.31)
------------------------------------------------------------------------------
1998 - Class A Shares (commenced August
15, 1997) 23.63 0.09 0.76
1998 - Class B Shares (commenced August
15, 1997) 23.63 0.06 0.74
1998 - Class C Shares (commenced August
15, 1997) 23.63 0.06 0.76
1998 - Institutional Shares 18.73 0.16 5.66
1998 - Service Shares (commenced July 18,
1997) 23.01 0.09 1.40
------------------------------------------------------------------------------
1997 - Institutional Shares 15.91 0.24 3.77
------------------------------------------------------------------------------
FOR THE PERIOD ENDED JANUARY 31,
1996 - Institutional Shares (commenced
August 1, 1995) 15.00 0.13 0.90
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
DISTRIBUTIONS TO SHAREHOLDERS
--------------------------------------
IN EXCESS NET INCREASE NET ASSETS RATIO OF
FROM NET OF NET (DECREASE) NET ASSET AT END OF NET EXPENSES
INVESTMENT INVESTMENT FROM NET IN NET ASSET VALUE, END TOTAL PERIOD TO AVERAGE
INCOME INCOME REALIZED GAINS VALUE OF PERIOD RETURNB (IN 000S) NET ASSETS
-------------------------------------------------------------------------------------------------
$ -- $ -- $(1.73) $ 0.04 $18.42 9.04%d $49,081 1.29%c
-- -- (1.73) (0.06) 18.23 8.53d 31,824 2.04c
-- -- (1.73) (0.06) 18.24 8.52d 9,807 2.04c
-- -- (1.73) 0.08 18.45 9.26d 190,549 0.89c
-- -- (1.73) 0.02 18.31 8.97d 190 1.39c
-------------------------------------------------------------------------------------------------
(0.07) -- (0.88) (3.23) 18.38 (10.48) 70,578 1.33
-- -- (0.88) (3.28) 18.29 (11.07) 37,821 1.93
(0.02) -- (0.88) (3.29) 18.30 (11.03) 10,800 1.93
(0.21) -- (0.88) (3.28) 18.37 (10.07) 196,512 0.87
(0.17) -- (0.88) (3.33) 18.29 (10.48) 289 1.37
-------------------------------------------------------------------------------------------------
(0.06) (0.04) (2.77) (2.02) 21.61 3.42d 90,588 1.35c
(0.09) -- (2.77) (2.06) 21.57 3.17d 28,743 1.85c
(0.09) -- (2.77) (2.04) 21.59 3.27d 6,445 1.85c
(0.13) -- (2.77) 2.92 21.65 30.86 236,440 0.85
(0.11) -- (2.77) (1.39) 21.62 6.30d 8 1.35c
-------------------------------------------------------------------------------------------------
(0.24) (0.93) (0.02) 2.82 18.73 25.63 145,253 0.85
-------------------------------------------------------------------------------------------------
(0.12) -- -- 0.91 15.91 6.89d 135,671 0.85c
-------------------------------------------------------------------------------------------------
|
MID CAP VALUE FUND (continued)
RATIOS ASSUMING NO
EXPENSE LIMITATIONS
--------------------------
RATIO OF
NET
INVESTMENT RATIO OF
INCOME RATIO OF NET INVESTMENT
(LOSS) TO EXPENSES TO INCOME (LOSS) PORTFOLIO
AVERAGE NET AVERAGE NET TO AVERAGE NET TURNOVER
ASSETS ASSETS ASSETS RATE
------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD
ENDED AUGUST 31,
1999 - Class A Shares 0.43%c 1.37%c 0.35%c 68.84%d
1999 - Class B Shares (0.33)c 2.12c (0.41)c 68.84d
1999 - Class C Shares (0.34)c 2.12c (0.42)c 68.84d
1999 - Institutional Shares 0.79c 0.97c 0.71c 68.84d
1999 - Service Shares 0.38c 1.47c 0.30c 68.84d
------------------------------------------------------------------------------
FOR THE YEARS ENDED JANUARY
31,
1999 - Class A Shares 0.38 1.41 0.30 92.18
1999 - Class B Shares (0.22) 2.01 (0.30) 92.18
1999 - Class C Shares (0.22) 2.01 (0.30) 92.18
1999 - Institutional Shares 0.83 0.95 0.75 92.18
1999 - Service Shares 0.32 1.45 0.24 92.18
------------------------------------------------------------------------------
1998 - Class A Shares
(commenced August 15, 1997) 0.33c 1.47c 0.21c 62.60
1998 - Class B Shares
(commenced August 15, 1997) (0.20)c 1.97c (0.32)c 62.60
1998 - Class C Shares
(commenced August 15, 1997) (0.23)c 1.97c (0.35)c 62.60
1998 - Institutional Shares 0.78 0.97 0.66 62.60
1998 - Service Shares
(commenced July 18, 1997) 0.63c 1.43c 0.51c 62.60
------------------------------------------------------------------------------
1997 - Institutional Shares 1.35 0.91 1.29 74.03
------------------------------------------------------------------------------
FOR THE PERIOD ENDED JANUARY
31,
1996 - Institutional Shares
(commenced August 1, 1995) 1.67c 0.98c 1.54c 58.77d
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
[This page intentionally left blank]
SMALL CAP VALUE FUND
INCOME (LOSS) FROM
INVESTMENT OPERATIONS/A/
------------------------------
NET ASSET
VALUE, NET NET REALIZED AND
BEGINNING INVESTMENT UNREALIZED
OF PERIOD INCOME (LOSS) GAIN (LOSS)
------------------------------------------------------------------------------
FOR THE SEVEN-MONTH PERIOD ENDED
AUGUST 31,
1999 - Class A Shares $18.51 $(0.05) $1.34
1999 - Class B Shares 18.10 (0.12) 1.29
1999 - Class C Shares 18.12 (0.11) 1.27
1999 - Institutional Shares 18.62 -- 1.33
1999 - Service Shares 18.50 (0.13) 1.39
------------------------------------------------------------------------------
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 24.05 (0.06) (4.48)
1999 - Class B Shares 23.73 (0.21) (4.42)
1999 - Class C Shares 23.73 (0.18) (4.43)
1999 - Institutional Shares 24.09 0.03 (4.50)
1999 - Service Shares 24.05 (0.04) (4.51)
------------------------------------------------------------------------------
1998 - Class A Shares 20.91 0.14 5.33
1998 - Class B Shares 20.80 (0.01) 5.27
1998 - Class C Shares (commenced
August 15, 1997) 24.69 (0.06) 1.43
1998 - Institutional Shares
(commenced August 15, 1997) 24.91 0.03 1.48
1998 - Service Shares (commenced
August 15, 1997) 24.91 (0.01) 1.48
------------------------------------------------------------------------------
1997 - Class A Shares 17.29 (0.21) 4.92
1997 - Class B Shares (commenced May
1, 1996) 20.79 (0.11) 1.21
------------------------------------------------------------------------------
1996 - Class A Shares 16.14 (0.23) 1.39
------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
APPENDIX B
DISTRIBUTIONS TO
SHAREHOLDERS
----------------------------
IN EXCESS NET INCREASE NET ASSET NET ASSETS RATIO OF
OF NET (DECREASE) VALUE, AT END OF NET EXPENSES
INVESTMENT FROM NET IN NET ASSET END OF TOTAL PERIOD TO AVERAGE
INCOME REALIZED GAINS VALUE PERIOD RETURN/B/ (IN 000S) NET ASSETS
-----------------------------------------------------------------------------------------
$ -- $ -- $1.29 $19.80 6.97%d $210,500 1.50%c
-- -- 1.17 19.27 6.46d 37,386 2.25c
-- -- 1.16 19.28 6.40d 8,079 2.25c
-- -- 1.33 19.95 7.14d 27,023 1.10c
-- -- 1.26 19.76 6.81d 57 1.60c
-----------------------------------------------------------------------------------------
-- (1.00) (5.54) 18.51 (17.37) 261,661 1.50
-- (1.00) (5.63) 18.10 (18.00) 42,879 2.25
-- (1.00) (5.61) 18.12 (17.91) 8,212 2.25
-- (1.00) (5.47) 18.62 (17.04) 15,351 1.13
-- (1.00) (5.55) 18.50 (17.41) 261 1.62
-----------------------------------------------------------------------------------------
-- (2.33) 3.14 24.05 26.17 370,246 1.54
-- (2.33) 2.93 23.73 25.29 42,677 2.29
(0.34) (1.99) (0.96) 23.73 5.51d 5,604 2.09c
(0.28) (2.05) (0.82) 24.09 6.08d 14,626 1.16c
(0.31) (2.02) (0.86) 24.05 5.91d 2 1.45c
-----------------------------------------------------------------------------------------
-- (1.09) 3.62 20.91 27.28 212,061 1.60
-- (1.09) 0.01 20.80 5.39d 3,674 2.35c
-----------------------------------------------------------------------------------------
-- (0.01) 1.15 17.29 7.20 204,994 1.41
-----------------------------------------------------------------------------------------
|
SMALL CAP VALUE FUND (continued)
RATIOS ASSUMING NO VOLUNTARY
WAIVER OF FEES OR
EXPENSE LIMITATIONS
-----------------------------------
RATIO OF RATIO OF
NET INVESTMENT RATIO OF NET INVESTMENT
INCOME (LOSS) TO EXPENSES TO INCOME (LOSS) PORTFOLIO
AVERAGE NET AVERAGE NET TO AVERAGE NET TURNOVER
ASSETS ASSETS ASSETS RATE
-----------------------------------------------------------------------------------------------
FOR THE SEVEN-MONTH
PERIOD ENDED AUGUST 31,
1999 - Class A Shares (0.35)%c 1.61%c (0.46)%c 46.95%d
1999 - Class B Shares (1.10)c 2.36c (1.21)c 46.95d
1999 - Class C Shares (1.10)c 2.36c (1.21)c 46.95d
1999 - Institutional
Shares 0.05c 1.21c (0.06)c 46.95d
1999 - Service Shares (0.41)c 1.71c (0.52)c 46.95d
-----------------------------------------------------------------------------------------------
FOR THE YEARS ENDED
JANUARY 31,
1999 - Class A Shares (0.24) 1.74 (0.48) 98.46
1999 - Class B Shares (0.99) 2.29 (1.03) 98.46
1999 - Class C Shares (0.99) 2.29 (1.03) 98.46
1999 - Institutional
Shares 0.13 1.17 0.09 98.46
1999 - Service Shares (0.47) 1.66 (0.51) 98.46
-----------------------------------------------------------------------------------------------
1998 - Class A Shares (0.28) 1.76 (0.50) 84.81
1998 - Class B Shares (0.92) 2.29 (0.92) 84.81
1998 - Class C Shares
(commenced August
15, 1997) (0.79)c 2.09c (0.79)c 84.81
1998 - Institutional
Shares (commenced
August 15, 1997) 0.27c 1.16c 0.27c 84.81
1998 - Service Shares
(commenced August 15,
1997) (0.07)c 1.45c (0.07)c 84.81
-----------------------------------------------------------------------------------------------
1997 - Class A Shares (0.72) 1.85 (0.97) 99.46
1997 - Class B Shares
(commenced May 1, 1996) (1.63)c 2.35c (1.63)c 99.46
-----------------------------------------------------------------------------------------------
1996 - Class A Shares (0.59) 1.66 (0.84) 57.58
-----------------------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
Appendix C
Prior Performance of Similarly Advised Accounts of the Investment Adviser
CORE LARGE CAP VALUE FUND
The following table sets forth the Investment Adviser's composite perfor- mance data relating to the historical performance of all discretionary pri- vate accounts managed by the Investment Adviser that have investment objec- tives, policies, and strategies substantially similar to the CORE Large Cap Value Fund. The information is provided to illustrate the past performance of the Investment Adviser in managing substantially similar accounts as mea- sured against the Russell 1000 Value Index and does not represent the per- formance of the CORE Large Cap Value Fund. Investors should not consider this performance data as a substitute for the performance of the CORE Large Cap Value Fund nor should investors consider this data as an indication of future performance of the CORE Large Cap Value Fund or of the Investment Adviser. The Russell 1000 Value Index is unmanaged and investors cannot invest directly in the Index.
PRIVATE RUSSELL
ACCOUNT NET 1000
COMPOSITE VALUE
PERFORMANCE INDEX
----------------------------------------------------------------------------
1998 11.40 % 15.64 %
1997 32.59 % 35.18 %
1996 26.41 % 21.64 %
1995 37.92 % 38.35 %
1994 (2.17)% (2.01)%
1993 16.90 % 18.12 %
8/1/92-12/31/92 5.39 % 4.01 %
----------------------------------------------------------------------------
|
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED 12/31/98
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS (8/1/92)
----------------------------------------------------------------------------
Private Account Net Composite Performance 11.40% 23.13% 20.30% 19.30%
Russell 1000 Value Index 15.64% 23.88% 20.85% 19.68%
----------------------------------------------------------------------------
|
The Investment Adviser's composite performance information was calculated on a time-weighted and asset-weighted total return basis which includes real- ized and unrealized gains and losses plus income, as recommended by the Association for
Investment Management and Research ("AIMR"). The composite performance is net of applicable investment management fees, brokerage commissions, execu- tion costs and custodial fees, without provision for federal and state tax- es, if any. Total return performance of the CORE Large Cap Value Fund will be calculated in accordance with the regulations of the SEC. The SEC stan- dardized average annual total return is neither time-weighted nor asset- weighted and is determined for specified periods by computing the annualized percentage change in the value of an initial amount that is invested in a share class of the Fund at the maximum public offering price. Investors should be aware that the differences in methodology between AIMR and SEC requirements could result in different performance data for identical time periods.
All returns presented reflect the reinvestment of dividends and other earn- ings. The weighted-average expenses of the private accounts used in calcu- lating the Investment Adviser's net composite performance data were 0.59% annualized, which are lower than the estimated expenses of Service Shares of the CORE Large Cap Value Fund stated under "Fund Fees and Expenses" above. The performance of the private accounts would have been lower if they had been subject to the expenses of the CORE Large Cap Value Fund. In addition, the private accounts are not subject to the same diversification require- ments, specific tax restrictions and investment limitations imposed on the CORE Large Cap Value Fund by the Act and Subchapter M of the Code. Conse- quently, the performance results of the Investment Adviser's composite could have been adversely affected if the private accounts had been regulated as investment companies under the federal securities laws.
Appendix D
Prior Performance of Similarly Advised Accounts of the Investment Adviser
STRATEGIC GROWTH FUND
The following table sets forth the Investment Adviser's composite perfor- mance data relating to the historical performance of all discretionary pri- vate accounts managed by the Investment Adviser that have investment objec- tives, policies, and strategies substantially similar to the Strategic Growth Fund. The information is provided to illustrate the past performance of the Investment Adviser in managing substantially similar accounts as mea- sured against the S&P 500 Index and does not represent the performance of the Strategic Growth Fund. Investors should not consider this performance data as a substitute for the performance of the Strategic Growth Fund nor should investors consider this data as an indication of future performance of the Strategic Growth Fund or of the Investment Adviser. The S&P 500 Index is unmanaged and investors cannot invest directly in the Index.
PRIVATE ACCOUNT
NET COMPOSITE S&P 500
PERFORMANCE INDEX
--------------------------------------------------------------------------
1998 35.35% 28.57%
1997 41.14% 33.37%
1996 21.79% 22.95%
1995 28.07% 37.58%
1994 -1.69% 1.32%
1993 17.10% 10.08%
1992 9.22% 7.62%
1991 37.44% 30.47%
1990 -9.32% -3.05%
1989 33.82% 31.70%
1988 23.63% 16.61%
1987 5.34% 5.25%
1986 18.99% 18.67%
1985 37.98% 31.73%
1984 8.52% 6.19%
1983 34.41% 22.56%
1982 34.43% 21.55%
1981 1.02% -4.97%
--------------------------------------------------------------------------
|
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIOD ENDED 12/31/98
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS (1/1/81)
-------------------------------------------------------------------------
Private Account Net Composite
Performance 35.35% 32.51% 23.98% 20.11% 19.96%
S&P 500 Index 28.57% 28.23% 24.06% 19.22% 16.94%
-------------------------------------------------------------------------
|
The Investment Adviser's composite performance information was calculated on a time-weighted and asset-weighted total return basis which includes real- ized and unrealized gains and losses plus income, as recommended by the Association for Investment Management and Research ("AIMR"). The composite performance is net of applicable investment management fees, brokerage com- missions, execution costs and custodial fees, without provision for federal and state taxes, if any. Total return performance of the Strategic Growth Fund will be calculated in accordance with the regulations of the SEC. The SEC standardized average annual total return is neither time-weighted nor asset-weighted and is determined for specified periods by computing the annualized percentage change in the value of an initial amount that is invested in a share class of the Fund at the maximum public offering price. Investors should be aware that the differences in methodology between AIMR and SEC requirements could result in different performance data for identi- cal time periods.
All returns presented reflect the reinvestment of dividends and other earn- ings. The weighted-average expenses of the private accounts used in calcu- lating the Investment Adviser's net composite performance data were 0.76% annualized, which are lower than the estimated expenses of Service Shares of the Strategic Growth Fund stated under "Fund Fees and Expenses" above. The performance of the private accounts would have been lower if they had been subject to the expenses of the Strategic Growth Fund. In addition, the pri- vate accounts are not subject to the same diversification requirements, spe- cific tax restrictions and investment limitations imposed on the Strategic Growth Fund by the Act and Subchapter M of the Code. Consequently, the per- formance results of the Investment Adviser's composite could have been adversely affected if the private accounts had been regulated as investment companies under the federal securities laws.
Index
1 General Investment
Management Approach
3 Fund Investment Objectives
and Strategies
3 Goldman Sachs Balanced
Fund
5 Goldman Sachs Growth and
Income Fund
6 Goldman Sachs CORE Large
Cap Value Fund
7 Goldman Sachs CORE U.S.
Equity Fund
8 Goldman Sachs CORE Large
Cap Growth Fund
9 Goldman Sachs CORE Small
Cap Equity Fund
10 Goldman Sachs Capital
Growth Fund
11 Goldman Sachs Strategic
Growth Fund
12 Goldman Sachs Growth
Opportunities Fund
13 Goldman Sachs Mid Cap
Value Fund
14 Goldman Sachs Small Cap
Value Fund
15 Goldman Sachs Large Cap Value Fund
16 Other Investment Practices
and Securities
20 Principal Risks of the
Funds
24 Fund Performance
34 Fund Fees and Expenses
38 Service Providers
46 Dividends
48 Shareholder Guide
48 How To Buy Shares
51 How To Sell Shares
55 Taxation
57 Appendix A
Additional Information
on Portfolio Risks,
Securities and
Techniques
78 Appendix B
Financial Highlights
121 Appendix C
CORE Large Cap Value
Fund--Prior Performance
of Similarly Advised
Accounts of the
Investment Adviser
123 Appendix D
Strategic Growth Fund--
Prior Performance of
Similarly Advised
Accounts of the
Investment Adviser
|
Domestic Equity Funds
Prospectus (Service Shares)
FOR MORE INFORMATION
Annual/Semi-annual Report
Additional information about the Funds' investments is available in the Funds' annual and semi-annual reports to shareholders. In the Funds' annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the last fiscal year.
Statement of Additional Information
Additional information about the Funds and their policies is also available
in the Funds' Additional Statement. The Additional Statement is incorporated
by reference into this Prospectus (is legally considered part of this Pro-
spectus).
The Funds' annual and semi-annual reports, and the Additional Statement, are available free upon request by calling Goldman Sachs at 1-800-621-2550.
To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-621-2550
By mail - Goldman Sachs Funds, 4900 Sears Tower - 60th Floor, Chicago, IL
60606-6372
By e-mail - gs-funds@gs.com
On the Internet - Text-only versions of the Funds' documents are located
online and may be downloaded from:
SEC EDGAR database - http://www.sec.gov
You may review and obtain copies of Fund documents by visiting the SEC's
Public Reference Room in Washington, D.C. You may also obtain copies of Fund
documents, after paying a duplicating fee, by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102 or by electronic request to:
publicinfo@sec.gov. Information on the operation of the public reference
room may be obtained by calling the SEC at (202) 942-8090.
[LOGO OF GOLDMAN SACHS]
The Funds' investment company registration number is 811-5349.
CORESM is a service mark of Goldman, Sachs & Co.
EQDOMPROSVC
Prospectus
GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS
Class A, B
and C Shares
November 30, 1999
.Goldman Sachs
CORE/SM/
International
Equity Fund
.Goldman Sachs
International
Equity Fund
.Goldman Sachs
European
Equity Fund
.Goldman Sachs
Japanese
Equity Fund
.Goldman Sachs
International
Small Cap Fund
.Goldman Sachs
Emerging
Markets Equity
Fund
.Goldman Sachs
Asia Growth
Fund
[LOGO OF GOLDMAN SACHS]
THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A FUND IS NOT A BANK
DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN A FUND
INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
[ART]
NOT FDIC-INSURED May Lose Value No Bank Guarantee
General Investment Management Approach
Goldman Sachs Asset Management, a unit of the Investment Management Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser to the CORE International Equity Fund. Goldman Sachs Asset Management Interna- tional serves as investment adviser to International Equity, European Equi- ty, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds. Goldman Sachs Asset Management and Goldman Sachs Asset Management International are each referred to in this Prospectus as the "In- vestment Adviser."
ACTIVE INTERNATIONAL STYLE FUNDS
Goldman Sachs' Active International Investment Philosophy:
How the Investment Adviser Acts on
Belief Belief
----------------------------------------------------------------------------
.Equity markets are inefficient Seeks excess return through team
driven, research intensive and
bottom-up stock selection.
.Returns are variable Seeks to capitalize on variability
of market and regional returns
through asset allocation decisions.
.Corporate fundamentals ultimately Seeks to conduct rigorous, first-
drive share price hand research of business and
company management.
.A business' intrinsic value will be Seeks to realize value through a
achieved over time long-term investment horizon.
.Portfolio risk must be carefully Seeks to systematically monitor and
analyzed and monitored manage risk through diversification,
multifactor risk models and currency
management.
|
The Investment Adviser attempts to manage risk in these Funds through disci- plined portfolio construction and continual portfolio review and analysis. As a result, bottom-up stock selection, driven by fundamental research, should be a main driver of returns.
QUANTITATIVE ("CORE") STYLE FUNDS
Goldman Sachs' CORE Investment Philosophy:
Goldman Sachs' quantitative style of funds--CORE--emphasizes the two build-
ing blocks of active management: stock selection and portfolio construction.
I. CORE STOCK SELECTION
The CORE Fund uses the Goldman Sachs proprietary multifactor model
("Multifactor Model"), a rigorous computerized rating system, to forecast
the returns of securities held in the Fund's portfolio. The Multifactor
Model incorporates common variables covering measures of:
.Value (price-to-book, price-to-earnings, cash flow to enterprise value)
.Momentum (earnings momentum, price momentum, sustainable growth)
.Risk (market risk, company-specific risk, earnings risk)
All of the above factors are carefully evaluated within the Multifactor Model since each has demonstrated a significant impact on the performance of the securities and markets they were designed to forecast.
II. CORE PORTFOLIO CONSTRUCTION
A proprietary computer optimizer calculates every security combination (at every possible weighting) to construct the most efficient risk/return port- folio given the CORE Fund benchmark. In this process, the Investment Adviser manages risk by limiting deviations from the benchmark. In addition, the CORE International Equity Fund utilizes proprietary quantitative models to allocate assets across countries.
Goldman Sachs CORE Funds are fully invested, broadly diversified and offer consistent overall portfolio characteristics. They may serve as good founda- tions on which to build a portfolio.
Fund Investment Objectives and Strategies
Goldman Sachs CORE International Equity Fund
Objective: Long-term growth of capital
Benchmarks: MSCI Europe, Australasia, Far East ("EAFE") Index
(unhedged)
Investment Focus: Large-capitalization equity securities of companies that are organized outside the United States or whose securi- ties are primarily traded outside the United States
Investment Style: Quantitative
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of large-cap companies that are organized outside the United States or whose securities are principally traded outside the United States.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of companies that are organized outside the United States or whose securities are principally traded outside the United States.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time, provided the Fund's assets are invested in at least three foreign countries. The Fund may invest in the securities of issuers in countries with emerging markets or economies ("emerging countries").
The Fund seeks broad representation of large-cap issuers across major coun- tries and sectors of the international economy. The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintain- ing risk, style, capitalization and industry characteristics similar to the EAFE Index. In addition, the Fund seeks a portfolio composed of companies with attractive valuations and stronger momentum characteristics than the EAFE Index.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered to be cash equivalents.
Goldman Sachs International Equity Fund
Long-term capital appreciation
Objective:
Benchmark: MSCI EAFE Index (unhedged)
Equity securities of companies organized outside the
Investment Focus: United States or whose securities are principally traded
outside the United States
Active International
Investment Style:
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of companies that are organized outside the United States or whose securities are principally traded outside the United States. The Fund intends to invest in companies with public stock market capitalizations that are larger than $1 billion at the time of investment.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time provided that the Fund's assets are invested in at least three foreign countries.
The Fund expects to invest a substantial portion of its assets in the secu- rities of issuers located in the developed countries of Western Europe and in Japan. However, the Fund may also invest in the securities of issuers located in Australia, Canada, New Zealand and in emerging countries. Cur- rently, emerging countries include, among others, most Latin American, Afri- can, Asian and Eastern European nations.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs European Equity Fund
Objective: Long-term capital appreciation
Benchmark: MSCI Europe Index (unhedged)
Investment Focus: Equity securities of European companies
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of European companies. Because of its focus, the Fund will be more susceptible to European economic, market, political and local risks than a fund that is more geographically diversified.
A European issuer is a company that either:
.Has a class of its securities whose principal securities markets is in a
European country;
.Is organized under the laws of, or has a principal office in, a European
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more of the European countries; or
.Maintains 50% or more of its assets in one or more of the European coun-
tries.
The Fund may allocate its assets among different countries as determined by the Investment Adviser from time to time, provided that the Fund's assets are invested in at least three European countries. It is currently antici- pated that a majority of the Fund's assets will be invested in the equity securities of large cap companies located in the developed countries of Western Europe. However, the Fund may also invest, without limit, in mid cap companies and small cap companies, as well as companies located in emerging countries. Currently, emerging countries include among others, most Latin American, African, Asian, most Eastern European nations, including the states that formerly comprised the Soviet Union and Yugoslavia.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of non-European countries and in fixed-income securities, such as government, corporate and bank debt obligations.
Goldman Sachs Japanese Equity Fund
Long-term capital appreciation Objective:
Tokyo Price Index ("TOPIX") (unhedged) Benchmark:
Equity securities of Japanese companies Investment Focus:
Active International Investment Style:
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
Japanese companies. A Japanese issuer is a company that either:
.Has a class of its securities whose principal securities markets is in
Japan;
.Is organized under the laws of, or has a principal office in Japan;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in Japan; or
.Maintains 50% or more of its assets in Japan.
The Fund's concentration in Japanese companies will expose it to the risk of adverse social, political and economic events which occur in Japan or affect the Japanese markets.
Japan's economy, the second largest in the world, has grown substantially over the last three decades. Japan's economic growth in the 1990's has been substantially below the level of earlier decades. Its economy has drifted between modest growth and recession. In calendar year 1998, Japan's gross national product contracted by 2.8% -- its worst performance in the post-war period. In addition to this economic downturn, Japan is undergoing struc- tural adjustments related to high wages and taxes, currency valuations and structural rigidities. Japan has also been experiencing notable uncertainty and loss of public confidence in connection
FUND INVESTMENT OBJECTIVES AND STRATEGIES
with the reform of its political process and the deregulation of its econo- my. These conditions present risks to the Japanese Equity Fund and its abil- ity to attain its investment objective.
Japan's economy is heavily dependent upon international trade, and is espe- cially sensitive to trade barriers and disputes. In particular, Japan relies on large imports of agricultural products, raw materials and fuels. A sub- stantial rise in world oil or commodity prices, or a fall-off in Japan's manufactured exports, could be expected to adversely affect Japan's economy. In addition, Japan is vulnerable to earthquakes, volcanoes and other natural disasters. Japan's banking industry has recently suffered from non-perform- ing loans, declining real estate values and lower valuations of securities holdings.
The Japanese securities markets are less regulated than the U.S. markets. Evidence has emerged from time to time of distortion of market prices to serve political or other purposes. Shareholders' rights are also not always equally enforced.
For most of this decade, Japanese securities markets have experienced sig- nificant declines. Although the stock market exhibited some strength recent- ly, it is not possible to determine whether this will continue.
The common stocks of many Japanese companies trade at high price-earnings ratios. Differences in accounting methods make it difficult to compare the earnings of Japanese companies with those of companies in other countries, especially the United States. In general, however, reported net income in Japan is understated relative to U.S. accounting standards and this is one reason price-earnings ratios of the stocks of Japanese companies have tended historically to be higher than those of U.S. stocks. In addition, Japanese companies have tended to have higher growth rates than U.S. companies, and Japanese interest rates have generally been lower than U.S. interest rates. These factors have contributed to lower discount rates and higher price- earnings ratios in Japan than in the United States.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of non-Japanese companies and in fixed-income securities, such as government, corporate and bank debt obligations.
Goldman Sachs International Small Cap Fund
Objective: Long-term capital appreciation
Benchmark: MSCI EAFE Small Cap Index (unhedged)
Investment Focus: Equity securities of foreign companies with public stock
market capitalizations of $1 billion or less at the time
of investment
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
companies:
.With public stock market capitalizations of $1 billion or less at the time
of investment; and
.That are organized outside the United States or whose securities are prin-
cipally traded outside the United States.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time provided that the Fund's assets are invested in at least three foreign countries. The Fund expects to invest a substantial portion of its assets in small cap securities of companies in the developed countries of Western Europe, Japan and Asia. However, the Fund may also invest in the securities of issuers located in Australia, Canada, New Zealand and in emerging countries. Currently, emerging countries include, among others, most Latin American, African, Asian and Eastern Euro- pean nations.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of larger-cap companies with public stock market capital- izations of more than $1 billion at the time of investment and in fixed- income securities, such as government, corporate and bank debt obligations. If the market capitalization of a company held by the Fund increases above $1 billion, the Fund may, consistent with its investment objective, continue to hold the security.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs Emerging Markets Equity Fund
Objective: Long-term capital appreciation
Benchmark: MSCI Emerging Markets Free Index
Investment Focus: Equity securities of emerging country issuers
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of emerging country issuers. The Investment Adviser may consider classifica- tions by the World Bank, the International Finance Corporation or the United Nations and its agencies in determining whether a country is emerging or developed. Currently, emerging countries include, among others, most Latin American, African, Asian and Eastern European nations. The Investment Adviser currently intends that the Fund's investment focus will be in the following emerging countries as well as any other emerging country to the extent that foreign investors are permitted by applicable law to make such investments:
.Argentina .Egypt .Jordan .Philippines .Sri Lanka .Botswana .Greece .Kenya .Poland .Taiwan .Brazil .Hong Kong .Malaysia .Portugal .Thailand .Chile .Hungary .Mexico .Russia .Turkey .China .India .Morocco .Singapore .Venezuela .Colombia .Indonesia .Pakistan .South Africa .Zimbabwe .Czech Republic .Israel .Peru .South Korea |
Goldman Sachs Emerging Markets Equity Fund continued
An emerging country issuer is any company that either:
.Has a class of its securities whose principal securities market is in an
emerging country;
.Is organized under the laws of, or has a principal office in, an emerging
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more emerging countries; or
.Maintains 50% or more of its assets in one or more of the emerging coun-
tries.
Under normal circumstances, the Fund maintains investments in at least six emerging countries, and will not invest more than 35% of its total assets in securities of issuers in any one emerging country. Allocation of the Fund's investments will depend upon the relative attractiveness of the emerging country markets and particular issuers. In addition, macro-economic factors and the portfolio managers' and Goldman Sachs economists' views of the rela- tive attractiveness of emerging countries and currencies are considered in allocating the Fund's assets among emerging countries.
Other. The Fund may invest in the aggregate up to 35% of its total assets in
(i) fixed-income securities of private and government emerging country
issuers; and (ii) equity and fixed-income securities, such as government,
corporate and bank debt obligations, of issuers in developed countries.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs Asia Growth Fund
Objective: Long-term capital appreciation
Benchmark: MSCI All County Asia Free ex-Japan Index (unhedged)
Investment Focus: Equity securities of companies in Asian countries
Investment Process: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
Asian issuers.
An Asian issuer is any company that either:
.Has a class of its securities whose principal securities markets is in one
or more Asian countries;
.Is organized under the laws of, or has a principal office in, an Asian
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more Asian countries; or
.Maintains 50% or more of its assets in one or more Asian countries.
The Fund may allocate its assets among the Asian countries as determined from time to time by the Investment Adviser. For purposes of the Fund's investment policies, Asian countries are:
.China .Malaysia .South Korea .Hong Kong .Pakistan .Sri Lanka .India .Philippines .Taiwan .Indonesia .Singapore .Thailand |
as well as any other country in Asia (other than Japan) to the extent that foreign investors are permitted by applicable law to make such investments.
Goldman Sachs Asia Growth Fund continued
Allocation of the Fund's investments will depend upon the Investment Advis- er's views of the relative attractiveness of the Asian markets and particu- lar issuers.
Concentration of the Fund's assets in one or a few of the Asian countries and Asian currencies will subject the Fund to greater risks than if the Fund's assets were not so concentrated. For example, on August 31, 1999 (the end of the Fund's last fiscal year), more than 25% of the Fund's assets were invested in securities that traded in Hong Kong.
Starting in mid-1997 some Pacific region countries began to experience cur- rency devaluations that resulted in high interest rate levels and sharp reductions in economic activity. This situation resulted in a significant drop in the securities prices of companies located in the region. Some coun- tries have experienced government intervention, have sought assistance from the International Monetary Fund and have experienced substantial domestic unrest. Although some countries are taking steps to restructure their finan- cial sectors in a manner that may facilitate a return to long-term economic growth, there can be no assurance that these efforts will be successful or that their current problems will not persist. At the end of its last fiscal year, a substantial portion of the Asia Growth Fund was invested in securi- ties traded in the Hong Kong market. In 1997, the sovereignty of Hong Kong reverted from the United Kingdom to China. Hong Kong's financial prospects depend, in large part, on its ability to retain the legal, financial and monetary systems that allow economic freedom and market expansion. Although Hong Kong is, by law, to maintain a high degree of autonomy, there can also be no assurance that the general economic position of Hong Kong will not be adversely affected as a result of the exercise of Chinese sovereignty over Hong Kong. In particular, business confidence in Hong Kong can be signifi- cantly affected by political developments and statements by public figures in China, which can in turn affect the performance of the securities mar- kets. In addition, the reversion of Hong Kong to China has created uncer- tainty as to future currency valuations relative to the U.S. dollar. Any future valuation changes could be adverse from the perspective of U.S. investors.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of issuers in non-Asian countries and Japan, and in fixed- income securities, such as government, corporate and bank debt obligations.
[This page intentionally left blank]
Other Investment Practices and Securities
The table below identifies some of the investment techniques that may (but are
not required to) be used by the Funds in seeking to achieve their investment
objectives. The table also highlights the differences among the Funds in their
use of these techniques and other investment practices and investment securi-
ties. Numbers in this table show allowable usage only; for actual usage, con-
sult the Fund's annual/semi-annual reports. For more information see Appendix
A.
10 Percent of total assets (italic type) 10 Percent of net assets (roman type) . No specific percentage limitation on usage; limited only by the CORE objectives and strategies of the International International European Fund Equity Equity Equity -- Not permitted Fund Fund Fund ------------------------------------------------------------------------------ Investment Practices Borrowings 33 1/3 33 1/3 33 1/3 Cross Hedging of Currencies . . . Currency Swaps* 15 15 15 Custodial Receipts . . . Equity Swaps* 15 15 15 Foreign Currency Transactions . . . Futures Contracts and Options on Futures Contracts . . . Investment Company Securities (including World Equity Benchmark Shares and Standard & Poor's Depository Receipts) 10 10 10 Options on Foreign Currencies/1/ . . . Options on Securities and Securities Indices/2/ . . . Unseasoned Companies . . . Warrants and Stock Purchase Rights . . . Repurchase Agreements . . . Securities Lending 33 1/3 33 1/3 33 1/3 Short Sales Against the Box -- 25 25 When-Issued Securities and Forward Commitments . . . ------------------------------------------------------------------------------ |
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 1 The Funds may purchase and sell call and put options. 2 The Funds may sell covered call and put options and purchase call and put options.
OTHER INVESTMENT PRACTICES AND SECURITIES
Japanese International Emerging Asia
Equity Small Cap Markets Growth
Fund Fund Equity Fund Fund
------------------------------------------------------------------------------------------------
33 1/3 33 1/3 33 1/3 33 1/3
. . . .
15 15 15 15
. . . .
15 15 15 15
. . . .
. . . .
10 10 10 10
. . . .
. . . .
. . . .
. . . .
. . . .
33 1/3 33 1/3 33 1/3 33 1/3
25 25 25 25
. . . .
------------------------------------------------------------------------------------------------
|
10 Percent of total assets (italic type) 10 Percent of net assets (roman type) . No specific percentage limitation on CORE usage; limited only by the objectives International International European and strategies of the Fund Equity Equity Equity -- Not permitted Fund Fund Fund ------------------------------------------------------------------------------ Investment Securities American, European and Global Depository Receipts . . . Asset-Backed and Mortgage-Backed Securities/2/ -- . . Bank Obligations/1/,/2/ . . . Convertible Securities . . . Corporate Debt Obligations/2/ ./4/ . . Equity Securities 90+ 65+ 65+ Emerging Country Securities 25 . . Fixed Income Securities/3/ 10/4/ 35 35/5/ Foreign Securities . . . Foreign Government Securities/2/ . . . Non-Investment Grade Fixed Income Securities/2/ -- ./6/ ./6/ Real Estate Investment Trusts . . . Structured Securities* . . . Temporary Investments 35 100 100 U.S. Government Securities/2/ . . . ------------------------------------------------------------------------------ |
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 1 Issued by U.S. or foreign banks.
2 Limited by the amount the Fund invests in fixed-income securities.
3 Except as noted under "Non-Investment Grade Fixed Income Securities," fixed-income securities are investment grade (e.g., BBB or higher by Stan- dard & Poor's Rating Group ("Standard & Poor's") or Baa or higher by Moody's Investor's Service, Inc. ("Moody's")).
4 Cash equivalents only.
5 The European Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) equity securities of non-European countries; and (2) fixed- income securities.
6 May be BB or lower by Standard & Poor's or Ba or lower by Moody's.
OTHER INVESTMENT PRACTICES AND SECURITIES
Japanese International Emerging
Equity Small Cap Markets Asia Growth
Fund Fund Equity Fund Fund
---------------------------------------------------------------------------------------------
. . . .
. . . .
. . . .
. . . .
. . . .
65+ 65+ 65+ 65+
. . . .
35/7/ 35/8/ 35/9/ 35/10/
. . . .
. . . .
./6/ ./6/ ./6/ ./6/
. . . .
. . . .
100 100 35 100
. . . .
---------------------------------------------------------------------------------------------
|
7 The Japanese Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities; and (2) equity securities of non- Japanese companies.
8 The International Small Cap Fund may invest in the aggregate up to 35% of its total assets in (1) fixed-income securities; and (2) equity securities of larger cap companies with public stock market capitalizations of more than $1 billion at the time of investment.
9 The Emerging Markets Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities of private and government emerging country issuers; and (2) equity and fixed-income securities of issuers in developed countries.
10 The Asia Growth Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities; and (2) equity securities of issuers in non-Asian countries and Japan.
Principal Risks of the Funds
Loss of money is a risk of investing in each Fund. An investment in a Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The following summarizes important risks that apply to the Funds and may result in a loss of your investment. None of the Funds should be relied upon as a complete investment program. There can be no assurance that a Fund will achieve its investment objective.
CORE International Emerging
. Applicable International International European Japanese Small Cap Markets Asia
--Not applicable Equity Equity Equity Equity Equity Equity Growth
-----------------------------------------------------------------------------------------------
Credit/Default . . . . . . .
Emerging Countries . . . . . . .
Interest Rate . . . . . . .
Small Cap -- -- . -- . -- --
Foreign . . . . . . .
Derivatives . . . . . . .
Management . . . . . . .
Market . . . . . . .
Liquidity . . . . . . .
Stock . . . . . . .
Geographic . . . . . . .
Other . . . . . . .
-----------------------------------------------------------------------------------------------
|
All Funds:
.Credit/Default Risk--The risk that an issuer of fixed-income securities held
by a Fund (which may have low credit ratings) may default on its obligation to
pay interest and repay principal.
.Emerging Countries Risk--The securities markets of Asian, Latin American,
Eastern European, African and other emerging countries are less liquid, are
especially subject to greater price volatility, have smaller market capital-
izations, have less government regulation and are not subject to as extensive
and frequent accounting, financial and other reporting requirements as the
securities markets of more developed countries. Further, investment in equity
securities of issuers located in Russia and certain other emerging countries
involves risk of loss resulting from problems in share registration and cus-
tody and substantial economic and political disrup-
PRINCIPAL RISKS OF THE FUNDS
tions. These risks are not normally associated with investment in more devel- oped countries.
.Interest Rate Risk--The risk that when interest rates increase, fixed-income securities held by a Fund will decline in value. Long-term fixed-income secu- rities will normally have more price volatility because of this risk than short-term securities.
.Foreign Risks--The risk that when a Fund invests in foreign securities, it
will be subject to risk of loss not typically associated with domestic
issuers. Loss may result because of less foreign government regulation, less
public information and less economic, political and social stability. Loss may
also result from the imposition of exchange controls, confiscations and other
government restrictions. A Fund will also be subject to the risk of negative
foreign currency rate fluctuations. Foreign risks will normally be greatest
when a Fund invests in issuers located in emerging countries.
.Derivatives Risk--The risk that loss may result from a Fund's investments in
options, futures, swaps, structured securities and other derivative instru-
ments. These instruments may be leveraged so that small changes may produce
disproportionate losses to a Fund.
.Management Risk--The risk that a strategy used by the Investment Adviser may
fail to produce the intended results.
.Market Risk--The risk that the value of the securities in which a Fund invests
may go up or down in response to the prospects of individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
.Liquidity Risk--The risk that a Fund will not be able to pay redemption pro-
ceeds within the time period stated in this Prospectus because of unusual mar-
ket conditions, an unusually high volume of redemption requests, or other rea-
sons. Funds that invest in small capitalization stocks and emerging country
issuers will be especially subject to the risk that during certain periods the
liquidity of particular issuers or industries, or all securities within these
investment categories, will shrink or disappear suddenly and without warning
as a result of adverse economic, market or political events, or adverse
investor perceptions whether or not accurate. The Goldman Sachs Asset Alloca-
tion Portfolios (the "Asset Allocation Portfolios") expect to invest a signif-
icant percentage of their assets in the Funds and other funds for which
Goldman Sachs now or in the future acts as investment adviser or underwriter.
Redemptions by an Asset Allocation Portfolio of its position in a Fund may
further increase liquidity risk and may impact a Fund's net asset value
("NAV").
.Stock Risk--The risk that stock prices have historically risen and fallen in
periodic cycles. As of the date of this Prospectus, U.S. stock markets and
certain foreign stock markets were trading at or close to record high levels.
There is no guarantee that such levels will continue.
.Geographic Risk--The European Equity Fund invests primarily in equity securi-
ties of European companies. The Japanese Equity Fund invests primarily in
equity securities of Japanese equity companies. The Asia Growth Fund invests
primarily in equity securities of Asian issuers. Concentration of the invest-
ments of these or other Funds in issuers located in a particular country or
region will subject the Fund, to a greater extent than if investments were
less concentrated, to the risks of adverse securities markets, exchange rates
and social, political, regulatory or economic events which may occur in that
country or region.
.Other Risks--Each Fund is subject to other risks, such as the risk that its
operations, or the value of its portfolio securities, will be disrupted by the
"Year 2000 Problem."
Specific Funds:
.Small Cap Stock Risk--The securities of small capitalization stocks involve greater risks than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements. Securities of such issuers may lack sufficient market liquidity to enable a Fund to effect sales at an advantageous time or without a substantial drop in price.
More information about the Funds' portfolio securities and investment tech- niques, and their associated risks, is provided in Appendix A. You should con- sider the investment risks discussed in this section and in Appendix A. Both are important to your investment choice.
Fund Performance
HOW THE FUNDS HAVE PERFORMED
The bar chart and table below provide an indication of the risks of invest- ing in a Fund by showing: (a) changes in the performance of a Fund's Class A Shares from year to year; and (b) how the average annual returns of a Fund's Class A, B and C Shares compare to those of broad-based securities market indices. The bar chart and table assume reinvestment of dividends and dis- tributions. A Fund's past performance is not necessarily an indication of how the Fund will perform in the future. The average annual total return calculation reflects a maximum initial sales charge of 5.5% for Class A Shares, the assumed contingent deferred sales charge ("CDSC") for Class B Shares (5% maximum declining to 0% after six years), and the assumed CDSC for Class C Shares (1% if redeemed within 12 months of purchase). The bar chart does not reflect the sales loads applicable to Class A Shares. If the sales loads were reflected, returns would be less. Performance reflects expense limitations in effect. If expense limitations were not in place, a Fund's performance would have been reduced. The European Equity, Japanese Equity and International Small Cap Funds did not commence operations until October 1, 1998, May 1, 1998 and May 1, 1998. Since these Funds have less than one calendar year's performance, no performance information is provided in this section.
CORE International Equity Fund TOTAL RETURN CALENDAR YEAR (CLASS A) -------------------------------------------------------------------------------- The total return for Class A Shares [BAR CHART] for the 9-month period ended 1998 September 30, ------ 1999 was 9.24%. 13.83% Best Quarter Q4 '98 +18.84% Worst Quarter Q3 '98 -16.00% |
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ---------------------------------------------------------------------------- Class A (Inception 8/15/97) Including Sales Charges 7.57% (4.09)% Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index* 20.33% 8.44% ---------------------------------------------------------------------------- Class B (Inception 8/15/97) Including CDSC 8.36% (3.41)% MSCI EAFE Index* 20.33% 8.44% ---------------------------------------------------------------------------- Class C (Inception 8/15/97) Including CDSC 12.34% (0.44)% MSCI EAFE Index* 20.33% 8.44% ---------------------------------------------------------------------------- |
* The unmanaged MSCI EAFE Index is a market capitalization-weighted composite of securities in 20 developed markets. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
International Equity Fund TOTAL RETURN CALENDAR YEAR (CLASS A) -------------------------------------------------------------------------------- The total return for Class A Shares [BAR CHART] for the 9-month period ended 1993 1994 1995 1996 1997 1998 September 30, ------ ------ ------ ------ ----- ------ 1999 was 7.61%. 20.74% -6.86% 18.93% 18.69% 4.47% 17.98% Best Quarter Q1 '98 +16.93% Worst Quarter Q3 '98 -14.37% |
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year 5 Years Since Inception ------------------------------------------------------------------------ Class A (Inception 12/1/92) Including Sales Charges 11.50% 8.90% 10.82% MSCI EAFE Index (unhedged)* 20.33% 9.49% 13.00% FT/S&P Actuaries Europe & Pacific Index (unhedged)** 19.31% 6.84% 9.67% ------------------------------------------------------------------------ Class B (Inception 5/1/96) Including CDSC 12.05% N/A 9.04% MSCI EAFE Index (unhedged)* 20.33% N/A 8.13% FT/S&P Actuaries Europe & Pacific Index (unhedged)** 19.31% N/A 6.60% ------------------------------------------------------------------------ Class C (Inception 8/15/97) Including CDSC 16.23% N/A 5.11% MSCI EAFE Index (unhedged)* 20.33% N/A 8.44% FT/S&P Actuaries Europe & Pacific Index (unhedged)** 19.31% N/A 6.71% ------------------------------------------------------------------------ |
* The MSCI EAFE Index, an unmanaged index of common stock prices, is replac- ing the FT/S&P Actuaries Europe & Pacific Index ("EuroPac") as the Interna- tional Equity Fund's performance benchmark. The MSCI EAFE Index is widely used throughout the investment management industry to represent the invest- ment opportunities available to a large-cap, developed country interna- tional equity strategy and, in the Investment Adviser's opinion, is a more appropriate benchmark against which to measure the performance of the International Equity Fund. The Index figures do not reflect any fees or expenses.
** The unmanaged FT/S&P EuroPac Index is a market capitalization-weighted com- posite of approximately 1,500 stocks from 20 countries in Europe and the Asia-Pacific region. From the inception of the Fund until 8/31/94, the Fund was managed using the hedged EuroPac as a benchmark, and after such date, the unhedged EuroPac as a benchmark. The Index figures do not reflect any fees or expenses.
Emerging Markets Equity Fund TOTAL RETURN CALENDAR YEAR (CLASS A) -------------------------------------------------------------------------------- The total return for Class A Shares [BAR CHART] for the 9-month period ended September 30, 1998 1999 ------- was 25.24%. -27.06% Best Quarter Q4 '98 +14.03% Worst Quarter Q3 '98 -22.94% |
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ------------------------------------------------------------------ Class A (Inception 12/15/97) Including Sales Charges (31.10)% (28.30)% MSCI Emerging Markets Free (EMF) Index* (25.33)% (19.87)% ------------------------------------------------------------------ Class B (Inception 12/15/97) Including CDSC (30.88)% (27.40)% MSCI EMF Index* (25.33)% (19.87)% ------------------------------------------------------------------ Class C (Inception 12/15/97) Including CDSC (27.82)% (24.36)% MSCI EMF Index* (25.33)% (19.87)% ------------------------------------------------------------------ |
* The unmanaged MSCI EMF Index is a market capitalization-weighted composite of securities in over 30 emerging markets countries. "Free" indicates an index that excludes shares in otherwise free markets that are not purchas- able by foreigners. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
Asia Growth Fund TOTAL RETURN CALENDAR YEAR (CLASS A) -------------------------------------------------------------------------------- The total return for Class A Shares [BAR CHART] for the 9-month |
period ended 1995 1996 1997 1998 September 30, -------- -------- -------- -------- 1999 6.55% 7.95% -41.07% -15.26% was 27.99%.
Best Quarter
Q4 '98 +21.59%
Worst Quarter
Q4 '97 -27.33%
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception --------------------------------------------------------------- Class A (Inception 7/8/94) Including Sales Charges (19.94)% (12.21)% MSCI All Country Asia Free ex-Japan* (10.27)% (11.22)% --------------------------------------------------------------- Class B (Inception 5/1/96) Including CDSC (19.93)% (25.86)% MSCI All Country Asia Free ex-Japan* (10.27)% (22.76)% --------------------------------------------------------------- Class C (Inception 8/15/97) Including CDSC (16.84)% (38.72)% MSCI All Country Asia Free ex-Japan* (10.27)% (36.20)% --------------------------------------------------------------- |
* The unmanaged MSCI All Country Asia Free ex-Japan Index is a market capi- talization-weighted composite of securities in ten Asian countries. "Free" indicates an index that excludes shares in otherwise free markets that are not purchasable by foreigners. The Index figures do not reflect any fees or expenses.
Fund Fees and Expenses (Class A, B and C Shares)
This table describes the fees and expenses that you would pay if you buy and hold Class A, Class B, or Class C Shares of a Fund.
CORE International
Equity Fund
-------------------------
Class A Class B Class C
----------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 0.85% 0.85% 0.85%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.41% 0.41% 0.41%
----------------------------------------------------------------------------
Total Fund Operating Expenses* 1.76% 2.26% 2.26%
----------------------------------------------------------------------------
|
See page 33 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be termi- nated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without share- holder approval.
CORE International
Equity Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 0.85% 0.85% 0.85%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.31% 0.31% 0.31%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.66% 2.16% 2.16%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
International Equity
Fund
-----------------------------------------
Class A Class B Class C
----------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.34% 0.34% 0.34%
----------------------------------------------------------------------------
Total Fund Operating Expenses* 1.84% 2.34% 2.34%
----------------------------------------------------------------------------
|
See page 33 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
International Equity
Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.29% 0.29% 0.29%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.79% 2.29% 2.29%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
European Equity Fund
---------------------------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.79% 0.79% 0.79%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 2.29% 2.79% 2.79%
--------------------------------------------------------------------------
|
See page 33 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
European Equity Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.29% 0.29% 0.29%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.79% 2.29% 2.29%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
Japanese Equity Fund
---------------------------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 1.12% 1.12% 1.12%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 2.62% 3.12% 3.12%
--------------------------------------------------------------------------
|
See page 33 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Japanese Equity Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.20% 0.20% 0.20%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.70% 2.20% 2.20%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
International Small Cap
Fund
---------------------------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.20% 1.20% 1.20%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.72% 0.72% 0.72%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 2.42% 2.92% 2.92%
--------------------------------------------------------------------------
|
See page 33 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
International Small Cap
Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.20% 1.20% 1.20%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.35% 0.35% 0.35%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 2.05% 2.55% 2.55%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
Emerging Markets Equity
Fund
---------------------------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.20% 1.20% 1.20%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.71% 0.71% 0.71%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 2.41% 2.91% 2.91%
--------------------------------------------------------------------------
|
See page 33 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Emerging Markets Equity
Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.20% 1.20% 1.20%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.34% 0.34% 0.34%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 2.04% 2.54% 2.54%
------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
Asia Growth Fund
---------------------------------------
Class A Class B Class C
--------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.77% 0.77% 0.77%
--------------------------------------------------------------------------
Total Fund Operating Expenses* 2.27% 2.77% 2.77%
--------------------------------------------------------------------------
|
See page 33 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Fund which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without shareholder approval.
Asia Growth Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/6/
Management Fees 1.00% 1.00% 1.00%
Distribution and Service Fees 0.50% 1.00% 1.00%
Other Expenses7 0.35% 0.35% 0.35%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.85% 2.35% 2.35%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
/1/The maximum sales charge is a percentage of the offering price. A CDSC of 1% is imposed on certain redemptions (within 18 months of purchase) of Class A Shares sold without an initial sales charge as part of an investment of $1 mil- lion or more.
/2/The maximum CDSC is a percentage of the lesser of the NAV at the time of the
redemption or the NAV when the shares were originally purchased.
/3/A CDSC is imposed upon Class B Shares redeemed within six years of purchase
at a rate of 5% in the first year, declining to 1% in the sixth year, and elim-
inated thereafter.
/4/A CDSC of 1% is imposed on Class C Shares redeemed within 12 months of pur-
chase.
/5/A transaction fee of $7.50 may be charged for redemption proceeds paid by
wire. In addition to free reinvestments of dividends and distributions in
shares of other Goldman Sachs Funds or shares of the Goldman Sachs Institu-
tional Liquid Assets Portfolios (the "ILA Portfolios") and free automatic
exchanges pursuant to the Automatic Exchange Program, six free exchanges are
permitted in each 12- month period. A fee of $12.50 may be charged for each
subsequent exchange during such period.
/6/The Funds' operating expenses for the current fiscal year have been
annualized for the seven-month period (February 1, 1999 through August 31,
1999).
/7/"Other Expenses" include transfer agency fees equal to 0.19% of the average
daily net assets of each Fund's Class A, B and C Shares, plus all other ordi-
nary expenses not detailed above. The Investment Adviser has voluntarily agreed
to reduce or limit certain "Other Expenses" (excluding management fees, distri-
bution and service fees, transfer agency fees, taxes, interest and brokerage
fees and litigation, indemnification and other extraordinary expenses) to the
following percentages of each Fund's average daily net assets:
Other
Fund Expenses
--------------------------
CORE
International
Equity 0.12%
International
Equity 0.10%
European Equity 0.10%
Japanese Equity 0.01%
International
Small Cap 0.16%
Emerging Markets
Equity 0.15%
Asia Growth 0.16%
|
Example
The following Example is intended to help you compare the cost of investing in a Fund (without expense limitations) with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in Class A, B or C Shares of a Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that a Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years ---------------------------------------------------------- CORE International Equity Class A Shares $719 $1,074 $1,452 $2,509 Class B Shares - Assuming complete redemption at end of period $729 $1,006 $1,410 $2,470 - Assuming no redemption $229 $ 706 $1,210 $2,470 Class C Shares - Assuming complete redemption at end of period $329 $ 706 $1,210 $2,595 - Assuming no redemption $229 $ 706 $1,210 $2,595 ---------------------------------------------------------- International Equity Class A Shares $727 $1,097 $1,491 $2,590 Class B Shares - Assuming complete redemption at end of period $737 $1,030 $1,450 $2,552 - Assuming no redemption $237 $ 730 $1,250 $2,552 Class C Shares - Assuming complete redemption at end of period $337 $ 730 $1,250 $2,676 - Assuming no redemption $237 $ 730 $1,250 $2,676 ---------------------------------------------------------- European Equity Class A Shares $769 $1,226 $1,708 $3,031 Class B Shares - Assuming complete redemption at end of period $782 $1,165 $1,674 $3,000 - Assuming no redemption $282 $ 865 $1,474 $3,000 Class C Shares - Assuming complete redemption at end of period $382 $ 865 $1,474 $3,119 - Assuming no redemption $282 $ 865 $1,474 $3,119 ---------------------------------------------------------- |
FUND FEES AND EXPENSES
Fund 1 Year 3 Years 5 Years 10 Years --------------------------------------------------------- Japanese Equity Class A Shares $801 $1,320 $1,864 $3,341 Class B Shares - Assuming complete redemption at end of period $815 $1,263 $1,835 $3,314 - Assuming no redemption $315 $ 963 $1,635 $3,314 Class C Shares - Assuming complete redemption at end of period $415 $ 963 $1,635 $3,430 - Assuming no redemption $315 $ 963 $1,635 $3,430 --------------------------------------------------------- International Small Cap Class A Shares $782 $1,263 $1,770 $3,155 Class B Shares - Assuming complete redemption at end of period $795 $1,204 $1,738 $3,125 - Assuming no redemption $295 $ 904 $1,538 $3,125 Class C Shares - Assuming complete redemption at end of period $395 $ 904 $1,538 $3,242 - Assuming no redemption $295 $ 904 $1,538 $3,242 --------------------------------------------------------- Emerging Markets Equity Class A Shares $781 $1,260 $1,765 $3,145 Class B Shares - Assuming complete redemption at end of period $794 $1,201 $1,733 $3,115 - Assuming no redemption $294 $ 901 $1,533 $3,115 Class C Shares - Assuming complete redemption at end of period $394 $ 901 $1,533 $3,233 - Assuming no redemption $294 $ 901 $1,533 $3,233 --------------------------------------------------------- Asia Growth Class A Shares $767 $1,220 $1,698 $3,012 Class B Shares - Assuming complete redemption at end of period $780 $1,159 $1,664 $2,980 - Assuming no redemption $280 $ 859 $1,464 $2,980 Class C Shares - Assuming complete redemption at end of period $380 $ 859 $1,464 $3,099 - Assuming no redemption $280 $ 859 $1,464 $3,099 --------------------------------------------------------- |
The hypothetical example assumes that a CDSC will not apply to redemptions of Class A Shares within the first 18 months. Class B Shares convert to Class A Shares eight years after purchase; therefore, Class A expenses are used in the hypothetical example after year eight.
Certain institutions that sell Fund shares and/or their salespersons may receive other compensation in connection with the sale and distribution of Class A, Class B and Class C Shares for services to their customers' accounts and/or the Funds. For additional information regarding such compensation, see "What Should I Know When I Purchase Shares Through An Authorized Dealer?"
Service Providers
INVESTMENT ADVISERS
Investment Adviser Fund
------------------------------------------------------------------------
Goldman Sachs Asset Management ("GSAM") CORE International Equity
32 Old Slip
New York, New York 10005
------------------------------------------------------------------------
Goldman Sachs Asset Management International
("GSAMI") International Equity
133 Peterborough Court European Equity
London, England EC4A 2BB Japanese Equity
International Small Cap
Emerging Markets Equity
Asia Growth
------------------------------------------------------------------------
|
As of September 1, 1999, the Investment Management Division ("IMD") was established as a new operating division of Goldman Sachs. This newly created entity includes GSAM and GSAMI. Goldman Sachs registered as an investment adviser in 1981. GSAMI, a member of the Investment Management Regulatory Organization Limited since 1990 and a registered investment adviser since 1991, is an affiliate of Goldman Sachs. The Goldman Sachs Group, L.P., which controlled the Investment Advisers, merged into the Goldman Sachs Group, Inc. as a result of an initial public offering. As of September 30, 1999, GSAM and GSAMI, along with other units of IMD, had assets under management of $203 billion.
The Investment Adviser provides day-to-day advice regarding the Funds' port- folio transactions. The Investment Adviser makes the investment decisions for the Funds and places purchase and sale orders for the Funds' portfolio transactions in U.S. and foreign markets. As permitted by applicable law, these orders may be directed to any brokers, including Goldman Sachs and its affiliates. While the Investment Adviser is ultimately responsible for the management of the Funds, it is able to draw upon the research and expertise of its asset management affiliates for portfolio decisions and management with respect to certain portfolio securities. In addition, the Investment Adviser has access to the research and certain proprietary technical models developed by Goldman Sachs, and will apply quantitative and qualitative analysis in determining the appropriate allocations among categories of issuers and types of securities.
The Investment Adviser also performs the following additional services for
the Funds:
.Supervises all non-advisory operations of the Funds
.Provides personnel to perform necessary executive, administrative and cler-
ical services to the Funds
SERVICE PROVIDERS
.Arranges for the preparation of all required tax returns, reports to share-
holders, prospectuses and statements of additional information and other
reports filed with the Securities and Exchange Commission (the "SEC") and
other regulatory authorities
.Maintains the records of each Fund
.Provides office space and all necessary office equipment and services
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the Investment Adviser is entitled to the following fees, computed daily and payable monthly, at the annual rates (as a percentage of each respective portfolio's average daily net assets) listed below:
Actual Rate
For the Fiscal
Year Ended
Contractual Rate August 31, 1999
------------------------------------------------------------
GSAM:
------------------------------------------------------------
CORE International Equity 0.85% 0.85%
------------------------------------------------------------
GSAMI:
------------------------------------------------------------
International Equity 1.00% 1.00%
------------------------------------------------------------
European Equity 1.00% 1.00%
------------------------------------------------------------
Japanese Equity 1.00% 1.00%
------------------------------------------------------------
International Small Cap 1.20% 1.20%
------------------------------------------------------------
Emerging Markets Equity 1.20% 1.20%
------------------------------------------------------------
Asia Growth 1.00% 1.00%
------------------------------------------------------------
|
The difference, if any, between the stated fees and the actual fees paid by the Funds reflects that the Investment Adviser did not charge the full amount of the fees to which it would have been entitled. The Investment Adviser may discontinue or modify any such voluntary limitations in the future at its discretion.
FUND MANAGERS
M. Roch Hillenbrand, a Managing Director of Goldman Sachs since 1997, is the Head of Global Equities for GSAM, overseeing the United States, Europe, Japan, and non-Japan Asia. In this capacity, he is responsible for managing the group as it defines and implements global portfolio management processes that are consistent, reliable and predictable. Since 1981 Mr. Hillenbrand has been President of
Commodities Corporation LLC, of which Goldman Sachs is the parent company. Over the course of his 19-year career at Commodities Corporation, Mr. Hillenbrand has had extensive experience in dealing with internal and exter- nal investment managers who have managed a range of futures and equities strategies across multiple markets, using a variety of styles.
International Equity Portfolio Management Team
.Global portfolio teams based in London, Singapore, Tokyo and New York.
Local presence is a key to the Investment Adviser's fundamental research
capabilities
.Team manages over $33.2 billion in international equities for retail, institutional and high net worth clients .Focus on bottom-up stock selection as main driver of returns, though the team leverages the asset allocation, currency and risk management capabili- ties of GSAM
London-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
David Dick Senior Portfolio Manager-- Since Mr. Dick joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director senior portfolio manager
on the European Equity
team in 1998. From 1990
to 1998, he was with
Mercury Asset
Management, where he was
a portfolio manager for
European equity and was
head of Mercury's
European sector
strategy.
----------------------------------------------------------------------------------------------
Ivor H. Farman Senior Portfolio Manager-- Since Mr. Farman joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director International Equity Fund 1996 senior portfolio manager
in 1996. From 1995 to
1996, he was responsible
for originating and
marketing French equity
ideas at Exane in Paris.
Prior to 1995, he spent
five years engaged in
French equity research
and marketing at Banque
Nationale de Paris and
Schroders in London.
----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
James P. Senior Portfolio Manager-- Since Mr. Hordern joined the
Hordern International Small Cap 1998 Investment Adviser as a
Executive Fund portfolio manager in
Director 1997. From 1991 to 1997,
he was an Assistant
Director and portfolio
manager at Mercury Asset
Management on the
European Specialist
Team.
----------------------------------------------------------------------------------------------
Ralf Laier Portfolio Manager-- Since Mr. Laier joined the
Vice President Emerging Markets Equity 1998 Investment Adviser as a
Fund portfolio manager with a
focus on Central/Eastern
European (CEE) and the
Commonwealth of
Independent States (CIS)
in 1997. Prior to
joining the Investment
Adviser, from 1995 to
1997, he was Vice
President of Soros
Global Research, where
he analyzed investment
opportunities in
CEE/CIS. From 1994 to
1995, he achieved a
Ph.D. from the Academy
of Economics in Pozan,
Poland.
----------------------------------------------------------------------------------------------
Susan Noble Senior Portfolio Manager-- Since Ms. Noble joined the
Managing European Equity Fund 1998 Investment Adviser as a
Director International Equity Fund 1998 senior portfolio manager
and head of the European
Equity Team in October
1997. From 1986 to 1997,
she worked at Fleming
Investment Management in
London, where she most
recently was Portfolio
Management Director for
the European equity
investment strategy and
process.
----------------------------------------------------------------------------------------------
Andrew Orchard Senior Portfolio Manager-- Since Andrew joined the
Executive European Equity Fund 1999 Investment Adviser as a
Director International Equity Fund 1999 portfolio manager in
1999. From 1994 to 1999
he was a portfolio
manager at Morgan
Grenfell Asset
Management where he
managed global equity
portfolios and chaired
Morgan Grenfell's Global
Sector Committee.
----------------------------------------------------------------------------------------------
|
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
Andrew Portfolio Manager-- Since Mr. Shrimpton joined the
Shrimpton Emerging Markets Equity 1998 Investment Adviser as a
Vice President Fund portfolio manager with a
focus on Africa as well
as the financial
industry in the EMEA
region in 1996. Since
1985 he was a UK equity
analyst and portfolio
manager for CIN
Management, where he
initiated CIN
Management's first
investments in Latin
America.
----------------------------------------------------------------------------------------------
Robert Stewart Senior Portfolio Manager-- Since Robert joined the
Executive European Equity Fund 1999 Investment Adviser as a
Director International Equity Fund 1999 portfolio manager in
1996. He is a member of
the European Equity
Team. From 1996 to 1998
he was a portfolio
manager in Japan where
he managed Japanese
Equity Institutional
Portfolios. Prior to
that Robert was a
portfolio manager at
CINMan from 1989 to 1996
where he managed
international equities.
----------------------------------------------------------------------------------------------
Danny Truell Senior Portfolio Manager-- Since Mr. Truell joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director senior portfolio manager
and head of UK equities
in 1998. From 1992 to
1996, he was Investment
Banking Executive
Director for SBC Warburg
and Chief Asian Equity
Strategist.
----------------------------------------------------------------------------------------------
Gabriella Portfolio Manager-- Since Ms. Antici joined the
Antici Emerging Markets Equity 1998 Investment Adviser as a
Vice President Fund portfolio manager in
1997. From 1994 to 1997,
she was a Vice President
for HSBC Asset
Management, where she
was a portfolio manager
for emerging markets and
head of the Latin
American Department.
----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
New York-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
-----------------------------------------------------------------------------------------------
Robert A. Senior Portfolio Manager-- Since Mr. Beckwitt joined the
Beckwitt Emerging Markets Equity 1997 Investment Adviser as a
Managing Fund portfolio manager in
Director 1996. From 1986 to 1996,
Head of he was Chief Investment
Emerging Strategist-Portfolio
Markets Equity Adviser to high net
worth investors at
Fidelity Investments.
-----------------------------------------------------------------------------------------------
Melissa Brown Senior Portfolio Manager-- Since Ms. Brown joined the
Vice President CORE International Equity 1998 Investment Adviser as a
Fund portfolio manager in
1998. From 1984 to 1998,
she was the director of
Quantitative Equity
Research and served on
the Investment Policy
Committee at Prudential
Securities.
-----------------------------------------------------------------------------------------------
Mark M. Carhart Portfolio Manager-- Since Mr. Carhart joined the
Managing CORE International Equity 1998 Investment Adviser as a
Director Fund member of the
Quantitative Research
and Risk Management team
in 1997. From August
1995 to September 1997,
he was Assistant
Professor of Finance at
the Marshall School of
Business at USC and a
Senior Fellow of the
Wharton Financial
Institutions Center.
From 1993 to 1995, he
was a lecturer and
graduate student at the
University of Chicago
Graduate School of
Business.
-----------------------------------------------------------------------------------------------
Kent A. Clark Senior Portfolio Manager-- Since Mr. Clark joined the
Managing CORE International Equity 1997 Investment Adviser as a
Director Fund portfolio manager in the
quantitative equity
management team in 1992.
-----------------------------------------------------------------------------------------------
Raymond J. Portfolio Manager-- Since Mr. Iwanowski joined the
Iwanowski CORE International Equity 1998 Investment Adviser as an
Managing Fund associate and portfolio
Director manager in 1997. From
1993 to 1997, he was a
Vice President and head
of the Fixed Derivatives
Client Research group at
Salomon Brothers.
-----------------------------------------------------------------------------------------------
Robert C. Jones Senior Portfolio Manager-- Since Mr. Jones joined the
Managing CORE International Equity 1997 Investment Adviser as a
Director Fund portfolio manager in
1989.
-----------------------------------------------------------------------------------------------
|
Singapore-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
-----------------------------------------------------------------------------------------------
Alice Lui Portfolio Manager-- Since Ms. Lui joined the
Vice President Asia Growth Fund 1994 Investment Adviser as a
Emerging Markets Equity 1999 portfolio manager in
Fund 1990.
International Equity Fund 1999
International Small Cap 1999
Fund
-----------------------------------------------------------------------------------------------
Ravi Shanker Senior Portfolio Manager-- Since Mr. Shanker joined the
Vice President Asia Growth Fund 1997 Investment Adviser as an
Emerging Markets Equity 1998 operations manager in
Fund 1997. From July 1996 to
International Equity Fund 1999 1997, he worked for
International Small Cap 1999 Goldman Sachs in
Fund Singapore as a strategic
advisor for transactions
involving infrastructure
industries in Asia. From
1988 to 1996, he worked
for Goldman Sachs as an
investment banker in the
Investment Banking
Division.
-----------------------------------------------------------------------------------------------
Siew-Hua Thio Portfolio Manager-- Since Ms. Thio joined the
Vice President Asia Growth Fund 1998 Investment Adviser as a
Emerging Markets Equity 1998 portfolio manager in
Fund 1998. From 1997 to 1998,
International Equity Fund 1998 she was Head of Research
International Small Cap 1998 for Indosuez WI Carr in
Fund Singapore. From 1993 to
1997, she was a research
analyst at the same
firm.
-----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Tokyo-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
--------------------------------------------------------------------------------------
Toshiyuki Ejima Portfolio Manager-- Since Toshiyuki joined the
Vice President Japanese Equity Fund 1999 Investment Adviser as a
portfolio manager in
April 1999. Prior to
that he was a portfolio
manager at Daiichi
Mutual Life from 1993 to
1999 where he managed
Japanese equities.
--------------------------------------------------------------------------------------
Shigeka Kouda Portfolio Manager-- Since Mr. Kouda joined the
Vice President International Small 1998 Investment Adviser as a
Cap Fund portfolio manager in
1997. From 1992 to 1997,
he was at the Fixed
Income Division of
Goldman Sachs (Japan)
Limited, where he was
extensively involved in
emerging markets trading
as well as International
Fixed Income
institutional sales.
--------------------------------------------------------------------------------------
Shogo Maeda Senior Portfolio Since Mr. Maeda joined the
Managing Manager-- 1994 Investment Adviser as a
Director Japanese Equity Fund 1994 portfolio manager in
International Equity 1998 1994. From 1987 to 1994,
Fund he worked at Nomura
International Small Investment Management
Cap Fund Incorporated as a Senior
Portfolio Manager.
--------------------------------------------------------------------------------------
Miyako Portfolio Manager-- Since Ms. Shibamoto joined the
Shibamoto Japanese Equity Fund 1998 Investment Adviser as a
Vice President member of the Japanese
Equity team in March
1998. From 1993 to 1998,
she was a Vice President
at Scudder Stevens and
Clark (Japan).
--------------------------------------------------------------------------------------
Takeya Suzuki Portfolio Manager-- Since Mr. Suzuki joined the
Vice President Japanese Equity Fund 1998 Investment Adviser as a
portfolio manager in
1996. From 1990 to 1996,
he was a Japanese equity
portfolio manager at
Nomura Investment
Management where he
actively managed assets
for U.S. pension funds.
--------------------------------------------------------------------------------------
|
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the exclusive distributor (the "Distributor") of each Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606-6372, also serves as the Funds' transfer agent (the "Transfer Agent") and, as such, performs various shareholder servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and hold shares of the Funds. Goldman Sachs reserves the right to redeem at any time some or all of the shares acquired for its own account.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS
The involvement of the Investment Adviser, Goldman Sachs and their affili- ates in the management of, or their interest in, other accounts and other activities of Goldman Sachs may present conflicts of interest with respect to a Fund or limit a Fund's investment activities. Goldman Sachs and its affiliates engage in proprietary trading and advise accounts and funds which have investment objectives similar to those of the Funds and/or which engage in and compete for transactions in the same types of securities, currencies and instruments as the Funds. Goldman Sachs and its affiliates will not have any obligation to make available any information regarding their proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of the Funds. The results of a Fund's investment activities, therefore, may differ from those of Goldman Sachs and its affiliates, and it is possible that a Fund could sustain losses during periods in which Goldman Sachs and its affili- ates and other accounts achieve significant profits on their trading for proprietary or other accounts. In addition, the Funds may, from time to time, enter into transactions in which other clients of Goldman Sachs have an adverse interest. A Fund's activities may be limited because of regula- tory restrictions applicable to Goldman Sachs and its affiliates, and/or their internal policies designed to comply with such restrictions.
YEAR 2000
Many computer systems were designed using only two digits to signify the year (for example, "98" for "1998"). On January 1, 2000, if these computer systems are not corrected, they may incorrectly interpret "00" as the year "1900" rather than the year "2000," leading to computer shutdowns or errors (commonly
SERVICE PROVIDERS
known as the "Year 2000 Problem"). To the extent these systems conduct forward-looking calculations, these computer problems may occur prior to January 1, 2000. Like other investment companies and financial and business organizations, the Funds could be adversely affected in their ability to process securities trades, price securities, provide shareholder account services and otherwise conduct normal business operations if the Investment Adviser or other Fund service providers do not adequately address this prob- lem in a timely manner.
In order to address the Year 2000 Problem, the Investment Adviser has taken the following measures:
.The Investment Adviser has established a dedicated group which analyzed these issues and implemented system modifications to prepare for the Year 2000 Problem.
.The Investment Adviser has either tested with or received assurances from the Fund's other service providers to confirm that they are taking reason- able steps to avoid Year 2000 Problems, and the Investment Adviser contin- ues to monitor the situation.
.The Investment Adviser has developed broad and comprehensive contingency plans, as well as event management plans that will help manage the Funds through the date change by allowing the Investment Adviser to closely moni- tor and respond to Year 2000-related events as they unfold around the world.
Currently, the Investment Adviser does not anticipate that the transition to the 21st century will have any material impact on its ability to continue to service the Funds at current levels.
In addition, the Investment Adviser has undertaken measures to appropriately take into account available information concerning the Year 2000 prepared- ness of the issuers of securities held by the Funds. The Investment Adviser may obtain such Year 2000 information from various sources which the Invest- ment Adviser believes to be reliable, including the issuers' public regula- tory filings. However, the Investment Adviser is not in a position to verify the accuracy or completeness of such information.
At this time, however, no assurance can be given that the actions taken by the Investment Adviser and the Funds' other service providers will be suffi- cient to avoid any adverse effect on the Funds due to the Year 2000 Problem.
Dividends
Each Fund pays dividends from its net investment income and distributions
from net realized capital gains. You may choose to have dividends and dis-
tributions paid in:
.Cash
.Additional shares of the same class of the same Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund.
Special restrictions may apply for certain ILA Portfolios. See the
Additional Statement.
You may indicate your election on your Account Application. Any changes may be submitted in writing to Goldman Sachs at any time before the record date for a particular dividend or distribution. If you do not indicate any choice, your dividends and distributions will be reinvested automatically in the applicable Fund.
The election to reinvest dividends and distributions in additional shares will not affect the tax treatment of such dividends and distributions, which will be treated as received by you and then used to purchase the shares.
The Funds' investments in foreign securities may be subject to foreign with- holding taxes. Under certain circumstances, the Funds may elect to pass- through these taxes to you. If this election is made, a proportionate amount of such taxes will constitute a distribution to you, which would allow you either (1) to credit such proportionate amount of foreign taxes against your U.S. federal income tax liability or (2) to take such amount as an itemized deduction.
Dividends from net investment income and distributions from net capital gains are declared and paid annually.
From time to time a portion of a Fund's dividends may constitute a return of capital.
At the time of an investor's purchase of shares of a Fund, a portion of the NAV per share may be represented by undistributed income or undistributed realized appreciation of the Fund's portfolio securities. Therefore, subse- quent distributions on such shares from such income or realized appreciation may be taxable to you even if the NAV of the shares is, as a result of the distributions, reduced below the cost of such shares and the distributions (or portions thereof) represent a return of a portion of the purchase price.
Shareholder Guide
The following section will provide you with answers to some of the most often asked questions regarding buying and selling the Funds' shares.
HOW TO BUY SHARES
How Can I Purchase Class A, Class B And Class C Shares Of The Funds? You may purchase shares of the Funds through:
. Goldman Sachs;
. Authorized Dealers; or
. Directly from Goldman Sachs Trust (the "Trust").
In order to make an initial investment in a Fund, you must furnish to the Fund, Goldman Sachs or your Authorized Dealer the information in the Account Application attached to this Prospectus.
To Open an Account:
. Complete the enclosed Account Application
. Mail your payment and Account Application to:
Your Authorized Dealer
- Purchases by check or Federal Reserve draft should be made payable to
your Authorized Dealer
- Your Authorized Dealer is responsible for forwarding payment promptly
(within three business days) to the Fund
or
Goldman Sachs Funds c/o National Financial Data Services, Inc. ("NFDS"),
P.O. Box 219711, Kansas City, MO 64121-9711
- Purchases by check or Federal Reserve draft should be made payable to
Goldman Sachs Funds - (Name of Fund and Class of Shares)
- NFDS will not accept a check drawn on a foreign bank, a third-party
check, cash, money orders, travelers checques or credit card checks
- Federal funds wire, Automated Clearing House Network ("ACH") transfer or
bank wires should be sent to State Street Bank and Trust Company ("State
Street") (each Fund's custodian). Please call the Funds at 1-800-526-
7384 to get detailed instructions on how to wire your money.
What Is My Minimum Investment In The Funds?
Initial Additional
------------------------------------------------------------------------------
Regular Accounts $1,000 $50
------------------------------------------------------------------------------
Tax-Sheltered Retirement Plans (excluding SIMPLE IRAs and
Education IRAs) $250 $50
------------------------------------------------------------------------------
Uniform Gift to Minors Act Accounts/Uniform Transfer to
Minors Act Accounts $250 $50
------------------------------------------------------------------------------
403(b) Plan Accounts $200 $50
------------------------------------------------------------------------------
SIMPLE IRAs and Education IRAs $50 $50
------------------------------------------------------------------------------
Automatic Investment Plan Accounts $50 $50
------------------------------------------------------------------------------
|
What Alternative Sales Arrangements Are Available? The Funds offer three classes of shares through this Prospectus.
------------------------------------------------------------------------
Maximum Amount You Can Buy In The Class A No limit
Aggregate Across Funds
------------------------------------------------
Class B $250,000
------------------------------------------------
Class C $1,000,000
------------------------------------------------------------------------
Initial Sales Charge Class A Applies to purchases of less
than $1 million--varies by
size of investment with a
maximum of 5.5%
------------------------------------------------
Class B None
------------------------------------------------
Class C None
------------------------------------------------------------------------
CDSC Class A 1.00% on certain investments
of $1 million or more if you
sell within 18 months
------------------------------------------------
Class B 6 year declining CDSC with a
maximum of 5%
------------------------------------------------
Class C 1% if shares are redeemed
within 12 months of purchase
------------------------------------------------------------------------
Conversion Feature Class A None
------------------------------------------------
Class B Class B Shares convert to
Class A Shares after 8 years
------------------------------------------------
Class C None
------------------------------------------------------------------------
|
What Else Should I Know About Share Purchases?
The Trust reserves the right to:
. Refuse to open an account if you fail to (i) provide a social security
number or other taxpayer identification number; or (ii) certify that such
number is correct (if required to do so under applicable law).
. Reject or restrict any purchase or exchange order by a particular pur-
chaser (or group of related purchasers). This may occur, for example, when
a pattern of
SHAREHOLDER GUIDE
frequent purchases, sales or exchanges of shares of a Fund is evident, or
if purchases, sales or exchanges are, or a subsequent abrupt redemption
might be, of a size that would disrupt management of a Fund.
. Modify or waive the minimum investment amounts.
. Modify the manner in which shares are offered.
. Modify the sales charge rates applicable to future purchases of shares.
The Funds may allow you to purchase shares with securities instead of cash if consistent with a Fund's investment policies and operations and if approved by the Fund's Investment Adviser.
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange shares is deter-
mined by a Fund's NAV and share class. Each class calculates its NAV as fol-
lows:
The Funds' investments are valued based on market quotations or if accurate quotations are not readily available, the fair value of the Fund's invest- ments may be determined in good faith under procedures established by the Trustees.
. NAV per share of each share class is calculated by the Fund's custodian on
each business day as of the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m. New York time). Fund shares will not be
priced on any day the New York Stock Exchange is closed.
. When you buy shares, you pay the NAV next calculated after the Funds
receive your order in proper form, plus any applicable sales charge.
. When you sell shares, you receive the NAV next calculated after the Funds
receive your order in proper form, less any applicable CDSC.
Note: The time at which transactions and shares are priced and the time by which orders must be received may be changed in case of an emergency or if regular trading on the New York Stock Exchange is stopped at a time other than 4:00 p.m. New York time.
Foreign securities may trade in their local markets on days a Fund is closed. As a result, the NAV of a Fund that holds foreign securities may be impacted on days when investors may not purchase or redeem Fund shares.
In addition, the impact of events that occur after the publication of market quotations used by a Fund to price its securities but before the close of regular trading on the New York Stock Exchange will normally not be reflected in a Fund's next
determined NAV unless the Trust, in its discretion, makes an adjustment in light of the nature and materiality of the event, its effect on Fund opera- tions and other relevant factors.
COMMON QUESTIONS ABOUT THE PURCHASE OF CLASS A SHARES
What Is The Offering Price Of Class A Shares? The offering price of Class A Shares of each Fund is the next determined NAV per share plus an initial sales charge paid to Goldman Sachs at the time of purchase of shares. The sales charge varies depending upon the amount you purchase. In some cases, described below, the initial sales charge may be eliminated altogether, and the offering price will be the NAV per share. The current sales charges and commissions paid to Authorized Dealers are as fol- lows:
Sales Charge Maximum Dealer
Sales Charge as as Percentage Allowance as
Amount of Purchase Percentage of of Net Amount Percentage of
(including sales charge, if any) Offering Price Invested Offering Price*
---------------------------------------------------------------------------------
Less than $50,000 5.50% 5.82% 5.00%
$50,000 up to (but less than)
$100,000 4.75 4.99 4.00
$100,000 up to (but less than)
$250,000 3.75 3.90 3.00
$250,000 up to (but less than)
$500,000 2.75 2.83 2.25
$500,000 up to (but less than)
$1 million 2.00 2.04 1.75
$1 million or more 0.00** 0.00** ***
---------------------------------------------------------------------------------
|
* Dealer's allowance may be changed periodically. During special promo- tions, the entire sales charge may be allowed to Authorized Dealers. Authorized Dealers to whom substantially the entire sales charge is allowed may be deemed to be "underwriters" under the Securities Act of 1933. ** No sales charge is payable at the time of purchase of Class A Shares of $1 million or more, but a CDSC of 1% may be imposed in the event of certain redemptions within 18 months of purchase. *** The Distributor pays a one-time commission to Authorized Dealers who initiate or are responsible for purchases of $1 million or more of shares of the Funds equal to 1.00% of the amount under $3 million, 0.50% of the next $2 million, and 0.25% thereafter. The Distributor may also pay, with respect to all or a portion of the amount purchased, a commission in accordance with the foregoing schedule to Authorized Dealers who initiate or are responsible for purchases of $500,000 or more by certain pension and profit sharing plans, pension funds and other company-sponsored benefit plans investing in the Funds which sat- isfy the criteria set forth below in "When Are Class A Shares Not Sub- ject To A Sales Load?" or $1 million or more by certain "wrap" accounts. Purchases by such plans will be made at NAV with no initial sales charge, but if all of the shares held are redeemed within 18 months after the end of the calendar month in which such purchase was made, a CDSC of 1% may be imposed upon the plan sponsor or the third party administrator. In addition, Authorized Dealers will remit to the Distributor such payments received in connection with "wrap" accounts in the event that shares are redeemed within 18 months after the end of the calendar month in which the purchase was made.
SHAREHOLDER GUIDE
What Else Do I Need To Know About Class A Shares' CDSC? Purchases of $1 million or more of Class A Shares will be made at NAV with no initial sales charge. However, if you redeem shares within 18 months after the end of the calendar month in which the purchase was made, exclud- ing any period of time in which the shares were exchanged into and remained invested in an equivalent class of an ILA Portfolio, a CDSC of 1% may be imposed. The CDSC may not be imposed if your Authorized Dealer enters into an agreement with the Distributor to return all or an applicable prorated portion of its commission to the Distributor. The CDSC is waived on redemp- tions in certain circumstances. See "In What Situations May The CDSC On Class A, B Or C Shares Be Waived Or Reduced?" below.
When Are Class A Shares Not Subject To A Sales Load?
Class A Shares of the Funds may be sold at NAV without payment of any sales
charge to the following individuals and entities:
. Goldman Sachs, its affiliates or their respective officers, partners,
directors or employees (including retired employees and former partners),
any partnership of which Goldman Sachs is a general partner, any Trustee
or officer of the Trust and designated family members of any of these
individuals;
. Qualified retirement plans of Goldman Sachs;
. Trustees or directors of investment companies for which Goldman Sachs or
an affiliate acts as sponsor;
. Any employee or registered representative of any Authorized Dealer or
their respective spouses, children and parents;
. Banks, trust companies or other types of depository institutions investing
for their own account or investing for discretionary or non-discretionary
accounts;
. Any state, county or city, or any instrumentality, department, authority
or agency thereof, which is prohibited by applicable investment laws from
paying a sales charge or commission in connection with the purchase of
shares of a Fund;
. Pension and profit sharing plans, pension funds and other company-spon-
sored benefit plans that:
. Buy shares of Goldman Sachs Funds worth $500,000 or more; or
. Have 100 or more eligible employees at the time of purchase; or
. Certify that they expect to have annual plan purchases of shares of
Goldman Sachs Funds of $200,000 or more; or
. Are provided administrative services by certain third-party administra-
tors that have entered into a special service arrangement with Goldman
Sachs relating to such plans; or
. Have at the time of purchase aggregate assets of at least $2,000,000;
. "Wrap" accounts for the benefit of clients of broker-dealers, financial
institutions or financial planners, provided they have entered into an
agreement with GSAM specifying aggregate minimums and certain operating
policies and standards;
. Registered investment advisers investing for accounts for which they
receive asset-based fees;
. Accounts over which GSAM or its advisory affiliates have investment dis-
cretion; or
. Shareholders receiving distributions from a qualified retirement plan
invested in the Goldman Sachs Funds and reinvesting such proceeds in a
Goldman Sachs IRA.
You must certify eligibility for any of the above exemptions on your Account Application and notify the Fund if you no longer are eligible for the exemp- tion. The Fund will grant you an exemption subject to confirmation of your entitlement. You may be charged a fee if you effect your transactions through a broker or agent.
How Can The Sales Charge On Class A Shares Be Reduced?
. Right of Accumulation: When buying Class A Shares in Goldman Sachs Funds,
your current aggregate investment determines the initial sales load you
pay. You may qualify for reduced sales charges when the current market
value of holdings (shares at current offering price), plus new purchases,
reaches $50,000 or more. Class A Shares of any of the Goldman Sachs Funds
may be combined under the Right of Accumulation. To qualify for a reduced
sales load, you or your Authorized Dealer must notify the Funds' Transfer
Agent at the time of investment that a quantity discount is applicable.
Use of this service is subject to a check of appropriate records. The
Additional Statement has more information about the Right of Accumulation.
. Statement of Intention: You may obtain a reduced sales charge by means of
a written Statement of Intention which expresses your non-binding commit-
ment to invest in the aggregate $50,000 or more (not counting reinvest-
ments of dividends and distributions) within a period of 13 months in
Class A Shares of one or more Goldman Sachs Fund. Any investments you make
during the period will receive the discounted sales load based on the full
amount of your investment commitment. If the investment commitment of the
Statement of Intention is not met prior to the expiration of the 13-month
period, the entire amount will be subject to the higher applicable sales
charge. By signing the Statement of Intention, you authorize the Transfer
Agent to escrow and redeem Class A Shares in your account to pay this
additional charge. The Additional Statement has more information about the
Statement of Intention, which you should read carefully.
SHAREHOLDER GUIDE
COMMON QUESTIONS ABOUT THE PURCHASE OF CLASS B SHARES
What Is The Offering Price Of Class B Shares? You may purchase Class B Shares of the Funds at the next determined NAV without an initial sales charge. However, Class B Shares redeemed within six years of purchase will be subject to a CDSC at the rates shown in the table below based on how long you held your shares.
The CDSC schedule is as follows:
CDSC as a
Percentage of
Dollar Amount
Year Since Purchase Subject to CDSC
----------------------------------------
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter None
----------------------------------------
|
Proceeds from the CDSC are payable to the Distributor and may be used in whole or in part to defray the Distributor's expenses related to providing distribution-related services to the Funds in connection with the sale of Class B Shares, including the payment of compensation to Authorized Dealers. A commission equal to 4% of the amount invested is paid to Authorized Deal- ers.
What Should I Know About The Automatic Conversion Of Class B Shares? Class B Shares of a Fund will automatically convert into Class A Shares of the same Fund at the end of the calendar quarter that is eight years after the purchase date.
If you acquire Class B Shares of a Fund by exchange from Class B Shares of another Goldman Sachs Fund, your Class B Shares will convert into Class A Shares of such Fund based on the date of the initial purchase and the CDSC schedule of that purchase.
If you acquire Class B Shares through reinvestment of distributions, your Class B Shares will convert into Class A Shares based on the date of the initial purchase of the shares on which the distribution was paid.
The conversion of Class B Shares to Class A Shares will not occur at any time the Funds are advised that such conversions may constitute taxable events for federal tax purposes, which the Funds believe is unlikely. If conversions do not occur as a
result of possible taxability, Class B Shares would continue to be subject to higher expenses than Class A Shares for an indeterminate period.
A COMMON QUESTION ABOUT THE PURCHASE OF CLASS C SHARES
What Is The Offering Price Of Class C Shares?
You may purchase Class C Shares of the Funds at the next determined NAV without paying an initial sales charge. However, if you redeem Class C Shares within 12 months of purchase, a CDSC of 1% will normally be deducted from the redemption proceeds; provided that in connection with purchases by pension and profit sharing plans, pension funds and other company-sponsored benefit plans, where all of the Class C Shares are redeemed within 12 months of purchase, a CDSC of 1% may be imposed upon the plan sponsor or third party administrator.
Proceeds from the CDSC are payable to the Distributor and may be used in whole or in part to defray the Distributor's expenses related to providing distribution-related services to the Funds in connection with the sale of Class C Shares, including the payment of compensation to Authorized Dealers. An amount equal to 1% of the amount invested is normally paid by the Dis- tributor to Authorized Dealers.
COMMON QUESTIONS APPLICABLE TO THE PURCHASE OF CLASS A, B
AND C SHARES
What Else Do I Need To Know About The CDSC On Class A, B Or C Shares?
. The CDSC is based on the lesser of the NAV of the shares at the time of
redemption or the original offering price (which is the original NAV).
. No CDSC is charged on shares acquired from reinvested dividends or capi-
tal gains distributions.
. No CDSC is charged on the per share appreciation of your account over
the initial purchase price.
. When counting the number of months since a purchase of Class B or Class
C Shares was made, all payments made during a month will be combined and
considered to have been made on the first day of that month.
. To keep your CDSC as low as possible, each time you place a request to
sell shares, the Funds will first sell any shares in your account that do
not carry a CDSC and then the shares in your account that have been held
the longest.
SHAREHOLDER GUIDE
In What Situations May The CDSC On Class A, B Or C Shares Be Waived Or
Reduced?
The CDSC on Class A, Class B and Class C Shares that are subject to a CDSC
may be waived or reduced if the redemption relates to:
. Retirement distributions or loans to participants or beneficiaries from
pension and profit sharing plans, pension funds and other company-spon-
sored benefit plans (each a "Retirement Plan");
. The death or disability (as defined in Section 72(m)(7) of the Internal
Revenue Code of 1986, as amended (the "Code")) of a participant or benefi-
ciary in a Retirement Plan;
. Hardship withdrawals by a participant or beneficiary in a Retirement Plan;
. Satisfying the minimum distribution requirements of the Code;
. Establishing "substantially equal periodic payments" as described under
Section 72(t)(2) of the Code;
. The separation from service by a participant or beneficiary in a Retire-
ment Plan;
. The death or disability (as defined in Section 72(m)(7) of the Code) of a
shareholder if the redemption is made within one year of the event;
. Excess contributions distributed from a Retirement Plan;
. Distributions from a qualified Retirement Plan invested in the Goldman
Sachs Funds which are being rolled over to a Goldman Sachs IRA; or
. Redemption proceeds which are to be reinvested in accounts or non-regis-
tered products over which GSAM or its advisory affiliates have investment
discretion.
In addition, Class A, B and C Shares subject to a systematic withdrawal plan may be redeemed without a CDSC. The Funds reserve the right to limit such redemptions, on an annual basis, to 12% each of the value of your Class B and C Shares and 10% of the value of your Class A Shares.
How Do I Decide Whether To Buy Class A, B Or C Shares? The decision as to which Class to purchase depends on the amount you invest, the intended length of the investment and your personal situation.
. Class A Shares. If you are making an investment of $50,000 or more that
qualifies for a reduced sales charge, you should consider purchasing Class
A Shares.
. Class B Shares. If you plan to hold your investment for at least six years
and would prefer not to pay an initial sales charge, you might consider
purchasing Class B Shares. By not paying a front-end sales charge, your
entire investment in Class B Shares is available to work for you from the
time you make your initial investment. However, the distribution and serv-
ice fee paid by Class B
Shares will cause your Class B Shares (until conversion to Class A Shares)
to have a higher expense ratio, and thus lower performance and lower divi-
dend payments (to the extent dividends are paid) than Class A Shares. A
maximum purchase limitation of $250,000 in the aggregate normally applies
to Class B Shares.
. Class C Shares. If you are unsure of the length of your investment or plan
to hold your investment for less than six years and would prefer not to
pay an initial sales charge, you may prefer Class C Shares. By not paying
a front-end sales charge, your entire investment in Class C Shares is
available to work for you from the time you make your initial investment.
However, the distribution and service fee paid by Class C Shares will
cause your Class C Shares to have a higher expense ratio, and thus lower
performance and lower dividend payments (to the extent dividends are paid)
than Class A Shares (or Class B Shares after conversion to Class A
Shares).
Although Class C Shares are subject to a CDSC for only 12 months, Class C
Shares do not have the conversion feature applicable to Class B Shares and
your investment will therefore pay higher distribution fees indefinitely.
A maximum purchase limitation of $1,000,000 in the aggregate normally
applies to purchases of Class C Shares.
Note: Authorized Dealers may receive different compensation for selling Class A, Class B or Class C Shares.
In addition to Class A, Class B and Class C Shares, each Fund also offers other classes of shares to investors. These other share classes are subject to different fees and expenses (which affect performance), have different minimum investment requirements and are entitled to different services. Information regarding these other share classes may be obtained from your sales representative or from Goldman Sachs by calling the number on the back cover of this Prospectus.
HOW TO SELL SHARES
How Can I Sell Class A, Class B And Class C Shares Of The Funds? You may arrange to take money out of your account by selling (redeeming) some or all of your shares. Each Fund will redeem its shares upon request on any business day at the NAV next determined after receipt of such request in proper form, subject to any applicable CDSC. You may request that redemption proceeds be sent to you by check or by wire (if the wire instructions are on record). Redemptions may be requested in writing or by telephone.
SHAREHOLDER GUIDE
Instructions For Redemptions:
--------------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund name and Class of Shares
.The dollar amount you want to sell
.How and where to send the proceeds
.Obtain a signature guarantee (see details below)
.Mail your request to:
Goldman Sachs Funds
c/o NFDS
P.O. Box 219711
Kansas City, MO 64121-9711
--------------------------------------------------------------------
By Telephone: If you have not declined the telephone redemption
privilege on your Account Application:
.1-800-526-7384
(8:00 a.m. to 4:00 p.m. New York time)
.You may redeem up to $50,000 of your shares
within any 7 calendar day period
.Proceeds which are sent directly to a Goldman
Sachs brokerage account are not subject to the
$50,000 limit
--------------------------------------------------------------------
|
When Do I Need A Signature Guarantee To Redeem Shares?
A signature guarantee is required if:
. You are requesting in writing to redeem shares in an amount over $50,000;
. You would like the redemption proceeds sent to an address that is not your
address of record; or
. You would like to change the bank designated on your Account Application.
A signature guarantee is designed to protect you, the Funds and Goldman Sachs from fraud. You may obtain a signature guarantee from a bank, securi- ties broker or dealer, credit union having the authority to issue signature guarantees, savings and loan association, building and loan association, cooperative bank, federal savings bank or association, national securities exchange, registered securities association or clearing agency, provided that such institution satisfies the standards established by Goldman Sachs. Additional documentation may be required for executors, trustees or corpora- tions or when deemed appropriate by the Transfer Agent.
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor, and the Transfer Agent will not be liable for any loss you may incur in the event that the Trust accepts unauthorized tel- ephone redemption requests that the Trust reasonably believes to be genuine. The Trust may accept telephone redemption instructions from any person iden- tifying himself
or herself as the owner of an account or the owner's registered representa- tive where the owner has not declined in writing to use this service. Thus, you risk possible losses if a telephone redemption is not authorized by you.
In an effort to prevent unauthorized or fraudulent redemption and exchange
requests by telephone, Goldman Sachs and NFDS each employ reasonable proce-
dures specified by the Trust to confirm that such instructions are genuine.
If reasonable procedures are not employed, the Trust may be liable for any
loss due to unauthorized or fraudulent transactions. The following general
policies are currently in effect:
. All telephone requests are recorded.
. Proceeds of telephone redemption requests will be sent only to your
address of record or authorized bank account designated in the Account
Application (unless you provide written instructions and a signature guar-
antee, indicating another address or account) and exchanges of shares nor-
mally will be made only to an identically registered account.
. Telephone redemptions will not be accepted during the 30-day period fol-
lowing any change in your address of record.
. The telephone redemption option does not apply to shares held in a "street
name" account. "Street name" accounts are accounts maintained and serviced
by your Authorized Dealer. If your account is held in "street name," you
should contact your registered representative of record, who may make tel-
ephone redemptions on your behalf.
. The telephone redemption option may be modified or terminated at any time.
Note: It may be difficult to make telephone redemptions in times of drastic economic or market conditions.
How Are Redemption Proceeds Paid?
By Wire: You may arrange for your redemption proceeds to be wired as federal
funds to the bank account designated in your Account Application. The fol-
lowing general policies govern wiring redemption proceeds:
. Redemption proceeds will normally be wired on the next business day in
federal funds (for a total of one business day delay), but may be paid up
to three business days following receipt of a properly executed wire
transfer redemption request. If you are selling shares you recently paid
for by check, the Fund will pay you when your check has cleared, which may
take up to 15 days. If the Federal Reserve Bank is closed on the day that
the redemption proceeds would ordinarily be wired, wiring the redemption
proceeds may be delayed one additional business day.
. A transaction fee of $7.50 may be charged for payments of redemption pro-
ceeds by wire. Your bank may also charge wiring fees. You should contact
your bank directly to learn whether it charges such fees.
SHAREHOLDER GUIDE
. To change the bank designated on your Account Application, you must send written instructions (with your signature guaranteed) to the Transfer Agent.
. Neither the Trust, Goldman Sachs nor any Authorized Dealer assumes any responsibility for the performance of your bank or any intermediaries in the transfer process. If a problem with such performance arises, you should deal directly with your bank or any such intermediaries. By Check: You may elect to receive your redemption proceeds by check. Redemption proceeds paid by check will normally be mailed to the address of record within three business days of a properly executed redemption request. If you are selling shares you recently paid for by check, the Fund will pay you when your check has cleared, which may take up to 15 days.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
. Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
The Trust reserves the right to:
. Redeem your shares if your account balance is less than $50 as a result of
a redemption. The Funds will not redeem your shares on this basis if the
value of your account falls below the minimum account balance solely as a
result of market conditions. The Funds will give you 60 days' prior writ-
ten notice to allow you to purchase sufficient additional shares of the
Fund in order to avoid such redemption.
. Redeem your shares in other circumstances determined by the Board of
Trustees to be in the best interests of the Trust.
. Pay redemptions by a distribution in-kind of securities (instead of cash).
If you receive redemption proceeds in-kind, you should expect to incur
transaction costs upon the disposition of those securities.
Can I Reinvest Redemption Proceeds In The Same Or Another Goldman Sachs
Fund?
You may redeem shares of a Fund and reinvest a portion or all of the redemp-
tion proceeds (plus any additional amounts needed to round off purchases to
the nearest full share) at NAV. To be eligible for this privilege, you must
hold the shares you want to redeem for at least 30 days and you must rein-
vest the share proceeds within 90 days after you redeem. You may reinvest as
follows:
. Class A or B Shares--Class A Shares of the same Fund or any other Goldman
Sachs Fund
. Class C Shares--Class C Shares of the same Fund or any other Goldman Sachs
Fund
. You should obtain and read the applicable prospectuses before investing in
any other Funds.
. If you pay a CDSC upon redemption of Class A or Class C Shares and then
reinvest in Class A or Class C Shares as described above, your account
will be credited with the amount of the CDSC you paid. The reinvested
shares will, however, continue to be subject to a CDSC. The holding period
of the shares acquired through reinvestment will include the holding
period of the redeemed shares for purposes of computing the CDSC payable
upon a subsequent redemption. For Class B Shares, you may reinvest the
redemption proceeds in Class A Shares at NAV but the amount of the CDSC
paid upon redemption of the Class B Shares will not be credited to your
account.
. The reinvestment privilege may be exercised at any time in connection with
transactions in which the proceeds are reinvested at NAV in a tax-shel-
tered retirement plan. In other cases, the reinvestment privilege may be
exercised once per year upon receipt of a written request.
. You may be subject to tax as a result of a redemption. You should consult
your tax adviser concerning the tax consequences of a redemption and rein-
vestment.
Can I Exchange My Investment From One Fund To Another? You may exchange shares of a Fund at NAV without the imposition of an ini- tial sales charge or CDSC at the time of exchange for shares of the same class or an equivalent class of any other Goldman Sachs Fund. The exchange privilege may be materially modified or withdrawn at any time upon 60 days' written notice to you.
Instructions For Exchanging Shares:
-------------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund names and Class of Shares
.The dollar amount you want to exchange
.Obtain a signature guarantee (see details above)
.Mail the request to:
Goldman Sachs Funds
c/o NFDS
P.O. Box 219711
Kansas City, MO 64121-9711
or for overnight delivery -
Goldman Sachs Funds
c/o NFDS
330 West 9th St.
Poindexter Bldg., 1st Floor
Kansas City, MO 64105
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By Telephone: If you have not declined the telephone exchange
privilege on your Account Application:
.1-800-526-7384 (8:00 a.m. to 4:00 p.m.
New York time)
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|
SHAREHOLDER GUIDE
You should keep in mind the following factors when making or considering an
exchange:
. You should obtain and carefully read the prospectus of the Fund you are
acquiring before making an exchange.
. Six free exchanges are allowed in each 12 month period.
. A $12.50 fee may be charged for each subsequent exchange.
. There is no charge for exchanges made pursuant to the Automatic Exchange
Program.
. The exchanged shares may later be exchanged for shares of the same class
(or an equivalent class) of the original Fund at the next determined NAV
without the imposition of an initial sales charge or CDSC if the amount in
the Fund resulting from such exchanges is less than the largest amount on
which you have previously paid the applicable sales charge.
. When you exchange shares subject to a CDSC, no CDSC will be charged at
that time. The exchanged shares will be subject to the CDSC of the shares
originally held. For purposes of determining the amount of the applicable
CDSC, the length of time you have owned the shares will be measured from
the date you acquired the original shares subject to a CDSC and will not
be affected by a subsequent exchange.
. Eligible investors may exchange certain classes of shares for another
class of shares of the same Fund. For further information, call Goldman
Sachs Funds at 1-800-526-7384.
. All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirements of that Fund.
. Exchanges are available only in states where exchanges may be legally
made.
. It may be difficult to make telephone exchanges in times of drastic eco-
nomic or market conditions.
. Goldman Sachs and NFDS may use reasonable procedures described under "What
Do I Need to Know About Telephone Redemption Requests?" in an effort to
prevent unauthorized or fraudulent telephone exchange requests.
. Telephone exchanges normally will be made only to an identically regis-
tered account. Shares may be exchanged among accounts with different
names, addresses and social security or other taxpayer identification num-
bers only if the exchange instructions are in writing and accompanied by a
signature guarantee.
For federal income tax purposes, an exchange is treated as a redemption of the shares surrendered in the exchange, on which you may be subject to tax, followed by a purchase of shares received in the exchange. You should con- sult your tax adviser concerning the tax consequences of an exchange.
SHAREHOLDER SERVICES
Can I Arrange To Have Automatic Investments Made On A Regular Basis? You may be able to make systematic cash investments through your bank via ACH transfer or your checking account via bank draft each month. Forms for this option are available from Goldman Sachs, your Authorized Dealer or you may check the appropriate box on the Account Application.
Can My Dividends And Distributions From A Fund Be Invested In Other Funds?
You may elect to cross-reinvest dividends and capital gain distributions
paid by a Fund in shares of the same class or an equivalent class of any
other Goldman Sachs Fund.
. Shares will be purchased at NAV.
. No initial sales charge or CDSC will be imposed.
. You may elect cross-reinvestment into an identically registered account or
an account registered in a different name or with a different address,
social security number or taxpayer identification number provided that the
account has been properly established, appropriate signature guarantees
obtained and the minimum initial investment has been satisfied.
Can I Arrange To Have Automatic Exchanges Made On A Regular Basis?
You may elect to exchange automatically a specified dollar amount of shares
of a Fund for shares of the same class or an equivalent class of any other
Goldman Sachs Fund.
. Shares will be purchased at NAV.
. No initial sales charge is imposed.
. Shares subject to a CDSC acquired under this program may be subject to a
CDSC at the time of redemption from the Fund into which the exchange is
made depending upon the date and value of your original purchase.
. Automatic exchanges are made monthly on the 15th day of each month or the
first business day thereafter.
. Minimum dollar amount: $50 per month.
What Else Should I Know About Cross-Reinvestments And Automatic Exchanges?
Cross-reinvestments and automatic exchanges are subject to the following
conditions:
. You must hold $5,000 or more in the Fund which is paying the dividend or
from which the exchange is being made.
SHAREHOLDER GUIDE
. You must invest an amount in the Fund into which cross-reinvestments or
automatic exchanges are being made that is equal to that Fund's minimum
initial investment or continue to cross-reinvest or to make automatic
exchanges until such minimum initial investment is met.
. You should obtain and read the prospectus of the Fund into which dividends
are invested or automatic exchanges are made.
Can I Have Automatic Withdrawals Made On A Regular Basis?
You may draw on your account systematically via check or ACH transfer in any
amount of $50 or more.
. It is normally undesirable to maintain a systematic withdrawal plan at the
same time that you are purchasing additional Class A, Class B or Class C
Shares because of the sales charge imposed on your purchases of Class A
Shares or the imposition of a CDSC on your redemptions of Class A, Class B
or Class C Shares.
. You must have a minimum balance of $5,000 in a Fund.
. Checks are mailed on or about the 25th day of each month.
. Each systematic withdrawal is a redemption and therefore a taxable trans-
action.
. The CDSC applicable to Class A, Class B or Class C Shares redeemed under
the systematic withdrawal plan may be waived.
What Types of Reports Will I Be Sent Regarding My Investment?
You will be provided with a printed confirmation of each transaction in your account and an individual quarterly account statement. A year-to-date state- ment for your account will be provided upon request made to Goldman Sachs. If your account is held in "street name" you may receive your statement and confirmation on a different schedule.
You will also receive an annual shareholder report containing audited finan- cial statements and a semi-annual shareholder report. If you have consented to the delivery of a single copy of shareholder reports, prospectuses and other information to all shareholders who share the same mailing address with your account, you may revoke your consent at any time by contacting Goldman Sachs Funds by phone at 1-800-526-7384 or by mail at Goldman Sachs Funds, 4900 Sears Tower--60th Floor, Chicago, IL 60606-6372. The Funds will begin sending individual copies to you within 30 days after receipt of your revocation.
The Funds do not generally provide sub-accounting services.
What Should I Know When I Purchase Shares Through An Authorized Dealer? Authorized Dealers and other financial intermediaries may provide varying arrangements for their clients to purchase and redeem Fund shares. They may charge additional fees not described in this Prospectus to their customers for such services.
If shares of a Fund are held in a "street name" account with an Authorized Dealer, all recordkeeping, transaction processing and payments of distribu- tions relating to your account will be performed by the Authorized Dealer, and not by the Fund and its Transfer Agent. Since the Funds will have no record of your transactions, you should contact the Authorized Dealer to purchase, redeem or exchange shares, to make changes in or give instructions concerning the account or to obtain information about your account. The transfer of shares in a "street name" account to an account with another dealer or to an account directly with the Fund involves special procedures and will require you to obtain historical purchase information about the shares in the account from the Authorized Dealer.
Authorized Dealers and other financial intermediaries may be authorized to
accept, on behalf of the Trust, purchase, redemption and exchange orders
placed by or on behalf of their customers, and if approved by the Trust, to
designate other intermediaries to accept such orders. In these cases:
. A Fund will be deemed to have received an order that is in proper form
when the order is accepted by an Authorized Dealer or intermediary on a
business day, and the order will be priced at the Fund's NAV per share
(adjusted for any applicable sales charge) next determined after such
acceptance.
. Authorized Dealers and intermediaries are responsible for transmitting
accepted orders to the Funds within the time period agreed upon by them.
You should contact your Authorized Dealer or intermediary to learn whether it is authorized to accept orders for the Trust.
The Investment Adviser, Distributor and/or their affiliates may pay addi- tional compensation from time to time, out of their assets and not as an additional charge to the Funds, to selected Authorized Dealers and other persons in connection with the sale, distribution and/or servicing of shares of the Funds and other Goldman Sachs Funds. Additional compensation based on sales may, but is currently not expected to, exceed 0.50% (annualized) of the amount invested.
DISTRIBUTION SERVICES AND FEES
What Are The Different Distribution And Service Fees Paid By Class A, B and
C Shares?
The Trust has adopted distribution and service plans (each a "Plan") under
which Class A, Class B and Class C Shares bear distribution and service fees
paid to Authorized Dealers and Goldman Sachs. If the fees received by
Goldman Sachs pursuant to the Plans exceed its expenses, Goldman Sachs may
realize a profit from their arrangements. Goldman Sachs pays the distribu-
tion and service fees on a quarterly basis.
SHAREHOLDER GUIDE
Under the Plans, Goldman Sachs is entitled to a monthly fee from each Fund for distribution services equal, on an annual basis, to 0.25%, 0.75% and 0.75%, respectively, of a Fund's average daily net assets attributed to Class A, Class B and Class C Shares. Because these fees are paid out of the Fund's assets on an ongoing basis, over time, these fees will increase the cost of your investment and may cost you more than paying other types of such charges.
The distribution fees are subject to the requirements of Rule 12b-1 under
the Act, and may be used (among other things) for:
. Compensation paid to and expenses incurred by Authorized Dealers, Goldman
Sachs and their respective officers, employees and sales representatives;
. Commissions paid to Authorized Dealers;
. Allocable overhead;
. Telephone and travel expenses;
. Interest and other costs associated with the financing of such compensa-
tion and expenses;
. Printing of prospectuses for prospective shareholders;
. Preparation and distribution of sales literature or advertising of any
type; and
. All other expenses incurred in connection with activities primarily
intended to result in the sale of Class A, Class B and Class C Shares.
In connection with the sale of Class C Shares, Goldman Sachs normally begins paying the 0.75% distribution fee as an ongoing commission to Authorized Dealers after the shares have been held for one year.
PERSONAL ACCOUNT MAINTENANCE SERVICES AND FEES
Under the Plans, Goldman Sachs is also entitled to receive a separate fee equal on an annual basis to 0.25% of each Fund's average daily net assets attributed to Class B or Class C Shares. This fee is for personal and account maintenance services, and may be used to make payments to Goldman Sachs, Authorized Dealers and their officers, sales representatives and employees for responding to inquiries of, and furnishing assistance to, shareholders regarding ownership of their shares or their accounts or simi- lar services not otherwise provided on behalf of the Funds. If the fees received by Goldman Sachs pursuant to the Plans exceed its expenses, Goldman Sachs may realize a profit from this arrangement.
In connection with the sale of Class C Shares, Goldman Sachs normally begins paying the 0.25% ongoing service fee to Authorized Dealers after the shares have been held for one year.
Taxation
TAXABILITY OF DISTRIBUTIONS
As with any investment, you should consider how your investment in the Funds will be taxed. The tax information below is provided as general information. More tax information is available in the Additional Statement. You should consult your tax adviser about the federal, state, local or foreign tax con- sequences of your investment in the Funds.
Unless your investment is an IRA or other tax-advantaged account, you should consider the possible tax consequences of Fund distributions and the sale of your Fund shares.
TAXES ON DISTRIBUTIONS
Distributions you receive from the Funds are generally subject to federal income tax, and may also be subject to state or local taxes. This is true whether you reinvest your distributions in additional Fund shares or receive them in cash. For federal tax purposes, the Funds' income dividend distribu- tions and short-term capital gain distributions are taxable to you as ordi- nary income. Any long-term capital gain distributions are taxable as long- term capital gains, no matter how long you have owned your Fund shares.
Although distributions are generally treated as taxable to you in the year they are paid, distributions declared in October, November or December but paid in January are taxable as if they were paid in December. A percentage of the Funds' dividends paid to corporate shareholders may be eligible for the corporate dividends-received deduction. The Funds will inform sharehold- ers of the source and tax status of all distributions promptly after the close of each calendar year.
Each Fund may be subject to foreign withholding or other foreign taxes on income or gain from certain foreign securities. In general, the Funds may deduct these taxes in computing their taxable income.
If you buy shares of a Fund before it makes a distribution, the distribution will be taxable to you even though it may actually be a return of a portion of your investment. This is known as "buying a dividend."
TAXATION
TAXES ON SALES
Your sale of Fund shares is a taxable transaction for federal income tax purposes, and may also be subject to state and local taxes. For tax purpos- es, the exchange of your Fund shares for shares of a different Goldman Sachs Fund is the same as a sale. When you sell your shares, you will generally recognize a capital gain or loss in an amount equal to the difference between your adjusted tax basis in the shares and the amount received. Gen- erally, this gain or loss is long-term or short-term depending on whether your holding period exceeds twelve months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.
OTHER INFORMATION
When you open your account, you should provide your social security or tax identification number on your Account Application. By law, each Fund must withhold 31% of your taxable distributions and any redemption proceeds if you do not provide your correct taxpayer identification number, or certify that it is correct, or if the IRS instructs the Fund to do so. Non-U.S. investors may be subject to U.S. withholding and estate tax.
Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks
The Funds will be subject to the risks associated with equity securities. "Equity securities" include common stocks, preferred stocks, interests in real estate investment trusts, convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures, limited liability companies and similar enterprises, warrants and stock pur- chase rights. In general, stock values fluctuate in response to the activi- ties of individual companies and in response to general market and economic conditions. Accordingly, the value of the stocks that a Fund holds may decline over short or extended periods. The stock markets tend to be cycli- cal, with periods when stock prices generally rise and periods when prices generally decline. The volatility of equity securities means that the value of your investment in the Funds may increase or decrease. As of the date of this Prospectus, certain stock markets were trading at or close to record high levels and there can be no guarantee that such levels will continue.
To the extent that a Fund invests in fixed-income securities, that Fund will also be subject to the risks associated with its fixed-income securities. These risks include interest rate risk, credit risk and call/extension risk. In general, interest rate risk involves the risk that when interest rates decline, the market value of fixed-income securities tends to increase (al- though many mortgage related securities will have less potential than other debt securities for capital appreciation during periods of declining rates). Conversely, when interest rates increase, the market value of fixed-income securities tends to decline. Credit risk involves the risk that an issuer could default on its obligations, and a Fund will not recover its invest- ment. Call risk and extension risk are normally present in mortgage-backed securities and asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (call risk) or lengthen (exten- sion risk). In general, if interest rates on new mortgage loans fall suffi- ciently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to invest- ors.
The Investment Adviser will not consider the portfolio turnover rate a lim- iting factor in making investment decisions for a Fund. A high rate of port- folio turn-
APPENDIX A
over (100% or more) involves correspondingly greater expenses which must be borne by a Fund and its shareholders. The portfolio turnover rate is calcu- lated by dividing the lesser of the dollar amount of sales or purchases of portfolio securities by the average monthly value of a Fund's portfolio securities, excluding securities having a maturity at the date of purchase of one year or less. See "Financial Highlights" in Appendix B for a state- ment of the Funds' historical portfolio turnover rates.
The following sections provide further information on certain types of secu- rities and investment techniques that may be used by the Funds, including their associated risks. Additional information is provided in the Additional Statement, which is available upon request. Among other things, the Addi- tional Statement describes certain fundamental investment restrictions that cannot be changed without shareholder approval. You should note, however, that all investment objectives and policies not specifically designated as fundamental are non-fundamental and may be changed without shareholder approval. If there is a change in a Fund's investment objective, you should consider whether that Fund remains an appropriate investment in light of your then current financial position and needs.
B. Other Portfolio Risks
Risks of Investing in Small Capitalization Companies and REITs. Each Fund may invest in small capitalization companies and REITs. Investments in small capitalization companies and REITs involve greater risk and portfolio price volatility than investments in larger capitalization stocks. Among the rea- sons for the greater price volatility of these investments are the less cer- tain growth prospects of smaller firms and the lower degree of liquidity in the markets for such securities. Small capitalization companies and REITs may be thinly traded and may have to be sold at a discount from current mar- ket prices or in small lots over an extended period of time. In addition, these securities are subject to the risk that during certain periods the liquidity of particular issuers or industries, or all securities in these investment categories, will shrink or disappear suddenly and without warning as a result of adverse economic or market conditions, or adverse investor perceptions whether or not accurate. Because of the lack of sufficient mar- ket liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Small capitalization companies and REITs include "unseasoned" issuers that do not have an established financial history; often have limited prod- uct lines, markets or financial resources; may depend on or use a few key personnel for management; and may be susceptible to losses and risks of bankruptcy. Transaction costs for these investments are often higher than those of larger capitalization companies. Investments
in small capitalization companies and REITs may be more difficult to price precisely than other types of securities because of their characteristics and lower trading volumes.
Risks of Foreign Investments. Certain Funds may invest in foreign invest- ments. Foreign investments involve special risks that are not typically associated with U.S. dollar denominated or quoted securities of U.S. issuers. Foreign investments may be affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such invest- ments and changes in exchange control regulations (e.g., currency blockage). A decline in the exchange rate of the currency (i.e., weakening of the cur- rency against the U.S. dollar) in which a portfolio security is quoted or denominated relative to the U.S. dollar would reduce the value of the port- folio security. In addition, if the currency in which a Fund receives divi- dends, interest or other payments declines in value against the U.S. dollar before such income is distributed as dividends to shareholders or converted to U.S. dollars, the Fund may have to sell portfolio securities to obtain sufficient cash to pay such dividends.
The introduction of a single currency, the euro, on January 1, 1999 for par- ticipating nations in the European Economic and Monetary Union presents unique uncertainties, including the legal treatment of certain outstanding financial contracts after January 1, 1999 that refer to existing currencies rather than the euro; the establishment and maintenance of exchange rates for currencies being converted into the euro; the fluctuation of the euro relative to non-euro currencies during the transition period from January 1, 1999 to December 31, 2001 and beyond; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union ("EU"), may have an impact on the euro. These or other factors, including political and economic risks, could cause market disruptions, and could adversely affect the value of securities held by the Funds. Because of the number of countries using this single currency, a significant portion of the assets held by the Funds may be denominated in the euro.
Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such proce- dures have been unable to keep pace with the volume of securities transac- tions, thus making it difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. issuers. There may
APPENDIX A
be less publicly available information about a foreign issuer than about a
U.S. issuer. In addition, there is generally less government regulation of
foreign markets, companies and securities dealers than in the United States.
Foreign securities markets may have substantially less volume than U.S.
securities markets and secu-
rities of many foreign issuers are less liquid and more volatile than secu-
rities of comparable domestic issuers. Efforts in foreign countries to reme-
diate potential Year 2000 problems are not as extensive as those in the
United States. As a result, the operations of foreign markets, foreign
issuers and foreign governments may be disrupted by the Year 2000 Problem,
and the investment portfolio of a Fund may be adversely affected. Further-
more, with respect to certain foreign countries, there is a possibility of
nationalization, expropriation or confiscatory taxation, imposition of with-
holding or other taxes on dividend or interest payments (or, in some cases,
capital gains), limitations on the removal of funds or other assets of the
Funds, and political or social instability or diplomatic developments which
could affect investments in those countries.
Concentration of a Fund's assets in one or a few countries and currencies will subject a Fund to greater risks than if a Fund's assets were not geo- graphically concentrated.
Investment in sovereign debt obligations by certain Funds involves risks not present in debt obligations of corporate issuers. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and a Fund may have limited recourse to compel payment in the event of a default. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt, and in turn a Fund's NAV, to a greater extent than the volatility inherent in debt obliga- tions of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the avail- ability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sov- ereign debtor's policy toward international lenders, and the political constraints to which a sovereign debtor may be subject.
Investments in foreign securities may take the form of sponsored and unsponsored American Depository Receipts ("ADRs") and Global Depository Receipts ("GDRs"). Certain Funds may also invest in European Depository Receipts ("EDRs") or other similar instruments representing securities of foreign issuers. ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. Prices of ADRs are quoted in U.S. dollars, and ADRs are traded in the United States. EDRs and GDRs are receipts
evidencing an arrangement with a non-U.S. bank. EDRs and GDRs are not neces- sarily quoted in the same currency as the underlying security.
Risks of Emerging Countries. Certain Funds may invest in securities of issuers located in emerging countries. The risks of foreign investment are heightened when the issuer is located in an emerging country. Emerging coun- tries are generally located in the Asia-Pacific region, Eastern Europe, Latin and South America and Africa. A Fund's purchase and sale of portfolio securities in certain emerging countries may be constrained by limitations as to daily changes in the prices of listed securities, periodic trading or settlement volume and/or limitations on aggregate holdings of foreign investors. Such limitations may be computed based on the aggregate trading volume by or holdings of a Fund, the Investment Adviser, its affiliates and their respective clients and other service providers. A Fund may not be able to sell securities in circumstances where price, trading or settlement vol- ume limitations have been reached.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees which may limit investment in such countries or increase the administrative costs of such investments. For example, certain Asian countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer's outstanding securities or a spe- cific class of securities which may have less advantageous terms (including price) than securities of the issuer available for purchase by nationals. In addition, certain countries may restrict or prohibit investment opportuni- ties in issuers or industries deemed important to national interests. Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by a Fund. The repatriation of both investment income and capital from certain emerging countries is subject to restrictions such as the need for governmental consents. Due to restrictions on direct invest- ment in equity securities in certain Asian countries, it is anticipated that a Fund may invest in such countries through other investment funds in such countries.
Many emerging countries have experienced currency devaluations and substan- tial (and, in some cases, extremely high) rates of inflation, which have had a negative effect on the economies and securities markets of such emerging countries. Economies in emerging countries generally are dependent heavily upon commodity prices and international trade and, accordingly, have been and may continue to be affected adversely by the economies of their trading partners, trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade.
APPENDIX A
Many emerging countries are subject to a substantial degree of economic, political and social instability. Governments of some emerging countries are authoritarian in nature or have been installed or removed as a result of military coups, while governments in other emerging countries have periodi- cally used force to suppress civil dissent. Disparities of wealth, the pace and success of democratization, and ethnic, religious and racial disaffec- tion, among other factors, have also led to social unrest, violence and/or labor unrest in some emerging countries. Unanticipated political or social developments may result in sudden and significant investment losses. Invest- ing in emerging countries involves greater risk of loss due to expropria- tion, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested.
A Fund's investment in emerging countries may also be subject to withholding or other taxes, which may be significant and may reduce the return from an investment in such country to the Fund.
Settlement procedures in emerging countries are frequently less developed and reliable than those in the United States and often may involve a Fund's delivery of securities before receipt of payment for their sale. In addi- tion, significant delays are common in certain markets in registering the transfer of securities. Settlement or registration problems may make it more difficult for a Fund to value its portfolio securities and could cause the Fund to miss attractive investment opportunities, to have a portion of its assets uninvested or to incur losses due to the failure of a counterparty to pay for securities the Fund has delivered or the Fund's inability to com- plete its contractual obligations. The creditworthiness of the local securi- ties firms used by the Fund in emerging countries may not be as sound as the creditworthiness of firms used in more developed countries. As a result, the Fund may be subject to a greater risk of loss if a securities firm defaults in the performance of its responsibilities.
The small size and inexperience of the securities markets in certain emerg- ing countries and the limited volume of trading in securities in those coun- tries may make a Fund's investments in such countries less liquid and more volatile than investments in countries with more developed securities mar- kets (such as the United States, Japan and most Western European countries). A Fund's investments in emerging countries are subject to the risk that the liquidity of a particular investment, or investments generally, in such countries will shrink or disappear suddenly and without warning as a result of adverse economic, market or political conditions or adverse investor per- ceptions, whether or not accurate. Because of the lack of sufficient market liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Invest-
ments in emerging countries may be more difficult to price precisely because of the characteristics discussed above and lower trading volumes.
A Fund's use of foreign currency management techniques in emerging countries may be limited. Due to the limited market for these instruments in emerging countries, the Investment Adviser does not currently anticipate that a sig- nificant portion of the Funds' currency exposure in emerging countries, if any, will be covered by such instruments.
Risks of Derivative Investments. A Fund's transactions, if any, in options, futures, options on futures, swaps, interest rate caps, floors and collars, structured securities and currency transactions involve additional risk of loss. Loss can result from a lack of correlation between changes in the value of derivative instruments and the portfolio assets (if any) being hedged, the potential illiquidity of the markets for derivative instruments, or the risks arising from margin requirements and related leverage factors associated with such transactions. The use of these management techniques also involves the risk of loss if the Investment Adviser is incorrect in its expectation of fluctuations in securities prices, interest rates or currency prices. Each Fund may also invest in derivative investments for non-hedging purposes (that is, to seek to increase total return). Investing for non- hedging purposes is considered a speculative practice and presents even greater risk of loss.
Risks of Illiquid Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities which cannot be disposed of in seven days in
the ordinary course of business at fair value. Illiquid securities include:
.Both domestic and foreign securities that are not readily marketable
.Certain stripped mortgage-backed securities
.Repurchase agreements and time deposits with a notice or demand period of
more than seven days
.Certain over-the-counter options
.Certain structured securities and all swap transactions
.Certain restricted securities, unless it is determined, based upon a review of the trading markets for a specific restricted security, that such restricted security is eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("144A Securities") and, therefore, is liquid.
Investing in 144A Securities may decrease the liquidity of a Fund's portfo- lio to the extent that qualified institutional buyers become for a time uninterested in purchasing these restricted securities. The purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of com- parable securities for which a liquid market exists.
APPENDIX A
Credit Risks. Debt securities purchased by the Funds may include securities (including zero coupon bonds) issued by the U.S. government (and its agen- cies, instrumentalities and sponsored enterprises), foreign governments, domestic and foreign corporations, banks and other issuers. Further informa- tion is provided in the Additional Statement.
Debt securities rated BBB or higher by Standard & Poor's or Baa or higher by Moody's are considered "investment grade." Securities rated BBB or Baa are considered medium-grade obligations with speculative characteristics, and adverse economic conditions or changing circumstances may weaken their issuers' capacity to pay interest and repay principal. A security will be deemed to have met a rating requirement if it receives the minimum required rating from at least one such rating organization even though it has been rated below the minimum rating by one or more other rating organizations, or if unrated by such rating organizations, determined by the Investment Adviser to be of comparable credit quality.
Certain Funds may invest in fixed-income securities rated BB or Ba or below (or comparable unrated securities) which are commonly referred to as "junk bonds." Junk bonds are considered predominantly speculative and may be ques- tionable as to principal and interest payments.
In some cases, junk bonds may be highly speculative, have poor prospects for reaching investment grade standing and be in default. As a result, invest- ment in such bonds will present greater speculative risks than those associ- ated with investment in investment grade bonds. Also, to the extent that the rating assigned to a security in a Fund's portfolio is downgraded by a rat- ing organization, the market price and liquidity of such security may be adversely affected.
Temporary Investment Risks. Each Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. government securities
.Commercial paper rated at least A-2 by Standard & Poor's or P-2 by Moody's
.Certificates of deposit
.Bankers' acceptances
.Repurchase agreements
.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year
When a Fund's assets are invested in such instruments, the Fund may not be achieving its investment objective.
C. Portfolio Securities and Techniques
This section provides further information on certain types of securities and investment techniques that may be used by the Funds, including their associ- ated risks. Further information is provided in the Additional Statement, which is available upon request.
Convertible Securities. Each Fund may invest in convertible securities. Con- vertible securities are preferred stock or debt obligations that are con- vertible into common stock. Convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar qual- ity. Convertible securities in which a Fund invests are subject to the same rating criteria as its other investments in fixed-income securities. Con- vertible securities have both equity and fixed-income risk characteristics. Like all fixed-income securities, the value of convertible securities is susceptible to the risk of market losses attributable to changes in interest rates. Generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. However, when the market price of the common stock underlying a convertible security exceeds the conversion price of the convertible secu- rity, the convertible security tends to reflect the market price of the underlying common stock. As the market price of the underlying common stock declines, the convertible security, like a fixed-income security, tends to trade increasingly on a yield basis, and thus may not decline in price to the same extent as the underlying common stock.
Foreign Currency Transactions. A Fund may, to the extent consistent with its investment policies, purchase or sell foreign currencies on a cash basis or through forward contracts. A forward contract involves an obligation to pur- chase or sell a specific currency at a future date at a price set at the time of the contract. A Fund may engage in foreign currency transactions for hedging purposes and to seek to protect against anticipated changes in future foreign currency exchange rates. In addition, certain Funds may also enter into such transactions to seek to increase total return, which is con- sidered a speculative practice.
Some Funds may also engage in cross-hedging by using forward contracts in a currency different from that in which the hedged security is denominated or quoted if the Investment Adviser determines that there is a pattern of cor- relation between the two currencies. A Fund may hold foreign currency received in connection with investments in foreign securities when, in the judgment of the Investment Adviser, it would be beneficial to convert such currency into U.S. dollars at a later date (e.g., the Investment Adviser may anticipate the foreign currency to appreciate against the U.S. dollar).
APPENDIX A
Currency exchange rates may fluctuate significantly over short periods of time, causing, along with other factors, a Fund's NAV to fluctuate (when the Fund's NAV fluctuates, the value of your shares may go up or down). Currency exchange rates also can be affected unpredictably by the intervention of U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the United States or abroad.
The market in forward foreign currency exchange contracts, currency swaps and other privately negotiated currency instruments offers less protection against defaults by the other party to such instruments than is available for currency instruments traded on an exchange. Such contracts are subject to the risk that the counterparty to the contract will default on its obli- gations. Since these contracts are not guaranteed by an exchange or clear- inghouse, a default on a contract would deprive a Fund of unrealized prof- its, transaction costs or the benefits of a currency hedge or could force the Fund to cover its purchase or sale commitments, if any, at the current market price.
Structured Securities. Each Fund may invest in structured securities. Struc- tured securities are securities whose value is determined by reference to changes in the value of specific currencies, interest rates, commodities, indices or other financial indicators (the "Reference") or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Structured securities may be posi- tively or negatively indexed, so that appreciation of the Reference may pro- duce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rates or the value of the security at maturity may be a multiple of changes in the value of the Refer- ence. Consequently, structured securities may present a greater degree of market risk than other types of fixed-income securities and may be more vol- atile, less liquid and more difficult to price accurately than less complex securities.
REITs. Each Fund may invest in REITS. REITS are pooled investment vehicles that invest primarily in either real estate or real estate related loans. The value of a REIT is affected by changes in the value of the properties owned by the REIT or securing mortgage loans held by the REIT. REITs are dependent upon the ability of the REITs' managers, and are subject to heavy cash flow dependency, default by borrowers and the qualification of the REITs under applicable regulatory requirements for favorable income tax treatment. REITs are also subject to risks generally associated with invest- ments in real estate including possible declines in the value of real estate, general and local economic conditions, environmental problems and changes in interest rates. To the extent that assets underlying a REIT are concentrated geographically, by property type or in certain other
respects, these risks may be heightened. A Fund will indirectly bear its proportionate share of any expenses, including management fees, paid by a REIT in which it invests.
Options on Securities, Securities Indices and Foreign Currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) of the option the obligation to buy, the underlying instrument dur-
ing the option period. A call option gives the purchaser of the option the
right to buy, and the writer (seller) of the option the obligation to sell,
the underlying instrument during the option period. Each Fund may write
(sell) covered call and put options and purchase put and call options on any
securities in which they may invest or on any securities index comprised of
securities in which they may invest. A Fund may also, to the extent that it
invests in foreign securities, purchase and sell (write) put and call
options on foreign currencies.
The writing and purchase of options is a highly specialized activity which involves special investment risks. Options may be used for either hedging or cross-hedging purposes, or to seek to increase total return (which is con- sidered a speculative activity). The successful use of options depends in part on the ability of the Investment Adviser to manage future price fluctu- ations and the degree of correlation between the options and securities (or currency) markets. If the Investment Adviser is incorrect in its expectation of changes in market prices or determination of the correlation between the instruments or indices on which options are written and purchased and the instruments in a Fund's investment portfolio, the Fund may incur losses that it would not otherwise incur. The use of options can also increase a Fund's transaction costs. Options written or purchased by the Funds may be traded on either U.S. or foreign exchanges or over-the-counter. Foreign and over- the-counter options will present greater possibility of loss because of their greater illiquidity and credit risks.
Futures Contracts and Options on Futures Contracts. Futures contracts are standardized, exchange-traded contracts that provide for the sale or pur- chase of a specified financial instrument or currency at a future time at a specified price. An option on a futures contract gives the purchaser the right (and the writer of the option the obligation) to assume a position in a futures contract at a specified exercise price within a specified period of time. A futures contract may be based on various securities (such as U.S. government securities), foreign currencies, securities indices and other financial instruments and indices. The Funds may engage in futures transac- tions on both U.S. and foreign exchanges.
Each Fund may purchase and sell futures contracts, and purchase and write call and put options on futures contracts, in order to seek to increase total return or to hedge against changes in interest rates, securities prices or, to the extent a Fund
APPENDIX A
invests in foreign securities, currency exchange rates, or to otherwise man- age their term structures, sector selection and durations in accordance with their investment objectives and policies. Each Fund may also enter into closing purchase and sale transactions with respect to such contracts and options. A Fund will engage in futures and related options transactions for bona fide hedging purposes as defined in regulations of the Commodity Futures Trading Commission or to seek to increase total return to the extent permitted by such regulations. A Fund may not purchase or sell futures con- tracts or purchase or sell related options to seek to increase total return, except for closing purchase or sale transactions, if immediately thereafter the sum of the amount of initial margin deposits and premiums paid on the Fund's outstanding positions in futures and related options entered into for the purpose of seeking to increase total return would exceed 5% of the mar- ket value of the Fund's net assets.
Futures contracts and related options present the following risks:
.While a Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency
exchange rates may result in poorer overall performance than if the Fund
had not entered into any futures contracts or options transactions.
.Because perfect correlation between a futures position and portfolio posi-
tion that is intended to be protected is impossible to achieve, the desired
protection may not be obtained and a Fund may be exposed to additional risk
of loss.
.The loss incurred by a Fund in entering into futures contracts and in writ-
ing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
.Futures markets are highly volatile and the use of futures may increase the
volatility of a Fund's NAV.
.As a result of the low margin deposits normally required in futures trad-
ing, a relatively small price movement in a futures contract may result in
substantial losses to a Fund.
.Futures contracts and options on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
.Foreign exchanges may not provide the same protection as U.S. exchanges.
Equity Swaps. Each Fund may invest in equity swaps. Equity swaps allow the parties to a swap agreement to exchange the dividend income or other compo- nents of return on an equity investment (for example, a group of equity securities or an index) for a component of return on another non-equity or equity investment.
An equity swap may be used by a Fund to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment may be restricted for legal reasons or is otherwise impractical. Equity swaps are
derivatives and their value can be very volatile. To the extent that the Investment Adviser does not accurately analyze and predict the potential relative fluctuation of the components swapped with another party, a Fund may suffer a loss. The value of some components of an equity swap (such as the dividends on a common stock) may also be sensitive to changes in inter- est rates. Furthermore, a Fund may suffer a loss if the counterparty defaults.
When-Issued Securities and Forward Commitments. Each Fund may purchase when- issued securities and make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time. When-issued securities are securities that have been authorized, but not yet issued. When-issued securities are purchased in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. A forward commitment involves the entering into a con- tract to purchase or sell securities for a fixed price at a future date beyond the customary settlement period.
The purchase of securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines before the settlement date. Conversely, the sale of securities on a forward commitment basis involves the risk that the value of the securities sold may increase before the settlement date. Although a Fund will generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring the securities for its portfolio, a Fund may dispose of when-issued securities or forward commitments prior to settlement if the Investment Adviser deems it appropriate.
Repurchase Agreements. Repurchase agreements involve the purchase of securi- ties subject to the seller's agreement to repurchase them at a mutually agreed upon date and price. Each Fund may enter into repurchase agreements with dealers in U.S. government securities and member banks of the Federal Reserve System which furnish collateral at least equal in value or market price to the amount of their repurchase obligation.
If the other party or "seller" defaults, a Fund might suffer a loss to the extent that the proceeds from the sale of the underlying securities and other collateral held by the Fund are less than the repurchase price and the Fund's costs associated with delay and enforcement of the repurchase agree- ment. In addition, in the event of bankruptcy of the seller, a Fund could suffer additional losses if a court determines that the Fund's interest in the collateral is not enforceable.
In evaluating whether to enter into a repurchase agreement, the Investment Adviser will carefully consider the creditworthiness of the seller. Certain Funds, together with other registered investment companies having advisory agreements with the Investment Adviser or any of its affiliates, may trans- fer uninvested cash
APPENDIX A
balances into a single joint account, the daily aggregate balance of which will be invested in one or more repurchase agreements.
Lending of Portfolio Securities. Each Fund may engage in securities lending. Securities lending involves the lending of securities owned by a Fund to financial institutions such as certain broker-dealers. The borrowers are required to secure their loan continuously with cash, cash equivalents, U.S. government securities or letters of credit in an amount at least equal to the market value of the securities loaned. Cash collateral may be invested in cash equivalents. To the extent that cash collateral is invested in other investment securities, such collateral will be subject to market deprecia- tion or appreciation, and a Fund will be responsible for any loss that might result from its investment of the borrowers' collateral. If the Investment Adviser determines to make securities loans, the value of the securities loaned may not exceed 33 1/3% of the value of the total assets of a Fund (including the loan collateral).
A Fund may lend its securities to increase its income. A Fund may, however, experience delay in the recovery of its securities if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund.
Short Sales Against-the-Box. Certain Funds may make short sales against-the- box. A short sale against-the-box means that at all times when a short posi- tion is open the Fund will own an equal amount of securities sold short, or securities convertible into or exchangeable for, without payment of any fur- ther consideration, an equal amount of the securities of the same issuer as the securities sold short.
Preferred Stock, Warrants and Rights. Each Fund may invest in preferred stock, warrants and rights. Preferred stocks are securities that represent an ownership interest providing the holder with claims on the issuer's earn- ings and assets before common stock owners but after bond owners. Unlike debt securities, the obligations of an issuer of preferred stock, including dividend and other payment obligations, may not typically be accelerated by the holders of such preferred stock on the occurrence of an event of default or other non-compliance by the issuer of the preferred stock.
Warrants and other rights are options to buy a stated number of shares of common stock at a specified price at any time during the life of the warrant or right. The holders of warrants and rights have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.
Other Investment Companies. Each Fund may invest in securities of other investment companies (including SPDRs and WEBs, as defined below) subject to statutory limitations prescribed by the Act. These limitations include a prohibition on
any Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of a Fund's total assets in securities of any one investment company or more than 10% of its total assets in securities of all investment companies. A Fund will indi- rectly bear its proportionate share of any management fees and other expenses paid by such other investment companies. Such other investment com- panies will have investment objectives, policies and restrictions substan- tially similar to those of the acquiring Fund and will be subject to sub- stantially the same risks.
.Standard & Poor's Depository Receipts. The Funds may, consistent with their investment policies, purchase Standard & Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on the American Stock Exchange ("AMEX") that represent ownership in the SPDR Trust, a trust which has been established to accumulate and hold a portfolio of common stocks that is intended to track the price performance and dividend yield of the S&P 500. The SPDR Trust is sponsored by a subsidiary of the AMEX. SPDRs may be used for several reasons, including, but not limited to, facilitating the han- dling of cash flows or trading, or reducing transaction costs. The price movement of SPDRs may not perfectly parallel the price action of the S&P 500.
.World Equity Benchmark Shares. World Equity Benchmark Shares ("WEBS") are shares of an investment company that invests substantially all of its assets in securities included in the MSCI indices for specified countries. WEBS are listed on the AMEX and were initially offered to the public in 1996. The market prices of WEBS are expected to fluctuate in accordance with both changes in the NAVs of their underlying indices and supply and demand of WEBS on the AMEX. To date, WEBS have traded at relatively modest discounts and premiums to their NAVs. However, WEBS have a limited operat- ing history and information is lacking regarding the actual performance and trading liquidity of WEBS for extended periods or over complete market cycles. In addition, there is no assurance that the requirements of the AMEX necessary to maintain the listing of WEBS will continue to be met or will remain unchanged. In the event substantial market or other disruptions affecting WEBS should occur in the future, the liquidity and value of a Fund's shares could also be substantially and adversely affected. If such disruptions were to occur, a Fund could be required to reconsider the use of WEBS as part of its investment strategy.
Unseasoned Companies. Each Fund may invest in companies (including predeces- sors) which have operated less than three years. The securities of such com- panies may have limited liquidity, which can result in their being priced higher or lower than might otherwise be the case. In addition, investments in unseasoned compa -
APPENDIX A
nies are more speculative and entail greater risk than do investments in companies with an established operating record.
Corporate Debt Obligations. Corporate debt obligations include bonds, notes, debentures, commercial paper and other obligations of corporations to pay interest and repay principal, and include securities issued by banks and other financial institutions. Each Fund may invest in corporate debt obliga- tions issued by U.S. and certain non-U.S. issuers which issue securities denominated in the U.S. dollar (including Yankee and Euro obligations). In addition to obligations of corporations, corporate debt obligations include securities issued by banks and other financial institutions and suprana- tional entities (i.e., the World Bank, the International Monetary Fund, etc.).
Bank Obligations. Each Fund may invest in obligations issued or guaranteed by U.S. or foreign banks. Bank obligations, including without limitations, time deposits, bankers' acceptances and certificates of deposit, may be gen- eral obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulations. Banks are subject to extensive but different governmental regulations which may limit both the amount and types of loans which may be made and interest rates which may be charged. In addition, the profitability of the banking industry is largely dependent upon the availability and cost of funds for the purpose of financing lending operations under prevailing money market conditions. General economic conditions as well as exposure to credit losses arising from possible financial difficulties of borrowers play an important part in the operation of this industry.
U.S. Government Securities and Related Custodial Receipts. Each Fund may invest in U.S. government securities and related custodial receipts. U.S. government securities include U.S. Treasury obligations and obligations issued or guaranteed by U.S. government agencies, instrumentalities or spon- sored enterprises. U.S. government securities may be supported by (a) the full faith and credit of the U.S. Treasury (such as the Government National Mortgage Association ("Ginnie Mae")); (b) the right of the issuer to borrow from the U.S. Treasury (such as securities of the Student Loan Marketing Association); (c) the discretionary authority of the U.S. government to pur- chase certain obligations of the issuer (such as the Federal National Mort- gage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac")); or (d) only the credit of the issuer. U.S. government securities also include Treasury receipts, zero coupon bonds and other stripped U.S. government securities, where the interest and principal compo- nents of stripped U.S. government securities are traded independently.
Interests in U.S. government securities may be purchased in the form of cus- todial receipts that evidence ownership of future interest payments, princi- pal payments
or both on certain notes or bonds issued or guaranteed as to principal and interest by the U.S. government, its agencies, instrumentalities, political subdivisions or authorities. For certain securities law purposes, custodial receipts are not considered obligations of the U.S. government.
Mortgage-Backed Securities. Certain Funds may invest in mortgage-backed securities. Mortgage-backed securities represent direct or indirect partici- pations in, or are collateralized by and payable from, mortgage loans secured by real property. Mortgage-backed securities can be backed by either fixed rate mortgage loans or adjustable rate mortgage loans, and may be issued by either a governmental or non-governmental entity. Privately issued mortgage-backed securities are normally structured with one or more types of "credit enhancement." However, these mortgage-backed securities typically do not have the same credit standing as U.S. government guaranteed mortgage- backed securities.
Mortgage-backed securities may include multiple class securities, including collateralized mortgage obligations ("CMOs") and Real Estate Mortgage Investment Conduit ("REMIC") pass-through or participation certificates. CMOs provide an investor with a specified interest in the cash flow from a pool of underlying mortgages or of other mortgage-backed securities. CMOs are issued in multiple classes. In many cases, payments of principal are applied to the CMO classes in the order of their respective stated maturi- ties, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. A REMIC is a CMO that qualifies for special tax treatment and invests in cer- tain mortgages principally secured by interests in real property and other permitted investments.
Mortgaged-backed securities also include stripped mortgage-backed securities ("SMBS"), which are derivative multiple class mortgage-backed securities. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments and the other that receives sub- stantially all of the principal payments from a pool of mortgage loans. The market value of SMBS consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on SMBS that receive all or most of the interest from mortgage loans are gener- ally higher than prevailing market yields on other mortgage-backed securi- ties because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
Asset-Backed Securities. Certain Funds may invest in asset-backed securi- ties. Asset-backed securities are securities whose principal and interest payments are collateralized by pools of assets such as auto loans, credit card receivables, leases, installment contracts and personal property. Asset-backed securities are often sub-
APPENDIX A
ject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the under- lying loans. During periods of declining interest rates, prepayment of loans underlying asset-backed securities can be expected to accelerate. According- ly, a Fund's ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is subject to generally prevailing interest rates at that time. Asset-backed securities present credit risks that are not presented by mortgage-backed securities. This is because asset-backed securities gener- ally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. There is the possibility that, in some cases, recoveries on repossessed collateral may not be available to support pay- ments on these securities. In the event of a default, a Fund may suffer a loss if it cannot sell collateral quickly and receive the amount it is owed.
Borrowings. Each Fund can borrow money from banks and other financial insti- tutions in amounts not exceeding one-third of its total assets for temporary or emergency purposes. A Fund may not make additional investments if borrowings exceed 5% of its total assets.
Appendix B
Financial Highlights
The financial highlights tables are intended to help you understand a Fund's financial performance for the past five years (or less if the Fund has been in operation for less than five years). Certain information reflects finan- cial results for a single Fund share. The total returns in the table repre- sent the rate that an investor would have earned or lost on an investment in a Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Arthur Andersen LLP, whose report, along with a Fund's financial statements, is included in the Fund's annual report (available upon request without charge).
CORE INTERNATIONAL EQUITY FUND
Income from
investment operations/a/
---------------------------
Net asset Net
value, investment Net realized and
beginning income unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $ 9.98 $ 0.05 $ 0.84
1999 - Class B Shares 9.95 0.01 0.85
1999 - Class C Shares 9.96 0.01 0.85
1999 - Institutional Shares 10.06 0.09 0.85
1999 - Service Shares 10.02 0.01 0.90
------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 9.22 (0.01) 0.79
1999 - Class B Shares 9.21 -- 0.74
1999 - Class C Shares 9.22 -- 0.74
1999 - Institutional Shares 9.24 0.05 0.80
1999 - Service Shares 9.23 -- 0.81
------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced August
15, 1997) 10.00 -- (0.78)
1998 - Class B Shares (commenced August
15, 1997) 10.00 (0.02) (0.77)
1998 - Class C Shares (commenced August
15, 1997) 10.00 (0.02) (0.76)
1998 - Institutional Shares (commenced
August 15, 1997) 10.00 0.02 (0.76)
1998 - Service Shares (commenced August
15, 1997) 10.00 0.01 (0.78)
------------------------------------------------------------------------------
|
See page 113 for all footnotes.
APPENDIX B
Distributions to
shareholders
------------------------
Net
increase Net
(decrease) Net asset assets
From net From net in net value, at end
investment realized asset end of Total of period
income gains value period return/b/ (in 000s)
---------------------------------------------------------------------------------
$ -- $ -- $ 0.89 $10.87 8.92%d $114,502
-- -- 0.86 10.81 8.64d 9,171
-- -- 0.86 10.82 8.63d 4,913
-- -- 0.94 11.00 9.34d 271,212
-- -- 0.91 10.93 9.08d 8
---------------------------------------------------------------------------------
(0.02) -- 0.76 9.98 8.37 110,338
-- -- 0.74 9.95 8.03 7,401
-- -- 0.74 9.96 8.03 3,742
(0.03) -- 0.82 10.06 9.20 280,731
(0.02) -- 0.79 10.02 8.74 22
---------------------------------------------------------------------------------
-- -- (0.78) 9.22 (7.66)d 7,087
-- -- (0.79) 9.21 (7.90)d 2,721
-- -- (0.78) 9.22 (7.80)d 1,608
(0.02) -- (0.76) 9.24 (7.45)d 17,719
-- -- (0.77) 9.23 (7.70)d 1
---------------------------------------------------------------------------------
|
CORE INTERNATIONAL EQUITY FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of
net
Ratio of Ratio of net investment
net investment Ratio of income
expenses income (loss) expenses (loss) to Portfolio
to average to average to average average turnover
net assets net assets net assets net assets rate
----------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 1.66%c 0.78%c 1.76%c 0.68%c 64.97%d
1999 - Class B Shares 2.16c 0.26c 2.26c 0.16c 64.97d
1999 - Class C Shares 2.16c 0.23c 2.26c 0.13c 64.97d
1999 - Institutional
Shares 1.01c 1.43c 1.11c 1.33c 64.97d
1999 - Service Shares 1.51c 0.07c 1.61c (0.03)c 64.97d
----------------------------------------------------------------------------------
For the Year Ended
January 31,
1999 - Class A Shares 1.63 (0.11) 1.94 (0.42) 194.61
1999 - Class B Shares 2.08 (0.03) 2.39 (0.34) 194.61
1999 - Class C Shares 2.08 (0.04) 2.39 (0.35) 194.61
1999 - Institutional
Shares 1.01 0.84 1.32 0.53 194.61
1999 - Service Shares 1.50 0.02 1.81 (0.29) 194.61
----------------------------------------------------------------------------------
For the Period Ended
January 31,
1998 - Class A Shares
(commenced August 15,
1997) 1.50c (0.27)c 4.87c (3.90)c 25.16d
1998 - Class B Shares
(commenced August 15,
1997) 2.00c (0.72)c 5.12c (3.84)c 25.16d
1998 - Class C Shares
(commenced August 15,
1997) 2.00c (0.73)c 5.12c (3.85)c 25.16d
1998 - Institutional
Shares (commenced
August 15, 1997) 1.00c 0.59 c 4.12c (2.53)c 25.16d
1998 - Service Shares
(commenced August 15,
1997) 1.50c 0.26 c 4.62c (2.86)c 25.16d
----------------------------------------------------------------------------------
|
[This page intentionally left blank]
INTERNATIONAL EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $21.92 $ 0.04 $ 1.16
1999 - Class B Shares 21.63 (0.02) 1.12
1999 - Class C Shares 21.45 (0.03) 1.12
1999 - Institutional Shares 22.20 0.12e 1.17e
1999 - Service Shares 21.93 0.06 1.15
------------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 19.85 (0.06) 3.24
1999 - Class B Shares 19.70 (0.17) 3.21
1999 - Class C Shares 19.56 (0.15) 3.15
1999 - Institutional Shares 19.97 0.03 3.31
1999 - Service Shares 19.84 (0.04) 3.24
------------------------------------------------------------------------------
1998 - Class A Shares 19.32 0.03 2.04
1998 - Class B Shares 19.24 (0.08) 2.02
1998 - Class C Shares (commenced
August 15, 1997) 22.60 (0.04) (1.38)
1998 - Institutional Shares 19.40 0.10 2.11
1998 - Service Shares 19.34 0.02 2.06
------------------------------------------------------------------------------
1997 - Class A Shares 17.20 0.10 2.23
1997 - Class B Shares (commenced May 1,
1996) 18.91 (0.06) 0.60
1997 - Institutional Shares (commenced
February 7, 1996) 17.45 0.04 2.15
1997 - Service Shares (commenced March 6,
1996) 17.70 (0.02) 1.87
------------------------------------------------------------------------------
1996 - Class A Shares 14.52 0.13 4.00
------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
--------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gain value of period return/b/ (in 000s) net assets
------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 1.20 $23.12 5.47%d $943,473 1.79%c
-- -- -- 1.10 22.73 5.09d 68,691 2.29c
-- -- -- 1.09 22.54 5.08d 11,241 2.29c
-- -- -- 1.29 23.49 5.81d 180,564 1.14c
-- -- -- 1.21 23.14 5.52d 3,852 1.64c
------------------------------------------------------------------------------------------------
-- -- (1.11) 2.07 21.92 16.39 947,973 1.73
-- -- (1.11) 1.93 21.63 15.80 69,231 2.24
-- -- (1.11) 1.89 21.45 15.70 11,619 2.24
-- -- (1.11) 2.23 22.20 17.09 111,315 1.13
-- -- (1.11) 2.09 21.93 16.49 3,568 1.63
------------------------------------------------------------------------------------------------
-- (0.30) (1.24) 0.53 19.85 11.12 697,590 1.67
-- (0.25) (1.23) 0.46 19.70 10.51 55,324 2.20
-- (0.38) (1.24) (3.04) 19.56 (5.92)d 3,369 2.27c
(0.07) (0.33) (1.24) 0.57 19.97 11.82 56,263 1.08
-- (0.35) (1.23) 0.50 19.84 11.25 3,035 1.55
------------------------------------------------------------------------------------------------
-- -- (0.21) 2.12 19.32 13.48 536,283 1.69
-- -- (0.21) 0.33 19.24 2.83d 19,198 2.23c
(0.03) -- (0.21) 1.95 19.40 12.53d 68,374 1.10c
-- -- (0.21) 1.64 19.34 10.42d 674 1.60c
------------------------------------------------------------------------------------------------
(0.58) -- (0.87) 2.68 17.20 28.68 330,860 1.52
------------------------------------------------------------------------------------------------
|
INTERNATIONAL EQUITY FUND (continued)
Ratios assuming
no voluntary
expense limitations
--------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) to expenses to income (loss) Portfolio
average net average to average net turnover
assets net assets assets rate
-------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 0.31%c 1.84%c 0.26%c 61.10%d
1999 - Class B Shares (0.19)c 2.34c (0.24)c 61.10d
1999 - Class C Shares (0.26)c 2.34c (0.31)c 61.10d
1999 - Institutional
Shares 0.89c 1.19c 0.84c 61.10d
1999 - Service Shares 0.47c 1.69c 0.42c 61.10d
-------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares (0.28) 1.82 (0.37) 113.79
1999 - Class B Shares (0.79) 2.32 (0.87) 113.79
1999 - Class C Shares (0.98) 2.32 (1.06) 113.79
1999 - Institutional
Shares 0.23 1.21 0.15 113.79
1999 - Service Shares (0.18) 1.71 (0.26) 113.79
-------------------------------------------------------------------------------
1998 - Class A Shares (0.27) 1.80 (0.40) 40.82
1998 - Class B Shares (0.90) 2.30 (1.00) 40.82
1998 - Class C Shares
(commenced August 15,
1997) (1.43)c 2.37c (1.53)c 40.82
1998 - Institutional
Shares 0.30 1.18 0.20 40.82
1998 - Service Shares (0.36) 1.65 (0.46) 40.82
-------------------------------------------------------------------------------
1997 - Class A Shares (0.07) 1.88 (0.26) 38.01
1997 - Class B Shares
(commenced May 1, 1996) (0.97)c 2.38c (1.12)c 38.01
1997 - Institutional
Shares (commenced
February 7, 1996) 0.43c 1.25c 0.28c 38.01
1997 - Service Shares
(commenced March 6,
1996) (0.40)c 1.75c (0.55)c 38.01
-------------------------------------------------------------------------------
1996 - Class A Shares 0.26 1.77 0.01 68.48
-------------------------------------------------------------------------------
|
[This page intentionally left blank]
EUROPEAN EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period loss gain (loss)
-----------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $12.20 $0.05 $(0.50)
1999 - Class B Shares 12.19 0.03 (0.51)
1999 - Class C Shares 12.20 0.04 (0.52)
1999 - Institutional Shares 12.23 0.18 (0.59)
1999 - Service Shares 12.20 0.08 (0.52)
-----------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced October
1, 1998) 10.00 (0.03) 2.23
1999 - Class B Shares (commenced October
1, 1998) 10.00 (0.02) 2.21
1999 - Class C Shares (commenced October
1, 1998) 10.00 (0.01) 2.21
1999 - Institutional Shares (commenced
October 1, 1998) 10.00 (0.01) 2.24
1999 - Service Shares (commenced October
1, 1998) 10.00 (0.03) 2.23
-----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
-----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $(0.45) $11.75 (3.69)%d $74,862 1.79%c
-- -- -- (0.48) 11.71 (3.94)d 879 2.29c
-- -- -- (0.48) 11.72 (3.93)d 388 2.29c
-- -- -- (0.41) 11.82 (3.35)d 5,965 1.14c
-- -- -- (0.44) 11.76 (3.61)d 2 1.64c
-----------------------------------------------------------------------------------------------
-- -- -- 2.20 12.20 22.00d 61,151 1.79c
-- -- -- 2.19 12.19 21.90d 432 2.29c
-- -- -- 2.20 12.20 22.00d 587 2.29c
-- -- -- 2.23 12.23 22.30d 12,740 1.14c
-- -- -- 2.20 12.20 22.00d 2 1.64c
-----------------------------------------------------------------------------------------------
|
EUROPEAN EQUITY FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
------------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) to expenses to income (loss) Portfolio
average net average net to average net turnover
assets assets assets rate
------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares 0.80%c 2.29%c 0.30%c 54.98%d
1999 - Class B Shares 0.43c 2.79c (0.07)c 54.98d
1999 - Class C Shares 0.42c 2.79c (0.08)c 54.98d
1999 - Institutional
Shares 1.53c 1.64c 1.03c 54.98d
1999 - Service Shares 1.10c 2.14c 0.60c 54.98d
------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares
(commenced October 1,
1998) (1.19)c 2.80c (2.20)c 70.77d
1999 - Class B Shares
(commenced October 1,
1998) (1.78)c 3.30c (2.79)c 70.77d
1999 - Class C Shares
(commenced October 1,
1998) (1.83)c 3.30c (2.84)c 70.77d
1999 - Institutional
Shares (commenced Octo-
ber 1, 1998) (0.33)c 2.15c (1.34)c 70.77d
1999 - Service Shares
(commenced October 1,
1998) (0.69)c 2.65c (1.70)c 70.77d
------------------------------------------------------------------------------
|
[This page intentionally left blank]
JAPANESE EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period loss gains
----------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $11.06 $(0.06) $5.24
1999 - Class B Shares 11.03 (0.09) 5.20
1999 - Class C Shares 11.04 (0.08) 5.20
1999 - Institutional Shares 11.10 (0.03) 5.29
1999 - Service Shares 11.04 (0.06) 5.24
----------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced May 1,
1998) 10.00 (0.06) 1.12
1999 - Class B Shares (commenced May 1,
1998) 10.00 (0.08) 1.11
1999 - Class C Shares (commenced May 1,
1998) 10.00 (0.09) 1.13
1999 - Institutional Shares (commenced
May 1, 1998) 10.00 (0.02) 1.13
1999 - Service Shares (commenced May 1,
1998) 10.00 (0.05) 1.09
----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
-------------------------------------
In excess Net assets Ratio of
From net of net Net increase Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $5.18 $16.24 46.84%d $34,279 1.70%c
-- -- -- 5.11 16.14 46.33d 4,219 2.20c
-- -- -- 5.12 16.16 46.41d 3,584 2.20c
-- -- -- 5.26 16.36 47.40d 22,709 1.05c
-- -- -- 5.18 16.22 46.92d 3 1.55c
----------------------------------------------------------------------------------------------
-- -- -- 1.06 11.06 10.60d 8,391 1.64c
-- -- -- 1.03 11.03 10.30d 1,427 2.15c
-- -- -- 1.04 11.04 10.40d 284 2.15c
-- (0.01) -- 1.10 11.10 11.06d 11,418 1.03c
-- -- -- 1.04 11.04 10.43d 2 1.53c
----------------------------------------------------------------------------------------------
|
JAPANESE EQUITY FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
----------------------------
Ratio of Ratio of
net investment Ratio of net investment
loss to expenses to loss to average Portfolio
average net average net turnover
assets net assets assets rate
---------------------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares (1.17)%c 2.62%c (2.09)%c 44.83%d
1999 - Class B Shares (1.57)c 3.12c (2.49)c 44.83d
1999 - Class C Shares (1.81)c 3.12c (2.73)c 44.83d
1999 - Institutional
Shares (0.37)c 1.97c (1.29)c 44.83d
1999 - Service Shares (0.74)c 2.47c (1.66)c 44.83d
---------------------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares
(commenced May 1, 1998) (1.20)c 4.18c (3.74)c 53.29d
1999 - Class B Shares
(commenced May 1, 1998) (1.76)c 4.69c (4.30)c 53.29d
1999 - Class C Shares
(commenced May 1, 1998) (1.69)c 4.69c (4.23)c 53.29d
1999 - Institutional
Shares (commenced May 1,
1998) (0.36)c 3.57c (2.90)c 53.29d
1999 - Service Shares
(commenced May 1, 1998) (0.68)c 4.07c (3.22)c 53.29d
---------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
INTERNATIONAL SMALL CAP FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period loss gain
-------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $10.62 $(0.03) $2.65
1999 - Class B Shares 10.61 (0.08)e 2.66e
1999 - Class C Shares 10.61 (0.08)e 2.66e
1999 - Institutional Shares 10.66 -- 2.69
1999 - Service Shares 10.61 (0.02) 2.65
-------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced May 1,
1998) 10.00 (0.04) 0.66
1999 - Class B Shares (commenced May 1,
1998) 10.00 (0.10) 0.71
1999 - Class C Shares (commenced May 1,
1998) 10.00 (0.06) 0.67
1999 - Institutional Shares (commenced May
1, 1998) 10.00 -- 0.67
1999 - Service Shares (commenced May 1,
1998) 10.00 (0.02) 0.63
-------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------------
Ratio of
In excess Net assets net
From net of net Net increase Net asset at end of expenses
investment investment From net in net asset value, end Total period to average
income loss realized gains value of period return/b/ (in 000s) net assets
-----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $2.62 $13.24 24.67%d $69,458 2.05%c
-- -- -- 2.58 13.19 24.32d 303 2.55c
-- -- -- 2.58 13.19 24.32d 419 2.55c
-- -- -- 2.69 13.35 25.24d 65,772 1.40c
-- -- -- 2.63 13.24 24.79d 2 1.90c
-----------------------------------------------------------------------------------------------
-- -- -- 0.62 10.62 6.20d 33,002 2.02c
-- -- -- 0.61 10.61 6.10d 213 2.51c
-- -- -- 0.61 10.61 6.10d 175 2.51c
-- (0.01) -- 0.66 10.66 6.67d 36,992 1.40c
-- -- -- 0.61 10.61 6.10d 2 1.90c
-----------------------------------------------------------------------------------------------
|
INTERNATIONAL SMALL CAP FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of Ratio of
net net
investment Ratio of investment
loss to expenses loss to Portfolio
average to average average turnover
net assets net assets net assets rate
------------------------------------------------------------------------------
For the Seven-Month Period Ended
August 31,
1999 - Class A Shares (0.68)%c 2.42%c (1.05)%c 58.81%d
1999 - Class B Shares (1.16)c 2.92c (1.53)c 58.81d
1999 - Class C Shares (1.21)c 2.92c (1.58)c 58.81d
1999 - Institutional Shares (0.05)c 1.77c (0.42)c 58.81d
1999 - Service Shares (0.35)c 2.27c (0.72)c 58.81d
------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced
May 1, 1998) (1.03)c 3.60c (2.61)c 96.11d
1999 - Class B Shares (commenced
May 1, 1998) (1.30)c 4.09c (2.88)c 96.11d
1999 - Class C Shares (commenced
May 1, 1998) (1.45)c 4.09c (3.03)c 96.11d
1999 - Institutional Shares
(commenced May 1, 1998) (0.19)c 2.98c (1.77)c 96.11d
1999 - Service Shares (commenced
May 1, 1998) (0.26)c 3.48c (1.84)c 96.11d
------------------------------------------------------------------------------
|
[This page intentionally left blank]
EMERGING MARKETS EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $ 7.04 $(0.01) $ 2.23
1999 - Class B Shares 7.03 (0.03) 2.21
1999 - Class C Shares 7.05 (0.03) 2.22
1999 - Institutional Shares 7.09 0.02 2.26
1999 - Service Shares 6.87 0.01 2.17
------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 9.69 0.04 (2.40)
1999 - Class B Shares 9.69 0.03 (2.41)
1999 - Class C Shares 9.70 0.01 (2.39)
1999 - Institutional Shares 9.70 0.06 (2.36)
1999 - Service Shares 9.69 (0.13) (2.41)
------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced December
15, 1997) 10.00 -- (0.31)
1998 - Class B Shares (commenced December
15, 1997) 10.00 -- (0.31)
1998 - Class C Shares (commenced December
15, 1997) 10.00 -- (0.30)
1998 - Institutional Shares (commenced
December 15, 1997) 10.00 0.01 (0.31)
1998 - Service Shares (commenced December
15, 1997) 10.00 -- (0.31)
------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
--------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 2.22 $9.26 31.53%d $ 65,698 2.04%c
-- -- -- 2.18 9.21 31.01d 972 2.54c
-- -- -- 2.19 9.24 31.06d 1,095 2.54c
-- -- -- 2.28 9.37 32.16d 108,574 1.39c
-- -- -- 2.18 9.05 31.73d 2 1.89c
--------------------------------------------------------------------------------------------------
(0.07) (0.22) -- (2.65) 7.04 (24.32) 52,704 2.09
(0.07) (0.21) -- (2.66) 7.03 (24.51) 459 2.59
(0.07) (0.20) -- (2.65) 7.05 (24.43) 273 2.59
(0.08) (0.23) -- (2.61) 7.09 (23.66) 90,189 1.35
(0.07) (0.21) -- (2.82) 6.87 (26.17) 1 1.85
--------------------------------------------------------------------------------------------------
-- -- -- (0.31) 9.69 (3.10)d 17,681 1.90c
-- -- -- (0.31) 9.69 (3.10)d 64 2.41c
-- -- -- (0.30) 9.70 (3.00)d 73 2.48c
-- -- -- (0.30) 9.70 (3.00)d 19,120 1.30c
-- -- -- (0.31) 9.69 (3.10)d 2 2.72c
--------------------------------------------------------------------------------------------------
|
EMERGING MARKETS EQUITY FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
------------------------------
Ratio
Ratio of net
of net investment
investment Ratio of income
income (loss) expenses to (loss) to Portfolio
to average average net average turnover
net assets assets net assets rate
------------------------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares (0.15)%c 2.41%c (0.52)%c 63.24%d
1999 - Class B Shares (0.71)c 2.91c (1.08)c 63.24d
1999 - Class C Shares (0.85)c 2.91c (1.22)c 63.24d
1999 - Institutional
Shares 0.50c 1.76c 0.13c 63.24d
1999 - Service Shares 0.12c 2.26c (0.25)c 63.24d
------------------------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 0.80 2.53 0.36 153.67
1999 - Class B Shares 0.19 3.03 (0.25) 153.67
1999 - Class C Shares 0.28 3.03 (0.16) 153.67
1999 - Institutional
Shares 1.59 1.79 1.15 153.67
1999 - Service Shares (1.84) 2.29 (2.28) 153.67
------------------------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares
(commenced December 15,
1997) 0.55c 5.88c (3.43)c 3.35d
1998 - Class B Shares
(commenced December 15,
1997) 0.05c 6.39c (3.93)c 3.35d
1998 - Class C Shares
(commenced December 15,
1997) (0.27)c 6.46c (4.25)c 3.35d
1998 - Institutional
Shares (commenced Decem-
ber 15, 1997) 0.80c 5.28c (3.18)c 3.35d
1998 - Service Shares
(commenced December 15,
1997) (0.05)c 6.70c (4.03)c 3.35d
------------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
ASIA GROWTH FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
-----------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $ 7.79 $(0.02) $3.30
1999 - Class B Shares 7.68 (0.04) 3.24
1999 - Class C Shares 7.68 (0.04) 3.21
1999 - Institutional Shares 7.91 0.01 3.36
-----------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 8.38 0.07 (0.66)
1999 - Class B Shares 8.31 0.01 (0.64)
1999 - Class C Shares 8.29 -- (0.61)
1999 - Institutional Shares 8.44 0.03 (0.56)
-----------------------------------------------------------------------------
1998 - Class A Shares 16.31 -- (7.90)
1998 - Class B Shares 16.24 0.01 (7.91)
1998 - Class C Shares (commenced August
15, 1997) 15.73 0.01 (7.42)
1998 - Institutional Shares 16.33 0.10 (7.96)
-----------------------------------------------------------------------------
1997 - Class A Shares 16.49 0.06 (0.11)
1997 - Class B Shares (commenced May 1,
1996) 17.31 (0.05) (0.48)
1997 - Institutional Shares (commenced
February 2, 1996) 16.61 0.04 (0.11)
-----------------------------------------------------------------------------
1996 - Class A Shares 13.31 0.17 3.44
-----------------------------------------------------------------------------
For the Period Ended January 31,
1995 - Class A Shares (commenced July 8,
1994) 14.18 0.11 (0.89)
-----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------
Net
In excess increase Net assets
From net of net From net (decrease) Net asset at end
investment investment realized in net value, end Total of period
income income gains asset value of period return/b/ (in 000s)
------------------------------------------------------------------------------
$ -- $ -- $ -- $ 3.28 $11.07 42.11%d $ 84,269
-- -- -- 3.20 10.88 41.67d 7,258
-- -- -- 3.17 10.85 41.28d 2,281
-- (0.04) -- 3.33 11.24 42.61d 12,363
------------------------------------------------------------------------------
-- -- -- (0.59) 7.79 (7.04) 59,940
-- -- -- (0.63) 7.68 (7.58) 4,190
-- -- -- (0.61) 7.68 (7.36) 999
-- -- -- (0.53) 7.91 (6.28) 4,200
------------------------------------------------------------------------------
-- (0.03) -- (7.93) 8.38 (48.49) 87,437
-- (0.03) -- (7.93) 8.31 (48.70) 3,359
-- (0.03) -- (7.44) 8.29 (47.17)d 436
(0.03) -- -- (7.89) 8.44 (48.19) 874
------------------------------------------------------------------------------
(0.12) -- (0.01) (0.18) 16.31 (1.01) 263,014
(0.51) (0.03) -- (1.07) 16.24 (6.02)d 3,354
(0.11) (0.06) (0.04) (0.28) 16.33 (1.09)d 13,322
------------------------------------------------------------------------------
(0.12) (0.14) (0.17) 3.18 16.49 26.49 205,539
------------------------------------------------------------------------------
0.01 -- (0.10) (0.87) 13.31 (5.46)d 124,298
------------------------------------------------------------------------------
|
ASIA GROWTH FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of
net
Ratio of Ratio of net investment
net investment Ratio of income
expenses income (loss) expenses (loss) to Portfolio
to average to average to average average turnover
net assets net assets net assets net assets rate
-----------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 1.85%c (0.38)%c 2.27%c (0.80)%c 96.58%d
1999 - Class B Shares 2.35c (0.90)c 2.77c (1.32)c 96.58d
1999 - Class C Shares 2.35c (0.89)c 2.77c (1.31)c 96.58d
1999 - Institutional
Shares 1.20c 0.14c 1.62c (0.28)c 96.58d
-----------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares 1.93 0.63 2.48 0.08 106.00
1999 - Class B Shares 2.45 0.10 2.97 (0.42) 106.00
1999 - Class C Shares 2.45 0.10 2.97 (0.42) 106.00
1999 - Institutional
Shares 1.16 1.10 1.68 0.58 106.00
-----------------------------------------------------------------------------------
1998 - Class A Shares 1.75 0.31 1.99 0.07 105.16
1998 - Class B Shares 2.30 (0.29) 2.50 (0.49) 105.16
1998 - Class C Shares
(commenced August 15,
1997) 2.35c (0.26)c 2.55c (0.46)c 105.16
1998 - Institutional
Shares 1.11 0.87 1.31 0.67 105.16
-----------------------------------------------------------------------------------
1997 - Class A Shares 1.67 0.20 1.87 -- 48.40
1997 - Class B Shares
(commenced May 1, 1996) 2.21c (0.56)c 2.37c (0.72)c 48.40
1997 - Institutional
Shares (commenced
February 2, 1996) 1.10c 0.54c 1.26c 0.38c 48.40
-----------------------------------------------------------------------------------
1996 - Class A Shares 1.77 1.05 2.02 0.80 88.80
-----------------------------------------------------------------------------------
For the Period Ended
January 31,
1995 - Class A Shares
(commenced July 8,
1994) 1.90c 1.83c 2.38c 1.35c 36.08d
-----------------------------------------------------------------------------------
|
APPENDIX B
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares methodology.
Index
1 General Investment
Management Approach
3 Fund Investment Objectives
and Strategies
3 Goldman Sachs CORE
International Equity Fund
4 Goldman Sachs International
Equity Fund
5 Goldman Sachs European
Equity Fund
6 Goldman Sachs Japanese
Equity Fund
8 Goldman Sachs International
Small Cap Fund
9 Goldman Sachs Emerging
Markets Equity Fund
11 Goldman Sachs Asia Growth
Fund
14 Other Investment Practices
and Securities
18 Principal Risks of the
Funds
21 Fund Performance
26 Fund Fees and Expenses
36 Service Providers
46 Dividends
47 Shareholder Guide
47 How To Buy Shares
56 How To Sell Shares
66 Taxation
68 Appendix A
Additional Information
on Portfolio Risks,
Securities and
Techniques
86 Appendix B
Financial Highlights
|
International Equity Funds
Prospectus (Class A, B and C Shares)
FOR MORE INFORMATION
Annual/Semi-annual Report
Additional information about the Funds' investments is available in the Funds' annual and semi-annual reports to shareholders. In the Funds' annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the last fiscal year.
Statement of Additional Information
Additional information about the Funds and their policies is also available
in the Funds' Statement of Additional Information ("Additional Statement").
The Additional Statement is incorporated by reference into this Prospectus
(is legally considered part of this Prospectus).
The Funds' annual and semi-annual reports, and the Additional Statement, are available free upon request by calling Goldman Sachs at 1-800-526-7384.
To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-526-7384
By mail - Goldman Sachs Funds, 4900 Sears Tower-60th Floor, Chicago, IL
60606-6372
By e-mail - gs-funds@gs.com
On the Internet - Text-only versions of the Funds' documents are located
online and may be downloaded from:
SEC EDGAR database - http://www.sec.gov Goldman Sachs - http://www.gs.com (Prospectus Only)
You may review and obtain copies of Fund documents by visiting the SEC's
Public Reference Room in Washington, D.C. You may also obtain copies of Fund
documents, after paying a duplicating fee, by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102 or by electronic request to:
publicinfo@sec.gov. Information on the operation of the public reference
room may be obtained by calling the SEC at (202) 942-8090.
[LOGO OF GOLDMAN SACHS]
The Funds' investment company registration number is 811-5349.
CORESM is a service mark of Goldman, Sachs & Co.
511045
EQINTLPROABC
Prospectus
GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS
Institutional
Shares
November 30, 1999
.Goldman Sachs
CORE/SM/
International
Equity Fund
.Goldman Sachs
International
Equity Fund
.Goldman Sachs
European
Equity Fund
.Goldman Sachs
Japanese
Equity Fund
.Goldman Sachs
International
Small Cap Fund
.Goldman Sachs
Emerging
Markets Equity
Fund
.Goldman Sachs
Asia Growth
Fund
[LOGO OF GOLDMAN SACHS]
THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A FUND IS NOT A BANK
DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN A FUND
INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
NOT FDIC-INSURED May Lose Value No Bank Guarantee
General Investment Management Approach
Goldman Sachs Asset Management, a unit of the Investment Management Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser to the CORE International Equity Fund. Goldman Sachs Asset Management Interna- tional serves as investment adviser to International Equity, European Equi- ty, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds. Goldman Sachs Asset Management and Goldman Sachs Asset Management International are each referred to in this Prospectus as the "In- vestment Adviser."
ACTIVE INTERNATIONAL STYLE FUNDS
Goldman Sachs' Active International Investment Philosophy:
How the Investment Adviser Acts on
Belief Belief
----------------------------------------------------------------------------
.Equity markets are inefficient Seeks excess return through team
driven, research intensive and
bottom-up stock selection.
.Returns are variable Seeks to capitalize on variability
of market and regional returns
through asset allocation decisions.
.Corporate fundamentals ultimately Seeks to conduct rigorous, first-
drive share price hand research of business and
company management.
.A business' intrinsic value will be Seeks to realize value through a
achieved over time long-term investment horizon.
.Portfolio risk must be carefully Seeks to systematically monitor and
analyzed and monitored manage risk through diversification,
multifactor risk models and currency
management.
|
The Investment Adviser attempts to manage risk in these Funds through disci- plined portfolio construction and continual portfolio review and analysis. As a result, bottom-up stock selection, driven by fundamental research, should be a main driver of returns.
QUANTITATIVE ("CORE") STYLE FUNDS
Goldman Sachs' CORE Investment Philosophy:
Goldman Sachs' quantitative style of funds--CORE--emphasizes the two build-
ing blocks of active management: stock selection and portfolio construction.
I. CORE STOCK SELECTION
The CORE Fund uses the Goldman Sachs proprietary multifactor model
("Multifactor Model"), a rigorous computerized rating system, to forecast
the returns of securities held in the Fund's portfolio. The Multifactor
Model incorporates common variables covering measures of:
.Value (price-to-book, price-to-earnings, cash flow to enterprise value)
.Momentum (earnings momentum, price momentum, sustainable growth)
.Risk (market risk, company-specific risk, earnings risk)
All of the above factors are carefully evaluated within the Multifactor Model since each has demonstrated a significant impact on the performance of the securities and markets they were designed to forecast.
II. CORE PORTFOLIO CONSTRUCTION
A proprietary computer optimizer calculates every security combination (at every possible weighting) to construct the most efficient risk/return port- folio given the CORE Fund benchmark. In this process, the Investment Adviser manages risk by limiting deviations from the benchmark. In addition, the CORE International Equity Fund utilizes proprietary quantitative models to allocate assets across countries.
Goldman Sachs CORE Funds are fully invested, broadly diversified and offer consistent overall portfolio characteristics. They may serve as good founda- tions on which to build a portfolio.
Fund Investment Objectives and Strategies
Goldman Sachs CORE International Equity Fund
Long-term growth of capital
Objective:
MSCI Europe, Australasia, Far East ("EAFE") Index
Benchmarks: (unhedged)
Large-capitalization equity securities of companies that
Investment Focus: are organized outside the United States or whose securi-
ties are primarily traded outside the United States
Quantitative
|
Investment Style:
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of large-cap companies that are organized outside the United States or whose securities are principally traded outside the United States.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of companies that are organized outside the United States or whose securities are principally traded outside the United States.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time, provided the Fund's assets are invested in at least three foreign countries. The Fund may invest in the securities of issuers in countries with emerging markets or economies ("emerging countries").
The Fund seeks broad representation of large-cap issuers across major coun- tries and sectors of the international economy. The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintain- ing risk, style, capitalization and industry characteristics similar to the EAFE Index. In addition, the Fund seeks a portfolio composed of companies with attractive valuations and stronger momentum characteristics than the EAFE Index.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered to be cash equivalents.
Goldman Sachs International Equity Fund
Long-term capital appreciation
Objective:
Benchmark: MSCI EAFE Index (unhedged)
Equity securities of companies organized outside the
Investment Focus: United States or whose securities are principally traded
outside the United States
Active International
Investment Style:
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of companies that are organized outside the United States or whose securities are principally traded outside the United States. The Fund intends to invest in companies with public stock market capitalizations that are larger than $1 billion at the time of investment.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time provided that the Fund's assets are invested in at least three foreign countries.
The Fund expects to invest a substantial portion of its assets in the secu- rities of issuers located in the developed countries of Western Europe and in Japan. However, the Fund may also invest in the securities of issuers located in Australia, Canada, New Zealand and in emerging countries. Cur- rently, emerging countries include, among others, most Latin American, Afri- can, Asian and Eastern European nations.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs European Equity Fund
Objective: Long-term capital appreciation
Benchmark: MSCI Europe Index (unhedged)
Investment Focus: Equity securities of European companies
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of European companies. Because of its focus, the Fund will be more susceptible to European economic, market, political and local risks than a fund that is more geographically diversified.
A European issuer is a company that either:
.Has a class of its securities whose principal securities markets is in a
European country;
.Is organized under the laws of, or has a principal office in, a European
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more of the European countries; or
.Maintains 50% or more of its assets in one or more of the European coun-
tries.
The Fund may allocate its assets among different countries as determined by the Investment Adviser from time to time, provided that the Fund's assets are invested in at least three European countries. It is currently antici- pated that a majority of the Fund's assets will be invested in the equity securities of large cap companies located in the developed countries of Western Europe. However, the Fund may also invest, without limit, in mid cap companies and small cap companies, as well as companies located in emerging countries. Currently, emerging countries include among others, most Latin American, African, Asian, most Eastern European nations, including the states that formerly comprised the Soviet Union and Yugoslavia.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of non-European countries and in fixed-income securities, such as government, corporate and bank debt obligations.
Goldman Sachs Japanese Equity Fund
Long-term capital appreciation Objective:
Tokyo Price Index ("TOPIX") (unhedged) Benchmark:
Equity securities of Japanese companies Investment Focus:
Active International Investment Style:
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
Japanese companies. A Japanese issuer is a company that either:
.Has a class of its securities whose principal securities markets is in
Japan;
.Is organized under the laws of, or has a principal office in Japan;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in Japan; or
.Maintains 50% or more of its assets in Japan.
The Fund's concentration in Japanese companies will expose it to the risk of adverse social, political and economic events which occur in Japan or affect the Japanese markets.
Japan's economy, the second largest in the world, has grown substantially over the last three decades. Japan's economic growth in the 1990's has been substantially below the level of earlier decades. Its economy has drifted between modest growth and recession. In calendar year 1998, Japan's gross national product contracted by 2.8% -- its worst performance in the post-war period. In addition to this economic downturn, Japan is undergoing struc- tural adjustments related to high wages and taxes, currency valuations and structural rigidities. Japan has also been experiencing notable uncertainty and loss of public confidence in connection
FUND INVESTMENT OBJECTIVES AND STRATEGIES
with the reform of its political process and the deregulation of its econo- my. These conditions present risks to the Japanese Equity Fund and its abil- ity to attain its investment objective.
Japan's economy is heavily dependent upon international trade, and is espe- cially sensitive to trade barriers and disputes. In particular, Japan relies on large imports of agricultural products, raw materials and fuels. A sub- stantial rise in world oil or commodity prices, or a fall-off in Japan's manufactured exports, could be expected to adversely affect Japan's economy. In addition, Japan is vulnerable to earthquakes, volcanoes and other natural disasters. Japan's banking industry has recently suffered from non-perform- ing loans, declining real estate values and lower valuations of securities holdings.
The Japanese securities markets are less regulated than the U.S. markets. Evidence has emerged from time to time of distortion of market prices to serve political or other purposes. Shareholders' rights are also not always equally enforced.
For most of this decade, Japanese securities markets have experienced sig- nificant declines. Although the stock market exhibited some strength recent- ly, it is not possible to determine whether this will continue.
The common stocks of many Japanese companies trade at high price-earnings ratios. Differences in accounting methods make it difficult to compare the earnings of Japanese companies with those of companies in other countries, especially the United States. In general, however, reported net income in Japan is understated relative to U.S. accounting standards and this is one reason price-earnings ratios of the stocks of Japanese companies have tended historically to be higher than those of U.S. stocks. In addition, Japanese companies have tended to have higher growth rates than U.S. companies, and Japanese interest rates have generally been lower than U.S. interest rates. These factors have contributed to lower discount rates and higher price- earnings ratios in Japan than in the United States.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of non-Japanese companies and in fixed-income securities, such as government, corporate and bank debt obligations.
Goldman Sachs International Small Cap Fund
Objective: Long-term capital appreciation
Benchmark: MSCI EAFE Small Cap Index (unhedged)
Investment Focus: Equity securities of foreign companies with public stock
market capitalizations of $1 billion or less at the time
of investment
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
companies:
.With public stock market capitalizations of $1 billion or less at the time
of investment; and
.That are organized outside the United States or whose securities are prin-
cipally traded outside the United States.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time provided that the Fund's assets are invested in at least three foreign countries. The Fund expects to invest a substantial portion of its assets in small cap securities of companies in the developed countries of Western Europe, Japan and Asia. However, the Fund may also invest in the securities of issuers located in Australia, Canada, New Zealand and in emerging countries. Currently, emerging countries include, among others, most Latin American, African, Asian and Eastern Euro- pean nations.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of larger-cap companies with public stock market capital- izations of more than $1 billion at the time of investment and in fixed- income securities, such as government, corporate and bank debt obligations. If the market capitalization of a company held by the Fund increases above $1 billion, the Fund may, consistent with its investment objective, continue to hold the security.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs Emerging Markets Equity Fund
Objective: Long-term capital appreciation
Benchmark: MSCI Emerging Markets Free Index
Investment Focus: Equity securities of emerging country issuers
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of emerging country issuers. The Investment Adviser may consider classifica- tions by the World Bank, the International Finance Corporation or the United Nations and its agencies in determining whether a country is emerging or developed. Currently, emerging countries include, among others, most Latin American, African, Asian and Eastern European nations. The Investment Adviser currently intends that the Fund's investment focus will be in the following emerging countries as well as any other emerging country to the extent that foreign investors are permitted by applicable law to make such investments:
.Argentina .Egypt .Jordan .Philippines .Sri Lanka .Botswana .Greece .Kenya .Poland .Taiwan .Brazil .Hong Kong .Malaysia .Portugal .Thailand .Chile .Hungary .Mexico .Russia .Turkey .China .India .Morocco .Singapore .Venezuela .Colombia .Indonesia .Pakistan .South Africa .Zimbabwe .Czech Republic .Israel .Peru .South Korea |
Goldman Sachs Emerging Markets Equity Fund continued
An emerging country issuer is any company that either:
.Has a class of its securities whose principal securities market is in an
emerging country;
.Is organized under the laws of, or has a principal office in, an emerging
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more emerging countries; or
.Maintains 50% or more of its assets in one or more of the emerging coun-
tries.
Under normal circumstances, the Fund maintains investments in at least six emerging countries, and will not invest more than 35% of its total assets in securities of issuers in any one emerging country. Allocation of the Fund's investments will depend upon the relative attractiveness of the emerging country markets and particular issuers. In addition, macro-economic factors and the portfolio managers' and Goldman Sachs economists' views of the rela- tive attractiveness of emerging countries and currencies are considered in allocating the Fund's assets among emerging countries.
Other. The Fund may invest in the aggregate up to 35% of its total assets in
(i) fixed-income securities of private and government emerging country
issuers; and (ii) equity and fixed-income securities, such as government,
corporate and bank debt obligations, of issuers in developed countries.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs Asia Growth Fund
Objective: Long-term capital appreciation
Benchmark: MSCI All County Asia Free ex-Japan Index (unhedged)
Investment Focus: Equity securities of companies in Asian countries
Investment Process: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
Asian issuers.
An Asian issuer is any company that either:
.Has a class of its securities whose principal securities markets is in one
or more Asian countries;
.Is organized under the laws of, or has a principal office in, an Asian
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more Asian countries; or
.Maintains 50% or more of its assets in one or more Asian countries.
The Fund may allocate its assets among the Asian countries as determined from time to time by the Investment Adviser. For purposes of the Fund's investment policies, Asian countries are:
.China .Malaysia .South Korea .Hong Kong .Pakistan .Sri Lanka .India .Philippines .Taiwan .Indonesia .Singapore .Thailand |
as well as any other country in Asia (other than Japan) to the extent that foreign investors are permitted by applicable law to make such investments.
Goldman Sachs Asia Growth Fund continued
Allocation of the Fund's investments will depend upon the Investment Advis- er's views of the relative attractiveness of the Asian markets and particu- lar issuers.
Concentration of the Fund's assets in one or a few of the Asian countries and Asian currencies will subject the Fund to greater risks than if the Fund's assets were not so concentrated. For example, on August 31, 1999 (the end of the Fund's last fiscal year), more than 25% of the Fund's assets were invested in securities that traded in Hong Kong.
Starting in mid-1997 some Pacific region countries began to experience cur- rency devaluations that resulted in high interest rate levels and sharp reductions in economic activity. This situation resulted in a significant drop in the securities prices of companies located in the region. Some coun- tries have experienced government intervention, have sought assistance from the International Monetary Fund and have experienced substantial domestic unrest. Although some countries are taking steps to restructure their finan- cial sectors in a manner that may facilitate a return to long-term economic growth, there can be no assurance that these efforts will be successful or that their current problems will not persist. At the end of its last fiscal year, a substantial portion of the Asia Growth Fund was invested in securi- ties traded in the Hong Kong market. In 1997, the sovereignty of Hong Kong reverted from the United Kingdom to China. Hong Kong's financial prospects depend, in large part, on its ability to retain the legal, financial and monetary systems that allow economic freedom and market expansion. Although Hong Kong is, by law, to maintain a high degree of autonomy, there can also be no assurance that the general economic position of Hong Kong will not be adversely affected as a result of the exercise of Chinese sovereignty over Hong Kong. In particular, business confidence in Hong Kong can be signifi- cantly affected by political developments and statements by public figures in China, which can in turn affect the performance of the securities mar- kets. In addition, the reversion of Hong Kong to China has created uncer- tainty as to future currency valuations relative to the U.S. dollar. Any future valuation changes could be adverse from the perspective of U.S. investors.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of issuers in non-Asian countries and Japan, and in fixed- income securities, such as government, corporate and bank debt obligations.
[This page intentionally left blank]
Other Investment Practices and Securities
The table below identifies some of the investment techniques that may (but are
not required to) be used by the Funds in seeking to achieve their investment
objectives. The table also highlights the differences among the Funds in their
use of these techniques and other investment practices and investment securi-
ties. Numbers in this table show allowable usage only; for actual usage, con-
sult the Fund's annual/semi-annual reports. For more information see Appendix
A.
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage limitation on usage; limited only by the objectives
and strategies of the Fund
-- Not permitted
CORE
International International European
Equity Equity Equity
Fund Fund Fund
------------------------------------------------------------------------------
Investment Practices
Borrowings 33 1/3 33 1/3 33 1/3
Cross Hedging of Currencies . . .
Currency Swaps* 15 15 15
Custodial Receipts . . .
Equity Swaps* 15 15 15
Foreign Currency Transactions . . .
Futures Contracts and Options on Futures
Contracts . . .
Investment Company Securities (including
World Equity Benchmark Shares and
Standard & Poor's Depository Receipts) 10 10 10
Options on Foreign Currencies/1/ . . .
Options on Securities and Securities
Indices/2/ . . .
Unseasoned Companies . . .
Warrants and Stock Purchase Rights . . .
Repurchase Agreements . . .
Securities Lending 33 1/3 33 1/3 33 1/3
Short Sales Against the Box -- 25 25
When-Issued Securities and Forward
Commitments . . .
------------------------------------------------------------------------------
|
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 1 The Funds may purchase and sell call and put options. 2 The Funds may sell covered call and put options and purchase call and put options.
OTHER INVESTMENT PRACTICES AND SECURITIES
Japanese International Emerging Asia
Equity Small Cap Markets Growth
Fund Fund Equity Fund Fund
----------------------------------------------------------------------------------------------------
33 1/3 33 1/3 33 1/3 33 1/3
. . . .
15 15 15 15
. . . .
15 15 15 15
. . . .
. . . .
10 10 10 10
. . . .
. . . .
. . . .
. . . .
. . . .
33 1/3 33 1/3 33 1/3 33 1/3
25 25 25 25
. . . .
----------------------------------------------------------------------------------------------------
|
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage limitation on usage; limited only by the objectives
and strategies of the Fund
-- Not permitted
CORE
International International European
Equity Equity Equity
Fund Fund Fund
------------------------------------------------------------------------------
Investment Securities
American, European and Global Depository
Receipts . . .
Asset-Backed and Mortgage-Backed
Securities/2/ -- . .
Bank Obligations/1/,/2/ . . .
Convertible Securities . . .
Corporate Debt Obligations/2/ ./4/ . .
Equity Securities 90+ 65+ 65+
Emerging Country Securities 25 . .
Fixed Income Securities/3/ 10/4/ 35 35/5/
Foreign Securities . . .
Foreign Government Securities/2/ . . .
Non-Investment Grade Fixed Income
Securities/2/ -- ./6/ ./6/
Real Estate Investment Trusts . . .
Structured Securities* . . .
Temporary Investments 35 100 100
U.S. Government Securities/2/ . . .
------------------------------------------------------------------------------
|
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 1 Issued by U.S. or foreign banks.
2 Limited by the amount the Fund invests in fixed-income securities.
3 Except as noted under "Non-Investment Grade Fixed Income Securities," fixed-income securities are investment grade (e.g., BBB or higher by Stan- dard & Poor's Rating Group ("Standard & Poor's") or Baa or higher by Moody's Investor's Service, Inc. ("Moody's")).
4 Cash equivalents only.
5 The European Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) equity securities of non-European countries; and (2) fixed- income securities.
6 May be BB or lower by Standard & Poor's or Ba or lower by Moody's.
OTHER INVESTMENT PRACTICES AND SECURITIES
Japanese International Emerging
Equity Small Cap Markets Asia Growth
Fund Fund Equity Fund Fund
--------------------------------------------------------------------------------
. . . .
. . . .
. . . .
. . . .
. . . .
65+ 65+ 65+ 65+
. . . .
35/7/ 35/8/ 35/9/ 35/10/
. . . .
. . . .
./6/ ./6/ ./6/ ./6/
. . . .
. . . .
100 100 35 100
. . . .
--------------------------------------------------------------------------------
|
7 The Japanese Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities; and (2) equity securities of non-Japanese companies.
8 The International Small Cap Fund may invest in the aggregate up to 35% of its total assets in (1) fixed-income securities; and (2) equity securities of larger cap companies with public stock market capitalizations of more than $1 billion at the time of investment.
9 The Emerging Markets Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities of private and government emerging country issuers; and (2) equity and fixed-income securities of issuers in developed countries.
10 The Asia Growth Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities; and (2) equity securities of issuers in non-Asian countries and Japan.
Principal Risks of the Funds
Loss of money is a risk of investing in each Fund. An investment in a Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The following summarizes important risks that apply to the Funds and may result in a loss of your investment. None of the Funds should be relied upon as a complete investment program. There can be no assurance that a Fund will achieve its investment objective.
. Applicable
-- Not applicable
CORE International Emerging
International International European Japanese Small Cap Markets Asia
Equity Equity Equity Equity Equity Equity Growth
-----------------------------------------------------------------------------------------------
Credit/Default . . . . . . .
Emerging Countries . . . . . . .
Interest Rate . . . . . . .
Small Cap -- -- . -- . -- --
Foreign . . . . . . .
Derivatives . . . . . . .
Management . . . . . . .
Market . . . . . . .
Liquidity . . . . . . .
Stock . . . . . . .
Geographic . . . . . . .
Other . . . . . . .
-----------------------------------------------------------------------------------------------
|
All Funds:
.Credit/Default Risk--The risk that an issuer of fixed-income securities held
by a Fund (which may have low credit ratings) may default on its obligation to
pay interest and repay principal.
.Emerging Countries Risk--The securities markets of Asian, Latin American,
Eastern European, African and other emerging countries are less liquid, are
especially subject to greater price volatility, have smaller market capital-
izations, have less government regulation and are not subject to as extensive
and frequent accounting, financial and other reporting requirements as the
securities markets of more developed countries. Further, investment in equity
securities of issuers located in Russia and certain other emerging countries
involves risk of loss resulting from problems in share registration and cus-
tody and substantial economic and political disrup-
PRINCIPAL RISKS OF THE FUNDS
tions. These risks are not normally associated with investment in more devel- oped countries.
.Interest Rate Risk--The risk that when interest rates increase, fixed-income securities held by a Fund will decline in value. Long-term fixed-income secu- rities will normally have more price volatility because of this risk than short-term securities.
.Foreign Risks--The risk that when a Fund invests in foreign securities, it
will be subject to risk of loss not typically associated with domestic
issuers. Loss may result because of less foreign government regulation, less
public information and less economic, political and social stability. Loss may
also result from the imposition of exchange controls, confiscations and other
government restrictions. A Fund will also be subject to the risk of negative
foreign currency rate fluctuations. Foreign risks will normally be greatest
when a Fund invests in issuers located in emerging countries.
.Derivatives Risk--The risk that loss may result from a Fund's investments in
options, futures, swaps, structured securities and other derivative instru-
ments. These instruments may be leveraged so that small changes may produce
disproportionate losses to a Fund.
.Management Risk--The risk that a strategy used by the Investment Adviser may
fail to produce the intended results.
.Market Risk--The risk that the value of the securities in which a Fund invests
may go up or down in response to the prospects of individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
.Liquidity Risk--The risk that a Fund will not be able to pay redemption pro-
ceeds within the time period stated in this Prospectus because of unusual mar-
ket conditions, an unusually high volume of redemption requests, or other rea-
sons. Funds that invest in small capitalization stocks and emerging country
issuers will be especially subject to the risk that during certain periods the
liquidity of particular issuers or industries, or all securities within these
investment categories, will shrink or disappear suddenly and without warning
as a result of adverse economic, market or political events, or adverse
investor perceptions whether or not accurate. The Goldman Sachs Asset Alloca-
tion Portfolios (the "Asset Allocation Portfolios") expect to invest a signif-
icant percentage of their assets in the Funds and other funds for which
Goldman Sachs now or in the future acts as investment adviser or underwriter.
Redemptions by an Asset Allocation Portfolio of its position in a Fund may
further increase liquidity risk and may impact a Fund's net asset value
("NAV").
.Stock Risk--The risk that stock prices have historically risen and fallen in
periodic cycles. As of the date of this Prospectus, U.S. stock markets and
certain foreign stock markets were trading at or close to record high levels.
There is no guarantee that such levels will continue.
.Geographic Risk--The European Equity Fund invests primarily in equity securi-
ties of European companies. The Japanese Equity Fund invests primarily in
equity securities of Japanese equity companies. The Asia Growth Fund invests
primarily in equity securities of Asian issuers. Concentration of the invest-
ments of these or other Funds in issuers located in a particular country or
region will subject the Fund, to a greater extent than if investments were
less concentrated, to the risks of adverse securities markets, exchange rates
and social, political, regulatory or economic events which may occur in that
country or region.
.Other Risks--Each Fund is subject to other risks, such as the risk that its
operations, or the value of its portfolio securities, will be disrupted by the
"Year 2000 Problem."
Specific Funds:
.Small Cap Stock Risk--The securities of small capitalization stocks involve greater risks than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements. Securities of such issuers may lack sufficient market liquidity to enable a Fund to effect sales at an advantageous time or without a substantial drop in price.
More information about the Funds' portfolio securities and investment tech- niques, and their associated risks, is provided in Appendix A. You should con- sider the investment risks discussed in this section and in Appendix A. Both are important to your investment choice.
Fund Performance
HOW THE FUNDS HAVE PERFORMED
The bar chart and table below provide an indication of the risks of invest- ing in a Fund by showing: (a) changes in the performance of a Fund's Insti- tutional Shares from year to year; and (b) how the average annual returns of a Fund's Institutional Shares compare to those of broad-based securities market indices. The bar chart and table assume reinvestment of dividends and distributions. A Fund's past performance is not necessarily an indication of how the Fund will perform in the future. Performance reflects expense limi- tations in effect. If expense limitations were not in place, a Fund's per- formance would have been reduced. The European Equity, Japanese Equity and International Small Cap Funds did not commence operations until October 1, 1998, May 1, 1998 and May 1, 1998. Since these Funds have less than one cal- endar year's performance, no performance information is provided in this section.
CORE International Equity Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the [BAR CHART]
9-month period
ended September
30, 1999 was
9.77%. 1998
------
Best Quarter 14.57%
Q4 '98 +19.05%
Worst Quarter
Q3 '98 -15.84%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ---------------------------------------------------------------------------- Institutional Shares (Inception 8/15/97) 14.57% 0.55% Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index* 20.33% 8.44% ---------------------------------------------------------------------------- |
* The unmanaged MSCI EAFE Index is a market capitalization-weighted composite of securities in 20 developed markets. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
International Equity Fund TOTAL RETURN CALENDAR YEAR -------------------------------------------------------------------------------- The total return for Institutional Shares for the 9-month period ended September [BAR CHART] 30, 1999 was |
Worst Quarter
Q3 '98 -14.25%
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ----------------------------------------------------------------------------- Institutional Shares (Inception 2/7/96) 18.72% 13.62% MSCI EAFE (unhedged)* 20.33% 9.23% FT/S&P Actuaries Europe & Pacific Index (unhedged)** 19.31% 7.85% ----------------------------------------------------------------------------- |
* The MSCI EAFE Index, an unmanaged index of common stock prices, is replac- ing the FT/S&P Actuaries Europe & Pacific Index ("EuroPac") as the Interna- tional Equity Fund's performance benchmark. The MSCI EAFE Index is widely used throughout the investment management industry to represent the invest- ment opportunities available to a large cap, developed country interna- tional equity strategy and, in the Investment Adviser's opinion, is a more appropriate benchmark against which to measure the performance of the International Equity Fund. The Index figures do not reflect any fees or expenses.
** The unmanaged EuroPac Index is a market capitalization-weighted composite of approximately 1,500 stocks from 20 countries in Europe and the Asia- Pacific region. The Index figures do not reflect any fees or expenses.
Emerging Markets Equity Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September [BAR CHART]
30, 1999 was
25.76%.
1998
Best Quarter -------
Q4 '98 +14.08% -26.29%
Worst Quarter
Q3 '98 -22.78%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception -------------------------------------------------------------------- Institutional Shares (Inception 12/15/97) (26.29)% (23.64)% MSCI Emerging Markets Free (EMF) Index* (25.33)% (19.87)% -------------------------------------------------------------------- |
* The unmanaged MSCI EMF Index is a market capitalization-weighted composite of securities in over 30 emerging market countries. "Free" indicates an index that excludes shares in otherwise free markets that are not purchas- able by foreigners. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
Asia Growth Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Institutional
Shares for the
9-month period
ended September [BAR CHART]
30, 1999 was
28.80%. 1997 1998
------ ------
Best Quarter -40.64% -14.73%
Q4 '98 +21.60%
Worst Quarter
Q4 '97 -27.19%
|
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception --------------------------------------------------------------------- Institutional Shares (Inception 2/2/96) (14.73)% (21.21)% MSCI All Country Asia Free ex-Japan Index* (10.27)% (19.82)% --------------------------------------------------------------------- |
* The unmanaged MSCI All Country Asia Free ex-Japan Index is a market capi- talization-weighted composite of securities in ten Asian countries. "Free" indicates an index that excludes shares in otherwise free markets that are not purchasable by foreigners. The Index figures do not reflect any fees or expenses.
Fund Fees and Expenses (Institutional Shares)
This table describes the fees and expenses that you would pay if you buy and hold Institutional Shares of a Fund.
CORE
International International European
Equity Fund Equity Fund Equity Fund
----------------------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your
investment):
Maximum Sales Charge (Load) Imposed on
Purchases None None None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None None None
Redemption Fees None None None
Exchange Fees None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/1/
Management Fees 0.85% 1.00% 1.00%
Distribution and Service Fees None None None
Other Expenses/2/ 0.26% 0.19% 0.64%
----------------------------------------------------------------------------------------
Total Fund Operating Expenses* 1.11% 1.19% 1.64%
----------------------------------------------------------------------------------------
|
See page 28 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Funds which are actually incurred are as set forth below. The expense limitations may be terminated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operat- ing Expenses" may increase without shareholder approv- al.
CORE
International International European
Equity Fund Equity Fund Equity Fund
------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from
Fund assets):/1/
Management Fees 0.85% 1.00% 1.00%
Distribution and Service Fees None None None
Other Expenses/2/ 0.16% 0.14% 0.14%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after
current expense limitations) 1.01% 1.14% 1.14%
------------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
Emerging Asia
Japanese International Markets Growth
Equity Fund Small Cap Fund Equity Fund Fund
----------------------------------------------------------------------------------------------
None None None None
None None None None
None None None None
None None None None
1.00% 1.20% 1.20% 1.00%
None None None None
0.97% 0.57% 0.56% 0.62%
----------------------------------------------------------------------------------------------
1.97% 1.77% 1.76% 1.62%
----------------------------------------------------------------------------------------------
|
Emerging Asia
Japanese International Markets Growth
Equity Fund Small Cap Fund Equity Fund Fund
----------------------------------------------------------------------------------------------
1.00% 1.20% 1.20% 1.00%
None None None None
0.05% 0.20% 0.19% 0.20%
----------------------------------------------------------------------------------------------
1.05% 1.40% 1.39% 1.20%
----------------------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
/1/The Funds' operating expenses for the current fiscal year have been
annualized for the seven-month period (February 1, 1999 through August 31,
1999).
/2/"Other Expenses" include transfer agency fees equal to 0.04% of the average
daily net assets of each Fund's Institutional Shares plus all other ordinary
expenses of the Funds not detailed above. The Investment Adviser has voluntar-
ily agreed to reduce or limit "Other Expenses" (excluding management fees,
transfer agency fees, taxes, interest and brokerage fees and litigation, indem-
nification and other extraordinary expenses) to the following percentages of
each Fund's average daily net assets:
Other
Fund Expenses
--------------------------
CORE
International
Equity 0.12%
International
Equity 0.10%
European Equity 0.10%
Japanese Equity 0.01%
International
Small Cap 0.16%
Emerging Markets
Equity 0.15%
Asia Growth 0.16%
|
FUND FEES AND EXPENSES
Example
The following Example is intended to help you compare the cost of investing in a Fund (without the expense limitations) with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in Institutional Shares of a Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your invest- ment has a 5% return each year and that a Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assump- tions your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years ---------------------------------------------------------- CORE International Equity $113 $353 $ 612 $1,352 ---------------------------------------------------------- International Equity $121 $378 $ 654 $1,443 ---------------------------------------------------------- European Equity $167 $517 $ 892 $1,944 ---------------------------------------------------------- Japanese Equity $200 $618 $1,062 $2,296 ---------------------------------------------------------- International Small Cap $180 $557 $ 959 $2,084 ---------------------------------------------------------- Emerging Markets Equity $179 $554 $ 954 $2,073 ---------------------------------------------------------- Asia Growth $165 $511 $ 881 $1,922 ---------------------------------------------------------- |
Institutions that invest in Institutional Shares on behalf of their customers may charge other fees directly to their customer accounts in connection with their investments. You should contact your institution for information regard- ing such charges. Such fees, if any, may affect the return customers realize with respect to their investments.
Certain institutions that invest in Institutional Shares may receive other com- pensation in connection with the sale and distribution of Institutional Shares or for services to their customers' accounts and/or the Funds. For additional information regarding such compensation, see "Shareholder Guide" in the Pro- spectus and "Other Information" in the Statement of Additional Information ("Additional Statement").
Service Providers
INVESTMENT ADVISERS
Investment Adviser Fund
------------------------------------------------------------------------
Goldman Sachs Asset Management ("GSAM") CORE International Equity
32 Old Slip
New York, New York 10005
------------------------------------------------------------------------
Goldman Sachs Asset Management International
("GSAMI") International Equity
133 Peterborough Court European Equity
London, England EC4A 2BB Japanese Equity
International Small Cap
Emerging Markets Equity
Asia Growth
------------------------------------------------------------------------
|
As of September 1, 1999, the Investment Management Division ("IMD") was established as a new operating division of Goldman Sachs. This newly created entity includes GSAM and GSAMI. Goldman Sachs registered as an investment adviser in 1981. GSAMI, a member of the Investment Management Regulatory Organization Limited since 1990 and a registered investment adviser since 1991, is an affiliate of Goldman Sachs. The Goldman Sachs Group, L.P., which controlled the Investment Advisers, merged into the Goldman Sachs Group, Inc. as a result of an initial public offering. As of September 30, 1999, GSAM and GSAMI, along with other units of IMD, had assets under management of $203 billion.
The Investment Adviser provides day-to-day advice regarding the Funds' port- folio transactions. The Investment Adviser makes the investment decisions for the Funds and places purchase and sale orders for the Funds' portfolio transactions in U.S. and foreign markets. As permitted by applicable law, these orders may be directed to any brokers, including Goldman Sachs and its affiliates. While the Investment Adviser is ultimately responsible for the management of the Funds, it is able to draw upon the research and expertise of its asset management affiliates for portfolio decisions and management with respect to certain portfolio securities. In addition, the Investment Adviser has access to the research and certain proprietary technical models developed by Goldman Sachs, and will apply quantitative and qualitative analysis in determining the appropriate allocations among categories of issuers and types of securities.
The Investment Adviser also performs the following additional services for
the Funds:
.Supervises all non-advisory operations of the Funds
.Provides personnel to perform necessary executive, administrative and cler-
ical services to the Funds
SERVICE PROVIDERS
.Arranges for the preparation of all required tax returns, reports to share-
holders, prospectuses and statements of additional information and other
reports filed with the Securities and Exchange Commission (the "SEC") and
other regulatory authorities
.Maintains the records of each Fund
.Provides office space and all necessary office equipment and services
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the Investment Adviser is entitled to the following fees, computed daily and payable monthly, at the annual rates (as a percentage of each respective portfolio's average daily net assets) listed below:
Actual Rate
For the Fiscal
Year Ended
Contractual Rate August 31, 1999
------------------------------------------------------------
GSAM:
------------------------------------------------------------
CORE International Equity 0.85% 0.85%
------------------------------------------------------------
GSAMI:
------------------------------------------------------------
International Equity 1.00% 1.00%
------------------------------------------------------------
European Equity 1.00% 1.00%
------------------------------------------------------------
Japanese Equity 1.00% 1.00%
------------------------------------------------------------
International Small Cap 1.20% 1.20%
------------------------------------------------------------
Emerging Markets Equity 1.20% 1.20%
------------------------------------------------------------
Asia Growth 1.00% 1.00%
------------------------------------------------------------
|
The difference, if any, between the stated fees and the actual fees paid by the Funds reflects that the Investment Adviser did not charge the full amount of the fees to which it would have been entitled. The Investment Adviser may discontinue or modify any such voluntary limitations in the future at its discretion.
FUND MANAGERS
M. Roch Hillenbrand, a Managing Director of Goldman Sachs since 1997, is the Head of Global Equities for GSAM, overseeing the United States, Europe, Japan, and non-Japan Asia. In this capacity, he is responsible for managing the group as it defines and implements global portfolio management processes that are consistent, reliable and predictable. Since 1981 Mr. Hillenbrand has been President of
Commodities Corporation LLC, of which Goldman Sachs is the parent company. Over the course of his 19-year career at Commodities Corporation, Mr. Hillenbrand has had extensive experience in dealing with internal and exter- nal investment managers who have managed a range of futures and equities strategies across multiple markets, using a variety of styles.
International Equity Portfolio Management Team
.Global portfolio teams based in London, Singapore, Tokyo and New York.
Local presence is a key to the Investment Adviser's fundamental research
capabilities
.Team manages over $33.2 billion in international equities for retail, institutional and high net worth clients .Focus on bottom-up stock selection as main driver of returns, though the team leverages the asset allocation, currency and risk management capabili- ties of GSAM
London-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
David Dick Senior Portfolio Manager-- Since Mr. Dick joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director senior portfolio manager
on the European Equity
team in 1998. From 1990
to 1998, he was with
Mercury Asset
Management, where he was
a portfolio manager for
European equity and was
head of Mercury's
European sector
strategy.
----------------------------------------------------------------------------------------------
Ivor H. Farman Senior Portfolio Manager-- Since Mr. Farman joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director International Equity Fund 1996 senior portfolio manager
in 1996. From 1995 to
1996, he was responsible
for originating and
marketing French equity
ideas at Exane in Paris.
Prior to 1995, he spent
five years engaged in
French equity research
and marketing at Banque
Nationale de Paris and
Schroders in London.
----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
James P. Senior Portfolio Manager-- Since Mr. Hordern joined the
Hordern International Small Cap 1998 Investment Adviser as a
Executive Fund portfolio manager in
Director 1997. From 1991 to 1997,
he was an Assistant
Director and portfolio
manager at Mercury Asset
Management on the
European Specialist
Team.
----------------------------------------------------------------------------------------------
Ralf Laier Portfolio Manager-- Since Mr. Laier joined the
Vice President Emerging Markets Equity 1998 Investment Adviser as a
Fund portfolio manager with a
focus on Central/Eastern
European (CEE) and the
Commonwealth of
Independent States (CIS)
in 1997. Prior to
joining the Investment
Adviser, from 1995 to
1997, he was Vice
President of Soros
Global Research, where
he analyzed investment
opportunities in
CEE/CIS. From 1994 to
1995, he achieved a
Ph.D. from the Academy
of Economics in Pozan,
Poland.
----------------------------------------------------------------------------------------------
Susan Noble Senior Portfolio Manager-- Since Ms. Noble joined the
Managing European Equity Fund 1998 Investment Adviser as a
Director International Equity Fund 1998 senior portfolio manager
and head of the European
Equity Team in October
1997. From 1986 to 1997,
she worked at Fleming
Investment Management in
London, where she most
recently was Portfolio
Management Director for
the European equity
investment strategy and
process.
----------------------------------------------------------------------------------------------
Andrew Orchard Senior Portfolio Manager-- Since Andrew joined the
Executive European Equity Fund 1999 Investment Adviser as a
Director International Equity Fund 1999 portfolio manager in
1999. From 1994 to 1999
he was a portfolio
manager at Morgan
Grenfell Asset
Management where he
managed global equity
portfolios and chaired
Morgan Grenfell's Global
Sector Committee.
----------------------------------------------------------------------------------------------
|
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
Andrew Portfolio Manager-- Since Mr. Shrimpton joined the
Shrimpton Emerging Markets Equity 1998 Investment Adviser as a
Vice President Fund portfolio manager with a
focus on Africa as well
as the financial
industry in the EMEA
region in 1996. Since
1985 he was a UK equity
analyst and portfolio
manager for CIN
Management, where he
initiated CIN
Management's first
investments in Latin
America.
----------------------------------------------------------------------------------------------
Robert Stewart Senior Portfolio Manager-- Since Robert joined the
Executive European Equity Fund 1999 Investment Adviser as a
Director International Equity Fund 1999 portfolio manager in
1996. He is a member of
the European Equity
Team. From 1996 to 1998
he was a portfolio
manager in Japan where
he managed Japanese
Equity Institutional
Portfolios. Prior to
that Robert was a
portfolio manager at
CINMan from 1989 to 1996
where he managed
international equities.
----------------------------------------------------------------------------------------------
Danny Truell Senior Portfolio Manager-- Since Mr. Truell joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director senior portfolio manager
and head of UK equities
in 1998. From 1992 to
1996, he was Investment
Banking Executive
Director for SBC Warburg
and Chief Asian Equity
Strategist.
----------------------------------------------------------------------------------------------
Gabriella Portfolio Manager-- Since Ms. Antici joined the
Antici Emerging Markets Equity 1998 Investment Adviser as a
Vice President Fund portfolio manager in
1997. From 1994 to 1997,
she was a Vice President
for HSBC Asset
Management, where she
was a portfolio manager
for emerging markets and
head of the Latin
American Department.
----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
New York-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
-----------------------------------------------------------------------------------------------
Robert A. Senior Portfolio Manager-- Since Mr. Beckwitt joined the
Beckwitt Emerging Markets Equity 1997 Investment Adviser as a
Managing Fund portfolio manager in
Director 1996. From 1986 to 1996,
Head of he was Chief Investment
Emerging Strategist-Portfolio
Markets Equity Adviser to high net
worth investors at
Fidelity Investments.
-----------------------------------------------------------------------------------------------
Melissa Brown Senior Portfolio Manager-- Since Ms. Brown joined the
Vice President CORE International Equity 1998 Investment Adviser as a
Fund portfolio manager in
1998. From 1984 to 1998,
she was the director of
Quantitative Equity
Research and served on
the Investment Policy
Committee at Prudential
Securities.
-----------------------------------------------------------------------------------------------
Mark M. Carhart Portfolio Manager-- Since Mr. Carhart joined the
Managing CORE International Equity 1998 Investment Adviser as a
Director Fund member of the
Quantitative Research
and Risk Management team
in 1997. From August
1995 to September 1997,
he was Assistant
Professor of Finance at
the Marshall School of
Business at USC and a
Senior Fellow of the
Wharton Financial
Institutions Center.
From 1993 to 1995, he
was a lecturer and
graduate student at the
University of Chicago
Graduate School of
Business.
-----------------------------------------------------------------------------------------------
Kent A. Clark Senior Portfolio Manager-- Since Mr. Clark joined the
Managing CORE International Equity 1997 Investment Adviser as a
Director Fund portfolio manager in the
quantitative equity
management team in 1992.
-----------------------------------------------------------------------------------------------
Raymond J. Portfolio Manager-- Since Mr. Iwanowski joined the
Iwanowski CORE International Equity 1998 Investment Adviser as an
Managing Fund associate and portfolio
Director manager in 1997. From
1993 to 1997, he was a
Vice President and head
of the Fixed Derivatives
Client Research group at
Salomon Brothers.
-----------------------------------------------------------------------------------------------
Robert C. Jones Senior Portfolio Manager-- Since Mr. Jones joined the
Managing CORE International Equity 1997 Investment Adviser as a
Director Fund portfolio manager in
1989.
-----------------------------------------------------------------------------------------------
|
Singapore-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
-----------------------------------------------------------------------------------------------
Alice Lui Portfolio Manager-- Since Ms. Lui joined the
Vice President Asia Growth Fund 1994 Investment Adviser as a
Emerging Markets Equity 1999 portfolio manager in
Fund 1990.
International Equity Fund 1999
International Small Cap 1999
Fund
-----------------------------------------------------------------------------------------------
Ravi Shanker Senior Portfolio Manager-- Since Mr. Shanker joined the
Vice President Asia Growth Fund 1997 Investment Adviser as an
Emerging Markets Equity 1998 operations manager in
Fund 1997. From July 1996 to
International Equity Fund 1999 1997, he worked for
International Small Cap 1999 Goldman Sachs in
Fund Singapore as a strategic
advisor for transactions
involving infrastructure
industries in Asia. From
1988 to 1996, he worked
for Goldman Sachs as an
investment banker in the
Investment Banking
Division.
-----------------------------------------------------------------------------------------------
Siew-Hua Thio Portfolio Manager-- Since Ms. Thio joined the
Vice President Asia Growth Fund 1998 Investment Adviser as a
Emerging Markets Equity 1998 portfolio manager in
Fund 1998. From 1997 to 1998,
International Equity Fund 1998 she was Head of Research
International Small Cap 1998 for Indosuez WI Carr in
Fund Singapore. From 1993 to
1997, she was a research
analyst at the same
firm.
-----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Tokyo-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
--------------------------------------------------------------------------------------
Toshiyuki Ejima Portfolio Manager-- Since Toshiyuki joined the
Vice President Japanese Equity Fund 1999 Investment Adviser as a
portfolio manager in
April 1999. Prior to
that he was a portfolio
manager at Daiichi
Mutual Life from 1993 to
1999 where he managed
Japanese equities.
--------------------------------------------------------------------------------------
Shigeka Kouda Portfolio Manager-- Since Mr. Kouda joined the
Vice President International Small 1998 Investment Adviser as a
Cap Fund portfolio manager in
1997. From 1992 to 1997,
he was at the Fixed
Income Division of
Goldman Sachs (Japan)
Limited, where he was
extensively involved in
emerging markets trading
as well as International
Fixed Income
institutional sales.
--------------------------------------------------------------------------------------
Shogo Maeda Senior Portfolio Since Mr. Maeda joined the
Managing Manager-- 1994 Investment Adviser as a
Director Japanese Equity Fund 1994 portfolio manager in
International Equity 1998 1994. From 1987 to 1994,
Fund he worked at Nomura
International Small Investment Management
Cap Fund Incorporated as a Senior
Portfolio Manager.
--------------------------------------------------------------------------------------
Miyako Portfolio Manager-- Since Ms. Shibamoto joined the
Shibamoto Japanese Equity Fund 1998 Investment Adviser as a
Vice President member of the Japanese
Equity team in March
1998. From 1993 to 1998,
she was a Vice President
at Scudder Stevens and
Clark (Japan).
--------------------------------------------------------------------------------------
Takeya Suzuki Portfolio Manager-- Since Mr. Suzuki joined the
Vice President Japanese Equity Fund 1998 Investment Adviser as a
portfolio manager in
1996. From 1990 to 1996,
he was a Japanese equity
portfolio manager at
Nomura Investment
Management where he
actively managed assets
for U.S. pension funds.
--------------------------------------------------------------------------------------
|
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the exclusive distributor (the "Distributor") of each Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606-6372, also serves as the Funds' transfer agent (the "Transfer Agent") and, as such, performs various shareholder servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and hold shares of the Funds. Goldman Sachs reserves the right to redeem at any time some or all of the shares acquired for its own account.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS
The involvement of the Investment Adviser, Goldman Sachs and their affili- ates in the management of, or their interest in, other accounts and other activities of Goldman Sachs may present conflicts of interest with respect to a Fund or limit a Fund's investment activities. Goldman Sachs and its affiliates engage in proprietary trading and advise accounts and funds which have investment objectives similar to those of the Funds and/or which engage in and compete for transactions in the same types of securities, currencies and instruments as the Funds. Goldman Sachs and its affiliates will not have any obligation to make available any information regarding their proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of the Funds. The results of a Fund's investment activities, therefore, may differ from those of Goldman Sachs and its affiliates, and it is possible that a Fund could sustain losses during periods in which Goldman Sachs and its affili- ates and other accounts achieve significant profits on their trading for proprietary or other accounts. In addition, the Funds may, from time to time, enter into transactions in which other clients of Goldman Sachs have an adverse interest. A Fund's activities may be limited because of regula- tory restrictions applicable to Goldman Sachs and its affiliates, and/or their internal policies designed to comply with such restrictions.
YEAR 2000
Many computer systems were designed using only two digits to signify the year (for example, "98" for "1998"). On January 1, 2000, if these computer systems are not corrected, they may incorrectly interpret "00" as the year "1900" rather than the year "2000," leading to computer shutdowns or errors (commonly
SERVICE PROVIDERS
known as the "Year 2000 Problem"). To the extent these systems conduct forward-looking calculations, these computer problems may occur prior to January 1, 2000. Like other investment companies and financial and business organizations, the Funds could be adversely affected in their ability to process securities trades, price securities, provide shareholder account services and otherwise conduct normal business operations if the Investment Adviser or other Fund service providers do not adequately address this prob- lem in a timely manner.
In order to address the Year 2000 Problem, the Investment Adviser has taken the following measures:
.The Investment Adviser has established a dedicated group which analyzed these issues and implemented system modifications to prepare for the Year 2000 Problem.
.The Investment Adviser has either tested with or received assurances from the Fund's other service providers to confirm that they are taking reason- able steps to avoid Year 2000 Problems, and the Investment Adviser contin- ues to monitor the situation.
.The Investment Adviser has developed broad and comprehensive contingency plans, as well as event management plans that will help manage the Funds through the date change by allowing the Investment Adviser to closely moni- tor and respond to Year 2000-related events as they unfold around the world.
Currently, the Investment Adviser does not anticipate that the transition to the 21st century will have any material impact on its ability to continue to service the Funds at current levels.
In addition, the Investment Adviser has undertaken measures to appropriately take into account available information concerning the Year 2000 prepared- ness of the issuers of securities held by the Funds. The Investment Adviser may obtain such Year 2000 information from various sources which the Invest- ment Adviser believes to be reliable, including the issuers' public regula- tory filings. However, the Investment Adviser is not in a position to verify the accuracy or completeness of such information.
At this time, however, no assurance can be given that the actions taken by the Investment Adviser and the Funds' other service providers will be suffi- cient to avoid any adverse effect on the Funds due to the Year 2000 Problem.
Dividends
Each Fund pays dividends from its net investment income and distributions
from net realized capital gains. You may choose to have dividends and dis-
tributions paid in:
.Cash
.Additional shares of the same class of the same Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund.
Special restrictions may apply for certain ILA Portfolios. See the
Additional Statement.
You may indicate your election on your Account Application. Any changes may be submitted in writing to Goldman Sachs at any time before the record date for a particular dividend or distribution. If you do not indicate any choice, your dividends and distributions will be reinvested automatically in the applicable Fund.
The election to reinvest dividends and distributions in additional shares will not affect the tax treatment of such dividends and distributions, which will be treated as received by you and then used to purchase the shares.
The Funds' investments in foreign securities may be subject to foreign with- holding taxes. Under certain circumstances, the Funds may elect to pass- through these taxes to you. If this election is made, a proportionate amount of such taxes will constitute a distribution to you, which would allow you either (1) to credit such proportionate amount of foreign taxes against your U.S. federal income tax liability or (2) to take such amount as an itemized deduction.
Dividends from net investment income and distributions from net capital gains are declared and paid annually.
From time to time a portion of a Fund's dividends may constitute a return of capital.
At the time of an investor's purchase of shares of a Fund, a portion of the NAV per share may be represented by undistributed income or undistributed realized appreciation of the Fund's portfolio securities. Therefore, subse- quent distributions on such shares from such income or realized appreciation may be taxable to you even if the NAV of the shares is, as a result of the distributions, reduced below the cost of such shares and the distributions (or portions thereof) represent a return of a portion of the purchase price.
Shareholder Guide
The following section will provide you with answers to some of the most often asked questions regarding buying and selling the Funds' Institutional Shares.
HOW TO BUY SHARES
How Can I Purchase Institutional Shares Of The Funds?
You may purchase Institutional Shares on any business day at their NAV next
determined after receipt of an order. No sales load is charged. You should
place an order with Goldman Sachs at 1-800-621-2550 and either:
.Wire federal funds to The Northern Trust Company ("Northern"), as
subcustodian for State Street Bank and Trust Company ("State Street") (each
Fund's custodian) on the next business day; or
.Send a check or Federal Reserve draft payable to Goldman Sachs Funds--(Name of Fund and Class of Shares), 4900 Sears Tower--60th Floor, Chicago, IL 60606-6372. The Fund will not accept a check drawn on a foreign bank or a third-party check.
In order to make an initial investment in a Fund, you must furnish to the Fund or Goldman Sachs the Account Application attached to this Prospectus. Purchases of Institutional Shares must be settled within three business days of receipt of a complete purchase order.
How Do I Purchase Shares Through A Financial Institution?
Certain institutions (including banks, trust companies, brokers and invest-
ment advisers) that provide recordkeeping, reporting and processing services
to their customers may be authorized to accept, on behalf of Goldman Sachs
Trust (the "Trust"), purchase, redemption and exchange orders placed by or
on behalf of their customers, and may designate other intermediaries to
accept such orders, if approved by the Trust. In these cases:
.A Fund will be deemed to have received an order in proper form when the
order is accepted by the authorized institution or intermediary on a busi-
ness day, and the order will be priced at the Fund's NAV next determined
after such acceptance.
.Authorized institutions and intermediaries will be responsible for trans- mitting accepted orders and payments to the Trust within the time period agreed upon by them.
You should contact your institution or intermediary to learn whether it is authorized to accept orders for the Trust.
These institutions may receive payments from the Funds or Goldman Sachs for the services provided by them with respect to the Funds' Institutional Shares. These payments may be in addition to other payments borne by the Funds.
The Investment Adviser, Distributor and/or their affiliates may pay addi- tional compensation from time to time, out of their assets and not as an additional charge to the Funds, to certain institutions and other persons in connection with the sale, distribution and/or servicing of shares of the Funds and other Goldman Sachs Funds. Additional compensation based on sales may, but is currently not expected to, exceed 0.50% (annualized) of the amount invested.
In addition to Institutional Shares, each Fund also offers other classes of shares to investors. These other share classes are subject to different fees and expenses (which affect performance), have different minimum investment requirements and are entitled to different services than Institutional Shares. Information regarding these other share classes may be obtained from your sales representative or from Goldman Sachs by calling the number on the back cover of this Prospectus.
SHAREHOLDER GUIDE
What is My Minimum Investment in the Funds?
Type of Investor Minimum Investment ------------------------------------------------------------------------------- .Banks, trust companies or $1,000,000 in Institutional Shares of a Fund other depository alone or in combination with other assets institutions investing for under the management of GSAM and its affiliates their own account or on behalf of clients .Pension and profit sharing plans, pension funds and other company-sponsored benefit plans .State, county, city or any instrumentality, department, authority or agency thereof .Corporations with at least $100 million in assets or in outstanding publicly traded securities ."Wrap" account sponsors (provided they have an agreement covering the arrangement with GSAM) .Registered investment advisers investing for accounts for which they receive asset-based fees ------------------------------------------------------------------------------- .Individual investors $10,000,000 .Qualified non-profit organizations, charitable trusts, foundations and endowments .Accounts over which GSAM or its advisory affiliates have investment discretion ------------------------------------------------------------------------------- |
The minimum investment requirement may be waived for current and former officers, partners, directors or employees of Goldman Sachs or any of its affiliates or for other investors at the discretion of the Trust's officers. No minimum amount is required for subsequent investments.
What Else Should I Know About Share Purchases?
The Trust reserves the right to:
.Modify or waive the minimum investment amounts.
.Reject or restrict any purchase or exchange orders by a particular pur-
chaser (or group of related purchasers). This may occur, for example, when
a pattern of frequent purchases, sales or exchanges of Institutional Shares
of a Fund is evident, or if purchases, sales or exchanges are, or a subse-
quent abrupt redemption might be, of a size that would disrupt the manage-
ment of a Fund.
The Funds may allow you to purchase shares with securities instead of cash if consistent with a Fund's investment policies and operations and if approved by the Fund's Investment Adviser.
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange Institutional
Shares is determined by a Fund's NAV. The Funds calculate NAV as follows:
(Value of Assets of the Class)
- (Liabilities of the Class)
NAV = _________________________________________________
Number of Outstanding Shares of the Class
The Funds' investments are valued based on market quotations or, if accurate
quotations are not readily available, the fair value of the Fund's invest-
ments may be determined in good faith under procedures established by the
Trustees.
.NAV per share of each class is calculated by State Street on each business
day as of the close of regular trading on the New York Stock Exchange (nor-
mally 4:00 p.m. New York time). Fund shares will not be priced on any day
the New York Stock Exchange is closed.
.When you buy shares, you pay the NAV next calculated after the Funds
receive your order in proper form.
.When you sell shares, you receive the NAV next calculated after the Funds
receive your order in proper form.
Note: The time at which transactions and shares are priced and the time by which orders must be received may be changed in case of an emergency or if regular trading on the New York Stock Exchange is stopped at a time other than 4:00 p.m. New York time.
Foreign securities may trade in their local markets on days a Fund is closed. As a result, the NAV of a Fund that holds foreign securities may be impacted on days when investors may not purchase or redeem Fund shares.
In addition, the impact of events that occur after the publication of market quotations used by a Fund to price its securities but before the close of regular trading on the New York Stock Exchange will normally not be reflected in a Fund's next determined NAV unless the Trust, in its discre- tion, makes an adjustment in light of the nature and materiality of the event, its effect on Fund operations and other relevant factors.
SHAREHOLDER GUIDE
HOW TO SELL SHARES
How Can I Sell Institutional Shares Of The Funds? You may arrange to take money out of your account by selling (redeeming) some or all of your shares. Generally, each Fund will redeem its Institu- tional Shares upon request on any business day at their NAV next determined after receipt of such request in proper form. You may request that redemp- tion proceeds be sent to you by check or by wire (if the wire instructions are on record). Redemptions may be requested in writing or by telephone.
Instructions For Redemptions:
-----------------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund name and Class of Shares
.The dollar amount you want to sell
.How and where to send the proceeds
.Mail your request to:
Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
-----------------------------------------------------------------------
By Telephone: If you have elected the telephone
redemption privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
-----------------------------------------------------------------------
|
Certain institutions and intermediaries are authorized to accept redemption requests on behalf of the Funds as described under "How Do I Purchase Shares Through A Financial Institution?"
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor and the Transfer Agent will not be liable for any
loss you may incur in the event that the Trust accepts unauthorized tele-
phone redemption requests that the Trust reasonably believes to be genuine.
In an effort to prevent unauthorized or fraudulent redemption and exchange
requests by telephone, Goldman Sachs employs reasonable procedures specified
by the Trust to confirm that such instructions are genuine. If reasonable
procedures are not employed, the Trust may be liable for any loss due to
unauthorized or fraudulent transactions. The following general policies are
currently in effect:
.All telephone requests are recorded.
.Any redemption request that requires money to go to an account or address
other than that designated on the Account Application must be in writing
and signed by an authorized person designated on the Account Application.
The
written request may be confirmed by telephone with both the requesting
party and the designated bank account to verify instructions.
.The telephone redemption option may be modified or terminated at any time.
Note: It may be difficult to make telephone redemptions in times of drastic economic or market conditions.
How Are Redemption Proceeds Paid?
By Wire: You may arrange for your redemption proceeds to be wired as federal
funds to the bank account designated in your Account Application. The fol-
lowing general policies govern wiring redemption proceeds:
.Redemption proceeds will normally be wired on the next business day in fed-
eral funds (for a total of one business day delay), but may be paid up to
three business days following receipt of a properly executed wire transfer
redemption request. If you are selling shares you recently paid for by
check, the Fund will pay you when your check has cleared, which may take up
to 15 days. If the Federal Reserve Bank is closed on the day that the
redemption proceeds would ordinarily be wired, wiring the redemption pro-
ceeds may be delayed one additional business day.
.To change the bank designated on your Account Application, you must send
written instructions signed by an authorized person designated on the
account application to the Transfer Agent.
.Neither the Trust, Goldman Sachs nor any other institution assumes any responsibility for the performance of your bank or any intermediaries in the transfer process. If a problem with such performance arises, you should deal directly with your bank or any such intermediaries.
By Check: You may elect in writing to receive your redemption proceeds by check. Redemption proceeds paid by check will normally be mailed to the address of record within three business days of a properly executed redemp- tion request. If you are selling shares you recently paid for by check, the Fund will pay you when your check has cleared, which may take up to 15 days.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
.Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
.Institutions (including banks, trust companies, brokers and investment
advisers) are responsible for the timely transmittal of redemption requests
by their customers to the Transfer Agent. In order to facilitate the timely
transmittal of redemption requests, these institutions may set times by
which they must receive
SHAREHOLDER GUIDE
redemption requests. These institutions may also require additional docu- mentation from you.
The Trust reserves the right to:
.Redeem your shares if your account balance falls below $50 as a result of
earlier redemptions. The Funds will not redeem your shares on this basis if
the value of your account falls below the minimum account balance solely as
a result of market conditions. The Fund will give you 60 days' prior writ-
ten notice to allow you to purchase sufficient additional shares of the
Fund in order to avoid such redemption.
.Redeem your shares in other circumstances determined by the Board of Trust-
ees to be in the best interest of the Trust.
.Pay redemptions by a distribution in-kind of securities (instead of cash).
If you receive redemption proceeds in-kind, you should expect to incur
transaction costs upon the disposition of those securities.
Can I Exchange My Investment From One Fund To Another? You may exchange Institutional Shares of a Fund at NAV for Institutional Shares of any other Goldman Sachs Fund. The exchange privilege may be mate- rially modified or withdrawn at any time upon 60 days' written notice to you.
Instructions For Exchanging Shares:
-------------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund names and Class of Shares
.The dollar amount to be exchanged
.Mail the request to:
Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
-------------------------------------------------------------------
By Telephone: If you have elected the telephone exchange
privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
-------------------------------------------------------------------
|
You should keep in mind the following factors when making or considering an
exchange:
.You should obtain and carefully read the prospectus of the Fund you are
acquiring before making an exchange.
.All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirements of that Fund, except that this
requirement may be waived at the discretion of the Trust.
.Telephone exchanges normally will be made only to an identically registered
account.
.Shares may be exchanged among accounts with different names, addresses and
social security or other taxpayer identification numbers only if the
exchange instructions are in writing and are signed by an authorized person
designated on the Account Application.
.Exchanges are available only in states where exchanges may be legally made.
.It may be difficult to make telephone exchanges in times of drastic eco-
nomic or market conditions.
.Goldman Sachs may use reasonable procedures described under "What Do I Need
To Know About Telephone Redemption Requests?" in an effort to prevent unau-
thorized or fraudulent telephone exchange requests.
For federal income tax purposes, an exchange is treated as a redemption of the shares surrendered in the exchange, on which you may be subject to tax, followed by a purchase of shares received in the exchange. You should con- sult your tax adviser concerning the tax consequences of an exchange.
What Types of Reports Will I Be Sent Regarding Investments In Institutional Shares?
You will receive an annual report containing audited financial statements and a semi-annual report. To eliminate unnecessary duplication, only one copy of such reports will be sent to shareholders with the same mailing address. If you would like a duplicate copy to be mailed to you, please con- tact Goldman Sachs Funds at 1-800-621-2550. You will also be provided with a printed confirmation for each transaction in your account and a monthly account statement. The Funds do not generally provide sub-accounting servic- es.
Taxation
TAXABILITY OF DISTRIBUTIONS
As with any investment, you should consider how your investment in the Funds will be taxed. The tax information below is provided as general information. More tax information is available in the Additional Statement. You should consult your tax adviser about the federal, state, local or foreign tax con- sequences of your investment in the Funds.
Unless your investment is an IRA or other tax-advantaged account, you should consider the possible tax consequences of Fund distributions and the sale of your Fund shares.
TAXES ON DISTRIBUTIONS
Distributions you receive from the Funds are generally subject to federal income tax, and may also be subject to state or local taxes. This is true whether you reinvest your distributions in additional Fund shares or receive them in cash. For federal tax purposes, the Funds' income dividend distribu- tions and short-term capital gain distributions are taxable to you as ordi- nary income. Any long-term capital gain distributions are taxable as long- term capital gains, no matter how long you have owned your Fund shares.
Although distributions are generally treated as taxable to you in the year they are paid, distributions declared in October, November or December but paid in January are taxable as if they were paid in December. A percentage of the Funds' dividends paid to corporate shareholders may be eligible for the corporate dividends-received deduction. The Funds will inform sharehold- ers of the source and tax status of all distributions promptly after the close of each calendar year.
Each Fund may be subject to foreign withholding or other foreign taxes on income or gain from certain foreign securities. In general, the Funds may deduct these taxes in computing their taxable income.
If you buy shares of a Fund before it makes a distribution, the distribution will be taxable to you even though it may actually be a return of a portion of your investment. This is known as "buying a dividend."
TAXES ON SALES
Your sale of Fund shares is a taxable transaction for federal income tax purposes, and may also be subject to state and local taxes. For tax purpos- es, the exchange of your Fund shares for shares of a different Goldman Sachs Fund is the same as a sale. When you sell your shares, you will generally recognize a capital gain or loss in an amount equal to the difference between your adjusted tax basis in the shares and the amount received. Gen- erally, this gain or loss is long-term or short-term depending on whether your holding period exceeds twelve months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.
OTHER INFORMATION
When you open your account, you should provide your social security or tax identification number on your Account Application. By law, each Fund most withhold 31% of your taxable distributions and any redemption proceeds if you do not provide your correct taxpayer identification number, or certify that it is correct, or if the IRS instructs the Fund to do so. Non-U.S. investors may be subject to U.S. withholding and estate tax.
Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks
The Funds will be subject to the risks associated with equity securities. "Equity securities" include common stocks, preferred stocks, interests in real estate investment trusts, convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures, limited liability companies and similar enterprises, warrants and stock pur- chase rights. In general, stock values fluctuate in response to the activi- ties of individual companies and in response to general market and economic conditions. Accordingly, the value of the stocks that a Fund holds may decline over short or extended periods. The stock markets tend to be cycli- cal, with periods when stock prices generally rise and periods when prices generally decline. The volatility of equity securities means that the value of your investment in the Funds may increase or decrease. As of the date of this Prospectus, certain stock markets were trading at or close to record high levels and there can be no guarantee that such levels will continue.
To the extent that a Fund invests in fixed-income securities, that Fund will also be subject to the risks associated with its fixed-income securities. These risks include interest rate risk, credit risk and call/extension risk. In general, interest rate risk involves the risk that when interest rates decline, the market value of fixed-income securities tends to increase (al- though many mortgage related securities will have less potential than other debt securities for capital appreciation during periods of declining rates). Conversely, when interest rates increase, the market value of fixed-income securities tends to decline. Credit risk involves the risk that an issuer could default on its obligations, and a Fund will not recover its invest- ment. Call risk and extension risk are normally present in mortgage-backed securities and asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (call risk) or lengthen (exten- sion risk). In general, if interest rates on new mortgage loans fall suffi- ciently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to invest- ors.
The Investment Adviser will not consider the portfolio turnover rate a lim- iting factor in making investment decisions for a Fund. A high rate of port- folio turn-
over (100% or more) involves correspondingly greater expenses which must be borne by a Fund and its shareholders. The portfolio turnover rate is calcu- lated by dividing the lesser of the dollar amount of sales or purchases of portfolio securities by the average monthly value of a Fund's portfolio securities, excluding securities having a maturity at the date of purchase of one year or less. See "Financial Highlights" in Appendix B for a state- ment of the Funds' historical portfolio turnover rates.
The following sections provide further information on certain types of secu- rities and investment techniques that may be used by the Funds, including their associated risks. Additional information is provided in the Additional Statement, which is available upon request. Among other things, the Addi- tional Statement describes certain fundamental investment restrictions that cannot be changed without shareholder approval. You should note, however, that all investment objectives and policies not specifically designated as fundamental are non-fundamental and may be changed without shareholder approval. If there is a change in a Fund's investment objective, you should consider whether that Fund remains an appropriate investment in light of your then current financial position and needs.
B. Other Portfolio Risks
Risks of Investing in Small Capitalization Companies and REITs. Each Fund may invest in small capitalization companies and REITs. Investments in small capitalization companies and REITs involve greater risk and portfolio price volatility than investments in larger capitalization stocks. Among the rea- sons for the greater price volatility of these investments are the less cer- tain growth prospects of smaller firms and the lower degree of liquidity in the markets for such securities. Small capitalization companies and REITs may be thinly traded and may have to be sold at a discount from current mar- ket prices or in small lots over an extended period of time. In addition, these securities are subject to the risk that during certain periods the liquidity of particular issuers or industries, or all securities in these investment categories, will shrink or disappear suddenly and without warning as a result of adverse economic or market conditions, or adverse investor perceptions whether or not accurate. Because of the lack of sufficient mar- ket liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Small capitalization companies and REITs include "unseasoned" issuers that do not have an established financial history; often have limited prod- uct lines, markets or financial resources; may depend on or use a few key personnel for management; and may be susceptible to losses and risks of bankruptcy. Transaction costs for these investments are often higher than those of larger capitalization companies. Investments
APPENDIX A
in small capitalization companies and REITs may be more difficult to price precisely than other types of securities because of their characteristics and lower trading volumes.
Risks of Foreign Investments. Certain Funds may invest in foreign invest- ments. Foreign investments involve special risks that are not typically associated with U.S. dollar denominated or quoted securities of U.S. issuers. Foreign investments may be affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such invest- ments and changes in exchange control regulations (e.g., currency blockage). A decline in the exchange rate of the currency (i.e., weakening of the cur- rency against the U.S. dollar) in which a portfolio security is quoted or denominated relative to the U.S. dollar would reduce the value of the port- folio security. In addition, if the currency in which a Fund receives divi- dends, interest or other payments declines in value against the U.S. dollar before such income is distributed as dividends to shareholders or converted to U.S. dollars, the Fund may have to sell portfolio securities to obtain sufficient cash to pay such dividends.
The introduction of a single currency, the euro, on January 1, 1999 for par- ticipating nations in the European Economic and Monetary Union presents unique uncertainties, including the legal treatment of certain outstanding financial contracts after January 1, 1999 that refer to existing currencies rather than the euro; the establishment and maintenance of exchange rates for currencies being converted into the euro; the fluctuation of the euro relative to non-euro currencies during the transition period from January 1, 1999 to December 31, 2001 and beyond; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union ("EU"), may have an impact on the euro. These or other factors, including political and economic risks, could cause market disruptions, and could adversely affect the value of securities held by the Funds. Because of the number of countries using this single currency, a significant portion of the assets held by the Funds may be denominated in the euro.
Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such proce- dures have been unable to keep pace with the volume of securities transac- tions, thus making it difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. issuers. There may
be less publicly available information about a foreign issuer than about a
U.S. issuer. In addition, there is generally less government regulation of
foreign markets, companies and securities dealers than in the United States.
Foreign securities markets may have substantially less volume than U.S.
securities markets and secu-
rities of many foreign issuers are less liquid and more volatile than secu-
rities of comparable domestic issuers. Efforts in foreign countries to reme-
diate potential Year 2000 problems are not as extensive as those in the
United States. As a result, the operations of foreign markets, foreign
issuers and foreign governments may be disrupted by the Year 2000 Problem,
and the investment portfolio of a Fund may be adversely affected. Further-
more, with respect to certain foreign countries, there is a possibility of
nationalization, expropriation or confiscatory taxation, imposition of with-
holding or other taxes on dividend or interest payments (or, in some cases,
capital gains), limitations on the removal of funds or other assets of the
Funds, and political or social instability or diplomatic developments which
could affect investments in those countries.
Concentration of a Fund's assets in one or a few countries and currencies will subject a Fund to greater risks than if a Fund's assets were not geo- graphically concentrated.
Investment in sovereign debt obligations by certain Funds involves risks not present in debt obligations of corporate issuers. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and a Fund may have limited recourse to compel payment in the event of a default. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt, and in turn a Fund's NAV, to a greater extent than the volatility inherent in debt obliga- tions of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the avail- ability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sov- ereign debtor's policy toward international lenders, and the political constraints to which a sovereign debtor may be subject.
Investments in foreign securities may take the form of sponsored and unsponsored American Depository Receipts ("ADRs") and Global Depository Receipts ("GDRs"). Certain Funds may also invest in European Depository Receipts ("EDRs") or other similar instruments representing securities of foreign issuers. ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. Prices of ADRs are quoted in U.S. dollars, and ADRs are traded in the United States. EDRs and GDRs are receipts
APPENDIX A
evidencing an arrangement with a non-U.S. bank. EDRs and GDRs are not neces- sarily quoted in the same currency as the underlying security.
Risks of Emerging Countries. Certain Funds may invest in securities of issuers located in emerging countries. The risks of foreign investment are heightened when the issuer is located in an emerging country. Emerging coun- tries are generally located in the Asia-Pacific region, Eastern Europe, Latin and South America and Africa. A Fund's purchase and sale of portfolio securities in certain emerging countries may be constrained by limitations as to daily changes in the prices of listed securities, periodic trading or settlement volume and/or limitations on aggregate holdings of foreign investors. Such limitations may be computed based on the aggregate trading volume by or holdings of a Fund, the Investment Adviser, its affiliates and their respective clients and other service providers. A Fund may not be able to sell securities in circumstances where price, trading or settlement vol- ume limitations have been reached.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees which may limit investment in such countries or increase the administrative costs of such investments. For example, certain Asian countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer's outstanding securities or a spe- cific class of securities which may have less advantageous terms (including price) than securities of the issuer available for purchase by nationals. In addition, certain countries may restrict or prohibit investment opportuni- ties in issuers or industries deemed important to national interests. Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by a Fund. The repatriation of both investment income and capital from certain emerging countries is subject to restrictions such as the need for governmental consents. Due to restrictions on direct invest- ment in equity securities in certain Asian countries, it is anticipated that a Fund may invest in such countries through other investment funds in such countries.
Many emerging countries have experienced currency devaluations and substan- tial (and, in some cases, extremely high) rates of inflation, which have had a negative effect on the economies and securities markets of such emerging countries. Economies in emerging countries generally are dependent heavily upon commodity prices and international trade and, accordingly, have been and may continue to be affected adversely by the economies of their trading partners, trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade.
Many emerging countries are subject to a substantial degree of economic, political and social instability. Governments of some emerging countries are authoritarian in nature or have been installed or removed as a result of military coups, while governments in other emerging countries have periodi- cally used force to suppress civil dissent. Disparities of wealth, the pace and success of democratization, and ethnic, religious and racial disaffec- tion, among other factors, have also led to social unrest, violence and/or labor unrest in some emerging countries. Unanticipated political or social developments may result in sudden and significant investment losses. Invest- ing in emerging countries involves greater risk of loss due to expropria- tion, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested.
A Fund's investment in emerging countries may also be subject to withholding or other taxes, which may be significant and may reduce the return from an investment in such country to the Fund.
Settlement procedures in emerging countries are frequently less developed and reliable than those in the United States and often may involve a Fund's delivery of securities before receipt of payment for their sale. In addi- tion, significant delays are common in certain markets in registering the transfer of securities. Settlement or registration problems may make it more difficult for a Fund to value its portfolio securities and could cause the Fund to miss attractive investment opportunities, to have a portion of its assets uninvested or to incur losses due to the failure of a counterparty to pay for securities the Fund has delivered or the Fund's inability to com- plete its contractual obligations. The creditworthiness of the local securi- ties firms used by the Fund in emerging countries may not be as sound as the creditworthiness of firms used in more developed countries. As a result, the Fund may be subject to a greater risk of loss if a securities firm defaults in the performance of its responsibilities.
The small size and inexperience of the securities markets in certain emerg- ing countries and the limited volume of trading in securities in those coun- tries may make a Fund's investments in such countries less liquid and more volatile than investments in countries with more developed securities mar- kets (such as the United States, Japan and most Western European countries). A Fund's investments in emerging countries are subject to the risk that the liquidity of a particular investment, or investments generally, in such countries will shrink or disappear suddenly and without warning as a result of adverse economic, market or political conditions or adverse investor per- ceptions, whether or not accurate. Because of the lack of sufficient market liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Invest-
APPENDIX A
ments in emerging countries may be more difficult to price precisely because of the characteristics discussed above and lower trading volumes.
A Fund's use of foreign currency management techniques in emerging countries may be limited. Due to the limited market for these instruments in emerging countries, the Investment Adviser does not currently anticipate that a sig- nificant portion of the Funds' currency exposure in emerging countries, if any, will be covered by such instruments.
Risks of Derivative Investments. A Fund's transactions, if any, in options, futures, options on futures, swaps, interest rate caps, floors and collars, structured securities and currency transactions involve additional risk of loss. Loss can result from a lack of correlation between changes in the value of derivative instruments and the portfolio assets (if any) being hedged, the potential illiquidity of the markets for derivative instruments, or the risks arising from margin requirements and related leverage factors associated with such transactions. The use of these management techniques also involves the risk of loss if the Investment Adviser is incorrect in its expectation of fluctuations in securities prices, interest rates or currency prices. Each Fund may also invest in derivative investments for non-hedging purposes (that is, to seek to increase total return). Investing for non- hedging purposes is considered a speculative practice and presents even greater risk of loss.
Risks of Illiquid Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities which cannot be disposed of in seven days in
the ordinary course of business at fair value. Illiquid securities include:
.Both domestic and foreign securities that are not readily marketable
.Certain stripped mortgage-backed securities
.Repurchase agreements and time deposits with a notice or demand period of
more than seven days
.Certain over-the-counter options
.Certain structured securities and all swap transactions
.Certain restricted securities, unless it is determined, based upon a review of the trading markets for a specific restricted security, that such restricted security is eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("144A Securities") and, therefore, is liquid.
Investing in 144A Securities may decrease the liquidity of a Fund's portfo- lio to the extent that qualified institutional buyers become for a time uninterested in purchasing these restricted securities. The purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of com- parable securities for which a liquid market exists.
Credit Risks. Debt securities purchased by the Funds may include securities (including zero coupon bonds) issued by the U.S. government (and its agen- cies, instrumentalities and sponsored enterprises), foreign governments, domestic and foreign corporations, banks and other issuers. Further informa- tion is provided in the Additional Statement.
Debt securities rated BBB or higher by Standard & Poor's or Baa or higher by Moody's are considered "investment grade." Securities rated BBB or Baa are considered medium-grade obligations with speculative characteristics, and adverse economic conditions or changing circumstances may weaken their issuers' capacity to pay interest and repay principal. A security will be deemed to have met a rating requirement if it receives the minimum required rating from at least one such rating organization even though it has been rated below the minimum rating by one or more other rating organizations, or if unrated by such rating organizations, determined by the Investment Adviser to be of comparable credit quality.
Certain Funds may invest in fixed-income securities rated BB or Ba or below (or comparable unrated securities) which are commonly referred to as "junk bonds." Junk bonds are considered predominantly speculative and may be ques- tionable as to principal and interest payments.
In some cases, junk bonds may be highly speculative, have poor prospects for reaching investment grade standing and be in default. As a result, invest- ment in such bonds will present greater speculative risks than those associ- ated with investment in investment grade bonds. Also, to the extent that the rating assigned to a security in a Fund's portfolio is downgraded by a rat- ing organization, the market price and liquidity of such security may be adversely affected.
Temporary Investment Risks. Each Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. government securities
.Commercial paper rated at least A-2 by Standard & Poor's or P-2 by Moody's
.Certificates of deposit
.Bankers' acceptances
.Repurchase agreements
.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year
When a Fund's assets are invested in such instruments, the Fund may not be achieving its investment objective.
APPENDIX A
C. Portfolio Securities and Techniques
This section provides further information on certain types of securities and investment techniques that may be used by the Funds, including their associ- ated risks. Further information is provided in the Additional Statement, which is available upon request.
Convertible Securities. Each Fund may invest in convertible securities. Con- vertible securities are preferred stock or debt obligations that are con- vertible into common stock. Convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar qual- ity. Convertible securities in which a Fund invests are subject to the same rating criteria as its other investments in fixed-income securities. Con- vertible securities have both equity and fixed-income risk characteristics. Like all fixed-income securities, the value of convertible securities is susceptible to the risk of market losses attributable to changes in interest rates. Generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. However, when the market price of the common stock underlying a convertible security exceeds the conversion price of the convertible secu- rity, the convertible security tends to reflect the market price of the underlying common stock. As the market price of the underlying common stock declines, the convertible security, like a fixed-income security, tends to trade increasingly on a yield basis, and thus may not decline in price to the same extent as the underlying common stock.
Foreign Currency Transactions. A Fund may, to the extent consistent with its investment policies, purchase or sell foreign currencies on a cash basis or through forward contracts. A forward contract involves an obligation to pur- chase or sell a specific currency at a future date at a price set at the time of the contract. A Fund may engage in foreign currency transactions for hedging purposes and to seek to protect against anticipated changes in future foreign currency exchange rates. In addition, certain Funds may also enter into such transactions to seek to increase total return, which is con- sidered a speculative practice.
Some Funds may also engage in cross-hedging by using forward contracts in a currency different from that in which the hedged security is denominated or quoted if the Investment Adviser determines that there is a pattern of cor- relation between the two currencies. A Fund may hold foreign currency received in connection with investments in foreign securities when, in the judgment of the Investment Adviser, it would be beneficial to convert such currency into U.S. dollars at a later date (e.g., the Investment Adviser may anticipate the foreign currency to appreciate against the U.S. dollar).
Currency exchange rates may fluctuate significantly over short periods of time, causing, along with other factors, a Fund's NAV to fluctuate (when the Fund's NAV fluctuates, the value of your shares may go up or down). Currency exchange rates also can be affected unpredictably by the intervention of U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the United States or abroad.
The market in forward foreign currency exchange contracts, currency swaps and other privately negotiated currency instruments offers less protection against defaults by the other party to such instruments than is available for currency instruments traded on an exchange. Such contracts are subject to the risk that the counterparty to the contract will default on its obli- gations. Since these contracts are not guaranteed by an exchange or clear- inghouse, a default on a contract would deprive a Fund of unrealized prof- its, transaction costs or the benefits of a currency hedge or could force the Fund to cover its purchase or sale commitments, if any, at the current market price.
Structured Securities. Each Fund may invest in structured securities. Struc- tured securities are securities whose value is determined by reference to changes in the value of specific currencies, interest rates, commodities, indices or other financial indicators (the "Reference") or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Structured securities may be posi- tively or negatively indexed, so that appreciation of the Reference may pro- duce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rates or the value of the security at maturity may be a multiple of changes in the value of the Refer- ence. Consequently, structured securities may present a greater degree of market risk than other types of fixed-income securities and may be more vol- atile, less liquid and more difficult to price accurately than less complex securities.
REITs. Each Fund may invest in REITS. REITS are pooled investment vehicles that invest primarily in either real estate or real estate related loans. The value of a REIT is affected by changes in the value of the properties owned by the REIT or securing mortgage loans held by the REIT. REITs are dependent upon the ability of the REITs' managers, and are subject to heavy cash flow dependency, default by borrowers and the qualification of the REITs under applicable regulatory requirements for favorable income tax treatment. REITs are also subject to risks generally associated with invest- ments in real estate including possible declines in the value of real estate, general and local economic conditions, environmental problems and changes in interest rates. To the extent that assets underlying a REIT are concentrated geographically, by property type or in certain other
APPENDIX A
respects, these risks may be heightened. A Fund will indirectly bear its proportionate share of any expenses, including management fees, paid by a REIT in which it invests.
Options on Securities, Securities Indices and Foreign Currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) of the option the obligation to buy, the underlying instrument dur-
ing the option period. A call option gives the purchaser of the option the
right to buy, and the writer (seller) of the option the obligation to sell,
the underlying instrument during the option period. Each Fund may write
(sell) covered call and put options and purchase put and call options on any
securities in which they may invest or on any securities index comprised of
securities in which they may invest. A Fund may also, to the extent that it
invests in foreign securities, purchase and sell (write) put and call
options on foreign currencies.
The writing and purchase of options is a highly specialized activity which involves special investment risks. Options may be used for either hedging or cross-hedging purposes, or to seek to increase total return (which is con- sidered a speculative activity). The successful use of options depends in part on the ability of the Investment Adviser to manage future price fluctu- ations and the degree of correlation between the options and securities (or currency) markets. If the Investment Adviser is incorrect in its expectation of changes in market prices or determination of the correlation between the instruments or indices on which options are written and purchased and the instruments in a Fund's investment portfolio, the Fund may incur losses that it would not otherwise incur. The use of options can also increase a Fund's transaction costs. Options written or purchased by the Funds may be traded on either U.S. or foreign exchanges or over-the-counter. Foreign and over- the-counter options will present greater possibility of loss because of their greater illiquidity and credit risks.
Futures Contracts and Options on Futures Contracts. Futures contracts are standardized, exchange-traded contracts that provide for the sale or pur- chase of a specified financial instrument or currency at a future time at a specified price. An option on a futures contract gives the purchaser the right (and the writer of the option the obligation) to assume a position in a futures contract at a specified exercise price within a specified period of time. A futures contract may be based on various securities (such as U.S. government securities), foreign currencies, securities indices and other financial instruments and indices. The Funds may engage in futures transac- tions on both U.S. and foreign exchanges.
Each Fund may purchase and sell futures contracts, and purchase and write call and put options on futures contracts, in order to seek to increase total return or to hedge against changes in interest rates, securities prices or, to the extent a Fund
invests in foreign securities, currency exchange rates, or to otherwise man- age their term structures, sector selection and durations in accordance with their investment objectives and policies. Each Fund may also enter into closing purchase and sale transactions with respect to such contracts and options. A Fund will engage in futures and related options transactions for bona fide hedging purposes as defined in regulations of the Commodity Futures Trading Commission or to seek to increase total return to the extent permitted by such regulations. A Fund may not purchase or sell futures con- tracts or purchase or sell related options to seek to increase total return, except for closing purchase or sale transactions, if immediately thereafter the sum of the amount of initial margin deposits and premiums paid on the Fund's outstanding positions in futures and related options entered into for the purpose of seeking to increase total return would exceed 5% of the mar- ket value of the Fund's net assets.
Futures contracts and related options present the following risks:
.While a Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency
exchange rates may result in poorer overall performance than if the Fund
had not entered into any futures contracts or options transactions.
.Because perfect correlation between a futures position and portfolio posi-
tion that is intended to be protected is impossible to achieve, the desired
protection may not be obtained and a Fund may be exposed to additional risk
of loss.
.The loss incurred by a Fund in entering into futures contracts and in writ-
ing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
.Futures markets are highly volatile and the use of futures may increase the
volatility of a Fund's NAV.
.As a result of the low margin deposits normally required in futures trad-
ing, a relatively small price movement in a futures contract may result in
substantial losses to a Fund.
.Futures contracts and options on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
.Foreign exchanges may not provide the same protection as U.S. exchanges.
Equity Swaps. Each Fund may invest in equity swaps. Equity swaps allow the parties to a swap agreement to exchange the dividend income or other compo- nents of return on an equity investment (for example, a group of equity securities or an index) for a component of return on another non-equity or equity investment.
An equity swap may be used by a Fund to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment may be restricted for legal reasons or is otherwise impractical. Equity swaps are
APPENDIX A
derivatives and their value can be very volatile. To the extent that the Investment Adviser does not accurately analyze and predict the potential relative fluctuation of the components swapped with another party, a Fund may suffer a loss. The value of some components of an equity swap (such as the dividends on a common stock) may also be sensitive to changes in inter- est rates. Furthermore, a Fund may suffer a loss if the counterparty defaults.
When-Issued Securities and Forward Commitments. Each Fund may purchase when- issued securities and make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time. When-issued securities are securities that have been authorized, but not yet issued. When-issued securities are purchased in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. A forward commitment involves the entering into a con- tract to purchase or sell securities for a fixed price at a future date beyond the customary settlement period.
The purchase of securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines before the settlement date. Conversely, the sale of securities on a forward commitment basis involves the risk that the value of the securities sold may increase before the settlement date. Although a Fund will generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring the securities for its portfolio, a Fund may dispose of when-issued securities or forward commitments prior to settlement if the Investment Adviser deems it appropriate.
Repurchase Agreements. Repurchase agreements involve the purchase of securi- ties subject to the seller's agreement to repurchase them at a mutually agreed upon date and price. Each Fund may enter into repurchase agreements with dealers in U.S. government securities and member banks of the Federal Reserve System which furnish collateral at least equal in value or market price to the amount of their repurchase obligation.
If the other party or "seller" defaults, a Fund might suffer a loss to the extent that the proceeds from the sale of the underlying securities and other collateral held by the Fund are less than the repurchase price and the Fund's costs associated with delay and enforcement of the repurchase agree- ment. In addition, in the event of bankruptcy of the seller, a Fund could suffer additional losses if a court determines that the Fund's interest in the collateral is not enforceable.
In evaluating whether to enter into a repurchase agreement, the Investment Adviser will carefully consider the creditworthiness of the seller. Certain Funds, together with other registered investment companies having advisory agreements with the Investment Adviser or any of its affiliates, may trans- fer uninvested cash
balances into a single joint account, the daily aggregate balance of which will be invested in one or more repurchase agreements.
Lending of Portfolio Securities. Each Fund may engage in securities lending. Securities lending involves the lending of securities owned by a Fund to financial institutions such as certain broker-dealers. The borrowers are required to secure their loan continuously with cash, cash equivalents, U.S. government securities or letters of credit in an amount at least equal to the market value of the securities loaned. Cash collateral may be invested in cash equivalents. To the extent that cash collateral is invested in other investment securities, such collateral will be subject to market deprecia- tion or appreciation, and a Fund will be responsible for any loss that might result from its investment of the borrowers' collateral. If the Investment Adviser determines to make securities loans, the value of the securities loaned may not exceed 33 1/3% of the value of the total assets of a Fund (including the loan collateral).
A Fund may lend its securities to increase its income. A Fund may, however, experience delay in the recovery of its securities if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund.
Short Sales Against-the-Box. Certain Funds may make short sales against-the- box. A short sale against-the-box means that at all times when a short posi- tion is open the Fund will own an equal amount of securities sold short, or securities convertible into or exchangeable for, without payment of any fur- ther consideration, an equal amount of the securities of the same issuer as the securities sold short.
Preferred Stock, Warrants and Rights. Each Fund may invest in preferred stock, warrants and rights. Preferred stocks are securities that represent an ownership interest providing the holder with claims on the issuer's earn- ings and assets before common stock owners but after bond owners. Unlike debt securities, the obligations of an issuer of preferred stock, including dividend and other payment obligations, may not typically be accelerated by the holders of such preferred stock on the occurrence of an event of default or other non-compliance by the issuer of the preferred stock.
Warrants and other rights are options to buy a stated number of shares of common stock at a specified price at any time during the life of the warrant or right. The holders of warrants and rights have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.
Other Investment Companies. Each Fund may invest in securities of other investment companies (including SPDRs and WEBs, as defined below) subject to statutory limitations prescribed by the Act. These limitations include a prohibition on
APPENDIX A
any Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of a Fund's total assets in securities of any one investment company or more than 10% of its total assets in securities of all investment companies. A Fund will indi- rectly bear its proportionate share of any management fees and other expenses paid by such other investment companies. Such other investment com- panies will have investment objectives, policies and restrictions substan- tially similar to those of the acquiring Fund and will be subject to sub- stantially the same risks.
.Standard & Poor's Depository Receipts. The Funds may, consistent with their investment policies, purchase Standard & Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on the American Stock Exchange ("AMEX") that represent ownership in the SPDR Trust, a trust which has been established to accumulate and hold a portfolio of common stocks that is intended to track the price performance and dividend yield of the S&P 500. The SPDR Trust is sponsored by a subsidiary of the AMEX. SPDRs may be used for several reasons, including, but not limited to, facilitating the han- dling of cash flows or trading, or reducing transaction costs. The price movement of SPDRs may not perfectly parallel the price action of the S&P 500.
.World Equity Benchmark Shares. World Equity Benchmark Shares ("WEBS") are shares of an investment company that invests substantially all of its assets in securities included in the MSCI indices for specified countries. WEBS are listed on the AMEX and were initially offered to the public in 1996. The market prices of WEBS are expected to fluctuate in accordance with both changes in the NAVs of their underlying indices and supply and demand of WEBS on the AMEX. To date, WEBS have traded at relatively modest discounts and premiums to their NAVs. However, WEBS have a limited operat- ing history and information is lacking regarding the actual performance and trading liquidity of WEBS for extended periods or over complete market cycles. In addition, there is no assurance that the requirements of the AMEX necessary to maintain the listing of WEBS will continue to be met or will remain unchanged. In the event substantial market or other disruptions affecting WEBS should occur in the future, the liquidity and value of a Fund's shares could also be substantially and adversely affected. If such disruptions were to occur, a Fund could be required to reconsider the use of WEBS as part of its investment strategy.
Unseasoned Companies. Each Fund may invest in companies (including predeces- sors) which have operated less than three years. The securities of such com- panies may have limited liquidity, which can result in their being priced higher or lower than might otherwise be the case. In addition, investments in unseasoned compa -
nies are more speculative and entail greater risk than do investments in companies with an established operating record.
Corporate Debt Obligations. Corporate debt obligations include bonds, notes, debentures, commercial paper and other obligations of corporations to pay interest and repay principal, and include securities issued by banks and other financial institutions. Each Fund may invest in corporate debt obliga- tions issued by U.S. and certain non-U.S. issuers which issue securities denominated in the U.S. dollar (including Yankee and Euro obligations). In addition to obligations of corporations, corporate debt obligations include securities issued by banks and other financial institutions and suprana- tional entities (i.e., the World Bank, the International Monetary Fund, etc.).
Bank Obligations. Each Fund may invest in obligations issued or guaranteed by U.S. or foreign banks. Bank obligations, including without limitations, time deposits, bankers' acceptances and certificates of deposit, may be gen- eral obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulations. Banks are subject to extensive but different governmental regulations which may limit both the amount and types of loans which may be made and interest rates which may be charged. In addition, the profitability of the banking industry is largely dependent upon the availability and cost of funds for the purpose of financing lending operations under prevailing money market conditions. General economic conditions as well as exposure to credit losses arising from possible financial difficulties of borrowers play an important part in the operation of this industry.
U.S. Government Securities and Related Custodial Receipts. Each Fund may invest in U.S. government securities and related custodial receipts. U.S. government securities include U.S. Treasury obligations and obligations issued or guaranteed by U.S. government agencies, instrumentalities or spon- sored enterprises. U.S. government securities may be supported by (a) the full faith and credit of the U.S. Treasury (such as the Government National Mortgage Association ("Ginnie Mae")); (b) the right of the issuer to borrow from the U.S. Treasury (such as securities of the Student Loan Marketing Association); (c) the discretionary authority of the U.S. government to pur- chase certain obligations of the issuer (such as the Federal National Mort- gage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac")); or (d) only the credit of the issuer. U.S. government securities also include Treasury receipts, zero coupon bonds and other stripped U.S. government securities, where the interest and principal compo- nents of stripped U.S. government securities are traded independently.
Interests in U.S. government securities may be purchased in the form of cus- todial receipts that evidence ownership of future interest payments, princi- pal payments
APPENDIX A
or both on certain notes or bonds issued or guaranteed as to principal and interest by the U.S. government, its agencies, instrumentalities, political subdivisions or authorities. For certain securities law purposes, custodial receipts are not considered obligations of the U.S. government.
Mortgage-Backed Securities. Certain Funds may invest in mortgage-backed securities. Mortgage-backed securities represent direct or indirect partici- pations in, or are collateralized by and payable from, mortgage loans secured by real property. Mortgage-backed securities can be backed by either fixed rate mortgage loans or adjustable rate mortgage loans, and may be issued by either a governmental or non-governmental entity. Privately issued mortgage-backed securities are normally structured with one or more types of "credit enhancement." However, these mortgage-backed securities typically do not have the same credit standing as U.S. government guaranteed mortgage- backed securities.
Mortgage-backed securities may include multiple class securities, including collateralized mortgage obligations ("CMOs") and Real Estate Mortgage Investment Conduit ("REMIC") pass-through or participation certificates. CMOs provide an investor with a specified interest in the cash flow from a pool of underlying mortgages or of other mortgage-backed securities. CMOs are issued in multiple classes. In many cases, payments of principal are applied to the CMO classes in the order of their respective stated maturi- ties, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. A REMIC is a CMO that qualifies for special tax treatment and invests in cer- tain mortgages principally secured by interests in real property and other permitted investments.
Mortgaged-backed securities also include stripped mortgage-backed securities ("SMBS"), which are derivative multiple class mortgage-backed securities. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments and the other that receives sub- stantially all of the principal payments from a pool of mortgage loans. The market value of SMBS consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on SMBS that receive all or most of the interest from mortgage loans are gener- ally higher than prevailing market yields on other mortgage-backed securi- ties because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
Asset-Backed Securities. Certain Funds may invest in asset-backed securi- ties. Asset-backed securities are securities whose principal and interest payments are collateralized by pools of assets such as auto loans, credit card receivables, leases, installment contracts and personal property. Asset-backed securities are often sub-
ject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the under- lying loans. During periods of declining interest rates, prepayment of loans underlying asset-backed securities can be expected to accelerate. According- ly, a Fund's ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is subject to generally prevailing interest rates at that time. Asset-backed securities present credit risks that are not presented by mortgage-backed securities. This is because asset-backed securities gener- ally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. There is the possibility that, in some cases, recoveries on repossessed collateral may not be available to support pay- ments on these securities. In the event of a default, a Fund may suffer a loss if it cannot sell collateral quickly and receive the amount it is owed.
Borrowings. Each Fund can borrow money from banks and other financial insti- tutions in amounts not exceeding one-third of its total assets for temporary or emergency purposes. A Fund may not make additional investments if borrowings exceed 5% of its total assets.
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Appendix B
Financial Highlights
The financial highlights tables are intended to help you understand a Fund's financial performance for the past five years (or less if the Fund has been in operation for less than five years). Certain information reflects finan- cial results for a single Fund share. The total returns in the table repre- sent the rate that an investor would have earned or lost on an investment in a Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Arthur Andersen LLP, whose report, along with a Fund's financial statements, is included in the Fund's annual report (available upon request without charge).
CORE INTERNATIONAL EQUITY FUND
Income from
investment operations/a/
---------------------------
Net asset Net
value, investment Net realized and
beginning income unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $ 9.98 $ 0.05 $ 0.84
1999 - Class B Shares 9.95 0.01 0.85
1999 - Class C Shares 9.96 0.01 0.85
1999 - Institutional Shares 10.06 0.09 0.85
1999 - Service Shares 10.02 0.01 0.90
------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 9.22 (0.01) 0.79
1999 - Class B Shares 9.21 -- 0.74
1999 - Class C Shares 9.22 -- 0.74
1999 - Institutional Shares 9.24 0.05 0.80
1999 - Service Shares 9.23 -- 0.81
------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced August
15, 1997) 10.00 -- (0.78)
1998 - Class B Shares (commenced August
15, 1997) 10.00 (0.02) (0.77)
1998 - Class C Shares (commenced August
15, 1997) 10.00 (0.02) (0.76)
1998 - Institutional Shares (commenced
August 15, 1997) 10.00 0.02 (0.76)
1998 - Service Shares (commenced August
15, 1997) 10.00 0.01 (0.78)
------------------------------------------------------------------------------
|
See page 97 for all footnotes.
APPENDIX B
Distributions to
shareholders
------------------------
Net
increase Net
(decrease) Net asset assets
From net From net in net value, at end
investment realized asset end of Total of period
income gains value period return/b/ (in 000s)
---------------------------------------------------------------------------------
$ -- $ -- $ 0.89 $10.87 8.92%d $114,502
-- -- 0.86 10.81 8.64d 9,171
-- -- 0.86 10.82 8.63d 4,913
-- -- 0.94 11.00 9.34d 271,212
-- -- 0.91 10.93 9.08d 8
---------------------------------------------------------------------------------
(0.02) -- 0.76 9.98 8.37 110,338
-- -- 0.74 9.95 8.03 7,401
-- -- 0.74 9.96 8.03 3,742
(0.03) -- 0.82 10.06 9.20 280,731
(0.02) -- 0.79 10.02 8.74 22
---------------------------------------------------------------------------------
-- -- (0.78) 9.22 (7.66)d 7,087
-- -- (0.79) 9.21 (7.90)d 2,721
-- -- (0.78) 9.22 (7.80)d 1,608
(0.02) -- (0.76) 9.24 (7.45)d 17,719
-- -- (0.77) 9.23 (7.70)d 1
---------------------------------------------------------------------------------
|
CORE INTERNATIONAL EQUITY FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of
net
Ratio of Ratio of net investment
net investment Ratio of income
expenses income (loss) expenses (loss) to Portfolio
to average to average to average average turnover
net assets net assets net assets net assets rate
----------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 1.66%c 0.78%c 1.76%c 0.68%c 64.97%d
1999 - Class B Shares 2.16c 0.26c 2.26c 0.16c 64.97d
1999 - Class C Shares 2.16c 0.23c 2.26c 0.13c 64.97d
1999 - Institutional
Shares 1.01c 1.43c 1.11c 1.33c 64.97d
1999 - Service Shares 1.51c 0.07c 1.61c (0.03)c 64.97d
----------------------------------------------------------------------------------
For the Year Ended
January 31,
1999 - Class A Shares 1.63 (0.11) 1.94 (0.42) 194.61
1999 - Class B Shares 2.08 (0.03) 2.39 (0.34) 194.61
1999 - Class C Shares 2.08 (0.04) 2.39 (0.35) 194.61
1999 - Institutional
Shares 1.01 0.84 1.32 0.53 194.61
1999 - Service Shares 1.50 0.02 1.81 (0.29) 194.61
----------------------------------------------------------------------------------
For the Period Ended
January 31,
1998 - Class A Shares
(commenced August 15,
1997) 1.50c (0.27)c 4.87c (3.90)c 25.16d
1998 - Class B Shares
(commenced August 15,
1997) 2.00c (0.72)c 5.12c (3.84)c 25.16d
1998 - Class C Shares
(commenced August 15,
1997) 2.00c (0.73)c 5.12c (3.85)c 25.16d
1998 - Institutional
Shares (commenced
August 15, 1997) 1.00c 0.59 c 4.12c (2.53)c 25.16d
1998 - Service Shares
(commenced August 15,
1997) 1.50c 0.26 c 4.62c (2.86)c 25.16d
----------------------------------------------------------------------------------
|
[This page intentionally left blank]
INTERNATIONAL EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $21.92 $ 0.04 $ 1.16
1999 - Class B Shares 21.63 (0.02) 1.12
1999 - Class C Shares 21.45 (0.03) 1.12
1999 - Institutional Shares 22.20 0.12e 1.17e
1999 - Service Shares 21.93 0.06 1.15
------------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 19.85 (0.06) 3.24
1999 - Class B Shares 19.70 (0.17) 3.21
1999 - Class C Shares 19.56 (0.15) 3.15
1999 - Institutional Shares 19.97 0.03 3.31
1999 - Service Shares 19.84 (0.04) 3.24
------------------------------------------------------------------------------
1998 - Class A Shares 19.32 0.03 2.04
1998 - Class B Shares 19.24 (0.08) 2.02
1998 - Class C Shares (commenced
August 15, 1997) 22.60 (0.04) (1.38)
1998 - Institutional Shares 19.40 0.10 2.11
1998 - Service Shares 19.34 0.02 2.06
------------------------------------------------------------------------------
1997 - Class A Shares 17.20 0.10 2.23
1997 - Class B Shares (commenced May 1,
1996) 18.91 (0.06) 0.60
1997 - Institutional Shares (commenced
February 7, 1996) 17.45 0.04 2.15
1997 - Service Shares (commenced March 6,
1996) 17.70 (0.02) 1.87
------------------------------------------------------------------------------
1996 - Class A Shares 14.52 0.13 4.00
------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
--------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gain value of period return/b/ (in 000s) net assets
------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 1.20 $23.12 5.47%d $943,473 1.79%c
-- -- -- 1.10 22.73 5.09d 68,691 2.29c
-- -- -- 1.09 22.54 5.08d 11,241 2.29c
-- -- -- 1.29 23.49 5.81d 180,564 1.14c
-- -- -- 1.21 23.14 5.52d 3,852 1.64c
------------------------------------------------------------------------------------------------
-- -- (1.11) 2.07 21.92 16.39 947,973 1.73
-- -- (1.11) 1.93 21.63 15.80 69,231 2.24
-- -- (1.11) 1.89 21.45 15.70 11,619 2.24
-- -- (1.11) 2.23 22.20 17.09 111,315 1.13
-- -- (1.11) 2.09 21.93 16.49 3,568 1.63
------------------------------------------------------------------------------------------------
-- (0.30) (1.24) 0.53 19.85 11.12 697,590 1.67
-- (0.25) (1.23) 0.46 19.70 10.51 55,324 2.20
-- (0.38) (1.24) (3.04) 19.56 (5.92)d 3,369 2.27c
(0.07) (0.33) (1.24) 0.57 19.97 11.82 56,263 1.08
-- (0.35) (1.23) 0.50 19.84 11.25 3,035 1.55
------------------------------------------------------------------------------------------------
-- -- (0.21) 2.12 19.32 13.48 536,283 1.69
-- -- (0.21) 0.33 19.24 2.83d 19,198 2.23c
(0.03) -- (0.21) 1.95 19.40 12.53d 68,374 1.10c
-- -- (0.21) 1.64 19.34 10.42d 674 1.60c
------------------------------------------------------------------------------------------------
(0.58) -- (0.87) 2.68 17.20 28.68 330,860 1.52
------------------------------------------------------------------------------------------------
|
INTERNATIONAL EQUITY FUND (continued)
Ratios assuming
no voluntary
expense limitations
--------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) to expenses to income (loss) Portfolio
average net average to average net turnover
assets net assets assets rate
-------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 0.31%c 1.84%c 0.26%c 61.10%d
1999 - Class B Shares (0.19)c 2.34c (0.24)c 61.10d
1999 - Class C Shares (0.26)c 2.34c (0.31)c 61.10d
1999 - Institutional
Shares 0.89c 1.19c 0.84c 61.10d
1999 - Service Shares 0.47c 1.69c 0.42c 61.10d
-------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares (0.28) 1.82 (0.37) 113.79
1999 - Class B Shares (0.79) 2.32 (0.87) 113.79
1999 - Class C Shares (0.98) 2.32 (1.06) 113.79
1999 - Institutional
Shares 0.23 1.21 0.15 113.79
1999 - Service Shares (0.18) 1.71 (0.26) 113.79
-------------------------------------------------------------------------------
1998 - Class A Shares (0.27) 1.80 (0.40) 40.82
1998 - Class B Shares (0.90) 2.30 (1.00) 40.82
1998 - Class C Shares
(commenced August 15,
1997) (1.43)c 2.37c (1.53)c 40.82
1998 - Institutional
Shares 0.30 1.18 0.20 40.82
1998 - Service Shares (0.36) 1.65 (0.46) 40.82
-------------------------------------------------------------------------------
1997 - Class A Shares (0.07) 1.88 (0.26) 38.01
1997 - Class B Shares
(commenced May 1, 1996) (0.97)c 2.38c (1.12)c 38.01
1997 - Institutional
Shares (commenced
February 7, 1996) 0.43c 1.25c 0.28c 38.01
1997 - Service Shares
(commenced March 6,
1996) (0.40)c 1.75c (0.55)c 38.01
-------------------------------------------------------------------------------
1996 - Class A Shares 0.26 1.77 0.01 68.48
-------------------------------------------------------------------------------
|
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EUROPEAN EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period loss gain (loss)
-----------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $12.20 $0.05 $(0.50)
1999 - Class B Shares 12.19 0.03 (0.51)
1999 - Class C Shares 12.20 0.04 (0.52)
1999 - Institutional Shares 12.23 0.18 (0.59)
1999 - Service Shares 12.20 0.08 (0.52)
-----------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced October
1, 1998) 10.00 (0.03) 2.23
1999 - Class B Shares (commenced October
1, 1998) 10.00 (0.02) 2.21
1999 - Class C Shares (commenced October
1, 1998) 10.00 (0.01) 2.21
1999 - Institutional Shares (commenced
October 1, 1998) 10.00 (0.01) 2.24
1999 - Service Shares (commenced October
1, 1998) 10.00 (0.03) 2.23
-----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
-----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $(0.45) $11.75 (3.69)%d $74,862 1.79%c
-- -- -- (0.48) 11.71 (3.94)d 879 2.29c
-- -- -- (0.48) 11.72 (3.93)d 388 2.29c
-- -- -- (0.41) 11.82 (3.35)d 5,965 1.14c
-- -- -- (0.44) 11.76 (3.61)d 2 1.64c
-----------------------------------------------------------------------------------------------
-- -- -- 2.20 12.20 22.00d 61,151 1.79c
-- -- -- 2.19 12.19 21.90d 432 2.29c
-- -- -- 2.20 12.20 22.00d 587 2.29c
-- -- -- 2.23 12.23 22.30d 12,740 1.14c
-- -- -- 2.20 12.20 22.00d 2 1.64c
-----------------------------------------------------------------------------------------------
|
EUROPEAN EQUITY FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
------------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) to expenses to income (loss) Portfolio
average net average net to average net turnover
assets assets assets rate
------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares 0.80%c 2.29%c 0.30%c 54.98%d
1999 - Class B Shares 0.43c 2.79c (0.07)c 54.98d
1999 - Class C Shares 0.42c 2.79c (0.08)c 54.98d
1999 - Institutional
Shares 1.53c 1.64c 1.03c 54.98d
1999 - Service Shares 1.10c 2.14c 0.60c 54.98d
------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares
(commenced October 1,
1998) (1.19)c 2.80c (2.20)c 70.77d
1999 - Class B Shares
(commenced October 1,
1998) (1.78)c 3.30c (2.79)c 70.77d
1999 - Class C Shares
(commenced October 1,
1998) (1.83)c 3.30c (2.84)c 70.77d
1999 - Institutional
Shares (commenced Octo-
ber 1, 1998) (0.33)c 2.15c (1.34)c 70.77d
1999 - Service Shares
(commenced October 1,
1998) (0.69)c 2.65c (1.70)c 70.77d
------------------------------------------------------------------------------
|
[This page intentionally left blank]
JAPANESE EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period loss gains
----------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $11.06 $(0.06) $5.24
1999 - Class B Shares 11.03 (0.09) 5.20
1999 - Class C Shares 11.04 (0.08) 5.20
1999 - Institutional Shares 11.10 (0.03) 5.29
1999 - Service Shares 11.04 (0.06) 5.24
----------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced May 1,
1998) 10.00 (0.06) 1.12
1999 - Class B Shares (commenced May 1,
1998) 10.00 (0.08) 1.11
1999 - Class C Shares (commenced May 1,
1998) 10.00 (0.09) 1.13
1999 - Institutional Shares (commenced
May 1, 1998) 10.00 (0.02) 1.13
1999 - Service Shares (commenced May 1,
1998) 10.00 (0.05) 1.09
----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
-------------------------------------
In excess Net assets Ratio of
From net of net Net increase Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $5.18 $16.24 46.84%d $34,279 1.70%c
-- -- -- 5.11 16.14 46.33d 4,219 2.20c
-- -- -- 5.12 16.16 46.41d 3,584 2.20c
-- -- -- 5.26 16.36 47.40d 22,709 1.05c
-- -- -- 5.18 16.22 46.92d 3 1.55c
----------------------------------------------------------------------------------------------
-- -- -- 1.06 11.06 10.60d 8,391 1.64c
-- -- -- 1.03 11.03 10.30d 1,427 2.15c
-- -- -- 1.04 11.04 10.40d 284 2.15c
-- (0.01) -- 1.10 11.10 11.06d 11,418 1.03c
-- -- -- 1.04 11.04 10.43d 2 1.53c
----------------------------------------------------------------------------------------------
|
JAPANESE EQUITY FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
----------------------------
Ratio of Ratio of
net investment Ratio of net investment
loss to expenses to loss to average Portfolio
average net average net turnover
assets net assets assets rate
---------------------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares (1.17)%c 2.62%c (2.09)%c 44.83%d
1999 - Class B Shares (1.57)c 3.12c (2.49)c 44.83d
1999 - Class C Shares (1.81)c 3.12c (2.73)c 44.83d
1999 - Institutional
Shares (0.37)c 1.97c (1.29)c 44.83d
1999 - Service Shares (0.74)c 2.47c (1.66)c 44.83d
---------------------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares
(commenced May 1, 1998) (1.20)c 4.18c (3.74)c 53.29d
1999 - Class B Shares
(commenced May 1, 1998) (1.76)c 4.69c (4.30)c 53.29d
1999 - Class C Shares
(commenced May 1, 1998) (1.69)c 4.69c (4.23)c 53.29d
1999 - Institutional
Shares (commenced May 1,
1998) (0.36)c 3.57c (2.90)c 53.29d
1999 - Service Shares
(commenced May 1, 1998) (0.68)c 4.07c (3.22)c 53.29d
---------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
INTERNATIONAL SMALL CAP FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period loss gain
-------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $10.62 $(0.03) $2.65
1999 - Class B Shares 10.61 (0.08)e 2.66e
1999 - Class C Shares 10.61 (0.08)e 2.66e
1999 - Institutional Shares 10.66 -- 2.69
1999 - Service Shares 10.61 (0.02) 2.65
-------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced May 1,
1998) 10.00 (0.04) 0.66
1999 - Class B Shares (commenced May 1,
1998) 10.00 (0.10) 0.71
1999 - Class C Shares (commenced May 1,
1998) 10.00 (0.06) 0.67
1999 - Institutional Shares (commenced May
1, 1998) 10.00 -- 0.67
1999 - Service Shares (commenced May 1,
1998) 10.00 (0.02) 0.63
-------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------------
Ratio of
In excess Net assets net
From net of net Net increase Net asset at end of expenses
investment investment From net in net asset value, end Total period to average
income loss realized gains value of period return/b/(in 000s) net assets
-----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $2.62 $13.24 24.67%d $69,458 2.05%c
-- -- -- 2.58 13.19 24.32d 303 2.55c
-- -- -- 2.58 13.19 24.32d 419 2.55c
-- -- -- 2.69 13.35 25.24d 65,772 1.40c
-- -- -- 2.63 13.24 24.79d 2 1.90c
-----------------------------------------------------------------------------------------------
-- -- -- 0.62 10.62 6.20d 33,002 2.02c
-- -- -- 0.61 10.61 6.10d 213 2.51c
-- -- -- 0.61 10.61 6.10d 175 2.51c
-- (0.01) -- 0.66 10.66 6.67d 36,992 1.40c
-- -- -- 0.61 10.61 6.10d 2 1.90c
-----------------------------------------------------------------------------------------------
|
INTERNATIONAL SMALL CAP FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of Ratio of
net net
investment Ratio of investment
loss to expenses loss to Portfolio
average to average average turnover
net assets net assets net assets rate
------------------------------------------------------------------------------
For the Seven-Month Period Ended
August 31,
1999 - Class A Shares (0.68)%c 2.42%c (1.05)%c 58.81%d
1999 - Class B Shares (1.16)c 2.92c (1.53)c 58.81d
1999 - Class C Shares (1.21)c 2.92c (1.58)c 58.81d
1999 - Institutional Shares (0.05)c 1.77c (0.42)c 58.81d
1999 - Service Shares (0.35)c 2.27c (0.72)c 58.81d
------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced
May 1, 1998) (1.03)c 3.60c (2.61)c 96.11d
1999 - Class B Shares (commenced
May 1, 1998) (1.30)c 4.09c (2.88)c 96.11d
1999 - Class C Shares (commenced
May 1, 1998) (1.45)c 4.09c (3.03)c 96.11d
1999 - Institutional Shares
(commenced May 1, 1998) (0.19)c 2.98c (1.77)c 96.11d
1999 - Service Shares (commenced
May 1, 1998) (0.26)c 3.48c (1.84)c 96.11d
------------------------------------------------------------------------------
|
[This page intentionally left blank]
EMERGING MARKETS EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $ 7.04 $(0.01) $ 2.23
1999 - Class B Shares 7.03 (0.03) 2.21
1999 - Class C Shares 7.05 (0.03) 2.22
1999 - Institutional Shares 7.09 0.02 2.26
1999 - Service Shares 6.87 0.01 2.17
------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 9.69 0.04 (2.40)
1999 - Class B Shares 9.69 0.03 (2.41)
1999 - Class C Shares 9.70 0.01 (2.39)
1999 - Institutional Shares 9.70 0.06 (2.36)
1999 - Service Shares 9.69 (0.13) (2.41)
------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced December
15, 1997) 10.00 -- (0.31)
1998 - Class B Shares (commenced December
15, 1997) 10.00 -- (0.31)
1998 - Class C Shares (commenced December
15, 1997) 10.00 -- (0.30)
1998 - Institutional Shares (commenced
December 15, 1997) 10.00 0.01 (0.31)
1998 - Service Shares (commenced December
15, 1997) 10.00 -- (0.31)
------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
--------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 2.22 $9.26 31.53%d $ 65,698 2.04%c
-- -- -- 2.18 9.21 31.01d 972 2.54c
-- -- -- 2.19 9.24 31.06d 1,095 2.54c
-- -- -- 2.28 9.37 32.16d 108,574 1.39c
-- -- -- 2.18 9.05 31.73d 2 1.89c
--------------------------------------------------------------------------------------------------
(0.07) (0.22) -- (2.65) 7.04 (24.32) 52,704 2.09
(0.07) (0.21) -- (2.66) 7.03 (24.51) 459 2.59
(0.07) (0.20) -- (2.65) 7.05 (24.43) 273 2.59
(0.08) (0.23) -- (2.61) 7.09 (23.66) 90,189 1.35
(0.07) (0.21) -- (2.82) 6.87 (26.17) 1 1.85
--------------------------------------------------------------------------------------------------
-- -- -- (0.31) 9.69 (3.10)d 17,681 1.90c
-- -- -- (0.31) 9.69 (3.10)d 64 2.41c
-- -- -- (0.30) 9.70 (3.00)d 73 2.48c
-- -- -- (0.30) 9.70 (3.00)d 19,120 1.30c
-- -- -- (0.31) 9.69 (3.10)d 2 2.72c
--------------------------------------------------------------------------------------------------
|
EMERGING MARKETS EQUITY FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
----------------------------
Ratio
Ratio of net
of net investment
investment Ratio of income
income (loss) expenses to (loss) to Portfolio
to average average net average turnover
net assets assets net assets rate
--------------------------------------------------------------------------------------------
For the Seven-Month Period
Ended August 31,
1999 - Class A Shares (0.15)%c 2.41%c (0.52)%c 63.24%d
1999 - Class B Shares (0.71)c 2.91c (1.08)c 63.24d
1999 - Class C Shares (0.85)c 2.91c (1.22)c 63.24d
1999 - Institutional
Shares 0.50c 1.76c 0.13c 63.24d
1999 - Service Shares 0.12c 2.26c (0.25)c 63.24d
--------------------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 0.80 2.53 0.36 153.67
1999 - Class B Shares 0.19 3.03 (0.25) 153.67
1999 - Class C Shares 0.28 3.03 (0.16) 153.67
1999 - Institutional
Shares 1.59 1.79 1.15 153.67
1999 - Service Shares (1.84) 2.29 (2.28) 153.67
--------------------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares
(commenced December 15,
1997) 0.55c 5.88c (3.43)c 3.35d
1998 - Class B Shares
(commenced December 15,
1997) 0.05c 6.39c (3.93)c 3.35d
1998 - Class C Shares
(commenced December 15,
1997) (0.27)c 6.46c (4.25)c 3.35d
1998 - Institutional
Shares (commenced Decem-
ber 15, 1997) 0.80c 5.28c (3.18)c 3.35d
1998 - Service Shares
(commenced December 15,
1997) (0.05)c 6.70c (4.03)c 3.35d
--------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
ASIA GROWTH FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
-----------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $ 7.79 $(0.02) $3.30
1999 - Class B Shares 7.68 (0.04) 3.24
1999 - Class C Shares 7.68 (0.04) 3.21
1999 - Institutional Shares 7.91 0.01 3.36
-----------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 8.38 0.07 (0.66)
1999 - Class B Shares 8.31 0.01 (0.64)
1999 - Class C Shares 8.29 -- (0.61)
1999 - Institutional Shares 8.44 0.03 (0.56)
-----------------------------------------------------------------------------
1998 - Class A Shares 16.31 -- (7.90)
1998 - Class B Shares 16.24 0.01 (7.91)
1998 - Class C Shares (commenced August
15, 1997) 15.73 0.01 (7.42)
1998 - Institutional Shares 16.33 0.10 (7.96)
-----------------------------------------------------------------------------
1997 - Class A Shares 16.49 0.06 (0.11)
1997 - Class B Shares (commenced May 1,
1996) 17.31 (0.05) (0.48)
1997 - Institutional Shares (commenced
February 2, 1996) 16.61 0.04 (0.11)
-----------------------------------------------------------------------------
1996 - Class A Shares 13.31 0.17 3.44
-----------------------------------------------------------------------------
For the Period Ended January 31,
1995 - Class A Shares (commenced July 8,
1994) 14.18 0.11 (0.89)
-----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------
Net
In excess increase Net assets
From net of net From net (decrease) Net asset at end
investment investment realized in net value, end Total of period
income income gains asset value of period return/b/ (in 000s)
------------------------------------------------------------------------------
$ -- $ -- $ -- $ 3.28 $11.07 42.11%d $ 84,269
-- -- -- 3.20 10.88 41.67d 7,258
-- -- -- 3.17 10.85 41.28d 2,281
-- (0.04) -- 3.33 11.24 42.61d 12,363
------------------------------------------------------------------------------
-- -- -- (0.59) 7.79 (7.04) 59,940
-- -- -- (0.63) 7.68 (7.58) 4,190
-- -- -- (0.61) 7.68 (7.36) 999
-- -- -- (0.53) 7.91 (6.28) 4,200
------------------------------------------------------------------------------
-- (0.03) -- (7.93) 8.38 (48.49) 87,437
-- (0.03) -- (7.93) 8.31 (48.70) 3,359
-- (0.03) -- (7.44) 8.29 (47.17)d 436
(0.03) -- -- (7.89) 8.44 (48.19) 874
------------------------------------------------------------------------------
(0.12) -- (0.01) (0.18) 16.31 (1.01) 263,014
(0.51) (0.03) -- (1.07) 16.24 (6.02)d 3,354
(0.11) (0.06) (0.04) (0.28) 16.33 (1.09)d 13,322
------------------------------------------------------------------------------
(0.12) (0.14) (0.17) 3.18 16.49 26.49 205,539
------------------------------------------------------------------------------
0.01 -- (0.10) (0.87) 13.31 (5.46)d 124,298
------------------------------------------------------------------------------
|
ASIA GROWTH FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of
net
Ratio of Ratio of net investment
net investment Ratio of income
expenses income (loss) expenses (loss) to Portfolio
to average to average to average average turnover
net assets net assets net assets net assets rate
-----------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 1.85%c (0.38)%c 2.27%c (0.80)%c 96.58%d
1999 - Class B Shares 2.35c (0.90)c 2.77c (1.32)c 96.58d
1999 - Class C Shares 2.35c (0.89)c 2.77c (1.31)c 96.58d
1999 - Institutional
Shares 1.20c 0.14c 1.62c (0.28)c 96.58d
-----------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares 1.93 0.63 2.48 0.08 106.00
1999 - Class B Shares 2.45 0.10 2.97 (0.42) 106.00
1999 - Class C Shares 2.45 0.10 2.97 (0.42) 106.00
1999 - Institutional
Shares 1.16 1.10 1.68 0.58 106.00
-----------------------------------------------------------------------------------
1998 - Class A Shares 1.75 0.31 1.99 0.07 105.16
1998 - Class B Shares 2.30 (0.29) 2.50 (0.49) 105.16
1998 - Class C Shares
(commenced August 15,
1997) 2.35c (0.26)c 2.55c (0.46)c 105.16
1998 - Institutional
Shares 1.11 0.87 1.31 0.67 105.16
-----------------------------------------------------------------------------------
1997 - Class A Shares 1.67 0.20 1.87 -- 48.40
1997 - Class B Shares
(commenced May 1, 1996) 2.21c (0.56)c 2.37c (0.72)c 48.40
1997 - Institutional
Shares (commenced
February 2, 1996) 1.10c 0.54c 1.26c 0.38c 48.40
-----------------------------------------------------------------------------------
1996 - Class A Shares 1.77 1.05 2.02 0.80 88.80
-----------------------------------------------------------------------------------
For the Period Ended
January 31,
1995 - Class A Shares
(commenced July 8,
1994) 1.90c 1.83c 2.38c 1.35c 36.08d
-----------------------------------------------------------------------------------
|
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares methodology.
Index
1 General Investment Management Approach
3 Fund Investment Objectives and Strategies
3 Goldman Sachs CORE International Equity Fund
4 Goldman Sachs International Equity Fund
5 Goldman Sachs European Equity Fund
6 Goldman Sachs Japanese Equity Fund
8 Goldman Sachs International Small Cap Fund
9 Goldman Sachs Emerging Markets Equity Fund
11 Goldman Sachs Asia Growth Fund
14 Other Investment Practices and Securities
18 Principal Risks of the Funds
21 Fund Performance
26 Fund Fees and Expenses
30 Service Providers
40 Dividends
41 Shareholder Guide
41 How To Buy Shares
45 How To Sell Shares
49 Taxation
51 Appendix A
Additional Information on
Portfolio Risks,
Securities and Techniques
70 Appendix B
Financial Highlights
|
International Equity Funds
Prospectus (Institutional Shares)
FOR MORE INFORMATION
Annual/Semi-annual Report
Additional information about the Funds' investments is available in the Funds' annual and semi-annual reports to shareholders. In the Funds' annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the last fiscal year.
Statement of Additional Information
Additional information about the Funds and their policies is also available
in the Funds' Statement of Additional Information ("Additional Statement").
The Additional Statement is incorporated by reference into this Prospectus
(is legally considered part of this Prospectus).
The Funds' annual and semi-annual reports, and the Additional Statement, are available free upon request by calling Goldman Sachs at 1-800-621-2550.
To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-621-2550
By mail - Goldman Sachs Funds, 4900 Sears Tower-60th Floor, Chicago, IL
60606-6372
By e-mail - gs-funds@gs.com
On the Internet - Text-only versions of the Funds' documents are located
online and may be downloaded from:
SEC EDGAR database - http://www.sec.gov
You may review and obtain copies of Fund documents by visiting the SEC's
Public Reference Room in Washington, D.C. You may also obtain copies of Fund
documents, after paying a duplicating fee, by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102 or by electronic request to:
publicinfo@sec.gov. Information on the operation of the public reference
room may be obtained by calling the SEC at (202) 942-8090.
[LOGO OF GOLDMAN SACHS]
The Funds' investment company registration number is 811-5349.
CORESM is a service mark of Goldman, Sachs & Co.
EQINTLPROINS
Prospectus
GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS
Service Shares
November 30, 1999
.Goldman Sachs
CORE/SM/
International
Equity Fund
.Goldman Sachs
International
Equity Fund
.Goldman Sachs
European
Equity Fund
.Goldman Sachs
Japanese
Equity Fund
.Goldman Sachs
International
Small Cap Fund
.Goldman Sachs
Emerging
Markets Equity
Fund
.Goldman Sachs
Asia Growth
Fund
[LOGO OF GOLDMAN SACH]
THE SECURITIES AND EXCHANGE COMMISSION HAS
NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A FUND IS NOT A BANK
DEPOSIT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN A FUND
INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
NOT FDIC-INSURED May Lose Value No Bank Guarantee
General Investment Management Approach
Goldman Sachs Asset Management, a unit of the Investment Management Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser to the CORE International Equity Fund. Goldman Sachs Asset Management Interna- tional serves as investment adviser to International Equity, European Equi- ty, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds. Goldman Sachs Asset Management and Goldman Sachs Asset Management International are each referred to in this Prospectus as the "In- vestment Adviser."
ACTIVE INTERNATIONAL STYLE FUNDS
Goldman Sachs' Active International Investment Philosophy:
How the Investment Adviser Acts on
Belief Belief
----------------------------------------------------------------------------
.Equity markets are inefficient Seeks excess return through team
driven, research intensive and
bottom-up stock selection.
.Returns are variable Seeks to capitalize on variability
of market and regional returns
through asset allocation decisions.
.Corporate fundamentals ultimately Seeks to conduct rigorous, first-
drive share price hand research of business and
company management.
.A business' intrinsic value will be Seeks to realize value through a
achieved over time long-term investment horizon.
.Portfolio risk must be carefully Seeks to systematically monitor and
analyzed and monitored manage risk through diversification,
multifactor risk models and currency
management.
|
The Investment Adviser attempts to manage risk in these Funds through disci- plined portfolio construction and continual portfolio review and analysis. As a result, bottom-up stock selection, driven by fundamental research, should be a main driver of returns.
QUANTITATIVE ("CORE") STYLE FUNDS
Goldman Sachs' CORE Investment Philosophy:
Goldman Sachs' quantitative style of funds--CORE--emphasizes the two build-
ing blocks of active management: stock selection and portfolio construction.
I. CORE STOCK SELECTION
The CORE Fund uses the Goldman Sachs proprietary multifactor model
("Multifactor Model"), a rigorous computerized rating system, to forecast
the returns of securities held in the Fund's portfolio. The Multifactor
Model incorporates common variables covering measures of:
.Value (price-to-book, price-to-earnings, cash flow to enterprise value)
.Momentum (earnings momentum, price momentum, sustainable growth)
.Risk (market risk, company-specific risk, earnings risk)
All of the above factors are carefully evaluated within the Multifactor Model since each has demonstrated a significant impact on the performance of the securities and markets they were designed to forecast.
II. CORE PORTFOLIO CONSTRUCTION
A proprietary computer optimizer calculates every security combination (at every possible weighting) to construct the most efficient risk/return port- folio given the CORE Fund benchmark. In this process, the Investment Adviser manages risk by limiting deviations from the benchmark. In addition, the CORE International Equity Fund utilizes proprietary quantitative models to allocate assets across countries.
Goldman Sachs CORE Funds are fully invested, broadly diversified and offer consistent overall portfolio characteristics. They may serve as good founda- tions on which to build a portfolio.
Fund Investment Objectives and Strategies
Goldman Sachs CORE International Equity Fund
Objective: Long-term growth of capital
Benchmarks: MSCI Europe, Australasia, Far East ("EAFE") Index
(unhedged)
Investment Focus: Large-capitalization equity securities of companies that are organized outside the United States or whose securi- ties are primarily traded outside the United States
Investment Style: Quantitative
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital. The Fund seeks this objective through a broadly diversified portfolio of equity securities of large-cap companies that are organized outside the United States or whose securities are principally traded outside the United States.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, at least 90% of its total assets in equity securities of companies that are organized outside the United States or whose securities are principally traded outside the United States.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time, provided the Fund's assets are invested in at least three foreign countries. The Fund may invest in the securities of issuers in countries with emerging markets or economies ("emerging countries").
The Fund seeks broad representation of large-cap issuers across major coun- tries and sectors of the international economy. The Fund's investments are selected using both a variety of quantitative techniques and fundamental research in seeking to maximize the Fund's expected return, while maintain- ing risk, style, capitalization and industry characteristics similar to the EAFE Index. In addition, the Fund seeks a portfolio composed of companies with attractive valuations and stronger momentum characteristics than the EAFE Index.
Other. The Fund's investments in fixed-income securities are limited to securities that are considered to be cash equivalents.
Goldman Sachs International Equity Fund
Objective: Long-term capital appreciation
Benchmark: MSCI EAFE Index (unhedged)
Investment Focus: Equity securities of companies organized outside the
United States or whose securities are principally traded
outside the United States
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of companies that are organized outside the United States or whose securities are principally traded outside the United States. The Fund intends to invest in companies with public stock market capitalizations that are larger than $1 billion at the time of investment.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time provided that the Fund's assets are invested in at least three foreign countries.
The Fund expects to invest a substantial portion of its assets in the secu- rities of issuers located in the developed countries of Western Europe and in Japan. However, the Fund may also invest in the securities of issuers located in Australia, Canada, New Zealand and in emerging countries. Cur- rently, emerging countries include, among others, most Latin American, Afri- can, Asian and Eastern European nations.
Other. The Fund may also invest up to 35% of its total assets in fixed- income securities, such as government, corporate and bank debt obligations.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs European Equity Fund
Objective: Long-term capital appreciation
Benchmark: MSCI Europe Index (unhedged)
Investment Focus: Equity securities of European companies
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of European companies. Because of its focus, the Fund will be more susceptible to European economic, market, political and local risks than a fund that is more geographically diversified.
A European issuer is a company that either:
.Has a class of its securities whose principal securities markets is in a
European country;
.Is organized under the laws of, or has a principal office in, a European
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more of the European countries; or
.Maintains 50% or more of its assets in one or more of the European coun-
tries.
The Fund may allocate its assets among different countries as determined by the Investment Adviser from time to time, provided that the Fund's assets are invested in at least three European countries. It is currently antici- pated that a majority of the Fund's assets will be invested in the equity securities of large cap companies located in the developed countries of Western Europe. However, the Fund may also invest, without limit, in mid cap companies and small cap companies, as well as companies located in emerging countries. Currently, emerging countries include among others, most Latin American, African, Asian, most Eastern European nations, including the states that formerly comprised the Soviet Union and Yugoslavia.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of non-European countries and in fixed-income securities, such as government, corporate and bank debt obligations.
Goldman Sachs Japanese Equity Fund
Objective: Long-term capital appreciation
Benchmark: Tokyo Price Index ("TOPIX") (unhedged)
Investment Focus: Equity securities of Japanese companies
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
Japanese companies. A Japanese issuer is a company that either:
.Has a class of its securities whose principal securities markets is in
Japan;
.Is organized under the laws of, or has a principal office in Japan;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in Japan; or
.Maintains 50% or more of its assets in Japan.
The Fund's concentration in Japanese companies will expose it to the risk of adverse social, political and economic events which occur in Japan or affect the Japanese markets.
Japan's economy, the second largest in the world, has grown substantially over the last three decades. Japan's economic growth in the 1990's has been substantially below the level of earlier decades. Its economy has drifted between modest growth and recession. In calendar year 1998, Japan's gross national product contracted by 2.8% -- its worst performance in the post-war period. In addition to this economic downturn, Japan is undergoing struc- tural adjustments related to high wages and taxes, currency valuations and structural rigidities. Japan has also been experiencing notable uncertainty and loss of public confidence in connection
FUND INVESTMENT OBJECTIVES AND STRATEGIES
with the reform of its political process and the deregulation of its econo- my. These conditions present risks to the Japanese Equity Fund and its abil- ity to attain its investment objective.
Japan's economy is heavily dependent upon international trade, and is espe- cially sensitive to trade barriers and disputes. In particular, Japan relies on large imports of agricultural products, raw materials and fuels. A sub- stantial rise in world oil or commodity prices, or a fall-off in Japan's manufactured exports, could be expected to adversely affect Japan's economy. In addition, Japan is vulnerable to earthquakes, volcanoes and other natural disasters. Japan's banking industry has recently suffered from non-perform- ing loans, declining real estate values and lower valuations of securities holdings.
The Japanese securities markets are less regulated than the U.S. markets. Evidence has emerged from time to time of distortion of market prices to serve political or other purposes. Shareholders' rights are also not always equally enforced.
For most of this decade, Japanese securities markets have experienced sig- nificant declines. Although the stock market exhibited some strength recent- ly, it is not possible to determine whether this will continue.
The common stocks of many Japanese companies trade at high price-earnings ratios. Differences in accounting methods make it difficult to compare the earnings of Japanese companies with those of companies in other countries, especially the United States. In general, however, reported net income in Japan is understated relative to U.S. accounting standards and this is one reason price-earnings ratios of the stocks of Japanese companies have tended historically to be higher than those of U.S. stocks. In addition, Japanese companies have tended to have higher growth rates than U.S. companies, and Japanese interest rates have generally been lower than U.S. interest rates. These factors have contributed to lower discount rates and higher price- earnings ratios in Japan than in the United States.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of non-Japanese companies and in fixed-income securities, such as government, corporate and bank debt obligations.
Goldman Sachs International Small Cap Fund
Objective: Long-term capital appreciation
Benchmark: MSCI EAFE Small Cap Index (unhedged)
Investment Focus: Equity securities of foreign companies with public stock
market capitalizations of $1 billion or less at the time
of investment
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
companies:
.With public stock market capitalizations of $1 billion or less at the time
of investment; and
.That are organized outside the United States or whose securities are prin-
cipally traded outside the United States.
The Fund may allocate its assets among countries as determined by the Investment Adviser from time to time provided that the Fund's assets are invested in at least three foreign countries. The Fund expects to invest a substantial portion of its assets in small cap securities of companies in the developed countries of Western Europe, Japan and Asia. However, the Fund may also invest in the securities of issuers located in Australia, Canada, New Zealand and in emerging countries. Currently, emerging countries include, among others, most Latin American, African, Asian and Eastern Euro- pean nations.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of larger-cap companies with public stock market capital- izations of more than $1 billion at the time of investment and in fixed- income securities, such as government, corporate and bank debt obligations. If the market capitalization of a company held by the Fund increases above $1 billion, the Fund may, consistent with its investment objective, continue to hold the security.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs Emerging Markets Equity Fund
Objective: Long-term capital appreciation
Benchmark: MSCI Emerging Markets Free Index
Investment Focus: Equity securities of emerging country issuers
Investment Style: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan- tially all, and at least 65% of its total assets in equity securities of emerging country issuers. The Investment Adviser may consider classifica- tions by the World Bank, the International Finance Corporation or the United Nations and its agencies in determining whether a country is emerging or developed. Currently, emerging countries include, among others, most Latin American, African, Asian and Eastern European nations. The Investment Adviser currently intends that the Fund's investment focus will be in the following emerging countries as well as any other emerging country to the extent that foreign investors are permitted by applicable law to make such investments:
.Argentina .Egypt .Jordan .Philippines .Sri Lanka .Botswana .Greece .Kenya .Poland .Taiwan .Brazil .Hong Kong .Malaysia .Portugal .Thailand .Chile .Hungary .Mexico .Russia .Turkey .China .India .Morocco .Singapore .Venezuela .Colombia .Indonesia .Pakistan .South Africa .Zimbabwe .Czech Republic .Israel .Peru .South Korea |
Goldman Sachs Emerging Markets Equity Fund continued
An emerging country issuer is any company that either:
.Has a class of its securities whose principal securities market is in an
emerging country;
.Is organized under the laws of, or has a principal office in, an emerging
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more emerging countries; or
.Maintains 50% or more of its assets in one or more of the emerging coun-
tries.
Under normal circumstances, the Fund maintains investments in at least six emerging countries, and will not invest more than 35% of its total assets in securities of issuers in any one emerging country. Allocation of the Fund's investments will depend upon the relative attractiveness of the emerging country markets and particular issuers. In addition, macro-economic factors and the portfolio managers' and Goldman Sachs economists' views of the rela- tive attractiveness of emerging countries and currencies are considered in allocating the Fund's assets among emerging countries.
Other. The Fund may invest in the aggregate up to 35% of its total assets in
(i) fixed-income securities of private and government emerging country
issuers; and (ii) equity and fixed-income securities, such as government,
corporate and bank debt obligations, of issuers in developed countries.
FUND INVESTMENT OBJECTIVES AND STRATEGIES
Goldman Sachs Asia Growth Fund
Objective: Long-term capital appreciation
Benchmark: MSCI All County Asia Free ex-Japan Index (unhedged)
Investment Focus: Equity securities of companies in Asian countries
Investment Process: Active International
|
INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
Equity Securities. The Fund invests, under normal circumstances, substan-
tially all, and at least 65% of its total assets in equity securities of
Asian issuers.
An Asian issuer is any company that either:
.Has a class of its securities whose principal securities markets is in one
or more Asian countries;
.Is organized under the laws of, or has a principal office in, an Asian
country;
.Derives 50% or more of its total revenue from goods produced, sales made or
services performed in one or more Asian countries; or
.Maintains 50% or more of its assets in one or more Asian countries.
The Fund may allocate its assets among the Asian countries as determined from time to time by the Investment Adviser. For purposes of the Fund's investment policies, Asian countries are:
.China .Malaysia .South Korea .Hong Kong .Pakistan .Sri Lanka .India .Philippines .Taiwan .Indonesia .Singapore .Thailand |
as well as any other country in Asia (other than Japan) to the extent that foreign investors are permitted by applicable law to make such investments.
Goldman Sachs Asia Growth Fund continued
Allocation of the Fund's investments will depend upon the Investment Advis- er's views of the relative attractiveness of the Asian markets and particu- lar issuers.
Concentration of the Fund's assets in one or a few of the Asian countries and Asian currencies will subject the Fund to greater risks than if the Fund's assets were not so concentrated. For example, on August 31, 1999 (the end of the Fund's last fiscal year), more than 25% of the Fund's assets were invested in securities that traded in Hong Kong.
Starting in mid-1997 some Pacific region countries began to experience cur- rency devaluations that resulted in high interest rate levels and sharp reductions in economic activity. This situation resulted in a significant drop in the securities prices of companies located in the region. Some coun- tries have experienced government intervention, have sought assistance from the International Monetary Fund and have experienced substantial domestic unrest. Although some countries are taking steps to restructure their finan- cial sectors in a manner that may facilitate a return to long-term economic growth, there can be no assurance that these efforts will be successful or that their current problems will not persist. At the end of its last fiscal year, a substantial portion of the Asia Growth Fund was invested in securi- ties traded in the Hong Kong market. In 1997, the sovereignty of Hong Kong reverted from the United Kingdom to China. Hong Kong's financial prospects depend, in large part, on its ability to retain the legal, financial and monetary systems that allow economic freedom and market expansion. Although Hong Kong is, by law, to maintain a high degree of autonomy, there can also be no assurance that the general economic position of Hong Kong will not be adversely affected as a result of the exercise of Chinese sovereignty over Hong Kong. In particular, business confidence in Hong Kong can be signifi- cantly affected by political developments and statements by public figures in China, which can in turn affect the performance of the securities mar- kets. In addition, the reversion of Hong Kong to China has created uncer- tainty as to future currency valuations relative to the U.S. dollar. Any future valuation changes could be adverse from the perspective of U.S. investors.
Other. The Fund may invest in the aggregate up to 35% of its total assets in equity securities of issuers in non-Asian countries and Japan, and in fixed- income securities, such as government, corporate and bank debt obligations.
[This page intentionally left blank]
Other Investment Practices and Securities
The table below identifies some of the investment techniques that may (but are
not required to) be used by the Funds in seeking to achieve their investment
objectives. The table also highlights the differences among the Funds in their
use of these techniques and other investment practices and investment securi-
ties. Numbers in this table show allowable usage only; for actual usage, con-
sult the Fund's annual/semi-annual reports. For more information see Appendix
A.
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
CORE
International International European
Equity Equity Equity
Fund Fund Fund
------------------------------------------------------------------------------
Investment Practices
Borrowings 33 1/3 33 1/3 33 1/3
Cross Hedging of Currencies . . .
Currency Swaps* 15 15 15
Custodial Receipts . . .
Equity Swaps* 15 15 15
Foreign Currency Transactions . . .
Futures Contracts and Options on Futures
Contracts . . .
Investment Company Securities (including
World Equity Benchmark Shares and
Standard & Poor's Depository Receipts) 10 10 10
Options on Foreign Currencies/1/ . . .
Options on Securities and Securities
Indices/2/ . . .
Unseasoned Companies . . .
Warrants and Stock Purchase Rights . . .
Repurchase Agreements . . .
Securities Lending 33 1/3 33 1/3 33 1/3
Short Sales Against the Box -- 25 25
When-Issued Securities and Forward
Commitments . . .
------------------------------------------------------------------------------
|
. No specific percentage limitation on usage; limited only by the objectives and strategies of the Fund --Not permitted
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 1 The Funds may purchase and sell call and put options. 2 The Funds may sell covered call and put options and purchase call and put options.
OTHER INVESTMENT PRACTICES AND SECURITIES
Japanese International Emerging Asia
Equity Small Cap Markets Growth
Fund Fund Equity Fund Fund
------------------------------------------------------------
33 1/3 33 1/3 33 1/3 33 1/3
. . . .
15 15 15 15
. . . .
15 15 15 15
. . . .
. . . .
10 10 10 10
. . . .
. . . .
. . . .
. . . .
. . . .
33 1/3 33 1/3 33 1/3 33 1/3
25 25 25 25
. . . .
------------------------------------------------------------
|
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
CORE
International International European
Equity Equity Equity
Fund Fund Fund
------------------------------------------------------------------------------
Investment Securities
American, European and Global Depository
Receipts . . .
Asset-Backed and Mortgage-Backed
Securities/2/ -- . .
Bank Obligations/1/,/2/ . . .
Convertible Securities . . .
Corporate Debt Obligations/2/ ./4/ . .
Equity Securities 90+ 65+ 65+
Emerging Country Securities 25 . .
Fixed Income Securities/3/ 10/4/ 35 35/5/
Foreign Securities . . .
Foreign Government Securities/2/ . . .
Non-Investment Grade Fixed Income
Securities/2/ -- ./6/ ./6/
Real Estate Investment Trusts . . .
Structured Securities* . . .
Temporary Investments 35 100 100
U.S. Government Securities/2/ . . .
------------------------------------------------------------------------------
|
. No specific percentage limitation on usage; limited only by the objectives and strategies of the Fund --Not permitted
* Limited to 15% of net assets (together with other illiquid securities) for all structured securities which are not deemed to be liquid and all swap transactions. 1 Issued by U.S. or foreign banks.
2 Limited by the amount the Fund invests in fixed-income securities.
3 Except as noted under "Non-Investment Grade Fixed Income Securities," fixed-income securities are investment grade (e.g., BBB or higher by Stan- dard & Poor's Rating Group ("Standard & Poor's") or Baa or higher by Moody's Investor's Service, Inc. ("Moody's")).
4 Cash equivalents only.
5 The European Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) equity securities of non-European countries; and (2) fixed- income securities.
6 May be BB or lower by Standard & Poor's or Ba or lower by Moody's.
OTHER INVESTMENT PRACTICES AND SECURITIES
Japanese International Emerging
Equity Small Cap Markets Asia Growth
Fund Fund Equity Fund Fund
-----------------------------------------------------------------------------
. . . .
. . . .
. . . .
. . . .
. . . .
65+ 65+ 65+ 65+
. . . .
35/7/ 35/8/ 35/9/ 35/10/
. . . .
. . . .
./6/ ./6/ ./6/ ./6/
. . . .
. . . .
100 100 35 100
. . . .
-----------------------------------------------------------------------------
|
7 The Japanese Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities; and (2) equity securities of non- Japanese companies.
8 The International Small Cap Fund may invest in the aggregate up to 35% of its total assets in (1) fixed-income securities; and (2) equity securities of larger cap companies with public stock market capitalizations of more than $1 billion at the time of investment.
9 The Emerging Markets Equity Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities of private and government emerging country issuers; and (2) equity and fixed-income securities of issuers in developed countries.
10 The Asia Growth Fund may invest in the aggregate up to 35% of its total assets in: (1) fixed-income securities; and (2) equity securities of issuers in non-Asian countries and Japan.
Principal Risks of the Funds
Loss of money is a risk of investing in each Fund. An investment in a Fund is not a deposit of any bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. The following summarizes important risks that apply to the Funds and may result in a loss of your investment. None of the Funds should be relied upon as a complete investment program. There can be no assurance that a Fund will achieve its investment objective.
.Applicable
--Not applicable
CORE International Emerging
International International European Japanese Small Cap Markets Asia
Equity Equity Equity Equity Equity Equity Growth
-----------------------------------------------------------------------------------------------
Credit/Default . . . . . . .
Emerging Countries . . . . . . .
Interest Rate . . . . . . .
Small Cap -- -- . -- . -- --
Foreign . . . . . . .
Derivatives . . . . . . .
Management . . . . . . .
Market . . . . . . .
Liquidity . . . . . . .
Stock . . . . . . .
Geographic . . . . . . .
Other . . . . . . .
-----------------------------------------------------------------------------------------------
|
All Funds:
.Credit/Default Risk--The risk that an issuer of fixed-income securities held
by a Fund (which may have low credit ratings) may default on its obligation to
pay interest and repay principal.
.Emerging Countries Risk--The securities markets of Asian, Latin American,
Eastern European, African and other emerging countries are less liquid, are
especially subject to greater price volatility, have smaller market capital-
izations, have less government regulation and are not subject to as extensive
and frequent accounting, financial and other reporting requirements as the
securities markets of more developed countries. Further, investment in equity
securities of issuers located in Russia and certain other emerging countries
involves risk of loss resulting from problems in share registration and cus-
tody and substantial economic and political disrup-
PRINCIPAL RISKS OF THE FUNDS
tions. These risks are not normally associated with investment in more devel- oped countries.
.Interest Rate Risk--The risk that when interest rates increase, fixed-income securities held by a Fund will decline in value. Long-term fixed-income secu- rities will normally have more price volatility because of this risk than short-term securities.
.Foreign Risks--The risk that when a Fund invests in foreign securities, it
will be subject to risk of loss not typically associated with domestic
issuers. Loss may result because of less foreign government regulation, less
public information and less economic, political and social stability. Loss may
also result from the imposition of exchange controls, confiscations and other
government restrictions. A Fund will also be subject to the risk of negative
foreign currency rate fluctuations. Foreign risks will normally be greatest
when a Fund invests in issuers located in emerging countries.
.Derivatives Risk--The risk that loss may result from a Fund's investments in
options, futures, swaps, structured securities and other derivative instru-
ments. These instruments may be leveraged so that small changes may produce
disproportionate losses to a Fund.
.Management Risk--The risk that a strategy used by the Investment Adviser may
fail to produce the intended results.
.Market Risk--The risk that the value of the securities in which a Fund invests
may go up or down in response to the prospects of individual companies and/or
general economic conditions. Price changes may be temporary or last for
extended periods.
.Liquidity Risk--The risk that a Fund will not be able to pay redemption pro-
ceeds within the time period stated in this Prospectus because of unusual mar-
ket conditions, an unusually high volume of redemption requests, or other rea-
sons. Funds that invest in small capitalization stocks and emerging country
issuers will be especially subject to the risk that during certain periods the
liquidity of particular issuers or industries, or all securities within these
investment categories, will shrink or disappear suddenly and without warning
as a result of adverse economic, market or political events, or adverse
investor perceptions whether or not accurate. The Goldman Sachs Asset Alloca-
tion Portfolios (the "Asset Allocation Portfolios") expect to invest a signif-
icant percentage of their assets in the Funds and other funds for which
Goldman Sachs now or in the future acts as investment adviser or underwriter.
Redemptions by an Asset Allocation Portfolio of its position in a Fund may
further increase liquidity risk and may impact a Fund's net asset value
("NAV").
.Stock Risk--The risk that stock prices have historically risen and fallen in
periodic cycles. As of the date of this Prospectus, U.S. stock markets and
certain foreign stock markets were trading at or close to record high levels.
There is no guarantee that such levels will continue.
.Geographic Risk--The European Equity Fund invests primarily in equity securi-
ties of European companies. The Japanese Equity Fund invests primarily in
equity securities of Japanese equity companies. The Asia Growth Fund invests
primarily in equity securities of Asian issuers. Concentration of the invest-
ments of these or other Funds in issuers located in a particular country or
region will subject the Fund, to a greater extent than if investments were
less concentrated, to the risks of adverse securities markets, exchange rates
and social, political, regulatory or economic events which may occur in that
country or region.
.Other Risks--Each Fund is subject to other risks, such as the risk that its
operations, or the value of its portfolio securities, will be disrupted by the
"Year 2000 Problem."
Specific Funds:
.Small Cap Stock Risk--The securities of small capitalization stocks involve greater risks than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements. Securities of such issuers may lack sufficient market liquidity to enable a Fund to effect sales at an advantageous time or without a substantial drop in price.
More information about the Funds' portfolio securities and investment tech- niques, and their associated risks, is provided in Appendix A. You should con- sider the investment risks discussed in this section and in Appendix A. Both are important to your investment choice.
Fund Performance
HOW THE FUNDS HAVE PERFORMED
The bar chart and table below provide an indication of the risks of invest- ing in a Fund by showing: (a) changes in the performance of a Fund's Service Shares from year to year; and (b) how the average annual returns of a Fund's Service Shares compare to those of broad-based securities market indices. The bar chart and table assume reinvestment of dividends and distributions. A Fund's past performance is not necessarily an indication of how the Fund will perform in the future. Performance reflects expense limitations in effect. If expense limitations were not in place, a Fund's performance would have been reduced. The European Equity, Japanese Equity and International Small Cap Funds did not commence operations until October 1, 1998, May 1, 1998 and May 1, 1998. Since these Funds have less than one calendar year's performance, no performance information is provided in this section. As of the date of this Prospectus, Service Shares of the Asia Growth Fund had not commenced operations. Performance of the Asia Growth Fund is represented by the Fund's Class A Shares. Class A Shares are not offered in this Prospectus but have substantially similar annual returns because the shares are invested in the same investment portfolio of securities. Annual returns dif- fer only to the extent that Class A Shares have a 0.50% distribution and service fee and a 0.19% transfer agency fee while Service Shares have a 0.50% service fee and a 0.04% transfer agency fee. In addition, Class A Shares, unlike Service Shares, are subject to a maximum sales charge of 5.5%.
CORE International Equity Fund TOTAL RETURN CALENDAR YEAR -------------------------------------------------------------------------------- The total return for Service Shares for the 9-month [BAR CHART] period ended September 30, 1998 1999 was 9.40%. 14.09% Best Quarter Q4 '98 +18.97% |
Worst Quarter
Q3 '98 -15.97%
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ----------------------------------------------------------------------------- Service Shares (Inception 8/15/97) 14.09% 0.12% Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index* 20.33% 8.44% ----------------------------------------------------------------------------- |
* The unmanaged MSCI EAFE Index is a market capitalization-weighted composite of securities in 20 developed markets. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
International Equity Fund TOTAL RETURN CALENDAR YEAR -------------------------------------------------------------------------------- The total return for Service Shares for the 9-month period ended September 30, [BAR CHART] 1999 was 7.70%. |
Best Quarter
Q1 '98 +16.94% 1997 1998
4.59% 18.09%
Worst Quarter
Q3 '98 -14.37%
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ------------------------------------------------------------------------------ Service Shares (Inception 3/6/96) 18.09% 12.87% MSCI EAFE (unhedged)* 20.33% 9.57% FT/S&P Actuaries Europe & Pacific Index (unhedged)** 19.31% 8.21% ------------------------------------------------------------------------------ |
* The MSCI EAFE Index, an unmanaged index of common stock prices, is replac- ing the FT/S&P Actuaries Europe & Pacific Index ("EuroPac") as the Interna- tional Equity Fund's performance benchmark. The MSCI EAFE Index is widely used throughout the investment management industry to represent the invest- ment opportunities available to a large-cap, developed country interna- tional equity strategy and, in the Investment Adviser's opinion, is a more appropriate benchmark against which to measure the performance of the International Equity Fund. The Index figures do not reflect any fees or expenses.
** The unmanaged EuroPac Index is a market capitalization-weighted composite of approximately 1,500 stocks from 20 countries in Europe and the Asia- Pacific region. The Index figures do not reflect any fees or expenses.
Emerging Markets Equity Fund
TOTAL RETURN CALENDAR YEAR
--------------------------------------------------------------------------------
The total
return for
Service Shares
for the 9-month
period ended [BAR CHART]
September 30,
1999 was
25.29%.
1998
Best Quarter -28.81%
Q4 '98 +14.08%
|
Worst Quarter
Q3 '98 -23.84%
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception ------------------------------------------------------------------ Service Shares (Inception 12/15/97) (28.81)% (26.07)% MSCI Emerging Markets Free (EMF) Index* (25.33)% (19.87)% ------------------------------------------------------------------ |
* The unmanaged MSCI EMF Index is a market capitalization-weighted composite of securities in over 30 emerging market countries. "Free" indicates an index that excludes shares in otherwise free markets that are not purchas- able by foreigners. The Index figures do not reflect any fees or expenses.
FUND PERFORMANCE
Asia Growth Fund TOTAL RETURN CALENDAR YEAR (CLASS A) -------------------------------------------------------------------------------- The total return for Class A Shares [BAR CHART] for the 9-month period ended September 30, 1999 was 1995 1996 1997 1998 27.99%. 6.55% 7.95% -41.07% -15.26% Best Quarter Q4 '98 +21.59% |
Worst Quarter
Q4 "97 -27.33%
AVERAGE ANNUAL TOTAL RETURN
For the period ended December 31, 1998 1 Year Since Inception --------------------------------------------------------------- Class A (Inception 7/8/94) Including 5.5% Sales Charge (19.94)% (12.21)% MSCI All Country Asia Free ex-Japan* (10.27)% (11.22)% --------------------------------------------------------------- |
* The unmanaged MSCI All Country Asia Free ex-Japan Index is a market capi- talization-weighted composite of securities in ten Asian countries. "Free" indicates an index that excludes shares in otherwise free markets that are not purchasable by foreigners. The Index figures do not reflect any fees or expenses.
Fund Fees and Expenses (Service Shares)
This table describes the fees and expenses that you would pay if you buy and hold Service Shares of a Fund.
CORE International European
International Equity Equity
Equity Fund Fund Fund
-------------------------------------------------------------------------------------
Shareholder Fees
(fees paid directly from your
investment):
Maximum Sales Charge (Load) Imposed on
Purchases None None None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None None None
Redemption Fees None None None
Exchange Fees None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):2
Management Fees 0.85% 1.00% 1.00%
Service Fees3 0.50% 0.50% 0.50%
Other Expenses4 0.26% 0.19% 0.64%
-------------------------------------------------------------------------------------
Total Fund Operating Expenses* 1.61% 1.69% 2.14%
-------------------------------------------------------------------------------------
|
See page 28 for all other footnotes.
* As a result of the current expense limitations, "Other Expenses" and "Total Fund Operating Expenses" of the Funds which are actually incurred are as set forth below. The expense limitations may be termi- nated at any time at the option of the Investment Adviser. If this occurs, "Other Expenses" and "Total Fund Operating Expenses" may increase without share- holder approval.
CORE International European
International Equity Equity
Equity Fund Fund Fund
----------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund
assets):2
Management Fees 0.85% 1.00% 1.00%
Service Fees3 0.50% 0.50% 0.50%
Other Expenses4 0.16% 0.14% 0.14%
----------------------------------------------------------------------------
Total Fund Operating Expenses (after
current expense limitations) 1.51% 1.64% 1.64%
----------------------------------------------------------------------------
|
FUND FEES AND EXPENSES
Japanese Emerging Asia
Equity International Small Markets Growth
Fund Cap Fund Equity Fund Fund/1/
---------------------------------------------------------------------------------------------
None None None None
None None None None
None None None None
None None None None
1.00% 1.20% 1.20% 1.00%
0.50% 0.50% 0.50% 0.50%
0.97% 0.57% 0.56% 0.62%
---------------------------------------------------------------------------------------------
2.47% 2.27% 2.26% 2.12%
---------------------------------------------------------------------------------------------
|
Japanese Emerging Asia
Equity International Small Markets Growth
Fund Cap Fund Equity Fund Fund/1/
--------------------------------------------------------------------------------------------
1.00% 1.20% 1.20% 1.00%
0.50% 0.50% 0.50% 0.50%
0.05% 0.20% 0.19% 0.20%
--------------------------------------------------------------------------------------------
1.55% 1.90% 1.89% 1.70%
--------------------------------------------------------------------------------------------
|
Fund Fees and Expenses continued
/1/Service Shares had not commenced operations as of the date of this Prospectus.
/2/The Funds' operating expenses for the current fiscal year have been
annualized for the seven-month period (February 1, 1999 through August 31,
1999).
/3/Service Organizations may charge other fees to their customers who are bene-
ficial owners of Service Shares in connection with their customers' accounts.
Such fees may affect the return customers realize with respect to their invest-
ments.
/4/"Other Expenses" include transfer agency fees equal to 0.04% of the average
daily net assets of each Fund's Service Shares, plus all other ordinary
expenses not detailed above. The Investment Adviser has voluntarily agreed to
reduce or limit "Other Expenses" (excluding management fees, transfer agency
fees, service fees, taxes, interest and brokerage fees and litigation, indemni-
fication and other extraordinary expenses) to the following percentages of each
Fund's average daily net assets:
Other
Fund Expenses
--------------------------
CORE
International
Equity 0.12%
International
Equity 0.10%
European Equity 0.10%
Japanese Equity 0.01%
International
Small Cap 0.16%
Emerging Markets
Equity 0.15%
Asia Growth 0.16%
|
FUND FEES AND EXPENSES
Example
The following Example is intended to help you compare the cost of investing in a Fund (without the expense limitations) with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in Service Shares of a Fund for the time periods indicated and then redeem all of your Service Shares at the end of those periods. The Example also assumes that your invest- ment has a 5% return each year and that a Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assump- tions your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years ---------------------------------------------------------- CORE International Equity $164 $508 $ 876 $1,911 ---------------------------------------------------------- International Equity $172 $533 $ 918 $1,998 ---------------------------------------------------------- European Equity $217 $670 $1,149 $2,472 ---------------------------------------------------------- Japanese Equity $250 $770 $1,316 $2,806 ---------------------------------------------------------- International Small Cap $230 $709 $1,215 $2,605 ---------------------------------------------------------- Emerging Markets Equity $229 $706 $1,210 $2,595 ---------------------------------------------------------- Asia Growth $215 $664 $1,139 $2,452 ---------------------------------------------------------- |
Service Organizations that invest in Service Shares on behalf of their custom- ers may charge other fees directly to their customer accounts in connection with their investments. You should contact your Service Organization for infor- mation regarding such charges. Such fees, if any, may affect the return such customers realize with respect to their investments.
Certain Service Organizations that invest in Service Shares may receive other compensation in connection with the sale and distribution of Service Shares or for services to their customers' accounts and/or the Funds. For additional information regarding such compensation, see "Shareholder Guide" in the Pro- spectus and "Other Information" in the Statement of Additional Information ("Additional Statement").
Service Providers
INVESTMENT ADVISERS
Investment Adviser Fund
------------------------------------------------------------------------
Goldman Sachs Asset Management ("GSAM") CORE International Equity
32 Old Slip
New York, New York 10005
------------------------------------------------------------------------
Goldman Sachs Asset Management International
("GSAMI") International Equity
133 Peterborough Court European Equity
London, England EC4A 2BB Japanese Equity
International Small Cap
Emerging Markets Equity
Asia Growth
------------------------------------------------------------------------
|
As of September 1, 1999, the Investment Management Division ("IMD") was established as a new operating division of Goldman Sachs. This newly created entity includes GSAM and GSAMI. Goldman Sachs registered as an investment adviser in 1981. GSAMI, a member of the Investment Management Regulatory Organization Limited since 1990 and a registered investment adviser since 1991, is an affiliate of Goldman Sachs. The Goldman Sachs Group, L.P., which controlled the Investment Advisers, merged into the Goldman Sachs Group, Inc. as a result of an initial public offering. As of September 30, 1999, GSAM and GSAMI, along with other units of IMD, had assets under management of $203 billion.
The Investment Adviser provides day-to-day advice regarding the Funds' port- folio transactions. The Investment Adviser makes the investment decisions for the Funds and places purchase and sale orders for the Funds' portfolio transactions in U.S. and foreign markets. As permitted by applicable law, these orders may be directed to any brokers, including Goldman Sachs and its affiliates. While the Investment Adviser is ultimately responsible for the management of the Funds, it is able to draw upon the research and expertise of its asset management affiliates for portfolio decisions and management with respect to certain portfolio securities. In addition, the Investment Adviser has access to the research and certain proprietary technical models developed by Goldman Sachs, and will apply quantitative and qualitative analysis in determining the appropriate allocations among categories of issuers and types of securities.
The Investment Adviser also performs the following additional services for
the Funds:
.Supervises all non-advisory operations of the Funds
.Provides personnel to perform necessary executive, administrative and cler-
ical services to the Funds
SERVICE PROVIDERS
.Arranges for the preparation of all required tax returns, reports to share-
holders, prospectuses and statements of additional information and other
reports filed with the Securities and Exchange Commission (the "SEC") and
other regulatory authorities
.Maintains the records of each Fund
.Provides office space and all necessary office equipment and services
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the Investment Adviser is entitled to the following fees, computed daily and payable monthly, at the annual rates (as a percentage of each respective portfolio's average daily net assets) listed below:
Actual Rate
For the Fiscal
Year Ended
Contractual Rate August 31, 1999
------------------------------------------------------------
GSAM:
------------------------------------------------------------
CORE International Equity 0.85% 0.85%
------------------------------------------------------------
GSAMI:
------------------------------------------------------------
International Equity 1.00% 1.00%
------------------------------------------------------------
European Equity 1.00% 1.00%
------------------------------------------------------------
Japanese Equity 1.00% 1.00%
------------------------------------------------------------
International Small Cap 1.20% 1.20%
------------------------------------------------------------
Emerging Markets Equity 1.20% 1.20%
------------------------------------------------------------
Asia Growth 1.00% 1.00%
------------------------------------------------------------
|
The difference, if any, between the stated fees and the actual fees paid by the Funds reflects that the Investment Adviser did not charge the full amount of the fees to which it would have been entitled. The Investment Adviser may discontinue or modify any such voluntary limitations in the future at its discretion.
FUND MANAGERS
M. Roch Hillenbrand, a Managing Director of Goldman Sachs since 1997, is the Head of Global Equities for GSAM, overseeing the United States, Europe, Japan, and non-Japan Asia. In this capacity, he is responsible for managing the group as it defines and implements global portfolio management processes that are consistent, reliable and predictable. Since 1981 Mr. Hillenbrand has been President of
Commodities Corporation LLC, of which Goldman Sachs is the parent company. Over the course of his 19-year career at Commodities Corporation, Mr. Hillenbrand has had extensive experience in dealing with internal and exter- nal investment managers who have managed a range of futures and equities strategies across multiple markets, using a variety of styles.
International Equity Portfolio Management Team
.Global portfolio teams based in London, Singapore, Tokyo and New York.
Local presence is a key to the Investment Adviser's fundamental research
capabilities
.Team manages over $33.2 billion in international equities for retail, institutional and high net worth clients .Focus on bottom-up stock selection as main driver of returns, though the team leverages the asset allocation, currency and risk management capabili- ties of GSAM
London-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
David Dick Senior Portfolio Manager-- Since Mr. Dick joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director senior portfolio manager
on the European Equity
team in 1998. From 1990
to 1998, he was with
Mercury Asset
Management, where he was
a portfolio manager for
European equity and was
head of Mercury's
European sector
strategy.
----------------------------------------------------------------------------------------------
Ivor H. Farman Senior Portfolio Manager-- Since Mr. Farman joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director International Equity Fund 1996 senior portfolio manager
in 1996. From 1995 to
1996, he was responsible
for originating and
marketing French equity
ideas at Exane in Paris.
Prior to 1995, he spent
five years engaged in
French equity research
and marketing at Banque
Nationale de Paris and
Schroders in London.
----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
James P. Senior Portfolio Manager-- Since Mr. Hordern joined the
Hordern International Small Cap 1998 Investment Adviser as a
Executive Fund portfolio manager in
Director 1997. From 1991 to 1997,
he was an Assistant
Director and portfolio
manager at Mercury Asset
Management on the
European Specialist
Team.
----------------------------------------------------------------------------------------------
Ralf Laier Portfolio Manager-- Since Mr. Laier joined the
Vice President Emerging Markets Equity 1998 Investment Adviser as a
Fund portfolio manager with a
focus on Central/Eastern
European (CEE) and the
Commonwealth of
Independent States (CIS)
in 1997. Prior to
joining the Investment
Adviser, from 1995 to
1997, he was Vice
President of Soros
Global Research, where
he analyzed investment
opportunities in
CEE/CIS. From 1994 to
1995, he achieved a
Ph.D. from the Academy
of Economics in Pozan,
Poland.
----------------------------------------------------------------------------------------------
Susan Noble Senior Portfolio Manager-- Since Ms. Noble joined the
Managing European Equity Fund 1998 Investment Adviser as a
Director International Equity Fund 1998 senior portfolio manager
and head of the European
Equity Team in October
1997. From 1986 to 1997,
she worked at Fleming
Investment Management in
London, where she most
recently was Portfolio
Management Director for
the European equity
investment strategy and
process.
----------------------------------------------------------------------------------------------
Andrew Orchard Senior Portfolio Manager-- Since Andrew joined the
Executive European Equity Fund 1999 Investment Adviser as a
Director International Equity Fund 1999 portfolio manager in
1999. From 1994 to 1999
he was a portfolio
manager at Morgan
Grenfell Asset
Management where he
managed global equity
portfolios and chaired
Morgan Grenfell's Global
Sector Committee.
----------------------------------------------------------------------------------------------
|
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
----------------------------------------------------------------------------------------------
Andrew Portfolio Manager-- Since Mr. Shrimpton joined the
Shrimpton Emerging Markets Equity 1998 Investment Adviser as a
Vice President Fund portfolio manager with a
focus on Africa as well
as the financial
industry in the EMEA
region in 1996. Since
1985 he was a UK equity
analyst and portfolio
manager for CIN
Management, where he
initiated CIN
Management's first
investments in Latin
America.
----------------------------------------------------------------------------------------------
Robert Stewart Senior Portfolio Manager-- Since Robert joined the
Executive European Equity Fund 1999 Investment Adviser as a
Director International Equity Fund 1999 portfolio manager in
1996. He is a member of
the European Equity
Team. From 1996 to 1998
he was a portfolio
manager in Japan where
he managed Japanese
Equity Institutional
Portfolios. Prior to
that Robert was a
portfolio manager at
CINMan from 1989 to 1996
where he managed
international equities.
----------------------------------------------------------------------------------------------
Danny Truell Senior Portfolio Manager-- Since Mr. Truell joined the
Executive European Equity Fund 1998 Investment Adviser as a
Director senior portfolio manager
and head of UK equities
in 1998. From 1992 to
1996, he was Investment
Banking Executive
Director for SBC Warburg
and Chief Asian Equity
Strategist.
----------------------------------------------------------------------------------------------
Gabriella Portfolio Manager-- Since Ms. Antici joined the
Antici Emerging Markets Equity 1998 Investment Adviser as a
Vice President Fund portfolio manager in
1997. From 1994 to 1997,
she was a Vice President
for HSBC Asset
Management, where she
was a portfolio manager
for emerging markets and
head of the Latin
American Department.
----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
New York-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
-----------------------------------------------------------------------------------------------
Robert A. Senior Portfolio Manager-- Since Mr. Beckwitt joined the
Beckwitt Emerging Markets Equity 1997 Investment Adviser as a
Managing Fund portfolio manager in
Director 1996. From 1986 to 1996,
Head of he was Chief Investment
Emerging Strategist-Portfolio
Markets Equity Adviser to high net
worth investors at
Fidelity Investments.
-----------------------------------------------------------------------------------------------
Melissa Brown Senior Portfolio Manager-- Since Ms. Brown joined the
Vice President CORE International Equity 1998 Investment Adviser as a
Fund portfolio manager in
1998. From 1984 to 1998,
she was the director of
Quantitative Equity
Research and served on
the Investment Policy
Committee at Prudential
Securities.
-----------------------------------------------------------------------------------------------
Mark M. Carhart Portfolio Manager-- Since Mr. Carhart joined the
Managing CORE International Equity 1998 Investment Adviser as a
Director Fund member of the
Quantitative Research
and Risk Management team
in 1997. From August
1995 to September 1997,
he was Assistant
Professor of Finance at
the Marshall School of
Business at USC and a
Senior Fellow of the
Wharton Financial
Institutions Center.
From 1993 to 1995, he
was a lecturer and
graduate student at the
University of Chicago
Graduate School of
Business.
-----------------------------------------------------------------------------------------------
Kent A. Clark Senior Portfolio Manager-- Since Mr. Clark joined the
Managing CORE International Equity 1997 Investment Adviser as a
Director Fund portfolio manager in the
quantitative equity
management team in 1992.
-----------------------------------------------------------------------------------------------
Raymond J. Portfolio Manager-- Since Mr. Iwanowski joined the
Iwanowski CORE International Equity 1998 Investment Adviser as an
Managing Fund associate and portfolio
Director manager in 1997. From
1993 to 1997, he was a
Vice President and head
of the Fixed Derivatives
Client Research group at
Salomon Brothers.
-----------------------------------------------------------------------------------------------
Robert C. Jones Senior Portfolio Manager-- Since Mr. Jones joined the
Managing CORE International Equity 1997 Investment Adviser as a
Director Fund portfolio manager in
1989.
-----------------------------------------------------------------------------------------------
|
Singapore-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
-----------------------------------------------------------------------------------------------
Alice Lui Portfolio Manager-- Since Ms. Lui joined the
Vice President Asia Growth Fund 1994 Investment Adviser as a
Emerging Markets Equity 1999 portfolio manager in
Fund 1990.
International Equity Fund 1999
International Small Cap 1999
Fund
-----------------------------------------------------------------------------------------------
Ravi Shanker Senior Portfolio Manager-- Since Mr. Shanker joined the
Vice President Asia Growth Fund 1997 Investment Adviser as an
Emerging Markets Equity 1998 operations manager in
Fund 1997. From July 1996 to
International Equity Fund 1999 1997, he worked for
International Small Cap 1999 Goldman Sachs in
Fund Singapore as a strategic
advisor for transactions
involving infrastructure
industries in Asia. From
1988 to 1996, he worked
for Goldman Sachs as an
investment banker in the
Investment Banking
Division.
-----------------------------------------------------------------------------------------------
Siew-Hua Thio Portfolio Manager-- Since Ms. Thio joined the
Vice President Asia Growth Fund 1998 Investment Adviser as a
Emerging Markets Equity 1998 portfolio manager in
Fund 1998. From 1997 to 1998,
International Equity Fund 1998 she was Head of Research
International Small Cap 1998 for Indosuez WI Carr in
Fund Singapore. From 1993 to
1997, she was a research
analyst at the same
firm.
-----------------------------------------------------------------------------------------------
|
SERVICE PROVIDERS
Tokyo-Based Portfolio Management Team
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
--------------------------------------------------------------------------------------
Toshiyuki Ejima Portfolio Manager-- Since Toshiyuki joined the
Vice President Japanese Equity Fund 1999 Investment Adviser as a
portfolio manager in
April 1999. Prior to
that he was a portfolio
manager at Daiichi
Mutual Life from 1993 to
1999 where he managed
Japanese equities.
--------------------------------------------------------------------------------------
Shigeka Kouda Portfolio Manager-- Since Mr. Kouda joined the
Vice President International Small 1998 Investment Adviser as a
Cap Fund portfolio manager in
1997. From 1992 to 1997,
he was at the Fixed
Income Division of
Goldman Sachs (Japan)
Limited, where he was
extensively involved in
emerging markets trading
as well as International
Fixed Income
institutional sales.
--------------------------------------------------------------------------------------
Shogo Maeda Senior Portfolio Since Mr. Maeda joined the
Managing Manager-- 1994 Investment Adviser as a
Director Japanese Equity Fund 1994 portfolio manager in
International Equity 1998 1994. From 1987 to 1994,
Fund he worked at Nomura
International Small Investment Management
Cap Fund Incorporated as a Senior
Portfolio Manager.
--------------------------------------------------------------------------------------
Miyako Portfolio Manager-- Since Ms. Shibamoto joined the
Shibamoto Japanese Equity Fund 1998 Investment Adviser as a
Vice President member of the Japanese
Equity team in March
1998. From 1993 to 1998,
she was a Vice President
at Scudder Stevens and
Clark (Japan).
--------------------------------------------------------------------------------------
Takeya Suzuki Portfolio Manager-- Since Mr. Suzuki joined the
Vice President Japanese Equity Fund 1998 Investment Adviser as a
portfolio manager in
1996. From 1990 to 1996,
he was a Japanese equity
portfolio manager at
Nomura Investment
Management where he
actively managed assets
for U.S. pension funds.
--------------------------------------------------------------------------------------
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DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the exclusive distributor (the "Distributor") of each Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606-6372, also serves as the Funds' transfer agent (the "Transfer Agent") and, as such, performs various shareholder servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and hold shares of the Funds. Goldman Sachs reserves the right to redeem at any time some or all of the shares acquired for its own account.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS
The involvement of the Investment Adviser, Goldman Sachs and their affili- ates in the management of, or their interest in, other accounts and other activities of Goldman Sachs may present conflicts of interest with respect to a Fund or limit a Fund's investment activities. Goldman Sachs and its affiliates engage in proprietary trading and advise accounts and funds which have investment objectives similar to those of the Funds and/or which engage in and compete for transactions in the same types of securities, currencies and instruments as the Funds. Goldman Sachs and its affiliates will not have any obligation to make available any information regarding their proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of the Funds. The results of a Fund's investment activities, therefore, may differ from those of Goldman Sachs and its affiliates, and it is possible that a Fund could sustain losses during periods in which Goldman Sachs and its affili- ates and other accounts achieve significant profits on their trading for proprietary or other accounts. In addition, the Funds may, from time to time, enter into transactions in which other clients of Goldman Sachs have an adverse interest. A Fund's activities may be limited because of regula- tory restrictions applicable to Goldman Sachs and its affiliates, and/or their internal policies designed to comply with such restrictions.
YEAR 2000
Many computer systems were designed using only two digits to signify the year (for example, "98" for "1998"). On January 1, 2000, if these computer systems are not corrected, they may incorrectly interpret "00" as the year "1900" rather than the year "2000," leading to computer shutdowns or errors (commonly
SERVICE PROVIDERS
known as the "Year 2000 Problem"). To the extent these systems conduct forward-looking calculations, these computer problems may occur prior to January 1, 2000. Like other investment companies and financial and business organizations, the Funds could be adversely affected in their ability to process securities trades, price securities, provide shareholder account services and otherwise conduct normal business operations if the Investment Adviser or other Fund service providers do not adequately address this prob- lem in a timely manner.
In order to address the Year 2000 Problem, the Investment Adviser has taken the following measures:
.The Investment Adviser has established a dedicated group which analyzed these issues and implemented system modifications to prepare for the Year 2000 Problem.
.The Investment Adviser has either tested with or received assurances from the Fund's other service providers to confirm that they are taking reason- able steps to avoid Year 2000 Problems, and the Investment Adviser contin- ues to monitor the situation.
.The Investment Adviser has developed broad and comprehensive contingency plans, as well as event management plans that will help manage the Funds through the date change by allowing the Investment Adviser to closely moni- tor and respond to Year 2000-related events as they unfold around the world.
Currently, the Investment Adviser does not anticipate that the transition to the 21st century will have any material impact on its ability to continue to service the Funds at current levels.
In addition, the Investment Adviser has undertaken measures to appropriately take into account available information concerning the Year 2000 prepared- ness of the issuers of securities held by the Funds. The Investment Adviser may obtain such Year 2000 information from various sources which the Invest- ment Adviser believes to be reliable, including the issuers' public regula- tory filings. However, the Investment Adviser is not in a position to verify the accuracy or completeness of such information.
At this time, however, no assurance can be given that the actions taken by the Investment Adviser and the Funds' other service providers will be suffi- cient to avoid any adverse effect on the Funds due to the Year 2000 Problem.
Dividends
Each Fund pays dividends from its net investment income and distributions
from net realized capital gains. You may choose to have dividends and dis-
tributions paid in:
.Cash
.Additional shares of the same class of the same Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund.
Special restrictions may apply for certain ILA Portfolios. See the
Additional Statement.
You may indicate your election on your Account Application. Any changes may be submitted in writing to Goldman Sachs at any time before the record date for a particular dividend or distribution. If you do not indicate any choice, your dividends and distributions will be reinvested automatically in the applicable Fund.
The election to reinvest dividends and distributions in additional shares will not affect the tax treatment of such dividends and distributions, which will be treated as received by you and then used to purchase the shares.
The Funds' investments in foreign securities may be subject to foreign with- holding taxes. Under certain circumstances, the Funds may elect to pass- through these taxes to you. If this election is made, a proportionate amount of such taxes will constitute a distribution to you, which would allow you either (1) to credit such proportionate amount of foreign taxes against your U.S. federal income tax liability or (2) to take such amount as an itemized deduction.
Dividends from net investment income and distributions from net capital gains are declared and paid annually.
From time to time a portion of a Fund's dividends may constitute a return of capital.
At the time of an investor's purchase of shares of a Fund, a portion of the NAV per share may be represented by undistributed income or undistributed realized appreciation of the Fund's portfolio securities. Therefore, subse- quent distributions on such shares from such income or realized appreciation may be taxable to you even if the NAV of the shares is, as a result of the distributions, reduced below the cost of such shares and the distributions (or portions thereof) represent a return of a portion of the purchase price.
Shareholder Guide
The following section will provide you with answers to some of the most often asked questions regarding buying and selling the Funds' Service Shares.
HOW TO BUY SHARES
How Can I Purchase Service Shares Of The Funds?
Generally, Service Shares may be purchased only through institutions that have agreed to provide account administration and personal and account main- tenance services to their customers who are the beneficial owners of Service Shares. These institutions are called "Service Organizations." Customers of a Service Organization will normally give their purchase instructions to the Service Organization, and the Service Organization will, in turn, place pur- chase orders with Goldman Sachs. Service Organizations will set times by which purchase orders and payments must be received by them from their cus- tomers. Generally, Service Shares may be purchased from the Funds on any business day at their NAV next determined after receipt of an order by Goldman Sachs from a Service Organization. No sales load is charged. Pur- chases of Service Shares must be settled within three business days of receipt of a complete purchase order.
Service Organizations are responsible for transmitting purchase orders and
payments to Goldman Sachs in a timely fashion. Service Organizations should
place an order with Goldman Sachs at 1-800-621-2550 and either:
.Wire federal funds to The Northern Trust Company ("Northern"), as
subcustodian for State Street Bank and Trust Company ("State Street") (each
Fund's custodian) on the next business day; or
.Send a check or Federal Reserve draft payable to Goldman Sachs Funds--(Name of Fund and Class of Shares), 4900 Sears Tower--60th Floor, Chicago, IL 60606-6372. The Fund will not accept a check drawn on a foreign bank or a third-party check.
What Do I Need To Know About Service Organizations?
Service Organizations may provide the following services in connection with
their customers' investments in Service Shares:
.Acting, directly or through an agent, as the sole shareholder of record
.Maintaining account records for customers
.Processing orders to purchase, redeem or exchange shares for customers .Responding to inquiries from prospective and existing shareholders .Assisting customers with investment procedures
In addition, some (but not all) Service Organizations are authorized to
accept, on behalf of Goldman Sachs Trust (the "Trust"), purchase, redemption
and exchange orders placed by or on behalf of their customers, and may des-
ignate other intermediaries to accept such orders, if approved by the Trust.
In these cases:
.A Fund will be deemed to have received an order in proper form when the
order is accepted by the authorized Service Organization or intermediary on
a business day, and the order will be priced at the Fund's NAV next deter-
mined after such acceptance.
.Service Organizations or intermediaries will be responsible for transmit-
ting accepted orders and payments to the Trust within the time period
agreed upon by them.
You should contact your Service Organization directly to learn whether it is authorized to accept orders for the Trust.
Pursuant to a service plan adopted by the Trust's Board of Trustees, Service Organizations are entitled to receive payment for their services from the Trust of up to 0.50% (on an annualized basis) of the average daily net assets of the Service Shares of the Funds, which are attributable to or held in the name of the Service Organization for its customers.
The Investment Adviser, Distributor and/or their affiliates may pay addi- tional compensation from time to time, out of their assets and not as an additional charge to the Funds, to selected Service Organizations and other persons in connection with the sale, distribution and/or servicing of shares of the Funds and other Goldman Sachs Funds. Additional compensation based on sales may, but is currently not expected to, exceed 0.50% (annualized) of the amount invested.
In addition to Service Shares, each Fund also offers other classes of shares
to investors. These other share classes are subject to different fees and
expenses (which affect performance), have different minimum investment
requirements and
are entitled to different services than Service Shares. Information regard-
ing these other share classes may be obtained from your sales representative
or from Goldman Sachs by calling the number on the back cover of this Pro-
spectus.
What Is My Minimum Investment In The Funds? The Funds do not have any minimum purchase or account requirements with respect to Service Shares. A Service Organization may, however, impose a mini-
SHAREHOLDER GUIDE mum amount for initial and subsequent investments in Service Shares, and may establish other requirements such as a minimum account balance. A Service Organization may redeem Service Shares held by non-complying accounts, and may impose a charge for any special services.
What Else Should I Know About Share Purchases?
The Trust reserves the right to:
.Reject or restrict any purchase or exchange orders by a particular pur-
chaser (or group of related purchasers). This may occur, for example, when
a pattern of frequent purchases, sales or exchanges of Service Shares of a
Fund is evident, or if purchases, sales or exchanges are, or a subsequent
abrupt redemption might be, of a size that would disrupt the management of
a Fund.
The Funds may allow Service Organizations to purchase shares with securities instead of cash if consistent with a Fund's investment policies and opera- tions and if approved by the Fund's Investment Adviser.
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange Service Shares
is determined by a Fund's NAV. The Funds calculate NAV as follows:
The Funds' investments are valued based on market quotations or, if accurate quotations are not readily available, the fair value of the Fund's invest- ments may be determined in good faith under procedures established by the Trustees.
.NAV per share of each class is calculated by State Street on each business
day as of the close of regular trading on the New York Stock Exchange (nor-
mally 4:00 p.m. New York time). Fund shares will not be priced on any day
the New York Stock Exchange is closed.
.When you buy shares, you pay the NAV next calculated after the Funds
receive your order in proper form.
.When you sell shares, you receive the NAV next calculated after the Funds
receive your order in proper form.
Note: The time at which transactions and shares are priced and the time by which orders must be received may be changed in case of an emergency or if regular trading on the New York Stock Exchange is stopped at a time other than 4:00 p.m. New York time.
Foreign securities may trade in their local markets on days a Fund is closed. As a result, the NAV of a Fund that holds foreign securities may be impacted on days when investors may not purchase or redeem Fund shares.
In addition, the impact of events that occur after the publication of market quotations used by a Fund to price its securities but before the close of regular trading on the New York Stock Exchange will normally not be reflected in a Fund's next determined NAV unless the Trust, in its discre- tion, makes an adjustment in light of the nature and materiality of the event, its effect on Fund operations and other relevant factors.
HOW TO SELL SHARES
How Can I Sell Service Shares Of The Funds? Generally, Service Shares may be sold (redeemed) only through Service Orga- nizations. Customers of a Service Organization will normally give their redemption instructions to the Service Organization, and the Service Organi- zation will, in turn, place redemption orders with the Funds. Generally, each Fund will redeem its Service Shares upon request on any business day at their NAV next determined after receipt of such request in proper form. Redemption proceeds may be sent to recordholders by check or by wire (if the wire instructions are on record).
A Service Organization may request redemptions in writing or by telephone if the optional telephone redemption privilege is elected on the Account Application.
------------------------------------------------
By Writing: Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
------------------------------------------------
By Telephone: 1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York
time)
------------------------------------------------
|
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor and the Transfer Agent will not be liable for any loss you may incur in the event that the Trust accepts unauthorized tele- phone redemption requests that the Trust reasonably believes to be genuine. In an effort to prevent unauthorized or fraudulent redemption and exchange requests by telephone, Goldman Sachs employs reasonable procedures specified by the Trust to confirm that such instructions are genuine. If reasonable procedures are not employed, the Trust may be liable for any loss due to unauthorized or fraudulent transactions. The following general policies are currently in effect:
SHAREHOLDER GUIDE
.All telephone requests are recorded.
.Any redemption request that requires money to go to an account or address
other than that designated on the Account Application must be in writing
and signed by an authorized person designated on the Account Application.
The written request may be confirmed by telephone with both the requesting
party and the designated bank account to verify instructions.
.The telephone redemption option may be modified or terminated at any time.
Note: It may be difficult to make telephone redemptions in times of drastic economic or market conditions.
How Are Redemption Proceeds Paid?
By Wire: The Funds will arrange for redemption proceeds to be wired as fed-
eral funds to the bank account designated in the recordholder's Account
Application. The following general policies govern wiring redemption pro-
ceeds:
.Redemption proceeds will normally be wired on the next business day in fed-
eral funds (for a total of one business day delay), but may be paid up to
three business days following receipt of a properly executed wire transfer
redemption request. If the shares to be sold were recently paid for by
check, the Fund will pay the redemption proceeds when the check has
cleared, which may take up to 15 days. If the Federal Reserve Bank is
closed on the day that the redemption proceeds would ordinarily be wired,
wiring the redemption proceeds may be delayed one additional business day.
.To change the bank designated on your Account Application, you must send
written instructions signed by an authorized person designated on the
Account Application to the Service Organization.
.Neither the Trust nor Goldman Sachs assumes any responsibility for the per- formance of intermediaries or your Service Organization in the transfer process. If a problem with such performance arises, you should deal directly with such intermediaries or Service Organization.
By Check: A recordholder may elect in writing to receive redemption proceeds by check. Redemption proceeds paid by check will normally be mailed to the address of record within three business days of receipt of a properly exe- cuted redemption request. If the shares to be sold were recently paid for by check, the Fund will pay the redemption proceeds when the check has cleared, which may take up to 15 days.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
. Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
. Service Organizations are responsible for the timely transmittal of redemption requests by their customers to the Transfer Agent. In order to facilitate the timely transmittal of redemption requests, Service Organi- zations may set times by which they must receive redemption requests. Service Organizations may also require additional documentation from you.
The Trust reserves the right to:
. Redeem the Service Shares of any Service Organization whose account bal-
ance falls below $50 as a result of a redemption. The Funds will not
redeem Service Shares on this basis if the value of the account falls
below the minimum account balance solely as a result of market conditions.
The Fund will give 60 days' prior written notice to allow a Service Organ-
ization to purchase sufficient additional shares of the Fund in order to
avoid such redemption.
. Redeem the shares in other circumstances determined by the Board of Trust-
ees to be in the best interest of the Trust.
. Pay redemptions by a distribution in-kind of securities (instead of cash).
If you receive redemption proceeds in-kind, you should expect to incur
transaction costs upon the disposition of those securities.
Can I Exchange My Investment From One Fund To Another? A Service Organization may exchange Service Shares of a Fund at NAV for Service Shares of any other Goldman Sachs Fund. The exchange privilege may be materially modified or withdrawn at any time upon 60 days' written notice.
Instructions For Exchanging Shares:
---------------------------------------------------------------
By Writing: .Write a letter of instruction that includes:
.The recordholder name(s) and signature(s)
.The account number
.The Fund names and Class of Shares
.The dollar amount to be exchanged
.Mail the request to:
Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
---------------------------------------------------------------
By Telephone: If you have elected the telephone exchange
privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
---------------------------------------------------------------
|
You should keep in mind the following factors when making or considering an
exchange:
.You should obtain and carefully read the prospectus of the Fund you are
acquiring before making an exchange.
SHAREHOLDER GUIDE
.All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirement of that Fund, except that this
requirement may be waived at the discretion of the Trust.
.Telephone exchanges normally will be made only to an identically registered
account.
.Shares may be exchanged among accounts with different names, addresses and
social security or other taxpayer identification numbers only if the
exchange instructions are in writing and are signed by an authorized person
designated on the Account Application.
.Exchanges are available only in states where exchanges may be legally made.
.It may be difficult to make telephone exchanges in times of drastic eco-
nomic or market conditions.
.Goldman Sachs may use reasonable procedures described under "What Do I Need
To Know About Telephone Redemption Requests?" in an effort to prevent unau-
thorized or fraudulent telephone exchange requests.
For federal income tax purposes, an exchange is treated as a redemption of the shares surrendered in the exchange, on which you may be subject to tax, followed by a purchase of shares received in the exchange. You should con- sult your tax adviser concerning the tax consequences of an exchange.
What Types Of Reports Will Be Sent Regarding Investments In Service Shares?
Service Organizations will receive from the Funds annual reports containing audited financial statements and semi-annual reports. Service Organizations will also be provided with a printed confirmation for each transaction in their account and a monthly account statement. Service Organizations are responsible for providing these or other reports to their customers who are the beneficial owners of Service Shares in accordance with the rules that apply to their accounts with the Service Organizations.
Taxation
TAXABILITY OF DISTRIBUTIONS
As with any investment, you should consider how your investment in the Funds will be taxed. The tax information below is provided as general information. More tax information is available in the Additional Statement. You should consult your tax adviser about the federal, state, local or foreign tax con- sequences of your investment in the Funds.
Unless your investment is an IRA or other tax-advantaged account, you should consider the possible tax consequences of Fund distributions and the sale of your Fund shares.
TAXES ON DISTRIBUTIONS
Distributions you receive from the Funds are generally subject to federal income tax, and may also be subject to state or local taxes. This is true whether you reinvest your distributions in additional Fund shares or receive them in cash. For federal tax purposes, the Funds' income dividend distribu- tions and short-term capital gain distributions are taxable to you as ordi- nary income. Any long-term capital gain distributions are taxable as long- term capital gains, no matter how long you have owned your Fund shares.
Although distributions are generally treated as taxable to you in the year they are paid, distributions declared in October, November or December but paid in January are taxable as if they were paid in December. A percentage of the Funds' dividends paid to corporate shareholders may be eligible for the corporate dividends-received deduction. The Funds will inform sharehold- ers of the source and tax status of all distributions promptly after the close of each calendar year.
Each Fund may be subject to foreign withholding or other foreign taxes on income or gain from certain foreign securities. In general, the Funds may deduct these taxes in computing their taxable income.
If you buy shares of a Fund before it makes a distribution, the distribution will be taxable to you even though it may actually be a return of a portion of your investment. This is known as "buying a dividend."
TAXATION
TAXES ON SALES
Your sale of Fund shares is a taxable transaction for federal income tax purposes, and may also be subject to state and local taxes. For tax purpos- es, the exchange of your Fund shares for shares of a different Goldman Sachs Fund is the same as a sale. When you sell your shares, you will generally recognize a capital gain or loss in an amount equal to the difference between your adjusted tax basis in the shares and the amount received. Gen- erally, this gain or loss is long-term or short-term depending on whether your holding period exceeds twelve months, except that any loss realized on shares held for six months or less will be treated as a long-term capital loss to the extent of any capital gain dividends that were received on the shares.
OTHER INFORMATION
When you open your account, you should provide your social security or tax identification number on your Account Application. By law, each Fund must withhold 31% of your taxable distributions and any redemption proceeds if you do not provide your correct taxpayer identification number, or certify that it is correct, or if the IRS instructs the Fund to do so. Non-U.S. investors may be subject to U.S. withholding and estate tax.
Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks
The Funds will be subject to the risks associated with equity securities. "Equity securities" include common stocks, preferred stocks, interests in real estate investment trusts, convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures, limited liability companies and similar enterprises, warrants and stock pur- chase rights. In general, stock values fluctuate in response to the activi- ties of individual companies and in response to general market and economic conditions. Accordingly, the value of the stocks that a Fund holds may decline over short or extended periods. The stock markets tend to be cycli- cal, with periods when stock prices generally rise and periods when prices generally decline. The volatility of equity securities means that the value of your investment in the Funds may increase or decrease. As of the date of this Prospectus, certain stock markets were trading at or close to record high levels and there can be no guarantee that such levels will continue.
To the extent that a Fund invests in fixed-income securities, that Fund will also be subject to the risks associated with its fixed-income securities. These risks include interest rate risk, credit risk and call/extension risk. In general, interest rate risk involves the risk that when interest rates decline, the market value of fixed-income securities tends to increase (al- though many mortgage related securities will have less potential than other debt securities for capital appreciation during periods of declining rates). Conversely, when interest rates increase, the market value of fixed-income securities tends to decline. Credit risk involves the risk that an issuer could default on its obligations, and a Fund will not recover its invest- ment. Call risk and extension risk are normally present in mortgage-backed securities and asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can either shorten (call risk) or lengthen (exten- sion risk). In general, if interest rates on new mortgage loans fall suffi- ciently below the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to increase. Conversely, if mortgage loan interest rates rise above the interest rates on existing outstanding mortgage loans, the rate of prepayment would be expected to decrease. In either case, a change in the prepayment rate can result in losses to invest- ors.
The Investment Adviser will not consider the portfolio turnover rate a lim- iting factor in making investment decisions for a Fund. A high rate of port- folio turn-
APPENDIX A
over (100% or more) involves correspondingly greater expenses which must be borne by a Fund and its shareholders. The portfolio turnover rate is calcu- lated by dividing the lesser of the dollar amount of sales or purchases of portfolio securities by the average monthly value of a Fund's portfolio securities, excluding securities having a maturity at the date of purchase of one year or less. See "Financial Highlights" in Appendix B for a state- ment of the Funds' historical portfolio turnover rates.
The following sections provide further information on certain types of secu- rities and investment techniques that may be used by the Funds, including their associated risks. Additional information is provided in the Additional Statement, which is available upon request. Among other things, the Addi- tional Statement describes certain fundamental investment restrictions that cannot be changed without shareholder approval. You should note, however, that all investment objectives and policies not specifically designated as fundamental are non-fundamental and may be changed without shareholder approval. If there is a change in a Fund's investment objective, you should consider whether that Fund remains an appropriate investment in light of your then current financial position and needs.
B. Other Portfolio Risks
Risks of Investing in Small Capitalization Companies and REITs. Each Fund may invest in small capitalization companies and REITs. Investments in small capitalization companies and REITs involve greater risk and portfolio price volatility than investments in larger capitalization stocks. Among the rea- sons for the greater price volatility of these investments are the less cer- tain growth prospects of smaller firms and the lower degree of liquidity in the markets for such securities. Small capitalization companies and REITs may be thinly traded and may have to be sold at a discount from current mar- ket prices or in small lots over an extended period of time. In addition, these securities are subject to the risk that during certain periods the liquidity of particular issuers or industries, or all securities in these investment categories, will shrink or disappear suddenly and without warning as a result of adverse economic or market conditions, or adverse investor perceptions whether or not accurate. Because of the lack of sufficient mar- ket liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Small capitalization companies and REITs include "unseasoned" issuers that do not have an established financial history; often have limited prod- uct lines, markets or financial resources; may depend on or use a few key personnel for management; and may be susceptible to losses and risks of bankruptcy. Transaction costs for these investments are often higher than those of larger capitalization companies. Investments
in small capitalization companies and REITs may be more difficult to price precisely than other types of securities because of their characteristics and lower trading volumes.
Risks of Foreign Investments. Certain Funds may invest in foreign invest- ments. Foreign investments involve special risks that are not typically associated with U.S. dollar denominated or quoted securities of U.S. issuers. Foreign investments may be affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such invest- ments and changes in exchange control regulations (e.g., currency blockage). A decline in the exchange rate of the currency (i.e., weakening of the cur- rency against the U.S. dollar) in which a portfolio security is quoted or denominated relative to the U.S. dollar would reduce the value of the port- folio security. In addition, if the currency in which a Fund receives divi- dends, interest or other payments declines in value against the U.S. dollar before such income is distributed as dividends to shareholders or converted to U.S. dollars, the Fund may have to sell portfolio securities to obtain sufficient cash to pay such dividends.
The introduction of a single currency, the euro, on January 1, 1999 for par- ticipating nations in the European Economic and Monetary Union presents unique uncertainties, including the legal treatment of certain outstanding financial contracts after January 1, 1999 that refer to existing currencies rather than the euro; the establishment and maintenance of exchange rates for currencies being converted into the euro; the fluctuation of the euro relative to non-euro currencies during the transition period from January 1, 1999 to December 31, 2001 and beyond; whether the interest rate, tax and labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other countries that now are or may in the future become members of the European Union ("EU"), may have an impact on the euro. These or other factors, including political and economic risks, could cause market disruptions, and could adversely affect the value of securities held by the Funds. Because of the number of countries using this single currency, a significant portion of the assets held by the Funds may be denominated in the euro.
Brokerage commissions, custodial services and other costs relating to investment in international securities markets generally are more expensive than in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, such proce- dures have been unable to keep pace with the volume of securities transac- tions, thus making it difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to U.S. issuers. There may
APPENDIX A
be less publicly available information about a foreign issuer than about a
U.S. issuer. In addition, there is generally less government regulation of
foreign markets, companies and securities dealers than in the United States.
Foreign securities markets may have substantially less volume than U.S.
securities markets and secu-
rities of many foreign issuers are less liquid and more volatile than secu-
rities of comparable domestic issuers. Efforts in foreign countries to reme-
diate potential Year 2000 problems are not as extensive as those in the
United States. As a result, the operations of foreign markets, foreign
issuers and foreign governments may be disrupted by the Year 2000 Problem,
and the investment portfolio of a Fund may be adversely affected. Further-
more, with respect to certain foreign countries, there is a possibility of
nationalization, expropriation or confiscatory taxation, imposition of with-
holding or other taxes on dividend or interest payments (or, in some cases,
capital gains), limitations on the removal of funds or other assets of the
Funds, and political or social instability or diplomatic developments which
could affect investments in those countries.
Concentration of a Fund's assets in one or a few countries and currencies will subject a Fund to greater risks than if a Fund's assets were not geo- graphically concentrated.
Investment in sovereign debt obligations by certain Funds involves risks not present in debt obligations of corporate issuers. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and a Fund may have limited recourse to compel payment in the event of a default. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt, and in turn a Fund's NAV, to a greater extent than the volatility inherent in debt obliga- tions of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign currency reserves, the avail- ability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sov- ereign debtor's policy toward international lenders, and the political constraints to which a sovereign debtor may be subject.
Investments in foreign securities may take the form of sponsored and unsponsored American Depository Receipts ("ADRs") and Global Depository Receipts ("GDRs"). Certain Funds may also invest in European Depository Receipts ("EDRs") or other similar instruments representing securities of foreign issuers. ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. Prices of ADRs are quoted in U.S. dollars, and ADRs are traded in the United States. EDRs and GDRs are receipts
evidencing an arrangement with a non-U.S. bank. EDRs and GDRs are not neces- sarily quoted in the same currency as the underlying security.
Risks of Emerging Countries. Certain Funds may invest in securities of issuers located in emerging countries. The risks of foreign investment are heightened when the issuer is located in an emerging country. Emerging coun- tries are generally located in the Asia-Pacific region, Eastern Europe, Latin and South America and Africa. A Fund's purchase and sale of portfolio securities in certain emerging countries may be constrained by limitations as to daily changes in the prices of listed securities, periodic trading or settlement volume and/or limitations on aggregate holdings of foreign investors. Such limitations may be computed based on the aggregate trading volume by or holdings of a Fund, the Investment Adviser, its affiliates and their respective clients and other service providers. A Fund may not be able to sell securities in circumstances where price, trading or settlement vol- ume limitations have been reached.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees which may limit investment in such countries or increase the administrative costs of such investments. For example, certain Asian countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer's outstanding securities or a spe- cific class of securities which may have less advantageous terms (including price) than securities of the issuer available for purchase by nationals. In addition, certain countries may restrict or prohibit investment opportuni- ties in issuers or industries deemed important to national interests. Such restrictions may affect the market price, liquidity and rights of securities that may be purchased by a Fund. The repatriation of both investment income and capital from certain emerging countries is subject to restrictions such as the need for governmental consents. Due to restrictions on direct invest- ment in equity securities in certain Asian countries, it is anticipated that a Fund may invest in such countries through other investment funds in such countries.
Many emerging countries have experienced currency devaluations and substan- tial (and, in some cases, extremely high) rates of inflation, which have had a negative effect on the economies and securities markets of such emerging countries. Economies in emerging countries generally are dependent heavily upon commodity prices and international trade and, accordingly, have been and may continue to be affected adversely by the economies of their trading partners, trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade.
APPENDIX A
Many emerging countries are subject to a substantial degree of economic, political and social instability. Governments of some emerging countries are authoritarian in nature or have been installed or removed as a result of military coups, while governments in other emerging countries have periodi- cally used force to suppress civil dissent. Disparities of wealth, the pace and success of democratization, and ethnic, religious and racial disaffec- tion, among other factors, have also led to social unrest, violence and/or labor unrest in some emerging countries. Unanticipated political or social developments may result in sudden and significant investment losses. Invest- ing in emerging countries involves greater risk of loss due to expropria- tion, nationalization, confiscation of assets and property or the imposition of restrictions on foreign investments and on repatriation of capital invested.
A Fund's investment in emerging countries may also be subject to withholding or other taxes, which may be significant and may reduce the return from an investment in such country to the Fund.
Settlement procedures in emerging countries are frequently less developed and reliable than those in the United States and often may involve a Fund's delivery of securities before receipt of payment for their sale. In addi- tion, significant delays are common in certain markets in registering the transfer of securities. Settlement or registration problems may make it more difficult for a Fund to value its portfolio securities and could cause the Fund to miss attractive investment opportunities, to have a portion of its assets uninvested or to incur losses due to the failure of a counterparty to pay for securities the Fund has delivered or the Fund's inability to com- plete its contractual obligations. The creditworthiness of the local securi- ties firms used by the Fund in emerging countries may not be as sound as the creditworthiness of firms used in more developed countries. As a result, the Fund may be subject to a greater risk of loss if a securities firm defaults in the performance of its responsibilities.
The small size and inexperience of the securities markets in certain emerg- ing countries and the limited volume of trading in securities in those coun- tries may make a Fund's investments in such countries less liquid and more volatile than investments in countries with more developed securities mar- kets (such as the United States, Japan and most Western European countries). A Fund's investments in emerging countries are subject to the risk that the liquidity of a particular investment, or investments generally, in such countries will shrink or disappear suddenly and without warning as a result of adverse economic, market or political conditions or adverse investor per- ceptions, whether or not accurate. Because of the lack of sufficient market liquidity, a Fund may incur losses because it will be required to effect sales at a disadvantageous time and only then at a substantial drop in price. Invest-
ments in emerging countries may be more difficult to price precisely because of the characteristics discussed above and lower trading volumes.
A Fund's use of foreign currency management techniques in emerging countries may be limited. Due to the limited market for these instruments in emerging countries, the Investment Adviser does not currently anticipate that a sig- nificant portion of the Funds' currency exposure in emerging countries, if any, will be covered by such instruments.
Risks of Derivative Investments. A Fund's transactions, if any, in options, futures, options on futures, swaps, interest rate caps, floors and collars, structured securities and currency transactions involve additional risk of loss. Loss can result from a lack of correlation between changes in the value of derivative instruments and the portfolio assets (if any) being hedged, the potential illiquidity of the markets for derivative instruments, or the risks arising from margin requirements and related leverage factors associated with such transactions. The use of these management techniques also involves the risk of loss if the Investment Adviser is incorrect in its expectation of fluctuations in securities prices, interest rates or currency prices. Each Fund may also invest in derivative investments for non-hedging purposes (that is, to seek to increase total return). Investing for non- hedging purposes is considered a speculative practice and presents even greater risk of loss.
Risks of Illiquid Securities. Each Fund may invest up to 15% of its net
assets in illiquid securities which cannot be disposed of in seven days in
the ordinary course of business at fair value. Illiquid securities include:
.Both domestic and foreign securities that are not readily marketable
.Certain stripped mortgage-backed securities
.Repurchase agreements and time deposits with a notice or demand period of
more than seven days
.Certain over-the-counter options
.Certain structured securities and all swap transactions
.Certain restricted securities, unless it is determined, based upon a review of the trading markets for a specific restricted security, that such restricted security is eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("144A Securities") and, therefore, is liquid.
Investing in 144A Securities may decrease the liquidity of a Fund's portfo- lio to the extent that qualified institutional buyers become for a time uninterested in purchasing these restricted securities. The purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of com- parable securities for which a liquid market exists.
APPENDIX A
Credit Risks. Debt securities purchased by the Funds may include securities (including zero coupon bonds) issued by the U.S. government (and its agen- cies, instrumentalities and sponsored enterprises), foreign governments, domestic and foreign corporations, banks and other issuers. Further informa- tion is provided in the Additional Statement.
Debt securities rated BBB or higher by Standard & Poor's or Baa or higher by Moody's are considered "investment grade." Securities rated BBB or Baa are considered medium-grade obligations with speculative characteristics, and adverse economic conditions or changing circumstances may weaken their issuers' capacity to pay interest and repay principal. A security will be deemed to have met a rating requirement if it receives the minimum required rating from at least one such rating organization even though it has been rated below the minimum rating by one or more other rating organizations, or if unrated by such rating organizations, determined by the Investment Adviser to be of comparable credit quality.
Certain Funds may invest in fixed-income securities rated BB or Ba or below (or comparable unrated securities) which are commonly referred to as "junk bonds." Junk bonds are considered predominantly speculative and may be ques- tionable as to principal and interest payments.
In some cases, junk bonds may be highly speculative, have poor prospects for reaching investment grade standing and be in default. As a result, invest- ment in such bonds will present greater speculative risks than those associ- ated with investment in investment grade bonds. Also, to the extent that the rating assigned to a security in a Fund's portfolio is downgraded by a rat- ing organization, the market price and liquidity of such security may be adversely affected.
Temporary Investment Risks. Each Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. government securities
.Commercial paper rated at least A-2 by Standard & Poor's or P-2 by Moody's
.Certificates of deposit
.Bankers' acceptances
.Repurchase agreements
.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year
When a Fund's assets are invested in such instruments, the Fund may not be achieving its investment objective.
C. Portfolio Securities and Techniques
This section provides further information on certain types of securities and investment techniques that may be used by the Funds, including their associ- ated risks. Further information is provided in the Additional Statement, which is available upon request.
Convertible Securities. Each Fund may invest in convertible securities. Con- vertible securities are preferred stock or debt obligations that are con- vertible into common stock. Convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar qual- ity. Convertible securities in which a Fund invests are subject to the same rating criteria as its other investments in fixed-income securities. Con- vertible securities have both equity and fixed-income risk characteristics. Like all fixed-income securities, the value of convertible securities is susceptible to the risk of market losses attributable to changes in interest rates. Generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. However, when the market price of the common stock underlying a convertible security exceeds the conversion price of the convertible secu- rity, the convertible security tends to reflect the market price of the underlying common stock. As the market price of the underlying common stock declines, the convertible security, like a fixed-income security, tends to trade increasingly on a yield basis, and thus may not decline in price to the same extent as the underlying common stock.
Foreign Currency Transactions. A Fund may, to the extent consistent with its investment policies, purchase or sell foreign currencies on a cash basis or through forward contracts. A forward contract involves an obligation to pur- chase or sell a specific currency at a future date at a price set at the time of the contract. A Fund may engage in foreign currency transactions for hedging purposes and to seek to protect against anticipated changes in future foreign currency exchange rates. In addition, certain Funds may also enter into such transactions to seek to increase total return, which is con- sidered a speculative practice.
Some Funds may also engage in cross-hedging by using forward contracts in a currency different from that in which the hedged security is denominated or quoted if the Investment Adviser determines that there is a pattern of cor- relation between the two currencies. A Fund may hold foreign currency received in connection with investments in foreign securities when, in the judgment of the Investment Adviser, it would be beneficial to convert such currency into U.S. dollars at a later date (e.g., the Investment Adviser may anticipate the foreign currency to appreciate against the U.S. dollar).
APPENDIX A
Currency exchange rates may fluctuate significantly over short periods of time, causing, along with other factors, a Fund's NAV to fluctuate (when the Fund's NAV fluctuates, the value of your shares may go up or down). Currency exchange rates also can be affected unpredictably by the intervention of U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the United States or abroad.
The market in forward foreign currency exchange contracts, currency swaps and other privately negotiated currency instruments offers less protection against defaults by the other party to such instruments than is available for currency instruments traded on an exchange. Such contracts are subject to the risk that the counterparty to the contract will default on its obli- gations. Since these contracts are not guaranteed by an exchange or clear- inghouse, a default on a contract would deprive a Fund of unrealized prof- its, transaction costs or the benefits of a currency hedge or could force the Fund to cover its purchase or sale commitments, if any, at the current market price.
Structured Securities. Each Fund may invest in structured securities. Struc- tured securities are securities whose value is determined by reference to changes in the value of specific currencies, interest rates, commodities, indices or other financial indicators (the "Reference") or the relative change in two or more References. The interest rate or the principal amount payable upon maturity or redemption may be increased or decreased depending upon changes in the applicable Reference. Structured securities may be posi- tively or negatively indexed, so that appreciation of the Reference may pro- duce an increase or decrease in the interest rate or value of the security at maturity. In addition, changes in the interest rates or the value of the security at maturity may be a multiple of changes in the value of the Refer- ence. Consequently, structured securities may present a greater degree of market risk than other types of fixed-income securities and may be more vol- atile, less liquid and more difficult to price accurately than less complex securities.
REITs. Each Fund may invest in REITS. REITS are pooled investment vehicles that invest primarily in either real estate or real estate related loans. The value of a REIT is affected by changes in the value of the properties owned by the REIT or securing mortgage loans held by the REIT. REITs are dependent upon the ability of the REITs' managers, and are subject to heavy cash flow dependency, default by borrowers and the qualification of the REITs under applicable regulatory requirements for favorable income tax treatment. REITs are also subject to risks generally associated with invest- ments in real estate including possible declines in the value of real estate, general and local economic conditions, environmental problems and changes in interest rates. To the extent that assets underlying a REIT are concentrated geographically, by property type or in certain other
respects, these risks may be heightened. A Fund will indirectly bear its proportionate share of any expenses, including management fees, paid by a REIT in which it invests.
Options on Securities, Securities Indices and Foreign Currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) of the option the obligation to buy, the underlying instrument dur-
ing the option period. A call option gives the purchaser of the option the
right to buy, and the writer (seller) of the option the obligation to sell,
the underlying instrument during the option period. Each Fund may write
(sell) covered call and put options and purchase put and call options on any
securities in which they may invest or on any securities index comprised of
securities in which they may invest. A Fund may also, to the extent that it
invests in foreign securities, purchase and sell (write) put and call
options on foreign currencies.
The writing and purchase of options is a highly specialized activity which involves special investment risks. Options may be used for either hedging or cross-hedging purposes, or to seek to increase total return (which is con- sidered a speculative activity). The successful use of options depends in part on the ability of the Investment Adviser to manage future price fluctu- ations and the degree of correlation between the options and securities (or currency) markets. If the Investment Adviser is incorrect in its expectation of changes in market prices or determination of the correlation between the instruments or indices on which options are written and purchased and the instruments in a Fund's investment portfolio, the Fund may incur losses that it would not otherwise incur. The use of options can also increase a Fund's transaction costs. Options written or purchased by the Funds may be traded on either U.S. or foreign exchanges or over-the-counter. Foreign and over- the-counter options will present greater possibility of loss because of their greater illiquidity and credit risks.
Futures Contracts and Options on Futures Contracts. Futures contracts are standardized, exchange-traded contracts that provide for the sale or pur- chase of a specified financial instrument or currency at a future time at a specified price. An option on a futures contract gives the purchaser the right (and the writer of the option the obligation) to assume a position in a futures contract at a specified exercise price within a specified period of time. A futures contract may be based on various securities (such as U.S. government securities), foreign currencies, securities indices and other financial instruments and indices. The Funds may engage in futures transac- tions on both U.S. and foreign exchanges.
Each Fund may purchase and sell futures contracts, and purchase and write call and put options on futures contracts, in order to seek to increase total return or to hedge against changes in interest rates, securities prices or, to the extent a Fund
APPENDIX A
invests in foreign securities, currency exchange rates, or to otherwise man- age their term structures, sector selection and durations in accordance with their investment objectives and policies. Each Fund may also enter into closing purchase and sale transactions with respect to such contracts and options. A Fund will engage in futures and related options transactions for bona fide hedging purposes as defined in regulations of the Commodity Futures Trading Commission or to seek to increase total return to the extent permitted by such regulations. A Fund may not purchase or sell futures con- tracts or purchase or sell related options to seek to increase total return, except for closing purchase or sale transactions, if immediately thereafter the sum of the amount of initial margin deposits and premiums paid on the Fund's outstanding positions in futures and related options entered into for the purpose of seeking to increase total return would exceed 5% of the mar- ket value of the Fund's net assets.
Futures contracts and related options present the following risks:
.While a Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency
exchange rates may result in poorer overall performance than if the Fund
had not entered into any futures contracts or options transactions.
.Because perfect correlation between a futures position and portfolio posi-
tion that is intended to be protected is impossible to achieve, the desired
protection may not be obtained and a Fund may be exposed to additional risk
of loss.
.The loss incurred by a Fund in entering into futures contracts and in writ-
ing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
.Futures markets are highly volatile and the use of futures may increase the
volatility of a Fund's NAV.
.As a result of the low margin deposits normally required in futures trad-
ing, a relatively small price movement in a futures contract may result in
substantial losses to a Fund.
.Futures contracts and options on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
.Foreign exchanges may not provide the same protection as U.S. exchanges.
Equity Swaps. Each Fund may invest in equity swaps. Equity swaps allow the parties to a swap agreement to exchange the dividend income or other compo- nents of return on an equity investment (for example, a group of equity securities or an index) for a component of return on another non-equity or equity investment.
An equity swap may be used by a Fund to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment may be restricted for legal reasons or is otherwise impractical. Equity swaps are
derivatives and their value can be very volatile. To the extent that the Investment Adviser does not accurately analyze and predict the potential relative fluctuation of the components swapped with another party, a Fund may suffer a loss. The value of some components of an equity swap (such as the dividends on a common stock) may also be sensitive to changes in inter- est rates. Furthermore, a Fund may suffer a loss if the counterparty defaults.
When-Issued Securities and Forward Commitments. Each Fund may purchase when- issued securities and make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time. When-issued securities are securities that have been authorized, but not yet issued. When-issued securities are purchased in order to secure what is considered to be an advantageous price and yield to the Fund at the time of entering into the transaction. A forward commitment involves the entering into a con- tract to purchase or sell securities for a fixed price at a future date beyond the customary settlement period.
The purchase of securities on a when-issued or forward commitment basis involves a risk of loss if the value of the security to be purchased declines before the settlement date. Conversely, the sale of securities on a forward commitment basis involves the risk that the value of the securities sold may increase before the settlement date. Although a Fund will generally purchase securities on a when-issued or forward commitment basis with the intention of acquiring the securities for its portfolio, a Fund may dispose of when-issued securities or forward commitments prior to settlement if the Investment Adviser deems it appropriate.
Repurchase Agreements. Repurchase agreements involve the purchase of securi- ties subject to the seller's agreement to repurchase them at a mutually agreed upon date and price. Each Fund may enter into repurchase agreements with dealers in U.S. government securities and member banks of the Federal Reserve System which furnish collateral at least equal in value or market price to the amount of their repurchase obligation.
If the other party or "seller" defaults, a Fund might suffer a loss to the extent that the proceeds from the sale of the underlying securities and other collateral held by the Fund are less than the repurchase price and the Fund's costs associated with delay and enforcement of the repurchase agree- ment. In addition, in the event of bankruptcy of the seller, a Fund could suffer additional losses if a court determines that the Fund's interest in the collateral is not enforceable.
In evaluating whether to enter into a repurchase agreement, the Investment Adviser will carefully consider the creditworthiness of the seller. Certain Funds, together with other registered investment companies having advisory agreements with the Investment Adviser or any of its affiliates, may trans- fer uninvested cash
APPENDIX A
balances into a single joint account, the daily aggregate balance of which will be invested in one or more repurchase agreements.
Lending of Portfolio Securities. Each Fund may engage in securities lending. Securities lending involves the lending of securities owned by a Fund to financial institutions such as certain broker-dealers. The borrowers are required to secure their loan continuously with cash, cash equivalents, U.S. government securities or letters of credit in an amount at least equal to the market value of the securities loaned. Cash collateral may be invested in cash equivalents. To the extent that cash collateral is invested in other investment securities, such collateral will be subject to market deprecia- tion or appreciation, and a Fund will be responsible for any loss that might result from its investment of the borrowers' collateral. If the Investment Adviser determines to make securities loans, the value of the securities loaned may not exceed 33 1/3% of the value of the total assets of a Fund (including the loan collateral).
A Fund may lend its securities to increase its income. A Fund may, however, experience delay in the recovery of its securities if the institution with which it has engaged in a portfolio loan transaction breaches its agreement with the Fund.
Short Sales Against-the-Box. Certain Funds may make short sales against-the- box. A short sale against-the-box means that at all times when a short posi- tion is open the Fund will own an equal amount of securities sold short, or securities convertible into or exchangeable for, without payment of any fur- ther consideration, an equal amount of the securities of the same issuer as the securities sold short.
Preferred Stock, Warrants and Rights. Each Fund may invest in preferred stock, warrants and rights. Preferred stocks are securities that represent an ownership interest providing the holder with claims on the issuer's earn- ings and assets before common stock owners but after bond owners. Unlike debt securities, the obligations of an issuer of preferred stock, including dividend and other payment obligations, may not typically be accelerated by the holders of such preferred stock on the occurrence of an event of default or other non-compliance by the issuer of the preferred stock.
Warrants and other rights are options to buy a stated number of shares of common stock at a specified price at any time during the life of the warrant or right. The holders of warrants and rights have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.
Other Investment Companies. Each Fund may invest in securities of other investment companies (including SPDRs and WEBs, as defined below) subject to statutory limitations prescribed by the Act. These limitations include a prohibition on
any Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of a Fund's total assets in securities of any one investment company or more than 10% of its total assets in securities of all investment companies. A Fund will indi- rectly bear its proportionate share of any management fees and other expenses paid by such other investment companies. Such other investment com- panies will have investment objectives, policies and restrictions substan- tially similar to those of the acquiring Fund and will be subject to sub- stantially the same risks.
.Standard & Poor's Depository Receipts. The Funds may, consistent with their investment policies, purchase Standard & Poor's Depository Receipts ("SPDRs"). SPDRs are securities traded on the American Stock Exchange ("AMEX") that represent ownership in the SPDR Trust, a trust which has been established to accumulate and hold a portfolio of common stocks that is intended to track the price performance and dividend yield of the S&P 500. The SPDR Trust is sponsored by a subsidiary of the AMEX. SPDRs may be used for several reasons, including, but not limited to, facilitating the han- dling of cash flows or trading, or reducing transaction costs. The price movement of SPDRs may not perfectly parallel the price action of the S&P 500.
.World Equity Benchmark Shares. World Equity Benchmark Shares ("WEBS") are shares of an investment company that invests substantially all of its assets in securities included in the MSCI indices for specified countries. WEBS are listed on the AMEX and were initially offered to the public in 1996. The market prices of WEBS are expected to fluctuate in accordance with both changes in the NAVs of their underlying indices and supply and demand of WEBS on the AMEX. To date, WEBS have traded at relatively modest discounts and premiums to their NAVs. However, WEBS have a limited operat- ing history and information is lacking regarding the actual performance and trading liquidity of WEBS for extended periods or over complete market cycles. In addition, there is no assurance that the requirements of the AMEX necessary to maintain the listing of WEBS will continue to be met or will remain unchanged. In the event substantial market or other disruptions affecting WEBS should occur in the future, the liquidity and value of a Fund's shares could also be substantially and adversely affected. If such disruptions were to occur, a Fund could be required to reconsider the use of WEBS as part of its investment strategy.
Unseasoned Companies. Each Fund may invest in companies (including predeces- sors) which have operated less than three years. The securities of such com- panies may have limited liquidity, which can result in their being priced higher or lower than might otherwise be the case. In addition, investments in unseasoned compa -
APPENDIX A
nies are more speculative and entail greater risk than do investments in companies with an established operating record.
Corporate Debt Obligations. Corporate debt obligations include bonds, notes, debentures, commercial paper and other obligations of corporations to pay interest and repay principal, and include securities issued by banks and other financial institutions. Each Fund may invest in corporate debt obliga- tions issued by U.S. and certain non-U.S. issuers which issue securities denominated in the U.S. dollar (including Yankee and Euro obligations). In addition to obligations of corporations, corporate debt obligations include securities issued by banks and other financial institutions and suprana- tional entities (i.e., the World Bank, the International Monetary Fund, etc.).
Bank Obligations. Each Fund may invest in obligations issued or guaranteed by U.S. or foreign banks. Bank obligations, including without limitations, time deposits, bankers' acceptances and certificates of deposit, may be gen- eral obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulations. Banks are subject to extensive but different governmental regulations which may limit both the amount and types of loans which may be made and interest rates which may be charged. In addition, the profitability of the banking industry is largely dependent upon the availability and cost of funds for the purpose of financing lending operations under prevailing money market conditions. General economic conditions as well as exposure to credit losses arising from possible financial difficulties of borrowers play an important part in the operation of this industry.
U.S. Government Securities and Related Custodial Receipts. Each Fund may invest in U.S. government securities and related custodial receipts. U.S. government securities include U.S. Treasury obligations and obligations issued or guaranteed by U.S. government agencies, instrumentalities or spon- sored enterprises. U.S. government securities may be supported by (a) the full faith and credit of the U.S. Treasury (such as the Government National Mortgage Association ("Ginnie Mae")); (b) the right of the issuer to borrow from the U.S. Treasury (such as securities of the Student Loan Marketing Association); (c) the discretionary authority of the U.S. government to pur- chase certain obligations of the issuer (such as the Federal National Mort- gage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac")); or (d) only the credit of the issuer. U.S. government securities also include Treasury receipts, zero coupon bonds and other stripped U.S. government securities, where the interest and principal compo- nents of stripped U.S. government securities are traded independently.
Interests in U.S. government securities may be purchased in the form of cus- todial receipts that evidence ownership of future interest payments, princi- pal payments
or both on certain notes or bonds issued or guaranteed as to principal and interest by the U.S. government, its agencies, instrumentalities, political subdivisions or authorities. For certain securities law purposes, custodial receipts are not considered obligations of the U.S. government.
Mortgage-Backed Securities. Certain Funds may invest in mortgage-backed securities. Mortgage-backed securities represent direct or indirect partici- pations in, or are collateralized by and payable from, mortgage loans secured by real property. Mortgage-backed securities can be backed by either fixed rate mortgage loans or adjustable rate mortgage loans, and may be issued by either a governmental or non-governmental entity. Privately issued mortgage-backed securities are normally structured with one or more types of "credit enhancement." However, these mortgage-backed securities typically do not have the same credit standing as U.S. government guaranteed mortgage- backed securities.
Mortgage-backed securities may include multiple class securities, including collateralized mortgage obligations ("CMOs") and Real Estate Mortgage Investment Conduit ("REMIC") pass-through or participation certificates. CMOs provide an investor with a specified interest in the cash flow from a pool of underlying mortgages or of other mortgage-backed securities. CMOs are issued in multiple classes. In many cases, payments of principal are applied to the CMO classes in the order of their respective stated maturi- ties, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. A REMIC is a CMO that qualifies for special tax treatment and invests in cer- tain mortgages principally secured by interests in real property and other permitted investments.
Mortgaged-backed securities also include stripped mortgage-backed securities ("SMBS"), which are derivative multiple class mortgage-backed securities. SMBS are usually structured with two different classes: one that receives substantially all of the interest payments and the other that receives sub- stantially all of the principal payments from a pool of mortgage loans. The market value of SMBS consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on SMBS that receive all or most of the interest from mortgage loans are gener- ally higher than prevailing market yields on other mortgage-backed securi- ties because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
Asset-Backed Securities. Certain Funds may invest in asset-backed securi- ties. Asset-backed securities are securities whose principal and interest payments are collateralized by pools of assets such as auto loans, credit card receivables, leases, installment contracts and personal property. Asset-backed securities are often sub-
APPENDIX A
ject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the under- lying loans. During periods of declining interest rates, prepayment of loans underlying asset-backed securities can be expected to accelerate. According- ly, a Fund's ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is subject to generally prevailing interest rates at that time. Asset-backed securities present credit risks that are not presented by mortgage-backed securities. This is because asset-backed securities gener- ally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. There is the possibility that, in some cases, recoveries on repossessed collateral may not be available to support pay- ments on these securities. In the event of a default, a Fund may suffer a loss if it cannot sell collateral quickly and receive the amount it is owed.
Borrowings. Each Fund can borrow money from banks and other financial insti- tutions in amounts not exceeding one-third of its total assets for temporary or emergency purposes. A Fund may not make additional investments if borrowings exceed 5% of its total assets.
Appendix B
Financial Highlights
The financial highlights tables are intended to help you understand a Fund's financial performance for the past five years (or less if the Fund has been in operation for less than five years). Certain information reflects finan- cial results for a single Fund share. The total returns in the table repre- sent the rate that an investor would have earned or lost on an investment in a Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Arthur Andersen LLP, whose report, along with a Fund's financial statements, is included in the Fund's annual report (available upon request without charge).
CORE INTERNATIONAL EQUITY FUND
Income from
investment operations/a/
---------------------------
Net asset Net
value, investment Net realized and
beginning income unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $ 9.98 $ 0.05 $ 0.84
1999 - Class B Shares 9.95 0.01 0.85
1999 - Class C Shares 9.96 0.01 0.85
1999 - Institutional Shares 10.06 0.09 0.85
1999 - Service Shares 10.02 0.01 0.90
------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 9.22 (0.01) 0.79
1999 - Class B Shares 9.21 -- 0.74
1999 - Class C Shares 9.22 -- 0.74
1999 - Institutional Shares 9.24 0.05 0.80
1999 - Service Shares 9.23 -- 0.81
------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced August
15, 1997) 10.00 -- (0.78)
1998 - Class B Shares (commenced August
15, 1997) 10.00 (0.02) (0.77)
1998 - Class C Shares (commenced August
15, 1997) 10.00 (0.02) (0.76)
1998 - Institutional Shares (commenced
August 15, 1997) 10.00 0.02 (0.76)
1998 - Service Shares (commenced August
15, 1997) 10.00 0.01 (0.78)
------------------------------------------------------------------------------
|
See page 95 for all footnotes.
APPENDIX B
Distributions to
shareholders
------------------------
Net
increase Net
(decrease) Net asset assets
From net From net in net value, at end
investment realized asset end of Total of period
income gains value period return/b/ (in 000s)
---------------------------------------------------------------------------------
$ -- $ -- $ 0.89 $10.87 8.92%d $114,502
-- -- 0.86 10.81 8.64d 9,171
-- -- 0.86 10.82 8.63d 4,913
-- -- 0.94 11.00 9.34d 271,212
-- -- 0.91 10.93 9.08d 8
---------------------------------------------------------------------------------
(0.02) -- 0.76 9.98 8.37 110,338
-- -- 0.74 9.95 8.03 7,401
-- -- 0.74 9.96 8.03 3,742
(0.03) -- 0.82 10.06 9.20 280,731
(0.02) -- 0.79 10.02 8.74 22
---------------------------------------------------------------------------------
-- -- (0.78) 9.22 (7.66)d 7,087
-- -- (0.79) 9.21 (7.90)d 2,721
-- -- (0.78) 9.22 (7.80)d 1,608
(0.02) -- (0.76) 9.24 (7.45)d 17,719
-- -- (0.77) 9.23 (7.70)d 1
---------------------------------------------------------------------------------
|
CORE INTERNATIONAL EQUITY FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of
net
Ratio of Ratio of net investment
net investment Ratio of income
expenses income (loss) expenses (loss) to Portfolio
to average to average to average average turnover
net assets net assets net assets net assets rate
----------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 1.66%c 0.78%c 1.76%c 0.68%c 64.97%d
1999 - Class B Shares 2.16c 0.26c 2.26c 0.16c 64.97d
1999 - Class C Shares 2.16c 0.23c 2.26c 0.13c 64.97d
1999 - Institutional
Shares 1.01c 1.43c 1.11c 1.33c 64.97d
1999 - Service Shares 1.51c 0.07c 1.61c (0.03)c 64.97d
----------------------------------------------------------------------------------
For the Year Ended
January 31,
1999 - Class A Shares 1.63 (0.11) 1.94 (0.42) 194.61
1999 - Class B Shares 2.08 (0.03) 2.39 (0.34) 194.61
1999 - Class C Shares 2.08 (0.04) 2.39 (0.35) 194.61
1999 - Institutional
Shares 1.01 0.84 1.32 0.53 194.61
1999 - Service Shares 1.50 0.02 1.81 (0.29) 194.61
----------------------------------------------------------------------------------
For the Period Ended
January 31,
1998 - Class A Shares
(commenced August 15,
1997) 1.50c (0.27)c 4.87c (3.90)c 25.16d
1998 - Class B Shares
(commenced August 15,
1997) 2.00c (0.72)c 5.12c (3.84)c 25.16d
1998 - Class C Shares
(commenced August 15,
1997) 2.00c (0.73)c 5.12c (3.85)c 25.16d
1998 - Institutional
Shares (commenced
August 15, 1997) 1.00c 0.59 c 4.12c (2.53)c 25.16d
1998 - Service Shares
(commenced August 15,
1997) 1.50c 0.26 c 4.62c (2.86)c 25.16d
----------------------------------------------------------------------------------
|
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INTERNATIONAL EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $21.92 $ 0.04 $ 1.16
1999 - Class B Shares 21.63 (0.02) 1.12
1999 - Class C Shares 21.45 (0.03) 1.12
1999 - Institutional Shares 22.20 0.12e 1.17e
1999 - Service Shares 21.93 0.06 1.15
------------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 19.85 (0.06) 3.24
1999 - Class B Shares 19.70 (0.17) 3.21
1999 - Class C Shares 19.56 (0.15) 3.15
1999 - Institutional Shares 19.97 0.03 3.31
1999 - Service Shares 19.84 (0.04) 3.24
------------------------------------------------------------------------------
1998 - Class A Shares 19.32 0.03 2.04
1998 - Class B Shares 19.24 (0.08) 2.02
1998 - Class C Shares (commenced
August 15, 1997) 22.60 (0.04) (1.38)
1998 - Institutional Shares 19.40 0.10 2.11
1998 - Service Shares 19.34 0.02 2.06
------------------------------------------------------------------------------
1997 - Class A Shares 17.20 0.10 2.23
1997 - Class B Shares (commenced May 1,
1996) 18.91 (0.06) 0.60
1997 - Institutional Shares (commenced
February 7, 1996) 17.45 0.04 2.15
1997 - Service Shares (commenced March 6,
1996) 17.70 (0.02) 1.87
------------------------------------------------------------------------------
1996 - Class A Shares 14.52 0.13 4.00
------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
--------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gain value of period return/b/ (in 000s) net assets
------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 1.20 $23.12 5.47%d $943,473 1.79%c
-- -- -- 1.10 22.73 5.09d 68,691 2.29c
-- -- -- 1.09 22.54 5.08d 11,241 2.29c
-- -- -- 1.29 23.49 5.81d 180,564 1.14c
-- -- -- 1.21 23.14 5.52d 3,852 1.64c
------------------------------------------------------------------------------------------------
-- -- (1.11) 2.07 21.92 16.39 947,973 1.73
-- -- (1.11) 1.93 21.63 15.80 69,231 2.24
-- -- (1.11) 1.89 21.45 15.70 11,619 2.24
-- -- (1.11) 2.23 22.20 17.09 111,315 1.13
-- -- (1.11) 2.09 21.93 16.49 3,568 1.63
------------------------------------------------------------------------------------------------
-- (0.30) (1.24) 0.53 19.85 11.12 697,590 1.67
-- (0.25) (1.23) 0.46 19.70 10.51 55,324 2.20
-- (0.38) (1.24) (3.04) 19.56 (5.92)d 3,369 2.27c
(0.07) (0.33) (1.24) 0.57 19.97 11.82 56,263 1.08
-- (0.35) (1.23) 0.50 19.84 11.25 3,035 1.55
------------------------------------------------------------------------------------------------
-- -- (0.21) 2.12 19.32 13.48 536,283 1.69
-- -- (0.21) 0.33 19.24 2.83d 19,198 2.23c
(0.03) -- (0.21) 1.95 19.40 12.53d 68,374 1.10c
-- -- (0.21) 1.64 19.34 10.42d 674 1.60c
------------------------------------------------------------------------------------------------
(0.58) -- (0.87) 2.68 17.20 28.68 330,860 1.52
------------------------------------------------------------------------------------------------
|
INTERNATIONAL EQUITY FUND (continued)
Ratios assuming
no voluntary
expense limitations
--------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) to expenses to income (loss) Portfolio
average net average to average net turnover
assets net assets assets rate
-------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 0.31%c 1.84%c 0.26%c 61.10%d
1999 - Class B Shares (0.19)c 2.34c (0.24)c 61.10d
1999 - Class C Shares (0.26)c 2.34c (0.31)c 61.10d
1999 - Institutional
Shares 0.89c 1.19c 0.84c 61.10d
1999 - Service Shares 0.47c 1.69c 0.42c 61.10d
-------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares (0.28) 1.82 (0.37) 113.79
1999 - Class B Shares (0.79) 2.32 (0.87) 113.79
1999 - Class C Shares (0.98) 2.32 (1.06) 113.79
1999 - Institutional
Shares 0.23 1.21 0.15 113.79
1999 - Service Shares (0.18) 1.71 (0.26) 113.79
-------------------------------------------------------------------------------
1998 - Class A Shares (0.27) 1.80 (0.40) 40.82
1998 - Class B Shares (0.90) 2.30 (1.00) 40.82
1998 - Class C Shares
(commenced August 15,
1997) (1.43)c 2.37c (1.53)c 40.82
1998 - Institutional
Shares 0.30 1.18 0.20 40.82
1998 - Service Shares (0.36) 1.65 (0.46) 40.82
-------------------------------------------------------------------------------
1997 - Class A Shares (0.07) 1.88 (0.26) 38.01
1997 - Class B Shares
(commenced May 1, 1996) (0.97)c 2.38c (1.12)c 38.01
1997 - Institutional
Shares (commenced
February 7, 1996) 0.43c 1.25c 0.28c 38.01
1997 - Service Shares
(commenced March 6,
1996) (0.40)c 1.75c (0.55)c 38.01
-------------------------------------------------------------------------------
1996 - Class A Shares 0.26 1.77 0.01 68.48
-------------------------------------------------------------------------------
|
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EUROPEAN EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period loss gain (loss)
-----------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $12.20 $0.05 $(0.50)
1999 - Class B Shares 12.19 0.03 (0.51)
1999 - Class C Shares 12.20 0.04 (0.52)
1999 - Institutional Shares 12.23 0.18 (0.59)
1999 - Service Shares 12.20 0.08 (0.52)
-----------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced October
1, 1998) 10.00 (0.03) 2.23
1999 - Class B Shares (commenced October
1, 1998) 10.00 (0.02) 2.21
1999 - Class C Shares (commenced October
1, 1998) 10.00 (0.01) 2.21
1999 - Institutional Shares (commenced
October 1, 1998) 10.00 (0.01) 2.24
1999 - Service Shares (commenced October
1, 1998) 10.00 (0.03) 2.23
-----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
-----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $(0.45) $11.75 (3.69)%d $74,862 1.79%c
-- -- -- (0.48) 11.71 (3.94)d 879 2.29c
-- -- -- (0.48) 11.72 (3.93)d 388 2.29c
-- -- -- (0.41) 11.82 (3.35)d 5,965 1.14c
-- -- -- (0.44) 11.76 (3.61)d 2 1.64c
-----------------------------------------------------------------------------------------------
-- -- -- 2.20 12.20 22.00d 61,151 1.79c
-- -- -- 2.19 12.19 21.90d 432 2.29c
-- -- -- 2.20 12.20 22.00d 587 2.29c
-- -- -- 2.23 12.23 22.30d 12,740 1.14c
-- -- -- 2.20 12.20 22.00d 2 1.64c
-----------------------------------------------------------------------------------------------
|
EUROPEAN EQUITY FUND (continued)
Ratios assuming no
voluntary waiver of fees
or expense limitations
------------------------
Ratio of Ratio of
net investment Ratio of net investment
income (loss) to expenses to income (loss) Portfolio
average net average net to average net turnover
assets assets assets rate
------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares 0.80%c 2.29%c 0.30%c 54.98%d
1999 - Class B Shares 0.43c 2.79c (0.07)c 54.98d
1999 - Class C Shares 0.42c 2.79c (0.08)c 54.98d
1999 - Institutional
Shares 1.53c 1.64c 1.03c 54.98d
1999 - Service Shares 1.10c 2.14c 0.60c 54.98d
------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares
(commenced October 1,
1998) (1.19)c 2.80c (2.20)c 70.77d
1999 - Class B Shares
(commenced October 1,
1998) (1.78)c 3.30c (2.79)c 70.77d
1999 - Class C Shares
(commenced October 1,
1998) (1.83)c 3.30c (2.84)c 70.77d
1999 - Institutional
Shares (commenced Octo-
ber 1, 1998) (0.33)c 2.15c (1.34)c 70.77d
1999 - Service Shares
(commenced October 1,
1998) (0.69)c 2.65c (1.70)c 70.77d
------------------------------------------------------------------------------
|
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JAPANESE EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period loss gains
----------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $11.06 $(0.06) $5.24
1999 - Class B Shares 11.03 (0.09) 5.20
1999 - Class C Shares 11.04 (0.08) 5.20
1999 - Institutional Shares 11.10 (0.03) 5.29
1999 - Service Shares 11.04 (0.06) 5.24
----------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced May 1,
1998) 10.00 (0.06) 1.12
1999 - Class B Shares (commenced May 1,
1998) 10.00 (0.08) 1.11
1999 - Class C Shares (commenced May 1,
1998) 10.00 (0.09) 1.13
1999 - Institutional Shares (commenced
May 1, 1998) 10.00 (0.02) 1.13
1999 - Service Shares (commenced May 1,
1998) 10.00 (0.05) 1.09
----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
-------------------------------------
In excess Net assets Ratio of
From net of net Net increase Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/(in 000s) net assets
----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $5.18 $16.24 46.84%d $34,279 1.70%c
-- -- -- 5.11 16.14 46.33d 4,219 2.20c
-- -- -- 5.12 16.16 46.41d 3,584 2.20c
-- -- -- 5.26 16.36 47.40d 22,709 1.05c
-- -- -- 5.18 16.22 46.92d 3 1.55c
----------------------------------------------------------------------------------------------
-- -- -- 1.06 11.06 10.60d 8,391 1.64c
-- -- -- 1.03 11.03 10.30d 1,427 2.15c
-- -- -- 1.04 11.04 10.40d 284 2.15c
-- (0.01) -- 1.10 11.10 11.06d 11,418 1.03c
-- -- -- 1.04 11.04 10.43d 2 1.53c
----------------------------------------------------------------------------------------------
|
JAPANESE EQUITY FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
----------------------------
Ratio of Ratio of
net investment Ratio of net investment
loss to expenses to loss to average Portfolio
average net average net turnover
assets net assets assets rate
---------------------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares (1.17)%c 2.62%c (2.09)%c 44.83%d
1999 - Class B Shares (1.57)c 3.12c (2.49)c 44.83d
1999 - Class C Shares (1.81)c 3.12c (2.73)c 44.83d
1999 - Institutional
Shares (0.37)c 1.97c (1.29)c 44.83d
1999 - Service Shares (0.74)c 2.47c (1.66)c 44.83d
---------------------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares
(commenced May 1, 1998) (1.20)c 4.18c (3.74)c 53.29d
1999 - Class B Shares
(commenced May 1, 1998) (1.76)c 4.69c (4.30)c 53.29d
1999 - Class C Shares
(commenced May 1, 1998) (1.69)c 4.69c (4.23)c 53.29d
1999 - Institutional
Shares (commenced May 1,
1998) (0.36)c 3.57c (2.90)c 53.29d
1999 - Service Shares
(commenced May 1, 1998) (0.68)c 4.07c (3.22)c 53.29d
---------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
INTERNATIONAL SMALL CAP FUND
Income from
investment operations/a/
-------------------------
Net asset
value, Net Net realized
beginning investment and unrealized
of period loss gain
-------------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $10.62 $(0.03) $2.65
1999 - Class B Shares 10.61 (0.08)e 2.66e
1999 - Class C Shares 10.61 (0.08)e 2.66e
1999 - Institutional Shares 10.66 -- 2.69
1999 - Service Shares 10.61 (0.02) 2.65
-------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced May 1,
1998) 10.00 (0.04) 0.66
1999 - Class B Shares (commenced May 1,
1998) 10.00 (0.10) 0.71
1999 - Class C Shares (commenced May 1,
1998) 10.00 (0.06) 0.67
1999 - Institutional Shares (commenced May
1, 1998) 10.00 -- 0.67
1999 - Service Shares (commenced May 1,
1998) 10.00 (0.02) 0.63
-------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------------
Ratio of
In excess Net assets net
From net of net Net increase Net asset at end of expenses
investment investment From net in net asset value, end Total period to average
income loss realized gains value of period return/b/ (in 000s) net assets
-----------------------------------------------------------------------------------------------
$ -- $ -- $ -- $2.62 $13.24 24.67%d $69,458 2.05%c
-- -- -- 2.58 13.19 24.32d 303 2.55c
-- -- -- 2.58 13.19 24.32d 419 2.55c
-- -- -- 2.69 13.35 25.24d 65,772 1.40c
-- -- -- 2.63 13.24 24.79d 2 1.90c
-----------------------------------------------------------------------------------------------
-- -- -- 0.62 10.62 6.20d 33,002 2.02c
-- -- -- 0.61 10.61 6.10d 213 2.51c
-- -- -- 0.61 10.61 6.10d 175 2.51c
-- (0.01) -- 0.66 10.66 6.67d 36,992 1.40c
-- -- -- 0.61 10.61 6.10d 2 1.90c
-----------------------------------------------------------------------------------------------
|
INTERNATIONAL SMALL CAP FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of Ratio of
net net
investment Ratio of investment
loss to expenses loss to Portfolio
average to average average turnover
net assets net assets net assets rate
------------------------------------------------------------------------------
For the Seven-Month Period Ended
August 31,
1999 - Class A Shares (0.68)%c 2.42%c (1.05)%c 58.81%d
1999 - Class B Shares (1.16)c 2.92c (1.53)c 58.81d
1999 - Class C Shares (1.21)c 2.92c (1.58)c 58.81d
1999 - Institutional Shares (0.05)c 1.77c (0.42)c 58.81d
1999 - Service Shares (0.35)c 2.27c (0.72)c 58.81d
------------------------------------------------------------------------------
For the Period Ended January 31,
1999 - Class A Shares (commenced
May 1, 1998) (1.03)c 3.60c (2.61)c 96.11d
1999 - Class B Shares (commenced
May 1, 1998) (1.30)c 4.09c (2.88)c 96.11d
1999 - Class C Shares (commenced
May 1, 1998) (1.45)c 4.09c (3.03)c 96.11d
1999 - Institutional Shares
(commenced May 1, 1998) (0.19)c 2.98c (1.77)c 96.11d
1999 - Service Shares (commenced
May 1, 1998) (0.26)c 3.48c (1.84)c 96.11d
------------------------------------------------------------------------------
|
[This page intentionally left blank]
EMERGING MARKETS EQUITY FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares $ 7.04 $(0.01) $ 2.23
1999 - Class B Shares 7.03 (0.03) 2.21
1999 - Class C Shares 7.05 (0.03) 2.22
1999 - Institutional Shares 7.09 0.02 2.26
1999 - Service Shares 6.87 0.01 2.17
------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 9.69 0.04 (2.40)
1999 - Class B Shares 9.69 0.03 (2.41)
1999 - Class C Shares 9.70 0.01 (2.39)
1999 - Institutional Shares 9.70 0.06 (2.36)
1999 - Service Shares 9.69 (0.13) (2.41)
------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares (commenced December
15, 1997) 10.00 -- (0.31)
1998 - Class B Shares (commenced December
15, 1997) 10.00 -- (0.31)
1998 - Class C Shares (commenced December
15, 1997) 10.00 -- (0.30)
1998 - Institutional Shares (commenced
December 15, 1997) 10.00 0.01 (0.31)
1998 - Service Shares (commenced December
15, 1997) 10.00 -- (0.31)
------------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------------
In excess Net increase Net assets Ratio of
From net of net (decrease) Net asset at end of net expenses
investment investment From net in net asset value, end Total period to average
income income realized gains value of period return/b/ (in 000s) net assets
--------------------------------------------------------------------------------------------------
$ -- $ -- $ -- $ 2.22 $9.26 31.53%d $ 65,698 2.04%c
-- -- -- 2.18 9.21 31.01d 972 2.54c
-- -- -- 2.19 9.24 31.06d 1,095 2.54c
-- -- -- 2.28 9.37 32.16d 108,574 1.39c
-- -- -- 2.18 9.05 31.73d 2 1.89c
--------------------------------------------------------------------------------------------------
(0.07) (0.22) -- (2.65) 7.04 (24.32) 52,704 2.09
(0.07) (0.21) -- (2.66) 7.03 (24.51) 459 2.59
(0.07) (0.20) -- (2.65) 7.05 (24.43) 273 2.59
(0.08) (0.23) -- (2.61) 7.09 (23.66) 90,189 1.35
(0.07) (0.21) -- (2.82) 6.87 (26.17) 1 1.85
--------------------------------------------------------------------------------------------------
-- -- -- (0.31) 9.69 (3.10)d 17,681 1.90c
-- -- -- (0.31) 9.69 (3.10)d 64 2.41c
-- -- -- (0.30) 9.70 (3.00)d 73 2.48c
-- -- -- (0.30) 9.70 (3.00)d 19,120 1.30c
-- -- -- (0.31) 9.69 (3.10)d 2 2.72c
--------------------------------------------------------------------------------------------------
|
EMERGING MARKETS EQUITY FUND (continued)
Ratios assuming no voluntary
waiver of fees or
expense limitations
----------------------------
Ratio
Ratio of net
of net investment
investment Ratio of income
income (loss) expenses to (loss) to Portfolio
to average average net average turnover
net assets assets net assets rate
------------------------------------------------------------------------------------------
For the Seven-Month Period Ended August 31,
1999 - Class A Shares (0.15)%c 2.41%c (0.52)%c 63.24%d
1999 - Class B Shares (0.71)c 2.91c (1.08)c 63.24d
1999 - Class C Shares (0.85)c 2.91c (1.22)c 63.24d
1999 - Institutional
Shares 0.50c 1.76c 0.13c 63.24d
1999 - Service Shares 0.12c 2.26c (0.25)c 63.24d
------------------------------------------------------------------------------------------
For the Year Ended January 31,
1999 - Class A Shares 0.80 2.53 0.36 153.67
1999 - Class B Shares 0.19 3.03 (0.25) 153.67
1999 - Class C Shares 0.28 3.03 (0.16) 153.67
1999 - Institutional
Shares 1.59 1.79 1.15 153.67
1999 - Service Shares (1.84) 2.29 (2.28) 153.67
------------------------------------------------------------------------------------------
For the Period Ended January 31,
1998 - Class A Shares
(commenced December 15,
1997) 0.55c 5.88c (3.43)c 3.35d
1998 - Class B Shares
(commenced December 15,
1997) 0.05c 6.39c (3.93)c 3.35d
1998 - Class C Shares
(commenced December 15,
1997) (0.27)c 6.46c (4.25)c 3.35d
1998 - Institutional
Shares (commenced Decem-
ber 15, 1997) 0.80c 5.28c (3.18)c 3.35d
1998 - Service Shares
(commenced December 15,
1997) (0.05)c 6.70c (4.03)c 3.35d
------------------------------------------------------------------------------------------
|
[This page intentionally left blank]
ASIA GROWTH FUND
Income from
investment operations/a/
-------------------------
Net asset Net
value, investment Net realized
beginning income and unrealized
of period (loss) gain (loss)
-----------------------------------------------------------------------------
For the Seven-Month Period Ended August
31,
1999 - Class A Shares $ 7.79 $(0.02) $3.30
1999 - Class B Shares 7.68 (0.04) 3.24
1999 - Class C Shares 7.68 (0.04) 3.21
1999 - Institutional Shares 7.91 0.01 3.36
-----------------------------------------------------------------------------
For the Years Ended January 31,
1999 - Class A Shares 8.38 0.07 (0.66)
1999 - Class B Shares 8.31 0.01 (0.64)
1999 - Class C Shares 8.29 -- (0.61)
1999 - Institutional Shares 8.44 0.03 (0.56)
-----------------------------------------------------------------------------
1998 - Class A Shares 16.31 -- (7.90)
1998 - Class B Shares 16.24 0.01 (7.91)
1998 - Class C Shares (commenced August
15, 1997) 15.73 0.01 (7.42)
1998 - Institutional Shares 16.33 0.10 (7.96)
-----------------------------------------------------------------------------
1997 - Class A Shares 16.49 0.06 (0.11)
1997 - Class B Shares (commenced May 1,
1996) 17.31 (0.05) (0.48)
1997 - Institutional Shares (commenced
February 2, 1996) 16.61 0.04 (0.11)
-----------------------------------------------------------------------------
1996 - Class A Shares 13.31 0.17 3.44
-----------------------------------------------------------------------------
For the Period Ended January 31,
1995 - Class A Shares (commenced July 8,
1994) 14.18 0.11 (0.89)
-----------------------------------------------------------------------------
|
APPENDIX B
Distributions to shareholders
---------------------------------
Net
In excess increase Net assets
From net of net From net (decrease) Net asset at end
investment investment realized in net value, end Total of period
income income gains asset value of period return/b/ (in 000s)
------------------------------------------------------------------------------
$ -- $ -- $ -- $ 3.28 $11.07 42.11%d $ 84,269
-- -- -- 3.20 10.88 41.67d 7,258
-- -- -- 3.17 10.85 41.28d 2,281
-- (0.04) -- 3.33 11.24 42.61d 12,363
------------------------------------------------------------------------------
-- -- -- (0.59) 7.79 (7.04) 59,940
-- -- -- (0.63) 7.68 (7.58) 4,190
-- -- -- (0.61) 7.68 (7.36) 999
-- -- -- (0.53) 7.91 (6.28) 4,200
------------------------------------------------------------------------------
-- (0.03) -- (7.93) 8.38 (48.49) 87,437
-- (0.03) -- (7.93) 8.31 (48.70) 3,359
-- (0.03) -- (7.44) 8.29 (47.17)d 436
(0.03) -- -- (7.89) 8.44 (48.19) 874
------------------------------------------------------------------------------
(0.12) -- (0.01) (0.18) 16.31 (1.01) 263,014
(0.51) (0.03) -- (1.07) 16.24 (6.02)d 3,354
(0.11) (0.06) (0.04) (0.28) 16.33 (1.09)d 13,322
------------------------------------------------------------------------------
(0.12) (0.14) (0.17) 3.18 16.49 26.49 205,539
------------------------------------------------------------------------------
0.01 -- (0.10) (0.87) 13.31 (5.46)d 124,298
------------------------------------------------------------------------------
|
ASIA GROWTH FUND (continued)
Ratios assuming
no voluntary waiver
of fees or
expense limitations
---------------------
Ratio of
net
Ratio of Ratio of net investment
net investment Ratio of income
expenses income (loss) expenses (loss) to Portfolio
to average to average to average average turnover
net assets net assets net assets net assets rate
-----------------------------------------------------------------------------------
For the Seven-Month
Period Ended August 31,
1999 - Class A Shares 1.85%c (0.38)%c 2.27%c (0.80)%c 96.58%d
1999 - Class B Shares 2.35c (0.90)c 2.77c (1.32)c 96.58d
1999 - Class C Shares 2.35c (0.89)c 2.77c (1.31)c 96.58d
1999 - Institutional
Shares 1.20c 0.14c 1.62c (0.28)c 96.58d
-----------------------------------------------------------------------------------
For the Years Ended
January 31,
1999 - Class A Shares 1.93 0.63 2.48 0.08 106.00
1999 - Class B Shares 2.45 0.10 2.97 (0.42) 106.00
1999 - Class C Shares 2.45 0.10 2.97 (0.42) 106.00
1999 - Institutional
Shares 1.16 1.10 1.68 0.58 106.00
-----------------------------------------------------------------------------------
1998 - Class A Shares 1.75 0.31 1.99 0.07 105.16
1998 - Class B Shares 2.30 (0.29) 2.50 (0.49) 105.16
1998 - Class C Shares
(commenced August 15,
1997) 2.35c (0.26)c 2.55c (0.46)c 105.16
1998 - Institutional
Shares 1.11 0.87 1.31 0.67 105.16
-----------------------------------------------------------------------------------
1997 - Class A Shares 1.67 0.20 1.87 -- 48.40
1997 - Class B Shares
(commenced May 1, 1996) 2.21c (0.56)c 2.37c (0.72)c 48.40
1997 - Institutional
Shares (commenced
February 2, 1996) 1.10c 0.54c 1.26c 0.38c 48.40
-----------------------------------------------------------------------------------
1996 - Class A Shares 1.77 1.05 2.02 0.80 88.80
-----------------------------------------------------------------------------------
For the Period Ended
January 31,
1995 - Class A Shares
(commenced July 8,
1994) 1.90c 1.83c 2.38c 1.35c 36.08d
-----------------------------------------------------------------------------------
|
APPENDIX B
a Includes the balancing effect of calculating per share amounts.
b Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account.
c Annualized.
d Not annualized.
e Calculated based on the average shares methodology.
Index
1 General Investment Management Approach
3 Fund Investment Objectives and Strategies
3 Goldman Sachs CORE International Equity Fund
4 Goldman Sachs International Equity Fund
5 Goldman Sachs European Equity Fund
6 Goldman Sachs Japanese Equity Fund
8 Goldman Sachs International Small Cap Fund
9 Goldman Sachs Emerging Markets Equity Fund
11 Goldman Sachs Asia Growth Fund
14 Other Investment Practices and Securities
|
18 Principal Risks of the
Funds
21 Fund Performance
26 Fund Fees and Expenses
30 Service Providers
40 Dividends
41 Shareholder Guide
41 How To Buy Shares
44 How to Sell Shares
48 Taxation
50 Appendix A
Additional Information on
Portfolio Risks,
Securities and Techniques
68 Appendix B
Financial Highlights
|
International Equity Funds
Prospectus (Service Shares)
FOR MORE INFORMATION
Annual/Semi-annual Report
Additional information about the Funds' investments is available in the Funds' annual and semi-annual reports to shareholders. In the Funds' annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during the last fiscal year.
Statement of Additional Information
Additional information about the Funds and their policies is also available
in the Funds' Statement of Additional Information ("Additional Statement").
The Additional Statement is incorporated by reference into this Prospectus
(is legally considered part of this Prospectus).
The Funds' annual and semi-annual reports, and the Additional Statement, are available free upon request by calling Goldman Sachs at 1-800-621-2550.
To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-621-2550
By mail - Goldman Sachs Funds, 4900 Sears Tower-60th Floor, Chicago, IL
60606-6372
By e-mail - gs-funds@gs.com
On the Internet - Text-only versions of the Funds' documents are located
online and may be downloaded from:
SEC EDGAR database - http://www.sec.gov
You may review and obtain copies of Fund documents by visiting the SEC's
Public Reference Room in Washington, D.C. You may also obtain copies of Fund
documents, after paying a duplicating fee, by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102 or by electronic request to:
publicinfo@sec.gov. Information on the operation of the public reference
room may be obtained by calling the SEC at (202) 942-8090.
[LOGO OF GOLDMAN SACHS]
The Funds' investment company registration number is 811-5349.
CORE SM is a service mark of Goldman, Sachs & Co.
EQINTLPROSVC
PART B
STATEMENT OF ADDITIONAL INFORMATION
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
SERVICE SHARES
INSTITUTIONAL SHARES
GOLDMAN SACHS BALANCED FUND
GOLDMAN SACHS GROWTH AND INCOME FUND
GOLDMAN SACHS CORESM LARGE CAP VALUE FUND
GOLDMAN SACHS CORESM U.S. EQUITY FUND
GOLDMAN SACHS CORESM LARGE CAP GROWTH FUND GOLDMAN SACHS CORESM SMALL CAP EQUITY FUND GOLDMAN SACHS CORESM INTERNATIONAL EQUITY FUND GOLDMAN SACHS CAPITAL GROWTH FUND GOLDMAN SACHS STRATEGIC GROWTH FUND GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
GOLDMAN SACHS MID CAP VALUE FUND
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
GOLDMAN SACHS SMALL CAP VALUE FUND
GOLDMAN SACHS LARGE CAP VALUE FUND
GOLDMAN SACHS EUROPEAN EQUITY FUND
GOLDMAN SACHS JAPANESE EQUITY FUND
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND GOLDMAN SACHS EMERGING MARKETS EQUITY FUND GOLDMAN SACHS ASIA GROWTH FUND
(Equity Portfolios of Goldman Sachs Trust)
4900 Sears Tower
Chicago, Illinois 60606-6303
This Statement of Additional Information (the "Additional Statement") is not a Prospectus. This Additional Statement should be read in conjunction with the Prospectuses for the Class A Shares, Class B Shares, Class C Shares, Service Shares and Institutional Shares of: Goldman Sachs Balanced Fund, Goldman Sachs Growth and Income Fund, Goldman Sachs CORE Large Cap Value Fund, Goldman Sachs CORE U.S. Equity Fund, Goldman Sachs CORE Large Cap Growth Fund, Goldman Sachs CORE Small Cap Equity Fund, Goldman Sachs CORE International Equity Fund, Goldman Sachs Capital Growth Fund, Goldman Sachs Strategic Growth Fund, Goldman Sachs Growth Opportunities Fund, Goldman Sachs Mid Cap Value Fund, Goldman Sachs International Equity Fund, Goldman Sachs Small Cap Value Fund, Goldman Sachs Large Cap Value Fund, Goldman Sachs European Equity Fund, Goldman Sachs Japanese Equity Fund, Goldman Sachs International Small Cap Fund, Goldman Sachs Emerging Markets Equity Fund, and Goldman Sachs Asia Growth Fund dated November 30, 1999 (the "Prospectuses"), which may
be obtained without charge from Goldman, Sachs & Co. by calling the telephone number, or writing to one of the addresses, listed below.
The audited financial statements and related report of Arthur Andersen LLP, independent public accountants, for each Fund contained in each Fund's 1999 annual report is incorporated herein by reference in the section "Financial Statements." No other portions of the Fund's Annual Report are incorporated by reference.
CORE(SM) is a service mark of Goldman, Sachs & Co.
TABLE OF CONTENTS Page
-----
INTRODUCTION........................................................... B-5
INVESTMENT POLICIES.................................................... B-7
INVESTMENT RESTRICTIONS................................................ B-47
MANAGEMENT............................................................. B-50
PORTFOLIO TRANSACTIONS AND BROKERAGE................................... B-74
NET ASSET VALUE........................................................ B-82
PERFORMANCE INFORMATION................................................ B-84
SHARES OF THE TRUST.................................................... B-95
TAXATION............................................................... B-102
FINANCIAL STATEMENTS................................................... B-110
OTHER INFORMATION...................................................... B-110
DISTRIBUTION AND SERVICE PLANS......................................... B-111
OTHER INFORMATION REGARDING MAXIMUM SALES CHARGE,
PURCHASES, REDEMPTIONS, EXCHANGES AND DIVIDENDS................... B-122
SERVICE PLAN........................................................... B-126
Appendix A (Description of Securities Ratings)......................... 1-A
Appendix B (Business Principles of Goldman, Sachs & Co.)............... 1-B
Appendix C (Statement of Intention and Escrow Agreement)............... 1-C
|
The date of this Additional Statement is November 30, 1999.
GOLDMAN SACHS FUNDS MANAGEMENT, L.P.
Investment Adviser to:
Goldman Sachs CORE U.S. Equity Fund
Goldman Sachs Capital Growth Fund
32 Old Slip
New York, New York 10005
GOLDMAN SACHS ASSET MANAGEMENT
Investment Adviser to:
Goldman Sachs Balanced Fund
Goldman Sachs Growth and Income Fund
Goldman Sachs CORE Large Cap Value Fund
Goldman Sachs CORE Large Cap Growth Fund
Goldman Sachs CORE Small Cap Equity Fund
Goldman Sachs Strategic Growth Fund
Goldman Sachs Growth Opportunities Fund
Goldman Sachs CORE International Equity Fund
Goldman Sachs Mid Cap Value Fund
Goldman Sachs Small Cap Value Fund
Goldman Sachs Large Cap Value Fund
32 Old Slip
New York, New York 10005
GOLDMAN, SACHS & CO.
Distributor
85 Broad Street
New York, New York 10004
GOLDMAN, SACHS & CO.
Transfer Agent 4900
Sears Tower Chicago,
Illinois 60606
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
Investment Adviser to:
Goldman Sachs International Equity Fund
Goldman Sachs European Equity Fund
Goldman Sachs Japanese Equity Fund
Goldman Sachs International Small Cap Fund
Goldman Sachs Emerging Markets Equity Fund
Goldman Sachs Asia Growth Fund 133
Peterborough Court
London, England EC4A 2BB
Toll free (in U.S.) . . . 800-621-2550
INTRODUCTION
Goldman Sachs Trust (the "Trust") is an open-end, management investment company. The Trust is organized as a Delaware business trust, and is a successor to a Massachusetts business trust that was combined with the Trust on April 30, 1997. The following series of the Trust are described in this Additional Statement: Goldman Sachs Balanced Fund ("Balanced Fund"), Goldman Sachs Growth and Income Fund ("Growth and Income Fund"), Goldman Sachs CORE Large Cap Value Fund ("CORE Large Cap Value Fund"), Goldman Sachs CORE U.S. Equity Fund ("CORE U.S. Equity Fund")(formerly known as "Goldman Sachs Select Equity Fund"), Goldman Sachs CORE Large Cap Growth Fund ("CORE Large Cap Growth Fund"), Goldman Sachs CORE Small Cap Equity Fund ("CORE Small Cap Equity Fund"), Goldman Sachs CORE International Equity Fund ("CORE International Equity Fund"), Goldman Sachs Capital Growth Fund ("Capital Growth Fund"), Goldman Sachs Strategic Growth Fund ("Strategic Growth Fund"), Goldman Sachs Growth Opportunities Fund ("Growth Opportunities Fund"), Goldman Sachs Mid Cap Value Fund ("Mid Cap Value Fund") (formerly known as "Mid Cap Equity Fund"), Goldman Sachs International Equity Fund ("International Equity Fund"), Goldman Sachs Small Cap Value Fund ("Small Cap Value Fund"), Goldman Sachs Large Cap Value Fund ("Large Cap Value Fund"), Goldman Sachs European Equity Fund ("European Equity Fund"), Goldman Sachs Japanese Equity Fund ("Japanese Equity Fund"), Goldman Sachs International Small Cap Fund ("International Small Cap Fund"), Goldman Sachs Emerging Markets Equity Fund ("Emerging Markets Equity Fund") and Goldman Sachs Asia Growth Fund ("Asia Growth Fund") (collectively referred to herein as the "Funds").
The Funds, except the European Equity, Japanese Equity, International Small
Cap, CORE Large Cap Value, CORE Large Cap Growth, CORE International Equity,
Strategic Growth Fund, Growth Opportunities, CORE Small Cap Equity and Large Cap
Value Funds were initially organized as a series of a corporation formed under
the laws of the State of Maryland on September 27, 1989 and were reorganized as
a Delaware business trust as of April 30, 1997. The Trustees have authority
under the Trust's charter to create and classify shares into separate series and
to classify and reclassify any series or portfolio of shares into one or more
classes without further action by shareholders. Pursuant thereto, the Trustees
have created the Funds and other series. Additional series may be added in the
future from time to time. Each Fund currently offers five classes of shares:
Class A Shares, Class B Shares, Class C Shares, Institutional Shares and Service
Shares. See "Shares of the Trust."
Goldman Sachs Asset Management ("GSAM"), a separate operating division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Investment Adviser to the Balanced, Growth and Income, CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, Strategic Growth, Growth Opportunities, CORE International Equity, Mid Cap Value, Small Cap Value and Large Cap Value Funds. Goldman Sachs Funds Management, L.P. ("GSFM"), an affiliate of Goldman Sachs, serves as the Investment Adviser to the CORE U.S. Equity and Capital Growth Funds. Goldman Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs, serves as the Investment Adviser to the International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds. GSAM, GSFM and GSAMI are sometimes referred to collectively herein as the "Investment Advisers." In
addition, Goldman Sachs serves as each Fund's distributor and transfer agent. Each Fund's custodian is State Street Bank and Trust Company ("State Street").
The following information relates to and supplements the description of each Fund's investment policies contained in the Prospectuses. See the Prospectuses for a more complete description of the Funds' investment objectives and policies. There is no assurance that a Fund will achieve its objective.
INVESTMENT POLICIES
Each Fund has distinct investment objectives and policies. There can be no assurance that a Fund's objectives will be achieved. Each Fund is a diversified open-end management company as defined in the Investment Company Act of 1940, as amended (the "Act").
Each Fund's share price will fluctuate with market, economic and, to the extent applicable, foreign exchange conditions, so that an investment in any of the Funds may be worth more or less when redeemed than when purchased. None of the Funds should be relied upon as a complete investment program.
The Investment Adviser may purchase for the Funds common stocks, preferred stocks, interests in real estate investment trusts, convertible debt obligations, convertible preferred stocks, equity interests in trusts, partnerships, joint ventures, limited liability companies and similar enterprises, warrants and stock purchase rights ("equity securities"). In choosing a Fund's securities, the Investment Adviser utilizes first-hand fundamental research, including visiting company facilities to assess operations and to meet decision-makers. The Investment Adviser may also use macro analysis of numerous economic and valuation variables to anticipate changes in company earnings and the overall investment climate. The Investment Adviser is able to draw on the research and market expertise of the Goldman Sachs Global Investment Research Department and other affiliates of the Investment Adviser, as well as information provided by other securities dealers. Equity securities in a Fund's portfolio will generally be sold when the Investment Adviser believes that the market price fully reflects or exceeds the securities' fundamental valuation or when other more attractive investments are identified.
Value Style Funds. The Growth and Income Fund, Mid Cap Value Fund, Small Cap Value Fund, Large Cap Value Fund and a portion of the equity portion of Balanced Fund are managed using a value oriented approach. (The equity portion of the Balanced Fund utilizes a blend of value and growth investment styles. See "Growth Style Funds" below). The Investment Adviser evaluates securities using fundamental analysis and intends to purchase equity securities that are, in its view, underpriced relative to a combination of such companies' long-term earnings prospects, growth rate, free cash flow and/or dividend-paying ability. Consideration will be given to the business quality of the issuer. Factors positively affecting the Investment Adviser's view of that quality include the competitiveness and degree of regulation in the markets in which the company operates, the existence of a management team with a record of success, the position of the company in the markets in which it operates, the level of the company's financial leverage and the sustainable return on capital invested in the business. The Funds may also purchase securities of companies that have experienced difficulties and that, in the opinion of the Investment Adviser, are available at attractive prices.
Growth Style Funds. The Capital Growth, Strategic Growth and Growth Opportunities Funds and a portion of the equity portion of the Balanced Fund are managed using a growth equity oriented approach. Equity securities for these Funds are selected based on their prospects for above average growth. The Investment Adviser will select securities of growth companies trading, in the
Investment Adviser's opinion, at a reasonable price relative to other
industries, competitors and historical price/earnings multiples. The Funds will
generally invest in companies whose earnings are believed to be in a relatively
strong growth trend, or, to a lesser extent, in companies in which significant
further growth is not anticipated but whose market value per share is thought to
be undervalued. In order to determine whether a security has favorable growth
prospects, the Investment Adviser ordinarily looks for one or more of the
following characteristics in relation to the security's prevailing price:
prospects for above average sales and earnings growth per share; high return on
invested capital; free cash flow generation; sound balance sheet, financial and
accounting policies, and overall financial strength; strong competitive
advantages; effective research, product development, and marketing; pricing
flexibility; strength of management; and general operating characteristics that
will enable the company to compete successfully in its marketplace.
Quantitative Style Funds. CORE U.S. Equity, CORE Large Cap Growth, CORE Large Cap Value, CORE Small Cap Equity and CORE International Equity Funds (the "CORE Equity Funds") are managed using both quantitative and fundamental techniques. CORE is an acronym for "Computer-Optimized, Research-Enhanced," which reflects the CORE Funds' investment process. This investment process and the proprietary multifactor model used to implement it are discussed below.
Investment Process. The Investment Adviser begins with a broad universe of U.S. equity securities for CORE U.S. Equity, CORE Large Cap Growth, CORE Large Cap Value and CORE Small Cap Equity Funds (the "CORE U.S. Equity Funds"), and a broad universe of foreign equity securities for CORE International Equity Fund. As described more fully below, the Investment Adviser uses a proprietary multifactor model (the "Multifactor Model") to forecast the returns of different markets, currencies and individual securities. In the case of an equity security followed by the Goldman Sachs Global Investment Research Department (the "Research Department"), a rating is assigned based upon the Research Department's evaluation. In the discretion of the Investment Adviser, ratings may also be assigned to equity securities based on research ratings obtained from other industry sources.
In building a diversified portfolio for each CORE Equity Fund, the Investment Adviser utilizes optimization techniques to seek to maximize the Fund's expected return, while maintaining a risk profile similar to the Fund's benchmark. Each portfolio is primarily composed of securities rated highest by the foregoing investment process and has risk characteristics and industry weightings similar to the relevant Fund's benchmark.
Multifactor Models. The Multifactor Models are rigorous computerized rating systems for forecasting the returns of different equity markets, currencies and individual equity securities according to fundamental investment characteristics. The CORE U.S. Equity Funds use one Multifactor Model to forecast the returns of securities held in each Fund's portfolio. The CORE International Equity Fund uses multiple Multifactor Models to forecast returns. Currently, the CORE International Equity Fund uses one model to forecast equity market returns, one model to forecast currency returns and 22 separate models to forecast individual equity security returns in 22 different countries. Despite this variety, all Multifactor Models incorporate common variables covering measures of value, growth, momentum and risk (e.g., book/price ratio, earnings/price
ratio, price momentum, price volatility, consensus growth forecasts, earnings estimate revisions, earnings stability, and, in the case of models for CORE International Equity Fund, currency momentum and country political risk ratings). All of the factors used in the Multifactor Models have been shown to significantly impact the performance of the securities, currencies and markets they were designed to forecast.
The weightings assigned to the factors in the Multifactor Model used by the CORE U.S. Equity Funds are derived using a statistical formulation that considers each factor's historical performance in different market environments. As such, the U.S. Multifactor Model is designed to evaluate each security using only the factors that are statistically related to returns in the anticipated market environment. Because they include many disparate factors, the Investment Adviser believes that all the Multifactor Models are broader in scope and provide a more thorough evaluation than most conventional quantitative models. Securities and markets ranked highest by the relevant Multifactor Model do not have one dominant investment characteristic; rather, they possess an attractive combination of investment characteristics. By using a variety of relevant factors to select securities, currencies or markets, the Investment Adviser believes that the Fund will be better balanced and have more consistent performance than an investment portfolio that uses only one or two factors to select such investments.
The Investment Adviser will monitor, and may occasionally suggest and make
changes to, the method by which securities, currencies or markets are selected
for or weighted in a Fund. Such changes (which may be the result of changes in
the Multifactor Models or the method of applying the Multifactor Models) may
include: (i) evolutionary changes to the structure of the Multifactor Models
(e.g., the addition of new factors or a new means of weighting the factors);
(ii) changes in trading procedures (e.g., trading frequency or the manner in
which a Fund uses futures); or (iii) changes in the method by which securities,
currencies or markets are weighted in a Fund. Any such changes will preserve a
Fund's basic investment philosophy of combining qualitative and quantitative
methods of selecting securities using a disciplined investment process.
Research Department. In assigning ratings to equity securities, the Research Department uses a four category rating system ranging from "recommended for purchase" to "likely to under perform." The ratings reflect the analyst's judgment as to the investment results of a specific security and incorporate economic outlook, valuation, risk and a variety of other factors.
By employing both a quantitative (i.e., the Multifactor Models) and a qualitative (i.e., research enhanced) method of selecting securities, each CORE Equity Fund seeks to capitalize on the strengths of each discipline.
Other Information. Since normal settlement for equity securities is three trading days (for certain international markets settlement may be longer), the Funds will need to hold cash balances to satisfy shareholder redemption requests. Such cash balances will normally range from 2% to 5% of a Fund's net assets. CORE U.S. Equity Fund may enter into futures transactions only with respect to the S&P 500 Index and the CORE Large Cap Growth, CORE Large Cap Value and CORE Small Cap Equity Funds may enter into futures transactions only with respect to a representative index in order to keep a Fund's effective equity exposure close to
100%. CORE Small Cap Equity and CORE International Equity Funds may purchase other types of futures contracts. For example, if cash balances are equal to 5% of the net assets, the Fund may enter into long futures contracts covering an amount equal to 5% of the Fund's net assets. As cash balances fluctuate based on new contributions or withdrawals, a Fund may enter into additional contracts or close out existing positions.
Actively Managed International Funds. The International Equity, Japanese Equity, European Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds are managed using an active international approach, which utilizes a consistent process of stock selection undertaken by portfolio management teams located within each of the major investment regions, including Europe, Japan, Asia and the United States. In selecting securities, the Investment Adviser uses a long-term, bottom-up strategy based on first-hand fundamental research that is designed to give broad exposure to the available opportunities while seeking to add return primarily through stock selection. Equity securities for these Funds are evaluated based on three key factors--the business, the management and the valuation. The Investment Adviser ordinarily seeks securities that have, in the Investment Adviser's opinion, superior earnings growth potential, sustainable franchise value with management attuned to creating shareholder value and relatively discounted valuations. In addition, the Investment Adviser uses a multi-factor risk model which seeks to assure that deviations from the benchmark are justifiable.
The investment objective of the Balanced Fund is to provide long-term growth of capital and current income. The Fund seeks growth of capital primarily through investments in equity securities (stocks). The Fund seeks to provide current income through investment in fixed-income securities.
The Balanced Fund is intended to provide a foundation on which an investor can build an investment portfolio or to serve as the core of an investment program, depending on the investor's goals. The Balanced Fund is designed for relatively conservative investors who seek a combination of long-term capital growth and current income in a single investment. The Balanced Fund offers a portfolio of equity and fixed-income securities intended to provide less volatility than a portfolio completely invested in equity securities and greater diversification than a portfolio invested in only one asset class. Balanced Fund may be appropriate for people who seek capital appreciation but are concerned about the volatility typically associated with a fund that invests solely in stocks and other equity securities.
Fixed-Income Strategies Designed to Maximize Return and Manage Risk. GSAM's approach to managing the fixed-income portion of the Balanced Fund's portfolio seeks to provide high returns relative to a market benchmark, the Lehman Brothers Aggregate Bond Index (the "Index"), while also seeking to provide high current income. This approach emphasizes (1) sector allocation strategies which enable GSAM to tactically overweight or underweight one sector of the fixed-income market (i.e., mortgages, corporate bonds, U.S. Treasuries, non-dollar bonds, emerging market debt) versus another; (2) individual security selection based on identifying relative value (fixed-income securities inexpensive relative to other in their sector); and or (3) to a lesser extent,
strategies based on GSAM's expectation of the direction of interest rates or the spread between short-term and long-term interest rates such as yield curve strategy.
The Index currently includes U.S. Government Securities and fixed-rate, publicly issued, U.S. dollar-denominated fixed income securities rated at least BBB or Baa by a nationally recognized statistical ratings organization ("NRSRO"). The securities currently included in the Index have at least one year remaining to maturity; have an outstanding principal amount of at least $100 million; and are issued by the following types of issuers, with each category receiving a different weighting in the Index: U.S. Treasury; agencies, authorities or instrumentalities of the U.S. government; issuers of mortgage- backed securities; utilities; industrial issuers; financial institutions; foreign issuers; and issuers of asset-backed securities. The Index is a trademark of Lehman Brothers. Inclusion of a security in the Index does not imply an opinion by Lehman Brothers as to its attractiveness or appropriateness for investment. Although Lehman Brothers obtains factual information used in connection with the Index from sources which it considers reliable, Lehman Brothers claims no responsibility for the accuracy, completeness or timeliness or such information and has no liability to any person for any loss arising from results obtained from the use of the Index data.
GSAM seeks to manage fixed-income portfolio risk in a number of ways. These include diversifying the fixed-income portion of the Balanced Fund's portfolio among various types of fixed-income securities and utilizing sophisticated quantitative models to understand how the fixed-income portion of the portfolio will perform under a variety of market and economic scenarios. In addition, GSAM uses extensive credit analysis to select and to monitor any investment-grade or non-investment grade bonds that may be included in the Balanced Fund's portfolio. In employing this and other investment strategies, the GSAM team has access to extensive fundamental research and analysis available through Goldman Sachs and a broad range of other sources.
A number of investment strategies will be used in selecting fixed-income securities for the Fund's portfolio. GSAM's fixed-income investment philosophy is to actively manage the portfolio within a risk-controlled framework. The Investment Adviser de-emphasizes interest rate anticipation by monitoring the duration of the portfolio within a narrow range of the Investment Adviser's target duration, and instead focuses on seeking to add value through sector selection, security selection and yield curve strategies.
Market Sector Selection. Market sector selection is the underweighting or overweighting of one or more market sectors (i.e., U.S. Treasuries, U.S. Government agency securities, corporate securities, mortgage-backed securities and asset-backed securities). GSAM may decide to overweight or underweight a given market sector or subsector (e.g., within the corporate sector, industrials, financial issuers and utilities) based on, among other things, expectations of future yield spreads between different sectors or subsectors.
Issuer Selection. Issuer selection is the purchase and sale of corporate securities based on a corporation's current and expected credit standing (within the constraints imposed by the Balanced Fund's minimum credit quality requirements). This strategy focuses on four types of investment-grade corporate issuers. Selection of securities from the first type of issuers - those with low but stable credit - is intended to enhance total returns by providing incremental yield. Selecting
securities from the second type of issuers - those with low and intermediate but improving credit quality - is intended to enhance total returns in two stages. Initially, these securities are expected to provide incremental yield. Eventually, price appreciation should occur relative to alternative securities as credit quality improves, the NRSROs upgrade credit ratings, and credit spreads narrow. Securities from the third type of issuers - issuers with deteriorating credit quality - will be avoided, since total returns are typically enhanced by avoiding the widening of credit spreads and the consequent relative price depreciation. Finally, total returns can be enhanced by focusing on securities that are rated differently by different rating organizations. If the securities are trading in line with the higher published quality rating while GSAM concurs with the lower published quality rating, the securities would generally be sold and any potential price deterioration avoided. On the other hand, if the securities are trading in line with the lower published quality rating while the higher published quality rating is considered more realistic, the securities may be purchased in anticipation of the expected market reevaluation and relative price appreciation.
Yield Curve Strategy. Yield curve strategy consists of overweighting or underweighting different maturity sectors relative to a benchmark to take advantage of the shape of the yield curve. Three alternative maturity sector selections are available: a "barbell" strategy in which short and long maturity sectors are overweighted while intermediate maturity sectors are underweighted; a "bullet" strategy in which, conversely, short-and long-maturity sectors are underweighted while intermediate-maturity sectors are overweighted; and a "neutral yield curve" strategy in which the maturity distribution mirrors that of a benchmark.
The International Equity Fund will seek to achieve its investment objective by investing primarily in equity securities of companies that are organized outside the United States or whose securities are principally traded outside the United States. Because research coverage outside the United States is fragmented and relatively unsophisticated, many foreign companies that are well- positioned to grow and prosper have not come to the attention of investors. GSAMI believes that the high historical returns and less efficient pricing of foreign markets create favorable conditions for the International Equity Fund's highly focused investment approach. For a description of the risks of the International Equity Fund's investments in Asia, see "Investing in Emerging Markets, including Asia and Eastern Europe."
A Rigorous Process of Stock Selection. Using fundamental industry and company research, GSAMI's equity team in London, Singapore and Tokyo seeks to identify companies that may achieve superior long-term returns. Stocks are carefully selected for the International Equity Fund's portfolio through a three-stage investment process. Because the International Equity Fund is a long-term holder of stocks, the portfolio managers adjust the Fund's portfolio only when expected returns fall below acceptable levels or when the portfolio managers identify substantially more attractive investments.
Using the research of Goldman Sachs as well as information gathered from other sources in Europe and the Asia-Pacific region, the Investment Adviser seeks to identify attractive industries around the world. Such industries are expected to have favorable underlying economics and allow
companies to generate sustainable and predictable high returns. As a rule, they are less economically sensitive, relatively free of regulation and favor strong franchises.
Within these industries the Investment Adviser seeks to identify well-run companies that enjoy a stable competitive advantage and are able to benefit from the favorable dynamics of the industry. This stage includes analyzing the current and expected financial performance of the company; contacting suppliers, customers and competitors; and meeting with management. In particular, the portfolio managers look for companies whose managers have a strong commitment to both maintaining the high returns of the existing business and reinvesting the capital generated at high rates of return. Management should act in the interests of the owners and seek to maximize returns to all stockholders.
GSAMI's currency team manages the foreign exchange risk embedded in foreign equities by means of a currency overlay program. The program may be utilized to protect the value of foreign investments in sustained periods of dollar appreciation and to add returns by seeking to take advantage of foreign exchange fluctuations.
The members of GSAMI's international equity team bring together years of experience in analyzing and investing in companies in Europe and the Asia- Pacific region. Their expertise spans a wide range of skills including investment analysis, investment management, investment banking and business consulting. GSAMI's worldwide staff of over 300 professionals includes portfolio managers based in London, Singapore and Tokyo who bring firsthand knowledge of their local markets and companies to every investment decision.
Each Fund may, under normal market conditions, invest in corporate debt obligations, including obligations of industrial, utility and financial issuers. CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity and CORE International Equity Funds may only invest in debt securities that are cash equivalents. Corporate debt obligations are subject to the risk of an issuer's inability to meet principal and interest payments on the obligations and may also be subject to price volatility due to such factors as market interest rates, market perception of the creditworthiness of the issuer and general market liquidity.
An economic downturn could severely affect the ability of highly leveraged issuers of junk bond securities to service their debt obligations or to repay their obligations upon maturity. Factors having an adverse impact on the market value of junk bonds will have an adverse effect on a Fund's net asset value to the extent it invests in such securities. In addition, a Fund may incur additional expenses to the extent it is required to seek recovery upon a default in payment of principal or interest on its portfolio holdings.
The secondary market for junk bonds, which is concentrated in relatively few market makers, may not be as liquid as the secondary market for more highly rated securities. This reduced liquidity may have an adverse effect on the ability of Balanced, Growth and Income, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value, Small Cap Value, Large Cap Value, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging
Markets Equity and Asia Growth Funds to dispose of a particular security when necessary to meet their redemption requests or other liquidity needs. Under adverse market or economic conditions, the secondary market for junk bonds could contract further, independent of any specific adverse changes in the condition of a particular issuer. As a result, the Investment Advisers could find it difficult to sell these securities or may be able to sell the securities only at prices lower than if such securities were widely traded. Prices realized upon the sale of such lower rated or unrated securities, under such circumstances, may be less than the prices used in calculating a Fund's net asset value.
Since investors generally perceive that there are greater risks associated with the medium to lower rated securities of the type in which Balanced, Growth and Income, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value, Small Cap Value, Large Cap Value, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds may invest, the yields and prices of such securities may tend to fluctuate more than those for higher rated securities. In the lower quality segments of the fixed-income securities market, changes in perceptions of issuers' creditworthiness tend to occur more frequently and in a more pronounced manner than do changes in higher quality segments of the fixed-income securities market, resulting in greater yield and price volatility.
Another factor which causes fluctuations in the prices of fixed-income securities is the supply and demand for similarly rated securities. In addition, the prices of fixed-income securities fluctuate in response to the general level of interest rates. Fluctuations in the prices of portfolio securities subsequent to their acquisition will not affect cash income from such securities but will be reflected in a Fund's net asset value.
Medium to lower rated and comparable non-rated securities tend to offer higher yields than higher rated securities with the same maturities because the historical financial condition of the issuers of such securities may not have been as strong as that of other issuers. Since medium to lower rated securities generally involve greater risks of loss of income and principal than higher rated securities, investors should consider carefully the relative risks associated with investment in securities which carry medium to lower ratings and in comparable unrated securities. In addition to the risk of default, there are the related costs of recovery on defaulted issues. The Investment Adviser will attempt to reduce these risks through portfolio diversification and by analysis of each issuer and its ability to make timely payments of income and principal, as well as broad economic trends and corporate developments.
The Investment Adviser employs its own credit research and analysis, which includes a study of existing debt, capital structure, ability to service debt and to pay dividends, the issuer's sensitivity to economic conditions, its operating history and the current trend of earnings. The Investment Adviser continually monitors the investments in a Fund's portfolio and evaluates whether to dispose of or to retain non-investment grade and comparable unrated securities whose credit ratings or credit quality may have changed.
Each Fund may invest in U.S. Government securities. Generally, these securities include U.S. Treasury obligations and obligations issued or guaranteed by U.S. Government agencies, instrumentalities or sponsored enterprises. U.S. Government securities also include Treasury receipts and other stripped U.S. Government securities, where the interest and principal components of stripped U.S. Government securities are traded independently. A Fund may also invest in zero coupon U.S. Treasury securities and in zero coupon securities issued by financial institutions, which represent a proportionate interest in underlying U.S. Treasury securities. A zero coupon security pays no interest to its holder during its life and its value consists of the difference between its face value at maturity and its cost. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically.
Each Fund may invest in obligations issued or guaranteed by U.S. or foreign banks. Bank obligations, including without limitation, time deposits, bankers' acceptances and certificates of deposit, may be general obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulation. Banks are subject to extensive but different governmental regulations which may limit both the amount and types of loans which may be made and interest rates which may be charged. In addition, the profitability of the banking industry is largely dependent upon the availability and cost of funds for the purpose of financing lending operations under prevailing money market conditions. General economic conditions as well as exposure to credit losses arising from possible financial difficulties of borrowers play an important part in the operation of this industry.
A Fund's investments in fixed-income securities may include zero coupon bonds, which are debt obligations issued or purchased at a significant discount from face value. The discount approximates the total amount of interest the bonds would have accrued and compounded over the period until maturity. Zero coupon bonds do not require the periodic payment of interest. Such investments benefit the issuer by mitigating its need for cash to meet debt service but also require a higher rate of return to attract investors who are willing to defer receipt of such cash. Such investments may experience greater volatility in market value than debt obligations which provide for regular payments of interest. In addition, if an issuer of zero coupon bonds held by a Fund defaults, the Fund may obtain no return at all on its investment. Each Fund will accrue income on such investments for each taxable year which (net of deductible expenses, if any) is distributable to shareholders and which, because no cash is generally received at the time of accrual, may require the liquidation of other portfolio securities to obtain sufficient cash to satisfy the Fund's distribution obligations.
The interest rates payable on certain fixed-income securities in which a Fund may invest are not fixed and may fluctuate based upon changes in market rates. A variable rate obligation has an interest rate which is adjusted at predesignated periods in response to changes in the market rate of interest on which the interest rate is based. Variable and floating rate obligations are less effective than fixed rate instruments at locking in a particular yield. Nevertheless, such obligations may fluctuate in value in response to interest rate changes if there is a delay between changes in market interest rates and the interest reset date for the obligation.
Each Fund may invest in custodial receipts in respect of securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies, instrumentalities, political subdivisions or authorities. Such custodial receipts evidence ownership of future interest payments, principal payments or both on certain notes or bonds issued or guaranteed as to principal and interest by the U.S. Government, its agencies, instrumentalities, political subdivisions or authorities. These custodial receipts are known by various names, including "Treasury Receipts," "Treasury Investors Growth Receipts" ("TIGRs"), and "Certificates of Accrual on Treasury Securities" ("CATs"). For certain securities law purposes, custodial receipts are not considered U.S. Government securities.
The Balanced Fund may invest in municipal securities. Municipal securities consist of bonds, notes and other instruments issued by or on behalf of states, territories and possessions of the United States (including the District of Columbia) and their political subdivisions, agencies or instrumentalities, the interest on which is exempt from regular federal income tax. Municipal securities are often issued to obtain funds for various public purposes. Municipal securities also include "private activity bonds" or industrial development bonds, which are issued by or on behalf of public authorities to obtain funds for privately operated facilities, such as airports and waste disposal facilities, and, in some cases, commercial and industrial facilities.
The yields and market values of municipal securities are determined primarily by the general level of interest rates, the creditworthiness of the issuers of municipal securities and economic and political conditions affecting such issuers. Due to their tax exempt status, the yields and market prices of municipal securities may be adversely affected by changes in tax rates and policies, which may have less effect on the market for taxable fixed-income securities. Moreover, certain types of municipal securities, such as housing revenue bonds, involve prepayment risks which could affect the yield on such securities. The credit rating assigned to municipal securities may reflect the existence of guarantees, letters of credit or other credit enhancement features available to the issuers or holders of such municipal securities.
Investments in municipal securities are subject to the risk that the issuer could default on its obligations. Such a default could result from the inadequacy of the sources or revenues from which interest and principal payments are to be made or the assets collateralizing such obligations.
Revenue bonds, including private activity bonds, are backed only by specific assets or revenue sources and not by the full faith and credit of the governmental issuer.
General Characteristics. Each Fund (other than the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity and CORE International Equity Funds) may invest in mortgage-backed securities. Each mortgage pool underlying mortgage-backed securities consists of mortgage loans evidenced by promissory notes secured by first mortgages or first deeds of trust or other similar security instruments creating a first lien on owner occupied and non-owner occupied one-unit to four-unit residential properties, multifamily (i.e., five or more) properties, agriculture properties, commercial properties and mixed use properties (the "Mortgaged Properties"). The Mortgaged Properties may consist of detached individual dwelling units, multifamily dwelling units, individual condominiums, townhouses, duplexes, triplexes, fourplexes, row houses, individual units in planned unit developments and other attached dwelling units. The Mortgaged Properties may also include residential investment properties and second homes.
The investment characteristics of adjustable and fixed rate mortgage-backed securities differ from those of traditional fixed-income securities. The major differences include the payment of interest and principal on mortgage-backed securities on a more frequent (usually monthly) schedule, and the possibility that principal may be prepaid at any time due to prepayments on the underlying mortgage loans or other assets. These differences can result in significantly greater price and yield volatility than is the case with traditional fixed- income securities. As a result, if a Fund purchases mortgage-backed securities at a premium, a faster than expected prepayment rate will reduce both the market value and the yield to maturity from those which were anticipated. A prepayment rate that is slower than expected will have the opposite effect of increasing yield to maturity and market value. Conversely, if a Fund purchases mortgage- backed securities at a discount, faster than expected prepayments will increase, while slower than expected prepayments will reduce yield to maturity and market values. To the extent that a Fund invests in mortgage-backed securities, its Investment Adviser may seek to manage these potential risks by investing in a variety of mortgage-backed securities and by using certain hedging techniques.
Government Guaranteed Mortgage-Backed Securities. There are several types of guaranteed mortgage-backed securities currently available, including guaranteed mortgage pass-through certificates and multiple class securities, which include guaranteed Real Estate Mortgage Investment Conduit Certificates ("REMIC Certificates"), collateralized mortgage obligations and stripped mortgage-backed securities. A Fund is permitted to invest in other types of mortgage-backed securities that may be available in the future to the extent consistent with its investment policies and objective.
A Fund's investments in mortgage-backed securities may include securities issued or guaranteed by the U.S. Government or one of its agencies, authorities, instrumentalities or sponsored enterprises, such as the Government National Mortgage Association ("Ginnie Mae"), the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac").
Ginnie Mae Certificates. Ginnie Mae is a wholly-owned corporate instrumentality of the United States. Ginnie Mae is authorized to guarantee the timely payment of the principal of and interest on certificates that are based on and backed by a pool of mortgage loans insured by the Federal Housing Administration ("FHA Loans"), or guaranteed by the Veterans Administration ("VA Loans"), or by pools of other eligible mortgage loans. In order to meet its obligations under any guaranty, Ginnie Mae is authorized to borrow from the United States Treasury in an unlimited amount.
Fannie Mae Certificates. Fannie Mae is a stockholder-owned corporation chartered under an act of the United States Congress. Each Fannie Mae Certificate is issued and guaranteed by Fannie Mae and represents an undivided interest in a pool of mortgage loans (a "Pool") formed by Fannie Mae. Each Pool consists of residential mortgage loans ("Mortgage Loans") either previously owned by Fannie Mae or purchased by it in connection with the formation of the Pool. The Mortgage Loans may be either conventional Mortgage Loans (i.e., not insured or guaranteed by any U.S. Government agency) or Mortgage Loans that are either insured by the Federal Housing Administration ("FHA") or guaranteed by the Veterans Administration ("VA"). However, the Mortgage Loans in Fannie Mae Pools are primarily conventional Mortgage Loans. The lenders originating and servicing the Mortgage Loans are subject to certain eligibility requirements established by Fannie Mae.
Fannie Mae has certain contractual responsibilities. With respect to each Pool, Fannie Mae is obligated to distribute scheduled monthly installments of principal and interest after Fannie Mae's servicing and guaranty fee, whether or not received, to Certificate holders. Fannie Mae also is obligated to distribute to holders of Certificates an amount equal to the full principal balance of any foreclosed Mortgage Loan, whether or not such principal balance is actually recovered. The obligations of Fannie Mae under its guaranty of the Fannie Mae Certificates are obligations solely of Fannie Mae.
Freddie Mac Certificates. Freddie Mac is a publicly held U.S. Government sponsored enterprise. The principal activity of Freddie Mac currently is the purchase of first lien, conventional, residential mortgage loans and participation interests in such mortgage loans and their resale in the form of mortgage securities, primarily Freddie Mac Certificates. A Freddie Mac Certificate represents a pro rata interest in a group of mortgage loans or participation in mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac.
Freddie Mac guarantees to each registered holder of a Freddie Mac Certificate the timely payment of interest at the rate provided for by such Freddie Mac Certificate (whether or not received on the underlying loans). Freddie Mac also guarantees to each registered Certificate holder ultimate collection of all principal of the related mortgage loans, without any offset or deduction, but does not, generally, guarantee the timely payment of scheduled principal. The obligations of Freddie Mac under its guaranty of Freddie Mac Certificates are obligations solely of Freddie Mac.
The mortgage loans underlying the Freddie Mac and Fannie Mae Certificates consist of adjustable rate or fixed rate mortgage loans with original terms to maturity of between five and thirty years. Substantially all of these mortgage loans are secured by first liens on one-to-four-
family residential properties or multifamily projects. Each mortgage loan must meet the applicable standards set forth in the law creating Freddie Mac or Fannie Mae. A Freddie Mac Certificate group may include whole loans, participation interests in whole loans and undivided interests in whole loans and participations comprising another Freddie Mac Certificate group.
Mortgage Pass-Through Securities. Each Fund (other than the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity and CORE International Equity Funds) may invest in both government guaranteed and privately issued mortgage pass-through securities ("Mortgage Pass-Throughs"); that is, fixed or adjustable rate mortgage-backed securities which provide for monthly payments that are a "pass-through" of the monthly interest and principal payments (including any prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees or other amounts paid to any guarantor, administrator and/or servicer of the underlying mortgage loans.
The following discussion describes only a few of the wide variety of structures of Mortgage Pass-Throughs that are available or may be issued.
Description of Certificates. Mortgage Pass-Throughs may be issued in one or more classes of senior certificates and one or more classes of subordinate certificates. Each such class may bear a different pass-through rate. Generally, each certificate will evidence the specified interest of the holder thereof in the payments of principal or interest or both in respect of the mortgage pool comprising part of the trust fund for such certificates.
Ratings. The ratings assigned by a rating organization to Mortgage Pass- Throughs address the likelihood of the receipt of all distributions on the underlying mortgage loans by the related
certificate-holders under the agreements pursuant to which such certificates are issued. A rating organization's ratings take into consideration the credit quality of the related mortgage pool, including any credit support providers, structural and legal aspects associated with such certificates, and the extent to which the payment stream on such mortgage pool is adequate to make payments required by such certificates. A rating organization's ratings on such certificates do not, however, constitute a statement regarding frequency of prepayments on the related mortgage loans. In addition, the rating assigned by a rating organization to a certificate does not address the remote possibility that, in the event of the insolvency of the issuer of certificates where a subordinated interest was retained, the issuance and sale of the senior certificates may be recharacterized as a financing and, as a result of such recharacterization, payments on such certificates may be affected.
Credit Enhancement. Credit support falls generally into two categories:
(i) liquidity protection and (ii) protection against losses resulting from
default by an obligor on the underlying assets. Liquidity protection refers to
the provision of advances, generally by the entity administering the pools of
mortgages, the provision of a reserve fund, or a combination thereof, to ensure,
subject to certain limitations, that scheduled payments on the underlying pool
are made in a timely fashion. Protection against losses resulting from default
ensures ultimate payment of the obligations on at least a portion of the assets
in the pool. Such credit support can be provided by, among other things,
payment guarantees, letters of credit, pool insurance, subordination, or any
combination thereof.
Subordination; Shifting of Interest; Reserve Fund. In order to achieve ratings on one or more classes of Mortgage Pass-Throughs, one or more classes of certificates may be subordinate certificates which provide that the rights of the subordinate certificate-holders to receive any or a specified portion of distributions with respect to the underlying mortgage loans may be subordinated to the rights of the senior certificate-holders. If so structured, the subordination feature may be enhanced by distributing to the senior certificate- holders on certain distribution dates, as payment of principal, a specified percentage (which generally declines over time) of all principal payments received during the preceding prepayment period ("shifting interest credit enhancement"). This will have the effect of accelerating the amortization of the senior certificates while increasing the interest in the trust fund evidenced by the subordinate certificates. Increasing the interest of the subordinate certificates relative to that of the senior certificates is intended to preserve the availability of the subordination provided by the subordinate certificates. In addition, because the senior certificate-holders in a shifting interest credit enhancement structure are entitled to receive a percentage of principal prepayments which is greater than their proportionate interest in the trust fund, the rate of principal prepayments on the mortgage loans will have an even greater effect on the rate of principal payments and the amount of interest payments on, and the yield to maturity of, the senior certificates.
In addition to providing for a preferential right of the senior certificate-holders to receive current distributions from the mortgage pool, a reserve fund may be established relating to such certificates (the "Reserve Fund"). The Reserve Fund may be created with an initial cash deposit by the originator or servicer and augmented by the retention of distributions otherwise available to the subordinate certificate-holders or by excess servicing fees until the Reserve Fund reaches a specified amount.
Alternative Credit Enhancement. As an alternative, or in addition to the credit enhancement afforded by subordination, credit enhancement for Mortgage Pass-Throughs may be provided by mortgage insurance, hazard insurance, by the deposit of cash, certificates of deposit, letters of credit, a limited guaranty or by such other methods as are acceptable to a rating agency. In certain circumstances, such as where credit enhancement is provided by guarantees or a letter of credit, the security is subject to credit risk because of its exposure to an external credit enhancement provider.
Voluntary Advances. Generally, in the event of delinquencies in payments on the mortgage loans underlying the Mortgage Pass-Throughs, the servicer agrees to make advances of cash for the benefit of certificate-holders, but only to the extent that it determines such voluntary advances will be recoverable from future payments and collections on the mortgage loans or otherwise.
Optional Termination. Generally, the servicer may, at its option with respect to any certificates, repurchase all of the underlying mortgage loans remaining outstanding at such time if the aggregate outstanding principal balance of such mortgage loans is less than a specified percentage (generally 5- 10%) of the aggregate outstanding principal balance of the mortgage loans as of the cut-off date specified with respect to such series.
Multiple Class Mortgage-Backed Securities and Collateralized Mortgage Obligations. A Fund may invest in multiple class securities including collateralized mortgage obligations ("CMOs") and REMIC Certificates. These securities may be issued by U.S. Government agencies and instrumentalities such as Fannie Mae or Freddie Mac or by trusts formed by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage bankers, commercial banks, insurance companies, investment banks and special purpose subsidiaries of the foregoing. In general, CMOs are debt obligations of a legal entity that are collateralized by, and multiple class mortgage-backed securities represent direct ownership interests in, a pool of mortgage loans or mortgage-backed securities the payments on which are used to make payments on the CMOs or multiple class mortgage-backed securities.
Fannie Mae REMIC Certificates are issued and guaranteed as to timely distribution of principal and interest by Fannie Mae. In addition, Fannie Mae will be obligated to distribute the principal balance of each class of REMIC Certificates in full, whether or not sufficient funds are otherwise available.
Freddie Mac guarantees the timely payment of interest on Freddie Mac REMIC Certificates and also guarantees the payment of principal as payments are required to be made on the underlying mortgage participation certificates ("PCs"). PCs represent undivided interests in specified level payment, residential mortgages or participation therein purchased by Freddie Mac and placed in a PC pool. With respect to principal payments on PCs, Freddie Mac generally guarantees ultimate collection of all principal of the related mortgage loans without offset or deduction. Freddie Mac also guarantees timely payment of principal of certain PCs.
CMOs and guaranteed REMIC Certificates issued by Fannie Mae and Freddie Mac are types of multiple class mortgage-backed securities. Investors may purchase beneficial interests in REMICs, which are known as "regular" interests or "residual" interests. The Funds do not intend to purchase residual interests in REMICs. The REMIC Certificates represent beneficial ownership interests in a REMIC trust, generally consisting of mortgage loans or Fannie Mae, Freddie Mac or Ginnie Mae guaranteed mortgage-backed securities (the "Mortgage Assets"). The obligations of Fannie Mae or Freddie Mac under their respective guaranty of the REMIC Certificates are obligations solely of Fannie Mae or Freddie Mac, respectively.
CMOs and REMIC Certificates are issued in multiple classes. Each class of CMOs or REMIC Certificates, often referred to as a "tranche," is issued at a specific adjustable or fixed interest rate and must be fully retired no later than its final distribution date. Principal prepayments on the Mortgage Loans or the Mortgage Assets underlying the CMOs or REMIC Certificates may cause some or all of the classes of CMOs or REMIC Certificates to be retired substantially earlier than their final distribution dates. Generally, interest is paid or accrues on all classes of CMOs or REMIC Certificates on a monthly basis.
The principal of and interest on the Mortgage Assets may be allocated among the several classes of CMOs or REMIC Certificates in various ways. In certain structures (known as "sequential pay" CMOs or REMIC Certificates), payments of principal, including any principal prepayments, on the Mortgage Assets generally are applied to the classes of CMOs or REMIC Certificates in the order of their respective final distribution dates. Thus, no payment of principal will be made on any class of sequential pay CMOs or REMIC Certificates until all other classes having an earlier final distribution date have been paid in full.
Additional structures of CMOs and REMIC Certificates include, among others, "parallel pay" CMOs and REMIC Certificates. Parallel pay CMOs or REMIC Certificates are those which are structured to apply principal payments and prepayments of the Mortgage Assets to two or more classes concurrently on a proportionate or disproportionate basis. These simultaneous payments are taken into account in calculating the final distribution date of each class.
A wide variety of REMIC Certificates may be issued in parallel pay or sequential pay structures. These securities include accrual certificates (also known as "Z-Bonds"), which only accrue interest at a specified rate until all other certificates having an earlier final distribution date have been retired and are converted thereafter to an interest-paying security, and planned amortization class ("PAC") certificates, which are parallel pay REMIC Certificates that generally require that specified amounts of principal be applied on each payment date to one or more classes or REMIC Certificates (the "PAC Certificates"), even though all other principal payments and prepayments of the Mortgage Assets are then required to be applied to one or more other classes of the PAC Certificates. The scheduled principal payments for the PAC Certificates generally have the highest priority on each payment date after interest due has been paid to all classes entitled to receive interest currently. Shortfalls, if any, are added to the amount payable on the next payment date. The PAC Certificate payment schedule is taken into account in calculating the final distribution date of each class of PAC. In order to create PAC tranches, one or more tranches generally must be created that absorb most of the volatility in the underlying mortgage assets. These tranches tend to have market prices and yields that are much more volatile than other PAC classes.
Stripped Mortgage-Backed Securities. The Balanced Fund may invest in stripped mortgage-backed securities ("SMBS"), which are derivative multiclass mortgage securities. Although the market for such securities is increasingly liquid, certain SMBS may not be readily marketable and will be considered illiquid for purposes of the Fund's limitation on investments in illiquid securities. The market value of the class consisting entirely of principal payments generally is unusually volatile in response to changes in interest rates. The yields on a class of SMBS that receives all or most of the interest from Mortgage Assets are generally higher than prevailing market yields on other mortgage-backed securities because their cash flow patterns are more volatile and there is a greater risk that the initial investment will not be fully recouped.
The Balanced Fund may invest in leveraged inverse floating rate debt instruments ("inverse floaters"). The interest rate on an inverse floater resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. The higher degree of leverage inherent in inverse floaters is associated with greater volatility in their market values. Accordingly, the duration of an inverse floater may exceed its stated final maturity. Certain inverse floaters may be deemed to be illiquid securities for purposes of each Fund's 15% limitation on investments in such securities.
Each Fund (except the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity and CORE International Equity Funds) may invest in asset-backed securities. Asset-backed securities represent participation in, or are secured by and payable from, assets such as motor vehicle installment sales, installment loan contracts, leases of various types of real and personal property, receivables from revolving credit (credit card) agreements and other categories of receivables. Such assets are securitized through the use of trusts and special
purpose corporations. Payments or distributions of principal and interest may be guaranteed up to certain amounts and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation, or other credit enhancements may be present.
Like mortgage-backed securities, asset-backed securities are often subject to more rapid repayment than their stated maturity date would indicate as a result of the pass-through of prepayments of principal on the underlying loans. A Fund's ability to maintain positions in such securities will be affected by reductions in the principal amount of such securities resulting from prepayments, and its ability to reinvest the returns of principal at comparable yields is subject to generally prevailing interest rates at that time. To the extent that a Fund invests in asset-backed securities, the values of such Fund's portfolio securities will vary with changes in market interest rates generally and the differentials in yields among various kinds of asset-backed securities.
Asset-backed securities present certain additional risks that are not presented by mortgage-backed securities because asset-backed securities generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. Credit card receivables are generally unsecured and the debtors on such receivables are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set-off certain amounts owed on the credit cards, thereby reducing the balance due. Automobile receivables generally are secured, but by automobiles rather than residential real property. Most issuers of automobile receivables permit the loan servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest superior to that of the holders of the asset-backed securities. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state laws, the trustee for the holders of the automobile receivables may not have a proper security interest in the underlying automobiles. Therefore, there is the possibility that, in some cases, recoveries on repossessed collateral may not be available to support payments on these securities.
The Balanced Fund may invest in loan participations. Such loans must be to issuers in whose obligations Balanced Fund may invest. A loan participation is an interest in a loan to a U.S. or foreign company or other borrower which is administered and sold by a financial intermediary. In a typical corporate loan syndication, a number of lenders, usually banks (co-lenders), lend a corporate borrower a specified sum pursuant to the terms and conditions of a loan agreement. One of the co-lenders usually agrees to act as the agent bank with respect to the loan.
Participation interests acquired by the Balanced Fund may take the form of a direct or co-lending relationship with the corporate borrower, an assignment of an interest in the loan by a co-lender or another participant, or a participation in the seller's share of the loan. When the Balanced Fund acts as co-lender in connection with a participation interest or when the Balanced Fund acquires certain participation interests, the Balanced Fund will have direct recourse against the borrower if the borrower fails to pay scheduled principal and interest. In cases where the Balanced Fund lacks direct recourse, it will look to the agent bank to enforce appropriate credit remedies
against the borrower. In these cases, the Balanced Fund may be subject to delays, expenses and risks that are greater than those that would have been involved if the Fund had purchased a direct obligation (such as commercial paper) of such borrower. For example, in the event of the bankruptcy or insolvency of the corporate borrower, a loan participation may be subject to certain defenses by the borrower as a result of improper conduct by the agent bank. Moreover, under the terms of the loan participation, the Balanced Fund may be regarded as a creditor of the agent bank (rather than of the underlying corporate borrower), so that the Balanced Fund may also be subject to the risk that the agent bank may become insolvent. The secondary market, if any, for these loan participations is limited and any loan participations purchased by the Balanced Fund will be regarded as illiquid.
For purposes of certain investment limitations pertaining to diversification of the Balanced Fund's portfolio investments, the issuer of a loan participation will be the underlying borrower. However, in cases where the Balanced Fund does not have recourse directly against the borrower, both the borrower and each agent bank and co-lender interposed between the Balanced Fund and the borrower will be deemed issuers of a loan participation.
Each Fund may purchase and sell futures contracts and may also purchase and write options on futures contracts. The CORE Large Cap Value, CORE Large Cap Growth and CORE Small Cap Equity Funds may only enter into such transactions with respect to a representative index. The CORE U.S. Equity Fund may enter into futures transactions only with respect to the S&P 500 Index. The other Funds may purchase and sell futures contracts based on various securities (such as U.S. Government securities), securities indices, foreign currencies and other financial instruments and indices. Each Fund will engage in futures and related options transactions only for bona fide hedging purposes as defined below or for purposes of seeking to increase total return to the extent permitted by regulations of the Commodity Futures Trading Commission ("CFTC"). Futures contracts entered into by a Fund are traded on U.S. exchanges or boards of trade that are licensed and regulated by the CFTC or on foreign exchanges. Neither the CFTC, National Futures Association nor any domestic exchange regulates activities of any foreign exchange or boards of trade, including the execution, delivery and clearing of transactions, or has the power to compel enforcement of the rules of a foreign exchange or board of trade or any applicable foreign law. This is true even if the exchange is formally linked to a domestic market so that a position taken on the market may be liquidated by a transaction on another market. Moreover, such laws or regulations will vary depending on the foreign country in which the foreign futures or foreign options transaction occurs. For these reasons, persons who trade foreign futures or foreign options contracts may not be afforded certain of the protective measures provided by the Commodity Exchange Act, the CFTC's regulations and the rules of the National Futures Association and any domestic exchange, including the right to use reparations proceedings before the CFTC and arbitration proceedings provided by the National Futures Association or any domestic futures exchange. In particular, a Fund's investments in foreign futures or foreign options transactions may not be provided the same protections in respect of transactions on United States futures exchanges.
Futures Contracts. A futures contract may generally be described as an agreement between two parties to buy and sell particular financial instruments for an agreed price during a
designated month (or to deliver the final cash settlement price, in the case of a contract relating to an index or otherwise not calling for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, a Fund can seek through the sale of futures contracts to offset a decline in the value of its current portfolio securities. When rates are falling or prices are rising, a Fund, through the purchase of futures contracts, can attempt to secure better rates or prices than might later be available in the market when it effects anticipated purchases. Similarly, each Fund (other than the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth and CORE Small Cap Equity Funds) can purchase and sell futures contracts on a specified currency in order to seek to increase total return or to hedge against changes in currency exchange rates. Each Fund (other than the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth and CORE Small Cap Equity Funds) can purchase futures contracts on foreign currency to establish the price in U.S. dollars of a security quoted or denominated in such currency that such Fund has acquired or expects to acquire. The Balanced Fund may also use futures contracts to manage the term structure and duration of its fixed-income securities holdings in accordance with that Fund's investment objectives and policies.
Positions taken in the futures market are not normally held to maturity, but are instead liquidated through offsetting transactions which may result in a profit or a loss. While each Fund will usually liquidate futures contracts on securities or currency in this manner, a Fund may instead make or take delivery of the underlying securities or currency whenever it appears economically advantageous for the Fund to do so. A clearing corporation associated with the exchange on which futures are traded guarantees that, if still open, the sale or purchase will be performed on the settlement date.
Hedging Strategies. Hedging, by use of futures contracts, seeks to establish with more certainty than would otherwise be possible the effective price, rate of return or currency exchange rate on portfolio securities or securities that a Fund owns or proposes to acquire. A Fund may, for example, take a "short" position in the futures market by selling futures contracts to seek to hedge against an anticipated rise in interest rates or a decline in market prices or (other than the CORE Large Cap Value, CORE U.S. Equity, the CORE Large Cap Growth and CORE Small Cap Equity Funds) foreign currency rates that would adversely affect the dollar value of such Fund's portfolio securities. Similarly, each Fund (other than the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth and CORE Small Cap Equity Funds) may sell futures contracts on a currency in which its portfolio securities are quoted or denominated or in one currency to seek to hedge against fluctuations in the value of securities quoted or denominated in a different currency if there is an established historical pattern of correlation between the two currencies. If, in the opinion of the applicable Investment Adviser, there is a sufficient degree of correlation between price trends for a Fund's portfolio securities and futures contracts based on other financial instruments, securities indices or other indices, a Fund may also enter into such futures contracts as part of its hedging strategy. Although under some circumstances prices of securities in a Fund's portfolio may be more or less volatile than prices of such futures contracts, the Investment Advisers will attempt to estimate the extent of this volatility difference based on historical patterns and compensate for any such differential by having a Fund enter into a greater or lesser number of futures contracts or by attempting to achieve only a partial hedge against price changes affecting a Fund's securities portfolio. When hedging of this character is successful, any depreciation in the value of portfolio
securities will be substantially offset by appreciation in the value of the futures position. On the other hand, any unanticipated appreciation in the value of a Fund's portfolio securities would be substantially offset by a decline in the value of the futures position.
On other occasions, a Fund may take a "long" position by purchasing such futures contracts. This may be done, for example, when a Fund anticipates the subsequent purchase of particular securities when it has the necessary cash, but expects the prices or currency exchange rates then available in the applicable market to be less favorable than prices or rates that are currently available.
Options on Futures Contracts. The acquisition of put and call options on futures contracts will give a Fund the right (but not the obligation), for a specified price, to sell or to purchase, respectively, the underlying futures contract at any time during the option period. As the purchaser of an option on a futures contract, a Fund obtains the benefit of the futures position if prices move in a favorable direction but limits its risk of loss in the event of an unfavorable price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium which may partially offset a decline in the value of a Fund's assets. By writing a call option, a Fund becomes obligated, in exchange for the premium, to sell a futures contract if the option is exercised, which may have a value higher than the exercise price. Conversely, the writing of a put option on a futures contract generates a premium, which may partially offset an increase in the price of securities that a Fund intends to purchase. However, a Fund becomes obligated to purchase a futures contract if the option is exercised, which may have a value lower than the exercise price. Thus, the loss incurred by a Fund in writing options on futures is potentially unlimited and may exceed the amount of the premium received. A Fund will incur transaction costs in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its position by selling or purchasing an offsetting option on the same financial instrument. There is no guarantee that such closing transactions can be effected. A Fund's ability to establish and close out positions on such options will be subject to the development and maintenance of a liquid market.
Other Considerations. Each Fund will engage in futures transactions and will engage in related options transactions only for bona fide hedging as defined in the regulations of the CFTC or to seek to increase total return to the extent permitted by such regulations.
In addition to bona fide hedging, a CFTC regulation permits a Fund to engage in other future transactions if the aggregate initial margin and premiums required to establish such positions in futures contracts and options on futures do not exceed 5% of the net asset value of such Fund's portfolio, after taking into account unrealized profits and losses on any such positions and excluding the amount by which such options were in-the-money at the time of purchase. A Fund will engage in transactions in futures contracts and related options transactions only to the extent such transactions are consistent with the requirements of the Internal Revenue Code of 1986 as ammended (the "Code") for maintaining its qualification as a regulated investment company for federal income tax purposes.
Transactions in futures contracts and options on futures involve brokerage costs, require margin deposits and, in certain cases, require the Fund to segregate with its custodian cash or liquid assets in an amount equal to the underlying value of such contracts and options.
While transactions in futures contracts and options on futures may reduce certain risks, such transactions themselves entail certain other risks. Thus, unanticipated changes in interest rates, securities prices or currency exchange rates may result in a poorer overall performance for a Fund than if it had not entered into any futures contracts or options transactions. In the event of an imperfect correlation between a futures position and a portfolio position which is intended to be protected, the desired protection may not be obtained and a Fund may be exposed to risk of loss.
Perfect correlation between a Fund's futures positions and portfolio positions will be difficult to achieve because no futures contracts based on individual equity or corporate fixed-income securities are currently available. In addition, it is not possible for a Fund to hedge fully or perfectly against currency fluctuations affecting the value of securities quoted or denominated in foreign currencies because the value of such securities is likely to fluctuate as a result of independent factors not related to currency fluctuations. The profitability of a Fund's trading in futures depends upon the ability of the Investment Adviser to analyze correctly the futures markets.
Writing Covered Options. Each Fund may write (sell) covered call and put options on any securities in which it may invest. A call option written by a Fund obligates such Fund to sell specified securities to the holder of the option at a specified price if the option is exercised at any time before the expiration date. All call options written by a Fund are covered, which means that such Fund will own the securities subject to the option as long as the option is outstanding or such Fund will use the other methods described below. A Fund's purpose in writing covered call options is to realize greater income than would be realized on portfolio securities transactions alone. However, a Fund may forego the opportunity to profit from an increase in the market price of the underlying security.
A put option written by a Fund would obligate such Fund to purchase specified securities from the option holder at a specified price if the option is exercised at any time before the expiration date. All put options written by a Fund would be covered, which means that such Fund will segregate cash or liquid assets with a value at least equal to the exercise price of the put option or will use the other methods described below. The purpose of writing such options is to generate additional income for the Fund. However, in return for the option premium, each Fund accepts the risk that it may be required to purchase the underlying securities at a price in excess of the securities' market value at the time of purchase.
Call and put options written by a Fund will also be considered to be covered to the extent that the Fund's liabilities under such options are wholly or partially offset by its rights under call and put options purchased by the Fund or by an offsetting forward contract which, by virtue of its exercise price or otherwise, reduces a Fund's net exposure on its written option position.
A Fund may also write (sell) covered call and put options on any securities index consisting of securities in which it may invest. Options on securities indices are similar to options on securities, except that the exercise of securities index options requires cash payments and does not involve the actual purchase or sale of securities. In addition, securities index options are designed to reflect price fluctuations in a group of securities or segment of the securities market rather than price fluctuations in a single security.
A Fund may cover call options on a securities index by owning securities whose price changes are expected to be similar to those of the underlying index, or by having an absolute and immediate right to acquire such securities without additional cash consideration (or for additional cash consideration which has been segregated by the Fund) upon conversion or exchange of other securities in its portfolio. A Fund may cover call and put options on a securities index by segregating cash or liquid assets with a value equal to the exercise price.
A Fund may terminate its obligations under an exchange traded call or put option by purchasing an option identical to the one it has written. Obligations under over-the-counter options may be terminated only by entering into an offsetting transaction with the counterparty to such option. Such purchases are referred to as "closing purchase transactions."
Purchasing Options. Each Fund may purchase put and call options on any securities in which it may invest or options on any securities index composed of securities in which it may invest. A Fund would also be able to enter into closing sale transactions in order to realize gains or minimize losses on options it had purchased.
A Fund may purchase call options in anticipation of an increase in the market value of securities of the type in which it may invest. The purchase of a call option would entitle a Fund, in return for the premium paid, to purchase specified securities at a specified price during the option period. A Fund would ordinarily realize a gain if, during the option period, the value of such securities exceeded the sum of the exercise price, the premium paid and transaction costs; otherwise such a Fund would realize either no gain or a loss on the purchase of the call option.
A Fund may purchase put options in anticipation of a decline in the market value of securities in its portfolio ("protective puts") or in securities in which it may invest. The purchase of a put option would entitle a Fund, in exchange for the premium paid, to sell specified securities at a specified price during the option period. The purchase of protective puts is designed to offset or hedge against a decline in the market value of a Fund's securities. Put options may also be purchased by a Fund for the purpose of affirmatively benefiting from a decline in the price of securities which it does not own. A Fund would ordinarily realize a gain if, during the option period, the value of the underlying securities decreased below the exercise price sufficiently to more than cover the premium and transaction costs; otherwise such a Fund would realize either no gain or a loss on the purchase of the put option. Gains and losses on the purchase of protective put options would tend to be offset by countervailing changes in the value of the underlying portfolio securities.
A Fund would purchase put and call options on securities indices for the same purposes as it would purchase options on individual securities. For a description of options on securities indices, see "Writing Covered Options" above.
Yield Curve Options. The Balanced Fund may enter into options on the yield "spread" or differential between two securities. Such transactions are referred to as "yield curve" options. In contrast to other types of options, a yield curve option is based on the difference between the yields of designated securities, rather than the prices of the individual securities, and is settled through cash payments. Accordingly, a yield curve option is profitable to the holder if this differential widens (in the case of a call) or narrows (in the case of a put), regardless of whether the yields of the underlying securities increase or decrease.
The Balanced Fund may purchase or write yield curve options for the same purposes as other options on securities. For example, the Fund may purchase a call option on the yield spread between two securities if it owns one of the securities and anticipates purchasing the other security and wants to hedge against an adverse change in the yield spread between the two securities. The Balanced Fund may also purchase or write yield curve options in an effort to increase current income if, in the judgment of the Investment Adviser, the Fund will be able to profit from movements in the spread between the yields of the underlying securities. The trading of yield curve options is subject to all of the risks associated with the trading of other types of options. In addition, however, such options present risk of loss even if the yield of one of the underlying securities remains constant, if the spread moves in a direction or to an extent which was not anticipated.
Yield curve options written by the Balanced Fund will be "covered." A call (or put) option is covered if the Fund holds another call (or put) option on the spread between the same two securities and segregates cash or liquid assets sufficient to cover the Fund's net liability under the two options. Therefore, the Fund's liability for such a covered option is generally limited to the difference between the amount of such Fund's liability under the option written by the Fund less the value of the option held by the Fund. Yield curve options may also be covered in such other manner as may be in accordance with the requirements of the counterparty with which the option is traded and applicable laws and regulations. Yield curve options are traded over-the-counter, and because they have been only recently introduced, established trading markets for these options have not yet developed.
Risks Associated with Options Transactions. There is no assurance that a liquid secondary market on an options exchange will exist for any particular exchange-traded option or at any particular time. If a Fund is unable to effect a closing purchase transaction with respect to covered options it has written, the Fund will not be able to sell the underlying securities or dispose of segregated assets until the options expire or are exercised. Similarly, if a Fund is unable to effect a closing sale transaction with respect to options it has purchased, it will have to exercise the options in order to realize any profit and will incur transaction costs upon the purchase or sale of underlying securities.
Reasons for the absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by
an exchange on opening or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or the Options Clearing Corporation may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options on that exchange that had been issued by the Options Clearing Corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms.
Each Fund may purchase and sell both options that are traded on U.S. and foreign exchanges and options traded over-the-counter with broker-dealers who make markets in these options. The ability to terminate over-the-counter options is more limited than with exchange-traded options and may involve the risk that broker-dealers participating in such transactions will not fulfill their obligations.
Transactions by each Fund in options on securities and indices will be subject to limitations established by each of the exchanges, boards of trade or other trading facilities governing the maximum number of options in each class which may be written or purchased by a single investor or group of investors acting in concert. Thus, the number of options which a Fund may write or purchase may be affected by options written or purchased by other investment advisory clients of the Investment Advisers. An exchange, board of trade or other trading facility may order the liquidation of positions found to be in excess of these limits, and it may impose certain other sanctions.
The writing and purchase of options is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The use of options to seek to increase total return involves the risk of loss if the Investment Adviser is incorrect in its expectation of fluctuations in securities prices or interest rates. The successful use of options for hedging purposes also depends in part on the ability of the Investment Adviser to manage future price fluctuations and the degree of correlation between the options and securities markets. If the Investment Adviser is incorrect in its expectation of changes in securities prices or determination of the correlation between the securities indices on which options are written and purchased and the securities in a Fund's investment portfolio, the investment performance of the Fund will be less favorable than it would have been in the absence of such options transactions. The writing of options could increase a Fund's portfolio turnover rate and, therefore, associated brokerage commissions or spreads.
Each Fund may invest in shares of REITs. REITs are pooled investment vehicles which invest primarily in income producing real estate or real estate related loans or interest. REITs are generally classified as equity REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity REITs invest the majority of their assets directly in real property and derive income primarily from the collection of rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive income from the collection of interest payments. Like regulated investment companies such as the Funds, REITs are not taxed on income distributed to shareholders provided they comply with certain requirements under the Code. A Fund will indirectly bear its proportionate share of any expenses paid by REITs in which it invests in addition to the expenses paid by a Fund.
Investing in REITs involves certain unique risks. Equity REITs may be affected by changes in the value of the underlying property owned by such REITs, while mortgage REITs may be affected by the quality of any credit extended. REITs are dependent upon management skills, are not diversified (except to the extent the Code requires), and are subject to the risks of financing projects. REITs are subject to heavy cash flow dependency, default by borrowers, self- liquidation, and the possibilities of failing to qualify for the exemption from tax for distributed income under the Code and failing to maintain their exemptions from the Act. REITs (especially mortgage REITs) are also subject to interest rate risks.
Each Fund may invest in warrants or rights (in addition to those acquired in units or attached to other securities) which entitle the holder to buy equity securities at a specific price for a specific period of time. A Fund will invest in warrants and rights only if such equity securities are deemed appropriate by the Investment Adviser for investment by the Fund. The CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity and CORE International Equity Funds have no present intention of acquiring warrants or rights. Warrants and rights have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.
Each Fund may invest in securities of foreign issuers. The Balanced, Growth and Income, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value, Small Cap Value and Large Cap Value Funds may invest in the aggregate up to 10%, 25%, 10%, 10%, 10%, 25%, 25% and 25%, respectively, of their total assets in foreign securities. The CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Fund will invest primarily in foreign securities under normal circumstances. With respect to the CORE U.S. Equity, CORE Large Cap Growth, CORE Large Cap Value and CORE Small Cap Equity Funds, equity securities of foreign issuers must be traded in the United States.
Investments in foreign securities may offer potential benefits not available from investments solely in U.S. dollar-denominated or quoted securities of domestic issuers. Such benefits may include the opportunity to invest in foreign issuers that appear, in the opinion of the applicable Investment Adviser, to offer the potential for long-term growth of capital and income, the opportunity to invest in foreign countries with economic policies or business cycles different from those of the United States and the opportunity to reduce fluctuations in portfolio value by taking
advantage of foreign stock markets that do not necessarily move in a manner parallel to U.S. markets.
Investing in foreign securities involves certain special risks, including those set forth below, which are not typically associated with investing in U.S. dollar-denominated or quoted securities of U.S. issuers. Investments in foreign securities usually involve currencies of foreign countries. Accordingly, any Fund that invests in foreign securities may be affected favorably or unfavorably by changes in currency rates and in exchange control regulations and may incur costs in connection with conversions between various currencies. The Balanced, Growth and Income, CORE International Equity, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value, International Equity, Small Cap Value, Large Cap Value, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds may be subject to currency exposure independent of their securities positions. To the extent that a Fund is fully invested in foreign securities while also maintaining currency positions, it may be exposed to greater combined risk.
Currency exchange rates may fluctuate significantly over short periods of time. They generally are determined by the forces of supply and demand in the foreign exchange markets and the relative merits of investments in different countries, actual or anticipated changes in interest rates and other complex factors, as seen from an international perspective. Currency exchange rates also can be affected unpredictably by intervention by U.S. or foreign governments or central banks or the failure to intervene or by currency controls or political developments in the United States or abroad.
Since foreign issuers generally are not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to U.S. companies, there may be less publicly available information about a foreign company than about a U.S. company. Volume and liquidity in most foreign securities markets are less than in the United States and securities of many foreign companies are less liquid and more volatile than securities of comparable U.S. companies. Fixed commissions on foreign securities exchanges are generally higher than negotiated commissions on U.S. exchanges, although each Fund endeavors to achieve the most favorable net results on its portfolio transactions. There is generally less government supervision and regulation of foreign securities exchanges, brokers, dealers and listed and unlisted companies than in the United States.
Foreign markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such delays in settlement could result in temporary periods when some of a Fund's assets are uninvested and no return is earned on such assets. The inability of a Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems could result either in losses to the Fund due to subsequent declines in value of the portfolio securities or, if the Fund has entered into a contract to sell the securities, could result in possible liability to the purchaser. In addition, with respect to certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political or social instability, or diplomatic developments which could affect a Fund's investments
in those countries. Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self- sufficiency and balance of payments position.
Each Fund may invest in foreign securities which take the form of sponsored and unsponsored American Depository Receipts ("ADRs") and Global Depository Receipts ("GDRs") and (except for the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth and CORE Small Cap Equity Funds) may also invest in European Depository Receipts ("EDRs") or other similar instruments representing securities of foreign issuers (together, "Depository Receipts").
ADRs represent the right to receive securities of foreign issuers deposited in a domestic bank or a correspondent bank. ADRs are traded on domestic exchanges or in the U.S. over-the-counter market and, generally, are in registered form. EDRs and GDRs are receipts evidencing an arrangement with a non-U.S. bank similar to that for ADRs and are designed for use in the non-U.S. securities markets. EDRs and GDRs are not necessarily quoted in the same currency as the underlying security.
To the extent a Fund acquires Depository Receipts through banks which do not have a contractual relationship with the foreign issuer of the security underlying the Depository Receipts to issue and service such Depository Receipts (unsponsored), there may be an increased possibility that the Fund would not become aware of and be able to respond to corporate actions such as stock splits or rights offerings involving the foreign issuer in a timely manner. In addition, the lack of information may result in inefficiencies in the valuation of such instruments. Investment in Depository Receipts does not eliminate all the risks inherent in investing in securities of non-U.S. issuers. The market value of Depository Receipts is dependent upon the market value of the underlying securities and fluctuations in the relative value of the currencies in which the Depository receipts and the underlying securities are quoted. However, by investing in Depository Receipts, such as ADRs, that are quoted in U.S. dollars, a Fund may avoid currency risks during the settlement period for purchases and sales.
As described more fully below, each Fund (except the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth and CORE Small Cap Equity Funds) may invest in countries with emerging economies or securities markets. Political and economic structures in many of such countries may be undergoing significant evolution and rapid development, and such countries may lack the social, political and economic stability characteristic of more developed countries. Certain of such countries may have in the past failed to recognize private property rights and have at times nationalized or expropriated the assets of private companies. As a result, the risks described above, including the risks of nationalization or expropriation of assets, may be heightened. See "Investing in Emerging Markets, including Asia and Eastern Europe," below.
Investing in Emerging Countries, including Asia and Eastern Europe. CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Asia Growth and Emerging Markets Equity Funds are intended for long-term investors who can accept the risks associated with investing primarily in equity and equity-related securities of foreign issuers, including emerging country issuers, as well as the risks associated with investments
quoted or denominated in foreign currencies. The Balanced, Growth and Income, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value and Small Cap Value Funds may invest, to a lesser extent, in equity and equity-related securities of foreign issuers, including emerging country issuers.
Each of the securities markets of the emerging countries is less liquid and subject to greater price volatility and has a smaller market capitalization than the U.S. securities markets. Issuers and securities markets in such countries are not subject to as extensive and frequent accounting, financial and other reporting requirements or as comprehensive government regulations as are issuers and securities markets in the U.S. In particular, the assets and profits appearing on the financial statements of emerging country issuers may not reflect their financial position or results of operations in the same manner as financial statements for U.S. issuers. Substantially less information may be publicly available about emerging country issuers than is available about issuers in the United States.
Emerging country securities markets are typically marked by a high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as a high concentration of ownership of such securities by a limited number of investors. The markets for securities in certain emerging countries are in the earliest stages of their development. Even the markets for relatively widely traded securities in emerging countries may not be able to absorb, without price disruptions, a significant increase in trading volume or trades of a size customarily undertaken by institutional investors in the securities markets of developed countries. The limited size of many of these securities markets can cause prices to be erratic for reasons apart from factors that affect the soundness and competitiveness of the securities issuers. For example, prices may be unduly influenced by traders who control large positions in these markets. Additionally, market making and arbitrage activities are generally less extensive in such markets, which may contribute to increased volatility and reduced liquidity of such markets. The limited liquidity of emerging country markets may also affect a Fund's ability to accurately value its portfolio securities or to acquire or dispose of securities at the price and time it wishes to do so or in order to meet redemption requests.
Transaction costs, including brokerage commissions or dealer mark-ups, in emerging countries may be higher than in the United States and other developed securities markets. In addition, existing laws and regulations are often inconsistently applied. As legal systems in emerging countries develop, foreign investors may be adversely affected by new or amended laws and regulations. In circumstances where adequate laws exist, it may not be possible to obtain swift and equitable enforcement of the law.
Foreign investment in the securities markets of certain emerging countries is restricted or controlled to varying degrees. These restrictions may limit a Fund's investment in certain emerging countries and may increase the expenses of the Fund. Certain emerging countries require governmental approval prior to investments by foreign persons or limit investment by foreign persons to only a specified percentage of an issuer's outstanding securities or a specific class of securities which may have less advantageous terms (including price) than securities of the company available for purchase by nationals. In addition, the repatriation of both investment income and capital from several of the emerging countries is subject to restrictions which require governmental
consents or prohibit repatriation entirely for a period of time. Even where there is no outright restriction on repatriation of capital, the mechanics of repatriation may affect certain aspects of the operation of a Fund. A Fund may be required to establish special custodial or other arrangements before investing in certain emerging countries.
Each of the emerging countries may be subject to a substantially greater
degree of economic, political and social instability and disruption than is the
case in the United States, Japan and most Western European countries. This
instability may result from, among other things, the following: (i)
authoritarian governments or military involvement in political and economic
decision making, including changes or attempted changes in governments through
extra-constitutional means; (ii) popular unrest associated with demands for
improved political, economic or social conditions; (iii) internal insurgencies;
(iv) hostile relations with neighboring countries; (v) ethnic, religious and
racial disaffection or conflict; and (vi) the absence of developed legal
structures governing foreign private investments and private property. Such
economic, political and social instability could disrupt the principal financial
markets in which the Funds may invest and adversely affect the value of the
Funds' assets. A Fund's investments could in the future be adversely affected by
any increase in taxes or by political, economic or diplomatic developments.
Certain Funds may seek investment opportunities within former "east bloc"
countries in Eastern Europe. See "Fund Investment Objectives and Strategies" in
the prospectus. All or a substantial portion of such investments may be
considered "not readily marketable" for purposes of the limitation set forth
below. For example, most Eastern European countries have had a centrally
planned, socialist economy since shortly after World War II. The governments of
a number of Eastern European countries currently are implementing reforms
directed at political and economic liberalization, including efforts to
decentralize the economic decision-making process and move towards a market
economy. However, business entities in many Eastern European countries do not
have any recent history of operating in a market-oriented economy, and the
ultimate impact of Eastern European countries' attempts to move toward more
market-oriented economies is currently unclear. In addition, any change in the
leadership or policies of Eastern European countries may halt the expansion of
or reverse the liberalization of foreign investment policies now occurring and
adversely affect existing investment opportunities.
The economies of emerging countries may differ unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, capital reinvestment, resources, self-sufficiency and balance of payments. Many emerging countries have experienced in the past, and continue to experience, high rates of inflation. In certain countries inflation has at times accelerated rapidly to hyperinflationary levels, creating a negative interest rate environment and sharply eroding the value of outstanding financial assets in those countries. The economies of many emerging countries are heavily dependent upon international trade and are accordingly affected by protective trade barriers and the economic conditions of their trading partners. In addition, the economies of some emerging countries are vulnerable to weakness in world prices for their commodity exports.
A Fund's income and, in some cases, capital gains from foreign stocks and securities will be subject to applicable taxation in certain of the countries in which it invests, and treaties between the U.S. and such countries may not be available in some cases to reduce the otherwise applicable tax rates. See "Taxation."
Foreign markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such delays in settlement could result in temporary periods when a portion of the assets of a Fund remain uninvested and no return is earned on such assets. The inability of a Fund to make intended security purchases or sales due to settlement problems could result either in losses to the Fund due to subsequent declines in value of the portfolio securities or, if the Fund has entered into a contract to sell the securities, could result in possible liability to the purchaser.
Investing in Japan. The Japanese Equity Fund invests in the equity securities of Japanese companies. Japan's economy, the second-largest in the world, has grown substantially over the last three decades. The boom in Japan's equity and property markets during the expansion of the late 1980's supported high rates of investment and consumer spending on durable goods, but both of these components of demand have since retreated sharply following the decline in asset prices. Japan's economic growth in the 1990's has been substantially below the levels of earlier decades. Its economy has drifted between modest growth and recession. Profits have fallen sharply, unemployment has reached a historical high and consumer confidence is low. The banking sector continues to suffer from non-performing loans and this economy is subject to deflationary pressures. Numerous discount-rate cuts since its peak in 1991, a succession of fiscal stimulus packages, support plans for the debt-burdened financial system and spending for reconstruction following the Kobe earthquake may help to contain the recessionary forces, but substantial uncertainties remain. In calendar year 1998, Japan's gross national product contracted by 2.8%, its worse performance in the post-war period.
In addition to the cyclical downturn, Japan is suffering through structural adjustments. Like the Europeans, the Japanese have seen a deterioration of their competitiveness due to high wages, a strong currency and structural rigidities. Finally, Japan is reforming its political process and deregulating its economy. This has brought about turmoil, uncertainty and a crisis of confidence.
While the Japanese governmental system itself seems stable, the dynamics of the country's politics have been unpredictable in recent years. The economic crisis of 1990-92 brought the downfall of the conservative Liberal Democratic Party, which had ruled since 1955. Since then, the country has seen a series of unstable multi-party coalitions and several prime ministers come and go, because of politics as well as personal scandals. With the pending formation of a three- party coalition government, the political environment appears to be in the process of stabilizing. However, should the political instability continue, efforts to establish effective economic and fiscal policies may be hampered. Future political developments may lead to changes in policy that might adversely affect the Funds' investments.
Japan's heavy dependence on international trade has been adversely affected by trade tariffs and other protectionist measures as well as the economic condition of its trading partners. While Japan subsidizes its agricultural industry, only 19% of its land is suitable for cultivation and it is only 50% self-sufficient in food production. Accordingly, it is highly dependent on large imports of wheat, sorghum and soybeans. In addition,the manufacturing industry, its most important economic sector, depends on imported raw materials and fuels, including iron ore, copper, oil and
many forest products. Japan's high volume of exports, such as automobiles, machine tools and semiconductors, has caused trade tensions, particularly with the United States. Some trade agreements, however, have been implemented to reduce these tensions. The relaxing of official and de facto barriers to imports, or hardships created by any pressures brought by trading partners, could adversely affect Japan's economy. A substantial rise in world oil or commodity prices could also have a negative affect. The Japanese Yen has fluctuated widely over the last year. As of September 1999, the Yen had restrengthened. The strength of the yen itself may prove an impediment to strong continued exports and economic recovery, because it makes Japanese goods sold in other countries more expensive and reduces the value of foreign earnings repatriated to Japan. Because the Japanese economy is so dependent on exports, any fall-off in exports may be seen as a sign of economic weakness, which may adversely affect the market.
Geologically, Japan is located in a volatile area of the world, and has historically been vulnerable to earthquakes, volcanoes and other natural disasters. As demonstrated by the Kobe earthquake in January of 1995, in which 5,000 people were killed and billions of dollars of damage was sustained, these natural disasters can be significant enough to affect the country's economy.
Forward Foreign Currency Exchange Contracts. The Growth and Income, CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, Capital Growth, Strategic Growth, Growth Opportunities, Mid Cap Value, Small Cap Value and Large Cap Value Funds may enter into forward foreign currency exchange contracts for hedging purposes and to seek to protect against anticipated changes in future foreign currency exchange rates. The Balanced, CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds may enter into forward foreign currency exchange contracts for hedging purposes and to seek to increase total return. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded in the interbank market between currency traders (usually large commercial banks) and their customers. A forward contract generally has no deposit requirement, and no commissions are generally charged at any stage for trades.
At the maturity of a forward contract a Fund may either accept or make delivery of the currency specified in the contract or, at or prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with respect to forward contracts are often, but not always, effected with the currency trader who is a party to the original forward contract.
A Fund may enter into forward foreign currency exchange contracts in several circumstances. First, when a Fund enters into a contract for the purchase or sale of a security denominated or quoted in a foreign currency, or when a Fund anticipates the receipt in a foreign currency of dividend or interest payments on such a security which it holds, the Fund may desire to "lock in" the U.S. dollar price of the security or the U.S. dollar equivalent of such dividend or interest payment, as the case may be. By entering into a forward contract for the purchase or sale, for a fixed amount of dollars, of the amount of foreign currency involved in the underlying transactions, the Fund will attempt to protect itself against an adverse change in the relationship
between the U.S. dollar and the subject foreign currency during the period between the date on which the security is purchased or sold, or on which the dividend or interest payment is declared, and the date on which such payments are made or received.
Additionally, when the Investment Adviser believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may enter into a forward contract to sell, for a fixed amount of U.S. dollars, the amount of foreign currency approximating the value of some or all of such Fund's portfolio securities quoted or denominated in such foreign currency. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. Using forward contracts to protect the value of a Fund's portfolio securities against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange, which a Fund can achieve at some future point in time. The precise projection of short-term currency market movements is not possible, and short-term hedging provides a means of fixing the U.S. dollar value of only a portion of a Fund's foreign assets.
The Balanced, CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds may engage in cross-hedging by using forward contracts in one currency to hedge against fluctuations in the value of securities quoted or denominated in a different currency if GSAM or GSAMI determines that there is a pattern of correlation between the two currencies.
The Balanced, CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds may also enter into forward contracts to seek to increase total return. Unless otherwise covered in accordance with applicable regulations, cash or liquid assets of a Fund will be segregated in an amount equal to the value of the Fund's total assets committed to the consummation of forward foreign currency exchange contracts. The segregated assets will be marked-to-market on a daily basis. If the value of the segregated assets declines, additional cash or liquid assets will be segregated on a daily basis so that the value of the assets will equal the amount of a Fund's commitments with respect to such contracts. Although the contracts are not presently regulated by the CFTC, the CFTC may in the future assert authority to regulate these contracts. If this happens, a Fund's ability to utilize forward foreign currency exchange contracts may be restricted.
While a Fund may enter into forward contracts to reduce currency exchange rate risks, transactions in such contracts involve certain other risks. Thus, while the Fund may benefit from such transactions, unanticipated changes in currency prices may result in a poorer overall performance for the Fund than if it had not engaged in any such transactions. Moreover, there may be imperfect correlation between a Fund's portfolio holdings of securities quoted or denominated in a particular currency and forward contracts entered into by such Fund. Such imperfect correlation may cause a Fund to sustain losses which will prevent the Fund from achieving a complete hedge or expose the Fund to risk of foreign exchange loss.
Markets for trading foreign forward currency contracts offer less protection against defaults than is available when trading in currency instruments on an exchange. Forward contracts are subject to the risk that the counterparty to such contract will default on its obligations. Since a forward foreign currency exchange contract is not guaranteed by an exchange or clearinghouse, a default on the contract would deprive a Fund of unrealized profits, transaction costs or the benefits of a currency hedge or force the Fund to cover its purchase or sale commitments, if any, at the current market price. A Fund will not enter into forward foreign currency exchange contracts, currency swaps or other privately negotiated currency instruments unless the credit quality of the unsecured senior debt or the claims-paying ability of the counterparty is considered to be investment grade by the Investment Adviser. To the extent that a substantial portion of a Fund's total assets, adjusted to reflect the Fund's net position after giving effect to currency transactions, is denominated or quoted in the currencies of foreign countries, the Fund will be more susceptible to the risk of adverse economic and political developments within those countries.
Writing and Purchasing Currency Call and Put Options. Each Fund may, to the extent that it invests in foreign securities, write and purchase put and call options on foreign currencies for the purpose of protecting against declines in the U.S. dollar value of foreign portfolio securities and against increases in the U.S. dollar cost of foreign securities to be acquired. As with other kinds of option transactions, however, the writing of an option on foreign currency will constitute only a partial hedge, up to the amount of the premium received. If and when a Fund seeks to close out an option, the Fund could be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. The purchase of an option on foreign currency may constitute an effective hedge against exchange rate fluctuations; however, in the event of exchange rate movements adverse to a Fund's position, the Fund may forfeit the entire amount of the premium plus related transaction costs. Options on foreign currencies to be written or purchased by a Fund will be traded on U.S. and foreign exchanges or over-the-counter.
Options on currency may be used for either hedging or cross-hedging purposes, which involves writing or purchasing options on one currency to hedge against changes in exchange rates for a different currency with a pattern of correlation, or to seek to increase total return when the Investment Adviser anticipates that the currency will appreciate or depreciate in value, but the securities quoted or denominated in that currency do not present attractive investment opportunities and are not included in the Fund's portfolio.
A call option written by a Fund obligates a Fund to sell a specified currency to the holder of the option at a specified price if the option is exercised at any time before the expiration date. A put option written by a Fund would obligate a Fund to purchase a specified currency from the option holder at a specified price if the option is exercised at any time before the expiration date. The writing of currency options involves a risk that a Fund will, upon exercise of the option, be required to sell currency subject to a call at a price that is less than the currency's market value or be required to purchase currency subject to a put at a price that exceeds the currency's market value. For a description of how to cover written put and call options, see "Writing Covered Options" above.
A Fund may terminate its obligations under a call or put option by purchasing an option identical to the one it has written. Such purchases are referred to as "closing purchase transactions."
A Fund may enter into closing sale transactions in order to realize gains or minimize losses on options purchased by the Fund.
A Fund would normally purchase call options on foreign currency in anticipation of an increase in the U.S. dollar value of currency in which securities to be acquired by a Fund are quoted or denominated. The purchase of a call option would entitle the Fund, in return for the premium paid, to purchase specified currency at a specified price during the option period. A Fund would ordinarily realize a gain if, during the option period, the value of such currency exceeded the sum of the exercise price, the premium paid and transaction costs; otherwise the Fund would realize either no gain or a loss on the purchase of the call option.
A Fund would normally purchase put options in anticipation of a decline in the U.S. dollar value of currency in which securities in its portfolio are quoted or denominated ("protective puts"). The purchase of a put option would entitle a Fund, in exchange for the premium paid, to sell specified currency at a specified price during the option period. The purchase of protective puts is designed merely to offset or hedge against a decline in the dollar value of a Fund's portfolio securities due to currency exchange rate fluctuations. A Fund would ordinarily realize a gain if, during the option period, the value of the underlying currency decreased below the exercise price sufficiently to more than cover the premium and transaction costs; otherwise the Fund would realize either no gain or a loss on the purchase of the put option. Gains and losses on the purchase of protective put options would tend to be offset by countervailing changes in the value of underlying currency or portfolio securities.
In addition to using options for the hedging purposes described above, the Funds may use options on currency to seek to increase total return. The Funds may write (sell) covered put and call options on any currency in order to realize greater income than would be realized on portfolio securities transactions alone. However, in writing covered call options for additional income, the Funds may forego the opportunity to profit from an increase in the market value of the underlying currency. Also, when writing put options, the Funds accept, in return for the option premium, the risk that they may be required to purchase the underlying currency at a price in excess of the currency's market value at the time of purchase.
Special Risks Associated With Options on Currency. An exchange-traded options position may be closed out only on an options exchange, which provides a secondary market for an option of the same series. Although a Fund will generally purchase or write only those options for which there appears to be an active secondary market, there is no assurance that a liquid secondary market on an exchange will exist for any particular option, or at any particular time. For some options no secondary market on an exchange may exist. In such event, it might not be possible to effect closing transactions in particular options, with the result that a Fund would have to exercise its options in order to realize any profit and would incur transaction costs upon the sale of underlying securities pursuant to the exercise of put options. If a Fund as a covered call option writer is unable to effect a closing purchase transaction in a secondary market, it will not be able to sell the underlying currency (or security quoted or denominated in that currency) until the option expires or it delivers the underlying currency upon exercise.
There is no assurance that higher than anticipated trading activity or other unforeseen events might not, at times, render certain of the facilities of the Options Clearing Corporation inadequate, and thereby result in the institution by an exchange of special procedures which may interfere with the timely execution of customers' orders.
A Fund may purchase and write over-the-counter options to the extent consistent with its limitation on investments in illiquid securities. Trading in over-the-counter options is subject to the risk that the other party will be unable or unwilling to close out options purchased or written by a Fund.
The amount of the premiums, which a Fund may pay or receive, may be adversely affected as new or existing institutions, including other investment companies, engage in or increase their option purchasing and writing activities.
The Balanced, CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds may enter into currency swaps for both hedging purposes and to seek to increase total return. In addition, the Balanced Fund may enter into mortgage, credit, index and interest rate swaps and other interest rate swap arrangements such as rate caps, floors and collars, for hedging purposes or to seek to increase total return. Currency swaps involve the exchange by a Fund with another party of their respective rights to make or receive payments in specified currencies. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed rate payments for floating rate payments. Mortgage swaps are similar to interest rate swaps in that they represent commitments to pay and receive interest. The notional principal amount, however, is tied to a reference pool or pools of mortgages. Index swaps involve the exchange by a Fund with another party of the respective amounts payable with respect to a notional principal amount at interest rates equal to two specified indices. Credit swaps involve the receipt of floating or fixed rate payments in exchange for assuming potential credit losses of an underlying security. Credit swaps give one party to a transaction the right to dispose of or acquire an asset (or group of assets), or the right to receive or make a payment for the other party, upon the occurrence of specified credit events. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payment of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling the interest rate floor. An interest rate collar is the combination of a cap and a floor that preserves a certain return within a predetermined range of interest rates.
A Fund will enter into interest rate, mortgage and index swaps only on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Interest rate, index and mortgage swaps do not involve the delivery of securities, other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate, index and mortgage swaps is limited to the net amount of interest
payments that the Fund is contractually obligated to make. If the other party to an interest rate, index or mortgage swap defaults, the Fund's risk of loss consists of the net amount of interest payments that the Fund is contractually entitled to receive. In contrast, currency swaps usually involve the delivery of a gross payment stream in one designated currency in exchange for the gross payment stream in another designated currency. Therefore, the entire payment stream under a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations. To the extent that the Fund's potential exposure in a transaction involving a swap or an interest rate floor, cap or collar is covered by the segregation of cash or liquid assets or otherwise, the Funds and the Investment Advisers believe that swaps do not constitute senior securities under the Act and, accordingly, will not treat them as being subject to a Fund's borrowing restrictions.
A Fund will not enter into transactions involving swaps, caps, floors or collars unless the unsecured commercial paper, senior debt or claims paying ability of the other party thereto is considered to be investment grade by the Investment Adviser.
The use of interest rate, mortgage, index, credit and currency swaps, as well as interest rate caps, floors and collars, is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. If an Investment Adviser is incorrect in its forecasts of market values, interest rates and currency exchange rates, the investment performance of a Fund would be less favorable than it would have been if this investment technique were not used. The Investment Advisers, under the supervision of the Board of Trustees, are responsible for determining and monitoring the liquidity of the Funds' transactions in swaps, caps, floors and collars.
Each Fund may invest in convertible securities. Convertible securities include corporate notes or preferred stock but are ordinarily long-term debt obligation of the issuer convertible at a stated exchange rate into common stock of the issuer. As with all debt securities, the market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. Convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar quality. However, when the market price of the common stock underlying a convertible security exceeds the conversion price, the price of the convertible security tends to reflect the value of the underlying common stock. As the market price of the underlying common stock declines, the convertible security tends to trade increasingly on a yield basis, and thus may not depreciate to the same extent as the underlying common stock. Convertible securities rank senior to common stocks in an issuer's capital structure and consequently entail less risk than the issuer's common stock. In evaluating a convertible security, the Investment Adviser will give primary emphasis to the attractiveness of the underlying common stock. Convertible debt securities are equity investments for purposes of each Fund's investment policies.
Each Fund may invest in preferred securities. Unlike debt securities, the obligations of an issuer of preferred stock, including dividend and other payment obligations, may not typically be
accelerated by the holders of preferred stock on the occurrence of an event of default (such as a covenant default or filing of a bankruptcy petition) or other non-compliance by the issuer with the terms of the preferred stock. Often, however, on the occurrence of any such event of default or non-compliance by the issuer, preferred stockholders will be entitled to gain representation on the issuer's board of directors or increase their existing board representation. In addition, preferred stockholders may be granted voting rights with respect to certain issues on the occurrence of any event of default.
Each Fund may enter into equity swap contracts to invest in a market without owning or taking physical custody of securities in circumstances in which direct investment is restricted for legal reasons or is otherwise impracticable. Equity swaps may also be used for hedging purposes or to seek to increase total return. The counterparty to an equity swap contract will typically be a bank, investment banking firm or broker/dealer. Equity swap contracts may be structured in different ways. For example, a counterparty may agree to pay the Fund the amount, if any, by which the notional amount of the equity swap contract would have increased in value had it been invested in the particular stocks (or an index of stocks), plus the dividends that would have been received on those stocks. In these cases, the Fund may agree to pay to the counterparty a floating rate of interest on the notional amount of the equity swap contract plus the amount, if any, by which that notional amount would have decreased in value had it been invested in such stocks. Therefore, the return to the Fund on the equity swap contract should be the gain or loss on the notional amount plus dividends on the stocks less the interest paid by the Fund on the notional amount. In other cases, the counterparty and the Fund may each agree to pay the other the difference between the relative investment performances that would have been achieved if the notional amount of the equity swap contract had been invested in different stocks (or indices of stocks).
A Fund will enter into equity swaps only on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Payments may be made at the conclusion of an equity swap contract or periodically during its term. Equity swaps do not involve the delivery of securities or other underlying assets. Accordingly, the risk of loss with respect to equity swaps is limited to the net amount of payments that a Fund is contractually obligated to make. If the other party to an equity swap defaults, a Fund's risk of loss consists of the net amount of payments that such Fund is contractually entitled to receive, if any. Inasmuch as these transactions are entered into for hedging purposes or are offset by segregated cash or liquid assets to cover the Funds' potential exposure, the Funds and their Investment Advisers believe that transactions do not constitute senior securities under the Act and, accordingly, will not treat them as being subject to a Fund's borrowing restrictions.
A Fund will not enter into swap transactions unless the unsecured commercial paper, senior debt or claims paying ability of the other party thereto is considered to be investment grade by the Investment Adviser.
Each Fund may lend portfolio securities. Under present regulatory policies, such loans may be made to institutions, such as brokers or dealers and would be required to be secured continuously by collateral in cash, cash equivalents, letters of credit or U.S. Government securities maintained on a current basis at an amount at least equal to the market value of the securities loaned. A Fund would be required to have the right to call a loan and obtain the securities loaned at any time on five days' notice. For the duration of a loan, a Fund would continue to receive the equivalent of the interest or dividends paid by the issuer on the securities loaned and would also receive compensation from investment of the collateral. A Fund would not have the right to vote any securities having voting rights during the existence of the loan, but a Fund would call the loan in anticipation of an important vote to be taken among holders of the securities or the giving or withholding of their consent on a material matter affecting the investment. As with other extensions of credit there are risks of delay in recovering, or even loss of rights in, the collateral should the borrower of the securities fail financially. However, the loans would be made only to firms deemed by the Investment Advisers to be of good standing, and when, in the judgment of the Investment Advisers, the consideration which can be earned currently from securities loans of this type justifies the attendant risk. If the Investment Advisers determine to make securities loans, it is intended that the value of the securities loaned would not exceed one-third of the value of the total assets of a Fund (including the loan collateral).
Cash received as collateral for securities lending transactions may be invested in other investment eligible securities. Investing the collateral subjects it to market depreciation or appreciation, and the Fund is responsible for any loss that may result from its investment of the borrowed collateral.
Each Fund may purchase securities on a when-issued basis or purchase or sell securities on a forward commitment basis. These transactions involve a commitment by a Fund to purchase or sell securities at a future date. The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchases and forward commitment transactions are negotiated directly with the other party, and such commitments are not traded on exchanges. A Fund will generally purchase securities on a when-issued basis or purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, a Fund may dispose of or negotiate a commitment after entering into it. A Fund may realize a capital gain or loss in connection with these transactions. For purposes of determining a Fund's duration, the maturity of when-issued or forward commitment securities will be calculated from the commitment date. A Fund is generally required to segregate until three days prior to the settlement date, cash and liquid assets in an amount sufficient to meet the purchase price unless the Fund's obligations are otherwise covered. Securities purchased or sold on a when-issued or forward commitment basis involve a risk of loss if the value of the security to be purchased declines prior to the settlement date or if the value of the security to be sold increases prior to the settlement date.
Each Fund may invest in companies (including predecessors) which have operated less than three years. The securities of such companies may have limited liquidity, which can result in their being priced higher or lower than might otherwise be the case. In addition, investments in unseasoned companies are more speculative and entail greater risk than do investments in companies with an established operating record.
A Fund reserves the right to invest up to 10% of its total assets in the securities of all investment companies (including SPDRs and Webs) but may not acquire more than 3% of the voting securities of any other investment company. Pursuant to an exemptive order obtained from the SEC, the Funds may invest in money market funds for which an Investment Adviser or any of its affiliates serves as investment adviser. A Fund will indirectly bear its proportionate share of any management fees and other expenses paid by investment companies in which it invests in addition to the advisory and administration fees (and other expenses) paid by the Fund. However, to the extent that the Fund invests in a money market fund for which an Investment Adviser or any of its affiliates acts as Investment Adviser, the advisory and administration fees payable by the Fund to an Investment Adviser will be reduced by an amount equal to the Fund's proportionate share of the advisory and administration fees paid by such money market fund to the Investment Adviser.
SPDRs are interests in a unit investment trust ("UIT") that may be obtained
from the UIT or purchased in the secondary market (SPDRs are listed on the
American Stock Exchange). There is a 5% limit based on total assets on
investments by any one Fund in SPDRs. The UIT will issue SPDRs in aggregations
known as "Creation Units" in exchange for a "Portfolio Deposit" consisting of
(a) a portfolio of securities substantially similar to the component securities
("Index Securities") of the Standard & Poor's 500 Composite Stock Price Index
(the "S&P Index"), (b) a cash payment equal to a pro rata portion of the
dividends accrued on the UIT's portfolio securities since the last dividend
payment by the UIT, net of expenses and liabilities, and (c) a cash payment or
credit ("Balancing Amount") designed to equalize the net asset value of the S&P
Index and the net asset value of a Portfolio Deposit.
SPDRs are not individually redeemable, except upon termination of the UIT. To redeem, the Portfolio must accumulate enough SPDRs to reconstitute a Creation Unit. The liquidity of small holdings of SPDRs, therefore, will depend upon the existence of a secondary market. Upon redemption of a Creation Unit, the Portfolio will receive Index Securities and cash identical to the Portfolio Deposit required of an investor wishing to purchase a Creation Unit that day.
The price of SPDRs is derived from and based upon the securities held by the UIT. Accordingly, the level of risk involved in the purchase or sale of a SPDR is similar to the risk involved in the purchase or sale of traditional common stock, with the exception that the pricing mechanism for SPDRs is based on a basket of stocks. Disruptions in the markets for the securities underlying SPDRs purchased or sold by the Funds could result in losses on SPDRs.
Each Fund (other than the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth and CORE Small Cap Equity Funds) may also purchase shares of investment companies investing primarily in foreign securities, including "country funds." Country funds have portfolios consisting primarily of securities of issuers located in one foreign country or region. Each Fund may, subject to the limitations stated above, invest in World Equity Benchmark Shares ("WEBS") and similar securities that invest in securities included in foreign securities indices.
Each Fund may enter into repurchase agreements with dealers in U.S. Government securities and member banks of the Federal Reserve System which furnish collateral at least equal in value or market price to the amount of their repurchase obligation. CORE International Equity, International Equity, Japanese Equity, European Equity, International Small Cap, Emerging Markets Equity, Asia Growth and Balanced Funds may also enter into repurchase agreements involving certain foreign government securities. A repurchase agreement is an arrangement under which a Fund purchases securities and the seller agrees to repurchase the securities within a particular time and at a specified price. Custody of the securities is maintained by a Fund's custodian (or subcustodian). The repurchase price may be higher than the purchase price, the difference being income to a Fund, or the purchase and repurchase prices may be the same, with interest at a stated rate due to a Fund together with the repurchase price on repurchase. In either case, the income to a Fund is unrelated to the interest rate on the security subject to the repurchase agreement.
For purposes of the Act and generally for tax purposes, a repurchase agreement is deemed to be a loan from a Fund to the seller of the security. For other purposes, it is not always clear whether a court would consider the security purchased by a Fund subject to a repurchase agreement as being owned by a Fund or as being collateral for a loan by a Fund to the seller. In the event of commencement of bankruptcy or insolvency proceedings with respect to the seller of the security before repurchase of the security under a repurchase agreement, a Fund may encounter delay and incur costs before being able to sell the security. Such a delay may involve loss of interest or a decline in price of the security. If the court characterizes the transaction as a loan and a Fund has not perfected a security interest in the security, a Fund may be required to return the security to the seller's estate and be treated as an unsecured creditor of the seller. As an unsecured creditor, a Fund would be at risk of losing some or all of the principal and interest involved in the transaction.
The Investment Advisers seek to minimize the risk of loss from repurchase agreements by analyzing the creditworthiness of the obligor, in this case the seller of the security. Apart from the risk of bankruptcy or insolvency proceedings, there is also the risk that the seller may fail to repurchase the security. However, if the market value of the security subject to the repurchase agreement becomes less than the repurchase price (including accrued interest), a Fund will direct the seller of the security to deliver additional securities so that the market value of all securities subject to the repurchase agreement equals or exceeds the repurchase price. Certain repurchase agreements which provide for settlement in more than seven days can be liquidated before the nominal fixed term on seven days or less notice. Such repurchase agreements will be regarded as liquid instruments.
In addition, a Fund, together with other registered investment companies having advisory agreements with the Investment Advisers or their affiliates, may transfer uninvested cash balances into a single joint account, the daily aggregate balance of which will be invested in one or more repurchase agreements.
A Fund may borrow money by entering into transactions called reverse repurchase agreements. Under these arrangements, the Fund will sell portfolio securities to dealers in U.S. Government Securities or members of the Federal Reserve System, with an agreement to repurchase the security on an agreed date, price and interest payment. Reverse repurchase agreements involve the possible risk that the value of portfolio securities the Fund relinquishes may decline below the price the Fund must pay when the transaction closes. Borrowings may magnify the potential for gain or loss on amounts invested resulting in an increase in the speculative character of the Fund's outstanding shares.
When a Fund enters into a reverse repurchase agreement, it places in a separate custodial account either liquid assets or other high grade debt securities that have a value equal to or greater than the repurchase price. The account is then continuously monitored to make sure that an appropriate value is maintained. Reverse repurchase agreements are considered to be borrowings under the Act.
When the Balanced Fund enters into a mortgage dollar roll, it will segregate cash or liquid assets in an amount equal to the forward purchase price until the settlement date.
Each Fund may engage in active short-term trading to benefit from yield disparities among different issues of securities or among the markets for equity securities, or for other reasons. It is anticipated that the portfolio turnover rate of each Fund will vary from year to year.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the Trust as fundamental policies that cannot be changed without the affirmative vote of the holders of a majority (as defined in the Act) of the outstanding voting securities of the affected Fund. The investment objective of each Fund and all other investment policies or practices of each Fund are considered by the Trust not to be fundamental and accordingly may be changed without shareholder approval. See "Investment Objectives and Policies" in the Prospectuses. For purposes of the Act, "majority" means the lesser of (a) 67% or more of the shares of the Trust or a Fund present at a meeting, if the holders of more than 50% of the outstanding shares of the Trust or a Fund are present or represented by proxy, or (b) more than 50% of the shares of the Trust or a Fund. For purposes of the following limitations, any limitation which involves a maximum percentage shall not be considered violated unless an excess over the percentage occurs immediately after, and is caused
by, an acquisition or encumbrance of securities or assets of, or borrowings by, a Fund. With respect to the Funds' fundamental investment restriction no. 3, asset coverage of at least 300% (as defined in the Act), inclusive of any amounts borrowed, must be maintained at all times.
A Fund may not:
(1) Make any investment inconsistent with the Fund's classification as a diversified company under the Investment Company Act of 1940, as amended (the "Act"). This restriction does not, however, apply to any Fund classified as a non-diversified company under the Act.
(2) Invest 25% or more of its total assets in the securities of one or more issuers conducting their principal business activities in the same industry (excluding the U.S. Government or any of its agencies or instrumentalities).
(3) Borrow money, except (a) the Fund may borrow from banks (as defined in the Act) or through reverse repurchase agreements in amounts up to 33-1/3% of its total assets (including the amount borrowed), (b) the Fund may, to the extent permitted by applicable law, borrow up to an additional 5% of its total assets for temporary purposes, (c) the Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities, (d) the Fund may purchase securities on margin to the extent permitted by applicable law and (e) the Fund may engage in transactions in mortgage dollar rolls which are accounted for as financings.
(4) Make loans, except through (a) the purchase of debt obligations
in accordance with the Fund's investment objective and policies,
(b) repurchase agreements with banks, brokers, dealers and other
financial institutions, and (c) loans of securities as permitted
by applicable law.
(5) Underwrite securities issued by others, except to the extent that the sale of portfolio securities by the Fund may be deemed to be an underwriting.
(6) Purchase, hold or deal in real estate, although a Fund may purchase and sell securities that are secured by real estate or interests therein, securities of real estate investment trusts and mortgage-related securities and may hold and sell real estate acquired by a Fund as a result of the ownership of securities.
(7) Invest in commodities or commodity contracts, except that the Fund may invest in currency and financial instruments and contracts that are commodities or commodity contracts.
(8) Issue senior securities to the extent such issuance would violate applicable law.
Each Fund may, notwithstanding any other fundamental investment restriction or policy, invest some or all of its assets in a single open-end investment company or series thereof with substantially the same investment objective, restrictions and policies as the Fund.
In addition to the fundamental policies mentioned above, the Trustees have adopted the following non-fundamental policies which can be changed or amended by action of the Trustees without approval of shareholders.
A Fund may not:
(a) Invest in companies for the purpose of exercising control or management.
(b) Invest more than 15% of the Fund's net assets in illiquid investments including repurchase agreements with a notice or demand period of more than seven days, securities which are not readily marketable and restricted securities not eligible for resale pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act")
(c) Purchase additional securities if the Fund's borrowings (excluding covered mortgage dollar rolls) exceed 5% of its net assets.
(d) Make short sales of securities, except short sales against the box.
MANAGEMENT
The Trustees are responsible for deciding matters of general policy and reviewing the actions of the Investment Advisers, distributor and transfer agent. The officers of the Trust conduct and supervise each Fund's daily business operations.
Information pertaining to the Trustees and officers of the Trust is set forth below. Trustees and officers deemed to be "interested persons" of the Trust for purposes of the Act are indicated by an asterisk.
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
Ashok N. Bakhru, 57 Chairman Chairman of the Board and Trustee -
P.O. Box 143 & Trustee Goldman Sachs Variable Insurance Trust
Lima, PA 19037 (registered investment company) (since
October 1997); President, ABN Associates
(July 1994-March 1996 and November 1998
to present); Executive Vice President -
Finance and Administration and Chief
Financial Officer, Coty Inc.
(manufacturer of fragrances and
cosmetics) (April 1996-November 1998);
Senior Vice President of Scott Paper
Company (until June 1994); Director of
Arkwright Mutual Insurance Company
(1994-Present); Trustee of International
House of Philadelphia (1989-Present);
Member of Cornell University Council
(1992-Present); Trustee of the Walnut
Street Theater (1992-Present); Director,
Private Equity Investors-III (since
November 1998); Trustee, Citizens
Scholarship Foundation of America (since
1998).
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Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
*David B. Ford, 53 Trustee Trustee- Goldman Sachs Variable
One New York Plaza Insurance Trust (registered investment
New York, NY 10004 company) (since October 1997); Director,
Commodities Corp. LLC (futures and
commodities traders) (since April 1997);
Managing Director, J. Aron & Company
(commodity dealer and risk management
adviser) (since November 1996); Managing
Director, Goldman Sachs & Co. Investment
Banking Division (since November 1996);
Chief Executive Officer and Director,
CIN Management (investment adviser)
(since August 1996); Chief Executive
Officer & Managing Director and
Director, Goldman Sachs Asset Management
International (since November 1995 and
December 1994, respectively); Co-Head,
Goldman Sachs Asset Management Division
(since November 1995); Co-Head and
Director, Goldman Sachs Funds Management
Inc. (since November 1995 and December
1994, respectively); Chairman and
Director, Goldman Sachs Asset Management
Japan Limited (since November 1994).
*Douglas C. Grip, 37 Trustee Trustee and President - Goldman Sachs
One New York Plaza & President Variable Insurance Trust (registered
New York, NY 10004 investment company) (since October
1997); Managing Director, Goldman Sachs
Asset Management Division (since
November 1997); President, Goldman Sachs
Fund Group (since April 1996);
President, MFS Retirement Services Inc.,
of Massachusetts Financial Services
(prior thereto).
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Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
*John P. McNulty, 47 Trustee Trustee - Goldman Sachs Variable
One New York Plaza Insurance Trust (registered investment
New York, NY 10004 company) (since October 1997); Managing
Director, Goldman Sachs (since November
1996); General Partner, J. Aron &
Company (since November 1995); Director
and Co-Head, Goldman Sachs Funds
Management Inc. (since November 1995);
Director, Goldman Sachs Asset Management
International (since January 1996);
Co-Head, GSAM (November 1995 to
present); Director, Global Capital
Reinsurance (insurance) (since 1989);
Director, Commodities Corp. LLC (since
April 1997); Limited Partner of Goldman
Sachs (1994 - November 1995) and
Trustee, Trust for Credit Unions
(registered investment company) (since
January 1996).
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Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
Mary P. McPherson, 64 Trustee Trustee - Goldman Sachs Variable
The Andrew W. Mellon Foundation Insurance Trust (registered investment
140 East 62nd Street company) (since October 1997); Vice
New York, NY 10021 President and Senior Program Officer,
The Andrew W. Mellon Foundation
(provider of grants for conservation,
environmental and educational purposes)
(since October 1997); President of Bryn
Mawr College (1978-1997); Director,
Smith College (since 1998); Director,
Josiah Macy, Jr. Foundation (health
education programs) (since 1977);
Director of the Philadelphia
Contributionship (insurance) (since
1985); Director, Amherst College
(1986-1998); Director, Dayton Hudson
Corporation (general retailing
merchandising) (1988-1997); Director,
The Spenser Foundation (educational
research) (since 1993); and member of
PNC Advisory Board (banking) (since
1993).
*Alan A. Shuch, 50 Trustee Trustee - Goldman Sachs Variable
One New York Plaza Insurance Trust (registered investment
New York, NY 10004 company) (since October 1997); Limited
Partner, Goldman Sachs (since December
1994); Consultant to GSAM (since
December 1994); Director, Chief
Operating Officer and Vice President of
Goldman Sachs Funds Management Inc.
(from November 1993 - November 1994);
Chairman and Director, Goldman Sachs
Asset Management - Japan Limited
(November 1993 - November 1994);
Director, Goldman Sachs Asset Management
International (November 1993 - November
1994); General Partner, Goldman Sachs &
Co. Investment Banking Division
(December 1986 - November 1994).
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Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
Jackson W. Smart, Jr., 69 Trustee Trustee - Goldman Sachs Variable
One Northfield Plaza, Suite 218 Insurance Trust (registered investment
Northfield, IL 60093 company) (since October 1997); Chairman,
Executive Committee and Director, First
Commonwealth, Inc. (a managed dental
care company) (since January 1996);
Chairman and Chief Executive Officer,
MSP Communications Inc. (a company
engaged in radio broadcasting) (October
1988 - December 1997); Director, Federal
Express Corporation (NYSE) (since 1976);
Director, Evanston Hospital Corporation
(since 1980).
William H. Springer, 70 Trustee Trustee - Goldman Sachs Variable
701 Morningside Drive Insurance Trust (registered investment
Lake Forest, IL 60045 company) (since October 1997); Director,
The Walgreen Co. (a retail drug store
business) (since April 1988); Director
of Baker, Fentress & Co. (a closed-end,
non-diversified management investment
company) (April 1992 - present);
Chairman and Trustee, Northern
Institutional Funds (since April 1984).
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Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
Richard P. Strubel, 60 Trustee Trustee - Goldman Sachs Variable
737 N. Michigan Ave., Suite 1405 Insurance Trust (registered investment
Chicago, IL 60611 company) (since October 1997); Director,
Gildan Activewear Inc. (since February
1999); Director of Kaynar Technologies
Inc. (since March 1997); Managing
Director, Tandem Partners, Inc. (since
1990); President and Chief Executive
Officer, Microdot, Inc. (a diversified
manufacturer of fastening systems and
connectors) (January 1984 - October
1994); Trustee, Northern Institutional
Funds (since December 1982).
*Nancy L. Mucker, 50 Vice President Vice President - Goldman Sachs Variable
4900 Sears Tower Insurance Trust (registered investment
Chicago, IL 60606 company) (since 1997); Vice President,
Goldman Sachs (since April 1985);
Co-Manager of Shareholder Servicing of
Goldman Sachs Asset Management (since
November 1989).
*John M. Perlowski, 35 Treasurer Treasurer - Goldman Sachs Variable
One New York Plaza Insurance Trust (registered investment
New York, NY 10004 company) (since 1997); Vice President,
Goldman Sachs (since July 1995); Banking
Director, Investors Bank and Trust
(November 1993 - July 1995).
*James A. Fitzpatrick, 39 Vice President Vice President - Goldman Sachs Variable
4900 Sears Tower Insurance Trust (registered investment
Chicago, IL 60606 company) (since October 1997); Vice
President, Goldman Sachs (sine 1998);
Vice President of GSAM (since April
1997); Vice President and General
Manager, First Data Corporation -
Investor Services Group (1994 to 1997).
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Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
*Jesse Cole, 36 Vice President Vice President - Goldman Sachs Variable
4900 Sears Tower Insurance Trust (registered investment
Chicago, IL 60606 company) (since 1998); Vice President,
GSAM (June 1998 to Present); Vice
President, AIM Management Group, Inc.
(investment advisor) (April 1996-June
1998); Assistant Vice President, The
Northern Trust Company (June 1987-April
1996).
*Philip V. Giuca , Jr., 37 Assistant Treasurer Assistant Treasurer - Goldman Sachs
One New York Plaza Variable Insurance Trust (registered
New York, NY 10004 investment company) (since 1997); Vice
President, Goldman Sachs (May
1992-Present).
*Adrien Deberghes, 31 Assistant Treasurer Assistant Treasurer - Goldman Sachs
One New York Plaza Variable Insurance Trust (registered
New York, NY 10004 investment company) (since 1999); Vice
President, Mutual Fund Administration,
GSAM (since 1998); Senior Associate,
GSAM (1997-1998).
*Michael J. Richman, 39 Secretary Secretary - Goldman Sachs Variable
85 Broad Street Insurance Trust (registered investment
New York, NY 10004 company) (since 1997); General Counsel
of the Funds Group of GSAM (since
December 1997); Associate General
Counsel of GSAM (February 1994 -
December 1997); Counsel to the Funds
Group, GSAM (June 1992 to December
1997); Associate General Counsel,
Goldman Sachs (since December 1998);
Vice President of Goldman Sachs (since
June 1992); and Assistant General
Counsel of Goldman Sachs (June 1992 to
December 1998).
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Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
*Howard B. Surloff, 34 Assistant Secretary Assistant Secretary - Goldman Sachs
85 Broad Street Variable Insurance Trust (registered
New York, NY 10004 investment company) (since 1997);
Assistant General Counsel, GSAM and
Associate General Counsel to the Funds
Group (since December 1997); Assistant
General Counsel and Vice President,
Goldman Sachs (since November 1993 and
May 1994, respectively); Counsel to the
Funds Group, GSAM (November 1993 -
December 1997); Associate of Shereff,
Friedman, Hoffman & Goodman (October
1990 to November 1993).
*Valerie A. Zondorak, 34 Assistant Secretary Assistant Secretary - Goldman Sachs
85 Broad Street Variable Insurance Trust (registered
New York, NY 10004 investment company) (since 1997);
Assistant General Counsel, GSAM and
Assistant General Counsel to the Funds
Group (since December 1997); Vice
President and Counsel, Goldman Sachs
(since March 1997); Counsel to the Funds
Group, GSAM (March 1997 - December
1997); Associate of Shereff, Friedman,
Hoffman & Goodman (September 1990 to
February 1997).
*Deborah A. Farrell, 29 Assistant Secretary Assistant Secretary - Goldman Sachs
85 Broad Street Variable Insurance Trust (registered
New York, NY 10004 investment company) (since 1997); Legal
Products Analyst, Goldman Sachs (since
December 1998); Legal Assistant, Goldman
Sachs (January 1996-December 1998);
Assistant Secretary to the Funds Group
(1996 to present); Executive Secretary,
Goldman Sachs (January 1994 - January
1996); Legal Secretary, Cleary,
Gottlieb, Steen and Hamilton (September
1990 to January 1994).
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Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
----------- ---------- -----------------------
*Kaysie P. Uniacke, 38 Assistant Secretary Assistant Secretary - Goldman Sachs
One New York Plaza Variable Insurance Trust (registered
New York, NY 10004 investment company) (since 1997);
Managing Director, GSAM (since 1997);
Vice President and Senior Portfolio
Manager, GSAM (1988 to 1997).
*Elizabeth D. Anderson, 30 Assistant Secretary Assistant Secretary - Goldman Sachs
One New York Plaza Variable Insurance Trust (registered
New York, NY 10004 investment company) (since 1997);
Portfolio Manager, GSAM (since April
1996); Junior Portfolio Manager, GSAM
(1995 - April 1996); Funds Trading
Assistant, GSAM (1993 - 1995);
Compliance Analyst, Prudential Insurance
(1991 - 1993).
*Amy E. Belanger, 30 Assistant Secretary Assistant Secretary - Goldman Sachs
85 Broad Street Variable Insurance Trust (registered
New York, NY 10004 investment company) (since 1999);
Counsel, Goldman Sachs (since 1998);
Associate, Dechert Price & Rhoads
(September 1996-1998).
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Each interested Trustee and officer holds comparable positions with certain other companies of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser, administrator and/or distributor. As of October 31, 1999, the Trustees and officers of the Trust as a group owned less than 1% of the outstanding shares of beneficial interest of each Fund.
The Trust pays each Trustee, other than those who are "interested persons" of Goldman Sachs, a fee for each Trustee meeting attended and an annual fee. Such Trustees are also reimbursed for travel expenses incurred in connection with attending such meetings.
The following table sets forth certain information with respect to the compensation of each Trustee of the Trust for the period from February 1, 1999 to August 31, 1999:
Aggregate Total Compensation from Goldman
Compensation Pension or Retirement Benefits Sachs Trust and the Goldman Sachs
Name of Trustee from the Funds/2/ Accrued as Part of Funds' Expenses fund complex (including the Funds)/3/
------------------------- --------------- ---------------------------------- -----------------------------------
Ashok N. Bakhru/1/ $21,434 $ - $71,000
David B. Ford 0 - 0
Douglas C. Grip 0 - 0
John P. McNulty 0 - 0
Mary P. McPherson 16,151 - 53,500
Alan A. Shuch 0 - 0
Jackson W. Smart 16,151 - 53,500
William H. Springer 16,151 - 53,500
Richard P. Strubel 16,151 - 53,500
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/1/ Includes compensation as Chairman of the Board of Trustees.
/2/ Reflects amount paid by the Funds during the period from February 1, 1999 to August 31, 1999.
/3/ The Goldman Sachs Fund complex consists of the Goldman Sachs Trust and Goldman Sachs Variable Insurance Trust. Goldman Sachs Trust consists of 45 mutual funds, including 17 equity funds, on August 31, 1999. Goldman Sachs Variable Insurance Trust consisted of 8 mutual funds as of August 31, 1999.
The following table sets forth certain information with respect to the compensation of each Trustee of the Trust for the fiscal year ended January 31, 1999:
Aggregate Total Compensation from Goldman
Compensation Pension or Retirement Benefits Sachs Trust and the Goldman Sachs
Name of Trustee from the Funds/2/ Accrued as Part of Funds' Expenses fund complex (including the Funds)/3/
--------------- ---------------- ---------------------------------- -------------------------------------
Ashok N. Bakhru/1/ $28,888 $0 $112,566
David B. Ford 0 0 0
Douglas C. Grip 0 0 0
John P. McNulty 0 0 0
Mary P. McPherson 21,848 0 86,375
Alan A. Shuch 0 0 0
Jackson W. Smart 20,201 0 86,375
William H. Springer 20,201 0 86,375
Richard P. Strubel 20,201 0 86,375
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/2/ Reflects amount paid by the Funds during the fiscal year ended January 31,
1999.
/3/ The Goldman Sachs Fund complex consists of the Goldman Sachs Trust and
Goldman Sachs Variable Insurance Trust. Goldman Sachs Trust consists of 45
mutual funds, including 17 equity funds, on January 31, 1999. Goldman Sachs
Variable Insurance Trust consisted of 8 mutual funds of January 31, 1999.
Class A Shares of the Fund may be sold at net asset value without payment of any sales charge to Goldman Sachs, its affiliates or their respective officers, partners, directors or employees (including rehired employees and former partners), any partnership of which Goldman Sachs is a general partner, any trustee or officer of the Trust and designated family members of any of the above individuals. The sales load waivers are due to the nature of the investors and the reduced sales effort that is needed to obtain such investments.
As stated in the Funds' Prospectus, GSFM, 32 Old Slip, New York, New York, a Delaware limited partnership and an affiliate of Goldman Sachs, 85 Broad Street, New York, New York, serves as Investment Adviser to CORE U.S. Equity and Capital Growth Funds. GSAM, One New York Plaza, New York, New York, a separate operating division of Goldman Sachs, serves as Investment Adviser to Balanced, Growth and Income, CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, Strategic Growth, Growth Opportunities, CORE International Equity, Mid Cap Value, Small Cap Value and Large Cap Value Funds. GSAMI, 133 Petersborough Court, London, England EC4A 2BB serves as Investment Adviser to the International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds. GSAMI is also an affiliate of Goldman Sachs. See "Service Providers" in the Funds' Prospectus for a description of the applicable Investment Adviser's duties to the Funds.
The Goldman Sachs Group, L.P. which controls the Funds' Investment Advisers merged into the Goldman Sachs Group, Inc. as a result of an initial public offering.
Founded in 1869, Goldman Sachs is among the oldest and largest investment banking firms in the United States. Goldman Sachs is a leader in developing portfolio strategies and in many fields of investing and financing, participating in financial markets worldwide and serving individuals, institutions, corporations and governments. Goldman Sachs is also among the principal market sources for current and thorough information on companies, industrial sectors, markets, economies and currencies, and trades and makes markets in a wide range of equity and debt securities 24-hours a day. The firm is headquartered in New York and has offices throughout the United States and in Beijing, Frankfurt, George Town, Hong Kong, London, Madrid, Mexico City, Milan, Montreal, Osaka, Paris, Sao Paulo, Seoul, Shanghai, Singapore, Sydney, Taipei, Tokyo, Toronto, Vancouver and Zurich. It has trading professionals throughout the United States, as well as in London, Tokyo, Hong Kong and Singapore. The active participation of Goldman Sachs in the world's financial markets enhances its ability to identify attractive investments. Goldman Sachs has agreed to permit the Funds to use the name "Goldman Sachs" or a derivative thereof as part of each Fund's name for as long as a Fund's Management Agreement is in effect.
The Investment Advisers are able to draw on the substantial research and market expertise of Goldman Sachs, whose investment research effort is one of the largest in the industry. The Goldman Sachs Global Investment Research Department covers approximately
2,200 companies, including approximately 1,000 U.S. corporations in 60 industries. The in-depth information and analyses generated by Goldman Sachs' research analysts are available to the Investment Advisers.
For more than a decade, Goldman Sachs has been among the top-ranked firms in Institutional Investor's annual "All-America Research Team" survey. In addition, many of Goldman Sachs' economists, securities analysts, portfolio strategists and credit analysts have consistently been highly ranked in respected industry surveys conducted in the U.S. and abroad. Goldman Sachs is also among the leading investment firms using quantitative analytics (now used by a growing number of investors) to structure and evaluate portfolios.
In managing the Funds, the Investment Advisers have access to Goldman Sachs' economics research. The Economics Research Department, based in London, conducts economic, financial and currency markets research which analyzes economic trends and interest and exchange rate movement worldwide. The Economics Research Department tracks factors such as inflation and money supply figures, balance of trade figures, economic growth, commodity prices, monetary and fiscal policies, and political events that can influence interest rates and currency trends. The success of Goldman Sachs' international research team has brought wide recognition to its members. The team has earned top rankings in various external surveys such as Extel, Institutional Investor and Reuters. These rankings acknowledge the achievements of the firm's economists, strategists and equity analysts.
In allocating assets among foreign countries and currencies for the Funds which can invest in foreign securities (in particular, the CORE International Equity, International Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds), the Investment Advisers will have access to the Global Asset Allocation Model. The model is based on the observation that the prices of all financial assets, including foreign currencies, will adjust until investors globally are comfortable holding the pool of outstanding assets. Using the model, the Investment Advisers will estimate the total returns from each currency sector which are consistent with the average investor holding a portfolio equal to the market capitalization of the financial assets among those currency sectors. These estimated equilibrium returns are then combined with the expectations of Goldman Sachs' research professionals to produce an optimal currency and asset allocation for the level of risk suitable for a Fund given its investment objectives and criteria.
The Management Agreements provide that GSAM, GSFM and GSAMI, in their capacity as Investment Advisers, may render similar services to others as long as the services under the management agreements are not impaired thereby. The Large Cap Value, Strategic Growth, Growth Opportunities, CORE Large Cap Value, European Equity, Japanese Equity and International Small Cap Funds' Management agreements were initially approved by the Trustees, including a majority of the non-interested Trustees (as defined below) who are not parties to the management Agreement on October 26, 1999, April 28, 1999, April 28, 1999, November 3, 1998, July 22, 1998, April 23, 1998 and April 23, 1998, respectively. The CORE Small Cap Equity and CORE International Equity Funds' management agreements were initially approved by the
Trustees, including a majority of the non-interested Trustees (as defined below) who are not parties to the Management Agreements, on July 22, 1997. The CORE Large Cap Growth and Emerging Markets Equity Funds' Management Agreements were initially approved by the Trustees, including a majority of the non-interested Trustees (as defined below) who are not parties to the Management Agreements, on April 23, 1997 and January 28, 1997, respectively. The Funds' management Agreements were most recently approved by the Trustees, including a majority of the Trustees who are not parties to the Management Agreements or "interested persons" (as such term is defined in the Act) of any party thereto (the "non- interested Trustees"), on April 27, 1999. These arrangements were most recently approved by the shareholders of each Fund (other than Strategic Growth, Growth Opportunities, CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, Large Cap Value, CORE International Equity, Emerging Markets Equity, Japanese Equity, International Small Cap and European Equity Funds) on April 21, 1997. The sole shareholder of the Large Cap Value, Strategic Growth, Growth Opportunities, CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, CORE International Equity, Emerging Markets Equity, Japanese Equity, International Small Cap and European Equity Funds approved these arrangements on October 26, 1999, April 28, 1999, April 28, 1999, November 3, 1998, April 30, 1997, July 21, 1997, July 21, 1997, January 28, 1997, April 23, 1998, April 23, 1998 and July 22, 1998, respectively. Each Management Agreement will remain in effect until June 30, 2000 and will continue in effect with respect to the applicable Fund from year to year thereafter provided such continuance is specifically approved at least annually by (a) the vote of a majority of the outstanding voting securities of such Fund or a majority of the Trustees of the Trust, and (b) the vote of a majority of the non-interested Trustees of the Trust, cast in person at a meeting called for the purpose of voting on such approval.
Each Management Agreement will terminate automatically if assigned (as defined in the Act). Each Management Agreement is also terminable at any time without penalty by the Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund on 60 days' written notice to the applicable Investment Adviser and by the Investment Adviser on 60 days' written notice to the Trust.
Pursuant to the Management Agreements the Investment Advisers are entitled to receive the fees set forth below, payable monthly based on such Fund's average daily net assets. In addition, as of the date of this Additional Statement the Investment Advisers were voluntarily limiting their management fees for certain funds to the annual rates also listed below:
Management Management
With Fee Without Fee
Fund Limitations Limitations
------------------------------------------- ------------ ------------
GSAM
Balanced Fund 0.65% 0.65%
Growth and Income Fund 0.70% 0.70%
CORE Large Cap Value Fund 0.60% 0.60%
CORE Large Cap Growth Fund 0.60% 0.75%
CORE Small Cap Equity Fund 0.85% 0.85%
Strategic Growth Fund 1.00% 1.00%
Growth Opportunities Fund 1.00% 1.00%
CORE International Equity Fund 0.85% 0.85%
Mid Cap Value Fund 0.75% 0.75%
Small Cap Value Fund 1.00% 1.00%
Large Cap Value Fund 0.75% 0.75%
GSFM
CORE U.S. Equity Fund 0.70% 0.75%
Capital Growth Fund 1.00% 1.00%
GSAMI
International Equity Fund 1.00% 1.00%
European Equity 1.00% 1.00%
Japanese Equity Fund 1.00% 1.00%
International Small Cap Fund 1.20% 1.20%
Emerging Markets Equity Fund 1.20% 1.20%
Asia Growth Fund 1.00% 1.00%
|
GSAM, GSFM and GSAMI may discontinue or modify the above limitations in the future at their discretion.
Prior to May 1, 1997, the Funds then in operation had separate investment advisory (and subadvisory, in the case of the International Equity Fund) and administration agreements. Effective May 1, 1997, the services under such agreements were combined in the management agreement. The services required to be performed for the Funds and the combined advisory (and subadvisory, in the case of the International Equity Fund) and administration fees payable by the Funds under the former advisory (and subadvisory, in the case of the International Equity Fund) and administration agreements are identical to the services and fees under the management agreement.
For the fiscal period ended August 31, 1999 and the fiscal years ended January 31, 1999, January 31, 1998 and January 31, 1997 the amounts of the combined investment advisory (and subadvisory, in the case of the International Equity Fund) and administration fees incurred by each Fund then in existence were as follows (with and without the fee limitations that were then in effect):
Fiscal period ended Fiscal year ended
=================== =================
Augst 31, January 31,
========== ============
1999 1999
============================= ===============================
With Fee Without Fee With Fee Without Fee
Limitations Limitations Limitations Limitations
============= ============== --------------- -------------
Balanced Fund 928,470 928,470 $ 1,609,311 $ 1,609,311
Growth and Income Fund 5,645,766 5,645,766 13,527,887 13,527,887
CORE Large Cap Value Fund/1/ 869,263 869,263 12,245 12,245
CORE U.S. Equity Fund 4,865,259 5,212,778 5,691,415 6,647,941
CORE Large Cap Growth Fund/1/ 2,640,795 3,300,994 1,658,095 2,072,619
CORE Small Cap Equity Fund/1/ 689,175 689,175 730,302 769,013
CORE International Equity Fund/1/ 1,938,801 1,938,801 1,810,772 1,890,475
Capital Growth Fund 15,000,472 15,000,472 17,460,353 17,460,353
Strategic Growth Fund/1/, /2/ 29,606 29,606 N/A N/A
Growth Opportunities Fund/1/, /2/ 23,911 23,911 N/A N/A
Mid Cap Value Fund 1,332,432 1,332,432 2,953,154 2,953,154
International Equity Fund 6,475,659 6,475,659 9,243,090 9,814,989
Small Cap Value Fund 1,733,424 1,733,424 4,417,249 4,417,249
Large Cap Value/1/, /3/ NA NA N/A N/A
European Equity Fund/1/ 451,498 451,498 171,505 171,505
Japanese Equity Fund/1/ 226,009 226,009 118,094 122,901
International Small Cap Fund/1/ 598,694 598,694 280,977 287,765
Emerging Market Equity Fund/1/ 1,148,664 1,148,664 1,454,673 1,519,721
Asia Growth Fund 501,770 501,770 736,821 808,815
|
Fiscal year ended Fiscal year ended
================ =================
January 31, January 31,
=========== ===========
1998 1997
========================= ========================
With Fee Without Fee With Fee Without Fee
Limitations Limitations Limitations Limitations
----------- ----------- ----------- -----------
Balanced Fund $ 870,444 $ 870,844 $ 402,183 $ 402,183
Growth and Income Fund 7,740,380 7,740,380 3,541,318 3,541,318
CORE Large Cap Value Fund/1/ N/A N/A N/A N/A
CORE U.S. Equity Fund 3,087,383 3,924,639 1,667,381 2,119,552
CORE Large Cap Growth Fund/1/ 182,628 228,283 N/A N/A
CORE Small Cap Equity Fund/1/ 65,418 74,140 N/A N/A
CORE International Equity Fund/1/ 51,031 57,835 N/A N/A
Capital Growth Fund 10,913,224 10,913,224 8,697,265 8,697,265
Strategic Growth Fund/1/, /2/ N/A N/A N/A N/A
Growth Opportunities Fund/1/, /2/ N/A N/A N/A N/A
Mid Cap Value Fund 1,653,946 1,653,946 964,945 964,945
International Equity Fund 6,772,826 7,525,362 4,124,076 4,638,203
Small Cap Value Fund 3,206,411 3,206,411 2,130,703 2,130,703
Large Cap Value/1/, /3/ N/A N/A N/A N/A
European Equity Fund/1/ N/A N/A N/A N/A
Japanese Equity Fund/1/ N/A N/A N/A N/A
International Small Cap Fund/1/ N/A N/A N/A N/A
Emerging Market Equity Fund/1/ 31,937 34,840 N/A N/A
Asia Growth Fund 1,874,193 2,179,299 2,221,857 2,583,555
|
/1/ The CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, CORE International Equity, Strategic Growth, Growth Opportunity, Large Cap Value, European Equity, Japanese Equity, International Small Cap and Emerging Markets Equity Funds commenced operations on December 31, 1998, May 1, 1997, August 15, 1997, August 15, 1997, May 24, 1999, May 24, 1999, November 30, 1999, October 1, 1998, May 1, 1998, May 1, 1998 and December 15, 1997, respectively.
/2/ During the fiscal years ended January 31, 1999, 1998 and 1997, no Shares of the Strategic Growth, Growth Opportunities and Large Cap Value Funds had been offered.
/3/ During the fiscal years ended August 31, 1999, no Shares of the Large Cap Value Funds had been offered.
Under the Management Agreement, each Investment Adviser also: (i)
supervises all non-advisory operations of each Fund that it advises; (ii)
provides personnel to perform such executive, administrative and clerical
services as are reasonably necessary to provide effective administration of each
Fund; (iii) arranges for at each Fund's expense: (a) the preparation of all
required tax returns, (b) the preparation and submission of reports to existing
shareholders, (c) the periodic updating of prospectuses and statements of
additional information and (d) the preparation of reports to be filed with the
SEC and other regulatory authorities; (iv) maintains each Fund's records; and
(v) provides office space and all necessary office equipment and services.
Activities of Goldman Sachs and Its Affiliates and Other Accounts Managed by Goldman Sachs. The involvement of the Investment Advisers and Goldman Sachs and their affiliates in the management of, or their interest in, other accounts and other activities of Goldman Sachs may present conflicts of interest with respect to the Funds or impede their investment activities.
Goldman Sachs and its affiliates, including, without limitation, the Investment Advisers and their advisory affiliates, have proprietary interests in, and may manage or advise with respect to, accounts or funds (including separate accounts and other funds and collective investment vehicles) which have investment objectives similar to those of the Funds and/or which engage in transactions in the same types of securities, currencies and instruments as the Funds. Goldman Sachs and its affiliates are major participants in the global currency, equities, swap and fixed-income markets, in each case both on a proprietary basis and for the accounts of customers. As such, Goldman Sachs and its affiliates are actively engaged in transactions in the same securities, currencies and instruments in which the Funds invest. Such activities could affect the prices and availability of the securities, currencies and instruments in which the Funds will invest, which could have an adverse impact on each Fund's performance. Such transactions, particularly in respect of proprietary accounts or customer accounts other than those included in the Investment Advisers' and their advisory affiliates' asset management activities, will be executed independently of the Funds' transactions and thus at prices or rates that may be more or less favorable. When the Investment Advisers and their advisory affiliates seek to purchase or sell the same assets for their managed accounts, including the Funds, the assets actually purchased or sold may be allocated among the accounts on a basis determined in its good faith discretion to be equitable. In some cases, this system may adversely affect the size or the price of the assets purchased or sold for the Funds.
From time to time, the Funds' activities may be restricted because of regulatory restrictions applicable to Goldman Sachs and its affiliates, and/or their internal policies designed to comply with such restrictions. As a result, there may be periods, for example, when the Investment Advisers and/or their affiliates will not initiate or recommend certain types of transactions in certain securities or instruments with respect to which the Investment Advisers and/or their affiliates are performing services or when position limits have been reached.
In connection with their management of the Funds, the Investment Advisers may have access to certain fundamental analysis and proprietary technical models developed by Goldman
Sachs and other affiliates. The Investment Advisers will not be under any obligation, however, to effect transactions on behalf of the Funds in accordance with such analysis and models. In addition, neither Goldman Sachs nor any of its affiliates will have any obligation to make available any information regarding their proprietary activities or strategies, or the activities or strategies used for other accounts managed by them, for the benefit of the management of the Funds and it is not anticipated that the Investment Advisers will have access to such information for the purpose of managing the Funds. The proprietary activities or portfolio strategies of Goldman Sachs and its affiliates or the activities or strategies used for accounts managed by them or other customer accounts could conflict with the transactions and strategies employed by the Investment Advisers in managing the Funds.
The results of each Fund's investment activities may differ significantly from the results achieved by the Investment Advisers and their affiliates for their proprietary accounts or accounts (including investment companies or collective investment vehicles) managed or advised by them. It is possible that Goldman Sachs and its affiliates and such other accounts will achieve investment results which are substantially more or less favorable than the results achieved by a Fund. Moreover, it is possible that a Fund will sustain losses during periods in which Goldman Sachs and its affiliates achieve significant profits on their trading for proprietary or other accounts. The opposite result is also possible.
The investment activities of Goldman Sachs and its affiliates for their proprietary accounts and accounts under their management may also limit the investment opportunities for the Fund in certain emerging markets in which limitations are imposed upon the aggregate amount of investment, in the aggregate or individual issuers, by affiliated foreign investors.
An investment policy committee which may include partners of Goldman Sachs and its affiliates may develop general policies regarding a Fund's activities but will not be involved in the day-to-day management of such Fund. In such instances, those individuals may, as a result, obtain information regarding the Fund's proposed investment activities which is not generally available to the public. In addition, by virtue of their affiliation with Goldman Sachs, any such member of an investment policy committee will have direct or indirect interests in the activities of Goldman Sachs and its affiliates in securities and investments similar to those in which the Fund invests.
In addition, certain principals and certain of the employees of the Investment Advisers are also principals or employees of Goldman Sachs or their affiliated entities. As a result, the performance by these principals and employees of their obligations to such other entities may be a consideration of which investors in the Funds should be aware.
Each Investment Adviser may enter into transactions and invest in currencies or instruments on behalf of a Fund in which customers of Goldman Sachs serve as the counterparty, principal or issuer. In such cases, such party's interests in the transaction will be adverse to the interests of a Fund, and such party may have no incentive to assure that the Funds obtain the best possible prices or terms in connection with the transactions. Goldman Sachs and its affiliates may also create, write or issue derivative instruments for customers of Goldman Sachs or its affiliates, the
underlying securities or instruments of which may be those in which a Fund invests or which may be based on the performance of a Fund. The Funds may, subject to applicable law, purchase investments which are the subject of an underwriting or other distribution by Goldman Sachs or its affiliates and may also enter into transactions with other clients of Goldman Sachs or its affiliates where such other clients have interests adverse to those of the Funds. At times, these activities may cause departments of the Firm to give advice to clients that may cause these clients to take actions adverse to the interests of the client. To the extent affiliated transactions are permitted, the Funds will deal with Goldman Sachs and its affiliates on an arms-length basis.
Each Fund will be required to establish business relationships with its counterparties based on the Fund's own credit standing. Neither Goldman Sachs nor its affiliates will have any obligation to allow their credit to be used in connection with a Fund's establishment of its business relationships, nor is it expected that a Fund's counterparties will rely on the credit of Goldman Sachs or any of its affiliates in evaluating the Fund's creditworthiness.
From time to time, Goldman Sachs or any of its affiliates may, but is not required to, purchase and hold shares of a Fund in order to increase the assets of the Fund. Increasing a Fund's assets may enhance investment flexibility and diversification and may contribute to economies of scale that tend to reduce the Fund's expense ratio. Goldman Sachs reserves the right to redeem at any time some or all of the shares of a Fund acquired for its own account. A large redemption of shares of a Fund by Goldman Sachs could significantly reduce the asset size of the Fund, which might have an adverse effect on the Fund's investment flexibility, portfolio diversification and expense ratio. Goldman Sachs will consider the effect of redemptions on a Fund and other shareholders in deciding whether to redeem its shares.
It is possible that a Fund's holdings will include securities of entities for which Goldman Sachs performs investment banking services as well as securities of entities in which Goldman Sachs makes a market. From time to time, Goldman Sachs' activities may limit the Funds' flexibility in purchases and sales of securities. When Goldman Sachs is engaged in an underwriting or other distribution of securities of an entity, the Investment Advisers may be prohibited from purchasing or recommending the purchase of certain securities of that entity for the Funds.
Goldman Sachs, 85 Broad Street, New York, New York 10004 serves as the exclusive distributor of shares of the Funds pursuant to a "best efforts" arrangement as provided by a distribution agreement with the Trust on behalf of each Fund. Shares of the Funds are offered and sold on a continuous basis by Goldman Sachs, acting as agent. Pursuant to the distribution agreement, after the Prospectus and periodic reports have been prepared, set in type and mailed to shareholders, Goldman Sachs will pay for the printing and distribution of copies thereof used in connection with the offering to prospective investors. Goldman Sachs will also pay for other supplementary sales literature and advertising costs. Goldman Sachs may enter into sales agreements with certain investment dealers and other financial service firms (the "Authorized Dealers") to solicit subscriptions for shares of the Funds. Goldman Sachs receives a portion of the
sales charge imposed on the sale, in the case of Class A Shares, or redemption in the case of Class B and Class C Shares (and in certain cases, Class A Shares), of such Fund shares.
Goldman Sachs retained approximately the following combined commissions on sales of Class A, Class B and Class C Shares during the following periods:
Fiscal period ended Fiscal year ended Fiscal year ended Fiscal year ended
===================== =================== =================== ===================
August 31, January 31, January 31, January 31,
========== =========== =========== ===========
1999 1999 1998 1997
==== ==== ==== ====
Balanced Fund/1/ 45,772 $ 328,147 $ 387,000 $ 94,000
Growth and Income Fund/1/ 161,907 1,625,895 2,405,000 555,000
CORE Large Cap Value Fund/2/ 47,033 1,035 N/A N/A
CORE U.S. Equity Fund/1/ 247,772 516,723 566,000 380,000
CORE Large Cap Growth Fund/3/ 209,999 360,931 129,000 N/A
CORE Small Cap Equity Fund/4/ 25,650 120,911 49,000 N/A
CORE International Equity Fund/4/ 20,943 93,771 24,000 N/A
Capital Growth Fund/1/ 964,994 1,625,245 743,000 323,000
Strategic Growth Fund/5/ 67,647 N/A N/A N/A
Growth Opportunities Fund/5/ 88,874 N/A N/A N/A
Mid Cap Value Fund/4/ 24,203 403,632 704,000 N/A
International Equity Fund/1/ 818,240 1,226,623 1,091,000 1,563,000
Small Cap Value Fund/1/ 58,547 595,864 662,000 219,000
Large Cap Value Fund/6/ NA N/A N/A N/A
European Equity Fund/7/ 217,889 433,970 N/A N/A
Japanese Equity Fund/7/ 13,174 5,020 N/A N/A
International Small Cap Fund/7/ 507,718 267,136 N/A N/A
Emerging Market Equity Fund/8/ 67,356 495,353 107,000 N/A
Asia Growth Fund/1/ 106,223 133,988 414,000 1,397,000
|
/1/ Prior to August 15, 1997, The Balanced, Growth and Income, CORE U.S. Equity, Capital Growth, International Equity, Small Cap Value and Asia Growth Funds had not sold Class C Shares.
/2/ The CORE Large Cap Value Fund commenced operations on December 31, 1998.
/3/ Prior to May 1, 1997 and August 15, 1997, the CORE Large Cap Growth Fund had not sold Class B and Class C Shares, respectively.
/4/ Prior to August 15, 1997, the CORE Small Cap Equity, CORE International Equity and Mid Cap Value Funds had not sold Class A, Class B or Class C Shares.
/5/ The Strategic Growth and Growth Opportunities Fund commenced operations on May 24, 1999.
/6/ During the fiscal period ended August 31, 1999 and the fiscal years ended January 31, 1999, January 31, 1998 and January 31, 1997, no shares of the Large Cap Value Fund were offered.
/7/ Prior to October 1, 1998, May 1, 1998 and May 1, 1998, the European Equity, Japanese Equity and International Small Cap Funds had not sold Class A, Class B or Class C Shares.
/8/ Prior to December 15, 1997, the Emerging Markets Equity Fund had not sold Class A, Class B or Class C Shares.
Goldman Sachs, 4900 Sears Tower, Chicago, IL 60606 serves as the Trust's transfer agent. Under its transfer agency agreement with the Trust, Goldman Sachs has undertaken with the Trust to (i) record the issuance, transfer and redemption of shares, (ii) provide confirmations of purchases and redemptions, and quarterly statements, as well as certain other statements, (iii) provide certain information to the Trust's custodian and the relevant sub-custodian in connection with redemptions, (iv) provide dividend crediting and certain disbursing agent services, (v) maintain shareholder accounts, (vi) provide certain state Blue Sky and other information, (vii) provide shareholders and certain regulatory authorities with tax related information, (viii) respond to shareholder inquiries, and (ix) render certain other miscellaneous services. For its transfer agency services, Goldman Sachs is entitled to receive a transfer agency fee equal, on an ongoing basis, to 0.04% of average daily net assets with respect to each Fund's Institutional and Service Shares and 0.19% of average daily net assets with respect to each Fund's Class A, Class B and Class C Shares.
As compensation for the services rendered to the Trust by Goldman Sachs as transfer agent and the assumption by Goldman Sachs of the expenses related thereto, Goldman Sachs received fees for the fiscal period ended August 31, 1999 and the fiscal years ended January 31, 1999, January 31, 1998 and January 31, 1997 from each Fund then in existence as follows under the fee schedules then in effect:
Class A, B and C Class A, B and C Class A and B
================ ================ =============
fiscal period ended Fiscal year ended Fiscal year ended
=================== ================= =================
August 31, January 31, January 31,
========== =========== ===========
1999 1999 1998 1997
==== ==== ==== ====
Balanced Fund/1/ 265,040 $ 415,314 $ 240,869 $148,576
Growth and Income Fund/1/ 1,472,797 2,847,724 1,545,495 870,527
CORE Large Cap Value Fund/2/ 79,434 478 N/A N/A
CORE U.S. Equity Fund/1/ 937,880 1,026,711 483,534 319,246
CORE Large Cap Growth Fund/3/ 507,346 297,884 107,944 N/A
CORE Small Cap Equity Fund/4/ 85,644 169,333 62,625 N/A
CORE International Equity Fund/4/ 135,685 107,285 36,474 N/A
Capital Growth Fund/1/ 2,686,092 2,429,326 992,678 908,310
Strategic Growth Fund/5/ 2,713 N/A N/A N/A
Growth Opportunities Fund/5/ 1,832 N/A N/A N/A
MidCap Value Fund/4/ 120,585 227,387 142,558 N/A
International Equity Fund/1/ 1,081,759 1,276,567 860,719 586,243
Small Cap Value Fund/1/ 308,496 686,997 595,479 511,883
Large Cap Value Fund/6/ NA N/A N/A N/A
European Equity/7/ 74,588 25,506 N/A N/A
Japanese Equity Fund/7/ 25,658 23,737 N/A N/A
International Small Cap Fund/7/ 44,408 39,575 N/A N/A
Emerging Markets Equity Fund 68,673 131,048 1,907 N/A
Asia Growth Fund/8/ 87,224 260,032 370,233 385,114
|
/1/ Prior to May 1, 1996 and August 15, 1997, the Balanced, Growth and Income, CORE U.S. Equity, Capital Growth, International Equity, Small Cap Value, and Asia Growth Funds had not sold Class B and Class C Shares, respectively.
/2/ The CORE Large Cap Value Fund commenced operations on December 31, 1998.
/3/ Prior to May 1, 1997and August 15, 1997, the CORE Large Cap Growth Fund had not sold Class B, Class C, respectively.
/4/ Prior to August 15, 1997, the CORE Small Cap Equity, CORE International Equity and Mid Cap Value Funds had not sold Class A, Class B, Class C Shares.
/5/ The Strategic Growth and Growth Opportunities Funds commenced operations on May 24, 1999.
/6/ The Large Cap Value Fund commenced operation on November 30, 1999.
/7/ Prior to October 1, 1998, May 1, 1998 and May 1, 1998 the European Equity, Japanese Equity and International, Small Cap Funds had not sold Class A, Class B, or Class C shares.
/8/ Prior to December 15, 1997, Emerging Markets Equity Fund had not sold Class A, Class B, Class C Institutional or Service Shares.
Institutional Shares
=====================================
Fiscal period Fiscal year Fiscal year Fiscal year
============= =========== =========== ===========
ended ended ended ended
============= =========== =========== ===========
August 31, January 31, January 31, January 31,
============= =========== =========== ===========
1999 1999 1998 1997
============= =========== =========== ===========
Balanced Fund/1/ 1303 $ 10,146 $ N/A $ N/A
Growth and Income Fund 9957 65,822 2,593 15
CORE Large Cap Value Fund/2/ 41227 716 N/A N/A
CORE U.S. Equity Fund/1/ 77800 47,585 0 N/A
CORE Large Cap Growth Fund/3/ 68733 95,848 49 N/A
CORE Small Cap Equity Fund/4/ 14387 99,495 0 N/A
CORE International Equity Fund/4/ 62671 181,201 0 N/A
Capital Growth Fund/1/ 33191 7,002 683 N/A
Strategic Growth Fund/5/ 613 N/A N/A N/A
Growth Opportunities Fund/5/ 571 N/A N/A N/A
Mid Cap Value Fund/4/ 45624 189,538 74,315 51,464
International Equity Fund/1/ 30437 15,221 0 N/A
Small Cap Value Fund/1/ 4353 6,745 2,674 N/A
Large Cap Value Fund/6/ NA N/A N/A N/A
European Equity 2357 1,490 N/A N/A
Japanese Equity Fund 3738 33,786 N/A N/A
International Small Cap Fund 10,606 40,115 N/A N/A
Emerging Markets Equity Fund/7/ 23830 32,313 617 N/A
Asia Growth Fund/1/ 1708 406 0 N/A
|
Service Shares
====================================================
Fiscal period Fiscal year Fiscal year Fiscal year
============= =========== =========== ===========
Ended ended ended ended
============= =========== =========== ===========
August 31, January 31, January 31, January 31,
============= =========== =========== ===========
1999 1999 1998 1997
============= =========== =========== ===========
Balanced Fund/1/ 36 $ 246 $ N/A $ N/A
Growth and Income Fund 2595 4,575 5,033 488
CORE Large Cap Value Fund/2/ 1 0 N/A N/A
CORE U.S. Equity Fund/1/ 2767 1,735 0 N/A
CORE Large Cap Growth Fund/3/ 511 490 21 N/A
CORE Small Cap Equity Fund/4/ 4 31 0 N/A
CORE International Equity
Fund/4/ 2 8 0 N/A
Capital Growth Fund/1/ 1335 612 0 N/A
Strategic Growth Fund/5/ 0 N/A N/A N/A
Growth Opportunities Fund/5/ 0 N/A N/A N/A
Mid Cap Value Fund/4/ 53 60 1 N/A
International Equity Fund/1/ 851 596 0 N/A
Small Cap Value Fund/1/ 38 47 0 N/A
Large Cap Value Fund NA N/A N/A N/A
European Equity/6/ 0 0 N/A N/A
Japanese Equity Fund/6/ 0 5 N/A N/A
International Small Cap Fund/6/ 1 4 N/A N/A
Emerging Markets Equity Fund/7/ 1 44 0 N/A
Asia Growth Fund/1/ 0 N/A 0 N/A
|
/1/ Prior to August 15, 1997, the Balanced Fund had not sold Institutional Shares or Service Shares; prior to June 3, 1996 and March 6, 1996, Growth and Income Fund had not sold Institutional and Service Shares, respectively; prior to June 7, 1996 CORE U.S. Equity Fund had not sold Service Shares; prior to August 15, 1997 neither Capital Growth Fund nor Small Cap Value Fund had sold Institutional or Service Shares; prior to February 7, 1996 and March 6, 1996, International Equity Fund and had not sold Institutional or Service Shares prior to February 2, 1996 Asia Growth Fund had not sold Institutional Shares; Asia Growth Fund had not sold Service Shares as of November 30, 1999.
/2/ The CORE Large Cap Value Fund commenced operations on December 31, 1998.
/3/ Prior to May 1, 1997 and May 1, 1997 CORE Large Cap Growth Fund had not sold Class A, Class B, Class C, Institutional or Service Shares, respectively.
/4/ Prior to August 15, 1997,the CORE Small Cap Equity and the CORE International Equity Funds had not sold Class A, Class B, Class C, Institutional or Service Shares. Mid Cap Value Fund had not sold Service Shares prior to July 18, 1997.
/5/ The Strategic Growth and Growth Opportunities Funds commenced operations on May 24, 1999.
/6/ The Large Cap Value Fund commenced operations on November 30, 1999.
/7/ Prior to December 15, 1997, the Emerging Markets Equity Fund had not sold Institutional or Service Shares.
The Trust's distribution and transfer agency agreements each provide that Goldman Sachs may render similar services to others so long as the services Goldman Sachs provides thereunder are not impaired thereby. Such agreements also provide that the Trust will indemnify Goldman Sachs against certain liabilities.
The Trust, on behalf of each Fund, is responsible for the payment of each Fund's respective expenses. The expenses include, without limitation, the fees payable to the Investment Advisers, service fees paid to Service Organizations, the fees and expenses of the Trust's custodian and subcustodians, transfer agent fees, brokerage fees and commissions, filing fees for the registration or qualification of the Trust's shares under federal or state securities laws, expenses of the organization of the Trust, fees and expenses incurred by the Trust in connection with membership in investment company organizations, taxes, interest, costs of liability insurance, fidelity bonds or indemnification, any costs, expenses or losses arising out of any liability of, or claim for damages or other relief asserted against, the Trust for violation of any law, legal and auditing fees and expenses (including the cost of legal and certain accounting services rendered by employees of GSAM, GSAMI and Goldman Sachs with respect to the Trust), expenses of preparing and setting in type prospectuses, statements of additional information, proxy material, reports and notices and the printing and distributing of the same to the Trust's shareholders and regulatory authorities, any expenses assumed by a Fund pursuant to its distribution and service plans, compensation and expenses of its "non-interested" Trustees and extraordinary expenses, if any, incurred by the Trust. Except for fees under any distribution and service plans applicable to a particular class and transfer agency fees, all Fund expenses are borne on a non-class specific basis.
The imposition of the Investment Adviser's fee, as well as other operating expenses, will have the effect of reducing the total return to investors. From time to time, the Investment Adviser may waive receipt of it fees and/or voluntarily assume certain expenses of a Fund, which would have the effect of lowering that Fund's overall expense ratio and increasing total return to investors at the time such amounts are waived or assumed, as the case may be.
The Investment Advisers voluntarily have agreed to reduce or limit certain "Other Expenses" (excluding management, distribution and service fees, transfer agency fees, service share fees, taxes, interest, brokerage, and litigation, indemnification and other extraordinary expenses) for the following Funds to the extent such expenses exceed the following percentage of average daily net assets:
Other
Expenses
---------
Balanced Fund 0.01%
Growth and Income Fund 0.05%
CORE Large Cap Value Fund 0.00%
CORE U.S. Equity Fund 0.00%
CORE Large Cap Growth Fund 0.00%
CORE Small Cap Equity Fund 0.04%
CORE International Equity Fund 0.12%
Capital Growth Fund 0.00%
Strategic Growth Fund 0.00%
Growth Opportunities Fund 0.00%
Mid Cap Value Fund 0.10%
Small Cap Value Fund 0.06%
Large Cap Value Fund 0.00%
International Equity Fund 0.10%
European Equity Fund 0.10%
Japanese Equity Fund 0.01%
International Small Cap Fund 0.16%
Emerging Markets Equity Fund 0.15%
Asia Growth Fund 0.16%
|
Such reductions or limits, if any, are calculated monthly on a cumulative basis and may be discontinued or modified by the applicable Investment Adviser in its discretion at any time.
Fees and expenses of legal counsel, registering shares of a Fund, holding meetings and communicating with shareholders may include an allocable portion of the cost of maintaining an internal legal and compliance department. Each Fund may also bear an allocable portion of the applicable Investment Adviser's costs of performing certain accounting services not being provided by a Fund's Custodian.
REINBURSEMENT
For the fiscal period ended August 31, 1999 and the fiscal years ended January 31, 1999, January 31, 1998 and January 31, 1997, the amounts of certain "Other Expenses" of each Fund then in existence that were reduced or otherwise limited were as follows under the expense limitations that were then in effect:
Fiscal period ended Fiscal year ended Fiscal year ended Fiscal year ended
=================== ================= ================= =================
August 31, January 31, January 31, January 31,
========== =========== =========== ===========
1999 1999 1998 1997
==== ==== ==== ====
Balanced Fund/1/ 307,789 $ 481,945 $420,659 $319,552
Growth and Income Fund/1/ 599,598 1,033,046 0 0
CORE Large Cap Value Fund/2/ 239,291 137,173 N/A N/A
CORE U.S. Equity Fund 340,568 534,447 63,253 104,833
CORE Large Cap Growth Fund/3/ 323,807 483,322 332,713 N/A
CORE Small Cap Equity Fund/4/ 275,311 415,298 202,498 N/A
CORE International Equity Fund/4/ 223,253 806,303 206,055 N/A
Capital Growth Fund/1/ 457,262 933,189 0 N/A
Strategic Growth Fund/5/ 303,839 N/A N/A N/A
Growth Opportunities Fund/5/ 303,862 N/A N/A N/A
Mid Cap Value Fund/4/ 134,639 459,373 264,378 72,441
International Equity Fund 311,046 1,803,009 0 144,265
Small Cap Value Fund/1/ 191,783 556,422 0 N/A
Large Cap Value Fund/6/ NA N/A N/A N/A
European Equity Fund/7/ 227,469 190,277 N/A N/A
Japanese Equity Fund/7/ 208,419 263,545 N/A N/A
International Small Cap Fund/7/ 183,234 361,922 N/A N/A
Emerging Markets Equity Fund/8/ 355,841 696,214 112,725 N/A
Asia Growth Fund/1/ 211,592 519,489 125,828 50,407
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/1/ Prior to May 1, 1996 and August 15, 1997, Balanced, Growth and Income, CORE U.S. Equity, Capital Growth, Small Cap Value, International Equity and Asia Growth Funds had not sold Class B and Class C Shares respectively. Prior to August 15, 1997, Balanced Fund had not sold Institutional Shares or Service Shares; prior to June 3, 1996 and March 6, 1996, Growth and Income Fund had not sold Institutional and Service Shares, respectively; prior to June 7, 1996 CORE U.S. Equity Fund had not sold Service Shares; prior to August 15, 1997 neither Capital Growth Fund nor Small Cap Value Fund had sold Institutional or Service Shares; prior to February 7, 1996 and March 6, 1996, International Equity Fund had and sold Institutional Shares and prior to February 2, 1996, Asia Growth Fund had not sold Institutional Shares and Service Shares, respectively. As of November 30, 1999 Asia Growth Fund had not sold Service Shares.
/2/ CORE Large Cap Value Fund commenced operations on December 31, 1998.
/3/ Prior to May 1, 1997 and August 15, 1997, the CORE Large Cap Growth Fund had not sold Class B, Class C or Service Shares, respectively.
/4/ Prior to August 15, 1997,the CORE Small Cap Equity and CORE International Equity Funds had not sold Class A, Class B, Class C, Institutional or Service Shares. The Mid Cap Value Fund had not sold Class A, Class B or Class C Shares prior to August 5, 1997 or Service Shares prior to July 18, 1997.
/5/ The Strategic Growth and Growth Opportunities Funds commenced operations on May 24, 1999.
/6/ The Large Cap Value Fund commenced operations on November 30, 1999.
/7/ Prior to October 1, 1998, May 1, 1998 and May 1, 1998, the European Equity, Japanese Equity and International Small Cap Funds had not sold Class A, Class B or Class C, Institutional or Service Shares
/8/ Prior to December 15, 1997, the Emerging Markets Equity Fund had not sold Class A, Class B, Class C, Institutional or Service Shares.
State Street, P.O. Box 1713, Boston, Massachusetts 02105, is the custodian of the Trust's portfolio securities and cash. State Street also maintains the Trust's accounting records. State Street may appoint domestic and foreign sub- custodians from time to time to hold certain securities purchased by the Trust and to hold cash for the Trust.
Pricewaterhouse Coopers, independent public accountants, 160 Federal Street, Boston, MA 02110, have been selected as auditors of the Funds of the Trust. In addition to audit services, Pricewaterhouse Coopers prepares the Funds' federal and state tax returns, and provides consultation and assistance on accounting, internal control and related matters.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Investment Advisers are responsible for decisions to buy and sell securities for the Funds, the selection of brokers and dealers to effect the transactions and the negotiation of brokerage commissions, if any. Purchases and sales of securities on a securities exchange are effected through brokers who charge a commission for their services. Orders may be directed to any broker including, to the extent and in the manner permitted by applicable law, Goldman Sachs.
In the over-the-counter market, securities are generally traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission, although the price of a security usually includes a profit to the dealer. In underwritten offerings, securities are purchased at a fixed price which includes an amount of compensation to the underwriter, generally referred to as the underwriter's concession or discount. On occasion, certain money market instruments may be purchased directly from an issuer, in which case no commissions or discounts are paid.
In placing orders for portfolio securities of a Fund, the Investment Advisers are generally required to give primary consideration to obtaining the most favorable execution and net price available. This means that an Investment Adviser will seek to execute each transaction at a price and commission, if any, which provides the most favorable total cost or proceeds reasonably attainable in the circumstances. As permitted by Section 28(e) of the Securities Exchange Act of 1934, the Fund may pay a broker which provides brokerage and research services to the Fund an amount of disclosed commission in excess of the commission which another broker would have charged for effecting that transaction. Such practice is subject to a good faith determination that such commission is reasonable in light of the services provided and to such policies as the Trustees may adopt from time to time. While the Investment Advisers generally seek reasonably competitive spreads or commissions, a Fund will not necessarily be paying the lowest spread or commission available. Within the framework of this policy, the Investment Advisers will consider research and investment services provided by brokers or dealers who effect or are parties to portfolio transactions of a Fund, the Investment Advisers and their affiliates, or their other clients. Such research and investment services are those which brokerage houses customarily provide to institutional investors and include research reports on particular industries and companies, economic surveys and analyses, recommendations as to specific securities and other products or services (e.g., quotation equipment and computer related costs and expenses), advice concerning the value of securities, the advisability of investing in, purchasing or selling securities, the availability of securities or the purchasers or sellers of securities, furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy and performance of accounts, effecting securities transactions and performing functions incidental thereto (such as clearance and settlement) and providing lawful and appropriate assistance to the Investment Advisers in the performance of their decision-making responsibilities. Such services are used by the Investment Advisers in connection with all of their investment activities, and some of such services obtained in connection with the execution of transactions for a Fund may be used in managing other investment accounts. Conversely, brokers furnishing such services may be selected for the execution of transactions of such other accounts, whose aggregate assets are far
larger than those of a Fund, and the services furnished by such brokers may be used by the Investment Advisers in providing management services for the Trust.
In circumstances where two or more broker-dealers offer comparable prices and execution capability, preference may be given to a broker-dealer which has sold shares of the Fund as well as shares of other investment companies or accounts managed by the Investment Advisers. This policy does not imply a commitment to execute all portfolio transactions through all broker-dealers that sell shares of the Fund.
On occasions when an Investment Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as its other customers (including any other fund or other investment company or advisory account for which such Investment Adviser acts as investment adviser or sub-investment adviser), the Investment Adviser, to the extent permitted by applicable laws and regulations, may aggregate the securities to be sold or purchased for the Fund with those to be sold or purchased for such other customers in order to obtain the best net price and most favorable execution under the circumstances. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the applicable Investment Adviser in the manner it considers to be equitable and consistent with its fiduciary obligations to such Fund and such other customers. In some instances, this procedure may adversely affect the price and size of the position obtainable for a Fund.
Commission rates in the U.S. are established pursuant to negotiations with the broker based on the quality and quantity of execution services provided by the broker in the light of generally prevailing rates. The allocation of orders among brokers and the commission rates paid are reviewed periodically by the Trustees.
Subject to the above considerations, the Investment Advisers may use Goldman Sachs as a broker for a Fund. In order for Goldman Sachs to effect any portfolio transactions for each Fund, the commissions, fees or other remuneration received by Goldman Sachs must be reasonable and fair compared to the commissions, fees or other remuneration paid to other brokers in connection with comparable transactions involving similar securities being purchased or sold on a securities exchange during a comparable period of time. This standard would allow Goldman Sachs to receive no more than the remuneration which would be expected to be received by an unaffiliated broker in a commensurate arm's- length transaction. Furthermore, the Trustees, including a majority of the Trustees who are not "interested" Trustees, have adopted procedures which are reasonably designed to provide that any commissions, fees or other remuneration paid to Goldman Sachs are consistent with the foregoing standard. Brokerage transactions with Goldman Sachs are also subject to such fiduciary standards as may be imposed upon Goldman Sachs by applicable law.
For the fiscal period ended August 31, 1999 and the fiscal years ended January 31, 1999, January 31, 1998 and January 31, 1997, each Fund in existence paid brokerage commissions as follows:
Total Total Brokerage
Brokerage Amount of Commissions
Total Commissions Transaction Paid
Brokerage Paid to on which to Brokers
Commissions Affiliated Commissions Providing
Paid Persons Paid Research
==== ======= ==== ========
Fiscal Year Period August 31, 1999:
Balanced Fund $ 199,123 $ 18,798 (9%) $ 137,175,861 (4) N/A
Growth and Income Fund 2,361,135 139,095 (6) 1,954,788,960 (4) 85,582,371
CORE Large Cap Value Fund 240,567 1,839 (0) 332,291,465 (0) N/A
CORE U.S. Equity Fund 481,746 5,296 (1) 731,549,511 (0) N/A
CORE Large Cap Growth Fund 225,700 4,909 (2) 400,102,053 (8) N/A
CORE Small Cap Equity Fund 83,581 693 (1) 60,482,834 (3) N/A
CORE International Equity Fund 601,449 - (0) 974,940,454 (0) N/A
Capital Growth Fund 1,000,740 31,968 (3) 1,076,147,992 (5) 51,571,233
Strategic Growth Fund/3/ 23,988 - (0) 21,715,180 (0) N/A
Growth Opportunity Fund/3/ 26,193 - (0) 18,065,858 (0) N/A
Mid Cap Value Fund 691,991 34,185 (5) 408,033,649 (3) 12,802,584
International Equity Fund 1,415,066 - (0) 1,466,285,559 (0) N/A
European Equity Fund 157,143 - (0) 386,316,045 (0) N/A
Small Cap Value Fund 626,104 33,536 (5) 311,817,920 (3) 8,675,529
Large Cap Value Fund/3/ - - (N/A) - N/A
Japanese Equity Fund 83,541 3,043 (4) 193,418,571 (5) N/A
International Small Cap Fund 184,208 - (0) 156,758,635 (0) N/A
Emerging Markets Equity Fund 537,548 29,251 (5) 208,383,598 (4) N/A
Asia Growth Fund 489,354 35,497 (7) 184,149,170 (6) N/A
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/1/ Percentage of total commissions paid.
/2/ Percentage of total amount of transactions involving the payment of commissions effected through affiliated persons.
/3/ Not operational.
Total Total Brokerage
Brokerage Amount of Commissions
Total Commissions Transaction Paid
Brokerage Paid to on which to Brokers
Commissions Affiliated Commissions Providing
Paid Persons Paid Research
==== ======= ==== ========
Fiscal Year Ended January 31, 1999:
Balanced Fund $ 278,343 $ 24,859(9%)/1/ $ 699,638,329(3%)/2/ N/A
Growth and Income Fund 3,210,832 315,934(10%)/1/ 4,646,698,452(7%)/2/ N/A
CORE Large Cap Value Fund 25,776 130(1%)/1/ 60,101,321(0%)/2/ N/A
CORE U.S. Equity Fund 339,110 250,313(74%)/1/ 1,258,046,574(0%)/2/ N/A
CORE Large Cap Growth Fund 230,692 50,914(22%)/1/ 698,188,311(10%)/2/ N/A
CORE Small Cap Equity Fund 167,436 34,173(20%)/1/ 211,969,412(27%)/2/ N/A
CORE International Equity Fund 583,909 0(0%)/1/ 908,196,568(0%)/2/ N/A
Capital Growth Fund 1,022,092 0(0%)/1/ 1,454,154,897(0%)/2/ N/A
Strategic Growth Fund/3/ N/A N/A N/A N/A
Growth Opportunities Fund/3/ N/A N/A N/A N/A
Mid Cap Value Fund 577,025 49,450(9%)/1/ 649,019,064(7%)/2/ N/A
International Equity Fund 1,148,992 0(0%)/1/ 1,608,739,812(0%)/2/ N/A
Small Cap Value Fund 759,195 14,218(2%)/1/ 716,225,444(2%)/2/ N/A
Large Cap Value Fund/3/ N/A N/A N/A N/A
European Equity Fund 139,120 0(0%)/1/ 72,621,844(0%)/2/ N/A
Japanese Equity Fund 33,379 437(1%)/1/ 34,360,336(6%)/2/ N/A
International Small Cap Fund 89,276 0(0%)/1/ 86,891,167(0%)/2/ N/A
Emerging Markets Equity Fund 590,262 51,073(9%)/1/ 472,328,927(3%)/2/ N/A
Asia Growth Fund 320,855 19,653(6%)/1/ 148,887,187(6%)/2/ N/A
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Total Total Brokerage
Brokerage Amount of Commissions
Total Commissions Transaction Paid
Brokerage Paid to on which to Brokers
Commissions Affiliated Commissions Providing
Paid Persons Paid Research
==== ======= ==== ========
Fiscal Year Ended January 31, 1998:
Balanced Fund $ 111,054 $ 13,185(12%)/1/ $2,731,475,157(1%)/2/ N/A
Growth and Income Fund 1,550,312 190,001(12%)/1/ 9,046,102,538(3%)/2/ N/A
CORE Large Cap Value Fund/3/ N/A N/A N/A N/A
CORE U.S. Equity Fund 944,895 0 (0%)/1/ 1,996,000,522(0%)/2/ N/A
CORE Large Cap Growth Fund 54,360 288 (1%)/1/ 200,813,608(0%)/2/ N/A
CORE Small Cap Equity Fund 59,517 0 (0%)/1/ 159,674,227(0%)/2/ N/A
CORE International Equity Fund 43,120 0 (0%)/1/ 142,395,942(0%)/2/ N/A
Capital Growth Fund 514,890 37,947 (7%)/1/ 2,748,868,081(5%)/2/ N/A
Strategic Growth Fund/3/ N/A N/A N/A N/A
Growth Opportunities Fund/3/ N/A N/A N/A N/A
Mid Cap Value Fund 480,808 76,398(15%)/1/ 2,584,258,044(2%)/2/ N/A
International Equity Fund 506,607 0 (0%)/1/ 3,898,716,988(0%)/2/ N/A
Small Cap Value Fund 646,533 82,143(13%)/1/ 5,686,763,232(1%)/2/ N/A
Large Cap Value Fund/3/ N/A N/A N/A N/A
European Equity Fund N/A N/A N/A N/A
Japanese Equity Fund/3/ N/A N/A N/A N/A
International Small Cap Fund/3/ N/A N/A N/A N/A
Emerging Markets Equity Fund 59,999 6,230(10%)/1/ 236,915,108(1%)/2/ N/A
Asia Growth Fund 814,656 2,885 (0%)/1/ 2,160,632,195(1%)/2/ N/A
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For the fiscal period ended August 31, 1999 and the fiscal years ended January 31, 1999, January 31, 1998 and January 31, 1997, each Fund in existence paid brokerage commissions as follows:
Total Total Brokerage
Brokerage Amount of Commissions
Total Commissions Transaction Paid
Brokerage Paid to on which to Brokers
Commissions Affiliated Commissions Providing
Paid Persons Paid Research
==== ======= ==== ========
Fiscal Year Ended January 31, 1997:
Balanced Fund $ 62,072 $ 5,112 (8%)/1/$ 1,057,742(15%)/2/ 0
Growth and Income Fund 779,396 77,587(10%)/1/ 13,310,208 (9%)/2/ 0
CORE Large Cap Value Fund N/A N/A N/A N/A
CORE U.S. Equity Fund 279,620 0(0%)/1/ 6,706,824 (0%)/2/ 0
CORE Large Cap Growth Fund N/A N/A N/A N/A
CORE Small Cap Equity Fund N/A N/A N/A N/A
CORE International Equity Fund N/A N/A N/A N/A
Capital Growth Fund 1,460,140 304,052(21%)/1/ 29,920,578 (1%)/2/ 42,039
Strategic Growth Fund/3/ N/A N/A N/A N/A
Growth Opportunity Fund/3/ N/A N/A N/A N/A
Mid Cap Value Fund 364,294 22,134 (6%)/1/ 6,655,100 (7%)/2/ 0
International Equity Fund 1,529,436 0(0%) 48,059,958 (0%)/2/ 0
European Equity Fund N/A N/A N/A N/A
Small Cap Value Fund 758,205 36,087 (5%)/1/ 16,439,842 (1%)/2/ 0
Large Cap Value Fund/3/ N/A N/A N/A N/A
Japanese Equity Fund N/A N/A N/A N/A
International Small Cap Fund N/A N/A N/A N/A
Emerging Markets Equity Fund N/A N/A N/A N/A
Asia Growth Fund 1,554,313 50,624 (3%)/1/ 102,609,295 (4%)/2/ 0
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During the fiscal year ended January 31, 1999, the Funds acquired and sold securities of their regular broker-dealers. As of August 31, 1999, the Funds held the following amounts of securities of their regular broker-dealers, as defined in Rule 10b-1 under the Act, or their parents ($ in thousands):
Fund Broker/Dealer Amount
---- ------------- ------
Balanced Fund Citigroup $ 2,337
State Street $ 969
Morgan Stanley $ 318
Merrill Lynch $ 1,930
Bear Stearns Companies, Inc. $ 1,786
Deutsch Bank $ 5,595
Lehman Brothers $ 1,786
Growth and Income Deutsch Bank $27,416
Fund Bear Stearns 8,169
Lehman Brothers 8,169
Citigroup 5,446
CORE Large Cap Value Citigroup $ 6,310
Fund Lehman Brothers 77
Deutsch Bank 259
Morgan Stanley Dean Witter 1,639
CORE U.S. Equity Morgan Stanley Dean Witter $6,959
Fund Citigroup 1,757
CORE Large Cap Lehman Brothers $ 1,312
Growth Fund Deutsch Bank 4,407
Citigroup 875
Bear Stearns Companies, Inc. 1,312
CORE Small Cap Citigroup 71
Equity Fund Bear Stearns Companies, Inc. 106
Deutsch Bank 356
Lehman Brothers 106
CORE International N/A N/A
Equity Fund
Capital Growth Fund Citigroup $37,001
Bear Stearns Companies, Inc. 7,223
State Street 39,416
Deutsch Bank 24,240
Lehman Brothers 7,223
Strategic Growth Bear Stearns 174
Fund Deutsch Bank 583
Citigroup 216
State Street 353
Lehman Brothers 174
Growth Opportunities Citigroup $ 39
Fund State Street 78
Bear Stearns 58
Deutsch Bank 194
Mid Cap Value Fund Deutsch Bank $ 4,310
Bear Stearns Companies, Inc. 1,284
Lehman Brothers 1,284
Citigroup 856
International State Street $45,418
Equity Fund
Small Cap Value Salomon Brothers $451
Fund Bear Stearns Companies, Inc. 676
Deutsch Bank 2,268
Lehman Brothers 676
Large Cap Value N/A N/A
Fund
European Equity State Street Bank $5,034
Fund
Japanese Equity State Street Bank $ 2,785
Fund
International Small State Street Bank $17,603
Cap Fund
Emerging Markets State Street Bank $9,664
Equity Fund
Asia Growth Fund State Street Bank $2,595
|
As of January 31, 1999, the Funds held the following amounts of securities of their regular broker/dealers, as defined in Rule 10b-1 under the Act, or their parents ($ in thousands):
Fund Broker/Dealer Amount
---- ------------- ------
Balanced Fund Chase Manhattan Corp. $3,487
Merrill Lynch 2,060
Morgan Stanley 418
ABN-AMRO 4,993,000
Bear Stearns Companies, Inc. 1,427,000
Growth and Income Chase Manhattan Corp. $15,734
Fund ABN-AMRO 8,017
Bear Stearns 2,291
CS First Boston 3,330
CORE Large Cap Value Chase Manhattan Corp. $1,769
Fund Bear Stearns Companies, Inc. 123
Lehman Brothers 170
Merrill Lynch 198
Morgan Stanley Dean Witter 564
CORE U.S. Equity Chase Manhattan Corp. $4,762
Fund Merrill Lynch 14,372
Morgan Stanley Dean Witter 13,586
ABN-AMRO 10,302
Bear Stearns Companies, Inc. 13,120
CS First Boston 4,280
Donaldson, Lufkin & Jenrette $6,776
CORE Large Cap Lehman Brothers $4,736
Fund Growth Merrill Lynch 2,402
Morgan Stanley Dean Witter 5,686
ABN-AMRO 7,419
Bear Stearns Companies, Inc. 5,849
CS First Boston 3,082
Donaldson, Lufkin & Jenrette 1,646
CORE Small Cap ABN-AMRO $1,231
Equity Fund Bear Stearns Companies, Inc. 352
CS First Boston 511
CORE International N/A N/A
Equity Fund
Capital Growth Fund ABN-AMRO $15,155
Bear Stearns Companies, Inc. 4,330
CS First Boston 6,296
Strategic Growth N/A N/A
Fund
Growth Opportunities N/A N/A
Fund
Mid Cap Value Fund ABN-AMRO $10,478
Bear Stearns Companies, Inc. 2,994
CS First Boston 4,353
International N/A N/A
Equity Fund
Small Cap Value ABN-AMRO $6,927
Fund Bear Stearns Companies, Inc. 1,979
CS First Boston 2,878
European Equity N/A N/A
Fund
Japanese Equity N/A N/A
International Small N/A N/A
Cap Fund
Emerging Markets Merrill Lynch $7,547
Equity Fund
Asia Growth Fund N/A N/A
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NET ASSET VALUE
Under the Act, the Trustees are responsible for determining in good faith the fair value of securities of each Fund. In accordance with procedures adopted by the Trustees, the net value per share of each class of each Fund is calculated by determining the value of the net assets attributed to each class of that Fund and dividing by the number of outstanding shares of that class. All securities are valued as of the close of regular trading on the New York Stock Exchange (normally, but not always, 4:00 p.m. New York time) on each Business Day. The term "Business Day" means any day the New York Stock Exchange is open for trading, which is Monday through Friday except for holidays. The New York Stock Exchange is closed on the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day (observed), Good Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
In the event that the New York Stock Exchange or the national securities exchange on which stock options are traded adopt different trading hours on either a permanent or temporary basis, the Trustees will reconsider the time at which net asset value is computed. In addition, each Fund may compute its net asset value as of any time permitted pursuant to any exemption, order or statement of the SEC or its staff.
Portfolio securities of the Fund for which accurate market quotations are available are valued as follows: (a) securities listed on any U.S. or foreign stock exchange or on the National Association of Securities Dealers Automated Quotations System ("NASDAQ") will be valued at the last sale price on the exchange or system in which they are principally traded on the valuation date. If there is no sale on the valuation day, securities traded will be valued at the closing bid price, or if a closing bid price is not available, at either the exchange or system-defined close price on the exchange or system in which such securities are principally traded. If the relevant exchange or system has not closed by the above-mentioned time for determining the Funds net asset value, the securities will be valued at the last sale price, or if not available at the bid price at the time the net asset value is determined; (b) over-the-counter securities not quoted on NASDAQ will be valued at the last sale price on the valuation day or, if no sale occurs, at the last bid price at the time net asset value is determined; (c) equity securities for which no prices are obtained under section (a) or (b) including those for which a pricing service supplies no exchange quotation or a quotation that is believed by the portfolio manager/trader to be inaccurate, will be valued at their fair value in accordance with procedures approved by the Board of Trustees; (d) fixed-income securities with a remaining maturity of 60 days or more for which accurate market quotations are readily available will normally be valued according to dealer-supplied bid quotations or bid quotations from a recognized pricing service (e.g., Merrill Lynch, J.J. Kenny, Muller Data Corp., Bloomberg, EJV, Reuters or Standard & Poor's); (e) fixed-income securities for which accurate market quotations are not readily available are valued by the Investment Advisers based on valuation models that take into account spread and daily yield changes on government securities in the appropriate market (i.e., matrix pricing); (f) debt securities with a remaining maturity of 60 days or less are valued by the Investment Adviser at amortized cost, which the Trustees have determined to approximate fair value; and (g) all other instruments, including those for which a pricing service supplies no exchange quotation or a quotation that is believed by the portfolio manager/trader to be inaccurate, will be valued at fair value in accordance with the valuation procedures approved by the Board of Trustees.
The value of all assets and liabilities expressed in foreign currencies will be converted into U.S. dollar values at current exchange rates of such currencies against U.S. dollars last quoted by any major bank. If such quotations are not available, the rate of exchange will be determined in good faith by or under procedures established by the Board of Trustees.
Generally, trading in securities on European and Far Eastern securities exchanges and on over-the-counter markets is substantially completed at various times prior to the close of business on each Business Day in New York (i.e., a day on which the New York Stock Exchange is open for trading). In addition, European or Far Eastern securities trading generally or in a particular country or countries may not take place on all Business Days in New York. Furthermore, trading takes place in various foreign markets on days which are not Business Days in New York and days on which the Funds' net asset values are not calculated. Such calculation does not take place contemporaneously with the determination of the prices of the majority of the portfolio securities used in such calculation. The impact of events that occur after the publication of market quotations used by a Fund to price its securities but before the close of regular trading on the
New York Stock Exchange will normally not be reflected in a Fund's next determined NAV unless the Trust, in its discretion, makes an adjustment in light of the nature and materiality of the event, its effect on Fund operations and other relevant factors.
The proceeds received by each Fund and each other series of the Trust from the issue or sale of its shares, and all net investment income, realized and unrealized gain and proceeds thereof, subject only to the rights of creditors, will be specifically allocated to such Fund and constitute the underlying assets of that Fund or series. The underlying assets of each Fund will be segregated on the books of account, and will be charged with the liabilities in respect of such Fund and with a share of the general liabilities of the Trust. Expenses of the Trust with respect to the Funds and the other series of the Trust are generally allocated in proportion to the net asset values of the respective Funds or series except where allocations of direct expenses can otherwise be fairly made.
PERFORMANCE INFORMATION
Each Fund may from time to time quote or otherwise use yield and total return information in advertisements, shareholder reports or sales literature. Average annual total return and yield are computed pursuant to formulas specified by the SEC.
Thirty-day yield is derived by dividing net investment income per share earned during the period by the maximum public offering price per share on the last day of such period. The results are compounded on a bond equivalent (semi-annual) basis and then annualized. Net investment income per share is equal to the dividends and interest earned during the period, reduced by accrued expenses for the period. The calculation of net investment income for these purposes may differ from the net investment income determined for accounting purposes.
Distribution rate for a specified period is calculated by annualizing distributions of net investment income for such period and dividing this amount by the net asset value per share or maximum public offering price on the last day of the period.
Average annual total return for a specified period is derived by calculating the actual dollar amount of the investment return on a $1,000 investment made at the maximum public offering price at the beginning of the period, and then calculating the annual compounded rate of return which would produce that amount, assuming a redemption at the end of the period. This calculation assumes a complete redemption of the investment. It also assumes that all dividends and distributions are reinvested at net asset value on the reinvestment dates during the period.
Year-by-year total return and cumulative total return for a specified period are each derived by calculating the percentage rate required to make a $1,000 investment (made at the maximum public offering price with all distributions reinvested) at the beginning of such period equal to the actual total value of such investment at the end of such period. The table set forth below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of $1,000 in a Fund for the periods indicated.
Total return calculations for Class A Shares reflect the effect of paying the maximum initial sales charge. Investment at a lower sales charge would result in higher performance figures. Total return calculations for Class B and Class C Shares reflect deduction of the applicable CDSC imposed upon redemption of Class B and Class C Shares held for the applicable period. Each Fund may also from time to time advertise total return on a cumulative, average, year-by-year or other basis for various specified periods by means of quotations, charts graphs or schedules. In addition, each Fund may furnish total return calculations based on investments at various sales charge levels or at NAV. Any performance information which is based on a Fund's NAV per Share would be reduced if any applicable sales charge were taken into account. In addition to the above, each Fund may from time to time advertise its performance relative to certain averages, performance rankings, indices, other information prepared by recognized mutual fund statistical services and investments for which reliable performance information is available. The Funds' performance quotations do not reflect any fees charged by an Authorized Dealer, Service Organization or other financial intermediary to its customer accounts in connection with investments in the Funds.
Occasionally, statistics may be used to specify Fund volatility or risk. Measures of volatility or risk are generally used to compare a Fund's net asset value or performance relative to a market index. One measure of volatility is beta. Beta is the volatility of a Fund relative to the total market. A beta of more than 1.00 indicates volatility greater than the market, and a beta of less than 1.00 indicates volatility less than the market. Another measure of volatility or risk is standard deviation. Standard deviation is used to measure variability of net asset value or total return around an average, over a specified period of time. The premise is that greater volatility connotes greater risk undertaken in achieving performance.
From time to time the Trust may publish an indication of a Fund's past performance as measured by independent sources such as (but not limited to) Lipper Analytical Services, Inc., Morningstar Mutual Funds, Weisenberger Investment Companies Service, Donoghue's Money Fund Report, Micropal, Barron's, Business Week, Consumer's Digest, Consumer's Report, Investors Business Daily, The New York Times, Kiplinger's Personal Finance Magazine, Changing Times, Financial World, Forbes, Fortune, Money, Personal Investor, Sylvia Porter's Personal Finance and The Wall Street Journal. The Trust may also advertise information which has been provided to the NASD for publication in regional and local newspapers. In addition, the Trust may from time to time advertise a Fund's performance relative to certain indices and benchmark investments, including: (a) the Lipper Analytical Services, Inc. Mutual Fund Performance Analysis, Fixed-Income Analysis and Mutual Fund Indices (which measure total return and average current yield for the mutual fund industry and rank mutual fund performance); (b) the CDA Mutual Fund Report published by CDA Investment Technologies, Inc. (which analyzes price, risk and various measures of return for the mutual fund industry); (c) the Consumer Price Index published by the U.S. Bureau of Labor Statistics (which measures changes in the price of goods and services); (d) Stocks, Bonds, Bills and Inflation published by Ibbotson Associates (which provides historical performance figures for stocks, government securities and inflation); (e) the Salomon Brothers' World Bond Index (which measures the total return in U.S. dollar terms of government bonds, Eurobonds and foreign bonds of ten countries, with all such bonds having a minimum maturity of five years); (f) the
Lehman Brothers Aggregate Bond Index or its component indices; (g) the Standard & Poor's Bond Indices (which measure yield and price of corporate, municipal and U.S. Government bonds); (h) the J.P. Morgan Global Government Bond Index; (i) other taxable investments including certificates of deposit (CDs), money market deposit accounts (MMDAs), checking accounts, savings accounts, money market mutual funds and repurchase agreements; (j) Donoghues' Money Fund Report (which provides industry averages for 7-day annualized and compounded yields of taxable, tax-free and U.S. Government money funds); (k) the Hambrecht & Quist Growth Stock Index; (l) the NASDAQ OTC Composite Prime Return; (m) the Russell Midcap Index; (n) the Russell 2000 Index- Total Return; (o) the Russell 1000 Value Index; (p) the Russell 1000 Growth Index-Total Return; (q) the Value- Line Composite-Price Return; (r) the Wilshire 4500 Index; (s) the FT-Actuaries Europe and Pacific Index; (t) historical investment data supplied by the research departments of Goldman Sachs, Lehman Brothers, First Boston Corporation, Morgan Stanley (including the EAFE Indices, the Morgan Stanley Capital International Combined Asia ex Japan Free Index and the Morgan Stanley Capital International Emerging Markets Free Index), Salomon Brothers, Merrill Lynch, Donaldson Lufkin and Jenrette or other providers of such data; (u) CDA/Wiesenberger Investment Companies Services or Wiesenberger Investment Companies Service; (v) The Goldman Sachs Commodities Index; (w) information produced by Micropal, Inc.; and (x) The Toykyo Price Index. The composition of the investments in such indices and the characteristics of such benchmark investments are not identical to, and in some cases are very different from, those of a Fund's portfolio. These indices and averages are generally unmanaged and the items included in the calculations of such indices and averages may not be identical to the formulas used by a Fund to calculate its performance figures.
Information used in advertisements and materials furnished to present and prospective investors may include statements or illustrations relating to the appropriateness of certain types of securities and/or mutual funds to meet specific financial goals. Such information may address:
. cost associated with aging parents;
. funding a college education (including its actual and estimated cost);
. health care expenses (including actual and projected expenses);
. long-term disabilities (including the availability of, and coverage provided by, disability insurance);
. retirement (including the availability of social security benefits, the tax treatment of such benefits and statistics and other information relating to maintaining a particular standard of living and outliving existing assets);
. asset allocation strategies and the benefits of diversifying among asset classes;
. the benefits of international and emerging market investments;
. the effects of inflation on investing and saving;
. the benefits of establishing and maintaining a regular pattern of investing and the benefits of dollar-cost averaging; and
. measures of portfolio risk, including but not limited to, alpha, beta and standard deviation.
The Trust may from time to time use comparisons, graphs or charts in advertisements to depict the following types of information:
. the performance of various types of securities (common stocks, small company stocks, long-term government bonds, treasury bills and certificates of deposit) over time. However, the characteristics of these securities are not identical to, and may be very different from, those of a Fund's portfolio;
. the dollar and non-dollar based returns of various market indices (i.e., Morgan Stanley Capital International EAFE Index, FT-Actuaries Europe & Pacific Index and the Standard & Poor's Index of 500 Common Stocks) over varying periods of time;
. total stock market capitalizations of specific countries and regions on a global basis;
. performance of securities markets of specific countries and regions; and
. value of a dollar amount invested in a particular market or type of security over different periods of time.
In addition, the Trust may from time to time include rankings of Goldman, Sachs & Co.'s research department by publications such as the Institutional Investor and the Wall Street Journal in advertisements.
The CORE Large Cap Growth Fund commenced operations on May 1, 1997. The performance information shown below for periods before that date is for a predecessor separate account managed by the Investment Adviser which converted into Class A Shares as of the commencement date. The performance record of the separate account quoted by the Fund have been adjusted downward based on the expenses applicable to Class A Shares (the class into which the separate account transferred) to reflect the expenses expected to be incurred by the Fund during
its initial year of operation. These expenses include any sales charges and asset-based charges (i.e., fees under Distribution and Service Plans) imposed and other operating expenses. Total return quotations are calculated pursuant to the methodology prescribed by the SEC for standardized performance calculations. Prior to May 1, 1997, the separate account was a separate investment advisory account under discretionary management by the Investment Adviser and had substantially similar investment objectives, policies and strategies as the Fund. Unlike the Fund, the separate account was not registered as an investment company under the Act and therefore was not subject to certain investment restrictions and operational requirements that are imposed on investment companies by the Act. If the separate account had been registered as an investment company under the Act, the separate account's performance may have been adversely affected by such restrictions and requirements. On May 1, 1997, the separate account transferred a portion of its assets to the Fund in exchange for Fund shares. The performance record of each other class has been linked to the performance of the separate account (based on Class A expenses) and the Class A performance for any periods prior to commencement of operations of a class of shares.
The Service Shares of the Balanced, Capital Growth, Small Cap Value, Growth and Income, CORE U.S. Equity, CORE Large Cap Growth and International Equity Funds commenced operations on August 15, 1997, August 15, 1997, August 15, 1997, March 6, 1996, June 7, 1996, May 1, 1997 and March 6, 1996, respectively. The Service Shares of these Funds had no operating or performance history prior thereto. However, in accordance with interpretive positions expressed by the staff of the SEC, each of these Funds has adopted the performance records of its respective Class A Shares from that class's inception date (October 12, 1994, April 20, 1990, October 22, 1992, February 5, 1993, May 24, 1991, May 1, 1997 and December 1, 1992 respectively) to the inception dates of Service Shares stated above. Quotations of performance data of these Funds relating to this period include the performance record of the applicable Class A Shares (excluding the impact of any applicable front-end sales charge). The performance records of the applicable Class A Shares reflect the expenses incurred by the Funds. These expenses include asset-based charges (i.e., fees under Distribution and Service Plans) and other operating expenses. Total return quotations are calculated pursuant to SEC-approved methodology.
INTRODUCTION
VALUE OF $1,000 INVESTMENT
(AVERAGE ANNUAL TOTAL RETURN)
Assuming no voluntary
waiver of fees and no
expense reimbursements
-----------------------
Assumes Assumes
Maximum maximum
Applicable Assumes Applicable Assumes
Sales no sales sales no sales
Fund Class Time Period Charge** Charge Charge** Charge
---- ----- ----------- -------- ------ ---------- ---------
Balanced Fund A 10/12/94-8/31/99 - Since inception 24.28% 13.84% 24.05% 12.70%
Balanced Fund A 9/1/98-8/31/99 - One year 39.54% 13.08% 39.41% 12.78%
Balanced Fund B 5/1/96-8/31/99 - Since inception 9.79% 10.65% 9.55% 10.41%
Balanced Fund B 9/1/98-8/31/99 - One year 7.16% 12.26% 6.94% 12.04%
Balanced Fund C 8/15/97-8/31/99 - Since inception 2.84% 2.84% 2.59% 2.59%
Balanced Fund C 9/1/98-8/31/99 - One year 11.22% 12.24% 11.00% 12.02%
Balanced Fund Institutional 8/15/97-8/31/99 - Since inception N/A 3.94% N/A 3.64%
Balanced Fund Institutional 9/1/98-8/31/99 - One year N/A 13.55% N/A 13.29%
Balanced Fund Service 10/12/94-8/31/99 - Since inception N/A 13.72% N/A 12.64%
Balanced Fund Service 9/1/98-8/31/99 - One Year N/A 12.80% N/A 12.55%
Growth and Income A 2/5/93-8/31/99 - Since inception 13.20% 14.18% 12.70% 13.67%
Growth and Income A 9/1/94-8/31/99 - Five years 13.02% 14.30% 12.85% 14.13%
Growth and Income A 9/1/98-8/31/99 - One year 7.96% 14.23% 7.91% 14.19%
Growth and Income B 5/1/96-8/31/99 - Since inception 10.53% 11.39% 10.53% 11.39%
Growth and Income B 9/1/98-8/31/99 - One year 8.29% 13.31% 8.31% 13.33%
Growth and Income C 8/15/97-8/31/99 - Since inception (2.05)% (2.05)% (2.05)% (2.06)%
Growth and Income C 9/1/98-8/31/99 - One year 12.36% 13.36% 12.39% 13.39%
Growth and Income Institutional 6/3/96-8/31/99 - Since inception N/A 12.33% N/A 12.31%
Growth and Income Institutional 9/1/98-8/31/99 - One year N/A 14.73% N/A 14.73%
Growth and Income Service 2/5/93-8/31/99 - Since inception N/A 14.14 N/A 13.71%
Growth and Income Service 9/1/94-8/31/99 - Five years N/A 14.25% N/A 14.18%
Growth and Income Service 9/1/98-8/31/99 - One year N/A 14.15% N/A 14.14%
CORE Large Cap Value A 12/31/98-8/31/99 - Since inception* 0.07% 5.87% (0.63)% 5.13%
CORE Large Cap Value B 12/31/98-8/31/99 - Since inception* 0.22% 5.23% (0.51)% 4.50%
CORE Large Cap Value C 12/31/98-8/31/99 - Since inception* 4.28% 5.29% 3.54% 4.55%
CORE Large Cap Value Institutional 12/31/98-8/31/99 - Since inception* N/A 6.02% N/A 5.28%
CORE Large Cap Value Service 12/31/98-8/31/99 - Since inception* N/A 5.78% N/A 5.04%
CORE U.S. Equity A 5/24/91-8/31/99 - Since inception 15.89% 16.68% 15.66% 16.45%
CORE U.S. Equity A 9/1/94-8/31/99 - Five years 21.07% 22.45% 20.86% 22.23%
CORE U.S. Equity A 9/1/98-8/31/99 - One year 31.28% 38.94% 31.12% 38.77%
|
INTRODUCTION
VALUE OF $1,000 INVESTMENT
(AVERAGE ANNUAL TOTAL RETURN)
Assuming no voluntary
waiver of fees and no
expense reimbursements
----------------------
Assumes Assumes
Maximum maximum
Applicable Assumes Applicable Assumes
Sales no sales sales no sales
Fund Class Time Period Charge** Charge Charge** Charge
---- ------------- ----------- -------- ------ ---------- ------
CORE U.S. Equity B 5/1/96-8/31/99 - Since inception 20.93% 21.60% 20.85% 21.52%
CORE U.S. Equity B 9/1/98-8/31/99 - One year 32.79% 37.90% 32.70% 37.81%
CORE U.S. Equity C 8/15/97-8/31/99 - Since inception 16.48% 16.48% 16.31% 16.31%
CORE U.S. Equity C 9/1/98-8/31/99 - One year 36.87% 37.89% 36.76% 37.78%
CORE U.S. Equity Institutional 6/15/95-8/31/99 - Since inception N/A 24.28% N/A 24.05%
CORE U.S. Equity Institutional 9/1/98-8/31/99 - One year N/A 39.54% N/A 39.41%
CORE U.S. Equity Service 5/24/91-8/31/99 - Since inception N/A 16.72% N/A 16.44%
CORE U.S. Equity Service 9/1/94-8/31/99 - Five years N/A 22.50% N/A 22.22%
CORE U.S. Equity Service 9/1/98-8/31/99 - One year N/A 38.81% N/A 38.58%
CORE Large Cap Growth A 11/11/91-8/31/99 - Since inception 20.84% 21.75% 20.58% 21.48%
CORE Large Cap Growth A 9/1/94-8/31/99 - Five years 25.87% 27.37% 25.44% 26.93%
CORE Large Cap Growth A 9/1/98-8/31/99 - One year 39.75% 47.88% 39.34% 47.66%
CORE Large Cap Growth B 5/1/97-8/31/99 - Since inception 25.53% 26.50% 24.76% 25.73%
CORE Large Cap Growth B 9/1/98-8/31/99 - One year 41.69% 46.69% 41.32% 46.32%
CORE Large Cap Growth C 8/15/97-8/31/99- Since inception 20.64% 20.64% 20.22% 20.22%
CORE Large Cap Growth C 9/1/98-8/31/99 - One year 45.81% 46.81% 46.00% 47.00%
CORE Large Cap Growth Institutional 11/11/91-8/31/99 - Since inception N/A 21.84% N/A 21.52%
CORE Large Cap Growth Institutional 9/1/98-8/31/99 - Five years N/A 27.52% N/A 26.99%
CORE Large Cap Growth Institutional 9/1/98-8/31/99 - One year N/A 48.43% N/A 47.05%
CORE Large Cap Growth Service 11/11/91-8/31/99 - Since inception N/A 21.68% N/A 21.51%
CORE Large Cap Growth Service 9/1/98-8/31/99 - Five years N/A 27.26% N/A 26.98%
CORE Large Cap Growth Service 9/1/98-8/31/99 - One year N/A 47.82% N/A 47.84%
CORE Small Cap Equity A 8/15/97-8/31/99 - Since inception (4.37)% 1.38% (2.41)% 0.32%
CORE Small Cap Equity A 9/1/98-8/31/99 - One year 14.02% 20.60% 13.49% 20.05%
CORE Small Cap Equity B 8/15/97-8/31/99 - Since inception (0.82)% 0.66% (1.77)% (0.29)%
CORE Small Cap Equity B 9/1/98-8/31/99 - One year 14.69% 19.69% 14.20% 19.20%
CORE Small Cap Equity C 8/15/97-8/31/99 - Since inception 0.70% 0.70% (0.25)% (0.25)%
CORE Small Cap Equity C 9/1/98-8/31/99 - One year 18.67% 19.67% 18.17% 19.17%
CORE Small Cap Equity Institutional 8/15/97-8/31/99 - Since inception N/A 1.79% N/A 0.83%
CORE Small Cap Equity Institutional 9/1/98-8/31/99 - One Year N/A 21.18% N/A 20.64%
CORE Small Cap Equity Service 8/15/97-8/31/99 - Since inception N/A 1.33% N/A 0.33%
|
INTRODUCTION
VALUE OF $1,000 INVESTMENT
(AVERAGE ANNUAL TOTAL RETURN)
Assuming no voluntary
waiver of fees and no
expense reimbursements
----------------------
Assumes Assumes
Maximum maximum
Applicable Assumes Applicable Assumes
Sales no sales sales no sales
Fund Class Time Period Charge** Charge Charge** Charge
---- ----- ----------- -------- ------ -------- ------
CORE Small Cap Equity Institutional 9/1/98-8/31/99 - One year N/A 21.18% N/A 20.64%
CORE Small Cap Equity Service 8/15/97-8/31/99 - Since inception N/A 1.33% N/A 0.33%
CORE Small Cap Equity Service 9/1/98-8/31/99 - One year N/A 20.48% N/A 19.94%
CORE International Equity A 8/15/97-8/31/99 - Since inception 1.47% 4.30% 0.47% 3.28%
CORE International Equity A 9/1/98-8/31/99 - One year 19.07% 25.96% 18.87% 25.74%
CORE International Equity B 8/15/97-8/31/99 - Since inception 2.46% 3.88% 1.52% 2.94%
CORE International Equity B 9/1/98-8/31/99 - One year 20.41% 25.41% 20.22% 25.22%
CORE International Equity C 8/15/97-8/31/99 - Since inception 3.93% 3.93% 2.99% 2.99%
CORE International Equity C 9/1/98-8/31/99 - One year 24.52% 25.52% 24.34% 25.34%
CORE International Equity Institutional 8/15/97-8/31/99 - Since inception N/A 5.00% N/A 4.06%
CORE International Equity Institutional 9/1/98-8/31/99 - One year N/A 26.96% N/A 26.73%
CORE International Equity Service 8/15/97-8/31/99 - Since inception N/A 4.53% N/A 3.54%
CORE International Equity Service 9/1/98-8/31/99 - One year N/A 26.28% N/A 26.05%
Capital Growth A 4/20/90-8/31/99 - Since inception 18.34% 19.06% 18.06% 18.78%
Capital Growth A 9/1/94-8/31/99 - Five years 21.16% 22.54% 20.96% 22.34%
Capital Growth A 9/1/98-8/31/99 - One year 33.02% 40.78% 32.94% 40.69%
Capital Growth B 5/1/96-8/31/99 - Since inception 24.58% 25.31% 24.68% 25.41%
Capital Growth B 9/1/98-8/31/99 - One year 34.49% 39.67% 34.47% 39.65%
Capital Growth C 8/15/97-8/31/99 - Since inception 22.05% 22.05% 22.01% 22.01%
Capital Growth C 9/1/98-8/31/99 - One year 38.72% 39.76% 38.70% 39.74%
Capital Growth Institutional 8/15/97-8/31/99 - Since inception N/A 23.36% N/A 23.33%
Capital Growth Institutional 9/1/98-8/31/99 - One year N/A 41.34% N/A 41.29%
Capital Growth Service 4/20/90-8/31/99 - Since inception N/A 19.03% N/A 18.77%
Capital Growth Service 9/1/94-8/31/99 - Five years N/A 22.49% N/A 22.33%
Capital Growth Service 9/1/98-8/31/99 - One year N/A 40.65% N/A 40.60%
Strategic Growth A 5/24/99-8/31/99 - Since Inception* (4.91)% 0.60% (7.57)% (2.19)%
Strategic Growth B 5/24/99-8/31/99 - Since Inception* (4.60)% 0.40% (7.39)% (2.39)%
Strategic Growth C 5/24/99-8/31/99 - Since Inception* (0.50)% 0.50% (3.29)% (2.29)%
Strategic Growth Institutional 5/24/99-8/31/99 - Since Inception* N/A 0.70% N/A (2.10)%
Strategic Growth Service 5/24/99-8/31/99 - Since Inception* N/A 0.60% N/A (2.19)%
|
INTRODUCTION
VALUE OF $1,000 INVESTMENT
(AVERAGE ANNUAL TOTAL RETURN)
Assuming no voluntary
waiver of fees and no
expense reimbursements
----------------------
Assumes Assumes
Maximum maximum
Applicable Assumes Applicable Assumes
Sales no sales sales no sales
Fund Class Time Period Charge** Charge Charge** Charge
---- ----- ----------- -------- ------ ------- ------
Growth Opportunities A 5/24/99-8/31/99 - Since Inception* (4.25)% 1.30% (7.55)% (2.18)%
Growth Opportunities B 5/24/99-8/31/99 - Since Inception* (3.20)% 1.80% (6.68)% (1.68)%
Growth Opportunities C 5/24/99-8/31/99 - Since Inception* 0.00% 1.00% (3.47)% (2.47)%
Growth Opportunities Institutional 5/24/99-8/31/99 - Since Inception* N/A 1.30% N/A (2.18)%
Growth Opportunities Service 5/24/99-8/31/99 - Since Inception* N/A 1.20% N/A (2.27)%
Mid Cap Value A 8/15/97-8/31/99 - Since inception (2.28)% 0.46% (2.37)% 0.37%
Mid Cap Value A 9/1/98-8/31/99 - One year 14.52% 21.16% 14.41% 21.05%
Mid Cap Value B 8/15/97-8/31/99 - Since inception (1.68)% (0.21)% (1.76)% (0.29)%
Mid Cap Value B 9/1/98-8/31/99 - One year 14.42% 20.13% 14.39% 20.10%
Mid Cap Value C 8/15/97-8/31/99 - Since inception (0.14)% (0.14)% (0.22)% (0.22)%
Mid Cap Value C 9/1/98-8/31/99 - One year 19.00% 20.15% 18.96% 20.11%
Mid Cap Value Institutional 8/1/95-8/31/99 - Since inception N/A 14.31% N/A 14.21%
Mid Cap Value Institutional 9/1/98-8/31/99 - One year N/A 21.56% N/A 21.48%
Mid Cap Value Service 7/18/97-8/31/99 - Since inception N/A 1.72% N/A 1.63%
Mid Cap Value Service 9/1/98-8/31/99 - One year N/A 21.00% N/A 20.92%
International Equity A 12/1/92-8/31/99 - Since inception 10.84% 11.77% 10.68% 11.61%
International Equity A 9/1/94-8/31/99 - Five years 10.99% 12.25% 10.91% 12.17%
International Equity A 9/1/98-8/31/99 - One year 12.81% 19.39% 12.77% 19.34%
International Equity B 5/1/96-8/31/99 - Since inception 9.37% 10.20% 9.39% 10.22%
International Equity B 9/1/98-8/31/99 - One year 13.40% 18.68% 13.35% 18.63%
International Equity C 8/15/97-8/31/99 - Since inception 6.79% 6.79% 6.70% 6.70%
International Equity C 9/1/98-8/31/99 - One year 17.56% 18.61% 17.51% 18.56%
International Equity Institutional 2/7/96-8/31/99 - Since inception N/A 13.26% N/A 13.17%
International Equity Institutional 9/1/98-8/31/99 - One year N/A 20.05% N/A 19.99%
International Equity Service 12/1/92-8/31/99 - Since inception N/A 11.83% N/A 11.68%
International Equity Service 9/1/94-8/31/99 - Five years N/A 12.33% N/A 12.26%
International Equity Service 9/1/98-8/31/99 - One year N/A 19.43% N/A 19.36%
Small Cap Value A 10/22/92-8/31/99 - Since inception 9.12% 10.02% 8.87% 9.77%
Small Cap Value A 9/1/94-8/31/99 - Five years 4.26% 5.44% 4.08% 5.27%
Small Cap Value A 9/1/98-8/31/99 - One year 8.51% 14.84% 8.33% 14.65%
|
INTRODUCTION
VALUE OF $1,000 INVESTMENT
(AVERAGE ANNUAL TOTAL RETURN)
Assuming no voluntary
waiver of fees and no
expense reimbursements
----------------------
Assumes Assumes
Maximum maximum
Applicable Assumes Applicable Assumes
Sales no sales sales no sales
Fund Class Time Period Charge** Charge Charge** Charge
---- ----- ----------- -------- ------ ------- ------
Small Cap Value B 5/1/96-8/31/99 - Since inception 3.40% 4.35% 3.38% 4.33%
Small Cap Value B 9/1/98-8/31/99 - One year 8.52% 13.89% 8.43% 13.80%
Small Cap Value C 8/15/97-8/31/99 - Since inception (3.29)% (3.89)% (3.94)% (3.94)%
Small Cap Value C 9/1/98-8/31/99 - One year 12.88% 13.95% 12.79% 13.86%
Small Cap Value Institutional 8/15/97-8/31/99 - Since inception N/A (2.83)% N/A (2.88)%
Small Cap Value Institutional 9/1/98-8/31/99 - One year N/A (15.18)% N/A (15.08)%
Small Cap Value Service 10/22/92-8/31/99 - Since inception N/A 9.99% N/A 9.80%
Small Cap Value Service 9/1/94-8/31/99 - Five years N/A 5.40% N/A 5.31%
Small Cap Value Service 9/1/98-8/31/99 - One year N/A 14.61% N/A 14.52%
European Equity A 10/1/98-8/31/99 - Since inception* 11.06% 17.50% 10.38% 16.78%
European Equity B 10/1/98-8/31/99 - Since inception* 12.10% 17.10% 11.38% 16.38%
European Equity C 10/1/98-8/31/99 - Since inception* 16.20% 17.20% 15.48% 16.48%
European Equity Institutional 10/1/98-8/31/99 - Since inception* N/A 18.20% N/A 17.47%
European Equity Service 10/1/98-8/31/99 - Since inception* N/A 17.60% N/A 16.78%
Japanese Equity Fund A 5/1/98-8/31/99 - Since inception 37.79% 43.72% 35.29% 41.14%
Japanese Equity Fund A 9/1/98-8/31/99 - One year 63.06% 72.59% 60.06% 70.00%
Japanese Equity Fund B 5/1/98-8/31/99 - Since inception 40.39% 43.05% 37.81% 40.47%
Japanese Equity Fund B 9/1/98-8/31/99 - One year 66.70% 71.70% 64.12% 69.12%
Japanese Equity Fund C 5/1/98-8/31/99 - Since inception 43.21% 43.21% 40.63% 40.63%
Japanese Equity Fund C 9/1/98-8/31/99 - One year 70.95% 71.95% 68.37% 69.37%
Japanese Equity Fund Institutional 5/1/98-8/31/99 - Since inception N/A 44.58% N/A 42.00%
Japanese Equity Fund Institutional 9/1/98-8/31/99 - One year N/A 73.79 N/A 71.15%
Japanese Equity Fund Service 5/1/98-8/31/99 - Since inception N/A 43.61% N/A 41.01%
Japanese Equity Fund Service 9/1/98-8/31/99 - One year N/A 72.41% N/A 69.79%
International Small Cap Fund A 5/1/98-8/31/99 - Since inception 18.26% 23.36% 17.01% 22.05%
International Small Cap Fund A 9/1/98-8/31/99 - One Year 34.77% 41.30% 32.34% 40.12%
International Small Cap Fund B 5/1/98-8/31/99 - Since inception 20.21% 23.01% 18.90% 21.70%
International Small Cap Fund B 9/1/98-8/31/99 - One Year 35.77% 40.77% 34.59% 39.59%
|
INTRODUCTION
VALUE OF $1,000 INVESTMENT
(AVERAGE ANNUAL TOTAL RETURN)
Assuming no voluntary
waiver of fees and no
expense reimbursements
-----------------------
Assumes Assumes
Maximum maximum
Applicable Assumes Applicable Assumes
Sales no sales sales no sales
Fund Class Time Period Charge** Charge Charge** Charge
---- ----- ----------- -------- ------ -------- ------
International Small Cap Fund C 5/1/98-8/31/99 - Since inception 23.01% 23.01% 21.71% 21.71%
International Small Cap Fund C 9/1/98-8/31/99 - One Year 39.77 40.77% 38.60 39.60%
International Small Cap Fund Institutional 5/1/98-8/31/99 - Since inception N/A 24.19% N/A 22.90%
International Small Cap Fund Institutional 9/1/98-8/31/99 - One Year N/A 42.12% N/A 40.92%
International Small Cap Fund Service 5/1/98-8/31/99 - Since inception N/A 23.36% N/A 22.06%
International Small Cap Fund Service 9/1/98-8/31/99 - One Year N/A 41.30% N/A 40.10%
Emerging Markets Equity A 12/15/97-8/31/99 - Since inception (5.25)% (2.08)% (5.92)% (2.76)%
Emerging Markets Equity A 9/1/98-8/31/99 - One Year 46.60% 55.08% 45.99% 54.44%
Emerging Markets Equity B 12/15/97-8/31/99 - Since inception (4.75)% (2.45)% (5.43)% (3.13)%
Emerging Markets Equity B 9/1/98-8/31/99 - One Year 48.88% 54.08% 48.24% 53.44%
Emerging Markets Equity C 12/15/97-8/31/99 - Since inception (2.31)% (2.31)% (2.99)% (2.99)%
Emerging Markets Equity C 9/1/98-8/31/99 - One Year 53.18% 54.22% 52.55% 53.59%
Emerging Markets Equity Institutional 12/15/97-8/31/99 - Since inception N/A (1.25)% N/A (1.94)%
Emerging Markets Equity Institutional 9/1/98-8/31/99 - One Year N/A 56.08% N/A 57.51%
Emerging Markets Equity Service 12/15/97-8/31/99 - Since inception N/A (3.40)% N/A (3.68)%
Emerging Markets Equity Service 9/1/98-8/31/99 - One Year N/A (55.27)% N/A (54.69)%
Asia Growth A 7/8/94-8/31/99 - Since inception (5.16)% (4.12)% (5.44)% (4.40)%
Asia Growth A 9/1/94-8/31/99 - Five Years (7.23)% (6.18)% (7.50)% (6.95)%
Asia Growth A 9/1/98-8/31/99 - One year 73.24% 83.28% 72.38% 82.37%
Asia Growth B 5/1/96-8/31/99 - Since inception (13.67)% (12.88)% (13.83)% (13.04)%
Asia Growth B 9/1/98-8/31/99 - One year (77.25)% (82.24)% (76.36)% 81.35%
Asia Growth C 8/15/97-8/31/99 - Since inception (16.50)% (16.50)% (16.84)% (16.84)%
Asia Growth C 9/1/98-8/31/99 - One Year 81.35% 82.35% 80.46% 81.46%
Asia Growth Institutional 2/2/96-8/31/99 - Since inception N/A (10.03)% N/A (10.29)%
Asia Growth Institutional 9/1/98-8/31/99 - One year N/A 84.62% N/A 83.85%
|
* Represents an aggregate total return (not annualized) since this class has not completed a full twelve months of operations.
** Total return reflects a maximum initial sales charge of 5.5% for Class A Shares, the assumed deferred sales charge for Class B Shares (5% maximum declining to 0% after six years) and the assumed deferred sales charge for Class C Shares (1% if redeemed within 12 months of purchase).
Effective for fiscal year 1999, the fiscal year-end of the Funds changed from January 31 to August 31. Accordingly, the performance information presented above relates to periods ended August 31, 1999.
As of August 31, 1999, the Large Cap Value Fund had not commenced investment operations and, accordingly, no performance information is presented.
From time to time, advertisements or information may include a discussion of certain attributes or benefits to be derived by an investment in the Fund. Such advertisements or information may include symbols, headlines or other material which highlight or summarize the information discussed in more detail in the communication.
The Trust may from time to time summarize the substance of discussions contained in shareholder reports in advertisements and publish the Investment Adviser's views as to markets, the rationale for a Fund's investments and discussions of a Fund's current asset allocation.
In addition, from time to time, advertisements or information may include a discussion of asset allocation models developed by GSAM and/or its affiliates, certain attributes or benefits to be derived from asset allocation strategies and the Goldman Sachs mutual funds that may be offered as investment options for the strategic asset allocations. Such advertisements and information may also include GSAM's current economic outlook and domestic and international market views to suggest periodic tactical modifications to current asset allocation strategies. Such advertisements and information may include other materials which highlight or summarize the services provided in support of an asset allocation program.
A Fund's performance data will be based on historical results and will not be intended to indicate future performance. A Fund's total return and yield will vary based on market conditions, portfolio expenses, portfolio investments and other factors. The value of a Fund's shares will fluctuate and an investor's shares may be worth more or less than their original cost upon redemption. The Trust may also, at its discretion, from time to time make a list of a Fund's holdings available to investors upon request.
Total return will be calculated separately for each class of shares in existence. Because each class of shares is subject to different expenses, total return with respect to each class of shares of a Fund will differ.
SHARES OF THE TRUST
The Funds, except the CORE International Equity, CORE Small Cap Equity, CORE Large Cap Value, CORE Large Cap Growth, Strategic Growth, Growth Opportunities, Large Cap Value, European Equity, Japanese Equity, International Small Cap and Emerging Markets Equity Funds, were reorganized on April 30, 1997 from series of a Maryland corporation to part of Goldman Sachs Trust, a Delaware business trust, established by a Declaration of Trust dated January 28, 1997.
The Trustees have authority under the Trust's Declaration of Trust to create and classify shares of beneficial interest in separate series, without further action by shareholders. The Trustees also have authority to classify and reclassify any series of shares into one or more classes of shares. As of the date of this Additional Statement, the Trustees have classified the shares of each of the Funds into five classes: Institutional Shares, Service Shares, Class A Shares, Class B Shares and Class C Shares.
Each Institutional Share, Service Share, Class A Share, Class B Share and Class C Share of a Fund represents a proportionate interest in the assets belonging to the applicable class of the Fund. All expenses of a Fund are borne at the same rate by each class of shares, except that fees under Service Plans are borne exclusively by Service Shares, fees under Distribution and Service Plans are borne exclusively by Class A, Class B or Class C Shares and transfer agency fees are borne at different rates by different share classes. The Trustees may determine in the future that it is appropriate to allocate other expenses differently between classes of shares and may do so to the extent consistent with the rules of the SEC and positions of the Internal Revenue Service. Each class of shares may have different minimum investment requirements and be entitled to different shareholder services. With limited exceptions, shares of a class may only be exchanged for shares of the same or an equivalent class of another fund. See "Shareholder Guide" in the Prospectus.
Institutional Shares may be purchased at net asset value without a sales charge for accounts in the name of an investor or institution that is not compensated by a Fund under a Plan for services provided to the institution's customers.
Service Shares may be purchased at net asset value without a sales charge for accounts held in the name of an institution that, directly or indirectly, provides certain account administration and shareholder liaison services to its customers, including maintenance of account records and processing orders to purchase, redeem and exchange Service Shares. Service Shares bear the cost of account administration fees at the annual rate of up to 0.50% of the average daily net assets of the Fund attributable to Service Shares.
Class A Shares are sold, with an initial sales charge of up to 5.5%, through brokers and dealers who are members of the National Association of Securities Dealers, Inc. and certain other financial service firms that have sales agreements with Goldman Sachs. Class A Shares bear the cost of distribution and service fees at the aggregate rate of up to 0.25% of the average daily net assets of such Class A Shares (0.50% with respect to the CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets and Asia Growth Funds). With respect to Class A Shares, the Distributor at its discretion may use compensation for distribution services paid under the Distribution and Services Plan for personal and account maintenance services and expenses so long as such total compensation under the Plan does not exceed the maximum cap on "service fees" imposed by the NASD.
Class B Shares of the Funds are sold subject to a contingent deferred sales charge of up to 5.0% through brokers and dealers who are members of the National Association of Securities Dealers Inc. and certain other financial services firms that have sales arrangements with Goldman Sachs. Class B Shares bear the cost of distribution (Rule 12b-1) fees at the aggregate rate of up to 0.75% of the average daily net assets attributable to Class B Shares. Class B Shares also bear the cost of service fees at an annual rate of up to 0.25% of the average daily net assets attributable to Class B Shares.
Class C Shares of the Funds are sold subject to a contingent deferred sales charge of up to 1.0% through brokers and dealers who are members of the National Association of Securities Dealers Inc. and certain other financial services firms that have sales arrangements with Goldman Sachs. Class C
Shares bear the cost of distribution (Rule 12b-1) fees at the aggregate rate of up to 0.75% of the average daily net assets attributable to Class C Shares. Class C Shares also bear the cost of service fees at an annual rate of up to 0.25% of the average daily net assets attributable to Class C Shares.
It is possible that an institution or its affiliate may offer different classes of shares (i.e., Institutional, Service, Class A Shares, Class B Shares and Class C Shares) to its customers and thus receive different compensation with respect to different classes of shares of each Fund. Dividends paid by each Fund, if any, with respect to each class of shares will be calculated in the same manner, at the same time on the same day and will be the same amount, except for differences caused by the differences in expenses discussed above. Similarly, the net asset value per share may differ depending upon the class of shares purchased.
Certain aspects of the shares may be altered after advance notice to shareholders if it is deemed necessary in order to satisfy certain tax regulatory requirements.
When issued, shares are fully paid and non-assessable. In the event of liquidation, shareholders are entitled to share pro rata in the net assets of the applicable class of the relevant Fund available for distribution to such shareholders. All shares are freely transferable and have no preemptive, subscription or conversion rights.
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Balanced Fund - Edward Jones & Co. Attention: Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (55%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Growth and Income Fund - Edward Jones & Co., Attention: Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (42%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the CORE Large Cap Value Fund - State Street Bank and Trust Company - FBO Goldman Sachs Growth and Income Strategy, P.O. Box 1713, Boston, MA 02105-1713 (20%); State Street Bank and Trust Company - Goldman Sachs Growth Strategy, P.O. Box 1713, Boston, MA 02105-1713 (20%); State Street Bank & Trust Co - Goldman Sachs Aggressive Growth Omnibus a/c Core Large Cap Value, P.O. Box 1713, Boston, MA 02105-1713 (10%); and Resources Trust Company - FBO Various Customers, 8051 E. Maplewood Ave, Englewood, CO 80111-4757 (14%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the CORE U.S. Equity Fund - Edward Jones & Co., Attention: Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (54%); and State Street Bank and Trust Company - GS Profit Sharing Master Trust, Attention: Louis Pereira, P.O. Box 1992, Boston, MA 02105-1992 (31%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the CORE Large Cap Growth Fund - Edward Jones & Co., Attention:
Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (8%); State Street Bank and Trust Company - Goldman Sachs Growth and Income Strategy, P.O. Box 1713, Boston, MA 02105-1713 (7%); State Street Bank and Trust Company - FBO Goldman Sachs Growth Strategy, P.O. Box 1713, Boston, MA 02105- 1713 (6%); and Alfa Mutual Insurance Co. - Saving and PS Plan, Invesco Trust Co., P.O. Box 77405, Atlanta, GA 30357-1405 (5%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the CORE Small Cap Equity Fund - State Street Bank and Trust Company - FBO Goldman Sachs Growth and Income Strategy, P.O. Box 1713, Boston, MA 02105-1713 (11%); State Street Bank and Trust Company - Goldman Sachs Growth Strategy, P.O. Box 1713, Boston, MA 02105- 1713 (10%); Resources Trust Company - FBO Various Customers, 8051 E. Maplewood Ave, Englewood, CO 80111-4757 (7%); State Street Bank and Trust Company - Goldman Sachs Aggressive Growth Strategy, P.O. Box 1713, Boston, MA 02105-1713 (5%); Goldman Sachs & Co, FBO Acct # 021017538, c/o Mutual Fund Ops, 85 Broad St., New York, NY 1004-2456 (5%); and Huntington Hospital Pension Fund, Attention: J Ronald Gaudreault, 270 Park Avenue, Huntington, NY 11743-2799 (5%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the CORE International Equity Fund - State Street Bank and Trust Company - FBO Goldman Sachs Growth and Income Strategy, P.O. Box 1713, Boston, MA 02105-1713 (24%); State Street Bank and Trust Company - Goldman Sachs Growth Strategy Omnibus A/C, P.O. Box 1713, Boston, MA 02105-1713 (21%); Resources Trust Company - FBO Various Customers, 8051 E. Maplewood Ave, Englewood, CO 80111-4757 (14%); State Street Bank and Trust Company - Goldman Sachs Aggressive Growth Strategy Omnibus A/C, P.O. Box 1713, Boston, MA 02105-1713 (10%); and State Street Bank and Trust Company - FBO Goldman Sachs Balanced Strategy, P.O. Box 1713, Boston, MA 02105-1713 (6%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Capital Growth Fund - Edward Jones & Co., Attention: Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (16%).
As of October 31, 1999 the following entity owned of record or
beneficially more than 5% of the outstanding shares of the Mid Cap Value Fund -
State Street Bank and Trust Company - GS Profit Sharing Master Trust, Attention:
Louis Pereira, P.O. Box 1992, Boston, MA 02105-1992 (64%); and Edward Jones &
Co., Attention: Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights,
MD 63043-3009 (7%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the International Equity Fund - Edward Jones & Co., Attention: Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (19%); and Merrill Lynch Pierce Fenner & Smith - For the Sole Benefit of It's Customers, Attention: Service Team SEQ #97PSO, 4800 Deer Lake Drive East 3rd Floor, Jackson, FL 32246-6484 (11%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Small Cap Value Fund - Edward Jones & Co., Attention: Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (30%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the European Equity Fund - Goldman Sachs & Co. - FBO Acct #010100683, C/O Mutual Fund Ops, 85 Broad Street, New York, NY 10004-2434 (6%); and Goldman Sachs & Co. FBO Account #010241388, 85 Broad Street, New York, NY 10004 (6%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Japanese Equity Fund - The Goldman Sachs Seed Account, Attention: Darin Pritchett, 4900 Sears Tower, Chicago, Il 60606 (25%); and c/o Mutual Funds Ops, Goldman Sachs & Co., FBO Acct #038125605, 85 Broad Street, New York, NY 10004.
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the International Small Cap Fund - State Street Bank and Trust Company - FBO Goldman Sachs Growth & Income, P.O. Box 1713, Boston, MA 02105-1713 (6%); and Goldman Sachs & Co. - FBO Account #029049525, C/O Mutual Funds Ops, 85 Broad Street, New York, NY 10004- 2456 (6%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Emerging Markets Equity Fund - University of Texas Board of Regents, Attention: Security Operations, P.O. Box 2033, Austin, TX 78768-2033 (13%); Pennsylvania Public School - Employees Retirement System, Attention: Brian Carl, P.O. Box 125, Harrisburg, PA 17108-0125 (15%); State Street Bank and Trust Company - FBO Goldman Sachs Growth and Income Strategy, P.O. Box 1713, Boston, MA 02105-1713 (10%); State Street Bank and Trust Company - FBO Goldman Sachs Growth Strategy, P.O. Box 1713, Boston, MA 02105 (9%); and Resources Trust Company - FBO Various Customers, 8051 E. Maplewood Avenue, Englewood, CO 80111-4757 (6%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Asia Growth Fund - Edward Jones & Co., Attention: Mutual Fund Shareholder, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (18%); and State Street Bank and Trust Company - FBO Goldman Sachs Employee Pension Plan, Attention: Jennifer Consigli, 200 Newport Avenue, North Quincy, MA 02170-1742 (7%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Growth Opportunities Fund - c/o Mutual Fund Ops, Goldman Sachs & Co. - FBO Acct #010059178, 85 Broad Street, New York, NY 10004 (9%); and Goldman Sachs Seed Account, Attn: Darin Pritchett, 4900 Sears Tower, Chicago, IL 60606 (31%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Strategic Growth Fund - Edward Jones, 201 Progress Pkwy, Maryland Heights, MD 63043-3009 (6%); and Goldman Sachs Seed Account, Attn: Darin Pritchett, 4900 Sears Tower, Chicago, IL 60606 (14%).
As of October 31, 1999 the following entity owned of record or beneficially more than 5% of the outstanding shares of the Global Income Fund - State Street Bank & Trust - FBO Goldman Sachs Growth & Income, P.O. Box 1713, Boston, MA 02105-1713 (16%); State Street Bank & Trust - FBO Goldman Sachs Growth Strategy, P.O. Box 1713, Boston, MA 02105-1713 (6%); and State Street Bank & Trust, Goldman Sachs Profit Sharing Master Trust, P.O. Box 1992, Boston MA 02105 (10%).
The Act requires that where more than one class or series of shares exists, each class or series must be preferred over all other classes or series in respect of assets specifically allocated to such class or series. In addition, Rule 18f-2 under the Act provides that any matter required to be submitted by the provisions of the Act or applicable state law, or otherwise, to the holders of the outstanding voting securities of an investment company such as the Trust shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding shares of each class or series affected by such matter. Rule 18f-2 further provides that a class or series shall be deemed to be affected by a matter unless the interests of each class or series in the matter are substantially identical or the matter does not affect any interest of such class or series. However, Rule 18f-2 exempts the selection of independent public accountants, the approval of principal distribution contracts and the election of trustees from the separate voting requirements of Rule 18f-2.
The Trust is not required to hold annual meetings of shareholders and does not intend to hold such meetings. In the event that a meeting of shareholders is held, each share of the Trust will be entitled, as determined by the Trustees, either to one vote for each share or to one vote for each dollar of net asset value represented by such shares on all matters presented to shareholders including the elections of Trustees (this method of voting being referred to as "dollar based voting"). However, to the extent required by the Act or otherwise determined by the Trustees, series and classes of the Trust will vote separately from each other. Shareholders of the Trust do not have cumulative voting rights in the election of Trustees. Meetings of shareholders of the Trust, or any series or class thereof, may be called by the Trustees, certain officers or upon the written request of holders of 10% or more of the shares entitled to vote at such meetings. The Trustees will call a special meeting of shareholders for the purpose of electing Trustees, if, at any time, less than a majority of Trustees holding office at the time were elected by shareholders. The shareholders of the Trust will have voting rights only with respect to the limited number of matters specified in the Declaration of Trust and such other matters as the Trustees may determine or may be required by law.
The Declaration of Trust provides for indemnification of Trustees,
officers, employees and agents of the Trust unless the recipient is adjudicated
(i) to be liable by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such person's
office or (ii) not to have acted in good faith in the reasonable belief that
such person's actions were in the best interest of the Trust. The Declaration of
Trust provides that, if any shareholder or former shareholder of any series is
held personally liable solely by reason of being or having been a shareholder
and not because of the shareholder's acts or omissions or for some other reason,
the shareholder or former shareholder (or heirs, executors, administrators,
legal representatives or general successors) shall be held harmless from and
indemnified against all loss and expense arising from such liability. The Trust,
acting on behalf of any affected series, must, upon request by such shareholder,
assume the defense of any claim made against such shareholder for any act or obligation of the series and satisfy any judgment thereon from the assets of the series.
The Declaration of Trust permits the termination of the Trust or of any series or class of the Trust (i) by a majority of the affected shareholders at a meeting of shareholders of the Trust, series or class; or (ii) by a majority of the Trustees without shareholder approval if the Trustees determine that such action is in the best interest of the Trust, series or its respective shareholders. The factors and events that the Trustees may take into account in making such determination include (i) the inability of the Trust or any successor series or class to maintain its assets at an appropriate size; (ii) changes in laws or regulations governing the Trust, series or class or affecting assets of the type in which it invests; or (iii) economic developments or trends having a significant adverse impact on their business or operations.
The Declaration of Trust authorizes the Trustees without shareholder approval to cause the Trust, or any series thereof, to merge or consolidate with any corporation, association, trust or their organization or sell or exchange all or substantially all of the property belonging to the Trust or any series thereof. In addition, the Trustees, without shareholder approval, may adopt a master-feeder structure by investing all or a portion of the assets of a series of the Trust in the securities of another open-end investment company.
The Declaration of Trust permits the Trustees to amend the Declaration of
Trust without a shareholder vote. However, shareholders of the Trust have the
right to vote on any amendment (i) that would adversely affect the voting rights
of shareholder; (ii) that is required by law to be approved by shareholders;
(iii) that would amend the provisions of the Declaration of Trust regarding
amendments and supplements thereto; or (iv) that the Trustees determine to
submit to shareholders.
The Trustees may appoint separate Trustees with respect to one or more series or classes of the Trust's shares (the "Series Trustees"). Series Trustees may, but are not required to, serve as Trustees of the Trust or any other series or class of the Trust. The Series Trustees have, to the exclusion of any other Trustees of the Delaware Trust, all the powers and authorities of Trustees under the Declaration of Trust with respect to any other series or class.
Under Delaware Law, the shareholders of the Funds are not generally subject to liability for the debts or obligations of the Trust. Similarly, Delaware law provides that a series of the Trust will not be liable for the debts or obligations of any other series of the Trust. However, no similar statutory or other authority limiting business trust shareholder liability exists in other states. As a result, to the extent that a Delaware business trust or a shareholder is subject to the jurisdiction of courts of such other states, the courts may not apply Delaware law and may thereby subject the Delaware business trust shareholders to liability. To guard against this risk, the Declaration of Trust contains an express disclaimer of shareholder liability for acts or obligations of a Fund. Notice of such disclaimer will normally be given in each agreement, obligation or instrument entered into or executed by a series or the Trustees. The Declaration of Trust provides for indemnification by the relevant Fund for all loss suffered by a
shareholder as a result of an obligation of the series. The Declaration of Trust also provides that a series shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the series and satisfy any judgment thereon. In view of the above, the risk of personal liability of shareholders of a Delaware business trust is remote.
In addition to the requirements under Delaware law, the Declaration of Trust provides that shareholders of a series may bring a derivative action on behalf of the series only if the following conditions are met: (a) shareholders eligible to bring such derivative action under Delaware law who hold at least 10% of the outstanding shares of the series, or 10% of the outstanding shares of the class to which such action relates, shall join in the request for the Trustees to commence such action; and (b) the Trustees must be afforded a reasonable amount of time to consider such shareholder request and to investigate the basis of and to employ other advisers in considering the merits of the request and shall require an undertaking by the shareholders making such request to reimburse the series for the expense of any such advisers in the event that the Trustees determine not to bring such action.
The Declaration of Trust further provides that the Trustees will not be liable for error of judgment or mistakes of fact or law, but nothing in the Declaration of Trust protects a Trustee against liability to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office.
TAXATION
The following is a summary of the principal U.S. federal income, and certain state and local, tax considerations regarding the purchase, ownership and disposition of shares in each Fund of the Trust. This summary does not address special tax rules applicable to certain classes of investors, such as tax-exempt entities, insurance companies and financial institutions. Each prospective shareholder is urged to consult his own tax adviser with respect to the specific federal, state, local and foreign tax consequences of investing in each Fund. The summary is based on the laws in effect on the date of this Additional Statement, which are subject to change.
Each Fund is a separate taxable entity. The Large Cap Value Fund each intends to elect and each other Fund has elected to be treated and intends to qualify for each taxable year as a regulated investment company under Subchapter M of the Code.
There are certain tax requirements that all Funds must follow in order to avoid federal taxation in its efforts to adhere to these requirements, the Funds may have to limit their investment activities in some types of instruments. Qualification as a regulated investment company under the Code requires, among other things, that (a) a Fund derive at least 90% of its gross income for its taxable year from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of stocks or securities or foreign currencies, or other income (including but not limited to gains from options, futures, and forward contracts) derived with respect to its business of investing in such stock, securities or currencies (the "90% gross income test"); and (b) such Fund diversify its
holdings so that, at the close of each quarter of its taxable year, (i) at least 50% of the market value of such Fund's total (gross) assets is comprised of cash, cash items, U.S. Government securities, securities of other regulated investment companies and other securities limited in respect of any one issuer to an amount not greater in value than 5% of the value of such Fund's total assets and to not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total (gross) assets is invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies) or two or more issuers controlled by the Fund and engaged in the same, similar or related trades or businesses. For purposes of the 90% gross income test, income that a Fund earns from equity interests in certain entities that are not treated as corporations (e.g., partnerships or trusts) for U.S. tax purposes will generally have the same character for such Fund as in the hands of such an entity; consequently, a Fund may be required to limit its equity investments in such entities that earn fee income, rental income, or other nonqualifying income. In addition, future Treasury regulations could provide that qualifying income under the 90% gross income test will not include gains from foreign currency transactions that are not directly related to a Fund's principal business of investing in stock or securities or options and futures with respect to stock or securities. Using foreign currency positions or entering into foreign currency options, futures and forward or swap contracts for purposes other than hedging currency risk with respect to securities in a Fund's portfolio or anticipated to be acquired may not qualify as "directly-related" under these tests.
If a Fund complies with such provisions, then in any taxable year in which such Fund distributes, in compliance with the Code's timing and other requirements, at least 90% of its "investment company taxable income" (which includes dividends, taxable interest, taxable accrued original issue discount and market discount income, income from securities lending, any net short-term capital gain in excess of net long-term capital loss, certain net realized foreign exchange gains and any other taxable income other than "net capital gain," as defined below, and is reduced by deductible expenses), and at least 90% of the excess of its gross tax-exempt interest income (if any) over certain disallowed deductions, such Fund (but not its shareholders) will be relieved of federal income tax on any income of the Fund, including long-term capital gains, distributed to shareholders. However, if a Fund retains any investment company taxable income or "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), it will be subject to a tax at regular corporate rates on the amount retained. If the Fund retains any net capital gain, the Fund may designate the retained amount as undistributed capital gains in a notice to its shareholders who, if subject to U.S. federal income tax on long-term capital gains, (i) will be required to include in income for federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (ii) will be entitled to credit their proportionate shares of the tax paid by the Fund against their U.S. federal income tax liabilities, if any, and to claim refunds to the extent the credit exceeds such liabilities. For U.S. federal income tax purposes, the tax basis of shares owned by a shareholder of the Fund will be increased by an amount equal under current law to 65% of the amount of undistributed net capital gain included in the shareholder's gross income. Each Fund intends to distribute for each taxable year to its shareholders all or substantially all of its investment company taxable income, net capital gain and any net tax-exempt interest. Exchange control or other foreign laws, regulations or practices may restrict repatriation of investment income, capital or the proceeds of securities sales by foreign investors such as the CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity or Asia Growth Funds and may therefore make it more difficult for such a
Fund to satisfy the distribution requirements described above, as well as the excise tax distribution requirements described below. However, each Fund generally expects to be able to obtain sufficient cash to satisfy such requirements from new investors, the sale of securities or other sources. If for any taxable year a Fund does not qualify as a regulated investment company, it will be taxed on all of its investment company taxable income and net capital gain at corporate rates, and its distributions to shareholders will be taxable as ordinary dividends to the extent of its current and accumulated earnings and profits.
In order to avoid a 4% federal excise tax, each Fund must distribute (or be deemed to have distributed) by December 31 of each calendar year at least 98% of its taxable ordinary income for such year, at least 98% of the excess of its capital gains over its capital losses (generally computed on the basis of the one-year period ending on October 31 of such year), and all taxable ordinary income and the excess of capital gains over capital losses for the previous year that were not distributed for such year and on which the Fund paid no federal income tax. For federal income tax purposes, dividends declared by a Fund in October, November or December to shareholders of record on a specified date in such a month and paid during January of the following year are taxable to such shareholders as if received on December 31 of the year declared. The Funds anticipate that they will generally make timely distributions of income and capital gains in compliance with these requirements so that they will generally not be required to pay the excise tax. For federal income tax purposes, each Fund is permitted to carry forward a net capital loss in any year to offset its own capital gains, if any, during the eight years following the year of the loss. At August 31, 1999 the following Funds had capital loss carry forwards approximating the amount indicated for federal tax purposes, expiring in the year indicated: CORE Small Cap Equity Fund, $6,229,000 (expires 2006); Strategic Growth Fund, $69,000 (expires 2007); Mid Cap Value Fund, $4,250,000 (expires 2006); Small Cap Value Fund, $43,533,000 (expires 2007); Emerging Markets Equity Fund, $27,002,000 (expires 2006); and Asia Growth Fund, $95,393,000 (expiring 2002 through 2007). These amounts are available to be carried forward to offset future capital gains to the extent permitted by the Code and applicable tax regulations.
Gains and losses on the sale, lapse, or other termination of options and futures contracts, options thereon and certain forward contracts (except certain foreign currency options, forward contracts and futures contracts) will generally be treated as capital gains and losses. Certain of the futures contracts, forward contracts and options held by a Fund will be required to be "marked-to-market" for federal income tax purposes, that is, treated as having been sold at their fair market value on the last day of the Fund's taxable year. These provisions may require a Fund to recognize income or gains without a concurrent receipt of cash. Any gain or loss recognized on actual or deemed sales of these futures contracts, forward contracts, or options will (except for certain foreign currency options, forward contracts, and futures contracts) be treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss. As a result of certain hedging transactions entered into by a Fund, the Fund may be required to defer the recognition of losses on futures contracts, forward contracts, and options or underlying securities or foreign currencies to the extent of any unrecognized gains on related positions held by such Fund and the characterization of gains or losses as long-term or short-term may be changed. The tax provisions described above applicable to options, futures and forward contracts may affect the amount, timing and character of a Fund's distributions to shareholders. Application of certain requirements for qualification as a regulated investment company and/or these
tax rules to certain investment practices, such as dollar rolls, or certain derivatives such as interest rate swaps, floors, caps and collars and currency, mortgage or index swaps may be unclear in some respects, and a Fund may therefore be required to limit its participation in such transactions. Certain tax elections may be available to a Fund to mitigate some of the unfavorable consequences described in this paragraph.
Section 988 of the Code contains special tax rules applicable to certain foreign currency transactions and instruments that may affect the amount, timing and character of income, gain or loss recognized by a Fund. Under these rules, foreign exchange gain or loss realized with respect to foreign currencies and certain futures and options thereon, foreign currency-denominated debt instruments, foreign currency forward contracts, and foreign currency- denominated payables and receivables will generally be treated as ordinary income or loss, although in some cases elections may be available that would alter this treatment. If a net foreign exchange loss treated as ordinary loss under Section 988 of the Code were to exceed a Fund's investment company taxable income (computed without regard to such loss) for a taxable year, the resulting loss would not be deductible by the Fund or its shareholders in future years. Net loss, if any, from certain foregoing currency transactions or instruments could exceed net investment income otherwise calculated for accounting purposes with the result being either no dividends being paid or a portion of a Fund's dividends being treated as a return of capital for tax purposes, nontaxable to the extent of a shareholder's tax basis in his shares and, once such basis is exhausted, generally giving rise to capital gains.
A Fund's investment in zero coupon securities, deferred interest securities, certain structured securities or other securities bearing original issue discount or, if a Fund elects to include market discount in income currently, market discount, as well as any "mark to market" gain from certain options, futures or forward contracts, as described above, will generally cause it to realize income or gain prior to the receipt of cash payments with respect to these securities or contracts. In order to obtain cash to enable it to distribute this income or gain, maintain its qualification as a regulated investment company and avoid federal income or excise taxes, the Fund may be required to liquidate portfolio securities that it might otherwise have continued to hold.
Each Fund (other than the CORE Large Cap Value, CORE U.S. Equity, CORE Large Cap Growth and CORE Small Cap Equity Funds) anticipates that it will be subject to foreign taxes on its income (possibly including, in some cases, capital gains) from foreign securities. Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes in some cases. If, as may occur for CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds, more than 50% of a Fund's total assets at the close of any taxable year consists of stock or securities of foreign corporations, the Fund may file an election with the Internal Revenue Service pursuant to which shareholders of the Fund would be required to (i) include in ordinary gross income (in addition to taxable dividends actually received) their pro rata shares of foreign income taxes paid by the Fund that are treated as income taxes under U.S. tax regulations (which excludes, for example, stamp taxes, securities transaction taxes, and similar taxes) even though not actually received by such shareholders, and (ii) treat such respective pro rata portions as foreign income taxes paid by them.
If the CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds make this election, its respective shareholders may then deduct such pro rata portions of qualified foreign taxes in computing their taxable incomes, or, alternatively, use them as foreign tax credits, subject to applicable limitations, against their U.S. federal income taxes. Shareholders who do not itemize deductions for federal income tax purposes will not, however, be able to deduct their pro rata portion of foreign taxes paid by a Fund, although such shareholders will be required to include their shares of such taxes in gross income if the election is made.
If a shareholder chooses to take credit for the foreign taxes deemed paid by such shareholder as a result of any such election by the CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity or Asia Growth Funds, the amount of the credit that may be claimed in any year may not exceed the same proportion of the U.S. tax against which such credit is taken which the shareholder's taxable income from foreign sources (but not in excess of the shareholder's entire taxable income) bears to his entire taxable income. For this purpose, distributions from long-term and short-term capital gains or foreign currency gains by a Fund will generally not be treated as income from foreign sources. This foreign tax credit limitation may also be applied separately to certain specific categories of foreign-source income and the related foreign taxes. As a result of these rules, which have different effects depending upon each shareholder's particular tax situation, certain shareholders of the CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity and Asia Growth Funds may not be able to claim a credit for the full amount of their proportionate share of the foreign taxes paid by such Fund even if the election is made by such a Fund.
Shareholders who are not liable for U.S. federal income taxes, including tax-exempt shareholders, will ordinarily not benefit from this election. Each year, if any, that the CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity or Asia Growth Fund files the election described above, its shareholders will be notified of the amount of (i) each shareholder's pro rata share of qualified foreign taxes paid by a Fund and (ii) the portion of Fund dividends which represents income from each foreign country. The other Funds will not be entitled to elect to pass foreign taxes and associated credits or deductions through to their shareholders because they will not satisfy the 50% requirement described above. If a Fund cannot or does not make this election, it may deduct such taxes in computing the amount it is required to distribute.
If a Fund acquires stock (including, under proposed regulations, an option to acquire stock such as is inherent in a convertible bond) in certain foreign corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, rents, royalties or capital gain) or hold at least 50% of their assets in investments producing such passive income ("passive foreign investment companies"), the Fund could be subject to federal income tax and additional interest charges on "excess distributions" received from such companies or gain from the sale of stock in such companies, even if all income or gain actually received by the Fund is timely distributed to its shareholders. The Fund would not be able to pass through to its shareholders any credit or deduction for such a tax. In some cases, elections may be available that would ameliorate these adverse tax
consequences, but such elections would require the Fund to include each year certain amounts as income or gain (subject to the distribution requirements described above) without a concurrent receipt of cash. Each Fund may limit and/or manage its holdings in passive foreign investment companies to minimize its tax liability or maximize its return from these investments.
Investments in lower-rated securities may present special tax issues for a Fund to the extent actual or anticipated defaults may be more likely with respect to such securities. Tax rules are not entirely clear about issues such as when a Fund may cease to accrue interest, original issue discount, or market discount; when and to what extent deductions may be taken for bad debts or worthless securities; how payments received on obligations in default should be allocated between principal and income; and whether exchanges of debt obligations in a workout context are taxable. These and other issues will be addressed by a Fund, in the event it invests in such securities, in order to seek to eliminate or minimize any adverse tax consequences.
For U.S. federal income tax purposes, distributions by a Fund, whether reinvested in additional shares or paid in cash, generally will be taxable to shareholders who are subject to tax. Shareholders receiving a distribution in the form of newly issued shares will be treated for U.S. federal income tax purposes as receiving a distribution in an amount equal to the amount of cash they would have received had they elected to receive cash and will have a cost basis in each share received equal to such amount divided by the number of shares received.
Distributions from investment company taxable income for the year will be taxable as ordinary income unless a shareholder's investment is in an IRA or other tax advantage account. Distributions designated as derived from a Fund's dividend income, if any, that would be eligible for the dividends- received deduction if such Fund were not a regulated investment company may be eligible, for the dividends received deduction for corporate shareholders. The dividends- received deduction, if available, is reduced to the extent the shares with respect to which the dividends are received are treated as debt-financed under federal income tax law and is eliminated if the shares are deemed to have been held for less than a minimum period, generally 46 days. Because eligible dividends are limited to those a Fund receives from U.S. domestic corporations, it is unlikely that a substantial portion of the distributions made by the CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Asia Growth and Emerging Markets Equity Funds will qualify for the dividends-received deduction. The entire dividend, including the deducted amount, is considered in determining the excess, if any, of a corporate shareholder's adjusted current earnings over its alternative minimum taxable income, which may increase its liability for the federal alternative minimum tax, and the dividend may, if it is treated as an "extraordinary dividend" under the Code, reduce such shareholder's tax basis in its shares of a Fund. Capital gain dividends (i.e., dividends from net capital gain) if designated as such in a written notice to shareholders mailed not later than 60 days after a Fund's taxable year closes, will be taxed to shareholders as long-term capital gain regardless of how long shares have been held by shareholders, but are not eligible for the dividends-received deduction for corporations. Such long-term capital gain will be taxed at a maximum rate of 20%. Distributions, if any, that are in excess of a Fund's current and accumulated earnings and profits will first reduce a
shareholder's tax basis in his shares and, after such basis is reduced to zero, will generally constitute capital gains to a shareholder who holds his shares as capital assets.
Different tax treatment, including penalties on certain excess contributions and deferrals, certain pre-retirement and post-retirement distributions, and certain prohibited transactions is accorded to accounts maintained as qualified retirement plans. Shareholders should consult their tax advisers for more information.
When a shareholder's shares are sold, redeemed or otherwise disposed of in a transaction that is treated as a sale for tax purposes, the shareholder will generally recognize gain or loss equal to the difference between the shareholder's adjusted tax basis in the shares and the cash, or fair market value of any property, received to aid in computing your tax basis, a shareholder should generally retain its account statements for the period that it hold shares. If the shareholder holds the shares as a capital asset at the time of sale, the character of the gain or loss should be capital, and treated as long-term if the shareholder's holding period is more than one year, and short-term otherwise. In general, the maximum long-term capital gain rate will be 20% for capital gains on assets held more than one year. Shareholders should consult their own tax advisers with reference to their particular circumstances to determine whether a redemption (including an exchange) or other disposition of Fund shares is properly treated as a sale for tax purposes, as is assumed in this discussion. If a shareholder receives a capital gain dividend with respect to shares and such shares have a tax holding period of six months or less at the time of a sale or redemption of such shares, then any loss the shareholder realizes on the sale or redemption will be treated as a long-term capital loss to the extent of such capital gain dividend. All or a portion of any sales load paid upon the purchase of shares of a Fund will not be taken into account in determining gain or loss on the redemption or exchange of such shares within 90 days after their purchase to the extent the redemption proceeds are reinvested, or the exchange is effected, without payment of an additional sales load pursuant to the reinvestment or exchange privilege. The load not taken into account will be added to the tax basis of the newly-acquired shares. Additionally, any loss realized on a sale or redemption of shares of a Fund may be disallowed under "wash sale" rules to the extent the shares disposed of are replaced with other shares of the same Fund within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed of, such as pursuant to a dividend reinvestment in shares of such Fund. If disallowed, the loss will be reflected in an adjustment to the basis of the shares acquired.
Each Fund may be required to withhold, as "backup withholding," federal income tax at a rate of 31% from dividends (including capital gain dividends) and share redemption and exchange proceeds to individuals and other non-exempt shareholders who fail to furnish such Fund with a correct taxpayer identification number ("TIN") certified under penalties of perjury, or if the Internal Revenue Service or a broker notifies the Fund that the payee is subject to backup withholding as a result of failing to properly report interest or dividend income to the Internal Revenue Service or that the TIN furnished by the payee to the Fund is incorrect, or if (when required to do so) the payee fails to certify under penalties of perjury that it is not subject to backup withholding. A Fund may refuse to accept an application that does not contain any required TIN or certification that the TIN provided is correct. If
the backup withholding provisions are applicable, any such dividends and proceeds, whether paid in cash or reinvested in additional shares, will be reduced by the amounts required to be withheld. Any amounts withheld may be credited against a shareholder's U.S. federal income tax liability. If a shareholder does not have a TIN, it should apply for one immediately by contacting the local office of the Social Security Administration or the Internal Revenue Service (IRS). Backup withholding could apply to payments relating to a shareholder's account while it is waiting receipt of a TIN. Special rules apply for certain entities. For example, for an account established under a Uniform Gifts or Transfer to Minors Act, the TIN of the minor should be furnished.
The discussion above relates solely to U.S. federal income tax law as it applies to "U.S. persons" subject to tax under such law. Shareholders who, as to the United States, are not "U.S. persons," (i.e., are nonresident aliens, foreign corporations, fiduciaries of foreign trusts or estates, foreign partnerships or other non-U.S. investors) generally will be subject to U.S. federal withholding tax at the rate of 30% on distributions treated as ordinary income unless the tax is reduced or eliminated pursuant to a tax treaty or the dividends are effectively connected with a U.S. trade or business of the shareholder. In the latter case the dividends will be subject to tax on a net income basis at the graduated rates applicable to U.S. individuals or domestic corporations. Distributions of net capital gain, including amounts retained by a Fund which are designated as undistributed capital gains, to a non-U.S. shareholder will not be subject to U.S. federal income or withholding tax unless the distributions are effectively connected with the shareholder's trade or business in the United States or, in the case of a shareholder who is a nonresident alien individual, the shareholder is present in the United States for 183 days or more during the taxable year and certain other conditions are met. Non-U.S. shareholders may also be subject to U.S. federal withholding tax on deemed income resulting from any election by CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity or Asia Growth Funds to treat qualified foreign taxes it pays as passed through to shareholders (as described above), but they may not be able to claim a U.S. tax credit or deduction with respect to such taxes.
Any capital gain realized by a non-U.S. shareholder upon a sale or redemption of shares of a Fund will not be subject to U.S. federal income or withholding tax unless the gain is effectively connected with the shareholder's trade or business in the U.S., or in the case of a shareholder who is a nonresident alien individual, the shareholder is present in the U.S. for 183 days or more during the taxable year and certain other conditions are met.
Non-U.S. persons who fail to furnish a Fund with an IRS Form W-8 or an acceptable substitute may be subject to backup withholding at the rate of 31% on capital gain dividends and the proceeds of redemptions and exchanges. Each shareholder who is not a U.S. person should consult his or her tax adviser regarding the U.S. and non-U.S. tax consequences of ownership of shares of and receipt of distributions from the Funds.
Each Fund may be subject to state or local taxes in jurisdictions in which such Fund may be deemed to be doing business. In addition, in those states or localities which have income tax laws, the treatment of such Fund and its shareholders under such laws may differ from their treatment under federal income tax laws, and investment in such Fund may have tax consequences for shareholders different from those of a direct investment in such Fund's portfolio securities. Shareholders should consult their own tax advisers concerning these matters.
FINANCIAL STATEMENTS
The audited financial statements and related reports of Arthur Andersen LLP, independent public accountants, contained in each Fund's 1999 Annual Report are hereby incorporated by reference. A copy of the annual reports may be obtained without charge by writing Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606 or by calling Goldman, Sachs & Co., at the telephone number on the back cover of each Fund's prospectus. No other part of the Annual Reports are incorporated herein by reference.
OTHER INFORMATION
Each Fund will redeem shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of the Fund during any 90-day period for any one shareholder. Each Fund, however, reserves the right to pay redemptions exceeding $250,000 or 1% of the net asset value of the Fund at the time of redemption by a distribution in kind of securities (instead of cash) from such Fund. The securities distributed in kind would be readily marketable and would be valued for this purpose using the same method employed in calculating the Fund's net asset value per share. See "Net Asset Value." If a shareholder receives redemption proceeds in kind, the shareholder should expect to incur transaction costs upon the disposition of the securities received in the redemption.
The right of a shareholder to redeem shares and the date of payment by each Fund may be suspended for more than seven days for any period during which the New York Stock Exchange is closed, other than the customary weekends or holidays, or when trading on such Exchange is restricted as determined by the SEC; or during any emergency, as determined by the SEC, as a result of which it is not reasonably practicable for such Fund to dispose of securities owned by it or fairly to determine the value of its net assets; or for such other period as the SEC may by order permit for the protection of shareholders of such Fund.
As stated in the Prospectuses, the Trust may authorize Service Organizations and other institutions that provide recordkeeping, reporting and processing services to their customers to accept on the Trust's behalf purchase, redemption and exchange orders placed by or on behalf of their customers and, if approved by the Trust, to designate other intermediaries to accept such orders. These institutions may receive payments from the Trust or Goldman Sachs for their services. Certain Service Organizations or institutions may enter into sub-transfer agency agreements with the Trust or Goldman Sachs with respect to their services.
The Investment Adviser, Distributor and/or their affiliates may pay, out of their own assets, compensation to Authorized Dealers, Service Organization and other financial intermediaries ("Intermediaries") for the sale and distribution of Shares of the Funds and/or for the servicing of those shares. These payments ("Additional Payments") would be in addition to the payments by the Funds described in the Funds' Prospectus and this Additional Statement for distribution and shareholder servicing and processing, and would also be in addition to the sales commissions payable to Intermediaries as set forth in the Prospectus. These Additional Payments may take the form of "due diligence" payments for an Intermediary's examination of the Funds and payments for providing extra employee training and information relating to the Funds; "listing" fees for the placement of the Funds on an Intermediary's list of mutual funds available for purchase by its customers; "finders" or "referral" fees for directing investors to the Funds; "marketing support" fees for providing assistance in promoting the sale of the Funds' shares; and payments for the sale of shares and/or the maintenance of share balances. In addition, the Investment Adviser, Distributor and/or their affiliates may make Additional Payments for subaccounting, administrative and/or shareholder processing services that are in addition to the shareholder servicing and processing fees paid by the Funds. The Additional Payments made by the Investment Adviser, Distributor and their affiliates may be a fixed dollar amount, may be based on the number of customer accounts maintained by an Intermediary, or may be based on a percentage of the value of shares sold to, or held by, customers of the Intermediary involved, and may be different for different Intermediaries. Furthermore, the Investment Adviser, Distributor and/or their affiliates may, to the extent permitted by applicable regulations, contribute to various non-cash and cash incentive arrangements to promote the sale of shares, as well as sponsor various educational programs, sales contests and/or promotions. The Investment Adviser, Distributor and their affiliates may also pay for the travel expenses, meals, lodging and entertainment of Intermediaries and their salespersons and guests in connection with educational, sales and promotional programs subject to applicable NASD regulations.
In the interest of economy and convenience, the Trust does not issue certificates representing the Funds' shares. Instead, the Transfer Agent maintains a record of each shareholder's ownership. Each shareholder receives confirmation of purchase and redemption orders from the Transfer Agent. Fund shares and any dividends and distributions paid by the Funds are reflected in account statements from the Transfer Agent.
The Prospectuses and this Additional Statement do not contain all the information included in the Registration Statement filed with the SEC under the 1933 Act with respect to the securities offered by the Prospectuses. Certain portions of the Registration Statement have been omitted from the Prospectuses and this Additional Statement pursuant to the rules and regulations of the SEC. The Registration Statement including the exhibits filed therewith may be examined at the office of the SEC in Washington, D.C.
Statements contained in the Prospectuses or in this Additional Statement as to the contents of any contract or other document referred to are not necessarily complete, and, in each instance, reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement
of which the Prospectuses and this Additional Statement form a part, each such statement being qualified in all respects by such reference.
DISTRIBUTION AND SERVICE PLANS
(Class A Shares, Class B Shares and Class C Shares Only)
Distribution and Service Plans. As described in the Prospectus, the Trust has adopted, on behalf of Class A, Class B and Class C Shares of each Fund, distribution and service plans (each a "Plan") pursuant to Rule 12b-1 under the Act. See "Shareholder Services" in the Prospectus.
The Plans for each Fund were most recently approved on April 27, 1999 by a majority vote of the Trustees of the Trust, including a majority of the non- interested Trustees of the Trust who have no direct or indirect financial interest in the Plans, cast in person at a meeting called for the purpose of approving the Plans.
The compensation for distribution services payable under a Plan may not exceed 0.25%, 0.75% and 0.75%, per annum of a Fund's average daily net assets attributable to Class A, Class B and Class C Shares respectively, of such Fund. Under the Plans for Class A (CORE International Equity, International Equity, European Equity, Japanese Equity, International Small Cap, Emerging Markets Equity, Asia Growth and Real Estate Securities Funds only), Class B and Class C Shares, Goldman Sachs is also entitled to received a separate fee for personal and account maintenance services equal to an annual basis of 0.25% of each Fund's average daily net assets attributable to Class A, Class B or Class C Shares. With respect to Class A Shares, the Distributor at its discretion may use compensation for distribution services paid under the Plan for personal and account maintenance services and expenses so long as such total compensation under the Plan does not exceed the maximum cap on "service fees" imposed by the NASD.
Each Plan is a compensation plan which provides for the payment of a specified fee without regard to the expenses actually incurred by Goldman Sachs. If such fee exceeds Goldman Sachs' expenses, Goldman Sachs may realize a profit from these arrangements. The distribution fees received by Goldman Sachs under the Plans and contingent deferred sales charge on Class A, Class B and Class C Shares may be sold by Goldman Sachs as distributor to entities which provide financing for payments to Authorized Dealers in respect of sales of Class A, Class B and Class C Shares. To the extent such fees are not paid to such dealers, Goldman Sachs may retain such fee as compensation for its services and expenses of distributing the Funds' Class A, Class B and Class C Shares.
Under each Plan, Goldman Sachs, as distributor of each Fund's Class A, Class B and Class C Shares, will provide to the Trustees of the Trust for their review, and the Trustees of the Trust will review at least quarterly, a written report of the services provided and amounts expended by Goldman Sachs under the Plans and the purposes for which such services were performed and expenditures were made.
The Plans will remain in effect until May 1, 2000 and from year to year thereafter, provided that such continuance is approved annually by a majority vote of the Trustees of the Trust, including a
majority of the non-interested Trustees of the Trust who have no direct or indirect financial interest in the Plans. The Plans may not be amended to increase materially the amount of distribution compensation without approval of a majority of the outstanding Class A, Class B or Class C Shares of the affected Fund and share class. All material amendments of a Plan must also be approved by the Trustees of the Trust in the manner described above. A Plan may be terminated at any time as to any Fund without payment of any penalty by a vote of a majority of the non-interested Trustees of the Trust or by vote of a majority of the Class A, Class B or Class C Shares, respectively, of the applicable Fund and share class. If a Plan was terminated by the Trustees of the Trust and no successor plan was adopted, the Fund would cease to make payments to Goldman Sachs under the Plan and Goldman Sachs would be unable to recover the amount of any of its unreimbursed expenditures. So long as a Plan is in effect, the selection and nomination of non-interested Trustees of the Trust will be committed to the discretion of the non-interested Trustees of the Trust. The Trustees of the Trust have determined that in their judgment there is a reasonable likelihood that the Plans will benefit the Funds and their Class A, Class B and Class C Shareholders.
The following chart shows the: 1) distribution and service fees paid to Goldman Sachs for the fiscal period ended August 31, 1999 and the fiscal year ended January 31, 1999, and 2) distribution fees paid to Goldman Sachs for the fiscal years ended January 31, 1998 and January 31, 1997 by each applicable Fund then in existence pursuant to the Class A Plan:
Fiscal period Fiscal year Fiscal year Fiscal year
ended ended ended ended
August 31, January 31, January 31, January 31,
1999 1999 1998 1997
================ ================= ================= ===============
Balanced Fund 268,705 $ 466,990 $ 0 $ 0
Growth and Income Fund 1,432,452 4,004,764 723,634 139,025
CORE Large Cap Value Fund/1/ 88,576 579 N/A N/A
CORE U.S. Equity Fund 901,485 1,963,368 720,025 363,264
CORE Large Cap Growth Fund/1/ 366,944 270,829 0 N/A
CORE Small Cap Equity Fund/1/ 84,036 81,416 1,380 N/A
CORE International Equity Fund/1/ 321,043 208,905 2,751 N/A
Capital Growth Fund 2,987,610 3,953,381 0 0
Strategic Growth Fund/1/ 2,430 N/A N/A N/A
Growth Opportunities Fund/1/ 2,204 N/A N/A N/A
Mid Cap Value Fund/1/ 93,442 449,380 67,478 N/A
International Equity Fund 2,622,519 4,032,788 1,416,253 900,274
Small Cap Value Fund 339,961 872,585 0 0
Large Cap Value Fund/2/ NA N/A N/A N/A
European Equity Fund/1/ 192,446 66,759 N/A N/A
Japanese Equity Fund/1/ 55,407 19,466 N/A N/A
International Small Cap Fund/1/ 115,648 62,146 N/A N/A
Emerging Markets Equity Fund/1/ 176,746 226,631 3,381 N/A
Asia Growth Fund 208,976 349,621 431,390 526,448
|
/1/ The Class A Share class of the CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, CORE International Equity, Strategic Growth, Growth Opportunities, Mid Cap Value, European Equity, Japanese Equity, International Small Cap and Emerging Markets Equity Funds commenced operations on December 31, 1998, May 1, 1997, August 15, 1997, August 15, 1997, May 24, 1999, May 24, 1999, August 15, 1997, October 1, 1998, May 1, 1998, May 1, 1998 and December 15, 1997, respectively.
/2/ During the periods shown, no shares of The Large Cap Value Fund were offered.
The following chart shows the: 1) distribution and service fees that would have been paid to Goldman Sachs for the fiscal period ended August 31, 1999 and the fiscal year ended January 31, 1999, and 2) distribution fees that would have been paid to Goldman Sachs for the fiscal years ended January 31, 1998 and January 31, 1997 by each applicable Fund then in existence pursuant to the Class A Plan, without the voluntary limitations then in effect:
Fiscal period Fiscal year Fiscal year Fiscal year
ended ended ended ended
August 31, January 31, January 31, January 31,
1999 1999 1998 1997
==== ==== ==== ====
Balanced Fund 268,705 $ 823,738 $ 301,397 $ 153,392
Growth and Income Fund 1,432,452 5,307,490 2,324,970 1,252,257
CORE Large Cap Value Fund/1/ 88,576 579 N/A N/A
CORE U.S. Equity Fund 901,485 1,963,368 771,451 432,457
CORE Large Cap Growth Fund/1/ 366,944 405,481 61,924 N/A
CORE Small Cap Equity Fund/1/ 84,036 102,281 6,898 N/A
CORE International Equity Fund/1/ 321,043 208,905 2,751 N/A
Capital Growth Fund 2,987,610 6,150,756 2,678,370 2,171,462
Strategic Growth Fund/1/ 2,430 N/A N/A N/A
Growth Opportunities Fund/1/ 2,204 N/A N/A N/A
Mid Cap Value Fund/1/ 93,442 449,380 67,478 N/A
International Equity Fund 2,622,519 4,090,492 1,632,745 1,071,755
Small Cap Value Fund 339,961 1,655,658 727,298 529,684
Large Cap Value Fund/2/ NA N/A N/A N/A
European Equity Fund/1/ 192,446 66,759 N/A N/A
Japanese Equity Fund/1/ 55,407 19,466 N/A N/A
International Small Cap Fund/1/ 115,648 62,146 N/A N/A
Emerging Markets Equity Fund/1/ 176,746 226,631 3,381 N/A
Asia Growth Fund 208,976 368,632 513,560 626,724
|
1. The Class A Share class of the CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, CORE International Equity, Strategic Growth, Growth Opportunities, Mid Cap Value, European Equity, Japanese Equity, International Small Cap and Emerging Markets Equity Funds commenced operations on December 31, 1998, May 1, 1997, August 15, 1997, August 15, 1997, May 24, 1999, May 24, 1999, August 15, 1997, October 1, 1998, May 1, 1998, May 1, 1998 and December 15, 1997, respectively.
2. During the periods shown, no shares of The Large Cap Value Fund were offered.
The following chart shows the: 1) distribution and service fees paid to Goldman Sachs for the fiscal period ended August 31, 1999 and the fiscal year ended January 31, 1999, and 2) distribution fees paid to Goldman Sachs for the fiscal years ended January 31, 1998 and January 31, 1997 by each applicable Fund then in existence pursuant to the Class B Plan:
Fiscal period Fiscal year Fiscal year Fiscal year
ended ended ended ended
August 31, January 31, January 31, January 31,
1999 1999 1998 1997
==== ==== ==== ====
Balanced Fund 247,828 $ 372,044 $ 74,569 $ 3,861
Growth and Income Fund 1,796,760 3,924,188 1,117,813 28,075
CORE Large Cap Value Fund/1/ 40,251 122 N/A N/A
CORE U.S. Equity Fund 1,115,835 995,389 265,025 36,508
CORE Large Cap Growth Fund/1/ 858,809 449,058 34,332 N/A
CORE Small Cap Equity Fund/1/ 80,244 140,016 20,064 N/A
CORE International Equity Fund/1/ 47,034 54,688 5,700 N/A
Capital Growth Fund 1,739,629 1,193,755 127,395 7,632
Strategic Growth Fund/1/ 2,398 N/A N/A N/A
Growth Opportunities Fund/1/ 598 N/A N/A N/A
Mid Cap Value Fund/1/ 200,960 417,334 47,585 N/A
International Equity Fund 388,156 653,844 314,578 44,148
Small Cap Value Fund 220,759 494,223 160,608 8,973
Large Cap Value Fund/2/ NA N/A N/A N/A
European Equity Fund/1/ 4,365 387 N/A N/A
Japanese Equity Fund/1/ 15,230 5,736 N/A N/A
International Small Cap Fund/1/ 1,354 1,566 N/A N/A
Emerging Markets Equity Fund/1/ 4,255 3,075 38 N/A
Asia Growth Fund 32,196 43,192 28,550 10,229
|
1. The Class B Share class of the CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, CORE International Equity, Strategic Growth, Growth Opportunities, Mid Cap Value, European Equity, Japanese Equity, International Small Cap and Emerging Markets Equity Funds commenced operations on December 31, 1998, May 1, 1997, August 15, 1997, August 15, 1997, May 24, 1999, May 24, 1999, August 15, 1997, October 1, 1998, May 1, 1998, May 1, 1998 and December 15, 1997, respectively.
2. During the periods shown, no shares of the Large Cap Value Fund were offered.
The following chart shows the: 1) distribution and service fees paid to Goldman Sachs for the fiscal period ended August 31, 1999 and the fiscal year ended January 31, 1999, and 2) distribution fees paid to Goldman Sachs for the fiscal year ended January 31, 1998 by each applicable Fund then in existence pursuant to the Class C Plan:
Fiscal period Fiscal year Fiscal year
ended ended ended
August 31, January 31, January 31,
1999 1999 1998
==== ==== ====
Balanced 72,293 $142,821 $13,290
Growth and Income 225,003 553,531 57,542
CORE Large Cap Value Fund/1/ 23,517 82 N/A
CORE U.S. Equity Fund 214,434 152,737 14,614
CORE Large Cap Growth Fund/1/ 343,654 156,368 6,880
CORE Small Cap Equity Fund/1/ 34,375 44,551 4,038
CORE International Equity Fund/1/ 25,018 27,157 3,118
Capital Growth Fund 447,252 262,717 9,607
Strategic Growth Fund/1/ 2,161 N/A N/A
Growth Opportunities Fund/1/ 224 N/A N/A
Mid Cap Value Fund/1/ 59,930 113,272 10,495
International Equity Fund 60,274 74,197 7,485
Small Cap Value Fund 43,062 8,298 12,158
Large Cap Value Fund/2/ NA N/A N/A
European Equity Fund/1/ 3,312 337 N/A
Japanese Equity Fund/1/ 9,001 1,390 N/A
International Small Cap Fund/1/ 1,082 725 N/A
Emerging Markets Fund/1/ 3,702 2,250 28
Asia Growth Fund 8,922 9,090 2,854
|
/1/ The Class C Share class of the CORE Large Cap Value, CORE Large Cap Growth, CORE Small Cap Equity, CORE International Equity, Strategic Growth, Growth Opportunities, Mid Cap Value, European Equity, Japanese Equity, International Small Cap and Emerging Markets Equity Funds commenced operations on December 31, 1998, August 15, 1997, August 15, 1997, August 15, 1997, May 24, 1999, May 24, 1999, August 15, 1997, October 1, 1998, May 1, 1998, May 1, 1998 and December 15, 1997, respectively.
/2/ During the periods shown, no shares of the Large Cap Value Fund were offered.
No distribution fees were paid to Goldman Sachs under the Class C Plans during the fiscal year ended January 31, 1997.
During the fiscal year ended January 31, 1999, Goldman Sachs incurred the following expenses in connection with distribution under the Class A Plan of each applicable Fund with Class A Shares then in existence:
Compensation Printing and Preparation
and Expenses Allocable Mailing of and
of the Overhead, Prospectuses Distribution
Distributor Telephone to Other of Sales
Compensation & Its Sales and Travel Than Current Literature and
to Dealers/1/ Personnel Expenses Shareholders Advertising
------------ ------------ ------------ ------------ --------------
Fiscal Year Ended January 31, 1999:
Balanced Fund $ 529,148 $ 360,366 $ 382,623 $ 30,628 $107,723
Growth and Income Fund 3,455,990 1,371,522 1,254,000 100,381 353,049
CORE Large Cap Value Fund 209 6,092 6,779 543 1,909
CORE U.S. Equity Fund 1,075,702 827,205 740,356 59,264 208,439
CORE Large Cap Growth Fund 329,211 412,689 456,309 36,527 128,469
CORE Small Cap Equity Fund 95,707 256,871 279,715 22,391 78,751
CORE International Equity Fund 139,410 472,886 565,684 45,282 159,262
Capital Growth Fund 2,922,885 2,726,172 1,895,753 151,752 533,727
Strategic Growth Fund/2/ ---- ---- ---- ---- ----
Growth Opportunities Fund/2/ ---- ---- ---- ---- ----
Mid Cap Value 688,906 421,030 344,128 27,547 96,885
International Equity Fund 2,101,670 2,661,147 2,133,158 170,756 600,566
Small Cap Value Fund 1,105,321 798,257 618,983 49,549 174,268
Large Cap Value Fund/2/
European Equity Fund 77,916 172,015 170,084 13,615 47,885
Japanese Equity Fund 36,322 149,025 170,376 13,638 47,967
International Small Cap 105,008 261,347 281,137 22,505 79,151
Emerging Market Equity Fund 513,317 413,276 387,371 31,008 109,060
Asia Growth Fund 344,149 413,621 396,790 31,762 111,712
|
/1/ Advance commissions paid to dealers of 1% on Class A Shares are considered deferred assets which are amortized over a period of 1 year; amounts presented above reflect amortization expense recorded during the period presented.
/2/ During the period shown, no shares of the Strategic Growth, Growth Opportunities, or Large Cap Value Funds were offered.
During the fiscal period ended August 31, 1999, Goldman Sachs incurred the following expenses in connection with distribution under the Class A Plan of each applicable Fund with Class A Shares then in existence:
Compensation Printing and Preparation
and Expenses Allocable Mailing of and
of the Overhead, Prospectuses Distribution
Distributor Telephone to Other of Sales
Compensation & Its Sales and Travel Than Current Literature and
to Dealers1 Personnel Expenses Shareholders Advertising
------------ ------------ ------------ ------------ --------------
Fiscal Period Ended August 31, 1999:
Balanced Fund $ 284,131 $ 98,160 $ 114,599 $ 6,695 $ 31,216
Growth and Income Fund 1,422,613 283,015 253,604 14,816 69,080
CORE Large Cap Value Fund 88,377 156,716 224,556 13,119 61,167
CORE U.S. Equity Fund 767,056 453,822 472,623 27,611 128,739
CORE Large Cap Growth Fund 372,962 293,544 383,525 22,406 104,469
CORE Small Cap Equity Fund 104,448 126,273 132,745 7,755 36,159
CORE International Equity Fund 167,638 149,640 207,739 12,136 56,586
Capital Growth Fund 2,390,976 1,571,258 1,104,408 64,521 300,832
Strategic Growth Fund 2,726 38,163 55,709 3,255 15,175
Growth Opportunities Fund 746 27,886 40,707 2,378 11,088
Mid Cap Value 147,306 103,157 110,167 6,436 30,009
International Equity Fund 1,338,095 1,381,648 1,244,776 72,721 339,067
Small Cap Value Fund 371,033 247,168 218,804 12,783 59,601
Large Cap Value/2/ - - - - -
European Equity Fund 266,561 242,715 222,276 12,986 60,546
Japanese Equity Fund 41,568 125,074 158,986 9,288 43,307
International Small Cap 163,959 161,681 175,260 10,239 47,739
Emerging Market Equity Fund 186,200 171,602 164,463 9,608 44,798
Asia Growth Fund 99,181 206,937 238,244 13,919 64,896
|
/1/ Advance commissions paid to dealers of 1% on Class A Shares are considered deferred assets which are amortized over a period of 1 year; amounts presented above reflect amortization expense recorded during the period presented.
/2/ During the period shown, no shares of the Large Cap Value Fund were offered.
During the fiscal year ended January 31, 1999, Goldman Sachs incurred the following expenses in connection with distribution under the Class B Plan of each applicable Fund with Class B Shares then in existence:
Compensation Printing and Preparation
and Expenses Allocable Mailing of and
of the Overhead, Prospectuses Distribution
Distributor Telephone to Other of Sales
Compensation & Its Sales and Travel Than Current Literature and
to Dealers1 Personnel Expenses Shareholders Advertising
------------ ------------ ------------ ------------ --------------
Fiscal Year Ended Jauary 31, 1999:
Balanced Fund $ 337,025 $ 58,444 $ 71,112 $ 5,692 $20,021
Growth and Income Fund 3,724,345 279,663 339,383 27,167 95,549
CORE Large Cap Value Fund 35 5,474 6,660 533 1,875
CORE U.S. Equity Fund 824,545 107,505 130,598 10,454 36,768
CORE Large Cap Growth Fund 354,359 142,953 173,917 13,922 48,964
CORE Small Cap Equity Fund 109,290 119,334 145,193 11,622 40,877
CORE International Equity Fund 47,527 92,413 112,445 9,001 31,657
Capital Growth Fund 910,940 95,082 115,153 9,218 32,420
Strategic Growth Fund/2/ ---- ---- ---- ---- ----
Growth Opportunities Fund/2/ ---- ---- ---- ---- ----
Mid Cap Value Fund 407,838 91,292 110,596 8,853 31,137
International Equity Fund 605,118 121,626 147,961 11,844 41,657
Small Cap Value Fund 481,953 56,634 68,841 5,511 19,381
Large Cap Value Fund/2/
European Equity Fund 222 154 187 15 53
Japanese Equity Fund 4,540 47,432 57,713 4,620 16,248
International Small Cap 1,352 4,574 5,566 446 1,567
Emerging Market Equity Fund 2,843 1,873 2,279 182 642
Asia Growth Fund 69,014 17,962 21,483 1,720 6,048
---------------------------
|
/1/ Advance commissions paid to dealers of 4% on Class B shares are considered
deferred assets which are amortized over a period of 1 year; amounts
presented above reflect amortization expense recorded during the period
presented.
/2/ During the periods shown, no shares of the Strategic Growth, Growth
Opportunities or Large Cap Value Funds were offered.
Compensation Printing and Preparation
and Expenses Allocable Mailing of and
of the Overhead, Prospectuses Distribution
Distributor Telephone to Other of Sales
Compensation & Its Sales and Travel Than Current Literature and
to Dealers1 Personnel Expenses Shareholders Advertising
------------ ------------ ------------ ------------ --------------
Fiscal Period Ended August 31, 1999:
Balanced Fund $ 251,348 $ 17,182 $ 25,082 $ 1,465 $ 6,832
Growth and Income Fund 2,321,874 48,513 70,668 4,129 19,249
CORE Large Cap Value Fund 20,782 15,292 22,323 1,304 6,081
CORE U.S. Equity Fund 809,304 91,629 133,562 7,803 36,381
CORE Large Cap Growth Fund 570,671 150,530 219,689 12,835 59,841
CORE Small Cap Equity Fund 79,535 20,029 29,237 1,708 7,964
CORE International Equity Fund 44,321 10,199 14,888 870 4,055
Capital Growth Fund 1,180,236 87,668 127,236 7,433 34,658
Strategic Growth Fund 730 6,753 9,858 576 2,685
Growth Opportunities Fund 312 3,392 4,952 289 1,349
Mid Cap Value 269,285 37,309 54,110 3,161 14,739
International Equity Fund 386,822 56,612 82,641 4,828 22,511
Small Cap Value Fund 303,668 21,377 31,162 1,821 8,488
Large Cap Value/2/ - - - - -
European Equity Fund 3,355 1,551 2,264 132 617
Japanese Equity Fund 11,125 16,139 23,559 1,376 6,417
International Small Cap 1,342 683 997 58 272
Emerging Market Equity Fund 3,625 1,187 1,733 101 472
Asia Growth Fund 47,560 11,933 17,140 1,001 4,669
---------------------------
|
/2/ During the period shown, no shares of the Large Cap Value Fund were offered.
During the fiscal year ended January 31, 1999, Goldman Sachs incurred the following expenses in connection with distribution under the Class C Plan of each applicable Fund with Class C Shares then in existence:
Compensation Printing and Preparation
and Expenses Allocable Mailing of and
of the Overhead, Prospectuses Distribution
Distributor Telephone to Other of Sales
Compensation & Its Sales and Travel Than Current Literature and
to Dealers1 Personnel Expenses Shareholders Advertising
------------ ------------ ------------ ------------ --------------
Fiscal Year Ended January 31, 1999:
Balanced Fund $155,489 $22,725 $27,651 2,213 $ 7,785
Growth and Income Fund 642,535 38,821 47,236 3,781 13,299
CORE Large Cap Value Fund ---- 5,474 6,660 533 1,875
CORE U.S. Equity Fund 153,636 16,039 19,516 1,562 5,495
CORE Large Cap Growth Fund 133,109 48,875 59,469 4,760 16,743
CORE Small Cap Equity Fund 47,805 36,337 44,213 3,539 12,448
CORE International Equity Fund 28,306 45,144 54,929 4,397 15,465
Capital Growth Fund 223,924 20,452 24,886 1,992 7,006
Strategic Growth Fund/2/ ---- ---- ---- ---- ----
Growth Opportunities Fund/2/ ---- ---- ---- ---- ----
Mid Cap Value 124,212 24,313 29,583 2,368 8,329
International Equity Fund 74,109 14,632 17,798 1,425 5,011
Small Cap Value Fund 96,526 9,640 11,723 938 3,300
Large Cap Value Fund/2/ ---- ---- ---- ---- ----
European Equity Fund 178 84 103 8 29
Japanese Equity Fund 2,314 4,777 5,813 465 1,637
International Small Cap 651 1,554 1,891 151 532
Emerging Market Equity Fund 2,859 1,468 1,787 143 503
Asia Growth Fund 13,673 3,594 4,373 350 1,231
---------------------------
|
/1/ Advance commissions paid to dealers of 1% on Class C shares are considered
deferred assets which are amortized over a period of 1 year; amounts
presented above reflect amortization expense recorded during the period
presented.
/2/ During the periods shown, no shares of the Strategic Growth, Growth
Opportunities or Large Cap Value Funds were offered.
Compensation Printing and Preparation
and Expenses Allocable Mailing of and
of the Overhead, Prospectuses Distribution
Distributor Telephone to Other of Sales
Compensation & Its Sales and Travel Than Current Literature and
to Dealers/1/ Personnel/l/ Expenses Shareholders Advertising
------------- ------------ ------------ ------------ --------------
Fiscal Period Ended August 31, 1999:
Balanced Fund $ 62,953 $ 5,054 $ 7,378 $ 431 $ 2,010
Growth and Income Fund 268,022 6,134 8,954 523 2,439
CORE Large Cap Value Fund 11,957 9,206 13,439 785 3,661
CORE U.S. Equity Fund 170,360 17,503 25,551 1,493 6,960
CORE Large Cap Growth Fund 281,528 59,434 86,760 5,069 23,633
CORE Small Cap Equity Fund 36,485 8,498 12,405 725 3,379
CORE International Equity Fund 23,309 5,420 7,911 462 2,155
Capital Growth Fund 354,037 22,281 32,525 1,900 8,860
Strategic Growth Fund 834 8,205 11,978 700 3,263
Growth Opportunities Fund 4 999 1,459 85 397
Mid Cap Value 65,136 10,973 16,018 936 4,363
International Equity Fund 54,406 8,553 12,485 729 3,401
Small Cap Value Fund 27,521 11,249 16,421 959 4,473
Large Cap Value2 - - - - -
European Equity Fund 4,355 1,264 1,845 108 503
Japanese Equity Fund 5,823 6,984 10,194 596 2,777
International Small Cap 952 491 717 42 195
Emerging Market Equity Fund 4,489 959 1,400 82 381
Asia Growth Fund 12,834 3,308 4,829 282 1,315
|
/2/ During the period shown, no shares of the Large Cap Value Fund were offered.
The foregoing tables and the information contained in the preceeding paragraph reflect amounts expended by Goldman Sachs, which amounts are in excess of the compensation received by Goldman Sachs under the Plans. The payments under the plans were used by Goldman Sachs to compensate it for the expenses shown above on a pro-rata basis.
For the fiscal years and periods indicated below, Goldman Sachs received service fees from the Funds pursuant to the Plans then in existence at the rate of 0.25% of each Fund's average daily net assets attributable to Class A, Class B, or Class C Shares, which totaled:
Class A Class B Class C
----------------------- -------------------- ---------
1998 1997 1998 1997/1/ 1998
========== ========== ======== ========= ==========
Balanced Fund/2/ $ 268,705 $ 153,392 $ 61,957 $ 1,294 $ 18,073
Growth and Income Fund/2/ 1,432,452 1,252,257 449,190 9,358 56,251
CORE Large Cap Value Fund/3/ 88,576 N/A 10,063 N/A 5,879
CORE U.S. Equity Fund/2/ 901,485 432,457 278,959 12,169 53,608
CORE Large Cap Growth Fund/4/ 366,944 N/A 214,702 N/A 85,913
CORE Small Cap Equity Fund/5/ 84,036 N/A 20,061 N/A 8,594
CORE International Equity Fund/5/ 160522 N/A 11,759 N/A 6,254
Capital Growth Fund/2/ 2,987,610 2,171,462 434,907 2,854 111,813
Strategic Growth Fund/6/ 2,430 N/A 599 N/A 540
Growth Opportunities Fund/6/ 2,204 N/A 148 N/A 56
Mid Cap Value Fund/5/ 93,442 N/A 50,240 N/A 14,982
International Equity Fund/2/ 1,311,260 1,071,755 97,039 14,733 15,069
Small Cap Value Fund/2/ 339,961 569,684 55,190 2,992 10,766
Large Cap Value Fund/6/ N/A N/A N/A N/A N/A
European Equity Fund/7/ 96,223 N/A 1,091 N/A 828
Japanese Equity Fund/7/ 27,703 N/A 3,808 N/A 2,250
International Small Cap Fund/7/ 57,824 N/A 338 N/A 273
Emerging Market Equity Fund/8/ 88,373 N/A 1,064 N/A 926
Asia Growth Fund/2/ 104,488 626,724 8,049 3,410 2,230
|
/2/ Prior to May 1, 1996 and August 15, 1997, the Balanced, Growth and Income, CORE U.S. Equity, Capital Growth, International Equity, Small Cap Value, and Asia Growth Funds had not sold Class B and Class C Shares, respectively.
/3/ The CORE Large Cap Value Fund commenced operations on December 31, 1998.
/4/ Prior to May 1, 1997 and August 15, 1997, the CORE Large Cap Growth Fund had not sold Class B and Class C Shares, respectively.
/5/ Prior to August 15, 1997, the CORE Small Cap Equity, CORE International Equity and Mid Cap Value Funds had not sold Class A, Class B or Class C Shares.
/6/ During the periods shown, no shares of the Strategic Growth, Growth Opportunities or Large Cap Value Funds were offered.
/7/ Prior to October 1, 1998, May 1, 1998 and May 1, 1998, European Equity, Japanese Equity and International Small Cap Funds had not sold Class A, Class B or Class C Shares.
/8/ Prior to December 15, 1997, the Emerging Markets Equity Fund had not sold Class A, Class B or Class C Shares.
OTHER INFORMATION REGARDING MAXIMUM SALES CHARGE, PURCHASES, REDEMPTIONS,
EXCHANGES AND DIVIDENDS
(Class A Shares, Class B Shares and Class C Shares Only)
Class A Shares of each Fund are sold at a maximum sales charge of 5.5%. Using the initial offering price per share as of August 31, 1999 and assuming a $10.00 initial offering price per share of the Large Cap Value Fund, the maximum offering price of each Fund's Class A shares would be as follows:
Maximum Offering
Net Asset Sales Price to
Value Charge Public
----------- ------- --------
Balanced Fund $20.38 5.5% $21.57
Growth and Income Fund 24.68 5.5% 26.13
CORE U.S. Equity Fund 34.21 5.5% 36.20
CORE Large Cap Value Fund 10.55 5.5% 11.16
CORE Large Cap Growth Fund 17.02 5.5% 18.01
CORE Small Cap Equity Fund 10.23 5.5% 10.83
CORE International Equity Fund 10.87 5.5% 11.50
Capital Growth Fund 24.96 5.5% 26.41
Strategic Growth Fund 10.06 5.5% 10.65
Growth Opportunities Fund 10.13 5.5% 10.72
Mid Cap Value Fund 18.42 5.5% 19.49
International Equity Fund 23.12 5.5% 24.47
Small Cap Value Fund 19.80 5.5% 20.95
Large Cap Value Fund N/A N/A N/A
European Equity Fund 11.75 5.5% 12.43
Japanese Equity Fund 16.24 5.5% 17.19
International Small Cap Fund 13.24 5.5% 14.01
Emerging Market Equity Fund 9.26 5.5% 9.80
Asia Growth Fund 11.07 5.5% 11.71
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The following information supplements the information in the Prospectus under the captions "Shareholder Guide" and "Dividends". Please see the Prospectus for more complete information.
If shares of a Fund are held in a "street name" account with an Authorized Dealer, all recordkeeping, transaction processing and payments of distributions relating to the beneficial owner's account will be performed by the Authorized Dealer, and not by the Fund and its Transfer Agent. Since the Funds will have no record of the beneficial owner's transactions, a beneficial owner should contact the Authorized Dealer to purchase, redeem or exchange shares, to make changes in or give instructions concerning the account or to obtain information about the account. The transfer of shares in a "street name" account to an account with another dealer or to an account directly with the Fund involves special procedures and will require the beneficial owner to obtain historical purchase information about the shares in the account from the Authorized Dealer.
A Class A shareholder qualifies for cumulative quantity discounts if the current purchase price of the new investment plus the shareholder's current holdings of existing Class A Shares (acquired by purchase or exchange) of the Funds and Class A Shares of any other Goldman Sachs Fund (as defined in the Prospectus) total the requisite amount for receiving a discount. For example, if a shareholder owns shares with a current market value of $35,000 and purchases additional Class A Shares of any Fund with a purchase price of $25,000, the sales charge for the $25,000 purchase would be 4.75% (the rate applicable to a single purchase of more than $50,000). Class A Shares purchased without the imposition of a sales charge may not be aggregated with Class A Shares purchased subject to a sales charge. Class A Shares of the Funds and any other Goldman Sachs Fund purchased (i) by an individual, his spouse and his children, and (ii) by a trustee, guardian or other fiduciary of a single trust estate or a single fiduciary account, will be combined for the purpose of determining whether a purchase will qualify for such right of accumulation and, if qualifying, the applicable sales charge level. For purposes of applying the right of accumulation, shares of the Funds and any other Goldman Sachs Fund purchased by an existing client of the Private Client Services Division of Goldman Sachs will be combined with Class A Shares held by any other Private Client Services account. In addition, Class A Shares of the Funds and Class A Shares of any other Goldman Sachs Fund purchased by partners, directors, officers or employees of the same business organization, groups of individuals represented by and investing on the recommendation of the same accounting firm, certain affinity groups or other similar organizations (collectively, "eligible persons") may be combined for the purpose of determining whether a purchase will qualify for the right of accumulation and, if qualifying, the applicable sales charge level. This right of accumulation is subject to the following conditions: (i) the business organization's, group's or firm's agreement to cooperate in the offering of the Funds' shares to eligible persons; and (ii) notification to the Funds at the time of purchase that the investor is eligible for this right of accumulation. In addition, in connection with SIMPLE IRA accounts, cumulative quantity discounts are available on a per plan basis if (1) your employee has been assigned a cumulative discount number by Goldman Sachs, and (2) your account, alone or in combination with the accounts of other plan participants also invested in Class A Shares of the Goldman Sachs Funds, totals the requisite aggregate amount as described in the Prospectus.
If a shareholder anticipates purchasing at least $50,000 of Class A Shares of a Fund alone or in combination with Class A Shares of any other Goldman Sachs Fund within a 13-month period, the shareholder may purchase shares of the Fund at a reduced sales charge by submitting a Statement of Intention (the "Statement"). Shares purchased pursuant to a Statement will be eligible for the same sales charge discount that would have been available if all of the purchases had been made at the same time. The shareholder or his Authorized Dealer must inform Goldman Sachs that the Statement is in effect each time shares are purchased. There is no obligation to purchase the full amount of shares indicated in the Statement. A shareholder may include the value of all Class A Shares on which a sales charge has previously been paid as an "accumulation credit" toward the completion of the Statement, but a price readjustment will be made only on Class A Shares purchased within ninety (90) days before submitting the Statement. The Statement authorizes the Transfer Agent to hold in escrow a sufficient number of shares which can be redeemed to make up any difference in the sales charge on the amount actually invested. For purposes of satisfying the amount specified on the Statement, the gross amount of each investment, exclusive of any appreciation on shares previously purchased, will be taken into account.
The provisions applicable to the Statement, and the terms of the related escrow agreement, are set forth in Appendix C to this Additional Statement.
Shareholders may receive dividends and distributions in additional Shares of the same class of the Fund in which they have invested or they may elect to receive them in cash or Shares of the same class of other mutual funds sponsored by Goldman Sachs (the "Goldman Sachs Funds") or ILA Service Units of the Prime Obligations Portfolio or the Tax-Exempt Diversified Portfolio, if they hold Class A Shares of a Fund, or ILA, Class B or Class C Units of the Prime Obligations Portfolio, if they hold Class B or Class C Shares of a Fund (the "ILA Portfolios").
A Fund shareholder should obtain and read the prospectus relating to any other Fund, Goldman Sachs Fund or ILA Portfolio and its shares or units and consider its investment objective, policies and applicable fees before electing cross- reinvestment into that Fund or Portfolio. The election to cross-reinvest dividends and capital gain distributions will not affect the tax treatment of such dividends and distributions, which will be treated as received by the shareholder and then used to purchase shares of the acquired fund. Such reinvestment of dividends and distributions in shares of other Goldman Sachs Funds or in units of ILA Portfolios is available only in states where such reinvestment may legally be made.
A Fund shareholder may elect to exchange automatically a specified dollar amount of shares of a Fund into an identical account of another Fund or an account registered in a different name or with a different address, social security or other taxpayer identification number, provided that the account in the acquired fund has been established, appropriate signatures have been obtained and the minimum initial investment requirement has been satisfied. A Fund shareholder should obtain and read the prospectus relating to any other Goldman Sachs
Fund and its shares and consider its investment objective, policies and applicable fees and expenses before electing an automatic exchange into that Goldman Sachs Fund.
A systematic withdrawal plan (the "Systematic Withdrawal Plan") is available to shareholders of a Fund whose shares are worth at least $5,000. The Systematic Withdrawal Plan provides for monthly payments to the participating shareholder of any amount not less than $50.
Dividends and capital gain distributions on shares held under the Systematic Withdrawal Plan are reinvested in additional full and fractional shares of the applicable Fund at net asset value. The Transfer Agent acts as agent for the shareholder in redeeming sufficient full and fractional shares to provide the amount of the systematic withdrawal payment. The Systematic Withdrawal Plan may be terminated at any time. Goldman Sachs reserves the right to initiate a fee of up to $5 per withdrawal, upon thirty (30) days written notice to the shareholder. Withdrawal payments should not be considered to be dividends, yield or income. If periodic withdrawals continuously exceed new purchases and reinvested dividends and capital gains distributions, the shareholder's original investment will be correspondingly reduced and ultimately exhausted. The maintenance of a withdrawal plan concurrently with purchases of additional Class A, Class B or Class C Shares would be disadvantageous because of the sales charge imposed on purchases of Class A Shares or the imposition of a CDSC on redemptions of Class A, Class B or Class C Shares. The CDSC applicable to Class A, Class B or Class C Shares redeemed under a systematic withdrawal plan may be waived. See "Shareholder Guide" in the Prospectus. In addition, each withdrawal constitutes a redemption of shares, and any gain or loss realized must be reported for federal and state income tax purposes. A shareholder should consult his or her own tax adviser with regard to the tax consequences of participating in the Systematic Withdrawal Plan. For further information or to request a Systematic Withdrawal Plan, please write or call the Transfer Agent.
SERVICE PLAN
(Service Shares Only)
The Funds have adopted a service plan (the "Plan") with respect to its Service
Shares which authorizes it to compensate Service Organizations for providing
certain administration services and personal and account maintenance services to
their customers who are or may become beneficial owners of such Shares.
Pursuant to the Plan, each Fund enters into agreements with Service
Organizations which purchase Service Shares of the Fund on behalf of their
customers ("Service Agreements"). Under such Service Agreements the Service
Organizations may perform some or all of the following services: (a) act,
directly or through an agent, as the sole shareholder of record and nominee for
all customers, (b) maintain account records for each customer who beneficially
owns Service Shares of a Fund, (c) answer questions and handle correspondence
from customers regarding their accounts, (d) process customer orders to
purchase, redeem and exchange Service Shares of a Fund, and handle the
transmission of funds representing the customers' purchase price or redemption
proceeds, (e) issue confirmations for transactions in shares by customers, (f)
provide facilities to answer questions from prospective and existing investors
about Service Shares of a Fund, (g) receive and answer investor correspondence,
including requests for prospectuses and statements of additional information,
(h) display and make prospectuses available on the Service Organization's
premises, (i) assist customers in completing application forms, selecting
dividend and other account options and opening custody accounts with the Service
Organization and (j) act as liaison between customers and a Fund, including
obtaining information from the Fund, working with the Fund to correct errors and
resolve problems and providing statistical and other information to a Fund. As
compensation for such services, each Fund will pay each Service Organization a
service fee in an amount up to 0.50% (on an annualized basis) of the average
daily net assets of the Service Shares of such Fund attributable to or held in
the name of such Service Organization.
The amount of the service fees paid by each Fund then in existence to Service Organizations pursuant to the Plan was as follows for the fiscal period ended August 31, 1999 and the fiscal years ended January 31, 1999, January 31, 1998 and January 31, 1997 indicated:
Fiscal period Fiscal year Fiscal year Fiscal year
Ended ended ended ended
August 31, January 31, January 31, January 31,
1999 1999 1998 1997
============= =========== =========== ===========
Balanced Fund 445 $ 1,402 $ 31 N/A
Growth and Income Fund 32,442 57,187 32,418 6,126
CORE Large Cap Value Fund 13 1 N/A N/A
CORE U.S. Equity Fund 34,586 49,461 27,222 4,581
CORE Large Cap Growth Fund 6,385 2,992 257 N/A
CORE Small Cap Equity Fund 176 74 4 N/A
CORE International Equity Fund 20 53 3 N/A
Capital Growth Fund 16,691 7,655 4 N/A
Strategic Growth Fund 2 N/A N/A N/A
Growth Opportunities Fund 2 N/A N/A N/A
Mid Cap Value Fund 656 685 12 N/A
International Equity Fund 10,635 17,786 9,236 1,032
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Fiscal period Fiscal year Fiscal year Fiscal year
Ended ended ended ended
August 31, January 31, January 31, January 31,
1999 1999 1998 1997
============= =========== =========== ===========
Small Cap Value Fund 471 588 4 N/A
Large Cap Value Fund NA N/A N/A N/A
European Equity Fund 6 3 N/A N/A
Japanese Equity Fund 6 6 N/A N/A
International Small Cap Fund 5 6 N/A N/A
Emerging Markets Equity Fund 4 7 1 N/A
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The Funds have adopted the Plan pursuant to Rule 12b-1 under the Act in order to avoid any possibility that payments to the Service Organizations pursuant to the Service Agreements might violate the Act. Rule 12b-1, which was adopted by the SEC under the Act, regulates the circumstances under which an investment company or series thereof may bear expenses associated with the distribution of its shares. In particular, such an investment company or series thereof cannot engage directly or indirectly in financing any activity which is primarily intended to result in the sale of shares issued by the company unless it has adopted a plan pursuant to, and complies with the other requirements of, such Rule. The Trust believes that fees paid for the services provided in the Plan and described above are not expenses incurred primarily for effecting the distribution of Service Shares. However, should such payments be deemed by a court or the SEC to be distribution expenses, such payments would be duly authorized by the Plan.
Conflict of interest restrictions (including the Employee Retirement Income Security Act of 1974) may apply to a Service Organization's receipt of compensation paid by a Fund in connection with the investment of fiduciary assets in Service Shares of a Fund. Service Organizations, including banks regulated by the Comptroller of the Currency, the Federal Reserve Board or the Federal Deposit Insurance Corporation, and investment advisers and other money managers subject to the jurisdiction of the SEC, the Department of Labor or state securities commissions, are urged to consult their legal advisers before investing fiduciary assets in Service Shares of a Fund. In addition, under some state securities laws, banks and other financial institutions purchasing Service Shares on behalf of their customers may be required to register as dealers.
The Trustees, including a majority of the Trustees who are not interested persons of the Trust and who have no direct or indirect financial interest in the operation of the Plan or the related Service Agreements, most recently voted to approve the Plan and related Service Agreements at a meeting called for the purpose of voting on such Plan and Service Agreements on April 27, 1999. The Plan and related Service Agreements will remain in effect until May 1, 2000 and will continue in effect thereafter only if such continuance is specifically approved annually by a vote of the Trustees in the manner described above. The Plan may not be amended to increase materially the amount to be spent for the services described therein without approval of the Service Shareholders of the affected Fund and all material amendments of the Plan must also be approved by the Trustees in the manner described above. The Plan may be terminated at any time by a majority of the Trustees as described above or by a vote of a majority of the outstanding Service Shares of the affected Fund. The Service Agreements may be terminated at any time, without payment of any penalty, by vote of a majority of the Trustees as described above or by a vote of a majority of the outstanding Service Shares of the affected Fund on not more than sixty (60) days' written notice to any other party to the Service Agreements. The
Service Agreements will terminate automatically if assigned. So long as the Plan is in effect, the selection and nomination of those Trustees who are not interested persons will be committed to the discretion of the non-interested Trustees. The Trustees have determined that, in their judgment, there is a reasonable likelihood that the Plan will benefit the Funds and the holders of Service Shares of the Funds.
Appendix A
A Standard & Poor's ("S&P") commercial paper rating is a current opinion of the credit worthiness of an obligor with respect to financial obligations having an original maturity of no more than 365 days. The following summarizes the rating categories used by Standard and Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category indicating that the obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
"B" - Obligations are regarded as having significant speculative characteristics. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and are dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.
"D" - Obligations are in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The "D" rating will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually senior debt obligations not having an original maturity in excess of one year, unless explicitly noted. The following summarizes the rating categories used by Moody's for commercial paper:
1-A
"Prime-1" - Issuers (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: leading market positions in well-established industries; high rates of return on funds employed; conservative capitalization structure with moderate reliance on debt and ample asset protection; broad margins in earnings coverage of fixed financial charges and high internal cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuers (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an acceptable ability for repayment of senior short-term debt obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime rating categories.
The three rating categories of Duff & Phelps for investment grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating category. The following summarizes the rating categories used by Duff & Phelps for commercial paper:
"D-1+" - Debt possesses the highest certainty of timely payment. Short-term liquidity, including internal operating factors and/or access to alternative sources of funds, is outstanding, and safety is just below risk-free U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment. Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small.
2-A
"D-3" - Debt possesses satisfactory liquidity and other protection factors qualify issues as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics. Liquidity is not sufficient to insure against disruption in debt service. Operating factors and market access may be subject to a high degree of variation.
"D-5" - Issuer has failed to meet scheduled principal and/or interest payments.
Fitch IBCA short-term ratings apply to debt obligations that have time horizons of less than 12 months for most obligations, or up to three years for U.S. public finance securities. The following summarizes the rating categories used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This designation indicates the best capacity for timely payment of financial commitments and may have an added "+" to denote any exceptionally strong credit feature.
"F2" - Securities possess good credit quality. This designation indicates a satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of the higher ratings.
"F3" - Securities possess fair credit quality. This designation indicates that the capacity for timely payment of financial commitments is adequate; however, near-term adverse changes could result in a reduction to non-investment grade.
"B" - Securities possess speculative credit quality. This designation indicates minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions.
"C" - Securities possess high default risk. This designation indicates that default is a real possibility and that the capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.
"D" - Securities are in actual or imminent payment default.
Thomson Financial BankWatch short-term ratings assess the likelihood of an untimely payment of principal and interest of debt instruments with original maturities of one year or less. The following summarizes the ratings used by Thomson Financial BankWatch:
3-A
"TBW-1" - This designation represents Thomson Financial BankWatch's highest category and indicates a very high likelihood that principal and interest will be paid on a timely basis.
"TBW-2" - This designation represents Thomson Financial BankWatch's second- highest category and indicates that while the degree of safety regarding timely repayment of principal and interest is strong, the relative degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents Thomson Financial BankWatch's lowest investment-grade category and indicates that while the obligation is more susceptible to adverse developments (both internal and external) than those with higher ratings, the capacity to service principal and interest in a timely fashion is considered adequate.
"TBW-4" - This designation represents Thomson Financial BankWatch's lowest rating category and indicates that the obligation is regarded as non-investment grade and therefore speculative.
The following summarizes the ratings used by Standard & Poor's for corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and "C" the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
4-A
"BB" - An obligation rated "BB" is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation.
"B" - An obligation rated "B" is more vulnerable to nonpayment than obligations rated "BB", but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation.
"CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment, and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
"CC" - An obligation rated "CC" is currently highly vulnerable to nonpayment.
"C" - The "C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action has been taken, but payments on this obligation are being continued.
"D" - An obligation rated "D" is in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
"r" - This symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or volatility of
expected returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk - such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
The following summarizes the ratings used by Moody's for corporate and municipal long-term debt:
5-A
"Aaa" - Bonds are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards. Together with the "Aaa" group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in "Aaa" securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long- term risk appear somewhat larger than the "Aaa" securities.
"A" - Bonds possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds are considered as medium-grade obligations, (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these ratings provide questionable protection of interest and principal ("Ba" indicates speculative elements; "B" indicates a general lack of characteristics of desirable investment; "Caa" are of poor standing; "Ca" represents obligations which are speculative in a high degree; and "C" represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default.
Con. (---) - Bonds for which the security depends upon the completion of some act or the fulfillment of some condition are rated conditionally. These are bonds secured by (a) earnings of projects under construction, (b) earnings of projects unseasoned in operating experience, (c) rentals which begin when facilities are completed, or (d) payments to which some other limiting condition attaches. Parenthetical rating denotes probable credit stature upon completion of construction or elimination of basis of condition.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from "Aa" through "Caa". The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of its generic rating category.
6-A
The following summarizes the long-term debt ratings used by Duff & Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The risk factors are negligible, being only slightly more than for risk-free U.S. Treasury debt.
"AA" - Debt is considered to be of high credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions.
"A" - Debt possesses protection factors which are average but adequate. However, risk factors are more variable in periods of greater economic stress.
"BBB" - Debt possesses below-average protection factors but such protection factors are still considered sufficient for prudent investment. Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these ratings is considered to be below investment grade. Although below investment grade, debt rated "BB" is deemed likely to meet obligations when due. Debt rated "B" possesses the risk that obligations will not be met when due. Debt rated "CCC" is well below investment grade and has considerable uncertainty as to timely payment of principal, interest or preferred dividends. Debt rated "DD" is a defaulted debt obligation, and the rating "DP" represents preferred stock with dividend arrearages.
To provide more detailed indications of credit quality, the "AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within these major categories.
The following summarizes the ratings used by Fitch IBCA for corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest credit quality. These ratings denote the lowest expectation of credit risk and are assigned only in case of exceptionally strong capacity for timely payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit quality. These ratings denote a very low expectation of credit risk and indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
"A" - Bonds considered to be investment grade and of high credit quality. These ratings denote a low expectation of credit risk and indicate strong capacity for timely payment of
7-A
financial commitments. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.
"BBB" - Bonds considered to be investment grade and of good credit quality. These ratings denote that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity.
"BB" - Bonds considered to be speculative. These ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic changes over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade.
"B" - Bonds are considered highly speculative. These ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
"CCC", "CC", "C" - Bonds have high default risk. Default is a real possibility, and capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. "CC" ratings indicate that default of some kind appears probable, and "C" ratings signal imminent default.
"DDD," "DD" and "D" - Bonds are in default. The ratings of obligations in this category are based on their prospects for achieving partial of full recovery in a reorganization of the obligor. While expected recovery values are highly speculative and cannot be estimated with any precision, the following serve as general guidelines. "DDD" obligations have the highest potential for recovery, around 90%-100% of outstanding amounts and accrued interest. "DD" indicates potential recovering in the range of 50%-90%, and the lowest recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some or all of their obligations. Entities rated "DDD" have the highest prospect for resumption of performance or continued operation with or without a formal reorganization process. Entities rated "DD" and "D" are generally undergoing a formal reorganization or liquidation process; those rated "DD" are likely to satisfy a higher portion of their outstanding obligations, while entities rated "D" have a poor prospect for repaying all obligations.
To provide more detailed indications of credit quality, the Fitch IBCA ratings from and including "AA" to "CCC" may be modified by the addition of a plus (+) or minus (-) sign to denote relative standing within these major rating categories.
8-A
Thomson Financial BankWatch assesses the likelihood of an untimely repayment of principal or interest over the term to maturity of long term debt and preferred stock which are issued by United States commercial banks, thrifts and non-bank banks; non-United States banks; and broker-dealers. The following summarizes the rating categories used by Thomson Financial BankWatch for long- term debt ratings:
"AAA" - This designation indicates that the ability to repay principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay principal and interest on a timely basis, with limited incremental risk compared to issues rated in the highest category.
"A" - This designation indicates that the ability to repay principal and interest is strong. Issues rated "A" could be more vulnerable to adverse developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents the lowest investment-grade category and indicates an acceptable capacity to repay principal and interest. Issues rated "BBB" are more vulnerable to adverse developments (both internal and external) than obligations with higher ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned by Thomson Financial BankWatch to non-investment grade long-term debt. Such issues are regarded as having speculative characteristics regarding the likelihood of timely payment of principal and interest. "BB" indicates the lowest degree of speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may include a plus or minus sign designation which indicates where within the respective category the issue is placed.
A Standard and Poor's rating reflects the liquidity concerns and market access risks unique to notes due in three years or less. The following summarizes the ratings used by Standard & Poor's for municipal notes:
9-A
"SP-1" - The issuers of these municipal notes exhibit a strong capacity to pay principal and interest. Those issues determined to possess a very strong capacity to pay debt service are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
"SP-3" - The issuers of these municipal notes exhibit speculative capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term loans are designated Moody's Investment Grade ("MIG") and variable rate demand obligations are designated Variable Moody's Investment Grade ("VMIG"). Such ratings recognize the differences between short-term credit risk and long-term risk. The following summarizes the ratings by Moody's Investors Service, Inc. for short-term notes:
"MIG-1"/"VMIG-1" - This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
"MIG-2"/"VMIG-2" - This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
"MIG-3"/"VMIG-3" - This designation denotes favorable quality, with all security elements accounted for but lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.
"SG" - This designation denotes speculative quality. Debt instruments in this category lack of margins of protection.
Fitch IBCA and Duff & Phelps use the short-term ratings described under Commercial Paper Ratings for municipal notes.
10-A
Appendix B
BUSINESS PRINCIPLES OF GOLDMAN, SACHS & CO.
Goldman Sachs is noted for its Business Principles, which guide all of the firm's activities and serve as the basis for its distinguished reputation among investors worldwide.
Our client's interests always come first. Our experience shows that if we serve our clients well, our own success will follow.
Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard.
We take great pride in the professional quality of our work. We have an uncompromising determination to achieve excellence in everything we undertake. Though we may be involved in a wide variety and heavy volume of activity, we would, if it came to a choice, rather be best than biggest.
We stress creativity and imagination in everything we do. While recognizing that the old way may still be the best way, we constantly strive to find a better solution to a client's problems. We pride ourselves on having pioneered many of the practices and techniques that have become standard in the industry.
We make an unusual effort to identify and recruit the very best person for every job. Although our activities are measured in billions of dollars, we select our people one by one. In a service business, we know that without the best people, we cannot be the best firm.
We offer our people the opportunity to move ahead more rapidly than is possible at most other places. We have yet to find limits to the responsibility that our best people are able to assume. Advancement depends solely on ability, performance and contribution to the Firm's success, without regard to race, color, religion, sex, age, national origin, disability, sexual orientation, or any other impermissible criterion or circumstance.
We stress teamwork in everything we do. While individual creativity is always encouraged, we have found that team effort often produces the best results. We have no room for those who put their personal interests ahead of the interests of the Firm and its clients.
The dedication of our people to the Firm and the intense effort they give their jobs are greater than one finds in most other organizations. We think that this is an important part of our success.
1-B
Our profits are a key to our success. They replenish our capital and attract and keep our best people. It is our practice to share our profits generously with all who help create them. Profitability is crucial to our future.
We consider our size an asset that we try hard to preserve. We want to be big enough to undertake the largest project that any of our clients could contemplate, yet small enough to maintain the loyalty, the intimacy and the esprit de corps that we all treasure and that contribute greatly to our success.
We constantly strive to anticipate the rapidly changing needs of our clients and to develop new services to meet those needs. We know that the world of finance will not stand still and that complacency can lead to extinction.
We regularly receive confidential information as part of our normal client relationships. To breach a confidence or to use confidential information improperly or carelessly would be unthinkable.
Our business is highly competitive, and we aggressively seek to expand our client relationships. However, we must always be fair competitors and must never denigrate other firms.
Integrity and honesty are the heart of our business. We expect our people to maintain high ethical standards in everything they do, both in their work for the firm and in their personal lives.
2-B
GOLDMAN, SACHS & CO.'S INVESTMENT BANKING AND SECURITIES ACTIVITIES
Goldman Sachs is a leading financial services firm traditionally known on Wall Street and around the world for its institutional and private client service.
With thirty-seven offices around the world Goldman Sachs employs over 11,000 professionals focused on opportunities in major markets.
The number one underwriter of all international equity issues from 1989- 1997.
The number one lead manager of U.S. common stock offerings for the past nine years (1989-1997).*
The number one lead manager for initial public offerings (IPOs) worldwide (1989-1997).
3-B
GOLDMAN, SACHS & CO.'S HISTORY OF EXCELLENCE
1869 Marcus Goldman opens Goldman Sachs for business
1890 Dow Jones Industrial Average first published
1896 Goldman, Sachs & Co. joins New York Stock Exchange
1906 Goldman, Sachs & Co. takes Sears Roebuck & Co. public (at 93 years, the
firm's longest-standing client relationship)
Dow Jones Industrial Average tops 100
1925 Goldman, Sachs & Co. finances Warner Brothers, producer of the first
talking film
1956 Goldman, Sachs & Co. co-manages Ford's public offering, the largest to
date
1970 Goldman, Sachs & Co. opens London office
1972 Dow Jones Industrial Average breaks 1000
1986 Goldman, Sachs & Co. takes Microsoft public
1988 Goldman Sachs Asset Management is formally established
1991 Goldman, Sachs & Co. provides advisory services for the largest
privatization in the region of the sale of Telefonos de Mexico
1995 Goldman Sachs Asset Management introduces Global Tactical Asset
Allocation Program
Dow Jones Industrial Average breaks 5000
1996 Goldman, Sachs & Co. takes Deutsche Telekom public
Dow Jones Industrial Average breaks 6000
1997 Goldman Sachs Asset Management increases assets under management by 100%
over 1996
Dow Jones Industrial Average breaks 7000
4-B
|
1998 Goldman Sachs Asset Management reaches $195.5 billion in assets under
management
Dow Jones Industrial Average breaks 9000
1999 Goldman Sachs becomes a public company
|
5-B
APPENDIX C
Statement of Intention
(applicable only to Class A shares)
If a shareholder anticipates purchasing $50,000 or more of Class A Shares of a Fund alone or in combination with Class A Shares of another Goldman Sachs Fund within a 13-month period, the shareholder may obtain shares of the Fund at the same reduced sales charge as though the total quantity were invested in one lump sum by checking and filing the Statement of Intention in the Account Application. Income dividends and capital gain distributions taken in additional shares will not apply toward the completion of the Statement of Intention.
To ensure that the reduced price will be received on future purchases, the investor must inform Goldman Sachs that the Statement of Intention is in effect each time shares are purchased. Subject to the conditions mentioned below, each purchase will be made at the public offering price applicable to a single transaction of the dollar amount specified on the Account Application. The investor makes no commitment to purchase additional shares, but if the investor's purchases within 13 months plus the value of shares credited toward completion do not total the sum specified, the investor will pay the increased amount of the sales charge prescribed in the Escrow Agreement.
Escrow Agreement
Out of the initial purchase (or subsequent purchases if necessary), 5% of the dollar amount specified on the Account Application will be held in escrow by the Transfer Agent in the form of shares registered in the investor's name. All income dividends and capital gains distributions on escrowed shares will be paid to the investor or to his or her order. When the minimum investment so specified is completed (either prior to or by the end of the 13th month), the investor will be notified and the escrowed shares will be released.
If the intended investment is not completed, the investor will be asked to remit to Goldman Sachs any difference between the sales charge on the amount specified and on the amount actually attained. If the investor does not within 20 days after written request by Goldman Sachs pay such difference in the sales charge, the Transfer Agent will redeem, pursuant to the authority given by the investor in the Account Application, an appropriate number of the escrowed shares in order to realize such difference. Shares remaining after any such redemption will be released by the Transfer Agent.
1-C
GOLDMAN SACHS BALANCED FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 55.1%
Banks - 3.4%
28,700 Bank of America Corp. $ 1,736,350
27,000 Bank One Corp. 1,083,375
18,500 Citigroup, Inc. 822,094
29,900 First Union Corp. 1,240,850
13,100 KeyCorp 379,900
21,600 National City Corp. 596,700
16,200 State Street Corp. 969,975
20,400 Wells Fargo & Co. 812,175
------------
7,641,419
--------------------------------------------------------------
Chemical - 0.6%
9,777 Du Pont (E.I.) de Nemours & Co. 619,617
8,600 Minnesota Mining and Manufacturing Co. 812,700
------------
1,432,317
--------------------------------------------------------------
Clothing - 0.3%
24,100 The TJX Companies, Inc. 695,888
--------------------------------------------------------------
Computer Hardware - 3.5%
21,500 Cisco Systems, Inc.* 1,457,969
24,900 Compaq Computer Corp. 577,369
10,400 EMC Corp.* 624,000
9,600 Hewlett-Packard Co. 1,011,600
18,100 International Business Machines, Inc. 2,254,581
4,100 NCR Corp.* 179,375
13,400 Sun Microsystems, Inc.* 1,065,300
12,900 Xerox Corp. 615,975
------------
7,786,169
--------------------------------------------------------------
Computer Software - 2.1%
6,600 CheckFree Holdings Corp.* 193,050
10,800 Computer Associates International, Inc. 610,200
40,600 Microsoft Corp.* 3,758,037
5,400 Oracle Corp.* 197,100
------------
4,758,387
--------------------------------------------------------------
Consumer Services - 0.9%
15,700 Cendant Corp.* 281,619
42,100 Service Corp. International 581,506
26,050 Valassis Communications, Inc.* 1,139,688
------------
2,002,813
--------------------------------------------------------------
Defense/Aerospace - 0.5%
9,600 Northrop Grumman Corp. 696,000
6,400 Raytheon Co. 429,600
------------
1,125,600
--------------------------------------------------------------
Department Store - 0.7%
27,000 Federated Department Stores, Inc.* 1,242,000
8,400 The May Department Stores Co. 328,125
------------
1,570,125
--------------------------------------------------------------
Drugs - 4.3%
37,600 American Home Products Corp. 1,560,400
22,400 Bristol-Myers Squibb Co. 1,576,400
9,200 Eli Lilly & Co. 686,550
--------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Drugs - (continued)
25,900 Merck & Co. $ 1,740,156
38,200 Pfizer, Inc. 1,442,050
17,900 Pharmacia & Upjohn, Inc. 935,275
11,600 Schering-Plough Corp. 609,725
14,700 Warner-Lambert Co. 973,875
------------
9,524,431
------------------------------------------------------------
Electronics Equipment - 1.3%
4,900 General Instrument Corp.* 241,019
1,500 General Motors Corp. (Hughes)* 77,250
9,400 Lucent Technologies, Inc. 602,188
3,400 Motorola, Inc. 313,650
8,300 QUALCOMM, Inc.* 1,595,156
------------
2,829,263
------------------------------------------------------------
Electrical Utilities - 2.3%
29,400 AES Corp.* 1,784,212
35,900 Entergy Corp. 1,070,269
14,000 FPL Group, Inc. 756,000
3,400 Pacificorp 69,488
14,000 PG&E Corp. 424,375
25,100 Unicom Corp. 969,487
------------
5,073,831
------------------------------------------------------------
Energy Resources - 2.3%
5,600 Atlantic Richfield Co. 492,450
10,687 Conoco, Inc. Class B 287,213
18,000 Exxon Corp. 1,419,750
3,500 Mobil Corp. 358,313
27,200 Occidental Petroleum Corp. 589,900
27,600 Royal Dutch Petroleum Co. ADR 1,707,750
6,100 Tosco Corp.[_] 155,550
3,600 Unocal Corp. 150,750
------------
5,161,676
------------------------------------------------------------
Environmental Services - 0.5%
54,500 Waste Management, Inc. 1,188,781
------------------------------------------------------------
Financial Services - 2.0%
8,400 Countrywide Credit Industries, Inc. 269,850
35,000 Federal Home Loan Mortgage Corp. 1,802,500
25,800 Federal National Mortgage Association 1,602,825
33,900 MBNA Corp. 836,906
------------
4,512,081
------------------------------------------------------------
Food & Beverage - 3.0%
2,600 Anheuser-Busch Companies, Inc. 200,200
66,360 Archer Daniels Midland Co. 862,680
18,800 Coca-Cola Co. 1,124,475
38,100 ConAgra, Inc. 933,450
5,000 H.J. Heinz Co. 233,438
60,400 Nabisco Group Holdings Corp. 1,072,100
19,600 Pepsico, Inc. 668,850
53,000 Sara Lee Corp. 1,175,937
5,400 William Wrigley Jr. Co. 422,887
------------
6,694,017
------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Shares Description Value
Common Stocks - (continued)
Forest - 0.2%
10,600 International Paper Co. $ 498,863
------------------------------------------------------------------------
Heavy Electrical - 1.4%
5,100 Emerson Electric Co. 319,388
25,400 General Electric Co. 2,852,737
------------
3,172,125
------------------------------------------------------------------------
Home Products - 2.1%
18,700 Avon Products, Inc. 820,463
7,600 Clorox Co. 343,900
23,400 Colgate Palmolive Co. 1,251,900
8,500 Ecolab, Inc. 319,281
11,900 Procter & Gamble Co. 1,181,075
25,600 Ralston-Ralston Purina Group 704,000
------------
4,620,619
------------------------------------------------------------------------
Hotel - 0.6%
14,300 Marriott International, Inc. 489,775
34,400 Starwood Hotels & Resorts Worldwide, Inc. Class B 819,150
------------
1,308,925
------------------------------------------------------------------------
Industrial Parts - 0.2%
3,200 Ingersoll-Rand Co. 203,600
1,900 Textron, Inc. 153,425
------------
357,025
------------------------------------------------------------------------
Information Services - 1.0%
8,682 At Home Corp. Series A* 348,365
7,500 Automatic Data Processing, Inc. 294,844
21,200 First Data Corp. 932,800
8,600 Galileo International, Inc. 417,100
2,440 VeriSign, Inc.* 264,283
------------
2,257,392
------------------------------------------------------------------------
Leisure - 0.2%
3,000 Eastman Kodak Co. 220,312
8,600 Hasbro, Inc. 210,163
------------
430,475
------------------------------------------------------------------------
Life Insurance - 1.3%
11,800 Aetna, Inc. 917,450
10,100 Cigna Corp. 907,106
4,900 Hartford Life, Inc. 212,844
6,600 Nationwide Financial Services, Inc. 240,900
18,060 UNUMProvident Corp. 651,289
------------
2,929,589
------------------------------------------------------------------------
Media - 4.9%
26,400 AH Belo Corp. Series A 499,950
12,100 AMFM, Inc.* 595,925
57,480 AT&T Corp.-Liberty Media Group* 1,839,360
8,900 Cablevision Systems Corp.* 623,000
35,900 CBS, Inc.* 1,687,300
------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Media - (continued)
6,864 Clear Channel Communications, Inc.* $ 480,909
16,000 Comcast Corp. 522,000
4,300 EchoStar Communications Corp.* 359,588
24,600 Infinity Broadcasting Corp.* 665,737
26,490 MediaOne Group, Inc.* 1,741,717
19,300 The Walt Disney Co. 535,575
22,700 Time Warner, Inc. 1,346,394
------------
10,897,455
--------------------------------------------------------------
Medical Products - 1.0%
12,700 Baxter International, Inc. 851,694
11,700 Becton, Dickinson & Co. 329,062
11,100 Johnson & Johnson 1,134,975
------------
2,315,731
--------------------------------------------------------------
Medical Providers - 0.6%
23,500 Columbia/HCA Healthcare Corp. 578,687
67,000 Healthsouth Corp.* 548,563
5,500 Tenet Healthcare Corp.* 95,906
------------
1,223,156
--------------------------------------------------------------
Motor Vehicle - 1.7%
41,546 Delphi Automative Systems Corp. 778,988
11,000 Federal-Mogul Corp. 501,875
6,600 Ford Motor Co. 344,025
23,300 General Motors Corp. 1,540,712
12,500 TRW, Inc. 681,250
------------
3,846,850
--------------------------------------------------------------
Oil Refining - 0.5%
11,700 Texaco, Inc. 742,950
13,000 USX-Marathon Group, Inc. 404,625
------------
1,147,575
--------------------------------------------------------------
Oil Services - 0.5%
16,100 Schlumberger Ltd. 1,074,675
--------------------------------------------------------------
Property Insurance - 1.6%
30,700 Allstate Corp. 1,007,344
4,500 AMBAC Financial Group, Inc. 237,656
8,365 American International Group, Inc. 775,331
14,500 Hartford Financial Services Group, Inc. 658,844
5,400 Loews Corp. 423,900
10,100 XL Capital Ltd. 508,156
------------
3,611,231
--------------------------------------------------------------
Publishing - 1.3%
11,500 Central Newspapers, Inc. 486,594
6,900 Gannett Co. 468,769
25,100 New York Times Co. 980,468
13,900 R.R. Donnelley & Sons Co. 436,112
2,800 Tribune Co. 261,275
18,900 Ziff-Davis, Inc.* 291,769
------------
2,924,987
--------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Railroads - 0.3%
21,500 Burlington Northern Santa Fe Corp. $ 623,500
---------------------------------------------------------
Restaurants - 0.4%
7,600 McDonald's Corp. 314,450
13,000 Tricon Global Restaurants, Inc.* 528,125
------------
842,575
---------------------------------------------------------
Security/Asset Management - 0.1%
3,700 Morgan Stanley Dean Witter & Co. 317,506
---------------------------------------------------------
Semiconductors - 1.3%
35,500 Intel Corp. 2,917,656
---------------------------------------------------------
Specialty Retail - 1.7%
5,900 CVS Corp. 245,956
8,200 Home Depot, Inc. 501,225
16,400 Tandy Corp. 774,900
43,600 Toys "R' Us, Inc.* 602,225
26,700 Wal-Mart Stores, Inc. 1,183,144
25,600 Walgreen Co. 593,600
------------
3,901,050
---------------------------------------------------------
Telephone - 3.5%
13,600 Ameritech Corp. 858,500
29,749 AT&T Corp. 1,338,705
13,200 Bell Atlantic Corp. 808,500
8,100 BellSouth Corp. 366,525
13,500 GTE Corp. 926,437
22,700 MCI Worldcom, Inc.* 1,719,525
19,900 SBC Communications, Inc. 955,200
5,900 Sprint Corp. 261,813
10,200 U.S. West, Inc. 532,950
------------
7,768,155
---------------------------------------------------------
Tobacco - 0.7%
44,100 Philip Morris Companies, Inc. 1,650,994
---------------------------------------------------------
Wireless - 0.3%
20,200 Crown Castle International Corp.* 305,525
5,300 Sprint Corp. (PCS Group) Series 1* 316,675
------------
622,200
---------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $112,392,806) $123,257,107
---------------------------------------------------------
|
Principal Interest Maturity
Amount Rate Date Value
Asset-Backed Securities - 4.9%
Americredit Automobile Receivables Trust Series 1997-D, Class A3
$1,725,000 5.88% 12/05/2003 $ 1,701,012
Americredit Automobile Receivables Trust Series 1998-A, Class A3
1,100,000 6.24 09/05/2003 1,094,490
Chevy Chase Auto Receivables Trust Series 1995-2, Class A
9,326 5.80 06/15/2002 9,317
-----------------------------------------------------------------------------------------------
|
Principal Interest Maturity
Amount Rate Date Value
Asset-Backed Securities - (continued)
Contimortgage Home Equity Loan Series 1998-1, Class A5
$3,000,000 6.43% 04/15/2016 $ 2,949,540
Fasco Auto Trust Series 1996-1, Class A
54,602 6.65 11/15/2001 54,709
Fingerhut Master Trust Series 1996-1, Class A
40,000 6.45 02/20/2002 40,012
First Sierra Equipment Contract Trust Series 1998-1, Class A4
1,350,000 5.63 08/12/2004 1,317,938
Green Tree Financial Corp. Series 1998-6, Class M1
2,000,000 6.63 06/01/2030 1,808,120
IMC Home Equity Loan Series 1996 3A 7
1,000,000 8.05 08/01/2026 1,049,063
Mid State Trust Series 4, Class A
635,240 8.33 04/01/2030 649,647
Standard Credit Card Master Trust I Series 1995-9, Class A
360,000 6.55 10/07/2007 356,285
----------------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $11,373,274) $11,030,133
----------------------------------------------------------------------------------------------
Corporate Bonds - 15.0%
Finance Bonds - 5.1%
BankAmerica Corp.
$1,000,000 7.75% 07/15/2002 $ 1,022,880
Beneficial Corp.
1,350,000 6.43 04/10/2002 1,340,023
Capital One Bank
500,000 6.39 03/05/2001 497,920
150,000 6.15 06/01/2001 147,879
300,000 6.76 07/23/2002 297,465
590,000 7.15 09/15/2006 590,195
Chelsea GCA Realty
656,000 7.75 01/26/2001 653,658
Citigroup, Inc.
315,000 8.00 02/01/2003 324,226
Comdisco, Inc.
965,000 6.13 01/15/2003 923,206
700,000 6.29 06/30/2003 673,253
Conseco, Inc.
320,000 7.60 06/21/2001 318,051
Continental Bank
100,000 12.50 04/01/2001 108,387
Countrywide Capital Corp.
330,000 8.05 06/15/2027 319,767
Countrywide Home Loans, Inc.
850,000 6.45 02/27/2003 833,255
Fleet Mortgage Group, Inc.
250,000 6.50 06/15/2000 250,302
Ford Motor Credit Co.
170,000 6.13 04/28/2003 164,920
Golden West Financial Corp.
200,000 10.25 12/01/2000 208,402
----------------------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Principal Interest Maturity
Amount Rate Date Value
Corporate Bonds - (continued)
Finance Bonds - (continued)
Liberty Property LP
$ 205,000 7.10% 08/15/2004 $ 195,182
Long Island Savings Bank
620,000 6.20 04/02/2001 608,642
Meditrust, Inc.
270,000 7.82 09/10/2026 240,932
Providian National Bank
250,000 6.65 02/01/2004 237,315
PXRE Capital Trust I
65,000 8.85 02/01/2027 51,691
Riggs National Corp.
280,000 9.65 06/15/2009 294,675
Simon Debartolo Group LP
675,000 6.63 06/15/2003 649,615
Wells Fargo & Co.
485,000 6.63 07/15/2004 478,123
----------------------------------------------------------------------------------------------
TOTAL FINANCE BONDS
(Cost $11,834,601) $11,429,964
----------------------------------------------------------------------------------------------
Industrial Bonds - 9.6%
360 Communications Co.
$ 575,000 7.13% 03/01/2003 $ 576,472
Adelphia Communications
125,000 7.88 05/01/2009 112,344
Adelphia Communications Series B
120,000 10.25 07/15/2000 120,300
Alaska Communications+
125,000 9.38 05/15/2009 117,813
Allied Waste North America, Inc.
250,000 7.63 01/01/2006 230,000
AMFM, Inc.
250,000 10.75 05/15/2006 268,750
British Sky Broadcasting+
240,000 8.20% 07/15/2009 237,791
CBS Corp.
205,000 8.88 06/01/2001 210,812
Chancellor Media Corp.
250,000 8.00 11/01/2008 237,500
Charter Commerce Holdings+~
125,000 0.00/9.92 04/01/2011 75,000
Charter Communications Holdings LLC+
250,000 8.25 04/01/2007 234,375
CMS Energy Corp. Series B
150,000 7.38 11/15/2000 149,517
Continental Airlines, Inc.
339,546 6.54 09/15/2009 325,805
Crown Castle International Corp.+~
250,000 0.00/10.375 05/15/2011 138,750
Daimler Chrysler AG
30,000 7.45 03/01/2027 29,386
60,000 7.45 02/01/2097 56,318
----------------------------------------------------------------------------------------------
|
Principal Interest Maturity
Amount Rate Date Value
Corporate Bonds - (continued)
Industrial Bonds - (continued)
Federal-Mogul Corp.+
$ 250,000 7.50% 01/15/2009 $ 228,255
Ford Motor Co.
300,000 6.63 10/01/2028 265,662
Gulf Canada Resources Ltd.
90,000 9.25 01/15/2004 90,199
Hayes Lemmerz International, Inc. Series B
250,000 8.25 12/15/2008 231,250
Hertz Corp.
1,055,000 6.00 01/15/2003 1,017,991
Intermedia Communications, Inc.
250,000 8.60 06/01/2008 221,250
International Home Foods, Inc.
250,000 10.38 11/01/2006 255,000
ITT Corp.
50,000 6.25 11/15/2000 48,627
Joseph E Seagram & Sons, Inc.
275,000 6.25 12/15/2001 270,102
K Mart Corp.
200,000 8.00 12/13/2001 198,502
Lenfest Communications, Inc.
300,000 8.38 11/01/2005 309,606
Lyondell Chemical Co. Series B
250,000 9.88 05/01/2007 253,750
MCI Worldcom, Inc.
275,000 6.40 08/15/2005 265,185
Metronet Communications
345,000 0/9.95 06/15/2008 261,337
News America Holdings, Inc.
345,000 8.50 02/15/2005 356,088
135,000 8.00 10/17/2016 131,516
300,000 7.25 05/18/2018 279,804
Northwest Airlines Corp. Class C
208,432 8.97 01/02/2015 212,100
NWA Trust Class A
57,900 8.26 03/10/2006 58,233
Occidental Petroleum Corp.
90,000 6.50 04/01/2005 85,784
235,000 7.65 02/15/2006 234,902
Orange PLC
500,000 8.00 08/01/2008 475,000
Oryx Energy Co.
135,000 9.50 11/01/1999 135,626
Owens Corning
720,000 7.50 05/01/2005 692,374
Packaging Corp. of America+
125,000 9.63 04/01/2009 126,250
Panamsat Corp.
1,080,000 6.13 01/15/2005 984,377
Paramount Communications
200,000 5.88 07/15/2000 198,924
--------------------------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
August 31, 1999
Principal Interest Maturity
Amount Rate Date Value
Corporate Bonds - (continued)
Industrial Bonds - (continued)
Pep Boys-Manny, Moe & Jack
$ 200,000 6.52% 07/16/2007 $ 190,467
Philip Morris Companies, Inc.
400,000 9.00 01/01/2001 411,400
150,000 7.00 07/15/2005 146,910
195,000 6.95 06/01/2006 195,412
Raytheon Co.
605,000 6.45 08/15/2002 596,113
RJR Nabisco, Inc.+
355,000 7.38 05/15/2003 348,617
Rogers Cablesystems Ltd.
115,000 9.63 08/01/2002 117,875
Safety-Kleen Corp.+
250,000 9.25 05/15/2009 246,875
Safeway, Inc.
265,000 6.05 11/15/2003 254,215
Sprint Capital Corp.
100,000 5.70 11/15/2003 94,838
465,000 5.88 05/01/2004 441,476
Starwood Hotels & Resorts Worldwide, Inc.
465,000 6.75 11/15/2003 436,960
Tele-Communications, Inc.
125,000 9.65 10/01/2003 131,760
Telewest Communications PLC+
125,000 0.00/11.00 10/01/2007 110,781
250,000 0.00/9.25 04/15/2009 152,500
Tenet Healthcare Corp.
175,000 8.63 12/01/2003 173,250
Time Warner, Inc.
445,000 9.63 05/01/2002 471,268
250,000 7.98 08/15/2004 259,217
565,000 7.75 06/15/2005 572,916
TRW, Inc.+
460,000 6.63 06/01/2004 447,726
Tyco International Group
875,000 5.88 11/01/2004 822,544
U.S. Home Corp.
130,000 7.95 03/01/2001 130,650
United Rentals, Inc.*
500,000 8.80 08/15/2008 475,000
US Air, Inc.
312,531 8.93 04/15/2008 342,687
US West Capital Funding, Inc.+
500,000 6.88 08/15/2001 499,370
USI American Holdings, Inc.
60,000 7.25 12/01/2006 57,047
Viacom, Inc.
900,000 6.75 01/15/2003 885,330
Williams Communications Solutions, Inc.
1,125,000 6.13 02/15/2002 1,104,997
-----------------------------------------------------------------------------------------------
|
Principal Interest Maturity
Amount Rate Date Value
Corporate Bonds - (continued)
Industrial Bonds - (continued)
WMX Technologies, Inc.
$ 320,000 6.38% 12/01/2003 $ 292,819
----------------------------------------------------------------------------------------------
TOTAL INDUSTRIAL BONDS
(Cost $22,228,646) $21,419,647
----------------------------------------------------------------------------------------------
Utility Bonds - 0.3%
CE Electric UK Funding Co.+
$ 200,000 6.85% 12/30/2004 $ 193,529
Edison Mission Energy Funding Corp. Series A+
70,863 6.77 09/15/2003 70,004
Niagara Mohawk Power Corp.
450,000 6.88 04/01/2003 451,921
----------------------------------------------------------------------------------------------
TOTAL UTILITY BONDS
(Cost $732,394) $ 715,454
----------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $34,795,641) $33,565,065
----------------------------------------------------------------------------------------------
Emerging Market Debt - 1.7%
Financiera Energy Nacional
$ 120,000 9.38% 06/15/2006 $ 87,372
MRS Logistica SA
100,000 10.63 08/15/2005 65,000
National Power Corp.
240,000 7.63 11/15/2000 240,000
National Republic of Bulgaria#
370,000 5.88 07/28/2011 253,912
Petroleos Mexicanos+#
350,000 9.37 07/15/2005 325,937
Poland Communications, Inc.
200,000 9.88 11/01/2003 199,000
Province of Tucuman
165,000 9.45 08/01/2004 127,463
Republic of Brazil }
370,537 8.00 04/15/2014 221,396
Republic of Colombia
120,000 8.63 04/01/2008 90,600
Republic of Malaysia
530,000 8.75 06/15/2009 524,896
Republic of Panama
10,000 9.38 04/01/2029 9,375
Republic of Panama#
618,480 6.08 05/10/2002 594,514
330,000 4.25 07/17/2014 234,504
Republic of Philippines
350,000 8.88 04/15/2008 335,125
Republic of Poland#
70,000 4.00 10/27/2024 44,100
United Mexican States
250,000 6.25 12/31/2019 178,750
380,000 6.25 12/31/2019 271,700
----------------------------------------------------------------------------------------------
TOTAL EMERGING MARKET DEBT
(Cost $3,957,400) $ 3,803,644
----------------------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Principal Interest Maturity
Amount Rate Date Value
Mortgage Backed Obligations - 18.2%
Asset Securitization Corp. Series 1997-D4, Class A 1D
$ 450,000 7.49% 04/14/2029 $ 453,830
Chase Commercial Mortgage Securities Corp. Series 1997-2, Class A2
2,200,000 6.60 11/19/2007 2,103,508
Collateralized Mortgage Obligation Trust Series 64, Class Z
367,301 9.00 11/20/2020 378,335
Commercial Mortgage Asset Trust Series 1999-C1, Class A3
200,000 6.64 09/17/2010 188,097
CS First Boston Mortgage Securities Corp. Series 1997-C2, Class A2
700,000 6.52 07/17/2007 668,598
Federal Home Loan Mortgage Corp. (FHLMC)
8,600,000 7.50 10/01/2001 8,548,916
794,784 6.00 12/01/2013 757,032
1,000,000 6.35 03/25/2018 993,430
1,018,642 7.00 06/01/2028 989,987
502,559 7.00 08/01/2028 488,422
908,294 7.00 09/01/2028 882,743
1,204,928 7.00 12/01/2028 1,171,033
Federal National Mortgage Association (FNMA)
211,665 6.50 09/01/2025 201,742
216,816 6.50 10/01/2025 206,451
285,819 6.50 11/01/2025 272,957
395,288 6.50 09/01/2027 374,536
344,804 6.50 11/01/2027 326,377
361,905 6.50 03/01/2028 342,565
539,113 6.50 04/01/2028 510,303
849,127 6.50 06/01/2028 803,750
165,461 6.50 08/01/2028 156,618
754,087 6.50 09/01/2028 713,788
4,000,000 6.50 TBA-30 yr/\ 3,786,250
Federal National Mortgage Association Principal-Only Stripped Security@*
4,030,000 6.86 10/09/2019 1,009,394
Federal National Mortgage Association Series 1993-31, Class PJ
1,000,000 6.55 10/25/2020 987,210
First Union-Lehman Brothers Commercial Mortgage Services Series 1997-C1,
Class A2
300,000 7.30 12/18/2006 298,875
Government National Mortgage Association (GNMA)
220,160 7.00 02/15/2023 214,861
252,688 7.00 04/15/2023 245,739
142,848 7.00 05/15/2023 139,410
1,275,395 7.00 07/15/2023 1,242,762
580,828 7.00 08/15/2023 566,848
527,078 7.00 09/15/2023 514,391
115,233 7.00 10/15/2023 112,064
158,224 7.00 11/15/2023 154,071
398,744 7.00 12/15/2023 387,778
5,000,498 6.50 11/15/2028 4,731,972
1,987,512 6.50 01/15/2029 1,874,462
993,517 6.50 04/15/2029 937,006
--------------------------------------------------------------------------------------------------
|
Principal Interest Maturity
Amount Rate Date Value
Mortgage Backed Obligations - (continued)
Merrill Lynch Mortgage Investors, Inc. Series 1998-C2, Class A2
$2,000,000 6.39% 02/15/2030 $ 1,929,700
----------------------------------------------------------------------------------------------
TOTAL MORTGAGE BACKED OBLIGATIONS
(Cost $41,861,166) $40,665,811
----------------------------------------------------------------------------------------------
Sovereign Credit - 2.0%
Commonwealth of Australia
$1,800,000 8.75% 08/15/2008 $ 1,335,978
Federal Republic of Germany
2,050,000 7.38 01/03/2005 2,456,466
Province of Quebec
200,000 13.25 09/15/2014 209,582
445,000 7.50 07/15/2023 443,958
105,000 5.74 03/02/2026 104,072
----------------------------------------------------------------------------------------------
TOTAL SOVEREIGN CREDIT
(Cost $4,637,925) $ 4,550,056
----------------------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
August 31, 1999
Principal Interest Maturity
Amount Rate Date Value
U.S. Treasury Obligations - 0.9%
U.S. Treasury Principal-Only Stripped Securities0*
$ 500,000 6.13% 08/15/2005 $ 346,470
1,450,000 6.50 05/15/2017 460,897
4,900,000 6.75 08/15/2026[_] 912,282
U.S. Treasury Bills0
100,000 4.39 10/12/1999 98,659
100,000 4.56 12/09/1999[_] 98,658
----------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $2,006,631) $ 1,916,966
----------------------------------------------------------------------------------------------
Repurchase Agreement - 8.3%
Joint Repurchase Agreement
$18,500,000 5.52% 09/01/1999 $ 18,500,000
----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $18,500,000) $ 18,500,000
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $229,524,843) $237,288,782
----------------------------------------------------------------------------------------------
|
* Non-income producing security.
. Represents security with notional or nominal principal amounts. The actual
effective yield of this security is different than the stated coupon due to
amortization of related premiums.
@ This security is issued with a zero-coupon. The interest rate disclosed for
this security represents effective yield to maturity.
+ Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold, normally to qualified institu-
tional buyers in transactions exempt from registration. Total market-value
of Rule 144A securities amounted to $3,553,573 at August 31, 1999.
# Variable rate security. Coupon rate disclosed is that which is in effect at
August 31, 1999.
[_]Portions of these securities are being segregated as collateral for futures
contracts, TBA securities, mortgage dollar rules and forward settlement
sales.
~ These securities are issued with a zero coupon which increases to the
stated rate at a set date in the future.
/\TBA (To Be Assigned) securities are purchased on a forward commitment basis
with an approximate (generally (+/-) 2.5%) principal amount and no definite
maturity date. The actual principal amount and maturity date will be deter-
mined upon settlement when the specific mortgage pools are assigned.
} Coupon consists of 5% cash payment and 3% paid-in-kind securities.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $229,524,843) $237,288,782 Cash 191,272 Receivables: Investment securities sold 9,177,898 Dividends and interest, at value 1,227,661 Fund shares sold 131,478 Forward foreign currency exchange contracts 47,302 Reimbursement from investment adviser 85,343 Deferred organization expenses, net 1,507 Other assets 10,458 ------------------------------------------------------------------------------ Total assets 248,161,701 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased 23,720,847 Fund shares repurchased 373,326 Amounts owed to affiliates 243,370 Forward foreign currency exchange contracts 89,169 Variation margin 32,560 Options written, at value (premium received $35,020) 23,350 Accrued expenses and other liabilities 109,560 ------------------------------------------------------------------------------ Total liabilities 24,592,182 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 207,837,283 Accumulated undistributed net investment income 1,302,040 Accumulated net realized gain from investment, futures, options and foreign currency related transactions 6,981,891 Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currency 7,448,305 ------------------------------------------------------------------------------ NET ASSETS $223,569,519 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share:(a) Class A $20.38 Class B $20.26 Class C $20.23 Institutional $20.39 Service $20.37 ------------------------------------------------------------------------------ Shares outstanding: Class A 8,311,526 Class B 1,999,723 Class C 557,767 Institutional 115,786 Service 727 ------------------------------------------------------------------------------ Total shares outstanding, $.001 par value (unlimited number of shares authorized) 10,985,529 ------------------------------------------------------------------------------ |
(a) Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A shares is $21.57. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge, assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $1,270,413 Interest(b) 3,994,189 ------------------------------------------------------------------------------ Total income 5,264,602 ------------------------------------------------------------------------------ Expenses: Management fees 928,470 Distribution and service fees(c) 588,826 Transfer agent fees(d) 266,379 Custodian fees 90,212 Registration fees 74,020 Professional fees 44,381 Amortization of deferred organization expenses 7,802 Trustee fees 6,426 Service share fees 445 Other 104,945 ------------------------------------------------------------------------------ Total expenses 2,111,906 ------------------------------------------------------------------------------ Less -- expenses reimbursed (307,789) ------------------------------------------------------------------------------ Net expenses 1,804,117 ------------------------------------------------------------------------------ NET INVESTMENT INCOME 3,460,485 ------------------------------------------------------------------------------ Realized and unrealized gain (loss) on investment, futures, op- tions and foreign currency related transactions: Net realized gain (loss) from: Investment transactions 7,020,961 Futures transactions (1,033,898) Options written 36,437 Foreign currency related transactions (10,658) Net change in unrealized gain (loss) on: Investments (6,943,236) Futures (515,372) Options written 11,670 Translation of assets and liabilities denominated in foreign currencies (69,369) ------------------------------------------------------------------------------ Net realized and unrealized loss on investment, futures, options and foreign currency related transactions (1,503,465) ------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,957,020 ------------------------------------------------------------------------------ |
(a) Taxes withheld on dividends were $11,258.
(b) Taxes withheld on interest were $175.
(c) The distribution and service fees for Class A, Class B and Class C were
$268,705, $247,828, and $72,293, respectively.
(d) The transfer agent fees for Class A, Class B, Class C, Institutional
Class and Service Class were $204,217, $47,087, $13,736, $1,303 and $36,
respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statements of Changes in Net Assets
For the
Seven-Month For the
Period Ended Year Ended
August 31, 1999 January 31, 1999
From operations:
Net investment income $ 3,460,485 $ 6,835,375
Net realized gain (loss) from investment,
futures, options and foreign currency
related transactions 6,012,842 (3,394,596)
Net change in unrealized (loss) gain on
investments, futures, options and
translation of assets and liabilities
denominated in foreign currencies (7,516,307) 4,114,362
------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,957,020 7,555,141
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares (2,035,907) (5,454,393)
Class B shares (312,410) (858,147)
Class C shares (88,561) (325,754)
Institutional shares (66,533) (294,710)
Service shares (2,011) (7,267)
------------------------------------------------------------------------------
Total distributions to shareholders (2,505,422) (6,940,271)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 22,988,417 116,979,156
Reinvestment of dividends and
distributions 2,398,095 6,132,572
Cost of shares repurchased (60,433,602) (69,069,832)
------------------------------------------------------------------------------
Net (decrease) increase in net assets
resulting from share transactions (35,047,090) 54,041,896
------------------------------------------------------------------------------
TOTAL (DECREASE) INCREASE (35,595,492) 54,656,766
------------------------------------------------------------------------------
Net assets:
Beginning of period 259,165,011 204,508,245
------------------------------------------------------------------------------
End of period $223,569,519 $259,165,011
------------------------------------------------------------------------------
Accumulated undistributed net investment
income $ 1,302,040 $ 375,856
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Balanced Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year-end of the Funds from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for-
eign securities exchange or the NASDAQ system are valued daily at their last
sale or closing price on the principal exchange on which they are traded. If
no sale occurs, securities are valued at the last bid price. Debt securities
are valued at prices supplied by independent pricing services, broker / deal-
er-supplied valuations or matrix pricing systems. Unlisted equity and debt
securities for which market quotations are available are valued at the last
sale price on valuation date, or if no sale occurs, at the last bid price.
Short-term debt obligations maturing in sixty days or less are valued at am-
ortized cost. Securities for which quotations are not readily available are
valued at fair value using methods approved by the Trusts's Board of Trust-
ees.
Investing in emerging markets may involve special risks and considerations
not typically associated with investing in the United States. These risks in-
clude revaluation of currencies, high rates of inflation, repatriation re-
strictions on income and capital, and adverse political and economic
developments. Moreover, securities issued in these markets may be less liq-
uid, subject to government ownership controls, delayed settlements, and their
prices more volatile than those of comparable securities in the United
States.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned. Howev- er, the Fund does not amortize premiums on U.S. Government and corporate bonds.
C. Mortgage Dollar Rolls -- The Fund may enter into mortgage "dollar rolls" in which the Fund sells securities in the current month for delivery and si- multaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. For financial reporting and tax reporting purposes, the Fund treats mortgage dollar rolls as two separate transactions; one involving the pur- chase of a security and a separate transaction involving a sale.
D. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement
GOLDMAN SACHS BALANCED FUND date on investment securities transactions and forward exchange contracts; and (iii) gains and losses from the difference between amounts of dividends and interest recorded and the amounts actually received.
E. Forward Foreign Currency Exchange Contracts -- The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell forward contracts to seek to increase total return. All commitments are "marked-to-market" daily at the applicable trans- lation rates. The Fund realizes gains or losses at the time a forward con- tract is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
F. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
G. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
H. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, mortgage dollar rolls, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
I. Forward Sales Contracts -- The Fund may enter into forward security sales of mortgage backed securities in which the Fund sells securities in the cur- rent month for delivery of securities defined by pool stipulated characteris- tics on a specified future date. The value of the contract is recorded as a liability on the Fund's records with the difference between its market value and cash proceeds received being recorded as an unrealized gain or loss. Gains or losses are realized upon delivery of the security.
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements (continued)
August 31, 1999
J. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $230,983,624. Accordingly, the gross unrealized gain
on investments was $17,288,053 and the gross unrealized loss on investments
was $10,982,895 resulting in a net unrealized gain of $6,305,158.
K. Deferred Organization Expenses -- Organization-related costs are being am- ortized on a straight-line basis over a period of five years.
L. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual fund of the Trust are allocated to the funds on a straight-
line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions. Each class of shares of the Fund separately bears its respective
class-specific transfer agency fees.
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management, ("GSAM"), a separate operating division of Goldman,
Sachs & Co. ("Goldman Sachs"), serves as the investment adviser to the Fund.
Under the Agreement, the adviser, subject to the general supervision of the
Trust's Board of Trustees, manages the Fund's portfolio. As compensation for
the services rendered pursuant to the Agreement, the assumption of the ex-
penses related thereto and administering the Fund's business affairs, includ-
ing providing facilities, the adviser is entitled to a fee, computed daily
and payable monthly, at an annual rate equal to .65% of the average daily net
assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" of the
Fund (excluding management fees, distribution and service fees, transfer
agent fees, taxes, interest, brokerage, litigation, Service share fees, in-
demnification costs and other extraordinary expenses), to the extent that
such expenses exceed, on an annual basis, .01% of the average daily net as-
sets of the Fund. For the period ended August 31, 1999, Goldman Sachs has
agreed to reimburse approximately $308,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .25%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $46,000 during the period
ended August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: .19% of the average daily net as-
sets for Class A, Class B and Class C Shares and .04% of the average daily
net assets for Institutional and Service Shares.
GOLDMAN SACHS BALANCED FUND
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on a annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$126,000, $81,000 and $36,000 for management, distribution and service and
transfer agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments, futures and options) for the period ended August 31, 1999,
were $212,138,434 and $245,629,642, respectively. Included in these amounts
are purchases and proceeds of sales or maturities of governmental securities
in the amounts of $110,169,982 and $114,104,720, respectively.
For the period ended August 31, 1999, Goldman Sachs earned approximately
$19,000 of brokerage commissions from portfolio transactions.
The Fund had the following outstanding forward foreign currency exchange
contracts:
Open Forward Foreign Value on Current Unrealized Unrealized
Currency Sale Contracts Settlement Date Value Gain Loss
------------------------------------------------------------------------------------
Australian Dollar expiring 9/13/99 $1,388,771 $1,341,469 $47,302 $ --
Euro currency expiring 9/14/99 2,489,205 2,578,374 -- 89,169
------------------------------------------------------------------------------------
Total forward open
foreign currency sale contracts $3,877,976 $3,919,843 $47,302 $89,169
------------------------------------------------------------------------------------
|
The contractual amounts of the forward foreign currency exchange contracts
does not necessarily represent the amounts potentially subject to risk. The
measurement of the risk associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At August 31,
1999, the Fund had sufficient cash and securities to cover any commitments
under these contracts. The Fund has recorded a "Receivable for forward for-
eign currency exchange contracts" and a "Payable for forward foreign currency
exchange contracts" of $47,302 and $89,169, respectively, relating to open
forward foreign currency exchange contracts in the accompanying Statement of
Assets and Liabilities.
For the period ended August 31, 1999, written call option transactions in
the Fund were as follows:
Written Options Number of Contracts Premium Received
------------------------------------------------------------------------------
Balance outstanding, beginning of period -- $ --
Options written 329 71,457
Options expired (157) (36,437)
------------------------------------------------------------------------------
Balance outstanding, end of period 172 $ 35,020
------------------------------------------------------------------------------
|
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund, depending on the fluc-
tuations in the value of the contracts, and are recorded for financial re-
porting purposes as unrealized gains or losses. When contracts are closed,
the Fund realizes a gain or loss which is reported in the Statement of Opera-
tions.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements (continued)
August 31, 1999
changes in the value of the underlying securities. This risk may decrease the
effectiveness of the Fund's hedging strategies and potentially result in a
loss. At August 31, 1999 open futures contracts were as follows:
Number of Contracts Settlement Market Unrealized
Type Long/(Short) Month Value Gain (Loss)
------------------------------------------------------------------------------
Euro Dollars 25 March 2000 $ 5,875,938 $ (42,659)
2 Year U.S. Trea-
sury Note 10 December 1999 2,070,000 (2,405)
5 Year U.S. Trea-
sury Note (63) December 1999 (6,800,063) 226
10 Year U.S.
Treasury Note (7) September 1999 (770,000) 8,378
10 Year U.S.
Treasury Note (16) December 1999 (1,749,750) 6,449
20 Year U.S.
Treasury Bond 124 September 1999 14,178,625 (258,709)
S&P 500 Index 5 December 1999 1,668,750 (178)
------------------------------------------------------------------------------
$14,473,500 $(288,898)
------------------------------------------------------------------------------
|
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu- rities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund's custodian.
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment agreements with GSAM or its affiliates, transfers uninvested cash into
joint accounts, the daily aggregate balance of which is invested in one or
more repurchase agreements.
At August 31, 1999, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $18,500,000 in principal
amount. At August 31, 1999, the following repurchase agreements held in this
joint account were fully collateralized by Federal Agency obligations:
Principal Interest Maturity Amortized
Repurchase Agreement Amount Rate Date Cost
--------------------------------------------------------------------------------------
Banc of America Securities LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
--------------------------------------------------------------------------------------
Bear Stearns & Co., Inc. 300,000,000 5.51 09/01/1999 300,000,000
--------------------------------------------------------------------------------------
Deutsche Bank Securities, Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
--------------------------------------------------------------------------------------
Lehman Brothers, Inc. 300,000,000 5.65 09/01/1999 300,000,000
--------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. 200,000,000 5.50 09/01/1999 200,000,000
--------------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $3,106,800,000
--------------------------------------------------------------------------------------
|
GOLDMAN SACHS BALANCED FUND
8 CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund has reclassified $10,788 from paid-in capital and $28,879 from accumulated undistributed net investment income to accumulated net realized gain from investment, options, futures and foreign currency related transactions. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund's capital accounts on a tax basis.
9. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month Period For the Year Ended
Ended August 31, 1999 January 31, 1999
---------------------------- ------------------------
Shares Dollars Shares Dollars
-----------------------------------------------------
Class A Shares
Shares sold 690,947 $ 14,334,527 3,748,039 $ 76,506,479
Reinvestments of divi-
dends and distributions 96,208 1,976,640 241,188 4,838,697
Shares repurchased (1,873,693) (38,906,818) (2,655,783) (53,412,703)
-----------------------------------------------------
(1,086,538) (22,595,651) 1,333,444 27,932,473
--------------------------------------------------------------------------------
Class B Shares
Shares sold 222,544 4,589,209 1,305,421 26,769,887
Reinvestments of divi-
dends and distributions 13,623 279,018 37,761 751,177
Shares repurchased (392,771) (8,099,668) (357,101) (7,118,524)
-----------------------------------------------------
(156,604) (3,231,441) 986,081 20,402,540
--------------------------------------------------------------------------------
Class C Shares
Shares sold 109,915 2,268,065 532,005 10,982,657
Reinvestments of divi-
dends and distributions 3,746 76,630 13,484 268,120
Shares repurchased (258,346) (5,306,034) (281,904) (5,604,206)
-----------------------------------------------------
(144,685) (2,961,339) 263,585 5,646,571
--------------------------------------------------------------------------------
Institutional Shares
Shares sold 86,577 1,782,979 108,930 2,247,577
Reinvestments of divi-
dends and distributions 3,129 63,796 13,275 267,312
Shares repurchased (365,015) (7,628,710) (143,532) (2,931,934)
-----------------------------------------------------
(275,309) (5,781,935) (21,327) (417,045)
--------------------------------------------------------------------------------
Service Shares
Shares sold 682 13,637 22,926 472,556
Reinvestments of divi-
dends and distributions 99 2,011 375 7,266
Shares Repurchased (24,012) (492,372) (123) (2,465)
-----------------------------------------------------
(23,231) (476,724) 23,178 477,357
--------------------------------------------------------------------------------
NET (DECREASE) INCREASE (1,686,367) $ (35,047,090) 2,584,961 $ 54,041,896
--------------------------------------------------------------------------------
|
Goldman Sachs Balanced Fund -- Tax Information (unaudited)
During the tax year ended August 31, 1999, 17.18% of the ordi- nary income dividends paid from net investment income by the Fund qualify for the dividends received deduction available to corpora- tions.
GOLDMAN SACHS BALANCED FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from
investment operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset In excess Net increase
value, Net Net realized From net of net (decrease)
beginning investment and unrealized investment investment From net in net asset
of period income gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $20.48 $0.32 $(0.19) $(0.23) $ -- $ -- $(0.10)
1999 - Class B Shares 20.37 0.22 (0.18) (0.15) -- -- (0.11)
1999 - Class C Shares 20.34 0.23 (0.19) (0.15) -- -- (0.11)
1999 - Institutional
Shares 20.48 0.53 (0.35) (0.27) -- -- (0.09)
1999 - Service Shares 20.47 1.22 (1.14) (0.18) -- -- (0.10)
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 20.29 0.58 0.20 (0.59) -- -- 0.19
1999 - Class B Shares 20.20 0.41 0.21 (0.45) -- -- 0.17
1999 - Class C Shares 20.17 0.41 0.21 (0.45) -- -- 0.17
1999 - Institutional
Shares 20.29 0.64 0.20 (0.65) -- -- 0.19
1999 - Service Shares 20.28 0.53 0.21 (0.55) -- -- 0.19
----------------------------------------------------------------------------------------------------------------
1998 - Class A Shares 18.78 0.57 2.66 (0.56) -- (1.16) 1.51
1998 - Class B Shares 18.73 0.50 2.57 (0.42) (0.02) (1.16) 1.47
1998 - Class C Shares
(commenced August 15,
1997) 21.10 0.25 0.24 (0.22) (0.04) (1.16) (0.93)
1998 - Institutional
Shares (commenced August
15, 1997) 21.18 0.26 0.32 (0.23) (0.08) (1.16) (0.89)
1998 - Service Shares
(commenced August 15,
1997) 21.18 0.22 0.32 (0.22) (0.06) (1.16) (0.90)
----------------------------------------------------------------------------------------------------------------
1997 - Class A Shares 17.31 0.66 2.47 (0.66) -- (1.00) 1.47
1997 - Class B Shares
(commenced May 1, 1996) 17.46 0.42 2.34 (0.42) (0.07) (1.00) 1.27
----------------------------------------------------------------------------------------------------------------
1996 - Class A Shares 14.22 0.51 3.43 (0.50) -- (0.35) 3.09
----------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
(e) Includes the effect of mortgage dollar roll transactions.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income to expenses to income to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate(e)
$20.38 0.62%(d) $169,395 1.10%(c) 2.58%(c) 1.32%(c) 2.36%(c) 90.41%(d)
20.26 0.20(d) 40,515 1.85(c) 1.83(c) 2.07(c) 1.61(c) 90.41(d)
20.23 0.18(d) 11,284 1.85(c) 1.84(c) 2.07(c) 1.62(c) 90.41(d)
20.39 0.86(d) 2,361 0.70(c) 2.96(c) 0.92(c) 2.74(c) 90.41(d)
20.37 0.39(d) 15 1.20(c) 2.46(c) 1.42(c) 2.24(c) 90.41(d)
20.48 3.94 192,453 1.04 2.90 1.45 2.49 175.06
20.37 3.15 43,926 1.80 2.16 2.02 1.94 175.06
20.34 3.14 14,286 1.80 2.17 2.02 1.95 175.06
20.48 4.25 8,010 0.73 3.22 0.95 3.00 175.06
20.47 3.80 490 1.23 2.77 1.45 2.55 175.06
---------------------------------------------------------------------------------------------------------------------------------
20.29 17.54 163,636 1.00 2.94 1.57 2.37 190.43
20.20 16.71 23,639 1.76 2.14 2.07 1.83 190.43
20.17 2.49(d) 8,850 1.77(c) 2.13(c) 2.08(c) 1.82(c) 190.43
20.29 2.93(d) 8,367 0.76(c) 3.13(c) 1.07(c) 2.82(c) 190.43
20.28 2.66(d) 16 1.26(c) 2.58(c) 1.57(c) 2.27(c) 190.43
---------------------------------------------------------------------------------------------------------------------------------
18.78 18.59 81,410 1.00 3.76 1.77 2.99 208.11
18.73 16.22(d) 2,110 1.75(c) 2.59(c) 2.27(c) 2.07(c) 208.11
---------------------------------------------------------------------------------------------------------------------------------
17.31 28.10 50,928 1.00 3.65 1.90 2.75 197.10
---------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS BALANCED FUND
Report of Independent Public Accountants To the Shareholders and Board of Trustees of Goldman Sachs Trust -- Balanced Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Balanced Fund, one of the portfolios constituting Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related statement of operations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the financial highlights are the responsibility of the Fund's management. Our responsibility is to ex- press an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Balanced Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS STRATEGIC GROWTH FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 89.8%
Banks - 3.8%
8,950 Citigroup, Inc. $ 397,716
5,900 State Street Corp. 353,262
2,500 Wells Fargo & Co. 99,531
-----------
850,509
-----------------------------------------------------------
Chemical - 0.4%
1,492 Du Pont (E.I.) de Nemours & Co. 94,556
-----------------------------------------------------------
Computer Hardware - 5.6%
6,500 Cisco Systems, Inc.* 440,781
3,500 EMC Corp.* 210,000
2,600 International Business Machines, Inc. 323,863
3,400 Sun Microsystems, Inc.* 270,300
-----------
1,244,944
-----------------------------------------------------------
Computer Software - 4.3%
2,500 CheckFree Holdings Corp.* 73,125
9,500 Microsoft Corp. * 879,344
-----------
952,469
-----------------------------------------------------------
Consumer Services - 2.1%
15,000 Service Corp. International 207,188
5,900 Valassis Communications, Inc.* 258,125
-----------
465,313
-----------------------------------------------------------
Drugs - 10.6%
6,800 American Home Products Corp. 282,200
7,700 Bristol-Myers Squibb Co. 541,887
1,800 Eli Lilly & Co. 134,325
1,400 Merck & Co. 94,063
12,500 Pfizer, Inc. 471,875
7,700 Schering-Plough Corp. 404,731
6,300 Warner-Lambert Co. 417,375
-----------
2,346,456
-----------------------------------------------------------
Electronics Equipment - 2.4%
2,700 QUALCOMM, Inc.* 518,906
-----------------------------------------------------------
Electrical Utilities - 3.0%
11,000 AES Corp.* 667,562
-----------------------------------------------------------
Energy Resources - 0.3%
2,088 Conoco, Inc. Class B 56,115
-----------------------------------------------------------
Environmental Services - 0.2%
2,100 Waste Management, Inc. 45,806
-----------------------------------------------------------
Financial Services - 5.6%
9,000 Federal Home Loan Mortgage Corp. 463,500
7,700 Federal National Mortgage Association 478,362
12,200 MBNA Corp. 301,188
-----------
1,243,050
-----------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Food & Beverage - 4.4%
6,100 Coca-Cola Co. $ 364,856
8,000 Nabisco Group Holdings Corp. 142,000
5,200 Pepsico, Inc. 177,450
3,800 William Wrigley Jr. Co. 297,588
-----------
981,894
-----------------------------------------------------------------------
Heavy Electrical - 1.9%
3,800 General Electric Co. 426,788
-----------------------------------------------------------------------
Home Products - 6.5%
7,700 Avon Products, Inc. 337,837
8,700 Colgate Palmolive Co. 465,450
4,600 Procter & Gamble Co. 456,550
6,800 Ralston-Ralston Purina Group 187,000
-----------
1,446,837
-----------------------------------------------------------------------
Hotel - 1.6%
8,300 Marriott International, Inc. 284,275
2,700 Starwood Hotels & Resorts Worldwide, Inc. Class B 64,294
-----------
348,569
-----------------------------------------------------------------------
Information Services - 3.3%
2,708 At Home Corp. Series A* 108,658
9,700 First Data Corp. 426,800
3,500 Outdoor Systems Co.* 113,094
700 VeriSign, Inc.* 75,819
-----------
724,371
-----------------------------------------------------------------------
Leisure - 0.2%
1,900 Hasbro, Inc. 46,431
-----------------------------------------------------------------------
Media - 13.2%
7,100 AH Belo Corp. 134,456
22,600 AT&T Corp.-Liberty Media Group* 723,200
9,800 CBS, Inc.* 460,600
2,700 Comcast Corp. 88,088
1,200 EchoStar Communications Corp.* 100,350
4,100 Infinity Broadcasting Corp.* 110,956
8,300 MediaOne Group, Inc. * 545,725
3,500 The Walt Disney Co. 97,125
11,000 Time Warner, Inc. 652,437
-----------
2,912,937
-----------------------------------------------------------------------
Medical Products - 1.3%
2,700 Johnson & Johnson 276,075
-----------------------------------------------------------------------
Oil Services - 1.4%
4,500 Schlumberger Ltd. 300,375
-----------------------------------------------------------------------
Property Insurance - 2.8%
6,300 AMBAC Financial Group, Inc. 332,719
3,200 American International Group, Inc. 296,600
-----------
629,319
-----------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Publishing - 2.9%
4,500 Gannett Co. $ 305,719
5,200 New York Times Co. 203,125
1,400 Tribune Co. 130,637
-----------
639,481
--------------------------------------------------------
Semiconductors - 2.4%
6,500 Intel Corp. 534,219
--------------------------------------------------------
Specialty Retail - 6.7%
6,300 CVS Corp. 262,631
4,800 Home Depot, Inc. 293,400
4,500 Tandy Corp. 212,625
8,600 Wal-Mart Stores, Inc. 381,088
14,000 Walgreen Co. 324,625
-----------
1,474,369
--------------------------------------------------------
Telephone - 2.1%
6,100 MCI Worldcom, Inc.* 462,075
--------------------------------------------------------
Wireless - 0.8%
1,800 Sprint Corp. (PCS Group) Series 1* 107,550
1,000 Telephone & Data Systems, Inc. 69,625
-----------
177,175
--------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $20,170,418) $19,866,601
--------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Repurchase Agreement - 8.1% Joint Repurchase Agreement $1,800,000 5.52% 09/01/1999 $ 1,800,000 ------------------------------------------------------------ TOTAL REPURCHASE AGREEMENT (Cost $1,800,000) $ 1,800,000 ------------------------------------------------------------ TOTAL INVESTMENTS (Cost $21,970,418) $21,666,601 ------------------------------------------------------------ |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $21,970,418) $21,666,601 Cash 213,713 Receivables: Investment securities sold 47,623 Dividends and interest 9,440 Fund shares sold 1,574,010 Reimbursement from investment adviser 188,359 ----------------------------------------------------------------------------- Total assets 23,699,746 ----------------------------------------------------------------------------- Liabilities: Payables: Investment securities purchased 1,328,739 Amounts owed to affiliates 22,776 Accrued expenses and other liabilities 213,411 ----------------------------------------------------------------------------- Total liabilities 1,564,926 ----------------------------------------------------------------------------- Net Assets: Paid-in capital 22,510,097 Accumulated undistributed net investment income 2,182 Accumulated net realized loss from investment transactions (73,642) Net unrealized loss on investments (303,817) ----------------------------------------------------------------------------- NET ASSETS $22,134,820 ----------------------------------------------------------------------------- Net asset value, offering and redemption price per share:(a) Class A $ 10.06 Class B $ 10.04 Class C $ 10.05 Institutional $ 10.07 Service $ 10.06 ----------------------------------------------------------------------------- Shares outstanding: Class A 1,031,250 Class B 338,028 Class C 237,714 Institutional 594,127 Service 150 ----------------------------------------------------------------------------- Total shares outstanding, $.001 par value (unlimited number of shares authorized) 2,201,269 ----------------------------------------------------------------------------- |
(a) Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A shares is $10.65. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge, assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Statement of Operations
For the Period Ended August 31, 1999(a)
Investment income: Dividends $ 18,353 Interest 19,206 ------------------------------------------------------------------------ Total income 37,559 ------------------------------------------------------------------------ Expenses: Registration fees 136,700 Custodian fees 69,516 Professional fees 34,741 Management fees 29,606 Printing fees 28,000 Distribution and service fees(b) 6,989 Transfer agent fees(c) 3,326 Service share fees 2 Other 34,999 ------------------------------------------------------------------------ Total expenses 343,879 ------------------------------------------------------------------------ Less -- expenses reimbursed (303,839) ------------------------------------------------------------------------ Net expenses 40,040 ------------------------------------------------------------------------ NET INVESTMENT LOSS (2,481) ------------------------------------------------------------------------ Realized and unrealized loss on investment transactions: Net realized loss from: Investment transactions (73,642) Net change in unrealized loss on: Investments (303,817) ------------------------------------------------------------------------ Net realized and unrealized loss on investment transactions (377,459) ------------------------------------------------------------------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(379,940) ------------------------------------------------------------------------ |
(a) Commencement date of operations was May 24, 1999 for all share classes.
(b) Class A, Class B and Class C had distribution and service fees of $2,430,
$2,398 and $2,161, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $1,845, $456, $411, $613 and $1, respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Statement of Changes in Net Assets
For the Period Ended August 31, 1999(a)
From operations: Net investment loss $ (2,481) Net realized loss from investment transactions (73,642) Net change in unrealized loss on investments (303,817) --------------------------------------------------------------------------- Net decrease in net assets resulting from operations (379,940) --------------------------------------------------------------------------- From share transactions: Proceeds from sales of shares 22,791,503 Reinvestment of dividends and distributions -- Cost of shares repurchased (276,743) --------------------------------------------------------------------------- Net increase in net assets resulting from share transactions 22,514,760 --------------------------------------------------------------------------- TOTAL INCREASE 22,134,820 --------------------------------------------------------------------------- Net assets: Beginning of period -- --------------------------------------------------------------------------- End of period $22,134,820 --------------------------------------------------------------------------- Accumulated undistributed net investment income $ 2,182 --------------------------------------------------------------------------- |
(a) Commencement date of operations was May 24, 1999 for all share classes. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Strategic Growth Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service. The Fund commenced operations on May 24, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker / deal- er-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at am- ortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends and interest recorded and the amounts actually received.
D. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
E. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by
GOLDMAN SACHS STRATEGIC GROWTH FUND the premium originally paid. If the Fund exercises a purchased call option, the cost of the security which the Fund purchases upon exercise will be in- creased by the premium originally paid.
F. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
G. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
The Fund had approximately $69,000 at August 31, 1999 (the Fund's tax year-
end) of capital loss carry forward expiring in 2007 for federal tax purposes.
This amount is available to be carried forward to offset future capital gains
to the extent permitted by applicable laws or regulations.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $21,975,389. Accordingly, the gross unrealized gain on
investments was $733,265 and the gross unrealized loss on investments was
$1,042,053 resulting in a net unrealized loss of $308,788.
H. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual fund of the Trust are allocated to the funds on a straight-
line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions. Each class of shares of the Fund separately bears its respective
class-specific transfer agency fees.
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Asset Management ("GSAM"), a separate operating division of Goldman,
Sachs & Co. ("Goldman Sachs"), serves as the investment adviser to the Fund.
Under the Agreement, the adviser, subject to the general supervision of the
Trust's Board of Trustees, manages the Fund's portfolio. As compensation for
the services rendered pursuant to the Agreement, the assumption of the ex-
penses related thereto and administering the Fund's business affairs, includ-
ing providing facilities, the adviser is entitled to a fee, computed daily
and payable monthly, at an annual rate equal to 1.00% of the average daily
net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" of the
Fund (excluding management fees, distribution and service fees, transfer
agent fees, taxes, interest, brokerage, litigation, Service share fees, in-
demnification costs and other extraordinary expenses) to the extent such ex-
penses exceed, on an annual basis, 0.00% of the average daily net assets of
the Fund. For the period ended August 31, 1999, Goldman Sachs reimbursed ap-
proximately $304,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .25%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to
Distribution Agreements. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $68,000 for the period ended
August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: .19% of the average daily net as-
sets for Class A, Class B and Class C shares and .04% of the average daily
net assets for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$16,000, $5,000 and $2,000 for management, distribution and service and
transfer agent fees, respectively.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Notes to Financial Statements (continued)
August 31, 1999
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments) for the period ended August 31, 1999, were $21,010,239 and
$766,179, respectively.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund daily, depending on the
daily fluctuations in the value of the contracts, and are recorded for finan-
cial reporting purposes as unrealized gains or losses. When contracts are
closed, the Fund realizes a gain or loss which is reported in the Statement
of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At August 31, 1999, there were no open futures
contracts.
5. LINE OF CREDIT FACILITY
The Fund participates in a $250,000,000 uncommitted and a $250,000,000 com- mitted, unsecured revolving line of credit facility. Under the most restric- tive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid to the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under these facilities.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu- rities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund's custodian.
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment agreements with GSAM or its affiliates, transfers uninvested cash into
joint accounts, the daily aggregate balance of which is invested in one or
more repurchase agreements.
At August 31, 1999, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $1,800,000 in principal amount.
At August 31, 1999, the following repurchase agreements held in this joint
account were fully collateralized by Federal Agency obligations:
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
-----------------------------------------------------------------------------------
Banc of America
Securities LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
-----------------------------------------------------------------------------------
Bear Stearns & Co.,
Inc. 300,000,000 5.51 09/01/1999 300,000,000
-----------------------------------------------------------------------------------
Deutsche Bank
Securities, Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
-----------------------------------------------------------------------------------
Lehman Brothers,
Inc. 300,000,000 5.65 09/01/1999 300,000,000
-----------------------------------------------------------------------------------
Salomon Smith
Barney Holdings,
Inc. 200,000,000 5.50 09/01/1999 200,000,000
-----------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $3,106,800,000
-----------------------------------------------------------------------------------
|
GOLDMAN SACHS STRATEGIC GROWTH FUND
8. CERTAIN RECLASSIFICATIONS AND OTHER MATTERS
In accordance with Statement of Position 93-2, the Fund has reclassified
$4,663 from paid-in capital to accumulated undistributed net investment in-
come. This reclassification has no impact on the net asset value of the Fund
and is designed to present the Fund's capital accounts on a tax basis.
As of August 31, 1999, the Goldman Sachs Group was the beneficial owner of
approximately 23% of the outstanding share of the Fund.
9. SUMMARY OF SHARE TRANSACTIONS
Share activity for the period ended August 31, 1999 is as follows (a):
Shares Dollars
------------------------
Class A Shares
Shares sold $1,045,628 $10,768,656
Reinvestments of dividends and distributions -- --
Shares repurchased (14,378) (145,441)
------------------------
1,031,250 10,623,215
----------------------------------------------------------------------
Class B Shares
Shares sold 351,153 3,596,720
Reinvestments of dividends and distributions -- --
Shares repurchased (13,125) (131,280)
------------------------
338,028 3,465,440
----------------------------------------------------------------------
Class C Shares
Shares sold 237,714 2,435,567
Reinvestments of dividends and distributions -- --
Shares repurchased -- (2)
------------------------
237,714 2,435,565
----------------------------------------------------------------------
Institutional Shares
Shares sold 594,129 5,989,060
Reinvestments of dividends and distributions -- --
Shares repurchased (2) (20)
------------------------
594,127 5,989,040
----------------------------------------------------------------------
Service Shares
Shares sold 150 1,500
Reinvestments of dividends and distributions -- --
Shares repurchased -- --
------------------------
150 1,500
----------------------------------------------------------------------
NET INCREASE 2,201,269 $22,514,760
----------------------------------------------------------------------
|
(a) Commencement date of operations was May 24, 1999 for all share classes.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
Income from
investment operations(a) Distributions to shareholders
----------------------------- ------------------------------------
Net asset Net In excess
value, investment From net of net Net increase
beginning income Net realized and investment investment From net in net asset
of period (loss) unrealized gain income income realized gains value
FOR THE PERIOD ENDED AUGUST 31,
1999 - Class A Shares
(commenced May 24) $10.00 $ -- $0.06 $-- $-- $-- $0.06
1999 - Class B Shares
(commenced May 24) 10.00 (0.03)(e) 0.07(e) -- -- -- 0.04
1999 - Class C Shares
(commenced May 24) 10.00 (0.03)(e) 0.08(e) -- -- -- 0.05
1999 - Institutional
Shares (commenced May
24) 10.00 0.01 0.06 -- -- -- 0.07
1999 - Service Shares
(commenced May 24) 10.00 (0.01) 0.07 -- -- -- 0.06
------------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
(e) Calculated based on the average shares outstanding methodology.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Ratios assuming no voluntary waiver of
fees or expense limitations
-----------------------------------------
Net assets Ratio of
Net asset at end of Ratio of net investment Ratio of Ratio of Portfolio
value, end Total period net expenses to income (loss) to expenses to net investment loss to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$10.06 0.60%(d) $10,371 1.44%(c) (0.17)%(c) 11.70%(c) (10.43)%(c) 6.98%(d)
10.04 0.40(d) 3,393 2.19(c) (0.97)(c) 12.45(c) (11.23)(c) 6.98(d)
10.05 0.50(d) 2,388 2.19(c) (0.99)(c) 12.45(c) (11.25)(c) 6.98(d)
10.07 0.70(d) 5,981 1.04(c) 0.24(c) 11.30(c) (10.02)(c) 6.98(d)
10.06 0.60(d) 2 1.54(c) (0.24)(c) 11.80(c) (10.50)(c) 6.98(d)
---------------------------------------------------------------------------------------------------------------------------------
|
Goldman Sachs Strategic Growth Fund -- Tax Information (unaudited)
During the tax year ended August 31, 1999, 100% of the ordinary income div- idends paid from net investment income by the Fund qualify for the dividends received deduction available to corporations.
GOLDMAN SACHS STRATEGIC GROWTH FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust -- Strategic
Growth Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Strategic Growth Fund, one of the portfolios constituting Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related state- ment of operations, the statement of changes in net assets and the financial highlights for the period presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Strategic Growth Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the period presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS MID CAP VALUE FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 96.5%
Apparel - 2.6%
425,200 Fruit of the Loom, Inc.* $ 2,976,400
356,300 Reebok International Ltd.* 4,208,794
------------
7,185,194
--------------------------------------------------------------
Banks - 5.0%
388,500 Pacific Century Financial Corp. 7,211,531
98,900 Republic of New York Corp. 6,861,188
------------
14,072,719
--------------------------------------------------------------
Business Services - 0.6%
114,000 Modis Professional Services, Inc.* 1,802,625
--------------------------------------------------------------
Chemical - 1.9%
202,900 IMC Global, Inc. 3,233,719
93,300 Millennium Chemicals, Inc. 2,145,900
------------
5,379,619
--------------------------------------------------------------
Clothing - 0.5%
32,100 Ross Stores, Inc. 1,336,163
--------------------------------------------------------------
Computer Hardware - 2.1%
352,000 Inacom Corp.* 3,432,000
15,400 NCR Corp.* 673,750
67,200 Quantum Corp. - DLT & Storage Systems* 1,230,600
73,100 Quantum Corp. - Hard Disk Drive* 520,837
------------
5,857,187
--------------------------------------------------------------
Computer Software - 0.7%
234,400 Mentor Graphics Corp.* 2,102,275
--------------------------------------------------------------
Consumer Durables - 1.6%
193,600 Miller Herman, Inc. 4,561,700
--------------------------------------------------------------
Defense/Aerospace - 2.3%
89,200 Northrop Grumman Corp. 6,467,000
--------------------------------------------------------------
Department Store - 3.1%
155,700 Dillard's, Inc. 3,658,950
114,400 Federated Department Stores, Inc.* 5,262,400
------------
8,921,350
--------------------------------------------------------------
Drugs - 2.6%
318,600 Bergen Brunswig Corp. 4,918,388
298,700 Perrigo Co.* 2,370,931
------------
7,289,319
--------------------------------------------------------------
Electrical Utilities - 4.0%
312,600 CMP Group, Inc. 8,303,437
166,300 Northeast Utilities* 2,920,644
------------
11,224,081
--------------------------------------------------------------
Energy Resources - 2.1%
143,000 Occidental Petroleum Corp. 3,101,312
114,800 Tosco Corp. 2,927,400
------------
6,028,712
--------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Environmental Services - 2.1%
214,500 Allied Waste Industries, Inc.* $ 2,734,875
291,200 Republic Services, Inc.* 3,166,800
------------
5,901,675
-------------------------------------------------------------------------
Financial Services - 3.4%
319,700 Sovereign Bancorp, Inc. 3,206,991
283,275 Waddell & Reed Financial, Inc. Class B 6,462,211
------------
9,669,202
-------------------------------------------------------------------------
Food & Beverage - 4.2%
276,570 Archer Daniels Midland Co. 3,595,410
432,400 Fleming Companies, Inc. 5,215,825
163,800 Nabisco Group Holdings Corp. 2,907,450
------------
11,718,685
-------------------------------------------------------------------------
Forest Product - 0.8%
97,600 Georgia-Pacific Corp. (Timber Group) 2,348,500
-------------------------------------------------------------------------
Heavy Electrical - 3.1%
2,100 Cooper Industries, Inc. 108,938
348,100 UCAR International, Inc.* 8,484,937
------------
8,593,875
-------------------------------------------------------------------------
Heavy Machinery - 1.3%
361,400 Agco Corp. 3,726,938
-------------------------------------------------------------------------
Hotel - 1.9%
51,300 Promus Hotel Corp.* 1,490,906
159,900 Starwood Hotels & Resorts Worldwide, Inc. Class B 3,807,619
------------
5,298,525
-------------------------------------------------------------------------
Industrial Parts - 1.9%
59,200 Stanley Works 1,561,400
244,900 Unova, Inc.* 3,688,806
------------
5,250,206
-------------------------------------------------------------------------
Information Services - 0.7%
74,700 Dun & Bradstreet Corp. 1,956,206
-------------------------------------------------------------------------
Insurance - 1.3%
77,100 Radian Group 3,570,694
-------------------------------------------------------------------------
Life Insurance - 2.2%
56,400 Aetna, Inc. 4,385,100
30,200 Reliastar Financial Corp. 1,360,887
13,700 Torchmark Corp. 390,450
------------
6,136,437
-------------------------------------------------------------------------
Media - 2.5%
177,700 AH Belo Corp. Series A 3,365,194
72,900 Media General, Inc. 3,572,100
------------
6,937,294
-------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS MID CAP VALUE FUND
Shares Description Value
Common Stocks - (continued)
Medical Providers - 8.6%
143,000 HCR Manor Care, Inc.* $ 2,797,437
675,800 Health Management Association, Inc.* 5,406,400
418,400 Healthsouth Corp.* 3,425,650
163,300 Quest Diagnostics, Inc.* 4,317,244
304,800 Tenet Healthcare Corp.* 5,314,950
358,700 Total Renal Care Holdings* 2,892,019
------------
24,153,700
------------------------------------------------------------
Motor Vehicle - 5.0%
17,000 Dana Corp. 740,563
142,900 Federal-Mogul Corp. 6,519,812
105,800 Lear Corp.* 4,251,837
46,500 TRW, Inc. 2,534,250
------------
14,046,462
------------------------------------------------------------
Oil Refining - 1.1%
49,400 USX-Marathon Group, Inc. 1,537,575
69,600 Valero Energy Corp. 1,479,000
------------
3,016,575
------------------------------------------------------------
Property Insurance - 8.6%
78,800 CNA Financial Corp.* 2,866,350
154,400 Everest Reinsurance Holdings, Inc. 4,284,600
98,400 Loews Corp. 7,724,400
104,800 Mercury General Corp. 3,170,200
198,500 Old Republic International Corp. 3,076,750
61,800 XL Capital Ltd. 3,109,312
------------
24,231,612
------------------------------------------------------------
Publishing - 1.6%
72,100 R.R. Donnelley & Sons Co. 2,262,137
39,900 Times Mirror Co. Series A 2,304,225
------------
4,566,362
------------------------------------------------------------
Railroads - 1.3%
157,000 Canadian Pacific Ltd. 3,679,688
------------------------------------------------------------
Restaurants - 0.7%
156,500 CBRL Group, Inc. 2,054,063
------------------------------------------------------------
Semiconductors - 4.5%
179,900 Avnet, Inc. 7,960,575
223,237 Vishay Intertechnology, Inc.* 4,785,643
------------
12,746,218
------------------------------------------------------------
Specialty Retail - 2.5%
124,300 Autozone, Inc.* 2,959,894
299,100 Toys "R' Us, Inc.* 4,131,318
------------
7,091,212
------------------------------------------------------------
Steel - 1.0%
281,500 Ispat International NV 2,920,563
------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Shipping/Logistics - 1.9%
65,300 CNF Transportation, Inc. $ 2,542,619
127,700 Ryder Systems, Inc. 2,817,381
------------
5,360,000
-------------------------------------------------------------
Tobacco - 4.1%
165,867 R.J. Reynolds Tobacco Holdings, Inc.* 4,550,976
219,300 UST, Inc. 6,949,069
------------
11,500,045
-------------------------------------------------------------
Unit Trust - 1.1%
40,711 Mid Cap Spdr Trust Unit Series 1 3,012,614
-------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $286,027,328) $271,715,295
-------------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Repurchase Agreement - 4.7% Joint Repurchase Agreement $13,300,000 5.52% 09/01/1999 $ 13,300,000 ------------------------------------------------------------------------------------------------ TOTAL REPURCHASE AGREEMENT (Cost $13,300,000) $ 13,300,000 ------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS (Cost $299,327,328) $285,015,295 ------------------------------------------------------------------------------------------------ |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS MID CAP VALUE FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $299,327,328) $285,015,295 Cash 160,027 Receivables: Investment securities sold 982,971 Dividends and interest 289,456 Fund shares sold 527,178 Reimbursement from investment adviser 38,901 Deferred organization expenses, net 15,801 Other assets 13,092 ------------------------------------------------------------------------------ Total assets 287,042,721 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased 4,865,367 Fund shares repurchased 391,827 Amounts owed to affiliates 256,492 Accrued expenses and other liabilities 78,345 ------------------------------------------------------------------------------ Total liabilities 5,592,031 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 299,344,740 Accumulated undistributed net investment income 1,394,240 Accumulated net realized loss from investment, options and foreign currency related transactions (4,976,257) Net unrealized loss on investments (14,312,033) ------------------------------------------------------------------------------ NET ASSETS $281,450,690 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share:(a) Class A $18.42 Class B $18.23 Class C $18.24 Institutional $18.45 Service $18.31 ------------------------------------------------------------------------------ Shares outstanding: Class A 2,665,019 Class B 1,745,500 Class C 537,622 Institutional 10,326,474 Service 10,364 ------------------------------------------------------------------------------ Total shares outstanding, $.001 par value (unlimited number of shares authorized) 15,284,979 ------------------------------------------------------------------------------ |
(a) Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A shares is $19.49. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge, assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS MID CAP VALUE FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 2,410,349 Interest 608,359 ------------------------------------------------------------------------------ Total income 3,018,708 ------------------------------------------------------------------------------ Expenses: Management fees 1,332,432 Distribution and service fees(b) 354,332 Transfer agent fees(c) 166,262 Registration fees 99,373 Custodian fees 63,310 Professional fees 40,309 Amortization of deferred organization expenses 9,970 Trustee fees 6,426 Service share fees 656 Other 100,013 ------------------------------------------------------------------------------ Total expenses 2,173,083 ------------------------------------------------------------------------------ Less -- expenses reimbursed (134,639) ------------------------------------------------------------------------------ Net expenses 2,038,444 ------------------------------------------------------------------------------ NET INVESTMENT INCOME 980,264 ------------------------------------------------------------------------------ Realized and unrealized gain on investment and options transac- tions: Net realized gain from: Investment transactions 13,492,070 Options written 203,797 Net change in unrealized loss on: Investments 11,157,599 ------------------------------------------------------------------------------ Net realized and unrealized gain on investment and options transactions 24,853,466 ------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $25,833,730 ------------------------------------------------------------------------------ |
(a) Taxes withheld on dividends were $16,497.
(b) Class A, Class B and Class C had distribution and service fees of
$93,442, $200,960, and $59,930, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $71,015, $38,183, $11,387, $45,624 and $53,
respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS MID CAP VALUE FUND
Statements of Changes in Net Assets
For the
Seven-Month For the
Period Ended Year Ended
August 31, 1999 January 31, 1999
From operations:
Net investment income $ 980,264 $ 2,221,134
Net realized gain from investment,
options and foreign currency related
transactions 13,695,867 6,435,290
Net change in unrealized gain (loss) on
investments and translation of assets and
liabilities denominated in foreign
currencies 11,157,599 (58,648,058)
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 25,833,730 (49,991,634)
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares -- (280,574)
Class B shares -- (3,078)
Class C shares -- (9,612)
Institutional shares -- (2,055,325)
Service shares -- (2,638)
In excess of net investment income --
Class A shares -- (6,261)
Class B shares -- (69)
Class C shares -- (214)
Institutional shares -- (45,868)
Service shares -- (59)
From net realized gain on investment and
options transactions
Class A shares (4,331,730) (3,498,210)
Class B shares (2,778,438) (1,854,834)
Class C shares (868,578) (536,322)
Institutional shares (16,406,543) (9,058,413)
Service shares (16,471) (14,028)
------------------------------------------------------------------------------
Total distributions to shareholders (24,401,760) (17,365,505)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 40,482,737 203,854,529
Reinvestment of dividends and
distributions 23,418,266 16,585,994
Cost of shares repurchased (99,881,814) (199,307,468)
------------------------------------------------------------------------------
Net (decrease) increase in net assets
resulting from share transactions (35,980,811) 21,133,055
------------------------------------------------------------------------------
TOTAL DECREASE (34,548,841) (46,224,084)
------------------------------------------------------------------------------
Net assets:
Beginning of period 315,999,531 362,223,615
------------------------------------------------------------------------------
End of period $281,450,690 $ 315,999,531
------------------------------------------------------------------------------
Accumulated undistributed (distributions
in excess of) net investment income $ 1,394,240 $ (31,716)
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS MID CAP VALUE FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Mid Cap Value Fund (formerly Mid Cap Equity) (the "Fund"). Effective May 1, 1999, the name of Goldman Sachs Mid Cap Equity Fund was changed to Goldman Sachs Mid Cap Value Fund. The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year-end of the Funds from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or foreign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker / dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated on the identified-cost basis. Dividend income is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment income in an amount equal to the cash dividend. Interest income is recorded on the ba- sis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends and interest recorded and the amounts actually received.
D. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
GOLDMAN SACHS MID CAP VALUE FUND
Notes to Financial Statements (continued)
August 31, 1999
E. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the options written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
F. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
G. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
The Fund had approximately $4,250,000 at August 31, 1999 (the Fund's tax
year-end) of capital loss carryforward expiring in 2006 for federal tax pur-
poses. This amount is available to be carried forward to offset future capi-
tal gains to the extent permitted by applicable laws or regulations.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $300,053,164. Accordingly, the gross unrealized gain
on investments was $21,113,780 and the gross unrealized loss on investments
was $36,151,649 resulting in a net unrealized loss of $15,037,869.
H. Deferred Organization Expenses -- Organization-related costs are being am- ortized on a straight-line basis over a period of five years.
I. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual fund of the Trust are allocated to the funds based on a
straight-line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions. Each class of shares of the Fund separately bears its respective
class-specific transfer agency fees.
GOLDMAN SACHS MID CAP VALUE FUND
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management ("GSAM"), a separate operating division of Goldman,
Sachs & Co. ("Goldman Sachs"), serves as the investment adviser to the Fund.
Under the Agreement, the adviser, subject to the general supervision of the
Trust's Board of Trustees, manages the Fund's portfolio. As compensation for
the services rendered pursuant to the Agreement, the assumption of the ex-
penses related thereto and administering the Fund's business affairs, includ-
ing providing facilities, the adviser is entitled to a fee, computed daily
and payable monthly, at an annual rate equal to .75% of the average daily net
assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" of the
Fund (excluding management fees, distribution and service fees, transfer
agent fees, taxes, interest, brokerage, litigation, Service share fees, in-
demnification costs and other extraordinary expenses) to the extent such ex-
penses exceed, on an annual basis, .10% of the average daily net assets of
the Fund. For the period ended August 31, 1999, Goldman Sachs has agreed to
reimburse approximately $135,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .25%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $25,000 during the period
ended August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: .19% of the average daily net as-
sets for Class A, Class B and Class C shares and .04% of the average daily
net assets for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on a annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$186,000, $48,000 and $22,000 for management, distribution and service and
transfer agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments) for the period ended August 31, 1999, were $193,764,546 and
$220,633,785, respectively.
For the period ended August 31, 1999, Goldman Sachs earned approximately
$34,000 of brokerage commissions from portfolio transactions.
For the period ended August 31, 1999, written call option transactions in
the Fund were as follows:
Written Options Number of Contracts Premium Received ----------------------------------------------------------------------------- Balance outstanding, beginning of pe- riod -- $ -- Options written 1,339 399,012 Options assigned (242) (130,304) Options terminated in closing purchase transactions (660) (128,591) Options expired (437) (140,117) ----------------------------------------------------------------------------- BALANCE OUTSTANDING, END OF PERIOD -- $ -- ----------------------------------------------------------------------------- |
GOLDMAN SACHS MID CAP VALUE FUND
Notes to Financial Statements (continued)
August 31, 1999
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices or to seek to increase total return. Upon
entering into a futures contract, the Fund is required to deposit with a bro-
ker or the Fund's custodian bank an amount of cash or securities equal to the
minimum "initial margin" requirement of the associated futures exchange. Sub-
sequent payments for futures contracts ("variation margin") are paid or re-
ceived by the Fund daily, depending on the daily fluctuations in the value of
the contracts, and are recorded for financial reporting purposes as
unrealized gains or losses. When contracts are closed, the Fund realizes a
gain or loss which is reported in the Statement of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At August 31, 1999, there were no open futures
contracts.
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu- rities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund's custodian.
GOLDMAN SACHS MID CAP VALUE FUND
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment agreements with GSAM or its affiliates, transfers uninvested cash into
joint accounts, the daily aggregate balance of which is invested in one or
more repurchase agreements.
At August 31, 1999, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $13,300,000 in principal
amount. At August 31, 1999, the following repurchase agreements held in this
joint account were fully collateralized by Federal Agency obligations:
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
------------------------------------------------------------------------------
Banc of America Securi-
ties LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
------------------------------------------------------------------------------
Bear Stearns & Co., Inc. 300,000,000 5.51 09/01/1999 300,000,000
------------------------------------------------------------------------------
Deutsche Bank Securities,
Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
------------------------------------------------------------------------------
Lehman Brothers, Inc. 300,000,000 5.65 09/01/1999 300,000,000
------------------------------------------------------------------------------
Salomon Smith Barney
Holdings, Inc. 200,000,000 5.50 09/01/1999 200,000,000
------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $3,106,800,000
------------------------------------------------------------------------------
|
8. OTHER MATTERS AND CERTAIN RECLASSIFICATIONS
As of August 31, 1999, Goldman, Sachs & Co. Employees Profit Sharing Master
Trust was the beneficial owner of approximately 65% of the outstanding shares
of the Fund.
In accordance with Statement of Position 93-2, the Fund has reclassified
$13,374 from paid-in capital and $432,318 from accumulated net realized loss
from investment, options and foreign currency related transactions to accumu-
lated undistributed net investment income. These reclassifications have no
impact on the net asset value of the Fund and are designed to present the
Fund's capital accounts on a tax basis.
GOLDMAN SACHS MID CAP VALUE FUND
Notes to Financial Statements (continued)
August 31, 1999
9. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month
Period Ended For the Year Ended
August 31, 1999 January 31, 1999
------------------------ -------------------------
Shares Dollars Shares Dollars
-----------------------------------------------------------------------------
Class A Shares
Shares sold 1,367,506 $ 26,553,720 6,897,312 $ 143,833,096
Reinvestments of divi-
dends and distributions 214,436 4,213,683 198,815 3,620,601
Shares repurchased (2,756,189) (54,358,686) (7,448,798) (147,546,061)
-----------------------------------------------
(1,174,247) (23,591,283) (352,671) (92,364)
-----------------------------------------------------------------------------
Class B Shares
Shares sold 232,886 4,652,883 1,238,560 27,854,158
Reinvestments of divi-
dends and distributions 121,303 2,361,741 82,866 1,503,199
Shares repurchased (675,993) (12,921,155) (586,417) (11,387,076)
-----------------------------------------------
(321,804) (5,906,531) 735,009 17,970,281
-----------------------------------------------------------------------------
Class C Shares
Shares sold 98,072 2,005,005 499,586 10,988,153
Reinvestments of divi-
dends and distributions 33,722 656,882 22,110 401,070
Shares repurchased (184,318) (3,524,952) (230,071) (4,500,505)
-----------------------------------------------
(52,524) (863,065) 291,625 6,888,718
-----------------------------------------------------------------------------
Institutional Shares
Shares sold 348,804 7,246,129 967,052 20,867,072
Reinvestments of divi-
dends and distributions 821,203 16,169,493 607,168 11,044,402
Shares repurchased (1,537,957) (28,938,741) (1,801,025) (35,855,143)
-----------------------------------------------
(367,950) (5,523,119) (226,805) (3,943,669)
-----------------------------------------------------------------------------
Service Shares
Shares sold 1,188 25,000 15,505 312,050
Reinvestments of divi-
dends and distributions 843 16,467 923 16,722
Shares repurchased (7,477) (138,280) (978) (18,683)
-----------------------------------------------
(5,446) (96,813) 15,450 310,089
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) (1,921,971) $(35,980,811) 462,608 $ 21,133,055
-----------------------------------------------------------------------------
|
GOLDMAN SACHS MID CAP VALUE FUND
Goldman Sachs Mid Cap Value Fund -- Tax Information (unaudited)
During the tax year ended August 31, 1999, 29.85% of the ordi-
nary income dividends paid by the Fund qualify for the dividend
received deduction available for corporations.
Pursuant to Section 852 of the Internal Revenue Code, the Fund
designates $26,791,369 as capital gain dividends paid during its
period ended August 31, 1999.
GOLDMAN SACHS MID CAP VALUE FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from
investment operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset Net In excess Net increase
value, investment Net realized From net of net (decrease)
beginning income and unrealized investment investment From net in net asset
of period (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $18.38 $0.06 $1.71 $ -- $ -- $(1.73) $ 0.04
1999 - Class B Shares 18.29 (0.04) 1.71 -- -- (1.73) (0.06)
1999 - Class C Shares 18.30 (0.04) 1.71 -- -- (1.73) (0.06)
1999 - Institutional
Shares 18.37 0.09 1.72 -- -- (1.73) 0.08
1999 - Service Shares 18.29 0.05 1.70 -- -- (1.73) 0.02
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 21.61 0.10 (2.38) (0.07) -- (0.88) (3.23)
1999 - Class B Shares 21.57 (0.05) (2.35) -- -- (0.88) (3.28)
1999 - Class C Shares 21.59 (0.05) (2.34) (0.02) -- (0.88) (3.29)
1999 - Institutional
Shares 21.65 0.19 (2.38) (0.21) -- (0.88) (3.28)
1999 - Service Shares 21.62 0.03 (2.31) (0.17) -- (0.88) (3.33)
----------------------------------------------------------------------------------------------------------------
1998 - Class A Shares
(commenced August 15,
1997) 23.63 0.09 0.76 (0.06) (0.04) (2.77) (2.02)
1998 - Class B Shares
(commenced August 15,
1997) 23.63 0.06 0.74 (0.09) -- (2.77) (2.06)
1998 - Class C Shares
(commenced August 15,
1997) 23.63 0.06 0.76 (0.09) -- (2.77) (2.04)
1998 - Institutional
Shares 18.73 0.16 5.66 (0.13) -- (2.77) 2.92
1998 - Service Shares
(commenced July 18,
1997) 23.01 0.09 1.40 (0.11) -- (2.77) (1.39)
----------------------------------------------------------------------------------------------------------------
1997 - Institutional
Shares 15.91 0.24 3.77 (0.24) (0.93) (0.02) 2.82
FOR THE PERIOD ENDED JANUARY 31,
1996 - Institutional
Shares (commenced August
1, 1995) 15.00 0.13 0.90 (0.12) -- -- 0.91
----------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS MID CAP VALUE FUND
Ratios assuming no
expense limitations
-------------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$18.42 9.04%(d) $49,081 1.29%(c) 0.43%(c) 1.37%(c) 0.35%(c) 68.84%(d)
18.23 8.53(d) 31,824 2.04(c) (0.33)(c) 2.12(c) (0.41)(c) 68.84(d)
18.24 8.52(d) 9,807 2.04(c) (0.34)(c) 2.12(c) (0.42)(c) 68.84(d)
18.45 9.26(d) 190,549 0.89(c) 0.79(c) 0.97(c) 0.71(c) 68.84(d)
18.31 8.97(d) 190 1.39(c) 0.38(c) 1.47(c) 0.30(c) 68.84(d)
18.38 (10.48) 70,578 1.33 0.38 1.41 0.30 92.18
18.29 (11.07) 37,821 1.93 (0.22) 2.01 (0.30) 92.18
18.30 (11.03) 10,800 1.93 (0.22) 2.01 (0.30) 92.18
18.37 (10.07) 196,512 0.87 0.83 0.95 0.75 92.18
18.29 (10.48) 289 1.37 0.32 1.45 0.24 92.18
-------------------------------------------------------------------------------------------------------------------------------
21.61 3.42(d) 90,588 1.35(c) 0.33(c) 1.47(c) 0.21(c) 62.60
21.57 3.17(d) 28,743 1.85(c) (0.20)(c) 1.97(c) (0.32)(c) 62.60
21.59 3.27(d) 6,445 1.85(c) (0.23)(c) 1.97(c) (0.35)(c) 62.60
21.65 30.86 236,440 0.85 0.78 0.97 0.66 62.60
21.62 6.30(d) 8 1.35(c) 0.63(c) 1.43(c) 0.51(c) 62.60
-------------------------------------------------------------------------------------------------------------------------------
18.73 25.63 145,253 0.85 1.35 0.91 1.29 74.03
15.91 6.89(d) 135,671 0.85(c) 1.67(c) 0.98(c) 1.54(c) 58.77(d)
-------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS MID CAP VALUE FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust--Mid Cap
Value Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Mid Cap Value Fund, one of the portfolios constituting Goldman Sachs Trust--Equity Funds (a Delaware Business Trust), including the state- ment of investments, as of August 31, 1999, and the related statement of op- erations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Mid Cap Value Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS CAPITAL GROWTH FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 97.3%
Banks - 4.2%
401,149 Bank of America Corp. $ 24,269,514
746,800 Citigroup, Inc. 33,185,925
653,800 State Street Corp. 39,146,275
343,400 Wells Fargo & Co. 13,671,613
--------------
110,273,327
------------------------------------------------------------------
Chemical - 1.0%
199,329 Du Pont (E.I.) de Nemours & Co. 12,632,475
145,500 Minnesota Mining and Manufacturing Co. 13,749,750
--------------
26,382,225
------------------------------------------------------------------
Computer Hardware - 6.9%
872,050 Cisco Systems, Inc.* 59,135,891
424,300 EMC Corp.* 25,458,000
444,900 International Business Machines, Inc. 55,417,856
540,600 Sun Microsystems, Inc.* 42,977,700
--------------
182,989,447
------------------------------------------------------------------
Computer Software - 4.7%
262,800 CheckFree Holdings Corp.* 7,686,900
1,261,400 Microsoft Corp.* 116,758,337
--------------
124,445,237
------------------------------------------------------------------
Consumer Services - 3.1%
641,200 Cendant Corp.* 11,501,525
1,699,680 Service Corp. International 23,476,830
1,055,670 Valassis Communications, Inc.* 46,185,563
--------------
81,163,918
------------------------------------------------------------------
Drugs - 10.0%
780,300 American Home Products Corp. 32,382,450
906,800 Bristol-Myers Squibb Co. 63,816,050
268,200 Eli Lilly & Co. 20,014,425
401,100 Merck & Co. 26,948,906
1,545,460 Pfizer, Inc. 58,341,115
467,400 Schering-Plough Corp. 24,567,713
595,800 Warner-Lambert Co. 39,471,750
--------------
265,542,409
------------------------------------------------------------------
Electronics Equipment - 3.8%
192,920 General Instrument Corp.* 9,489,253
381,840 Lucent Technologies, Inc. 24,461,625
343,400 QUALCOMM, Inc.* 65,997,187
--------------
99,948,065
------------------------------------------------------------------
Electrical Utilities - 2.7%
1,190,500 AES Corp.* 72,248,469
------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Energy Resources - 2.7%
70,800 Atlantic Richfield Co. $ 6,225,975
419,544 Conoco, Inc. Class B 11,275,233
269,500 Exxon Corp. 21,256,812
143,000 Mobil Corp. 14,639,625
181,800 Royal Dutch Petroleum Co. ADR 11,248,875
143,800 Unocal Corp. 6,021,625
--------------
70,668,145
-----------------------------------------------------------------------------
Environmental Services - 0.6%
767,600 Waste Management, Inc. 16,743,275
-----------------------------------------------------------------------------
Financial Services - 4.3%
799,500 Federal Home Loan Mortgage Corp. 41,174,250
634,700 Federal National Mortgage Association 39,430,737
1,368,480 MBNA Corp. 33,784,350
--------------
114,389,337
-----------------------------------------------------------------------------
Food & Beverage - 4.1%
775,800 Coca-Cola Co. 46,402,537
994,560 Nabisco Group Holdings Corp. 17,653,440
793,000 Pepsico, Inc. 27,061,125
217,880 William Wrigley Jr. Co. 17,062,728
--------------
108,179,830
-----------------------------------------------------------------------------
Heavy Electrical - 3.4%
795,300 General Electric Co. 89,322,131
-----------------------------------------------------------------------------
Home Products - 6.6%
752,900 Avon Products, Inc. 33,033,487
311,200 Clorox Co. 14,081,800
944,400 Colgate Palmolive Co. 50,525,400
455,000 Ecolab, Inc. 17,090,938
318,680 Procter & Gamble Co. 31,628,990
1,037,300 Ralston-Ralston Purina Group 28,525,750
--------------
174,886,365
-----------------------------------------------------------------------------
Hotel - 1.1%
574,740 Marriott International, Inc. 19,684,845
373,180 Starwood Hotels & Resorts Worldwide, Inc. Class B 8,886,349
--------------
28,571,194
-----------------------------------------------------------------------------
Information Services - 3.5%
353,026 At Home Corp. Series A* 14,165,168
304,800 Automatic Data Processing, Inc. 11,982,450
872,160 First Data Corp. 38,375,040
351,900 Galileo International, Inc. 17,067,150
106,400 VeriSign, Inc.* 11,524,450
--------------
93,114,258
-----------------------------------------------------------------------------
Leisure - 0.3%
350,690 Hasbro, Inc. 8,569,987
-----------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CAPITAL GROWTH FUND
Shares Description Value
Common Stocks - (continued)
Life Insurance - 0.7%
199,300 Hartford Life, Inc. $ 8,657,094
269,800 Nationwide Financial Services, Inc. 9,847,700
--------------
18,504,794
---------------------------------------------------------------
Media - 14.3%
1,068,400 AH Belo Corp. Series A 20,232,825
494,400 AMFM, Inc.* 24,349,200
2,319,900 AT&T Corp.-Liberty Media Group* 74,236,800
364,700 Cablevision Systems Corp.* 25,529,000
959,100 CBS, Inc.* 45,077,700
278,912 Clear Channel Communications, Inc.* 19,541,272
648,600 Comcast Corp. 21,160,575
172,740 EchoStar Communications Corp.* 14,445,383
998,400 Infinity Broadcasting Corp.* 27,019,200
659,200 MediaOne Group, Inc.* 43,342,400
340,800 The Walt Disney Co. 9,457,200
913,620 Time Warner, Inc. 54,189,086
--------------
378,580,641
---------------------------------------------------------------
Medical Products - 1.1%
295,700 Johnson & Johnson 30,235,325
---------------------------------------------------------------
Oil Refining - 0.9%
353,300 Texaco, Inc. 22,434,550
---------------------------------------------------------------
Oil Services - 1.6%
652,900 Schlumberger Ltd. 43,581,075
---------------------------------------------------------------
Property Insurance - 1.5%
170,400 AMBAC Financial Group, Inc. 8,999,250
341,721 American International Group, Inc. 31,673,265
--------------
40,672,515
---------------------------------------------------------------
Publishing - 3.0%
470,200 Central Newspapers, Inc. 19,895,338
276,500 Gannett Co. 18,784,719
444,100 New York Times Co. 17,347,656
113,300 Tribune Co. 10,572,306
771,970 Ziff-Davis, Inc.* 11,917,287
--------------
78,517,306
---------------------------------------------------------------
Restaurants - 0.5%
309,000 McDonald's Corp. 12,784,875
---------------------------------------------------------------
Semiconductors - 2.5%
813,600 Intel Corp. 66,867,750
---------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Specialty Retail - 5.0%
229,600 CVS Corp. $ 9,571,450
331,700 Home Depot, Inc. 20,275,162
666,800 Tandy Corp. 31,506,300
1,076,800 Wal-Mart Stores, Inc. 47,715,700
1,027,120 Walgreen Co. 23,816,345
--------------
132,884,957
--------------------------------------------------------------
Telephone - 1.7%
598,200 MCI Worldcom, Inc.* 45,313,650
--------------------------------------------------------------
Tobacco - 0.5%
372,100 Philip Morris Companies, Inc. 13,930,494
--------------------------------------------------------------
Wireless - 1.0%
823,420 Crown Castle International Corp.* 12,454,228
219,400 Sprint Corp. (PCS Group) Series 1* 13,109,150
--------------
25,563,378
--------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,840,883,671) $2,577,308,929
--------------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Repurchase Agreement - 2.8% Joint Repurchase Agreement $74,800,000 5.52% 09/01/1999 $ 74,800,000 ------------------------------------------------ TOTAL REPURCHASE AGREEMENT (Cost $74,800,000) $ 74,800,000 ------------------------------------------------ TOTAL INVESTMENTS (Cost $1,915,683,671) $2,652,108,929 ------------------------------------------------ |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CAPITAL GROWTH FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $1,915,683,671) $2,652,108,929 Cash 185,639 Receivables: Investment securities sold 6,436,588 Dividends and interest 2,006,467 Fund shares sold 5,485,954 Reimbursement from investment adviser 138,511 Other assets 66,534 ----------------------------------------------------------------------------- Total assets 2,666,428,622 ----------------------------------------------------------------------------- Liabilities: Payables: Investment securities purchased 10,286,307 Fund shares repurchased 2,554,553 Amounts owed to affiliates 3,417,903 Accrued expenses and other liabilities 242,887 ----------------------------------------------------------------------------- Total liabilities 16,501,650 ----------------------------------------------------------------------------- Net Assets: Paid-in capital 1,738,017,305 Accumulated net realized gain from investment transactions 175,484,409 Net unrealized gain on investments 736,425,258 ----------------------------------------------------------------------------- NET ASSETS $2,649,926,972 ----------------------------------------------------------------------------- Net asset value, offering and redemption price per share:(a) Class A $24.96 Class B $24.37 Class C $24.33 Institutional $25.06 Service $24.88 ----------------------------------------------------------------------------- Shares outstanding: Class A 78,962,794 Class B 13,533,620 Class C 3,586,830 Institutional 10,182,508 Service 259,935 ----------------------------------------------------------------------------- Total shares outstanding, $.001 par value (unlimited number of shares authorized) 106,525,687 ----------------------------------------------------------------------------- |
(a) Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A shares is $26.41. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge, assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CAPITAL GROWTH FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 12,584,079 Interest 1,074,501 ----------------------------------------------------------------------------- Total income 13,658,580 ----------------------------------------------------------------------------- Expenses: Management fees 15,000,472 Distribution and service fees(b) 5,174,492 Transfer agent fees(c) 2,720,617 Registration fees 167,581 Custodian fees 139,396 Professional fees 34,846 Service share fees 16,691 Trustee fees 6,426 Other 169,017 ----------------------------------------------------------------------------- Total expenses 23,429,538 ----------------------------------------------------------------------------- Less--expenses reimbursed (457,262) ----------------------------------------------------------------------------- Net expenses 22,972,276 ----------------------------------------------------------------------------- NET INVESTMENT LOSS (9,313,696) ----------------------------------------------------------------------------- Realized and unrealized gain (loss) on investment transactions: Net realized gain from: Investment transactions 120,162,134 Net change in unrealized gain on: Investments (19,552,612) ----------------------------------------------------------------------------- Net realized and unrealized gain on investment transactions 100,609,522 ----------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 91,295,826 ----------------------------------------------------------------------------- |
(a) Taxes withheld on dividends were $43,301.
(b) Class A, Class B and Class C had distribution and service fees of
$2,987,611, $1,739,629 and $447,252, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $2,270,583, $330,530, $84,978, $33,191 and $1,335,
respectively.
The accompanying notes are an integral part of these financial statements. 9
GOLDMAN SACHS CAPITAL GROWTH FUND
Statements of Changes in Net Assets
For the
Seven-Month
Period Ended For the
August 31, Year Ended
1999 January 31, 1999
From operations:
Net investment loss $ (9,313,696) $ (4,273,950)
Net realized gain from investment
transactions 120,162,134 133,916,314
Net change in unrealized gain on
investments (19,552,612) 392,953,579
-----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 91,295,826 522,595,943
-----------------------------------------------------------------------------
Distributions to shareholders:
From net realized gain on investment
transactions
Class A shares -- (59,433,653)
Class B shares -- (6,254,745)
Class C shares -- (1,535,180)
Institutional shares -- (949,782)
Service shares -- (97,173)
-----------------------------------------------------------------------------
Total distributions to shareholders -- (68,270,533)
-----------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 705,992,404 958,527,625
Reinvestment of dividends and
distributions -- 63,389,050
Cost of shares repurchased (481,582,281) (452,101,755)
-----------------------------------------------------------------------------
Net increase in net assets resulting from
share transactions 224,410,123 569,814,920
-----------------------------------------------------------------------------
TOTAL INCREASE 315,705,949 1,024,140,330
-----------------------------------------------------------------------------
Net assets:
Beginning of period 2,334,221,023 1,310,080,693
-----------------------------------------------------------------------------
End of period $2,649,926,972 $2,334,221,023
-----------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CAPITAL GROWTH FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Capital Growth Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year-end of the Fund from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker / deal- er-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at am- ortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends and interest recorded and the amounts actually received.
D. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
GOLDMAN SACHS CAPITAL GROWTH FUND
Notes to Financial Statements (continued)
August 31, 1999
E. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
F. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
G. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
At August 31, 1999, the aggregate cost of portfolio securities for federal
income tax purposes is $1,915,867,079. Accordingly, the gross unrealized gain
on investments was $836,210,220 and the gross unrealized loss on investments
was $99,968,370 resulting in a net unrealized gain of $736,241,850.
H. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual fund of the Trust are allocated to the funds on a straight-
line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions. Each class of shares of the Fund separately bears its respective
class-specific transfer agency fees.
GOLDMAN SACHS CAPITAL GROWTH FUND
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Funds Management, L.P. ("GSFM"), an affiliate of Goldman, Sachs & Co.
("Goldman Sachs"), serves as the investment adviser to the Fund. Under the
Agreement, the adviser, subject to the general supervision of the Trust's
Board of Trustees, manages the Fund's portfolio. As compensation for the
services rendered pursuant to the Agreement, the assumption of the expenses
related thereto and administering the Fund's business affairs, including pro-
viding facilities, the adviser is entitled to a fee, computed daily and pay-
able monthly, at an annual rate equal to 1.00% of the average daily net
assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" of the
Fund (excluding management fees, distribution and service fees, transfer
agent fees, taxes, interest, brokerage, litigation, Service share fees, in-
demnification costs and other extraordinary expenses) to the extent such ex-
penses exceed, on an annual basis, 0.00% of the average daily net assets of
the Fund. For the period ended August 31, 1999, Goldman Sachs has agreed to
reimburse approximately $457,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .25%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to
Distribution Agreements. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $966,000 for the period ended
August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: .19% of the average daily net as-
sets for Class A, Class B and Class C shares and .04% of the average daily
net assets for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$2,255,000, $769,000, and $394,000 for management, distribution and service
and transfer agent fees, respectively.
GOLDMAN SACHS CAPITAL GROWTH FUND
Notes to Financial Statements (continued)
August 31, 1999
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments) for the period ended August 31, 1999, were $652,019,035 and
$458,198,147, respectively.
For the period ended August 31, 1999 Goldman Sachs earned approximately
$32,000 of brokerage commissions from portfolio transactions.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund daily, depending on the
daily fluctuations in the value of the contracts, and are recorded for finan-
cial reporting purposes as unrealized gains or losses. When contracts are
closed, the Fund realizes a gain or loss which is reported in the Statement
of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At August 31, 1999, there were no open futures
contracts.
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement,the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu- rities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund's custodian.
GOLDMAN SACHS CAPITAL GROWTH FUND
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment agreements with GSFM or its affiliates, transfers uninvested cash into
joint accounts, the daily aggregate balance of which is invested in one or
more repurchase agreements.
At August 31, 1999, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $74,800,000 in principal
amount. At August 31, 1999, the following repurchase agreements held in this
joint account were fully collateralized by Federal Agency obligations:
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
------------------------------------------------------------------------------------------
Banc of America Securities LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
------------------------------------------------------------------------------------------
Bear Stearns & Co., Inc. 300,000,000 5.51 09/01/1999 300,000,000
------------------------------------------------------------------------------------------
Deutsche Bank Securities, Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
------------------------------------------------------------------------------------------
Lehman Brothers, Inc. 300,000,000 5.65 09/01/1999 300,000,000
------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. 200,000,000 5.50 09/01/1999 200,000,000
------------------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $3,106,800,000
------------------------------------------------------------------------------------------
|
8. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund has reclassified $4,273,950 and $9,313,696 from accumulated net realized gain from investment transactions to paid-in capital and accumulated net investment income, re- spectively. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund's capital accounts on a tax ba- sis.
GOLDMAN SACHS CAPITAL GROWTH FUND
Notes to Financial Statements (continued)
August 31, 1999
9. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month
Period Ended August 31, For the Year Ended
1999 January 31, 1999
--------------------------- ------------------------
Shares Dollars Shares Dollars
------------------------------------------------------------------------------
Class A Shares
Shares sold 12,642,498 $ 314,261,490 32,045,496 $ 679,898,165
Reinvestments of divi-
dends and distributions -- -- 2,523,862 55,320,129
Shares repurchased (16,595,373) (416,956,361) (19,634,822) (411,065,361)
-------------------------------------------------------
(3,952,875) (102,694,871) 14,934,536 324,152,933
------------------------------------------------------------------------------
Class B Shares
Shares sold 4,426,589 107,188,155 8,217,516 174,195,041
Reinvestments of divi-
dends and distributions -- -- 269,890 5,814,080
Shares repurchased (922,539) (22,536,793) (692,115) (14,198,964)
-------------------------------------------------------
3,504,050 84,651,362 7,795,291 165,810,157
------------------------------------------------------------------------------
Class C Shares
Shares sold 1,430,606 34,761,116 2,456,617 52,140,496
Reinvestments of divi-
dends and distributions -- -- 62,802 1,350,138
Shares repurchased (404,991) (9,881,726) (254,033) (5,309,819)
-------------------------------------------------------
1,025,615 24,879,390 2,265,386 48,180,815
------------------------------------------------------------------------------
Institutional Shares
Shares sold 9,692,869 245,837,614 2,253,646 49,347,338
Reinvestments of divi-
dends and distributions -- -- 36,717 807,532
Shares repurchased (1,248,315) (31,382,873) (946,047) (21,160,240)
-------------------------------------------------------
8,444,554 214,454,741 1,344,316 28,994,630
------------------------------------------------------------------------------
Service Shares
Shares sold 164,617 3,944,029 140,100 2,946,585
Reinvestments of divi-
dends and distributions -- -- 4,439 97,171
Shares repurchased (33,428) (824,528) (15,887) (367,371)
-------------------------------------------------------
131,189 3,119,501 128,652 2,676,385
------------------------------------------------------------------------------
NET INCREASE 9,152,533 $ 224,410,123 26,468,181 $ 569,814,920
------------------------------------------------------------------------------
|
GOLDMAN SACHS CAPITAL GROWTH FUND
Goldman Sachs Capital Growth Fund -- Tax Information (unaudited)
During the tax year ended August 31, 1999, 85.86% of the ordi- nary income dividends paid from net investment income by the Fund qualify for the dividends received deduction available to corpora- tions.
GOLDMAN SACHS CAPITAL GROWTH FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from investment
operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset Net In excess Net increase
value, investment Net realized From net of net (decrease)
beginning income and unrealized investment investment From net in net asset
of period (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $24.03 $(0.08) $1.01 $ -- $ -- $ -- $0.93
1999 - Class B Shares 23.57 (0.17) 0.97 -- -- -- 0.80
1999 - Class C Shares 23.52 (0.16) 0.97 -- -- -- 0.81
1999 - Institutional
Shares 24.07 (0.02) 1.01 -- -- -- 0.99
1999 - Service Shares 23.96 (0.08) 1.00 -- -- -- 0.92
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 18.48 (0.03) 6.35 -- -- (0.77) 5.55
1999 - Class B Shares 18.27 (0.12) 6.19 -- -- (0.77) 5.30
1999 - Class C Shares 18.24 (0.10) 6.15 -- -- (0.77) 5.28
1999 - Institutional
Shares 18.45 0.01 6.38 -- -- (0.77) 5.62
1999 - Service Shares 18.46 (0.04) 6.31 -- -- (0.77) 5.50
-------------------------------------------------------------------------------------------------------------------
1998 - Class A Shares 16.73 0.02 4.78 (0.01) (0.01) (3.03) 1.75
1998 - Class B Shares 16.67 0.02 4.61 -- -- (3.03) 1.60
1998 - Class C Shares
(commenced August 15,
1997) 19.73 (0.02) 1.60 -- (0.04) (3.03) (1.49)
1998 - Institutional
Shares (commenced August
15, 1997) 19.88 0.02 1.66 (0.01) (0.07) (3.03) (1.43)
1998 - Service Shares
(commenced August 15, 1997) 19.88 (0.01) 1.66 -- (0.04) (3.03) (1.42)
-------------------------------------------------------------------------------------------------------------------
1997 - Class A Shares 14.91 0.10 3.56 (0.10) (0.02) (1.72) 1.82
1997 - Class B Shares
(commenced May 1, 1996) 15.67 0.01 2.81 (0.01) (0.09) (1.72) 1.00
-------------------------------------------------------------------------------------------------------------------
1996 - Class A Shares 13.67 0.12 3.93 (0.12) -- (2.69) 1.24
-------------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CAPITAL GROWTH FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-------------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$24.96 3.87%(d) $1,971,097 1.44%(c) (0.53)%(c) 1.47%(c) (0.56)%(c) 18.16%(d)
24.37 3.39(d) 329,870 2.19(c) (1.29)(c) 2.22(c) (1.32)(c) 18.16(d)
24.33 3.44(d) 87,284 2.19(c) (1.29)(c) 2.22(c) (1.32)(c) 18.16(d)
25.06 4.11(d) 255,210 1.04(c) (0.20)(c) 1.07(c) (0.23)(c) 18.16(d)
24.88 3.84(d) 6,466 1.54(c) (0.65)(c) 1.57(c) (0.68)(c) 18.16(d)
24.03 34.58 1,992,716 1.42 (0.18) 1.58 (0.34) 30.17
23.57 33.60 236,369 2.19 (0.98) 2.21 (1.00) 30.17
23.52 33.55 60,234 2.19 (1.00) 2.21 (1.02) 30.17
24.07 35.02 41,817 1.07 0.11 1.09 0.09 30.17
23.96 34.34 3,085 1.57 (0.37) 1.59 (0.39) 30.17
----------------------------------------------------------------------------------------------------------------------------
18.48 29.71 1,256,595 1.40 0.08 1.65 (0.17) 61.50
18.27 28.73 40,827 2.18 (0.77) 2.18 (0.77) 61.50
18.24 8.83(d) 5,395 2.21(c) (0.86)(c) 2.21(c) (0.86)(c) 61.50
18.45 9.31(d) 7,262 1.16(c) 0.18(c) 1.16(c) 0.18(c) 61.50
18.46 9.18(d) 2 1.50(c) (0.16)(c) 1.50(c) (0.16)(c) 61.50
----------------------------------------------------------------------------------------------------------------------------
16.73 25.97 920,646 1.40 0.62 1.65 0.37 52.92
16.67 19.39(d) 3,221 2.15(c) (0.39)(c) 2.15(c) (0.39)(c) 52.92
----------------------------------------------------------------------------------------------------------------------------
14.91 30.45 881,056 1.36 0.65 1.61 0.40 63.90
----------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS CAPITAL GROWTH FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust -- Capital
Growth Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Capital Growth Fund, one of the portfolios constituting Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including the state- ment of investments, as of August 31, 1999, and the related statement of op- erations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Capital Growth Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 92.4%
Apparel - 1.5%
16,200 Unifi, Inc.* $ 218,700
------------------------------------------------------
Banks - 3.5%
8,300 Charter One Financial, Inc. 194,272
2,100 Marshall & Ilsley Corp. 122,981
4,600 National Commerce Bancorp 97,462
1,300 State Street Corp. 77,838
-----------
492,553
------------------------------------------------------
Chemical - 0.5%
3,600 Solutia, Inc. 72,000
------------------------------------------------------
Clothing - 4.6%
12,600 Limited, Inc. 477,225
2,800 Payless ShoeSource, Inc.* 139,650
1,800 Too, Inc.* 31,612
-----------
648,487
------------------------------------------------------
Computer Hardware - 2.1%
8,500 Symbol Technologies, Inc. 295,906
------------------------------------------------------
Computer Software - 2.1%
2,200 CheckFree Holdings Corp.* 64,350
7,700 Policy Management* 235,331
-----------
299,681
------------------------------------------------------
Construction - 1.3%
4,100 Martin Marietta Materials 187,063
------------------------------------------------------
Consumer Durables - 4.5%
11,900 Ethan Allen Interiors, Inc. 347,331
7,000 Masco Corp. 198,188
5,000 Shaw Industries, Inc. 100,000
-----------
645,519
------------------------------------------------------
Consumer Services - 5.4%
9,400 Cendant Corp.* 168,612
2,500 Cintas Corp. 128,438
10,300 Kroll O Gara Co.* 197,631
5,200 Pittston Brinks Group 123,825
2,200 Robert Half International, Inc.* 57,750
6,600 Service Corp. International 91,163
-----------
767,419
------------------------------------------------------
Drugs - 1.5%
1,000 Biogen, Inc.* 76,750
6,800 Mylan Labs, Inc. 134,725
-----------
211,475
------------------------------------------------------
Electrical Equipment - 1.5%
2,800 Sanmina Corp.* 210,000
------------------------------------------------------
Electrical Utilities - 1.3%
3,100 AES Corp.* 188,131
------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Energy Resources - 2.9%
3,600 Kerr McGee Corp. $ 201,600
9,600 Louis Dreyfus Natural Gas Corp.* 210,000
-----------
411,600
--------------------------------------------------------
Environmental Services - 1.0%
11,100 Allied Waste Industries, Inc.* 141,525
--------------------------------------------------------
Financial Services - 2.9%
9,400 Allied Capital Corp. 212,381
2,100 Arthur J. Gallagher & Co. 114,713
8,300 Sovereign Bancorp, Inc. 83,259
-----------
410,353
--------------------------------------------------------
Food & Beverage - 2.4%
7,000 Keebler Foods Co.* 208,687
7,600 Nabisco Group Holdings Corp. 134,900
-----------
343,587
--------------------------------------------------------
Forest - 0.9%
6,700 Louisiana Pacific Corp. 123,950
--------------------------------------------------------
Hotel - 1.7%
5,046 MGM Grand, Inc.* 247,885
--------------------------------------------------------
Industrial Equipment - 1.2%
10,400 Innotrac Corp.* 167,700
--------------------------------------------------------
Industrial Parts - 2.3%
8,100 American Standard Companies, Inc.* 332,100
--------------------------------------------------------
Industrial Services - 1.4%
4,600 Grainger W.W., Inc. 200,388
--------------------------------------------------------
Information Services - 5.4%
2,500 Ceridian Corp.* 70,000
10,200 Comdisco, Inc. 214,838
3,400 Equifax, Inc. 103,700
9,300 Fiserv, Inc.* 286,556
900 VeriSign, Inc.* 97,481
-----------
772,575
--------------------------------------------------------
Insurance - 2.1%
6,300 Radian Group 291,769
--------------------------------------------------------
Leisure - 0.8%
4,000 Sun International Hotels, Ltd.* 116,500
--------------------------------------------------------
Media - 11.4%
1,100 AH Belo Corp. Series A 20,831
5,000 AMFM, Inc.* 246,250
5,000 Cablevision Systems Corp.* 350,000
10,900 Insight Communications, Inc.* 297,025
14,900 Sinclair Broadcast Group, Inc.* 242,125
6,200 Westwood One, Inc.* 237,925
5,400 Wink Communications, Inc.* 221,400
-----------
1,615,556
--------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Medical Products - 5.2%
12,700 Acuson Corp.* $ 200,025
8,300 Datascope Corp.* 259,375
7,800 St. Jude Medical, Inc.* 282,750
-----------
742,150
-----------------------------------------------------------
Medical Providers - 3.1%
28,700 Health Management Association, Inc.* 229,600
9,300 Hooper Holmes, Inc. 213,900
-----------
443,500
-----------------------------------------------------------
Mining - 1.1%
6,800 Stillwater Mining Co.* 150,025
-----------------------------------------------------------
Motor Vehicle - 1.0%
3,100 Dana Corp. 135,044
-----------------------------------------------------------
Oil Refining - 1.0%
4,600 USX-Marathon Group, Inc. 143,175
-----------------------------------------------------------
Property Insurance - 2.3%
2,100 AMBAC Financial Group, Inc. 110,906
1,800 MBIA, Inc. 93,375
3,000 PMI Group, Inc. 127,500
-----------
331,781
-----------------------------------------------------------
Post-Secondary Education - 2.5%
22,400 ITT Educational Services, Inc.* 350,000
-----------------------------------------------------------
Security/Asset Management - 1.2%
4,400 Legg Mason, Inc. 168,025
-----------------------------------------------------------
Semiconductors - 1.2%
2,100 Altera Corp.* 88,463
1,100 Xilinx, Inc.* 76,931
-----------
165,394
-----------------------------------------------------------
Specialty Retail - 1.0%
13,800 Office Depot, Inc.* 144,038
-----------------------------------------------------------
Telephone - 1.8%
2,600 NTL, Inc.* 255,287
-----------------------------------------------------------
Tobacco - 1.7%
1,366 R.J. Reynolds Tobacco Holdings, Inc.* 37,480
6,600 UST, Inc. 209,137
-----------
246,617
-----------------------------------------------------------
Wireless - 3.1%
8,500 Clearnet Communications, Inc.* 134,937
2,900 Nextel Communications, Inc.* 167,656
1,900 Telephone & Data Systems, Inc. 132,288
-----------
434,881
-----------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $13,899,033) $13,122,339
-----------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Repurchase Agreement - 4.2% Joint Repurchase Agreement $600,000 5.52% 09/01/1999 $ 600,000 ------------------------------------------------------------ TOTAL REPURCHASE AGREEMENT (Cost $600,000) $ 600,000 ------------------------------------------------------------ TOTAL INVESTMENTS (Cost $14,499,033) $13,722,339 ------------------------------------------------------------ |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $14,499,033) $13,722,339 Cash 126,393 Receivables: Investment securities sold 306,181 Dividends and interest 5,612 Fund shares sold 167,397 Reimbursement from investment adviser 188,380 ----------------------------------------------------------------------------- Total assets 14,516,302 ----------------------------------------------------------------------------- Liabilities: Payables: Investment securities purchased 58,658 Fund shares repurchased 19,229 Amounts owed to affiliates 15,746 Accrued expenses and other liabilities 218,094 ----------------------------------------------------------------------------- Total liabilities 311,727 ----------------------------------------------------------------------------- Net Assets: Paid-in capital 14,554,471 Accumulated undistributed net investment income 4,476 Accumulated net realized gain from investment transactions 422,322 Net unrealized loss on investments (776,694) ----------------------------------------------------------------------------- NET ASSETS $14,204,575 ----------------------------------------------------------------------------- Net asset value, offering and redemption price per share:(a) Class A $10.13 Class B $10.18 Class C $10.10 Institutional $10.13 Service $10.12 ----------------------------------------------------------------------------- Shares outstanding: Class A 809,880 Class B 51,071 Class C 25,390 Institutional 515,356 Service 150 ----------------------------------------------------------------------------- Total shares outstanding, $.001 par value (unlimited number of shares authorized) 1,401,847 ----------------------------------------------------------------------------- |
(a) Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A shares is $10.72. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge, assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Statement of Operations
For the Period Ended August 31, 1999(a)
Investment income: Dividends $ 12,811 Interest 18,930 ---------------------------------------------------------------------------- Total income 31,741 ---------------------------------------------------------------------------- Expenses: Registration fees 136,700 Custodian fees 69,516 Professional fees 34,741 Printing fees 28,000 Management fees 23,911 Distribution and service fees(b) 3,026 Transfer agent fees(c) 2,402 Service share fees 2 Other 35,000 ---------------------------------------------------------------------------- Total expenses 333,298 ---------------------------------------------------------------------------- Less -- expenses reimbursed (303,861) ---------------------------------------------------------------------------- Net expenses 29,437 ---------------------------------------------------------------------------- NET INVESTMENT INCOME 2,304 ---------------------------------------------------------------------------- Realized and unrealized gain (loss) on investment transactions: Net realized gain from: Investment transactions 422,322 Net change in unrealized loss on: Investments (776,694) ---------------------------------------------------------------------------- Net realized and unrealized loss on investment transactions (354,372) ---------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(352,068) ---------------------------------------------------------------------------- |
(a) Commencement date of operations was May 24, 1999 for all classes.
(b) Class A, Class B and Class C had distribution and service fees of $2,204,
$598 and $224, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $1,673, $114, $43, $571 and $1, respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Statement of Changes in Net Assets
For the Period Ended August 31, 1999(a)
From operations: Net investment income $ 2,304 Net realized gain from investment transactions 422,322 Net change in unrealized loss on investments (776,694) --------------------------------------------------------------------------- Net decrease in net assets resulting from operations (352,068) --------------------------------------------------------------------------- From share transactions: Proceeds from sales of shares 14,846,644 Reinvestment of dividends and distributions -- Cost of shares repurchased (290,001) --------------------------------------------------------------------------- Net increase in net assets resulting from share transactions 14,556,643 --------------------------------------------------------------------------- TOTAL INCREASE 14,204,575 --------------------------------------------------------------------------- Net assets: Beginning of period -- --------------------------------------------------------------------------- End of period $14,204,575 --------------------------------------------------------------------------- Accumulated undistributed net investment income $ 4,476 --------------------------------------------------------------------------- |
(a) Commencement date of operations was May 24, 1999 for all share classes. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Growth Opportunities Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Serv- ice. The Fund commenced operations on May 24, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker / deal- er-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at am- ortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends and interest recorded and the amounts actually received.
D. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
E. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND the closing sale transaction are greater or less than the cost of the option. If the Fund exercises a purchased put option, the Fund will realize a gain or loss from the sale of the underlying security, and the proceeds from such sale will be decreased by the premium originally paid. If the Fund exercises a purchased call option, the cost of the security which the Fund purchases upon exercise will be increased by the premium originally paid.
F. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
G. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $14,549,349. Accordingly, the gross unrealized gain on
investments was $470,603 and the gross unrealized loss on investments was
$1,297,613 resulting in a net unrealized loss of $827,010.
H. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual fund of the Trust are allocated to the funds on a straight-
line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions. Each class of shares of the Fund separately bears its respective
class-specific transfer agency fees.
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Asset Management ("GSAM"), an affiliate of Goldman, Sachs & Co.
("Goldman Sachs"), serves as the investment adviser to the Fund. Under the
Agreement, the adviser, subject to the general supervision of the Trust's
Board of Trustees, manages the Fund's portfolio. As compensation for the
services rendered pursuant to the Agreement, the assumption of the expenses
related thereto and administering the Fund's business affairs, including pro-
viding facilities, the adviser is entitled to a fee, computed daily and pay-
able monthly, at an annual rate equal to 1.00% of the average daily net
assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" of the
Fund (excluding management fees, distribution and service fees, transfer
agent fees, taxes, interest, brokerage, litigation, Service share fees, in-
demnification costs and other extraordinary expenses) to the extent such ex-
penses exceed, on an annual basis, 0.00% of the average daily net assets of
the Fund. For the period ended August 31, 1999, Goldman Sachs has agreed to
reimburse approximately $304,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .25%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to
Distribution Agreements. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $89,000 for the period ended
August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: .19% of the average daily net as-
sets for Class A, Class B and Class C shares and .04% of the average daily
net assets for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$12,000, $2,000, and $2,000 for management, distribution and service and
transfer agent fees, respectively.
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Notes to Financial Statements (continued)
August 31, 1999
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments) for the period ended August 31, 1999, were $15,814,609 and
$2,337,898, respectively.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund daily, depending on the
daily fluctuations in the value of the contracts, and are recorded for finan-
cial reporting purposes as unrealized gains or losses. When contracts are
closed, the Fund realizes a gain or loss which is reported in the Statement
of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At August 31, 1999, there were no open futures
contracts.
5. LINE OF CREDIT FACILITY
The Fund participates in a $250,000,000 uncommitted and a $250,000,000 com- mitted, unsecured revolving line of credit facility. Under the most restric- tive arrangement, the fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under these facilities.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu- rities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund's custodian.
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment agreements with GSAM or its affiliates, transfers uninvested cash into
joint accounts, the daily aggregate balance of which is invested in one or
more repurchase agreements.
At August 31, 1999, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $600,000 in principal amount.
At August 31, 1999, the following repurchase agreements held in this joint
account were fully collateralized by Federal Agency obligations:
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
----------------------------------------------------------------------------------------
Banc of America Securities LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
----------------------------------------------------------------------------------------
Bear Stearns & Co., Inc. 300,000,000 5.51 09/01/1999 300,000,000
----------------------------------------------------------------------------------------
Deutsche Bank Securities, Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
----------------------------------------------------------------------------------------
Lehman Brothers, Inc. 300,000,000 5.65 09/01/1999 300,000,000
----------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. 200,000,000 5.50 09/01/1999 200,000,000
----------------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $3,106,800,000
----------------------------------------------------------------------------------------
|
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
8. CERTAIN RECLASSIFICATIONS AND OTHER MATTERS
In accordance with Statement of Position 93-2, the Fund has reclassified
$2,172 from paid-in capital to accumulated undistributed net investment in-
come. This reclassification has no impact on the net asset value of the Fund
and is designed to present the Fund's capital accounts on a tax basis.
As of August 31, 1999, the Goldman Sachs Group was the beneficial owner of
approximately 36% of the outstanding shares of the Fund.
9. SUMMARY OF SHARE TRANSACTIONS
Share activity for the period ended August 31, 1999 is as follows:(a)
Shares Dollars
---------------
Class A Shares
Shares sold 837,654 $ 8,891,707
Reinvestments of dividends and distributions -- --
Shares repurchased (27,774) (289,978)
---------------
809,880 8,601,729
---------------------------------------------------------------------
Class B Shares
Shares sold 51,071 529,423
Reinvestments of dividends and distributions -- --
Shares repurchased -- (2)
---------------
51,071 529,421
---------------------------------------------------------------------
Class C Shares
Shares sold 25,390 263,994
Reinvestments of dividends and distributions -- --
Shares repurchased -- (1)
---------------
25,390 263,993
---------------------------------------------------------------------
Institutional Shares
Shares sold 515,358 5,160,020
Reinvestments of dividends and distributions -- --
Shares repurchased (2) (20)
---------------
515,356 5,160,000
---------------------------------------------------------------------
Service Shares
Shares sold 150 1,500
Reinvestments of dividends and distributions -- --
Shares repurchased -- --
---------------
150 1,500
---------------------------------------------------------------------
NET INCREASE 1,401,847 $14,556,643
---------------------------------------------------------------------
|
(a) Commencement date of operations was May 24, 1999 for all share classes.
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
Income from
investment operations(a) Distributions to shareholders
--------------------------- ------------------------------------
Net asset Net In excess
value, investment Net realized From net of net Net increase
beginning income and unrealized investment investment From net in net asset
of period (loss) gain income income realized gains value
FOR THE PERIOD ENDED AUGUST 31,
1999 - Class A Shares
(commenced May 24) $10.00 $(0.01)(e) $0.14(e) $ -- $ -- $ -- $0.13
1999 - Class B Shares
(commenced May 24) 10.00 (0.03)(e) 0.21(e) -- -- -- 0.18
1999 - Class C Shares
(commenced May 24) 10.00 (0.03)(e) 0.13(e) -- -- -- 0.10
1999 - Institutional
Shares (commenced May
24) 10.00 0.01 0.12 -- -- -- 0.13
1999 - Service Shares
(commenced May 24) 10.00 -- 0.12 -- -- -- 0.12
---------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
(e) Calculated based on the average shares outstanding methodology.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Ratios assuming no voluntary
waiver of fees or expense limitations
-------------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to loss to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$10.13 1.30%(d) $8,204 1.44%(c) (0.27)%(c) 14.15%(c) (12.98)%(c) 26.53%(d)
10.18 1.80(d) 520 2.19(c) (1.04)(c) 14.90(c) (13.75)(c) 26.53(d)
10.10 1.00(d) 256 2.19(c) (1.12)(c) 14.90(c) (13.83)(c) 26.53(d)
10.13 1.30(d) 5,223 1.04(c) 0.39(c) 13.75(c) (12.32)(c) 26.53(d)
10.12 1.20(d) 2 1.54(c) 0.03(c) 14.25(c) (12.68)(c) 26.53(d)
------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS GROWTH OPPORTUNITIES FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust -- Growth Op-
portunities Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Growth Opportunities Fund, one of the portfolios constituting Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related state- ment of operations, the statement of changes in net assets and the financial highlights for the period presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Growth Opportunities Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the period presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 98.4%
Apparel - 4.3%
1,000,500 Burlington Industries, Inc.* $ 5,690,344
538,500 Reebok International Ltd.* 6,361,031
------------
12,051,375
------------------------------------------------------------
Banks - 2.8%
429,000 Pacific Century Financial Corp. 7,963,312
------------------------------------------------------------
Business Services - 1.6%
446,500 Healthplan Services Corp. 2,790,625
114,600 Modis Professional Services, Inc.* 1,812,113
------------
4,602,738
------------------------------------------------------------
Chemical - 2.2%
1,400,900 Methanex Corp.* 4,202,700
93,800 Millennium Chemicals, Inc. 2,157,400
------------
6,360,100
------------------------------------------------------------
Clothing - 1.8%
296,300 J. Baker, Inc. 2,222,250
348,300 Syms Corp.* 2,829,937
------------
5,052,187
------------------------------------------------------------
Computer Hardware - 2.3%
675,552 Inacom Corp.* 6,586,632
4,000 Quantum Corp.-Hard Disk Drive* 28,500
------------
6,615,132
------------------------------------------------------------
Computer Software - 1.6%
491,300 Mentor Graphics Corp.* 4,406,347
------------------------------------------------------------
Construction - 1.7%
186,500 Stone & Webster, Inc. 4,790,719
------------------------------------------------------------
Drugs - 0.8%
271,300 Perrigo Co.* 2,153,444
------------------------------------------------------------
Electrical Equipment - 2.4%
424,100 Varian, Inc.* 6,732,587
------------------------------------------------------------
Electrical Utilities - 0.8%
88,900 CMP Group, Inc. 2,361,406
------------------------------------------------------------
Energy Resources - 1.0%
232,900 Swift Energy Co.* 2,940,363
------------------------------------------------------------
Financial Services - 2.2%
308,133 Insignia Financial Group, Inc.* 3,062,072
323,300 Sovereign Bancorp, Inc. 3,243,103
------------
6,305,175
------------------------------------------------------------
Food & Beverage - 2.1%
322,600 Fleming Companies, Inc. 3,891,362
277,900 Vlasic Foods International, Inc.* 2,049,513
------------
5,940,875
------------------------------------------------------------
Forest - 1.4%
353,600 Lydall, Inc.* 3,823,300
------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Heavy Electrical - 4.1%
118,400 Belden, Inc. $ 2,775,000
113,900 Carbide/Graphite Group, Inc.* 1,509,175
296,100 UCAR International, Inc.* 7,217,437
------------
11,501,612
------------------------------------------------------------
Heavy Machinery - 3.2%
471,900 Agco Corp. 4,866,469
367,700 Titan International, Inc. 4,090,662
------------
8,957,131
------------------------------------------------------------
Industrial Parts - 8.9%
148,200 AVTeam, Inc.* 1,157,813
468,200 Denison International PLC ADR* 5,852,500
292,200 Milacron, Inc. 5,259,600
628,300 Tristar Aerospace Co.* 4,515,906
374,000 Unova, Inc.* 5,633,375
174,300 Wolverine Tube, Inc.* 2,679,862
------------
25,099,056
------------------------------------------------------------
Information Services - 3.1%
235,000 Advo, Inc.* 4,611,875
102,600 GTECH Holdings Corp.* 2,590,650
288,900 Opinion Research Corp.* 1,444,500
------------
8,647,025
------------------------------------------------------------
Insurance - 5.6%
198,500 Frontier Insurance Group, Inc. 2,406,813
187,900 Penn Treaty American Corp.* 4,439,137
55,565 Radian Group 2,573,354
100,400 SCPIE Holdings, Inc. 3,043,375
161,900 Zenith National Insurance Corp. 3,490,969
------------
15,953,648
------------------------------------------------------------
Manufacturing - 1.1%
186,200 American National Can Group, Inc.* 3,049,025
------------------------------------------------------------
Media - 1.3%
73,500 Media General, Inc. 3,601,500
------------------------------------------------------------
Medical Products - 3.2%
174,400 Haemonetics Corp.* 3,411,700
261,400 Varian Medical Systems 5,652,775
------------
9,064,475
------------------------------------------------------------
Medical Providers - 6.9%
596,600 American Physician Partners, Inc.* 4,623,650
1,225,600 Beverly Enterprises, Inc.* 6,128,000
197,300 Foundation Health Systems, Inc.* 2,515,575
315,000 Matria Healthcare, Inc.* 1,870,312
164,100 Quest Diagnostics, Inc.* 4,338,394
------------
19,475,931
------------------------------------------------------------
Oil Refining - 1.5%
198,800 Valero Energy Corp. 4,224,500
------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS SMALL CAP VALUE FUND
Shares Description Value
Common Stocks - (continued)
Post-Secondary Education - 2.2%
201,900 Career Education Corp.* $ 5,249,400
66,000 ITT Educational Services, Inc.* 1,031,250
------------
6,280,650
--------------------------------------------------------
Publishing - 1.4%
138,200 Lee Enterprises, Inc. 3,964,613
--------------------------------------------------------
Real Estate - 3.2%
97,800 Prentiss Properties Trust 2,218,838
443,000 Prime Hospitality Corp.* 4,125,437
242,800 RFS Hotel Investors, Inc. 2,777,025
------------
9,121,300
--------------------------------------------------------
Reinsurance - 4.9%
545,800 ESG Re Ltd. 7,368,300
388,800 PXRE Corp. 6,585,300
------------
13,953,600
--------------------------------------------------------
Restaurants - 2.1%
40,600 Avado Brands, Inc. 279,125
291,300 Morton's Restaurant Group, Inc.* 5,534,700
------------
5,813,825
--------------------------------------------------------
Semiconductors - 8.4%
740,000 General Semiconductor, Inc* 7,261,250
241,700 Hutchinson Technology, Inc.* 6,525,900
64,900 Kemet Corp.* 1,675,231
87,000 MEMC Electronic Materials, Inc.* 1,729,125
103,800 Varian Semiconductor Equipment,
Inc.* 2,361,450
203,377 Vishay Intertechnology, Inc.* 4,359,895
------------
23,912,851
--------------------------------------------------------
Specialty Retail - 4.1%
169,200 Brookstone, Inc.* 2,834,100
729,500 Friedmans, Inc. 6,360,328
95,412 Movado Group, Inc. 2,540,345
------------
11,734,773
--------------------------------------------------------
Steel - 1.0%
286,400 Ispat International NV 2,971,400
--------------------------------------------------------
Shipping/Logistics - 3.2%
121,500 Hub Group, Inc.* 2,809,687
82,900 Landstar Systems, Inc.* 3,067,300
185,600 Teekay Shipping Corp. 3,166,800
------------
9,043,787
--------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $296,462,179) $278,469,762
--------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Corporate Bonds - 0.1% J. Baker, Inc. $ 500,000 7.00% 06/01/2002 $ 417,500 -------------------------------------------------------------------------------------------- TOTAL CORPORATE BONDS (Cost $499,168) $ 417,500 -------------------------------------------------------------------------------------------- Repurchase Agreement - 2.5% Joint Repurchase Agreement $7,000,000 5.52% 09/01/1999 $ 7,000,000 -------------------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (Cost $7,000,000) $ 7,000,000 -------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (Cost $303,961,347) $285,887,262 -------------------------------------------------------------------------------------------- |
* Non-income producing security.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $303,961,347) $285,887,262 Cash 112,992 Receivables: Investment securities sold 492,476 Dividends and interest 238,362 Fund shares sold 433,443 Reimbursement from investment adviser 43,503 Other assets 1,762 ------------------------------------------------------------------------------ Total assets 287,209,800 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased 2,596,563 Fund shares repurchased 1,111,921 Amounts owed to affiliates 379,732 Accrued expenses and other liabilities 76,539 ------------------------------------------------------------------------------ Total liabilities 4,164,755 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 346,859,967 Accumulated net realized loss from investment and options transactions (45,740,837) Net unrealized loss on investments (18,074,085) ------------------------------------------------------------------------------ NET ASSETS $283,045,045 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share:(a) Class A $19.80 Class B $19.27 Class C $19.28 Institutional $19.95 Service $19.76 ------------------------------------------------------------------------------ Shares outstanding: Class A 10,633,953 Class B 1,940,288 Class C 418,946 Institutional 1,354,278 Service 2,893 ------------------------------------------------------------------------------ Total shares outstanding, $.001 par value (unlimited number of shares authorized) 14,350,358 ------------------------------------------------------------------------------ |
(a) Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A shares is $20.95. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge, assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 1,676,385 Interest 320,731 ----------------------------------------------------------------------------- Total income 1,997,116 ----------------------------------------------------------------------------- Expenses: Management fees 1,733,424 Distribution and service fees(b) 603,782 Transfer agent fees(c) 312,887 Custodian fees 80,734 Registration fees 66,779 Professional fees 36,826 Trustee fees 6,426 Service share fees 471 Other 111,959 ----------------------------------------------------------------------------- Total expenses 2,953,288 ----------------------------------------------------------------------------- Less -- expenses reimbursed (191,783) ----------------------------------------------------------------------------- Net expenses 2,761,505 ----------------------------------------------------------------------------- NET INVESTMENT LOSS (764,389) ----------------------------------------------------------------------------- Realized and unrealized gain (loss) on investment and options transactions: Net realized gain (loss) from: Investment transactions (24,683,341) Options written 86,283 Net change in unrealized loss on: Investments 42,816,511 ----------------------------------------------------------------------------- Net realized and unrealized gain on investment and options transactions 18,219,453 ----------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 17,455,064 ----------------------------------------------------------------------------- |
(a) Taxes withheld on dividends were $10,072.
(b) Class A, Class B and Class C had distribution and service fees of
$339,961, $220,759 and $43,062, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $258,370, $41,944, $8,182, $4,353 and $38, respec-
tively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Changes in Net Assets
For the Seven-Month Period Ended August 31, 1999
From operations: Net investment loss $ (764,389) Net realized loss on investment and options transactions (24,597,058) Net change in unrealized loss on investments 42,816,511 ----------------------------------------------------------------------------- Net increase in net assets resulting from operations 17,455,064 ----------------------------------------------------------------------------- From share transactions: Proceeds from sales of shares 96,142,667 Reinvestment of dividends and distributions -- Cost of shares repurchased (158,916,521) ----------------------------------------------------------------------------- Net decrease in net assets resulting from share transactions (62,773,854) ----------------------------------------------------------------------------- TOTAL DECREASE (45,318,790) ----------------------------------------------------------------------------- Net assets: Beginning of period 328,363,835 ----------------------------------------------------------------------------- End of period $ 283,045,045 ----------------------------------------------------------------------------- |
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Changes in Net Assets
For the Year Ended January 31, 1999
From operations: Net investment loss $ (1,430,151) Net realized loss on investment transactions (21,053,205) Net change in unrealized gain (loss) on investments (75,425,946) ----------------------------------------------------------------------------- Net decrease in net assets resulting from operations (97,909,302) ----------------------------------------------------------------------------- Distributions to shareholders: From net realized gain on investment transactions Class A shares (20,135,069) Class B shares (2,897,126) Class C shares (512,006) Institutional shares (946,473) Service shares (16,422) ----------------------------------------------------------------------------- Total distributions to shareholders (24,507,096) ----------------------------------------------------------------------------- From share transactions: Proceeds from sales of shares 285,768,961 Reinvestment of dividends and distributions 22,881,335 Cost of shares repurchased (291,025,366) ----------------------------------------------------------------------------- Net increase in net assets resulting from share transactions 17,624,930 ----------------------------------------------------------------------------- TOTAL DECREASE (104,791,468) ----------------------------------------------------------------------------- Net assets: Beginning of year 433,155,303 ----------------------------------------------------------------------------- End of year $ 328,363,835 ----------------------------------------------------------------------------- |
GOLDMAN SACHS SMALL CAP VALUE FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Small Cap Value Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year-end of the Funds from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker / deal- er-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at am- ortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends and interest recorded and the amounts actually received.
D. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
GOLDMAN SACHS SMALL CAP VALUE FUND
E. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
F. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
G. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in-capital, de-
pending on the type of book/tax differences that may exist.
The Fund had approximately $43,533,000 at August 31, 1999 (the Fund's tax
year-end) of capital loss carryforward expiring in 2007 for federal tax pur-
poses. This amount is available to be carried forward to offset future capi-
tal gains to the extent permitted by applicable laws or regulations.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $306,268,832. Accordingly, the gross unrealized gain
on investments was $29,911,891 and the gross unrealized loss on investments
was $50,293,461 resulting in a net unrealized loss of $20,381,570.
H. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual fund of the Trust are allocated to the funds on a straight-
line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions. Each class of Shares of the Fund separately bears its respective
class-specific transfer agency fees.
GOLDMAN SACHS SMALL CAP VALUE FUND
Notes to Financial Statements (continued)
August 31, 1999
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management ("GSAM"), a separate operating division of Goldman,
Sachs & Co. ("Goldman Sachs"), serves as the investment adviser to the Fund.
Under the Agreement, the adviser, subject to the general supervision of the
Trust's Board of Trustees, manages the Fund's portfolio. As compensation for
the services rendered pursuant to the Agreement, the assumption of the
expenses related thereto and administering the Fund's business affairs,
including providing facilities, the adviser is entitled to a fee, computed
daily and payable monthly, at an annual rate equal to 1.00% of the average
daily net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" of the
Fund (excluding management fees, distribution and service fees, transfer
agent fees, taxes, interest, brokerage, litigation, Service share fees,
indemnification costs and other extraordinary expenses) to the extent such
expenses exceed, on an annual basis, .06% of the average daily net assets of
the Fund. For the period ended August 31, 1999, Goldman Sachs has agreed to
reimburse approximately $192,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .25%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $59,000 during the period
ended August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and
payable monthly at an annual rate as follows: .19% of the average daily net
assets for Class A, Class B and Class C shares and .04% of the average daily
net assets for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$250,000, $86,000, and $44,000 for management, distribution and service and
transfer agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments and options transactions) for the period ended August 31,
1999 were $135,517,459 and $186,615,192 respectively.
For the period ended August 31, 1999, Goldman Sachs earned approximately
$34,000 of brokerage commissions from portfolio transactions.
For the period ended August 31, 1999, written put option transactions in
the Fund were as follows:
Written Options Number of Contracts Premium Received ---------------------------------------------------------------------------- Balance outstanding, beginning of pe- riod -- $ -- Options written 438 86,283 Options expired (438) (86,283) ---------------------------------------------------------------------------- BALANCE OUTSTANDING, END OF PERIOD -- $ -- ---------------------------------------------------------------------------- |
GOLDMAN SACHS SMALL CAP VALUE FUND
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000, com- mitted unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying securities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund's custodian.
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having
management agreements with GSAM or its affiliates, transfers uninvested cash
into joint accounts, the daily aggregate balance of which is invested in one
or more repurchase agreements.
At August 31, 1999, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $7,000,000 in principal amount.
At August 31, 1999, the following repurchase agreements held in this joint
account were fully collateralized by Federal Agency obligations:
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
------------------------------------------------------------------------------------------
Banc of America Securities LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
------------------------------------------------------------------------------------------
Bear Stearns & Co., Inc. 300,000,000 5.51 09/01/1999 300,000,000
------------------------------------------------------------------------------------------
Deutsche Bank Securities, Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
------------------------------------------------------------------------------------------
Lehman Brothers, Inc. 300,000,000 5.65 09/01/1999 300,000,000
------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. 200,000,000 5.50 09/01/1999 200,000,000
------------------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT $3,106,800,000
------------------------------------------------------------------------------------------
|
GOLDMAN SACHS SMALL CAP VALUE FUND
Notes to Financial Statements (continued)
August 31, 1999
8. TRANSACTIONS WITH AFFILIATED COMPANIES
A Fund is considered to be invested in an affiliated company if that Fund owns greater than five percent of the outstanding voting securities of such company. During the period ended August 31, 1999, transactions with affili- ates of the Fund were as follows:
Market
Purchases Sales Realized Dividend Value
Affiliate Name at Cost Proceeds Gain/(Loss) Income 8/31/99
----------------------------------------------------------------------------------------------
Allied Holdings, Inc. $ -- $ 4,604,081 $(4,006,005) $ -- $ N/A
----------------------------------------------------------------------------------------------
AVTeam, Inc. -- 3,611,400 (880,000) -- 1,157,813
----------------------------------------------------------------------------------------------
Friedmans, Inc. 529,507 2,269,737 (1,142,031) 18,948 6,360,328
----------------------------------------------------------------------------------------------
Healthplan Services Corp. -- 4,063,406 (5,701,461) 179,616 2,790,625
----------------------------------------------------------------------------------------------
J. Baker, Inc. -- -- -- 19,697 2,222,250
----------------------------------------------------------------------------------------------
Matria Healthcare, Inc. -- 10,650,853 2,018,441 -- 1,870,313
----------------------------------------------------------------------------------------------
MDC Corp. -- 6,577,699 1,106,348 -- N/A
----------------------------------------------------------------------------------------------
Mortons Restaurant Group, Inc. -- 2,178,372 149,723 -- 5,534,700
----------------------------------------------------------------------------------------------
Opinion Research Corp. -- 972,630 (667,520) -- 1,444,500
----------------------------------------------------------------------------------------------
Swift Energy Co. -- 5,231,295 (149,690) -- 2,940,363
----------------------------------------------------------------------------------------------
|
9. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund has reclassified $764,389 from paid-in capital to accumulated net investment loss. This re- classification has no impact on the net asset value of the Fund and is de- signed to present the Fund's capital accounts on a tax basis.
GOLDMAN SACHS SMALL CAP VALUE FUND
10. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month
Period For the Year Ended
Ended August 31, 1999 January 31, 1999
---------------------------- --------------------------
Shares Dollars Shares Dollars
-------------------------------------------------------------------------------
Class A Shares
Shares sold 3,974,603 $ 75,211,330 11,250,168 $ 248,147,068
Reinvestments of divi-
dends and distributions -- -- 1,120,125 18,887,752
Shares repurchased (7,479,721) (141,251,011) (13,625,605) (275,189,998)
----------------------------------------------------
(3,505,118) (66,039,681) (1,255,312) (8,155,178)
-------------------------------------------------------------------------------
Class B Shares
Shares sold 223,866 4,216,615 1,020,790 24,298,444
Reinvestments of divi-
dends and distributions -- -- 159,248 2,632,705
Shares repurchased (652,859) (11,537,114) (609,437) (12,177,880)
----------------------------------------------------
(428,993) (7,320,499) 570,601 14,753,269
-------------------------------------------------------------------------------
Class C Shares
Shares sold 121,721 2,343,776 348,913 8,014,845
Reinvestments of divi-
dends and distributions -- -- 24,492 404,852
Shares repurchased (156,184) (2,743,702) (156,144) (3,072,836)
----------------------------------------------------
(34,463) (399,926) 217,261 5,346,861
-------------------------------------------------------------------------------
Institutional Shares
Shares sold 693,113 14,235,041 191,950 5,013,154
Reinvestments of divi-
dends and distributions -- -- 55,467 939,606
Shares repurchased (163,344) (3,050,873) (30,030) (583,311)
----------------------------------------------------
529,769 11,184,168 217,387 5,369,449
-------------------------------------------------------------------------------
Service Shares
Shares sold 7,750 135,905 13,163 295,450
Reinvestments of divi-
dends and distributions -- -- 974 16,420
Shares repurchased (18,993) (333,821) (71) (1,341)
----------------------------------------------------
(11,243) (197,916) 14,066 310,529
-------------------------------------------------------------------------------
NET INCREASE (DECREASE) (3,450,048) $ (62,773,854) (235,997) $ 17,624,930
-------------------------------------------------------------------------------
|
GOLDMAN SACHS SMALL CAP VALUE FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income (loss) from Distributions to
investment operations(a) shareholders
------------------------------ -------------------------
Net asset In excess Net increase
value, Net Net realized and of net (decrease)
beginning investment unrealized investment From net in net asset
of period income (loss) gain (loss) income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $18.51 $(0.05) $1.34 $ -- $ -- $ 1.29
1999 - Class B Shares 18.10 (0.12) 1.29 -- -- 1.17
1999 - Class C Shares 18.12 (0.11) 1.27 -- -- 1.16
1999 - Institutional
Shares 18.62 -- 1.33 -- -- 1.33
1999 - Service Shares 18.50 (0.13) 1.39 -- -- 1.26
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 24.05 (0.06) (4.48) -- (1.00) (5.54)
1999 - Class B Shares 23.73 (0.21) (4.42) -- (1.00) (5.63)
1999 - Class C Shares 23.73 (0.18) (4.43) -- (1.00) (5.61)
1999 - Institutional
Shares 24.09 0.03 (4.50) -- (1.00) (5.47)
1999 - Service Shares 24.05 (0.04) (4.51) -- (1.00) (5.55)
----------------------------------------------------------------------------------------------------------
1998 - Class A Shares 20.91 0.14 5.33 -- (2.33) 3.14
1998 - Class B Shares 20.80 (0.01) 5.27 -- (2.33) 2.93
1998 - Class C Shares
(commenced August
15, 1997) 24.69 (0.06) 1.43 (0.34) (1.99) (0.96)
1998 - Institutional
Shares (commenced August
15, 1997) 24.91 0.03 1.48 (0.28) (2.05) (0.82)
1998 - Service Shares
(commenced August 15,
1997) 24.91 (0.01) 1.48 (0.31) (2.02) (0.86)
----------------------------------------------------------------------------------------------------------
1997 - Class A Shares 17.29 (0.21) 4.92 -- (1.09) 3.62
1997 - Class B Shares
(commenced May 1, 1996) 20.79 (0.11) 1.21 -- (1.09) 0.01
----------------------------------------------------------------------------------------------------------
1996 - Class A Shares 16.14 (0.23) 1.39 -- (0.01) 1.15
----------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS SMALL CAP VALUE FUND
Ratios assuming no voluntary
waiver of fees or expense limitations
-------------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$19.80 6.97%(d) $210,500 1.50%(c) (0.35)%(c) 1.61%(c) (0.46)%(c) 46.95%(d)
19.27 6.46(d) 37,386 2.25(c) (1.10)(c) 2.36(c) (1.21)(c) 46.95(d)
19.28 6.40(d) 8,079 2.25(c) (1.10)(c) 2.36(c) (1.21)(c) 46.95(d)
19.95 7.14(d) 27,023 1.10(c) 0.05(c) 1.21(c) (0.06)(c) 46.95(d)
19.76 6.81(d) 57 1.60(c) (0.41)(c) 1.71(c) (0.52)(c) 46.95(d)
18.51 (17.37) 261,661 1.50 (0.24) 1.74 (0.48) 98.46
18.10 (18.00) 42,879 2.25 (0.99) 2.29 (1.03) 98.46
18.12 (17.91) 8,212 2.25 (0.99) 2.29 (1.03) 98.46
18.62 (17.04) 15,351 1.13 0.13 1.17 0.09 98.46
18.50 (17.41) 261 1.62 (0.47) 1.66 (0.51) 98.46
-------------------------------------------------------------------------------------------------------------------------------
24.05 26.17 370,246 1.54 (0.28) 1.76 (0.50) 84.81
23.73 25.29 42,677 2.29 (0.92) 2.29 (0.92) 84.81
23.73 5.51(d) 5,604 2.09(c) (0.79)(c) 2.09(c) (0.79)(c) 84.81
24.09 6.08(d) 14,626 1.16(c) 0.27(c) 1.16(c) 0.27(c) 84.81
24.05 5.91(d) 2 1.45(c) (0.07)(c) 1.45(c) (0.07)(c) 84.81
-------------------------------------------------------------------------------------------------------------------------------
20.91 27.28 212,061 1.60 (0.72) 1.85 (0.97) 99.46
20.80 5.39(d) 3,674 2.35(c) (1.63)(c) 2.35(c) (1.63)(c) 99.46
-------------------------------------------------------------------------------------------------------------------------------
17.29 7.20 204,994 1.41 (0.59) 1.66 (0.84) 57.58
-------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS SMALL CAP VALUE FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust -- Small Cap
Value Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Small Cap Value Fund, one of the portfolios constituting Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related state- ment of operations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Small Cap Value Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 93.2%
Banks - 8.2%
364,300 Bank of America Corp. $ 22,040,150
545,300 Bank One Corp. 21,880,162
592,000 First Union Corp. 24,568,000
230,400 KeyCorp 6,681,600
417,800 National City Corp. 11,541,725
293,600 Wells Fargo & Co. 11,688,950
--------------
98,400,587
-----------------------------------------------------------------
Chemical - 1.4%
93,100 Du Pont (E.I.) de Nemours & Co. 5,900,213
110,800 Minnesota Mining and Manufacturing Co. 10,470,600
--------------
16,370,813
-----------------------------------------------------------------
Clothing - 1.1%
458,300 The TJX Companies, Inc. 13,233,413
-----------------------------------------------------------------
Computer Hardware - 5.0%
382,300 Compaq Computer Corp. 8,864,581
184,200 Hewlett-Packard Co. 19,410,075
136,400 International Business Machines, Inc. 16,990,325
75,800 NCR Corp.* 3,316,250
254,000 Xerox Corp. 12,128,500
--------------
60,709,731
-----------------------------------------------------------------
Computer Software - 2.8%
212,200 Computer Associates International, Inc. 11,989,300
189,000 Microsoft Corp.* 17,494,312
103,700 Oracle Corp.* 3,785,050
--------------
33,268,662
-----------------------------------------------------------------
Defense/Aerospace - 1.8%
184,300 Northrop Grumman Corp. 13,361,750
121,300 Raytheon Co. 8,142,262
--------------
21,504,012
-----------------------------------------------------------------
Department Store - 2.8%
519,100 Federated Department Stores, Inc.* 23,878,600
96,600 Sears Roebuck & Co. 3,622,500
162,000 The May Department Stores Co. 6,328,125
--------------
33,829,225
-----------------------------------------------------------------
Drugs - 5.0%
362,200 American Home Products Corp. 15,031,300
48,400 Eli Lilly & Co. 3,611,850
316,800 Merck & Co. 21,285,000
383,600 Pharmacia & Upjohn, Inc. 20,043,100
--------------
59,971,250
-----------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Electronics Equipment - 0.6%
27,400 General Motors Corp. (Hughes)* $ 1,411,100
67,100 Motorola, Inc. 6,189,975
--------------
7,601,075
-----------------------------------------------------------------------------
Electrical Utilities - 5.6%
641,800 Entergy Corp. 19,133,663
240,800 FPL Group, Inc. 13,003,200
153,000 Pacificorp 3,126,938
334,100 PG&E Corp. 10,127,406
560,100 Unicom Corp. 21,633,862
--------------
67,025,069
-----------------------------------------------------------------------------
Energy Resources - 5.6%
79,200 Atlantic Richfield Co. 6,964,650
217,100 Exxon Corp. 17,123,762
499,000 Occidental Petroleum Corp. 10,822,063
465,100 Royal Dutch Petroleum Co. ADR 28,778,062
120,000 Tosco Corp. 3,060,000
--------------
66,748,537
-----------------------------------------------------------------------------
Environmental Services - 1.3%
692,000 Waste Management, Inc. 15,094,250
-----------------------------------------------------------------------------
Financial Services - 2.3%
297,500 Federal Home Loan Mortgage Corp. 15,321,250
194,900 Federal National Mortgage Association 12,108,162
--------------
27,429,412
-----------------------------------------------------------------------------
Food & Beverage - 6.3%
50,800 Anheuser-Busch Companies, Inc. 3,911,600
1,282,575 Archer Daniels Midland Co. 16,673,475
748,000 ConAgra, Inc. 18,326,000
88,300 H.J. Heinz Co. 4,122,506
690,600 Nabisco Group Holdings Corp. 12,258,150
906,700 Sara Lee Corp. 20,117,406
--------------
75,409,137
-----------------------------------------------------------------------------
Forest - 0.7%
179,300 International Paper Co. 8,438,306
-----------------------------------------------------------------------------
Heavy Electrical - 1.6%
100,000 Emerson Electric Co. 6,262,500
118,000 General Electric Co. 13,252,875
--------------
19,515,375
-----------------------------------------------------------------------------
Home Products - 0.6%
74,700 Procter & Gamble Co. 7,413,975
-----------------------------------------------------------------------------
Hotel - 1.0%
484,200 Starwood Hotels & Resorts Worldwide, Inc. Class B 11,530,013
-----------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH AND INCOME FUND
Shares Description Value
Common Stocks - (continued)
Industrial Parts - 0.6%
62,200 Ingersoll-Rand Co. $ 3,957,475
37,500 Textron, Inc. 3,028,125
--------------
6,985,600
---------------------------------------------------------
Leisure - 0.3%
57,000 Eastman Kodak Co. 4,185,938
---------------------------------------------------------
Life Insurance - 3.9%
234,100 Aetna, Inc. 18,201,275
177,900 Cigna Corp. 15,977,644
354,894 UNUMProvident Corp. 12,798,365
--------------
46,977,284
---------------------------------------------------------
Media - 3.3%
230,600 CBS, Inc.* 10,838,200
346,700 MediaOne Group, Inc.* 22,795,525
214,700 The Walt Disney Co. 5,957,925
--------------
39,591,650
---------------------------------------------------------
Medical Products - 2.5%
246,700 Baxter International, Inc. 16,544,319
231,400 Becton, Dickinson & Co. 6,508,125
70,600 Johnson & Johnson 7,218,850
--------------
30,271,294
---------------------------------------------------------
Medical Providers - 0.8%
411,600 Columbia/HCA Healthcare Corp. 10,135,650
---------------------------------------------------------
Motor Vehicle - 6.3%
764,034 Delphi Automative Systems Corp. 14,325,637
277,300 Federal-Mogul Corp. 12,651,813
126,700 Ford Motor Co. 6,604,238
449,500 General Motors Corp. 29,723,187
224,700 TRW, Inc. 12,246,150
--------------
75,551,025
---------------------------------------------------------
Oil Refining - 0.9%
53,500 Texaco, Inc. 3,397,250
226,100 USX-Marathon Group, Inc. 7,037,363
--------------
10,434,613
---------------------------------------------------------
Property Insurance - 3.3%
556,200 Allstate Corp. 18,250,312
247,700 Hartford Financial Services
Group, Inc. 11,254,869
192,800 XL Capital Ltd. 9,700,250
--------------
39,205,431
---------------------------------------------------------
Publishing - 1.4%
266,500 New York Times Co. 10,410,156
213,400 R.R. Donnelley & Sons Co. 6,695,425
--------------
17,105,581
---------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Railroads - 1.0%
423,700 Burlington Northern Santa Fe Corp. $ 12,287,300
----------------------------------------------------------------
Restaurants - 0.9%
253,500 Tricon Global Restaurants, Inc.* 10,298,438
----------------------------------------------------------------
Security/Asset Management - 0.5%
71,200 Morgan Stanley Dean Witter & Co. 6,109,850
----------------------------------------------------------------
Semiconductors - 2.0%
289,500 Intel Corp. 23,793,281
----------------------------------------------------------------
Telephone - 9.7%
262,800 Ameritech Corp. 16,589,250
298,766 AT&T Corp. 13,444,470
254,000 Bell Atlantic Corp. 15,557,500
144,100 BellSouth Corp. 6,520,525
259,100 GTE Corp. 17,780,737
155,600 MCI Worldcom, Inc.* 11,786,700
382,700 SBC Communications, Inc. 18,369,600
114,700 Sprint Corp. 5,089,813
228,900 U.S. West, Inc. 11,960,025
--------------
117,098,620
----------------------------------------------------------------
Tobacco - 2.1%
688,900 Philip Morris Companies, Inc. 25,790,694
----------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,118,372,821) $1,119,315,091
----------------------------------------------------------------
|
Principal Interest Maturity
Amount Rate Date Value
U.S. Treasury Obligations - 0.3%
U.S. Treasury Bills^
$ 3,200,000 4.79% 12/09/1999# $ 3,157,056
100,000 4.70 12/09/1999# 98,658
----------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,256,600) $ 3,255,714
----------------------------------------------------------------------------------------------
Repurchase Agreement - 7.0%
Joint Repurchase Agreement
$84,600,000 5.52% 09/01/1999 $ 84,600,000
----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $84,600,000) $ 84,600,000
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $1,206,229,421) $1,207,170,805
----------------------------------------------------------------------------------------------
|
* Non-income producing security.
# Portions of these securities are being segregated as collateral relating to
initial margin requirement on futures transactions.
^The interest rate disclosed for this security represents effective yield to
maturity.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $1,206,229,421) $ 1,207,170,805 Cash(a) 1,354,765 Receivables: Investment securities sold 49,167,385 Dividends and interest 2,773,856 Fund shares sold 726,273 Other assets 831 ------------------------------------------------------------------------------ Total assets 1,261,193,915 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased 55,766,058 Fund shares repurchased 2,781,215 Amounts owed to affiliates 1,426,008 Variation margin 24,477 Options written, at value (premium received $572,270) 369,538 Accrued expenses and other liabilities 223,888 ------------------------------------------------------------------------------ Total liabilities 60,591,184 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 1,143,836,521 Accumulated undistributed net investment income 634,990 Accumulated net realized gain from investment, futures and options transactions 54,988,533 Net unrealized gain on investments, futures and options 1,142,687 ------------------------------------------------------------------------------ NET ASSETS $1,200,602,731 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share:(b) Class A $24.68 Class B $24.46 Class C $24.41 Institutional $24.72 Service $24.68 ------------------------------------------------------------------------------ Shares outstanding: Class A 34,653,264 Class B 11,116,028 Class C 1,283,375 Institutional 1,301,982 Service 405,587 ------------------------------------------------------------------------------ Total shares outstanding, $.001 par value (unlimited number of shares authorized) 48,760,236 ------------------------------------------------------------------------------ |
(a) Includes restricted cash of $1,250,000 relating to initial margin
requirements on futures transactions.
(b) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A shares is $26.12. At redemption, Class B and Class C
shares may be subject to a contingent deferred sales charge, assessed on
the amount equal to the lesser of the current net asset value or the
original purchase price of the shares.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 17,276,963 Interest 2,524,369 ------------------------------------------------------------------------------ Total income 19,801,332 ------------------------------------------------------------------------------ Expenses: Management fees 5,645,766 Distribution and service fees(b) 3,454,215 Transfer agent fees(c) 1,485,349 Custodian fees 145,205 Registration fees 101,361 Professional fees 44,561 Service share fees 32,442 Trustee fees 6,426 Other 197,576 ------------------------------------------------------------------------------ Total expenses 11,112,901 ------------------------------------------------------------------------------ Less -- expenses reimbursed (59,598) ------------------------------------------------------------------------------ Net expenses 11,053,303 ------------------------------------------------------------------------------ NET INVESTMENT INCOME 8,748,029 ------------------------------------------------------------------------------ Realized and unrealized gain (loss) on investment, futures and options transactions: Net realized gain from: Investment transactions 70,787,088 Futures transactions 3,040,117 Options written 581,821 Net change in unrealized gain (loss) on: Investments (52,796,298) Futures (1,429) Options written 202,732 ------------------------------------------------------------------------------ Net realized and unrealized gain on investment, futures and options transactions 21,814,031 ------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 30,562,060 ------------------------------------------------------------------------------ |
(a) Taxes withheld on dividends were $240,256.
(b) Class A, Class B and Class C had distribution and service fees of
$1,432,452, $1,796,760 and $225,003, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $1,088,663, $341,384, $42,750, $9,957 and $2,595,
respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH AND INCOME FUND
Statements of Changes in Net Assets
For the For the
Seven-Month Year Ended
Period Ended January 31,
August 31, 1999 1999
From operations:
Net investment income $ 8,748,029 $ 12,713,525
Net realized gain (loss) from investment,
futures and options transactions 74,409,026 (79,720,615)
Net change in unrealized gain on
investment, futures and options
transactions (52,594,995) (91,067,228)
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 30,562,060 (158,074,318)
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares (5,816,651) (9,893,876)
Class B shares (690,509) (555,085)
Class C shares (77,463) (98,749)
Institutional shares (244,239) (2,084,974)
Service shares (63,039) (80,841)
In excess of net investment income
Class A shares -- (473,558)
Class B shares -- (26,568)
Class C shares -- (4,727)
Institutional shares -- (99,795)
Service shares -- (3,869)
------------------------------------------------------------------------------
Total distributions to shareholders (6,891,901) (13,322,042)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 114,124,273 1,026,751,116
Reinvestment of dividends and distributions 6,538,450 10,754,319
Cost of shares repurchased (649,333,927) (761,706,430)
------------------------------------------------------------------------------
Net (decrease) increase in net assets
resulting from share transactions (528,671,204) 275,799,005
------------------------------------------------------------------------------
TOTAL (DECREASE) INCREASE (505,001,045) 104,402,645
------------------------------------------------------------------------------
Net assets:
Beginning of period 1,705,603,776 1,601,201,131
------------------------------------------------------------------------------
End of period $1,200,602,731 $1,705,603,776
------------------------------------------------------------------------------
Accumulated undistributed (distributions in
excess of) net investment income $ 634,990 $ (1,221,249)
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Growth and Income Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year-end of the Fund from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker / deal- er-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at am- ortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends and interest recorded and the amounts actually received.
D. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
August 31, 1999
E. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
F. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transacations, the Fund is required to segregate liq- uid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
G. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $1,207,969,447. Accordingly, the gross unrealized gain
on investments was $80,796,302 and the gross unrealized loss on investments
was $81,594,944 resulting in a net unrealized loss of $798,642.
H. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual fund of the Trust are allocated to the funds on a straight-
line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions for their services with respect to such shares. Each class of shares of
the Fund separately bears its respective class-specific transfer agency fees.
GOLDMAN SACHS GROWTH AND INCOME FUND
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management ("GSAM"), a separate operating division of Goldman,
Sachs & Co. ("Goldman Sachs"), serves as the investment adviser to the Fund.
Under the Agreement, the adviser, subject to the general supervision of the
Trust's Board of Trustees, manages the Fund's portfolio. As compensation for
the services rendered pursuant to the Agreement, the assumption of the ex-
penses related thereto and administering the Fund's business affairs, includ-
ing providing facilities, the adviser is entitled to a fee, computed daily
and payable monthly, at an annual rate equal to .70% of the average daily net
assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" of the
Fund (excluding management fees, distribution and service fees, transfer
agent fees, taxes, interest, brokerage commissions, litigation, Service share
fees, indemnification costs and other extraordinary expenses) to the extent
such expenses exceed, on an annual basis, .05% of the average daily net as-
sets of the Fund. For the period ended August 31, 1999, Goldman Sachs has
agreed to reimburse approximately $60,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .25%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $161,000 during the period
ended August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: .19% of the average daily net as-
sets for Class A, Class B and Class C shares and .04% of the average daily
net assets for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on a annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$774,000, $457,000 and $195,000 for management, distribution and service and
transfer agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments, futures and options transactions) for the period ended Au-
gust 31, 1999, were $718,587,974 and $1,233,658,940, respectively.
For the period ended August 31, 1999, Goldman Sachs earned approximately
$139,000 of brokerage commissions from portfolio transactions.
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
August 31, 1999
For the period ended August 31, 1999, written call option transactions in
the Fund were as follows:
Written Options Number of Contracts Premium Received
-------------------------------------------------------------------------
Balance outstanding, beginning of
period -- $ --
Options written 5,317 1,154,091
Options expired (2,522) (581,821)
-------------------------------------------------------------------------
BALANCE OUTSTANDING, END OF PERIOD 2,795 $ 572,270
-------------------------------------------------------------------------
|
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund daily, depending on the
daily fluctuations in the value of the contracts, and are recorded for finan-
cial reporting purposes as unrealized gains or losses. When contracts are
closed, the Fund realizes a gain or loss which is reported in the Statement
of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At August 31, 1999, open futures contracts were
as follows:
Number of Settlement Market Unrealized
Type Contracts Long Month Value Loss
-------------------------------------------------------------------
S&P 500 Index 40 December 1999 $13,350,000 $1,429
-------------------------------------------------------------------
|
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed unsecured revolving line of credit facility. Under the most restrictive arrangement the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu- rities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund's custodian.
GOLDMAN SACHS GROWTH AND INCOME FUND
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment agreements with GSAM or its affiliates, transfers uninvested cash into
joint accounts, the daily aggregate balance of which is invested in one or
more repurchase agreements.
At August 31, 1999, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $84,600,000 in principal
amount. At August 31, 1999, the following repurchase agreements held in this
joint account were fully collateralized by Federal Agency obligations:
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
----------------------------------------------------------------------------------------
Banc of America Securities LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
----------------------------------------------------------------------------------------
Bear Stearns & Co., Inc. 300,000,000 5.51 09/01/1999 300,000,000
----------------------------------------------------------------------------------------
Deutsche Bank Securities, Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
----------------------------------------------------------------------------------------
Lehman Brothers, Inc. 300,000,000 5.65 09/01/1999 300,000,000
----------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. 200,000,000 5.50 09/01/1999 200,000,000
----------------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $3,106,800,000
----------------------------------------------------------------------------------------
|
8. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund has reclassified $111 from accumulated net realized gain from investment, futures and options transactions to accumulated undistributed net investment income. This reclas- sification has no impact on the net asset value of the Fund and is designed to present the Fund's capital accounts on a tax basis.
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
August 31, 1999
9. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month Period Ended
August 31, 1999 For the Year Ended January 31, 1999
---------------------------------- ------------------------------------
Shares Dollars Shares Dollars
--------------------------------------------------------------------------------------------------
Class A Shares
Shares sold 2,693,500 $ 68,994,627 19,137,910 $ 508,921,386
Reinvestments of divi-
dends and distributions 222,190 5,612,552 390,593 9,715,068
Shares repurchased (14,386,320) (361,520,290) (20,323,258) (510,471,024)
----------------------------------------------------------------------
(11,470,630) (286,913,111) (794,755) 8,165,430
--------------------------------------------------------------------------------------------------
Class B Shares
Shares sold 532,909 13,448,149 7,059,564 191,017,805
Reinvestments of divi-
dends and distributions 23,841 604,660 21,979 509,810
Shares repurchased (3,930,139) (97,151,929) (4,555,733) (111,930,613)
----------------------------------------------------------------------
(3,373,389) (83,099,120) 2,525,810 79,597,002
--------------------------------------------------------------------------------------------------
Class C Shares
Shares sold 104,662 2,636,497 1,937,045 52,029,313
Reinvestments of divi-
dends and distributions 2,859 72,208 4,364 105,648
Shares repurchased (823,868) (20,529,279) (1,174,701) (28,489,276)
----------------------------------------------------------------------
(716,347) (17,820,574) 766,708 23,645,685
--------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 1,012,105 26,839,595 10,119,858 268,940,951
Reinvestments of divi-
dends and distributions 7,373 189,388 14,004 346,705
Shares repurchased (6,850,928) (165,722,925) (4,396,583) (108,988,620)
----------------------------------------------------------------------
(5,831,450) (138,693,942) 5,737,279 160,299,036
--------------------------------------------------------------------------------------------------
Service Shares
Shares sold 85,566 2,205,405 218,320 5,841,661
Reinvestments of divi-
dends and distributions 2,354 59,642 3,132 77,088
Shares repurchased (173,088) (4,409,504) (73,792) (1,826,897)
----------------------------------------------------------------------
(85,168) (2,144,457) 147,660 4,091,852
--------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (21,476,984) $ (528,671,204) 8,382,702 $ 275,799,005
--------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS GROWTH AND INCOME FUND
Goldman Sachs Growth and Income Fund -- Tax Information (unaudited)
During the tax year ended August 31, 1999, 43.50% of the ordinary income dividends paid from net investment income by the Fund qualify for the divi- dends received deduction available to corporations.
GOLDMAN SACHS GROWTH AND INCOME FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from
investment operations(a) Distributions to shareholders
---------------------------- ------------------------------------
Net asset In excess Net increase
value, Net Net realized From net of net (decrease)
beginning investment and unrealized investment investment From net in net asset
of period income (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $24.33 $ 0.19 $0.31 $(0.15) $ -- $ -- $ 0.35
1999 - Class B Shares 24.13 0.08 0.31 (0.06) -- -- 0.33
1999 - Class C Shares 24.08 0.08 0.30 (0.05) -- -- 0.33
1999 - Institutional
Shares 24.35 0.34 0.23 (0.20) -- -- 0.37
1999 - Service Shares 24.33 0.17 0.32 (0.14) -- -- 0.35
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 25.93 0.20 (1.60) (0.19) (0.01) -- (1.60)
1999 - Class B Shares 25.73 0.02 (1.58) (0.04) -- -- (1.60)
1999 - Class C Shares 25.70 0.02 (1.59) (0.05) -- -- (1.62)
1999 - Institutional
Shares 25.95 0.29 (1.58) (0.30) (0.01) -- (1.60)
1999 - Service Shares 25.92 0.17 (1.58) (0.17) (0.01) -- (1.59)
------------------------------------------------------------------------------------------------------------------
1998 - Class A Shares 23.18 0.11 5.27 (0.11) -- (2.52) 2.75
1998 - Class B Shares 23.10 0.04 5.14 -- (0.03) (2.52) 2.63
1998 - Class C Shares
(commenced August 15,
1997) 28.20 (0.01) 0.06 -- (0.03) (2.52) (2.50)
1998 - Institutional
Shares 23.19 0.27 5.23 (0.22) -- (2.52) 2.76
1998 - Service Shares 23.17 0.14 5.23 (0.06) (0.04) (2.52) 2.75
------------------------------------------------------------------------------------------------------------------
1997 - Class A Shares 19.98 0.35 5.18 (0.35) (0.01) (1.97) 3.20
1997 - Class B Shares
(commenced May 1, 1996) 20.82 0.17 4.31 (0.17) (0.06) (1.97) 2.28
1997 - Institutional
Shares (commenced June
3, 1996) 21.25 0.29 3.96 (0.30) (0.04) (1.97) 1.94
1997 - Service Shares
(commenced March 6,
1996) 20.71 0.28 4.50 (0.28) (0.07) (1.97) 2.46
------------------------------------------------------------------------------------------------------------------
1996 - Class A Shares 15.80 0.33 4.75 (0.30) -- (0.60) 4.18
------------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS GROWTH AND INCOME FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$24.68 2.05%(d) $ 855,174 1.19%(c) 1.26%(c) 1.20%(c) 1.25%(c) 55.43%(d)
24.46 1.60(d) 271,912 1.94(c) 0.51(c) 1.95(c) 0.50(c) 55.43(d)
24.41 1.58(d) 31,328 1.94(c) 0.51(c) 1.95(c) 0.50(c) 55.43(d)
24.72 2.32(d) 32,181 0.79(c) 1.72(c) 0.80(c) 1.71(c) 55.43(d)
24.68 2.01(d) 10,008 1.29(c) 1.16(c) 1.30(c) 1.15(c) 55.43(d)
24.33 (5.40) 1,122,157 1.22 0.78 1.32 0.68 125.79
24.13 (6.07) 349,662 1.92 0.09 1.92 0.09 125.79
24.08 (6.12) 48,146 1.92 0.10 1.92 0.10 125.79
24.35 (5.00) 173,696 0.80 1.25 0.80 1.25 125.79
24.33 (5.44) 11,943 1.30 0.72 1.30 0.72 125.79
--------------------------------------------------------------------------------------------------------------------------------
25.93 23.71 1,216,582 1.25 0.43 1.42 0.26 61.95
25.73 22.87 307,815 1.94 (0.35) 1.94 (0.35) 61.95
25.70 0.51(d) 31,686 1.99(c) (0.48)(c) 1.99(c) (0.48)(c) 61.95
25.95 24.24 36,225 0.83 0.76 0.83 0.76 61.95
25.92 23.63 8,893 1.32 0.32 1.32 0.32 61.95
--------------------------------------------------------------------------------------------------------------------------------
23.18 28.42 615,103 1.22 1.60 1.43 1.39 53.03
23.10 22.23(d) 17,346 1.93(c) 0.15(c) 1.93(c) 0.15(c) 53.03
23.19 20.77(d) 193 0.82(c) 1.36(c) 0.82(c) 1.36(c) 53.03
23.17 23.87(d) 3,174 1.32(c) 0.94(c) 1.32(c) 0.94(c) 53.03
--------------------------------------------------------------------------------------------------------------------------------
19.98 32.45 436,757 1.20 1.67 1.45 1.42 57.93
--------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS GROWTH AND INCOME FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust--Growth and
Income Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Growth and Income Fund, one of the portfolios constituting Goldman Sachs Trust--Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related statement of operations, the statements of changes in net assets and the financial high- lights for the periods presented. These financial statements and the finan- cial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Growth and Income Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS CORE U.S. EQUITY FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 99.6%
Airlines - 0.3%
33,100 AMR Corp.* $ 1,940,488
36,400 Delta Air Lines, Inc. 1,849,575
--------------
3,790,063
---------------------------------------------------------------
Alcohol - 0.4%
91,700 The Seagram Company Ltd. 4,865,831
---------------------------------------------------------------
Apparel - 0.1%
23,700 Nike, Inc. Class B 1,096,125
---------------------------------------------------------------
Banks - 6.0%
167,762 BankAmerica Corp. 10,149,601
61,900 Chase Manhattan Corp. 5,180,256
395,450 Citigroup, Inc. 17,572,809
22,400 Comerica, Inc. 1,166,200
19,800 Fifth Third Bancorp 1,311,750
173,100 Firstar Corp. 4,641,244
248,600 Fleet Financial Group, Inc. 9,897,387
169,800 Mellon Bank Corp. 5,667,075
91,600 PNC Bank Corp. 4,791,825
73,700 Suntrust Banks, Inc. 4,739,831
82,900 U.S. Bancorp 2,559,538
126,600 Wells Fargo & Co. 5,040,263
--------------
72,717,779
---------------------------------------------------------------
Chemical - 1.6%
43,700 Aptargroup, Inc. 1,125,275
122,000 Dow Chemicals Co. 13,862,250
52,400 PPG Industries, Inc. 3,147,275
58,500 Solutia, Inc. 1,170,000
--------------
19,304,800
---------------------------------------------------------------
Clothing - 0.1%
44,700 Intimate Brands, Inc. 1,723,744
---------------------------------------------------------------
Computer Hardware - 9.5%
92,800 Apple Computer, Inc.* 6,055,200
313,300 Cisco Systems, Inc.* 21,245,656
27,400 Dell Computer Corp.* 1,337,462
101,800 EMC Corp.* 6,108,000
107,000 Hewlett-Packard Co. 11,275,125
300,300 International Business Machines, Inc. 37,406,119
177,100 Lexmark International Group, Inc.* 13,946,625
68,800 Sun Microsystems, Inc.* 5,469,600
30,800 Tech Data Corp.* 1,141,525
240,800 Xerox Corp. 11,498,200
--------------
115,483,512
---------------------------------------------------------------
Computer Software - 6.0%
700,400 Microsoft Corp.* 64,830,775
209,400 Novell, Inc.* 4,960,163
33,300 Oracle Corp.* 1,215,450
43,300 Rational Software Corp.* 1,171,806
29,300 Unisys Corp.* 1,259,900
--------------
73,438,094
---------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Consumer Durables - 0.2%
31,700 Whirlpool Corp. $ 2,240,794
-------------------------------------------------------------
Defense/Aerospace - 1.9%
234,800 Allied Signal, Inc. 14,381,500
145,200 General Dynamics Corp. 9,147,600
--------------
23,529,100
-------------------------------------------------------------
Department Store - 2.1%
184,300 Dayton Hudson Corp. 10,689,400
43,600 Federated Department Stores, Inc.* 2,005,600
31,000 The May Department Stores Co. 1,210,938
272,600 Wal-Mart Stores, Inc. 12,079,587
--------------
25,985,525
-------------------------------------------------------------
Drugs - 7.2%
75,100 Allergan, Inc. 7,500,612
207,100 Amgen, Inc.* 17,228,131
103,500 Biogen, Inc.* 7,943,625
307,600 Bristol-Myers Squibb Co. 21,647,350
149,300 Merck & Co. 10,031,094
346,500 Pfizer, Inc. 13,080,375
70,800 Pharmacia & Upjohn, Inc. 3,699,300
123,200 Schering-Plough Corp. 6,475,700
--------------
87,606,187
-------------------------------------------------------------
Electrical Equipment - 3.6%
27,700 Danaher Corp. 1,627,375
35,300 Eaton Corp. 3,459,400
33,200 Johnson Controls, Inc. 2,270,050
148,900 Lucent Technologies, Inc. 9,538,906
21,400 PE Corp.--PE Biosystems Group 1,472,587
85,100 QUALCOMM, Inc.* 16,355,156
217,300 Qwest Communications International,
Inc.* 6,247,375
18,000 Solectron Corp.* 1,408,500
61,800 Vishay Intertechnology, Inc.* 1,324,838
--------------
43,704,187
-------------------------------------------------------------
Electrical Utilities - 2.5%
33,300 Ameren Corp. 1,334,081
29,200 Consolidated Edison, Inc. 1,284,800
29,400 Dominion Resources, Inc. 1,359,750
59,700 Duke Energy Co. 3,432,750
146,300 Edison International, Inc. 3,712,362
81,500 FPL Group, Inc. 4,401,000
32,700 GPU, Inc. 1,115,888
53,400 PECO Energy Co. 2,169,375
123,100 Public Service Enterprise 5,047,100
98,300 Texas Utilities Co. 3,975,006
60,300 Unicom Corp. 2,329,088
--------------
30,161,200
-------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE U.S. EQUITY FUND
Shares Description Value
Common Stocks - (continued)
Energy Resources - 6.4%
423,400 Exxon Corp. $ 33,395,675
175,100 Mobil Corp. 17,925,863
433,300 Royal Dutch Petroleum Co. ADR 26,810,437
--------------
78,131,975
---------------------------------------------------------------
Entertainment - 1.0%
130,400 Carnival Cruise Lines Corp. 5,827,250
31,700 Royal Caribbean Cruise Lines 1,483,956
113,400 Viacom, Inc. Class B* 4,769,888
--------------
12,081,094
---------------------------------------------------------------
Financial Services - 2.1%
157,770 Associates First Capital Corp. 5,413,483
44,700 Federal Home Loan Mortgage Corp. 2,302,050
19,400 Federal National Mortgage Association 1,205,225
21,500 H&R Block, Inc. 1,195,938
51,400 Marsh & McLennan Co. 3,742,562
145,600 Providian Financial Corp. 11,302,200
--------------
25,161,458
---------------------------------------------------------------
Food & Beverage - 4.8%
235,725 Archer Daniels Midland Co. 3,064,425
63,700 Coca-Cola Co. 3,810,056
103,700 ConAgra, Inc. 2,540,650
46,800 General Mills, Inc. 3,919,500
714,300 Nabisco Group Holdings Corp. 12,678,825
214,500 Nabisco Holdings Corp. 8,432,531
403,900 Pepsico, Inc. 13,783,087
69,700 Supervalu, Inc. 1,568,250
122,492 Unilever NV 8,436,637
--------------
58,233,961
---------------------------------------------------------------
Forest - 0.7%
87,000 Georgia-Pacific Corp. 3,599,625
35,800 International Paper Co. 1,684,838
58,300 Weyerhaeuser Co. 3,279,375
--------------
8,563,838
---------------------------------------------------------------
Gas Utilities - 0.1%
45,000 Keyspan Corp. 1,327,500
---------------------------------------------------------------
Gold - 0.4%
247,400 Barrick Gold Corp. 4,793,375
---------------------------------------------------------------
Grocery - 0.8%
104,600 Food Lion, Inc. 826,994
278,800 Kroger Co.* 6,447,250
42,934 Safeway, Inc.* 1,999,114
--------------
9,273,358
---------------------------------------------------------------
Heavy Electrical - 3.5%
39,900 Emerson Electric Co. 2,498,738
357,300 General Electric Co. 40,129,256
--------------
42,627,994
---------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Home Products - 1.6%
97,200 Fortune Brands, Inc. $ 3,645,000
160,800 Procter & Gamble Co. 15,959,400
--------------
19,604,400
---------------------------------------------------------
Hotel - 0.3%
106,500 Marriott International, Inc. 3,647,625
---------------------------------------------------------
Industrial Parts - 1.2%
110,000 Caterpillar, Inc. 6,228,750
59,100 Ingersoll-Rand Co. 3,760,238
69,800 United Technologies Corp. 4,615,525
--------------
14,604,513
---------------------------------------------------------
Industrial Services - 0.5%
139,100 Hertz Corp. 5,607,469
---------------------------------------------------------
Information Services - 1.1%
108,200 America Online, Inc.* 9,880,013
84,900 First Data Corp. 3,735,600
--------------
13,615,613
---------------------------------------------------------
Leisure - 1.4%
203,500 Eastman Kodak Co. 14,944,531
77,400 Hasbro, Inc. 1,891,463
--------------
16,835,994
---------------------------------------------------------
Life Insurance - 1.5%
44,500 Aetna, Inc. 3,459,875
32,900 AFLAC, Inc. 1,478,444
16,900 American General Corp. 1,199,900
122,500 Cigna Corp. 11,002,031
25,200 Hartford Life, Inc. 1,094,625
--------------
18,234,875
---------------------------------------------------------
Media - 1.9%
33,900 Cox Communications, Inc.* 1,260,656
95,300 Fox Entertainment Group, Inc.* 2,197,856
219,900 General Motors Corp. Class H* 11,324,850
118,400 Infinity Broadcasting Corp.* 3,204,200
21,400 Time Warner, Inc. 1,269,288
58,400 Univision Communications, Inc.* 4,307,000
--------------
23,563,850
---------------------------------------------------------
Medical Products - 4.0%
130,600 Abbott Laboratories 5,664,775
40,700 Bausch & Lomb, Inc. 2,688,744
29,300 Boston Scientific Corp.* 994,369
179,900 Johnson & Johnson 18,394,775
213,893 Tyco International Ltd. 21,670,034
--------------
49,412,697
---------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE U.S. EQUITY FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Medical Providers - 1.1%
200,600 Beverly Enterprises, Inc.* $ 1,003,000
120,100 Columbia/HCA Healthcare Corp. 2,957,463
1 Lifepoint Hospitals, Inc.* 7
79,300 Tenet Healthcare Corp.* 1,382,794
1 Triad Hospitals, Inc.* 11
82,100 United Healthcare Corp. 4,992,706
42,900 Wellpoint Health Networks, Inc. 3,126,337
--------------
13,462,318
-----------------------------------------------------------------
Mining - 0.4%
39,800 Alcoa, Inc. 2,569,588
150,000 Bethlehem Steel Corp.* 1,153,125
56,700 Inco Ltd. 1,162,350
--------------
4,885,063
-----------------------------------------------------------------
Motor Vehicle - 1.4%
246,900 Ford Motor Co. 12,869,662
76,800 Navistar International Corp.* 3,734,400
--------------
16,604,062
-----------------------------------------------------------------
Oil Services - 0.6%
108,100 Schlumberger Ltd. 7,215,675
-----------------------------------------------------------------
Property Insurance - 4.1%
212,612 Allstate Corp. 6,976,331
302,293 American International Group, Inc. 28,018,783
59,100 Hartford Financial Services Group, Inc. 2,685,356
18,800 Jefferson-Pilot Corp. 1,254,900
26,800 Loews Corp. 2,103,800
244,700 Travelers Property & Casualty Corp. 8,686,850
--------------
49,726,020
-----------------------------------------------------------------
Publishing - 0.2%
22,000 Gannett Co. 1,494,625
23,600 Knight Ridder, Inc. 1,272,925
--------------
2,767,550
-----------------------------------------------------------------
Railroads - 0.4%
177,000 Burlington Northern Santa Fe Corp. 5,133,000
-----------------------------------------------------------------
Restaurants - 0.2%
59,410 Tricon Global Restaurants, Inc.* 2,413,531
-----------------------------------------------------------------
Security/Asset Management - 1.5%
122,200 Charles Schwab Corp. 4,826,900
105,900 Equitable Companies, Inc. 6,539,325
81,100 Morgan Stanley Dean Witter & Co. 6,959,394
--------------
18,325,619
-----------------------------------------------------------------
Semiconductors - 2.9%
341,400 Intel Corp. 28,058,812
51,400 Texas Instruments, Inc. 4,218,013
38,300 Xilinx, Inc.* 2,678,606
--------------
34,955,431
-----------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Specialty Retail - 3.4%
164,800 Best Buy Co., Inc.* $ 11,577,200
169,400 Circuit City Stores, Inc. 7,284,200
111,900 Lowes Co., Inc. 5,063,475
112,400 Tandy Corp. 5,310,900
208,500 The Home Depot, Inc. 12,744,562
--------------
41,980,337
-------------------------------------------------------
Telephone - 6.5%
283,300 Ameritech Corp. 17,883,312
591,675 AT&T Corp. 26,625,375
96,800 BellSouth Corp. 4,380,200
32,500 Centurytel, Inc. 1,277,656
170,500 MCI Worldcom, Inc.* 12,915,375
78,000 SBC Communications, Inc. 3,744,000
284,700 Sprint Corp. 12,633,563
--------------
79,459,481
-------------------------------------------------------
Thrifts - 0.1%
12,800 Golden West Financial Corp. 1,162,400
-------------------------------------------------------
Tobacco - 0.8%
228,300 Philip Morris Companies, Inc. 8,546,981
43,300 Universal Corp. 1,228,638
--------------
9,775,619
-------------------------------------------------------
Wireless - 1.2%
190,400 Alltel Corp. 12,875,800
34,500 United States Cellular Corp.* 1,942,781
--------------
14,818,581
-------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $954,461,619) $1,213,653,217
-------------------------------------------------------
TOTAL INVESTMENTS
(Cost $954,461,619) $1,213,653,217
-------------------------------------------------------
|
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 98.1%
Airlines - 0.0%
24,400 Southwest Airlines Co. $ 407,175
-------------------------------------------------------------
Alcohol - 0.7%
29,500 Anheuser-Busch Companies, Inc. 2,271,500
67,500 The Seagram Company Ltd. 3,581,719
------------
5,853,219
-------------------------------------------------------------
Apparel - 0.6%
115,000 Nike, Inc. Class B 5,318,750
-------------------------------------------------------------
Banks - 0.1%
37,500 Firstar Corp. 1,005,469
-------------------------------------------------------------
Chemical - 1.0%
9,600 Avery Dennison Corp. 526,800
70,500 Dow Chemicals Co. 8,010,563
------------
8,537,363
-------------------------------------------------------------
Clothing - 0.3%
53,800 Ann Taylor Stores Corp.* 1,782,125
21,000 Footstar, Inc.* 682,500
------------
2,464,625
-------------------------------------------------------------
Computer Hardware - 13.6%
69,900 Apple Computer, Inc.* 4,560,975
600,800 Cisco Systems, Inc.* 40,741,750
7,100 Electronics for Imaging, Inc.* 416,237
142,800 EMC Corp.* 8,568,000
188,400 Hewlett-Packard Co. 19,852,650
118,000 International Business Machines, Inc. 14,698,375
156,400 Lexmark International Group, Inc.* 12,316,500
127,000 Sun Microsystems, Inc.* 10,096,500
105,500 Tech Data Corp.* 3,910,094
67,300 Xerox Corp. 3,213,575
------------
118,374,656
-------------------------------------------------------------
Computer Software - 9.9%
63,700 Adobe Systems, Inc. 6,346,112
625,700 Microsoft Corp.* 57,916,356
181,700 Novell, Inc.* 4,304,019
365,000 Oracle Corp.* 13,322,500
55,100 Sabre Group Holdings, Inc.* 3,085,600
22,700 Unisys Corp.* 976,100
------------
85,950,687
-------------------------------------------------------------
Department Store - 1.9%
94,300 Dayton Hudson Corp. 5,469,400
244,200 Wal-Mart Stores, Inc. 10,821,113
------------
16,290,513
-------------------------------------------------------------
Drugs - 11.4%
49,200 Allergan, Inc. 4,913,850
400,000 Amgen, Inc.* 33,275,000
2,500 Andrx Corp.* 179,688
39,100 Biogen, Inc.* 3,000,925
279,400 Bristol-Myers Squibb Co. 19,662,775
-------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Drugs - (continued)
17,700 Genzyme Corp.* $ 998,944
20,000 Immunex Corp.* 1,346,250
158,200 Merck & Co. 10,629,062
496,800 Pfizer, Inc. 18,754,200
122,100 Schering-Plough Corp. 6,417,881
------------
99,178,575
-----------------------------------------------------------------
Electrical Equipment - 7.2%
7,000 Danaher Corp. 411,250
218,000 General Instrument Corp.* 10,722,875
10,900 Johnson Controls, Inc. 745,288
272,900 Lucent Technologies, Inc. 17,482,656
43,800 PE Corp.--PE Biosystems Group 3,013,987
124,800 QUALCOMM, Inc.* 23,985,000
186,500 Qwest Communications International, Inc.* 5,361,875
12,400 Solectron Corp.* 970,300
3,300 Teradyne, Inc.* 224,606
------------
62,917,837
-----------------------------------------------------------------
Electrical Utilities - 0.3%
30,500 Calpine Corp.* 2,764,063
-----------------------------------------------------------------
Energy Resources - 0.3%
30,600 Exxon Corp. 2,413,575
-----------------------------------------------------------------
Entertainment - 0.5%
109,800 Viacom, Inc. Class B* 4,618,463
-----------------------------------------------------------------
Environmental Services - 0.2%
20,300 Allied Waste Industries, Inc.* 258,825
117,800 Republic Services, Inc.* 1,281,075
------------
1,539,900
-----------------------------------------------------------------
Financial Services - 1.0%
10,400 Marsh & McLennan Co. 757,250
97,450 Providian Financial Corp. 7,564,556
------------
8,321,806
-----------------------------------------------------------------
Food & Beverage - 4.9%
228,900 Coca-Cola Co. 13,691,081
17,500 Coca-Cola Enterprises, Inc. 497,656
59,600 ConAgra, Inc. 1,460,200
19,400 General Mills, Inc. 1,624,750
34,800 H.J. Heinz Co. 1,624,725
25,700 Hormel Foods Corp. 1,034,425
275,600 IBP, Inc. 6,321,575
13,400 Keebler Foods Co.* 399,488
310,700 Nabisco Group Holdings Corp. 5,514,925
64,300 Nabisco Holdings Corp. 2,527,794
83,100 Pepsico, Inc. 2,835,787
9,300 Quaker Oats Co. 621,356
60,803 Unilever NV 4,187,807
------------
42,341,569
-----------------------------------------------------------------
Gold - 0.2%
91,600 Barrick Gold Corp. 1,774,750
-----------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
Shares Description Value
Common Stocks - (continued)
Grocery - 1.2%
201,200 Kroger Co.* $ 4,652,750
116,900 Safeway, Inc.* 5,443,156
------------
10,095,906
------------------------------------------------------------
Heavy Electrical - 5.3%
12,500 Emerson Electric Co. 782,813
406,500 General Electric Co. 45,655,031
------------
46,437,844
------------------------------------------------------------
Home Products - 2.8%
86,800 Clorox Co. 3,927,700
11,200 Fortune Brands, Inc. 420,000
199,700 Procter & Gamble Co. 19,820,225
------------
24,167,925
------------------------------------------------------------
Hotel - 0.3%
78,900 Marriott International, Inc. 2,702,325
4,530 MGM Grand, Inc.* 222,536
------------
2,924,861
------------------------------------------------------------
Industrial Parts - 0.3%
23,200 Caterpillar, Inc. 1,313,700
25,800 United Technologies Corp. 1,706,025
------------
3,019,725
------------------------------------------------------------
Industrial Services - 0.9%
11,300 Cintas Corp. 580,537
179,500 Hertz Corp. 7,236,094
------------
7,816,631
------------------------------------------------------------
Information Services - 4.0%
66,400 America Online, Inc.* 6,063,150
43,000 Automatic Data Processing, Inc. 1,690,437
44,800 Computer Sciences Corp. 3,099,600
25,300 Electronic Data Systems 1,419,963
148,200 Exodus Communications, Inc.* 11,911,575
133,900 First Data Corp. 5,891,600
26,500 Interpublic Group of Companies, Inc. 1,050,063
33,100 Omnicom Group, Inc. 2,494,912
6,000 Sotheby's Holdings, Inc. 174,750
5,600 VeriSign, Inc.* 606,550
------------
34,402,600
------------------------------------------------------------
Leisure - 2.6%
313,200 Eastman Kodak Co. 23,000,625
------------------------------------------------------------
Media - 0.8%
31,800 Fox Entertainment Group, Inc.* 733,388
110,200 General Motors Corp. Class H* 5,675,300
5,400 Univision Communications, Inc.* 398,250
------------
6,806,938
------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Medical Products - 5.0%
146,500 Abbott Laboratories $ 6,354,437
28,200 Bausch & Lomb, Inc. 1,862,963
220,200 Johnson & Johnson 22,515,450
45,200 Medtronic, Inc. 3,536,900
90,200 Tyco International Ltd. 9,138,387
------------
43,408,137
-----------------------------------------------------------
Medical Providers - 2.3%
88,500 Columbia/HCA Healthcare Corp. 2,179,312
33,100 Healthsouth Corp.* 271,006
26,700 Lincare Holdings, Inc.* 704,213
28,700 Pacificare Health Systems* 1,722,000
59,000 Tenet Healthcare Corp.* 1,028,812
31,900 Trigon Healthcare, Inc.* 1,158,369
177,000 Wellpoint Health Networks, Inc.* 12,898,875
------------
19,962,587
-----------------------------------------------------------
Motor Vehicle - 1.4%
11,900 Delphi Automative Systems Corp. 223,125
246,400 Navistar International Corp.* 11,981,200
------------
12,204,325
-----------------------------------------------------------
Oil Refining - 0.1%
17,800 Dynegy, Inc. 418,300
9,800 The Coastal Corp. 424,463
------------
842,763
-----------------------------------------------------------
Oil Services - 0.3%
45,100 Schlumberger Ltd. 3,010,425
-----------------------------------------------------------
Property Insurance - 1.6%
136,500 American International Group, Inc. 12,651,844
36,500 Travelers Property & Casualty Corp. 1,295,750
------------
13,947,594
-----------------------------------------------------------
Restaurants - 0.6%
11,400 McDonald's Corp. 471,675
121,200 Tricon Global Restaurants, Inc.* 4,923,750
------------
5,395,425
-----------------------------------------------------------
Security/Asset Management - 2.0%
451,500 Charles Schwab Corp. 17,834,250
-----------------------------------------------------------
Semiconductors - 4.0%
413,600 Intel Corp. 33,992,750
8,000 Texas Instruments, Inc. 656,500
------------
34,649,250
-----------------------------------------------------------
Specialty Retail - 4.1%
112,300 Best Buy Co., Inc.* 7,889,075
119,300 Circuit City Stores, Inc. 5,129,900
131,000 CVS Corp. 5,461,063
10,800 Lowes Co., Inc. 488,700
-----------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Specialty Retail - (continued)
239,500 The Home Depot, Inc. $ 14,639,437
40,200 Tiffany & Co. 2,125,575
------------
35,733,750
------------------------------------------------------
Telephone - 3.0%
7,700 Ameritech Corp. 486,062
162,900 AT&T Corp. 7,330,500
33,700 BCE, Inc. 1,575,475
161,900 MCI Worldcom, Inc.* 12,263,925
66,100 SBC Communications, Inc. 3,172,800
28,000 Sprint Corp. 1,242,500
------------
26,071,262
------------------------------------------------------
Tobacco - 1.1%
256,400 Philip Morris Companies, Inc. 9,598,975
------------------------------------------------------
Truck Freight - 0.1%
28,500 FDX Corp.* 1,209,469
------------------------------------------------------
Wireless - 0.2%
11,000 Alltel Corp. 743,875
5,300 Telephone & Data Systems, Inc. 369,013
13,400 United States Cellular Corp.* 754,587
------------
1,867,475
------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $725,725,430) $854,481,737
------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Repurchase Agreement - 1.6% Joint Repurchase Agreement $13,600,000 5.52% 09/01/1999 $ 13,600,000 ----------------------------------------------- TOTAL REPURCHASE AGREEMENT (Cost $13,600,000) $ 13,600,000 ----------------------------------------------- TOTAL INVESTMENTS (Cost $739,325,430) $868,081,737 ----------------------------------------------- |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 99.4%
Airlines - 1.6%
22,700 Alaska Air Group, Inc.* $ 981,775
18,000 America West Holdings Corp. Class B* 351,000
51,700 Frontier Airlines, Inc.* 649,481
5,600 Midwest Express Holdings, Inc.* 151,200
------------
2,133,456
-----------------------------------------------------------
Apparel - 3.0%
34,200 Brown Group, Inc. 594,225
28,000 K-Swiss, Inc. 878,500
7,000 Kellwood Co. 167,125
5,200 Kenneth Cole Productions, Inc.* 177,775
11,600 Oxford Industries, Inc. 250,850
16,300 Phillips-Van Heusen Corp. 138,550
12,450 Quiksilver, Inc.* 214,763
9,800 Russell Corp. 164,150
18,100 Springs Industries, Inc. 679,881
44,800 Wellman, Inc. 753,200
------------
4,019,019
-----------------------------------------------------------
Banks - 4.5%
19,000 Bancwest Corp. 794,437
24,300 Brookline Bancorp, Inc. 264,263
5,800 Commerce Bancorp, Inc. 249,400
5,900 First Charter Corp. 128,325
17,600 First Commonwealth Financial Corp. 423,500
14,000 Hudson United Bancorp 445,375
12,492 Imperial Bancorp* 212,364
30,600 Independence Community Bank Corp. 378,675
9,100 Independent Bank Corp. 122,850
8,000 Net.B@nk, Inc.* 186,000
14,200 One Valley Bancorp, Inc. 543,150
20,400 Southwest Bancorp of Texas, Inc.* 351,900
12,650 Trustco Bank Corp. 376,338
11,700 United Bankshares, Inc. 300,544
13,500 UST Corp. 410,062
21,300 Western Bancorp 846,675
------------
6,033,858
-----------------------------------------------------------
Chemical - 2.4%
10,700 Aptargroup, Inc. 275,525
5,200 Brady Corp. 156,000
18,100 Dexter Corp. 659,519
12,100 Gencorp, Inc. 260,150
17,100 Geon Co. 510,862
4,700 H.B. Fuller Co. 283,175
24,700 Octel Corp.* 280,963
27,800 Spartech Corp. 773,187
------------
3,199,381
-----------------------------------------------------------
Clothing - 1.2%
31,700 Ann Taylor Stores Corp.* 1,050,062
4,600 Talbots, Inc. 142,313
9,900 The Buckle, Inc.* 167,063
21,500 The Cato Corp. 288,906
------------
1,648,344
-----------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Computer Hardware - 3.1%
10,600 Advanced Digital Information Corp.* $ 341,850
13,700 Gerber Scientific, Inc. 279,994
18,800 Imation Corp.* 529,925
20,200 Inacom Corp.* 196,950
4,700 Jack Henry & Associates, Inc. 152,750
37,800 MTI Technology Corp.* 843,412
5,800 Proxim, Inc.* 282,750
18,000 Sandisk Corp.* 1,518,750
------------
4,146,381
------------------------------------------------------------
Computer Software - 7.2%
13,700 Advantage Learning Systems, Inc.* 307,394
11,400 Advent Software, Inc.* 560,025
8,400 AVT Corp.* 237,300
9,100 Broadvision, Inc.* 906,019
19,900 CACI International, Inc.* 447,750
6,900 Clarify, Inc.* 303,600
7,300 Concord Communications, Inc.* 269,416
9,400 Dendrite International, Inc.* 391,275
16,000 Genesys Telecommunication* 468,000
19,600 IMR Global Corp.* 334,425
26,000 Informix Corp.* 189,312
25,500 Mentor Graphics Corp.* 228,703
7,600 Mercury Interactive Corp.* 362,900
21,700 National Computer Systems, Inc. 846,300
23,600 Peregrine Systems, Inc.* 778,800
6,900 Pervasive Software, Inc.* 146,625
30,600 Progress Software Corp.* 937,125
7,400 Project Software & Development, Inc.* 325,137
12,600 Remedy Corp.* 308,700
68,100 Sybase, Inc.* 851,250
8,300 Transaction Systems Architects, Inc.* 244,331
8,100 TSI International Software Ltd.* 153,900
5,200 Visual Networks, Inc.* 215,800
------------
9,814,087
------------------------------------------------------------
Construction - 2.9%
13,400 Comfort Systems USA, Inc.* 189,275
6,450 Elcor Corp. 124,163
10,500 Florida Rock Industrial, Inc. 419,344
10,900 Granite Construction, Inc. 272,500
13,200 Group Maintenance America Corp.* 162,525
16,000 Insituform Technologies, Inc.* 332,000
8,800 Jacobs Engineering Group, Inc.* 290,400
16,300 Kaufman & Broad Home Co. 333,131
9,100 M.D.C. Holdings, Inc. 171,194
18,800 Morrison Knudsen Corp.* 202,100
7,200 NCI Building Systems, Inc.* 131,850
14,400 Pulte Corp. 333,000
16,600 Ryland Group, Inc. 399,437
12,800 TJ International, Inc. 372,800
4,300 U.S. Home Corp.* 129,000
------------
3,862,719
------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Shares Description Value
Common Stocks - (continued)
Consumer Durables - 0.6%
11,400 Applied Power, Inc. $ 349,125
15,100 La- Z-Boy, Inc. 331,256
5,600 Salton, Inc.* 156,100
------------
836,481
----------------------------------------------------------
Defense/Aerospace - 0.4%
12,700 AAR Corp. 271,463
3,700 Precision Castparts Corp. 131,350
8,500 Triumph Group, Inc.* 210,375
------------
613,188
----------------------------------------------------------
Department Store - 0.6%
27,000 Shopko Stores, Inc.* 772,875
----------------------------------------------------------
Drugs - 6.1%
33,300 Alpharma, Inc. 1,128,037
17,400 Amerisource Health Corp.* 449,138
49,810 Bindley Western Industries, Inc. 834,317
17,500 Cambrex Corp. 470,313
18,800 Chirex, Inc.* 568,700
14,600 Covance, Inc.* 234,513
7,000 Gilead Sciences, Inc.* 545,562
28,000 Herbalife International, Inc. 336,000
9,150 Jones Pharmaceutical, Inc. 247,622
30,100 Millennium Pharmaceutical* 1,774,019
31,284 Priority Healthcare Corp. Class B* 879,862
21,200 Roberts Pharmaceutical Co.* 568,425
4,800 Syncor International Corp.* 172,800
------------
8,209,308
----------------------------------------------------------
Electrical Equipment - 5.9%
12,000 Aavid Thermal Technologies, Inc.* 273,000
15,600 Aeroflex, Inc.* 255,450
12,800 Artesyn Technologies, Inc.* 280,800
12,600 C-Cube Microsystems, Inc.* 350,437
16,200 DII Group, Inc.* 574,087
16,000 Esterline Technologies Corp.* 262,000
63,700 Federal Signal Corp. 1,333,719
8,000 Kemet Corp.* 206,500
13,800 Kimball International, Inc. Class B 266,513
24,800 Methode Electronics, Inc. 446,400
6,900 Oak Industries, Inc.* 216,488
19,300 Park Electrochemical Corp. 560,906
23,800 Pioneer Standard Electronics, Inc. 336,175
6,800 Polycom, Inc.* 248,625
44,000 Sawtek, Inc.* 1,454,750
21,900 Sensormatic Electronics Corp.* 255,956
7,800 Technitrol, Inc. 273,000
8,600 Xircom, Inc.* 342,388
------------
7,937,194
----------------------------------------------------------
Electrical Utilities - 2.1%
19,000 Avista Corp. 327,750
23,700 CMP Group, Inc. 629,531
4,800 Eastern Utilities Assoc. 143,700
----------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Electrical Utilities - (continued)
13,400 Empire District Electric Co. $ 341,700
16,900 Hawaiian Electric Industries, Inc. 601,006
15,700 Public Service Company of New Mexico 295,356
1,458 Sierra Pacific Resources 35,539
13,100 TNP Enterprises, Inc. 489,613
------------
2,864,195
---------------------------------------------------------------
Energy Resources - 1.1%
13,600 Barrett Resources Corp.* 490,450
17,800 Cabot Oil & Gas Corp. 339,312
12,300 Cross Timbers Oil Co. 152,213
8,400 Houston Exploration Co.* 178,500
25,200 Southwestern Energy Co. 225,225
5,200 St. Mary Land & Exploration Co. 137,800
------------
1,523,500
---------------------------------------------------------------
Entertainment - 0.7%
76,700 Handleman Co.* 1,016,275
---------------------------------------------------------------
Financial Services - 3.8%
51,200 Advanta Corp. 1,008,000
41,800 Arcadia Financial Ltd.* 237,737
14,400 Arthur J. Gallagher & Co. 786,600
26,800 Credit Acceptance Corp.* 157,450
7,000 E.W. Blanch Holdings, Inc. 463,750
11,400 Financial Federal Corp.* 214,463
35,500 Long Beach Financial Corp.* 534,719
12,600 Metris Companies, Inc. 347,287
5,700 NCO Group, Inc.* 259,350
63,325 Resource Bancshares Mortgage Group, Inc. 379,950
57,500 Security Capital Group, Inc. Class B* 808,594
------------
5,197,900
---------------------------------------------------------------
Food & Beverage - 2.3%
16,000 Agribrands International, Inc.* 778,000
5,000 American Italian Pasta Co.* 140,000
4,700 Corn Products International 153,044
29,200 Fleming Companies, Inc. 352,225
14,700 International Multifoods Corp. 333,506
8,800 Michael Foods, Inc. 243,650
19,300 Pilgrim's Pride Corp. Class B 205,063
9,650 Pilgrim's Pride Corp.* 78,406
22,000 Smithfield Foods, Inc.* 646,250
11,600 Universal Foods Corp. 245,050
------------
3,175,194
---------------------------------------------------------------
Forest - 1.0%
21,300 ACX Technologies, Inc.* 263,588
9,300 Glatfelter (P.H.) Co. 122,644
19,500 Potlatch Corp. 753,187
10,800 United Stationers, Inc.* 244,350
------------
1,383,769
---------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Gas Utilities - 2.3%
27,000 Aquarion Co. $ 972,000
14,300 California Water Services Group 427,212
11,100 Equitable Resources, Inc. 407,925
17,100 Oneok, Inc. 531,169
11,700 SEMCO Energy, Inc. 169,650
25,200 UGI Corp. 578,025
------------
3,085,981
------------------------------------------------------
Heavy Electrical - 1.4%
14,050 A.O. Smith Corp. 381,106
9,900 Anixter International, Inc.* 208,519
14,500 Baldor Electric Co. 257,375
16,000 C&D Technologies, Inc. 504,000
22,900 Foster Wheeler Corp. 296,269
9,400 Regal Beloit Corp. 209,737
------------
1,857,006
------------------------------------------------------
Heavy Machinery - 0.6%
5,400 Astec Industries, Inc.* 182,925
12,700 Columbus McKinnon Corp. 222,250
5,800 Nacco Industries, Inc. 451,675
------------
856,850
------------------------------------------------------
Home Products - 0.7%
45,400 Playtex Products, Inc.* 661,138
10,100 WD-40 Co. 247,450
------------
908,588
------------------------------------------------------
Hotel - 0.4%
41,400 Aztar Corp.* 380,362
21,700 Boyd Gaming Corp.* 116,638
------------
497,000
------------------------------------------------------
Industrial Parts - 3.9%
18,200 Clarcor, Inc. 326,463
11,100 Commercial Intertech Corp. 138,750
12,900 Flowserve Corp. 203,981
20,600 Helix Technology Corp. 581,950
14,200 Kaman Corp. 185,488
13,500 Kennametal, Inc. 357,750
21,700 Mark IV Industries, Inc. 429,931
17,100 Thomas Industries, Inc. 332,381
44,100 Timken Co. 774,506
30,400 Toro Co. 1,117,200
30,600 Watsco, Inc. 428,400
17,600 Watts Industries, Inc. 387,200
------------
5,264,000
------------------------------------------------------
Industrial Services - 3.9%
20,800 Aaron Rents, Inc. Class B 393,900
10,200 ABM Industries, Inc. 234,600
31,700 Avis Rent A Car, Inc.* 697,400
16,400 Chemed Corp. 498,150
------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Industrial Services - (continued)
5,700 Cort Business Services Corp.* $ 142,856
57,700 Dollar Thrifty Automotive Group, Inc.* 1,085,481
13,500 Interim Services, Inc.* 248,906
7,800 Metamor Worldwide, Inc.* 125,044
14,600 Personnel Group of America, Inc.* 122,275
14,600 Rent-A-Center, Inc. * 323,938
26,250 Rollins Truck Leasing Corp. 272,344
12,100 Rollins, Inc. 189,819
20,200 Wackenhut Corp. 488,587
11,600 Xtra Corp.* 525,625
------------
5,348,925
-----------------------------------------------------------------
Information Services - 2.6%
9,000 American Management Systems, Inc.* 257,625
13,700 Bell & Howell Co.* 458,950
28,600 Concentric Network Corp.* 627,412
8,200 F.Y.I., Inc.* 268,038
9,000 Fair Isaac & Co., Inc. 254,250
17,000 infoUSA, Inc. Class B* 86,063
4,600 Maximus, Inc.* 159,275
6,500 Medquist, Inc.* 226,281
6,150 Profit Recovery Group International, Inc.* 234,084
38,000 URS Corp.* 940,500
------------
3,512,478
-----------------------------------------------------------------
Leisure - 1.8%
18,800 Action Performance Co., Inc.* 464,125
26,800 Callaway Golf Co. 266,325
18,900 Hollywood Park, Inc.* 320,118
6,400 JAKKS Pacific, Inc.* 193,600
11,700 Russ Berrie and Company, Inc. 274,219
5,800 SCP Pool Corp.* 133,400
41,700 Station Casinos, Inc.* 844,425
------------
2,496,212
-----------------------------------------------------------------
Life Insurance - 1.5%
46,979 Delphi Financial Group, Inc.* 1,667,754
17,200 FBL Financial Group, Inc. 340,775
------------
2,008,529
-----------------------------------------------------------------
Media - 0.5%
25,700 Ascent Entertainment Group, Inc.* 350,163
11,900 Gaylord Entertainment Co. 362,950
------------
713,113
-----------------------------------------------------------------
Medical Products - 1.3%
2,000 IDEC Pharmaceuticals Corp.* 254,125
13,000 OEC Medical Systems, Inc.* 448,500
16,600 ResMed, Inc.* 460,650
27,100 Sola International, Inc.* 430,213
20,300 Sunrise Medical, Inc.* 142,100
------------
1,735,588
-----------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Shares Description Value
Common Stocks - (continued)
Medical Providers - 1.1%
49,900 Ameripath, Inc.* $ 467,813
13,200 Hooper Holmes, Inc. 303,600
26,000 Quest Diagnostics, Inc.* 687,375
------------
1,458,788
--------------------------------------------------------------
Mining - 3.0%
39,200 Armco, Inc.* 269,500
49,500 Asarco, Inc. 1,033,312
31,300 Bethlehem Steel Corp.* 240,619
11,600 Commercial Metals Co. 355,250
30,100 Cyprus Amax Minerals Co. 509,819
63,900 National Steel Corp. Class B 519,187
16,100 Oregon Steel Mills, Inc. 176,094
23,200 Quanex Corp. 603,200
11,000 Reliance Steel & Aluminum Corp. 364,375
------------
4,071,356
--------------------------------------------------------------
Motor Vehicle - 1.8%
10,700 Arvin Industries, Inc. 382,525
6,770 Dura Automotive Systems, Inc.* 175,174
8,700 Modine Manufacturing Co. 258,825
5,400 Monaco Coach Corp.* 156,600
17,400 Simpson Industries, Inc. 217,500
25,200 Standard Products Co. 872,550
5,600 Superior Industries International, Inc. 156,800
11,100 Tower Automotive, Inc.* 222,000
------------
2,441,974
--------------------------------------------------------------
Oil Refining - 0.4%
22,400 Northwestern Corp. 554,400
--------------------------------------------------------------
Oil Services - 1.9%
11,000 Helmerich & Payne, Inc. 303,188
11,600 Marine Drilling Co., Inc.* 184,150
21,400 National Oilwell, Inc.* 363,800
21,800 Oceaneering International, Inc.* 437,362
72,300 Parker Drilling Co.* 361,500
24,500 Pool Energy Services Co.* 646,187
29,800 Seitel, Inc.* 290,550
------------
2,586,737
--------------------------------------------------------------
Property Insurance - 2.2%
7,100 Argonaut Group, Inc. 179,275
39,500 Capital Re Corp. 478,937
6,200 Commerce Group, Inc. 137,950
9,091 Fidelity National Financial, Inc. 139,774
28,600 First American Financial Corp. 425,425
10,909 Medical Assurance, Inc.* 274,089
6,900 PMA Capital Corp. 136,706
6,700 Radian Group 310,294
6,300 SCPIE Holdings, Inc. 190,969
16,800 Selective Insurance Group 299,250
14,400 Stewart Information Services Corp. 299,700
7,200 Trenwick Group, Inc. 157,950
------------
3,030,319
--------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Publishing - 1.5%
13,000 Big Flower Press Holdings, Inc.* $ 375,375
11,800 Jostens, Inc. 237,475
8,200 Pulitzer, Inc. 359,262
50,400 Wallace Computer Services, Inc. 1,077,300
------------
2,049,412
--------------------------------------------------------------
Restaurants - 1.5%
11,700 Buffets, Inc.* 130,894
25,600 Luby's Cafeterias, Inc. 342,400
36,300 Rare Hospitality International, Inc.* 714,656
20,500 Ruby Tuesday, Inc. 371,563
14,500 Sonic Corp.* 444,062
------------
2,003,575
--------------------------------------------------------------
Security/Asset Management - 2.0%
12,900 Advest Group, Inc. 246,713
21,400 Jeffries Group, Inc. 529,650
9,000 John Nuveen Co. 351,562
6,400 National Discount Brokers Group, Inc.* 195,600
40,280 Southwest Securities Group, Inc. 1,359,450
------------
2,682,975
--------------------------------------------------------------
Semiconductors - 3.5%
54,600 3dfx Interactive, Inc.* 607,425
13,400 Actel Corp.* 210,213
30,600 CTS Corp. 1,457,325
21,200 Cypress Semiconductor Corp.* 490,250
43,000 Kent Electronics Corp.* 728,313
13,800 Lam Research Corp.* 778,837
9,100 Transwitch Corp.* 452,156
------------
4,724,519
--------------------------------------------------------------
Specialty Retail - 3.6%
13,500 Bandag, Inc. 448,875
11,600 Genesco, Inc.* 137,750
33,000 Haverty Furniture Cos., Inc. 534,187
20,400 Heilig Meyers Co. 108,375
151,800 Hollywood Entertainment Co.* 2,058,787
27,300 HomeBase, Inc.* 119,438
11,900 Michaels Stores, Inc.* 365,181
8,500 Micro Warehouse, Inc.* 104,125
16,000 Musicland Stores Corp.* 136,000
14,600 Pep Boys-Manny, Moe & Jack 212,613
27,600 PETsMART, Inc.* 132,825
15,400 School Specialty, Inc.* 190,575
32,500 Spiegel, Inc.* 290,469
------------
4,839,200
--------------------------------------------------------------
Telephone - 0.8%
22,300 Dycom Industries, Inc.* 688,513
11,900 US LEC Corp.* 386,750
------------
1,075,263
--------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Thrifts - 2.4%
12,000 Carolina First Corp. $ 262,500
5,400 First Republic Bank San Francisco California* 138,712
30,800 FirstFed Financial Corp.* 469,700
15,200 Reliance Bancorp, Inc. 525,350
73,747 Republic Security Financial 705,206
37,300 Richmond County Financial 739,006
19,600 Staten Island Bancorp, Inc. 351,575
------------
3,192,049
--------------------------------------------------------------------
Tobacco - 0.6%
24,500 Dimon, Inc. 105,656
24,300 Universal Corp. 689,513
------------
795,169
--------------------------------------------------------------------
Truck Freight - 1.1%
10,000 Alexander & Baldwin, Inc. 241,875
17,400 Arnold Industries, Inc. 247,950
14,000 Consolidated Freightways Corp.* 151,375
10,700 Overseas Shipholding Group 149,131
8,000 Seacor Smit, Inc.* 415,500
18,200 Yellow Corp. * 288,925
------------
1,494,756
--------------------------------------------------------------------
Wireless - 0.6%
39,375 Price Communications Corp.* 809,648
|
----------------------------- TOTAL COMMON STOCKS (Cost $127,072,813) $134,481,534 ----------------------------- |
Principal Interest Maturity Amount Rate Date Value Repurchase Agreement - 0.8% Joint Repurchase Agreement $1,100,000 5.52% 09/01/1999 $ 1,100,000 --------------------------------------------- TOTAL REPURCHASE AGREEMENT (Cost $1,100,000) $ 1,100,000 --------------------------------------------- TOTAL INVESTMENTS (Cost $128,172,813) $135,581,534 --------------------------------------------- |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE LARGE CAP VALUE FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 99.0%
Airlines - 0.5%
19,400 Delta Air Lines, Inc. $ 985,762
10,300 UAL Corp.* 667,569
------------
1,653,331
-------------------------------------------------------------
Apparel - 0.4%
23,200 Nike, Inc. Class B 1,073,000
-------------------------------------------------------------
Banks - 14.9%
17,500 Bank of New York Co., Inc. 625,625
105,000 Bank One Corp. 4,213,125
112,400 BankAmerica Corp. 6,800,200
15,100 BB&T Corp. 505,850
78,200 Chase Manhattan Corp. 6,544,362
140,850 Citigroup, Inc. 6,259,022
34,300 Comerica, Inc. 1,785,744
5,700 Fifth Third Bancorp 377,625
117,100 Firstar Corp. 3,139,744
11,300 FirstMerit Corp. 296,978
103,200 Fleet Financial Group, Inc. 4,108,650
32,800 Mellon Bank Corp. 1,094,700
9,200 Mercantile Bancorp., Inc. 507,725
24,400 National City Corp. 674,050
16,900 PNC Bank Corp. 884,081
19,300 Regions Financial Corp 681,531
16,600 SouthTrust Corp. 586,188
38,100 Suntrust Banks, Inc. 2,450,306
45,700 UnionBanCal Corp. 1,753,738
48,100 Wells Fargo & Co. 1,914,981
2,200 Zions Bancorp 109,450
------------
45,313,675
-------------------------------------------------------------
Chemical - 3.1%
31,800 Avery Dennison Corp. 1,745,025
38,900 Dow Chemicals Co. 4,420,012
16,165 Du Pont (E.I.) de Nemours & Co. 1,024,457
14,600 PPG Industries, Inc. 876,912
6,500 Rohm & Haas Co. 242,938
11,000 Sherwin Williams Co. 268,125
16,600 Vulcan Materials Co. 707,575
------------
9,285,044
-------------------------------------------------------------
Computer Hardware - 3.6%
1,500 Apple Computer, Inc.* 97,875
5,500 Electronics for Imaging, Inc.* 322,438
15,900 Hewlett-Packard Co. 1,675,462
44,400 International Business Machines, Inc. 5,530,575
39,400 Lexmark International Group, Inc.* 3,102,750
4,700 Pitney-Bowes Inc. 277,300
------------
11,006,400
-------------------------------------------------------------
Computer Software - 0.9%
3,300 Microsoft Corp.* 305,456
71,100 Novell, Inc.* 1,684,181
-------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Computer Software - (continued)
17,500 Oracle Corp.* $ 638,750
2,100 Unisys Corp.* 90,300
------------
2,718,687
----------------------------------------------------------
Consumer Durables - 0.2%
10,500 Whirlpool Corp. 742,219
----------------------------------------------------------
Defense/Aerospace - 1.8%
44,700 Allied Signal, Inc. 2,737,875
26,800 General Dynamics Corp. 1,688,400
17,200 Raytheon Co. Class B 1,171,750
------------
5,598,025
----------------------------------------------------------
Department Store - 0.2%
3,900 Federated Department Stores, Inc.* 179,400
7,600 J. C. Penney Co., Inc. 275,500
------------
454,900
----------------------------------------------------------
Drugs - 2.3%
28,000 Allergan, Inc. 2,796,500
24,400 Amgen, Inc.* 2,029,775
7,900 Andrx Corp.* 567,813
20,700 Bristol-Myers Squibb Co. 1,456,762
1,200 Genzyme Corp.* 67,725
600 Pharmacia & Upjohn, Inc. 31,350
------------
6,949,925
----------------------------------------------------------
Electrical Equipment - 0.7%
28,100 Johnson Controls, Inc. 1,921,338
3,100 Motorola, Inc. 285,975
------------
2,207,313
----------------------------------------------------------
Electrical Utilities - 5.6%
21,700 Alliant Energy Corp. 627,944
6,700 Calpine Corp.* 607,187
78,000 Dominion Resources, Inc. 3,607,500
29,500 DTE Energy Co. 1,163,406
7,800 Energy East Corp. 195,000
82,200 Entergy Corp. 2,450,587
35,500 FPL Group, Inc. 1,917,000
27,200 PECO Energy Co. 1,105,000
1,800 PG&E Corp. 54,563
45,100 Public Service Enterprise 1,849,100
2,200 Southern Co. 59,538
60,100 Texas Utilities Co. 2,430,294
25,900 Unicom Corp. 1,000,387
------------
17,067,506
----------------------------------------------------------
Energy Resources - 9.9%
24,100 Apache Corp. 1,096,550
5,500 Atlantic Richfield Co. 483,656
71,000 Chevron Corp. 6,549,750
34,028 Conoco, Inc. Class B 914,496
167,300 Exxon Corp. 13,195,787
----------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE LARGE CAP VALUE FUND
Shares Description Value
Common Stocks - (continued)
Energy Resources - continued
45,700 Mobil Corp. $ 4,678,538
48,900 Royal Dutch Petroleum Co. ADR 3,025,688
------------
29,944,465
--------------------------------------------------------------------
Entertainment - 0.5%
14,200 Carnival Cruise Lines Corp. 634,563
18,000 Royal Caribbean Cruise Lines 842,625
------------
1,477,188
--------------------------------------------------------------------
Financial Services - 3.0%
1,100 American Express Co. 151,250
12,000 Aon Corp. 400,500
4,700 C.I.T. Group, Inc. 111,919
13,200 Countrywide Credit Industries, Inc. 424,050
26,300 Federal National Mortgage Association 1,633,888
17,200 H&R Block, Inc. 956,750
10,600 Heller Financial, Inc. 242,475
44,600 Marsh & McLennan Co. 3,247,437
24,000 Providian Financial Corp. 1,863,000
------------
9,031,269
--------------------------------------------------------------------
Food & Beverage - 3.6%
45,900 ConAgra, Inc. 1,124,550
600 General Mills, Inc. 50,250
14,000 Hormel Foods Corp. 563,500
102,100 IBP, Inc. 2,341,919
191,600 Nabisco Group Holdings Corp. 3,400,900
87,400 Nabisco Holdings Corp. 3,435,912
6,500 Supervalu, Inc. 146,250
------------
11,063,281
--------------------------------------------------------------------
Forest - 0.5%
13,500 Georgia-Pacific Corp. 558,563
14,900 Weyerhaeuser Co. 838,125
------------
1,396,688
--------------------------------------------------------------------
Gas Utilities - 0.5%
52,700 Keyspan Corp. 1,554,650
--------------------------------------------------------------------
Gold - 1.7%
169,000 Barrick Gold Corp. 3,274,375
108,700 Freeport-McMoRan Copper & Gold, Inc. Class B 1,745,994
26,500 Placer Dome, Inc. 274,937
------------
5,295,306
--------------------------------------------------------------------
Grocery - 0.4%
63 Albertson's, Inc. 3,020
47,600 Kroger Co.* 1,100,750
------------
1,103,770
--------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Heavy Electrical - 0.9%
21,000 Emerson Electric Co. $ 1,315,125
22,600 Phelps Dodge Corp. 1,264,187
------------
2,579,312
--------------------------------------------------------------
Home Products - 0.2%
17,700 Fortune Brands, Inc. 663,750
2,100 Premark International, Inc. 69,825
------------
733,575
--------------------------------------------------------------
Hotel - 0.2%
19,900 Marriott International, Inc. 681,575
--------------------------------------------------------------
Industrial Parts - 2.1%
23,900 Ingersoll-Rand Co. 1,520,638
28,500 Parker Hannifin Corp. 1,246,875
12,600 Tecumseh Products Co. 718,200
2,200 Textron, Inc. 177,650
39,700 United Technologies Corp. 2,625,162
------------
6,288,525
--------------------------------------------------------------
Industrial Services - 0.6%
20,600 Dollar Thrifty Automotive Group, Inc.* 387,537
31,900 Hertz Corp. 1,285,969
------------
1,673,506
--------------------------------------------------------------
Information Services - 0.2%
7,400 Rhythms NetConnections, Inc.* 283,050
9,600 Sotheby's Holdings, Inc. 279,600
------------
562,650
--------------------------------------------------------------
Leisure - 1.4%
59,500 Eastman Kodak Co. 4,369,531
--------------------------------------------------------------
Life Insurance - 2.5%
6,300 Aetna, Inc. 489,825
23,100 American General Corp. 1,640,100
19,100 Cigna Corp. 1,715,419
40,600 Hartford Life, Inc. 1,763,562
9,800 Lincoln National Corp. 459,375
30,300 Nationwide Financial Services, Inc. 1,105,950
8,500 Unumprovident Corp. 306,531
------------
7,480,762
--------------------------------------------------------------
Media - 3.3%
67,800 Cox Communications, Inc.* 2,521,312
122,800 Fox Entertainment Group, Inc.* 2,832,075
113,700 Infinity Broadcasting Corp.* 3,077,006
4,200 Time Warner, Inc. 249,113
18,700 Univision Communications, Inc.* 1,379,125
------------
10,058,631
--------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE LARGE CAP VALUE FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Medical Products - 1.3%
34,800 Bausch & Lomb, Inc. $ 2,298,975
16,831 Tyco International Ltd. 1,705,191
------------
4,004,166
--------------------------------------------------------------
Medical Providers - 0.5%
19,600 Pacificare Health Systems * 1,176,000
2,300 Trigon Healthcare, Inc.* 83,519
4,700 United Healthcare Corp. 285,819
------------
1,545,338
--------------------------------------------------------------
Mining - 0.6%
9,100 Alcan Aluminum, Ltd. 299,163
6,600 Alcoa, Inc. 426,112
39,400 USX-US Steel Group 1,063,800
------------
1,789,075
--------------------------------------------------------------
Motor Vehicle - 1.8%
17,123 Delphi Automative Systems Corp. 321,056
27,900 Ford Motor Co. 1,454,288
63,700 Navistar International Corp.* 3,097,412
9,800 Paccar, Inc. 540,225
------------
5,412,981
--------------------------------------------------------------
Oil Refining - 0.7%
33,200 Texaco, Inc. 2,108,200
--------------------------------------------------------------
Property Insurance - 6.9%
3,600 Allmerica Financial Corp. 203,400
28,300 Allstate Corp. 928,594
22,400 AMBAC Financial Group, Inc. 1,183,000
80,125 American International Group, Inc. 7,426,586
76,200 Hartford Financial Services Group, Inc. 3,462,337
13,600 Jefferson-Pilot Corp. 907,800
43,500 Loews Corp. 3,414,750
6,900 The PMI Group, Inc. 293,250
88,400 Travelers Property & Casualty Corp. 3,138,200
------------
20,957,917
--------------------------------------------------------------
Publishing - 0.3%
9,800 Knight Ridder, Inc. 528,587
4,600 Mcgraw-Hill Companies, Inc. 237,763
5,500 R.R. Donnelley & Sons Co. 172,563
------------
938,913
--------------------------------------------------------------
Railroads - 1.1%
74,400 Burlington Northern Santa Fe Corp. 2,157,600
7,400 Canadian National Railway Co. 470,362
2,800 CSX Corp. 122,325
24,100 Norfolk Southern Corp. 631,119
------------
3,381,406
--------------------------------------------------------------
Restaurants - 0.2%
31,300 Brinker International, Inc.* 751,200
--------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Security/Asset Management - 2.0%
66,935 Bear Stearns Companies, Inc. $ 2,786,169
2,400 Equitable Companies, Inc. 148,200
19,100 Morgan Stanley Dean Witter & Co. 1,639,019
39,900 Paine Webber Group, Inc. 1,566,075
------------
6,139,463
--------------------------------------------------------
Semiconductors - 0.8%
5,500 LSI Logic Corp.* 312,125
15,000 Texas Instruments, Inc. 1,230,938
10,800 Xilinx, Inc.* 755,325
------------
2,298,388
--------------------------------------------------------
Specialty Retail - 3.7%
21,600 Best Buy Co., Inc.* 1,517,400
55,100 Circuit City Stores, Inc. 2,369,300
56,600 CVS Corp. 2,359,512
17,000 Lowes Co., Inc. 769,250
5,100 Staples, Inc.* 110,925
2,200 Tandy Corp. 103,950
9,000 The Home Depot, Inc. 550,125
39,800 Tiffany & Co. 2,104,425
37,000 Zale Corp.* 1,283,438
------------
11,168,325
--------------------------------------------------------
Telephone - 11.2%
57,800 Ameritech Corp. 3,648,625
188,246 AT&T Corp. 8,471,070
49,600 BCE, Inc. 2,318,800
63,300 Bell Atlantic Corp. 3,877,125
67,800 BellSouth Corp. 3,067,950
24,600 Centurytel, Inc. 967,088
71,400 GTE Corp. 4,899,825
5,100 MCI Worldcom, Inc.* 386,325
61,600 SBC Communications, Inc. 2,956,800
72,500 Sprint Corp. 3,217,187
------------
33,810,795
--------------------------------------------------------
Thrifts - 0.6%
19,100 Golden West Financial Corp. 1,734,519
--------------------------------------------------------
Tobacco - 0.2%
17,500 Philip Morris Companies, Inc. 655,156
--------------------------------------------------------
Truck Freight - 0.1%
5,200 FDX Corp.* 220,675
--------------------------------------------------------
Wireless - 1.3%
24,700 Telephone & Data Systems, Inc. 1,719,738
37,400 United States Cellular Corp.* 2,106,087
------------
3,825,825
--------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $298,694,782) $300,107,051
--------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE LARGE CAP VALUE FUND
Principal Interest Maturity Amount Rate Date Value Repurchase Agreement - 0.3% Joint Repurchase Agreement $800,000 5.52% 09/01/1999 $ 800,000 --------------------------------------------- TOTAL REPURCHASE AGREEMENT (Cost $800,000) $ 800,000 --------------------------------------------- TOTAL INVESTMENTS (Cost $299,494,782) $300,907,051 --------------------------------------------- |
* Non-income producing security.
The percentages shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 99.2%
Belgium - 0.7%
14,700 Dexia Belgium Credit Communal (Banks) $ 2,150,619
100 Electrabel SA (Utilities) 33,460
19,400 Fortis B (Insurance) 666,974
------------
2,851,053
-----------------------------------------------------------------------
Britain - 14.7%
32,300 Abbey National (Banks) 555,498
43,829 Allied Domecq PLC (Tobacco) 403,329
103,900 Allied Zurich PLC (Insurance) 1,264,523
85,200 AMEC PLC (Construction) 365,976
140,800 Arjo Wiggins Appleton PLC (Paper) 487,016
58,800 AstraZeneca Group PLC (Health) 2,331,828
30,300 Barclays PLC (Banks) 900,351
193,971 BG (Utilities) 1,167,107
262,470 Billiton PLC (Nonferrous Metals) 1,069,378
335,600 BP Amoco PLC (Energy Resources) 6,225,203
83,800 British American Tobacco (Tobacco) 702,399
311,200 British Steel PLC (Steel) 817,326
385,100 British Telecom PLC (Telecommunication) 5,898,108
78,583 Cable & Wireless (Telecommunication) 900,142
1 Carillion PLC * (Construction) 2
16,790 Daily Mail & General Trust (Broadcasting) 945,412
29,600 Debenhams PLC (Merchandising) 187,625
78,400 Diageo PLC (Tobacco) 795,880
171,885 FKI PLC (Electrical Equipment) 587,624
11,400 General Electric Co. PLC (Electrical Equipment) 113,893
250,536 George Wimpey PLC (Construction) 606,891
119,380 Glaxo Wellcome PLC (Health) 3,136,798
11,100 Granada Group PLC (Leisure) 98,932
63,895 Halifax Group PLC (Banks) 713,393
41,800 Hanson PLC (Construction) 356,077
277,000 HSBC Holdings PLC (Banks) 3,431,411
64,150 J. Sainsbury PLC (Merchandising) 442,232
44,944 Kingfisher Group (Merchandising) 540,848
68,312 Lex Service PLC (Business Services) 673,689
43,100 National Power (Utilities) 305,960
88,700 National Westminster Bank PLC (Banks) 1,820,860
235,500 Norwich Union PLC (Insurance) 1,606,420
21,258 P & O Finance BV (Ship Transportation) 341,999
20,000 Pearson (Broadcasting) 412,497
35,300 Railtrack Group PLC (Business Services) 674,105
28,800 Reuters Group PLC (Business Services) 423,256
23,900 RMC Group PLC (Construction) 395,462
435,077 Rolls Royce (Defense/Aerospace) 1,730,632
122,325 Royal Bank of Scotland Group (Banks) 2,522,932
-----------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Britain - (continued)
99,300 Safeway (Merchandising) $ 412,165
304,046 Smith Group (Health) 1,017,431
82,600 Smith Group (Merchandising) 761,442
184,300 Smithkline Beecham (Health) 2,398,701
59,400 Standard Chartered PLC (Banks) 864,843
1 Tarmac (Construction) 8
37,308 Thames Water (Business Services) 537,189
58,466 Unilever NV (Food & Beverage) 550,252
12,721 Unilever NV (Food & Beverage) 886,137
57,700 United Utility (Business Services) 686,926
118,900 Vodafone AirTouch PLC (Telecommunication) 2,394,906
50,900 Whitbread PLC (Leisure) 701,780
209,767 Williams PLC (Electrical Utilities) 1,191,281
51,300 Wolseley PLC (Construction) 404,404
------------
58,760,479
--------------------------------------------------------------------
Finland - 2.6%
85,000 Finnair Series 1 (Airlines) 427,107
153,000 Merita PLC (Banks) 809,255
85,550 Metsa Serla OY (Paper) 810,871
84,000 Nokia AB Oyj Series A (Telecommunication) 7,019,890
35,000 UPM Kymmene OY (Paper) 1,212,560
------------
10,279,683
--------------------------------------------------------------------
France - 8.0%
10,650 Assurances Generales de France (Insurance) 550,574
31,400 Axa (Insurance) 3,912,901
32,380 Banque National de Paris (Banks) 2,479,929
9,400 Carrefour SA (Specialty Retail) 1,531,343
10,500 Casino Guich Perr (Merchandising) 1,107,410
2,700 Compagnie de Saint Gobain (Construction) 522,683
1,800 Danone (Food & Beverage) 445,947
14,836 Dexia France (Banks) 1,935,102
12,500 Elf Aquitaine (Energy Resources) 2,195,038
689,300 Eurotunnel SA * (Business Services) 1,050,013
72,300 France Telecom (Telecommunication) 5,636,762
9,450 GTM Entrepose (Construction) 1,033,657
1,400 L' Oreal SA (Health) 905,625
1,310 Labinal (Electrical Equipment) 185,279
16,600 Lafarge SA (Construction) 1,785,883
11,200 Lagardere S.C.A. (Multi-Industrial) 454,960
8,800 Pechiney (Nonferrous Metals) 512,930
8,000 Pernod Ricard (Tobacco) 614,399
4,800 Pinault-Printemps-Redoute SA (Merchandising) 832,739
15,000 Rhone-Poulenc SA (Chemical) 728,647
4,300 SEITA (Tobacco) 234,716
--------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
France - (continued)
400 Societe Eurafrance SA (Financial Services) $ 245,844
17,400 Suez Lyonnaise Eaux (Business Services) 2,906,399
------------
31,808,780
-----------------------------------------------------------------------------
Germany - 9.0%
13,050 Allianz AG Holdings (Insurance) 3,441,571
350 AMB Aachener & Muenchener Beteiligungs AG (Insurance) 29,620
71,450 BASF AG (Chemical) 3,242,526
30,250 Bayer AG (Chemical) 1,316,798
59,800 Commerzbank AG (Banks) 2,144,494
91,715 Daimler Chrysler AG (Auto) 6,927,276
102,250 Deutsche Telekom AG (Telecommunication) 4,532,118
36,550 Fag Kugelfischer (Industrial Services) 384,711
11,275 Hoechst AG (Health) 477,090
6,800 HypoVereinsbank (Banks) 403,548
4,700 IWKA AG (Machinery) 89,047
300 Karstadt AG (Merchandising) 142,175
34,400 Lufthansa AG (Airlines) 665,937
57,750 Man AG (Machinery) 1,954,906
2,023 Mannesmann AG (Machinery) 310,732
46,100 Merck KGAA (Health) 1,570,293
4,700 Meto AG * (Appliance) 35,965
7,050 Metro AG (Merchandising) 404,961
50,525 Siemens AG (Electrical Equipment) 4,254,449
6,500 Thyssen AG * (Steel) 151,960
51,900 Veba AG (Utilities) 3,310,614
------------
35,790,791
-----------------------------------------------------------------------------
Hong Kong - 3.3%
760,000 Amoy Properties (Real Estate) 748,754
193,000 Bank of East Asia (Banks) 444,912
129,000 Cathay Pacific Airways (Airlines) 219,295
57,000 Cheung Kong Holdings Ltd. (Real Estate) 497,334
220,500 CLP Holdings Ltd. (Utilities) 1,042,171
319,000 Great Eagle Holdings Ltd. (Real Estate) 468,338
140,000 Hang Seng Bank Ltd. (Banks) 1,582,120
17,000 Harbour Centre Development Ltd. (Leisure) 13,574
118,000 Hong Kong & China Gas Co. Ltd. (Utilities) 167,922
272,000 Hong Kong Construction Holdings Ltd. (Construction) 133,112
801,400 Hong Kong Telecom (Telecommunication) 1,816,461
266,000 Hutchison Whampoa (Financial Services) 2,594,947
50,000 Johnson Electric Holdings Ltd. (Electrical Equipment) 225,373
-----------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Hong Kong - (continued)
88,000 New World Development Co. Ltd. (Real Estate) $ 211,928
597,000 Sino Land Co. (Real Estate) 299,849
165,000 Sun Hung Kai Properties Co. Ltd. (Real Estate) 1,402,465
168,500 Swire Pacific Ltd. Class A (Multi-Industrial) 868,009
30,000 Television Broadcasts Ltd. (Media) 134,451
158,000 Wharf Holdings Co. Ltd. (Real Estate) 429,342
------------
13,300,357
------------------------------------------------------------------------
Italy - 5.7%
73,700 Assicurazioni Generali (Insurance) 2,490,934
327,600 Banca Commercial Italiana (Banks) 2,231,792
77,700 Banca Popolare di Milano BPM (Banks) 563,857
391,900 CIR-Compagnie Industriali Riunite SpA (Multi-
Industrial) 583,716
1,049,700 ENI SpA (Energy Resources) 6,318,316
492,200 Istituto Nazionale delle Assicurazioni SpA
(Insurance) 1,187,136
23,700 Italcementi SpA (Construction) 323,416
55,650 Magneti Marelli SpA (Industrial Services) 145,996
70,200 Mediaset SpA (Broadcasting) 620,822
559,900 Montedison SpA (Multi-Industrial) 844,013
10,800 Pirelli SpA * (Industrial Services) 20,222
59,300 Rolo Banca 1473 (Banks) 1,176,197
70,800 San Paolo-IMI SpA (Banks) 951,925
65,500 Sirti SpA (Construction) 338,824
32,400 Telecom Italia Mobile SpA (Telecommunication) 112,420
117,400 Telecom Italia SpA-ITL50 (Telecommunication) 684,296
395,125 Telecom Italia SpA-ITL1000 (Telecommunication) 3,983,376
------------
22,577,258
------------------------------------------------------------------------
Japan - 28.8%
41,000 77 Bank Ltd. (Banks) 401,619
29,200 Acom Co. (Financial Services) 2,967,138
80,000 Alps Electric Co. (Electrical Utilities) 2,326,794
520,000 Bank of Tokyo Mitsubishi (Banks) 7,776,100
41,000 Canon Sales Co., Inc. (Business Services) 652,865
46,000 Canon, Inc. (Computer Hardware) 1,346,321
39 Central Japan Railway Co. (Railroads) 253,258
79,000 Chiba Bank Ltd. (Banks) 296,968
32,000 Chugoku Electric Power Co. (Utilities) 527,992
79,000 Chuo Trust & Bank (Financial Services) 517,346
------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Shares Description Value
Common Stocks - (continued)
Japan - (continued)
111,000 Cosmo Oil Co. Ltd. (Energy Resources) $ 203,046
271,000 Daicel Chemical Industries (Chemical) 1,115,379
88,000 Daiichi Pharmaceutical Co. (Health) 1,361,028
117,000 Dainippon Pharmaceutical Co. Ltd. (Health) 721,251
57,000 Daito Trust Construction Co. Ltd. (Construction) 742,900
48,000 Daiwa Securities Group, Inc. (Financial Services) 435,067
271 DDI Corp. (Telecommunication) 1,710,248
241,000 Fuji Heavy Industries Ltd. (Auto) 1,922,093
102,000 Fujitsu Ltd. (Computer Hardware) 2,994,649
391,000 Hitachi (Electrical Equipment) 3,973,119
36,000 Hitachi Chemical Co. Ltd. (Chemical) 540,321
42,000 Honda Motor Co. Ltd. (Auto) 1,690,218
328,000 Industrial Bank of Japan Ltd. (Banks) 3,344,949
225,000 Ishikawajima Har (Machinery) 442,448
172,000 Izumiya Co. (Merchandising) 1,596,744
51,000 JUSCO Co. Ltd. (Merchandising) 984,223
59,000 Kaken Pharmaceutical Co. Ltd. (Health) 431,701
22,800 KDD Corp. (Telecommunication) 1,782,961
244,000 Konica Corp. (Multi-Industrial) 984,168
40,200 Kyocera Corp. (Electrical Utilities) 2,647,277
243,000 Kyowa Hakko Kogyo (Health) 1,844,697
55,600 Kyushu Electric Power Co., Inc. (Utilities) 889,925
120,000 Lion Corp. (Health) 460,969
108,000 Matsushita Electric Industrial Co. (Appliance) 2,133,626
202,000 Mazda Motor Corp. (Auto) 1,136,233
379,000 Mitsubishi Electric (Electrical Equipment) 1,920,391
626,000 Mitsubishi Heavy Industries Ltd. (Machinery) 2,731,074
73,000 Mitsubishi Trust & Banking (Banks) 767,824
254,000 Mitsui Co. (Wholesale) 1,791,137
731,000 Mitsui Osk Lines (Ship Transportation) 1,404,033
63,000 Mitsui Soko Co. (Business Services) 210,317
20,000 Mitsumi Electric Co. Ltd. (Electrical Equipment) 601,820
10,000 Nichiei Co.* (Financial Services) 923,766
344,000 Nippon Express Co. (Railroads) 2,633,448
59,000 Nippon Kayaku Co. Ltd. (Health) 339,964
514,000 Nippon Oil Co. Ltd. (Energy Resources) 2,280,057
129,000 Nippon Suisan Kaisha Ltd. (Food & Beverage) 253,670
466 Nippon Telephone & Telegraph Corp. (Telecommunication) 5,242,420
97,000 Nishimatsu Construction (Construction) 563,360
140,000 Nissan Motor Co.* (Auto) 816,939
------------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Japan - (continued)
128 NTT Mobile Communications Network, Inc.*
(Telecommunication) $ 2,118,992
173,000 Sakura Bank Ltd. (Banks) 917,730
75,000 Sankyo Co. Ltd. (Health) 2,092,194
3,000 Secom Co. Ltd. (Business Services) 410,207
151,000 Sekisui Chemical Co. Ltd. (Construction) 842,457
208,000 Sekisui House (Construction) 2,239,137
63,000 Sharp Corp. (Electrical Equipment) 962,272
15,000 Shikoku Electric Power (Utilities) 241,460
236,000 Shionogi & Co. (Health) 2,028,993
300,000 Showa Denko KK (Chemical) 411,579
397,000 Snow Brand Milk (Food & Beverage) 1,819,152
15,200 Sony Corp. (Appliance) 1,971,336
50,000 Sumitomo Bank (Banks) 685,965
419,000 Sumitomo Osaka Cement (Construction) 793,278
115,000 Suzuki Motor Corp. (Auto) 1,945,854
315,000 Taiheiyo Cement (Construction) 826,862
50,000 Takeda Chemical Industries Ltd. (Health) 2,515,206
65,000 Tokyo Electric Power (Electrical Utilities) 1,515,983
155,000 Toppan Printing Co. (Business Services) 1,984,726
185,000 Toshiba Corp. (Electrical Equipment) 1,646,362
104,000 Toyo Seikan Kaisha (Multi-Industrial) 2,425,573
210,000 Toyota Motor Corp. (Auto) 6,203,869
221 West Japan Railway (Railroads) 879,270
308,000 Yasuda Fire & Marine Insurance (Insurance) 2,121,224
------------
115,235,542
----------------------------------------------------------------------------
Netherlands - 5.5%
159,800 ABN AMRO Holding NV (Banks) 3,896,473
7,600 DSM NV (Chemical) 895,216
9,750 Heineken NV (Tobacco) 486,822
90,200 ING Groep NV (Financial Services) 4,952,196
38,200 Koninklijke Ahold NV (Merchandising) 1,369,894
6,400 Koninklijke Hoogovens NV (Steel) 370,670
71,200 Koninklijke Nedlloyd NV (Railroads) 2,033,610
35,786 Koninklijke Royal Philips Electronics NV (Appliance) 3,692,873
18,200 KPN NV (Telecommunication) 816,321
54,700 Royal Dutch Petroleum Co. (Energy Resources) 3,367,706
------------
21,881,781
----------------------------------------------------------------------------
Portugal - 0.5%
40,900 Banco Comercial Portugues SA (Banks) 1,087,708
10,100 Banco Espirito Santo SA (Banks) 256,530
9,700 Banco Mello SA (Banks) 90,811
----------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Portugal - (continued)
3,400 Banco Port Atlan* (Banks) $ 51,289
24,800 BPI-SGPS SA (Banks) 498,721
------------
1,985,059
-------------------------------------------------------------------------------
Singapore - 5.6%
543,000 Acma Ltd. (Telecommunication) 412,854
174,000 City Developments (Real Estate) 1,054,232
872,000 Comfort Group Ltd. (Railroads) 440,273
26,000 Creative Technology Ltd. (Electrical Equipment) 257,915
220,970 DBS Bank Ltd. (Banks) 2,533,247
532,000 DBS Land (Real Estate) 1,213,472
404,000 Hotel Properties Ltd. (Leisure) 371,963
68,000 Jurong Shipyard Ltd. (Machinery) 306,980
173,000 Keppel Corp. Ltd. (Multi-Industrial) 560,053
305,000 Marco Polo Development Ltd. (Real Estate) 456,549
242,000 Overseas Chinese Banking Corp.-- Alien Market (Banks) 1,696,228
98,500 Overseas Union Bank Ltd. (Banks) 514,880
372,400 Singapore Airlines Ltd. (Airlines) 3,495,052
99,000 Singapore Press Holdings Ltd. (Publishing) 1,646,570
767,000 Singapore Technologies Engineering Ltd. (Machinery) 924,865
1,607,700 Singapore Telecommunications Ltd. (Telecommunication) 2,855,375
298,300 United Engineers (Construction) 306,539
615,000 United Industrial Corp. Ltd. (Real Estate) 352,525
373,700 United Overseas Bank (Banks) 2,774,725
32,000 Venture Manufacturing Ltd. (Electrical Equipment) 306,029
------------
22,480,326
-------------------------------------------------------------------------------
Spain - 6.0%
13,400 Acerinox SA (Steel) 441,557
52,000 Argentaria Corp. Bancaria de Espana (Banks) 1,185,426
63,600 Banco Bilbao Vizcaya SA (Banks) 849,064
233,600 Banco Santander Central Hispano SA (Banks) 2,350,051
14,100 Compania Espanola de Petroleos SA (Energy Resources) 170,337
8,800 Corporacion Financiera Alba SA (Multi-Industrial) 258,048
103,600 Dragados Y Construcciones SA (Construction) 1,270,185
224,400 Endesa SA (Electrical Utilities) 4,510,247
13,500 Fomento de Construcciones y Contratas SA
(Construction) 799,020
5,700 Gas Natural SDG SA (Gas Utilities) 134,825
40,900 Iberdrola SA (Utilities) 589,716
-------------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Spain - (continued)
185,950 Repsol SA (Energy Resources) $ 3,886,933
339,103 Telefonica de Espana SA * (Telecommunication) 5,416,672
161,100 Union Electric Fenosa (Utilities) 2,300,664
------------
24,162,745
---------------------------------------------------------------------------
Sweden - 2.9%
114,900 Electrolux AB (Appliance) 2,316,701
111,100 Ericsson Telecommunications Series B (Electrical
Equipment) 3,589,530
8,180 Esselte Series B (Business Services) 69,053
17,400 Hennes & Mauritz AB Series B (Merchandising) 440,653
15,600 Mo och Domsjoe AB Series B (Paper) 477,493
18,100 Scania AB Series B (Machinery) 682,625
64,300 Skandinaviska Enskilda Banken Series A (Banks) 667,758
156,650 Svenska Handelsbanken Series A (Banks) 2,178,601
6,700 Volvo AB Series A (Auto) 189,208
39,207 Volvo AB Series B (Auto) 1,100,063
------------
11,711,685
---------------------------------------------------------------------------
Switzerland - 5.9%
356 Alusuisse-Lonza Group Ltd. (Multi-Industrial) 423,613
1,879 Baloise Holdings (Insurance) 1,573,804
995 Compagnie Financiere Richemont AG Class A (Multi-
Industrial) 1,894,361
3,712 Credit Suisse Group (Banks) 701,813
3,215 George Fischer AG (Machinery) 988,283
281 Jelmoli Holding AG (Merchandising) 285,142
320 Movenpick Holdings (Leisure) 141,733
1,993 Nestle SA (Food & Beverage) 3,939,360
2,778 Novartis AG (Health) 4,003,464
90 Pargesa Holding AG (Financial Services) 142,791
36 Roche Holding AG--CHF 100 (Health) 642,559
301 Roche Holding AG--Genussheine NPV (Health) 3,486,164
205 Schindler Holdings AG (Machinery) 332,022
418 Schindler Holdings AG--PTG Certificates (Machinery) 637,763
1,485 Schw Ruckversicher (Insurance) 2,900,889
2,423 Valora Holding AG (Merchandising) 611,877
1,703 Zurich Allied AG (Insurance) 1,000,838
------------
23,706,476
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $355,012,667) $396,532,015
---------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Shares Description Value
Preferred Stocks - 0.0%
Germany -
0.0%
3,050 Rheinmetall AG
(Defense/Aerospace) $ 48,558
-------------------------------------
Italy - 0.0%
5,075 IFI Instituto
Finanziario (Multi-
Industrial) 133,678
-------------------------------------
TOTAL PREFERRED STOCKS
(Cost $223,137) $182,236
-------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Short-Term Obligation - 0.5% Federal Home Loan Mortgage Corp.+ $2,000,000 5.12% 10/05/1999 $ 1,990,433 ----------------------------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATION (Cost $1,990,433) $ 1,990,433 ----------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (Cost $357,226,237) $398,704,684 ----------------------------------------------------------------------------------------------- |
* Non-income producing security.
# This security is issued with a zero-coupon. The interest rate disclosed for
this security represents effective yield to maturity.
+ A portion of this security is segregated as collateral for initial margin
requirement on Futures transactions.
Percentage of
Total Net Assets
Common and Preferred Stock Industry Classifications
Airlines 1.2%
Appliance 2.5
Auto 5.5
Banks 15.8
Broadcasting 0.5
Business Services 2.6
Chemical 2.1
Computer Hardware 1.1
Construction 3.7
Defense/Aerospace 0.4
Electrical Equipment 4.7
Electrical Utilities 3.1
Energy Resources 6.2
Financial Services 3.2
Food & Beverage 2.0
Gas Utilities 0.0
Health 7.9
Industrial Services 0.1
Insurance 5.7
Leisure 0.3
Machinery 2.4
Media 0.0
Merchandising 2.5
Multi-Industrial 2.4
Nonferrous Metals 0.4
Paper 0.7
Publishing 0.4
Railroads 1.6
Real Estate 1.8
Ship Transportation 0.4
Specialty Retail 0.4
Steel 0.4
Telecommunication 13.3
Tobacco 0.8
Utilities 2.6
Wholesale 0.5
---------------------------------------------------
TOTAL COMMON AND PREFERRED STOCK 99.2%
---------------------------------------------------
|
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Statements of Assets and Liabilities
August 31, 1999
CORE U.S.
Equity Fund
Assets:
Investment in securities, at value (identified cost
$954,461,619, $739,325,430, $128,172,813, $299,494,782 and
$357,226,237, respectively) $1,213,653,217
Cash, at value(b) 1,262,143
Receivables:
Dividends and interest, at value 1,498,809
Fund shares sold 4,206,938
Variation margin --
Reimbursement from investment adviser 79,868
Other assets 43,817
-----------------------------------------------------------------------------
Total assets 1,220,744,792
-----------------------------------------------------------------------------
Liabilities:
Payables:
Fund shares repurchased 901,001
Amounts owed to affiliates 1,300,526
Variation margin 4,700
Accrued expenses and other liabilities, at value 111,274
-----------------------------------------------------------------------------
Total liabilities 2,317,501
-----------------------------------------------------------------------------
Net Assets:
Paid-in capital 839,411,583
Accumulated undistributed net investment income 804,328
Accumulated net realized gain (loss) on investment, futures
and foreign currency related transactions 119,046,115
Net unrealized gain on investments, futures and translation
of assets and liabilities denominated in foreign currencies 259,165,265
-----------------------------------------------------------------------------
NET ASSETS $1,218,427,291
-----------------------------------------------------------------------------
Net asset value, offering and redemption price per share:(a)
Class A $34.21
Class B $33.56
Class C $33.46
Institutional $34.61
Service $34.05
-----------------------------------------------------------------------------
Shares outstanding:
Class A 17,954,472
Class B 6,378,289
Class C 1,295,997
Institutional 9,691,645
Service 328,989
-----------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number
of shares authorized) 35,649,392
-----------------------------------------------------------------------------
|
(a) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A shares of CORE U.S. Equity, CORE Large Cap Growth,
CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity
is $36.20, $18.01, $10.83, $11.16 and $11.50, respectively. At redemp-
tion, Class B and Class C shares may be subject to a contingent deferred
sales charge, assessed on the amount equal to the lesser of the current
net asset value or the original purchase price of the shares.
(b) Includes restricted cash of $1,000,000, $840,000 and $730,000, respec-
tively for CORE U.S. Equity, CORE Large Cap Growth and CORE Large Cap
Value relating to initial margin requirements on futures transaction.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
CORE Large Cap CORE Small Cap CORE Large Cap CORE International
Growth Fund Equity Fund Value Fund Equity Fund
$868,081,737 $135,581,534 $300,907,051 $398,704,684
1,100,045 138,210 871,140 170,410
394,311 150,437 562,628 699,211
3,531,077 343,489 1,183,792 513,940
-- 6,038 -- --
93,491 80,885 75,161 66,216
16,168 7,958 11,674 390,148
---------------------------------------------------------------------------------
873,216,829 136,308,551 303,611,446 400,544,609
---------------------------------------------------------------------------------
1,277,379 711,057 153,665 142,388
801,680 141,779 218,553 375,052
68,112 -- 7,662 19,348
43,857 113,239 110,643 201,760
---------------------------------------------------------------------------------
2,191,028 966,075 490,523 738,548
---------------------------------------------------------------------------------
737,567,028 135,129,996 297,783,487 352,664,249
-- -- 478,248 2,637,600
4,870,886 (7,201,585) 3,465,457 2,990,037
128,587,887 7,414,065 1,393,731 41,514,175
---------------------------------------------------------------------------------
$871,025,801 $135,342,476 $303,120,923 $399,806,061
---------------------------------------------------------------------------------
$17.02 $10.23 $10.55 $10.87
$16.75 $10.09 $10.50 $10.81
$16.75 $10.10 $10.51 $10.82
$17.10 $10.30 $10.55 $11.00
$16.95 $10.22 $10.55 $10.93
---------------------------------------------------------------------------------
17,671,442 5,146,281 8,633,441 10,530,336
10,842,024 1,358,479 1,377,281 848,293
4,507,009 620,920 764,208 454,208
18,166,722 6,082,226 17,965,455 24,651,243
148,098 6,243 1,253 715
---------------------------------------------------------------------------------
51,335,295 13,214,149 28,741,638 36,484,795
---------------------------------------------------------------------------------
|
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Statements of Operations
For the Seven-Month Period Ended August 31, 1999
CORE U.S.
Equity Fund
Investment income:
Dividends(a) $ 8,477,941
Interest 504,234
------------------------------------------------------------------------------
Total income 8,982,175
------------------------------------------------------------------------------
Expenses:
Management fees 5,212,778
Distribution and service fees(b) 2,231,754
Transfer agent fees(b) 1,018,447
Custodian fees 112,034
Registration fees 96,553
Printing fees 80,359
Professional fees 38,456
Trustee fees 6,426
Service share fees 34,586
Other 34,541
------------------------------------------------------------------------------
Total expenses 8,865,934
------------------------------------------------------------------------------
Less -- expenses reimbursed and fees waived (688,087)
------------------------------------------------------------------------------
Net expenses 8,177,847
------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 804,328
------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment, futures and
foreign currency related transactions:
Net realized gain (loss) from:
Investment transactions 107,390,321
Futures transactions 547,400
Foreign currency related transactions --
Net change in unrealized gain (loss) on:
Investments (66,419,570)
Futures (757,943)
Translation of assets and liabilities denominated in foreign
currencies --
------------------------------------------------------------------------------
Net realized and unrealized gain on investment, futures, and
foreign currency related transactions 40,760,208
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 41,564,536
------------------------------------------------------------------------------
|
(a) For the CORE U.S. Equity, CORE Large Cap Growth, CORE Large Cap Value and
CORE International Equity Funds, taxes withheld on dividends were
$188,196, $85,193, $7,443, and $756,799, respectively.
(b) Class-specific distribution and service and transfer agent fees were as
follows:
Distribution and Service
fees Transfer Agent fees
---------------------------- -----------------------------------------------
Class A Class B Class C Class A Class B Class C Institutional Service
-------- ---------- -------- -------- -------- ------- ------------- -------
CORE U.S. Equity Fund $901,485 $1,115,835 $214,434 $685,129 $212,009 $40,742 $77,800 $2,767
CORE Large Cap Growth
Fund 366,944 858,809 343,654 278,878 163,174 65,294 68,733 511
CORE Small Cap Equity
Fund 84,036 80,244 34,375 63,867 15,246 6,531 14,387 14
CORE Large Cap Value
Fund 88,576 40,251 23,517 67,318 7,648 4,468 41,227 1
CORE International Eq-
uity Fund 321,043 47,034 25,018 121,996 8,936 4,753 62,671 2
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
CORE Large Cap CORE Small Cap CORE Large Cap CORE International
Growth Fund Equity Fund Value Fund Equity Fund
$ 3,489,915 $ 940,243 $ 2,534,169 $ 5,529,675
640,310 46,896 254,574 48,544
--------------------------------------------------------------------------------
4,130,225 987,139 2,788,743 5,578,219
--------------------------------------------------------------------------------
3,300,995 689,175 869,263 1,938,801
1,569,407 198,655 152,344 393,095
576,590 100,045 120,662 198,358
78,061 68,779 78,440 333,972
114,096 91,643 52,789 76,842
80,207 85,213 57,431 32,313
39,551 37,516 40,096 46,483
6,426 6,426 4,664 6,074
6,385 176 13 20
23,069 21,408 11,667 10,405
--------------------------------------------------------------------------------
5,794,787 1,299,036 1,387,369 3,036,363
--------------------------------------------------------------------------------
(984,006) (275,311) (239,291) (223,253)
--------------------------------------------------------------------------------
4,810,781 1,023,725 1,148,078 2,813,110
--------------------------------------------------------------------------------
(680,556) (36,586) 1,640,665 2,765,109
--------------------------------------------------------------------------------
19,998,250 12,409,919 2,862,192 11,051,910
2,319,152 (296,710) 636,227 918,205
-- -- -- (179,050)
21,430,691 (11,427,160) 1,522,840 19,565,749
(638,509) 25,644 (19,531) (3,516)
-- -- -- 3,536
--------------------------------------------------------------------------------
43,109,584 711,693 5,001,728 31,356,834
--------------------------------------------------------------------------------
$ 42,429,028 $ 675,107 $ 6,642,393 $ 34,121,943
--------------------------------------------------------------------------------
|
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Statements of Changes in Net Assets
For the Seven-Month Period Ended August 31, 1999
CORE U.S.
Equity Fund
From operations:
Net investment income (loss) $ 804,328
Net realized gain from investment, futures and foreign
currency related transactions 107,937,721
Net change in unrealized gain (loss) on investments, futures
and translation of assets and liabilities denominated in
foreign currencies (67,177,513)
------------------------------------------------------------------------------
Net increase in net assets resulting from operations 41,564,536
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares --
Class B shares --
Class C shares --
Institutional shares --
Service shares --
------------------------------------------------------------------------------
Total distributions to shareholders --
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 319,448,902
Reinvestment of dividends and distributions --
Cost of shares repurchased (246,210,936)
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from share
transactions 73,237,966
------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) 114,802,502
------------------------------------------------------------------------------
Net assets:
Beginning of period 1,103,624,789
------------------------------------------------------------------------------
End of period $1,218,427,291
------------------------------------------------------------------------------
Accumulated undistributed net investment income $ 804,328
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
CORE Large Cap CORE Small Cap CORE Large Cap CORE International
Growth Fund Equity Fund Value Fund Equity Fund
$ (680,556) $ (36,586) $ 1,640,665 $ 2,765,109
22,317,402 12,113,209 3,498,419 11,791,065
20,792,182 (11,401,516) 1,503,309 19,565,769
-----------------------------------------------------------------------------
42,429,028 675,107 6,642,393 34,121,943
-----------------------------------------------------------------------------
-- -- (229,621) (2,101)
-- -- (19,258) --
-- -- (7,228) --
-- -- (950,208) --
-- -- (5) --
-----------------------------------------------------------------------------
-- -- (1,206,320) (2,101)
-----------------------------------------------------------------------------
351,963,413 32,163,634 299,579,334 76,300,041
-- -- 301,711 2,066
(127,065,442) (46,364,918) (62,866,712) (112,849,452)
-----------------------------------------------------------------------------
224,897,971 (14,201,284) 237,014,333 (36,547,345)
-----------------------------------------------------------------------------
267,326,999 (13,526,177) 242,450,406 (2,427,503)
-----------------------------------------------------------------------------
603,698,802 148,868,653 60,670,517 402,233,564
-----------------------------------------------------------------------------
$ 871,025,801 $135,342,476 $ 303,120,923 $ 399,806,061
-----------------------------------------------------------------------------
$ -- $ -- $ 478,248 $ 2,637,600
-----------------------------------------------------------------------------
|
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Statements of Changes in Net Assets
For the Year Ended January 31, 1999
CORE U.S.
Equity Fund
From operations:
Net investment income (loss) $ 2,036,756
Net realized gain (loss) from investment, futures and
foreign currency related transactions 27,478,562
Net change in unrealized gain (loss) on investments, futures
and foreign currency related transactions 176,422,425
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 205,937,743
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares (627,909)
Class B shares --
Class C shares --
Institutional shares (1,448,951)
Service shares (34,929)
In excess of net investment income
Class A shares (111,425)
Class B shares --
Class C shares --
Institutional shares (257,121)
Service shares (6,198)
From net realized gain on investment, futures and foreign
currency related transactions
Class A shares (10,973,418)
Class B shares (2,631,225)
Class C shares (453,366)
Institutional shares (6,196,732)
Service shares (222,218)
------------------------------------------------------------------------------
Total distributions to shareholders (22,963,492)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 472,932,540
Reinvestment of dividends and distributions 21,759,127
Cost of shares repurchased (248,643,259)
------------------------------------------------------------------------------
Net increase in net assets resulting from share transactions 246,048,408
------------------------------------------------------------------------------
TOTAL INCREASE 429,022,659
------------------------------------------------------------------------------
Net assets:
Beginning of year 674,602,130
------------------------------------------------------------------------------
End of year $1,103,624,789
------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of) net
investment income $ --
------------------------------------------------------------------------------
|
(a) Commencement date of operations was December 31, 1998 for all share clas- ses. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
CORE Large Cap CORE Small Cap CORE Large Cap CORE International
Growth Fund Equity Fund Value Fund(a) Equity Fund
$ (15,644) $ 173,270 $ 37,422 $ 1,407,352
(16,923,839) (18,927,424) (32,964) (8,586,417)
102,776,431 18,052,638 (109,578) 21,848,298
-----------------------------------------------------------------------------
85,836,948 (701,516) (105,120) 14,669,233
-----------------------------------------------------------------------------
-- (47,356) -- (250,453)
-- -- -- --
-- -- -- --
-- (125,897) -- (808,555)
-- (17) -- (35)
-- (6,981) -- --
-- -- -- --
-- -- -- --
(125,793) (18,557) -- --
(218) (3) -- --
(10,120) -- -- --
(4,694) -- -- --
(1,573) -- -- --
(12,174) -- -- --
(85) -- -- --
-----------------------------------------------------------------------------
(154,657) (198,811) -- (1,059,043)
-----------------------------------------------------------------------------
502,793,514 153,543,862 62,186,814 470,437,011
57,232 80,120 -- 288,383
(61,380,388) (36,515,377) (1,411,177) (111,237,527)
-----------------------------------------------------------------------------
441,470,358 117,108,605 60,775,637 359,487,867
-----------------------------------------------------------------------------
527,152,649 116,208,278 60,670,517 373,098,057
-----------------------------------------------------------------------------
76,546,153 32,660,375 -- 29,135,507
-----------------------------------------------------------------------------
$ 603,698,802 $148,868,653 $60,670,517 $ 402,233,564
-----------------------------------------------------------------------------
$ (158,558) $ (61,646) $ 37,422 $ (153,510)
-----------------------------------------------------------------------------
|
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the CORE U.S. Equity Fund, CORE Large Cap Growth Fund, CORE Small Cap Equity Fund, CORE Large Cap Value Fund and the CORE International Equity Fund, collectively the "Funds" or individu- ally a "Fund". Each Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Funds. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year-end of the Funds from January 31 to August 31. Accordingly, the financial statements of the Funds are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by an independent pricing services, broker / dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Funds are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes recorded and the
amounts actually received.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
D. Forward Foreign Currency Exchange Contracts -- The CORE International Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio posi- tions. The CORE International Equity Fund may also purchase and sell forward contracts to seek to increase total return. All commitments are "marked-to- market" daily at the applicable translation rates and any resulting unrealized gains or losses are recorded in the Fund's financial statements. The Fund realizes gains or losses at the time a forward contract is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inabil- ity of counterparties to meet the terms of their contracts and from unantici- pated movements in the value of a foreign currency relative to the U.S. dollar.
E. Option Accounting Principles -- When the Funds write call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Funds enter
into a closing purchase transaction, the Funds realize a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Funds realize a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Funds purchase upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Funds,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Funds have purchased expires on the stipulated expiration date, the Funds
will realize a loss in the amount of the cost of the option. If the Funds en-
ter into a closing sale transaction, the Funds will realize a gain or loss,
depending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Funds exercise a pur-
chased put option, the Funds will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Funds exercise a purchased call option, the
cost of the security which the Funds purchase upon exercise will be increased
by the premium originally paid.
F. Segregation Transactions -- The Funds may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Funds are required to segregate liq- uid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
G. Expenses -- Expenses incurred by the Trust that do not specifically relate
to an individual fund of the Trust are generally allocated to the funds on a
straight-line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shareholders of the Funds bear all expenses
and fees relating to their respective Distribution and Service plans. Share-
holders of Service shares bear all expenses and fees paid to service organi-
zations. Each class of shares of the Funds separately bears its respective
class-specific transfer agency fees.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements (continued)
August 31, 1999
H. Federal Taxes -- It is each Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provisions are required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of each Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
The CORE Small Cap Equity Fund has approximately $6,229,000 at August 31,
1999, (the Funds' tax year-end) of capital loss carryforward expiring in 2006
for Federal tax purposes. This amount is available to be carried forward to
offset future capital gains to the extent permitted by applicable law or reg-
ulations.
At August 31, 1999, the Funds' aggregate unrealized gains and losses based
on cost for federal income tax purposes were as follows:
Tax Gross Gross Net Unrealized
Fund Cost Unrealized Gain Unrealized Loss Gain
------------------------------------------------------------------------------
CORE U.S. Equity $955,624,468 $288,195,962 $(30,167,213) $258,028,749
------------------------------------------------------------------------------
CORE Large Cap
Growth 739,371,161 155,297,694 (26,587,118) 128,710,576
------------------------------------------------------------------------------
CORE Small Cap
Equity 129,139,677 19,348,820 (12,906,963) 6,441,857
------------------------------------------------------------------------------
CORE Large Cap
Value 299,612,333 17,144,758 (15,850,040) 1,294,718
------------------------------------------------------------------------------
CORE Interna-
tional Equity 357,922,824 51,010,803 (10,228,943) 40,781,860
------------------------------------------------------------------------------
|
3. AGREEMENTS
Pursuant to Investment Management Agreements ("the Agreements"), Goldman Sachs Asset Management ("GSAM"), a separate operating division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the investment adviser to CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE Interna- tional Equity Fund and Goldman Sachs Funds Management, L.P. ("GSFM"), an af- filiate of Goldman Sachs, serves as the investment adviser to CORE U.S. Equity Fund. Under the Agreements, the respective adviser, subject to the general supervision of the Trust's Board of Trustees, manages the Funds' portfolios. As compensation for the services rendered pursuant to the Agree- ments, the assumption of the expenses related thereto and administering the Funds' business affairs, including providing facilities, the respective ad- viser is entitled to a fee, computed daily and payable monthly, at an annual rate equal to .75%, .75%, .85%, .60% and .85% of the average daily net assets of CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds, respectively. For the period ended August 31, 1999, the advisers for CORE U.S. Equity and CORE Large Cap Growth have voluntarily agreed to waive a portion of their management fee equal annually to .05% and .15%, respectively, of each Fund's average daily net assets. The advisers may discontinue or modify these waivers in the fu- ture at their discretion.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Each adviser has voluntarily agreed to limit certain "Other Expenses" for
the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE
Large Cap Value and CORE International Equity Funds (excluding management
fees, distribution and service fees, transfer agent fees, taxes, interest,
brokerage, litigation, Service share fees, indemnification costs and extraor-
dinary expenses), to the extent such expenses exceed, on an annual basis,
.00%, .00%, .04%, .00%, and .12% of the average daily net assets of the
funds, respectively.
The Trust, on behalf of each Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from each Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .25% (.50%
for CORE International Equity), 1.00% and 1.00% of the Funds' average daily
net assets attributable to Class A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Funds pursuant to
Distribution Agreements. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charge and has
advised the Funds that it retained approximately $248,000, $210,000, $26,000,
$47,000 and $21,000 during the period ended August 31, 1999 for the CORE U.S.
Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value
and CORE International Equity Funds, respectively.
Goldman Sachs also serves as the transfer agent of the Funds for a fee.
Fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: .19% of the average daily net as-
sets for Class A, Class B and Class C shares and .04% of the average daily
net assets for Institutional and Service shares.
The Trust, on behalf of each Fund, has adopted a Service Plan. This plan
allows for Service shares to compensate service organizations for providing
varying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on a annualized basis), of the average daily net asset value of the
Service shares.
For the period ended August 31, 1999, the Funds' advisers have voluntarily
agreed to waive certain fees and reimburse other expenses as follows (in
thousands):
Fund Management Fees Waiver Reimbursement Total Waivers and Reimbursement -------------------------------------------------------------------------------------------- CORE U.S. Equity $347 $341 $688 -------------------------------------------------------------------------------------------- CORE Large Cap Growth 660 324 984 -------------------------------------------------------------------------------------------- CORE Small Cap Equity -- 275 275 -------------------------------------------------------------------------------------------- CORE Large Cap Value -- 239 239 -------------------------------------------------------------------------------------------- CORE International Eq- uity -- 223 223 -------------------------------------------------------------------------------------------- |
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements (continued)
August 31, 1999
At August 31, 1999, the amounts owed to affiliates were as follows (in thou-
sands):
Management Distribution Transfer
Fund Fees and Service Fees Agent Fees Total
-------------------------------------------------------------------------------
CORE U.S. Equity $727 $347 $227 $1,301
-------------------------------------------------------------------------------
CORE Large Cap Growth 432 272 98 802
-------------------------------------------------------------------------------
CORE Small Cap Equity 99 29 14 142
-------------------------------------------------------------------------------
CORE Large Cap Value 156 38 25 219
-------------------------------------------------------------------------------
CORE International Equity 285 60 30 375
-------------------------------------------------------------------------------
|
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short- term investments, futures and options) for the period ended August 31, 1999, were as follows:
Fund Purchases Sales or Maturities -------------------------------------------------------------------------------------- CORE U.S. Equity $592,318,250 $487,142,120 -------------------------------------------------------------------------------------- CORE Large Cap Growth 474,330,442 239,077,147 -------------------------------------------------------------------------------------- CORE Small Cap Equity 71,726,971 82,445,566 -------------------------------------------------------------------------------------- CORE Large Cap Value 318,279,705 82,548,436 -------------------------------------------------------------------------------------- CORE International Equity 250,079,310 277,435,318 -------------------------------------------------------------------------------------- |
For the period ended August 31, 1999, Goldman Sachs earned approximately
$5,000, $5,000, $700 and $1,800 of brokerage commissions from portfolio
transactions executed on behalf of the CORE U.S. Equity, CORE Large Cap
Growth, CORE Small Cap Equity and CORE Large Cap Value Funds, respectively.
The Funds may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Funds are re-
quired to deposit with a broker or the Fund's custodian bank an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Funds, depending on the
fluctuations in the value of the contracts, and are recorded for financial
reporting purposes as unrealized gains or losses. When contracts are closed,
the Funds realize a gain or loss which is reported in the Statement of Opera-
tions.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
The use of futures contracts involve, to varying degrees, elements of mar- ket risk which may exceed the amounts recognized in the Statements of Assets and Liabilities. Changes in the value of the futures contract may not di- rectly correlate with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Funds' strategies and potentially result in a loss. At August 31, 1999, open futures contracts were as follows:
Number of
Contracts Settlement Market Unrealized
Fund Type Long Month Value Gain (Loss)
---------------------------------------------------------------------------------------------
CORE U.S. Equity Fund S&P 500 Index 3 September 1999 $ 989,850 $ (26,333)
---------------------------------------------------------------------------------------------
CORE Large Cap Growth
Fund S&P 500 Index 44 September 1999 $14,517,800 $(168,420)
---------------------------------------------------------------------------------------------
CORE Small Cap Equity
Fund Russell 2000 Index 5 September 1999 $ 1,071,000 $ 5,344
---------------------------------------------------------------------------------------------
CORE Large Cap Value
Fund S&P 500 Index 5 September 1999 $ 1,649,750 $ (18,538)
---------------------------------------------------------------------------------------------
CORE International Eq-
uity Fund FTSE 100 Index 8 September 1999 $ 802,405 $ 3,107
All Ordinaries Index 2 September 1999 94,324 (4,989)
CAC-40-10EU Index 7 September 1999 340,776 2,516
IBEX 35 Index 2 September 1999 207,804 (287)
Hang Seng Index 1 September 1999 87,638 (936)
TOPIX Index 6 September 1999 805,872 28,247
MIB 30 Index 1 September 1999 178,438 (2,337)
DAX Index 3 September 1999 419,583 8,171
---------------------
$ 2,936,840 $ 33,492
---------------------------------------------------------------------------------------------
|
5. LINE OF CREDIT FACILITY
The Funds participated in a $250,000,000 uncommitted and a $50,000,000 com- mitted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Funds now participate in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, each Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Funds based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Funds did not have any borrowings under any of these facilities.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu- rities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at each Fund's custodian.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements (continued)
August 31, 1999
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Funds, together with other registered investment companies having manage-
ment agreements with GSAM and GSFM or their affiliates, transfer uninvested
cash into joint accounts, the daily aggregate balance of which is invested in
one or more repurchase agreements.
At August 31, 1999, the CORE Large Cap Growth, CORE Small Cap Equity and
CORE Large Cap Value Funds had undivided interests in the repurchase agree-
ments in the joint account which equaled $13,600,000, $1,100,000 and
$800,000, respectively, in principal amount. At August 31, 1999, the follow-
ing repurchase agreements held in this joint account were fully collateral-
ized by Federal Agency obligations:
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
---------------------------------------------------------------------------------------
Banc of America Securities LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
---------------------------------------------------------------------------------------
Bear Stearns & Co., Inc. 300,000,000 5.51 09/01/1999 300,000,000
---------------------------------------------------------------------------------------
Deutsche Bank Securities Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
---------------------------------------------------------------------------------------
Lehman Brothers, Inc. 300,000,000 5.65 09/01/1999 300,000,000
---------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. 200,000,000 5.50 09/01/1999 200,000,000
---------------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $3,106,800,000
---------------------------------------------------------------------------------------
|
8. OTHER MATTERS
As of August 31, 1999, Goldman, Sachs & Co. Profit Sharing Master Trust was the beneficial owner of approximately 13% of the outstanding shares of the CORE U.S. Equity Fund. In addition, the following Goldman Sachs Asset Alloca- tion Portfolios were beneficial owners of the Funds (as a percentage of out- standing shares):
Goldman Sachs Goldman Sachs Goldman Sachs Goldman Sachs Goldman Sachs
Conservative Strategy Balanced Strategy Growth and Income Growth Strategy Aggressive Growth
Fund Portfolio Portfolio Strategy Portfolio Portfolio Strategy Portfolio
----------------------------------------------------------------------------------------------------------------------
CORE Large Cap Growth 0.1% 1.0% 7.3% 6.3% 2.9%
----------------------------------------------------------------------------------------------------------------------
CORE Small Cap Equity -- 1.3 11.9 10.4 5.5
----------------------------------------------------------------------------------------------------------------------
CORE Large Cap Value 0.5 2.9 20.8 21.0 10.2
----------------------------------------------------------------------------------------------------------------------
CORE International Eq-
uity -- 5.2 23.7 21.3 9.3
----------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
9. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the CORE Large Cap Growth Fund reclassified $838,413 from paid-in capital and $701 from accumulated net re- alized gain on investment and futures transactions to accumulated undistrib- uted net investment income. CORE Small Cap Equity reclassified $98,232 from paid-in capital to accumulated undistributed net investment income. CORE Large Cap Value reclassified $2 from accumulated undistributed net investment income to accumulated net realized gain on investment and futures transac- tions, and $6,483 from paid-in capital to accumulated undistributed net in- vestment income. CORE International Equity Fund reclassified $28,102 and $433 from accumulated net realized gain on investment, futures and foreign cur- rency related transactions to accumulated undistributed net investment income and paid-in capital, respectively. These reclassifications have no impact on the net asset values of each Fund and are designed to present each Fund's capital accounts on a tax basis.
Goldman Sachs Trust -- CORE Equity Funds -- Tax Information (unaudited)
During the tax year ended August 31, 1999, 53.80% of the ordi- nary income dividends paid by the CORE Large Cap Value Fund, qual- ify for the dividends received deduction available for corporations.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements (continued)
August 31, 1999
10. SUMMARY OF SHARE TRANSACTIONS
Share activity for the seven-month period ended August 31, 1999, is as fol- lows:
CORE U.S. Equity Fund
-----------------------------
Shares Dollars
-----------------------------
Class A Shares
Shares sold 4,480,478 $152,209,945
Reinvestment of dividends and distributions -- --
Shares repurchased (4,885,988) (165,197,641)
-----------------------------
(405,510) (12,987,696)
---------------------------------------------------------------------
Class B Shares
Shares sold 2,114,834 70,617,885
Reinvestment of dividends and distributions -- --
Shares repurchased (424,409) (14,199,866)
-----------------------------
1,690,425 56,418,019
---------------------------------------------------------------------
Class C Shares
Shares sold 622,703 20,790,097
Reinvestment of dividends and distributions -- --
Shares repurchased (157,393) (5,321,657)
-----------------------------
465,310 15,468,440
----------------------------------------------------------------------
Institutional Shares
Shares sold 2,156,813 74,023,816
Reinvestment of dividends and distributions -- --
Shares repurchased (1,693,849) (58,817,319)
-----------------------------
462,964 15,206,497
----------------------------------------------------------------------
Service Shares
Shares sold 53,313 1,807,159
Reinvestment of dividends and distributions -- --
Shares repurchased (77,444) (2,674,453)
-----------------------------
(24,131) (867,294)
---------------------------------------------------------------------
NET INCREASE (DECREASE) 2,189,058 $ 73,237,966
---------------------------------------------------------------------
|
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
CORE Large Cap Value
CORE Large Cap Growth Fund CORE Small Cap Equity Fund Fund CORE International Equity Fund
------------------------------------------------------------------------------------------------------------------------
Shares Dollars Shares Dollars Shares Dollars Shares Dollars
------------------------------------------------------------------------------------------------------------------------
10,470,228 $ 170,184,476 1,258,148 $ 13,030,383 9,581,268 $104,106,541 4,236,762 $ 43,587,990
-- -- -- -- 20,832 227,047 193 2,066
(3,654,092) (60,336,764) (2,417,812) (24,600,070) (1,624,984) (18,072,273) (4,760,025) (49,081,701)
------------------------------------------------------------------------------------------------------------------------
6,816,136 109,847,712 (1,159,664) (11,569,687) 7,977,116 86,261,315 (523,070) (5,491,645)
------------------------------------------------------------------------------------------------------------------------
5,780,900 93,035,450 301,937 3,002,544 1,385,917 15,120,099 209,022 2,180,794
-- -- -- -- 1,345 14,579 -- --
(801,603) (12,987,080) (473,346) (4,654,066) (43,481) (468,504) (104,302) (1,068,660)
------------------------------------------------------------------------------------------------------------------------
4,979,297 80,048,370 (171,409) (1,651,522) 1,343,781 14,666,174 104,720 1,112,134
------------------------------------------------------------------------------------------------------------------------
2,791,478 45,140,043 159,684 1,608,796 751,112 8,221,628 495,659 5,019,291
-- -- -- -- 610 6,613 -- --
(604,096) (9,757,233) (189,207) (1,825,005) (13,955) (152,653) (417,071) (4,248,461)
------------------------------------------------------------------------------------------------------------------------
2,187,382 35,382,810 (29,523) (216,209) 737,767 8,075,588 78,588 770,830
------------------------------------------------------------------------------------------------------------------------
2,587,072 42,841,502 1,430,824 14,494,462 16,847,196 172,118,566 2,418,684 25,505,971
-- -- -- -- 4,958 53,468 -- --
(2,662,983) (43,943,062) (1,498,950) (15,266,801) (4,143,528) (44,173,282) (5,665,112) (58,430,254)
------------------------------------------------------------------------------------------------------------------------
(75,911) (1,101,560) (68,126) (772,339) 12,708,626 127,998,752 (3,246,428) (32,924,283)
------------------------------------------------------------------------------------------------------------------------
47,403 761,942 2,880 27,449 1,092 12,500 553 5,995
-- -- -- -- 1 4 -- --
(2,545) (41,303) (1,987) (18,976) -- -- (2,003) (20,376)
------------------------------------------------------------------------------------------------------------------------
44,858 720,639 893 8,473 1,093 12,504 (1,450) (14,381)
------------------------------------------------------------------------------------------------------------------------
13,951,762 $ 224,897,971 (1,427,829) $ (14,201,284) 22,768,383 $237,014,333 (3,587,640) $ (36,547,345)
------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements (continued)
August 31, 1999
11. SUMMARY OF SHARE TRANSACTIONS
Share activity for the year ended January 31, 1999, is as follows:
CORE U.S. Equity Fund
---------------------
Shares Dollars
---------------------
Class A Shares
Shares sold 8,753,952 $ 259,032,390
Reinvestment of dividends and distributions 381,760 11,200,848
Shares repurchased (5,761,134) (166,304,148)
---------------------
3,374,578 103,929,090
-----------------------------------------------------------------------
Class B Shares
Shares sold 2,857,310 83,492,448
Reinvestment of dividends and distributions 83,374 2,414,741
Shares repurchased (501,968) (14,454,259)
---------------------
2,438,716 71,452,930
-----------------------------------------------------------------------
Class C Shares
Shares sold 670,600 19,394,950
Reinvestment of dividends and distributions 13,055 377,761
Shares repurchased (91,806) (2,614,971)
---------------------
591,849 17,157,740
-----------------------------------------------------------------------
Institutional Shares
Shares sold 3,495,701 106,922,172
Reinvestment of dividends and distributions 252,278 7,502,432
Shares repurchased (2,092,487) (62,588,379)
---------------------
1,655,492 51,836,225
-----------------------------------------------------------------------
Service Shares
Shares sold 138,492 4,090,580
Reinvestment of dividends and distributions 8,981 263,345
Shares repurchased (89,923) (2,681,502)
---------------------
57,550 1,672,423
-----------------------------------------------------------------------
NET INCREASE 8,118,185 $ 246,048,408
-----------------------------------------------------------------------
|
(a) Commencement date of operations was December 31, 1998 for all share clas- ses.
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
CORE Large Cap Value
CORE Large Cap Growth Fund CORE Small Cap Equity Fund Fund(a) CORE International Equity Fund
----------------------------------------------------------------------------------------------------------------------
Shares Dollars Shares Dollars Shares Dollars Shares Dollars
----------------------------------------------------------------------------------------------------------------------
8,392,008 $ 114,907,937 6,683,657 $ 62,993,476 659,370 $ 6,646,109 16,982,750 $ 159,894,304
775 9,734 5,387 51,508 -- -- 25,532 247,660
(2,029,343) (26,663,301) (1,432,586) (14,382,982) (3,045) (30,471) (6,723,268) (65,336,060)
----------------------------------------------------------------------------------------------------------------------
6,363,440 88,254,370 5,256,458 48,662,002 656,325 6,615,638 10,285,014 94,805,904
----------------------------------------------------------------------------------------------------------------------
5,276,877 72,837,485 828,354 8,824,797 33,500 341,048 515,393 5,051,846
1,075 13,374 -- -- -- -- -- --
(577,338) (7,608,153) (241,316) (2,380,103) -- -- (67,362) (640,971)
----------------------------------------------------------------------------------------------------------------------
4,700,614 65,242,706 587,038 6,444,694 33,500 341,048 448,031 4,410,875
----------------------------------------------------------------------------------------------------------------------
2,156,694 29,856,923 565,318 5,743,510 26,441 266,200 308,917 2,996,602
93 1,154 -- -- -- -- -- --
(183,652) (2,472,936) (156,900) (1,557,935) -- -- (107,735) (1,051,525)
----------------------------------------------------------------------------------------------------------------------
1,973,135 27,385,141 408,418 4,185,575 26,441 266,200 201,182 1,945,077
----------------------------------------------------------------------------------------------------------------------
19,639,867 283,752,115 7,133,876 75,923,060 5,393,552 54,931,857 30,484,309 302,474,224
2,288 32,678 2,982 28,592 -- -- 4,168 40,723
(1,788,450) (24,482,623) (1,837,364) (18,190,952) (136,723) (1,380,706) (4,511,270) (44,208,971)
----------------------------------------------------------------------------------------------------------------------
17,853,705 259,302,170 5,299,494 57,760,700 5,256,829 53,551,151 25,977,207 258,305,976
----------------------------------------------------------------------------------------------------------------------
105,509 1,439,054 5,527 59,019 160 1,600 2,004 20,035
21 292 2 20 -- -- -- --
(11,909) (153,375) (339) (3,405) -- -- -- --
----------------------------------------------------------------------------------------------------------------------
93,621 1,285,971 5,190 55,634 160 1,600 2,004 20,035
----------------------------------------------------------------------------------------------------------------------
30,984,515 $ 441,470,358 11,556,598 $ 117,108,605 5,973,255 $60,775,637 36,913,438 $ 359,487,867
----------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS CORE U.S. EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from
investment operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset Net In excess Net increase
value, investment Net realized From net of net (decrease)
beginning income and unrealized investment investment From net in net asset
of period (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $32.98 $ 0.03 $1.20 $ -- $ -- $ -- $ 1.23
1999 - Class B Shares 32.50 (0.11) 1.17 -- -- -- 1.06
1999 - Class C Shares 32.40 (0.10) 1.16 -- -- -- 1.06
1999 - Institutional
Shares 33.29 0.11 1.21 -- -- -- 1.32
1999 - Service Shares 32.85 0.01 1.19 -- -- -- 1.20
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 26.59 0.04 7.02 (0.03) (0.01) (0.63) 6.39
1999 - Class B Shares 26.32 (0.10) 6.91 -- -- (0.63) 6.18
1999 - Class C Shares 26.24 (0.10) 6.89 -- -- (0.63) 6.16
1999 - Institutional
Shares 26.79 0.20 7.11 (0.15) (0.03) (0.63) 6.50
1999 - Service Shares 26.53 0.06 7.01 (0.10) (0.02) (0.63) 6.32
----------------------------------------------------------------------------------------------------------------
1998 - Class A Shares 23.32 0.11 5.63 (0.12) -- (2.35) 3.27
1998 - Class B Shares 23.18 0.11 5.44 -- (0.06) (2.35) 3.14
1998 - Class C Shares
(commenced August 15,
1997) 27.48 0.03 1.22 -- (0.14) (2.35) (1.24)
1998 - Institutional
Shares 23.44 0.30 5.65 (0.24) (0.01) (2.35) 3.35
1998 - Service Shares 23.27 0.19 5.57 (0.07) (0.08) (2.35) 3.26
----------------------------------------------------------------------------------------------------------------
1997 - Class A Shares 19.66 0.16 4.46 (0.16) -- (0.80) 3.66
1997 - Class B Shares
(commenced May 1, 1996) 20.44 0.04 3.70 (0.04) (0.16) (0.80) 2.74
1997 - Institutional
Shares 19.71 0.30 4.51 (0.28) -- (0.80) 3.73
1997 - Service Shares
(commenced June 7, 1996) 21.02 0.13 3.15 (0.13) (0.10) (0.80) 2.25
----------------------------------------------------------------------------------------------------------------
1996 - Class A Shares 14.61 0.19 5.43 (0.16) -- (0.41) 5.05
1996 - Institutional
Shares (commenced June
15, 1995) 16.97 0.16 3.23 (0.24) -- (0.41) 2.74
----------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE U.S. EQUITY FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$34.21 3.73%(d) $614,310 1.14%(c) 0.15%(c) 1.24%(c) 0.05%(c) 41.84%(d)
33.56 3.26(d) 214,087 1.89(c) (0.60)(c) 1.99(c) (0.70)(c) 41.84(d)
33.46 3.27(d) 43,361 1.89(c) (0.61)(c) 1.99(c) (0.71)(c) 41.84(d)
34.61 3.97(d) 335,465 0.74(c) 0.54(c) 0.84(c) 0.44(c) 41.84(d)
34.05 3.65(d) 11,204 1.24(c) 0.06(c) 1.34(c) (0.04)(c) 41.84(d)
32.98 26.89 605,566 1.23 0.15 1.36 0.02 63.79
32.50 26.19 152,347 1.85 (0.50) 1.98 (0.63) 63.79
32.40 26.19 26,912 1.87 (0.53) 2.00 (0.66) 63.79
33.29 27.65 307,200 0.69 0.69 0.82 0.56 63.79
32.85 27.00 11,600 1.19 0.19 1.32 0.06 63.79
------------------------------------------------------------------------------------------------------------------------------
26.59 24.96 398,393 1.28 0.51 1.47 0.32 65.89
26.32 24.28 59,208 1.79 (0.05) 1.96 (0.22) 65.89
26.24 4.85(d) 6,267 1.78(c) (0.21)(c) 1.95(c) (0.38)(c) 65.89
26.79 25.76 202,893 0.65 1.16 0.82 0.99 65.89
26.53 25.11 7,841 1.15 0.62 1.32 0.45 65.89
------------------------------------------------------------------------------------------------------------------------------
23.32 23.75 225,968 1.29 0.91 1.53 0.67 37.28
23.18 18.59(d) 17,258 1.83(c) 0.06(c) 2.00(c) (0.11)(c) 37.28
23.44 24.63 148,942 0.65 1.52 0.85 1.32 37.28
23.27 15.92(d) 3,666 1.15(c) 0.69(c) 1.35(c) 0.49(c) 37.28
------------------------------------------------------------------------------------------------------------------------------
19.66 38.63 129,045 1.25 1.01 1.55 0.71 39.35
19.71 20.14(d) 64,829 0.65(c) 1.49(c) 0.96(c) 1.18(c) 39.35
------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from
investment operations(a) Distributions to shareholders
---------------------------- ------------------------------------
Net asset In excess
value, Net Net realized From net of net Net increase
beginning investment and unrealized investment investment From net in net asset
of period income (loss) gain income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $16.17 $(0.01) $0.86 $ -- $ -- $ -- $0.85
1999 - Class B Shares 15.98 (0.07) 0.84 -- -- -- 0.77
1999 - Class C Shares 15.99 (0.07) 0.83 -- -- -- 0.76
1999 - Institutional
Shares 16.21 0.03 0.86 -- -- -- 0.89
1999 - Service Shares 16.11 (0.02) 0.86 -- -- -- 0.84
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares 11.97 0.01 4.19 -- -- -- 4.20
1999 - Class B Shares 11.92 (0.06) 4.12 -- -- -- 4.06
1999 - Class C Shares 11.93 (0.05) 4.11 -- -- -- 4.06
1999 - Institutional
Shares 11.97 0.02 4.23 -- (0.01) -- 4.24
1999 - Service Shares 11.95 (0.01) 4.17 -- -- -- 4.16
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares
(commenced May 1, 1997) 10.00 0.01 2.35 (0.01) -- (0.38) 1.97
1998 - Class B Shares
(commenced May 1, 1997) 10.00 (0.03) 2.33 -- -- (0.38) 1.92
1998 - Class C Shares
(commenced August 15,
1997) 11.80 (0.02) 0.54 -- (0.01) (0.38) 0.13
1998 - Institutional
Shares (commenced May 1,
1997) 10.00 0.01 2.35 (0.01) -- (0.38) 1.97
1998 - Service Shares
(commenced May 1, 1997) 10.00 (0.02) 2.35 -- -- (0.38) 1.95
|
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$17.02 5.26%(d) $300,684 1.04%(c) (0.11)%(c) 1.26%(c) (0.33)%(c) 32.74%(d)
16.75 4.82(d) 181,626 1.79(c) (0.87)(c) 2.01(c) (1.09)(c) 32.74(d)
16.75 4.75(d) 75,502 1.79(c) (0.87)(c) 2.01(c) (1.09)(c) 32.74(d)
17.10 5.49(d) 310,704 0.64(c) 0.31(c) 0.86(c) 0.09(c) 32.74(d)
16.95 5.21(d) 2,510 1.14(c) (0.21)(c) 1.36(c) (0.43)(c) 32.74(d)
16.17 35.10 175,510 0.97 0.05 1.46 (0.44) 63.15
15.98 34.07 93,711 1.74 (0.73) 2.11 (1.10) 63.15
15.99 34.04 37,081 1.74 (0.74) 2.11 (1.11) 63.15
16.21 35.54 295,734 0.65 0.35 1.02 (0.02) 63.15
16.11 34.85 1,663 1.15 (0.16) 1.52 (0.53) 63.15
11.97 23.79(d) 53,786 0.91(c) 0.12(c) 2.40(c) (1.37)(c) 74.97(d)
11.92 23.26(d) 13,857 1.67(c) (0.72)(c) 2.91(c) (1.96)(c) 74.97(d)
11.93 4.56(d) 4,132 1.68(c) (0.76)(c) 2.92(c) (2.00)(c) 74.97(d)
11.97 23.89(d) 4,656 0.72(c) 0.42(c) 1.96(c) (0.82)(c) 74.97(d)
11.95 23.56(d) 115 1.17(c) (0.21)(c) 2.41(c) (1.45)(c) 74.97(d)
|
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from Distributions to
investment operations(a) shareholders
---------------------------- -------------------------
Net asset
value, Net Net realized From net Net increase
beginning investment and unrealized investment From net in net asset
of period income (loss) gain (loss) income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $10.16 $(0.01) $0.08 $ -- $ -- $0.07
1999 - Class B Shares 10.07 (0.05) 0.07 -- -- 0.02
1999 - Class C Shares 10.08 (0.05) 0.07 -- -- 0.02
1999 - Institutional
Shares 10.20 0.02 0.08 -- -- 0.10
1999 - Service Shares 10.16 (0.01) 0.07 -- -- 0.06
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares 10.59 0.01 (0.43) (0.01) -- (0.43)
1999 - Class B Shares 10.56 (0.05) (0.44) -- -- (0.49)
1999 - Class C Shares 10.57 (0.04) (0.45) -- -- (0.49)
1999 - Institutional
Shares 10.61 0.04 (0.43) (0.02) -- (0.41)
1999 - Service Shares 10.60 0.01 (0.44) (0.01) -- (0.44)
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares
(commenced August 15,
1997) 10.00 (0.01) 0.65 -- (0.05) 0.59
1998 - Class B Shares
(commenced August 15,
1997) 10.00 (0.03) 0.64 -- (0.05) 0.56
1998 - Class C Shares
(commenced August 15,
1997) 10.00 (0.02) 0.64 -- (0.05) 0.57
1998 - Institutional
Shares (commenced August
15, 1997) 10.00 0.01 0.65 -- (0.05) 0.61
1998 - Service Shares
(commenced August 15,
1997) 10.00 0.01 0.64 -- (0.05) 0.60
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Net assets Ratio of Ratio of Ratio of
Net asset at end of net expenses net investment Ratio of net investment Portfolio
value, end Total period to average income (loss) to expenses to loss to turnover
of period return(b) (in 000s) net assets average net assets average net assets average net assets rate
$10.23 0.69%(d) $52,660 1.33%(c) (0.12)%(c) 1.67%(c) (0.46)%(c) 52.03%(d)
10.09 0.20(d) 13,711 2.08(c) (0.86)(c) 2.42(c) (1.20)(c) 52.03(d)
10.10 0.20(d) 6,274 2.08(c) (0.86)(c) 2.42(c) (1.20)(c) 52.03(d)
10.30 0.98(d) 62,633 0.93(c) 0.28(c) 1.27(c) (0.06)(c) 52.03(d)
10.22 0.59(d) 64 1.43(c) (0.22)(c) 1.77(c) (0.56)(c) 52.03(d)
10.16 (3.97) 64,087 1.31 0.08 2.00 (0.61) 75.38
10.07 (4.64) 15,406 2.00 (0.55) 2.62 (1.17) 75.38
10.08 (4.64) 6,559 2.01 (0.56) 2.63 (1.18) 75.38
10.20 (3.64) 62,763 0.94 0.60 1.56 (0.02) 75.38
10.16 (4.07) 54 1.44 0.01 2.06 (0.61) 75.38
10.59 6.37(d) 11,118 1.25(c) (0.36)(c) 3.92(c) (3.03)(c) 37.65(d)
10.56 6.07(d) 9,957 1.95(c) (1.04)(c) 4.37(c) (3.46)(c) 37.65(d)
10.57 6.17(d) 2,557 1.95(c) (1.07)(c) 4.37(c) (3.49)(c) 37.65(d)
10.61 6.57(d) 9,026 0.95(c) 0.15(c) 3.37(c) (2.27)(c) 37.65(d)
10.60 6.47(d) 2 1.45(c) 0.40(c) 3.87(c) (2.02)(c) 37.65(d)
|
GOLDMAN SACHS CORE LARGE CAP VALUE FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from Distributions to
investment operations(a) shareholders
------------------------- -------------------------
Net asset
value, Net Net realized From net Net increase
beginning investment and unrealized investment From net in net asset
of period income gain income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $10.15 $0.04 $0.40 $(0.04) $ -- $0.40
1999 - Class B Shares 10.15 0.01 0.36 (0.02) -- 0.35
1999 - Class C Shares 10.15 0.01 0.37 (0.02) -- 0.36
1999 - Institutional
Shares 10.16 0.06 0.38 (0.05) -- 0.39
1999 - Service Shares 10.16 0.02 0.40 (0.03) -- 0.39
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares
(commenced December 31,
1998) 10.00 0.01 0.14 -- -- 0.15
1999 - Class B Shares
(commenced December 31,
1998) 10.00 -- 0.15 -- -- 0.15
1999 - Class C Shares
(commenced December 31,
1998) 10.00 -- 0.15 -- -- 0.15
1999 - Institutional
Shares (commenced Decem-
ber 31, 1998) 10.00 0.01 0.15 -- -- 0.16
1999 - Service Shares
(commenced December 31,
1998) 10.00 0.02 0.14 -- -- 0.16
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE LARGE CAP VALUE FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
------------------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment income
value, end Total period net expenses to income to expenses to (loss) to
of period return(b)(d) (in 000s) average net assets(c) average net assets(c) average net assets(c) average net assets(c)
-----------------------------------------------------------------------------------------------------------------------------
$10.55 4.31% 91,072 1.04% 0.87% 1.21% 0.70%
10.50 3.68 14,464 1.79 0.05 1.96 (0.12)
10.51 3.73 8,032 1.79 0.09 1.96 (0.08)
10.55 4.35 189,540 0.64 1.29 0.81 1.12
10.55 4.11 13 1.14 0.72 1.31 0.55
-----------------------------------------------------------------------------------------------------------------------------
10.15 1.50 6,665 1.08 1.45 8.03 (5.50)
10.15 1.50 340 1.82 0.84 8.77 (6.11)
10.15 1.50 268 1.83 0.70 8.78 (6.25)
10.16 1.60 53,396 0.66 1.97 7.61 (4.98)
10.16 1.60 2 1.16 2.17 8.11 (4.78)
Portfolio
turnover
rate(d)
-----------------------------------------------------------------------------------------------------------------------------
36.10%
36.10
36.10
36.10
36.10
-----------------------------------------------------------------------------------------------------------------------------
0.00
0.00
0.00
0.00
0.00
-----------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from Distributions to
investment operations(a) shareholders
------------------------- -------------------------
Net asset Net Net increase
value, investment Net realized From net (decrease)
beginning income and unrealized investment From net in net asset
of period (loss) gain (loss) income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $ 9.98 $ 0.05 $0.84 $ -- $ -- $ 0.89
1999 - Class B Shares 9.95 0.01 0.85 -- -- 0.86
1999 - Class C Shares 9.96 0.01 0.85 -- -- 0.86
1999 - Institutional
Shares 10.06 0.09 0.85 -- -- 0.94
1999 - Service Shares 10.02 0.01 0.90 -- -- 0.91
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares 9.22 (0.01) 0.79 (0.02) -- 0.76
1999 - Class B Shares 9.21 -- 0.74 -- -- 0.74
1999 - Class C Shares 9.22 -- 0.74 -- -- 0.74
1999 - Institutional
Shares 9.24 0.05 0.80 (0.03) -- 0.82
1999 - Service Shares 9.23 -- 0.81 (0.02) -- 0.79
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares
(commenced August 15,
1997) 10.00 -- (0.78) -- -- (0.78)
1998 - Class B Shares
(commenced August 15,
1997) 10.00 (0.02) (0.77) -- -- (0.79)
1998 - Class C Shares
(commenced August 15,
1997) 10.00 (0.02) (0.76) -- -- (0.78)
1998 - Institutional
Shares (commenced August
15, 1997) 10.00 0.02 (0.76) (0.02) -- (0.76)
1998 - Service Shares
(commenced August 15,
1997) 10.00 0.01 (0.78) -- -- (0.77)
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
$10.87 8.92%(d) $114,502 1.66%(c) 0.78%(c) 1.76%(c) 0.68%(c) 64.97%(d)
10.81 8.64(d) 9,171 2.16(c) 0.26(c) 2.26(c) 0.16(c) 64.97(d)
10.82 8.63(d) 4,913 2.16(c) 0.23(c) 2.26(c) 0.13(c) 64.97(d)
11.00 9.34(d) 271,212 1.01(c) 1.43(c) 1.11(c) 1.33(c) 64.97(d)
10.93 9.08(d) 8 1.51(c) 0.07(c) 1.61(c) (0.03)(c) 64.97(d)
9.98 8.37 110,338 1.63 (0.11) 1.94 (0.42) 194.61
9.95 8.03 7,401 2.08 (0.03) 2.39 (0.34) 194.61
9.96 8.03 3,742 2.08 (0.04) 2.39 (0.35) 194.61
10.06 9.20 280,731 1.01 0.84 1.32 0.53 194.61
10.02 8.74 22 1.50 0.02 1.81 (0.29) 194.61
9.22 (7.66)(d) 7,087 1.50(c) (0.27)(c) 4.87(c) (3.90)(c) 25.16(d)
9.21 (7.90)(d) 2,721 2.00(c) (0.72)(c) 5.12(c) (3.84)(c) 25.16(d)
9.22 (7.80)(d) 1,608 2.00(c) (0.73)(c) 5.12(c) (3.85)(c) 25.16(d)
9.24 (7.45)(d) 17,719 1.00(c) 0.59 (c) 4.12(c) (2.53)(c) 25.16(d)
9.23 (7.70)(d) 1 1.50(c) 0.26 (c) 4.62(c) (2.86)(c) 25.16(d)
|
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of Goldman Sachs Trust - CORE Eq-
uity Funds:
We have audited the accompanying statements of assets and liabilities of Goldman Sachs CORE U.S. Equity Fund, CORE Large Cap Growth Fund, CORE Small Cap Equity Fund, CORE Large Cap Value Fund and CORE International Equity Fund, portfolios of Goldman Sachs Trust--Equity Funds (a Delaware Business Trust), including the statements of investments, as of August 31, 1999, and the related statements of operations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs CORE U.S. Equity Fund, CORE Large Cap Growth Fund, CORE Small Cap Equity Fund, CORE Large Cap Value Fund and CORE International Eq- uity Fund as of August 31, 1999, the results of their operations, the changes in their net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 94.4%
Australia - 2.9%
116,900 Brambles Industries Ltd. (Multi-Industrial) $ 3,257,405
352,500 Broken Hill Proprietary Co. Ltd. (Nonferrous Metals) 3,791,857
260,747 Lend Lease Corp. (Financial Services) 3,186,394
301,300 National Australia Bank (Banks) 4,556,770
294,074 News Corp. Ltd. (Media) 2,149,587
697,500 Pioneer International Ltd. (Construction) 1,781,136
231,700 Rio Tinto Ltd. (Mining) 3,978,975
358,270 Tab Corp. Holdings Ltd. (Entertainment) 2,447,299
518,800 Telstra Corp. (Utilities) 2,699,296
637,493 Westpac Banking Corp. (Banks) 3,866,267
1,011,923 Woolworths Ltd. (Specialty Retail) 3,538,852
------------
35,253,838
------------------------------------------------------------------------------
Britain - 19.2%
1,186,336 Allied Zurich PLC (Insurance) 14,438,395
352,825 AstraZeneca Group PLC (Health) 13,991,960
209,531 Barclays PLC (Banks) 6,226,119
824,048 BP Amoco PLC (Energy Resources) 15,285,656
1,258,528 British Telecom PLC (Telecommunications) 19,275,342
862,237 Carlton Communications PLC (Media) 6,540,495
820,771 Diageo PLC (Tobacco) 8,332,084
915,203 General Electric Co. PLC (Electrical Equipment) 9,143,475
812,351 Glaxo Wellcome PLC (Health) 21,345,123
650,383 Great Universal Stores PLC (Specialty Retail) 6,550,068
485,537 Halifax Group PLC (Banks) 5,421,058
1,026,247 HSBC Holdings PLC* (Banks) 12,712,908
721,857 Lloyds TSB Group PLC (Banks) 9,993,194
1,010,181 Misys PLC (Business Services) 8,946,616
246,063 National Westminster Bank PLC (Banks) 5,051,255
1,179,425 Rentokil Initial PLC (Business Services) 4,724,675
938,923 Select Appointment Holdings PLC* (Business Services) 13,398,490
1,287,886 Shell Transport & Trading Co. (Energy Resources) 10,271,702
1,686,049 Stagecoach Holdings PLC (Railroads) 5,865,818
891,858 Unilever NV (Food & Beverage) 8,393,708
1,287,439 Vodafone AirTouch PLC (Telecommunications) 25,931,835
------------
231,839,976
------------------------------------------------------------------------------
China - 0.5%
1,715,000 China Telecom Ltd.* (Telecommunications) 5,322,863
------------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Denmark - 0.6%
125,884 ISS International Service System Series B* (Business
Services) $ 6,942,659
------------------------------------------------------------------------------
Finland - 1.6%
234,954 Nokia AB Oyj Series A (Telecommunications) 19,635,133
------------------------------------------------------------------------------
France - 11.5%
18,297 Accor SA (Hotel) 4,409,177
240,293 Alstom (Machinery) 8,103,700
107,295 Axa (Insurance) 13,370,532
27,624 Carrefour SA (Specialty Retail) 4,500,193
60,020 Dexia France (Banks) 7,828,580
92,345 Elf Aquitaine (Energy Resources) 16,216,061
90,001 Equant* (Computer Software) 7,973,630
416,153 Rhone-Poulenc SA (Chemicals) 20,215,236
220,418 SEITA (Tobacco) 12,031,525
62,995 Societe Generale (Banks) 12,348,250
33,291 ST Microelectronics (Semiconductors) 2,213,380
102,374 Total Fina SA Class B (Energy Resources) 13,212,147
217,263 Vivendi (Business Services) 16,800,688
------------
139,223,099
------------------------------------------------------------------------------
Germany - 5.0%
321,097 Commerzbank AG (Banks) 11,514,892
65,099 HypoVereinsbank (Financial Services) 3,863,324
134,287 Mannesmann AG (Machinery) 20,626,450
322,640 Preussag AG (Multi-Industrial) 18,396,317
74,969 Siemens AG (Diversified Industrial Manufacturing) 6,312,751
------------
60,713,734
------------------------------------------------------------------------------
Hong Kong - 3.0%
532,000 Cheung Kong Holdings Ltd. (Real Estate) 4,641,785
416,000 CLP Holdings Ltd. (Utilities) 1,966,181
377,000 Hang Seng Bank Ltd. (Banks) 4,260,422
1,881,000 Hong Kong & China Gas Co. Ltd. (Utilities) 2,676,796
2,380,800 Hong Kong Telecom (Telecommunications) 5,396,345
951,000 Hutchison Whampoa (Financial Services) 9,277,422
10,000 New World China Land Ltd.* (Real Estate) 8,049
1,756,000 New World Development Co. Ltd. (Real Estate) 4,228,928
469,000 Sun Hung Kai Properties Co. Ltd. (Real Estate) 3,986,400
------------
36,442,328
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Shares Description Value
Common Stocks - (continued)
Ireland - 0.6%
723,130 Bank of Ireland* (Banks) $ 6,555,731
----------------------------------------------------------------------------
Italy - 1.9%
502,859 San Paolo-IMI SpA (Banks) 6,761,074
9,444,971 Seat Pagine Gialle SpA (Business Services) 7,933,139
1,854,575 Unicredito Italiano SpA (Banks) 8,573,334
------------
23,267,547
----------------------------------------------------------------------------
Japan - 24.8%
203,059 Aderans Co. Ltd. (Specialty Retail) 9,137,516
773,000 Asahi Glass Co. Ltd. (Home Products) 4,892,450
893,000 Bank of Tokyo-Mitsubishi (Banks) 13,353,958
264,000 Bridgestone Corp. (Auto) 7,485,252
190,265 Canon, Inc. (Computer Hardware) 5,568,647
806,000 Chiba Bank Ltd. (Banks) 3,029,826
302,600 Circle K Japan Co. (Specialty Retail) 12,924,882
536,000 Fuji Bank Ltd. (Banks) 5,539,672
215,000 Fuji Photo Film Ltd. (Leisure) 7,865,734
121,000 Honda Motor Co. Ltd. (Auto) 4,869,438
252 Hoya Corp. (Electrical Equipment) 15,120
108 Inaba Denkisangyo (Electrical Equipment) 1,827
302,000 Kao Corp. (Food & Beverage) 8,590,296
700,000 Kirin Brewery Ltd. (Alcohol) 8,515,114
497 Kokuyo Co. Ltd. (Specialty Retail) 8,864
85,300 Konami Co. Ltd. (Computer Software) 7,481,840
776 Max Co. (Electrical Equipment) 9,028
750 Mirai Industry Co. Ltd. (Multi-Industrial) 12,073
1,792,790 Mitsui Marine & Fire (Insurance) 9,854,729
730,000 NGK Insulators Ltd. (Multi-Industrial) 7,678,237
56,742 Nintendo Co. Ltd. (Entertainment) 9,860,502
1,327 Nippon Telephone & Telegraph Corp.
(Telecommunications) 14,928,523
122 NTT Mobile Communications Network, Inc. New Shares
(Telecommunications) 2,030,823
488 NTT Mobile Communications Network, Inc.*
(Telecommunications) 8,078,657
716,000 Ricoh Co. Ltd. (Computer Hardware) 12,783,025
83,800 Rohm Co. (Electrical Equipment) 16,708,648
54 Shimachu Co. (Specialty Retail) 1,003
391,000 Shin-Etsu Chemical Co. Ltd. (Chemicals) 15,949,696
95,811 SMC Corp. (Machinery) 14,634,323
171,000 Taisho Pharmaceutical Co. Ltd. (Drugs) 7,210,043
112,200 Takefuji Corp. (Financial Services) 18,071,450
142,037 TDK Corp. (Computer Hardware) 17,278,018
|
Shares Description Value
Common Stocks - (continued)
Japan - (continued)
327,000 Terumo Corp. (Medical Products) $ 10,467,828
231,600 Tokyo Electric Power (Electrical Utilities) 5,401,564
451,500 Toppan Forms Co. Ltd. (Publishing) 10,674,784
397,000 Yamanouchi Pharmaceutical (Drugs) 17,719,486
57 Yoshinoya D&C Co. Ltd. (Restaurants) 1,355,467
------------
299,988,343
------------------------------------------------------------------------------
Netherlands - 10.0%
78,256 Aegon NV (Financial Services) 6,854,439
244,773 Benckiser NV Class B (Food & Beverage) 14,966,328
252,752 Fortis Netherlands NV* (Financial Services) 8,569,324
438,948 Getronics NV (Business Services) 21,522,203
246,178 ING Groep NV (Financial Services) 13,515,761
116,017 Koninklijke Royal Philips Electronics NV (Appliance) 11,972,168
270,740 KPN NV (Telecommunications) 12,143,453
316,949 Libertel NV* (Telecommunications) 6,035,118
313,463 TNT Post Group NV (Business Services) 7,742,783
450,273 VNU NV (Media) 17,290,456
------------
120,612,033
------------------------------------------------------------------------------
New Zealand - 0.1%
277,000 Telecom Corp. of New Zealand Ltd. (Utilities) 1,241,862
------------------------------------------------------------------------------
Singapore - 1.3%
451,000 City Developments (Real Estate) 2,732,521
312,847 DBS Bank Ltd. (Banks) 3,586,544
778,000 First Capital Corp. Ltd. (Real Estate) 1,081,390
507,000 Natsteel Electronics Ltd. (Electrical Equipment) 2,529,730
111,000 Singapore Airlines Ltd. (Airlines) 1,041,758
173,000 Singapore Press Holdings Ltd. (Publishing) 2,877,339
1,025,000 Singapore Technologies Engineering Ltd. (Machinery) 1,235,967
489,000 Singapore Telecommunications Ltd.
(Telecommunications) 868,494
------------
15,953,743
------------------------------------------------------------------------------
Spain - 2.6%
196,201 Acerinox SA (Steel) 6,465,218
347,008 Endesa SA (Electrical Utilities) 6,974,563
1,136,043 Telefonica de Espana SA* (Telecommunications) 18,146,615
------------
31,586,396
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Sweden - 4.7%
432,337 Ericsson Telecommunications Series B
(Electrical Equipment) $ 13,968,376
1,317,205 Securitas AB Series B* (Business Services) 18,878,925
1,142,082 Skandia Forsakring (Insurance) 23,304,965
--------------
56,152,266
---------------------------------------------------------------------------
Switzerland - 4.1%
4,850 Nestle SA (Food & Beverage) 9,586,501
8,606 Novartis AG (Health) 12,402,380
1,172 Roche Holding AG (Health) 13,574,033
50,093 UBS AG (Banks) 14,156,645
--------------
49,719,559
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,001,564,056) $1,140,451,110
---------------------------------------------------------------------------
Preferred Stocks - 0.9%
Germany - 0.9%
84,259 Henkel KGAA Vorzug, Non-Voting (Chemicals) $ 6,105,634
13,347 SAP AG (Computer Software) 5,365,265
--------------
11,470,899
---------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $11,625,088) $ 11,470,899
---------------------------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Short-Term Obligation - 3.8% State Street Bank & Trust Euro-Time Deposit $45,418,000 5.50% 09/01/1999 $ 45,418,000 --------------------------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATION (Cost $45,418,000) $ 45,418,000 --------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (Cost $1,058,607,144) $1,197,340,009 --------------------------------------------------------------------------------------------- |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
As a % of total
net assets
Common and Preferred Stock Industry Classifications
Airlines 0.1%
Alcohol 0.7
Appliance 1.0
Auto 1.0
Banks 12.0
Business Services 8.9
Chemicals 3.5
Computer Hardware 3.0
Computer Software 1.7
Construction 0.1
Diversified Industrial Manufacturing 0.5
Drugs 2.1
Electrical Equipment 3.5
Electrical Utilities 1.0
Energy Resources 4.6
Entertainment 1.0
Financial Services 5.2
Food & Beverage 3.4
Health 5.1
Home Products 0.4
Hotel 0.4
Insurance 5.0
Leisure 0.7
Machinery 3.7
Media 2.2
Medical Products 0.9
Mining 0.3
Multi-Industrial 2.4
Nonferrous Metals 0.3
Publishing 1.1
Railroads 0.5
Real Estate 1.4
Restaurants 0.1
Semiconductors 0.2
Specialty Retail 3.0
Steel 0.5
Telecommunications 11.4
Tobacco 1.7
Utilities 0.7
--------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCK 95.3%
--------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $1,058,607,144) $1,197,340,009 Cash, at value 564,230 Receivables: Investment securities sold, at value 15,459,246 Dividends and interest, at value 1,826,341 Fund shares sold 12,708,631 Forward foreign currency exchange contracts, at value 26,518 Variation margin(a) 2,471,516 Reimbursement from investment adviser 95,641 Other assets, at value 1,095,742 ---------------------------------------------------------------------------- Total assets 1,231,587,874 ---------------------------------------------------------------------------- Liabilities: Payables: Investment securities purchased, at value 18,009,154 Fund shares repurchased 3,382,461 Amounts owed to affiliates 1,613,562 Forward foreign currency exchange contracts, at value 416,413 Accrued expenses and other liabilities, at value 345,377 ---------------------------------------------------------------------------- Total liabilities 23,766,967 ---------------------------------------------------------------------------- Net Assets: Paid-in capital 946,201,036 Accumulated undistributed net investment income 6,242,794 Accumulated net realized gain from investment, options, futures and foreign currency related transactions 116,694,141 Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currencies 138,682,936 ---------------------------------------------------------------------------- NET ASSETS $1,207,820,907 ---------------------------------------------------------------------------- Net asset value, offering and redemption price per share(b) Class A $23.12 Class B $22.73 Class C $22.54 Institutional $23.49 Service $23.14 ---------------------------------------------------------------------------- Shares Outstanding: Class A 40,815,150 Class B 3,021,681 Class C 498,644 Institutional 7,687,724 Service 166,459 ---------------------------------------------------------------------------- Total shares outstanding, $.001 par value (unlimited number of shares authorized) 52,189,658 ---------------------------------------------------------------------------- |
(a) Includes approximately $1,145,000 relating to initial margin requirements
for futures transactions.
(b) Maximum public offering price per share for Class A shares is $24.47 (NAV
per share X 1.0582). At redemption, Class B and Class C shares are sub-
ject to a contingent deferred sales charge, assessed on the amount equal
to the lesser of the current net asset value or the original purchase
price of the shares.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 12,961,397 Interest 621,135 ------------------------------------------------------------------------------ Total income 13,582,532 ------------------------------------------------------------------------------ Expenses: Management fees 6,475,659 Distribution and service fees(b) 3,070,949 Transfer agent fees(c) 1,113,047 Custodian fees 726,028 Registration fees 113,873 Professional fees 45,335 Service share fees 10,635 Trustee fees 5,773 Other 93,505 ------------------------------------------------------------------------------ Total expenses 11,654,804 ------------------------------------------------------------------------------ Less -- expenses reimbursed (311,046) ------------------------------------------------------------------------------ Net expenses 11,343,758 ------------------------------------------------------------------------------ NET INVESTMENT INCOME 2,238,774 ------------------------------------------------------------------------------ Realized and unrealized gain (loss) on investment, futures and foreign currency related transactions: Net realized gain (loss) from: Investment transactions 96,860,780 Futures transactions (863,213) Foreign currency related transactions 2,725,602 Net change in unrealized gain (loss) on: Investments (33,864,411) Futures 334,730 Translation of assets and liabilities denominated in foreign currencies 123,621 ------------------------------------------------------------------------------ Net realized and unrealized gain on investment, futures and foreign currency related transactions 65,317,109 ------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 67,555,883 ------------------------------------------------------------------------------ |
(a) Taxes withheld on dividends were $1,557,370.
(b) Class A, Class B and Class C had distribution and service fees of
$2,622,519, $388,156 and $60,274, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $996,557, $73,750, $11,452, $30,437 and $851, re-
spectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Changes in Net Assets
For the
Seven-Month
Period Ended
August 31, 1999
From operations:
Net investment income $ 2,238,774
Net realized gain from investment, futures and foreign cur-
rency related transactions 98,723,169
Net change in unrealized gain (loss) on investments,
futures, and translation of assets and liabilities
denominated in foreign currencies (33,406,060)
------------------------------------------------------------------------------
Net increase in net assets resulting from operations 67,555,883
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 1,029,391,946
Reinvestment of dividends and distributions --
Cost of shares repurchased (1,032,832,481)
------------------------------------------------------------------------------
Net decrease in net assets resulting from share
transactions (3,440,535)
------------------------------------------------------------------------------
TOTAL INCREASE 64,115,348
------------------------------------------------------------------------------
Net assets:
Beginning of period 1,143,705,559
------------------------------------------------------------------------------
End of period $ 1,207,820,907
------------------------------------------------------------------------------
Accumulated undistributed net investment income $ 6,242,794
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Changes in Net Assets
For the
Year Ended
January 31, 1999
From operations:
Net investment loss $ (2,714,406)
Net realized gain from investment and foreign currency re-
lated transactions 96,004,014
Net change in unrealized gain (loss) on investments and
translation of assets and liabilities denominated in
foreign currencies 55,278,283
------------------------------------------------------------------------------
Net increase in net assets resulting from operations 148,567,891
------------------------------------------------------------------------------
Distributions to shareholders:
From net realized gain on investment and foreign currency
transactions
Class A shares (41,132,351)
Class B shares (3,418,683)
Class C shares (556,864)
Institutional shares (4,927,209)
Service shares (179,258)
------------------------------------------------------------------------------
Total distributions to shareholders (50,214,365)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 2,171,378,743
Reinvestment of dividends and distributions 40,976,198
Cost of shares repurchased (1,982,583,097)
------------------------------------------------------------------------------
Net increase in net assets resulting from share
transactions 229,771,844
------------------------------------------------------------------------------
TOTAL INCREASE 328,125,370
------------------------------------------------------------------------------
Net assets:
Beginning of year 815,580,189
------------------------------------------------------------------------------
End of year $ 1,143,705,559
------------------------------------------------------------------------------
Accumulated undistributed net investment income $ 1,040,126
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from
investment operations(a) Distributions to shareholders
-------------------------- ------------------------------------
Net asset Net In excess
value, investment Net realized From net of net
beginning income and unrealized investment investment From net
of period (loss) gain (loss) income income realized gains
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $21.92 $ 0.04 $1.16 $ -- $ -- $ --
1999 - Class B Shares 21.63 (0.02) 1.12 -- -- --
1999 - Class C Shares 21.45 (0.03) 1.12 -- -- --
1999 - Institutional
Shares 22.20 0.12(e) 1.17(e) -- -- --
1999 - Service Shares 21.93 0.06 1.15 -- -- --
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 19.85 (0.06) 3.24 -- -- (1.11)
1999 - Class B Shares 19.70 (0.17) 3.21 -- -- (1.11)
1999 - Class C Shares 19.56 (0.15) 3.15 -- -- (1.11)
1999 - Institutional
Shares 19.97 0.03 3.31 -- -- (1.11)
1999 - Service Shares 19.84 (0.04) 3.24 -- -- (1.11)
----------------------------------------------------------------------------------------------------
1998 - Class A Shares 19.32 0.03 2.04 -- (0.30) (1.24)
1998 - Class B Shares 19.24 (0.08) 2.02 -- (0.25) (1.23)
1998 - Class C Shares
(commenced August 15,
1997) 22.60 (0.04) (1.38) -- (0.38) (1.24)
1998 - Institutional
Shares 19.40 0.10 2.11 (0.07) (0.33) (1.24)
1998 - Service Shares 19.34 0.02 2.06 -- (0.35) (1.23)
----------------------------------------------------------------------------------------------------
1997 - Class A Shares 17.20 0.10 2.23 -- -- (0.21)
1997 - Class B Shares
(commenced May 1, 1996) 18.91 (0.06) 0.60 -- -- (0.21)
1997 - Institutional
Shares (commenced Febru-
ary 7, 1996) 17.45 0.04 2.15 (0.03) -- (0.21)
1997 - Service Shares
(commenced March 6,
1996) 17.70 (0.02) 1.87 -- -- (0.21)
----------------------------------------------------------------------------------------------------
1996 - Class A Shares 14.52 0.13 4.00 (0.58) -- (0.87)
----------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
(e) Calculated based on the average shares outstanding methodology.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Ratios assuming no
voluntary expense
limitations
------------------
Ratio of Ratio of
Net increase Net assets Ratio of net investment Ratio of net investment
(decrease) Net asset at end of net expenses income (loss) to expenses to income (loss) Portfolio
in net asset value, end Total period to average average net average net to average net turnover
value of period return(b) (in 000s) net assets assets assets assets rate
$1.20 $23.12 5.47%(d) $943,473 1.79%(c) 0.31%(c) 1.84%(c) 0.26%(c) 61.10%(d)
1.10 22.73 5.09(d) 68,691 2.29(c) (0.19)(c) 2.34(c) (0.24)(c) 61.10(d)
1.09 22.54 5.08(d) 11,241 2.29(c) (0.26)(c) 2.34(c) (0.31)(c) 61.10(d)
1.29 23.49 5.81(d) 180,564 1.14(c) 0.89(c) 1.19(c) 0.84(c) 61.10(d)
1.21 23.14 5.52(d) 3,852 1.64(c) 0.47(c) 1.69(c) 0.42(c) 61.10(d)
2.07 21.92 16.39 947,973 1.73 (0.28) 1.82 (0.37) 113.79
1.93 21.63 15.80 69,231 2.24 (0.79) 2.32 (0.87) 113.79
1.89 21.45 15.70 11,619 2.24 (0.98) 2.32 (1.06) 113.79
2.23 22.20 17.09 111,315 1.13 0.23 1.21 0.15 113.79
2.09 21.93 16.49 3,568 1.63 (0.18) 1.71 (0.26) 113.79
-------------------------------------------------------------------------------------------------------------------------
0.53 19.85 11.12 697,590 1.67 (0.27) 1.80 (0.40) 40.82
0.46 19.70 10.51 55,324 2.20 (0.90) 2.30 (1.00) 40.82
(3.04) 19.56 (5.92)(d) 3,369 2.27(c) (1.43)(c) 2.37(c) (1.53)(c) 40.82
0.57 19.97 11.82 56,263 1.08 0.30 1.18 0.20 40.82
0.50 19.84 11.25 3,035 1.55 (0.36) 1.65 (0.46) 40.82
-------------------------------------------------------------------------------------------------------------------------
2.12 19.32 13.48 536,283 1.69 (0.07) 1.88 (0.26) 38.01
0.33 19.24 2.83(d) 19,198 2.23(c) (0.97)(c) 2.38(c) (1.12)(c) 38.01
1.95 19.40 12.53(d) 68,374 1.10(c) 0.43(c) 1.25(c) 0.28(c) 38.01
1.64 19.34 10.42(d) 674 1.60(c) (0.40)(c) 1.75(c) (0.55)(c) 38.01
-------------------------------------------------------------------------------------------------------------------------
2.68 17.20 28.68 330,860 1.52 0.26 1.77 0.01 68.48
-------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs International Equity Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year end of the Fund from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securi- ties are valued at prices supplied by independent pricing services, broker / dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost. Securities for which quotations are not readily available, are valued at fair value using methods approved by the Board of Trustees of the Trust.
B. Security Transactions And Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
on current exchange rates; (ii) purchases and sales of foreign investments,
income and expenses are converted into U.S. dollars based on currency ex-
change rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; and (ii) currency gains and losses between trade
date and settlement date on investment securities transactions and forward
exchange contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes recorded and the
amounts actually received.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND D. Forward Foreign Currency Exchange Contracts -- The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell such contracts to seek to increase total re- turn. All commitments are "marked-to-market" daily at the applicable transla- tion rates and any resulting unrealized gains or losses are recorded in the Fund's financial statements. The Fund realizes gains or losses at the time a forward contract is offset by entry into a closing transaction or extin- guished by delivery of the currency. Risks may arise upon entering these con- tracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
E. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
F. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
G. Segregation Transaction -- The Fund may enter into certain derivative
transactions to seek to increase total return. Forward foreign currency ex-
change contracts, futures contracts, written options, mortgage dollar rolls,
when-issued and forward commitments represent examples of such transactions.
As a result of entering into those transactions the Fund is required to seg-
regate liquid assets on the accounting records equal to or greater than the
market value of the corresponding transactions.
H. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual fund of the Trust are allocated to the funds based on a
straight-line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shares bear all expenses and fees relating to
the Distribution and Service plans. Shareholders of Service shares bear all
expenses and fees paid to service organizations. Each class of shares of the
Fund separately bears its respective class-specific transfer agency fees.
I. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book / tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $1,060,091,222. Accordingly gross unrealized gain on
investments was $168,699,398 and the gross unrealized loss on investments was
$31,450,611 resulting in a net unrealized gain of $137,248,787.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs
Asset Management ("GSAM"), a separate operating division of Goldman, Sachs &
Co. ("Goldman Sachs"), serves as the investment adviser to the Fund. Under
the Agreement, GSAMI, subject to the general supervision of the Trust's Board
of Trustees, manages the Fund's portfolio. As compensation for the services
rendered under the Agreement, the assumption of the expenses related thereto
and administering the Fund's business affairs, including providing facili-
ties, GSAMI is entitled to a fee, computed daily and payable monthly, at an
annual rate equal to 1.00% of the average daily net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" (ex-
cluding management fees, distribution and service fees, transfer agent fees,
taxes, interest, brokerage, litigation, Service share fees, indemnification
costs and other extraordinary expenses) to the extent such expenses exceed,
on an annual basis, .10% of the average daily net assets of the Fund. Goldman
Sachs has agreed to reimburse approximately $311,000 for the period ended Au-
gust 31, 1999.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .50%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $818,000 for the period ended
August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: 0.19% of average daily net assets
for Class A, Class B and Class C shares and 0.04% of average daily net assets
for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$990,000, $457,000 and $167,000 for management, distribution and service and
transfer agent fees, respectively.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments and futures) for the period ended August 31, 1999, were
$665,136,041 and $667,728,986, respectively.
At August 31, 1999, the Fund had the following outstanding forward foreign
currency exchange contracts:
Value on
Open Forward Foreign Currency Settlement Current Unrealized Unrealized
Sale Contracts Date Value Gain Loss
--------------------------------------------------------------------------------------------
Hong Kong Dollar
expiring 9/10/1999 $20,448,129 $20,444,586 $ 3,543 $ --
expiring 12/8/1999 20,847,800 21,260,082 -- 412,282
--------------------------------------------------------------------------------------------
TOTAL OPEN FORWARD FOREIGN CURRENCY
SALE CONTRACTS $41,295,929 $41,704,668 $ 3,543 $412,282
--------------------------------------------------------------------------------------------
Closed but Unsettled Realized Realized
Forward Foreign Currency Contracts Purchase Value Sale Value Gain Loss
--------------------------------------------------------------------------------------------
Euro
expiring 10/26/1999 $16,956,131 $16,979,106 $22,975 $ --
Hong Kong Dollar
expiring 12/8/1999 573,886 569,755 -- 4,131
--------------------------------------------------------------------------------------------
TOTAL CLOSED BUT UNSETTLED FORWARD FOREIGN
CURRENCY CONTRACTS $17,530,017 $17,548,861 $22,975 $ 4,131
--------------------------------------------------------------------------------------------
|
The contractual amounts of forward foreign currency exchange contracts do
not necessarily represent the amounts potentially subject to risk. The mea-
surement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At August 31,
1999, the Fund had sufficient cash and securities to cover any commitments
under these contracts.
The Fund has recorded a "Receivable for forward foreign currency exchange
contracts sold" and "Payable for forward foreign currency exchange contracts
purchased" of $26,518 and $416,413, respectively, in the accompanying State-
ment of Assets and Liabilities.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank, an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund, depending on the fluc-
tuations in the value of the contracts, and are recorded for financial re-
porting purposes as unrealized gains or losses. When contracts are closed,
the Fund realizes a gain or loss which is reported in the Statement of Opera-
tions.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
The use of futures contracts involve, to varying degrees, elements of mar-
ket and counterparty risk which may exceed the amounts recognized in the
Statement of Assets and Liabilities. Changes in the value of the futures con-
tracts may not directly correlate with changes in the value of the underlying
securities. This risk may decrease the effectiveness of the Fund's hedging
strategies and potentially result in a loss.
At August 31, 1999 the following futures contracts were open as follows:
Number of
Contracts Settlement Market Unrealized
Type Long Month Value Gain
------------------------------------------------------------------------------------
FTSE 100 Index 76 September 1999 $ 7,622,852 $ 58,496
MIB 30 Index 28 September 1999 4,996,266 113,232
DAX Index 45 September 1999 6,293,742 163,002
------------------------------------------------------------------------------------
$18,912,860 $334,730
------------------------------------------------------------------------------------
|
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
6. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund reclassified $2,963,894 from accumulated net realized gain on investment, options, futures and foreign currency related transactions to accumulated undistributed net investment income and $1,628 from accumulated net realized gain on invest- ment, options, futures and foreign currency related transactions to paid-in capital. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund's capital accounts on a tax basis.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
7. SUMMARY OF SHARE TRANSACTIONS
Share activity for:
Seven Month Period Year Ended
Ended August 31, 1999 January 31, 1999
-------------------------------------------------------
Shares Dollars Shares Dollars
----------------------------------------------------------------------------------
Class A Shares
Shares sold 40,503,629 $ 878,896,664 90,785,418 $ 1,949,815,404
Reinvestments of divi-
dends and distributions -- -- 1,669,818 34,480,481
Shares repurchased (42,925,516) (937,796,470) (84,367,795) (1,819,683,956)
-------------------------------------------------------
(2,421,887) (58,899,806) 8,087,441 164,611,929
----------------------------------------------------------------------------------
Class B Shares
Shares sold 231,545 5,004,374 794,593 17,488,784
Reinvestments of divi-
dends and distributions -- -- 156,073 3,180,373
Shares repurchased (410,880) (8,878,625) (557,697) (11,834,003)
-------------------------------------------------------
(179,335) (3,874,251) 392,969 8,835,154
----------------------------------------------------------------------------------
Class C Shares
Shares sold 3,386,747 71,812,024 6,644,608 139,922,460
Reinvestments of divi-
dends and distributions -- -- 19,517 394,623
Shares repurchased (3,429,722) (73,325,070) (6,294,716) (133,220,855)
-------------------------------------------------------
(42,975) (1,513,046) 369,409 7,096,228
----------------------------------------------------------------------------------
Institutional Shares
Shares sold 3,229,820 73,161,867 2,805,737 62,386,145
Reinvestments of divi-
dends and distributions -- -- 131,238 2,741,464
Shares repurchased (556,938) (12,395,514) (740,110) (16,145,728)
-------------------------------------------------------
2,672,882 60,766,353 2,196,865 48,981,881
----------------------------------------------------------------------------------
Service Shares
Shares sold 23,838 517,017 78,227 1,765,950
Reinvestments of divi-
dends and distributions -- -- 8,677 179,257
Shares repurchased (20,037) (436,802) (77,199) (1,698,555)
-------------------------------------------------------
3,801 80,215 9,705 246,652
----------------------------------------------------------------------------------
NET INCREASE (DECREASE) 32,486 (3,440,535) 11,056,389 $ 229,771,844
----------------------------------------------------------------------------------
|
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Goldman Sachs International Equity Fund -- Tax Information
(unaudited)
Pursuant to Section 852 of the Internal Revenue Code, the Fund designated $50,214,365 as capital gain dividends paid during its year ended August 31, 1999.
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Report of Independent Public Accountants To the Shareholders and Board of Trustees of Goldman Sachs Trust -- International Equity Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs International Equity Fund, one of the portfolios constituting Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related state- ment of operations, the statements of changes in Net Assets and the Financial Highlights for the periods presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs International Equity Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 95.5%
Britain - 30.3%
121,196 Allied Zurich PLC (Insurance) $ 1,475,025
42,860 AstraZeneca Group PLC (Health) 1,699,697
22,305 Barclays PLC (Banks) 662,783
46,943 Bowthorpe PLC (Electrical Equipment) 451,621
87,317 BP Amoco PLC (Energy Resources) 1,619,684
129,489 British Telecom PLC (Telecommunications) 1,983,226
88,372 Carlton Communications PLC (Media) 670,346
92,363 Diageo PLC (Tobacco) 937,626
78,932 General Electric Co. PLC (Electrical Equipment) 788,582
85,150 Glaxo Wellcome PLC (Health) 2,237,379
73,445 Great Universal Stores PLC (Specialty Retail) 739,671
52,108 Halifax Group PLC (Banks) 581,790
104,497 HSBC Holdings PLC (Banks) 1,294,484
81,121 Lloyds TSB Group PLC (Banks) 1,123,017
105,521 Misys PLC (Business Services) 934,541
25,888 National Westminster Bank PLC (Banks) 531,437
126,406 Rentokil Initial PLC (Business Services) 506,372
95,407 Select Appointment Holdings PLC* (Business Services) 1,361,464
137,804 Shell Transport & Trading Co. (Energy Resources) 1,099,074
156,383 Stagecoach Holdings PLC (Railroads) 544,061
94,890 Unilever NV (Food & Beverage) 893,056
134,029 Vodafone AirTouch PLC (Telecommunications) 2,699,637
-----------
24,834,573
---------------------------------------------------------------------------
Denmark - 0.8%
11,974 ISS International Service System Series B* (Business
Services) 660,381
---------------------------------------------------------------------------
Finland - 2.4%
23,897 Nokia AB Oyj Series A (Telecommunications) 1,997,075
---------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
France - 17.3%
1,943 Accor SA (Hotel) $ 468,221
22,636 Alstom* (Machinery) 763,382
10,951 Axa (Insurance) 1,364,655
2,694 Carrefour SA* (Specialty Retail) 438,876
5,915 Dexia France (Banks) 771,510
9,323 Elf Aquitaine (Energy Resources) 1,637,147
9,331 Equant* (Computer Software) 826,679
45,309 Rhone-Poulenc SA (Chemicals) 2,200,951
23,175 SEITA (Tobacco) 1,265,008
6,566 Societe Generale (Banks) 1,287,064
3,425 ST Microelectronics (Semiconductors) 227,714
10,349 Total Fina SA Class B (Energy Resources) 1,335,618
21,334 Vivendi (Business Services) 1,649,733
-----------
14,236,558
----------------------------------------------------------------------------
Germany - 7.5%
33,372 Commerzbank AG (Banks) 1,196,757
6,976 HypoVereinsbank (Financial Services) 413,993
13,303 Mannesmann AG (Machinery) 2,043,337
32,826 Preussag AG (Multi-Industrial) 1,871,676
7,880 Siemens AG (Diversified Industrial Manufacturing) 663,534
-----------
6,189,297
----------------------------------------------------------------------------
Ireland - 0.9%
82,997 Bank of Ireland* (Banks) 752,432
----------------------------------------------------------------------------
Italy - 3.0%
52,272 San Paolo-IMI SpA (Banks) 702,811
641,261 Seat Pagine Gialle SpA (Business Services) 885,257
196,071 Unicredito Italiano SpA (Banks) 906,397
-----------
2,494,465
----------------------------------------------------------------------------
Netherlands - 15.3%
8,349 Aegon NV (Financial Services) 731,289
25,778 Benckiser NV Class B (Food & Beverage) 1,576,162
26,572 Fortis Netherlands NV (Financial Services) 900,899
42,355 Getronics NV (Business Services) 2,076,722
25,394 ING Groep NV (Financial Services) 1,394,191
11,307 Koninklijke Royal Philips Electronics NV* (Appliance) 1,166,806
31,248 KPN NV (Telecommunications) 1,401,561
33,293 Libertel NV* (Telecommunications) 633,942
32,942 TNT Post Group NV (Business Services) 813,693
47,326 VNU NV (Media) 1,817,316
-----------
12,512,581
----------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Shares Description Value
Common Stocks - (continued)
Spain - 4.6%
21,843 Acerinox SA (Steel) $ 719,771
37,474 Endesa SA (Electrical Utilities) 753,195
16,700 Sogecable SA* (Broadcasting) 455,432
112,677 Telefonica de Espana SA* (Telecommunications) 1,799,849
-----------
3,728,247
-----------------------------------------------------------------------
Sweden - 6.9%
45,731 Ericsson Telecommunications Series B (Electrical
Equipment) 1,477,523
134,705 Securitas AB Series B (Business Services) 1,930,668
109,417 Skandia Forsakring (Insurance) 2,232,729
-----------
5,640,920
-----------------------------------------------------------------------
Switzerland - 6.5%
510 Nestle SA (Food & Beverage) 1,008,065
927 Novartis AG (Health) 1,335,929
118 Roche Holding AG* (Health) 1,366,669
5,743 UBS AG (Banks) 1,623,013
-----------
5,333,676
-----------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $74,061,084) $78,380,205
-----------------------------------------------------------------------
Preferred Stocks - 1.6%
Germany - 1.6%
10,723 Henkel KGAA Vorzug, Non-Voting (Chemicals) $ 777,017
1,422 SAP AG (Computer Software) 571,620
-----------
1,348,637
-----------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $1,419,946) $ 1,348,637
-----------------------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Short-Term Obligations - 6.1% State Street Bank & Trust Euro-Time Deposits $2,255,535 2.50% 09/01/1999 $ 2,360,080 2,527,933 2.45 09/02/1999 2,674,173 ---------------------------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (Cost $5,034,253) $ 5,034,253 ---------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (Cost $80,515,283) $84,763,095 ---------------------------------------------------------------------------------------------- |
* Non-income producing security. The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements. 7
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Investments (continued)
August 31, 1999
As a % of total
net assets
Common and Preferred Stock Industry Classifications
Appliance 1.4%
Banks 13.9
Broadcasting 0.6
Business Services 13.2
Chemicals 3.6
Computer Software 1.7
Diversified Industrial Manufacturing 0.8
Electrical Equipment 3.3
Electrical Utilities 0.9
Energy Resources 6.9
Financial Services 4.2
Food & Beverage 4.2
Health 8.1
Hotel 0.6
Insurance 6.2
Machinery 3.4
Media 3.0
Multi-Industrial 2.3
Railroads 0.7
Semiconductors 0.3
Specialty Retail 1.4
Steel 0.9
Telecommunications 12.8
Tobacco 2.7
----------------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCK 97.1%
----------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $80,515,283) $84,763,095 Cash, at value 576,666 Receivables: Investment securities sold, at value 498,662 Dividends and interest, at value 176,916 Fund shares sold 50,195 Variation Margin(a) 287,388 Reimbursement from investment adviser 63,662 Other assets, at value 109,165 ------------------------------------------------------------------------------ Total assets 86,525,749 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased, at value 4,188,750 Fund shares repurchased 22,229 Amounts owed to affiliates 112,743 Accrued expenses and other liabilities, at value 105,581 ------------------------------------------------------------------------------ Total liabilities 4,429,303 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 74,025,095 Accumulated undistributed net realized gain from investment, futures and foreign currency related transactions 3,868,953 Net unrealized gain on investments, futures, and translation of assets and liabilities denominated in foreign currencies 4,202,398 ------------------------------------------------------------------------------ NET ASSETS $82,096,446 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share:(a) Class A $11.75 Class B $11.71 Class C $11.72 Institutional $11.82 Service $11.76 ------------------------------------------------------------------------------ Shares outstanding: Class A 6,371,125 Class B 75,037 Class C 33,088 Institutional 504,557 Service 160 ------------------------------------------------------------------------------ Total shares outstanding, $0.001 par value (unlimited number of shares authorized) 6,983,967 ------------------------------------------------------------------------------ |
(a) Includes approximately $95,000 relating to initial margin requirements
for futures transactions.
(b) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A shares is $12.43. At redemption, Class B and Class C
shares may be subject to a contingent deferred sales charge, assessed on
the amount equal to the lesser of the current net asset value or the
original purchase price of the shares.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 1,142,109 Interest 34,247 ----------------------------------------------------------------------------- Total income 1,176,356 ----------------------------------------------------------------------------- Expenses: Management fees 451,498 Distribution and service fees(b) 200,123 Custodian fees 145,205 Transfer agent fees(c) 76,945 Professional fees 42,920 Registration fees 40,319 Trustee fees 6,273 Service share fees 6 Other 39,707 ----------------------------------------------------------------------------- Total expenses 1,002,996 ----------------------------------------------------------------------------- Less -- expenses reimbursed (227,469) ----------------------------------------------------------------------------- Net expenses 775,527 ----------------------------------------------------------------------------- NET INVESTMENT INCOME 400,829 ----------------------------------------------------------------------------- Realized and unrealized gain (loss) on investment, futures and foreign currency related transactions: Net realized gain from: Investment transactions 1,771,250 Futures transactions 18,310 Foreign currency related transactions 192,409 Net change in unrealized gain on: Investments (4,993,757) Futures (38,422) Translation of assets and liabilities denominated in foreign currencies (40,697) ----------------------------------------------------------------------------- Net realized and unrealized loss on investment, futures and foreign currency related transactions (3,090,907) ----------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(2,690,078) ----------------------------------------------------------------------------- |
(a) Taxes withheld on dividends were $132,015.
(b) Class A, Class B and Class C had distribution and service fees of
$192,446, $4,365 and $3,312, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $73,129, $829, $629, $2,357 and $1, respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statements of Changes in Net Assets
For the
Seven-Month For the
Period Ended Period Ended
August 31, 1999 January 31, 1999(a)
From operations:
Net investment income (loss) $ 400,829 $ (172,676)
Net realized gain from investment,
futures and foreign currency related
transactions 1,981,969 1,555,106
Net change in unrealized gain on
investments, futures and translation
of assets and liabilities denominated
in foreign currencies (5,072,876) 9,275,274
-----------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (2,690,078) 10,657,704
-----------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 30,108,519 65,352,139
Cost of shares repurchased (20,233,820) (1,098,018)
-----------------------------------------------------------------------------
Net increase in net assets resulting
from share transactions 9,874,699 64,254,121
-----------------------------------------------------------------------------
TOTAL INCREASE 7,184,621 74,911,825
-----------------------------------------------------------------------------
Net assets:
Beginning of period 74,911,825 --
-----------------------------------------------------------------------------
End of period $82,096,446 $74,911,825
-----------------------------------------------------------------------------
Accumulated net investment loss $ -- $ (175,403)
-----------------------------------------------------------------------------
|
(a) Commencement date of operations was October 1, 1998 for all share clas- ses.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout each Period
Income from
investment operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset Net In excess Net increase
value, investment Net realized From net of net (decrease)
beginning income and unrealized investment investment From net in net asset
of period (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $12.20 $0.05 $(0.50) $-- $-- $-- $(0.45)
1999 - Class B Shares 12.19 0.03 (0.51) -- -- -- (0.48)
1999 - Class C Shares 12.20 0.04 (0.52) -- -- -- (0.48)
1999 - Institutional
Shares 12.23 0.18 (0.59) -- -- -- (0.41)
1999 - Service Shares 12.20 0.08 (0.52) -- -- -- (0.44)
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares
(commenced October 1,
1998) 10.00 (0.03) 2.23 -- -- -- 2.20
1999 - Class B Shares
(commenced October 1,
1998) 10.00 (0.02) 2.21 -- -- -- 2.19
1999 - Class C Shares
(commenced October 1,
1998) 10.00 (0.01) 2.21 -- -- -- 2.20
1999 - Institutional
Shares (commenced Octo-
ber 1, 1998) 10.00 (0.01) 2.24 -- -- -- 2.23
1999 - Service Shares
(commenced October 1,
1998) 10.00 (0.03) 2.23 -- -- -- 2.20
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales or redemption charges. Total return would be reduced if a sales or
redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of Ratio of
Net assets Ratio of net investment Ratio of net investment
Net asset at end of net expenses income (loss) to expenses to income (loss) to Portfolio
value, end Total period to average average net average net average net turnover
of period return(b) (in 000s) net assets assets assets assets rate
$11.75 (3.69)%(d) $74,862 1.79%(c) 0.80%(c) 2.29%(c) 0.30%(c) 54.98%(d)
11.71 (3.94)(d) 879 2.29(c) 0.43(c) 2.79(c) (0.07)(c) 54.98(d)
11.72 (3.93)(d) 388 2.29(c) 0.42(c) 2.79(c) (0.08)(c) 54.98(d)
11.82 (3.35)(d) 5,965 1.14(c) 1.53(c) 1.64(c) 1.03(c) 54.98(d)
11.76 (3.61)(d) 2 1.64(c) 1.10(c) 2.14(c) 0.60(c) 54.98(d)
12.20 22.00(d) 61,151 1.79(c) (1.19)(c) 2.80(c) (2.20)(c) 70.77(d)
12.19 21.90(d) 432 2.29(c) (1.78)(c) 3.30(c) (2.79)(c) 70.77(d)
12.20 22.00(d) 587 2.29(c) (1.83)(c) 3.30(c) (2.84)(c) 70.77(d)
12.23 22.30(d) 12,740 1.14(c) (0.33)(c) 2.15(c) (1.34)(c) 70.77(d)
12.20 22.00(d) 2 1.64(c) (0.69)(c) 2.65(c) (1.70)(c) 70.77(d)
--------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs European Equity Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year end of the Fund from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for a seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securi- ties are valued at prices supplied by independent pricing services, broker / dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date or, if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
on current exchange rates; (ii) purchases and sales of foreign investments,
income and expenses are converted into U.S. dollars based on currency ex-
change rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes recorded and the
amounts actually received.
GOLDMAN SACHS EUROPEAN EQUITY FUND
D. Forward Foreign Currency Exchange Contracts -- The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell such contracts to seek to increase total re- turn. All commitments are "marked-to-market" daily at the applicable transla- tion rates and any resulting unrealized gains or losses are recorded in the Fund's financial statements. The Fund realizes gains or losses at the time a forward contract is offset by entry into a closing transaction or extin- guished by the delivery of the currency. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
E. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
F. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
G. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
H. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual fund of the Trust are generally allocated to the funds
based on a straight-line or pro rata basis depending upon the nature of the
expense.
Class A, Class B and Class C shares bear all expenses and fees relating to
their respective Distribution and Service plans. Shareholders of Service
shares bear all expenses and fees paid to service organizations. Each class
of shares of the Fund separately bears its respective class-specific transfer
agency fees.
I. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book / tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $80,573,070. Accordingly, the gross unrealized gain on
investments was $7,311,967 and the gross unrealized loss on investments was
$3,121,942 resulting in a net unrealized gain of $4,190,025.
GOLDMAN SACHS EUROPEAN EQUITY FUND
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs
Asset Management ("GSAM"), a separate operating division of Goldman, Sachs &
Co. ("Goldman Sachs"), serves as the investment adviser to the Fund. Under
the Agreement, GSAMI, subject to the general supervision of the Trust's Board
of Trustees, manages the Fund's portfolio. As compensation for the services
rendered under the Agreement, the assumption of the expenses related thereto
and administering the Fund's business affairs, including providing facili-
ties, GSAMI is entitled to a fee, computed daily and payable monthly, at an
annual rate equal to 1.00% of the average daily net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" (ex-
cluding management fees, distribution and service fees, transfer agent fees,
taxes, interest, brokerage, litigation, Service share fees, indemnification
costs and other extraordinary expenses) to the extent such expenses exceed,
on an annual basis, .10% of the average daily net assets of the Fund. Goldman
Sachs has agreed to reimburse approximately $227,000 for the period ended Au-
gust 31, 1999.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $218,000 for the period ended
August 31, 1999.
The Trust on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, up to .50%,
1.00%, and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. Fees
charged for such transfer agency services are calculated daily and payable
monthly at an annual rate as follows: 0.19% of average daily net assets for
Class A, Class B and Class C shares and 0.04% of average daily net assets for
Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This Plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$69,000, $32,000 and $12,000 for management, distribution and service and
transfer agent fees, respectively.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments and futures) for the period ended August 31, 1999, were
$56,125,932 and $41,061,882, respectively.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank, an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund, depending on the fluc-
tuations in the value of the contracts, and are recorded for financial re-
porting purposes as unrealized gains or losses. When contracts are closed,
the Fund realizes a gain or loss which is reported in the Statement of Opera-
tions.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contracts may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss.
At August 31, 1999, open futures contracts were as follows:
Number of
Contracts Settlement Market Unrealized
Type Long Month Value Loss
----------------------------------------------------------------------------------
FTSE 100 Index 3 September 1999 $300,902 $ (1,407)
MIB 30 Index 2 September 1999 356,876 (6,443)
EURX DAX Index 6 September 1999 839,166 (30,572)
----------------------------------------------------------------------------------
$(38,422)
----------------------------------------------------------------------------------
|
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
GOLDMAN SACHS EUROPEAN EQUITY FUND
6. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund reclassified $250,368 from accumulated undistributed net investment income to accumulated undis- tributed net realized gain from investments, futures and foreign currency re- lated transactions and $24,942 from paid-in-capital to accumulated undistributed net investment income. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund's capital accounts on a tax basis.
7. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month Period Ended For the Period Ended
August 31, 1999 January 31, 1999(a)
---------------------------------- ----------------------------
Shares Dollars Shares Dollars
-----------------------------------------------------------------------------------------
Class A Shares
Shares sold 2,119,807 $24,745,494 5,087,352 $53,619,415
Shares repurchased (759,657) (8,753,714) (76,377) (844,311)
-------------------------------------------------------------------
1,360,150 15,991,780 5,010,975 52,775,104
-----------------------------------------------------------------------------------------
Class B Shares
Shares sold 53,116 627,367 35,445 410,945
Shares repurchased (13,524) (156,078) -- --
-------------------------------------------------------------------
39,592 471,289 35,445 410,945
-----------------------------------------------------------------------------------------
Class C Shares
Shares sold 148,372 1,718,395 48,110 570,630
Shares repurchased (163,394) (1,909,241) -- --
-------------------------------------------------------------------
(15,022) (190,846) 48,110 570,630
-----------------------------------------------------------------------------------------
Institutional Shares
Shares sold 254,200 3,017,263 1,062,367 10,749,551
Shares repurchased (791,417) (9,414,787) (20,593) (253,707)
-------------------------------------------------------------------
(537,217) (6,397,524) 1,041,774 10,495,844
-----------------------------------------------------------------------------------------
Service Shares
Shares sold -- -- 160 1,598
-------------------------------------------------------------------
-- -- 160 1,598
-----------------------------------------------------------------------------------------
NET INCREASE 847,503 $ 9,874,699 6,136,464 $64,254,121
-----------------------------------------------------------------------------------------
|
(a)Commencement date of operations was October 1, 1998 for all share classes.
GOLDMAN SACHS EUROPEAN EQUITY FUND
Report of Independent Public Accountants To the Shareholders and Board of Trustees of Goldman Sachs Trust -- European Equity Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs European Equity Fund, one of the portfolios constituting Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related state- ment of operations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant esti- mates made by management, as well as evaluating the overall financial state- ment presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs European Equity Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 84.1%
Australia - 1.6%
61,300 AAPT Ltd.* (Telecommunications) $ 189,017
43,472 Cochlear Ltd. (Drugs) 450,701
66,500 Fairfax (John) Holdings Ltd. (Publishing) 193,164
35,000 Macquarie Bank Ltd. (Banks) 466,990
131,600 North Ltd.* (Mining) 290,686
51,200 Tab Corp. Holdings Ltd. (Entertainment) 349,741
91,500 Village Roadshow Ltd. (Entertainment) 176,409
-----------
2,116,708
-----------------------------------------------------------------------------
Britain - 6.2%
1,375,000 Belgo Group (Grocery) 154,847
88,000 Capita Group PLC (Construction) 981,111
184,000 Cattles PLC (Financial Services) 1,019,787
125,000 F.I. Group (Computer Software) 723,960
103,400 Future Network PLC* (Media) 781,845
89,611 Jarvis PLC (Construction) 425,291
174,785 Mayflower Corp. PLC (Auto) 719,857
72,500 Nestor Healthcare Group PLC (Health) 601,852
30,346 PizzaExpress PLC (Restaurants) 361,395
52,800 Serco Group (Business Services) 1,274,170
400,000 TBI (Financial Services) 604,909
62,356 The Berkeley Group PLC (Construction) 788,001
-----------
8,437,025
-----------------------------------------------------------------------------
China - 0.4%
562,000 Legend Holdings (Electrical Equipment) 542,827
-----------------------------------------------------------------------------
Denmark - 4.8%
20,268 Bang & Olufsen Holding A/S Series B (Entertainment) 1,192,710
12,103 Coloplast Class B (Medical Products) 1,212,846
18,654 Falck A/S (Electrical Equipment) 1,696,975
26,961 ISS International Service System Series B* (Business
Services) 1,486,933
16,424 Sondagsavisen A/S (Publishing) 867,681
-----------
6,457,145
-----------------------------------------------------------------------------
Finland - 2.3%
6,966 Helsingin Puhelin Oyj (Utilities) 324,235
30,220 Nokian Renkaat Oyj (Auto) 1,035,770
85,295 Rapala Normark Corp.* (Specialty Retail) 604,536
35,855 Tieto Corp. (Business Services) 1,213,735
-----------
3,178,276
-----------------------------------------------------------------------------
France - 7.9%
7,500 ALTEN* (Business Services) 618,842
5,500 Altran Technologies (Business Services) 1,502,834
5,000 Cerg Finance (Computer Software) 513,057
22,145 Entrelec Groupe SA (Electrical Utilities) 994,437
16,146 Etam (Specialty Retail) 785,682
6,327 FI System* (Business Services) 501,976
|
Shares Description Value
Common Stocks - (continued)
France - (continued)
12,306 GFI Informatique (Business Services) $ 909,951
15,912 IPSOS* (Media) 729,689
11,625 Laurent-Perrier* (Alcohol) 442,095
14,310 Leon de Bruxelles SA (Restaurants) 595,825
29,809 Royal Canin SA (Grocery) 1,876,239
4,215 Serp Recyclage SA* (Environmental Services) 579,649
5,354 Unibail (Real Estate) 739,116
-----------
10,789,392
-----------------------------------------------------------------------------
Germany - 4.0%
8,986 Allbecon AG (Business Services) 556,091
1,165 Bien-Haus AG (Construction) 208,275
11,944 Dis Deutscher Industrie (Business Services) 732,827
7,962 Intershop Communications AG* (Computer Software) 714,236
18,933 Kamps AG (Food & Beverage) 1,049,481
32,535 NSE Software AG* (Computer Software) 636,717
6,590 Rhoen-Klinikum AG (Health) 773,806
4,938 Tecis Holding AG* (Financial Services) 156,188
6,519 Wanderer-Werke AG* (Multi-Industrial) 596,515
-----------
5,424,136
-----------------------------------------------------------------------------
Hong Kong - 3.5%
950,000 Cafe De Coral Holdings (Restaurants) 449,619
165,200 Dah Sing Financial Holdings (Banks) 657,404
459,000 Dickson Concepts International Ltd. (Specialty
Retail) 425,607
686,000 Esprit Holdings (Multi-Industrial) 543,330
1,074,000 First Tractor Co. (Machinery) 221,304
758,000 Giordano International Ltd. (Specialty Retail) 702,855
680,000 Hengan International Group Co. Ltd.* (Health) 251,774
725,600 HKR International Ltd. (Real Estate) 560,677
280,000 Hong Kong Construction Holdings Ltd.* (Construction) 137,027
1,130,000 JCG Holdings Ltd. (Financial Services) 734,910
-----------
4,684,507
-----------------------------------------------------------------------------
Ireland - 0.5%
240,000 Kingspan Group PLC (Construction) 698,181
-----------------------------------------------------------------------------
Italy - 5.3%
80,000 Banca Popolare Commercio e Industria Ordinary Shares
(Banks) 1,926,979
3,566 Banca Popolare Commercio e Industria New Shares*
(Banks) 85,631
125,000 Banca Popolare di Milano BPM (Banks) 907,106
121,404 Brembo SpA* (Auto) 1,483,334
100,000 Gruppo Buffetti (Restaurants) 751,073
144,250 Gruppo Coin SpA* (Department Store) 1,254,329
128,563 Simint SpA (Apparel) 844,562
-----------
7,253,014
-----------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Shares Description Value
Common Stocks - (continued)
Japan - 26.9%
18,000 Able, Inc.* (Real Estate) $ 1,198,518
30,000 Aderans Co. Ltd. (Specialty Retail) 1,349,979
17,400 Aiphone Co. (Electrical Equipment) 265,770
15,000 Citizen Electronic (Electrical Equipment) 1,193,579
199,000 Daiwa Electronics (Consumer Durables) 768,080
7,500 Fuji Seal (Heavy Machinery) 1,022,088
87,000 Fujitec Co. Ltd. (Construction) 911,099
4,500 Funai Electric Co. Ltd. (Electrical Equipment) 1,298,532
55,000 Hakuto Co. (Electrical Equipment) 1,549,367
170,000 Hitachi Powdered Metals (Mining) 1,114,831
67,000 Inaba Denkisangyo (Electrical Equipment) 1,133,672
52,000 Iuchi Seieido Co. (Electrical Equipment) 1,521,928
50,000 Japan Business Computer Co. Ltd. (Computer Software) 1,189,006
57,400 Japan CBM Corp. (Electrical Equipment) 1,107,733
141,000 Kato Sangyo Co. Ltd. (Food & Beverage) 1,031,692
81,000 Kawasumi Labs, Inc. (Chemicals) 1,252,024
18,000 Koekisha Co. Ltd. (Medical Providers) 559,747
48,500 Komeri Co. Ltd. (Home Products) 1,525,952
20,000 Meitec Corp. (Business Services) 713,404
50,000 Ministop Co. Ltd. (Specialty Retail) 1,440,527
31,000 Mirai Industry Co. Ltd. (Multi-Industrial) 499,017
16,900 Misumi Corp. (Industrial Parts) 1,095,907
1,300 Nichii Gakkan Co. (Business Services) 201,180
58,000 Nippon Kanzai Co. (Business Services) 1,469,429
82,000 Ogura Clutch Co. Ltd. (Auto) 1,177,482
20,000 People Co. Ltd. (Health) 1,093,886
15,300 Riso Kagaku Corp. (Specialty Retail) 825,628
24,000 Rock Field Co. Ltd. (Grocery) 1,404,857
50,000 Sato Corp. (Machinery) 1,280,468
44,500 Sumitomo Real Estate (Real Estate) 1,786,756
9,000 Taiyo Ink Manufacturing Co. (Chemicals) 1,012,485
500 Toyo Kohan Co. Ltd. (Steel) 1,943
68,800 Trusco Nakayama (Wholesale) 1,025,692
63 Yoshinoya D&C Co. Ltd. (Restaurants) 1,498,148
-----------
36,520,406
---------------------------------------------------------------------------
Norway - 0.7%
40,542 Schibsted ASA (Media) 414,090
16,514 Tomra Systems ASA (Machinery) 580,863
-----------
994,953
---------------------------------------------------------------------------
Portugal - 0.5%
88,042 Seguros Imperio (Insurance) 629,594
---------------------------------------------------------------------------
Singapore - 2.0%
116,000 Datacraft Asia Ltd. (Telecommunications) 447,760
231,000 First Capital Corp. Ltd. (Real Estate) 321,081
436,000 GES International Ltd. (Computer Hardware) 437,684
115,000 Marco Polo Development Ltd. (Real Estate) 172,141
|
Shares Description Value
Common Stocks - (continued)
Singapore - (continued)
50,000 Natsteel Electronics Ltd. (Electrical Equipment) $ 249,480
110,000 Venture Manufacturing Ltd. (Electrical Equipment) 1,051,975
------------
2,680,121
---------------------------------------------------------------------------
Spain - 5.4%
89,760 Azkoyen SA* (Consumer Durables) 1,120,440
20,749 Banco Pastor (Banks) 976,745
17,310 Baron de Ley SA* (Alcohol) 657,378
49,700 Funespana (Medical Providers) 1,232,361
47,500 Sogecable SA* (Broadcasting) 1,295,390
42,600 Telefonica Publicidad e Informacion SA*
(Publishing) 977,897
212,384 TelePizza SA* (Restaurants) 1,112,118
------------
7,372,329
---------------------------------------------------------------------------
Sweden - 3.1%
135,900 Europolitan Holdings AB (Telecommunications) 1,271,019
54,677 Getinge Industrier AB Class B (Medical Products) 760,417
10,800 Icon Medialab International AB* (Business Services) 755,593
35,894 Iro AB (Machinery) 355,321
26,035 Sifo Group AB Series B (Business Services) 154,952
239,035 Swedish Match AB (Tobacco) 966,825
------------
4,264,127
---------------------------------------------------------------------------
Switzerland - 9.0%
728 Bachem AB Class B (Chemicals) 1,010,643
2,642 Belimo Holding AG (Construction) 890,739
10,465 Charles Voegele Holding AG* (Apparel) 1,826,377
1,168 Komax Group AG (Machinery) 652,449
535 Kudelski SA* (Electrical Equipment) 2,003,553
750 Lindt & Spruengli AG Class B (Food & Beverage) 1,946,024
2,390 Selecta Group (Food & Beverage) 1,056,991
4,970 Societe Generale D'Affichage (Media) 2,907,681
------------
12,294,457
---------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $95,026,851) $114,337,198
---------------------------------------------------------------------------
Preferred Stocks - 2.5%
Australia - 0.2%
308,500 Star City Holdings (Entertainment) $ 295,420
---------------------------------------------------------------------------
Germany - 2.3%
439 Porsche AG (Auto) 1,107,584
15,700 Rhoen-Klinikum AG Non-Voting (Health) 1,943,164
------------
3,050,748
---------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $2,806,193) $ 3,346,168
---------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Statement of Investments (continued)
August 31, 1999
Principal Interest Maturity Amount Rate Date Value Short-Term Obligation - 12.9% State Street Bank & Trust Euro- Time Deposit $17,603,000 5.50% 09/01/1999 $ 17,603,000 ----------------------------------------------- TOTAL SHORT-TERM OBLIGATION (Cost $17,603,000) $ 17,603,000 ----------------------------------------------- TOTAL INVESTMENTS (Cost $115,436,044) $135,286,366 ----------------------------------------------- |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
As a % of
total net assets
Common and Preferred Stock Industry Classi-
fications
Alcohol 0.8%
Apparel 2.0
Auto 4.1
Banks 3.7
Broadcasting 1.0
Business Services 8.9
Chemicals 2.4
Computer Hardware 0.3
Computer Software 2.8
Construction 3.7
Consumer Durables 1.4
Department Store 0.9
Drugs 0.3
Electrical Equipment 10.0
Electrical Utilities 0.7
Entertainment 1.5
Environmental Services 0.4
Financial Services 1.9
Food & Beverage 3.7
Grocery 2.5
Health 3.4
Heavy Machinery 0.8
Home Products 1.1
Industrial Parts 0.8
Insurance 0.5
Machinery 2.3
Media 3.6
Medical Products 1.5
Medical Providers 1.3
Mining 1.0
Multi-Industrial 1.2
Publishing 1.5
Real Estate 3.5
Restaurants 3.5
Specialty Retail 4.5
Steel 0.0
Telecommunications 1.4
Tobacco 0.7
Utilities 0.2
Wholesale 0.8
----------------------------------------------------
TOTAL COMMON AND PREFERRED STOCK 86.6%
----------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $115,436,044) $135,286,366 Cash, at value 849,190 Receivables: Investment securities sold, at value 1,123,139 Dividends and interest, at value 67,375 Fund shares sold 436,859 Variation margin(a) 318,162 Reimbursement from investment adviser 45,452 Deferred organization expenses, net 11,394 Other assets, at value 47,759 ------------------------------------------------------------------------------ Total assets 138,185,696 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased, at value 2,000,858 Fund shares repurchased 24,340 Amounts owed to affiliates 153,194 Accrued expenses and other liabilities, at value 53,748 ------------------------------------------------------------------------------ Total liabilities 2,232,140 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 112,525,738 Accumulated net realized gain from investment, futures and foreign currency related transactions 3,553,389 Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currencies 19,874,429 ------------------------------------------------------------------------------ NET ASSETS $135,953,556 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share(a) Class A $13.24 Class B $13.19 Class C $13.19 Institutional $13.35 Service $13.24 ------------------------------------------------------------------------------ Shares outstanding: Class A 5,245,931 Class B 22,961 Class C 31,736 Institutional 4,927,802 Service 161 ------------------------------------------------------------------------------ Total shares of beneficial interest outstanding, $.001 par value (unlimited number of shares authorized) 10,228,591 ------------------------------------------------------------------------------ |
(a) Includes approximately $241,000 relating to initial margin requirements
for futures transactions.
(b) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A shares is $14.01. At redemption, Class B and Class C
shares may be subject to a contingent deferred sales charge, assessed on
the amount equal to the lesser of the current net asset value or the
original purchase price of the shares.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 574,017 Interest 106,276 ----------------------------------------------------------------------------- Total income 680,293 ----------------------------------------------------------------------------- Expenses: Management fees 598,694 Custodian fees 121,972 Distribution and service fees(b) 118,084 Registration fees 60,428 Transfer agent fees(c) 55,015 Professional fees 36,828 Trustee fees 6,074 Amortization of deferred organization expenses 1,497 Service share fees 5 Other 38,258 ----------------------------------------------------------------------------- Total expenses 1,036,855 ----------------------------------------------------------------------------- Less -- expenses reimbursed (183,234) ----------------------------------------------------------------------------- Net expenses 853,621 ----------------------------------------------------------------------------- NET INVESTMENT LOSS (173,328) ----------------------------------------------------------------------------- Realized and unrealized gain (loss) on investment, futures and foreign currency related transactions: Net realized gain (loss) from: Investment transactions 3,763,753 Futures transactions (59,630) Foreign currency related transactions (43,302) Net change in unrealized gain (loss) on: Investments 17,331,142 Futures 27,792 Translation of assets and liabilities denominated in foreign currencies (42,019) ----------------------------------------------------------------------------- Net realized and unrealized gain on investment, futures and foreign currency related transactions 20,977,736 ----------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $20,804,408 ----------------------------------------------------------------------------- |
(a) Taxes withheld on dividends were $76,617.
(b) Class A, Class B and Class C had distribution and service fees of
$115,648, $1,354 and $1,082, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $43,945, $257, $206, $10,606 and $1, respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Statements of Changes in Net Assets
For the
Seven-Month For the
Period Ended Period Ended
August 31, 1999 January 31, 1999(a)
From operations:
Net investment loss $ (173,328) $ (147,894)
Net realized gain from investment,
futures and foreign currency related
transactions 3,660,821 232,160
Net change in unrealized gain on
investments, futures and translation
of assets and liabilities denominated
in foreign currencies 17,316,915 2,557,514
------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 20,804,408 2,641,780
------------------------------------------------------------------------------
Distributions to shareholders:
In excess of net investment income
Class A shares -- --
Class B shares -- --
Class C shares -- --
Institutional shares (3,921) (21,659)
Service shares -- --
------------------------------------------------------------------------------
Total distributions to shareholders (3,921) (21,659)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 58,890,454 81,743,079
Reinvestment of dividends 2,349 8,522
Cost of shares repurchased (14,124,187) (13,987,269)
------------------------------------------------------------------------------
Net increase in net assets resulting
from share transactions 44,768,616 67,764,332
------------------------------------------------------------------------------
TOTAL INCREASE 65,569,103 70,384,453
------------------------------------------------------------------------------
Net assets:
Beginning of period 70,384,453 --
------------------------------------------------------------------------------
End of period $135,953,556 $ 70,384,453
------------------------------------------------------------------------------
Accumulated distributions in excess of
net investment income $ -- $ (106,697)
------------------------------------------------------------------------------
|
(a) The Fund commenced operations on May 1, 1998 for all share classes.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout each Period
Income from
investment operations(a) Distributions to shareholders
--------------------------- ------------------------------------
Net asset In excess
value, Net Net realized From net of net
beginning investment and unrealized investment investment From net
of period loss gain income loss realized gains
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $10.62 $(0.03) $2.65 $-- $ -- $--
1999 - Class B Shares 10.61 (0.08)(e) 2.66(e) -- -- --
1999 - Class C Shares 10.61 (0.08)(e) 2.66(e) -- -- --
1999 - Institutional
Shares 10.66 -- 2.69 -- -- --
1999 - Service Shares 10.61 (0.02) 2.65 -- -- --
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares
(commenced May 1, 1998) 10.00 (0.04) 0.66 -- -- --
1999 - Class B Shares
(commenced May 1, 1998) 10.00 (0.10) 0.71 -- -- --
1999 - Class C Shares
(commenced May 1, 1998) 10.00 (0.06) 0.67 -- -- --
1999 - Institutional
Shares (commenced May 1,
1998) 10.00 -- 0.67 -- (0.01) --
1999 - Service Shares
(commenced May 1, 1998) 10.00 (0.02) 0.63 -- -- --
-----------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
(e) Calculated based on the average shares methodology.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of
Net assets Ratio of net investment Ratio of Ratio of net
Net increase Net asset at end of net expenses loss to expenses to investment loss to Portfolio
in net asset value, end Total period to average average net average net average net turnover
value of period return(b) (in 000s) net assets assets assets assets rate
$2.62 $13.24 24.67%(d) $69,458 2.05%(c) (0.68)%(c) 2.42%(c) (1.05)%(c) 58.81%(d)
2.58 13.19 24.32(d) 303 2.55(c) (1.16)(c) 2.92(c) (1.53)(c) 58.81(d)
2.58 13.19 24.32(d) 419 2.55(c) (1.21)(c) 2.92(c) (1.58)(c) 58.81(d)
2.69 13.35 25.24(d) 65,772 1.40(c) (0.05)(c) 1.77(c) (0.42)(c) 58.81(d)
2.63 13.24 24.79(d) 2 1.90(c) (0.35)(c) 2.27(c) (0.72)(c) 58.81(d)
--------------------------------------------------------------------------------------------------------------------------------
0.62 10.62 6.20(d) 33,002 2.02(c) (1.03)(c) 3.60(c) (2.61)(c) 96.11(d)
0.61 10.61 6.10(d) 213 2.51(c) (1.30)(c) 4.09(c) (2.88)(c) 96.11(d)
0.61 10.61 6.10(d) 175 2.51(c) (1.45)(c) 4.09(c) (3.03)(c) 96.11(d)
0.66 10.66 6.67(d) 36,992 1.40(c) (0.19)(c) 2.98(c) (1.77)(c) 96.11(d)
0.61 10.61 6.10(d) 2 1.90(c) (0.26)(c) 3.48(c) (1.84)(c) 96.11(d)
--------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs International Small Cap Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Serv- ice.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year end of the Fund from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for a seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securi- ties are valued at prices supplied by independent pricing services, broker / dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
on current exchange rates; (ii) purchases and sales of foreign investments,
income and expenses are converted into U.S. dollars based on currency ex-
change rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes recorded and the
amounts actually received.
D. Forward Foreign Currency Exchange Contracts -- The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell such contracts to seek to increase total re- turn. All commitments are "marked-to-market" daily at the applicable transla- tion rates and any resulting unrealized gains or losses are recorded in the Fund's financial statements. The Fund records realized gains or losses at the time a forward contract is offset by entry into a closing transaction or ex- tinguished by delivery of the currency. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
E. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
F. Deferred Organization Expenses -- Organization-related costs are amortized on a straight-line basis over a period of five years.
G. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
H. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into those transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
I. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required. The characterization of distributions to shareholders
for financial reporting purposes is determined in accordance with income tax
rules. Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net invest-
ment income or net realized gain on investment transactions, or from paid-in
capital, depending on the type of book/tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $115,509,337. Accordingly, the gross unrealized gain
on investments was $22,822,821 and the gross unrealized loss on investments
was $3,045,792 resulting in a net unrealized gain of $19,777,029.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Notes to Financial Statements (continued)
August 31, 1999
J. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual fund of the Trust are allocated to the funds based on a
straight-line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shares bear all expenses and fees relating to
their respective Distribution and Service plans. Shareholders of Service
shares bear all expenses and fees paid to service organizations. Each class
of shares of the Fund separately bears its respective class-specific transfer
agency fees.
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs
Asset Management ("GSAM"), a separate operating division of Goldman, Sachs &
Co. ("Goldman Sachs"), serves as the investment adviser to the Fund. Under
the Agreement, GSAMI, subject to the general supervision of the Trust's Board
of Trustees, manages the Fund's portfolio. As compensation for the services
rendered under the Agreement, the assumption of the expenses related thereto
and administering the Fund's business affairs, including providing facili-
ties, GSAMI is entitled to a fee, computed daily and payable monthly, at an
annual rate equal to 1.20% of the average daily net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" (ex-
cluding management fees, distribution and service fees, transfer agent fees,
taxes, interest, brokerage, litigation, Service share fees, indemnification
costs and other extraordinary expenses) to the extent such expenses exceed,
on an annual basis, .16% of the average daily net assets of the Fund. Goldman
Sachs has agreed to reimburse approximately $183,000 for the period ended Au-
gust 31, 1999.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .50%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $301,000 for the period ended
August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: 0.19% of average daily net assets
for Class A, Class B and Class C shares and 0.04% of average daily net assets
for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This Plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$119,000, $23,000 and $11,000 for management, distribution and service, and
transfer agent fees, respectively.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments and futures) for the period ended August 31, 1999, were
$78,432,241 and $49,097,556, respectively.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank, an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund, depending on the fluc-
tuations in the value of the contracts, and are recorded for financial re-
porting purposes as unrealized gains or losses. When contracts are closed,
the Fund realizes a gain or loss which is reported in the Statement of Opera-
tions.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss.
At August 31, 1999, open futures contracts were open as follows:
Number of
Type Contracts Long Settlement Month Market Value Unrealized Gain
-----------------------------------------------------------------------------
FTSE 100 Index 50 September 1999 $5,015,034 $27,792
-----------------------------------------------------------------------------
|
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
6. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund reclassified $2,262 from paid-in-capital to accumulated undistributed net investment income and $281,684 from accumulated net realized gain from investment, futures and for- eign currency related transactions to accumulated undistributed net invest- ment income. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund's capital accounts on a tax ba- sis.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Notes to Financial Statements (continued)
August 31, 1999
7. SUMMARY OF SHARE TRANSACTIONS
Share activity for the:
Seven-Month Nine-Month
Period Ended Period Ended
August 31, 1999 January 31, 1999(a)
---------------------- ----------------------
Shares Dollars Shares Dollars
--------------------------------------------------------------------------
Class A Shares
Shares sold 2,607,810 $32,403,673 3,789,828 $39,461,070
Shares repurchased (470,755) (5,480,465) (680,952) (6,496,553)
------------------------------------------
2,137,055 26,923,208 3,108,876 32,964,517
--------------------------------------------------------------------------
Class B Shares
Shares sold 6,837 79,235 24,738 250,752
Shares repurchased (3,975) (41,451) (4,639) (43,306)
------------------------------------------
2,862 37,784 20,099 207,446
--------------------------------------------------------------------------
Class C Shares
Shares sold 21,336 268,279 19,740 196,453
Shares repurchased (6,059) (68,915) (3,281) (32,610)
------------------------------------------
15,277 199,364 16,459 163,843
--------------------------------------------------------------------------
Institutional Shares
Shares sold 2,231,140 26,139,267 4,172,165 41,833,210
Reinvestment of dividends 183 2,349 851 8,522
Shares repurchased (773,017) (8,533,356) (703,520) (7,414,800)
------------------------------------------
1,458,306 17,608,260 3,469,496 34,426,932
--------------------------------------------------------------------------
Service Shares
Shares sold -- -- 161 1,594
------------------------------------------
-- -- 161 1,594
--------------------------------------------------------------------------
NET INCREASE 3,613,500 $44,768,616 6,615,091 $67,764,332
--------------------------------------------------------------------------
|
(a) The Fund commenced operations on May 1, 1998 for all share classes.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
8. OTHER MATTERS
As of August 31, 1999 the Goldman Sachs Growth and Income Strategy Portfolio and the Goldman Sachs Growth Strategy Portfolio were the beneficial owners of approximately 7% and 6% of the outstanding shares of the Fund, respectively.
GOLDMAN SACHS INTERNATIONAL SMALL CAP FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of Goldman Sachs Trust--Interna-
tional Small Cap Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs International Small Cap Fund, one of the portfolios constitut- ing Goldman Sachs Trust--Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related state- ment of operations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs International Small Cap Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 83.1%
China - 2.6%
1,402,000 Angang New Steel Co. Ltd. Class H (Steel) $ 198,613
356,000 China Telecom Ltd.* (Telecommunications) 1,104,921
330,000 Great Wall Technology Co. Class H (Electrical
Equipment) 214,619
444,000 Guangdong Kelon Electrical Holdings Co. Ltd. Class H
(Appliance) 454,584
1,238,000 Shandong International Power Development Co. Ltd.
Class H* (Electrical Utilities) 247,125
1,262,000 Yanzhou Coal Mining Co. Ltd. Class H (Mining) 552,589
------------
2,772,451
-------------------------------------------------------------------------------
Hong Kong - 25.8%
391,000 Axa China Region Ltd. (Insurance) 274,434
869,000 Cathay Pacific Airways (Airlines) 1,477,263
198,000 Cheung Kong Holdings Ltd. (Real Estate) 1,727,582
159,000 CLP Holdings Ltd. (Utilities) 751,497
1,178,000 Cosco Pacific Ltd. (Industrial Services) 1,031,617
262,400 Dah Sing Financial Holdings (Banks) 1,044,206
283,000 Dao Heng Bank Group Ltd. (Financial Services) 1,290,190
345,500 Dickson Concepts International Ltd. (Specialty
Retail) 320,365
486,000 First Pacific Co. (Financial Services) 375,536
744,000 Giordano International Ltd. (Specialty Retail) 689,874
168,000 Hang Seng Bank Ltd. (Banks) 1,898,543
1,060,000 Hengan International Group Co. Ltd.* (Health) 392,471
405,184 HKR International Ltd. (Real Estate) 313,089
729,000 Hong Kong & China Gas Co. Ltd. (Utilities) 1,037,418
1,051,400 Hong Kong Telecom (Telecommunications) 2,383,114
605,000 Hutchison Whampoa (Financial Services) 5,902,040
234,500 Johnson Electric Holdings Ltd. (Electrical Equipment) 1,057,000
370,000 Li & Fung Ltd. (Wholesale) 1,186,493
10,000 New World China Land Ltd.* (Real Estate) 8,049
425,000 New World Development Co. Ltd. (Real Estate) 1,023,516
862,000 South China Morning Post Holdings Ltd. (Publishing) 543,961
137,000 Sun Hung Kai Properties Co. Ltd. (Real Estate) 1,164,471
109,000 Television Broadcasts Ltd. (Media) 488,506
356,000 Wharf Holdings Co. Ltd. (Real Estate) 967,379
------------
27,348,614
-------------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
India - 11.2%
440 Colgate Palmolive Ltd. (Home Products) $ 2,839
2,144 Glaxo India Ltd. (Drugs) 34,767
34,300 Hindalco Industries Ltd. (Nonferrous Metals) 724,264
71,465 Hindustan Lever Ltd. (Home Products) 4,380,776
1,885 Hindustan Lever Ltd. (Tobacco) 115,550
43,000 Housing Development Finance Corp. Ltd.*
(Construction) 255,577
22,200 Infosys Technologies Ltd. (Computer Software) 2,859,575
68,796 ITC Ltd. (Multi-Industrial) 1,625,943
510 Larsen & Toubro Ltd. (Multi-Industrial) 4,593
87,400 Mahanagar Telephone Nigam Ltd. (Telephone) 406,091
14,400 Niit Ltd. (Business Services) 702,197
23,100 Punjab Tractors Ltd. (Agriculture) 732,266
------------
11,844,438
----------------------------------------------------------------------------
Indonesia - 2.3%
1,108,500 Pab K Tjiwi Kimia (Paper) 317,953
1,612,500 PT Bank Pan Indonesia Tbk - Alien Market (Banks) 294,329
133,600 PT Gudang Garam Tbk (Tobacco) 322,242
790,000 PT Indofood Sukses* (Food & Beverage) 844,589
2,516,000 PT Matahari Putra Prima Tbk* (Merchandising) 254,224
640,520 PT Telekomunikasi Indonesia Series B
(Telecommunications) 246,354
413,000 PT Tempo Scan Pacific Tbk (Health) 218,077
------------
2,497,768
----------------------------------------------------------------------------
Malaysia - 2.1%
84,000 Berjaya Sports Toto Berhad (Leisure) 194,526
53,000 Edaran Otomobil Nasional Berhad (Auto) 195,263
209,000 Malayan Banking Berhad (Banks) 687,500
69,000 New Straits Times Press M Berhad (Publishing) 150,711
28,000 Public Bank Berhad - Alien Market (Banks) 26,379
343,000 Public Bank Berhad (Banks) 288,842
189,000 Resorts World Berhad (Leisure) 479,961
79,000 Tenaga Nasional Berhad (Electrical Utilities) 180,868
------------
2,204,050
----------------------------------------------------------------------------
Philippines - 1.6%
108,000 Bank of the Philippine Islands (Banks) 310,321
54,190 Manila Electric Co. Class B (Electrical Utilities) 161,170
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
Shares Description Value
Common Stocks - (continued)
Philippines - (continued)
45,400 Metropolitan Bank and Trust (Banks) $ 374,758
20,400 Philippine Long Distance Telephone Co.
(Telecommunications) 483,327
2,074,400 SM Prime (Construction) 381,679
------------
1,711,255
---------------------------------------------------------------------------
Singapore - 5.1%
152,000 City Developments (Real Estate) 920,939
22,000 Cycle & Carriage Ltd. (Auto) 124,146
178,000 Datacraft Asia Ltd. (Telecommunications) 687,080
150,000 First Capital Corp. Ltd. (Real Estate) 208,494
348,000 GES International Ltd. (Computer Hardware) 349,344
75,664 Singapore Press Holdings Ltd. (Publishing) 1,258,445
474,000 Singapore Telecommunications Ltd.
(Telecommunications) 841,853
107,000 Venture Manufacturing Ltd. (Electrical Equipment) 1,023,285
------------
5,413,586
---------------------------------------------------------------------------
South Korea - 17.1%
12,150 Daelim Industrial Co. (Construction) 186,804
47,440 Hana Bank (Banks) 421,957
100,278 Hankook Tire Co. Ltd. (Auto) 464,651
15,010 Hite Brewery Co.* (Alcohol) 469,182
23,420 Honam Petrochemical Corp. (Chemicals) 480,105
8,030 Housing & Commercial Bank* (Banks) 187,741
17,000 Hyundai Motor Co. Ltd.* (Auto) 527,065
23,570 Hyundai Securities (Financial Services) 557,055
84,340 Korea Electric Power Corp. (Electrical Utilities) 3,143,549
7,900 Korea Telecom Corp. ADR* (Telecommunications) 256,750
30,500 LG Chemical Ltd. (Chemicals) 974,036
20,000 LG Electronics (Appliance) 847,099
3,381 Pohang Iron & Steel Co. Ltd. (Steel) 452,518
28,630 Pohang Iron & Steel Co. Ltd. ADR (Steel) 1,052,153
28,749 Samsung Electronics (Consumer Durables) 5,455,126
115,690 Shinhan Bank (Banks) 1,244,611
274 Sindo Ricoh (Electrical Equipment) 10,677
6,330 SK Corp. (Energy Resources) 152,821
171 SK Telecom Co. Ltd. (Telecommunications) 171,072
5,898 SK Telecom Co. Ltd. ADR (Telecommunications) 66,721
14,433 Trigem Computer, Inc. (Computer Software) 1,075,903
------------
18,197,596
---------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
Taiwan - 12.1%
303,600 Acer Peripherals, Inc. (Business Services) $ 787,642
239,750 Acer, Inc. (Computer Hardware) 512,673
60,000 Asustek Computer, Inc. (Computer Hardware) 645,283
1,006,356 Bank Sinopac (Financial Services) 620,270
217,850 Cathay Life Insurance Co. (Insurance) 654,235
674,560 Chinatrust Commercial Bank (Banks) 674,560
98,800 Compeq Manufacturing Co. Ltd. (Electrical Equipment) 497,107
452,720 Evergreen Marine Corp. (Ship Transportation) 468,380
719,040 Far Eastern Textile Ltd. (Apparel) 1,042,382
151,650 Formosa Plastics Corp. (Chemicals) 290,901
176,400 Hon Hai Precision (Electrical Equipment) 1,148,264
589,200 Kang Na Hsiung Enterprise (Home Products) 383,536
421,000 Macronix International Co. Ltd. (Semiconductors) 513,673
198,240 President Chain Stores (Specialty Retail) 585,992
56,640 Quanta Computer (Business Services) 552,151
1 Siliconware Precis (Electrical Equipment) 2
543,156 Taiwan Semiconductor (Electrical Equipment) 2,305,851
437,000 United Microelectonics Corp. Ltd. (Electrical
Equipment) 1,113,113
------------
12,796,015
------------------------------------------------------------------------------
Thailand - 3.2%
40,000 Advanced Info Service Public-Alien Market*
(Telecommunications) 549,060
52,000 BEC World PLC - Alien Market (Entertainment) 309,395
58,000 Delta Electronics Thailand Public Co. Ltd. - Alien
Market (Electrical Equipment) 460,125
258,000 Land and House Public Co. Ltd. - Alien Market* (Real
Estate) 390,501
12,500 Siam Cement Public - Alien Market* (Construction) 323,591
847,300 TelecomAsia Corp. Public - Alien Market*
(Telecommunications) 812,585
211,300 Thai Farmers Bank - Alien Market* (Banks) 303,275
242,000 Tipco Asphalt Public Co. Ltd. - Alien Market*
(Construction) 268,398
------------
3,416,930
------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $69,760,620) $ 88,202,703
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Investments (continued)
August 31, 1999
Shares/
Units Description Value
Preferred Stock - 0.2%
Thailand - 0.2%
210,400 Siam Commercial Bank Public Co. Ltd.* (Banks) $ 238,841
----------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $147,829) $ 238,841
----------------------------------------------------------------------------
Rights - 0.2%
Taiwan - 0.0%
38,640 Quanta Computer Inc. - Rights exp. 09/09/1999*
(Computer Hardware) $ 110
Thailand - 0.2%
211,300 Thai Farmers Bank Public Co. Ltd. -Alien Market -
Rights exp. 09/16/1999* (Banks) 192,993
----------------------------------------------------------------------------
TOTAL RIGHTS
(Cost $0) $ 193,103
----------------------------------------------------------------------------
Warrants - 0.1%
Indonesia - 0.0%
178,500 PT Bank Pan Indonesia Tbk -Alien Market exp.
07/08/2002* (Banks) $ 9,891
----------------------------------------------------------------------------
Thailand - 0.1%
210,400 Siam Commercial Bank Public Co. Ltd. - Alien Market
exp. 05/10/2002* (Banks) 94,713
----------------------------------------------------------------------------
TOTAL WARRANTS
(Cost $0) $ 104,604
----------------------------------------------------------------------------
|
Equity Swaps - 3.1%
Singapore - 3.1%
87,000 Units Development Bank of Singapore
Equity Swap*
exp. 05/18/2000 $ 992,890
69,000 Units Development Bank of Singapore
Equity Swap*
exp. 05/25/2000 787,465
64,000 Units Development Bank of Singapore
Equity Swap*
exp. 07/28/2000 727,855
123,000 Units Overseas Chinese Banking
Corporation Equity Swap*
exp. 05/18/2000 811,720
----------------------------------------------------------
TOTAL EQUITY SWAPS
(Cost $2,850,462) $ 3,319,930
----------------------------------------------------------
|
Shares/
Units Description Value
Structured Notes - 11.2%
Singapore - 2.0%
33,000 Units Merrill Lynch International - SIA exp.
02/18/2000* $ 302,445
91 Units UBS AG Equity Linked Note -Overseas Chinese
Banking Corporation exp. 04/10/2000* 653,007
74 Units UBS AG Equity Linked Note -Singapore Airlines
exp. 04/10/2000* 693,395
70 Units UBS AG Equity Linked Note -United Overseas
Bank exp. 04/10/2000* 456,645
-----------------------------------------------------------------------------
2,105,492
-----------------------------------------------------------------------------
South Korea - 3.6%
396,323 Units Merrill Lynch Call Warrant on KOSPI 200 exp.
09/03/2000* 3,768,279
-----------------------------------------------------------------------------
Taiwan - 5.6%
161,224 Units Taiwan Index Linked Note exp. 12/30/1999 1,804,096
3,300,000 Units Taiwan Index Linked Note exp. 03/27/2000 4,148,430
-----------------------------------------------------------------------------
5,952,526
-----------------------------------------------------------------------------
TOTAL STRUCTURED NOTES
(Cost $8,265,020) $ 11,826,297
-----------------------------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Short-Term Obligation - 2.4% State Street Bank & Trust Euro- Time Deposit $2,595,000 5.50% 09/01/1999 $ 2,595,000 ----------------------------------------------- TOTAL SHORT-TERM OBLIGATION (Cost $2,595,000) $ 2,595,000 ----------------------------------------------- TOTAL INVESTMENTS (Cost $83,618,931) $106,480,478 ----------------------------------------------- |
* Non-income producing security.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
As a % of
total net assets
Common and Preferred Stock Industry Classifications
Agriculture 0.7%
Airlines 1.4
Alcohol 0.5
Apparel 1.0
Appliance 1.2
Auto 1.2
Banks 7.5
Business Services 1.9
Chemicals 1.7
Computer Hardware 1.4
Computer Software 3.7
Construction 1.3
Consumer Durables 5.1
Drugs 0.0
Electrical Equipment 7.4
Electrical Utilities 3.5
Energy Resources 0.2
Entertainment 0.3
Financial Services 8.2
Food & Beverage 0.8
Health 0.6
Home Products 4.5
Industrial Services 1.0
Insurance 0.9
Leisure 0.6
Media 0.5
Merchandising 0.2
Mining 0.5
Multi-Industrial 1.5
Nonferrous Metals 0.7
Paper 0.3
Publishing 1.8
Real Estate 6.3
Semiconductors 0.5
Ship Transportation 0.5
Specialty Retail 1.5
Steel 1.6
Telecommunications 7.2
Telephone 0.4
Tobacco 0.4
Utilities 1.7
Wholesale 1.1
---------------------------------------------------
TOTAL COMMON AND
PREFERRED STOCK 83.3%
---------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $83,618,931) $106,480,478 Cash, at value 280,501 Receivables: Investment securities sold, at value 1,497,940 Dividends and interest, at value 154,163 Fund shares sold 149,471 Reimbursement from investment adviser 67,546 Other assets, at value 35,994 ------------------------------------------------------------------------------ Total assets 108,666,093 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased, at value 1,029,743 Capital gains tax 1,147,250 Fund shares repurchased 82,050 Amounts owed to affiliates 144,295 Accrued expenses and other liabilities, at value 92,135 ------------------------------------------------------------------------------ Total liabilities 2,495,473 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 181,349,428 Accumulated net realized loss from investment, futures and foreign currency related transactions (96,891,937) Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currencies 21,713,129 ------------------------------------------------------------------------------ NET ASSETS $106,170,620 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share(a) Class A $11.07 Class B $10.88 Class C $10.85 Institutional $11.24 ------------------------------------------------------------------------------ Shares outstanding: Class A 7,609,126 Class B 667,091 Class C 210,286 Institutional 1,099,697 ------------------------------------------------------------------------------ Total shares outstanding, $.001 par value (unlimited number of shares authorized) 9,586,200 ------------------------------------------------------------------------------ |
(a) Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A shares is $11.71. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 686,073 Interest 47,286 ----------------------------------------------------------------------------- Total income 733,359 ----------------------------------------------------------------------------- Expenses: Management fees 501,770 Distribution and service fees(b) 250,094 Custodian fees 137,465 Transfer agent fees(c) 88,932 Registration fees 72,739 Professional fees 45,145 Trustee fees 6,074 Other 32,460 ----------------------------------------------------------------------------- Total expenses 1,134,679 ----------------------------------------------------------------------------- Less -- expenses reimbursed (211,592) ----------------------------------------------------------------------------- Net expenses 923,087 ----------------------------------------------------------------------------- NET INVESTMENT LOSS (189,728) ----------------------------------------------------------------------------- Realized and unrealized gain (loss) on investment, futures and foreign currency related transactions: Net realized gain (loss) from: Investment transactions 2,517,806 Futures transactions 774,816 Foreign currency related transactions (79,301) Net change in unrealized gain (loss) on: Investments 26,459,314 Translation of assets and liabilities denominated in foreign currencies 2,769 ----------------------------------------------------------------------------- Net realized and unrealized gain on investment, futures and foreign currency related transactions 29,675,404 ----------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $29,485,676 ----------------------------------------------------------------------------- |
(a) Taxes withheld on dividends were $54,723.
(b) Class A, Class B and Class C had distribution and service fees of
$208,976, $32,196 and $8,922, respectively.
(c) Class A, Class B, Class C and Institutional Class had transfer agent fees
of $79,412, $6,117, $1,695 and $1,708, respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Changes in Net Assets
For the Seven-Month Period Ended August 31, 1999
From operations: Net investment loss $ (189,728) Net realized gain from investment, futures and foreign currency related transactions 3,213,321 Net change in unrealized gain (loss) on investments and translation of assets and liabilities denominated in foreign currencies 26,462,083 ---------------------------------------------------------------------------- Net increase in net assets resulting from operations 29,485,676 ---------------------------------------------------------------------------- Distributions to shareholders: In excess of net investment income Class A shares -- Class B shares -- Class C shares -- Institutional shares (43,226) ---------------------------------------------------------------------------- Total distributions to shareholders (43,226) ---------------------------------------------------------------------------- From share transactions: Proceeds from sales of shares 97,742,029 Reinvestment of dividends and distributions 40,413 Cost of shares repurchased (90,383,194) ---------------------------------------------------------------------------- Net increase in net assets resulting from share transactions 7,399,248 ---------------------------------------------------------------------------- TOTAL INCREASE 36,841,698 ---------------------------------------------------------------------------- Net assets: Beginning of period 69,328,922 ---------------------------------------------------------------------------- End of period $106,170,620 ---------------------------------------------------------------------------- |
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Changes in Net Assets
For the Year Ended January 31, 1999
From operations: Net investment income $ 492,262 Net realized loss from investment, futures and foreign currency related transactions (27,883,885) Net change in unrealized loss on investments, futures and translation of assets and liabilities denominated in foreign currencies 21,285,501 ----------------------------------------------------------------------------- Net decrease in net assets resulting from operations (6,106,122) ----------------------------------------------------------------------------- From share transactions: Proceeds from sales of shares 138,273,446 Cost of shares repurchased (154,943,929) ----------------------------------------------------------------------------- Net decrease in net assets resulting from share transactions (16,670,483) ----------------------------------------------------------------------------- TOTAL DECREASE (22,776,605) ----------------------------------------------------------------------------- Net assets: Beginning of year 92,105,527 ----------------------------------------------------------------------------- End of year $ 69,328,922 ----------------------------------------------------------------------------- Accumulated distributions in excess of net investment income $ (105,797) ----------------------------------------------------------------------------- |
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from
investment operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset Net In excess Net increase
value, investment Net realized From net of net (decrease)
beginning income and unrealized investment investment From net in net asset
of period (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $ 7.79 $(0.02) $3.30 $ -- $ -- $ -- $3.28
1999 - Class B Shares 7.68 (0.04) 3.24 -- -- -- 3.20
1999 - Class C Shares 7.68 (0.04) 3.21 -- -- -- 3.17
1999 - Institutional
Shares 7.91 0.01 3.36 -- (0.04) -- 3.33
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 8.38 0.07 (0.66) -- -- -- (0.59)
1999 - Class B Shares 8.31 0.01 (0.64) -- -- -- (0.63)
1999 - Class C Shares 8.29 -- (0.61) -- -- -- (0.61)
1999 - Institutional
Shares 8.44 0.03 (0.56) -- -- -- (0.53)
----------------------------------------------------------------------------------------------------------------
1998 - Class A Shares 16.31 -- (7.90) -- (0.03) -- (7.93)
1998 - Class B Shares 16.24 0.01 (7.91) -- (0.03) -- (7.93)
1998 - Class C Shares
(commenced August 15,
1997) 15.73 0.01 (7.42) -- (0.03) -- (7.44)
1998 - Institutional
Shares 16.33 0.10 (7.96) (0.03) -- -- (7.89)
----------------------------------------------------------------------------------------------------------------
1997 - Class A Shares 16.49 0.06 (0.11) (0.12) -- (0.01) (0.18)
1997 - Class B Shares
(commenced May 1, 1996) 17.31 (0.05) (0.48) (0.51) (0.03) -- (1.07)
1997 - Institutional
Shares (commenced Febru-
ary 2, 1996) 16.61 0.04 (0.11) (0.11) (0.06) (0.04) (0.28)
----------------------------------------------------------------------------------------------------------------
1996 - Class A Shares 13.31 0.17 3.44 (0.12) (0.14) (0.17) 3.18
FOR THE PERIOD ENDED JANUARY 31,
1995 - Class A Shares
(commenced July 8, 1994) 14.18 0.11 (0.89) 0.01 -- (0.10) (0.87)
----------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS ASIA GROWTH FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of Ratio of
Net assets Ratio of net investment Ratio of net investment
Net asset at end of net expenses income (loss) expenses income (loss) to Portfolio
value, end Total period to average to average to average average turnover
of period return(b) (in 000s) net assets net assets net assets net assets rate
---------------------------------------------------------------------------------------------------------------------
$11.07 42.11%(d) $84,269 1.85%(c) (0.38)%(c) 2.27%(c) (0.80)%(c) 96.58%(d)
10.88 41.67(d) 7,258 2.35(c) (0.90)(c) 2.77(c) (1.32)(c) 96.58(d)
10.85 41.28(d) 2,281 2.35(c) (0.89)(c) 2.77(c) (1.31)(c) 96.58(d)
11.24 42.61(d) 12,363 1.20(c) 0.14(c) 1.62(c) (0.28)(c) 96.58(d)
---------------------------------------------------------------------------------------------------------------------
7.79 (7.04) 59,940 1.93 0.63 2.48 0.08 106.00
7.68 (7.58) 4,190 2.45 0.10 2.97 (0.42) 106.00
7.68 (7.36) 999 2.45 0.10 2.97 (0.42) 106.00
7.91 (6.28) 4,200 1.16 1.10 1.68 0.58 106.00
---------------------------------------------------------------------------------------------------------------------
8.38 (48.49) 87,437 1.75 0.31 1.99 0.07 105.16
8.31 (48.70) 3,359 2.30 (0.29) 2.50 (0.49) 105.16
8.29 (47.17)(d) 436 2.35(c) (0.26)(c) 2.55(c) (0.46)(c) 105.16
8.44 (48.19) 874 1.11 0.87 1.31 0.67 105.16
---------------------------------------------------------------------------------------------------------------------
16.31 (1.01) 263,014 1.67 0.20 1.87 -- 48.40
16.24 (6.02)(d) 3,354 2.21(c) (0.56)(c) 2.37(c) (0.72)(c) 48.40
16.33 (1.09)(d) 13,322 1.10(c) 0.54(c) 1.26(c) 0.38(c) 48.40
---------------------------------------------------------------------------------------------------------------------
16.49 26.49 205,539 1.77 1.05 2.02 0.80 88.80
---------------------------------------------------------------------------------------------------------------------
13.31 (5.46)(d) 124,298 1.90(c) 1.83(c) 2.38(c) 1.35(c) 36.08(d)
---------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Asia Growth Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service (Service shares have not commenced operations).
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year end of the Fund from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for-
eign securities exchange or the NASDAQ system are valued daily at their last
sale or closing price on the principal exchange on which they are traded. If
no sale occurs, securities are valued at the last bid price. Debt securities
are valued at prices supplied by independent pricing services, broker / deal-
er-supplied valuations or matrix pricing systems. Unlisted equity and debt
securities for which market quotations are available are valued at the last
sale price on the valuation date or, if no sale occurs, at the last bid
price. Short-term debt obligations maturing in sixty days or less are valued
at amortized cost. Securities for which quotations are not readily available
are valued at fair value using methods approved by the Board of Trustees of
the Trust.
Investing in emerging markets may involve special risks and considerations
not typically associated with investing in the United States. These risks in-
clude revaluation of currencies, high rates of inflation, repatriation re-
strictions on income and capital and future adverse political and economic
developments. Moreover, securities issued in these markets may be less liq-
uid, subject to government ownership controls, delayed settlements, and their
prices may be more volatile than those of comparable securities in the United
States.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned. In ad- dition, it is the Fund's policy to accrue for estimated capital gains taxes on appreciated foreign securities held.
C. Derivative Financial Instruments -- The Fund may utilize derivative finan- cial instruments such as structured notes and equity swaps. Such instruments are used by the Fund as a means of investing in a particular market or in- creasing the return on the Fund's investments or both. The value of the prin- cipal and/or interest on such securities is determined by reference to changes in the value of the financial indicators including, but not limited to indices, currencies or interest rates. These financial instruments may subject the Fund to a greater degree of market or counterparty risk and loss than other types of securities.
GOLDMAN SACHS ASIA GROWTH FUND
D. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
on current exchange rates; (ii) purchases and sales of foreign investments,
income and expenses are converted into U.S. dollars based on currency ex-
change rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes recorded and the
amounts actually received.
E. Forward Foreign Currency Exchange Contracts -- The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell such contracts to seek to increase total re- turn. All commitments are "marked-to-market" daily at the applicable transla- tion rates and any resulting gains or losses are recorded in the Fund's financial statements. The Fund realizes gains or losses at the time a forward contract is offset by entry into a closing transaction or extinguished by de- livery of the currency. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of their con- tracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
F. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements (continued)
August 31, 1999
G. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
GOLDMAN SACHS ASIA GROWTH FUND
H. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, mortgage dollar rolls, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
I. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual Fund of the Trust are allocated to the Funds based on a
straight-line or pro rata basis depending on the nature of the expense.
Class A, Class B and Class C shares bear all expenses and fees relating to
their respective Distribution and Service plans. Shareholders of Service
shares bear all expenses and fees paid to service organizations. Each class
of shares of the Fund separately bears its respective class-specific transfer
agency fees.
J. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required. The characterization of distributions to shareholders
for financial reporting purposes is determined in accordance with income tax
rules. Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net invest-
ment income or net realized gain on investment transactions, or from paid-in
capital, depending on the type of book / tax differences that may exist.
The Fund had approximately $95,393,000 at August 31, 1999 (the Fund's tax
year end) of capital loss carryforwards expiring 2002 through 2007 for fed-
eral tax purposes. These amounts are available to be carried forward to off-
set future capital gains to the extent permitted by applicable laws or
regulations.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $85,163,314. Accordingly, the gross unrealized gain on
investments was $23,258,713 and the gross unrealized loss on investments was
$1,941,549 resulting in a net unrealized gain of $21,317,164.
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements (continued)
August 31, 1999
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs
Asset Management ("GSAM"), a separate operating division of Goldman, Sachs &
Co. ("Goldman Sachs"), serves as the investment adviser to the Fund. Under
the Agreement, GSAMI, subject to the general supervision of the Trust's Board
of Trustees, manages the Fund's portfolio. As compensation for the services
rendered under the Agreement, the assumption of the expenses related thereto
and administering the Fund's business affairs, including providing facili-
ties, GSAMI is entitled to a fee, computed daily and payable monthly, at an
annual rate equal to 1.00% of the average daily net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" (ex-
cluding management fees, distribution and service fees, transfer agent fees,
taxes, interest, brokerage, litigation, indemnification costs and other ex-
traordinary expenses) to the extent such expenses exceed, on an annual basis,
.16% of the average daily net assets of the Fund. Goldman Sachs has agreed to
reimburse approximately $212,000 for the period ended August 31, 1999.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .50%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $106,000 for the period ended
August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able monthly at an annual rate as follows: 0.19% of average daily net assets
for Class A, Class B and Class C Shares and 0.04% of average daily net assets
for Institutional shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$87,000, $42,000 and $15,000 for management, distribution and service and
transfer agent fees, respectively.
GOLDMAN SACHS ASIA GROWTH FUND
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments and futures transactions) for the period ended August 31,
1999, were $89,434,272 and $81,172,174, respectively.
For the period ended August 31, 1999, Goldman Sachs earned approximately
$35,000 of brokerage commissions from portfolio transactions.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank, an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund, depending on the fluc-
tuations in the value of the contracts, and are recorded as unrealized gains
or losses. When contracts are closed, the Fund realizes a gain or loss which
is reported in the Statement of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contracts may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At August 31, 1999, the Fund had no open futures
contracts.
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements (continued)
August 31, 1999
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. The facility is to be used solely for temporary or emergency pur- poses. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
GOLDMAN SACHS ASIA GROWTH FUND
6. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month
Period For the Year Ended
Ended August 31, 1999 January 31, 1999
-----------------------------
--------------------------
Shares Dollars Shares Dollars
------------------------------------------------------------------------------
Class A Shares
Shares sold 7,428,461 $ 68,519,866 15,227,587 $ 114,095,624
Shares repurchased (7,511,626) (69,221,284) (17,965,578) (136,028,026)
---------------------------------------------------
(83,165) (701,418) (2,737,991) (21,932,402)
------------------------------------------------------------------------------
Class B Shares
Shares sold 201,786 2,022,897 345,699 2,823,123
Shares repurchased (80,372) (733,280) (204,359) (1,519,808)
---------------------------------------------------
121,414 1,289,617 141,340 1,303,315
------------------------------------------------------------------------------
Class C Shares
Shares sold 2,420,991 19,122,822 2,148,809 16,213,829
Shares repurchased (2,340,851) (18,439,726) (2,071,174) (15,859,777)
---------------------------------------------------
80,140 683,096 77,635 354,052
------------------------------------------------------------------------------
Institutional Shares
Shares sold 753,741 8,076,444 636,785 5,140,870
Reinvestment of divi-
dends 3,661 40,413 -- --
Shares repurchased (188,772) (1,988,904) (209,306) (1,536,318)
---------------------------------------------------
568,630 6,127,953 427,479 3,604,552
------------------------------------------------------------------------------
NET INCREASE (DECREASE) 687,019 $ 7,399,248 (2,091,537) $ (16,670,483)
------------------------------------------------------------------------------
|
7. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund reclassified $338,751 from paid-in capital to accumulated undistributed net investment income and $624,078 from paid-in capital to accumulated net realized loss from invest- ment, futures and foreign currency related transactions. These reclassifica- tions have no impact on the net asset value of the Fund and are designed to present the Fund's capital accounts on a tax basis.
GOLDMAN SACHS ASIA GROWTH FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust -- Asia
Growth Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Asia Growth Fund, one of the portfolios constituting Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including the state- ment of investments, as of August 31, 1999, and the related statement of op- erations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Asia Growth Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS JAPANESE EQUITY FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 90.3%
Japan - 90.3%
38,000 77 Bank Ltd. (Banks) $ 372,232
4,100 Advantest Corp. (Electrical Equipment) 556,867
5,750 Aiful Corp. (Financial Services) 999,748
10,700 Aiphone Co. (Electrical Equipment) 163,433
161,000 Asahi Chemical Industry Co. Ltd. (Chemicals) 861,435
170,000 Asahi Glass Co. Ltd. (Home Products) 1,075,959
98,000 Bank of Tokyo-Mitsubishi (Banks) 1,465,496
40,000 Bridgestone Corp. (Auto) 1,134,129
14,000 Canon, Inc. (Computer Hardware) 409,750
48,000 Chiba Bank Ltd. (Banks) 180,436
51,000 Citizen Watch Co. (Specialty Retail) 439,402
35,000 Dai-Ichi Kangyo Bank Ltd. (Banks) 368,455
88 East Japan Railway Co. (Railroads) 533,626
19,600 Familymart Co. (Specialty Retail) 1,007,472
20,100 Fanuc Ltd. (Machinery) 1,213,335
36,000 Fuji Bank Ltd. (Banks) 372,068
34,000 Fuji Photo Film Ltd. (Leisure) 1,243,884
63,000 Fujitec Co. Ltd. (Construction) 659,761
51,000 Fujitsu Ltd. (Computer Hardware) 1,497,325
45,000 Hitachi Construction Machinery Co. Ltd. (Heavy
Machinery) 279,874
25,000 Honda Motor Co. Ltd. (Auto) 1,006,082
30,000 Inaba Denkisangyo (Electrical Equipment) 507,614
90,000 Industrial Bank of Japan Ltd. (Banks) 917,821
7,000 Ito En Ltd. (Food & Beverage) 541,638
53 Japan Tobacco, Inc. (Tobacco) 736,818
33,000 Kao Corp. (Food & Beverage) 938,675
2,000 Keyence Corp. (Industrial Parts) 454,566
72,000 Kirin Brewery Ltd. (Alcohol) 875,840
12,100 Konami Co. Ltd. (Computer Software) 1,061,316
10,000 Matsumotokyoshi (Specialty Retail) 748,159
8,800 Meitec Corp. (Business Services) 313,898
44,000 Minebea Co. (Electrical Equipment) 531,211
28,100 Ministop Co. Ltd. (Specialty Retail) 809,576
9,600 Misumi Corp. (Industrial Parts) 622,527
70,000 Mitsubishi Corp. (Wholesale) 583,253
161,000 Mitsui Co. (Wholesale) 1,135,327
168,000 Mitsui Marine & Fire (Insurance) 923,474
251,000 Mitsui Mining & Smelting (Mining) 1,485,316
12,000 Murata Manufacturing Co. Ltd. (Industrial Parts) 965,839
58,000 NEC Corp. (Computer Hardware) 944,254
7,900 Nintendo Co. Ltd. (Entertainment) 1,372,845
76,000 Nippon Mining & Metals Co. Ltd. (Mining) 590,845
194 Nippon Telephone & Telegraph Corp. (Telecommunications) 2,182,467
125 NTT Mobile Communications Network, Inc.
(Telecommunications) 2,071,615
80,000 Ricoh Co. Ltd. (Computer Hardware) 1,428,271
7,800 Riso Kagaku Corp. (Specialty Retail) 420,908
4,000 Rohm Co. (Electrical Equipment) 797,549
123,000 Sakura Bank Ltd. (Banks) 652,490
85,000 Sanwa Bank (Banks) 1,166,141
8,000 Secom Co. Ltd. (Business Services) 1,093,886
|
Shares Description Value
Common Stocks - (continued)
Japan - (continued)
77,000 Sharp Corp. (Electrical Equipment) $ 1,176,110
30,000 Shin-Etsu Chemical Co. Ltd. (Chemicals) 1,223,762
3,500 SMC Corp. (Machinery) 534,596
117,000 Sumitomo Bakelite (Chemicals) 1,224,201
50,000 Sumitomo Electric Industries (Electrical Equipment) 681,392
21,000 Taisho Pharmaceutical Co. Ltd. (Drugs) 885,444
16,000 Takeda Chemical Industries Ltd. (Health) 804,866
9,000 Takefuji Corp. (Financial Services) 1,449,582
11,000 TDK Corp. (Computer Hardware) 1,338,089
23,000 Terumo Corp. (Medical Products) 736,269
5,300 Toho Co. (Specialty Retail) 819,225
49,000 Tokyo Electric Power (Electrical Utilities) 1,142,818
54,000 Toppan Forms Co. Ltd. (Publishing) 1,276,718
31,000 Yamanouchi Pharmaceutical (Drugs) 1,383,637
15,300 York-Benimaru Co. Ltd. (Specialty Retail) 597,531
22 Yoshinoya D&C Co. Ltd. (Restaurants) 523,163
--------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $44,374,508) $58,512,311
--------------------------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Short-Term Obligation - 4.3% State Street Bank & Trust Euro-Time Deposit $2,785,000 5.50% 09/01/1999 $ 2,785,000 ---------------------------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATION (Cost $2,785,000) $ 2,785,000 ---------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (Cost $47,159,508) $61,297,311 ---------------------------------------------------------------------------------------------- |
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS JAPANESE EQUITY FUND
As a % of
total net assets
Common Stock Industry Concentrations
Alcohol 1.3%
Auto 3.3
Banks 8.5
Business Services 2.2
Chemicals 5.1
Computer Hardware 8.7
Computer Software 1.6
Construction 1.0
Drugs 3.5
Electrical Equipment 6.8
Electrical Utilities 1.8
Entertainment 2.1
Financial Services 3.8
Food & Beverage 2.3
Health 1.2
Heavy Machinery 0.4
Home Products 1.7
Industrial Parts 3.2
Insurance 1.4
Leisure 1.9
Machinery 2.7
Medical Products 1.1
Mining 3.2
Publishing 2.0
Railroads 0.8
Restaurants 0.8
Specialty Retail 7.5
Telecommunications 6.6
Tobacco 1.1
Wholesale 2.7
-------------------------------------------------------
TOTAL COMMON STOCK 90.3%
-------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS JAPANESE EQUITY FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $47,159,508) $61,297,311 Cash, at value 3,468,919 Receivables: Investment securities sold, at value 647,838 Dividends and interest, at value 18,484 Fund shares sold 360,773 Variation margin(a) 578,571 Reimbursement from investment adviser 65,324 Deferred organization expenses, net 11,364 Other assets 587 ------------------------------------------------------------------------------ Total assets 66,449,171 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased, at value 1,145,071 Fund shares repurchased 205,000 Amounts owed to affiliates 76,394 Forward foreign currency exchange contracts, at value 141,914 Accrued expenses and other liabilities, at value 87,256 ------------------------------------------------------------------------------ Total liabilities 1,655,635 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 46,431,275 Accumulated undistributed net investment income 270,409 Accumulated net realized gain from investment, futures and foreign currency related transactions 3,907,447 Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currencies 14,184,405 ------------------------------------------------------------------------------ NET ASSETS $64,793,536 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share:(b) Class A $16.24 Class B $16.14 Class C $16.16 Institutional $16.36 Service $16.22 ------------------------------------------------------------------------------ Shares outstanding: Class A 2,111,110 Class B 261,435 Class C 221,794 Institutional 1,388,399 Service 161 ------------------------------------------------------------------------------ Total shares outstanding, $.001 par value (unlimited number of shares authorized) 3,982,899 ------------------------------------------------------------------------------ |
(a) Includes approximately $182,000 relating to initial margin requirements
for futures transactions.
(b) Maximum public offering price per share for Class A shares is $17.19 (NAV
per share multiplied by 1.0582). At redemption, Class B and Class C
shares are subject to a contingent deferred sales charge, assessed on the
amount equal to the lesser of the current net asset value or the original
purchase price of the shares.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS JAPANESE EQUITY FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 107,462 Interest 27,508 ----------------------------------------------------------------------------- Total income 134,970 ----------------------------------------------------------------------------- Expenses: Management fees 226,009 Distribution and service fees(b) 79,638 Registration fees 61,739 Custodian fees 52,275 Professional fees 36,828 Transfer agent fees(c) 29,296 Trustee fees 6,273 Amortization of deferred organization expenses 1,493 Service share fees 6 Other 52,975 ----------------------------------------------------------------------------- Total expenses 546,532 ----------------------------------------------------------------------------- Less -- expenses reimbursed (208,419) ----------------------------------------------------------------------------- Net expenses 338,113 ----------------------------------------------------------------------------- NET INVESTMENT LOSS (203,143) ----------------------------------------------------------------------------- Realized and unrealized gain on investment, futures and foreign currency related transactions: Net realized gain from: Investment transactions 4,007,670 Futures transactions 101,078 Foreign currency related transactions 221,442 Net change in unrealized gain (loss) on: Investments 12,189,344 Futures 20,305 Translation of assets and liabilities denominated in foreign currencies 33,076 ----------------------------------------------------------------------------- Net realized and unrealized gain on investment, futures and foreign currency related transactions 16,572,915 ----------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $16,369,772 ----------------------------------------------------------------------------- |
(a) Taxes withheld on dividends were $19,075.
(b) Class A, Class B and Class C had distribution and service fees of
$55,407, $15,230 and $9,001, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $21,053, $2,894, $1,710, $3,638 and $1, respec-
tively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS JAPANESE EQUITY FUND
Statements of Changes in Net Assets
For the
Seven-Month For the
Period Ended Period Ended
August 31, 1999 January 31, 1999(a)
From operations:
Net investment loss $ (203,143) $ (86,973)
Net realized gain from investment,
futures and foreign currency related
transactions 4,330,190 140,585
Net change in unrealized gain on
investments, futures and translation
of assets and liabilities denominated
in foreign currencies 12,242,725 1,941,680
-----------------------------------------------------------------------------
Net increase in net assets resulting
from operations 16,369,772 1,995,292
-----------------------------------------------------------------------------
Distributions to shareholders:
In excess of net investment income
Class A shares (1,121) --
Class B shares -- --
Class C shares (715) --
Institutional shares (1,768) (6,204)
Service shares -- --
-----------------------------------------------------------------------------
Total distributions to shareholders (3,604) (6,204)
-----------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 29,653,297 23,719,687
Reinvestment of dividends and
distributions 3,181 --
Cost of shares repurchased (2,751,373) (4,186,512)
-----------------------------------------------------------------------------
Net increase in net assets resulting
from share transactions 26,905,105 19,533,175
-----------------------------------------------------------------------------
TOTAL INCREASE 43,271,273 21,522,263
-----------------------------------------------------------------------------
Net assets:
Beginning of period 21,522,263 --
-----------------------------------------------------------------------------
End of period $64,793,536 $21,522,263
-----------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess) of net
investment income $ 270,409 $ (34,385)
-----------------------------------------------------------------------------
|
(a) Commencement date of operations was May 1, 1998 for all share classes.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS JAPANESE EQUITY FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end, manage- ment investment company. The Trust includes the Goldman Sachs Japanese Equity Fund (the "Fund"). The Fund is a diversified portfolio offering five classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year end of the Fund from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for- eign securities exchange or the NASDAQ system are valued daily at their last sale or closing price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker / deal- er-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on the valuation date or, if no sale occurs the last bid price. Short-term debt obligations maturing in sixty days or less are valued at am- ortized cost. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment
valuations, foreign currency and other assets and liabilities initially
expressed in foreign currencies are converted each business day into U.S.
dollars based on current exchange rates; (ii) purchases and sales of foreign
investments, income and expenses are converted into U.S. dollars based on
currency exchange rates prevailing on the respective dates of such
transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes recorded and the
amounts actually received.
GOLDMAN SACHS JAPANESE EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
D. Forward Foreign Currency Exchange Contracts -- The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell such contracts to seek to increase total re- turn. All commitments are "marked-to-market" daily at the applicable transla- tion rates and any resulting unrealized gains or losses are recorded in the Fund's financial statements. The Fund records realized gains or losses at the time a forward contract is offset by entry into a closing transaction or ex- tinguished by delivery of the currency. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.
E. Short Securities Position -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked to market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
F. Deferred Organization Expenses -- Organization-related costs are amortized on a straight-line basis over a period of five years.
G. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
GOLDMAN SACHS JAPANESE EQUITY FUND
H. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, mortgage dollar rolls, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
I. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual Fund of the Trust are allocated to the Funds based on a
straight-line or prorata basis depending upon the nature of the expense.
Class A, Class B and Class C shares bear all expenses and fees relating to
their respective Distribution and Service Plans. Shareholders of Service
shares bear all expenses and fees paid to service organizations. Each class
of shares of the Fund separately bears its respective class-specific transfer
agency fees.
J. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required. The characterization of distributions to shareholders
for financial reporting purposes is determined in accordance with income tax
rules. Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net invest-
ment income or net realized gain on investment transactions, or from paid-in
capital, depending on the type of book / tax differences that may exist.
At August 31, 1999, the aggregate cost of portfolio securities for federal
income tax purposes is $47,261,756. Accordingly, the gross unrealized gain on
investments was $14,350,960 and the gross unrealized loss on investments was
$315,405 resulting in a net unrealized gain of $14,035,555.
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs
Asset Management ("GSAM"), a separate operating division of Goldman Sachs &
Co. ("Goldman Sachs") serves as the investment adviser to the Fund. Under the
Agreement, GSAMI, subject to the general supervision of the Trust's Board of
Trustees, manages the Fund's portfolio. As compensation for the services ren-
dered under the Agreement, the assumption of the expenses related thereto and
administering the Fund's business affairs, including providing facilities,
GSAMI is entitled to a fee, computed daily and payable monthly, at an annual
rate equal to 1.00% of the average daily net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" (ex-
cluding management fees, distribution and service fees, transfer agent fees,
taxes, interest, brokerage, litigation, Service share fees, indemnification
costs and other extraordinary expenses) to the extent such expenses exceed,
on an annual basis, .01% of the average daily net assets of the Fund. Goldman
Sachs has agreed to reimburse approximately $208,000 for the period ended Au-
gust 31, 1999.
The Trust, on behalf of the Fund, had adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or Autho-
rized Dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .50%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
GOLDMAN SACHS JAPANESE EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $13,000 for the period ended
August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agent services are calculated daily and pay-
able monthly at an annual rate as follows: 0.19% of average daily net assets
for Class A, Class B and Class C Shares and 0.04% of average daily net assets
for Institutional and Service Shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This Plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$50,000, $19,000 and $7,000 for management, distribution and service and
transfer agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments and futures transactions) for the period ended August 31,
1999, were $38,131,660 and $16,215,586, respectively.
For the period ended August 31, 1999, Goldman Sachs earned approximately
$3,000 of brokerage commissions from portfolio transactions.
At August 31, 1999, the Fund had the following outstanding forward foreign
currency exchange contracts:
Value on Unrealized
Open Forward Foreign Currency Settlement Current ----------------
Sale Contracts Date Value Gain Loss
--------------------------------------------------------------------------------
Japanese Yen
expiring 9/10/1999 $ 250,000 $ 275,276 $ -- $ 25,276
expiring 9/20/1999 108,396 116,638 $ -- 8,242
--------------------------------------------------------------------------------
TOTAL OPEN FORWARD FOREIGN CURRENCY
SALE CONTRACTS $ 358,396 $ 391,914 $ -- $ 33,518
--------------------------------------------------------------------------------
|
Realized
Closed but Unsettled Purchase -------------
Forward Currency Contracts Value Sale Value Gain Loss
--------------------------------------------------------------------------
Japanese Yen
expiring 9/20/1999 $4,002,000 $3,893,604 $ -- $108,396
--------------------------------------------------------------------------
TOTAL CLOSED BUT UNSETTLED FORWARD
FOREIGN CURRENCY CONTRACTS $4,002,000 $3,893,604 $ -- $108,396
--------------------------------------------------------------------------
|
GOLDMAN SACHS JAPANESE EQUITY FUND
The contractual amounts of forward foreign currency exchange contracts do
not necessarily represent the amounts potentially subject to risk. The mea-
surement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At August 31,
1999, the Fund had sufficient cash and securities to cover any commitments
under these contracts.
The Fund has recorded a "Payable for forward foreign currency exchange con-
tracts" of $141,914 in the accompanying Statement of Assets and Liabilities.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank, an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund, depending on the fluc-
tuations in the value of the contracts, and are recorded as unrealized gains
or losses. When contracts are closed, the Fund realizes a gain or loss which
is reported in the Statement of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contracts may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss.
At August 31, 1999, open futures contracts were as follows:
Number of
Contracts Settlement Market Unrealized
Type Long Month Value Gain
---------------------------------------------------------------------------------------
TOPIX Index 25 September 1999 $3,357,799 $20,305
---------------------------------------------------------------------------------------
$3,357,799 $20,305
---------------------------------------------------------------------------------------
|
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted, unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency proposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
GOLDMAN SACHS JAPANESE EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
6. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund reclassified $509,285 from accumulated net realized gain from investment and foreign currency re- lated transactions to accumulated undistributed net investment income and $2,256 from paid-in-capital to accumulated undistributed net investment in- come. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund's capital accounts on a tax basis.
7. OTHER MATTERS
As of August 31, 1999, the Goldman Sachs Group was the beneficial owner of approximately 25% of the outstanding shares of the Fund.
GOLDMAN SACHS JAPANESE EQUITY FUND
8. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month
Period Ended For the Period Ended
August 31, 1999 January 31, 1999(a)
---------------------- ----------------------
Shares Dollars Shares Dollars
------------------------------------------------------------------------------
Class A Shares
Shares sold 1,490,616 $19,567,798 974,018 $ 9,912,925
Reinvestment of dividends and
distributions 61 921 -- --
Shares repurchased (138,512) (1,823,081) (215,073) (2,211,327)
-------------------------------------
1,352,165 17,745,638 758,945 7,701,598
------------------------------------------------------------------------------
Class B Shares
Shares sold 156,293 2,037,345 143,378 1,452,502
Reinvestment of dividends and
distributions -- -- -- --
Shares repurchased (24,231) (344,034) (14,005) (144,559)
-------------------------------------
132,062 1,693,311 129,373 1,307,943
------------------------------------------------------------------------------
Class C Shares
Shares sold 209,165 2,748,964 197,598 2,047,960
Reinvestment of dividends and
distributions 44 665 -- --
Shares repurchased (13,133) (201,949) (171,880) (1,830,626)
-------------------------------------
196,076 2,547,680 25,718 217,334
------------------------------------------------------------------------------
Institutional Shares
Shares sold 384,318 5,299,190 1,028,740 10,304,702
Reinvestment of dividends and
distributions 104 1,595 -- --
Shares repurchased (24,763) (382,309) -- --
-------------------------------------
359,659 4,918,476 1,028,740 10,304,702
------------------------------------------------------------------------------
Service Shares
Shares sold -- -- 161 1,598
-------------------------------------
-- -- 161 1,598
------------------------------------------------------------------------------
NET INCREASE 2,039,962 $26,905,105 1,942,937 $19,533,175
------------------------------------------------------------------------------
|
(a) Commencement date of operations was May 1, 1998 for all share classes.
GOLDMAN SACHS JAPANESE EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout each Period
Income from
investment operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset In excess
value, Net Net realized From net of net Net increase
beginning investment and unrealized investment investment From net in net asset
of period loss gains income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $11.06 $(0.06) $5.24 $-- $-- $-- $5.18
1999 - Class B Shares 11.03 (0.09) 5.20 -- -- -- 5.11
1999 - Class C Shares 11.04 (0.08) 5.20 -- -- -- 5.12
1999 - Institutional
Shares 11.10 (0.03) 5.29 -- -- -- 5.26
1999 - Service Shares 11.04 (0.06) 5.24 -- -- -- 5.18
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares
(commenced May 1, 1998) 10.00 (0.06) 1.12 -- -- -- 1.06
1999 - Class B Shares
(commenced May 1, 1998) 10.00 (0.08) 1.11 -- -- -- 1.03
1999 - Class C Shares
(commenced May 1, 1998) 10.00 (0.09) 1.13 -- -- -- 1.04
1999 - Institutional
Shares (commenced May 1,
1998) 10.00 (0.02) 1.13 -- (0.01) -- 1.10
1999 - Service Shares
(commenced May 1, 1998) 10.00 (0.05) 1.09 -- -- -- 1.04
----------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS JAPANESE EQUITY FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of
Net assets Ratio of net investment Ratio of Ratio of
Net asset at end of net expenses loss to expenses to net investment loss Portfolio
value, end Total period to average average net average to average net turnover
of period return(b) (in 000s) net assets assets net assets assets rate
$16.24 46.84%(d) $34,279 1.70%(c) (1.17)%(c 2.62%(c (2.09)%(c) 44.83%(d)
16.14 46.33(d) 4,219 2.20(c) (1.57)(c) 3.12(c) (2.49)(c) 44.83(d)
16.16 46.41(d) 3,584 2.20(c) (1.81)(c) 3.12(c) (2.73)(c) 44.83(d)
16.36 47.40(d) 22,709 1.05(c) (0.37)(c) 1.97(c) (1.29)(c) 44.83(d)
16.22 46.92(d) 3 1.55(c) (0.74)(c) 2.47(c) (1.66)(c) 44.83(d)
11.06 10.60(d) 8,391 1.64(c) (1.20)(c) 4.18(c) (3.74)(c) 53.29(d)
11.03 10.30(d) 1,427 2.15(c) (1.76)(c) 4.69(c) (4.30)(c) 53.29(d)
11.04 10.40(d) 284 2.15(c) (1.69)(c) 4.69(c) (4.23)(c) 53.29(d)
11.10 11.06(d) 11,418 1.03(c) (0.36)(c) 3.57(c) (2.90)(c) 53.29(d)
11.04 10.43(d) 2 1.53(c) (0.68)(c) 4.07(c) (3.22)(c) 53.29(d)
----------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS JAPANESE EQUITY FUND
Report of Independent Public Accountants To the Shareholders and Board of Trustees of Goldman Sachs Trust -- Japanese Equity Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Japanese Equity Fund, one of the portfolios constituting Goldman Sachs Trust--Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related statement of operations, the statements of changes in net assets and the financial high- lights for the periods presented. These financial statements and the finan- cial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Japanese Equity Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Investments
August 31, 1999
Shares Description Value
Common Stocks - 80.7%
Argentina - 1.6%
22,251 Cresud S.A.C.I.F.y A. ADR (Agriculture) $ 229,464
18,483 IRSA Inversiones y Represent SA GDR (Real Estate) 536,007
155,700 Perez Compac SA Class B (Energy Resources) 906,296
38,700 Telefonica de Argentina SA Class B ADR
(Telecommunications) 1,151,325
------------
2,823,092
------------------------------------------------------------------------------
Brazil - 5.1%
224,916,200 Cia Energetica Class A (Utilities) 491,492
33,100 Companhia Cervejaria Brahma ADR (Food & Beverage) 349,619
6,485 Companhia Energetica de Minas Gerais-CEMIG ADR
(Electrical Utilities) 98,086
168,087 Embratel Participacoes SA ADR (Telecommunications) 1,796,430
45,676 Tele Centro Sul Participacoes SA ADR
(Telecommunications) 2,497,906
143,154 Tele Norte Leste Participacoes SA ADR
(Telecommunications) 2,290,464
88,128 Telesp Participacoes SA ADR (Telecommunications) 1,437,588
------------
8,961,585
------------------------------------------------------------------------------
Britain - 0.2%
196,915 Coca-Cola Beverages PLC* (Food & Beverage) 398,847
------------------------------------------------------------------------------
Chile - 3.3%
26,600 Banco BHIF ADR (Financial Services) 412,300
27,400 Banco Santiago ADR (Banks) 575,400
57,000 Cia de Telecomunicaciones de Chile SA ADR
(Telecommunications) 1,282,500
23,100 Compania Cervecerias Unidas SA ADR (Food &
Beverage) 604,931
56,800 Distribucion y Servicio D&S SA ADR (Merchandising) 937,200
68,900 Embotelladora Andina SA Series B ADR (Food &
Beverage) 900,007
56,446 Empresa Nacional de Electricidad SA Endesa ADR
(Electrical Utilities) 698,519
21,404 Enersis SA ADR (Electrical Utilities) 480,252
------------
5,891,109
------------------------------------------------------------------------------
China - 1.5%
1,158,000 Angang New Steel Co. Ltd. Class H (Steel) 164,046
1,387,000 Beijing Datang Power Generation Co. Ltd. Class H
(Electrical Utilities) 370,645
368,000 Beijing Yanhua Petrochemical Co. Ltd. Class H
(Chemicals) 77,724
609,000 China Southern Airlines Co. Ltd. Class H*
(Airlines) 142,742
|
Shares Description Value
Common Stocks - (continued)
China - (continued)
198,000 China Telecom Ltd.* (Telecommunications) $ 614,535
215,000 Guangdong Kelon Electrical Holdings Co. Ltd. Class
H (Appliance) 220,125
1,219,000 Jiangxi Copper Co. Ltd. Class H (Nonferrous Metals) 219,784
282,000 Legend Holdings (Electrical Equipment) 272,380
720,000 Qingling Motors Co. Ltd. Class H (Machinery) 160,414
516,000 Shandong International Power Development Co. Ltd.
Class H* (Electrical Utilities) 103,002
1,393,000 Zhejiang Expressway Co. Ltd. Class H (Business
Services) 247,568
------------
2,592,965
-------------------------------------------------------------------------------
Colombia - 0.7%
29,200 Banco Ganadero SA Class B ADR (Banks) 512,825
237,700 Bavaria SA (Food & Beverage) 719,863
------------
1,232,688
-------------------------------------------------------------------------------
Czech Republic - 0.9%
16,450 Ceska Sporitelna* (Banks) 81,375
141,100 CEZ* (Electrical Utilities) 307,820
12,980,864 Spif Cesky* (Financial Services) 392,337
45,815 SPT Telecom AS* (Telecommunications) 779,734
------------
1,561,266
-------------------------------------------------------------------------------
Greece - 4.1%
14,635 Alpha Credit Bank (Banks) 1,100,947
10,835 Attica Enterprises (Ship Transportation) 186,029
7,020 Commercial Bank of Greece (Banks) 681,741
3,480 EFG Eurobank (Banks) 132,588
1,740 Ergo Bank SA (Banks) 157,977
94,515 Hellenic Telecommunications Organization SA (OTE)
(Telecommunications) 1,961,401
7,130 Heracles General Cement SA (Construction) 224,026
896 Intracom (Electrical Equipment) 77,834
11,528 Mailis (Industrial Services) 306,142
20,755 National Bank of Greece (Banks) 1,534,416
28,146 STET Hellas Telecommunications SA ADR*
(Telecommunications) 482,000
3,005 Titan Cement Co SA (Construction) 328,903
------------
7,174,004
-------------------------------------------------------------------------------
Hungary - 1.0%
6,000 BorsodChem Rt. (Chemicals) 174,478
3,230 Gedeon Richter Ltd. Class S GDR (Medical Products) 161,500
21,572 Magyar Travkozlesi Rt ADR (Telecommunications) 655,249
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Shares Description Value
Common Stocks - (continued)
Hungary - (continued)
19,580 Mol Magyar Olaj-es Gazipari Rt Class S GDR (Energy
Resources) $ 496,353
4,800 North American Bus Industries Rt.* (Motor Vehicle) 91,989
3,445 OTP Bank Rt. GDR (Banks) 156,748
------------
1,736,317
------------------------------------------------------------------------------
India - 9.0%
86,050 Hindalco Industries Ltd. GDR+ (Nonferrous Metals) 2,387,887
44,000 Infosys Technologies Ltd. ADR (Business Services) 4,364,250
89,600 ITC Ltd. GDR (Tobacco) 2,755,200
148,150 Mahanagar Telephone Nigam Ltd. GDR
(Telecommunications) 1,592,612
183,500 Mahindra & Mahindra Ltd. GDR (Auto) 2,137,775
44,700 Ranbaxy Laboratories Ltd. GDR (Medical Products) 1,173,375
77,800 Reliance Industries Ltd. GDR (Chemicals) 863,580
41,100 State Bank of India GDR (Banks) 570,263
------------
15,844,942
------------------------------------------------------------------------------
Indonesia - 2.4%
55,024 Daya Guna Samudera (Food & Beverage) 22,239
1,122,500 Indah Kiat Paper & Pulp. Corp.* (Paper) 409,778
2,582,800 PT Bank Pan Indonesia Tbk -Alien Market (Banks) 471,437
292,000 PT Gudang Garam Tbk (Tobacco) 704,302
798,000 PT Indofood Sukses* (Food & Beverage) 853,142
1,872,000 PT Matahari Putra Prima Tbk* (Merchandising) 189,153
201,500 PT Semen Gresik Persero Tbk (Construction) 394,068
368,500 PT Tambang Timah Tbk (Nonferrous Metals) 242,624
2,394,200 PT Telekomunikasi Indonesia Series B
(Telecommunications) 920,846
------------
4,207,589
------------------------------------------------------------------------------
Israel - 3.4%
461,430 Bank Hapoalim (Banks) 1,063,797
288,562 Bank Leumi (Banks) 498,606
207,697 Bezeq Israel Telecomm* (Telecommunications) 751,541
24,300 Blue Square-Israel Ltd. ADR (Specialty Retail) 344,756
2,400 Check Point Software Technologies Ltd. (Computer
Software) 185,100
24,400 ECI Telecom Ltd. (Electrical Equipment) 692,350
7,500 Formula Systems Ltd.* (Computer Software) 187,935
5,200 Gilat Satellite Networks Ltd.* (Electrical
Equipment) 245,050
|
Shares Description Value
Common Stocks - (continued)
Israel - (continued)
176,217 ICL Israel Chemical (Chemicals) $ 172,805
9,706 IDB Holding Corp. Ltd. (Multi-Industrial) 262,204
1,300 Israel Corp. Ltd.* (Multi-Industrial) 139,740
21,413 Koors Industries Ltd. ADR (Multi-Industrial) 377,404
11,800 Scitex Corp Ltd.* (Computer Hardware) 110,625
68,418 Super Sol (Merchandising) 179,506
17,860 Teva Pharmaceutical Industries Ltd. ADR (Medical
Products) 840,536
------------
6,051,955
------------------------------------------------------------------------------
Malaysia - 1.6%
148,000 Edaran Otomobil Nasional Berhad (Auto) 545,263
335,000 Malayan Banking Berhad (Banks) 1,101,974
186,000 New Straits Times Press M Berhad (Publishing) 406,263
302,000 Resorts World Berhad (Leisure) 766,921
------------
2,820,421
------------------------------------------------------------------------------
Mexico - 10.2%
285,100 Alfa SA Series A (Multi-Industrial) 1,077,854
959,900 Cifra Ser C Class C* (Merchandising) 1,451,606
46,100 Desc SA de CV Series C ADR (Multi-Industrial) 901,831
29,100 Fomento Economico Mexicano, SA de CV Series B
(Food & Beverage) 962,119
273,400 Grupo Carso SA Series A (Multi-Industrial) 1,058,370
515,900 Grupo Financiero Banamax Accival, SA de CV Banacci
Series O* (Banks) 988,946
733,000 Grupo Modelo SA Series C (Tobacco) 1,955,447
35,800 Grupo Televisa SA ADR* (Broadcasting) 1,302,225
299,400 Kimberly Clark Class A (Medical Products) 946,984
98,200 Telefonos de Mexico SA ADR (Telecommunications) 7,303,625
------------
17,949,007
------------------------------------------------------------------------------
Pakistan - 0.3%
79,000 Fauji Fertilizer Co. Ltd. (Chemicals) 78,124
352,000 Hub Power Co. Ltd. (Electrical Utilities) 124,515
37,000 Pakistan State Oil Co. Ltd. (Energy Resources) 89,156
610,000 Pakistan Telecommunications Co. Ltd. Class A
(Telecommunications) 246,940
------------
538,735
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Common Stocks - (continued)
Peru - 0.7%
31,100 Credicorp Ltd. (Banks) $ 320,719
68,800 Telefonica del Peru SAA Class B ADR
(Telecommunications) 941,700
------------
1,262,419
------------------------------------------------------------------------------
Philippines - 3.6%
3,113,000 Ayala Land, Inc. (Real Estate) 776,779
113,800 Bank of the Philippine Islands (Banks) 326,987
238,500 Manila Electric Co. Class B (Electrical Utilities) 709,338
129,130 Metropolitan Bank and Trust (Banks) 1,065,912
2,322,700 Petron Corp. (Energy Resources) 207,828
11,700 Philippine Long Distance Telephone Co.
(Telecommunications) 277,202
58,250 Philippine Long Distance Telephone Co. ADR
(Telecommunications) 1,379,797
440,540 San Miguel Corp. "B" Class B (Tobacco) 716,190
5,088,300 SM Prime (Construction) 936,222
------------
6,396,255
------------------------------------------------------------------------------
Poland - 1.0%
12,800 Bank Handlowy Warszawie (Banks) 185,274
2,240 Bank Slaski (Banks) 148,300
3,860 BRE Bank SA (Banks) 126,318
20,130 Elektrim Spolka Akcyjna SA (Multi-Industrial) 253,367
44,800 KGHM Polska Miedz SA (Nonferrous Metals) 289,833
19,200 Orbis SA (Leisure) 161,430
93,200 Telekomunikacja Polska SA (Telecommunications) 633,455
12,100 Wielkopolski Bank Kredytowy (Financial Services) 81,631
------------
1,879,608
------------------------------------------------------------------------------
Russia - 2.1%
45,573 LUKoil Holding ADR (Energy Resources) 1,389,976
27,108 Mosenergo ADR (Electrical Utilities) 81,324
15,755 Rao Gazprom ADR (Electrical Utilities) 127,221
1,865 RAO Unified Energy Systems GDR (Electrical
Utilities) 14,454
79,897 RAO Unified Energy Systems Class S (Electrical
Utilities) 559,279
10,300 Rostelecom ADR (Telecommunications) 70,169
182,402 Surgutneftegaz ADR (Energy Resources) 1,436,416
------------
3,678,839
------------------------------------------------------------------------------
|
Shares Description Value
Common Stocks - (continued)
South Africa - 8.0%
77,700 ABSA Group Ltd. (Financial Services) $ 399,640
52,700 Anglo American Platinum Corp. (Nonferrous Metals) 1,198,534
15,029 Angloglold (Mining) 753,241
49,500 Bidvest Group Ltd. (Multi-Industrial) 354,646
437,500 BOE Ltd. (Financial Services) 323,515
60,100 Comparex Holdings Ltd. (Business Services) 372,323
91,680 De Beers Centenary (Agriculture) 2,500,843
153,959 Dimension Data Holdings Ltd. (Computer Software) 638,808
935,898 FirstRand Ltd. (Financial Services) 948,893
90,020 Gold Fields Ltd. (Mining) 310,643
21,000 Impala Platinum Holdings Ltd. (Nonferrous Metals) 672,911
13,120 Investec Group Ltd. (Banks) 457,060
46,519 Liberty Life Association of Africa (Information
Services) 545,034
60,400 Nedcor Investment Bank Holdings (Financial Services) 43,175
55,900 Nedcor Ltd. (Banks) 1,111,478
85,500 Rembrandt Group (Tobacco) 640,670
411,000 Sanlam Ltd.* (Information Services) 489,648
152,425 Sasol (Chemicals) 1,107,088
116,879 South African Brewery (Alcohol) 960,307
28,228 Tiger Oats (Food & Beverage) 241,206
------------
14,069,663
-------------------------------------------------------------------------------
South Korea - 9.8%
4,100 Cheil Jedang Corp. (Food & Beverage) 324,735
38,000 Daewoo Heavy Industries (Machinery) 60,195
7,000 Daewoo Securities (Financial Services) 128,674
9,700 Dongwon Securities (Financial Services) 236,646
55,001 Hankook Tire Co. Ltd. (Auto) 254,854
22,730 Housing & Commercial Bank* (Banks) 531,426
55,400 Hyundai Engineering & Construction Co.
(Construction) 492,757
21,222 Hyundai Motor Co. Ltd.* (Auto) 657,963
57,800 Korea Electric Power Corp. ADR (Electrical
Utilities) 1,040,400
45,200 Korea Electric Power Corp. (Electrical Utilities) 1,684,710
67,000 Korea Exchange Bank* (Banks) 332,588
22,000 Korea Telecom Corp. ADR* (Telecommunications) 715,000
23,000 Korean Air (Airlines) 457,857
17,000 LG Chemical Ltd. (Chemicals) 542,906
15,800 LG Electronics (Appliance) 669,208
7,888 Pohang Iron & Steel Co. Ltd. (Steel) 1,055,742
6,500 Pohang Iron & Steel Co. Ltd. ADR (Steel) 238,875
19,000 Samsung Corp.* (Wholesale) 334,773
7,470 Samsung Display Devices Co. (Electrical Equipment) 432,191
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Shares Description Value
Common Stocks - (continued)
South Korea - (continued)
11,924 Samsung Electro-Mechanics Co. (Electrical
Equipment) $ 626,250
17,006 Samsung Electronics (Consumer Durables) 3,226,890
4,000 Samsung Fire & Marine Insurance (Insurance) 197,543
9,974 Samsung Securities Co. Ltd. (Financial Services) 391,187
158,160 Shinhan Bank (Banks) 1,701,510
2,648 SK Corp. (Energy Resources) 63,929
601 SK Telecom Co. Ltd. (Telecommunications) 601,254
22,101 SK Telecom Co. Ltd. ADR (Telecommunications) 250,018
------------
17,250,081
------------------------------------------------------------------------------
Taiwan - 5.1%
354,200 Acer Peripherals, Inc. (Business Services) 918,915
609,850 Bank Sinopac (Financial Services) 375,882
213,900 Cathay Life Insurance Co. (Insurance) 642,373
124,800 China Development Industrial Bank (Financial
Services) 217,811
589,900 China Steel Corp. (Steel) 460,048
455,160 Chinatrust Commercial Bank (Banks) 455,160
615,600 Evergreen Marine Corp. (Ship Transportation) 636,894
555,330 Far Eastern Textile Ltd. (Apparel) 805,054
180,960 Formosa Chemicals & Fibre Corp. (Chemicals) 182,098
155,720 Formosa Plastics Corp. (Chemicals) 298,708
147,840 Hon Hai Precision (Electrical Equipment) 962,355
140,970 Nan Ya Plastic Corp. (Chemicals) 232,734
256,060 President Chain Stores (Specialty Retail) 756,907
40,960 Quanta Computer (Business Services) 399,296
70,720 Siliconware Precis (Electrical Equipment) 138,994
374,842 Taiwan Semiconductor (Electrical Equipment) 1,591,310
------------
9,074,539
------------------------------------------------------------------------------
Thailand - 2.5%
33,000 Advanced Info Service Public-Alien Market*
(Telecommunications) 452,975
117,800 Bangkok Bank Public-Alien Market (Banks) 299,726
431,100 Bangkok Expressway* (Construction) 253,125
93,000 BEC World PLC-Alien Market (Entertainment) 553,340
178,600 Electricity Generating Public Co.-Alien Market
(Utilities) 279,645
65,000 Land and House Public Co. Ltd.-Alien Market* (Real
Estate) 98,382
82,500 PTT Exploration & Production Public-Alien Market*
(Energy Resources) 650,183
|
Shares Description Value
Common Stocks - (continued)
Thailand - (continued)
9,600 Shin Corp. PLC* (Computer Hardware) $ 43,841
26,200 Siam Cement Public-Alien Market* (Construction) 678,247
749,800 TelecomAsia Corp. Public-Alien Market*
(Telecommunications) 719,080
218,300 Thai Farmers Bank-Alien Market* (Banks) 313,322
249,400 United Broadcasting Corp. Public Co. Ltd.*
(Broadcasting) 130,167
------------
4,472,033
----------------------------------------------------------------------------
Turkey - 1.5%
15,604,401 Akbank (Banks) 206,704
7,132,000 Akcansa Cimento AS (Construction) 97,677
4,803,100 Arcelik AS (Consumer Durables) 110,534
695,300 Aygaz AS (Electrical Utilities) 53,857
630,100 Ege Biracilik Ve Malt Sanayii AS (Tobacco) 47,392
12,470,300 Eregli Demir ve Celik Fabrikalari TAS Erdemir
(Steel) 218,384
566,830 Migros (Merchandising) 225,892
42,912,040 Turkiye Garanti Bankasi AS (Banks) 289,035
42,762,026 Turkiye Is Bankasi Isbank Class C (Banks) 652,855
596,800 Vestel Elektronik Sanayi ve Ticaret AS*
(Consumer Durables) 63,646
47,110,740 Yapi Kredi Bankesi (Banks) 613,476
------------
2,579,452
----------------------------------------------------------------------------
Venezuela - 1.1%
41,200 C.A. La Electricidad de Caracas ADR (Electrical
Utilities) 587,100
64,600 Compania Anonima Nacional Telefonos de Venezuela
Class D ADR (Telecommunications) 1,287,963
------------
1,875,063
----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $122,040,420) $142,322,474
----------------------------------------------------------------------------
Preferred Stocks - 5.6%
Brazil - 5.2%
284,625,400 Banco Bradesco SA (Banks) $ 1,125,470
1,358,000 Companhia Cervejaria Brahma (Food & Beverage) 718,567
29,847,623 Companhia Energetica de Minas Gerais-CEMIG
(Electrical Utilities) 459,672
150,998,000 Companhia Paranaense de Energia-Copel Class B
(Electrical Utilities) 1,044,887
50,700 Companhia Vale do Rio Doce Class A (Steel) 1,123,736
13,490,100 Petroleo Brasileiro SA (Energy Resources) 1,803,827
1,000 Tele Centro Sul Participacoes SA
(Telecommunications) 11
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Investments (continued)
August 31, 1999
Shares Description Value
Preferred Stocks - (continued)
Brazil - (continued)
15,269,912 Telecomunicacoes de Sao Palo SA
(Telecommunications) $ 1,338,540
37,178,991 Telesp Celular SA Class B (Telecommunications) 1,682,920
-------------
9,297,630
------------------------------------------------------------------------------
Russia - 0.2%
48,155 LUKoil Holding ADR (Energy Resources) 300,969
------------------------------------------------------------------------------
Thailand - 0.2%
276,100 Siam Commercial Bank Public Co. Ltd.* (Banks) 313,424
------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $13,513,997) $ 9,912,023
------------------------------------------------------------------------------
Rights - 0.2%
Greece - 0.1%
7,020 Commercial Bank of Greece SA -Rights exp.
10/01/1999* (Banks) $ 160,818
------------------------------------------------------------------------------
Taiwan - 0.0%
96,000 China Development Industrial - Rights exp.
09/13/1999* (Industrial Services) 4,679
40,960 Quanta Computer Inc. - Rights exp. 09/09/1999*
(Computer Hardware) 116
-------------
4,795
------------------------------------------------------------------------------
Thailand - 0.1%
218,300 Thai Farmers Bank Public Co. Ltd. - Alien
Market - Rights exp. 09/16/1999* (Banks) 199,387
------------------------------------------------------------------------------
TOTAL RIGHTS
(Cost $0) $ 365,000
------------------------------------------------------------------------------
Warrants - 0.3%
Indonesia - 0.0%
138,600 PT Bank Pan Indonesia Tbk -Alien Market exp.
07/08/2002* (Banks) $ 7,680
------------------------------------------------------------------------------
Philippines - 0.2%
931,500 Jollibee Foods exp. 03/24/2003* (Food & Beverage) 410,870
------------------------------------------------------------------------------
Thailand - 0.1%
276,100 Siam Commercial Bank Public Co. Ltd. - Alien
Market exp. 05/10/2002* (Banks) 124,288
------------------------------------------------------------------------------
TOTAL WARRANTS
(Cost $445,202) $ 542,838
------------------------------------------------------------------------------
|
Principal Interest Maturity Amount Rate Date Value Bond - 0.3% Russia - 0.3% American Development Bank RUB17,900,000 31.0% 05/08/2000 $ 552,128 -------------------------------------------------------------------------------------------- TOTAL BOND (Cost $2,022,577) $ 552,128 -------------------------------------------------------------------------------------------- |
Structured Notes - 7.0%
South Korea - 6.4%
1,187,570 units Merrill Lynch
Call Warrant
on KOSPI 200*
exp. 12/09/1999 $ 11,315,523
------------------------------------------------
Taiwan - 0.6%
90,314 units Taiwan Index
Linked Note exp.
12/30/1999 1,010,614
------------------------------------------------
TOTAL STRUCTURED NOTES
(Cost $6,416,488) $ 12,326,137
------------------------------------------------
|
Short-Term Obligation - 5.5%
State Street Bank & Trust Euro-Time Deposit $9,664,000 5.50% 09/01/1999 $ 9,664,000 ----------------------------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATION (Cost $9,664,000) $ 9,664,000 ----------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (Cost $154,102,684) $ 175,684,600 ----------------------------------------------------------------------------------------------- |
* Non-income producing security.
+ Securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institu- tional buyers in transactions exempt from registration. Total market-value of Rule 144A securities amounted to $2,387,887 at August 31, 1999.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
As a %
of Total
Net Assets
Common and Preferred Stock Industry Classifications
Agriculture 1.5%
Airlines 0.3
Alcohol 0.5
Apparel 0.5
Appliance 0.5
Auto 2.0
Banks 11.5
Broadcasting 0.8
Business Services 3.6
Chemicals 2.1
Computer Hardware 0.1
Computer Software 0.6
Construction 1.9
Consumer Durables 1.9
Electrical Equipment 2.9
Electrical Utilities 4.8
Energy Resources 4.2
Entertainment 0.3
Financial Services 2.2
Food & Beverage 3.5
Industrial Services 0.2
Information Services 0.6
Insurance 0.5
Leisure 0.5
Machinery 0.1
Medical Products 1.8
Merchandising 1.7
Mining 0.6
Motor Vehicle 0.1
Multi-Industrial 2.5
Nonferrous Metals 2.8
Paper 0.2
Publishing 0.2
Real Estate 0.8
Ship Transportation 0.5
Specialty Retail 0.6
Steel 1.9
Telecommunications 20.5
Tobacco 3.9
Utilities 0.4
Wholesale 0.2
-----------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCK 86.3%
-----------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
Investment in securities, at value (identified cost $154,102,684) $175,684,600 Cash, at value 914,695 Receivables: Investment securities sold, at value 22,586 Dividends and interest, at value 575,404 Fund shares sold 106,457 Forward foreign currency exchange contracts 136,576 Reimbursement from investment adviser 114,611 Deferred organization expenses, net 9,686 Other assets, at value 6,156 ------------------------------------------------------------------------------ Total assets 177,570,771 ------------------------------------------------------------------------------ Liabilities: Payables: Investment securities purchased, at value 403,598 Fund shares repurchased 234,829 Amounts owed to affiliates 221,172 Capital gains tax 195,098 Accrued expenses and other liabilities, at value 175,127 ------------------------------------------------------------------------------ Total liabilities 1,229,824 ------------------------------------------------------------------------------ Net Assets: Paid-in capital 188,103,207 Accumulated net investment loss (45,928) Accumulated net realized loss from investment and foreign currency related transactions (33,113,120) Net unrealized gain on investments and translation of assets and liabilities denominated in foreign currencies 21,396,788 ------------------------------------------------------------------------------ NET ASSETS $176,340,947 ------------------------------------------------------------------------------ Net asset value, offering and redemption price per share(a) Class A $9.26 Class B $9.21 Class C $9.24 Institutional $9.37 Service $9.05 ------------------------------------------------------------------------------ Shares outstanding: Class A 7,093,000 Class B 105,545 Class C 118,481 Institutional 11,593,102 Service 166 ------------------------------------------------------------------------------ Total shares outstanding, $.001 par value (unlimited number of shares authorized) 18,910,294 ------------------------------------------------------------------------------ |
(a) Maximum public offering price per share (NAV per share X 1.0582) for Class A shares is $9.80. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge, assessed on the amount equal to the lesser of the current net asset value or the original pur- chase price of the shares. The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
Investment income: Dividends(a) $ 1,533,844 Interest 278,432 ---------------------------------------------------------------------------- Total income 1,812,276 ---------------------------------------------------------------------------- Expenses: Management fees 1,148,664 Custodian fees 319,452 Distribution and service fees(b) 184,703 Transfer agent fees(c) 92,504 Registration fees 78,419 Professional fees 42,051 Trustee fees 6,074 Amortization of deferred organization expenses 1,710 Service share fees 4 Other 55,548 ---------------------------------------------------------------------------- Total expenses 1,929,129 ---------------------------------------------------------------------------- Less -- expenses reimbursed (355,841) ---------------------------------------------------------------------------- Net expenses 1,573,288 ---------------------------------------------------------------------------- NET INVESTMENT INCOME 238,988 ---------------------------------------------------------------------------- Realized and unrealized gain (loss) on investment and foreign currency related transactions: Net realized gain (loss) from: Investment transactions 12,353,122 Foreign currency related transactions (202,406) Net change in unrealized gain on: Investments 30,854,273 Translation of assets and liabilities denominated in foreign currencies 316,179 ---------------------------------------------------------------------------- Net realized and unrealized gain on investment and foreign currency related transactions: 43,321,168 ---------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $43,560,156 ---------------------------------------------------------------------------- |
(a) Taxes withheld on dividends were $138,247.
(b) Class A, Class B and Class C had distribution and service fees of
$176,746, $4,255 and $3,702, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $67,162, $808, $703, $23,830 and $1, respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statements of Changes in Net Assets
For the
Seven-Month For the
Period Ended Year Ended
August 31, 1999 January 31, 1999
From operations:
Net investment income $ 238,988 $ 1,649,430
Net realized gain (loss) from investment
and foreign currency related transactions 12,150,716 (41,326,432)
Net change in unrealized gain (loss) on
investments and translation of assets and
liabilities denominated in foreign
currencies 31,170,452 (8,910,101)
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 43,560,156 (48,587,103)
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares -- (569,869)
Class B shares -- (4,352)
Class C shares -- (2,737)
Institutional shares -- (1,092,333)
Service shares -- (11)
In excess of net investment income
Class A shares -- (1,680,766)
Class B shares -- (12,834)
Class C shares -- (8,074)
Institutional shares -- (3,221,713)
Service shares -- (33)
------------------------------------------------------------------------------
Total distributions to shareholders -- (6,592,722)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 32,173,466 220,344,538
Reinvestment of dividends and
distributions -- 4,301,531
Cost of shares repurchased (43,018,256) (62,779,701)
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from share transactions (10,844,790) 161,866,368
------------------------------------------------------------------------------
TOTAL INCREASE 32,715,366 106,686,543
------------------------------------------------------------------------------
Net assets:
Beginning of period 143,625,581 36,939,038
------------------------------------------------------------------------------
End of period $176,340,947 $143,625,581
------------------------------------------------------------------------------
Accumulated undistributed net investment
income (loss) $ (45,928) $ 26,133
------------------------------------------------------------------------------
|
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un- der the Investment Company Act of 1940 (as amended) as an open-end management investment company. The Trust includes the Goldman Sachs Emerging Markets Equity Fund (the "Fund"). At August 31, 1999, the Fund is a diversified port- folio offering five classes of shares -- Class A, Class B, Class C, Institu- tional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist- ently followed by the Fund. The preparation of financial statements in con- formity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates. Effective for fiscal year 1999, the Board of Trustees approved a change in the fiscal year end of the Fund from January 31 to August 31. Accordingly, the financial statements of the Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for-
eign securities exchange or the NASDAQ system are valued daily at their last
sale or closing price on the principal exchange on which they are traded. If
no sale occurs, securities are valued at the last bid price. Debt securities
are valued at prices supplied by independent pricing services, broker / deal-
er-supplied valuations or matrix pricing systems. Unlisted equity and debt
securities for which market quotations are available are valued at the last
sale price on valuation date or, if no sale occurs, at the last bid price.
Short-term debt obligations maturing in sixty days or less are valued at am-
ortized cost. Securities for which quotations are not readily available, are
valued at fair value using methods approved by the Board of Trustees of the
Trust.
Investing in emerging markets may involve special risks and considerations
not typically associated with investing in the United States. These risks in-
clude revaluation of currencies, high rates of inflation, repatriation re-
strictions on income and capital, and adverse political and economic
developments. Moreover, securities issued in these markets may be less liq-
uid, subject to government ownership controls, delayed settlements, and their
prices more volatile than those of comparable securities in the United
States.
B. Security Transactions and Investment Income -- Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfo- lio securities are calculated using the identified-cost basis. Dividend in- come is recorded on the ex-dividend date. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment in- come in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned. It is the Fund's policy, where necessary, to accrue for estimated capital gains taxes on appreciated foreign securities.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
on current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based on currency
exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes recorded and the
amounts actually received.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
D. Forward Foreign Currency Exchange Contracts -- The Fund may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date as a hedge or
cross-hedge against either specific transactions or portfolio positions. The
Fund may also purchase and sell such contracts to seek to increase total re-
turn. All commitments are "marked-to-market" daily at the applicable transla-
tion rates and any resulting unrealized gains or losses are recorded in the
Fund's financial statements. The Fund realizes gains or losses at the time a
forward contract is offset by entry into a closing transaction or extin-
guished by delivery of the currency. Risks may arise upon entering these con-
tracts from the potential inability of counterparties to meet the terms of
their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
E. Derivative Financial Instruments -- The Fund may utilize derivative finan- cial instruments such as structured notes and equity swaps. Such instruments are used by the Fund as a means of investing in a particular market or in- creasing the return on the Fund's investments or both. The value of the prin- cipal of and/or interest on such securities is determined by reference to changes in the value of the financial indicators including, but not limited to indices, currencies or interest rates. These financial instruments may subject the Fund to a greater degree of market or counterparty risk and loss than other types of securities.
F. Short Securities Positions -- The Fund may enter into covered short sales. Short securities positions are accounted for at cost and subsequently marked- to-market to reflect the current market value of the position. The market value of the short position is recorded as a liability on the Fund's records and any difference between this market value and the sales proceeds is re- ported as an unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker.
G. Deferred Organization Expenses -- Organization-related costs are amortized on a straight-line basis over a period of five years.
H. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
I. Segregation Transactions -- The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency ex- change contracts, futures contracts, written options, mortgage dollar rolls, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
J. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual Fund of the Trust are allocated to the Funds based on a
straight-line or pro rata basis depending upon the nature of the expense.
Class A, Class B and Class C shares bear all expenses and fees relating to
their respective Distribution and Service Plans. Shareholders of Service
shares bear all expenses and fees paid to service organizations. Each class
of shares of the Fund separately bears its respective class-specific transfer
agency fees.
K. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required. The characterization of distributions to shareholders
for financial reporting purposes is determined in accordance with income tax
rules. Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net invest-
ment income or net realized gain on investment transactions, or from paid-in
capital, depending on the type of book/tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $160,175,226. Accordingly, the gross unrealized gain
on investments was $30,901,434 and the gross unrealized loss on investments
was $15,392,060 resulting in a net unrealized gain of $15,509,374.
The Fund had approximately $27,002,000 at August 31, 1999 (the Fund's tax
year end) of capital loss carryforward expiring 2006 for federal tax purpos-
es. This amount is available to be carried forward to offset future capital
gains to the extent permitted by applicable laws or regulations.
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs
Asset Management ("GSAM"), a separate operating division of Goldman, Sachs &
Co. ("Goldman Sachs"), serves as the investment adviser to the Fund. Under
the Agreement, GSAMI, subject to the general supervision of the Trust's Board
of Trustees, manages the Fund's portfolio. As compensation for the services
rendered under the Agreement, the assumption of the expenses related thereto
and administering the Fund's business affairs, including providing facili-
ties, GSAMI is entitled to a fee, computed daily and payable monthly, at an
annual rate equal to 1.20% of the average daily net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" (ex-
cluding management fees, distribution and service fees, transfer agent fees,
taxes, interest, brokerage, litigation, Service share fees, indemnification
costs and other extraordinary expenses) to the extent such expenses exceed,
on an annual basis, 0.15% of the average daily net assets of the Fund.
Goldman Sachs has agreed to reimburse approximately $356,000 for the period
ended August 31, 1999.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .50%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it has retained approximately $67,000 for the period
ended August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. Fees
charged for such transfer agency services are calculated daily and payable
monthly at an annual rate as follows: 0.19% of average daily net assets for
Class A, Class B and Class C shares and 0.04% of average daily net assets for
Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This Plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
are beneficial owners of such shares. The Service Plan provides for compensa-
tion to the service organizations in an amount up to .50% (on an annualized
basis), of the average daily net asset value of the Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$178,000, $29,000 and $14,000 for management, distribution and service and
transfer agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments) for the year ended August 31, 1999, were $99,812,263 and
$120,924,457, respectively.
Unrealized
------------
Open Forward Foreign Currency Value on
Sale Contracts Settlement Date Current Value Gain Loss
------------------------------------------------------------------------------
Czech Koruna
expiring 2/2/2000 $1,453,272 $1,390,705 $62,567 $ --
------------------------------------------------------------------------------
TOTAL OPEN FORWARD FOREIGN
CURRENCY SALE CONTRACTS $1,453,272 $1,390,705 $62,567 $ --
------------------------------------------------------------------------------
Realized
------------
Closed but Unsettled
Forward Foreign Currency Contracts Purchase Value Sale Value Gain Loss
------------------------------------------------------------------------------
Czech Koruna
expiring 2/2/2000 $1,472,719 $1,546,728 $74,009 $ --
------------------------------------------------------------------------------
TOTAL CLOSED BUT UNSETTLED FORWARD
FOREIGN CURRENCY CONTRACTS $1,472,719 $1,546,728 $74,009 $ --
------------------------------------------------------------------------------
|
The contractual amounts of forward foreign currency exchange contracts do
not necessarily represent the amounts potentially subject to risk. The mea-
surement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At August 31,
1999, the Fund had sufficient cash and securities to cover any commitments
under these contracts.
The Fund has recorded a "Receivable for forward foreign currency exchange
contracts purchased" of $136,576 in the accompanying Statement of Assets and
Liabilities.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
For the period ended August 31, 1999, Goldman Sachs earned approximately
$50,000 of brokerage commissions from portfolio transactions.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank, an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund, depending on the fluc-
tuations in the value of the contracts, and are recorded for financial re-
porting purposes as unrealized gains or losses. When contracts are closed,
the Fund realizes a gain or loss which is reported in the Statement of Opera-
tions.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At August 31, 1999, the Fund had no open futures
contracts.
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit- ted unsecured revolving line of credit facility which was terminated on April 30, 1999. Effective April 30, 1999, the Fund now participates in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has not been utilized. During the period ended August 31, 1999, the Fund did not have any borrowings under any of these facilities.
6. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund has reclassified $710,409 from paid-in-capital to accumulated net realized loss from invest- ment and foreign currency related transactions and $311,049 from accumulated net investment loss to accumulated net realized loss from investment and for- eign currency related transactions. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund's capi- tal accounts on a tax basis.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
7. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
For the Seven-Month Period Ended August 31, 1999 For the Year Ended January 31, 1999
---------------------------------------------------------------------------------------
Shares Dollars Shares Dollars
------------------------------------------------------------------------------------------------------------------
Class A Shares
Shares sold 2,397,786 $ 20,583,469 10,357,445 $ 89,405,582
Reinvestment of divi-
dends and distributions -- -- 318,269 2,176,957
Shares repurchased (2,788,776) (23,870,559) (5,015,931) (38,121,169)
---------------------------------------------------------------------------------------
(390,990) (3,287,090) 5,659,783 53,461,370
------------------------------------------------------------------------------------------------------------------
Class B Shares
Shares sold 54,000 468,026 73,263 638,031
Reinvestment of divi-
dends and distributions -- -- 1,969 13,468
Shares repurchased (13,777) (120,123) (16,489) (112,961)
---------------------------------------------------------------------------------------
40,223 347,903 58,743 538,538
------------------------------------------------------------------------------------------------------------------
Class C Shares
Shares sold 92,068 838,996 44,699 387,030
Reinvestment of divi-
dends and distributions -- -- 1,550 10,621
Shares repurchased (12,341) (114,463) (15,015) (115,705)
---------------------------------------------------------------------------------------
79,727 724,533 31,234 281,946
------------------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 1,216,533 10,282,975 13,487,704 129,913,895
Reinvestment of divi-
dends and distributions -- -- 304,854 2,100,442
Shares repurchased (2,338,484) (18,913,111) (3,049,355) (24,429,866)
---------------------------------------------------------------------------------------
(1,121,951) (8,630,136) 10,743,203 107,584,471
------------------------------------------------------------------------------------------------------------------
Service Shares
Shares sold -- -- -- --
Reinvestment of divi-
dends and distributions -- -- 6 43
---------------------------------------------------------------------------------------
-- -- 6 43
------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (1,392,991) $ (10,844,790) 16,492,969 $ 161,866,368
------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
8. OTHER MATTERS
As of August 31, 1999, the Goldman Sachs Growth and Income Strategy Portfo- lio, the Goldman Sachs Growth Strategy Portfolio and the Goldman Sachs Ag- gressive Growth Strategy Portfolio were beneficial owners of approximately 15%, 12% and 6% of the outstanding shares of the Fund, respectively. In addi- tion, two clients are the beneficial owners of 13% and 12% of the outstanding shares of the Fund, respectively.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
Income from
investment operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset Net In excess Net increase
value, investment Net realized From net of net (decrease)
beginning income and unrealized investment investment From net in net asset
of period (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares $ 7.04 $(0.01) $2.23 $ -- $ -- $ -- $ 2.22
1999 - Class B Shares 7.03 (0.03) 2.21 -- -- -- 2.18
1999 - Class C Shares 7.05 (0.03) 2.22 -- -- -- 2.19
1999 - Institutional
Shares 7.09 0.02 2.26 -- -- -- 2.28
1999 - Service Shares 6.87 0.01 2.17 -- -- -- 2.18
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares 9.69 0.04 (2.40) (0.07) (0.22) -- (2.65)
1999 - Class B Shares 9.69 0.03 (2.41) (0.07) (0.21) -- (2.66)
1999 - Class C Shares 9.70 0.01 (2.39) (0.07) (0.20) -- (2.65)
1999 - Institutional
Shares 9.70 0.06 (2.36) (0.08) (0.23) -- (2.61)
1999 - Service Shares 9.69 (0.13) (2.41) (0.07) (0.21) -- (2.82)
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares
(commenced December 15,
1997) 10.00 -- (0.31) -- -- -- (0.31)
1998 - Class B Shares
(commenced December 15,
1997) 10.00 -- (0.31) -- -- -- (0.31)
1998 - Class C Shares
(commenced December 15,
1997) 10.00 -- (0.30) -- -- -- (0.30)
1998 - Institutional
Shares (commenced Decem-
ber 15, 1997) 10.00 0.01 (0.31) -- -- -- (0.30)
1998 - Service Shares
(commenced December 15,
1997) 10.00 -- (0.31) -- -- -- (0.31)
----------------------------------------------------------------------------------------------------------------
|
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of
Net assets Ratio of net investment Ratio of Ratio of net
Net asset at end of net expenses income (loss) expenses to investment income Portfolio
value, end Total period to average to average average net (loss) to average turnover
of period return(b) (in 000s) net assets net assets assets net assets rate
$9.26 31.53%(d) $65,698 2.04%(c) (0.15)%(c) 2.41%(c) (0.52)%(c) 63.24%(d)
9.21 31.01(d) 972 2.54(c) (0.71)(c) 2.91(c) (1.08)(c) 63.24(d)
9.24 31.06(d) 1,095 2.54(c) (0.85)(c) 2.91(c) (1.22)(c) 63.24(d)
9.37 32.16(d) 108,574 1.39(c) 0.50(c) 1.76(c) 0.13(c) 63.24(d)
9.05 31.73(d) 2 1.89(c) 0.12(c) 2.26(c) (0.25)(c) 63.24(d)
7.04 (24.32) 52,704 2.09 0.80 2.53 0.36 153.67
7.03 (24.51) 459 2.59 0.19 3.03 (0.25) 153.67
7.05 (24.43) 273 2.59 0.28 3.03 (0.16) 153.67
7.09 (23.66) 90,189 1.35 1.59 1.79 1.15 153.67
6.87 (26.17) 1 1.85 (1.84) 2.29 (2.28) 153.67
9.69 (3.10)(d) 17,681 1.90(c) 0.55(c) 5.88(c) (3.43)(c) 3.35(d)
9.69 (3.10)(d) 64 2.41(c) 0.05(c) 6.39(c) (3.93)(c) 3.35(d)
9.70 (3.00)(d) 73 2.48(c) (0.27)(c) 6.46(c) (4.25)(c) 3.35(d)
9.70 (3.00)(d) 19,120 1.30(c) 0.80(c) 5.28(c) (3.18)(c) 3.35(d)
9.69 (3.10)(d) 2 2.72(c) (0.05)(c) 6.70(c) (4.03)(c) 3.35(d)
---------------------------------------------------------------------------------------------------------------------------------
|
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of Goldman Sachs Trust -- Emerging Markets Equity Fund:
We have audited the accompanying statement of assets and liabilities of Goldman Sachs Emerging Markets Equity Fund, one of the portfolios constitut- ing Goldman Sachs Trust--Equity Funds (a Delaware Business Trust), including the statement of investments, as of August 31, 1999, and the related state- ment of operations, the statements of changes in net assets and the financial highlights for the periods presented. These financial statements and the fi- nancial highlights are the responsibility of the Fund's management. Our re- sponsibility is to express an opinion on these financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan- cial statements. Our procedures included confirmation of securities owned as of August 31, 1999, by correspondence with the custodian and brokers. An au- dit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights re- ferred to above present fairly, in all material respects, the financial posi- tion of Goldman Sachs Emerging Markets Equity Fund as of August 31, 1999, the results of its operations, the changes in its net assets and the financial highlights for the periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
PART C
OTHER INFORMATION
The following exhibits relating to Goldman Sachs Trust are incorporated herein by reference to Post-Effective Amendment No. 26 to Goldman Sachs Trust's Registration Statement on Form N-1A (Accession No. 000950130-95-002856); to Post-Effective Amendment No. 27 to such Registration Statement (Accession No. 0000950130-96-004931); to Post-Effective Amendment No. 29 to such Registration Statement (Accession No. 0000950130-97-000573); to Post-Effective Amendment No. 31 to such Registration Statement (Accession No. 0000950130-97-000805); to Post- Effective Amendment No. 32 to such Registration Statement (Accession No. 0000950130-97-0001846); to Post-Effective Amendment No. 40 to such Registration Statement (Accession No. 0000950130-97-004495); to Post-Effective Amendment No. 41 to such Registration Statement (Accession No 0000950130-98-000676); to Post- Effective Amendment No. 43 to such Registration Statement (Accession No. 0000950130-98-000965); to Post-Effective Amendment No. 44 to such Registration Statement (Accession No. 0000950130-98-002160); to Post-Effective Amendment No. 46 to such Registration Statement (Accession No. 0000950130-98-003563); to Post- Effective Amendment No. 47 to such Registration Statement (Accession No. 0000950130-98-004845); to Post-Effective Amendment No. 48 to such Registration Statement (Accession No. 0000950109-98-005275); to Post-Effective Amendment No. 50 to such Registration Statement (Accession No. 0000950130-98-006081); to Post- Effective Amendment No. 51 to such Registration Statement (Accession No. 0000950130-99-000178); to Post-Effective Amendment No. 52 to such Registration Statement (Accession No. 0000950130-99-000742); to Post-Effective Amendment No. 53 to such Registration Statement (Accession No. 0000950130-99-001069); to Post- Effective Amendment No. 54 to such Registration Statement (Accession No. 0000950130-99-002212); to Post-Effective Amendment No. 55 to such Registration Statement (accession No. 0000950109-99-002544); to Post-Effective Amendment No. 56 to such Registration Statement (accession No. 0000950130-99-005294)and to Post-Effective Amendment No. 57 to such Registration Statement (accession No. 0000950109-99-003474).
(a)(1). Agreement and Declaration of Trust dated January 28, 1997. (Accession No. 0000950130-97-000573).
(a)(2). Amendment No. 1 dated April 24, 1997 to Agreement and Declaration of Trust January 28, 1997. (Accession No. 0000950130-97-004495).
(a)(3). Amendment No. 2 dated July 21, 1997 to Agreement and Declaration of Trust, as amended, dated January 28, 1997. (Accession No. 0000950130-97-004495).
(a)(4). Amendment No.3 dated October 21, 1997 to the Agreement and Declaration of Trust, as amended, dated January 28, 1997. (Accession No. 0000950130-98-000676).
(a)(5). Amendment No. 4 dated January 28, 1998 to the Agreement and Declaration of Trust, as amended, dated January 28, 1997. (Accession No. 0000950130-98-000676).
(a)(6). Amendment No. 5 dated April 23, 1998 to Agreement and Declaration of Trust as amended, dated January 28, 1997. (Accession No. 0000950130-98-004845).
(a)(7). Amendment No. 6 dated July 22, 1998 to Agreement and Declaration of Trust as amended, dated January 28, 1997. (Accession No. 0000950130-98-004845).
(a)(8). Amendment No. 7 dated November 3, 1998 to Agreement and Declaration of Trust as amended, dated January 28, 1997 (Accession No. 0000950130-98-006081).
(a)(9). Amendment No. 8 dated January 22, 1999 to Agreement and Declaration of Trust as amended, dated January 28, 1997 (Accession No. 0000950130-99-000742).
(a)(10). Amendment No. 9 dated April 28, 1999 to Agreement and Declaration of Trust as amended, dated January 28, 1997. (Accession No. 0000950109-99-002544)
(a)(11). Amendment No. 10 dated July 27, 1999 to Agreement and Declaration of Trust as amended, dated January 28, 1997(accession No. 0000950130-99-005294).
(a)(12). Amendment No. 11 dated July 27, 1999 to Agreement and Declaration of Trust as amended, dated January 28, 1997 (accession No. 0000950130-99-005294).
(b). Amended and Restated By-laws of the Delaware business trust dated January 28, 1997. (Accession No. 0000950130-97-000573).
(b)(2). Amended and restated by-laws of the Delaware business trust dated January 28, 1997, as amended or restated July 27, 1999 (accession No. 0000950130-99-005294).
(c). Not applicable.
(d)(1). Management Agreement dated April 30, 1997 between Registrant, on behalf of Goldman Sachs Short Duration Government Fund, and Goldman Sachs Funds Management, L.P. (Accession No. 0000950130- 98-000676).
(d)(2). Management Agreement dated April 30, 1997 between Registrant, on behalf of Goldman Sachs Adjustable Rate Government Fund, and Goldman Sachs Funds Management, L.P. (Accession No. 0000950130- 98-000676).
(d)(3). Management Agreement dated April 30, 1997 between Registrant, on behalf of Goldman Sachs Short Duration Tax-Free Fund, and Goldman Sachs Asset Management. (Accession No. 0000950130-98-000676).
(d)(4). Management Agreement dated April 30, 1997 between Registrant, on behalf of Goldman Sachs Core Fixed Income Fund, and Goldman Sachs Asset Management. (Accession No. 0000950130-98-000676).
(d)(5). Management Agreement dated April 30, 1997 between the Registrant, on behalf of Goldman Sachs - Institutional Liquid Assets, and Goldman Sachs Asset Management. (Accession No. 0000950130-98- 000676).
(d)(6). Management Agreement dated April 30, 1997 as amended November 3, 1998, between Registrant, Goldman Sachs Asset Management, Goldman Sachs Fund Management L.P. and Goldman, Sachs Asset Management International (Accession No. 0000950109-98-005275).
(d)(7). Management Agreement dated January 1, 1998 on behalf of the Goldman Sachs Asset Allocation Portfolios and Goldman Sachs Asset Management (Accession No. 0000950130-98-000676).
(d)(8). Amended Annex A to Management Agreement dated January 1, 1998 on behalf of the Goldman Sachs Asset Allocation Portfolios and Goldman Sachs Asset Management (Conservative Strategy Portfolio) (Accession No. 0000950130-99-000742).
(d)(9). Amended Annex A dated April 28, 1999 to Management Agreement dated April 30, 1997. (Accession No. 0000950109-99-002544)
(d)(10). Amended Annex A dated July 27, 1999 to Management Agreement dated April 30, 1997 (accession No. 0000950130-99-005294).
(e). None.
(f). Not applicable.
(g)(1). Custodian Agreement dated July 15, 1991, between Registrant and State Street Bank and Trust Company. (Accession No. 0000950130- 95-002856).
(g)(2). Custodian Agreement dated December 27, 1978 between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, filed as Exhibit 8(a). (Accession No. 0000950130-98-000965).
(g)(3). Letter-Agreement dated December 27, 1978 between Registrant and
State Street Bank and Trust Company, on behalf of Goldman Sachs
- Institutional Liquid Assets, pertaining to the fees payable by
Registrant pursuant to the Custodian Agreement, filed as Exhibit
8(b). (Accession No. 0000950130-98-000965).
(g)(4). Amendment dated May 28, 1981 to the Custodian Agreement referred to above as Exhibit (g)(2) (Accession No. 0000950130-98-000965).
(g)(5). Fee schedule relating to the Custodian Agreement between Registrant on behalf of the Goldman Sachs Asset Allocation Portfolios and State Street Bank and Trust Company. (Accession No. 0000950130-97-004495).
(g)(6). Letter Agreement dated June 14, 1984 between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, pertaining to a change in wire charges under the Custodian Agreement, filed as Exhibit 8(d). (Accession No. 0000950130-98-000965).
(g)(7). Letter Agreement dated March 29, 1983 between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, pertaining to the latter's designation of Bank of America, N.T. and S.A. as its subcustodian and certain other matters, filed as Exhibit 8(f). (Accession No. 0000950130-98-000965).
(g)(8). Letter Agreement dated March 21, 1985 between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, pertaining to the creation of a joint repurchase agreement account,
filed as Exhibit 8(g). (Accession No. 0000950130-98-000965).
(g)(9). Letter Agreement dated November 7, 1985, with attachments, between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, authorizing State Street Bank and Trust Company to permit redemption of units by check, filed as Exhibit 8(h). (Accession No. 0000950130-98-000965).
(g)(10). Money Transfer Services Agreement dated November 14, 1985, including attachment, between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, pertaining to transfers of funds on deposit with State Street Bank and Trust Company, filed as Exhibit 8(i). (Accession No. 0000950130-98-000965).
(g)(11). Letter Agreement dated November 27, 1985 between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, amending the Custodian Agreement. (Accession No. 0000950130-98-000965).
(g)(12). Letter Agreement dated July 22, 1986 between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, pertaining to a change in wire charges. (Accession No. 0000950130-98-000965).
(g)(13). Letter Agreement dated June 20, 1987 between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, amending the Custodian Agreement. (Accession No. 0000950130-98-000965).
(g)(14). Letter Agreement between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets, pertaining to the latter's designation of Security Pacific National Bank as its sub-custodian and certain other matters. (Accession No. 0000950130-98-000965).
(g)(15). Amendment dated July 19, 1988 to the Custodian Agreement between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets. (Accession No. 0000950130-98-000965).
(g)(16). Amendment dated December 19, 1988 to the Custodian Agreement between Registrant and State Street Bank and Trust Company, on behalf of Goldman Sachs - Institutional Liquid Assets. (Accession No. 0000950130-98-000965).
(g)(17). Custodian Agreement dated April 6, 1990 between Registrant and State Street Bank and Trust Company on behalf of Goldman Sachs Capital Growth Fund. (Accession No. 0000950130-98-006081).
(g)(18). Sub-Custodian Agreement dated March 29, 1983 between State Street Bank and Trust Company and Bank of America, National Trust and Savings Association on behalf of Goldman Sachs Institutional Liquid Assets. (Accession No. 0000950130-98-006081).
(g)(19). Fee schedule dated January 8, 1999 relating to Custodian Agreement dated April 6, 1990 between Registrant and State Street Bank and Trust Company (Conservative Strategy Portfolio)(Accession No. 0000950130-99-000742).
(g)(20). Fee schedule dated April 12, 1999 relating to Custodian Agreement dated April 6, 1990 between Registrant and State Street Bank and Trust Company (Strategic Growth and Growth Opportunities Portfolios). (Accession No. 0000950109-99-002544)
(g)(21). Fee schedule dated July 19, 1999 relating to Custodian Agreement dated April 6, 1990 between Registrant and State Street Bank and Trust Company (Internet Tollkeeper Fund) (accession No. 0000950130-99-005294).
(h)(1). Wiring Agreement dated June 20, 1987 among Goldman, Sachs & Co., State Street Bank and Trust Company and The Northern Trust Company. (Accession No. 0000950130-98-000965).
(h)(2). Letter Agreement dated June 20, 1987 regarding use of checking account between Registrant and The Northern Trust Company. (Accession No. 0000950130-98-000965).
(h)(3). Transfer Agency Agreement dated July 15, 1991 between Registrant and Goldman, Sachs & Co. (Accession No. 0000950130-95-002856).
(h)(4). Fee schedule relating to Transfer Agency Agreement between Registrant on behalf of the Goldman Sachs Asset Allocation Portfolios and Goldman, Sachs & Co. (Accession No. 0000950130- 97-004495).
(h)(7). Fee schedule dated July 31, 1998 relating to Transfer Agency Agreement between Registrant and Goldman, Sachs & Co. on behalf of all Funds of Goldman Sachs Trust other than the Institutional Liquid Assets and Financial Square Money Market Funds. (Accession No. 0000950130-98-004845).
(h)(8). Transfer Agency Agreement dated May 1, 1988 between Goldman Sachs Institutional Liquid Assets and Goldman, Sachs & Co. (Accession No. 0000950130-98-006081).
(h)(9). Fee Schedule dated July 31, 1998 relating to Transfer Agency Agreement between Registrant and Goldman, Sachs & Co. on behalf of ILA Money Market Funds. (Accession No. 0000950130-98-006081).
(h)(10). Transfer Agency Agreement dated April 30, 1997 between Registrant and Goldman, Sachs & Co. on behalf of the Financial Square Funds. (Accession No. 0000950130-98-006081).
(h)(11). Transfer Agency Agreement dated April 6, 1990 between GS-Capital Growth Fund, Inc. and Goldman Sachs & Co. (Accession No. 0000950130-98-006081).
(h)(12). Goldman Sachs - Institutional Liquid Assets Administration Class Administration Plan dated April 22, 1998. (Accession No. 0000950130-98-006081).
(h)(13). FST Administration Class Administration Plan dated April 22, 1998. (Accession No. 0000950130-98-006081).
(h)(14). Goldman Sachs - Institutional Liquid Assets Service Class Service Plan dated April 22, 1998. (Accession No. 0000950130-98-006081).
(h)(15). FST Service Class Service Plan dated April 22, 1998. (Accession No. 0000950130-98-006081).
(h)(16). FST Preferred Class Preferred Administration Plan dated April 22, 1998. (Accession No. 0000950130-98-006081).
(h)(17). Goldman Sachs Trust Administration Class Administration Plan dated April 23, 1998. (Accession No. 0000950130-98-006081).
(h)(18). Goldman Sachs Trust Service Class Service Plan dated April 22, 1998 (Accession No. 0000950130-98-006081).
(h)(19). Cash Management Shares Service Plan dated May 1, 1998. (Accession No. 0000950130-98-006081).
(h)(20). Form of Retail Service Agreement on behalf of Goldman Sachs Trust relating to Class A Shares of Goldman Sachs Asset Allocation Portfolios, Goldman Sachs Fixed Income Funds, Goldman Sachs Domestic Equity Funds and Goldman Sachs International Equity Funds. (Accession No. 0000950130-98-006081).
(h)(21). Form of Retail Service Agreement on behalf of Goldman Sachs Trust relating to the Preferred Class, Administration Class, Service Class and Cash Management Class, as applicable, of Goldman Sachs Financial Square Funds, Goldman Sachs - International Liquid Asset Portfolios, Goldman Sachs Fixed Income Funds, Goldman Sachs Domestic Equity Funds, Goldman Sachs International Equity Funds and Goldman Sachs Asset Allocation Portfolios. (Accession No. 0000950130-98-006081).
(h)(22). Form of Supplemental Service Agreement on behalf of Goldman Sachs Trust relating to the Administrative Class, Service Class and Cash Management Class of Goldman Sachs - Institutional Liquid Assets Portfolios. (Accession No. 0000950130-98-006081).
(h)(23). Form of Supplemental Service Agreement on behalf of Goldman Sachs
Trust relating to the FST Shares, FST Preferred Shares, FST
Administration Shares and FST Service Shares of Goldman Sachs
Financial Square Funds. (Accession No. 0000950130-98-006081).
(h)(24). Fee Schedule dated July 31, 1998 relating to
Transfer Agency Agreement dated July 15, 1991
between the Registrant and Goldman, Sachs & co.
Internet Tollkeeper Fund) (accession No.
0000950130-99-005294).
(i)(1). Opinion of Drinker, Biddle & Reath LLP. (With respect to the Asset Allocation Portfolios). (Accession No. 0000950130-97- 004495).
(i)(2). Opinion of Morris, Nichols, Arsht & Tunnell. (Accession No. 0000950130-97-001846)
(i)(3). Opinion of Drinker Biddle & Reath LLP.(With respect to Japanese Equity and International Small Cap). (Accession No. 0000950130- 98-003563).
(i)(4). Opinion of Drinker Biddle & Reath LLP. (With respect to Cash Management Shares). (Accession No. 0000950130-98-003563)
(i)(5). Opinion of Drinker Biddle & Reath LLP. (With respect to the European Equity Fund). (Accession No. 0000950130-98-006081).
(i)(6). Opinion of Drinker Biddle & Reath LLP. (With respect to the CORE Large Cap Value Fund). (Accession No. 0000950130-98-006081).
(i)(7). Opinion of Drinker Biddle & Reath LLP (with respect to the Conservative Strategy Portfolio) (Accession No. 0000950130-99- 001069).
(i)(8). Opinion of Drinker Biddle & Reath LLP (with respect to the Strategic Growth and Growth Opportunities Portfolios). (Accession No. 0000950109-99-002544)
(j) None.
(k). Not applicable.
(l). Not applicable.
(m)(1). Class A Distribution and Service Plan amended and restated as of September 1, 1998. (Accession No. 0000950130-98-004845)
(m)(2). Class B Distribution and Service Plan amended and restated as of September 1, 1998. (Accession No. 0000950130-98-004845)
(m)(3). Class C Distribution and Service Plan amended and restated as of September 1, 1998. (Accession No. 0000950130-98-004845)
(m)(4). Cash Management Shares Plan of Distribution pursuant to Rule 12b- 1 dated May 1, 1998. (Accession No. 0000950130-98-006081).
(n) None.
(o). Plan dated September 1, 1998 entered into by Registrant pursuant to Rule 18f-3. (Accession No. 0000950130-98-004845)
(p)(1). Powers of Attorney of Messrs. Bakhru, Ford, Grip, Shuch, Smart, Springer, Strubel, McNulty, Mosior, Gilman, Perlowski, Richman, Surloff, Mmes. MacPherson, Mucker and Taylor. (Accession No. 0000950130-97-000805)
(p)(2). Powers of Attorney dated October 21, 1997 on behalf of James A. Fitzpatrick and Valerie A. Zondorak. (Accession No. 0000950130- 98-000676)
The following exhibits relating to Goldman Sachs Trust are filed herewith electronically pursuant to EDGAR rules:
(a)(13). Amendment No. 12 dated October 26, 1999 to Agreement and Declaration of Trust as amended, dated January 28, 1997.
(d)(11). Amended Annex A dated October 26, 1999 to Management Agreement dated April 30, 1997.
(e)(1). Distribution Agreement dated April 30, 1997 as amended October 26, 1999 between Registrant and Goldman, Sachs & Co.
(i)(9) Opinion of Drinker Biddle & Reath LLP (with respect to the Internet Tollkeeper Fund)
J. Consent of Arthur Andersen LLP.
Not Applicable.
Article IV of the Declaration of Trust of Goldman Sachs Trust, Delaware business trust, provides for indemnification of the Trustees, officers and agents of the Trust, subject to certain limitations. The Declaration of Trust is incorporated by reference to Exhibit (a)(1).
The Management Agreement with each of the Funds (other than the ILA Portfolios) provides that the applicable Investment Adviser will not be liable for any error of judgment or mistake of law or for any loss suffered by a Fund, except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Adviser or from reckless disregard by the Investment Adviser of its obligations or duties under the Management Agreement. Section 7 of the Management Agreement with respect to the ILA Portfolios provides that the ILA Portfolios will indemnify the Adviser against certain liabilities; provided, however, that such indemnification does not apply to any loss by
reason of its willful misfeasance, bad faith or gross negligence or the Adviser's reckless disregard of its obligation under the Management Agreement. The Management Agreements are incorporated by reference to Exhibits (d)(1) through (d)(7);
Section 9 of the Distribution Agreement between the Registrant and Goldman Sachs
dated April 30, 1997, as amended October 26, 1999 and Section 7 of the Transfer
Agency Agreements between the Registrant and Goldman, Sachs & Co. dated July 15,
1991, May 1, 1988, April 30, 1997 and April 6, 1990 each provide that the
Registrant will indemnify Goldman, Sachs & Co. against certain liabilities. A
copy of the Distribution Agreement is included herewith as Exhibit (e)(1). The
Transfer Agency Agreements are incorporated by reference as Exhibits (h)(3),
(h)(8), (h)(10) and (h)(11), respectively, to the Registrant's Registration
Statement.
Mutual fund and Trustees and officers liability policies purchased jointly by the Registrant, Trust for Credit Unions, Goldman Sachs Variable Insurance Trust and The Commerce Funds insure such persons and their respective trustees, partners, officers and employees, subject to the policies' coverage limits and exclusions and varying deductibles, against loss resulting from claims by reason of any act, error, omission, misstatement, misleading statement, neglect or breach of duty.
The business and other connections of the officers and Managing Directors of Goldman, Sachs & Co., Goldman Sachs Funds Management, L.P., and Goldman Sachs Asset Management International are listed on their respective Forms ADV as currently filed with the Commission (File Nos. 801-16048, 801-37591 and 801- 38157, respectively) the texts of which are hereby incorporated by reference.
(a) Goldman, Sachs & Co. or an affiliate or a division thereof currently serves as investment adviser and distributor of the units of Trust for Credit Unions, for shares of Goldman Sachs Trust and for shares of Goldman Sachs Variable Insurance Trust. Goldman, Sachs & Co., or a division thereof currently serves as administrator and distributor of the units or shares of The Commerce Funds.
(b) Set forth below is certain information pertaining to the Managing Directors of Goldman, Sachs & Co., the Registrant's principal underwriter, who are members of Goldman, Sachs & Co.'s Management Committee. None of the members of the management committee holds a position or office with the Registrant, except John P. McNulty who is a trustee of the Registrant.
GOLDMAN SACHS MANAGEMENT COMMITTEE
Name and Principal
Business Address Position
------------------ --------
Henry M. Paulson, Jr. (1) Chairman and Chief
Executive Officer
Robert J. Hurst (1) Vice Chairman
John A. Thain (1)(3) President and Co-Chief
Operating Officer
John L. Thornton (3) President and Co-Chief
Operating Officer
Lloyd C. Blankfein (1) Managing Director
Richard A. Friedman (1) Managing Director
Steven M. Heller (1) Managing Director
Robert S. Kaplan (1) Managing Director
Robert J. Katz (1) Managing Director
John P. McNulty (2) Managing Director
Michael P. Mortara (1) Managing Director
Daniel M. Neidich (1) Managing Director
Robin Neustein (2) Managing Director
Mark Schwartz (4) Managing Director
Robert K. Steel (2) Managing Director
Leslie C. Tortora (2) Managing Director
Patrick J. Ward (3) Managing Director
Gregory K. Palm (1) Counsel and Managing
Director
_______________________
(1) 85 Broad Street, New York, NY 10004
(2) One New York Plaza, New York, NY 10004
|
(3) Peterborough Court, 133 Fleet Street, London EC4A 2BB, England
(4) ARK Mori Building, 12-32 Akasaka I-Chome Minato-KY, Tokyo 107-6019, Japan
(c) Not Applicable.
The Declaration of Trust, By-laws and minute books of the Registrant and certain investment adviser records are in the physical possession of Goldman Sachs Asset Management, One New York Plaza, New York, New York 10004. All other accounts, books and other documents required to be maintained under Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are in the physical possession of State Street Bank and Trust Company, P.O. Box 1713, Boston, Massachusetts 02105 except for certain transfer agency records which are maintained by Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606.
Not applicable.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment No. 58 pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post- Effective Amendment No. 58 to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City and State of New York on the 19th day of November, 1999.
GOLDMAN SACHS TRUST
(A Delaware business trust)
By: /s/Michael J. Richman
---------------------
Michael J. Richman
Secretary
|
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to said Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
Name Title Date ---- ----- ---- *Douglas C. Grip President and --------------- Trustee November 19, 1999 Douglas C. Grip *John M. Perlowski Principal Accounting ----------------- Officer And Principal John M. Perlowski Financial Officer November 19, 1999 *David B. Ford Trustee November 19, 1999 ------------- David B. Ford *Mary Patterson McPherson Trustee November 19, 1999 ------------------------ Mary Patterson McPherson *Ashok N. Bakhru Chairman and Trustee November 19, 1999 --------------- Ashok N. Bakhru *Alan A. Shuch Trustee November 19, 1999 ------------- Alan A. Shuch *Jackson W. Smart Trustee November 19, 1999 ---------------- Jackson W. Smart, Jr. *John P. McNulty Trustee November 19, 1999 --------------- John P. McNulty *William H. Springer Trustee November 19, 1999 ------------------- William H. Springer *Richard P. Strubel Trustee November 19, 1999 ------------------ Richard P. Strubel |
*By:/s/ Michael J. Richman
------------------------
Michael J. Richman,
Attorney-In-Fact
|
* Pursuant to a power of attorney previously filed.
EXHIBIT INDEX
(a)(13). Amendment No. 12 dated October 26, 1999 to Agreement and Declaration of Trust as amended, dated January 28, 1997.
(d)(11). Amended Annex A dated October 26, 1999 to Management Agreement dated April 30, 1997.
(e)(1). Distribution Agreement dated April 30, 1997 as amended October 26, 1999 between Registrant and Goldman, Sachs & Co.
(i)(9) Opinion of Drinker Biddle & Reath LLP (with respect to the Internet Tollkeeper Fund)
j. Consent of Arthur Andersen LLP.
Exhibit (a)(13)
AMENDMENT NO.12
TO THE
DECLARATION OF TRUST
OF
GOLDMAN SACHS TRUST
This AMENDMENT NO. 12 dated the 26th day October, 1999 to the AGREEMENT AND DECLARATION OF TRUST (the "Declaration"), as amended, dated the 28th day of January, 1997 is made by the Trustees name below;
WHEREAS, the Trustees have established a trust for the investment and reinvestment of funds contributed thereto;
WHEREAS, the Trustees divided the beneficial interest in the trust assets into transferable shares of beneficial interest and divided such shares of beneficial interest into separate Series;
WHEREAS, the Trustees desire to create new Series and designate new Classes of shares;
NOW, THEREFORE, in consideration of the foregoing premises and the agreements contained herein, the undersigned, being all of the Trustees of the Trust and acting in accordance with Article V, Section 1 of the Declaration, hereby amend the Declaration as follows:
The Trust shall consist of one or more Series. Without limiting the authority of the Trustees to establish and designate any further Series, the Trustees hereby establish the following 52 Series: Goldman Sachs Adjustable Rate Government Fund, Goldman Sachs Short Duration Government Fund, Goldman Sachs Short Duration Tax-Free Fund, Goldman Sachs Core Fixed Income Fund, Goldman Sachs Global Income Fund, Goldman Sachs Government Income Fund, Goldman Sachs Municipal Income Fund, Goldman Sachs High Yield Fund, Goldman Sachs Balanced Fund, Goldman Sachs CORE Large Cap Growth Fund, Goldman Sachs CORE U.S. Equity Fund, Goldman Sachs CORE Small Cap Equity Fund, Goldman Sachs CORE International Equity Fund, Goldman Sachs Growth and Income Fund, Goldman Sachs Capital Growth Fund, Goldman Sachs Mid Cap Value Fund, Goldman Sachs Small Cap Value Fund, Goldman Sachs International Equity Fund, Goldman Sachs Asia Growth Fund, Goldman Sachs Emerging Markets Equity Fund, Goldman Sachs Real Estate Securities Fund, Goldman Sachs International Small Cap Fund, Goldman Sachs Japanese Equity Fund, Goldman Sachs European Equity Fund, Goldman Sachs CORE Large Cap Value Fund, Goldman Sachs Strategic Growth Fund, Goldman Sachs Growth Opportunities Fund, Goldman Sachs Internet Tollkeeper Fund, Goldman Sachs Large Cap Value Fund, Goldman Sachs Growth Strategy Portfolio, Goldman Sachs Aggressive Growth Strategy Portfolio, Goldman Sachs Balanced Strategy Portfolio, Goldman Sachs Growth and Income Strategy Portfolio, Goldman Sachs Conservative Strategy Portfolio, Institutional Liquid Assets- - Prime Obligations Portfolio, Institutional Liquid Assets-Government Portfolio, Institutional Liquid Assets-Treasury Obligations Portfolio, Institutional Liquid Assets-Money Market Portfolio, Institutional Liquid Assets-Federal Portfolio, Institutional Liquid Assets-Treasury Instruments Portfolio, Institutional Liquid Assets-Tax-Exempt Diversified Portfolio, Institutional Liquid Assets-Tax-Exempt New York Portfolio, Institutional Liquid Assets- Tax-Exempt California Portfolio, Goldman Sachs-Financial Square Prime
Obligations Fund, Goldman Sachs-Financial Square Government Fund, Goldman Sachs-Financial Square Treasury Obligations Fund, Goldman Sachs-Financial Square Money Market Fund, Goldman Sachs-Financial Square Premium Money Market Fund, Goldman Sachs-Financial Square Municipal Money Market Fund, Goldman Sachs-Financial Square Tax-Free Money Market Fund, Goldman Sachs- Financial Square Federal Fund, and Goldman Sachs-Financial Square Treasury Instruments Fund (the "Existing Series"). Each additional Series shall be established and is effective upon the adoption of a resolution of a majority of the Trustees or any alternative date specified in such resolution. The Trustees may designate the relative rights and preferences of the Shares of each Series. The Trustees may divide the Shares of any Series into Classes. Without limiting the authority of the Trustees to establish and designate any further Classes, the Trustees hereby establish the following classes of shares with respect to the series set forth below:
Class A Shares: Goldman Sachs Adjustable Rate Government Fund, Goldman Sachs
Global Income Fund, Goldman Sachs Government Income Fund,
Goldman Sachs Municipal Income Fund, Goldman Sachs High
Yield Fund, Goldman Sachs Short Duration Government Fund,
Goldman Sachs Short Duration Tax-Free Fund, Goldman Sachs
Core Fixed Income Fund, Goldman Sachs Balanced Fund, Goldman
Sachs CORE U.S. Equity Fund, Goldman Sachs CORE Small Cap
Equity Fund, Goldman Sachs CORE International Equity Fund,
Goldman Sachs CORE Large Cap Growth Fund, Goldman Sachs
Growth and Income Fund, Goldman Sachs Mid Cap Value Fund,
Goldman Sachs Capital Growth Fund, Goldman Sachs Small Cap
Value Fund, Goldman Sachs International Equity Fund, Goldman
Sachs Emerging Markets Equity Fund, Goldman Sachs Asia
Growth Fund, Goldman Sachs Real Estate Securities Fund,
Goldman Sachs International Small Cap Fund, Goldman Sachs
Japanese Equity Fund, Goldman Sachs European Equity Fund,
Goldman Sachs CORE Large Cap Value Fund, Goldman Sachs
Strategic Growth Fund, Goldman Sachs Growth Opportunities
Fund, Goldman Sachs Internet Tollkeeper Fund, Goldman Sachs
Large Cap Value Fund, Goldman Sachs Growth Strategy
Portfolio, Goldman Sachs Aggressive Growth Strategy
Portfolio, Goldman Sachs Balanced Strategy Portfolio,
Goldman Sachs Growth and Income Strategy Portfolio, Goldman
Sachs Conservative Strategy Portfolio.
Class B Shares Goldman Sachs Global Income Fund, Goldman Sachs Government
Income Fund, Goldman Sachs Municipal Income Fund, Goldman
Sachs High Yield Fund, Goldman Sachs Short Duration
Government Fund, Goldman Sachs Short Duration Tax-Free Fund,
Goldman Sachs Core Fixed Income Fund, Goldman Sachs Balanced
Fund, Goldman Sachs CORE U.S. Equity Fund, Goldman Sachs
CORE Small Cap Equity Fund, Goldman Sachs CORE International
Equity Fund, Goldman Sachs CORE Large Cap Growth Fund,
Goldman Sachs Growth and Income Fund, Goldman Sachs Mid Cap
Value Fund, Goldman Sachs Capital Growth Fund, Goldman Sachs
Small Cap Value Fund, Goldman Sachs International Equity
Fund, Goldman Sachs Emerging Markets Equity Fund, Goldman
Sachs Asia Growth Fund, Goldman Sachs International Small
Cap Fund, Goldman Sachs Japanese Equity Fund, Goldman Sachs
CORE Large Cap Value Fund, Goldman Sachs Growth
Opportunities Fund, Goldman Sachs Strategic Growth Fund,
Goldman Sachs Internet Tollkeeper Fund, Goldman Sachs Large
Cap Value Fund, Institutional Liquid Assets Prime
Obligations Portfolio, Goldman Sachs Real Estate Securities
Fund, Goldman Sachs European Equity Fund, Goldman Sachs
Growth Strategy Portfolio, Goldman Sachs Aggressive Growth
Strategy Portfolio, Goldman Sachs Balanced Strategy
Portfolio, Goldman Sachs Growth and Income Strategy
Portfolio, Goldman Sachs Conservative Strategy Portfolio.
Class C Shares Goldman Sachs Global Income Fund, Goldman Sachs Government
Income Fund, Goldman Sachs Municipal Income Fund, Goldman
Sachs High Yield Fund, Goldman Sachs Short Duration
Government Fund, Goldman Sachs Short Duration Tax-Free Fund,
Goldman Sachs Core Fixed Income Fund, Goldman Sachs Balanced
Fund, Goldman Sachs CORE U.S. Equity Fund, Goldman Sachs
CORE Small Cap Equity Fund, Goldman Sachs CORE International
Equity Fund, Goldman Sachs CORE Large Cap Growth Fund,
Goldman Sachs Growth and Income Fund, Goldman Sachs Mid Cap
Value Fund, Goldman Sachs Capital
|
Growth Fund, Goldman Sachs Small Cap Value Fund, Goldman
Sachs International Equity Fund, Goldman Sachs Emerging
Markets Equity Fund, Goldman Sachs Asia Growth Fund,
Goldman Sachs International Small Cap Fund, Goldman Sachs
Japanese Equity Fund, Institutional Liquid Assets Prime
Obligations Portfolio, Goldman Sachs Real Estate
Securities Fund, Goldman Sachs European Equity Fund,
Goldman Sachs CORE Large Cap Value Fund, Goldman Sachs
Strategic Growth Fund, Goldman Sachs Growth Opportunities
Fund, Goldman Sachs Internet Tollkeeper Fund, Goldman
Sachs Large Cap Value Fund, Goldman Sachs Growth Strategy
Portfolio, Goldman Sachs Aggressive Growth Strategy
Portfolio, Goldman Sachs Balanced Strategy Portfolio,
Goldman Sachs Growth and Income Strategy Portfolio,
Goldman Sachs Conservative Strategy Portfolio.
Institutional Shares: Goldman Sachs Adjustable Rate Government Fund, Goldman
Sachs Short Duration Government Fund, Goldman Sachs Short
Duration Tax-Free Fund, Goldman Sachs Government Income
Fund, Goldman Sachs Municipal Income Fund, Goldman Sachs
Core Fixed Income Fund, Goldman Sachs Global Income Fund,
Goldman Sachs High Yield Fund, Goldman Sachs Balanced
Fund, Goldman Sachs Small Cap Value Fund, Goldman Sachs
Capital Growth Fund, Goldman Sachs CORE Large Cap Growth
Fund, Goldman Sachs CORE U.S. Equity Fund, Goldman Sachs
CORE Small Cap Equity Fund, Goldman Sachs CORE
International Equity Fund, Goldman Sachs Growth and
Income Fund, Goldman Sachs Mid Cap Value Fund, Goldman
Sachs International Equity Fund, Goldman Sachs Emerging
Markets Equity Fund, Goldman Sachs Asia Growth Fund,
Goldman Sachs International Small Cap Fund, Goldman Sachs
Japanese Equity Fund, Goldman Sachs Real Estate
Securities Fund, Goldman Sachs European Equity Fund,
Goldman Sachs CORE Large Cap Value Fund, Goldman Sachs
Growth Opportunities Fund, Goldman Sachs Strategic Growth
Fund, Goldman Sachs Internet Tollkeeper Fund, Goldman
Sachs Large Cap Value Fund, Goldman Sachs-Financial
Square Prime Obligations Fund, Goldman Sachs-Financial
Square Government Fund, Goldman Sachs-Financial Square
Treasury Obligations Fund, Goldman Sachs-Financial Square
Money Market Fund, Goldman Sachs-Financial Square Premium
Money Market Fund, Goldman Sachs-Financial Square
Municipal Money Market Fund, Goldman Sachs-Financial
Square Tax-Free Money Market Fund, Goldman Sachs-
Financial Square Federal Fund, Goldman Sachs-Financial
Square Treasury Instruments Fund, Institutional Liquid
Assets-Prime Obligations Portfolio, Institutional Liquid
Assets-Government Portfolio, Institutional Liquid Assets-
Treasury Obligations Portfolio, Institutional Liquid
Assets-Money Market Portfolio, Institutional Liquid
Assets-Federal Portfolio, Institutional Liquid Assets-
Treasury Instruments Portfolio, Institutional Liquid
Assets-Tax-Exempt Diversified Portfolio, Institutional
Liquid Assets-Tax-Exempt New York Portfolio,
Institutional Liquid Assets-Tax-Exempt California
Portfolio, Goldman Sachs Growth Strategy Portfolio,
Goldman Sachs Aggressive Growth Strategy Portfolio,
Goldman Sachs Balanced Strategy Portfolio, Goldman Sachs
Growth and Income Strategy Portfolio, Goldman Sachs
Conservative Strategy Portfolio.
Service Shares: Goldman Sachs Adjustable Rate Government Fund, Goldman
Sachs Short Duration Government Fund, Goldman Sachs Short
Duration Tax- Free Fund, Goldman Sachs Government Income
Fund, Goldman Sachs Municipal Income Fund, Goldman Sachs
Core Fixed Income Fund, Goldman Sachs Global Income Fund,
Goldman Sachs High Yield Fund, Goldman Sachs Balanced
Fund, Goldman Sachs Small Cap Value Fund, Goldman Sachs
Capital Growth Fund, Goldman Sachs CORE U.S. Equity Fund,
Goldman Sachs CORE Large Cap Growth Fund, Goldman Sachs
CORE Small Cap Equity Fund, Goldman Sachs CORE
International Equity Fund, Goldman Sachs Growth and
Income Fund, Goldman Sachs Mid Cap Value Fund, Goldman
Sachs International Equity Fund, Goldman Sachs Emerging
Markets Equity Fund, Goldman Sachs Asia Growth Fund,
Goldman Sachs International Small Cap Fund, Goldman Sachs
Japanese Equity Fund, Goldman Sachs Real Estate
Securities Fund, Goldman Sachs European Equity Fund,
Goldman Sachs CORE Large Cap Value Fund, Goldman Sachs
Strategic Growth Fund, Goldman Sachs Growth
|
Opportunities Fund, Goldman Sachs Internet Tollkeeper
Fund, Goldman Sachs Large Cap Value Fund, Goldman Sachs-
Financial Square Prime Obligations Fund, Goldman Sachs-
Financial Square Government Fund, Goldman Sachs-
Financial Square Treasury Obligations Fund, Goldman
Sachs-Financial Square Money Market Fund, Goldman Sachs-
Financial Square Premium Money Market Fund, Goldman
Sachs-Financial Square Municipal Money Market Fund,
Goldman Sachs-Financial Square Tax-Free Money Market
Fund, Goldman Sachs-Financial Square Federal Fund,
Goldman Sachs-Financial Square Treasury Instruments
Fund, Institutional Liquid Assets-Prime Obligations
Portfolio, Institutional Liquid Assets-Government
Portfolio, Institutional Liquid Assets-Treasury
Obligations Portfolio, Institutional Liquid Assets-Money
Market Portfolio, Institutional Liquid Assets-Federal
Portfolio, Institutional Liquid Assets-Treasury
Instruments Portfolio, Institutional Liquid Assets-Tax-
Exempt Diversified Portfolio, Institutional Liquid
Assets-Tax-Exempt New York Portfolio, Institutional
Liquid Assets-Tax-Exempt California Portfolio, Goldman
Sachs Growth Strategy Portfolio, Goldman Sachs
Aggressive Growth Strategy Portfolio, Goldman Sachs
Balanced Strategy Portfolio, Goldman Sachs Growth and
Income Strategy Portfolio, Goldman Sachs Conservative
Strategy Portfolio.
Administration Shares: Goldman Sachs-Financial Square Prime Obligations Fund,
Goldman Sachs-Financial Square Government Fund, Goldman
Sachs-Financial Square Treasury Obligations Fund,
Goldman Sachs-Financial Square Money Market Fund,
Goldman Sachs-Financial Square Premium Money Market
Fund, Goldman Sachs-Financial Square Municipal Money
Market Fund, Goldman Sachs-Financial Square Tax-Free
Money Market Fund, Goldman Sachs-Financial Square
Federal Fund, Goldman Sachs-Financial Square Treasury
Instruments Fund, Institutional Liquid Assets-Prime
Obligations Portfolio, Institutional Liquid Assets-
Government Portfolio, Institutional Liquid Assets-
Treasury Obligations Portfolio, Institutional Liquid
Assets-Money Market Portfolio, Institutional Liquid
Assets-Federal Portfolio, Institutional Liquid Assets-
Treasury Instruments Portfolio, Institutional Liquid
Assets-Tax-Exempt Diversified Portfolio, Institutional
Liquid Assets-Tax-Exempt New York Portfolio and
Institutional Liquid Assets-Tax-Exempt California
Portfolio.
Preferred
Administration Shares: Goldman Sachs-Financial Square Prime Obligations Fund,
Goldman Sachs-Financial Square Government Fund, Goldman
Sachs-Financial Square Treasury Obligations Fund,
Goldman Sachs-Financial Square Money Market Fund,
Goldman Sachs-Financial Square Premium Money Market
Fund, Goldman Sachs-Financial Square Municipal Money
Market Fund, Goldman Sachs-Financial Square Tax-Free
Money Market Fund, Goldman Sachs-Financial Square
Federal Fund and Goldman Sachs-Financial Square Treasury
Instruments Fund. Cash Management Shares: Institutional
Liquid Assets-Prime Obligations Portfolio, Institutional
Liquid Assets-Money Market Portfolio, Institutional
Liquid Assets-Government Portfolio, Institutional Liquid
Assets-Tax-Exempt Diversified Portfolio, Institutional
Liquid Assets-Tax-Exempt California Portfolio,
Institutional Liquid Assets-Tax-Exempt New York
Portfolio.
|
Select Shares: Goldman Sachs-Financial Square Prime Obligations Fund,
Goldman Sachs-Financial Square Government Fund, Goldman
Sachs-Financial Square Treasury Obligations Fund, Goldman
Sachs-Financial Square Money Market Fund, Goldman
Sachs-Financial Square Premium Money Market Fund, Goldman
Sachs-Financial Square Municipal Money Market Fund, Goldman
Sachs-Financial Square Tax-Free Money Market Fund, Goldman
Sachs-Financial Square Federal Fund and Goldman
Sachs-Financial Square Treasury Instruments Fund.
|
All capitalized terms which are not defined herein shall have the same meanings as are assigned to those terms in the Declaration.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the date first written above.
/s/ Ashok N. Bakhru, _________________________________________ Ashok N. Bakhru, as Trustee and not individually /s/ David B. Ford, _________________________________________ David B. Ford, as Trustee and not individually /s/ Douglas Grip, _________________________________________ Douglas Grip, as Trustee and not individually /s/ John P. McNulty, _________________________________________ John P. McNulty, as Trustee and not individually, /s/ Mary P. McPherson _________________________________________ Mary P. McPherson as Trustee and not individually, /s/ Alan A. Shuch _________________________________________ Alan A. Shuch as Trustee and not individually, |
/s/ Jackson W. Smart, Jr. _________________________________________ Jackson W. Smart, Jr. as Trustee and not individually, /s/ William H. Springer _________________________________________ William H. Springer as Trustee and not individually, /s/ Richard P. Strubel _________________________________________ Richard P. Strubel as Trustee and not individually, |
Exhibit (D)(11)
Amended Annex A
The compensation payable under Paragraph 5 of the Management Agreement between Goldman Sachs Trust and each of the undersigned shall be as follows:
Goldman Sachs Asset Management Annual Rate
------------
Goldman Sachs Government Income Fund 0.65%
Goldman Sachs Municipal Income Fund 0.55%
Goldman Sachs High Yield Fund 0.70%
Goldman Sachs Balanced Fund 0.65%
Goldman Sachs Growth and Income Fund 0.70%
Goldman Sachs CORE Large Cap Value Fund/4/ 0.60%
Goldman Sachs CORE Large Cap Growth Fund 0.75%
Goldman Sachs CORE Small Cap Equity Fund/1/ 1.00%
Goldman Sachs CORE International Equity Fund/1/ 1.00%
Goldman Sachs Mid Cap Value Fund 0.75%
Goldman Sachs Small Cap Value Fund 1.00%
Goldman Sachs Real Estate Securities Fund/1/ 1.00%
Goldman Sachs Strategic Growth Fund/5/ 1.00%
Goldman Sachs Growth Opportunities Fund/5/ 1.00%
Goldman Sachs Internet Toll-Keeper Fund/6/ 1.00%
Goldman Sachs Large Cap Value Fund/7/ 0.75%
Goldman Sachs-Financial Square Prime Obligations Fund 0.205%
Goldman Sachs-Financial Square Money Market Fund 0.205%
Goldman Sachs-Financial Square Premium Money Market Fund 0.205%
Goldman Sachs-Financial Square Treasury Obligations Fund 0.205%
Goldman Sachs-Financial Square Treasury Instruments Fund 0.205%
Goldman Sachs-Financial Square Government Fund 0.205%
Goldman Sachs-Financial Square Federal Fund 0.205%
Goldman Sachs-Financial Square Tax-Free Money Market Fund 0.205%
Goldman Sachs-Financial Square Municipal Money Market Fund 0.205%
Goldman Sachs Funds Management L.P.
Goldman Sachs CORE U.S. Equity Fund 0.75%
Goldman Sachs Capital Growth Fund 1.00%
Goldman Sachs Asset Management International
Goldman Sachs Global Income Fund 0.90%
Goldman Sachs International Equity Fund 1.00%
Goldman Sachs Emerging Markets Equity Fund 1.20%
Goldman Sachs Asia Growth Fund 1.00%
Goldman Sachs International Small Cap Fund/2/ 1.20%
Goldman Sachs Japanese Equity Fund/2/ 1.00%
Goldman Sachs European Equity Fund/3/ 1.00%
|
/1/ Please note that the CORE Small Cap Equity Fund, CORE International Equity
Fund and Real Estate Securities Fund were approved at the July 21, 1997
Goldman Sachs Trust Board Meeting.
/2/ Please note that the International Small Cap Fund and Japanese Equity Fund
were approved at the April 23, 1998 Goldman Sachs Trust Board Meeting.
/3/ Please note that the European Equity Fund was approved at the July 22, 1998
Goldman Sachs Trust Board Meeting.
/4/ Please note that the CORE Large Cap Value Fund was approved at the November
3, 1998 Goldman Sachs Trust Board Meeting.
/5/ Please note that the Strategic Growth Fund and Growth Opportunities Fund
were approved at the April 28, 1999 Goldman Sachs Trust Board Meeting.
/6/ Please note that the Internet Toll-Keeper Fund was approved at the July 27,
1999 Goldman Sachs Trust Board Meeting.
/7/ Please note that the Large Cap Value Fund was approved at the October 26,
1999 Goldman Sachs Trust Board Meeting.
Exhibit (e)(1)
GOLDMAN SACHS TRUST
Distribution Agreement
April 30, 1997, as amended October 26, 1999
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Dear Sirs:
(b) The Trust's notification of registration on Form N-8A (as amended) complies with the applicable requirements of the Investment Company Act and the Rules and Regulations thereunder.
(d) No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Securities Act and the Rules and Regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Trust by you (with respect to information relating solely to your role as the exclusive distributor of the Shares of the Funds) expressly for use therein.
(e) The Trust has been duly created and is lawfully and validly existing as a business trust under the laws of the State of Delaware, and has, on the date hereof, and will have, on and after the date hereof, full power and authority to own its properties and conduct its business as described in each Registration Statement, Prospectus and SAI, and is duly qualified to do business under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business.
(f) The Trust's authorized capitalization is as set forth in the Registration Statements. Issuance of the Shares of the Funds as contemplated by this Agreement and by each Prospectus and SAI has been duly and validly authorized, and the Shares of the Funds, when issued and paid for as contemplated hereby and thereby, will be fully-paid and, except as contemplated by the Prospectus and SAI, nonassessable and will conform to the description thereof contained in the corresponding Prospectus and SAI. The holders of outstanding shares of each Fund are not entitled to preemptive or other rights to subscribe for the Shares of any Fund, other than as contemplated by the Prospectus and SAI relating to each Fund.
(g) This Agreement has been duly authorized, executed and delivered by the Trust.
(i) The Fund Agreements constitute or will constitute, on and after the Initial Acceptance Date, assuming due authorization, execution and delivery by the parties thereto other than the Trust, valid and legally binding instruments, enforceable in accordance with their respective terms, subject, as to enforceability, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.
(j) No consent, approval, authorization or order of any court or governmental agency or body is or shall be required, as the case may be, for the consummation from time to time of the transactions contemplated by this Agreement and the Fund Agreements, except such as may be required (i) under the Securities Act, the Securities Exchange Act of 1934, as amended (the
(k) The operations and activities of the Trust and each Fund as contemplated by the Prospectuses and the SAIs, the performance by the Trust and each Fund of this Agreement and the Fund Agreements,
the making of the offer or the sale of Shares of each Fund and consummation from time to time of such sales, the redemption of Shares of each Fund, or any other transactions contemplated herein, in the Fund Agreements, in the Prospectuses or in the SAIs, will not conflict with, result in a breach of, or constitute a default under, the declaration of trust or the Trust's By- laws or, in any material respect, the terms of any other agreement or instrument to which the Trust is a party or by which it is bound, or any order or regulation applicable to the Trust of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Trust.
(l) There is not pending, or to the best knowledge of the Trust, threatened, any action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator to which the Trust is (or, to the best knowledge of the Trust, is threatened to be) a party, of a character required to be described in any Registration Statement, Prospectus or SAI which is not described as required.
(m) There is no contract or other document of a character required to be described in any Registration Statement, Prospectus or SAI, or to be filed as an exhibit, which is not described or filed as required.
(n) Except as stated or contemplated in the Registration Statements,
Prospectuses and SAIs, (i) the Trust has not incurred any liabilities or
obligations, direct or contingent, or entered into any transactions, whether
or not in the ordinary course of business, that are material to the Trust,
(ii) there has not been any material adverse change, or, any development
involving a prospective material adverse change, in the condition (financial
or other) of the Trust, (iii) there has been no dividend or distribution
paid or declared in respect of the Trust, and (iv) the Trust has not
incurred any indebtedness for borrowed money.
(o) Each Fund will elect or has elected to be treated as a regulated investment company as defined in Section 851(a) of the Internal Revenue Code of 1986 for its first taxable year and will operate so as to qualify as such in its current and all subsequent taxable years.
(p) Except as stated or contemplated in any Prospectus or SAI, the Trust owns all of its assets free and clear in all material respects of all liens, security interests, pledges, mortgages, charges and other encumbrances or defects.
(b) You acknowledge that the only information provided to you by the Trust is that contained in each
(c) You agree to perform such services as are described in each Registration Statement, Prospectus and SAI as to be performed by the Distributor including, without limitation, distributing Account Information Forms.
(d) All of your activities as distributor of the Shares of the Funds shall comply, in all material respects, with all applicable laws, Rules and Regulations, including, without limitation, all rules and regulations made or adopted by the Commission or by any securities association registered under the Exchange Act, including the NASD, as in effect from time to time.
(a) You will act as agent for the Trust in the distribution of Shares of the Funds and you agree to use your best efforts to offer and sell Shares of the Funds subject to a sales charge to the public at the public offering price as set forth in the relevant Prospectus, subject to any waivers or reductions of any applicable sales charges, dealer allowances and fees as you and each of the Authorized Dealers, if any, shall have agreed to in writing. You may also subscribe for Shares of a Fund as principals for resale to the public or for resale to Authorized Dealers. You shall devote reasonable time and effort to effect sales of Shares of the Funds, but you shall not be obligated to sell any specific number of Shares. Nothing contained herein shall prevent you from entering into like distribution arrangements with other investment companies.
(b) The Distributor is authorized to purchase Shares of any Fund presented to them by Authorized Dealers at the price determined in accordance with, and in the manner set forth in, the Prospectus for such Fund.
(c) Unless you are otherwise notified by the Trust, any right granted to you to accept orders for Shares of any Fund or to make sales on behalf of the Trust or to purchase Shares of any Fund for resale will not apply to (i) Shares issued in connection with the merger or consolidation of any other investment company with the Trust or its acquisition, by purchase or otherwise, of all or substantially all of the assets of any investment company or substantially all the outstanding securities of any such company, and (ii) Shares that may be offered by the Trust to shareholders by virtue of their being such shareholders.
(a) With respect to any Class which is sold to the public subject to a sales charge, you will be entitled to receive that portion of the sales charges applicable to sales of Shares of such Class and not reallocated to Authorized Dealers as set forth in the relevant Prospectus, subject to any waivers or
(b) The Trust has entered into Plans of Distribution pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1 Plans") with respect to certain classes of certain Funds. The Trust shall pay to you as distributor of such Classes the compensation pursuant to the Rule 12b-1 Plans as shall be set forth from time to time in the Prospectuses and SAIs and provided for under the Rule 12b-1 Plan.
(c) The amounts payable as compensation pursuant to this Section 5 shall be subject to the limitations in Section 2830 of the Conduct Rules of the NASD.
of a Fund in any jurisdiction or the initiation or (to the best knowledge of the Trust) threatening of any proceeding for such purpose. The Trust will use its best efforts to prevent the issuance of any such order or suspension and, if issued, to obtain as soon as possible the withdrawal or suspension thereof.
(b) If, at any time when a Prospectus or SAI is required to be delivered under the Securities Act, any event occurs as a result of which such Prospectus or SAI would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend any Registration Statement or amend or supplement any Prospectus or SAI to comply with the Securities Act, the Investment Company Act or the Rules and Regulations thereunder, the Trust will notify you promptly of any such circumstance and promptly will prepare and file with the Commission, subject to the third sentence of Section 6(a), an amendment or supplement which will correct such statement or omission or effect such compliance.
(c) As soon as practicable (giving effect to the normal periodic reporting requirements under the Investment Company Act and the Rules and Regulations thereunder), the Trust will make generally available to its shareholders and, subject to Section 8 of this Agreement, to you (with sufficient copies for the Authorized Dealers), a report containing the financial statements required to be included in such reports under Section 30(d) of the Investment Company Act and Rule 30d-1 thereunder.
(d) Subject to Section 8 of this Agreement, the Trust will furnish to you as many conformed copies of the Registration Statements including exhibits thereto, on each Effective Date, as you may reasonably request for yourself and for delivery to the Authorized Dealers and, so long as delivery of a Prospectus or SAI by you or any Authorized Dealer may be required by law, the number of copies of each Prospectus and each SAI as you may reasonably request for yourself and for delivery to the Authorized Dealers.
(e) To the extent required by applicable state law, the Trust will use its best efforts to arrange for the qualification of an appropriate number of the Shares of the Funds for sale under the laws of such of the 50 states of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Territory of Guam, and such other jurisdiction as you and the Trust may approve, and will maintain such qualifications in effect as long as may be reasonably requested by you, provided that the Trust shall not be required in connection herewith or as a condition hereto to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction. You shall furnish such information and other material relating to your affairs and activities as may be required by the Trust in connection with such qualifications.
(f) The Trust shall keep you fully informed with respect to its affairs and, subject to Section 8 of this Agreement, the Trust, if so requested, will furnish to you, as soon as they are available (with sufficient copies for the Authorized Dealers), copies of all reports, communications and financial statements sent by the Trust to its shareholders or filed by, or on behalf of, the Trust with the Commission.
(g) The Trust agrees that on each date the Trust is required to file with the Commission a notice under paragraph (b)(1) of Rule 24f-2 under the Investment Company Act, the Trust, if so requested, shall furnish to you a copy of the opinion of counsel for the Trust required by such Rule to the effect that the Shares covered by the notice were legally issued, fully paid and nonassessable. The Trust further agrees that if, in connection with the filing of any post-effective amendment to any Registration Statement after the date of this Agreement:
(i) a change is made to the statements under the caption "Shares of the Fund" in any Prospectus or SAI
that is deemed material by you, the Trust, if so requested, shall furnish to you an opinion of counsel for the Trust, dated the date of such post- effective amendment, to the effect of paragraph 2 (to the extent it relates to the description of the Shares);
(ii) the Fund Agreements are amended or modified in any manner, the Trust, if so requested, shall furnish to you an opinion of counsel for the Trust, dated the date of such post-effective amendment; or
(iii) any change is made to the statements under the caption "Taxation" in any Prospectus or SAI, the Trust, if so requested, shall furnish to you an opinion of counsel for the Trust, dated the date of such post-effective amendment.
Any opinion or statement furnished pursuant to this Section 6(g) shall be modified as necessary to relate to this Agreement and the Fund Agreements and the Rules and Regulations as then in effect and shall state that the Authorized Dealers may rely on it.
(h) The Trust, if so requested, shall furnish to you on each subsequent Effective Date with respect to an amendment of a Registration Statement which first includes certified financial statements for the preceding fiscal year, in respect of a Fund, a copy of the report of the Trust's independent public accountants with respect to the financial statements and selected per share data and ratios relating to such Fund, addressed to you. The Trust further agrees that the Trust, if so requested, shall furnish to you (i) on each date on which the Trust, pursuant to the preceding sentence, furnishes to you a report of its independent public accountants, a certificate of its treasurer or assistant treasurer in a form reasonably satisfactory to you describing in reasonable detail how the figures included under the captions "Portfolio Transactions" and "Performance Information" (or similar captions) in the Prospectus or SAI of such Fund and the figures relating to the aggregate amounts of remuneration paid to officers, trustees and members of the advisory board and affiliated persons thereof (as required by Section 30(d)(5) of the Investment Company Act) were calculated and confirming that such calculations are in conformity with the Rules and Regulations under the Investment Company Act and (ii) on each date the Trust files with the Commission the Trust's required semi-annual financial statements, a certificate of its treasurer or assistant treasurer in a form reasonably satisfactory to you, describing the manner in which such financial statements were prepared and confirming that such financial statements have been prepared in conformity with the Rules and Regulations under the Investment Company Act.
(a) If filing of any Prospectus or SAI, or any amendment or supplement to any Prospectus or SAI, or any other document is required pursuant to any applicable provision of Rule 497, such Prospectus or SAI, or any such amendment or supplement and other document will be filed in the manner and within the time period required by the applicable provision of Rule 497; and no order suspending the effectiveness of the amendment shall have been issued and no proceedings for that purpose shall have been instituted or, to the best knowledge of the Trust, threatened and the Trust shall have complied with any request of the Commission for additional information (to be included in the relevant Registration Statement, Prospectus, SAI or as the Commission otherwise shall have requested).
(b) At the Initial Acceptance Date with respect to each Fund, you shall have received from counsel to the Distributors, if so requested, such opinion or opinions, dated the Initial Acceptance Date, with respect to the issuance and sale of the Shares, the relevant Registration Statement, Prospectus and SAI and other related matters as you may reasonably require, and the Trust shall have furnished to such counsel such documents as they may request for the purpose of enabling them to pass upon such matters. Each such opinion shall state that the Authorized Dealers may rely on it.
(c) There shall not have been any change, or any development involving a prospective change, in or affecting the Trust the effect of which in any case is, in your good faith judgment, so material and adverse as to make it impractical or inadvisable to proceed with the offering of Shares of the Funds as contemplated by this Agreement.
(d) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York declared by either
Federal or New York State authorities; (iii) the outbreak or escalation of
hostilities involving the United States or the declaration of a national
emergency or war if the effect of any such event specified in this Clause
(iii) in your judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares of a Fund on the
terms and in the manner contemplated in any Prospectus.
(e) The Trust shall have furnished to you such further information, certificates and documents as you may have reasonably requested.
If any of the conditions specified in this Section 7 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions, certificates or letters mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to you, this Agreement and all your obligations hereunder may be cancelled by you. In the event of such cancellation, the Trust shall remain liable for the expenses set forth in Section 8.
(a) The Trust will pay (or will enter into arrangements providing that parties other than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and filing of the Registration Statements (including Prospectuses and SAIs) under the Securities Act or the Investment Company Act, or both, and any amendments or supplements thereto that may be made from time to time;
(2) in connection with the registration and qualification of Shares of the Funds for sale in the various jurisdictions in which it is determined to be advisable to qualify such Shares of the Funds for sale (including registering the Trust as a broker or dealer or any officer of the Trust or other person as agent or salesman of the Trust in any such jurisdictions);
(3) of preparing, setting in type, printing and mailing any notice, proxy statement, report, Prospectus, SAI or other communication to shareholders in their capacity as such;
(4) of preparing, setting in type, printing and mailing Prospectuses annually, and any supplements thereto, to existing shareholders;
(5) in connection with the issue and transfer of Shares of the Funds resulting from the
acceptance by you of orders to purchase Shares of the Funds placed with you by investors, including the expenses of printing and mailing confirmations of such purchase orders and the expenses of printing and mailing a Prospectus included with the confirmation of such orders and, if requested by the purchaser, an SAI;
(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the portion allocated to you in this Section 8;
(8) of wiring funds in payment of Share purchases or in satisfaction of redemption or repurchase requests, unless such expenses are paid for by the investor or shareholder who initiates the transaction;
(9) of the cost of printing and postage of business reply envelopes sent to shareholders;
(10) of one of more CRT terminals connected with the computer facilities
of the Transfer Agent other than the portion allocated to you in this
Section 8;
(12) of the expense of setting in type, printing and postage of any periodic newsletter to shareholders other than the portion allocated to you in this Section 8; and
(13) of the salaries and overhead of persons employed by you as shareholder representatives other than the portion allocated to you in this Section 8.
(b) Except as provided in any Rule 12b-1 Plan or Service Plan, you shall pay or arrange for the payment of all fees and expenses:
(1) of printing and distributing any Prospectuses or reports prepared for your use in connection with the offering of Shares of the Funds to the public;
(2) of preparing, setting in type, printing and mailing any other literature used by you in connection with the offering of Shares of the Funds to the public;
(3) of advertising in connection with the offering of Shares of the Funds to the public;
(4) incurred in connection with your registration as a broker or dealer or the registration or qualification of your officers, partners, directors, agents or representatives under Federal and state laws;
(5) of that portion of WATS (or equivalent) telephone lines allocated to you on the basis of use by investors (but not shareholders) who request information or Prospectuses;
(6) of that portion of the expense of setting in type, printing and postage of any periodic newsletter to shareholders attributable to promotional material included in such newsletter at your
request concerning investment companies other than the Trust or concerning the Trust to the extent you are required to assume the expense thereof pursuant to this Section 8, except such material which is limited to information, such as listings of other investment companies and their investment objectives, given in connection with the exchange privilege as from time to time described in the Prospectuses;
(7) of that portion of the salaries and overhead of persons employed by you as shareholder representatives attributable to the time spent by such persons in responding to requests from investors, but not shareholders, for information about the Trust;
(8) of any activity which is primarily intended to result in the sale of Shares of any Class of a Fund, unless a 12b-1 Plan shall be in effect which provides that shares of such Classes shall bear some or all of such expenses, in which case such Class shall bear such expenses in accordance with such Plan; and
(9) of that portion of one or more CRT terminals connected with the computer facilities of the Transfer Agent attributable to your use of such terminal(s) to gain access to such of the Transfer Agent's records as also serve as your records.
Expenses which are to be allocated between you and the Trust shall be allocated pursuant to reasonable procedures or formulae mutually agreed upon from time to time, which procedures or formulae shall to the extent practicable reflect studies of relevant empirical data.
(b) You will indemnify and hold harmless the Trust against any losses, claims, damages or liabilities to which the Trust may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof), arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, any Preliminary Prospectus, or any Prospectus or SAI, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Registration Statement, any Preliminary Prospectus, or any Prospectus or SAI in reliance upon and in conformity with written information furnished to the Trust by you expressly for use therein; and will reimburse the Trust for any legal or other expenses reasonably incurred by the Trust in connection with investigating or defending any such action or claim.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or actions
in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Trust on the one hand and you on the other
from the offering of the Shares of the Fund or Funds in respect of which
such losses, claims, damages or liabilities (or actions in respect thereof)
arose. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party
failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Trust on the one
hand and you on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relative equitable considerations.
The relative benefits received by the Trust on the one hand and you on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Shares of the relevant Funds (before deducting
expenses) received by the Trust bear to the total compensation received by
you in selling Shares of such Funds under this Agreement, including any
sales charge as set forth in the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Trust on the one hand or you on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Trust and you agree that it would not be just
and equitable if the contributions pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this subsection (d), you shall not
be required to contribute any amount in excess of the amount by which the
total price at which the Shares of the relevant Funds sold by you and
distributed to the public were offered to the public exceeds the amount of
any damages which you have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Trust under this Section 9 shall be in addition to any liability which the Trust may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls you within the meaning of the Securities Act; and your obligations under this Section 9 shall be in addition to any liability which you may otherwise have and shall extend, upon the same terms and conditions, to each trustee or officer of the Trust (including any person who, with his consent, is named in the relevant Registration Statement as about to become a trustee of the Trust) and to each person, if any, who controls the Trust within the meaning of the Securities Act.
(f) It is understood, however, that nothing in this paragraph 9 shall protect any indemnified party against, or entitle any indemnified party to indemnification against, or contribution with respect to, any liability to the Trust or its shareholders to which such indemnified party is subject, by reason of its willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of any reckless disregard of its obligations and duties, under this Agreement, or otherwise to an extent or in a manner that is inconsistent with Section 17(i) of the Investment Company Act.
(a) This Agreement shall commence on the date first set forth above and continue in effect until June 30, 1998 and then for successive annual periods after June 30, 1998, provided such continuance is specifically approved at least annually by (i) the Trustees of the Trust or (ii) a vote of a majority (as defined in the Investment Company Act) of the Fund's outstanding voting securities, provided that in either event the continuance is also approved by a vote of a majority of the Trustees of the Trust who are not interested persons (as defined in the Investment Company Act) of the Trust or any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. The Trust authorizes, if and when you so determine, you to assign to a third party any payments with respect to one or more Classes of Shares that you are entitled to receive for your services hereunder, including any payments of initial or deferred sales charges or payments in accordance with a Rule 12b-1 or Service Plan so long as such Plan is in effect, free and clear of any offset, defense or counterclaim the Trust may have against you and except to the extent that any change or modification after the date hereof of (x) the provisions of the Investment Company Act, the Rules and Regulations thereunder or other applicable law or (y) any interpretation of the Investment Company Act, the Rules and Regulations thereunder or other applicable law shall restrict your right to make such transfer free and clear of any offset, defense or counterclaim.
(b) The sale of Shares of the Funds in accordance with the terms of this Agreement shall be subject to termination or suspension in the absolute discretion of the Trust, by notice given to you as set forth in Section 12 hereof.
(c) This Agreement will terminate automatically in the event of its assignment (as defined in the Investment Company Act). In addition, this Agreement may be terminated by the Trust at any time with respect to any Class of its Shares, without the payment of any penalty, by vote of a majority of the Trustees of the Trust who are not interested persons (as defined in the Investment Company Act) of the Trust or by a vote of a majority of the outstanding voting securities of such Class on 60 days' written notice.
The provisions of Section 8, 9 and 11 hereof and your right to receive any contingent deferred sale charges shall, to the extent permitted by applicable law, survive the termination or cancellation of this Agreement.
The name "Goldman Sachs Trust" is the designation of the Trustees for the time being under a Declaration of Trust dated January 28, 1997, as amended from time to time, and all persons dealing with the Trust must look solely to the property of the Trust for the enforcement of any claims against the Trust as neither the Trustees, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Trust. No series of the Trust shall be liable for any claims against any other series of the Trust.
If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement between you and the Trust, and, to the extent set forth herein, shall be for the benefit of each Authorized Dealer.
Very truly yours,
GOLDMAN SACHS TRUST
By: /s/ Douglas C. Grip -------------------------- Name: Douglas C. Grip Title: President of the Trust |
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
/s/ Goldman, Sachs & Co. ------------------------ (Goldman, Sachs & Co.) |
Goldman Sachs Adjustable Rate Government Fund
Goldman Sachs Core Fixed Income Fund
Goldman Sachs Global Income Fund
Goldman Sachs Government Income Fund
Goldman Sachs Municipal Income Fund
Goldman Sachs Short Duration Tax-Free Fund
Goldman Sachs Short Duration Government Fund
Goldman Sachs High Yield Fund
Goldman Sachs Balanced Fund
Goldman Sachs CORE Large Cap Growth Fund
Goldman Sachs CORE U.S. Equity Fund
Goldman Sachs CORE Small Cap Equity Fund
Goldman Sachs CORE International Equity Fund
Goldman Sachs CORE Large Cap Value Fund
Goldman Sachs Growth and Income Fund
Goldman Sachs Capital Growth Fund
Goldman Sachs International Equity Fund
Goldman Sachs Small Cap Value Fund
Goldman Sachs Asia Growth Fund
Goldman Sachs Emerging Markets Equity Fund
Goldman Sachs Mid Cap Value Fund
Goldman Sachs Real Estate Securities Fund
Goldman Sachs International Small Cap Fund
Goldman Sachs Japanese Equity Fund
Goldman Sachs European Equity Fund
Goldman Sachs Strategic Growth Fund
Goldman Sachs Growth Opportunities Fund
Goldman Sachs Internet Toll-Keeper Fund
Goldman Sachs Large Cap Value Fund
Goldman Sachs Growth Strategy Portfolio Goldman Sachs Aggressive Growth Strategy Portfolio Goldman Sachs Balanced Strategy Portfolio Goldman Sachs Growth and Income Strategy Portfolio Goldman Sachs Conservative Strategy Portfolio
Law Offices
DRINKER BIDDLE & REATH LLP
One Logan Square
18th and Cherry Streets
Philadelphia, PA 19107-6996
Telephone: (215) 988-2700
FAX: (215) 988-2757
October 1, 1999
Goldman Sachs Trust
4900 Sears Tower
Chicago, IL 60606
Ladies and Gentlemen:
We have acted as counsel for Goldman Sachs Trust, a Delaware business trust (the "Trust"), in connection with the registration under the Securities Act of 1933 of shares of beneficial interest ("Shares") representing interests in an additional series, or fund, of the Trust known as the Internet Tollkeeper Fund. The Internet Tollkeeper Fund has five classes of shares: Class A Shares, Class B Shares, Class C Shares, Institutional Shares and Service Shares. The Trust is authorized to issue an unlimited number of shares of each class. These classes are hereinafter referred to as the "Shares."
We have reviewed the Trust's Declaration of Trust, its by-laws, and certain resolutions adopted by its Board of Trustees, and have considered such other legal and factual matters as we have deemed appropriate.
This opinion is based exclusively on the Delaware Business Trust Act and the federal law of the United States of America.
Based on the foregoing, we are of the opinion that the Shares, when issued against payment therefor as described in the Trust's prospectuses relating thereto, will be legally issued, fully paid and non-assessable by the Trust, and that the holders of the Shares will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the general corporation law of the State of Delaware (except that we express no opinion as to such holders who are also trustees of the Trust). Pursuant to Section 2 of Article VIII of the Declaration of Trust, the Trustees have the power to cause shareholders, or shareholders of a particular series or class, to pay certain custodian, transfer, servicing or similar agent charges by setting off the same against declared but unpaid dividends or by reducing Share ownership (or by both means).
Goldman Sachs Trust
October 1, 1999
We hereby consent to the filing of this opinion with the Securities and Exchange Commission as part of a Post-Effective Amendment to the Registration Statement of the Trust. Except as provided in this paragraph, the opinion set forth above is expressed solely for the benefit of the addressee hereof in connection with the matters contemplated hereby and may not be relied upon by, or filed with, any other person or entity or for any other purpose without our prior written consent.
Very truly yours,
/S/ DRINKER BIDDLE & REATH LLP ------------------------------ DRINKER BIDDLE & REATH LLP |
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports for Goldman Sachs Trust - Equity Funds dated October 8, 1999 (and to all references to our firm) included in or made a part of Post-Effective Amendment No. 58 and Amendment No. 60 to Registration Statement File Nos. 33-17619 and 811-5349, respectively.
Arthur Andersen LLP
Boston, Massachusetts
November 17, 1999