<PAGE>
Goldman Sachs Trust
Goldman Sachs Domestic Equity Funds
Institutional Shares
Service Shares
Class A, B and C Shares
Supplement dated October 1, 1999 to
Prospectuses dated April 30, 1999
Under "Service Providers," subsection "Fund Managers--Value Team," the
following portfolio manager should be added:
<TABLE>
<CAPTION>
Years
Primarily Five Year Employment
Name and Title Fund Responsibility Responsible History
- --------------------------------------------------------------------------------------
<C> <C> <C> <S>
Eileen Rominger Senior Portfolio Manager-- Since Ms. Rominger joined the
Managing Growth and Income 1999 Investment Adviser as a
Director Mid Cap Value senior portfolio manager
Small Cap Value in 1999. From 1981 to
1999, she worked at
Oppenheimer Capital,
most recently as a
senior portfolio
manager.
- --------------------------------------------------------------------------------------
Under "Service Providers," subsection "Fund Managers--Growth Equity Invest-
ment Team," the following portfolio managers should be added:
<CAPTION>
Years
Primarily Five Year Employment
Name and Title Fund Responsibility Responsible History
- --------------------------------------------------------------------------------------
<C> <C> <C> <S>
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.
- --------------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------------
</TABLE>
EQDOMSTK1099
509873
<PAGE>
Under Appendix B Financial Highlights, the following replaces the financial
highlights for the Real Estate Securities Fund:
<TABLE>
<CAPTION>
Income from Distributions to
investment operations(a) shareholders
------------------------- ---------------------
Net realized
Net asset and unrealized In excess
value, Net gain (loss) on From net of net
beginning investment investment investment investment
of period income transactions income income
- ---------------------------------------------------------------------------------
For The Six Months Ended June 30, (unaudited)
<S> <C> <C> <C> <C> <C>
1999 - Class A Shares $9.20 $0.21e $0.60e $(0.17) $ --
1999 - Class B Shares 9.27 0.20e 0.59e (0.15) --
1999 - Class C Shares 9.21 0.21e 0.57e (0.15) --
1999 - Institutional
Shares 9.21 0.22e 0.61e (0.18) --
1999 - Service Shares 9.21 0.20e 0.61e (0.16) --
- ---------------------------------------------------------------------------------
For The Period Ended December 31,
1998 - Class A Shares
(commenced July 27) 10.00 0.15 (0.80) (0.15) --
1998 - Class B Shares
(commenced July 27) 10.00 0.14e (0.83)e (0.04) --
1998 - Class C Shares
(commenced July 27) 10.00 0.22e (0.91)e (0.10) --
1998 - Institutional
Shares (commenced July
27) 10.00 0.31e (0.95)e (0.15) --
1998 - Service Shares
(commenced July 27) 10.00 0.25e (0.91)e (0.13) --
- ---------------------------------------------------------------------------------
</TABLE>
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.
<PAGE>
<TABLE>
<CAPTION>
Ratios assuming
no voluntary waiver
of fees
or 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 to expenses to income Portfolio
in net asset value, end Total period to average average average net to average turnover
value of period return(b) (in 000s) net assets net assets assets net assets rate
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.64 $9.84 8.91%d $112,430 1.44%c 4.47%c 2.02%c 3.89%c 8.89%d
0.64 9.91 8.63d 161 2.19c 4.09c 2.52c 3.76c 8.89d
0.63 9.84 8.57d 245 2.19c 4.48c 2.52c 4.15c 8.89d
0.65 9.86 9.20d 63,892 1.04c 4.64c 1.37c 4.31c 8.89d
0.65 9.86 8.95d 2 1.54c 4.31c 1.87c 3.98c 8.89d
- ---------------------------------------------------------------------------------------------------------
(0.80) 9.20 (6.53)d 19,961 1.47c 23.52c 3.52c 21.47c 6.03d
(0.73) 9.27 (6.88)d 2 2.19c 3.60c 4.02c 1.77c 6.03d
(0.79) 9.21 (6.85)d 1 2.19c 5.49c 4.02c 3.66c 6.03d
(0.79) 9.21 (6.37)d 47,516 1.04c 8.05c 2.87c 6.22c 6.03d
(0.79) 9.21 (6.56)d 1 1.54c 6.29c 3.37c 4.46c 6.03d
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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 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
(FORMERLY, GOLDMAN SACHS MID CAP EQUITY FUND)
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
GOLDMAN SACHS SMALL 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
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
(EQUITY PORTFOLIOS OF GOLDMAN SACHS TRUST)
SUPPLEMENT DATED OCTOBER 1, 1999 TO
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 1999 (AS REVISED MAY 5,
1999)
The semi-annual financials of the Goldman Sachs Real Estate
Securities Fund for the period ended June 30, 1999 are listed
below and are to be incorporated into the Statement of
Additional Information.
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
Statement of Investments
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - 95.7%
<C> <S> <C>
HOTELS - 15.6%
135,700 Felcor Suites Hotels, Inc. $ 2,815,775
407,800 Host Marriott Corp. 4,842,625
78,700 Meristar Hospitality Corp. 1,765,831
173,500 Prime Hospitality Corp.* 2,082,000
141,200 Promus Hotel Corp.* 4,377,200
383,200 Starwood Hotels & Resorts Worldwide 11,711,550
------------
27,594,981
-------------------------------------------------------------
INDUSTRIAL - 7.2%
192,500 AMB Property Corp. 4,523,750
96,700 Centerpoint Properties Corp. 3,541,638
184,700 Liberty Property Trust 4,594,413
------------
12,659,801
-------------------------------------------------------------
MANUFACTURING HOMES - 1.5%
100,100 Manufactured Home Communities, Inc. 2,602,600
-------------------------------------------------------------
MIXED - 20.8%
266,600 Brandywine Realty Trust 5,282,013
337,200 Catellus Development Corp.* 5,226,600
151,000 Cousins Properties, Inc. 5,105,688
186,100 Duke Realty Investors, Inc. 4,198,881
135,400 Highwood Properties, Inc. 3,715,038
239,400 Prentiss Properties Trust, Inc. 5,625,900
120,250 Reckson Associates Realty Corp. 2,825,875
136,100 Vornado Realty Trust 4,806,031
------------
36,786,026
-------------------------------------------------------------
MULTI-FAMILY - 12.4%
145,800 Apartment Investment & Management Co. 6,232,950
116,900 AvalonBay Communities, Inc. 4,325,300
108,300 Equity Residential Properties Trust 4,880,269
79,800 Essex Property Trust, Inc. 2,822,925
133,100 Home Properties of New York, Inc. 3,676,888
------------
21,938,332
-------------------------------------------------------------
OFFICE - 18.9%
85,000 Alexandria Real Estate Equities, Inc. 2,656,250
145,300 Boston Properties, Inc. 5,212,638
200,700 Corporate Office Properties Trust 1,643,231
243,800 Equity Office Properties Trust 6,247,375
161,400 Mack-Cali Realty Corp. 4,993,313
70,200 Parkway Properties, Inc. 2,325,375
134,200 Spieker Properties, Inc. 5,217,025
251,600 TrizecHahn Corp. 5,126,350
------------
33,421,557
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
RETAIL - 15.5%
265,700 Developers Diversified Realty Corp. $ 4,417,263
145,900 General Growth Properties 5,179,450
132,200 Kimco Realty Corp. 5,172,325
94,600 Macerich Co. 2,483,250
248,300 Prime Retail, Inc. 2,157,106
167,750 Rouse Co. 4,256,656
149,700 Simon Property Group, Inc. 3,798,634
------------
27,464,684
-----------------------------------------------------------
SELF-STORAGE - 3.8%
240,900 Public Storage, Inc. 6,745,200
-----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $159,041,593) $169,213,181
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
REPURCHASE AGREEMENT - 1.9%
<C> <S> <C> <C>
Joint Repurchase Agreement Account
$3,400,000 5.13% 07/01/1999 $ 3,400,000
-----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $3,400,000) $ 3,400,000
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $162,441,593)(A) $172,613,181
-----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
FEDERAL INCOME TAX INFORMATION:
Gross unrealized gain for investments in which value exceeds
cost $ 11,540,689
Gross unrealized loss for investments in which cost exceeds
value (1,381,768)
-----------------------------------------------------------------------------
Net unrealized gain 10,158,921
-----------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $162,454,260.
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.
1
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
Statement of Assets and Liabilities
June 30, 1999 (Unaudited)
ASSETS:
<TABLE>
<S> <C>
Investment in securities, at value (identified cost
$162,441,593) $172,613,181
Cash 11,854
Receivables:
Dividends and interest 1,126,201
Fund shares sold 3,131,074
Reimbursement from adviser 131,220
Other assets 14,055
-----------------------------------------------------------------------------
TOTAL ASSETS 177,027,585
-----------------------------------------------------------------------------
LIABILITIES:
Payables:
Fund shares repurchased 54,609
Amounts owed to affiliates 185,482
Accrued expenses and other liabilities 57,115
-----------------------------------------------------------------------------
TOTAL LIABILITIES 297,206
-----------------------------------------------------------------------------
NET ASSETS:
Paid-in capital 165,619,073
Accumulated undistributed net investment income 460,080
Accumulated net realized gain on investment transactions 479,638
Net unrealized gain on investments 10,171,588
-----------------------------------------------------------------------------
NET ASSETS $176,730,379
-----------------------------------------------------------------------------
Net asset value, offering and redemption price per share:(a)
Class A $9.84
Class B $9.91
Class C $9.84
Institutional $9.86
Service $9.86
-----------------------------------------------------------------------------
Shares outstanding:
Class A 11,421,966
Class B 16,228
Class C 24,880
Institutional 6,478,918
Service 166
-----------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number of
shares authorized) 17,942,158
-----------------------------------------------------------------------------
</TABLE>
(a) Maximum public offering price per share for Class A shares is $10.41 (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.
2
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
Statement of Operations
For the Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends(a) $ 4,057,514
Interest 98,952
--------------------------------------------------------------------------
TOTAL INCOME 4,156,466
--------------------------------------------------------------------------
EXPENSES:
Management fees 714,274
Distribution and service fees(b) 215,624
Registration fees 101,967
Transfer agent fees(c) 93,135
Custodian fees 38,950
Professional fees 31,272
Trustee fees 5,334
Other 58,128
--------------------------------------------------------------------------
TOTAL EXPENSES 1,258,684
--------------------------------------------------------------------------
Less -- expenses reimbursed and fees waived (340,194)
--------------------------------------------------------------------------
NET EXPENSES 918,490
--------------------------------------------------------------------------
NET INVESTMENT INCOME 3,237,976
--------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS:
Net realized gain from investment transactions 752,553
Net change in unrealized gain on investments 9,901,592
--------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENT TRANSACTIONS: 10,654,145
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $13,892,121
--------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $6,342.
(b) Class A, Class B and Class C had distribution and service fees of
$214,805, $326 and $493, respectively.
(c) Class A, Class B, Class C and Institutional Class had transfer agent fees
of $81,625, $62, $94 and $11,354, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
JUNE 30, 1999 PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1998(A)
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 3,237,976 $ 756,089
Net realized gain (loss) on investment
transactions 752,553 (272,915)
Net change in unrealized gain on
investments 9,901,592 269,996
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 13,892,121 753,170
------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A shares (1,773,487) (142,487)
Class B shares (1,580) (6)
Class C shares (2,474) (17)
Institutional shares (1,178,731) (435,155)
Service shares (27) (21)
------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,956,299) (577,686)
------------------------------------------------------------------------------
FROM SHARE TRANSACTIONS:
Proceeds from sales of shares 102,212,306 68,339,282
Reinvestment of dividends and
distributions 2,153,017 377,842
Cost of shares repurchased (6,052,019) (1,411,355)
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS 98,313,304 67,305,769
------------------------------------------------------------------------------
TOTAL INCREASE 109,249,126 67,481,253
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 67,481,253 --
------------------------------------------------------------------------------
End of period $176,730,379 $67,481,253
------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED NET INVESTMENT
INCOME $ 460,080 $ 178,403
------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations was July 27, 1998 for all classes.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
Notes to Financial Statements
June 30, 1999 (Unaudited)
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 Real Estate Securi-
ties 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 invests primarily in securities of issuers that are engaged in or
related to the real estate industry, and does have a policy of concentrating
its investments in the real estate industry. Therefore, an investment in the
Fund is subject to certain risks associated with the direct ownership of real
estate and with the real estate industry in general.
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. 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. Restricted securities, and other securities for which quo-
tations are not readily available, are valued at fair value using methods ap-
proved by the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions
are recorded as of the trade date. Realized gains and losses on sales of in-
vestments are calculated on the identified-cost basis. Dividend income is re-
corded 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. This amount is also used as an estimate of
the fair value of the stock received. Interest income is determined on the
basis of interest accrued.
C. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code (the "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 capital, depending on
the type of book/tax differences that may exist. In addition, distributions
paid by the Fund's investments in real estate investment trusts ("REITs") of-
ten include a "return of capital" which is recorded by the Fund as a reduc-
tion of the cost basis of the securities held. The Code requires a REIT to
distribute at least 95% of its taxable income to investors. In many cases,
however, because of "non-cash" expenses such as property depreciation, an eq-
uity REIT's cash flow will exceed its taxable income. The REIT may distribute
this excess cash to offer a more competitive yield. This portion of the dis-
tribution is deemed a return of capital, and is generally not taxable to
shareholders.
The Fund, at its most recent tax year-end of December 31, 1998, had approx-
imately $230,000 of capital loss carryforwards expiring in 2006 for U.S. tax
purposes. This amount is available to be carried forward to offset future
capital gains to the extent permitted by applicable laws or regulations.
D. EXPENSES -- Expenses incurred by the Trust which do not specifically re-
late 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. Each class
of shares separately bears its respective class-specific transfer agency
fees. Shareholders of Service shares bear all expenses and fees paid to serv-
ice organizations.
5
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES 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.
3. AGREEMENTS
Goldman Sachs Asset Management ("GSAM"), a separate operating division of
Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser pursuant
to an Investment Management Agreement (the "Agreement"). Under the Agreement,
GSAM, 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 administer-
ing the Fund's business affairs, including providing facilities, GSAM is en-
titled 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.
Goldman Sachs has voluntarily agreed to reduce or limit certain "Other Ex-
penses" for the Fund (excluding management fees, Service share fees, distri-
bution and service fees, litigation and indemnification costs, taxes,
interest, brokerage commissions, transfer agent fees and extraordinary ex-
penses) until further notice to the extent such expenses exceed .00% of the
average daily net assets of the Fund. For the period ended June 30, 1999, the
adviser reimbursed approximately $233,000.
Goldman Sachs serves as the Distributor of shares of the Funds 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 $795,000 for the period ended
June 30, 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 for distribution and shareholder
maintenance services equal, on an annual basis, to .50%, 1.00% and 1.00% of
the average daily net assets attributable to Class A, Class B and Class C
shares, respectively. Goldman Sachs has voluntarily agreed to waive a portion
of the Distribution and Service fees equal, on an annual basis, to .25% of
the average daily net assets attributable to the Class A shares. For the pe-
riod ended June 30, 1999, Goldman Sachs has waived approximately $107,000 of
the Distribution and Service fees attributable to the Class A shares. Goldman
Sachs may discontinue or modify this waiver in the future at its discretion.
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.
Goldman Sachs also serves as the Transfer Agent of the Fund for a fee cal-
culated 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.
6
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
Notes to Financial Statements (continued)
June 30, 1999 (Unaudited)
At June 30, 1999, the Fund owed approximately $143,000, $23,000 and $19,000
for Management, Distribution and Service and Transfer Agent fees, respective-
ly.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments) for the period ended June 30, 1999, were $111,653,665 and
$12,047,117, respectively.
For the period ended June 30, 1999, Goldman Sachs earned approximately
$15,600 of brokerage commissions from portfolio transactions.
5. 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.
6. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment agreements with GSAM or its affiliates, transfers uninvested cash bal-
ances into joint accounts, the daily aggregate balance of which is invested
in one or more repurchase agreements. At June 30, 1999, the Fund had an undi-
vided interest in the following joint repurchase agreement account, which
equaled $3,400,000 in principal amount. At June 30, 1999, the repurchase
agreements held in this joint account were fully collateralized by Federal
Agency obligations.
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY AMORTIZED
REPURCHASE AGREEMENTS AMOUNT RATE DATE COST
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABN/AMRO, INC. $412,400,000 5.30% 07/01/1999 $ 412,400,000
------------------------------------------------------------------------------
BANC OF AMERICA SECURITIES 500,000,000 5.05 07/01/1999 500,000,000
------------------------------------------------------------------------------
BEAR STEARNS COMPANIES, INC. 200,000,000 5.00 07/01/1999 200,000,000
------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $1,112,400,000
------------------------------------------------------------------------------
</TABLE>
7. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted, unsecured revolving line
of credit facility. Under the most restrictive arrangement, the Fund must
have owned securities having a market value in excess of 300% of the total
bank borrowings. 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 six
months ended June 30, 1999, the Fund did not have any borrowings under any of
these facilities.
8. OTHER MATTERS
As of June 30, 1999, the Goldman Sachs Growth and Income Strategy Portfolio
was the beneficial owner of approximately 5% of the outstanding shares of the
Fund.
7
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
9. SUMMARY OF SHARE TRANSACTIONS
Share activity for the six months ended June 30, 1999 (unaudited) and the pe-
riod ended December 31, 1998 is as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30, 1999 FOR THE PERIOD ENDED DECEMBER 31, 1998(A)
--------------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Shares sold 9,212,080 $85,520,390 2,290,778 $ 21,057,481
Reinvestment of divi-
dends and distribu-
tions 176,603 1,632,004 15,406 140,082
Shares repurchased (136,082) (1,362,723) (136,819) (1,259,100)
--------------------------------------------------------------
9,252,601 85,789,671 2,169,365 19,938,463
-------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 15,888 149,550 3,365 30,562
Reinvestment of divi-
dends and distribu-
tions 151 1,454 1 6
Shares repurchased -- -- (3,177) (29,200)
--------------------------------------------------------------
16,039 151,004 189 1,368
-------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 24,658 236,137 161 1,600
Reinvestment of divi-
dends and distribu-
tions 221 2,082 2 16
Shares repurchased (162) (1,436) -- --
--------------------------------------------------------------
24,717 236,783 163 1,616
-------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
Shares sold 1,756,918 16,306,229 5,144,538 47,248,039
Reinvestment of divi-
dends and distribu-
tions 55,905 517,451 25,915 237,717
Shares repurchased (491,039) (4,687,860) (13,319) (123,055)
--------------------------------------------------------------
1,321,784 12,135,820 5,157,134 47,362,701
-------------------------------------------------------------------------------------------
SERVICE SHARES
Shares sold -- -- 161 1,600
Reinvestment of divi-
dends and distribu-
tions 3 26 2 21
Shares repurchased -- -- -- --
--------------------------------------------------------------
3 26 163 1,621
-------------------------------------------------------------------------------------------
NET INCREASE 10,615,144 $98,313,304 7,327,014 $ 67,305,769
-------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations was July 27, 1998 for all classes.
8
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
INCOME FROM DISTRIBUTIONS TO
INVESTMENT OPERATIONS(A) SHAREHOLDERS
------------------------------------ ---------------------
NET REALIZED
NET ASSET AND UNREALIZED IN EXCESS
VALUE, NET GAIN (LOSS) ON FROM NET OF NET
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT
OF PERIOD INCOME TRANSACTIONS INCOME INCOME
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
<S> <C> <C> <C> <C> <C>
1999 - Class A Shares $9.20 $0.21(e) $0.60(e) $(0.17) $--
1999 - Class B Shares 9.27 0.20(e) 0.59(e) (0.15) --
1999 - Class C Shares 9.21 0.21(e) 0.57(e) (0.15) --
1999 - Institutional
Shares 9.21 0.22(e) 0.61(e) (0.18) --
1999 - Service Shares 9.21 0.20(e) 0.61(e) (0.16) --
FOR THE PERIOD ENDED DECEMBER 31,
1998 - Class A Shares
(commenced July 27) 10.00 0.15 (0.80) (0.15) --
1998 - Class B Shares
(commenced July 27) 10.00 0.14(e) (0.83)(e) (0.04) --
1998 - Class C Shares
(commenced July 27) 10.00 0.22(e) (0.91)(e) (0.10) --
1998 - Institutional
Shares (commenced July
27) 10.00 0.31(e) (0.95)(e) (0.15) --
1998 - Service Shares
(commenced July 27) 10.00 0.25(e) (0.91)(e) (0.13) --
-----------------------------------------------------------------------------------
</TABLE>
(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.
9
<PAGE>
GOLDMAN SACHS REAL ESTATE SECURITIES FUND
<TABLE>
<CAPTION>
RATIOS ASSUMING
NO VOLUNTARY WAIVER
OF FEES
OR 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 TO EXPENSES TO INCOME PORTFOLIO
IN NET ASSET VALUE, END TOTAL PERIOD TO AVERAGE AVERAGE AVERAGE NET TO AVERAGE TURNOVER
VALUE OF PERIOD RETURN(B) (IN 000S) NET ASSETS NET ASSETS ASSETS NET ASSETS RATE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.64 $9.84 8.91%(d) $112,430 1.44%(c) 4.47%(c) 2.02%(c) 3.89%(c) 8.89%(d)
0.64 9.91 8.63(d) 161 2.19(c) 4.09(c) 2.52(c) 3.76(c) 8.89(d)
0.63 9.84 8.57(d) 245 2.19(c) 4.48(c) 2.52(c) 4.15(c) 8.89(d)
0.65 9.86 9.20(d) 63,892 1.04(c) 4.64(c) 1.37(c) 4.31(c) 8.89(d)
0.65 9.86 8.95(d) 2 1.54(c) 4.31(c) 1.87(c) 3.98(c) 8.89(d)
(0.80) 9.20 (6.53)(d) 19,961 1.47(c) 23.52(c) 3.52(c) 21.47(c) 6.03(d)
(0.73) 9.27 (6.88)(d) 2 2.19(c) 3.60(c) 4.02(c) 1.77(c) 6.03(d)
(0.79) 9.21 (6.85)(d) 1 2.19(c) 5.49(c) 4.02(c) 3.66(c) 6.03(d)
(0.79) 9.21 (6.37)(d) 47,516 1.04(c) 8.05(c) 2.87(c) 6.22(c) 6.03(d)
(0.79) 9.21 (6.56)(d) 1 1.54(c) 6.29(c) 3.37(c) 4.46(c) 6.03(d)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
10
