-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I8UA2hy2y1qTFxcQ/YnAsG8TYJzmf3cE+6ukD/gXVooKT5GleIaxGNqbZejZRZIv c0whvQ9ypH3p10ACOOXJ/g== 0000950130-98-005060.txt : 19981022 0000950130-98-005060.hdr.sgml : 19981022 ACCESSION NUMBER: 0000950130-98-005060 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19981021 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDMAN SACHS TRUST CENTRAL INDEX KEY: 0000822977 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05349 FILM NUMBER: 98728642 BUSINESS ADDRESS: STREET 1: 4900 SEARS TWR STREET 2: C/O GOLDMAN SACHS & CO CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126554400 MAIL ADDRESS: STREET 1: 85 BROAD ST STREET 2: 85 BROARD STREET CITY: NEW YORK STATE: NY ZIP: 10004 FORMER COMPANY: FORMER CONFORMED NAME: GOLDMAN SACHS SHORT INTERMEDIATE GOVERNMENT FUND DATE OF NAME CHANGE: 19910711 FORMER COMPANY: FORMER CONFORMED NAME: SHORT INTERMEDIATE GOVERNMENT FUND DATE OF NAME CHANGE: 19900104 N-30D 1 MID CAP EQUITY FUND Goldman Sachs Funds MID CAP EQUITY FUND Semi-Annual Report July 31, 1998 Long-term capital growth potential through a diversified portfolio of equity securities. Goldman Sachs GOLDMAN SACHS MIDCAP EQUITY FUND Fund Basics as of July 31, 1998 Assets Under Management $408 Million Number of Holdings 49 NASDAQ SYMBOLS Class A Shares GCMAX Class B Shares GCMBX Class C Shares GCMCX Institutional Shares GSMCX Service Shares GSMSX Mutual funds, annuities, and other investment products: . are not FDIC insured; . are not deposits or obligations of, or guaranteed by, any financial institution; . are subject to investment risks, including possible loss of the principal amount invested.
- ----------------------------------------------------------------------------------------- PERFORMANCE REVIEW - ----------------------------------------------------------------------------------------- January 31, 1998-July 31, 1998 Fund Total Return (based on NAV)/1/ Russell MidCap Index /2/ Class A -3.52% 5.91% Class B -3.71% 5.91% Class C -3.75% 5.91% Institutional -3.28% 5.91% Service -3.47% 5.91% - -----------------------------------------------------------------------------------------
/1/ The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund's performance assumes the investment of dividends and other distributions. /2/ The Russell MidCap Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.
- --------------------------------------------------------------------------------------- SEC TOTAL RETURN - --------------------------------------------------------------------------------------- For the period ended 7/31/98 Class A Class B Class C Institutional Service - --------------------------------------------------------------------------------------- Last 6 months /3/ -8.83% -8.52% -4.71% -3.28% -3.47% One Year /4/ N/A N/A N/A 0.16% -0.25% Five Years /4/ N/A N/A N/A N/A N/A Since Inception -5.73%/3/ -5.62%/3/ -1.60%/3/ 19.34%/4/ 2.52%/4/ (8/15/97) (8/15/97) (8/15/97) (8/1/95) (7/18/97) - ---------------------------------------------------------------------------------------
/3/ The SEC Cumulative Total Return is determined by computing the percentage change in the value of $1,000 invested at the maximum public offering price for specified periods, assuming reinvestment of all distributions at NAV. The total return calculation 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). The public offering price of the Class A shares on 7/31/98 was $22.06 and represents the NAV plus the maximum sales charge of 5.5%. /4/ The SEC Average Annual Total Return is determined by computing the annual percentage change in the value of $1,000 invested at the maximum public offering price for the specified periods, assuming reinvestment of all distributions at NAV. The total return calculation reflects sales charges.
- ------------------------------------------------------------------------------------------- TOP 10 COMPANY HOLDINGS AS OF 7/31/98 - ------------------------------------------------------------------------------------------- % of Total Company Holding Net Assets Line of Business - ------------------------------------------------------------------------------------------- Aetna, Inc. 4.19% Healthcare Management Fruit Of The Loom, Inc. 3.80% Textiles Central Maine Power Co. 3.45% Utilities Quantum Corp. 3.37% PC & Peripherals Union Carbide Corp. 3.13% Chemical Products Avnet, Inc. 3.00% Semiconductors Loews Corp. 2.95% Insurance Brokers & Other Insurance UST, Inc. 2.86% Tobacco Unicom Corp. 2.85% Utilities Tosco Corp. 2.85% Energy Refining & Marketing - -------------------------------------------------------------------------------------------
The top 10 holdings may not be representative of the Fund's future investments. Total return figures represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor's shares, when redeemed, may be worth more or less than their original cost. GOLDMAN SACHS MID CAP EQUITY FUND Market Overview Dear Shareholder, During the period under review, the bull market that began in 1995 continued its unprecedented run into positive territory. On July 17, the U.S. stock market, as measured by the Dow Jones Industrial Average, reached a record level of 9337.97. Simultaneously, investors found themselves subjected to increasing levels of market volatility. . The U.S. Equity Market: Amidst Increasing Volatility, Market Continues Its Climb -- The U.S. stock market generated strong performance, rising into record territory during the final month of the period under review. Throughout, the mantle of market leadership was held by mega-cap stocks, the largest and most liquid stocks in the Standard & Poor's 500 Index. Several factors -- including ongoing Asian market turbulence, benign inflation and concern about the sustainability of the current bull market -- made mega-caps the investment of choice among U.S. investors. . The U.S. Economy: A Growth Surge, Followed by a Slowdown -- Early in the period, a strong economy fueled speculation that the Federal Reserve Board would choose to increase rates in a preemptive strike against inflation. The move never came, though, as the release of economic indicators suggesting a slight slowdown in growth combined with fears that a rate increase could intensify a worsening situation in Asia. By period end, a need for a Fed increase was ruled out again as continued Asian market turbulence and a striking General Motors workforce combined to further curb the U.S. economy's pace of economic growth. . Market Outlook: Uncertainty Brings Opportunity -- We believe the recent sharp declines in the stock market have created opportunities to buy both excellent companies at discounted valuations and companies experiencing temporary uncertainties at deeply depressed prices. Longer term, in our opinion, the outlook for the economy and the stock market is favorable. We believe that the economy will continue to expand, albeit at a moderate rate, and that inflation will remain benign, allowing interest rates to hold steady. We encourage you to maintain your long-term investment program, and look forward to serving your investment needs in the years ahead. /s/ David B. Ford /s/ John P. McNulty David B. Ford John P. McNulty Co-Head, Co-Head, Goldman Sachs Asset Management Goldman Sachs Asset Management August 31, 1998 1 GOLDMAN SACHS MIDCAP EQUITY FUND Performance Overview Dear Shareholder, We are pleased to report on the performance of the Goldman Sachs Mid Cap Equity Fund for the six-month period ended July 31, 1998. Performance Review During the six-month period covered by this report, all of the Fund's share classes underperformed the 5.91% cumulative total return of the Fund's benchmark, the Russell MidCap Index. The Fund's underperformance relative to its benchmark is primarily attributable to our value discipline and strategy of buying uncertainty. We have consistently applied our strategy over the last five years, performing rigorous, firsthand research into low-expectation stocks. We aim to exploit market anomalies by investigating over-discounted company-specific or industry issues, understanding the fundamentals of cyclical or otherwise complex businesses, and building positions when companies are inexpensive relative to long-term earnings power. When, over the course of a multiyear investment horizon, short-term issues are resolved, cycles turn or corporate actions become evident and acknowledged by the broader Wall Street community, we believe that our value investments will generate solid returns for our clients. Portfolio Composition As bottom-up stock-pickers, the Fund's management team focuses on individual companies first, but sometimes finds a concentration of value within particular industries or sectors. With this in mind, as of July 31, 1998, the Fund maintained overweight positions in basic industry, consumer nondurables, health, media and communications, and transportation. Underweight positions were consumer nondurables, consumer services, defense/aerospace, energy, finance, technology and utilities. Portfolio Highlights . ShopKo Stores -- ShopKo contributed substantially to returns over the period. The company, a regional retailer operating primarily in the Midwest, has appreciated due to solid growth in its in-store optical and pharmacy businesses, benefiting from the increased popularity of over-the-counter vitamins, nutritional supplements and new premium drugs. . Lear Corp. -- Lear is well-positioned to benefit from favorable industry trends for light vehicle suppliers. In February, Lear agreed to buy GM's Delphi Automotive Systems' seating business. The acquisition should boost Lear's market share in the U.S. and Europe, and solidify its dominant position in North America. . Republic of New York Corp. -- Despite a weak start due to continued concerns over the effects of the Asian financial crisis on American companies, Republic New York Corp. fared well over the period. The position's performance was driven by growth at Safra Republic, a Swiss affiliate, of which it owns 49%. 2 GOLDMAN SACHS MID CAP EQUITY FUND VALUE INVESTMENT PROCESS Value stocks represent companies that are currently undervalued in the market, but whose intrinsic value we believe ultimately will be recognized. Our value stock selection process emphasizes a bottom-up approach. Search for Value We search for value from a universe of 1,000 stocks, and then select 200 to 300 of the least expensive. Fundamental Research We refine our stock list through rigorous analysis of companies' "fundamentals" and face-to- face meetings with company management, competitors, suppliers and customers. Risk Management We maintain ongoing risk management resulting in an intentional and quantifiable risk/return profile. Key New Acquisitions . Loews Corp. -- Loews is a holding company composed of CNA Financial (more than 60% of market value), Diamond Offshore and Lorillard Tobacco. We believe that Loews trades at an excessive conglomerate discount (that is, the net asset value of its subsidiaries represents a premium to its current market value) and therefore offers an inexpensive way to invest in an already attractively priced CNA. Additionally, the potential resolution of outstanding legal claims against the tobacco industry presents the opportunity to unlock the significant embedded value of Lorillard. . Tricon Global Restaurants -- Tricon, which is composed of Pizza Hut, Kentucky Fried Chicken and Taco Bell restaurants, was a division of Pepsi until September 1997. We believe that Tricon's new management is focused on improving operations and increasing restaurant sales to franchisees; these initiatives should enable the company to pay down debt, reduce expenses and remove underperforming stores from its portfolio. We believe that as Tricon's operational improvements and franchising program progress more quickly than expected, the company's bottom line will improve accordingly. Portfolio Outlook We remain focused on our value strategy, which entails rigorous, firsthand research into low expectation stocks. We aim to exploit market anomalies by investigating overdiscounted, company-specific industry issues, understanding the fundamentals of cyclical or otherwise complex businesses, and building positions in the portfolio when companies are inexpensive relative to long- term earnings power. We believe that our rigorous research has the potential to generate a portfolio of discounted names poised for long-term appreciation. Most importantly, when the current excesses are wrung from the system, we believe that our discipline has the potential to dampen volatility and preserve capital. We thank you for your investment and look forward to your continued confidence. Goldman Sachs U.S. Value Investment Team August 31, 1998 3 GOLDMAN SACHS MID CAP EQUITY FUND An Action Plan for Volatile Markets When fear and uncertainty temporarily take hold of global markets, you can gain a greater sense of control over your own investment portfolio by making sound decisions. Whether you are a seasoned investor or a market neophyte, the following thoughts are intended to help you maintain some perspective during these volatile market times. Remember the factors you considered when you first began investing: your long-term objectives, time horizon, risk tolerance and financial needs. Stay on Course Don't let market directions dictate your investment decisions -- avoid the common mistake of basing decisions on emotions or uncertainty. Remember the factors you considered when you first began investing: your long-term objectives, time horizon, risk tolerance and financial needs. Stay Diversified Global diversification is one of the best defenses against uncertain markets. Because the world's countries have varying economies, growth rates and stages of development, they tend to offer strong performance at different times. Diversifying among equity markets enables you to capture a wide range of opportunities and seek maximum risk-adjusted returns. Stay Invested Investors often redeem at market lows because of concern or lack of information - -- and negatively impact their longer-term returns. With stock investing, the longer your holding period, the greater the likelihood of positive returns. Consult Your Financial Advisor Market declines provide a good opportunity to touch base with your advisor, gain confirmation that you are properly diversified and assess whether any recent life events necessitate a change in asset allocation policy. For More Information Goldman Sachs Asset Management offers a broad spectrum of equity mutual funds that can help you weather market ups and downs. For more information on Goldman Sachs Funds, contact your investment professional. 4 GOLDMAN SACHS MID CAP EQUITY FUND Performance Summary July 31, 1998 (Unaudited) The following graph shows the value as of July 31, 1998, of a $10,000 invest- ment made in the Institutional Class of shares on August 1, 1995 (commence- ment of operations). For comparative purposes, the performance of the Fund's benchmark (the Russell Mid Cap Index) is shown. This performance data repre- sents past performance and should not be considered indicative of future per- formance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor's shares, when redeemed, to be worth more or less than their original cost. Performance of Class A, Class B, Class C and Service shares will vary from the Institutional Class of shares due to differences in fees and loads. MID-CAP EQUITY FUND'S LIFETIME PERFORMANCE GROWTH OF A $10,000 INVESTMENT, DISTRIBUTIONS REINVESTED AUGUST 1, 1995 TO JULY 31, 1998 LOGO GS-Mid Cap Equity Inst Inception Date 08/01/95 Russell Mid Cap Index Fund ------------------------- AUG 1/95 10,000 10,000 AUG 10,153 10,140 SEPT 10,382 10,227 OCT 10,150 9,973 NOV 10,654 10,253 DEC 10,716 10,494 JAN/96 10,942 10,689 FEB 11,199 10,877 MAR 11,362 10,796 APR 11,683 10,937 MAY 11,860 11,085 JUNE 11,682 10,762 JULY 10,959 10,353 AUG 11,480 10,749 SEP 12,048 11,307 OCT 12,144 11,428 NOV 12,883 12,469 DEC 12,752 12,740 JAN/97 13,229 13,436 FEB 13,209 13,623 MAR 12,648 13,329 APR 12,963 14,010 MAY 13,909 15,337 JUNE 14,364 15,947 JULY 15,562 16,980 AUG 15,392 17,123 SEP 16,271 17,883 OCT 15,638 17,419 NOV 16,010 17,195 DEC 16,452 17,331 JAN '98 16,143 17,583 FEB 17,405 18,801 MAR 18,230 19,362 APR 18,276 19,670 MAY 17,709 19,313 JUNE 17,954 18,639 JULY 17,097 17,006
SINCE INCEPTION OF CLASS ONE YEAR SIX MONTHS AVERAGE ANNUAL TOTAL RETURN THROUGH JULY 31, 1998 CLASS A (COMMENCED AUGUST 15, 1997)(A) Excluding sales charges -0.22% n/a -3.52% Including sales charges -5.73% n/a -8.83% ------------------------------------------------------------------------------ CLASS B (COMMENCED AUGUST 15, 1997)(A) Excluding redemption charges -0.66% n/a -3.71% Including redemption charges -5.62% n/a -8.52% ------------------------------------------------------------------------------ CLASS C (COMMENCED AUGUST 15, 1997)(A) Excluding redemption charges -0.60% n/a -3.75% Including redemption charges -1.60% n/a -4.71% ------------------------------------------------------------------------------ INSTITUTIONAL CLASS (COMMENCED AUGUST 1, 1995) 19.34% 0.16% -3.28% ------------------------------------------------------------------------------ SERVICE CLASS (COMMENCED JULY 18, 1997) 2.52% -0.25% -3.47% ------------------------------------------------------------------------------
(a) Since inception represents the cumulative total return since the class has not been in operation for a full 12 months. 5 GOLDMAN SACHS MID CAP EQUITY FUND Statement of Investments July 31, 1998 (Unaudited) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SHARES DESCRIPTION VALUE COMMON STOCKS - 96.0% AIRFREIGHT, TRUCK & OTHER - 2.8% 262,700 CNF Transportation, Inc. $ 11,361,775 ------------------------------------------------------------ AIRLINES - 0.6% 48,700 Continental Airlines, Inc.* 2,605,450 ------------------------------------------------------------ AUTO SUPPLIERS - 2.4% 181,800 Lear Corp.* 9,646,763 ------------------------------------------------------------ BANKS - 4.6% 369,900 Pacific Century Financial Corp. 7,259,288 195,200 Republic of New York Corp. 11,577,800 ----------------------------------- 18,837,088 ------------------------------------------------------------ CHEMICAL PRODUCTS - 5.3% 345,100 IMC Global, Inc. 8,821,619 266,700 Union Carbide Corp. 12,801,600 ----------------------------------- 21,623,219 ------------------------------------------------------------ COMPUTER SERVICES/SOFTWARE - 2.2% 429,700 Quest Diagnostics Inc.* 8,808,850 ------------------------------------------------------------ CONSTRUCTION/ENVIRONMENTAL SERVICES - 2.3% 222,600 Fluor Corp. 9,363,113 ------------------------------------------------------------ DEPARTMENT STORES - 4.3% 163,200 Sears Roebuck & Co. 8,282,400 319,800 ShopKo Stores Inc.* 9,354,150 ----------------------------------- 17,636,550 ------------------------------------------------------------ ENERGY REFINING & MARKETING - 2.8% 415,600 Tosco Corp. 11,636,800 ------------------------------------------------------------ FOREST PRODUCTS - 6.2% 170,700 Georgia Pacific Corp. 8,769,713 433,200 Georgia-Pacific Corp. (Timber Group) 9,719,925 524,200 Stone Container Corp.* 6,847,363 ----------------------------------- 25,337,001 ------------------------------------------------------------ GAMING COMPANIES - 1.9% 574,200 Circus Circus Enterprises, Inc.* 7,859,363 ------------------------------------------------------------ HEALTHCARE MANAGEMENT - 8.8% 247,300 Aetna, Inc. 17,140,981 324,800 Foundation Health Systems, Inc.* 6,699,000 374,300 Tenet Healthcare Corp.* 11,205,606 27,600 Trigon Healthcare, Inc.* 864,225 ----------------------------------- 35,909,812 ------------------------------------------------------------ HOTELS & RESTAURANTS - 0.9% 105,300 Tricon Global Restaurants, Inc.* 3,724,988 ------------------------------------------------------------ INSURANCE BROKERS & OTHER INSURANCE - 3.0% 149,500 Loews Corp. 12,053,438 ------------------------------------------------------------
SHARES DESCRIPTION VALUE COMMON STOCKS - (CONTINUED) INSURANCE SPECIALTY - 1.2% 177,750 Old Republic International Corp. $ 4,721,484 -------------------------------------------------------- INSURANCE-LIFE - 2.7% 57,249 American General Corp. 3,910,822 142,200 Reliastar Financial Corp. 7,056,675 ------------------------------- 10,967,497 -------------------------------------------------------- INSURANCE-PROPERTY AND CASUALTY - 3.6% 79,000 Allmerica Financial Corp. 5,283,125 235,400 CNA Financial Corp.* 9,327,725 ------------------------------- 14,610,850 -------------------------------------------------------- INTEGRATED OIL - 1.5% 95,500 Elf Aquitane ADR 6,195,563 -------------------------------------------------------- LOGISTICS/RAIL - 2.0% 341,900 Canadian Pacific, Ltd. 8,162,863 -------------------------------------------------------- MEDIA & COMMUNICATIONS - 0.3% 56,200 AH Belo Corp. 1,180,666 -------------------------------------------------------- PACKAGING - 1.0% 98,100 Crown Cork & Seal, Inc. 4,034,363 -------------------------------------------------------- PC AND PERIPHERALS - 4.5% 25,900 CHS Electronics, Inc.* 443,538 788,500 Quantum Corp.* 13,798,750 177,400 Seagate Technology, Inc.* 4,035,850 ------------------------------- 18,278,138 -------------------------------------------------------- PHARMACEUTICALS - 1.0% 433,900 Perrigo Co.* 4,094,931 -------------------------------------------------------- REAL ESTATE - 0.6% 117,800 LNR Property Corp. 2,628,413 -------------------------------------------------------- SEMICONDUCTORS - 5.0% 223,700 Avnet, Inc. 12,275,538 608,750 Vishay Intertechnology, Inc.* 7,989,844 ------------------------------- 20,265,382 -------------------------------------------------------- STEEL - 4.4% 503,000 AK Steel Holding Corp. 8,016,563 397,100 ISPAT International NV* 6,006,138 149,000 Ucar International, Inc.* 3,929,875 ------------------------------- 17,952,576 -------------------------------------------------------- SUPERMARKETS - 1.7% 464,000 Fleming Companies, Inc. 7,105,000 -------------------------------------------------------- TEXTILES - 3.8% 497,800 Fruit of The Loom, Inc.* 15,525,138 -------------------------------------------------------- TIRE & OTHER RELATED RUBBER PRODUCTS - 2.0% 130,800 Goodyear Tire & Rubber Co. 7,970,625 --------------------------------------------------------
6 GOLDMAN SACHS MID CAP EQUITY FUND THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SHARES DESCRIPTION VALUE COMMON STOCKS - (CONTINUED) TOBACCO - 4.9% 337,800 RJR Nabisco Holdings, Inc. $ 8,254,988 433,500 UST, Inc. 11,704,500 ------------------------- 19,959,488 -------------------------------------------------- UTILITIES - 7.7% 745,500 Central Maine Power Co. 14,117,906 380,000 Northeast Utilities* 5,795,000 336,700 Unicom Corp. 11,637,186 ------------------------- 31,550,092 -------------------------------------------------- TOTAL COMMON STOCKS (COST $404,171,388) $391,607,279 --------------------------------------------------
PRINCIPAL INTEREST MATURITY AMOUNT RATE DATE VALUE REPURCHASE AGREEMENT - 3.8% Joint Repurchase Agreement Account $15,700,000 5.69% 08/03/98 $ 15,700,000 ----------------------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $15,700,000) $ 15,700,000 ----------------------------------------------------------------------------------------------- TOTAL INVESTMENTS (COST $419,871,388)(A) $407,307,279 -----------------------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION: Gross unrealized gain for investments in which value exceeds cost $34,824,273 Gross unrealized loss for investments in which cost exceeds value (47,893,960) ----------------------------------- Net unrealized loss $(13,069,687) -----------------------------------
* Non-income producing security. (a) The aggregate cost for federal income tax purposes is $420,376,966. The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets. 7 GOLDMAN SACHS MID CAP EQUITY FUND Statement of Assets and Liabilities July 31, 1998 (Unaudited) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. ASSETS: Investment in securities, at value (identified cost $419,871,388) $407,307,279 Cash 307 Receivables: Investment securities sold 8,713,922 Fund shares sold 1,240,045 Dividends and interest 318,164 Deferred organization expenses, net 34,425 Other assets 269,177 ----------------------------------------------------------------------------- TOTAL ASSETS 417,883,319 ----------------------------------------------------------------------------- LIABILITIES: Payables: Investment securities purchased 7,443,427 Fund shares repurchased 1,784,771 Amounts owed to affiliates 705,569 Accrued expenses and other liabilities 69,517 ----------------------------------------------------------------------------- TOTAL LIABILITIES 10,003,284 ----------------------------------------------------------------------------- NET ASSETS: Paid-in capital 379,872,787 Accumulated undistributed net investment income 1,259,172 Accumulated undistributed net realized gain on investment transactions 39,312,185 Net unrealized loss on investments (12,564,109) ----------------------------------------------------------------------------- NET ASSETS $407,880,035 -----------------------------------------------------------------------------
CLASS A CLASS B CLASS C ---------------------------------------------------------------------------- Total shares of beneficial interest outstanding, $.001 par value (Unlimited shares authorized) 5,690,789 2,227,600 607,053 Net asset and Class A redemption value per share(a) $20.85 $20.77 $20.78 ----------------------------------------------------------------------------
INSTITUTIONAL SERVICE -------------------------------------------------------------------------- Total shares of beneficial interest outstanding, $.001 par value (Unlimited shares authorized) 10,992,894 3,973 Net asset value, offering and redemption price per share $20.94 $20.87 --------------------------------------------------------------------------
(a) Maximum public offering price per share (NAV X 1.0582) for Class A shares is $22.06. At redemption, Class B and 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. 8 GOLDMAN SACHS MID CAP EQUITY FUND Statement of Operations For the Six Months Ended July 31, 1998 (Unaudited) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. INVESTMENT INCOME: Dividends(a) $ 2,751,354 Interest 782,027 ------------------------------------------------------------------------------ TOTAL INCOME 3,533,381 ------------------------------------------------------------------------------ EXPENSES: Management fees 1,618,705 Distribution fees 351,219 Transfer agent fees 241,916 Authorized dealer service fees 218,522 Registration fees 97,999 Custodian fees 53,753 Professional fees 30,667 Amortization of deferred organization expenses 8,465 Trustee fees 2,932 Other 28,657 ------------------------------------------------------------------------------ TOTAL EXPENSES 2,652,835 ------------------------------------------------------------------------------ Less -- expenses reimbursed by Goldman Sachs (248,533) ------------------------------------------------------------------------------ NET EXPENSES 2,404,302 ------------------------------------------------------------------------------ NET INVESTMENT INCOME 1,129,079 ------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain from: Investment transactions 24,623,892 Net change in unrealized gain (loss) on: Investments (46,030,976) Translation of assets and liabilities denominated in foreign currencies 288,441 ------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED LOSS ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS (21,118,643) ------------------------------------------------------------------------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (19,989,564) ------------------------------------------------------------------------------
(a) Taxes withheld on dividends were $16,975. 9 GOLDMAN SACHS MID CAP EQUITY FUND Statement of Changes in Net Assets THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
FOR THE SIX MONTHS ENDED JULY 31, 1998 (UNAUDITED) FROM OPERATIONS: Net investment income $ 1,129,079 Net realized gain on investment transactions 24,623,892 Net change in unrealized gain (loss) on investments and translation of assets and liabilities denominated in foreign currencies (45,742,535) --------------------------------------------------------------------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (19,989,564) --------------------------------------------------------------------------- FROM SHARE TRANSACTIONS: Net proceeds from sales of shares 117,239,568 Reinvestment of dividends and distributions -- Cost of shares repurchased (51,593,584) --------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 65,645,984 --------------------------------------------------------------------------- TOTAL INCREASE 45,656,420 --------------------------------------------------------------------------- NET ASSETS: Beginning of year 362,223,615 --------------------------------------------------------------------------- End of period $407,880,035 --------------------------------------------------------------------------- ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 1,259,172 ---------------------------------------------------------------------------
10 GOLDMAN SACHS MID CAP EQUITY FUND Statement of Changes in Net Assets THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
FOR THE YEAR ENDED JANUARY 31, 1998 FROM OPERATIONS: Net investment income $ 1,525,200 Net realized gain on investment transactions 33,414,228 Net change in unrealized gain (loss) on investments and translation of assets and liabilities denominated in foreign currencies 11,262,563 ----------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 46,201,991 ----------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS: From net investment income Class A shares (88,869) Class B shares -- Class C shares -- Institutional shares (1,204,893) Service shares (15) In excess of net investment income Class A shares (63,822) Class B shares (36,518) Class C shares (7,184) Institutional shares -- Service shares (8) From net realized gain on investment and foreign currency transactions Class A shares (2,003,140) Class B shares (739,050) Class C shares (118,344) Institutional shares (23,361,534) Service shares (307) ----------------------------------------------------------------------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (27,623,684) ----------------------------------------------------------------------------- FROM SHARE TRANSACTIONS: Net proceeds from sales of shares 219,499,016 Reinvestment of dividends and distributions 27,184,097 Cost of shares repurchased (48,291,135) ----------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 198,391,978 ----------------------------------------------------------------------------- TOTAL INCREASE 216,970,285 ----------------------------------------------------------------------------- NET ASSETS: Beginning of year 145,253,330 ----------------------------------------------------------------------------- End of year $362,223,615 ----------------------------------------------------------------------------- ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 130,093 -----------------------------------------------------------------------------
11 GOLDMAN SACHS MID CAP EQUITY FUND Financial Highlights Selected Data for a Share Outstanding Throughout Each Period THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
INCOME FROM INVESTMENT OPERATIONS(E) DISTRIBUTIONS TO SHAREHOLDERS ------------------------------- ------------------------------------------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON NET ASSET NET INVESTMENTS, IN EXCESS FROM NET NET INCREASE VALUE, INVESTMENT OPTIONS AND FROM NET OF NET REALIZED GAIN (DECREASE) BEGINNING INCOME FOREIGN CURRENCY INVESTMENT INVESTMENT ON INVESTMENT IN NET ASSET OF PERIOD (LOSS) RELATED TRANSACTIONS INCOME INCOME TRANSACTIONS VALUE FOR THE SIX MONTHS ENDED JULY 31, (UNAUDITED) 1998 - Class A Shares $21.61 $0.03 $(0.79) $ -- $ -- $ -- $(0.76) 1998 - Class B Shares 21.57 (0.02) (0.78) -- -- -- (0.80) 1998 - Class C Shares 21.59 (0.02) (0.79) -- -- -- (0.81) 1998 - Institutional Shares 21.65 0.09 (0.80) -- -- -- (0.71) 1998 - Service Shares 21.62 -- (0.75) -- -- -- (0.75) FOR THE YEARS ENDED JANUARY 31, 1998 - Class A Shares(b) 23.63 0.09 0.76 (0.06) (0.04) (2.77) (2.02) 1998 - Class B Shares(b) 23.63 0.06 0.74 (0.09) -- (2.77) (2.06) 1998 - Class C Shares(b) 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(b) 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(b) 15.00 0.13 0.90 (0.12) -- -- 0.91 ---------------------------------------------------------------------------------------------------------------------
(a) 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. (b) Class A, Class B, Class C, Institutional and Service share activity commenced on August 15, 1997, August 15, 1997, August 15, 1997, August 1, 1995 and July 18, 1997, respectively. (c) Annualized. (d) Not annualized. (e) Includes the balancing effect of calculating per share amounts. 12 GOLDMAN SACHS MID CAP EQUITY FUND
RATIOS ASSUMING NO EXPENSE LIMITATIONS --------------------------- RATIO OF RATIO OF NET ASSETS RATIO OF NET INVESTMENT RATIO OF NET INVESTMENT NET ASSET PORTFOLIO AT END OF NET EXPENSES INCOME (LOSS) TO EXPENSES TO INCOME (LOSS) VALUE, END TOTAL TURNOVER PERIOD TO AVERAGE AVERAGE NET AVERAGE NET TO AVERAGE NET OF PERIOD RETURN(A) RATE (IN 000S) NET ASSETS ASSETS ASSETS ASSETS $20.85 (3.52)%(d) 27.55%(d) $118,663 1.35%(c) 0.28%(c) 1.47%(c) 0.16%(c) 20.77 (3.71)(d) 27.55(d) 46,268 1.85(c) (0.21)(c) 1.97(c) (0.33)(c) 20.78 (3.75)(d) 27.55(d) 12,615 1.85(c) (0.21)(c) 1.97(c) (0.33)(c) 20.94 (3.28)(d) 27.55(d) 230,251 0.85(c) 0.79(c) 0.97(c) 0.67(c) 20.87 (3.47)(d) 27.55(d) 83 1.35(c) 0.18(c) 1.47(c) 0.06(c) 21.61 3.42(d) 62.60 90,588 1.35(c) 0.33(c) 1.47(c) 0.21(c) 21.57 3.17(d) 62.60 28,743 1.85(c) (0.20)(c) 1.97(c) (0.32)(c) 21.59 3.27(d) 62.60 6,445 1.85(c) (0.23)(c) 1.97(c) (0.35)(c) 21.65 30.86 62.60 236,440 0.85 0.78 0.97 0.66 21.62 6.30(d) 62.60 8 1.35(c) 0.63(c) 1.43(c) 0.51(c) - ------------------------------------------------------------------------------------------------------------- 18.73 25.63 74.03 145,253 0.85 1.35 0.91 1.29 15.91 6.89(d) 58.77(d) 135,671 0.85(c) 1.67(c) 0.98(c) 1.54(c) - -------------------------------------------------------------------------------------------------------------
13 GOLDMAN SACHS MID CAP EQUITY FUND Notes to Financial Statements July 31, 1998 (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, manage- ment investment company. The Trust includes the Goldman Sachs Mid Cap Equity Fund (the "Fund"). At July 31, 1998, the Fund offered 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. 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 or NASDAQ. If no sale occurs, securities traded on a U.S. exchange or NASDAQ are valued at the mean between the closing bid and asked price, and securities traded on a foreign exchange will be valued at the official bid price. Un- listed 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 mean between the most recent bid and asked prices. Debt securities are valued at prices supplied by an independent pricing service, which reflect broker / dealer-supplied valuations and matrix pricing systems. Short-term debt obligations maturing in sixty days or less are valued at amortized cost. Restricted securities, and other 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. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are recorded on the trade date. Realized gains and losses on sales of invest- ments 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. Interest income is determined 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, 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) gains and losses between trade date and set- tlement 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. 14 GOLDMAN SACHS MID CAP EQUITY FUND D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Fund is authorized to enter into forward foreign currency exchange contracts for the purchase 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 or 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 records re- alized gains or losses at the time the forward contract is offset by entry into a closing transaction or extinguished 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 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 cash received is re- ported as unrealized gain or loss. Gains and losses are realized when a short position is closed out by delivering securities back to the broker. F. 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 capital, depending on the type of book / tax differences that may exist as well as timing differences associated with having different book and tax year ends. G. DEFERRED ORGANIZATION EXPENSES -- Organization-related costs are being am- ortized on a straight-line basis over a period of five years. 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 each Fund's relative net assets. Class A, Class B and Class C shares bear all expenses and fees relating to distribution and authorized dealer service plans. Service shares separately bear a service class fee payable monthly to service organizations for their services. 15 GOLDMAN SACHS MID CAP EQUITY FUND Notes to Financial Statements (continued) July 31, 1998 (Unaudited) I. 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. J. FUTURES CONTRACTS -- 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 broker, an amount of cash or securities equal to the minimum "initial mar- gin" requirement of the respective futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Fund dai- ly, dependent on the daily fluctuations 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 Opera- tions. 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- tract 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. 16 GOLDMAN SACHS MID CAP EQUITY FUND 3. AGREEMENTS Goldman Sachs Asset Management ("GSAM"), a separate operating division of Goldman, Sachs & Co. ("Goldman Sachs"), acts as the Fund's 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 ren- dered under the Agreement, the assumption of the expenses related thereto and administering the Fund's business affairs, including providing facilities, GSAM 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. During the six months ended July 31, 1998, Goldman Sachs voluntarily agreed to reduce or limit certain "Other Expenses" for the Fund (excluding manage- ment, service, distribution and authorized dealer service fees and litigation and indemnification costs, taxes, interest, brokerage commissions and ex- traordinary expenses) to the extent such expenses exceeded .10% of the aver- age daily net assets of the Fund. For the six months ended July 31, 1998, Goldman Sachs reimbursed approximately $249,000. At July 31, 1998, approxi- mately $216,000 is owed to the Fund. Effective September 1, 1998, the expense limitation has been modified. 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 $329,000 during the six months ended July 31, 1998. The Trust, on behalf of the Fund, has adopted Distribution Plans (the "Dis- tribution Plans") pursuant to Rule 12b-1. Under the Distribution Plans, Goldman Sachs is entitled to a quarterly fee from the Fund for distribution services equal, on an annual basis, to .25%, .75% and .75% of the Fund's av- erage daily net assets attributable to Class A, Class B and Class C shares, respectively. The Trust, on behalf of the Fund, has adopted Authorized Dealer Service Plans (the "Dealer Service Plans") pursuant to which Goldman Sachs and Autho- rized Dealers are compensated for providing personal and account maintenance services. The Fund pays a fee under its Dealer Service Plan equal, on an an- nual basis, to .25% of its average daily net assets attributable to Class A, Class B and Class C shares. Goldman Sachs also serves as the Transfer Agent of the Fund for a fee. Effective September 1, 1998 fees charged for such transfer agent services are 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 Class 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. At July 31, 1998, the Fund owed approximately $281,000, $198,000, $127,000 and $100,000 for Management, Distribution, Authorized Dealer 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 six-months ended July 31, 1998, were $196,584,760 and $109,436,571, respectively. For the six months ended July 31, 1998, Goldman Sachs earned approximately $34,000 of brokerage commissions from portfolio transactions. 17 GOLDMAN SACHS MID CAP EQUITY FUND Notes to Financial Statements (continued) July 31, 1998 (Unaudited) 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 into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements. The underlying securities for the repurchase agreements are U.S. Treasury and agency obligations. At July 31, 1998, the Fund had an undivided interest in the repurchase agreements in the following joint account which equaled $15,700,000 in principal amount. At July 31, 1998, the repurchase agreements held in this joint account, along with the corresponding underlying securities (including the type of security, market value, interest rate and maturity date) were as follows:
PRINCIPAL INTEREST MATURITY AMORTIZED AMOUNT RATE DATE COST ----------------------------------------------------------------------------- BEAR STEARNS COMPANIES, INC., $100,000,000 5.70% 08/03/98 $ 100,000,000 dated 07/31/98, repurchase price $100,047,500 (total collateral value $103,015,560 consisting of GNMA: 6.50%, 08/15/27; FHLMC: 7.00%, 11/01/27; FNMA: 9.00%, 11/01/25) ----------------------------------------------------------------------------- DONALDSON, LUFKIN & JENRETTE, 200,000,000 5.68 08/03/98 200,000,000 dated 07/31/98, repurchase price $200,094,667 (total collateral value $207,985,925 consisting of FMNA: 7.00%, 03/01/28; FHLMC: 5.50%, 05/01/13) ----------------------------------------------------------------------------- NATIONSBANK, 300,000,000 5.70 08/03/98 300,000,000 dated 07/31/98, repurchase price $300,142,500 (total collateral value $306,061,477 consisting of FNMA: 6.50%, 11/01/12) ----------------------------------------------------------------------------- NOMURA SECURITIES, INTERNA- TIONAL, 450,000,000 5.70 08/03/98 450,000,000 dated 07/31/98, repurchase price $450,213,750 (total collateral value $459,000,001 consisting of FNMA: 5.50%-9.00%, 07/01/99-08/01/28; FHLMC: 5.00%-8.50%, 12/01/98-07/01/28) ----------------------------------------------------------------------------- SALOMON-SMITH BARNEY, 404,700,000 5.69 08/03/98 404,700,000 dated 07/31/98, repurchase price $404,891,895 (total collateral value $413,162,707 consisting of FNMA: 6.50%-8.00%, 08/01/26-07/01/28; FHLMC: 8.00%-8.50%, 05/01/27-11/01/27) ----------------------------------------------------------------------------- TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $1,454,700,000 -----------------------------------------------------------------------------
7. LINE OF CREDIT FACILITY The Fund participates in a $250,000,000 uncommitted, unsecured revolving line of credit facility. In addition, the Fund participates in a $50,000,000 com- mitted, unsecured revolving line of credit facility. Both facilities are to be used solely for temporary or emergency purposes. Under the most restric- tive arrangement, the Fund must own securities having a market value in ex- cess of 300% of the total bank borrowings. The interest rate on the borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid based on the amount of the commitment which has not been utilized. During the six months ended July 31, 1998, the Fund did not have any borrowings under these facilities. 18 GOLDMAN SACHS MID CAP EQUITY FUND 8. SUMMARY OF SHARE TRANSACTIONS Share activity for the six months ended July 31, 1998 and for the year ended January 31, 1998 are as follows:
FOR THE SIX MONTHS ENDED JULY 31, 1998 (UNAUDITED) FOR THE YEAR ENDED JANUARY 31, 1998 ------------------------------------------------------------ SHARES DOLLARS SHARES DOLLARS --------------------------------------------------------------------------------------- CLASS A SHARES Shares sold 3,127,975 $ 72,265,975 5,841,266 $ 131,260,250 Reinvestments of divi- dends and distributions -- -- 94,688 2,037,019 Shares repurchased (1,629,123) (37,222,059) (1,744,017) (40,763,741) ------------------------------------------------------------ 1,498,852 35,043,916 4,191,937 92,533,528 --------------------------------------------------------------------------------------- CLASS B SHARES Shares sold 1,003,946 23,418,233 1,399,203 30,963,114 Reinvestments of divi- dends and distributions -- -- 30,492 662,853 Shares repurchased (108,641) (2,450,768) (97,400) (2,201,814) ------------------------------------------------------------ 895,305 20,967,465 1,332,295 29,424,153 --------------------------------------------------------------------------------------- CLASS C SHARES Shares sold 353,053 8,239,883 324,716 7,154,293 Reinvestments of divi- dends and distributions -- -- 4,930 106,487 Shares repurchased (44,521) (1,020,197) (31,125) (693,155) ------------------------------------------------------------ 308,532 7,219,686 298,521 6,567,625 --------------------------------------------------------------------------------------- INSTITUTIONAL SHARES Shares sold 556,447 13,235,477 2,288,783 50,110,458 Reinvestments of divi- dends and distributions -- -- 1,099,576 24,377,632 Shares repurchased (484,782) (10,900,560) (222,904) (4,630,323) ------------------------------------------------------------ 71,665 2,334,917 3,165,455 69,857,767 --------------------------------------------------------------------------------------- SERVICE SHARES Shares sold 3,613 80,000 452 10,901 Reinvestments of divi- dends and distributions -- -- 5 106 Shares repurchased -- -- (97) (2,102) ------------------------------------------------------------ 3,613 80,000 360 8,905 --------------------------------------------------------------------------------------- NET INCREASE 2,777,967 $ 65,645,984 8,988,568 $198,391,978 ---------------------------------------------------------------------------------------
19 GOLDMAN SACHS MID CAP EQUITY FUND Notes to Financial Statements (continued) July 31, 1998 (Unaudited) 9. OTHER MATTERS As of July 31, 1998, Goldman, Sachs & Co. Employees Profit Sharing Master Trust was the beneficial owner of 52% of the outstanding shares of the Fund. 20 GOLDMAN SACHS FUND PROFILE Goldman Sachs Mid Cap Equity Fund THE GOLDMAN SACHS ADVANTAGE When you invest in the Goldman Sachs Mid Cap Equity Fund, you can capitalize on Goldman Sachs' history of excellence while benefiting from the firm's leadership in three areas: 1 Global Resources With professionals based in offices throughout the Americas, Europe and Asia, Goldman Sachs possesses first-hand knowledge of the world's markets and economies. 2 Fundamental Research Goldman Sachs is recognized by the managements of corporations worldwide as a leader in investment research. As a result, we obtain face-to-face meetings with managers on a timely, regular basis. 3 Risk Management Goldman, Sachs & Co. excels in understanding, monitoring and managing investment risk --a process that is integrated into all Goldman Sachs investment products. An Investment Idea for the Long Term Historically, stocks have demonstrated greater potential to build wealth over the long term than most other types of investments. Goldman Sachs Mid Cap Equity Fund offers investors access to the benefits associated with equity investing. The Fund seeks long-term capital appreciation, primarily through equity securities of companies with public stock market capitalizations between $500 million and $10 billion at the time of investment. Target Your Needs The Goldman Sachs Mid Cap Equity Fund has a distinct investment objective and a defined place on the risk/return spectrum. As your investment objectives or market conditions change, you can exchange shares within Goldman Sachs Funds without any additional charge.* (Please note: in general, greater returns are associated with greater risk.) - -------------------------------------------------------------------------------- Goldman Sachs Funds ASSET ALLOCATION Higher Risk/Return Lower Risk/Return - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY DOMESTIC EQUITY FIXED INCOME MONEY MARKET . Goldman Sachs Mid Cap Equity Fund For More Information To learn more about the Goldman Sachs Mid Cap Equity Fund and other Goldman Sachs Funds, call your investment professional today. /*/ The exchange privilege is subject to termination and its terms are subject to change. GOLDMAN SACHS ASSET MANAGEMENT ONE NEW YORK PLAZA, 42ND FLOOR, NEW YORK, NEW YORK 10004 TRUSTEES Ashok N. Bakhru, Chairman David B. Ford Douglas C. Grip John P. McNulty Mary P. McPherson Alan A. Shuch Jackson W. Smart, Jr. William H. Springer Richard B. Strubel OFFICERS Douglas C. Grip, President Jesse Cole, Vice President James A. Fitzpatrick, Vice President Anne Marcel, Vice President Nancy L. Mucker, Vice President John M. Perlowski, Treasurer Philip V. Giuca, Jr., Assistant Treasurer Michael J. Richman, Secretary Howard B. Surloff, Assistant Secretary Valerie A. Zondorak, Assistant Secretary GOLDMAN SACHS Investment Adviser, Distributor and Transfer Agent Visit our internet address: www.gs.com/funds This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Investors should read the Prospectus carefully before investing or sending money. Goldman, Sachs & Co., distributor of the Fund, is not a bank, and Fund shares distributed by it are neither bank deposits nor obligations of, nor endorsed, nor guaranteed by any bank or other insured depository institution, nor are they insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any other government agency. Investment in the Fund involves risks, including possible loss of the principal amount invested. Small Cap Value Fund's, Mid Cap Equity Fund's, Capital Growth Fund's, and Growth and Income Fund's foreign investments and active management techniques entail risks in addition to those customarily associated with investing in dollar-denominated securities of U.S issuers. Compared with domestic securities markets, foreign markets may be less liquid, more volatile and less subject to government regulation, and may make available less public information about issuers. The Funds may incur losses because of changes in securities prices expressed in local currencies, movements in exchange rates or both. The stocks of smaller companies are often associated with higher risks, including greater volatility, than stocks of larger companies. An investment in a money market fund is neither insured nor guaranteed by the U.S. government and there can be no assurance that any money market fund will be able to maintain a net asset value of $1.00 per share. (C) Copyright 1998 Goldman, Sachs & Co. All rights reserved. Date of first use: September 30, 1998 MIDCAPSAR /49K / 9-98 -----END PRIVACY-ENHANCED MESSAGE-----