Prospectus
April
29, 2024
GOLDMAN
SACHS REAL ESTATE SECURITIES AND GLOBAL INFRASTRUCTURE
FUNDS
THE SECURITIES AND
EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED
UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
|
AN
INVESTMENT IN A FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE
FEDERAL DEPOSIT
INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND
INVOLVES
INVESTMENT
RISKS, AND YOU MAY LOSE MONEY IN A
FUND. |
◼
Goldman Sachs
Real Estate Securities Fund
◼
Class P
Shares: GMJPX
◼
Goldman Sachs
Global Real Estate Securities Fund
◼
Class P
Shares: GGUPX
◼
Goldman Sachs
Global Infrastructure Fund
◼
Class P
Shares: GGWPX
|
|
|
|
|
|
Class
P |
|
Management
Fees |
|
|
Other
Expenses |
|
|
Total
Annual Fund Operating Expenses |
|
|
Fee
Waiver and Expense Limitation1
|
( |
|
Total
Annual Fund Operating Expenses After Fee Waiver and Expense
Limitation |
|
1
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
P Shares |
$ |
$ |
$ |
$ |
|
|
|
|
1
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Year |
5
Years |
Since
Inception |
Inception
Date | |
|
Class
P Shares |
|
|
|
|
|
Returns
Before Taxes |
|
|
|
|
|
Returns
After Taxes on Distributions |
|
|
|
|
|
Returns
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
|
Wilshire
U.S. Real Estate Securities Index (reflects no deduction for fees or
expenses) |
|
|
|
|
|
Portfolio
Management |
Goldman
Sachs Asset Management, L.P. is the investment adviser for the Fund(the
"Investment Adviser" or "GSAM").
Portfolio
Managers: Timothy
Ryan, CFA, Managing Director, has managed the Fund since 2010; Kristin Kuney,
CFA, Managing Director, has managed the Fund since 2017; and Abhinav Zutshi,
CFA, Vice President, has managed the Fund since 2023.
3
|
Buying
and Selling Fund Shares |
The Fund
does not impose minimum purchase requirements for initial or subsequent
investments in Class P Shares.
You may
purchase and redeem (sell) Class P Shares of the Fund on any business day
through the Goldman Sachs Private Wealth Management business unit, The Goldman
Sachs Trust Company, N.A., The Goldman Sachs Trust Company of Delaware, The Ayco
Company, L.P. or with certain intermediaries that are authorized to offer Class
P Shares.
|
Tax
Information |
For
important tax information, please see “Tax Information” on page 13 of the
Prospectus.
|
Payments
to Broker-Dealers and
Other
Financial Intermediaries |
For
important information about financial intermediary compensation, please see
“Payments to Broker-Dealers and Other Financial Intermediaries” on page 13 of
the Prospectus.
4
|
|
|
|
|
|
Class
P |
|
Management
Fees |
|
|
Other
Expenses |
|
|
Total
Annual Fund Operating Expenses |
|
|
Expense
Limitation1
|
( |
|
Total
Annual Fund Operating Expenses After Expense
Limitation |
|
1
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
P Shares |
$ |
$ |
$ |
$ |
|
|
|
|
5
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
1
Year |
5
Years |
Since
Inception |
Inception
Date | |
|
Class
P Shares |
|
|
|
|
|
Returns
Before Taxes |
|
|
|
|
|
Returns
After Taxes on Distributions |
|
|
|
|
|
Returns
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
|
FTSE
EPRA Nareit Developed Index (Net, USD, Unhedged; reflects no deduction for
fees or expenses) |
|
|
|
|
|
Portfolio
Management |
Goldman
Sachs Asset Management, L.P. is the investment adviser for the Fund(the
"Investment Adviser" or "GSAM").
Portfolio
Managers: Frankie
Chun Wah Lee, Vice President, has managed the Fund since 2015; and Kristin
Kuney, CFA, Managing Director, has managed the Fund since 2021.
|
Buying
and Selling Fund Shares |
The Fund
does not impose minimum purchase requirements for initial or subsequent
investments in Class P Shares.
You may
purchase and redeem (sell) Class P Shares of the Fund on any business day
through the Goldman Sachs Private Wealth Management business unit, The Goldman
Sachs Trust Company, N.A., The Goldman Sachs Trust Company of Delaware, The Ayco
Company, L.P. or with certain intermediaries that are authorized to offer Class
P Shares.
|
Tax
Information |
For
important tax information, please see “Tax Information” on page 13 of the
Prospectus.
|
Payments
to Broker-Dealers and
Other
Financial Intermediaries |
For
important information about financial intermediary compensation, please see
“Payments to Broker-Dealers and Other Financial Intermediaries” on page 13 of
the Prospectus.
8
|
|
|
|
|
|
Class
P |
|
Management
Fees |
|
|
Other
Expenses |
|
|
Total
Annual Fund Operating Expenses |
|
|
Expense
Limitation1
|
( |
|
Total
Annual Fund Operating Expenses After Expense
Limitation |
|
1
|
|
|
|
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
P Shares |
$ |
$ |
$ |
$ |
|
|
|
|
9
|
|
10
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Year |
5
Years |
Since
Inception |
Inception
Date | |
|
Class
P Shares |
|
|
|
|
|
Returns
Before Taxes |
|
|
|
|
|
Returns
After Taxes on Distributions |
|
|
|
|
|
Returns
After Taxes on Distributions and Sale of Fund Shares |
|
|
|
|
|
Dow
Jones Brookfield Global Infrastructure Index (Net, USD, Unhedged; reflects
no deduction for fees
or
expenses) |
|
|
|
|
|
Portfolio
Management |
Goldman
Sachs Asset Management, L.P. is the investment adviser for the Fund(the
"Investment Adviser" or "GSAM").
Portfolio
Managers: Kristin
Kuney, CFA, Managing Director, has managed the Fund since 2020; and Abhinav
Zutshi, CFA, Vice President, has managed the Fund since 2021.
|
Buying
and Selling Fund Shares |
The Fund
does not impose minimum purchase requirements for initial or subsequent
investments in Class P Shares.
You may
purchase and redeem (sell) Class P Shares of the Fund on any business day
through the Goldman Sachs Private Wealth Management business unit, The Goldman
Sachs Trust Company, N.A., The Goldman Sachs Trust Company of Delaware, The Ayco
Company, L.P. or with certain intermediaries that are authorized to offer Class
P Shares.
|
Tax
Information |
For
important tax information, please see “Tax Information” on page 13 of the
Prospectus.
|
Payments
to Broker-Dealers and
Other
Financial Intermediaries |
For
important information about financial intermediary compensation, please see
“Payments to Broker-Dealers and Other Financial Intermediaries” on page 13 of
the Prospectus.
12
Real
Estate Securities and Global Infrastructure Funds –
Additional Summary Information
Additional Summary Information
|
Tax
Information |
The Funds'
distributions are taxable, and will be taxed as ordinary income or capital
gains, unless you are investing through a tax-deferred arrangement, such as a
401(k) plan or an individual retirement account. Investments made through
tax-deferred arrangements may become taxable upon withdrawal from such
arrangements.
|
Payments
to Broker-Dealers and
Other
Financial Intermediaries |
If you
purchase a Fund through an intermediary that is authorized to offer Class P
Shares, the Fund and/or its related companies may pay the intermediary for the
sale of Fund shares and related services. These payments may create a conflict
of interest by influencing the intermediary and your salesperson to recommend a
Fund over another investment. Ask your salesperson or visit your intermediary’s
website for more information.
13
Investment
Management Approach
|
INVESTMENT
OBJECTIVE |
The Real
Estate Securities Fund and Global Real Estate Securities Fund seek total return
comprised of long-term growth of capital and dividend income.
The Global
Infrastructure Fund seeks total return comprised of long-term growth of capital
and income.
Each Fund’s
investment objective may be changed without shareholder approval upon sixty
days’ notice.
|
PRINCIPAL
INVESTMENT STRATEGIES |
Real Estate
Securities Fund
The Fund
invests, under normal circumstances, at least 80% of its Net Assets in a
portfolio of equity investments in issuers that are primarily engaged in or
related to the real estate industry (“real estate industry companies”). An
issuer is primarily engaged in or related to the real estate industry if it
derives at least 50% of its gross revenues or net profits from the ownership,
development, construction, financing, management or sale of commercial,
industrial or residential real estate or interests therein. Real estate industry
companies may include REITs, REIT-like structures, or real estate operating
companies whose businesses and services are related to the real estate industry.
Shareholders will be provided with sixty days’ notice in the manner prescribed
by the SEC before any change in the Fund’s policy to invest at least 80% of its
Net Assets in the particular type of investment suggested by its
name.
The Fund’s
investment strategy is based on the premise that property market fundamentals
are the primary determinant of growth, underlying the success of companies in
the real estate industry. The Investment Adviser focuses on companies that can
achieve sustainable growth in cash flow and dividend paying capability over
time. The Investment Adviser attempts to purchase securities so that its
underlying portfolio will be diversified geographically and by property type.
Although the Fund will invest primarily in publicly traded U.S. securities, it
may invest up to 15% of its total assets in foreign securities, including
securities quoted in foreign currencies.
The Fund
may invest up to 20% of its total assets in fixed income investments such as
government, corporate and bank debt obligations and in other equity
investments.
The Fund’s
benchmark index is the Wilshire U.S. Real Estate Securities Index. The Index is
an unmanaged index of publicly traded REITs and real estate operating
companies.
The Fund
concentrates its investments in securities of issuers in the real estate
industry.
Global Real Estate
Securities Fund
The Fund
invests, under normal circumstances, at least 80% of its Net Assets in a
portfolio of equity investments in issuers that are real estate industry
companies within and outside the United States. An issuer is primarily engaged
in or related to the real estate industry if it derives at least 50% of its
gross revenues or net profits from the ownership, development, construction,
financing, management or sale of commercial, industrial or residential real
estate or interests therein. Real estate industry companies may include REITs,
REIT-like structures, or real estate operating companies whose businesses and
services are related to the real estate industry. Shareholders will be provided
with sixty days’ notice in the manner prescribed by the SEC before any change in
the Fund’s policy to invest at least 80% of its Net Assets in the particular
type of investment suggested by its name.
The Fund’s
investment strategy is based on the premise that property market fundamentals
are the primary determinant of growth, underlying the success of companies in
the real estate industry. The Investment Adviser focuses on companies that can
achieve sustainable growth in cash flow and dividend paying capability overtime.
The Investment Adviser attempts to purchase securities so that its underlying
portfolio will be varied geographically and by property type.
The Fund
will invest in securities of real estate industry companies that are
economically tied to at least three countries, including the United States. The
Fund will also invest, under normal circumstances, at least 40% of its Net
Assets in securities of real estate industry companies that are economically
tied to countries outside the United States (or, if less, at least the
percentage of Net Assets that is 5% less than the percentage of the FTSE EPRA
Nareit Developed Index, represented by real estate industry companies that are
economically tied to countries outside the United States, as determined by the
provider of the index). Although the Fund will invest, under normal
circumstances, primarily in securities of real estate industry companies that
are economically tied to the United States, Japan, the United Kingdom,
Australia, Hong Kong, Singapore, Canada and Continental Europe, the Fund may
invest in securities of real estate industry companies that are economically
tied to countries with emerging markets or economies (“emerging countries”),
including Central American, South American, African, Middle Eastern, and certain
Asian and Eastern European countries.
14
Investment
Management Approach
The Fund
may invest without restriction as to issuer capitalization, currency, maturity
or credit rating. A portion of the Fund’s securities are denominated in foreign
currencies and held outside the United States.
The Fund
may also invest up to 20% of its Net Assets (measured at the time of purchase)
in issuers that are not real estate industry companies, or fixed income
investments, such as government, corporate and bank debt
obligations.
The Fund
concentrates its investments in securities of issuers in the real estate
industry.
The Fund’s
benchmark index is the FTSE EPRA Nareit Developed Index (Net, USD, Unhedged).
The Index is designed to track the performance of listed real estate companies
and REITs worldwide.
Goldman Sachs Real
Estate Securities Team’s Investment Philosophy:
When
choosing portfolio securities for the Real Estate Securities Fund and Global
Real Estate Securities Fund, the Investment Adviser:
◼
Selects
stocks based on quality and location of assets, experienced management and a
sustainable competitive advantage.
◼
Seeks to
buy securities at a discount to the intrinsic value of the business (assets and
management).
◼
Seeks a
team approach to decision making.
The
Investment Adviser may consider ESG factors as part of the fundamental research
and stock selection process.
The Goldman
Sachs Real Estate Securities team may integrate ESG factors alongside
traditional fundamental factors as part of its fundamental research process to
seek to assess overall business quality and valuation, as well as potential
risks. Traditional fundamental factors that the Goldman Sachs Real Estate
Securities team may consider include, but are not limited to, cash flows,
balance sheet leverage, return on invested capital, industry dynamics, earnings
quality and profitability. ESG factors that the Goldman Sachs Real Estate
Securities team may consider include, but are not limited to, carbon intensity
and emissions profiles, workplace health and safety, community impact,
governance practices and stakeholder relations, employee relations, board
structure, transparency and management incentives. The identification of a risk
related to an ESG factor will not necessarily exclude a particular security or
sector that, in the Goldman Sachs Real Estate Securities team’s view, is
otherwise suitable and attractively priced for investment, and the Goldman Sachs
Real Estate Securities team may invest in a security or sector without
integrating ESG factors or considerations into its fundamental investment
process. The relevance of specific traditional fundamental factors and ESG
factors to the fundamental investment process varies across asset classes,
sectors and strategies. The Goldman Sachs Real Estate Securities team may
utilize data sources provided by third-party vendors and/or engage directly with
issuers when assessing the above factors.
The Goldman
Sachs Real Estate Securities team employs a fundamental investment process that
considers a wide range of factors, and no one factor or consideration is
determinative.
As
stakeholders, the Funds have a vested interest in helping the companies in which
they invest unlock value by improving corporate practices and being thoughtful
stewards of capital. As part of its focus on long-term, active ownership, the
Investment Adviser may, in certain circumstances, use proxy voting and
engagement as some of the tools available to encourage positive corporate
decision making and productive change, where possible.
Global Infrastructure
Fund
The Fund
invests, under normal circumstances, at least 80% of its Net Assets in a
portfolio of investments in issuers that are infrastructure companies. The Fund
will invest primarily in the common stock of infrastructure companies.
Shareholders will be provided with sixty days’ notice in the manner prescribed
by the SEC before any change in the Fund’s policy to invest at least 80% of its
Net Assets in the particular type of investment suggested by its
name.
An issuer
is engaged in or related to the infrastructure group of industries if it is
involved in the ownership, development, construction, renovation, financing,
management, sale or operation of infrastructure assets, or that provide the
services and raw materials necessary for the construction and maintenance of
infrastructure assets. Infrastructure assets include, but are not limited to,
utilities, energy, transportation, real estate, media, telecommunications and
capital goods.
The Fund
will invest in the securities of infrastructure companies that are economically
tied to at least three countries, including the United States. Although the Fund
will invest, under normal circumstances, primarily in the securities of
infrastructure companies that are economically tied to developed countries
(namely developed countries in North America and Europe), the Fund may also
invest in the securities of infrastructure companies that are economically tied
to emerging countries.
The Fund
may invest without restriction as to issuer capitalization (including small- and
mid-capitalization companies). A portion of the Fund’s securities are
denominated in foreign currencies and held outside the United
States.
The Fund
may invest in REITs. The Fund may also invest up to 20% of its total assets
(measured at time of purchase) in MLPs that are taxed as partnerships and up to
20% of its Net Assets (measured at time of purchase) in issuers that are not
infrastructure companies. The Fund may also invest in fixed income investments,
such as government, corporate and bank debt
obligations.
15
ETFs that
provide exposure to infrastructure companies and derivative instruments, such as
futures, that have similar economic exposures to infrastructure companies will
be counted towards the Fund’s 80% policy discussed above.
The Fund
concentrates its investments in the securities of issuers in the infrastructure
group of industries. Therefore, under normal circumstances, the Fund will invest
more than 25% of its total assets in securities issued by companies in the
infrastructure group of industries. The Fund may, however, invest less than 25%
of its total assets in this group of industries as a temporary defensive
position.
The Fund’s
benchmark index is the Dow Jones Brookfield Global Infrastructure Index (Net,
USD, Unhedged). The Index intends to measure the stock performance of pure-play
infrastructure companies domiciled globally. The Index covers all sectors of the
infrastructure market. Components are required to have more than 70% of cash
flows derived from infrastructure lines of business.
Goldman Sachs Global
Infrastructure Team’s Investment Philosophy
When
choosing portfolio securities for the Global Infrastructure Fund, the Investment
Adviser:
◼
Selects
stocks based on the quality and location of the assets, balance sheet and
management team.
◼
Seeks to
buy securities at a discount to the intrinsic value of the
business.
◼
Seeks to
employ a total return approach comprised of both yield and capital
appreciation.
◼
Seeks to
leverage its competitive advantages, including its global platform benefits
(including the ability to leverage Goldman Sachs’ fundamental equity and fixed
income teams globally).
The
Investment Adviser may consider ESG factors as part of the fundamental research
and stock selection process.
The Goldman
Sachs Global Infrastructure team may integrate ESG factors with traditional
fundamental factors as part of its fundamental research process to seek to
assess overall business quality and valuation, as well as potential risks.
Traditional fundamental factors that the Goldman Sachs Global Infrastructure
team may consider include, but are not limited to, cash flows, balance sheet
leverage, return on invested capital, industry dynamics, earnings quality and
profitability. ESG factors that the Goldman Sachs Global Infrastructure team may
consider include, but are not limited to, carbon intensity and emissions
profiles, workplace health and safety, community impact, governance practices
and stakeholder relations, employee relations, board structure, transparency and
management incentives. The identification of a risk related to an ESG factor
will not necessarily exclude a particular security or sector that, in the
Goldman Sachs Global Infrastructure team’s view, is otherwise suitable and
attractively priced for investment. The relevance of specific traditional
fundamental factors and ESG factors to the fundamental investment process varies
across asset classes, sectors and strategies. The Goldman Sachs Global
Infrastructure team may utilize data sources provided by third-party vendors
and/or engage directly with issuers when assessing the above
factors.
The Goldman
Sachs Global Infrastructure team employs a fundamental investment process that
considers a wide range of factors, and no one factor or consideration is
determinative.
As a
stakeholder, the Global Infrastructure Fund has a vested interest in helping the
companies in which it invests unlock value by improving corporate practices and
being a thoughtful steward of capital. As part of its focus on long-term, active
ownership, the Investment Adviser may, in certain circumstances, use proxy
voting and engagement as some of the tools available to encourage positive
corporate decision making and productive change, where
possible.
All
Funds
In
determining whether an issuer is economically tied to a particular country, the
Investment Adviser will consider whether the issuer:
◼
Has a class
of securities whose principal securities market is in that
country;
◼
Has its
principal office in that country;
◼
Derives 50%
or more of its total revenue or profit from goods produced, sales made or
services provided in that country;
◼
Maintains
50% or more of its assets in that country; or
◼
Is
otherwise determined to be economically tied to that country by the Investment
Adviser its discretion. For example, the Investment Adviser may use the
classifications assigned by third parties, including an issuer’s “country of
risk” as determined by Bloomberg or the classifications assigned to an issuer by
the Fund’s benchmark index provider. These classifications are generally based
on a number of criteria, including an issuer’s country of domicile, the primary
stock exchange on which an issuer’s securities trade, the location from which
the majority of an issuer’s revenue is derived, and an issuer’s reporting
currency. Although the Investment Adviser may rely on these classifications, it
is not required to do so.
The Funds
may, from time to time, take temporary defensive positions that are inconsistent
with the Funds’ principal investment strategies in attempting to respond to
adverse market, political or other conditions. For temporary defensive purposes
(and to the extent that it is permitted to invest in the following), each Fund
may invest up to 100% of its total assets in securities issued or guaranteed by
the U.S. government, its agencies, instrumentalities or sponsored enterprises
(“U.S. Government Securities”), commercial paper rated at least A-2 by S&P
Global Ratings (“Standard & Poor’s”), P-2 by Moody’s Investors Service, Inc.
(“Moody’s”) or having a comparable credit rating by another NRSRO (or if
unrated, determined by the Investment Adviser to be of comparable credit
quality),
16
Investment
Management Approach
certificates
of deposit, bankers’ acceptances, repurchase agreements, non-convertible
preferred stocks and non-convertible corporate bonds with a remaining maturity
of less than one year, certain ETFs and other investment companies and cash
items. When
a Fund’s assets are invested in such instruments, the Fund may not be achieving
its investment objective.
THE REAL
ESTATE SECURITIES FUND AND GLOBAL INFRASTRUCTURE FUND ARE “NON-DIVERSIFIED”
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (“INVESTMENT COMPANY ACT”),
AND MAY INVEST A LARGER PERCENTAGE OF THEIR ASSETS IN FEWER ISSUERS THAN
DIVERSIFIED MUTUAL FUNDS.
GSAM serves
as investment adviser to the Funds. GSAM is referred to in the Prospectus as the
“Investment Adviser.”
References
in the Prospectus to a Fund’s benchmark or benchmarks are for informational
purposes only, and unless otherwise noted are not an indication of how a
particular Fund is managed.
|
ADDITIONAL
PERFORMANCE INFORMATION |
The below
is additional information that relates to the “Performance” section of each
Fund’s summary section.
Note that
the “Best Quarter” and “Worst Quarter” figures shown in the “Performance”
section of each Fund’s Summary section are applicable only to the time period
covered by the bar chart.
These
definitions apply to the after-tax returns shown in the “Performance” section of
each Fund’s Summary section.
Average
Annual Total Returns Before Taxes. These
returns do not reflect taxes on distributions on a Fund’s Shares nor do they
show how performance can be impacted by taxes when shares are redeemed (sold) by
you.
Average
Annual Total Returns After Taxes on Distributions. These
returns assume that taxes are paid on distributions on a Fund’s Class P Shares
(i.e., dividends and capital gains) but do not reflect taxes that may be
incurred upon redemption (sale) of the Class P Shares at the end of the
performance period.
Average
Annual Total Returns After Taxes on Distributions and Sale of Fund
Shares. These
returns reflect taxes paid on distributions on a Fund’s Class P Shares and taxes
applicable when the shares are redeemed (sold).
Note
on Tax Rates. The
after-tax performance figures are calculated using the historically highest
individual federal marginal income tax rates at the time of the distributions
and do not reflect state and local taxes. In calculating the federal income
taxes due on redemptions, capital gains taxes resulting from a redemption are
subtracted from the redemption proceeds and the tax benefits from capital losses
resulting from the redemption are added to the redemption proceeds. Under
certain circumstances, the addition of the tax benefits from capital losses
resulting from redemptions may cause the Returns After Taxes on Distributions
and Sale of Fund Shares to be greater than the Returns After Taxes on
Distributions or even the Returns Before Taxes.
|
OTHER
INVESTMENT PRACTICES AND
SECURITIES |
Although
each Fund’s principal investment strategies are described in the Fund’s
Summary—Principal Strategy section of the Prospectus, the following tables
identify some of the investment techniques that may (but are not required to) be
used by the Funds in seeking to achieve their investment objectives. The tables
also highlight the differences and similarities among the Funds in their use of
these techniques and other investment practices and investment securities.
Numbers in these tables show allowable usage only; for actual usage, consult the
Funds’ annual/semi-annual reports. For more information about these and other
investment practices and securities, see Appendix A.
The Funds
publish on their website (http://www.gsamfunds.com) complete portfolio holdings
as of the end of each calendar quarter subject to a fifteen day lag between the
date of the information and the date on which the information is disclosed. In
addition, the Funds publish on their website month-end top ten holdings subject
to a fifteen calendar-day lag between the date of the information and the date
on which the information is disclosed. In addition, a description of the Funds’
policies and procedures with respect to the disclosure of the Funds’ portfolio
holdings is available in the Funds’ SAI.
17
|
10
Percent of total assets (including securities lending collateral) (italic
type)
10 Percent
of net assets (excluding borrowings for investment purposes) (roman
type)
• No
specific percentage limitation on usage; limited only by the strategies of
the Fund
— Not
permitted |
Real
Estate
Securities
Fund |
Global
Real
Estate
Securities
Fund |
Global
Infrastructure
Fund |
|
Investment
Practices |
|
|
|
|
Borrowings |
33 1∕3 |
33 1∕3 |
33 1∕3 |
|
Credit,
Currency, Equity, Index, Interest Rate, Total Return and Mortgage Swaps
and Options on Swaps |
• |
• |
• |
|
Cross
Hedging of Currencies
|
• |
• |
• |
|
Custodial
Receipts and Trust Certificates
|
• |
• |
• |
|
Foreign
Currency Transactions (including forward contracts)* |
• |
• |
• |
|
Futures
Contracts and Options and Swaps on Futures Contracts
|
• |
• |
• |
|
Illiquid
Investments** |
15 |
15 |
15 |
|
Initial
Public Offerings (“IPO”) |
• |
• |
• |
|
Interest
Rate Caps, Floors and Collars |
• |
• |
• |
|
Investment
Company Securities (including ETFs)*** |
10 |
10 |
10 |
|
Mortgage
Dollar Rolls |
• |
• |
• |
|
Options
on Foreign Currencies1
|
• |
• |
• |
|
Options2
|
• |
• |
• |
|
Preferred
Stock
|
• |
• |
• |
|
Repurchase
Agreements
|
• |
• |
• |
|
Securities
Lending
|
33 1∕3 |
33 1∕3 |
— |
|
Unseasoned
Companies
|
• |
• |
• |
|
Warrants
and Stock Purchase Rights |
• |
• |
• |
|
When-Issued
Securities and Forward Commitments
|
• |
• |
• |
*
Limited
by the amount each Fund may invest in foreign securities.
**
Illiquid
investments are any investments that a Fund reasonably expects cannot be sold or
disposed of in current market conditions in seven calendar days or less without
the sale or disposition significantly changing the market value of the
investment.
***
This
percentage limitation does not apply to a Fund’s investments in investment
companies (including ETFs) where a higher percentage limitation is permitted
under the Investment Company Act or rules, regulations or exemptive relief
thereunder.
1
The
Funds may purchase and sell call and put options on foreign
currencies.
2
The
Funds may sell call and put options and purchase call and put options on
securities and securities indices in which they may invest.
18
Investment
Management Approach
|
10 Percent
of total assets (excluding securities lending collateral) (italic
type)
10 Percent
of Net Assets (including borrowings for investment purposes) (roman
type)
• No
specific percentage limitation on usage; limited only by the objectives
and strategies of the Fund
— Not
permitted |
Real
Estate
Securities
Fund |
Global
Real
Estate
Securities
Fund |
Global
Infrastructure
Fund |
|
Investment
Securities |
|
|
|
|
American,
European and Global Depositary Receipts
|
• |
• |
• |
|
Asset-Backed
and Mortgage-Backed Securities1
|
• |
• |
• |
|
Bank
Obligations1,2
|
• |
• |
• |
|
Convertible
Securities3
|
• |
• |
• |
|
Corporate
Debt Obligations1
|
• |
• |
• |
|
Equity
Investments
|
80+ |
80+ |
• |
|
Emerging
Country Securities |
— |
• |
• |
|
Fixed
Income Securities |
20 |
20 |
• |
|
Foreign
Government Securities1
|
• |
• |
• |
|
Foreign
Securities |
154
|
40+5
|
• |
|
Master
Limited Partnerships |
• |
• |
20 |
|
Non-Investment
Grade Fixed Income Securities6
|
20 |
20 |
• |
|
Private
Investments in Public Equity (“PIPEs”) |
• |
• |
• |
|
Real
Estate Investment Trusts
|
• |
• |
• |
|
Special
Purpose Acquisition Companies (“SPACs”) |
• |
• |
• |
|
Stripped
Mortgage-Backed Securities1
|
• |
• |
• |
|
Structured
Securities (which may include equity-linked notes)7
|
• |
• |
• |
|
Temporary
Investments
|
• |
• |
• |
|
U.S.
Government Securities1
|
• |
• |
• |
|
Yield
Curve Options and Inverse Floating Rate Securities |
• |
• |
• |
1
Limited
by the amount the Fund invests in fixed income securities.
2
Issued
by U.S. or foreign banks.
3
Convertible
securities purchased by the Funds use the same rating criteria for convertible
and non-convertible debt securities.
4
The
Real Estate Securities Fund may invest in the aggregate up to 15% of its total
assets in foreign securities.
5
The
Fund will also invest, under normal circumstances, at least 40% of its Net
Assets in securities of real estate industry companies that are economically
tied to countries outside the United States (or, if less, at least the
percentage of Net Assets that is 5% less than the percentage of the FTSE EPRA
Nareit Developed Index, represented by real estate industry companies that are
economically tied to countries outside the United States, as determined by the
provider of the index).
6
May
be BB+ or lower by Standard & Poor’s or Ba1 or lower by Moody’s or have a
comparable credit rating by another NRSRO at the time of
investment.
7
Structured
securities are not subject to the same minimum credit quality requirement as a
Fund’s investments in fixed income securities.
19
Risks of
the Funds
Loss
of money is a risk of investing in the Fund (which, for the remainder of the
Prospectus, refers to one or more of the Funds offered in this Prospectus). The
principal risks of the Fund are discussed in the Summary sections of the
Prospectus. The following section provides additional information on the risks
that apply to the Fund, which may result in a loss of your investment. The risks
applicable to the Fund are presented below in alphabetical order, and not in the
order of importance or potential exposure. An investment in the Fund is not a
bank deposit and is not insured or guaranteed by the FDIC or any other
governmental agency. Investors should carefully consider these risks before
investing. The Fund should not be relied upon as a complete investment program.
There can be no assurance that the Fund will achieve its investment
objective.
|
✓ Principal
Risk
• Additional
Risk |
Real
Estate
Securities
Fund |
Global
Real
Estate
Securities
Fund |
Global
Infrastructure
Fund |
|
Credit/Default |
• |
•
|
• |
|
Cybersecurity |
• |
• |
• |
|
Derivatives |
• |
• |
• |
|
Dividend-Paying
Investments |
✓ |
✓ |
✓ |
|
Emerging
Countries |
|
✓ |
✓ |
|
ESG
Integration |
• |
• |
• |
|
Foreign |
• |
✓ |
✓ |
|
Geographic |
✓ |
✓ |
• |
|
Industry
Concentration |
✓ |
✓ |
✓ |
|
Infrastructure
Company |
|
|
✓ |
|
Interest
Rate |
• |
• |
• |
|
Investment
Style |
• |
• |
• |
|
IPO |
• |
• |
• |
|
Large
Shareholder Transactions |
✓ |
✓ |
✓ |
|
Liquidity |
• |
• |
• |
|
Management |
• |
• |
• |
|
Market |
✓ |
✓ |
✓ |
|
Master
Limited Partnerships |
• |
• |
✓ |
|
Mid-Cap
and Small-Cap |
• |
• |
✓ |
|
Mortgage
Backed and Other Asset Backed Securities |
• |
• |
• |
|
NAV |
• |
• |
• |
|
Non-Diversification |
✓ |
|
✓ |
|
Non-Investment
Grade Fixed Income Securities |
• |
• |
• |
|
Private
Investments in Public Equity (“PIPEs”) |
• |
• |
• |
|
Real
Estate Industry |
✓ |
✓ |
• |
|
REIT |
✓ |
✓ |
✓ |
|
Sovereign
Default |
• |
• |
• |
|
Special
Purpose Acquisition Companies (“SPACs”) |
• |
• |
• |
|
Stock |
• |
• |
✓ |
|
U.S.
Government Securities |
• |
• |
• |
◼
Credit/Default
Risk—An issuer
or guarantor of fixed income securities or instruments held by the Fund (which
may have low credit ratings) may default on its obligation to pay interest and
repay principal or default on any other obligation. The credit quality of the
Fund’s portfolio securities or instruments may meet the Fund’s credit quality
requirements at the time of purchase but then deteriorate thereafter, and such a
deterioration can occur rapidly. In certain instances, the downgrading or
default of a single holding or guarantor of the Fund’s holdings may impair the
Fund’s liquidity and have the potential to cause significant NAV deterioration.
These risks are heightened in market environments where interest rates are
rising as well as in connection with the Fund’s investments in
non-investment grade fixed income securities.
◼
Cybersecurity
Risk—The Fund
may be susceptible to operational and information security risks resulting from
cyber-attacks. Cyber-attacks include, among others, stealing or corrupting
confidential information and other data that is maintained online or digitally
for financial gain, denial-of-service attacks on websites causing operational
disruption, and the unauthorized release of confidential information and other
data. Cyber-attacks have the ability to cause significant disruptions and impact
business operations; to result in financial losses; to prevent shareholders from
transacting business; to interfere with the Fund’s calculation of
20
Risks
of the Funds
NAV; and to
lead to violations of applicable privacy and other laws, regulatory fines,
penalties, reputational damage, reimbursement or other compensation costs and/or
additional compliance costs. Cyber-attacks affecting the Fund or its Investment
Adviser, custodian, Transfer Agent, or other third-party service providers may
adversely impact the Fund and its shareholders.
◼
Derivatives
Risk—The Fund’s
use of options, forwards, futures, swaps, options on swaps, structured
securities and other derivative instruments (collectively referred to in this
paragraph as “derivatives”) may result in losses, including due to adverse
market movements. Derivatives, which may pose risks in addition to and greater
than those associated with investing directly in securities, currencies or other
instruments, may increase market exposure and be illiquid or less liquid,
volatile, difficult to price and leveraged so that small changes in the value of
the underlying assets or instruments may produce disproportionate losses to the
Fund. Certain derivatives are also subject to counterparty risk, which is the
risk that the other party in the transaction will not fulfill, or lacks the
capacity or authority to fulfill, its contractual obligations, liquidity risk,
which includes the risk that the Fund will not be able to close its derivatives
position when it is advantageous to do so, and risks arising from margin
requirements, which include the risk that the Fund will be required to pay
additional margin or set aside additional collateral to maintain open derivative
positions. Derivatives may be used for both hedging and non-hedging
purposes.
The use of
derivatives is a highly specialized activity that involves investment techniques
and risks different from those associated with investments in more traditional
securities and instruments, and there is no guarantee that the use of
derivatives will achieve their intended result. If the Investment Adviser is
incorrect in its expectation of the timing or level of fluctuation in securities
prices, interest rates, currency prices or other variables, the use of
derivatives could result in losses, which in some cases may be significant. A
lack of correlation between changes in the value of derivatives and the value of
the portfolio assets (if any) being hedged could also result in losses. In
addition, there is a risk that the performance of the derivatives or other
instruments used by the Investment Adviser to replicate the performance of a
particular asset class may not accurately track the performance of that asset
class. Futures markets are highly volatile and the use of futures may increase
the volatility of a Fund’s NAV.
The use of
derivatives is also subject to operational and legal risks. Operational risks
generally refer to risks related to potential operational issues, including
documentation issues, settlement issues, system failures, inadequate controls,
and human error. Legal risks generally refer to risks of loss resulting from
insufficient documentation or legality or enforceability of a
contract.
◼
Dividend-Paying
Investments Risk—The Fund’s
investments in dividend-paying securities could cause the Fund to underperform
other funds that invest in similar asset classes but employ a different
investment style. Securities that pay dividends, as a group, can fall out of
favor with the market, causing such securities to underperform securities that
do not pay dividends. Depending upon market conditions and political and
legislative responses to such conditions, dividend-paying securities that meet
the Fund’s investment criteria may not be widely available and/or may be highly
concentrated in only a few market sectors. For example, in response to the
outbreak of a novel strain of coronavirus (known as COVID-19), the U.S.
Government passed the Coronavirus Aid, Relief and Economic Security Act in March
2020, which established loan programs for certain issuers impacted by COVID-19.
Among other conditions, borrowers under these loan programs are generally
restricted from paying dividends. The adoption of new legislation could further
limit or restrict the ability of issuers to pay dividends. To the extent that
dividend-paying securities are concentrated in only a few market sectors, the
Fund may be subject to the risks of volatile economic cycles and/or conditions
or developments that may be particular to a sector to a greater extent than if
its investments were diversified across different sectors. In addition, issuers
that have paid regular dividends or distributions to shareholders may not
continue to do so at the same level or at all in the future. A sharp rise in
interest rates or an economic downturn could cause an issuer to abruptly reduce
or eliminate its dividend. This may limit the ability of the Fund to produce
current income.
◼
Emerging
Countries Risk—Investments
in securities of issuers located in, or otherwise economically tied to, emerging
countries are subject to the risks associated with investments in foreign
securities. The securities markets of most emerging countries are less liquid,
developed and efficient, are subject to greater price volatility, and have
smaller market capitalizations. In addition, emerging markets and frontier
countries may have more or less government regulation and generally do not
impose as extensive and frequent accounting, auditing, financial and other
reporting requirements as the securities markets of more developed countries. As
a result, there could be less information available about issuers in emerging
and frontier market countries, which could negatively affect the Investment
Adviser’s ability to evaluate local companies or their potential impact on the
Fund’s performance. Further, investments in securities of issuers located
in certain emerging countries involve the risk of loss resulting from
problems in share registration, settlement or custody, substantial economic,
political and social disruptions and the imposition of sanctions or exchange
controls (including repatriation restrictions). The legal remedies for investors
in emerging and frontier markets may be more limited than the remedies available
in the U.S., and the ability of U.S. authorities (e.g., SEC and
the U.S. Department of Justice) to bring actions against bad actors may be
limited. These risks are not normally associated with investments in more
developed countries. For more information about these risks, see Appendix
A.
◼
ESG
Integration Risk—The
Investment Adviser employs a fundamental investment process that may integrate
ESG factors with traditional fundamental factors. The relevance and
weightings of specific ESG factors to or within the fundamental investment
process varies across asset classes, sectors and strategies and no one factor or
consideration is determinative. When integrating ESG factors into the
investment process, the Investment Adviser may rely on third-party data that it
believes to be reliable, but it does not
21
guarantee
the accuracy of such third-party data. ESG information from third-party
data providers may be incomplete, inaccurate or unavailable, which may adversely
impact the investment process. Moreover, ESG information, whether from an
external and/or internal source, is, by nature and in many instances, based on a
qualitative and subjective assessment. An element of subjectivity and
discretion is therefore inherent to the interpretation and use of ESG
data. The process for conducting ESG assessments and implementation of ESG
views in client/fund portfolios, including the format and content of such
analysis and the tools and/or data used to perform such analysis, may also vary
among the Investment Adviser’s portfolio management teams. While the Investment
Adviser believes that the integration of material ESG factors into the Fund’s
investment process has the potential to identify financial risks and contribute
to the Fund’s long-term performance, ESG factors may not be considered for each
and every investment decision, and there is no guarantee that the integration of
ESG factors will result in better performance. Investors can differ in
their views of what constitutes positive or negative ESG
characteristics. Moreover, the current lack of common standards may result
in different approaches to integrating ESG factors. As a result, the Fund
may invest in companies that do not reflect the beliefs and values of any
particular investor. The Investment Adviser’s approach to ESG integration
may evolve and develop over time, both due to a refinement of investment
decision-making processes to address ESG factors and risks, and because of legal
and regulatory developments.
◼
Foreign
Risk—When the
Fund invests in foreign securities, it may be subject to risk of loss not
typically associated with U.S. issuers. Loss may result because of more or less
foreign government regulation; less public information; less stringent investor
protection; less stringent accounting, corporate governance, financial reporting
and disclosure standards; and less economic, political and social stability in
the countries in which the Fund invests. Loss may also result from, among other
things, deteriorating economic and business conditions in other countries,
including the United States, regional and global conflicts, the imposition of
sanctions, exchange controls (including repatriation restrictions), foreign
taxes, confiscation of assets and property, trade restrictions (including
tariffs), expropriations and other government restrictions by the United States
and other governments, higher transaction costs, difficulty enforcing
contractual obligations or from problems in share registration, settlement or
custody. The type and severity of sanctions and other similar measures,
including counter sanctions and other retaliatory actions, that may be imposed
could vary broadly in scope, and their impact is impossible to predict. These
types of measures may include, but are not limited to, banning a sanctioned
country from global payment systems that facilitate cross-border payments,
restricting the settlement of securities transactions by certain investors, and
freezing the assets of particular countries, entities, or persons. The
imposition of sanctions and other similar measures could, among other things,
cause a decline in the value and/or liquidity of securities issued by the
sanctioned country or companies located in or economically tied to the
sanctioned country, downgrades in the credit ratings of the sanctioned country
or companies located in or economically tied to the sanctioned country,
devaluation of the sanctioned country’s currency, and increased market
volatility and disruption in the sanctioned country and throughout the world.
Sanctions and other similar measures could limit or prevent the Fund from buying
and selling securities (in the sanctioned country and other markets),
significantly delay or prevent the settlement of securities transactions, and
significantly impact the Fund’s liquidity and performance. The Fund or the
Investment Adviser may determine not to invest in, or may limit its overall
investment in, a particular issuer, country or geographic region due to, among
other things, heightened risks regarding sanctions, repatriation restrictions,
confiscation of assets and property, expropriation or nationalization.
Geopolitical developments in certain countries in which the Fund may invest have
caused, or may in the future cause, significant volatility in financial markets.
These and other geopolitical developments, including ongoing regional armed
conflict in Europe and elsewhere, could negatively impact the value of the
Fund’s investments.
The Fund
will also be subject to the risk of negative foreign currency rate fluctuations,
which may cause the value of securities denominated in such foreign currency (or
other instruments through which the Fund has exposure to foreign currencies) to
decline in value. Currency exchange rates may fluctuate significantly over short
periods of time. Foreign risks will normally be greatest when the Fund invests
in securities of issuers located in emerging countries. For more information
about these risks, see Appendix A.
◼
Geographic
Risk—If
the Fund focuses its investments in securities of issuers located in a
particular country or geographic region, the Fund may be subjected,
to a greater extent than if its investments were less focused, to the risks of
volatile economic cycles and/or conditions and developments that may be
particular to that country or region, such as: adverse securities markets;
adverse exchange rates; adverse social, political, regulatory, economic,
business, environmental or other developments; or natural
disasters.
◼
Industry
Concentration Risk —The Real
Estate Securities and Global Real Estate Securities Funds concentrate their
investments in the real estate industry, and the Global Infrastructure Fund
concentrates its investments in the infrastructure group of industries, each of
which has historically experienced substantial price volatility. Concentrating
Fund investments in a limited number of issuers conducting business in the same
industry or group of industries will subject the Funds to a greater risk of loss
as a result of adverse economic, business, political, environmental or other
developments than if their investments were diversified across different
industries.
◼
Infrastructure
Company Risk—Infrastructure
companies are susceptible to various factors that may negatively impact their
businesses or operations, including costs associated with compliance with and
changes in environmental, governmental and other
22
Risks
of the Funds
regulations,
rising interest costs in connection with capital construction and improvement
programs, government budgetary constraints that impact publicly funded projects,
the effects of general economic conditions throughout the world, surplus
capacity and depletion concerns, increased competition from other providers of
services, uncertainties regarding the availability of fuel and other natural
resources at reasonable prices, the effects of energy conservation policies,
unfavorable tax laws or accounting policies and high leverage.
Infrastructure
companies will also be affected by innovations in technology that could render
the way in which a company delivers a product or service obsolete, significant
changes to the number of ultimate end-users of a company’s products,
inexperience with and potential losses resulting from a developing deregulatory
environment, increased susceptibility to terrorist attacks and natural or
man-made disasters and other natural risks (including earthquakes, floods,
lightning, hurricanes, tsunamis and wind). Infrastructure companies also face
operating risks, including the risk of fire, explosions, leaks, mining and
drilling accidents or other catastrophic events.
◼
Interest
Rate Risk—When
interest rates increase, fixed income securities or instruments held by the Fund
(which may include inflation protected securities) will generally decline in
value. Long-term fixed income securities or instruments will normally have more
price volatility because of this risk than short-term fixed income securities or
instruments. A wide variety of market factors can cause interest rates to rise,
including central bank monetary policy, rising inflation and changes in general
economic conditions. Changing interest rates may have unpredictable effects on
the markets, may result in heightened market volatility and may detract from
Fund performance to the extent the Fund is exposed to such interest rates and/or
volatility. In addition, changes in monetary policy may exacerbate the risks
associated with changing interest rates. Funds with longer average portfolio
durations will generally be more sensitive to changes in interest rates than
funds with a shorter average portfolio duration. Fluctuations in interest rates
may also affect the liquidity of fixed income securities and instruments held by
the Fund.
It is difficult to predict the magnitude, timing or direction of interest rate changes and the impact these changes will have on the markets in which the Fund invests.
It is difficult to predict the magnitude, timing or direction of interest rate changes and the impact these changes will have on the markets in which the Fund invests.
◼
Investment
Style Risk—Different
investment styles (e.g., “growth,”
“value” or “quantitative”) tend to shift in and out of favor depending upon
market and economic conditions and investor sentiment. The Fund may outperform
or underperform other funds that invest in similar asset classes but employ
different investment styles.
◼
IPO
Risk—The market
value of shares issued in an IPO will fluctuate considerably due to factors such
as the absence of a prior public market, unseasoned trading, the small number of
shares available for trading and limited information about a company’s business
model, quality of management, earnings growth potential, and other criteria used
to evaluate its investment prospects. The purchase of IPO shares may involve
high transaction costs. Investments in IPO shares, which are subject to market
risk and liquidity risk, involve greater risks than investments in shares of
companies that have traded publicly on an exchange for extended periods of time.
When a Fund’s asset base is small, a significant portion of the Fund’s
performance could be attributable to investments in IPOs, because such
investments would have a magnified impact on the Fund. As a Fund’s assets grow,
the effect of the Fund’s investments in IPOs on the Fund’s performance probably
will decline, which could reduce the Fund’s performance.
◼
Large
Shareholder Transactions Risk—The Fund
may experience adverse effects when certain large shareholders, such as other
funds, institutional investors (including those trading by use of
non-discretionary mathematical formulas), financial intermediaries (who may make
investment decisions on behalf of underlying clients and/or include the Fund in
their investment model), individuals, accounts and Goldman Sachs affiliates,
purchase or redeem large amounts of shares of the Fund. Such large shareholder
redemptions, which may occur rapidly or unexpectedly, may cause the Fund to sell
portfolio securities at times when it would not otherwise do so, which may
negatively impact the Fund’s NAV and liquidity. Similarly, large Fund share
purchases may adversely affect the Fund’s performance to the extent that the
Fund is delayed in investing new cash or otherwise maintains a larger cash
position than it ordinarily would. These transactions may also accelerate the
realization of taxable income to shareholders if such sales of investments
resulted in gains, and may also increase transaction costs. In addition, a large
redemption could result in the Fund’s current expenses being allocated over a
smaller asset base, leading to an increase in the Fund’s expense
ratio.
◼
Liquidity
Risk—The Fund
may invest in securities or instruments that trade in lower volumes, that are
less liquid than other investments and/or that may become illiquid or less
liquid in response to market developments or adverse investor perceptions.
Investments that are illiquid or that trade in lower volumes may be more
difficult to value. When there is no willing buyer and investments cannot be
readily sold at the desired time or price, the Fund may have to accept a lower
price or may not be able to sell the security or instrument at all. An inability
to sell one or more portfolio positions can adversely affect the Fund's value or
prevent the Fund from being able to take advantage of other investment
opportunities.
Illiquidity
can be caused by a drop in overall market trading volume, an inability to find a
willing buyer, or legal restrictions on the securities’ resale. To the extent
that the traditional dealer counterparties that engage in fixed income trading
do not maintain inventories of bonds (which provide an important indication of
their ability to “make markets”) that keep pace with the growth of
23
the bond
markets over time, relatively low levels of dealer inventories could lead to
decreased liquidity and increased volatility in the fixed income markets.
Additionally, market participants other than the Fund may attempt to sell fixed
income holdings at the same time as the Fund, which could cause downward pricing
pressure and contribute to decreased liquidity.
Because the
Fund may invest in non-investment grade fixed income securities, small- and
mid-capitalization stocks, REITs and/or emerging country issuers, the Fund may
be especially subject to the risk that during certain periods, the liquidity of
particular issuers or industries, or all securities within a particular
investment category, may shrink or disappear suddenly and without warning as a
result of adverse economic, market or political events (including periods of
rapid interest rate changes), or adverse investor perceptions, whether or not
accurate.
Liquidity
risk may also refer to the risk that the Fund will not be able to pay redemption
proceeds within the allowable time period stated in the Prospectus or without
significant dilution to remaining investors’ interests because of unusual market
conditions, declining prices of the securities sold, an unusually high volume of
redemption requests or other reasons. While the Fund reserves the right to meet
redemption requests through in-kind distributions, the Fund may instead choose
to raise cash to meet redemption requests through sales of portfolio securities
or permissible borrowings. If the Fund is forced to sell securities at an
unfavorable time and/or under unfavorable conditions, such sales may adversely
affect the Fund's NAV and dilute remaining investors’
interests.
Certain
shareholders, including clients or affiliates of the Investment Adviser and/or
other funds managed by the Investment Adviser, may from time to time own or
control a significant percentage of the Fund's shares. Redemptions by these
shareholders of their shares of the Fund may further increase the Fund's
liquidity risk and may impact the Fund's NAV. These shareholders may include,
for example, institutional investors, funds of funds, discretionary
advisory clients, certain participating insurance companies, accounts or
Goldman Sachs affiliates and other shareholders, whose buy-sell decisions are
controlled by a single decision-maker.
◼
Management
Risk—A strategy
used by the Investment Adviser may fail to produce the intended
results.
◼
Market
Risk—The value
of the securities in which the Fund invests may go up or down in response
to the prospects of individual companies, particular sectors or governments
and/or general economic conditions throughout the world. Price changes may be
temporary or last for extended periods. The Fund's investments may be
overweighted from time to time in one or more sectors or countries, which will
increase the Fund's exposure to risk of loss from adverse developments affecting
those sectors or countries.
Global
economies and financial markets are becoming increasingly interconnected, and
conditions and events in one country, region or financial market may adversely
impact issuers in a different country, region or financial market. Furthermore,
local, regional and global events such as war, military conflict, acts of
terrorism, social unrest, natural disasters, recessions, inflation, rapid
interest rate changes, supply chain disruptions, sanctions, the spread of
infectious illness or other public health threats could also adversely impact
issuers, markets and economies, including in ways that cannot necessarily be
foreseen. The Fund could be negatively impacted if the value of a portfolio
holding were harmed by such political or economic conditions or events. In
addition, governmental and quasi-governmental organizations have taken a number
of unprecedented actions designed to support the markets. Such conditions,
events and actions may result in greater market risk.
◼
Master
Limited Partnership Risk— The Fund’s
investments in securities of an MLP involve risks that differ from investments
in common stock, including risks related to limited control and limited rights
to vote on matters affecting the MLP, risks related to potential conflicts of
interest between the MLP and the MLP’s general partner, cash flow risks,
dilution risks and risks related to the general partner’s right to require
unit-holders to sell their common units at an undesirable time or price,
resulting from regulatory changes or other reasons. Certain MLP securities may
trade in lower volumes due to their smaller capitalizations. Accordingly, those
MLPs may be subject to more abrupt or erratic price movements and may lack
sufficient market liquidity to enable the Fund to effect sales at an
advantageous time or without a substantial drop in price. Investment in those
MLPs may restrict the Fund’s ability to take advantage of other investment
opportunities. MLPs are generally considered interest-rate sensitive
investments. During periods of interest rate volatility, these investments may
not provide attractive returns.
To the
extent a distribution received by the Fund from an MLP is treated as a return of
capital, the Fund’s adjusted tax basis in the interests of the MLP may be
reduced, which will result in an increase in an amount of income or gain (or
decrease in the amount of loss) that will be recognized by the Fund for tax
purposes upon the sale of any such interests or upon subsequent distributions in
respect of such interests. Furthermore, any return of capital distribution
received from the MLP may require the Fund to restate the character of its
distributions and amend any shareholder tax reporting previously issued.
Moreover, a change in current tax law, or a change in the underlying business
mix of a given MLP, could result in an MLP being treated as a corporation for
U.S. federal income tax purposes, which could result in a reduction of the value
of the Fund's investment in the MLP and lower income to the
Fund.
24
Risks
of the Funds
Individuals
and certain other noncorporate entities are generally eligible for a 20%
deduction with respect to taxable income from MLPs. Currently, there is not a
regulatory mechanism for regulated investment companies such as the Funds to
pass through the 20% deduction to shareholders. As a result, in comparison,
investors investing directly in MLPs would generally be eligible for the 20%
deduction for such taxable income from these investments while investors
investing in MLPs held indirectly if any through the Funds would not be eligible
for the 20% deduction for their share of such taxable income.
◼
Mid-Cap
and Small-Cap Risk—The
securities of mid-capitalization and small-capitalization companies involve
greater risks than those associated with larger, more established companies and
may be subject to more abrupt or erratic price movements. Securities of such
issuers may lack sufficient market liquidity to enable the Fund to effect sales
at an advantageous time or without a substantial drop in price. Both
mid-capitalization and small-capitalization companies often have narrower
markets and more limited managerial and financial resources than larger, more
established companies. As a result, their performance can be more volatile and
they face greater risk of business failure, which could increase the volatility
of the Fund's portfolio. Generally, the smaller the company size, the greater
these risks become.
◼
Mortgage-Backed
and Other Asset-Backed Securities Risk—Mortgage-related
and other asset-backed securities are subject to credit/default, interest rate
and certain additional risks. Generally, rising interest rates tend to extend
the duration of fixed rate mortgage-backed securities, making them more
sensitive to changes in interest rates. As a result, in a period of rising
interest rates, if the Fund holds mortgage-backed securities, it may exhibit
additional volatility. This is known as extension risk. In addition, adjustable
and fixed rate mortgage-backed securities are subject to prepayment risk. When
interest rates decline, borrowers may pay off their mortgages sooner than
expected. This can reduce the returns of the Fund because the Fund may have to
reinvest that money at the lower prevailing interest rates. Due to these risks,
asset-backed securities may become more volatile in certain interest rate
environments.
The Fund’s
investments in other asset-backed securities are subject to risks similar to
those associated with mortgage-backed securities, as well as additional risks
associated with the nature of the assets and the servicing of those assets.
Asset-backed securities may not have the benefit of a security interest in
collateral comparable to that of mortgage assets, resulting in additional credit
risk.
The Fund
may invest in mortgage-backed securities issued by the U.S. Government (see
“U.S. Government Securities Risk”). To the extent that the Fund invests in
mortgage-backed securities offered by non-governmental issuers, such as
commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers, the Fund may be
subject to additional risks. Timely payment of interest and principal of
non-governmental issuers are supported by various forms of private insurance or
guarantees, including individual loan, title, pool and hazard insurance
purchased by the issuer. There can be no assurance that the private insurers can
meet their obligations under the policies. An unexpectedly high rate of defaults
on the mortgages held by a mortgage pool may adversely affect the value of a
mortgage-backed security and could result in losses to the Fund. The risk of
such defaults is generally higher in the case of mortgage pools that include
subprime mortgages or during periods of rising interest rates. Subprime
mortgages refer to loans made to borrowers with weakened credit histories or
with a lower capacity to make timely payments on their
mortgages.
The values
of, and income generated by, commercial mortgage-backed securities (“CMBS”) may
be adversely affected by changing interest rates and other developments
impacting the commercial real estate market, such as population shifts and other
demographic changes, increasing vacancies (potentially for extended periods) and
reduced demand for commercial and office space as well as maintenance or tenant
improvement costs and costs to convert properties for other uses. These
developments could result from, among other things, changing tastes and
preferences (such as for remote work arrangements) as well as cultural,
technological, global or local economic and market developments. In addition,
changing interest rate environments and associated changes in lending standards
and higher refinancing rates may adversely affect the commercial real estate and
CMBS markets. The occurrence of any of the foregoing developments would likely
increase default risk for the properties and loans underlying these investments
as well as impact the value of, and income generated by, these investments.
These developments could also result in reduced liquidity for CMBS and other
real estate-related investments.
The Fund
may gain exposure to Agency Mortgage-Backed Securities by utilizing TBA
agreements. TBA agreements involve the risk that the other party to the
transaction will not meet its obligation. If this occurs, the Fund could lose
the opportunity to obtain a price or yield that it considers advantageous. In
such circumstances, the Fund may not be able to secure an alternative investment
with comparable terms. TBA agreements may give rise to a form of leverage. The
Fund’s use of TBA agreements may also result in a higher portfolio turnover rate
and/or increased capital gains for the Fund.
◼
NAV
Risk—The net
asset value of the Fund and the value of your investment will
fluctuate.
◼
Non-Diversification
Risk—The Real
Estate Securities Fund and Global Infrastructure Fund are non-diversified,
meaning that each such Fund is permitted to invest a larger percentage of its
assets in one or more issuers or in fewer issuers than diversified mutual funds.
Thus, the Fund may be more susceptible to adverse developments affecting any
single issuer held in its portfolio, and may be more susceptible to greater
losses because of these developments.
25
◼
Non-Investment
Grade Fixed Income Securities Risk—Non-investment
grade fixed income securities and unrated securities of comparable credit
quality (commonly known as “junk bonds”) are considered speculative and are
subject to the increased risk of an issuer’s inability to meet principal and
interest payment obligations. These securities may be subject to greater price
volatility due to such factors as specific issuer developments, interest rate
sensitivity, negative perceptions of the junk bond markets generally and less
liquidity.
◼
Private
Investments in Public Equities Risk—The Fund
may purchase equity securities in a private placement that are issued by issuers
who have outstanding, publicly-traded equity securities of the same class
(“private investments in public equity” or “PIPEs”). Shares in PIPEs generally
are not registered with the SEC until after a certain time period from the date
the private sale is completed. This restricted period can last many months.
Until the public registration process is completed, PIPEs are restricted as to
resale and the Fund cannot freely trade the securities. Generally, such
restrictions cause the PIPEs to be illiquid during this time. PIPEs may contain
provisions that the issuer will pay specified financial penalties to the holder
if the issuer does not publicly register the restricted equity securities within
a specified period of time, but there is no assurance that the restricted equity
securities will be publicly registered, or that the registration will remain in
effect.
◼
Real
Estate Industry Risk—The Fund is
subject to certain risks associated with real estate in general. These risks
include, among others: possible declines in the value of (or income generated
by) real estate; risks related to general and local economic conditions;
fluctuations in occupancy levels and demand for properties or real
estate-related services; changes in the availability or terms of mortgages and
other financing that may render the sale or refinancing of properties difficult
or unattractive; variations in rental income, neighborhood values or the appeal
of property to tenants; limits on rents; interest rates; overbuilding; extended
vacancies of properties; increases in competition, property taxes and operating
expenses; and changes in zoning laws. In addition, real estate industry
companies that hold mortgages may be affected by the quality of any credit
extended. Real estate values or income generated by real estate may be adversely
affected by many additional factors, including: the over-supply of and reduced
demand for real estate rentals and sales; demographic trends, such as population
shifts or changing tastes and preferences (such as for remote work
arrangements); the attractiveness, type and location of the property; increased
maintenance or tenant improvement costs and costs to convert properties for
other uses; and the financial condition of tenants, buyers and sellers, and the
inability to re-lease space on attractive terms or to obtain mortgage financing
on a timely basis or at all. Real estate industry companies are dependent upon
management skill, may not be diversified, and are subject to heavy cash flow
dependency, default by borrowers and self-liquidation. Real estate industry
companies whose underlying properties are concentrated in a particular industry
or geographic region are also subject to risks affecting such industries and
regions. The real estate industry is particularly sensitive to economic
downturns, and companies in the real estate industry may be highly leveraged
and, thus, subject to increased risks for investors. The values of securities of
companies in the real estate industry may go through cycles of relative
under-performance and out-performance in comparison to equity securities markets
in general.
◼
REIT
Risk—Investing
in REITs involves certain unique risks in addition to those risks associated
with investing in the real estate industry in general. REITs whose underlying
properties are concentrated in a particular industry or geographic region are
also subject to risks affecting such industries and regions. The securities of
REITs involve greater risks than those associated with larger, more established
companies and may be subject to more abrupt or erratic price movements because
of interest rate changes, economic conditions and other factors. For example,
the value of these securities may decline when interest rates rise and will also
be affected by the real estate market and by the management or development of
the underlying properties. The underlying properties may be subject to mortgage
loans, which may also be subject to the risks of default. REITs may also fail to
qualify for tax free pass-through of income or may fail to maintain their
exemptions from investment company registration. Securities of such issuers may
lack sufficient market liquidity to enable a Fund to effect sales at an
advantageous time or without a substantial drop in price.
◼
Sovereign
Default Risk—The issuer
of non-U.S. sovereign debt held by the Fund or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay the
principal or interest when due. This may result from political or social
factors, the general economic environment of a country or levels of borrowing
rates, foreign debt, or foreign currency exchange rates.
◼
Political
Risk—The risks
associated with the general political and social environment of a country. These
factors may include among other things government instability, poor
socioeconomic conditions, corruption, lack of law and order, lack of democratic
accountability, poor quality of the bureaucracy, internal and external conflict,
the imposition of international sanctions, and religious and ethnic tensions.
High political risk can impede the economic welfare of a
country.
◼
Economic
Risk—The risks
associated with the general economic environment of a country. These can
encompass, among other things, low quality and growth rate of Gross Domestic
Product (“GDP”), high inflation or deflation, high government deficits as a
percentage of GDP, weak financial sector, overvalued exchange rate, and high
current account deficits as a percentage of GDP.
26
Risks
of the Funds
◼
Repayment
Risk—A country
may be unable to pay its external debt obligations in the immediate future.
Repayment risk factors may include but are not limited to high borrowing rates
(which may increase in market environments where interest rates are rising),
high foreign debt as a percentage of GDP, high foreign debt service as a
percentage of exports, low foreign exchange reserves as a percentage of
short-term debt or exports, and an unsustainable exchange rate
structure.
◼
Special
Purpose Acquisition Companies Risk—The Fund
may invest in stock, warrants, and other securities of SPACs. A SPAC is
typically a publicly traded company that raises funds through an IPO for the
purpose of acquiring or merging with another company to be identified subsequent
to the SPAC’s IPO. Because SPACs and similar entities are in essence blank check
companies without operating history or ongoing business other than seeking
acquisitions, the value of their securities is particularly dependent on the
ability of the entity’s management to identify and complete a profitable
acquisition. An investment in a SPAC is subject to a variety of risks, including
that (i) prior to any acquisition or merger, a SPAC’s assets are typically
invested in U.S. government securities, money market funds and similar
investments whose returns or yields may be significantly lower than those of the
Fund’s other investments; (ii) the Fund generally will not receive significant
income from its investments in SPACs (both prior to and after any acquisition or
merger) and, therefore, the Fund’s investments in SPACs will not significantly
contribute to the Fund’s distributions to shareholders; (iii) attractive
acquisition or merger targets may become scarce if the number of SPACs seeking
to acquire operating businesses increases; (iv) an attractive acquisition or
merger target may not be identified at all, in which case the SPAC will be
required to return any remaining monies to shareholders (unless such
shareholders approve alternative arrangements), and the Fund may be subject to
opportunity costs to the extent that alternative investments would have produced
higher returns; (v) if an acquisition or merger target is identified, the Fund
may elect not to participate in, or vote to approve, the proposed transaction or
the Fund may be required to divest its interests in the SPAC, due to regulatory
or other considerations, in which case the Fund may not reap any resulting
benefits; (vi) an acquisition or merger once effected may prove unsuccessful and
an investment in the SPAC may lose value; (vii) an investment in a SPAC may be
diluted by additional, later offerings of securities by the SPAC or by other
investors exercising existing rights to purchase securities of the SPAC; (viii)
a significant portion of the funds raised by the SPAC may be expended during the
search for a target acquisition or merger; (ix) only a thinly traded market for
shares of or interests in a SPAC may develop, or there may be no market at all,
leaving the Fund unable to sell its interest in a SPAC or to sell its interest
only at a lower price; and (x) the values of investments in SPACs may be highly
volatile and may depreciate significantly over time. In addition, the Fund may
obtain certain private rights and other interests issued by a SPAC (commonly
referred to as “founder shares”), which may be subject to forfeiture or expire
worthless and which generally have more limited liquidity than SPAC shares
issued in an IPO.
◼
Stock
Risk—Stock
prices have historically risen and fallen in periodic cycles. U.S. and
foreign stock markets have experienced periods of substantial price volatility
in the past and may do so again in the future. Stock prices may fluctuate from
time to time in response to the activities of individual companies and in
response to general market and economic conditions. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments, and the stock prices of such companies may suffer a decline in
response.
◼
U.S.
Government Securities Risk—The U.S.
government may not provide financial support to U.S. government agencies,
instrumentalities or sponsored enterprises if it is not obligated to do so by
law. U.S. government securities issued by those agencies, instrumentalities and
sponsored enterprises, including those issued by the Federal National Mortgage
Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie
Mac”) and the Federal Home Loan Banks, are neither issued nor guaranteed by the
U.S. Treasury and, therefore, are not backed by the full faith and credit of the
United States. The maximum potential liability of the issuers of some U.S.
government securities held by the Fund may greatly exceed their current
resources, including any legal right to support from the U.S. Treasury. It is
possible that issuers of U.S. government securities will not have the funds to
meet their payment obligations in the future. Fannie Mae and Freddie Mac have
been operating under conservatorship, with the Federal Housing Finance Agency
(“FHFA”) acting as their conservator, since September 2008. The entities are
dependent upon the continued support of the U.S. Department of the Treasury and
FHFA in order to continue their business operations. These factors, among
others, could affect the future status and role of Fannie Mae and Freddie Mac
and the value of their securities and the securities which they guarantee.
Additionally, the U.S. government and its agencies and instrumentalities do not
guarantee the market values of their securities, which may
fluctuate.
More
information about the Fund’s portfolio securities and investment techniques, and
its associated risks, is provided in Appendix A. You should consider the
investment risks discussed in this section and in Appendix A. Both are important
to your investment choice.
27
Service
Providers
|
INVESTMENT
ADVISER |
|
Investment
Adviser |
Fund |
|
Goldman
Sachs Asset Management, L.P. (“GSAM”)
200
West Street
New
York, NY 10282 |
Real
Estate Securities
Global
Real Estate Securities
Global
Infrastructure |
GSAM has
been registered as an investment adviser with the SEC since 1990 and is an
indirect, wholly-owned subsidiary of The Goldman Sachs Group, Inc. and an
affiliate of Goldman Sachs. Founded in 1869, The Goldman Sachs Group, Inc. is a
publicly-held financial holding company and a leading global investment banking,
securities and investment management firm. As of December 31, 2023, GSAM,
including its investment advisory affiliates, had assets under supervision of
approximately $2.54 trillion.
The
Investment Adviser provides day-to-day advice regarding the Fund’s portfolio
transactions. The Investment Adviser makes the investment decisions for the Fund
and places purchase and sale orders for the Fund’s portfolio transactions in
U.S. and foreign markets. As permitted by applicable law, these orders may be
directed to any executing brokers, dealers, futures commission merchants or
other counterparties, including Goldman Sachs and its affiliates. While the
Investment Adviser is ultimately responsible for the management of the Fund, it
is able to draw upon the research and expertise of its asset management
affiliates for portfolio decisions and management with respect to certain
portfolio securities. In addition, the Investment Adviser has access to the
research and certain proprietary technical models developed by Goldman Sachs
(subject to legal, internal, regulatory and Chinese Wall restrictions), and will
apply quantitative and qualitative analysis in determining the appropriate
allocations among categories of issuers and types of
securities.
The
Investment Adviser also performs the following additional services for the Funds
(to the extent not performed by others pursuant to agreements with the
Funds):
◼
Supervises
all non-advisory operations of the Fund
◼
Provides
personnel to perform necessary executive, administrative and clerical services
to the Fund
◼
Arranges
for the preparation of all required tax returns, reports to shareholders,
prospectuses and statements of additional information and other reports filed
with the SEC and other regulatory authorities
◼
Maintains
the records of the Fund
◼
Provides
office space and all necessary office equipment and services
An
investment in the Fund may be negatively impacted because of the operational
risks arising from factors such as processing errors and human errors,
inadequate or failed internal or external processes, failures in systems and
technology, changes in personnel, and errors caused by third-party service
providers or trading counterparties. The use of certain investment strategies
that involve manual or additional processing, such as over-the-counter
derivatives, increase these risks. Although the Fund attempts to minimize
such failures through controls and oversight, it is not possible to identify all
of the operational risks that may affect the Fund or to develop processes and
controls that completely eliminate or mitigate the occurrence of such failures.
The Fund and its shareholders could be negatively impacted as a
result.
From time
to time, Goldman Sachs or its affiliates may invest “seed” capital in the Fund.
These investments are generally intended to enable the Fund to commence
investment operations and achieve sufficient scale. Goldman Sachs and its
affiliates may hedge the exposure of the seed capital invested in the Fund by,
among other things, taking an offsetting position in the benchmark of the
Fund.
28
Service
Providers
|
MANAGEMENT
FEES AND OTHER EXPENSES |
As
compensation for its services and its assumption of certain expenses, the
Investment Adviser is entitled to the following fees, computed daily and payable
monthly, at the annual rates listed below (as a percentage of each respective
Fund’s average daily net assets):
|
Fund |
Contractual
Management
Fee
Annual
Rate |
Average
Daily
Net
Assets |
Actual
Rate
For
the Fiscal
Year
Ended
December
31, 2023* |
|
Real
Estate Securities |
0.87% |
First
$1 Billion |
0.84% |
|
|
0.78% |
Next
$1 Billion |
|
|
|
0.74% |
Next
$3 Billion |
|
|
|
0.73% |
Next
$3 Billion |
|
|
|
0.71% |
Over
$8 Billion |
|
|
Global
Real Estate Securities |
0.93% |
First
$1 Billion |
0.93% |
|
|
0.84% |
Next
$1 Billion |
|
|
|
0.80% |
Next
$3 billion |
|
|
|
0.78% |
Next
$3 Billion |
|
|
|
0.76% |
Over
$8 Billion |
|
|
Global
Infrastructure |
0.90% |
First
$1 Billion |
0.90% |
|
|
0.81% |
Next
$1 Billion |
|
|
|
0.77% |
Next
$3 Billion |
|
|
|
0.75% |
Next
$3 Billion |
|
|
|
0.74% |
Over
$8 Billion |
|
*
The
Actual Rate may not correlate to the Contractual Management Fee Annual Rate as a
result of management fee waivers that may be in effect from time to
time.
The
Investment Adviser has agreed to waive a portion of its management fee in order
to achieve an effective net management fee of 0.80% and 0.91% as an annual
percentage of the average daily net assets of the Real Estate Securities Fund
and Global Real Estate Securities Fund, respectively through at least April 29,
2025, and prior to such date, the Investment Adviser may not terminate the
arrangement without the approval of the Board of Trustees. These management
fee waivers may be modified or terminated by the Investment Adviser at its
discretion and without shareholder approval after such date, although the
Investment Adviser does not presently intend to do so.
In addition
to the management fee waivers described above, the Investment Adviser may waive
an additional portion of its management fee, including fees earned as the
Investment Adviser to any of the affiliated funds in which the Funds invest,
from time to time and may discontinue or modify any such waivers in the future,
consistent with the terms of any fee waiver arrangements in
place.
A
discussion regarding the basis for the Board of Trustees’ approval of the
Management Agreement for the Funds in 2023 is available in the Funds’
Semi-Annual reports dated June 30, 2023.
The
Investment Adviser has agreed to reduce or limit “Other Expenses” (excluding
acquired fund fees and expenses, transfer agency fees and expenses, service
fees, taxes, interest, brokerage fees, expenses of shareholder meetings,
litigation and indemnification, and extraordinary expenses) to 0.004%, 0.004%
and 0.034% of average daily net assets for the Real Estate Securities, Global
Real Estate Securities and Global Infrastructure Funds, respectively, through at
least April 29, 2025, and prior to such date the Investment Adviser may not
terminate the arrangements without the approval of the Board of Trustees. The
expense limitations may be modified or terminated by the Investment Adviser at
its discretion and without shareholder approval after such date, although the
Investment Adviser does not presently intend to do so. A Fund’s “Other Expenses”
may be further reduced by any custody and transfer agency fee credits received
by the Fund.
29
|
FUND
MANAGERS |
Real Estate
Securities Team
The
individuals jointly and primarily responsible for the day-to-day management of
the Funds are listed below. The Fund’s portfolio managers' individual
responsibilities may differ and may include, among other things, security
selection, asset allocation, risk budgeting and general oversight of the
management of the Funds’ portfolios.
|
Name
and Title |
Fund
Responsibility |
Years
Primarily
Responsible
|
Five
Year Employment History |
|
Timothy
Ryan, CFA
Managing
Director |
Portfolio
Manager—
Real
Estate Securities |
Since
2010 |
Mr.
Ryan joined the Investment Adviser in 2010. |
|
Frankie
Chun Wah Lee
Vice
President |
Portfolio
Manager—
Global
Real Estate
Securities |
Since
2015 |
Mr.
Lee joined the Investment Adviser as a portfolio manager
in
2010. |
|
Kristin
Kuney, CFA
Managing
Director |
Portfolio
Manager—
Real
Estate Securities
Global
Real Estate
Securities |
Since
2017
2021 |
Ms.
Kuney joined the Investment Adviser in 2000 and the
Real
Estate Team in 2004.
|
|
Abhinav
Zutshi, CFA
Vice
President |
Portfolio
Manager—
Real
Estate Securities |
Since
2023 |
Mr.
Zutshi joined the Investment Adviser in April
2009. |
Global Infrastructure
Team
The
individuals jointly and primarily responsible for the day-to-day management of
the Fund are listed below. The Fund’s portfolio managers’ individual
responsibilities may differ and may include, among other things, security
selection, asset allocation, risk budgeting and general oversight of the
management of the Fund’s portfolio.
|
Name
and Title |
Fund
Responsibility |
Years
Primarily
Responsible
|
Five
Year Employment History |
|
Kristin
Kuney, CFA
Managing
Director |
Portfolio
Manager—
Global
Infrastructure |
Since
2020
|
Ms.
Kuney joined the Investment Adviser in 2000. |
|
Abhinav
Zutshi, CFA
Vice
President |
Portfolio
Manager— Global
Infrastructure |
Since
2021
|
Mr.
Zutshi joined the Investment Adviser in April
2009. |
For
information about the portfolio managers’ compensation, other accounts managed
by the portfolio managers and the portfolio managers’ ownership of securities in
the Fund, see the SAI.
|
DISTRIBUTOR
AND TRANSFER AGENT |
Goldman
Sachs, 200 West Street, New York, NY 10282, serves as the exclusive distributor
(the “Distributor”) of the Fund’s shares. Goldman Sachs, 71 South Wacker Drive,
Suite 1200, Chicago, IL 60606, also serves as the Fund’s transfer agent (the
“Transfer Agent”) and, as such, performs various shareholder servicing
functions.
For its
transfer agency services, Goldman Sachs is entitled to receive a transfer agency
fee equal, on an annualized basis, to 0.03% of average daily net assets with
respect to Class P Shares.
From time
to time, Goldman Sachs or any of its affiliates may purchase and hold shares of
the Funds. Goldman Sachs and its affiliates reserve the right to redeem at any
time some or all of the shares acquired for their own accounts.
|
ACTIVITIES
OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER
ACCOUNTS
MANAGED BY GOLDMAN SACHS |
The
involvement of the Investment Adviser, Goldman Sachs and their affiliates in the
management of, or their interest in, other accounts and other activities of
Goldman Sachs will present conflicts of interest with respect to the Fund and
will, under certain circumstances, limit the Fund’s investment activities.
Goldman Sachs is a worldwide full service investment banking, broker dealer,
asset management and financial services organization and a major participant in
global financial markets that provides a wide range of financial services to a
substantial and diversified client base that includes corporations, financial
institutions, governments and individuals. As such, it acts as a broker-dealer,
investment adviser, investment banker, underwriter, research provider,
administrator, financier, adviser, market maker, trader, prime broker,
derivatives dealer, clearing agent, lender, counterparty, agent, principal,
distributor, investor or in other commercial capacities for accounts or
companies or affiliated or unaffiliated investment funds
30
Service
Providers
(including
pooled investment vehicles and private funds) in which one or more accounts,
including the Fund, invest. In those and other capacities, Goldman Sachs and its
affiliates advise and deal with clients and third parties in all markets and
transactions and purchase, sell, hold and recommend a broad array of
investments, including securities, derivatives, loans, commodities, currencies,
credit default swaps, indices, baskets and other financial instruments and
products for their own accounts or for the accounts of their customers and have
other direct and indirect interests in the global fixed income, currency,
commodity, equities, bank loans and other markets and the securities and issuers
in which the Fund may directly and indirectly invest. Thus, it is expected that
the Fund will have multiple business relationships with and will invest in,
engage in transactions with, make voting decisions with respect to, or obtain
services from entities for which Goldman Sachs and its affiliates perform or
seek to perform investment banking or other services. The Investment Adviser
and/or certain of its affiliates are the managers of the Goldman Sachs Funds.
The Investment Adviser and its affiliates earn fees from this and other
relationships with the Fund. Although management fees paid by the Fund to the
Investment Adviser and certain other fees paid to the Investment Adviser’s
affiliates are based on asset levels, the fees are not directly contingent on
Fund performance, and the Investment Adviser and its affiliates will still
receive significant compensation from the Fund even if shareholders lose money.
Goldman Sachs and its affiliates engage in proprietary trading and advise
accounts and funds which have investment objectives similar to those of the Fund
and/or which engage in and compete for transactions in the same types of
securities, currencies and instruments as the Fund. Goldman Sachs and its
affiliates will not have any obligation to make available any information
regarding their proprietary activities or strategies, or the activities or
strategies used for other accounts managed by them, for the benefit of the
management of the Fund. The results of the Fund’s investment activities,
therefore, will likely differ from those of Goldman Sachs, its affiliates, and
other accounts managed by Goldman Sachs, and it is possible that the Fund could
sustain losses during periods in which Goldman Sachs and its affiliates and
other accounts achieve significant profits on their trading for Goldman Sachs or
other accounts. In addition, the Fund may enter into transactions in which
Goldman Sachs and its affiliates or their other clients have an adverse
interest. For example, the Fund may take a long position in a security at the
same time that Goldman Sachs and its affiliates or other accounts managed by the
Fund’s Investment Adviser or its affiliates take a short position in the same
security (or vice versa). These and other transactions undertaken by Goldman
Sachs, its affiliates or Goldman Sachs-advised clients may, individually or in
the aggregate, adversely impact the Fund. Transactions by one or more Goldman
Sachs-advised clients or the Investment Adviser may have the effect of diluting
or otherwise disadvantaging the values, prices or investment strategies of the
Fund. The Fund’s activities will, under certain circumstances, be limited
because of regulatory restrictions applicable to Goldman Sachs and its
affiliates, and/or their internal policies designed to comply with such
restrictions. As a global financial services firm, Goldman Sachs and its
affiliates also provide a wide range of investment banking and financial
services to issuers of securities and investors in securities. Goldman Sachs,
its affiliates and others associated with it are expected to create markets or
specialize in, have positions in and/or effect transactions in, securities of
issuers held by the Fund, and will likely also perform or seek to perform
investment banking and financial services for one or more of those issuers.
Goldman Sachs and its affiliates are expected to have business relationships
with and purchase or distribute or sell services or products from or to
distributors, consultants or others who recommend the Fund or who engage in
transactions with or for the Fund. For more information about conflicts of
interest, see the section entitled “Potential Conflicts of Interest” in the
SAI.
The Fund
will, from time to time, make brokerage and other payments to Goldman Sachs and
its affiliates in connection with the Fund’s portfolio investment transactions,
in accordance with applicable law.
Under a
securities lending program approved by the Funds’ Board of Trustees, the Global
Real Estate Securities Fund has retained an affiliate of the Investment Adviser
to serve as a securities lending agent for the Fund to the extent that the Fund
engages in the securities lending program. For these services, the lending agent
would receive a fee from the Fund, including a fee based on the returns earned
on the Fund’s investment of the cash received as collateral for the loaned
securities. The Board of Trustees periodically reviews reports on portfolio
securities loan transactions for which the affiliated lending agent has acted as
lending agent. In addition, the Fund may make brokerage and other payments to
Goldman Sachs and its affiliates in connection with the Fund’s portfolio
investment transactions in accordance with applicable
law.
31
Distributions
The Fund
pays distributions from its investment income and from net realized capital
gains. You may choose to have distributions paid in:
◼
Cash
◼
Additional
shares of the same class of the same Fund
◼
Shares of
the same or an equivalent class of another fund managed by the Investment
Adviser and/or certain of its advisory affiliates (each, a “Goldman Sachs
Fund”). Special restrictions may apply. See the SAI.
You may
indicate your election on your account application. Any changes may be submitted
in writing or via telephone in some instances, to the Transfer Agent (either
directly or through your intermediary) at any time before the record date for a
particular distribution. If you do not indicate any choice, your distributions
will be reinvested automatically in the applicable Fund. In addition a
Fund may occasionally make a distribution at a time when it is not normally
made. If cash distributions are elected with respect to the Fund’s distributions
from net investment income, then cash distributions must also be elected with
respect to the net short-term capital gains component, if any, of the Fund’s
distributions.
The
election to reinvest distributions in additional shares will not affect the tax
treatment of such distributions, which will be treated as received by you and
then used to purchase the shares.
Distributions
from net investment income and distributions from net capital gains, if any, are
normally declared and paid as follows:
|
Fund |
Investment
Income
Dividends |
Capital
Gains
Distributions |
|
Real
Estate Securities |
Quarterly |
Annually |
|
Global
Real Estate Securities |
Quarterly |
Annually |
|
Global
Infrastructure |
Quarterly |
Annually |
From time
to time a portion of the Fund’s distributions may constitute a return of capital
for tax purposes, and/or may include amounts in excess of the Fund’s net
investment income for the period calculated in accordance with generally
accepted accounting principles (GAAP).
When you
purchase shares of the Fund, part of the NAV per share may be represented by
undistributed income and/or realized gains that have previously been earned by
the Fund. Therefore, subsequent distributions on such shares from such income
and/or realized gains may be taxable to you even if the NAV of the shares is, as
a result of the distributions, reduced below the cost of such shares and the
distributions (or portions thereof) represent a return of a portion of the
purchase price.
32
Shareholder
Guide
The
following section will provide you with answers to some of the most frequently
asked questions regarding buying and selling the Funds' shares.
|
Important
Notice: |
|
Class
P Shares generally are available to the following
investors: |
|
◼Clients
of the Goldman Sachs Private Wealth Management business unit (“GS PWM”)
that custody their positions at
Goldman
Sachs & Co. LLC (“Goldman Sachs”); |
|
◼Clients
of The Goldman Sachs Trust Company, N.A. or The Goldman Sachs Trust
Company of Delaware (collectively, the
“Trust
Companies”) that custody their positions at Goldman
Sachs; |
|
◼Clients
of The Ayco Company, L.P. (“Ayco”) that either custody their positions at
Goldman Sachs or with certain
intermediaries
that are authorized to offer Class P Shares (“Authorized Institutions”)
(such clients of GS PWM, the Trust
Companies,
and Ayco are collectively referred to herein as “GS Clients”);
or |
|
◼Other
investors at the discretion of Goldman Sachs Trust’s (the “Trust”)
officers. |
|
You
may only purchase Class P Shares in accordance with the eligibility
criteria described above. If you are a GS Client and
propose
to transfer your shares to another institution for any reason, or if you
are no longer a GS Client, you may be required to
redeem
your shares of the Fund, or at the discretion of the Trust’s officers, you
may be able hold Class P Shares through another
institution,
which must be an Authorized Institution and the basis on which you hold
such Class P Shares may be limited to hold
and
redeem only. If available in such circumstances, in the alternative you
may be able to choose to exchange your shares of the
Fund
for a different share class offered by the Fund or another Goldman Sachs
Fund, which may be offered in another
Prospectus.
There is no guarantee that a different share class offered by the Fund
will be available to clients of the institution to
which
you intend to transfer your shares or that an option to exchange will be
made available. Moreover, the shares you receive
in
any exchange are subject to different (and possibly higher) fees and
expenses (which affect performance). Information
regarding
these other share classes may be obtained from the institution to which
you intend to transfer your shares or from the
Transfer
Agent by calling the number on the back cover of the
Prospectus. |
|
A
redemption is a taxable transaction for federal income tax purposes, and
may also be subject to state and local taxes. You
should
consult your tax adviser concerning the potential tax consequences of
investing in Class P Shares. None of the Trust, the
Investment
Adviser, Goldman Sachs, the Trust Companies, Ayco or an Authorized
Institution will be responsible for any loss in
an
investor’s account or tax liability resulting from a redemption or
exchange of Class P Shares. For more information about
exchanges,
please see “How to Sell Shares—Can I Exchange My Investment From One
Goldman Sachs Fund To Another
Goldman
Sachs Fund.” |
|
How
to Buy Shares |
Shares
Offering
Shares of
the Fund are continuously offered through Goldman Sachs, acting in its capacity
as the Fund’s distributor (the “Distributor”). The Fund and the Distributor will
have the sole right to accept orders to purchase shares and reserve the right to
reject any purchase order in whole or in part.
How Can I Purchase
Shares Of The Fund?
If you are
a GS Client, you may purchase shares of the Fund through Goldman Sachs, the
Trust Companies, Ayco, or an Authorized Institution. Goldman Sachs, the Trust
Companies, Ayco, and Authorized Institutions have been authorized by the Trust
to accept purchase, redemption or exchange orders on behalf of the Fund for GS
Clients. In order to make an initial investment in the Fund you must furnish to
Goldman Sachs, the Trust Companies, Ayco or your Authorized Institution the
information in the account application.
To open an
account, contact Goldman Sachs, the Trust Companies, Ayco or your Authorized
Institution. Goldman Sachs, the Trust Companies, Ayco, and Authorized
Institutions will normally give order instructions on behalf of GS Clients to
Goldman Sachs, acting in its capacity as the Fund’s transfer agent (the
“Transfer Agent”). Goldman Sachs, the Trust Companies, Ayco, or your Authorized
Institution, as applicable, is responsible for transmitting accepted orders and
payments to the Transfer Agent within the time period agreed upon by them and
will set times by which orders and payments must be received by them from GS
Clients. The Trust, Transfer Agent, Investment Adviser and their affiliates will
not be responsible for any loss in connection with orders that are not
transmitted to the Transfer Agent on a timely basis.
33
The Fund
will be deemed to have received an order for purchase, redemption or exchange of
Fund shares when the order is accepted in “proper form” by any of the Transfer
Agent, Goldman Sachs, the Trust Companies, Ayco or an Authorized Institution, as
applicable, on a business day, and the order will be priced at the Fund’s
current NAV per share next determined after acceptance by any of the Transfer
Agent, Goldman Sachs, the Trust Companies, Ayco or an Authorized Institution, as
applicable. Proper form generally means that specific trade details and customer
identifying information must be received by the Transfer Agent at the time an
order is submitted. Goldman Sachs, the Trust Companies, Ayco and Authorized
Institutions may have different requirements regarding what constitutes proper
form for trade instructions. Please contact Goldman Sachs, the Trust Companies,
Ayco or your Authorized Institution for more information.
What Is My Minimum
Investment In The Fund?
No minimum
amount is required for initial purchases or additional investments in Class P
Shares.
What Should I Know
When I Purchase Shares?
All
recordkeeping, transaction processing and payments of distributions relating to
your account will be performed by Goldman Sachs, the Trust Companies, Ayco, or
your Authorized Institution, as applicable, and not by a Fund and its Transfer
Agent. Since the Fund will have no record of your transactions, you should
contact Goldman Sachs, the Trust Companies, Ayco, or your Authorized
Institution, as applicable, to purchase, redeem or exchange shares, to make
changes in or give instructions concerning your account or to obtain information
about your account. If you transfer your shares, the Trust reserves the right to
redeem your shares. The Trust, the Investment Adviser, Goldman Sachs, the Trust
Companies, Ayco and an Authorized Institution will not be responsible for any
loss in an investor’s account or tax liability resulting from a
redemption.
Goldman
Sachs, the Trust Companies, Ayco, and Authorized Institutions that invest in
shares on behalf of GS Clients may charge fees directly to the GS Clients’
accounts in connection with their investments. You should contact Goldman Sachs,
the Trust Companies, Ayco, or your Authorized Institution for information
regarding such charges, as these fees, if any, may affect the return that GS
Clients realize with respect to their investments.
The
Investment Adviser, Distributor and/or their affiliates may make payments or
provide services to Authorized Institutions to promote the sale, distribution
and/or servicing of shares of the Fund and other Goldman Sachs Funds. These
payments are made out of the Investment Adviser’s, Distributor’s and/or their
affiliates’ own assets, and are not an additional charge to the Fund. Such
payments are intended to compensate Authorized Institutions for, among other
things: marketing shares of the Fund and other Goldman Sachs Funds, which may
consist of payments relating to the Fund’s inclusion on preferred or recommended
fund lists or in certain sales programs sponsored by Authorized Institutions;
access to Authorized Institutions’ registered representatives, advisors or
salespersons, including at conferences and other meetings; assistance in
training and education of personnel; marketing support; the provision of
analytical or other data to the Investment Adviser or its affiliates relating to
sales of shares of the Funds and other Goldman Sachs Funds; the support or
purchase of technology platforms/software; and/or other specified services
intended to assist in the distribution and marketing of the Fund and other
Goldman Sachs Funds, including provision of consultative services to the
Investment Adviser or its affiliates relating to marketing and/or sale of shares
of the Fund and other Goldman Sachs Funds. The payments may also, to the extent
permitted by applicable regulations, sponsor various trainings and educational
programs. The payments by the Investment Adviser, Distributor and/or their
affiliates, which are in addition to the fees paid for these services by the
Fund, may also compensate Authorized Institutions for subaccounting,
sub-transfer agency, administrative and/or shareholder processing services.
These additional payments may exceed amounts earned on these assets by the
Investment Adviser, Distributor and/or their affiliates for the performance of
these or similar services. The amount of these additional payments is normally
not expected to exceed 0.50% (annualized) of the amount sold or invested through
Authorized Institutions. In addition, certain Authorized Institutions may have
access to certain services from the Investment Adviser, Distributor and/or their
affiliates, including research reports, economic analysis, and portfolio
analysis, portfolio construction and similar tools and software. In certain
cases, Authorized Institutions may not pay for these products or services or may
only pay for a portion of the total cost of these products or services. Please
refer to the “Payments to Others (Including Intermediaries)” section of the SAI
for more information about these payments and services.
The
payments made by the Investment Adviser, Distributor and/or their affiliates and
the services provided by each of Goldman Sachs, the Trust Companies, Ayco, or an
Authorized Institution may differ. The presence of these payments, receipt of
these services and the basis on which Goldman Sachs, the Trust Companies, Ayco,
or an Authorized Institution compensates its registered representatives,
advisors or salespersons may create an incentive for a particular registered
representative, advisor or salesperson to highlight, feature or recommend the
Fund based, at least in part, on the level of compensation paid. You should
contact Goldman Sachs, the Trust Companies, Ayco, or your Authorized Institution
for more information about the payments it receives and any potential conflicts
of interest.
34
Shareholder
Guide
What Else Should I
Know About Share Purchases?
The Trust
reserves the right to:
◼
Require
Goldman Sachs, the Trust Companies, Ayco, or an Authorized Institution to refuse
to open an account if you fail to (i) provide a taxpayer identification number,
a Social Security Number or other government-issued identification (e.g., for an
individual, a driver’s license or passport) or (ii) certify that such number or
other information is correct (if required to do so under applicable
law).
◼
Reject or
restrict any purchase or exchange order by a particular purchaser (or group of
related purchasers) for any reason in its discretion. Without limiting the
foregoing, the Trust may reject or restrict purchase and exchange orders by a
particular purchaser (or group of related purchasers) when a pattern of frequent
purchases, sales or exchanges of shares of the Fund is evident, or if purchases,
sales or exchanges are, or a subsequent redemption might be, of a size that
would disrupt the management of the Fund.
◼
Close the
Fund to new investors from time to time and reopen any such Fund whenever it is
deemed appropriate by the Investment Adviser.
◼
Provide
for, modify or waive the minimum investment requirements.
◼
Modify the
manner in which shares are offered.
◼
Modify the
sales charge rate applicable to future purchases of shares.
Shares of
the Fund are only registered for sale in the United States and certain of its
territories. Generally, shares of the Fund will only be offered or sold to “U.S.
persons” and all offerings or other solicitation activities will be conducted
within the United States, in accordance with the rules and regulations of the
Securities Act of 1933, as amended (“Securities Act”).
The Fund
may allow you to purchase shares through Goldman Sachs, the Trust Companies,
Ayco or an Authorized Institution with securities instead of cash if consistent
with the Fund’s investment policies and operations and approved by the
Investment Adviser.
Notwithstanding
the foregoing, the Trust, Goldman Sachs, the Trust Companies, Ayco and any
Authorized Institution reserve the right to reject or restrict purchase or
exchange requests from any investor. The Trust, Goldman Sachs, the Trust
Companies and Ayco will not be liable for any loss resulting from rejected
purchase or exchange orders.
Please be
advised that abandoned or unclaimed property laws for certain states (to which
your account may be subject) require financial organizations to transfer
(escheat) unclaimed property (including shares of the Fund) to the appropriate
state if no activity occurs in an account for a period of time specified by
state law. For IRA accounts escheated to a state under these abandoned property
laws, the escheatment will generally be treated as a taxable distribution to
you; federal and any applicable state income tax will be withheld. This may
apply to your Roth IRA as well.
Customer
Identification Program. Federal
law requires the Fund to obtain, verify and record identifying information for
certain investors, which will be reviewed solely for customer identification
purposes, which may include the name, residential or business street address,
date of birth (for an individual), Social Security Number or taxpayer
identification number or other information, for each investor who opens an
account directly with the Fund. Applications without the required information
may not be accepted by the Fund. Throughout the life of your account, the Fund
may request updated identifying information in accordance with their Customer
Identification Program. After accepting an application, to the extent permitted
by applicable law or their Customer Identification Program, the Fund reserves
the right to: (i) place limits on transactions in any account until the identity
of the investor is verified; (ii) refuse an investment in the Fund; or (iii)
involuntarily redeem an investor’s shares and close an account in the event that
the Fund is unable to verify an investor’s identity or are unable to obtain all
required information. The Fund and its agents will not be responsible for any
loss or tax liability in an investor’s account resulting from the investor’s
delay in providing all required information or from closing an account and
redeeming an investor’s shares pursuant to their Customer Identification
Program.
How Are Shares
Priced?
The price
you pay when you buy shares is the Fund’s next-determined NAV per share after
any of the Transfer Agent, Goldman Sachs, the Trust Companies, Ayco or an
Authorized Institution, as applicable, has received and accepted your order in
proper form. The price you receive when you sell shares is the Fund’s
next-determined NAV per share after any of the Transfer Agent, Goldman Sachs,
the Trust Companies, Ayco or an Authorized Institution, as applicable, has
received and accepted your order in proper form. Each class generally calculates
its NAV as follows:
|
NAV
= |
(Value
of Assets of the Class)
–
(Liabilities of the Class) |
|
|
Number
of Outstanding Shares of the
Class |
The Fund’s
investments for which market quotations are readily available are valued at
market value on the basis of quotations provided by pricing sources. If accurate
quotations are not readily available, if the Fund’s fund accounting agent is
unable for other reasons to facilitate pricing of individual securities or
calculate the Fund’s NAV, or if the Investment Adviser believes that such
quotations do not accurately reflect fair value, the fair value of the Fund’s
investments may be determined in good faith under valuation
35
procedures
approved by the Board of Trustees. Thus, such pricing may be based on subjective
judgments and it is possible that the prices resulting from such valuation
procedures may differ materially from the value realized on a sale. Cases where
there is no clear indication of the value of the Fund’s investments include,
among others, situations where a security or other asset or liability does not
have a price source or a price is unavailable.
Equity
securities listed on an exchange are generally valued at the last available sale
price on the exchange on which they are principally traded. To the extent the
Fund invests in foreign equity securities, “fair value” prices will be provided
by an independent third-party pricing (fair value) service in accordance with
the fair value procedures approved by the Board of Trustees. Fair value prices
are used because many foreign markets operate at times that do not coincide with
those of the major U.S. markets. Events that could affect the values of foreign
portfolio holdings may occur between the close of the foreign market and the
time of determining the NAV, and would not otherwise be reflected in the
NAV.
Fixed
income securities are generally valued on the basis of prices (including
evaluated prices) and quotations provided by pricing services or securities
dealers. Pricing services may use matrix pricing or valuation models, which
utilize certain inputs and assumptions, including, but not limited to, yield or
price with respect to comparable fixed income securities, to determine current
value. Pricing services generally value fixed income securities assuming orderly
transactions of an institutional round lot size, but the Fund may hold or
transact in such securities in smaller odd lot sizes. Odd lots may trade at
lower prices than institutional round lots.
Investments
in other open-end registered investment companies (if any), excluding
investments in ETFs, are valued based on the NAV of those open-end registered
investment companies (which may use fair value pricing as discussed in their
prospectuses). Investments in ETFs will generally be valued at the last sale
price or official closing price on the exchange on which they are principally
traded.
In
addition, the Investment Adviser, consistent with its procedures and applicable
regulatory guidance, may (but need not) determine to make an adjustment to the
previous closing prices of either domestic or foreign securities in light of
significant events, to reflect what it believes to be the fair value of the
securities at the time of determining the Fund’s NAV. Significant events that
could affect a large number of securities in a particular market may include,
but are not limited to: situations relating to one or more single issuers in a
market sector; significant fluctuations in U.S. or foreign markets; market
dislocations; market disruptions or unscheduled market closings; equipment
failures; natural or man-made disasters or acts of God; armed conflicts;
governmental actions or other developments; as well as the same or similar
events which may affect specific issuers or the securities markets even though
not tied directly to the securities markets. Other significant events that could
relate to a single issuer may include, but are not limited to: corporate actions
such as reorganizations, mergers and buy-outs; corporate announcements,
including those relating to earnings, products and regulatory news; significant
litigation; ratings downgrades; bankruptcies; and trading limits or
suspensions.
One effect
of using an independent third-party pricing (fair value) service and fair
valuation may be to reduce stale pricing arbitrage opportunities presented by
the pricing of Fund shares. However, it involves the risk that the values used
by the Fund to price its investments may be different from those used by other
investment companies and investors to price the same
investments.
Please note
the following with respect to the price at which your transactions are
processed:
◼
NAV per
share of each share class is generally calculated by the Fund’s fund accounting
agent on each business day as of the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m. Eastern time) or such other times as the New
York Stock Exchange or NASDAQ market may officially close. Fund shares will
generally not be priced on any day the New York Stock Exchange is
closed.
◼
The Trust
reserves the right to reprocess purchase (including dividend reinvestments),
redemption and exchange transactions that were processed at a NAV that is
subsequently adjusted, and to recover amounts from (or distribute amounts to)
shareholders accordingly based on the official closing NAV, as
adjusted.
◼
The Trust
reserves the right to advance the time by which purchase and redemption orders
must be received for same business day credit as otherwise permitted by the
SEC.
Consistent
with industry practice, investment transactions not settling on the same day are
recorded and factored into the Fund’s NAV on the business day following trade
date (T+1). The use of T+1 accounting generally does not, but may, result in a
NAV that differs materially from the NAV that would result if all transactions
were reflected on their trade dates.
Note:
The time at which transactions and shares are priced and the time by which
orders must be received may be changed in case of an emergency or if regular
trading on the New York Stock Exchange is stopped at a time other than its
regularly scheduled closing time. In the event the New York Stock Exchange does
not open for business, the Trust may, but is not required to, open one or more
Funds for purchase, redemption and exchange transactions if the Federal Reserve
wire payment system is open. To learn whether the Fund is open for business
during this situation, please call the appropriate phone number located on the
back cover of the Prospectus.
Foreign
securities may trade in their local markets on days the Fund is closed. As a
result, if the Fund holds foreign securities, its NAV may be impacted on days
when investors may not purchase or redeem Fund shares.
36
Shareholder
Guide
The Fund
relies on various sources to calculate its NAV. The ability of the Fund’s fund
accounting agent to calculate the NAV per share of each share class of the Fund
is subject to operational risks associated with processing or human errors,
systems or technology failures, cyber attacks, and errors caused by third party
service providers, data sources, or trading counterparties. Such failures may
result in delays in the calculation of the Fund’s NAV and/or the inability to
calculate NAV over extended time periods. The Fund may be unable to recover any
losses associated with such failures. In addition, if the third party service
providers and/or data sources upon which the Fund directly or indirectly relies
to calculate its NAV or price individual securities are unavailable or otherwise
unable to calculate the NAV correctly, it may be necessary for alternative
procedures to be utilized to price the securities at the time of determining the
Fund’s NAV.
|
How
to Sell Shares |
How Can I Sell Shares
Of The Fund?
Generally,
shares may be sold (redeemed) only through Goldman Sachs, the Trust Companies,
Ayco, or an Authorized Institution. Goldman Sachs, the Trust Companies, Ayco and
Authorized Institutions will normally give redemption instructions on behalf of
GS Clients to the Transfer Agent. On any business day the Fund is open, the Fund
will generally redeem its shares upon request at their next-determined NAV per
share after any of the Transfer Agent, Goldman Sachs, the Trust Companies, Ayco
or an Authorized Institution, as applicable, has received and accepted a
redemption order in proper form, as described under “How To Buy Shares—How Can I
Purchase Shares Of The Fund?” above. Redemptions may be requested by electronic
trading platform, in writing or by telephone (unless Goldman Sachs, the Trust
Companies, Ayco, or an Authorized Institution opts out of the telephone
redemption privilege on the account application). You should contact Goldman
Sachs, the Trust Companies, Ayco or your Authorized Institution, to discuss
redemptions and redemption proceeds. The Fund may transfer redemption proceeds
to an account with Goldman Sachs, the Trust Companies, Ayco, or your Authorized
Institution. In the alternative, Goldman Sachs, the Trust Companies, Ayco, or
your Authorized Institution may request that redemption proceeds be sent to you
by check or wire (if the wire instructions are designated in the current records
of the Transfer Agent).
When Do I Need A
Medallion Signature Guarantee To Redeem Shares?
Generally,
a redemption request must be in writing and signed by an authorized person with
a Medallion signature guarantee if:
◼
You would
like the redemption proceeds sent to an address that is not your address of
record; or
◼
You would
like the redemption proceeds sent to a domestic bank account that is not
designated in the current records of the Transfer Agent.
A Medallion
signature guarantee must be obtained from a bank, brokerage firm or other
financial intermediary that is a member of an approved Medallion Guarantee
Program or that is otherwise approved by the Trust. A notary public cannot
provide a Medallion signature guarantee. The written request may be confirmed by
telephone with both the requesting party and the designated Authorized
Institution to verify instructions. Additional documentation may be
required.
What Do I Need To
Know About Telephone Redemption Requests?
The Trust
and Goldman Sachs will not be liable for any loss or tax liability you may incur
in the event that the Trust accepts unauthorized telephone redemption requests
that the Trust reasonably believes to be genuine. The Trust may accept telephone
redemption instructions from any person identifying himself or herself as the
owner of an account or the owner’s registered representative where the owner has
not declined in writing to use this service. Goldman Sachs, the Trust Companies,
Ayco, or your Authorized Institution may submit redemption requests by telephone
on your behalf. Thus, you risk possible losses if a telephone redemption is not
authorized by you.
In an
effort to prevent unauthorized or fraudulent redemption and exchange requests by
telephone, Goldman Sachs and SS&C Global Investor & Distribution
Solutions, Inc. (“SS&C”) each employ reasonable procedures specified by the
Trust to confirm that such instructions are genuine. The following general
policies are currently in effect:
◼
Telephone
requests are recorded.
◼
Proceeds of
telephone redemption requests will be sent to your address of record or
authorized account designated in the current records of the Transfer Agent
(unless you provide written instructions and a Medallion signature guarantee
indicating another address or account).
◼
For the
30-day period following a change of address, telephone redemptions will only be
filled by a wire transfer to the authorized account designated in the current
records of the Transfer Agent (see immediately preceding bullet point). In order
to receive the redemption by check during this time period, the redemption
request must be in the form of a written, Medallion signature guaranteed
letter.
◼
The
telephone redemption option does not apply to shares held in an account
maintained and serviced by your Authorized Institution. If your shares are held
in an account with an Authorized Institution, you should contact your registered
representative of record, who may make telephone redemptions on your
behalf.
37
◼
The
telephone redemption option may be modified or terminated at any time without
prior notice.
Note:
It may be difficult to make telephone redemptions in times of unusual economic
or market conditions.
How Are Redemption
Proceeds Paid?
By
Wire: You may
arrange for your redemption proceeds to be paid as federal funds to an account
with Goldman Sachs, the Trust Companies, Ayco, or your Authorized Institution or
to a domestic bank account designated in the current records of the Transfer
Agent. In addition, redemption proceeds may be transmitted through an electronic
trading platform to an account with Goldman Sachs, the Trust Companies, Ayco, or
your Authorized Institution. The following general policies govern wiring
redemption proceeds:
◼
Redemption
proceeds will normally be paid in federal funds, between one and two business
days (or such other times in accordance with the requirements of Goldman Sachs,
the Trust Companies, Ayco, or your Authorized Institution) following receipt of
a properly executed wire transfer redemption request. In certain circumstances,
however (such as unusual market conditions or in cases of very large redemptions
or excessive trading), it may take up to seven days to pay redemption
proceeds.
◼
Redemption
requests may only be postponed or suspended for longer than seven days as
permitted under Section 22(e) of the Investment Company Act of 1940 (the
“Investment Company Act”) if (i) the New York Stock Exchange is closed for
trading or trading is restricted; (ii) an emergency exists which makes the
disposal of securities owned by the Fund or the fair determination of the value
of the Fund’s net assets not reasonably practicable; or (iii) the SEC, by order
or regulation, permits the suspension of the right of
redemption.
◼
If you are
selling shares you recently paid for by check, the Fund will pay you when your
check has cleared, which may take up to 15 days.
◼
If the
Federal Reserve Bank is closed on the day that the redemption proceeds would
ordinarily be wired, wiring the redemption proceeds may be delayed until the
Federal Reserve Bank reopens.
◼
To change
the bank wiring instructions designated in the current records of the Transfer
Agent, you must send written instructions signed by an authorized person
designated in the current records of the Transfer Agent. A Medallion signature
guarantee may be required if you are requesting a redemption in conjunction with
the change.
◼
None of the
Trust, the Investment Adviser or the Transfer Agent assumes any responsibility
for the performance of your bank, Goldman Sachs, the Trust Companies, Ayco, or
Authorized Institution in the transfer process. If a problem with such
performance arises, you should deal directly with your bank, Goldman Sachs, the
Trust Companies, Ayco, or Authorized Institution.
By
Check: You may
elect to receive your redemption proceeds by check. Redemption proceeds paid by
check will normally be mailed to the address of record within two business days
(or such other times in accordance with the requirements of your Authorized
Institution) following receipt of a properly executed redemption request, except
in certain circumstances (such as those set forth above with respect to wire
transfer redemption requests). If you are selling shares you recently paid for
by check, the Fund will pay you when your check has cleared, which may take up
to 15 days.
What Else Do I Need
To Know About Redemptions?
The
following generally applies to redemption requests:
◼
Additional
documentation may be required when deemed appropriate by the Transfer Agent. A
redemption request will not be in proper form until such additional
documentation has been received.
◼
Goldman
Sachs, the Trust Companies, Ayco and Authorized Institutions are responsible for
the timely transmittal of redemption requests by GS Clients to the Transfer
Agent. In order to facilitate the timely transmittal of redemption requests,
Goldman Sachs, the Trust Companies, Ayco and Authorized Institutions may set
times by which they must receive redemption requests. Goldman Sachs, the Trust
Companies, Ayco or Authorized Institutions may also require additional
documentation from you.
◼
As
disclosed above, if you are a GS Client and propose to transfer your shares to
another institution for any reason, you may be required to either redeem your
shares of a Fund or if available, you may be able to choose to exchange
your shares of a Fund for a different share class offered by the Fund,
which may be offered in another Prospectus.
The Trust
reserves the right to:
◼
Redeem your
shares in the event any of Goldman Sachs, the Trust Companies, Ayco or your
Authorized Institution is no longer authorized to offer Class P
Shares.
◼
Redeem your
shares in the case of actual or suspected threatening conduct or actual or
suspected fraudulent, suspicious or illegal activity by you or any other
individual associated with your account.
◼
Subject to
applicable law, redeem your shares in other circumstances determined by the
Board of Trustees to be in the best interest of the Trust.
◼
Pay
redemptions by a distribution in-kind of securities (instead of cash). If you
receive redemption proceeds in-kind, you should expect to incur transaction
costs upon the disposition of those securities. In addition, if you receive
redemption proceeds in-kind, you will be subject to market gains or losses upon
the disposition of those securities.
38
Shareholder
Guide
◼
Reinvest
any amounts (e.g., dividends, distributions or redemption proceeds) which you
have elected to receive by check should your check remain uncashed for more than
180 days. No interest will accrue on amounts represented by uncashed checks.
Your check will be reinvested in your account at the NAV on the day of the
reinvestment. When reinvested, those amounts are subject to the risk of loss
like any Fund investment. If you elect to receive distributions in cash and a
check remains uncashed for more than 180 days, your cash election may be changed
automatically to reinvest and your future dividend and capital gains
distributions will be reinvested in the Fund at the NAV as of the date of
payment of the distribution. This provision may not apply to certain retirement
or qualified accounts, accounts with a non-U.S. address or closed accounts. Your
participation in a systematic withdrawal program may be terminated if a check
remains uncashed.
◼
Charge an
additional fee in the event a redemption is made via wire
transfer.
◼
Terminate
your account if you are no longer a GS Client, or otherwise no longer eligible
to invest in Class P Shares of the Funds.
The Fund
typically expects to meet redemption requests by using holdings of cash or cash
equivalents and/or proceeds from the sale of portfolio holdings. In addition,
under stressed market conditions, as well as for other temporary or emergency
purposes, the Fund may distribute redemption proceeds in-kind (instead of cash),
access a line of credit or overdraft facility, or borrow through other sources
to meet redemption requests.
None of the
Trust, the Investment Adviser, Goldman Sachs, the Trust Companies, Ayco or an
Authorized Institution will be responsible for any loss in an investor’s account
or tax liability resulting from an involuntary redemption.
Can I Exchange My
Investment From One Goldman Sachs Fund To Another Goldman Sachs
Fund?
You may
exchange your shares at NAV at the time of exchange for Class P Shares of
another Goldman Sachs Fund. The exchange privilege may be materially modified or
withdrawn at any time upon 60 days’ written notice. You should contact Goldman
Sachs, the Trust Companies, Ayco or your Authorized Institution to arrange for
the exchange of your shares for Class P Shares of another Goldman Sachs Fund. If
you propose to transfer your Class P Shares to another institution for any
reason, you may be required to either redeem your shares of the Fund or if
available, you may be able to choose to exchange your shares of the Fund for a
different share class offered by the Fund or another Goldman Sachs Fund, which
may be offered in another Prospectus. For more information, please see “How to
Sell Shares—What Else Do I Need to Know About Redemptions?” The shares you
receive in any exchange are subject to different (and possibly higher) fees and
expenses (which affect performance).
You should
keep in mind the following factors when making or considering an
exchange:
◼
You should
obtain and carefully read the prospectus of the Goldman Sachs Fund you are
acquiring before making an exchange. You should be aware that not all Goldman
Sachs Funds may offer all share classes.
◼
Currently,
the Fund does not impose any charge for exchanges, although the Fund may impose
a charge in the future.
◼
All
exchanges which represent an initial investment in a Goldman Sachs Fund must
satisfy the minimum initial investment requirement of that Fund. This
requirement may be waived at the discretion of the Trust. Exchanges into a
Goldman Sachs Fund need not meet the traditional minimum investment requirement
for that Fund if the entire balance of the original Fund account is
exchanged.
◼
Exchanges
are available only in states where exchanges may be legally
made.
◼
It may be
difficult to make telephone exchanges in times of unusual economic or market
conditions.
◼
Goldman
Sachs and SS&C may use reasonable procedures described above in “How To Sell
Shares—What Do I Need To Know About Telephone Redemption Requests?” in an effort
to prevent unauthorized or fraudulent telephone exchange
requests.
◼
Normally, a
telephone exchange will be made only to an identically registered
account.
◼
Exchanges
into Goldman Sachs Funds or certain share classes of Goldman Sachs Funds that
are closed to new investors may be restricted.
For federal
income tax purposes, an exchange from one Goldman Sachs Fund to another is
treated as a redemption of the shares surrendered in the exchange, on which you
may be subject to tax, followed by a purchase of shares received in the
exchange. You should consult your tax adviser concerning the tax consequences of
an exchange.
|
Shareholder
Services |
Can My Distributions
From The Fund Be Invested In Other Goldman Sachs Funds?
You may
elect to cross-reinvest distributions paid by a Goldman Sachs Fund in shares of
the same class of other Goldman Sachs Funds.
◼
Shares will
be purchased at NAV.
◼
You may
elect cross-reinvestment into an identically registered account or a similarly
registered account provided that at least one name on the account is registered
identically.
39
◼
You cannot
make cross-reinvestments into a Goldman Sachs Fund unless that Fund’s minimum
initial investment requirement is met.
◼
You should
obtain and read the prospectus of the Goldman Sachs Fund into which
distributions are invested.
What Types Of Reports
Will I Be Sent Regarding My Investment?
Each of
Goldman Sachs, the Trust Companies, Ayco or an Authorized Institution is
responsible for providing any communication from the Fund to shareholders,
including but not limited to, prospectuses, prospectus supplements, proxy
materials and notices regarding the source of dividend payments under Section 19
of the Investment Company Act. They may charge additional fees not described in
the Prospectus to GS Clients for such services.
Goldman
Sachs, the Trust Companies, Ayco or an Authorized Institution will provide you
with a printed confirmation of each transaction in your account and a monthly
account statement.
You will
also receive an annual shareholder report containing audited financial
statements and a semi-annual shareholder report. If you have consented to the
delivery of a single copy of shareholder reports, prospectuses and other
information to all shareholders who share the same mailing address with your
account, you may revoke your consent at any time by contacting Goldman Sachs,
the Trust Companies, Ayco or your Authorized Institution. The Fund will begin
sending individual copies to you within 30 days after receipt of your
revocation.
|
Restrictions
on Excessive Trading
Practices |
Policies
and Procedures on Excessive Trading Practices. In
accordance with the policy adopted by the Board of Trustees, the Trust
discourages frequent purchases and redemptions of Fund shares and does not
permit market timing or other excessive trading practices. Purchases and
exchanges should be made with a view to longer-term investment purposes only
that are consistent with the investment policies and practices of the respective
Fund. Excessive, short-term (market timing) trading practices may disrupt
portfolio management strategies, increase brokerage and administrative costs,
harm Fund performance and result in dilution in the value of Fund shares held by
longer-term shareholders. The Trust and Goldman Sachs reserve the right to
reject or restrict purchase or exchange requests from any investor. The Trust
and Goldman Sachs will not be liable for any loss resulting from rejected
purchase or exchange orders. To minimize harm to the Trust and its shareholders
(or Goldman Sachs), the Trust (or Goldman Sachs) will exercise this right if, in
the Trust’s (or Goldman Sachs’) judgment, an investor has a history of excessive
trading or if an investor’s trading, in the judgment of the Trust (or Goldman
Sachs), has been or may be disruptive to the Fund. In making this judgment,
trades executed in multiple accounts under common ownership or control may be
considered together to the extent they can be identified. No waivers of the
provisions of the policy established to detect and deter market timing and other
excessive trading activity are permitted that would harm the Trust or its
shareholders or would subordinate the interests of the Trust or its shareholders
to those of Goldman Sachs or any affiliated person or associated person of
Goldman Sachs.
As a
deterrent to excessive trading, many foreign equity securities held by the
Goldman Sachs Funds are priced by an independent pricing service using fair
valuation. For more information on fair valuation, please see “How To Buy
Shares—How Are Shares Priced?”
Pursuant to
the policy adopted by the Board of Trustees of the Trust, Goldman Sachs has
developed criteria that it uses to identify trading activity that may be
excessive. Excessive trading activity in the Fund is measured by the number of
“round trip” transactions in a shareholder’s account. A “round trip” includes a
purchase or exchange into the Fund followed or preceded by a redemption or
exchange out of the same Fund. If the Fund detects that a shareholder has
completed two or more round trip transactions in a single Fund within a rolling
90-day period, the Fund may reject or restrict subsequent purchase or exchange
orders by that shareholder permanently. In addition, the Fund may, in its sole
discretion, permanently reject or restrict purchase or exchange orders by a
shareholder if the Fund detects other trading activity that is deemed to be
disruptive to the management of the Fund or otherwise harmful to the Fund. For
purposes of these transaction surveillance procedures, the Fund may consider
trading activity in multiple accounts under common ownership, control, or
influence. A shareholder that has been restricted from participation in the Fund
pursuant to this policy will be allowed to apply for re-entry after one year. A
shareholder applying for re-entry must provide assurances acceptable to the Fund
that the shareholder will not engage in excessive trading activities in the
future.
Goldman
Sachs may modify its surveillance procedures and criteria from time to time
without prior notice regarding the detection of excessive trading or to address
specific circumstances. Goldman Sachs will apply the criteria in a manner that,
in Goldman Sachs’ judgment, will be uniform.
Fund shares
may be held through omnibus arrangements maintained by Goldman Sachs, the Trust
Companies, Ayco or Authorized Institutions. Omnibus accounts include multiple
investors and such accounts typically provide the Fund with a net purchase or
redemption request on any given day where the purchases and redemptions of Fund
shares by the investors are netted against one another. The identity of
individual investors whose purchase and redemption orders are aggregated are
ordinarily not tracked by the Fund on a regular basis. Goldman Sachs, the Trust
Companies, Ayco or an Authorized Institution may not have the capability or may
40
Shareholder
Guide
not be
willing to apply the Fund’s market timing policies. While Goldman Sachs, the
Trust Companies and Ayco may monitor share turnover at the omnibus account
level, the Fund’s ability to monitor and detect market timing by shareholders in
these omnibus accounts may be limited in certain circumstances, and certain
Authorized Institutions may charge the Fund a fee for providing certain
shareholder financial information requested as part of the Fund’s surveillance
process. The netting effect makes it more difficult to identify, locate and
eliminate market timing activities. In addition, those investors who engage in
market timing and other excessive trading activities may employ a variety of
techniques to avoid detection. There can be no assurance that the Fund, Goldman
Sachs, the Trust Companies and Ayco will be able to identify all those who trade
excessively or employ a market timing strategy, and curtail their trading in
every instance. If necessary, the Trust may prohibit additional purchases of
Fund shares by an Authorized Institution or by certain clients of the Authorized
Institution. Authorized Institutions may also monitor trading activities by
their clients in the Fund. The criteria used by Authorized Institutions to
monitor for excessive trading may differ from the criteria used by the Fund. If
an Authorized Institution fails to cooperate in the implementation or
enforcement of the Trust’s excessive trading policies, the Trust may take
certain actions including terminating the relationship.
41
Taxation
As with any
investment, you should consider how your investment in the Fund will be taxed.
The tax information below is provided as general information. More tax
information is available in the SAI. You should consult your tax adviser about
the federal, state, local or foreign tax consequences of your investment in the
Fund. Except as otherwise noted, the tax information provided assumes that you
are a U.S. citizen or resident.
Unless your
investment is through an IRA or other tax-advantaged account, you should
carefully consider the possible tax consequences of Fund distributions and
the sale of your Fund shares.
|
DISTRIBUTIONS |
The Fund
contemplates declaring as dividends each year all or substantially all of its
taxable income. Distributions you receive from the Fund are generally
subject to federal income tax, and may also be subject to state or local taxes.
This is true whether you reinvest your distributions in additional Fund shares
or receive them in cash. For federal tax purposes, the Funds' distributions
attributable to net investment income and short-term capital gains are taxable
to you as ordinary income, while distributions of long-term capital gains are
taxable to you as long-term capital gains, no matter how long you have owned
your Fund shares.
Under
current provisions of the Code, the maximum individual rate applicable to
long-term capital gains is generally either 15% or 20%, depending on whether the
individual's income exceeds certain threshold amounts. Fund distributions to
noncorporate shareholders attributable to dividends received by the Funds from
U.S. and certain foreign corporations will generally be taxed at the
preferential rate described above, as long as certain other requirements are
met. For these lower rates to apply, the non-corporate shareholder must own
their relevant Fund shares for at least 61 days during the 121-day period
beginning 60 days before a Fund’s ex-dividend date. The amount of a Fund’s
distributions that would otherwise qualify for this favorable tax treatment will
be reduced as a result of a Fund’s securities lending activities or high
portfolio turnover rate.
Distributions
in excess of a Fund’s current and accumulated earnings and profits are treated
as a tax-free return of your investment to the extent of your basis in the
shares, and generally as capital gain thereafter. A return of capital, which for
tax purposes is treated as a return of your investment, reduces your basis in
shares, thus reducing any loss or increasing any gain on a subsequent taxable
disposition of shares. A distribution will reduce the Fund’s NAV per share and
may be taxable to you as ordinary income or capital gain even though, from an
economic standpoint, the distribution may constitute a return of
capital.
An
additional 3.8% Medicare tax is imposed on certain net investment income
(including ordinary dividends and capital gain distributions received from the
Fund and net gains from redemptions or other taxable dispositions of Fund
shares) of U.S. individuals, estates and trusts to the extent that such person’s
“modified adjusted gross income” (in the case of an individual) or “adjusted
gross income” (in the case of an estate or trust) exceeds certain threshold
amounts.
The Fund’s
transactions in derivatives (such as futures contracts and swaps) will be
subject to special tax rules, the effect of which may be to accelerate income to
the Fund, defer losses to the Fund, cause adjustments in the holding periods of
the Funds' securities and convert short-term capital losses into long-term
capital losses. These rules could therefore affect the amount, timing and
character of distributions to you. A Fund's use of derivatives may result in the
Fund realizing more short-term capital gains and ordinary income subject to
tax at ordinary income tax rates than it would if it did not use
derivatives.
Although
distributions are generally treated as taxable to you in the year they are paid,
distributions declared in October, November or December but paid in January are
taxable as if they were paid in December. A percentage of the Fund’s dividends
paid to corporate shareholders may be eligible for the corporate
dividends-received deduction. This percentage may, however, be reduced as a
result of the Fund’s securities lending activities or by a high portfolio
turnover rate. Character and tax status of all distributions will be available
to shareholders after the close of each calendar year.
The REIT
investments of the Funds (and any other Fund that holds REIT investments) often
do not provide complete tax information to the Fund until after the calendar
year. Consequently, because of the delay, it may be necessary for a Fund to
request permission to extend the deadline for issuance of Forms
1099-DIV.
Individuals
and certain other noncorporate entities are generally eligible for a 20%
deduction with respect to ordinary dividends received from REITs (“qualified
REIT dividends”) and certain taxable income from MLPs. Applicable Treasury
regulations permit a regulated investment company to pass through to its
shareholders qualified REIT dividends eligible for the 20% deduction. However,
the regulations do not provide a mechanism for a regulated investment company to
pass through to its shareholders income from MLPs that would be eligible for
such deduction if received directly by the shareholders.
Each Fund
may be subject to foreign withholding or other foreign taxes on income or gain
from certain foreign securities. In general, the Fund may deduct these taxes in
computing its taxable income.
42
Taxation
If you buy
shares of each Fund before it makes a distribution, the distribution will be
taxable to you even though it may actually be a return of a portion of your
investment. This is known as “buying into a dividend.”
|
SALES
AND EXCHANGES |
Your sale
of Fund shares is a taxable transaction for federal income tax purposes, and may
also be subject to state and local taxes. For tax purposes, the exchange of your
Fund shares for shares of a different Goldman Sachs Fund is the same as a sale.
When you sell your shares, you will generally recognize a capital gain or loss
in an amount equal to the difference between your adjusted tax basis in the
shares and the amount received. Generally, this capital gain or loss is
long-term or short-term depending on whether your holding period exceeds twelve
months, except that any loss realized on shares held for six months or less will
be treated as a long-term capital loss to the extent of any capital gain
dividends that were received on the shares. Additionally, any loss realized on a
sale, exchange or redemption of shares of the Fund may be disallowed under “wash
sale” rules to the extent the shares disposed of are replaced with other shares
of the Fund within a period of 61 days beginning 30 days before and ending 30
days after the shares are disposed of such as pursuant to a dividend
reinvestment in shares of that Fund. If disallowed, the loss will be reflected
in an adjustment to the basis of the shares acquired.
|
OTHER
INFORMATION |
When you
open your account, you should provide your Social Security Number or tax
identification number on your account application. By law, each Fund must
withhold 24% of your taxable distributions and any redemption proceeds if you do
not provide your correct taxpayer identification number, or certify that it is
correct, or if the IRS instructs the Fund to do so.
Non-U.S.
investors will generally be subject to U.S. withholding tax and may be subject
to estate tax with respect to their Fund shares. However, withholding is
generally not required on properly designated distributions to non-U.S.
investors of long-term capital gains. Non-U.S. investors generally are not
subject to U.S. federal income tax withholding on certain distributions of
interest income and/or short-term capital gains that are designated by a Fund.
It is expected that the Funds will generally make designations of short-term
gains, to the extent permitted, but the Funds do not intend to make designations
of any distributions attributable to interest income. Therefore, all
distributions of interest income will be subject to withholding when paid to
non-U.S. investors.
The Fund is
required to withhold U.S. tax (at a 30% rate) on payments of dividends made to
certain non-U.S. entities that fail to comply (or be deemed compliant) with
extensive reporting and withholding requirements designed to inform the U.S.
Department of the Treasury of U.S.-owned foreign investment accounts.
Shareholders may be requested to provide additional information to enable the
Funds to determine whether withholding is required.
The Funds
are required to report to you and the IRS annually on Form 1099-B not only the
gross proceeds of Fund shares you sell or redeem but also, for shares purchased
on or after January 1, 2012, their cost basis. Cost
basis will be calculated using the Funds’ default method of average cost, unless
you instruct a Fund to use a different methodology. If you
would like to use the average cost method of calculation, no action is required.
To elect an alternative method, you should contact Goldman Sachs Funds at the
address or phone number on the back cover of the Prospectus. If your account is
held with an intermediary, contact your representative with respect to reporting
of cost basis and available elections for your account.
You should
carefully review the cost basis information provided by the Funds and make any
additional basis, holding period or other adjustments that are required when
reporting these amounts on your federal income tax
returns.
43
Appendix
A
Additional
Information on Portfolio Risks, Securities and
Techniques
|
A. General
Portfolio Risks |
The Funds
will be subject to the risks associated with equity investments. “Equity
investments” may include common stocks, preferred stocks, interests in REITs,
convertible debt obligations, convertible preferred stocks, equity interests in
trusts, partnerships, joint ventures, limited liability companies and similar
enterprises, master limited partnerships (“MLPs”), other investment companies
(including ETFs), warrants, stock purchase rights and synthetic and derivative
instruments (such as swaps and futures contracts) that have economic
characteristics similar to equity securities. In general, the values of equity
investments fluctuate in response to the activities of individual companies and
in response to general market and economic conditions. Accordingly, the values
of equity investments that a Fund holds may decline over short or extended
periods. The stock markets tend to be cyclical, with periods when stock prices
generally rise and periods when prices generally decline. This volatility means
that the value of your investment in the Funds may increase or decrease. In
recent years, certain stock markets have experienced substantial price
volatility. To the extent a Fund’s net assets decrease or increase in the future
due to price volatility or share redemption or purchase activity, the Fund’s
expense ratio may correspondingly increase or decrease from the expense ratio
disclosed in the Prospectus.
To the
extent a Fund invests in pooled investment vehicles (including investment
companies and ETFs), partnerships and REITs, the Fund will be affected by the
investment policies, practices and performance of such entities in direct
proportion to the amount of assets a Fund invests therein.
To the
extent that a Fund invests in fixed income securities, that Fund will also be
subject to the risks associated with its fixed income securities. These risks
include, among others, interest rate risk, credit/default risk and
call/extension risk. In general, interest rate risk involves the risk that when
interest rates decline, the market value of fixed income securities tends to
increase (although many mortgage-related securities will have less potential
than other debt securities for capital appreciation during periods of declining
rates). Conversely, when interest rates increase, the market value of fixed
income securities tends to decline. Credit/default risk involves the risk that
an issuer or guarantor could default on its obligations, and a Fund will not
recover its investment. Call risk and extension risk are normally present in
mortgage-backed securities and asset-backed securities. For example, homeowners
have the option to prepay their mortgages. Therefore, the duration of a security
backed by home mortgages can either shorten (call risk) or lengthen (extension
risk). In general, if interest rates on new mortgage loans fall sufficiently
below the interest rates on existing outstanding mortgage loans, the rate of
prepayment would be expected to increase. Conversely, if mortgage loan interest
rates rise above the interest rates on existing outstanding mortgage loans, the
rate of prepayment would be expected to decrease. In either case, a change in
the prepayment rate can result in losses to investors. The same would be true of
asset-backed securities such as securities backed by car
loans.
A rising
interest rate environment could cause the value of a Fund’s fixed income
securities to decrease, and fixed income markets to experience increased
volatility in addition to heightened levels of liquidity risk. Additionally,
decreases in the value of fixed income securities could lead to increased
shareholder redemptions, which could impair a Fund’s ability to achieve its
investment objective. The risks associated with changing interest rates may have
unpredictable effects on the markets and a Fund’s
investments.
The Funds
may invest in non-investment grade fixed income securities (commonly known as
“junk bonds”), which are rated below investment grade (or determined to be of
equivalent quality, if not rated) at the time of purchase and are therefore
considered speculative. Because non-investment grade fixed income securities are
issued by issuers with low credit ratings, they pose a greater risk of default
than investment grade securities.
The
Investment Adviser will not consider the portfolio turnover rate a limiting
factor in making investment decisions for a Fund. A high rate of portfolio
turnover (100% or more) involves correspondingly greater expenses which must be
borne by a Fund and its shareholders, and is also likely to result in higher
short-term capital gains taxable to certain shareholders. The portfolio turnover
rate is calculated by dividing the lesser of the dollar amount of sales or
purchases of portfolio securities by the average monthly value of a Fund’s
portfolio securities, excluding securities having a maturity at the date of
purchase of one year or less. See “Financial Highlights” in Appendix B for a
statement of each Fund’s historical portfolio turnover rates.
The Funds
may, from time to time, enter into arrangements with certain brokers or other
counterparties that require the segregation of collateral. For operational, cost
or other reasons, when setting up arrangements relating to the
execution/clearing of trades, a Fund may choose to select a segregation model
which may not be the most protective option available in the case of a default
by a broker or counterparty.
The
following sections provide further information on certain types of securities
and investment techniques that may be used by the Funds, including their
associated risks. Additional information is provided in the SAI, which is
available upon request. Among other things, the SAI describes certain
fundamental investment restrictions that cannot be changed without shareholder
approval. You should
44
Appendix
A
note,
however, that all investment objectives and all investment policies not
specifically designated as fundamental are non-fundamental, and may be changed
without shareholder approval. If there is a change in a Fund’s investment
objective, you should consider whether that Fund remains an appropriate
investment in light of your then current financial position and
needs.
|
B.
Other Portfolio Risks |
Risks
of Investing in Mid-Capitalization and Small-Capitalization Companies.
The Funds
may, to the extent consistent with their respective investment policies, invest
in mid- and small-capitalization companies. Investments in mid- and
small-capitalization companies involve greater risk and portfolio price
volatility than investments in larger capitalization stocks. Among the reasons
for the greater price volatility of these investments are the less certain
growth prospects of smaller firms and the lower degree of liquidity in the
markets for such securities. Mid- and small-capitalization companies may be
thinly traded and may have to be sold at a discount from current market prices
or in small lots over an extended period of time. In addition, these securities
are subject to the risk that during certain periods the liquidity of particular
issuers or industries, or all securities in particular investment categories,
will shrink or disappear suddenly and without warning as a result of adverse
economic or market conditions, or adverse investor perceptions whether or not
accurate. Because of the lack of sufficient market liquidity, a Fund may incur
losses because it will be required to effect sales at a disadvantageous time and
only then at a substantial drop in price. Mid- and small-capitalization
companies include “unseasoned” issuers that do not have an established financial
history; often have limited product lines, markets or financial resources; may
depend on or use a few key personnel for management; and may be susceptible to
losses and risks of bankruptcy. Mid- and small-capitalization companies may be
operating at a loss or have significant variations in operating results; may be
engaged in a rapidly changing business with products subject to a substantial
risk of obsolescence; may require substantial additional capital to support
their operations, to finance expansion or to maintain their competitive
position; and may have substantial borrowings or may otherwise have a weak
financial condition. In addition, these companies may face intense competition,
including competition from companies with greater financial resources, more
extensive development, manufacturing, marketing, and other capabilities, and a
larger number of qualified managerial and technical personnel. Transaction costs
for these investments are often higher than those of larger capitalization
companies. Investments in mid- and small-capitalization companies may be more
difficult to price precisely than other types of securities because of their
characteristics and lower trading volumes.
Risks
of Foreign Investments. The Funds
may make foreign investments. Foreign investments involve special risks that are
not typically associated with U.S. dollar denominated or quoted securities of
U.S. issuers. Foreign investments may be affected by changes in currency rates,
changes in foreign or U.S. laws or restrictions applicable to such investments
and changes in exchange control regulations (e.g., currency
blockage). A decline in the exchange rate of the currency (i.e., weakening
of the currency against the U.S. dollar) in which a portfolio security is quoted
or denominated relative to the U.S. dollar would reduce the value of the
portfolio security. In addition, if the currency in which a Fund receives
dividends, interest or other payments declines in value against the U.S. dollar
before such income is distributed as dividends to shareholders or converted to
U.S. dollars, the Fund may have to sell portfolio securities to obtain
sufficient cash to pay such dividends.
Certain
foreign markets may rely heavily on particular industries or foreign capital and
are more vulnerable to diplomatic developments, the imposition of economic
sanctions against a particular country or countries, organizations, entities
and/or individuals, changes in international trading patterns, trade barriers,
and other protectionist or retaliatory measures. International trade barriers or
economic sanctions against foreign countries, organizations, entities and/or
individuals may adversely affect a Fund’s foreign holdings or
exposures.
Brokerage
commissions, custodial services and other costs relating to investment in
international securities markets generally are more expensive than in the United
States. In addition, clearance and settlement procedures may be different in
foreign countries and, in certain markets, such procedures have been unable to
keep pace with the volume of securities transactions, thus making it difficult
to conduct such transactions.
Foreign
issuers are not generally subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to U.S. issuers. There may be
less publicly available information about a foreign issuer than about a U.S.
issuer. In addition, there is generally less government regulation of foreign
markets, companies and securities dealers than in the United States and the
legal remedies for investors may be more limited than the remedies available in
the United States. Foreign securities markets may have substantially less volume
than U.S. securities markets and securities of many foreign issuers are less
liquid and more volatile than securities of comparable domestic issuers.
Furthermore, with respect to certain foreign countries, there is a possibility
of nationalization, expropriation or confiscatory taxation, imposition of
withholding or other taxes on dividend or interest payments (or, in some cases,
capital gains distributions), limitations on the removal of funds or other
assets from such countries, and risks of political or social instability or
diplomatic developments which could adversely affect investments in those
countries.
45
Certain
foreign investments may become less liquid in response to social, political or
market developments or adverse investor perceptions, or become illiquid after
purchase by a Fund, particularly during periods of market turmoil. Certain
foreign investments may become illiquid when, for instance, there are few, if
any, interested buyers and sellers or when dealers are unwilling to make a
market for certain securities. When a Fund holds illiquid investments, its
portfolio may be harder to value, especially in changing markets.
If a Fund
focuses its investments in one or a few countries and currencies, the Fund may
be subjected to greater risks than if a Fund’s assets were not geographically
focused.
Investments
in foreign securities may take the form of sponsored and unsponsored American
Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), European
Depositary Receipts (“EDRs”) or other similar instruments representing
securities of foreign issuers. ADRs, GDRs and EDRs represent the right to
receive securities of foreign issuers deposited in a bank or other depository.
ADRs and certain GDRs are traded in the United States. GDRs may be traded in
either the United States or in foreign markets. EDRs are traded primarily
outside the United States. Prices of ADRs are quoted in U.S. dollars. EDRs and
GDRs are not necessarily quoted in the same currency as the underlying
security.
Risks
of Sovereign Debt. Investment
in sovereign debt obligations by a Fund involves risks not present in debt
obligations of corporate issuers. The issuer of the debt or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal or interest when due in accordance with the terms of such debt,
and a Fund may have limited recourse to compel payment in the event of a
default. Periods of economic uncertainty may result in the volatility of market
prices of sovereign debt, and in turn a Fund’s NAV, to a greater extent than the
volatility inherent in debt obligations of U.S. issuers.
A sovereign
debtor’s willingness or ability to repay principal and pay interest in a timely
manner may be affected by, among other factors, its cash flow situation, the
extent of its foreign currency reserves, the availability of sufficient foreign
exchange on the date a payment is due, the relative size of the debt service
burden to the economy as a whole, the sovereign debtor’s policy toward
international lenders, and the political constraints to which a sovereign debtor
may be subject.
Risks
of Emerging Countries. The Funds
(other than the Real Estate Securities Fund) may invest in securities of issuers
located in, or otherwise economically tied to, emerging countries or investments
limited to commodities sourced from emerging countries. The risks of foreign
investment are heightened when the issuer is located in an emerging country.
Emerging countries are generally located in Africa, Asia, the Middle East,
Eastern and Central Europe, and Central and South America. A Fund’s purchase and
sale of portfolio securities in certain emerging countries may be constrained by
limitations relating to daily changes in the prices of listed securities,
periodic trading or settlement volume and/or limitations on aggregate holdings
of foreign investors. Such limitations may be computed based on the aggregate
trading volume by or holdings of a Fund, the Investment Adviser, its affiliates
and their respective clients and other service providers. A Fund may not be able
to sell securities in circumstances where price, trading or settlement volume
limitations have been reached.
Foreign
investment in the securities markets of certain emerging countries is restricted
or controlled to varying degrees which may limit investment in such countries or
increase the administrative costs of such investments. For example, certain
Asian countries require governmental approval prior to investments by foreign
persons or limit investment by foreign persons to only a specified percentage of
an issuer’s outstanding securities or a specific class of securities which may
have less advantageous terms (including price) than securities of the issuer
available for purchase by nationals. In addition, certain countries may restrict
or prohibit investment opportunities in issuers or industries deemed important
to national interests. Such restrictions may affect the market price, liquidity
and rights of securities that may be purchased by a Fund. The repatriation of
investment income, capital or the proceeds of securities sales from certain
emerging countries is subject to restrictions such as the need for governmental
consents, which may make it difficult for a Fund to invest in such emerging
countries. A Fund could be adversely affected by delays in, or a refusal to
grant, any required governmental approval for such repatriation. In situations
where a country restricts direct investment in securities (which may occur in
certain Asian and other countries), a Fund may invest in such countries through
other investment funds in such countries.
Emerging
market countries may have more or less government regulation and generally do
not impose as extensive and frequent accounting, auditing, financial and other
reporting requirements as the securities markets of more developed countries.
The degree of cooperation between issuers in emerging and frontier market
countries with foreign and U.S. financial regulators may vary significantly.
Accordingly, regulators may not have sufficient access to audit and oversee
issuers, and there could be less information available about issuers in certain
emerging market countries. As a result, the Investment Adviser’s ability to
evaluate local companies or their potential impact on the Fund’s performance
could be inhibited.
Many
emerging countries have experienced currency devaluations and substantial (and,
in some cases, extremely high) rates of inflation. Other emerging countries have
experienced economic recessions. These circumstances have had a negative effect
on the economies and securities markets of such emerging
countries.
46
Appendix
A
Economies
in emerging countries generally are dependent heavily upon commodity prices and
international trade and, accordingly, have been and may continue to be affected
adversely by the economies of their trading partners, trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which they
trade.
Many
emerging countries are subject to a substantial degree of economic, political
and social instability. Governments of some emerging countries are authoritarian
in nature or have been installed or removed as a result of military coups, while
governments in other emerging countries have periodically used force to suppress
civil dissent. Disparities of wealth, the pace and success of democratization,
and ethnic, religious and racial disaffection, among other factors, have also
led to social unrest, violence and/or labor unrest in some emerging countries.
Unanticipated political or social developments may result in sudden and
significant investment losses. Investing in emerging countries involves greater
risk of loss due to expropriation, nationalization, confiscation of assets and
property or the imposition of restrictions on foreign investments and on
repatriation of capital invested. As an example, in the past, some Eastern
European governments have expropriated substantial amounts of private property,
and many claims of the property owners have never been fully settled. There is
no assurance that similar expropriations will not occur in other
countries.
A Fund’s
investment in emerging countries may also be subject to withholding or other
taxes, which may be significant and may reduce the return to the Fund from an
investment in issuers in such countries.
Settlement
procedures in emerging countries are frequently less developed and reliable than
those in the United States and may involve a Fund’s delivery of securities
before receipt of payment for their sale. In addition, significant delays may
occur in certain markets in registering the transfer of securities. Settlement
or registration problems may make it more difficult for a Fund to value its
portfolio securities and could cause the Fund to miss attractive investment
opportunities, to have a portion of its assets uninvested or to incur losses due
to the failure of a counterparty to pay for securities the Fund has delivered or
the Fund’s inability to complete its contractual obligations because of theft or
other reasons.
The
creditworthiness of the local securities firms used by a Fund in emerging
countries may not be as sound as the creditworthiness of firms used in more
developed countries. As a result, the Fund may be subject to a greater risk of
loss if a securities firm defaults in the performance of its
responsibilities.
The small
size and inexperience of the securities markets in certain emerging countries
and the limited volume of trading in securities in those countries may make a
Fund’s investments in such countries less liquid and more volatile than
investments in countries with more developed securities markets (such as the
United States, Japan and most Western European countries). A Fund’s investments
in emerging countries are subject to the risk that the liquidity of a particular
investment, or investments generally, in such countries will shrink or disappear
suddenly and without warning as a result of adverse economic, market or
political conditions or adverse investor perceptions, whether or not accurate.
Because of the lack of sufficient market liquidity, a Fund may incur losses
because it will be required to effect sales at a disadvantageous time and only
then at a substantial drop in price. Investments in emerging countries may be
more difficult to value precisely because of the characteristics discussed above
and lower trading volumes.
A Fund’s
use of foreign currency management techniques in emerging countries may be
limited. The Investment Adviser anticipates that a significant portion of the
Funds’ currency exposure in emerging countries may not be covered by those
techniques.
Foreign
Custody Risk. A Fund that
invests in foreign securities may hold such securities and cash with foreign
banks, agents, and securities depositories appointed by the Fund’s custodian
(each a “Foreign Custodian”). Some Foreign Custodians may be recently organized
or new to the foreign custody business. In some countries, Foreign Custodians
may be subject to little or no regulatory oversight over or independent
evaluation of their operations. Further, the laws of certain countries may place
limitations on a Fund’s ability to recover its assets if a Foreign Custodian
enters bankruptcy. Investments in emerging markets may be subject to even
greater custody risks than investments in more developed markets. Custody
services in emerging market countries are very often undeveloped and may be
considerably less well regulated than in more developed countries, and thus may
not afford the same level of investor protection as would apply in developed
countries.
Risks
of Derivative Investments. The Funds
may, to the extent consistent with their respective investment policies, invest
in derivative instruments, including without limitation, options, futures,
options on futures swaps, interest rate caps, floors, and collars, structured
securities and forward contracts and other derivatives relating to foreign
currency transactions. Derivatives may be used for both hedging and nonhedging
purposes (that is, to seek to increase total return), although suitable
derivative instruments may not always be available to the Investment Adviser for
these purposes. Losses from derivative instruments can result from a lack of
correlation between changes in the value of derivative instruments and the
portfolio assets (if any) being hedged, the potential illiquidity of the markets
for derivative instruments, the failure of the counterparty to perform its
contractual obligations, or the risks related to leverage factors associated
with such transactions. Derivatives are also subject to risks arising from
margin requirements, which include the risk that a Fund will be required to pay
additional margin or set aside additional collateral to maintain open derivative
positions and the risk of loss by a Fund of margin deposits in the event of the
bankruptcy or other similar insolvency with respect to a broker or counterparty
with whom a Fund has an open derivative position. Losses may also arise if the
Funds receive cash collateral under the transactions and some or all of that
collateral is invested in the market. To the extent that cash collateral is so
invested, such collateral will be subject to
47
market
depreciation or appreciation, and a Fund may be responsible for any loss that
might result from its investment of the counterparty’s cash collateral. If cash
collateral is not invested, a Fund may be exposed to additional risk of loss in
the event of the insolvency of its custodian holding such collateral. The use of
these management techniques also involves the risk of loss if the Investment
Adviser is incorrect in its expectation of the timing or level of fluctuations
in securities prices, interest rates, currency prices or other variables.
Derivative instruments may be harder to value, subject to greater volatility and
more likely subject to changes in tax treatment than other investments. For
these reasons, the Investment Adviser’s attempts to hedge portfolio risks
through the use of derivative instruments may not be successful, and the
Investment Adviser may choose not to hedge portfolio risks. Using derivatives
for nonhedging purposes is considered a speculative practice and presents
greater risk of loss than derivatives used for hedging purposes.
Risks
of Illiquid Investments. Each Fund
may not acquire any “illiquid investment” if, immediately after the acquisition,
the Fund would have invested more than 15% of its net assets in illiquid
investments that are assets. An “illiquid investment” is an investment that a
Fund reasonably expects cannot be sold or disposed of in current market
conditions in seven calendar days or less without the sale or disposition
significantly changing the market value of the investment. In determining
whether an investment is an illiquid investment, the Investment Adviser will
take into account actual or estimated daily transaction volume of an investment,
group of related investments or asset class and other relevant market, trading,
and investment-specific considerations. In addition, in determining the
liquidity of an investment, the Investment Adviser must determine whether
trading varying portions of a position in a particular portfolio investment or
asset class, in sizes that a Fund would reasonably anticipate trading, is
reasonably expected to significantly affect its liquidity, and if so, the Fund
must take this determination into account when classifying the liquidity of that
investment or asset class.
Investments
purchased by the Funds that are liquid at the time of purchase may subsequently
become illiquid. If one or more investments in a Fund’s portfolio become
illiquid, the Fund may exceed the 15 percent limitation in illiquid investments.
In the event that changes in the portfolio or other external events cause a Fund
to exceed this limit, the Fund must take steps to bring its illiquid investments
that are assets to or below 15% of its net assets within a reasonable period of
time. This requirement would not force a Fund to liquidate any portfolio
instrument where the Fund would suffer a loss on the sale of that
instrument.
In cases
where no clear indication of the value of a Fund’s portfolio instruments is
available, the portfolio instruments will be valued at their fair value
according to the valuation procedures approved by the Board of Trustees. These
cases include, among others, situations where a security or other asset or
liability does not have a price source, or the secondary markets on which an
investment has previously been traded are no longer viable, due to its lack of
liquidity. For more information on fair valuation, please see “Shareholder
Guide—How To Buy Shares—How Are Shares Priced?”.
Credit/Default
Risks. Debt
securities purchased by the Funds may include U.S. Government Securities
(including zero coupon bonds) and securities issued by foreign governments,
domestic and foreign corporations, banks and other issuers. Some of these fixed
income securities are described in the next section below. Further information
is provided in the SAI.
The Real
Estate Securities Fund also has credit rating requirements for the securities it
buys, which are applied at the time of purchase. For this purpose, the Fund
relies only on the ratings of the following NRSROs: Standard & Poor’s,
Moody’s and Fitch, Inc. Unrated securities may be purchased by the Fund if they
are determined by the Investment Adviser to be of a credit quality consistent
with the Fund’s credit rating requirements.
Debt
securities rated BBB– or higher by Standard & Poor’s, or Baa3 or higher by
Moody’s or having a comparable credit rating by another NRSRO are considered
“investment grade.” Securities rated BBB– or Baa3 are considered medium-grade
obligations with speculative characteristics, and adverse economic conditions or
changing circumstances may weaken their issuers’ capacity to pay interest and
repay principal. For the purpose of determining compliance with any credit
rating requirement, each Fund assigns a security, at the time of purchase, the
highest rating by an NRSRO if the security is rated by more than one NRSRO.
Therefore, a security will be deemed to have met a rating requirement if it
receives the minimum required rating from at least one such rating organization
even though it has been rated below the minimum rating by one or more other
rating organizations, or if unrated by such rating organizations, the security
is determined by the Investment Adviser to be of comparable credit
quality.
A security
satisfies a Fund’s minimum rating requirement regardless of its relative ranking
(for example, plus or minus) within a designated major rating category (for
example, BBB or Baa). If a security satisfies a Fund’s minimum rating
requirement at the time of purchase and is subsequently downgraded below that
rating, the Fund will not be required to dispose of the security. If a downgrade
occurs, the Investment Adviser will consider which action, including the sale of
the security, is in the best interest of a Fund and its
shareholders.
The Funds
may invest in fixed income securities rated BB+ or Ba1 or below (or comparable
unrated securities) which are commonly referred to as “junk bonds.” Junk bonds
are considered speculative and may be questionable as to principal and interest
payments.
48
Appendix
A
In some
cases, junk bonds may be highly speculative, have poor prospects for reaching
investment grade standing and be in default. As a result, investment in such
bonds will present greater speculative risks than those associated with
investment in investment grade bonds. Also, to the extent that the rating
assigned to a security in a Fund’s portfolio is downgraded by a rating
organization, the market price and liquidity of such security may be adversely
affected.
Temporary
Investment Risks. Each Fund
may, for temporary defensive purposes (and to the extent it is permitted to
invest in the following), invest up to 100% of its total assets
in:
◼
U.S.
Government Securities
◼
Commercial
paper rated at least A-2 by Standard & Poor’s; P-2 by Moody’s or having a
comparable credit rating by another NRSRO (or, if unrated, determined by the
Investment Adviser to be of comparable credit quality)
◼
Certificates
of deposit
◼
Bankers’
acceptances
◼
Repurchase
agreements
◼
Non-convertible
preferred stocks and non-convertible corporate bonds with a remaining maturity
of less than one year
◼
ETFs
◼
Other
investment companies
◼
Cash
items
When a
Fund’s assets are invested in such instruments, the Fund may not be achieving
its investment objective.
Risks
of Investing in Master Limited Partnerships (“MLPs”). Investments
in securities of an MLP involve risks that differ from investments in common
stock, including risks related to limited control and limited rights to vote on
matters affecting the MLP, risks related to potential conflicts of interest
between the MLP and the MLP’s general partner, cash flow risks, dilution risks
and risks related to the general partner’s right to require unit-holders to sell
their common units at an undesirable time or price. Certain MLP securities may
trade in lower volumes due to their smaller capitalizations. Accordingly, those
MLPs may be subject to more abrupt or erratic price movements and may lack
sufficient market liquidity to enable the Funds to effect sales at an
advantageous time or without a substantial drop in price. Investment in those
MLPs may restrict a Fund’s ability to take advantage of other investment
opportunities. MLPs are generally considered interest-rate sensitive
investments. During periods of interest rate volatility, these investments may
not provide attractive returns. Depending on the state of interest rates in
general, the use of MLPs could enhance or harm the overall performance of a
Fund.
MLPs are
subject to various risks related to the underlying operating companies they
control, including dependence upon specialized management skills and the risk
that those operating companies may lack or have limited operating histories. The
success of a Fund’s investments in an MLP will vary depending on the underlying
industry represented by the MLP’s portfolio.
Certain
MLPs in which a Fund may invest depend upon their parent or sponsor entities for
the majority of their revenues. If the parent or sponsor entities fail to make
payments or satisfy their obligations to an MLP, the revenues and cash flows of
that MLP and ability of that MLP to make distributions to unit holders such as a
Fund would be adversely affected. Certain MLPs in which a Fund may invest depend
upon a limited number of customers for substantially all of their revenue.
Similarly, certain MLPs in which a Fund may invest depend upon a limited number
of suppliers of goods or services to continue their operations. The loss of
those customers or suppliers could have a material adverse effect on an MLP’s
results of operations and cash flow, and on its ability to make distributions to
unit holders such as a Fund.
A Fund must
recognize income that it receives from underlying MLPs for tax purposes, even if
the Fund does not receive cash distributions from the MLPs in an amount
necessary to pay such tax liability. In addition, a percentage of a distribution
received by a Fund as the holder of an MLP interest may be treated as a return
of capital, which would reduce the Fund’s adjusted tax basis in the interests of
the MLP, which will result in an increase in the amount of income or gain (or
decrease in the amount of loss) that will be recognized by the Fund for tax
purposes upon the sale of any such interests or upon subsequent distributions in
respect of such interests. Furthermore, any return of capital distribution
received from the MLP may require a Fund to restate the character of its
distributions and amend any shareholder tax reporting previously
issued.
MLPs do not
pay U.S. federal income tax at the partnership level. Rather, each partner is
allocated a share of the partnership’s income, gains, losses, deductions and
expenses. A change in current tax law, or a change in the underlying business
mix of a given MLP, could result in an MLP being treated as a corporation for
U.S. federal income tax purposes, which would result in the MLP being required
to pay U.S. federal income tax (as well as state and local income taxes) on its
taxable income. The classification of an MLP as a corporation for U.S. federal
income tax purposes would have the effect of reducing the amount of cash
available for distribution by the MLP. If any MLP in which a Fund invests were
treated as a corporation for U.S. federal income tax purposes, it could result
in a reduction of the value of the Fund’s investment in the MLP and lower income
to the Fund.
49
|
C.
PORTFOLIO SECURITIES AND
TECHNIQUES |
This
section provides further information on certain types of securities and
investment techniques that may be used by the Funds, including their associated
risks.
The Funds
may purchase other types of securities or instruments similar to those described
in this section if otherwise consistent with the Fund’s investment objective and
policies. Further information is provided in the SAI, which is available upon
request.
Convertible
Securities. The Funds
may invest in convertible securities. Convertible securities are preferred stock
or debt obligations that are convertible into common stock. Convertible
securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality. Convertible securities have both
equity and fixed income risk characteristics. Like all fixed income securities,
the value of convertible securities is susceptible to the risk of market losses
attributable to changes in interest rates. Generally, the market value of
convertible securities tends to decline as interest rates increase and,
conversely, to increase as interest rates decline. However, when the market
price of the common stock underlying a convertible security exceeds the
conversion price of the convertible security, the convertible security tends to
reflect the market price of the underlying common stock. As the market price of
the underlying common stock declines, the convertible security, like a fixed
income security, tends to trade increasingly on a yield basis, and thus may not
decline in price to the same extent as the underlying common
stock.
Foreign
Currency Transactions. The Funds
may, to the extent consistent with their investment policies, purchase or sell
foreign currencies on a cash basis or through forward contracts. A forward
contract involves an obligation to purchase or sell a specific currency at a
future date at a price set at the time of the contract. A Fund may engage in
foreign currency transactions for hedging purposes and to seek to protect
against anticipated changes in future foreign currency exchange rates. The Funds
may also enter into such transactions to seek to increase total return, which
presents additional risk.
Some Funds
may also engage in cross-hedging by using forward contracts in a currency
different from that in which the hedged security is denominated or quoted. A
Fund may hold foreign currency received in connection with investments in
foreign securities when, in the judgment of the Investment Adviser, it would be
beneficial to convert such currency into U.S. dollars at a later date
(e.g.
the
Investment Adviser may anticipate the foreign currency to appreciate against the
U.S. dollar).
The Funds
may, from time to time, engage in non-deliverable forward transactions to manage
currency risk or to gain exposure to a currency without purchasing securities
denominated in that currency. A non-deliverable forward is a transaction that
represents an agreement between a Fund and a counterparty (usually a commercial
bank) to pay the other party the amount that it would cost based on current
market rates as of the termination date to buy or sell a specified (notional)
amount of a particular currency at an agreed upon foreign exchange rate on an
agreed upon future date. If the counterparty defaults, a Fund will have
contractual remedies pursuant to the agreement related to the transaction, but
the Fund may be delayed or prevented from obtaining payments owed to it pursuant
to non-deliverable forward transactions. Such non-deliverable forward
transactions will be settled in cash.
Currency
exchange rates may fluctuate significantly over short periods of time, causing,
along with other factors, a Fund’s NAV to fluctuate (when the Fund’s NAV
fluctuates, the value of your shares may go up or down). Currency exchange rates
also can be affected unpredictably by the intervention of U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the United States or
abroad.
Certain
forward foreign currency exchange contracts and other currency transactions are
not exchange traded or cleared. The market in such forward foreign currency
exchange contracts, currency swaps and other privately negotiated currency
instruments offers less protection against defaults by the other party to such
instruments than is available for currency instruments traded on an exchange.
Such contracts are subject to the risk that the counterparty to the contract
will default on its obligations. Because these contracts are not guaranteed by
an exchange or clearinghouse, a default on a contract would deprive a Fund of
unrealized profits, transaction costs or the benefits of a currency hedge or
could force the Fund to cover its purchase or sale commitments, if any, at the
current market price.
A Fund is
not required to post cash collateral with its counterparties in certain foreign
currency transactions. Accordingly, a Fund may remain more fully invested (and
more of the Fund’s assets may be subject to investment and market risk) than if
it were required to post collateral with its counterparties (which is the case
with certain transactions). Where a Fund’s counterparties are not required to
post cash collateral with the Fund, the Fund will be subject to additional
counterparty risk.
Credit
Ratings. The Real
Estate Securities Fund has credit rating requirements for the securities it
buys. The Fund will deem a security to have met its minimum credit rating
requirement if the security has the required rating at the time of purchase from
at least one NRSRO even though it has been rated below the minimum rating by one
or more other NRSROs. Unrated securities may be purchased by the Fund if they
are determined by the Investment Adviser to be of comparable quality. A security
satisfies the Fund’s minimum rating requirement regardless of its relative
ranking (for example, plus or minus) within a designated major rating category
(for example, BBB or Baa). If a security satisfies the Fund’s minimum rating
requirement at the time of purchase and is subsequently
50
Appendix
A
downgraded
below such rating, the Fund will not be required to dispose of such security.
However, during this period, the Investment Adviser will only buy securities at
or above the Fund’s minimum average rating requirement. If a downgrade occurs,
the Investment Adviser will consider what action, including the sale of such
security, is in the best interests of the Fund and its
shareholders.
The Funds
may invest in credit default swaps, which are derivative investments. When a
Fund sells a credit default swap (commonly known as selling protection), the
Fund may be required to pay the “notional value” of the credit default swap on a
specified security (or group of securities) if the security defaults. A Fund
will be the seller of a credit default swap only when the credit of the security
is deemed by the Investment Adviser to meet the Fund’s minimum credit criteria
at the time the swap is first entered into.
Structured
Securities. Each Fund
may invest in structured securities. Structured securities are securities whose
value is determined by reference to changes in the value of specific currencies,
securities, interest rates, commodities, indices or other financial indicators
(the “Reference”) or the relative change in two or more References. Investments
in structured securities may provide exposure to certain securities or markets
in situations where regulatory or other restrictions prevent direct investments
in such issuers or markets.
The
interest rate or the principal amount payable upon maturity or redemption may be
increased or decreased depending upon changes in the applicable Reference.
Structured securities may be positively or negatively indexed, so that
appreciation of the Reference may produce an increase or decrease in the
interest rate or value of the security at maturity. In addition, changes in the
interest rates or the value of the security at maturity may be a multiple of
changes in the value of the Reference, effectively leveraging a Fund’s
investments so that small changes in the value of the Reference may result in
disproportionate gains or losses to the Fund. Consequently, structured
securities may present a greater degree of market risk than many types of
securities and may be more volatile, less liquid and more difficult to price
accurately than less complex securities. Structured securities are also subject
to the risk that the issuer of the structured securities may fail to perform its
contractual obligations. Certain issuers of structured products may be deemed to
be investment companies as defined in the Investment Company Act. As a result, a
Fund’s investments in structured securities may be subject to the limits
applicable to investments in other investment companies.
Structured
securities are considered hybrid instruments because they are derivative
instruments, the value of which depends on, or is derived from or linked to, the
value of an underlying asset, interest rate index or commodity. Commodity-linked
notes are hybrid instruments because the principal and/or interest payments on
those notes is linked to the value of the individual commodities, futures
contracts or the performance of one or more commodity
indices.
Structured
securities include, but are not limited to, equity linked notes. An equity
linked note is a note whose performance is tied to a single stock, a stock index
or a basket of stocks. Equity linked notes combine the principal protection
normally associated with fixed income investments with the potential for capital
appreciation normally associated with equity investments. Upon the maturity of
the note, the holder generally receives a return of principal based on the
capital appreciation of the linked securities. Depending on the terms of the
note, equity linked notes may also have a “cap” or “floor” on the maximum
principal amount to be repaid to holders, irrespective of the performance of the
underlying linked securities. For example, a note may guarantee the repayment of
the original principal amount invested (even if the underlying linked securities
have negative performance during the note’s term), but may cap the maximum
payment at maturity at a certain percentage of the issuance price or the return
of the underlying linked securities. Alternatively, the note may not guarantee a
full return on the original principal, but may offer a greater participation in
any capital appreciation of the underlying linked securities. The terms of an
equity linked note may also provide for periodic interest payments to holders at
either a fixed or floating rate. The secondary market for equity linked notes
may be limited, and the lack of liquidity in the secondary market may make these
securities difficult to dispose of and to value. Equity linked notes will be
considered equity securities for purposes of a Fund’s investment objective and
policies.
Structured
securities may also include credit linked notes. Credit linked notes are
securities with embedded credit default swaps. An investor holding a credit
linked note generally receives a fixed or floating coupon and the note’s par
value upon maturity, unless the referred credit defaults or declares bankruptcy,
in which case the investor receives the amount recovered. In effect, investors
holding credit linked notes receive a higher yield in exchange for assuming the
risk of a specified credit event.
Structured
securities may also include inverse floating rate debt securities (“inverse
floaters”). The interest rate on inverse floaters resets in the opposite
direction from the market rate of interest to which the inverse floater is
indexed. An inverse floater may be considered to be leveraged to the extent that
its interest rate varies by a magnitude that exceeds the magnitude of the change
in the index rate of interest. The higher the degree of leverage of an inverse
floater, the greater the volatility of its market value.
REITs.
The Funds
may invest in REITs. REITs are pooled investment vehicles that invest primarily
in either real estate or real estate related loans. The value of a REIT is
affected by changes in the value of the properties owned by the REIT or securing
mortgage loans held by the REIT. REITs are dependent upon the ability of the
REITs’ managers, and are subject to heavy cash flow dependency, default by
borrowers and the qualification of the REITs under applicable regulatory
requirements for favorable income tax treatment. REITs are also subject to risks
generally associated with investments in real estate including possible declines
in the value of real estate, general and local economic conditions,
environmental problems and changes in interest rates. To the extent that assets
underlying a REIT are concentrated geographically, by property type or in
certain other respects, these risks may be heightened. A Fund will indirectly
bear its proportionate share of any expenses, including management fees, paid by
a REIT in which it invests.
51
Options
on Securities, Securities Indices and Foreign Currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) of the option the obligation to buy, the underlying instrument during
the option period.
A call
option gives the purchaser of the option the right to buy, and the writer
(seller) of the option the obligation to sell, the underlying instrument during
the option period. Each Fund may write call and put options and purchase call
and put options, on any securities and other instruments in which it may invest
or any index consisting of securities or other instruments in which it may
invest. A Fund may also, to the extent consistent with its investment policies,
purchase and sell (write) put and call options on foreign
currencies.
The writing
and purchase of options is a highly specialized activity which involves special
investment risks. Options may be used for either hedging or cross-hedging
purposes, or to seek to increase total return (which presents additional risk).
The successful use of options depends in part on the ability of the Investment
Adviser to anticipate future price fluctuations and the degree of correlation
between the options and securities (or currency) markets. If the Investment
Adviser is incorrect in its expectation of changes in market prices or
determination of the correlation between the instruments or indices on which
options are written and purchased and the instruments in a Fund’s investment
portfolio, the Fund may incur losses that it would not otherwise incur. The use
of options can also increase a Fund’s transaction costs. Options written or
purchased by the Funds may be traded on either U.S. or foreign exchanges or over
the counter. Foreign and over-the-counter options will present greater
possibility of loss because of their greater illiquidity and credit
risks.
Futures
Contracts and Options and Swaps on Futures Contracts. Futures
contracts are standardized, exchange-traded contracts that provide for the sale
or purchase of a specified financial instrument or currency at a future time at
a specified price. An option on a futures contract gives the purchaser the right
(and the writer of the option the obligation) to assume a position in a futures
contract at a specified exercise price within a specified period of time. A swap
on a futures contract provides an investor with the ability to gain economic
exposure to a particular futures market. A futures contract may be based on
particular securities, foreign currencies, securities indices and other
financial instruments and indices. The Funds may engage in futures transactions
on both U.S. and foreign exchanges.
Each Fund
may, to the extent consistent with its investment policies, purchase and sell
futures contracts, purchase and write call and put options on futures contracts
and enter into swaps on futures contracts in order to seek to increase total
return or to hedge against changes in interest rates, securities prices or, to
the extent a Fund invests in foreign securities, currency exchange rates, or to
otherwise manage its term structure, sector selections and duration in
accordance with its investment objective and policies. Each Fund may also enter
into closing purchase and sale transactions with respect to such contracts and
options.
Futures
contracts and related options and swaps present the following
risks:
◼
While a
Fund may benefit from the use of futures and options and swaps on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in poorer overall performance than if the Fund had not entered
into any futures contracts, options transactions or swaps.
◼
Because
perfect correlation between a futures position and a portfolio position that is
intended to be protected is impossible to achieve, the desired protection may
not be obtained and a Fund may be exposed to additional risk of
loss.
◼
The loss
incurred by a Fund in entering into futures contracts and in writing call
options and entering into swaps on futures is potentially unlimited and may
exceed the amount of the premium received.
◼
Futures
markets are highly volatile and the use of futures may increase the volatility
of a Fund’s NAV.
◼
As a result
of the low margin deposits normally required in futures trading, a relatively
small price movement in a futures contract may result in substantial losses to a
Fund.
◼
Futures
contracts and options and swaps on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single
day.
◼
Foreign
exchanges may not provide the same protection as U.S.
exchanges.
When-Issued
Securities and Forward Commitments. The Funds
may purchase when-issued securities and make contracts to purchase or sell
securities for a fixed price at a future date beyond customary settlement time.
When-issued securities are securities that have been authorized, but not yet
issued. When-issued securities are purchased in order to secure what is
considered to be an advantageous price and yield to the Fund at the time of
entering into the transaction. A forward commitment involves the entering into a
contract to purchase or sell securities for a fixed price at a future date
beyond the customary settlement period.
The
purchase of securities on a when-issued or forward commitment basis involves a
risk of loss if the value of the security to be purchased declines before the
settlement date. Conversely, the sale of securities on a forward commitment
basis involves the risk that the value of the securities sold may increase
before the settlement date. Although a Fund will generally purchase securities
on a when-issued or forward commitment basis with the intention of acquiring the
securities for its portfolio, a Fund may dispose of when-issued securities or
forward commitments prior to settlement if the Investment Adviser deems it
appropriate.
52
Appendix
A
Repurchase
Agreements. Repurchase
agreements involve the purchase of securities subject to the seller’s agreement
to repurchase them at a mutually agreed upon date and price. Each Fund may enter
into repurchase agreements with counterparties approved by the Investment
Adviser pursuant to procedures by the Board of Trustees that furnish collateral
at least equal in value or market price to the amount of their repurchase
obligation. The collateral may consist of any type of security (government or
corporate) of any or no credit rating. Repurchase agreements involving
obligations other than U.S. Government Securities may be subject to additional
risks.
If the
other party or “seller” defaults, a Fund might suffer a loss to the extent that
the proceeds from the sale of the underlying securities and other collateral
held by the Fund are less than the repurchase price and the Fund’s costs
associated with delay and enforcement of the repurchase agreement. In addition,
in the event of bankruptcy of the seller, a Fund could suffer additional losses
if a court determines that the Fund’s interest in the collateral is not
enforceable.
The Funds,
together with other registered investment companies having advisory agreements
with the Investment Adviser or any of its affiliates, may transfer uninvested
cash balances into a single joint account, the daily aggregate balance of which
will be invested in one or more repurchase agreements.
Lending
of Portfolio Securities. The Real
Estate Securities and Global Real Estate Securities Funds may engage in
securities lending. Securities lending involves the lending of securities owned
by a Fund to financial institutions such as certain broker-dealers including, as
permitted by the SEC, Goldman Sachs. The borrowers are required to secure their
loan continuously with cash, cash equivalents, U.S. government securities or
letters of credit in an amount at least equal to the market value of the
securities loaned. Cash collateral may be invested by a Fund in short-term
investments, including registered and unregistered investment pools managed by
the Investment Adviser, its affiliates or the Funds’ custodian and from which
the Investment Adviser or its affiliates may receive fees. To the extent that
cash collateral is so invested, such collateral will be subject to market
depreciation or appreciation, and a Fund will be responsible for any loss that
might result from its investment of the borrowers’ collateral. If the Investment
Adviser determines to make securities loans, the value of the securities loaned
may not exceed 33 1/3% of the value of the total assets of a Fund (including the
loan collateral). Loan collateral (including any investment of the collateral)
is not subject to the percentage limitations described elsewhere in the
Prospectus regarding investments in fixed income securities and cash
equivalents.
A Fund may
lend its securities to increase its income. A Fund may, however, experience
delay in the recovery of its securities or incur a loss if the institution with
which it has engaged in a portfolio loan transaction breaches its agreement with
the Fund or its agent or becomes insolvent.
Preferred
Stock, Warrants and Stock Purchase Rights. The Funds
may invest in preferred stock, warrants and stock purchase rights (or “rights”).
Preferred stocks are securities that represent an ownership interest providing
the holder with claims on the issuer’s earnings and assets before common stock
owners but after bond owners. Unlike debt securities, the obligations of an
issuer of preferred stock, including dividend and other payment obligations, may
not typically be accelerated by the holders of such preferred stock on the
occurrence of an event of default or other non-compliance by the issuer of the
preferred stock.
Warrants
and other rights are options to buy a stated number of shares of common stock at
a specified price at any time during the life of the warrant or right. The
holders of warrants and rights have no voting rights, receive no dividends and
have no rights with respect to the assets of the issuer.
Other
Investment Companies. Each Fund
may invest in securities of other investment companies, including ETFs and money
market funds, subject to statutory limitations prescribed by the Investment
Company Act or rules, regulations or exemptive relief thereunder. These
statutory limitations include in certain circumstances a prohibition on any Fund
acquiring more than 3% of the voting shares of any other investment company, and
a prohibition on investing more than 5% of a Fund’s total assets in securities
of any one investment company or more than 10% of its total assets in securities
of all investment companies.
Subject to
applicable law and/or pursuant to an exemptive order obtained from the SEC or
under an exemptive rule adopted by the SEC, a Fund may invest in certain other
investment companies (including ETFs and money market funds) and business
development companies beyond the statutory limits described above or otherwise
provided that certain conditions are met. Some of those investment companies may
be funds for which the Investment Adviser or any of its affiliates serves as
investment adviser, administrator or distributor.
Additionally,
to the extent that any Fund serves as an “acquired fund” to another Goldman
Sachs Fund or unaffiliated investment company, the Fund’s ability to invest in
other investment companies and private funds may be limited and, under these
circumstances, the Fund’s investments in other investment companies and private
funds will be consistent with applicable law and/or exemptive rules adopted by
or exemptive orders obtained from the SEC. For example, to the extent the Fund
serves as an acquired fund in a fund of funds arrangement in reliance on Rule
12d1-4 under the Investment Company Act, the Fund would be prohibited from
purchasing or otherwise acquiring the securities of an investment company or
private fund if, after such purchase or acquisition, the aggregate value of the
Fund’s investments in such investment companies and private funds would exceed
10% of the value of the Fund’s total assets, subject to limited exceptions
(including for investments in money market funds).
53
The use of
ETFs is generally intended to help a Fund match the total return of the
particular market segments or indices represented by those ETFs, although that
may not be the result. Most ETFs are passively managed investment companies
whose shares are purchased and sold on a securities exchange. An ETF generally
represents a portfolio of securities designed to track a particular market
segment or index. An investment in an ETF generally presents the same primary
risks as an investment in a conventional fund (i.e., one that
is not exchange-traded) that has the same investment objectives, strategies and
policies. In addition, an ETF may fail to accurately track the market segment or
index that underlies its investment objective. The price of an ETF can
fluctuate, and a Fund could lose money investing in an ETF. Moreover, ETFs are
subject to the following risks that do not apply to conventional funds: (i) the
market price of the ETF’s shares may trade at a premium or a discount to their
NAV; (ii) an active trading market for an ETF’s shares may not develop or be
maintained; and (iii) there is no assurance that the requirements of the
exchange necessary to maintain the listing of an ETF will continue to be met or
remain unchanged.
A Fund will
indirectly bear its proportionate share of any management fees and other
expenses paid by such other investment companies, in addition to the fees and
expenses regularly borne by the Fund. Although the Funds do not expect to do so
in the foreseeable future, each Fund is authorized to invest substantially all
of its assets in a single open-end investment company or series thereof that has
substantially the same investment objective, policies and fundamental
restrictions as the Fund.
Unseasoned
Companies. Each Fund
may invest in companies which (together with their predecessors) have operated
less than three years. The securities of such companies may have limited
liquidity, which can result in their being priced higher or lower than might
otherwise be the case. In addition, investments in unseasoned companies are more
speculative and entail greater risk than do investments in companies with an
established operating record.
Corporate
Debt Obligations. Corporate
debt obligations include bonds, notes, debentures, commercial paper and other
obligations of corporations to pay interest and repay principal. Each Fund may
invest in corporate debt obligations issued by U.S. and certain non-U.S. issuers
which issue securities denominated in the U.S. dollar (including Yankee and Euro
obligations). In addition to obligations of corporations, corporate debt
obligations include securities issued by banks and other financial institutions
and supranational entities (i.e., the World
Bank, the International Monetary Fund, etc.).
Bank
Obligations. Each Fund
may invest in obligations issued or guaranteed by U.S. or foreign banks. Bank
obligations, including without limitation, time deposits, bankers’ acceptances
and certificates of deposit, may be general obligations of the parent bank or
may be limited to the issuing branch by the terms of the specific obligations or
by government regulations. Banks are subject to extensive but different
governmental regulations which may limit both the amount and types of loans
which may be made and interest rates which may be charged. In addition, the
profitability of the banking industry is largely dependent upon the availability
and cost of funds for the purpose of financing lending operations under
prevailing money market conditions. General economic conditions as well as
exposure to credit losses arising from possible financial difficulties of
borrowers play an important part in the operation of this
industry.
U.S.
Government Securities. Each Fund
may invest in U.S. Government Securities. U.S. Government Securities include
U.S. Treasury obligations and obligations issued or guaranteed by U.S.
government agencies, instrumentalities or sponsored enterprises. U.S. Government
Securities may be supported by (i) the full faith and credit of the U.S.
Treasury; (ii) the right of the issuer to borrow from the U.S. Treasury; (iii)
the discretionary authority of the U.S. government to purchase certain
obligations of the issuer; or (iv) only the credit of the issuer. U.S.
Government Securities also include Treasury receipts, zero coupon bonds and
other stripped U.S. Government Securities, where the interest and principal
components of stripped U.S. Government Securities are traded
independently.
U.S.
Government Securities may also include Treasury inflation-protected securities
whose principal value is periodically adjusted according to the rate of
inflation. U.S. Government Securities are deemed to include (i) securities for
which the payment of principal and interest is backed by an irrevocable letter
of credit issued by the U.S. government, its agencies, authorities or
instrumentalities; and (ii) participations in loans made to foreign governments
or their agencies that are so guaranteed. Certain of these participations may be
illiquid.
U.S.
Treasury Securities, which include, among other things, the separately traded
principal and interest components of securities guaranteed or issued by the U.S.
Treasury if such components are traded independently under the Separate Trading
of Registered Interest and Principal of Securities program, have historically
involved little risk of loss of principal if held to maturity. However, no
assurance can be given that the U.S. government will be able or willing to repay
the principal or interest when due, or provide financial support to U.S.
government agencies, authorities, instrumentalities or sponsored enterprises
that issue U.S. Government Securities if it is not obligated to do so by
law.
Custodial
Receipts and Trust Certificates. The Funds
may invest in custodial receipts and trust certificates representing interests
in securities held by a custodian or trustee. The securities so held may include
U.S. Government Securities or other types of securities in which a Fund may
invest. The custodial receipts or trust certificates may evidence ownership of
future interest payments, principal payments or both on the underlying
securities, or, in some cases, the payment obligation of a third party that has
entered into an interest rate swap or other arrangement with the custodian or
trustee. For certain securities laws purposes, custodial receipts and trust
certificates may not be considered obligations of the U.S. government or other
issuer of the securities held by the custodian or trustee.
54
Appendix
A
If for tax
purposes a Fund is not considered to be the owner of the underlying securities
held in the custodial or trust account, the Fund may suffer adverse tax
consequences. As a holder of custodial receipts and trust certificates, a Fund
will bear its proportionate share of the fees and expenses charged to the
custodial account or trust. Each Fund may also invest in separately issued
interests in custodial receipts and trust certificates.
Floating
and Variable Rate Obligations. The Funds
may purchase floating and variable rate obligations. The value of these
obligations is generally more stable than that of a fixed rate obligation in
response to changes in interest rate levels. The issuers of financial
intermediaries providing demand features may support their ability to purchase
the obligations by obtaining credit with liquidity supports. These may include
lines of credit, which are conditional commitments to lend, and letters of
credit, which will ordinarily be irrevocable both of which may be issued by
domestic banks or foreign banks. A Fund may purchase variable or floating rate
obligations from the issuers or may purchase certificates of participation, a
type of floating or variable rate obligation, which are interests in a pool of
debt obligations held by a bank or other financial
institutions.
Floating
and variable rate obligations may be transferable among financial institutions,
but may not have the liquidity of conventional debt securities and are often
subject to legal or contractual restrictions on resale. Floating and variable
rate obligations are not currently listed on any securities exchange or
automatic quotation system. As a result, no active market may exist for some
floating and variable rate obligations. To the extent a secondary market exists
for other floating and variable rate obligations, such market may be subject to
irregular trading activity, wide bid/ask spreads, and extended trade settlement
periods. The lack of a highly liquid secondary market for floating and variable
rate obligations may have an adverse effect on the value of such obligations and
may make it more difficult to value the obligations for purposes of calculating
their respective net asset value.
For
floating and variable rate obligations, there may be a lag between an actual
change in the underlying interest rate benchmark and the reset time for an
interest payment of such an obligation, which could harm or benefit a Fund,
depending on the interest rate environment or other circumstances. In a rising
interest rate environment, for example, a floating or variable rate obligation
that does not reset immediately would prevent a Fund from taking full advantage
of rising interest rates in a timely manner. However, in a declining interest
rate environment, a Fund may benefit from a lag due to an obligation’s interest
rate payment not being immediately impacted by a decline in interest
rates.
Certain
floating and variable rate obligations have an interest rate floor feature,
which prevents the interest rate payable by the security from dropping below a
specified level as compared to a reference interest rate (the “reference rate”),
such as Secured Overnight Financing Rate (“SOFR”), a term SOFR published by CME
Group Benchmark Administration Limited (CBA) calculated using certain
derivatives markets (“Term SOFR”) or another rate determined using SOFR. Such a
floor protects a Fund from losses resulting from a decrease in the reference
rate below the specified level. However, if the reference rate is below the
floor, there will be a lag between a rise in the reference rate and a rise in
the interest rate payable by the obligation, and a Fund may not benefit from
increasing interest rates for a significant amount of time.
At the end
of 2021, certain LIBORs were discontinued, but the most widely used LIBORs may
continue to be provided on a representative basis until June 30, 2023. The
unavailability or replacement of LIBOR may affect the value, liquidity or return
on certain Fund investments and may result in costs incurred in connection with
closing out positions and entering into new trades. Any pricing adjustments to a
Fund’s investments resulting from a substitute reference rate may also adversely
affect the Fund’s performance and/or NAV.
SOFR is a
measure of the cost of borrowing cash overnight, collateralized by the U.S.
Treasury securities, and is based on directly observable U.S. Treasury-backed
repurchase transactions.
Mortgage-Backed
Securities. The Funds
may invest in mortgage-backed securities. Mortgage-backed securities represent
direct or indirect participations in, or are collateralized by and payable from,
mortgage loans secured by real property. Mortgage-backed securities can be
backed by either fixed rate mortgage loans or adjustable rate mortgage loans,
and may be issued by either a governmental or non-governmental entity. Privately
issued mortgage-backed securities are normally structured with one or more types
of “credit enhancement.” However, these mortgage-backed securities typically do
not have the same credit standing as U.S. government guaranteed mortgage-backed
securities.
Mortgage-backed
securities may include multiple class securities, including collateralized
mortgage obligations (“CMOs”) and Real Estate Mortgage Investment Conduit
(“REMIC”) pass-through or participation certificates. A REMIC is a CMO that
qualifies for special tax treatment and invests in certain mortgages principally
secured by interests in real property and other permitted investments. CMOs
provide an investor with a specified interest in the cash flow from a pool of
underlying mortgages or of other mortgage-backed securities. CMOs are issued in
multiple classes each with a specified fixed or floating interest rate and a
final scheduled distribution rate. In many cases, payments of principal are
applied to the CMO classes in the order of their respective stated maturities,
so that no principal payments will be made on a CMO class until all other
classes having an earlier stated maturity date are paid in
full.
55
Sometimes,
however, CMO classes are “parallel pay,” i.e., payments
of principal are made to two or more classes concurrently. In some cases, CMOs
may have the characteristics of a stripped mortgage-backed security whose price
can be highly volatile. CMOs may exhibit more or less price volatility and
interest rate risk than other types of mortgage-related obligations, and under
certain interest rate and payment scenarios, a Fund may fail to recoup fully its
investment in certain of these securities regardless of their credit
quality.
Mortgaged-backed
securities also include stripped mortgage-backed securities (“SMBS”), which are
derivative multiple class mortgage-backed securities. SMBS are usually
structured with two different classes: one that receives substantially all of
the interest payments and the other that receives substantially all of the
principal payments from a pool of mortgage loans. The market value of SMBS
consisting entirely of principal payments generally is unusually volatile in
response to changes in interest rates. The yields on SMBS that receive all or
most of the interest from mortgage loans are generally higher than prevailing
market yields on other mortgage-backed securities because their cash flow
patterns are more volatile and there is a greater risk that the initial
investment will not be fully recouped.
Throughout
2008, the market for mortgage-backed securities began experiencing
substantially, often dramatically, lower valuations and greatly reduced
liquidity. Markets for other asset-backed securities have also been affected.
These instruments are increasingly subject to liquidity constraints, price
volatility, credit downgrades and unexpected increases in default rates and,
therefore, may be more difficult to value and more difficult to dispose of than
previously. These events may have an adverse effect on the Funds to the extent
they invest in mortgage-backed or other fixed income securities or instruments
affected by the volatility in the fixed income markets.
Asset-Backed
Securities. The Funds
may invest in asset-backed securities. Asset-backed securities are securities
whose principal and interest payments are collateralized by pools of assets such
as auto loans, credit card receivables, leases, installment contracts and
personal property. Asset-backed securities are often subject to more rapid
repayment than their stated maturity date would indicate as a result of the
pass-through of prepayments of principal on the underlying loans. During periods
of declining interest rates, prepayment of loans underlying asset-backed
securities can be expected to accelerate. Accordingly, a Fund’s ability to
maintain positions in such securities will be affected by reductions in the
principal amount of such securities resulting from prepayments, and its ability
to reinvest the returns of principal at comparable yields is subject to
generally prevailing interest rates at that time. Asset-backed securities
present credit risks that are not presented by mortgage-backed securities. This
is because asset-backed securities generally do not have the benefit of a
security interest in collateral that is comparable to mortgage assets. If the
issuer of an asset-backed security defaults on its payment obligations, there is
the possibility that, in some cases, a Fund will be unable to possess and sell
the underlying collateral and that a Fund’s recoveries on repossessed collateral
may not be available to support payments on the securities. In the event of a
default, a Fund may suffer a loss if it cannot sell collateral quickly and
receive the amount it is owed. Asset-backed securities may also be subject to
increased volatility and may become illiquid and more difficult to value even
when there is no default or threat of default due to market conditions impacting
asset-backed securities more generally.
Non-Investment
Grade Fixed Income Securities. Non-investment
grade fixed income securities and unrated securities of comparable credit
quality (commonly known as “junk bonds”) are considered speculative. In some
cases, these obligations may be highly speculative and have poor prospects for
reaching investment grade standing. Non-investment grade fixed income securities
are subject to the increased risk of an issuer’s inability to meet principal and
interest obligations. These securities, also referred to as high yield
securities, may be subject to greater price volatility due to such factors as
specific issuer developments, interest rate sensitivity, negative perceptions of
the junk bond markets generally and less liquidity.
Non-investment
grade fixed income securities are often issued in connection with a corporate
reorganization or restructuring or as part of a merger, acquisition, takeover or
similar event. They are also issued by less established companies seeking to
expand. Such issuers are often highly leveraged and generally less able than
more established or less leveraged entities to make scheduled payments of
principal and interest in the event of adverse developments or business
conditions. Non-investment grade securities are also issued by governmental
bodies that may have difficulty in making all scheduled interest and principal
payments. The market value of non-investment grade fixed income securities tends
to reflect individual issuer developments to a greater extent than that of
higher rated securities which react primarily to fluctuations in the general
level of interest rates. As a result, a Fund’s ability to achieve its investment
objective may depend to a greater extent on the Investment Adviser’s judgment
concerning the creditworthiness of issuers than funds which invest in
higher-rated securities. Issuers of non-investment grade fixed income securities
may not be able to make use of more traditional methods of financing and their
ability to service debt obligations may be affected more adversely than issuers
of higher-rated securities by economic downturns, specific corporate or
financial developments or the issuer’s inability to meet specific projected
business forecasts. Negative publicity about the junk bond market and investor
perceptions regarding lower rated securities, whether or not based on
fundamental analysis, may depress the prices for such
securities.
A holder’s
risk of loss from default is significantly greater for non-investment grade
fixed income securities than is the case for holders of other debt securities
because such non-investment grade securities are generally unsecured and are
often subordinated to the rights of other creditors of the issuers of such
securities. Investment by a Fund in defaulted securities poses additional risk
of loss should nonpayment of principal and interest continue in respect of such
securities. Even if such securities are held to maturity, recovery by a Fund of
its initial investment and any anticipated income or appreciation is
uncertain.
56
Appendix
A
The
secondary market for non-investment grade fixed income securities is
concentrated in relatively few market makers and is dominated by institutional
investors, including mutual funds, insurance companies and other financial
institutions. Accordingly, the secondary market for such securities is not as
liquid as, and is more volatile than, the secondary market for higher-rated
securities. In addition, market trading volume for high yield fixed income
securities is generally lower and the secondary market for such securities could
shrink or disappear suddenly and without warning as a result of adverse market
or economic conditions, independent of any specific adverse changes in the
condition of a particular issuer. The lack of sufficient market liquidity may
cause a Fund to incur losses because it will be required to effect sales at a
disadvantageous time and then only at a substantial drop in price. These factors
may have an adverse effect on the market price and a Fund’s ability to dispose
of particular portfolio investments. A less liquid secondary market also may
make it more difficult for a Fund to obtain precise valuations of the high yield
securities in its portfolio.
Credit
ratings issued by credit rating agencies are designed to evaluate the safety of
principal and interest payments of rated securities. They do not, however,
evaluate the market value risk of non-investment grade securities and,
therefore, may not fully reflect the true risks of an investment. In addition,
credit rating agencies may or may not make timely changes in a rating to reflect
changes in the economy or in the conditions of the issuer that affect the market
value of the security. Consequently, credit ratings are used only as a
preliminary indicator of investment quality.
Borrowings
and Reverse Repurchase Agreements. Each Fund
can borrow money from banks and other financial institutions in amounts not
exceeding one-third of its total assets (including the amount borrowed or
received).
Reverse
repurchase agreements involve the sale of securities held by a Fund subject to
the Fund’s agreement to repurchase them at a mutually agreed upon date and price
(including interest). These transactions may be entered into as a temporary
measure for emergency purposes or to meet redemption
requests.
Borrowings
and reverse repurchase agreements involve leveraging. If the securities held by
a Fund decline in value while these transactions are outstanding, the NAV of the
Fund’s outstanding shares will decline in value by proportionately more than the
decline in value of the securities. In addition, reverse repurchase agreements
involve the risk that the investment return earned by a Fund (from the
investment of the proceeds) will be less than the interest expense of the
transaction, that the market value of the securities sold by the Fund will
decline below the price the Fund is obligated to pay to repurchase the
securities, and that the securities may not be returned to the
Fund.
Mortgage
Dollar Rolls. The Funds
may enter into mortgage dollar rolls. A mortgage dollar roll involves the sale
by a Fund of securities for delivery in the current month. The Fund
simultaneously contracts with the same counterparty to repurchase substantially
similar (same type, coupon and maturity) but not identical securities on a
specified future date. During the roll period, the Fund loses the right to
receive principal and interest paid on the securities sold. However, the Fund
benefits to the extent of any difference between (a) the price received for the
securities sold and (b) the lower forward price for the future purchase and/or
fee income plus the interest earned on the cash proceeds of the securities sold.
Unless the benefits of a mortgage dollar roll exceed the income, capital
appreciation and gain or loss due to mortgage prepayments that would have been
realized on the securities sold as part of the roll, the use of this technique
will diminish the Fund’s performance.
Successful
use of mortgage dollar rolls depends upon the Investment Adviser’s ability to
predict correctly interest rates and mortgage prepayments. If the Investment
Adviser is incorrect in its prediction, a Fund may experience a loss. The Funds
do not currently intend to enter into mortgage dollar rolls for financing and do
not treat them as borrowings.
Yield
Curve Options. The Funds
may enter into options on the yield “spread” or differential between two
securities. Such transactions are referred to as “yield curve” options. In
contrast to other types of options, a yield curve option is based on the
difference between the yields of designated securities, rather than the prices
of the individual securities, and is settled through cash payments. Accordingly,
a yield curve option is profitable to the holder if this differential widens (in
the case of a call) or narrows (in the case of a put), regardless of whether the
yields of the underlying securities increase or decrease.
The trading
of yield curve options is subject to all of the risks associated with the
trading of other types of options. In addition, such options present a risk of
loss even if the yield on an underlying security remains constant, or if the
spread moves in a direction or to an extent which was not
anticipated.
Interest
Rate Swaps, Mortgage Swaps, Credit Swaps, Currency Swaps, Index Swaps, Total
Return Swaps, Equity Swaps, Options on Swaps and Interest Rate Caps, Floors and
Collars. The Funds
may enter into swap transactions and options agreements, including interest rate
caps, floors and collars. Interest rate swaps involve the exchange by a Fund
with another party of their respective commitments to pay or receive interest,
such as an exchange of fixed-rate payments for floating rate payments. Mortgage
swaps are similar to interest rate swaps in that they represent commitments to
pay and receive interest. The notional principal amount, however, is tied to a
reference pool or pools of mortgages. Credit swaps involve the receipt of
floating or fixed rate payments in exchange for assuming potential credit losses
on an underlying security or pool of securities. Credit swaps give one party to
a transaction (the buyer of the credit swap) the right to dispose of or acquire
an asset (or group of assets or exposure to the performance of an index), or the
right to receive a payment from the other party, upon the occurrence of
specified credit events. Currency swaps involve the exchange
57
of the
parties’ respective rights to make or receive payments in specified currencies.
Total return swaps give a party the right to receive the appreciation in the
value of a specified security, index or other instrument in return for a fee
paid to the counterparty, which will typically be based on an agreed upon
interest rate. If the underlying asset in a total return swap declines in value
over the term of the swap, the party may also be required to pay the dollar
value of that decline to the counterparty. Equity swaps allow the parties to a
swap agreement to exchange the dividend income or other components of return on
an equity investment (for example, a group of equity securities or an index) for
another payment stream. An equity swap may be used by a Fund to invest in a
market without owning or taking physical custody of securities in circumstances
in which direct investment may be restricted for legal reasons or is otherwise
deemed impractical or disadvantageous.
The Funds
may also purchase and write (sell) options contracts on swaps, commonly referred
to as swaptions. A swaption is an option to enter into a swap agreement. Like
other types of options, the buyer of a swaption pays a non-refundable premium
for the option and obtains the right, but not the obligation, to enter into an
underlying swap or to modify the terms of an existing swap on agreed-upon terms.
The seller of a swaption, in exchange for the premium, becomes obligated (if the
option is exercised) to enter into or modify an underlying swap on agreed-upon
terms, which generally entails a greater risk of loss than a Fund incurs in
buying a swaption. The purchase of an interest rate cap entitles the purchaser,
to the extent that a specified index exceeds a predetermined interest rate, to
receive payment of interest on a notional principal amount from the party
selling such interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a notional principal amount
from the party selling the interest rate floor. An interest rate collar is the
combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates.
The Funds
may enter into the transactions described above for hedging purposes or to seek
to increase total return. As an example, when a Fund is the buyer of a credit
default swap (commonly known as buying protection), it may make periodic
payments to the seller of the credit default swap to obtain protection against a
credit default on a specified underlying asset (or group of assets). If a
default occurs, the seller of a credit default swap may be required to pay the
Fund the notional amount of the credit default swap on a specified security (or
group of securities). On the other hand, when a Fund is a seller of a credit
default swap (commonly known as selling protection), in addition to the credit
exposure the Fund has on the other assets held in its portfolio, the Fund is
also subject to the credit exposure on the notional amount of the swap since, in
the event of a credit default, the Fund may be required to pay the notional
amount of the credit default swap on a specified security (or group of
securities) to the buyer of the credit default swap. A Fund will be the seller
of a credit default swap only when the credit of the underlying asset is deemed
by the Investment Adviser to meet the Fund’s minimum credit criteria at the time
the swap is first entered into.
The use of
interest rate, mortgage, credit, currency, index, total return and equity swaps,
options on swaps, and interest rate caps, floors and collars is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. If the
Investment Adviser is incorrect in its forecasts of market values, interest
rates and currency exchange rates, or in its evaluation of the creditworthiness
of swap counterparties and the issuers of the underlying assets, the investment
performance of a Fund would be less favorable than it would have been if these
investment techniques were not used.
Currently,
certain standardized swap transactions are subject to mandatory central clearing
and exchange trading. Although central clearing and exchange trading are
expected to decrease counterparty risk and increase liquidity compared to
bilaterally negotiated swaps, central clearing and exchange trading do not
eliminate counterparty risk or illiquidity risk entirely. Depending on the size
of a Fund and other factors, the margin required under the rules of a
clearinghouse and by a clearing member may be in excess of the collateral
required to be posted by the Fund to support its obligations under a similar
bilateral, uncleared swap. However, certain applicable regulators have adopted
rules imposing certain margin requirements, including minimums, on uncleared
swaps which may result in a Fund and its counterparties posting higher amounts
for uncleared swaps.
Inverse
Floating Rate Securities. The Funds
may invest in inverse floating rate debt securities (“inverse floaters”). The
interest rate on inverse floaters resets in the opposite direction from the
market rate of interest to which an inverse floater is indexed. An inverse
floater may be considered to be leveraged to the extent that its interest rate
varies by a magnitude that exceeds the magnitude of the change in the index rate
of interest. The higher the degree of leverage of an inverse floater, the
greater the volatility of its market value.
58
Appendix
B
Financial
Highlights
The
financial highlights tables are intended to help you understand the Fund’s
financial performance for the past five years (or less if the Fund has
been in operation for less than five years). Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). The
information for the Fund has been audited by PricewaterhouseCoopers LLP, whose
report, along with the Fund’s financial statements, is included in the Fund’s
annual report (available upon request).
|
|
Goldman
Sachs Real Estate Securities Fund | ||||
|
|
Class
P Shares | ||||
|
|
Year
Ended December 31, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Per
Share Data | |||||
|
Net
asset value, beginning of year |
$10.79 |
$15.66 |
$11.55 |
$13.82 |
$13.04 |
|
Net
investment income(a)
|
0.25 |
0.18 |
0.13 |
0.17 |
0.29 |
|
Net
realized and unrealized gain (loss) |
1.54 |
(4.51
) |
4.97 |
(1.26
) |
3.02 |
|
Total
from investment operations |
1.79 |
(4.33
) |
5.10 |
(1.09
) |
3.31 |
|
Distributions
to shareholders from net investment income |
(0.19
) |
(0.18
) |
(0.17
) |
(0.18
) |
(0.27
) |
|
Distributions
to shareholders from net realized gains |
(0.29
) |
(0.36
) |
(0.82
) |
(1.00
) |
(2.26
) |
|
Total
distributions |
(0.48
) |
(0.54
) |
(0.99
) |
(1.18
) |
(2.53
) |
|
Net
asset value, end of year |
$12.10 |
$10.79 |
$15.66 |
$11.55 |
$13.82 |
|
Total
Return(b) |
16.94
% |
(27.78
)% |
44.79
% |
(7.48
)% |
26.04
% |
|
Net
assets, end of year (in 000’s) |
$56,585 |
$70,378 |
$109,444 |
$70,215 |
$89,616 |
|
Ratio
of net expenses to average net assets |
0.88
% |
0.90
% |
0.90
% |
0.90
% |
0.90
% |
|
Ratio
of total expenses to average net assets |
1.18
% |
1.19
% |
1.16
% |
1.23
% |
1.18
% |
|
Ratio
of net investment income to average net assets |
2.22
% |
1.42
% |
0.93
% |
1.47
% |
1.90
% |
|
Portfolio
turnover rate(c)
|
35
% |
35
% |
37
% |
57
% |
37
% |
(a)
Calculated
based on the average shares outstanding methodology.
(b)
Assumes
investment at the NAV at the beginning of the year, reinvestment of all
dividends and distributions, a complete redemption of the investment at the NAV
at the end of the year and no sales or redemption charges (if any). Total
returns would be reduced if a sales or redemption charge was taken into account.
Returns do not reflect the impact of taxes to shareholders relating to Fund
distributions or the redemption of Fund shares.
(c)
The
Fund’s portfolio turnover rate is calculated in accordance with regulatory
requirements, without regard to transactions involving short term investments.
If such transactions were included, the Fund’s portfolio turnover rate may be
higher.
59
|
|
Goldman
Sachs Global Real Estate Securities Fund | ||||
|
|
Class
P Shares | ||||
|
|
Year
Ended December 31, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Per
Share Data | |||||
|
Net
asset value, beginning of year |
$8.83 |
$12.62 |
$10.22 |
$11.11 |
$9.80 |
|
Net
investment income(a)
|
0.23 |
0.19 |
0.14 |
0.15 |
0.22 |
|
Net
realized and unrealized gain (loss) |
0.93 |
(3.68
) |
2.55 |
(0.88
) |
2.01 |
|
Total
from investment operations |
1.16 |
(3.49
) |
2.69 |
(0.73
) |
2.23 |
|
Distributions
to shareholders from net investment income |
(0.17
) |
(0.09
) |
(0.29
) |
(0.13
) |
(0.62
) |
|
Distributions
to shareholders from net realized gains |
— |
(0.13
) |
— |
(0.02
) |
(0.30
) |
|
Distributions
to shareholders from return of capital |
— |
(0.08
) |
— |
(0.01
) |
— |
|
Total
distributions |
(0.17
) |
(0.30
) |
(0.29
) |
(0.16
) |
(0.92
) |
|
Net
asset value, end of year |
$9.82 |
$8.83 |
$12.62 |
$10.22 |
$11.11 |
|
Total
Return(b) |
13.39
% |
(27.78
)% |
26.48
% |
(6.36
)% |
22.98
% |
|
Net
assets, end of year (in 000’s) |
$49,417 |
$46,093 |
$50,241 |
$33,176 |
$43,099 |
|
Ratio
of net expenses to average net assets |
0.96
% |
0.96
% |
0.96
% |
0.96
% |
0.96
% |
|
Ratio
of total expenses to average net assets |
1.32
% |
1.28
% |
1.20
% |
1.20
% |
1.14
% |
|
Ratio
of net investment income to average net assets |
2.55
% |
1.91
% |
1.18
% |
1.56
% |
1.98
% |
|
Portfolio
turnover rate(c)
|
47
% |
80
% |
52
% |
75
% |
42
% |
(a)
Calculated
based on the average shares outstanding methodology.
(b)
Assumes
investment at the NAV at the beginning of the year, reinvestment of all
dividends and distributions, a complete redemption of the investment at the NAV
at the end of the year and no sales or redemption charges (if any). Total
returns would be reduced if a sales or redemption charge was taken into account.
Returns do not reflect the impact of taxes to shareholders relating to Fund
distributions or the redemption of Fund shares.
(c)
The
Fund’s portfolio turnover rate is calculated in accordance with regulatory
requirements, without regard to transactions involving short term investments.
If such transactions were included, the Fund’s portfolio turnover rate may be
higher.
60
Appendix
B
|
|
Goldman
Sachs Global Infrastructure Fund | ||||
|
|
Class
P Shares | ||||
|
|
Year
Ended December 31, | ||||
|
|
2023 |
2022 |
2021 |
2020 |
2019 |
|
Per
Share Data | |||||
|
Net
asset value, beginning of year |
$12.19 |
$13.44 |
$11.76 |
$12.47 |
$9.68 |
|
Net
investment income(a)
|
0.30 |
0.24 |
0.19 |
0.21 |
0.23 |
|
Net
realized and unrealized gain (loss) |
0.31 |
(1.22
) |
1.75 |
(0.69
) |
2.83 |
|
Total
from investment operations |
0.61 |
(0.98
) |
1.94 |
(0.48
) |
3.06 |
|
Distributions
to shareholders from net investment income |
(0.32
) |
(0.24
) |
(0.22
) |
(0.17
) |
(0.24
) |
|
Distributions
to shareholders from net realized gains |
— |
— |
(0.04
) |
— |
— |
|
Distributions
to shareholders from return of capital |
(0.02
) |
(0.03
) |
— |
(0.06
) |
(0.03
) |
|
Total
distributions |
(0.34
) |
(0.27
) |
(0.26
) |
(0.23
) |
(0.27
) |
|
Net
asset value, end of year |
$12.46 |
$12.19 |
$13.44 |
$11.76 |
$12.47 |
|
Total
Return(b) |
5.17
% |
(7.32
)% |
16.66
% |
(3.72
)% |
31.77
% |
|
Net
assets, end of year (in 000’s) |
$79,927 |
$107,173 |
$117,473 |
$12,085 |
$3,936 |
|
Ratio
of net expenses to average net assets |
0.98
% |
0.98
% |
0.98
% |
0.98
% |
0.99
% |
|
Ratio
of total expenses to average net assets |
1.12
% |
1.04
% |
1.07
% |
1.18
% |
1.12
% |
|
Ratio
of net investment income to average net assets |
2.50
% |
1.87
% |
1.51
% |
1.77
% |
1.99
% |
|
Portfolio
turnover rate(c)
|
26
% |
36
% |
50
% |
57
% |
39
% |
(a)
Calculated
based on the average shares outstanding methodology.
(b)
Assumes
investment at the NAV at the beginning of the year, reinvestment of all
dividends and distributions, a complete redemption of the investment at the NAV
at the end of the year and no sales or redemption charges (if any). Total
returns would be reduced if a sales or redemption charge was taken into account.
Returns do not reflect the impact of taxes to shareholders relating to Fund
distributions or the redemption of Fund shares.
(c)
The
Fund’s portfolio turnover rate is calculated in accordance with regulatory
requirements, without regard to transactions involving short term investments.
If such transactions were included, the Fund’s portfolio turnover rate may be
higher.
61
Real
Estate Securities and Global Infrastructure Funds Prospectus (Class P
Shares)
|
FOR
MORE INFORMATION |
Annual/Semi-Annual
Report
Additional
information about the Fund’s investments is available in the Fund’s annual and
semi-annual reports to shareholders. In the Fund’s annual reports, you will find
a discussion of the market conditions and investment strategies that
significantly affected the Fund’s performance during the last fiscal
year.
Statement of
Additional Information
Additional
information about the Fund and its policies is also available in the Fund’s SAI.
The SAI is incorporated by reference into the Prospectus (i.e., is
legally considered part of the Prospectus).
The Fund’s
annual and semi-annual reports and the SAI are available free upon request by
calling Goldman Sachs at
1-800-526-7384. You can also access and download the annual and semi-annual reports and the SAI at the Fund’s website: http://www.gsam.com/content/gsam/us/en/advisors/fund-center/summary-prospectuses.html.
1-800-526-7384. You can also access and download the annual and semi-annual reports and the SAI at the Fund’s website: http://www.gsam.com/content/gsam/us/en/advisors/fund-center/summary-prospectuses.html.
From time
to time, certain announcements and other information regarding the Fund may be
found at
http://www.gsamfunds.com/announcements-ind for individual investors or http://www.gsamfunds.com/announcements for advisers.
http://www.gsamfunds.com/announcements-ind for individual investors or http://www.gsamfunds.com/announcements for advisers.
To obtain
other information and for shareholder inquiries:
|
|
|
|
|
◼ By
telephone: |
1-800-621-2550 |
|
|
◼ By
mail: |
Goldman
Sachs,
71
South Wacker Drive, Suite 1200
Chicago,
IL 60606 |
|
|
◼ On
the Internet: |
SEC
EDGAR database – http://www.sec.gov |
|
Other
information about the Fund is available on the EDGAR Database on the SEC’s
internet site at http://www.sec.gov. You may
obtain copies of this information, after paying a duplicating fee, by electronic
request at the following e-mail address: [email protected].
The
Fund's investment company registration number is 811-05349.
GSAM®
is a registered service mark of Goldman Sachs & Co. LLC
RESPRO-24P