<PAGE>
GOLDMAN SACHS GLOBAL INCOME FUND
MANAGED BY
INVESTMENT ADVISER
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
NEW YORK, NEW YORK
SUBADVISER
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
AN AFFILIATE OF GOLDMAN, SACHS & CO.
LONDON, ENGLAND
-----------
Goldman Sachs Global Income Fund (the "Fund") is one fund in a family of
funds advised by Goldman Sachs Asset Management (the "Investment Adviser") or
its affiliates, Goldman Sachs Funds Management, L.P. and Goldman Sachs Asset
Management International (the ""Subadviser''). The Fund is organized as a
separate non-diversified portfolio of Goldman Sachs Trust (the ""Trust''), an
open-end management investment company.
The Fund will pursue a global investment program emphasizing intermediate-
duration fixed income securities.
The Fund seeks to provide investors with a high total return, emphasizing
current income and, to a lesser extent, providing opportunities for capital
appreciation, through investment in a portfolio of high quality fixed income
securities of U.S. and foreign issuers and through transactions in foreign
currencies. High quality securities are defined as securities rated, at the
time of investment, at least AA by Standard & Poor's
(continued on next page)
-----------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------
GOLDMAN, SACHS & CO.
-----------
The date of this Prospectus is March 1, 1995
<PAGE>
Ratings Group or Aa by Moody's Investors Service, Inc. or, if unrated by such
rating organizations, determined by the Investment Adviser or Subadviser to be
of comparable credit quality. The Fund intends to invest at least 50% of its
net assets in securities having the highest applicable credit quality rating,
at the time of investment, or, if unrated by such rating organizations,
determined to be of comparable credit quality. There can be no assurance that
the Fund will achieve its investment objective.
INVESTMENTS IN SECURITIES OF FOREIGN ISSUERS AND INVESTMENTS IN FOREIGN
CURRENCIES, AS WELL AS THE CURRENCY MANAGEMENT TECHNIQUES DESCRIBED BELOW,
ENTAIL RISKS IN ADDITION TO THOSE THAT ARE CUSTOMARILY ASSOCIATED WITH
INVESTING IN DOLLAR-DENOMINATED FIXED INCOME SECURITIES OF U.S. ISSUERS. THE
FUND IS INTENDED FOR INVESTORS WHO CAN ACCEPT THE RISKS ASSOCIATED WITH ITS
INVESTMENTS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE "RISKS, SPECIAL
INVESTMENT METHODS AND INVESTMENT LIMITATIONS."
It is expected that the Fund will employ certain currency and interest rate
management techniques. These techniques will be used both to hedge the foreign
currency and interest rate risks associated with the Fund's portfolio
securities and, in the case of certain techniques, to seek to increase the
total return of the Fund. See "Investment Objective and Policies."
Goldman Sachs Asset Management, New York, New York, a separate operating
division of Goldman, Sachs & Co., serves as the Fund's investment adviser and
administrator. Goldman Sachs Asset Management International, London, England,
an affiliate of Goldman, Sachs & Co., serves as the Fund's subadviser.
Goldman, Sachs & Co. serves as the Fund's distributor and transfer agent. The
Fund's custodian is State Street Bank and Trust Company.
This Prospectus, which sets forth concisely the information about the Trust
and the Fund that a prospective investor ought to know before investing,
should be retained for future reference. A Statement of Additional Information
(the "Additional Statement"), dated March 1, 1995, containing further
information about the Trust and the Fund which may be of interest to
investors, has been filed with the Securities and Exchange Commission, is
incorporated herein by reference in its entirety, and may be obtained without
charge from Goldman, Sachs & Co. by calling the telephone number, or writing
to one of the addresses, listed below.
GOLDMAN SACHS TRUST GOLDMAN SACHS ASSET MANAGEMENT
4900 SEARS TOWER INVESTMENT ADVISER AND ADMINISTRATOR
CHICAGO, ILLINOIS 60606 ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
GOLDMAN, SACHS & CO. GOLDMAN SACHS ASSET MANAGEMENT
DISTRIBUTOR INTERNATIONAL
85 BROAD STREET SUBADVISER
NEW YORK, NEW YORK 10004 140 FLEET STREET
LONDON, ENGLAND EC4A 2BJ
GOLDMAN, SACHS & CO.
TRANSFER AGENT
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606
TOLL FREE (IN U.S.)................... 800-526-7384
<PAGE>
SUMMARY
INTRODUCTION
Goldman Sachs Global Income Fund (the "Fund") is one fund in a family of
funds advised by Goldman Sachs Asset Management (the "Investment Adviser") or
its affiliates, Goldman Sachs Funds Management, L.P. and Goldman Sachs Asset
Management International (the "Subadviser"). The Fund is organized as a
separate non-diversified portfolio of Goldman Sachs Trust (the "Trust"), an
open-end management investment company.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide investors with a high
total return, emphasizing current income and, to a lesser extent, providing
opportunities for capital appreciation, through investment in a portfolio of
high quality fixed income securities of U.S. and foreign issuers and through
transactions in foreign currencies. High quality securities are defined as
securities rated at least AA by Standard & Poor's Ratings Group or Aa by
Moody's Investors Service, Inc. or, if unrated by such rating organizations,
determined by the Investment Adviser or Subadviser to be of comparable credit
quality. The Fund intends to invest at least 50% of its net assets in
securities having the highest applicable credit quality rating, at the time of
investment, or, if unrated by such rating organizations, determined by the
Investment Adviser or Subadviser to be of comparable credit quality. A security
will be deemed to have met this 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. There can
be no assurance that the Fund will achieve its investment objective.
Under normal market conditions, the Fund will have at least 30% of its total
assets, adjusted to reflect the Fund's net exposure after giving effect to
currency transactions and positions, denominated in U.S. dollars. In addition,
the Fund will normally maintain a dollar weighted average portfolio duration of
not more than five years. Duration represents the weighted average maturity of
expected cash flows on a debt obligation, discounted to present value. The
longer the duration of a debt obligation, the more sensitive its value is to
changes in interest rates.
The Fund's Investment Adviser and Subadviser will use a proprietary model of
Goldman, Sachs & Co. ("Goldman Sachs") to develop a portfolio that, in their
view, produces the optimal expected return for a given level of risk. In
managing the Fund's portfolio, the Investment Adviser and Subadviser will have
access to the research of Goldman Sachs, and will also apply quantitative
analysis to provide guidance concerning appropriate country and currency
allocations.
It is expected that the Fund will employ certain currency and interest rate
management techniques. These techniques will be used both to hedge the foreign
currency and interest rate risks associated with the Fund's portfolio
securities and, in the case of certain techniques, to seek to increase the
total return of the Fund. Such techniques include forward foreign currency
exchange contracts, options on securities, indices and foreign currencies,
futures contracts, options on futures contracts, interest rate and currency
swaps and interest rate floors, caps and collars.
3
<PAGE>
The Fund may enter into forward foreign currency exchange contracts, currency
futures contracts and options on such contracts, currency options and currency
swaps to seek to increase total return when the Fund's Investment Adviser or
Subadviser anticipates that a foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities or are not included in the Fund's portfolio. To the
extent that the Fund is fully invested in foreign securities while also
maintaining currency positions, it may be exposed to greater combined risk. The
Fund's net currency positions may expose it to risks independent of its
securities positions. See "Investment Objective and Policies" and "Risks,
Special Investment Methods and Investment Limitations."
The Fund is intended for investors who can accept the risks involved in
investments in domestic and foreign fixed income securities and foreign
currencies. The net asset value of the Fund's shares of beneficial interest
("shares") will change in response to changes in interest rates and currency
exchange rates. Changes in interest rates and exchange rates for foreign
currencies in which the Fund's investments are denominated may adversely affect
the value of such investments and the value of the Fund's shares. In addition,
while investments in securities issued by foreign governments and corporations
offer potential benefits not available from investments solely in securities of
domestic issuers, they also involve certain significant risks that are not
typically associated with investing in obligations of U.S. issuers. See "Risks,
Special Investment Methods and Investment Limitations."
INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR
Goldman Sachs Asset Management, a separate operating division of Goldman
Sachs, serves as the Fund's investment adviser pursuant to an Investment
Advisory Agreement. For its advisory services, the Investment Adviser receives
from the Fund a monthly fee equal on an annual basis to 0.25% of the Fund's
average daily net assets. Goldman Sachs Asset Management International ("GSAM
International"), an affiliate of Goldman Sachs, serves as subadviser to the
Fund pursuant to a Subadvisory Agreement. The Subadviser receives from the Fund
a monthly fee equal on an annual basis to 0.50% of the Fund's average daily net
assets. The Subadviser's fee is in addition to the fee paid to the Investment
Adviser. Goldman Sachs and GSAM International are each registered with the
Securities and Exchange Commission ("SEC") as investment advisers. In
performing their investment advisory and subadvisory services, the Investment
Adviser and Subadviser, while remaining ultimately responsible for the
management of the Fund, are able to draw upon the research and expertise of
their affiliate offices for portfolio decisions and management with respect to
certain portfolio securities.
Goldman Sachs Asset Management also serves as the administrator of the Fund
pursuant to an Administration Agreement, for which it receives from the Fund a
monthly fee equal on an annual basis to 0.15% of the Fund's average daily net
assets. See "Management--Investment Adviser, Subadviser and Administrator." The
combined advisory and administration fees paid by the Fund are greater than
those paid by most funds, but are believed by the Investment Adviser to be
comparable to fees paid by other funds with a similar global investment
strategy.
4
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund may be bought through Goldman Sachs and certain investment
dealers including members of the National Association of Securities Dealers,
Inc. ("NASD") and certain other financial service firms that have sales
agreements with Goldman Sachs ("Authorized Dealers"). The minimum initial
investment in the Fund is $1,500, except in connection with the special
investment programs described under "Purchase of Shares" and purchases by
certain institutional investors, and except that this requirement may be waived
at the discretion of the Trust's officers. Shares of the Fund may be purchased
at the current net asset value per share plus any applicable sales charge. The
sales charge is paid at the time of purchase of shares of the Fund. The maximum
sales charge is currently 4.5% of the purchase price with reduced sales charges
for purchases of shares of the Fund of $100,000 or more. The sales charge is
waived for specified classes of investors described under "Purchase of Shares--
Offering Price" and in connection with exchanges of shares. The Fund and
Goldman Sachs reserve the right to modify the minimum investment requirement,
the manner in which shares are offered or the sales charge rates applicable to
future purchases of shares. See "Purchase of Shares." The Fund will redeem its
shares upon request of a shareholder on any Business Day, as defined below, at
the net asset value next determined after receipt of such request in proper
form. See "Redemption of Shares."
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs serves as the distributor for the Fund in the sale of its
shares. Under the Transfer Agency Agreement with the Fund, Goldman Sachs
provides transfer agency services and responds to shareholder inquiries. See
"Management--Distributor and Transfer Agent."
DISTRIBUTION PLAN
The Trust, on behalf of the Fund, has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "Act"). Under the Plan, the Fund will pay to Goldman Sachs a
quarterly fee for distribution and personal and account maintenance services
that is equal, on an annual basis, to 0.50% of the Fund's average daily net
assets. Currently, Goldman Sachs has voluntarily agreed to limit the amount of
such fee to 0.25% of the Fund's average daily net assets. Goldman Sachs has no
current intention of modifying or discontinuing such limitation, but may do so
in the future at its discretion. See "Distribution Plan."
DIVIDEND POLICY
The Fund intends that all or substantially all of the Fund's net investment
income will be declared as a dividend and paid monthly. From time to time a
portion of such dividends may constitute a return of capital. The Fund also
intends that all or substantially all net realized long-term and short-term
capital gains will be declared as a dividend and paid at least annually.
Shareholders will receive dividends in additional shares of the Fund or may
elect to receive cash, shares of certain designated mutual funds sponsored by
Goldman Sachs whose shares are subject to an initial sales charge (the "Goldman
Sachs Portfolios") or ILA Service Units of the Prime Obligations Portfolio or
the Tax-Exempt Diversified Portfolio of Goldman Sachs Money Market Trust (the
"ILA Portfolios"). For further information concerning dividends, see
"Dividends."
5
<PAGE>
RISK FACTORS
The Fund is intended for long-term investors who can accept the risks
involved in investing in domestic and foreign fixed income securities as well
as the risks associated with transactions in foreign currencies. See "Shares of
the Trust" and "Investment Objectives and Policies."
It is expected that the Fund will employ investment techniques involving
risks different from those associated with investing solely in dollar-
denominated fixed income securities of U.S. issuers. Such techniques include
transactions in options, futures contracts, options on futures, forward foreign
currency exchange contracts, currency options and futures, currency and
interest rate swaps and interest rate floors, caps and collars. See "Risks,
Special Investment Methods and Investment Limitations."
INVESTMENT IN FIXED INCOME SECURITIES--EFFECTS OF INTEREST AND EXCHANGE RATE
FLUCTUATIONS. The net asset value of the shares of the Fund will change in
response to fluctuations in interest rates and in currency exchange rates.
Except to the extent that values are independently affected by currency
exchange rate fluctuations, when interest rates decline, the value of fixed
income securities in which the Fund will invest and, therefore, the Fund's net
asset value generally can be expected to rise. Conversely, when interest rates
rise, the value of fixed income securities in which the Fund will invest and,
therefore, the Fund's net asset value generally can be expected to decline. The
performance of investments in fixed income securities denominated in a foreign
currency ("Non-Dollar Securities") will also depend on the strength of the
foreign currency against the dollar and the interest rate environment in the
country issuing the currency. Absent other events which could otherwise affect
the value of Non-Dollar Securities (such as a change in the political climate
or an issuer's credit quality), appreciation in the value of the foreign
currency generally can be expected to increase the value of the Fund's Non-
Dollar Securities in terms of U.S. dollars. A rise in foreign interest rates or
a decline in the value of foreign currencies relative to the U.S. dollar
generally can be expected to depress the value of the Fund's Non-Dollar
Securities.
FOREIGN CURRENCY TRANSACTIONS. The Fund may enter into forward foreign
currency exchange contracts, currency futures contracts and options on such
contracts, currency options and currency swaps to seek to increase total return
when the Investment Adviser or the Subadviser anticipates that a foreign
currency will appreciate or depreciate in value, but securities denominated in
that currency do not present attractive investment opportunities or are not
included in the Fund's portfolio. In addition, the Fund may enter into forward
foreign currency exchange contracts, options on currency, futures contracts on
currency, options on such futures, and currency swaps in order to hedge its
positions against potential adverse changes in future foreign currency exchange
rates and for risk management and other purposes incidental to the management
of the Fund's portfolio. Forward contracts, over-the-counter options and swaps
are subject to the risk that the other party to the contract will default on
its obligations. Since a forward contract, over-the-counter option or swap is
not guaranteed by an exchange or clearinghouse, a default on the contract would
deprive the Fund of unrealized profits, transaction costs and the hedging
benefits of the contract or force the Fund to cover its purchase or sale
commitments, if any, at the current market price. The Fund will not enter into
such transactions unless the credit quality of the unsecured senior debt or the
claims-paying ability of the other party thereto is considered to be investment
grade by the Investment Adviser or the Subadviser. The Fund will incur expenses
in connection with currency transactions.
6
<PAGE>
STRUCTURED SECURITIES. The Fund may invest in structured notes, bonds or
debentures, the value of the principal of and/or interest on which is
determined by reference to changes in the value of specific currencies,
interest rates, commodities, indices or other financial indicators (the
"Reference") or the relative change in two or more References. The change in
interest rate or the value of the security at maturity may be a multiple of the
change in the value of the Reference. Consequently, structured securities
entail a greater degree of market risk than other types of debt obligations.
Structured securities may also be more volatile, less liquid and more difficult
to accurately price than less complex securities.
INVESTMENT IN SECURITIES OF FOREIGN ISSUERS. Investing in the securities of
foreign issuers involves considerations and potential risks not typically
associated with investing in the securities of U.S. issuers. For example,
foreign securities markets may be less liquid, more volatile and less subject
to governmental regulation than U.S. securities markets. There also may be less
publicly available information about foreign issuers than about domestic
issuers. In addition, the value of securities of foreign issuers held in the
Fund's portfolio will be affected by changes in currency exchange rates, which
may be volatile, as well as political and economic developments related to the
investment.
NON-DIVERSIFICATION. Since the Fund is "non-diversified" under the Act, it is
subject only to certain federal tax diversification requirements in addition to
the policies adopted by the Investment Adviser and Subadviser. The Fund may,
with respect to 50% of its total assets at the end of any tax quarter, invest
up to 25% of its total assets in the securities of an issuer (except that this
limitation does not apply to U.S. Government securities). With respect to the
remaining 50% of its total assets, the Fund may not, at the end of any tax
quarter, invest more than 5% of its total assets in the securities of any one
issuer (except the U.S. Government) nor acquire more than 10% of the
outstanding voting securities of any issuer. To the extent that the Fund is not
diversified under the Act, it will be more susceptible to adverse developments
affecting any single issuer of portfolio securities.
CONCENTRATION. The Fund may invest more than 25% of its total assets in the
securities of corporate and governmental issuers located in each of Canada,
Germany, Japan and the United Kingdom as well as the securities of U.S.
issuers. However, not more than 25% of the Fund's total assets will be invested
in securities of any one foreign government. For purposes of these percentage
limitations, the term "securities" does not include foreign currencies, which
means that the Fund could have more than 25% of its total assets denominated in
any currency listed in Appendix A. Concentration of the Fund's investments in
such issuers or currencies will subject the Fund, to a greater extent than if
investment were more limited, to the risks of adverse securities markets,
exchange rates and social, political or economic events which may occur in
those countries.
CONFLICTS OF INTEREST. The involvement of Goldman Sachs, its divisions and
affiliates (including the Investment Adviser and the Subadviser), partners and
officers, in the investment activities and business operations of the Fund may
present certain conflicts of interest, as described under "Management--
Investment Adviser, Subadviser and Administrator."
7
<PAGE>
FEES AND EXPENSES
<TABLE>
<CAPTION>
GOLDMAN SACHS
GLOBAL
INCOME FUND
-------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases.................... 4.5%*
Maximum Sales Charge Imposed on Reinvested Dividends......... None
Redemption Fees.............................................. None**
Exchange Fees................................................ None**
ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Management Fees (include advisory and subadvisory fees of
0.25% and 0.50%, respectively, and administration fees of
0.15%)...................................................... 0.90%
Distribution and Service (Rule 12b-1) Fees (after expense
limitation)................................................. 0.25%***
Other Expenses............................................... 0.13%
----
TOTAL FUND OPERATING EXPENSES (AFTER EXPENSE LIMITATION). 1.28%***
====
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE: ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a hypo-
thetical $1,000 investment (including the maxi-
mum sales charge), assuming (1) a 5% annual re-
turn and (2) redemption at the end of each time
period......................................... $57 $84 $112 $193
</TABLE>
- --------
* As a percentage of the offering price. No sales charge is imposed on
purchases by certain classes of investors. See "Purchase of Shares."
** A transaction fee of $7.50 may be charged for redemption proceeds paid by
wire. In addition to free reinvestments of dividends and distributions in
shares of other Goldman Sachs Portfolios or units of the ILA Portfolios and
free automatic exchanges pursuant to the Automatic Exchange Program, six
free exchanges are permitted in each twelve month period. A fee of $12.50
may be charged for each subsequent exchange during such period. See
"Purchase of Shares--Exchange Privilege." A contingent deferred sales
charge may be imposed in connection with certain redemptions of shares sold
without an initial sales charge to certain participant directed plans. See
"Purchase of Shares--Participant Directed Plans." The transfer agency fee
incurred by the Fund is based on a fixed per account charge plus
transaction fees. See "Management--Distributor and Transfer Agent."
*** During the fiscal year ended October 31, 1994, Goldman Sachs agreed to
limit the amount of the distribution and service fees payable by the Fund
to 0.25% of its average daily net assets. Goldman Sachs has no current
intention of modifying or discontinuing such limitation, but may do so in
the future at its discretion. If Goldman Sachs did not agree to limit the
amount of the distribution and service fees payable by the Fund to 0.25% of
its average daily net assets the Fund's distribution and service fees and
total operating expenses would have been 0.50% and 1.53%, respectively, of
such assets. See "Distribution Plan."
Investors should be aware that, due to the distribution fees, a long-term
shareholder in the Fund may pay over time more than the economic equivalent of
the maximum front-end sales charge permitted under the rules of the NASD.
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses of the Fund that an investor in the Fund will
bear directly or indirectly. The costs and expenses included in the table and
hypothetical example above should not be considered as representative of past
or future expenses. Actual fees and expenses may be greater or less than those
indicated. Moreover, while the example assumes a 5% annual return, the Fund's
actual performance will vary and may result in an actual return greater or less
than 5%. See "Management--Investment Adviser, Subadviser and Administrator."
8
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
The following data with respect to a share of the Fund outstanding during
the periods indicated has been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report incorporated by reference and
attached to the Additional Statement, from the Fund's annual report to
shareholders for the period ended October 31, 1994 (the "Annual Report"). This
information should be read in conjunction with the financial statements and
related notes incorporated by reference and attached to the Additional
Statement. The Annual Report also contains performance information and is
available upon request and without charge by calling the telephone number or
writing to one of the addresses on the inside cover of this Prospectus.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31, FOR THE PERIOD
----------------------------------------- ENDED
1994 1993 1992 OCTOBER 31, 1991(a)
------------ ------------ ------------ -------------------
<S> <C> <C> <C> <C>
Net asset value, begin-
ning of period $15.07 $14.69 $14.60 $14.55
- ----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.84 0.85 1.14 0.25
Net realized and
unrealized gain (loss)
on investments, options
and futures (1.37) 1.07 0.45 0.23
Net realized and
unrealized loss on
foreign currency related
transactions (0.12) (0.42) (0.36) (0.19)
- ----------------------------------------------------------------------------------------
Total income (loss) from
investment operations (0.65) 1.50 1.23 0.29
- ----------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.22) (0.85) (1.14) (0.24)
Net realized gain on
investment, option and
futures transactions (0.16) (0.27) -- --
Paid in capital (0.61) -- -- --
- ----------------------------------------------------------------------------------------
Total distributions to
shareholders (0.99) (1.12) (1.14) (0.24)
- ----------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value (1.64) 0.38 0.09 0.05
- ----------------------------------------------------------------------------------------
Net asset value, end of
period $13.43 $15.07 $14.69 $14.60
- ----------------------------------------------------------------------------------------
Total return(b) (4.49)% 10.75% 8.77% 2.00%(c)
Ratio of net expenses to
average net assets 1.28 % 1.30% 1.37% 0.38%(c)
Ratio of net investment
income to average net
assets 5.73 % 5.78% 7.85% 1.72%(c)
Portfolio turnover rate 343.74 % 313.88% 270.75% 34.22%(c)
Net assets at end of
period $396,584,133 $675,661,804 $588,892,642 $388,744,486
Ratio information
assuming no voluntary
waiver of distribution
fees:
Ratio of expenses to
average net assets 1.53 % 1.55% 1.62% 0.44%(c)
Ratio of net investment
income to average net
assets 5.48 % 5.53% 7.60% 1.66%(c)
</TABLE>
- -------------------------------------------------------------------------------
(a) For the period from August 2, 1991 (commencement of operations) to October
31, 1991.
(b) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no sales
charges. Total return would be reduced if a sales charge were taken into
account.
(c) Not annualized.
9
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
THE FUND SEEKS The Fund's investment objective is to provide investors
A HIGH TOTAL with a high total return, emphasizing current income and, to
RETURN, a lesser extent, providing opportunities for capital
EMPHASIZING appreciation, through investment in a portfolio of high
CURRENT INCOME quality fixed income securities of U.S. and foreign issuers
AND, TO A and through transactions in foreign currencies. High quality
LESSER EXTENT, securities are defined as securities which have ratings of
PROVIDING at least AA by Standard & Poor's Ratings Group ("S&P") or Aa
OPPORTUNITIES by Moody's Investors Service, Inc. ("Moody's") ("High
FOR CAPITAL Quality Ratings") or, if unrated by such rating
APPRECIATION. organizations, are determined by the Fund's Investment
Adviser or Subadviser to be of comparable credit quality. A
security will be deemed to have met this requirement if it
receives the minimum required rating from at least one such
rating organization, at the time of investment, even though
it has been rated below the minimum rating by one or more
other rating organizations. There can be no assurance that
the Fund will be successful in achieving its investment
objective.
SELECTION OF PORTFOLIO INVESTMENTS
THE FUND WILL Under normal circumstances, the Fund will seek to meet its
INVEST investment objective by pursuing investment opportunities in
PRIMARILY IN foreign and domestic fixed income securities markets and by
FOREIGN AND engaging in currency transactions to enhance returns and for
DOMESTIC FIXED the purpose of hedging its portfolio. In determining the
INCOME countries and currencies in which the Fund will invest, the
SECURITIES Fund's portfolio managers will form an opinion based
MARKETS. primarily on the views of Goldman Sachs' economists as well
as information provided by securities dealers, including
information relating to factors such as interest rates,
inflation, monetary and fiscal policies, taxation, and
political climate. The portfolio managers will apply the
Black-Litterman Model (the "Model") to their views to
develop a portfolio that produces, in the view of the
Investment Adviser and Subadviser, the optimal expected
return for a given level of risk. The Model factors in the
opinions of the portfolio managers, adjusting for their
level of confidence in such opinions, with the views implied
by an international capital asset pricing formula. The Model
is also used to maintain the level of portfolio risk within
the guidelines established by the Investment Adviser.
In selecting securities for the Fund's portfolio, the
portfolio managers consider such factors as the security's
duration, sector and credit quality rating as well as the
security's yield and prospects for capital appreciation. The
Fund will, under normal market conditions, have at least 30%
of its total assets, adjusted to reflect the Fund's net
exposure after giving effect to currency transactions and
positions, denominated in U.S. dollars. It is expected that
the Fund will use currency transactions both to enhance
returns for a given level of risk and to hedge its exposure
to foreign currencies. While the Fund will have both long
and short currency positions, its net long and short foreign
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currency exposure will not exceed the value of the Fund's
total assets. The Fund may, for temporary defensive
purposes, invest up to 100% of its total assets in dollar-
denominated securities or securities of U.S. issuers. See
"Risks, Special Investment Methods and Investment
Limitations."
PORTFOLIO DURATION
THE FUND WILL The Fund will maintain a dollar weighted average portfolio
MAINTAIN A duration of not more than five years. Duration represents
DOLLAR WEIGHTED the weighted average maturity of expected cash flows on a
AVERAGE debt obligation, discounted to present value. The longer the
PORTFOLIO duration of a debt obligation, the more sensitive its value
DURATION OF NOT is to changes in interest rates. Maturity measures only the
MORE THAN FIVE time until final payment is due on a bond or other debt
YEARS. security; it takes no account of the pattern of a security's
cash flows over time. In computing the duration of its
portfolio, the Fund will have to estimate the duration of
debt obligations that are subject to prepayment or
redemption by the issuer.
The Fund may use various techniques to shorten or lengthen
the dollar weighted average duration of its portfolio,
including the acquisition of debt obligations at a premium
or discount, transactions in options, futures contracts and
options on futures and interest rate swaps. Subject to the
policy of maintaining a dollar weighted average portfolio
duration not exceeding five years, the Fund may invest in
individual obligations deemed to have estimated remaining
maturities of ten years or less. The Fund is not subject to
any limitation with respect to the average maturity of its
portfolio.
CURRENCY AND INTEREST RATE TECHNIQUES
THE FUND It is expected that the Fund will employ certain currency
EMPLOYS and interest rate management techniques involving risks
CURRENCY AND different from those associated with investing solely in
INTEREST RATE dollar-denominated fixed income securities of U.S. issuers.
MANAGEMENT Such management techniques include transactions in options
TECHNIQUES (including yield curve options), futures, options on
WHICH INVOLVE futures, forward foreign currency exchange contracts,
RISK. currency options and futures, currency and interest rate
swaps and interest rate floors, caps and collars. To the
extent that the Fund is fully invested in foreign securities
while also maintaining currency positions, it may be exposed
to greater combined risk. The Fund's net currency positions
may expose it to risks independent of its securities
positions. See "Risks, Special Investment Methods and
Investment Limitations."
OTHER INVESTMENT POLICIES
Since the Fund is "non-diversified" under the Act, the
only statutory or regulatory diversification requirements to
which it is subject arise under federal tax law. The Fund
may, with respect to 50% of its total assets, invest up to
25% of its total assets in the securities of an issuer
(except that this limitation does
11
<PAGE>
not apply to U.S. Government securities). With respect to
the remaining 50% of the Fund's total assets, (1) the Fund
may not invest more than 5% of its total assets in the
securities of any one issuer (other than the U.S.
Government), and (2) the Fund may not acquire more than 10%
of the outstanding voting securities of any issuer. These
tests apply at the end of each quarter of its taxable year
and are subject to certain conditions and limitations under
the Internal Revenue Code of 1986, as amended (the "Code").
Since the Fund is not diversified under the Act, it may be
more susceptible to adverse developments affecting any
single issuer in which its investments are concentrated. Not
more than 25% of the Fund's total assets will be invested in
the securities of any one foreign government or any other
issuer (except that this limitation does not apply to the
U.S. Government). However, this 25% restriction does not
prohibit the Fund from concentrating more than 25% of its
total assets in the securities of issuers located in Canada,
Germany, Japan and the United Kingdom as well as in the
United States. In addition, for purposes of these percentage
limitations, the term "securities" does not include foreign
currencies, which means that the Fund could have more than
25% of its total assets denominated in any particular
currency described in Appendix A.
Except as otherwise stated under "Investment
Restrictions," the Fund's investment objective and policies
are not fundamental and may be changed without a vote of the
shareholders. If there is a change in the Fund's investment
objective, shareholders should consider whether the Fund
remains an appropriate investment in light of their then
current financial positions and needs.
Market risks are inherent in all securities in varying
degrees. Therefore, there can be no assurance that the Fund
will be successful in meeting its investment objective. The
Fund is intended for investors who can accept the risks
involved in investments in domestic and foreign fixed income
securities, in foreign currencies and in the currency and
interest rate management techniques that are expected to be
employed by the Fund. An investment in shares of the Fund
does not constitute a complete investment program. Investors
may wish to complement an investment in the Fund with other
types of investments.
FIXED INCOME SECURITIES
THE FUND MAY The fixed income securities in which the Fund may invest
INVEST IN FIXED include: (i) securities issued or guaranteed by the U.S.
INCOME Government, its agencies or instrumentalities ("U.S.
SECURITIES. Government securities") and custodial receipts therefor;
(ii) securities issued or guaranteed by a foreign government
or any of its political subdivisions, authorities, agencies
or instrumentalities or by supranational entities (i.e.,
international organizations designated or supported by
governmental entities to promote economic reconstruction or
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<PAGE>
development, such as the World Bank); (iii) corporate debt
securities; (iv) certificates of deposit and bankers'
acceptances issued or guaranteed by, or time deposits
maintained at, banks (including U.S. or foreign branches of
U.S. banks or U.S. or foreign branches of foreign banks)
having total assets of more than $1 billion; (v) commercial
paper rated A-1 or better by S&P, Prime-1 or better by
Moody's, Fitch-1 or better by Fitch Investors Service, Inc.,
or Duff 1 or better by Duff & Phelps Inc. or, if not rated
by such rating organizations, issued by U.S. or foreign
companies having outstanding debt securities with a High
Quality Rating and determined by the Investment Adviser or
Subadviser to be of comparable credit quality to securities
with a High Quality Rating; and (vi) mortgage and asset
backed securities.
Although the Fund may invest in securities satisfying the
minimum credit quality criteria prescribed above, the Fund
generally intends to invest at least 50% of its net assets
in securities having the highest applicable credit quality
rating, at the time of investment, and unrated securities
determined by the Investment Adviser or Subadviser to be of
comparable credit quality to securities with the highest
applicable credit quality rating. If a security that at the
time of purchase satisfies the Fund's minimum rating
criteria is subsequently downgraded below such rating
criteria, the Fund will not be required to dispose of such
security. If a downgrading occurs, the Investment Adviser or
Subadviser will consider what action, including the sale of
such security, is in the best interest of the Fund.
Currently, most of the foreign securities that meet the
Fund's credit quality standards are securities issued by
foreign governments. The debt securities in which the Fund
will invest may have fixed, variable or floating interest
rates.
FOREIGN INVESTMENTS AND CURRENCIES
The Fund will, under normal market conditions, have at
least 30% of its total assets, adjusted to reflect the
Fund's net exposure after giving effect to currency
transactions and positions, denominated in U.S. dollars. The
performance of investments in Non-Dollar Securities will
depend on, among other things, the strength of the foreign
currency against the dollar and the interest rate
environment in the country issuing the foreign currency.
Absent other events which could otherwise affect the value
of Non-Dollar Securities (such as a change in the political
climate or an issuer's credit quality), appreciation in the
value of the foreign currency generally can be expected to
increase the value of the Fund's Non-Dollar Securities in
terms of U.S. dollars. A rise in foreign interest rates or
decline in the value of foreign currencies relative to the
U.S. dollar generally can be expected to depress the value
of the Fund's Non-Dollar Securities in terms of U.S.
dollars. The Investment Adviser and the Subadviser evaluate
investments on the basis of fundamental economic criteria
(e.g., relative inflation levels and trends, growth rate
forecasts, balance of payments status and economic policies)
as well as technical and political data.
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<PAGE>
Under normal circumstances, the Fund will invest in
securities of issuers in at least three countries. No more
than 25% of the Fund's total assets will be invested in
securities of issuers located in any country other than
Canada, Germany, Japan, the United Kingdom and the United
States. Investing the Fund's assets in securities of issuers
located outside the United States will subject the Fund to
the risks of adverse social, political or economic events
which may occur in such foreign countries. See "Risks,
Special Investment Methods and Investment Limitations--
Foreign Currency Transactions" below. The Fund may, for
temporary defensive purposes (such as when instability or
unfavorable conditions exist in foreign countries), invest
100% of its total assets in dollar-denominated securities or
securities of U.S. issuers. See "Risks, Special Investment
Methods and Investment Limitations."
INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR
THE FUND'S The Fund's investment adviser is Goldman Sachs Asset
INVESTMENT Management, a separate operating division of Goldman Sachs.
ADVISER AND The Fund's subadviser is GSAM International, an affiliate of
ADMINISTRATOR Goldman Sachs. The management services provided by the
IS GOLDMAN Investment Adviser and Subadviser are subject to the general
SACHS ASSET supervision of the Trust's Board of Trustees. Goldman Sachs
MANAGEMENT. THE Asset Management also serves as the administrator of the
FUND'S Fund.
SUBADVISER IS
GSAM Goldman Sachs Asset Management and its affiliates serve a
INTERNATIONAL. wide range of clients including private and public pension
funds, endowments, foundations, banks, thrifts, insurance
companies, corporations, and private investors and family
groups.
Founded in 1869, Goldman Sachs is among the oldest and
largest investment banking firms in the United States.
Goldman Sachs is a leader in virtually every field of
investing and financing, participating in financial markets
worldwide and serving individuals, institutions,
corporations and governments. Goldman Sachs is headquartered
in New York and has offices throughout the United States and
in Beijing, Frankfurt, George Town, Hong Kong, London,
Madrid, Milan, Montreal, Osaka, Paris, Seoul, Shanghai,
Singapore, Sydney, Taipei, Tokyo, Toronto, Vancouver and
Zurich.
GSAM International was organized in 1990. As a company
with unlimited liability under the laws of England, it is
authorized to conduct investment advisory business in the
United Kingdom as a member of the Investment Management
Regulatory Organisation Limited, a United Kingdom self-
regulatory organization.
The Investment Adviser and Subadviser are able to draw on
the research and expertise of Goldman Sachs in making
investment decisions for the Fund. The day-to-day
supervision of the Investment Adviser and Subadviser may be
effected by partners, officers and directors of Goldman
Sachs, Goldman Sachs
14
<PAGE>
International ("GSI") and their affiliates who may be
involved in the global bond trading activities of Goldman
Sachs and its affiliates. However, neither Goldman Sachs,
GSI nor any of their affiliates is expected or obligated to
make available to the Fund any information concerning their
proprietary trading activities or strategies, or the trading
activities or strategies used for other accounts managed by
them, and the Fund's investment results may differ from
those achieved by other clients or proprietary accounts of
Goldman Sachs or its affiliates. For a discussion of certain
potential conflicts of interest involving Goldman Sachs and
its affiliates, see "Management--Investment Adviser,
Subadviser and Administrator."
RISKS, SPECIAL INVESTMENT METHODS
AND INVESTMENT LIMITATIONS
FOREIGN TRANSACTIONS
THE FUND WILL FOREIGN SECURITIES. Investments in securities of foreign
INVEST IN issuers and Non-Dollar Securities offer potential benefits,
SECURITIES OF but also involve certain significant risks that are not
FOREIGN typically associated with investing in domestic securities.
ISSUERS.
Among the risks involved in investments in securities of
foreign issuers and Non-Dollar Securities are fluctuations
in currency exchange rates and the possible imposition of
exchange control regulations (e.g., currency blockage) or
other foreign or U.S. laws or restrictions applicable to
such investments. A decline in the exchange rate would
reduce the value of certain portfolio securities. In
addition, if the exchange rate for the currency in which the
Fund receives interest payments declines against the U.S.
dollar before such interest is paid as dividends to
shareholders, the Fund may have to sell portfolio securities
to obtain sufficient cash to pay such dividends. As
discussed below, the Fund may employ certain investment
techniques to hedge its foreign currency exposure; however,
such techniques also entail certain risks.
There may be less publicly available information about a
foreign issuer than about a domestic issuer. Foreign issuers
are not generally subject to accounting, auditing and
financial reporting standards comparable to those applicable
to domestic issuers. Most foreign securities markets may
have substantially less volume and are subject to less
government supervision than U.S. securities markets, and
securities of many foreign issuers may be less liquid and
more volatile than securities of comparable domestic
issuers. In addition, there is generally less government
regulation of securities exchanges, securities dealers, and
listed and unlisted companies in foreign countries than in
the United States.
Foreign markets also have different clearance and
settlement procedures, and in certain markets there have
been times when settlements have been
15
<PAGE>
unable to keep pace with the volume of securities
transactions, making it difficult to conduct such
transactions. Delays in settlement could result in temporary
periods when a portion of the assets of the Fund is
uninvested and no return is earned thereon. The inability of
the Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive
investment opportunities. Inability to dispose of portfolio
securities due to settlement problems could result either in
losses to the Fund due to subsequent declines in value of
the portfolio security or, if the Fund has entered into a
contract to sell the security, could result in possible
liability to the purchaser. Costs associated with
transactions in securities traded on foreign markets or of
foreign issuers are generally higher than costs associated
with transactions in U.S. securities on U.S. markets.
In addition, with respect to certain foreign countries,
there is a possibility of expropriation or confiscatory
taxation, imposition of withholding or other taxes on
dividend or interest payments or capital gains, limitations
on the removal of funds or other assets of the Fund,
political or social instability or diplomatic developments
which could affect investments in those countries.
Individual foreign economies may differ favorably or
unfavorably from the United States economy in such respects
as growth of gross national product, rate of inflation,
capital reinvestment, resources, self-sufficiency and
balance of payments position. The securities markets, values
of securities, yields and risks associated with securities
markets in different countries may change independently of
each other.
THE FUND MAY CONCENTRATION IN CANADA, GERMANY, JAPAN AND THE UNITED
INVEST A KINGDOM. The Fund may invest more than 25% of its total
SUBSTANTIAL assets in the securities of corporate and governmental
PORTION OF ITS issuers located in each of Canada, Germany, Japan and the
ASSETS IN United Kingdom as well as the securities of U.S. issuers.
ISSUERS LOCATED Concentration of the Fund's investments in such issuers or
IN CANADA, currencies will subject the Fund, to a greater extent than
GERMANY, JAPAN if investment was more limited, to the risks of adverse
AND THE UNITED securities markets, exchange rates and social, political or
KINGDOM AS WELL economic events which may occur in those countries. See
AS THE Appendix A to this Prospectus for further information about
SECURITIES OF the foregoing countries. In addition, for purposes of these
U.S. ISSUERS. percentage limitations, the term "securities" does not
include foreign currencies, which means that the Fund could
have more than 25% of its total assets denominated in any
particular currency described in Appendix A.
THE FUND MAY FOREIGN CURRENCY TRANSACTIONS. Because investment in
ENTER INTO foreign issuers will usually involve currencies of foreign
FOREIGN countries, the value of the assets of the Fund as measured
CURRENCY in U.S. dollars will be affected by changes in foreign
TRANSACTIONS. currency exchange rates. Currencies in which the Fund's
portfolio securities may be denominated include, but are not
limited to, those listed in Appendix A as well as the U.S.
dollar.
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<PAGE>
An issuer of fixed income securities purchased by the Fund
may be domiciled in a country other than the country in
whose currency the instrument is denominated. The Fund may
also invest in debt securities denominated in the European
Currency Unit ("ECU"), which is a "basket" consisting of
specified amounts in the currencies of certain of the twelve
member states of the European Community. The specific
amounts of currencies comprising the ECU may be adjusted by
the Council of Ministers of the European Community from time
to time to reflect changes in relative values of the
underlying currencies. In addition, the Fund may invest in
securities denominated in other currency "baskets."
Currency exchange rates may fluctuate significantly over
short periods of time causing, together with other factors,
the Fund's net asset value to fluctuate as well. Currency
exchange rates generally are determined by the forces of
supply and demand in the foreign exchange markets and the
relative merits of investments in different countries,
actual or anticipated changes in interest rates and other
complex factors, as seen from an international perspective.
Currency exchange rates also can be affected unpredictably
by intervention or failure to intervene by U.S. or foreign
governments or central banks or by currency controls or
political developments in the U.S. or abroad. To the extent
that a substantial portion of the Fund's total assets,
adjusted to reflect the Fund's net position after giving
effect to currency transactions, is denominated in the
currencies of foreign countries, the Fund will be more
susceptible to the risk of adverse economic and political
developments within those countries.
In addition to investing in Non-Dollar Securities, the
Fund may engage in a variety of foreign currency techniques.
The Fund may hold foreign currency received in connection
with investments in foreign securities when, in the judgment
of the Investment Adviser or Subadviser, it would be
beneficial to convert such currency into U.S. dollars at a
later date, based on anticipated changes in the relevant
exchange rate. The Fund will incur costs in connection with
conversions between various currencies.
The Fund may purchase or sell forward foreign currency
exchange contracts to seek to increase total return when the
Investment Adviser or Subadviser anticipates that the
foreign currency will appreciate or depreciate in value, but
securities denominated in that currency do not in the
Adviser's or Subadviser's view present attractive investment
opportunities and are not held in the Fund's portfolio. In
addition, the Fund may enter into forward foreign currency
exchange contracts in order to protect against adverse
changes in future foreign currency exchange rates. The Fund
may engage in cross-hedging by using forward contracts in
one currency to hedge against fluctuations in the value of
securities denominated in a different currency if the
Investment Adviser or Subadviser believes that there is a
pattern of correlation between the two currencies.
17
<PAGE>
The Fund may enter into contracts to purchase foreign
currencies to protect against an anticipated rise in the
U.S. dollar price of securities it intends to purchase. The
Fund may enter into contracts to sell foreign currencies to
protect against the decline in value of its Non-Dollar
Securities due to a decline in the value of foreign
currencies against the U.S. dollar. Contracts to sell
foreign currency could limit any potential gain which might
be realized by the Fund if the value of the underlying
currency increased.
If the Fund enters into a forward foreign currency
exchange contract to sell foreign currency to increase total
return or to buy foreign currency for any purpose, the Fund
will be required to place cash or high grade liquid debt
securities in a segregated account of the Fund in an amount
equal to the value of the Fund's total assets committed to
the consummation of the forward contract. If the value of
the securities placed in the segregated account declines,
additional cash or securities will be placed in the account
so that the value of the account will equal the amount of
the Fund's commitment with respect to the contract.
Forward contracts are subject to the risk that the
counterparty to such contract will default on its
obligations. Since a forward foreign currency exchange
contract is not guaranteed by an exchange or clearinghouse,
a default on the contract would deprive the Fund of
unrealized profits, transaction costs or the benefits of a
currency hedge or force the Fund to cover its purchase or
sale commitments, if any, at the current market price. The
Fund will not enter into such transactions unless the credit
quality of the unsecured senior debt or the claims-paying
ability of the counterparty is considered to be investment
grade by the Investment Adviser or the Subadviser.
THE FUND MAY OPTIONS ON CURRENCIES. The Fund may purchase and write put
PURCHASE AND and call options on currencies for the purpose of protecting
WRITE (SELL) against declines in the U.S. dollar value of foreign
OPTIONS ON portfolio securities and against increases in the U.S.
FOREIGN dollar cost of foreign securities to be acquired. The Fund
CURRENCIES. may use options on currency to cross-hedge, which involves
writing or purchasing options on one currency to hedge
against changes in exchange rates for a different currency
with a pattern of correlation. As with other kinds of option
transactions, however, the writing of an option on currency
will constitute only a partial hedge, up to the amount of
the premium received. The Fund could be required to purchase
or sell currencies at disadvantageous exchange rates,
thereby incurring losses. The purchase of an option on
currency may constitute an effective hedge against exchange
rate fluctuations; however, in the event of exchange rate
movements adverse to the Fund's position, the Fund may
forfeit the entire amount of the premium plus related
transaction costs. In addition, the Fund may purchase call
or put options on currency to seek to increase total return
when the Investment Adviser or Subadviser anticipates that
the currency will appreciate or depreciate in value, but the
securities denominated in that currency do not present
attractive investment opportunities and are not
18
<PAGE>
held in the Fund's portfolio. Options on currencies to be
written or purchased by the Fund will be traded on U.S. and
foreign exchanges or over-the-counter. See "Risks Associated
with Options Transactions" below for a discussion of the
liquidity risks associated with options transactions.
INTEREST RATE SWAPS, CURRENCY SWAPS, AND INTEREST RATE CAPS,
FLOORS AND COLLARS
THE FUND MAY The Fund may enter into interest rate swaps and currency
ENTER INTO swaps for both hedging and to seek to increase total return.
INTEREST RATE The Fund may also enter into other types of interest rate
SWAPS, CURRENCY swap arrangements such as caps, floors and collars. The Fund
SWAPS, AND will typically use interest rate swaps to shorten the
INTEREST RATE effective duration of its portfolio. Interest rate swaps
CAPS, FLOORS involve the exchange by the Fund with another party of their
AND COLLARS. respective commitments to pay or receive interest, such as
an exchange of fixed rate payments for floating rate
payments. Currency swaps involve the exchange of their
respective rights to make or receive payments in specified
currencies. The purchase of an interest rate cap entitles
the purchaser, to the extent that a specified index exceeds
a predetermined interest rate, to receive payments 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. Since interest rate swaps, currency
swaps, and interest rate caps, floors and collars are
individually negotiated, the Fund expects to achieve an
acceptable degree of correlation between its portfolio
investments and its swap, cap, floor and collar positions
entered into for hedging purposes.
The Fund will enter into interest rate swaps only on a net
basis, which means that the two payment streams are netted
out, with the Fund receiving or paying, as the case may be,
only the net amount of the two payments. Interest rate swaps
do not involve the delivery of securities, other underlying
assets or principal. Accordingly, the risk of loss with
respect to interest rate swaps is limited to the net amount
of interest payments that the Fund is contractually
obligated to make. If the other party to an interest rate
swap defaults, the Fund's risk of loss consists of the net
amount of interest payments that the Fund is contractually
entitled to receive, if any. In contrast, currency swaps
usually involve the delivery of the entire principal value
of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value
of a currency swap is subject to the risk that the other
party to the swap will default on its contractual delivery
obligations. The Fund will maintain in a segregated account
with the Fund's custodian cash and liquid, high grade debt
securities equal to the net amount, if any, of the excess of
the Fund's obligations over its entitlements with respect to
swap transactions. To the extent that the net amount of a
swap is held in a segregated account consisting of cash and
liquid, high grade debt securities,
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<PAGE>
the Fund, the Investment Adviser and the Subadviser believe
that interest rate and currency swaps do not constitute
senior securities under the Act and, accordingly, will not
treat them as being subject to the Fund's borrowing
restriction.
The Fund will not enter into interest rate or currency
swap, or interest rate cap, floor or collar transactions
unless the unsecured commercial paper, senior debt or claims
paying ability of the other party is rated either AA or A-1
or better by S&P or Aa or P-1 or better by Moody's or, if
unrated by such rating organizations, determined to be of
comparable quality by the Investment Adviser or Subadviser.
The use of interest rate swaps, currency swaps, and
interest rate floors, caps 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
or Subadviser is incorrect in its forecasts of market
values, interest rates and currency exchange rates, the
investment performance of the Fund would be less favorable
than it would have been if this investment technique were
not used. The staff of the SEC currently takes the position
that swaps, caps, floors and collars are illiquid and thus
subject to the Fund's 15% limitation on illiquid securities.
STRUCTURED SECURITIES
The Fund may invest in structured notes, bonds or
debentures, the value of the principal of and/or interest on
which is determined by reference to changes in the value of
specific currencies, interest rates, commodities, indices or
other financial indicators (the "Reference") or the relative
change in two or more References. The interest rate or the
principal amount payable upon maturity or redemption may be
increased or decreased depending upon changes in the
applicable Reference. The terms of the structured securities
may provide that in certain circumstances no principal is
due at maturity and, therefore, may result in the loss of
the Fund's investment. 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, the change in interest rate or the value of the
security at maturity may be a multiple of the change in the
value of the Reference. Consequently, structured securities
entail a greater degree of market risk than other types of
debt obligations. Structured securities may also be more
volatile, less liquid and more difficult to accurately price
than less complex securities.
INVERSE FLOATING RATE SECURITIES
THE FUND MAY The Fund may invest in inverse floating rate securities.
INVEST IN The interest rate on an inverse floater resets in the
INVERSE opposite direction from the market rate of interest to which
FLOATING RATE the inverse floater is indexed. An inverse floater may be
SECURITIES. considered to be leveraged to the extent that its interest
rate varies by a
20
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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.
U.S. GOVERNMENT SECURITIES
U.S. Government securities are obligations issued or
guaranteed by the U.S. Government, its agencies, authorities
or instrumentalities. Some U.S. Government securities, such
as Treasury bills, notes and bonds, which differ only in
their interest rates, maturities and times of issuance, are
supported by the full faith and credit of the United States
of America. Others, such as obligations issued or guaranteed
by U.S. Government agencies, authorities or
instrumentalities, are supported either by (a) the full
faith and credit of the U.S. Government (such as securities
of the Government National Mortgage Association), (b) the
right of the issuer to borrow from the Treasury (such as
securities of the Student Loan Marketing Association), (c)
the discretionary authority of the U.S. Government to
purchase the agency's obligations (such as securities of the
Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation), or (d) only the credit of the
issuer. No assurance can be given that the U.S. Government
will continue to provide financial support to U.S.
Government agencies, authorities or instrumentalities in the
future.
Securities guaranteed as to principal and interest by the
U.S. Government, its agencies, authorities or
instrumentalities are deemed to include (a) securities for
which the payment of principal and interest is backed by a
guaranty of the U.S. Government, its agencies, authorities
or instrumentalities and (b) participations in loans made to
foreign governments or their agencies that are so
guaranteed. The secondary market for certain of these
participations is limited. Such participations may therefore
be regarded as illiquid.
The Fund may also invest in separately traded principal
and interest components of securities guaranteed or issued
by the U.S. Government or its agencies or instrumentalities
if such components are traded independently under the
Separate Trading of Registered Interest and Principal of
Securities program ("STRIPS") or any similar program
sponsored by the U.S. Government.
CUSTODIAL RECEIPTS. The Fund may acquire custodial
receipts in respect of securities issued or guaranteed as to
principal and interest by the U.S. Government, its agencies,
authorities or instrumentalities. Such custodial receipts
evidence ownership of future interest payments, principal
payments or both on certain notes or bonds issued by the
U.S. Government, its agencies or instrumentalities. For
certain securities law purposes, custodial receipts are not
considered obligations of the U.S. Government.
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MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
THE FUND MAY The Fund may invest in mortgage-backed securities, which
INVEST IN represent direct or indirect participations in, or are
MORTGAGE-BACKED collateralized by and payable from, mortgage loans secured
AND ASSET- by real property. The Fund may also invest in asset-backed
BACKED securities, which represent participations in, or are
SECURITIES. secured by and payable from, assets such as motor vehicle
installment sales contracts, installment loan contracts,
leases of various types of real and personal property and
receivables from revolving credit (credit card) agreements
and other categories of receivables. Such securities are
generally issued by trusts and special purpose corporations.
Mortgage-backed and 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 mortgage-backed and asset-backed securities can
be expected to accelerate, and thus impair the Fund's
ability to reinvest the returns of principal at comparable
yields. Conversely, in a rising interest rate environment, a
declining prepayment rate will extend the average life of
many mortgage-backed and asset-backed securities. This
possibility is often referred to as extension risk.
Extending the average life of a mortgage-backed or asset-
backed security increases the risk of depreciation due to
future increases in market interest rates. Accordingly, the
market values of such securities will vary with changes in
market interest rates generally and in yield differentials
among various kinds of U.S. Government securities and other
mortgage-backed and asset-backed securities. Asset-backed
securities present certain risks that are not presented by
mortgage-backed securities because asset-backed securities
generally do not have the benefit of a security interest in
collateral that is comparable to mortgage assets. There is
the possibility that, in some cases, recoveries on
repossessed collateral may not be available to support
payments on these securities.
OPTIONS ON SECURITIES AND SECURITIES INDICES
THE FUND MAY The Fund may write (sell) covered call and put options on
PURCHASE AND any securities in which it may invest. The Fund may also
WRITE (SELL) write call and put options on any securities index composed
OPTIONS ON of securities in which it may invest. The Fund may write and
SECURITIES AND purchase options, referred to as "yield curve options," on
SECURITIES the yield differential between two securities. In addition,
INDICES. the Fund may purchase put and call options on any securities
in which it may invest or options on any securities index
composed of securities in which it may invest.
The writing and purchase of options is a highly
specialized activity which involves investment techniques
and risks different from those associated with ordinary
portfolio securities transactions. The use of options to
increase total return involves the risk of loss if the
Investment Adviser or Subadviser is
22
<PAGE>
incorrect in its expectations of fluctuations in securities
prices or interest rates. The successful use of puts for
hedging purposes depends in part on the ability of the
Investment Adviser or Subadviser to predict future price
fluctuations and the degree of correlation between the
options and securities markets. If the Investment Adviser or
Subadviser is incorrect in its determination of the
correlation between the securities indices on which options
are written or purchased and the securities in the Fund's
investment portfolio or, with respect to yield curve
options, of the direction or the extent of the movement of
the yield differential, the investment performance of the
Fund will be less favorable than it would have been in the
absence of such option transactions. The writing of options
could significantly increase the Fund's portfolio turnover
rate and, therefore, associated brokerage commissions or
spreads.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
THE FUND MAY To hedge against changes in interest rates, securities
ENGAGE IN prices or currency exchange rates or to seek to increase
FUTURES total return, the Fund may purchase and sell various kinds
TRANSACTIONS. of futures contracts, and purchase and write call and put
options on any of such futures contracts. The Fund may also
enter into closing purchase and sale transactions with
respect to any of such contracts and options. The futures
contracts may be based on various securities (such as U.S.
Government securities), securities indices, foreign
currencies and other financial instruments and indices. The
Fund will engage in futures and related options transactions
only for bona fide hedging purposes as defined in
regulations of the Commodity Futures Trading Commission or
to seek to increase total return to the extent permitted by
such regulations.
The Fund may not purchase or sell futures contracts or
purchase or sell related options to increase total return,
except for closing purchase or sale transactions, if
immediately thereafter the sum of the amount of margin
deposits and premiums paid on the Fund's outstanding
positions in futures and related options entered into for
the purpose of seeking to increase total return would exceed
5% of the market value of the Fund's net assets.
Transactions in futures contracts and options on futures
involve brokerage costs, require margin deposits and, in the
case of contracts and options obligating the Fund to
purchase securities or currencies, require the Fund to
segregate cash or liquid, high grade debt securities with a
value equal to the amount of the Fund's obligations.
While transactions in futures contracts and options on
futures may reduce certain risks, such transactions
themselves entail certain other risks. See "Investment
Objectives and Policies--Futures Contracts and Options on
Futures Contracts" in the Additional Statement. Thus, while
the Fund may benefit from the use of futures and options on
futures, unanticipated changes in interest rates, securities
prices or currency exchange rates may result in a poorer
overall performance for the Fund than if it had not entered
into any futures contracts or options transactions. The loss
incurred by the Fund in writing options on futures is
potentially unlimited and may exceed the amount of the
premium received.
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<PAGE>
The use of futures may increase the volatility of the
Fund's net asset value. The profitability of the Fund's
trading in futures to increase total return will depend on
the ability of the Investment Adviser and Subadviser to
correctly analyze the futures markets. In addition, because
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 the Fund.
Further, futures contracts and options on futures may be
illiquid, and exchanges may limit fluctuations in futures
contract prices during a single day.
In the event of an imperfect correlation between a futures
position and a portfolio position which is intended to be
protected, the desired protection may not be obtained and
the Fund may be exposed to risk of loss. In addition, it is
not possible to hedge fully or perfectly against currency
fluctuations affecting the value of securities denominated
in foreign currencies because the value of such securities
is also likely to fluctuate as a result of independent
factors not related to currency fluctuations. Therefore,
perfect correlation between the Fund's futures positions and
portfolio positions will be impossible to achieve.
The Fund's transactions in foreign currency, forward
foreign currency exchange contracts, options, futures
contracts, and certain other derivative transactions may be
limited by the requirements of the Code for qualification as
a regulated investment company.
RISKS OF DERIVATIVE TRANSACTIONS. The Fund's transactions
in interest rate and currency swaps, interest rate caps,
floors and collars, inverse floating rate securities,
structured securities, options, futures, options on futures
and currency forward contracts involve certain risks,
including a possible lack of correlation between changes in
the value of hedging instruments and the portfolio assets
being hedged, the potential illiquidity of the markets for
derivative instruments, the risks arising from the margin
requirements and related leverage factors associated with
such transactions. The use of these management techniques to
seek to increase total return also involves the risk of loss
if the Investment Adviser or Subadviser is incorrect in its
expectation of fluctuations in currency exchange rates
securities prices or interest rates.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may purchase securities that are not registered
or are offered in an exempt non-public offering ("restricted
securities") under the Securities Act of 1933, as amended
("1933 Act"), including securities offered and sold to
"qualified institutional buyers" in reliance on Rule 144A
under the 1933 Act. However, the Fund will not invest more
than 15% of its assets in illiquid investments, which
includes repurchase agreements maturing in more than seven
days, time deposits with a notice or demand period of more
than seven days, interest rate and currency swaps, and
interest rate caps, floors and collars, securities that are
not readily marketable and restricted securities,
24
<PAGE>
unless the Board of Trustees of the Trust determines, based
upon a continuing review of the trading markets for the
specific restricted security, that such restricted security
eligible for sale under Rule 144A is liquid. The Board of
Trustees may adopt guidelines and delegate to the Investment
Adviser the daily function of determining and monitoring the
liquidity of restricted securities. The Board of Trustees,
however, will retain sufficient oversight and be ultimately
responsible for the determinations. Since it is not possible
to predict with assurance exactly how this market for
restricted securities sold and offered under Rule 144A will
develop, the Board of Trustees will carefully monitor the
Fund's investments in these securities, focusing on such
important factors, among others, as valuation, liquidity and
availability of information. This investment practice could
have the effect of increasing the level of illiquidity in
the Fund to the extent that qualified institutional buyers
become for a time uninterested in purchasing these
restricted securities.
The purchase price and subsequent valuation of restricted
securities normally reflect a discount from the price at
which such securities trade when they are not restricted,
since the restriction makes them less liquid. The amount of
the discount from the prevailing market price is expected to
vary depending upon the type of security, the character of
the issuer, the party who will bear the expenses of
registering the restricted securities and prevailing supply
and demand conditions.
ZERO COUPON, DEFERRED INTEREST AND CAPITAL APPRECIATION
BONDS
THE FUND MAY The Fund may invest in zero coupon, deferred interest and
INVEST IN ZERO capital appreciation bonds. Zero coupon, deferred interest
COUPON, and capital appreciation bonds are debt obligations which
DEFERRED are issued at a significant discount from face value that do
INTEREST AND not entitle the holder to any payment of interest prior to
CAPITAL maturity or a specified commencement or redemption date (or
APPRECIATION cash payment date). The amount of the discount varies
BONDS. depending on the time remaining until maturity or cash
payment date, prevailing interest rates, the liquidity of
the security and the perceived credit quality of the issuer.
These securities also may take the form of debt securities
that have been stripped of their unmatured interest coupons,
the coupons themselves or receipts or certificates
representing interests in such stripped debt obligations or
coupons. The market prices of zero coupon, deferred interest
and capital appreciation bonds generally are more volatile
than the market prices of interest-bearing securities and
are likely to respond to a greater degree to changes in
interest rates than interest-bearing securities having
similar maturities and credit quality. The Fund's
investments in zero coupon, deferred interest and capital
appreciation bonds or stripped securities may require the
Fund to sell certain of its portfolio securities to generate
sufficient cash to satisfy certain income distribution
requirements. See "Taxation" in the Additional Statement.
25
<PAGE>
OTHER INVESTMENT COMPANIES
THE FUND MAY The Fund reserves the right to invest up to 10% of its
INVEST IN total assets, calculated at the time of purchase, in the
SECURITIES OF securities of other investment companies including business
OTHER development companies and small business investment
INVESTMENT companies. The Fund may not invest more than 5% of its total
COMPANIES. assets in the securities of any one investment company or in
more than 3% of the voting securities of any other
investment company. Pursuant to an exemptive order obtained
from the SEC, other investment companies in which the Fund
may invest include money market funds for which the
Investment Adviser, the Subadviser or any of their
affiliates serves as investment adviser. The Fund will
indirectly bear its proportionate share of any management
fees and other expenses paid by investment companies in
which it invests in addition to the advisory and
administration fees paid by the Fund. However, to the extent
that the Fund invests in a money market fund for which the
Investment Adviser or any of its affiliates acts as adviser,
the advisory and administration fees payable by the Fund to
the Investment Adviser will be reduced by an amount equal to
the Fund's proportionate share of the advisory and
administration fees paid by such money market fund to the
Investment Adviser or any of its affiliates.
REPURCHASE AGREEMENTS
THE FUND MAY The Fund may enter into repurchase agreements with dealers
ENTER INTO in U.S. Government securities and member banks of the
REPURCHASE Federal Reserve System which furnish collateral at least
AGREEMENTS. equal in value or market price to the amount of their
repurchase obligation. In a repurchase agreement, the Fund
purchases a debt security from a seller which undertakes to
repurchase the security at a specified resale price on an
agreed future date (ordinarily a week or less). The resale
price generally exceeds the purchase price by an amount
which reflects an agreed-upon market interest rate for the
term of the repurchase agreement. The primary risk is that,
if the seller defaults, the 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 in
connection with the related repurchase agreement are less
than the repurchase price. Repurchase agreements maturing in
more than seven days are considered by the Fund to be
illiquid. In addition, the Fund, 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.
26
<PAGE>
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES
THE FUND MAY The Fund may purchase securities on a when-issued basis.
PURCHASE WHEN- When-issued transactions arise when securities are purchased
ISSUED by the Fund with payment and delivery taking place in the
SECURITIES AND future in order to secure what is considered to be an
ENTER INTO advantageous price and yield to the Fund at the time of
FORWARD entering into the transaction. The Fund may also purchase
COMMITMENT securities on a forward commitment basis. In a forward
TRANSACTIONS. commitment transaction, the Fund contracts to purchase
securities for a fixed price at a future date beyond
customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date
cash or liquid, high grade debt obligations in an amount
sufficient to meet the purchase price. Alternatively, the
Fund may enter into offsetting contracts for the forward
sale of other securities that it owns. 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 prior to the settlement date. Although
the Fund would generally purchase securities on a when-
issued or forward commitment basis with the intention of
actually acquiring securities for its portfolio, the Fund
may dispose of a when-issued security or forward commitment
prior to settlement if the Investment Adviser or Subadviser
deems it appropriate to do so.
LENDING OF PORTFOLIO SECURITIES
THE FUND MAY The Fund may also seek to increase its income by lending
EARN ADDITIONAL portfolio securities. Under present regulatory policies,
INCOME BY such loans may be made to institutions, such as certain
LENDING ITS broker-dealers, and are required to be secured continuously
PORTFOLIO by collateral in cash, cash equivalents, or U.S. Government
SECURITIES. securities maintained on a current basis in an amount at
least equal to the market value of the securities loaned.
Cash collateral may be invested in cash equivalents. If the
Investment Adviser or Subadviser 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 the Fund.
See "Investment Restrictions" in the Additional Statement.
The Fund may experience loss or delay in the recovery of its
securities if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the
Fund.
INVESTMENT RESTRICTIONS
CERTAIN OF THE The Fund is subject to certain investment restrictions
FUND'S which, as described in more detail in the Additional
INVESTMENT Statement, are fundamental policies that cannot be changed
RESTRICTIONS without the approval of a majority of the outstanding shares
CAN BE CHANGED of the Fund. Among other restrictions, the Fund may not
ONLY BY invest more than 25% of its total assets in the securities
SHAREHOLDER of issuers (including any one foreign government, but
VOTE. excluding the U.S. Government) in any one industry. For
purposes of this percentage limitation, the term
"securities" does not include foreign currencies, which
means that the Fund could have more than 25% of its total
assets denominated in a particular currency. The Fund may
not borrow
27
<PAGE>
money, except from banks for temporary or short-term
purposes, in connection with clearance of portfolio
transactions, redemptions and failed settlements and to
finance certain additional purchases of securities, provided
that the Fund maintains asset coverage of at least 300% for
all such borrowings. As a matter of non-fundamental policy,
the Fund may not purchase securities while such borrowings
exceed 5% of the value of the Fund's assets.
PORTFOLIO TURNOVER
THE FUND MAY The Fund may engage in active short-term trading to
ENGAGE IN benefit from yield disparities among different issues of
ACTIVE TRADING. securities or among the markets for fixed income securities
of different countries, to seek short- term profits during
periods of fluctuating interest rates, or for other reasons.
Such trading will increase the Fund's portfolio turnover
rate and may increase the incidence of short-term capital
gains (distributions of which are taxable to shareholders as
ordinary income). A high rate of portfolio turnover (100% or
higher) involves correspondingly greater expenses which must
be borne by the Fund and its shareholders and may under
certain circumstances make it more difficult for the Fund to
qualify as a regulated investment company under the Code.
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 the
Fund's portfolio securities, excluding securities having a
maturity at the date of purchase of one year or less.
MANAGEMENT
TRUSTEES AND OFFICERS
THE TRUSTEES The Trust's Board of Trustees is responsible for deciding
ARE RESPONSIBLE matters of general policy and reviewing the actions of the
FOR THE OVERALL Investment Adviser, Subadviser, administrator, distributor
MANAGEMENT AND and transfer agent. The officers of the Trust conduct and
SUPERVISION OF supervise the Fund's daily business operations. The
THE TRUST'S Additional Statement contains information as to the identity
BUSINESS. of, and other information about, the Trustees and officers
of the Trust.
INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR
GOLDMAN SACHS INVESTMENT ADVISER AND SUBADVISER. Goldman Sachs Asset
ASSET Management, One New York Plaza, New York, New York 10004, a
MANAGEMENT AND separate operating division of Goldman Sachs, acts as the
GSAM investment adviser and administrator of the Fund. GSAM
INTERNATIONAL, International, 140 Fleet Street, London EC4A 2BJ England, an
ACTING UNDER affiliate of Goldman Sachs, acts as subadviser of the Fund.
THE SUPERVISION Goldman Sachs registered as an investment adviser in 1981.
OF THE As of January 31, 1995, Goldman Sachs Asset Management,
TRUSTEES, together with its affiliates, acted as investment adviser,
MANAGE THE administrator or distributor for approximately $48.7 billion
FUND'S in assets. GSAM International became a member of the
INVESTMENTS. Investment
28
<PAGE>
Management Regulatory Organisation Limited in 1990 and
registered with the SEC as an investment adviser in 1991.
Under its Investment Advisory Agreement with the Fund,
Goldman Sachs Asset Management, with input from GSAM
International and subject to the general supervision of the
Trust's Board of Trustees, oversees the investment of the
Fund's assets. Under its Subadvisory Agreement with the
Fund, GSAM International, subject to the general supervision
of the Trust's Board of Trustees and the Investment Adviser,
provides day-to-day management of the Fund's portfolio.
Goldman Sachs has agreed to permit the Fund to use the name
"Goldman Sachs" or a derivative thereof as part of the
Fund's name for as long as the Investment Advisory and
Subadvisory Agreements are in effect.
In performing their investment advisory and subadvisory
services, the Investment Adviser and Subadviser, while
remaining ultimately responsible for the management of the
Fund, are able to draw upon the research and expertise of
their affiliate offices for portfolio decisions and
management with respect to certain portfolio securities.
The Fund's portfolio manager is Stephen Fitzgerald. Mr.
Fitzgerald joined GSAM International in 1992 and is a Vice
President. Prior to 1992, he spent two years managing multi-
currency fixed income and balanced portfolios at Invesco MIM
Limited, where he was a senior member of the derivative
products group. Prior to his employment at Invesco, Mr.
Fitzgerald spent three years with Foreign and Colonial
Management Limited in London managing fixed income and
derivative funds and, prior to that, in the treasury
department of NRMA Insurance Limited in Sydney.
It is the responsibility of the Investment Adviser and
Subadviser to make investment decisions for the Fund and to
place purchase and sale orders for the Fund's portfolio
transactions in U.S. and foreign securities and currency
transactions. Such orders may be directed to any broker
including, to the extent and in the manner permitted by
applicable law, Goldman Sachs or its affiliates in foreign
countries.
THE FUND PAYS As compensation for the services rendered to the Fund by
GOLDMAN SACHS Goldman Sachs Asset Management and GSAM International
ASSET pursuant to the Investment Advisory and Subadvisory
MANAGEMENT AND Agreements, respectively, and the assumption by Goldman
GSAM Sachs Asset Management and GSAM International of the related
INTERNATIONAL expenses, the Fund pays Goldman Sachs Asset Management and
AN ADVISORY AND GSAM International a fee, computed daily and payable
SUBADVISORY FEE monthly, at an annual rate equal to 0.25% and 0.50%,
AT AN ANNUAL respectively, of the Fund's average daily net assets. The
RATE EQUAL TO advisory fees (combined with the administration fee) paid by
0.25% AND the Fund are greater than those paid by most funds, but are
0.50%, believed by the Investment Adviser to be comparable to fees
RESPECTIVELY, paid by other funds with a similar global investment
OF AVERAGE strategy. For the fiscal year ended October 31, 1994, the
DAILY NET Fund paid Goldman Sachs Asset Management and GSAM
ASSETS. International fees for investment advisory services at the
foregoing rates. Goldman Sachs Asset
29
<PAGE>
Management and GSAM International have each agreed to reduce
the fees payable to them (to the extent of such fees) by the
amount the Fund's expenses would exceed the applicable
expense limitations imposed by state securities
administrators. See "Management--Expenses" in the Additional
Statement.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER
ACCOUNTS MANAGED BY GOLDMAN SACHS. The involvement of the
Investment Adviser, the Subadviser and Goldman Sachs and
their affiliates in the management of, or their interest in,
other accounts and other activities of Goldman Sachs may
present conflicts of interest with respect to the Fund or
limit its investment activities. Goldman Sachs and its
affiliates engage in proprietary trading and advise accounts
and funds which have investment objectives similar to those
of the 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 and it is not anticipated that the Investment
Adviser or the Subadviser will have access to proprietary
information for the purpose of managing the Fund. The
results of the Fund's investment activities, therefore, may
differ from those of Goldman Sachs and its affiliates 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
proprietary or other accounts. From time to time, the Fund's
activities may be limited because of regulatory restrictions
applicable to Goldman Sachs and its affiliates, and/or their
internal policies designed to comply with such restrictions.
See "Activities of Goldman Sachs and its Affiliates and
Other Accounts Managed by Goldman Sachs" in the Additional
Statement for further information.
THE FUND PAYS ADMINISTRATOR. As administrator, pursuant to an
GOLDMAN SACHS Administration Agreement with the Fund, Goldman Sachs Asset
ASSET Management provides personnel for supervisory,
MANAGEMENT AN administrative, and clerical functions; oversees the
ADMINISTRATION performance of administrative and professional services to
FEE AT AN the Fund by others; provides office facilities; and
ANNUAL RATE prepares, but does not pay for, reports to shareholders, the
EQUAL TO 0.15% SEC and other regulatory authorities. As compensation for
OF AVERAGE the services rendered to the Fund by Goldman Sachs Asset
DAILY NET Management pursuant to the Administration Agreement, the
ASSETS. Fund pays Goldman Sachs Asset Management a fee, computed
daily and payable monthly, at an annual rate equal to 0.15%
of the Fund's average daily net assets. Goldman Sachs Asset
Management has agreed to reduce its fees payable (to the
extent of its fees) by the amount (if any) that the Fund's
expenses would exceed the applicable expense limitations
imposed by state securities administrators. See
"Management--Expenses" in the Additional Statement. For the
fiscal year
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<PAGE>
ended October 31, 1994, the Fund paid Goldman Sachs Asset
Management a fee for administrative services at the
foregoing rate.
Goldman Sachs may from time to time, at its own expense,
provide compensation to certain Authorized Dealers for
performing administrative services for their customers.
These services include maintaining account records,
processing orders to purchase, redeem and exchange Fund
shares and responding to certain customer inquiries. The
amount of such compensation may be up to .1875% annually of
the average daily net assets of the Fund attributable to
shares held by customers of such Authorized Dealers. In
addition, Goldman Sachs may from time to time, as its own
expense, provide compensation to certain Authorized Dealers
who perform administrative services with respect to
depository institutions whose customers purchase shares of
the Fund. These services include responding to certain
inquiries from and providing written materials to depository
institutions about the Fund; furnishing advice about and
assisting depository institutions in obtaining from state
regulatory agencies any rulings, exemptions or other
authorizations that may be required to conduct a mutual fund
sales program; acting as liaison between depository
institutions and national regulatory organizations;
assisting with the preparation of sales material; and
providing general assistance and advice in establishing and
maintaining mutual fund sales programs on the premises of
depository institutions. The amount of such compensation may
be up to .08% annually of the average daily net assets of
the Fund attributable to shares purchased through, and held
by the customers of, such depository institutions. Such
compensation does not represent an additional expense to the
Fund or its shareholders, since it will be paid from the
assets of Goldman Sachs or its affiliates.
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York, serves
as the exclusive distributor of the Fund's shares. Shares
may also be sold by Authorized Dealers. Authorized Dealers
include investment dealers that are members of the NASD and
certain other financial service firms. To become an
Authorized Dealer, a dealer or financial service firm must
enter into a sales agreement with Goldman Sachs. The minimum
investment requirements, services, programs and purchase and
redemption options for shares purchased through a particular
Authorized Dealer may be different from those available to
investors purchasing through other Authorized Dealers.
Goldman Sachs, 4900 Sears Tower, Chicago, Illinois, also
serves as the Fund's transfer agent (the "Transfer Agent")
and as such performs various shareholder servicing
functions. As compensation for the services rendered to the
Fund by Goldman Sachs as transfer agent and the assumption
by Goldman Sachs of the expenses related thereto, Goldman
Sachs is entitled to receive a fee with respect to the Fund
equal to $12,000 per year plus $3.50 per account, together
with out-of-pocket and transaction-related expenses
31
<PAGE>
(including those out-of-pocket expenses payable to servicing
agents). Shareholders with inquiries regarding the Fund
should contact Goldman Sachs (as Transfer Agent) at the
address or the telephone number set forth on the inside
front cover page of this Prospectus.
REPORTS TO SHAREHOLDERS
THE FUND WILL Shareholders will receive an annual report containing
FURNISH audited financial statements and a semi-annual report. Each
SHAREHOLDERS shareholder will also be provided with a printed
WITH SEMI- confirmation for each transaction in the shareholder's
ANNUAL AND account and an individual quarterly account statement. A
ANNUAL REPORTS year-to-date statement for any account will be provided upon
AND QUARTERLY request made to Goldman Sachs. The Fund does not generally
STATEMENTS. provide sub-accounting services.
PURCHASE OF SHARES
Shares of the Fund may be purchased in any amount (subject
to the minimum investment requirement) through any
Authorized Dealer (including Goldman Sachs) on any Business
Day (as defined under "Additional Information") at the net
asset value next determined after receipt of an order, plus
the applicable sales charge. The sales charge will vary with
the size of the purchase as shown in the table below and
under certain other conditions as described below. The Fund
receives the net asset value per share, while the sales
charge is divided between Goldman Sachs and the Authorized
Dealer. If, by the close of regular trading on the New York
Stock Exchange (currently 3:00 p.m. Chicago time, 4:00 p.m.
New York time), a purchase order is received by Goldman
Sachs or an Authorized Dealer, the price per share will be
based on the net asset value computed on the day the
purchase order is received. Purchased shares will be issued
as of the time of such computation on that day. See "Net
Asset Value."
PURCHASE PROCEDURES
HOW TO PURCHASE Purchases of shares may be made by check (except that a
SHARES. check drawn on a foreign bank will not be accepted), Federal
Reserve draft, Federal Funds wire, ACH transfer or bank
wire. Checks or Federal Reserve drafts should be made
payable as follows: (i) to an investor's Authorized Dealer,
if purchased through such Authorized Dealer, or (ii) to
"Goldman Sachs Trust--Goldman Sachs Global Income Fund," and
should be directed to Goldman Sachs Trust--Goldman Sachs
Global Income Fund, c/o National Financial Data Services,
Inc. ("NFDS"), P.O. Box 419711, Kansas City, MO 64141-6711.
Federal Funds wires, ACH transfers and bank wires should be
sent to State Street Bank and Trust Company ("State
Street"). Payment by check, Federal Reserve draft, Federal
Funds wire, ACH transfer or bank wire must be received
within five business days of receipt of the purchase order
by the Fund, Goldman Sachs
32
<PAGE>
or an Authorized Dealer. An investor's Authorized Dealer is
responsible for forwarding payment promptly to the Fund.
In order to make an initial investment in the Fund, an
investor must establish an account with the Fund by
furnishing necessary information to the Fund, Goldman Sachs
or any Authorized Dealer. An Account Information Form, a
copy of which is attached to this Prospectus, should be used
to establish such an account. The Fund reserves the right to
refuse to open an account for, or to close the account of,
any investor who fails to (1) provide a social security
number or other taxpayer identification number, or (2)
certify that such number is correct (if required to do so
under applicable law) in establishing an account. Subsequent
purchases of shares may be made in the manner set forth in
the preceding paragraph.
AN INITIAL The minimum initial investment in the Fund is $1,500,
INVESTMENT MUST except in connection with the special investment programs
BE AT LEAST described below, purchases by certain institutional
$1,500. investors as described below, and in conjunction with
various monthly accumulation plans established with certain
Authorized Dealers. The minimum initial investment in the
Fund is currently $50,000 for unitholders or shareholders of
Goldman Sachs Money Market Trust, GS Core Fixed Income Fund,
GS Short-Term Government Agency Fund, GS Adjustable Rate
Government Agency Fund, GS Short Duration Tax-Free Fund or
GS Government Agency Portfolio (for Financial Institutions)
that are banks, trust companies or other types of depository
institutions. These requirements may be waived at the
discretion of the Trust's officers. Except in connection
with certain investment programs, a minimum of $50 is
required for subsequent investments. The Fund reserves the
right to redeem shares of any shareholder whose account
balance is less than $50 as a result of earlier redemptions.
Such redemptions will not be implemented if the value of a
shareholder's account falls below the minimum account
balance solely as a result of market conditions. The Fund
will give sixty (60) days' prior written notice to
shareholders whose shares are being redeemed to allow them
to purchase sufficient additional shares of the Fund to
avoid such redemption. In addition, the Fund and Goldman
Sachs reserve the right to modify the minimum investment,
the manner in which shares are offered and the sales charge
rates applicable to future purchases of shares.
33
<PAGE>
OFFERING PRICE
THE SALES The offering price is the next determined net asset value
CHARGE MAY VARY per share plus a sales charge, if any, paid at the time of
DEPENDING ON purchase of shares of the Fund as shown in the following
THE DOLLAR table or as set forth under "Participant-Directed Plans":
AMOUNT INVESTED
IN THE FUND.
<TABLE>
<CAPTION>
SALES CHARGE AS MAXIMUM
AMOUNT OF PURCHASE SALES CHARGE AS PERCENTAGE DEALER ALLOWANCE
(INCLUDING SALES CHARGE, PERCENTAGE OF OF NET AMOUNT AS PERCENTAGE
IF ANY) OFFERING PRICE INVESTED OF OFFERING PRICE
------------------------ --------------- --------------- -----------------
<S> <C> <C> <C>
Less than $100,000...... 4.50% 4.71% 4.00%
$100,000 up to (but less
than) $250,000......... 3.00 3.09 2.50
$250,000 up to (but less
than) $500,000......... 2.50 2.56 2.00
$500,000 up to (but less
than) $1 million....... 2.00 2.04 1.75
$1 million up to (but
less than) $3 million.. 1.25 1.27 1.15
$3 million or more...... 0.00 0.00 *
</TABLE>
--------
* Goldman Sachs may pay a commission equal to 0.50% of the
amount of shares purchased to Authorized Dealers who
initiate or are responsible for purchases of $3 million or
more of shares of the Fund, provided such shares remain in
the Fund for at least twelve months.
The entire amount of the sales charge will be reallowed to
Authorized Dealers during the period January 3, 1995 through
April 17, 1995 if shares of the Fund are purchased through
any Individual Retirement Account (IRA), including self-
directed IRAs.
In addition to concessions allowed to Authorized Dealers,
Goldman Sachs may, from time to time, assist Authorized
Dealers by, among other things, providing sales literature
to and holding informational programs for the benefit of
Authorized Dealers' registered representatives. Authorized
Dealers may limit the participation of registered
representatives in such informational programs by means of
sales incentive programs which may require the sale of
minimum dollar amounts of shares of the Goldman Sachs
Portfolios. Goldman Sachs may also provide additional
promotional incentives to Authorized Dealers in connection
with sales of shares of the Goldman Sachs Portfolios. These
incentives may include payment for travel expenses,
including lodging, incurred in connection with trips taken
by qualified registered representatives and members of their
families within or without the United States. Incentive
payments will be provided for out of the sales charge and
distribution fees or out of Goldman Sachs' other resources.
Other than sales charges and distribution fees, the Fund and
its shareholders do not bear distribution expenses. An
Authorized Dealer receiving such incentives may be deemed to
be an underwriter under the 1933 Act. In some instances,
such incentives may
34
<PAGE>
be made available only to certain Authorized Dealers whose
representatives have sold or are expected to sell
significant amounts of shares.
Shares of the Fund may be sold at net asset value without
payment of any initial sales charge to (a) Goldman Sachs,
its affiliates or their respective officers, partners,
directors or employees (including retired employees and
former partners), any partnership of which Goldman Sachs is
a general partner, any Trustee or officer of the Trust and
designated family members of any of the above individuals;
(b) qualified retirement plans of Goldman Sachs; (c)
trustees or directors of investment companies for which
Goldman Sachs or an affiliate acts as sponsor; (d) any
employee or registered representative of any Authorized
Dealer or their respective spouses and minor children; (e)
institutional investors, including insurance companies,
broker-dealers, discretionary accounts of investment
advisers with at least $100 million under management for the
last twelve months and business entities that have either
gross assets of at least $100 million or publicly traded
securities outstanding; (f) unitholders or shareholders of
Goldman Sachs Money Market Trust, GS Core Fixed Income Fund,
GS Short-Term Government Agency Fund, GS Adjustable Rate
Government Agency Fund, GS Short Duration Tax-Free Fund or
GS Government Agency Portfolio (for Financial Institutions)
that are banks, trust companies or other types of depository
institutions; (g) any state, county or city, or any
instrumentality, department, authority or agency thereof,
which is prohibited by applicable investment laws from
paying a sales charge or commission in connection with the
purchase of shares of the Fund; (h) pension and profit
sharing plans, pension funds or other benefit plans
sponsored by state and municipal governments and by certain
business entities, and Taft-Hartley plans, provided any such
plan has a minimum of $25 million under management; (i)
qualified non-profit organizations, foundations and
endowments that have gross assets of at least $100 million;
and (j) shareholders whose purchase is attributable to
redemption proceeds (subject to appropriate documentation)
from a registered open-end management investment company not
distributed or managed by Goldman Sachs or its affiliates,
if such redemption has occurred no more than 60 days prior
to the purchase of shares of the Fund and the shareholder
either (i) paid an initial sales charge or (ii) was at some
time subject to a deferred sales charge with respect to the
redemption proceeds. In order to take advantage of these
exemptions, a purchaser must certify its eligibility for an
exemption to Goldman Sachs on its Account Information Form
and must certify on such Form that it will notify Goldman
Sachs if, at the time of additional purchase, it is no
longer eligible for an exemption. Goldman Sachs reserves the
right to request additional certification or information
from a purchaser in order to verify that such purchaser is
eligible for an exemption. Goldman Sachs reserves the right
to limit the participation in the Fund of its partners and
employees. In addition, under certain circumstances,
dividends and distributions from any Goldman Sachs Portfolio
may be reinvested in shares of the Fund at net asset value,
as described under "Cross-Reinvestment of Dividends and
Distributions."
35
<PAGE>
PARTICIPANT-DIRECTED PLANS
Participant-directed qualified retirement plans, including
401(k), 403(b), 457 and tax-sheltered annuity plans, may
purchase shares of the Fund at the next determined net asset
value per share plus a sales charge paid, except as set
forth below, at the time of purchase of shares of the Fund,
as shown in the following table.
<TABLE>
<CAPTION>
SALES CHARGE MAXIMUM DEALER
AMOUNT OF PURCHASE SALES CHARGE AS AS PERCENTAGE ALLOWANCE AS
(INCLUDING SALES PERCENTAGE OF OF NET AMOUNT PERCENTAGE OF
CHARGE, IF ANY) OFFERING PRICE INVESTED OFFERING PRICE
------------------ --------------- ------------- --------------
<S> <C> <C> <C>
Less than $100,000...... 4.50% 4.71% 4.00%
$100,000 up to (but less
than) $250,000......... 3.00 3.09 2.50
$250,000 up to (but less
than) $500,000 ........ 2.50 2.56 2.00
$500,000 or more........ 0.00* 0.00* **
</TABLE>
--------
* No sales charge is payable by participant-directed plans at
the time of purchase on investments of $500,000 or more, but
for such investments a contingent deferred sales charge, as
described below, may be imposed in the event of certain
redemptions within one year of purchase.
** Goldman Sachs may pay a one-time commission equal to a
percentage of the amount of shares purchased to Authorized
Dealers who initiate or are responsible for purchases by
participant-directed plans of $500,000 or more of shares of
the Fund, at the rates shown in the following table:
<TABLE>
<CAPTION>
MAXIMUM DEALER
COMMISSION AS
PERCENTAGE
OF AMOUNT
AMOUNT OF PURCHASE OF PURCHASE
------------------ --------------
<S> <C>
$500,000 up to (but less than) $2 million..... 1.00%
$2 million up to (but less than) $3 million... 0.80
$3 million up to (but less than) $50 million.. 0.50
$50 million up to (but less than) $100 million 0.25
$100 million or more.......................... 0.15
</TABLE>
Participant-directed plans are defined as qualified
employee benefit plans not affiliated with Goldman Sachs
which allow their participants to select among one or more
investment options, including the Fund. In order to take
advantage of the reduced sales charge rate described herein,
the sponsor of a participant-directed plan must submit an
investment authorization form to Goldman Sachs (the
"Authorization Form") which establishes the Fund as an
eligible investment for the plan.
36
<PAGE>
CUMULATIVE QUANTITY DISCOUNTS. For purposes of determining
the amount of purchase and the sales charge rate applicable
to purchases by participant-directed plans, shares of the
Fund and any other Goldman Sachs Portfolio will be combined
with shares purchased or held for all participants in the
same participant-directed plan. Participant-directed plans
may qualify for cumulative quantity discounts by using the
right of accumulation and statement of intention in the man-
ner described in this Prospectus. If a plan does not pur-
chase the entire amount of shares contemplated by a state-
ment of intention, Goldman Sachs may elect not to pursue the
recovery of any additional sales charge due if the amount of
the sales charge or the investment shortfall is considered
de minimis by Goldman Sachs.
CONTINGENT DEFERRED SALES CHARGE. Purchases by
participant-directed plans of $500,000 or more of Fund
shares will be made at net asset value with no initial sales
charge. However, if, within 12 months after the effective
date of the applicable Authorization Form, the plan sponsor
notifies Goldman Sachs that it is terminating the
eligibility of the Fund as an investment for its plan, a
contingent deferred sales charge ("CDSC") will be imposed on
all redemptions resulting from such termination. Any CDSCs
will be paid to the Fund's principal distributor, Goldman
Sachs. The amount of the CDSC will be equal to 1% of the
current market value or the original purchase cost of the
redeemed shares, whichever is less. No CDSC will be imposed
on increases in account value above the initial purchase
price, including any dividends that have been reinvested in
additional Fund shares. In determining whether a CDSC
applies to a redemption, the calculation will be made in a
manner that results in the lowest possible CDSC.
EXCHANGES. No CDSC is imposed upon exchanges between the
Fund and another Goldman Sachs Portfolio or an ILA
Portfolio. However, shares acquired in an exchange will be
subject to the CDSC to the same extent as if there had been
no exchange. (As stated above, no CDSC will be imposed
unless the plan sponsor terminates the eligibility of the
Fund as an investment for the plan within the first twelve
months). For purposes of determining whether the CDSC is
applied, the length of time a plan has owned shares acquired
by exchange will be measured from the date the plan acquired
the original shares and will not be affected by any
subsequent exchange.
OTHER PURCHASE INFORMATION
Information concerning purchases of shares through an
Authorized Dealer should be obtained directly from the
Authorized Dealer. In the case of purchases made through the
investor's Authorized Dealer, it is the responsibility of
such Authorized Dealer to promptly forward payment to the
Fund for shares being purchased. Authorized Dealers who
receive a portion of the sales charge applicable to the
purchase of shares of the Fund will not be permitted to
impose any other fees in connection with the purchase of
such shares.
37
<PAGE>
If shares of the Fund are held in a "street name" account
with an Authorized Dealer, all recordkeeping, transaction
processing and payments of distributions relating to the
beneficial owner's account will be performed by the
Authorized Dealer, and not by the Fund and its Transfer
Agent. Since the Fund will have no record of the beneficial
owner's transactions, a beneficial owner should contact the
Authorized Dealer to purchase, redeem or exchange shares, to
make changes in or give instructions concerning the account
or to obtain information about the account. The transfer of
shares in a "street name" account to an account with another
dealer or to an account directly with the Fund involves
special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in
the account from the Authorized Dealer.
The Fund and Goldman Sachs each reserves the right to
reject any specific purchase order (including exchanges) or
to restrict purchases or exchanges by a particular purchaser
(or group of related purchasers). The Fund or Goldman Sachs
may reject or restrict purchases or exchanges of shares by a
particular purchaser or group, for example, when a pattern
of frequent purchases and sales of shares of the Fund is
evident, or if the purchase and sale or exchange orders are,
or a subsequent abrupt redemption might be, of a size that
would disrupt management of the Fund.
REINVESTMENT OF REDEMPTION PROCEEDS
A shareholder whose shares are redeemed may reinvest at
net asset value any portion or all of his redemption
proceeds (plus that amount necessary to acquire a fractional
share to round off his purchase to the nearest full share)
in shares of the Fund or any other Goldman Sachs Portfolio.
Shareholders should obtain and read the applicable
prospectuses of such other funds and consider their
objectives, policies and applicable fees carefully before
investing in any of such funds. This reinvestment privilege
is subject to the condition that the shares redeemed have
been held for at least thirty (30) days before the
redemption and that the reinvestment is effected within
ninety (90) days after such redemption. Shares are sold to a
reinvesting shareholder at the net asset value next
determined following timely receipt by Goldman Sachs or an
Authorized Dealer of a written purchase order indicating
that the shares are eligible for reinvestment at net asset
value.
A reinvesting shareholder may realize a gain or loss for
federal tax purposes as a result of such redemption. If the
redemption occurs within ninety (90) days after the original
purchase of the shares, any sales charge paid on the
original purchase cannot be taken into account by a
shareholder reinvesting at net asset value pursuant to the
reinvestment privilege for purposes of determining gain or
loss realized on the redemption, but instead will be added
to the tax basis of the shares received in the reinvestment.
To the extent that any loss is realized and shares of the
Fund are purchased within thirty (30) days before or after
the redemption, some or all of the loss generally
38
<PAGE>
may not be allowed as a deduction depending upon the number
of shares purchased. Shareholders should consult their own
tax advisers concerning the tax consequences of a
reinvestment. Upon receipt of a written request, the
reinvestment privilege may be exercised once annually by a
shareholder, except that there is no such limit as to the
availability of this privilege in connection with
transactions the sole purpose of which is to reinvest the
proceeds at net asset value in a tax-sheltered retirement
plan.
RIGHT OF ACCUMULATION
INVESTORS MAY A shareholder qualifies for cumulative quantity discounts
QUALIFY FOR A if the current purchase price of the new investment plus the
REDUCED SALES shareholder's current holdings of existing shares (acquired
CHARGE. by purchase or exchange) of the Fund and shares of any other
Goldman Sachs Portfolio total the requisite amount for
receiving a discount. For example, if a shareholder owns
shares with a current market value of $75,000 and purchases
additional shares with a purchase price of $25,000, the
sales charge for the $25,000 purchase would be 3.0% (the
rate applicable to a single purchase of $100,000). Shares
purchased without the imposition of a sales charge may not
be aggregated with shares purchased subject to a sales
charge. Shares of the Fund and any other Goldman Sachs
Portfolio purchased (i) by an individual, his spouse and his
minor children, and (ii) by a trustee, guardian or other
fiduciary of a single trust estate or a single fiduciary
account, will be combined for the purpose of determining
whether a purchase will qualify for such right of
accumulation and, if qualifying, the applicable sales charge
level. For purposes of applying the right of accumulation,
shares of the Fund and any other Goldman Sachs Portfolio
purchased by an existing client of the Private Client
Services Division of Goldman Sachs will be combined with
shares held by any other account over which such client or
the client's spouse exercises investment or voting power. In
addition, shares of the Fund and shares of any other Goldman
Sachs Portfolio purchased by partners, directors, officers
or employees of the same business organization or by groups
of individuals represented by and investing on the
recommendation of the same accounting firm or other similar
organization (collectively, "eligible persons") may be
combined for the purpose of determining whether a purchase
will qualify for the right of accumulation and, if
qualifying, the applicable sales charge level. This right of
accumulation is subject to the following conditions: (i) the
business organization's or firm's agreement to cooperate in
the offering of the Fund's shares to eligible persons; and
(ii) notification to the Fund at the time of purchase that
the investor is eligible for this right of accumulation.
STATEMENT OF INTENTION
If a shareholder anticipates purchasing at least $100,000
of shares of the Fund alone or in combination with shares of
any other Goldman Sachs Portfolio within a 13-month period,
the shareholder may purchase shares of the Fund at a reduced
sales charge by submitting a Statement of Intention (the
39
<PAGE>
"Statement"). See Appendix B of the Prospectus. Shares
purchased pursuant to a Statement will be eligible for the
same sales charge discount that would have been available if
all of the purchases had been made at the same time. The
shareholder or his Authorized Dealer must inform Goldman
Sachs that the Statement is in effect each time shares are
purchased. There is no obligation to purchase the full
amount of shares indicated in the Statement. A shareholder
may include the value of all shares on which a sales charge
has previously been paid as an "accumulation credit" toward
the completion of the Statement, but a price readjustment
will be made only on shares purchased within ninety (90)
days before submitting the Statement. The Statement
authorizes the Transfer Agent to hold in escrow a sufficient
number of shares which can be redeemed to make up any
difference in the sales charge on the amount actually
invested. For purposes of satisfying the amount specified on
the Statement, the gross amount of each investment,
exclusive of any appreciation on shares previously
purchased, will be taken into account.
AUTOMATIC INVESTMENT PLAN
THE FUND OFFERS Systematic cash investments may be made through a
SHAREHOLDERS shareholder's bank via the Automated Clearing House Network
MANY CONVENIENT or a shareholder's checking account via bank draft each
FEATURES AND month. Required forms are available from Goldman Sachs or
BENEFITS, any Authorized Dealer. A minimum investment of $50 is
INCLUDING required for Automatic Investment Plans.
DOLLAR COST
AVERAGING. CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
A shareholder in the Fund may elect to cross-reinvest
dividends and capital gain distributions paid by the Fund at
net asset value without a sales charge in shares of any
other Goldman Sachs Portfolio or in units of the ILA
Portfolios. In addition, shareholders of any other Goldman
Sachs Portfolio may elect to cross-reinvest dividends and
capital gain distributions paid by such Goldman Sachs
Portfolio at net asset value without a sales charge in
shares of the Fund. Such cross-reinvestments are subject to
the following conditions: (i) the value of the shareholder's
account(s) in the paying fund must equal or exceed $10,000
and (ii) the value of the account in the acquired fund must
equal or exceed the acquired fund's minimum initial
investment requirement or, the shareholder must elect to
have dividends and capital gain distributions paid on the
paying and acquired fund shares automatically reinvested in
additional acquired fund shares, until the value of acquired
fund shares in the shareholder's account equals or exceeds
the acquired fund's minimum initial investment requirement.
A Fund shareholder should obtain and read the prospectus
relating to any other Goldman Sachs Portfolio or ILA
Portfolio and its shares or units and consider its
investment objective, policies and applicable fees before
electing cross-reinvestment into that fund. The election to
cross-reinvest dividends and capital gain distributions will
not affect the tax treatment of such dividends and
distributions, which will be treated as received by the
shareholder and then used to purchase shares of the acquired
fund.
40
<PAGE>
Such reinvestment of dividends and distributions in shares
of other Goldman Sachs Portfolios or in units of ILA
Portfolios is available only in states where such
reinvestment may legally be made.
TAX-SHELTERED RETIREMENT PLANS
The Fund will offer shares for purchase by retirement
plans including Individual Retirement Account Plans for
individuals and their non-employed spouses and defined
contribution plans such as 401(k) Salary Reduction Plans.
See "Participant-Directed Plans."
Detailed information concerning these plans and copies of
the plans will be available from the Transfer Agent. This
information should be read carefully, and consultation with
an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and
describes the federal income tax consequences of
establishing a plan. Under all plans, dividends and
distributions will be automatically reinvested in additional
shares of the Fund or, if so directed by the shareholder, in
cash, in shares of another Goldman Sachs Portfolio or in
units of the ILA Portfolios. An initial investment minimum
of $250 applies to purchases in connection with tax-
sheltered retirement plans.
AUTOMATIC EXCHANGE PROGRAM
Shareholders of the Fund may elect on the Account
Information Form to automatically exchange a specified
dollar amount of Fund shares at net asset value without an
additional sales charge for shares of any other Goldman
Sachs Portfolio. Shareholders of any other Goldman Sachs
Portfolio may similarly elect to automatically exchange a
specified dollar amount of shares of such Goldman Sachs
Portfolio at net asset value without an additional sales
charge for shares of the Fund. These automatic exchanges are
made monthly on the fifteenth day of each month or the first
Business Day thereafter and are subject to the following
conditions. The minimum dollar amount for automatic
exchanges must be at least $50 per month. At the time the
election is made (i) the value of the shareholder's account
in the fund from which the exchange is made must equal or
exceed $10,000 and (ii) the value of the account in the
acquired fund must equal or exceed the acquired fund's
minimum initial investment requirement or, if the
shareholder has elected the automatic exchange privilege and
the value of the acquired fund does not equal the acquired
fund's minimum, such election must continue until the
minimum initial investment requirement is met. The names,
addresses and social security or other taxpayer
identification numbers for the shareholder accounts with the
exchanged and acquired funds must be identical. A Fund
shareholder should obtain and read the prospectus relating
to any other Goldman Sachs Portfolio and its shares and
consider its investment objective, policies and applicable
fees and expenses before electing an automatic exchange into
that Goldman Sachs Portfolio.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged at net asset value
without an additional sales charge for: (i) shares of any
Goldman Sachs Portfolio; and
41
<PAGE>
(ii) units of the ILA Portfolios. A shareholder needs to
obtain and read the prospectus relating to a fund and its
shares or units and consider its investment objective,
policies and applicable fees before making an exchange into
that fund. The shares or units of these other funds acquired
by an exchange may later be exchanged for shares of the Fund
at the next determined net asset value without a sales
charge if the dollar amount in the Fund resulting from such
exchanges is below the shareholder's all-time highest dollar
amount on which it has previously paid a sales charge.
Shares or units of these other funds purchased through
dividends and/or capital gains reinvestment may be exchanged
for shares of the Fund without a sales charge. In addition
to free automatic exchanges pursuant to the Automatic
Exchange Program, six free exchanges are permitted in each
twelve-month period. A fee of $12.50 may be charged for each
subsequent exchange during such period. The exchange
privilege may be modified or withdrawn at any time upon
sixty (60) days' notice to shareholders and is subject to
certain limitations (see "Purchase of Shares").
An exchange may be made by either writing to Goldman
Sachs, Attention: Goldman Sachs Trust--Goldman Sachs Global
Income Fund, Shareholder Services, c/o NFDS, P.O. Box
419711, Kansas City, MO 64141-6711 or, if previously elected
in the Fund's Account Information Form, by telephone at 800-
526-7384 (8:00 a.m. to 3:00 p.m. Chicago time). Certain
procedures are employed to prevent unauthorized or
fraudulent exchange requests as set forth under "Redemption
of Shares." Under the telephone exchange privilege, shares
may be exchanged among accounts with different names,
addresses and social security or other taxpayer
identification numbers only if the exchange request is in
writing and is received in accordance with the procedures
set forth under "Redemption of Shares." In times of drastic
economic or market changes the telephone exchange privilege
may be difficult to implement.
For federal income tax purposes, an exchange is treated as
a sale of the shares surrendered in the exchange, on which
an investor may realize a gain or loss, followed by a
purchase of shares or units received in the exchange. If
such sale occurs within ninety (90) days after the purchase
of such shares, to the extent a sales charge that would
otherwise apply to the shares or units received in the
exchange is not imposed, the sales charge paid on such
purchase cannot be taken into account by the exchanging
shareholder for purposes of determining gain or loss
realized on such sale for federal income tax purposes, but
instead will be added to the tax basis of the shares or
units received in the exchange. Shareholders should consult
their own tax advisers concerning the tax consequences of an
exchange.
All exchanges which represent an initial investment in a
fund must satisfy the minimum investment requirements of the
fund into which the shares are being exchanged. Exchanges
are available only in states where exchanges may legally be
made.
42
<PAGE>
DISTRIBUTION PLAN
THE FUND WILL The Trust, on behalf of the Fund, has adopted a
FINANCE Distribution Plan (the "Plan") pursuant to Rule 12b-1 under
DISTRIBUTION the Act. Under the Plan, the Fund will pay to Goldman Sachs
AND SHAREHOLDER a quarterly fee for distribution and personal and account
SERVICE maintenance services equal, on an annual basis, to 0.50% of
ACTIVITIES the Fund's average daily net assets, of which up to 0.25%
THROUGH may be for personal and account maintenance services.
QUARTERLY Currently, Goldman Sachs has voluntarily agreed to limit the
PAYMENTS TO amount of such fee to 0.25% of the Fund's average daily net
GOLDMAN SACHS assets. Goldman Sachs has no current intention of modifying
EQUAL ON AN or discontinuing such limitation, but may do so in the
ANNUAL BASIS TO future at its discretion. For the fiscal year ended October
0.25% OF THE 31, 1994, the Fund paid Goldman Sachs a fee for distribution
FUND'S AVERAGE services at the rate of 0.25% of the Fund's average daily
DAILY NET net assets.
ASSETS.
Goldman Sachs may use the fee for its expenses of
distribution of shares of the Fund. In addition, Goldman
Sachs may pay up to the entire amount of such fee to
Authorized Dealers for providing services in connection with
the sale of Fund shares. The types of expenses for which
Goldman Sachs and Authorized Dealers may be compensated for
distribution services under the Plan include compensation
paid to and expenses incurred by their respective officers,
employees and sales representatives, allocable overhead,
telephone and travel expenses, the printing of prospectuses
for prospective shareholders, preparation and distribution
of sales literature, advertising of any type and all other
expenses incurred in connection with activities primarily
intended to result in the sale of Fund shares. The portion
of the fee for personal and account maintenance services may
be used to make payments to Goldman Sachs, Authorized
Dealers and their officers, sales representatives and
employees for responding to inquiries of, and furnishing
assistance to, shareholders regarding ownership of their
shares or their accounts or similar services not otherwise
provided by or on behalf of the Fund. If the fee received by
Goldman Sachs exceeds its expenses, Goldman Sachs may
realize a profit from these arrangements. The Plan will be
reviewed and is subject to approval annually by the Board of
Trustees. The aggregate compensation that may be received
under the Plan for distribution services and pursuant to a
sales charge may not exceed the limitations imposed by the
NASD's Rules of Fair Practice.
REDEMPTION OF SHARES
THE REDEMPTION The Fund will redeem its shares upon request of a
PRICE WILL BE shareholder on any Business Day at the net asset value next
BASED ON THE determined after the receipt of such request in proper form.
NET ASSET VALUE See "Net Asset Value." Redemption proceeds will normally be
NEXT COMPUTED mailed by check to shareholders within seven (7) days of
AFTER RECEIPT receipt of a properly executed request. If shares to be
OF A REDEMPTION redeemed were recently purchased by check, the Fund may
REQUEST. delay transmittal of redemption proceeds until such time as
it has assured itself that good funds have been collected
for the purchase of such shares. This may take up to fifteen
(15) days.
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Redemption requests may be made by writing to or calling the
Transfer Agent at the address or telephone number set forth
on the inside front cover page of this Prospectus or by
contacting an Authorized Dealer.
THERE ARE A shareholder may request redemptions by telephone if the
SEVERAL WAYS optional telephone redemption privilege is elected on the
SHAREHOLDERS Account Information Form accompanying this Prospectus. It
MAY ACCESS may be difficult to implement redemptions by telephone in
THEIR ACCOUNTS. times of drastic economic or market changes. In an effort to
prevent unauthorized or fraudulent redemption and exchange
requests by telephone, Goldman Sachs and NFDS each employ
reasonable procedures specified by the Trust to confirm that
such instructions are genuine. Consequently, proceeds of
telephone redemption requests will only be sent to the
shareholder's address of record or authorized bank account
designated in the Account Information Form and exchanges of
shares will only be made to an identical account. Telephone
requests may also be recorded. The Trust may implement other
procedures from time to time. If reasonable procedures are
not implemented, the Trust may be liable for any loss due to
unauthorized or fraudulent transactions. In all other cases,
neither the Fund, the Trust nor Goldman Sachs will be
responsible for the authenticity of instructions received by
telephone. Proceeds of telephone redemptions will be mailed
to the shareholder's address of record or wired to the
authorized bank account indicated on the Account Information
Form, unless the shareholder provides written instructions
(accompanied by a signature guarantee) indicating another
address.
Written requests for redemptions must be signed by each
shareholder with its signature guaranteed by a bank, a
securities broker or dealer, a credit union having authority
to issue signature guarantees, a savings and loan
association, a building and loan association, a cooperative
bank, a federal savings bank or association, a national
securities exchange, a registered securities association or
a clearing agency, provided that such institution satisfies
the standards established by the Transfer Agent.
The Fund will also arrange for the proceeds of redemptions
effected by any means to be wired as Federal Funds to the
bank account designated in the shareholder's Account
Information Form. Redemption proceeds will normally be wired
on the next Business Day in Federal Funds (for a total one-
day delay) following receipt of a properly executed wire
transfer redemption request. Wiring of redemption proceeds
may be delayed one additional Business Day if the Federal
Reserve Bank is closed on the day redemption proceeds would
ordinarily be wired. A transaction fee of $7.50 may be
charged for payments of redemption proceeds by wire. In
order to change the bank designated on the Account
Information Form to receive redemption proceeds, a written
request must be received by the Transfer Agent. This request
must be signature guaranteed as set forth above. Further
documentation may be required for executors, trustees or
corporations. Once wire transfer instructions have been
given by Goldman Sachs or an Authorized Dealer,
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neither the Fund, the Trust, Goldman Sachs nor an Authorized
Dealer assumes any further responsibility for the
performance of intermediaries or the shareholder's bank in
the transfer process. If a problem with such performance
arises, the shareholder should deal directly with such
intermediaries or bank.
Additional documentation regarding a redemption by any
means may be required to effect a redemption when deemed
appropriate by the Transfer Agent. The request for such
redemption will not be considered to have been received in
proper form until such additional documentation has been
received.
Except with respect to shareholders whose account balances
are less than $50, or who have not provided a social
security number or other taxpayer identification number and
certification (if required) that such number is correct,
shares are not redeemable at the option of the Fund unless
the Board of Trustees of the Trust determines in its sole
discretion that failure to so redeem may have material
adverse consequences to the shareholders of the Fund. The
Fund, however, assumes no responsibility to compel
redemptions.
SYSTEMATIC WITHDRAWAL PLAN
A systematic withdrawal plan (the "Systematic Withdrawal
Plan") is available to shareholders of the Fund whose shares
are worth at least $10,000. The Systematic Withdrawal Plan
provides for monthly payments to the participating
shareholder of any amount not less than $50.
Dividends and capital gain distributions on shares held
under the Systematic Withdrawal Plan are reinvested in
additional full and fractional shares of the Fund at net
asset value. The Transfer Agent acts as agent for the
shareholder in redeeming sufficient full and fractional
shares to provide the amount of the systematic withdrawal
payment. The Systematic Withdrawal Plan may be terminated at
any time. Goldman Sachs reserves the right to initiate a fee
of up to $5 per withdrawal, upon thirty (30) days written
notice to the shareholder. Withdrawal payments should not be
considered to be dividends, yield or income. If periodic
withdrawals continuously exceed new purchases and reinvested
dividends and capital gains distributions, the shareholder's
original investment will be correspondingly reduced and
ultimately exhausted. Furthermore, each withdrawal
constitutes a redemption of shares, and any gain or loss
realized must be reported for federal and state income tax
purposes. A shareholder should consult his or her own tax
adviser with regard to the tax consequences of participating
in the Systematic Withdrawal Plan. For further information
or to request a Systematic Withdrawal Plan, please write or
call the Transfer Agent.
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DIVIDENDS
SHAREHOLDERS Each dividend and capital gains distribution, if any,
MAY CHOOSE declared by the Fund on its outstanding shares will, at the
WHETHER TO election of each shareholder, be paid (i) in cash, (ii) in
RECEIVE additional shares of the Fund or (iii) in shares of any of
DISTRIBUTIONS the Goldman Sachs Portfolios or units of the ILA Portfolios
(INCLUDING as described under "Cross-Reinvestment of Dividends and
CAPITAL GAINS) Distributions." This election should initially be made on a
IN CASH OR TO shareholder's Account Information Form and may be changed
REINVEST upon written notice to Goldman Sachs at any time prior to
DISTRIBUTIONS the record date for a particular dividend or distribution.
IN SHARES OF If no election is made, all dividends and capital gains
THE FUND, IN distributions will be reinvested in the Fund. If cash
SHARES OF ANY dividends are elected with respect to the Fund's net
OF THE GOLDMAN investment income dividends then cash dividends must also be
SACHS elected with respect to the short-term capital gains
PORTFOLIOS OR component, if any, of the Fund's annual dividend.
IN UNITS OF THE Reinvestments of dividends from net investment income in
ILA PORTFOLIOS. additional shares of the Fund will be made on the last
Business Day of each month. Reinvestments of dividends from
net investment income in additional shares of another
Goldman Sachs Portfolio or in units of the ILA Portfolios
will be made on the payment date. Cash dividends will be
paid on or about the last calendar day of the month. Capital
gains distributions will be reinvested or paid in cash, in
accordance with the shareholder's prior election, on the
payment date.
The election to reinvest dividends and distributions paid
by the Fund in additional shares or units of the Fund or any
other Goldman Sachs Portfolio or ILA Portfolio will not
affect the tax treatment of such dividends and
distributions, which will be treated as received by the
shareholder and then used to purchase shares or units of the
Fund, another Goldman Sachs Portfolio or an ILA Portfolio.
The Fund intends that all or substantially all of the
Fund's net investment income will be declared as a dividend
and paid monthly, and all or substantially all net realized
long-term and short-term capital gains will be declared as a
dividend and paid at least annually. Net loss, if any, from
certain foreign currency transactions or instruments that is
otherwise taken into account in calculating net investment
income or net realized capital gains for accounting purposes
may not be taken into account in determining the amount of
dividends to be declared and paid, with the result that a
portion of the Fund's dividends may be treated as a return
of capital, nontaxable to the extent of a shareholder's tax
basis in his shares. In determining amounts of capital gains
to be distributed, capital losses, including any available
capital loss carryovers from prior years, will be offset
against capital gains realized during the current year.
At the time of an investor's purchase of shares of the
Fund a portion of the net asset value per share may be
represented by undistributed income of the Fund or realized
or unrealized appreciation of the Fund's portfolio
46
<PAGE>
securities. Therefore, subsequent distributions (or portions
thereof) of taxable income or realized appreciation on such
shares may be taxable to the investor even if the net asset
value 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.
NET ASSET VALUE
NET ASSET VALUE The net asset value per share of the Fund is calculated by
IS COMPUTED the Fund's custodian as of the close of regular trading on
DAILY AS OF THE the New York Stock Exchange (normally 3:00 p.m. Chicago
CLOSE OF time, 4:00 p.m. New York time), on each Business Day (as
REGULAR TRADING such term is defined under "Additional Information"). Net
ON THE NEW YORK asset value per share is calculated by adding the value of
STOCK EXCHANGE. all securities and other assets of the Fund, subtracting the
liabilities of the Fund, and dividing the remainder by the
number of outstanding shares.
Investments in debt obligations are valued at fair value,
based on yield equivalents, a pricing matrix or other
sources, under valuation procedures established by the
Trust's Board of Trustees. Other portfolio securities for
which accurate market quotations are readily available are
valued on the basis of quotations, which may be furnished by
a pricing service or provided by dealers in such securities.
Portfolio securities for which accurate market quotations
are not readily available are valued in accordance with the
Trust's valuation procedures. Debt obligations with a
remaining maturity of 60 days or less are valued at
amortized cost. The Board of Trustees has determined that
the amortized cost of such securities approximates fair
market value.
PERFORMANCE INFORMATION
From time to time the Fund may publish average annual
total return and yield in advertisements and communications
to shareholders or prospective investors.
Average annual total return is determined by computing the
average annual percentage change in value of $1,000 invested
at the maximum public offering price for specified periods
ending with the most recent calendar quarter, assuming
reinvestment of all dividends and distributions at net asset
value. The total return calculation assumes a complete
redemption of the investment at the end of the relevant
period. The Fund may also from time to time advertise total
return on a cumulative, average, year-by-year or other basis
for various specified periods by means of quotations,
charts, graphs or schedules. In addition, the Fund may
furnish total return calculations based on investments at
various sales charge levels or at net asset value. Any
performance data which is based on the Fund's net asset
value per share would be reduced if a sales charge were
taken into account. In addition to the above, the Fund may
from time to time advertise its performance relative to
certain performance rankings and indices.
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<PAGE>
Yield is computed by dividing net investment income earned
during a recent thirty-day period by the product of the
average daily number of shares outstanding and entitled to
receive dividends during the period and the maximum offering
price per share on the last day of the relevant period. The
results are compounded on a bond equivalent (semi-annual)
basis and then annualized. Net investment income per share
is equal to the dividends and interest earned during the
period, reduced by accrued expenses for the period. The
calculation of net investment income for these purposes may
differ from the net investment income determined for
accounting purposes.
Quotations of distribution rates are calculated by
annualizing the most recent distribution of net investment
income for a monthly, quarterly or other relevant period and
dividing this amount by the net asset value per share or
maximum public offering price on the last day of the period
for which the distribution rates are being calculated.
The investment results of the Fund will fluctuate over
time and any presentation of investment results for any
prior period should not be considered a representation of
what an investment may earn or what the Fund's performance
may be in any future period. In addition to information
provided in shareholder reports, the Fund may, in its
discretion, from time to time make a list of its holdings
available to investors upon request.
SHARES OF THE TRUST
THE FUND IS A The Fund is a series of Goldman Sachs Trust, which was
SERIES OF AN organized under the laws of The Commonwealth of
OPEN-END Massachusetts on September 24, 1987 as a Massachusetts
INVESTMENT business trust under an Agreement and Declaration of Trust,
COMPANY. as amended (the "Trust Agreement"). Under the Trust
Agreement, the Trustees are authorized to issue an unlimited
number of shares of beneficial interest, $.001 par value per
share. The Trustees of the Trust are responsible for the
overall management and supervision of its affairs. The
Trustees of the Trust have authority under the Trust
Agreement to create and classify shares of beneficial
interest in separate series, without further action by
shareholders. As of the date of this Prospectus, the
Trustees have authorized shares of the Fund and ten other
series. Additional series may be added in the future. The
Trustees also have authority to classify and reclassify any
series or portfolio of shares into one or more classes.
When issued, shares are fully paid and non-assessable. In
the event of liquidation, shareholders are entitled to share
pro rata in the net assets of the Fund available for
distribution to such shareholders. All shares entitle their
holders to one vote per share, are freely transferable and
have no preemptive, subscription or conversion rights.
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<PAGE>
Under Massachusetts law, there is a remote possibility
that shareholders of a business trust could, under certain
circumstances, be held personally liable as partners for the
obligations of such trust. The Trust Agreement contains
provisions intended to limit such liability and to provide
indemnification out of Trust property of any shareholder
charged or held personally liable for obligations or
liabilities of the Trust solely by reason of being or having
been a shareholder of the Trust and not because of such
shareholder's acts or omissions or for some other reason.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its
obligations.
Unless otherwise required by the Act, ordinarily it will
not be necessary for the Trust to hold annual meetings of
shareholders. As a result, shareholders may not consider
each year the election of Trustees or the appointment of
independent accountants. Shareholders may remove a Trustee
by the affirmative vote of at least two-thirds of the
Trust's outstanding shares and the Trustees must promptly
call a meeting for such purpose when requested to do so in
writing by the record holders of not less than 10% of the
outstanding shares. Shareholders may, under certain
circumstances, communicate with other shareholders in
connection with requesting a special meeting of
shareholders. The Board of Trustees, however, will call a
special meeting for the purpose of electing Trustees if, at
any time, less than a majority of Trustees holding office at
the time were elected by shareholders.
In the interest of economy and convenience, the Trust does
not issue certificates representing the Fund's shares.
Instead, the Transfer Agent maintains a record of each
shareholder's ownership. Each shareholder receives
confirmation of purchase and redemption orders from the
Transfer Agent. Fund shares and any dividends and
distributions paid by the Fund are reflected in account
statements from the Transfer Agent.
TAXATION
FEDERAL TAXES
THE FUND IS NOT The Fund is treated as a separate entity for tax purposes,
EXPECTED TO has qualified and elected to be treated as a regulated
HAVE ANY investment company under Subchapter M of the Internal
FEDERAL TAX Revenue Code of 1986, as amended (the "Code") and intends to
LIABILITY. continue to qualify for such treatment. To qualify for
treatment as a regulated investment company, the Fund must
satisfy certain requirements relating to the sources of its
income, diversification of its assets and distribution of
its income to shareholders. As a regulated investment
company, the Fund will not be subject to federal income or
excise tax on any net investment income and net realized
capital gains that are distributed to its shareholders in
accordance with certain timing requirements of the Code.
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<PAGE>
Dividends paid by the Fund from net investment income, the
excess of net short-term capital gain over net long-term
capital loss, original issue discount or certain market
discount income, or certain net foreign exchange gains will
be taxable to shareholders as ordinary income. Dividends
paid by the Fund from the excess of net long-term capital
gain over net short-term capital loss will be taxable as
long-term capital gains regardless of how long the
shareholders have held their shares. These tax consequences
will apply regardless of whether distributions are received
in cash or reinvested in shares. Certain distributions paid
by the Fund in January of a given year may be taxable to
shareholders as if received the prior December 31.
Shareholders will be informed annually about the amount and
character of distributions received from the Fund for
federal income tax purposes.
Investors should consider the tax implications of buying
shares immediately prior to a distribution. Investors who
purchase shares shortly before the record date for a
distribution will pay a per share price that includes the
value of the anticipated distribution and will be taxed on
the distribution even though the distribution represents a
return of a portion of the purchase price.
Redemptions and exchanges of shares are taxable events on
which a shareholder may recognize a gain or loss.
Individuals and certain other classes of shareholders may
be subject to 31% backup withholding of federal income tax
on distributions, redemptions and exchanges if they fail to
furnish the Fund with their correct taxpayer identification
number and certain certifications or if they are otherwise
subject to backup withholding. Individuals, corporations and
other shareholders that are not U.S. persons under the Code
are subject to different tax rules and may be subject to
nonresident alien withholding at the rate of 30% (or a lower
rate provided by an applicable tax treaty) on amounts
treated as ordinary dividends from the Fund.
The Fund may be subject to foreign withholding or other
foreign taxes on income (possibly including, in some cases,
capital gains) earned on foreign securities. If more than
50% of the value of its total assets is comprised of stock
or securities of foreign corporations at the end of its
taxable year and the Fund so elects, shareholders will
include in their gross incomes (in addition to dividends
they receive) their pro rata shares of qualified foreign
taxes paid by the Fund and may be entitled to take federal
income tax credits or deductions with respect to such taxes.
If the Fund cannot or does not so elect, it may deduct such
taxes in computing its taxable income, if any.
OTHER TAXES
In addition to federal taxes, a shareholder may be subject
to state, local or foreign taxes on payments received from
the Fund. A state income (and
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possibly local income and/or intangible property) tax
exemption is generally available to the extent the Fund's
distributions are derived from interest on (or, in the case
of intangibles taxes, the value of its assets is
attributable to) certain U.S. Government obligations,
provided in some states that certain thresholds for holdings
of such obligations and/or reporting requirements are
satisfied.
For a further discussion of certain tax consequences of
investing in shares of the Fund, see "Taxation" in the
Additional Statement. Shareholders are urged to consult
their own tax advisers regarding specific questions as to
federal, state and local taxes as well as to any foreign
taxes.
ADDITIONAL INFORMATION
The term "a vote of the majority of the outstanding
shares" of the Fund means the vote of the lesser of (i) 67%
or more of the shares present at a meeting, if the holders
of more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of
the outstanding shares of the Fund.
As used in this Prospectus, the term "Business Day" means
any day the New York Stock Exchange is open for trading,
which is Monday through Friday except for holidays. The New
York Stock Exchange is closed on the following holidays: New
Year's Day (observed), Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
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APPENDIX A
COUNTRY SUMMARIES
As stated in the Prospectus, the Fund may invest in securities issued by
foreign issuers and denominated in foreign currencies and engage in certain
foreign currency transactions. The following summaries are designed to provide
a brief general discussion of the economic and certain other conditions of
each of these countries. The summaries are presented in alphabetical order.
Because the Fund may invest more than 25% of its total assets in securities of
issuers located, in addition to the United States, in each of Canada, Germany,
Japan and the United Kingdom additional information is provided in their
respective summaries. In addition, more than 25% of the Fund's total assets,
adjusted to reflect currency transactions and positions, may be denominated in
any currency described in this Appendix. The information in these summaries
has been derived from sources that the Fund believes to be reliable, but has
not been independently verified. In some cases the data are seasonally
adjusted. Except as otherwise noted below, currency exchange rate is a period
average.
Although the countries for which summaries are provided below generally have
developed and industrialized economies, they are subject to periods of
economic or political instability. For example, efforts by the member
countries of the European Community to eliminate internal barriers to the free
movement of goods, persons, services and capital have encountered opposition
arising from the conflicting economic, political and cultural interests and
traditions of the member countries and their citizens. The reunification of
the former German Democratic Republic (East Germany) with the Federal
Democratic Republic of German (West Germany) has caused considerable economic
and social dislocations. The efforts of the German central bank to control
domestic inflation associated with reunification costs by raising interest
rates has adversely affected the economies of other European countries whose
currencies are linked to the German deutschemark. Such events can materially
affect securities markets and have also disrupted the relationship of such
currencies with each other and with the U.S. dollar. In Japan, a deflation in
the market values of Japanese real estate and equity securities and the
resulting instability in the Japanese banking system, have had adverse effects
on the economies of both Japan and its regular trading partners. Future
political and economic developments can be expected to produce continuing
effects on securities and currency markets.
AUSTRALIA. The currency is the Australian dollar (November 1994: AUD
1.3265 = $1 U.S.). Gross Domestic Product was AUD 418.1 billion ($284.3
billion) in 1993. The current account balance in foreign trade in 1993 was a
deficit of AUD 15.9 billion ($10.8 billion), which was 3.8% of GDP. The annual
rate of inflation was 1.8% in 1993. The average rate of inflation over the
three years ended in 1993 was 2.0%. Australia is a major power in the
Southeast Pacific with close ties to Japan and Southeast Asia. Iron, steel,
textiles, electrical equipment, chemicals, autos, aircraft, ships, machinery,
cattle and wool are chief industries.
AUSTRIA. The currency is the Austrian schilling (November 1994: ATS
10.850 = $1 U.S.). Gross Domestic Product was ATS 2,109.7 billion ($181.4
billion) in 1993. The 1993 current account balance in foreign trade was a
deficit of ATS 10.2 billion ($0.9 billion), which was 0.4% of GDP. The annual
rate of inflation in 1993 was 3.6%. The average rate of inflation over the
three years ended 1993 was 3.6%. Steel, machinery, autos, electrical and
optical equipment, glassware, sport goods, paper, textiles, chemicals and
cement are the chief industries. Austria produces most of its food as well as
an array of industrial products.
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BELGIUM. The currency is the Belgian franc (November 1994: BEF 31.713 = $1
U.S.). Gross Domestic Product was BEF 7,032 billion ($203.3 billion) in 1993.
The current account balance in foreign trade in 1993 was a surplus of BEF
435.5 billion ($12.6 billion), which was 6.2% of GDP. The annual rate of
inflation was 2.8% in 1992. The average rate of inflation over the three years
ended 1993 was 2.8%. Steel, glassware, diamond cutting, textiles and chemicals
are important industries.
CANADA. The currency is the Canadian dollar (November 1994: CAD 1.365 = $1
U.S.). Gross Domestic Product was CAD 711.7 billion ($551.7 billion) in 1993.
The current account balance in foreign trade in 1993 was a deficit of CAD 30.8
billion ($23.9 billion), which was 4.3% of the GDP. The annual rate of
inflation in 1993 was 1.8%. The average rate of inflation for the three years
ended 1993 was 3.0%.
Canadian Bond Markets. As of year end 1992, the Canadian Bond market had
640.3 billion Canadian dollars outstanding. The market has two major domestic
sectors. The largest of these is the provincial government market which has
261 billion Canadian dollars outstanding. The Federal debt market has 214
billion Canadian dollars outstanding. In 1992 total government debt
outstanding was 67% of GDP.
DENMARK. The currency is the Danish krone (November 1994: DKK 6.023 = $1
U.S.). Gross Domestic Product was DKK 881.8 billion ($136.0 billion) in 1993.
The current account balance in 1993 was a surplus of DKK 36.0 billion ($5.5
billion), which was 4.1% GDP. The annual rate of inflation was 1.3% in 1993.
The average rate of inflation over the three years ended 1993 was 1.9%.
Machinery, textiles, furniture, electronics and dairy are the chief
industries.
FINLAND. The currency is the Finnish markka (November 1994: FIM 4.717 = $1
U.S.). Gross Domestic Product was FIM 478.7 billion ($83.8 billion) in 1993.
The current account balance in foreign trade in 1993 was a deficit of FIM 5.6
billion ($1.0 billion), which was 1.2% of GDP. The annual rate of inflation
was 2.1% in 1993. The average rate of inflation over the three years ended
1993 was 2.9%. Machinery, metal, ship building, textiles and clothing are the
chief industries.
FRANCE. The currency is the French franc (November 1994: FRF 5.295 = $1
U.S.). Gross Domestic Product was FRF 7,093.5 billion ($1,252.6 billion) in
1993. The current account balance in foreign trade in 1993 was a surplus of
FRF 57.8 billion ($10.2 billion), which was 0.8% of GDP. The annual rate of
inflation was 2.1% in 1993. The average rate of inflation over the three years
ended 1993 was 2.6%. Steel, chemicals, autos, textiles, wine, perfume,
aircraft and electronic equipment are the chief industries.
GERMANY. The currency is the German deutschemark (November 1994: GDM
1.5387 = $1 U.S.). Gross National Product was GDM 2,820.0 billion ($1,705.7
billion) in 1993. The current account balance in foreign trade in 1993 was a
deficit of GDM 33.1 billion ($20.0 billion), which was 1.2% of the GDP. The
annual rate of inflation in 1993 was 4.1%. The average rate of inflation for
the three years ended 1993 was 3.9%.
German Bond Markets. The German public bond market has three primary
sectors: the federal government market; the bank bond market; and the
corporate bond market which includes domestically issued and Eurodeutschemark
issues. As of June 1993 the total amount of public debt outstanding was GDM
2,742 billion of which GDM 594 billion represents federal debt. The bank
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bond market is large, with approximately GDM 1,230 billion outstanding. The
GDM Eurobond market is the primary market for both domestic corporate
borrowers and supranational, sovereign, and foreign corporate borrowers. There
is approximately GDM 316 billion outstanding in International GDM bonds. There
are currently three exchanges listing futures on deutschemark financial
instruments.
GREECE. The currency is the Greek drachma (November 1994: GDR 237.11 = $1
U.S.). Gross Domestic Product was GDR 16,760 billion ($73.1 billion) in 1993.
The current account balance in foreign trade in 1993 was a deficit of GDR
171.2 billion ($0.7 billion), which was 1.0% of the GDP. The annual rate of
inflation in 1992 was 14.4%. The average rate of inflation for the three years
ended 1993 was 16.6%. Agriculture, tourism, textiles and shipping are the
chief industries.
IRELAND. The currency is the Irish pound (November 1994: IRP 0.6388 = $1
U.S.). Gross Domestic Product was IRP 32.3 billion ($47.4 billion) in 1993.
The trade balance in 1993 was a surplus of IRP 2.6 billion ($3.8 billion),
which was 8.0% of the GDP. The annual rate of inflation in 1993 was 1.4%. The
average rate of inflation for the three years ended 1993 was 2.6%.
Agriculture, paper, machinery and textiles are the chief industries.
ITALY. The currency is the Italian lira (November 1994: ITL 1,584.94 = $1
U.S.). Gross Domestic Product was ITL 1,507.2 trillion ($1,222.6 billion) in
1992. The current account balance in foreign trade in 1992 was a surplus of
ITL 17,588 billion ($11.2 billion). The annual rate of inflation was 4.5% in
1993. The average rate of inflation over the three years ended 1993 was 5.3%.
Steel, machinery, autos, textiles, shoes, machine tools and chemicals are the
chief industries.
JAPAN. The currency is the Japanese yen (November 1994: Yen 97.96 = $1
U.S.). Gross Domestic Product was Yen 468.8 trillion ($4,216 billion) in 1993.
The current account balance in foreign trade in 1992 was a surplus of Yen
14,622 billion ($131.5 billion), which was 3.1% of the GDP. The annual rate of
inflation in 1993 was 1.3%. The average rate of inflation for the three years
ended 1993 was 2.1%.
Japanese Bond Markets. The Japanese government bond market is the second
largest government bond market behind the United States. Over the last few
years both the government and private bond markets have been substantially
reformed and deregulated. While many of the market's new characteristics have
corollaries in other markets there are many more unique characteristics that
must be understood in order to effectively trade Japanese bonds. The Japanese
government bond market is divided into four sectors distinguished by the
maturity of the bonds being issued. As of March 1993, the total amount of
Japanese government bonds outstanding was 114,000 billion yen. There is a very
pronounced liquidity tiering in the secondary market for government bonds,
with the long-term sector of the market accounting for almost 95% of all
trades. The Euroyen market, established in 1977, allows highly rated
supranational, sovereign and corporate entities to issue yen-denominated debt
outside Japan.
LUXEMBOURG. The currency is the Luxembourg franc which is identical in value
to the Belgian franc (November 1994: LUF 31.713 = $1 U.S.). Gross Domestic
Product was LUF 339.2 billion ($10.6
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billion) in 1992. The annual rate of inflation was 3.6% in 1993. The average
rate of inflation over the three years ended 1993 was 3.3%. Steel, chemicals,
beer, tires, tobacco, metal products and cement are the chief industries.
NETHERLANDS. The currency is the Dutch guilder (November 1994: NLG
1.726 = $1 U.S.). Gross Domestic Product was NLG 573.9 billion ($309.0
billion) in 1993. The current account balance in foreign trade in 1993 was a
surplus of NLG 18.6 billion ($10.0 billion), which was 3.2% of GDP. The annual
rate of inflation was 2.6% in 1993. The average rate of inflation over the
three years ended 1993 was 3.0%. Metals, machinery, chemicals, oil refinery,
diamond cutting, electronics and tourism are the chief industries.
NEW ZEALAND. The currency is the New Zealand dollar (December 1993: NZD
1.849 = $1 U.S.). Gross Domestic Product was NZD $80.9 billion (U.S. $43.7
billion) in 1993. The current account balance in foreign trade in 1993 was a
deficit of NZD $1.7 billion (U.S. $0.9 billion), which was 2.1% of GDP. The
annual rate of inflation was 1.3% in 1993. The average rate of inflation over
the three years ended 1993 was 1.6%. Food processing, fishing, textiles
(especially wool-related), forest products and machinery are the chief
industries.
NORWAY. The currency is the Norwegian kronor (November 1994: NOK 6.727 = $1
U.S.). Gross Domestic Product was NOK 733.7 billion ($103.4 billion) in 1993.
The current account balance in foreign trade during 1993 was a surplus of NOK
17.4 billion ($2.5 billion), which was 2.4% of GDP. The annual rate of
inflation was 2.3% in 1993. The average rate of inflation over the three years
ended 1993 was 2.7%. Engineering, metals, chemicals food processing, fishing,
paper, shipbuilding and oil and gas are the chief industries.
PORTUGAL. The currency is the Portuguese escudo (November 1994: PES
157.30 = $1 U.S.). Gross Domestic Product was PES 11,343.0 billion ($84.0
billion) in 1992. The current account balance in foreign trade in 1993 was a
surplus of PES 152.3 billion ($0.9 billion). The annual rate of inflation in
1993 was 6.7%. The average rate of inflation for the three years ended 1993
was 9.0%. Fishing, agriculture, tourism and engineering are the chief
industries.
SPAIN. The currency is the Spanish peseta (November 1994: ESP 128.483 = $1
U.S.). Gross Domestic Product was ESP 60,880 billion ($478.4 billion) in 1993.
The current account balance in foreign trade in 1992 was a deficit of ESP
769.4 billion ($6.3 billion), which was 1.3% of GDP. The annual rate of
inflation was 4.6% in 1992. The average rate of inflation over the three years
ended 1993 was 5.5%. Machinery, steel textiles, shoes, autos and processed
foods are the chief industries.
SWEDEN. The currency is the Swedish krona (November 1994: SEK 7.351 = $1
U.S.). Gross Domestic Product was SEK 1,449.5 billion ($186.2 billion) in
1993. The current account balance in foreign trade in 1993 was a deficit of
SEK 14.3 billion ($1.8 billion), which was 1.0% of GDP. The annual rate of
inflation was 4.6% in 1993. The average rate of inflation over the three years
ended 1993 was 5.4%. Steel, machinery, instruments, autos, shipbuilding,
shipping and paper are the chief industries.
SWITZERLAND. The currency is the Swiss franc (November 1994: CHF 1.295 = $1
U.S.). Gross Domestic Product was CHF 343.0 billion ($232.1 billion) in 1993.
The current account balance in foreign trade in 1993 was a surplus of CHF 24.7
billion ($16.7 billion), which was 7.2% of GDP. The annual rate of inflation
was 3.3% in 1993. The average rate of inflation over the three years ended
1993
A-4
<PAGE>
was 4.4%. Machinery, machine tools, steel, instruments, watches, textiles,
foodstuffs (cheese, chocolate), chemicals, drugs, banking and tourism are the
chief industries.
UNITED KINGDOM. The currency is the British pound sterling (November 1994:
BPS 0.629 = $1 U.S.). Gross Domestic Product was BPS 630.0 billion ($946.3
billion) in 1993. The current account balance in foreign trade in 1993 was a
deficit of BPS 10.9 billion ($16.4 billion), which was 1.7% of the GDP. The
annual rate of inflation in 1993 was 1.6%. The average rate of inflation for
the three years ended 1993 was 3.7%.
British Bond Markets. The British public bond market has five primary
sectors: the government bond market; the short-term debt market; the
derivative bond market; the mortgage bond market; and the Eurosterling bond
market. The derivative bond market includes the London International Financial
Futures Exchange. The Eurosterling bond market allows highly rated
supranational, sovereign and corporate entities to issue sterling-denominated
debt outside the United Kingdom. As of 1993, the total amount of UK government
debt outstanding was 152 billion pounds, 60% of total national debt.
A-5
<PAGE>
SHORT-TERM INTEREST RATES*
<TABLE>
<CAPTION>
FEDERAL
UNITED REPUBLIC
CANADA JAPAN KINGDOM USA OF GERMANY
------ ----- ------- ----- ----------
<S> <C> <C> <C> <C> <C>
December, 1983............................ 9.81 6.44 9.44 10.06 6.38
December, 1984............................ 10.13 6.25 10.06 8.75 5.63
December, 1985............................ 9.25 6.69 11.94 8.00 4.88
December, 1986............................ 8.38 4.63 11.25 6.38 5.00
December, 1987............................ 8.50 4.38 8.94 7.44 3.50
December, 1988............................ 10.88 4.69 13.19 9.31 5.44
December, 1989............................ 12.12 6.81 15.19 8.38 8.38
January, 1990............................. 12.44 7.06 15.09 8.38 8.25
February, 1990............................ 13.38 7.44 15.19 8.38 8.56
March, 1990............................... 13.25 7.50 15.25 8.50 8.06
April, 1990............................... 13.50 7.38 15.38 8.69 8.38
May, 1990................................. 13.62 7.38 15.19 8.38 8.25
June, 1990................................ 13.44 7.69 14.97 8.38 8.25
July, 1990................................ 13.12 7.81 15.03 7.94 8.31
August, 1990.............................. 12.62 8.25 15.06 8.06 8.50
September, 1990........................... 12.19 8.50 14.97 8.31 8.69
October, 1990............................. 12.25 8.31 13.81 8.06 8.69
November, 1990............................ 12.06 8.44 13.69 8.38 9.31
December, 1990............................ 11.38 8.44 14.06 7.56 9.31
January, 1991............................. 10.69 8.25 13.94 7.06 9.25
February, 1991............................ 9.81 8.12 12.69 6.88 9.12
March, 1991............................... 9.62 7.88 12.41 6.38 9.31
April, 1991............................... 9.12 8.06 11.69 6.06 9.12
May, 1991................................. 8.69 7.75 11.38 6.06 9.06
June, 1991................................ 8.56 8.00 11.31 6.19 9.19
July, 1991................................ 8.75 7.44 11.12 6.06 9.38
August, 1991.............................. 8.44 7.25 10.88 5.69 9.25
September, 1991........................... 8.25 6.53 10.38 5.62 9.38
October, 1991............................. 7.75 6.25 10.50 5.25 9.50
November, 1991............................ 7.38 6.12 10.69 5.00 9.50
December, 1991............................ 7.00 5.69 11.00 4.25 9.62
January, 1992............................. 6.94 5.19 10.69 4.19 9.62
February, 1992............................ 7.19 5.19 10.19 4.19 9.56
March, 1992............................... 7.19 4.75 10.81 4.25 9.75
April, 1992............................... 6.63 4.69 10.50 4.00 9.75
May, 1992................................. 6.06 4.69 10.00 4.00 9.69
June, 1992................................ 5.50 4.44 10.06 3.88 9.75
July, 1992................................ 5.19 4.00 10.31 3.38 9.75
August, 1992.............................. 4.75 3.88 10.69 3.44 9.81
</TABLE>
(continued on following page)
- --------
* Rates quoted are daily end-of-period offer rates on 3-month Eurocurrency
deposits.
A-6
<PAGE>
SHORT-TERM INTEREST RATES*--(CONTINUED)
<TABLE>
<CAPTION>
FEDERAL
UNITED REPUBLIC
CANADA JAPAN KINGDOM USA OF GERMANY
------ ----- ------- ---- ----------
<S> <C> <C> <C> <C> <C>
September, 1992............................ 7.88 3.88 9.00 3.06 9.06
October, 1992.............................. 6.13 3.69 7.56 3.50 9.00
November, 1992............................. 8.19 3.75 7.44 3.94 8.88
December, 1992............................. 6.88 3.75 7.06 3.38 8.69
January, 1993.............................. 6.38 3.50 6.32 3.25 8.50
February, 1993............................. 5.88 3.25 6.13 3.13 8.25
March, 1993................................ 5.13 3.25 5.94 3.19 7.88
April, 1993................................ 5.19 3.19 6.13 3.13 7.63
May, 1993.................................. 4.94 3.25 5.88 3.31 7.56
June, 1993................................. 4.56 3.25 6.00 3.25 7.50
July, 1993................................. 4.13 3.19 5.88 3.25 6.81
August, 1993............................... 4.81 2.69 5.94 3.19 6.63
September, 1993............................ 4.81 2.50 6.00 3.31 6.69
October, 1993.............................. 4.50 2.31 5.69 3.38 6.44
November, 1993............................. 4.13 2.13 5.38 3.44 6.19
December, 1993............................. 3.88 2.00 5.38 3.31 5.88
January, 1994.............................. 3.69 2.19 5.44 3.19 5.81
February, 1994............................. 3.88 2.38 5.19 3.75 5.94
March, 1994................................ 5.81 2.31 5.44 3.94 5.69
April, 1994................................ 6.06 2.31 5.25 4.31 5.38
May, 1994.................................. 6.19 2.19 5.25 4.63 5.13
June, 1994................................. 6.38 2.19 5.19 4.88 5.00
July, 1994................................. 5.75 2.25 N/A 4.88 5.06
August, 1994............................... 5.44 2.25 5.37 4.94 4.84
September, 1994............................ 5.13 2.25 5.75 5.31 5.03
October, 1994.............................. 5.31 2.28 5.84 5.57 5.13
November, 1994............................. 5.81 2.25 6.03 6.09 5.12
December, 1994............................. 6.88 2.25 6.56 6.38 5.06
</TABLE>
- --------
* Rates quoted are daily end-of-period offer rates on 3-month Eurocurrency
deposits.
A-7
<PAGE>
MARKET EXCHANGE RATES**
<TABLE>
<CAPTION>
WEST BRITISH
CANADIAN GERMAN POUND JAPANESE
DOLLAR MARK STERLING YEN
CAD/US$ DM/US$ POUND/US$ YEN/US$
-------- ------ --------- --------
<S> <C> <C> <C> <C>
1978......................................... 1.1842 1.8205 0.4895 194.5526
1979......................................... 1.1688 1.7247 0.4527 239.2347
1980......................................... 1.1946 1.9743 0.4182 203.3554
1981......................................... 1.1857 2.2366 0.5248 219.6355
1982......................................... 1.2290 2.3742 0.6180 234.6318
1983......................................... 1.2446 2.7278 0.6899 231.7251
1984......................................... 1.3213 3.1565 0.8628 251.1752
1985......................................... 1.3977 2.4495 0.6922 200.3501
1986......................................... 1.3807 1.9390 0.6748 158.7500
1987......................................... 1.2997 1.5750 0.5323 121.3500
1988......................................... 1.1920 1.7755 0.5537 125.0500
1989......................................... 1.1580 1.6915 0.6215 143.6499
January, 1990................................ 1.1895 1.6832 0.5947 144.3250
February, 1990............................... 1.1905 1.6913 0.5931 148.7000
March, 1990.................................. 1.1720 1.6924 0.6079 157.4700
April, 1990.................................. 1.1645 1.6813 0.6119 159.1000
May, 1990.................................... 1.1760 1.6913 0.5945 152.2500
June, 1990................................... 1.1687 1.6713 0.5732 152.2500
July, 1990................................... 1.1532 1.5954 0.5392 146.5500
August, 1990................................. 1.1525 1.5680 0.5299 143.4000
September, 1990.............................. 1.1540 1.5640 0.5339 138.2300
October, 1990................................ 1.1663 1.5195 0.5133 129.2500
November, 1990............................... 1.1665 1.5035 0.5159 133.0500
December, 1990............................... 1.1605 1.4970 0.5181 135.7500
January, 1991................................ 1.1620 1.4833 0.5092 131.7000
February, 1991............................... 1.1505 1.5187 0.5215 132.4000
March, 1991.................................. 1.1586 1.7075 0.5762 141.3500
April, 1991.................................. 1.1502 1.7325 0.5850 137.1000
May, 1991.................................... 1.1444 1.7273 0.5845 138.0000
June, 1991................................... 1.1415 1.8123 0.6167 138.0500
July, 1991................................... 1.1530 1.7465 0.5936 137.7500
August, 1991................................. 1.1419 1.7455 0.5935 136.8000
September, 1991.............................. 1.1316 1.6618 0.5706 132.9500
October, 1991................................ 1.1225 1.6755 0.5752 131.2500
November, 1991............................... 1.1340 1.6325 0.5680 130.0500
December, 1991............................... 1.1563 1.5185 0.5349 124.9000
January, 1992................................ 1.1749 1.6125 0.5610 125.2000
February, 1992............................... 1.1830 1.6390 0.5696 129.4200
March, 1992.................................. 1.1892 1.6435 0.5760 132.7500
</TABLE>
(continued on following page)
- --------
** All rates are end of period values.
A-8
<PAGE>
MARKET EXCHANGE RATES**--(CONTINUED)
<TABLE>
<CAPTION>
WEST BRITISH
CANADIAN GERMAN POUND JAPANESE
DOLLAR MARK STERLING YEN
CAD/US$ DM/US$ POUND/US$ YEN/US$
-------- ------ --------- --------
<S> <C> <C> <C> <C>
April, 1992.................................. 1.1923 1.6490 0.5629 133.2500
May, 1992.................................... 1.2027 1.6075 0.5466 127.6500
June, 1992................................... 1.1990 1.5241 0.5253 125.7700
July, 1992................................... 1.1823 1.4748 0.5191 127.1000
August, 1992................................. 1.1950 1.4020 0.5029 122.9500
September, 1992.............................. 1.2470 1.4145 0.5626 120.0000
October, 1992................................ 1.2407 1.5410 0.6423 123.3700
November, 1992............................... 1.2873 1.5917 0.6596 124.6800
December, 1992............................... 1.2714 1.6190 0.6603 124.8200
January, 1993................................ 1.2674 1.6109 0.6729 124.7300
February, 1993............................... 1.2491 1.6457 0.7015 118.2500
March, 1993.................................. 1.2593 1.6070 0.6603 114.8800
April, 1993.................................. 1.2711 1.5855 0.6353 111.0500
May, 1993.................................... 1.2713 1.5902 0.6398 107.0800
June, 1993................................... 1.2822 1.7085 0.6706 107.3000
July, 1993................................... 1.2861 1.7420 0.6745 105.1000
August, 1993................................. 1.3195 1.6763 0.6700 104.7500
September, 1993.............................. 1.3340 1.6345 0.6684 106.3000
October, 1993................................ 1.3207 1.6880 0.6757 108.6000
November, 1993............................... 1.3355 1.7165 0.6730 109.0800
December, 1993............................... 1.3254 1.7387 0.6768 111.8500
January, 1994................................ 1.3297 1.7345 0.6636 108.4900
February, 1994............................... 1.3500 1.7045 0.6732 104.5000
March, 1994.................................. 1.3836 1.6742 0.6739 102.7500
April, 1994.................................. 1.3823 1.6540 0.6585 101.7000
May, 1994.................................... 1.3833 1.6465 0.6617 104.7800
June, 1994................................... 1.3835 1.5881 0.6475 98.4400
July, 1994................................... 1.3866 1.5840 0.6477 100.1500
August, 1994................................. 1.3670 1.5816 0.6519 100.0500
September, 1994.............................. 1.3436 1.5503 0.6339 99.1500
October, 1994................................ 1.3533 1.5033 0.6115 96.9550
November, 1994............................... 1.3760 1.5692 0.6392 98.9750
December, 1994............................... 1.4019 1.5495 0.6391 99.5800
</TABLE>
- --------
** All rates are end of period values.
A-9
<PAGE>
APPENDIX B
STATEMENT OF INTENTION
(APPLICABLE ONLY TO SHARES PURCHASED SUBJECT TO A SALES CHARGE)
If a shareholder anticipates purchasing $100,000 or more of shares of the
Fund alone or in combination with shares of another fund described in this
Prospectus within a 13-month period, the shareholder may obtain shares of the
Fund at the same reduced sales charge as though the total quantity were
invested in one lump sum by filing this Statement of Intention incorporated by
reference in the Account Information Form.
Instructions for issuance of shares in the name of a person who does not
sign the Account Information Form must be accompanied by a written statement
stating that the shares were paid for by a person who signed the Account
Information Form.
To insure that the reduced price will be received on future purchases, the
investor or his Authorized Dealer must inform Goldman, Sachs & Co. that this
Statement of Intention is in effect each time shares are purchased.
Subject to the conditions mentioned below, each purchase will be made at a
public offering price applicable to a single transaction of the dollar amount
specified on the Account Information Form, as described in the Prospectus. The
investor makes no commitment to purchase additional shares, but if his
purchases within 13 months plus the value of shares credited toward completion
do not total the sum specified, he will pay the increased amount of the sales
charge prescribed in the Escrow Agreement.
Income dividends and capital gain distributions taken in additional shares
will apply toward the completion of this Statement of Intention.
This Statement of Intention is not effective until accepted by Goldman,
Sachs & Co.
ESCROW AGREEMENT
Out of the initial purchase (or subsequent purchases if necessary) 5% of the
dollar amount specified on the Account Information Form shall be held in
escrow by the Transfer Agent in the form of shares registered in the
investor's name. All income dividends and capital gains distributions on
escrowed shares will be paid to the investor or to his order.
When the minimum investment so specified is completed (either prior to or by
the end of the thirteenth month), the shareholder will be notified and the
escrowed shares will be released.
If the intended investment is not completed, the investor will be asked to
remit to Goldman, Sachs & Co. any difference between the sales charge on the
amount specified and on the amount actually attained. If the investor does not
within 20 days after written request by Goldman, Sachs & Co. pay such
difference in the sales charge, the Transfer Agent will redeem an appropriate
number of the escrowed shares in order to realize such difference. Shares
remaining after any such redemption will be released by the Transfer Agent.
In signing the Account Information Form, the investor irrevocably
constitutes and appoints the Transfer Agent his attorney to surrender for
redemption any or all escrowed shares with full power of substitution in the
premises.
B-1
<PAGE>
APPENDIX C
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON ACCOUNT INFORMATION FORM
You are required by law to provide the Fund with your correct Social
Security or other Taxpayer Identification Number (TIN), regardless of whether
you file tax returns. Failure to do so may subject you to penalties. Failure
to provide your correct TIN, to check the appropriate boxes in, and to sign
your name in the Social Security Number or other Taxpayer Identification
Number Certification section (the "Certification Section") of the Account
Information Form could result in withholding of 31% by the Fund for the
federal backup withholding tax on distributions, redemptions, exchanges and
other payments relating to your account. The Fund reserves the right to refuse
to open an account for, or to close the account of, any investor who fails to
(1) provide a TIN, or (2) certify that such TIN is correct (if required to do
so under applicable law) in establishing an account.
Any tax withheld may be credited against taxes owed on your federal income
tax return.
Special rules apply for certain entities. For example, for an account
established under a Uniform Gifts or Transfers to Minors Act, the TIN of the
minor should be furnished.
If you do not have a TIN, you should apply for one immediately by contacting
your local office of the Social Security Administration or the Internal
Revenue Service (IRS). If you do not have a TIN but have applied for or intend
to apply for one, you should check the first box in the Certification Section.
In this event, you should provide your TIN and required certifications within
60 days. Backup withholding could apply to payments relating to your account
prior to the Fund's receipt of your TIN and required certifications.
If you have been notified by the IRS that you are subject to backup
withholding because you failed to report all your interest and/or dividend
income on your tax return and you have not been notified by the IRS that such
withholding should cease, you must cross out item (2) in the Certification
Section.
If you are an exempt recipient, you should furnish your TIN and check the
second box in the Certification Section. Exempt recipients include:
corporations, tax-exempt pension plans and IRA's, governmental agencies,
financial institutions, registered securities and commodities dealers and
others.
If you are a nonresident alien or foreign entity, check the third box in the
Certification Section and provide a completed Form W-8 to the Fund in order to
avoid backup withholding on certain payments. Other payments to you may be
subject to nonresident alien withholding of up to 30%.
For further information regarding backup and nonresident alien withholding,
see Sections 3406, 1441 and 1442 of the Internal Revenue Code and consult your
tax adviser.
C-1
<PAGE>
ACCOUNT INFORMATION FORM THE GOLDMAN SACHS PORTFOLIOS
This Account Information Form Should be
Forwarded Promptly to Goldman, Sachs & Co.
or any Authorized Dealer
- -------------------------------------------------------------------------------
SEND TO: The Goldman Sachs Portfolios
c/o NFDS
P.O. Box 419711
Kansas City, MO 64141-6711
For additional information
call 1-800-526-7384 Date: __________
- -------------------------------------------------------------------------------
INITIAL INVESTMENT-- [_] Asia Growth Fund [_] Global Income Fund
$1,500 MINIMUM [_] Balanced Fund [_] Government Income Fund
[_] Capital Growth Fund [_] Municipal Income Fund
[_] Growth & Income Fund [_] Other Fund_____________
[_] International Equity GOLDMAN SACHS MONEY MARKET
Fund TRUST*
[_] Select Equity Fund [_] ILA/Prime Obligations
[_] Small Cap Equity Fund Portfolio Service Units
[_] Adjustable Rate Mortgage [_] ILA/Tax-Exempt Diversi-
Fund fied Portfolio Service
Units
*$10,000 minimum or balance
of existing account
- -------------------------------------------------------------------------------
1. ACCOUNT Please Print
REGISTRATION
INDIVIDUAL
---------------------------------------- --------------
First Name Initial Last SS# or Tax ID#
JOINT TENANTS
The account will be registered as "Joint Tenants with
Right of Survivorship" unless otherwise specified.
---------------------------------------- --------------
First Name Initial Last SS# or Tax ID#
---------------------------------------- --------------
First Name Initial Last SS# or Tax ID#
GIFT TO MINORS
--------------------------------------------------------
Custodian's Name (Only one can be named)
---------------------------------------- --------------
Minor's Name (Only one) SS#
Under the _________ (State of Residence) Uniform Gift to
Minors Act
CORPORATION, TRUST, OR OTHER ENTITY
---------------------------------------- --------------
Name of Corporation, Trust or other Tax ID#
Non-Person Entity
--------------------------------------------------------
Attention:
--------------------------------------------------------
Date of Trust Instrument: Name of Beneficiary (If to
be included in the
registration)
--------------------------------------------------------
Name(s) of Trustee(s) (If to be included in the
registration)
- -------------------------------------------------------------------------------
2. MAILING ADDRESS ( )
------------------------------------ ------------------
Street Daytime Phone
--------------------------------------------------------
City State Zip Code
<PAGE>
- --------------------------------------------------------------------------------
3. TO PURCHASE SHARES Check appropriate box(es).
[_] A check for $_______ is enclosed. Check(s) should be
payable to the Fund(s) selected.
[_] An order # ______ for ______ shares or $_________
was placed on _____________________.
[_] I certify that I am an entity exempt from the sales
charge according to the section in the Fund
Prospectus "Purchase of Shares" and I am, therefore,
entitled to purchase shares of the Fund at net asset
value. By checking this box, the undersigned agrees
that I will notify Goldman, Sachs & Co. at or prior
to purchase if I am no longer in one of the
categories of eligible investors.
Reason for exemption _____________________________.
- --------------------------------------------------------------------------------
4. DIVIDEND AND Choose how you wish to receive dividends. If no boxes
DISTRIBUTION are checked, Option A will be assigned.
OPTIONS A. [_] All income and capital gains dividends
reinvested in the account.
B. [_] All income and short-term capital gains
dividends in cash and long-term capital gains
reinvested in the account. (COMPLETE CASH
DIVIDENDS SECTION BELOW.)
C. [_] All income and capital gains dividends paid in
cash. (COMPLETE CASH DIVIDENDS SECTION BELOW.)
D. [_] All dividends and capital gains reinvested in
another Goldman Sachs Portfolio account: (See
prospectus regarding limitations on this
privilege.)
Fund Name _________________ Account Number ____________
Please send cash dividends to (if no special payee,
cash dividends will be sent to the account registration
address):
[_] Account registration address.
[_] Check to special payee as follows:
[_] Deposit to bank (attach voided check)
Name of Payee ________________ Account No. (if
applicable) ____________
Street Address _________________________________________
City _____________________________ State ____ Zip ______
- --------------------------------------------------------------------------------
5. RIGHT OF See "Purchase of Shares"
ACCUMULATION
Cumulative quantity discounts are applicable if a
shareholder's current value of existing shares of the
Fund alone or in combination with shares of any other
fund described in the Prospectus, on which a sales
charge was paid, total the requisite amount for
receiving a discount as described in the accompanying
Prospectus. Below are listed all the accounts (account
name, Fund and number) which should be aggregated for a
right of accumulation.
Name _____________ Name _____________ Name _____________
Fund _____________ Fund _____________ Fund _____________
Acct No. _________ Acct No. _________ Acct No. _________
- --------------------------------------------------------------------------------
6. STATEMENT OF See "Purchase of Shares"
INTENTION
Although not obligated to do so, it is the
undersigned's intention to invest, over a 13-month
period from this date, in shares of the Fund alone or
in combination with shares of any other fund, on which
a sales charge was paid, described in the Prospectus
which qualify for a quantity discount as described in
the accompanying Prospectus, in an amount that will
equal or exceed:
[_] $50,000 [_] $100,000 [_] $250,000 [_] $500,000
[_] $1,000,000 [_] $3,000,000
I agree to the Statement of Intention and Escrow
Agreement set forth in the Appendices to the
accompanying Prospectus and incorporated by reference
herein.
<PAGE>
- --------------------------------------------------------------------------------
7. AUTOMATIC INVEST- See "Purchase of Shares"
MENT PLAN (ATTACH
VOIDED CHECK) Check One: [_] Monthly [_] Quarterly
Beginning on or about the 5th [_] or the 15th [_]
(check one) beginning with ___________(month) and every
month/quarter thereafter, I/We authorize State Street
Bank (the custodian for the Fund) to debit the amount
requested below from my/our bank account for investment
in the Fund. I/We understand that my/our participation
in the Automatic Investment Plan (the "Plan") is
subject to the terms and conditions of such plan as
amended from time to time.
--------------------------------------------------------
Bank Name Bank Account Number (if assigned)
--------------------------------------------------------
Amount of each monthly investment Name of Fund
(minimum $50)
--------------------------------------------------------
Amount of each monthly investment Name of Fund
(minimum $50)
--------------------------------------------------------
Authorized Signature (as shown on bank records)
--------------------------------------------------------
Authorized Signature (if joint bank account both sign)
- --------------------------------------------------------------------------------
8. TELEPHONE EXCHANGE [_] I/We authorize Goldman, Sachs & Co. to accept and act
upon telephone instructions from myself or any other
person for the exchange of shares of the Fund into
any fund described in the accompanying Prospectus.
I/We understand and agree that neither the Fund nor
Goldman, Sachs & Co. will be liable for any loss,
expense, or cost arising out of any telephone request
effected hereunder.
- --------------------------------------------------------------------------------
9. TELEPHONE REDEMPTION
(ATTACH VOIDED See "Redemption of Shares"
CHECK)
[_] Goldman, Sachs & Co. is hereby authorized to honor
telephone, telegraphic, or other instructions,
without signature guarantee, from any person for the
redemption of shares for the above account, without
an obligation on behalf of Goldman, Sachs & Co., to
verify that such person is the shareholder of record
or authorized to give redemption instructions,
provided that the proceeds are transmitted to the
following bank account only or are mailed to the
account registration address. Absent its own gross
negligence, neither the Fund nor Goldman, Sachs & Co.
shall be liable for such redemption or for payments
made to any unauthorized account.
--------------------------------------------------------
Bank Name ABA Routing #
--------------------------------------------------------
Street Address City State Zip
--------------------------------------------------------
Account Name Account Number
- --------------------------------------------------------------------------------
10. AUTOMATIC The originating fund's balance must be at least $10,000
EXCHANGES and the receiving fund's minimum investment must be met
prior to discontinuing this privilege if the minimum
investment requirement for the receiving fund has not
already been met.
I hereby authorize automatic exchanges of $______ (exact
dollars--$50 minimum) into my identically registered
account:
Exchange from ____________________________ (Name of Fund)
to ____________________________ (Name of Fund)
Account No. (if known) ___________________
Please make exchanges on the 15th (or next business day)
beginning the month of _________________________.
- --------------------------------------------------------------------------------
11. CHECKWRITING
PRIVILEGE See "Check Redemption Privilege"
[_] Check the box if you would like an application for
checkwriting sent to you.
The checkwriting privilege is available to holders of
ILA/Prime Obligations Portfolio Service Units or
ILA/Tax-Exempt Diversified Portfolio Service Units
ONLY.
<PAGE>
- --------------------------------------------------------------------------------
12. SOCIAL SECURITY . By the execution of this Account Information Form, the
NUMBER OR OTHER undersigned represents and warrants that it has full
TAXPAYER right, power and authority to make the investment
IDENTIFICATION applied for pursuant to this Form and is acting for
NUMBER itself or in some fiduciary capacity in making such
CERTIFICATION AND investment.
SIGNATURE
AUTHORIZATION THE UNDERSIGNED AFFIRMS THAT IT HAS RECEIVED A CURRENT
PROSPECTUS FOR THE FUND AND HAS REVIEWED THE SAME.
The undersigned understands that a lesser degree of
flexibility concerning the timing of a redemption of its
investment in Goldman Sachs Adjustable Rate Mortgage
Fund, Goldman Sachs Global Income Fund, Goldman Sachs
Municipal Income Fund, Goldman Sachs Government Income
Fund, Goldman Sachs Capital Growth Fund, Goldman Sachs
Select Equity Fund, Goldman Sachs Small Cap Equity Fund,
Goldman Sachs International Equity Fund, Goldman Sachs
Growth and Income Fund, Goldman Sachs Asia Growth Fund
and Goldman Sachs Balanced Fund, as well as all other
non-money market funds, increases the likelihood that
the shareholder will be required to redeem shares under
unfavorable market conditions. If shares are redeemed at
a disadvantageous time, the value of the Fund's shares
upon redemption may be less than the price at which the
Fund's shares were purchased. Since none of the Funds
listed in this paragraph is a money market fund or
maintains a constant net asset value per share, the
undersigned may experience a loss of principal on its
investments in any such Fund during any particular
period.
. Fill in boxes below
Taxpayer Identification No.: ____________________________
(For joint tenants, first listed individual should
provide his/her number and sign below.) Under penalties
of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number
to be issued to me), and
(2) I am not subject to backup withholding because (a) I
am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service (IRS)
that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup withholding.
Certification Instruction: You must cross out item (2)
above if you have been notified by the IRS that you are
currently subject to federal backup withholding because
of underreporting interest or dividends on your federal
tax return. (Also see the "Guidelines for Certification
of Taxpayer Identification Number on Account Information
Form" contained in the Appendices to the accompanying
Prospectus).
NOTE: FAILURE TO COMPLETE THIS SECTION MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO
YOU.
By checking only the appropriate box and signing below,
I certify under penalties of perjury that:
[_] I do not have a taxpayer identification number, but
I have applied for or intend to apply for one. I
understand that the required 31% withholding may
apply before I provide such number and
certifications, which should be provided within 60
days.
or [_] I am an exempt recipient.
or [_] I am neither a citizen nor a resident of the United
States for the purpose of the Internal Revenue
Code. I am a resident of __________________ .
All recipients, including exempt recipients, must report
their taxpayer identification numbers and provide the
certifications requested to prevent backup withholding.
Sign Here:
---------------------------------------------------------
Signature Name (print) and Title (if any)
Date:
<PAGE>
- -------------------------------------------------------------------------------
13. SYSTEMATIC See "Redemption of Shares"
WITHDRAWAL PLAN
Minimum account balance must be $10,000. Withdrawal
minimum is $50.
Check One: [_] Monthly [_] Quarterly
Please make payments via (check one) [_] check [_] ACH
(Bank must be ACH affiliated. Attach voided check).
Payments made via check are withdrawn from your account
on or about the 25th of each month/quarter. (I
understand that I may change the date of redemption,
via ACH, or the amount at any time in writing to the
Fund at the address stated above.)
Complete this section if withdrawal payments are to be
made via ACH (funds are automatically credited to the
designated bank account.)
BANK INFORMATION:
Please withdraw $___________ from my account on the
___________ of the month.
Bank Account Registration: _____________________________
Routing #: _____________ Bank Account #: ______________
Bank Name/Branch Name: _________________________________
Bank Street Address: ___________________________________
Bank Telephone Number: _________________________________
Complete this section ONLY if check is to be made
payable to person(s) other than the registered owner,
and you must have this application SIGNATURE
GUARANTEED.
--------------------------------------------------------
Name of check recipient Address City State Zip
SIGNATURE GUARANTEE(S)
This request must be signed by each shareholder with
his or her signature guaranteed by a commercial bank,
trust company or member firm of a national securities
exchange.
--------------------------------------------------------
Shareholder Signature
--------------------------------------------------------
Signature Guaranteed By
--------------------------------------------------------
Authorized Signature
- -------------------------------------------------------------------------------
14. FOR DEALER ONLY Investment dealer's signature is required for
Systematic Withdrawal Plan or Statement of Intention.
If a Systematic Withdrawal Plan is being opened, we
believe that the amount to be withdrawn is reasonable
in light of the investor's circumstances and we
recommend establishment of the account.
--------------------------------------------------------
Name of Dealer Firm Home Office Location
--------------------------------------------------------
City State Zip
--------------------------------------------------------
Branch Office Location Branch Number/Branch Phone
--------------------------------------------------------
Authorized Signature State Zip
--------------------------------------------------------
Reg. Rep. Number Reg. Rep.'s Name
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UN-
LAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE TRUST OR THE FUND SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................... 3
Financial Highlights....................................................... 9
Investment Objective and Policies.......................................... 10
Investment Adviser, Subadviser and Administrator........................... 14
Risks, Special Investment Methods and Investment Limitations............... 15
Investment Restrictions.................................................... 27
Portfolio Turnover......................................................... 28
Management................................................................. 28
Reports to Shareholders.................................................... 32
Purchase of Shares......................................................... 32
Distribution Plan.......................................................... 43
Redemption of Shares....................................................... 43
Dividends.................................................................. 46
Net Asset Value............................................................ 47
Performance Information.................................................... 47
Shares of the Trust........................................................ 48
Taxation................................................................... 49
Additional Information..................................................... 51
Appendix A................................................................. A-1
Appendix B................................................................. B-1
Appendix C................................................................. C-1
Account Information Form
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOLDMAN SACHS
GLOBAL INCOME FUND
MANAGED BY
INVESTMENT ADVISER
GOLDMAN SACHS ASSET
MANAGEMENT,
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
SUBADVISER
GOLDMAN SACHS ASSET
MANAGEMENT INTERNATIONAL
AN AFFILIATE OF
GOLDMAN, SACHS & CO.
-------------
PROSPECTUS
-------------
GOLDMAN, SACHS & CO.
GI1/40K/0395
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GOLDMAN SACHS GLOBAL INCOME FUND
SUPPLEMENT DATED JUNE 1, 1995 TO PROSPECTUS DATED MARCH 1, 1995
The class of shares of the Fund offered by the accompanying Prospectus has
been designated as the Class A Shares of the Fund.
Effective August 1, 1995, certain changes will be made to the Fund's
operating expenses. Specifically, the Investment Adviser and Subadviser
voluntarily have agreed to limit their advisory and subadvisory fees to 0.10%
an 0.30%, respectively, of the Fund's average daily net assets. In addition,
the Investment Adviser and Subadviser voluntarily have agreed to limit certain
"Other Expenses" of the Fund (excluding transfer agency fees estimated to be
0.04% of average daily net assets, advisory, administration, distribution and
authorized dealer service fees, taxes, interest and brokerage and litigation,
indemnification and other extraordinary expenses) to 0.06% of the Fund's
average daily net assets. The investment Adviser and Subadviser have no current
intention of modifying or discontinuing any of such limitations but may do so
in the future at their discretion.
THE FOLLOWING REPLACES THE FEES AND EXPENSES TABLE IN THE ACCOMPANYING
PROSPECTUS EFFECTIVE AUGUST 1, 1995:
FEES AND EXPENSES
<TABLE>
<CAPTION>
GOLDMAN SACHS
GLOBAL
INCOME FUND
-------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases...................... 4.5%*
Maximum Sales Charge Imposed on Reinvested Dividends........... None
Redemption Fees................................................ None**
Exchange Fees.................................................. None**
ANNUAL FUND OPERATING EXPENSES:
(AS PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Management Fees (including, after limitation, advisory and
subadvisory fees of 0.10% and 0.30%, respectively, and admin-
istration fees of 0.15%)...................................... 0.55%***
Distribution (Rule 12b-1) Fees................................. 0.25%
Other Expenses:
Authorized Dealer Service Fees............................... 0.25%
Other Expenses (after limitation)............................ 0.10%
----
TOTAL FUND OPERATING EXPENSES (AFTER FEE AND EXPENSE LIMITA- 1.15%***
TION)......................................................... ====
</TABLE>
Example:
You would pay the following expenses on a hypothetical $1,000 investment
(including the maximum sales charge), assuming (1) a 5% annual return and (2)
redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$56 $80 $105 $178
</TABLE>
<PAGE>
- --------
* As a percentage of the offering price. No sales charge is imposed on
purchases by certain classes of investors. See "Purchase of Shares."
** A transaction fee of $7.50 may be charged for redemption proceeds paid by
wire. In addition to free reinvestments of dividends and distributions in
shares of other Goldman Sachs Portfolios or units of the ILA Portfolios and
free automatic exchanges pursuant to the Automatic Exchange Program, six
free exchanges are permitted in each twelve month period. A fee of $12.50
may be charged for each subsequent exchange during such period. See
"Purchase of Shares--Exchange Privilege." A contingent deferred sales
charge may be imposed in connection with certain redemptions of Class A
Shares sold without an initial sales charge to certain participant-directed
plans. See "Purchase of Shares--Participant-Directed Plans." The transfer
agency fee incurred with respect to the Class A Shares of the Fund is based
on a fixed per account charge plus transaction fees. See "Management--
Distribution and Transfer Agent."
*** Based upon estimated amounts for the current fiscal year. The Investment
Adviser and Subadviser voluntarily have agreed to limit their advisory and
subadvisory fees to the amounts shown in the table and to limit certain
"Other Expenses" of the Fund (excluding transfer agency fees estimated to
be 0.04% of average daily net assets, advisory, administration,
distribution and authorized dealer service fees, taxes, interest and
brokerage and litigation, indemnification and other extraordinary expenses)
to 0.06% per annum of the Fund's average daily net assets. The Investment
Adviser and Subadviser have no current intention of modifying or
discontinuing such expense limitations but may do so in the future in their
discretion. Without such limitations, the Fund's "Management Fees", "Other
Expenses" and "Total Operating Expense" would be 0.90%, 0.23% and 1.63%,
respectively. See "Management--Investment Adviser, Subadviser and
Administrator." During the fiscal year ended October 31, 1994, the
Authorized Dealer Service Plan was not in existence and the Distribution
(Rule 12b-1) Fees were contractually set at 0.50%. During that period,
Goldman Sachs agreed to limit the amount of the fees under such
Distribution Plan to 0.25% and did not waive any management fees. The
annual "Management Fees," "Distribution Fees," "Other Expenses" and "Total
Operating Expenses" respectively, incurred by the Fund during the fiscal
year ended October 31, 1994 (expressed as a percentage of average daily net
assets after fee adjustment) were 0.90%, 0.25%, 0.13% and 1.28%,
respectively.
Investors should be aware that, due to the distribution fees, a long-term
Class A shareholder in the Fund may pay over time more than the economic
equivalent of the maximum front-end sales charge permitted under the rules of
NASD.
The information with respect to the Fund set forth in the foregoing table and
hypothetical example relates only to the Class A Shares of the Fund (the class
offered by this Prospectus). The Fund also offers Institutional Shares and
Administration Shares which are subject to different fees and expenses (which
affects performance), have different minimum investment requirements and are
entitled to different services. Information regarding Institutional and
Administration Shares may be obtained from your sales representative or from
Goldman Sachs by calling the number on the inside cover page of this
prospectus.
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses of the Fund that an investor in Class A Shares
will bear directly or indirectly. The cost and expenses included in the table
and hypothetical example above are based upon estimated fees and expenses for
the current fiscal year. The information on costs and expenses included in the
table are hypothetical examples and should not be considered as representative
of past or future expenses. Actual fees and expenses may be greater or less
than those indicated. Moreover, while the example assumes a
2
<PAGE>
5% annual return, the Fund's actual performance will vary and may result in an
actual return greater or less than 5%. See "Management--Investment Adviser,
Subadviser and Administrator."
THE FUND'S INVESTMENT POLICIES HAVE BEEN AMENDED AS SET FORTH BELOW (CHANGES
IN POLICY ARE SET FORTH IN ITALICS):
The Fund's investment objective is to provide investors with a high total
return, emphasizing current income and, to a lesser extent, providing
opportunities for capital appreciation primarily through investment in a
portfolio of high quality fixed income securities of U.S. and foreign issuers
and through transactions in foreign currencies. High quality securities are
defined as securities which have ratings of at least AA by Standard & Poor's
Rating Group ("S&P") or Aa by Moody's Investors Service, Inc. ("Moody's")
("High Quality Ratings") or, if unrated by such rating organizations, are
determined by the Fund's Investment Adviser or Subadviser to be of comparable
credit quality. The Fund may also invest in obligations of a sovereign issuer
rated at least A by Moody's or S&P, or if not rated by such rating
organizations determined by the Investment Adviser or Subadviser to be of
comparable credit quality, if the obligations are denominated in the issuer's
own currency.
The Fund will maintain a dollar weighted average duration of not more than
7.5 years. The Fund is not subject to any limitation with respect to the
average maturity of its portfolio or the individual securities in which the
Fund may invest.
DISTRIBUTION AND AUTHORIZED DEALER SERVICE PLANS
Effective June 1, 1995, the Fund's Distribution Plan has been amended and the
Fund has adopted an Authorized Dealer Service Plan. Under the amended
Distribution Plan, Goldman Sachs will continue to provide the distribution
services described in the accompanying Prospectus; however, personal and
account administration services will no longer be provided under the
Distribution Plan. Goldman Sachs is entitled to be compensated under the
amended Distribution Plan at a rate of up to 0.25% annually of the Fund's
average daily net assets rather than the previous fee of up to 0.50% annually
of average daily net assets.
Pursuant to the Authorized Dealer Service Plan, Goldman Sachs and Authorized
Dealers will be compensated for providing personal and account maintenance
services at an annual rate equal to 0.25% of the Fund's average daily net
assets. The fee for personal and account maintenance services paid pursuant to
the Authorized Dealer Service Plan may be used to make payments to Goldman
Sachs, Authorized Dealers and their officers, sales representatives and
employees for responding to inquiries of, and furnishing advice to,
shareholders regarding their shares or their accounts or similar services not
otherwise provided on behalf of the Funds. The aggregate services provided and
the aggregate fees payable under the amended Distribution Plan and the
Authorized Dealer Service Plan are the same as the services previously provided
and the fees previously payable under the Distribution Plan (however, Goldman
Sachs previously limited the amount of distribution expenses, which limitation
is not being continued).
PURCHASE AND REDEMPTION PROCEDURE
Effective June 7, 1995, purchases and redemptions of Shares of the Fund must
be settled within three Business Days of the receipt by a Fund of a complete
purchase order or properly executed redemption request. Except for the
requirement that the Fund receive payment for any Shares within three Business
Days (previously five Business Days) of receipt of a purchase order, the
purchase procedures
3
<PAGE>
described in the accompanying Prospectus have not changed. Redemption proceeds
to be paid by check will normally be mailed within three Business Days after
receipt of a properly executed redemption request. Redemption proceeds paid by
wire will normally be wired on the next Business Day following receipt of a
properly executed redemption request but may be paid up to three Business Days
after receipt of a properly executed redemption request.
Under the section entitled "Purchase of Shares--Offering Price," the
following replaces the fourth paragraph:
Shares of the Fund may be sold at net asset value without payment of
any initial sales charge to (a) Goldman, Sachs, its affiliates or their
respective officers, partners, directors or employees (including
retired employees and former partners), any partnership of which
Goldman Sachs is a general partner, any Trustee or officer of the Trust
and designated family members of any of the above individuals; (b)
qualified retirement plans of Goldman Sachs; (c) trustees or directors
of investment companies for which Goldman Sachs or an affiliate acts as
sponsor; (d) any employee or registered representative of any
Authorized Dealer or their respective spouses and children; (e) banks,
trust companies or other types of depository institutions investing for
their own account or investing for accounts for which they have
investment discretion; (f) banks, trust companies or other types of
depository institutions investing for accounts for which they do not
have investment discretion, provided they have entered into an
agreement with GSAM specifying aggregate minimums and certain operating
policies and standards; (g) any state, county or city, or any
instrumentality, department, authority or agency thereof, which is
prohibited by applicable investment laws from paying a sales charge or
commission in connection with the purchase of shares of the Fund; (h)
pension and profit sharing plans, pension funds and other company-
sponsored benefit plans having either 200 eligible employees or at
least $500,000 under management with GSAM and its affiliates; (i)
qualified non-profit organizations, foundations and endowments that
have at least $1,000,000 under management with GSAM and its affiliates;
(j) shareholders whose purchase is attributable to redemption proceeds
(subject to appropriate documentation) from a registered open-end
management investment company not distributed or managed by Goldman
Sachs or its affiliates, if such redemption has occurred no more than
60 days prior to the purchase of shares of the Fund and the shareholder
either (i) paid an initial sale charge or (ii) was at some time subject
to a deferred sales charge with respect to the redemption proceeds; (k)
"wrap" accounts for the benefit of clients of broker-dealers, financial
institutions or financial planners, provided that they have entered
into an agreement with GSAM specifying aggregate minimums and certain
operating policies and standards; (l) registered investment advisers
who have entered into an agreement with GSAM specifying aggregate
minimums and certain operating policies and standards. Purchasers must
certify eligibility for an exemption on the Account Information Form
and notify Goldman Sachs if, the shareholder is no longer eligible for
an exemption. Exemptions will be granted subject to confirmation of a
purchaser's entitlement. Goldman Sachs reserves the right to limit the
participation in the Fund of its partners and employees. In addition,
under certain circumstances, dividends or distributions from any of the
Goldman Sachs Portfolios may be reinvested in shares of the Fund at net
asset value, as described under "Cross-Reinvestment of Dividends and
Distributions."
4
