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GOLDMAN SACHS TRUST
GOLDMAN SACHS ASSET ALLOCATION PORTFOLIOS
CLASS A, B AND C SHARES
INSTITUTIONAL SHARES
SERVICE SHARES
SUPPLEMENT DATED MAY 1, 1998 TO
PROSPECTUSES DATED JANUARY 1, 1998
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Under "DESCRIPTION OF UNDERLYING FUNDS" in each Prospectus:
The investment policies of the Mid Cap Equity Fund are modified by the
following:
The Fund invests, under normal circumstances, substantially all of its
assets in equity securities and at least 65% of its total assets in equity
securities of companies with public stock market capitalizations within the
range of the market capitalization of companies constituting the Russell
Midcap Index at the time of investment (currently between $400 million and
$16 billion) ("Mid-Cap Companies").
The investment policies of the Small Cap Value Fund are amended to
eliminate the current emphasis on investments in companies with public
stock market capitalizations of $500 million or less at the time of
investment.
The following is a concise description of the investment objectives of
additional Underlying Funds that are available for investment by the Asset
Allocation Portfolios:
<TABLE>
<C> <C> <S>
Fund Name Investment Objectives Investment Criteria
- -------------------------------------------------------------------------------------------
Japanese Equity Fund Long-term capital appreciation. Substantially all, and at
least 65%, of total assets
in equity securities of
Japanese companies. The Fund
may employ currency manage-
ment techniques.
- -------------------------------------------------------------------------------------------
International Small Cap Fund Long-term capital appreciation. Substantially all, and at
least 65%, of total assets
in equity securities of
companies with public stock
market capitalizations of $1
billion or less at the time
of investment that are
organized outside the United
States or whose securities
are principally traded out-
side the United States. The
Fund may employ currency
management techniques.
</TABLE>
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Under the subsection "Underlying Equity Funds," the following paragraph is
added:
ACTIVELY MANAGED FUNDS. The International Equity, Japanese Equity,
International Small Cap, Emerging Markets Equity and Asia Growth Funds are
managed using an active international approach, which utilizes a consistent
process of stock selection undertaken by portfolio management teams located
within each of the major investment regions, including Europe, Japan, Asia
and the United States. In selecting securities, the Investment Adviser uses
a long-term, bottom-up strategy based on first-hand fundamental research
that is designed to give broad exposure to the available opportunities
while seeking to add return primarily through stock selection. Equity
securities for these Funds are evaluated based on three key factors--the
business, the management and the valuation. The Investment Adviser
ordinarily seeks securities that have, in the Investment Adviser's opinion,
superior earnings growth potential, sustainable franchise value with
management attuned to creating shareholder value and relatively discounted
valuations. In addition, the Investment Adviser uses a multi-factor risk
model which seeks to assure that deviations from the benchmark are
justifiable.
Under "MANAGEMENT," subsection "Investment Adviser" in each Prospectus, the
fourth paragraph is amended as follows:
The investments of each Portfolio are managed by Robert B. Litterman, Ph.D
and Mark M. Carhart, Ph.D. Mr. Litterman is a Managing Director of Goldman
Sachs and since April 1998 head of GSAM's Quantitative Research and Risk
Management team. From November 1994 to April 1998, he was the head of the
Firmwide Risk department and worked with the late Fischer Black on the
Black-Litterman Global Asset Allocation Model. Mr. Carhart joined the
Investment Adviser in 1997 as a member of the Quantitative Research and
Risk Management team. From August 1995 to September 1997, he was Assistant
Professor of Finance at the Marshall School of Business at USC and a Senior
Fellow of the Wharton Financial Institutions Center.
Under "MANAGEMENT," after the "Distributor and Transfer Agent" subsection in
each Prospectus, the following will be included:
YEAR 2000
Many computer systems were designed using only two digits to signify the
year (for example, "98" for "1998"). On January 1, 2000, if these computer
systems are not corrected, they may incorrectly interpret "00" as the year
"1900" rather than the year "2000," leading to computer shutdowns or errors
(commonly known as the "Year 2000 Problem"). To the extent these systems
conduct forward-looking calculations, these computer problems may occur
prior to January 1, 2000. Like other investment companies and financial and
business organizations, the Portfolios could be adversely affected in their
ability to process securities trades, price securities, provide shareholder
account services and otherwise conduct normal business operations if the
computer systems used by the Investment Adviser or other Portfolio service
providers do not adequately address this problem in a timely manner. The
Investment Adviser has established a dedicated group to analyze these
issues and to implement the systems modifications necessary to prepare for
the Year 2000 Problem. Currently, the Investment Adviser does not
anticipate that the transition to the 21st century will have any material
impact on its ability to continue to service the Portfolios at current
levels. In addition, the Investment Adviser has sought assurances from the
Portfolios' other service providers that they are taking the steps
necessary so that they do not experience Year 2000 Problems, and the
Investment Adviser will continue to monitor the situation.
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At this time, however, no assurance can be given that the actions taken by
the Investment Adviser and the Portfolios' other service providers will be
sufficient to avoid any adverse effect on the Portfolios due to the Year
2000 Problem.
Under "REPORTS TO SHAREHOLDERS" in the Goldman Sachs Asset Allocation
Portfolios Class A, B, C and Institutional Prospectuses, the following is
added after the first sentence:
To eliminate unnecessary duplication, only one copy of the annual and semi-
annual reports may be sent to shareholders with the same mailing address.
Shareholders who desire a duplicate copy of such reports to be mailed to
their residence should contact Goldman Sachs at 800-526-7384 (Class A, B
and C shareholders) and 800-621-2550 (Institutional shareholders).
Under "HOW TO INVEST," subsection "Offering Price--Class A Shares" in the
Goldman Sachs Asset Allocation Portfolios Class A, B and C Prospectus, the
first sentence of the second full paragraph is replaced with the following:
Purchases of $1 million or more of Class A shares will be made at net asset
value with no initial sales charge, but if the shares are redeemed within
18 months after the end of the calendar month in which the purchase was
made, excluding any period of time in which the shares were exchanged into
and remained invested in an ILA Portfolio (the "CDSC period"), a CDSC of
1.00% may be imposed unless, in certain cases, the investor's Authorized
Dealer enters into an agreement with Goldman Sachs to return all or an
applicable prorated portion of its commission to Goldman Sachs.
Under "HOW TO INVEST," subsection "Offering Price--Class A Shares" in the
Goldman Sachs Asset Allocation Portfolios Class A, B and C Prospectus,
subsection (h)(4) of the third full paragraph is revised as follows:
(4) are provided administrative services by certain third-party
administrators that have entered into a special service arrangement with
Goldman Sachs relating to such plan;
Appendix A of each Prospectus is amended as follows:
Under "Description of Investments and Investment Techniques of the
Underlying Funds," the following two paragraphs are added:
STANDARD AND POOR'S DEPOSITORY RECEIPTS
Each Underlying Equity Fund may, consistent with its objectives, purchase
Standard & Poor's Depository Receipts ("SPDRs"). SPDRs are American Stock
Exchange-traded securities that represent ownership in the SPDR Trust, a
trust which has been established to accumulate and hold a portfolio of
common stocks that is intended to track the price performance and dividend
yield of the S&P 500. This trust is sponsored by a subsidiary of the
American Stock Exchange. SPDRs may be used for several reasons, including
but not limited to: facilitating the handling of cash flows or trading, or
reducing transaction costs. The use of SPDRs would introduce additional
risks to the portfolio as the price movement of the instrument does not
perfectly correlate with the price action of the underlying index.
EQUITY SWAPS
Each Underlying Equity Fund may invest up to 10% of its total assets in
equity swaps. Equity swaps allow the parties to a swap agreement to
exchange the dividend income or other
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components of return on an equity investment (e.g., a group of equity
securities or an index) for a component of return on another non-equity or
equity investment. An equity swap may be used by a Fund to invest in a
market without owning or taking physical custody of securities in
circumstances in which direct investment may be restricted for legal
reasons or is otherwise impractical. Equity swaps are derivatives and their
value can be very volatile. To the extent that its Investment Adviser does
not accurately analyze and predict the potential relative fluctuation of
the components swapped with another party, a Fund may suffer a loss. The
value of some components of an equity swap (such as the dividends on a
common stock) may also be sensitive to changes in interest rates.
Furthermore, during the period a swap is outstanding, a Fund may suffer a
loss if the counterparty defaults. In connection with its investments in
equity swaps, a Fund will either segregate cash or liquid assets or
otherwise cover its obligations in a manner required by the SEC.
Under the subsection "Foreign Investments--Foreign Securities," the
following is added after the last sentence of the first paragraph:
The expected introduction of a single currency, the euro, on January 1,
1999 for participating nations in the European Economic and Monetary Union
presents unique uncertainties, including whether the payment and
operational systems of banks and other financial institutions will be ready
by the scheduled launch date; the legal treatment of certain outstanding
financial contracts after January 1, 1999 that refer to existing currencies
rather than the euro; the establishment of exchange rates for existing
currencies and the euro; and the creation of suitable clearing and
settlement payment systems for the new currency. These or other factors,
including political and economic risks, could cause market disruptions
before or after the introduction of the euro, and could adversely effect
the value of securities held by the Underlying Funds.
AASTK5/98
