<PAGE>
Goldman Sachs Funds
EUROPEAN EQUITY FUND Annual Report January 31, 1999
Long-term capital growth potential
through investments in equity markets
located throughout Europe.
[LOGO]
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Market Overview
Dear Shareholder,
Throughout the period under review, events that began in Asia in 1997 continued
to impact Europe's equity markets.
- - Market Review: Europe's Stocks Fluctuated Along With Investor Confidence --
The arrival of 1998 heralded another step up in the staircase pattern of
global equity prices. Worries about contagion from Asia and Japan receded
rapidly from the prior months, and the deflationary influence from the East
helped cool the European economies, thereby lowering bond yields and
increasing equity valuations. Global economic conditions continued to provide
a near-ideal background for holders of equity securities.
In contrast, the second half of the period was marked by a trend of escalating
volatility. Political and economic woes in Indonesia, Russia and Brazil
affected market performance around the globe, while the continuing weakness of
the Japanese yen placed further pressure on the emerging Asian economies. The
consequent collapse of several hedge funds further roiled the financial
sector, prompting investors to seek security in the form of fixed income
investments.
By period end, equity markets rebounded on renewed confidence that concerted
action from the G-7, including an easing of rates by the Federal Reserve
Board, would help avert a global financial meltdown. Markets were further
boosted by encouraging news out of Japan, which appeared to indicate it may
finally begin to address its structural problems.
- - Market Outlook: Changes In Corporate Europe Provide Means For Upward Momentum
-- Although the higher valuations implied by current market levels have yet to
be supported by earnings announcements, there is clearly an upward momentum in
European equity markets. The potential danger lies in the decoupling of the
condition of the economy from the financial strength of the equity markets.
The fears of a marked economic downturn in Europe appear to have subsided;
however, a number of analysts are predicting a lower economic growth rate in
1999 -- approximately 1.5% - 2.0% -- than that seen in 1998. While this level
of economic growth is not reflective of a recessionary environment, it may not
be strong enough to sustain current valuations. Consequently, there is risk of
a downgrade in valuations when a potential slowdown in the economy translates
into weaker corporate earnings.
Offsetting this mildly negative influence is continued merger and acquisition
activity, a phenomenon that is likely to continue. The advent of the euro has
forced strategic changes in corporate Europe, culminating in large scale
mergers in industries as diverse as banking to oil, from the auto sector to
paper companies. This is expected to continue and will provide further
momentum.
We encourage you to maintain your long term investment program, and look
forward to serving your investment needs in the years ahead.
Sincerely,
/s/ David B. Ford /s/ John P. McNulty
David B. Ford John P. McNulty
Co-Head, Co-Head,
Goldman Sachs Asset Goldman Sachs Asset
Management International Management International
February 26, 1999
- --------------------
- NOT FDIC
INSURED
- May Lose Value
- No Bank
Guarantee
- --------------------
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Fund Basics
as of January 31, 1999
Assets Under Management
$74.9 Million
Number of Holdings
43
NASDAQ SYMBOLS
Class A Shares
GSEAX
Class B Shares
GSUBX
Class C Shares
GSUCX
Institutional Shares
GSEIX
Service Shares
GEESX
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PERFORMANCE REVIEW
- -------------------------------------------------------------------------------------------
Inception (October 1, 1998)-- Fund Total Return FT/S&P Actuaries
January 31, 1999 (without sales charge)/1/ European Total Return Index/2/
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 22.00% 17.86%
Class B 21.90% 17.86%
Class C 22.00% 17.86%
Institutional 22.30% 17.86%
Service 22.00% 17.86%
- -------------------------------------------------------------------------------------------
</TABLE>
/1/ The net asset value represents the net assets of the Fund (ex-dividend)
divided by the total number of shares. The Fund's performance assumes the
investment of dividends and other distributions.
/2/ The FT/S&P Actuaries Europe Index (unhedged) is an unmanaged market
capitalization-weighted composite of approximately 750 stocks from 16
countries in Europe. Total returns are calculated without dividends
reinvested. In addition, investors cannot invest directly in the Index.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN (WITH SALES CHARGE)/3/
- ----------------------------------------------------------------------------------------------------------------------
For the period ended 12/31/98 Class A Class B Class C Institutional Service
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Since inception 10.21% 11.60% 15.60% 16.80%/4/ 16.70%/4/
(10/1/98)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
/3/ The Cumulative Total Return (with sales charge) is determined by computing
the percentage change in the value of $1,000 invested at the maximum public
offering price for the specified periods, assuming reinvestment of all
distributions at NAV. The total return calculation reflects a maximum
initial sales charge of 5.5% for Class A shares, and the assumed deferred
sales charge for Class B shares (5% maximum declining to 1% in the sixth
year) and Class C shares (1% if redeemed within 12 months of purchase). The
public offering price of the Class A shares on December 31, 1998 was $12.34
and represents the NAV plus the maximum sales charge of 5.5%.
/4/ Cumulative Total Return as of 12/31/98.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TOP 10 COMPANY HOLDINGS AS OF 1/31/99
- -------------------------------------------------------------------------------
% of Total
Company Net Assets Country Line of Business
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Misys PLC 3.8% Britain Business Services
Vodafone Group PLC 3.5% Britain Telecommunications
Societe Generale 3.4% France Banking, Finance
Vivendi 3.3% France Utility
TNTPost Group NV 3.0% Netherlands Business Services
Mannesmann AG 3.0% Germany Industrial Machinery
Forenings Sparbanken AB 2.8% Sweden Banking
Securitas AB 2.8% Sweden Business Services
Rentokil Initial PLC 2.8% Britain Business Services
Bank of Ireland 2.8% Ireland Banking
- -------------------------------------------------------------------------------
</TABLE>
The top 10 holdings may not be representative of the Fund's future investments.
Total return figures represent past performance and do not indicate future
results, which will vary. The investment return and principal value of an
investment will fluctuate and, therefore, an investor's shares, when redeemed,
may be worth more or less than their original cost. Performance reflects expense
limitations in effect. In its absence, performance would be reduced.
1
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Performance Overview
Dear Shareholder,
It is a pleasure to welcome you as a shareholder in the Goldman Sachs European
Equity Fund.This annual report covers the brief period from October 1,1998,the
Fund's inception,through January 31,1999.
Performance Review
Over the short time period covered by this report (October 1, 1998 through
January 31, 1999), the Fund's Class A, B, C, Institutional and Service share
classes generated cumulative total returns, without sales charges, of 22.00%,
21.90%, 22.00%, 22.30% and 22.00%, respectively. Over the same time period,
the Fund's benchmark, the FT/S&P Actuaries Europe Total Return Index,
generated a cumulative total return of 17.86%.
The primary reason for the Fund's outperformance relative to its benchmark was
a combination of both stock selection and sector asset allocation within
Europe.
Portfolio Composition
The Fund has predominantly been positioned in strong business franchises
within sectors offering long-term structural growth prospects within Europe.
Most notably, the Fund is overweight in the business services sector, a highly
fragmented and underdeveloped industry with low capital intensity
characterized by high returns on investment, strong cash generation and ample
reinvestment opportunities. Within this sector the Fund is exposed to a
variety of different businesses, including temporary employment, logistics,
and security, environmental and postal services.
The telecommunications and media sectors also feature prominently in the Fund.
The Fund's position in telecommunications reflects the unprecedented growth
opportunity for cellular telephony in Europe. Penetration rates show no signs
of leveling off, and service providers are becoming ever more innovative in
delivering value-added services to their customers. In addition, the Fund has
exposure in the wire-line sector, which is benefiting from deregulation across
European markets and explosive demand from data transmission and Internet
services. In the media sector, we believe the Fund invests in businesses with
particularly strong franchise value and good cash generative qualities, and
where technology is often fundamentally changing business models for the
better.
Although the financials sector is facing unprecedented change and
consolidation with the advent of the euro, we also see a number of competitive
threats facing the sector, such as transparency of pricing for services.
Accordingly, the Fund's exposure in this sector is limited to select banks
that we believe possess strong competitive advantages and above-average
returns on equity.
Portfolio Highlights
- - TNT Post Group -- TNT Post Group is one of the most efficient postal groups in
the world. The company has been proactive in reinvesting its strong cash flow
back into the related and synergistic business areas of express parcel
delivery and logistics, thereby positioning itself at the forefront of the
postal services industry in the run-up to European postal deregulation.
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
INVESTMENT
PROCESS OVERVIEW
Goldman Sachs European
Equity Fund's investment
process unites Goldman
Sachs Asset Management's
excellence in research,
portfolio construction and
risk management in a
systematic approach.
Research Process
Consumer
------------
Energy, Transport, Utilities
------------
Financials
------------
Industrials
-
European List
-
Sector View
-
Portfolio
Construction
- Client Guidelines
- Risk Analysis
-
Optimal Portfolio
-
Risk Management
Performance
Monitoring &
Attribution
- - Seat Pagine Gialle SpA -- Seat Pagine Gialle, Italy's Yellow Pages publisher,
is a business encompassing good growth prospects, opportunities for margin
leverage due to restructuring efforts and, above all, extremely strong cash
generation. Moreover the company's business model is being fundamentally
changed by the advent of the Internet, as it makes the transition into a full
service Internet Portal.
- - Securitas AB -- Securitas is practically the sole consolidator of the highly
fragmented European security services markets, and currently has under 10% of
the industry. The business is characterized by strong organic growth,
opportunities for differentiation of its services and strong cash generation.
Recently, the company acquired Pinkertons in the U.S., marking its first move
into the equally highly fragmented U.S. security services market. The move
provides an important new opportunity for future growth.
- - Olivetti -- Olivetti has radically transformed itself from an industrial
conglomerate with heavy involvement in PC manufacturing, into Italy's number
two telecommunications services provider. The company's assets include
interests in Omnitel, Europe's second largest cellular telephony franchise,
with more than 6 million subscribers, and Infostrada, a fixed-line operator
that provides both business and residential services at a substantial discount
to the fixed-incumbent operator.
Portfolio Outlook
Sector positioning is unlikely to change dramatically, as we believe the Fund
is positioned to take advantage of growth industries that we expect will
become increasingly important components of the benchmark. In particular,
mobile telecommunications is expected to remain a prominent feature of the
Fund, given the growth profile of this industry, the wide range of investment
opportunities and prospects for consolidation on a Europe-wide basis.
Moreover, continuing deregulation of the industry throughout Europe is
providing a number of new investment opportunities. In addition, we believe
the overweight position in the business services sector remains appropriate,
given the wide range of relatively loosely correlated investment opportunities
we have been able to find, all of which we believe offer strong long term
growth prospects.
Finally, we continue to see restructuring and the drive for shareholder value
as recurrent themes throughout Europe and, accordingly, have a number of
investments in the Fund that we believe are well positioned to take advantage
of these trends.
We thank you for your investment and look forward to your continued
confidence.
Goldman Sachs European Equity Team
London
February 26, 1999
3
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
The Goldman Sachs Advantage
Founded in 1869, Goldman, Sachs & Co.is a premier financial services firm
traditionally known on Wall Street and around the world for its institutional
expertise.
Today, the firm's Asset Management Division provides individual investors the
opportunity to tap the resources of a global institutional powerhouse -- and put
this expertise to work in their individual portfolios.
What Sets Goldman Sachs Funds Apart?
1
Resources and Relationships
Our porfolio management teams are located on-site, around the world, in New
York, London, Tokyo and Singapore. Their understanding of local economies,
markets, industries and cultures helps deliver what many investors want: access
to global investment opportunities and consistent, risk-adjusted performance.
2
In-Depth Research
Our portfolio management teams make on-site visits to hundreds of companies each
month, then construct selective portfolios with an emphasis on their best ideas.
Our teams also have access to Goldman, Sachs & Co.'s Global Investment Research
Department.
3
Risk Management
In this, our institutional heritage is clear. Institutions, as well as many
individual investors, often look to us to manage the risks of global investing
over time in different market environments.
To learn more about the Goldman Sachs Family of Funds, call your investment
professional today.
4
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Performance Summary
January 31, 1999
The following graph shows the value, as of January 31, 1999, of a $10,000 in-
vestment made (with the maximum sales charge of 5.5% for Class A and contin-
gent deferred sales charges of 5.0% and 1.0% for Class B and C, respectively
and at NAV for the Institutional and Service classes) on October 1, 1998
(commencement of operations) of the Goldman Sachs European Equity Fund. For
comparative purposes, the performance of the Fund's benchmark (FT/S&P Europe
Unhedged) is shown. This performance data represents past performance and
should not be considered indicative of future performance which will fluctu-
ate with changes in market conditions. These performance fluctuations will
cause an investor's shares, when redeemed, to be worth more or less than
their original cost.
European Equity Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested October 1, 1998 to
January 31, 1999
[GRAPHIC]
Institu- FT Europe
Class A Class B Class C tional Service Unhedged
------- ------- ------- -------- ------- ---------
10/1/98 9,450 10,000 10,000 10,000 10,000 10,000
10/98 10,550 10,550 10,550 10,560 10,550 10,792
11/98 10,350 10,940 10,940 10,960 10,950 11,405
12/98 11,021 11,660 11,660 11,680 11,670 11,867
1/99 11,531 11,690 12,100 12,230 12,200 11,786
<TABLE>
<CAPTION>
Aggregate Total Return through January 31,
1999(a) Since Inception
<S> <C>
Class A
Excluding sales charges 22.00%
Including sales charges 15.31%
--------------------------------------------------------------
Class B
Excluding contingent deferred sales charges 21.90%
Including contingent deferred sales charges 16.90%
--------------------------------------------------------------
Class C
Excluding contingent deferred sales charges 22.00%
Including contingent deferred sales charges 21.00%
--------------------------------------------------------------
Institutional Class 22.30%
--------------------------------------------------------------
Service Class 22.00%
--------------------------------------------------------------
</TABLE>
(a) Commenced operations on October 1, 1998.
5
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Investments
January 31, 1999
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - 88.9%
<C> <S> <C>
Belgium - 1.0%
18,050 Fortis Belgium (Insurance) $ 716,090
---------------------------------------------------------------------------
Britain - 22.7%
73,670 British Energy PLC (Utility) 836,547
118,500 Capita Group PLC Ord (Building Materials &
Construction) 1,103,788
109,444 GKN (Industrial Machinery) 1,350,840
54,217 Glaxo Wellcome PLC (Pharmaceuticals) 1,826,435
79,245 Great Universal Stores PLC (Retail) 1,015,269
199,567 Hays PLC (Business Services) 1,970,565
268,800 Misys PLC (Business Services) 2,811,225
281,070 Rentokil Initial PLC (Business Services) 2,076,881
125,400 Select Appointments Holdings PLC (Business Services) 1,407,449
134,852 Vodafone Group PLC (Utility) 2,629,823
-----------
17,028,822
---------------------------------------------------------------------------
Denmark - 1.4%
15,016 ISS International Service System (Business Services) 1,067,651
---------------------------------------------------------------------------
France - 16.2%
13,100 Axa (Insurance) 1,903,124
13,095 Dexia France (Banking) 2,009,575
14,065 Elf Aquitaine (Oil & Gas) 1,525,292
14,154 Societe Generale (Banking) 2,542,150
16,385 ST Microelectronics* (Electronics) 1,715,422
8,400 Vivendi (Utility) 2,457,835
-----------
12,153,398
---------------------------------------------------------------------------
Germany - 3.0%
16,023 Mannesmann AG (Industrial Machinery) 2,265,839
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
Greece - 0.8%
17,900 Panafon Hellenic Telecom* (Telecommunications) $ 613,040
------------------------------------------------------------------------
Ireland - 2.8%
91,900 Bank of Ireland (Banking) 2,063,229
------------------------------------------------------------------------
Italy - 6.5%
361,000 Olivetti (Telecommunications Equipment) 1,419,869
1,241,620 Seat Pagine Gialle SpA (Business Services) 1,453,754
450,000 Seat Pagine Gialle SpA Di Risp shares (Business
Services) 409,230
235,300 Telecom Italia Mobile SpA (Utility) 1,602,189
-----------
4,885,042
------------------------------------------------------------------------
Netherlands - 10.3%
25,611 Benckiser NV (Food & Grocery) 1,518,259
24,280 Fortis Netherlands (Insurance) 992,230
65,724 TNT Post Group NV (Business Services) 2,282,444
34,900 VNU (Media & Communications) 1,428,213
7,390 Wolters Kluwer NV (Media & Communications) 1,461,281
-----------
7,682,427
------------------------------------------------------------------------
Portugal - 1.9%
58,971 Electricidade de Portugal SA (Utility) 1,441,258
------------------------------------------------------------------------
Spain - 4.1%
83,315 Banco Santander SA (Banking) 1,610,041
30,408 Telefonica de Espana SA (Telecommunications) 1,391,293
608 Telefonica SA (Telecommunications) 27,826
-----------
3,029,160
------------------------------------------------------------------------
</TABLE>
6 The accompanying notes are an integral part of these financial statements.
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
Sweden - 9.0%
40,890 Ericsson Telecommunications (Telecommunications
Equipment) $ 1,107,646
78,307 ForeningsSparbanken AB (Banking) 2,081,002
132,716 Securitas AB (Business Services) 2,078,666
89,404 Skandia Forsakring (Insurance) 1,457,680
-----------
6,724,994
--------------------------------------------------------------------------
Switzerland - 9.2%
3,765 Adecco SA (Business Services) 1,785,003
853 Nestle SA (Food & Beverages) 1,564,004
1,047 Novartis AG (Pharmaceuticals) 1,964,836
4,963 UBS AG (Banking) 1,609,567
-----------
6,923,410
--------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $57,100,221) $66,594,360
--------------------------------------------------------------------------
Preferred Stock - 1.7%
Germany - 1.7%
18,800 Henkel KGAA--Vorzug, Non-Voting (Chemical Products) $ 1,292,939
--------------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $1,545,509) $ 1,292,931
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
Short-Term Obligation - 14.4%
<S> <C> <C> <C>
State Street Bank & Trust Euro-Time Deposit(a)
$9,501,948 3.00% 02/01/99 $10,815,455
-------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATION
(Cost $10,815,455) $10,815,455
-------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $69,461,185)(b) $78,702,754
-------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Federal Income
Tax Information:
Gross unrealized
gain for
investments in
which value
exceeds cost $10,112,294
Gross unrealized
loss for
investments in
which cost
exceeds value (870,725)
-------------------------------
Net unrealized
gain 9,241,569
-------------------------------
</TABLE>
* Non-income producing security.
(a) Portions of this security are being segregated for extended settlement
securities.
(b) The aggregate cost for federal income tax purposes is $69,461,185.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements. 7
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Investments
January 31, 1999
<TABLE>
<CAPTION>
As a % of total
net assets
<S> <C>
Common and Preferred Stock Industry Classifications
Banking 15.8%
Building Materials & Construc-
tion 1.5
Business Services 23.1
Chemical Products 1.7
Electronics 2.3
Food & Grocery 4.1
Industrial Machinery 4.8
Insurance 6.8
Media & Communications 3.9
Oil & Gas 2.0
Pharmaceuticals 5.1
Retail 1.4
Telecommunications 2.7
Telecommunications Equipment 3.4
Utilities 12.0
-----------------------------------------------------------
TOTAL COMMON AND PREFERRED
STOCK 90.6%
-----------------------------------------------------------
</TABLE>
8 The accompanying notes are an integral part of these financial statements.
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Assets and Liabilities
January 31, 1999
Assets:
<TABLE>
<S> <C>
Investment in securities, at value (identified cost
$69,461,185) $78,702,754
Cash, at value 671,336
Receivables:
Investment securities sold, at value 368,970
Dividends and interest, at value 32,442
Fund shares sold 1,627,308
Forward foreign currency exchange contracts, at value 63,264
Reimbursement from investment adviser 127,185
Other assets, at value 1,851
-------------------------------------------------------------------------------
Total assets 81,595,110
-------------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased, at value 6,399,200
Amounts owed to affiliates 95,330
Forward foreign currency exchange contracts, at value 43,455
Accrued expenses and other liabilities, at value 145,300
-------------------------------------------------------------------------------
Total liabilities 6,683,285
-------------------------------------------------------------------------------
Net Assets:
Paid-in capital 64,175,338
Accumulated net investment loss (175,403)
Accumulated net realized gain on investment, futures and
foreign currency related transactions 1,636,616
Net unrealized gain on investments and translation of assets
and liabilities denominated in foreign currencies 9,275,274
-------------------------------------------------------------------------------
NET ASSETS $74,911,825
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class Class
Class A B C
----------------------------------------------------------------------------
<S> <C> <C> <C>
Total shares of beneficial interest outstanding,
$.001 par value (unlimited shares authorized) 5,010,975 35,445 48,110
Net asset value, offering and redemption price per
share(a) $12.20 $12.19 $12.20
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Institutional Service
--------------------------------------------------------------------------
<S> <C> <C>
Total shares of beneficial interest outstanding,
$.001 par value (unlimited shares authorized) 1,041,774 160
Net asset value, offering and redemption price per
share $12.23 $12.20
--------------------------------------------------------------------------
</TABLE>
(a) Maximum public offering price per share for Class A shares is $12.91 (NAV
per share X 1.0582). At redemption, Class B and Class C shares are sub-
ject to a contingent deferred sales charge, assessed on the amount equal
to the lesser of the current net asset value or the original purchase
price of the shares.
The accompanying notes are an integral part of these financial statements. 9
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Operations
For the Period Ended January 31, 1999(a)
<TABLE>
<S> <C>
Investment income:
Dividends(b) $ 49,732
Interest 61,416
------------------------------------------------------------------------------
Total income 111,148
------------------------------------------------------------------------------
Expenses:
Management fees 171,505
Registration fees 99,491
Distribution and service fees(c) 67,483
Custodian fees 39,038
Transfer agent fees 26,996
Professional fees 31,300
Trustee fees 2,595
Other 17,853
------------------------------------------------------------------------------
Total expenses 456,261
------------------------------------------------------------------------------
Less -- expenses reimbursed by Goldman Sachs (172,437)
------------------------------------------------------------------------------
Net expenses 283,824
------------------------------------------------------------------------------
NET INVESTMENT LOSS (172,676)
------------------------------------------------------------------------------
Realized and unrealized gain on investment, futures and foreign
currency transactions:
Net realized gain from:
Investment transactions 924,400
Futures transactions 390,826
Foreign currency related transactions 239,880
Net change in unrealized gain on:
Investments 9,241,569
Translation of assets and liabilities denominated in foreign
currencies 33,705
------------------------------------------------------------------------------
Net realized and unrealized gain on investment, futures and
foreign currency transactions 10,830,380
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,657,704
------------------------------------------------------------------------------
</TABLE>
(a) The Fund commenced operations on October 1, 1998.
(b) Taxes withheld on dividends were $8,835.
(c) Class A, Class B and Class C had distribution and service fees of
$66,759, $387 and $337, respectively.
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Period Ended
January 31, 1999
<S> <C>
From operations:
Net investment loss $ (172,676)
Net realized gain on investment, futures and foreign cur-
rency related transactions 1,555,106
Net change in unrealized gain on investments and transla-
tion of assets and liabilities denominated in foreign cur-
rencies 9,275,274
------------------------------------------------------------------------------
Net increase in net assets resulting from operations 10,657,704
------------------------------------------------------------------------------
From share transactions:
Net proceeds from sales of shares 65,352,139
Cost of shares repurchased (1,098,018)
------------------------------------------------------------------------------
Net increase in net assets resulting from share
transactions 64,254,121
------------------------------------------------------------------------------
TOTAL INCREASE 74,911,825
------------------------------------------------------------------------------
Net assets:
Beginning of period --
------------------------------------------------------------------------------
End of period $74,911,825
------------------------------------------------------------------------------
Accumulated net investment loss $ (175,403)
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Income from
investment operations(d) Distributions to shareholders
--------------------------- --------------------------------------
Net realized
and unrealized From net
gain on realized gain
investment, on investment,
Net asset futures and In excess futures
value, Net foreign From net of net and foreign Net increase
beginning investment currency related investment investment currency related in net asset
of period loss transactions income income transactions value
FOR THE PERIOD ENDED JANUARY 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - Class A Shares
(commenced October 1,
1998) $10.00 $(0.03) $2.23 $ -- $ -- $ -- $2.20
1999 - Class B Shares
(commenced October 1,
1998) 10.00 (0.02) 2.21 -- -- -- 2.19
1999 - Class C Shares
(commenced October 1,
1998) 10.00 (0.01) 2.21 -- -- -- 2.20
1999 - Institutional
Shares (commenced Octo-
ber 1, 1998) 10.00 (0.01) 2.24 -- -- -- 2.23
1999 - Service Shares
(commenced October 1,
1998) 10.00 (0.03) 2.23 -- -- -- 2.20
</TABLE>
- --------------------------------------------------------------------------------
(a) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(b) Annualized.
(c) Not annualized.
(d) Includes the balancing effect of calculating per share amounts.
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
<TABLE>
<CAPTION>
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of
Net assets Ratio of net investment Ratio of Ratio of
Net asset at end of net expenses loss to expenses to net investment loss Portfolio
value, end Total period to average average net average net to average net turnover
of period return(a) (in 000s) net assets assets assets assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$12.20 22.00%(c) $61,151 1.79%(b) (1.19)%(b) 2.80%(b) (2.20)%(b) 70.77%(c)
12.19 21.90(c) 432 2.29(b) (1.78)(b) 3.30(b) (2.79)(b) 70.77(c)
12.20 22.00(c) 587 2.29(b) (1.83)(b) 3.30(b) (2.84)(b) 70.77(c)
12.23 22.30(c) 12,740 1.14(b) (0.33)(b) 2.15(b) (1.34)(b) 70.77(c)
12.20 22.00(c) 2 1.64(b) (0.69)(b) 2.65(b) (1.70)(b) 70.77(c)
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements
January 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un-
der the Investment Company Act of 1940 (as amended) as an open-end, manage-
ment investment company. The Trust includes the Goldman Sachs European Equity
Fund (the "Fund"). At January 31, 1999, the Fund offered five classes of
shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist-
ently followed by the Fund. The preparation of financial statements in con-
formity with generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts.
A. Investment Valuation -- Investments in securities traded on a U.S. or for-
eign securities exchange or the NASDAQ system are valued daily at their last
sale or closing price on the principal exchange on which they are traded.
If no sale occurs, securities are valued at the mean between the closing bid
and asked price. Debt securities are valued at prices supplied by an indepen-
dent pricing service, which reflect broker / dealer-supplied valuations or
matrix pricing systems. Unlisted equity and debt securities for which market
quotations are available are valued at the last sale price on valuation date
or, if no sale occurs, at the mean between the most recent bid and asked
prices. Short-term debt obligations maturing in sixty days or less are valued
at amortized cost. Restricted securities, and other securities for which quo-
tations are not readily available, are valued at fair value using methods ap-
proved by the Board of Trustees of the Trust.
B. Security Transactions and Investment Income -- Security transactions are
recorded as of the trade date. Realized gains and losses on sales of portfo-
lio securities are calculated using the identified-cost basis. Dividend in-
come is recorded on the ex-dividend date. Dividends for which the Fund has
the choice to receive either cash or stock are recognized as investment in-
come in an amount equal to the cash dividend. Interest income is recorded on
the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
on current exchange rates; (ii) purchases and sales of foreign investments,
income and expenses are converted into U.S. dollars based on currency ex-
change rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes recorded and the
amounts actually received.
14
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
D. Forward Foreign Currency Exchange Contracts -- The Fund may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date as a hedge or
cross-hedge against either specific transactions or portfolio positions. The
Fund may also purchase and sell such contracts to seek to increase total re-
turn. All commitments are "marked-to-market" daily at the applicable transla-
tion rates and any resulting unrealized gains or losses are recorded in the
Fund's financial statement. The Fund realizes gains or losses at the time a
forward contract is offset by entry into a closing transaction or extin-
guished by delivery of the currency. Risks may arise upon entering these con-
tracts from the potential inability of counterparties to meet the terms of
their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
E. Short Securities Positions -- The Fund may enter into covered short sales.
Short securities positions are accounted for at cost and subsequently marked-
to-market to reflect the current market value of the position. The market
value of the short position is recorded as a liability on the Fund's records
and any difference between this market value and the cash received is re-
ported as unrealized gain or loss. Gains and losses are realized when a short
position is closed out by delivering securities back to the broker.
F. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book / tax differences that may exist as well as tim-
ing differences associated with having different book and tax year ends.
G. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual fund of the Trust are generally allocated to the funds
based on a straight-line or pro rata basis depending upon the nature of the
expense.
Class A, Class B and Class C shares bear all expenses and fees relating to
their respective distribution and service plans. Effective September 1, 1998
each class of shares separately bears its respective class-specific transfer
agency fees. Service shares bear all expenses and fees paid to service orga-
nizations for their services with respect to such shares.
H. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
15
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements (continued)
January 31, 1999
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
I. Futures Contracts -- The Fund may enter into futures transactions to hedge
against changes in interest rates, securities prices, currency exchange rates
or to seek to increase total return.
Upon entering into a futures contract, the Fund is required to deposit with
a broker an amount of cash or securities equal to the minimum "initial mar-
gin" requirement of the associated futures exchange. Subsequent payments for
futures contracts ("variation margin") are paid or received by the Fund, de-
pending on the fluctuations in the value of the contracts, and are recorded
for financial reporting purposes as unrealized gains or losses. When con-
tracts are closed, the Fund realizes a gain or loss which is reported in the
Statement of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket and counterparty risk which may exceed the amounts recognized in the
Statement of Assets and Liabilities. Changes in the value of the futures con-
tracts may not directly correlate with changes in the value of the underlying
securities. This risk may decrease the effectiveness of the Fund's hedging
strategies and potentially result in a loss.
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs
Asset Management ("GSAM"), serves as the investment adviser to the Fund. Un-
der the Agreement, GSAMI, subject to the general supervision of the Trust's
Board of Trustees, manages the Fund's portfolio. As compensation for the
services rendered under the Agreement, the assumption of the expenses related
thereto and administering the Fund's business affairs, including providing
facilities, GSAMI is entitled to a fee, computed daily and payable monthly,
at an annual rate equal to 1.00% of the average daily net assets of the Fund.
For the period ended January 31, 1999, the adviser voluntarily agreed to
limit certain "Other Expenses" (excluding management fees, distribution and
service fees, transfer agent fees, taxes, interest, brokerage, litigation,
Service share fees, indemnification costs and other extraordinary expenses)
to the extent such expenses exceeded .10% of the average daily net assets of
the Fund. Goldman Sachs has reimbursed approximately $172,000 for the period
ended January 31, 1999.
16
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Goldman Sachs serves as the Distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges and has
advised the Fund that it retained approximately $434,000 for the period ended
January 31, 1999.
The Trust on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or Autho-
rized Dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, up to .50%,
1.00%, and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs also serves as the Transfer Agent of the Fund for a fee that
is calculated daily and payable monthly at an annual rate as follows: 0.19%
of average daily net assets for Class A, Class B and Class C shares and 0.04%
of average daily net assets for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This Plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
As of January 31, 1999, the amounts owed to affiliates were approximately
$60,000, $25,000 and $10,000 for Management, Distribution and Service and
Transfer Agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments and futures) for the period ended January 31, 1999, were
$94,408,324 and $37,342,015, respectively.
At January 31, 1999, the Fund had the following outstanding forward foreign
currency exchange contracts:
<TABLE>
<CAPTION>
Value on
Foreign Currency Settlement Current Unrealized
Sale Contracts Date Value Gain
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Euro
expiring 2/16/99 $211,162 $206,449 $4,713
-------------------------------------------------------------------------------
TOTAL FOREIGN CURRENCY SALE CONTRACTS $211,162 $206,449 $4,713
-------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements (continued)
January 31, 1999
The contractual amounts of forward foreign currency exchange contracts do
not necessarily represent the amounts potentially subject to risk. The mea-
surement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At January 31,
1999, the Fund had sufficient cash and securities to cover any commitments
under these contracts.
The Fund has recorded a "Receivable for forward foreign currency exchange
contracts sold" and "Payable for forward foreign currency exchange contracts
purchased" of $63,264 ($58,551 of realized gains relating to forward foreign
currency exchange contracts closed but not settled as of January 31, 1999 and
$4,713 of unrealized gains relating to open forward foreign currency exchange
contracts as detailed in the table above) and $43,455 (comprised of $43,455
of realized losses relating to forward foreign currency exchange contracts
closed but not settled as of January 31, 1999), respectively, in the accompa-
nying Statement of Assets and Liabilities.
5. LINE OF CREDIT FACILITY
The Fund participates in a $250,000,000 uncommitted, unsecured revolving line
of credit facility. In addition, the Fund participates in a $50,000,000 com-
mitted, unsecured revolving line of credit facility. Both facilities are to
be used solely for temporary or emergency purposes. Under the most restric-
tive arrangement, the Fund must own securities having a market value in ex-
cess of 300% of the total bank borrowings. The interest rate on the
borrowings is based on the Federal Funds rate. The committed facility also
requires a fee to be paid based on the amount of the commitment which has not
been utilized. During the period ended January 31, 1999, the Fund did not
have any borrowings under these facilities.
6. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund reclassified $81,510
from accumulated net investment loss to accumulated net realized gain on in-
vestment, future and foreign currency related transactions and $78,783 from
paid-in capital to accumulated net investment loss. These reclassifications
have no impact on the net asset value of the Fund and are designed to present
the Fund's capital accounts on a tax basis.
18
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
7. SUMMARY OF SHARE TRANSACTIONS
Share activity for the period ended January 31, 1999 is as follows:
<TABLE>
<CAPTION>
For the Period Ended
January 31, 1999(a)
Shares Dollars
---------------------------------------------
<S> <C> <C>
Class A Shares
Shares sold 5,087,352 $53,619,415
Shares repurchased (76,377) (844,311)
5,010,975 52,775,104
---------------------------------------------
Class B Shares
Shares sold 35,445 410,945
35,445 410,945
---------------------------------------------
Class C Shares
Shares sold 48,110 570,630
48,110 570,630
---------------------------------------------
Institutional Shares
Shares sold 1,062,367 10,749,551
Shares repurchased (20,593) (253,707)
1,041,774 10,495,844
---------------------------------------------
Service Shares
Shares sold 160 1,598
160 1,598
---------------------------------------------
NET INCREASE 6,136,464 $64,254,121
---------------------------------------------
</TABLE>
(a)The Fund commenced operations on October 1, 1998.
8. OTHER MATTERS
As of January 31, 1999, Goldman Sachs Group LP was the beneficial owner of
approximately 16% of the outstanding shares of the Fund.
On January 1, 1999, the European Monetary Union "EMU" introduced a new sin-
gle currency, the euro, which will replace the national currencies of the
participating member countries. Until 2002, the national currencies will con-
tinue to exist, but exchange rates will be tied to the euro. The introduction
of the euro is likely to affect all stages of the investment process, includ-
ing trading, foreign exchange and accounting. Because this change to a single
currency is new, the introduction of the euro may result in market volatility
and may affect the business or financial conditions of European issuers or of
a Portfolio investing in European issuers. In addition, while the conversion
will eliminate currency risk among participating nations, currency risk be-
tween the euro and the U.S. dollar remains a factor.
19
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of Goldman Sachs Trust -- European
Equity Fund:
We have audited the accompanying statement of assets and liabilities of
Goldman Sachs European Equity Fund, one of the portfolios constituting
Goldman Sachs Trust -- Equity Funds (a Delaware Business Trust), including
the statement of investments, as of January 31, 1999, and the related state-
ment of operations, the statement of changes in net assets and the financial
highlights for the period presented. These financial statements and the fi-
nancial highlights are the responsibility of the Fund's management. Our re-
sponsibility is to express an opinion on these financial statements and the
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the finan-
cial statements. Our procedures included confirmation of securities owned as
of January 31, 1999 by correspondence with the custodian and brokers. An au-
dit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and the financial highlights re-
ferred to above present fairly, in all material respects, the financial posi-
tion of Goldman Sachs European Equity Fund as of January 31, 1999, the
results of its operations, the changes in its net assets and the financial
highlights for the period presented, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 19, 1999
20
<PAGE>
GOLDMAN SACHS FUND PROFILE
Goldman Sachs
European Equity Fund
An Investment Idea for the Long Term
History has shown that a long-term plan that includes
international stocks can help provide greater protection
against market volatility over time than a portfolio that
invest only in U.S. stocks.
Goldman Sachs European Equity Fund offers investors access
to the benefits associated with international market
diversification. The Fund seeks long-term capital growth
through investments in equity securities of European
countries.
Target Your Needs
The Goldman Sachs European Equity Fund has a distinct
investment objective and a defined place on the risk/return
spectrum. As your investment objectives change, you can
exchange shares within Goldman Sachs Funds without any
additional charge.(*) (Please note: in general, greater
returns are associated with greater risk.)
----------------------------------------------------------
Goldman Sachs Funds
Goldman Sachs Funds offers more than 30 investment options
for global diversification across borders, investment
styles,asset classes and security capitalizations.
INTERNATIONAL EQUITY
- Goldman Sachs
European
Equity
Fund
DOMESTIC
EQUITY
FIXED
INCOME
MONEY
MARKET
[LEFT ARROW] Lower Risk/Return Higher Risk/Return [RIGHT ARROW]
ASSET ALLOCATION
SPECIALTY
For More Information
To learn more about the Goldman Sachs European Equity Fund and other Goldman
Sachs Funds, call your investment professional today.
/*/ The exchange privilege is subject to termination and its terms are subject
to change.
<PAGE>
GOLDMAN SACHS ASSET MANAGEMENT ONE NEW YORK PLAZA, 42ND FLOOR, NEW YORK,
NEW YORK 10004
TRUSTEES OFFICERS
Ashok N. Bakhru, Chairman Douglas C. Grip, President
David B. Ford Jesse H. Cole, Vice President
Douglas C. Grip James A. Fitzpatrick, Vice President
John P. McNulty Anne E. Marcel, Vice President
Mary P. McPherson Nancy L. Mucker, Vice President
Alan A. Shuch John M. Perlowski, Treasurer
Jackson W. Smart, Jr. Philip V. Giuca, Jr., Assistant Treasurer
William H. Springer Michael J. Richman, Secretary
Richard P. Strubel Howard B. Surloff, Assistant Secretary
Valerie A. Zondorak, Assistant Secretary
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
Investment Adviser
GOLDMAN SACHS INTERNATIONAL
Peterborough Court, 133 Fleet Street
London EC4A 2BB, England
Visit our internet address: www.gs.com/funds
This material is not authorized for distribution to prospective investors unless
preceded or accompanied by a current Prospectus. Investors should read the
Prospectus carefully before investing or sending money.
Asia Growth Fund's, Emerging Markets Equity Fund's and International Equity
Fund's investment in securities of foreign issuers and foreign currencies
entails certain risks not customarily associated with investing in securities of
U.S. issuers quoted in U.S. dollars. In particular, the securities market of
emerging countries in which the Funds may invest without limit are less liquid,
are subject to greater price volatility, have smaller market capitalizations,
have problems with share registration and custody, have less government
regulation, and are not subject to as extensive and frequent accounting,
financial and other reporting requirements as the securities markets of more
developed countries.
Asia Growth Fund's, Japanese Equity Fund's, International Small Cap Equity
Fund's, European Equity Fund's and CORE International Equity Fund's foreign
investments and active management techniques entail risks in addition to those
customarily associated with investing in dollar-denominated securities of U.S.
issuers. Compared with domestic securities markets, foreign markets may be less
liquid, more volatile and less subject to government regulation, and may make
available less public information about issuers. The Funds may incur losses
because of changes in securities prices expressed in local currencies, movements
in exchange rates or both. Concentration of the Japanese Equity and Asia Growth
Fund's assets in one or a few countries and currencies will subject the Fund to
greater risk than if a Fund's assets were not geographically concentrated.
The stocks of smaller companies are often associated with high risks, including
greater volatility, than stocks of larger companies.
An investment in a money market fund is neither insured nor guaranteed by the
U.S. government and there can be no assurance that any money market fund will be
able to maintain a net asset value of $1.00 per share.
Copyright 1999 Goldman, Sachs & Co. All rights reserved. Date of first use:
March 31, 1999 EUROPEAR/9K/3-99
