<PAGE>
Goldman Sachs Funds
EUROPEAN EQUITY FUND Semiannual Report February 29, 2000
Long-term capital growth potential
[GRAPHIC]
through investments in equity markets
located throughout Europe.
-------
Goldman
Sachs
-------
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Market Overview
Dear Shareholder,
During the period under review, European equities posted solid results, as
an economic rebound and strong demand for technology stocks bolstered the
financial markets.
[_] Market Review: European Equities Perform Admirably -- In our last
report to shareholders, we expressed a positive outlook for the
European equity markets. This was based on signs of resurgence in
business and consumer confidence, an increase in consolidation
activity in key sectors, and the added benefit of Asian countries
restocking inventories. We also foresaw opportunities in newer
sectors, such as cable, digital media and Internet franchises.
As we write to you today, much of this has materialized.
Continued evidence of broad-based economic recovery has unfolded,
and consumers and businesses alike have expressed growing
optimism regarding the future. Corporate consolidation has
occurred in sectors as diverse as financial services, luxury,
utilities and business services. And the dramatic economic
recovery in Asia has bolstered demand for European goods and
resources. But perhaps the most dramatic trend has been the
strength of the technology sector. Like the U.S. markets, the
stock market rally in Europe generally has been very narrow, with
the technology, media and utility (which include communications)
sectors moving sharply forward. This strong performance has
overshadowed the poor results in virtually all other areas of the
European market.
[_] Market Outlook: Cautious Optimism -- Looking ahead, we are
cautiously optimistic about the prospects for European equities.
The advent of the European Monetary Union has increased the level
of competition and is forcing companies to be more accountable to
their shareholders. In addition, the ongoing drive to improve
efficiencies should result in an increase in merger and
acquisition activity. On the other hand, economic growth has
already prompted the European Central Bank to raise interest
rates in a preemptive strike against inflation. And valuations of
many technology stocks may leave little room for disappointing
results.
Based on these uncertainties and the potential for short term
market volatility, we encourage you to work closely with your
financial advisor to maintain a long term focus on your
investment portfolio. As always, we appreciate your support and
we look forward to serving your investment needs in the years to
come.
Sincerely,
/s/ David B. Ford
David B. Ford
Co-Head, Goldman Sachs Asset Management
/s/ David W. Blood
David W. Blood
Co-Head, Goldman Sachs Asset Management
March 13, 2000
- ----------------
. NOT FDIC
INSURED
. May Lose Value
. No Bank
Guarantee
- ----------------
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Fund Basics
as of February 29, 2000
Assets Under Management
$133.0 Million
Number of Holdings
92
NASDAQ Symbols
Class A Shares
GSEAX
Class B Shares
GSUBX
Class C Shares
GSUCX
Institutional Shares
GSEIX
Service Shares
GEESX
- --------------------------------------------------------------------------------
PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
August 31, 1999 - Fund Total Return MSCI FT/S&P Actuaries
February 29, 2000 (without sales charge)1 Europe Index2 European Index2
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 28.17% 13.97% 10.12%
Class B 27.83 13.97 10.12
Class C 27.89 13.97 10.12
Institutional 28.60 13.97 10.12
Service 28.31 13.97 10.12
- --------------------------------------------------------------------------------
</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
reinvestment of dividends and other distributions.
2 The Morgan Stanley Capital International (MSCI) Europe Index, an unmanaged
index of common stock prices, replaces the FT/S&P Actuaries Europe Index
(unhedged) as of 11/30/99 as the European Equity Fund's performance
benchmark. The MSCI~Europe Index is widely used throughout the investment
management industry to represent the investment opportunities available to
a large cap, developed country European equity strategy and, in the
Investment Advisor's opinion, is a more appropriate benchmark against which
to measure the performance of the European Equity Fund. The Index figures
include dividends reinvested and do not reflect any fees or expenses.The
unmanaged FT/S&P Actuaries Europe Index (unhedged) is a market
capitalization-weighted composite of approximately 750 stocks from 16
countries in Europe. The Index figures include dividends reinvested and do
not reflect any fees or expenses.
- --------------------------------------------------------------------------------
STANDARDIZED TOTAL RETURNS3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period ended 12/31/99 Class A Class B Class C Institutional Service
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Last 6 months 20.97% 22.38% 26.66% 28.39% 28.28%
One Year 19.30 20.30 24.69 27.07 26.41
Since inception 30.25 32.47 35.75 37.08 36.41
(10/1/98)
- ----------------------------------------------------------------------------------------------
</TABLE>
3 The Standardized Total Returns are average annual total returns or
cumulative total returns (only if the performance period is one year or
less) as of the most recent calendar quarter-end. They assume reinvestment
of all distributions at net asset value. These returns reflect a maximum
initial sales charge of 5.5% for Class A Shares, the assumed deferred sales
charge for Class B Shares (5% maximum declining to 0% after six years) and
the assumed deferred sales charge for Class C Shares (1% if redeemed within
12 months of purchase). Because Institutional and Service Shares do not
involve a sales charge, such a charge is not applied to their Standardized
Total Returns.
- --------------------------------------------------------------------------------
Top 10 Holdings as of 2/29/00
- --------------------------------------------------------------------------------
% of Total
Holding Net Assets Country Line of Business
- --------------------------------------------------------------------------------
Vodafone AirTouch PLC 6.7% United Kingdom Telecommunications
Nokia Oyj Series A 3.8 Finland Telecommunications
Ericsson Telecommunications
Series B 3.4 Sweden Electrical Equipment
Telefonica de Espana SA 2.6 Spain Telecommunications
Vivendi 2.6 France Business Services
SAP AG 2.4 Germany Computer Software
KPN NV 2.3 Netherlands Telecommunications
Deutsche Telekom AG 2.0 Germany Telecommunications
Shell Transport &~Trading Co. 2.0 United Kingdom Energy Resources
Glaxo Wellcome PLC 1.8 United Kingdom Health
- --------------------------------------------------------------------------------
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,
We are pleased to report on the performance of the Goldman Sachs
European Equity Fund for the six month period that ended February 29,
2000.
Performance Review
Over the six month period ended February 29, 2000, the Fund's
Class A, B, C, Institutional and Service share classes generated
cumulative total returns, without sales charges, of 28.17%,
27.83%, 27.89%, 28.60% and 28.31%, respectively. Over the same
time period, the Fund's new benchmark, the MSCI Europe Index,
generated a cumulative total return of 13.97%.
The Fund's strong absolute and relative performance was largely
due to astute regional allocations and stock selection.
Portfolio Composition
In recent months, the Fund has overweight country exposures in
the Netherlands, Spain, UK and Sweden. Underweight positions were
held in Germany, Switzerland and Italy.
The Fund has predominantly focused on strong business franchises
within sectors offering long-term structural growth prospects
within Europe. Most notably, the Fund is overweight in the
following sectors: telecommunications, business services and
media industries. We have made an effort to diversify the Fund's
holdings within these sectors. In order to maintain a
well-diversified portfolio we have also searched for
well-positioned, attractively valued stocks in non-technology
sectors.
Portfolio Highlights
[_] Reuters Group -- Reuters fell out of favor with investors
following disappointing results in the second half of 1999. We
saw this as a buying opportunity, and have benefited from the
substantial appreciation of its stock. The main factor behind the
rebound was the firm's joint venture with Equant, through which
Reuters' content will be distributed through Equant's network. We
believe this open architecture will allow Reuters to build its
retail business and substantially lower its costs. In addition,
Reuters will spin off its Greenhouse fund, which is an incubator
for start-ups in the technology sector. In essence, Reuters has
moved swiftly in a rapidly changing environment to develop a
compelling strategy.
2
<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
- --------------------------------------------------------------------------------
[_] Investment Guidelines
[_] Risk Analysis
Optimal Portfolio
- --------------------------------------------------------------------------------
Risk Management
- --------------------------------------------------------------------------------
Performance
Monitoring &
Attribution
[_] Seat Pagine Gialle -- Seat Pagine Gialle, the Italian Yellow
Pages, performed well, as investors believed the firm owned
valuable content that would position it favorably as a
business-to-consumer opportunity. In February, Telecom Italia
launched a bid at a premium for the firm, and its stock price
subsequently doubled in price. Telecom Italia will merge Seat
Pagine Gialle assets with its own search engine "Tin.it" to
create a compelling Internet portal.
[_] Securitas AB -- Securitas is a leading global security company
offering guarding, alarms and other services. The company
continues to consolidate its fragmented market through
acquisitions, while growing the firm organically at approximately
8% per year. Securitas projects a 25% earnings growth in 2000,
and the market has driven up its stock price accordingly.
Portfolio Outlook
We continue to invest in quality stocks that we believe are
undervalued and have strong growth opportunities. Such stocks are
located in a wide variety of sectors. Currently, a compelling
growth story is in the media and wireless technology industries,
where both technological advances and demand on both a European
and global level are proceeding at a rapid pace. In addition,
certain pharmaceutical, financial and consumer sector stocks
continue to offer compelling valuations in addition to being
involved in merger and acquisition activity.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs European Equity Investment Team
London
February 29, 2000
<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 Investment 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 portfolio 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 Funds, call your investment
professional today.
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Performance Summary
February 29, 2000 (Unaudited)
The following graph shows the value as of February 29, 2000, of a $10,000 in-
vestment made on October 1, 1998 (commencement of operations) in Class A
Shares (maximum sales charge of 5.5%), Class B Shares (applicable contingent
deferred sales charges of 5.0% declining to 0% after six years), Class C
Shares (applicable contingent deferred sales charge of 1% if redeemed within
twelve months), Institutional and Service Shares (at NAV) of the Goldman
Sachs European Equity Fund. For comparative purposes, the performance of the
Fund's new benchmark (Morgan Stanley Capital International (MSCI) Europe In-
dex (MSCI Europe)) as of November 30, 1999 and the Fund's previous benchmark
(FT/S&P Europe Unhedged) are shown. This performance data represents past
performance and should not be considered indicative of future performance
which will fluctuate with changes in market conditions. These performance
fluctuations will cause an investor's shares, when redeemed, to be worth more
or less than their original cost.
European Equity Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested October 1, 1998 to
February 29, 2000
[GRAPH]
MSCI FT Europe Class A Class B Class C Institutional Service
Europe Unhedged Shares Shares Shares Shares Shares
------ -------- ------ ------ ------ ------ ------
10/1/98 10,000 10,000 9,450 10,000 10,000 10,000 10,000
Oct-98 10,803 10,792 9,972 10,550 10,550 10,560 10,550
Nov-98 11,381 11,405 10,350 10,940 10,940 10,960 10,950
Dec-98 11,882 11,867 11,021 11,660 11,660 11,680 11,670
Jan-99 11,808 11,786 11,531 12,190 12,200 12,230 12,200
Feb-99 11,512 11,519 11,153 11,790 11,800 11,840 11,800
Mar-99 11,641 11,691 11,210 11,840 11,850 11,900 11,860
Apr-99 11,990 12,105 11,163 11,790 11,800 11,860 11,810
May-99 11,417 11,505 10,633 11,220 11,230 11,300 11,250
Jun-99 11,612 11,716 10,870 11,470 11,480 11,560 11,500
Jul-99 11,722 11,872 11,011 11,620 11,630 11,720 11,660
Aug-99 11,844 12,002 11,106 11,710 11,720 11,820 11,760
Sep-99 11,755 11,913 11,163 11,760 11,770 11,880 11,810
Oct-99 12,190 12,280 11,654 12,270 12,290 12,410 12,350
Nov-99 12,522 12,586 12,486 13,140 13,160 13,310 13,230
Dec-99 13,808 13,782 13,915 14,642 14,662 14,842 14,752
Jan-00 12,827 12,754 13,088 13,766 13,786 13,957 13,866
Feb-00 13,499 13,218 14,234 14,547 14,989 15,200 15,089
<TABLE>
<CAPTION>
Average Annual Total Return through
February 29, 2000(a) Since Inception One Year Six Months(b)
<S> <C> <C> <C>
Class A
Excluding sales charges 33.52% 27.54% 28.17%
Including sales charges 28.31% 20.51% 21.15%
-----------------------------------------------------------------------------
Class B
Excluding contingent deferred sales
charges 32.95% 26.88% 27.83%
Including contingent deferred sales
charges 30.29% 21.62% 22.55%
-----------------------------------------------------------------------------
Class C
Excluding contingent deferred sales
charges 33.07% 26.94% 27.89%
Including contingent deferred sales
charges 33.07% 25.89% 26.83%
-----------------------------------------------------------------------------
Institutional 34.40% 28.29% 28.60%
-----------------------------------------------------------------------------
Service 33.70% 27.79% 28.31%
-----------------------------------------------------------------------------
</TABLE>
(a) Commencement date of operations was October 1, 1998 for all share clas-
ses.
(b) Not annualized.
5
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Investments
February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - 88.9%
<C> <S> <C>
Belgium - 0.0%
5,554 Dexia* (Banks) $ 54
-----------------------------------------------------------------------------
Finland - 3.8%
25,037 Nokia Oyj Series A (Telecommunications) 4,997,636
-----------------------------------------------------------------------------
France - 13.5%
15,910 Accor SA (Hotels) 579,928
7,478 Air Liquide SA (Chemicals) 1,010,987
5,319 Alcatel (Telecommunications) 1,247,399
23,892 Alstom (Electrical Equipment 552,707
9,333 Axa (Insurance) 1,174,475
12,495 Banque National de Paris (Banks) 988,012
8,158 Carrefour SA (Specialty Retail) 1,239,014
18,855 Compagnie Generale des Etablissements Michelin (Auto) 589,638
3,324 Equant NV* (Computer Software) 376,306
3,767 France Telecom SA (Telecommunications) 608,447
41,096 Rhodia SA (Chemicals) 701,431
32,591 Rhone-Poulenc SA (Chemicals) 1,665,657
6,972 ST Microelectronics (Semiconductors) 1,384,958
18,114 Total Fina SA Class B (Energy Resources) 2,401,757
29,679 Vivendi (Business Services) 3,491,573
------------
18,012,289
-----------------------------------------------------------------------------
Germany - 10.4%
6,031 Allianz AG (Insurance) 2,087,833
23,400 BASF AG (Chemicals) 1,080,845
22,553 Deutsche Bank AG (Banks) 1,913,811
32,343 Deutsche Telekom AG (Telecommunications) 2,685,316
3,589 Epcos AG* (Electronics Equipment) 494,905
7,363 HypoVereinsbank (Banks) 399,738
3,838 Muenchener Rueckversicherungs-Gesellschaft AG
(Property Insurance) 1,051,449
20,197 Preussag AG (Multi-Industrial) 925,303
11,225 Siemens AG (Electrical Equipment) 1,995,994
23,982 Thyssen AG (Steel) 586,471
36,910 Viag AG (Diversified Industrial Manufacturing) 658,458
------------
13,880,123
-----------------------------------------------------------------------------
Ireland - 0.3%
68,045 Bank of Ireland (Banks) 397,960
-----------------------------------------------------------------------------
Italy - 3.9%
585,919 Banca di Roma SpA (Banks) 667,267
117,581 ENI SpA (Energy Resources) 547,641
71,532 San Paolo-IMI SpA (Banks) 1,131,244
99,019 Seat Pagine Gialle SpA (Business Services) 615,872
97,796 Telecom Italia SpA (Telecommunications) 1,717,288
120,506 Unicredito Italiano SpA (Banks) 445,061
------------
5,124,373
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
Netherlands - 8.9%
12,203 Aegon NV (Financial Services) $ 842,542
505 Equant NV* (Computer Software) 56,976
28,097 Fortis Netherlands NV (Financial Services) 706,610
16,380 Getronics NV (Business Services) 1,374,185
27,109 ING Groep NV (Financial Services) 1,372,936
9,791 Koninklijke Royal Philips Electronics NV (Appliance) 1,815,120
24,387 KPN NV (Telecommunications) 3,105,338
26,136 VNU NV (Media) 1,805,790
21,482 Wolters Kluwer NV (Publishing) 766,665
------------
11,846,162
----------------------------------------------------------------------------
Spain - 5.2%
23,054 Acerinox SA (Steel) 831,438
69,292 Altadis (ex Tabacalera SA) (Tobacco) 763,287
65,974 Banco Santander Central Hispano SA (Banks) 693,444
51,095 Endesa SA (Electrical Utilities) 1,082,482
121,305 Telefonica de Espana SA* (Telecommunications) 3,491,685
------------
6,862,336
----------------------------------------------------------------------------
Sweden - 7.2%
46,599 Ericsson Telecommunications Series B (Electrical
Equipment) 4,467,157
43,332 Investor AB* (Financial Services) 633,740
133,802 Nordbanken Holding AB (Banks) 703,255
49,172 Nordic Baltic Holding AB FDR (Financial Services) 263,162
72,929 Securitas AB Series B (Business Services) 1,954,051
39,046 Skandia Forsakring (Insurance) 1,601,636
------------
9,623,001
----------------------------------------------------------------------------
Switzerland - 5.5%
328 Adecco SA* (Business Services) 259,802
366 Nestle SA (Food & Beverage) 617,797
1,329 Novartis AG (Health) 1,693,847
188 Roche Holding AG (Health) 2,028,347
623 Swiss Re (Property Insurance) 1,002,632
6,957 UBS AG (Banks) 1,692,807
------------
7,295,232
----------------------------------------------------------------------------
United Kingdom - 30.2%
143,089 Allied Zurich PLC (Insurance) 1,205,147
67,856 Amvescap PLC (Financial Services) 773,437
25,154 AstraZeneca Group PLC (Health) 822,009
14,735 Barclays PLC (Banks) 353,969
306,011 BP Amoco PLC (Energy Resources) 2,295,991
90,823 British Aerospace PLC (Defense/Aerospace) 446,994
159,392 British American Tobacco PLC (Tobacco) 651,727
----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
United Kingdom - (continued)
131,648 British Telecom PLC (Telecommunications) $ 2,296,550
66,801 Cable & Wireless Communications PLC*
(Telecommunications) 1,131,571
5,109 Colt Telecom Group PLC* (Telecommunications) 293,345
142,985 Diageo PLC (Tobacco) 1,094,792
31,341 EMAP PLC (Publishing) 661,521
5,482 Energis PLC* (Telecommunications) 277,807
101,940 Glaxo Wellcome PLC (Health) 2,444,566
134,705 HSBC Holdings PLC (Banks) 1,577,927
85,621 Lloyds TSB Group PLC (Banks) 758,978
26,643 National Westminster Bank PLC (Banks) 505,997
125,110 Reckitt Benckiser PLC (Food & Beverage) 1,086,311
98,062 Reuters Group PLC (Business Services) 2,034,411
141,139 ScottishPower PLC (Energy Resources) 1,070,631
382,307 Shell Transport & Trading Co. (Energy Resources) 2,637,503
214,061 SmithKline Beecham PLC (Health) 2,406,118
426,900 Stagecoach Holdings PLC (Railroads) 620,031
42,661 Thus PLC* (Telecommunications) 422,951
306,499 Unilever PLC (Food & Beverage) 1,825,301
52,086 United News & Media PLC (Publishing) 694,005
1,585,606 Vodafone AirTouch PLC (Telecommunications) 8,873,824
50,052 WPP Group PLC (Business Services) 965,193
------------
40,228,607
--------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $101,572,660) $118,267,773
--------------------------------------------------------------------------
Preferred Stocks - 2.3%
Germany - 2.3%
3,752 SAP AG (Computer Software) 3,122,379
--------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $2,076,586) $ 3,122,379
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
Short-Term Obligations - 8.8%
<S> <C> <C> <C>
State Street Bank & Trust Euro-Time Deposits
$5,700,000 3.31% 03/01/2000 $ 5,510,473
6,370,000 5.75 03/02/2000 6,142,589
-----------------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $11,653,062) $ 11,653,062
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $115,302,308) $133,043,214
-----------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
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 (continued)
February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Percentage of
Total Net Assets
<S> <C>
Common and Preferred Stock Industry Classifications+
Appliance 1.4%
Auto 0.4
Banks 9.2
Business Services 8.0
Chemicals 3.3
Computer Software 2.6
Defense/Aerospace 0.3
Diversified Industrial Manufacturing 0.5
Electrical Equipment 5.3
Electrical Utilities 0.8
Electronics Equipment 0.4
Energy Resources 6.7
Financial Services 3.5
Food & Beverage 2.7
Health 7.1
Hotels 0.4
Insurance 4.6
Media 1.4
Multi-Industrial 0.7
Property Insurance 1.5
Publishing 1.6
Railroads 0.5
Semiconductors 1.0
Specialty Retail 0.9
Steel 1.1
Telecommunications 23.4
Tobacco 1.9
------------------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCK 91.2%
------------------------------------------------------------------------
</TABLE>
+ Industry concentrations greater than one tenth of one percent are
disclosed.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Assets and Liabilities
February 29, 2000 (Unaudited)
<TABLE>
<S> <C>
Assets:
Investment in securities, at value (identified cost
$115,302,308) $133,043,214
Cash, at value 3,515,749
Receivables:
Investment securities sold, at value 754,814
Dividends and interest, at value 116,637
Fund shares sold 1,927,558
Variation margin(a) 1,312,494
Reimbursement from investment adviser 53,630
Other assets, at value 101,001
------------------------------------------------------------------------------
Total assets 140,825,097
------------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased, at value 7,571,389
Amounts owed to affiliates 165,417
Accrued expenses and other liabilities, at value 74,581
------------------------------------------------------------------------------
Total liabilities 7,811,387
------------------------------------------------------------------------------
Net Assets:
Paid-in capital 106,368,695
Distribution in excess of net investment income (430,973)
Accumulated undistributed net realized gain from investment,
futures and foreign currency related transactions 9,240,326
Net unrealized gain on investments, futures, and translation
of assets and liabilities denominated in foreign currencies 17,835,662
------------------------------------------------------------------------------
NET ASSETS $133,013,710
------------------------------------------------------------------------------
Net asset value, offering and redemption price per share:(b)
Class A $14.28
Class B $14.19
Class C $14.21
Institutional $14.42
Service $14.31
------------------------------------------------------------------------------
Shares outstanding:
Class A 8,534,757
Class B 185,731
Class C 64,660
Institutional 526,249
Service 156
------------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number of
shares authorized) 9,311,553
------------------------------------------------------------------------------
</TABLE>
(a) Includes approximately $1,197,000 relating to initial margin requirements
and collateral for futures transactions.
(b) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A Shares is $15.11. At redemption, Class B and Class C
Shares may be subject to a contingent deferred sales charge, assessed on
the amount equal to the lesser of the current net asset value or the
original purchase price of the shares.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statement of Operations
For the Six Months Ended February 29, 2000 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Dividends(a) $ 343,182
Interest 78,512
-----------------------------------------------------------------------------
Total income 421,694
-----------------------------------------------------------------------------
Expenses:
Management fees 481,580
Distribution and Service fees(b) 233,306
Custodian fees 104,902
Transfer Agent fees(c) 87,691
Registration fees 36,476
Professional fees 23,001
Trustee fees 4,008
Other 36,666
-----------------------------------------------------------------------------
Total expenses 1,007,630
-----------------------------------------------------------------------------
Less -- expenses reimbursed (154,963)
-----------------------------------------------------------------------------
Net expenses 852,667
-----------------------------------------------------------------------------
NET INVESTMENT LOSS (430,973)
-----------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment, futures and
foreign currency related transactions:
Net realized gain from:
Investment transactions 8,054,772
Futures transactions 872,924
Foreign currency related transactions 1,314,696
Net change in unrealized gain on:
Investments 13,493,094
Futures 153,306
Translation of assets and liabilities denominated in foreign
currencies (13,136)
-----------------------------------------------------------------------------
Net realized and unrealized gain on investment, futures and
foreign currency related transactions 23,875,656
-----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $23,444,683
-----------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $63,068.
(b) Class A, Class B and Class C had Distribution and Service fees of
$222,879, $8,178 and $2,249, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
Transfer Agent fees of $84,695, $1,554, $427, $1,015 and $0, respective-
ly.
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the For the
Six Months Ended Seven Months Ended Period Ended
February 29, 2000 August 31, 1999 January 31, 1999(a)
(Unaudited)
<S> <C> <C> <C>
From operations:
Net investment income
(loss) $ (430,973) $ 400,829 $ (172,676)
Net realized gain from
investment, futures and
foreign currency related
transactions 10,242,392 1,981,969 1,555,106
Net change in unrealized
gain (loss) on
investments, futures and
translation of assets
and liabilities
denominated in foreign
currencies 13,633,264 (5,072,876) 9,275,274
--------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 23,444,683 (2,690,078) 10,657,704
--------------------------------------------------------------------------------------
Distributions to share-
holders:
From net realized gain
on investment, futures
and foreign currency
transactions
Class A Shares (4,552,387) -- --
Class B Shares (85,427) -- --
Class C Shares (18,441) -- --
Institutional Shares (214,659) -- --
Service Shares (105) -- --
--------------------------------------------------------------------------------------
Total distributions to
shareholders (4,871,019) -- --
--------------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of
shares 36,846,574 30,108,519 65,352,139
Reinvestment of
dividends and
distributions 4,698,361 -- --
Cost of shares
repurchased (9,201,335) (20,233,820) (1,098,018)
--------------------------------------------------------------------------------------
Net increase in net
assets resulting from
share transactions 32,343,600 9,874,699 64,254,121
--------------------------------------------------------------------------------------
TOTAL INCREASE 50,917,264 7,184,621 74,911,825
--------------------------------------------------------------------------------------
Net assets:
Beginning of period 82,096,446 74,911,825 --
--------------------------------------------------------------------------------------
End of period $133,013,710 $ 82,096,446 $74,911,825
--------------------------------------------------------------------------------------
Distribution in excess
of net investment income $ (430,973) $ -- $ (175,403)
--------------------------------------------------------------------------------------
</TABLE>
(a) Commencement date of operations was October 1, 1998 for all share clas-
ses.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements
February 29, 2000 (Unaudited)
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un-
der the Investment Company Act of 1940 (as amended) as an open-end, manage-
ment investment company. The Trust includes the Goldman Sachs European Equity
Fund (the "Fund"). The Fund is a diversified portfolio offering 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. Actual
results could differ from those estimates. Effective for fiscal year 1999,
the Board of Trustees approved a change in the fiscal year end of the Fund
from January 31 to August 31. Accordingly, the Statements of Changes in Net
Assets, Summary of Share Transactions, and Financial Highlights of the Fund
are included for the seven months ended August 31, 1999 and for the year
ended January 31, 1999.
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 price on the principal exchange on which they are traded. If no sale oc-
curs, securities are valued at the last bid price. Debt securities are valued
at prices supplied by independent pricing services, 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 last bid price. Short-term debt
obligations maturing in sixty days or less are valued at amortized cost,
which approximates market value. Securities for which quotations are not
readily available are valued at fair value using methods approved by the
Board of Trustees of the Trust.
B. 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. 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.
At February 29, 2000, the aggregate cost of portfolio securities for fed-
eral income tax purposes is $115,360,468. Accordingly, the gross unrealized
gain on investments was $25,732,392 and the gross unrealized loss on invest-
ments was $8,049,646 resulting in a net unrealized gain of $17,682,746.
D. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual Fund of the Trust are allocated to the Funds based on 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. Shareholders of Service
Shares bear all expenses and fees paid to service organizations. Each class
of shares separately bears its respective class-specific Transfer Agency
fees.
12
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
E. 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.
F. Segregation Transactions -- The Fund may enter into certain derivative
transactions to seek to increase total return. Forward foreign currency ex-
change contracts, futures contracts, written options, when-issued securities
and forward commitments represent examples of such transactions. As a result
of entering into these transactions, the Fund is required to segregate liquid
assets on the accounting records equal to or greater than the market value of
the corresponding transactions.
13
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements (continued)
February 29, 2000 (Unaudited)
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), a unit of the Investment Man-
agement Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the in-
vestment adviser to the Fund. Under 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 busi-
ness 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.
The investment adviser has voluntarily agreed to limit certain "Other Ex-
penses" (excluding Management fees, Distribution and Service fees, Transfer
Agent fees, taxes, interest, brokerage, litigation, Service Share fees, in-
demnification costs and other extraordinary expenses) to the extent such ex-
penses exceed, on an annual basis, 0.10% of the average daily net assets of
the Fund.
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, to 0.50%,
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 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 $269,000 for the period ended
February 29, 2000.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. The
fees charged for such transfer agency services are calculated daily and pay-
able 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
0.50% (on an annualized basis), of the average daily net asset value of the
Service Shares.
As of February 29, 2000, the amounts owed to affiliates were approximately
$99,000, $48,000 and $18,000 for Management, Distribution and Service, and
Transfer Agent fees, respectively.
14
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding
short-term investments and futures) for the period ended February 29, 2000,
were $73,545,744 and $53,432,300, respectively. For the period ended February
29, 2000. Goldman Sachs earned approximately $1,900 of brokerage commissions
from portfolio transactions, including futures transactions executed on be-
half of the fund.
Forward Foreign Currency Exchange Contracts -- The Fund may enter into for-
ward foreign currency exchange contracts for the purchase or sale of a spe-
cific 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 return.
All commitments are "marked-to-market" daily at the applicable translation
rates and any resulting unrealized gains or losses are recorded in the Fund's
financial statements. The Fund realizes gains or losses at the time a forward
contract is offset by entry into a closing transaction or extinguished by the
delivery of the currency. Risks may arise upon entering these contracts from
the potential inability of counterparties to meet the terms of their con-
tracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
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 or the Fund's custodian bank,
an amount of cash or securities equal to the minimum "initial margin" re-
quirement of the associated futures exchange. Subsequent payments for futures
contracts ("variation margin") are paid or received by the Fund, depending on
the fluctuations in the value of the contracts, and are recorded for finan-
cial reporting purposes as unrealized gains or losses. When contracts 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 risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contracts may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss.
At February 29, 2000, open futures contracts were as follows:
<TABLE>
<CAPTION>
Number of
Type Long Contracts Settlement Month Market Value Unrealized Gain
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MIB 30 Index 18 March 2000 $3,356,149 $ 97,515
EURX DAX Index 19 March 2000 2,594,737 17,369
----------------------------------------------------------------------------
$114,884
----------------------------------------------------------------------------
</TABLE>
15
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Notes to Financial Statements (continued)
February 29, 2000 (Unaudited)
4. PORTFOLIO SECURITIES TRANSACTIONS (continued)
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 equiv-
alent liability. The amount of the liability is subsequently marked-to-market
to reflect the current market value of the option written. When a written op-
tion 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 liability
related to such option is extinguished. When a written call option is exer-
cised, the Fund realizes a gain or loss from the sale of the underlying secu-
rity, and the proceeds of the sale are increased by the premium originally
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 pur-
chases upon exercise. There is a risk of loss from a change in value of such
options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid. At February 29, 2000, there were no open
written option contracts.
5. LINE OF CREDIT FACILITY
The Fund participates in a $250,000,000 uncommitted and a $250,000,000 com-
mitted, unsecured revolving line of credit facility. Under the most restric-
tive arrangement, the Fund must own securities having a market value in
excess of 400% of the total bank borrowings. This facility is to be used
solely for temporary or emergency purposes. The interest rate on borrowings
is based on the Federal Funds rate. The committed facility also requires a
fee to be paid by the Fund based on the amount of the commitment. During the
period ended February 29, 2000, the Fund did not have any borrowings under
any of these facilities.
6. CHANGE IN INDEPENDENT ACCOUNTANTS
On October 26, 1999 the Board of Trustees of the Fund upon the recommendation
of the Board's audit committee, determined not to retain Arthur Andersen LLP
and approved a change of the Fund's independent accountants to
PricewaterhouseCoopers LLP. For the periods ended August 31, 1999 and January
31, 1999, Arthur Andersen LLP's audit reports contained no adverse opinion or
disclaimer of opinion; nor were their reports qualified or modified as to un-
certainty, audit scope, or accounting principles. Further, there were no dis-
agreements between the Fund and Arthur Andersen LLP on accounting principles
or practices, financial statement disclosure or audit scope or procedure,
which if not resolved to the satisfaction of Arthur Andersen LLP would have
caused them to make reference to the disagreement in their report.
16
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
6. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
<TABLE>
<CAPTION>
For the Six Months Ended For the Seven-Month Period Ended
February 29, 2000 (Unaudited) August 31, 1999
----------------------------- -----------------------------------
Shares Dollars Shares Dollars
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold 2,282,604 $ 31,142,396 2,119,807 $ 24,745,494
Reinvestment of dividends and distributions 337,798 4,394,754 -- --
Shares repurchased (456,770) (5,866,127) (759,657) (8,753,714)
-------------------------------------------------------------------
2,163,632 29,671,023 1,360,150 15,991,780
----------------------------------------------------------------------------------------------------------------
Class B Shares
Shares sold 120,602 1,557,694 53,116 627,367
Reinvestment of dividends and distributions 6,038 78,134 -- --
Shares repurchased (15,946) (204,383) (13,524) (156,078)
-------------------------------------------------------------------
110,694 1,431,445 39,592 471,289
----------------------------------------------------------------------------------------------------------------
Class C Shares
Shares sold 41,505 572,776 148,372 1,718,395
Reinvestment of dividends and distributions 924 11,976 -- --
Shares repurchased (10,857) (131,956) (163,394) (1,909,241)
-------------------------------------------------------------------
31,572 452,796 (15,022) (190,846)
----------------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 254,063 3,571,918 254,200 3,017,263
Reinvestment of dividends and distributions 16,264 213,392 -- --
Shares repurchased (248,635) (2,996,939) (791,417) (9,414,787)
-------------------------------------------------------------------
21,692 788,371 (537,217) (6,397,524)
----------------------------------------------------------------------------------------------------------------
Service Shares
Shares sold 148 1,790 -- --
Reinvestment of dividends and distributions 8 105 -- --
Shares repurchased (160) (1,930) -- --
-------------------------------------------------------------------
(4) (35) -- --
----------------------------------------------------------------------------------------------------------------
NET INCREASE 2,327,586 $32,343,600 847,503 $ 9,874,699
----------------------------------------------------------------------------------------------------------------
<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
Reinvestment of dividends and distributions -- --
Shares repurchased (76,377) (844,311)
----------------------
5,010,975 52,775,104
-------------------------------------------------------------------
Class B Shares
Shares sold 35,445 410,945
Reinvestment of dividends and distributions -- --
Shares repurchased -- --
----------------------
35,445 410,945
-------------------------------------------------------------------
Class C Shares
Shares sold 48,110 570,630
Reinvestment of dividends and distributions -- --
Shares repurchased -- --
----------------------
48,110 570,630
-------------------------------------------------------------------
Institutional Shares
Shares sold 1,062,367 10,749,551
Reinvestment of dividends and distributions -- --
Shares repurchased (20,593) (253,707)
----------------------
1,041,774 10,495,844
-------------------------------------------------------------------
Service Shares
Shares sold 160 1,598
Reinvestment of dividends and distributions -- --
Shares repurchased -- --
----------------------
160 1,598
-------------------------------------------------------------------
NET INCREASE 6,136,464 $64,254,121
-------------------------------------------------------------------
</TABLE>
(a) Commencement date of operations was October 1, 1998 for all share clas-
ses.
17
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout each Period
<TABLE>
<CAPTION>
Income from Distributions to
investment operations(a) shareholders
--------------------------- ----------------
Net asset Net Net increase
value, investment Net realized (decrease)
beginning income and unrealized From net in net asset
of period (loss) gain (loss) realized gains value
FOR THE SIX MONTHS ENDED FEBRUARY 29, (Unaudited)
<S> <C> <C> <C> <C> <C>
2000 - Class A Shares $11.75 $(0.06)(e) $ 3.30(e) $(0.71) $ 2.53
2000 - Class B Shares 11.71 (0.09)(e) 3.28(e) (0.71) 2.48
2000 - Class C Shares 11.72 (0.09)(e) 3.29(e) (0.71) 2.49
2000 - Institutional
Shares 11.82 (0.02)(e) 3.33(e) (0.71) 2.60
2000 - Service Shares 11.76 (0.04)(e) 3.30(e) (0.71) 2.55
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares 12.20 0.05 (0.50) -- (0.45)
1999 - Class B Shares 12.19 0.03 (0.51) -- (0.48)
1999 - Class C Shares 12.20 0.04 (0.52) -- (0.48)
1999 - Institutional
Shares 12.23 0.18 (0.59) -- (0.41)
1999 - Service Shares 12.20 0.08 (0.52) -- (0.44)
FOR THE PERIOD ENDED JANUARY 31,
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) Includes the balancing effect of calculating per share amounts.
(b) 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.
(c) Not annualized.
(d) Annualized.
(e) Calculated based on the average shares outstanding methodology.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
GOLDMAN SACHS EUROPEAN EQUITY FUND
<TABLE>
<CAPTION>
Ratios assuming no expense limitations
--------------------------------------
Net assets Ratio of Ratio of Ratio of
Net asset at end of net expenses to net investment Ratio of net investment Portfolio
value, end Total period average net income (loss) to expenses to income (loss) to turnover
of period return(b)(c) (in 000s) assets(d) average net assets(d) average net assets(d) average net assets(d) rate(c)
<S> <C> <C> <C> <C> <C> <C> <C>
$14.28 28.17% $121,871 1.79% (0.92)% 2.11% (1.24)% 58.55%
14.19 27.83 2,635 2.29 (1.39) 2.61 (1.71) 58.55
14.21 27.89 919 2.29 (1.41) 2.61 (1.73) 58.55
14.42 28.60 7,587 1.14 (0.27) 1.46 (0.59) 58.55
14.31 28.31 2 1.64 (0.69) 1.96 (1.01) 58.55
11.75 (3.69) 74,862 1.79 0.80 2.29 0.30 54.98
11.71 (3.94) 879 2.29 0.43 2.79 (0.07) 54.98
11.72 (3.93) 388 2.29 0.42 2.79 (0.08) 54.98
11.82 (3.35) 5,965 1.14 1.53 1.64 1.03 54.98
11.76 (3.61) 2 1.64 1.10 2.14 0.60 54.98
12.20 22.00 61,151 1.79 (1.19) 2.80 (2.20) 70.77
12.19 21.90 432 2.29 (1.78) 3.30 (2.79) 70.77
12.20 22.00 587 2.29 (1.83) 3.30 (2.84) 70.77
12.23 22.30 12,740 1.14 (0.33) 2.15 (1.34) 70.77
12.20 22.00 2 1.64 (0.69) 2.65 (1.70) 70.77
</TABLE>
19
<PAGE>
(This page intentionally left blank)
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 invests 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.
[GRAPH]
INTERNATIONAL EQUITY
. Goldman Sachs European Equity Fund
DOMESTIC EQUITY
FIXED INCOME
MONEY MARKET
Lower Risk/Return
Higher Risk/Return
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 32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005
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 Nancy L. Mucker, Vice President
Mary P. McPherson John M. Perlowski, Treasurer
Alan A. Shuch Philip V. Giuca, Jr., Assistant Treasurer
Jackson W. Smart, Jr. Michael J. Richman, Secretary
William H. Springer Howard B. Surloff, Assistant Secretary
Richard P. Strubel 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.
Emerging markets securities are volatile. They are subject to substantial
currency fluctuations and sudden economic and political developments. At times,
the Fund may be unable to sell certain of its portfolio securities without a
substantial drop in price, if at all.
Concentration of the Fund's assets in one or a few countries (or a particular
geographic area) and currencies will subject a fund to greater risks than if a
fund's assets were not geographically concentrated.
The stocks of smaller companies are often more volatile and present greater
risks than stocks of larger companies.
The Fund may participate in the Initial Public Offering (IPO)~market, and a
portion of the Fund's returns consequently may be attributable to its investment
in IPOs, which may have a magnified impact due to the Fund's small asset base.
As the Fund's assets grow, it is probable that the effect of the Fund's
investment in IPOs on its total returns may not be as significant.
Goldman, Sachs & Co. is the distributor of the Fund.
Copyright 2000 Goldman, Sachs & Co. All rights reserved. Date of first use:
April 30, 2000 / 00-528
EUROPESAR /3.8K / 4-00
