<PAGE>
Goldman Sachs Funds
ASIA GROWTH FUND Annual Report January 31, 1999
[ARTWORK]
Long-term capital growth potential
through a diversified portfolio of stocks
related to Asia, excluding Japan.
[LOGO] Goldman Sachs
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Market Overview
Dear Shareholder,
Throughout the period under review, Asia's markets demonstrated volatile
performance, while events occurring within the region continued to impact the
world.
. Asian Market Performance Was Mixed -- In January and February, the region,
led alternately by the Korean and ASEAN markets, staged a brief comeback.
U.S. and European investors, believing that the Asian crisis was abating,
showed renewed interest in the region. Investor optimism was short-lived,
however, and Asian markets turned in mixed performance in the ensuing months.
A weakening Japanese economy, political upheaval and rioting in Indonesia,
and nuclear testing by India and Pakistan all contributed to generally poor
market performance.
September marked a dramatic upturn in sentiment towards the region. Market
rallies were driven by a confluence of events, the most important of which
were growing account surpluses, the stabilization and appreciation of Asian
currencies led by a stronger Yen, a sharp drop in interest rates in several
countries, and a "buying panic" by institutional investors who were very
underweight Asia. The liquidity rallies lifted a wide range of stocks,
without particular regard to company-specific considerations.
As the period drew to a close, the upward momentum of Asia's markets came
to a halt. Investors adopted a wait-and-see stance, choosing to await further
confirmation of the Asian governments' commitment to financial and corporate
restructuring and further interest rate cuts from the U.S. Federal Reserve
Board.
. Market Outlook: Potential Exists for Corporate and Economic Recovery in
Select Countries -- While Asia still presents significant risks, we believe
that some key trends that emerged during 1998 will clear the way for
corporate and economic recovery in selected countries over the year to come.
For one, some governments have begun to deliver on their promises to sell off
nationalized financial assets while others have begun to create the
legislative framework for banking reform and corporate restructuring. In
addition, Asian governments have implemented monetary and fiscal policies
intended to increase the competitiveness of domestic businesses while
allowing interest rates to fall.
Macro risks going forward include a slowing of the U.S. and European
economies and a possible renewed weakness in the yen. Nevertheless, we
believe that investors will focus primarily on the timing of economic
recoveries in Asian countries, as well as the companies which have the
potential to deliver earnings growth in an economic upturn.
We encourage you to maintain your diversified, 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 Management Goldman Sachs Asset Management
International International
February 28, 1999
. NOT FDIC
INSURED
. May Lose Value
. No Bank
Guarantee
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Fund Basics
as of January 31, 1999
Assets Under Management
$69.3 Million
Number of Holdings
68
NASDAQ SYMBOLS
Class A Shares
GSAGX
Class B Shares
GSABX
Class C Shares
GSACX
Institutional Shares
GSAIX
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
PERFORMANCE REVIEW
- ----------------------------------------------------------------------------------------------------
January 31, 1998-January Fund Total Return (without MSCI AC Asia Free (Ex Japan)
31,1999 sales charge)/1/ Index/2/
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A -7.04% -3.27%
Class B -7.58% -3.27%
Class C -7.36% -3.27%
Institutional -6.28% -3.27%
- ----------------------------------------------------------------------------------------------------
</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 Morgan Stanley Capital International (MSCI) All Country (AC) Asia Free
(ex Japan) Index is a market capitalization-weighted composite of securities
in 10 Asian countries, including Hong Kong, India, Indonesia, Malaysia,
Pakistan, Singapore, South Korea, Sri Lanka, Thailand and the Philippines.
Total returns are calculated without dividends reinvested. "Free" indicates
an index that excludes shares in otherwise free markets that are not
purchasable by foreigners. The Index figures do not reflect any fees or
expenses. Investors cannot invest directly in the Index.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
TOTAL RETURN (WITH SALES CHARGE)
- ----------------------------------------------------------------------------------------------------
For the period ended Class A Class B Class C Institutional
12/31/98
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Last 6 Months/3/ 8.13% 8.98% 13.00%/5/ 14.64%/5/
One Year/4/ -19.94% -19.93% -16.84%/5/ -14.73%/5/
Since Inception/4/ -12.21% -25.86% -38.72%/5/ -21.21%/5/
(7/8/94) (5/1/96) (8/15/97) (2/2/96)
- ----------------------------------------------------------------------------------------------------
</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, the assumed deferred sales
charge for Class B shares (5% maximum declining to 1% in the sixth year),
and the assumed deferred sales charge for 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 $8.58 and represents the NAV plus the
maximum sales charge of 5.5%.
/4/ The Average Annual Total Return (with sales charge) is determined by
computing the annual percentage change in the value of $1,000 invested at
the maximum public offering price for specified periods, assuming
reinvestment of all distributions at NAV. The total return calculation
reflects sales charges.
/5/ Cumulative or Average Annual Total Return as of 12/31/98.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
TOP 10 COMPANY HOLDINGS AS OF 1/31/99
- ----------------------------------------------------------------------------------------------------
% of Total
Company Holding Net Assets Country Line of Business
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hindustan Lever Ltd. 4.9% India Consumer Goods
Hutchinson Whampoa 4.0% Hong Kong Diversified
ITC Ltd. 3.8% India Consumer Goods
Sun Hung Kai Properties Co. 2.8% Hong Kong Real Estate
China Telecom Ltd. 2.8% Hong Kong Telecommunications
Dao Heng Bank Group 2.8% Hong Kong Banking
Singapore Press Holdings Ltd. 2.5% Singapore Media
HKR International Ltd. 2.5% Hong Kong Real Estate
Cheung Kong Holdings Ltd. 2.5% Hong Kong Real Estate
United Overseas Bank 2.4% Singapore 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 fee
waivers and expense limitations in effect. in their absence, performance would
be reduced.
1
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Performance Overview
Dear Shareholders:
We are pleased to report on the performance of the Goldman Sachs Asia Growth
Fund for the 12-month period ended January 31,1999.
Performance Review
Over the 12-month period covered by this report, the Fund's Class A, B, C and
Institutional shares generated annual total returns, without sales charges,
of -7.04%, -7.58%,-7.36% and -6.28%, respectively. Over the same time period,
the Fund's benchmark, the Morgan Stanley Capital International (MSCI) AC Asia
Free (Ex Japan) Index, generated an annualized total return of -3.27%.
The Fund's underperformance arose from two main factors: (1) an underweight
position in South Korea until the beginning of the fourth quarter of 1998, and
(2) high cash levels during the first two weeks of October 1998, when regional
markets rallied significantly.
External factors also affected performance negatively. The continued
liquidation of our Malaysian holdings in response to capital controls imposed
in September created idle ringgit cash balances that were exchanged into U.S.
dollars throughout the month of October. This process of divestment increased
cash levels and deprived the Fund of two months of positive Malaysian
performance prior to that country's exclusion from the MSCI Index.
Stock selection, however, was, on a relative basis, a large positive
contributor to performance, particularly in Hong Kong, Taiwan and India.
Portfolio Composition
For the first half of the period under review, the Fund maintained an
overweight position in Hong Kong due to our positive views on the quality,
valuation and management of corporations in this market relative to the
region. Beginning in the third quarter of 1998, however, our view on Hong Kong
turned negative due to pressure on the Hong Kong dollar -- result of
increasing deflationary pressures on asset prices and attacks on the currency
by hedge funds. This situation was temporarily defused by the government's
decision to intervene in the stock market. While this form of government
support in a traditionally free market was taken quite positively by
investors, we believe that Hong Kong's determination to defend the peg of its
currency to the U.S. dollar will make the adjustment process more painful by
depressing asset prices and wages, and will likely retard the recovery of the
Hong Kong economy.
Portfolio Highlights
. ITC Ltd.(India) -- The company controls two-thirds of the cigarette business
in India and is the sole manufacturer/distributor of BAT products in India. It
is one of the very few large, liquid consumer stocks in the country and has an
impressive track record of delivering profits. In 1998, operating margins
improved due to falling costs and improved sales mix. In the coming year, the
company will benefit from the absence of an excise tax increase and the access
to more international brands afforded by the merger between BAT and Rothmans.
. Philippine Long Distance(PLD) -- PLD is the leading provider of fixed line
telephony services in the Philippines. Although it is exposed to declining
international accounting rates
2
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
INVESTMENT
PROCESS OVERVIEW
The investment process
for the Goldman Sachs
Asia Growth Fund combines
both qualitative and
quantitative analysis,
with an emphasis on
portfolio manager input.
Company Visits
--------------
Internal Research
-------------------
Return Expectations
.
Stock Selection
---------------
.
Portfolio Construction ------
---------------------- |
. Stock & Industry |
Views Relative |
to Benchmark |
. |
|
Portfolio Review & Analysis ----
- ---------------------------
. Performance
Measurement
& Attribution
. BARRA
. Risk Analysis
and international direct dial collection rates, the company benefits from very
favorable domestic tariff schemes, which allow it to increase its domestic rates
in line with the depreciation of the peso. The strong performance of PLD's stock
can be attributed to the depreciation of the peso in the last year and
speculation that the company's weak ownership structure would invite a takeover.
These rumors proved to be true and, in November 1998, the company was acquired
by a Hong Kong-based conglomerate, First Pacific Holdings.
New Acquisitions
. Medison Co. -- Medison is a medical systems company specializing in ultrasound
equipment. With a lower research staff cost and shorter product development
cycle time, Medison is one of the lowest cost ultrasound equipment producers
in the world, with a 20% cost advantage, excluding any currency effect. At the
same time, with the bargain purchase of Kretztechnik, the inventor of 4-D
ultrasound technology, Medison was able to maintain its technological
leadership in 3D/4D ultrasound. Over the next two years, the company aims to
benefit from gaining market share in the U.S. and European low-end market and
from leading the expansion into the high-end 3D/4D market.
. Infosys Technology -- Infosys is the leading information technology (IT)
service provider in India. The company pioneered an offshore software
development model that even its U.S. counterparts are now trying to emulate.
With a proven track record of successful execution of projects, Infosys has
gathered an impressive list of clients that includes Nordstrom and VISA.
Additionally, Infosys boasts the highest return on equity (34.1%) among
international IT competitors. Going forward, Infosys will continue to enjoy
the advantages of low costs and access to a highly qualified talent pool by
expanding its operations in India. Simultaneously, it should be able to
increase its revenues by establishing a stronger presence in the U.S. and by
getting involved in software development at the IT strategy stage.
Portfolio Outlook
In Asia, we believe that bottom-up stock selectivity will become more important
in the coming year, since not all companies or sectors will participate equally
in an Asian economic recovery. To this end, we intend to continue to focus on
finding companies whose earnings are likely to grow sharply as these economies
recover.
We thank you for your continuing support in what has been a challenging period
for the Asian markets and we look forward to reporting to you in the future.
Goldman Sachs Asia Equity Team
Singapore
February 26, 1999
3
<PAGE>
GOLDMAN SACHS ASIA GROWTH 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 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 Family of Funds, call your investment
professional today.
4
<PAGE>
GOLDMAN SACHS ASIA GROWTH 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%) in Class A shares on
July 8, 1994 (commencement of operations) of the Goldman Sachs Asia Growth
Fund. For comparative purposes, the performance of the Fund's benchmark (the
Morgan Stanley all Country Asia Free ex Japan Index ("MSCI Index") is shown.
This performance data represents past performance and should not be consid-
ered 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.
Performance of Class B, Class C and Institutional shares will vary from Class
A due to differences in fees and loads.
Asia Growth Fund's Lifetime Performance
Performance of a $10,000 Investment, Distributions Reinvested July 8, 1994 to
January 31, 1999
[GRAPH APPEARS HERE]
MSCI Asia Growth Fund -
Index Class A
7/8/94 10000 9450
7/94 10700 9847
8/94 11539 10473
9/94 11298 10520
10/94 11456 10567
11/94 10431 9933
12/94 10126 9705
1/95 9075 8934
2/95 9822 9504
3/95 9790 9471
4/95 9636 9316
5/95 10705 10450
6/95 10522 10289
7/95 10702 10504
8/95 10191 10048
9/95 10297 10269
10/95 10108 10034
11/95 9865 9779
12/95 10340 10341
1/96 11131 11300
2/96 11236 11341
3/96 11299 11218
4/96 11687 11862
5/96 11537 11842
6/96 11343 11465
7/96 10484 10656
8/96 10782 10773
9/96 10953 10793
10/96 10734 10485
11/96 11229 10999
12/96 11178 11165
1/97 11395 11186
2/97 11482 11097
3/97 10954 10651
4/97 10630 10431
5/97 11087 11152
6/97 11471 11261
7/97 11543 11330
8/97 9480 9135
9/97 9424 9055
10/97 7314 6786
11/97 6802 6655
12/97 6534 6580
1/98 5957 5761
2/98 7210 6772
3/98 7088 6655
4/98 6454 6208
5/98 5450 5370
6/98 4820 4874
7/98 4685 4806
8/98 3998 4153
9/98 4386 4586
10/98 5331 5356
11/98 5753 5603
12/98 5864 5576
1/99 5763 5356
<TABLE>
<CAPTION>
Average Annual Total Return through January 31, 1999
Since Inception One Year
<S> <C> <C> <C>
Class A (commenced July
8, 1994)
Excluding sales charges -11.68% -7.04%
Including sales charges -12.77% -12.18%
------------------------------------------------------
Class B (commenced May
1, 1996)
Excluding contingent
deferred charges -25.42% -7.58%
Including contingent
deferred charges -26.24% -12.20%
------------------------------------------------------
Class C (commenced Au-
gust 15, 1997)
Excluding contingent
deferred charges -38.58% -7.36%
Including contingent
deferred charges -38.58% -8.29%
------------------------------------------------------
Institutional Class
(commenced February 2,
1996) -21.69% -6.28%
------------------------------------------------------
</TABLE>
5
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Investments
January 31, 1999
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - 85.6%
<C> <S> <C>
Hong Kong - 27.6%
929,500 Asia Satellite Telecom Holdings Ltd. (Utility) $ 1,553,405
3,600,000 Beijing Datang Power Gen-H (Utility) 929,176
249,000 Cheung Kong Holdings Ltd. (Real Estate) 1,727,203
1,088,000 China Telecom Ltd.* (Telecommunications) 1,944,662
148,000 CLP Holdings Ltd. (Utility) 672,311
312,000 Dah Sing Financial (Banking) 585,846
775,000 Dao Heng Bank Group (Banking) 1,910,296
1,612,000 Hengan International* (Health Care) 582,490
3,191,384 HKR International Ltd. (Real Estate) 1,750,385
388,000 Hutchison Whampoa (Diversified) 2,753,975
334,000 National Mutual Asia (Insurance) 250,000
1,771,000 Ng Fung Hong (Consumer Goods) 1,337,026
1,578,000 South China Morning Post (Printing & Publishing) 692,391
297,000 Sun Hung Kai Properties Co. (Real Estate) 1,954,754
3,167,000 Zhejiang Expressway (Construction) 465,928
-----------
19,109,848
---------------------------------------------------------------------------
India - 15.6%
440 Colgate Palmolive (Consumer Goods) 1,854
54,800 Glaxo Welcomme India (Consumer Goods) 803,170
74,550 Hindustan Lever Ltd. (Tobacco) 3,402,473
12,300 Infosys Technology (Technology) 1,360,555
138,396 ITC Ltd. (Consumer Goods) 2,608,972
510 Larsen & Toubro (Heavy Industries) 2,245
182,600 Mahanagar Telephone (Telecommunications) 749,051
13,650 Niit Limited (Technology) 680,091
41,750 Novartis India (Consumer Goods) 789,752
1,926 Ranbaxy Lab (Consumer Goods) 14,369
41,200 Videsh Sanchar Nigam Ltd. GDR (Telecommunications) 432,600
-----------
10,845,132
---------------------------------------------------------------------------
Indonesia - 2.3%
60,400 Asia Pulp & Paper Co. Ltd. ADR (Cyclicals) 437,900
655,000 Daya Guna Samudera (Food & Beverages) 343,183
208,600 Gudang Garam (Tobacco) 253,846
446,000 Indofoods Sukses (Food & Beverages) 243,730
1,543,000 Pab K Tjiwi Kimia (Paper & Forest Products) 321,639
-----------
1,600,298
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
Philippines - 3.2%
1,241,580 Ayala Land Inc. (Real Estate) $ 378,924
218,190 Manila Electric Co. (Utility) 657,404
28,200 Philippine Long Distance (Telecommunications) 659,221
2,795,800 SM Prime (Real Estate) 530,113
-----------
2,225,662
------------------------------------------------------------------------------
Singapore - 15.5%
243,000 City Developments (Real Estate) 990,957
220,000 Datacraft Asia ADR (Electrical Services) 433,400
116,000 Natsteel Electronics Ltd. (Electronics) 346,217
230,000 Overseas Chinese Banking Corp-Alien Market (Financial
Services) 1,576,832
436,000 Parkway Holdings (Conglomerates) 819,433
156,000 Rothmans Industries (Consumer Goods) 986,525
193,000 Singapore Airlines Ltd. (Airlines) 1,311,761
154,664 Singapore Press Holdings Ltd. (Media &
Communications) 1,755,052
537,000 Singapore Tech Engineering (Engineering) 482,319
299,000 Singapore Telecommunications (Telecommunications) 418,812
273,000 United Overseas Bank (Banking) 1,629,610
-----------
10,750,918
------------------------------------------------------------------------------
South Korea - 14.9%
86,500 Housing & Communications Bank (Banking) 1,240,447
115,270 Kook Min Bank (Financial Services) 859,375
72,200 Korea Electric Power Corp. ADR (Utility) 1,249,963
31,800 Medison Co. (Health & Medical Services) 326,119
56,050 Pohang Iron & Steel Ltd. ADR (Steel) 1,050,938
14,100 Pusan City Gas (Oil & Gas) 349,200
29,200 Samsung Display (Electronics) 1,341,957
21,100 Samsung Electronics (Electronics & Other Electrical
Equipment) 1,614,374
1,155 Samsung Electronics--Rights exp. 02/10/99
(Electronics & Other Electrical Equipment) 37,943
900 Samsung Fire & Marine Insurance (Insurance) 294,128
721 SK Telecom Ltd. (Telecommunications) 547,837
139,898 SK Telecom Ltd. ADR* (Telecommunications) 1,425,211
-----------
10,337,492
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
<TABLE>
<CAPTION>
Shares/
Units Description Value
Common Stocks - (continued)
<C> <S> <C>
Taiwan - 3.5%
109,000 Hon Hai Precision (Electronic Connectors) $ 583,537
140,000 President Chain Stores (Retail) 402,907
19,000 Quanta Computer (Computer Services/Software) 343,958
260,480 Siliconware Precis* (Technology) 487,669
241,550 Taiwan Semiconductor* (Technology) 631,625
------------
2,449,696
----------------------------------------------------------------------
Thailand - 3.0%
998,900 Bangkok Expressway (Construction) 813,216
74,200 PTT Exploration & Production (Energy Source) 559,772
355,300 Thai Farmers Bank Public-Alien Market
(Financial Services) 674,925
------------
2,047,913
----------------------------------------------------------------------
TOTAL COMMON STOCKS
(cost $63,573,572) $ 59,366,959
----------------------------------------------------------------------
</TABLE>
Structured Notes - 9.5%
<TABLE>
<C> <S> <C>
3,000,000 units Taiwan Index Linked Note $ 3,247,800
441,224 units Taiwan Index Linked Note 3,362,127
----------------------------------------------------------------------
TOTAL STRUCTURED NOTES
(cost $6,670,455) $ 6,609,927
</TABLE>
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
Short-Term Obligations - 2.6%
<S> <C> <C> <C>
State Street Bank & Trust Euro-
Time Deposit
$1,793,400 4.75% 02/01/99(a) $ 1,793,400
-------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(cost $1,793,400) $ 1,793,400
-------------------------------------------------
TOTAL INVESTMENTS
(cost $72,037,427)(b) $67,770,286
-------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost $ 5,607,215
Gross unrealized loss for
investments in which cost
exceeds value (11,129,361)
-------------------------------------------------
Net unrealized loss(b) $ (5,522,146)
-------------------------------------------------
</TABLE>
* Non-income producing security.
(a) A portion of this security is being segregated as collateral for extended
settlement securities.
(b) The aggregate cost for federal income tax purposes is $73,292,432.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
<TABLE>
<CAPTION>
As a % of
total net assets
Common Stock Industry Classifications
<S> <C>
Airlines 1.9%
Banking 7.7
Computer Services/ Software 2.5
Conglomerates 1.2
Construction 1.8
Consumer Goods 7.2
Diversified 4.0
Electrical Services 0.6
Electronic Connectors 0.8
Electronics 2.4
Electronics & Other Electrical Equipment 2.4
Energy Source 0.8
Engineering 0.7
Financial Services 4.5
Food & Beverages 0.8
Health & Medical Services 0.5
Health Care 0.8
Heavy Industries 0.0
Insurance 0.8
Media & Communications 2.5
Oil & Gas 0.5
Paper & Forest Products 1.1
Pharmaceuticals 2.3
Printing & Publishing 1.0
Real Estate 10.6
Retail 0.6
Steel 1.5
Technology 2.6
Telecommunications 8.9
Tobacco 5.3
Utilities 7.3
------------------------------------------------
TOTAL COMMON STOCK 85.6%
------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Assets and Liabilities
January 31, 1999
Assets:
<TABLE>
<S> <C> <C>
Investment in securities, at value (identified cost
$72,037,427) $ 67,770,286
Cash, at value 1,439,338
Receivables:
Investment securities sold, at value 2,283,677
Dividends and interest, at value 76,496
Fund shares sold 1,877,467
Reimbursement from investment adviser 94,985
Other assets, at value 2,675
-----------------------------------------------------------------------------
Total assets 73,544,924
-----------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased, at value 2,625,137
Capital gains tax 477,876
Fund shares repurchased 764,729
Amounts owed to affiliates 105,411
Accrued expenses and other liabilities 242,849
-----------------------------------------------------------------------------
Total liabilities 4,216,002
-----------------------------------------------------------------------------
Net Assets:
Paid-in capital 174,913,009
Accumulated distributions in excess of net investment
income (105,797)
Accumulated net realized loss on investment, futures and
foreign currency related transactions (100,729,336)
Net unrealized loss on investments, futures and
translation of assets and liabilities denominated in
foreign currencies (4,748,954)
-----------------------------------------------------------------------------
NET ASSETS $ 69,328,922
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class C
--------------------------------------------------------------------------
<S> <C> <C> <C>
Total shares of beneficial interest
outstanding, $.001 par value (unlimited
shares authorized) 7,692,291 545,677 130,146
Net asset value, offering and redemption
price per share(a) $7.79 $7.68 $7.68
--------------------------------------------------------------------------
<CAPTION>
Institutional
--------------------------------------------------------------------------
<S> <C> <C> <C>
Total shares of beneficial interest
outstanding, $.001 par value (unlimited
shares authorized) 531,067
Net asset value, offering and redemption
price per share $7.91
--------------------------------------------------------------------------
</TABLE>
(a) Maximum public offering price per share (NAV X 1.0582) for Class A
shares is $8.24. 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.
8
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Operations
For the Year Ended January 31, 1999
<TABLE>
<S> <C>
Investment income:
Dividends(a) $ 1,686,262
Interest 376,865
------------------------------------------------------------------------------
Total income 2,063,127
------------------------------------------------------------------------------
Expenses:
Management fees 808,815
Distribution and service fees(b) 420,914
Transfer agent fees 260,438
Custodian fees 205,741
Professional fees 85,624
Registration fees 61,867
Amortization of deferred organization expenses 45,380
Trustee fees 6,766
Other 114,111
------------------------------------------------------------------------------
Total expenses 2,009,656
------------------------------------------------------------------------------
Less -- expenses reimbursed and fees waived by Goldman Sachs (438,791)
------------------------------------------------------------------------------
Net expenses 1,570,865
------------------------------------------------------------------------------
NET INVESTMENT INCOME 492,262
------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment, futures and
foreign currency transactions:
Net realized gain (loss) from:
Investment transactions (29,933,218)
Futures transactions 2,083,948
Foreign currency related transactions (34,615)
Net change in unrealized gain (loss) on:
Investments 21,366,224
Futures 53,843
Translation of assets and liabilities denominated in foreign
currencies (134,566)
------------------------------------------------------------------------------
Net realized and unrealized loss on investment futures and
foreign currency transactions (6,598,384)
------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (6,106,122)
------------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $177,470.
(b) Class A, Class B and Class C had distribution and service fees of
$368,632, $43,192 and $9,090, respectively.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Year Ended
January 31, 1999
<S> <C>
From operations:
Net investment income $ 492,262
Net realized loss on investment, futures and foreign
currency related transactions (27,883,885)
Net change in unrealized loss on investments, futures and
translation of assets and liabilities denominated in
foreign currencies 21,285,501
-----------------------------------------------------------------------------
Net decrease in net assets resulting from operations (6,106,122)
-----------------------------------------------------------------------------
From share transactions:
Net proceeds from sales of shares 138,273,446
Cost of shares repurchased (154,943,929)
-----------------------------------------------------------------------------
Net decrease in net assets resulting from share
transactions (16,670,483)
-----------------------------------------------------------------------------
TOTAL DECREASE (22,776,605)
-----------------------------------------------------------------------------
Net assets:
Beginning of year 92,105,527
-----------------------------------------------------------------------------
End of year $ 69,328,922
-----------------------------------------------------------------------------
Accumulated distributions in excess of net investment
income $ (105,797)
-----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Year Ended
January 31, 1998
<S> <C>
From operations:
Net investment income $ 699,043
Net realized loss on investment, futures and foreign
currency related transactions (57,330,108)
Net change in unrealized gain (loss) on investments,
futures and translation of assets and liabilities
denominated in foreign currencies (57,053,599)
------------------------------------------------------------------------
Net decrease in net assets resulting from operations (113,684,664)
------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares (455,983)
Institutional shares (22,635)
In excess of net investment income
Class B shares (10,435)
Class C shares (617)
------------------------------------------------------------------------
Total distributions to shareholders (489,670)
------------------------------------------------------------------------
From share transactions:
Net proceeds from sales of shares 94,368,053
Reinvestment of dividends and distributions 592,004
Cost of shares repurchased (168,369,800)
------------------------------------------------------------------------
Net decrease in net assets resulting from share
transactions (73,409,743)
------------------------------------------------------------------------
TOTAL DECREASE (187,584,077)
------------------------------------------------------------------------
Net assets:
Beginning of year 279,689,604
------------------------------------------------------------------------
End of year $ 92,105,527
------------------------------------------------------------------------
Accumulated undistributed net investment income $ 137,887
------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from
investment operations(d) Distributions to shareholders
------------------------------- -----------------------------------
Net realized
and unrealized From net
Net asset Net gain (loss) on In excess realized gain Net increase
value, investment investments and From net of net on investment (decrease)
beginning income foreign currency investment investment and futures in net asset
of period (loss) related transactions income income transactions value
FOR THE YEARS ENDED JANUARY 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - Class A Shares $ 8.38 $0.07 $(0.66) $ -- $ -- $ -- $(0.59)
1999 - Class B Shares 8.31 0.01 (0.64) -- -- -- (0.63)
1999 - Class C Shares 8.29 -- (0.61) -- -- -- (0.61)
1999 - Institutional
Shares 8.44 0.03 (0.56) -- -- -- (0.53)
---------------------------------------------------------------------------------------------------------------------
1998 - Class A Shares 16.31 -- (7.90) -- (0.03) -- (7.93)
1998 - Class B Shares 16.24 0.01 (7.91) -- (0.03) -- (7.93)
1998 - Class C Shares
(commenced August 15,
1997) 15.73 0.01 (7.42) -- (0.03) -- (7.44)
1998 - Institutional
Shares 16.33 0.10 (7.96) (0.03) -- -- (7.89)
---------------------------------------------------------------------------------------------------------------------
1997 - Class A Shares 16.49 0.06 (0.11) (0.12) -- (0.01) (0.18)
1997 - Class B Shares
(commenced May 1, 1996) 17.31 (0.05) (0.48) (0.51) (0.03) -- (1.07)
1997 - Institutional
Shares (commenced Febru-
ary 2, 1996) 16.61 0.04 (0.11) (0.11) (0.06) (0.04) (0.28)
---------------------------------------------------------------------------------------------------------------------
1996 - Class A Shares 13.31 0.17 3.44 (0.12) (0.14) (0.17) 3.18
FOR THE PERIOD ENDED JANUARY 31,
1995 - Class A Shares
(commenced July 8, 1994) 14.18 0.11 (0.89) 0.01 -- (0.10) (0.87)
---------------------------------------------------------------------------------------------------------------------
</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.
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
<TABLE>
<CAPTION>
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of Ratio of
Net assets Ratio of net investment Ratio of net investment
Net asset at end of net expenses income (loss) expenses income (loss) to Portfolio
value, end Total period to average to average to average average turnover
of period return(a) (in 000s) net assets net assets net assets net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$ 7.79 (7.04)% $ 59,940 1.93% 0.63% 2.48% 0.08% 106.00%
7.68 (7.58) 4,190 2.45 0.10 2.97 (0.42) 106.00
7.68 (7.36) 999 2.45 0.10 2.97 (0.42) 106.00
7.91 (6.28) 4,200 1.16 1.10 1.68 0.58 106.00
- ---------------------------------------------------------------------------------------------------------------------------------
8.38 (48.49) 87,437 1.75 0.31 1.99 0.07 105.16
8.31 (48.70) 3,359 2.30 (0.29) 2.50 (0.49) 105.16
8.29 (47.17)(c) 436 2.35(b) (0.26)(b) 2.55(b) (0.46)(b) 105.16
8.44 (48.19) 874 1.11 0.87 1.31 0.67 105.16
- ---------------------------------------------------------------------------------------------------------------------------------
16.31 (1.01) 263,014 1.67 0.20 1.87 -- 48.40
16.24 (6.02)(c) 3,354 2.21(b) (0.56)(b) 2.37(b) (0.72)(b) 48.40
16.33 (1.09)(c) 13,322 1.10(b) 0.54(b) 1.26(b) 0.38(b) 48.40
- ---------------------------------------------------------------------------------------------------------------------------------
16.49 26.49 205,539 1.77 1.05 2.02 0.80 88.80
13.31 (5.46)(c) 124,298 1.90(b) 1.83(b) 2.38(b) 1.35(b) 36.08(c)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
GOLDMAN SACHS ASIA GROWTH 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 Asia Growth
Fund (the "Fund"). At January 31, 1999, the Asia Growth Fund offered five
classes of shares -- Class A, Class B, Class C, Institutional and Service
(Service shares have not commenced operations).
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. Certain
reclassifications have been made to prior period amounts to conform with the
current period presentation. Such reclassifications have no effect on previ-
ously reported net asset values of the Fund.
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 independent
pricing service, which reflect broker / dealer-supplied valuations or matrix
pricing systems. Unlisted equity and debt securities for which market quota-
tions are available are valued at the last sale price on the valuation date
or, if no sale occurs at the mean between the most recent bid and asked pric-
es. Short-term debt obligations maturing in sixty days or less are valued at
amortized cost. Restricted securities, and other securities for which quota-
tions 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. In ad-
dition, it is the Fund's policy to accrue for estimated capital gains taxes
on appreciated foreign securities held.
Investing in emerging markets may involve special risks and considerations
not typically associated with investing in the United States. These risks in-
clude revaluation of currencies, high rates of inflation, repatriation re-
strictions on income and capital and future adverse political and economic
developments. Moreover, securities issued in these markets may be less liq-
uid, subject to government ownership controls, delayed settlements, and their
prices may be more volatile than those of comparable securities in the United
States.
14
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
C. Derivative Financial Instruments -- Structured Notes
The Fund may utilize derivative financial instruments such as structured
notes. Such instruments are used by the Fund as a means of investing in a
particular market or of increasing the return on the Fund's investments or
both. The value of the principal and/or interest on such securities is deter-
mined by reference to changes in the value of the financial indicators in-
cluding, but not limited to indices, currencies or interest rates. These
financial instruments may subject the Fund to a greater degree of market risk
and loss than other types of securities.
D. 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.
E. 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 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 de-
livery 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.
F. 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.
G. 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 reporting purposes is determined in accordance with income tax
rules. Therefore, the source of the
15
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements (continued)
January 31, 1999
Fund's distributions may be shown in the accompanying financial statements as
either from or in excess of net investment income or net realized gain on in-
vestment transactions, or from paid-in capital, depending on the type of book
/ tax differences that may exist as well as timing differences associated
with having different book and tax year ends.
The Fund had approximately $93,204,000 at October 31, 1998 (the Fund's tax
year end) of capital loss carryforwards expiring 2002 through 2006 for fed-
eral tax purposes. These amounts are available to be carried forward to off-
set future capital gains to the extent permitted by applicable laws or
regulations.
H. Deferred Organization Expenses -- Organization-related costs are being am-
ortized on a straight-line basis over a period of five years. Such costs are
fully amortized at January 31, 1999.
I. 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 on 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. Each class of shares sepa-
rately bears their respective class-specific transfer agency fees. Service
shares bear all expenses and fees paid to service organizations for their
services with respect to such shares.
J. 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.
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.
K. 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.
16
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
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
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 market and
counterparty risk which may exceed the amounts recognized in the Statement of
Assets and Liabilities. Changes in the value of the futures contracts 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. Under the Agree-
ment, GSAMI, subject to the general supervision of the Trust's Board of
Trustees, manages the Fund's portfolio. As compensation for the services ren-
dered 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 year
ended January 31, 1999, the Manager has agreed to waive $72,000 of its man-
agement fee. The Manager may discontinue or modify this waiver in the future
at its discretion.
The adviser had voluntarily agreed to limit certain "Other Expenses" (ex-
cluding management fees, distribution and service fees, transfer agent fees,
taxes, interest, brokerage, litigation, indemnification costs and other ex-
traordinary expenses) through August 31, 1998 to the extent such expenses ex-
ceeded .24% of the average daily net assets of the Fund. Effective September
1, 1998, this expense limitation was modified to .16% (excluding management
fees, distribution and service fees, transfer agent fees, taxes, interest,
brokerage, litigation, indemnification costs and other extraordinary ex-
penses). Goldman Sachs has reimbursed approximately $348,000 for the year
ended January 31, 1999.
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 $134,000 for the year ended
January 31, 1999.
Prior to September 1, 1998, the Trust, on behalf of the Fund, had adopted
Distribution Plans (the "Distribution Plans") pursuant to Rule 12b-1. Under
the Distribution Plans, Goldman Sachs was entitled to a quarterly fee from
the Fund for distribution services equal, on an annual basis, to .25%, .75%
and .75% of the Fund's average daily net assets attributable to Class A,
Class B and Class C shares, respectively. For the year ended January 31,
1999, the Distributor voluntarily agreed to waive approximately $19,000 of
12b-1 fees attributable to the Class A shares.
Prior to September 1, 1998, the Trust, on behalf of the Fund, had adopted
Authorized Dealer Service Plans (the "Dealer Service Plans") pursuant to
which Goldman Sachs and Authorized Dealers are compensated for providing per-
sonal and account maintenance services.
17
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements (continued)
January 31, 1999
The Fund pays a fee under the Dealer Service Plans equal, on an annual basis,
up to .25% of its average daily net assets attributable to Class A, Class B
and Class C shares.
Effective September 1, 1998, the Distribution Plans and Dealer Service
Plans were combined into Distribution and Service Plans. Under the Distribu-
tion and Service Plans, Goldman Sachs and/or Authorized Dealers are entitled
to a monthly fee from the Fund for distribution and shareholder maintenance
services equal, on an annual basis, to .50%, 1.00%, and 1.00% of each 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. Ef-
fective September 1, 1998, the fees charged for such transfer agency services
are 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 shares.
As of January 31, 1999, the amounts owed to affiliates were approximately
$61,000, $31,000 and $13,000 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 transactions) for the year ended January 31,
1999, were $75,303,696 and $80,606,898, respectively.
For the year ended January 31, 1999, Goldman Sachs earned approximately
$34,000 of brokerage commissions from portfolio transactions.
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 year ended January 31, 1999, the Fund did not have
any borrowings under these facilities.
6. OTHER MATTERS
As of January 31, 1999, Goldman, Sachs & Co. Employees Profit Sharing Master
Trust was the beneficial owner of 8% of the outstanding shares of the Fund.
18
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
7. SUMMARY OF SHARE TRANSACTIONS
Share activity for the years ended:
<TABLE>
<CAPTION>
January 31, 1999 January 31, 1998
-------------------------- ------------------------------
Shares Dollars Shares Dollars
---------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold 15,227,587 $ 114,095,624 7,223,511 $ 87,540,626
Reinvestments of divi-
dends and distribu-
tions -- -- 43,677 582,740
Shares repurchased (17,965,578) (136,028,026) (12,959,028) (156,582,479)
-------------------------- ------------------------------
(2,737,991) (21,932,402) (5,691,840) (68,459,113)
-------------------------- ------------------------------
Class B Shares
Shares sold 345,699 2,823,123 303,767 4,001,854
Reinvestments of divi-
dends and distribu-
tions -- -- 718 9,264
Shares repurchased (204,359) (1,519,808) (106,535) (1,359,625)
-------------------------- ------------------------------
141,340 1,303,315 197,950 2,651,493
-------------------------- ------------------------------
Class C Shares
Shares sold 2,148,809 16,213,829 70,257 777,621
Shares repurchased (2,071,174) (15,859,777) (17,746) (163,381)
-------------------------- ------------------------------
77,635 354,052 52,511 614,240
-------------------------- ------------------------------
Institutional Shares
Shares sold 636,785 5,140,870 163,318 2,047,952
Shares repurchased (209,306) (1,536,318) (875,229) (10,264,315)
-------------------------- ------------------------------
427,479 3,604,552 (711,911) (8,216,363)
-------------------------- ------------------------------
NET DECREASE (2,091,537) $ (16,670,483) (6,153,290) $ (73,409,743)
-------------------------- ------------------------------
</TABLE>
8. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund reclassified $784,275
from accumulated distributions in excess of net investment income to accumu-
lated net realized loss on investment, futures and foreign currency related
transactions and $48,329 from paid-in capital to accumulated distributions in
excess of net investment income. These reclassifications have no impact on
the net asset value of the Fund and are designed to present the Fund's capi-
tal accounts on a tax basis.
19
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust -- Asia
Growth Fund:
We have audited the accompanying statement of assets and liabilities of
Goldman Sachs Asia Growth Fund, one of the portfolios constituting Goldman
Sachs Trust -- Equity Funds (a Delaware Business Trust), including the state-
ment of investments, as of January 31, 1999, and the related statement of op-
erations, the statements of changes in net assets and the financial
highlights for the periods 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 audits.
We conducted our audits 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 audits provide 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 Asia Growth Fund as of January 31, 1999, the results of
its operations, the changes in its net assets and the financial highlights
for the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 19, 1999
20
<PAGE>
GOLDMAN SACHS FUND PROFILE
Goldman Sachs Asia Growth Fund
An Investment Idea for the Long Term
History has shown that a long-term plan that includes stocks of emerging market
countries is more likely to provide greater returns and reduce overall portfolio
volatility over time than a portfolio that invests only in U.S.-based stocks.
Goldman Sachs Asia Growth Fund provides investors access to the benefits
associated with emerging market investing. The Fund seeks long-term capital
appreciation, primarily through equity securities of companies related to Asia,
excluding Japan.
Target Your Needs
The Goldman Sachs Asia Growth 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 an 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.
ASSET ALLOCATION SPECIALTY
- --------------------------------------------------------------------------------
Lower Risk/Return Higher Risk/Return
-----------------------------------------------------------------------
MONEY FIXED DOMESTIC INTERNATIONAL
MARKET INCOME EQUITY EQUITY
. Goldman Sachs
Asia Growth
Fund
For More Information
To learn more about the Goldman Sachs Asia Growth 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. Phillip 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 Funds'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 higher 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 AGAR/18K/3-99
