<PAGE>
Goldman Sachs Funds
Emerging Markets Equity Fund Annual Report August 31, 1999
[GRAPHIC APPEARS HERE]
Long-term capital growth potential
through a diversified portfolio
of emerging markets stocks.
---------------
Goldman
Sachs
---------------
<PAGE>
Goldman Sachs Emerging Markets Equity Fund
Market Overview
Dear Shareholder,
During the period under review, emerging markets as a whole rebounded
dramatically following last year's underperformance.
. Asia -- Asian stocks rebounded strongly during the reporting
period. Increasing evidence that Asia's economies were
recovering from a deep recession far more quickly than
anticipated has been the driving factor behind the large
gains. The turnaround in the region has been led by Korea,
whose economy grew at an estimated rate of 3%, versus a 5%
contraction in 1998. Singapore also appears poised to exceed
its most optimistic growth projections, as a combination of
lower interest rates and an increase in electronics exports
has led to dramatic growth and market gains. Hong Kong,
Taiwan and Thailand also performed admirably, despite
retracing some of their gains as the period ended.
. Latin America -- After being under severe pressure earlier
this year, Latin American markets managed to recover, due to
the fact that no major financial contagion from the
Brazilian devaluation spread to the rest of the region.
Brazil was able to stabilize its currency and as a result of
the recession avoid a significant pick-up in inflation.
Nonetheless, the increased interest rates that occurred in
late 1998 caused a significant slowdown in all Latin
American economies.
. Europe, Middle East, Africa (EMEA) -- The performance in the
EMEA regions has been mixed across the various markets. We
saw an increase in political volatility in countries such as
Russia and the Czech Republic, but believe that the new
governments in South Africa, Israel and Turkey are committed
to acceleration in economic reform.
. Market Outlook -- Despite recent price gains, Asian equities
remain a very attractive investment. Since the July 1997
currency crisis, large current account deficits have become
even larger surpluses, allowing sharply lower domestic
interest rates while maintaining stable currencies.
Furthermore, the Asian corporates, highly leveraged and
laboring under huge depreciation costs, have begun to
restructure debt and retire assets, allowing large gains in
earnings even with moderate top-line growth.
We have become slightly more optimistic about Latin American
markets, due to better prospects of economic recovery for
late 1999 and 2000, declining interest rates and attractive
valuations. As such we have reduced our underweight position
in the region. However, we remain cautious due to the
region's high dependence on external capital flows.
The outlook for EMEA equities will be long-term driven by
the region's ability to decrease its fairly high interest
rates. This is particularly true for Israel, Turkey, Greece,
South Africa and Russia.
. Special Note: Reporting Period Change --The fiscal year-end
of your Fund has been changed to August 31. Previously, your
Fund had a January 31 fiscal year-end. This will serve as
the Fund's annual report. This change does not affect your
Fund's investment objective or strategy in any way.
We encourage you to maintain your long term investment
program and we look forward to serving your investment needs
in the years to come.
Sincerely,
/s/David B. Ford /s/John P. McNulty
David B. Ford John P. McNulty
Co-Head, Goldman Sachs Co-Head, Goldman Sachs
Asset Management Asset Management
September 3, 1999
- ----------------------
. NOT FDIC INSURED
. May Lose Value
. No Bank Guarantee
- ----------------------
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Fund Basics
as of August 31, 1999
Assets Under Management
$176.3 Million
Number of Holdings
232
NASDAQ SYMBOLS
Class A Shares
GEMAX
Class B Shares
GEKBX
Class C Shares
GEMCX
Institutional Shares
GEMIX
Service Shares
GEMSX
- --------------------------------------------------------------------------------
PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
January 31, 1999- Fund Total Return MSCI EMF (Partial Domestic)
August 31, 1999 (without sales charge)/1/ MSCI EMF Index/2/
- --------------------------------------------------------------------------------
Class A 31.53% 39.57%
Class B 31.01 39.57
Class C 31.06 39.57
Institutional 32.16 39.57
Service 31.73 39.57
- --------------------------------------------------------------------------------
/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) Emerging Markets Free (EMF)
Index (with dividends reinvested) is an unmanaged market capitalization-
weighted composite of securities in over 30 emerging market countries,
including Argentina, Botswana, Brazil, Chile, China, Colombia, the Czech
Republic, Egypt, Greece, Hong Kong, Hungary, India, Israel, Jordan, Kenya,
Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Portugal,
Russia, Singapore, South Africa, South Korea, Sri Lanka, Taiwan, Thailand,
Turkey, Venezuela and Zimbabwe. "Free" indicates an index that excludes
shares in otherwise free markets that are not purchasable by foreigners.
Investors cannot directly invest in the Index. The Index figures do not
reflect any fees or expenses.
- --------------------------------------------------------------------------------
STANDARDIZED TOTAL RETURNS3
- --------------------------------------------------------------------------------
For the period
ended 6/30/99 Class A Class B Class C Institutional Service
- --------------------------------------------------------------------------------
Last 6 Months 26.35% 28.24% 32.43% 34.07% 33.63%
One Year 11.12 11.59 16.02 18.11 16.30
Since Inception -3.65 -3.07% -0.25 0.71 -1.58
(12/15/97)
- --------------------------------------------------------------------------------
/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 and 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 COMPANY HOLDINGS AS OF 8/31/99
- --------------------------------------------------------------------------------
% of Total
Company Holding Net Assets Country Line of Business
- --------------------------------------------------------------------------------
Telefonos de Mexico SA ADR 4.1% Mexico Telecommunications
Infosys Technologies Ltd. ADR 2.5 India Business Services
Samsung Electronics 1.8 South Korea Consumer Durables
ITCLtd. GDR 1.6 India Tobacco
Korea Electric Power Corp. 1.5 South Korea Electrical Utilities
De Beers Centenary 1.4 South Africa Agriculture
Telecentro Sul SA ADR 1.4 Brazil Telecommunications
Hindalco Industries Ltd. GDR 1.4 India Nonferrous Metals
Telenorte Leste SA ADR 1.3 Brazil Telecommunications
Mahindra & Mahindra Ltd. GDR 1.2 India Auto
- --------------------------------------------------------------------------------
The top 10 company 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 their absence, performance would be reduced.
1
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Performance Overview
Dear Shareholder,
We are pleased to report on the performance of the Goldman Sachs Emerging
Markets Equity Fund for the seven-month period ended August 31, 1999. This
reporting period is based on the Fund's new August 31st fiscal year-end.
Performance Review
Over the seven-month period covered by this report, the
Fund's A, B, C, Institutional and Service share classes
generated cumulative total returns, without sales charges,
of 31.53%, 31.01%, 31.06%, 32.16% and 31.73%, respectively.
Over the same time period, the Fund's benchmark, the Morgan
Stanley Capital International (MSCI) Emerging Markets Free
Index generated a cumulative total return of 39.57%.
While the Fund produced strong absolute returns, its
regional allocations and stock selection at various periods
detracted from performance.
Regional Allocation
The Fund held an overweight position in Asia throughout the
reporting period. We believe the region's relative
valuations, real interest rate levels, currency levels and
trade situations made it a more attractive region in which
to invest. In Latin America, we slowly reduced the Fund's
large underweight position as the period progressed. And in
the EMEA (Europe, Middle East, Africa), we moved from an
overweight to underweight position.
. Telecentro Sul -- Telecentro Sul is a telecommunications
company that operates in the center region of Brazil. The
company has strong growth prospects and is realizing
significant gains in efficiency as a result of its
privatization last year. In addition, the company's new
management team has shown very promising results, as
evidenced by its recent financial results, as well as its
growth strategy.
. Infosys -- Infosys, the leading information technology
("IT") service provider in India, continues to be a strong
performer for the Fund. 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 VISA and Nordstrom.
Going forward, we believe 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 improve its revenue by
establishing a stronger presence in the U.S. and by getting
involved in software development at the IT strategy stage.
Key New Acquisitions
. Brahma -- Brahma is the largest beer company in Brazil and
Latin America. There are two reasons why we have become more
optimistic about Brahma. First, the prospects for economic
growth in late 1999 and 2000 should improve the outlook for
beer consumption in Brazil. Second, and most important, is
the announcement that Brahma and Antarctica (the second
largest beer company Brazil) are merging. Although the final
merger is yet to be approved by the authorities, we believe
that it will occur. This should generate substantial cost
savings for the combined company, as well as significant
strategic advantages for future growth strategies.
2
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
INVESTMENT
PROCESS OVERVIEW
The investment process for the Goldman Sachs Emerging Markets Equity Fund
combines both qualitative and quantitative analysis, with an emphasis on
portfolio manager input.
Asset Allocation
Committee
. Proprietary
Quantitative Model
. Portfolio
Manager Views
Country Allocation
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
. Far Eastern Textile -- Far Eastern Textile (FET) is the Far
Eastern Group's flagship and also one of Taiwan's few fully
integrated textile manufacturers. While its core business is
cyclical in nature and low in growth potential, FET's
holdings in cellular and real estate should create earnings
growth and value for the next several years. Taiwan is
experiencing the explosive growth in its overall cellular
market, as mobile penetration has increased from 20% to 30%
within the past 12 months. Far East Tone, a 58%-owned
subsidiary of FET, is one of three island-wide cellular
operators and is expected to contribute about 50% of FET's
net profit.
Portfolio Outlook
. Asia -- We believe Asian equities remain an attractive
investment. Many inefficient Asian corporations have begun
to restructure debt and retire assets. This has allowed
large gains in earnings, even with moderate top-line growth.
And in comparison to other regional markets, Asian
valuations are compelling. Investors are cautioned, however,
to prepare themselves for high levels of volatility.
. Latin America -- Within Latin America, we remain the most
optimistic about the Brazilian market. The country's
recession has been mild, and we expect a recovery to occur
relatively shortly, with moderate inflationary pressures.
Although we recognize that the country still has a long term
fiscal problem, we believe that the government is committed
to the fiscal adjustment, and thus will be successful in
approving the main structural reforms. Additionally, stock
market valuation levels are extremely attractive and the
earnings outlook has improved significantly.
. Europe, Middle East, Africa (EMEA) -- In general, we remain
optimistic that policy makers will succeed to lower
inflation in the region, despite severe short-term problems
such as the earthquake in Turkey. We expect that the
convergence theme towards EMU and EU will provide the
respective countries with strong economic fundamentals,
which will benefit the corporate sector and capital markets.
However, we do not rule-out a further decrease in liquidity
and a possibility for some short-term market anomalies ahead
of the turn of the millennium.
We thank you for your investment and look forward to your
continued confidence.
Goldman Sachs Emerging Markets Equity Investment Team
New York, London and Singapore
September 3, 1999
3
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
The Goldman Sachs Advantage
Founded in 1869, Goldman, Sachs & Co. is a premier financial services firm
traditionally known on Wall Street and around the world for its
institutional expertise.
Today, the firm's Asset Management Division provides individual
investors the opportunity to tap the resources of a global
institutional powerhouse -- and put this expertise to work in
their individual portfolios.
What Sets Goldman Sachs Funds Apart?
1
---------------------------
Resources and Relationships
---------------------------
Our porfolio management teams are located on-site, around
the world, in New York, London, Tokyo and Singapore. Their
understanding of local economies, markets, industries and
cultures helps deliver what many investors want: access to
global investment opportunities and consistent, risk-
adjusted performance.
2
-----------------
In-Depth Research
-----------------
Our portfolio management teams make on-site visits to
hundreds of companies each month, then construct selective
portfolios with an emphasis on their best ideas. Our teams
also have access to Goldman, Sachs & Co.'s Global Investment
Research Department.
3
---------------
Risk Management
---------------
In this, our institutional heritage is clear. Institutions,
as well as many individual investors, often look to us to
manage the risks of global investing over time in different
market environments.
To learn more about the Goldman Sachs Family of Funds, call your
investment professional today.
4
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Performance Summary
August 31, 1999
The following graph shows the value, as of August 31, 1999, of a $10,000 in-
vestment made (with the maximum sales charge of 5.5% for Class A and a maxi-
mum contingent deferred sales charges of 5.0% declining to 0% after six years
for Class B and 1% if redeemed within twelve months for Class C, respective-
ly, and at NAV for the Institutional and Service Classes) on December 15,
1997 (commencement of operations) in the Goldman Sachs Emerging Markets Eq-
uity Fund. For comparative purposes, the performance of the Fund's benchmark
(Morgan Stanley Emerging Markets Free Index ("MSCI EMF")) is shown. All per-
formance data shown 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.
Emerging Markets Equity Fund's Lifetime Performance
Performance of a $10,000 Investment, Distributions Reinvested December 15,
1997 to August 31, 1999
[LINE GRAPH APPEARS HERE]
Morgan Stanley Institutional Service
EMF Class A Class B Class C Class Class
12/15/97 10,000 9,450 10,000 10,000 10,000 10,000
Dec-97 10,621 9,679 10,240 10,240 10,230 10,240
Jan-98 9,788 9,159 9,690 9,700 9,700 9,690
Feb-98 10,810 9,896 10,470 10,470 10,480 10,450
Mar-98 11,279 10,312 10,900 10,910 10,930 10,860
Apr-98 11,156 10,369 10,960 10,970 11,000 10,890
May-98 9,628 8,875 9,380 9,390 9,420 9,290
Jun-98 8,618 8,034 8,500 8,510 8,560 8,390
Jul-98 8,891 8,308 8,780 8,790 8,840 8,620
Aug-98 6,321 5,879 6,220 6,230 6,270 6,070
Sep-98 6,722 6,191 6,550 6,560 6,610 6,390
Oct-98 7,429 6,796 7,180 7,190 7,250 7,020
Nov-98 8,047 7,070 7,470 7,470 7,550 7,300
Dec-98 7,931 7,059 7,451 7,466 7,541 7,290
Jan-99 7,802 6,931 7,315 7,331 7,405 7,154
Feb-99 7,879 6,803 7,170 7,185 7,269 7,029
Mar-99 8,917 7,660 8,064 8,090 8,188 7,904
Apr-99 10,020 8,635 9,095 9,119 9,243 8,925
May-99 9,962 8,369 8,803 8,828 8,961 8,644
Jun-99 11,093 9,442 9,927 9,962 10,110 9,578
Jul-99 10,791 9,206 9,677 9,801 9,870 9,518
Aug-99 10,889 9,117 9,200 9,608 9,786 9,425
<TABLE>
<CAPTION>
Average Annual Total Return through
August 31, 1999(a) Since Inception One Year Seven Months
<S> <C> <C> <C>
Class A
Excluding sales charges -2.08% 55.08% 31.53%
Including sales charges -5.25% 46.60% 24.30%
----------------------------------------------------------------------------
Class B
Excluding contingent deferred sales
charges -2.45% 54.08% 31.01%
Including contingent deferred sales
charges -4.75% 48.88% 26.01%
----------------------------------------------------------------------------
Class C
Excluding contingent deferred sales
charges -2.31% 54.22% 31.06%
Including contingent deferred sales
charges -2.31% 53.18% 30.06%
----------------------------------------------------------------------------
Institutional Class -1.25% 56.08% 32.16%
----------------------------------------------------------------------------
Service Class -3.40% 55.27% 31.73%
----------------------------------------------------------------------------
</TABLE>
(a) Commencement date of operations was December 15, 1997 for all share clas-
ses.
5
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Investments
August 31, 1999
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 80.7%
Argentina - 1.6%
22,251 Cresud S.A.C.I.F.y A. ADR (Agriculture) $ 229,464
18,483 IRSA Inversiones y Represent SA GDR (Real Estate) 536,007
155,700 Perez Compac SA Class B (Energy Resources) 906,296
38,700 Telefonica de Argentina SA Class B ADR
(Telecommunications) 1,151,325
------------
2,823,092
------------------------------------------------------------------------------
Brazil - 5.1%
224,916,200 Cia Energetica Class A (Utilities) 491,492
33,100 Companhia Cervejaria Brahma ADR (Food & Beverage) 349,619
6,485 Companhia Energetica de Minas Gerais-CEMIG ADR
(Electrical Utilities) 98,086
168,087 Embratel Participacoes SA ADR (Telecommunications) 1,796,430
45,676 Tele Centro Sul Participacoes SA ADR
(Telecommunications) 2,497,906
143,154 Tele Norte Leste Participacoes SA ADR
(Telecommunications) 2,290,464
88,128 Telesp Participacoes SA ADR (Telecommunications) 1,437,588
------------
8,961,585
------------------------------------------------------------------------------
Britain - 0.2%
196,915 Coca-Cola Beverages PLC* (Food & Beverage) 398,847
------------------------------------------------------------------------------
Chile - 3.3%
26,600 Banco BHIF ADR (Financial Services) 412,300
27,400 Banco Santiago ADR (Banks) 575,400
57,000 Cia de Telecomunicaciones de Chile SA ADR
(Telecommunications) 1,282,500
23,100 Compania Cervecerias Unidas SA ADR (Food &
Beverage) 604,931
56,800 Distribucion y Servicio D&S SA ADR (Merchandising) 937,200
68,900 Embotelladora Andina SA Series B ADR (Food &
Beverage) 900,007
56,446 Empresa Nacional de Electricidad SA Endesa ADR
(Electrical Utilities) 698,519
21,404 Enersis SA ADR (Electrical Utilities) 480,252
------------
5,891,109
------------------------------------------------------------------------------
China - 1.5%
1,158,000 Angang New Steel Co. Ltd. Class H (Steel) 164,046
1,387,000 Beijing Datang Power Generation Co. Ltd. Class H
(Electrical Utilities) 370,645
368,000 Beijing Yanhua Petrochemical Co. Ltd. Class H
(Chemicals) 77,724
609,000 China Southern Airlines Co. Ltd. Class H*
(Airlines) 142,742
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
China - (continued)
198,000 China Telecom Ltd.* (Telecommunications) $ 614,535
215,000 Guangdong Kelon Electrical Holdings Co. Ltd. Class
H (Appliance) 220,125
1,219,000 Jiangxi Copper Co. Ltd. Class H (Nonferrous Metals) 219,784
282,000 Legend Holdings (Electrical Equipment) 272,380
720,000 Qingling Motors Co. Ltd. Class H (Machinery) 160,414
516,000 Shandong International Power Development Co. Ltd.
Class H* (Electrical Utilities) 103,002
1,393,000 Zhejiang Expressway Co. Ltd. Class H (Business
Services) 247,568
------------
2,592,965
-------------------------------------------------------------------------------
Colombia - 0.7%
29,200 Banco Ganadero SA Class B ADR (Banks) 512,825
237,700 Bavaria SA (Food & Beverage) 719,863
------------
1,232,688
-------------------------------------------------------------------------------
Czech Republic - 0.9%
16,450 Ceska Sporitelna* (Banks) 81,375
141,100 CEZ* (Electrical Utilities) 307,820
12,980,864 Spif Cesky* (Financial Services) 392,337
45,815 SPT Telecom AS* (Telecommunications) 779,734
------------
1,561,266
-------------------------------------------------------------------------------
Greece - 4.1%
14,635 Alpha Credit Bank (Banks) 1,100,947
10,835 Attica Enterprises (Ship Transportation) 186,029
7,020 Commercial Bank of Greece (Banks) 681,741
3,480 EFG Eurobank (Banks) 132,588
1,740 Ergo Bank SA (Banks) 157,977
94,515 Hellenic Telecommunications Organization SA (OTE)
(Telecommunications) 1,961,401
7,130 Heracles General Cement SA (Construction) 224,026
896 Intracom (Electrical Equipment) 77,834
11,528 Mailis (Industrial Services) 306,142
20,755 National Bank of Greece (Banks) 1,534,416
28,146 STET Hellas Telecommunications SA ADR*
(Telecommunications) 482,000
3,005 Titan Cement Co SA (Construction) 328,903
------------
7,174,004
-------------------------------------------------------------------------------
Hungary - 1.0%
6,000 BorsodChem Rt. (Chemicals) 174,478
3,230 Gedeon Richter Ltd. Class S GDR (Medical Products) 161,500
21,572 Magyar Travkozlesi Rt ADR (Telecommunications) 655,249
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Hungary - (continued)
19,580 Mol Magyar Olaj-es Gazipari Rt Class S GDR (Energy
Resources) $ 496,353
4,800 North American Bus Industries Rt.* (Motor Vehicle) 91,989
3,445 OTP Bank Rt. GDR (Banks) 156,748
------------
1,736,317
------------------------------------------------------------------------------
India - 9.0%
86,050 Hindalco Industries Ltd. GDR+ (Nonferrous Metals) 2,387,887
44,000 Infosys Technologies Ltd. ADR (Business Services) 4,364,250
89,600 ITC Ltd. GDR (Tobacco) 2,755,200
148,150 Mahanagar Telephone Nigam Ltd. GDR
(Telecommunications) 1,592,612
183,500 Mahindra & Mahindra Ltd. GDR (Auto) 2,137,775
44,700 Ranbaxy Laboratories Ltd. GDR (Medical Products) 1,173,375
77,800 Reliance Industries Ltd. GDR (Chemicals) 863,580
41,100 State Bank of India GDR (Banks) 570,263
------------
15,844,942
------------------------------------------------------------------------------
Indonesia - 2.4%
55,024 Daya Guna Samudera (Food & Beverage) 22,239
1,122,500 Indah Kiat Paper & Pulp. Corp.* (Paper) 409,778
2,582,800 PT Bank Pan Indonesia Tbk -Alien Market (Banks) 471,437
292,000 PT Gudang Garam Tbk (Tobacco) 704,302
798,000 PT Indofood Sukses* (Food & Beverage) 853,142
1,872,000 PT Matahari Putra Prima Tbk* (Merchandising) 189,153
201,500 PT Semen Gresik Persero Tbk (Construction) 394,068
368,500 PT Tambang Timah Tbk (Nonferrous Metals) 242,624
2,394,200 PT Telekomunikasi Indonesia Series B
(Telecommunications) 920,846
------------
4,207,589
------------------------------------------------------------------------------
Israel - 3.4%
461,430 Bank Hapoalim (Banks) 1,063,797
288,562 Bank Leumi (Banks) 498,606
207,697 Bezeq Israel Telecomm* (Telecommunications) 751,541
24,300 Blue Square-Israel Ltd. ADR (Specialty Retail) 344,756
2,400 Check Point Software Technologies Ltd. (Computer
Software) 185,100
24,400 ECI Telecom Ltd. (Electrical Equipment) 692,350
7,500 Formula Systems Ltd.* (Computer Software) 187,935
5,200 Gilat Satellite Networks Ltd.* (Electrical
Equipment) 245,050
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Israel - (continued)
176,217 ICL Israel Chemical (Chemicals) $ 172,805
9,706 IDB Holding Corp. Ltd. (Multi-Industrial) 262,204
1,300 Israel Corp. Ltd.* (Multi-Industrial) 139,740
21,413 Koors Industries Ltd. ADR (Multi-Industrial) 377,404
11,800 Scitex Corp Ltd.* (Computer Hardware) 110,625
68,418 Super Sol (Merchandising) 179,506
17,860 Teva Pharmaceutical Industries Ltd. ADR (Medical
Products) 840,536
------------
6,051,955
------------------------------------------------------------------------------
Malaysia - 1.6%
148,000 Edaran Otomobil Nasional Berhad (Auto) 545,263
335,000 Malayan Banking Berhad (Banks) 1,101,974
186,000 New Straits Times Press M Berhad (Publishing) 406,263
302,000 Resorts World Berhad (Leisure) 766,921
------------
2,820,421
------------------------------------------------------------------------------
Mexico - 10.2%
285,100 Alfa SA Series A (Multi-Industrial) 1,077,854
959,900 Cifra Ser C Class C* (Merchandising) 1,451,606
46,100 Desc SA de CV Series C ADR (Multi-Industrial) 901,831
29,100 Fomento Economico Mexicano, SA de CV Series B
(Food & Beverage) 962,119
273,400 Grupo Carso SA Series A (Multi-Industrial) 1,058,370
515,900 Grupo Financiero Banamax Accival, SA de CV Banacci
Series O* (Banks) 988,946
733,000 Grupo Modelo SA Series C (Tobacco) 1,955,447
35,800 Grupo Televisa SA ADR* (Broadcasting) 1,302,225
299,400 Kimberly Clark Class A (Medical Products) 946,984
98,200 Telefonos de Mexico SA ADR (Telecommunications) 7,303,625
------------
17,949,007
------------------------------------------------------------------------------
Pakistan - 0.3%
79,000 Fauji Fertilizer Co. Ltd. (Chemicals) 78,124
352,000 Hub Power Co. Ltd. (Electrical Utilities) 124,515
37,000 Pakistan State Oil Co. Ltd. (Energy Resources) 89,156
610,000 Pakistan Telecommunications Co. Ltd. Class A
(Telecommunications) 246,940
------------
538,735
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Investments (continued)
August 31, 1999
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Peru - 0.7%
31,100 Credicorp Ltd. (Banks) $ 320,719
68,800 Telefonica del Peru SAA Class B ADR
(Telecommunications) 941,700
------------
1,262,419
------------------------------------------------------------------------------
Philippines - 3.6%
3,113,000 Ayala Land, Inc. (Real Estate) 776,779
113,800 Bank of the Philippine Islands (Banks) 326,987
238,500 Manila Electric Co. Class B (Electrical Utilities) 709,338
129,130 Metropolitan Bank and Trust (Banks) 1,065,912
2,322,700 Petron Corp. (Energy Resources) 207,828
11,700 Philippine Long Distance Telephone Co.
(Telecommunications) 277,202
58,250 Philippine Long Distance Telephone Co. ADR
(Telecommunications) 1,379,797
440,540 San Miguel Corp. "B" Class B (Tobacco) 716,190
5,088,300 SM Prime (Construction) 936,222
------------
6,396,255
------------------------------------------------------------------------------
Poland - 1.0%
12,800 Bank Handlowy Warszawie (Banks) 185,274
2,240 Bank Slaski (Banks) 148,300
3,860 BRE Bank SA (Banks) 126,318
20,130 Elektrim Spolka Akcyjna SA (Multi-Industrial) 253,367
44,800 KGHM Polska Miedz SA (Nonferrous Metals) 289,833
19,200 Orbis SA (Leisure) 161,430
93,200 Telekomunikacja Polska SA (Telecommunications) 633,455
12,100 Wielkopolski Bank Kredytowy (Financial Services) 81,631
------------
1,879,608
------------------------------------------------------------------------------
Russia - 2.1%
45,573 LUKoil Holding ADR (Energy Resources) 1,389,976
27,108 Mosenergo ADR (Electrical Utilities) 81,324
15,755 Rao Gazprom ADR (Electrical Utilities) 127,221
1,865 RAO Unified Energy Systems GDR (Electrical
Utilities) 14,454
79,897 RAO Unified Energy Systems Class S (Electrical
Utilities) 559,279
10,300 Rostelecom ADR (Telecommunications) 70,169
182,402 Surgutneftegaz ADR (Energy Resources) 1,436,416
------------
3,678,839
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
South Africa - 8.0%
77,700 ABSA Group Ltd. (Financial Services) $ 399,640
52,700 Anglo American Platinum Corp. (Nonferrous Metals) 1,198,534
15,029 Angloglold (Mining) 753,241
49,500 Bidvest Group Ltd. (Multi-Industrial) 354,646
437,500 BOE Ltd. (Financial Services) 323,515
60,100 Comparex Holdings Ltd. (Business Services) 372,323
91,680 De Beers Centenary (Agriculture) 2,500,843
153,959 Dimension Data Holdings Ltd. (Computer Software) 638,808
935,898 FirstRand Ltd. (Financial Services) 948,893
90,020 Gold Fields Ltd. (Mining) 310,643
21,000 Impala Platinum Holdings Ltd. (Nonferrous Metals) 672,911
13,120 Investec Group Ltd. (Banks) 457,060
46,519 Liberty Life Association of Africa (Information
Services) 545,034
60,400 Nedcor Investment Bank Holdings (Financial Services) 43,175
55,900 Nedcor Ltd. (Banks) 1,111,478
85,500 Rembrandt Group (Tobacco) 640,670
411,000 Sanlam Ltd.* (Information Services) 489,648
152,425 Sasol (Chemicals) 1,107,088
116,879 South African Brewery (Alcohol) 960,307
28,228 Tiger Oats (Food & Beverage) 241,206
------------
14,069,663
-------------------------------------------------------------------------------
South Korea - 9.8%
4,100 Cheil Jedang Corp. (Food & Beverage) 324,735
38,000 Daewoo Heavy Industries (Machinery) 60,195
7,000 Daewoo Securities (Financial Services) 128,674
9,700 Dongwon Securities (Financial Services) 236,646
55,001 Hankook Tire Co. Ltd. (Auto) 254,854
22,730 Housing & Commercial Bank* (Banks) 531,426
55,400 Hyundai Engineering & Construction Co.
(Construction) 492,757
21,222 Hyundai Motor Co. Ltd.* (Auto) 657,963
57,800 Korea Electric Power Corp. ADR (Electrical
Utilities) 1,040,400
45,200 Korea Electric Power Corp. (Electrical Utilities) 1,684,710
67,000 Korea Exchange Bank* (Banks) 332,588
22,000 Korea Telecom Corp. ADR* (Telecommunications) 715,000
23,000 Korean Air (Airlines) 457,857
17,000 LG Chemical Ltd. (Chemicals) 542,906
15,800 LG Electronics (Appliance) 669,208
7,888 Pohang Iron & Steel Co. Ltd. (Steel) 1,055,742
6,500 Pohang Iron & Steel Co. Ltd. ADR (Steel) 238,875
19,000 Samsung Corp.* (Wholesale) 334,773
7,470 Samsung Display Devices Co. (Electrical Equipment) 432,191
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
South Korea - (continued)
11,924 Samsung Electro-Mechanics Co. (Electrical
Equipment) $ 626,250
17,006 Samsung Electronics (Consumer Durables) 3,226,890
4,000 Samsung Fire & Marine Insurance (Insurance) 197,543
9,974 Samsung Securities Co. Ltd. (Financial Services) 391,187
158,160 Shinhan Bank (Banks) 1,701,510
2,648 SK Corp. (Energy Resources) 63,929
601 SK Telecom Co. Ltd. (Telecommunications) 601,254
22,101 SK Telecom Co. Ltd. ADR (Telecommunications) 250,018
------------
17,250,081
------------------------------------------------------------------------------
Taiwan - 5.1%
354,200 Acer Peripherals, Inc. (Business Services) 918,915
609,850 Bank Sinopac (Financial Services) 375,882
213,900 Cathay Life Insurance Co. (Insurance) 642,373
124,800 China Development Industrial Bank (Financial
Services) 217,811
589,900 China Steel Corp. (Steel) 460,048
455,160 Chinatrust Commercial Bank (Banks) 455,160
615,600 Evergreen Marine Corp. (Ship Transportation) 636,894
555,330 Far Eastern Textile Ltd. (Apparel) 805,054
180,960 Formosa Chemicals & Fibre Corp. (Chemicals) 182,098
155,720 Formosa Plastics Corp. (Chemicals) 298,708
147,840 Hon Hai Precision (Electrical Equipment) 962,355
140,970 Nan Ya Plastic Corp. (Chemicals) 232,734
256,060 President Chain Stores (Specialty Retail) 756,907
40,960 Quanta Computer (Business Services) 399,296
70,720 Siliconware Precis (Electrical Equipment) 138,994
374,842 Taiwan Semiconductor (Electrical Equipment) 1,591,310
------------
9,074,539
------------------------------------------------------------------------------
Thailand - 2.5%
33,000 Advanced Info Service Public-Alien Market*
(Telecommunications) 452,975
117,800 Bangkok Bank Public-Alien Market (Banks) 299,726
431,100 Bangkok Expressway* (Construction) 253,125
93,000 BEC World PLC-Alien Market (Entertainment) 553,340
178,600 Electricity Generating Public Co.-Alien Market
(Utilities) 279,645
65,000 Land and House Public Co. Ltd.-Alien Market* (Real
Estate) 98,382
82,500 PTT Exploration & Production Public-Alien Market*
(Energy Resources) 650,183
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Thailand - (continued)
9,600 Shin Corp. PLC* (Computer Hardware) $ 43,841
26,200 Siam Cement Public-Alien Market* (Construction) 678,247
749,800 TelecomAsia Corp. Public-Alien Market*
(Telecommunications) 719,080
218,300 Thai Farmers Bank-Alien Market* (Banks) 313,322
249,400 United Broadcasting Corp. Public Co. Ltd.*
(Broadcasting) 130,167
------------
4,472,033
----------------------------------------------------------------------------
Turkey - 1.5%
15,604,401 Akbank (Banks) 206,704
7,132,000 Akcansa Cimento AS (Construction) 97,677
4,803,100 Arcelik AS (Consumer Durables) 110,534
695,300 Aygaz AS (Electrical Utilities) 53,857
630,100 Ege Biracilik Ve Malt Sanayii AS (Tobacco) 47,392
12,470,300 Eregli Demir ve Celik Fabrikalari TAS Erdemir
(Steel) 218,384
566,830 Migros (Merchandising) 225,892
42,912,040 Turkiye Garanti Bankasi AS (Banks) 289,035
42,762,026 Turkiye Is Bankasi Isbank Class C (Banks) 652,855
596,800 Vestel Elektronik Sanayi ve Ticaret AS*
(Consumer Durables) 63,646
47,110,740 Yapi Kredi Bankesi (Banks) 613,476
------------
2,579,452
----------------------------------------------------------------------------
Venezuela - 1.1%
41,200 C.A. La Electricidad de Caracas ADR (Electrical
Utilities) 587,100
64,600 Compania Anonima Nacional Telefonos de Venezuela
Class D ADR (Telecommunications) 1,287,963
------------
1,875,063
----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $122,040,420) $142,322,474
----------------------------------------------------------------------------
Preferred Stocks - 5.6%
Brazil - 5.2%
284,625,400 Banco Bradesco SA (Banks) $ 1,125,470
1,358,000 Companhia Cervejaria Brahma (Food & Beverage) 718,567
29,847,623 Companhia Energetica de Minas Gerais-CEMIG
(Electrical Utilities) 459,672
150,998,000 Companhia Paranaense de Energia-Copel Class B
(Electrical Utilities) 1,044,887
50,700 Companhia Vale do Rio Doce Class A (Steel) 1,123,736
13,490,100 Petroleo Brasileiro SA (Energy Resources) 1,803,827
1,000 Tele Centro Sul Participacoes SA
(Telecommunications) 11
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Investments (continued)
August 31, 1999
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Preferred Stocks - (continued)
Brazil - (continued)
15,269,912 Telecomunicacoes de Sao Palo SA
(Telecommunications) $ 1,338,540
37,178,991 Telesp Celular SA Class B (Telecommunications) 1,682,920
-------------
9,297,630
------------------------------------------------------------------------------
Russia - 0.2%
48,155 LUKoil Holding ADR (Energy Resources) 300,969
------------------------------------------------------------------------------
Thailand - 0.2%
276,100 Siam Commercial Bank Public Co. Ltd.* (Banks) 313,424
------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $13,513,997) $ 9,912,023
------------------------------------------------------------------------------
Rights - 0.2%
Greece - 0.1%
7,020 Commercial Bank of Greece SA -Rights exp.
10/01/1999* (Banks) $ 160,818
------------------------------------------------------------------------------
Taiwan - 0.0%
96,000 China Development Industrial - Rights exp.
09/13/1999* (Industrial Services) 4,679
40,960 Quanta Computer Inc. - Rights exp. 09/09/1999*
(Computer Hardware) 116
-------------
4,795
------------------------------------------------------------------------------
Thailand - 0.1%
218,300 Thai Farmers Bank Public Co. Ltd. - Alien
Market - Rights exp. 09/16/1999* (Banks) 199,387
------------------------------------------------------------------------------
TOTAL RIGHTS
(Cost $0) $ 365,000
------------------------------------------------------------------------------
Warrants - 0.3%
Indonesia - 0.0%
138,600 PT Bank Pan Indonesia Tbk -Alien Market exp.
07/08/2002* (Banks) $ 7,680
------------------------------------------------------------------------------
Philippines - 0.2%
931,500 Jollibee Foods exp. 03/24/2003* (Food & Beverage) 410,870
------------------------------------------------------------------------------
Thailand - 0.1%
276,100 Siam Commercial Bank Public Co. Ltd. - Alien
Market exp. 05/10/2002* (Banks) 124,288
------------------------------------------------------------------------------
TOTAL WARRANTS
(Cost $445,202) $ 542,838
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Bond - 0.3%
Russia - 0.3%
American Development Bank
RUB17,900,000 31.0% 05/08/2000 $ 552,128
--------------------------------------------------------------------------------------------
TOTAL BOND
(Cost $2,022,577) $ 552,128
--------------------------------------------------------------------------------------------
</TABLE>
Structured Notes - 7.0%
<TABLE>
<C> <S> <C>
South Korea - 6.4%
1,187,570 units Merrill Lynch
Call Warrant
on KOSPI 200*
exp. 12/09/1999 $ 11,315,523
------------------------------------------------
Taiwan - 0.6%
90,314 units Taiwan Index
Linked Note exp.
12/30/1999 1,010,614
------------------------------------------------
TOTAL STRUCTURED NOTES
(Cost $6,416,488) $ 12,326,137
------------------------------------------------
</TABLE>
Short-Term Obligation - 5.5%
<TABLE>
<S> <C> <C> <C>
State Street Bank & Trust Euro-Time Deposit
$9,664,000 5.50% 09/01/1999 $ 9,664,000
-----------------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATION
(Cost $9,664,000) $ 9,664,000
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $154,102,684) $ 175,684,600
-----------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
+ Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold, normally to qualified institu-
tional buyers in transactions exempt from registration. Total market-value
of Rule 144A securities amounted to $2,387,887 at August 31, 1999.
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.
10
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
As a %
of Total
Net Assets
<S> <C>
Common and Preferred Stock Industry Classifications
Agriculture 1.5%
Airlines 0.3
Alcohol 0.5
Apparel 0.5
Appliance 0.5
Auto 2.0
Banks 11.5
Broadcasting 0.8
Business Services 3.6
Chemicals 2.1
Computer Hardware 0.1
Computer Software 0.6
Construction 1.9
Consumer Durables 1.9
Electrical Equipment 2.9
Electrical Utilities 4.8
Energy Resources 4.2
Entertainment 0.3
Financial Services 2.2
Food & Beverage 3.5
Industrial Services 0.2
Information Services 0.6
Insurance 0.5
Leisure 0.5
Machinery 0.1
Medical Products 1.8
Merchandising 1.7
Mining 0.6
Motor Vehicle 0.1
Multi-Industrial 2.5
Nonferrous Metals 2.8
Paper 0.2
Publishing 0.2
Real Estate 0.8
Ship Transportation 0.5
Specialty Retail 0.6
Steel 1.9
Telecommunications 20.5
Tobacco 3.9
Utilities 0.4
Wholesale 0.2
-----------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCK 86.3%
-----------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
<TABLE>
<S> <C>
Investment in securities, at value (identified cost
$154,102,684) $175,684,600
Cash, at value 914,695
Receivables:
Investment securities sold, at value 22,586
Dividends and interest, at value 575,404
Fund shares sold 106,457
Forward foreign currency exchange contracts 136,576
Reimbursement from investment adviser 114,611
Deferred organization expenses, net 9,686
Other assets, at value 6,156
------------------------------------------------------------------------------
Total assets 177,570,771
------------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased, at value 403,598
Fund shares repurchased 234,829
Amounts owed to affiliates 221,172
Capital gains tax 195,098
Accrued expenses and other liabilities, at value 175,127
------------------------------------------------------------------------------
Total liabilities 1,229,824
------------------------------------------------------------------------------
Net Assets:
Paid-in capital 188,103,207
Accumulated net investment loss (45,928)
Accumulated net realized loss from investment and foreign
currency related transactions (33,113,120)
Net unrealized gain on investments and translation of assets
and liabilities denominated in foreign currencies 21,396,788
------------------------------------------------------------------------------
NET ASSETS $176,340,947
------------------------------------------------------------------------------
Net asset value, offering and redemption price per share(a)
Class A $9.26
Class B $9.21
Class C $9.24
Institutional $9.37
Service $9.05
------------------------------------------------------------------------------
Shares outstanding:
Class A 7,093,000
Class B 105,545
Class C 118,481
Institutional 11,593,102
Service 166
------------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number of
shares authorized) 18,910,294
------------------------------------------------------------------------------
</TABLE>
(a) Maximum public offering price per share (NAV per share X 1.0582) for
Class A shares is $9.80. 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 pur-
chase price of the shares.
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
<TABLE>
<S> <C>
Investment income:
Dividends(a) $ 1,533,844
Interest 278,432
----------------------------------------------------------------------------
Total income 1,812,276
----------------------------------------------------------------------------
Expenses:
Management fees 1,148,664
Custodian fees 319,452
Distribution and service fees(b) 184,703
Transfer agent fees(c) 92,504
Registration fees 78,419
Professional fees 42,051
Trustee fees 6,074
Amortization of deferred organization expenses 1,710
Service share fees 4
Other 55,548
----------------------------------------------------------------------------
Total expenses 1,929,129
----------------------------------------------------------------------------
Less -- expenses reimbursed (355,841)
----------------------------------------------------------------------------
Net expenses 1,573,288
----------------------------------------------------------------------------
NET INVESTMENT INCOME 238,988
----------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment and foreign
currency related transactions:
Net realized gain (loss) from:
Investment transactions 12,353,122
Foreign currency related transactions (202,406)
Net change in unrealized gain on:
Investments 30,854,273
Translation of assets and liabilities denominated in foreign
currencies 316,179
----------------------------------------------------------------------------
Net realized and unrealized gain on investment and foreign
currency related transactions: 43,321,168
----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $43,560,156
----------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $138,247.
(b) Class A, Class B and Class C had distribution and service fees of
$176,746, $4,255 and $3,702, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $67,162, $808, $703, $23,830 and $1, respectively.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Seven-Month For the
Period Ended Year Ended
August 31, 1999 January 31, 1999
<S> <C> <C>
From operations:
Net investment income $ 238,988 $ 1,649,430
Net realized gain (loss) from investment
and foreign currency related transactions 12,150,716 (41,326,432)
Net change in unrealized gain (loss) on
investments and translation of assets and
liabilities denominated in foreign
currencies 31,170,452 (8,910,101)
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 43,560,156 (48,587,103)
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares -- (569,869)
Class B shares -- (4,352)
Class C shares -- (2,737)
Institutional shares -- (1,092,333)
Service shares -- (11)
In excess of net investment income
Class A shares -- (1,680,766)
Class B shares -- (12,834)
Class C shares -- (8,074)
Institutional shares -- (3,221,713)
Service shares -- (33)
------------------------------------------------------------------------------
Total distributions to shareholders -- (6,592,722)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 32,173,466 220,344,538
Reinvestment of dividends and
distributions -- 4,301,531
Cost of shares repurchased (43,018,256) (62,779,701)
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from share transactions (10,844,790) 161,866,368
------------------------------------------------------------------------------
TOTAL INCREASE 32,715,366 106,686,543
------------------------------------------------------------------------------
Net assets:
Beginning of period 143,625,581 36,939,038
------------------------------------------------------------------------------
End of period $176,340,947 $143,625,581
------------------------------------------------------------------------------
Accumulated undistributed net investment
income (loss) $ (45,928) $ 26,133
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Notes to Financial Statements
August 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 management
investment company. The Trust includes the Goldman Sachs Emerging Markets
Equity Fund (the "Fund"). At August 31, 1999, the Fund is a diversified port-
folio offering five classes of shares -- Class A, Class B, Class C, Institu-
tional 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 financial statements of the
Fund are presented for the seven-month period ended August 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 or closing price on the principal exchange on which they are traded. If
no sale occurs, securities are valued at the last bid price. Debt securities
are valued at prices supplied by independent pricing services, broker / deal-
er-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 am-
ortized cost. Securities for which quotations are not readily available, are
valued at fair value using methods approved by the Board of Trustees of the
Trust.
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 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 more volatile than those of comparable securities in the United
States.
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. It is
the Fund's policy, where necessary, to accrue for estimated capital gains
taxes on appreciated foreign securities.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
on current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based on currency
exchange 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.
15
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
D. Forward Foreign Currency Exchange Contracts -- The Fund may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date as a hedge or
cross-hedge against either specific transactions or portfolio positions. The
Fund may also purchase and sell such contracts to seek to increase total re-
turn. All commitments are "marked-to-market" daily at the applicable transla-
tion rates and any resulting unrealized gains or losses are recorded in the
Fund's financial statements. The Fund realizes gains or losses at the time a
forward contract is offset by entry into a closing transaction or extin-
guished by delivery of the currency. Risks may arise upon entering these con-
tracts from the potential inability of counterparties to meet the terms of
their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
E. Derivative Financial Instruments -- The Fund may utilize derivative finan-
cial instruments such as structured notes and equity swaps. Such instruments
are used by the Fund as a means of investing in a particular market or in-
creasing the return on the Fund's investments or both. The value of the prin-
cipal of and/or interest on such securities is determined by reference to
changes in the value of the financial indicators including, but not limited
to indices, currencies or interest rates. These financial instruments may
subject the Fund to a greater degree of market or counterparty risk and loss
than other types of securities.
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 sales proceeds is re-
ported as an unrealized gain or loss. Gains and losses are realized when a
short position is closed out by delivering securities back to the broker.
G. Deferred Organization Expenses -- Organization-related costs are amortized
on a straight-line basis over a period of five years.
H. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
I. 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, mortgage dollar rolls,
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.
16
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
J. 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 of the Fund separately bears its respective class-specific transfer
agency fees.
K. 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 Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net invest-
ment income or net realized gain on investment transactions, or from paid-in
capital, depending on the type of book/tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $160,175,226. Accordingly, the gross unrealized gain
on investments was $30,901,434 and the gross unrealized loss on investments
was $15,392,060 resulting in a net unrealized gain of $15,509,374.
The Fund had approximately $27,002,000 at August 31, 1999 (the Fund's tax
year end) of capital loss carryforward expiring 2006 for federal tax purpos-
es. This amount is available to be carried forward to offset future capital
gains to the extent permitted by applicable laws or regulations.
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), an affiliate of Goldman Sachs
Asset Management ("GSAM"), a separate operating division of Goldman, Sachs &
Co. ("Goldman Sachs"), serves as the investment 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 business affairs, including providing facili-
ties, GSAMI is entitled to a fee, computed daily and payable monthly, at an
annual rate equal to 1.20% of the average daily net assets of the Fund.
The adviser has voluntarily agreed to limit certain "Other Expenses" (ex-
cluding management fees, distribution and service fees, transfer agent fees,
taxes, interest, brokerage, litigation, Service share fees, indemnification
costs and other extraordinary expenses) to the extent such expenses exceed,
on an annual basis, 0.15% of the average daily net assets of the Fund.
Goldman Sachs has agreed to reimburse approximately $356,000 for the period
ended August 31, 1999.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .50%,
1.00% and 1.00% of the Fund's average daily net assets attributable to Class
A, Class B and Class C shares, respectively.
Goldman Sachs 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 has retained approximately $67,000 for the period
ended August 31, 1999.
Goldman Sachs also serves as the transfer agent of the Fund for a fee. 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 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
17
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
are beneficial owners of such shares. The Service Plan provides for compensa-
tion to the service organizations in an amount up to .50% (on an annualized
basis), of the average daily net asset value of the Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$178,000, $29,000 and $14,000 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) for the year ended August 31, 1999, were $99,812,263 and
$120,924,457, respectively.
<TABLE>
<CAPTION>
Unrealized
------------
Open Forward Foreign Currency Value on
Sale Contracts Settlement Date Current Value Gain Loss
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Czech Koruna
expiring 2/2/2000 $1,453,272 $1,390,705 $62,567 $ --
------------------------------------------------------------------------------
TOTAL OPEN FORWARD FOREIGN
CURRENCY SALE CONTRACTS $1,453,272 $1,390,705 $62,567 $ --
------------------------------------------------------------------------------
<CAPTION>
Realized
------------
Closed but Unsettled
Forward Foreign Currency Contracts Purchase Value Sale Value Gain Loss
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Czech Koruna
expiring 2/2/2000 $1,472,719 $1,546,728 $74,009 $ --
------------------------------------------------------------------------------
TOTAL CLOSED BUT UNSETTLED FORWARD
FOREIGN CURRENCY CONTRACTS $1,472,719 $1,546,728 $74,009 $ --
------------------------------------------------------------------------------
</TABLE>
The contractual amounts of forward foreign currency exchange contracts do
not necessarily represent the amounts potentially subject to risk. The mea-
surement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At August 31,
1999, the Fund had sufficient cash and securities to cover any commitments
under these contracts.
The Fund has recorded a "Receivable for forward foreign currency exchange
contracts purchased" of $136,576 in the accompanying Statement of Assets and
Liabilities.
18
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
For the period ended August 31, 1999, Goldman Sachs earned approximately
$50,000 of brokerage commissions from portfolio transactions.
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank, an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund, depending on the fluc-
tuations in the value of the contracts, and are recorded for financial re-
porting purposes as unrealized gains or losses. When contracts are closed,
the Fund realizes a gain or loss which is reported in the Statement of Opera-
tions.
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 contract 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 August 31, 1999, the Fund had no open futures
contracts.
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit-
ted unsecured revolving line of credit facility which was terminated on April
30, 1999. Effective April 30, 1999, the Fund now participates in a
$250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving
line of credit facility. Under the most restrictive 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 which has not been utilized. During the period
ended August 31, 1999, the Fund did not have any borrowings under any of
these facilities.
6. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund has reclassified
$710,409 from paid-in-capital to accumulated net realized loss from invest-
ment and foreign currency related transactions and $311,049 from accumulated
net investment loss to accumulated net realized loss from investment and for-
eign currency related transactions. 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 EMERGING MARKETS EQUITY FUND
Notes to Financial Statements (continued)
August 31, 1999
7. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
<TABLE>
<CAPTION>
For the Seven-Month Period Ended August 31, 1999 For the Year Ended January 31, 1999
---------------------------------------------------------------------------------------
Shares Dollars Shares Dollars
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold 2,397,786 $ 20,583,469 10,357,445 $ 89,405,582
Reinvestment of divi-
dends and distributions -- -- 318,269 2,176,957
Shares repurchased (2,788,776) (23,870,559) (5,015,931) (38,121,169)
---------------------------------------------------------------------------------------
(390,990) (3,287,090) 5,659,783 53,461,370
------------------------------------------------------------------------------------------------------------------
Class B Shares
Shares sold 54,000 468,026 73,263 638,031
Reinvestment of divi-
dends and distributions -- -- 1,969 13,468
Shares repurchased (13,777) (120,123) (16,489) (112,961)
---------------------------------------------------------------------------------------
40,223 347,903 58,743 538,538
------------------------------------------------------------------------------------------------------------------
Class C Shares
Shares sold 92,068 838,996 44,699 387,030
Reinvestment of divi-
dends and distributions -- -- 1,550 10,621
Shares repurchased (12,341) (114,463) (15,015) (115,705)
---------------------------------------------------------------------------------------
79,727 724,533 31,234 281,946
------------------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 1,216,533 10,282,975 13,487,704 129,913,895
Reinvestment of divi-
dends and distributions -- -- 304,854 2,100,442
Shares repurchased (2,338,484) (18,913,111) (3,049,355) (24,429,866)
---------------------------------------------------------------------------------------
(1,121,951) (8,630,136) 10,743,203 107,584,471
------------------------------------------------------------------------------------------------------------------
Service Shares
Shares sold -- -- -- --
Reinvestment of divi-
dends and distributions -- -- 6 43
---------------------------------------------------------------------------------------
-- -- 6 43
------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (1,392,991) $ (10,844,790) 16,492,969 $ 161,866,368
------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
8. OTHER MATTERS
As of August 31, 1999, the Goldman Sachs Growth and Income Strategy Portfo-
lio, the Goldman Sachs Growth Strategy Portfolio and the Goldman Sachs Ag-
gressive Growth Strategy Portfolio were beneficial owners of approximately
15%, 12% and 6% of the outstanding shares of the Fund, respectively. In addi-
tion, two clients are the beneficial owners of 13% and 12% of the outstanding
shares of the Fund, respectively.
21
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from
investment operations(a) Distributions to shareholders
------------------------- ------------------------------------
Net asset Net In excess Net increase
value, investment Net realized From net of net (decrease)
beginning income and unrealized investment investment From net in net asset
of period (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - Class A Shares $ 7.04 $(0.01) $2.23 $ -- $ -- $ -- $ 2.22
1999 - Class B Shares 7.03 (0.03) 2.21 -- -- -- 2.18
1999 - Class C Shares 7.05 (0.03) 2.22 -- -- -- 2.19
1999 - Institutional
Shares 7.09 0.02 2.26 -- -- -- 2.28
1999 - Service Shares 6.87 0.01 2.17 -- -- -- 2.18
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares 9.69 0.04 (2.40) (0.07) (0.22) -- (2.65)
1999 - Class B Shares 9.69 0.03 (2.41) (0.07) (0.21) -- (2.66)
1999 - Class C Shares 9.70 0.01 (2.39) (0.07) (0.20) -- (2.65)
1999 - Institutional
Shares 9.70 0.06 (2.36) (0.08) (0.23) -- (2.61)
1999 - Service Shares 9.69 (0.13) (2.41) (0.07) (0.21) -- (2.82)
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares
(commenced December 15,
1997) 10.00 -- (0.31) -- -- -- (0.31)
1998 - Class B Shares
(commenced December 15,
1997) 10.00 -- (0.31) -- -- -- (0.31)
1998 - Class C Shares
(commenced December 15,
1997) 10.00 -- (0.30) -- -- -- (0.30)
1998 - Institutional
Shares (commenced Decem-
ber 15, 1997) 10.00 0.01 (0.31) -- -- -- (0.30)
1998 - Service Shares
(commenced December 15,
1997) 10.00 -- (0.31) -- -- -- (0.31)
----------------------------------------------------------------------------------------------------------------
</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) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
<TABLE>
<CAPTION>
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Ratio of
Net assets Ratio of net investment Ratio of Ratio of net
Net asset at end of net expenses income (loss) expenses to investment income Portfolio
value, end Total period to average to average average net (loss) to average turnover
of period return(b) (in 000s) net assets net assets assets net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$9.26 31.53%(d) $65,698 2.04%(c) (0.15)%(c) 2.41%(c) (0.52)%(c) 63.24%(d)
9.21 31.01(d) 972 2.54(c) (0.71)(c) 2.91(c) (1.08)(c) 63.24(d)
9.24 31.06(d) 1,095 2.54(c) (0.85)(c) 2.91(c) (1.22)(c) 63.24(d)
9.37 32.16(d) 108,574 1.39(c) 0.50(c) 1.76(c) 0.13(c) 63.24(d)
9.05 31.73(d) 2 1.89(c) 0.12(c) 2.26(c) (0.25)(c) 63.24(d)
7.04 (24.32) 52,704 2.09 0.80 2.53 0.36 153.67
7.03 (24.51) 459 2.59 0.19 3.03 (0.25) 153.67
7.05 (24.43) 273 2.59 0.28 3.03 (0.16) 153.67
7.09 (23.66) 90,189 1.35 1.59 1.79 1.15 153.67
6.87 (26.17) 1 1.85 (1.84) 2.29 (2.28) 153.67
9.69 (3.10)(d) 17,681 1.90(c) 0.55(c) 5.88(c) (3.43)(c) 3.35(d)
9.69 (3.10)(d) 64 2.41(c) 0.05(c) 6.39(c) (3.93)(c) 3.35(d)
9.70 (3.00)(d) 73 2.48(c) (0.27)(c) 6.46(c) (4.25)(c) 3.35(d)
9.70 (3.00)(d) 19,120 1.30(c) 0.80(c) 5.28(c) (3.18)(c) 3.35(d)
9.69 (3.10)(d) 2 2.72(c) (0.05)(c) 6.70(c) (4.03)(c) 3.35(d)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
GOLDMAN SACHS EMERGING MARKETS EQUITY FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of
Goldman Sachs Trust -- Emerging Markets Equity Fund:
We have audited the accompanying statement of assets and liabilities of
Goldman Sachs Emerging Markets Equity Fund, one of the portfolios constitut-
ing Goldman Sachs Trust--Equity Funds (a Delaware Business Trust), including
the statement of investments, as of August 31, 1999, and the related state-
ment of operations, 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 August 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 Emerging Markets Equity Fund as of August 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
October 8, 1999
24
<PAGE>
GOLDMAN SACHS FUND PROFILE
Goldman Sachs Emerging Markets Equity 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 Emerging Markets Equity Fund offers investors
access to the benefits associated with emerging market investing.
The Fund seeks long-term capital appreciation, primarily through
equity securities of emerging country issuers.
Target Your Needs
The Goldman Sachs Emerging Markets 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 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.
[GRAPHIC APPEAR HERE]
For More Information
To learn more about the Goldman Sachs Emerging Markets 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 Adrien E. Deberghes, Jr., Assistant Treasurer
Jackson W. Smart, Jr. Philip V. Giuca, Jr., Assistant Treasurer
William H. Springer Michael J. Richman, Secretary
Richard P. Strubel Howard B. Surloff, Assistant Secretary
Valerie A. Zondorak, Assistant Secretary
GOLDMAN, SACHS & CO.
Distributor and Transfer Agent
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
Investment Adviser
GOLDMAN SACHS INTERNATIONAL
Peterborough Court, 133 Fleet Street
London EC4A 2BB, England
Visit our internet address: www.gs.com/funds
This material is not authorized for distribution to prospective investors unless
preceded or accompanied by a current Prospectus. Investors should read the
Prospectus carefully before investing or sending money.
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.
An investment in a money market fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any government agency. Although a money market
fund seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
Copyright 1999 Goldman, Sachs & Co. All rights reserved. Date of first use:
October 15, 1999 EMEAR / 7K / 10-99
