<PAGE>
Goldman Sachs Funds
================================================================================
ASIA GROWTH FUND Annual Report January 31, 1998
================================================================================
Long-term capital growth potential
through a diversified portfolio of stocks
related to Asia, excluding Japan.
[GRAPHIC]
[LOGO]
Goldman
Sachs
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Fund Basics
as of January 31, 1998
Assets Under Management
-----------------------
$92.2 Million
-----------------------
Number of Holdings
-----------------------
43
-----------------------
NASDAQ SYMBOLS
Class A Shares
-----------------------
GSAGX
-----------------------
Class B Shares
-----------------------
GSABX
-----------------------
Class C Shares
-----------------------
GSACX
-----------------------
Institutional Shares
-----------------------
GSAIX
-----------------------
================================================================================
PERFORMANCE REVIEW
================================================================================
<TABLE>
<CAPTION>
January 31, 1997- Fund Total Return MSCI AC Asia
January 31, 1998 (based on NAV)(1) Free (Ex Japan) Index(2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A -48.49% -47.71%
Class B -48.70% -47.71%
Class C (8/15/97-1/31/98) -47.17% -45.37%
Institutional -48.19% -47.71%
- --------------------------------------------------------------------------------
</TABLE>
(1) The net asset value represents the net assets of the Fund (ex-dividend)
divided by the total number of shares.
(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.
================================================================================
SEC AVERAGE ANNUAL TOTAL RETURN(3)
================================================================================
<TABLE>
<CAPTION>
For the period Class C
ending 12/31/97 Class A Class B (Cumulative)(4) Institutional
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Last 12 Months -44.32% -44.30% N/A -40.64%
Since Inception -11.32% -31.76% -40.06% -24.40%
(7/8/94) (5/1/96) (8/15/97) (2/2/96)
- --------------------------------------------------------------------------------
</TABLE>
(3) The SEC Average Annual Total Return is determined by computing the annual
percentage change in the value of $1,000 invested at the maximum public
offering price for the specified periods, assuming reinvestment of all
distributions at NAV. The total return calculation reflects a maximum
initial sales charge of 5.5% for Class A shares and the assumed deferred
sales charge for Class B shares (5% maximum declining to 0% after six
years). The public offering price of the Class A shares on 1/31/98 was
$8.87 and represents the NAV plus the maximum sales charge of 5.5%.
(4) The SEC Cumulative Total Return is determined by computing the 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 the assumed deferred sales charge for
Class C shares (1% if redeemed within 12 months of purchase).
================================================================================
TOP 10 HOLDINGS AS OF 1/31/98
================================================================================
<TABLE>
<CAPTION>
Percentage of
Company Holding Total Net Assets Line of Business
- --------------------------------------------------------------------------------
<S> <C> <C>
Hutchison Whampoa 7.7% Diversified
Hong Kong Telecom 6.5% Telecommunications
Hindustan Lever Ltd. 3.9% Consumer Goods and Services
Hong Kong Electric 3.9% Utilities
Singapore Press Holdings 3.8% Media
Mahanagar Telephone 3.8% Telecommunications
Ranbaxy Laboratories 3.4% Consumer Goods and Services
ITC Ltd 3.1% Consumer Goods and Services
Cheung Kong 2.4% Real Estate
China Light & Power 2.3% Utilities
- --------------------------------------------------------------------------------
</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.
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Market Overview
Dear Shareholder,
While 1997 may best be remembered as a year of record returns on Wall Street, it
will also be recalled as a watershed in Asian market history. A decision by Thai
authorities to allow the devaluation of their currency set in motion a series of
events that impacted the world.
o The Asian Markets: Thai Currency Devaluation Causes Region-Wide
Currency Crisis -- Early in 1997, most Asian markets were weak,
largely due to uncertainties in the U.S. interest rate outlook.
Performance improved briefly in late January and February, but
the region subsequently sold off in response to a rise in U.S.
interest rates and weaker-than-expected economic indicators in
several countries. Although the markets rebounded in May, posting
their strongest monthly gain for the year, the recovery was
short-lived.
On July 2, Thai authorities allowed their currency, the
baht, to float freely against the U.S. dollar. The action was
taken as the government had been unable to address severe
domestic problems impacting Thailand during the past two years --
primarily high current account imbalances and financial sector
weakness. The decision set in motion a wave of currency
speculation over regional countries that had, albeit to a lesser
extent than Thailand, pursued overly aggressive investment
policies. The Philippines, Malaysia and Indonesia were most
immediately affected, as these governments allowed their
currencies to slide in order to keep their exports competitive.
While the Hong Kong market remained strong, its dollar peg came
under intense scrutiny.
In October, continued speculative attack against the Hong
Kong dollar sent interest rates soaring and led to government
intervention. The Hong Kong market plummeted, and world markets
again responded in kind. At period-end, South Korea's economic
and financial problems reached crisis point, forcing the
government to seek assistance from the International Monetary
Fund -- though questions remained as to whether the assistance
provided was sufficient.
o Outlook: Some Perspective Is Necessary -- Going forward, it is
necessary to place the current turmoil in Asia into perspective.
While emerging markets will at times experience a higher level of
volatility than more mature economies, they also stand to benefit
from significant long-term growth potential as economies and
markets develop. Additionally, we believe the currency delinkings
are likely to mark the beginning of a new, healthier stage in the
region's economic development. However, the adjustment process
for these economies will likely be subject to significant
volatility and could be lengthy, depending on the appropriateness
of policy responses.
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 Goldman Sachs
Asset Management Asset Management
International International
February 27, 1998
1
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Performance Overview
Dear Shareholder,
We are pleased to report on the performance of the Goldman Sachs Asia Growth
Fund for the 12-month period ended January 31, 1998.
Performance Review: Declines for Fund, Index and Peer Group
Asian markets in general fared poorly over the 12-month period ended
January 31, 1998, a circumstance that is reflected in the average return of
-42.39% generated by the Fund's Lipper peer group, Pacific (Ex-Japan)
Funds. Within the peer group, the Fund's Class A shares, Class B shares and
Institutional shares ranked 56, 58 and 66, respectively, out of 82 funds.
(Class C share rankings are not available, as the performance record is
less than 12 months. Please note that Lipper rankings do not take sales
charges into account and that past performance is not a guarantee of future
results.)
Regional Allocations
Early in the fiscal year, relative to its benchmark, the MSCI All Country
Asia Free (ex Japan) Index, the Fund was overweighted in Hong Kong (which
initially hurt Fund performance), India and the Philippines. Conversely,
the Fund's weighting in Hong Kong during the difficult investment
environment of the latter portion of the period under review, as well as
its underweightings in countries that were most severely affected,
including Thailand, Indonesia and Malaysia, helped cushion the impact of
market declines. However, underweighted positions in Korea and Thailand in
January hurt performance as these two markets rallied briefly in the wake
of positive new policy announcements.
Portfolio Highlights
o Hutchison Whampoa -- Located in Hong Kong, Hutchinson Whampoa -- the
portfolio's largest holding -- outperformed the Hang Seng Index by
over 10.9% during the period. The company has benefited from strong
growth in its core container terminal and telecom businesses in Hong
Kong, and from management's ability to realize value in its portfolio
of assets world-wide. For example, the company recently sold back to
Procter & Gamble an 11% stake in Procter & Gamble China for a
substantial net gain.
o Hindustan Lever Ltd. -- Hindustan Lever, the leading Indian maker of
consumer non-durable goods, was a strong performer during the period
as a dramatic slowdown in industrial production caused cyclical stocks
to underperform more resilient consumer stocks. The company
experienced strong growth in its businesses as low-end consumer goods
increasingly became more affordable. Also helping performance was the
fact that the company possesses strong distribution channels -- a key
quality in a country the size of India and one that prevents other
domestic and multinational companies from becoming effective
competition.
o PTTEP -- A state-owned oil production and exploration company in
Thailand, PTTEP continued to increase the value of its oil and gas
assets in the Gulf of Thailand and around the region. The company's
assets, valued in U.S. dollars, were not affected by fluctuations in
the Thai baht or the domestic economy, and so the company was a
natural hedge to the turmoil in the country.
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
V
===============
Stock Selection
===============
V
==================
Portfolio
Construction
==================
o Stock & Industry
Views Relative
to Benchmark
V
==================
Portfolio Review
& Analysis
==================
o Performance
Measurement
& Attribution
o BARRA
o Risk Analysis
Key New Acquisitions
In view of the uncertain environment, we have increased our exposure to
cash-rich companies with stable cash flows and earnings:
o Berjaya Sports Toto -- Located in Malaysia, the company is involved in
the operation of Toto betting (a four-digit numbers game). The company
currently has 681 outlets nationwide, and is well positioned to
further tap consumer awareness of Toto betting.
o Hong Kong Telecom -- Hong Kong Telecom has significant cash reserves
and is generating substantial free cash flow from its existing
businesses, which makes it very defensive in Asia's current interest
rate and currency environment.
o China Light & Power (CLP) -- CLP was recently added to the portfolio
for its defensive qualities. CLP generates and supplies electricity to
Kowloon and the New Territories, and benefits from a policy of control
with the Hong Kong government that guarantees its return on assets.
Portfolio Outlook
The near-term outlook for Asia is less negative than initially feared, as
various countries are starting to take positive steps toward resolving
their economic woes. However, continued currency turmoil and the resulting
high interest rates are expected to continue in the coming months.
Moreover, investor sentiment has grown increasingly negative. Such an
environment is bound to create investment opportunities. While pursuing
these opportunities, we plan to maintain our defensive investment stance by
focusing on companies with strong balance sheets and dominant business
franchises. We will continue to employ our bottom-up strategy to identify
extremely undervalued companies in the region.
We thank you for your investment and look forward to your continued
confidence.
Sincerely,
/s/ Warwick M. Negus /s/ Alice Lui
Warwick M. Negus Alice Lui
Portfolio Manager, Portfolio Manager,
Goldman Sachs Asia Growth Fund Goldman Sachs Asia Growth Fund
/s/ Ravi Shanker /s/ Karma A. Wilson
Ravi Shanker Karma A. Wilson
Portfolio Manager, Portfolio Manager,
Goldman Sachs Asia Growth Fund Goldman Sachs Asia Growth Fund
February 27, 1998
3
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Emerging Markets Offer Long-Term Rewards
For investors willing to
assume the sometimes
significant price fluctuations
associated with emerging
market investments, the
long-term rewards may be
higher returns and lower
portfolio volatility.
Two compelling reasons for investors to consider allocating a portion of their
portfolios to emerging market countries are the potential for higher returns and
reduced overall portfolio volatility.
Diversification Can Reduce Portfolio Volatility
Emerging market countries have widely varying economies, growth rates and stages
of development. As a result, stock markets in emerging market countries
generally do not move in tandem with markets in developed countries.
Diversifying among markets can help to reduce the impact a downturn in any one
market may have on a portfolio. Over time, this can lead to lower overall
portfolio volatility.
The chart below illustrates the low correlation that stock markets in emerging
market countries have had to market performances in the U.S. over the past 10
years.
- --------------------------------------------------------------------------------
Performance of Emerging vs. U.S. Equity Markets
(MSCI EMF Index vs. S&P 500 Index)
(Rolling 10-Year Cumulative Returns)
[TABLE ILLUSTRATED BY A BAR CHART]
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992
<S> <C> <C> <C> <C> <C>
MSCI EMF 34.87% 114.70% 85.16% 188.79% 214.92%
S&P 500 16.61% 53.56% 48.80% 94.14% 108.94%
1993 1994 1995 1996 1997
MSCI EMF 439.34% 392.58% 358.39% 376.36% 312.53%
S&P 500 130.00% 133.03% 220.61% 294.22% 425.73%
</TABLE>
Source: Morgan Stanley Capital International (MSCI) Emerging Markets Free (EMF)
Index and the S&P 500 Index. The MSCI EMF Index is a market
capitalization-weighted composite of securities in over 30 emerging market
countries. The MSCI EMF Index and the S&P 500 Index (with dividends reinvested)
are unmanaged indices and the figures for the Indices do not reflect any fees or
expenses. In addition, investors cannot invest directly in the indices. The
chart is for illustrative purposes only and is not representative of any Goldman
Sachs fund. Past performance is not indicative of future results.
Emerging Country Markets Offer Greater Return Potential
Historically, emerging market countries have been among the fastest growing in
the world. On average, the rate of economic growth in emerging market countries
- -- at 6% to 8% -- is four to five percentage points greater than the growth
rates of developed countries. This can lead to greater corporate profitability
and potentially greater market returns over time.
For More Information
A mutual fund composed of emerging market stocks is one of the most convenient
ways for investors to access the benefits associated with emerging country
investing. Goldman Sachs Asset Management offers a variety of funds that invest
in emerging market countries. For more information on these and other Goldman
Sachs Funds, contact your investment professional.
4
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Performance Summary
January 31, 1998
The following graph shows the value as of January 31, 1998, of a $10,000 in-
vestment made (with the maximum sales charge of 5.5%) in Class A shares on
July 8, 1994. For comparative purposes, the performance of the Fund's bench-
mark (the Morgan Stanley All Country Asia Free ex Japan Index ("MSCI")) is
shown. This performance data represents past performance and should not be
considered indicative of future performance which will fluctuate with changes
in market conditions. These performance fluctuations will cause an investor's
shares, when redeemed, to be worth more or less than their original cost.
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
GROWTH OF A $10,000 INVESTMENT, DISTRIBUTIONS REINVESTED JULY 8, 1994 TO
JANUARY 31, 1998.
[GRAPH APPEARS HERE]
MSCI FUND
07/08/1994 10000 9450
Jul-94 10700 9847
Aug-94 11539 10473
Sep-94 11298 10520
Oct-94 11456 10567
Nov-94 10431 9933
Dec-94 10126 9705
Jan-95 9075 8934
Feb-95 9822 9504
Mar-95 9790 9471
Apr-95 9636 9316
May-95 10705 10450
Jun-95 10522 10289
Jul-95 10702 10504
Aug-95 10191 10048
Sep-95 10297 10269
Oct-95 10108 10034
Nov-95 9865 9779
Dec-95 10340 10341
Jan-96 11131 11300
Feb-96 11236 11341
Mar-96 11299 11218
Apr-96 11687 11862
May-96 11537 11842
Jun-96 11343 11465
Jul-96 10484 10656
Aug-96 10782 10773
Sep-96 10953 10793
Oct-96 10734 10485
Nov-96 11229 10999
Dec-96 11178 11165
Jan-97 11395 11186
Feb-97 11482 11097
Mar-97 10954 10651
Apr-97 10630 10431
May-97 11087 11152
Jun-97 11471 11261
Jul-97 11543 11330
Aug-97 9480 9135
Sep-97 9424 9055
Oct-97 7314 6786
Nov-97 6802 6655
Dec-97 6534 6580
Jan-98 5957 5761
SINCE INCEPTION ONE YEAR
AVERAGE ANNUAL TOTAL RETURN THROUGH JANUARY 31, 1998
CLASS A (COMMENCED JULY
8, 1994)
Excluding sales charges (12.94)% (48.49)%
Including sales charges (14.31)% (51.33)%
------------------------------------------------------
CLASS B (COMMENCED MAY
1, 1996)
Excluding redemption
charges (34.00)% (48.70)%
Including redemption
charges (35.51)% (51.27)%
------------------------------------------------------
CLASS C (COMMENCED AU-
GUST 15, 1997)(a)
Excluding redemption
charges (47.17)% n/a
Including redemption
charges (47.70)% n/a
------------------------------------------------------
INSTITUTIONAL CLASS
(COMMENCED FEBRUARY 2,
1996) (28.41)% (48.19)%
------------------------------------------------------
(a) Represents aggregate total return since the class has not been in opera-
tion for a full 12 months.
5
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - 74.1%
<C> <S> <C>
HONG KONG DOLLAR - 37.6%
1,512,000 Asia Satellite Telephone (Telecommunications) $ 2,110,586
4,272,000 Beijing Datang Power Gen-H (Utility)* 2,029,159
427,000 Cheung Kong Holdings
(Real Estate)* 2,179,979
389,000 CLP Holdings (Utility) 2,136,810
811,500 Dao Heng Bank Group (Banking) 1,206,185
2,292,000 Guangnan Holdings
(Consumer Goods)* 1,170,143
3,708,784 HKR International Ltd. (Real Estate)* 1,833,540
1,014,500 Hong Kong Electric (Utility) 3,625,556
2,884,000 Hong Kong Telecomm (Telecommunications) 6,001,344
1,214,000 Hutchison Whampoa (Telecommunications) 7,139,330
764,000 New World Development Co. (Diversified) 1,841,618
1,995,000 Ng Fung Hong (Other)* 1,882,319
575,600 Wing Hang Bank Ltd. (Banking) 840,672
4,661,000 Zhejiang Expressway (Construction)* 656,649
---------------------------------------------
34,653,890
----------------------------------------------------------------------
INDIAN RUPEE - 14.3%
1,090 Colgate Palmolive (Consumer Goods) 6,522
108,550 Hindustan Lever Ltd. (Consumer Goods) 3,636,355
197,796 ITC Ltd. (Consumer Goods) 2,844,117
644 Larsen & Toubro Ltd. (Heavy Industries) 3,066
630,400 Mahanagar Telephone (Telecommunications)* 3,535,296
350 Mahindra & Mahindra Ltd. (Automotive) 2,223
400 Niit Ltd. (Technology) 6,986
176,250 Ranbaxy Labs (Consumer Goods)* 3,143,087
---------------------------------------------
13,177,652
----------------------------------------------------------------------
INDONESIAN RUPIAH - 1.2%
1,819,500 Daya Guna Samudera (Consumer Goods) 1,079,006
----------------------------------------------------------------------
MALAYSIAN RINGGIT - 2.2%
430,000 Berjaya Sports (Leisure) 981,688
623,000 Tenaga Nasional Berhad (Utility) 1,051,914
---------------------------------------------
2,033,602
----------------------------------------------------------------------
NEW TAIWAN DOLLAR - 1.1%
207,000 Siliconware Precis (Technology) 502,279
134,000 Taiwan Semiconductor (Technology) 463,089
---------------------------------------------
965,368
----------------------------------------------------------------------
PHILIPPINE PESO - 3.6%
3,240,000 Ayala Land Inc. (Real Estate) 1,130,233
290,270 Manila Electric Co. (Utility) 911,313
7,320 Metro Bank & Trust Co. (Banking) 42,558
52,000 Philippine Long Distance (Telecommunications) 1,263,721
---------------------------------------------
3,347,825
----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
SINGAPORE DOLLAR - 11.3%
372,000 City Developments (Real Estate) $ 1,160,805
167,000 Overseas Chinese Bank (Financial Services)* 696,442
1,257,000 Parkway Holdings (Consumer Goods) 1,898,880
153,000 Rothmans Industries (Consumer Goods) 758,530
150,000 Singapore Airlines (Transportation)* 979,878
272,000 Singapore Press Holdings (Media) 3,537,824
684,000 Singapore Telecomm (Telecommunications)* 1,356,430
-------------------------------------------
10,388,789
--------------------------------------------------------------------
THAILAND BAHT - 2.8%
947,000 Bangkok Expressway (Construction)* 722,668
161,800 PTT Exploration & Production
(Energy Source) 1,864,918
-------------------------------------------
2,587,586
--------------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $89,772,478) $68,233,718
--------------------------------------------------------------------
</TABLE>
6 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
<TABLE>
<CAPTION>
UNITS/PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C> <C>
STRUCTURED NOTE - 12.8%
US DOLLAR - 12.8%
783,987 units Taiwan Index Linked Note $ 7,236,200
492,926 units Taiwan Index Note 4,529,990
------------------------------------------------------------------------
TOTAL STRUCTURED NOTES
(COST $15,860,795) $ 11,766,190
------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 5.3%
US DOLLAR - 5.3%
$4,920,110 State Street Bank Euro-Time Deposit
5.56%, 02/02/98(b) $ 4,920,110
------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATION $ 4,920,110
------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $110,553,383) (A) $ 84,920,018
</TABLE>
------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
FEDERAL INCOME
TAX INFORMA-
TION:
Gross
unrealized gain
for investments
in which value
exceeds cost $ 3,430,898
Gross
unrealized loss
for investments
in which cost
exceeds value (31,819,749)
------------------------------
Net unrealized
loss $(28,388,851)
------------------------------
</TABLE>
Futures contracts open at January 31, 1998 are as follows:
<TABLE>
<CAPTION>
Number of Settlement Unrealized
Type Short(c) Month Loss
--------------- --------- ------------- ----------
<S> <C> <C> <C>
Hang Seng Index 22 February 1998 $53,843
</TABLE>
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $113,308,869.
(b) Portion of this security is being segregated as collateral for futures
contracts.
(c) Each Hang Seng Index represents 50 HKD x index value at time of purchase
in notional par value. The total net notional amount and market value at
risk are $1,274,353 and $1,220,510, respectively. The determination of
notional amounts does not consider market risks factors and therefore
notional amounts as presented here are indicative of volume of activity
and not a measure of market risks.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
<TABLE>
<S> <C>
COMMON STOCK INDUSTRY CONCENTRATIONS
Automotive 0.0%
Banking 2.3%
Construction 1.5%
Consumer Goods 15.8%
Diversified 2.0%
Energy Sources 2.0%
Financial Services 0.8%
Heavy Industry 0.0%
Leisure 1.1%
Media 3.8%
Other 2.0%
Real Estate 6.8%
Technology 1.1%
Telecommunications 23.2%
Transportation 1.1%
Utility 10.6%
--------------------------------------------
TOTAL COMMON STOCK 74.1%
--------------------------------------------
</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, 1998
ASSETS:
<TABLE>
<S> <C> <C>
Investment in securities, at value (identified cost
$110,553,383) $ 84,920,018
Cash, at value 3,633,162
Receivables:
Fund shares sold 4,569,167
Dividends and interest, at value 70,738
Deferred organization expenses, net 45,380
Other assets 14,334
-----------------------------------------------------------------------------
TOTAL ASSETS 93,252,799
-----------------------------------------------------------------------------
LIABILITIES:
Payables:
Fund shares repurchased 134,703
Capital gains tax 505,583
Amounts owed to affiliates 281,380
Accrued expenses and other liabilities 225,606
-----------------------------------------------------------------------------
TOTAL LIABILITIES 1,147,272
-----------------------------------------------------------------------------
NET ASSETS:
Paid-in capital 191,631,821
Accumulated undistributed net investment income 137,887
Accumulated distributions in excess of net realized gains
on investment and futures transactions (50,144,575)
Accumulated net realized foreign currency loss (23,485,151)
Net unrealized loss on investments and futures (18,360,285)
Net unrealized loss on translation of assets and
liabilities denominated in foreign currencies (7,674,170)
-----------------------------------------------------------------------------
NET ASSETS $ 92,105,527
-----------------------------------------------------------------------------
</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) 10,430,282 404,337 52,511
Net asset and Class A redemption value per
share(a) $8.38 $8.31 $8.29
Maximum public offering price per share
(Class A NAV X 1.0582) $8.87 $8.31 $8.29
-----------------------------------------------------------------------------
<CAPTION>
INSTITUTIONAL
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Total shares of beneficial interest
outstanding, $.001 par value (unlimited
shares authorized) 103,588
Net asset value, offering and redemption
price per share $8.44
-----------------------------------------------------------------------------
</TABLE>
(a) 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.
8 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Statement of Operations
For the Year Ended January 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends(a) $ 3,567,537
Interest 909,396
------------------------------------------------------------------------------
TOTAL INCOME 4,476,933
------------------------------------------------------------------------------
EXPENSES:
Management fees 2,179,299
Distribution fees 544,964
Authorized dealer service fees 524,028
Transfer agent fees 370,233
Custodian fees 392,707
Professional fees 75,733
Amortization of deferred organization expenses 31,733
Trustee fees 3,657
Other 168,640
------------------------------------------------------------------------------
TOTAL EXPENSES 4,290,994
------------------------------------------------------------------------------
Less -- expenses reimbursed and fees waived by Goldman Sachs (513,104)
------------------------------------------------------------------------------
NET EXPENSES 3,777,890
------------------------------------------------------------------------------
NET INVESTMENT INCOME 699,043
------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENT, FUTURES AND FOR-
EIGN CURRENCY TRANSACTIONS:
Net realized loss from:
Investment transactions(b) (31,911,904)
Futures transactions (957,101)
Foreign currency related transactions (24,461,103)
Net change in unrealized loss on:
Investments (51,320,817)
Futures (53,843)
Translation of assets and liabilities denominated in foreign
currencies (5,678,939)
------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENT, FUTURES AND
FOREIGN CURRENCY TRANSACTIONS (114,383,707)
------------------------------------------------------------------------------
NET DECREASE IN ASSETS RESULTING FROM OPERATIONS $(113,684,664)
------------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $272,188.
(b) Net of capital gains taxes withheld of $531,662.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 9
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JANUARY 31, 1998 JANUARY 31, 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 699,043 $ 538,846
Net realized loss on investment and
futures transactions (32,869,005) (7,436,150)
Net realized loss on foreign currency
related transactions (24,461,103) (1,099,538)
Net change in unrealized gain (loss) on
investments and futures (51,374,660) 5,823,115
Net change in unrealized loss on
translation of assets and liabilities
denominated in foreign currencies (5,678,939) (599,549)
------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS (113,684,664) (2,773,276)
------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A shares (455,983) (206,784)
Class B shares -- --
Class C shares -- --
Institutional shares (22,635) --
In excess of net investment income
Class A shares -- --
Class B shares (10,435) (5,064)
Class C shares (617) --
Institutional shares -- (83,075)
------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (489,670) (294,923)
------------------------------------------------------------------------------
FROM SHARE TRANSACTIONS:
Net proceeds from sales of shares 94,368,053 144,448,826
Reinvestment of dividends and
distributions 587,801 221,279
Cost of shares repurchased (168,365,597) (67,451,011)
------------------------------------------------------------------------------
NET DECREASE (INCREASE) IN NET ASSETS
RESULTING FROM SHARE TRANSACTIONS (73,409,743) 77,219,094
------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) (187,584,077) 74,150,895
------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 279,689,604 205,538,709
------------------------------------------------------------------------------
End of year $ 92,105,527 $279,689,604
------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS
IN EXCESS OF) NET INVESTMENT INCOME $ 137,887 $ (1,316,323)
------------------------------------------------------------------------------
</TABLE>
10 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements
January 31, 1998
1. ORGANIZATION
Effective May 1, 1997, Goldman Sachs Equity Portfolios, Inc. was reorganized
from a Maryland corporation to a Delaware business trust named the Goldman
Sachs Trust (the "Trust"). The Trust includes the Goldman Sachs Asia Growth
Fund (the "Fund"). The Trust is registered under the Investment Company Act
of 1940, as amended, as an open-end, management investment company. At Janu-
ary 31, 1998, the Asia Growth Fund offered five classes of shares--Class A,
Class B, Class C, Institutional and Service (Service shares have not com-
menced 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.
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 or
NASDAQ. If no sale occurs, securities traded on a U.S. exchange or NASDAQ are
valued at the mean between the closing bid and asked price, and securities
traded on a foreign exchange will be valued at the official bid price. Un-
listed equity and debt securities for which market quotations 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 prices. Debt securities are
valued at prices supplied by an independent pricing service, which reflect
broker / dealer-supplied valuations and matrix pricing systems. Short-term
debt obligations maturing in sixty days or less are valued at amortized cost.
Restricted securities, and other securities for which quotations are not
readily available, are valued at fair value using methods approved by the
Board of Trustees of the Trust.
B. Securities Transactions and Investment Income -- Securities transactions
are recorded on the trade date. Realized gains and losses on sales of invest-
ments are calculated on the identified-cost basis. Dividend income is re-
corded on the ex-dividend date. Dividends for which the Fund has the choice
to receive either cash or stock are recognized as investment income in an
amount equal to the cash dividend. Interest income is determined on the basis
of interest accrued, premium amortized and discount earned. In addition, it
is the Fund's policy to accrue for estimated capital gains taxes on 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.
C. DERIVATIVE FINANCIAL INSTRUMENTS -- STRUCTURED NOTES
Subject to its investment restrictions, the fund may utilize derivative fi-
nancial 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 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 risk and loss than other types of fixed
income securities. At January, 31, 1998 and for the year then ended, the av-
erage fair value of structured notes held by the fund and the net unrealized
loss arising from trading such securities were $12,215,316 and $4,094,605,
respectively.
11
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements (continued)
January 31, 1998
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
valuations, 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 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 and investments; (ii) gains and losses between
trade date and settlement date on investment securities transactions and for-
ward exchange contracts; and (iii) gains and losses from the difference be-
tween amounts of dividends and interest recorded and the amounts actually
received.
E. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Fund is authorized to
enter into forward foreign currency exchange contracts for the purchase 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 or to
seek to increase total return. All commitments are "marked-to-market" daily
at the applicable translation rates and any resulting unrealized gains or
losses are recorded in the Fund's financial statements. The Fund records re-
alized gains or losses at the time the forward contract is offset by entry
into a closing transaction or extinguished by delivery of the currency. Risks
may arise upon entering these contracts 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.
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
provisions are required. The characterization of distributions to sharehold-
ers 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 in-
vestment income or net realized gain on investment transactions, or from cap-
ital, 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 $184,000, $5,487,000, $10,408,000 and
$14,137,000 at October 31, 1997 (the Fund's tax year end) of capital loss
carryforwards expiring in 2002, 2003, 2004 and 2005, respectively, 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.
12
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
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
each Fund's relative net assets.
Class A, Class B and Class C shares bear all expenses and fees relating to
the distribution and authorized dealer service plans as well as other ex-
penses which are directly attributable to such shares. Each class of shares
separately bears their respective class-specific transfer agency fees.
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 or currency exchange
rates or to seek to increase total return.
Upon entering into a futures contract, the Fund is required to deposit with
a broker, an amount of cash or securities equal to the minimum "initial mar-
gin" requirement of the respective futures. Subsequent payments for futures
contracts ("variation margin") are paid or received by the Fund daily, depen-
dent on the daily fluctuations in the value of the contracts, and are re-
corded as unrealized gains or losses. When contracts are closed, the Fund
realized 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.
13
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements (continued)
January 31, 1998
3. AGREEMENTS
As of May 1, 1997, the Fund's Investment Advisory and Administration Agree-
ments were combined into an Investment Management Agreement (the "Agreement")
encompassing the same services and fee structure. Goldman Sachs Asset Manage-
ment International ("GSAM International") an affiliate of Goldman, Sachs &
Co. ("Goldman Sachs"), acts as investment adviser. Under the Agreement, GSAM
International, 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,
GSAM International 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.
Goldman Sachs has voluntarily agreed to reduce or limit certain "Other Ex-
penses" for the Fund (excluding management, service, distribution and autho-
rized dealer service fees and litigation and indemnification costs, taxes,
interest, brokerage commissions, transfer agent fees and extraordinary ex-
penses) until further notice to the extent such expenses exceed .24% of the
average daily net assets of the Fund. For the year ended January 31, 1998,
Goldman Sachs has reimbursed approximately $126,000. At January 31, 1998, ap-
proximately $4,700 is owed to the Fund.
Goldman Sachs serves as the Distributor of shares of the Fund pursuant to
Distribution Agreements. Goldman Sachs may receive a portion of the Class A
sales load and Class B and Class C contingent deferred sales charges imposed
and has advised the Fund that it retained approximately $414,000 during the
year ended January 31, 1998.
The Trust has adopted Distribution Plans (the "Distribution Plans") pursu-
ant to Rule 12b-1. Under the Distribution Plans, Goldman Sachs is 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 attrib-
utable to Class A, Class B and Class C shares, respectively.
For the year ended January 31, 1998, the Distributor has voluntarily agreed
to waive approximately $82,000 of its distribution fee attributable to the
Class A shares and the Manager has agreed to waive $305,000 of its management
fee attributable to all classes. The Distributor and Manager may discontinue
or modify these waivers in the future at their discretion.
The Trust has adopted Authorized Dealer Service Plans (the "Service Plans")
pursuant to which Goldman Sachs and Authorized Dealers are compensated for
providing personal and account maintenance services. The Fund pays a fee un-
der its Service Plan equal, on an annual basis, to .25% of its average daily
net assets attributable to Class A, Class B and Class C shares. Goldman Sachs
also serves as the Transfer Agent of the Fund for a fee.
At January 31, 1998, the Fund owed approximately $64,000, $64,000, $65,000
and $88,000 for Management, Distribution, Authorized Dealer Service and
Transfer Agent fees, respectively.
14
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
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,
1998, were $209,322,562 and $288,302,543, respectively.
For the year ended January 31, 1998, Goldman Sachs earned approximately
$74,000 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, 1998, the Fund did not have
any borrowings under these facililties.
15
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Notes to Financial Statements (continued)
January 31, 1998
6. SUMMARY OF SHARE TRANSACTIONS
Share activity for the years ended January 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JANUARY 31, 1998 FOR THE YEAR ENDED JANUARY 31, 1997
---------------------------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Shares sold 7,223,511 $ 87,540,626 7,588,351 $ 124,281,405
Reinvestments of divi-
dends and distributions 43,677 582,740 11,669 184,607
Shares repurchased (12,959,028) (156,582,479) (3,945,614) (63,723,269)
---------------------------------------------------------------------------
(5,691,840) (68,459,113) 3,654,406 60,742,743
----------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares sold 303,767 4,001,854 210,879 3,433,876
Reinvestments of divi-
dends and distributions 718 9,264 279 4,391
Shares repurchased (106,535) (1,359,625) (4,771) (76,391)
---------------------------------------------------------------------------
197,950 2,651,493 206,387 3,361,876
----------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares sold 70,257 777,621 -- --
Reinvestments of divi-
dends and distributions 48 (185) -- --
Shares repurchased (17,794) (163,196) -- --
---------------------------------------------------------------------------
52,511 614,240 -- --
----------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
Shares sold 163,318 2,047,952 1,041,822 16,733,545
Reinvestments of divi-
dends and distributions 277 (4,018) 2,040 32,281
Shares repurchased (875,506) (10,260,297) (228,363) (3,651,351)
---------------------------------------------------------------------------
(711,911) (8,216,363) 815,499 13,114,475
----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (6,153,290) $ (73,409,743) 4,676,292 $ 77,219,094
----------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
7. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund reclassified
$1,384,341 from paid-in capital to accumulated undistributed net investment
income, $1,387,871 from accumulated undistributed net investment income to
accumulated net realized foreign currency loss, $1,248,367 from accumulated
undistributed net realized loss on investment and futures transactions to ac-
cumulated undistributed net investment income and $466 from paid-in capital
to accumulated undistributed net realized loss on investment and futures
transactions.
17
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS(E) DISTRIBUTIONS TO SHAREHOLDERS
-------------------------------------------------- -----------------------------------
FROM NET
NET ASSET NET NET REALIZED NET REALIZED IN EXCESS REALIZED GAIN NET INCREASE
VALUE, INVESTMENT AND UNREALIZED AND UNREALIZED FROM NET OF NET ON INVESTMENT (DECREASE)
BEGINNING INCOME GAIN (LOSS) ON LOSS ON FOREIGN CURRENCY INVESTMENT INVESTMENT AND FUTURES IN NET ASSET
OF PERIOD (LOSS) INVESTMENTS RELATED TRANSACTIONS INCOME INCOME TRANSACTIONS VALUE
FOR THE YEARS ENDED JANUARY 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 - Class A
Shares $16.31 $ -- $(5.78) $(2.12) $ -- $(0.03) $ -- $(7.93)
1998 - Class B
Shares 16.24 0.01 (5.79) (2.12) -- (0.03) -- (7.93)
1998 - Class C
Shares(b) 15.73 0.01 (5.43) (1.99) -- (0.03) -- (7.44)
1998 - Institu-
tional Shares 16.33 0.10 (5.83) (2.13) (0.03) -- -- (7.89)
--------------------------------------------------------------------------------------------------------------------------------
1997 - Class A
Shares 16.49 0.06 (0.11) -- (0.12) -- (0.01) (0.18)
1997 - Class B
Shares(b) 17.31 (0.05) (0.48) -- (0.51) (0.03) -- (1.07)
1997 - Institu-
tional Shares(b) 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(b) 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) Class A, Class B, Class C and Institutional share activity commenced
on July 8, 1994, May 1, 1996, August 15, 1997 and February 2, 1996,
respectively.
(c) Annualized.
(d) Not annualized.
(e) Includes the balancing effect of calculating per share amounts.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate on security
transactions on which commissions are charged. This rate may vary
due to various types of transactions and number of security trades
executed.
18 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<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 PORTFOLIO AVERAGE AT END OF NET EXPENSES INCOME (LOSS) TO EXPENSES TO INCOME (LOSS) TO
VALUE, END TOTAL TURNOVER COMMISSION PERIOD TO AVERAGE AVERAGE NET AVERAGE NET AVERAGE NET
OF PERIOD RETURN(A) RATE RATE(F) (IN 000S) NET ASSETS ASSETS ASSETS ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 8.38 (48.49)% 105.16% $.0070 $87,437 1.75% 0.31% 1.99% 0.07%
8.31 (48.70) 105.16 .0070 3,359 2.30 (0.29) 2.50 (0.49)
8.29 (47.17)(d) 105.16 .0070 436 2.35(c) (0.26)(c) 2.55(c) (0.46)(c)
8.44 (48.19) 105.16 .0070 874 1.11 0.87 1.31 0.67
- -----------------------------------------------------------------------------------------------------------------------------
16.31 (1.01) 48.40 .0151 263,014 1.67 0.20 1.87 0.00
16.24 (6.02)(d) 48.40 .0151 3,354 2.21(c) (0.56)(c) 2.37(c) (0.72)(c)
16.33 (1.09)(d) 48.40 .0151 13,322 1.10(c) 0.54(c) 1.26(c) 0.38 (c)
- -----------------------------------------------------------------------------------------------------------------------------
16.49 26.49 88.80 -- 205,539 1.77 1.05 2.02 0.80
- -----------------------------------------------------------------------------------------------------------------------------
13.31 (5.46)(d) 36.08 -- 124,298 1.90(c) 1.83(c) 2.38(c) 1.35 (c)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
GOLDMAN SACHS ASIA GROWTH FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of Goldman 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, 1998, and the related statement of op-
erations and the statement 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, 1998 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, 1998, 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 12, 1998
20
<PAGE>
GOLDMAN SACHS FUND PROFILE
Goldman Sachs Asia Growth Fund
THE GOLDMAN
SACHS ADVANTAGE
When you invest in the Goldman Sachs Asia Growth Fund, you can capitalize on
Goldman Sachs' history of excellence while benefiting from the firm's leadership
in three areas:
1
Global Resources
With more than 10,600 professionals based in 35 offices in 19 countries
throughout the Americas, Europe and Asia, Goldman Sachs possesses first-hand
knowledge of the world's markets and economies.
2
Fundamental Research
Goldman Sachs is recognized by the managements of corporations worldwide as a
leader in investment research. As a result, we obtain face-to-face meetings with
managers on a timely, regular basis.
3
Risk Management
Goldman, Sachs & Co. excels in understanding, monitoring and managing investment
risk -- a process that is integrated into all Goldman Sachs investment products.
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 any additional
charge. (Please note: in general, greater returns are associated with greater
risk.)
- --------------------------------------------------------------------------------
Goldman Sachs International Equity Funds
[THE FOLLOWING TABLE WAS REPRESENTED BY A CHART IN THE PRINTED MATERIAL]
<TABLE>
<CAPTION>
[Fund Risk/Return]
<S> <C>
Higher ASIA GROWTH FUND
Risk/Return
Emerging Markets Equity Fund
International Equity Fund
Lower
Risk/Return CORE International Equity Fund
</TABLE>
For More Information
To learn more about the Goldman Sachs Asia Growth Fund and other Goldman Sachs
Funds, call your investment professional today.
<PAGE>
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GOLDMAN SACHS ASSET MANAGEMENT
ONE NEW YORK PLAZA, 42ND FLOOR, NEW YORK, NEW YORK 10004
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TRUSTEES
Ashok N. Bakhru, Chairman
David B. Ford
Douglas C. Grip
John P. McNulty
Mary P. McPherson
Alan A. Shuch
Jackson W. Smart, Jr.
William H. Springer
Richard B. Strubel
OFFICERS
Douglas C. Grip, President
James A. Fitzpatrick, Vice President
John W. Mosior, Vice President
Nancy L. Mucker, Vice President
Scott M. Gilman, Treasurer
John M. Perlowski, Assistant Treasurer
Michael J. Richman, Secretary
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
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.
Goldman, Sachs & Co., distributor of the Fund, is not a bank, and Fund shares
distributed by it are neither bank deposits nor obligations of, nor endorsed,
nor guaranteed by any bank or other insured depository institution, nor are they
insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve
Board or any other government agency. Investment in the Fund involves risks,
including possible loss of the principal amount invested.
The Fund's foreign investments and active management techniques are subject to
risks in addition to those customarily associated with investing in
dollar-denominated securities of U.S. issuers. In particular, the securities
markets of emerging countries in which the Fund 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.
The Lipper rankings shown in this report are based on relative performance
within an individual fund's Lipper category. Please be advised that certain
differences do exist among the funds; for example, there may be differences in
investment policies, risks, fees and expense ratios, and Goldman Sachs strongly
recommends that these factors be taken into consideration before an investment
decision is made.
(C)Copyright 1998 Goldman, Sachs & Co. All rights reserved.
Date of first use: March 31, 1998 AGAR / 47K / 3-98
