<PAGE>
Goldman Sachs Funds
================================================================================
CORE EQUITY FUNDS Annual Report January 31, 1998
================================================================================
Long-term capital growth potential
through diversified portfolios of
stocks with attractive quantitative
and qualitative rankings.
[GRAPHIC]
[LOGO]
Goldman
Sachs
<PAGE>
MARKET OVERVIEW
Goldman Sachs CORE Equity Funds
Dear Shareholder,
The world's bourses turned in widely diverse performances in 1997. The U.S.
market soared, while Asian markets plummeted. Consistency came in the form of
larger cap stocks, which were undeniably the performance leaders over their mid-
and small-cap stock brethren.
o The U.S. Equity Market: An Upward Climb Marked by Periods of
Volatility -- Early in the year, market volatility resulting from
uncertainty regarding Federal Reserve policy eased after economic
indicators reassured investors that further rate hikes were unlikely.
Renewed investor confidence and a positive economy sent the market
soaring through the remainder of the year. Waxing and waning investor
sentiment, however, continued to cause a degree of market volatility.
Most notably, in October, investor uncertainty helped foster a
temporary overreaction to falling Asian markets. The market dropped
precipitously, posting the largest single-day decline in nearly a
decade. In the aftermath, the market firmed as investors accepted the
argument that Asian market weakness would likely have little impact on
U.S. companies.
o International Equity Markets: Market Performances Vary Widely -- In
1997, Europe's overall economic recovery continued, but growth for
specific countries was mixed. Political will for European Monetary
Union and fundamental themes -- including loose monetary policy and
subdued inflation -- helped support stock performance. Conversely,
Japan's market turned in lackluster performance. Investors, unnerved
by the government's austerity program and a series of corporate
bankruptcies, chose to focus on international blue-chip stocks that
benefited from the yen's weakness. Additional bad news came in the
form of Asia's market woes, which propelled the Tokyo market into a
decline. In Asia, markets remained weak throughout the first half of
the year. The region's highly leveraged economies were severely
impacted in the second half of the year, following a decision by Thai
authorities to allow their currency to devalue. In the aftermath,
investors saw sharply lower asset prices, higher yields, extreme
volatility and widely varying liquidity conditions.
o Outlook -- Going forward, we believe the fundamental strengths of the
U.S. economy will remain intact. However, we believe the domestic
market will produce returns close to the historic norm -- a scenario
that should be accompanied by more normal levels of volatility.
Europe's domestic economy is well positioned to withstand the moderate
global shock resulting from Asia's market downturn, as both monetary
and fiscal policy underpin Europe's economic growth. In Japan, we are
reasonably optimistic about the prospects for the equity market, as it
is moderately undervalued relative to interest rates and compared with
many of the conventional valuation measures. In Asia, we anticipate
further weakness in the markets and currencies, as investors await the
reforms that will attract capital back into these markets.
We encourage you to maintain your long-term investment program, and
look forward to serving your investment needs in the years ahead.
Sincerely,
/s/ David B. Ford /s/ John P. McNulty
David B. Ford John P. McNulty
Co-Head, Goldman Sachs Co-Head, Goldman Sachs
Asset Management Asset Management
February 27, 1998
<PAGE>
FUND BASICS
CORE U.S. Equity Fund
as of January 31, 1998
Assets Under Management
-----------------------
$674.6 Million
-----------------------
Number of Holdings
-----------------------
164
-----------------------
NASDAQ SYMBOLS
Class A Shares
-----------------------
GSSQX
-----------------------
Class B Shares
-----------------------
GSSBX
-----------------------
Class C Shares
-----------------------
GSUSX
-----------------------
Institutional Shares
-----------------------
GSELX
-----------------------
Service Shares
-----------------------
GSESX
-----------------------
================================================================================
PERFORMANCE REVIEW
================================================================================
<TABLE>
<CAPTION>
January 31, 1997- Fund Total Return S&P 500
January 31, 1998 (based on NAV)(1) Index(2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A 24.96% 26.92%
Class B 24.28% 26.92%
Class C (8/15/97-1/31/98) 4.85% 6.78%
Institutional 25.76% 26.92%
Service 25.11% 26.92%
- --------------------------------------------------------------------------------
</TABLE>
(1) The net asset value represents the net assets of the Fund (ex-dividend)
divided by the total number of shares.
(2) The S&P 500 Index (with dividends reinvested) figures do not reflect any
fees or expenses. In addition, 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 Service
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Last 12 Months 24.56% 25.57% N/A 32.67% 32.02%
Five Years 18.47% N/A N/A N/A N/A
Since Inception 15.31% 23.47% 3.41% 27.95% 26.38%
(5/24/91) (5/1/96) (8/15/97) (6/15/95) (6/7/96)
- --------------------------------------------------------------------------------
</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
$28.14 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>
General Electric Co. 3.8% Electric Equipment
Exxon Corp. 2.1% Energy
Ford Motor Company 1.8% Automotive
Philip Morris Co. Inc. 1.7% Tobacco
American International Group Inc. 1.6% Financial Services
Bristol Myers-Squibb Co. 1.5% Pharmaceuticals
Microsoft Corp. 1.5% Computer Software
Royal Dutch Pete Co. 1.5% Energy
AT&T Corp. 1.5% Telecommunications
GTE Corporation 1.5% Telecommunications
- --------------------------------------------------------------------------------
</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.
1
<PAGE>
PERFORMANCE OVERVIEW
CORE U.S. Equity Fund
Dear Shareholder,
We are pleased to report on the performance of the Goldman Sachs CORE U.S.
Equity Fund for the 12-month period ending January 31, 1998.
Performance Review: Strong Performance Relative to Peers
The total returns of the Fund's share classes fared well in the peer
rankings for the one-year period ended January 31, 1998, according to
Lipper Analytical Services, Inc. The Fund's Class A shares, Institutional
and Service shares ranked in the top 25% of all funds in the Lipper Growth
Fund category (placing 209, 153 and 197, respectively, out of 846 funds.
For the five-year period, Class A shares ranked 62 out of 322 funds). Class
B shares ranked in the top 30% of all funds (243 out of 846 funds. Class C
shares were not ranked because their performance records are 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).
Sector Allocations
In general, the Fund's sector exposures stem from the Fund's "bottom-up,"
individual stock selection process, not from economic forecasts for
specific sectors. With this in mind, the Fund had a slight tilt toward
defensive, value stocks, and maintained slight underweightings in "pricey"
sectors and cyclical sectors.
Portfolio Highlights
The CORE investment process includes analysis of each stock based upon its
Value, Momentum and Risk characteristics. Throughout the period under
review, the Fund placed above-average emphasis on defensive, value-oriented
securities. This proved beneficial to performance as large-cap value stocks
outperformed large-cap growth stocks over the 12-month period ended January
31, 1998. Furthermore, the qualitative stock insights produced by Goldman
Sachs' Global Investment Research Department contributed to strong results.
Noteworthy company performance spanned a diverse group of sectors.
o The Fund benefited from its positions in healthcare, as pharmaceutical
holdings generated strong returns over the period. These companies
included Pfizer Inc. (up 78.97%), Schering Plough Corp. (up 94.51%)
and Warner Lambert Co. (up 88.44%).
o Our bias toward the consumer services sector was rewarded via
positions in general merchandisers such as Dayton Hudson Corp. (up
93.66%), as well as building materials and home improvement supplier
Home Depot Inc. (up 84.08%).
o In the financial sector, Morgan Stanley, Dean Witter Discover & Co.
(up 7.86% since the position was initiated in November 1997) produced
positive results.
2
<PAGE>
PERFORMANCE OVERVIEW
The Goldman Sachs CORE U.S. Equity Fund seeks long-term capital growth and
dividend income by investing in a broadly diversified portfolio of large-cap and
blue-chip equity securities representing all major sectors of the U.S. economy.
================================================================================
CORE INVESTMENT PROCESS (Computer Optimized, Research Enhanced)
================================================================================
------------------ -----------------
Computer Optimized + Research Enhanced
------------------ -----------------
o Risk management tools o Fundamental Research from
designed to minimize Goldman Sachs' Global
industry and style risk. Investment Research
Department and other
o Emphasis on stock research sources.
selection with attention
to attractive o Quantitative insights
quantitative and from proprietary
qualitative ratings. multi-factor model rank
each stock by its value,
o Construct portfolio with momentum and risk
maximum expected return characteristics.
forecast within risk
guidelines.
\/
------------
CORE Process
------------
Result: A risk-controlled portfolio grounded by a
rigorous quantitative model and enhanced by fundamental
research.
- --------------------------------------------------------------------------------
Portfolio Outlook
We intend to maintain our disciplined, long-term approach and defensive
stance, as the cautionary conditions that initially motivated us to assume
this position -- the market's increasing volatility and historically low
risk premiums -- have not yet abated. In fact, in view of the market's
recent behavior, we intend to strengthen our focus on value-oriented, lower
volatility stocks.
We thank you for your investment and look forward to your continued
confidence.
Sincerely,
/s/ Robert C. Jones /s/ Kent A. Clark /s/ Victor H. Pinter
Robert C. Jones Kent A. Clark Victor H. Pinter
Portfolio Manager, Portfolio Manager, Portfolio Manager,
CORE U.S. Equity Fund CORE U.S. Equity Fund CORE U.S. Equity Fund
February 27, 1998
3
<PAGE>
FUND BASICS
CORE Large Cap Growth Fund
as of January 31, 1998
Assets Under Management
-----------------------
$76.5 Million
Number of Holdings
-----------------------
136
NASDAQ SYMBOLS
Class A Shares
-----------------------
GLCGX
-----------------------
Class B Shares
-----------------------
GCLCX
-----------------------
Class C Shares
-----------------------
GLCCX
-----------------------
Institutional Shares
-----------------------
GCGIX
-----------------------
Service Shares
-----------------------
GSCLX
-----------------------
================================================================================
PERFORMANCE REVIEW
================================================================================
<TABLE>
<CAPTION>
January 31, 1997- Fund Total Return Russell 1000
January 31, 1998 (based on NAV)(1) Growth Index(2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A(4) 26.57% 25.58%
Class B (5/1/97-1/31/98) 23.26% 25.35%
Class C (8/15/97-1/31/98) 4.56% N/A
Institutional(4) 26.67% 25.58%
Service (5/1/97-1/31/98) 23.56% 25.35%
- --------------------------------------------------------------------------------
</TABLE>
(1) The net asset value represents the net assets of the Fund (ex-dividend)
divided by the total number of shares.
(2) The Russell 1000 Growth Index (with dividends reinvested) figures do not
reflect any fees or expenses. In addition, investors cannot invest directly
in the Index.
================================================================================
SEC AVERAGE ANNUAL TOTAL RETURN(3)
================================================================================
<TABLE>
<CAPTION>
For the period Class B Class C Service
ending 12/31/97 Class A(4) (Cumulative)(5) (Cumulative)(5) Institutional(4) (Cumulative)(5)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Last 12 Months 24.81% N/A N/A 32.28% N/A
Five Years 21.92% N/A N/A 23.26% N/A
Since Inception 19.76% 15.92% 1.61% 20.93% 21.29%
(11/11/91) (5/1/97) (8/15/97) (11/11/91) (5/1/97)
- -------------------------------------------------------------------------------------------------------------
</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
$12.67 and represents the NAV plus the maximum sales charge of 5.5%.
(4) Performance data for Institutional shares prior to May 1, 1997
(commencement of operations) is that of Class A shares. Class A share
performance for such period is that of a predecessor separate account
(which converted into Class A shares) adjusted to reflect the higher fees
and expenses applicable to the Fund's Class A shares. Although the
predecessor separate account was managed by Goldman Sachs Asset Management
in a manner and pursuant to investment objectives in all material respects
equivalent to management and investment objectives of the CORE Large Cap
Growth Fund, the separate account was not registered under the Investment
Company Act of 1940 (the "Act") and was not subject to certain investment
restrictions imposed by the Act. If it had registered under the Act,
performance might have been adversely affected.
(5) 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>
Microsoft Corp. 3.0% Computer Software
Dayton Hudson Corp. 2.8% Department Stores
American International Group Inc. 2.7% Financial Services
General Electric Co. 2.7% Electric Equipment
Intel Corp. 2.6% Semiconductors
The Travelers Group Inc. 2.5% Property Insurance
Merrill Lynch Co. Inc. 2.1% Financial Services
Best Buy Co. Inc. 2.0% Home Products
Pfizer Inc. 2.0% Pharmaceuticals
Abbott Laboratories 1.8% Medical Products
- --------------------------------------------------------------------------------
</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.
4
<PAGE>
PERFORMANCE OVERVIEW
CORE Large Cap Growth Fund
Dear Shareholder,
We are pleased to report on the performance of the Goldman Sachs CORE Large Cap
Growth Fund for the 12-month period ended January 31, 1998.
Performance Review: Strong Performance Relative to Benchmark
For the 12-month period ended January 31, 1998, the Fund's Class A shares
generated an average annual total return of 26.57% (based on NAV),
outperforming the 25.58% return generated by the Fund's benchmark, the
Russell 1000 Growth Index.
Sector Allocations
In general, the Fund's sector exposures stem from our bottom-up stock
selection process and are not the result of an explicit top-down decision
to overweight or underweight any given sector. With this in mind, during
the period the Fund was underweighted in consumer services and technology,
and overweighted in finance and consumer cyclicals.
Portfolio Highlights
The CORE investment process analyzes each stock based upon its Value,
Momentum and Risk characteristics. In general, throughout the fiscal year,
the Fund had an above-average tilt towards low-risk, "cheaper" securities
within the growth universe. This proved beneficial to performance, as
large-cap value stocks outperformed large-cap growth stocks over the
12-month period ended January 31, 1998. In addition, qualitative stock
recommendations produced by Goldman Sachs' Global Investment Research
Department contributed to strong results.
Noteworthy company performance spanned a diverse group of sectors.
o The Fund benefited from its positions in healthcare, as pharmaceutical
holdings generated strong returns over the period. These companies
included Pfizer Inc. (up 78.97%), Schering Plough Corp. (up 94.51%)
and Warner Lambert Co. (up 88.44%).
o Technology holdings contributing to portfolio performance included
Compaq Computer Corp. (up 76.84%) and Cisco Systems (up 82.79%).
o Entertainment holdings Walt Disney & Co. (up 31.33%) and Carnival Inc.
(up 52.62%) generated strong returns.
o In the financial sector, Morgan Stanley, Dean Witter Discover & Co.
(up 7.86% since the position was initiated in November 1997) and The
Travelers Group Inc. (up 34.88%) produced positive results.
5
<PAGE>
PERFORMANCE OVERVIEW
The Goldman Sachs CORE Large Cap Growth Fund seeks long-term capital growth,
primarily by investing in a broadly diversified portfolio of equity securities
that are expected to have better prospects for earnings growth than the growth
rate of the general domestic economy.
================================================================================
CORE INVESTMENT PROCESS (Computer Optimized, Research Enhanced)
================================================================================
------------------ -----------------
Computer Optimized + Research Enhanced
------------------ -----------------
o Risk management tools o Fundamental Research from
designed to minimize Goldman Sachs' Global
industry and style risk. Investment Research
Department and other
o Emphasis on stock research sources.
selection with attention
to attractive o Quantitative insights
quantitative and from proprietary
qualitative ratings. multi-factor model rank
each stock by its value,
o Construct portfolio with momentum and risk
maximum expected return characteristics.
forecast within risk
guidelines.
\/
------------
CORE Process
------------
Result: A risk-controlled portfolio grounded by a
rigorous quantitative model and enhanced by fundamental
research.
- --------------------------------------------------------------------------------
Portfolio Outlook
We intend to maintain our disciplined, long-term approach and defensive
stance, as the cautionary conditions that initially motivated us to assume
this position -- the market's increasing volatility and historically low
risk premiums -- have not yet abated. In fact, in view of the market's
recent behavior, we intend to strengthen our focus on "cheaper," lower
volatility stocks within the growth universe.
We thank you for your investment and look forward to your continued
confidence.
Sincerely,
/s/ Robert C. Jones /s/ Kent A. Clark /s/ Victor H. Pinter
Robert C. Jones Kent A. Clark Victor H. Pinter
Portfolio Manager, Portfolio Manager, Portfolio Manager,
CORE Large Cap CORE Large Cap CORE Large Cap
Growth Fund Growth Fund Growth Fund
February 27, 1998
6
<PAGE>
FUND BASICS
CORE Small Cap Equity Fund
as of January 31, 1998
Assets Under Management
-----------------------
$32.7 Million
-----------------------
Number of Holdings
-----------------------
182
-----------------------
NASDAQ SYMBOLS
Class A Shares
-----------------------
GCSAX
-----------------------
Class B Shares
-----------------------
GCSBX
-----------------------
Class C Shares
-----------------------
GCSCX
-----------------------
Institutional Shares
-----------------------
GCSIX
-----------------------
Service Shares
-----------------------
GCSSX
-----------------------
================================================================================
PERFORMANCE REVIEW
================================================================================
<TABLE>
<CAPTION>
August 15, 1997- Fund Total Return Russell 2000
January 31, 1998 (based on NAV)(1) Index(2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A 6.37% 4.99%
Class B 6.07% 4.99%
Class C 6.17% 4.99%
Institutional 6.57% 4.99%
Service 6.47% 4.99%
- --------------------------------------------------------------------------------
</TABLE>
(1) The net asset value represents the net assets of the Fund (ex-dividend)
divided by the total number of shares.
(2) The Russell 2000 Index (with dividends reinvested) figures do not reflect
any fees or expenses. In addition, investors cannot invest directly in the
Index.
================================================================================
SEC CUMULATIVE TOTAL RETURN(3)
================================================================================
<TABLE>
<CAPTION>
For the period
ending 12/31/97 Class A Class B Class C Institutional Service
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Since Inception 2.06% 2.65% 6.67% 8.07% 7.97%
(8/15/97)
- --------------------------------------------------------------------------------
</TABLE>
(3) 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 a maximum initial sales charge of
5.5% for Class A shares, the assumed deferred sales charge for Class B
shares (5% maximum declining to 0% after six years), and the assumed
deferred sales charge for Class C shares (1% if redeemed within 12 months
of purchase). The public offering price of the Class A shares on 1/31/98
was $11.21 and represents the NAV plus the maximum sales charge of 5.5%.
================================================================================
TOP 10 HOLDINGS AS OF 1/31/98
================================================================================
<TABLE>
<CAPTION>
Percentage of
Company Holding Total Net Assets Line of Business
- --------------------------------------------------------------------------------
<S> <C> <C>
CNB Bancshares Inc. 1.7% Financials
BA Merchant Services Inc. 1.3% Financials
Schweitzer-Mauduit Int. 1.1% Tobacco
Nationwide Financial Services 1.1% Life Insurance
Texas Industries Inc. 1.1% Mining
TNP Enterprises Inc. 1.0% Utilities
Zale Corp. 1.0% Consumer Services
Rollins Truck Leasing 1.0% Industrial Services
The Scotts Co. 1.0% Chemical
Kaydon Corp. 1.0% Industrial Machinery
- --------------------------------------------------------------------------------
</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.
7
<PAGE>
PERFORMANCE OVERVIEW
CORE Small Cap Equity Fund
Dear Shareholder,
On behalf of Goldman Sachs, it is a pleasure to welcome you as a shareholder in
the Goldman Sachs CORE Small Cap Equity Fund. This report covers the brief
period beginning August 15, 1997 -- the Fund's inception date -- and ending
January 31, 1998.
Performance Review: Strong Performance Relative to Benchmark
From inception on August 15, 1997 through January 31, 1998, the Fund's
Class A shares generated a total return of 6.37% (based on NAV),
outperforming the 4.99% return generated by the Fund's benchmark, the
Russell 2000 Index.
Sector Allocations
In general, the Fund's sector exposures stem from the Fund's bottom-up
stock selection process, not from economic forecasts for specific sectors.
With this in mind, the Fund favored defensive, value stocks in a slight
overweighting to "cheap" sectors -- for example, consumer durables -- and
less volatile sectors such as energy. The portfolio maintained a slight
underweighting in "pricey" sectors, including consumer nondurables, and
cyclical sectors such as basic industry.
Portfolio Highlights
The CORE investment process analyzes each stock based upon its Value,
Momentum and Risk characteristics. Of these three investment themes, the
portfolio had a bias towards defensive, value stocks because of the
market's increasing volatility and low risk premiums. Furthermore, the
qualitative stock insights produced by Goldman Sachs' Global Investment
Research Department also contributed to the Fund's strong performance
results.
o On an individual stock level, the Fund benefited from the performance
of many of its top 10 holdings, such as TNP Enterprises Inc. (up
44.16%).
o An overweight position in finance abetted performance, as thrift
institutions and life insurance holdings, including Nationwide
Financial Services (up 32.69%) and Sovereign Bancorp (up 20.42%),
appreciated during the period under review.
8
<PAGE>
PERFORMANCE OVERVIEW
The Goldman Sachs CORE Small Cap Equity Fund seeks long-term capital growth by
investing primarily in a broadly diversified portfolio of equity securities of
U.S. issuers that are included in the Russell 2000 Index at the time of
investment.
================================================================================
CORE INVESTMENT PROCESS (Computer Optimized, Research Enhanced)
================================================================================
------------------ -----------------
Computer Optimized + Research Enhanced
------------------ -----------------
o Risk management tools o Fundamental Research from
designed to minimize Goldman Sachs' Global
industry and style risk. Investment Research
Department and other
o Emphasis on stock research sources.
selection with attention
to attractive o Quantitative insights
quantitative and from proprietary
qualitative ratings. multi-factor model rank
each stock by its value,
o Construct portfolio with momentum and risk
maximum expected return characteristics.
forecast within risk
guidelines.
\/
------------
CORE Process
------------
Result: A risk-controlled portfolio grounded by a
rigorous quantitative model and enhanced by fundamental
research.
- --------------------------------------------------------------------------------
Portfolio Outlook
We intend to maintain our disciplined, long-term approach and defensive
stance, as the cautionary conditions that initially motivated us to assume
this position -- the market's increasing volatility and historically low
risk premiums -- have not yet abated. In fact, in view of the market's
recent behavior, we intend to strengthen our focus on value-oriented, lower
volatility stocks.
We thank you for your investment and look forward to your continued
confidence.
Sincerely,
/s/ Robert C. Jones /s/ Kent A. Clark /s/ Victor H. Pinter
Robert C. Jones Kent A. Clark Victor H. Pinter
Portfolio Manager, Portfolio Manager, Portfolio Manager,
CORE Small Cap CORE Small Cap CORE Small Cap
Equity Fund Equity Fund Equity Fund
February 27, 1998
9
<PAGE>
FUND BASICS
CORE International Equity Fund
as of January 31, 1998
Assets Under Management
-----------------------
$29.2 Million
-----------------------
Number of Holdings
-----------------------
102
-----------------------
NASDAQ SYMBOLS
Class A Shares
-----------------------
GCIAX
-----------------------
Class B Shares
-----------------------
GCIBX
-----------------------
Class C Shares
-----------------------
GCICX
-----------------------
Institutional Shares
-----------------------
GCIIX
-----------------------
Service Shares
-----------------------
GCISX
-----------------------
================================================================================
PERFORMANCE REVIEW
================================================================================
<TABLE>
<CAPTION>
August 15, 1997- Fund Total Return MS EAFE
January 31, 1998 (based on NAV)(1) Index(2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A -7.66% -2.78%
Class B -7.90% -2.78%
Class C -7.80% -2.78%
Institutional -7.45% -2.78%
Service -7.70% -2.78%
- --------------------------------------------------------------------------------
</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) Europe, Australasia, Far
East (EAFE) Index is a market capitalization weighted composite of
securities in 21 developed markets, including Australia, Austria, Belgium,
Denmark, Finland, Germany, Hong Kong, Ireland, Italy, Japan and the United
Kingdom. Total returns are calculated without dividends reinvested.
Investors cannot invest directly in the Index. The Index figures do not
reflect any fees or expenses.
================================================================================
SEC CUMULATIVE TOTAL RETURN(3)
================================================================================
<TABLE>
<CAPTION>
For the period
ending 12/31/97 Class A Class B Class C Institutional Service
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Since Inception -17.07% -16.78% -13.18% -12.06% -12.20%
(8/15/97)
- --------------------------------------------------------------------------------
</TABLE>
(3) 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 a maximum initial sales charge of
5.5% for Class A shares, the assumed deferred sales charge for Class B
shares (5% maximum declining to 0% after six years) and the assumed
deferred sales charge for Class C shares (1% if redeemed within 12 months
of purchase). The public offering price of the Class A shares on 1/31/98
was $9.77 and represents the NAV plus the maximum sales charge of 5.5%.
================================================================================
TOP 10 HOLDINGS AS OF 1/31/98
================================================================================
<TABLE>
<CAPTION>
Percentage of
Company Holding Total Net Assets Line of Business
- --------------------------------------------------------------------------------
<S> <C> <C>
Novartis 4.2% Healthcare
Telefonica de Espana 3.2% Telecommunications
Deutsche Bank 3.1% Banking
British Telecom 3.1% Telecommunications
Glaxo Wellcome 2.9% Healthcare
Hitachi 2.5% Electronics
Int'l. Nederland Group 2.0% Finance
Matsushita Electrical Ind. 2.0% Appliances
Barclays 2.0% Banking
Aquitaine (ELF) 2.0% Energy
- --------------------------------------------------------------------------------
</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.
10
<PAGE>
PERFORMANCE OVERVIEW
CORE International Equity Fund
Dear Shareholder,
On behalf of Goldman Sachs, it is a pleasure to welcome you as a shareholder in
the Goldman Sachs CORE International Equity Fund. This report covers the brief
period beginning August 15, 1997 -- the Fund's inception date -- and ending
January 31, 1998.
Performance Review: Value Stock Positions Hurt Performance
Since inception on August 15, 1997 through January 31, 1998, the Fund's
Class A shares generated a total return of -7.66% (based on NAV), compared
to a -2.78% return generated by the Fund's benchmark, the Morgan Stanley
Capital International Europe, Australasia and Far East Index (MSCI EAFE).
The Fund lagged its benchmark in large part due to its fluctuating cash
position (typical of new funds), a situation that did not allow us to fully
participate in or diversify into markets to the extent that we would have
ideally wanted.
Sector Allocations
The Fund's sector exposures approximated those of the MSCI EAFE Index. In
seeking value through stock selection, the Fund modestly overweights and
underweights industries relative to the benchmark. In particular, the Fund
had underweight positions in the energy and consumer goods sectors and
overweight positions in multi-industry, capital equipment and materials
sectors. These differences are an outcome of the Fund's bottom-up stock
selection process, not from economic forecasts for specific sectors. We
intend to maintain a balanced approach by considering all of our investment
themes (Value, Momentum and Risk) when making investment decisions.
Portfolio Outlook
The Fund's investment approach is objective, disciplined and
risk-controlled. As mentioned previously, stock selection focuses on three
themes: Value, Momentum and Risk. The strategy has a preference for Value,
meaning that stocks that are inexpensive relative to various measures of
fundamentals are preferred to those that are expensive on the same
measures. Examples of these include Merck (Germany) and Suez-Lyonnaise des
Eau (France). Stocks with strong Momentum characteristics, such as Abbey
National (United Kingdom)and Aegon (Netherlands) are preferred to stocks
with poor Momentum characteristics, while less risky stocks are preferred
to more risky stocks (we measure risk by evaluating both company-specific
risk -- excluding market risk -- and earnings risk). Over time we expect
that adhering to these themes will enable the Fund to outperform its
benchmark.
We thank you for your investment and look forward to your continued
confidence.
Sincerely,
/s/ Robert C. Jones /s/ Kent A. Clark /s/ Victor H. Pinter
Robert C. Jones Kent A. Clark Victor H. Pinter
Portfolio Manager, Portfolio Manager, Portfolio Manager,
CORE International CORE International CORE International
Equity Fund Equity Fund Equity Fund
February 27, 1998
11
<PAGE>
PERFORMANCE OVERVIEW
The Goldman Sachs CORE International Equity Fund seeks long-term capital
appreciation, primarily through equity securities of large-cap companies that
are organized or whose securities are principally traded outside the United
States.
================================================================================
CORE INTERNATIONAL INVESTMENT PROCESS
(Computer Optimized, Research Enhanced)
================================================================================
-------------------
Forecast
Returns
1
-------------------
o Countries, currencies and individual stocks.
o Common investment themes (Value, Momentum and Risk).
\/
-------------------
Construct Efficient
Portfolios
2
-------------------
o Maximize expected return for a given level of risk.
o Determine optimal country weights using equity market and currency
return forecasts.
o Construct a portfolio using stock return forecasts and optimal country
weights.
o Mirror benchmark exposures to common risk factors (style and
industries).
\/
-------------------
Monitor Holdings
and Performance
3
-------------------
o Continually review return forecasts and portfolio risk.
o Adjust positions as needed.
o Verify sources of value added.
- --------------------------------------------------------------------------------
12
<PAGE>
GOLDMAN SACHS CORE U.S. EQUITY 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
May 24, 1991. For comparative purposes, the performance of the Fund's bench-
mark (the Standard and Poor's 500 Index ("S&P 500 Index")) is shown. This
performance data represents past performance and should not be considered in-
dicative 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, Institutional and Service shares will vary from Class A
due to differences in fees and loads.
CORE U.S. EQUITY FUND'S LIFETIME PERFORMANCE
GROWTH OF A $10,000 INVESTMENT, DISTRIBUTIONS REINVESTED MAY 24, 1991 TO
JANUARY 31, 1998
[GRAPH APPEARS HERE]
Core U.S. Equity Fund
(Class A) S&P 500
05/24/1991 9450 10000
9626 10377
9099 9902
Jul-91 9586 10363
9860 10609
9726 10431
9586 10571
9273 10145
10384 11306
Jan-92 10116 11095
10237 11239
9894 11020
10069 11343
10055 11399
9632 11229
Jul-92 9847 11688
9625 11449
9773 11583
9827 11623
10277 12019
10381 12167
Jan-93 10551 12268
10606 12436
10960 12698
10462 12391
10653 12722
10824 12760
Jul-93 10701 12708
11103 13191
11180 13089
11517 13360
11306 13233
11705 13393
Jan-94 12147 13848
11979 13472
11438 12885
11735 13050
11720 13264
11461 12939
Jul-94 11933 13364
12315 13912
11969 13572
12227 13878
11734 13372
11857 13570
Jan-95 12013 13922
12465 14465
12811 14893
13312 15331
13855 15944
14266 16314
Jul-95 14833 16855
14883 16898
15474 17611
15358 17547
15878 18318
16035 18671
Jan-96 16654 19306
16933 19486
17111 19673
17314 19962
17704 20477
17746 20555
Jul-96 16882 19646
17179 20061
17973 21190
18544 21775
19865 23421
19462 22957
Jan-97 20620 24392
20682 24583
19904 23573
21053 24978
22203 26499
23220 27686
Jul-97 25174 29890
23971 28216
25237 29762
24239 28768
25077 30100
25651 30618
Jan-98 25767 30957
<TABLE>
<CAPTION>
SINCE INCEPTION FIVE YEARS ONE YEAR
AVERAGE ANNUAL TOTAL RETURN THROUGH JANUARY 31, 1998
<S> <C> <C> <C>
CLASS A (COMMENCED MAY 24, 1991)
Excluding sales charges 16.15% 19.54% 24.96%
Including sales charges 15.18% 18.20% 18.07%
----------------------------------------------------------------------------
CLASS B (COMMENCED MAY 1, 1996)
Excluding redemption charges 24.71% n/a 24.28%
Including redemption charges 22.49% n/a 18.81%
----------------------------------------------------------------------------
CLASS C (COMMENCED AUGUST 15,
1997)(A)
Excluding redemption charges 4.85%(a) n/a n/a
Including redemption charges 3.80% n/a n/a
----------------------------------------------------------------------------
INSTITUTIONAL CLASS (COMMENCED JUNE
15, 1995) 27.17% n/a 25.76%
----------------------------------------------------------------------------
SERVICE CLASS (COMMENCED JUNE 7,
1996) 25.18% n/a 25.11%
----------------------------------------------------------------------------
</TABLE>
(a) Represents aggregate total return since the class has not been in opera-
tion for a full 12 months.
13
<PAGE>
GOLDMAN SACHS CORE U.S. EQUITY FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - 98.4%
AEROSPACE & DEFENSE - 1.3%
73,800 Allied-Signal, Inc. $ 2,873,588
112,000 Coltec Industries, Inc.* 2,618,000
42,600 United Technologies Corp. 3,477,225
------------
8,968,813
----------------------------------------------------
AGRICULTURE/HEAVY EQUIPMENT - 1.6%
149,500 Caterpillar, Inc. 7,176,000
73,700 Deere & Co. 3,887,675
------------
11,063,675
----------------------------------------------------
AIRLINES - 1.2%
51,700 America West Holdings Corp.* 1,127,706
23,400 AMR Corp.* 2,954,250
36,600 Delta Air Lines, Inc. 4,176,975
------------
8,258,931
----------------------------------------------------
APPAREL & TEXTILES - 0.6%
70,700 Intimate Brands, Inc. 1,789,594
48,000 Jones Apparel Group, Inc.* 2,088,000
------------
3,877,594
----------------------------------------------------
APPLIANCES - 0.3%
49,000 Sunbeam Corp. 1,858,938
----------------------------------------------------
AUTO/VEHICLE - 3.2%
234,600 Ford Motor Co. 11,964,600
164,600 General Motors Corp. 9,536,513
------------
21,501,113
----------------------------------------------------
AUTOPARTS - 0.2%
31,900 Federal-Mogul Corp. 1,435,500
----------------------------------------------------
BANKS - 6.5%
47,100 Bank of New York, Inc. 2,552,231
91,000 BankAmerica Corp. 6,466,688
61,600 Chase Manhattan Corp. 6,602,750
25,200 Citicorp 2,998,800
25,400 Comerica, Inc. 2,397,125
33,600 First Chicago Nbd Corp. 2,507,400
97,100 First Union Corp. 4,666,869
168,763 Nationsbank Corp. 10,125,750
27,800 US Bancorp. 3,044,100
7,600 Wells Fargo & Co. 2,348,400
------------
43,710,113
----------------------------------------------------
BUSINESS SERVICES - 0.7%
47,300 Automatic Data Processing 2,829,131
71,400 Interim Services Inc.* 1,704,675
------------
4,533,806
----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
CHEMICAL PRODUCTS - 2.3%
77,600 Crompton & Knowles Corp. $ 2,221,300
45,100 Dow Chemical Co. 4,059,000
77,300 Du Pont (EI) De Nemours & Co. 4,377,113
81,300 IMC Global, Inc. 2,621,925
87,100 Solutia, Inc. 2,433,356
------------
15,712,694
---------------------------------------------------------------
COMPUTER SOFTWARE - 1.5%
68,900 Microsoft Corp.* 10,279,001
---------------------------------------------------------------
COMPUTERS AND BUSINESS EQUIPMENT - 2.2%
61,700 Sundstrand Corp. 3,358,794
111,600 Unisys Corp.* 1,841,400
123,300 Xerox Corp. 9,910,238
------------
15,110,432
---------------------------------------------------------------
CONGLOMERATES - 0.8%
39,910 Raytheon Co.* 2,040,402
36,200 Textron, Inc. 2,165,213
33,000 Tyco International Ltd. 1,464,375
------------
5,669,990
---------------------------------------------------------------
CONSUMER STAPLES - 2.1%
42,700 Gillette Co. 4,216,625
126,200 Procter & Gamble Co. 9,890,925
------------
14,107,550
---------------------------------------------------------------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT - 5.1%
157,400 General Motors Corp. Class H 5,449,975
39,900 Arrow Electronics, Inc.* 1,291,763
328,100 General Electric Co. 25,427,750
32,800 Motorola, Inc. 1,949,550
------------
34,119,038
---------------------------------------------------------------
ENTERPRISE SYSTEMS - 2.2%
133,000 Compaq Computer Corp. 3,998,313
51,700 Hewlett-Packard Co. 3,102,000
77,500 International Business Machines, Inc. 7,648,281
------------
14,748,594
---------------------------------------------------------------
ENTERTAINMENT AND LEISURE - 0.9%
53,842 Walt Disney Co. 5,737,538
---------------------------------------------------------------
FINANCIAL SERVICES - 4.1%
58,700 American Express Co. 4,912,456
77,100 Case Corp. 4,495,894
135,600 Federal National Mortgage Association 8,373,300
30,900 Hartford Financial Services Group, Inc. 2,781,000
109,899 The Travelers Group, Inc. 5,440,001
------------
26,002,651
---------------------------------------------------------------
</TABLE>
14 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
FOOD & BEVERAGES - 5.1%
254,000 Archer Daniels Midland Co. $ 5,349,875
65,000 Campbell Soup Co. 3,477,500
136,300 Coca Cola Co. 8,825,425
39,500 Dean Foods Co. 2,266,313
113,200 Interstate Bakeries Corp. 3,933,700
113,100 Pepsico, Inc. 4,078,669
32,400 Sara Lee Corp. 1,767,825
79,900 Unilever N V 4,559,294
------------
34,258,601
-----------------------------------------------------------
FOREST PRODUCTS - 1.1%
80,100 Champion International Corp. 4,100,119
65,500 International Paper Co. 2,992,531
------------
7,092,650
-----------------------------------------------------------
GREETING CARDS - 0.4%
58,200 American Greetings Corp. 2,520,788
-----------------------------------------------------------
HEALTH AND BEAUTY AIDS - 1.0%
31,900 Alberto Culver Co. Class B 945,038
85,700 Johnson & Johnson Co. 5,736,544
------------
6,681,582
-----------------------------------------------------------
HEALTHCARE MANAGEMENT - 2.3%
40,200 Cardinal Health, Inc. 3,112,988
120,800 Columbia/HCA Healthcare Corp. 3,020,000
41,100 Lincare Holdings, Inc.* 2,512,238
113,300 Tenet Healthcare Corp.* 3,908,850
64,100 Wellpoint Health Networks, Inc.* 3,140,900
------------
15,694,976
-----------------------------------------------------------
HOTELS & RESTAURANTS - 0.2%
61,410 Tricon Global Restaurants, Inc.* 1,673,423
-----------------------------------------------------------
INDUSTRIAL MACHINERY - 0.4%
46,600 Cummins-Engine, Inc. 2,493,100
-----------------------------------------------------------
INSURANCE - 3.8%
50,698 Aegon N V American 4,803,636
25,356 Allstate Corp. 2,244,006
98,875 American International Group, Inc. 10,907,148
38,000 Conseco, Inc. 1,738,500
54,500 Everest Reinsurance Holdings 2,064,188
25,800 MBIA, Inc. 1,670,550
35,600 Protective Life Corp. 2,236,125
------------
25,664,153
-----------------------------------------------------------
INSURANCE-LIFE - 0.1%
13,100 American Financial Group, Inc. 493,706
-----------------------------------------------------------
INSURANCE-PROPERTY & CASUALTY - 0.4%
61,800 Travelers Property & Casualty Corp. 2,580,150
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
MEDIA/ENTERTAINMENT - 0.3%
82,300 Tele-Communications, Inc.* $ 2,304,400
-----------------------------------------------------
MISCELLANEOUS - 0.8%
84,000 Beverly Enterprises, Inc.* 1,165,500
145,500 Endesa SA ADR 2,791,781
44,700 Fred Meyer, Inc.* 1,648,313
------------
5,605,594
-----------------------------------------------------
OFFICE FURNISHINGS & SUPPLIES - 1.0%
56,300 Avery Dennison Corporation 2,526,463
69,700 Miller Herman Inc. 4,033,888
------------
6,560,351
-----------------------------------------------------
OIL-INTERNATIONAL - 5.8%
21,600 Amoco Corp. 1,757,700
234,100 Exxon Corp. 13,885,056
94,600 Mobil Corp. 6,444,625
199,800 Royal Dutch Petroleum 10,239,750
77,300 Shell Transport & Trading PLC 3,130,650
66,300 Texaco, Inc. 3,451,744
------------
38,909,525
-----------------------------------------------------
OIL & GAS - 1.8%
16,900 Ashland, Inc. 891,475
78,400 Phillips Petroleum Co. 3,449,600
91,100 Sun Company, Inc. 3,530,125
45,700 Tenneco, Inc. 1,853,706
76,300 USX-Marathon Group, Inc. 2,560,819
------------
12,285,725
-----------------------------------------------------
OIL & GAS-REFINING AND MARKETING -
0.1%
30,200 Valero Energy Corp. 953,188
-----------------------------------------------------
OIL & GAS EXPLORATION - 0.3%
38,200 BJ Services Co.* 2,313,488
-----------------------------------------------------
OIL & GAS SERVICES - 0.9%
46,900 Camco International, Inc. 2,564,844
64,800 Ensco International, Inc. 1,757,700
55,500 Helmerich & Payne, Inc. 1,418,719
------------
5,741,263
-----------------------------------------------------
PHARMACEUTICALS - 7.3%
65,700 Abbott Laboratories 4,652,381
50,700 American Home Products Corp. 4,838,681
57,900 Bergen Brunswig Corp. 2,638,069
104,200 Bristol Myers Squibb Co. 10,387,438
60,800 Eli Lilly & Co. 4,104,000
84,300 Merck & Co. 9,884,175
81,200 Mylan Labs, Inc. 1,456,525
56,200 Pfizer, Inc. 4,604,888
62,000 Schering-Plough Corp. 4,487,250
12,800 Warner Lambert Co. 1,926,400
------------
48,979,807
-----------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 15
<PAGE>
GOLDMAN SACHS CORE U.S. EQUITY FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
PUBLISHING - 1.1%
190,400 Dun & Bradstreet Corp. $ 6,069,000
35,400 Meredith Corp. 1,387,238
------------
7,456,238
-------------------------------------------------------------------
RAILROADS - 0.2%
32,000 Trinity Industries, Inc. 1,448,000
-------------------------------------------------------------------
RETAIL - 5.8%
163,600 Best Buy Co., Inc.* 8,282,250
34,216 Consolidated Stores Corp.* 1,407,133
105,700 Dayton Hudson Corp. 7,603,794
77,500 Dillards Inc. 2,722,188
118,200 Federated Department Stores, Inc.* 5,008,725
87,000 Pier 1 Imports, Inc. 2,033,625
101,100 Ross Stores, Inc. 3,285,750
94,100 TJX Companies, Inc. 3,187,638
151,200 Wal Mart Stores, Inc. 6,029,100
------------
39,560,203
-------------------------------------------------------------------
SAVINGS & LOAN - 0.8%
91,900 H.F. Ahmanson & Co. 5,358,919
-------------------------------------------------------------------
SECURITY AND COMMODITY BROKERS, DEALERS AND SERVICES - 2.6%
55,100 Lehman Brothers Holdings, Inc. 2,992,619
124,800 Merrill Lynch Co., Inc. 7,878,000
114,900 Morgan Stanley, Dean Witter, Discover & Co. 6,707,288
54,000 PaineWebber Group, Inc. 1,717,875
------------
19,295,782
-------------------------------------------------------------------
SEMICONDUCTORS - 1.4%
32,000 Dallas Semiconductor Corp. 1,512,000
96,200 Intel Corp. 7,792,200
------------
9,304,200
-------------------------------------------------------------------
STEEL - 0.8%
68,000 AK Steel Holding Corp. 1,215,500
247,400 Bethlehem Steel Corp.* 2,443,075
71,500 British Steel PLC ADR 1,595,344
------------
5,253,919
-------------------------------------------------------------------
SUPERMARKETS - 1.6%
41,200 Albertson's, Inc. 1,964,725
109,400 Kroger Co.* 4,280,275
66,867 Safeway, Inc.* 4,442,476
------------
10,687,476
-------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
TELECOMMUNICATIONS - 5.7%
105,200 Ameritech Corp. $ 4,517,025
162,000 AT&T Corp. 10,145,250
48,700 Bellsouth Corp. 2,949,394
185,700 GTE Corp. 10,132,256
100,100 MCI Communications Corp. 4,648,394
51,200 Sprint Corp. 3,040,000
87,500 Worldcom, Inc.* 3,133,594
------------
38,565,913
------------------------------------------------------
TELECOMMUNICATIONS SERVICES - 1.0%
125,000 Telecom Argentina ADR 3,921,875
80,400 Valassis Communications, Inc.* 2,773,800
------------
6,695,675
------------------------------------------------------
TIRE & OTHER RELATED RUBBER PRODUCTS -
0.3%
29,100 Goodyear Tire & Rubber Co. 1,822,388
------------------------------------------------------
TOBACCO - 2.0%
271,200 Philip Morris Co., Inc. 11,254,800
75,600 RJR Nabisco Holdings Corp. 2,381,400
------------
13,636,200
------------------------------------------------------
TRUCKING - 0.5%
22,100 Airborne Freight Corp. 1,571,863
58,800 Ryder System, Inc. 1,969,800
------------
3,541,663
------------------------------------------------------
TRUCKING & LOGISTICS - 0.4%
45,900 FDX Corp.* 2,986,369
------------------------------------------------------
UTILITIES - 4.3%
25,400 Aptargroup, Inc. 1,295,400
51,400 Cinergy Corp. 1,773,300
45,300 Columbia Energy Group 3,437,138
95,200 Dominion Resources, Inc. 3,796,100
26,200 DQE Inc. 856,413
74,900 Duke Energy Corp. 4,058,644
126,200 Edison International 3,391,625
46,800 FPL Group, Inc. 2,685,150
91,000 Texas Utilities Co. 3,742,375
126,100 Unicom Corp. 3,909,100
------------
28,945,245
------------------------------------------------------
TOTAL COMMON STOCKS
(COST $514,222,914) $664,060,631
------------------------------------------------------
</TABLE>
16 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE U.S. EQUITY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - 0.1%
$ 980,000 U.S. Treasury Bills 5.12% - 5.16%, 02/05/98 -
02/12/98(b) $ 978,512
-----------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $978,512) $ 978,512
-----------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.8%
$5,300,000 Joint Repurchase Agreement Account 5.64%, 02/02/98
(b) $ 5,300,000
-----------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $5,300,000) $ 5,300,000
-----------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $520,501,426) (A) $670,339,143
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------
FEDERAL INCOME TAX INFORMATION:
<S> <C>
Gross
unrealized gain
for investments
in which value
exceeds cost $158,475,782
Gross
unrealized loss
for investments
in which cost
exceeds value (8,650,138)
------------------------------
Net unrealized
gain $149,825,644
------------------------------
</TABLE>
Futures contracts open at January 31, 1998 are as follows:
<TABLE>
<CAPTION>
Number of
Contracts Settlement Unrealized
Type Long (c) Month Gain
------------- --------- ---------- ----------
<S> <C> <C> <C>
S&P 500 Index 22 March 1998 $82,636
-----------------------------------------------
</TABLE>
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $520,513,499.
(b) Portion of this security is being segregated as collateral for futures
contracts.
(c) Each S&P 500 Stock Index represents 250 X index value at time of purchase
in notional par value. The total net notional amount and market value at
risk are $5,350,264 and $5,432,900, respectively. The determination of
notional amounts does not consider market risk factors and therefore
notional amounts as presented here are indicative only of volume of
activity and not a measure of market risk.
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. 17
<PAGE>
GOLDMAN SACHS CORE LARGE CAP 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% and redemption charges
of 5.0% for Class A and B, respectively and at NAV for the Institutional and
Service Classes) on May 1, 1997. For comparative purposes, the performance of
the Fund's benchmark (Russell 1000 Growth Index) is shown. All performance
data shown represents past performance and should not be considered indica-
tive of future performance which will fluctuate with changes in market condi-
tions. These performance fluctuations will cause an investor's shares, when
redeemed, to be worth more or less than their original cost.
CORE LARGE CAP GROWTH FUND'S LIFETIME PERFORMANCE
GROWTH OF A $10,000 INVESTMENT, DISTRIBUTIONS REINVESTED MAY 1, 1997 TO
JANUARY 31, 1998.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Core Large Cap Core Large Cap Core Large Cap Core Large Cap
Growth Fund Russell 1000 Growth Fund Growth Fund Growth Fund
(Class A) Growth Index Class B Institutional Class Service Class
<S> <C> <C> <C> <C> <C>
05/01/1997 9450 10000 10000 10000 10000
May-97 9972 10722 10540 10550 10550
Jun-97 10425 11151 11020 11040 11030
Jul-97 11295 12137 11940 11950 11940
Aug-97 10983 11427 11610 11630 11610
Sep-97 11474 11989 12120 12150 12120
Oct-97 11096 11545 11700 11750 11720
Nov-97 11342 12036 11960 12020 11970
Dec-97 11485 12171 12109 12172 12129
Jan-98 11700 12535 11809 12389 12356
</TABLE>
<TABLE>
<CAPTION>
SINCE INCEPTION
AGGREGATE TOTAL RETURN THROUGH JANUARY 31, 1998
<S> <C> <C> <C>
CLASS A (COMMENCED MAY 1, 1997)
Excluding sales charges 23.79%
Including sales charges 17.00%
--------------------------------------------------
CLASS B (COMMENCED MAY 1, 1997)
Excluding redemption charges 23.26%
Including redemption charges 18.09%
--------------------------------------------------
CLASS C (COMMENCED AUGUST 15, 1997)
Excluding redemption charges 4.56%
Including redemption charges 3.53%
--------------------------------------------------
INSTITUTIONAL CLASS
(COMMENCED MAY 1, 1997) 23.89%
--------------------------------------------------
SERVICE CLASS (COMMENCED
MAY 1, 1997) 23.56%
--------------------------------------------------
</TABLE>
18
<PAGE>
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - 94.1%
<C> <S> <C>
ADVERTISING/MARKETING - 0.6%
12,500 Valassis Communications, Inc.* $ 431,250
----------------------------------------------------
AEROSPACE & DEFENSE - 1.0%
19,400 Coltec Industries, Inc.* 453,475
10,000 Gulfstream Aerospace Corp.* 340,645
-----------
794,120
----------------------------------------------------
AGRICULTURE/HEAVY EQUIPMENT - 1.5%
13,600 Caterpillar, Inc. 652,800
8,600 Dover Corp. 292,938
7,000 New Holland NV 176,313
-----------
1,122,051
----------------------------------------------------
AIRLINES - 2.0%
9,700 America West Holdings Corp.* 211,581
4,500 Delta Air Lines, Inc. 513,563
9,000 UAL Corp.* 799,875
-----------
1,525,019
----------------------------------------------------
APPAREL & TEXTILES - 1.2%
20,600 Footstar, Inc.* 551,050
8,600 Jones Apparel Group, Inc.* 374,100
-----------
925,150
----------------------------------------------------
APPLIANCES - 0.4%
8,500 Sunbeam Corp. 322,469
----------------------------------------------------
AUTO/VEHICLE - 0.8%
3,500 Ford Motor Co. 178,500
7,400 General Motors Corp. 428,738
-----------
607,238
----------------------------------------------------
AUTOPARTS - 0.2%
3,600 Federal-Mogul Corp. 162,000
----------------------------------------------------
BANKS - 0.6%
3,500 BankAmerica Corp. 248,719
3,400 Nationsbank Corp. 204,000
-----------
452,719
----------------------------------------------------
BUSINESS SERVICES - 0.4%
11,500 Interim Services, Inc.* 274,563
7,200 Medaphis Corp.* 57,375
-----------
331,938
----------------------------------------------------
CHEMICAL PRODUCTS - 1.2%
3,200 Dow Chemical Co. 288,000
14,600 Solutia, Inc. 407,888
14,300 Wellman, Inc. 256,506
-----------
952,394
----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
COMPUTER PERIPHERALS - 0.3%
8,400 Banctec, Inc.* $ 214,725
-----------------------------------------------------------
COMPUTER SOFTWARE & SERVICES - 4.5%
18,300 Cadence Design System, Inc.* 512,400
4,800 Computer Associates International 255,300
9,100 Electronic Data Systems Corp. 378,788
15,600 Microsoft Corp.* 2,327,325
-----------
3,473,813
-----------------------------------------------------------
COMPUTERS AND BUSINESS EQUIPMENT - 2.2%
13,200 Ingram Micro, Inc.* 367,950
14,200 Tech Data Corp.* 601,725
16,000 Unisys Corp.* 264,000
5,900 Xerox Corp. 474,213
-----------
1,707,888
-----------------------------------------------------------
CONGLOMERATES - 0.4%
7,500 Tyco International Ltd. 332,813
-----------------------------------------------------------
CONSTRUCTION/ENVIRONMENTAL SERVICES - 1.3%
9,800 ACX Technologies, Inc.* 227,850
19,300 Hanson PLC ADR 429,425
6,800 USG Corp.* 357,850
-----------
1,015,125
-----------------------------------------------------------
CONSUMER STAPLES - 3.4%
7,500 Corning, Inc. 255,000
11,300 Gillette Co. 1,115,875
16,100 Procter & Gamble Co. 1,261,838
-----------
2,632,713
-----------------------------------------------------------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT - 5.1%
21,000 General Motors Corp. Class H 727,125
10,500 Arrow Electronics, Inc.* 339,938
3,300 Avid Technology, Inc.* 96,113
26,700 General Electric Co. 2,069,250
7,300 Motorola, Inc. 433,894
4,200 Tellabs, Inc.* 214,988
-----------
3,881,308
-----------------------------------------------------------
ENTERPRISE SYSTEMS - 2.7%
28,600 Compaq Computer Corp. 859,706
8,200 Hewlett-Packard Co. 492,000
2,600 International Business Machines, Inc. 256,588
9,400 Sun Microsystems, Inc.* 450,613
-----------
2,058,907
-----------------------------------------------------------
ENTERTAINMENT & LEISURE - 2.4%
9,500 Carnival Corp. 530,219
11,300 Walt Disney Co. 1,204,156
-----------
1,734,375
-----------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 19
<PAGE>
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
EXPRESS DELIVERY - 0.2%
2,800 Federal Express Corp.* $ 182,175
---------------------------------------------------------
FINANCIAL SERVICES - 0.6%
5,700 American Express Co. 477,019
---------------------------------------------------------
FOOD & BEVERAGES - 2.6%
17,100 Archer Daniels Midland Co. 360,169
19,500 Coca Cola Co. 1,262,625
9,600 Interstate Bakeries Corp. 333,600
-----------
1,956,394
---------------------------------------------------------
FOREST PRODUCTS - 0.6%
5,600 Aracruz Celulose S.A. ADR 78,400
7,900 Champion International Corp. 404,381
-----------
482,781
---------------------------------------------------------
HEALTH AND BEAUTY AIDS - 1.2%
10,100 Alberto Culver Co. Class B 299,213
9,800 Johnson & Johnson 655,988
-----------
955,201
---------------------------------------------------------
HEALTHCARE MANAGEMENT - 3.7%
33,600 Beverly Enterprises, Inc.* 466,200
18,500 Biomet, Inc. 529,563
29,100 Columbia/HCA Healthcare Corp. 727,500
3,400 Lincare Holdings, Inc.* 207,840
12,500 Tenet Healthcare Corp.* 431,250
9,500 Wellpoint Health Networks, Inc.* 465,500
-----------
2,827,853
---------------------------------------------------------
INDUSTRIAL MACHINERY - 0.3%
3,300 Kennametal, Inc. 162,319
1,900 Tecumseh Products Co. 90,725
-----------
253,044
---------------------------------------------------------
INSURANCE - 0.5%
2,200 AMBAC Financial Group, Inc. 104,638
6,000 Conseco, Inc. 274,500
-----------
379,138
---------------------------------------------------------
INSURANCE-LIFE - 3.1%
4,200 Protective Life Corp. 263,813
3,750 Sunamerica, Inc. 150,703
38,038 The Travelers Group, Inc. 1,882,881
-----------
2,297,397
---------------------------------------------------------
INSURANCE-PROPERTY & CASUALTY - 3.4%
18,900 American International Group, Inc. 2,084,906
10,200 Travelers Property & Casualty Corp. 425,850
-----------
2,510,756
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
OFFICE FURNISHINGS & SUPPLIES - 1.0%
7,300 Avery Dennison Corp. $ 327,588
2,900 Herman Miller, Inc. 167,838
9,300 Ikon Office Solutions, Inc. 292,950
-----------
788,376
-----------------------------------------------------------
OIL & GAS - 0.5%
9,500 Sun Company, Inc. 368,125
-----------------------------------------------------------
OIL & GAS EXPLORATION - 0.2%
16,800 Santa Fe Energy Resources, Inc.* 176,400
-----------------------------------------------------------
OIL & GAS SERVICES - 2.0%
9,100 Camco International, Inc. 497,656
19,300 Ensco International, Inc. 523,513
7,400 Global Marine, Inc.* 169,738
8,800 Marine Drilling Companies, Inc.* 158,400
3,600 Norsk Hydro A/S ADR 162,000
-----------
1,511,307
-----------------------------------------------------------
PHARMACEUTICALS - 9.5%
19,700 Abbott Laboratories 1,395,006
5,400 American Home Products Corp. 515,363
15,100 Bergen Brunswig Corp. 687,998
6,900 Eli Lilly & Co. 465,750
6,500 Guidant Corp. 417,625
4,700 Merck & Co. 551,075
18,600 Mylan Labs, Inc. 333,638
18,400 Pfizer, Inc. 1,507,650
10,100 Schering-Plough Corp. 730,988
4,500 Warner Lambert Co. 677,250
-----------
7,282,343
-----------------------------------------------------------
PUBLISHING - 1.1%
27,300 Dun & Bradstreet Corp. 870,188
-----------------------------------------------------------
RAILROADS - 0.7%
8,900 Kansas City Southern Industries, Inc. 266,444
6,300 Trinity Industries, Inc. 285,075
-----------
551,519
-----------------------------------------------------------
RECREATIONAL PRODUCTS - 0.5%
8,700 Mattel, Inc. 352,350
-----------------------------------------------------------
RETAIL - 12.0%
30,200 Best Buy Co., Inc.* 1,528,875
5,259 CVS Corp. 344,793
29,400 Dayton Hudson Corp. 2,114,963
9,600 Ethan Allen Interiors, Inc. 459,600
13,400 Federated Department Stores, Inc.* 567,825
14,750 Fred Meyer, Inc.* 543,906
19,300 Pier 1 Imports, Inc. 451,138
13,300 Proffitt's, Inc.* 390,688
22,600 Ross Stores, Inc. 734,500
7,950 The Gap, Inc. 310,547
-----------------------------------------------------------
</TABLE>
20 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
RETAIL - (CONTINUED)
8,100 Tiffany & Co. $ 313,875
14,100 TJX Companies, Inc. 477,638
12,600 Wal Mart Stores, Inc. 502,425
14,800 Zale Corp.* 362,600
-----------
9,103,373
-----------------------------------------------------------------
SAVINGS & LOAN - 1.1%
29,900 Dime Bancorp., Inc. 837,200
-----------------------------------------------------------------
SECURITY AND COMMODITY BROKERS, DEALERS AND SERVICES - 4.9%
5,400 Donaldson, Lufkin & Jenrette, Inc. 379,688
6,600 Lehman Brothers Holdings, Inc. 358,463
25,000 Merrill Lynch Co., Inc. 1,578,125
18,500 Morgan Stanley, Dean Witter, Discover & Co. 1,079,938
12,700 PaineWebber Group, Inc. 404,019
-----------
3,800,233
-----------------------------------------------------------------
SEMICONDUCTORS - 3.1%
24,600 Intel Corp. 1,992,600
12,700 National Semiconductor Corp.* 357,188
-----------
2,349,788
-----------------------------------------------------------------
STEEL - 1.1%
14,500 AK Steel Holding Corp. 259,188
51,500 Bethlehem Steel Corp.* 508,563
4,500 British Steel PLC ADR 100,406
-----------
868,157
-----------------------------------------------------------------
SUPERMARKETS - 1.6%
9,500 Kroger Co.* 371,688
13,100 Safeway, Inc.* 870,331
-----------
1,242,019
-----------------------------------------------------------------
TELECOMMUNICATIONS - 2.6%
16,200 GTE Corp. 883,913
17,100 MCI Communications Corp. 794,081
10,500 Telecom Argentina ADR 329,438
-----------
2,007,432
-----------------------------------------------------------------
TOBACCO - 2.5%
32,900 Philip Morris Co., Inc. 1,365,350
16,400 RJR Nabisco Holdings Corp. 516,600
-----------
1,881,950
-----------------------------------------------------------------
TRUCKING - 0.9%
6,600 Hertz Corp. 264,000
16,000 Navistar International Corp.* 432,000
-----------
696,000
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
UTILITIES - 0.4%
4,200 Columbia Energy Group $ 318,675
----------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $66,994,976) $72,005,208
----------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - 0.3%
$225,000 U.S. Treasury Bill,
5.16%, 02/12/98(b) $ 224,727
----------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $224,727) $ 224,727
----------------------------------------------------------------
REPURCHASE AGREEMENT - 2.8%
$2,100,000 Joint Repurchase Agreement Account (b)
5.64%, 02/02/98 $ 2,100,000
----------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $2,100,000) $ 2,100,000
----------------------------------------------------------------
TOTAL INVESTMENTS
(COST $69,319,703)(A) $74,329,935
----------------------------------------------------------------
</TABLE>
FEDERAL INCOME TAX INFORMATION:
<TABLE>
<S> <C> <C>
Gross
unrealized gain
for investments
in which value
exceeds cost $ 6,357,270
Gross
unrealized loss
for investments
in which cost
exceeds value (1,431,894)
-----------------------------
Net unrealized
gain $ 4,925,376
-----------------------------
</TABLE>
Futures contracts open at January 31, 1998 are as follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS SETTLEMENT UNREALIZED
TYPE LONG(C) MONTH GAIN
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
S&P 500 Index 8 March 1998 $9,042
--------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $69,404,559.
(b) Portion of this security is being segregated as collateral for futures
contracts.
(c) Each S&P 500 Stock Index represents 250 X index value at time of purchase
in notional par value. The total net notional amount and market value at
risk are $1,966,558 and $1,975,600, respectively. The determination of
notional amounts does not consider market risk factors and therefore
notional amounts as presented here are indicative only of volume of ac-
tivity and not a measure of market risk.
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. 21
<PAGE>
GOLDMAN SACHS CORE SMALL CAP EQUITY 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% per Class A and redemp-
tion charges of 5.0% and 1.0% for Class B and C, respectively and at NAV for
the Institutional and Service Classes) on August 15, 1997. For comparative
purposes, the performance of the Fund's benchmark (Russell 2000 Growth Index)
is shown. All performance 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 origi-
nal cost. Performance of Class C shares will vary due to differences in fees
and loads.
CORE SMALL CAP EQUITY FUND'S LIFETIME PERFORMANCE
GROWTH OF A $10,000 INVESTMENT, DISTRIBUTIONS REINVESTED AUGUST 15, 1997 TO
JANUARY 31, 1998
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CORE Small Cap CORE Small Cap CORE Small Cap CORE Small Cap CORE Small Cap
Equity Fund Equity Fund Equity Fund Equity Fund Equity Fund
(Class A) Russell 2000 Index Class B Class C Fund Institutional Class Service Class
<S> <C> <C> <C> <C> <C> <C>
08/15/1997 9500 10000 10000 10000 10000 10000
Aug-97 9707 10284 10260 10260 10270 10260
Sep-97 10340 11037 10940 10940 10950 10950
Oct-97 9896 10552 10460 10460 10480 10480
Nov-97 9849 10484 10400 10400 10430 10420
Dec-97 10206 10667 10767 10767 10807 10797
Jan-98 10054 10499 10105 10516 10657 10647
</TABLE>
<TABLE>
<CAPTION>
SINCE INCEPTION
AGGREGATE TOTAL RETURN THROUGH JANUARY 31, 1998
<S> <C> <C> <C>
CLASS A (COMMENCED AUGUST 15, 1997)
Excluding sales charges 6.37%
Including sales charges 0.54%
--------------------------------------------------
CLASS B (COMMENCED AUGUST 15, 1997)
Excluding redemption charges 6.07%
Including redemption charges 1.05%
--------------------------------------------------
CLASS C (COMMENCED AUGUST 15, 1997)
Excluding redemption charges 6.17%
Including redemption charges 5.16%
--------------------------------------------------
INSTITUTIONAL CLASS
(COMMENCED AUGUST 15, 1997) 6.57%
--------------------------------------------------
SERVICE CLASS (COMMENCED
AUGUST 15, 1997) 6.47%
--------------------------------------------------
</TABLE>
22
<PAGE>
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - 94.1%
<C> <S> <C>
AEROSPACE & DEFENSE - 1.1%
3,800 AAR Corp. $ 172,900
3,000 Alliant Techsystems, Inc.* 178,313
-----------
351,213
--------------------------------------------------------
AGRICULTURE/HEAVY EQUIPMENT - 1.2%
6,300 Allied Products Corp. 145,688
11,100 Terex Corp.* 233,794
-----------
379,482
--------------------------------------------------------
AIRLINES - 0.9%
13,100 America West Holdings Corp.* 285,744
--------------------------------------------------------
ALCOHOLIC BEVERAGES - 0.8%
4,300 Adolph Coors Co. Class B 136,525
16,700 The Boston Beer Co., Inc.* 132,556
-----------
269,081
--------------------------------------------------------
APPARREL & TEXTILES - 1.2%
8,200 Nautica Enterprises, Inc.* 229,600
3,600 Oxford Industries, Inc. 108,000
2,550 Pacific Sunwear of California* 73,313
-----------
410,913
--------------------------------------------------------
AUTO/VEHICLE - 0.6%
3,700 Budget Group, Inc.* 129,269
3,800 Exide Corp. 83,838
-----------
213,107
--------------------------------------------------------
AUTOPARTS - 1.9%
2,900 Arvin Industries, Inc. 100,050
13,200 Excel Industries, Inc. 233,475
6,200 Federal-Mogul Corp. 279,000
-----------
612,525
--------------------------------------------------------
BANKS - 4.7%
12,400 CNB Bancshares, Inc. 542,500
4,200 Community Bank System, Inc. 130,461
5,500 First Commonwealth Financial Corp. 168,438
7,600 First Republic Bank Corp.* 238,925
3,300 Onbancorp 230,175
3,700 Southwest Bancorp of Texas, Inc.* 129,269
3,400 UST Corp. 85,000
-----------
1,524,768
--------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
BUSINESS SERVICES - 5.0%
6,000 AC Nielsen Corp.* $ 129,750
12,400 American Business Information, Inc.* 155,000
26,100 BA Merchant Services, Inc.* 440,435
2,900 Bowne & Co., Inc. 106,394
6,200 Commonwealth Telephone Enterprises, Inc.* 145,700
5,000 Corestaff, Inc.* 122,500
5,800 Cort Business Services Corp.* 222,938
11,500 Interim Services, Inc.* 274,563
4,500 Medaphis Corp.* 35,859
-----------
1,633,139
---------------------------------------------------------------
CHEMICAL PRODUCTS - 3.0%
4,300 Albemarle Corp. 95,138
4,400 Dexter Corp. 179,575
10,200 The Scotts Co.* 321,938
4,700 Waters Corp.* 216,788
8,500 Wellman, Inc. 152,469
-----------
965,908
---------------------------------------------------------------
COMMERCIAL PRODUCTS - 0.5%
5,200 Knoll, Inc.* 160,225
---------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES - 1.9%
6,500 Platinum Technology, Inc.* 182,000
9,500 Intersolv, Inc.* 169,813
4,900 Synopsys, Inc.* 151,583
7,600 USCS International, Inc.* 117,800
-----------
621,196
---------------------------------------------------------------
COMPUTERS AND BUSINESS EQUIPMENT - 1.3%
7,100 Banctec, Inc.* 181,494
4,600 Inacom Corp.* 115,000
6,500 Sandisk Corp.* 130,000
-----------
426,494
---------------------------------------------------------------
CONSTRUCTION MATERIALS - 0.6%
8,600 Florida Rock Industrial, Inc. 184,900
---------------------------------------------------------------
CONSTRUCTION/ENVIRONMENTAL SERVICES - 2.4%
5,900 ACX Technologies, Inc.* 137,175
7,600 Caci International, Inc.* 161,500
9,600 Newpark Resources, Inc.* 156,000
4,100 Stone & Webster, Inc. 158,875
7,900 US Rentals, Inc.* 176,763
-----------
790,313
---------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 23
<PAGE>
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
CONSUMER PRODUCTS - 0.5%
6,100 Herbalife International, Inc. $ 149,450
--------------------------------------------------------------
CONSUMER STAPLES - 1.1%
10,600 Nu Skin Asia Pacific, Inc.* 245,788
23,400 Paragon Trade Brands, Inc.* 112,613
-----------
358,401
--------------------------------------------------------------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT - 2.4%
6,300 Anixter International, Inc.* 104,736
3,600 Avid Technology, Inc.* 104,850
2,400 Dynatech Corp.* 112,800
4,400 Input/Output, Inc.* 87,450
2,600 Marshall Industries, Inc.* 78,325
2,100 Sanmina Corp.* 141,225
8,500 Unitrode Corp.* 154,063
-----------
783,449
--------------------------------------------------------------
ENTERTAINMENT & LEISURE - 1.0%
16,400 Ascent Entertainment Group* 174,250
20,500 Boyd Gaming Corp.* 146,063
-----------
320,313
--------------------------------------------------------------
FINANCIAL SERVICES - 1.7%
3,400 Americredit Corp.* 82,450
5,600 Homeside, Inc.* 155,400
3,200 Jeffries Group, Inc. 123,200
11,425 Resource Bancshares Mortgage Group, Inc. 184,942
-----------
545,992
--------------------------------------------------------------
FOOD & BEVERAGES - 1.8%
5,100 Michael Foods, Inc. 127,500
14,900 Pilgrims Pride Corp. 227,225
13,700 Ralcorp. Holdings, Inc.* 228,619
-----------
583,344
--------------------------------------------------------------
FOREST PRODUCTS - 0.5%
3,800 United Stationers, Inc.* 182,875
--------------------------------------------------------------
GAMING - 0.3%
7,100 Grand Casinos, Inc.* 94,963
--------------------------------------------------------------
HEALTH AND BEAUTY AIDS - 0.3%
2,900 Alberto Culver Co. Class B 85,913
--------------------------------------------------------------
HEALTH SUPPLIES/SERVICES - 0.5%
3,700 Cohu, Inc. 159,100
--------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
HEALTHCARE MANAGEMENT - 5.3%
12,800 American Homepatient, Inc.* $ 297,597
6,300 Coventry Corp.* 84,656
6,993 Integrated Health Services, Inc. 200,175
4,600 Mariner Health Group, Inc.* 70,725
4,200 Medimmune, Inc.* 192,675
8,700 Novacare, Inc.* 108,750
6,500 Oec Medical Systems, Inc.* 143,810
7,700 Paragon Health Network, Inc.* 142,450
4,600 Prime Hospitality Corp.* 86,825
2,900 Quest Diagnostics, Inc.* 48,213
11,600 Sun Healthcare Group, Inc.* 216,050
6,000 Trigon Healthcare, Inc.* 149,250
-----------
1,741,176
---------------------------------------------------------
HOMEBUILDERS - 1.1%
3,000 Fairfield Communities, Inc.* 126,000
10,104 Lennar Corp. 248,175
-----------
374,175
---------------------------------------------------------
HOTELS & RESTAURANTS - 1.8%
10,300 Buffets, Inc.* 94,631
8,500 Ruby Tuesday, Inc.* 211,969
7,000 Showbiz Pizza Time, Inc.* 172,375
4,000 Sonic Corp.* 113,000
-----------
591,975
---------------------------------------------------------
INDUSTRIAL MACHINERY - 3.0%
3,100 Applied Power, Inc. 216,225
10,300 Commercial Intertech Corp. 198,275
9,200 Kaydon Corp. 319,125
1,400 Nacco Industries, Inc. 140,613
1,400 SPX Corp.* 102,200
-----------
976,438
---------------------------------------------------------
INSURANCE - 0.3%
1,700 Capital Re Corp. 101,256
90 Medical Assurance, Inc.* 2,340
-----------
103,596
---------------------------------------------------------
INSURANCE - LIFE - 3.7%
2,500 Amerus Life Holdings, Inc. 85,933
7,200 Delphi Financial Group, Inc.* 318,600
5,100 Hartford Life, Inc. 218,344
9,600 John Alden Financial Corp. 208,800
10,000 Nationwide Financial Services, Inc. 366,875
-----------
1,198,552
---------------------------------------------------------
</TABLE>
24 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
INSURANCE-PROPERTY & CASUALTY - 1.4%
6,800 Chartwell Re Corp. $ 230,350
4,300 Fremont General Corp. 218,494
-----------
448,844
-------------------------------------------------------
INSURANCE BROKERS - 1.7%
3,500 Arthur J Gallagher & Co. 129,500
4,710 Fidelity National Financial, Inc. 135,413
3,900 First American Financial Corp. 194,025
3,300 SCPIE Holdings, Inc. 94,050
-----------
552,988
-------------------------------------------------------
INVESTMENT COMPANIES - 0.4%
3,700 Piper Jaffray Companies, Inc. 135,050
-------------------------------------------------------
MACHINERY - 1.0%
8,400 Columbus Mckinnon Corp. 191,100
5,700 Thomas Industries, Inc. 124,688
-----------
315,788
-------------------------------------------------------
MEDIA-ENTERTAINMENT - 1.8%
700 Cablevision Sys Corp.* 61,863
10,900 Jones Intercable, Inc.* 174,400
8,000 McClatchy Newspapers, Inc. 215,000
1,500 SFX Broadcasting Inc.* 129,188
-----------
580,450
-------------------------------------------------------
MINING - 0.3%
23,000 Hecla Mining Co.* 106,375
-------------------------------------------------------
MISCELLAENOUS - 0.9%
500 Alltrista Corp.* 14,344
4,600 California Water Services Group 134,550
3,900 Superior Telecom, Inc. 154,050
-----------
302,944
-------------------------------------------------------
NONFERROUS METALS - 0.9%
4,100 AFC Cable Systems, Inc.* 116,850
6,900 Encore Wire Corp.* 188,888
-----------
305,738
-------------------------------------------------------
OIL & GAS EXPLORATION/SERVICES - 3.6%
7,200 Barrett Resources Corp.* 201,600
6,300 Belco Oil & Gas Corp.* 117,731
9,800 Benton Oil & Gas Co.* 121,275
9,700 Cabot Oil & Gas Corp. 192,181
10,300 Marine Drilling Companies, Inc.* 185,400
8,500 Pool Energy Services Co.* 174,781
2,100 Seacor Smit, Inc.* 107,100
6,700 Seitel, Inc.* 93,381
-----------
1,193,449
-------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
PACKAGING - 0.9%
5,600 Aptargroup, Inc. $ 285,600
-----------------------------------------------------------
PHARMACEUTICALS - 1.6%
7,000 Advanced Tissue Sciences, Inc.* 96,250
6,100 Alpharma, Inc. 125,431
7,700 Bindley Western Industries, Inc. 215,119
4,175 Organogenesis, Inc.* 92,111
-----------
528,911
-----------------------------------------------------------
PIPELINES - 0.9%
5,500 Aquarion Co. 190,781
3,500 Oneok, Inc. 119,656
-----------
310,437
-----------------------------------------------------------
RECREATIONAL PRODUCTS - 1.0%
10,900 Huffy Corp. 160,775
6,800 Russ Berrie and Co., Inc. 174,675
-----------
335,450
-----------------------------------------------------------
RETAIL - 7.1%
6,300 Best Buy Co., Inc.* 318,938
4,904 Consolidated Stores Corp.* 201,677
4,300 Department 56, Inc.* 122,281
4,600 Ethan Allen Interiors, Inc. 220,225
5,900 Furniture Brands International, Inc.* 152,294
6,800 Michaels Stores, Inc.* 209,100
8,500 Microage, Inc.* 92,969
9,800 Pier 1 Imports, Inc. 229,075
6,300 Proffitt's, Inc.* 185,063
6,100 Williams-Sonoma, Inc.* 259,632
13,600 Zale Corp.* 333,200
-----------
2,324,454
-----------------------------------------------------------
SAVINGS AND LOAN - 2.2%
4,300 Albank Financial Corp. 195,113
5,700 Firstfed Financial Corp.* 200,213
17,100 Sovereign Bancorp, Inc. 318,488
-----------
713,814
-----------------------------------------------------------
SEMICONDUCTORS - 0.9%
8,000 California Microwave, Inc.* 146,000
4,000 Esterline Technologies Corp.* 137,250
-----------
283,250
-----------------------------------------------------------
SPECIALTY RETAIL - 1.2%
3,100 Abercrombie & Fitch Co.* 96,488
3,000 Brylane, Inc.* 149,250
4,400 Goody's Family Clothing, Inc.* 150,700
-----------
396,438
-----------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 25
<PAGE>
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
STEEL - 2.9%
8,500 AK Steel Holding Corp. $ 151,934
6,400 Lone Star Technologies, Inc.* 185,200
7,800 National Steel Corp.* 100,425
5,300 Reliance Steel & Aluminum Corp. 173,244
7,200 Texas Industries, Inc. 352,350
-----------
963,153
------------------------------------------------------------
SUPERMARKETS - 1.1%
13,600 Fleming Companies, Inc. 204,850
2,800 Whole Foods Market, Inc.* 140,700
-----------
345,550
------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT - 0.7%
1,500 Amphenol Corp.* 80,438
5,600 Sawtek, Inc.* 145,950
-----------
226,388
------------------------------------------------------------
TELECOMMUNICATIONS SERVICES - 1.0%
3,600 Mobile Telecomm Technology Corp.* 81,225
12,400 Paging Network, Inc.* 158,875
2,800 Premisys Communications, Inc.* 79,975
-----------
320,075
------------------------------------------------------------
TEMPORARY HEALTH SERVICES - 0.2%
3,000 Staffmark, Inc.* 75,375
------------------------------------------------------------
TIRE AND OTHER RELATED RUBBER PRODUCTS - 0.5%
3,600 Carlisle Companies, Inc. 159,300
------------------------------------------------------------
TOBACCO - 1.6%
6,700 Consolidated Cigar Holdings, Inc.* 161,638
10,400 Schweitzer-Mauduit International, Inc. 371,800
-----------
533,438
------------------------------------------------------------
TRUCK RENTAL - 1.0%
17,900 Rollins Truck Leasing Corp. 325,556
------------------------------------------------------------
TRUCKING - 2.6%
2,600 Airborne Freight Corp. 184,925
3,900 Avondale Industries, Inc.* 110,297
19,800 Consolidated Freightways Corp.* 293,288
8,300 Yellow Corp.* 216,838
-----------
805,348
------------------------------------------------------------
UTILITIES-ELECTRIC - 2.4%
11,600 Public Service Company of
New Mexico $ 262,450
10,200 TNP Enterprises, Inc. 341,063
10,900 Calpine Corp.* 171,675
-----------
775,188
------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION VALUE
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
TOTAL COMMON STOCKS
(COST $29,965,522) $30,728,071
----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
U.S. TREASURY OBLIGATIONS - 0.2%
<C> <S> <C>
$65,000 U.S. Treasury Bills 5.12%-5.60%, 02/05/98-02/12/98 $ 64,951
----------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $64,951) $ 64,951
----------------------------------------------------------------------------
REPURCHASE AGREEMENT - 2.5%
$800,000 Joint Repurchase Agreement Account(b)
5.64%, 02/02/98 $ 800,000
----------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $800,000) $ 800,000
----------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $30,830,473) $31,593,022
----------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION:
Gross unrealized gain for investments in which value exceeds
cost $ 1,915,825
Gross unrealized loss for investments in which cost exceeds
value (1,213,520)
----------------------------------------------------------------------------
Net unrealized gain $ 702,305
----------------------------------------------------------------------------
</TABLE>
Futures contracts open at January 31, 1998 are as follows:
<TABLE>
<CAPTION>
Number of
Contracts Settlement Unrealized
Type Long(c) Month Gain
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
S&P 500 Stock Index 9 March 1998 $394
----------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $30,890,717.
(b) Portion of this security is being segregated as collateral for futures
contracts.
(c) Each S&P 500 Stock Index represents 250 X index value at time of purchase
in notional par value. The total net notional amount and market value at
risk are $200,000 and $646,575, respectively. The determination of
notional amounts does not consider market risk factors and therefore
notional amounts as presented here are indicative only of volume of ac-
tivity and not a measure of market risk.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
26 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE INTERNATIONAL EQUITY 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% per Class A and redemp-
tion charges of 5.0% and 1.0% for Class B and C, respectively and at NAV for
the Institutional and Service Classes) on August 15, 1997. For comparative
purposes, the performance of the Fund's benchmark (Morgan Stanley gross Eu-
rope, Australia, Far East Index) is shown. All performance data shown repre-
sents 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.
CORE INTERNATIONAL EQUITY FUND'S LIFETIME PERFORMANCE
GROWTH OF A $10,000 INVESTMENT, DISTRIBUTIONS REINVESTED AUGUST 15, 1997 TO
JANUARY 31, 1998
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
CORE International Morgan Stanley Class B Fund Class C Fund Institutional Class Service Class
Equity Fund (Class A) Gross EAFE
<S> <C> <C> <C> <C> <C> <C>
08/15/1997 9450 10000 10000 10000 10000 10000
Aug-97 9045 9540 9570 9570 9570 9570
Sep-97 9405 10076 9950 9950 9960 9950
Oct-97 8620 9304 9110 9120 9130 9120
Nov-97 8365 9211 8840 8840 8860 8850
Dec-97 8293 9294 8760 8770 8794 8780
Jan-98 8728 9722 8749 8128 9255 9230
</TABLE>
<TABLE>
<CAPTION>
SINCE INCEPTION
AGGREGATE TOTAL RETURN THROUGH JANUARY 31, 1998
<S> <C> <C> <C>
CLASS A (COMMENCED AU-
GUST 15, 1997)
Excluding sales charges -7.66%
Including sales charges -12.72%
--------------------------------------------------
CLASS B (COMMENCED AU-
GUST 15, 1997)
Excluding redemption
charges -7.90%
Including redemption
charges -12.51%
--------------------------------------------------
CLASS C (COMMENCED AU-
GUST 15, 1997)
Excluding redemption
charges -7.80%
Including redemption
charges -8.72%
--------------------------------------------------
INSTITUTIONAL CLASS
(COMMENCED AUGUST 15,
1997) -7.45%
--------------------------------------------------
SERVICE CLASS (COMMENCED
AUGUST 15, 1997) -7.70%
--------------------------------------------------
</TABLE>
27
<PAGE>
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - 93.5%
AUSTRALIAN DOLLAR - 0.5%
3,200 Coles Myer Ltd. (Retail)* $ 16,146
16,000 David Jones Ltd. (Retail)* 17,328
20,000 News Corporation (Media/Entertainment) 125,986
----------
159,460
------------------------------------------------------------
AUSTRIAN SCHILLING - 1.9%
650 Creditanstalt Bank (Bank) 46,192
750 Va Stahl AG (Steel) 26,941
8,350 Z Laenderbank Bank Austria AG (Bank) 471,473
----------
544,606
------------------------------------------------------------
BELGIAN FRANC - 0.8%
150 Generale de Banque (Bank) 64,881
1,700 Tractebel Inv International
(Conglomerate) 156,733
----------
221,614
------------------------------------------------------------
BRITISH POUND STERLING - 16.1%
7,000 Abbey National (Insurance) 140,558
19,300 Barclays (Bank) 581,309
8,800 Bat Industries (Tobacco) 80,162
9,500 British Aerospace (Aerospace &
Defense) 246,589
29,900 British Petroleum (Oil & Gas) 403,673
94,800 British Telecom (Telecommunications) 905,352
57,700 Cable & Wireless (Telecommunications) 546,333
31,800 Glaxo Wellcome (Pharmaceuticals) 852,939
19,300 HSBC Holdings (Bank) 475,888
22,500 Royal Bank of Scotland Group (Bank) 319,564
15,900 Tesco (Supermarkets) 139,907
----------
4,692,274
------------------------------------------------------------
DANISH KRONE - 1.2%
2,600 Tele Danmark AS (Telecommunications) 168,718
2,300 Unidanmark (Bank) 172,313
----------
341,031
------------------------------------------------------------
FINNISH MARKKA - 4.8%
68,500 Enso OY (Forest Products) $ 555,711
34,250 Finnair (Airlines) 307,493
37,250 Metsa Serla OY (Forest Products) 282,047
3,100 Nokia AB OY (Electronics) 241,659
1,386,910
------------------------------------------------------------
FRENCH FRANC - 6.8%
5,750 Axa Uap (Insurance) 476,848
1,900 Cie Financier de Paribas (Bank) 169,640
5,100 Elf Aquitaine (Oil & Gas Exploration) 573,799
1,800 Erid Beghin Say (Consumer Staples) 319,664
2,300 Rhone Poulenc SA (Chemical Products) 104,925
1,650 Suez Lyonn Eaux (Bank) 195,978
10,550 Usinor (Steel) 144,730
----------
1,985,584
------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
GERMAN DEUTSCHE MARK - 10.1%
400 Allianz AG (Insurance) $ 119,002
2,400 Axa Colonia Konz (Insurance) 222,327
3,050 BASF AG (Chemical Products) 103,143
12,450 Commerzbank AG (Bank) 451,949
14,100 Deutsche Bank AG (Bank) 915,809
5,500 Deutsche Telekom (Telecommunications) 96,075
21,865 Deutz AG (Machinery) 155,164
2,100 Fag Kugelfischer (Industrial Machinery) 26,125
3,100 Hoechst AG (Pharmaceuticals) 108,811
10,600 Merck Kgaa (Pharmaceuticals) 374,376
2,600 Siemens AG (Electronics) 158,606
350 Viag AG (Conglomerate) 201,567
----------
2,932,954
---------------------------------------------------------------------------
HONG KONG DOLLAR - 2.7%
94,000 Hong Kong Electric (Utility) 335,931
68,000 Hong Kong Land Holdings ADR
(Real Estate) 109,290
7,000 Hutchison Whampoa (Conglomerate)* 41,166
63,000 Swire Pacific (Conglomerate)* 286,623
----------
773,010
---------------------------------------------------------------------------
ITALIAN LIRA - 3.6%
23,700 Banca Comm Italiana (Bank) 96,911
102,600 Fiat SPA (Auto/Vehicle) 338,641
113,600 Ist Naz Ass (Insurance) 250,175
22,000 Istit Fin Ind (Conglomerate) 363,370
----------
1,049,097
---------------------------------------------------------------------------
JAPANESE YEN - 22.2%
33,000 Citizen Watch Co. (Jewelry) 233,950
99 East Japan Railway (Railroads) 463,222
67,000 Fuji Bank (Bank) 420,166
31,000 Fujitsu (Computers and Business
Equipment) 354,076
87,000 Hino Motors (Industrial Machinery) 265,215
91,000 Hitachi (Electronics) 716,818
30,000 Izumiya Co. (Retail) 199,685
64,000 Konica Corporation (Computers and Business Equipment) 326,176
106,000 Long Credit Bank Japan (Bank) 237,968
205,000 Marubeni Corp. (Trading) 513,509
39,000 Matsushita Electric Industries (Retail) 588,557
150,000 Mitsubishi Chemical (Chemical Products) 264,671
30,000 Nippon Paper Industries (Forest Products) 134,935
15 Nippon Telephone Corp. (Telecommunications) 137,682
52,000 Nissan Motor Co. (Auto/Vehicle) 231,430
89,000 Snow Brand Milk (Food & Beverages) 279,023
32,000 Takashimaya Co (Retail) 247,783
4,000 Tokyo Electric Power (Utility) 74,675
45,000 Toppan Printing Co. (Business Services) 560,063
50,000 Toshiba Corp. (Industrial Machinery) 232,767
----------
6,482,371
---------------------------------------------------------------------------
</TABLE>
28 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Statement of Investments
January 31, 1998
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
MALAYSIAN RINGGIT - 1.6%
793,000 Berjaya Group Berhad (Conglomerate) $ 146,153
236,000 Lion Land Berhad (Real Estate) 33,113
75,000 Malaysia Airline Systems (Airlines) 63,496
25,000 Malaysia International Shipping (Trucking) 28,775
26,000 Rothmans Pall Mall (Tobacco) 205,589
-----------
477,126
-----------------------------------------------------------------
NETHERLANDS GUILDER - 5.7%
1,300 Aegon NV (Insurance) 123,858
1,900 Asr Verzekeringsgr (Insurance) 118,112
12,800 Ing Groep NV (Financial Services) 585,270
9,200 KLM (Airlines) 318,617
9,000 Kon Hoogovensnv (Steel) 386,670
1,900 Philips Electronic (Retail) 128,105
-----------
1,660,632
-----------------------------------------------------------------
NORWEGIAN KRONE - 2.0%
8,000 Bergesen DY AS (Trucking) 173,115
2,700 Kvaerner ASA (Agriculture/Heavy Equipment) 95,187
1,700 Kvaerner ASA (Agriculture/Heavy Equipment) 65,522
5,400 Norsk Hydro AS (Oil & Gas Services) 242,710
-----------
576,534
-----------------------------------------------------------------
PORTUGUESE ESCUDO - 0.5%
7,500 Elec de Portugal (Utility) 154,964
-----------------------------------------------------------------
SINGAPORE DOLLAR - 0.4%
101,000 National Steel Ltd. (Steel) 83,651
7,000 Singapore Airlines (Airlines) 45,728
-----------
129,379
-----------------------------------------------------------------
SPANISH PESETA - 4.1%
2,100 Banco Santander (Bank) 73,986
12,800 Iberdrola SA (Utility)* 193,327
28,700 Telefonica de Espana
(Telecommunications) 937,251
-----------
1,204,564
-----------------------------------------------------------------
SWEDISH KRONA - 2.4%
2,100 Incentive AB (Agriculture/Heavy
Equipment) 186,929
13,700 Skand Enskilda Banken (Bank) 168,904
12,600 Volvo AB (Auto/Vehicle) 344,355
-----------
700,188
-----------------------------------------------------------------
SWISS FRANC - 6.1%
230 George Fischer AG (Industrial Machinery) 349,332
40 Jelmoli Holdings AG (Retail) 38,747
460 Novartis AG (Pharmaceuticals) 785,229
260 Novartis AG (Pharmaceuticals) 444,917
300 Zurich Versicherun (Insurance) 149,655
-----------
1,767,880
-----------------------------------------------------------------
TOTAL COMMON STOCKS
(COST $27,115,202) $27,240,178
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
SHORT-TERM OBLIGATIONS - 8.2%
$2,391,000 State Street Bank & Trust
Euro Time Deposit 5.563%, 02/02/98 $ 2,391,000
------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(COST $2,391,000) $ 2,391,000
------------------------------------------------------------
TOTAL INVESTMENTS
(COST $29,506,202) (A) $29,631,178
------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
FEDERAL INCOME TAX INFORMATION:
Gross unrealized gain for investments in which value exceeds
cost $ 1,572,823
Gross unrealized loss for investments in which cost exceeds
value (1,504,964)
---------------------------------------------------------------------------
Net unrealized gain $ 67,859
---------------------------------------------------------------------------
</TABLE>
* Non Income Producing.
(a) The aggregate cost for federal income tax purposes is $29,563,319.
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 CLASSIFICATIONS
Aerospace & Defense 0.8%
Agriculture/Heavy Equipment 1.2
Airlines 2.5
Auto/Vehicle 3.1
Bank 16.8
Business Services 1.9
Chemical Products 1.6
Computers and Business Equipment 2.3
Conglomerate 4.1
Consumer Staples 1.1
Electronics 3.8
Financial Services 2.0
Food & Beverages 1.0
Forest Products 3.3
Industrial Machinery 3.0
Insurance 5.5
Jewelry 0.8
Machinery 0.5
Media/Entertainment 0.4
Oil & Gas 1.4
Oil & Gas Exploration 2.0
Oil & Gas Services 0.8
Pharmaceuticals 8.8
Railroads 1.6
Real Estate 0.5
Retail 4.2
Steel 2.2
Supermarkets 0.5
Telecommunications 9.7
Tobacco 1.0
Trading 1.8
Trucking 0.7
Utility 2.6
---------------------------------------------
TOTAL COMMON STOCKS 93.5%
---------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 29
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Statements of Assets and Liabilities
January 31, 1998
<TABLE>
<CAPTION>
GOLDMAN SACHS
CORE U.S.
EQUITY FUND
ASSETS:
<S> <C>
Investment in securities, at value (identified cost,
$520,501,426, $69,319,703, $30,830,473 and $29,506,202) $670,339,143
Cash 85,588
Receivables:
Investment securities sold --
Fund shares sold 5,092,731
Dividends and interest 606,916
Variation margin 3,850
Deferred organization expenses, net --
Other assets 7,229
-----------------------------------------------------------------------------
TOTAL ASSETS 676,135,457
-----------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased --
Forward foreign currency exchange contracts --
Fund shares repurchased 306,950
Amounts owed to affiliates 1,099,005
Variation margin --
Accrued expenses and other liabilities 127,372
-----------------------------------------------------------------------------
TOTAL LIABILITIES 1,533,327
-----------------------------------------------------------------------------
NET ASSETS:
Paid-in capital 520,091,264
Accumulated undistributed (distributions in excess of) net
investment income (loss) 75,033
Accumulated undistributed (distributions in excess of) net
realized gain (loss) on investment and futures transactions 4,515,480
Accumulated net realized foreign currency loss --
Net unrealized gain on investments and futures 149,920,353
Net unrealized loss on translation of assets and liabilities,
as denominated in foreign currencies --
-----------------------------------------------------------------------------
NET ASSETS $674,602,130
-----------------------------------------------------------------------------
</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) 14,985,404 2,249,148 238,838
Net asset and Class A redemption value per
share(a) $26.59 $26.32 $26.24
Maximum public offering price per share
(Class A NAV X 1.0582) $28.14 $26.32 $26.24
-----------------------------------------------------------------------------
<CAPTION>
INSTITUTIONAL SERVICE
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Total shares of beneficial interest
outstanding, $.001 par value (unlimited
shares authorized) 7,573,189 295,570
Net asset value, offering and redemption
price per share $26.79 $26.53
-----------------------------------------------------------------------------
</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.
30 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
<TABLE>
<CAPTION>
GOLDMAN SACHS GOLDMAN SACHS GOLDMAN SACHS
CORE LARGE CAP CORE SMALL CAP CORE INTERNATIONAL
GROWTH FUND EQUITY FUND EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$74,329,935 $31,593,022 $29,631,178
99,811 91,563 1,303,278
-- -- 261,002
2,237,097 1,147,846 1,971,336
25,623 8,526 27,624
1,072 -- --
42,438 45,342 45,342
124,918 40,508 27,076
------------------------------------------------------------------------------
76,860,894 32,926,807 33,266,836
------------------------------------------------------------------------------
-- -- 3,842,039
-- -- 15,791
69,803 52,577 68,995
125,260 48,289 24,869
-- 2,918 --
119,678 162,648 179,635
------------------------------------------------------------------------------
314,741 266,432 4,131,329
------------------------------------------------------------------------------
72,037,383 32,319,133 29,722,894
(16,664) (35,674) (11,740)
(493,840) (386,027) (539,186)
-- -- (136,569)
5,019,274 762,943 632,463
-- -- (532,355)
------------------------------------------------------------------------------
$76,546,153 $32,660,375 $29,135,507
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4,491,866 1,162,113 346,492 1,049,487 942,850 242,025 768,392 295,542 174,438
$11.97 $11.92 $11.93 $10.59 $10.56 $10.57 $9.22 $9.21 $9.22
$12.67 $11.92 $11.93 $11.21 $10.56 $10.57 $9.76 $9.21 $9.22
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
388,928 9,619 850,858 160 1,920,464 161
$11.97 $11.95 $10.61 $10.60 $9.24 $9.23
----------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 31
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Statements of Operations
For the Year Ended January 31, 1998
<TABLE>
<CAPTION>
GOLDMAN SACHS
CORE U.S.
EQUITY FUND
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends(a) $ 8,627,109
Interest 756,432
-------------------------------------------------------------------------------
TOTAL INCOME 9,383,541
-------------------------------------------------------------------------------
EXPENSES:
Management fees 3,924,639
Distribution fees 1,051,090
Authorized dealer service fees 864,664
Service class fees 27,222
Transfer agent fees 483,534
Custodian fees 149,262
Professional fees 63,446
Registration fees 44,088
Amortization of deferred organization expenses --
Trustee fees 5,519
Other 131,103
-------------------------------------------------------------------------------
TOTAL EXPENSES 6,744,567
-------------------------------------------------------------------------------
Less -- expenses reimbursed and fees waived by
Goldman Sachs (951,935)
-------------------------------------------------------------------------------
NET EXPENSES 5,792,632
-------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 3,590,909
-------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT, FUTURES AND FOREIGN CUR-
RENCY TRANSACTIONS:
Net realized gain (loss) from:
Investment transactions 50,034,399
Futures transactions 1,626,406
Foreign currency related transactions --
Net change in unrealized gain (loss) on:
Investments 58,744,545
Futures (9,164)
Translation of assets and liabilities denominated
in foreign currencies --
-------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT, FUTURES AND FOREIGN CURRENCY
TRANSACTIONS: 110,396,186
-------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $113,987,095
-------------------------------------------------------------------------------
</TABLE>
(a) For the CORE U.S. Equity, CORE Large Cap Growth and CORE International
Funds, taxes withheld on dividends were $47,374, $396 and $11,406, re-
spectively.
(b) Commencement dates of operations for the CORE Large Cap Growth, CORE
Small Cap Equity and CORE International Equity Funds were May 1, 1997,
August 15, 1997 and August 15, 1997, respectively.
32 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
<TABLE>
<CAPTION>
GOLDMAN SACHS GOLDMAN SACHS GOLDMAN SACHS
CORE LARGE CAP CORE SMALL CAP CORE INTERNATIONAL
GROWTH FUND(B) EQUITY FUND(B) EQUITY FUND(B)
<S> <C> <C>
$ 258,531 $ 48,424 $ 69,116
50,565 35,771 31,547
---------------------------------------------------------------------------------------
309,096 84,195 100,663
---------------------------------------------------------------------------------------
228,283 74,140 57,835
103,136 31,000 11,569
75,661 14,932 5,688
256 -- --
108,014 62,625 36,474
73,860 35,519 57,237
65,445 30,526 31,272
57,476 63,025 73,316
7,562 4,658 4,658
372 233 284
40,064 23,361 19,825
---------------------------------------------------------------------------------------
760,129 340,019 298,158
---------------------------------------------------------------------------------------
(440,292) (216,739) (212,859)
---------------------------------------------------------------------------------------
319,837 123,280 85,299
---------------------------------------------------------------------------------------
(10,741) (39,085) 15,364
---------------------------------------------------------------------------------------
1,348,933 (254,571) (539,186)
(2,540) (21,950) --
-- -- (150,509)
5,010,232 762,549 632,463
9,042 394 --
-- -- (532,355)
---------------------------------------------------------------------------------------
6,365,667 486,422 (589,587)
---------------------------------------------------------------------------------------
$6,354,926 $ 447,337 $ 574,223
---------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 33
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
GOLDMAN SACHS GOLDMAN SACHS
CORE U.S. EQUITY FUND CORE U.S. EQUITY FUND
FOR THE YEAR ENDED FOR THE YEAR ENDED
JANUARY 31, 1998 JANUARY 31, 1997
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ 3,590,909 $ 3,164,879
Net realized gain (loss) on
investment and futures
transactions 51,660,805 15,032,718
Net realized loss on foreign
currency related transactions -- --
Net change in unrealized gain
on investments and futures 58,735,381 49,460,545
Net change in unrealized loss
on translation of assets and
liabilities denominated in
foreign currencies -- --
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS 113,987,095 67,658,142
------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A shares (1,575,637) (1,515,575)
Class B shares -- (4,750)
Class C shares -- --
Institutional shares (1,709,339) (1,606,175)
Service shares (33,980) (6,666)
In excess of net investment
income
Class A shares (51,278) --
Class B shares (119,427) (118,421)
Class C shares (23,315) --
Institutional shares -- (34,205)
Service shares (2,900) (16,030)
From net realized gain on
investment, foreign currency
and futures transactions
Class A shares (30,719,012) (7,174,235)
Class B shares (3,604,362) (440,131)
Class C shares (101,633) --
Institutional shares (15,675,265) (4,675,726)
Service shares (556,742) (68,472)
In excess of net realized gain
on investment, foreign
currency and futures
transactions
Class A shares -- --
Class B shares (633,585) --
Class C shares (257,250) --
Institutional shares -- --
Service shares -- --
------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (55,063,725) (15,660,386)
------------------------------------------------------------------------------
FROM SHARE TRANSACTIONS:
Net proceeds from sales of
shares 265,252,943 167,209,718
Reinvestment of dividends and
distributions 52,659,270 14,904,237
Cost of shares repurchased (98,067,148) (32,152,494)
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 219,845,065 149,961,461
------------------------------------------------------------------------------
TOTAL INCREASE 278,768,435 201,959,217
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 395,833,695 193,874,478
------------------------------------------------------------------------------
End of period $674,602,130 $395,833,695
------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED
(DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME $ 75,033 $ --
------------------------------------------------------------------------------
</TABLE>
(a) Commencement dates of operations for the CORE Large Cap Growth, CORE
Small Cap Equity and CORE International Equity Funds were May 1, 1997,
August 15, 1997 and August 15, 1997, respectively.
34 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
<TABLE>
<CAPTION>
GOLDMAN SACHS GOLDMAN SACHS GOLDMAN SACHS
CORE LARGE CAP GROWTH FUND CORE SMALL CAP EQUITY FUND CORE INTERNATIONAL EQUITY FUND
FOR THE PERIOD ENDED FOR THE PERIOD ENDED FOR THE PERIOD ENDED
JANUARY 31, 1998(A) JANUARY 31, 1998(A) JANUARY 31, 1998(A)
<S> <C> <C>
$ (10,741) $ (39,085) $ 15,364
1,346,393 (276,521) (539,186)
-- -- (150,509)
5,019,274 762,943 632,463
-- -- (532,355)
--------------------------------------------------------------------------------------------
6,354,926 447,337 (574,223)
--------------------------------------------------------------------------------------------
(10,499) -- --
-- -- --
-- -- --
(3) -- (13,900)
-- -- --
-- -- (1,401)
-- -- --
(461) -- --
-- -- --
(2) -- --
(1,161,485) -- --
(165,444) -- --
(16,967) -- --
(79) -- --
(1,739) -- --
(230,942) (37,526) --
(194,227) (34,574) --
(67,511) (7,527) --
-- (29,872) --
(1,839) (7) --
--------------------------------------------------------------------------------------------
(1,851,198) (109,506) (15,301)
--------------------------------------------------------------------------------------------
79,057,752 32,949,538 30,283,218
1,734,068 94,459 15,251
(8,749,395) (721,453) (573,438)
--------------------------------------------------------------------------------------------
72,042,425 32,322,544 29,725,031
--------------------------------------------------------------------------------------------
76,546,153 32,660,375 29,135,507
--------------------------------------------------------------------------------------------
-- -- --
--------------------------------------------------------------------------------------------
$76,546,153 $32,660,375 $29,135,507
--------------------------------------------------------------------------------------------
(16,664) $ (35,674) $ (11,740)
--------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 35
<PAGE>
GOLDMAN SACHS CORE U.S. EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS(E) DISTRIBUTIONS TO SHAREHOLDERS
------------------------- -----------------------------------------------------
NET REALIZED FROM NET IN EXCESS OF
NET ASSET AND UNREALIZED IN EXCESS REALIZED GAIN NET REALIZED GAIN NET INCREASE/
VALUE, NET GAIN (LOSS) ON FROM NET OF NET ON INVESTMENT ON INVESTMENT (DECREASE)
BEGINNING INVESTMENT INVESTMENTS INVESTMENT INVESTMENT AND FUTURES AND FUTURES IN NET ASSET
OF PERIOD INCOME AND FUTURES INCOME INCOME TRANSACTIONS TRANSACTIONS VALUE
FOR THE YEARS ENDED JANUARY 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 - Class A
Shares $23.32 $0.11 $5.63 $(0.12) $ -- $(2.35) $ -- $3.27
1998 - Class B
Shares 23.18 0.11 5.44 -- (0.06) (2.00) (.35) 3.14
1998 - Class C
Shares(b) 27.48 0.03 1.22 -- (0.14) (0.67) (1.68) (1.24)
1998 - Institu-
tional Shares 23.44 0.30 5.65 (0.24) (.01) (1.33) (1.02) 3.35
1998 - Service
Shares 23.27 0.19 5.57 (0.07) (.08) (2.35) -- 3.26
--------------------------------------------------------------------------------------------------------------------------
1997 - Class A
Shares 19.66 0.16 4.46 (0.16) -- (0.80) -- 3.66
1997 - Class B
Shares(b) 20.44 0.04 3.70 (0.04) (0.16) (0.80) -- 2.74
1997 - Institu-
tional Shares 19.71 0.30 4.51 (0.28) -- (0.80) -- 3.73
1997 - Service
Shares(b) 21.02 0.13 3.15 (0.13) (0.10) (0.80) -- 2.25
--------------------------------------------------------------------------------------------------------------------------
1996 - Class A
Shares 14.61 0.19 5.43 (0.16) -- (0.41) -- 5.05
1996 - Institu-
tional Shares(b) 16.97 0.16 3.23 (0.24) -- (0.41) -- 2.74
--------------------------------------------------------------------------------------------------------------------------
1995 - Class A
Shares 15.93 0.20 (0.38) (0.20) -- (0.94) -- (1.32)
--------------------------------------------------------------------------------------------------------------------------
1994 - Class A
Shares 15.46 0.17 2.08 (0.17) -- (1.61) -- 0.47
--------------------------------------------------------------------------------------------------------------------------
1993 - Class A
Shares 15.05 0.22 0.41 (0.22) -- -- -- 0.41
FOR THE PERIOD ENDED JANUARY 31,
1992 - Class A
Shares(b) 14.17 0.11 0.88 (0.11) -- -- -- 0.88
--------------------------------------------------------------------------------------------------------------------------
</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, Institutional and Sevice share activity
commenced on May 24, 1991, May 1, 1996, August 15, 1997, June 15,
1995 and June 7, 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.
36 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE U.S. EQUITY 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) EXPENSES TO INCOME (LOSS) TO
VALUE, END TOTAL TURNOVER COMMISSION PERIOD TO AVERAGE TO AVERAGE AVERAGE NET AVERAGE
OF PERIOD RETURN(A) RATE RATE(F) (IN 000S) NET ASSETS NET ASSETS ASSETS NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$26.59 24.96% 65.89% $.0651 $398,393 1.28% 0.51% 1.47% 0.32%
26.32 24.28 65.89 .0651 59,208 1.79 (0.05) 1.96 (0.22)
26.24 4.85(d) 65.89 .0651 6,267 1.78(c) (0.21)(c) 1.95(c) (0.38)(c)
26.79 25.76 65.89 .0651 202,893 0.65 1.16 0.82 0.99
26.53 25.11 65.89 .0651 7,841 1.15 0.62 1.32 0.45
- ------------------------------------------------------------------------------------------------------------------------------
23.32 23.75 37.78 .0417 225,968 1.29 0.91 1.53 0.67
23.18 18.59(d) 37.28 .0417 17,258 1.83(c) 0.06(c) 2.00(c) (0.11)(c)
23.44 24.63 37.28 .0417 148,942 0.65 1.52 0.85 1.32
23.27 15.92(d) 37.28 .0417 3,666 1.15(c) 0.69(c) 1.35(c) 0.49(c)
- ------------------------------------------------------------------------------------------------------------------------------
19.66 38.63 39.35 -- 129,045 1.25 1.01 1.55 0.71
19.71 20.14(d) 39.35 -- 64,829 0.65(c) 1.49(c) 0.96(c) 1.18(c)
- ------------------------------------------------------------------------------------------------------------------------------
14.61 (1.10) 56.18 -- 94,968 1.38 1.33 1.63 1.08
- ------------------------------------------------------------------------------------------------------------------------------
15.93 15.12 87.73 -- 92,769 1.42 0.92 1.67 0.67
- ------------------------------------------------------------------------------------------------------------------------------
15.46 4.30 144.93 -- 117,757 1.28 1.30 1.53 1.05
- ------------------------------------------------------------------------------------------------------------------------------
15.05 7.01(d) 135.02 -- 151,142 1.57(c) 1.24(c) 1.82(c) 0.99(c)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS(E) DISTRIBUTIONS TO SHAREHOLDERS
---------------------------- ----------------------------------------------------
NET REALIZED FROM NET IN EXCESS OF NET
NET ASSET AND UNREALIZED IN EXCESS REALIZED GAIN REALIZED GAIN
VALUE, NET GAIN (LOSS) ON FROM NET OF NET ON INVESTMENT ON INVESTMENT NET INCREASE
BEGINNING INVESTMENT INVESTMENTS INVESTMENT INVESTMENT AND FUTURES AND FUTURES IN NET ASSET
OF PERIOD INCOME (LOSS) AND FUTURES INCOME INCOME TRANSACTIONS TRANSACTIONS VALUE
FOR THE PERIOD ENDED JANUARY 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998 - Class A
Shares(b) $10.00 $ 0.01 $2.35 $(0.01) -- $(0.32) $(0.06) $1.97
1998 - Class B
Shares(b) 10.00 (0.03) 2.33 -- -- (0.18) (0.20) 1.92
1998 - Class C
Shares(b) 11.80 (0.02) 0.54 -- (.01) (0.38) -- 0.13
1998 - Institu-
tional Shares(b) 10.00 0.01 2.35 (0.01) -- (0.19) (0.19) 1.97
1998 - Service
Shares(b) 10.00 (0.02) 2.35 -- -- (0.08) (0.30) 1.95
</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 Institutional and Service share activity commenced
on May 1, 1997. Class C share activity commenced on August 15, 1997.
(c) Annualized.
(d) Not annualized.
(e) Includes the balancing effect of calculating per share amounts.
38 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE LARGE CAP GROWTH FUND
<TABLE>
<CAPTION>
RATIOS ASSUMING NO VOLUNTARY WAIVER
OF FEES OR EXPENSE LIMITATIONS
-----------------------------------
RATIO OF
NET ASSETS RATIO OF RATIO OF RATIO OF NET INVESTMENT
NET ASSET PORTFOLIO AVERAGE AT END OF NET EXPENSES NET INVESTMENT EXPENSES TO LOSS TO
VALUE, END TOTAL TURNOVER COMMISSION PERIOD TO AVERAGE INCOME TO AVERAGE NET AVERAGE NET
OF PERIOD RETURN(A) RATE RATE (IN 000S) NET ASSETS AVERAGE NET ASSETS ASSETS ASSETS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$11.97 23.79%(d) 74.97% $.0282 $53,786 0.91%(c) 0.12%(c) 2.40%(c) (1.37)%(c)
11.92 23.26(d) 74.97 .0282 13,857 1.67(c) (0.72)(c) 2.91(c) (1.96)(c)
11.93 4.56(d) 74.97 .0282 4,132 1.68(c) (0.76)(c) 2.92(c) (2.00)(c)
11.97 23.89(d) 74.97 .0282 4,656 0.72(c) 0.42(c) 1.96(c) (0.82)(c)
11.95 23.56(d) 74.97 .0282 115 1.17(c) (0.21)(c) 2.41(c) (1.45)(c)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
GOLDMAN SACHS CORE SMALL CAP EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
INCOME FROM DISTRIBUTIONS TO
INVESTMENT OPERATIONS(E) SHAREHOLDERS
---------------------------- ------------------------
NET REALIZED
AND UNREALIZED FROM NET
NET ASSET GAIN (LOSS) ON REALIZED GAIN
VALUE, NET INVESTMENT FROM NET ON INVESTMENT NET INCREASE
BEGINNING INVESTMENT AND FUTURES INVESTMENT AND FUTURES IN NET ASSET
OF PERIOD INCOME (LOSS) TRANSACTIONS INCOME TRANSACTIONS VALUE
FOR THE PERIOD ENDED JANUARY 31,
<S> <C> <C> <C> <C> <C> <C>
1998 - Class A Shares(b) $10.00 $(0.01) $0.65 -- $(0.05) $0.59
1998 - Class B Shares(b) 10.00 (0.03) 0.64 -- (0.05) 0.56
1998 - Class C Shares(b) 10.00 (0.02) 0.64 -- (0.05) 0.57
1998 - Institutional
Shares(b) 10.00 0.01 0.65 -- (0.05) 0.61
1998 - Service Shares(b) 10.00 0.01 0.64 -- (0.05) 0.60
</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) Commenced operations on August 15, 1997.
(c) Annualized.
(d) Not annualized.
(e) Includes the balancing effect of calculating per share amounts.
40 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE SMALL CAP EQUITY 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 (IN 000S) NET ASSETS ASSETS ASSETS ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.59 6.37%(d) 37.65% $.0370 $11,118 1.25%(c) (0.36)%(c) 3.92%(c) (3.03)%(c)
10.56 6.07(d) 37.65 .0370 9,957 1.95(c) (1.04)(c) 4.37(c) (3.46)(c)
10.57 6.17(d) 37.65 .0370 2,557 1.95(c) (1.07)(c) 4.37(c) (3.49)(c)
10.61 6.57(d) 37.65 .0370 9,026 0.95(c) 0.15(c) 3.37(c) (2.27)(c)
10.60 6.47(d) 37.65 .0370 2 1.45(c) 0.40(c) 3.87(c) (2.02)(c)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout The Period
<TABLE>
<CAPTION>
INCOME FROM DISTRIBUTIONS TO
INVESTMENT OPERATIONS(E) SHAREHOLDERS
------------------------------------------ ------------------------
NET REALIZED
AND UNREALIZED NET REALIZED FROM NET
NET ASSET GAIN (LOSS) ON AND UNREALIZED REALIZED GAIN
VALUE, NET INVESTMENTS GAIN (LOSS) ON FROM NET ON INVESTMENT NET DECREASE
BEGINNING INVESTMENT AND FUTURES CURRENCY RELATED INVESTMENT AND FUTURES IN NET ASSET
OF PERIOD INCOME TRANSACTIONS TRANSACTIONS INCOME TRANSACTIONS VALUE
FOR THE PERIOD ENDED JANUARY 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1998 - Class A Shares(b) $10.00 $ -- $0.13 $(0.91) $ -- -- $(0.78)
1998 - Class B Shares(b) 10.00 (0.02) 0.13 (0.90) -- -- (0.79)
1998 - Class C Shares(b) 10.00 (0.02) 0.13 (0.89) -- -- (0.78)
1998 - Institutional
Shares(b) 10.00 0.02 0.13 (0.89) (0.02) -- (0.76)
1998 - Service Shares(b) 10.00 0.01 0.13 (0.91) -- -- (0.77)
</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) Commenced operations on August 15, 1997.
(c) Annualized.
(d) Not annualized.
(e) Includes the balancing effect of calculating per share amounts.
42 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
GOLDMAN SACHS CORE INTERNATIONAL EQUITY 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 (IN 000S) NET ASSETS ASSETS ASSETS ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$9.22 (7.66)%(d) 25.16% $.0069 $ 7,087 1.50%(c) (0.27)%(c) 4.87%(c) (3.90)%(c)
9.21 (7.90)(d) 25.16 .0069 2,721 2.00(c) (0.72)(c) 5.12(c) (3.84)(c)
9.22 (7.80)(d) 25.16 .0069 1,608 2.00(c) (0.73)(c) 5.12(c) (3.85)(c)
9.24 (7.45)(d) 25.16 .0069 17,719 1.00(c) 0.59 (c) 4.12(c) (2.53)(c)
9.23 (7.70)(d) 25.16 .0069 1 1.50(c) 0.26 (c) 4.62(c) (2.86)(c)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
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 CORE U.S. Equity Fund (for-
merly known as the Goldman Sachs Select Equity Fund), CORE Large Cap Growth
Fund, CORE Small Cap Equity Fund and the CORE International Equity Fund, col-
lectively the "Funds" or individually a "Fund". The Trust is registered under
the Investment Company Act of 1940, as amended, as an open-end, management
investment company. At January 31, 1998, the Funds offered five classes of
shares--Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist-
ently followed by the Funds. 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 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 Funds' policy to accrue for estimated capital gains taxes on foreign
securities held by the Funds subject to such taxes.
C. FOREIGN CURRENCY TRANSLATIONS -- The books and records of the Funds 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, 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.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- Certain of the Funds are
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 po-
sitions. The CORE International Equity Fund may enter into such contracts to
seek to increase total return. All commitments are "marked to market" daily
at the applicable translation rates and any resulting unrealized gains or
losses are recorded in the funds' financial statements. The Funds record re-
alized
44
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
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.
E. FEDERAL TAXES -- It is each 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 their 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 each 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.
F. DEFERRED ORGANIZATION EXPENSES -- Organization-related costs are amortized
on a straight-line basis over a period of five years.
G. EXPENSES -- Expenses incurred by the Trust which do not specifically re-
late to an individual fund of the Trust are generally allocated to the Funds
based on 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. Service shares sepa-
rately bear a service class fee payable monthly, at an annual rate equal to
.50% of the average daily net assets of the service class.
H. OPTION ACCOUNTING PRINCIPLES -- When the Funds write 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 Funds enter
into a closing purchase transaction, the Funds realize 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 Funds realize 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
Funds purchase 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 Funds,
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
Funds have purchased expires on the stipulated expiration date, the Funds
will realize a loss in the amount of the cost of the option. If the Funds en-
ter into a closing sale transaction, the Funds will realize a gain or loss,
depending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Funds exercise a pur-
chased put option, the Funds 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 Funds exercise a purchased call option, the
cost of the security which the Funds purchase upon exercise will be increased
by the premium originally paid.
I. FUTURES CONTRACTS -- The Funds may enter into futures transactions to
hedge against changes in interest rates, securities prices or to seek to in-
crease total return.
Upon entering into a futures contract, the Funds are required to deposit
with a broker an amount of cash or securities equal to the minimum "initial
margin" requirement of the respective futures exchange. Subsequent payments
for futures contracts ("variation margin") are paid or received by the Funds
daily, dependent on the daily fluctuations in the value of the contracts, and
are recorded for financial reporting purposes as unrealized gains or losses.
When contracts are closed, the Funds realize a gain or loss which is reported
in the Statement of Operations.
45
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements
January 31, 1998
The use of futures contracts involve, to varying degrees, elements of mar-
ket and counterparty risk which may exceed the amounts recognized in the
Statements of Assets and Liabilities. Changes in the value of the futures
contract may not directly correlate with changes in the value of the under-
lying securities. This risk may decrease the effectiveness of the Funds'
hedging strategies and potentially result in a loss.
3. AGREEMENTS
As of May 1, 1997, the Funds' 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 ("GSAM"), a separate operating division of Goldman, Sachs & Co.
("Goldman Sachs"), acts as investment adviser to the CORE Large Cap Growth,
CORE Small Cap Equity and CORE International Equity Funds; Goldman Sachs
Funds Management L.P. ("GSFM"), an affiliate of Goldman Sachs, acts as in-
vestment adviser to the CORE U.S. Equity Fund. Under the Agreements, GSAM and
GSFM, subject to the general supervision of the Trust's Board of Trustees,
manage the Funds' portfolios. As compensation for the services rendered under
the Agreements, the assumption of the expenses related thereto and adminis-
tering the Funds' business affairs, including providing facilities, GSAM is
entitled to a fee, computed daily and payable monthly, at an annual rate
equal to .75%, .85% and .85% of the average daily net assets of the CORE
Large Cap Growth, CORE Small Cap Equity and CORE International Equity Funds,
respectively. GSFM is entitled to a fee of .75% of the average daily net as-
sets of the CORE U.S. Equity Fund.
Goldman Sachs has voluntarily agreed to reduce or limit certain "Other Ex-
penses" for the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Eq-
uity and CORE International Equity Funds (excluding management, service,
distribution and authorized dealer service fees and litigation and indemnifi-
cation costs, taxes, interest, brokerage commissions and extraordinary ex-
penses and transfer agent fees in the case of the CORE U.S. Equity Fund)
until further notice to the extent such expenses exceed .06%, .05%, .20% and
.25% of the average daily net assets of the funds, respectively.
Goldman Sachs serves as the Distributor of shares of the Funds 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 charge imposed
and has advised the Funds that it retained approximately $566,000, $129,000,
$49,000 and $24,000 during the period ended January 31, 1998 for the CORE
U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity and CORE Interna-
tional Equity Funds, respectively.
The Trust, on behalf of each Fund, has adopted Distribution Plans (the
"Distribution Plans") pursuant to Rule 12b-1. Under the Distribution Plans,
Goldman Sachs is entitled to receive a quarterly fee from each Fund for dis-
tribution services equal, on an annual basis, to .25%, .75% and .75% of the
Funds' average daily net assets attributable to Class A, Class B and Class C
shares, respectively.
The Trust, on behalf of each Fund, 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 serv-
ices. Each Fund pays a fee under 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 funds
for a fee.
For the period ended January 31, 1998 Goldman Sachs, GSAM, GSFM and the Dis-
tributor have voluntarily agreed to waive certain fees and reimburse other
expenses as follows (in thousands):
<TABLE>
<CAPTION>
WAIVERS
------------------
CLASS A REIMBURSEMENT
FUND MANAGEMENT 12B-1 REIMBURSEMENT OUTSTANDING
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORE U.S. Equity 837 51 64 --
-------------------------------------------------------------------------
CORE Large Cap Growth 46 62 332 124
-------------------------------------------------------------------------
CORE Small Cap Equity 9 6 202 40
-------------------------------------------------------------------------
CORE International Equity 7 -- 206 25
-------------------------------------------------------------------------
</TABLE>
GSAM and GSFM may discontinue or modify this waiver in the future at its dis-
cretion.
46
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
At January 31, 1998, the amounts owed to affiliates were as follows (in thou-
sands):
<TABLE>
<CAPTION>
AUTHORIZED
DEALER TRANSFER
FUND MANAGEMENT DISTRIBUTOR SERVICE AGENT TOTAL
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CORE U.S. Equity 349 342 266 142 1,099
---------------------------------------------------------------------------
CORE Large Cap Growth 32 26 35 32 125
---------------------------------------------------------------------------
CORE Small Cap Equity 18 19 11 -- 48
---------------------------------------------------------------------------
CORE International Equity 12 8 5 -- 25
---------------------------------------------------------------------------
</TABLE>
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments, futures and options) for the period ended January 31, 1998,
were as follows:
<TABLE>
<CAPTION>
SALES OR
FUND PURCHASES MATURITIES
----------------------------------------------------------------------------------------
<S> <C> <C>
CORE U.S. Equity $500,903,526 $334,451,033
----------------------------------------------------------------------------------------
CORE Large Cap Growth 97,206,589 31,560,546
----------------------------------------------------------------------------------------
CORE Small Cap Equity 37,277,847 7,057,754
----------------------------------------------------------------------------------------
CORE International Equity 31,642,851 3,863,704
----------------------------------------------------------------------------------------
</TABLE>
At January 31, 1998, the CORE International Equity Fund had the following
outstanding forward foreign currency exchange contracts:
<TABLE>
<CAPTION>
VALUE ON
FOREIGN CURRENCY SETTLEMENT CURRENT UNREALIZED
PURCHASE CONTRACTS DATE VALUE GAIN/LOSS
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Austrian Schilling expiring 2/02/98 $ 22,775 $ 22,493 $ (282)
Belgian Franc expiring 2/02/98 54,961 54,192 (769)
Deutsche Mark expiring 2/06/98 208,827 208,342 (485)
Finnish Markka expiring 2/02/98 31,108 30,676 (432)
Finnish Markka expiring 2/04/98 93,293 93,001 (292)
French Franc expiring 2/27/98 100,006 98,496 (1,510)
French Franc expiring 2/27/98 66,620 66,443 (177)
Hong Kong Dollar expiring 2/03/98 94,147 94,147 --
Italian Lira expiring 2/04/98 50,615 49,894 (721)
Japanese Yen expiring 2/02/98 304,107 299,316 (4,791)
Japanese Yen expiring 2/04/98 472,273 473,501 1,228
Netherlands Guilder expiring 2/02/98 101,195 99,771 (1,424)
Netherlands Guilder expiring 2/04/98 93,350 93,138 (212)
Norwegian Krone expiring 2/04/98 22,327 22,263 (64)
Portugese Escudo expiring 2/02/98 158,437 155,097 (3,340)
Pound Sterling expiring 2/06/98 9,991 9,988 (3)
Spanish Peseta expiring 2/02/98 45,698 45,107 (591)
Spanish Peseta expiring 2/04/98 55,662 55,569 (93)
Swedish Krona expiring 2/04/98 65,233 65,182 (51)
Swiss Franc expiring 2/02/98 107,314 105,763 (1,551)
Swiss Franc expiring 2/06/98 85,244 85,013 (231)
-----------------------------------------------------------------------------
TOTAL FOREIGN CURRENCY PURCHASE CONTRACTS $2,243,183 $2,227,392 $(15,791)
-----------------------------------------------------------------------------
</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 January 31,
1998, the CORE International Equity Fund had sufficient cash and securities
to cover any commitments under these contracts.
CORE International Equity Fund has recorded a "Payable for forward foreign
currency exchange contracts" resulting from open forward foreign currency ex-
change contracts of $15,791, in the accompanying Statements of Assets and Li-
abilities.
For the period ended January 31, 1998, Goldman Sachs earned approximately
$300 of brokerage commissions from portfolio transactions executed on behalf
of the CORE Large Cap Growth Fund.
47
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements
January 31, 1998
5. SUMMARY OF SHARE TRANSACTIONS
Share activity for the period ended January 31, 1998 is as follows:
<TABLE>
<CAPTION>
GOLDMAN SACHS
CORE U.S. EQUITY FUND
---------------------
SHARES DOLLARS
---------------------
<S> <C> <C>
CLASS A SHARES
Shares sold 6,317,528 $166,483,899
Reinvestment of dividends and distributions 1,196,100 30,986,861
Shares repurchased (2,217,030) (58,462,482)
---------------------
5,296,598 139,008,278
----------------------------------------------------------------------
CLASS B SHARES
Shares sold 1,587,418 41,644,211
Reinvestment of dividends and distributions 160,708 4,120,872
Shares repurchased (243,200) (6,477,303)
---------------------
1,504,926 39,287,780
----------------------------------------------------------------------
CLASS C SHARES
Shares sold 301,152 8,133,714
Reinvestment of dividends and distributions 13,010 332,320
Shares repurchased (75,324) (2,069,721)
---------------------
238,838 6,396,313
----------------------------------------------------------------------
INSTITUTIONAL SHARES
Shares sold 1,723,166 45,504,817
Reinvestment of dividends and distributions 637,429 16,625,599
Shares repurchased (1,139,364) (30,605,181)
---------------------
1,221,231 31,525,235
----------------------------------------------------------------------
SERVICE SHARES
Shares sold 132,991 3,486,302
Reinvestment of dividends and distributions 22,975 593,618
Shares repurchased (17,860) (452,461)
---------------------
138,106 3,627,459
----------------------------------------------------------------------
NET INCREASE IN SHARES 8,399,699 $219,845,065
----------------------------------------------------------------------
</TABLE>
(a) Commencement dates of operations for the CORE Large Cap Growth, CORE
Small Cap Equity and CORE International Equity Funds were May 1, 1997,
August 15, 1997 and August 15, 1997, respectively.
48
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
<TABLE>
<CAPTION>
GOLDMAN SACHS GOLDMAN SACHS GOLDMAN SACHS
CORE LARGE CAP GROWTH FUND(A) CORE SMALL CAP EQUITY FUND(A) CORE INTERNATIONAL EQUITY FUND(A)
----------------------------------------------------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4,984,608 $ 55,490,159 1,082,435 $ 11,495,763 794,938 $ 7,369,683
116,958 1,326,300 2,621 26,811 156 1,407
(609,700) (7,218,956) (35,569) (376,899) (26,702) (238,798)
----------------------------------------------------------------------------------------------------
4,491,866 49,597,503 1,049,487 11,145,675 768,392 7,132,236
----------------------------------------------------------------------------------------------------
1,245,868 14,674,329 952,128 10,018,888 307,513 2,897,478
29,355 331,745 3,118 31,832 -- --
(113,110) (1,345,680) (12,396) (128,919) (11,971) (110,882)
----------------------------------------------------------------------------------------------------
1,162,113 13,660,394 942,850 9,921,801 295,542 2,786,596
----------------------------------------------------------------------------------------------------
351,956 4,181,116 259,583 2,755,067 192,766 1,797,901
6,404 72,365 582 5,937 -- --
(11,868) (140,832) (18,140) (190,833) (18,328) (161,309)
----------------------------------------------------------------------------------------------------
346,492 4,112,649 242,025 2,570,171 174,438 1,636,592
----------------------------------------------------------------------------------------------------
392,622 4,603,030 850,292 8,678,220 1,925,620 18,216,557
7 79 2,917 29,872 1,603 13,900
(3,701) (43,927) (2,351) (24,802) (6,759) (62,449)
----------------------------------------------------------------------------------------------------
388,928 4,559,182 850,858 8,683,290 1,920,464 18,168,008
----------------------------------------------------------------------------------------------------
9,303 109,118 160 1,600 161 1,599
316 3,579 -- 7 -- --
-- -- -- -- -- --
----------------------------------------------------------------------------------------------------
9,619 112,697 160 1,607 161 1,599
----------------------------------------------------------------------------------------------------
6,399,018 $ 72,042,425 3,085,380 $ 32,322,544 3,158,997 $ 29,725,031
----------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Notes to Financial Statements
January 31, 1998
Share activity for the year ended January 31, 1997 is as follows:
<TABLE>
<CAPTION>
GOLDMAN SACHS
CORE U.S. EQUITY FUND
-----------------------
SHARES DOLLARS
-----------------------
<S> <C> <C>
CLASS A SHARES
Shares sold 3,862,697 $ 81,642,386
Reinvestment of dividends and distributions 370,586 8,175,333
Shares repurchased (1,109,202) (23,823,146)
-----------------------
3,124,081 65,994,573
----------------------------------------------------------------------
CLASS B SHARES
Shares sold 733,802 15,946,016
Reinvestment of dividends and distributions 24,314 535,407
Shares repurchased (13,894) (310,118)
-----------------------
744,222 16,171,305
----------------------------------------------------------------------
INSTITUTIONAL SHARES
Shares sold 3,151,881 66,277,175
Reinvestment of dividends and distributions 275,197 6,102,331
Shares repurchased (363,536) (7,991,198)
-----------------------
3,063,542 64,388,308
----------------------------------------------------------------------
SERVICE SHARES
Shares sold 154,590 3,344,141
Reinvestment of dividends and distributions 4,126 91,166
Shares repurchased (1,252) (28,032)
-----------------------
157,464 3,407,275
----------------------------------------------------------------------
NET INCREASE IN SHARES 7,089,309 $149,961,461
----------------------------------------------------------------------
</TABLE>
50
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu-
rities, including accrued interest, is required to equal or exceed the value
of the repurchase agreement. The underlying securities for all repurchase
agreements are held in safekeeping at each Fund's custodian.
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Funds, together with other registered investment companies having advi-
sory agreements with GSAM or its affiliates, transfer uninvested cash into
joint accounts, the daily aggregate balance of which is invested in one or
more repurchase agreements. The underlying securities for the repurchase
agreements are U.S. Treasury and agency obligations. At January 31, 1998, the
CORE U.S. Equity, CORE Large Cap Growth and CORE Small Cap Equity Funds had
undivided interests in the repurchase agreements in the following joint ac-
count which equaled $5,300,000, $2,100,000 and $800,000, respectively, in
principal amount. At January 31, 1998, the repurchase agreements held in this
joint account, along with the corresponding underlying securities (including
the type of security, market value, interest rate and maturity date) were as
follows:
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY AMORTIZED
AMOUNT RATE DATE COST
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BEAR STEARNS COMPANIES, INC., $600,000,000 5.65% 02/02/98 $ 600,000,000
dated 01/30/98, repurchase price $600,282,500 (total collateral value
$618,151,386 consisting of FNMA: 6.50%-8.50%, 08/01/27-01/01/28; GNMA:
6.50%-8.00%, 05/15/23-11/15/27; FHLMC: 6.50%-7.00%, 06/01/00-10/01/26)
------------------------------------------------------------------------------
LEHMAN BROTHERS INC., 474,200,000 5.65 02/02/98 474,200,000
dated 01/30/98, repurchase price $474,423,269 (total collateral value
$483,683,617 consisting of FGLMC: 5.50%-9.50%, 01/01/99-01/01/28; FHA/VA:
7.50%-14.00%, 01/01/01-09/01/12; FNMA: 5.50%-11.25%, 09/01/00-01/01/28)
------------------------------------------------------------------------------
NOMURA SECURITIES INTERNATION-
AL, 200,000,000 5.64 02/02/98 200,000,000
dated 01/30/98, repurchase price $200,094,000 (total collateral value
$204,002,700 consisting of FHLMC: 6.00%, 10/20/99; FHLB: 5.48%-5.53%,
01/15/03-01/21/03; FNMA: 7.40%, 07/01/04; FMC discount note: 03/06/98)
------------------------------------------------------------------------------
NOMURA SECURITIES, INTERNA-
TIONAL, 270,000,000 5.64 02/02/98 270,000,000
dated 01/30/98, repurchase price $270,126,900 (total collateral value
$275,400,571 consisting of FNMA: 5.90%-7.52%, 02/12/98-01/22/08; FHLMC:
6.59%-7.13%, 07/21/99-08/13/07; FHLB: 6.19%-7.00%, 08/26/99-08/21/07; FMC
discount note: 03/06/98; FFCB: 6.30%, 08/08/07)
------------------------------------------------------------------------------
SALOMON-SMITH BARNEY, 200,000,000 5.61 02/02/98 200,000,000
dated 01/30/98, repurchase price $200,093,500 (total collateral value
$204,048,538 consisting of U.S. Treasury Stripped Interest Only Security:
02/15/99; U.S. Treasury Stripped Principal Only Security: 7.88%, 08/15/01)
------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $1,744,200,000
------------------------------------------------------------------------------
</TABLE>
8. LINE OF CREDIT FACILITY
The Funds participate in a $250,000,000 uncommitted, unsecured revolving line
of credit facility. In addition, the Funds participate 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 Funds must own securities having a market value in ex-
cess of 300% of the total bank borrowings. The interest rate on the
borrowings is based on the Federal Funds rate. The committed facility also
requires a fee to be paid based on the amount of the commitment which has not
been utilized. During the period ended January 31, 1998, the Funds did not
have any borrowings under these facilities.
9. CERTAIN RECLASSIFICATIONS
In accordance with statement of Position 93-2, the CORE Large Cap Growth,
CORE Small Cap Equity and CORE International Equity Funds have reclassified
$5,042, $3,411 and $2,137, respectively, from paid-in capital to distribu-
tions in excess of net investment income (loss). Additionally, the CORE In-
ternational Equity Fund reclassified $13,940 from accumulated net realized
foreign currency loss to distributions in excess of net investment income.
These reclassifications have no impact on the net asset value of the funds
and are designed to present the Funds' capital accounts on a tax basis.
51
<PAGE>
GOLDMAN SACHS TRUST - CORE EQUITY FUNDS
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of Goldman Sachs Trust - CORE Eq-
uity Funds
We have audited the accompanying statements of assets and liabilities of
Goldman Sachs CORE U.S. Equity Fund, CORE Large Cap Growth Fund, CORE Small
Cap Equity, and CORE International Equity Fund, portfolios of Goldman Sachs
Trust--Equity Funds (a Delaware Business Trust), including the statements of
investments, as of January 31, 1998, and the related statements of operations
and the statements of changes in net assets and the financial highlights for
the periods presented. These financial statements and the financial high-
lights are the responsibility of the Funds' management. Our responsibility is
to express an opinion on these financial statements and the financial high-
lights 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 Trust - CORE Equity Funds 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
52
<PAGE>
GOLDMAN SACHS CORE EQUITY FUNDS
For Best Results,
It's Time in the Market That Counts
For optimal long-term investment results, time in the market can make the
difference.
After a year of record-breaking returns in the U.S. stock market, forecasts
for 1998 are more subdued. As a result, investors may be tempted to move
out of equities. Doing so, however, could substantially reduce a
portfolio's long-term return potential.
Investors Who Time the Market Get Less on Their Investment
Investors who try to time the market -- that is, those who try to predict
market highs and lows, and invest accordingly -- can do more harm than good
to their portfolio's long-term returns.
The chart below illustrates the effect that missing the "best" days in the
market -- when stocks post their largest gains -- would have had on a
portfolio's returns over the 15-year period from 1982 through 1996.
- --------------------------------------------------------------------------------
The Impact of Missing the "Best" Days in the Market (1982-1996)
(Annual Return Percentage)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
Annual Return
Percentage
-------------
<S> <C>
Invested all 5,478 trading days 16.78%
Less 10 best days 13.39%
Less 40 best days 7.53%
Less 70 best days 2.87%
</TABLE>
Based on the daily total returns of the S&P 500 Index. It assumes that all
dividends were reinvested and that there were no investment fees, sales
charges or taxes paid during the period. The returns shown above have been
annualized. The chart is for illustrative purposes only and is not
representative of any Goldman Sachs Fund. Past performance is not
indicative of future results. Investors cannot invest in the Index
directly.
Over the Long Term, a Buy and Hold Strategy Works Best
Over the past 20 years, the market has generated negative returns only
twice. In other words, over the long term, securities prices have
increased. This statistic illustrates a common theory about equity
investing: buying and holding securities is generally a sounder investment
strategy than attempting to time the market.
For More Information
A diversified portfolio of different stock types is one of the best ways to
reduce the effects of market fluctuations on a portfolio. For most
investors, diversification is most easily acquired through mutual funds.
Goldman Sachs Asset Management offers a broad spectrum of equity mutual
funds that can help investors weather market ups and downs. For more
information on these and other Goldman Sachs Funds, contact your investment
professional.
<PAGE>
================================================================================
GOLDMAN SACHS ASSET MANAGEMENT
ONE NEW YORK PLAZA, 42ND FLOOR, NEW YORK, NEW YORK 10004
================================================================================
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
Investment Adviser,
Distributor and Transfer Agent
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 stocks of smaller companies are often associated with higher risks than
stocks of larger companies, including higher volatility.
Funds that invest in foreign securities and utilize active management techniques
are subject to risks in addition to those customarily associated with investing
in dollar-denominated securities of U.S. issuers. Compared with U.S. securities
markets, foreign markets may be less liquid, more volatile and less subject to
governmental regulation, and may make available less public information about
issuers. Funds that invest in foreign issues may incur losses because of changes
in securities prices expressed in local currencies, movements in exchange rates,
or both.
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 COREAR / 114K / 3-98
