N-30D 1 dn30d.htm BALANCED BALANCED

GOLDMAN SACHS BALANCED FUND

Market Review

Dear Shareholder:

During the six-month period under review, the overall equity market continued the downward trend that began last year, and many investors rotated to more defensive stocks and high-quality bonds.

n

Market Review: Stocks Fall, Bonds Rise and Select Opportunities Emerge — For the six month reporting period that ended February 28, 2001, the US stock market, as measured by the S&P 500 Index, fell 17.84%, while the bond market, as measured by the Lehman Aggregate Bond Index rose 7.50%. As a whole, the stock market’s decline was a sharp contrast to double-digit gains generated in previous years. And certain areas of the market fell even more dramatically. Nowhere was this more evident than in the technology sector. As the reporting period progressed, the correction in the price of technology stocks intensified. All told, during the period the technology-laden NASDAQ Composite Index plunged 48.84%. As a result, many investors abandoned technology stocks in favor of “safer havens,” such as high-quality bonds and more defensive stocks that tend to perform well during periods of market uncertainty.

   
 

The news wasn’t all bad in the financial markets, however. After a prolonged period of underperforming their growth counterparts, value stocks posted relatively strong returns. Investors were drawn to the solid fundamentals found in many value-oriented industries, including the financial services, real estate and healthcare sectors. U.S. Treasury securities also generated impressive results, as these issues rose sharply as interest rates fell.
   
n

The Economy Stumbles — In our last report to shareholders, we explained that economic growth in the U.S. was beginning to moderate. Since that time, we’ve seen economic activity fall sharply. By the fourth quarter, many financial and economic indicators suggested the increasing probability of a recession. The most significant signs of moderation included weak production data, higher weekly unemployment claims, and lower consumer confidence. This triggered the Federal Reserve Board (the “Fed”) to switch gears and officially move from a “tightening” to an “easing” bias. In January 2001, the Fed lowered interest rates on two occasions, and explained that further cuts may be necessary to ward off a recession.

   
 

In summary, it has been an eventful period in the financial markets, one that we believe magnifies the importance of a long-term investment approach and the value of professional investment management and advice. As always, we appreciate your confidence and look forward to serving your investment needs in the future.

     
 

Sincerely,

 
     
     
 
     
  David B. Ford David W. Blood
  Co-Head, Goldman Sachs Asset Management Co-Head, Goldman Sachs Asset Management
     
  March 15, 2001  

GOLDMAN SACHS BALANCED FUND

What Differentiates Goldman Sachs
Balanced Fund Investment Process?

The Balanced Fund is a diversified investment portfolio that utilizes an asset allocation process of strategically selecting different asset classes — such as stocks, bonds and cash — in precise proportions and then adjusting holdings over time. Goldman Sachs’ exclusive approach to asset allocation combines our global presence, extensive market knowledge and risk management expertise

 

      
GOLDMAN SACHS
BALANCED FUND
INVESTMENT PROCESS
      
 
1
VALUE AND GROWTH EQUITY INVESTMENTS
     
    Utilizing two distinct, complementary investing strategies, our approach to selecting stocks for the Fund’s equity portion provides diversified equity participation.
     
    Over time, the performance of value and growth stocks have been roughly equal — but that performance has been generated at different times as the styles move in and out of favor. Since it is impossible to predict cycles of outperformance, many investors choose to have exposure to both in their portfolio.
     
  2 
RESEARCH-INTENSIVE APPROACH
     
    In equity investing, we take an intensive, hands-on approach to research, meeting with company management to gain an in-depth understanding of their long-term business objectives. We also meet with a company’s customers, competitors and suppliers so that we have insight into industry wide trends.
     
    With expertise in global fixed income and currency management, Goldman Sachs is a preeminent fixed income manager that strives to maximize returns within a risk adjusted framework.
       
    3
ESTABLISHED TEAM MANAGEMENT
       
      We are distinguished from our competitors by our team approach to investment management. In contrast to a “star”approach centered on one manager, each portfolio manager/research analyst participates fully in the decision-making process.This approach encourages intense debate over new and existing holdings and prevents us from becoming too ingrained in our ideas. Finally, our team structure protects us in the event that one of our portfolio managers/research analysts leaves the firm.

1

Fund Basics
as of February 28, 2001

PERFORMANCE REVIEW
   
Fund Total Return
 S&P 500
Lehman
August 31, 2000–February 28, 2001
(without sales charge)1
Index2
Aggregate Index2
Class A     –7.34 % –17.84 % 7.50 %
Class B     –7.65   –17.84   7.50  
Class C     –7.71   –17.84   7.50  
Institutional     –7.13   –17.84   7.50  
Service     –7.41   –17.84   7.50  

1 The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.

2 The unmanaged S&P 500 Index and the Lehman Brothers Aggregate Bond Index (with dividends reinvested) figures do not reflect fees or expenses. Investors cannot invest directly in the indices.

STANDARDIZED TOTAL RETURNS3
For the period ended 12/31/00 Class A
Class B
 Class C Institutional Service
One Year –6.07 %
–6.23
 % –2.25 % –0.03 % –0.73 %
Five Years 8.32  
N/A
  
N/A
  
N/A
   9.40 4
Since Inception 10.77  
8.24
   3.24   4.41   11.66 4
  (10/12/94 )
(5/1/96
 ) (8/15/97 ) (8/15/97 ) (10/12/94 )

3 The Standardized Total Returns are average annual total returns or cumulative total returns (only if the performance period is one year or less) as of the most recent calendar quarter-end. They assume reinvestment of all distributions at net asset value. These returns reflect a maximum initial sales charge of 5.5% for Class A shares, the assumed deferred sales charge for Class B shares (5% maximum declining to 0% after six years) and the assumed deferred sales charge for Class C shares (1% if redeemed within 12 months of purchase). Because Institutional and Service shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns.

4 Performance data for Service shares prior to 8/15/97 is that of the Class A shares (excluding the impact of the front-end sales charge applicable to Class A shares since Service shares are not subject to any sales charges). Performance of Class A shares of the Balanced Fund reflects the expenses applicable to the Fund's Class A shares. The fees applicable to Service shares are different from those applicable to Class A shares which impact performance ratings and rankings for a class of shares.

Total return figures represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance reflects fee waivers and expense limitations in effect. In their absence, performance would be reduced.

TOP 10 EQUITY HOLDINGS AS OF 2/28/01
Holding     % of Total Net Assets
Line of Business
General Electric Co.     2.1
%
 Financial Services
Microsoft Corp.     1.8   Computer Software
Pfizer, Inc.     1.7   Drugs
Exxon Mobil Corp.     1.4   Energy Resources
Citigroup, Inc.     1.3   Banks
Wal-Mart Stores, Inc.     1.2   Department Stores
Federal Home Loan Mortgage Corp.     1.1   Financial Services
AOL Time Warner Inc.     1.1   Media
American International Group, Inc.     0.9   Property Insurance
Intel Corp.     0.8   Semiconductors

The top 10 equity holdings may not be representative of the Fund’s future investments.

2

Portfolio Results

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Balanced Fund for the six-month period that ended February 28, 2001.

Performance Review
   
  Over the six-month period that ended February 28, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated cumulative total returns, without sales charges, of –7.34%, –7.65%, –7.71%, –7.13%, and –7.41%, respectively. Over the same time period, the Fund’s benchmarks, the S&P 500 Index and the Lehman Aggregate Bond Index, returned –17.84% and 7.50%, respectively. These figures compare to the –6.99% cumulative total return of the combined S&P 500 and Lehman Aggregate Bond Index.
   
   
  Asset Allocation
   
n

Equities — As of February 28, 2001, the Fund was 50.3% invested in growth and value equities. This compared to a 47.6% allocation on August 31, 2000. As a result of our bottom-up approach to stock selection, the Fund was overweight in the Consumer Services, Financials and Basic Materials sectors and underweight in Cyclicals, Technology, Health Care, Energy and Utilities. Although we typically have an underweight in Technology relative to the S&P 500 Index, we further reduced our exposure in this area due to short-term weakness in the sector. We increased our weighting in interest rate-sensitive Financials Services, which benefited as investors anticipated that a slowdown in economic growth would lead the Federal Reserve Board to cut rates in the near future.

   
n

Fixed Income — As of February 28, 2001, the Fund was 47.2% invested in fixed income securities, compared with 51.4% on August 31, 2000. In general, the portfolio was neutral in corporates, overweight in mortgage-backed and asset-backed securities, and underweight in Treasuries and agency securities. The Fund also maintained tactical non-dollar allocations in New Zealand, and in the emerging markets sector we had a tactical allocation in Korea, Poland, Mexico and Qatar.

 
n

Cash — As of February 28, 2001, the Fund was 2.5% invested in cash equivalents.

 
 

Portfolio Highlights

 
n

Bristol Myers Squibb — Bristol Myers Squibb is the leading pharmaceutical company and it has continued to generate high profit margins with relatively low fixed-capital expenditures — even in a difficult economic climate. Over the long-term, we believe the company should benefit from favorable demographic trends, as the baby boom population ages and the demand for pharmaceuticals increases.

3

n

Walgreen Co. — Walgreen is a national drugstore chain, and its stock rose significantly as investors praised its ability to produce consistent sales and earnings growth. Walgreen was able to expand gross margins, even while embarking on an aggressive store expansion plan. We believe this is a sign that Walgreen has an efficient business model.

   
n

Philip Morris — Philip Morris received positive press during the reporting period, as it announced the eventual spin-off of its Kraft Foods division, which is considered one of the country’s strongest food companies. The company also benefited from a flight to companies with a consistent ability to grow earnings power and generate free cash.

   
   
 

Portfolio Outlook

   
n

Equity — Our strategy of blending both growth and value styles of investing within the equity portfolio of the Balanced Fund assisted us in providing broad exposure to the U.S. market. While we typically do not forecast the direction of the market, we believe that, over the long-term, this blend of two research-based, long-term investment strategies will provide diverse exposure to the U.S. equity market, with excess return potential through stock selection.

   
n

Fixed Income — Given the challenging nature of the corporate market, we are continuing to target a neutral exposure to this sector on a dollar duration basis. In the wake of the Treasury rally and dramatic increase in mortgage backed security (MBS) pre-payment speeds, we are positioning the portfolio in MBS’ with superior call-protection.

   
 

We thank you for your investment and look forward to earning your continued confidence.

   
   
   
 

Goldman Sachs Value Investment Team, Goldman Sachs Growth Equity Investment Team,Goldman Sachs Fixed Income Investment Team

   
  New York
  March 15, 2001

4

 

GOLDMAN SACHS BALANCED FUND
 
Performance Summary
February 28, 2001 (Unaudited)
 
The following graph shows the value, as of February 28, 2001, of a $10,000 investment made on October 12, 1994 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Balanced Fund. For comparative purposes, the performance of the Fund’s benchmarks (the Standard and Poor’s 500 Index with dividends reinvested (“S&P 500 Index”) and the Lehman Brothers Aggregate Bond Index (“LBABI”)) are shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class B, Class C, Institutional and Service Shares will vary from Class A due to differences in fees and loads.
 
Balanced Fund’s Lifetime Performance
 
Growth of a $10,000 Investment, Distributions Reinvested October 12, 1994 to February 28, 2001.
 
 
 
Average Annual Total Return through February 28, 2001      Since Inception      Five Year      One Year      Six Month (a)
 
Class A (commenced October 12, 1994)
Excluding sales charges     
11.07%
     
8.53%  
     
0.83%
     
-7.34%
Including sales charges     
10.09%
     
7.31%  
     
-4.74% 
     
-12.45% 
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges     
   7.82%  
     
 n/a
     
0.11%
     
-7.65%
Including contingent deferred sales charges     
   7.41%  
     
 n/a
     
-4.89% 
     
-12.27% 
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges     
  2.38%  
     
 n/a
     
0.06%
     
-7.71%
Including contingent deferred sales charges     
  2.38%  
     
 n/a
     
-0.94% 
     
-8.63%
Institutional (commenced August 15, 1997)     
  3.55%  
     
 n/a
     
1.27%
     
-7.13%
Service (commenced August 15, 1997)     
  2.94%  
     
 n/a
     
0.71%
     
-7.41%
 
(a) 
Not annualized.
 
GOLDMAN SACHS BALANCED FUND
 
Statement of Investments
February 28, 2001 (Unaudited)
    
Shares		    Description    Value  
                  
 
Common Stocks – 50.3%
 
Airlines – 0.2%
17,250      Southwest Airlines Co.    $          320,850
Alcohol – 0.2%
7,600      Anheuser-Busch Cos., Inc.    332,120
Banks – 3.2%
5,500      Bank of America Corp.    274,725
4,000      Bank One Corp.    141,080
41,433      Citigroup, Inc.    2,037,675
3,660      J.P. Morgan Chase & Co.    170,776
2,500      M&T Bank Corp.    171,250
6,100      Mellon Financial Corp.    282,491
6,100      PNC Financial Services Group    423,950
4,200      State Street Corp.    421,890
9,200      The Bank of New York Co., Inc.    476,376
13,600      Wells Fargo & Co.    675,104
            
                          5,075,317
Chemicals – 0.9%
12,577      E.I. du Pont de Nemours & Co.    549,489
5,700      Minnesota Mining & Manufacturing
Co.		    642,675
8,500      The Dow Chemical Co.    278,885
            
                          1,471,049
Clothing – 0.0%
3,100      The Gap, Inc.    84,444
Computer Hardware – 2.7%
800      Brocade Communications Systems,
Inc.*		    31,050
55,200      Cisco Systems, Inc.*    1,307,550
9,800      Compaq Computer Corp.    197,960
21,200      Dell Computer Corp.*    463,750
30,200      EMC Corp.*    1,200,752
2,200      Emulex Corp.*    67,788
13,100      Hewlett-Packard Co.    377,935
500      Juniper Networks, Inc.*    32,281
30,000      Sun Microsystems, Inc.*    596,250
            
                          4,275,316
Computer Software – 3.4%
12,700      International Business Machines, Inc.    1,268,730
1,700      Intuit, Inc. *    69,912
47,600      Microsoft Corp.*    2,808,400
39,300      Oracle Corp.*    746,700
4,000      Sabre Holdings Corp.    172,480
1,400      Siebel Systems, Inc.*    53,550
4,100      VERITAS Software Corp.*    266,244
            
                          5,386,016
Defense/Aerospace – 0.5%
9,900      Honeywell International, Inc.    462,429
5,200      The B.F. Goodrich Co.    210,288
1,700      The Boeing Co.    105,740
            
                              778,457
    
Shares		    Description    Value  
                  
 
Common Stocks – (continued)
 
Department Stores – 1.3%
4,500      The May Department Stores Co.    $          178,155
37,100      Wal-Mart Stores, Inc.    1,858,339
            
                          2,036,494
Drugs – 5.1%
10,200      American Home Products Corp.    630,054
7,900      Amgen, Inc.*    569,294
2,000      AstraZeneca PLC ADR    92,500
20,800      Bristol-Myers Squibb Co.    1,318,928
10,000      Eli Lilly & Co.    794,600
14,500      Merck & Co., Inc.    1,162,900
59,025      Pfizer, Inc.    2,656,125
5,117      Pharmacia Corp.    264,549
16,900      Schering-Plough Corp.    680,225
            
                  8,169,175
Electrical Equipment – 0.9%
1,500      Corning, Inc.    40,650
6,520      JDS Uniphase Corp.*    174,410
8,500      Lucent Technologies, Inc.    98,515
2,352      McDATA Corp.*    42,042
5,826      Motorola, Inc.    88,381
15,800      Nortel Networks Corp.    292,142
10,500      QUALCOMM, Inc.*    575,531
2,600      Solectron Corp.*    70,850
            
                          1,382,521
Electrical Utilities – 1.2%
4,400      Duke Energy Corp.    179,300
11,700      Energy East Corp.    219,960
5,500      Entergy Corp.    213,565
2,975      Exelon Corp.    194,476
4,200      FPL Group, Inc.    273,210
13,600      Niagara Mohawk Holdings, Inc.*    233,648
8,500      The AES Corp.*    458,745
3,400      The Southern Co.    105,230
            
                          1,878,134
Energy Resources – 3.0%
10,698      Anadarko Petroleum Corp.    668,625
3,200      Chevron Corp.    274,112
2,900      Enron Corp.    198,650
28,045      Exxon Mobil Corp.    2,273,047
16,900      Royal Dutch Petroleum Co.    985,777
10,700      Unocal Corp.    377,282
            
                          4,777,493
Entertainment – 1.0%
16,800      The Walt Disney Co.    519,960
21,613      Viacom, Inc. Class B*    1,074,166
            
                          1,594,126
Environmental Services – 0.2%
12,400      Waste Management, Inc.    314,588
 
GOLDMAN SACHS BALANCED FUND
 
 
    
Shares		    Description    Value  
                  
 
Common Stocks – (continued)
 
Financial Services – 4.4%
27,400      Federal Home Loan Mortgage Corp.    $      1,804,290
11,500      Federal National Mortgage Assoc.    916,550
72,200      General Electric Co.    3,357,300
4,800      Household International, Inc.    278,016
15,000      MBNA Corp.    493,200
800      Stilwell Financial, Inc.    25,520
1,800      USA Education, Inc.    130,554
            
                          7,005,430
Food & Beverage – 1.4%
16,200      PepsiCo, Inc.    746,496
16,800      The Coca-Cola Co.    890,904
3,500      The Quaker Oats Co.    341,320
3,200      Wm. Wrigley Jr. Co.    297,984
            
                  2,276,704
Forest – 0.8%
8,300      Bowater, Inc.    417,739
16,800      International Paper Co.    632,688
1,900      Kimberly-Clark Corp.    135,850
2,700      Weyerhaeuser Co.    145,098
            
                  1,331,375
Grocery – 0.1%
6,700      The Kroger Co.*    162,408
Heavy Electrical – 0.1%
1,700      Emerson Electric Co.    113,730
Heavy Machinery – 0.2%
8,300      Crane Co.    221,195
3,700      Deere & Co.    150,590
            
                  371,785
Home Products – 1.3%
5,600      Avon Products, Inc.    237,776
10,900      Colgate-Palmolive Co.    643,645
10,400      Energizer Holdings, Inc.*    258,960
3,200      The Estee Lauder Cos., Inc.    123,648
4,200      The Gillette Co.    136,542
9,700      The Procter & Gamble Co.    683,850
            
                  2,084,421
Hotels – 0.7%
16,300      Harrah’s Entertainment, Inc.*    505,626
8,400      Marriott International, Inc.    358,512
7,300      Starwood Hotels & Resorts Worldwide,
Inc. Class B		    254,770
            
                  1,118,908
Industrial Parts – 0.9%
5,100      Caterpillar, Inc.    212,160
1,100      Parker-Hannifin Corp.    47,333
11,100      Tyco International Ltd.    606,615
6,600      United Technologies Corp.    514,206
            
                  1,380,314
    
Shares		    Description    Value  
                  
 
Common Stocks – (continued)
 
Information Services – 0.6%
4,000    Electronic Data Systems Corp.    $          255,320
10,900    First Data Corp.    673,184
         
                928,504
Internet – 0.2%
2,200    CheckFree Corp.*    106,013
2,650    E.piphany, Inc.*    44,553
800    S1 Corp.*    5,650
2,235    VeriSign, Inc.*    106,582
5,300    Yahoo!, Inc.*    126,206
         
                389,004
Leisure – 0.1%
14,300    Cendant Corp.*    187,044
Life Insurance – 0.6%
7,200    AFLAC, Inc.    433,152
1,000    CIGNA Corp.    109,670
8,300    Lincoln National Corp.    364,121
         
                906,943
Media – 3.2%
15,700    A.H. Belo Corp.    282,600
40,950    AOL Time Warner, Inc.*    1,803,028
31,060    AT&T Corp.-Liberty Media Corp.*    456,582
7,501    Automatic Data Processing, Inc.    442,514
2,500    Cablevision Systems Corp.*    194,000
4,626    Clear Channel Communications, Inc.*    264,376
10,000    Comcast Corp.*    433,125
4,200    EchoStar Communications Corp.*    109,725
1,700    Gannett Co., Inc.    112,438
14,968    General Motors Corp. Class H*    339,324
2,600    Tribune Co.    105,560
4,900    Univision Communications, Inc.*    161,700
5,500    USA Networks, Inc. Class B*    129,594
8,250    Valassis Communications, Inc.*    249,397
         
                5,083,963
Medical Products – 1.1%
6,700    Abbott Laboratories    328,233
1,900    Baxter International, Inc.    174,971
3,883    GlaxoSmithKline PLC ADR    214,769
10,300    Johnson & Johnson    1,002,499
         
                1,720,472
Mining – 0.2%
8,200    Alcoa, Inc.    293,232
Motor Vehicle – 0.2%     
8,239    Ford Motor Co.    229,126
3,008    General Motors Corp.    160,387
         
                389,513
The accompanying notes are an integral part of these financial statements.
7
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
February 28, 2001 (Unaudited)
    
Shares		    Description    Value  
                  
 
Common Stocks – (continued)
 
Oil Refining – 0.3%
1,103    El Paso Corp.    $            77,416
6,500    Texaco, Inc.    416,650
         
                494,066
Oil Services – 0.4%
4,600    Baker Hughes, Inc.    180,320
2,900    Halliburton Co.    115,478
4,300    Schlumberger Ltd.    274,125
3,100    Transocean Sedco Forex, Inc.    149,203
         
                719,126
Property Insurance – 2.0%
13,350    AMBAC Financial Group, Inc.    752,940
16,647    American International Group, Inc.    1,361,725
3,900    RenaissanceRe Holdings Ltd. Series B    289,965
2,800    The Hartford Financial Services Group,
Inc.		    178,780
7,500    XL Capital Ltd.    570,075
         
                3,153,485
Publishing – 0.1%   
3,900    The New York Times Co.    172,380
Railroads – 0.2%
7,500    Canadian National Railway Co.    282,075
Restaurants – 0.3%
16,500    McDonald’s Corp.    485,100
Security/Asset Management – 0.8%
6,200    John Hancock Financial Services, Inc.    213,280
4,300    Merrill Lynch & Co., Inc.    257,570
6,200    Morgan Stanley Dean Witter & Co.    403,806
16,550    The Charles Schwab Corp.    345,895
         
                        1,220,551
Semiconductors – 1.3%
1,100    Analog Devices, Inc.*    41,030
4,300    Applied Materials, Inc.*    181,675
600    Broadcom Corp.*    29,550
47,400    Intel Corp.    1,353,862
2,000    PMC-Sierra, Inc.*    67,000
9,800    Texas Instruments, Inc.    289,590
5,300    Xilinx, Inc.*    206,038
         
                        2,168,745
Specialty Retail – 1.2%
1,300    Best Buy Co., Inc.*    53,248
10,900    CVS Corp.    664,900
17,050    The Home Depot, Inc.    724,625
10,500    Walgreen Co.    465,360
         
                        1,908,133
Telephone – 2.5%
17,372    AT&T Corp.    399,556
6,400    BellSouth Corp.    268,544
    
Shares		    Description    Value  
                  
 
Common Stocks – (continued)
 
Telephone – (continued)
12,600    Qwest Communications International,
Inc.*		    $          465,822
28,365    SBC Communications, Inc.    1,353,010
5,700    Sprint Corp.    127,452
21,942    Verizon Communications, Inc.    1,086,129
14,950    WorldCom, Inc.    248,544
         
                        3,949,057
Thrifts – 0.1%
3,500    Washington Mutual, Inc.    179,795
Tobacco – 0.8%
25,500    Philip Morris Cos., Inc.    1,228,590
Wireless – 0.4%
1,700    American Tower Corp.*    49,198
16,500    Crown Castle International Corp.*    414,562
10,500    Sprint Corp. (PCS Group)*    264,390
         
                            728,150
TOTAL COMMON STOCKS
(Cost $72,081,518)    $    80,309,103
 
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
Asset-Backed Securities – 3.7%
 
Credit Card – 1.5%
Citibank Credit Card Issuance Trust Series 2000-A3, Class A3
$  1,400,000    6.88 %    11/15/2009    $      1,486,871
 
MBNA Master Credit Card Trust Series 1999-J, Class A
500,000    7.00      02/15/2012    533,079
 
Standard Credit Card Master Trust I Series 1995-9, Class A
360,000    6.55      10/07/2007    372,979
                 
                          2,392,929
Home Equity – 1.9%
Contimortgage Home Equity Loan Series 1998-1, Class A5
3,000,000    6.43      04/15/2016    3,033,280
Manufactured Housing – 0.3%
Mid-State Trust Series 4, Class A
542,886    8.33      04/01/2030    584,584
TOTAL ASSET-BACKED SECURITIES
(Cost $5,879,854)            $      6,010,793
 
Corporate Bonds – 15.8%
 
Aerospace/Defense – 0.4%
Raytheon Co.
$      605,000    6.45 %    08/15/2002    $          610,348
Airlines – 0.5%
Continental Airlines, Inc.
331,952    6.54      09/15/2009    330,392
 
Northwest Airlines, Inc. Class A
184,216    7.67      07/02/2015    190,144
 
GOLDMAN SACHS BALANCED FUND
 
 
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
Corporate Bonds – (continued)
 
Airlines – (continued)
Northwest Airlines, Inc. Class C
$      194,191    8.97 %    01/02/2015    $          207,817
 
Northwest Airlines, Inc. – Trust Series A
49,875    8.26      03/10/2006    51,733
                 
                          780,086
Automotive – 1.1%
Chrysler Corp.
90,000    7.45      03/01/2027    80,097
 
Ford Motor Co.
390,000    6.63      10/01/2028    341,753
 
General Motors Corp.
200,000    7.20      01/15/2011    204,490
 
The Hertz Corp.
1,055,000    6.00      01/15/2003    1,053,224
                 
                          1,679,564
Automotive Parts – 0.4%
Federal-Mogul Corp.
250,000    7.50      01/15/2009    45,000
 
Hayes Lemmerz International, Inc. Series B
250,000    8.25      12/15/2008    162,500
 
TRW, Inc.
460,000    6.63      06/01/2004    450,133
                 
                          657,633
Chemicals – 0.3%
Lyondell Chemical Co. Series B
250,000    9.88      05/01/2007    258,750
 
NL Industries, Inc.
198,000    11.75      10/15/2003    201,465
                 
                          460,215
Commercial Banks – 1.6%
Bank of America Corp.
495,000    7.40      01/15/2011    517,345
 
Citicorp
315,000    8.00      02/01/2003    329,339
 
Continental Bank NA
100,000    12.50      04/01/2001    100,486
 
FleetBoston Financial Corp.
180,000    7.25      09/15/2005    190,623
90,000    6.88      01/15/2028    86,930
 
Long Island Savings Bank
620,000    6.20      04/02/2001    620,370
 
Wells Fargo & Co.
485,000    6.63      07/15/2004    500,093
 
Wells Fargo Bank NA#
195,000    7.80      06/15/2010    207,162
                 
                          2,552,348
Conglomerates – 0.3%
Tyco International Group SA
550,000    5.88      11/01/2004    550,255
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
Corporate Bonds – (continued)
 
Consumer Cyclicals – 0.1%
United Rentals, Inc. Series B
$      250,000    8.80 %    08/15/2008    $          220,000
Credit Card Banks – 0.5%
Capital One Bank
500,000    6.38      02/15/2003    499,130
100,000    6.65      03/15/2004    99,384
Providian National Bank
250,000    6.65      02/01/2004    246,628
                 
                          845,142
Electric – 0.5%
MidAmerican Energy Holdings Co.
250,000    7.23      09/15/2005    258,764
Niagara Mohawk Power Co.
450,000    6.88      04/01/2003    459,733
                 
                          718,497
Energy – 0.7%
KeySpan Corp.
75,000    7.25      11/15/2005    79,032
Occidental Petroleum Corp.
275,000    7.65      02/15/2006    291,139
Phillips Petroleum Co.
160,000    8.50      05/25/2005    174,983
The Williams Cos., Inc.
625,000    6.13      02/15/2002    623,904
                 
                          1,169,058
Environmental – 0.5%
Allied Waste North America, Inc. Series B
250,000    7.63      01/01/2006    242,500
Waste Management, Inc.#
500,000    6.13      07/15/2001    497,985
                 
                          740,485
Finance Companies – 0.9%
American General Finance Corp.
265,000    5.75      11/01/2003    265,387
AXA Financial, Inc.
100,000    7.75      08/01/2010    109,747
Beneficial Corp.
350,000    6.43      04/10/2002    354,756
Comdisco, Inc.
335,000    6.13      01/15/2003    289,889
General Motors Acceptance Corp.
190,000    5.75      11/10/2003    188,881
195,000    6.38      01/30/2004    196,493
                 
                          1,405,153
Health Care – 0.1%
Tenet Healthcare Corp.
175,000    8.63      12/01/2003    180,250
Insurance Companies – 0.1%
Conseco, Inc.
140,000    8.50      10/15/2002    131,600
 
The accompanying notes are an integral part of these financial statements.
9
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
February 28, 2001 (Unaudited)
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
Corporate Bonds – (continued)
 
Lodging – 0.4%
Hilton Hotels Corp.
$      155,000    8.25 %    02/15/2011    $          159,723
ITT Corp.
465,000    6.75      11/15/2003    464,886
                 
                          624,609
Media-Cable – 1.7%
Adelphia Communications Corp.
125,000    7.88      05/01/2009    113,750
125,000    9.38      11/15/2009    124,375
Charter Communications Holdings LLC
250,000    8.25      04/01/2007    242,500
Comcast UK Cable Partners Ltd.+
125,000    0.00/11.20      11/15/2007    120,625
Cox Communications, Inc.
145,000    7.50      08/15/2004    150,844
50,000    7.75      08/15/2006    53,120
90,000    6.40      08/01/2008    88,753
125,000    6.80      08/01/2028    114,418
Lenfest Communications, Inc.
300,000    8.38      11/01/2005    326,370
Rogers Cablesystems Ltd.
115,000    9.63      08/01/2002    118,162
Telewest Communications PLC+
250,000    0.00/11.00      10/01/2007    250,000
250,000    0.00/9.25 †    04/15/2009    155,625
Time Warner Entertainment Co.
445,000    9.63      05/01/2002    463,538
Time Warner, Inc.
250,000    7.98      08/15/2004    265,129
150,000    8.11      08/15/2006    162,977
                 
                          2,750,186
Media-Non Cable – 1.1%
Clear Channel Communications, Inc.
250,000    8.00      11/01/2008    260,625
Crown Castle International Corp.+
250,000    0.00/10.38      05/15/2011    182,500
News America Holdings, Inc.
135,000    8.00      10/17/2016    133,176
PanAmSat Corp.
205,000    6.13      01/15/2005    197,311
Viacom, Inc.
900,000    6.75      01/15/2003    915,255
120,000    7.70      07/30/2010    130,568
                 
                          1,819,435
Mortgage Banks – 0.5%
Countrywide Capital III Series B
330,000    8.05      06/15/2027    320,858
Countrywide Home Loans, Inc.
500,000    6.45      02/27/2003    507,031
                 
                          827,889
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
Corporate Bonds – (continued)
 
Paper – 0.3%
Packaging Corp. of America
$      250,000    9.63 %    04/01/2009    $          266,250
Riverwood International Corp.
250,000    10.63      08/01/2007    260,000
                 
                          526,250
REIT – 0.4%
Liberty Property LP
205,000    7.10      08/15/2004    208,206
Simon Property Group LP
425,000    6.63      06/15/2003    425,842
                 
                          634,048
Supermarkets – 0.4%
Ahold Finance USA, Inc.
115,000    8.25      07/15/2010    125,466
 
Fred Meyer, Inc.
260,000    7.45      03/01/2008    272,100
 
Safeway, Inc.
265,000    6.05      11/15/2003    267,606
                 
                          665,172
Technology – 0.1%
Flextronics International Ltd.
125,000    9.88      07/01/2010    131,250
Telecommunications – 2.1%
360 Communications Co.
575,000    7.13      03/01/2003    587,994
 
Alaska Communications Holdings, Inc.
125,000    9.38      05/15/2009    115,000
 
Ameritech Capital Funding
135,000    6.25      05/18/2009    132,404
 
AT&T Canada, Inc. +
170,000    0.00/9.95      06/15/2008    142,800
 
Deutsche Telekom AG
305,000    7.75      06/15/2005    314,106
 
Global Crossing Holdings Ltd.†
125,000    9.13      11/15/2006    123,750
 
Intermedia Communications, Inc. Series B
250,000    8.60      06/01/2008    245,625
 
Metromedia Fiber Network, Inc.
125,000    10.00      12/15/2009    118,750
 
Nextel Communications, Inc.
250,000    9.38      11/15/2009    233,750
 
Price Communications Wireless, Inc. Series B
250,000    9.13      12/15/2006    260,000
 
Qwest Capital Funding, Inc.
200,000    7.25      02/15/2011    200,460
 
Qwest Corp.†
425,000    7.63      06/09/2003    438,496
GOLDMAN SACHS BALANCED FUND
 
 
 
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
Corporate Bonds – (continued)
 
Telecommunications – (continued)
Tele-Communications, Inc.
$        75,000    9.65 %    10/01/2003    $            78,786
Verizon Global Funding Corp.
145,000    6.75      12/01/2005    149,079
150,000    7.25      12/01/2010    157,023
                 
                          3,298,023
Tobacco – 0.6%
Philip Morris Cos., Inc.
200,000    7.50      04/01/2004    207,415
150,000    7.00      07/15/2005    154,053
195,000    6.95      06/01/2006    195,144
R.J. Reynolds Tobacco Holdings, Inc.
355,000    7.38      05/15/2003    352,160
                 
                          908,772
Yankee Bonds – 0.2%
HSBC Holdings PLC
110,000    7.50      07/15/2009    117,477
National Westminster Bank PLC
260,000    7.38      10/01/2009    276,786
                 
                          394,263
TOTAL CORPORATE BONDS
(Cost $25,452,334)    $ 25,280,531
 
Emerging Market Debt – 3.1%
 
Federal Republic of Brazil
$      100,000    12.25 %    03/06/2030    $            92,000
Federal Republic of Brazil C-Bonds
147,769    8.00      04/15/2014    117,015
Grupo Industrial Durango SA
100,000    12.63      08/01/2003    101,250
Hanvit Bank†
170,000    11.75      03/01/2010    170,109
MRS Logistica SA
100,000    10.63      08/15/2005    90,750
National Republic of Bulgaria#
60,000    6.31      07/28/2011    44,813
140,000    3.00      07/28/2012    103,512
New Zealand Government
2,300,000    8.00      11/15/2006    1,090,589
Petroleos Mexicanos#†
160,000    9.50      09/15/2027    166,000
Province of Quebec
550,000    7.50      07/15/2023    605,121
105,000    5.74      03/02/2026    115,064
Province of Saskatchewan
90,000    8.50      07/15/2022    110,750
PTC International Finance BV+
210,000    0.00/10.75      07/01/2007    173,250
Republic of Argentina
80,000    11.75      05/21/2003    78,750
80,000    11.75      06/15/2015    72,600
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
Emerging Market Debt – (continued)
 
Republic of Panama
$        70,000    7.88 %    02/13/2002    $            70,175
293,105    7.73 #    05/10/2002    293,837
50,000    9.63      02/08/2011    49,423
140,000    10.75      05/15/2020    141,050
160,000    9.38      04/01/2029    159,500
Republic of Philippines
50,000    9.88      03/16/2010    46,700
40,000    10.63      03/16/2025    34,025
Republic of Poland+
40,000    0.00/3.75      10/27/2024    28,100
Republic of Venezuela
166,665    7.38      12/18/2007    140,936
Russian Federation
140,000    9.25      11/27/2001    140,519
110,000    11.75      06/10/2003    106,975
110,000    8.75      07/24/2005    90,612
140,000    8.75      03/31/2030    56,262
220,000    8.75      03/31/2030    89,100
State of Qatar
60,000    9.50      05/21/2009    65,325
280,000    9.75 †    06/15/2030    291,375
TOTAL EMERGING MARKET DEBT
(Cost $4,707,901)    $      4,935,487
 
Mortgage Backed Obligations – 20.9%
 
Federal Home Loan Mortgage Corp. (FHLMC) – 1.9%
$  3,000,000    7.50 %    TBA-30 yrV    $      3,065,640
Federal National Mortgage Association (FNMA) – 8.9%
193,712    8.00      04/01/2015    200,370
277,233    8.00      08/01/2015    286,761
785,288    8.00      09/01/2015    812,278
180,641    6.50      09/01/2025    180,744
193,553    6.50      10/01/2025    193,664
252,479    6.50      11/01/2025    252,867
999,900    7.00      11/01/2030    1,011,149
999,900    7.50      01/01/2031    1,021,148
6,000,000    7.00      TBA-30 yrV    6,116,280
4,000,000    7.50      TBA-30 yrV    4,085,000
                 
                          14,160,261
Government National Mortgage Association (GNMA) – 7.1%
589,925    8.00      12/15/2021    613,894
277,877    8.00      01/15/2022    289,168
83,969    8.00      04/15/2022    87,353
149,025    6.50      06/15/2023    149,488
149,867    6.50      08/15/2023    150,332
209,721    6.50      09/15/2023    210,371
106,472    6.50      10/15/2023    106,802
271,177    6.50      11/15/2023    272,019
376,779    6.50      12/15/2023    377,948
636,098    6.50      01/15/2024    637,793
The accompanying notes are an integral part of these financial statements.
11
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
February 28, 2001 (Unaudited)
 
 
 
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
Mortgage Backed Obligations – (continued)
 
Government National Mortgage Association (GNMA) – (continued)
$      982,982    6.50 %    02/15/2024    $          985,601
96,866    6.50      03/15/2024    97,124
1,291,590    6.50      04/15/2024    1,295,031
1,100,412    7.00      04/15/2028    1,116,918
914,278    7.00      06/15/2028    927,992
939,014    7.00      07/15/2028    953,099
267,659    7.50      09/15/2030    274,099
1,657,761    7.50      11/15/2030    1,697,647
74,680    7.50      12/15/2030    76,477
1,000,100    7.50      02/15/2031    1,024,162
                 
                          11,343,318
Collateralized Mortgage Obligations (CMOs) – 3.0%
Inverse Floaters# – 1.1%
FHLMC-GNMA Series 14, Class SB
872,608    5.31      06/25/2023    836,048
 
FNMA Series 1993-248, Class SA
1,000,000    4.37      08/25/2023    930,207
                 
                          1,766,255
Non-Agency CMOs – 1.9%
Asset Securitization Corp. Series 1997-D4, Class A 1D
450,000    7.49      04/14/2029    480,948
CS First Boston Mortgage Securities Corp. Series 1997-C2,
Class A2
700,000    6.52      07/17/2007    720,030
CS First Boston Mortgage Securities Corp. Series 1999-C1,
Class A1
899,232    6.91      01/15/2008    936,687
First Union National Bank Commercial Mortgage Trust Series
2000-C2, Class A2
800,000    7.20      09/15/2010    850,808
                 
                          2,988,473
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (CMOS)
(Cost $4,435,008)    $      4,754,728
TOTAL MORTGAGE BACKED OBLIGATIONS
(Cost $32,666,110)    $    33,323,947
 
Agency Debentures – 0.3%
 
Federal National Mortgage Association (FNMA) – 0.3%
$      400,000    7.25 %    01/15/2010    $          443,073
TOTAL AGENCY DEBENTURES
(Cost $434,516)    $          443,073
Principal
Amount		    Interest
Rate		    Maturity
Date		    Value  
                                
 
U.S. Treasury Obligations – 3.4%
 
U.S. Treasury Principal-Only Stripped Securities@
$  2,750,000    5.85 %    05/15/2020    $          930,872
2,940,000    5.85      11/15/2021    914,455
1,290,000    5.82      11/15/2024    340,352
1,000,000    5.80      08/15/2025    254,099
3,310,000    5.77      08/15/2026    797,210
 
U.S. Treasury Bonds
150,000    8.88      08/15/2017    205,542
100,000    6.88      08/15/2025    117,843
 
U.S. Treasury Notes
1,500,000    6.00      08/15/2009    1,602,027
1,100,000    5.77      11/15/2026    261,315
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,051,561)    $      5,423,715
 
Repurchase Agreement – 10.1%
 
Joint Repurchase Agreement Account II^
$16,100,000    5.48 %    03/01/2001    $    16,100,000
TOTAL REPURCHASE AGREEMENT
(Cost $16,100,000)    $    16,100,000
TOTAL INVESTMENTS
(Cost $162,373,794)    $  171,826,649
*
Non-income producing security.
 
Ù
Joint repurchase agreement was entered into on February 28, 2001.
 
#
Variable rate security. Coupon rate disclosed is that which is in effect at February 28, 2001.
 
V 
TBA (To Be Assigned) securities are purchased on a forward commitment basis with an approximate (generally ± 2.5%) principal amount and maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned.
 
†
Securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounted to $1,345,355 at February 28, 2001.
 
+
These securities are issued with a zero coupon which increases to the stated rate at a set date in the future.
 
@
Security is issued with a zero coupon. The interest rate disclosed for this security represents effective yield to maturity.
 
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.
 
Investment Abbreviations:
ADR—American Depositary Receipt
 
GOLDMAN SACHS BALANCED FUND
Statement of Assets and Liabilities
February 28, 2001 (Unaudited)
Assets:     
 
Investment in securities, at value (identified cost $162,373,794)      $155,726,649  
Repurchase Agreement      16,100,000  
Cash (a)      1,343,875  
Receivables:
    Investment securities sold      24,842,608  
    Dividends and interest, at value      827,150  
    Fund shares sold      128,112  
    Reimbursement from investment adviser      48,642  
    Forward foreign currency exchange contracts, at value      3,103  
Other assets      13,031  
Total assets      199,033,170  
 
Liabilities:   
 
Payables:
    Investment securities purchased      34,734,147  
    Fund shares repurchased      1,192,793  
    Amounts owed to affiliates      159,313  
    Variation margin      98,090  
Forward sale contract, at value (cost $3,064,219)      3,072,180  
Accrued expenses and other liabilities      95,181  
Total liabilities      39,351,704  
 
Net Assets:   
 
Paid-in capital      153,620,467  
Accumulated undistributed net investment income      628,989  
Accumulated net realized loss on investment, futures and foreign currency related transactions      (3,876,546 )
Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currencies      9,308,556  
NET ASSETS      $159,681,466  
Net asset value, offering and redemption price per share: (b)
Class A      $19.14  
Class B      $19.01  
Class C      $18.98  
Institutional      $19.18  
Service      $19.15  
Shares outstanding:
Class A      6,243,411  
Class B      1,581,299  
Class C      402,204  
Institutional      128,466  
Service      806  
Total shares outstanding, $.001 par value (unlimited number of shares authorized)      8,356,186  
 
(a)
Includes restricted cash of $1,300,000 relating to initial margin requirements and collateral on futures transactions.
(b)
Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A Shares is $20.25. At redemption, Class B and Class C Shares may be subject to a deferred contingent sales charge, assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares.
The accompanying notes are an integral part of these financial statements.
13
GOLDMAN SACHS BALANCED FUND
Statement of Operations
For the Six Months Ended February 28, 2001 (Unaudited)
 
Investment income:
 
Interest      $  2,944,113  
Dividends (a)      419,557  
Total income      3,363,670  
 
Expenses:
 
Management fees      541,099  
Distribution and Service fees (b)      352,051  
Transfer Agent fees (c)      156,336  
Custodian fees      73,513  
Registration fees      38,601  
Professional fees      20,088  
Trustee fees      4,206  
Other      58,201  
Total expenses      1,244,095  
Less — expense reductions      (141,249 )
Net expense      1,102,846  
NET INVESTMENT INCOME      2,260,824  
 
Realized and unrealized gain (loss) on investment, futures and foreign currency related transactions:
 
Net realized gain (loss) from:
    Investment transactions      124,967  
    Futures transactions      (2,098,403 )
    Foreign currency related transactions      (7,678 )
Net change in unrealized gain (loss) on:
    Investments      (12,687,734 )
    Futures      (545,258 )
    Translation of assets and liabilities denominated in foreign currencies      (88,187 )
Net realized and unrealized loss on investment, futures and foreign currency related transactions      (15,302,293 )
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS      $(13,041,469 )
 
(a) 
Foreign taxes withheld on dividends were $1,020.
(b) 
Class A, Class B and Class C Shares had Distribution and Service fees of $156,065, $156,345 and $39,641, respectively.
(c) 
Class A, Class B, Class C, Institutional Class and Service Class Shares had Transfer Agent fees of $118,610, $29,705, $7,532, $482 and $7, respectively.
 
14
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statements of Changes in Net Assets
       For the Six
Months Ended
February 28, 2001		      For the
Year Ended
August 31, 2000
       (Unaudited)       
 
From operations:
 
Net investment income      $    2,260,824        $    5,558,893  
Net realized gain (loss) from investment, futures and foreign currency related transactions      (1,981,114 )      1,398,621  
Net change in unrealized gain (loss) on investments, futures and translation of assets and liabilities
denominated in foreign currencies		      (13,321,179 )      15,181,430  
Net increase (decrease) in net assets resulting from operations      (13,041,469 )      22,138,944  
 
Distributions to shareholders:
 
From net investment income
    Class A Shares      (2,966,791 )      (3,728,709 )
    Class B Shares      (628,086 )      (664,618 )
    Class C Shares      (158,610 )      (176,298 )
    Institutional Shares      (60,755 )      (68,550 )
    Service Shares      (7,095 )      (353 )
From net realized gains
    Class A Shares      (1,605,143 )      (6,165,905 )
    Class B Shares      (410,699 )      (1,496,998 )
    Class C Shares      (103,384 )      (399,802 )
    Institutional Shares      (30,870 )      (97,914 )
    Service Shares      (203 )      (569 )
Total distributions to shareholders      (5,971,636 )      (12,799,716 )
 
From share transactions:
 
Proceeds from sales of shares      13,227,848        14,022,180  
Reinvestment of dividends and distributions      5,715,576        12,298,235  
Cost of shares repurchased      (20,823,472 )      (78,654,543 )
Net decrease in net assets resulting from share transactions      (1,880,048 )      (52,334,128 )
TOTAL DECREASE      (20,893,153 )      (42,994,900 )
 
Net assets:
 
Beginning of period      180,574,619          223,569,519  
End of period      $159,681,466        $180,574,619  
Accumulated undistributed net investment income      $        628,989        $    2,189,502  
The accompanying notes are an integral part of these financial statements.
15
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements
February 28, 2001 (Unaudited)
1.  ORGANIZATION
 
Goldman Sachs Trust (the “Trust”) is a Delaware business trust registered under the Investment Company Act of 1940 (as amended) as an open-end management investment company. The Trust includes the Goldman Sachs Balanced Fund (the “Fund”). The Fund is a diversified portfolio offering five classes of shares — Class A, Class B, Class C, Institutional and Service.
 
2.  SIGNIFICANT ACCOUNTING POLICIES
 
The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.
 
A.  Investment Valuation — Investments in securities traded on a U.S. or foreign securities exchange or the NASDAQ system are valued daily at their last sale on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.
        Investing in emerging markets may involve special risks and considerations not typically associated with investing in the United States. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls, delayed settlements, and their prices more volatile than those of comparable securities in the United States.
 
B.  Security Transactions and Investment Income — Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes where applicable. 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 recorded on the basis of interest accrued, premium amortized and discount earned. However, the Fund does not amortize premiums on U.S. Government and corporate bonds.
        Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.
 
C.  Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provision is required. Income distributions, if any, are declared and paid quarterly. Capital gains distributions, if any, are declared and paid annually.
        The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of the Fund’s distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist.
        At February 28, 2001, the aggregate cost of portfolio securities for federal income tax purposes was $163,628,643. Accordingly, the gross unrealized gain on investments was $13,688,293 and the gross unrealized loss on investments was $5,490,287 resulting in a net unrealized gain of $8,198,006.
GOLDMAN SACHS BALANCED FUND
 
 
2.  SIGNIFICANT ACCOUNTING POLICIES (continued)
 
D.  Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Funds on a straight-line or pro rata basis depending upon the nature of the expense.
        Class A, Class B and Class C Shares bear all expenses and fees relating to their respective Distribution and Service plans. Shareholders of Service Shares bear all expenses and fees paid to service organizations. Each class of shares separately bears its respective class-specific Transfer Agency fees.
 
E.  Mortgage Dollar Rolls — The Fund may enter into mortgage “dollar rolls” in which the Fund sells securities in the current month for delivery and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. For financial reporting and tax reporting purposes, the Fund treats mortgage dollar rolls as two separate transactions; one involving the purchase of a security and a separate transaction involving a sale.
 
F.  Foreign Currency Translations — The books and records of the Fund are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon 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 holdings of foreign currencies; (ii) gains and losses from the sale of investments (applicable to fixed income securities); (iii) currency gains and losses between trade date and settlement date on investment securities transactions and forward exchange contracts; and (iv) gains and losses from the difference between amounts of dividends and interest recorded and the amounts actually received.
 
G.  Segregation Transactions — The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, mortgage dollar rolls, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.
 
H.  Forward Sales Contracts — The Fund may enter into forward security sales of mortgage backed securities in which the Fund sells securities in the current month for delivery of securities defined by pool stipulated characteristics on a specified future date. The value of the contract is recorded as a liability on the Fund’s records with the difference between its market value and cash proceeds received being recorded as an unrealized gain or loss. Gains or losses are realized upon delivery of the security.
 
I.  Deferred Organization Expenses — Organization-related costs are being amortized on a straight-line basis over a period of five years.
 
J.  Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities, 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 the Fund’s custodian.
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements (continued)
February 28, 2001 (Unaudited)
 
 
3.  AGREEMENTS
 
Pursuant to the Investment Management Agreement (the “Agreement”), Goldman Sachs Asset Management, (“GSAM”), a unit of the Investment Management Division of Goldman, Sachs & Co. (“Goldman Sachs”), serves as the investment adviser to the Fund. Under the Agreement, the adviser, subject to the general supervision of the Trust’s Board of Trustees, manages the Fund’s portfolio. As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, the adviser is entitled to a fee, computed daily and payable monthly, at an annual rate equal to 0.65% of the average daily net assets of the Fund.
        The adviser has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding Management fees, Distribution and Service fees, Transfer Agent fees, taxes, interest, brokerage, litigation, Service Share fees, indemnification costs and other extraordinary expenses), to the extent that such expenses exceed, on an annual basis, 0.06% of the average daily net assets of the Fund. For the six months ended February 28, 2001, Goldman Sachs has agreed to reimburse approximately $140,000. In addition, the Fund has entered into certain offset arrangements with the custodian resulting in a reduction in the Fund’s expenses. For the six months ended February 28, 2001, custody fees were reduced by approximately $1,000.
        The Trust, on behalf of the Fund, has adopted Distribution and Service Plans. Under the Distribution and Service Plans, Goldman Sachs and/or authorized dealers are entitled to a monthly fee from the Fund for distribution and shareholder maintenance services equal, on an annual basis, to 0.25%, 1.00% and 1.00% of the Fund’s average daily net assets attributable to Class A, Class B and Class C Shares, respectively.
        Goldman Sachs serves as the distributor of shares of the Fund pursuant to a Distribution Agreement. Goldman Sachs may receive a portion of the Class A sales load and Class B and Class C contingent deferred sales charges and has advised the Fund that it retained approximately $8,000 during the six months ended February 28, 2001.
        Goldman Sachs also serves as the transfer agent of the Fund for a fee. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate as follows: 0.19% of the average daily net assets for Class A, Class B and Class C Shares and 0.04% of the average daily net assets for Institutional and Service Shares.
        The Trust, on behalf of the Fund, has adopted a Service Plan. This plan allows for Service Shares to compensate service organizations for providing varying levels of account administration and shareholder liaison services to their customers who are beneficial owners of such shares. The Service Plan provides for compensation to the service organizations in an amount up to 0.50% (on a annualized basis) of the average daily net asset value of the Service Shares.
        As of February 28, 2001, the amounts owed to affiliates were approximately $82,000, $53,000 and $24,000 for Management, Distribution and Service, and Transfer Agent fees, respectively.
 
4.  PORTFOLIO SECURITIES TRANSACTIONS
 
The cost of purchases and proceeds of sales and maturities of securities (excluding short-term investments, futures and options) for the six months ended February 28, 2001, were $213,111,075 and $223,744,493, respectively. Included in these amounts are the cost of purchases and proceeds of sales and maturities of U.S. Government and agency obligations in the amounts of $164,379,158 and $170,347,126, respectively. For the six months ended February 28, 2001, Goldman Sachs earned approximately $8,000 of brokerage commissions from portfolio transactions, including futures transactions executed on behalf of the Fund.
 
Forward Foreign Currency Exchange Contracts — The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell forward contracts to seek to increase total return. All commitments are “marked-to-market” daily at the applicable translation rates. The Fund realizes gains or losses at the time a forward contract is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into 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.
GOLDMAN SACHS BALANCED FUND
 
4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)
 
At February 28, 2001, forward foreign currency exchange contracts were as follows:
 
Open Forward Foreign Currency
Sales Contracts		    Value on
Settlement Date		    Current Value    Unrealized Gain
New Zealand Dollar                        
    expiring 05/16/2001    $1,044,304    $1,041,201    $3,103
 
        The contractual amounts of forward foreign currency contracts do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. At February 28, 2001, the Fund had sufficient cash and securities to cover any commitments under these contracts.
 
Option Accounting Principles — When the Fund writes call or put options, an amount equal to the premium received is recorded as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When a written option expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. When a written call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security, and the proceeds of the sale are increased by the premium originally received. When a written put option is exercised, the amount of the premium originally received will reduce the cost of the security which the Fund purchases upon exercise. There is a risk of loss from a change in value of such options which may exceed the related premiums received.
        Upon the purchase of a call option or a protective put option by the Fund, the premium paid is recorded as an investment and subsequently marked-to-market to reflect the current market value of the option. If an option which the Fund has purchased expires on the stipulated expiration date, the Fund will realize a loss in the amount of the cost of the option. If the Fund enters into a closing sale transaction, the Fund will realize a gain or loss, depending on whether the sale proceeds for the closing sale transaction are greater or less than the cost of the option. If the Fund exercises a purchased put option, the Fund will realize a gain or loss from the sale of the underlying security, and the proceeds from such sale will be decreased by the premium originally paid. If the Fund exercises a purchased call option, the cost of the security which the Fund purchases upon exercise will be increased by the premium originally paid.
        At February 28, 2001, the Fund did not have any written call options.
 
Futures Contracts — The Fund may enter into futures transactions to hedge against changes in interest rates, securities prices, currency exchange rates or to seek to increase total return. Upon entering into a futures contract, the Fund is required to deposit with a broker or the Fund’s custodian bank an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Fund, depending on the fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Fund realizes a gain or loss which is reported in the Statement of Operations.
        The use of futures contracts involve, to varying degrees, elements of market risk which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contract may not directly correlate with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Fund’s hedging strategies and potentially result in a loss.
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements (continued)
February 28, 2001 (Unaudited)
 
 
4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)
 
        At February 28, 2001, open futures contracts were as follows:
 
Type    Number of
Contracts
Long/(Short)		    Settlement Month    Market Value    Unrealized
Gain(Loss)
Euro Dollars    5      March 2011    $  1,187,406      $      2,376  
Euro Dollars    12      March 2003    2,837,100      51,077  
Euro Dollars    12      March 2004    2,829,450      43,827  
Euro Dollars    12      June 2003    2,834,850      48,827  
Euro Dollars    12      June 2004    2,827,500      42,777  
Euro Dollars    12      September 2002    2,843,550      58,602  
Euro Dollars    12      September 2003    2,832,900      46,977  
Euro Dollars    12      December 2002    2,838,000      54,102  
Euro Dollars    12      December 2003    2,829,150      44,877  
S&P 500 Index    28      March 2001    8,694,000      (575,089 )
2 Year U.S. Treasury Note    63      June 2001    12,933,703      61,410  
5 Year U.S. Treasury Note    (9 )    March 2001    (943,031 )    (4,123 )
5 Year U.S. Treasury Note    (136 )    June 2001     (14,288,500 )    (77,855 )
10 Year U.S. Treasury Note    85      June 2001    9,004,688      92,607  
20 Year U.S. Treasury Bond    (15 )    June 2001    (1,579,219 )    (29,044 )
           $37,681,547      $(138,652 )
 
5.  LINE OF CREDIT FACILITY
 
The Fund participates in a $350,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. This facility also requires a fee to be paid by the Fund based on the amount of the commitment which has been utilized. During the six months ended February 28, 2001, the Fund did not have any borrowings under this facility.
 
6.  JOINT REPURCHASE AGREEMENT ACCOUNT
 
The Fund, together with other registered investment companies having management agreements with GSAM or its affiliates, transfers uninvested cash into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements.
        At February 28, 2001, the Fund had an undivided interest in the repurchase agreements in the joint account which equaled $16,100,000 in principal amount. At February 28, 2001, the following repurchase agreements held in this joint account were fully collateralized by Federal Agency obligations:
 
Repurchase Agreements    Principal
Amount		    Interest
Rate		    Maturity
Date		    Amortized
Cost		    Maturity
Value
ABN/Amro, Inc.   
$  500,000,000    
    5.48 %   
03/01/2001
   
$  500,000,000    
   
$  500,076,111   
Barclays Capital Inc.   
500,000,000
    5.50     
03/01/2001
   
500,000,000
   
500,076,389
Chase Securities, Inc.   
850,000,000
    5.48     
03/01/2001
   
850,000,000
   
850,129,389
C.S. First Boston Corp.   
 1,000,000,000    
    5.48     
03/01/2001
   
 1,000,000,000    
   
 1,000,152,222    
Deutsche Bank Securities, Inc.   
975,000,000
    5.47     
03/01/2001
   
975,000,000
   
975,148,146
Greenwich Capital   
300,000,000
    5.48     
03/01/2001
   
300,000,000
   
300,045,667
J.P. Morgan & Co., Inc.   
500,000,000
    5.47     
03/01/2001
   
500,000,000
   
500,075,972
Societe Generale   
250,000,000
    5.48     
03/01/2001
   
250,000,000
   
250,038,056
UBS Warburg LLC   
1,465,500,000   
    5.48     
03/01/2001
   
1,465,500,000   
   
1,465,723,082   
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT II   
$6,340,500,000     
   
$6,341,465,034    
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements (continued)
February 28, 2001 (Unaudited)
 
7.  SUMMARY OF SHARE TRANSACTIONS
 
Share activity is as follows:
 
       For the Six Months Ended
February 28, 2001 (Unaudited)
      For the Year Ended
August 31, 2000
       Shares      Dollars      Shares      Dollars
Class A Shares            
Shares sold      493,795        $  9,739,676        472,085        $  9,684,221  
Reinvestments of dividends and distributions      222,516        4,495,039        478,974        9,686,061  
Shares repurchased      (805,181 )       (16,106,940 )       (2,930,304 )       (60,263,205 )
       (88,870 )      (1,872,225 )      (1,979,245 )      (40,892,923 )
Class B Shares            
Shares sold      128,536        2,548,225        153,476        3,127,574  
Reinvestments of dividends and distributions      45,543        914,542        97,539        1,962,412  
Shares repurchased      (179,997 )      (3,589,453 )      (663,521 )      (13,518,116 )
       (5,918 )      (126,686 )      (412,506 )      (8,428,130 )
Class C Shares            
Shares sold      34,976        692,718        47,375        974,400  
Reinvestments of dividends and distributions      11,295        226,518        25,220        506,596  
Shares repurchased      (51,576 )      (1,034,275 )      (222,853 )      (4,520,537 )
       (5,305 )      (115,039 )      (150,258 )      (3,039,541 )
Institutional Shares            
Shares sold      12,210        241,079        11,157        233,723  
Reinvestments of dividends and distributions      3,903        78,924        7,030        142,244  
Shares repurchased      (4,530 )      (91,807 )      (17,090 )      (350,812 )
       11,583        228,196        1,097        25,155  
Service Shares            
Shares sold      35        6,150        112        2,262  
Reinvestments of dividends and distributions      27        553        46        922  
Shares repurchased      (51 )      (997 )      (91 )      (1,873 )
       12        5,706        67        1,311  
NET DECREASE      (88,498 )      $  (1,880,048 )      (2,540,845 )      $(52,334,128 )
GOLDMAN SACHS BALANCED FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
              
Income from investment operations
   Distributions to shareholders
 
     Net asset
value,
beginning
of period		    Net
investment
Income		    Net realized
and unrealized
gain (loss)		    Total from
investment
operations		    From net
investment
income		    In excess
of net
investment
income		    From net
realized gains		    Total
distributions
 
FOR THE SIX MONTHS ENDED FEBRUARY 28, (Unaudited)
 
2001 - Class A Shares   
$21.42  
    $0.29 (c)   
$(1.83) 
   
$(1.54)
   
$(0.48)  
   
$    —     
     
$(0.26)  
   
$(0.74)  
2001 - Class B Shares   
21.27
    0.21 (c)   
(1.81)
   
(1.60)
   
(0.40)
   
—
     
(0.26)
   
(0.66)
2001 - Class C Shares   
21.25
    0.21 (c)   
(1.82)
   
(1.61)
   
(0.40)
   
—
     
(0.26)
   
(0.66)
2001 - Institutional Shares   
21.46
    0.33 (c)   
(1.83)
   
(1.50)
   
(0.52)
   
—
     
(0.26)
   
(0.78)
2001 - Service Shares   
21.41
    0.30 (c)   
(1.86)
   
(1.56)
   
(0.44)
   
—
     
(0.26)
   
(0.70)
 
FOR THE YEAR ENDED AUGUST 31,
 
2000 - Class A Shares   
20.38
    0.60 (c)   
   1.75
 
   
  2.35 
   
(0.50)
   
—
     
(0.81)
   
(1.31)
2000 - Class B Shares   
20.26
    0.45 (c)   
   1.73
 
   
  2.18 
   
(0.36)
   
—
     
(0.81)
   
(1.17)
2000 - Class C Shares   
20.23
    0.45 (c)   
   1.74
 
   
  2.19 
   
(0.36)
   
—
     
(0.81)
   
(1.17)
2000 - Institutional Shares   
20.39
    0.71 (c)   
   1.75
 
   
  2.46 
   
(0.58)
   
—
     
(0.81)
   
(1.39)
2000 - Service Shares   
20.37
    0.59 (c)   
   1.74
 
   
  2.33 
   
(0.48)
   
—
     
(0.81)
   
(1.29)
 
FOR THE SEVEN MONTHS ENDED AUGUST 31,
 
1999 - Class A Shares   
20.48
      0.32     
 (0.19) 
   
  0.13
 
   
  (0.23)  
   
    —   
     
      —
     
(0.23)
1999 - Class B Shares   
20.37
    0.22     
(0.18)
   
  0.04
 
   
(0.15)
   
    —   
     
      —
     
(0.15)
1999 - Class C Shares   
20.34
    0.23     
(0.19)
   
  0.04
 
   
(0.15)
   
    —    
    
      —
     
(0.15)
1999 - Institutional Shares   
20.48
    0.53     
(0.35)
   
  0.18
 
   
(0.27)
   
    —   
     
      —
     
(0.27)
1999 - Service Shares   
20.47
    1.22     
(1.14)
   
  0.08
 
   
(0.18)
   
    —   
     
      —
     
(0.18)
 
FOR THE YEARS ENDED JANUARY 31,
 
1999 - Class A Shares   
  20.29
      0.58     
    0.20  
     
  0.78
 
   
  (0.59)  
   
 — 
     
     —
     
(0.59)
1999 - Class B Shares   
20.20
    0.41     
  0.21
     
  0.62
 
   
(0.45)
   
—
     
     —
     
(0.45)
1999 - Class C Shares   
20.17
    0.41     
  0.21
     
  0.62
 
   
(0.45)
   
—
     
     —
     
(0.45)
1999 - Institutional Shares   
20.29
    0.64     
  0.20
     
  0.84
 
   
(0.65)
   
—
     
     —
     
(0.65)
1999 - Service Shares   
20.28
    0.53     
  0.21
     
  0.74
 
   
(0.55)
   
—
     
     —
     
(0.55)
1998 - Class A Shares   
18.78
    0.57     
  2.66
     
  3.23
 
   
(0.56)
   
—
 
   
(1.16)
   
(1.72)
1998 - Class B Shares   
18.73
    0.50     
  2.57
     
  3.07
 
   
(0.42)
   
 (0.02)         
   
(1.16)
   
(1.60)
1998 - Class C Shares (commenced August 15, 1997)   
21.10
    0.25     
  0.24
     
  0.49
 
   
(0.22)
   
(0.04)        
   
(1.16)
   
(1.42)
1998 - Institutional Shares (commenced August 15, 1997)   
21.18
    0.26     
  0.32
     
  0.58
 
   
(0.23)
   
(0.08)        
   
(1.16)
   
(1.47)
1998 - Service Shares (commenced August 15, 1997)   
21.18
    0.22     
  0.32
     
  0.54
 
   
(0.22)
   
(0.06)        
   
(1.16)
   
(1.44)
1997 - Class A Shares   
17.31
    0.66     
  2.47
     
  3.13
 
   
(0.66)
   
—
     
(1.00)
   
(1.66)
1997 - Class B Shares (commenced May 1, 1996)   
17.46
    0.42     
  2.34
     
  2.76
 
   
(0.42)
   
(0.07)        
   
(1.00)
   
(1.49)
 
(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. Total returns for periods less than one full year are not annualized.
(b)
Annualized.
(c)
Calculated based on average shares outstanding methodology.
(d)
Includes the effect of mortgage dollar roll transactions.
GOLDMAN SACHS BALANCED FUND
 
 
Ratios assuming no
expense reductions
   
                   
Net asset
value, end
of period  
Total
return (a)   
Net assets
at end of
period
(in 000s)  
Ratio of
net expenses to
average net assets  
Ratio of
net investment
income to
average net assets  
Ratio of
expenses to
average net assets 
Ratio of
net investment
income to
average net assets
Portfolio 
turnover  
rate (d)
                         
$19.14  
 (7.34 )% $119,511 1.15 % (b) 2.89
%(b)
1.32
%(b)
2.72
%(b)
    131%
19.01
 (7.65 ) 30,055 1.90 (b) 2.14 (b) 2.07 (b) 1.97 (b)
 131
18.98
 (7.71 ) 7,636 1.90 (b) 2.14 (b) 2.07 (b) 1.97 (b)
 131
19.18
 (7.13 ) 2,464 0.75 (b) 3.29 (b) 0.92 (b) 3.12 (b)
 131
19.15
 (7.41 ) 15 1.25 (b) 2.97 (b) 1.42 (b) 2.80 (b)
  131
                         
21.42
 12.00 135,632 1.12 2.94 1.29 2.77
 154
21.27
 11.17   33,759 1.87   2.19   2.04   2.02  
 154
21.25
 11.23   8,658 1.87   2.19   2.04   2.02  
 154
21.46
 12.59   2,509 0.72   3.46   0.89   3.29  
 154
21.41
 11.89   17 1.22   2.86   1.39   2.69  
 154
                         
20.38
 0.62   169,395 1.10 (b) 2.58 (b) 1.32 (b) 2.36 (b)
 90
20.26
 0.20   40,515 1.85 (b) 1.83 (b) 2.07 (b) 1.61 (b)
 90
20.23
 0.18   11,284 1.85 (b) 1.84 (b) 2.07 (b) 1.62 (b)
 90
20.39
 0.86   2,361 0.70 (b) 2.96 (b) 0.92 (b) 2.74 (b)
 90
20.37
 0.39   15 1.20 (b) 2.46 (b) 1.42 (b) 2.24 (b)
 90
                         
20.48
 3.94   192,453 1.04   2.90   1.45   2.49  
175
20.37
 3.15   43,926 1.80   2.16   2.02   1.94  
175
20.34
 3.14   14,286 1.80   2.17   2.02   1.95  
175
20.48
 4.25   8,010 0.73   3.22   0.95   3.00  
175
20.47
 3.80   490 1.23   2.77   1.45   2.55  
175
20.29
 17.54    163,636 1.00   2.94   1.57   2.37  
190
 20.20
  16.71   23,639 1.76    2.14    2.07    1.83  
190
20.17
 2.49   8,850 1.77 (b) 2.13 (b) 2.08 (b) 1.82 (b)
190
20.29
 2.93   8,367 0.76 (b) 3.13 (b) 1.07 (b) 2.82 (b)
190
20.28
 2.66   16 1.26 (b) 2.58 (b) 1.57 (b) 2.27 (b)
190
18.78
 18.59       81,410 1.00   3.76   1.77   2.99  
208
18.73
 16.22   2,110 1.75 (b) 2.59 (b) 2.27 (b) 2.07 (b)
208

FUNDS PROFILE

Goldman Sachs Funds

THE GOLDMAN
SACHS ADVANTAGE

Our goal is to deliver:

Goldman Sachs is a premier financial services firm, known since 1869 for creating thoughtful and customized investment solutions in complex global markets.

Today, the Investment Management Division of Goldman Sachs serves a diverse set of clients worldwide, including private institutions, public entities and individuals. With portfolio management teams located around the world — and more than $280 billion in assets under management, our investment professionals bring firsthand knowledge of local markets to every investment decision, making us one of the few truly global asset managers.

1  An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

CORESM is a service mark of Goldman, Sachs & Co.

Goldman Sachs Research Select FundSM is a service mark of Goldman, Sachs & Co.

Goldman Sachs Internet Tollkeeper FundSM is a service mark of Goldman, Sachs & Co.

*Goldman Sachs International Growth Opportunities Fund was formerly Goldman Sachs International Small Cap Fund.