<PAGE>
Goldman Sachs Funds
GROWTH AND INCOME FUND Annual Report August 31, 1999
[GRAPHIC APPEARS HERE] Long-term capital growth and growth
of income potential from a diversified
portfolio of equity securities.
[LOGO OF GOLDMAN SACHS APPEARS HERE]
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Market Overview
Dear Shareholder,
During the period under review, the ongoing strength of the U.S. economy
surprised many experts, and amidst shifting preferences for equities, most
sectors of the stock market produced solid returns.
. U.S. Equities Performed Well, As Events Proved the Value of
Diversification -- As 1999 began, the market continued its
ascent, due largely to a strong economy and low inflation. But
the market rally was extremely narrow, as gains were mostly
limited to a few very large growth companies and the
technology sector. In April, investors abruptly shifted gears
and took a renewed interest in economically sensitive,
smaller-cap and value-oriented stocks. Most sectors retreated
in July, as concerns over inflation led to higher interest
rates. As the reporting period ended, there were mixed signals
on the inflation front, and some market sectors rebounded.
. The U.S. Economy Continued To Move Forward -- A year ago, the
robust growth we continue to see in the U.S. economy seemed
unlikely. During the fourth quarter of 1998, the Federal
Reserve Board made the last of three interest rate cuts. The
Fed's actions signaled its concerns over the economic crisis
overseas, and its potential for triggering a meaningful
slowdown of the U.S. economy in 1999. However, during the
first quarter of the year, economic data pointed to economies
in Asia rebounding much faster than anticipated, and the U.S.
economy resumed its march forward. While inflation had not
been a concern for quite some time, several factors, including
rising commodity prices and wage pressures, led the Federal
Reserve to raise short-term rates toward the end of the
reporting period.
. Market Outlook: Short-Term Optimism -- We continue to have a
generally positive outlook for U.S. stocks in the coming
months. Corporate profits should remain healthy, and we would
expect to see strong economic growth for the remainder of
1999. While inflation could be somewhat higher than in years
past, it should remain moderate.
There are several factors that could derail the stock
market's record ascent. These include the Federal Reserve's
interest rate stance, lower productivity gains, potentially
higher labor costs, corporate profit margins and Y2K issues.
Therefore, we encourage you to maintain a diversified
portfolio and continue focusing on the longer-term.
. Special Note: Reporting Period Change -- To better serve the
needs of our shareholders, the fiscal year-end of your Fund
has been changed to August 31. Previously, your Fund had a
January 31 fiscal year-end. Because of the new reporting
period, this will serve as the Fund's annual report. This
change does not affect your Fund's investment objective or
strategy in any way.
As always, we appreciate your support and we look forward to
serving your investment needs in the years to come.
Sincerely,
/s/ David B. Ford /s/ John P. McNulty
David B. Ford John P. McNulty
Co-Head, Goldman Sachs Co-Head, Goldman Sachs
Asset Management Asset Management
September 3, 1999
. NOT FDIC INSURED
. May Lose Value
. No Bank Guarantee
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Fund Basics
as of August 31, 1999
Assets Under Management
$1.2 Billion
Number of Holdings
91
NASDAQ Symbols
Class A Shares
GSGRX
Class B Shares
GSGBX
Class C Shares
GSGCX
Institutional Shares
GSIIX
Service Shares
GSGSX
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PERFORMANCE REVIEW
- --------------------------------------------------------------------------------------------------------
January 31, 1999-August 31, 1999 Fund Total Return (without sales charge)/1/ S&P 500 Index/2/
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A 2.05% 3.98%
Class B 1.60 3.98
Class C 1.58 3.98
Institutional 2.32 3.98
Service 2.01 3.98
- --------------------------------------------------------------------------------------------------------
</TABLE>
/1/ The net asset value represents the net assets of the Fund (ex-dividend)
divided by the total number of shares. The Fund's performance assumes the
reinvestment of dividends and other distributions.
/2/ The unmanaged S&P 500 Index (with dividends reinvested) figures do not
reflect any fees or expenses. In addition, investors cannot invest directly
in the Index.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
STANDARDIZED TOTAL RETURNS/3/
- ------------------------------------------------------------------------------------------------------
For the period ended 6/30/99 Class A Class B Class C Institutional Service
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Last 6 Months 5.68% 6.34% 10.36% 12.02% 11.73%
One Year -6.01 -6.19 -2.30 -0.09 -0.61
Five Years 16.64 N/A N/A N/A 17.91/4/
Since Inception 15.05 14.21 2.26 16.11 16.03/4/
(2/5/93) (5/1/96) (8/15/97) (6/3/96) (2/5/93)
- ------------------------------------------------------------------------------------------------------
</TABLE>
/3/ The Standardized Total Returns are average annual total returns or
cumulative total returns (only if the performance period is one year or
less) as of the most recent calendar quarter-end. They assume reinvestment
of all distributions at net asset value. These returns reflect a maximum
initial sales charge of 5.5% for Class A shares and the assumed deferred
sales charge for Class B shares (5% maximum declining to 0% after six
years) and the assumed deferred sales charge for Class C shares (1% if
redeemed within 12 months of purchase). Because Institutional and Service
shares do not involve a sales charge, such a charge is not applied to their
Standardized Total Returns.
/4/ Performance data for Service shares prior to 3/6/96 is that of Class A
shares (excluding the impact of front-end sales charges applicable to Class
A shares since Service shares are not subject to any sales charges).
Performance of Class A shares of the Growth and Income Fund reflects the
expenses applicable to the Fund's Class A shares. The fees applicable to
Services shares are different from those applicable to Class A shares which
impact performance ratings and rankings for a class of shares.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 8/31/99
- -----------------------------------------------------------------------------------------
Holding % of Total Net Assets Line of Business
- -----------------------------------------------------------------------------------------
<S> <C> <C>
General Motors Corp. 2.5% Motor Vehicles
Royal Dutch Petroleum Co. ADR 2.4 Energy Resources
Philip Morris Companies, Inc. 2.1 Tobacco
First Union Corp. 2.0 Banks
Federated Department Stores, Inc. 2.0 Department Store
Intel Corp. 2.0 Semiconductors
MediaOne Group, Inc. 1.9 Media
Bank of America Corp. 1.8 Banks
Bank One Corp. 1.8 Banks
Unicom Corp. 1.8 Electrical Utilities
- -----------------------------------------------------------------------------------------
</TABLE>
The top 10 holdings may not be representative of the Fund's future investments.
Total return figures represent past performance and do not indicate future
results, which will vary. The investment return and principal value of an
investment will fluctuate and, therefore, an investor's shares, when redeemed,
may be worth more or less than their original cost. Performance reflects expense
limitations in effect. In their absence, performance would be reduced.
1
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Performance Overview
Dear Shareholder,
The following is a report on the performance of the Goldman Sachs Growth and
Income Fund for the seven-month period ended August 31, 1999. This reporting
period is based on the Fund's new August 31st fiscal year-end.
Performance Review
Over the seven-month period ended August 31, 1999, the Fund's Class A,
B, C, Institutional and Service shares generated total cumulative
returns, without sales charges, of 2.05%, 1.60%, 1.58%, 2.32%, and
2.01%, respectively. These figures compared to the 3.98% total
cumulative return of the Fund's benchmark, the S&P 500 Index.
In 1998 and through March of 1999, the performance and valuation
discrepancies between growth and value stocks had grown to extreme
levels. As the market's outlook for global growth brightened in April,
however, long-neglected economically sensitive stocks rose sharply.
This occurred as investors began searching again for fundamental value
in sectors and companies beyond the exclusive club of the largest-cap
growth stocks. In the following two months, we witnessed less
pronounced outperformance by value although gains continued to be more
broad-based. In the final two months of the reporting period, returns
were muted, as fears of inflation and Federal Reserve tightening
prompted considerable market volatility.
Portfolio Composition
As we seek to add value through superior stock selection, we spend the
majority of our efforts performing thorough, first-hand fundamental
research. We rebuild, analyze and forecast the financial statements of
companies, and test our assumptions through meetings and discussions
with company management, competitors, customers and suppliers. We aim
to construct portfolios reflecting our evaluation of each security. As
such, industry weightings will reflect our views of where value exists
in the market. At the end of August, the Fund was most overweight in
consumer cyclical stocks and most underweight in technology.
. Federated Department Stores -- Federated has benefited from the strong
consumer economy and sales, exceeding industry expectations. The stock
additionally benefited from investor optimism surrounding its recent
acquisition of Fingerhut, and its evolving electronic commerce
strategy.
. Raytheon -- Raytheon, a Fund defense systems holding, received a
prolonged boost as the market's broadened search for value began in
April. Despite its recent strong performance, we believe that the
stock remains attractive based on its cash-generating ability,
relative to its peers, who are typically pure manufacturing
operations. We believe Raytheon's strong defense electronics business
offers diversification and strong growth prospects.
2
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
VALUE
INVESTMENT
PROCESS
Value stocks represent companies that are currently undervalued in the market,
but whose intrinsic value we believe ultimately will be recognized. Our value
stock selection process emphasizes a bottom-up approach.
Search for Value
We search for value from a universe of 1,000 stocks, and then select 200 to 300
of the least expensive.
Fundamental Research
We refine our stock list through rigorous analysis of companies' "fundamentals"
and face-to-face meetings with company management, competitors, suppliers and
customers.
Risk Management
We maintain ongoing risk management resulting in an intentional and quantifiable
risk/return profile.
. Atlantic Richfield Co. -- Atlantic Richfield, one of the Fund's energy
holdings contributed strong gains to the portfolio during the period.
The company's stock benefited when investors refocused their attention
on the sector following the recovery of oil prices late in the first
quarter.
Portfolio Outlook
We continue to improve the Fund's level of diversification and
liquidity in order to provide returns more consistent with its peer
group and the S&P 500 Index. Within this risk management framework, we
maintain a value orientation and hope to continue to add value through
stock selection and fundamental research. We believe that our
holdings, which collectively sell at a discount to the S&P 500 Index,
offer both a margin of downside protection and significant upside
return potential over the long term.
We thank you for your investment and look forward to your continued
confidence.
Goldman Sachs Value Investment Team
New York
September 3, 1999
3
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
The Goldman Sachs Advantage
Founded in 1869, Goldman, Sachs & Co. is a premier financial services firm
traditionally known on Wall Street and around the world for its institutional
expertise.
Today, the firm's Asset Management Division provides individual
investors the opportunity to tap the resources of a global
institutional powerhouse -- and put this expertise to work in their
individual portfolios.
What Sets Goldman Sachs Funds Apart?
1
----------------------------
Resources and Relationships
----------------------------
Our portfolio management teams are located on-site, around the
world, in New York, London, Tokyo and Singapore. Their
understanding of local economies, markets, industries and
cultures helps deliver what many investors want: access to global
investment opportunities and consistent, risk-adjusted
performance.
2
----------------------------
In-Depth Research
----------------------------
Our portfolio management teams make on-site visits to hundreds of
companies each month, then construct selective portfolios with an
emphasis on their best ideas. Our teams also have access to
Goldman, Sachs & Co.'s Global Investment Research Department.
3
----------------------------
Risk Management
----------------------------
In this, our institutional heritage is clear. Institutions, as
well as many individual investors, often look to us to manage the
risks of global investing over time in different market
environments.
To learn more about the Goldman Sachs Family of Funds, call your
investment professional today.
4
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Performance Summary
August 31, 1999
The following graph shows the value, as of August 31, 1999, of a $10,000 in-
vestment made (with the maximum sales charge of 5.5%) in Class A shares on
February 5, 1993 (commencement of operations) in the Goldman Sachs Growth and
Income Fund. 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.
Growth and Income Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested February 5, 1993 to
August 31, 1999.
[LINE GRAPH APPEARS HERE]
S&P 500 Class A
2/5/93 10,000 9,450
Feb 9,943 9,507
Mar 10,153 9,773
Apr 9,907 9,513
May 10,172 9,727
June 10,202 9,637
July 10,161 9,764
Aug 10,547 10,045
Sept 10,466 9,942
Oct 10,682 9,962
Nov 10,580 9,908
Dec 10,708 10,185
Jan-94 11,073 10,686
Feb 10,772 10,842
Mar 10,302 10,674
Apr 10,434 10,722
May 10,606 10,960
June 10,346 10,739
July 10,685 10,950
Aug 11,123 11,570
Sept 10,852 11,383
Oct 11,096 11,055
Nov 10,692 10,645
Dec 10,850 10,787
Jan-95 11,131 11,110
Feb 11,565 11,764
Mar 11,908 12,124
Apr 12,258 12,385
May 12,748 12,752
June 13,044 13,023
July 13,477 13,434
Aug 13,511 13,661
Sept 14,081 13,930
Oct 14,030 13,646
Nov 14,646 14,115
Dec 14,929 14,399
Jan-96 15,436 14,716
Feb 15,580 15,026
Mar 15,729 15,132
Apr 15,961 15,398
May 16,372 15,709
June 16,435 15,457
July 15,708 15,004
Aug 16,040 15,405
Sept 16,943 16,140
Oct 17,410 16,549
Nov 18,726 17,860
Dec 18,355 18,152
Jan-97 19,502 18,911
Feb 19,655 19,286
Mar 18,847 18,714
Apr 19,970 19,556
May 21,187 20,937
June 22,136 21,555
July 23,898 23,420
Aug 22,559 23,208
Sept 23,796 24,044
Oct 23,001 23,061
Nov 24,066 23,143
Dec 24,480 23,214
Jan-98 24,751 23,395
Feb 26,536 25,389
Mar 27,895 25,902
Apr 28,176 26,037
May 27,692 25,360
June 28,816 24,676
July 28,508 23,101
Aug 24,385 19,771
Sept 25,949 20,489
Oct 28,058 21,424
Nov 29,758 21,977
Dec 31,473 21,950
Jan-99 32,788 22,132
Feb 31,768 21,350
Mar 33,039 22,211
Apr 34,318 23,771
May 33,508 24,063
June 35,351 24,544
July 34,248 23,500
Aug 34,077 22,585
<TABLE>
<CAPTION>
Average Annual Total
Return through August 31,
1999 Since Inception Five Years One Year Seven Months
<S> <C> <C> <C> <C>
Class A (commenced February 5, 1993)
Excluding sales charges 14.18% 14.30% 14.23% 2.05%
Including sales charges 13.20% 13.02% 7.96% -3.58%
-----------------------------------------------------------------------------
Class B (commenced May 1, 1996)
Excluding contingent
deferred sales charges 11.39% n/a 13.31% 1.60%
Including contingent
deferred sales charges 10.53% n/a 8.29% -3.41%
-----------------------------------------------------------------------------
Class C (commenced August 15, 1997)
Excluding contingent
deferred sales charges -2.05% n/a 13.36% 1.58%
Including contingent
deferred sales charges -2.05% n/a 12.36% 0.58%
-----------------------------------------------------------------------------
Institutional Class (com-
menced June 3, 1996) 12.33% n/a 14.73% 2.32%
-----------------------------------------------------------------------------
Service Class (commenced
March 6, 1996) 11.43% n/a 14.15% 2.01%
-----------------------------------------------------------------------------
</TABLE>
5
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Investments
August 31, 1999
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 93.2%
Banks - 8.2%
364,300 Bank of America Corp. $ 22,040,150
545,300 Bank One Corp. 21,880,162
592,000 First Union Corp. 24,568,000
230,400 KeyCorp 6,681,600
417,800 National City Corp. 11,541,725
293,600 Wells Fargo & Co. 11,688,950
--------------
98,400,587
-----------------------------------------------------------------
Chemical - 1.4%
93,100 Du Pont (E.I.) de Nemours & Co. 5,900,213
110,800 Minnesota Mining and Manufacturing Co. 10,470,600
--------------
16,370,813
-----------------------------------------------------------------
Clothing - 1.1%
458,300 The TJX Companies, Inc. 13,233,413
-----------------------------------------------------------------
Computer Hardware - 5.0%
382,300 Compaq Computer Corp. 8,864,581
184,200 Hewlett-Packard Co. 19,410,075
136,400 International Business Machines, Inc. 16,990,325
75,800 NCR Corp.* 3,316,250
254,000 Xerox Corp. 12,128,500
--------------
60,709,731
-----------------------------------------------------------------
Computer Software - 2.8%
212,200 Computer Associates International, Inc. 11,989,300
189,000 Microsoft Corp.* 17,494,312
103,700 Oracle Corp.* 3,785,050
--------------
33,268,662
-----------------------------------------------------------------
Defense/Aerospace - 1.8%
184,300 Northrop Grumman Corp. 13,361,750
121,300 Raytheon Co. 8,142,262
--------------
21,504,012
-----------------------------------------------------------------
Department Store - 2.8%
519,100 Federated Department Stores, Inc.* 23,878,600
96,600 Sears Roebuck & Co. 3,622,500
162,000 The May Department Stores Co. 6,328,125
--------------
33,829,225
-----------------------------------------------------------------
Drugs - 5.0%
362,200 American Home Products Corp. 15,031,300
48,400 Eli Lilly & Co. 3,611,850
316,800 Merck & Co. 21,285,000
383,600 Pharmacia & Upjohn, Inc. 20,043,100
--------------
59,971,250
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Electronics Equipment - 0.6%
27,400 General Motors Corp. (Hughes)* $ 1,411,100
67,100 Motorola, Inc. 6,189,975
--------------
7,601,075
-----------------------------------------------------------------------------
Electrical Utilities - 5.6%
641,800 Entergy Corp. 19,133,663
240,800 FPL Group, Inc. 13,003,200
153,000 Pacificorp 3,126,938
334,100 PG&E Corp. 10,127,406
560,100 Unicom Corp. 21,633,862
--------------
67,025,069
-----------------------------------------------------------------------------
Energy Resources - 5.6%
79,200 Atlantic Richfield Co. 6,964,650
217,100 Exxon Corp. 17,123,762
499,000 Occidental Petroleum Corp. 10,822,063
465,100 Royal Dutch Petroleum Co. ADR 28,778,062
120,000 Tosco Corp. 3,060,000
--------------
66,748,537
-----------------------------------------------------------------------------
Environmental Services - 1.3%
692,000 Waste Management, Inc. 15,094,250
-----------------------------------------------------------------------------
Financial Services - 2.3%
297,500 Federal Home Loan Mortgage Corp. 15,321,250
194,900 Federal National Mortgage Association 12,108,162
--------------
27,429,412
-----------------------------------------------------------------------------
Food & Beverage - 6.3%
50,800 Anheuser-Busch Companies, Inc. 3,911,600
1,282,575 Archer Daniels Midland Co. 16,673,475
748,000 ConAgra, Inc. 18,326,000
88,300 H.J. Heinz Co. 4,122,506
690,600 Nabisco Group Holdings Corp. 12,258,150
906,700 Sara Lee Corp. 20,117,406
--------------
75,409,137
-----------------------------------------------------------------------------
Forest - 0.7%
179,300 International Paper Co. 8,438,306
-----------------------------------------------------------------------------
Heavy Electrical - 1.6%
100,000 Emerson Electric Co. 6,262,500
118,000 General Electric Co. 13,252,875
--------------
19,515,375
-----------------------------------------------------------------------------
Home Products - 0.6%
74,700 Procter & Gamble Co. 7,413,975
-----------------------------------------------------------------------------
Hotel - 1.0%
484,200 Starwood Hotels & Resorts Worldwide, Inc. Class B 11,530,013
-----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Industrial Parts - 0.6%
62,200 Ingersoll-Rand Co. $ 3,957,475
37,500 Textron, Inc. 3,028,125
--------------
6,985,600
---------------------------------------------------------
Leisure - 0.3%
57,000 Eastman Kodak Co. 4,185,938
---------------------------------------------------------
Life Insurance - 3.9%
234,100 Aetna, Inc. 18,201,275
177,900 Cigna Corp. 15,977,644
354,894 UNUMProvident Corp. 12,798,365
--------------
46,977,284
---------------------------------------------------------
Media - 3.3%
230,600 CBS, Inc.* 10,838,200
346,700 MediaOne Group, Inc.* 22,795,525
214,700 The Walt Disney Co. 5,957,925
--------------
39,591,650
---------------------------------------------------------
Medical Products - 2.5%
246,700 Baxter International, Inc. 16,544,319
231,400 Becton, Dickinson & Co. 6,508,125
70,600 Johnson & Johnson 7,218,850
--------------
30,271,294
---------------------------------------------------------
Medical Providers - 0.8%
411,600 Columbia/HCA Healthcare Corp. 10,135,650
---------------------------------------------------------
Motor Vehicle - 6.3%
764,034 Delphi Automative Systems Corp. 14,325,637
277,300 Federal-Mogul Corp. 12,651,813
126,700 Ford Motor Co. 6,604,238
449,500 General Motors Corp. 29,723,187
224,700 TRW, Inc. 12,246,150
--------------
75,551,025
---------------------------------------------------------
Oil Refining - 0.9%
53,500 Texaco, Inc. 3,397,250
226,100 USX-Marathon Group, Inc. 7,037,363
--------------
10,434,613
---------------------------------------------------------
Property Insurance - 3.3%
556,200 Allstate Corp. 18,250,312
247,700 Hartford Financial Services
Group, Inc. 11,254,869
192,800 XL Capital Ltd. 9,700,250
--------------
39,205,431
---------------------------------------------------------
Publishing - 1.4%
266,500 New York Times Co. 10,410,156
213,400 R.R. Donnelley & Sons Co. 6,695,425
--------------
17,105,581
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Railroads - 1.0%
423,700 Burlington Northern Santa Fe Corp. $ 12,287,300
----------------------------------------------------------------
Restaurants - 0.9%
253,500 Tricon Global Restaurants, Inc.* 10,298,438
----------------------------------------------------------------
Security/Asset Management - 0.5%
71,200 Morgan Stanley Dean Witter & Co. 6,109,850
----------------------------------------------------------------
Semiconductors - 2.0%
289,500 Intel Corp. 23,793,281
----------------------------------------------------------------
Telephone - 9.7%
262,800 Ameritech Corp. 16,589,250
298,766 AT&T Corp. 13,444,470
254,000 Bell Atlantic Corp. 15,557,500
144,100 BellSouth Corp. 6,520,525
259,100 GTE Corp. 17,780,737
155,600 MCI Worldcom, Inc.* 11,786,700
382,700 SBC Communications, Inc. 18,369,600
114,700 Sprint Corp. 5,089,813
228,900 U.S. West, Inc. 11,960,025
--------------
117,098,620
----------------------------------------------------------------
Tobacco - 2.1%
688,900 Philip Morris Companies, Inc. 25,790,694
----------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,118,372,821) $1,119,315,091
----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
U.S. Treasury Obligations - 0.3%
<S> <C> <C> <C>
U.S. Treasury Bills^
$ 3,200,000 4.79% 12/09/1999# $ 3,157,056
100,000 4.70 12/09/1999# 98,658
----------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,256,600) $ 3,255,714
----------------------------------------------------------------------------------------------
Repurchase Agreement - 7.0%
Joint Repurchase Agreement
$84,600,000 5.52% 09/01/1999 $ 84,600,000
----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $84,600,000) $ 84,600,000
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $1,206,229,421) $1,207,170,805
----------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
# Portions of these securities are being segregated as collateral relating to
initial margin requirement on futures transactions.
^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.
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Assets and Liabilities
August 31, 1999
Assets:
<TABLE>
<S> <C>
Investment in securities, at value (identified cost
$1,206,229,421) $ 1,207,170,805
Cash(a) 1,354,765
Receivables:
Investment securities sold 49,167,385
Dividends and interest 2,773,856
Fund shares sold 726,273
Other assets 831
------------------------------------------------------------------------------
Total assets 1,261,193,915
------------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased 55,766,058
Fund shares repurchased 2,781,215
Amounts owed to affiliates 1,426,008
Variation margin 24,477
Options written, at value (premium received $572,270) 369,538
Accrued expenses and other liabilities 223,888
------------------------------------------------------------------------------
Total liabilities 60,591,184
------------------------------------------------------------------------------
Net Assets:
Paid-in capital 1,143,836,521
Accumulated undistributed net investment income 634,990
Accumulated net realized gain from investment, futures and
options transactions 54,988,533
Net unrealized gain on investments, futures and options 1,142,687
------------------------------------------------------------------------------
NET ASSETS $1,200,602,731
------------------------------------------------------------------------------
Net asset value, offering and redemption price per share:(b)
Class A $24.68
Class B $24.46
Class C $24.41
Institutional $24.72
Service $24.68
------------------------------------------------------------------------------
Shares outstanding:
Class A 34,653,264
Class B 11,116,028
Class C 1,283,375
Institutional 1,301,982
Service 405,587
------------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number
of shares authorized) 48,760,236
------------------------------------------------------------------------------
</TABLE>
(a) Includes restricted cash of $1,250,000 relating to initial margin
requirements on futures transactions.
(b) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A shares is $26.12. At redemption, Class B and Class C
shares may be subject to a contingent deferred sales charge, assessed on
the amount equal to the lesser of the current net asset value or the
original purchase price of the shares.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Operations
For the Seven-Month Period Ended August 31, 1999
<TABLE>
<S> <C>
Investment income:
Dividends(a) $ 17,276,963
Interest 2,524,369
------------------------------------------------------------------------------
Total income 19,801,332
------------------------------------------------------------------------------
Expenses:
Management fees 5,645,766
Distribution and service fees(b) 3,454,215
Transfer agent fees(c) 1,485,349
Custodian fees 145,205
Registration fees 101,361
Professional fees 44,561
Service share fees 32,442
Trustee fees 6,426
Other 197,576
------------------------------------------------------------------------------
Total expenses 11,112,901
------------------------------------------------------------------------------
Less -- expenses reimbursed (59,598)
------------------------------------------------------------------------------
Net expenses 11,053,303
------------------------------------------------------------------------------
NET INVESTMENT INCOME 8,748,029
------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment, futures and
options transactions:
Net realized gain from:
Investment transactions 70,787,088
Futures transactions 3,040,117
Options written 581,821
Net change in unrealized gain (loss) on:
Investments (52,796,298)
Futures (1,429)
Options written 202,732
------------------------------------------------------------------------------
Net realized and unrealized gain on investment, futures and
options transactions 21,814,031
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 30,562,060
------------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $240,256.
(b) Class A, Class B and Class C had distribution and service fees of
$1,432,452, $1,796,760 and $225,003, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $1,088,663, $341,384, $42,750, $9,957 and $2,595,
respectively.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the
Seven-Month Year Ended
Period Ended January 31,
August 31, 1999 1999
<S> <C> <C>
From operations:
Net investment income $ 8,748,029 $ 12,713,525
Net realized gain (loss) from investment,
futures and options transactions 74,409,026 (79,720,615)
Net change in unrealized gain on
investment, futures and options
transactions (52,594,995) (91,067,228)
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 30,562,060 (158,074,318)
------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares (5,816,651) (9,893,876)
Class B shares (690,509) (555,085)
Class C shares (77,463) (98,749)
Institutional shares (244,239) (2,084,974)
Service shares (63,039) (80,841)
In excess of net investment income
Class A shares -- (473,558)
Class B shares -- (26,568)
Class C shares -- (4,727)
Institutional shares -- (99,795)
Service shares -- (3,869)
------------------------------------------------------------------------------
Total distributions to shareholders (6,891,901) (13,322,042)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 114,124,273 1,026,751,116
Reinvestment of dividends and distributions 6,538,450 10,754,319
Cost of shares repurchased (649,333,927) (761,706,430)
------------------------------------------------------------------------------
Net (decrease) increase in net assets
resulting from share transactions (528,671,204) 275,799,005
------------------------------------------------------------------------------
TOTAL (DECREASE) INCREASE (505,001,045) 104,402,645
------------------------------------------------------------------------------
Net assets:
Beginning of period 1,705,603,776 1,601,201,131
------------------------------------------------------------------------------
End of period $1,200,602,731 $1,705,603,776
------------------------------------------------------------------------------
Accumulated undistributed (distributions in
excess of) net investment income $ 634,990 $ (1,221,249)
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements
August 31, 1999
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un-
der the Investment Company Act of 1940 (as amended) as an open-end, manage-
ment investment company. The Trust includes the Goldman Sachs Growth and
Income 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 consist-
ently followed by the Fund. The preparation of financial statements in con-
formity with generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts. Actual
results could differ from those estimates. Effective for fiscal year 1999,
the Board of Trustees approved a change in the fiscal year-end of the Fund
from January 31 to August 31. Accordingly, the financial statements of the
Fund are presented for the seven-month period ended August 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for-
eign securities exchange or the NASDAQ system are valued daily at their last
sale or closing price on the principal exchange on which they are traded. If
no sale occurs, securities are valued at the last bid price. Debt securities
are valued at prices supplied by independent pricing services, broker / deal-
er-supplied valuations or matrix pricing systems. Unlisted equity and debt
securities for which market quotations are available are valued at the last
sale price on valuation date, or if no sale occurs, at the last bid price.
Short-term debt obligations maturing in sixty days or less are valued at am-
ortized cost. Securities for which quotations are not readily available are
valued at fair value using methods approved by the Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are
recorded as of the trade date. Realized gains and losses on sales of portfo-
lio securities are calculated using the identified-cost basis. Dividend in-
come is recorded on the ex-dividend date. Dividends for which the Fund has
the choice to receive either cash or stock are recognized as investment in-
come in an amount equal to the cash dividend. Interest income is recorded on
the basis of interest accrued, premium amortized and discount earned.
C. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends and interest recorded and the amounts actually received.
D. Short Securities Positions -- The Fund may enter into covered short sales.
Short securities positions are accounted for at cost and subsequently marked-
to-market to reflect the current market value of the position. The market
value of the short position is recorded as a liability on the Fund's records
and any difference between this market value and the sales proceeds is re-
ported as an unrealized gain or loss. Gains and losses are realized when a
short position is closed out by delivering securities back to the broker.
11
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
August 31, 1999
E. Option Accounting Principles -- When the Fund writes call or put options,
an amount equal to the premium received is recorded as an asset and as an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written. When a
written option expires on its stipulated expiration date or the Fund enters
into a closing purchase transaction, the Fund realizes a gain or loss without
regard to any unrealized gain or loss on the underlying security, and the li-
ability related to such option is extinguished. When a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds of the sale are increased by the premium origi-
nally received. When a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the
Fund purchases upon exercise. There is a risk of loss from a change in value
of such options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
F. Segregation Transactions -- The Fund may enter into certain derivative
transactions to seek to increase total return. Forward foreign currency ex-
change contracts, futures contracts, written options, when-issued securities
and forward commitments represent examples of such transactions. As a result
of entering into these transacations, the Fund is required to segregate liq-
uid assets on the accounting records equal to or greater than the market
value of the corresponding transactions.
G. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
At August 31, 1999 the aggregate cost of portfolio securities for federal
income tax purposes is $1,207,969,447. Accordingly, the gross unrealized gain
on investments was $80,796,302 and the gross unrealized loss on investments
was $81,594,944 resulting in a net unrealized loss of $798,642.
H. 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 shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions for their services with respect to such shares. Each class of shares of
the Fund separately bears its respective class-specific transfer agency fees.
12
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
3. AGREEMENTS
Pursuant to the Investment Management Agreement ("the Agreement"), Goldman
Sachs Asset Management ("GSAM"), a separate operating division of Goldman,
Sachs & Co. ("Goldman Sachs"), serves as the investment adviser to the Fund.
Under the Agreement, 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 ex-
penses related thereto and administering the Fund's business affairs, includ-
ing providing facilities, the adviser is entitled to a fee, computed daily
and payable monthly, at an annual rate equal to .70% 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 commissions, litigation, Service share
fees, indemnification costs and other extraordinary expenses) to the extent
such expenses exceed, on an annual basis, .05% of the average daily net as-
sets of the Fund. For the period ended August 31, 1999, Goldman Sachs has
agreed to reimburse approximately $60,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to .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 $161,000 during the period
ended August 31, 1999.
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 pay-
able monthly at an annual rate as follows: .19% of the average daily net as-
sets for Class A, Class B and Class C shares and .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 al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on a annualized basis), of the average daily net asset value of the
Service shares.
As of August 31, 1999, the amounts owed to affiliates were approximately
$774,000, $457,000 and $195,000 for management, distribution and service and
transfer agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments, futures and options transactions) for the period ended Au-
gust 31, 1999, were $718,587,974 and $1,233,658,940, respectively.
For the period ended August 31, 1999, Goldman Sachs earned approximately
$139,000 of brokerage commissions from portfolio transactions.
13
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
August 31, 1999
For the period ended August 31, 1999, written call option transactions in
the Fund were as follows:
<TABLE>
<CAPTION>
Written Options Number of Contracts Premium Received
-------------------------------------------------------------------------
<S> <C> <C>
Balance outstanding, beginning of
period -- $ --
Options written 5,317 1,154,091
Options expired (2,522) (581,821)
-------------------------------------------------------------------------
BALANCE OUTSTANDING, END OF PERIOD 2,795 $ 572,270
-------------------------------------------------------------------------
</TABLE>
The Fund may enter into futures transactions to hedge against changes in
interest rates, securities prices, currency exchange rates or to seek to in-
crease total return. Upon entering into a futures contract, the Fund is re-
quired to deposit with a broker or the Fund's custodian bank an amount of
cash or securities equal to the minimum "initial margin" requirement of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Fund daily, depending on the
daily fluctuations in the value of the contracts, and are recorded for finan-
cial 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 mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At August 31, 1999, open futures contracts were
as follows:
<TABLE>
<CAPTION>
Number of Settlement Market Unrealized
Type Contracts Long Month Value Loss
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
S&P 500 Index 40 December 1999 $13,350,000 $1,429
-------------------------------------------------------------------
</TABLE>
5. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit-
ted, unsecured revolving line of credit facility which was terminated on
April 30, 1999. Effective April 30, 1999, the Fund now participates in a
$250,000,000 uncommitted and a $250,000,000 committed unsecured revolving
line of credit facility. Under the most restrictive arrangement the Fund must
own securities having a market value in excess of 400% of the total bank
borrowings. These facilities are to be used solely for temporary or emergency
purposes. The interest rate on borrowings is based on the Federal Funds rate.
The committed facility also requires a fee to be paid by the Fund based on
the amount of the commitment which has not been utilized. During the period
ended August 31, 1999, the Fund did not have any borrowings under any of
these facilities.
6. 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 the Fund's custodian.
14
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment 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 August 31, 1999, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $84,600,000 in principal
amount. At August 31, 1999, the following repurchase agreements held in this
joint account were fully collateralized by Federal Agency obligations:
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Banc of America Securities LLC $1,300,000,000 5.52% 09/01/1999 $1,300,000,000
----------------------------------------------------------------------------------------
Bear Stearns & Co., Inc. 300,000,000 5.51 09/01/1999 300,000,000
----------------------------------------------------------------------------------------
Deutsche Bank Securities, Inc. 1,006,800,000 5.50 09/01/1999 1,006,800,000
----------------------------------------------------------------------------------------
Lehman Brothers, Inc. 300,000,000 5.65 09/01/1999 300,000,000
----------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. 200,000,000 5.50 09/01/1999 200,000,000
----------------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $3,106,800,000
----------------------------------------------------------------------------------------
</TABLE>
8. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Fund has reclassified $111
from accumulated net realized gain from investment, futures and options
transactions to accumulated undistributed net investment income. This reclas-
sification has no impact on the net asset value of the Fund and is designed
to present the Fund's capital accounts on a tax basis.
15
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
August 31, 1999
9. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
<TABLE>
<CAPTION>
For the Seven-Month Period Ended
August 31, 1999 For the Year Ended January 31, 1999
---------------------------------- ------------------------------------
Shares Dollars Shares Dollars
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold 2,693,500 $ 68,994,627 19,137,910 $ 508,921,386
Reinvestments of divi-
dends and distributions 222,190 5,612,552 390,593 9,715,068
Shares repurchased (14,386,320) (361,520,290) (20,323,258) (510,471,024)
----------------------------------------------------------------------
(11,470,630) (286,913,111) (794,755) 8,165,430
--------------------------------------------------------------------------------------------------
Class B Shares
Shares sold 532,909 13,448,149 7,059,564 191,017,805
Reinvestments of divi-
dends and distributions 23,841 604,660 21,979 509,810
Shares repurchased (3,930,139) (97,151,929) (4,555,733) (111,930,613)
----------------------------------------------------------------------
(3,373,389) (83,099,120) 2,525,810 79,597,002
--------------------------------------------------------------------------------------------------
Class C Shares
Shares sold 104,662 2,636,497 1,937,045 52,029,313
Reinvestments of divi-
dends and distributions 2,859 72,208 4,364 105,648
Shares repurchased (823,868) (20,529,279) (1,174,701) (28,489,276)
----------------------------------------------------------------------
(716,347) (17,820,574) 766,708 23,645,685
--------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 1,012,105 26,839,595 10,119,858 268,940,951
Reinvestments of divi-
dends and distributions 7,373 189,388 14,004 346,705
Shares repurchased (6,850,928) (165,722,925) (4,396,583) (108,988,620)
----------------------------------------------------------------------
(5,831,450) (138,693,942) 5,737,279 160,299,036
--------------------------------------------------------------------------------------------------
Service Shares
Shares sold 85,566 2,205,405 218,320 5,841,661
Reinvestments of divi-
dends and distributions 2,354 59,642 3,132 77,088
Shares repurchased (173,088) (4,409,504) (73,792) (1,826,897)
----------------------------------------------------------------------
(85,168) (2,144,457) 147,660 4,091,852
--------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (21,476,984) $ (528,671,204) 8,382,702 $ 275,799,005
--------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Goldman Sachs Growth and Income Fund -- Tax Information (unaudited)
During the tax year ended August 31, 1999, 43.50% of the ordinary income
dividends paid from net investment income by the Fund qualify for the divi-
dends received deduction available to corporations.
17
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from
investment operations(a) Distributions to shareholders
---------------------------- ------------------------------------
Net asset In excess Net increase
value, Net Net realized From net of net (decrease)
beginning investment and unrealized investment investment From net in net asset
of period income (loss) gain (loss) income income realized gains value
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1999 - Class A Shares $24.33 $ 0.19 $0.31 $(0.15) $ -- $ -- $ 0.35
1999 - Class B Shares 24.13 0.08 0.31 (0.06) -- -- 0.33
1999 - Class C Shares 24.08 0.08 0.30 (0.05) -- -- 0.33
1999 - Institutional
Shares 24.35 0.34 0.23 (0.20) -- -- 0.37
1999 - Service Shares 24.33 0.17 0.32 (0.14) -- -- 0.35
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 25.93 0.20 (1.60) (0.19) (0.01) -- (1.60)
1999 - Class B Shares 25.73 0.02 (1.58) (0.04) -- -- (1.60)
1999 - Class C Shares 25.70 0.02 (1.59) (0.05) -- -- (1.62)
1999 - Institutional
Shares 25.95 0.29 (1.58) (0.30) (0.01) -- (1.60)
1999 - Service Shares 25.92 0.17 (1.58) (0.17) (0.01) -- (1.59)
------------------------------------------------------------------------------------------------------------------
1998 - Class A Shares 23.18 0.11 5.27 (0.11) -- (2.52) 2.75
1998 - Class B Shares 23.10 0.04 5.14 -- (0.03) (2.52) 2.63
1998 - Class C Shares
(commenced August 15,
1997) 28.20 (0.01) 0.06 -- (0.03) (2.52) (2.50)
1998 - Institutional
Shares 23.19 0.27 5.23 (0.22) -- (2.52) 2.76
1998 - Service Shares 23.17 0.14 5.23 (0.06) (0.04) (2.52) 2.75
------------------------------------------------------------------------------------------------------------------
1997 - Class A Shares 19.98 0.35 5.18 (0.35) (0.01) (1.97) 3.20
1997 - Class B Shares
(commenced May 1, 1996) 20.82 0.17 4.31 (0.17) (0.06) (1.97) 2.28
1997 - Institutional
Shares (commenced June
3, 1996) 21.25 0.29 3.96 (0.30) (0.04) (1.97) 1.94
1997 - Service Shares
(commenced March 6,
1996) 20.71 0.28 4.50 (0.28) (0.07) (1.97) 2.46
------------------------------------------------------------------------------------------------------------------
1996 - Class A Shares 15.80 0.33 4.75 (0.30) -- (0.60) 4.18
------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Ratios assuming no voluntary waiver
of fees or expense limitations
-----------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$24.68 2.05%(d) $ 855,174 1.19%(c) 1.26%(c) 1.20%(c) 1.25%(c) 55.43%(d)
24.46 1.60(d) 271,912 1.94(c) 0.51(c) 1.95(c) 0.50(c) 55.43(d)
24.41 1.58(d) 31,328 1.94(c) 0.51(c) 1.95(c) 0.50(c) 55.43(d)
24.72 2.32(d) 32,181 0.79(c) 1.72(c) 0.80(c) 1.71(c) 55.43(d)
24.68 2.01(d) 10,008 1.29(c) 1.16(c) 1.30(c) 1.15(c) 55.43(d)
24.33 (5.40) 1,122,157 1.22 0.78 1.32 0.68 125.79
24.13 (6.07) 349,662 1.92 0.09 1.92 0.09 125.79
24.08 (6.12) 48,146 1.92 0.10 1.92 0.10 125.79
24.35 (5.00) 173,696 0.80 1.25 0.80 1.25 125.79
24.33 (5.44) 11,943 1.30 0.72 1.30 0.72 125.79
- --------------------------------------------------------------------------------------------------------------------------------
25.93 23.71 1,216,582 1.25 0.43 1.42 0.26 61.95
25.73 22.87 307,815 1.94 (0.35) 1.94 (0.35) 61.95
25.70 0.51(d) 31,686 1.99(c) (0.48)(c) 1.99(c) (0.48)(c) 61.95
25.95 24.24 36,225 0.83 0.76 0.83 0.76 61.95
25.92 23.63 8,893 1.32 0.32 1.32 0.32 61.95
- --------------------------------------------------------------------------------------------------------------------------------
23.18 28.42 615,103 1.22 1.60 1.43 1.39 53.03
23.10 22.23(d) 17,346 1.93(c) 0.15(c) 1.93(c) 0.15(c) 53.03
23.19 20.77(d) 193 0.82(c) 1.36(c) 0.82(c) 1.36(c) 53.03
23.17 23.87(d) 3,174 1.32(c) 0.94(c) 1.32(c) 0.94(c) 53.03
- --------------------------------------------------------------------------------------------------------------------------------
19.98 32.45 436,757 1.20 1.67 1.45 1.42 57.93
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Report of Independent Public Accountants
To the Shareholders and Board of Trustees ofGoldman Sachs Trust--Growth and
Income Fund:
We have audited the accompanying statement of assets and liabilities of
Goldman Sachs Growth and Income Fund, one of the portfolios constituting
Goldman Sachs Trust--Equity Funds (a Delaware Business Trust), including the
statement of investments, as of August 31, 1999, and the related statement of
operations, the statements of changes in net assets and the financial high-
lights for the periods presented. These financial statements and the finan-
cial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the finan-
cial statements. Our procedures included confirmation of securities owned as
of August 31, 1999, by correspondence with the custodian and brokers. An au-
dit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and the financial highlights re-
ferred to above present fairly, in all material respects, the financial posi-
tion of Goldman Sachs Growth and Income Fund as of August 31, 1999, the
results of its operations, the changes in its net assets and the financial
highlights for the periods presented, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 8, 1999
20
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GOLDMAN SACHS FUND PROFILE
Goldman Sachs Growth and Income Fund
An Investment Idea for the Long Term
Historically, stocks have demonstrated greater potential to build
wealth over the long term than most other types of investments.
Goldman Sachs Growth and Income Fund provides investors access to
the benefits associated with equity investing. The Fund seeks
long-term capital growth and growth of income, primarily through
equity securities that, in management's view, offer favorable
capital appreciation and/or dividend-paying ability.
Target Your Needs
The Goldman Sachs Growth and Income Fund has a distinct
investment objective and a defined place on the risk/return
spectrum. As your investment objectives change, you can exchange
shares within the Goldman Sachs Funds family without an
additional charge.* (Please note: in general, greater returns are
associated with greater risk.)
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[GRAPHIC APPEARS HERE]
Goldman Sachs Funds
Goldman Sachs Funds offers more than 30 investment options for
global diversification across borders, investment styles, asset
classes and security capitalizations.
DOMESTIC EQUITY
. Goldman Sachs
MONEY Growth and INTERNATIONAL
MARKET FIXED INCOME Income Fund EQUITY
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Lower Risk/Return Higher Risk/Return
ASSET ALLOCATION
SPECIALTY
For More Information
To learn more about the Goldman Sachs Growth and Income Fund and
other Goldman Sachs Funds, call your investment professional
today.
* The exchange privilege is subject to termination and its terms
are subject to change.
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GOLDMAN SACHS ASSET MANAGEMENT 32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005
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 P. Strubel
OFFICERS
Douglas C. Grip, President
Jesse H. Cole, Vice President
James A. Fitzpatrick, Vice President
Nancy L. Mucker, Vice President
John M. Perlowski, Treasurer
Adrien E. Deberghes, Jr., Assistant Treasurer
Philip V. Giuca, Jr., Assistant Treasurer
Michael J. Richman, Secretary
Howard B. Surloff, Assistant Secretary
Valerie A. Zondorak, Assistant Secretary
GOLDMAN SACHS
Investment Adviser,
Distributor and Transfer Agent
Visit our internet address: www.gs.com/funds
This material is not authorized for distribution to prospective investors unless
preceded or accompanied by a current Prospectus. Investors should read the
Prospectus carefully before investing or sending money.
The Growth and Income Fund's foreign investments may be more volatile than an
investment in U.S. securities and are subject to the risks of currency
fluctuations and political developments.
An investment in a money market fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any government agency. Although a money market
fund seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
Copyright 1999 Goldman, Sachs & Co. All rights reserved. Date of first use:
October 15, 1999
GIAR / 82.5K / 10-99
