GOLDMAN SACHS TRUST
N-30D, 2000-11-09
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GOLDMAN SACHS BALANCED FUND

Market Overview

Dear Shareholder:

During the period under review the financial markets experienced a dramatic increase in volatility. However, investors who stayed the course were generally rewarded for their disciplined approach, as many sectors of the market generated solid returns.

As always, we appreciate your support and we look forward to serving your investment needs in the years to come.

Sincerely,

 
  David B. Ford David W. Blood
  Co-Head, Goldman Sachs Asset Management Co-Head, Goldman Sachs Asset Management
  September 15, 2000  

 

GOLDMAN SACHS BALANCED FUND

Fund Basics

as of August 31, 2000

PERFORMANCE REVIEW
August 31, 1999–August 31, 2000   Fund Total Return (without sales charge)1  
S&P 500 Index2
  Lehman Aggregate Index2  

Class A   12.00 % 16.32 % 7.55 %
Class B   11.17   16.32   7.55  
Class C   11.23   16.32   7.55  
Institutional   12.59   16.32   7.55  
Service   11.89   16.32   7.55  

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 RETURNS 3
For the period ended 6/30/00
Class A
 
Class B
 
Class C
  Institutional  
Service
 

One Year –1.86 % –2.01 % 2.10 % 4.40%   3.80 %
Five Years 10.73  
N/A
 
N/A
  N/A   11.86 4
Since Inception 12.19   9.96   4.71   5.90   13.19 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 8/31/00
Holding % of Total Net Assets   Line of Business

General Electric Co. 2.1%   Multi-Industry
Intel Corp. 2.0   Semiconductors
Cisco Systems, Inc. 1.8   Computer Hardware
Pfizer, Inc. 1.4   Drugs
Microsoft Corp. 1.4   Computer Software
Citigroup, Inc. 1.2   Banks
Exxon Mobil Corp. 1.1   Energy Resources
Nortel Networks Corp. 0.9   Electrical Equipment
Oracle Corp. 0.9   Computer Software
Wal-Mart Stores, Inc. 0.9   Specialty Retail

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

GOLDMAN SACHS BALANCED FUND

Performance Overview

Dear Shareholder,

We are pleased to report on the performance of the Goldman Sachs Balanced Fund for the one year period that ended August 31, 2000.

Performance Review

Over the one-year period that ended August 31, 2000, the Fund’s Class A, B, C, Institutional and Service shares generated cumulative total returns, without sales charges, of 12.00%, 11.17%, 11.23%, 12.59%, and 11.89%, respectively. Over the same time period, the Fund’s benchmarks, the S&P 500 Index and the Lehman Aggregate Bond Index, returned 16.32% and 7.55%, respectively.

GROWTH
INVESTMENT
PROCESS

50% of the Fund’s equity
investment process is
characterized as Growth.

Strong Growth
Characteristics

Growth companies have earn-
ings expectations that exceed
those of the stock market as a
whole. We search for growth
companies with:

Result

A diversified portfolio of
stocks with strong long-term
growth potential.

Asset Allocation

GOLDMAN SACHS BALANCED FUND

 

 

GOLDMAN SACHS BALANCED 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 Investment 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?


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.

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.

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 Funds, call your investment professional today.

GOLDMAN SACHS BALANCED FUND
 
Performance Summary
August 31, 2000
 
The following graph shows the value, as of August 31, 2000, 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 August 31, 2000.
 
 
 
Average Annual Total Return through August 31, 2000      Since Inception      Five Year      One Year
 
Class A (commenced October 12, 1994)
Excluding sales charges      13.52%      11.99%      12.00%
Including sales charges      12.43%      10.73%      5.82%

Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges      10.76%      n/a      11.17%
Including contingent deferred sales charges      10.34%      n/a      5.87%

Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges      5.52%      n/a      11.23%
Including contingent deferred sales charges      5.52%      n/a      10.17%

Institutional (commenced August 15, 1997)      6.70%      n/a      12.59%

Service (commenced August 15, 1997)      6.07%      n/a      11.89%

 
GOLDMAN SACHS BALANCED FUND
Statement of Investments
August 31, 2000
    
Shares
   Description    Value  
                  
 
Common Stocks – 47.6%
 
Airlines – 0.1%
10,300    Southwest Airlines Co.    $          233,038

Alcohol – 0.1%
2,400    Anheuser-Busch Cos., Inc.    189,150

Apparel – 0.1%
3,900    Nike, Inc. Class B    154,294

Banks – 2.6%
6,500    Bank of America Corp.    348,156
3,500    Bank One Corp.    123,375
36,133    Citigroup, Inc.    2,109,283
600    J.P. Morgan & Co., Inc.    100,313
6,700    Mellon Financial Corp.    303,175
1,200    PNC Financial Services Group    70,725
5,900    State Street Corp.    694,725
6,000    The Bank of New York Co., Inc.    314,625
3,950    The Chase Manhattan Corp.    220,706
11,300    Wells Fargo & Co.    488,019
         
                4,773,102

Chemicals – 0.9%
12,877    E.I. du Pont de Nemours & Co.    577,855
8,400    Minnesota Mining & Manufacturing
Co.
   781,200
10,000    The Dow Chemicals Co.    261,875
         
                1,620,930

Clothing – 0.0%
2,300    The Gap, Inc.    51,606

Computer Hardware – 4.4%
900    Apple Computer, Inc.*    54,844
47,400    Cisco Systems, Inc.*    3,252,825
8,000    Compaq Computer Corp.    272,500
19,100    Dell Computer Corp.*    833,237
15,700    EMC Corp.*    1,538,600
4,200    Hewlett-Packard Co.    507,150
800    Network Appliance, Inc.*    93,600
10,400    Sun Microsystems, Inc.*    1,320,150
2,500    Xerox Corp.    40,156
         
                7,913,062

Computer Software – 3.4%
1,400    Gemstar-TV Guide International, Inc.*    126,350
11,900    International Business Machines, Inc.    1,570,800
35,400    Microsoft Corp.*    2,471,362
18,800    Oracle Corp.*    1,709,625
1,900    VERITAS Software Corp.*    229,069
         
                6,107,206

Consumer Services – 0.2%
14,300    Cendant Corp.*    188,581
8,250    Valassis Communications, Inc.*    238,219
         
        426,800

Defense/Aerospace – 0.1%
4,700    Honeywell International, Inc.    181,244

    
Shares
   Description    Value  
                  
 
Common Stocks – (continued)
 
Department Store – 0.0%
3,000    The May Department Stores Co.    $            68,813

Drugs – 3.9%
5,500    American Home Products Corp.    298,031
7,200    Amgen, Inc.*    545,850
24,800    Bristol-Myers Squibb Co.    1,314,400
6,000    Eli Lilly & Co.    438,000
11,600    Merck & Co., Inc.    810,550
59,925    Pfizer, Inc.    2,591,756
3,717    Pharmacia Corp.    217,677
15,600    Schering-Plough Corp.    625,950
2,800    SmithKline Beecham PLC ADR    182,875
         
                7,025,089

Electronics Equipment – 2.4%
2,400    Corning, Inc.    787,050
1,000    Corvis Corp.*    103,813
19,200    Lucent Technologies, Inc.    802,800
14,626    Motorola, Inc.    527,450
21,000    Nortel Networks Corp.    1,712,812
6,700    QUALCOMM, Inc.*    401,163
         
                4,335,088

Electrical Utilities – 1.0%
3,200    Duke Energy Corp.    239,400
6,000    Entergy Corp.    182,625
4,400    FPL Group, Inc.    234,850
15,400    Niagara Mohawk Holdings, Inc.*    198,275
11,700    The AES Corp.*    745,875
3,400    The Southern Co.    101,787
1,700    Unicom Corp.    77,669
         
                1,780,481

Energy Resources – 2.3%
7,098    Anadarko Petroleum Corp.    466,835
3,200    Chevron Corp.    270,400
2,900    Enron Corp.    246,138
23,445    Exxon Mobil Corp.    1,913,698
14,400    Royal Dutch Petroleum Co.    881,100
7,400    Unocal Corp.    246,975
6,000    USX-Marathon Group    164,625
         
                4,189,771

Entertainment – 1.1%
15,500    Carnival Corp.    309,031
13,500    The Walt Disney Co.    525,656
16,277    Viacom, Inc. Class B *    1,095,646
         
                1,930,333

Environmental Services – 0.0%
3,400    Waste Management, Inc.    64,388

Financial Services – 1.1%
19,600    Federal Home Loan Mortgage Corp.    825,650
9,900    Federal National Mortgage Assn.    532,125

The accompanying notes are an integral part of these financial statements.
 
GOLDMAN SACHS BALANCED FUND
 
 
    
Shares
   Description    Value  
                  
 
Common Stocks – (continued)
 
Financial Services – (continued)
1,700    Household International, Inc.    $            81,600
16,800    MBNA Corp.    593,250
         
                2,032,625

Food & Beverage – 1.3%
11,000    Nabisco Group Holdings Corp.    308,687
15,000    PepsiCo., Inc.    639,375
14,600    The Coca-Cola Co.    768,325
4,800    The Quaker Oats Co.    326,100
3,200    Wm. Wrigley Jr. Co.    237,000
         
                2,279,487

Forest – 0.6%             
5,700    Bowater, Inc.    292,837
1,700    Fort James Corp.    53,763
14,400    International Paper Co.    459,000
1,900    Kimberly-Clark Corp.    111,150
2,700    Weyerhaeuser Co.    125,044
         
                        1,041,794

Grocery – 0.3%             
3,500    Safeway, Inc.*    172,594
13,300    The Kroger Co.*    301,744
         
                            474,338

Heavy Electrical – 0.1%             
1,800    Emerson Electric Co.    119,138

Heavy Machinery – 0.1%
6,600    Crane Co.    165,825
2,700    Deere & Co.    88,931
         
                            254,756

Home Products – 0.9%             
5,600    Avon Products, Inc.    219,450
11,100    Colgate-Palmolive Co.    565,406
10,400    Energizer Holdings, Inc.*    205,400
4,200    The Gillette Co.    126,000
8,000    The Procter & Gamble Co.    494,500
         
                        1,610,756

Hotels – 0.6%             
16,300    Harrah’s Entertainment, Inc.*    462,512
8,400    Marriott International, Inc.    331,800
10,300    Starwood Hotels & Resorts Worldwide,
Inc. Class B
   329,600
         
                        1,123,912

Industrial Parts – 0.6%             
3,800    Caterpillar, Inc.    139,650
4,400    Parker-Hannifin Corp.    153,175
9,000    Tyco International Ltd.    513,000
4,500    United Technologies Corp.    280,969
         
                        1,086,794

    
Shares
   Description    Value  
                  
 
Common Stocks – (continued)
 
Information Services – 0.5%             
6,000    Automatic Data Processing, Inc.    $          357,750
1,600    Electronic Data Systems Corp.    79,700
9,200    First Data Corp.    438,725
         
                            876,175

Internet – 0.9%             
11,800    America Online, Inc.*    691,775
2,200    CheckFree Corp.*    113,988
1,800    DoubleClick, Inc.*    73,237
600    E.piphany, Inc.*    62,400
300    Juniper Networks, Inc.*    63,063
2,500    S1 Corp.*    43,594
1,935    VeriSign, Inc.*    384,823
2,200    Yahoo!, Inc.*    267,300
         
                1,700,180

Life Insurance – 0.5%             
5,200    AFLAC, Inc.    280,800
15,900    MetLife, Inc.*    386,569
4,300    Nationwide Financial Services, Inc.    171,462
         
                            838,831

Media – 2.0%             
15,700    A.H. Belo Corp.    300,263
28,660    AT&T Corp.-Liberty Media Corp.*    612,607
2,500    Cablevision Systems Corp.*    168,125
4,026    Clear Channel Communications, Inc.*    291,382
11,300    Comcast Corp.    420,925
3,400    EchoStar Communications Corp.*    165,750
8,000    Infinity Broadcasting Corp.*    303,000
1,400    The News Corp. Ltd. ADR    73,675
15,900    Time Warner, Inc.    1,359,450
         
                        3,695,177

Medical Products – 0.6%
3,500    Abbott Laboratories    153,125
2,100    Baxter International, Inc.    174,825
7,900    Johnson & Johnson    726,306
         
                        1,054,256

Mining – 0.2%             
8,900    Alcoa, Inc.    295,925

Motor Vehicle – 0.2%             
8,239    Ford Motor Co.    199,281
3,008    General Motors Corp.    217,140
         
                            416,421

Multi-Industry – 2.1%             
64,200    General Electric Co.    3,767,737

Oil Refining – 0.1%             
3    Conoco, Inc. Class B    78
4,600    Texaco, Inc.    236,900
         
                            236,978

The accompanying notes are an integral part of these financial statements.
 
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
August 31, 2000
    
Shares
   Description    Value  
                  
 
Common Stocks – (continued)
 
Oil Services – 0.9%             
1,500    Baker Hughes, Inc.    $            54,844
1,900    Diamond Offshore Drilling, Inc.    85,144
6,300    Halliburton Co.    333,900
2,700    Santa Fe International Corp.    106,144
10,300    Schlumberger Ltd.    878,718
3,000    Transocean Sedco Forex, Inc.    179,250
         
                        1,638,000

Property Insurance – 1.7%             
5,700    Ambac Financial Group, Inc.    368,362
15,847    American International Group, Inc.    1,412,364
5,100    The Hartford Financial Services Group,
Inc.
   339,788
2,300    The St. Paul Cos., Inc.*    109,538
12,600    XL Capital Ltd.    868,612
         
                        3,098,664

Publishing – 0.3%             
2,800    Gannett Co., Inc.    158,550
6,200    The New York Times Co.    242,963
3,200    Tribune Co.    114,200
         
        515,713

Railroads – 0.1%             
5,700    Canadian National Railway Co.    167,794

Restaurants – 0.3%             
17,400    McDonald’s Corp.    519,825

Security/Asset Management – 0.6%             
1,500    Merrill Lynch & Co., Inc.    217,500
3,600    Morgan Stanley Dean Witter & Co.    387,225
10,250    The Charles Schwab Corp.    391,422
         
                            996,147

Semiconductors – 3.5%
2,100    Advanced Micro Devices, Inc.*    79,013
1,800    Altera Corp.*    114,991
2,300    Analog Devices, Inc.*    231,150
3,800    Applied Materials, Inc.*    327,987
200    Broadcom Corp.*    50,000
47,200    Intel Corp.    3,534,100
4,420    JDS Uniphase Corp.*    550,221
600    KLA-Tencor Corp.*    39,375
1,200    Maxim Integrated Products, Inc.*    105,225
700    Novellus Systems, Inc.*    43,094
500    PMC-Sierra, Inc.*    118,000
11,600    Texas Instruments, Inc.    776,475
3,000    Xilinx, Inc.*    266,625
         
                6,236,256

Specialty Retail – 1.9%
1,000    Best Buy Co., Inc.*    61,750
8,000    CVS Corp.    297,000
4,000    RadioShack Corp.    236,000
16,750    The Home Depot, Inc.    805,047

    
Shares
   Description    Value  
                  
 
Common Stocks – (continued)
 
Specialty Retail – (continued)
15,100    Walgreen Co.    $          496,412
33,500    Wal-Mart Stores, Inc.    1,589,156
         
                3,485,365

Telephone – 1.8%
9,572    AT&T Corp.    301,518
1,200    NEXTLINK Communications, Inc.*    42,075
5,000    Qwest Communications International,
Inc.*
   258,125
20,565    SBC Communications, Inc.    858,589
2,800    Sprint Corp.    93,800
19,842    Verizon Communications    865,607
20,550    WorldCom, Inc.*    750,075
         
                3,169,789

Tobacco – 0.3%
21,100    Philip Morris Cos., Inc.    625,088

Wireless – 0.9%
900    ALLTEL Corp.    45,506
12,300    Crown Castle International Corp.*    426,656
11,868    General Motors Corp. Class H*    393,127
9,800    Sprint Corp. (PCS Group)*    491,838
6,700    Vodafone Group PLC ADR    274,281
         
                1,631,408

TOTAL COMMON STOCKS
(Cost $62,725,091)    $    86,033,724

 
Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Asset-Backed Securities – 4.3%
 
Auto – 0.0%
Fasco Auto Trust Series 1996-1, Class A
$        16,249   
6.65
%
   11/15/2001    $            16,199

Credit Card – 1.0%
Capital One Master Trust Series 2000-1, Class A
1,500,000    7.10      04/17/2006    1,508,760
 
Standard Credit Card Master Trust I Series 1995-9, Class A
360,000    6.55      10/07/2007    352,818
                 
                          1,861,578

Home Equity – 2.2%
Contimortgage Home Equity Loan Series 1998-1, Class A5
3,000,000    6.43      04/15/2016    2,953,200
IMC Home Equity Loan Series 1996-3, Class A7
 
1,000,000    8.05      08/25/2026    1,008,390
                 
                          3,961,590

Lease – 0.7%
First Sierra Receivables Series 1998-1, Class A4
1,350,000    5.63      08/12/2004    1,323,972

The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
 
 
Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Asset-Backed Securities – (continued)
 
Manufactured Housing – 0.4%
Mid-State Trust Series 4, Class A
$      599,945    8.33 %    04/01/2030    $          605,296

TOTAL ASSET-BACKED SECURITIES
(Cost $7,937,393)    $      7,768,635

 
Corporate Bonds – 18.9%
 
Aerospace/Defense – 0.3%
Raytheon Co.
$      605,000    6.45 %    08/15/2002    $          594,963

Airlines – 0.6%
Continental Airlines, Inc.
332,733    6.54      09/15/2009    315,191
 
Northwest Airlines, Inc. Class A
187,078    7.67      01/02/2015    181,832
 
Northwest Airlines, Inc. Class C
201,599    8.97      01/02/2015    203,706
 
NWA Trust Series A
52,725    8.26      03/10/2006    52,771
 
US Airways, Inc. Class C
306,820    8.93      04/15/2008    291,443
                 
                          1,044,943

Automotive – 0.9%
Chrysler Corp.
90,000    7.45      03/01/2027    86,399
 
Ford Motor Co.
390,000    6.63      10/01/2028    333,106
 
Ford Motor Credit Co.
170,000    5.75      02/23/2004    161,529
 
The Hertz Corp.
1,055,000    6.00      01/15/2003    1,026,762
                 
                          1,607,796

Automotive Parts – 0.5%
Federal-Mogul Corp.
250,000    7.50      01/15/2009    186,250
 
Hayes Lemmerz International, Inc. Series B
250,000    8.25      12/15/2008    218,125
 
TRW, Inc.
460,000    6.63      06/01/2004    442,454
                 
                          846,829

Building Materials – 0.1%
Owens Corning
520,000    7.50      05/01/2005    273,000

Chemicals – 0.3%
Lyondell Chemical Co. Series B
250,000    9.88      05/01/2007    255,000
 
NL Industries, Inc.
250,000    11.75      10/15/2003    253,750
                 
                          508,750

Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Corporate Bonds – (continued)
 
Commercial Banks – 1.6%
Bank of America Corp.
$      355,000    7.75 %    07/15/2002    $       358,702
480,000    7.25      10/15/2025    448,949
 
Citicorp
315,000    8.00      02/01/2003    319,867
 
Continental Bank NA
100,000    12.50      04/01/2001    102,966
 
First Union Corp.
290,000    7.10      08/15/2004    286,132
 
Golden West Financial Corp.
200,000    10.25      12/01/2000    201,388
 
Long Island Savings Bank
620,000    6.20      04/02/2001    617,066
 
Wells Fargo & Co.
485,000    6.63      07/15/2004    475,848
 
Wells Fargo Bank NA #
140,000    7.80      06/15/2010    141,842
                 
                          2,952,760

Conglomerates – 0.5%
Tyco International Group SA
875,000    5.88      11/01/2004    828,651

Consumer Cyclicals – 0.3%
United Rentals, Inc. Series B
500,000    8.80      08/15/2008    460,000

Credit Card Banks – 0.9%
Capital One Bank
500,000    6.39      03/05/2001    498,125
150,000    6.15      06/01/2001    148,706
300,000    6.76      07/23/2002    295,705
500,000    6.38      02/15/2003    484,227
 
Providian National Bank
250,000    6.65      02/01/2004    239,393
                 
                          1,666,156

Electric – 0.5%
CMS Energy Corp. Series B
150,000    7.38      11/15/2000    149,505
 
Edison Mission Energy Funding†
57,642    6.77      09/15/2003    55,761
 
MidAmerican Energy Holdings Co.
250,000    7.23      09/15/2005    245,977
 
Niagara Mohawk Power Co.
450,000    6.88      04/01/2003    445,878
                 
                          897,121

Energy – 1.1%
Gulf Canada Resources Ltd.
90,000    9.25      01/15/2004    91,238
 
Occidental Petroleum Corp.
525,000    7.65      02/15/2006    527,390

 
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
August 31, 2000
Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Corporate Bonds – (continued)
 
Energy – (continued)
Petroleum Geo-Services ASA
$      110,000    7.13 %    03/30/2028    $            94,349
 
Phillips Petroleum Co.
160,000    8.50      05/25/2005    167,465
 
The Williams Cos., Inc.
1,125,000    6.13      02/15/2002    1,103,642
                 
                                  1,984,084

Environmental – 0.4%
Allied Waste North America, Inc. Series B
250,000    7.63      01/01/2006    229,688
 
Waste Management, Inc.#
500,000    6.13      07/15/2001    488,701
                 
                          718,389

Finance Companies – 1.5%
Beneficial Corp.
1,350,000    6.43      04/10/2002    1,332,381
 
Comdisco, Inc.
965,000    6.13      01/15/2003    900,160
400,000    9.50      08/15/2003    401,272
                 
                          2,633,813

Food – 0.1%
International Home Foods, Inc.
250,000    10.38      11/01/2006    267,500

Health Care – 0.1%
Tenet Healthcare Corp.
175,000    8.63      12/01/2003    174,781

Insurance Companies – 0.1%
Conseco, Inc.
260,000    8.50      10/15/2002    166,400

Lodging – 0.3%
ITT Corp.
50,000    6.25      11/15/2000    49,834
465,000    6.75      11/15/2003    444,932
                 
                          494,766

Media-Cable – 1.6%
Adelphia Communications Corp.
125,000    7.88      05/01/2009    105,937
125,000    9.38      11/15/2009    116,094
 
Charter Communications Holdings LLC
250,000    8.25      04/01/2007    230,000
 
Comcast UK Cable Partners Ltd.+
125,000    0.00/11.20      11/15/2007    116,562
 
Cox Communications, Inc.
145,000    7.50      08/15/2004    145,293
60,000    6.40      08/01/2008    55,894
50,000    6.80      08/01/2028    43,054
 
Lenfest Communications, Inc.
300,000    8.38      11/01/2005    311,317

Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Corporate Bonds – (continued)
 
Media-Cable – (continued)
Rogers Cablesystems Ltd.
$      115,000    9.63 %    08/01/2002    $          117,300
 
Telewest Communications PLC+
250,000    0.00/11.00      10/01/2007    238,437
250,000    0.00/9.25    04/15/2009    138,750
 
Time Warner Entertainment Co.
445,000    9.63      05/01/2002    460,663
 
Time Warner, Inc.
250,000    7.98      08/15/2004    256,350
565,000    7.75      06/15/2005    575,031
                 
                          2,910,682

Media-Non Cable – 1.5%
Clear Channel Communications, Inc.
250,000    8.00      11/01/2008    252,500
 
Crown Castle International Corp.+
250,000    0.00/10.38      05/15/2011    162,500
 
J. Seagram & Sons, Inc.
275,000    6.25      12/15/2001    271,542
 
News America Holdings, Inc.
245,000    8.50      02/15/2005    254,398
135,000    8.00      10/17/2016    131,362
225,000    7.25      05/18/2018    202,962
 
PanAmSat Corp.
205,000    6.13      01/15/2005    191,185
 
Viacom, Inc.
205,000    8.88      06/01/2001    206,905
900,000    6.75      01/15/2003    890,487
120,000    7.70      07/30/2010    121,633
                 
                          2,685,474

Mortgage Banks – 0.6%
Countrywide Capital III Series B
330,000    8.05      06/15/2027    298,852
 
Countrywide Home Loans, Inc.
850,000    6.45      02/27/2003    830,851
                 
                          1,129,703

Paper – 0.3%
Packaging Corp. of America
250,000    9.63      04/01/2009    256,250
 
Riverwood International Corp.
250,000    10.63      08/01/2007    255,000
                 
                          511,250

REIT – 0.9%
Chelsea GCA Realty, Inc.
656,000    7.75      01/26/2001    655,707
 
Liberty Property LP
205,000    7.10      08/15/2004    198,362
 
Meditrust Cos.
215,000    7.82      09/10/2026    165,550

The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
 
 
 
Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Corporate Bonds – (continued)
 
REIT – (continued)
Simon Property Group LP
$      675,000    6.63 %    06/15/2003    $      649,364
                 
                          1,668,983

Retailers – 0.1%
Kmart Corp.
165,000    8.38      12/01/2004    155,994

Supermarkets – 0.3%
Ahold Finance USA, Inc.
115,000    8.25      07/15/2010    115,809
 
Fred Meyer, Inc.
260,000    7.45      03/01/2008    250,881
 
Safeway, Inc.
265,000    6.05      11/15/2003    254,539
                 
                          621,229

Technology – 0.1%
Flextronics International Ltd.
125,000    9.88      07/01/2010    129,687

Telecommunications – 2.1%
360 Communications Co.
575,000    7.13      03/01/2003    575,062
 
Alaska Communications Holdings, Inc.
125,000    9.38      05/15/2009    115,000
 
AT&T Canada, Inc.+
345,000    0.00/9.95      06/15/2008    280,313
 
Deutsche Telekom AG
305,000    7.75      06/15/2005    308,756
 
Global Crossing Holdings Ltd.†
125,000    9.13      11/15/2006    124,063
 
Intermedia Communications, Inc. Series B
250,000    8.60      06/01/2008    205,000
 
MCI WorldCom, Inc.
275,000    6.40      08/15/2005    264,041
 
Metromedia Fiber Network, Inc.
125,000    10.00      12/15/2009    123,125
 
Nextel Communications, Inc.
250,000    9.38      11/15/2009    245,000
 
Price Communications Wireless, Inc. Series B
250,000    9.13      12/15/2006    255,000
 
Qwest Corp.†
425,000    7.63      06/09/2003    427,905
 
Sprint Capital Corp.
565,000    5.88      05/01/2004    537,389
130,000    6.88      11/15/2028    111,125
 
Tele-Communications, Inc.
100,000    9.65      10/01/2003    103,325
 
US West Capital Funding, Inc.
200,000    6.88      07/15/2028    171,504
                 
                          3,846,608

Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Corporate Bonds – (continued)
 
Tobacco – 0.6%
Philip Morris Cos., Inc.
$      400,000    9.00 %    01/01/2001    $      401,492
150,000    7.00      07/15/2005    143,157
195,000    6.95      06/01/2006    192,652
 
R.J. Reynolds Tobacco Holdings, Inc.
355,000    7.38      05/15/2003    335,475
                 
                          1,072,776

Yankee Bonds – 0.7%
HSBC Holdings PLC
110,000    7.50      07/15/2009    109,907
 
National Westminster Bank PLC
260,000    7.38      10/01/2009    257,192
 
Province of Quebec
730,000    7.50      07/15/2023    733,478
105,000    5.74      03/02/2026    104,354
 
Province of Saskatchewan
90,000    8.50      07/15/2022    101,427
                 
                          1,306,358

TOTAL CORPORATE BONDS   
(Cost $35,694,101)    $  34,159,446

 
Emerging Market Debt – 3.9%
 
Federal Republic of Brazil
$      100,000    12.25 %    03/06/2030    $           98,438
60,000    11.00      08/17/2040    49,125
 
Federal Republic of Brazil C-Bonds
149,000    8.00      04/15/2014    115,196
 
Federal Republic of Germany
2,000,000    5.25      07/04/2010    1,769,817
 
Grupo Industrial Durango SA
100,000    12.63      08/01/2003    101,486
 
Hanvit Bank†
170,000    11.75      03/01/2010    170,650
 
MRS Logistica SA
100,000    10.63      08/15/2005    88,392
 
National Power Corp.
240,000    7.63      11/15/2000    239,564
 
National Republic of Bulgaria#
490,000    2.75      07/28/2012    372,706
 
Petroleos Mexicanos#†
160,000    9.50      09/15/2027    166,400
 
PTC International Finance BV+
210,000    0.00/10.75      07/01/2007    155,400
 
Republic of France
2,050,000    5.00      07/12/2005    1,796,229
 
Republic of Panama
70,000    7.88      02/13/2002    69,256
390,793    7.93 #    05/14/2002    386,641
140,000    10.75      05/15/2020    142,371
160,000    9.38      04/01/2029    157,700

The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statement of Investments (continued)
August 31, 2000
 
 
 
Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Emerging Market Debt – (continued)
 
Republic of Peru#
$      460,000    3.75 %    03/07/2017    $      298,713
 
Republic of Philippines
130,000    9.50      10/21/2024    124,069
270,000    10.63      03/16/2025    238,194
 
Republic of Poland+
150,000    0.00/4.00      10/27/2024    95,625
 
Republic of Turkey
80,000    11.75      06/15/2010    84,000
 
State of Qatar
130,000    9.50      05/21/2009    136,500
70,000    9.75    06/15/2030    72,581
 
TFM, SA de CV+
140,000    0.00/11.75      06/15/2009    109,200
 
United Mexican States
60,000    9.88      02/01/2010    64,275

TOTAL EMERGING MARKET DEBT
(Cost $7,035,101)    $    7,102,528

 
Mortgage Backed Obligations – 21.4%
 
Federal Home Loan Mortgage Corp. (FHLMC) – 5.7%
$      973,411    7.00 %    11/01/2025    $       953,602
746,675    6.00      11/01/2028    694,766
1,946,115    6.00      01/01/2029    1,810,821
7,000,000    7.50      TBA-30 yrD    6,962,250
                 
                          10,421,439

Federal National Mortgage Association (FNMA) – 5.8%
$      189,939    6.50 %    09/01/2025    $      182,271
205,973    6.50      10/01/2025    197,658
262,255    6.50      11/01/2025    252,150
171,010    6.50      02/01/2028    163,724
876,781    6.50      03/01/2028    838,220
389,572    6.50      07/01/2028    372,438
55,800    6.50      08/01/2028    53,346
877,098    6.00      09/01/2028    815,754
415,988    6.50      11/01/2028    397,693
2,716,227    6.00      12/01/2028    2,526,255
497,654    6.50      12/01/2028    475,767
60,186    6.00      01/01/2029    55,977
37,479    6.50      01/01/2029    35,831
121,930    6.00      02/01/2029    113,402
629,502    6.00      03/01/2029    585,474
127,619    6.50      04/01/2029    121,957
136,655    6.50      05/01/2029    130,592
156,760    6.50      10/01/2029    149,805
1,000,000    7.00      11/01/2029    975,310
1,000,100    8.00      08/01/2030    1,009,631
1,000,000    8.50      TBA-30 yrD    1,019,062
                 
                          10,472,317

Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
Mortgage Backed Obligations – (continued)
 
Government National Mortgage Association (GNMA) – 6.6%
$      150,729    6.50 %    06/15/2023    $       145,456
647,739    6.50      08/15/2023    625,081
1,171,091    6.50      09/15/2023    1,130,126
198,047    6.50      10/15/2023    191,119
1,782,164    6.50      11/15/2023    1,719,824
387,944    6.50      12/15/2023    374,374
665,175    6.50      01/15/2024    641,741
106,640    6.50      03/15/2024    102,883
1,357,353    6.50      04/15/2024    1,309,534
1,904,626    6.50      03/15/2026    1,834,173
941,807    6.50      05/15/2026    906,970
901,083    6.50      01/15/2029    864,760
245,518    8.00      10/15/2029    249,294
480,845    8.00      07/15/2030    488,044
1,273,816    8.00      08/15/2030    1,292,885
                 
                          11,876,264

Collateralized Mortgage Obligations (CMOs) – 3.3%
Inverse Floater# – 0.9%
FHLMC-GNMA Series 14, Class SB
$      914,509    3.71 %    06/25/2023    $       718,109
 
FNMA Series 1993-248, Class SA
1,000,000    3.96      08/25/2023    869,945
                 
                          $    1,588,054

Non-Agency CMOs – 2.4%
Asset Securitization Corp. Series 1997-D4, Class A 1D
$      450,000    7.49 %    04/14/2029    $       454,302
 
CS First Boston Mortgage Securities Corp. Series 1997-C2,
Class A2
700,000    6.52      07/17/2007    680,596
 
CS First Boston Mortgage Securities Corp. Series 1999-C1,
Class A1
954,634    6.91      01/15/2008    945,063
 
First Union-Lehman Brothers Commercial Mortgage Services
Series 1997-C1, Class A2
300,000    7.30      12/18/2006    301,853
 
Merrill Lynch Mortgage Investors, Inc. Series 1998-C2,
Class A2
2,000,000    6.39      02/15/2030    1,902,940
                 
                          $    4,284,754

TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS (CMOS)
   $    5,872,808

TOTAL MORTGAGE BACKED OBLIGATIONS
(Cost $38,418,279)    $   38,642,828

 
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
 
 
Principal
Amount
   Interest
Rate
   Maturity
Date
   Value  
                                
 
U.S. Treasury Obligations – 2.9%
 
U.S. Treasury Note
$ 1,800,000    5.75 %    11/30/2002    $      1,783,688
U.S. Treasury Principal-Only Stripped Securities @
2,000,000    6.10      11/15/2018    686,638
4,650,000    6.08      05/15/2020    1,464,606
1,290,000    5.99      11/15/2024    319,506
1,000,000    5.96      08/15/2025    238,349
3,310,000    5.92      08/15/2026    750,539

TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,009,370)   $      5,243,326

 
Repurchase Agreement – 3.9%
 
Joint Repurchase Agreement Account IIÙ
$ 7,100,000    6.66 %    09/01/2000    $      7,100,000

TOTAL REPURCHASE AGREEMENT
(Cost $7,100,000)   $      7,100,000

TOTAL INVESTMENTS
(Cost $163,919,335)   $  186,050,487

*
Non-income producing security.
 
Ù
Joint repurchase agreement was entered into on August 31, 2000.
 
#
Variable rate security. Coupon rate disclosed is that which is in effect at August 31, 2000.
 
D 
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 $1,156,110 at August 31, 2000.
 
+
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

 
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statement of Assets and Liabilities
August 31, 2000
Assets:
 
Investment in securities, at value (identified cost $163,919,335)      $186,050,487
Cash (a)      900,000
Receivables:
    Investment securities sold      9,421,378
    Interest and dividends, at value      1,052,930
    Variation margin      160,771
    Forward foreign currency exchange contracts, at value      93,216
    Reimbursement from investment adviser      78,839
    Fund shares sold      77,176
Other assets      10,223

Total assets      197,845,020

 
Liabilities:
 
Due to custodian      599,135
Payables:
    Investment securities purchased      14,954,212
    Fund shares repurchased      535,001
    Amounts owed to affiliates      192,295
Forward sale contract, at value      929,062
Accrued expenses and other liabilities      60,696

Total liabilities      17,270,401

 
Net Assets:
 
Paid-in capital      155,500,515
Accumulated undistributed net investment income      2,189,502
Accumulated net realized gain from investment, futures, options and foreign currency related transactions      254,867
Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currency      22,629,735

NET ASSETS      $180,574,619

Net asset value, offering and redemption price per share: (b)
Class A      $21.42
Class B      $21.27
Class C      $21.25
Institutional      $21.46
Service      $21.41

Shares outstanding:
Class A      6,332,281
Class B      1,587,217
Class C      407,509
Institutional      116,883
Service      794

Total shares outstanding, $.001 par value (unlimited number of shares authorized)      8,444,684

 
(a)
Restricted cash 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 $22.67. 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.
GOLDMAN SACHS BALANCED FUND
Statement of Operations
For the Year Ended August 31, 2000
Investment income:     
 
Interest      $  7,062,157  
Dividends (a)      1,080,922  

Total income      8,143,079  

 
Expenses:        
 
Management fees      1,303,563  
Distribution and Service fees (b)      844,254  
Transfer Agent fees (c)      377,304  
Custodian fees      189,959  
Registration fees      59,552  
Professional fees      47,686  
Trustee fees      8,729  
Amortization of deferred organization expenses      1,507  
Other      102,056  

Total expenses      2,934,610  

Less — expense reductions      (350,424 )

Net expenses      2,584,186  

NET INVESTMENT INCOME      5,558,893  

 
Realized and unrealized gain (loss) on investment, futures, options and foreign currency related transactions:        
 
Net realized gain (loss) from:            
    Investment transactions      638,987  
    Options written      35,020  
    Futures transactions      731,379  
    Foreign currency related transactions      (6,765 )
Net change in unrealized gain (loss) on:            
    Investments      14,367,213  
    Options written      (11,670 )
    Futures      695,504  
    Translation of assets and liabilities denominated in foreign currencies      130,383  

Net realized and unrealized gain on investment, futures, options and foreign currency related transactions      16,580,051  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS      $22,138,944  

 
(a)
Foreign taxes withheld on dividends were $4,197.
(b)
Class A, Class B and Class C had Distribution and Service fees of $378,767, $369,057 and $96,430, respectively.
(c)
Class A, Class B, Class C, Institutional Class and Service Class had Transfer Agent fees of $287,864, $70,121, $18,322, $991 and $6, respectively.
The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Statements of Changes in Net Assets
       For the
Year Ended
August 31, 2000
     For the
Seven Months
Ended
August 31, 1999
     For the
Year Ended
January 31, 1999
 
From operations:
 
Net investment income      $    5,558,893        $    3,460,485        $    6,835,375  
Net realized gain (loss) from investment, futures, options and foreign currency related
transactions
     1,398,621        6,012,842        (3,394,596 )
Net change in unrealized gain (loss) on investments, futures, options and translation of
assets and liabilities denominated in foreign currencies
     15,181,430        (7,516,307 )      4,114,362  

Net increase in net assets resulting from operations      22,138,944        1,957,020        7,555,141  

 
Distributions to shareholders:
 
From net investment income
    Class A Shares      (3,728,709 )      (2,035,907 )      (5,454,393 )
    Class B Shares      (664,618 )      (312,410 )      (858,147 )
    Class C Shares      (176,298 )      (88,561 )      (325,754 )
    Institutional Shares      (68,550 )      (66,533 )      (294,710 )
    Service Shares      (353 )      (2,011 )      (7,267 )
From net realized gains
    Class A Shares      (6,165,905 )              
    Class B Shares      (1,496,998 )              
    Class C Shares      (399,802 )              
    Institutional Shares      (97,914 )              
    Service Shares      (569 )              

Total distributions to shareholders      (12,799,716 )      (2,505,422 )      (6,940,271 )

 
From share transactions:
 
Proceeds from sales of shares      14,022,180        22,988,417        116,979,156  
Reinvestment of dividends and distributions      12,298,235        2,398,095        6,132,572  
Cost of shares repurchased      (78,654,543 )      (60,433,602 )      (69,069,832 )

Net increase (decrease) in net assets resulting from share transactions      (52,334,128 )      (35,047,090 )      54,041,896  

TOTAL INCREASE (DECREASE)      (42,994,900 )      (35,595,492 )      54,656,766  

 
Net assets:
 
Beginning of period        223,569,519        259,165,011        204,508,245  

End of period      $180,574,619        $223,569,519        $259,165,011  

Accumulated undistributed net investment income      $    2,189,502        $    1,302,040        $        375,856  

The accompanying notes are an integral part of these financial statements.
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements
August 31, 2000
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. 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 Statements of Changes in Net Assets, Summary of Share Transactions and Financial Highlights of the Fund are included for the seven months ended August 31, 1999 and the year ended January 31, 1999.
 
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.
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements (continued)
August 31, 2000
 
2.  SIGNIFICANT ACCOUNTING POLICIES (continued)
 
        At August 31, 2000, the aggregate cost of portfolio securities for federal income tax purposes is $165,174,184. Accordingly, the gross unrealized gain on investments was $26,179,794 and the gross unrealized loss on investments was $5,303,491 resulting in a net unrealized gain of $20,876,303.
 
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
 
 
 
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% (.01% prior to May 1, 2000) of the average daily net assets of the Fund. For the year ended August 31, 2000, Goldman Sachs has agreed to reimburse approximately $342,000. In addition, the Fund has entered into certain offset arrangements with the custodian resulting in a reduction in the Fund’s expenses. For the year ended August 31, 2000, custody fees were reduced by approximately $8,000.
        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 $22,000 during the year ended August 31, 2000.
        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 August 31, 2000, the amounts owed to affiliates were approximately $99,000, $64,000 and $29,000 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 year ended August 31, 2000, were $300,414,813 and $351,951,681, respectively. Included in these amounts are purchases and proceeds of sales and maturities of U.S. Government and agency obligations in the amounts of $205,615,990 and $201,945,316, respectively. For the year ended August 31, 2000, Goldman Sachs earned approximately $26,000 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
Notes to Financial Statements (continued)
August 31, 2000
4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)
 
        At August 31, 2000, forward foreign currency exchange contracts were as follows:
 
Open Forward Foreign
Currency Sale Contracts
     Value on
Settlement Date
     Current Value      Unrealized Gain

Euro
expiring 10/13/2000
     $3,726,992      $3,633,776      $93,216

 
        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 August 31, 2000, 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.
        For the year ended August 31, 2000, written call option transactions in the Fund were as follows:
 
Written Options    Number of Contracts    Premium Received

Balance outstanding, beginning of year    172      $  35,020  
Options assigned    (94 )    (14,207 )
Options expired    (78 )     (20,813 )

Balance outstanding, end of year         $        —  

GOLDMAN SACHS BALANCED FUND
 
 
 
 
4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)
 
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. At August 31, 2000, open futures contracts were as follows:
 
Type    Number of Contracts
Long/(Short)
   Settlement Month    Market Value    Unrealized
Gain(Loss)

Euro Dollars    12      March 2003    $  2,795,700      $    9,677  
Euro Dollars    12      March 2004    2,794,200      8,577  
Euro Dollars    12      June 2003    2,795,250      9,227  
Euro Dollars    12      June 2004    2,793,300      8,577  
Euro Dollars    12      September 2002    2,795,850      10,902  
Euro Dollars    12      September 2003    2,795,100      9,177  
Euro Dollars    12      December 2002    2,794,050      10,152  
Euro Dollars    12      December 2003    2,793,000      8,727  
S&P 500 Index    39      September 2000    14,831,700      333,412  
2 Year U.S. Treasury Note    10      December 2000    1,994,844      1,981  
5 Year U.S. Treasury Note    (167 )    December 2000    (16,710,438 )    (42,033 )
10 Year U.S. Treasury Note    32      December 2000    3,202,500      590  
20 Year U.S. Treasury Bond    5      September 2000    501,875      35,639  
20 Year U.S. Treasury Bond    3      December 2000    301,313      2,001  

                          $26,478,244      $406,606  

 
5.  LINE OF CREDIT FACILITY
 
Effective May 31, 2000, the Fund participates in a $350,000,000 committed, unsecured revolving line of credit facility. Prior thereto, the Fund participated in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Fund based on the amount of the commitment which has been utilized. During the year ended August 31, 2000, the Fund did not have any borrowings under any of these facilities.
GOLDMAN SACHS BALANCED FUND
 
Notes to Financial Statements (continued)
August 31, 2000
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 August 31, 2000, the Fund had an undivided interest in the repurchase agreements in the joint account which equaled $7,100,000 in principal amount. At August 31, 2000, 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.    $  814,100,000    6.66 %    09/01/2000    $  814,100,000    $  814,250,608

Banc of America Securities LLC    900,000,000    6.67      09/01/2000    900,000,000    900,166,750

Barclays Capital, Inc.    500,000,000    6.67      09/01/2000    500,000,000    500,092,639

Bear Stearns Companies, Inc.    300,000,000    6.67      09/01/2000    300,000,000    300,055,583

Chase Securities, Inc.    450,000,000    6.67      09/01/2000    450,000,000    450,083,375

Donaldson, Lufkin & Jenrette, Inc.     1,000,000,000    6.67      09/01/2000     1,000,000,000    1,000,185,278

J.P. Morgan & Co., Inc.    800,000,000    6.65      09/01/2000    800,000,000    800,147,778

Morgan Stanley Dean Witter & Co.    750,000,000    6.65      09/01/2000    750,000,000    750,138,542

Morgan Stanley Dean Witter & Co.    300,000,000    6.60      09/01/2000    300,000,000    300,055,000

UBS Warburg LLC    800,000,000    6.65      09/01/2000    800,000,000    800,147,778

TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT II    $6,614,100,000    $6,615,323,331

 
7.  CERTAIN RECLASSIFICATIONS
 
In accordance with AICPA Statement of Position 93-2, the Fund reclassified $32,903 from accumulated undistributed net investment income to accumulated net realized gain from investment, futures, options and foreign currency related transactions and $2,640 from paid-in capital to accumulated net realized gain from investment, futures, options and foreign currency related transactions. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund’s capital accounts on a tax basis. Reclassifications result primarily from the difference in the tax treatment of foreign currency, net operating losses and organization costs.
GOLDMAN SACHS BALANCED FUND
 
 
 
 
 
8.  CHANGE IN INDEPENDENT ACCOUNTANTS
 
On October 26, 1999, the Board of Trustees of the Fund upon the recommendation of the Board’s audit committee, determined not to retain Arthur Andersen LLP and approved a change of the Fund’s independent accountants to PricewaterhouseCoopers LLP. For the period ended August 31, 1999 and the fiscal year ended January 31, 1999, Arthur Andersen LLP’s audit reports contained no adverse opinion or disclaimer of opinion; nor were their reports qualified or modified as to uncertainty, audit scope, or accounting principles. Further, there were no disagreements between the Fund and Arthur Andersen LLP on accounting principles or practices, financial statement disclosure or audit scope or procedure, which if not resolved to the satisfaction of Arthur Andersen LLP would have caused them to make reference to the disagreement in their reports.
 
 
Goldman Sachs Balanced Fund — Tax Information (unaudited)
 
        For the year ended August 31, 2000, 17.77% of the dividends paid from net investment company taxable income by the Balanced Fund qualify for the dividends received deduction available to corporations.
 
        Pursuant to Section 852 of the Internal Revenue Code, the Fund designated $2,481,606 as capital gains dividends paid during its year ended August 31, 2000.
 
GOLDMAN SACHS BALANCED FUND
Notes to Financial Statements (continued)
August 31, 2000
 
9.  SUMMARY OF SHARE TRANSACTIONS
 
Share activity is as follows:
 
       For the Year Ended August 31, 2000
       Shares      Dollars

Class A Shares
Shares sold      472,085      $  9,684,221 
Reinvestments of dividends and distributions      478,974      9,686,061 
Shares repurchased       (2,930,304)       (60,263,205)

       (1,979,245)      (40,892,923)

Class B Shares
Shares sold      153,476      3,127,574 
Reinvestments of dividends and distributions      97,539      1,962,412 
Shares repurchased      (663,521)      (13,518,116)

       (412,506)      (8,428,130)

Class C Shares
Shares sold      47,375      974,400 
Reinvestments of dividends and distributions      25,220      506,596 
Shares repurchased      (222,853)      (4,520,537)

       (150,258)      (3,039,541)

Institutional Shares
Shares sold      11,157      233,723 
Reinvestments of dividends and distributions      7,030      142,244 
Shares repurchased      (17,090)      (350,812)

       1,097      25,155 

Service Shares
Shares sold      112      2,262 
Reinvestments of dividends and distributions      46      922 
Shares repurchased      (91)      (1,873)

       67      1,311 

NET DECREASE      (2,540,845)      $(52,334,128)

GOLDMAN SACHS BALANCED FUND
 
 
 
9.  SUMMARY OF SHARE TRANSACTIONS (continued)
 
Share activity is as follows:
 
       For the Seven Months
Ended August 31, 1999

     For the Year Ended
January 31, 1999

       Shares      Dollars      Shares      Dollars

Class A Shares            
Shares sold      690,947        $14,334,527        3,748,039        $76,506,479  
Reinvestments of dividends and distributions      96,208        1,976,640        241,188        4,838,697  
Shares repurchased       (1,873,693 )      (38,906,818 )      (2,655,783 )      (53,412,703 )

       (1,086,538 )      (22,595,651 )      1,333,444        27,932,473  

Class B Shares            
Shares sold      222,544        4,589,209        1,305,421        26,769,887  
Reinvestments of dividends and distributions      13,623        279,018        37,761        751,177  
Shares repurchased      (392,771 )      (8,099,668 )      (357,101 )      (7,118,524 )

       (156,604 )      (3,231,441 )      986,081        20,402,540  

Class C Shares            
Shares sold      109,915        2,268,065        532,005        10,982,657  
Reinvestments of dividends and distributions      3,746        76,630        13,484        268,120  
Shares repurchased      (258,346 )      (5,306,034 )      (281,904 )      (5,604,206 )

       (144,685 )      (2,961,339 )      263,585        5,646,571  

Institutional Shares            
Shares sold      86,577        1,782,979        108,930        2,247,577  
Reinvestments of dividends and distributions      3,129        63,796        13,275        267,312  
Shares repurchased      (365,015 )      (7,628,710 )      (143,532 )      (2,931,934 )

       (275,309 )      (5,781,935 )      (21,327 )      (417,045 )

Service Shares            
Shares sold      682        13,637        22,926        472,556  
Reinvestments of dividends and distributions      99        2,011        375        7,266  
Shares repurchased      (24,012 )      (492,372 )      (123 )      (2,465 )

       (23,231 )      (476,724 )      23,178        477,357  

NET INCREASE (DECREASE)      (1,686,367 )      $(35,047,090 )      2,584,961        $54,041,896  

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 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 )

1996 - Class A Shares    14.22    0.51      3.43      3.94    (0.50 )         (0.35 )    (0.85 )

 
(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.
The accompanying notes are an integral part of these financial statements.
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)
 
                      
 
$21.42    12.00 %    $135,632    1.12 %    2.94 %    1.29 %    2.77 %    153.69 %
21.27    11.17      33,759    1.87      2.19      2.04      2.02      153.69  
21.25    11.23      8,658    1.87      2.19      2.04      2.02      153.69  
21.46    12.59      2,509    0.72      3.46      0.89      3.29      153.69  
21.41    11.89      17    1.22      2.86      1.39      2.69      153.69  
 
                      
 
20.38    0.62      169,395    1.10 (b)    2.58 (b)    1.32 (b)    2.36 (b)    90.41  
20.26    0.20      40,515    1.85 (b)    1.83 (b)    2.07 (b)    1.61 (b)    90.41  
20.23    0.18      11,284    1.85 (b)    1.84 (b)    2.07 (b)    1.62 (b)    90.41  
20.39    0.86      2,361    0.70 (b)    2.96 (b)    0.92 (b)    2.74 (b)    90.41  
20.37    0.39      15    1.20 (b)    2.46 (b)    1.42 (b)    2.24 (b)    90.41  
 
                      
 
20.48    3.94      192,453    1.04      2.90      1.45      2.49      175.06  
20.37    3.15      43,926    1.80      2.16      2.02      1.94      175.06  
20.34    3.14      14,286    1.80      2.17      2.02      1.95      175.06  
20.48    4.25      8,010    0.73      3.22      0.95      3.00      175.06  
20.47    3.80      490    1.23      2.77      1.45      2.55      175.06  

20.29    17.54       163,636    1.00      2.94      1.57      2.37       190.43  
 20.20     16.71      23,639    1.76       2.14       2.07       1.83      190.43  
20.17    2.49      8,850    1.77 (b)    2.13 (b)    2.08 (b)    1.82 (b)    190.43  
20.29    2.93      8,367    0.76 (b)    3.13 (b)    1.07 (b)    2.82 (b)    190.43  
20.28    2.66      16    1.26 (b)    2.58 (b)    1.57 (b)    2.27 (b)    190.43  

18.78    18.59          81,410    1.00      3.76      1.77      2.99      208.11  
18.73    16.22      2,110    1.75 (b)    2.59 (b)    2.27 (b)    2.07 (b)    208.11  

17.31    28.10      50,928    1.00      3.65      1.90      2.75      197.10  

 
GOLDMAN SACHS BALANCED FUND
 
Report of Independent Accountants
 
 
To the Shareholders and Board of Trustees of
Goldman Sachs Trust — Balanced Fund:
 
In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Goldman Sachs Balanced Fund (“the Fund”), one of the portfolios constituting Goldman Sachs Trust, at August 31, 2000, the results of its operations, the changes in its net assets and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at August 31, 2000 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The statements of changes in net assets of the Fund for the period ended August 31, 1999 and the year ended January 31, 1999 and the financial highlights for each of the periods ended on or before August 31, 1999 were audited by other independent accountants whose report dated October 8, 1999 expressed an unqualified opinion thereon.
 
PricewaterhouseCoopers LLP
 
Boston, Massachusetts
October 23, 2000
GOLDMAN SACHS FUND PROFILE

 

The Goldman Sachs Balanced Fund

 

An Investment Idea for the Long Term

History has shown that an investment composed of a blend of stocks and bonds provides reduced volatility of returns while capturing the appreciation potential of the portion invested in stocks.

Goldman Sachs Balanced Fund provides investors access to the benefits associated with an investment that is composed of both stocks and bonds. The Fund seeks long-term capital growth and current income through investments in equity and fixed income securities.

Target Your Needs

The Goldman Sachs Balanced Fund has a distinct investment objective and a defined place on the risk/return spectrum. As your investment objectives change, you can exchange shares within Goldman Sachs Funds without any additional charge.* (Please note: in general, greater returns are associated with greater risk.)

For More Information

To learn more about the Goldman Sachs Balanced 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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