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.

• Market Review: Increased Volatility and a Dramatic Correction — For the one-year reporting period that ended August 31, 2000, the U.S. stock market, as measured by the S&P 500 Index, appreciated 16.32%. However, this masked the volatile nature of the market. During the first half of the reporting period the markets rose, however the vast majority of the gains were generated by large cap growth and technology-related stocks. Then, in mid-March, the markets abruptly corrected due to continued strong economic growth, inflationary pressures and rising interest rates.

  While a range of stocks were negatively impacted by the correction, technology issues experienced the brunt of the decline. At one point the technology-heavy Nasdaq composite was down 37% from its peak. While the Nasdaq posted a one-year return of 45.93% for the period ended August 31, 2000, this was largely due to the strong performance of technology stocks late in 1999 and in the summer of 2000. However, by the end of the reporting period the Nasdaq was still off 19% from its peak. In contrast, the S&P 500 Index, which also fell during the middle of the period, recovered to the point that it was again nearing its record high by the end of August.

• Indications of Slower Economic Growth — After a series of six short-term interest rate hikes by the Federal Reserve Board (the “Fed”) to slow economic growth, the economy finally began to show signs of moderating during the summer. As such, the Fed left rates unchanged during both its June and August meetings. With the presidential election nearing, it’s now unlikely that the Fed will move to raise rates again before year-end.
• Market Outlook: More Moderate Growth — Looking ahead, we remain cautiously optimistic about the near term prospects for the U.S equity market. Reasonable growth in the U.S., stronger demand growth outside of the U.S. (particularly in Asia), and continued productivity gains would be a combination of factors that would be quite beneficial to equities. However, we do not anticipate the 20-30% gains the stock market has provided over the past several years. As such, we believe it’s important for investors to maintain realistic expectations about their investment returns, and to maintain a long-term focus for their portfolios.

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:

• Favorable financial
  characteristics
• High returns on
  invested capital
• Dominant market shares
  for core service or product
• Recurring revenue streams
• Solid brand franchises
• Management committed
  to maximizing shareholder
  returns

Result

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

Asset Allocation

• Equities — As of August 31, 2000, the Fund was 47.6% invested in growth and value equities. This compared to a 49.3% allocation on February 29, 2000. As a result of our bottom-up approach to stock selection, the Fund was overweight in the Consumer Services and Consumer Discretionary sectors, and underweight in the Technology and Industrial sectors.
  
  
• Early in the reporting period we took steps to upgrade the quality of the value stocks contained in the Fund’s portfolio, and to analyze that portion of the portfolio relative to the S&P 500 Index. As a result, our exposure in that area relative to the S&P 500 now reflect a value tilt, rather than a deep value bias. There were no such material changes made to the strategic allocation of the Fund’s growth holdings.
  
  
• Fixed Income — As of August 31, 2000, the Fund was 51.4% invested in fixed income securities, compared with 53.2% on February 29, 2000. In general, the portfolio was overweight in corporates, mortgage-backed and asset-backed securities and underweight in Treasuries and agency securities. The Fund also maintained tactical allocations in several non-dollar sectors, including New Zealand and Mexico. Our Mexican securities performed very well, due to a credit upgrade and their subsequent inclusion in the index.
  
  
• Cash Equivalents — As of August 31, 2000, the Fund was 4.4% invested in cash equivalents.

  Portfolio Highlights

• Intel Corp., Cisco Systems, Inc. and Nortel Networks Corp. —These three issues are a sampling of the selective technology stocks that have enhanced the Fund’s returns. We believe that our holdings in this area should continue to benefit from the overall growth of the Internet, and we’ll continue to search for companies that provide the backbone and infrastructure of the Internet. We prefer this strategy of investing in technology companies, rather than Internet sites, or “dot.coms,” many of which are in an unproven and uncertain stage.

GOLDMAN SACHS BALANCED FUND

 

• Pfizer Inc. — Our holding in Pfizer performed well, as the U.S. Federal Trade Commission voted to approve its purchase of Warner-Lambert (also a Fund holding). We believe this merger will position the combined company (now known as Pfizer) with the industry’s deepest pipeline and largest research and development budget.
  
  
• Exxon Mobil Corp. — Exxon was a strong performer for the Fund during the reporting period. The firm benefited from positive reaction to the Federal Trade Commission’s approval of its merger with Mobil, and the anticipated strategic benefits of this union. In addition, oil prices have risen sharply, as foreign producers have lived up to their promise to restrain output levels. This, coupled with an increase in demand, has led to appreciation in the firm’s stocks price.

  Portfolio Outlook

• Equity — Our strategy of blending both growth and value styles of investing within the equity portfolio of the Balanced Fund assisted us in providing broad exposure to the U.S. market. And while we typically do not forecast the direction of the market, we believe that, over the long-term, this blend of two research-based, long-term investment strategies will provide diverse exposure to the U.S. equity market, with excess return potential through stock selection.
  
  
• Fixed Income — Given the questionable technical nature of the corporate market, we are targeting a neutral exposure to corporates on a dollar-duration basis. In addition, given recent spread tightening and the continued U.S. Treasury buybacks, we are less bullish on mortgages versus Treasuries. In general, we believe the recent positive tone in the mortgage market will continue due to tighter swap spreads and a favorable pre-payment environment.

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

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

  New York

  September 15, 2000

 

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.

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%

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

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

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

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

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

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

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

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

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.

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.

		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

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.

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.

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.

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		—			$        —

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.

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.

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.

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)

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

				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.

													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

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.