<PAGE>
Goldman Sachs Funds
GROWTH AND INCOME FUND Semiannual Report February 29, 2000
Long-term capital growth and growth
of income potential from a diversified
portfolio of equity securities.
[GRAPHIC]
[LOGO OF GOLDMAN SACHS]
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Market Overview
Dear Shareholder,
During the period under review, the Federal Reserve Board attempted to
subdue the strong U.S. economy and ward off a rise in inflation. In
the financial markets, technology stocks soared, while most other
sectors languished.
. A Record-Breaking Economic Expansion and the Prospect for
Higher Interest Rates -- Despite repeated attempts by the
Federal Reserve Board to slow economic growth, the economy
continued to grow at a rapid pace during the reporting
period. GDP increased 6.9% during the fourth quarter of
1999, and the economic expansion hit a record nine years in
February 2000. However, the Federal Reserve was not in a
celebratory mood, as it remained focused on cooling the
economy and preempting inflation. Among the Federal
Reserve's major concerns were the stock market driven
"wealth effect" which led to unrestrained consumer spending,
low unemployment resulting in increased wage pressures, and
significantly higher oil prices.
. A Wide Disparity in Returns and Increased Volatility --
During 1999, the technology-rich NASDAQ index registered an
unprecedented 85.6% return, with more than half of its gain
occurring after the index crossed 3000 on November 3rd. As
year 2000 began, it seemed unlikely that the trend could
continue. But, while most of the stock market has fallen
under the strain of rising interest rates, technology stocks
have continued to surge ahead. By early March 2000, the
NASDAQ index had crossed 5000, and investors continued to
embrace technology stocks at the expense of most other
market sectors. Elsewhere, after many years of relative
underperformance, small-cap stocks performed well versus
their larger-cap counterparts--fueled by smaller technology
firms. Overall, the equity markets have been quite volatile,
as wide swings in day-to-day results have become the norm.
This could continue in the months ahead, due largely to the
uncertainty regarding the economy, interest rates and
corporate profits.
. Market Outlook:Inflation Holds the Key -- Looking ahead, we
believe that inflation will be the key macroeconomic issue
affecting the U.S. financial markets. While the best news on
inflation has likely passed, global excess capacity and the
growth of e-commerce should help to prevent a sharp
increase. However, there are several factors that could lead
to an unhealthy rise in inflation. First, the U.S. economy
could continue to be more robust than expected, putting
additional pressure on an already tight labor market.
Second, the tight labor market could cause inflation to rise
even if the economy slows. Third, the increase in economic
growth outside the U.S. could cause the excess supply of
worldwide resources to fall. This could lead to higher
import prices and force U.S. companies to raise prices.
Based on these uncertainties and the increase in short-term
market volatility, we encourage you to work closely with
your financial advisor to maintain a long-term focus on your
investment portfolio. As always, we appreciate your support
and we look forward to serving your investment needs in the
years to come.
. NOT FDIC Sincerely,
INSURED
. May Lose Value /S/ David B. Ford
. No Bank David B. Ford
Guarantee Co-Head, Goldman Sachs Asset Management
/S/ David W. Blood
David W. Blood
Co-Head, Goldman Sachs Asset Management
March 13, 2000
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Fund Basics
as of February 29, 2000
Assets Under Management
$853.2 Million
Number of Holdings
129
NASDAQ SYMBOLS
Class A Shares
GSGRX
Class B Shares
GSGBX
Class C Shares
GSGCX
Institutional Shares
GSIIX
Service Shares
GSGSX
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
PERFORMANCE REVIEW
- ---------------------------------------------------------------------------------------------------
August 31, 1999-February 29, 2000 Fund Total Return (without sales charge)1 S&P 500 Index2
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A -5.25% 4.11%
Class B -5.60 4.11
Class C -5.61 4.11
Institutional -4.94 4.11
Service -5.28 4.11
- ---------------------------------------------------------------------------------------------------
</TABLE>
1 The net asset value represents the net assets of the Fund (ex-dividend)
divided by the total number of shares. The Fund's performance assumes the
reinvestment of dividends and other distributions.
2 The unmanaged S&P 500 Index (with dividends reinvested) figures do not
reflect any fees or expenses. In addition, investors cannot invest directly
in the Index.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
STANDARDIZED TOTAL RETURNS3
- ---------------------------------------------------------------------------------------------------
For the period ended 12/31/99 Class A Class B Class C Institutional Service
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Last 6 Months -10.58% -10.45% -6.66% -5.17% -5.45%
One Year 0.00 -0.29 3.94 6.23 5.64
Five Years 15.26 N/A N/A N/A 16.504
Since Inception 12.98 10.26 -0.71 12.03 13.854
(2/5/93) (5/1/96) (8/15/97) (6/3/96) (2/5/93)
- ---------------------------------------------------------------------------------------------------
</TABLE>
3 The Standardized Total Returns are average annual total returns or
cumulative total returns (only if the performance period is one year or
less) as of the most recent calendar quarter-end. They assume reinvestment
of all distributions at net asset value. These returns reflect a maximum
initial sales charge of 5.5% for Class A shares, the assumed deferred sales
charge for Class B shares (5% maximum declining to 0% after six years) and
the assumed deferred sales charge for Class C shares (1% if redeemed within
12 months of purchase). Because Institutional and Service shares do not
involve a sales charge, such a charge is not applied to their Standardized
Total Returns.
4 Performance data for Service shares prior to 3/6/96 is that of Class A
shares (excluding the impact of front-end sales charges applicable to Class
A shares since Service shares are not subject to any sales charges).
Performance of Class A shares of the Growth and Income Fund reflects the
expenses applicable to the Fund's Class A shares. The fees applicable to
Services shares are different from those applicable to Class A shares which
impact performance ratings and rankings for a class of shares.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 2/29/00
- ---------------------------------------------------------------------------------------------------
Holding % of Total Net Assets Line of Business
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Cisco Systems, Inc. 3.8% Computer Hardware
Microsoft Corp. 3.6 Computer Software
Intel Corp. 3.6 Semiconductors
General Electric Co. 3.2 Heavy Electrical
Exxon Mobil Corp. 3.0 Oil Refining
Motorola, Inc. 2.2 Electrical Equipment
Oracle Corp. 2.0 Computer Software
International Business Machines, Inc. 1.9 Computer Hardware
Citigroup, Inc. 1.9 Banks
Convergys Corp. 1.6 Information Services
- ---------------------------------------------------------------------------------------------------
</TABLE>
The top 10 holdings may not be representative of the Fund's future investments.
Total return figures represent past performance and do not indicate future
results, which will vary. The investment return and principal value of an
investment will fluctuate and, therefore, an investor's shares, when redeemed,
may be worth more or less than their original cost. Performance reflects expense
limitations in effect. In their absence, performance would be reduced.
1
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Performance Overview
Dear Shareholder,
We are pleased to report on the performance of the Goldman Sachs
Growth and Income Fund for the six month period that ended February
29, 2000.
Performance Review
Over the six month period ended February 29, 2000, the Fund's
Class A, B, C, Institutional and Service shares generated
cumulative total returns, without sales charges, of -5.25%,
-5.60%, -5.61%, -4.94%, and -5.28%, respectively. These figures
compared to the 4.11% total cumulative return of the Fund's
benchmark, the S&P 500 Index.
As our returns indicate, it has been a very challenging period
for value-oriented funds. Investors have largely favored a narrow
group of growth-oriented technology stocks. With the shares of
many technology stocks rising sharply, investors' disdain for
less highly visible growth has produced lackluster stock
performance for many companies, and value based strategies have
suffered. As a result of this performance disparity, the
valuation gap between growth and value indexes has stretched to
historic proportions. We believe that this has created many
opportunities to invest in quality businesses selling at
conservative valuations.
Portfolio Composition
During the fourth quarter of 1999, we introduced more of a
quality bias into the Growth and Income Fund portfolio. Through
intensive fundamental research, we believe that we can identify
companies that enjoy competitive advantage in their industry
sectors, yet sell at attractive valuation levels. In addition to
a quality bias, we believe our portfolio composition also
reflects our mandate to add value through stock selection rather
than sector bets. Whereas our portfolio has historically been
substantially underweight in technology, some of our value stocks
are indeed beneficiaries of emerging technologies as they use
these information-based tools to reinvent their traditional
industrial businesses. We think that Fund shareholders can
benefit from the extraordinary economic benefits of technology --
both through judicious investments in companies that sell
software, hardware, and services -- and through investments in
the companies which are the most adept users of these tools.
Thus, our research and our portfolio construction disciplines
have resulted in the current portfolio structure.
Portfolio Highlights
. Southwest Airlines -- Southwest Airlines was a favorable
contributor in the period and exemplifies creation of competitive
advantage in a difficult industry. By standardizing equipment and
procedures, the airline has achieved extraordinary efficiency.
The Internet has helped them in this regard, as Southwest now
generates more than 20% of its bookings through its website at
very low cost. Fuel costs are a challenge for Southwest and
others in the industry, but its very low fares provide
flexibility to pass some of the higher costs along.
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
VALUE INVESTMENT PROCESS
Our value stock selection process emphasizes quality companies that sell at
attractive valuation levels.
1 Search for Quality We search for quality companies that have competitive
advantages in their industry sectors.
2 Fundamental Research We refine our stock selection through rigorous
analysis of companies' "fundamentals" and face-to-face meetings with
company management, competitors, suppliers and customers.
3 Risk Management We maintain ongoing risk management resulting in an
intentional and quantifiable risk/return profile.
. Motorola, Inc. -- Motorola was a strong performer during the last six
month period. Motorola enjoys a strong market position in wireless
handsets and infrastructure. However, due to some missed product cycle
opportunities, Motorola's profitability and valuation had fallen
significantly short of its competition. In our assessment, the company
has addressed its product deficiencies and has realigned business
processes in a way that should lead to sustained margin improvement.
In fact, we have seen early indications that this is occurring, and we
believe this may lead to continued recognition in the marketplace.
. Computer Associates -- Computer Associates also contributed positively
to performance. Concerns regarding a slowdown in demand during the Y2K
"freeze" in spending on software and services proved to be
exaggerated, as the company experienced healthy demand. The company
continues to successfully transition its product mix through internal
development and acquisitions.
Portfolio Outlook
With the recent restructuring of the Fund's portfolio, we believe that
it is better positioned to provide returns more consistent with its
peer group and the S&P 500 Index. Within this risk-managed framework,
we will continue to maintain a value orientation and seek to enhance
returns through stock selection and fundamental research. We believe
that the Fund's holdings, which collectively sell at a discount to the
S&P 500, offer both a margin of downside protection and significant
upside return potential over the long term.
We thank you for your investment and look forward to your continued
confidence.
Goldman Sachs Value Investment Team
New York
February 29, 2000
3
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
The Goldman Sachs Advantage
Founded in 1869, Goldman, Sachs & Co. is a premier financial services
firm traditionally known on Wall Street and around the world for its
institutional expertise.
Today, the firm's 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?
1
Resources and Relationships
Our portfolio management teams are located on-site, around the world,
in New York, London, Tokyo and Singapore. Their understanding of local
economies, markets, industries and cultures helps deliver what many
investors want: access to global investment opportunities and
consistent, risk-adjusted performance.
2
In-Depth Research
Our portfolio management teams make on-site visits to hundreds of
companies each month, then construct selective portfolios with an
emphasis on their best ideas. Our teams also have access to Goldman,
Sachs & Co.'s Global Investment Research Department.
3
Risk Management
In this, our institutional heritage is clear. Institutions, as well as
many individual investors, often look to us to manage the risks of
global investing over time in different market environments.
To learn more about the Goldman Sachs Funds, call your investment professional
today.
4
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Performance Summary
February 29, 2000 (Unaudited)
The following graph shows the value, as of February 29, 2000, of a $10,000
investment made on February 5, 1993 (commencement of operations) in Class A
Shares (maximum sales charge of 5.5%) in the Goldman Sachs Growth and Income
Fund. For comparative purposes, the performance of the Fund's benchmark (the
Standard and Poor's 500 Index ("S&P 500 Index")) is 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 re-
deemed, to be worth more or less than their original cost. Performance of
Class B, Class C, Institutional and Service Shares will vary from Class A due
to differences in fees and loads.
Growth and Income Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested February 5, 1993 to
February 29, 2000.
[GRAPH]
S&P 500 Class A
5/FEB/93 10,000 9,450
FEB 9,943 9,507
MAR 10,153 9,773
APR 9,907 9,513
MAY 10,172 9,727
JUNE 10,202 9,637
JULY 10,161 9,764
AUG 10,547 10,045
SEPT 10,466 9,942
OCT 10,682 9,962
NOV 10,580 9,908
DEC 10,708 10,185
JAN/94 11,073 10,686
FEB 10,772 10,842
MAR 10,302 10,674
APR 10,434 10,722
MAY 10,606 10,960
JUNE 10,346 10,739
JULY 10,685 10,950
AUG 11,123 11,570
SEPT 10,852 11,383
OCT 11,096 11,055
NOV 10,692 10,645
DEC 10,850 10,787
JAN/95 11,131 11,110
FEB 11,565 11,764
MAR 11,908 12,124
APR 12,258 12,385
MAY 12,748 12,752
JUNE 13,044 13,023
JULY 13,477 13,434
AUG 13,511 13,661
SEPT 14,081 13,930
OCT 14,030 13,646
NOV 14,646 14,115
DEC 14,929 14,399
JAN/96 15,436 14,716
FEB 15,580 15,026
MAR 15,729 15,132
APR 15,961 15,398
MAY 16,372 15,709
JUNE 16,435 15,457
JULY 15,708 15,004
AUG 16,040 15,405
SEPT 16,943 16,140
OCT 17,410 16,549
NOV 18,726 17,860
DEC 18,355 18,152
JAN/97 19,502 18,911
FEB 19,655 19,286
MAR 18,847 18,714
APR 19,970 19,556
MAY 21,187 20,937
JUNE 22,136 21,555
JULY 23,898 23,420
AUG 22,559 23,208
SEPT 23,796 24,044
OCT 23,001 23,061
NOV 24,066 23,143
DEC 24,480 23,214
JAN/98 24,751 23,395
FEB 26,536 25,389
MAR 27,895 25,902
APR 28,176 26,037
MAY 27,692 25,360
JUNE 28,816 24,676
JULY 28,508 23,101
AUG 24,385 19,771
SEPT 25,949 20,489
OCT 28,058 21,424
NOV 29,758 21,977
DEC 31,473 21,950
JAN/99 32,788 22,132
FEB 31,768 21,350
MAR 33,039 22,211
APR 34,318 23,771
MAY 33,508 24,063
JUNE 35,351 24,544
JULY 34,248 23,500
AUG 34,077 22,585
SEPT 33,143 21,455
OCT 35,241 22,282
NOV 35,956 22,520
DEC 38,074 23,224
JAN/00 36,163 22,089
FEB 35,479 21,400
<TABLE>
<CAPTION>
Average Annual Total
Return through February
29, 2000 Since Inception Five Years One Year Six Months(a)
<S> <C> <C> <C> <C>
Class A (commenced February 5, 1993)
Excluding sales charges 12.25% 12.70% 0.23% -5.25%
Including sales charges 11.36% 11.43% -5.28% -10.47%
-----------------------------------------------------------------------------
Class B (commenced May 1, 1996)
Excluding contingent
deferred sales charges 8.20% n/a -0.54% -5.60%
Including contingent
deferred sales charges 7.38% n/a -5.50% -10.32%
-----------------------------------------------------------------------------
Class C (commenced August 15, 1997)
Excluding contingent
deferred sales charges -3.86% n/a -0.53% -5.61%
Including contingent
deferred sales charges -3.86% n/a -1.52% -6.56%
-----------------------------------------------------------------------------
Institutional Class (com-
menced June 3, 1996) 9.11% n/a 0.78% -4.94%
-----------------------------------------------------------------------------
Service Class (commenced
March 6, 1996) 8.79% n/a 0.16% -5.28%
-----------------------------------------------------------------------------
</TABLE>
(a) Not annualized.
5
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Investments
February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 96.5%
Airlines - 0.6%
285,300 Southwest Airlines Co. $ 5,260,219
--------------------------------------------------------------------
Alcohol - 0.5%
69,400 Anheuser-Busch Cos., Inc. 4,450,275
--------------------------------------------------------------------
Apparel - 0.4%
113,400 Nike, Inc. Class B 3,224,813
--------------------------------------------------------------------
Banks - 4.9%
111,000 Bank of America Corp. 5,112,938
308,200 Citigroup, Inc. 15,930,087
163,600 Mellon Financial Corp. 4,928,450
75,400 The Bank of New York Co., Inc. 2,511,763
84,200 The Chase Manhattan Corp. 6,704,425
198,600 Wells Fargo & Co. 6,566,212
------------
41,753,875
--------------------------------------------------------------------
Chemicals - 2.6%
218,600 E.I. du Pont de Nemours & Co. 11,039,300
96,600 Minnesota Mining & Manufacturing Co. 8,512,875
23,000 The Dow Chemicals Co. 2,495,500
------------
22,047,675
--------------------------------------------------------------------
Clothing - 0.4%
65,200 The Gap, Inc. 3,149,975
--------------------------------------------------------------------
Computer Hardware - 11.0%
80,100 3Com Corp.* 7,849,800
12,300 Apple Computer, Inc.* 1,409,888
242,500 Cisco Systems, Inc.* 32,055,469
187,800 Compaq Computer Corp. 4,671,525
192,200 Dell Computer Corp.* 7,844,162
74,800 EMC Corp.* 8,901,200
42,800 Hewlett-Packard Co. 5,756,600
158,600 International Business Machines, Inc. (IBM) 16,177,200
94,300 Sun Microsystems, Inc.* 8,982,075
------------
93,647,919
--------------------------------------------------------------------
Computer Software - 6.3%
45,500 Computer Associates International, Inc. 2,926,219
2,500 i2 Technologies, Inc.* 408,750
348,000 Microsoft Corp.* 31,102,500
229,700 Oracle Corp.* 17,055,225
12,700 VERITAS Software Corp.* 2,513,012
------------
54,005,706
--------------------------------------------------------------------
Defense/Aerospace - 0.2%
45,900 The Boeing Co. 1,680,950
--------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Department Store - 1.9%
134,000 The May Department Stores Co. $ 3,509,125
269,500 Wal-Mart Stores, Inc. 13,121,281
------------
16,630,406
-----------------------------------------------------------------
Drugs - 4.5%
105,700 Bristol-Myers Squibb Co. 6,005,081
79,300 Merck & Co., Inc. 4,881,906
199,300 Pfizer, Inc. 6,402,512
66,400 Pharmacia & Upjohn, Inc. 3,162,300
147,300 Schering-Plough Corp. 5,137,088
48,500 SmithKline Beecham PLC ADR 2,725,094
121,200 Warner-Lambert Co. 10,370,175
------------
38,684,156
-----------------------------------------------------------------
Electrical Equipment - 6.0%
31,200 Corning, Inc. 5,865,600
116,100 Lucent Technologies, Inc. 6,907,950
107,700 Motorola, Inc. 18,362,850
117,300 Nortel Networks Corp. 13,078,950
23,700 QUALCOMM, Inc. 3,375,769
71,900 Qwest Communications International, Inc.* 3,334,362
------------
50,925,481
-----------------------------------------------------------------
Electrical Utilities - 1.1%
153,100 Entergy Corp. 3,100,275
166,100 PG&E Corp. 3,425,813
66,100 Unicom Corp. 2,499,406
------------
9,025,494
-----------------------------------------------------------------
Energy Resources - 2.1%
177,400 Royal Dutch Petroleum Co. ADR 9,313,500
447,100 Union Pacific Resources Group, Inc. 3,995,956
160,600 Unocal Corp. 4,296,050
------------
17,605,506
-----------------------------------------------------------------
Entertainment - 2.1%
407,900 Carnival Corp. 11,752,619
108,800 The Seagram Co. Ltd. 6,392,000
------------
18,144,619
-----------------------------------------------------------------
Financial Services - 1.9%
270,800 Federal Home Loan Mortgage Corp. 11,305,900
167,900 Household International, Inc. 5,362,306
------------
16,668,206
-----------------------------------------------------------------
Food & Beverage - 1.9%
59,600 Bestfoods 2,499,475
88,300 H.J. Heinz Co. 2,820,081
113,600 PepsiCo, Inc. 3,663,600
113,800 The Coca-Cola Co. 5,512,188
31,900 The Quaker Oats Co. 1,720,606
------------
16,215,950
-----------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Forest - 2.0%
90,500 Bowater, Inc. $ 4,451,469
131,600 Fort James Corp. 2,475,725
180,300 International Paper Co. 6,637,294
96,700 Willamette Industries, Inc. 3,281,756
------------
16,846,244
-----------------------------------------------------------
Grocery - 2.0%
157,000 Safeway, Inc.* 6,054,313
730,300 The Kroger Co.* 10,863,212
------------
16,917,525
-----------------------------------------------------------
Heavy Electrical - 3.4%
32,700 Emerson Electric Co. 1,489,894
207,100 General Electric Co. 27,376,031
------------
28,865,925
-----------------------------------------------------------
Heavy Machinery - 0.2%
47,100 Deere & Co. 1,683,825
-----------------------------------------------------------
Home Products - 1.6%
133,400 The Gillette Co. 4,702,350
81,300 The Procter & Gamble Co. 7,154,400
40,000 Unilever NV 1,820,000
------------
13,676,750
-----------------------------------------------------------
Industrial Parts - 0.9%
34,500 Caterpillar, Inc. 1,209,656
62,200 Ingersoll-Rand Co. 2,383,038
105,200 Parker-Hannifin Corp. 3,813,500
------------
7,406,194
-----------------------------------------------------------
Information Services - 3.8%
133,400 America Online, Inc.* 7,870,600
5,400 Ariba, Inc.* 1,428,300
56,400 Automatic Data Processing, Inc. 2,456,925
343,900 Convergys Corp.* 13,240,150
38,300 Electronic Data Systems 2,479,925
11,400 Intertrust Technologies Corp.* 968,287
27,200 Yahoo!, Inc.* 4,343,500
------------
32,787,687
-----------------------------------------------------------
Life Insurance - 1.1%
255,700 AFLAC, Inc. 9,349,031
-----------------------------------------------------------
Media - 4.9%
78,900 AT&T Corp.-Liberty Media Group* 4,122,525
164,700 CBS Corp.* 9,809,944
32,500 Clear Channel Communications, Inc.* 2,165,312
64,800 Comcast Corp. 2,754,000
46,200 MediaOne Group, Inc.* 3,626,700
214,700 The Walt Disney Co. 7,192,450
141,100 Time Warner, Inc. 12,064,050
------------
41,734,981
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Medical Products - 2.2%
132,900 Abbott Laboratories $ 4,352,475
69,700 Baxter International, Inc. 3,798,650
124,500 Becton, Dickinson & Co. 3,867,281
92,400 Johnson & Johnson 6,629,700
------------
18,648,106
-------------------------------------------------------------------
Mining - 0.5%
68,800 Alcoa, Inc. 4,712,800
-------------------------------------------------------------------
Motor Vehicle - 0.1%
13,100 Ford Motor Co. 545,288
-------------------------------------------------------------------
Oil Refining - 3.4%
336,136 Exxon Mobil Corp. 25,315,242
157,800 USX-Marathon Group 3,412,425
------------
28,727,667
-------------------------------------------------------------------
Oil Services - 0.9%
95,800 Halliburton Co. 3,658,362
56,000 Santa Fe International Corp. 1,606,500
54,100 Transocean Sedco Forex, Inc. 2,133,569
------------
7,398,431
-------------------------------------------------------------------
Property Insurance - 3.2%
118,000 American International Group, Inc. 10,435,625
135,400 The Hartford Financial Services Group, Inc. 4,231,250
310,400 XL Capital Ltd. 12,551,800
------------
27,218,675
-------------------------------------------------------------------
Publishing - 0.4%
82,900 The New York Times Co. 3,502,525
-------------------------------------------------------------------
Railroads - 0.7%
296,200 Burlington Northern Santa Fe Corp. 5,831,438
-------------------------------------------------------------------
Restaurants - 0.7%
202,400 McDonald's Corp. 6,388,250
-------------------------------------------------------------------
Security/Asset Management - 1.0%
15,800 J.P. Morgan & Co., Inc. 1,753,800
98,600 Morgan Stanley Dean Witter & Co. 6,945,138
------------
8,698,938
-------------------------------------------------------------------
Semiconductors - 5.0%
269,000 Intel Corp. 30,397,000
4,300 JDS Uniphase Corp.* 1,133,587
65,700 Texas Instruments, Inc. 10,939,050
------------
42,469,637
-------------------------------------------------------------------
Specialty Retail - 1.6%
16,500 Best Buy Co., Inc.* 897,187
139,700 CVS Corp. 4,889,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Investments (continued)
February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Specialty Retail - (continued)
21,200 Tandy Corp. $ 806,925
123,600 The Home Depot, Inc. 7,145,625
------------
13,739,237
------------------------------------------------------
Telephone - 7.5%
26,550 Allegiance Telecom, Inc.* 2,625,131
15,800 Amdocs Ltd.* 1,172,163
176,366 AT&T Corp. 8,719,094
61,400 Bell Atlantic Corp. 3,004,763
88,200 BellSouth Corp. 3,594,150
17,700 Global Crossing Ltd.* 825,263
149,000 GTE Corp. 8,791,000
266,700 MCI WorldCom, Inc.* 11,901,487
27,500 NEXTLINK Communications, Inc.* 3,030,156
114,869 SBC Communications, Inc. 4,365,022
209,400 Sprint Corp. 12,773,400
46,400 U.S. West, Inc. 3,369,800
------------
64,171,429
------------------------------------------------------
Tobacco - 0.4%
164,700 Philip Morris Cos., Inc. 3,304,294
------------------------------------------------------
Wireless - 0.6%
31,400 ALLTEL Corp. 1,821,200
67,800 Sprint Corp. (PCS Group)* 3,508,650
------------
5,329,850
------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $803,386,894) $823,075,952
------------------------------------------------------
TOTAL INVESTMENTS
(Cost $803,386,894) $823,075,952
------------------------------------------------------
</TABLE>
* Non-income producing security.
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.
8
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Assets and Liabilities
February 29, 2000 (Unaudited)
Assets:
<TABLE>
<S> <C>
Investment in securities, at value (identified cost
$803,386,894) $823,075,952
Cash(a) 4,500,000
Receivables:
Investment securities sold 36,146,161
Interest 1,250,551
Fund shares sold 852,364
Variation margin 60,750
Other assets 6,810
-------------------------------------------------------------------------------
Total assets 865,892,588
-------------------------------------------------------------------------------
Liabilities:
Due to custodian 930,985
Payables:
Investment securities purchased 4,299,917
Fund shares repurchased 6,237,724
Amounts owed to affiliates 926,367
Accrued expenses and other liabilities 316,507
-------------------------------------------------------------------------------
Total liabilities 12,711,500
-------------------------------------------------------------------------------
Net Assets:
Paid-in capital 907,904,799
Accumulated net investment loss (241,061)
Accumulated net realized loss on investment, futures and
options transactions (74,113,647)
Net unrealized gain on investments and futures 19,630,997
-------------------------------------------------------------------------------
NET ASSETS $853,181,088
-------------------------------------------------------------------------------
Net asset value, offering and redemption price per share:(b)
Class A $22.05
Class B $21.81
Class C $21.76
Institutional $22.11
Service $22.05
-------------------------------------------------------------------------------
Shares outstanding:
Class A 28,304,767
Class B 7,981,239
Class C 847,154
Institutional 1,254,824
Service 401,454
-------------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number of
shares authorized) 38,789,438
-------------------------------------------------------------------------------
</TABLE>
(a) Restricted cash relating to initial margin requirements and collateral on
futures contracts.
(b) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A Shares is $23.33. 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.
9
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statement of Operations
For the Six Months Ended February 29, 2000 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Dividends(a) $ 7,505,163
Interest 1,863,391
------------------------------------------------------------------------------
Total income 9,368,554
------------------------------------------------------------------------------
Expenses:
Management fees 3,668,068
Distribution and Service fees(b) 2,210,734
Transfer Agent fees(c) 965,203
Custodian fees 71,147
Professional fees 41,541
Registration fees 32,867
Service Share fees 23,716
Trustee fees 4,818
Other 99,057
------------------------------------------------------------------------------
Total expenses 7,117,151
------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,251,403
------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment, options and
futures transactions:
Net realized gain (loss) from:
Investment transactions (78,073,854)
Futures transactions 5,129,639
Options written 572,269
Net change in unrealized gain (loss) on:
Investments 18,747,674
Futures (56,632)
Options written (202,732)
------------------------------------------------------------------------------
Net realized and unrealized loss on investment, options and
futures transactions (53,883,636)
------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(51,632,233)
------------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $7,397.
(b) Class A, Class B and Class C had Distribution and Service fees of
$942,199, $1,142,118 and $126,417, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
Transfer Agent fees of $716,072, $217,002, $24,019, $6,213 and $1,897,
respectively.
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the
Six Months Ended For the Year Ended
February 29, 2000 Seven Months Ended January 31,
(Unaudited) August 31, 1999 1999
<S> <C> <C> <C>
From operations:
Net investment income $ 2,251,403 $ 8,748,029 $ 12,713,525
Net realized gain (loss)
from investment, futures
and options transactions (72,371,946) 74,409,026 (79,720,615)
Net change in unrealized
gain (loss) on
investment, futures and
options transactions 18,488,310 (52,594,995) (91,067,228)
---------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (51,632,233) 30,562,060 (158,074,318)
---------------------------------------------------------------------------------
Distributions to share-
holders:
From net investment
income
Class A Shares (2,415,118) (5,816,651) (9,893,876)
Class B Shares (259,337) (690,509) (555,085)
Class C Shares (28,414) (77,463) (98,749)
Institutional Shares (158,262) (244,239) (2,084,974)
Service Shares (25,262) (63,039) (80,841)
In excess of net
investment income
Class A Shares (201,702) -- (473,558)
Class B Shares (21,659) -- (26,568)
Class C Shares (2,373) -- (4,727)
Institutional Shares (13,217) -- (99,795)
Service Shares (2,110) -- (3,869)
From net realized gain
on investment, futures
and options transactions
Class A Shares (40,865,392) -- --
Class B Shares (12,294,241) -- --
Class C Shares (1,338,227) -- --
Institutional Shares (1,708,729) -- --
Service Shares (523,645) -- --
---------------------------------------------------------------------------------
Total distributions to
shareholders (59,857,688) (6,891,901) (13,322,042)
---------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of
shares 24,839,957 114,124,273 1,026,751,116
Reinvestment of
dividends and
distributions 56,573,297 6,538,450 10,754,319
Cost of shares
repurchased (317,344,976) (649,333,927) (761,706,430)
---------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from share transactions (235,931,722) (528,671,204) 275,799,005
---------------------------------------------------------------------------------
TOTAL INCREASE
(DECREASE) (347,421,643) (505,001,045) 104,402,645
---------------------------------------------------------------------------------
Net assets:
Beginning of period 1,200,602,731 1,705,603,776 1,601,201,131
---------------------------------------------------------------------------------
End of period $ 853,181,088 $1,200,602,731 $1,705,603,776
---------------------------------------------------------------------------------
Accumulated
undistributed
(distributions in excess
of) net investment
income $ (241,061) $ 634,990 $ (1,221,249)
---------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements
February 29, 2000 (Unaudited)
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un-
der the Investment Company Act of 1940 (as amended) as an open-end, manage-
ment investment company. The Trust includes the Goldman Sachs Growth and
Income Fund (the "Fund"). The Fund is a diversified portfolio offering five
classes of shares -- Class A, Class B, Class C, Institutional and Service.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consist-
ently followed by the Fund. The preparation of financial statements in con-
formity with generally accepted accounting principles requires management to
make estimates and assumptions that may affect the reported amounts. Actual
results could differ from those estimates. Effective for fiscal year 1999,
the Board of Trustees approved a change in the fiscal year-end of the Fund
from January 31 to August 31. Accordingly, the 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 for the year
ended January 31, 1999.
A. Investment Valuation -- Investments in securities traded on a U.S. or for-
eign securities exchange or the NASDAQ system are valued daily at their last
sale price on the principal exchange on which they are traded. If no sale oc-
curs, 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.
B. Security Transactions and Investment Income -- Security transactions are
recorded as of the trade date. Realized gains and losses on sales of portfo-
lio securities are calculated using the identified-cost basis. Dividend in-
come is recorded on the ex-dividend date. Dividends for which the Fund has
the choice to receive either cash or stock are recognized as investment in-
come in an amount equal to the cash dividend. Interest income is recorded on
the basis of interest accrued, premium amortized and discount earned.
C. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying fi-
nancial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital, de-
pending on the type of book/tax differences that may exist.
At February 29, 2000, the aggregate cost of portfolio securities for fed-
eral income tax purposes is $805,126,920. Accordingly, the gross unrealized
gain on investments was $101,526,935 and the gross unrealized loss on invest-
ments was $83,577,903 resulting in a net unrealized gain of $17,949,032.
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 for their
services with respect to such shares. Each class of shares separately bears
its respective class-specific Transfer Agency fees.
12
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
E. Foreign Currency Translations -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis: (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; and (ii) purchases and sales of foreign invest-
ments, income and expenses are converted into U.S. dollars based upon cur-
rency exchange rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies; (ii) currency gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of dividends and interest recorded and the amounts actually received.
F. Short Securities Positions -- The Fund may enter into covered short sales.
Short securities positions are accounted for at cost and subsequently marked-
to-market to reflect the current market value of the position. The market
value of the short position is recorded as a liability on the Fund's records
and any difference between this market value and the sales proceeds is re-
ported as an unrealized gain or loss. Gains and losses are realized when a
short position is closed out by delivering securities back to the broker.
G. Segregation Transactions -- The Fund may enter into certain derivative
transactions to seek to increase total return. Forward foreign currency ex-
change contracts, futures contracts, written options, when-issued securities
and forward commitments represent examples of such transactions. As a result
of entering into these 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.
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 super-
vision of the Trust's Board of Trustees, manages the Fund's portfolio. As
compensation for the services rendered pursuant to the Agreement, the assump-
tion 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 0.70% of the
average daily net assets of the Fund.
The investment adviser has voluntarily agreed to limit certain "Other Ex-
penses" of the Fund (excluding Management fees, Distribution and Service
fees, Transfer Agent fees, taxes, interest, brokerage commissions, litiga-
tion, Service Share fees, indemnification costs and other extraordinary ex-
penses) to the extent such expenses exceed, on an annual basis, 0.05% of the
average daily net assets of the Fund. For the period ended February 29, 2000,
there was no expense reimbursement.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to 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 $55,704 during the period
ended February 29, 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 pay-
able monthly at an annual rate as follows: 0.19% of the average daily net as-
sets for Class A, Class B and Class C Shares and 0.04% of the average daily
net assets for Institutional and Service shares.
13
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
February 29, 2000 (Unaudited)
3. AGREEMENTS (continued)
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service Shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
0.50% (on a annualized basis), of the average daily net asset value of the
Service Shares.
As of February 29, 2000, the amounts owed to affiliates were approximately
$500,000, $295,000 and $131,000 for Management, Distribution and Service and
Transfer Agent fees, respectively.
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments, futures and options transactions) for the period ended Feb-
ruary 29, 2000, were $609,283,223 and $846,195,297, respectively. For the
period ended February 29, 2000, Goldman Sachs earned approximately $95,000 of
brokerage commissions from portfolio transactions and futures transactions.
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" require-
ment of the associated futures exchange. Subsequent payments for futures con-
tracts ("variation margin") are paid or received by the Fund daily, depending
on the daily fluctuations in the value of the contracts, and are recorded for
financial reporting purposes as unrealized gains or losses. When contracts
are closed, the Fund realizes a gain or loss which is reported in the State-
ment of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket risk which may exceed the amounts recognized in the Statement of Assets
and Liabilities. Changes in the value of the futures contract may not di-
rectly correlate with changes in the value of the underlying securities. This
risk may decrease the effectiveness of the Fund's hedging strategies and po-
tentially result in a loss. At February 29, 2000, open futures contracts were
as follows:
<TABLE>
<CAPTION>
Number of Settlement Market Unrealized
Type Contracts Long Month Value Loss
---------------------------------------------------------------
<S> <C> <C> <C> <C>
S&P 500 Index 10 March 2000 $3,430,000 $58,061
---------------------------------------------------------------
</TABLE>
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 equiv-
alent liability. The amount of the liability is subsequently marked-to-market
to reflect the current market value of the option written. When a written op-
tion 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 exer-
cised, the Fund realizes a gain or loss from the sale of the underlying secu-
rity, 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 pur-
chases upon exercise. There is a risk of loss from a change in value of such
options which may exceed the related premiums received.
Upon the purchase of a call option or a protective put option by the Fund,
the premium paid is recorded as an investment and subsequently marked-to-mar-
ket to reflect the current market value of the option. If an option which the
Fund has purchased expires on the stipulated expiration date, the Fund will
realize a loss in the amount of the cost of the option. If the Fund enters
into a closing sale transaction, the Fund will realize a gain or loss, de-
pending on whether the sale proceeds for the closing sale transaction are
greater or less than the cost of the option. If the Fund exercises a pur-
chased put option, the Fund will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by
14
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
4. PORTFOLIO SECURITIES TRANSACTIONS (continued)
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 in-
creased by the premium originally paid. At February 29, 2000, there were no
open written option contracts.
5. LINE OF CREDIT FACILITY
The Fund participates in a $250,000,000 uncommitted and a $250,000,000 com-
mitted unsecured revolving line of credit facility. Under the most restric-
tive arrangement the Fund must own securities having a market value in excess
of 400% of the total bank borrowings. These facilities are to be used solely
for temporary or emergency purposes. The interest rate on borrowings is based
on the Federal Funds rate. The committed facility also requires a fee to be
paid by the Fund based on the amount of the commitment. During the period
ended February 29, 2000, the Fund did not have any borrowings under any of
these facilities.
15
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Notes to Financial Statements (continued)
February 29, 2000
6. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
<TABLE>
<CAPTION>
For the Six Months
Ended For the Seven Months
February 29, 2000 Ended For the Year Ended
(Unaudited) August 31, 1999 January 31, 1999
------------------------- -------------------------- --------------------------
Shares Dollars Shares Dollars Shares Dollars
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares
Shares sold 623,611 $ 14,801,648 2,693,500 $ 68,994,627 19,137,910 $ 508,921,386
Reinvestments of divi-
dends and distributions 1,807,791 42,273,236 222,190 5,612,552 390,593 9,715,068
Shares repurchased (8,779,899) (207,812,076) (14,386,320) (361,520,290) (20,323,258) (510,471,024)
-----------------------------------------------------------------------------------
(6,348,497) (150,737,192) (11,470,630) (286,913,111) (794,755) 8,165,430
-----------------------------------------------------------------------------------------------------------
Class B Shares
Shares sold 205,327 4,818,756 532,909 13,448,149 7,059,564 191,017,805
Reinvestments of divi-
dends and distributions 467,552 10,834,220 23,841 604,660 21,979 509,810
Shares repurchased (3,807,668) (89,360,573) (3,930,139) (97,151,929) (4,555,733) (111,930,613)
-----------------------------------------------------------------------------------
(3,134,789) (73,707,597) (3,373,389) (83,099,120) 2,525,810 79,597,002
-----------------------------------------------------------------------------------------------------------
Class C Shares
Shares sold 52,259 1,220,876 104,662 2,636,497 1,937,045 52,029,313
Reinvestments of divi-
dends and distributions 51,899 1,200,021 2,859 72,208 4,364 105,648
Shares repurchased (540,379) (12,714,904) (823,868) (20,529,279) (1,174,701) (28,489,276)
-----------------------------------------------------------------------------------
(436,221) (10,294,007) (716,347) (17,820,574) 766,708 23,645,685
-----------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 132,435 3,194,524 1,012,105 26,839,595 10,119,858 268,940,951
Reinvestments of divi-
dends and distributions 74,291 1,738,712 7,373 189,388 14,004 346,705
Shares repurchased (253,884) (6,010,428) (6,850,928) (165,722,925) (4,396,583) (108,988,620)
-----------------------------------------------------------------------------------
(47,158) (1,077,192) (5,831,450) (138,693,942) 5,737,279 160,299,036
-----------------------------------------------------------------------------------------------------------
Service Shares
Shares sold 33,814 804,153 85,566 2,205,405 218,320 5,841,661
Reinvestments of divi-
dends and distributions 22,542 527,108 2,354 59,642 3,132 77,088
Shares repurchased (60,489) (1,446,995) (173,088) (4,409,504) (73,792) (1,826,897)
-----------------------------------------------------------------------------------
(4,133) (115,734) (85,168) (2,144,457) 147,660 4,091,852
-----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) (9,970,798) $(235,931,722) (21,476,984) $(528,671,204) 8,382,702 $ 275,799,005
-----------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
7. CHANGE IN INDEPENDENT ACCOUNTANTS
On October 26, 1999 the Board of Trustees of the Fund, upon the recommenda-
tion 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 year
ended January 31, 1999, Arthur Anderson LLP's audit reports contained no ad-
verse opinion or disclaimer of opinion; nor were their reports qualified or
modified as to uncertainty, audit scope, or account principles. Further,
there were no disagreements between the Fund and Arthur Andersen LLP on ac-
counting principles or practices, financial statement disclosure or audit
scope or procedure, which if not resolved to the satisfaction of Arthur An-
dersen LLP would have caused them to make reference to the disagreement in
their report.
17
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from
investment operations(a) Distributions to shareholders
----------------------------- ------------------------------------
Net asset In excess Net increase
value, Net Net realized From net of net (decrease)
beginning investment and unrealized investment investment From net in net asset
of period income (loss) gain (loss) income income realized gains value
FOR THE SIX MONTHS ENDED FEBRUARY 29, (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
2000 - Class A Shares $24.68 $ 0.07 (e) $(1.29)(e) $(0.07) $(0.01) $(1.33) $(2.63)
2000 - Class B Shares 24.46 (0.02)(e) (1.27)(e) (0.03) -- (1.33) (2.65)
2000 - Class C Shares 24.41 (0.01)(e) (1.29)(e) (0.02) -- (1.33) (2.65)
2000 - Institutional
Shares 24.72 0.12 (e) (1.27)(e) (0.12) (0.01) (1.33) (2.61)
2000 - Service Shares 24.68 0.06 (e) (1.29)(e) (0.07) -- (1.33) (2.63)
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares 24.33 0.19 0.31 (0.15) -- -- 0.35
1999 - Class B Shares 24.13 0.08 0.31 (0.06) -- -- 0.33
1999 - Class C Shares 24.08 0.08 0.30 (0.05) -- -- 0.33
1999 - Institutional
Shares 24.35 0.34 0.23 (0.20) -- -- 0.37
1999 - Service Shares 24.33 0.17 0.32 (0.14) -- -- 0.35
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 25.93 0.20 (1.60) (0.19) (0.01) -- (1.60)
1999 - Class B Shares 25.73 0.02 (1.58) (0.04) -- -- (1.60)
1999 - Class C Shares 25.70 0.02 (1.59) (0.05) -- -- (1.62)
1999 - Institutional
Shares 25.95 0.29 (1.58) (0.30) (0.01) -- (1.60)
1999 - Service Shares 25.92 0.17 (1.58) (0.17) (0.01) -- (1.59)
-------------------------------------------------------------------------------------------------------------------
1998 - Class A Shares 23.18 0.11 5.27 (0.11) -- (2.52) 2.75
1998 - Class B Shares 23.10 0.04 5.14 -- (0.03) (2.52) 2.63
1998 - Class C Shares
(commenced August 15,
1997) 28.20 (0.01) 0.06 -- (0.03) (2.52) (2.50)
1998 - Institutional
Shares 23.19 0.27 5.23 (0.22) -- (2.52) 2.76
1998 - Service Shares 23.17 0.14 5.23 (0.06) (0.04) (2.52) 2.75
-------------------------------------------------------------------------------------------------------------------
1997 - Class A Shares 19.98 0.35 5.18 (0.35) (0.01) (1.97) 3.20
1997 - Class B Shares
(commenced May 1, 1996) 20.82 0.17 4.31 (0.17) (0.06) (1.97) 2.28
1997 - Institutional
Shares (commenced June
3, 1996) 21.25 0.29 3.96 (0.30) (0.04) (1.97) 1.94
1997 - Service Shares
(commenced March 6,
1996) 20.71 0.28 4.50 (0.28) (0.07) (1.97) 2.46
-------------------------------------------------------------------------------------------------------------------
1996 - Class A Shares 15.80 0.33 4.75 (0.30) -- (0.60) 4.18
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Not annualized.
(d) Annualized.
(e) Calculated based on the average shares outstanding methodology.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
GOLDMAN SACHS GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Ratios assuming no expense limitations
--------------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$22.05 (5.25)%(c) $ 624,073 1.19%(d) 0.60%(d) 1.19%(d) 0.60%(d) 63.16%(c)
21.81 (5.60)(c) 174,071 1.94(d) (0.14)(d) 1.94(d) (0.14)(d) 63.16(c)
21.76 (5.61)(c) 18,437 1.94(d) (0.13)(d) 1.94(d) (0.13)(d) 63.16(c)
22.11 (4.94)(c) 27,747 0.79(d) 0.99(d) 0.79(d) 0.99(d) 63.16(c)
22.05 (5.28)(c) 8,853 1.29(d) 0.51(d) 1.29(d) 0.51(d) 63.16(c)
24.68 2.05(c) 855,174 1.19(d) 1.26(d) 1.20(d) 1.25(d) 55.43(c)
24.46 1.60(c) 271,912 1.94(d) 0.51(d) 1.95(d) 0.50(d) 55.43(c)
24.41 1.58(c) 31,328 1.94(d) 0.51(d) 1.95(d) 0.50(d) 55.43(c)
24.72 2.32(c) 32,181 0.79(d) 1.72(d) 0.80(d) 1.71(d) 55.43(c)
24.68 2.01(c) 10,008 1.29(d) 1.16(d) 1.30(d) 1.15(d) 55.43(c)
24.33 (5.40) 1,122,157 1.22 0.78 1.32 0.68 125.79
24.13 (6.07) 349,662 1.92 0.09 1.92 0.09 125.79
24.08 (6.12) 48,146 1.92 0.10 1.92 0.10 125.79
24.35 (5.00) 173,696 0.80 1.25 0.80 1.25 125.79
24.33 (5.44) 11,943 1.30 0.72 1.30 0.72 125.79
- ---------------------------------------------------------------------------------------------------------------------------------
25.93 23.71 1,216,582 1.25 0.43 1.42 0.26 61.95
25.73 22.87 307,815 1.94 (0.35) 1.94 (0.35) 61.95
25.70 0.51(c) 31,686 1.99(d) (0.48)(d) 1.99(d) (0.48)(d) 61.95
25.95 24.24 36,225 0.83 0.76 0.83 0.76 61.95
25.92 23.63 8,893 1.32 0.32 1.32 0.32 61.95
- ---------------------------------------------------------------------------------------------------------------------------------
23.18 28.42 615,103 1.22 1.60 1.43 1.39 53.03
23.10 22.23(c) 17,346 1.93(d) 0.15(d) 1.93(d) 0.15(d) 53.03
23.19 20.77(c) 193 0.82(d) 1.36(d) 0.82(d) 1.36(d) 53.03
23.17 23.87(c) 3,174 1.32(d) 0.94(d) 1.32(d) 0.94(d) 53.03
- ---------------------------------------------------------------------------------------------------------------------------------
19.98 32.45 436,757 1.20 1.67 1.45 1.42 57.93
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
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<PAGE>
GOLDMAN SACHS FUND PROFILE
Goldman Sachs Growth and Income Fund
An Investment Idea for the Long Term
Historically, stocks have demonstrated greater potential to build
wealth over the long term than most other types of investments.
Goldman Sachs Growth and Income Fund provides investors access to
the benefits associated with equity investing. The Fund seeks
long-term capital growth and growth of income, primarily through
equity securities that, in management's view, offer favorable
capital appreciation and/or dividend-paying ability.
Target Your Needs
The Goldman Sachs Growth and Income Fund has a distinct
investment objective and a defined place on the risk/return
spectrum. As your investment objectives change, you can exchange
shares within the Goldman Sachs Funds family without an
additional charge.* (Please note: in general, greater returns are
associated with greater risk.)
-----------------------------------------------------------------
Goldman Sachs Funds
Goldman Sachs Funds offers more than 30 investment options for
global diversification across borders, investment styles, asset
classes and security capitalizations.
[GRAPH]
INTERNATIONAL
EQUITY
DOMESTIC
EQUITY
.Goldman Sachs
Growth and
Income Fund
FIXED
INCOME
MONEY
MARKET
-- Lower Risk/Return Higher Risk/Return --
ASSET ALLOCATION
SPECIALTY
For More Information
To learn more about the Goldman Sachs Growth and Income Fund and
other Goldman Sachs Funds, call your investment professional
today.
*The exchange privilege is subject to termination and its terms are subject to
change.
<PAGE>
GOLDMAN SACHS ASSET MANAGEMENT 32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005
TRUSTEES OFFICERS
Ashok N. Bakhru, Chairman Douglas C. Grip, President
David B. Ford Jesse H. Cole, Vice President
Douglas C. Grip James A. Fitzpatrick, Vice President
John P. McNulty Nancy L. Mucker, Vice President
Mary P. McPherson John M. Perlowski, Treasurer
Alan A. Shuch Philip V. Giuca, Jr., Assistant Treasurer
Jackson W. Smart, Jr. Michael J. Richman, Secretary
William H. Springer Howard B. Surloff, Assistant Secretary
Richard P. Strubel Valerie A. Zondorak, Assistant Secretary
GOLDMAN SACHS
Investment Adviser,
Distributor and Transfer Agent
Visit our internet address: www.gs.com/funds
This material is not authorized for distribution to prospective investors unless
preceded or accompanied by a current Prospectus. Investors should read the
Prospectus carefully before investing or sending money.
The Growth and Income Fund's foreign investments may be more volatile than an
investment in U.S. securities and are subject to the risks of currency
fluctuations and political developments.
Goldman, Sachs & Co. is the distributor of the Fund.
Copyright 2000 Goldman, Sachs & Co. All rights reserved. Date of first use:
April 30, 2000 / 00-514 GISAR / 67K /4-00
