<PAGE>
Goldman Sachs Funds
INTERNATIONAL EQUITY FUND Semiannual Report February 29, 2000
Long-term capital growth potential
through investments in equity markets
[ARTWORK] located around the world.
-------
GOLDMAN
SACHS
-------
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Market Overview
Dear Shareholder,
During the period under review, international equity markets posted generally
strong results -- aided by a strong rally during the fourth quarter of 1999.
Technology stocks were among the best performers in various markets around the
world.
[_] Market Review: Overall, International Markets Perform Well -- As the
reporting period came to a close, international equity markets around
the globe had posted generally solid results. The largest contributors
to performance occurred during the fourth quarter of 1999, as
investors correctly looked beyond Y2K fears and instead focused on
opportunities fortheir portfolios. More recently, concerns over
inflation have resulted in rising interest rates in the U.S. and
Europe. This has put somewhat of a damper on returns, as many
international markets have given back some of their gains thus far in
2000.
Japanese stocks were among the strongest performers, as restructuring
efforts and strong corporate profits reinforced the view that the
economy was on an upward trend. In Asia's developed markets, a
continuation of improving economic fundamentals and an increase in
foreign investors has helped last year's dramatic rebound to move
steadily forward. Many emerging market countries also generated
outstanding returns, as strong returns and attractive relative
valuations proved compelling for investors. In Europe, an economic
rebound, consolidation activity and the technology sector drove the
market higher.
[_] Market Outlook: Cautious Optimism -- Many attractive investment
opportunities remain in the international equity market. Improving
economic and corporate fundamentals, consolidation activity and the
vast potential of the "new economy" are a few of the positive trends
that exist. However, there are several areas that could adversely
affect results going forward. The prospect for continued interest rate
hikes in the U.S. could have a ripple effect in many regions and stunt
growth rates in more fragile economies. High valuations in some areas
of the market, most notably the technology sector, leave little room
for disappointing results. And currency fluctuations in the yen and
euro could put a strain on continued strong results.
Based on these uncertainties and the potential for 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.
Sincerely,
/s/ David B. Ford /s/ David W. Blood
David B. Ford David W. Blood
Co-Head, Goldman Sachs Co-Head, Goldman Sachs
Asset Management Asset Management
March 13, 2000
- ------------------
[_] NOT FDIC
INSURED
[_] May Lose Value
[_] No Bank
Guarantee
- ------------------
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Fund Basics
as of February 29, 2000
Assets Under Management
$1.6 Billion
Number of Holdings
169
NASDAQ SYMBOLS
Class A Shares
GSIFX
Class B Shares
GSEBX
Class C Shares
GSICX
Institutional Shares
GSIEX
Service Shares
GSISX
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
PERFORMANCE REVIEW
- ------------------------------------------------------------------------------------
August 31, 1999- Fund Total Return MSCI EAFE FT/S&P Actuaries
February 29, 2000 (without sales charge)(1) Index(2) Europe and Pacific Index(2)
<S> <C> <C> <C>
Class A 21.88% 13.76% 11.32%
Class B 21.61 13.76 11.32
Class C 21.72 13.76 11.32
Institutional 22.31 13.76 11.32
Service 22.09 13.76 11.32
- ------------------------------------------------------------------------------------
</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 Morgan Stanley Capital International (MSCI) Europe, Australia and Far
East (EAFE) Index (with dividends reinvested), an unmanaged index of common
stock prices, replaced the FT/S&P Actuaries Europe and Pacific Index
("EuroPac") as of 11/30/99 as the International Equity Fund's performance
benchmark. The MSCIEAFEIndex is widely used throughout the investment
management industry to represent the investment opportunities available to
a large cap, developed country international equity strategy and, in the
Investment Advisor's opinion, is a more appropriate benchmark against which
to measure the performance of the International Equity Fund. The Index
figures do not reflect any fees or expenses. The unmanaged EuroPac Index is
a market capitalization-weighted composite of approximately 1,500 stocks
from 20 countries in the Europe and Asia-Pacific region. The Index 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 20.92% 22.01% 26.56% 28.37% 28.05%
One Year 23.78 24.65 29.16 31.78 31.14
Five Years 16.58 N/A N/A N/A 18.01(4)
Since Inception 13.46 14.57 15.03 18.02 14.44(4)
(12/1/92) (5/1/96) (8/15/97) (2/7/96) (12/1/92)
- ----------------------------------------------------------------------------------------------------------
</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).
Performanceof Class A shares of the International Equity 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 2/29/00
- ------------------------------------------------------------------------------------------
% of Total
Holding Net Assets Country Line of Business
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Vodafone AirTouch PLC 4.5% United Kingdom Telecommunications
Nokia Oyj Series A 2.5 Finland Telecommunications
Ericsson Telecommunications Series B 2.3 Sweden Electrical Equipment
Telefonica de Espana SA 1.8 Spain Telecommunications
Nippon Telephone & Telegraph Corp. 1.8 Japan Telecommunications
Vivendi 1.8 France Business Services
SAP AG 1.6 Germany Computer Software
KPN NV 1.6 Netherlands Telecommunications
Deutsche Telekom AG 1.3 Germany Telecommunications
Shell Transport & Trading Co. 1.3 United Kingdom Energy Resources
- ------------------------------------------------------------------------------------------
</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 INTERNATIONAL EQUITY FUND
Performance Overview
Dear Shareholder,
We are pleased to report on the performance of the Goldman Sachs International
Equity 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 21.88%, 21.61%, 21.72%, 22.31% and 22.09%,
respectively. These figures compare very favorably to the 13.76% cumulative
total return of the Fund's new benchmark, the MSCI EAFE Index.
The Fund's outperformance versus its benchmark was largely due to astute
regional allocations and stock selection.
Portfolio Composition
In the beginning of the reporting period, we favored the strong-performing
Asian market and selective Japanese holdings. We had also moved to a
neutral stance in Europe, as it had failed to meet investor expectations.
However, as the period progressed, we took a more positive view of
Continental Europe, while continuing to favor the Asia-Pacific region, as
economic recoveries were clearly unfolding in both regions. Overall, a key
theme for the Fund was the wireless technology industry, which was accessed
through a variety of subsets.
Portfolio Highlights
[_] NTT Mobile Communication -- NTT Mobile Communications is a dominant
player in Japan's fast growing cellular market. The company's new
service for Mobile Internet, called "i-mode," has been a tremendous
success, positively contributing to lower churning, higher average
revenue per user, and thus better earnings. NTT Mobile's share price
appreciated substantially during the reporting period, outperforming
the overall market.
[_] Vodafone AirTouch PLC -- Vodafone completed a merger with U.S.-based
Airtouch in June 1999,and more recently was involved in the largest
corporate merger in history when it combined with Mannesmann of
Germany. The resulting company now holds the distinction of being the
largest mobile telephone company in the world. The new organization
has a significant presence in Europe, with large market shares in the
UK, Sweden, Greece, Holland, Portugal and now Germany. In addition, we
believe that through its acquisition of Airtouch, Vodafoneis well
positioned to benefit from the anticipated growth of the U.S. market
which currently lags the European market in terms of cellular
penetration.
[_] South China Morning Post (SCMP) -- SCMP's core publishing business is
an English language newspaper with a solid grip on Hong Kong's
English-speaking community. In the last 18 months, the company has
begun to invest in media and management resources that will allow it
to leverage off its editorial talent in the new media arena. Its
wholly-owned subsidiary SCMP.com is the firm's Internet vehicle and it
is in the process of converting
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
INVESTMENT
PROCESS OVERVIEW
The results of our bottom-up stock selection process are enhanced by a top-down
review of our regional market views and the views of the quantitative research
team.
- --------------------
Regional Portfolio
Management Team
- --------------------
Stock Selection
by Region:
[_] Expected
Stock Returns
[_] Expected
Market Returns
[_] Earnings
Momentum
[_] Economic and
Political Risks
- -----------------
Quantitative
Research/Asset
Allocation Team
- -----------------
Proprietary
Models:
[_] Expected
Country Returns
[_] Regional
Optimization
- --------------
Portfolio
Construction
- --------------
[_] Risk Control BARRA
[_] Currency
Management
Optimal
Portfolio
itself from an online newspaper to a purveyor of specialized information. Horse
racing news and financial commentary are two examples of the types of content in
which SCMP has aclear advantage over other local media companies and potential
foreign entrants into the Hong Kong media scene.
[_] Konami -- Konami is a major game software developer and distributor. During
the reporting period, the firm's stock price doubled due to its strong
earnings. Konami has been very successful in launching new music and dance
games for arcades and for Playstation, as well as selling character card
games. We took profits in February by selling our shares. However, we would
consider investing in the stock again at a lower valuation level.
Regional Outlook
[_] Europe -- We continue to invest in quality stocks that we believe are
undervalued and have strong growth opportunities. Such stocks are located
in a wide variety of sectors. Currently, acompelling growth story is in the
media and wireless technology industries, where both technological advances
and demand on both a European and global level are proceeding at a rapid
pace. In addition, certain pharmaceutical, financial and consumer sector
stocks continue to offer compelling valuations in addition to being
involved in merger and acquisition activity.
[_] Japan -- Looking ahead, we are cautiously optimistic about the market.
Although the macroeconomic picture is still blurred without a clear sign of
economic recovery, the corporate outlook is clearly improving. Overall,
it's anticipated that corporate earnings will grow at double-digit rates
for the next two years, largely due to the aggressive restructuring efforts
put in place over last year. Some of the high-growth stocks that had led
the rally over the past six months have high valuations, and we will be
watchful of any change in market sentiment toward such high-priced stocks.
However, we believe the majority of the stocks remain reasonably valued,
and their business environment is expected to gradually improve in coming
quarters. Ifthat occurs, investors'perceptions of those lagging stocks
could turn more positive, and helpto broaden the scope of the market's
rally.
[_] Asia -- We remain generally positive about the outlook for Asian stocks.
Technology should remain an important sector. Asia's dominance in many
technologies is built on the foundation of competitive, less speculative
companies, many of which continue to trade at compelling values. On a
cautious note, we recognize that the prospects of the Asian market are
closely tied to that of the U.S. Therefore, we will be closely monitoring
all economic data coming out of the U.S. in an effort to determine its
impact on the Asian markets.
We thank you for your investment and look forward to your continued
confidence
Goldman Sachs International Equity Investment Team
London, Tokyo, Singapore
February 29, 2000
3
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY 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 INTERNATIONAL EQUITY 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 December 1, 1992 (commencement of operations) in Class A
Shares (maximum sales charge of 5.5%) of the Goldman Sachs International Eq-
uity Fund. For comparative purposes, the performance of the Fund's new bench-
mark (Morgan Stanley Capital International (MSCI) Europe, Australia and Far
East Index (EAFE)) as of November 30, 1999 and the Fund's previous benchmarks
(the FT/S&P Euro-Pac Unhedged and the FT/S&P Europac Combined) are shown.
This performance data represents past performance and should not be consid-
ered 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.
International Equity Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested December 1, 1992 to
February 29, 2000
[GRAPH]
FT/S&P Euro-Pac FT/S&P Euro-Pac MSCI EAFE Class A
Unhedged Combined Index Shares
-------- -------- ----- ------
12/1/92 10,000 10,000 10,000 9,450
FEB 1993 10,401 10,256 10,364 9,780
AUG 1993 13,680 12,578 13,547 10,827
AUG 1994 15,041 13,113 15,054 11,240
AUG 1995 15,046 13,117 15,173 11,734
AUG 1996 16,277 14,190 16,413 14,214
AUG 1997 17,532 15,284 18,500 16,319
AUG 1998 17,099 14,907 18,525 16,786
AUG 1999 22,217 19,369 23,347 20,041
FEB 2000 24,730 21,560 26,559 24,426
<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 December 1, 1992)
Excluding sales charges 13.99% 19.05% 32.13% 21.88%
Including sales charges 13.10% 17.71% 24.88% 15.16%
-----------------------------------------------------------------------------
Class B (commenced May 1, 1996)
Excluding contingent
deferred sales charges 14.51% n/a 31.46% 21.61%
Including contingent
deferred sales charges 13.82% n/a 25.87% 16.00%
-----------------------------------------------------------------------------
Class C (commenced August 15, 1997)
Excluding contingent
deferred sales charges 13.89% n/a 31.55% 21.72%
Including contingent
deferred sales charges 13.89% n/a 30.43% 20.60%
-----------------------------------------------------------------------------
Institutional Class (com-
menced February 7, 1996) 17.21% n/a 33.03% 22.31%
-----------------------------------------------------------------------------
Service Class (commenced
March 6, 1996) 34.51% n/a 32.42% 22.09%
-----------------------------------------------------------------------------
</TABLE>
(a) Not annualized.
5
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Investments
February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - 91.0%
<C> <S> <C>
Australia - 2.4%
129,300 AMP Ltd. (Insurance) $ 1,177,129
65,400 Brambles Industries Ltd. (Multi-Industrial) 1,646,377
334,800 Broken Hill Proprietary Co. Ltd. (Nonferrous Metals) 3,316,070
287,300 Coles Myer Ltd. (Specialty Retail) 1,206,002
714,200 Foster's Brewing Group Ltd. (Food & Beverage) 1,880,567
144,947 Lend Lease Corp. Ltd. (Financial Services) 1,909,199
253,700 National Australia Bank (Banks) 3,341,661
595,574 News Corp. Ltd. (Media) 8,700,312
133,200 Pioneer International Ltd. (Construction) 355,813
133,900 Rio Tinto Ltd. (Mining) 1,920,280
285,470 Tab Corp. Holdings Ltd. (Entertainment) 1,704,356
1,566,700 Telstra Corp. (Utilities) 7,369,212
229,893 Westpac Banking Corp. (Banks) 1,471,591
233,300 WMC Ltd. (Mining) 878,809
238,700 Woodside Petroleum Ltd. (Oil Services) 1,366,355
301,723 Woolworths Ltd. (Specialty Retail) 926,696
------------
39,170,429
-------------------------------------------------------------------------------
Belgium - 0.0%
58,657 Dexia* (Banks) 566
-------------------------------------------------------------------------------
China - 0.4%
609,000 China Telecom Ltd.* (Telecommunications) 5,614,328
-------------------------------------------------------------------------------
Finland - 2.5%
205,209 Nokia Oyj Series A (Telecommunications) 40,961,776
-------------------------------------------------------------------------------
France - 9.2%
125,462 Accor SA (Hotels) 4,573,156
65,201 Air Liquide SA (Chemicals) 8,814,837
44,207 Alcatel (Telecommunications) 10,367,323
211,438 Alstom (Electrical Equipment) 4,891,312
269,930 Aventis SA (Chemicals) 13,795,551
73,944 Axa (Insurance) 9,305,195
102,415 Banque National de Paris (Banks) 8,098,218
66,864 Carrefour SA (Specialty Retail) 10,155,117
168,654 Compagnie Generale des Etablissements Michelin (Auto) 5,274,188
30,491 Equant NV * (Computer Software) 3,451,849
30,025 France Telecom SA (Telecommunications) 4,849,644
336,827 Rhodia SA (Chemicals) 5,748,999
57,975 ST Microelectronics (Semiconductors) 11,516,487
150,015 Total Fina SA Class B (Energy Resources) 19,890,670
243,246 Vivendi (Business Services) 28,616,569
------------
149,349,115
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
Germany - 7.0%
49,876 Allianz AG (Insurance) $17,266,253
191,787 BASF AG (Chemicals) 8,858,633
186,721 Deutsche Bank AG (Banks) 15,844,840
265,087 Deutsche Telekom AG (Telecommunications) 22,009,167
28,587 Epcos AG * (Electronics Equipment) 3,942,000
62,070 HypoVereinsbank (Banks) 3,369,785
31,732 Muenchener Rueckversicherungs-Gesellschaft AG
(Property Insurance) 8,693,221
165,537 Preussag AG (Multi-Industrial) 7,583,892
91,997 Siemens AG (Electrical Equipment) 16,358,618
191,113 Thyssen AG (Steel) 4,673,600
305,796 Viag AG (Diversified Industrial Manufacturing) 5,455,261
-----------
114,055,270
-----------------------------------------------------------------------
Hong Kong - 1.8%
1,497,800 Cable & Wireless HKT Ltd. (Telecommunications) 4,994,014
221,000 Cheung Kong Holdings Ltd. (Real Estate) 2,967,339
350,000 CLP Holdings Ltd. (Utilities) 1,542,484
1,803,000 Giordano International Ltd. (Specialty Retail) 2,015,457
371,000 Hang Seng Bank Ltd. (Banks) 3,348,720
1,944,000 Hong Kong & China Gas Co. Ltd. (Utilities) 2,272,983
681,000 Hutchison Whampoa Ltd.
(Multi-Industrial) 10,674,941
10,000 New World China Land Ltd. * (Real Estate) 2,955
884,000 New World Development Co. Ltd. (Real Estate) 1,272,122
-----------
29,091,015
-----------------------------------------------------------------------
Ireland - 0.2%
603,424 Bank of Ireland (Banks) 3,529,111
-----------------------------------------------------------------------
Italy - 2.6%
4,800,921 Banca di Roma SpA (Banks) 5,467,471
1,051,367 ENI SpA (Energy Resources) 4,896,813
585,556 San Paolo-IMI SpA (Banks) 9,260,284
1,214,256 Seat Pagine Gialle SpA * (Business Services) 5,222,244
779,563 Telecom Italia SpA (Telecommunications) 13,689,046
981,542 Unicredito Italiano SpA (Banks) 3,625,098
-----------
42,160,956
-----------------------------------------------------------------------
Japan - 25.3%
292,059 Aderans Co. Ltd. (Specialty Retail) 7,973,581
80,600 Advantest Corp. (Electronics Equipment) 14,611,202
1,866,000 Asahi Chemical Industry Co. Ltd. (Chemicals) 11,020,922
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
Japan - (continued)
1,232,000 Asahi Glass Co. Ltd. (Home Products) $ 8,408,791
385,000 Bridgestone Corp. (Auto) 8,601,492
374,265 Canon, Inc. (Computer Hardware) 15,565,282
1,845,000 Chiba Bank Ltd. (Banks) 7,958,593
302,600 Circle K Japan Co. (Specialty Retail) 11,538,372
643,000 Daiwa Securities Group, Inc. (Financial Services) 10,210,993
137,900 FANUC Ltd. (Electronics Equipment) 13,427,947
296,000 Fuji Photo Film Ltd. (Leisure) 13,010,693
399,000 Fujitsu Ltd. (Computer Hardware) 13,253,401
183,000 Honda Motor Co. Ltd. (Auto) 5,995,359
252 Hoya Corp. (Electrical Equipment) 20,571
8 Inaba Denkisangyo (Electrical Equipment) 84
523,000 Kao Corp. (Chemicals) 13,874,005
729,000 Kirin Brewery Ltd. (Food & Beverage) 8,697,447
497 Kokuyo Co. Ltd. (Specialty Retail) 5,405
776 Max Co. (Electrical Equipment) 6,991
750 Mirai Industry Co. Ltd.
(Multi-Industrial) 8,709
2,542,790 Mitsui Marine & Fire (Insurance) 10,644,614
38,542 Nintendo Co. Ltd. (Entertainment) 8,414,457
2,069 Nippon Telephone & Telegraph Corp.
(Telecommunications) 28,619,738
268 NTT Mobile Communications Network, Inc.
(Telecommunications) 10,804,386
689,000 Ricoh Co. Ltd. (Computer Hardware) 12,358,547
53,600 Rohm Co. (Electronics Equipment) 17,389,452
54 Shimachu Co. (Specialty Retail) 541
283,000 Shin-Etsu Chemical Co. Ltd. (Chemicals) 15,323,747
331,000 Skylark Co. Ltd. (Restaurants) 7,846,885
43,811 SMC Corp. (Machinery) 8,133,452
8,000 Softbank Corp. (Business Services) 11,648,542
30,500 Sony Corp. (Electrical Equipment) 9,020,794
730,000 Sumitomo Corp. (Wholesale) 8,091,550
148,000 Takeda Chemical Industries Ltd. (Drugs) 8,350,548
96,800 Takefuji Corp. (Financial Services) 12,641,216
37 TDK Corp. (Computer Hardware) 3,539
357,000 Terumo Corp. (Medical Products) 9,291,714
737,000 The Bank of Tokyo-Mitsubishi Ltd. (Banks) 9,020,931
931,000 The Fuji Bank Ltd. (Banks) 7,252,455
290,000 The Nomura Securities Co. Ltd. (Financial Services) 8,181,280
466,600 Tokyo Electric Power (Electrical Utilities) 10,191,018
415,600 Toppan Forms Co. Ltd. (Publishing) 8,131,592
354,000 Toyota Motor Corp. (Auto) 14,142,603
291,000 Yamanouchi Pharmaceutical Co. Ltd. (Drugs) 13,903,171
-----------
413,596,612
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
Netherlands - 6.0%
100,942 Aegon NV (Financial Services) $6,969,425
250,765 Fortis Netherlands NV (Financial Services) 6,306,473
136,149 Getronics NV (Business Services) 11,422,094
235,643 ING Groep NV (Financial Services) 11,934,145
81,044 Koninklijke Royal Philips Electronics NV (Appliance) 15,024,473
199,875 KPN NV (Telecommunications) 25,451,238
216,513 VNU NV (Media) 14,959,332
177,960 Wolters Kluwer NV (Publishing) 6,351,167
----------
98,418,347
------------------------------------------------------------------------------
New Zealand - 0.1%
332,100 Telecom Corp. of New Zealand Ltd. (Utilities) 1,373,599
------------------------------------------------------------------------------
Singapore - 0.8%
291,000 Chartered Semiconductor Manufacturing Ltd. *
(Semiconductors) 2,481,984
113,000 City Developments (Real Estate) 458,950
482,847 DBS Group Holdings Ltd. (Banks) 5,967,300
535,000 First Capital Corp. Ltd. (Real Estate) 400,435
80,000 Singapore Airlines Ltd. (Airlines) 742,675
93,000 Singapore Press Holdings Ltd. (Publishing) 1,780,679
638,000 Singapore Technologies Engineering Ltd. (Machinery) 781,073
489,000 Singapore Telecommunications Ltd. (Telecommunications) 794,430
----------
13,407,526
------------------------------------------------------------------------------
Spain - 3.5%
209,114 Acerinox SA (Steel) 7,541,656
566,162 Altadis (ex Tabacalera SA) (Tobacco) 6,218,369
545,833 Banco Santander Central Hispano SA (Banks) 5,737,178
418,774 Endesa SA (Electrical Utilities) 8,872,005
1,018,999 Telefonica de Espana SA * (Telecommunications) 29,331,220
----------
57,700,428
------------------------------------------------------------------------------
Sweden - 4.9%
387,274 Ericsson Telecommunications Series B (Electrical
Equipment) 37,125,558
360,130 Investor AB * (Financial Services) 5,266,984
1,201,854 Nordbanken Holding AB (Banks) 6,316,874
487,409 Nordic Baltic Holding AB FDR (Financial Services) 2,608,546
597,729 Securitas AB Series B (Business Services) 16,015,477
323,418 Skandia Forsakring (Insurance) 13,266,346
----------
80,599,785
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Investments (continued)
February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
Switzerland - 3.7%
3,012 Adecco SA * (Business Services) $ 2,385,742
3,044 Nestle SA (Food & Beverage) 5,138,177
10,900 Novartis AG (Health) 13,892,349
1,537 Roche Holding AG (Health) 16,582,814
5,105 Swiss Re (Property Insurance) 8,215,788
57,021 UBS AG (Banks) 13,874,597
-----------
60,089,467
-------------------------------------------------------------------------
United Kingdom - 20.6%
1,175,670 Allied Zurich PLC (Insurance) 9,901,914
556,153 Amvescap PLC (Financial Services) 6,339,147
208,640 AstraZeneca Group PLC (Health) 6,818,161
117,294 Barclays PLC (Banks) 2,817,672
2,534,336 BP Amoco PLC (Energy Resources) 19,015,044
848,492 British Aerospace PLC (Defense/Aerospace) 4,175,933
1,306,390 British American Tobacco PLC (Tobacco) 5,341,607
1,090,671 British Telecom PLC (Telecommunications) 19,026,345
648,542 Cable & Wireless Communications PLC *
(Telecommunications) 10,985,938
46,905 Colt Telecom Group PLC * (Telecommunications) 2,693,157
1,171,923 Diageo PLC (Tobacco) 8,973,051
259,384 EMAP PLC (Publishing) 5,474,871
50,285 Energis PLC * (Telecommunications) 2,548,254
835,512 Glaxo Wellcome PLC (Health) 20,035,943
1,104,062 HSBC Holdings PLC (Banks) 12,932,923
781,788 Lloyds TSB Group PLC (Banks) 6,930,077
242,049 National Westminster Bank PLC
(Banks) 4,596,934
1,025,414 Reckitt Benckiser PLC (Food & Beverage) 8,903,510
882,031 Reuters Group PLC (Business Services) 18,298,771
1,167,049 Scottish Power PLC (Energy Resources) 8,852,823
3,163,745 Shell Transport & Trading Co. (Energy Resources) 21,826,406
1,773,351 SmithKline Beecham PLC (Health) 19,933,062
3,498,921 Stagecoach Holdings PLC (Railroads) 5,081,843
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
Common Stocks - (continued)
<C> <S> <C>
United Kingdom - (continued)
339,782 Thus PLC * (Telecommunications) $ 3,368,677
2,546,683 Unilever PLC (Food & Beverage) 15,166,327
426,910 United News & Media PLC (Publishing) 5,688,242
13,121,311 Vodafone AirTouch PLC (Telecommunications) 73,433,257
410,231 WPP Group PLC (Business Services) 7,910,816
--------------
337,070,705
-----------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,245,082,467) $1,486,189,035
-----------------------------------------------------------------------
Preferred Stocks - 1.6%
Germany - 1.6%
30,755 SAP AG (Computer Software) $ 25,594,023
-----------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $15,415,447) $ 25,594,023
-----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
Short-Term Obligation - 6.4%
<S> <C> <C> <C>
State Street Bank & Trust Euro-Time Deposit
$104,908,000 5.75% 03/01/2000 $ 104,908,000
----------------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATION
(Cost $104,908,000) $ 104,908,000
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $1,365,405,914) $1,616,691,058
----------------------------------------------------------------------------------------------
</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.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Percentage of
Total Net Assets
<S> <C>
Common and Preferred Stock Industry Classifications +
Appliance 0.9%
Auto 2.1
Banks 8.6
Business Services 6.2
Chemicals 4.7
Computer Hardware 2.5
Computer Software 1.8
Defense/Aerospace 0.3
Diversified Industrial Manufacturing 0.3
Drugs 1.4
Electrical Equipment 4.1
Electrical Utilities 1.2
Electronics Equipment 3.0
Energy Resources 4.6
Entertainment 0.6
Financial Services 4.4
Food & Beverage 2.4
Health 4.7
Home Products 0.5
Hotels 0.3
Insurance 3.8
Leisure 0.8
Machinery 0.5
Media 1.5
Medical Products 0.6
Mining 0.2
Multi-Industrial 1.2
Nonferrous Metals 0.2
Oil Services 0.1
Property Insurance 1.0
Publishing 1.7
Railroads 0.3
Real Estate 0.3
Restaurants 0.5
Semiconductors 0.9
Specialty Retail 2.1
Steel 0.7
Telecommunications 19.0
Tobacco 1.3
Utilities 0.8
Wholesale 0.5
--------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCK 92.6%
--------------------------------------------------------
</TABLE>
+ Industry concentrations greater than one tenth of one percent are dis-
closed.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Assets and Liabilities
February 29, 2000 (Unaudited)
Assets:
<TABLE>
<S> <C>
Investment in securities, at value (identified cost
$1,365,405,914) $1,616,691,058
Cash, at value 114,154
Receivables:
Investment securities sold, at value 9,999,514
Dividends and interest, at value 1,152,238
Fund shares sold 18,361,147
Forward foreign currency exchange contracts, at value 561,678
Variation margin(a) 23,507,856
Reimbursement from investment adviser 206,950
Other assets 1,219,727
-------------------------------------------------------------------------------
Total assets 1,671,814,322
-------------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased, at value 32,787,967
Fund shares repurchased 2,323,633
Amounts owed to affiliates 2,027,984
Forward foreign currency exchange contracts, at value 1,397,084
Accrued expenses and other liabilities, at value 435,003
-------------------------------------------------------------------------------
Total liabilities 38,971,671
-------------------------------------------------------------------------------
Net Assets:
Paid-in capital 1,253,087,292
Distributions in excess of net investment loss (17,006,125)
Accumulated net realized gain on investment, options, futures
and foreign currency related transactions 138,723,389
Net unrealized gain on investments, futures and translation
of assets and liabilities denominated in foreign currencies 258,038,095
-------------------------------------------------------------------------------
NET ASSETS $1,632,842,651
-------------------------------------------------------------------------------
Net asset value, offering and redemption price per share:(b)
Class A $25.07
Class B $24.64
Class C $24.38
Institutional $25.49
Service $25.12
-------------------------------------------------------------------------------
Shares outstanding:
Class A 49,572,147
Class B 3,412,473
Class C 769,343
Institutional 11,088,963
Service 186,983
-------------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number
of shares authorized) 65,029,909
-------------------------------------------------------------------------------
</TABLE>
(a) Includes approximately $16,716,000 relating to initial margin require-
ments and collateral on futures transactions.
(b) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A Shares is $26.53. 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.
10
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Operations
For the Six Months Ended February 29, 2000 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Dividends(a) $ 5,051,327
Interest 2,415,730
-------------------------------------------------------------------------------
Total income 7,467,057
-------------------------------------------------------------------------------
Expenses:
Management fees 6,916,599
Distribution and Service fees(b) 3,114,731
Transfer Agent fees(c) 1,143,771
Custodian fees 876,680
Registration fees 86,884
Professional fees 44,410
Service Share fees 10,327
Trustee fees 4,008
Other 55,578
-------------------------------------------------------------------------------
Total expenses 12,252,988
-------------------------------------------------------------------------------
Less -- expenses reimbursed (348,234)
-------------------------------------------------------------------------------
Net expenses 11,904,754
-------------------------------------------------------------------------------
NET INVESTMENT LOSS (4,437,697)
-------------------------------------------------------------------------------
Realized and unrealized gain on investment, futures and foreign
currency related transactions:
Net realized gain from:
Investment transactions 143,470,320
Futures transactions 13,958,997
Foreign currency related transactions 2,089,461
Net change in unrealized gain on:
Investments 112,552,279
Futures 6,456,804
Translation of assets and liabilities denominated in foreign
currencies 346,076
-------------------------------------------------------------------------------
Net realized and unrealized gain on investment, futures and
foreign currency transactions 278,873,937
-------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $274,436,240
-------------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $781,497.
(b) Class A, Class B and Class C had Distribution and Service fees of
$2,665,982, $377,052 and $71,697, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
Transfer Agent fees of $1,013,074, $71,640, $13,622, $44,609 and $826,
respectively.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Six Months Ended
February 29, 2000
(Unaudited)
<S> <C>
From operations:
Net investment loss $ (4,437,697)
Net realized gain on investment, futures and foreign currency related
transactions 159,518,778
Net change in unrealized gain on investments, futures and translation of assets
and liabilities denominated in foreign currencies 119,355,159
--------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 274,436,240
--------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A Shares (1,336,028)
Class B Shares (68,938)
Class C Shares (16,435)
Institutional Shares (378,307)
Service Shares (5,388)
In excess of net investment income
Class A Shares (12,586,951)
Class B Shares (649,474)
Class C Shares (154,839)
Institutional Shares (3,564,096)
Service Shares (50,766)
From net realized gain on investment, futures and foreign currency transactions
Class A Shares (105,741,385)
Class B Shares (7,678,106)
Class C Shares (1,511,693)
Institutional Shares (22,154,888)
Service Shares (403,458)
--------------------------------------------------------------------------------------------------------
Total distributions to shareholders (156,300,752)
--------------------------------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 442,409,766
Reinvestment of dividends and distributions 121,560,212
Cost of shares repurchased (257,083,722)
--------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from share transactions 306,886,256
--------------------------------------------------------------------------------------------------------
TOTAL INCREASE 425,021,744
--------------------------------------------------------------------------------------------------------
Net assets:
Beginning of period 1,207,820,907
--------------------------------------------------------------------------------------------------------
End of period $1,632,842,651
--------------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income $ (17,006,125)
--------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Seven Months Ended
August 31, 1999
<S> <C>
From operations:
Net investment income $ 2,238,774
Net realized gain on investment, futures and foreign cur-
rency related transactions 98,723,169
Net change in unrealized loss on investments, futures and
translation of assets and liabilities denominated in
foreign currencies (33,406,060)
------------------------------------------------------------------------------
Net increase in net assets resulting from operations 67,555,883
------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 1,029,391,946
Reinvestment of dividends and distributions --
Cost of shares repurchased (1,032,832,481)
------------------------------------------------------------------------------
Net decrease in net assets resulting from share
transactions (3,440,535)
------------------------------------------------------------------------------
TOTAL INCREASE 64,115,348
------------------------------------------------------------------------------
Net assets:
Beginning of period 1,143,705,559
------------------------------------------------------------------------------
End of period $ 1,207,820,907
------------------------------------------------------------------------------
Accumulated undistributed net investment income $ 6,242,794
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the
Year Ended
January 31, 1999
<S> <C>
From operations:
Net investment loss $ (2,714,406)
Net realized gain on investment, futures and foreign currency related
transactions 96,004,014
Net change in unrealized gain on investments, futures and translation of assets
and liabilities denominated in foreign currencies 55,278,283
---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 148,567,891
---------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net realized gain on investment, futures and foreign currency transactions
Class A Shares (41,132,351)
Class B Shares (3,418,683)
Class C Shares (556,864)
Institutional Shares (4,927,209)
Service Shares (179,258)
---------------------------------------------------------------------------------------------------
Total distributions to shareholders (50,214,365)
---------------------------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of shares 2,171,378,743
Reinvestment of dividends and distributions 40,976,198
Cost of shares repurchased (1,982,583,097)
---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from share transactions 229,771,844
---------------------------------------------------------------------------------------------------
TOTAL INCREASE 328,125,370
---------------------------------------------------------------------------------------------------
Net assets:
Beginning of period 815,580,189
---------------------------------------------------------------------------------------------------
End of period $1,143,705,559
---------------------------------------------------------------------------------------------------
Accumulated undistributed net investment income $ 1,040,126
---------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY 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 International
Equity 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 $1,366,889,992. Accordingly gross unrealized gain
on investments was $336,710,690 and the gross unrealized loss on investments
was $86,909,624 resulting in a net unrealized gain of $249,801,066.
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Notes to Financial Statements (continued)
February 29, 2000 (Unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
D. Expenses -- Expenses incurred by the Trust which do not specifically re-
late to an individual Fund of the Trust are allocated to the Funds based 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
the Distribution and Service Plans. Shareholders of Service shares bear all
expenses and fees paid to service organizations. Each class of shares sepa-
rately bears its respective class-specific Transfer Agency fees.
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
on current exchange rates; (ii) purchases and sales of foreign investments,
income and expenses are converted into U.S. dollars based on currency ex-
change 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; and (ii) currency gains and losses between trade
date and settlement date on investment securities transactions and forward
exchange contracts; and (iii) gains and losses from the difference between
amounts of dividends, interest and foreign withholding taxes 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 Transaction -- The Fund may enter into certain derivative
transactions to seek to increase total return. Forward foreign currency ex-
change contracts, futures contracts, written options, mortgage dollar rolls,
when-issued and forward commitments represent examples of such transactions.
As a result of entering into those transactions the Fund is required to seg-
regate liquid assets on the accounting records equal to or greater than the
market value of the corresponding transactions.
16
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
3. AGREEMENTS
Pursuant to the Investment Management Agreement (the "Agreement"), Goldman
Sachs Asset Management International ("GSAMI"), a unit of the Investment Man-
agement Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the in-
vestment adviser to the Fund. Under the Agreement, GSAMI, subject to the
general supervision of the Trust's Board of Trustees, manages the Fund's
portfolio. As compensation for the services rendered under the Agreement, the
assumption of the expenses related thereto and administering the Fund's busi-
ness affairs, including providing facilities, GSAMI is entitled to a fee,
computed daily and payable monthly, at an annual rate equal to 1.00% of the
average daily net assets of the Fund.
The investment adviser has voluntarily agreed to limit certain "Other Ex-
penses" (excluding Management fees, Distribution and Service fees, Transfer
Agent fees, taxes, interest, brokerage, litigation, Service Share fees, in-
demnification costs and other extraordinary expenses) to the extent such ex-
penses exceed, on an annual basis, 0.10% of the average daily net assets of
the Fund. Goldman Sachs reimbursed approximately $348,000 for the period
ended February 29, 2000.
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 0.50%,
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 $1,013,000 for 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 average daily net assets
for Class A, Class B and Class C Shares and 0.04% of average daily net assets
for Institutional and Service shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This Plan al-
lows for Service Shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
0.50% (on an 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
$1,260,000, $561,000 and $207,000 for Management, Distribution and Service
and Transfer Agent fees, respectively.
17
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Notes to Financial Statements (continued)
February 29, 2000 (Unaudited)
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchases and proceeds of sales or maturities of securities (excluding short-
term investments and futures) for the period ended February 29, 2000, were
$779,101,880 and $675,268,612, respectively. For the period ended February
29, 2000, Goldman Sachs earned approximately $33,000 of brokerage commissions
from futures transactions.
Forward Foreign Currency Exchange Contracts -- The Fund may enter into for-
ward foreign currency exchange contracts for the purchase or sale of a spe-
cific 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 such contracts to seek to increase total return.
All commitments are "marked-to-market" daily at the applicable translation
rates and any resulting unrealized gains or losses are recorded in the Fund's
financial statements. The Fund realizes gains or losses at the time a forward
contract is offset by entry into a closing transaction or extinguished by de-
livery of the currency. Risks may arise upon entering these contracts from
the potential inability of counterparties to meet the terms of their con-
tracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
At February 29, 2000, the Fund had the following outstanding forward for-
eign currency exchange contracts:
<TABLE>
<CAPTION>
Open Forward Foreign Currency Value on Unrealized Unrealized
Sale Contracts Settlement Date Current Value Gain Loss
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Euro
expiring 3/15/2000 $ 884,062 $ 847,230 $ 36,832 $ --
expiring 4/28/2000 444,686 430,657 14,029 --
Hong Kong Dollar
expiring 6/8/2000 26,883,373 26,875,827 7,546 --
Japanese Yen
expiring 4/17/2000 40,489,912 40,571,602 -- 81,690
-------------------------------------------------------------------------------------------------
TOTAL OPEN FORWARD FOREIGN CURRENCY SALE
CONTRACTS $ 68,702,033 $ 68,725,316 $ 58,407 $ 81,690
-------------------------------------------------------------------------------------------------
<CAPTION>
Closed but Unsettled Realized Realized
Forward Foreign Currency Contracts Purchase Value Sale Value Gain Loss
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Euro
expiring 3/15/2000 $ 68,403,000 $ 67,518,938 $ -- $ 884,062
expiring 4/28/2000 116,184,808 115,758,102 -- 426,706
Hong Kong Dollar
expiring 6/8/2000 12,544,273 12,539,647 -- 4,626
Japanese Yen
expiring 4/17/2000 114,121,277 114,624,548 503,271 --
-------------------------------------------------------------------------------------------------
TOTAL CLOSED BUT UNSETTLED FORWARD FOREIGN
CURRENCY CONTRACTS $311,253,358 $310,441,235 $503,271 $1,315,394
-------------------------------------------------------------------------------------------------
</TABLE>
The contractual amounts of forward foreign currency exchange contracts do
not necessarily represent the amounts potentially subject to risk. The mea-
surement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At February 29,
2000, the Fund had sufficient cash and securities to cover any commitments
under these contracts.
The Fund has recorded a "Receivable for forward foreign currency exchange
contracts sold" and "Payable for forward foreign currency exchange contracts
purchased" of $561,678 and $1,397,084, respectively, in the accompanying
Statement of Assets and Liabilities.
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
18
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
4. PORTFOLIO SECURITIES TRANSACTIONS (continued)
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 con-
tracts are closed, the Fund realizes a gain or loss which is reported in the
Statement of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket and counterparty risk which may exceed the amounts recognized in the
Statement of Assets and Liabilities. Changes in the value of the futures con-
tracts 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 February 29, 2000, open futures contracts were as follows:
<TABLE>
<CAPTION>
Number of
Contracts Unrealized
Type Long Settlement Month Market Value Gain
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOPIX Index 222 March 2000 $34,930,882 $1,254,357
MIB 30 Index 135 March 2000 32,362,862 3,281,319
DAX Index 157 March 2000 29,098,129 2,255,858
-------------------------------------------------------------------------------------
$96,391,873 $6,791,534
-------------------------------------------------------------------------------------
</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 the
premium originally paid. If the Fund exercises a purchased call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid. At February 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.
19
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Notes to Financial Statements (continued)
February 29, 2000 (Unaudited)
6. 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 Andersen 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 accounting 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
Andersen LLP would have caused them to make reference to the disagreement in
their report.
20
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
7. SUMMARY OF SHARE TRANSACTIONS
Share activity for:
<TABLE>
<CAPTION>
For the Six Months
Ended February 29, 2000 For the Seven Months For the Year Ended
(Unaudited) Ended August 31, 1999 January 31, 1999
----------------------------------------------------------------------------------------
Shares Dollars Shares Dollars Shares Dollars
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares
Shares sold 13,069,466 $318,854,368 40,503,629 $ 878,896,664 90,785,418 $ 1,949,815,404
Reinvestments of
dividends and distribu-
tions 4,008,168 93,991,541 -- -- 1,669,818 34,480,481
Shares repurchased (8,320,637) (205,604,232) (42,925,516) (937,796,470) (84,367,795) (1,819,683,956)
----------------------------------------------------------------------------------------
8,756,997 207,241,677 (2,421,887) (58,899,806) 8,087,441 164,611,929
------------------------------------------------------------------------------------------------------------
Class B Shares
Shares sold 309,129 7,453,264 231,545 5,004,374 794,593 17,488,784
Reinvestments of divi-
dends and distributions 335,760 7,745,988 -- -- 156,073 3,180,373
Shares repurchased (254,097) (6,117,266) (410,880) (8,878,625) (557,697) (11,834,003)
----------------------------------------------------------------------------------------
390,792 9,081,986 (179,335) (3,874,251) 392,969 8,835,154
------------------------------------------------------------------------------------------------------------
Class C Shares
Shares sold 995,911 23,225,574 3,386,747 71,812,024 6,644,608 139,922,460
Reinvestments of divi-
dends and distributions 52,341 1,194,420 -- -- 19,517 394,623
Shares repurchased (777,553) (18,117,937) (3,429,722) (73,325,070) (6,294,716) (133,220,855)
----------------------------------------------------------------------------------------
270,699 6,302,057 (42,975) (1,513,046) 369,409 7,096,228
------------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 3,720,476 92,308,216 3,229,820 73,161,867 2,805,737 62,386,145
Reinvestments of divi-
dends and distributions 763,388 18,168,651 -- -- 131,238 2,741,464
Shares repurchased (1,082,625) (26,704,529) (556,938) (12,395,514) (740,110) (16,145,728)
----------------------------------------------------------------------------------------
3,401,239 83,772,338 2,672,882 60,766,353 2,196,865 48,981,881
------------------------------------------------------------------------------------------------------------
Service Shares
Shares sold 22,927 568,344 23,838 517,017 78,227 1,765,950
Reinvestments of divi-
dends and distributions 19,583 459,612 -- -- 8,677 179,257
Shares repurchased (21,986) (539,758) (20,037) (436,802) (77,199) (1,698,555)
----------------------------------------------------------------------------------------
20,524 488,198 3,801 80,215 9,705 246,652
------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) 12,840,251 $306,886,256 32,486 $ (3,440,535) 11,056,389 $ 229,771,844
------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from
investment operations(a) Distributions to shareholders
--------------------------- ------------------------------------
Net asset Net In excess
value, investment Net realized From net of net
beginning income and unrealized investment investment From net
of period (loss) gain (loss) income income realized gains
FOR THE SIX MONTHS ENDED FEBRUARY 29, (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
2000 - Class A Shares $23.12 $(0.09)(e) $4.95(e) $(0.03) $(0.31) $(2.57)
2000 - Class B Shares 22.73 (0.14)(e) 4.86(e) (0.02) (0.22) (2.57)
2000 - Class C Shares 22.54 (0.14)(e) 4.84(e) (0.03) (0.26) (2.57)
2000 - Institutional
Shares 23.49 (0.01)(e) 5.04(e) (0.04) (0.42) (2.57)
2000 - Service Shares 23.14 (0.07)(e) 4.98(e) (0.03) (0.33) (2.57)
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares 21.92 0.04 1.16 -- -- --
1999 - Class B Shares 21.63 (0.02) 1.12 -- -- --
1999 - Class C Shares 21.45 (0.03) 1.12 -- -- --
1999 - Institutional
Shares 22.20 0.12(e) 1.17(e) -- -- --
1999 - Service Shares 21.93 0.06 1.15 -- -- --
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 19.85 (0.06) 3.24 -- -- (1.11)
1999 - Class B Shares 19.70 (0.17) 3.21 -- -- (1.11)
1999 - Class C Shares 19.56 (0.15) 3.15 -- -- (1.11)
1999 - Institutional
Shares 19.97 0.03 3.31 -- -- (1.11)
1999 - Service Shares 19.84 (0.04) 3.24 -- -- (1.11)
-----------------------------------------------------------------------------------------------------
1998 - Class A Shares 19.32 0.03 2.04 -- (0.30) (1.24)
1998 - Class B Shares 19.24 (0.08) 2.02 -- (0.25) (1.23)
1998 - Class C Shares
(commenced August 15,
1997) 22.60 (0.04) (1.38) -- (0.38) (1.24)
1998 - Institutional
Shares 19.40 0.10 2.11 (0.07) (0.33) (1.24)
1998 - Service Shares 19.34 0.02 2.06 -- (0.35) (1.23)
-----------------------------------------------------------------------------------------------------
1997 - Class A Shares 17.20 0.10 2.23 -- -- (0.21)
1997 - Class B Shares
(commenced May 1, 1996) 18.91 (0.06) 0.60 -- -- (0.21)
1997 - Institutional
Shares (commenced Febru-
ary 7, 1996) 17.45 0.04 2.15 (0.03) -- (0.21)
1997 - Service Shares
(commenced March 6,
1996) 17.70 (0.02) 1.87 -- -- (0.21)
-----------------------------------------------------------------------------------------------------
1996 - Class A Shares 14.52 0.13 4.00 (0.58) -- (0.87)
-----------------------------------------------------------------------------------------------------
</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.
22
<PAGE>
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Ratios assuming no expense
limitations
--------------------------
Ratio of Ratio of
Net increase Net assets Ratio of net investment Ratio of net investment
(decrease) Net asset at end of net expenses income (loss) to expenses to income (loss) Portfolio
in net asset value, end Total period to average average net average net to average net turnover
value of period return(b) (in 000s) net assets assets assets assets rate
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1.95 $25.07 21.88%(c) $1,242,704 1.79%(d) (0.71)%(d) 1.84%(d) (0.76)%(d) 51.92%(c)
1.91 24.64 21.61(c) 84,093 2.29(d) (1.21)(d) 2.34(d) (1.26)(d) 51.92(c)
1.84 24.38 21.72(c) 18,756 2.29(d) (1.21)(d) 2.34(d) (1.26)(d) 51.92(c)
2.00 25.49 22.31(c) 282,594 1.14(d) (0.06)(d) 1.19(d) (0.11)(d) 51.92(c)
1.98 25.12 22.09(c) 4,696 1.64(d) (0.56)(d) 1.69(d) (0.61)(d) 51.92(c)
1.20 23.12 5.47(c) 943,473 1.79(d) 0.31(d) 1.84(d) 0.26(d) 61.10(c)
1.10 22.73 5.09(c) 68,691 2.29(d) (0.19)(d) 2.34(d) (0.24)(d) 61.10(c)
1.09 22.54 5.08(c) 11,241 2.29(d) (0.26)(d) 2.34(d) (0.31)(d) 61.10(c)
1.29 23.49 5.81(c) 180,564 1.14(d) 0.89(d) 1.19(d) 0.84(d) 61.10(c)
1.21 23.14 5.52(c) 3,852 1.64(d) 0.47(d) 1.69(d) 0.42(d) 61.10(c)
2.07 21.92 16.39 947,973 1.73 (0.28) 1.82 (0.37) 113.79
1.93 21.63 15.80 69,231 2.24 (0.79) 2.32 (0.87) 113.79
1.89 21.45 15.70 11,619 2.24 (0.98) 2.32 (1.06) 113.79
2.23 22.20 17.09 111,315 1.13 0.23 1.21 0.15 113.79
2.09 21.93 16.49 3,568 1.63 (0.18) 1.71 (0.26) 113.79
- --------------------------------------------------------------------------------------------------------------------------
0.53 19.85 11.12 697,590 1.67 (0.27) 1.80 (0.40) 40.82
0.46 19.70 10.51 55,324 2.20 (0.90) 2.30 (1.00) 40.82
(3.04) 19.56 (5.92)(c) 3,369 2.27(d) (1.43)(d) 2.37(d) (1.53)(d) 40.82
0.57 19.97 11.82 56,263 1.08 0.30 1.18 0.20 40.82
0.50 19.84 11.25 3,035 1.55 (0.36) 1.65 (0.46) 40.82
- --------------------------------------------------------------------------------------------------------------------------
2.12 19.32 13.48 536,283 1.69 (0.07) 1.88 (0.26) 38.01
0.33 19.24 2.83(c) 19,198 2.23(d) (0.97)(d) 2.38(d) (1.12)(d) 38.01
1.95 19.40 12.53(c) 68,374 1.10(d) 0.43(d) 1.25(d) 0.28(d) 38.01
1.64 19.34 10.42(c) 674 1.60(d) (0.40)(d) 1.75(d) (0.55)(d) 38.01
- --------------------------------------------------------------------------------------------------------------------------
2.68 17.20 28.68 330,860 1.52 0.26 1.77 0.01 68.48
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
GOLDMAN SACHS FUND PROFILE
Goldman Sachs International Equity Fund
An Investment Idea for the Long Term
History has shown that a long-term plan that includes international stocks
can help provide greater protection against market volatility over time
than a portfolio that invests only in U.S. stocks.
Goldman Sachs International Equity Fund offers investors access to the
benefits associated with international market diversification. The Fund
seeks long-term capital growth, primarily through equity securities of
companies that are organized outside the United States or whose securities
are principally traded outside the United States.
Target Your Needs
The Goldman Sachs International Equity 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.)
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]
ASSET ALLOCATION SPECIALTY
Higher Risk/Return
INTERNATIONAL EQUITY
. Goldman Sachs International Equity Fund
DOMESTIC EQUTIY
FIXED INCOME
MONEY MARKET
Lower Risk/Return
For More Information
To learn more about the Goldman Sachs International Equity 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 & CO.
Distributor and Transfer Agent
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
Investment Adviser
GOLDMAN SACHS INTERNATIONAL
Peterborough Court, 133 Fleet Street
London EC4A 2BB, England
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.
Emerging markets securities are volatile.They are subject to substantial
currency fluctuations and sudden economic and political develop- ments.At
times,the Fund may be unable to sell certain of its portfolio securities without
a substantial drop in price,if at all. Goldman,Sachs & Co.is the distributor of
the Fund.
Copyright 2000 Goldman,Sachs & Co. All rights reserved. Date of first use:
April 30,2000 / 00-528 INTLSAR / 88.5K / 4-00
