<PAGE>
Goldman Sachs Funds
SMALL CAP VALUE FUND Semiannual Report February 29, 2000
Long-term capital growth
potential through a portfolio of
smaller capitalization companies.
[GRAPHIC]
[LOGO OF GOLDMAN SACHS]
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE 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
the 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 SMALL CAP VALUE FUND
Fund Basics
as of February 29, 2000
Assets Under Management
$201.7 Million
Number of Holdings
78
NASDAQ SYMBOLS
Class A Shares
GSSMX
Class B Shares
GSQBX
Class C Shares
GSSCX
Institutional Shares
GSSIX
Service Shares
GSSSX
- --------------------------------------------------------------------------------
PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
August 31,1999- Fund Total Return Russell 2000 Russell 2000
February 29,2000 (without sales charge)1 Value Index2 Growth Index2
- --------------------------------------------------------------------------------
Class A -6.92% 2.82% 35.81%
Class B -7.32 2.82 35.81
Class C -7.26 2.82 35.81
Institutional -6.77 2.82 35.81
Service -6.98 2.82 35.81
- --------------------------------------------------------------------------------
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 Russell 2000 Value Index (with dividends reinvested), an unmanaged
index of common stock prices, replaced the unmanaged Russell 2000 Growth
Index as of 11/30/99 as the Small Cap Value Fund's performance benchmark.
The Russell 2000 Value Index includes more value-oriented stocks and,
therefore, is expected to be a better benchmark comparison for the Fund's
performance. The Russell 2000 Index is an unmanaged index of common stock
prices. 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 -18.26% -18.12% -14.67% 13.32% -13.54%
One Year -7.55 -7.72 -3.84 -1.74 -2.28
Five Years 5.77 N/A N/A N/A 6.944
Since Inception 7.65 1.13 -6.15 -5.12 8.474
(10/22/92) (5/1/96) (8/15/97) (8/15/97) (10/22/92)
- ---------------------------------------------------------------------------------------------------
</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 8/15/97 is that of the Class A
shares (excluding the impact of the front-end sales charge applicable to
Class A shares since Service shares are not subject to any sales charges).
Performance of Class A shares of the Small Cap Value 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.
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 2/29/00
- --------------------------------------------------------------------------------
Holding % of Total Net Assets Line of Business
- --------------------------------------------------------------------------------
General Semiconductor, Inc. 3.0% Semiconductors
Career Education Corp. 3.0 Industrial Services
Teekay Shipping Corp. 2.7 Truck Freight
PXRE Group, Ltd. 2.5 Property Insurance
Pacific Century Financial Corp. 2.5 Banks
Denison International PLC ADR 2.5 Industrial Parts
Mentor Graphics Corp. 2.3 Computer Software
Landstar Systems, Inc. 2.1 Truck Freight
BlackRock, Inc. 2.1 Security/Asset Management
Fleming Cos., Inc. 2.1 Food & Beverage
- --------------------------------------------------------------------------------
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 SMALL CAP VALUE FUND
Performance Overview
Dear Shareholder,
We are pleased to report on the performance of the Goldman Sachs Small
Cap Value 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 total
cumulative returns, without sales charges, of -6.92%, -7.32%,
-7.26%, -6.77%, and -6.98%, respectively. These figures compare
to the 2.82% total cumulative return of the Fund's benchmark, the
Russell 2000 Value 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.
While the stock price performance of our value investments was
eclipsed by the extraordinary performance of technology stocks
during the period, most of our companies performed quite well
from an operating standpoint, generating good revenues, operating
profit and free cash flow. We have found some extremely
attractive valuation levels in our segment of the investment
universe, and we believe that patience will be rewarded. We
firmly believe that high quality should characterize our stock
selection within the value framework, and we find that we can
currently buy leading companies at attractive valuations.
Portfolio Composition
As we seek to add value through superior stock selection, we
spend the majority of our efforts performing thorough, first-hand
fundamental research. We rebuild, analyze and forecast the
financial statements of companies, and test our assumptions
through meetings and discussions with company management,
competitors, customers and suppliers. We seek to buy well
positioned businesses which sell at conservative valuation
levels. We also understand that our Small Cap Value clients seek
a fund which will be competitive with the Russell 2000 Value
Index over a long-term investment horizon, and we approach
careful risk management and thoughtful portfolio construction
based on that mandate.
2
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE 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.
Portfolio Highlights
. General Semiconductor, Inc.-- General Semiconductor contributed
positively to performance, as the recovery in the semiconductor
equipment industry and prospects for solid long-term earnings
improvements fueled strong gains.
. Career Education Corp.-- We invested in Career Education Corp., a
vocational education firm, based on our belief that its valuation was
extremely depressed relative to its solid school franchises,
substantial growth and free cash flow. The company was a top
contributor to the Fund's performance, as it rose on the heels of
outstanding enrollment growth and resulting positive earnings
revisions.
. Varian Medical Systems, Inc., Varian Inc.-- These stocks began trading
in 1999, when Varian Associates, Inc. split into three separate,
publicly traded medical, semiconductor and high-tech instrument
companies. We believed that both Varian Medical Systems and Varian
Inc. traded at a substantial discount to their fundamental value in
the wake of the split. In the case of Varian Semiconductor, the
rebound in the semiconductor industry augmented realization of value.
Portfolio Outlook
We believe that value investments continue to offer substantial upside
with limited downside potential. In the past two years, value's
divergence from growth, both in terms of performance and P/E, has been
the largest in history. As value investors, we see an unprecedented
array of strong, profitable, growing companies selling at compelling
prices in today's market. As such, we believe that the current
environment offers tremendous investment opportunity for long-term
investors.
We will continue to perform disciplined, first-hand, fundamental
research to identify quality businesses selling at conservative
valuations, companies that we believe possess the potential to deliver
superior long-term returns. Thank you for your continued confidence.
Goldman Sachs Small Cap Value Investment Team
New York
February 29, 2000
3
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE 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 SMALL CAP VALUE 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 October 22, 1992 (commencement of operations) in Class A
Shares (with maximum sales charge of 5.5%) in the Goldman Sachs Small Cap
Value Fund. For comparative purposes, the performance of the Fund's new
benchmark, the Russell 2000 Value Index as of November 30, 1999 and the
Fund's previous benchmark, the Russell 2000 Growth Index are shown. This per-
formance data represents past performance and should not be considered indic-
ative 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.
Small Cap Value Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions reinvested October 22, 1992 to
February 29, 2000.
[GRAPH]
Russell 2000 (growth) Russell 2000 Value Class A
10/22/92 10,000 10,000 9,450
OCT 10,187 10,233 9,620
NOV 10,966 10,866 10,120
DEC 11,348 11,317 10,857
Jan-93 11,731 11,918 11,138
FEB 11,460 11,966 11,138
MAR 11,832 12,420 11,752
APR 11,508 12,121 11,618
MAY 12,016 12,502 11,772
JUNE 12,091 12,621 12,266
JULY 12,258 12,838 12,606
Aug-93 12,787 13,340 13,341
SEPT 13,148 13,660 13,663
OCT 13,486 13,973 13,897
NOV 13,042 13,610 13,763
DEC 13,488 14,010 14,241
Jan-94 13,912 14,510 14,493
FEB 13,861 14,468 14,269
MAR 13,130 13,818 14,058
APR 13,207 13,955 13,925
MAY 13,059 13,935 13,883
JUNE 12,618 13,572 13,609
JULY 12,825 13,823 13,294
Aug-94 13,540 14,367 13,960
SEPT 13,495 14,215 14,009
OCT 13,442 13,955 13,461
NOV 12,899 13,393 12,835
DEC 13,246 13,796 12,131
Jan-95 13,080 13,728 11,953
FEB 13,624 14,236 12,508
MAR 13,858 14,306 12,738
APR 14,166 14,731 12,819
MAY 14,409 15,046 12,442
JUNE 15,157 15,560 12,501
JULY 16,030 16,128 13,108
Aug-95 16,362 16,607 13,716
SEPT 16,655 16,855 13,679
OCT 15,924 16,182 12,605
NOV 16,592 16,825 13,160
DEC 17,030 17,346 13,177
Jan-96 17,012 17,461 12,813
FEB 17,542 17,735 13,221
MAR 17,905 18,107 14,185
APR 18,863 18,602 15,407
MAY 19,607 19,072 16,608
JUNE 18,800 18,847 16,393
JULY 17,159 17,845 15,682
Aug-96 18,156 18,619 16,267
SEP 18,866 19,127 16,964
OCT 18,574 19,349 16,097
NOV 19,340 20,390 16,134
DEC 19,846 21,053 16,054
Jan-97 20,243 21,377 16,320
FEB 19,750 21,580 16,335
MAR 18,817 21,002 16,515
APR 18,870 21,311 16,304
MAY 20,970 23,007 18,130
JUNE 21,870 24,171 18,942
JULY 22,887 25,186 19,200
Aug-97 23,411 25,587 19,886
SEP 25,125 27,288 21,805
OCT 24,021 26,546 21,169
NOV 23,865 26,838 20,589
DEC 24,283 27,748 20,899
JAN '98 23,899 27,246 20,591
FEB 25,665 28,894 22,132
MAR 26,979 30,067 23,681
APR 27,127 30,214 24,452
MAY 25,665 29,145 23,656
JUNE 25,719 28,979 22,611
JULY 23,636 26,710 20,428
Aug-98 19,046 22,527 15,847
SEP 20,537 23,800 15,323
OCT 21,375 24,507 16,251
NOV 22,495 25,171 17,124
DEC 23,888 25,961 17,372
JAN '99 24,205 25,372 17,014
FEB 22,245 23,639 15,681
MAR 22,592 23,445 15,102
APR 24,616 25,586 17,097
MAY 24,975 26,371 18,374
JUNE 26,104 27,326 19,652
JULY 25,389 26,678 18,871
Aug-99 24,449 25,702 18,200
SEP 24,454 25,188 17,363
OCT 24,555 24,684 15,939
NOV 26,021 24,812 16,518
DEC 28,966 25,574 16,996
JAN '00 28,500 24,904 16,839
FEB 33,205 26,426 16,940
<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 October 22, 1992)
Excluding sales charges 8.25% 6.25% 8.01% -6.92%
Including sales charges 7.42% 5.06% 2.10% -12.03%
---------------------------------------------------------------------------------------------------
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges 1.74% n/a 7.05% -7.32%
Including contingent deferred sales charges 0.94% n/a 2.07% -11.95%
---------------------------------------------------------------------------------------------------
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges -5.97% n/a 7.11% -7.26%
Including contingent deferred sales charges -5.97% n/a 6.11% -8.19%
---------------------------------------------------------------------------------------------------
Institutional Class (commenced August 15, 1997) -4.94% n/a 8.30% -6.77%
---------------------------------------------------------------------------------------------------
Service Class (commenced August 15, 1997) -5.37% n/a 7.72% -6.98%
---------------------------------------------------------------------------------------------------
</TABLE>
(a)Not annualized.
5
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Investments
February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 97.5%
Apparel - 1.2%
884,300 Burlington Industries, Inc.* $ 2,487,094
---------------------------------------------------------------
Banks - 5.9%
131,200 BancWest Corp. 1,992,600
88,100 Community First Bankshares, Inc. 1,233,400
337,200 Pacific Century Financial Corp. 5,121,225
126,500 Susquehanna Bancshares, Inc. 1,850,062
199,900 The Colonial BancGroup, Inc. 1,774,113
------------
11,971,400
---------------------------------------------------------------
Chemicals - 3.2%
1,318,800 Methanex Corp.* 3,049,725
242,000 Millennium Chemicals, Inc. 3,388,000
------------
6,437,725
---------------------------------------------------------------
Clothing - 0.8%
263,500 Venator Group, Inc.* 1,498,656
---------------------------------------------------------------
Computer Hardware - 2.3%
93,400 Hutchinson Technology, Inc.* 1,687,037
139,700 Tech Data Corp.* 3,029,744
------------
4,716,781
---------------------------------------------------------------
Computer Software - 2.3%
269,400 Mentor Graphics Corp.* 4,613,475
---------------------------------------------------------------
Construction - 7.0%
40,600 Alexandria Real Estate Equities, Inc. 1,240,837
107,500 Catellus Development Corp. 1,323,594
52,000 CenterPoint Properties Corp. 1,888,250
19,600 Coflexip SA ADR 878,325
61,400 LNR Property Corp. 1,197,300
109,100 Prentiss Properties Trust 2,243,369
60,300 Reckson Associates Realty Corp. 1,115,550
183,200 RFS Hotel Investors, Inc. 1,946,500
35,200 Storage USA, Inc. 1,106,600
96,500 Trammell Crow Co.* 1,158,000
------------
14,098,325
---------------------------------------------------------------
Drugs - 1.3%
111,300 Bergen Brunswig Corp. 549,544
8,300 PE Corp - Celera Genomics Group* 2,025,200
------------
2,574,744
---------------------------------------------------------------
Electrical Utilities - 1.8%
35,100 Bangor Hydro-Electric Co. 535,275
199,000 Public Service Co. of New Mexico 3,059,625
------------
3,594,900
---------------------------------------------------------------
Energy Resources - 1.6%
277,100 Swift Energy Co.* 3,273,244
---------------------------------------------------------------
Financial Services - 1.9%
58,800 Allied Capital Corp. 1,021,650
106,333 Insignia Financial Group, Inc.* 1,262,704
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Financial Services - (continued)
54,000 Waddell & Reed Financial, Inc. Class B $ 1,464,750
------------
3,749,104
----------------------------------------------------------------
Food & Beverage - 2.9%
269,800 Fleming Cos., Inc. 4,165,038
95,900 International Home Foods, Inc.* 1,624,306
------------
5,789,344
----------------------------------------------------------------
Forest - 1.3%
370,600 Lydall, Inc. 2,617,363
----------------------------------------------------------------
Gas Utilities - 0.9%
54,900 Indiana Energy, Inc. 895,556
46,900 Laclede Gas Co. 938,000
------------
1,833,556
----------------------------------------------------------------
Heavy Electrical - 3.6%
158,800 Belden, Inc. 3,592,850
246,100 UCAR International, Inc.* 3,753,025
------------
7,345,875
----------------------------------------------------------------
Heavy Machinery - 2.5%
278,400 AGCO Corp. 3,062,400
259,200 Titan International, Inc. 1,911,600
------------
4,974,000
----------------------------------------------------------------
Hotels - 1.7%
393,800 Prime Hospitality Corp.* 3,347,300
----------------------------------------------------------------
Industrial Parts - 5.5%
448,700 Denison International PLC ADR* 5,103,962
258,700 Milacron, Inc. 3,589,463
201,700 UNOVA, Inc.* 2,332,156
------------
11,025,581
----------------------------------------------------------------
Industrial Services - 5.1%
161,400 Career Education Corp.* 6,052,500
188,500 ITT Educational Services, Inc.* 2,262,000
124,100 Modis Professional Services, Inc.* 1,954,575
------------
10,269,075
----------------------------------------------------------------
Information Services - 2.0%
141,300 Advo, Inc.* 3,921,075
----------------------------------------------------------------
Leisure - 2.0%
68,700 GTECH Holdings Corp.* 1,374,000
148,012 Movado Group, Inc. 2,664,216
------------
4,038,216
----------------------------------------------------------------
Life Insurance - 1.2%
429,500 ESG Re Ltd. 2,362,250
----------------------------------------------------------------
Media - 1.8%
69,900 Media General, Inc. 3,612,956
----------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Investments
February 29, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Medical Products - 3.3%
152,300 Haemonetics Corp.* $ 3,626,644
75,400 Varian Medical Systems, Inc. 3,011,287
------------
6,637,931
--------------------------------------------------------------------
Medical Providers - 2.9%
1,225,600 Beverly Enterprises, Inc.* 3,217,200
324,100 Foundation Health Systems, Inc.* 2,694,081
------------
5,911,281
--------------------------------------------------------------------
Mining - 3.1%
168,500 American National Can Group, Inc. 1,685,000
158,700 Ispat International NV 1,993,669
192,100 Wolverine Tube, Inc.* 2,485,294
------------
6,163,963
--------------------------------------------------------------------
Oil Refining - 1.8%
141,100 Valero Energy Corp. 3,598,050
--------------------------------------------------------------------
Property Insurance - 6.4%
40,200 Financial Security Assurance Holdings Ltd. 1,809,000
364,400 PXRE Group Ltd. 5,124,375
53,165 Radian Group, Inc. 1,844,161
196,700 Zenith National Insurance Corp. 4,155,287
------------
12,932,823
--------------------------------------------------------------------
Publishing - 1.2%
119,000 Lee Enterprises, Inc. 2,476,688
--------------------------------------------------------------------
Real Estate - 1.5%
51,400 AvalonBay Communities, Inc. 1,734,750
40,000 Cousins Properties, Inc. 1,420,000
------------
3,154,750
--------------------------------------------------------------------
Restaurants - 2.8%
168,600 CBRL Group, Inc. 1,559,550
240,000 Morton's Restaurant Group, Inc.* 4,140,000
------------
5,699,550
--------------------------------------------------------------------
Security/Asset Management - 2.1%
197,700 BlackRock, Inc.* 4,287,619
--------------------------------------------------------------------
Semiconductors - 4.7%
362,800 General Semiconductor, Inc.* 6,054,225
130,200 MEMC Electronic Materials, Inc.* 2,270,362
27,677 Vishay Intertechnology, Inc.* 1,190,111
------------
9,514,698
--------------------------------------------------------------------
Specialty Retail - 1.0%
129,800 Brookstone, Inc.* 2,076,800
--------------------------------------------------------------------
Thrifts - 1.5%
415,400 Sovereign Bancorp, Inc. 3,011,650
--------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Truck Freight - 5.4%
73,600 Hub Group, Inc.* $ 1,315,600
76,700 Landstar Systems, Inc.* 4,309,582
248,600 Teekay Shipping Corp. 5,344,900
------------
10,970,082
-------------------------------------------------
TOTAL COMMON STOCKS
(Cost $216,404,291) $196,587,924
-------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - 0.1%
J. Baker, Inc.
$300,000 7.00% 06/01/2002 $ 232,125
------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $299,552) $ 232,125
------------------------------------------------------------------------------------------------
Repurchase Agreement - 1.2%
Joint Repurchase Agreement Account II
$2,400,000 5.86% 03/01/2000 $ 2,400,000
------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $2,400,000) $ 2,400,000
------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $219,103,843) $199,220,049
------------------------------------------------------------------------------------------------
</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.
7
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Assets and Liabilities
February 29, 2000 (Unaudited)
Assets:
<TABLE>
<S> <C>
Investment in securities, at value (identified cost
$219,103,843) $199,220,049
Cash 97,278
Receivables:
Investment securities sold 6,826,921
Dividends and interest 230,118
Fund shares sold 37,975
Reimbursement from adviser 35,542
Other assets 1,461
------------------------------------------------------------------------------
Total assets 206,449,344
------------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased 3,461,426
Fund shares repurchased 932,951
Amounts owed to affiliates 248,358
Accrued expenses and other liabilities 122,544
------------------------------------------------------------------------------
Total liabilities 4,765,279
------------------------------------------------------------------------------
Net Assets:
Paid-in capital 286,161,502
Accumulated undistributed net investment loss (169,288)
Accumulated net realized loss on investment transactions (64,424,355)
Net unrealized loss on investments (19,883,794)
------------------------------------------------------------------------------
NET ASSETS $201,684,065
------------------------------------------------------------------------------
Net asset value, offering and redemption price per share:(a)
Class A $18.43
Class B $17.86
Class C $17.88
Institutional $18.60
Service $18.38
------------------------------------------------------------------------------
Shares outstanding:
Class A 8,013,902
Class B 1,434,696
Class C 352,222
Institutional 1,193,368
Service 1,581
------------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number of
shares authorized) 10,995,769
------------------------------------------------------------------------------
</TABLE>
(a) Maximum public offering price per share (NAV per share multiplied by
1.0582) for Class A shares is $19.50. At redemption, Class B and Class C
Shares may be subject to a contingent deferred sales charge, assessed on
the amount equal to the lesser of the current net asset value or the
original purchase price of the shares.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
Statement of Operations
For the Six Months Ended February 29, 2000 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Dividends(a) $ 1,507,486
Interest 166,645
-------------------------------------------------------------------------
Total income 1,674,131
-------------------------------------------------------------------------
Expenses:
Management fees 1,165,007
Distribution and Service fees(b) 400,246
Transfer Agent fees(c) 203,497
Custodian fees 27,954
Professional fees 22,905
Registration fees 16,870
Trustee fees 4,818
Service share fees 108
Other 66,448
-------------------------------------------------------------------------
Total expenses 1,907,853
-------------------------------------------------------------------------
Less-expenses reimbursed (64,434)
-------------------------------------------------------------------------
Net expenses 1,843,419
-------------------------------------------------------------------------
NET INVESTMENT LOSS (169,288)
-------------------------------------------------------------------------
Realized and unrealized loss on investment transactions:
Net realized loss from:
Investment transactions (18,683,518)
Net change in unrealized loss on:
Investments (1,809,709)
-------------------------------------------------------------------------
Net realized and unrealized loss on investment and option
transactions (20,493,227)
-------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(20,662,515)
-------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $4,991.
(b) Class A, Class B and Class C had Distribution and Service fees of
$215,245, $150,435 and $34,566, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
Transfer Agent fees of $163,586, $28,583, $6,568, $4,751 and $9, respective-
ly.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the For the
Six Months Ended Seven-Month For the
February 29, 2000 Period Ended Year Ended
(Unaudited) August 31, 1999 January 31, 1999
<S> <C> <C> <C>
From operations:
Net investment loss $ (169,288) $ (764,389) $ (1,430,151)
Net realized loss on
investment transactions (18,683,518) (24,597,058) (21,053,205)
Net change in unrealized
gain (loss) on
investments (1,809,709) 42,816,511 (75,425,946)
--------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (20,662,515) 17,455,064 (97,909,302)
--------------------------------------------------------------------------------
Distributions to share-
holders:
From net realized gain
on investment
transactions
Class A Shares -- -- (20,135,069)
Class B Shares -- -- (2,897,126)
Class C Shares -- -- (512,006)
Institutional Shares -- -- (946,473)
Service Shares -- -- (16,422)
--------------------------------------------------------------------------------
Total distributions to
shareholders -- -- (24,507,096)
--------------------------------------------------------------------------------
From share transactions:
Proceeds from sales of
shares 14,447,956 96,142,667 285,768,961
Reinvestment of
dividends and
distributions -- -- 22,881,335
Cost of shares
repurchased (75,146,421) (158,916,521) (291,025,366)
--------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from share transactions (60,698,465) (62,773,854) 17,624,930
--------------------------------------------------------------------------------
TOTAL DECREASE (81,360,980) (45,318,790) (104,791,468)
--------------------------------------------------------------------------------
Net assets:
Beginning of period 283,045,045 328,363,835 433,155,303
--------------------------------------------------------------------------------
End of period $201,684,065 $ 283,045,045 $328,363,835
--------------------------------------------------------------------------------
Accumulated
undistributed net
investment loss $ (169,288) -- --
--------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE 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 Small Cap Value
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 Funds
from January 31 to August 31. Accordingly, the Statement of Changes in Net
Assets, Summary of Share Transactions and the Financial Highlights of the
Fund are included for the seven-month period 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
Trust's Board of Trustees.
B. Security Transactions and Investment Income -- Security transactions are
recorded as of the trade date. Realized gains and losses on sales of portfo-
lio securities are calculated using the identified-cost basis. Dividend in-
come is recorded on the ex-dividend date. Dividends for which the Fund has
the choice to receive either cash or stock are recognized as investment in-
come in an amount equal to the cash dividend. Interest income is recorded on
the basis of interest accrued, premium amortized and discount earned.
C. 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.
The Fund had approximately $43,533,000 at August 31, 1999 (the Fund's tax
year-end) of capital loss carryforward expiring in 2007 for federal tax pur-
poses. This amount is available to be carried forward to offset future capi-
tal gains to the extent permitted by applicable laws or regulations.
At February 29, 2000 the aggregate cost of portfolio securities for federal
income tax purposes is $220,176,121. Accordingly, the gross unrealized gain
on investments was $28,666,681 and the gross unrealized loss on investments
was $49,622,753 resulting in a net unrealized loss of $20,956,072.
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.
11
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
Notes to Financial Statements
February 29, 2000 (Unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective Distribution and Service plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions. Each class of Shares of the Fund separately 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
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. 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
supervision of the Trust's Board of Trustees, manages the Fund's portfolio.
As compensation for the services rendered pursuant to the Agreement, the
assumption of the expenses related thereto and administering the Fund's
business affairs, including providing facilities, the adviser is entitled to
a fee, computed daily and payable monthly, at an annual rate equal to 1.00%
of the average daily net assets of the Fund.
The investment adviser has voluntarily agreed to limit certain "Other
Expenses" of the Fund (excluding Management fees, Distribution and Service
fees, Transfer Agent fees, taxes, interest, brokerage, litigation, Service
Share fees, indemnification costs and other extraordinary expenses) to the
extent such expenses exceed, on an annual basis, 0.06% of the average daily
net assets of the Fund. For the period ended February 29, 2000, Goldman Sachs
reimbursed approximately $64,000.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and/or autho-
rized dealers are entitled to a monthly fee from the Fund for distribution
and shareholder maintenance services equal, on an annual basis, to 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 $59,000 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
payable monthly at an annual rate as follows: 0.19% of the average daily net
assets for Class A, Class B and Class C Shares and .04% of the average daily
net assets for Institutional and Service shares.
12
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
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
.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
$164,000, $56,000, and $28,000 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 and options transactions) for the period ended February 29,
2000 were $80,848,258 and $142,422,244 respectively.
For the period ended February 29, 2000, Goldman Sachs earned approximately
$502,000 of brokerage commissions from portfolio transactions.
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.
13
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
Notes to Financial Statements (continued)
February 29, 2000 (Unaudited)
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying
securities, including accrued interest, is required to equal or exceed the
value of the repurchase agreement. The underlying securities for all
repurchase agreements are held in safekeeping at the Fund's custodian.
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having
management agreements with GSAM or its affiliates, transfers uninvested cash
into joint accounts, the daily aggregate balance of which is invested in one
or more repurchase agreements.
At February 29, 2000, the Fund had an undivided interest in the repurchase
agreements in the joint account which equaled $2,400,000 in principal amount.
At February 29, 2000, the following repurchase agreements held in this joint
account were fully collateralized by Federal Agency obligations:
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Banc of America Securities LLC $1,650,000,000 5.86% 03/01/2000 $1,650,000,000
------------------------------------------------------------------------------------------
Bear Stearns Companies, Inc. 200,000,000 5.86 03/01/2000 200,000,000
------------------------------------------------------------------------------------------
Chase Securities, Inc. 300,000,000 5.86 03/01/2000 300,000,000
------------------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette, Inc. 500,000,000 5.85 03/01/2000 500,000,000
------------------------------------------------------------------------------------------
Salomon Smith Barney Holdings, Inc. 812,000,000 5.86 03/01/2000 812,000,000
------------------------------------------------------------------------------------------
Warburg Dillon Read 800,000,000 5.86 03/01/2000 800,000,000
------------------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT II $4,262,000,000
------------------------------------------------------------------------------------------
</TABLE>
8. CHANGE IN INDEPENDENT ACCOUNTANTS
On October 26, 1999 the Board of Trustees of the Fund upon the recommendation
of the Board's audit committee, determined not to retain Arthur Andersen LLP
and approved a change of the Fund's independent accountants to
PricewaterhouseCoopers LLP. For the period ended August 31, 1999 and the 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 An-
dersen LLP would have caused them to make reference to the disagreement in
their report.
14
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
9. SUMMARY OF SHARE TRANSACTIONS
Share activity is as follows:
<TABLE>
<CAPTION>
For the Six Months
Ended February 29, 2000
(Unaudited)
------------------------
Shares Dollars
-----------------------------------------------------------------------
<S> <C> <C>
Class A Shares
Shares sold 629,146 $ 11,621,204
Reinvestments of dividends and distributions -- --
Shares repurchased (3,249,197) (59,227,248)
---------------
(2,620,051) (47,606,044)
-----------------------------------------------------------------------
Class B Shares
Shares sold 72,334 1,283,714
Reinvestments of dividends and distributions -- --
Shares repurchased (577,926) (10,230,777)
---------------
(505,592) (8,947,063)
-----------------------------------------------------------------------
Class C Shares
Shares sold 60,687 1,081,051
Reinvestments of dividends and distributions -- --
Shares repurchased (127,411) (2,251,520)
---------------
(66,724) (1,170,469)
-----------------------------------------------------------------------
Institutional Shares
Shares sold 25,128 461,987
Reinvestments of dividends and distributions -- --
Shares repurchased (186,038) (3,413,313)
---------------
(160,910) (2,951,326)
-----------------------------------------------------------------------
Service Shares
Shares sold -- --
Reinvestments of dividends and distributions -- --
Shares repurchased (1,312) (23,563)
---------------
(1,312) (23,563)
-----------------------------------------------------------------------
NET DECREASE (3,354,589) $(60,698,465)
-----------------------------------------------------------------------
</TABLE>
15
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
9. SUMMARY OF SHARE TRANSACTIONS (continued)
Share activity is as follows:
<TABLE>
<CAPTION>
For the Seven-Month
Period Ended August 31,
1999
-------------------------
Shares Dollars
------------------------------------------------------------------------
<S> <C> <C>
Class A Shares
Shares sold 3,974,603 $ 75,211,330
Reinvestments of dividends and distributions -- --
Shares repurchased (7,479,721) (141,251,011)
----------------
(3,505,118) (66,039,681)
------------------------------------------------------------------------
Class B Shares
Shares sold 223,866 4,216,615
Reinvestments of dividends and distributions -- --
Shares repurchased (652,859) (11,537,114)
----------------
(428,993) (7,320,499)
------------------------------------------------------------------------
Class C Shares
Shares sold 121,721 2,343,776
Reinvestments of dividends and distributions -- --
Shares repurchased (156,184) (2,743,702)
----------------
(34,463) (399,926)
------------------------------------------------------------------------
Institutional Shares
Shares sold 693,113 14,235,041
Reinvestments of dividends and distributions -- --
Shares repurchased (163,344) (3,050,873)
----------------
529,769 11,184,168
------------------------------------------------------------------------
Service Shares
Shares sold 7,750 135,905
Reinvestments of dividends and distributions -- --
Shares repurchased (18,993) (333,821)
----------------
(11,243) (197,916)
------------------------------------------------------------------------
NET DECREASE (3,450,048) $ (62,773,854)
------------------------------------------------------------------------
</TABLE>
16
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
9. SUMMARY OF SHARE TRANSACTIONS (continued)
Share activity is as follows:
<TABLE>
<CAPTION>
For the Year Ended
January 31, 1999
--------------------------
Shares Dollars
-------------------------------------------------------------------------
<S> <C> <C>
Class A Shares
Shares sold 11,250,168 $ 248,147,068
Reinvestments of dividends and distributions 1,120,125 18,887,752
Shares repurchased (13,625,605) (275,189,998)
------------------
(1,255,312) (8,155,178)
-------------------------------------------------------------------------
Class B Shares
Shares sold 1,020,790 24,298,444
Reinvestments of dividends and distributions 159,248 2,632,705
Shares repurchased (609,437) (12,177,880)
------------------
570,601 14,753,269
-------------------------------------------------------------------------
Class C Shares
Shares sold 348,913 8,014,845
Reinvestments of dividends and distributions 24,492 404,852
Shares repurchased (156,144) (3,072,836)
------------------
217,261 5,346,861
-------------------------------------------------------------------------
Institutional Shares
Shares sold 191,950 5,013,154
Reinvestments of dividends and distributions 55,467 939,606
Shares repurchased (30,030) (583,311)
------------------
217,387 5,369,449
-------------------------------------------------------------------------
Service Shares
Shares sold 13,163 295,450
Reinvestments of dividends and distributions 974 16,240
Shares repurchased (71) (1,341)
------------------
14,066 310,529
-------------------------------------------------------------------------
NET INCREASE (DECREASE) (235,997) $ 17,624,930
-------------------------------------------------------------------------
</TABLE>
17
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income (loss) from Distributions to
investment operations(a) shareholders
------------------------------- -------------------------
Net asset In excess Net increase
value, Net Net realized and of net (decrease)
beginning investment unrealized investment From net in net asset
of period income (loss) gain (loss) income realized gains value
FOR THE SIX MONTHS ENDED FEBRUARY 29, (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
2000 - Class A Shares $19.80 $(0.01)(e) $(1.36)(e) $ -- $ -- $(1.37)
2000 - Class B Shares 19.27 (0.07)(e) (1.34)(e) -- -- (1.41)
2000 - Class C Shares 19.28 (0.07)(e) (1.33)(e) -- -- (1.40)
2000 - Institutional
Shares 19.95 0.03 (e) (1.38)(e) -- -- (1.35)
2000 - Service Shares 19.76 (0.02)(e) (1.36)(e) -- -- (1.38)
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares 18.51 (0.05) 1.34 -- -- 1.29
1999 - Class B Shares 18.10 (0.12) 1.29 -- -- 1.17
1999 - Class C Shares 18.12 (0.11) 1.27 -- -- 1.16
1999 - Institutional
Shares 18.62 -- 1.33 -- -- 1.33
1999 - Service Shares 18.50 (0.13) 1.39 -- -- 1.26
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares 24.05 (0.06) (4.48) -- (1.00) (5.54)
1999 - Class B Shares 23.73 (0.21) (4.42) -- (1.00) (5.63)
1999 - Class C Shares 23.73 (0.18) (4.43) -- (1.00) (5.61)
1999 - Institutional
Shares 24.09 0.03 (4.50) -- (1.00) (5.47)
1999 - Service Shares 24.05 (0.04) (4.51) -- (1.00) (5.55)
-----------------------------------------------------------------------------------------------------------
1998 - Class A Shares 20.91 0.14 5.33 -- (2.33) 3.14
1998 - Class B Shares 20.80 (0.01) 5.27 -- (2.33) 2.93
1998 - Class C Shares
(commenced August
15, 1997) 24.69 (0.06) 1.43 (0.34) (1.99) (0.96)
1998 - Institutional
Shares (commenced August
15, 1997) 24.91 0.03 1.48 (0.28) (2.05) (0.82)
1998 - Service Shares
(commenced August 15,
1997) 24.91 (0.01) 1.48 (0.31) (2.02) (0.86)
-----------------------------------------------------------------------------------------------------------
1997 - Class A Shares 17.29 (0.21) 4.92 -- (1.09) 3.62
1997 - Class B Shares
(commenced May 1, 1996) 20.79 (0.11) 1.21 -- (1.09) 0.01
-----------------------------------------------------------------------------------------------------------
1996 - Class A Shares 16.14 (0.23) 1.39 -- (0.01) 1.15
-----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions, a complete
redemption of the investment at the net asset value at the end of
the period and no sales or redemption charges. Total return would be
reduced if a sales or redemption charge were taken into account.
(c) Annualized.
(d) Not annualized.
(e) Calculated based on the average shares outstanding methodology.
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
GOLDMAN SACHS SMALL CAP VALUE FUND
<TABLE>
<CAPTION>
Ratios assuming no voluntary
waiver of fees or expense limitations
-------------------------------------
Net assets Ratio of Ratio of
Net asset at end of Ratio of net investment Ratio of net investment Portfolio
value, end Total period net expenses to income (loss) to expenses to income (loss) to turnover
of period return(b) (in 000s) average net assets average net assets average net assets average net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$18.43 (6.92)%(d) $147,588 1.50%(c) (0.06)% 1.56%(c) (0.12)% 36.69%(d)
17.86 (7.32)(d) 25,598 2.25(c) (0.82) 2.31(c) (0.88) 36.69(d)
17.88 (7.26)(d) 6,293 2.25(c) (0.80) 2.31(c) (0.86) 36.69(d)
18.60 (6.77)(d) 22,176 1.10(c) (0.36) 1.16(c) 0.30 36.69(d)
18.38 (6.98)(d) 29 1.60(c) (0.23) 1.66(c) (0.29) 36.69(d)
19.80 6.97(d) 210,500 1.50(c) (0.35)(c) 1.61(c) (0.46)(c) 46.95(d)
19.27 6.46(d) 37,386 2.25(c) (1.10)(c) 2.36(c) (1.21)(c) 46.95(d)
19.28 6.40(d) 8,079 2.25(c) (1.10)(c) 2.36(c) (1.21)(c) 46.95(d)
19.95 7.14(d) 27,023 1.10(c) 0.05(c) 1.21(c) (0.06)(c) 46.95(d)
19.76 6.81(d) 57 1.60(c) (0.41)(c) 1.71(c) (0.52)(c) 46.95(d)
18.51 (17.37) 261,661 1.50 (0.24) 1.74 (0.48) 98.46
18.10 (18.00) 42,879 2.25 (0.99) 2.29 (1.03) 98.46
18.12 (17.91) 8,212 2.25 (0.99) 2.29 (1.03) 98.46
18.62 (17.04) 15,351 1.13 0.13 1.17 0.09 98.46
18.50 (17.41) 261 1.62 (0.47) 1.66 (0.51) 98.46
-------------------------------------------------------------------------------------------------------------------------------
24.05 26.17 370,246 1.54 (0.28) 1.76 (0.50) 84.81
23.73 25.29 42,677 2.29 (0.92) 2.29 (0.92) 84.81
23.73 5.51(d) 5,604 2.09(c) (0.79)(c) 2.09(c) (0.79)(c) 84.81
24.09 6.08(d) 14,626 1.16(c) 0.27(c) 1.16(c) 0.27(c) 84.81
24.05 5.91(d) 2 1.45(c) (0.07)(c) 1.45(c) (0.07)(c) 84.81
-------------------------------------------------------------------------------------------------------------------------------
20.91 27.28 212,061 1.60 (0.72) 1.85 (0.97) 99.46
20.80 5.39(d) 3,674 2.35(c) (1.63)(c) 2.35(c) (1.63)(c) 99.46
-------------------------------------------------------------------------------------------------------------------------------
17.29 7.20 204,994 1.41 (0.59) 1.66 (0.84) 57.58
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
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<PAGE>
GOLDMAN SACHS FUND PROFILE
Goldman Sachs Small Cap Value 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 Small Cap Value Fund offers investors access to the benefits
associated with equity investing. The Fund seeks long-term capital growth,
primarily through equity securities of companies with public stock market
capitalizations of $1 billion or less at the time of investment.
Target Your Needs
The Goldman Sachs Small Cap Value 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]
INTERNATIONAL
EQUITY
DOMESTIC
EQUITY
.Goldman Sachs
Small Cap Value
Fund
FIXED
INCOME
MONEY
MARKET
-- Lower Risk/Return Higher Risk/Return --
ASSET ALLOCATION
SPECIALTY
For More Information
To learn more about the Goldman Sachs Small Cap Value 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 Small Cap Value 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.
The stocks of smaller companies are often more volatile and present greater
risks than stocks of larger companies. At times the Fund may be unable to sell
the securities it holds without a substantial drop in price, if at all.
The Fund may participate in the Initial Public Offering (IPO) market, and a
portion of the Fund's returns consequently may be attributable to its investment
in IPOs, which may have a magnified impact due to the Fund's small asset base.
As the Fund's assets grow, it is probable that the effect of the Fund's
investment in IPOs on its total returns may not be as significant.
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 SCVSAR / 25K / 4-00
