GOLDMAN SACHS RESEARCH SELECT FUND

Market Review

Dear Shareholder:

As we write to you today, the tragic national events of September 11th continue to dominate the nation’s thoughts. The people of Goldman Sachs are shocked and saddened by the horrible destruction and loss of life, and send our deepest sympathies to those who have been impacted in New York, Washington, D.C., Pennsylvania and across the country.

	In the aftermath of this tragedy, Goldman Sachs is offering assistance to others in the industry who have been more severely impacted than we were. Our people and firm are assisting the ongoing recovery and humanitarian efforts through donations of blood and volunteer work. Additionally, Goldman Sachs’ people are committed to contributing at least $10 million to provide humanitarian aid to the victims and families impacted by the events of September 11th.
	Goldman Sachs also shares the strong determination of the entire securities industry to show solidarity in the face of terrorism. We are committed to sending the clearest possible message that terrorism will not close free markets, and we continue to serve as a force of stability in the global securities markets.
	We want to take this opportunity to provide continued assurance regarding your investment in Goldman Sachs Funds. Immediately after the attack on September 11, all emergency recovery plans were successfully implemented, critical functions were moved to alternate locations, and we were prepared to resume normal operations on September 17 with the reopening of the New York Stock Exchange.
	As we write this letter, there continues to be uncertainty in the global financial markets, and events are unfolding at a rapid pace. While the markets are expected to remain volatile in the short-term, in decades past the American people and our economy have proven to be tremendously resilient following significant global events. As such, we urge our shareholders to remain focused on their long-term goals, maintain diversified portfolios, and work closely with their financial advisers.
	Because the period covered by this report ended prior to September 11, we have included a brief recap of the economy and financial markets for the one-year reporting period ended August 31, 2001.
n	Market Review: Stocks Fall Sharply, While Bonds Rally — During the one-year reporting period ended August 31, 2001, the U.S. stock market, as measured by the Fund’s benchmark, the S&P 500 Index, declined 24.39%, while the bond market, as measured by the Lehman Aggregate Bond Index, rose 12.35%. Factors underlying the stock market’s decline included the ongoing threat of economic recession, lower corporate profits, the bursting of the technology “bubble” and a weakening job market. As the period progressed, some areas of the stock market that had performed well during the latter stages of 2000 and the first half of 2001 could not avoid the downdraft — namely many value-oriented and more defensive issues. The sharpest decline occurred in the technology sector, as the tech-laden NASDAQ Composite Index plummeted 57.08% during the period. The NASDAQ has fallen 64% since its peak in March 2000.

GOLDMAN SACHS RESEARCH SELECT FUND

	In contrast, the bond market fared well during the period. Virtually all bond market sectors generated positive results, largely as a result of declining interest rates and an increase in investor demand.
n	A Faltering Economic Recovery — During the one-year reporting period ended August 31, 2001, the U.S. economy has come full circle. As the period began, we were in the midst of the longest economic expansion in U.S. history. However, since that time, economic activity has fallen sharply. By the fourth quarter of 2000, many economic indicators were pointing to a slowdown, which quickly intensified as the new year began. This reversal prompted the Federal Reserve Board (the “Fed”) to cut short-term interest rates seven times — for a total of 3.25 percentage points — in hopes of avoiding a recession. Under Chairman Alan Greenspan, the Fed has never lowered rates so significantly in such a short period of time. Despite this action, the GDP grew only an estimated 0.2% during the second quarter of 2001 — its slowest rate in eight years.
	On the following pages,you will find a review of your Fund’s activity during the period, including perspectives following the recent tragedy from your portfolio management team.
	In closing, we want to assure you that you have a strong and experienced team of portfolio managers who have experience managing assets through diverse market conditions and encourage you to maintain your long-term focus in the months ahead.
	As always, we appreciate your ongoing support.
	Sincerely,

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

September 20, 2001

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GOLDMAN SACHS RESEARCH SELECT FUND

How is the Goldman Sachs Research Select Fund Created?

Through this Fund, investors can access timely, high-quality equity research ideas from some of the industry’s most prominent and respected research professionals.

	GOLDMAN SACHS GLOBAL INVESTMENT RESEARCH DIVISION
INVESTMENT OBJECTIVE Long-term growth of capital	Coverage of more than 2,400 companies globally		Employs more than 800 professionals, including more than 250 equity analysts, 25 global research teams, and 11 portfolio strategists1
			Covers 52 economies and 26 stock markets
			Has frequently earned high research ratings in client polls across the Americas, Europe and Asia2 6
	THE GOLDMAN SACHS U.S. STOCK SELECTION COMMITTEE
INVESTMENT FOCUS A focused, concentrated portfolio of U.S. equity securities	Approves changes to the U.S. Recommended for Purchase List, manages the U.S. Select List and reviews industry analysts' investment conclusions		10 senior professionals (7 Managing Directors) Includes Goldman's Director of Private Client Investment, Director of Global Investment Research, Director of U.S. Investment Research, Director of U.S. Economic Research and senior sector specialists 6
	GOLDMAN SACHS U.S. RECOMMENDED FOR PURCHASE LIST
	300-400 stocks		Represents the highest rated securities recommended by Goldman Sachs equity research analysts 6
	THE U.S. SELECT LIST
	25-35 stocks		Integrates the top-down sector views of the U.S. Stock Selection Committee with the best ideas of Goldman Sachs Equity Research Represents stocks that the Committee believes will perform the best over the next 12-18 months within the context of a focused, well-structured equity portfolio Constructed from stocks on the U.S. Recommended for Purchase List Seeks to outperform the S&P 500 Index 6
	THE GOLDMAN SACHS RESEARCH SELECT FUND
			An experienced portfolio management team from Goldman Sachs' Investment Management Division:
		n	Constructs a mutual fund portfolio of the U.S. Select List stocks
		n	Ensures that the Committee's sector and stock views are accurately represented in the Fund
		n	Offers efficient trading strategies
	1 As of 12/31/00 2 For example, Institutional Investor and Reuters

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GOLDMAN SACHS RESEARCH SELECT FUND

Fund Basics
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return
August 31, 2000–August 31, 2001	(without sales charge)1			S&P 500 Index2
Class A		–34.35	%		–24.39	%
Class B		–34.85			–24.39
Class C		–34.82			–24.39
Institutional		–34.04			–24.39
Service		–34.35			–24.39

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged S&P 500 Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS

For the period ended 6/30/01

Class A

Class B

Class C

Institutional

Service

One Year

–22.36

%

–22.52

%

–19.26

%

–17.52

%

–17.83

%

Since Inception3

–23.53

–22.93

–19.82

–18.94

–19.23

(6/19/00)

3

The Standardized Total Returns are average annual 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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets			Line of Business
Qwest Communications International, Inc.		3.9	%	Telephone
Calpine Corp.		3.8		Electrical Utilities
Amdocs Ltd.		3.7		Computer Software
Amgen, Inc.		3.7		Healthcare
Philip Morris Companies, Inc.		3.7		Tobacco
Metlife, Inc.		3.7		Life Insurance
Kohl’s Corp.		3.7		Department Stores
Check Point Software Technologies Ltd.		3.7		Internet
Kinder Morgan, Inc.		3.7		Energy Resources
Alcoa, Inc.		3.7		Mining

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

The performance of the Fund may differ from that of the published U.S. Select List due to fees and expenses, transaction costs, the timing of portfolio transactions, modifications in stock weights in order to control trading costs, and the Fund’s holdings in securities other than equities. The Fund will be more volatile due to its concentration in a smaller number of stocks. Goldman Sachs Research Select Fund^SM is a service mark of Goldman, Sachs & Co.

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GOLDMAN SACHS RESEARCH SELECT FUND

Portfolio Results

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Research Select Fund for the one-year period that ended August 31, 2001.

Performance Review

During the Fund’s reporting period, its Class A, B, C, Institutional and Service shares generated total cumulative returns, without sales charges, of –34.35%, –34.85%, –34.82%, –34.04%, and –34.35%, respectively. These figures compare to the –24.39% total cumulative return of the Fund’s benchmark, the S&P 500 Index.

As these returns indicate, it has been an extremely challenging period in the financial markets. On the whole, the Fund’s performance benefited from an underweight in Technology relative to the S&P 500 Index during the period, as investors sold off this sector in favor of more defensive stocks. Relative results were also enhanced from an overweight in Utilities, and through stock selection in Technology and Consumer Non-Cyclicals sectors. Despite these positives, the Fund’s holdings in other areas of the market underperformed, most significantly in the Telecommunications and Healthcare sectors.

Investment Process

The Goldman Sachs Research Select Fund seeks long-term growth of capital through a focused portfolio of U.S. equity securities. The Fund will generally consist of the 25-35 stocks that make up the Goldman Sachs’ U.S. Select List. This list represents the stocks that the firm’s U.S. Stock Selection Committee believes will perform the best over the next 12 to 18 months, within the context of a well-structured equity portfolio.

Portfolio Positioning

The Fund emphasizes economic sectors that the Goldman Sachs U.S. Stock Selection Committee believes will perform best, while de-emphasizing or avoiding sectors they do not expect to perform well. As of August 31, 2001, the Fund was overweight Financials, Information Technology and Utilities, and underweight Telecommunications, Industrials and Healthcare versus the S&P 500 Index.

Portfolio Highlights

The stocks that contributed the most to the Fund’s returns in a positive manner during the reporting period were Philip Morris, Household International Inc. and United Technologies. Conversely, stocks that did not meet our expectations included Cisco Systems, Jabil Circuit and Checkpoint Software.

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GOLDMAN SACHS RESEARCH SELECT FUND

Portfolio Outlook

This past year has been an extremely volatile one for U.S. stocks and, since the reopening of the U.S. equity markets following the September 11th tragedy, we continue to experience a challenging and erratic market environment. Given the extreme conditions, we believe that it is more important than ever to use our strong research capabilities to identify the segments of the market that are likely to outperform. Looking ahead, we anticipate remaining fully invested, as we actively manage the Fund’s portfolio in the sectors and stocks that we believe hold the most promise.

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

Goldman Sachs Quantitative Equity Investment Team

New York
September 15, 2001

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 GOLDMAN SACHS RESEARCH SELECT 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

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

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

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.

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GOLDMAN SACHS RESEARCH SELECT FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on June 19, 2000 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Research Select Fund. For comparative purposes, the performance of the Fund’s benchmark, the Standard and Poor’s 500 Index with dividend reinvestment (“S&P 500 Index”), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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.

Research Select Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested June 19, 2000 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced June 19, 2000)
Excluding sales charges		-25.04%		-34.35%
Including sales charges		-28.48%		-37.98%
Class B (commenced June 19, 2000)
Excluding contingent deferred sales charges		-25.57%		-34.85%
Including contingent deferred sales charges		-28.06%		-38.11%
Class C (commenced June 19, 2000)
Excluding contingent deferred sales charges		-25.49%		-34.82%
Including contingent deferred sales charges		-25.49%		-35.47%
Institutional Class (commenced June 19, 2000)		-24.69%		-34.04%
Service Class (commenced June 19, 2000)		-25.04%		-34.35%

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 GOLDMAN SACHS RESEARCH SELECT FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 100.2%
Banks – 3.6%
	621,730	Citigroup, Inc.	$	28,444,147
Computer Hardware – 6.6%
	1,332,300	Dell Computer Corp.*		28,484,574
	2,104,200	Sun Microsystems, Inc.*		24,093,090
				52,577,664
Computer Software – 7.3%
	778,022	Amdocs Ltd.*		29,798,243
	282,400	International Business Machines Inc.		28,240,000
				58,038,243
Department Stores – 7.2%
	530,000	Kohl’s Corp.*		29,415,000
	810,526	Target Corp.		28,084,726
				57,499,726
Electrical Utilities – 3.8%
	916,228	Calpine Corp.*		30,253,849
Energy Resources – 7.1%
	787,116	Enron Corp.		27,541,189
	525,057	Kinder Morgan, Inc.		29,193,169
				56,734,358
Entertainment – 3.4%
	639,585	Viacom, Inc. Class B*		27,118,404
Financial Services – 17.5%
	771,785	American Express Co.		28,108,410
	438,073	Federal Home Loan Mortgage Corp.		27,546,030
	708,791	General Electric Co.		29,046,255
	449,456	Household International, Inc.		26,562,850
	805,566	MBNA Corp.		28,001,474
				139,265,019
Food & Beverage – 3.6%
	588,300	The Coca-Cola Co.		28,632,561
Healthcare – 7.2%
	462,500	Amgen, Inc.*		29,738,750
	424,614	Merck & Co., Inc.		27,642,371
				57,381,121
Industrial Parts – 3.7%
	558,036	Tyco International Ltd.		28,989,970
Information Services – 3.5%
	468,700	Electronic Data Systems Corp.		27,643,926
Internet – 7.1%
	725,792	AOL Time Warner, Inc.*		27,108,331
	912,900	Check Point Software Technologies Ltd.*		29,203,671
				56,312,002
Life Insurance – 3.7%
	966,415	MetLife, Inc.		29,475,657
Media – 3.6%
	559,181	Automatic Data Processing, Inc.		28,943,209
Mining – 3.7%
	764,900	Alcoa, Inc.		29,157,988
Telephone – 3.9%
	1,421,140	Qwest Communications International, Inc.		30,554,510
Tobacco – 3.7%
	622,375	Philip Morris Companies, Inc.		29,500,575
TOTAL COMMON STOCKS
(Cost $889,220,610)			$	796,522,929

Principal		Interest			Maturity
Amount		Rate			Date	Value
Repurchase Agreement – 0.4%
Joint Repurchase Agreement Account II^
$	2,800,000		3.69	%	09/04/2001	$	2,800,000
TOTAL REPURCHASE AGREEMENT
(Cost $2,800,000)						$	2,800,000
TOTAL INVESTMENTS
(Cost $892,020,610)						$	799,322,929

*	Non-income producing security.
^	Joint repurchase agreement was entered into August 31, 2001.

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.

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GOLDMAN SACHS RESEARCH SELECT FUND 

Statement of Assets and Liabilities

August 31, 2001

Assets:
Investment in securities, at value (identified cost $892,020,610)		$799,322,929
Cash(a)		891,869
Receivables:
	Fund shares sold	569,321
	Dividends and interest	409,488
	Variation margin	15,045
Other assets		1,233
Total assets		801,209,885
Liabilities:
Payables:
	Fund shares repurchased	4,456,002
	Amounts owed to affiliates	1,631,801
Accrued expenses and other liabilities		240,176
Total liabilities		6,327,979
Net assets:
Paid-in capital		1,089,710,045
Accumulated net realized loss on investment and futures transactions		(202,014,971	)
Net unrealized loss on investments and futures		(92,813,168	)
NET ASSETS		$794,881,906
Net asset value, offering and redemption price per share: (b)
	Class A	$7.07
	Class B	$7.01
	Class C	$7.02
	Institutional	$7.11
	Service	$7.07
Shares outstanding:
	Class A	43,069,317
	Class B	43,299,768
	Class C	24,171,091
	Institutional	2,403,279
	Service	1,791
Total shares outstanding, $.001 par value (unlimited number of shares authorized)		112,945,246

(a)	Includes restricted cash of $800,000 relating to initial margin requirements and collateral on futures transactions.
(b)	Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A shares is $7.48. At redemption, Class B and 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.

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 GOLDMAN SACHS RESEARCH SELECT FUND

Statement of Operations

For the Year Ended August 31, 2001

Investment income:
Dividends		$	6,191,014
Interest			143,286
Total income			6,334,300
Expenses:
Management fees			8,136,840
Distribution and Service fees(a)			5,552,970
Transfer Agent fees(b)			1,517,879
Registration fees			281,543
Custodian fees			153,212
Professional fees			67,229
Trustee fees			11,876
Other			259,053
Total expenses			15,980,602
Less — expense reductions			(252,065	)
Net expenses			15,728,537
NET INVESTMENT LOSS			(9,394,237	)
Realized and unrealized loss on investment and futures transactions:
Net realized loss from:
	Investment transactions		(200,412,370	)
	Futures transactions		(330,079	)
Net change in unrealized gain (loss) on:
	Investments		(129,605,102	)
	Futures		(115,487	)
Net realized and unrealized loss on investment and futures transactions			(330,463,038	)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	(339,857,275	)

(a)	Class A, Class B and Class C Shares had Distribution and Service fees of $798,800, $3,087,136 and $1,667,034, respectively.
(b)	Class A, Class B, Class C, Institutional Class and Service Class Shares had Transfer Agent fees of $607,088, $586,556, $316,736, $7,492 and $7, respectively.

The accompanying notes are an integral part of these financial statements.

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GOLDMAN SACHS RESEARCH SELECT FUND 

Statements of Changes in Net Assets

	For the			For the
	Year Ended			Period Ended
	August 31, 2001			August 31, 2000(a)
From operations:
Net investment loss	$	(9,394,237	)	$	(900,981	)
Net realized loss from investment and futures transactions		(200,742,449	)		(1,272,522	)
Net change in unrealized gain (loss) on investments and futures		(129,720,589	)		36,907,421
Net increase (decrease) in net assets resulting from operations		(339,857,275	)		34,733,918
From share transactions:
Proceeds from sales of shares		757,929,904			503,337,356
Cost of shares repurchased		(151,571,140	)		(9,690,857	)
Net increase in net assets resulting from share transactions		606,358,764			493,646,499
TOTAL INCREASE		266,501,489			528,380,417
Net assets:
Beginning of period		528,380,417			—
End of period	$	794,881,906		$	528,380,417

(a)  Commencement of operations was June 19, 2000 for all share classes.

The accompanying notes are an integral part of these financial statements.

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 GOLDMAN SACHS RESEARCH SELECT FUND

Notes to Financial Statements

August 31, 2001

1.  ORGANIZATION

Goldman Sachs Trust (the “Trust”) is a Delaware business trust registered under the Investment Company Act of 1940 (as amended) as an open-end management investment company. The Trust includes the Goldman Sachs Research Select Fund (the “Fund”). The Fund is a diversified portfolio offering five classes of shares — Class A, Class B, Class C, Institutional and Service.

2.  SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.

A.  Investment Valuation — Investments in securities traded on a U.S. or foreign securities exchange or the NASDAQ system are valued daily at their last sale price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.

B.  Security Transactions and Investment Income — Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes where applicable. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment income in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.

     Net investment income (other than class-specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.

C.  Segregation Transactions — The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, 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.

D.  Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provision is required. Income and capital gains distributions, if any, are declared and paid annually.

     The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of the Fund’s distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist.

     The Fund, as of its most recent tax year end of August 31, 2001, had a capital loss carryforward of approximately $9,594,000 expiring in 2009 for U.S. federal tax purposes. This amount is available to be carried forward to offset future capital gains to the extent permitted by applicable laws or regulations. In addition, the Fund will elect to treat net capital losses of approximately $168,306,000 incurred in the ten month period ended August 31, 2001 as having been incurred in the following fiscal year.

     At August 31, 2001, the aggregate cost of portfolio securities for federal income tax purposes is $916,250,778. Accordingly, the gross unrealized gain on investments was $29,801,588 and the gross unrealized loss on investments was $146,729,437 resulting in a net unrealized loss of $116,927,849.

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GOLDMAN SACHS RESEARCH SELECT FUND 

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

E.  Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Funds on a straight-line or pro rata basis depending upon the nature of the expense.

     Class A, Class B and Class C Shares bear all expenses and fees relating to their respective Distribution and Service Plans. Shareholders of Service Shares bear all expenses and fees paid to service organizations. Each class of shares of the Fund separately bears its respective class-specific Transfer Agency fees.

F.  Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price.

     During the term of a repurchase agreement, the value of the underlying securities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians.

3.  AGREEMENTS

Pursuant to the Investment Management Agreement (the “Agreement”), Goldman Sachs Asset Management (“GSAM”), a business 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 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 year ended August 31, 2001, the adviser reimbursed approximately $250,000. In addition, the Fund has entered into certain offset arrangements with the custodian resulting in a reduction in the Fund’s expenses. For the year ended August 31, 2001, custody fees were reduced by approximately $2,000.

     The Trust, on behalf of the Fund, has adopted Distribution and Service Plans. Under the Distribution and Service Plans, Goldman Sachs and/or authorized dealers are entitled to a monthly fee from the Fund for distribution and shareholder maintenance services equal, on an annual basis, to 0.25%, 1.00% and 1.00% of the Fund’s average daily net assets attributable to Class A, Class B and Class C Shares, respectively.

     Goldman Sachs serves as the distributor of shares of the Fund pursuant to Distribution Agreements. 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 $1,171,000 for the year ended August 31, 2001.

     Goldman Sachs also serves as the Transfer Agent of the Fund for a fee. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate as follows: 0.19% of the average daily net assets for Class A, Class B and Class C Shares and 0.04% of the average daily net assets for Institutional and Service Shares.

     The Trust, on behalf of the Fund, has adopted a Service Plan. This Plan allows for Service Shares to compensate service organizations for providing varying levels of account administration and shareholder liaison services to their customers who are beneficial owners of such shares. The Service Plan provides for compensation to the service organizations in an amount up to 0.50% (on an annualized basis), of the average daily net asset value of the Service Shares.

     For the year ended August 31, 2001, the amounts owed to affiliates were approximately $999,000, $498,000 and $135,000 for Management, Distribution and Service, and Transfer Agent fees, respectively.

13

 GOLDMAN SACHS RESEARCH SELECT FUND

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS

The cost of purchases and proceeds of sales and maturities of securities (excluding short-term investments and futures transactions) for the year ended August 31, 2001, were $1,972,389,778 and $1,367,923,539, respectively.

     For the year ended August 31, 2001, Goldman Sachs earned approximately $1,047,000 of brokerage commissions from portfolio transactions, including futures transactions executed on behalf of the Fund.

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 Funds’ custodian bank an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Fund, depending on the fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Fund realizes a gain or loss which is reported in the Statement of Operations.

     The use of futures contracts involve, to varying degrees, elements of market risk which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may not directly correlate with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Fund’s hedging strategies and potentially result in a loss.

     At August 31, 2001, open futures contracts were as follows:

	Number of Contracts					Unrealized
Type	Long		Settlement Month	Market Value		Loss
S&P 500 Index Futures		10	September 2001	$	2,837,750	$	115,487

5.  LINE OF CREDIT FACILITY

The Fund participates in a $350,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires the Fund to pay a fee based on the amount of the commitment which has not been utilized. During the year ended August 31, 2001, the Fund did not have any borrowings under this facility.

14

GOLDMAN SACHS RESEARCH SELECT FUND 

6.  JOINT REPURCHASE AGREEMENT ACCOUNT

The Fund, together with other registered investment companies having management agreements with GSAM or its affiliates, transfers uninvested cash into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements.

     At August 31, 2001, the Fund had an undivided interest in the repurchase agreements in the joint account, which equaled $2,800,000 in principal amount. At August 31, 2001, the following repurchase agreements held in this joint account were fully collateralized by Federal Agency obligations:

	Principal		Interest			Maturity	Amortized		Maturity
Repurchase Agreements	Amount		Rate			Date	Cost		Value
Bank of America	$	1,000,000,000		3.69	%	09/04/2001	$	1,000,000,000	$	1,000,410,000
Barclays Capital		400,000,000		3.69		09/04/2001		400,000,000		400,164,000
C.S. First Boston Corp.		300,000,000		3.69		09/04/2001		300,000,000		300,123,000
Deutsche Bank Securities, Inc.		3,000,000,000		3.70		09/04/2001		3,000,000,000		3,001,233,333
Greenwich Capital		400,000,000		3.69		09/04/2001		400,000,000		400,164,000
J.P. Morgan Chase & Co.		3,000,000,000		3.69		09/04/2001		3,000,000,000		3,001,230,000
Morgan Stanley		3,000,000,000		3.67		09/04/2001		3,000,000,000		3,001,223,333
UBS Warburg LLC		550,000,000		3.70		09/04/2001		550,000,000		550,226,111
UBS Warburg LLC		1,016,000,000		3.69		09/04/2001		1,016,000,000		1,016,416,560
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT II							$	12,666,000,000	$	12,671,190,337

7.  CERTAIN RECLASSIFICATIONS

In accordance with AICPA Statement of Position 93-2, the Fund has reclassified $9,394,237 from paid-in capital to accumulated net investment loss. This reclassification has no impact on the net asset value of the Fund and is designed to present the Fund’s capital accounts on a tax basis. Reclassifications result primarily from the difference in the tax treatment of net operating losses and organization costs.

15

 GOLDMAN SACHS RESEARCH SELECT FUND

Notes to Financial Statements  (continued)

August 31, 2001

8.  SUMMARY OF SHARE TRANSACTIONS

Share activity is as follows:

	For the Year
	Ended August 31, 2001
	Shares			Dollars
Class A Shares
Shares sold		32,309,787		$	298,135,336
Shares repurchased		(9,460,320	)		(79,514,912	)
		22,849,467			218,620,424
Class B Shares
Shares sold		29,557,781			273,278,062
Shares repurchased		(4,975,958	)		(41,204,326	)
		24,581,823			232,073,736
Class C Shares
Shares sold		18,336,739			169,144,808
Shares repurchased		(3,118,483	)		(25,888,320	)
		15,218,256			143,256,488
Institutional Shares
Shares sold		1,866,423			17,335,365
Shares repurchased		(638,951	)		(4,935,610	)
		1,227,472			12,399,755
Service Shares
Shares sold		3,913			36,333
Shares repurchased		(3,242	)		(27,972	)
		671			8,361
NET INCREASE		63,877,689		$	606,358,764

16

GOLDMAN SACHS RESEARCH SELECT FUND 

8.  SUMMARY OF SHARE TRANSACTIONS (continued)

Share activity is as follows:

	For the Period
	Ended August 31, 2000(a)
	Shares			Dollars
Class A Shares
Shares sold		20,575,834		$	206,719,550
Shares repurchased		(355,984	)		(3,608,374	)
		20,219,850			203,111,176
Class B Shares
Shares sold		18,789,070			188,934,348
Shares repurchased		(71,125	)		(724,005	)
		18,717,945			188,210,343
Class C Shares
Shares sold		8,987,442			90,662,633
Shares repurchased		(34,607	)		(356,002	)
		8,952,835			90,306,631
Institutional Shares
Shares sold		1,676,491			17,008,949
Shares repurchased		(500,684	)		(5,002,476	)
		1,175,807			12,006,473
Service Shares
Shares sold		1,120			11,876
Shares repurchased		—			—
		1,120			11,876
NET INCREASE		49,067,557		$	493,646,499

(a) Commencement date of operations was June 19, 2000 for all share classes.

17

 GOLDMAN SACHS RESEARCH SELECT FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from
			investment operations
	Net asset
	value,		Net			Net realized			Total from
	beginning		investment			and unrealized			investment
	of period		loss(c)			gain (loss)			operations
FOR THE YEAR ENDED AUGUST 31,
2001 - Class A Shares	$	10.77	$	(0.06	)	$	(3.64	)	$	(3.70	)
2001 - Class B Shares		10.76		(0.13	)		(3.62	)		(3.75	)
2001 - Class C Shares		10.77		(0.13	)		(3.62	)		(3.75	)
2001 - Institutional Shares		10.78		(0.03	)		(3.64	)		(3.67	)
2001 - Service Shares		10.78		(0.08	)		(3.63	)		(3.71	)
FOR THE PERIOD ENDED AUGUST 31,
2000 - Class A Shares (commenced June 19, 2000)		10.00		(0.02	)		0.79			0.77
2000 - Class B Shares (commenced June 19, 2000)		10.00		(0.04	)		0.80			0.76
2000 - Class C Shares (commenced June 19, 2000)		10.00		(0.04	)		0.81			0.77
2000 - Institutional Shares (commenced June 19, 2000)		10.00		(0.01	)		0.79			0.78
2000 - Service Shares (commenced June 19, 2000)		10.00		(0.02	)		0.80			0.78

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

The accompanying notes are an integral part of these financial statements.

18

GOLDMAN SACHS RESEARCH SELECT FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			loss to			expenses to			loss to			Portfolio
value, end		Total			period		to average			average			average			average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	7.07		(34.35	)%	$	304,677		1.50	%		(0.73	)%		1.53	%		(0.76	)%		171	%
	7.01		(34.85	)		303,539		2.25			(1.48	)		2.28			(1.51	)		171
	7.02		(34.82	)		169,576		2.25			(1.48	)		2.28			(1.51	)		171
	7.11		(34.04	)		17,077		1.10			(0.32	)		1.13			(0.35	)		171
	7.07		(34.35	)		13		1.60			(0.91	)		1.63			(0.94	)		171
	10.77		7.70			217,861		1.50	(b)		(1.04	)(b)		2.05	(b)		(1.59	)(b)		5
	10.76		7.60			201,437		2.25	(b)		(1.79	)(b)		2.80	(b)		(2.34	)(b)		5
	10.77		7.70			96,393		2.25	(b)		(1.78	)(b)		2.80	(b)		(2.33	)(b)		5
	10.78		7.80			12,677		1.10	(b)		(0.50	)(b)		1.65	(b)		(1.05	)(b)		5
	10.78		7.70			12		1.60	(b)		(1.13	)(b)		2.15	(b)		(1.68	)(b)		5

19

 GOLDMAN SACHS RESEARCH SELECT FUND

Report of Independent Accountants

To the Shareholders and Board of Trustees of
Goldman Sachs Trust — Research Select Fund:

In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Goldman Sachs Research Select Fund (“the Fund”), one of the portfolios constituting Goldman Sachs Trust, at August 31, 2001, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at August 31, 2001 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Boston, Massachusetts

October 19, 2001

20

FUNDS PROFILE

Goldman Sachs Funds

Goldman Sachs is a premier financial services firm, known since 1869 for creating thoughtful and customized investment solutions in complex global markets.

Today, the Investment Management Division of Goldman Sachs serves a diverse set of clients worldwide, including private institutions, public entities and individuals. With portfolio management teams located around the world — and more than $295 billion in assets under management, our investment professionals bring firsthand knowledge of local markets to every investment decision, making us one of the few truly global asset managers.

1	An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
	CORESM is a service mark of Goldman, Sachs & Co.
	Goldman Sachs Internet Tollkeeper FundSM and Goldman Sachs Research Select FundSM are service marks of Goldman, Sachs & Co.
*	Goldman Sachs International Growth Opportunities Fund was formerly Goldman Sachs International Small Cap Fund.

GOLDMAN SACHS ASSET MANAGEMENT 32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005

TRUSTEES	OFFICERS
Ashok N. Bakhru, Chairman	Gary Black, President
David B. Ford	Jesse H. Cole, Vice President
Patrick T. Harker	Kerry Daniels, Vice President
John P. McNulty	James A. Fitzpatrick, Vice President
Mary P. McPherson	Mary Hoppa, Vice President
Alan A. Shuch	Christopher Keller, Vice President
Wilma J. Smelcer	John M. Perlowski, Treasurer
Richard P. Strubel	Kenneth Curran, Assistant Treasurer
Kaysie Uniacke	Peter W. Fortner, Assistant Treasurer
	Philip V. Giuca, Jr., Assistant Treasurer
	Howard B. Surloff, Secretary
	Amy E. Belanger, Assistant Secretary
	Valerie A. Zondorak, Assistant Secretary
GOLDMAN, SACHS & CO. Distributor and Transfer Agent	GOLDMAN SACHS ASSET MANAGEMENT Investment Adviser

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 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.

Goldman Sachs Research Select Fund^SM is a service mark of Goldman, Sachs & Co.

The performance of the Fund may differ from that of the published U.S. Select List due to fees and expenses, transaction costs, the timing of portfolio transactions, modifications in stock weights in order to control trading costs, and the Fund’s holdings in securities other than equities. The Fund will be more volatile due to its concentration in a smaller number of stocks.

Copyright 2001 Goldman, Sachs & Co. All rights reserved. Date of first use: October 30, 2001 01-1641 / RESAR / 76K / 10-01

GOLDMAN SACHS VALUE EQUITY FUNDS

Market Review

Dear Shareholder:

As we write to you today, the tragic national events of September 11th continue to dominate the nation’s thoughts. The people of Goldman Sachs are shocked and saddened by the horrible destruction and loss of life, and send our deepest sympathies to those who have been impacted in New York, Washington, D.C., Pennsylvania and across the country.

	In the aftermath of this tragedy, Goldman Sachs is offering assistance to others in the industry who have been more severely impacted than we were. Our people and firm are assisting the ongoing recovery and humanitarian efforts through donations of blood and volunteer work. Additionally, Goldman Sachs people are committed to contributing at least $10 million to provide humanitarian aid to the victims and families impacted by the events of September 11th.
	Goldman Sachs also shares the strong determination of the entire securities industry to show solidarity in the face of terrorism. We are committed to sending the clearest possible message that terrorism will not close free markets, and we continue to serve as a force of stability in the global securities markets.
	We want to take this opportunity to provide continued assurance regarding your investment in Goldman Sachs Funds. Immediately after the attack on September 11, all emergency recovery plans were successfully implemented, critical functions were moved to alternate locations, and we were prepared to resume normal operations on September 17 with the reopening of the New York Stock Exchange.
	As we write this letter, there continues to be uncertainty in the global financial markets, and events are unfolding at a rapid pace. While the markets are expected to remain volatile in the short-term, in decades past the American people and our economy have proven to be tremendously resilient following significant global events. As such, we urge our shareholders to remain focused on their long-term goals, maintain diversified portfolios, and work closely with their financial advisers.
	Because the period covered by this report ended prior to September 11, we have included a brief recap of the economy and financial markets for the one-year reporting period ended August 31, 2001.
n	Market Review: Stocks Fall Sharply, While Bonds Rally — During the one-year reporting period ended August 31, 2001, the U.S. stock market, as measured by the S&P 500 Index, declined 24.39%, while the bond market, as measured by the Lehman Aggregate Bond Index, rose 12.35%. Factors underlying the stock market’s decline included the ongoing threat of economic recession, lower corporate profits, the bursting of the technology “bubble” and a weakening job market. As the period progressed, some areas of the stock market that had performed well during the latter stages of 2000 and the first half of 2001 could not avoid the downdraft — namely many value-oriented and more defensive issues. The sharpest decline occurred in the technology sector, as the tech-laden NASDAQ Composite Index plummeted 57.08% during the period. The NASDAQ has fallen 64.24% since its peak in March 2000.

GOLDMAN SACHS VALUE EQUITY FUNDS

	In contrast, the bond market fared well during the period. Virtually all bond market sectors generated positive results, largely as a result of declining interest rates and an increase in investor demand.
n	A Faltering Economic Recovery — During the one-year reporting period ended August 31, 2001, the U.S. economy has come full circle. As the period began, we were in the midst of the longest economic expansion in U.S. history. However, since that time, economic activity has fallen sharply. By the fourth quarter of 2000, many economic indicators were pointing to a slowdown, which quickly intensified as the new year began. This reversal prompted the Federal Reserve Board (the “Fed”) to cut short-term interest rates seven times — for a total of 3.25 percentage points — in hopes of avoiding a recession. Under Chairman Alan Greenspan, the Fed has never lowered rates so significantly in such a short period of time. Despite this action, the GDP grew only an estimated 0.2% during the second quarter of 2001 — its slowest rate in eight years.
	On the following pages, you will find a review of your Fund’s activity during the period, including perspectives following the recent tragedy from your portfolio management team.
	In closing, we want to assure you that you have a strong and experienced team of portfolio managers who have experience managing assets through diverse market conditions and encourage you to maintain your long-term focus in the months ahead.
	As always, we appreciate your ongoing support.
	Sincerely,

David B. Ford Co-Head, Goldman Sachs Asset Management	David W. Blood Co-Head, Goldman Sachs Asset Management
September 20, 2001

 1

GOLDMAN SACHS VALUE EQUITY FUNDS

What Differentiates Goldman Sachs’
Value Equity Investment Process?

Through independent fundamental research, Goldman Sachs’ Value Equity Team seeks to identify and invest in quality businesses that are selling at compelling valuations.

1	EMPHASIZE FIRSTHAND FUNDAMENTAL RESEARCH
At the heart of our value investment philosophy is a belief in the rigorous analysis of business fundamentals. Our approach includes:
n	Meetings with management teams and on-site company visits
n	Industry-specific, proprietary financial and valuation models
n	Assessment of management quality
n	Analysis of each company’s competitive position and industry dynamics
n	Interviews with competitors, suppliers and customers
2	BUY WELL-POSITIONED BUSINESSES
We only buy companies with sustainable operating advantages. For us, this means companies that:
n	Offer above-average returns on capital and discretionary cash flow
n	Operate in niche areas or have strong franchises with economies of scale
n	Have management acting in alignment with shareholder interests
3	BUY BUSINESSES THAT REPRESENT VALUE
We only buy companies that represent value opportunities. For us, this means companies that:
n	Are underpriced in the public markets relative to their long-term cash generation capability
n	Offer attractive long-term risk/reward profiles
RESULT
Value portfolios that offer:
	n	Capital appreciation potential as each company’s true value is recognized in the marketplace
	n	Capitalization-specific diversification
	n	Style consistency

2

FUND BASICS

Large Cap Value Fund
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return			Russell 1000
August 31, 2000–August 31, 2001	(without sales charge)1			Value Index2
Class A		–1.21	%		–1.12	%
Class B		–1.98			–1.12
Class C		–1.96			–1.12
Institutional		–0.81			–1.12
Service		–1.17			–1.12

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged Russell 1000 Value Index (with dividends reinvested) is a market capitalization weighted index of the 1,000 highest ranking U.S. stocks with below-average growth orientation. The Index figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		4.25	%		4.49	%		8.42	%		10.81	%		10.43	%
Since Inception		0.71			1.07			3.58			4.78			4.41
(12/15/99)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets			Line of Business
Exxon Mobil Corp.		4.7	%	Energy Resources
Citigroup, Inc.		4.4		Banks
SBC Communications Inc.		2.9		Telephone
Federal Home Loan Mortgage Corp.		2.2		Financial Services
Verizon Communications		2.0		Telephone
AMBAC Financial Group, Inc.		2.0		Property Insurance
XL Capital Ltd.		1.9		Property Insurance
Philip Morris Cos., Inc.		1.8		Tobacco
FirstEnergy Corp.		1.7		Electrical Utilities
Wells Fargo & Co.		1.4		Banks

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

 3

PORTFOLIO RESULTS

Large Cap Value Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Large Cap Value Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service share classes generated cumulative total returns, without sales charges, of –1.21%, –1.98%, –1.96%, –0.81%, and –1.17%, respectively. These returns compare to the Fund’s benchmark, the Russell 1000 Value Index, which generated a cumulative total return of –1.12%.
	The one-year reporting period has been a difficult one for large-cap stocks. Furthermore, the impact of the tragic events of Tuesday, September 11, 2001 has deeply affected the financial markets. Despite this adversity, value stocks in general, and the Large Cap Value Fund in particular, have performed relatively well. During this volatile period, moreover, the Fund benefited from a disciplined value approach that focuses on quality and diversification.
	Portfolio Composition
	Our quality bias has served us well in this uncertain, turbulent environment. Our research driven approach focuses on large-cap companies with financial strength, meaning strong balance sheets and the ability to generate excess cash flow. This emphasis has provided a foundation for underlying stock prices and has frequently led us to companies that were well positioned in their respective industries.
	Portfolio Highlights
	During the period, we have aggressively looked for opportunities to further upgrade the Fund’s portfolio. When market declines occur, investors often sell for emotional reasons. This usually results in valuations compressing within industries because investors sell securities indiscriminately, without regard to underlying fundamentals. It is during these times that higher quality companies often become available at very attractive relative prices.
	We believe our investment process is particularly well suited to identify these opportunities. Our team is structured around “centers of excellence,” whereby each team member has industry/sector specific responsibilities. Not only has this provided more in-depth industry expertise, but it has also allowed each of us to be more focused in our search for undervalued situations. Listed below are several of the more notable performers we held during the period.
n	Federal Home Loan Mortgage Corp. (Freddie Mac) — Freddie Mac, a company formed to help increase liquidity in the home loan market, was the Fund’s top contributor to performance during the reporting period. Freddie Mac’s portfolio growth has been strong and it has benefited from the lower interest rate environment.

4 

PORTFOLIO RESULTS

n	AMBAC Financial Group Inc. — Among our property/casualty insurance stocks, our investment in AMBAC Financial contributed favorably to performance. The company has distinguished itself by its strong balance sheet, excellent loss reserves and a history of consistent underwriting profit. We believe AMBAC is particularly well positioned to benefit from improving pricing trends in the insurance industry.
n	Entergy Corp. —Entergy Corp. is a domestic utility and power development company. The firm holds a strong position in the energy market and has a strong management team, including the former chairman of the Federal Energy Regulatory Commission. We believe this team will be instrumental in helping Entergy to carry out its global growth plan.
	Portfolio Outlook
	As the U.S. market continues to experience relatively high levels of volatility and uncertainty, we expect our investment strategy to remain consistent. We believe that a research-intensive approach to buying high-quality businesses when their valuations are generally below industry averages is a sound investment strategy in any environment.
	Furthermore, we believe the Fund’s diversified portfolio is a key advantage in this environment for two reasons. First, we maintain broad exposure to all industries. Therefore, while a few individual stocks and industries have declined precipitously since the market reopened on September 17, the Fund has continued to perform relatively well. Second, diversified portfolios generally provide greater liquidity. The Fund holds, on average, roughly 100 names. As such, if we need to raise cash to meet client needs we have built in the flexibility to do so.
	As always, we appreciate your investment and look forward to earning your continued confidence in the years to come.
	Goldman Sachs Large Cap Value Investment Team
	New York September 26, 2001

 5

FUND BASICS

Growth and Income Fund
as of August 31, 2001

PERFORMANCE REVIEW

August 31, 2000–August 31, 2001	Fund Total Return (without sales charge)1			S&P 500 Index2
Class A		–20.66	%		–24.39	%
Class B		–21.25			–24.39
Class C		–21.22			–24.39
Institutional		–20.32			–24.39
Service		–20.75			–24.39

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged S&P 500 Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		–16.66	%		–16.88	%		–13.33	%		–11.49	%		–11.92	%
Five Years		4.51			4.52			N/A			6.17			5.62	4
Since Inception		8.85			4.62			–4.00			5.74			9.53	4
		(2/5/93	)		(5/1/96	)		(8/15/97	)		(6/3/96	)		(2/5/93	)

3	The Standardized Total Returns are average annual total returns or cumulative total returns (only if the performance period is one year or less) as of the most recent calendar quarter-end. They assume reinvestment of all distributions at net asset value. These returns reflect a maximum initial sales charge of 5.5% for Class A shares, the assumed deferred sales charge for Class B shares (5% maximum declining to 0% after six years) and the assumed deferred sales charge for Class C shares (1% if redeemed within 12 months of purchase). Because Institutional and Service shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns.
4	Performance data for Service shares prior to 3/6/96 is that of Class A shares (excluding the impact of front-end sales charges applicable to Class A shares since Service shares are not subject to any sales charges). Performance of Class A shares of the Growth and Income Fund reflects the expenses applicable to the Fund’s Class A shares. The fees applicable to Services shares are different from those applicable to Class A shares which impact performance ratings and rankings for a class of shares.
	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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets		Line of Business
General Electric Co.		3.7%	Financial Services
Microsoft Corp.		3.0	Computer Software
Citigroup, Inc.		2.8	Banks
Exxon Mobil Corp.		2.8	Energy Resources
Federal Home Loan Mortgage Corp.		2.6	Financial Services
Pfizer, Inc.		2.4	Health Care
Wal-Mart Stores		1.9	Department Stores
SBC Communications, Inc.		1.8	Telephone
International Business Machines, Inc.		1.7	Computer Software
Johnson & Johnson		1.7	Medical Products

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

6 

Growth and Income Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Growth and Income Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated total cumulative returns, without sales charges, of –20.66%, –21.25%, –21.22%, –20.32%, and –20.75%, respectively. These figures compare to the –24.39% total cumulative return of the Fund’s benchmark, the S&P 500 Index.
	The one-year reporting period has been difficult for U.S. large-cap stocks. Furthermore, the impact of the tragic events of Tuesday, September 11, 2001 has deeply affected the financial markets. Despite this adversity, value stocks in general, and the Growth and Income Fund, have held up relatively well. During this volatile period, the Fund benefited from a value approach that focuses on quality and diversification.
	Portfolio Composition
	Our quality bias has served us well in this uncertain, turbulent period. Our research driven approach focuses on large-cap companies with financial strength, meaning strong balance sheets and the ability to generate excess cash flow. This emphasis has provided a foundation for underlying stock prices and has frequently led us to companies that were well positioned in their respective industries.
	Portfolio Highlights
	During the period, we have aggressively looked for opportunities to further upgrade the Fund’s portfolio. When market declines occur, investors often sell for emotional reasons. This usually results in valuations compressing within industries because investors sell securities indiscriminately, without regard to underlying fundamentals. It is during these times that higher quality companies often become available at very attractive relative prices.
	We believe our investment process is particularly well suited to identify these opportunities. Our team is structured around “centers of excellence,” whereby each team member has industry/sector specific responsibilities. Not only has this provided more in-depth industry expertise, but it has also allowed each of us to be more focused in our search for undervalued situations. Listed below are several of the more notable performers we held during the period.
n	Federal Home Loan Mortgage Corp. (Freddie Mac) — Freddie Mac, a company formed to help increase liquidity in the home loan market, was the Fund’s top contributor to the performance during the reporting period. Freddie Mac’s portfolio growth has been strong and it has benefited from the low interest rate environment.

 7

PORTFOLIO RESULTS

n	Canadian National Railway Co. — Our investments in solid businesses, such as Canadian National Railway Company in the transportation industry, had a positive impact on relative performance. This company has generated above-expectation revenue growth and strong free cash flow, conveying satisfactory performance despite the gloomy state of a slowing North American economy.
n	International Paper Co. — International Paper is a global forest products, paper and packaging company. The firm was a positive contributor to relative performance because it continued to benefit from capacity consolidation within the paper industry. Despite a continued shrinkage in demand, International Paper has shown that it is the leader in eliminating inefficient capacity.
	Portfolio Outlook
	As the U.S. market continues to experience relatively high levels of volatility and uncertainty, we expect our investment strategy to remain consistent. We believe that a research-intensive approach to buying high-quality businesses when their valuations are generally below industry averages is a sound investment strategy in any environment.
	Furthermore, we believe the Fund’s diversified portfolio is a key advantage in this environment for two reasons. First, we maintain broad exposure to all industries. Therefore, while a few individual stocks and industries have declined precipitously since the market reopened on September 17, the Fund has continued to perform relatively well. Second, diversified portfolios generally provide greater liquidity. The Fund holds, on average, roughly 100 names. As such, if we need to raise cash to meet client needs we have built in the flexibility to do so.
	As always, we appreciate your investment and look forward to earning your continued confidence in the years to come.
	Goldman Sachs Value Investment Team
	New York September 26, 2001

8

FUND BASICS

Mid Cap Value Fund
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return			Russell Midcap
August 31, 2000–August 31, 2001	(without sales charge)1			Value Index2
Class A		23.29	%		11.57	%
Class B		22.33			11.57
Class C		22.37			11.57
Institutional		23.75			11.57
Service		23.17			11.57

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 Midcap Value Index (with dividends reinvested) is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		29.14	%		30.62	%		34.61	%		37.18	%		36.52	%
Five Years		N/A			N/A			N/A			16.74			N/A
Since Inception		6.58			6.58			7.41			15.39			8.64
		(8/15/97	)		(8/15/97	)		(8/15/97	)		(8/1/95	)		(7/18/97	)

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.

Total return figures represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance reflects fee waivers and expense limitations in effect. In their absence, performance would be reduced.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets		Line of Business
Energy East Corp.		3.0%	Electrical Utilities
FirstEnergy Corp.		2.9	Electrical Utilities
Ocean Energy, Inc.		2.5	Energy Resources
Ross Stores, Inc.		2.3	Clothing
Supervalu, Inc.		2.3	Food & Beverage
Aon Corp.		2.2	Property Insurance
Pioneer Natural Resources Co.		2.2	Energy Resources
Deere & Co.		1.9	Heavy Machinery
ConAgra, Inc.		1.8	Food & Beverage
Republic Services, Inc.		1.8	Environmental Services

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

 9

PORTFOLIO RESULTS

Mid Cap Value Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Mid Cap Value Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated cumulative total returns, without sales charges, of 23.29%, 22.33%, 22.37%, 23.75%, and 23.17%, respectively. These figures compare very favorably to the 11.57% cumulative total return of the Fund’s benchmark, the Russell Midcap Value Index.
	Despite an overall difficult market environment, mid-cap stocks in general, and mid-cap value stocks in particular, generated strong results. The Fund’s outperformance was the result of not only strong stock selection but also our emphasis on diversification and quality.
	Portfolio Composition
	Throughout the reporting period, our research driven approach continued to focus on mid-cap companies with financial strength. This was exemplified by firms having strong balance sheets and the ability to generate excess cash flow. This strategy provided a foundation for underlying stock prices and frequently led us to companies that were well positioned in their respective industries.
	Portfolio Highlights
	During the period, we aggressively looked for opportunities to further upgrade the Fund’s portfolio. When market declines occur, investors often sell for emotional reasons. This usually results in valuations compressing within industries because investors sell securities indiscriminately, without regard to underlying fundamentals. It is during these times that higher quality companies often become available at very attractive relative prices.
	We believe our investment process is particularly well suited to identify these opportunities. Our team is structured around “centers of excellence,” whereby each team member has industry/sector specific responsibilities. Not only has this provided more in-depth industry expertise, but it has also allowed each of us to be more focused in our search for undervalued situations. Listed below are several of the more notable performers we held during the period.
n	Ross Stores Inc. — Ross Stores, a national chain of lower-priced retail stores, was a strong performer during the year. The company continues to expand its selection of brand names and home products, and this strategy enabled the firm to sustain its sales growth. In addition, we view the management team at Ross Stores as highly focused. Moreover, its pricing power has helped maintain low costs relative to its peers.

10

PORTFOLIO RESULTS

n	Supervalu, Inc. — Supervalu is the largest distributor of groceries to U.S. supermarkets. Despite a soft retail environment, Supervalu generated better than expected sales and profits. In addition, the company’s performance was enhanced following several reorganizations and a period of consolidation within the warehouse and chain market.
n	Republic Services, Inc. — Republic Services, a leading solid waste collection services provider, also aided the Fund’s performance. In line with the solid waste industry, the company generated strong results, despite a softening economy. We believe the firm is well positioned with its high percentage of franchise markets because this could help protect it from possible volume growth slowdowns in the future. In addition, relative to its larger competitors, Republic’s strong balance sheet should give it greater flexibility to capitalize on potentially attractive acquisition opportunities.
n	FirstEnergy Corp. — In the utility sector, our focus on companies like FirstEnergy, which has strong current cash flow, yielded positive results. We were also rewarded for avoiding utility firms whose stock prices were more dependent on “hoped for” future growth.
	Portfolio Outlook
	As the U.S. market continues to experience relatively high levels of volatility and uncertainty, we expect our investment strategy to remain consistent. We believe that a research-intensive approach to buying high-quality businesses when their valuations are generally below industry averages is a sound investment strategy in any environment.
	Furthermore, we believe the Fund’s diversified portfolio is a key advantage in this environment for two reasons. First, we maintain broad exposure to all industries. Therefore, while a few individual stocks and industries have declined precipitously since the market reopened on September 17, the Fund has continued to perform relatively well. Second, diversified portfolios generally provide greater liquidity. The Mid Cap Value Fund holds, on average, roughly 100 securities. As such, if we need to raise cash to meet client needs we have built in the flexibility to do so.
	As always, we appreciate your investment and look forward to earning your continued confidence in the years to come.
	Goldman Sachs Mid Cap Value Investment Team
	New York September 26, 2001

11

FUND BASICS

Small Cap Value Fund
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return			Russell 2000
August 31, 2000–August 31, 2001	(without sales charge)1			Value Index2
Class A		23.01	%		18.03	%
Class B		22.10			18.03
Class C		22.07			18.03
Institutional		23.48			18.03
Service		22.91			18.03

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) is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		28.62	%		30.10	%		34.05	%		36.66	%		36.01	%
Five Years		8.48			8.53			N/A			N/A			9.63	4
Since Inception		11.65			9.72			7.05			8.25			12.33	4
		(10/22/92	)		(5/1/96	)		(8/15/97	)		(8/15/97	)		(10/22/92	)

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.
	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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets		Line of Business
Sierra Pacific Resources		2.7%	Electrical Utilities
Zenith National Insurance Corp.		2.6	Property Insurance
Ingram Micro, Inc.		1.9	Computer Hardware
Charming Shoppes, Inc.		1.8	Clothing
ShopKo Stores, Inc.		1.8	Department Stores
Prentiss Properties Trust		1.7	Equity REIT
General Semiconductor, Inc.		1.7	Semiconductors
Commercial Metals Co.		1.6	Mining
Hutchinson Technology, Inc.		1.5	Computer Hardware
Community First Bankshares, Inc.		1.5	Banks

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

12

PORTFOLIO RESULTS

Small Cap Value Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Small Cap Value Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated total cumulative returns, without sales charges, of 23.01%, 22.10%, 22.07%, 23.48%, and 22.91%, respectively. These figures compare favorably to the 18.03% total cumulative return of the Fund’s benchmark, the Russell 2000 Value Index.
	Despite an overall difficult market environment, small-cap stocks in general, and small-cap value stocks in particular, generated strong results. The Fund’s outperformance was the result of not only strong stock selection, but also our emphasis on diversification and quality.
	Portfolio Composition
	Throughout the reporting period, our research driven approach continued to focus on small-cap companies with financial strength. This was exemplified by firms having strong balance sheets and the ability to generate excess cash flow. This strategy provided a foundation for underlying stock prices and frequently led us to companies that were well positioned in their respective industries.
	Portfolio Highlights
	During the period, we have aggressively looked for opportunities to further upgrade the Fund’s portfolio. When market declines occur, investors often sell for emotional reasons. This usually results in valuations compressing within industries because investors sell securities indiscriminately, without regard to underlying fundamentals. It is during these times that higher quality companies often become available at very attractive relative prices.
	We believe our investment process is particularly well suited to identify these opportunities. Our team is structured around “centers of excellence,” whereby each team member has industry/sector specific responsibilities. Not only has this provided more in-depth industry expertise, but it has also allowed each of us to be more focused in our search for undervalued situations. Listed below are several of the more notable performers we held during the period.
n	Beverly Enterprises, Inc. — Beverly Enterprises is the largest nursing home operator in the U.S. The company is a well-managed, low cost operator that should benefit from improved Medicare and Medicaid pricing. Beverly’s stock rose during the period, due in part to continued improving fundamentals in the nursing home industry.
n	Pacific Century Financial Corp. — Pacific Century Financial, a banking services company, was another strong performer during the year. The company has benefited from its aggressive strategy of focusing on business in Hawaii and the West Pacific. We believe the firm’s

13

PORTFOLIO RESULTS

	restructuring and new management team should allow it to maintain its strong competitive position. In addition, Pacific Century has a strong balance sheet that we believe positions it to perform well in a variety of market conditions.
n	Zenith National Insurance Corp. — Zenith National Insurance provides a variety of insurance products in California and Florida. The company benefited from improved industry pricing for workers’ compensation insurance and from growing investor recognition of its strong balance sheet and history of profitability.
	Portfolio Outlook
	As the U.S. market continues to experience relatively high levels of volatility and uncertainty, we expect our investment strategy to remain consistent. We believe that a research-intensive approach to buying high-quality businesses when their valuations are generally below industry averages is a sound investment strategy in any environment.
	Furthermore, we believe the Fund’s diversified portfolio is a key advantage in this environment for two reasons. First, we maintain broad exposure to all industries. Therefore, while a few individual stocks and industries have declined precipitously since the market reopened on September 17, the Fund has continued to perform relatively well. Second, diversified portfolios generally provide greater liquidity. The Fund holds, on average, roughly 100-130 names. As such, if we need to raise cash to meet client needs we have built in the flexibility to do so.
	As always, we appreciate your investment and look forward to earning your continued confidence in the years to come.
	Goldman Sachs Small Cap Value Investment Team
	New York September 26, 2001

14

GOLDMAN SACHS LARGE CAP VALUE FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on December 15, 1999 (commencement of operations) in Institutional Shares (at NAV) of the Goldman Sachs Large Cap Value Fund. For comparative purposes, the performance of the Fund’s benchmark, the Russell 1000 Value Index with dividends reinvested, is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class A, Class B, Class C and Service Shares may vary from the Institutional Shares due to differences in fees and loads.

Large Cap Value Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested December 15, 1999 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced December 15, 1999)
Excluding sales charges		1.53%		-1.21%
Including sales charges		-1.75%		-6.61%
Class B (commenced December 15, 1999)
Excluding contingent deferred sales charges		0.73%		-1.98%
Including contingent deferred sales charges		-1.62%		-6.88%
Class C (commenced December 15, 1999)
Excluding contingent deferred sales charges		0.69%		-1.96%
Including contingent deferred sales charges		0.69%		-2.94%
Institutional Class (commenced December 15, 1999)		1.83%		-0.81%
Service Class (commenced December 15, 1999)		1.50%		-1.17%

15

 GOLDMAN SACHS LARGE CAP VALUE FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 96.4%
Airlines – 1.0%
	100,505	Southwest Airlines Co.	$	1,798,034
Alcohol – 1.0%
	42,543	Anheuser-Busch Companies, Inc.		1,831,051
Banks – 13.6%
	42,535	Bank of America Corp.		2,615,902
	39,862	Bank One Corp.		1,382,813
	177,892	Citigroup, Inc.		8,138,559
	27,689	FleetBoston Financial Corp.		1,019,786
	17,155	M&T Bank Corp.		1,246,311
	21,876	Mellon Financial Corp.		771,129
	37,604	PNC Financial Services Group		2,504,050
	42,675	The Bank of New York Co., Inc.		1,694,198
	80,732	U.S. Bancorp.		1,956,944
	57,592	Wells Fargo & Co.		2,649,808
	22,323	Wilmington Trust Corp.		1,361,033
				25,340,533
Chemicals – 2.7%
	41,825	E.I. du Pont de Nemours & Co.		1,713,570
	18,767	Minnesota Mining & Manufacturing Co.		1,953,645
	39,862	The Dow Chemical Co.		1,397,562
				5,064,777
Computer Hardware – 1.1%
	114,340	Compaq Computer Corp.		1,412,099
	27,689	Hewlett-Packard Co.		642,662
				2,054,761
Computer Software – 1.4%
	18,710	International Business Machines, Inc.		1,871,000
	14,353	Microsoft Corp.*		818,839
				2,689,839
Defense/Aerospace – 2.1%
	18,767	Honeywell International, Inc.		699,259
	35,643	The B.F. Goodrich Co.		1,142,358
	31,275	United Technologies Corp.		2,139,210
				3,980,827
Department Stores – 0.9%
	47,918	The May Department Stores Co.		1,612,441
Electrical Utilities – 5.5%
	110,908	Energy East Corp.		2,335,722
	40,803	Entergy Corp.		1,571,732
	44,848	Exelon Corp.		2,448,701
	95,952	FirstEnergy Corp.		3,155,861
	38,051	Reliant Resources, Inc.*		748,844
				10,260,860
Energy Resources – 7.4%
	36,928	Anadarko Petroleum Corp.		1,911,024
	14,369	Burlington Resources, Inc.		546,022
	218,317	Exxon Mobil Corp.		8,765,428
	69,543	Pioneer Natural Resources Co.*		1,217,002
	37,798	Unocal Corp.		1,334,269
				13,773,745
Entertainment – 0.3%
	15,303	Viacom, Inc. Class B*		648,847
Environmental Services – 1.0%
	63,257	Waste Management, Inc.		1,956,539
Equity REIT – 0.8%
	58,524	Cousins Properties, Inc.		1,471,879
Financial Services – 6.6%
	22,087	American Express Co.		804,408
	46,028	Countrywide Credit Industries, Inc.		1,910,162
	64,628	Federal Home Loan Mortgage Corp.		4,063,809
	11,174	Federal National Mortgage Association		851,570
	19,253	Household International, Inc.		1,137,852
	52,754	J.P. Morgan Chase & Co.		2,078,508
	18,127	USA Education, Inc.		1,435,840
				12,282,149
Food & Beverage – 2.5%
	21,246	H.J. Heinz Co.		959,894
	14,369	Hershey Foods Corp.		926,513
	29,876	PepsiCo, Inc.		1,404,172
	39,862	Ralston Purina Group		1,302,690
				4,593,269
Forest – 2.6%
	35,643	Bowater, Inc.		1,690,904
	26,995	Georgia-Pacific Corp. (Timber Group)		1,066,842
	49,926	International Paper Co.		2,003,031
				4,760,777
Gas Utilities – 0.5%
	28,819	KeySpan Corp.		930,854
Grocery – 0.5%
	35,558	The Kroger Co.*		946,554
Health Care – 3.0%
	31,090	Bristol-Myers Squibb Co.		1,745,393
	28,809	Merck & Co., Inc.		1,875,466
	18,882	Pfizer, Inc.		723,369
	11,119	Pharmacia Corp.		440,312
	19,488	Schering-Plough Corp.		743,078
				5,527,618
Heavy Electrical – 0.5%
	16,005	Emerson Electric Co.		857,868

16     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS LARGE CAP VALUE FUND 

Shares		Description	Value
Common Stocks – (continued)
Heavy Machinery – 1.9%
	38,326	Crane Co.	$	1,076,578
	57,066	Deere & Co.		2,463,539
				3,540,117
Home Products – 2.0%
	19,143	Kimberly-Clark Corp.		1,187,823
	34,335	The Procter & Gamble Co.		2,545,940
				3,733,763
Industrial Parts – 1.2%
	31,081	Dover Corp. ADR		1,116,429
	14,162	Parker-Hannifin Corp.		623,128
	8,924	Tyco International Ltd.		463,602
				2,203,159
Information Services – 1.4%
	10,254	Electronic Data Systems Corp.		604,781
	30,018	First Data Corp.		1,976,685
				2,581,466
Life Insurance – 3.3%
	43,389	AFLAC, Inc.		1,194,065
	8,184	CIGNA Corp.		736,560
	60,208	John Hancock Financial Services, Inc.		2,405,310
	35,643	Lincoln National Corp.		1,777,160
				6,113,095
Media – 5.3%
	10,662	AOL Time Warner, Inc.*		398,226
	36,944	Comcast Corp.*		1,353,259
	11,174	EchoStar Communications Corp.*		314,660
	106,937	Fox Entertainment Group, Inc.*		2,622,095
	22,087	General Motors Corp. Class H*		411,923
	129,396	Liberty Media Corp. Series A*		1,966,819
	46,717	The Interpublic Group of Companies, Inc.		1,265,096
	38,555	The Walt Disney Co.		980,454
	20,872	USA Networks, Inc. Class B*		483,395
				9,795,927
Medical Products – 2.1%
	31,028	Abbott Laboratories		1,542,091
	18,510	Baxter International, Inc.		955,116
	28,390	Johnson & Johnson		1,496,448
				3,993,655
Mining – 0.6%
	31,090	Alcoa, Inc.		1,185,151
Oil Refining – 2.2%
	22,690	Chevron Corp.		2,059,117
	8,184	El Paso Corp.		397,661
	24,714	Texaco, Inc.		1,721,330
				4,178,108
Oil Services – 0.7%
	22,087	Baker Hughes, Inc.		727,546
	18,247	Noble Drilling Corp.*		496,318
				1,223,864
Property Insurance – 6.4%
	62,151	AMBAC Financial Group, Inc.		3,679,339
	23,301	American International Group, Inc.		1,822,138
	22,017	RenaissanceRe Holdings Ltd. Series B		1,570,913
	19,917	The Hartford Financial Services Group, Inc.		1,290,622
	41,738	XL Capital Ltd.		3,464,254
				11,827,266
Publishing – 0.4%
	12,796	Dow Jones & Co., Inc.		702,244
Railroads – 0.5%
	21,579	Canadian National Railway Co.		938,686
Restaurants – 0.5%
	30,627	McDonald’s Corp.		919,729
Security/Asset Management – 1.2%
	42,976	Merrill Lynch & Co., Inc.		2,217,562
Semiconductors – 0.5%
	32,125	Arrow Electronics, Inc.*		860,629
Telecommunications Equipment – 0.3%
	115,232	Agere Systems, Inc.*		587,683
Telephone – 7.4%
	102,919	AT&T Corp.		1,959,578
	35,029	BellSouth Corp.		1,306,582
	133,445	SBC Communications, Inc.		5,459,235
	43,187	Sprint Corp.		1,007,984
	74,069	Verizon Communications, Inc.		3,703,450
	31,344	WorldCom, Inc.-WorldCom Group		403,084
				13,839,913
Thrifts – 0.5%
	26,498	Dime Bancorp, Inc.		1,022,823
Tobacco – 1.8%
	71,979	Philip Morris Companies, Inc.		3,411,805
Truck Freight – 0.2%
	8,328	United Parcel Service, Inc. Class B		459,955
Wireless – 1.0%
	31,599	Convergys Corp.*		886,984
	36,928	Sprint Corp. (PCS Group)*		922,461
				1,809,445
TOTAL COMMON STOCKS
(Cost $183,185,736)			$	179,529,267

The accompanying notes are an integral part of these financial statements.      17

Statement of Investments  (continued)

August 31, 2001

 GOLDMAN SACHS LARGE CAP VALUE FUND

Principal		Interest			Maturity
Amount		Rate			Date		Value
Repurchase Agreement – 4.6%
Joint Repurchase Agreement Account II^
$	8,500,000		3.69	%		09/04/2001	$	8,500,000
TOTAL REPURCHASE AGREEMENT
(Cost $8,500,000)							$	8,500,000
TOTAL INVESTMENTS
(Cost $191,685,736)							$	188,029,267
*   Non-income producing security.
^  Joint repurchase agreement was entered into on August 31, 2001.
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

18     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS GROWTH AND INCOME FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on February 5, 1993 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Growth and Income Fund. For comparative purposes, the performance of the Fund’s benchmark, the Standard and Poor’s 500 Index with dividends reinvested (“S&P 500 Index”), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 Shares due to differences in fees and loads.

Growth and Income Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested February 5, 1993 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		Five Years		One Year
Class A (commenced February 5, 1993)
Excluding sales charges		8.54%		4.37%		-20.66%
Including sales charges		7.83%		3.19%		-25.02%
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges		3.36%		3.62%		-21.25%
Including contingent deferred sales charges		3.16%		3.21%		-25.19%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		-5.43%		n/a		-21.22%
Including contingent deferred sales charges		-5.43%		n/a		-22.01%
Institutional Class (commenced June 3, 1996)		4.25%		4.85%		-20.32%
Service Class (commenced March 6, 1996)		4.08%		4.30%		-20.75%

19

 GOLDMAN SACHS GROWTH AND INCOME FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 98.9%
Airlines – 0.8%
	231,932	Southwest Airlines Co.	$	4,149,264
Alcohol – 0.8%
	98,384	Anheuser-Busch Companies, Inc.		4,234,447
Banks – 7.2%
	54,354	Bank One Corp.		1,885,540
	307,912	Citigroup, Inc.		14,086,974
	32,340	M&T Bank Corp.		2,349,501
	41,222	Mellon Financial Corp.		1,453,076
	81,824	PNC Financial Services Group		5,448,660
	77,928	The Bank of New York Co., Inc.		3,093,742
	141,263	U.S. Bancorp		3,424,215
	86,012	Wells Fargo & Co.		3,957,412
				35,699,120
Chemicals – 1.9%
	86,987	E.I. du Pont de Nemours & Co.		3,563,857
	44,905	Minnesota Mining & Manufacturing Co.		4,674,611
	37,405	The Dow Chemical Co.		1,311,419
				9,549,887
Clothing – 0.2%
	45,587	The Gap, Inc.		895,785
Computer Hardware – 1.1%
	113,685	Compaq Computer Corp.		1,404,010
	139,685	Dell Computer Corp.*		2,986,465
	51,222	Hewlett-Packard Co.		1,188,863
				5,579,338
Computer Software – 5.6%
	86,792	International Business Machines, Inc.		8,679,200
	263,720	Microsoft Corp.*		15,045,226
	232,030	Oracle Corp.*		2,833,086
	22,209	Siebel Systems, Inc.*		479,714
	28,395	VERITAS Software Corp.*		815,505
				27,852,731
Defense/ Aerospace – 1.6%
	37,211	Honeywell International, Inc.		1,386,482
	69,940	The B.F. Goodrich Co.		2,241,577
	61,368	United Technologies Corp.		4,197,571
				7,825,630
Department Stores – 2.3%
	59,712	The May Department Stores Co.		2,009,309
	193,132	Wal-Mart Stores, Inc.		9,279,992
				11,289,301
Electrical Equipment – 0.1%
	38,574	Solectron Corp.*		524,606
Electrical Utilities – 3.9%
	273,916	Energy East Corp.		5,768,671
	58,932	Entergy Corp.		2,270,061
	47,770	Exelon Corp.		2,608,242
	216,401	FirstEnergy Corp.		7,117,429
	78,061	Reliant Resources, Inc.*		1,536,240
				19,300,643
Energy Resources – 6.4%
	92,890	Anadarko Petroleum Corp.		4,807,058
	35,846	Burlington Resources, Inc.		1,362,148
	349,966	Exxon Mobil Corp.		14,051,135
	190,519	Pioneer Natural Resources Co.*		3,334,083
	106,080	Royal Dutch Petroleum Co. ADR		6,007,310
	60,007	Unocal Corp.		2,118,247
				31,679,981
Entertainment – 0.5%
	63,477	Viacom, Inc. Class B*		2,691,425
Environmental Services – 0.8%
	121,860	Waste Management, Inc.		3,769,130
Equity REIT – 0.3%
	68,381	Cousins Properties, Inc.		1,719,782
Financial Services – 9.4%
	37,113	American Express Co.		1,351,655
	95,144	Countrywide Credit Industries, Inc.		3,948,476
	203,878	Federal Home Loan Mortgage Corp.		12,819,849
	22,307	Federal National Mortgage Association		1,700,016
	450,225	General Electric Co.		18,450,221
	64,095	Household International, Inc.		3,788,015
	53,867	J.P. Morgan Chase & Co.		2,122,360
	33,411	USA Education, Inc.		2,646,485
				46,827,077
Food & Beverage – 2.6%
	58,879	H.J. Heinz Co.		2,660,153
	29,028	Hershey Foods Corp.		1,871,726
	95,684	PepsiCo, Inc.		4,497,148
	80,423	The Coca-Cola Co.		3,914,187
				12,943,214
Forest – 2.2%
	111,339	Bowater, Inc.		5,281,922
	147,185	International Paper Co.		5,905,062
				11,186,984
Gas Utilities – 0.5%
	77,144	KeySpan Corp.		2,491,751
Grocery – 0.6%
	107,735	The Kroger Co.*		2,867,906
Health Care – 9.6%
	69,063	American Home Products Corp.		3,867,528
	50,653	Amgen, Inc.*		3,256,988
	91,370	Bristol-Myers Squibb Co.		5,129,512
	73,155	Eli Lilly & Co.		5,679,023
	54,733	GlaxoSmithKline PLC ADR		2,898,112

20     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS GROWTH AND INCOME FUND 

Shares		Description	Value
Common Stocks – (continued)
Health Care – (continued)
	97,312	Merck & Co., Inc.	$	6,335,011
	317,976	Pfizer, Inc.		12,181,661
	72,179	Pharmacia Corp.		2,858,288
	142,413	Schering-Plough Corp.		5,430,208
				47,636,331
Heavy Electrical – 0.1%
	10,812	Emerson Electric Co.		579,523
Heavy Machinery – 1.8%
	107,833	Crane Co.		3,029,029
	134,230	Deere & Co.		5,794,709
				8,823,738
Home Products – 1.7%
	28,931	Colgate-Palmolive Co.		1,566,613
	35,016	Kimberly-Clark Corp.		2,172,743
	64,973	The Procter & Gamble Co.		4,817,748
				8,557,104
Industrial Parts – 1.1%
	13,637	Parker-Hannifin Corp.		600,028
	90,494	Tyco International Ltd.		4,701,163
				5,301,191
Information Services – 1.5%
	35,554	Electronic Data Systems Corp.		2,096,975
	80,557	First Data Corp.		5,304,678
				7,401,653
Life Insurance – 2.9%
	119,569	AFLAC, Inc.		3,290,539
	13,053	CIGNA Corp.		1,174,770
	113,482	John Hancock Financial Services, Inc.		4,533,606
	112,216	Lincoln National Corp.		5,595,090
				14,594,005
Media – 5.2%
	222,240	AOL Time Warner, Inc.*		8,300,664
	28,249	Clear Channel Communications, Inc.*		1,420,077
	82,604	Comcast Corp.*		3,025,785
	161,194	Fox Entertainment Group, Inc.*		3,952,477
	49,971	General Motors Corp. Class H*		931,959
	136,666	Liberty Media Corp. Series A*		2,077,323
	94,917	The Interpublic Group of Companies, Inc.		2,570,352
	69,648	The Walt Disney Co.		1,771,149
	74,032	USA Networks, Inc. Class B*		1,714,581
				25,764,367
Medical Products – 2.9%
	89,617	Abbott Laboratories		4,453,965
	29,807	Baxter International, Inc.		1,538,041
	162,090	Johnson & Johnson		8,543,764
				14,535,770
Mining – 0.4%
	52,407	Alcoa, Inc.		1,997,755
Oil Refining – 1.8%
	29,125	Chevron Corp.		2,643,094
	14,709	El Paso Corp.		714,710
	78,512	Texaco, Inc.		5,468,361
				8,826,165
Oil Services – 0.6%
	57,959	Baker Hughes, Inc.		1,909,170
	40,620	Transocean Sedco Forex, Inc.		1,173,918
				3,083,088
Property Insurance – 5.5%
	76,223	AMBAC Financial Group, Inc.		4,512,402
	105,251	American International Group, Inc.		8,230,628
	52,991	RenaissanceRe Holdings Ltd. Series B		3,780,908
	37,893	The Hartford Financial Services Group, Inc.		2,455,466
	101,306	XL Capital Ltd.		8,408,398
				27,387,802
Publishing – 0.2%
	22,840	Dow Jones & Co., Inc.		1,253,459
Railroads – 0.6%
	71,791	Canadian National Railway Co.		3,122,909
Restaurants – 0.3%
	52,796	McDonald’s Corp.		1,585,464
Security/ Asset Management – 0.6%
	54,894	Merrill Lynch & Co., Inc.		2,832,530
Semiconductors – 2.9%
	32,827	Altera Corp.*		932,287
	91,557	Arrow Electronics, Inc.*		2,452,812
	291,352	Intel Corp.		8,146,202
	90,104	Texas Instruments, Inc.		2,982,442
				14,513,743
Specialty Retail – 0.6%
	64,853	The Home Depot, Inc.		2,979,995
Telecommunications Equipment – 1.9%
	312,397	Agere Systems, Inc.*		1,593,225
	325,932	Cisco Systems, Inc.*		5,322,469
	47,536	QUALCOMM, Inc.*		2,797,494
				9,713,188
Telephone – 4.6%
	155,524	AT&T Corp.		2,961,177
	42,373	BellSouth Corp.		1,580,513
	221,868	SBC Communications, Inc.		9,076,620
	95,493	Sprint Corp.		2,228,806
	116,791	Verizon Communications, Inc.		5,839,550
	86,208	WorldCom, Inc.-WorldCom Group		1,108,635
				22,795,301

The accompanying notes are an integral part of these financial statements.      21

 GOLDMAN SACHS GROWTH AND INCOME FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Thrifts – 0.5%
	59,029	Dime Bancorp, Inc.	$	2,278,519
Tobacco – 1.4%
	152,836	Philip Morris Companies, Inc.		7,244,426
Wireless – 1.4%
	86,646	Convergys Corp.*		2,432,153
	174,865	Sprint Corp. (PCS Group)*		4,368,128
				6,800,281
TOTAL COMMON STOCKS
(Cost $517,797,009)			$	492,686,309

Principal		Interest			Maturity
Amount		Rate			Date		Value
Repurchase Agreement – 1.2%
Joint Repurchase Agreement Account II^
$	5,900,000		3.69	%		09/04/2001	$	5,900,000
TOTAL REPURCHASE AGREEMENT
(Cost $5,900,000)							$	5,900,000
TOTAL INVESTMENTS
(Cost $523,697,009)							$	498,586,309

*	Non-income producing security.
^	Joint repurchase agreement was entered into on August 31, 2001.
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

22     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS MID CAP VALUE FUND 

Performance Summary

August 31, 2001

The following graph shows the value as of August 31, 2001, of a $10,000 investment made on August 1, 1995 (commencement of operations) in Institutional Shares (at NAV) of the Goldman Sachs Mid Cap Value Fund. For comparative purposes, the performance of the Fund’s benchmark, the Russell Midcap Value Index with dividends reinvested is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class A, Class B, Class C and Service Shares will vary from the Institutional Shares due to differences in fees and loads.

Mid Cap Value Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested August 1, 1995 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		Five Years			One Year
Class A (commenced August 15, 1997)
Excluding sales charges		7.75%		n/a			23.29%
Including sales charges		6.25%		n/a			16.49%
Class B (commenced August 15, 1997)
Excluding contingent deferred sales charges		7.01%		n/a			22.33%
Including contingent deferred sales charges		6.49%		n/a			17.31%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		7.01%		n/a			22.37%
Including contingent deferred sales charges		7.01%		n/a			21.36%
Institutional Class (commenced August 1, 1995)		14.92%		16.75	%		23.75%
Service Class (commenced July 18, 1997)		8.23%		n/a			23.17%

23

 GOLDMAN SACHS MID CAP VALUE FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 93.5%
Airlines – 0.7%
	33,065	Continental Airlines, Inc. Class B*	$	1,442,295
	71,405	Southwest Airlines Co.		1,277,436
				2,719,731
Apartments – 0.6%
	53,552	Apartment Investment & Management Co.		2,570,496
Banks – 8.1%
	113,859	Comerica, Inc.		6,803,075
	282,405	KeyCorp		7,088,366
	217,661	SouthTrust Corp.		5,302,222
	128,948	The Colonial BancGroup, Inc.		1,740,798
	186,722	UnionBanCal Corp.		6,927,386
	76,469	Wilmington Trust Corp.		4,662,315
				32,524,162
Chemicals – 3.7%
	34,056	Eastman Chemical Co.		1,321,032
	357,530	IMC Global, Inc.		4,222,429
	110,524	Potash Corp. of Saskatchewan, Inc.		6,944,223
	45,705	PPG Industries, Inc.		2,473,555
				14,961,239
Clothing – 2.3%
	312,611	Ross Stores, Inc.		9,159,502
Computer Hardware – 1.5%
	399,308	Ingram Micro, Inc.*		5,989,620
Computer Software – 1.1%
	91,516	Synopsys, Inc.*		4,222,548
Construction – 0.9%
	115,913	Clayton Homes, Inc.		1,774,628
	79,099	D.R. Horton, Inc.		1,996,459
				3,771,087
Consumer Durables – 1.2%
	4,548	Ethan Allen Interiors, Inc.		159,438
	207,754	Herman Miller, Inc.		4,740,946
				4,900,384
Defense/ Aerospace – 0.8%
	78,850	Raytheon Co.		2,072,966
	41,617	The B.F. Goodrich Co.		1,333,825
				3,406,791
Department Stores – 1.0%
	41,778	Federated Department Stores, Inc.*		1,516,959
	68,491	The May Department Stores Co.		2,304,722
				3,821,681
Electrical Equipment – 1.2%
	52,033	Eaton Corp.		3,742,734
	71,129	Solectron Corp.*		967,354
				4,710,088
Electrical Utilities – 10.1%
	95,723	American Electric Power Co., Inc.		4,381,242
	571,299	Energy East Corp.		12,031,557
	119,237	Entergy Corp.		4,593,009
	79,614	Exelon Corp.		4,346,925
	356,138	FirstEnergy Corp.		11,713,379
	28,820	FPL Group, Inc.		1,566,367
	95,999	Reliant Resources, Inc.*		1,889,260
				40,521,739
Energy Resources – 5.1%
	34,436	Devon Energy Corp.		1,593,354
	538,340	Ocean Energy, Inc.		10,147,709
	496,339	Pioneer Natural Resources Co.*		8,685,932
				20,426,995
Environmental Services – 1.8%
	367,295	Republic Services, Inc.*		7,290,806
Equity REIT – 3.5%
	98,879	Boston Properties, Inc.		3,895,833
	171,967	Duke-Weeks Realty Corp.		4,345,606
	40,512	Equity Residential Properties Trust		2,386,562
	96,724	Health Care Property Investors, Inc.		3,429,833
				14,057,834
Financial Services – 1.3%
	73,579	Countrywide Credit Industries, Inc.		3,053,529
	76,097	Metris Cos., Inc.		2,069,838
				5,123,367
Food & Beverage – 4.6%
	165,130	Archer-Daniels-Midland Co.		2,217,701
	320,169	ConAgra, Inc.		7,347,878
	432,786	Supervalu, Inc.		9,079,850
				18,645,429
Forest – 2.6%
	120,654	Georgia-Pacific Corp. (Timber Group)		4,768,246
	222,481	Sonoco Products Co.		5,775,607
				10,543,853
Gas Utilities – 0.7%
	83,289	KeySpan Corp.		2,690,235
Health Care – 0.7%
	85,522	Mylan Labs, Inc.		2,821,371
Heavy Electrical – 0.6%
	191,216	UCAR International, Inc.*		2,428,443
Heavy Machinery – 1.9%
	181,465	Deere & Co.		7,833,844
Home Products – 1.5%
	158,507	Fortune Brands, Inc.		6,062,893

24     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS MID CAP VALUE FUND 

Shares		Description	Value
Common Stocks – (continued)
Hotels – 1.9%
	208,700	Harrah’s Entertainment, Inc.*	$	5,964,646
	49,260	Starwood Hotels & Resorts Worldwide, Inc.		1,667,451
				7,632,097
Industrial Parts – 3.3%
	319,676	Pall Corp.		7,147,955
	144,013	Parker-Hannifin Corp.		6,336,572
				13,484,527
Media – 0.8%
	140,637	DoubleClick, Inc.*		1,129,315
	75,491	The Interpublic Group of Companies, Inc.		2,044,296
				3,173,611
Medical Providers – 4.3%
	188,958	Health Management Associates, Inc.*		3,769,712
	181,550	Humana, Inc.*		2,178,600
	148,443	Manor Care, Inc.*		4,175,702
	82,211	Tenet Healthcare Corp.		4,556,134
	570,257	WebMD Corp.*		2,794,259
				17,474,407
Mining – 1.1%
	61,655	Nucor Corp.		2,996,433
	38,235	Phelps Dodge Corp.		1,506,459
				4,502,892
Motor Vehicle – 2.3%
	119,135	Delphi Automotive Systems Corp.		1,785,834
	75,020	Lear Corp.*		2,718,725
	268,635	Visteon Corp.		4,593,658
				9,098,217
Office – 0.3%
	58,773	ProLogis Trust		1,292,418
Oil Refining – 0.4%
	33,207	Tosco Corp.		1,540,805
Oil Services – 0.4%
	52,691	Noble Drilling Corp.*		1,433,195
Property Insurance – 8.2%
	62,648	Allmerica Financial Corp.		3,337,259
	45,018	AMBAC Financial Group, Inc.		2,665,066
	238,654	Aon Corp.		8,865,996
	28,368	Everest Re Group, Ltd.		1,841,083
	55,951	Loews Corp.		2,731,528
	265,670	Old Republic International Corp.		7,133,239
	73,565	The St. Paul Companies, Inc.		3,091,937
	41,705	XL Capital Ltd.		3,461,515
				33,127,623
Publishing – 1.8%
	72,358	A.H. Belo Corp.		1,319,810
	29,017	Dow Jones & Co., Inc.		1,592,453
	88,243	Media General, Inc.		4,385,677
				7,297,940
Railroads – 1.2%
	75,415	Burlington Northern Santa Fe Corp.		2,044,501
	37,477	CSX Corp.		1,324,437
	30,822	Union Pacific Corp.		1,641,888
				5,010,826
Restaurants – 2.3%
	215,296	CBRL Group, Inc.		4,534,133
	111,469	Darden Restaurants, Inc.		3,190,243
	34,874	Tricon Global Restaurants, Inc.*		1,486,330
				9,210,706
Security/ Asset Management – 1.3%
	37,611	Alliance Capital Management Holding LP		1,969,312
	64,397	The Bear Stearns Companies, Inc.		3,360,879
				5,330,191
Semiconductors – 2.3%
	112,541	Arrow Electronics, Inc.*		3,014,973
	106,700	Fairchild Semiconductor Corp.*		2,301,519
	60,729	KEMET Corp.*		1,105,268
	113,438	Vishay Intertechnology, Inc.*		2,646,509
				9,068,269
Specialty Retail – 1.5%
	257,298	Toys ‘R’ Us, Inc.*		6,157,141
Telephone – 0.4%
	50,839	CenturyTel, Inc.		1,781,907
Thrifts – 1.7%
	103,650	GreenPoint Financial Corp.		4,085,883
	256,845	Sovereign Bancorp, Inc.		2,845,843
				6,931,726
Tobacco – 0.5%
	56,667	UST, Inc.		1,870,011
TOTAL COMMON STOCKS
(Cost $341,746,420)			$	376,622,647

The accompanying notes are an integral part of these financial statements.      25

 GOLDMAN SACHS MID CAP VALUE FUND

Statement of Investments  (continued)

August 31, 2001

Principal		Interest			Maturity
Amount		Rate			Date		Value
Repurchase Agreement – 4.8%
Joint Repurchase Agreement Account II^
$	19,300,000		3.69	%		09/04/2001	$	19,300,000
TOTAL REPURCHASE AGREEMENT
(Cost $19,300,000)							$	19,300,000
TOTAL INVESTMENTS
(Cost $361,046,420)							$	395,922,647
*   Non-income producing security.
^  Joint repurchase agreement was entered into on August 31, 2001.
The percentage shown for each investment category reflects the value of investments in that category as a percentage of total net assets.

26     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS SMALL CAP VALUE FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on October 22, 1992 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) in the Goldman Sachs Small Cap Value Fund. For comparative purposes, the performance of the Fund’s benchmark, the Russell 2000 Value Index with dividends reinvested, is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 Shares 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 August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		Five Years		One Year
Class A (commenced October 22, 1992)
Excluding sales charges		12.21%		10.03%		23.01%
Including sales charges		11.50%		8.79%		16.25%
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges		9.66%		9.20%		22.10%
Including contingent deferred sales charges		9.50%		8.85%		17.10%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		6.88%		n/a		22.07%
Including contingent deferred sales charges		6.88%		n/a		21.07%
Institutional Class (commenced August 15, 1997)		8.08%		n/a		23.48%
Service Class (commenced August 15, 1997)		7.58%		n/a		22.91%

27

 GOLDMAN SACHS SMALL CAP VALUE FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 95.8%
Airlines – 0.8%
	436,255	AirTran Holdings, Inc.*	$	2,848,745
Apartments – 1.0%
	96,453	Camden Property Trust		3,650,746
Apparel – 1.8%
	70,104	Kellwood Co.		1,525,463
	251,498	Tropical Sportswear Int’l Corp.*		5,100,379
				6,625,842
Banks – 8.7%
	221,651	Community First Bankshares, Inc.		5,397,202
	47,225	Corus Bankshares, Inc.		2,338,110
	18,874	Cullen/Frost Bankers, Inc.		674,745
	79,999	GBC Bancorp		2,508,769
	194,682	Pacific Century Financial Corp.		5,085,094
	111,502	Silicon Valley Bancshares*		2,493,185
	203,249	Sky Financial Group, Inc.		4,064,980
	121,536	Susquehanna Bancshares, Inc.		2,485,411
	376,231	The Colonial BancGroup, Inc.		5,079,118
	18,448	Wilmington Trust Corp.		1,124,775
				31,251,389
Chemicals – 3.1%
	231,561	Agrium, Inc.		2,466,125
	229,172	IMC Global, Inc.		2,706,521
	198,515	Millennium Chemicals, Inc.		2,668,042
	92,170	The Lubrizol Corp.		3,316,276
				11,156,964
Clothing – 2.9%
	958,067	Charming Shoppes, Inc.*		6,534,017
	239,789	Urban Outfitters, Inc.*		3,834,226
				10,368,243
Computer Hardware – 4.3%
	290,998	Hutchinson Technology, Inc.*		5,494,042
	452,185	Ingram Micro, Inc.*		6,782,775
	542,377	Maxtor Corp.*		3,270,534
				15,547,351
Construction – 1.5%
	21,967	Beazer Homes USA, Inc.*		1,425,658
	188,614	Clayton Homes, Inc.		2,887,680
	22,303	Lennar Corp.		993,599
				5,306,937
Consumer Durables – 0.7%
	65,986	Furniture Brands International, Inc.*		1,720,915
	51,504	Movado Group, Inc.		939,948
				2,660,863
Defense/Aerospace – 0.4%
	58,105	Ducommun, Inc.*		781,512
	39,787	Herley Industries, Inc.*		729,694
				1,511,206
Department Stores – 1.8%
	695,268	ShopKo Stores, Inc.*	$	6,306,081
Electrical Utilities – 5.9%
	122,854	El Paso Electric Co.*		1,830,524
	161,712	Energy East Corp.		3,405,655
	267,980	NewPower Holdings, Inc.*		1,071,920
	135,198	Public Service Co. of New Mexico		3,839,623
	573,238	Sierra Pacific Resources		9,716,384
	71,241	Unisource Energy Corp.		1,182,601
				21,046,707
Energy Resources – 1.6%
	43,645	Louis Dreyfus Natural Gas Corp.*		1,451,196
	181,174	Swift Energy Co.*		4,205,049
				5,656,245
Environmental Services – 0.8%
	234,182	Casella Waste Systems, Inc.*		2,725,878
Equity REIT – 8.5%
	47,667	CenterPoint Properties Corp.		2,323,766
	165,397	Correctional Properties Trust		2,447,876
	208,864	Cousins Properties, Inc.		5,252,930
	130,608	FelCor Lodging Trust, Inc.		2,746,686
	86,912	Health Care Property Investors, Inc.		3,081,900
	151,567	Liberty Property Trust		4,622,793
	218,990	Prentiss Properties Trust		6,203,987
	103,639	Storage USA, Inc.		3,907,190
				30,587,128
Financial Services – 1.9%
	98,807	Allied Capital Corp.		2,331,845
	124,277	Metris Cos., Inc.		3,380,335
	57,810	Willis Group Holdings Ltd.*		1,087,406
				6,799,586
Food & Beverage – 1.5%
	121,889	Corn Products International, Inc.		4,022,337
	129,572	The Topps Co., Inc.*		1,490,078
				5,512,415
Forest – 2.2%
	364,726	Caraustar Industries, Inc.		3,774,914
	218,695	Packaging Corp. of America*		4,019,614
				7,794,528
Gas Utilities – 1.3%
	12,752	Atmos Energy Corp.		275,443
	97,587	Northwest Natural Gas Co.		2,439,675
	91,368	Vectren Corp.		1,873,044
				4,588,162
Health Care – 0.5%
	31,679	Caliper Technologies Corp.*		443,506
	20,190	Kos Pharmaceuticals, Inc.*		696,959
	35,774	Molecular Devices Corp.*		811,712
				1,952,177

28     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS SMALL CAP VALUE FUND 

Shares		Description	Value
Common Stocks – (continued)
Heavy Electrical – 3.0%
	199,371	Belden, Inc.	$	4,575,565
	88,744	General Cable Corp.		1,343,584
	382,350	UCAR International, Inc.*		4,855,845
				10,774,994
Heavy Machinery – 1.8%
	284,530	AGCO Corp.		3,343,228
	179,957	Milacron, Inc.		3,239,226
				6,582,454
Home Products – 0.8%
	108,825	Oneida Ltd.		1,986,056
	37,490	Tupperware Corp.		885,889
				2,871,945
Hotels – 0.6%
	60,911	GTECH Holdings Corp.*		2,008,845
Industrial Parts – 2.2%
	114,306	Denison International PLC ADR*		1,886,049
	293,011	Lydall, Inc.*		2,927,180
	50,197	Pentair, Inc.		1,882,387
	139,257	Wabash National Corp.		1,350,793
				8,046,409
Industrial Services – 3.3%
	142,278	Cornell Cos., Inc.*		2,219,537
	140,007	Harsco Corp.		4,956,248
	139,884	Pittston Brink’s Group		3,085,841
	109,313	Wackenhut Corrections Corp.*		1,448,397
				11,710,023
Information Services – 0.5%
	50,481	National Data Corp.		1,949,071
Leisure – 0.6%
	163,141	Station Casinos, Inc.*		2,161,618
Life Insurance – 0.3%
	34,052	Liberty Financial Companies, Inc.		1,113,500
Media – 0.2%
	102,445	DoubleClick, Inc.*		822,633
Medical Products – 0.8%
	82,558	Haemonetics Corp.*		2,960,530
Medical Providers – 2.6%
	239,626	Beverly Enterprises, Inc.*		2,396,260
	133,342	Health Net, Inc.*		2,516,164
	297,622	Humana, Inc.*		3,571,464
	36,196	Manor Care, Inc.*		1,018,193
				9,502,081
Mining – 2.5%
	187,937	Commercial Metals Co.		5,901,222
	198,368	Wolverine Tube, Inc.*		2,927,912
				8,829,134
Motor Vehicle – 0.2%
	136,049	Intermet Corp.		700,652
Office – 0.5%
	59,714	SL Green Realty Corp.		1,749,620
Oil Services – 1.3%
	83,619	Cal Dive International, Inc.*	$	1,463,332
	60,335	NS Group, Inc.*		434,412
	115,701	TETRA Technologies, Inc.*		2,639,140
				4,536,884
Property Insurance – 6.2%
	134,756	Horace Mann Educators Corp.		2,722,071
	170,505	IPC Holdings Ltd.		4,107,466
	95,912	Mutual Risk Management Ltd.		1,012,831
	92,138	Old Republic International Corp.		2,473,905
	70,071	The Commerce Group, Inc.		2,620,655
	306,437	Zenith National Insurance Corp.		9,193,110
				22,130,038
Publishing – 3.0%
	123,309	ADVO, Inc.*		4,488,447
	83,693	Lee Enterprises, Inc.		2,765,217
	69,921	Media General, Inc.		3,475,074
				10,728,738
Restaurants – 1.8%
	177,663	CBRL Group, Inc.		3,741,583
	50,115	IHOP Corp.*		1,348,093
	96,653	Morton’s Restaurant Group, Inc.*		1,522,285
				6,611,961
Retail – 1.3%
	109,568	Pan Pacific Retail Properties, Inc.		2,875,064
	130,769	Taubman Centers, Inc.		1,758,843
				4,633,907
Security/ Asset Management – 0.8%
	44,836	American Capital Strategies Ltd.		1,265,272
	42,452	BlackRock, Inc.*		1,615,299
				2,880,571
Semiconductors – 2.7%
	201,700	Entegris, Inc.*		2,420,400
	466,482	General Semiconductor, Inc.*		6,040,942
	307,074	NeoMagic Corp.*		1,099,540
				9,560,882
Specialty Retail – 3.9%
	63,726	Aaron Rents, Inc. Class B		1,122,215
	297,621	Brookstone, Inc.*		4,136,932
	190,262	Lithia Motors, Inc.*		3,196,401
	156,942	Pier 1 Imports, Inc.		1,906,845
	232,932	The Good Guys, Inc.*		784,981
	188,610	Tuesday Morning Corp.*		2,674,490
				13,821,864

The accompanying notes are an integral part of these financial statements.      29

 GOLDMAN SACHS SMALL CAP VALUE FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Thrifts – 1.7%
	220,973	Sovereign BanCorp., Inc.	$	2,448,381
	152,985	Washington Federal, Inc.		3,797,088
				6,245,469
Truck Freight – 2.0%
	69,261	Arkansas Best Corp.*		1,840,265
	106,579	Heartland Express, Inc.*		2,888,291
	19,312	Landstar Systems, Inc.*		1,434,302
	26,433	Teekay Shipping Corp.		948,945
				7,111,803
TOTAL COMMON STOCKS
(Cost $302,594,440)			$	343,942,819

Principal		Interest			Maturity
Amount		Rate			Date		Value
Repurchase Agreement – 7.1%
Joint Repurchase Agreement Account II^
$	25,700,000		3.69	%		09/04/2001	$	25,700,000
TOTAL REPURCHASE AGREEMENT
(Cost $25,700,000)							$	25,700,000
TOTAL INVESTMENTS
(Cost $328,294,440)							$	369,642,819
*   Non-income producing security.
^   Joint repurchase agreement was entered into on August 31, 2001.
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

30     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS VALUE EQUITY FUNDS 

Statements of Assets and Liabilities

August 31, 2001

		Large Cap			Growth and			Mid Cap		Small Cap
		Value Fund			Income Fund			Value Fund		Value Fund
Assets:
Investment in securities, at value (identified cost $191,685,736, $523,697,009, $361,046,420 and $328,294,440, respectively)		$	188,029,267		$	498,586,309		$	395,922,647	$	369,642,819
Cash			89,530			39,116			10,666		10,838
Receivables:
	Fund shares sold		2,344,080			349,314			6,758,784		2,183,048
	Investment securities sold		—			—			1,306,282		451,883
	Dividends and interest		278,970			752,318			788,399		416,032
	Reimbursement from investment adviser		125,491			—			37,707		72,832
Other assets			—			—			2,130		1,465
Total assets			190,867,338			499,727,057			404,826,615		372,778,917
Liabilities:
Payables:
	Investment securities purchased		4,332,187			—			888,776		12,197,500
	Fund shares repurchased		58,418			979,636			566,830		891,569
	Amounts owed to affiliates		160,612			584,552			346,078		454,464
Accrued expenses and other liabilities			94,675			69,185			82,150		79,601
Total liabilities			4,645,892			1,633,373			1,883,834		13,623,134
Net Assets:
Paid-in capital			191,577,760			602,868,445			355,010,289		341,438,011
Accumulated undistributed net investment income (loss)			503,057			(129	)		3,515,999		1,238,692
Accumulated net realized gain (loss) on investment and futures transactions			(2,202,902	)		(79,663,932	)		9,540,266		(24,869,299	)
Net unrealized gain (loss) on investments			(3,656,469	)		(25,110,700	)		34,876,227		41,348,379
NET ASSETS		$	186,221,446		$	498,093,684		$	402,942,781	$	359,155,783
Net asset value, offering and redemption price per share:(a)
	Class A		$10.21			$19.66			$24.34		$28.55
	Class B		$10.10			$19.23			$24.01		$27.35
	Class C		$10.10			$19.19			$23.98		$27.38
	Institutional		$10.24			$19.84			$24.35		$28.98
	Service		$10.23			$19.63			$24.14		$28.43
Shares outstanding:
	Class A		12,047,648			18,067,925			3,966,738		8,576,986
	Class B		874,547			5,135,456			1,782,992		1,789,293
	Class C		359,923			539,945			671,262		662,554
	Institutional		4,955,214			1,421,754			10,153,088		1,594,357
	Service		150			284,228			10,604		35,395
Total shares outstanding, $.001 par value (unlimited number of shares authorized)			18,237,482			25,449,308			16,584,684		12,658,585

(a)  Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A Shares of the Large Cap Value, Growth and Income, Mid Cap Value and Small Cap Value Funds is $10.80, $20.80, $25.76 and $30.21, respectively. 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.      31

 GOLDMAN SACHS VALUE EQUITY FUNDS

Statements of Operations

For the Year Ended August 31, 2001

	Large Cap			Growth and			Mid Cap			Small Cap
	Value Fund			Income Fund			Value Fund			Value Fund
Investment income:
Dividends(a)	$	1,249,733		$	7,274,995		$	5,969,468		$	4,804,238
Interest		214,933			541,487			920,307			725,828
Total income		1,464,666			7,816,482			6,889,775			5,530,066
Expenses:
Management fees		559,356			4,334,429			2,214,608			2,644,441
Distribution and Service fees(b)		155,248			2,460,534			542,966			939,867
Transfer Agent fees(b)		92,877			1,122,551			259,111			458,240
Custodian fees		192,972			141,348			127,558			137,392
Registration fees		127,533			82,284			88,523			79,604
Printing fees		72,448			82,936			74,827			76,676
Professional fees		41,335			50,715			50,675			51,437
Trustee fees		9,978			9,978			9,978			9,978
Service share fees		—			34,479			1,176			2,035
Other		35,244			90,671			50,613			78,419
Total expenses		1,286,991			8,409,925			3,420,035			4,478,089
Less — expense reductions		(431,770	)		(123,562	)		(95,081	)		(264,263	)
Net expenses		855,221			8,286,363			3,324,954			4,213,826
NET INVESTMENT INCOME (LOSS)		609,445			(469,881	)		3,564,821			1,316,240
Realized and unrealized gain (loss) on investment transactions:
Net realized gain (loss) from investment transactions		(1,784,321	)		(23,409,316	)		31,401,841			29,101,096
Net change in unrealized gain on investments		(5,007,788	)		(124,968,017	)		22,044,876			23,416,879
Net realized and unrealized gain (loss) on investment transactions		(6,792,109	)		(148,377,333	)		53,446,717			52,517,975
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(6,182,664	)	$	(148,847,214	)	$	57,011,538		$	53,834,215

(a)	Foreign taxes withheld on dividends were $961, $26,805, $23,026 and $18,513 for the Large Cap Value, Growth and Income, Mid Cap Value and Small Cap Value Funds, respectively.
(b)	Class specific Distribution, Service and Transfer Agent fees were as follows:

	Distribution and Service fees						Transfer Agent fees
Fund	Class A		Class B		Class C		Class A		Class B		Class C		Institutional		Service
Large Cap Value	$	88,353	$	48,744	$	18,151	$	67,148	$	9,261	$	3,449	$	13,019	$	0
Growth and Income		1,123,975		1,212,045		124,514		854,221		230,289		23,658		11,625		2,758
Mid Cap Value		132,340		313,397		97,229		100,579		59,545		18,474		80,419		94
Small Cap Value		469,961		354,818		115,088		357,170		67,415		21,867		11,625		163

32     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS VALUE EQUITY FUNDS 

Statements of Changes in Net Assets

For the Year Ended August 31, 2001

		Large Cap			Growth and			Mid Cap			Small Cap
		Value Fund			Income Fund			Value Fund			Value Fund
From operations:
Net investment income (loss)		$	609,445		$	(469,881	)	$	3,564,821		$	1,316,240
Net realized gain (loss) from investment transactions			(1,784,321	)		(23,409,316	)		31,401,841			29,101,096
Net change in unrealized gain on investments			(5,007,788	)		(124,968,017	)		22,044,876			23,416,879
Net increase (decrease) in net assets resulting from operations			(6,182,664	)		(148,847,214	)		57,011,538			53,834,215
Distributions to shareholders:
From net investment income
	Class A Shares		(54,842	)		—			(297,297	)		—
	Class B Shares		(6,654	)		—			(82,704	)		—
	Class C Shares		(2,117	)		—			(27,256	)		—
	Institutional Shares		(175,037	)		—			(1,593,212	)		—
	Service Shares		(5	)		—			(1,478	)		—
Total distributions to shareholders			(238,655	)		—			(2,001,947	)		—
From share transactions:
Proceeds from sales of shares			188,878,656			39,933,973			173,604,372			169,066,632
Reinvestment of dividends and distributions			148,662			—			1,835,109			—
Cost of shares repurchased			(22,154,546	)		(177,088,728	)		(53,046,065	)		(85,690,999	)
Net increase (decrease) in net assets resulting from share transactions			166,872,772			(137,154,755	)		122,393,416			83,375,633
TOTAL INCREASE (DECREASE)			160,451,453			(286,001,969	)		177,403,007			137,209,848
Net assets:
Beginning of year			25,769,993			784,095,653			225,539,774			221,945,935
End of year		$	186,221,446		$	498,093,684		$	402,942,781		$	359,155,783
Accumulated undistributed net investment income (loss)		$	503,057		$	(129	)	$	3,515,999		$	1,238,692

The accompanying notes are an integral part of these financial statements.      33

 GOLDMAN SACHS VALUE EQUITY FUNDS

Statements of Changes in Net Assets

For the Period Ended August 31, 2000

		Large Cap			Growth and			Mid Cap			Small Cap
		Value Fund(a)			Income Fund			Value Fund			Value Fund
From operations:
Net investment income (loss)		$	130,830		$	1,454,425		$	2,866,324		$	(13,530	)
Net realized loss from investment, futures and options transactions			(418,576	)		(54,516,019	)		(16,933,957	)		(8,307,106	)
Net change in unrealized gain (loss) on investments, futures and options transactions			1,351,319			98,714,630			27,143,384			36,005,585
Net increase in net assets resulting from operations			1,063,573			45,653,036			13,075,751			27,684,949
Distributions to shareholders:
From net investment income
	Class A Shares		—			(1,750,861	)		(279,844	)		—
	Class B Shares		—			(187,991	)		—			—
	Class C Shares		—			(20,602	)		—			—
	Institutional Shares		—			(114,748	)		(1,995,272	)		—
	Service Shares		—			(18,316	)		(1,120	)		—
In excess of net investment income
	Class A Shares		—			(865,614	)		—			—
	Class B Shares		—			(92,941	)		—			—
	Class C Shares		—			(10,186	)		—			—
	Institutional Shares		—			(56,731	)		—			—
	Service Shares		—			(9,056	)		—			—
From net realized gain on investment and options transactions
	Class A Shares		—			(40,865,392	)		—			—
	Class B Shares		—			(12,294,241	)		—			—
	Class C Shares		—			(1,338,227	)		—			—
	Institutional Shares		—			(1,708,729	)		—			—
	Service Shares		—			(523,645	)		—			—
Total distributions to shareholders			—			(59,857,280	)		(2,276,236	)		—
From share transactions:
Proceeds from sales of shares			27,589,665			47,866,453			29,205,968			34,453,997
Reinvestment of dividends and distributions			—			56,587,452			2,225,142			—
Cost of shares repurchased			(2,883,245	)		(506,756,739	)		(98,141,541	)		(123,238,056	)
Net increase (decrease) in net assets resulting from share transactions			24,706,420			(402,302,834	)		(66,710,431	)		(88,784,059	)
TOTAL INCREASE (DECREASE)			25,769,993			(416,507,078	)		(55,910,916	)		(61,099,110	)
Net assets:
Beginning of period			—			1,200,602,731			281,450,690			283,045,045
End of period		$	25,769,993		$	784,095,653		$	225,539,774		$	221,945,935
Accumulated undistributed net investment income		$	131,769		$	—		$	2,001,174		$	—

(a)  Commencement date of operations was December 15, 1999 for all share classes.

The accompanying notes are an integral part of these financial statements.

34

GOLDMAN SACHS VALUE EQUITY FUNDS 

Notes to Financial Statements

August 31, 2001

1.  ORGANIZATION

Goldman Sachs Trust (the “Trust”) is a Delaware business trust registered under the Investment Company Act of 1940 (as amended) as an open-end, management investment company. The Trust includes the Goldman Sachs Large Cap Value Fund, Growth and Income Fund, Mid Cap Value Fund and Small Cap Value Fund (collectively the “Funds” or individually a “Fund”). Each Fund is a diversified portfolio offering five classes of shares — Class A, Class B, Class C, Institutional and Service.

2.  SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies consistently followed by the Funds. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.

A.  Investment Valuation — Investments in securities traded on a U.S. or foreign securities exchange or the NASDAQ system are valued daily at their last sale price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.

B.  Security Transactions and Investment Income — Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign taxes where applicable. Dividends for which the Funds have the choice to receive either cash or stock are recognized as investment income in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.

     Net investment income (other than class-specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Funds, based upon the relative proportion of net assets of each class.

C.  Federal Taxes — It is each 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 provisions are required. Income distributions, if any, are declared and paid quarterly for the Growth and Income Fund and annually for the Large Cap Value, Mid Cap Value and Small Cap Value Funds. Capital gains distributions, if any, are declared and paid annually.

     The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of each Fund’s distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist.

     The Funds, at their most recent tax year-ends of August 31, 2001, had approximately the following amounts of capital loss carryforwards for U.S. federal tax purposes. These amounts are available to be carried forward to offset future capital gains to the extent permitted by applicable laws or regulations.

Fund	Amount		Years of Expiration
Large Cap Value	$	130,000		2009
Growth and Income		43,881,000		2008
Small Cap Value		20,412,000		2007

     In addition, the Growth and Income Fund will elect to treat net capital losses of approximately $30,254,000 incurred in the ten-month period ended August 31, 2001 as having been incurred in the following fiscal year.

35

 GOLDMAN SACHS VALUE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

At August 31, 2001, the aggregate cost of portfolio securities, gross unrealized gain on investments and gross unrealized loss on investments for federal income tax purposes are as follows:

							Net
			Gross		Gross		Unrealized
Fund	Tax Cost		Unrealized Gain		Unrealized Loss		Gain (Loss)
Large Cap Value	$	193,633,948	$	4,152,953	$	9,757,634	$	(5,604,681	)
Growth and Income		529,225,511		42,376,960		73,016,162		(30,639,202	)
Mid Cap Value		363,845,968		39,576,131		7,499,452		32,076,679
Small Cap Value		332,712,510		43,970,435		7,040,126		36,930,309

D.  Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Funds on a straight-line or pro rata basis depending upon the nature of the expense.

     Class A, Class B and Class C Shares bear all expenses and fees relating to their respective Distribution and Service Plans. Shareholders of Service Shares bear all expenses and fees paid to service organizations for their services with respect to such shares. Each class of shares of the Funds separately bears its respective class-specific Transfer Agency fees.

E.  Foreign Currency Translations — The books and records of each Fund are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions.

     Net realized and unrealized gain (loss) on foreign currency transactions will represent: (i) foreign exchange gains and losses from the sale and holdings of foreign currencies; (ii) 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.  Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Funds’ custodian or designated subcustodians.

G.  Segregation Transactions — The Funds may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange 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 Funds are 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 Agreements (the “Agreements”), Goldman Sachs Asset Management (“GSAM”), a business unit of the Investment Management Division of Goldman, Sachs & Co. (“Goldman Sachs”), serves as the investment adviser to the Funds. Under the Agreement, the adviser, subject to the general supervision of the Trust’s Board of Trustees, manages the Funds’ portfolios. As compensation for the services rendered pursuant to the Agreements, the assumption of the expenses related thereto and administering the Funds’ business affairs, including providing facilities, the adviser is entitled to a fee, computed daily and payable monthly, at an annual rate equal to 0.75%, 0.70%, 0.75% and 1.00% of the average daily net assets of the Large Cap Value, Growth and Income, Mid Cap Value and Small Cap Value Funds, respectively.

36

GOLDMAN SACHS VALUE EQUITY FUNDS 

3.  AGREEMENTS (continued)

     The investment adviser has voluntarily agreed to limit certain “Other Expenses” of the Funds (excluding Management fees, Distribution and Service fees, Transfer Agent fees, taxes, interest, brokerage commissions, litigation, Service Share fees, indemnification costs and other extraordinary expenses) to the extent such expenses exceed, on an annual basis, 0.06%, 0.05%, 0.10% and 0.06% of the average daily net assets of the Large Cap Value, Growth and Income, Mid Cap Value and Small Cap Value Funds, respectively.

     The Trust, on behalf of each Fund, has adopted Distribution and Service Plans. Under the Distribution and Service Plans, Goldman Sachs and/or authorized dealers are entitled to a monthly fee from each Fund for distribution and shareholder maintenance services equal, on an annual basis, to 0.25%, 1.00% and 1.00% of the Funds’ 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 Funds 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 Funds that it retained approximately $802,000, $72,000, $328,000 and $538,000 during the year ended August 31, 2001 for the Large Cap Value, Growth and Income, Mid Cap Value and Small Cap Value Funds, respectively.

     Goldman Sachs also serves as the Transfer Agent of the Funds for a fee. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate as follows: 0.19% of the average daily net assets for Class A, Class B and Class C Shares and 0.04% of the average daily net assets for Institutional and Service Shares.

     The Trust, on behalf of each Fund, has adopted a Service Plan. This plan allows for Service Shares to compensate service organizations for providing varying levels of account administration and shareholder liaison services to their customers who are beneficial owners of such shares. The Service Plan provides for compensation to the service organizations in an amount up to 0.50% (on a annualized basis), of the average daily net asset value of the Service Shares.

     For the year ended August 31, 2001, the Funds’ adviser has voluntarily agreed to reimburse certain expenses. In addition, the Funds have entered into certain offset arrangements with the custodian resulting in a reduction in the Funds’ expenses. These expense reductions were as follows (in thousands):

			Custody		Total Expense
Fund	Reimbursement		Credit		Reduction
Large Cap Value	$	429	$	3	$	432
Growth and Income		121		3		124
Mid Cap Value		90		5		95
Small Cap Value		260		4		264

     At August 31, 2001, the amounts owed to affiliates were as follows (in thousands):

	Management		Distribution and		Transfer
Fund	Fees		Service Fees		Agent Fees		Total
Large Cap Value	$	107	$	33	$	21	$	161
Growth and Income		329		176		80		585
Mid Cap Value		249		66		31		346
Small Cap Value		298		105		51		454

37

 GOLDMAN SACHS VALUE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS

The cost of purchases and proceeds of sales and maturities of securities (excluding short-term investments) for the year ended August 31, 2001, were as follows:

Fund	Purchases		Sales and Maturities
Large Cap Value	$	213,498,483	$	51,116,588
Growth and Income		248,685,015		391,387,790
Mid Cap Value		400,303,758		282,655,466
Small Cap Value		317,728,909		235,020,998

     For the year ended August 31, 2001, Goldman Sachs earned approximately $25,000, $11,000, $41,000 and $152,000 of brokerage commissions from portfolio transactions executed on behalf of the Large Cap Value, Growth and Income, Mid Cap Value and Small Cap Value Funds, respectively.

Futures Contracts — The Funds 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, each Fund is required to deposit with a broker or the Fund’s custodian bank an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Funds daily, depending on the daily fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Funds realize a gain or loss which is reported in the Statement of Operations.

     The use of futures contracts involve, to varying degrees, elements of market risk which may exceed the amounts recognized in the Statements of Assets and Liabilities. Changes in the value of the futures contract may not directly correlate with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Funds’ hedging strategies and potentially result in a loss. At August 31, 2001, the Funds had no open futures contracts.

Option Accounting Principles — When the Funds write call or put options, an amount equal to the premium received is recorded as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When a written option expires on its stipulated expiration date or the Funds enter into a closing purchase transaction, the Funds realize a gain or loss without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. When a written call option is exercised, the Funds realize a gain or loss from the sale of the underlying security, and the proceeds of the sale are increased by the premium originally received. When a written put option is exercised, the amount of the premium originally received will reduce the cost of the security which the Funds purchase 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 Funds, the premium paid is recorded as an investment and subsequently marked-to-market to reflect the current market value of the option. If an option which the Funds have purchased expires on the stipulated expiration date, the Funds will realize a loss in the amount of the cost of the option. If the Funds enter into a closing sale transaction, the Funds will realize a gain or loss, depending on whether the sale proceeds for the closing sale transaction are greater or less than the cost of the option. If the Funds exercise a purchased put option, the Funds 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 Funds exercise a purchased call option, the cost of the security which the Funds purchase upon exercise will be increased by the premium originally paid. At August 31, 2001, the Funds had no open written option contracts.

38

GOLDMAN SACHS VALUE EQUITY FUNDS 

5.  LINE OF CREDIT FACILITY

The Funds participate in a $350,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, each Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Funds based on the amount of the commitment which has not been utilized. During the year ended August 31, 2001, the Funds did not have any borrowings under this facility.

6.  JOINT REPURCHASE AGREEMENT ACCOUNT

The Funds, together with other registered investment companies having management agreements with GSAM or its affiliates, transfer uninvested cash into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements.

     At August 31, 2001, the Large Cap Value, Growth and Income, Mid Cap Value and Small Cap Value Funds had undivided interests in the repurchase agreements in the joint account which equaled $8,500,000, $5,900,000, $19,300,000 and $25,700,000, respectively, in principal amount. At August 31, 2001, the following repurchase agreements held in this joint account were fully collateralized by Federal Agency obligations:

Repurchase Agreements	Principal		Interest			Maturity		Amortized		Maturity
	Amount		Rate			Date		Cost		Value
Bank of America	$	1,000,000,000		3.69	%		09/04/2001	$	1,000,000,000	$	1,000,410,000
Barclays Capital		400,000,000		3.69			09/04/2001		400,000,000		400,164,000
C.S. First Boston Corp.		300,000,000		3.69			09/04/2001		300,000,000		300,123,000
Deutsche Bank Securities, Inc.		3,000,000,000		3.70			09/04/2001		3,000,000,000		3,001,233,333
Greenwich Capital		400,000,000		3.69			09/04/2001		400,000,000		400,164,000
J.P. Morgan Chase & Co.		3,000,000,000		3.69			09/04/2001		3,000,000,000		3,001,230,000
Morgan Stanley		3,000,000,000		3.67			09/04/2001		3,000,000,000		3,001,223,333
UBS Warburg LLC		550,000,000		3.70			09/04/2001		550,000,000		550,226,111
UBS Warburg LLC		1,016,000,000		3.69			09/04/2001		1,016,000,000		1,016,416,560
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT II								$	12,666,000,000	$	12,671,190,337

39

 GOLDMAN SACHS VALUE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

7.  OTHER MATTERS

As of August 31, 2001, Goldman, Sachs & Co. Employees Profit Sharing Master Trust was the beneficial owner of approximately 47% of the outstanding shares of the Mid Cap Value Fund.

8.  CERTAIN RECLASSIFICATIONS

In accordance with AICPA Statement of Position 93-2, the Large Cap Value Fund reclassified $493 from paid-in capital and $5 from accumulated net realized loss on investment and futures transactions to accumulated undistributed net investment income. The Growth and Income Fund reclassified $469,752 from paid-in capital to accumulated undistributed net investment loss. The Mid Cap Value Fund reclassified $590 from paid-in capital and $48,049 from accumulated undistributed net investment income to accumulated net realized gain on investment and futures transactions. The Small Cap Value Fund reclassified $77,548 from accumulated undistributed net investment income to accumulated net realized loss on investment and futures transactions. These reclassifications have no impact on the net asset value of the Funds and are designed to present the Funds’ capital accounts on a tax basis. Reclassifications result primarily from the difference in the tax treatment of net operating losses, real estate investment trust reclassifications and organization costs.

40

GOLDMAN SACHS VALUE EQUITY FUNDS 

9.  SUMMARY OF SHARE TRANSACTIONS

Share activity for the year ended August 31, 2001 is as follows:

	Large Cap Value Fund						Growth and Income Fund						Mid Cap Value Fund						Small Cap Value Fund
	Shares			Dollars			Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A Shares
Shares sold		11,979,091		$	126,984,941			972,634		$	21,035,379			2,667,835		$	63,077,661			4,374,177		$	115,029,757
Reinvestments of dividends and distributions		4,283			46,084			—			—			13,577			288,509			—			—
Shares repurchased		(626,655	)		(6,648,246	)		(6,161,905	)		(134,478,447	)		(683,381	)		(15,075,313	)		(2,595,679	)		(66,907,554	)
		11,356,719			120,382,779			(5,189,271	)		(113,443,068	)		1,998,031			48,290,857			1,778,498			48,122,203
Class B Shares
Shares sold		870,463			9,112,316			261,691			5,526,206			952,410			21,619,573			752,465			19,183,625
Reinvestments of dividends and distributions		513			5,484			—			—			3,355			70,725			—			—
Shares repurchased		(149,648	)		(1,545,745	)		(1,494,704	)		(32,363,565	)		(304,526	)		(6,861,939	)		(266,715	)		(6,464,393	)
		721,328			7,572,055			(1,233,013	)		(26,837,359	)		651,239			14,828,359			485,750			12,719,232
Class C Shares
Shares sold		320,918			3,357,795			88,928			1,896,301			484,924			11,045,909			375,913			9,572,094
Reinvestments of dividends and distributions		181			1,934			—			—			1,162			24,466			—			—
Shares repurchased		(43,548	)		(456,874	)		(195,186	)		(4,217,548	)		(105,593	)		(2,364,832	)		(89,219	)		(2,178,528	)
		277,551			2,902,855			(106,258	)		(2,321,247	)		380,493			8,705,543			286,694			7,393,566
Institutional Shares
Shares sold		4,654,996			49,423,604			464,735			10,409,552			3,398,814			77,859,117			904,771			24,410,605
Reinvestments of dividends and distributions		8,843			95,160			—			—			68,393			1,449,931			—			—
Shares repurchased		(1,261,434	)		(13,503,681	)		(189,037	)		(4,212,910	)		(1,279,486	)		(28,743,835	)		(437,339	)		(10,109,220	)
		3,402,405			36,015,083			275,698			6,196,642			2,187,721			50,565,213			467,432			14,301,385
Service Shares
Shares sold		—			—			48,366			1,066,535			92			2,112			33,006			870,551
Reinvestments of dividends and distributions		—			—			—			—			70			1,478			—			—
Shares repurchased		—			—			(84,066	)		(1,816,258	)		(6	)		(146	)		(1,191	)		(31,304	)
		—			—			(35,700	)		(749,723	)		156			3,444			31,815			839,247
NET INCREASE (DECREASE)		15,758,003		$	166,872,772			(6,288,544	)	$	(137,154,755	)		5,217,640		$	122,393,416			3,050,189		$	83,375,633

41

 GOLDMAN SACHS VALUE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

9.  SUMMARY OF SHARE TRANSACTIONS

Share activity for the period ended August 31, 2000 is as follows:

	Large Cap Value Fund(a)						Growth and Income Fund						Mid Cap Value Fund						Small Cap Value Fund
	Shares			Dollars			Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A Shares
Shares sold		923,249		$	9,131,437			1,336,043		$	31,836,651			815,181		$	14,319,663			1,375,654		$	27,265,326
Reinvestments of dividends and distributions		—			—			1,808,369			42,287,423			16,254			270,462			—			—
Shares repurchased		(232,320	)		(2,326,070	)		(14,540,480	)		(344,395,625	)		(1,527,747	)		(26,456,142	)		(5,211,119	)		(99,633,194	)
		690,929			6,805,367			(11,396,068	)		(270,271,551	)		(696,312	)		(11,866,017	)		(3,835,465	)		(72,367,868	)
Class B Shares
Shares sold		162,981			1,619,970			354,447			8,333,880			203,697			3,662,014			183,134			3,555,201
Reinvestments of dividends and distributions		—			—			467,551			10,834,187			2			31			—			—
Shares repurchased		(9,762	)		(97,213	)		(5,569,557	)		(130,534,853	)		(817,446	)		(13,980,108	)		(819,879	)		(15,030,277	)
		153,219			1,522,757			(4,747,559	)		(111,366,786	)		(613,747	)		(10,318,063	)		(636,745	)		(11,475,076	)
Class C Shares
Shares sold		108,974			1,083,827			82,360			1,922,744			75,788			1,333,632			137,123			2,640,911
Reinvestments of dividends and distributions		—			—			51,899			1,200,022			—			—			—			—
Shares repurchased		(26,602	)		(248,355	)		(771,431	)		(18,113,626	)		(322,641	)		(5,484,036	)		(180,209	)		(3,309,647	)
		82,372			835,472			(637,172	)		(14,990,860	)		(246,853	)		(4,150,404	)		(43,086	)		(668,736	)
Institutional Shares
Shares sold		1,573,915			15,752,931			181,437			4,379,832			541,972			9,884,659			47,653			945,353
Reinvestments of dividends and distributions		—			—			74,291			1,738,712			117,753			1,953,524			—			—
Shares repurchased		(21,106	)		(211,607	)		(411,654	)		(9,765,648	)		(3,020,832	)		(52,215,710	)		(275,006	)		(5,233,437	)
		1,552,809			15,541,324			(155,926	)		(3,647,104	)		(2,361,107	)		(40,377,527	)		(227,353	)		(4,288,084	)
Service Shares
Shares sold		150			1,500			58,518			1,393,346			350			6,000			2,401			47,206
Reinvestments of dividends and distributions		—			—			22,542			527,108			68			1,125			—			—
Shares repurchased		—			—			(166,719	)		(3,946,987	)		(334	)		(5,545	)		(1,714	)		(31,501	)
		150			1,500			(85,659	)		(2,026,533	)		84			1,580			687			15,705
NET INCREASE (DECREASE)		2,479,479		$	24,706,420			(17,022,384	)	$	(402,302,834	)		(3,917,935	)	$	(66,710,431	)		(4,741,962	)	$	(88,784,059	)

(a)  Commencement date of operations was December 15, 1999 for all share classes.

42

GOLDMAN SACHS VALUE EQUITY FUNDS 

Goldman Sachs Trust — Value Equity Funds — Tax Information (Unaudited)

For the year ended August 31, 2001, 100% of the dividends paid from net investment company taxable income by the Large Cap Value and Mid Cap Value Funds, qualify for the dividends received deduction available to corporations.

43

 GOLDMAN SACHS LARGE CAP VALUE FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from									Distributions
			investment operations									to shareholders
	Net asset		Net
	value,		investment			Net realized			Total from			From net
	beginning		income			and unrealized			investment			investment
	of period		(loss)(c)			gain (loss)			operations			income
FOR THE YEAR ENDED AUGUST 31,
2001 - Class A Shares	$	10.39	$	0.08		$	(0.20	)	$	(0.12	)	$	(0.06	)
2001 - Class B Shares		10.33		(0.01	)		(0.19	)		(0.20	)		(0.03	)
2001 - Class C Shares		10.32		(0.01	)		(0.19	)		(0.20	)		(0.02	)
2001 - Institutional Shares		10.40		0.12			(0.20	)		(0.08	)		(0.08	)
2001 - Service Shares		10.38		0.08			(0.20	)		(0.12	)		(0.03	)
FOR THE PERIOD ENDED AUGUST 31,
2000 - Class A Shares (commenced Dec. 15, 1999)		10.00		0.06			0.33			0.39			—
2000 - Class B Shares (commenced Dec. 15, 1999)		10.00		—			0.33			0.33			—
2000 - Class C Shares (commenced Dec. 15, 1999)		10.00		0.01			0.31			0.32			—
2000 - Institutional Shares (commenced Dec. 15, 1999)		10.00		0.09			0.31			0.40			—
2000 - Service Shares (commenced Dec. 15, 1999)		10.00		0.07			0.31			0.38			—

(a)	Assumes investment at the NAV at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the NAV at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

44     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS LARGE CAP VALUE FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	10.21		(1.21	)%	$	123,013		1.25	%		0.73	%		1.83	%		0.15	%		69	%
	10.10		(1.98	)		8,830		2.00			(0.06	)		2.58			(0.64	)		69
	10.10		(1.96	)		3,636		2.00			(0.05	)		2.58			(0.63	)		69
	10.24		(0.81	)		50,740		0.85			1.09			1.43			0.51			69
	10.23		(1.17	)		2		1.35			0.80			1.93			0.22			69
	10.39		3.90			7,181		1.25	(b)		0.84	(b)		3.30	(b)		(1.21	)(b)		67
	10.33		3.30			1,582		2.00	(b)		0.06	(b)		4.05	(b)		(1.99	)(b)		67
	10.32		3.20			850		2.00	(b)		0.15	(b)		4.05	(b)		(1.90	)(b)		67
	10.40		4.00			16,155		0.85	(b)		1.31	(b)		2.90	(b)		(0.74	)(b)		67
	10.38		3.80			2		1.35	(b)		0.95	(b)		3.40	(b)		(1.10	)(b)		67

      45

 GOLDMAN SACHS GROWTH AND INCOME FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from									Distributions
			investment operations									to shareholders
	Net asset		Net												In excess
	value,		investment			Net realized			Total from			From net			of net			From net
	beginning		income			and unrealized			investment			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	24.78	$	0.01	(c)	$	(5.13	)	$	(5.12	)	$	—		$	—		$	—		$	—
2001 - Class B Shares		24.42		(0.15	)(c)		(5.04	)		(5.19	)		—			—			—			—
2001 - Class C Shares		24.37		(0.15	)(c)		(5.03	)		(5.18	)		—			—			—			—
2001 - Institutional Shares		24.91		0.11	(c)		(5.18	)		(5.07	)		—			—			—			—
2001 - Service Shares		24.77		(0.01	)(c)		(5.13	)		(5.14	)		—			—			—			—
2000 - Class A Shares		24.68		0.07	(c)		1.44			1.51			(0.05	)		(0.03	)		(1.33	)		(1.41	)
2000 - Class B Shares		24.46		(0.10	)(c)		1.42			1.32			(0.02	)		(0.01	)		(1.33	)		(1.36	)
2000 - Class C Shares		24.41		(0.09	)(c)		1.40			1.31			(0.01	)		(0.01	)		(1.33	)		(1.35	)
2000 - Institutional Shares		24.72		0.16	(c)		1.49			1.65			(0.09	)		(0.04	)		(1.33	)		(1.46	)
2000 - Service Shares		24.68		0.05	(c)		1.44			1.49			(0.05	)		(0.02	)		(1.33	)		(1.40	)
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares		24.33		0.19			0.31			0.50			(0.15	)		—			—			(0.15	)
1999 - Class B Shares		24.13		0.08			0.31			0.39			(0.06	)		—			—			(0.06	)
1999 - Class C Shares		24.08		0.08			0.30			0.38			(0.05	)		—			—			(0.05	)
1999 - Institutional Shares		24.35		0.34			0.23			0.57			(0.20	)		—			—			(0.20	)
1999 - Service Shares		24.33		0.17			0.32			0.49			(0.14	)		—			—			(0.14	)
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares		25.93		0.20			(1.60	)		(1.40	)		(0.19	)		(0.01	)		—			(0.20	)
1999 - Class B Shares		25.73		0.02			(1.58	)		(1.56	)		(0.04	)		—			—			(0.04	)
1999 - Class C Shares		25.70		0.02			(1.59	)		(1.57	)		(0.05	)		—			—			(0.05	)
1999 - Institutional Shares		25.95		0.29			(1.58	)		(1.29	)		(0.30	)		(0.01	)		—			(0.31	)
1999 - Service Shares		25.92		0.17			(1.58	)		(1.41	)		(0.17	)		(0.01	)		—			(0.18	)
1998 - Class A Shares		23.18		0.11			5.27			5.38			(0.11	)		—			(2.52	)		(2.63	)
1998 - Class B Shares		23.10		0.04			5.14			5.18			—			(0.03	)		(2.52	)		(2.55	)
1998 - Class C Shares (commenced August 15, 1997)		28.20		(0.01	)		0.06			0.05			—			(0.03	)		(2.52	)		(2.55	)
1998 - Institutional Shares		23.19		0.27			5.23			5.50			(0.22	)		—			(2.52	)		(2.74	)
1998 - Service Shares		23.17		0.14			5.23			5.37			(0.06	)		(0.04	)		(2.52	)		(2.62	)
1997 - Class A Shares		19.98		0.35			5.18			5.53			(0.35	)		(0.01	)		(1.97	)		(2.33	)
1997 - Class B Shares (commenced May 1, 1996)		20.82		0.17			4.31			4.48			(0.17	)		(0.06	)		(1.97	)		(2.20	)
1997 - Institutional Shares (commenced June 3, 1996)		21.25		0.29			3.96			4.25			(0.30	)		(0.04	)		(1.97	)		(2.31	)
1997 - Service Shares (commenced March 6, 1996)		20.71		0.28			4.50			4.78			(0.28	)		(0.07	)		(1.97	)		(2.32	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

46     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS GROWTH AND INCOME FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	19.66		(20.66	)%	$	355,205		1.19	%		0.07	%		1.21	%		0.05	%		40	%
	19.23		(21.25	)		98,747		1.94			(0.68	)		1.96			(0.70	)		40
	19.19		(21.22	)		10,360		1.94			(0.68	)		1.96			(0.70	)		40
	19.84		(20.32	)		28,201		0.79			0.49			0.81			0.47			40
	19.63		(20.75	)		5,581		1.29			(0.03	)		1.31			(0.05	)		40
	24.78		6.48			576,354		1.18			0.31			1.18			0.31			87
	24.42		5.70			155,527		1.93			(0.41	)		1.93			(0.41	)		87
	24.37		5.67			15,746		1.93			(0.40	)		1.93			(0.40	)		87
	24.91		7.05			28,543		0.78			0.69			0.78			0.69			87
	24.77		6.40			7,926		1.28			0.20			1.28			0.20			87
	24.68		2.05			855,174		1.19	(b)		1.26	(b)		1.20	(b)		1.25	(b)		55
	24.46		1.60			271,912		1.94	(b)		0.51	(b)		1.95	(b)		0.50	(b)		55
	24.41		1.58			31,328		1.94	(b)		0.51	(b)		1.95	(b)		0.50	(b)		55
	24.72		2.32			32,181		0.79	(b)		1.72	(b)		0.80	(b)		1.71	(b)		55
	24.68		2.01			10,008		1.29	(b)		1.16	(b)		1.30	(b)		1.15	(b)		55
	24.33		(5.40	)		1,122,157		1.22			0.78			1.32			0.68			126
	24.13		(6.07	)		349,662		1.92			0.09			1.92			0.09			126
	24.08		(6.12	)		48,146		1.92			0.10			1.92			0.10			126
	24.35		(5.00	)		173,696		0.80			1.25			0.80			1.25			126
	24.33		(5.44	)		11,943		1.30			0.72			1.30			0.72			126
	25.93		23.71			1,216,582		1.25			0.43			1.42			0.26			62
	25.73		22.87			307,815		1.94			(0.35	)		1.94			(0.35	)		62
	25.70		0.51			31,686		1.99	(b)		(0.48	)(b)		1.99	(b)		(0.48	)(b)		62
	25.95		24.24			36,225		0.83			0.76			0.83			0.76			62
	25.92		23.63			8,893		1.32			0.32			1.32			0.32			62
	23.18		28.42			615,103		1.22			1.60			1.43			1.39			53
	23.10		22.23			17,346		1.93	(b)		0.15	(b)		1.93	(b)		0.15	(b)		53
	23.19		20.77			193		0.82	(b)		1.36	(b)		0.82	(b)		1.36	(b)		53
	23.17		23.87			3,174		1.32	(b)		0.94	(b)		1.32	(b)		0.94	(b)		53

      47

 GOLDMAN SACHS MID CAP VALUE FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from									Distributions
			investment operations									to shareholders
	Net asset		Net												In excess
	value,		investment			Net realized			Total from			From net			of net			From net
	beginning		income			and unrealized			investment			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	19.88	$	0.24	(c)	$	4.37		$	4.61		$	(0.15	)	$	—		$	—		$	(0.15	)
2001 - Class B Shares		19.69		0.06	(c)		4.33			4.39			(0.07	)		—			—			(0.07	)
2001 - Class C Shares		19.67		0.06	(c)		4.33			4.39			(0.08	)		—			—			(0.08	)
2001 - Institutional Shares		19.86		0.33	(c)		4.36			4.69			(0.20	)		—			—			(0.20	)
2001 - Service Shares		19.73		0.21	(c)		4.34			4.55			(0.14	)		—			—			(0.14	)
2000 - Class A Shares		18.42		0.20	(c)		1.38			1.58			(0.12	)		—			—			(0.12	)
2000 - Class B Shares		18.23		0.06	(c)		1.40			1.46			—			—			—			—
2000 - Class C Shares		18.24		0.06	(c)		1.37			1.43			—			—			—			—
2000 - Institutional Shares		18.45		0.27	(c)		1.36			1.63			(0.22	)		—			—			(0.22	)
2000 - Service Shares		18.31		0.18	(c)		1.35			1.53			(0.11	)		—			—			(0.11	)
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares		18.38		0.06			1.71			1.77			—			—			(1.73	)		(1.73	)
1999 - Class B Shares		18.29		(0.04	)		1.71			1.67			—			—			(1.73	)		(1.73	)
1999 - Class C Shares		18.30		(0.04	)		1.71			1.67			—			—			(1.73	)		(1.73	)
1999 - Institutional Shares		18.37		0.09			1.72			1.81			—			—			(1.73	)		(1.73	)
1999 - Service Shares		18.29		0.05			1.70			1.75			—			—			(1.73	)		(1.73	)
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares		21.61		0.10			(2.38	)		(2.28	)		(0.07	)		—			(0.88	)		(0.95	)
1999 - Class B Shares		21.57		(0.05	)		(2.35	)		(2.40	)		—			—			(0.88	)		(0.88	)
1999 - Class C Shares		21.59		(0.05	)		(2.34	)		(2.39	)		(0.02	)		—			(0.88	)		(0.90	)
1999 - Institutional Shares		21.65		0.19			(2.38	)		(2.19	)		(0.21	)		—			(0.88	)		(1.09	)
1999 - Service Shares		21.62		0.03			(2.31	)		(2.28	)		(0.17	)		—			(0.88	)		(1.05	)
1998 - Class A Shares (commenced August 15, 1997)		23.63		0.09			0.76			0.85			(0.06	)		(0.04	)		(2.77	)		(2.87	)
1998 - Class B Shares (commenced August 15, 1997)		23.63		0.06			0.74			0.80			(0.09	)		—			(2.77	)		(2.86	)
1998 - Class C Shares (commenced August 15, 1997)		23.63		0.06			0.76			0.82			(0.09	)		—			(2.77	)		(2.86	)
1998 - Institutional Shares		18.73		0.16			5.66			5.82			(0.13	)		—			(2.77	)		(2.90	)
1998 - Service Shares (commenced August 15, 1997)		23.01		0.09			1.40			1.49			(0.11	)		—			(2.77	)		(2.88	)
1997 - Institutional Shares		15.91		0.24			3.77			4.01			(0.24	)		(0.93	)		(0.02	)		(1.19	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

48     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS MID CAP VALUE FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	24.34		23.29	%	$	96,568		1.29	%		1.05	%		1.32	%		1.02	%		101	%
	24.01		22.33			42,813		2.04			0.28			2.07			0.25			101
	23.98		22.37			16,094		2.04			0.28			2.07			0.25			101
	24.35		23.75			247,212		0.89			1.43			0.92			1.40			101
	24.14		23.17			256		1.39			0.94			1.42			0.91			101
	19.88		8.70			39,142		1.29			1.11			1.34			1.06			83
	19.69		8.01			22,284		2.04			0.35			2.09			0.30			83
	19.67		7.84			5,720		2.04			0.32			2.09			0.27			83
	19.86		9.08			158,188		0.89			1.51			0.94			1.46			83
	19.73		8.48			206		1.39			1.03			1.44			0.98			83
	18.42		9.04			49,081		1.29	(b)		0.43	(b)		1.37	(b)		0.35	(b)		69
	18.23		8.53			31,824		2.04	(b)		(0.33	)(b)		2.12	(b)		(0.41	)(b)		69
	18.24		8.52			9,807		2.04	(b)		(0.34	)(b)		2.12	(b)		(0.42	)(b)		69
	18.45		9.26			190,549		0.89	(b)		0.79	(b)		0.97	(b)		0.71	(b)		69
	18.31		8.97			190		1.39	(b)		0.38	(b)		1.47	(b)		0.30	(b)		69
	18.38		(10.48	)		70,578		1.33			0.38			1.41			0.30			92
	18.29		(11.07	)		37,821		1.93			(0.22	)		2.01			(0.30	)		92
	18.30		(11.03	)		10,800		1.93			(0.22	)		2.01			(0.30	)		92
	18.37		(10.07	)		196,512		0.87			0.83			0.95			0.75			92
	18.29		(10.48	)		289		1.37			0.32			1.45			0.24			92
	21.61		3.42			90,588		1.35	(b)		0.33	(b)		1.47	(b)		0.21	(b)		63
	21.57		3.17			28,743		1.85	(b)		(0.20	)(b)		1.97	(b)		(0.32	)(b)		63
	21.59		3.27			6,445		1.85	(b)		(0.23	)(b)		1.97	(b)		(0.35	)(b)		63
	21.65		30.86			236,440		0.85			0.78			0.97			0.66			63
	21.62		6.30			8		1.35	(b)		0.63	(b)		1.43	(b)		0.51	(b)		63
	18.73		25.63			145,253		0.85			1.35			0.91			1.29			74

      49

 GOLDMAN SACHS SMALL CAP VALUE FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from									Distributions
			investment operations									to shareholders
	Net asset		Net
	value,		investment			Net realized			Total from			From net
	beginning		income			and unrealized			investment			realized
	of period		(loss)			gain (loss)			operations			gains
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	23.21	$	0.15	(c)	$	5.19		$	5.34		$	—
2001 - Class B Shares		22.40		(0.04	) (c)		4.99			4.95			—
2001 - Class C Shares		22.42		(0.04	) (c)		5.00			4.96			—
2001 - Institutional Shares		23.47		0.25	(c)		5.26			5.51			—
2001 - Service Shares		23.13		0.13	(c)		5.17			5.30			—
2000 - Class A Shares		19.80		0.01	(c)		3.40			3.41			—
2000 - Class B Shares		19.27		(0.13	) (c)		3.26			3.13			—
2000 - Class C Shares		19.28		(0.12	) (c)		3.26			3.14			—
2000 - Institutional Shares		19.95		0.10	(c)		3.42			3.52			—
2000 - Service Shares		19.76		0.01	(c)		3.36			3.37			—
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	)		(4.54	)		(1.00	)
1999 - Class B Shares		23.73		(0.21	)		(4.42	)		(4.63	)		(1.00	)
1999 - Class C Shares		23.73		(0.18	)		(4.43	)		(4.61	)		(1.00	)
1999 - Institutional Shares		24.09		0.03			(4.50	)		(4.47	)		(1.00	)
1999 - Service Shares		24.05		(0.04	)		(4.51	)		(4.55	)		(1.00	)
1998 - Class A Shares		20.91		0.14			5.33			5.47			(2.33	)
1998 - Class B Shares		20.80		(0.01	)		5.27			5.26			(2.33	)
1998 - Class C Shares (commenced August 15, 1997)		24.69		(0.06	)		1.43			1.37			(2.33	)
1998 - Institutional Shares (commenced August 15, 1997)		24.91		0.03			1.48			1.51			(2.33	)
1998 - Service Shares (commenced August 15, 1997)		24.91		(0.01	)		1.48			1.47			(2.33	)
1997 - Class A Shares		17.29		(0.21	)		4.92			4.71			(1.09	)
1997 - Class B Shares (commenced May 1, 1996)		20.79		(0.11	)		1.21			1.10			(1.09	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

50     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS SMALL CAP VALUE FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	28.55		23.01	%	$	244,860		1.50	%		0.59	%		1.60	%		0.49	%		93	%
	27.35		22.10			48,939		2.25			(0.16	)		2.35			(0.26	)		93
	27.38		22.07			18,140		2.25			(0.16	)		2.35			(0.26	)		93
	28.98		23.48			46,211		1.10			0.97			1.20			0.87			93
	28.43		22.91			1,006		1.60			0.47			1.70			0.37			93
	23.21		17.22			157,791		1.50			0.07			1.57			—			75
	22.40		16.24			29,199		2.25			(0.68	)		2.32			(0.75	)		75
	22.42		16.34			8,428		2.25			(0.65	)		2.32			(0.72	)		75
	23.47		17.64			26,445		1.10			0.49			1.17			0.42			75
	23.13		17.05			83		1.60			0.03			1.67			(0.04	)		75
	19.80		6.97			210,500		1.50	(b)		(0.35	)(b)		1.61	(b)		(0.46	)(b)		47
	19.27		6.46			37,386		2.25	(b)		(1.10	)(b)		2.36	(b)		(1.21	)(b)		47
	19.28		6.40			8,079		2.25	(b)		(1.10	)(b)		2.36	(b)		(1.21	)(b)		47
	19.95		7.14			27,023		1.10	(b)		0.05	(b)		1.21	(b)		(0.06	)(b)		47
	19.76		6.81			57		1.60	(b)		(0.41	)(b)		1.71	(b)		(0.52	)(b)		47
	18.51		(17.37	)		261,661		1.50			(0.24	)		1.74			(0.48	)		98
	18.10		(18.00	)		42,879		2.25			(0.99	)		2.29			(1.03	)		98
	18.12		(17.91	)		8,212		2.25			(0.99	)		2.29			(1.03	)		98
	18.62		(17.04	)		15,351		1.13			0.13			1.17			0.09			98
	18.50		(17.41	)		261		1.62			(0.47	)		1.66			(0.51	)		98
	24.05		26.17			370,246		1.54			(0.28	)		1.76			(0.50	)		85
	23.73		25.29			42,677		2.29			(0.92	)		2.29			(0.92	)		85
	23.73		5.51			5,604		2.09	(b)		(0.79	)(b)		2.09	(b)		(0.79	)(b)		85
	24.09		6.08			14,626		1.16	(b)		0.27	(b)		1.16	(b)		0.27	(b)		85
	24.05		5.91			2		1.45	(b)		(0.07	)(b)		1.45	(b)		(0.07	)(b)		85
	20.91		27.28			212,061		1.60			(0.72	)		1.85			(0.97	)		99
	20.80		5.39			3,674		2.35	(b)		(1.63	)(b)		2.35	(b)		(1.63	)(b)		99

      51

 GOLDMAN SACHS VALUE EQUITY FUNDS

Report of Independent Accountants

To the Shareholders and Board of Trustees of

Goldman Sachs Trust — Value Equity Funds:

In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Goldman Sachs Large Cap Value Fund, Growth and Income Fund, Mid Cap Value Fund and Small Cap Value Fund (collectively “the Value Equity Funds”), portfolios of Goldman Sachs Trust at August 31, 2001, the results of their operations for the year then ended, and the changes in each of their net assets and the financial highlights for each of the two most recent periods then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Value Equity Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Value Equity Funds for the periods ended prior to August 31, 2000 were audited by other independent accountants whose report dated October 8, 1999 expressed unqualified opinions thereon.

PricewaterhouseCoopers LLP

Boston, Massachusetts

October 19, 2001

52

FUNDS PROFILE

Goldman Sachs Funds

Goldman Sachs is a premier financial services firm, known since 1869 for creating thoughtful and customized investment solutions in complex global markets.

Today, the Investment Management Division of Goldman Sachs serves a diverse set of clients worldwide, including private institutions, public entities and individuals. With portfolio management teams located around the world — and more than $295 billion in assets under management, our investment professionals bring firsthand knowledge of local markets to every investment decision, making us one of the few truly global asset managers.

1	An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
	CORESM is a service mark of Goldman, Sachs &Co.
	Goldman Sachs Internet Tollkeeper FundSM and Goldman Sachs Research Select FundSM are service marks of Goldman, Sachs & Co.
*	Goldman Sachs International Growth Opportunities Fund was formerly Goldman Sachs International Small Cap Fund.

GOLDMAN SACHS ASSET MANAGEMENT	32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005
TRUSTEES Ashok N. Bakhru, Chairman David B. Ford Patrick T. Harker John P. McNulty Mary P. McPherson Alan A. Shuch Wilma J. Smelcer Richard P. Strubel Kaysie P. Uniacke	OFFICERS Gary Black, President Jesse H. Cole, Vice President Kerry Daniels, Vice President James A. Fitzpatrick, Vice President Mary Hoppa, Vice President John M. Perlowski, Treasurer Kenneth Curran, Assistant Treasurer Peter W. Fortner, Assistant Treasurer Philip V. Giuca, Jr., Assistant Treasurer Howard B. Surloff, Secretary Amy E. Belanger, Assistant Secretary Valerie A. Zondorak, Assistant Secretary
GOLDMAN, SACHS & CO. Distributor and Transfer Agent	GOLDMAN SACHS ASSET MANAGEMENT Investment Adviser

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 Funds’ 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 Large Cap Value, Mid Cap Value and Small Cap Value Funds may participate in the Initial Public Offering (IPO) market, and a portion of the Funds’ returns consequently may be attributable to their investment in IPOs, which may have a magnified impact due to the Funds’ small asset base. As the Funds’ assets grow, it is probable that the effect of the Fund’s investment in IPOs on their total returns may not be as significant.

Stocks of smaller companies are often more volatile and present greater risks than stocks of larger companies. At times, the Funds 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 2001 Goldman, Sachs & Co. All rights reserved. Date of first use: October 30, 2001 / 01-1632 VALUEAR / 69K / 10-01

GOLDMAN SACHS BALANCED FUND

Market Review

Dear Shareholder:

As we write to you today, the tragic national events of September 11th continue to dominate the nation’s thoughts. The people of Goldman Sachs are shocked and saddened by the horrible destruction and loss of life, and send our deepest sympathies to those who have been impacted in New York, Washington, D.C., Pennsylvania and across the country.

	In the aftermath of this tragedy, Goldman Sachs is offering assistance to others in the industry who have been more severely impacted than we were. Our people and firm are assisting the ongoing recovery and humanitarian efforts through donations of blood and volunteer work. Additionally, Goldman Sachs’ people are committed to contributing at least $10 million to provide humanitarian aid to victims and families impacted by the events of September 11th.
	Goldman Sachs also shares the strong determination of the entire securities industry to show solidarity in the face of terrorism. We are committed to sending the clearest possible message that terrorism will not close free markets, and we continue to serve as a force of stability in the global securities markets.
	We want to take this opportunity to provide continued assurance regarding your investment in Goldman Sachs Funds. Immediately after the attack on September 11, all emergency recovery plans were successfully implemented, critical functions were moved to alternate locations, and we were prepared to resume normal operations on September 17 with the reopening of the New York Stock Exchange.
	As we write this letter, there continues to be uncertainty in the global financial markets, and events are unfolding at a rapid pace. While the markets are expected to remain volatile in the short-term, in decades past the American people and our economy have proven to be tremendously resilient following significant global events. As such, we urge our shareholders to remain focused on their long-term goals, maintain diversified portfolios, and work closely with their financial advisers.
	Because the period covered by this report ended prior to September 11, we have included a brief recap of the economy and financial markets for the one-year reporting period ended August 31, 2001.
n	Market Review: Stocks Fall Sharply, While Bonds Rally — During the one-year reporting period ended August 31, 2001, the U.S. stock market, as measured by the S&P 500 Index, declined 24.39%, while the bond market, as measured by the Lehman Aggregate Bond Index, rose 12.35%. Factors underlying the stock market’s decline included the ongoing threat of economic recession, lower corporate profits, the bursting of the technology “bubble” and a weakening job market. As the period progressed, some areas of the stock market that had performed well during the latter stages of 2000 and the first half of 2001 could not avoid the downdraft — namely many value-oriented and more defensive issues. The sharpest decline occurred in the technology sector, as the tech-laden NASDAQ Composite Index plummeted 57.08% during the period. The NASDAQ has fallen 64% since its peak in March 2000.
	In contrast, the bond market fared well during the period. Virtually all bond market sectors generated positive results, largely as a result of declining interest rates and an increase in investor demand.

GOLDMAN SACHS BALANCED FUND

n	A Faltering Economic Recovery — During the one-year reporting period ended August 31, 2001, the U.S. economy has come full circle. As the period began, we were in the midst of the longest economic expansion in U.S. history. However, since that time, economic activity has fallen sharply. By the fourth quarter of 2000, many economic indicators were pointing to a slowdown, which quickly intensified as the new year began. This reversal prompted the Federal Reserve Board (the “Fed”) to cut short-term interest rates seven times — for a total of 3.25 percentage points — in hopes of avoiding a recession. Under Chairman Alan Greenspan, the Fed has never lowered rates so significantly in such a short period of time. Despite this action, the GDP grew only an estimated 0.2% during the second quarter of 2001 — its slowest rate in eight years.
	On the following pages, you will find a review of your Fund’s activity during the period, including perspectives following the recent tragedy from your portfolio management team.
	In closing, we want to assure you that you have a strong and experienced team of portfolio managers who have experience managing assets through diverse market conditions and encourage you to maintain your long-term focus in the months ahead.
	As always, we appreciate your ongoing support.

Sincerely,
David B. Ford Co-Head, Goldman Sachs Asset Management	David W. Blood Co-Head, Goldman Sachs Asset Management
September 20, 2001

 1

GOLDMAN SACHS BALANCED FUND

What Differentiates Goldman Sachs
Balanced Fund Investment Process?

The Balanced Fund is a diversified investment portfolio that utilizes an asset allocation process of strategically selecting different asset classes — such as stocks, bonds and cash — in precise proportions. The Fund then adjusts its holdings over time. Goldman Sachs’ exclusive approach to asset allocation combines our global presence, extensive market knowledge and risk management expertise.

1   VALUE AND GROWTH EQUITY INVESTMENTS

Utilizing two distinct complementary investment strategies, our approach to selecting stocks for the Fund’s equity portion provides diversified equity participation.

Over time, the performance of value and growth stocks has been roughly equal — but that performance has been generated at different times as the styles move in and out of favor. Since it is impossible to predict cycles of outperformance, many investors choose to have exposure to both styles in their portfolio.

2   RESEARCH-INTENSIVE APPROACH

In Equity investing, we take an intensive, hands-on approach to research, meeting with company management to gain an in-depth understanding of their long-term business objectives. We also meet with a company’s customers, competitors and suppliers so that we have insight into industry-wide trends.

With expertise in global fixed income and currency management, Goldman Sachs is a preeminent fixed income manager that strives to maximize returns within a risk adjusted framework.

3   ESTABLISHED TEAM MANAGEMENT

We are distinguished from our competitors by our team approach to investment management. In contrast to a “star” approach centered on one manager, each portfolio manager/research analyst participates fully in the decision-making process. This approach encourages intense debate over new and existing holdings and prevents us from becoming too ingrained in our ideas. Finally, our team structure protects us in the event that one of our portfolio managers/research analysts leaves the firm.

2 

GOLDMAN SACHS BALANCED FUND

Fund Basics
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return			S&P 500			Lehman Brothers
August 31, 2000–August 31, 2001	(without sales charge)1			Index2			Aggregate Bond Index2
Class A		–9.95	%		–24.39	%		12.35	%
Class B		–10.62			–24.39			12.35
Class C		–10.63			–24.39			12.35
Institutional		–9.56			–24.39			12.35
Service		–10.06			–24.39			12.35

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged S&P 500 Index and the Lehman Brothers Aggregate Bond Index (with dividends reinvested) figures do not reflect fees or expenses. In addition, investors cannot invest directly in the Indices.

STANDARDIZED TOTAL RETURNS³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		–9.35	%		–9.57	%		–5.72	%		–3.66	%		–4.22	%
Five Years		6.89			6.91			N/A			N/A			7.964
Since Inception		9.61			7.10			2.18			3.35			10.424
		(10/12/94	)		(5/1/96	)		(8/15/97	)		(8/15/97	)		(10/12/94	)

3	The Standardized Total Returns are average annual total returns or cumulative total returns (only if the performance period is one year or less) as of the most recent calendar quarter-end. They assume reinvestment of all distributions at net asset value. These returns reflect a maximum initial sales charge of 5.5% for Class A shares, the assumed deferred sales charge for Class B shares (5% maximum declining to 0% after six years) and the assumed deferred sales charge for Class C shares (1% if redeemed within 12 months of purchase). Because Institutional and Service shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns.
4	Performance data for Service shares prior to 8/15/97 is that of the Class A shares (excluding the impact of the front-end sales charge applicable to Class A shares since Service shares are not subject to any sales charges). Performance of Class A shares of the Balanced Fund reflects the expenses applicable to the Fund’s Class A shares. The fees applicable to Service shares are different from those applicable to Class A shares which impact performance ratings and rankings for a class of shares.
	Total return figures represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance reflects fee waivers and expense limitations in effect. In their absence, performance would be reduced.

TOP 10 EQUITY HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets		Line of Business
General Electric Co.		2.1%	Financial Services
Microsoft Corp.		1.8	Computer Software
Exxon Mobil Corp.		1.5	Energy Resources
Pfizer, Inc.		1.5	Healthcare
Citigroup, Inc.		1.4	Banks
Federal Home Loan Mortgage Corp.		1.2	Financial Services
Wal-Mart Stores, Inc.		1.2	Department Stores
AOL Time Warner Inc.		1.1	Media
American International Group, Inc.		1.0	Property Insurance
Intel Corp.		0.9	Semiconductors

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

 3

GOLDMAN SACHS BALANCED FUND

Portfolio Results

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Balanced Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated cumulative total returns, without sales charges, of –9.95%, –10.62%, –10.63%, –9.56% and –10.06%, respectively. These figures compare to the –24.39% and 12.35% cumulative total returns of the Fund’s benchmarks, the S&P 500 Index and Lehman Brothers Aggregate Bond Index, respectively.
	Asset Allocation
n	Equities — At period end, the Fund was 51.2% invested in growth and value equities. This compared to a 47.6% allocation on August 31, 2000. As bottom-up stock pickers, we focus on the real worth of the business and, to the extent that we find several businesses in related industries that have strong long-term growth potential, we may develop an overweight in a particular sector. With this in mind, as of August 31, 2001, the Fund maintained overweight positions in the Finance and Media & Communication sectors. Underweight positions were held in the Utilities and Technology sectors.
n	Fixed Income — At period end, the Fund was 48.8% invested in fixed income securities, compared to 51.4% on August 31, 2000. In general, the portfolio was overweight in mortgage-backed and asset-backed securities, neutral in corporates and underweight in Treasuries and agency securities. The Fund also maintained tactical non-dollar allocations in New Zealand. In the emerging markets sector, we had a tactical allocation in Korea, Poland, Mexico and Qatar.
n	Cash — The Fund was 3.9% invested in cash at period end.
	Portfolio Highlights
n	Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corp. (Freddie Mac) — Both Fannie Mae and Freddie Mac are federally chartered, stockholder-owned corporations created to provide a secondary market for the home mortgage industry. Despite the recent downturn in their stock prices, both have federal backing which enables them to dominate the secondary mortgage business and we believe both should continue to deliver strong, consistent growth going forward.
n	AMBAC Financial Group Inc. — AMBAC is a leading municipal bond insurer. The company is characterized by its stability, because municipalities rarely default on their obligations. AMBAC’s stock has performed extremely well in the recent market environment, because its dual recurring revenue streams — premium and interest — provide downside protection in a weak economy.
n	XL Capital Ltd. — XL Capital is a leading provider of insurance and reinsurance. The company continued to perform well, since it holds a strong position in the specialty property casualty insurance sector. Its competitive advantage is strengthened by its Bermuda domicile, where taxes assessed on investment income and underwriting profit are lower. As a result of these accommodating regulations, the firm is able to enter the market quickly with innovative products.

4 

GOLDMAN SACHS BALANCED FUND

	Portfolio Outlook
n	Value Equity — Despite continuing high levels of volatility and uncertainty in the U.S. market, we expect our investment strategy to remain consistent. We believe that a research-intensive approach to buying high-quality businesses when their valuations are generally below industry averages is a sound investment strategy in any environment.
	Furthermore, we believe the Fund’s diversified portfolio is a key advantage in this environment for two reasons. First, we maintain broad exposure to all industries. Therefore, while a few individual stocks and industries have declined precipitously since the market reopened on September 17th, the value component of the Fund has performed relatively well.
n	Growth Equity — While we previously assumed that the economy would grow modestly next year, given the events of September 11, we have changed that assumption and believe that a flat or, more likely, a recessionary environment will be evident for the next several quarters. This is not a forecast, but rather an assumption so that we can test the strength of the various companies under the possibly difficult economic environment. With that assumption in mind, we are reemphasizing our focus on balance sheet and cash flow — a practice that we have always had. Most importantly, we are analyzing the strategic position of our companies and their position from both a marketing standpoint and a sustainability perspective.
	In terms of specific stocks, we are very comfortable with our holdings and have done very little trading since the terrorist attack. However, we do expect to be implementing some proactive trades in the near future. This will be done to take advantage of price/value dislocations (the price of the stock versus the price of the business), and we are monitoring this very carefully for every single name in the portfolio.
n	Fixed Income — Given the challenging nature of the corporate market, we are continuing to target a neutral exposure to this sector on a dollar duration basis. In the wake of the Treasury rally and dramatic increase in mortgage backed security (MBS) prepayment speeds, we are positioning the portfolio in MBS with superior call-protection. For the broad economy, recent events suggest that the economic recovery will be delayed from the near term to the middle of next year.
	We thank you for your investment and look forward to your continued confidence.
	Goldman Sachs Value Investment Team, Goldman Sachs Growth Equity Investment Team, Goldman Sachs Fixed Income Investment Team
	New York September 26, 2001

 5

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

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

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

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.

6

GOLDMAN SACHS BALANCED FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on October 12, 1994 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Balanced Fund. For comparative purposes, the performance of the Fund’s benchmarks, the Standard and Poor’s 500 Index with dividends reinvested (“S&P 500 Index”), and the Lehman Brothers Aggregate Bond Index with dividends reinvested (“LBAB Index”) are shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class B, Class C, Institutional and Service Shares will vary from Class A Shares due to differences in fees and loads.

Balanced Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested October 12, 1994 to August 31, 2001.

LINE GRAPH

	Class A Shares		S&P 500 Index		LBABI Index
10/12/94		9450		10000		10000
		9413		10152		9987
		9247		9782		9965
		9351		9927		10034
		9532		10184		10232
		9948		10582		10476
		10143		10895		10540
		10379		11215		10687
		10743		11664		11101
		10959		11934		11182
		11149		12330		11157
8/95		11319		12361		11292
		11509		12883		11402
		11455		12837		11550
		11762		13400		11724
		11978		13659		11888
		12211		14123		11966
		12275		14254		11758
		12303		14391		11676
		12402		14603		11610
		12566		14980		11587
		12544		15037		11742
		12372		14372		11774
8/96		12544		14675		11754
		12982		15501		11958
		13314		15929		12224
		14022		17133		12433
		14102		16794		12317
		14488		17843		12356
		14665		17983		12386
		14324		17244		12249
		14759		18272		12433
		15388		19384		12551
		15745		20253		12700
		16723		21865		13043
8/97		16566		20640		12932
		17019		21771		13122
		16720		21044		13313
		16760		22018		13374
		16870		22397		13509
		17030		22646		13682
		17852		24279		13671
		18087		25522		13717
		18172		25779		13789
		17952		25336		13920
		17725		26365		14038
		17087		26082		14067
8/98		15752		22311		14297
		16180		23741		14631
		16557		25671		14554
		17011		27227		14637
		17477		28795		14681
		17701		29999		14785
		17252		29066		14526
		17801		30229		14606
		18408		31398		14653
		18165		30657		14524
		18598		32359		14477
		18117		31349		14416
8/99		17811		31192		14409
		17589		30338		14576
		18205		32258		14630
		18416		32913		14629
		19026		34852		14559
		18472		33102		14512
		18333		32476		14689
		19375		35654		14882
		19052		34581		14837
		18811		33871		14829
		19315		34706		15139
		19240		34164		15276
8/00		19948		36286		15497
		19437		34371		15595
		19390		34225		15698
		18671		31527		15954
		18910		31681		16250
		19305		32805		16516
		18485		29814		16660
		17833		27923		16744
		18650		30093		16674
		18777		30295		16775
		18531		29559		16838
		18541		29269		17215
8/01		17963		27437		17412

Average Annual Total Return through August 31, 2001	Since Inception		Five Year		One Year
Class A (commenced October 12, 1994)
Excluding sales charges		9.77%		7.44%		-9.95%
Including sales charges		8.87%		6.23%		-14.92%
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges		6.40%		6.65%		-10.62%
Including contingent deferred sales charges		6.21%		6.24%		-15.09%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		1.28%		n/a		-10.63%
Including contingent deferred sales charges		1.28%		n/a		-11.52%
Institutional (commenced August 15, 1997)		2.43%		n/a		-9.56%
Service (commenced August 15, 1997)		1.84%		n/a		-10.06%

7

 GOLDMAN SACHS BALANCED FUND

Shares		Description	Value
Common Stocks – 51.2%
Airlines – 0.2%
	17,820	Southwest Airlines Co.	$	318,800
Alcohol – 0.2%
	7,855	Anheuser-Busch Cos., Inc.		338,079
Banks – 3.5%
	5,600	Bank of America Corp.		344,400
	4,124	Bank One Corp.		143,062
	44,688	Citigroup, Inc.		2,044,476
	3,790	J.P. Morgan Chase & Co.		149,326
	2,553	M&T Bank Corp.		185,475
	3,170	Mellon Financial Corp.		111,742
	6,284	PNC Financial Services Group		418,452
	8,800	State Street Corp.		427,328
	9,993	The Bank of New York Co., Inc.		396,722
	10,863	U.S. Bancorp		263,319
	14,173	Wells Fargo & Co.		652,100
				5,136,402
Chemicals – 0.9%
	11,964	E.I. du Pont de Nemours & Co.		490,165
	5,035	Minnesota Mining & Manufacturing Co.		524,143
	7,247	The Dow Chemical Co.		254,080
				1,268,388
Clothing – 0.0%
	3,240	The Gap, Inc.		63,666
Computer Hardware – 1.5%
	59,235	Cisco Systems, Inc.*		967,308
	8,792	Compaq Computer Corp.		108,581
	20,997	Dell Computer Corp.*		448,916
	18,400	EMC Corp.		284,464
	9,962	Hewlett-Packard Co.		231,218
	14,400	Sun Microsystems, Inc.*		164,880
				2,205,367
Computer Software – 3.4%
	12,175	International Business Machines, Inc.		1,217,500
	5,700	Intuit, Inc.*		215,346
	47,245	Microsoft Corp.*		2,695,327
	41,462	Oracle Corp.*		506,251
	6,400	Sabre Holdings Corp.*		269,952
	1,473	Siebel Systems, Inc.*		31,817
	4,562	VERITAS Software Corp.*		131,021
				5,067,214
Defense/ Aerospace – 0.3%
	5,947	Honeywell International, Inc.		221,585
	5,400	The B.F. Goodrich Co.		173,070
	2,000	The Boeing Co.		102,400
				497,055
Department Stores – 1.3%
	4,615	The May Department Stores Co.		155,295
	35,615	Wal-Mart Stores, Inc.		1,711,300
				1,866,595
Electrical Equipment – 0.6%
	2,352	McDATA Corp.*		33,587
	6,300	Nortel Networks Corp.		39,438
	12,131	QUALCOMM, Inc.*		713,909
	2,651	Solectron Corp.*		36,054
				822,988
Electrical Utilities – 1.3%
	2,600	Duke Energy Corp.		102,206
	21,011	Energy East Corp.		442,492
	4,615	Entergy Corp.		177,770
	3,664	Exelon Corp.		200,054
	16,915	FirstEnergy Corp.		556,334
	3,151	Mirant Corp.*		90,276
	5,988	Reliant Resources, Inc.*		117,844
	8,900	The AES Corp.*		294,768
				1,981,744
Energy Resources – 3.3%
	7,124	Anadarko Petroleum Corp.		368,667
	2,749	Burlington Resources, Inc.		104,462
	5,058	Chevron Corp.		459,014
	2,400	Enron Corp.		83,976
	55,192	Exxon Mobil Corp.		2,215,959
	14,614	Pioneer Natural Resources Co.*		255,745
	18,764	Royal Dutch Petroleum Co.		1,062,605
	7,418	Unocal Corp.		261,855
				4,812,283
Entertainment – 0.9%
	6,500	Metro-Goldwyn-Mayer, Inc.*		110,500
	10,400	The Walt Disney Co.		264,472
	20,761	Viacom, Inc. Class B*		880,266
				1,255,238
Environmental Services – 0.3%
	12,327	Waste Management, Inc.		381,274
Equity REIT – 0.1%
	5,302	Cousins Properties, Inc.		133,345
Financial Services – 4.8%
	2,847	American Express Co.		103,688
	7,298	Countrywide Credit Industries, Inc.		302,867
	27,706	Federal Home Loan Mortgage Corp.		1,742,153
	11,569	Federal National Mortgage Association		881,673
	73,646	General Electric Co.		3,018,013
	4,909	Household International, Inc.		290,122
	16,300	MBNA Corp.		566,588
	1,865	USA Education, Inc.		147,727
				7,052,831

8      The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS BALANCED FUND 

Shares		Description	Value
Common Stocks – (continued)
Food & Beverage – 1.7%
	4,542	H.J. Heinz Co.	$	205,207
	2,258	Hershey Foods Corp.		145,596
	22,616	PepsiCo, Inc.		1,062,952
	16,189	The Coca-Cola Co.		787,919
	6,500	Wm. Wrigley Jr. Co.		325,910
				2,527,584
Forest – 1.0%
	8,542	Bowater, Inc.		405,232
	14,889	International Paper Co.		597,347
	4,595	Kimberly-Clark Corp.		285,120
	2,400	Weyerhaeuser Co.		136,200
				1,423,899
Gas Utilities – 0.1%
	5,979	KeySpan Corp.		193,122
Grocery – 0.1%
	6,873	The Kroger Co.*		182,959
Healthcare – 5.0%
	12,400	American Home Products Corp.		694,400
	7,733	Amgen, Inc.*		497,232
	21,975	Bristol-Myers Squibb Co.		1,233,676
	9,996	Eli Lilly & Co.		775,989
	14,955	Merck & Co., Inc.		973,571
	56,121	Pfizer, Inc.		2,149,996
	5,319	Pharmacia Corp.		210,632
	19,997	Schering-Plough Corp.		762,486
				7,297,982
Heavy Electrical – 0.1%
	1,387	Emerson Electric Co.		74,343
Heavy Machinery – 0.5%
	8,542	Crane Co.		239,945
	10,309	Deere & Co.		445,039
				684,984
Home Products – 1.3%
	4,300	Avon Products, Inc.		198,359
	12,356	Colgate-Palmolive Co.		669,077
	9,100	Energizer Holdings, Inc.*		160,797
	4,900	The Gillette Co.		150,185
	9,704	The Procter & Gamble Co.		719,552
				1,897,970
Hotels – 0.7%
	14,200	Harrah’s Entertainment, Inc.*		405,836
	7,600	Marriott International, Inc.		333,260
	7,400	Starwood Hotels & Resorts Worldwide, Inc. Class B		250,490
				989,586
Industrial Parts – 0.9%
	1,178	Parker-Hannifin Corp.		51,832
	16,671	Tyco International Ltd.		866,059
	6,711	United Technologies Corp.		459,032
				1,376,923
Information Services – 0.7%
	2,749	Electronic Data Systems Corp.		162,136
	11,882	First Data Corp.		782,430
	3,400	TMP Worldwide, Inc.*		152,490
				1,097,056
Internet – 0.1%
	2,200	CheckFree Corp.*		48,202
	2,150	E.piphany, Inc.*		13,846
	2,635	VeriSign, Inc.*		108,167
				170,215
Leisure – 0.2%
	17,100	Cendant Corp.*		326,097
Life Insurance – 0.7%
	9,171	AFLAC, Inc.		252,386
	1,080	CIGNA Corp.		97,200
	8,542	Lincoln National Corp.		425,904
	7,200	MetLife, Inc.		219,600
				995,090
Media – 3.1%
	9,900	A.H. Belo Corp.		180,576
	41,530	AOL Time Warner, Inc.*		1,551,145
	3,200	Automatic Data Processing, Inc.		165,632
	2,300	Cablevision Systems Corp.		107,410
	1,000	Cablevision Systems Corp. – Rainbow Media Group*		23,800
	5,190	Clear Channel Communications, Inc.*		260,901
	10,884	Comcast Corp.*		398,681
	7,600	EchoStar Communications Corp.*		214,016
	12,396	Fox Entertainment Group, Inc.*		303,950
	2,000	Gannett Co., Inc.		123,320
	3,240	General Motors Corp. Class H*		60,426
	32,898	Liberty Media Corp. Series A*		500,050
	7,288	The Interpublic Group of Companies, Inc.		197,359
	5,700	Univision Communications, Inc.*		170,031
	5,695	USA Networks, Inc. Class B*		131,896
	6,750	Valassis Communications, Inc.*		239,085
				4,628,278
Medical Products – 1.3%
	6,873	Abbott Laboratories		341,588
	2,356	Baxter International, Inc.		121,570
	4,009	GlaxoSmithKline PLC ADR		212,276
	22,371	Johnson & Johnson		1,179,175
	1	Zimmer Holdings, Inc.		14
				1,854,623

The accompanying notes are an integral part of these financial statements.       9

 GOLDMAN SACHS BALANCED FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Mining – 0.2%
	8,124	Alcoa, Inc.	$	309,687
Motor Vehicle – 0.2%
	7,639	Ford Motor Co.		151,787
	2,008	General Motors Corp.		109,938
				261,725
Oil Refining – 0.4%
	3	Conoco, Inc. Class B		89
	1,178	El Paso Corp.		57,239
	8,387	Texaco, Inc.		584,154
				641,482
Oil Services – 0.3%
	4,713	Baker Hughes, Inc.		155,246
	5,000	Schlumberger Ltd.		245,000
	3,240	Transocean Sedco Forex, Inc.		93,636
				493,882
Property Insurance – 2.3%
	14,038	AMBAC Financial Group, Inc.		831,050
	17,897	American International Group, Inc.		1,399,545
	4,026	RenaissanceRe Holdings Ltd. Series B		287,255
	2,847	The Hartford Financial Services Group, Inc.		184,486
	7,757	XL Capital Ltd.		643,831
				3,346,167
Publishing – 0.2%
	1,762	Dow Jones & Co., Inc.		96,699
	4,100	The New York Times Co.		175,275
				271,974
Railroads – 0.2%
	5,596	Canadian National Railway Co.		243,426
Restaurants – 0.3%
	16,726	McDonald’s Corp.		502,282
Security/ Asset Management – 0.7%
	8,738	John Hancock Financial Services, Inc.		349,083
	7,035	Merrill Lynch & Co., Inc.		363,006
	2,500	Morgan Stanley Dean Witter & Co.		133,375
	17,690	The Charles Schwab Corp.		220,418
				1,065,882
Semiconductors – 1.6%
	2,553	Altera Corp.*		72,505
	2,300	Applied Materials, Inc.*		99,107
	7,066	Arrow Electronics, Inc.*		189,298
	47,677	Intel Corp.		1,333,049
	15,471	Texas Instruments, Inc.		512,090
	4,100	Xilinx, Inc.*		160,064
				2,366,113
Specialty Retail – 0.7%
	13,941	The Home Depot, Inc.		640,589
	11,300	Walgreen Co.		388,155
				1,028,744
Telecommunications Equipment – 0.1%
	24,424	Agere Systems, Inc.*		124,562
Telephone – 2.2%
	20,882	AT&T Corp.		397,593
	3,338	BellSouth Corp.		124,508
	14,300	Qwest Communications International, Inc.		307,450
	28,546	SBC Communications, Inc.		1,167,817
	10,023	Sprint Corp.		233,937
	17,138	Verizon Communications, Inc.		856,900
	12,827	WorldCom, Inc.-WorldCom Group		164,955
				3,253,160
Thrifts – 0.1%
	4,552	Dime Bancorp, Inc.		175,707
Tobacco – 0.8%
	25,680	Philip Morris Companies, Inc.		1,217,232
Wireless – 0.8%
	4,100	American Tower Corp.*		59,327
	6,647	Convergys Corp.*		186,582
	21,900	Crown Castle International Corp.*		223,161
	26,488	Sprint Corp. (PCS Group)*		661,670
				1,130,740
TOTAL COMMON STOCKS
(Cost $69,764,646)			$	75,354,745

Principal		Interest			Maturity
Amount		Rate			Date		Value
Asset-Backed Securities – 2.7%
Credit Card – 0.2%
Standard Credit Card Master Trust I Series 1995-9, Class A
$	360,000		6.55	%		10/07/2007	$	379,443
Home Equity – 2.1%
Contimortgage Home Equity Loan Series 1998-1, Class A5
	3,000,000		6.43			04/15/2016		3,039,725
Manufactured Housing – 0.4%
Mid-State Trust Series 4, Class A
	530,591		8.33			04/01/2030		575,886
TOTAL ASSET-BACKED SECURITIES
(Cost $3,973,644)							$	3,995,054

10     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS BALANCED FUND 

Principal		Interest			Maturity
Amount		Rate			Date		Value
Corporate Bonds – 16.5%
Aerospace/ Defense – 0.3%
Alliant Techsystems, Inc.†
$	125,000		8.50	%		05/15/2011	$	128,750
Raytheon Co.
	300,000		6.45			08/15/2002		303,453
								432,203
Airlines – 0.5%
Continental Airlines, Inc.
	323,347		6.54			09/15/2008		330,393
Northwest Airlines, Inc. Class A
	182,988		7.67			01/02/2015		195,802
Northwest Airlines, Inc. Class C
	193,223		8.97			01/02/2015		209,071
Northwest Airlines, Inc.-Trust Series A
	46,800		8.26			03/10/2006		49,076
								784,342
Automotive – 1.1%
Ford Motor Co.
	390,000		6.63			10/01/2028		347,480
General Motors Corp.
	200,000		7.20			01/15/2011		208,387
The Hertz Corp.
	1,055,000		6.00			01/15/2003		1,070,878
								1,626,745
Automotive Parts – 0.3%
Federal-Mogul Corp.Δ
	250,000		7.50			01/15/2009		36,250
Hayes Lemmerz International, Inc. Series B
	250,000		8.25			12/15/2008		152,500
TRW, Inc.
	300,000		6.63			06/01/2004		308,552
								497,302
Chemicals – 0.3%
Lyondell Chemical Co. Series B
	250,000		9.88			05/01/2007		252,500
NL Industries, Inc.
	250,000		11.75			10/15/2003		251,250
								503,750
Commercial Banks – 1.2%
Bank of America Corp.
	495,000		7.40			01/15/2011		532,714
BB&T Corp.
	105,000		6.50			08/01/2011		106,645
FleetBoston Financial Corp.
	180,000		7.25			09/15/2005		192,177
	90,000		6.88			01/15/2028		89,873
Washington Mutual Bank
	325,000		6.88			06/15/2011		338,017
Wells Fargo & Co.
	300,000		6.63			07/15/2004		314,982
	185,000		6.38			08/01/2011		187,273
								1,761,681
Conglomerates – 0.3%
Tyco International Group SA
	460,000		6.38			06/15/2005		475,851
Consumer Cyclicals – 0.2%
United Rentals, Inc. Series B
	250,000		8.80			08/15/2008		240,000
Credit Card Banks – 0.4%
Capital One Bank
	500,000		6.38			02/15/2003		505,957
	100,000		6.65			03/15/2004		101,589
								607,546
Department Stores – 0.1%
Federated Department Stores, Inc.
	145,000		6.63			09/01/2008		145,334
Diversified Operations – 0.1%
International Flavors & Fragrances, Inc.†
	110,000		6.45			05/15/2006		112,344
Electric – 0.1%
MidAmerican Energy Holdings Co.
	80,000		7.23			09/15/2005		83,987
	80,000		7.63			10/15/2007		84,973
								168,960
Energy – 1.1%
Amerada Hess Corp.
	140,000		5.90			08/15/2006		140,996
KeySpan Corp.
	75,000		7.25			11/15/2005		80,207
Kinder Morgan Energy Partners LP
	205,000		6.75			03/15/2011		209,350
Occidental Petroleum Corp.
	280,000		7.38			11/15/2008		298,411
Petroleum Geo-Services ASA
	30,000		7.50			03/31/2007		30,474
	225,000		7.13			03/30/2028		190,920
Phillips Petroleum Co.
	160,000		8.50			05/25/2005		177,410
Pride International, Inc.
	125,000		9.38			05/01/2007		130,469
R&B Falcon Corp. Series B
	180,000		6.75			04/15/2005		185,857
The Williams Cos., Inc.
	105,000		7.13			09/01/2011		107,268
TXU Corp. Series J
	90,000		6.38			06/15/2006		91,483
								1,642,845
Environmental – 0.4%
Allied Waste North America, Inc. Series B
	250,000		7.63			01/01/2006		251,875
Waste Management, Inc.#
	320,000		7.38			08/01/2010		334,673
								586,548

The accompanying notes are an integral part of these financial statements.      11

 GOLDMAN SACHS BALANCED FUND

Statement of Investments  (continued)

August 31, 2001

Principal		Interest			Maturity
Amount		Rate			Date		Value
Corporate Bonds – (continued)
Finance Companies – 1.1%
American General Finance Corp.
$	265,000		5.75	%		11/01/2003	$	271,887
	275,000		6.10			05/22/2006		282,880
AXA Financial, Inc.
	185,000		7.75			08/01/2010		203,529
Comdisco, Inc.Δ
	165,000		6.13			01/15/2003		136,950
General Motors Acceptance Corp.
	225,000		5.36			07/27/2004		226,394
Household Finance Corp.
	240,000		5.88			02/01/2009		235,626
Sears Roebuck Acceptance Corp.
	230,000		6.25			05/01/2009		225,563
								1,582,829
Financial Services – 0.3%
Citigroup, Inc.
	315,000		6.75			12/01/2005		332,987
MidAmerican Funding LLC
	90,000		6.75			03/01/2011		90,952
								423,939
Food & Beverage – 0.5%
ConAgra Foods, Inc.
	80,000		7.50			09/15/2005		84,578
	175,000		7.88			09/15/2010		191,792
Delhaize America, Inc.†
	145,000		7.38			04/15/2006		152,373
	105,000		8.13			04/15/2011		114,720
Hormel Foods Corp.†
	140,000		6.63			06/01/2011		143,713
								687,176
Health Care – 0.3%
Quest Diagnostics, Inc.
	130,000		6.75			07/12/2006		132,792
Tenet Healthcare Corp.
	175,000		8.63			12/01/2003		186,812
Wellpoint Health Networks, Inc.
	100,000		6.38			06/15/2006		101,866
								421,470
Insurance Companies – 0.1%
Conseco, Inc.
	45,000		8.50			10/15/2002		43,200
The Hartford Financial Services Group, Inc.
	165,000		6.38			11/01/2008		168,202
								211,402
Leisure – 0.2%
Cendant Corp.†
	245,000		6.88			08/15/2006		247,414
Media-Cable – 1.6%
Adelphia Communications Corp.
	125,000		7.88			05/01/2009		110,000
	125,000		9.38			11/15/2009		118,125
AOL Time Warner, Inc.
	240,000		6.13			04/15/2006		245,102
Charter Communications Holdings LLC
	250,000		8.25			04/01/2007		241,875
Comcast UK Cable Partners Ltd.+
	125,000		0.00/11.20			11/15/2007		90,000
Cox Communications, Inc.
	125,000		7.50			08/15/2004		132,030
	90,000		6.40			08/01/2008		89,460
	50,000		7.75			11/01/2010		53,385
	100,000		6.80			08/01/2028		90,858
Lenfest Communications, Inc.
	300,000		8.38			11/01/2005		327,268
Rogers Cablesystems Ltd.
	115,000		9.63			08/01/2002		117,300
Telewest Communications PLC+
	250,000		0.00/11.00			10/01/2007		200,000
	250,000		0.00/9.25			04/15/2009		117,500
Time Warner, Inc.
	250,000		7.98			08/15/2004		270,934
	150,000		8.11			08/15/2006		165,285
								2,369,122
Media-Non Cable – 0.7%
Clear Channel Communications, Inc.
	250,000		8.00			11/01/2008		260,000
Crown Castle International Corp.+
	250,000		0.00/10.38			05/15/2011		156,875
News America Holdings, Inc.
	135,000		8.00			10/17/2016		138,018
PanAmSat Corp.
	205,000		6.13			01/15/2005		193,981
Reed Elsevier Capital, Inc.
	75,000		6.13			08/01/2006		76,463
Viacom, Inc.
	220,000		7.70			07/30/2010		241,971
								1,067,308
Mortgage Banks – 0.6%
Countrywide Capital Corp. III Series B
	330,000		8.05			06/15/2027		345,467
Countrywide Home Loans, Inc.
	500,000		6.45			02/27/2003		514,975
								860,442
Paper – 0.4%
Container Corp. of America
	125,000		9.75			04/01/2003		128,125
Packaging Corp. of America
	250,000		9.63			04/01/2009		270,625
Riverwood International Corp.
	250,000		10.63			08/01/2007		260,000
								658,750

12     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS BALANCED FUND 

Principal		Interest			Maturity
Amount		Rate			Date		Value
Corporate Bonds – (continued)
REIT – 0.6%
EOP Operating LP
$	180,000		7.00	%		07/15/2011	$	184,776
Liberty Property LP
	205,000		7.10			08/15/2004		213,318
Simon Property Group LP
	425,000		6.63			06/15/2003		433,989
								832,083
Supermarkets – 0.4%
Fred Meyer, Inc.
	260,000		7.45			03/01/2008		278,702
Safeway, Inc.
	265,000		6.05			11/15/2003		272,650
								551,352
Technology – 0.1%
Flextronics International Ltd.
	125,000		9.88			07/01/2010		128,125
Telecommunications – 2.5%
360 Communications Co.
	575,000		7.13			03/01/2003		596,132
Alaska Communications Holdings, Inc.
	125,000		9.38			05/15/2009		108,750
Ameritech Capital Funding
	135,000		6.25			05/18/2009		134,260
AT&T Canada, Inc.+
	100,000		0.00/9.95			06/15/2008		73,834
British Telecommunications PLC+
	310,000		0.00/8.13			12/15/2010		344,236
Deutsche Telekom International Finance BV
	125,000		8.00			06/15/2010		135,083
France Telecom SA†
	460,000		7.75			03/01/2011		492,801
	65,000		8.50			03/01/2031		73,355
Global Crossing Holdings Ltd.
	125,000		9.13			11/15/2006		79,375
Intermedia Communications, Inc. Series B
	250,000		8.60			06/01/2008		257,813
Metromedia Fiber Network, Inc.
	125,000		10.00			12/15/2009		30,625
Nextel Communications, Inc.
	250,000		9.38			11/15/2009		192,500
Price Communications Wireless, Inc. Series B
	250,000		9.13			12/15/2006		260,000
Qwest Capital Funding, Inc.
	220,000		7.75			08/15/2006		233,821
	200,000		7.25	†		02/15/2011		202,623
Tele-Communications, Inc.
	75,000		9.65			10/01/2003		78,788
Verizon Global Funding Corp.†
	315,000		7.25			12/01/2010		336,933
								3,630,929
Tobacco – 0.4%
Philip Morris Companies, Inc.
	200,000		7.50			04/01/2004		211,616
	195,000		6.95			06/01/2006		203,435
R.J. Reynolds Tobacco Holdings, Inc.
	240,000		7.38			05/15/2003		246,580
								661,631
Yankee Bonds – 0.3%
HSBC Holdings PLC
	110,000		7.50			07/15/2009		119,230
National Westminster Bank PLC
	260,000		7.38			10/01/2009		282,381
								401,611
TOTAL CORPORATE BONDS
(Cost $24,417,277)							$	24,321,034
Foreign Debt Obligations€ – 1.7%
Canadian Government
CAD3,700,000 6.00						06/01/2011		2,504,474
TOTAL FOREIGN DEBT OBLIGATIONS
(Cost $2,474,945)							$	2,504,474
Sovereign Credit – 0.6%
Province of Quebec
	550,000		7.50			07/15/2023		602,410
	105,000		7.49			03/02/2026		114,449
Province of Saskatchewan
	90,000		8.50			07/15/2022		109,270
TOTAL SOVEREIGN CREDIT
(Cost $788,800)							$	826,129
Emerging Market Debt – 0.3%
Petroleos Mexicanos#
	160,000		9.50			09/15/2027		176,200
Republic of Panama
	72,339		7.73	#		05/10/2002		71,706
United Mexican States
	70,000		10.38			02/17/2009		78,925
	110,000		9.88			02/01/2010		121,481
	70,000		11.38			09/15/2016		84,569
TOTAL EMERGING MARKET DEBT
(Cost $514,022)							$	532,881

The accompanying notes are an integral part of these financial statements.      13

 GOLDMAN SACHS BALANCED FUND

Statement of Investments  (continued)

August 31, 2001

Principal		Interest			Maturity
Amount		Rate			Date			Value
Mortgage Backed Obligations – 24.2%
Federal Home Loan Mortgage Corp. (FHLMC) – 4.5%
$	787,318		7.00	%		03/01/2015		$	811,669
	1,379,898		8.00			07/01/2015			1,439,695
	821,844		7.00			12/01/2015			847,264
	863,852		7.00			02/01/2016			891,739
	698,817		7.50			02/01/2027			722,836
	1,839,550		7.50			03/01/2027			1,901,634
									6,614,837
Federal National Mortgage Association (FNMA) – 11.1%
	787,339		7.00			01/01/2016			810,960
	195,544		7.00			02/01/2016			201,410
	852,114		6.50			03/01/2016			869,037
	117,880		6.50			04/01/2016			120,227
	117,574		6.50			05/01/2016			119,909
	910,277		6.50			06/01/2016			928,355
	882,327		6.50			07/01/2016			899,850
	119,629		6.50			08/01/2016			122,005
	164,620		6.50			09/01/2025			166,748
	173,702		6.50			10/01/2025			175,948
	227,394		6.50			11/01/2025			230,590
	979,795		7.00			11/01/2030			1,001,527
	67,492		7.50			12/01/2030			69,559
	891,681		7.50			01/01/2031			918,984
	1,712,469		7.50			02/01/2031			1,764,905
	1,806,416		7.50			03/01/2031			1,861,729
	2,000,000		6.00			TBA-15 yr	Y		2,006,880
	4,000,000		6.50			TBA-15 yr	Y		4,066,240
FNMA Interest-Only Stripped Securities
	448,255		8.00			09/25/2016			67,238
									16,402,101
Government National Mortgage Association (GNMA) – 5.9%
	147,255		6.50			06/15/2023			149,744
	148,152		6.50			08/15/2023			150,656
	186,601		6.50			09/15/2023			189,755
	963,388		6.50			10/15/2023			979,675
	231,896		6.50			11/15/2023			235,816
	331,187		6.50			12/15/2023			336,786
	561,985		6.50			01/15/2024			571,331
	858,032		6.50			02/15/2024			872,301
	950,163		6.50			03/15/2024			964,409
	1,328,110		6.50			04/15/2024			1,349,954
	835,136		7.00			04/15/2028			856,791
	2,000,000		6.50			TBA-30 yr	Y		2,010,625
									8,667,843
Collateralized Mortgage Obligations (CMOs) – 2.7%
Inverse Floaters# – 0.7%
FNMA Series 1993-248, Class SA
	1,000,000		4.49			08/25/2023			961,973
Non-Agency CMOs – 2.0%
Asset Securitization Corp. Series 1997-D4, Class A 1D
	450,000		7.49			04/14/2027			485,322
CS First Boston Mortgage Securities Corp. Series 1997-C2, Class A2
	700,000		6.52			07/17/2007			730,353
CS First Boston Mortgage Securities Corp. Series 1999-C1, Class A1
	864,284		6.91			09/15/2041			911,534
First Union National Bank Commercial Mortgage Trust Series 2000-C2, Class A2
	800,000		7.20			09/15/2010			859,314
								$	2,986,523
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)
(Cost $3,703,895)								$	3,948,496
TOTAL MORTGAGE BACKED OBLIGATIONS
(Cost $34,880,433)								$	35,633,277
U.S. Treasury Obligations – 2.8%
U.S. Treasury Principal-Only Stripped Securities@
	2,750,000		5.75	%		08/15/2020			941,240
	3,700,000		5.85			11/15/2021			1,182,220
	1,290,000		5.82			11/15/2024			349,486
	1,000,000		5.80			08/15/2025			259,719
	3,550,000		5.77	•		11/15/2026			865,699
U.S. Treasury Bonds
	150,000		8.88			08/15/2017			205,781
	200,000		6.88			08/15/2025			236,781
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,859,195)								$	4,040,926

Units		Expiration Date	Value
Warrants – 0.0%
Republic of Panama*
	140	07/23/2012	$	70
TOTAL WARRANTS
(Cost $0)			$	70

14     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS BALANCED FUND 

Principal		Interest			Maturity
Amount		Rate			Date		Value
Repurchase Agreement – 3.9%
Joint Repurchase Agreement Account II^
$	5,700,000		3.69	%		09/04/2001	$	5,700,000
TOTAL REPURCHASE AGREEMENT
(Cost $5,700,000)							$	5,700,000
TOTAL INVESTMENTS
(Cost $146,372,962)							$	152,908,590

*	Non-income producing security.
^	Joint repurchase agreement was entered into on August 31, 2001.
#	Variable rate security. Coupon rate disclosed is that which is in effect at August 31, 2001.
Y	TBA (To Be Assigned) securities are purchased on a forward commitment basis with an approximate (generally± 2.5%) principal amount and maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned.
€	The principal amount of the security is stated in which the bond is denominated. See below.
	CAD = Canadian Dollar
†	Securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounted to $2,005,026 at August 31, 2001.
+	These securities are issued with a zero coupon which increases to the stated rate at a set date in the future.
@	Security is issued with a zero coupon. The interest rate disclosed for this security represents effective yield to maturity.
Δ	Security currently in default.
•	A portion of this security is segregated as collateral for initial margin requirement on futures transactions.
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.      15

 GOLDMAN SACHS BALANCED FUND

Statement of Assets and Liabilities

August 31, 2001

Assets:
Investment in securities, at value (identified cost $146,372,962)		$	152,908,590
Cash(a)			1,320,306
Receivables:
	Investment securities sold		9,571,715
	Dividends and interest, at value		795,658
	Fund shares sold		88,704
	Variation margin		18,177
	Reimbursement from investment adviser		55,179
Forward foreign currency exchange contracts, at value			26,243
Total assets			164,784,572
Liabilities:
Payables:
	Investment securities purchased		12,122,539
	Fund shares repurchased		131,200
	Amounts owed to affiliates		162,958
Forward sale contract, at value			5,119,060
Accrued expenses and other liabilities			75,122
Total liabilities			17,610,879
Net Assets:
Paid-in capital			147,683,317
Accumulated undistributed net investment income			477,974
Accumulated net realized loss on investment, futures and foreign currency related transactions			(7,260,030	)
Net unrealized gain on investments, futures and translation of assets and liabilities denominated in foreign currencies			6,272,432
NET ASSETS		$	147,173,693
Net asset value, offering and redemption price per share: (b)
	Class A		$18.34
	Class B		$18.21
	Class C		$18.19
	Institutional		$18.38
	Service		$18.35
Shares outstanding:
	Class A		5,961,130
	Class B		1,554,724
	Class C		390,975
	Institutional		129,438
	Service		855
Total shares outstanding, $.001 par value (unlimited number of shares authorized)			8,037,122

(a)	Includes restricted cash of $1,300,000 relating to initial margin requirements and collateral on futures transactions.
(b)	Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A Shares is $19.41. 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.

16     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS BALANCED FUND 

Statement of Operations

For the Year Ended August 31, 2001

Investment income:
Interest		$	5,465,622
Dividends(a)			922,219
Total income			6,387,841
Expenses:
Management fees			1,054,603
Distribution and Service fees(b)			685,348
Transfer Agent fees(c)			304,586
Custodian fees			178,601
Registration fees			67,986
Professional fees			51,175
Trustee fees			9,978
Other			105,810
Total expenses			2,458,087
Less — expense reductions			(309,590	)
Net expenses			2,148,497
NET INVESTMENT INCOME			4,239,344
Realized and unrealized gain (loss) on investment, futures and foreign currency related transactions:
Net realized gain (loss) from:
	Investment transactions		(2,822,204	)
	Futures transactions		(2,693,381	)
	Foreign currency related transactions		57,001
Net change in unrealized gain (loss) on:
	Investments		(15,608,562	)
	Futures		(681,320	)
	Translation of assets and liabilities denominated in foreign currencies		(67,421	)
Net realized and unrealized loss on investment, futures and foreign currency related transactions			(21,815,887	)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	(17,576,543	)

(a)	Foreign taxes withheld on dividends were $5,159.
(b)	Class A, Class B and Class C Shares had Distribution and Service fees of $304,187, $304,056 and $77,105, respectively.
(c)	Class A, Class B, Class C, Institutional Class and Service Class Shares had Transfer Agent fees of $231,182, $57,771, $14,650, $972 and $11, respectively.

The accompanying notes are an integral part of these financial statements.      17

 GOLDMAN SACHS BALANCED FUND

Statement of Changes in Net Assets

For the Year Ended August 31, 2001

From operations:
Net investment income		$	4,239,344
Net realized loss from investment, futures and foreign currency related transactions			(5,458,584	)
Net change in unrealized gain (loss) on investments, futures and translation of assets and liabilities denominated in foreign currencies			(16,357,303	)
Net decrease in net assets resulting from operations			(17,576,543	)
Distributions to shareholders:
From net investment income
	Class A Shares		(4,588,967	)
	Class B Shares		(927,368	)
	Class C Shares		(233,928	)
	Institutional Shares		(99,488	)
	Service Shares		(7,305	)
From net realized gains
	Class A Shares		(1,604,974	)
	Class B Shares		(410,699	)
	Class C Shares		(103,384	)
	Institutional Shares		(30,870	)
	Service Shares		(202	)
Total distributions to shareholders			(8,007,185	)
From share transactions:
Proceeds from sales of shares			26,911,143
Reinvestment of dividends and distributions			7,665,057
Cost of shares repurchased			(42,393,398	)
Net decrease in net assets resulting from share transactions			(7,817,198	)
TOTAL DECREASE			(33,400,926	)
Net assets:
Beginning of year			180,574,619
End of year		$	147,173,693
Accumulated undistributed net investment income		$	477,974

18     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS BALANCED FUND 

Statement of Changes in Net Assets

For the Year Ended August 31, 2000

From operations:
Net investment income		$	5,558,893
Net realized gain from investment, futures, options and foreign currency related transactions			1,398,621
Net change in unrealized gain (loss) on investments, futures, options and translation of assets and liabilities denominated in foreign currencies			15,181,430
Net increase in net assets resulting from operations			22,138,944
Distributions to shareholders:
From net investment income
	Class A Shares		(3,728,709	)
	Class B Shares		(664,618	)
	Class C Shares		(176,298	)
	Institutional Shares		(68,550	)
	Service Shares		(353	)
From net realized gains
	Class A Shares		(6,165,905	)
	Class B Shares		(1,496,998	)
	Class C Shares		(399,802	)
	Institutional Shares		(97,914	)
	Service Shares		(569	)
Total distributions to shareholders			(12,799,716	)
From share transactions:
Proceeds from sales of shares			14,022,180
Reinvestment of dividends and distributions			12,298,235
Cost of shares repurchased			(78,654,543	)
Net decrease in net assets resulting from share transactions			(52,334,128	)
TOTAL DECREASE			(42,994,900	)
Net assets:
Beginning of year			223,569,519
End of year		$	180,574,619
Accumulated undistributed net investment income		$	2,189,502

The accompanying notes are an integral part of these financial statements.      19

 GOLDMAN SACHS BALANCED FUND

Notes to Financial Statements

August 31, 2001

1.  ORGANIZATION

Goldman Sachs Trust (the “Trust”) is a Delaware business trust registered under the Investment Company Act of 1940 (as amended) as an open-end management investment company. The Trust includes the Goldman Sachs Balanced Fund (the “Fund”). The Fund is a diversified portfolio offering five classes of shares — Class A, Class B, Class C, Institutional and Service.

2.  SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies consistently followed by the Fund. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.

A. Investment Valuation — Investments in securities traded on a U.S. or foreign securities exchange or the NASDAQ system are valued daily at their last sale on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/ dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.

     Investing in emerging markets may involve special risks and considerations not typically associated with investing in the United States. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls, delayed settlements, and their prices more volatile than those of comparable securities in the United States.

B. Security Transactions and Investment Income — Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes where applicable. Dividends for which the Fund has the choice to receive either cash or stock are recognized as investment income in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned. However, the Fund does not amortize premiums on U.S. Government and corporate bonds.

     Net investment income (other than class-specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Fund based upon the relative proportion of net assets of each class.

     In November 2000, the American Institute of Certified Public Accountants (AICPA) issued a revised version of the AICPA Audit and Accounting Guide for Investment Companies (the Guide). The revised version of the Guide is effective September 1, 2001 for the Fund and will require the Fund to amortize/accrete all premiums and discounts on debt securities. The Fund currently does not amortize/accrete all such premiums and discounts. Upon adoption, the Fund will be required to record the cumulative effect of this change. The cumulative effect will impact net investment income and realized and unrealized gains and losses but will not impact net assets or net asset value per share. Based on securities held as of August 31, 2001, the cumulative effect was immaterial.

C. Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provision is required. Income distributions, if any, are declared and paid quarterly. Capital gains distributions, if any, are declared and paid annually.

20

GOLDMAN SACHS BALANCED FUND 

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

     The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of the Fund’s distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/ tax differences that may exist.

     The Fund, as of its most recent tax year end of August 31, 2001, had a capital loss carryforward of approximately $1,019,000 expiring in 2009 for U.S. Federal Tax purposes. This amount is available to be carried forward to offset future capital gains to the extent permitted by applicable laws or regulations.

     At August 31, 2001, the aggregate cost of portfolio securities for federal income tax purposes was $148,115,011. Accordingly, the gross unrealized gain on investments was $10,152,510 and the gross unrealized loss on investments was $5,358,931 resulting in a net unrealized gain of $4,793,579.

D. Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Funds on a straight-line or pro rata basis depending upon the nature of the expense.

     Class A, Class B and Class C Shares bear all expenses and fees relating to their respective Distribution and Service plans. Shareholders of Service Shares bear all expenses and fees paid to service organizations. Each class of shares separately bears its respective class-specific Transfer Agency fees.

E. Mortgage Dollar Rolls — The Fund may enter into mortgage “dollar rolls” in which the Fund sells securities in the current month for delivery and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. For financial reporting and tax reporting purposes, the Fund treats mortgage dollar rolls as two separate transactions; one involving the purchase of a security and a separate transaction involving a sale.

F. Foreign Currency Translations — The books and records of the Fund are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions.

     Net realized and unrealized gain (loss) on foreign currency transactions will represent: (i) foreign exchange gains and losses from the sale and holdings of foreign currencies; (ii) gains and losses from the sale of investments (applicable to fixed income securities); (iii) currency gains and losses between trade date and settlement date on investment securities transactions and forward exchange contracts; and (iv) gains and losses from the difference between amounts of dividends and interest recorded and the amounts actually received.

G. Segregation Transactions — The Fund may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange contracts, futures contracts, written options, mortgage dollar rolls, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Fund is required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.

21

 GOLDMAN SACHS BALANCED FUND

Notes to Financial Statements  (continued)

August 31, 2001

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

H. Forward Sales Contracts — The Fund may enter into forward security sales of mortgage-backed securities in which the Fund sells securities in the current month for delivery of securities defined by pool stipulated characteristics on a specified future date. The value of the contract is recorded as a liability on the Fund’s records with the difference between its market value and cash proceeds received being recorded as an unrealized gain or loss. Gains or losses are realized upon delivery of the security.

I. Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians.

3.  AGREEMENTS

Pursuant to the Investment Management Agreement (the “Agreement”), Goldman Sachs Asset Management, (“GSAM”), a business unit of the Investment Management Division of Goldman, Sachs & Co. (“Goldman Sachs”), serves as the investment adviser to the Fund. Under the Agreement, the adviser, subject to the general supervision of the Trust’s Board of Trustees, manages the Fund’s portfolio. As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Fund’s business affairs, including providing facilities, the adviser is entitled to a fee, computed daily and payable monthly, at an annual rate equal to 0.65% of the average daily net assets of the Fund.

     The adviser has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding Management fees, Distribution and Service fees, Transfer Agent fees, taxes, interest, brokerage, litigation, Service Share fees, indemnification costs and other extraordinary expenses), to the extent such expenses exceed, on an annual basis, 0.06% of the average daily net assets of the Fund. For the year ended August 31, 2001, Goldman Sachs has agreed to reimburse approximately $308,000. In addition, the Fund has entered into certain offset arrangements with the custodian resulting in a reduction in the Fund’s expenses. For the year ended August 31, 2001, custody fees were reduced by approximately $2,000.

     The Trust, on behalf of the Fund, has adopted Distribution and Service Plans. Under the Distribution and Service Plans, Goldman Sachs and/ or authorized dealers are entitled to a monthly fee from the Fund for distribution and shareholder maintenance services equal, on an annual basis, to 0.25%, 1.00% and 1.00% of the Fund’s average daily net assets attributable to Class A, Class B and Class C Shares, respectively.

     Goldman Sachs serves as the distributor of shares of the Fund pursuant to a Distribution Agreement. Goldman Sachs may receive a portion of the Class A sales load and Class B and Class C contingent deferred sales charges and has advised the Fund that it retained approximately $23,000 during the year ended August 31, 2001.

     Goldman Sachs also serves as the transfer agent of the Fund for a fee. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate as follows: 0.19% of the average daily net assets for Class A, Class B and Class C Shares and 0.04% of the average daily net assets for Institutional and Service Shares.

22

GOLDMAN SACHS BALANCED FUND 

3.  AGREEMENTS (continued)

     The Trust, on behalf of the Fund, has adopted a Service Plan. This plan allows for Service Shares to compensate service organizations for providing varying levels of account administration and shareholder liaison services to their customers who are beneficial owners of such shares. The Service Plan provides for compensation to the service organizations in an amount up to 0.50% (on an annualized basis) of the average daily net asset value of the Service Shares.

     As of August 31, 2001, the amounts owed to affiliates were approximately $84,000, $55,000 and $24,000 for Management, Distribution and Service, and Transfer Agent fees, respectively.

4.  PORTFOLIO SECURITIES TRANSACTIONS

The cost of purchases and proceeds from sales and maturities of securities (excluding short-term investments and futures transactions) for the year ended August 31, 2001, were $291,488,543 and $300,843,176, respectively. Included in these amounts are the cost of purchases and proceeds of sales and maturities of U.S. Government and agency obligations in the amounts of $212,201,160 and $213,521,990, respectively. For the year ended August 31, 2001, Goldman Sachs earned approximately $19,000 of brokerage commissions from portfolio transactions, including futures transactions executed on behalf of the Fund.

Forward Foreign Currency Exchange Contracts — The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell forward contracts to seek to increase total return. All commitments are “marked-to-market” daily at the applicable translation rates 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 delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.

     At August 31, 2001, forward foreign currency exchange contracts were as follows:

Open Forward Foreign	Value on
Currency Sales Contracts	Settlement Date		Current Value		Unrealized Gain
Canadian Dollar expiring 09/14/01	$	2,503,477	$	2,477,234	$	26,243

     The contractual amounts of forward foreign currency contracts do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. At August 31, 2001, the Fund had sufficient cash and securities to cover any commitments under these contracts.

23

 GOLDMAN SACHS BALANCED FUND

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

Option Accounting Principles — When the Fund writes call or put options, an amount equal to the premium received is recorded as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When a written option expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss without regard to any unrealized gain or loss on the underlying security and the liability related to such option is extinguished. When a written call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. When a written put option is exercised, the amount of the premium originally received will reduce the cost of the security which the Fund purchases upon exercise. There is a risk of loss from a change in value of such options which may exceed the related premiums received.

     Upon the purchase of a call option or a protective put option by the Fund, the premium paid is recorded as an investment and subsequently marked-to-market to reflect the current market value of the option. If an option which the Fund has purchased expires on the stipulated expiration date, the Fund will realize a loss in the amount of the cost of the option. If the Fund enters into a closing sale transaction, the Fund will realize a gain or loss, depending on whether the sale proceeds for the closing sale transaction are greater or less than the cost of the option. If the Fund exercises a purchased put option, the Fund will realize a gain or loss from the sale of the underlying security, and the proceeds from such sale will be decreased by the premium originally paid. If the Fund exercises a purchased call option, the cost of the security which the Fund purchases upon exercise will be increased by the premium originally paid.

     At August 31, 2001, the Fund had no open written option contracts.

Futures Contracts — The Fund may enter into futures transactions to hedge against changes in interest rates, securities prices, currency exchange rates or to seek to increase total return. Upon entering into a futures contract, the Fund is required to deposit with a broker or the Fund’s custodian bank an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Fund, depending on the fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Fund realizes a gain or loss which is reported in the Statement of Operations.

     The use of futures contracts involve, to varying degrees, elements of market risk which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contract may not directly correlate with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Fund’s hedging strategies and potentially result in a loss.

24

GOLDMAN SACHS BALANCED FUND 

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

     At August 31, 2001, open futures contracts were as follows:

	Number of Contracts							Unrealized
Type	Long/(Short)			Settlement Month	Market Value			Gain/(Loss)
Euro Dollars		5		September 2001	$	1,207,125		$	6,345
Euro Dollars		12		September 2002		2,875,950			54,272
Euro Dollars		20		December 2002		4,773,250			102,837
Euro Dollars		20		March 2003		4,760,500			91,137
Euro Dollars		20		June 2003		4,747,250			66,387
Euro Dollars		12		September 2003		2,841,900			55,977
Euro Dollars		12		December 2003		2,835,150			50,877
Euro Dollars		12		March 2004		2,833,350			47,727
Euro Dollars		12		June 2004		2,829,600			44,877
Euro Dollars		6		September 2004		1,413,300			10,170
Euro Dollars		6		December 2004		1,411,200			9,870
Euro Dollars		6		March 2005		1,411,050			9,570
Euro Dollars		3		June 2005		705,000			4,691
Euro Dollars		3		September 2005		704,475			4,541
Euro Dollars		3		December 2005		703,613			4,484
Euro Dollars		3		March 2006		703,800			4,484
S&P 500 Index		20		September 2001		5,675,500			(608,975	)
2 Year U.S. Treasury Note		31		December 2001		6,428,625			18,767
5 Year U.S. Treasury Note		(57	)	September 2001		(6,054,469	)		(94,800	)
5 Year U.S. Treasury Note		(60	)	December 2001		(6,356,250	)		(39,928	)
10 Year U.S. Treasury Note		33		December 2001		3,514,500			4,218
20 Year U.S. Treasury Bond		(23	)	September 2001		(2,438,719	)		(122,242	)
					$	37,525,700		$	(274,714	)

5.  LINE OF CREDIT FACILITY

The Fund participates in a $350,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. This facility also requires the Fund to pay a fee based on the amount of the commitment which has not been utilized. During the year ended August 31, 2001, the Fund did not have any borrowings under this facility.

25

 GOLDMAN SACHS BALANCED FUND

Notes to Financial Statements  (continued)

August 31, 2001

6.  JOINT REPURCHASE AGREEMENT ACCOUNT

The Fund, together with other registered investment companies having management agreements with GSAM or its affiliates, transfers uninvested cash into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements.

     At August 31, 2001, the Fund had an undivided interest in the repurchase agreements in the joint account which equaled $5,700,000 in principal amount. At August 31, 2001, the following repurchase agreements held in this joint account were fully collateralized by federal agency obligations:

	Principal		Interest		Maturity	Amortized		Maturity
Repurchase Agreements	Amount		Rate		Date	Cost		Value
Bank of America	$	1,000,000,000		3.69%	09/04/2001	$	1,000,000,000	$	1,000,410,000
Barclays Capital		400,000,000		3.69	09/04/2001		400,000,000		400,164,000
C.S. First Boston Corp.		300,000,000		3.69	09/04/2001		300,000,000		300,123,000
Deutsche Bank Securities, Inc.		3,000,000,000		3.70	09/04/2001		3,000,000,000		3,001,233,333
Greenwich Capital		400,000,000		3.69	09/04/2001		400,000,000		400,164,000
J.P. Morgan Chase & Co.		3,000,000,000		3.69	09/04/2001		3,000,000,000		3,001,230,000
Morgan Stanley		3,000,000,000		3.67	09/04/2001		3,000,000,000		3,001,223,333
UBS Warburg LLC		550,000,000		3.70	09/04/2001		550,000,000		550,226,111
UBS Warburg LLC		1,016,000,000		3.69	09/04/2001		1,016,000,000		1,016,416,560
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT II						$	12,666,000,000	$	12,671,190,337

7.  CERTAIN RECLASSIFICATIONS

In accordance with AICPA Statement of Position 93-2, the Fund reclassified $93,816 from accumulated undistributed net investment income to accumulated net realized loss on investment, futures and foreign currency related transactions. This reclassification has no impact on the net asset value of the Fund and is designed to present the Fund’s capital accounts on a tax basis. Reclassifications result primarily from the difference in the tax treatment of foreign currency, net operating losses and organization costs.

26

GOLDMAN SACHS BALANCED FUND 

Goldman Sachs Balanced Fund — Tax Information (Unaudited)

       For the year ended August 31, 2001, 19.10% of the dividends paid from net investment company taxable income by the Balanced Fund qualify for the dividends received deduction available to corporations.

       Pursuant to Section 852 of the Internal Revenue Code, the Fund designated $2,080,256 as capital gains dividends paid during its year ended August 31, 2001.

27

 GOLDMAN SACHS BALANCED FUND

Notes to Financial Statements  (continued)

August 31, 2001

8.  SUMMARY OF SHARE TRANSACTIONS

Share activity is as follows:

	For the Year Ended
	August 31, 2001
	Shares			Dollars
Class A Shares
Shares sold		1,077,081		$	20,887,648
Reinvestments of dividends and distributions		308,111			6,085,949
Shares repurchased		(1,756,343	)		(34,094,473	)
		(371,151	)		(7,120,876	)
Class B Shares
Shares sold		221,447			4,297,031
Reinvestments of dividends and distributions		59,668			1,175,714
Shares repurchased		(313,608	)		(6,091,858	)
		(32,493	)		(619,113	)
Class C Shares
Shares sold		70,161			1,350,793
Reinvestments of dividends and distributions		14,762			290,493
Shares repurchased		(101,457	)		(1,970,382	)
		(16,534	)		(329,096	)
Institutional Shares
Shares sold		18,943			368,806
Reinvestments of dividends and distributions		5,688			112,139
Shares repurchased		(12,076	)		(235,688	)
		12,555			245,257
Service Shares
Shares sold		73			6,865
Reinvestments of dividends and distributions		39			762
Shares repurchased		(51	)		(997	)
		61			6,630
NET DECREASE		(407,562	)	$	(7,817,198	)

28

GOLDMAN SACHS BALANCED FUND 

8.  SUMMARY OF SHARE TRANSACTIONS (continued)

Share activity is as follows:

	For the Year Ended
	August 31, 2000
	Shares			Dollars
Class A Shares
Shares sold		472,085		$	9,684,221
Reinvestments of dividends and distributions		478,974			9,686,061
Shares repurchased		(2,930,304	)		(60,263,205	)
		(1,979,245	)		(40,892,923	)
Class B Shares
Shares sold		153,476			3,127,574
Reinvestments of dividends and distributions		97,539			1,962,412
Shares repurchased		(663,521	)		(13,518,116	)
		(412,506	)		(8,428,130	)
Class C Shares
Shares sold		47,375			974,400
Reinvestments of dividends and distributions		25,220			506,596
Shares repurchased		(222,853	)		(4,520,537	)
		(150,258	)		(3,039,541	)
Institutional Shares
Shares sold		11,157			233,723
Reinvestments of dividends and distributions		7,030			142,244
Shares repurchased		(17,090	)		(350,812	)
		1,097			25,155
Service Shares
Shares sold		112			2,262
Reinvestments of dividends and distributions		46			922
Shares repurchased		(91	)		(1,873	)
		67			1,311
NET DECREASE		(2,540,845	)	$	(52,334,128	)

29

 GOLDMAN SACHS BALANCED FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from
			investment operations									Distributions to shareholders
	Net asset														In excess
	value,		Net			Net realized			Total from			From net			of net			From net
	beginning		investment			and unrealized			investment			investment			investment			realized			Total
	of period		income			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	21.42	$	0.54	(c)	$	(2.62	)	$	(2.08	)	$	(0.74	)	$	—		$	(0.26	)	$	(1.00	)
2001 - Class B Shares		21.27		0.39	(c)		(2.60	)		(2.21	)		(0.59	)		—			(0.26	)		(0.85	)
2001 - Class C Shares		21.25		0.39	(c)		(2.60	)		(2.21	)		(0.59	)		—			(0.26	)		(0.85	)
2001 - Institutional Shares		21.46		0.62	(c)		(2.62	)		(2.00	)		(0.82	)		—			(0.26	)		(1.08	)
2001 - Service Shares		21.41		0.55	(c)		(2.65	)		(2.10	)		(0.70	)		—			(0.26	)		(0.96	)
2000 - Class A Shares		20.38		0.60	(c)		1.75			2.35			(0.50	)		—			(0.81	)		(1.31	)
2000 - Class B Shares		20.26		0.45	(c)		1.73			2.18			(0.36	)		—			(0.81	)		(1.17	)
2000 - Class C Shares		20.23		0.45	(c)		1.74			2.19			(0.36	)		—			(0.81	)		(1.17	)
2000 - Institutional Shares		20.39		0.71	(c)		1.75			2.46			(0.58	)		—			(0.81	)		(1.39	)
2000 - Service Shares		20.37		0.59	(c)		1.74			2.33			(0.48	)		—			(0.81	)		(1.29	)
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares		20.48		0.32			(0.19	)		0.13			(0.23	)		—			—			(0.23	)
1999 - Class B Shares		20.37		0.22			(0.18	)		0.04			(0.15	)		—			—			(0.15	)
1999 - Class C Shares		20.34		0.23			(0.19	)		0.04			(0.15	)		—			—			(0.15	)
1999 - Institutional Shares		20.48		0.53			(0.35	)		0.18			(0.27	)		—			—			(0.27	)
1999 - Service Shares		20.47		1.22			(1.14	)		0.08			(0.18	)		—			—			(0.18	)
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares		20.29		0.58			0.20			0.78			(0.59	)		—			—			(0.59	)
1999 - Class B Shares		20.20		0.41			0.21			0.62			(0.45	)		—			—			(0.45	)
1999 - Class C Shares		20.17		0.41			0.21			0.62			(0.45	)		—			—			(0.45	)
1999 - Institutional Shares		20.29		0.64			0.20			0.84			(0.65	)		—			—			(0.65	)
1999 - Service Shares		20.28		0.53			0.21			0.74			(0.55	)		—			—			(0.55	)
1998 - Class A Shares		18.78		0.57			2.66			3.23			(0.56	)		—			(1.16	)		(1.72	)
1998 - Class B Shares		18.73		0.50			2.57			3.07			(0.42	)		(0.02	)		(1.16	)		(1.60	)
1998 - Class C Shares (commenced August 15, 1997)		21.10		0.25			0.24			0.49			(0.22	)		(0.04	)		(1.16	)		(1.42	)
1998 - Institutional Shares (commenced August 15, 1997)		21.18		0.26			0.32			0.58			(0.23	)		(0.08	)		(1.16	)		(1.47	)
1998 - Service Shares (commenced August 15, 1997)		21.18		0.22			0.32			0.54			(0.22	)		(0.06	)		(1.16	)		(1.44	)
1997 - Class A Shares		17.31		0.66			2.47			3.13			(0.66	)		—			(1.00	)		(1.66	)
1997 - Class B Shares (commenced May 1, 1996)		17.46		0.42			2.34			2.76			(0.42	)		(0.07	)		(1.00	)		(1.49	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
(b)	Annualized.
(c)	Calculated based on average shares outstanding methodology.
(d)	Includes the effect of mortgage dollar roll transactions.

30     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS BALANCED FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income to			expenses to			income to			Portfolio
value, end		Total			period		to average			average			average			average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate(d)
$	18.34		(9.95	)%	$	109,350		1.15	%		2.78	%		1.34	%		2.59	%		187	%
	18.21		(10.62	)		28,316		1.90			2.03			2.09			1.84			187
	18.19		(10.63	)		7,113		1.90			2.03			2.09			1.84			187
	18.38		(9.56	)		2,379		0.75			3.18			0.94			2.99			187
	18.35		(10.06	)		16		1.25			2.84			1.44			2.65			187
	21.42		12.00			135,632		1.12			2.94			1.29			2.77			154
	21.27		11.17			33,759		1.87			2.19			2.04			2.02			154
	21.25		11.23			8,658		1.87			2.19			2.04			2.02			154
	21.46		12.59			2,509		0.72			3.46			0.89			3.29			154
	21.41		11.89			17		1.22			2.86			1.39			2.69			154
	20.38		0.62			169,395		1.10	(b)		2.58	(b)		1.32	(b)		2.36	(b)		90
	20.26		0.20			40,515		1.85	(b)		1.83	(b)		2.07	(b)		1.61	(b)		90
	20.23		0.18			11,284		1.85	(b)		1.84	(b)		2.07	(b)		1.62	(b)		90
	20.39		0.86			2,361		0.70	(b)		2.96	(b)		0.92	(b)		2.74	(b)		90
	20.37		0.39			15		1.20	(b)		2.46	(b)		1.42	(b)		2.24	(b)		90
	20.48		3.94			192,453		1.04			2.90			1.45			2.49			175
	20.37		3.15			43,926		1.80			2.16			2.02			1.94			175
	20.34		3.14			14,286		1.80			2.17			2.02			1.95			175
	20.48		4.25			8,010		0.73			3.22			0.95			3.00			175
	20.47		3.80			490		1.23			2.77			1.45			2.55			175
	20.29		17.54			163,636		1.00			2.94			1.57			2.37			190
	20.20		16.71			23,639		1.76			2.14			2.07			1.83			190
	20.17		2.49			8,850		1.77	(b)		2.13	(b)		2.08	(b)		1.82	(b)		190
	20.29		2.93			8,367		0.76	(b)		3.13	(b)		1.07	(b)		2.82	(b)		190
	20.28		2.66			16		1.26	(b)		2.58	(b)		1.57	(b)		2.27	(b)		190
	18.78		18.59			81,410		1.00			3.76			1.77			2.99			208
	18.73		16.22			2,110		1.75	(b)		2.59	(b)		2.27	(b)		2.07	(b)		208

      31

 GOLDMAN SACHS BALANCED FUND

Report of Independent Accountants

To the Shareholders and Board of Trustees of

Goldman Sachs Trust — Balanced Fund:

In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Goldman Sachs Balanced Fund (“the Fund”), one of the portfolios constituting Goldman Sachs Trust, at August 31, 2001, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at August 31, 2001 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The financial highlights of the Fund for the periods ended prior to August 31, 2000 were audited by other independent accountants whose report dated October 8, 1999 expressed an unqualified opinion thereon.

PricewaterhouseCoopers LLP

Boston, Massachusetts

October 19, 2001

32

FUNDS PROFILE

Goldman Sachs Funds

Goldman Sachs is a premier financial services firm, known since 1869 for creating thoughtful and customized investment solutions in complex global markets.

Today, the Investment Management Division of Goldman Sachs serves a diverse set of clients worldwide, including private institutions, public entities and individuals. With portfolio management teams located around the world — and more than $295 billion in assets under management, our investment professionals bring firsthand knowledge of local markets to every investment decision, making us one of the few truly global asset managers.

1	An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
	CORESM is a service mark of Goldman, Sachs & Co.
	Goldman Sachs Internet Tollkeeper FundSM and Goldman Sachs Research Select FundSM are service marks of Goldman, Sachs & Co.
*	Goldman Sachs International Growth Opportunities Fund was formerly Goldman Sachs International Small Cap Fund.

GOLDMAN SACHS ASSET MANAGEMENT	32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005
TRUSTEES Ashok N. Bakhru, Chairman David B. Ford Patrick T. Harker John P. McNulty Mary P. McPherson Alan A. Shuch Wilma J. Smelcer Richard P. Strubel Kaysie P. Uniacke	OFFICERS Gary Black, President Jesse H. Cole, Vice President James A. Fitzpatrick, Vice President Mary Hoppa, Vice President John M. Perlowski, Treasurer Kenneth G. Curran, Assistant Treasurer Peter W. Fortner, Assistant Treasurer Philip V. Giuca, Jr., Assistant Treasurer Howard B. Surloff, Secretary Amy E. Belanger, Assistant Secretary Valerie A. Zondorak, Assistant Secretary
GOLDMAN, SACHS &CO. Distributor and Transfer Agent	GOLDMAN SACHS ASSET MANAGEMENT Investment Adviser

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 Fund’s foreign investments may be more volatile than an investment in U.S. securities and are subject to the risks of currency fluctuations and political developments.

Goldman, Sachs & Co. is the distributor of the Fund.

Copyright 2001 Goldman, Sachs & Co. All rights reserved. Date of first use: October 30, 2001 / 00-1632 BALAR / 10.5K / 10-01

GOLDMAN SACHS GROWTH EQUITY FUNDS

Market Review

Dear Shareholder:

As we write to you today, the tragic national events of September 11th continue to dominate the nation’s thoughts. The people of Goldman Sachs are shocked and saddened by the horrible destruction and loss of life, and send our deepest sympathies to those who have been impacted in New York, Washington, D.C., Pennsylvania and across the country.

	In the aftermath of this tragedy, Goldman Sachs is offering assistance to others in the industry who have been more severely impacted than we were. Our people and firm are assisting the ongoing recovery and humanitarian efforts through donations of blood and volunteer work. Additionally, Goldman Sachs people are committed to contributing at least $10 million to provide humanitarian aid to victims and families impacted by the events of September 11th.
	Goldman Sachs also shares the strong determination of the entire securities industry to show solidarity in the face of terrorism. We are committed to sending the clearest possible message that terrorism will not close free markets, and we continue to serve as a force of stability in the global securities markets.
	We want to take this opportunity to provide continued assurance regarding your investment in Goldman Sachs Funds. Immediately after the attack on September 11, all emergency recovery plans were successfully implemented, critical functions were moved to alternate locations, and we were prepared to resume normal operations on September 17 with the reopening of the New York Stock Exchange.
	As we write this letter, there continues to be uncertainty in the global financial markets, and events are unfolding at a rapid pace. While the markets are expected to remain volatile in the short-term, in decades past the American people and our economy have proven to be tremendously resilient following significant global events. As such, we urge our shareholders to remain focused on their long-term goals, maintain diversified portfolios, and work closely with their financial advisers.
	Because the period covered by this report ended prior to September 11, we have included a brief recap of the economy and financial markets for the one-year reporting period ended August 31, 2001.
n	Market Review: Stocks Fall Sharply, While Bonds Rally — During the one-year reporting period ended August 31, 2001, the U.S. stock market, as measured by the S&P 500 Index, declined 24.39%, while the bond market, as measured by the Lehman Aggregate Bond Index, rose 12.35%. Factors underlying the stock market’s decline included the ongoing threat of economic recession, lower corporate profits, the bursting of the technology “bubble” and a weakening job market. As the period progressed, some areas of the stock market that had performed well during the latter stages of 2000 and the first half of 2001 could not avoid the downdraft — namely many value-oriented and more defensive issues. The sharpest decline occurred in the technology sector, as the tech-laden NASDAQ Composite Index plummeted 57.08% during the period. The NASDAQ has fallen 64% since its peak in March 2000.

	In contrast, the bond market fared well during the period. Virtually all bond market sectors generated positive results, largely as a result of declining interest rates and an increase in investor demand.
n	A Faltering Economic Recovery — During the one-year reporting period ended August 31, 2001, the U.S. economy has come full circle. As the period began, we were in the midst of the longest economic expansion in U.S. history. However, since that time, economic activity has fallen sharply. By the fourth quarter of 2000, many economic indicators were pointing to a slowdown, which quickly intensified as the new year began. This reversal prompted the Federal Reserve Board (the “Fed”) to cut short-term interest rates seven times — for a total of 3.25 percentage points — in hopes of avoiding a recession. Under Chairman Alan Greenspan, the Fed has never lowered rates so significantly in such a short period of time. Despite this action, the GDP grew only an estimated 0.2% during the second quarter of 2001 — its slowest rate in eight years.
	On the following pages, you will find a review of the Funds’ activity during the period, including perspectives following the recent tragedy from your portfolio management team.
	In closing, we want to assure you that you have a strong and experienced team of portfolio managers who have experience managing assets through diverse market conditions and encourage you to maintain your long-term focus in the months ahead.

Sincerely,
David B. Ford	David W. Blood
Co-Head, Goldman Sachs Asset Management	Co-Head, Goldman Sachs Asset Management
September 20, 2001

1

GOLDMAN SACHS GROWTH EQUITY FUNDS

What Differentiates Goldman Sachs’
Growth Equity Investment Process?

Over the past 20 years, the Goldman Sachs Growth Equity Team has consistently applied a three-step investment process based on our belief that wealth is created through the long-term ownership of growing businesses.

1	BUY THE BUSINESS
Make decisions as long-term business owners rather than as stock traders Perform in-depth, fundamental research Focus on long-term structural and competitive advantages		Result Performance driven by the compounding growth of businesses over time — not short-term market movements Long-term participation in growing businesses — less reliance on macroeconomic predictions, market timing, sector rotation or momentum
2	BUY HIGH-QUALITY GROWTH BUSINESSES
Identify high quality growth businesses. Some required investment criteria include: n  Established brand names n  Dominant market shares n  Pricing power n  Recurring revenue streams n  Free cash flow n  Long product life cycles n  Favorable long-term growth prospects n  Excellent management		Result Investment in businesses that meet these criteria — and are strategically positioned for consistent long-term growth
3	BUY AT AN ATTRACTIVE PRICE
n	Perform rigorous valuation analysis of every potential investment	Result
n	Use valuation tools and analytics to ensure that the high-quality business franchises we have identified also represent sound investments	Good investment decisions based on solid understanding of what each business is worth Attractive buying opportunities as the stock prices of quality growth businesses fluctuate over time

2

FUND BASICS

Capital Growth Fund
as of August 31, 2001

PERFORMANCE REVIEW

August 31, 2000–August 31, 2001	Fund Total Return (without sales charge)1		S&P 500 Index2
Class A		–26.48%		–24.39%
Class B		–27.06		–24.39
Class C		–27.00		–24.39
Institutional		–26.18		–24.39
Service		–26.58		–24.39

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged S&P 500 Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		–20.91	%		–21.09	%		–17.75	%		–15.98	%		–16.38	%
Five Years		15.97			16.07			N/A			N/A			17.204
Ten Years		16.20			N/A			N/A			N/A			16.814
Since Inception		15.28			15.54			11.14			12.36			15.824
		(4/20/90	)		(5/1/96	)		(8/15/97	)		(8/15/97	)		(4/20/90	)

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 Class A shares (excluding the impact of front-end sales charges applicable to Class A shares since Service shares are not subject to any sales charges). Performance of Class A shares of the Capital Growth Fund reflects the expenses applicable to the Fund’s Class A shares. The fees applicable to Service shares are different from those applicable to Class A shares which impact performance ratings and rankings for a class of shares.
	Total return figures represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance reflects fee waivers and expense limitations in effect. In their absence, performance would be reduced.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets			Line of Business
General Electric Co.		4.2	%	Financial Services
Microsoft Corp.		4.0		Computer Software
Pfizer, Inc.		3.1		Healthcare
Exxon Mobil Corp.		3.0		Energy Resources
Wal-Mart Stores, Inc.		2.6		Department Stores
AOLTime Warner, Inc.		2.6		Media
Citigroup, Inc.		2.4		Banks
Bristol-Meyers Squibb Co.		2.3		Healthcare
PepsiCo, Inc.		2.0		Food & Beverage
American International Group, Inc.		2.0		Property Insurance

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

3

PORTFOLIO RESULTS

Capital Growth Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Capital Growth Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated cumulative total returns, without sales charges, of –26.48%, –27.06%, –27.00%, –26.18%, and –26.58%, respectively. These figures compare to the –24.39% cumulative total return of the Fund’s benchmark, the S&P 500 Index.
	As these returns indicate, the past year was characterized by weakness in the U.S. equity markets. During this period, the Fund underperformed its benchmark, due to several factors. First, several of the Fund’s Technology holdings, and in particular the former blue chip Technology stocks that we typically favor, posted poor returns. In our opinion, the key to evaluating Technology companies is to make sure that they possess long-term growth outlooks and will continue to dominate in their industries. However, this strategy was not rewarded during the period. In addition, the Fund experienced a downturn in its Media & Communication holdings. Many stocks that soared last year as a result of increased dot-com advertising spending have experienced a decline as Internet companies, as well as businesses across all industries, have cut advertising budgets.
	On the positive side, we added value through our overweight positions in both the Consumer Staples and Consumer Discretionary sectors, since investors rotated into these defensive areas. Many companies in these sectors — particularly those in the household products and foods/beverages industries — exhibit several of the characteristics we like. For example, their dominance within their market areas allows them greater flexibility in pricing, or pricing power.
	Portfolio Composition
	As bottom-up stock pickers, we focus on the real worth of the business, and to the extent that we find several businesses in related industries that have long-term growth potential, we may develop an overweight position in a particular sector. With this in mind, as of August 31, 2001, the Fund had overweight positions in the Consumer Staples, Consumer Discretionary and Media & Communication sectors. Underweight positions were held in the Cyclicals, Utilities and Health Care sectors.
	Portfolio Highlights
n	Fannie Mae & Freddie Mac — Fannie Mae & Freddie Mac are federally chartered, stockholder-owned corporations that were created to provide a secondary market for the home mortgage industry. Despite the recent downturn in their stock prices, we believe that Fannie and Freddie, whose federal backing enables them to dominate the secondary mortgage business, should continue to deliver strong, consistent growth going forward.
n	Procter & Gamble Co. — Procter and Gamble is a dominant worldwide manufacturer and marketer of household and personal care products. Its strong franchise and diversified revenue streams made it a strong performer over the past year. Given the uncertain market environment, investors migrated toward these types of businesses, as well as others in more defensive sectors.

4

n	AMBAC Financial Group Inc. — AMBAC is a leading municipal bond insurer. The company is characterized by its stability, because municipalities rarely default on their obligations. The stock has performed extremely well in the recent market environment, as its dual recurring revenue streams, the premium and its interest, provided downside protection in a weak economy.
	Portfolio Outlook
	In light of the national tragedy that occurred on September 11, we would like to assure our shareholders that our investment team, facilities, and back office operations are all intact and running smoothly. From a portfolio management and trading standpoint, we have been meeting constantly since the disaster and studying our positions in the Fund.
	While we previously assumed that the economy would grow modestly next year, we have changed that assumption to that of optimistically a flat, or more likely, a recessionary environment for the next several quarters. This is not a forecast, but rather an assumption so that we can test the strength of our various holdings under the possible difficult economic environment. Within that, we are reemphasizing our focus on balance sheet and cash flow — a practice that we’ve always done. Most important, we are analyzing the strategic position of the companies and their position from both a marketing standpoint and a sustainability perspective.
	From an overall Fund standpoint, diversity helped immensely. For example, we have seen some relative strength in the Fund’s holdings in the Consumer Staples area. The Healthcare group, in which the Fund is overweighted, has also been solid. We have also been pleased with the performance of Freddie Mac and Fannie Mae, two stocks in which the Fund has significant positions.
	Overall, we are very comfortable with the Fund’s holdings and have done very little trading since the terrorist attack. However, we expect to be implementing some proactive trades in the near future. This will be done to take advantage of price/value dislocations (the price of the stock versus the price of the business), and we are monitoring this very carefully for every single holding in the Fund’s portfolio.
	It is important to note that the Growth team has a great deal of experience and Herb Ehlers, our Chief Investment Officer, has close to 40 years of experience. However, we recognize that the events of September 11 are unprecedented and they could be changing the market, the environment, and the investor’s attitude worldwide toward investing in equities. In light of that, we are concerned about the increasing risk premium in the market. Most likely this will continue to increase because investors believe that the “peace dividend” is no more. This could mean that price-to-earnings multiples will decline as the risk premium increases. As a result, for investors who are looking to put new money in the market, we would emphasize that it is important to be diversified — as we are with your Fund.
	We thank you for your investment and look forward to your continued confidence.
	Goldman Sachs Growth Equity Investment Team
	New York, September 26, 2001

5

FUND BASICS

Strategic Growth Fund
as of August 31, 2001

PERFORMANCE REVIEW

August 31, 2000–August 31, 2001	Fund Total Return (without sales charge)1		S&P 500 Index2
Class A		–26.35%		–24.39%
Class B		–26.84		–24.39
Class C		–26.88		–24.39
Institutional		–26.06		–24.39
Service		–26.27		–24.39

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged S&P 500 Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A		Class B		Class C		Institutional		Service
One Year		–20.44%		–20.60%		–17.31%		–15.48%		–15.71%
Since Inception		–1.57		–1.09		0.39		1.47		1.14
(5/24/99)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets			Line of Business
Microsoft Corp		4.0	%	Computer Software
Pfizer, Inc.		3.8		Healthcare
General Electric Co.		3.7		Financial Services
Bristol-Meyers Squibb Co.		3.3		Healthcare
Federal Home Loan Mortgage Corp.		3.1		Financial Services
AOL Time Warner, Inc.		3.0		Media
Federal National Mortgage Association		3.0		Financial Services
Viacom, Inc. Class B		2.8		Entertainment
Citigroup, Inc.		2.8		Banks
Liberty Media Corp. Series A		2.8		Media

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

6

PORTFOLIO RESULTS

Strategic Growth Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Strategic Growth Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service share classes generated cumulative total returns, without sales charges, of –26.35%, –26.84%, –26.88%, –26.06%, and –26.27%, respectively. These results compare to the Fund’s benchmark, the S&P 500 Index, which generated a cumulative total return of –24.39%.
	The past year has been a difficult one for the equity markets. During this period, the Fund’s slight underperformance versus the S&P 500 Index was primarily due to weakness in its Utilities and Technology holdings. Global independent power producer AES Corp. (1.8% of the portfolio) fell as a result of the steep depreciation of several Latin American currencies, an area of the world to which the company has significant exposure. Despite owning the dominant brand franchises in the Technology sector, the Fund’s holdings still suffered, including Cisco Systems, Inc. and EMC Corp. (1.5% and 0.8% of the portfolio, respectively).
	Fortunately, we benefited from our strategic underweight in Technology relative to the Index, a position we maintained based on the belief that, over time, hard product tech companies have difficulty sustaining high growth rates. Our strategy is to selectively own the dominant brand franchises in the sector, focusing on companies with recurring revenue streams and established leadership in their industry.
	Portfolio Composition
	The Strategic Growth Fund invests primarily in large-cap growth stocks. More specifically, we focus the portfolio on high quality growth companies with dominant market share, pricing control, recurring revenue streams, and free cash flow. This portfolio is more selective and focused than many mutual funds, because we typically hold between 65 to 85 holdings.
n	First Data Corp. — First Data is a dominant player in the global payment industry and a leader in electronic commerce. Most importantly, it owns Western Union. With high barriers to entry, solid operating margins and a 150-year history, we believe this is the main reason to own First Data. Recently the firm’s stock price soared as a result of the money transfer agreements with India and China. As an increasing amount of people rely on the Internet for commerce, we feel First Data will continue to build its solid franchise as the payment mechanism of choice.
n	Cendant Corp. — Cendant is a consumer and business services company operating in three broad segments: travel services, real estate services and diversified services. The firm’s stock price steadily climbed throughout much of the period, because the diversity of its portfolio of companies enabled it to partially withstand a slowdown in the global economy.
n	Sabre Holdings Corp. — Sabre is the technology leader in the travel and transportation industries. The company performed extremely well over the past year as the announced acquisition of a close competitor further strengthened its dominant position in the online travel industry.

7

Portfolio Outlook

In light of the national tragedy that occurred on September 11, we would like to assure our shareholders that our investment team, facilities, and back office operations are all intact and running smoothly. From a portfolio management and trading standpoint, we have been meeting constantly since the disaster and studying our positions in the Fund.

While we previously assumed that the economy would grow modestly next year, we have changed that assumption to that of optimistically a flat, or more likely, a recessionary environment for the next several quarters. This is not a forecast, but rather an assumption so that we can test the strength of our various holdings under the possible difficult economic environment. Within that, we are reemphasizing our focus on balance sheet and cash flow — a practice that we’ve always done. Most important, we are analyzing the strategic position of the companies and their position from both a marketing standpoint and a sustainability perspective.

From an overall Fund standpoint, diversity helped immensely. For example, we have seen some relative strength in the Fund’s holdings in the Consumer Staples area. The Pharmaceuticals group, in which the Fund is overweighted, has also been solid. We have also been pleased with the performance of Freddie Mac and Fannie Mae, two stocks in which the Fund has significant positions.

In terms of specific stocks, we are very comfortable with our holdings and have done very little trading since the terrorist attack. However, we expect to be implementing some proactive trades in the near future. This will be done to take advantage of price/value dislocations (the price of the stock versus the price of the business) and we are monitoring this very carefully for every single holding in the Fund’s portfolio.

It is important to note that the Growth team has a great deal of experience and Herb Ehlers, our Chief Investment Officer, has close to 40 years of experience. However, we recognize that the events of September 11 are unprecedented and they could be changing the market, the environment and the investor’s attitude worldwide toward investing in equities. In light of that, we are concerned about the increasing risk premium in the market. Most likely this will continue to increase because investors believe that the “peace dividend” is no more. This could mean that price-to-earnings multiples will decline as the risk premium increases. As a result, for investors who are looking to put new money in the market, we would emphasize that it is important to be diversified — as we are with your Fund.

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

Goldman Sachs Growth Equity Investment Team

New York, September 26, 2001

8

FUND BASICS

Growth Opportunities Fund
as of August 31, 2001

PERFORMANCE REVIEW

Fund Total Return August 31, 2000–August 31, 2001	Fund Total Return (without sales charge)1		S&P MidCap 400 Index2
Class A		–4.17%		–8.13%
Class B		–4.92		–8.13
Class C		–4.85		–8.13
Institutional		–3.79		–8.13
Service		–4.24		–8.13

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged S&P MidCap 400 Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		10.36	%		10.70	%		14.95	%		17.26	%		16.61	%
Since Inception		38.86			40.98			41.59			43.17			42.39
(5/24/99)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets			Line of Business
Intuit, Inc.		2.3	%	Computer Software
AMBAC Financial Group, Inc.		2.2		Property Insurance
Millipore Corp.		2.1		Electrical Equipment
UST, Inc.		2.0		Tobacco
Cendant Corp.		2.0		Leisure
Apogent Technologies, Inc.		2.0		Medical Products
The Stanley Works		1.9		Consumer Durables
Triton PCSHoldings, Inc.		1.9		Wireless
Insight Communications, Inc.		1.8		Media
Grainger W.W., Inc.		1.8		Industrial Services

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

9

PORTFOLIO RESULTS

Growth Opportunities Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Growth Opportunities Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service share classes generated cumulative total returns, without sales charges, of –4.17%, –4.92%, –4.85%, –3.79%, and –4.24%, respectively. The Fund outperformed its benchmark on a relative basis, as the S&P MidCap 400 Index generated a cumulative total return of –8.13%
	While we realize that it is hard to be encouraged when a Fund is losing value, our performance has been strong relative to our benchmark and our mid-cap growth and mid-cap core peer groups. We believe that adhering to the Goldman Sachs Growth Equity Team’s time-tested philosophy (buying high quality growing businesses at reasonable valuations), applying that strategy to less efficiently priced segments of the market and maintaining a diversified portfolio provide a recipe for long-term success.
	The Fund’s relative outperformance versus its benchmark was primarily attributable to strong stock selection in the Producer Goods, Consumer Discretionary, and Consumer Staples sectors. On the other hand, the Fund’s Media & Communications holdings detracted from results because this area of the market has been particularly hard hit along with the economy. The Fund’s Technology holdings were also down in line with the market.
	Portfolio Composition
	The Fund invests primarily in medium-sized growth companies with a market capitalization between $1 and $10 billion. We seek companies that generally fall into these categories: (1) high growth companies with dominant market share in a niche industry, (2) companies that are undergoing fundamental improvements in their businesses or long-term growth rates, (3) under-followed/under-recognized growth companies whose long-term prospects are under-appreciated by Wall Street analysts. We strive to purchase these companies at reasonable valuations in order to capture the full benefits of their growth.
n	Cendant Corp. — Cendant is a consumer and business services company operating in travel, real estate, and diversified services. The firm owns dominant franchises within its business segments and virtually all of its businesses are the #1 or #2 players in their respective industries. Cendant’s business model focuses primarily on franchising, outsourcing and marketing its service-oriented businesses, generally seeking to avoid asset ownership. The results of this model are high margins, strong cash flow generation and few capital requirements.
n	Grainger W.W. Inc. — WW Grainger is the leading North American provider of maintenance, repair, operating (MRO) supplies, services and related information to businesses and institutions. The company has spent the last several years investing in systems and infrastructure to better serve its large customer base. Such investment is just now beginning to bear fruit, as measured by increased market share and cash flow generation. While a distribution business at its core, Grainger’s competitive advantage lies in both its scale and unique service capabilities.

10

•	Insight Communications Inc. — Insight is a cable television system operator serving approximately 1.4 million customers in the four contiguous states of Indiana, Kentucky, Illinois and Ohio. In addition to its geographic concentration, the company’s network is efficiently clustered, allowing for effective capital investment and allocation. Insight has among the most digitally upgraded systems and it is rapidly deploying advanced services to its customer base. The company has the characteristics we look for — a subscription-based business with high recurring revenues.
	Portfolio Outlook
	In light of the catastrophic terrorist attack on September 11 and its repercussions, we believe it is critical to convey our thoughts as well as the impact on the Fund’s investment strategy. First of all, our investment team, its facilities, and back office operations are all intact and running smoothly.
	The Growth Opportunities Fund employs all of the portfolio construction disciplines of Goldman Sachs Asset Management. In addition, the Fund enjoys the resources of the entire 25-person Growth investment team. This seasoned group, led by Chief Investment Officer Herb Ehlers, employs a time-tested strategy of utilizing intense fundamental research and analysis in order to create a portfolio of solid growth companies.
	As a result of the tragic events, we are reemphasizing the solidity of balance sheets and cash flows because we feel that a strong financial position will allow companies to weather such events and maintain their strategic focus and goals. We firmly believe that the holdings in the Fund’s portfolio — with their strong fundamentals and enduring competitive advantages — can withstand this volatile investment climate.
	Each of the approximately 80 stocks that the Fund owns has been reevaluated given the current circumstances. Moreover, we have been in constant contact with these companies in order to assess the implications to their respective businesses. The Fund is fortunate to be diversified across all areas of the market. Since the events of September 11, the Fund’s exposure to the Travel and Leisure industries has detracted from results. However, we believe that even our holdings in this area have the financial wherewithal to persevere through this difficult environment.
	As time progresses, we will be looking for investment opportunities as price/value dislocations occur (price of the stock vs. price of the business).
	We thank you for your investment and look forward to your continued confidence.
	Goldman Sachs Equity Investment Team
	New York, September 26, 2001

11

 GOLDMAN SACHS CAPITAL GROWTH FUND

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on April 20, 1990 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Capital Growth Fund. For comparative purposes, the performance of the Fund’s benchmark (the Standard and Poor’s 500 Index (with dividends reinvested) (“S&P 500 Index”)) is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 Shares due to differences in fees and loads.

Capital Growth Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested April 20, 1990 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		Ten Years		Five Years		One Year
Class A (commenced April 20, 1990)
Excluding sales charges		14.66%		15.08%		15.23%		-26.48%
Including sales charges		14.09%		14.43%		13.93%		-30.51%
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges		13.13%		n/a		14.36%		-27.06%
Including contingent deferred sales charges		12.95%		n/a		13.99%		-30.71%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		8.07%		n/a		n/a		-27.00%
Including contingent deferred sales charges		8.07%		n/a		n/a		-27.73%
Institutional Class (commenced August 15, 1997)		9.26%		n/a		n/a		-26.18%
Service Class (commenced August 15, 1997)		8.74%		n/a		n/a		-26.58%

12

GOLDMAN SACHS CAPITAL GROWTH FUND 

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 97.9%
Banks – 5.9%
	472,449	Bank of America Corp.	$	29,055,613
	1,544,100	Citigroup, Inc.		70,642,575
	680,880	State Street Corp.		33,063,533
	282,300	The Bank of New York Co., Inc.		11,207,310
	587,400	Wells Fargo & Co.		27,026,274
				170,995,305
Chemicals – 1.5%
	480,329	E.I. du Pont de Nemours & Co.		19,679,079
	111,000	Minnesota Mining & Manufacturing Co.		11,555,100
	355,200	The Dow Chemical Co.		12,453,312
				43,687,491
Computer Hardware – 3.4%
	2,468,680	Cisco Systems, Inc.*		40,313,545
	726,990	Dell Computer Corp.*		15,543,046
	1,344,680	EMC Corp.*		20,788,753
	409,020	Hewlett-Packard Co.		9,493,354
	1,044,700	Sun Microsystems, Inc.*		11,961,815
				98,100,513
Computer Software – 7.6%
	425,300	International Business Machines Corp.		42,530,000
	453,500	Intuit, Inc.*		17,133,230
	2,042,900	Microsoft Corp.*		116,547,445
	1,722,000	Oracle Corp.*		21,025,620
	469,830	Sabre Holdings Corp.*		19,817,430
	181,460	VERITAS Software Corp.*		5,211,531
				222,265,256
Defense/Aerospace – 0.5%
	227,600	Honeywell International, Inc.		8,480,376
	146,700	The Boeing Co.		7,511,040
				15,991,416
Department Stores – 2.6%
	1,591,900	Wal-Mart Stores, Inc.		76,490,795
Electrical Equipment – 1.8%
	201,074	McDATA Corp.*		2,871,337
	453,800	Nortel Networks Corp.		2,840,788
	802,240	QUALCOMM, Inc.*		47,211,824
				52,923,949
Electrical Utilities – 1.3%
	214,500	Duke Energy Corp.		8,431,995
	242,612	Mirant Corp.*		6,950,834
	694,000	The AES Corp.*		22,985,280
				38,368,109
Energy Resources – 5.7%
	217,000	Chevron Corp.		19,692,750
	196,000	Enron Corp.		6,858,040
	2,158,612	Exxon Mobil Corp.		86,668,272
	826,100	Royal Dutch Petroleum Co. ADR		46,782,043
	153,500	Unocal Corp.		5,418,550
				165,419,655
Entertainment – 2.3%
	472,930	Metro-Goldwyn-Mayer, Inc.*		8,039,810
	363,600	The Walt Disney Co.		9,246,348
	1,175,130	Viacom, Inc. Class B*		49,825,512
				67,111,670
Environmental Services – 0.2%
	217,600	Waste Management, Inc.		6,730,368
Financial Services – 9.8%
	226,400	Automatic Data Processing, Inc.		11,718,464
	853,200	Federal Home Loan Mortgage Corp.		53,649,216
	748,200	Federal National Mortgage Association		57,020,322
	2,985,300	General Electric Co.		122,337,594
	1,216,480	MBNA Corp.		42,284,845
				287,010,441
Food & Beverage – 4.0%
	1,235,950	PepsiCo, Inc.		58,089,650
	737,100	The Coca-Cola Co.		35,874,657
	465,160	Wm. Wrigley Jr. Co.		23,323,122
				117,287,429
Forest – 1.0%
	256,400	International Paper Co.		10,286,768
	131,800	Kimberly-Clark Corp.		8,178,190
	180,400	Weyerhaeuser Co.		10,237,700
				28,702,658
Healthcare – 9.9%
	506,300	American Home Products Corp.		28,352,800
	307,600	Amgen, Inc.*		19,778,680
	1,200,310	Bristol-Myers Squibb Co.		67,385,403
	337,400	Eli Lilly & Co.		26,192,362
	514,400	Merck & Co., Inc.		33,487,440
	2,340,610	Pfizer, Inc.		89,668,769
	649,000	Schering-Plough Corp.		24,746,370
				289,611,824
Heavy Electrical – 0.1%
	61,500	Emerson Electric Co.		3,296,400
Home Products – 3.4%
	306,200	Avon Products, Inc.		14,125,006
	736,260	Colgate-Palmolive Co.		39,868,479
	704,500	Energizer Holdings, Inc.*		12,448,515
	275,900	The Gillette Co.		8,456,335
	339,980	The Procter & Gamble Co.		25,209,517
				100,107,852

The accompanying notes are an integral part of these financial statements.      13

 GOLDMAN SACHS CAPITAL GROWTH FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Hotels – 2.6%
	1,041,000	Harrah’s Entertainment, Inc.*	$	29,751,780
	612,740	Marriott International, Inc.		26,868,649
	591,180	Starwood Hotels & Resorts Worldwide, Inc.		20,011,443
				76,631,872
Industrial Parts – 1.6%
	733,750	Tyco International Ltd.		38,118,312
	135,240	United Technologies Corp.		9,250,416
				47,368,728
Information Services – 1.4%
	398,410	First Data Corp.		26,235,299
	295,000	TMP Worldwide, Inc.*		13,230,750
				39,466,049
Internet – 0.4%
	141,530	CheckFree Corp.*		3,100,922
	181,935	E.piphany, Inc.*		1,171,662
	189,465	VeriSign, Inc.*		7,777,538
				12,050,122
Leisure – 0.9%
	1,304,300	Cendant Corp.*		24,873,001
Life Insurance – 0.5%
	526,700	MetLife, Inc.		16,064,350
Media – 7.2%
	750,680	A.H. Belo Corp.		13,692,403
	2,013,540	AOL Time Warner, Inc.*		75,205,719
	167,800	Cablevision Systems Corp.		7,836,260
	269,130	Clear Channel Communications, Inc.*		13,529,165
	252,820	Comcast Corp.*		9,260,797
	671,320	EchoStar Communications Corp.*		18,904,371
	139,400	Gannett Co., Inc.		8,595,404
	1,909,100	Liberty Media Corp. Series A*		29,018,320
	83,950	Rainbow Media Group*		1,998,010
	416,200	Univision Communications, Inc.*		12,415,246
	559,430	Valassis Communications, Inc.*		19,815,011
				210,270,706
Medical Products – 1.6%
	865,300	Johnson & Johnson		45,609,963
Mining – 0.4%
	294,900	Alcoa, Inc.		11,241,588
Motor Vehicle – 0.6%
	549,142	Ford Motor Co.		10,911,452
	148,048	General Motors Corp.		8,105,628
				19,017,080
Oil Refining – 0.5%
	190,600	Texaco, Inc.		13,275,290
Oil Services – 0.6%
	369,900	Schlumberger Ltd.		18,125,100
Property Insurance – 3.2%
	616,945	AMBAC Financial Group, Inc.		36,523,144
	733,231	American International Group, Inc.		57,338,664
				93,861,808
Publishing – 0.5%
	327,200	The New York Times Co.		13,987,800
Restaurants – 1.0%
	965,500	McDonald’s Corp.		28,993,965
Security/Asset Management – 1.3%
	206,200	Merrill Lynch & Co., Inc.		10,639,920
	178,400	Morgan Stanley Dean Witter & Co.		9,517,640
	1,418,500	The Charles Schwab Corp.		17,674,510
				37,832,070
Semiconductors – 3.3%
	175,000	Applied Materials, Inc.*		7,540,750
	1,899,600	Intel Corp.		53,112,816
	641,700	Texas Instruments, Inc.		21,240,270
	405,100	Xilinx, Inc.*		15,815,104
				97,708,940
Specialty Retail – 2.2%
	719,350	The Home Depot, Inc.		33,054,132
	882,420	Walgreen Co.		30,311,127
				63,365,259
Telephone – 3.8%
	605,298	AT&T Corp.		11,524,874
	1,066,700	Qwest Communications International, Inc.		22,934,050
	854,000	SBC Communications, Inc.		34,937,140
	234,200	Sprint Corp.		5,466,228
	607,218	Verizon Communications, Inc.		30,360,900
	453,350	WorldCom, Inc.-WorldCom Group		5,830,081
				111,053,273
Tobacco – 1.7%
	1,031,090	Philip Morris Cos., Inc.		48,873,666
Wireless – 1.6%
	310,500	American Tower Corp.*		4,492,935
	1,654,960	Crown Castle International Corp.*		16,864,042
	994,300	Sprint PCS Group*		24,837,614
				46,194,591
TOTAL COMMON STOCKS
(Cost $2,653,709,472)			$	2,859,966,352

14     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CAPITAL GROWTH FUND 

Principal		Interest			Maturity
Amount		Rate			Date		Value
Repurchase Agreement – 1.7%
Joint Repurchase Agreement Account II^
$	50,700,000		3.69	%		09/04/2001	$	50,700,000
TOTAL REPURCHASE AGREEMENT
(Cost $50,700,000)							$	50,700,000
TOTAL INVESTMENTS
(Cost $2,704,409,472)							$	2,910,666,352

*	Non-income producing security.
^	Joint repurchase agreement was entered into on August 31, 2001.

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.      15

 GOLDMAN SACHS STRATEGIC GROWTH FUND

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on May 24, 1999 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Strategic Growth Fund. For comparative purposes, the performance of the Fund’s benchmark (the Standard and Poor’s 500 Index (with dividends reinvested) (“S&P 500 Index”)), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 Shares due to differences in fees and loads.

Strategic Growth Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested May 24, 1999 to August 31, 2001.

LINE GRAPH

	Class A Shares		S&P 500 Index
5/24/99		9450		10000
		9376		9764
		9953		10306
		9660		9984
8/99		9509		9934
		9357		9662
		10255		10274
		10482		10482
		11352		11100
		10823		10543
2/00		10643		10343
		11503		11355
		11163		11014
		10917		10788
		11484		11053
		11305		10881
8/00		11834		11557
		11409		10947
		11361		10900
		10577		10041
		10503		10090
		10806		10448
2/01		9794		9495
		9095		8893
		9889		9584
		9908		9649
		9671		9414
		9388		9322
8/01		8716		8738

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced May 24, 1999)
Excluding sales charges		-3.50%		-26.35%
Including sales charges		-5.86%		-30.40%
Class B (commenced May 24, 1999)
Excluding contingent deferred sales charges		-4.19%		-26.84%
Including contingent deferred sales charges		-5.46%		-30.50%
Class C (commenced May 24, 1999)
Excluding contingent deferred sales charges		-4.14%		-26.88%
Including contingent deferred sales charges		-4.14%		-27.61%
Institutional Class (commenced May 24, 1999)		-3.12%		-26.06%
Service Class (commenced May 24, 1999)		-3.45%		-26.27%

16

GOLDMAN SACHS STRATEGIC GROWTH FUND 

Shares		Description	Value
Common Stocks – 98.5%
Banks – 5.9%
	105,900	Citigroup, Inc.	$	4,844,925
	92,800	State Street Corp.		4,506,368
	20,200	Wells Fargo & Co.		929,402
				10,280,695
Chemicals – 0.4%
	6,700	Minnesota Mining & Manufacturing Co.		697,470
Computer Hardware – 2.6%
	157,500	Cisco Systems, Inc.*		2,571,975
	85,500	EMC Corp.*		1,321,830
	61,300	Sun Microsystems, Inc.*		701,885
				4,595,690
Computer Software – 8.4%
	20,600	International Business Machines Corp.		2,060,000
	34,800	Intuit, Inc.*		1,314,744
	123,400	Microsoft Corp.*		7,039,970
	92,800	Oracle Corp.*		1,133,088
	64,000	Sabre Holdings Corp.*		2,699,520
	13,800	VERITAS Software Corp.*		396,336
				14,643,658
Department Stores – 2.5%
	90,200	Wal-Mart Stores, Inc.		4,334,110
Electrical Equipment – 2.5%
	25,252	McDATA Corp.*		360,599
	68,500	QUALCOMM, Inc.*		4,031,225
				4,391,824
Electrical Utilities – 1.8%
	94,000	The AES Corp.*		3,113,280
Entertainment – 3.6%
	46,000	Metro-Goldwyn-Mayer, Inc.*		782,000
	22,100	The Walt Disney Co.		562,003
	115,234	Viacom, Inc. Class B*		4,885,922
				6,229,925
Financial Services – 11.5%
	86,000	Federal Home Loan Mortgage Corp.		5,407,680
	68,100	Federal National Mortgage Assoc.		5,189,901
	158,200	General Electric Co.		6,483,036
	87,600	MBNA Corp.		3,044,976
				20,125,593
Food & Beverage – 4.8%
	74,130	PepsiCo, Inc.		3,484,110
	43,400	The Coca-Cola Co.		2,112,278
	56,100	Wm. Wrigley Jr. Co.		2,812,854
				8,409,242
Healthcare – 11.0%
	33,200	American Home Products Corp.		1,859,200
	10,100	Amgen, Inc.*		649,430
	102,900	Bristol-Myers Squibb Co.		5,776,806
	20,200	Eli Lilly & Co.		1,568,126
	13,500	Merck & Co., Inc.		878,850
	173,300	Pfizer, Inc.		6,639,123
	48,600	Schering-Plough Corp.		1,853,118
				19,224,653
Home Products – 3.6%
	10,800	Avon Products, Inc.		498,204
	53,500	Colgate-Palmolive Co.		2,897,025
	47,966	Energizer Holdings, Inc*		847,559
	19,500	The Gillette Co.		597,675
	20,900	The Procter & Gamble Co.		1,549,735
				6,390,198
Hotels – 2.8%
	67,000	Harrah’s Entertainment, Inc*		1,914,860
	29,200	Marriott International, Inc.		1,280,420
	48,600	Starwood Hotels & Resorts Worldwide, Inc.		1,645,110
				4,840,390
Industrial Parts – 1.3%
	43,800	Tyco International Ltd.		2,275,410
Information Services – 2.5%
	51,000	First Data Corp.		3,358,350
	23,900	TMP Worldwide, Inc.*		1,071,915
				4,430,265
Internet – 0.6%
	19,100	CheckFree Corp.*		418,481
	16,037	VeriSign, Inc.*		658,319
				1,076,800
Leisure – 1.7%
	154,500	Cendant Corp.*		2,946,315
Media – 9.9%
	44,300	A.H. Belo Corp.		808,032
	140,100	AOL Time Warner, Inc.*		5,232,735
	19,720	Clear Channel Communications, Inc.*		991,324
	25,400	Comcast Corp.*		930,402
	62,500	EchoStar Communications Corp.*		1,760,000
	12,000	Gannett Co., Inc.		739,920
	317,600	Liberty Media Corp. Series A*		4,827,520
	32,200	Univision Communications, Inc.*		960,526
	30,100	Valassis Communications, Inc.*		1,066,142
				17,316,601
Medical Products – 1.5%
	49,000	Johnson & Johnson		2,582,790
Oil Services – 1.3%
	47,900	Schlumberger Ltd.		2,347,100

The accompanying notes are an integral part of these financial statements.      17

 GOLDMAN SACHS STRATEGIC GROWTH FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Property Insurance – 4.3%
	75,200	AMBAC Financial Group, Inc.	$	4,451,840
	40,100	American International Group, Inc.		3,135,820
				7,587,660
Publishing – 0.6%
	24,900	The New York Times Co.		1,064,475
Restaurants – 1.0%
	56,900	McDonald’s Corp.		1,708,707
Security/Asset Management – 1.2%
	167,200	The Charles Schwab Corp.		2,083,312
Semiconductors – 2.9%
	116,000	Intel Corp.		3,243,360
	34,000	Texas Instruments, Inc.		1,125,400
	20,200	Xilinx, Inc.*		788,608
				5,157,368
Specialty Retail – 3.3%
	50,850	The Home Depot, Inc.		2,336,557
	102,900	Walgreen Co.		3,534,615
				5,871,172
Telephone – 1.4%
	39,831	AT&T Corp.		758,382
	64,300	Qwest Communications International, Inc.		1,382,450
	26,750	WorldCom, Inc.-WorldCom Group		344,005
				2,484,837
Tobacco – 1.3%
	47,500	Philip Morris Cos., Inc.		2,251,500
Wireless – 2.3%
	24,700	American Tower Corp.*		357,409
	158,400	Crown Castle International Corp.*		1,614,096
	81,500	Sprint PCS Group*		2,035,870
				4,007,375
TOTAL COMMON STOCKS
(Cost $195,431,616)			$	172,468,415
TOTAL INVESTMENTS
(Cost $195,431,616)			$	172,468,415

 * 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.

18     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS GROWTH OPPORTUNITIES FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on May 24, 1999 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Growth Opportunities Fund. For comparative purposes, the performance of the Fund’s benchmark, (the Standard and Poor’s Midcap 400 Index) (with dividends reinvested) (“S&P Midcap 400 Index”)), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 Shares due to differences in fees and loads.

Growth Opportunities Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested May 24, 1999 to August 31, 2001.

Average Annual Return through August 31, 2001	Since Inception		One Year
Class A (commenced May 24, 1999)
Excluding sales charges		32.57%		-4.17%
Including sales charges		29.33%		-9.42%
Class B (commenced May 24, 1999)
Excluding contingent deferred sales charges		31.96%		-4.92%
Including contingent deferred sales charges		30.99%		-9.67%
Class C (commenced May 24, 1999)
Excluding contingent deferred sales charges		31.60%		-4.85%
Including contingent deferred sales charges		31.60%		-5.80%
Institutional Class (commenced May 24, 1999)		33.08%		-3.79%
Service Class (commenced May 24, 1999)		32.38%		-4.24%

19

 GOLDMAN SACHS GROWTH OPPORTUNITIES FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 96.2%
Banks – 2.8%
	325,525	Charter One Financial, Inc.	$	9,505,330
	362,800	National Commerce Financial Corp.		9,200,608
				18,705,938
Chemicals – 1.4%
	214,300	Cambrex Corp.		9,594,211
Clothing – 0.5%
	228,100	The Limited, Inc.		3,216,210
Computer Hardware – 2.4%
	162,300	Pitney Bowes, Inc.		7,058,427
	682,082	Symbol Technologies, Inc.		9,208,107
				16,266,534
Computer Software – 6.0%
	113,200	Caminus Corp.*		2,419,084
	407,600	Intuit, Inc.*		15,399,128
	261,712	Sabre Holdings Corp.*		11,039,012
	160,852	Symantec Corp.*		6,915,027
	631,666	Witness Systems, Inc.*		5,204,928
				40,977,179
Construction – 1.1%
	196,800	Martin Marietta Materials		7,773,600
Consumer Durables – 2.6%
	127,764	Ethan Allen Interiors, Inc.		4,510,069
	312,000	The Stanley Works		13,069,680
				17,579,749
Electrical Equipment – 4.7%
	245,800	Amphenol Corp.*		9,937,694
	192,600	Jabil Circuit, Inc.*		4,450,986
	221,000	McDATA Corp.*		3,155,880
	221,600	Millipore Corp.		14,060,520
				31,605,080
Energy Resources – 4.5%
	128,800	Apache Corp.		6,044,584
	157,300	Devon Energy Corp.		7,278,271
	221,000	Louis Dreyfus Natural Gas Corp.*		7,348,250
	171,459	Mitchell Energy & Development Corp.		9,828,030
				30,499,135
Entertainment – 3.9%
	275,420	LodgeNet Entertainment Corp.*		5,946,318
	549,600	Mattel, Inc.		9,887,304
	617,700	Metro-Goldwyn-Mayer, Inc.*		10,500,900
				26,334,522
Financial Services – 1.8%
	511,000	Allied Capital Corp.		12,059,600
Healthcare – 6.7%
	149,385	Andrx Group*		10,500,272
	214,800	Biovail Corp.*		9,902,280
	140,400	Genzyme Corp.*		7,952,256
	94,700	IDEC Pharmaceuticals Corp.*		5,612,869
	190,400	IVAX Corp.*		6,408,864
	173,800	Millennium Pharmaceuticals, Inc.*		4,779,500
				45,156,041
Heavy Electrical – 1.3%
	338,550	Molex, Inc.		8,910,636
Home Products – 1.7%
	422,858	Energizer Holdings, Inc.*		7,471,901
	126,300	Ralston Purina Group		4,127,484
				11,599,385
Hotels – 2.7%
	423,100	Harrah’s Entertainment, Inc.*		12,092,198
	186,600	Starwood Hotels & Resorts Worldwide, Inc.		6,316,410
				18,408,608
Industrial Parts – 1.7%
	165,300	American Standard Cos., Inc.*		11,546,205
Industrial Services – 3.9%
	201,900	Edison Schools, Inc.*		3,714,960
	289,200	Grainger W.W., Inc.		12,236,052
	208,600	ITT Educational Services, Inc.*		6,954,724
	142,900	Robert Half International, Inc.*		3,556,781
				26,462,517
Information Services – 4.6%
	105,285	BARRA, Inc.*		5,127,380
	258,300	deCODE GENETICS, Inc.*		1,846,845
	53,635	Navigant International, Inc.*		817,934
	244,829	SunGard Data Systems, Inc.*		5,790,206
	258,800	TMP Worldwide, Inc.*		11,607,180
	264,244	Travelocity.com, Inc.*		6,320,716
				31,510,261
Internet – 1.7%
	796,000	CNET Networks, Inc.*		7,307,280
	490,481	Interwoven, Inc.*		3,997,420
				11,304,700
Leisure – 3.8%
	707,700	Cendant Corp.*		13,495,839
	296,787	Harman International Industries, Inc.		12,197,946
				25,693,785
Life Insurance – 2.6%
	211,200	Nationwide Financial Services, Inc.		9,525,120
	489,407	Phoenix Cos., Inc.*		8,344,389
				17,869,509

20     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS GROWTH OPPORTUNITIES FUND 

Shares		Description	Value
Common Stocks – (continued)
Media – 8.6%
	247,300	Cablevision Systems Corp.-Rainbow Media Group*	$	5,885,740
	213,921	EchoStar Communications Corp.*		6,024,015
	700,900	Entravision Communications Corp.*		8,501,917
	547,621	Insight Communications, Inc.*		12,480,283
	330,100	Liberty Digital, Inc.*		1,650,500
	673,816	Mediacom Communications Corp.*		11,643,540
	212,200	Univision Communications, Inc.*		6,329,926
	203,230	Westwood One, Inc.*		5,792,055
				58,307,976
Medical Products – 3.1%
	557,000	Apogent Technologies, Inc.*		13,390,280
	410,800	Boston Scientific Corp.*		7,846,280
				21,236,560
Medical Providers – 0.9%
	980,350	Hooper Holmes, Inc.		5,882,100
Oil Services – 1.7%
	157,600	Nabors Industries, Inc.*		3,864,352
	227,000	Weatherford International		7,552,290
				11,416,642
Property Insurance – 3.1%
	248,100	AMBAC Financial Group, Inc.		14,687,520
	132,100	Loews Corp.		6,449,122
				21,136,642
Security/Asset Management – 2.9%
	809,961	Instinet Group, Inc.*		9,565,639
	226,100	Legg Mason, Inc.		10,108,931
				19,674,570
Semiconductors – 2.4%
	649,687	Integrated Circuit Systems, Inc.*		11,986,725
	130,300	Microchip Technology, Inc.*		4,650,407
				16,637,132
Specialty Retail – 0.7%
	152,350	99 Cents Only Stores*		4,660,387
Telephone – 2.8%
	275,100	Broadwing, Inc.*		4,940,796
	263,500	CenturyTel, Inc.		9,235,675
	287,795	Openwave Systems, Inc.*		4,616,232
				18,792,703
Tobacco – 2.0%
	419,534	UST, Inc.		13,844,622
Truck Freight – 1.1%
	351,564	Pittston Brink’s Group		7,755,502
Wireless – 4.5%
	565,400	American Tower Corp.*		8,181,338
	923,700	Crown Castle International Corp.*		9,412,503
	366,600	Triton PCS Holdings, Inc.*		13,050,960
				30,644,801
TOTAL COMMON STOCKS
(Cost $638,026,083)			$	653,063,042

	Principal		Interest			Maturity
	Amount		Rate			Date		Value
	Repurchase Agreement – 3.0%
Joint Repurchase Agreement Account II^
	$	20,200,000		3.69	%		09/04/2001	$	20,200,000
	TOTAL REPURCHASE AGREEMENT
	(Cost $20,200,000)							$	20,200,000
	TOTAL INVESTMENTS
	(Cost $658,226,083)							$	673,263,042

*	Non-income producing security.
^	Joint repurchase agreement was entered into on August 31, 2001.

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.      21

 GOLDMAN SACHS GROWTH EQUITY FUNDS

Statements of Assets and Liabilities

August 31, 2001

		Capital			Strategic			Growth
		Growth			Growth			Opportunities
		Fund			Fund			Fund
Assets:
Investment in securities, at value (identified cost $2,704,409,472, $195,431,616, and $658,226,083, respectively)		$	2,910,666,352		$	172,468,415		$	673,263,042
Cash(a)			9,098,624			—			47,563
Receivables:
	Investment securities sold		—			3,718,151			1,153,528
	Fund shares sold		7,157,304			998,552			6,200,840
	Dividends and interest		3,517,208			94,603			272,528
	Reimbursement from investment adviser		170,813			92,059			—
Other assets			—			5,480			—
Total assets			2,930,610,301			177,377,260			680,937,501
Liabilities:
Due to Bank			—			862,905			—
Payables:
	Investment securities purchased		—			—			467,847
	Fund shares repurchased		5,570,639			1,131,885			525,065
	Amounts owed to affiliates		3,899,211			224,466			866,577
Accrued expenses and other liabilities			195,253			96,010			168,647
Total liabilities			9,665,103			2,315,266			2,028,136
Net Assets:
Paid-in capital			2,822,075,372			211,254,875			670,075,389
Accumulated net realized loss on investment and futures transactions			(107,387,054	)		(13,229,680	)		(6,202,983	)
Net unrealized gain (loss) on investments and futures			206,256,880			(22,963,201	)		15,036,959
NET ASSETS		$	2,920,945,198		$	175,061,994		$	678,909,365
Net asset value, offering and redemption price per share:(b)
	Class A	$	19.76		$	9.22		$	18.11
	Class B	$	18.90		$	9.07		$	17.92
	Class C	$	18.88		$	9.08		$	17.80
	Institutional	$	20.02		$	9.30		$	18.26
	Service	$	19.63		$	9.23		$	18.05
Shares outstanding:
	Class A		101,296,092			11,860,540			23,692,196
	Class B		17,915,189			1,570,307			4,116,898
	Class C		6,772,535			618,402			2,682,235
	Institutional		22,192,098			4,934,767			7,017,974
	Service		457,349			150			12,889
Total shares outstanding, $.001 par value (unlimited number of shares authorized)			148,633,263			18,984,166			37,522,192

(a)

Includes restricted cash of $9,000,000 for the Capital Growth Fund relating to initial margin requirements and collateral for futures transactions.

(b)

Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A Shares of the Capital Growth, Strategic Growth and Growth Opportunities Funds is $20.91, $9.76 and $19.16, respectively. 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.

22     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS GROWTH OF EQUITY FUNDS 

Statements of Operations

For the Year Ended August 31, 2001

		Capital			Strategic			Growth
		Growth			Growth			Opportunities
		Fund			Fund			Fund
Investment income:
Dividends(a)		$	31,667,618		$	1,271,228		$	2,518,906
Interest			8,204,403			289,029			1,467,706
Total income			39,872,021			1,560,257			3,986,612
Expenses:
Management fees			33,446,914			1,705,535			4,975,819
Distribution and service fees(b)			11,087,557			503,439			1,741,203
Transfer agent fees(b)			5,630,589			266,399			812,361
Custodian fees			330,188			91,693			121,593
Registration fees			248,427			81,070			167,862
Service share fees			55,055			—			970
Professional fees			53,676			49,008			49,008
Trustee fees			9,978			9,978			9,978
Other			280,860			164,188			165,210
Total expenses			51,143,244			2,871,310			8,044,004
Less — expense reductions			(789,341	)		(389,107	)		(7,239	)
Net expenses			50,353,903			2,482,203			8,036,765
NET INVESTMENT LOSS			(10,481,882	)		(921,946	)		(4,050,153	)
Realized and unrealized loss on investment and futures transactions:
Net realized loss from:
	Investment transactions		(77,839,370	)		(12,577,006	)		(1,118,504	)
	Futures transactions		(26,902,518	)		—			—
Net change in unrealized loss on:
	Investments		(925,049,838	)		(37,853,488	)		(25,559,628	)
	Futures		(2,474,175	)		—			—
Net realized and unrealized loss on investment and futures transactions			(1,032,265,901	)		(50,430,494	)		(26,678,132	)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	(1,042,747,783	)	$	(51,352,440	)	$	(30,728,285	)

(a)	Foreign taxes withheld on dividends were $178,883 and $299 for the Capital Growth and Strategic Growth Funds, respectively.
(b)	Class specific distribution, service and transfer agent fees were as follows:

	Distribution and Service Fees						Transfer Agent Fees
Fund	Class A		Class B		Class C		Class A		Class B		Class C		Institutional		Service
Capital Growth Fund	$	5,843,508	$	3,893,229	$	1,350,820	$	4,441,066	$	739,714	$	256,656	$	188,749	$4,404
Strategic Growth Fund		272,584		163,190		67,665		207,164		31,006		12,856		15,372	1
Growth Opportunities Fund		782,550		579,323		379,330		594,738		110,071		72,073		35,401	78

The accompanying notes are an integral part of these financial statements.      23

 GOLDMAN SACHS GROWTH EQUITY FUNDS

Statements of Changes in Net Assets

For the Year Ended August 31, 2001

		Capital			Strategic			Growth
		Growth			Growth			Opportunities
		Fund			Fund			Fund
From operations:
Net investment loss		$	(10,481,882	)	$	(921,946	)	$	(4,050,153	)
Net realized loss from investment and futures transactions			(104,741,888	)		(12,577,006	)		(1,118,504	)
Net change in unrealized loss on investments and futures			(927,524,013	)		(37,853,488	)		(25,559,628	)
Net decrease in net assets resulting from operations			(1,042,747,783	)		(51,352,440	)		(30,728,285	)
Distributions to shareholders:
From net realized gain on investment transactions
	Class A Shares		(180,185,022	)		(20,740	)		(7,186,983	)
	Class B Shares		(30,938,756	)		(3,104	)		(1,544,651	)
	Class C Shares		(10,200,064	)		(1,309	)		(988,519	)
	Institutional Shares		(33,317,308	)		(5,227	)		(2,059,314	)
	Service Shares		(888,084	)		(1	)		(6,292	)
Total distributions to shareholders			(255,529,234	)		(30,381	)		(11,785,759	)
From share transactions:
Proceeds from sales of shares			791,587,559			155,371,050			512,013,471
Reinvestment of dividends and distributions			231,872,695			26,412			11,072,443
Cost of shares repurchased			(647,167,852	)		(68,571,955	)		(108,672,612	)
Net increase in net assets resulting from share transactions			376,292,402			86,825,507			414,413,302
TOTAL INCREASE (DECREASE)			(921,984,615	)		35,442,686			371,899,258
Net assets:
Beginning of year			3,842,929,813			139,619,308			307,010,107
End of year		$	2,920,945,198		$	175,061,994		$	678,909,365

24     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS GROWTH OF EQUITY FUNDS 

Statements of Changes in Net Assets

For the Year Ended August 31, 2000

		Capital			Strategic			Growth
		Growth			Growth			Opportunities
		Fund			Fund			Fund
From operations:
Net investment loss		$	(15,662,487	)	$	(459,692	)	$	(846,286	)
Net realized gain (loss) from investment and futures transactions			333,295,023			(548,651	)		8,337,861
Net change in unrealized gain (loss) on investments			397,355,635			15,194,104			41,373,281
Net increase in net assets resulting from operations			714,988,171			14,185,761			48,864,856
Distributions to shareholders:
From net investment income
	Class A Shares		—			(1,011	)		(1,699	)
	Class B Shares		—			—			(381	)
	Class C Shares		—			—			(280	)
	Institutional Shares		—			(1,164	)		(2,161	)
	Service Shares		—			—			—
From net realized gain on investment transactions
	Class A Shares		(175,959,949	)		—			(264,562	)
	Class B Shares		(31,007,673	)		—			(52,339	)
	Class C Shares		(8,484,987	)		—			(26,174	)
	Institutional Shares		(24,209,541	)		—			(129,481	)
	Service Shares		(570,727	)		—			(35	)
Total distributions to shareholders			(240,232,877	)		(2,175	)		(477,112	)
From share transactions:
Proceeds from sales of shares			1,067,676,367			120,078,710			269,642,227
Reinvestment of dividends and distributions			220,662,950			1,911			470,028
Cost of shares repurchased			(570,091,770	)		(16,779,719	)		(25,694,467	)
Net increase in net assets resulting from share transactions			718,247,547			103,300,902			244,417,788
TOTAL INCREASE			1,193,002,841			117,484,488			292,805,532
Net assets:
Beginning of year			2,649,926,972			22,134,820			14,204,575
End of year		$	$3,842,929,813		$	139,619,308		$	307,010,107

The accompanying notes are an integral part of these financial statements.      25

 GOLDMAN SACHS GROWTH EQUITY FUNDS

Notes to Financial Statements

August 31, 2001

1.  ORGANIZATION

Goldman Sachs Trust (the “Trust”) is a Delaware business trust registered under the Investment Company Act of 1940 (as amended) as an open-end management investment company. The Trust includes the Goldman Sachs Capital Growth Fund, Goldman Sachs Strategic Growth Fund and Goldman Sachs Growth Opportunities Fund (collectively the “Funds” or individually a “Fund”). Each Fund is a diversified portfolio offering five classes of shares — Class A, Class B, Class C, Institutional and Service.

2.  SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies consistently followed by the Funds. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.

A.  Investment Valuation — Investments in securities traded on a U.S. or foreign securities exchange or the NASDAQ system are valued daily at their last sale price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.

B.  Security Transactions and Investment Income — Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes where applicable. Dividends for which the Funds have the choice to receive either cash or stock are recognized as investment income in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.

     Net investment income (other than class-specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Funds based upon the relative proportion of net assets of each class.

C.  Federal Taxes — It is each 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 their investment company taxable income and capital gains to their shareholders. Accordingly, no federal tax provisions are required. Income and capital gain distributions, if any, are declared and paid annually.

     The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of the Funds’ distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist.

     At August 31, 2001, the aggregate cost of portfolio securities, gross unrealized gain on investments and gross unrealized loss on investments for federal income tax purposes are as follows:

			Gross		Gross			Net
			Unrealized		Unrealized			Unrealized
Fund	Tax Cost		Gain		Loss			Gain (Loss)
Capital Growth	$	2,705,612,217	$	569,923,130	$	(364,868,995	)	$	205,054,135
Strategic Growth		199,642,033		6,744,589		(33,918,207	)		(27,173,618	)
Growth Opportunities		663,825,477		71,367,069		(61,929,504	)		9,437,565

26

GOLDMAN SACHS GROWTH OF EQUITY FUNDS 

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

D.  Expenses — Expenses incurred by the Trust that do not specifically relate to an individual fund of the Trust are allocated to the Funds on a straight-line or pro rata basis depending upon the nature of the expense.

     Class A, Class B and Class C Shares bear all expenses and fees relating to their respective Distribution and Service Plans. Shareholders of Service Shares bear all expenses and fees paid to service organizations. Each class of shares separately bears its respective class-specific Transfer Agency fees.

E.  Foreign Currency Translations — The books and records of each Fund are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions.

     Net realized and unrealized gain (loss) on foreign currency transactions will represent: (i) foreign exchange gains and losses from the sale and holdings of foreign currencies; (ii) 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.  Segregation Transactions — The Funds may enter into certain derivative transactions to seek to increase total return. Forward foreign currency exchange 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 Funds are required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.

G.  Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at the Funds’ custodian or designated subcustodians.

3.  AGREEMENTS

Pursuant to the Investment Management Agreements (the “Agreements”), Goldman Sachs Funds Management, L.P. (“GSFM”), an affiliate of the Investment Management Division of Goldman, Sachs & Co. (“Goldman Sachs”), serves as the investment adviser to the Capital Growth Fund. Goldman Sachs Asset Management (“GSAM”), a business unit of the Investment Management Division of Goldman Sachs & Co., serves as the investment adviser for the Strategic Growth and Growth Opportunities Funds. Under the Agreements, the respective adviser, subject to the general supervision of the Trust’s Board of Trustees, manages the Funds’ portfolios. As compensation for the services rendered pursuant to the Agreements, the assumption of the expenses related thereto and administering the Funds’ business affairs, including providing facilities, the respective 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 each Fund.

     Each adviser has voluntarily agreed to limit certain “Other Expenses” of the Capital Growth, Strategic Growth, and Growth Opportunities Funds (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, .00%, .00%, and .11% of the average daily net assets of the Funds, respectively.

     The Trust, on behalf of the Funds, has adopted Distribution and Service Plans. Under the Distribution and Service Plans, Goldman Sachs and/or authorized dealers are entitled to a monthly fee from the Funds for distribution and shareholder maintenance services equal, on an annual basis, to 0.25%, 1.00% and 1.00% of the Funds’ average daily net assets attributable to Class A, Class B and Class C Shares, respectively.

27

 GOLDMAN SACHS GROWTH EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

3.  AGREEMENTS (continued)

     Goldman Sachs serves as the distributor of shares of the Funds pursuant to Distribution Agreements. 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 Funds that it retained approximately $1,418,000, $536,000 and $2,330,000 during the year ended August 31, 2001, for the Capital Growth, Strategic Growth, and Growth Opportunities Funds, respectively.

     Goldman Sachs also serves as the Transfer Agent of the Funds for a fee. The fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate as follows: 0.19% of the average daily net assets for Class A, Class B and Class C Shares and 0.04% of the average daily net assets for Institutional and Service Shares.

     The Trust, on behalf of each Fund, has adopted a Service Plan. This Plan allows for Service Shares to compensate service organizations for providing varying levels of account administration and shareholder liaison services to their customers who are beneficial owners of such shares. The Service Plan provides for compensation to the service organizations in an amount up to 0.50% (on an annualized basis), of the average daily net asset value of the Service Shares.

     For the year ended August 31, 2001, the Funds’ advisers have voluntarily agreed to reimburse certain expenses. In addition, the Funds have entered into certain offset arrangements with the custodian resulting in a reduction in the Funds’ expenses. These expense reductions were as follows (in thousands):

			Custody		Total Expense
Fund	Reimbursement		Credit		Reductions
Capital Growth	$	777	$	12	$	789
Strategic Growth		385		4		389
Growth Opportunities		—		7		7

     At August 31, 2001, the amounts owed to affiliates were as follows (in thousands):

	Management		Distribution and		Transfer
Fund	Fees		Service Fees		Agent Fees		Total
Capital Growth	$	2,604	$	861	$	434	$	3,899
Strategic Growth		158		42		24		224
Growth Opportunities		579		195		93		867

28

GOLDMAN SACHS GROWTH OF EQUITY FUNDS 

4.  PORTFOLIO SECURITIES TRANSACTIONS

The cost of purchases and proceeds of sales and maturities of securities (excluding short-term investment and futures) for the year ended August 31, 2001, were as follows:

			Sales and
Fund	Purchases		Maturities
Capital Growth	$	827,298,473	$	576,159,873
Strategic Growth		132,252,025		41,300,352
Growth Opportunities		701,293,516		310,620,728

     For the year ended August 31, 2001, Goldman Sachs earned approximately $127,000, $8,000 and $81,000 of brokerage commissions from portfolio transactions including futures transactions executed on behalf of the Capital Growth, Strategic Growth and Growth Opportunities Funds, respectively.

Futures Contracts — The Funds 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 Funds are required to deposit with a broker or the Funds’ custodian bank an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Funds daily, depending on the daily fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Funds realize a gain or loss which is reported in the Statement of Operations.

     The use of futures contracts involve, to varying degrees, elements of market risk which may exceed the amounts recognized in the Statements of Assets and Liabilities. Changes in the value of the futures contract may not directly correlate with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Funds’ hedging strategies and potentially result in a loss.

     At August 31, 2001, the Funds had no open futures contracts.

29

 GOLDMAN SACHS GROWTH EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

Option Accounting Principles — When the Funds write call or put options, an amount equal to the premium received is recorded as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When a written option expires on its stipulated expiration date or the Funds enter into a closing purchase transaction, the Funds realize a gain or loss without regard to any unrealized gain or loss on the underlying security and the liability related to such option is extinguished. When a written call option is exercised, the Funds realize a gain or loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. When a written put option is exercised, the amount of the premium originally received will reduce the cost of the security which the Funds purchase 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 Funds, the premium paid is recorded as an investment and subsequently marked-to-market to reflect the current market value of the option. If an option which the Funds have purchased expires on the stipulated expiration date, the Funds will realize a loss in the amount of the cost of the option. If the Funds enter into a closing sale transaction, the Funds will realize a gain or loss, depending on whether the sale proceeds for the closing sale transaction are greater or less than the cost of the option. If the Funds exercise a purchased put option, the Funds 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 Funds exercise a purchased call option, the cost of the security which the Funds purchase upon exercise will be increased by the premium originally paid. At August 31, 2001, the Funds had no open written option contracts.

5.  LINE OF CREDIT FACILITY

The Funds participate in a $350,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, each Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. This facility also requires a fee to be paid by the Funds based on the amount of the commitment which has not been utilized. During the year ended August 31, 2001, the Funds did not have any borrowings under this facility.

Goldman Sachs Growth Equity Funds — Tax Information (Unaudited)

       For the year ended August 31, 2001, 32.95%, 0% and 8.10% of the dividends paid from net investment taxable income by the Capital Growth, Strategic Growth and Growth Opportunities Funds, qualify for the dividends received deduction available to corporations.

       Pursuant to Section 852 of the Internal Revenue code, Capital Growth, Strategic Growth and Growth Opportunities Funds designated $178,795,352, $30,381 and $1,009,527 respectively, as capital gain dividends paid during the year ended August 31, 2001.

30

GOLDMAN SACHS GROWTH OF EQUITY FUNDS 

6.  JOINT REPURCHASE AGREEMENT ACCOUNT

The Funds, together with other registered investment companies having management agreements with GSFM, GSAM or their affiliates, transfer uninvested cash into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements.

     At August 31, 2001, the Capital Growth and Growth Opportunities Funds had an undivided interest in the repurchase agreements in the joint account which equaled $50,700,000 and $20,200,000, respectively, in principal amount. At August 31, 2001, the following repurchase agreements held in this joint account were fully collateralized by Federal Agency obligations:

	Principal		Interest			Maturity		Amortized		Maturity
Repurchase Agreements	Amount		Rate			Date		Cost		Value
Bank of America	$	1,000,000,000		3.69	%		09/04/2001	$	1,000,000,000	$	1,000,410,000
Barclays Capital		400,000,000		3.69			09/04/2001		400,000,000		400,164,000
C.S. First Boston Corp.		300,000,000		3.69			09/04/2001		300,000,000		300,123,000
Deutsche Bank Securities, Inc.		3,000,000,000		3.70			09/04/2001		3,000,000,000		3,001,233,333
Greenwich Capital		400,000,000		3.69			09/04/2001		400,000,000		400,164,000
J.P. Morgan Chase & Co., Inc.		3,000,000,000		3.69			09/04/2001		3,000,000,000		3,001,230,000
Morgan Stanley		3,000,000,000		3.67			09/04/2001		3,000,000,000		3,001,223,333
UBS Warburg LLC		550,000,000		3.70			09/04/2001		550,000,000		550,226,111
UBS Warburg LLC		1,016,000,000		3.69			09/04/2001		1,016,000,000		1,016,416,560
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT II								$	12,666,000,000	$	12,671,190,337

7.  CERTAIN RECLASSIFICATIONS

In accordance with AICPA Statement of Position 93-2, certain reclassifications have been recorded to the Funds’ accounts. These reclassifications have no impact on the net asset value of the Funds and are designed to present the Funds’ capital accounts on a tax basis. Reclassifications result primarily from the difference in the tax treatment of foreign currency, net operating losses and organization costs.

							Accumulated
				Accumulated			Undistributed
				net realized			net investment
Fund	Paid-in Capital			gain (loss)			loss
Capital Growth	$	(10,481,882	)	$	—		$	10,481,882
Strategic Growth		(921,946	)		—			921,946
Growth Opportunities		(3,310,174	)		(739,979	)		4,050,153

31

 GOLDMAN SACHS GROWTH EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

8.  SUMMARY OF SHARE TRANSACTIONS

Share activity for year ended August 31, 2001 is as follows:

	Capital Growth Fund						Strategic Growth Fund						Growth Opportunities Fund
	Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A Shares
Shares sold		21,017,456		$	486,151,957			9,728,783		$	106,792,769			16,975,678		$	319,890,127
Reinvestments of dividends and distributions		6,698,398			164,577,678			1,499			17,362			379,445			7,019,729
Shares repurchased		(20,945,533	)		(475,727,022	)		(5,238,421	)		(56,795,315	)		(3,314,690	)		(61,902,137	)
		6,770,321			175,002,613			4,491,861			50,014,816			14,040,433			265,007,719
Class B Shares
Shares sold		3,382,523			75,201,556			473,015			5,143,230			2,494,265			46,820,227
Reinvestments of dividends and distributions		1,178,230			27,853,359			233			2,668			74,282			1,366,995
Shares repurchased		(2,782,777	)		(61,003,625	)		(285,423	)		(2,983,737	)		(614,596	)		(11,291,259	)
		1,777,976			42,051,290			187,825			2,162,161			1,953,951			36,895,963
Class C Shares
Shares sold		2,494,827			55,565,310			205,252			2,240,792			1,724,838			32,147,122
Reinvestments of dividends and distributions		368,629			8,699,646			101			1,155			42,193			770,862
Shares repurchased		(1,212,829	)		(26,556,822	)		(173,636	)		(1,817,626	)		(473,914	)		(8,697,980	)
		1,650,627			37,708,134			31,717			424,321			1,293,117			24,220,004
Institutional Shares
Shares sold		7,327,294			171,706,870			3,766,876			41,194,259			5,838,777			112,905,995
Reinvestments of dividends and distributions		1,207,137			29,973,200			449			5,227			102,889			1,914,767
Shares repurchased		(3,401,963	)		(79,817,991	)		(654,021	)		(6,975,277	)		(1,472,017	)		(26,768,286	)
		5,132,468			121,862,079			3,113,304			34,224,209			4,469,649			88,052,476
Service Shares
Shares sold		123,369			2,961,866			—			—			13,429			250,000
Reinvestments of dividends and distributions		31,457			768,812			—			—			5			90
Shares repurchased		(171,921	)		(4,062,392	)		—			—			(698	)		(12,950	)
		(17,095	)		(331,714	)		—			—			12,736			237,140
NET INCREASE		15,314,297		$	376,292,402			7,824,707		$	86,825,507			21,769,886		$	414,413,302

32

GOLDMAN SACHS GROWTH EQUITY FUNDS 

8.  SUMMARY OF SHARE TRANSACTIONS (continued)

Share activity for the year ended August 31, 2000 is as follows:

	Capital Growth Fund						Strategic Growth Fund						Growth Opportunities Fund
	Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A Shares
Shares sold		24,015,612		$	652,956,057			6,980,953		$	81,208,797			9,546,230		$	163,309,769
Reinvestments of dividends and distributions		6,216,899			162,385,895			65			749			18,793			263,625
Shares repurchased		(14,669,534	)		(395,793,370	)		(643,589	)		(7,592,195	)		(723,140	)		(12,932,520	)
		15,562,977			419,548,582			6,337,429			73,617,351			8,841,883			150,640,874
Class B Shares
Shares sold		4,183,831			108,757,719			1,151,624			12,874,188			2,216,674			36,648,725
Reinvestments of dividends and distributions		1,113,074			28,260,990			—			—			3,548			49,742
Shares repurchased		(2,693,312	)		(70,581,776	)		(107,170	)		(1,253,024	)		(108,346	)		(1,884,792	)
		2,603,593			66,436,933			1,044,454			11,621,164			2,111,876			34,813,675
Class C Shares
Shares sold		2,244,635			58,635,987			458,422			5,048,001			1,499,042			24,849,781
Reinvestments of dividends and distributions		290,772			7,371,075			—			—			1,796			24,984
Shares repurchased		(1,000,329	)		(26,074,413	)		(109,451	)		(1,260,537	)		(137,110	)		(2,322,043	)
		1,535,078			39,932,649			348,971			3,787,464			1,363,728			22,552,722
Institutional Shares
Shares sold		8,732,980			236,966,132			1,779,701			20,947,724			2,559,976			44,573,678
Reinvestments of dividends and distributions		845,809			22,210,942			101			1,162			9,403			131,642
Shares repurchased		(2,701,667	)		(72,457,337	)		(552,466	)		(6,673,963	)		(536,410	)		(8,258,792	)
		6,877,122			186,719,737			1,227,336			14,274,923			2,032,969			36,446,528
Service Shares
Shares sold		386,213			10,360,472			—			—			16,250			260,274
Reinvestments of dividends and distributions		16,688			434,048			—			—			3			35
Shares repurchased		(188,392	)		(5,184,874	)		—			—			(16,250	)		(296,320	)
		214,509			5,609,646			—			—			3			(36,011	)
NET INCREASE		26,793,279		$	718,247,547			8,958,190		$	103,300,902			14,350,459		$	244,417,788

33

 GOLDMAN SACHS CAPITAL GROWTH FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from									Distributions
			investment operations									to shareholders
									Total
	Net asset		Net						income (loss)						In excess
	value,		investment			Net realized			from			From net			of net			From net
	beginning		income			and unrealized			investment			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	28.95	$	(0.06	) (c)	$	(7.23	)	$	(7.29	)	$	—		$	—		$	(1.90	)	$	(1.90	)
2001 - Class B Shares		27.99		(0.23	) (c)		(6.96	)		(7.19	)		—			—			(1.90	)		(1.90	)
2001 - Class C Shares		27.94		(0.22	) (c)		(6.94	)		(7.16	)		—			—			(1.90	)		(1.90	)
2001 - Institutional Shares		29.19		0.03	(c)		(7.30	)		(7.27	)		—			—			(1.90	)		(1.90	)
2001 - Service Shares		28.81		(0.08	) (c)		(7.20	)		(7.28	)		—			—			(1.90	)		(1.90	)
2000 - Class A Shares		24.96		(0.11	) (c)		6.29			6.18			—			—			(2.19	)		(2.19	)
2000 - Class B Shares		24.37		(0.30	) (c)		6.11			5.81			—			—			(2.19	)		(2.19	)
2000 - Class C Shares		24.33		(0.30	) (c)		6.10			5.80			—			—			(2.19	)		(2.19	)
2000 - Institutional Shares		25.06		—	(c)		6.32			6.32			—			—			(2.19	)		(2.19	)
2000 - Service Shares		24.88		(0.13	) (c)		6.25			6.12			—			—			(2.19	)		(2.19	)
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares		24.03		(0.08	)		1.01			0.93			—			—			—			—
1999 - Class B Shares		23.57		(0.17	)		0.97			0.80			—			—			—			—
1999 - Class C Shares		23.52		(0.16	)		0.97			0.81			—			—			—			—
1999 - Institutional Shares		24.07		(0.02	)		1.01			0.99			—			—			—			—
1999 - Service Shares		23.96		(0.08	)		1.00			0.92			—			—			—			—
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares		18.48		(0.03	)		6.35			6.32			—			—			(0.77	)		(0.77	)
1999 - Class B Shares		18.27		(0.12	)		6.19			6.07			—			—			(0.77	)		(0.77	)
1999 - Class C Shares		18.24		(0.10	)		6.15			6.05			—			—			(0.77	)		(0.77	)
1999 - Institutional Shares		18.45		0.01			6.38			6.39			—			—			(0.77	)		(0.77	)
1999 - Service Shares		18.46		(0.04	)		6.31			6.27			—			—			(0.77	)		(0.77	)
1998 - Class A Shares		16.73		0.02			4.78			4.80			(0.01	)		(0.01	)		(3.03	)		(3.05	)
1998 - Class B Shares		16.67		0.02			4.61			4.63			—			—			(3.03	)		(3.03	)
1998 - Class C Shares (commenced August 15, 1997)		19.73		(0.02	)		1.60			1.58			—			(0.04	)		(3.03	)		(3.07	)
1998 - Institutional Shares (commenced August 15, 1997)		19.88		0.02			1.66			1.68			(0.01	)		(0.07	)		(3.03	)		(3.11	)
1998 - Service Shares (commenced August 15, 1997)		19.88		(0.01	)		1.66			1.65			—			(0.04	)		(3.03	)		(3.07	)
1997 - Class A Shares		14.91		0.10			3.56			3.66			(0.10	)		(0.02	)		(1.72	)		(1.84	)
1997 - Class B Shares (commenced May 1, 1996)		15.67		0.01			2.81			2.82			(0.01	)		(0.09	)		(1.72	)		(1.82	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

34     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CAPITAL GROWTH FUND 

													Ratios assuming
													no expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	19.76		(26.48	)%	$	2,001,259		1.44	%		(0.25	)%		1.46	%		(0.27	)%		18	%
	18.90		(27.06	)		338,673		2.19			(1.00	)		2.21			(1.02	)		18
	18.88		(27.00	)		127,839		2.19			(1.00	)		2.21			(1.02	)		18
	20.02		(26.18	)		444,195		1.04			0.15			1.06			0.13			18
	19.63		(26.58	)		8,979		1.54			(0.35	)		1.56			(0.37	)		18
	28.95		25.70			2,736,484		1.45			(0.41	)		1.47			(0.44	)		34
	27.99		24.75			451,666		2.20			(1.16	)		2.22			(1.19	)		34
	27.94		24.75			143,126		2.20			(1.16	)		2.22			(1.19	)		34
	29.19		26.18			497,986		1.05			—			1.07			(0.03	)		34
	28.81		25.53			13,668		1.55			(0.49	)		1.57			(0.52	)		34
	24.96		3.87			1,971,097		1.44	(b)		(0.53	)(b)		1.47	(b)		(0.56	)(b)		18
	24.37		3.39			329,870		2.19	(b)		(1.29	)(b)		2.22	(b)		(1.32	)(b)		18
	24.33		3.44			87,284		2.19	(b)		(1.29	)(b)		2.22	(b)		(1.32	)(b)		18
	25.06		4.11			255,210		1.04	(b)		(0.20	)(b)		1.07	(b)		(0.23	)(b)		18
	24.88		3.84			6,466		1.54	(b)		(0.65	)(b)		1.57	(b)		(0.68	)(b)		18
	24.03		34.58			1,992,716		1.42			(0.18	)		1.58			(0.34	)		30
	23.57		33.60			236,369		2.19			(0.98	)		2.21			(1.00	)		30
	23.52		33.55			60,234		2.19			(1.00	)		2.21			(1.02	)		30
	24.07		35.02			41,817		1.07			0.11			1.09			0.09			30
	23.96		34.34			3,085		1.57			(0.37	)		1.59			(0.39	)		30
	18.48		29.71			1,256,595		1.40			0.08			1.65			(0.17	)		62
	18.27		28.73			40,827		2.18			(0.77	)		2.18			(0.77	)		62
	18.24		8.83			5,395		2.21	(b)		(0.86	)(b)		2.21	(b)		(0.86	)(b)		62
	18.45		9.31			7,262		1.16	(b)		0.18	(b)		1.16	(b)		0.18	(b)		62
	18.46		9.18			2		1.50	(b)		(0.16	)(b)		1.50	(b)		(0.16	)(b)		62
	16.73		25.97			920,646		1.40			0.62			1.65			0.37			53
	16.67		19.39			3,221		2.15	(b)		(0.39	)(b)		2.15	(b)		(0.39	)(b)		53

      35

 GOLDMAN SACHS STRATEGIC GROWTH FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from
			investment operations
	Net asset		Net						Total
	value,		investment			Net realized			income (loss) from
	beginning		income			and unrealized			investment
	of period		(loss)			gain (loss)			operations
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	12.52	$	(0.06	) (c)	$	(3.24	)	$	(3.30	)
2001 - Class B Shares		12.40		(0.13	) (c)		(3.20	)		(3.33	)
2001 - Class C Shares		12.42		(0.13	) (c)		(3.21	)		(3.34	)
2001 - Institutional Shares		12.58		(0.02	) (c)		(3.26	)		(3.28	)
2001 - Service Shares		12.52		(0.04	) (c)		(3.25	)		(3.29	)
2000 - Class A Shares		10.06		(0.06	) (c)		2.52			2.46
2000 - Class B Shares		10.04		(0.14	) (c)		2.50			2.36
2000 - Class C Shares		10.05		(0.14	) (c)		2.51			2.37
2000 - Institutional Shares		10.07		(0.01	) (c)		2.52			2.51
2000 - Service Shares		10.06		(0.04	) (c)		2.50			2.46
FOR THE PERIOD ENDED AUGUST 31,
1999 - Class A Shares (commenced May 24)		10.00		—			0.06			0.06
1999 - Class B Shares (commenced May 24)		10.00		(0.03	) (c)		0.07			0.04
1999 - Class C Shares (commenced May 24)		10.00		(0.03	) (c)		0.08			0.05
1999 - Institutional Shares (commenced May 24)		10.00		0.01			0.06			0.07
1999 - Service Shares (commenced May 24)		10.00		(0.01	)		0.07			0.06

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

36     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS STRATEGIC GROWTH FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					end of		net expenses			income (loss)			expenses			loss to			Portfolio
value, end		Total			period		to average			to average			to average			average net			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			assets			rate
$	9.22		(26.35	)%	$	109,315		1.44	%		(0.52	)%		1.67	%		(0.75	)%		25	%
	9.07		(26.84	)		14,235		2.19			(1.27	)		2.42			(1.50	)		25
	9.08		(26.88	)		5,613		2.19			(1.27	)		2.42			(1.50	)		25
	9.30		(26.06	)		45,898		1.04			(0.15	)		1.27			(0.38	)		25
	9.23		(26.27	)		1		1.54			(0.37	)		1.77			(0.60	)		25
	12.52		24.46			92,271		1.44			(0.50	)		1.63			(0.69	)		19
	12.40		23.51			17,149		2.19			(1.24	)		2.38			(1.43	)		19
	12.42		23.58			7,287		2.19			(1.24	)		2.38			(1.43	)		19
	12.58		24.93			22,910		1.04			(0.09	)		1.23			(0.28	)		19
	12.52		24.45			2		1.54			(0.35	)		1.73			(0.54	)		19
	10.06		0.60			10,371		1.44	(b)		(0.17	)(b)		11.70	(b)		(10.43	)(b)		7
	10.04		0.40			3,393		2.19	(b)		(0.97	)(b)		12.45	(b)		(11.23	)(b)		7
	10.05		0.50			2,388		2.19	(b)		(0.99	)(b)		12.45	(b)		(11.25	)(b)		7
	10.07		0.70			5,981		1.04	(b)		0.24	(b)		11.30	(b)		(10.02	)(b)		7
	10.06		0.60			2		1.54	(b)		(0.24	)(b)		11.80	(b)		(10.50	)(b)		7

      37

 GOLDMAN SACHS GROWTH OPPORTUNITIES FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income (loss) from									Distributions
			investment operations									to shareholders
	Net asset		Net						Total
	value,		investment			Net realized			income (loss) from			From net
	beginning		income			and unrealized			investment			realized
	of period		(loss)			gain (loss)			operations			gains
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	19.50	$	(0.14	) (c)	$	(0.66	)	$	(0.80	)	$	(0.59	)
2001 - Class B Shares		19.45		(0.28	) (c)		(0.66	)		(0.94	)		(0.59	)
2001 - Class C Shares		19.31		(0.28	) (c)		(0.64	)		(0.92	)		(0.59	)
2001 - Institutional Shares		19.59		(0.07	) (c)		(0.67	)		(0.74	)		(0.59	)
2001 - Service Shares		19.45		(0.16	) (c)		(0.65	)		(0.81	)		(0.59	)
2000 - Class A Shares		10.13		(0.11	) (c)		9.71			9.60			(0.23	)
2000 - Class B Shares		10.18		(0.24	) (c)		9.74			9.50			(0.23	)
2000 - Class C Shares		10.10		(0.24	) (c)		9.68			9.44			(0.23	)
2000 - Institutional Shares		10.13		(0.04	) (c)		9.73			9.69			(0.23	)
2000 - Service Shares		10.12		(0.12	) (c)		9.68			9.56			(0.23	)
FOR THE PERIOD ENDED AUGUST 31,
1999 - Class A Shares (commenced May 24)		10.00		(0.01	) (c)		0.14			0.13			—
1999 - Class B Shares (commenced May 24)		10.00		(0.03	) (c)		0.21			0.18			—
1999 - Class C Shares (commenced May 24)		10.00		(0.03	) (c)		0.13			0.10			—
1999 - Institutional Shares (commenced May 24)		10.00		0.01			0.12			0.13			—
1999 - Service Shares (commenced May 24)		10.00		—			0.12			0.12			—

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

38     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS GROWTH OPPORTUNITIES FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					end of		net expenses			income (loss)			expenses			loss to			Portfolio
value, end		Total			period		to average			to average			to average			average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	18.11		(4.17	)%	$	428,981		1.54	%		(0.74	)%		1.54	%		(0.74	)%		66	%
	17.92		(4.92	)		73,776		2.29			(1.49	)		2.29			(1.49	)		66
	17.80		(4.85	)		47,738		2.29			(1.49	)		2.29			(1.49	)		66
	18.26		(3.79	)		128,182		1.14			(0.34	)		1.14			(0.34	)		66
	18.05		(4.24	)		232		1.64			(0.84	)		1.64			(0.84	)		66
	19.50		95.73			188,199		1.52			(0.64	)		1.61			(0.73	)		73
	19.45		94.27			42,061		2.27			(1.38	)		2.36			(1.47	)		73
	19.31		94.43			26,826		2.27			(1.38	)		2.36			(1.47	)		73
	19.59		96.67			49,921		1.12			(0.23	)		1.21			(0.32	)		73
	19.45		95.41			3		1.62			(0.69	)		1.71			(0.78	)		73
	10.13		1.30			8,204		1.44	(b)		(0.27	)(b)		14.15	(b)		(12.98	)(b)		27
	10.18		1.80			520		2.19	(b)		(1.04	)(b)		14.90	(b)		(13.75	)(b)		27
	10.10		1.00			256		2.19	(b)		(1.12	)(b)		14.90	(b)		(13.83	)(b)		27
	10.13		1.30			5,223		1.04	(b)		0.39	(b)		13.75	(b)		(12.32	)(b)		27
	10.12		1.20			2		1.54	(b)		0.03	(b)		14.25	(b)		(12.68	)(b)		27

      39

 GOLDMAN SACHS GROWTH EQUITY FUNDS

Report of Independent Accountants

To the Shareholders and Board of Trustees of
Goldman Sachs Trust — Growth Equity Funds:

In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Goldman Sachs Capital Growth Fund, Strategic Growth Fund and Growth Opportunities Fund (collectively “the Growth Equity Funds”), portfolios of Goldman Sachs Trust at August 31, 2001, the results of their operations for the year then ended, and the changes in each of their net assets and the financial highlights for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Growth Equity Funds’ management; our responsibility is to express an opinion of these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Growth Equity Funds for the periods ended prior to August 31, 2000, were audited by other independent accountants whose report dated October 8, 1999, expressed unqualified opinions thereon.

PricewaterhouseCoopers LLP

Boston, Massachusetts

October 19, 2001

40

FUNDS PROFILE

Goldman Sachs Funds

Goldman Sachs is a premier financial services firm, known since 1869 for creating thoughtful and customized investment solutions in complex global markets.

Today, the Investment Management Division of Goldman Sachs serves a diverse set of clients worldwide, including private institutions, public entities and individuals. With portfolio management teams located around the world — and more than $295 billion in assets under management, our investment professionals bring firsthand knowledge of local markets to every investment decision, making us one of the few truly global asset managers.

1	An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
	CORESM is a service mark of Goldman, Sachs & Co.
	Goldman Sachs Internet Tollkeeper FundSM and Goldman Sachs Research Select FundSM are service marks of Goldman, Sachs & Co.
*	Goldman Sachs International Growth Opportunities Fund was formerly Goldman Sachs International Small Cap Fund.

GOLDMAN SACHS ASSET MANAGEMENT	32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005
TRUSTEES	OFFICERS
Ashok N. Bakhru, Chairman	Gary Black, President
David B. Ford	Jesse H. Cole, Vice President
Patrick T. Harker	Kerry Daniels, Vice President
John P. McNulty	James A. Fitzpatrick, Vice President
Mary P. McPherson	Mary Hoppa, Vice President
Alan A. Shuch	Christopher Keller, Vice President
Wilma J. Smelcer	John M. Perlowski, Treasurer
Richard P. Strubel	Kenneth Curran, Assistant Treasurer
Kaysie Uniacke	Peter W. Fortner, Assistant Treasurer
	Philip V. Giuca, Jr., Assistant Treasurer
	Howard B. Surloff, Secretary
	Amy E. Belanger, Assistant Secretary
	Valerie A. Zondorak, Assistant Secretary
GOLDMAN, SACHS & CO	GOLDMAN SACHS FUND MANAGEMENT, L.P.
Distributor and Transfer Agent	Investment Adviser
	GOLDMAN SACHS ASSET MANAGEMENT
	Investment Adviser

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 Strategic Growth and Growth Opportunities Funds may participate in the Initial Public Offering (IPO) market, and a portion of the Funds’ returns consequently may be attributable to their investment in IPOs, which may have a magnified impact due to the Funds’ small asset base. As the Funds’ assets grow, it is probable that the effect of the Funds’ investment in IPOs on their total returns may not be as significant.

The Funds’ foreign investments may be more volatile than an investment in U.S. securities and are subject to the risks of currency fluctuations and political developments.

Goldman, Sachs & Co. is the distributor of the Fund.

Copyright 2001 Goldman, Sachs & Co. All rights reserved. Date of first use: October 30, 2001/01-1632 GROWTHAR/136K/10-01

GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Market Review

Dear Shareholder:

As we write to you today, the tragic national events of September 11th continue to dominate the nation’s thoughts. The people of Goldman Sachs are shocked and saddened by the horrible destruction and loss of life, and send our deepest sympathies to those who have been impacted in New York, Washington, D.C., Pennsylvania and across the country.

	In the aftermath of this tragedy, Goldman Sachs is offering assistance to others in the industry who have been more severely impacted than we were. Our people and firm are assisting the ongoing recovery and humanitarian efforts through donations of blood and volunteer work. Additionally, Goldman Sachs’ people are committed to contributing at least $10 million to provide humanitarian aid to the victims and families impacted by the events of September 11th.
	Goldman Sachs also shares the strong determination of the entire securities industry to show solidarity in the face of terrorism. We are committed to sending the clearest possible message that terrorism will not close free markets, and we continue to serve as a force of stability in the global securities markets.
	We want to take this opportunity to provide continued assurance regarding your investment in Goldman Sachs Funds. Immediately after the attack on September 11, all emergency recovery plans were successfully implemented, critical functions were moved to alternate locations, and we were prepared to resume normal operations on September 17 with the reopening of the New York Stock Exchange.
	As we write this letter, there continues to be uncertainty in the global financial markets, and events are unfolding at a rapid pace. While the markets are expected to remain volatile in the short-term, in decades past the American people and our economy have proven to be tremendously resilient following significant global events. As such, we urge our shareholders to remain focused on their long-term goals, maintain a diversified portfolio, and work closely with their financial advisers.
	Because the period covered by this report ended prior to September 11, we have included a brief recap of the economy and financial markets for the one-year reporting period ended August 31, 2001.
n	Market Review: International Stock Markets Fall Sharply — During the one-year reporting period, ended August 31, 2001, the international stock markets as measured by the MSCI EAFE Index declined 24.08%. Factors behind this decline included weakening global economies, lower corporate profits, the bursting of the technology “bubble” and country-specific events. As the period progressed, some areas of the stock market that had performed well during the latter stages of 2000 and the first half of 2001 could not avoid the downdraft — namely certain value-oriented and more defensive issues. The sharpest decline occurred in the Technology, Media and Telecom (TMT) sectors, due to problems arising from excess inventory, overcapacity, and slowing demand.

GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

n	Faltering Global Economies — Hopes that the U.S. economic slowdown would not spread internationally faded as the reporting period progressed. Slowing demand across Europe was punctuated by large inventories in France and weak industrial production numbers in Germany. Even the UK, which demonstrated surprising resiliency, displayed increasing signs of weakness toward the end of the period. In Japan, weak macroeconomic fundamentals continued to be the norm, while in Asia, the fallout from the TMT decline severely hampered prospects for a quick economic turnaround in the region.
	On the following pages, you will find a review of your Fund’s activity during the period, including perspectives following the recent tragedy from your portfolio management team.
	In closing, we want to assure you that you have a strong and experienced team of portfolio managers who have experience managing assets through diverse market conditions and encourage you to maintain your long-term focus in the months ahead.
	As always, we appreciate your ongoing support.
	Sincerely,

David B. Ford Co-Head, Goldman Sachs Asset Management	David W. Blood Co-Head, Goldman Sachs Asset Management
September 20, 2001

 1

GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

What Differentiates Goldman Sachs’
International Equity Investment Process?

The Goldman Sachs International Equity Team combines global resources and regional market expertise. We believe that collaboration among global research teams provides a competitive advantage when managing regional and multi-regional portfolios. Our goal is to deliver international diversification and strong, consistent investment results through a disciplined investment process that focuses on regional research teams, bottom-up stock selection and disciplined portfolio construction.

1	REGIONAL RESEARCH TEAMS
n	Research teams based in London, Tokyo, Singapore and Sao Paulo
n	Intensive dialogue between regional research teams creates a global perspective of industry trends and allows us to identify investment opportunities
n	Regional presence contributes to local market expertise
2	BOTTOM-UP STOCK SELECTION
Our research teams identify quality companies, extensively evaluate their business and assess the following criteria:
n	Possess strong market positions
n	Led by skilled managers who think and act like owners
n	Ability to generate high or improving returns on capital
n	Trade at a discount to our analysis of fair value
3	DISCIPLINED PORTFOLIO CONSTRUCTION
Portfolio construction is particularly important when constructing capitalization- and region-specific portfolios. Advantages of our stringent portfolio construction process include:
n	Effective implementation of research views
n	Appropriate distribution of risk across portfolios
n	Consistency of overall return
RESULT
International equity portfolios that offer:
	n	Access to markets across the world
	n	Region- or capitalization-specific diversification opportunities
	n	Confidence that portfolio managers have hands-on knowledge of each company

2

FUND BASICS

European Equity Fund
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return
August 31, 2000–August 31, 2001	(without sales charge)1			MSCI Europe Index2
Class A		–23.47	%		–21.09	%
Class B		–23.80			–21.09
Class C		–23.89			–21.09
Institutional		–22.94			–21.09
Service		–23.16			–21.09

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 Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		–27.23	%		–27.25	%		–24.23	%		–22.51	%		–22.78	%
Since inception		2.96			3.45			4.63			5.79			5.31
(10/1/98)

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.

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 its absence, performance would be reduced.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets		Line of Business
GlaxoSmithKline PLC		4.8%	Health
Vodafone Group PLC		3.4	Telecommunications
BP PLC		3.2	Energy Resources
Royal Dutch Petroleum Co.		2.9	Energy Resources
Nestle SA		2.7	Food & Beverage
ING Groep NV		2.5	Financial Services
Tesco PLC		2.3	Specialty Retail
British Telecom PLC		2.3	Telecommunications
Diageo PLC		2.2	Tobacco
HSBC Holdings PLC		2.2	Banks

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

 3

PORTFOLIO RESULTS

European Equity Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs European Equity Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service Share classes generated cumulative total returns, without sales charges, of –23.47%, –23.80%, –23.89%, –22.94%, and –23.16%, respectively. These returns compare to the Fund’s benchmark, the MSCI Europe Index, which generated a cumulative total return of –21.09%
	Global equities were extremely volatile during the reporting period and the European markets did not escape the downdraft. The Fund’s overall negative returns were largely due to overweight positions in the Financials, Healthcare and Telecom Services sectors. On the other hand, our overweight positions in the Consumer Cyclicals, Consumer Non-Cyclicals and Materials sectors contributed positively to Fund performance.
	Portfolio Composition
	Stock selection continued to drive the Fund’s positioning throughout the period, and in the second half of the period we increased the Fund’s exposure to Consumer Cyclical stocks, which tend to perform well in a falling interest rate environment. To this end, we initiated a position in BMW (1.4% of the Fund’s portfolio), the German automobile manufacturer. We believe BMW was attractively valued and is well positioned to achieve strong growth due to its brand strength and strategy.
	Overall, the Fund remains focused on market leaders, such as Tesco (2.3%), Diageo (2.2%) and Lafarge (1.6%), whose strong market positions give them a competitive advantage, and are perceived to be attractive on valuation grounds. The same is true in the Pharmaceutical sector, where our largest holding is GlaxoSmithKline (4.8%). The firm, which was formed through the merger of Glaxo Wellcome and SmithKline Beecham, is an industry powerhouse capable of leveraging a vast research and development budget.
	In terms of sectors, the Fund continues to have a ‘barbell’ strategy, with an overweight in ‘defensive’ Consumer Staple industries, such as Food, Household Products, Beverage and Tobacco, and an overweight in Consumer Cyclical sectors, notably Media and Semiconductors. Our key underweight positions are the Utilities sector and the Oil and old economy industrial sectors (Metals, Paper and Construction), which are typically exposed to severe economic weakness.
	Portfolio Highlights
n	GlaxoSmithKline PLC — GlaxoSmithKline is the world’s largest drug company by sales, with a 7% market share. The company has a strong management team and is forecast to report earnings growth in line with upper-tier global pharmaceutical companies over the next few years. In addition, we believe that planned efficiency gains following its recent merger will lead to a significant increase in operating margin.

4 

PORTFOLIO RESULTS

n	Lafarge SA — Lafarge’s key products include cement and building materials. It has successfully reinvested cash from its high margin domestic business into widespread global exposure, and has driven vertical integration. Lafarge also has strong positions in selected emerging cement markets. In addition, its acquisition of Blue Circle in the UK has strengthened the firm’s geographical profile. Finally, the company has a solid track record of value-enhancing deals, and has strong free cash flow to help pay down debt.
n	Diageo PLC —Diageo is a food, alcoholic beverage and fast food company. Its brands include Haagen Dasz, Burger King, Smirnoff and Johnnie Walker. The strength of the company’s brands and distribution network is impressive, and the company continues to generate strong free cash flow.
	Portfolio Outlook
	Following the atrocities in the United States, we have not made sweeping changes to our sector positioning. However, we would expect to lighten our exposure to certain Cyclical companies, where our stress-testing of balance sheet and cash flow characteristics reveals vulnerability in the event of marked or protracted economic weakness.
	Overall, our current market outlook is uncertain both for economic and technical reasons. The world economy will undoubtedly weaken, but its duration will be affected by the extent of the response, which at this time is unknown.
	We maintain our belief that companies that have strong franchises and balance sheets, with free cash flow will do well. As such, the Fund is overweight in Consumer Staples and certain Financials stocks, where we are overweight in banks such as Barclays (2.0%) and UniCredito Italiano (1.4%). Both companies display excellent management, and a good business mix with dominant market shares and prudent provisioning. Our approach to Technology is very selective, with limited exposure to semiconductors through ASML Holdings (0.8%), a capital equipment provider and SAP (1.5%), a German software provider. The Fund remains underweight in the more Cyclical end of the market, as these companies struggle to provide consistent returns to shareholders.
	We thank you for your investment and look forward to your continued confidence.
	Goldman Sachs European Equity Investment Team
	London September 26, 2001

 5

FUND BASICS

International Equity Fund
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return
August 31, 2000–August 31, 2001	(without sales charge)1			MSCI EAFE Index2
Class A		–26.49	%		–24.08	%
Class B		–26.86			–24.08
Class C		–26.85			–24.08
Institutional		–26.03			–24.08
Service		–26.41			–24.08

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 MSCI EAFE Index is an unmanaged index of common stock prices. The Index figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		–29.47	%		–29.42	%		–26.46	%		–24.83	%		–25.21	%
Five Years		3.09			3.29			N/A			4.91			4.41
Since Inception		7.01			3.79			0.34			6.56			7.81	4
		(12/1/92	)		(5/1/96	)		(8/15/97	)		(2/7/96	)		(12/1/92	)

3	The Standardized Total Returns are average annual total returns or cumulative total returns (only if the performance period is one year or less) as of the most recent calendar quarter-end. They assume reinvestment of all distributions at net asset value. These returns reflect a maximum initial sales charge of 5.5% for Class A Shares, the assumed deferred sales charge for Class B Shares (5% maximum declining to 0% after six years) and the assumed deferred sales charge for Class C Shares (1% if redeemed within 12 months of purchase). Because Institutional and Service Shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns.
4	Performance data for Service Shares prior to 3/6/96 is that of Class A Shares (excluding the impact of front-end sales charges applicable to Class A Shares since Service Shares are not subject to any sales charges). Performance of Class A Shares, of the 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.
	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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets		Line of Business
GlaxoSmithKline PLC		2.9%	Drugs
Royal Dutch Petroleum Co.		2.7	Energy Resources
Nestle SA		2.5	Food & Beverage
ING Groep NV		1.9	Financial Services
Vodafone Group PLC		1.9	Telecommunications
BP PLC		1.8	Energy Resources
Takeda Chemical Industries Ltd.		1.5	Drugs
Tesco PLC		1.5	Specialty Retail
British Telecom PLC		1.5	Telecommunications
Diageo PLC		1.4	Food & Beverage

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

6 

PORTFOLIO RESULTS

International Equity Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs International Equity Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service Shares generated cumulative total returns, without sales charges, of –26.49%, –26.86%, –26.85%, –26.03%, and –26.41%, respectively. These figures compare to the –24.08% cumulative total return of the Fund’s benchmark, the Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East Index (EAFE).
	The Fund’s overall returns and underperformance versus its benchmark were largely due to overweight positions in IT hardware and Telecom. Both areas yielded poor results in light of several high profile profit warnings and a number of large IT companies announcing significant job cuts. However, we maintained an overweight position in the Consumer Staples sector, which added to performance, thanks to the resilience of consumer confidence during the reporting period.
	Portfolio Composition
	Throughout the period we focused on companies that have strong franchises and balance sheets that generate free cash flow. We believe these types of organizations have the potential to perform well in difficult market environments. This strategy led us to overweight Consumer Staples such as Diageo (1.4% of the Fund’s portfolio), Nestle (2.5%), Kao Corp. (1.4%) and Tesco (1.5%).
	These characteristics can also be seen in our Financials positioning, where the Fund is underweight, due to our long-term concerns over Japanese banks. Elsewhere, banks such as Barclays Bank (1.3%) and Unicredito Italiano (1.3%) display excellent management, a good business mix with dominant market shares and prudent provisioning. Our approach to Technology is very selective, with limited exposure to semiconductors through ASML Holdings (0.6%), a capital equipment provider and SAP (1.1%), a German software provider. We remain and expect to remain underweight in the more cyclical end of the market, as these companies struggle to provide consistent returns to shareholders. Exceptions are such companies as Lafarge (1.3%), a French cement producer that has demonstrated an excellent acquisition strategy, generating high returns to shareholders.
	Portfolio Highlights
n	P&O Princess Cruises Plc — P&O is one of three dominant global cruise operators. As a key player in the cruise industry oligopoly, P&O has achieved tremendous returns on capital. Its business is U.S.-dominated, and its European business is growing rapidly. The increase in supply of cruise ships has discounted P&O’s stock price. We chose to initiate our position earlier this year based on our strong conviction in the company’s long-term prospects.
n	Tesco PLC — Among retailers, we added to our position in Tesco. We favor this UK food retailer based on its ability to drive growth through increasing non-food sales in the UK and its

 7

PORTFOLIO RESULTS

	international expansion efforts. Based on the high quality of its management, we believe that the company will deliver on these objectives. Tesco’s shares offer these growth prospects at a discount to other retailers with an international presence.
n	Diageo PLC — The Fund benefited significantly from positions in Consumer Staples stocks such as Diageo. Diageo, a dominant global spirits business, is driving sales growth through new product innovation, boasting such brand successes as the various Bacardi products and Smirnoff Ice. Our last meeting with Diageo highlighted the focus of the company’s management on achieving synergies from recent acquisitions.
	Portfolio Outlook
	In the immediate aftermath of the atrocities in the United States on September 11, world economies will undoubtedly weaken. But its duration will be affected by the impact of the policy response, which at this time is unknown. It is possible that a period of negative U.S. growth — mirrored by slower growth in Europe and Asia — and reduced inflationary pressures suggest monetary and fiscal policy globally could be easing more than we had previously anticipated. Rather than any permanent reduction in activity, the crisis could imply a redistribution of growth from the near term into the middle of next year.
	We believe it is worth reassuring our shareholders about the intensive effort which we have engaged in over the past few days following the appalling events of September 11th. The Fund’s investment team has worked diligently to delineate the broader market implications. We have also stress-tested the balance sheet and cash flow characteristics of the Fund’s holdings that we believe could be particularly vulnerable in the event that general trading conditions deteriorate sharply. In some cases, we have already taken action.
	We are currently overweight in the consumer areas with offsetting underweights in the Energy and Utilities sectors. In the aftermath of the events in the United States we raised our cash levels by selling futures positions. In terms of stocks we have looked to make a switch within the European insurance sector selling Swiss Re to buy Munich Re (0.8%) after they both fell by the same amount. We feel this does not account for Munich Re’s stronger solvency position and lower exposure to life insurance. After a discussion with the European financials team we have set buying levels for some of the European banks that we feel are nearing attractive valuations, and that appear to be discounting the adverse effects of a slowing economy. We are also looking to reduce exposure to the consumer sector in Asia.
	As always, we appreciate your confidence and look forward to serving your investment needs in the future.
	Goldman Sachs London Active Equity Team
	London September 26, 2001

8 

FUND BASICS

Japanese Equity Fund
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return
August 31, 2000–August 31, 2001	(without sales charge)1			TOPIX (USD)2
Class A		–39.60	%		–34.41	%
Class B		–39.90			–34.41
Class C		–39.84			–34.41
Institutional		–39.16			–34.41
Service		–39.44			–34.41

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 Tokyo Price Index (TOPIX) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		–36.84	%		–36.83	%		–34.19	%		–32.72	%		–32.99	%
Since inception		5.33			5.77			6.75			7.91			7.33
(5/1/98)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets		Line of Business
NTT DoCoMo, Inc.		6.6%	Telecommunications
Takeda Chemical Industries Ltd.		5.1	Drugs
Toyota Motor Corp.		4.3	Auto
Tokyo Electric Power		4.2	Electrical Utilities
Canon, Inc.		3.6	Computer Hardware
Honda Motor Co. Ltd.		3.5	Auto
Kao Corp.		3.2	Consumer Products
Fuji Photo Film Co. Ltd.		3.0	Leisure
Skylark Co. Ltd.		2.7	Restaurants
The Nomura Securities Co. Ltd.		2.5	Financial Services

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

 9

PORTFOLIO RESULTS

Japanese Equity Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Japanese Equity Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service Shares generated cumulative total returns, without sales charges, of –39.60%, –39.90%, –39.84%, –39.16%, and –39.44%, respectively. These figures compare to the –34.41% cumulative total return of the Fund’s benchmark, the Tokyo Price Index (TOPIX).
	As these returns indicate, it has been an extremely difficult period in the Japanese equity market. Sector allocation contributed positively to the relative performance of the Fund while stock selection has been a drag on the results. Although underweights in Banks and Software companies were successful, an overweight in the Electronics Machinery sector detracted from performance. At the security level, holdings such as Advantest (0.9% of the Fund’s portfolio), a semiconductor equipment producer, was detrimental. The firm’s stock price fell 69% due to concerns regarding product demand and a subsequent downward earnings revision.
	Sector Allocation
	As of August 31, 2001, the Fund held large positions in the Chemical, Drug and Cosmetics, and Business Machines sectors, while it continued to be underweight in the Autos and Banking sectors. It is important to note that the Fund’s sector weightings are the result of our bottom-up stock selection process, rather than sector-based decisions.
	Portfolio Highlights
n	Ricoh Co. — Ricoh is one of the leading imaging equipment makers in the world. The company has a strong position in the copy machine market, coupled with an extensive global sales and maintenance network. Investors recently approved an acquisition of the U.S. copier sales firm, Lanier, and it is expected that this will help Ricoh to expand its presence in the United States.
n	Nippon System Development Co. — We initiated a position in Nippon System Development, an independent system integrator with strong ties to UFJ Holdings and Hitachi. The company is expected to continue having high level of business not only from city banks, but also from trust banks that are planning to increase their IT spending for the introduction of the 401(k). In addition, given its earnings visibility, Nippon’s valuations appear inexpensive relative to its peers.
n	Kao Corp. — Kao is the largest manufacturer of home products, including personal care, cleaning and sanitary items. The company announced its interim results for the fiscal year 2001 with operating profits exceeding projections. In addition, investors favored Kao’s strong track record, with steady earnings growth in a volatile market environment.

10

PORTFOLIO RESULTS

Outlook

We have not changed the Fund’s portfolio significantly in response to the tragic terrorist attack. Rather, we continue to make decisions based on stock specific factors and find it quite important to focus on the basics — long-term earnings and valuations — in times of uncertainty and volatility. Having said that, we have moderately reduced our exposure to a few selected stocks that have significant exposure to the United States. This was done as we feel the market will continue to be concerned with the U.S. economy and the recent strength of the yen.

The Fund is currently overweight in Drugs/Cosmetics, Business Machines, Specialty Chemicals, Corporate Services and underweight in Banks, Computer and Telecom Hardware and Transportation. These decisions are a result of our bottom-up analysis. We are looking to add stocks from companies with good earnings potential and credible management, and are finding many opportunities as a result of the de-rating of high growth stocks in recent weeks.

We will continue to monitor how the recent events affect the corporate earnings outlook and will take appropriate actions on individual stocks if necessary. In summary, we believe it is important for us to retain a long-term perspective and not to overreact to market volatility.

We appreciate your continued support and look forward to reporting on the Fund’s progress in the future.

Goldman Sachs Japanese Equity Team

Tokyo
September 26, 2001

11

FUND BASICS

International Growth Opportunities Fund*
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return			MSCI Small Cap
August 31, 2000–August 31, 2001	(without sales charge)1			EAFE Index2
Class A		–34.26	%		–17.93	%
Class B		–34.64			–17.93
Class C		–34.60			–17.93
Institutional		–33.90			–17.93
Service		–34.17			–17.93

1

The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.

2

The unmanaged MSCI Small Cap EAFE Index, incepted 1/15/98, includes 1,502 securities from 23 developed markets with a capitalization range of $200—$800 million and a general regional allocation of 60% Europe, 30% Japan and 10% Asia. Total returns are calculated without dividends reinvested. The Index figures do not reflect fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A			Class B			Class C			Institutional			Service
One Year		–33.46	%		–33.46	%		–30.69	%		–29.17	%		–29.48	%
Since inception		3.21			3.68			4.62			5.76			5.18
(5/1/98)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets		Line of Business
Group 4 Falck A/S		2.1%	Electrical Equipment
Rhoen-Klinikum AG Non-Voting		1.8	Health
Amey PLC		1.6	Business Services
Omega Pharma SA		1.6	Drugs
Elior		1.6	Food & Beverage
Thiel Logistik AG		1.5	Computer Software
Altran Technologies SA		1.5	Business Services
Unibail		1.5	Real Estate
Brembo SpA		1.4	Auto
Dah Sing Financial Holdings		1.4	Banks

	The top 10 holdings may not be representative of the Fund’s future investments.
*	Effective December 29, 2000 the International Small Cap Fund was renamed the International Growth Opportunities Fund.

12

PORTFOLIO RESULTS

International Growth Opportunities Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs International Growth Opportunities Fund (previously called the Goldman Sachs International Small Cap Fund) for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service Share classes produced cumulative total returns, without sales charges, of –34.26%, –34.64%, –34.60%, –33.90% and –34.17%, respectively. These results compare to the –17.93% cumulative total return of the Fund’s benchmark, the Morgan Stanley Capital International Europe, Australasia, Far East Small Cap Index (“MSCI EAFE Small Cap Index”).
	Several factors contributed to the Fund’s underperformance versus the MSCI Small Cap EAFE Index during this period. First, in the short-term, there has been a move away from “growth” stocks and increased institutional investment in “value” stocks. Our analysis confirms that the MSCI EAFE Small Cap Index holds a value bias, while the Fund holds a significant growth bias. Worldwide growth indices have confirmed this trend, with dramatic declines during the period. The NASDAQ Composite Index declined 57.08%, and the technology-dominated German Neuer Market fell 79.88% during the past twelve months.
	Second, market volatility has risen dramatically, and the substantial correction in the Technology, Media and Telecom (TMT) sectors has been the key catalyst of market movements. Earnings downgrades from bellwether stocks in the sector, coupled with fears of a “hard landing” scenario in the United States, have exacerbated the sell-off. While European economies appear to be in a stronger position relative to the United States, there is a continuing debate as to the magnitude of the global slowdown. What is clear, however, is that until such time as interest rate cuts in the United States and Europe outweigh current sentiment in equity markets, we expect to see continued higher levels of volatility.
	In terms of specific stocks, negative contributors included Thiel Logistik (1.5% of the Fund’s portfolio), a Luxembourg based provider of a full range of logistics services. Tomra Systems (1.1%), a Norwegian manufacturer of reverse vending machines, also disappointed. Despite strong growth and the increased trend towards recycling, the stock suffered as new environmental legislation in Germany was delayed by the legislature.
	Portfolio Highlights
n	Vestas Wind Systems — Vestas, a wind turbine manufacturer, is the leader in wind energy and a prime play on alternative energy sources. The market for wind power turbines is projected to grow at 20-30% for the next 10-20 years, as the global need for electricity triples during the next quarter century. Vestas has been in the wind power market for more than 20 years, establishing a strong brand name and track record, which is critical when developing products with a 20 year lifespan. Vestas’ overall market share is 30%, and it excels across several key growth markets.
n	MAN Group — MAN Group is unique in being the only sizeable quoted hedge fund manager. Its focus is increasingly on the lower risk, but equally high growth fund of hedge fund business. MAN is a lead consolidator in the industry following its recent purchase of U.S. hedge fund manager Glenwood. As a result, it now has exceptional distribution capability in the large, but more mature, North American market. Despite the clear growth potential in the

13

PORTFOLIO RESULTS

	hedge fund market (projected at over 25% for the next 5 years), MAN trades at only a small premium to the more traditional asset management industry.
n	The Berkeley Group PLC — Berkeley Group is a UK homebuilder, with a strong focus on the southeast region of the UK. The company has developed substantial expertise in building on ‘brownfield’ sites, on which it currently constructs 90% of its properties. UK government legislation in 2000 stipulated that 60% of new homes must be built on brownfield sites and the expertise developed by Berkeley has given it a substantial strategic advantage. The company has also positioned itself very well to benefit from the ongoing imbalance of demand and supply for homes, particularly at the higher end of the London market.
	Portfolio Outlook
	The impact of the tragic events of September 11th has adversely affected many of the holdings in the Fund. International equity markets had already begun to feel the impact of a weakening U.S. economy on Europe and Asia, thereby making them more susceptible to this substantial exogenous shock. As a result, the immediate short-term outlook for equities has been clouded and will certainly be substantially influenced by U.S. reactions — both economic, political and militarily — to the terrorist attacks. However, we continue to feel that as stability returns and U.S. policy becomes clearer, international equity markets will become more discriminating in allocating capital between businesses. This should provide strong opportunities for our research intensive, bottom-up investment process to add significant value.
	During periods of uncertainty, the market usually rewards businesses that have historically demonstrated recurring revenues and highly predictable earnings streams with higher valuations. The market also typically differentiates between those companies that are able to fund their growth with internally generated cash flow, and those companies who need access to the capital markets to maintain their growth. These two characteristics are the cornerstone of our investment process, and have helped the Fund weather some of the recent instability in the market.
	However, during this period of extreme volatility we have seen apparent indiscriminate selling on the part of investors. We continue to view this as an opportunity to judiciously increase the Fund’s exposure to those businesses, across a broad array of sectors, who possess high growth potential, and where our confidence in the fundamentals remains high. The Fund’s significant outperformance since its inception indicates the long-term strength of our investment process. Consequently, we feel that the Fund offers excellent value over the long-term.
	We thank you for your investment and look forward to your continued confidence.
	Goldman Sachs International Growth Opportunities Investment Team
	London September 26, 2001

14

FUND BASICS

Emerging Markets Equity Fund
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return
August 31, 2000–August 31, 2001	(without sales charge)1			MSCI EMF Index2
Class A		–30.55	%		–27.82	%
Class B		–30.97			–27.82
Class C		–30.98			–27.82
Institutional		–30.20			–27.82
Service		–30.08			–27.82

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) Emerging Markets Free (EMF) Index (with dividends reinvested) is an unmanaged market capitalization-weighted composite of securities in over 30 emerging market countries, including Argentina, Botswana, Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Greece, Hong Kong, Hungary, India, Israel, Jordan, Kenya, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Portugal, Russia, Singapore, South Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Venezuela and Zimbabwe. “Free” indicates an index that excludes shares in otherwise free markets that are not purchasable by foreigners. The Index figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01

Class A

Class B

Class C

Institutional

Service

One Year

–29.92

%

–29.87

%

–26.87

%

–25.32

%

–25.24

%

Since Inception

–6.00

–5.70

–4.84

–3.79

–4.82

(12/15/97)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Company Holding	% of Total Net Assets		Line of Business
Telefonos de Mexico SA ADR		4.9%	Telecommunications
Taiwan Semiconductor		3.3	Semiconductors
Samsung Electronics		3.3	Semiconductors
China Mobile Ltd.		2.5	Telecommunications
SK Telecom Co. Ltd.		2.4	Telecommunications
Anglo American PLC		2.4	Financial Services
Grupo Modelo SA Series C		1.8	Tobacco
Hindustan Lever Ltd.		1.6	Consumer Cyclicals
Grupo Televisa SA ADR		1.5	Broadcasting
Teva Pharmaceutical Industries Ltd. ADR		1.5	Medical Products

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

15

PORTFOLIO RESULTS

Emerging Markets Equity Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Emerging Markets Equity Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service Share classes generated cumulative total returns, without sales charges, of –30.55%, –30.97%, –30.98%, –30.20%, and –30.08%, respectively. These returns compare to the Fund’s benchmark, the Morgan Stanley Capital International (MSCI) Emerging Markets Free Index, which generated a cumulative total return of -27.82%
	Regional Allocation
	The Fund’s overweight position in Latin America was cut to neutral in the second half of the period, as we sold out of our positions in Argentina entirely and reduced our exposure to Brazil. Argentina’s debt dynamics appeared unsustainable and we expected a significant macroeconomic adjustment there. Brazil suffered from domestic and external uncertainty — as high interest rates and an upcoming presidential election coincided with lower capital flows and increased risk aversion.
	Mexico was our only overweight position in Latin America at the end of the period. The country’s macroeconomic fundamentals remain solid, although Mexico could suffer from its close ties to the slowing U.S. economy. In the first quarter of 2001, Asia was increased to an overweight position, as we expected markets there to be the first to discount a resumption of global growth. The largest overweight position versus the benchmark was placed in Korea, due to the attractive valuations of its banks and exporters. Malaysia continued to be our largest underweight, due to the overvaluation of large-cap names and capital flight. However, our exposure was increased somewhat during the period, as corporate restructuring gained momentum and capital returned. Finally, at the end of the period Russia was our largest overweight position in Europe, Middle East, Africa (EMEA), due to quiet progress in economic and legislative reforms and due to the large current account surplus the country enjoyed.
	Portfolio Highlights
n	Telefonos de Mexico — Telefonos de Mexico is the largest fixed and wireless operator in Mexico, with an 80% market share. The stock was the largest holding in the Fund in both absolute terms and relative to the benchmark. The firm’s valuation appeared attractive to us, and despite a 20% gain over the period, has remained so.
n	Petroleo Brasileiro — This Brazilian company, which produces, transports, refines and markets petroleum and petroleum products, was the Fund’s largest underweight position relative to the benchmark. This proved beneficial, as its stock declined 19% over the period, due to increase in sovereign risk in Brazil.
n	Grupo Modelo — Based in Mexico, this brewer produces Corona, Modelo Especial and Negra Modelo. The stock lost ground over the reported period as the peso did not weaken as we expected. However, we continued to hold it for its franchise, valuation and exposure to exports.

16

PORTFOLIO RESULTS

Portfolio Outlook

Emerging markets investors are no strangers to crises, having endured them in 1990 (Gulf War), 1994/5 (Tequila Crisis), 1997/8 (Asia/Russian crises). Irrational exuberance is only a distant memory. The latest crisis, not confined to emerging markets this time, could cause a more cautious U.S. consumer to tip the U.S. economy into recession, slowing growth in emerging markets economies (particularly for exporters such as Mexico, Taiwan and Israel) as well.

However, earnings downgrades could become increasingly irrelevant as investors “look across the valley.” With the MSCI Index back to 1991 levels, valuations have, in our opinion, reached compelling levels. Global free liquidity is on the rise, and fiscal positions, corporate cash flows and corporate governance have come a long way in ten years. With much less competition for capital from bubble markets like the NASDAQ, we believe the long-term outlook is better than it has been in some time.

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

Goldman Sachs Emerging Markets Equity Investment Team

New York, London and Singapore
September 26, 2001

17

FUND BASICS

Asia Growth Fund
as of August 31, 2001

PERFORMANCE REVIEW

	Fund Total Return			MSCI AC Asia Free
August 31, 2000–August 31, 2001	(without sales charge)1			(Ex Japan) Index2
Class A		–27.53	%		–32.46	%
Class B		–27.80			–32.46
Class C		–27.78			–32.46
Institutional		–26.93			–32.46

1

The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.

2

The unmanaged Morgan Stanley Capital International (MSCI) All Country (AC) Asia Free (ex Japan) Index is a market capitalization-weighted composite of securities in 10 Asian countries, including Hong Kong, India, Indonesia, Malaysia, Pakistan, Singapore, South Korea, Sri Lanka, Thailand and the Philippines. Total returns are calculated without dividends reinvested. “Free” indicates an index that excludes shares in otherwise free markets that are not purchasable by foreigners. The Index figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01

Class A

Class B

Class C

Institutional

One Year

–31.55

%

–31.42

%

–28.45

%

–26.93

%

Five Years

–13.44

–13.22

N/A

–11.84

Since Inception

–7.29

–13.23

–15.03

–10.84

(7/8/94

)

(5/1/96

)

(8/15/97

)

(2/2/96

)

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 Shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Company Holding	% of Total Net Assets		Line of Business
Hutchison Whampoa Ltd.		4.4%	Multi-Industrial
Hang Seng Bank Ltd.		4.1	Banks
Taiwan Semiconductor		3.8	Semiconductors
Sun Hung Kai Properties Ltd.		3.6	Real Estate
Hindustan Lever Ltd.		3.6	Consumer Cyclicals
Samsung Electronics		3.5	Semiconductors
China Mobile Ltd.		3.3	Telecommunications
SK Telecom Co. Ltd. ADR		3.1	Telecommunications
Korea Electric Power Corp.		2.3	Electrical Utilities
Singapore Technologies Engineering Ltd.		2.0	Machinery

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

18

PORTFOLIO RESULTS

Asia Growth Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs Asia Growth Fund for the one-year period that ended August 31, 2001.

	Performance Review
	Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C and Institutional share classes generated cumulative total returns, without sales charges, of –27.53%, –27.80%, –27.78%, and –26.93%, respectively. Over the same time period, the Fund’s benchmark, the MSCI AC Asia Free (Ex Japan) Index, generated a cumulative total return of –32.46%.
	As these returns indicate, it has been a very challenging period in the Asian equity market. However, the Fund did outperform its benchmark during the reporting period. In anticipation of potential interest rate cuts in the United States we maintained an overweight position in interest rate sensitive sectors during the second half of 2000 and the beginning of 2001. The strategy was rewarded, as rates were cut numerous times, beginning in January 2001. Throughout the period we remained overweight in upstream petroleum companies on the back of sustained strength in energy prices. The major contribution to the Fund’s relative outperformance was the defensive position of the Fund. We favored defensive sectors such as Utilities that pay high dividend yields and domestic consumption firms that have stable earnings. While our holdings in the Technology, Media and Telecom (TMT) sectors suffered along with the market, we were underweight TMT, as our analysis led us to believe that those sectors suffer from excess inventory, overcapacity and slowing demand.
	Portfolio Composition
	The Fund initiated overweight positions in the interest rate sensitive sectors and upstream oil companies over the second half of 2000. During the same period, our weighting in the TMT sectors were gradually reduced to an underweight position. As the U.S. economy showed increasing signs of a hard landing and hopes for a turnaround in the global economy faded, the Fund increased its weighting in Utilities and domestic demand companies that are less exposed to the adverse external environment. As of August 31, 2001, the Fund was overweight in India, Indonesia and Hong Kong and underweight in Taiwan, South Korea, Singapore and Malaysia.
	Portfolio Highlights
n	Hong Kong Electric Holdings — Hong Kong Electric is a dominant electric utility in Hong Kong. A high dividend yield and consistent growth in dividends made it a solid defensive investment in an uncertain economic environment and its share price advanced 23% during the reporting period.
n	Hang Seng Bank — Hang Seng is Hong Kong’s homegrown bank, and among the largest publicly listed companies in the country. Despite its size, the firm is still gaining market share, due in part to the strong brand recognition it enjoys. The company is also among the region’s most cost efficient banks, with what we believe to be a sustainable high return-on-equity (ROE) and strong earnings growth.

19

PORTFOLIO RESULTS

n	Hindustan Lever — Hindustan Lever is 51% owned by the Unilever group and is the largest consumer company in India. It is also the most diversified consumer product company in Asia, with an excellent 10-year annual earnings growth of 29% and one of the highest ROE in the region. While it posted a 9.6% loss during the period, it significantly outperformed the overall market.
	Portfolio Outlook
	Before the tragic events on September 11th the U.S. corporate sector had already led the downturn in the global growth cycle and showed no sign of an imminent recovery. The terrorist attacks on the United States is likely to have very negative effects on consumer confidence in the United States. This increases the risk of the United States falling into a recession, as the hope of a consumer-led recovery becomes less likely.
	As of the end of August, the Fund remained defensive and continued to underweight the TMT sectors. However, our underweight position has been reduced somewhat, as certain companies approached reasonable valuation level after their share prices fell substantially. We maintain an overweight position in domestic demand plays and Utilities, which have more earnings visibility. We also continue to favor the more efficient upstream petroleum companies that are more likely to outperform even if energy prices begin to soften.
	We thank you for your investment and we look forward to your continued confidence in the future.
	Goldman Sachs Asia Equity Investment Team
	Singapore September 26, 2001

20

GOLDMAN SACHS EUROPEAN EQUITY FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on October 1, 1998 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs European Equity Fund. For comparative purposes, the performance of the Fund’s benchmark, the Morgan Stanley Capital International (MSCI) Europe Index (“MSCI Europe Index”), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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.

European Equity Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested October 1, 1998 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced October 1, 1998)
Excluding sales charges		3.81%		-23.47%
Including sales charges		1.82%		-27.66%
Class B (commenced October 1, 1998)
Excluding contingent deferred sales charges		3.33%		-23.80%
Including contingent deferred sales charges		2.26%		-27.61%
Class C (commenced October 1, 1998)
Excluding contingent deferred sales charges		3.36%		-23.89%
Including contingent deferred sales charges		3.36%		-24.65%
Institutional Class (commenced October 1, 1998)		4.50%		-22.94%
Service Class (commenced October 1, 1998)		4.05%		-23.16%

21

 GOLDMAN SACHS EUROPEAN EQUITY FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 99.3%
Belgium – 0.6%
	24,083	Interbrew* (Food & Beverage)	$	599,016
Denmark – 0.8%
	7,573	Group 4 Falck A/S (Electrical Equipment)		894,030
Finland – 1.4%
	95,184	Nokia Oyj (Telecommunications)		1,490,942
France – 12.2%
	49,568	AXA (Insurance)		1,354,121
	9,327	BNP Paribas SA (Banks)		856,397
	16,822	Castorama Dubois Investissement SA* (Specialty Retail)		940,512
	10,108	France Telecom SA (Telecommunications)		324,746
	11,272	L’Air Liquide SA (Chemicals)		1,593,467
	7,257	L’Oreal SA (Consumer Products)		492,162
	18,235	Lafarge SA* (Construction)		1,655,257
	34,593	NRJ Group (Media)		548,776
	20,058	Schneider Electric SA (Electrical Equipment)		1,112,318
	11,387	Total Fina SA Class B (Energy Resources)		1,684,258
	16,130	Vivendi Environnement (Utilities)		685,825
	18,345	Vivendi Universal SA (Conglomerates)		1,003,982
	9,240	Vivendi Universal SA ADR (Conglomerates)		505,520
				12,757,341
Germany – 9.3%
	4,251	Allianz AG (Insurance)		1,191,451
	46,536	Bayerische Motoren Werke (BMW) AG (Auto)		1,495,513
	25,483	Deutsche Bank AG (Banks)		1,758,345
	51,081	Deutsche Lufthansa AG (Transportation)		796,872
	26,140	Deutsche Telekom AG (Telecommunications)		402,798
	10,915	Infineon Technologies AG (Semiconductors)		255,413
	4,778	Muenchener Rueckversicherungs-Gesellschaft AG (Property Insurance)		1,370,865
	11,434	SAP AG (Software & Services)		1,549,634
	17,899	Siemens AG (Electrical Equipment)		912,207
				9,733,098
Ireland – 1.3%
	89,505	Bank of Ireland (Banks)		850,497
	9,900	Elan Corp. PLC ADR* (Drugs)		518,367
				1,368,864
Italy – 5.0%
	65,500	ENI SpA (Energy Resources)		869,373
	66,532	San Paolo – IMI SpA (Banks)		834,078
	140,000	Telecom Italia Mobile SpA (T.I.M.) (Telecommunications)		722,916
	166,296	Telecom Italia SpA (Telecommunications)		1,377,247
	345,000	UniCredito Italiano SpA (Banks)		1,486,651
				5,290,265
Netherlands – 10.9%
	32,008	Aegon NV (Insurance)		965,778
	46,726	ASML Holdings NV* (Semiconductors)		830,882
	7,664	Gucci Group (Consumer Goods)		596,056
	83,705	ING Groep NV (Financial Services)		2,645,105
	56,474	Koninklijke Royal Philips Electronics NV (Appliance)		1,523,786
	18,965	QIAGEN NV* (Medical Products)		396,545
	53,283	Royal Dutch Petroleum Co. (Energy Resources)		3,024,083
	43,993	VNU NV (Media)		1,445,784
				11,428,019
Portugal – 0.1%
	21,435	Electricidade de Portugal SA (Utilities)		55,537
Spain – 4.6%
	31,559	Acerinox SA (Steel)		903,744
	66,526	Banco Bilbao Vizcaya Argentaria  SA (Banks)		858,799
	69,874	Banco Santander Central Hispano SA (Banks)		637,130
	63,997	Industria de Diseno Textil SA (Inditex)* (Consumer Durables & Apparel)		1,119,959
	116,600	Telefonica de Espana SA* (Telecommunications)		1,354,693
				4,874,325
Sweden – 5.0%
	15,370	Electrolux AB Series  B (Appliance)		207,846
	80,527	Investor AB (Financial Services)		953,800
	188,838	Nordea AB (Banks)		1,150,038
	55,378	Securitas AB Series B (Business Services)		873,679

22     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS EUROPEAN EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
Sweden – (continued)
	145,060	Skandia Forsakrings AB (Insurance)	$	1,015,593
	207,209	Telefonaktiebolaget LM Ericsson AB Series B (Telecommunications)		1,013,509
				5,214,465
Switzerland – 11.5%
	16,484	Adecco SA (Business Services)		807,109
	13,683	Nestle SA (Food & Beverage)		2,886,501
	59,054	Novartis AG* (Health)		2,153,563
	28,712	Roche Holding AG (Health)		2,056,265
	14,403	Swiss Re* (Property Insurance)		1,432,877
	17,887	Syngenta AG* (Chemicals)		935,300
	27,557	UBS AG (Banks)		1,344,325
	1,735	Zurich Financial Services AG (Insurance)		490,263
				12,106,203
United Kingdom – 36.6%
	60,542	Abbey National PLC (Financial Services)		984,490
	64,658	Amvescap PLC (Financial Services)		910,606
	168,838	ARM Holdings PLC* (Technology Hardware & Equipment)		679,026
	36,439	AstraZeneca PLC (Health)		1,760,175
	69,843	Barclays PLC (Banks)		2,119,365
	389,755	BP PLC (Energy Resources)		3,307,598
	96,455	British Sky Broadcasting Group PLC* (Media)		1,090,234
	390,663	British Telecom PLC (Telecommunications)		2,393,598
	227,437	Diageo PLC (Tobacco)		2,294,999
	48,626	Exel PLC (Transportation)		518,204
	216,079	Friends Provident PLC* (Insurance)		799,214
	189,543	GlaxoSmithKline PLC* (Health)		5,030,608
	196,374	HSBC Holdings PLC (Banks)		2,286,624
	69,796	National Grid Group PLC (Utilities)		475,269
	161,264	P & O Princess Cruises PLC (Leisure)		866,315
	44,401	Reckitt Benckiser PLC (Food & Beverage)		675,601
	42,381	Reuters Group PLC (Business Services)		478,111
	58,154	Royal Bank of Scotland Group PLC (Banks)		1,452,261
	91,611	Scottish & Southern Energy PLC (Electrical Utilities)		883,186
	81,927	Six Continents PLC (Leisure)		876,660
	98,823	Smiths Group PLC (Conglomerates)		1,073,238
	645,947	Tesco PLC (Specialty Retail)		2,443,099
	167,321	Unilever PLC (Food & Beverage)		1,428,447
	1,794,850	Vodafone Group PLC (Telecommunications)		3,583,170
				38,410,098
TOTAL COMMON STOCKS
(Cost $117,513,402)			$	104,222,203
TOTAL INVESTMENTS
(Cost $117,513,402)			$	104,222,203
*  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.      23

 GOLDMAN SACHS EUROPEAN EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

	As a % of
	Total
	Net Assets
Common Stock Industry Classifications†
Appliance		1.6	%
Auto		1.4
Banks		14.9
Business Services		2.0
Chemicals		2.4
Conglomerates		2.5
Construction		1.6
Consumer Durables & Apparel		1.1
Consumer Goods		0.6
Consumer Products		0.5
Drugs		0.5
Electrical Equipment		2.8
Electrical Utilities		0.8
Energy Resources		8.5
Financial Services		5.2
Food & Beverage		5.3
Health		10.5
Insurance		5.5
Leisure		1.7
Media		2.9
Medical Products		0.4
Property Insurance		2.7
Semiconductors		1.0
Software & Services		1.5
Specialty Retail		3.2
Steel		0.9
Technology Hardware & Equipment		0.6
Telecommunications		12.1
Tobacco		2.2
Transportation		1.2
Utilities		1.2
TOTAL COMMON STOCK		99.3	%

†    Industry concentrations greater than one tenth of one percent are disclosed.

24     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS INTERNATIONAL EQUITY FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, 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 Equity Fund. For comparative purposes, the performance of the Fund’s benchmark, the Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East Index (“MSCI EAFE”), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		Five Years		One Year
Class A (commenced December 1, 1992)
Excluding sales charges		6.86%		3.51%		-26.49%
Including sales charges		6.17%		2.35%		-30.53%
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges		2.74%		2.98%		-26.86%
Including contingent deferred sales charges		2.54%		2.56%		-30.52%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		-1.10%		n/a		-26.85%
Including contingent deferred sales charges		-1.10%		n/a		-27.58%
Institutional Class (commenced February 7, 1996)		5.27%		4.16%		-26.03%
Service Class (commenced March 6, 1996)		4.47%		3.66%		-26.41%

25

 GOLDMAN SACHS INTERNATIONAL EQUITY FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 95.4%
Australia – 1.7%
	2,317,178	BHP Ltd. (Mining)	$	11,386,540
	145	Brambles Industries Ltd. (Multi-Industrial)		756
	2,363,903	Woolworths Ltd. (Specialty Retail)		13,369,784
				24,757,080
Finland – 1.0%
	897,426	Nokia Oyj (Telecommunications)		14,057,095
France – 9.6%
	586,154	AXA (Insurance)		16,012,822
	198,733	BNP Paribas SA (Banks)		18,247,485
	210,850	Castorama Dubois Investissement SA* (Specialty Retail)		11,788,550
	104,379	L’Air Liquide SA (Chemicals)		14,755,542
	198,074	Lafarge SA* (Construction)		17,979,897
	242,371	Schneider Electric SA (Electrical Equipment)		13,440,708
	85,636	Total Fina SA Class B (Energy Resources)		12,666,469
	270,451	Vivendi Environnement (Utilities)		11,499,200
	137,008	Vivendi Universal SA (Conglomerates)		7,498,149
	245,760	Vivendi Universal SA ADR (Conglomerates)		13,445,530
				137,334,352
Germany – 6.1%
	47,721	Allianz AG (Insurance)		13,375,029
	425,395	Bayerische Motoren Werke (BMW) AG (Auto)		13,670,785
	223,206	Deutsche Bank AG (Banks)		15,401,368
	400,570	Deutsche Lufthansa AG (Transportation)		6,248,954
	152,905	Infineon Technologies AG (Semiconductors)		3,578,013
	38,417	Muenchener Rueckversicherungs-Gesellschaft AG (Property Insurance)		11,022,297
	111,495	SAP AG (Software & Services)		15,110,764
	166,620	Siemens AG (Electrical Equipment)		8,491,646
				86,898,856
Hong Kong – 1.9%
	5,528,000	Giordano International Ltd. (Specialty Retail)		2,675,513
	844,400	Hang Seng Bank Ltd.* (Banks)		9,445,735
	1,499,000	Hongkong Electric Holdings Ltd. (Electrical Utilities)		5,679,122
	416,600	Hutchison Whampoa Ltd. (Multi-Industrial)		3,551,919
	4,570,000	Li & Fung Ltd. (Wholesale)		5,742,016
				27,094,305
Ireland – 1.6%
	1,345,674	Bank of Ireland (Banks)		12,811,022
	186,500	Elan Corp. PLC ADR* (Drugs)		9,688,675
				22,499,697
Italy – 3.6%
	844,556	San Paolo – IMI SpA (Banks)		10,587,767
	1,135,000	Telecom Italia Mobile SpA (T.I.M.) (Telecommunications)		5,860,786
	1,925,063	Telecom Italia SpA (Telecommunications)		15,943,181
	4,316,500	UniCredito Italiano SpA (Banks)		18,600,377
				50,992,111
Japan – 22.5%
	42,200	Advantest Corp. (Electronics Equipment)		2,395,486
	1,887,000	Asahi Kasei Corp. (Chemicals)		7,231,103
	291,000	Banyu Pharmaceutical Co. Ltd. (Drugs)		4,901,672
	403,560	C&S Co. Ltd. (Specialty Retail)		12,405,727
	411,265	Canon, Inc. (Computer Hardware)		12,400,124
	910,000	Daiwa Securities Group, Inc. (Financial Services)		7,710,111
	375,000	Fuji Photo Film Co. Ltd. (Leisure)		13,959,658
	447,000	Honda Motor Co. Ltd. (Auto)		16,150,503
	252	Hoya Corp. (Electrical Equipment)		13,371
	762,000	Kao Corp. (Consumer Products)		19,381,311
	72,600	Keyence Corp. (Industrial Parts)		10,498,522
	1,056,000	Kirin Brewery Ltd. (Food & Beverage)		8,119,998
	28,700	KONAMI Corp. (Entertainment)		906,430
	1,619,790	Mitsui Marine & Fire (Insurance)		9,917,778
	2,330	Mizuho Holdings, Inc. (Banks)		9,654,777
	82,400	Murata Manufacturing Co. Ltd. (Electronics Equipment)		4,927,275
	832,000	NGK Insulators Ltd. (Multi-Industrial)		6,306,481
	42	Nintendo Co. Ltd. (Entertainment)		6,703
	2,397	Nippon Telephone & Telegraph Corp. (Telecommunications)		10,901,419
	416,000	Ricoh Co. Ltd. (Computer Hardware)		6,786,474

26     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS INTERNATIONAL EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
Japan – (continued)
	88,700	Rohm Co. (Electronics Equipment)	$	9,793,717
	1,220,000	Sanyo Electric Co. Ltd. (Electrical Equipment)		5,497,115
	149,000	Secom Co. Ltd. (Business Services)		7,692,508
	761,000	Sharp Corp. (Electrical Equipment)		8,126,904
	174,000	Shin-Etsu Chemical Co. Ltd. (Chemicals)		5,392,850
	500,000	Skylark Co. Ltd. (Restaurants)		13,349,055
	108,311	SMC Corp. (Machinery)		9,888,333
	1,693,000	Sumitomo Corp. (Wholesale)		10,893,603
	456,000	Sumitomo Mitsui Banking Corp. (Banks)		3,725,271
	677,000	Suzuki Motor Corp. (Auto)		8,199,149
	524,000	Takeda Chemical Industries Ltd. (Drugs)		21,580,494
	396,000	The Nomura Securities Co. Ltd. (Financial Services)		6,737,019
	691,600	Tokyo Electric Power (Electrical Utilities)		17,881,939
	495,700	Toppan Forms Co. Ltd. (Publishing)		9,810,881
	532,500	Toyota Motor Corp. (Auto)		16,190,045
	578	UFJ Holdings, Inc. (Banks)		2,945,130
				322,278,936
Netherlands – 8.2%
	419,671	Aegon NV (Insurance)		12,662,745
	506,603	ASML Holding NV* (Semiconductors)		9,008,413
	866,534	ING Groep NV (Financial Services)		27,382,748
	544,545	Koninklijke Royal Philips Electronics NV (Appliance)		14,692,961
	688,974	Royal Dutch Petroleum Co. (Energy Resources)		39,102,797
	455,355	VNU NV (Media)		14,964,771
				117,814,435
Portugal – 0.1%
	417,775	Electricidade de Portugal SA (Utilities)		1,082,428
Singapore – 0.6%
	6,289,000	Singapore Technologies Engineering Ltd. (Machinery)		9,175,221
Spain – 3.5%
	377,342	Acerinox SA (Steel)		10,805,811
	602,770	Banco Bilbao Vizcaya Argentaria SA (Banks)		7,781,290
	785,293	Banco Santander Central Hispano SA (Banks)		7,160,516
	641,539	Industria de Diseno Textil SA (Inditex)* (Consumer Durables & Apparel)		11,227,045
	1,182,048	Telefonica de Espana SA* (Telecommunications)		13,733,386
				50,708,048
Sweden – 3.7%
	986,866	Investor AB (Financial Services)		11,688,912
	1,892,403	Nordea AB (Banks)		11,524,877
	848,100	Securitas AB Series B (Business Services)		13,380,179
	1,377,203	Skandia Forsakrings AB (Insurance)		9,642,059
	1,519,712	Telefonaktiebolaget LM Ericsson AB Series B (Telecommunications)		7,433,279
				53,669,306
Switzerland – 8.4%
	242,270	Adecco SA (Business Services)		11,862,315
	169,670	Nestle SA (Food & Beverage)		35,792,784
	481,466	Novartis AG* (Health)		17,557,957
	275,194	Roche Holding AG (Health)		19,708,548
	148,180	Swiss Re* (Property Insurance)		14,741,628
	310,975	UBS AG (Banks)		15,170,421
	16,870	Zurich Financial Services AG* (Insurance)		4,766,993
				119,600,646
United Kingdom – 22.9%
	798,573	Amvescap PLC (Financial Services)		11,246,642
	155,907	AstraZeneca PLC* (Health)		7,531,039
	606,388	Barclays PLC (Banks)		18,400,659
	148,600	BP PLC ADR (Energy Resources)		7,560,768
	2,957,199	BP PLC (Energy Resources)		25,095,830
	3,475,493	British Telecom PLC* (Telecommunications)		21,294,398
	2,055,246	Diageo PLC (Food & Beverage)		20,738,871
	886,447	Exel PLC (Transportation)		9,446,813
	1,539,480	GlaxoSmithKline PLC* (Drugs)		40,858,906
	298,800	GlaxoSmithKline PLC ADR* (Drugs)		15,821,460
	1,686,424	HSBC Holdings PLC (Banks)		19,637,113
	919,479	National Grid Group PLC (Utilities)		6,261,107
	2,086,391	P & O Princess Cruises PLC (Leisure)		11,208,150
	708,610	Reuters Group PLC (Business Services)		7,994,012
	476,260	Royal Bank of Scotland Group PLC (Banks)		11,893,483
	595,514	Six Continents PLC (Leisure)		6,372,296

The accompanying notes are an integral part of these financial statements.      27

 GOLDMAN SACHS INTERNATIONAL EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
United Kingdom – (continued)
	1,430,800	Smiths Group PLC (Conglomerates)	$	15,538,784
	5,670,658	Tesco PLC (Specialty Retail)		21,447,550
	1,733,835	Unilever PLC (Food & Beverage)		14,802,041
	13,537,385	Vodafone Group PLC (Telecommunications)		27,025,515
	411,100	Vodafone Group PLC ADR (Wireless)		8,283,665
				328,459,102
TOTAL COMMON STOCKS
(Cost $1,622,765,472)			$	1,366,421,618

Principal		Interest			Maturity
Amount		Rate			Date		Value
Short-Term Obligation – 4.5%
State Street Bank & Trust Euro – Time Deposit
$	64,483,000		3.63	%		09/04/2001	$	64,483,000
TOTAL SHORT-TERM OBLIGATION
(Cost $64,483,000)							$	64,483,000
TOTAL INVESTMENTS
(Cost $1,687,248,472)							$	1,430,904,618
*   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

	As a % of
	Total
	Net Assets
Common Stock Industry Classifications†
Appliance		1.0	%
Auto		3.8
Banks		13.5
Business Services		2.9
Chemicals		1.9
Computer Hardware		1.3
Conglomerates		2.5
Construction		1.3
Consumer Durables & Apparel		0.8
Consumer Products		1.4
Drugs		6.5
Electrical Equipment		2.5
Electrical Utilities		1.6
Electronics Equipment		1.2
Energy Resources		5.9
Entertainment		0.1
Financial Services		4.5
Food & Beverage		5.5
Health		3.1
Industrial Parts		0.7
Insurance		4.6
Leisure		2.2
Machinery		1.3
Media		1.0
Mining		0.8
Multi-Industrial		0.7
Property Insurance		1.8
Publishing		0.7
Restaurants		0.9
Semiconductors		0.9
Software & Services		1.1
Specialty Retail		4.3
Steel		0.8
Telecommunications		8.1
Transportation		1.1
Utilities		1.3
Wholesale		1.2
Wireless		0.6
TOTAL COMMON STOCK		95.4	%

†    Industry concentrations greater than one tenth of one percent are disclosed.

28     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS JAPANESE EQUITY FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on May 1, 1998 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Japanese Equity Fund. For comparative purposes, the performance of the Fund’s benchmark, the Tokyo Price Index (“Topix”), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 Shares due to differences in fees and loads.

Japanese Equity Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested May 1, 1998 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced May 1, 1998)
Excluding sales charges		1.88%		-39.60%
Including sales charges		0.17%		-42.93%
Class B (commenced May 1, 1998)
Excluding contingent deferred sales charges		1.43%		-39.90%
Including contingent deferred sales charges		0.51%		-42.91%
Class C (commenced May 1, 1998)
Excluding contingent deferred sales charges		1.43%		-39.84%
Including contingent deferred sales charges		1.43%		-40.44%
Institutional Class (commenced May 1, 1998)		2.53%		-39.16%
Service Class (commenced May 1, 1998)		1.98%		-39.44%

29

 GOLDMAN SACHS JAPANESE EQUITY FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 128.9%
	42,000	77 Bank Ltd. (Banks)	$	240,536
	5,400	Advantest Corp. (Electronics Equipment)		306,531
	46,000	Air Water, Inc. (Industrial Services)		216,954
	43,000	Anritsu Corp. (Electrical Equipment)		373,740
	37,000	Asahi Glass Co. Ltd. (Building Materials)		211,277
	62,000	Asahi Kasei Corp. (Chemicals)		237,588
	15,700	Bandai Co. Ltd. (Entertainment)		446,928
	32,000	Banyu Pharmaceutical Co. Ltd. (Drugs)		539,015
	14,520	C&S Co. Ltd (Specialty Retail)		446,355
	31,000	Canon, Inc. (Computer Hardware)		934,686
	64,000	Daiwa Securities Group, Inc. (Financial Services)		542,250
	95,000	Dowa Mining Co. Ltd. (Mining)		285,636
	82	East Japan Railway Co. (Railroads)		484,811
	21,000	Fuji Photo Film Co. Ltd. (Leisure)		781,741
	3,500	Funai Electric Co. Ltd. (Electrical Equipment)		217,248
	7,000	Hisamitsu Pharmaceutical Co., Inc. (Drugs)		117,910
	25,000	Honda Motor Co. Ltd. (Auto)		903,272
	44,000	Isetan Co. Ltd. (Specialty Retail)		407,630
	79,000	Kanebo Ltd.* (Consumer Products)		191,620
	45,000	Kaneka Corp. (Chemicals)		339,201
	33,000	Kao Corp. (Consumer Products)		839,348
	15,300	Katokichi Co. Ltd. (Food & Beverage)		335,676
	114	KDDI Corp. (Telecommunications)		325,481
	3,900	Keyence Corp. (Industrial Parts)		563,970
	14,500	Kirin Beverage Corp. (Food & Beverage)		259,506
	34,000	Kirin Brewery Ltd. (Food & Beverage)		261,439
	24,000	Kokuyo Co. Ltd. (Specialty Retail)		240,536
	10,200	Komeri Co. Ltd. (Home Products)		262,012
	7,300	Konami Corp. (Entertainment)		230,555
	3,900	KOSE Corp. (Specialty Retail)		142,881
	36,000	Matsushita Electric Works Ltd. (Construction)		329,271
	15,800	Meitec Corp. (Business Services)		443,121
	70,000	Minebea Co. Ltd. (Electronics Equipment)		393,229
	15,900	Ministop Co. Ltd. (Specialty Retail)		239,702
	5,410	MISUMI Corp. (Industrial Parts)		173,142
	99,000	Mitsui Mining & Smelting Co. Ltd. (Mining)		311,837
	164,000	Mitsui O.S.K. Lines Ltd. (Ship Transportation)		368,788
	4,000	Murata Manufacturing Co. Ltd. (Electronics Equipment)		239,188
	63,000	NGK Insulators Ltd. (Multi-Industrial)		477,534
	1,000	Nintendo Co. Ltd. (Entertainment)		159,599
	11,900	Nippon Kanzai Co. Ltd. (Business Services)		220,491
	53,000	Nippon Mining & Metals Co. Ltd. (Mining)		236,577
	3,200	Nippon System Development Co. Ltd. (Computer Software)		162,783
	107	Nippon Telephone & Telegraph Corp. (Telecommunications)		486,630
	47,000	Nissan Chemical Industries Ltd. (Chemicals)		324,193
	139	NTT DoCoMo, Inc. (Telecommunications)		1,709,184
	800	Paris Miki, Inc. (Specialty Retail)		24,997
	15,000	Pioneer Corp. (Electrical Equipment)		298,775
	36,000	Ricoh Co. Ltd. (Computer Hardware)		587,291
	4,200	Rohm Co. (Electronics Equipment)		463,739
	126,000	Sanyo Electric Co. Ltd. (Electrical Equipment)		567,735
	400	Sanyo Electric Credit Co. Ltd. (Financial Services)		11,623
	7,500	Sato Corp. (Electronics Equipment)		183,813
	10,000	Secom Co. Ltd. (Business Services)		516,276
	9,000	Seven-Eleven Japan Co. Ltd. (Specialty Retail)		298,648
	37,000	Sharp Corp. (Electrical Equipment)		395,132
	19,100	Shin-Etsu Chemical Co. Ltd. (Chemicals)		591,974
	26,000	Skylark Co. Ltd. (Restaurants)		694,151
	4,900	SMC Corp. (Machinery)		447,349
	15,000	Sumisho Lease Co. Ltd. (Financial Services)		218,301
	107,000	Sumitomo Chemical Co. Ltd. (Chemicals)		460,496
	74,000	Sumitomo Corp. (Wholesale)		476,153
	77,000	Sumitomo Mitsui Banking Corp. (Banks)		629,048
	4,500	Sumitomo Real Estate Sales Co. Ltd. (Real Estate)		129,237
	39,000	Suzuki Motor Corp. (Auto)		472,329
	5,800	Taiyo Ink Manufacturing Co. Ltd. (Chemicals)		144,102
	32,000	Takeda Chemical Industries Ltd. (Drugs)		1,317,893
	39,000	The Nomura Securities Co. Ltd. (Financial Services)		663,494
	74,000	The Sumitomo Marine & Fire Insurance Co. Ltd. (Insurance)		497,966
	72,000	The Sumitomo Trust & Banking Co. Ltd. (Banks)		459,645
	17,800	THK Co. Ltd. (Machinery)		230,867
	3,400	Toho Co. (Leisure)		432,964
	26,000	Tokyo Broadcasting System, Inc. (Media)		503,643
	42,600	Tokyo Electric Power (Electrical Utilities)		1,101,461
	31,700	Toppan Forms Co. Ltd. (Publishing)		627,406
	36,700	Toyota Motor Corp. (Auto)		1,115,821
	61	UFJ Holdings, Inc. (Banks)		310,818
	5,300	USS Co. Ltd. (Auto)		187,476

30     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS JAPANESE EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
	10,400	York-Benimaru Co. Ltd. (Specialty Retail)	$	246,128
	210	Yoshinoya D&C Co. Ltd. (Restaurants)		369,647
				33,638,000
TOTAL COMMON STOCKS
(Cost $42,887,765)			$	33,638,000
TOTAL INVESTMENTS
(Cost $42,887,765)			$	33,638,000
* 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.

	As a % of
	Total
	Net Assets
Common Stock Industry Classifications†
Auto		10.3	%
Banks		6.3
Building Materials		0.8
Business Services		4.5
Chemicals		8.0
Computer Hardware		5.8
Computer Software		0.6
Construction		1.3
Consumer Products		4.0
Drugs		7.6
Electrical Equipment		7.1
Electrical Utilities		4.2
Electronics Equipment		6.1
Entertainment		3.2
Financial Services		5.5
Food & Beverage		3.3
Home Products		1.0
Industrial Parts		2.8
Industrial Services		0.8
Insurance		1.9
Leisure		4.7
Machinery		2.6
Media		1.9
Mining		3.2
Multi-Industrial		1.8
Publishing		2.4
Railroads		1.9
Real Estate		0.5
Restaurants		4.1
Ship Transportation		1.4
Specialty Retail		7.8
Telecommunications		9.7
Wholesale		1.8
TOTAL COMMON STOCK		128.9	%
† Industry concentrations greater than one tenth of one percent are disclosed.

The accompanying notes are an integral part of these financial statements.      31

 GOLDMAN SACHS INTERNATIONAL GROWTH OPPORTUNITIES FUND

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on May 1, 1998 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs International Growth Opportunities Fund (formerly known as Goldman Sachs International Small Cap Fund). For comparative purposes, the performance of the Fund’s benchmark, Morgan Stanley Capital International Europe, Australasia and Far East Small Cap Index unhedged (“MSCI EAFE Small Cap Index”) is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 difference in fees and loads.

International Growth Opportunities Fund’s^(a) Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested May 1, 1998 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced May 1, 1998)
Excluding sales charges		2.87%		-34.26%
Including sales charges		1.14%		-37.88%
Class B (commenced May 1, 1998)
Excluding contingent deferred sales charges		2.42%		-34.64%
Including contingent deferred sales charges		1.49%		-37.91%
Class C (commenced May 1, 1998)
Excluding contingent deferred sales charges		2.42%		-34.60%
Including contingent deferred sales charges		2.42%		-35.26%
Institutional Class (commenced May 1, 1998)		3.52%		-33.90%
Service Class (commenced May 1, 1998)		2.98%		-34.17%

(a)  Effective December 29, 2000, the Fund’s name changed from International Small Cap Fund to the International Growth Opportunities Fund.

32

GOLDMAN SACHS INTERNATIONAL GROWTH OPPORTUNITIES FUND 

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 93.0%
Australia – 1.9%
	57,084	Primary Health Care Ltd. (Health)	$	144,468
	389,400	QBE Insurance Group Ltd. (Insurance)		2,196,829
	269,287	Westfield Holdings Ltd. (Real Estate)		2,411,698
				4,752,995
Austria – 0.6%
	33,831	EMTS Technologie AG* (Telecommunications)		1,601,731
Belgium – 1.6%
	84,595	Omega Pharma SA (Drugs)		3,995,231
Denmark – 4.6%
	40,963	Carlsberg A/S (Food & Beverage)		1,850,339
	26,255	DSV, De Sammensluttede Vognmaend af Series B (Transportation)		631,446
	44,931	Group 4 Falck A/S (Electrical Equipment)		5,304,327
	41,915	NEG Micon A/S* (Manufacturing)		1,263,933
	74,707	Vestas Wind Systems A/S (Energy Resources)		2,252,766
				11,302,811
Finland – 0.4%
	81,239	Elisa Communications Oyj Series A (Telecommunications)		839,724
	18,726	Vacon Oyj (Machinery)		183,857
				1,023,581
France – 8.8%
	77,098	Altran Technologies SA (Business Services)		3,686,723
	44,769	Coface (Insurance)		2,930,364
	341,056	Elior (Food & Beverage)		3,922,183
	119,884	Generale de Sante* (Health)		2,165,563
	29,205	IPSOS (Media)		1,938,169
	51,662	Sabate Diosos SA (Manufacturing)		797,951
	68,178	SR Teleperformance (Multi-Industry)		1,363,574
	9,018	Technip (Construction)		1,334,677
	67,013	Unibail (Real Estate)		3,649,199
				21,788,403
Germany – 4.3%
	31,721	Allbecon AG (Business Services)		187,444
	66,041	D. Logistics AG* (Business Services)		444,280
	55,959	Dis Deutscher Industrie (Business Services)		1,251,459
	38,103	IM Internationalmedia AG* (Media)		814,027
	116,599	Mediclin AG* (Medical Providers)		636,001
	9,451	Rhoen-Klinikum AG (Health)		447,638
	77,423	Techem AG (Electronics Equipment)		1,872,248
	72,777	Tecis Holding AG (Financial Services)		2,017,928
	66,856	Wedeco AG* (Business Services)		2,124,219
	43,071	Zapf Creaton AG (Entertainment)		884,922
				10,680,166
Hong Kong – 4.1%
	2,737,500	Amoy Properties Ltd. (Real Estate)		2,948,190
	669,800	Dah Sing Financial Holdings (Banks)		3,357,717
	1,022,000	Esprit Holdings Ltd. (Multi-Industry)		1,139,967
	5,656,000	Giordano International Ltd. (Specialty Retail)		2,737,464
				10,183,338
Ireland – 4.1%
	626,832	Anglo Irish Bank Corp. PLC (Banks)		2,342,096
	270,606	DCC PLC (Multi-Industry)		2,496,980
	966,015	Independent News & Media PLC (Publishing)		1,963,579
	914,646	Kingspan Group PLC (Construction)		2,477,884
	34,580	SmartForce PLC ADR* (Information Services)		1,006,278
				10,286,817
Israel – 1.1%
	65,881	Card-Guard Scientific Survival Ltd.* (Health)		2,408,451
	36,685	Oridion Systems Ltd.* (Health)		360,562
				2,769,013
Italy – 4.7%
	479,818	Brembo SpA (Auto)		3,441,638
	201,650	Caltagirone Editore SpA (Publishing)		1,439,062
	363,500	Ferretti SpA* (Leisure)		1,123,557
	261,161	Gruppo Coin SpA* (Department Stores)		3,217,061
	404,541	Saipem SpA (Energy Resources)		2,335,328
				11,556,646
Japan – 28.1%
	39,600	Aderans Co. Ltd. (Specialty Retail)		1,367,415
	176,000	Air Water, Inc. (Industrial Services)		830,084
	94,000	Alpine Electronics, Inc. (Electronics Equipment)		1,061,641
	39,000	ARRK Corp. (Manufacturing)		1,346,696
	4,640	Bellsystem24, Inc. (Business Services)		1,703,828
	14,800	Cawachi Ltd. (Specialty Retail)		780,292

The accompanying notes are an integral part of these financial statements.      33

 GOLDMAN SACHS INTERNATIONAL GROWTH OPPORTUNITIES FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Japan – (continued)
	37,000	Citizen Electronic (Electrical Equipment)	$	1,604,834
	46,000	Eneserve Corp. (Energy Resources)		2,227,650
	70,900	Enplas Corp. (Electrical Equipment)		1,274,868
	48,100	FP Corp. (Packaging)		1,701,436
	62,900	Fuji Electronics Co. Ltd. (Wholesale)		397,313
	32,900	Fuji Seal (Heavy Machinery)		1,025,224
	64,100	Fujimi, Inc. (Diversified Industrial Manufacturing)		1,079,715
	60,800	Fukuda Denshi Co. Ltd. (Health)		1,741,020
	29,800	Funai Electric Co. Ltd. (Electrical Equipment)		1,849,716
	70,200	Hakuto Co. (Electrical Equipment)		945,972
	3,000	Hisamitsu Pharmaceutical Co., Inc. (Drugs)		50,533
	32	Intelligence Ltd. (Business Services)		109,151
	117,900	Iuchi Seieido Co. (Electrical Equipment)		1,540,093
	104,000	Japan Business Computer Co. Ltd. (Computer Software)		1,403,192
	164,300	Japan CBM Corp. (Electrical Equipment)		963,093
	246,000	Kato Sangyo Co. Ltd. (Food & Beverage)		1,193,380
	136,000	Kawasumi Labs, Inc. (Chemicals)		1,466,122
	63,500	Koekisha Co. Ltd. (Medical Providers)		2,032,257
	78,100	Komeri Co. Ltd. (Home Products)		2,006,190
	18,800	KOSE Corp. (Specialty Retail)		688,761
	60,400	Kuroda Electric Co. Ltd. (Electronics Equipment)		1,032,652
	267	Kyoto Kimono Yuzen Co. Ltd. (Specialty Retail)		1,214,301
	87,000	Medical Support Co. (Food & Beverage)		468,943
	52,800	Meitec Corp. (Business Services)		1,480,810
	32,900	Milbon Co. Ltd. (Consumer Non-Durables)		1,080,642
	45,500	Ministop Co. Ltd. (Specialty Retail)		685,939
	161,800	Mirai Industry Co. Ltd. (Multi-Industry)		1,478,528
	19,510	MISUMI Corp. (Industrial Parts)		624,399
	24,300	Mitta Co. Ltd. (Specialty Retail)		304,940
	35,600	Miyachi Technos Corp. (Manufacturing)		500,712
	113,000	MKC-STAT Corp. (Business Services)		1,222,933
	30,600	Nagaileben Co. Ltd. (Apparel)		824,694
	195	NextCom K.K. (Business Services)		468,059
	127,000	Nippon Ceramic Co. Ltd. (Electronic Components)		2,081,459
	138,700	Nippon Kanzai Co. Ltd. (Business Services)		2,569,925
	110,200	Nishio Rent All Co. Ltd. (Business Services)		779,618
	108,000	Ogura Clutch Co. Ltd. (Auto)		451,156
	36,000	OZEKI Co. Ltd. (Grocery)		1,061,187
	93,000	PA Co. Ltd.* (Business Services)		285,889
	14,600	People Co. Ltd. (Health)		829,999
	35,700	Plenus Co. Ltd. (Business Services)		1,503,348
	35,000	Relocation Services Corp. (Real Estate)		1,798,122
	36,300	Resorttrust, Inc. (Real Estate)		1,054,744
	134,000	Rohto Pharmaceutical Co. Ltd. (Drugs)		1,297,848
	87,900	Sato Corp. (Electronics Equipment)		2,154,285
	24,100	Sogo Medical Co. Ltd. (Business Services)		649,514
	102,000	Star Micronics Co. Ltd. (Electronic Components)		610,789
	3,500	Sumitomo Real Estate Sales Co. Ltd. (Real Estate)		100,518
	62,200	Suruga Co. Ltd. (Consumer Durables)		1,644,907
	43,300	Taiyo Ink Manufacturing Co. Ltd. (Chemicals)		1,075,799
	121,000	Takara Co. Ltd. (Manufacturing)		1,488,870
	135,600	Trusco Nakayama (Wholesale)		1,773,586
	213,000	Uchida Yoko Co. Ltd. (Wholesale)		757,030
	30,900	USS Co. Ltd. (Auto)		1,093,022
	569	Yoshinoya D&C Co. Ltd. (Restaurants)		1,001,566
				69,841,209
Luxembourg – 1.5%
	254,146	Thiel Logistik AG* (Computer Software)		3,708,258
Netherlands – 1.1%
	32,057	ASM International NV* (Electronics Equipment)		680,489
	909	Gucci Group (Apparel)		70,368
	153,113	Vedior NV (Business Services)		1,886,093
				2,636,950
Norway – 1.8%
	135,281	Tandberg ASA* (Telecommunications)		1,763,718
	266,860	Tomra Systems ASA (Machinery)		2,786,350
				4,550,068
Singapore – 2.9%
	1,546,000	Keppel Land Ltd. (Real Estate)		1,678,311
	1,525,000	Singapore Technologies Engineering Ltd. (Machinery)		2,224,871

34     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS INTERNATIONAL GROWTH OPPORTUNITIES FUND 

Shares		Description	Value
Common Stocks – (continued)
Singapore – (continued)
	340,080	United Overseas Bank Ltd. (Banks)	$	2,187,764
	146,000	Venture Manufacturing Ltd. (Electrical Equipment)		972,774
				7,063,720
Spain – 4.7%
	79,250	Aldeasa SA (Specialty Retail)		1,442,364
	265,365	Amadeus Global Travel Distribution SA* (Business Services)		2,036,094
	86,424	Corporacion Mapfre, Compania Internacional de Reaseguros SA (Insurance)		1,689,213
	76,854	Promotora de Informaciones SA (Media)		824,442
	199,834	Sociedad General de Aguas de Barcelona SA (Multi-Industry)		2,870,372
	126,608	Sogecable SA* (Broadcasting)		2,792,310
				11,654,795
Sweden – 1.0%
	46,163	Eniro AB (Publishing)		345,333
	269,408	HiQ International AB (Business Services)		617,529
	240,237	Observer AB (Business Services)		1,301,779
	110,649	Proffice AB Series B (Business Services)		307,747
				2,572,388
Switzerland – 6.4%
	4,925	Belimo Holding AG (Construction)		1,608,609
	30,816	Komax Group (Machinery)		2,068,436
	7,887	Kudelski SA* (Electrical Equipment)		424,223
	5,133	Leica Geosystems AG* (Technology)		1,307,398
	3,900	Lindt & Spruengli AG (Food & Beverage)		2,068,500
	88,860	Logitech International SA* (Computer Hardware)		2,463,008
	52,284	SEZ Holding AG (Machinery)		2,585,059
	3,654	Societe Generale D’Affichage (Media)		1,598,598
	23	Synthes-Stratec, Inc. (Health)		15,686
	21,654	Tecan AG (Health)		1,674,078
				15,813,595
United Kingdom – 9.3%
	53,950	Aggreko PLC (Industrial Services)		342,302
	853,504	Amey PLC (Business Services)		4,089,366
	212,973	Enterprise Inns PLC (Food & Beverage)		1,857,457
	195,307	First Technology PLC (Auto)		1,179,635
	103,110	Garban-Intercapital PLC (Financial Services)		967,261
	243,410	Guardian IT PLC (Business Services)		918,858
	177,512	MAN Group PLC (Financial Services)		2,396,885
	849,949	Michael Page International PLC* (Business Services)		1,727,657
	339,050	Minerva PLC (Real Estate)		1,407,882
	47,200	NDS Group PLC ADR* (Internet Software)		1,166,784
	206,715	Nestor Healthcare Group PLC (Health)		1,731,746
	550,343	Serco Group (Business Services)		2,852,582
	220,475	The Berkeley Group PLC (Construction)		2,355,991
				22,994,406
TOTAL COMMON STOCKS
(Cost $280,249,807)			$	230,776,121
Preferred Stocks – 2.9%
Germany – 2.9%
	8,455	Porsche AG (Auto)	$	2,913,161
	88,976	Rhoen-Klinikum AG Non-Voting (Health)		4,361,485
				7,274,646
TOTAL PREFERRED STOCKS
(Cost $5,926,139)			$	7,274,646
Warrants – 0.0%
France – 0.0%
	3,600	IPSOS exp. 06/21/03* (Media)	$	4,615
TOTAL WARRANTS
(Cost $0)			$	4,615

The accompanying notes are an integral part of these financial statements.      35

 GOLDMAN SACHS INTERNATIONAL GROWTH OPPORTUNITIES FUND

Statement of Investments  (continued)

August 31, 2001

Principal		Interest			Maturity
Amount		Rate			Date		Value
Short-Term Obligation – 1.5%
State Street Bank & Trust Euro – Time Deposit
$	3,622,000		3.63	%		09/04/2001	$	3,622,000
TOTAL SHORT-TERM OBLIGATION
(Cost $3,622,000)							$	3,622,000
TOTAL INVESTMENTS
(Cost $289,797,946)							$	241,677,382
* 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

	As a % of
	Total
	Net Assets
Common and Preferred Stock Industry Classifications†
Apparel		0.4	%
Auto		3.7
Banks		3.2
Broadcasting		1.1
Business Services		13.8
Chemicals		1.0
Computer Hardware		1.0
Computer Software		2.1
Construction		3.1
Consumer Durables		0.7
Consumer Non-Durables		0.4
Department Stores		1.3
Diversified Industrial Manufacturing		0.4
Drugs		2.1
Electrical Equipment		6.0
Electronic Components		1.1
Electronics Equipment		2.7
Energy Resources		2.7
Entertainment		0.4
Financial Services		2.2
Food & Beverage		4.6
Grocery		0.4
Health		6.3
Heavy Machinery		0.4
Home Products		0.8
Industrial Parts		0.2
Industrial Services		0.5
Information Services		0.4
Insurance		2.7
Internet Software		0.5
Leisure		0.4
Machinery		4.0
Manufacturing		2.2
Media		2.1
Medical Providers		1.1
Multi-Industry		3.8
Packaging		0.7
Publishing		1.5
Real Estate		6.1
Restaurants		0.4
Specialty Retail		3.7
Technology		0.5
Telecommunications		1.7
Transportation		0.3
Wholesale		1.2
TOTAL COMMON AND PREFERRED STOCK		95.9	%
† Industry concentrations greater than one tenth of one percent are disclosed.

36     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS EMERGING MARKETS EQUITY FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on December 15, 1997 (commencement of operations) in Institutional Shares of the Goldman Sachs Emerging Markets Equity Fund. For comparative purposes, the performance of the Fund’s benchmark, the Morgan Stanley Capital International Emerging Markets Free Index (“MSCI EMF Index”), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class A, Class B, Class C and Service Shares will vary from Institutional Shares due to differences in fees and loads.

Emerging Markets Equity Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested December 15, 1997 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced December 15, 1997)
Excluding sales charges		-6.36%		-30.55%
Including sales charges		-7.77%		-34.37%
Class B (commenced December 15, 1997)
Excluding contingent deferred sales charges		-6.79%		-30.97%
Including contingent deferred sales charges		-7.56%		-34.43%
Class C (commenced December 15, 1997)
Excluding contingent deferred sales charges		-6.74%		-30.98%
Including contingent deferred sales charges		-6.74%		-31.67%
Institutional Class (commenced December 15, 1997)		-5.72%		-30.20%
Service Class (commenced December 15, 1997)		-6.66%		-30.08%

37

 GOLDMAN SACHS EMERGING MARKETS EQUITY FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 91.0%
Brazil – 2.0%
	56,720,000	Centrais Eletricas Brasileiras SA (Financial Services)	$	815,553
	1,600	Companhia Siderurgica Nacional ADR (Steel)		22,320
	35,500	Petroleo Brasileiro SA ADR (Energy Resources)		798,750
	37,900	Votorantim Celulose e Papel SA ADR (Paper)		542,728
				2,179,351
Chile – 1.7%
	81,273	Cia de Telecomunicaciones de Chile SA ADR* (Telecommunications)		1,029,729
	34,000	Embotelladora Andina SA Series B ADR (Food & Beverage)		348,500
	35,004	Enersis SA ADR (Electrical Utilities)		513,509
				1,891,738
China – 4.1%
	1,260,000	Beijing Capital International Airport Co. Ltd. Class H* (Airlines)		306,935
	478,000	Beijing Datang Power Generation Co. Ltd. Class H (Utilities)		160,871
	868,000	China Mobile Ltd.* (Telecommunications)		2,709,822
	1,483,900	Huaneng Power International, Inc. Class H (Utilities)		818,079
	1,720,000	PetroChina Co. Ltd. Class H*+ (Energy Resources)		350,629
	722,000	Yanzhou Coal Mining Co. Ltd. Class H (Mining)		217,534
				4,563,870
Czech Republic – 0.6%
	38,538	Ceska Sporitelna AS* (Banks)		272,021
	195,231	CEZ (Electrical Utilities)		403,051
				675,072
Hong Kong – 0.7%
	156,000	China Everbright Ltd. (Financial Services)		91,004
	1,142,000	China Overseas Land & Investment Ltd.* (Real Estate)		183,020
	604,394	China Resources Beijing Land Ltd. (Real Estate)		142,580
	67,100	Citic Pacific Ltd. (Multi-Industry)		148,830
	137,000	CNOOC Ltd.* (Energy Resources)		136,127
	177,200	Denway Motors Ltd.* (Auto)		48,845
				750,406
Hungary – 1.1%
	5,886	EGIS Rt. (Medical Products)		246,625
	44,254	Magyar Travkozlesi Rt ADR (Telecommunications)		562,026
	7,849	OTP Bank Rt. GDR (Financial Services)		412,857
				1,221,508
India – 8.6%
	86,112	Bharat Heavy Electricals Ltd. (Electrical Equipment)		280,979
	75,687	Bharat Petroleum Corp. Ltd. (Energy Resources)		277,803
	14,500	Britannia Industries Ltd. (Consumer Durables)		171,218
	14,021	Cipla Ltd. (Chemicals)		366,162
	15,600	Dr. Reddy’s Laboratories Ltd. ADR* (Medical Products)		362,544
	5,760	Dr. Reddy’s Laboratories Ltd. (Medical Products)		216,532
	60,382	Gas Authority of India Ltd. GDR (Energy Resources)		452,865
	9,300	Gas Authority of India Ltd. (Energy Resources)		11,053
	117,401	Hero Honda Motors Ltd. (Consumer Durables)		458,442
	7,418	Hindalco Industries Ltd. (Mining)		105,091
	390,394	Hindustan Lever Ltd. (Consumer Cyclicals)		1,813,194
	67,717	Housing Development Finance Corp. Ltd. (Banks)		1,011,444
	11,606	Hughes Software Systems Ltd. (Computer Software)		111,565
	7,170	Infosys Technologies Ltd. (Computer Software)		537,491
	52,191	ITC Ltd. (Tobacco)		796,987
	87,694	Mahanagar Telephone Nigam Ltd. (Telecommunication Services)		230,029
	24,305	Nestle India Ltd. (Food & Beverage)		260,562
	6,491	Ranbaxy Laboratories Ltd. (Medical Products)		82,701
	12,496	Ranbaxy Laboratories Ltd. GDR (Medical Products)		184,941
	101,313	Reliance Industries Ltd. (Multi-Industry)		666,855
	16,265	Satyam Computer Services Ltd. (Business Services)		58,198
	18,600	Satyam Computer Services Ltd. ADR (Business Services)		158,100
	74,144	State Bank of India (Banks)		309,982
	50,254	Tata Power Co. Ltd. (Electrical Utilities)		124,622
	47,497	Videsh Sanchar Nigam Ltd. (Telecommunications)		284,861
	2,564	Wipro Ltd. (Multi-Industrial)		80,824

38     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS EMERGING MARKETS EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
India – (continued)
	1,500	Wipro Ltd. ADR (Multi-Industrial)	$	48,810
	24,600	Zee Telefilms Ltd. (Consumer Durables)		60,508
				9,524,363
Indonesia – 2.3%
	935,500	PT Astra International Tbk* (Auto)		250,698
	280,000	PT Gudang Garam Tbk (Tobacco)		385,444
	286,700	PT Hanjaya Mandala Sampoerna Tbk (Multi-Industrial)		545,094
	1,247,900	PT Ramayana Lestari Sentosa Tbk (Consumer Durables)		394,259
	1,599,200	PT Telekomunikasi Indonesia (Telecommunications)		532,315
	597,100	PT Tempo Scan Pacific Tbk (Health)		197,068
	112,500	PT Unilever Indonesia Tbk (Consumer Goods)		215,797
				2,520,675
Israel – 3.2%
	169,416	Bank Hapoalim (Banks)		385,579
	61,093	Bank Leumi (Banks)		122,845
	20,100	Check Point Software Technologies Ltd.* (Internet)		642,999
	4,437	IDB Development Corp. Ltd. (Financial Services)		113,163
	3,770	IDB Holding Corp. Ltd. (Multi-Industry)		93,144
	9,100	NICE Systems Ltd. ADR* (Utilities)		127,309
	6,450	Orbotech Ltd. (Computer Software)		149,447
	5,900	Taro Pharmaceutical Industries Ltd.* (Pharmaceuticals & Biotechnology)		250,750
	23,020	Teva Pharmaceutical Industries Ltd. ADR (Medical Products)		1,636,722
				3,521,958
Malaysia – 5.2%
	120,247	British American Tobacco Berhad (Tobacco)		1,107,538
	57,000	Commerce Asset-Holding Berhad (Financial Services)		117,000
	159,000	Gamuda Berhad (Construction)		179,084
	312,000	IOI Corp. Berhad (Agriculture)		300,505
	208,000	Magnum Corp. Berhad (Multi-Industry)		111,663
	147,700	Malakoff Berhad (Electrical Utilities)		369,250
	154,351	Malayan Banking Berhad (Banks)		499,610
	360,300	Malaysia International Shipping Corp. Berhad – Alien Market (Ship Transportation)		677,933
	623,460	Public Bank Berhad – Alien Market (Banks)		479,080
	197,600	Public Bank Berhad (Banks)		128,440
	134,893	Resorts World Berhad (Leisure)		236,063
	272,000	Sime Darby Berhad (Electrical Equipment)		340,716
	29,500	Star Publications Berhad (Publishing)		71,033
	131,700	Telekom Malaysia Berhad (Telecommunications)		370,839
	260,400	Tenaga Nasional Berhad (Electrical Utilities)		740,084
				5,728,838
Mexico – 13.5%
	273,375	Alfa SA Series A (Industrial Services)		368,202
	81,675	America Movil SA de CV ADR Series L (Information Services)		1,375,407
	75,608	Carso Global Telecom Series A1* (Telecommunications)		165,481
	33,047	Cemex SA de CV ADR (Construction)		850,960
	208,821	Controladora Comercial Mexicana SA de CV UBC (Consumer Durables)		184,858
	153,480	Corporacion Interamericana de Entretenimiento SA de CV Series B* (Entertainment)		508,460
	1,246,695	Grupo Financiero BBVA Bancomer SA de CV Series O (Banks)		1,048,109
	212,651	Grupo Mexico SA Series B (Mining)		428,467
	818,744	Grupo Modelo SA Series C (Tobacco)		1,956,484
	45,414	Grupo Televisa SA ADR* (Broadcasting)		1,657,611
	147,284	Telefonos de Mexico SA ADR (Telecommunications)		5,369,975
	425,111	Wal-Mart de Mexico SA de CV Series C (Specialty Retail)		956,286
				14,870,300
Peru – 0.4%
	25,600	Compania de Minas Buenaventura SAu Series B ADR (Nonferrous Metals)		491,264

The accompanying notes are an integral part of these financial statements.      39

 GOLDMAN SACHS EMERGING MARKETS EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Philippines – 0.5%
	202,557	ABS-CBN Broadcasting Corp. PDR (Broadcasting)	$	133,052
	112,600	Manila Electric Co. Class B (Electrical Utilities)		98,249
	12,215	Philippine Long Distance Telephone Co. (Telecommunications)		116,162
	105,424	San Miguel Corp. Class B (Tobacco)		114,726
	1,227,293	SM Prime Holdings (Real Estate)		144,388
				606,577
Poland – 0.8%
	15,685	Bank Polska Kasa Opieki SA* (Banks)		248,269
	24,267	Elektrim Spolka Akcyjna SA* (Multi-Industry)		117,351
	23,934	KGHM Polska Miedz SA (Nonferrous Metals)		88,076
	11,949	Polski Koncern Naftowy SA GDR (Energy Resources)		99,177
	6,338	Powszechny Bank Kredytowy (Banks)		123,345
	3,567	Prokom Software SA (Computer Software)		70,764
	62,240	Telekomunikacja Polska SA (Telecommunications)		190,132
				937,114
Russia – 2.9%
	31,200	Gazprom ADR* (Energy Resources)		307,320
	12,200	Mobile Telesystems ADR* (Telecommunications)		317,810
	7,500	RAO Unified Energy Systems ADR (Electrical Equipment)		81,375
	105,921	RAO Unified Energy Systems GDR (Electrical Equipment)		1,149,243
	77,200	Sibeneft ADR (Energy Resources)		347,400
	75,202	Surgutneftegaz ADR* (Energy Resources)		991,162
				3,194,310
South Africa – 9.8%
	175,628	ABSA Group Ltd. (Financial Services)		812,312
	289,700	African Bank Investments Ltd. (Banks)		280,008
	30,422	Anglo American Platinum Corp. (Nonferrous Metals)		1,172,561
	6,530	Anglogold Ltd. (Mining)		230,003
	20,918	Barlow Ltd. (Conglomerates)		144,628
	57,341	Bidvest Group Ltd. (Multi-Industry)		326,075
	34,200	Dimension Data Holdings PLC* (Business Services)		56,783
	828,696	FirstRand Ltd. (Financial Services)		838,317
	51,782	Gold Fields Ltd. (Mining)		222,306
	44,459	Harmony Gold Mining Co. Ltd.* (Mining)		210,904
	8,672	Impala Platinum Holdings Ltd. (Nonferrous Metals)		376,413
	96,782	Imperial Holdings Ltd. (Conglomerates)		791,969
	9,809	Investec Group Ltd. (Banks)		232,659
	19,900	JD Group Ltd.* (Consumer Durables)		95,581
	80,943	Liberty Group Ltd. (Insurance)		545,245
	50,200	M-Cell Ltd. (Telecommunications)		86,920
	52,456	Nedcor Ltd. (Banks)		915,730
	141,533	Pick’ n Pay Stores Ltd. (Consumer Durables)		182,957
	787,558	Sanlam Ltd. (Information Services)		999,380
	40,399	Sappi Ltd. (Pulp and Paper)		406,285
	99,207	Sasol (Chemicals)		920,054
	52,131	South African Brewery (Alcohol)		385,785
	29,800	Standard Bank Investment Corp. Ltd.* (Banks)		120,690
	17,360	Tiger Oats (Food & Beverage)		126,616
	313,750	Truworths International Ltd. (Consumer Durables)		195,347
	48,007	Venfin Ltd. (Financial Services)		100,772
				10,776,300
South Korea – 13.8%
	14,080	Daeduck Electronics Co. Ltd. (Electrical Equipment)		107,884
	80,586	H&CB ADR (Banks)		878,387
	76,650	Hana Bank (Banks)		581,317
	6,910	Hankuk Electric Glass Co., Ltd. (Consumer Durables)		325,780
	10,280	Hite Brewery Co. Ltd. (Food & Beverage)		368,521
	53,940	Hotel Shilla Co. Ltd. (Entertainment)		282,563
	7,931	Housing & Commercial Bank (Banks)		176,107
	85,225	Hyundai Motor Co. Ltd. (Auto)		1,419,306
	13,200	Hyundai Securities Co. (Financial Services)		76,579
	59,705	Korea Electric Power Corp. (Electrical Utilities)		1,057,325
	13,900	Korea Telecom Corp. ADR (Telecommunications)		288,981
	8,370	Korea Telecom Corp. (Telecommunications)		333,753
	11,900	Korea Zinc Co. Ltd. (Mining)		139,562

40     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS EMERGING MARKETS EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
South Korea – (continued)
	11,172	LG Chem Ltd.* (Chemicals)	$	139,759
	2,992	LG Household & Health Care Ltd.* (Food & Beverage)		57,547
	5,380	Pohang Iron & Steel Co. Ltd. (Steel)		380,680
	24,756	Samsung Electronics (Semiconductors)		3,677,592
	25,139	Samsung Fire & Marine Insurance (Insurance)		739,036
	46,610	Samsung Heavy Industries Co. Ltd.* (Multi-Industrial)		138,482
	15,570	Samsung Securities Co. Ltd. (Financial Services)		391,989
	55,930	Shinhan Financial Group Co. Ltd.* (Financial Services)		546,618
	6,500	Shinsegae Department Store Co. (Merchandising)		457,389
	15,000	SK Telecom Co. Ltd. ADR (Telecommunications)		2,638,780
				15,203,937
Taiwan – 12.9%
	220,360	Advanced Semiconductor Engineering, Inc. (Electrical Equipment)		122,529
	97,200	Ambit Microsystems Corp. (Electrical Equipment)		361,720
	240,250	Asustek Computer, Inc. (Computer Hardware)		876,672
	361,000	Au Optronics Corp. (Computer Software)		271,822
	590,302	Bank Sinopac (Financial Services)		255,575
	801,651	Cathay Life Insurance Co. (Insurance)		954,181
	457,000	China Development Industrial Bank (Banks)		314,990
	1,228,510	China Steel Corp. (Steel)		437,610
	197,000	Chinatrust Commercial Bank (Banks)		131,790
	251,000	Compal Electronics, Inc. (Electronic Components)		228,248
	72,640	Compeq Manufacturing Co. Ltd. (Electrical Equipment)		100,976
	199,806	Delta Electronics, Inc. (Electrical Equipment)		295,109
	296,000	Evergreen Marine Corp. (Ship Transportation)		147,443
	557,831	Far Eastern Textile Ltd. (Merchandising)		238,286
	569,600	Formosa Plastic Corp. (Chemicals)		602,097
	1,059,430	Fubon Commercial Bank (Banks)		524,652
	304,270	Hon Hai Precision (Electrical Equipment)		1,176,370
	114,400	Macronix International Co. Ltd. (Semiconductors)		81,170
	325,526	Nan Ya Plastic Corp. (Chemicals)		249,824
	420,000	Polaris Securities Co. Ltd. (Financial Services)		167,854
	101,678	President Chain Store Corp. (Merchandising)		222,319
	199,580	Procomp Informatics Co. Ltd. (Semiconductors)		260,096
	178,250	Quanta Computer, Inc. (Telecommunications)		397,488
	173,100	Ritek Corp. (Electrical Equipment)		189,493
	1,991,139	Taiwan Semiconductor (Semiconductors)		3,690,498
	22,840	United Microelectronics Corp. ADR (Electrical Equipment)		171,072
	1,163,550	United Microelectronics Corp. ADR* (Electrical Equipment)		1,341,132
	285,215	Winbond Electronics Corp. (Electrical Equipment)		149,504
	439,500	Yageo Corp. (Electrical Equipment)		322,020
				14,282,540
Thailand – 3.1%
	42,893	Advanced Info Service Public Co. Ltd. – Alien Market (Telecommunications)		506,055
	471,596	Bangkok Bank Public – Alien Market* (Banks)		518,943
	47,651	BEC World Public – Alien Market (Media)		285,419
	48,570	Delta Electronics (Thailand) Public Co. Ltd. – Alien Market (Electrical Equipment)		253,457
	347,758	Land & Houses Public Co. Ltd. – Alien Market* (Real Estate)		315,606
	829,904	National Finance Public Co. Ltd. – Alien Market* (Financial Services)		197,708
	126,800	PTT Exploration & Production Public – Alien Market (Energy Resources)		336,599
	80,000	Shin Corp. Public Co. Ltd. – Alien Market* (Computer Hardware)		366,648
	31,850	Siam Cement Public – Alien Market* (Construction)		433,579
	319,800	TelecomAsia Corp. Public – Alien Market* (Telecommunications)		114,279
	248,235	Thai Farmers Bank Public Co. Ltd. – Alien Market* (Banks)		125,314
				3,453,607

The accompanying notes are an integral part of these financial statements.      41

 GOLDMAN SACHS EMERGING MARKETS EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Turkey – 1.3%
	9,790,874	Anadolu Efes Biracilik ve Malt Sanayii AS (Food & Beverage)	$	353,758
	3,694,000	Aygaz AS (Electrical Utilities)		62,690
	12,351,189	Eregli Demir ve Celik Fabrikalari TAS Erdemir* (Steel)		128,470
	92,271,307	Hurriyet Gazetecilik ve Matbaacilik AS (Broadcasting)		156,592
	2,550,134	Migros (Merchandising)		161,943
	12,231,000	Tofas Turk Otomobil Fabrikasi AS* (Motor Vehicle)		111,596
	8,014,493	Tupras-Turkiye Petrol Rafinerileri AS (Energy Resources)		187,200
	154,308,000	Turkiye Garanti Bankasi AS (Banks)		230,899
				1,393,148
United Kingdom – 2.5%
	180,008	Anglo American PLC* (Financial Services)		2,595,910
	4,955	Dimension Data Holdings PLC* (Business Services)		8,219
	56,864	Old Mutual PLC* (Financial Services)		114,644
				2,718,773
TOTAL COMMON STOCKS
(Cost $110,086,685)			$	100,505,649
Preferred Stocks – 6.1%
Brazil – 4.9%
	102,210,000	Banco Bradesco SA (Banks)	$	463,035
	5,983,822	Banco Itau SA (Banks)		413,811
	11,000	Brasil Telecom Participacoes SA ADR (Telecommunications)		321,200
	29,506	Companhia de Bebidas das Americas ADR (Food & Beverage)		555,893
	36,800,000	Companhia Energetica de Minas Gerais-CEMIG* (Utilities)		401,415
	35,522	Companhia Vale do Rio Doce (CVRD) (Mining)		717,857
	21,200	Empresa Brasileira de Aeronautica SA ADR (Materials)		553,320
	28,300	Petroleo Brasileiro SA (Energy Resources)		613,157
	47,356	Tele Norte Leste Participacoes SA ADR (Telecommunications)		516,181
	64,259,586	Telesp Celular Participacoes SA (Utilities)		331,613
	81,900	Ultrapar Participacoes SA ADR (Multi-Industry)		573,300
				5,460,782
Russia – 1.2%
	32,026	LUKoil Holding ADR (Energy Resources)		680,553
	45,400	Surgutneftegaz ADR (Energy Resources)		598,372
				1,278,925
TOTAL PREFERRED STOCKS
(Cost $8,012,126)			$	6,739,707

Units
Rights – 0.0%
Thailand – 0.0%
	91,200	TelecomAsia Corp. Public – Alien Market – Rights exp.  4/2002* (Telecommunications)		—
TOTAL RIGHTS
(Cost $0)			$	—
Warrants – 0.0%
Thailand – 0.0%
	53,000	Land & Houses Public Co. Ltd. – Alien Market exp.  05/10/2008* (Financial Services)	$	16,835
	276,100	Siam Commercial Bank Public Co. Ltd. – Alien Market exp.  05/10/2002* (Banks)		13,155
				29,990
TOTAL WARRANTS
(Cost $0)			$	29,990

Principal		Interest			Maturity
Amount		Rate			Date		Value
Short-Term Obligation – 1.6%
State Street Bank & Trust Euro – Time Deposit
$	1,790,000		3.63	%		09/04/200	$	1,790,000
TOTAL SHORT-TERM OBLIGATION
(Cost $1,790,000)							$	1,790,000
TOTAL INVESTMENTS
(Cost $119,888,811)							$	109,065,346
*  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
GDR —Global Depositary Receipt
PDR —Philippines Depositary Receipt

42     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS EMERGING MARKETS EQUITY FUND 

		As a % of
		Total
		Net Assets
	Common and Preferred Stock Industry Classifications†
	Agriculture		0.3	%
	Airlines		0.3
	Alcohol		0.3
	Auto		1.6
	Banks		9.5
	Broadcasting		1.8
	Business Services		0.3
	Chemicals		2.1
	Computer Hardware		1.1
	Computer Software		1.0
	Conglomerates		0.8
	Construction		1.3
	Consumer Cyclicals		1.6
	Consumer Durables		1.9
	Consumer Goods		0.2
	Electrical Equipment		5.8
	Electrical Utilities		3.1
	Electronic Components		0.2
	Energy Resources		5.6
	Entertainment		0.7
	Financial Services		6.9
	Food & Beverage		1.9
	Health		0.2
	Industrial Services		0.3
	Information Services		2.2
	Insurance		2.0
	Internet		0.6
	Leisure		0.2
	Materials		0.5
	Media		0.3
	Medical Products		2.5
	Merchandising		1.0
	Mining		2.0
	Motor Vehicle		0.1
	Multi-Industrial		0.7
	Multi-Industry		1.8
	Nonferrous Metals		1.9
	Paper		0.5
	Pharmaceuticals & Biotechnology		0.2
	Publishing		0.1
	Pulp and Paper		0.4
	Real Estate		0.7
	Semiconductors		7.0
	Ship Transportation		0.7
	Specialty Retail		0.9
	Steel		0.9
	Telecommunication Services		0.2
	Telecommunications		15.3
	Tobacco		3.9
	Utilities		1.7
	TOTAL COMMON AND PREFERRED STOCK		97.1	%
† Industry concentrations greater than one tenth  of one percent are disclosed.

The accompanying notes are an integral part of these financial statements.      43

 GOLDMAN SACHS ASIA GROWTH FUND

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on July 8, 1994 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs Asia Growth Fund. For comparative purposes, the performance of the Fund’s benchmark, the Morgan Stanley Capital International All Country Asia Free ex Japan Index (“MSCI AC Asia Free Index”), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class B, Class C and Institutional Shares will vary from Class A due to differences in fees and loads.

Asia Growth Fund’s Lifetime Performance

Performance of a $10,000 Investment, Distributions Reinvested July 8, 1994 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		Five Years		One Year
Class A (commenced July 8, 1994)
Excluding sales charges		-7.16%		-12.40%		-27.53%
Including sales charges		-7.89%		-13.38%		-31.53%
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges		-13.66%		-12.82%		-27.80%
Including contingent deferred sales charges		-13.82%		-13.17%		-31.41%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		-15.72%		n/a		-27.78%
Including contingent deferred sales charges		-15.72%		n/a		-28.51%
Institutional Class (commenced February 2, 1996)		-11.44%		-11.78%		-26.93%

44

GOLDMAN SACHS ASIA GROWTH FUND 

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 96.4%
Australia – 1.9%
	273,000	Cable & Wireless Optus Ltd.* (Telecommunications)	$	557,045
	51,745	WMC Ltd. (Mining)		227,454
				784,499
China – 5.6%
	438,000	China Mobile Ltd.* (Telecommunications)		1,367,399
	432,000	Huaneng Power International, Inc. Class H (Utilities)		238,163
	2,533,000	PetroChina Co. Ltd. Class H (Energy Resources)		516,362
	682,000	Yanzhou Coal Mining Co. Ltd. Class H (Mining)		205,482
				2,327,406
Hong Kong – 24.5%
	1,016,000	China Overseas Land & Investment Ltd. (Real Estate)		162,827
	147,000	Citic Pacific Ltd. (Multi-Industrial)		326,051
	179,300	CLP Holdings Ltd. (Electrical Utilities)		726,423
	437,500	CNOOC Ltd. (Energy Resources)		434,712
	83,600	Dah Sing Financial Group (Banks)		419,088
	173,000	Esprit Holdings Ltd. (Retail)		192,969
	501,000	Giordano International Ltd. (Specialty Retail)		242,481
	153,800	Hang Seng Bank Ltd. (Banks)		1,720,457
	91,000	Henderson Land Development Co. Ltd. (Real Estate)		415,349
	435,400	Hong Kong and China Gas Co. Ltd. (Energy Resources)		538,689
	176,000	Hong Kong Electric Holdings Ltd. (Electrical Utilities)		666,795
	121,700	Hong Kong Land Holdings Ltd. (Real Estate)		198,371
	213,500	Hutchison Whampoa Ltd. (Multi-Industrial)		1,820,294
	170,000	Sun Hung Kai Properties Ltd. (Real Estate)		1,482,108
	72,000	Swire Pacific Ltd. (Multi-Industrial)		348,937
	235,000	The Wharf (Holdings) Ltd. (Real Estate)		473,031
				10,168,582
India – 10.5%
	319,099	Hindustan Lever Ltd. (Consumer Cyclicals)		1,482,063
	4,000	Infosys Technologies Ltd. (Computer Software)		299,856
	45,010	ITC Ltd. (Tobacco)		687,329
	75,680	Nestle India Ltd. (Food & Beverage)		811,328
	47,647	Reliance Industries Ltd. (Petro Chemicals)		313,619
	108,199	Videsh Sanchar Nigam Ltd. (Telecommunications)		648,918
	4,521	Wipro Ltd. (Computer Software)		142,514
				4,385,627
Indonesia – 3.0%
	106,500	PT Gudang Garam Tbk (Tobacco)		146,606
	233,000	PT Hanjaya Mandala Sampoerna Tbk (Tobacco)		442,996
	134,000	PT Indosat (Persero) Tbk (Telecommunications)		139,859
	409,500	PT Ramayana Lestari Sentosa Tbk (Consumer Durables)		129,377
	1,129,500	PT Telekomunikasi Indonesia (Telecommunications)		375,969
				1,234,807
Malaysia – 8.4%
	50,300	British American Tobacco Malaysia Berhad (Tobacco)		463,289
	174,000	Hong Leong Bank Berhad (Banks)		158,432
	466,200	IOI Corp. Berhad (Agriculture)		449,024
	96,500	Malakoff Berhad (Electrical Utilities)		241,250
	222,200	Malayan Banking Berhad (Banks)		719,226
	64,000	Public Bank Berhad – Alien Market (Banks)		49,179
	58,400	Star Publications Berhad (Publishing)		140,621
	221,000	Telekom Malaysia Berhad (Telecommunications)		622,290
	224,000	Tenaga Nasional Berhad (Electrical Utilities)		636,632
				3,479,943
Philippines – 0.6%
	14,740	Philippine Long Distance Telephone Co. (Telecommunications)		140,174
	1,022,600	SM Prime Holdings (Real Estate)		120,306
				260,480
Singapore – 8.6%
	55,000	City Developments (Real Estate)		159,535
	46,150	DBS Group Holdings Ltd. (Banks)		363,156
	227,000	Keppel Land Ltd. (Real Estate)		246,427
	90,000	Oversea – Chinese Banking Corp. Ltd. (Banks)		568,639
	51,000	Singapore Airlines Ltd. (Airlines)		351,522
	48,000	Singapore Press Holdings Ltd. (Publishing)		545,893
	558,000	Singapore Technologies Engineering Ltd. (Machinery)		814,084
	81,312	United Overseas Bank Ltd. (Banks)		523,087
				3,572,343

The accompanying notes are an integral part of these financial statements.      45

 GOLDMAN SACHS ASIA GROWTH FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
South Korea – 16.1%
	18,307	Housing & Commercial Bank (Banks)	$	406,504
	29,850	Hyundai Motor Co. Ltd. (Auto)		497,111
	54,000	Korea Electric Power Corp. (Electrical Utilities)		956,294
	10,100	Korea Telecom Corp. ADR (Telecommunications)		209,979
	3,860	Korea Telecom Corp. (Telecommunications)		153,917
	3,300	Pohang Iron & Steel Co. Ltd. (Steel)		233,503
	11,290	S-Oil Corp. (Energy Resources)		346,468
	9,670	Samsung Electronics (Semiconductors)		1,436,513
	6,050	Samsung Securities Co., Ltd. (Financial Services)		152,314
	61,710	Shinhan Financial Group Co. Ltd. (Financial Services)		603,108
	5,630	Shinsegae Department Store Co. (Merchandising)		396,169
	7,410	SK Telecom Co. Ltd. ADR (Telecommunications)		1,303,557
				6,695,437
Taiwan – 14.1%
	63,700	Ambit Microsystems Corp. (Electrical Equipment)		237,053
	163,500	Asustek Computer, Inc. (Computer Hardware)		596,612
	347,118	Cathay Life Insurance Co. (Insurance)		413,164
	345,000	China Development Industrial Bank (Banks)		237,793
	53,370	China Steel Corp. (Steel)		19,011
	437,000	Chinatrust Commercial Bank (Banks)		292,346
	101,750	Compal Electronics, Inc. (Electronic Components)		92,527
	16,960	Compeq Manufacturing Co. Ltd. (Electrical Equipment)		23,576
	132,250	Delta Electronics, Inc. (Electrical Equipment)		195,330
	204,700	First Commercial Bank (Banks)		110,857
	105,984	Hon Hai Precision (Electrical Equipment)		409,756
	359,790	Nan Ya Plastic Corp. (Chemicals)		276,120
	171,750	Quanta Computer, Inc. (Computer Hardware)		382,993
	466,000	Taishin International Bank (Banks)		198,384
	843,326	Taiwan Semiconductor (Semiconductors)		1,563,072
	634,450	United Microelectronics Corp. ADR* (Semiconductors)		731,280
	144,210	Winbond Electronics Corp. (Electrical Equipment)		75,592
				5,855,466
Thailand – 3.1%
	33,200	Advanced Info Service Public – Alien Market (Telecommunications)		391,696
	160,500	Bangkok Bank Public – Alien Market* (Banks)		176,614
	37,800	BEC World Public – Alien Market (Media)		226,414
	57,700	PTT Exploration & Production Public – Alien Market (Energy Resources)		153,169
	174,000	Thai Farmers Bank Public Co. Ltd. – Alien Market* (Banks)		87,839
	165,000	Thai Union Frozen Products Public Co. (Food & Beverage)		252,694
				1,288,426
TOTAL COMMON STOCKS
(Cost $42,103,625)			$	40,053,016

Units
Rights – 0.0%
Thailand – 0.0%
	198,411	TelecomAsia Corp. Public – Alien Market – Rights exp.  4/2002* (Telecommunications)		—
TOTAL RIGHTS
(Cost $0)			$	—
TOTAL INVESTMENTS
(Cost $42,103,625)			$	40,053,016
* 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

46     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS ASIA GROWTH FUND 

	As a % of
	Total
	Net Assets
Common Stock Industry Classifications†
Agriculture		1.1	%
Airlines		0.8
Auto		1.2
Banks		14.5
Chemicals		0.7
Computer Hardware		2.4
Computer Software		1.1
Consumer Cyclicals		3.6
Consumer Durables		0.3
Electrical Equipment		2.3
Electrical Utilities		7.8
Electronic Components		0.2
Energy Resources		4.8
Financial Services		1.8
Food & Beverage		2.6
Insurance		1.0
Machinery		2.0
Media		0.5
Merchandising		0.9
Mining		1.0
Multi-Industrial		6.0
Petro Chemicals		0.7
Publishing		1.6
Real Estate		7.8
Retail		0.5
Semiconductors		9.0
Specialty Retail		0.6
Steel		0.6
Telecommunications		14.2
Tobacco		4.2
Utilities		0.6
TOTAL COMMON STOCK		96.4	%
† Industry concentrations greater than one tenth of one percent are disclosed.

The accompanying notes are an integral part of these financial statements.      47

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Statements of Assets and Liabilities

August 31, 2001

		European
		Equity Fund
Assets:
Investment in securities, at value (identified cost $117,513,402, $1,687,248,472, $42,887,765, $289,797,946, $119,888,811 and $42,103,625, respectively)		$	104,222,203
Cash, at value			512,298
Receivables:
	Investment securities sold, at value		314,452
	Dividends and interest, at value		333,808
	Fund shares sold		447,320
	Variation margin, at value(a)		764,535
	Reimbursement from investment adviser		195,180
	Forward foreign currency exchange contracts, at value		114,780
Deferred organization expenses, net			—
Other assets			630
Total assets			106,905,206
Liabilities:
Due to custodian			—
Payables:
	Fund shares repurchased		801,717
	Investment securities purchased, at value		843,103
	Amounts owed to affiliates		147,530
	Forward foreign currency exchange contracts, at value		62,291
Accrued expenses and other liabilities, at value			66,713
Total liabilities			1,921,354
Net Assets:
Paid-in capital			133,373,495
Accumulated undistributed (distributions in excess of) net investment income			(171,163	)
Accumulated net realized loss on investment, futures and foreign currency related transactions			(14,970,218	)
Net unrealized loss on investments, futures and translation of assets and liabilities denominated in foreign currencies			(13,248,262	)
NET ASSETS		$	104,983,852
Net asset value, offering and redemption price per share:(b)
	Class A		$9.31
	Class B		$9.17
	Class C		$9.18
	Institutional		$9.46
	Service		$9.38
Shares outstanding:
	Class A		9,699,156
	Class B		297,306
	Class C		130,138
	Institutional		1,132,725
	Service		177
Total shares outstanding, $.001 par value (unlimited number of shares authorized)			11,259,502

(a)	Includes approximately, $22,000, $2,098,000, $0 and $68,000 for European Equity, International Equity, International Growth Opportunities and Emerging Markets Equity relating to initial margin requirements for futures transactions, respectively.
(b)	Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A Shares of European Equity, International Equity, Japanese Equity, International Growth Opportunities, Emerging Markets Equity, and Asia Growth Funds is $9.85, $16.55, $9.33, $10.38, $7.63 and $8.54, respectively. 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.
(c)	Effective December 29, 2000, the Fund’s name changed from International Small Cap Fund to the International Growth Opportunities Fund.

48     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

International			Japanese			International Growth			Emerging Markets			Asia
Equity Fund			Equity Fund			Opportunities Fund(c)			Equity Fund			Growth Fund
$	1,430,904,618		$	33,638,000		$	241,677,382		$	109,065,346		$	40,053,016
	408,266			27,524			91,617			491,035			—
	548			12,015			6,253,513			822,049			3,043,713
	3,585,007			14,200			308,569			680,676			408,207
	4,229,597			192,029			411,065			12,016			4,766
	318,721			—			279,794			86,083			—
	469,750			86,218			175,659			122,490			110,473
	4,694,687			1,451			—			—			—
	—			6,064			6,832			3,794			—
	5,521			246			413			542			333
	1,444,616,715			33,977,747			249,204,844			111,284,031			43,620,508
	—			—			—			—			1,001,604
	4,216,254			7,623,744			428,463			45,791			598,983
	—			149,929			70,368			458,273			241,709
	2,007,667			49,615			374,882			140,064			71,835
	5,436,524			2,802			—			—			—
	197,866			52,845			88,928			167,553			142,107
	11,858,311			7,878,935			962,641			811,681			2,056,238
	1,809,161,688			52,551,293			385,029,176			158,111,494			134,522,054
	8,063,412			(173,891	)		(895,606	)		(1,169,811	)		(436,904	)
	(120,166,511	)		(17,043,404	)		(87,778,197	)		(35,550,186	)		(90,457,656	)
	(264,300,185	)		(9,235,186	)		(48,113,170	)		(10,919,147	)		(2,063,224	)
$	1,432,758,404		$	26,098,812		$	248,242,203		$	110,472,350		$	41,564,270
$	15.64		$	8.82		$	9.81		$	7.21		$	8.07
$	15.23		$	8.69		$	9.66		$	7.09		$	7.87
$	15.05		$	8.67		$	9.66		$	7.11		$	7.85
$	16.09		$	9.00		$	10.03		$	7.38		$	8.32
$	15.71		$	8.88		$	9.85		$	7.12			—
	68,299,446			2,187,202			16,504,575			4,694,605			4,193,309
	3,219,580			262,374			176,852			211,122			463,236
	1,174,080			258,673			189,067			92,191			128,764
	18,161,842			253,968			8,260,606			10,089,129			366,986
	357,755			180			837			1,088			—
	91,212,703			2,962,397			25,131,937			15,088,135			5,152,295

The accompanying notes are an integral part of these financial statements.      49

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Statements of Operations

For the Year Ended August 31, 2001

		European
		Equity Fund
Investment income:
Dividends(a)		$	2,101,841
Interest			147,351
Total income			2,249,192
Expenses:
Management fees			1,353,560
Distribution and Service fees(b)			630,727
Custodian fees			400,028
Transfer Agent fees(b)			235,791
Registration fees			81,823
Professional fees			45,434
Trustee fees			9,793
Service Share fees			—
Printing fees			84,154
Amortization of deferred organization expenses			—
Other			30,160
Total expenses			2,871,470
Less — expense reductions			(510,612	)
Net expenses			2,360,858
NET INVESTMENT INCOME (LOSS)			(111,666	)
Realized and unrealized gain (loss) on investment, futures, options and foreign currency related transactions:
Net realized gain (loss) from:
	Investment transactions		(12,387,720	)
	Futures transactions		(862,636	)
	Options written		—
	Foreign currency related transactions		(1,380,239	)
Net change in unrealized gain (loss) on:
	Investments		(22,036,850	)
	Futures		16,716
	Translation of assets and liabilities denominated in foreign currencies		79,959
Net realized and unrealized loss on investment, futures, options and foreign currency related transactions			(36,570,770	)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	(36,682,436	)

(a)	For the European Equity, International Equity, Japanese Equity, International Growth Opportunities, Emerging Markets Equity and Asia Growth Funds, foreign taxes withheld on dividends were $298,593, $3,160,455, $66,402, $444,577, $466,117 and $228,822, respectively.
(b)	Class specific Distribution, Service and Transfer Agent fees were as follows:

	Distribution and Service Fees						Transfer Agent Fees
Fund	Class A		Class B		Class C		Class A		Class B		Class C		Institutional		Service
European Equity Fund	$	580,268	$	36,028	$	14,431	$	220,502	$	6,845	$	2,742	$	5,702	$	—
International Equity Fund		5,991,909		635,373		202,282		2,276,926		120,721		38,434		123,302		2,018
Japanese Equity Fund		214,882		35,716		28,613		81,654		6,786		5,437		6,518		—
International Growth Opportunities Fund		1,197,973		21,369		24,602		455,230		4,060		4,674		55,172		3
Emerging Markets Equity Fund		224,629		17,159		7,811		85,359		3,260		1,484		42,266		1
Asia Growth Fund		265,912		47,638		14,607		101,047		9,051		2,775		3,025		—

50     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

International			Japanese			International Growth			Emerging Markets			Asia Growth
Equity Fund			Equity Fund			Opportunities Fund			Equity Fund			Fund
$	22,612,598		$	364,485		$	3,125,526		$	3,314,884		$	1,422,702
	4,499,277			23,995			804,565			150,954			123,164
	27,111,875			388,480			3,930,091			3,465,838			1,545,866
	15,954,500			657,056			4,585,526			1,837,081			669,704
	6,829,564			279,211			1,243,944			249,599			328,157
	1,874,265			163,444			664,234			657,897			337,790
	2,561,401			100,395			519,139			132,370			115,898
	202,008			56,690			71,396			77,924			57,276
	48,508			45,020			47,468			54,927			60,587
	9,793			9,793			9,793			9,793			9,793
	25,229			—			30			16			—
	113,873			85,561			84,662			85,107			89,348
	—			2,270			2,278			2,942			—
	96,360			32,077			37,191			34,454			35,453
	27,715,501			1,431,517			7,265,661			3,142,110			1,704,006
	(685,539	)		(319,939	)		(290,333	)		(381,123	)		(480,416	)
	27,029,962			1,111,578			6,975,328			2,760,987			1,223,590
	81,913			(723,098	)		(3,045,237	)		704,851			322,276
	(102,036,264	)		(16,353,419	)		(84,174,179	)		(32,204,242	)		(17,706,143	)
	(10,278,250	)		(245,880	)		(2,331,342	)		(491,103	)		—
	—			—			—			1,300,500			—
	11,830,118			(276,621	)		(101,582	)		(1,592,258	)		(353,099	)
	(397,747,701	)		(17,897,009	)		(84,341,908	)		(27,549,688	)		(6,072,272	)
	(7,207,266	)		—			(504,809	)		(5,258	)		—
	7,472			3,130			9,955			(32,587	)		10,585
	(505,431,891	)		(34,769,799	)		(171,443,865	)		(60,574,636	)		(24,120,929	)
$	(505,349,978	)	$	(35,492,897	)	$	(174,489,102	)	$	(59,869,785	)	$	(23,798,653	)

The accompanying notes are an integral part of these financial statements.      51

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Statements of Changes in Net Assets

For the Year Ended August 31, 2001

		European
		Equity Fund
From operations:
Net investment income (loss)		$	(111,666	)
Net realized loss from investment, futures, options and foreign currency related transactions			(14,630,595	)
Net change in unrealized loss on investments, futures, options and translation of assets and liabilities denominated in foreign currencies			(21,940,175	)
Net decrease in net assets resulting from operations			(36,682,436	)
Distributions to shareholders:
In excess of net investment income
	Class A Shares		—
	Class B Shares		—
	Class C Shares		—
	Institutional Shares		(58,384	)
	Service Shares		—
From net realized gains on investment, futures and foreign currency transactions
	Class A Shares		(12,387,461	)
	Class B Shares		(497,904	)
	Class C Shares		(194,261	)
	Institutional Shares		(1,482,994	)
	Service Shares		(243	)
Total distributions to shareholders			(14,621,247	)
From share transactions:
Proceeds from sales of shares			152,710,828
Reinvestment of dividends and distributions			13,548,830
Cost of shares repurchased			(170,590,575	)
Net increase (decrease) in net assets resulting from share transactions			(4,330,917	)
TOTAL DECREASE			(55,634,600	)
Net assets:
Beginning of year			160,618,452
End of year		$	104,983,852
Accumulated undistributed (distributions in excess of) net investment income		$	(171,163	)

(a)  Effective December 29, 2000, the Fund’s name changed from International Small Cap Fund to the International Growth Opportunities Fund.

52     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

International			Japanese			International Growth			Emerging Markets			Asia Growth
Equity Fund			Equity Fund			Opportunities Fund(a)			Equity Fund			Fund
$	81,913		$	(723,098	)	$	(3,045,237	)	$	704,851		$	322,276
	(100,484,396	)		(16,875,920	)		(86,607,103	)		(32,987,103	)		(18,059,242	)
	(404,947,495	)		(17,893,879	)		(84,836,762	)		(27,587,533	)		(6,061,687	)
	(505,349,978	)		(35,492,897	)		(174,489,102	)		(59,869,785	)		(23,798,653	)
	—			—			—			—			—
	—			—			—			—			—
	—			—			—			—			—
	—			—			—			—			—
	—			—			—			—			—
	(107,482,261	)		(3,757,369	)		(18,893,287	)		(1,961,833	)		—
	(7,129,351	)		(315,947	)		(170,584	)		(69,834	)		—
	(2,188,241	)		(221,894	)		(186,091	)		(27,341	)		—
	(27,396,225	)		(1,499,910	)		(11,481,155	)		(5,109,850	)		—
	(498,480	)		(169	)		(477	)		(91	)		—
	(144,694,558	)		(5,795,289	)		(30,731,594	)		(7,168,949	)		—
	1,227,497,332			79,822,094			237,227,893			65,863,306			63,674,766
	108,219,651			5,353,700			23,841,672			7,066,600			—
	(1,028,037,833	)		(125,331,988	)		(328,880,560	)		(108,964,932	)		(99,120,038	)
	307,679,150			(40,156,194	)		(67,810,995	)		(36,035,026	)		(35,445,272	)
	(342,365,386	)		(81,444,380	)		(273,031,691	)		(103,073,760	)		(59,243,925	)
	1,775,123,790			107,543,192			521,273,894			213,546,110			100,808,195
$	1,432,758,404		$	26,098,812		$	248,242,203		$	110,472,350		$	41,564,270
$	8,063,412		$	(173,891	)	$	(895,606	)	$	(1,169,811	)	$	(436,904	)

The accompanying notes are an integral part of these financial statements.      53

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Statements of Changes in Net Assets

For the Year Ended August 31, 2000

		European
		Equity Fund
From operations:
Net investment income (loss)		$	68,625
Net realized gain from investment, futures and foreign currency related transactions			13,509,776
Net change in unrealized gain (loss) on investments, futures and translation of assets and liabilities denominated in foreign currencies			4,489,515
Net increase in net assets resulting from operations			18,067,916
Distributions to shareholders:
From net investment income
	Class A Shares		—
	Class B Shares		—
	Class C Shares		—
	Institutional Shares		—
	Service Shares		—
In excess of net investment income
	Class A Shares		—
	Class B Shares		—
	Class C Shares		—
	Institutional Shares		—
	Service Shares		—
From net realized gains on investments, futures and foreign currency transactions
	Class A Shares		(4,552,387	)
	Class B Shares		(85,427	)
	Class C Shares		(18,441	)
	Institutional Shares		(214,659	)
	Service Shares		(105	)
Total distributions to shareholders			(4,871,019	)
From share transactions:
Proceeds from sales of shares			92,017,420
Reinvestment of dividends and distributions			4,698,363
Cost of shares repurchased			(31,390,674	)
Net increase (decrease) in net assets resulting from share transactions			65,325,109
TOTAL INCREASE (DECREASE)			78,522,006
Net assets:
Beginning of year			82,096,446
End of year		$	160,618,452
Accumulated undistributed (distributions in excess of) net investment income		$	(1,170,986	)

(a)  Effective December 29, 2000, the Fund’s name changed from International Small Cap Fund to the International Growth Opportunities Fund.

54     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

International			Japanese			International Growth			Emerging Markets			Asia Growth
Equity Fund			Equity Fund			Opportunities Fund(a)			Equity Fund			Fund
$	(653,334	)	$	(1,029,383	)	$	(1,653,153	)	$	(239,859	)	$	(461,855	)
	166,959,834			10,172,647			34,677,003			34,348,425			21,496,471
	1,964,374			(5,525,712	)		16,849,163			(4,728,402	)		(17,714,666	)
	168,270,874			3,617,552			49,873,013			29,380,164			3,319,950
	(4,137,059	)		—			—			—			—
	(213,456	)		—			—			—			—
	(50,889	)		—			—			—			—
	(1,171,372	)		—			—			—			—
	(16,685	)		—			—			—			—
	(9,786,740	)		(473,037	)		—			—			—
	(504,956	)		(63,355	)		—			—			—
	(120,385	)		(65,248	)		—			—			—
	(2,771,030	)		(411,232	)		—			—			—
	(39,469	)		(23	)		—			—			—
	(105,741,385	)		(3,934,010	)		(3,818,699	)		—			—
	(7,678,106	)		(595,331	)		(23,470	)		—			—
	(1,511,693	)		(521,995	)		(31,640	)		—			—
	(22,154,888	)		(2,840,673	)		(3,219,751	)		—			—
	(403,458	)		(259	)		(79	)		—			—
	(156,301,571	)		(8,905,163	)		(7,093,639	)		—			—
	962,871,083			103,614,398			421,373,628			106,627,300			144,806,450
	121,561,009			8,358,222			4,607,275			—			—
	(529,098,512	)		(63,935,353	)		(83,439,939	)		(98,802,301	)		(153,488,825	)
	555,333,580			48,037,267			342,540,964			7,824,999			(8,682,375	)
	567,302,883			42,749,656			385,320,338			37,205,163			(5,362,425	)
	1,207,820,907			64,793,536			135,953,556			176,340,947			106,170,620
$	1,775,123,790		$	107,543,192		$	521,273,894		$	213,546,110		$	100,808,195
$	(8,940,186	)	$	(1,052,384	)	$	—		$	(321,626	)	$	(372,165	)

The accompanying notes are an integral part of these financial statements.      55

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Notes to Financial Statements

August 31, 2001

1.  ORGANIZATION

Goldman Sachs Trust (the “Trust”) is a Delaware business trust registered under the Investment Company Act of 1940 (as amended) as an open-end management investment company. The Trust includes the Goldman Sachs European Equity, International Equity, Japanese Equity, International Growth Opportunities (formerly International Small Cap Fund), Emerging Markets Equity and Asia Growth Funds (collectively the “Funds” or individually a “Fund”). Each Fund is a diversified portfolio offering five classes of shares — Class A, Class B, Class C, Institutional and Service (Service Shares of Asia Growth Fund have not commenced operations).

2.  SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies consistently followed by the Funds. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.

A.  Investment Valuation — Investments in securities traded on a U.S. or foreign securities exchange or the NASDAQ system are valued daily at their last sale price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date or, if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available are valued at fair value using methods approved by the Board of Trustees of the Trust.

     Investing in emerging markets may involve special risks and considerations not typically associated with investing in the United States. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls, delayed settlements, and their prices may be more volatile than those of comparable securities in the United States.

B.  Security Transactions and Investment Income — Security transactions are recorded as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign withholding taxes where applicable. Dividends for which the Funds have the choice to receive either cash or stock are recognized as investment income in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned. It is the Funds’ policy, where necessary, to accrue for estimated capital gains taxes on appreciated foreign securities.

     Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily, to each class of shares of the Funds’ based upon the relative proportion of net assets of each class.

C.  Federal Taxes — It is the Funds’ policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable income and capital gains to its shareholders. Accordingly, no federal tax provision is required. Income and capital gains distributions, if any, are declared and paid annually.

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GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

     The Funds had approximately the following amounts of capital loss carryforwards for U.S. Federal tax purposes at August 31, 2001 (the Funds’ tax year end). These amounts are available to be carried forward to offset future capital gains to the extent permitted by applicable laws or regulations.

Fund	Amount		Years of Expiration
International Equity	$	4,358,000		2009
International Growth Opportunities		4,770,000		2009
Emerging Markets Equity		584,000		2009
Asia Growth		75,208,000		2005 - 2009

     The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of each Fund’s distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist.

     At August 31, 2001, the aggregate cost of the Funds’ portfolio securities, gross unrealized gain on investments and gross unrealized loss on investments for federal income tax purposes are as follows:

								Net
			Gross		Gross			Unrealized
Fund	Tax Cost		Unrealized Gain		Unrealized Loss			Gain (Loss)
European Equity	$	125,587,316	$	3,339,656	$	(24,704,769	)	$	(21,365,113	)
International Equity		1,697,205,147		46,364,201		(312,664,730	)		(266,300,529	)
Japanese Equity		45,623,477		655,213		(12,640,690	)		(11,985,477	)
International Growth Opportunities		294,017,260		14,798,759		(67,138,637	)		(52,339,878	)
Emerging Markets Equity		131,867,754		5,692,306		(28,494,714	)		(22,802,408	)
Asia Growth		44,458,350		1,422,803		(5,828,137	)		(4,405,334	)

D.  Expenses — Expenses incurred by the Trust which do not specifically relate 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 their respective Distribution and Service Plans. Shareholders of Service Shares bear all expenses and fees paid to service organizations. Each class of shares separately bears its respective class-specific Transfer Agency fees.

E.  Deferred Organization Expenses — Organization-related costs are amortized on a straight-line basis over a period of five years.

F.  Foreign Currency Translations — The books and records of each Fund are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based on current exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based on currency exchange rates prevailing on the respective dates of such transactions.

     Net realized and unrealized gain (loss) on foreign currency transactions will represent: (i) foreign exchange gains and losses from the sale and holdings of foreign currencies; (ii) 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.

57

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

G.  Derivative Financial Instruments — The Funds may utilize derivative financial instruments such as structured notes and equity swaps. Such instruments are used by the Funds as a means of investing in a particular market or increasing the return on the Funds’ investments or both. The value of the principal of and/or interest on such securities is determined by reference to changes in the value of the financial indicators including, but not limited to indices, currencies or interest rates. These financial instruments may subject the Funds to a greater degree of market or counterparty risk than other types of securities.

H.  Segregation Transactions — The Funds may enter into certain derivative transactions to seek to increase total returns. Forward foreign currency exchange contracts, futures contracts, written options, mortgage dollar rolls, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Funds are 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 International (“GSAMI”), an affiliate of Goldman, Sachs & Co. (“Goldman Sachs”), serves as the investment adviser to the Funds. Under the Agreement, GSAMI, subject to the general supervision of the Trust’s Board of Trustees, manages the Funds’ portfolios. As compensation for the services rendered under the Agreement, the assumption of the expenses related thereto and administering the Funds’ business affairs, including providing facilities, GSAMI is entitled to a fee, computed daily and payable monthly, at an annual rate equal to the average daily net assets of each Fund in the table below.

     The investment adviser has voluntarily agreed to limit certain “Other Expenses” (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, based on the average daily net assets of the Funds as follows:

	Management			Expense
Fund	Fee			Limitation
European Equity		1.00	%		0.10	%
International Equity		1.00			0.10
Japanese Equity		1.00			0.11
International Growth Opportunities		1.20			0.16
Emerging Markets Equity		1.20			0.35
Asia Growth		1.00			0.16

     The Trust, on behalf of each Fund, has adopted Distribution and Service Plans. Under the Distribution and Service Plans, Goldman Sachs and/or authorized dealers are entitled to a monthly fee from the Funds for distribution and shareholder maintenance services equal, on an annual basis, to 0.50%, 1.00% and 1.00% of each 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 Funds 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 Funds that it has retained approximately $358,000, $1,599,000, $114,000, $860,000, $101,000 and $20,000 for the year ended August 31, 2001, for the European Equity, International Equity, Japanese Equity, International Growth Opportunities, Emerging Markets Equity and Asia Growth Funds, respectively.

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GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

3.  AGREEMENTS (continued)

     Goldman Sachs also serves as the Transfer Agent of the Funds for a fee. Fees charged for such transfer agency services are calculated daily and payable 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. Goldman Sachs has voluntarily agreed to waive Transfer Agent fees of 0.04% for the period September 1, 2000 to August 31, 2001 for the Emerging Markets Equity Fund Service Class.

     The Trust, on behalf of each Fund, has adopted a Service Plan. This Plan allows for Service Shares to compensate service organizations for providing varying levels of account administration and shareholder liaison services to their customers who are beneficial owners of such shares. The Service Plan provides for compensation to the service organizations in an amount up to 0.50% (on an annualized basis), of the average daily net asset value of the Service Shares. Goldman Sachs has voluntarily agreed to waive the Service Share fee of 0.50% for the period September 1, 2000 to August 31, 2001 for the Emerging Markets Equity Fund Service Class.

     For the year ended August 31, 2001, the Funds’ adviser has voluntarily agreed to reimburse other expenses. In addition, the Funds have entered into certain offset arrangements with the custodian resulting in a reduction in the Funds’ expenses. These expense reductions were as follows (in thousands):

			Custody		Total Expense
Fund	Reimbursement		Credit		Reduction
European Equity	$	456	$	55	$	511
International Equity		677		9		686
Japanese Equity		320		—		320
International Growth Opportunities		290		—		290
Emerging Markets Equity		366		15		381
Asia Growth		474		6		480

     As of August 31, 2001, the amounts owed to affiliates were as follows (in thousands):

	Management		Distribution and		Transfer
Fund	Fees		Service Fees		Agent Fees		Total
European Equity	$	90	$	42	$	16	$	148
International Equity		1,272		534		202		2,008
Japanese Equity		31		14		5		50
International Growth Opportunities		268		76		31		375
Emerging Markets Equity		115		17		8		140
Asia Growth		45		20		7		72

59

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS

The cost of purchases and proceeds of sales and maturities of securities (excluding short-term investments, futures and options) for the year ended August 31, 2001, were as follows:

Fund	Purchases		Sales and Maturities
European Equity	$	143,611,401	$	152,963,511
International Equity		1,123,402,509		947,977,503
Japanese Equity		46,882,755		82,523,302
International Growth Opportunities		233,471,970		306,459,272
Emerging Markets Equity		206,621,062		250,156,713
Asia Growth		198,492,424		277,819,976

     For the year ended August 31, 2001, Goldman Sachs earned approximately $9,000, $105,000, $26,000, $36,000, $50,000 and $121,000 of brokerage commissions from portfolio transactions, including futures transactions executed on behalf of the European Equity, International Equity, Japanese Equity, International Growth Opportunities, Emerging Markets Equity and Asia Growth Funds, respectively.

Forward Foreign Currency Exchange Contracts — The Funds may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Funds 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 Funds’ financial statements. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.

     At August 31, 2001, the European Equity Fund had outstanding forward foreign exchange contracts, both to purchase and sell foreign currencies as follows:

					Unrealized
Open Forward Foreign Currency	Aggregate
Purchase Contracts	Face Value		Current Value		Gain		Loss
Euro expiring 10/24/2001	$	640,705	$	652,873	$	12,168	$	—
					Unrealized
Open Forward Foreign Currency	Aggregate
Sales Contracts	Face Value		Current Value		Gain		Loss
Euro expiring 10/24/2001	$	650,874	$	652,873	$	—	$	1,999
					Unrealized
Open Forward Foreign Currency	Purchase		Sale
Cross Contracts (Purchase/Sale)	Current Value		Current Value		Gain		Loss
Euro/ Great British Pound expiring 10/24/2001	$	2,718,207	$	2,804,239	$	86,032	$	—
Great British Pound/ Euro expiring 10/24/2001		2,778,499		2,718,207		—		60,292

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GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

					Unrealized
Open Forward Foreign Currency	Purchase		Sale
Cross Contracts (Purchase/Sale)	Current Value		Current Value		Gain		Loss
Euro/ Great British Pound expiring 10/24/2001	$	1,309,379	$	1,321,148	$	11,769	$	—
Great British Pound/ Euro expiring 10/24/2001		1,321,148		1,325,959		4,811		—
TOTAL OPEN FORWARD FOREIGN CURRENCY CROSS CONTRACTS (PURCHASE/SALE)	$	8,127,233	$	8,169,553	$	102,612	$	60,292

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 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

     At August 31, 2001, the International Equity Fund had outstanding forward foreign exchange contracts, both to purchase and sell foreign currencies as follows:

						Unrealized
Open Forward Foreign Currency		Aggregate
Purchase Contracts		Face Value		Current Value		Gain		Loss
Australian Dollar expiring 10/18/2001		$	17,518,486	$	18,138,580	$	620,094	$	—
	expiring 10/18/2001		3,267,891		3,237,238		—		30,653
	expiring 10/24/2001		19,136,334		19,464,103		327,769		—
Danish Krone expiring 10/26/2001			13,895,135		14,527,815		632,680		—
Euro expiring 9/20/2001			57,610,854		57,278,883		—		331,971
	expiring 10/24/2001		19,181,232		19,437,289		256,057		—
	expiring 10/24/2001		18,805,931		18,650,547		—		155,384
Great British Pound expiring 9/13/2001			17,414,402		17,753,018		338,616		—
Hong Kong Dollar
	expiring 9/10/2001		8,790,618		8,789,642		—		976
Japanese Yen
	expiring 9/28/2001		17,665,396		17,842,341		176,945		—
Norwegian Krone
	expiring 11/30/2001		6,185,549		6,212,072		26,523		—
New Zealand Dollar
	expiring 11/16/2001		2,338,006		2,397,612		59,606		—
Singapore Dollar
	expiring 10/18/2001		4,769,892		5,019,004		249,112		—
TOTAL OPEN FORWARD FOREIGN CURRENCY PURCHASE CONTRACTS		$	206,579,726	$	208,748,144	$	2,687,402	$	518,984

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GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

						Unrealized
Open Forward Foreign Currency		Aggregate
Sale Contracts		Face Value		Current Value		Gain		Loss
Great British Pound
	expiring 9/13/2001	$	23,011,470	$	23,631,016	$	—	$	619,546
Hong Kong Dollar
	expiring 9/10/2001		4,847,840		4,848,096		—		256
	expiring 11/29/2001		38,856,921		38,870,103		—		13,182
Japanese Yen
	expiring 9/28/2001		9,600,602		9,712,616		—		112,014
	expiring 10/24/2001		19,136,334		20,033,331		—		896,997
Singapore Dollar
	expiring 10/18/2001		937,085		977,831		—		40,746
Swedish Krona
	expiring 10/11/2001		25,717,243		27,148,623		—		1,431,380
Swiss Franc
	expiring 11/15/2001		17,152,355		17,300,290		—		147,935
	expiring 11/15/2001		4,105,795		4,084,781		21,014
TOTAL OPEN FORWARD FOREIGN CURRENCY SALE CONTRACTS		$	143,365,645	$	146,606,687	$	21,014	$	3,262,056

					Unrealized
Open Forward Foreign Currency	Purchase		Sale
Cross Contracts (Purchase/Sale)	Current Value		Current Value		Gain		Loss
Euro/ Great British Pound expiring 10/24/2001	$	37,360,030	$	38,532,873	$	1,172,843	$	—
Great British Pound/ Euro expiring 10/24/2001		38,185,887		37,360,030		—		825,857
Euro/ Swedish Krona expiring 10/24/2001		19,413,704		19,279,063		—		134,641
Swedish Krona/ Euro expiring 10/24/2001		19,065,656		19,413,704		348,048		—

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 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

					Unrealized
Open Forward Foreign Currency	Purchase		Sale
Cross Contracts (Purchase/Sale)	Current Value		Current Value		Gain		Loss
Euro/ Swedish Krona expiring 10/24/2001	$	19,695,169	$	19,247,066	$	—	$	448,103
Swedish Krona/ Euro expiring 10/24/2001		19,247,066		19,065,656		—		181,410
Euro/ Norwegian Krone expiring 10/24/2001		18,607,349		18,835,334		227,985		—
Norwegian Krone/Euro expiring 10/24/2001		18,835,334		18,769,861		—		65,473
Euro/ Great British Pound expiring 10/24/2001		18,748,094		18,916,611		168,517		—
Great British Pound/ Euro expiring 10/24/2001		18,916,611		18,985,489		68,878		—
TOTAL OPEN FORWARD FOREIGN CURRENCY CROSS CONTRACTS (PURCHASE/ SALE)	$	228,074,900	$	228,405,687	$	1,986,271	$	1,655,484

     At August 31, 2001, the Japanese Equity Fund had outstanding forward foreign exchange contracts, both to purchase and sell foreign currencies as follows:

					Unrealized
Open Forward Foreign Currency	Aggregate
Purchase Contracts	Face Value		Current Value		Gain		Loss
Japanese Yen expiring 9/28/2001	$	191,410	$	192,861	$	1,451	$	—

					Unrealized
Open Forward Foreign Currency	Aggregate
Sales Contracts	Face Value		Current Value		Gain		Loss
Japanese Yen expiring 9/28/2001	$	191,410	$	194,212	$	—	$	2,802

The contractual amounts of forward foreign currency exchange contracts do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. At August 31, 2001, the Fund had sufficient cash and securities to cover any commitments under these contracts.

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GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

Futures Contracts — The Funds 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 Funds are required to deposit with a broker or the Funds’ custodian bank, an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Funds, depending on the fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Funds realize a gain or loss which is reported in the Statement of Operations.

     The use of futures contracts involve, to varying degrees, elements of market risk which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contract may not directly correlate with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Funds’ hedging strategies and potentially result in a loss. At August 31, 2001, open futures contracts were as follows:

		Number of
		Contracts		Settlement	Market		Unrealized
Fund	Type	Long		Month	Value		Gain (Loss)
European Equity	FTSE 100 Index		2	September 2001		$155,121		$(3,610	)
	DJ EUR ER STX 50 Index		6	September 2001		204,275		(7,582	)
						$359,396		$(11,192	)
International Equity	TOPIX Index		442	September 2001		$40,762,201		$(7,240,157	)
Emerging Markets Equity	SGX Taiwan Index		14	September 2001		$292,740		$10,780
	Hang Seng Index		4	September 2001		284,319		(5,129	)
	DJ EURO VGM1		8	September 2001		272,366		(10,909	)
						$849,425		$(5,258	)

Option Accounting Principles — When the Funds write call or put options, an amount equal to the premium received is recorded as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When a written option expires on its stipulated expiration date or the Funds enter into a closing purchase transaction, the Funds realize a gain or loss without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. When a written call option is exercised, the Funds realize a gain or loss from the sale of the underlying security, and the proceeds of the sale are increased by the premium originally received. When a written put option is exercised, the amount of the premium originally received will reduce the cost of the security which the Funds purchase 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 Funds, the premium paid is recorded as an investment and subsequently marked-to-market to reflect the current market value of the option. If an option which the Funds have purchased expires on the stipulated expiration date, the Funds will realize a loss in the amount of the cost of the option. If the Funds enter into a closing sale transaction, the Funds will realize a gain or loss, depending on whether the sale proceeds for the closing sale transaction are greater or less than the cost of the option. If the Funds exercise a purchased put option, the Funds 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 Funds exercise a purchased call option, the cost of the security which the Funds purchase upon exercise will be increased by the premium originally paid.

65

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

     For the year ended August 31, 2001, written call option transactions in the Emerging Markets Equity Fund were as follows:

	Number of			Premium
Written Options	Contracts			Received
Options outstanding at August 31, 2000:		—		$	—
Options Written:		43,383			1,300,500
Options Exercised:		(43,383	)		(1,300,500	)
Options outstanding at August 31, 2001:		—		$	—

5.  LINE OF CREDIT FACILITY

The Funds participate in a $350,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, each Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facility also requires a fee to be paid by the Funds based on the amount of the commitment which has not been utilized. During the year ended August 31, 2001, the Funds did not have any borrowings under this facility.

6.  OTHER MATTERS

As of August 31, 2001 the following Goldman Sachs Asset Allocation Portfolios were beneficial owners of the Emerging Markets Equity Fund (as a percentage of outstanding shares) as follows:

	Goldman Sachs			Goldman Sachs			Goldman Sachs
	Growth Strategy			Growth &			Aggressive Growth
Fund	Portfolio			Income Strategy			Strategy Portfolio
Emerging Markets Equity		10	%		9	%		7	%

7.  CERTAIN RECLASSIFICATIONS

In accordance with AICPA Statement of Position 93-2, certain reclassifications have been recorded to the Fund’s accounts. These reclassifications have no impact on the net asset value of the Funds and are designed to present the Funds’ capital accounts on a tax basis. Reclassifications result primarily from the difference in the tax treatment of foreign currency, net operating losses and organization costs.

							Accumulated
				Accumulated			undistributed
				net realized			net investment
Fund	Paid-in Capital			gain (loss)			income (loss)
European Equity	$	(1,645,417	)	$	475,544		$	1,169,873
International Equity		36,977			(16,958,662	)		16,921,685
Japanese Equity		(1,758,025	)		156,434			1,601,591
International Growth Opportunities		(2,224,247	)		74,616			2,149,631
Emerging Markets Equity		31,681			1,521,355			(1,553,036	)
Asia Growth		33,916			353,099			(387,015	)

66

GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

Goldman Sachs Trust — International Equity Funds — Tax Information (Unaudited)

Pursuant to Section 852 of the Internal Revenue Code, European Equity, International Equity, Japanese Equity, International Growth Opportunities and Emerging Markets Equity Funds designate $8,118,283, $85,693,091, $4,929,925, $18,343,005 and $7,119,421, respectively, as capital gains dividends for the year ended August 31, 2001.

67

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

8.  SUMMARY OF SHARE TRANSACTIONS

Share activity for the year ended August 31, 2001 is as follows:

	European Equity Fund						International Equity Fund
	Shares			Dollars			Shares			Dollars
Class A Shares
Shares sold		11,916,783		$	135,041,917			54,677,956		$	1,013,456,692
Reinvestment of dividends and distributions		996,852			11,433,889			4,049,187			79,161,429
Shares repurchased		(13,345,697	)		(152,854,223	)		(47,386,314	)		(878,182,316	)
		(432,062	)		(6,378,417	)		11,340,829			214,435,805
Class B Shares
Shares sold		66,854			777,170			278,167			5,338,561
Reinvestment of dividends and distributions		41,551			470,771			334,779			6,394,293
Shares repurchased		(142,478	)		(1,548,017	)		(863,169	)		(15,736,011	)
		(34,073	)		(300,076	)		(250,223	)		(4,003,157	)
Class C Shares
Shares sold		219,470			2,374,275			703,606			13,060,435
Reinvestment of dividends and distributions		11,823			134,076			83,216			1,570,911
Shares repurchased		(209,147	)		(2,253,045	)		(575,260	)		(10,562,271	)
		22,146			255,306			211,562			4,069,075
Institutional Shares
Shares sold		1,341,152			14,517,466			9,926,539			190,599,632
Reinvestment of dividends and distributions		130,836			1,509,850			1,030,182			20,634,541
Shares repurchased		(1,384,611	)		(13,935,290	)		(6,307,346	)		(121,932,035	)
		87,377			2,092,026			4,649,375			89,302,138
Service Shares
Shares sold		—			—			263,910			5,042,012
Reinvestment of dividends and distributions		21			244			23,368			458,477
Shares repurchased		—			—			(89,705	)		(1,625,200	)
		21			244			197,573			3,875,289
NET INCREASE (DECREASE)		(356,591	)	$	(4,330,917	)		16,149,116		$	307,679,150

(a)  As of December 29, 2000, the Fund’s name changed from the International Small Cap Fund to the International Growth Opportunities Fund.

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GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

						International Growth						Emerging Markets
Japanese Equity Fund						Opportunities Fund(a)						Equity Fund						Asia Growth Fund
Shares			Dollars			Shares			Dollars			Shares			Dollars			Shares			Dollars
	4,715,482		$	58,443,030			15,844,821		$	194,314,262			2,759,747		$	23,849,771			5,057,683		$	46,307,071
	275,948			3,496,273			1,016,444			12,451,437			221,899			1,863,953			—			—
	(7,227,471	)		(86,302,936	)		(20,687,725	)		(243,513,103	)		(4,223,677	)		(35,559,590	)		(8,610,749	)		(79,709,301	)
	(2,236,041	)		(24,363,633	)		(3,826,460	)		(36,747,404	)		(1,242,031	)		(9,845,866	)		(3,553,066	)		(33,402,230	)
	24,001			286,536			48,410			602,588			56,867			480,939			39,275			372,280
	22,574			282,858			12,046			145,877			8,076			67,030			—			—
	(154,279	)		(1,906,442	)		(60,548	)		(726,247	)		(57,819	)		(482,349	)		(203,572	)		(1,848,790	)
	(107,704	)		(1,337,048	)		(92	)		22,218			7,124			65,620			(164,297	)		(1,476,510	)
	137,648			1,453,875			284,587			3,270,491			29,451			246,484			155,689			1,366,465
	16,071			200,714			13,470			163,120			3,086			25,679			—			—
	(167,691	)		(2,026,324	)		(338,916	)		(3,975,306	)		(61,708	)		(531,730	)		(235,033	)		(2,074,090	)
	(13,972	)		(371,735	)		(40,859	)		(541,695	)		(29,171	)		(259,567	)		(79,344	)		(707,625	)
	1,603,131			19,638,653			3,013,871			39,032,707			4,893,404			41,279,117			1,723,311			15,628,950
	106,819			1,373,686			887,881			11,080,761			596,945			5,109,847			—			—
	(3,195,891	)		(35,096,286	)		(7,070,646	)		(80,665,904	)		(8,633,811	)		(72,391,172	)		(1,815,257	)		(15,487,857	)
	(1,485,941	)		(14,083,947	)		(3,168,894	)		(30,552,436	)		(3,143,462	)		(26,002,208	)		(91,946	)		141,093
	—			—			643			7,845			926			6,995			—			—
	13			169			38			477			11			91			—			—
	—			—			—			—			(12	)		(91	)		—			—
	13			169			681			8,322			925			6,995			—			—
	(3,843,645	)	$	(40,156,194	)		(7,035,624	)	$	(67,810,995	)		(4,406,615	)	$	(36,035,026	)		(3,888,653	)	$	(35,445,272	)

69

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

8.  SUMMARY OF SHARE TRANSACTIONS (continued)

Share activity for the year ended August 31, 2000 is as follows:

	European Equity Fund						International Equity Fund
	Shares			Dollars			Shares			Dollars
Class A Shares
Shares sold		5,326,777		$	74,566,934			29,637,438		$	727,913,986
Reinvestment of dividends and distributions		337,798			4,394,755			4,008,202			93,992,338
Shares repurchased		(1,904,482	)		(26,514,624	)		(17,502,173	)		(431,597,850	)
		3,760,093			52,447,065			16,143,467			390,308,474
Class B Shares
Shares sold		312,710			4,322,812			596,787			14,423,566
Reinvestment of dividends and distributions		6,038			78,135			335,760			7,745,988
Shares repurchased		(62,406	)		(846,347	)		(484,425	)		(11,699,142	)
		256,342			3,554,600			448,122			10,470,412
Class C Shares
Shares sold		96,303			1,362,429			1,503,847			35,487,591
Reinvestment of dividends and distributions		924			11,976			52,340			1,194,420
Shares repurchased		(22,323	)		(291,955	)		(1,092,313	)		(25,780,443	)
		74,904			1,082,450			463,874			10,901,568
Institutional Shares
Shares sold		824,255			11,763,455			7,389,250			183,681,326
Reinvestment of dividends and distributions		16,264			213,392			763,388			18,168,651
Shares repurchased		(299,728	)		(3,735,818	)		(2,327,895	)		(58,028,723	)
		540,791			8,241,029			5,824,743			143,821,254
Service Shares
Shares sold		148			1,790			55,114			1,364,614
Reinvestment of dividends and distributions		8			105			19,583			459,612
Shares repurchased		(160	)		(1,930	)		(80,974	)		(1,992,354	)
		(4	)		(35	)		(6,277	)		(168,128	)
NET INCREASE (DECREASE)		4,632,126		$	65,325,109			22,873,929		$	555,333,580

(a)  As of December 29, 2000, the Fund’s name changed from the International Small Cap Fund to the International Growth Opportunities Fund.

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GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS 

						International Growth						Emerging Markets
Japanese Equity Fund						Opportunities Fund(a)						Equity Fund						Asia Growth Fund
Shares			Dollars			Shares			Dollars			Shares			Dollars			Shares			Dollars
	4,738,629		$	79,542,711			19,003,047		$	297,708,611			5,026,648		$	54,984,525			11,913,197		$	138,502,220
	251,265			4,158,443			157,580			2,229,751			—			—			—			—
	(2,677,761	)		(44,672,392	)		(4,075,523	)		(64,277,773	)		(6,183,012	)		(67,304,757	)		(11,775,948	)		(138,970,536	)
	2,312,133			39,028,762			15,085,104			235,660,589			(1,156,364	)		(12,320,232	)		137,249			(468,316	)
	256,898			4,363,660			204,200			3,281,798			177,799			2,059,925			202,864			2,476,344
	37,057			608,848			1,259			17,723			—			—			—			—
	(185,312	)		(3,068,196	)		(51,476	)		(813,483	)		(79,346	)		(873,521	)		(242,422	)		(2,884,327	)
	108,643			1,904,312			153,983			2,486,038			98,453			1,186,404			(39,558	)		(407,983	)
	184,775			3,116,549			654,778			10,258,693			83,030			978,614			231,312			2,696,102
	32,401			532,028			2,170			30,550			—			—			—			—
	(166,325	)		(2,745,926	)		(458,758	)		(7,319,550	)		(80,149	)		(857,557	)		(233,490	)		(2,757,642	)
	50,851			902,651			198,190			2,969,693			2,881			121,057			(2,178	)		(61,540	)
	984,742			16,591,478			7,042,187			110,124,526			4,246,307			48,602,783			88,366			1,131,784
	183,481			3,058,621			162,879			2,329,172			—			—			—			—
	(816,713	)		(13,448,640	)		(703,368	)		(11,028,965	)		(2,606,818	)		(29,764,998	)		(729,131	)		(8,876,320	)
	351,510			6,201,459			6,501,698			101,424,733			1,639,489			18,837,785			(640,765	)		(7,744,536	)
	—			—			—			—			163			1,453			—			—
	17			282			6			79			—			—			—			—
	(11	)		(199	)		(11	)		(168	)		(166	)		(1,468	)		—			—
	6			83			(5	)		(89	)		(3	)		(15	)		—			—
	2,823,143		$	48,037,267			21,938,970		$	342,540,964			584,456		$	7,824,999			(545,252	)	$	(8,682,375	)

71

 GOLDMAN SACHS EUROPEAN EQUITY FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment operations									Distributions to shareholders
	Net asset		Net											In excess
	value,		investment			Net realized			Total from			From net		of			From net
	beginning		income			and unrealized			investment			investment		investment			realized			Total
	of period		(loss)			gain (loss)			operations			income		income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	13.82	$	(0.02	) (c)	$	(2.93	)	$	(2.95	)	$	—	$	—		$	(1.56	)	$	(1.56	)
2001 - Class B Shares		13.69		(0.07	) (c)		(2.89	)		(2.96	)		—		—			(1.56	)		(1.56	)
2001 - Class C Shares		13.72		(0.07	) (c)		(2.91	)		(2.98	)		—		—			(1.56	)		(1.56	)
2001 - Institutional Shares		14.00		0.08	(c)		(3.00	)		(2.92	)		—		(0.06	)		(1.56	)		(1.62	)
2001 - Service Shares		13.86		0.02	(c)		(2.94	)		(2.92	)		—		—			(1.56	)		(1.56	)
2000 - Class A Shares		11.75		—	(c)		2.78			2.78			—		—			(0.71	)		(0.71	)
2000 - Class B Shares		11.71		(0.04	) (c)		2.73			2.69			—		—			(0.71	)		(0.71	)
2000 - Class C Shares		11.72		(0.04	) (c)		2.75			2.71			—		—			(0.71	)		(0.71	)
2000 - Institutional Shares		11.82		0.10	(c)		2.79			2.89			—		—			(0.71	)		(0.71	)
2000 - Service Shares		11.76		0.01	(c)		2.80			2.81			—		—			(0.71	)		(0.71	)
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares		12.20		0.05			(0.50	)		(0.45	)		—		—			—			—
1999 - Class B Shares		12.19		0.03			(0.51	)		(0.48	)		—		—			—			—
1999 - Class C Shares		12.20		0.04			(0.52	)		(0.48	)		—		—			—			—
1999 - Institutional Shares		12.23		0.18			(0.59	)		(0.41	)		—		—			—			—
1999 - Service Shares		12.20		0.08			(0.52	)		(0.44	)		—		—			—			—
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares (commenced October 1, 1998)		10.00		(0.03	)		2.23			2.20			—		—			—			—
1999 - Class B Shares (commenced October 1, 1998)		10.00		(0.02	)		2.21			2.19			—		—			—			—
1999 - Class C Shares (commenced October 1, 1998)		10.00		(0.01	)		2.21			2.20			—		—			—			—
1999 - Institutional Shares (commenced October 1, 1998)		10.00		(0.01	)		2.24			2.23			—		—			—			—
1999 - Service Shares (commenced October 1, 1998)		10.00		(0.03	)		2.23			2.20			—		—			—			—

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

The accompanying notes are an integral part of these financial statements.

72

GOLDMAN SACHS EUROPEAN EQUITY FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income (loss) to			expenses to			income (loss) to			Portfolio
value, end		Total			period		to average			average			average			average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	9.31		(23.47	)%	$	90,347		1.79	%		(0.16	)%		2.17	%		(0.54	)%		110	%
	9.17		(23.80	)		2,727		2.29			(0.63	)		2.67			(1.01	)		110
	9.18		(23.89	)		1,195		2.29			(0.64	)		2.67			(1.02	)		110
	9.46		(22.94	)		10,713		1.14			0.71			1.52			0.33			110
	9.38		(23.16	)		2		1.64			0.14			2.02			(0.24	)		110
	13.82		24.04			139,966		1.79			0.02			2.17			(0.36	)		98
	13.69		23.32			4,538		2.29			(0.27	)		2.67			(0.65	)		98
	13.72		23.48			1,482		2.29			(0.26	)		2.67			(0.64	)		98
	14.00		24.85			14,630		1.14			0.70			1.52			0.32			98
	13.86		24.28			2		1.64			0.09			2.02			(0.29	)		98
	11.75		(3.69	)		74,862		1.79	(b)		0.80	(b)		2.29	(b)		0.30	(b)		55
	11.71		(3.94	)		879		2.29	(b)		0.43	(b)		2.79	(b)		(0.07	)(b)		55
	11.72		(3.93	)		388		2.29	(b)		0.42	(b)		2.79	(b)		(0.08	)(b)		55
	11.82		(3.35	)		5,965		1.14	(b)		1.53	(b)		1.64	(b)		1.03	(b)		55
	11.76		(3.61	)		2		1.64	(b)		1.10	(b)		2.14	(b)		0.60	(b)		55
	12.20		22.00			61,151		1.79	(b)		(1.19	)(b)		2.80	(b)		(2.20	)(b)		71
	12.19		21.90			432		2.29	(b)		(1.78	)(b)		3.30	(b)		(2.79	)(b)		71
	12.20		22.00			587		2.29	(b)		(1.83	)(b)		3.30	(b)		(2.84	)(b)		71
	12.23		22.30			12,740		1.14	(b)		(0.33	)(b)		2.15	(b)		(1.34	)(b)		71
	12.20		22.00			2		1.64	(b)		(0.69	)(b)		2.65	(b)		(1.70	)(b)		71

73

 GOLDMAN SACHS INTERNATIONAL EQUITY FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment operations									Distributions to shareholders
	Net asset		Net												In excess
	value,		investment			Net realized			Total from			From net			of net			From net
	beginning		income			and unrealized			investment			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	23.59	$	(0.02	) (c)	$	(5.80	)	$	(5.82	)	$	—		$	—		$	(2.13	)	$	(2.13	)
2001 - Class B Shares		23.14		(0.12	) (c)		(5.66	)		(5.78	)		—			—			(2.13	)		(2.13	)
2001 - Class C Shares		22.89		(0.11	) (c)		(5.60	)		(5.71	)		—			—			(2.13	)		(2.13	)
2001 - Institutional Shares		24.06		0.11	(c)		(5.95	)		(5.84	)		—			—			(2.13	)		(2.13	)
2001 - Service Shares		23.65		0.02	(c)		(5.83	)		(5.81	)		—			—			(2.13	)		(2.13	)
2000 - Class A Shares		23.12		(0.03	) (c)		3.41			3.38			(0.10	)		(0.24	)		(2.57	)		(2.91	)
2000 - Class B Shares		22.73		(0.16	) (c)		3.38			3.22			(0.07	)		(0.17	)		(2.57	)		(2.81	)
2000 - Class C Shares		22.54		(0.14	) (c)		3.35			3.21			(0.09	)		(0.20	)		(2.57	)		(2.86	)
2000 - Institutional Shares		23.49		0.14	(c)		3.46			3.60			(0.14	)		(0.32	)		(2.57	)		(3.03	)
2000 - Service Shares		23.14		(0.01	) (c)		3.45			3.44			(0.11	)		(0.25	)		(2.57	)		(2.93	)
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares		21.92		0.04			1.16			1.20			—			—			—			—
1999 - Class B Shares		21.63		(0.02	)		1.12			1.10			—			—			—			—
1999 - Class C Shares		21.45		(0.03	)		1.12			1.09			—			—			—			—
1999 - Institutional Shares		22.20		0.12	(c)		1.17	(c)		1.29			—			—			—			—
1999 - Service Shares		21.93		0.06			1.15			1.21			—			—			—			—
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares		19.85		(0.06	)		3.24			3.18			—			—			(1.11	)		(1.11	)
1999 - Class B Shares		19.70		(0.17	)		3.21			3.04			—			—			(1.11	)		(1.11	)
1999 - Class C Shares		19.56		(0.15	)		3.15			3.00			—			—			(1.11	)		(1.11	)
1999 - Institutional Shares		19.97		0.03			3.31			3.34			—			—			(1.11	)		(1.11	)
1999 - Service Shares		19.84		(0.04	)		3.24			3.20			—			—			(1.11	)		(1.11	)
1998 - Class A Shares		19.32		0.03			2.04			2.07			—			(0.30	)		(1.24	)		(1.54	)
1998 - Class B Shares		19.24		(0.08	)		2.02			1.94			—			(0.25	)		(1.23	)		(1.48	)
1998 - Class C Shares (commenced August 15, 1997)		22.60		(0.04	)		(1.38	)		(1.42	)		—			(0.38	)		(1.24	)		(1.62	)
1998 - Institutional Shares		19.40		0.10			2.11			2.21			(0.07	)		(0.33	)		(1.24	)		(1.64	)
1998 - Service Shares		19.34		0.02			2.06			2.08			—			(0.35	)		(1.23	)		(1.58	)
1997 - Class A Shares		17.20		0.10			2.23			2.33			—			—			(0.21	)		(0.21	)
1997 - Class B Shares (commenced May  1, 1996)		18.91		(0.06	)		0.60			0.54			—			—			(0.21	)		(0.21	)
1997 - Institutional Shares (commenced February 7, 1996)		17.45		0.04			2.15			2.19			(0.03	)		—			(0.21	)		(0.24	)
1997 - Service Shares (commenced March  6, 1996)		17.70		(0.02	)		1.87			1.85			—			—			(0.21	)		(0.21	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

The accompanying notes are an integral part of these financial statements.

74

GOLDMAN SACHS INTERNATIONAL EQUITY FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income (loss) to			expenses to			income (loss)			Portfolio
value, end		Total			period		to average			average			average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	15.64		(26.49	)%	$	1,068,155		1.79	%		(0.10	)%		1.83	%		(0.14	)%		63	%
	15.23		(26.86	)		49,019		2.29			(0.64	)		2.33			(0.68	)		63
	15.05		(26.85	)		17,665		2.29			(0.62	)		2.33			(0.66	)		63
	16.09		(26.03	)		292,298		1.14			0.57			1.18			0.53			63
	15.71		(26.41	)		5,621		1.64			0.12			1.68			0.08			63
	23.59		14.68			1,343,869		1.79			(0.12	)		1.84			(0.17	)		80
	23.14		14.20			80,274		2.29			(0.65	)		2.34			(0.70	)		80
	22.89		14.28			22,031		2.29			(0.59	)		2.34			(0.64	)		80
	24.06		15.45			325,161		1.14			0.54			1.19			0.49			80
	23.65		15.00			3,789		1.64			(0.02	)		1.69			(0.07	)		80
	23.12		5.47			943,473		1.79	(b)		0.31	(b)		1.84	(b)		0.26	(b)		61
	22.73		5.09			68,691		2.29	(b)		(0.19	)(b)		2.34	(b)		(0.24	)(b)		61
	22.54		5.08			11,241		2.29	(b)		(0.26	)(b)		2.34	(b)		(0.31	)(b)		61
	23.49		5.81			180,564		1.14	(b)		0.89	(b)		1.19	(b)		0.84	(b)		61
	23.14		5.52			3,852		1.64	(b)		0.47	(b)		1.69	(b)		0.42	(b)		61
	21.92		16.39			947,973		1.73			(0.28	)		1.82			(0.37	)		114
	21.63		15.80			69,231		2.24			(0.79	)		2.32			(0.87	)		114
	21.45		15.70			11,619		2.24			(0.98	)		2.32			(1.06	)		114
	22.20		17.09			111,315		1.13			0.23			1.21			0.15			114
	21.93		16.49			3,568		1.63			(0.18	)		1.71			(0.26	)		114
	19.85		11.12			697,590		1.67			(0.27	)		1.80			(0.40	)		41
	19.70		10.51			55,324		2.20			(0.90	)		2.30			(1.00	)		41
	19.56		(5.92	)		3,369		2.27	(b)		(1.43	)(b)		2.37	(b)		(1.53	)(b)		41
	19.97		11.82			56,263		1.08			0.30			1.18			0.20			41
	19.84		11.25			3,035		1.55			(0.36	)		1.65			(0.46	)		41
	19.32		13.48			536,283		1.69			(0.07	)		1.88			(0.26	)		38
	19.24		2.83			19,198		2.23	(b)		(0.97	)(b)		2.38	(b)		(1.12	)(b)		38
	19.40		12.53			68,374		1.10	(b)		0.43	(b)		1.25	(b)		0.28	(b)		38
	19.34		10.42			674		1.60	(b)		(0.40	)(b)		1.75	(b)		(0.55	)(b)		38

75

 GOLDMAN SACHS JAPANESE EQUITY FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment operations									Distributions to shareholders
	Net asset														In excess
	value at		Net			Net realized			Total from			From net			of net			From net
	beginning		investment			and unrealized			investment			investment			investment			realized			Total
	of period		loss			gains (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	15.77	$	(0.14	) (c)	$	(5.80	)	$	(5.94	)	$	—		$	—		$	(1.01	)	$	(1.01	)
2001 - Class B Shares		15.63		(0.20	) (c)		(5.73	)		(5.93	)		—			—			(1.01	)		(1.01	)
2001 - Class C Shares		15.58		(0.19	) (c)		(5.71	)		(5.90	)		—			—			(1.01	)		(1.01	)
2001 - Institutional Shares		15.96		(0.08	) (c)		(5.87	)		(5.95	)		—			—			(1.01	)		(1.01	)
2001 - Service Shares		15.83		(0.11	) (c)		(5.83	)		(5.94	)		—			—			(1.01	)		(1.01	)
2000 - Class A Shares		16.24		(0.20	) (c)		1.67			1.47			—			(0.21	)		(1.73	)		(1.94	)
2000 - Class B Shares		16.14		(0.28	) (c)		1.68			1.40			—			(0.18	)		(1.73	)		(1.91	)
2000 - Class C Shares		16.16		(0.28	) (c)		1.64			1.36			—			(0.21	)		(1.73	)		(1.94	)
2000 - Institutional Shares		16.36		(0.09	) (c)		1.67			1.58			—			(0.25	)		(1.73	)		(1.98	)
2000 - Service Shares		16.22		(0.16	) (c)		1.65			1.49			—			(0.15	)		(1.73	)		(1.88	)
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares		11.06		(0.06	)		5.24			5.18			—			—			—			—
1999 - Class B Shares		11.03		(0.09	)		5.20			5.11			—			—			—			—
1999 - Class C Shares		11.04		(0.08	)		5.20			5.12			—			—			—			—
1999 - Institutional Shares		11.10		(0.03	)		5.29			5.26			—			—			—			—
1999 - Service Shares		11.04		(0.06	)		5.24			5.18			—			—			—			—
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares (commenced May 1, 1998)		10.00		(0.06	)		1.12			1.06			—			—			—			—
1999 - Class B Shares (commenced May 1, 1998)		10.00		(0.08	)		1.11			1.03			—			—			—			—
1999 - Class C Shares (commenced May 1, 1998)		10.00		(0.09	)		1.13			1.04			—			—			—			—
1999 - Institutional Shares (commenced May 1, 1998)		10.00		(0.02	)		1.13			1.11			(0.01	)		—			—			(0.01	)
1999 - Service Shares (commenced May 1, 1998)		10.00		(0.05	)		1.09			1.04			—			—			—			—

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

The accompanying notes are an integral part of these financial statements.

76

GOLDMAN SACHS JAPANESE EQUITY FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			loss to			expenses to			loss to			Portfolio
value, end		Total			period		to average			average			average			average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	8.82		(39.60	)%	$	19,289		1.80	%		(1.19	)%		2.29	%		(1.68	)%		75	%
	8.69		(39.90	)		2,281		2.30			(1.67	)		2.79			(2.16	)		75
	8.67		(39.84	)		2,242		2.30			(1.65	)		2.79			(2.14	)		75
	9.00		(39.16	)		2,285		1.15			(0.64	)		1.64			(1.13	)		75
	8.88		(39.44	)		2		1.65			(0.94	)		2.14			(1.43	)		75
	15.77		8.47			69,741		1.74			(1.20	)		2.10			(1.56	)		61
	15.63		8.12			5,783		2.24			(1.67	)		2.60			(2.03	)		61
	15.58		7.82			4,248		2.24			(1.66	)		2.60			(2.02	)		61
	15.96		9.14			27,768		1.09			(0.53	)		1.45			(0.89	)		61
	15.83		8.65			3		1.59			(0.94	)		1.95			(1.30	)		61
	16.24		46.84			34,279		1.70	(b)		(1.17	)(b)		2.62	(b)		(2.09	)(b)		45
	16.14		46.33			4,219		2.20	(b)		(1.57	)(b)		3.12	(b)		(2.49	)(b)		45
	16.16		46.41			3,584		2.20	(b)		(1.81	)(b)		3.12	(b)		(2.73	)(b)		45
	16.36		47.40			22,709		1.05	(b)		(0.37	)(b)		1.97	(b)		(1.29	)(b)		45
	16.22		46.92			3		1.55	(b)		(0.74	)(b)		2.47	(b)		(1.66	)(b)		45
	11.06		10.60			8,391		1.64	(b)		(1.20	)(b)		4.18	(b)		(3.74	)(b)		53
	11.03		10.30			1,427		2.15	(b)		(1.76	)(b)		4.69	(b)		(4.30	)(b)		53
	11.04		10.40			284		2.15	(b)		(1.69	)(b)		4.69	(b)		(4.23	)(b)		53
	11.10		11.06			11,418		1.03	(b)		(0.36	)(b)		3.57	(b)		(2.90	)(b)		53
	11.04		10.43			2		1.53	(b)		(0.68	)(b)		4.07	(b)		(3.22	)(b)		53

77

 GOLDMAN SACHS INTERNATIONAL GROWTH OPPORTUNITIES FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment operations									Distributions to shareholders
	Net asset											In excess
	value,		Net			Net realized			Total from			of net			From net
	beginning		investment			and unrealized			investment			investment			realized			Total
	of period		loss			gain (loss)			operations			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	16.12	$	(0.12	) (c)	$	(5.21	)	$	(5.33	)	$	—		$	(0.98	)	$	(0.98	)
2001 - Class B Shares		15.98		(0.18	) (c)		(5.16	)		(5.34	)		—			(0.98	)		(0.98	)
2001 - Class C Shares		15.97		(0.17	) (c)		(5.16	)		(5.33	)		—			(0.98	)		(0.98	)
2001 - Institutional Shares		16.37		(0.05	) (c)		(5.31	)		(5.36	)		—			(0.98	)		(0.98	)
2001 - Service Shares		16.16		(0.10	) (c)		(5.23	)		(5.33	)		—			(0.98	)		(0.98	)
2000 - Class A Shares		13.24		(0.12	) (c)		3.52			3.40			—			(0.52	)		(0.52	)
2000 - Class B Shares		13.19		(0.18	) (c)		3.49			3.31			—			(0.52	)		(0.52	)
2000 - Class C Shares		13.19		(0.19	) (c)		3.49			3.30			—			(0.52	)		(0.52	)
2000 - Institutional Shares		13.35		(0.03	) (c)		3.57			3.54			—			(0.52	)		(0.52	)
2000 - Service Shares		13.24		(0.10	) (c)		3.54			3.44			—			(0.52	)		(0.52	)
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares		10.62		(0.03	)		2.65			2.62			—			—			—
1999 - Class B Shares		10.61		(0.08	) (c)		2.66			2.58			—			—			—
1999 - Class C Shares		10.61		(0.08	) (c)		2.66			2.58			—			—			—
1999 - Institutional Shares		10.66		—			2.69			2.69			—			—			—
1999 - Service Shares		10.61		(0.02	)		2.65			2.63			—			—			—
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares (commenced May  1, 1998)		10.00		(0.04	)		0.66			0.62			—			—			—
1999 - Class B Shares (commenced May  1, 1998)		10.00		(0.10	)		0.71			0.61			—			—			—
1999 - Class C Shares (commenced May  1, 1998)		10.00		(0.06	)		0.67			0.61			—			—			—
1999 - Institutional Shares (commenced May 1, 1998)		10.00		—			0.67			0.67			(0.01	)		—			(0.01	)
1999 - Service Shares (commenced May  1, 1998)		10.00		(0.02	)		0.63			0.61			—			—			—

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.
(d)	As of December 29, 2000, the Fund’s name changed from the International Small Cap Fund to the International Growth Opportunities Fund.

The accompanying notes are an integral part of these financial statements.

78

GOLDMAN SACHS INTERNATIONAL GROWTH OPPORTUNITIES FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			loss to			expenses to			loss to			Portfolio
value, end		Total			period		to average			average			average			average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	9.81		(34.26	)%	$	161,849		2.05	%		(1.02	)%		2.13	%		(1.10	)%		64	%
	9.66		(34.64	)		1,709		2.55			(1.51	)		2.63			(1.59	)		64
	9.66		(34.60	)		1,826		2.55			(1.47	)		2.63			(1.55	)		64
	10.03		(33.90	)		82,850		1.40			(0.38	)		1.48			(0.46	)		64
	9.85		(34.17	)		8		1.90			(0.86	)		1.98			(0.94	)		64
	16.12		26.26			327,697		2.05			(0.79	)		2.22			(0.96	)		73
	15.98		25.66			2,827		2.55			(1.16	)		2.72			(1.33	)		73
	15.97		25.58			3,672		2.55			(1.23	)		2.72			(1.40	)		73
	16.37		27.12			187,075		1.40			(0.19	)		1.57			(0.36	)		73
	16.16		26.57			3		1.90			(0.63	)		2.07			(0.80	)		73
	13.24		24.67			69,458		2.05	(b)		(0.68	)(b)		2.42	(b)		(1.05	)(b)		59
	13.19		24.32			303		2.55	(b)		(1.16	)(b)		2.92	(b)		(1.53	)(b)		59
	13.19		24.32			419		2.55	(b)		(1.21	)(b)		2.92	(b)		(1.58	)(b)		59
	13.35		25.24			65,772		1.40	(b)		(0.05	)(b)		1.77	(b)		(0.42	)(b)		59
	13.24		24.79			2		1.90	(b)		(0.35	)(b)		2.27	(b)		(0.72	)(b)		59
	10.62		6.20			33,002		2.02	(b)		(1.03	)(b)		3.60	(b)		(2.61	)(b)		96
	10.61		6.10			213		2.51	(b)		(1.30	)(b)		4.09	(b)		(2.88	)(b)		96
	10.61		6.10			175		2.51	(b)		(1.45	)(b)		4.09	(b)		(3.03	)(b)		96
	10.66		6.67			36,992		1.40	(b)		(0.19	)(b)		2.98	(b)		(1.77	)(b)		96
	10.61		6.10			2		1.90	(b)		(0.26	)(b)		3.48	(b)		(1.84	)(b)		96

79

 GOLDMAN SACHS EMERGING MARKETS EQUITY FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment operations									Distributions to shareholders
	Net asset		Net												In excess
	value,		investment			Net realized			Total from			From net			of net			From net
	beginning		income			and unrealized			investment			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	10.83	$	0.01	(c)	$	(3.27	)	$	(3.26	)	$	—		$	—		$	(0.36	)	$	(0.36	)
2001 - Class B Shares		10.72		(0.02	) (c)		(3.25	)		(3.27	)		—			—			(0.36	)		(0.36	)
2001 - Class C Shares		10.75		(0.03	) (c)		(3.25	)		(3.28	)		—			—			(0.36	)		(0.36	)
2001 - Institutional Shares		11.02		0.05	(c)		(3.33	)		(3.28	)		—			—			(0.36	)		(0.36	)
2001 - Service Shares		10.63		0.08	(c)		(3.23	)		(3.15	)		—			—			(0.36	)		(0.36	)
2000 - Class A Shares		9.26		(0.05	) (c)		1.62			1.57			—			—			—			—
2000 - Class B Shares		9.21		(0.11	) (c)		1.62			1.51			—			—			—			—
2000 - Class C Shares		9.24		(0.10	) (c)		1.61			1.51			—			—			—			—
2000 - Institutional Shares		9.37		0.01	(c)		1.64			1.65			—			—			—			—
2000 - Service Shares		9.05		0.01	(c)		1.57			1.58			—			—			—			—
FOR THE SEVEN MONTHS ENDED AUGUST 31,
1999 - Class A Shares		7.04		(0.01	)		2.23			2.22			—			—			—			—
1999 - Class B Shares		7.03		(0.03	)		2.21			2.18			—			—			—			—
1999 - Class C Shares		7.05		(0.03	)		2.22			2.19			—			—			—			—
1999 - Institutional Shares		7.09		0.02			2.26			2.28			—			—			—			—
1999 - Service Shares		6.87		0.01			2.17			2.18			—			—			—			—
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares		9.69		0.04			(2.40	)		(2.36	)		(0.07	)		(0.22	)		—			(0.29	)
1999 - Class B Shares		9.69		0.03			(2.41	)		(2.38	)		(0.07	)		(0.21	)		—			(0.28	)
1999 - Class C Shares		9.70		0.01			(2.39	)		(2.38	)		(0.07	)		(0.20	)		—			(0.27	)
1999 - Institutional Shares		9.70		0.06			(2.36	)		(2.30	)		(0.08	)		(0.23	)		—			(0.31	)
1999 - Service Shares		9.69		(0.13	)		(2.41	)		(2.28	)		(0.07	)		(0.21	)		—			(0.28	)
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares (commenced December 15, 1997)		10.00		—			(0.31	)		(0.31	)		—			—			—			—
1998 - Class B Shares (commenced December 15, 1997)		10.00		—			(0.31	)		(0.31	)		—			—			—			—
1998 - Class C Shares (commenced December 15, 1997)		10.00		—			(0.30	)		(0.30	)		—			—			—			—
1998 - Institutional Shares (commenced December 15, 1997)		10.00		0.01			(0.31	)		(0.30	)		—			—			—			—
1998 - Service Shares (commenced December 15, 1997)		10.00		—			(0.31	)		(0.31	)		—			—			—			—

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

The accompanying notes are an integral part of these financial statements.

80

GOLDMAN SACHS EMERGING MARKETS EQUITY FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income (loss) to			expenses to			income (loss) to			Portfolio
value, end		Total			period		to average			average			average			average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	7.21		(30.55	)%	$	33,827		2.24	%		0.11	%		2.49	%		(0.14	)%		139	%
	7.09		(30.97	)		1,498		2.74			(0.29	)		2.99			(0.54	)		139
	7.11		(30.98	)		656		2.74			(0.41	)		2.99			(0.66	)		139
	7.38		(30.20	)		74,483		1.59			0.63			1.84			0.38			139
	7.12		(30.08	)		8		1.55			0.97			2.34			0.18			139
	10.83		16.95			64,279		2.11			(0.49	)		2.30			(0.68	)		125
	10.72		16.40			2,187		2.61			(1.00	)		2.80			(1.19	)		125
	10.75		16.34			1,304		2.61			(0.96	)		2.80			(1.15	)		125
	11.02		17.61			145,774		1.46			0.13			1.65			(0.06	)		125
	10.63		17.46			2		1.96			0.14			2.15			(0.05	)		125
	9.26		31.53			65,698		2.04	(b)		(0.15	)(b)		2.41	(b)		(0.52	)(b)		63
	9.21		31.01			972		2.54	(b)		(0.71	)(b)		2.91	(b)		(1.08	)(b)		63
	9.24		31.06			1,095		2.54	(b)		(0.85	)(b)		2.91	(b)		(1.22	)(b)		63
	9.37		32.16			108,574		1.39	(b)		0.50	(b)		1.76	(b)		0.13	(b)		63
	9.05		31.73			2		1.89	(b)		0.12	(b)		2.26	(b)		(0.25	)(b)		63
	7.04		(24.32	)		52,704		2.09			0.80			2.53			0.36			154
	7.03		(24.51	)		459		2.59			0.19			3.03			(0.25	)		154
	7.05		(24.43	)		273		2.59			0.28			3.03			(0.16	)		154
	7.09		(23.66	)		90,189		1.35			1.59			1.79			1.15			154
	6.87		(26.17	)		1		1.85			(1.84	)		2.29			(2.28	)		154
	9.69		(3.10	)		17,681		1.90	(b)		0.55	(b)		5.88	(b)		(3.43	)(b)		3
	9.69		(3.10	)		64		2.41	(b)		0.05	(b)		6.39	(b)		(3.93	)(b)		3
	9.70		(3.00	)		73		2.48	(b)		(0.27	)(b)		6.46	(b)		(4.25	)(b)		3
	9.70		(3.00	)		19,120		1.30	(b)		0.80	(b)		5.28	(b)		(3.18	)(b)		3
	9.69		(3.10	)		2		2.72	(b)		(0.05	)(b)		6.70	(b)		(4.03	)(b)		3

81

 GOLDMAN SACHS ASIA GROWTH FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

	Income from
	investment operations											Distributions to shareholders
	Net asset		Net												In excess
	value,		investment			Net realized			Total from			From net			of net			From net
	beginning		income			and unrealized			investment			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	11.16	$	0.04	(c)	$	(3.13	)	$	(3.09	)	$	—		$	—		$	—		$	—
2001 - Class B Shares		10.91		—	(c)		(3.04	)		(3.04	)		—			—			—			—
2001 - Class C Shares		10.88		(0.01	) (c)		(3.02	)		(3.03	)		—			—			—			—
2001 - Institutional Shares		11.41		0.13	(c)		(3.22	)		(3.09	)		—			—			—			—
2000 - Class A Shares		11.07		(0.05	) (c)		0.14			0.09			—			—			—			—
2000 - Class B Shares		10.88		(0.11	) (c)		0.14			0.03			—			—			—			—
2000 - Class C Shares		10.85		(0.11	) (c)		0.14			0.03			—			—			—			—
2000 - Institutional Shares		11.24		0.01	(c)		0.16			0.17			—			—			—			—
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares		7.79		(0.02	)		3.30			3.28			—			—			—			—
1999 - Class B Shares		7.68		(0.04	)		3.24			3.20			—			—			—			—
1999 - Class C Shares		7.68		(0.04	)		3.21			3.17			—			—			—			—
1999 - Institutional Shares		7.91		0.01			3.36			3.37			—			(0.04	)		—			—
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares		8.38		0.07			(0.66	)		(0.59	)		—			—			—			—
1999 - Class B Shares		8.31		0.01			(0.64	)		(0.63	)		—			—			—			—
1999 - Class C Shares		8.29		—			(0.61	)		(0.61	)		—			—			—			—
1999 - Institutional Shares		8.44		0.03			(0.56	)		(0.53	)		—			—			—			—
1998 - Class A Shares		16.31		—			(7.90	)		(7.90	)		—			(0.03	)		—			(0.03	)
1998 - Class B Shares		16.24		0.01			(7.91	)		(7.90	)		—			(0.03	)		—			(0.03	)
1998 - Class C Shares (commenced August 15, 1997)		15.73		0.01			(7.42	)		(7.41	)		—			(0.03	)		—			(0.03	)
1998 - Institutional Shares		16.33		0.10			(7.96	)		(7.86	)		(0.03	)		—			—			(0.03	)
1997 - Class A Shares		16.49		0.06			(0.11	)		(0.05	)		(0.12	)		—			(0.01	)		(0.13	)
1997 - Class B Shares (commenced May 1, 1996)		17.31		(0.05	)		(0.48	)		(0.53	)		(0.51	)		(0.03	)		—			(0.54	)
1997 - Institutional Shares (commenced February 2, 1996)		16.61		0.04			(0.11	)		(0.07	)		(0.11	)		(0.06	)		(0.04	)		(0.21	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the distributions of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

The accompanying notes are an integral part of these financial statements.

82

GOLDMAN SACHS ASIA GROWTH FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income (loss) to			expenses to			income (loss) to			Portfolio
value, end		Total			period		to average			average			average			average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	8.07		(27.53	)%	$	33,854		1.85	%		0.41	%		2.57	%		(0.31	)%		314	%
	7.87		(27.80	)		3,645		2.35			(0.04	)		3.07			(0.76	)		314
	7.85		(27.78	)		1,010		2.35			(0.07	)		3.07			(0.79	)		314
	8.32		(26.93	)		3,055		1.20			1.41			1.92			0.69			314
	11.16		0.72			86,458		1.85			(0.39	)		2.30			(0.84	)		207
	10.91		0.18			6,849		2.35			(0.91	)		2.80			(1.36	)		207
	10.88		0.18			2,265		2.35			(0.91	)		2.80			(1.36	)		207
	11.41		1.42			5,236		1.20			0.12			1.65			(0.33	)		207
	11.07		42.11			84,269		1.85	(b)		(0.38	)(b)		2.27	(b)		(0.80	)(b)		97
	10.88		41.67			7,258		2.35	(b)		(0.90	)(b)		2.77	(b)		(1.32	)(b)		97
	10.85		41.28			2,281		2.35	(b)		(0.89	)(b)		2.77	(b)		(1.31	)(b)		97
	11.24		42.61			12,363		1.20	(b)		(0.14	)(b)		1.62	(b)		(0.28	)(b)		97
	7.79		(7.04	)		59,940		1.93			0.63			2.48			0.08			106
	7.68		(7.58	)		4,190		2.45			0.10			2.97			(0.42	)		106
	7.68		(7.36	)		999		2.45			0.10			2.97			(0.42	)		106
	7.91		(6.28	)		4,200		1.16			1.10			1.68			0.58			106
	8.38		(48.49	)		87,437		1.75			0.31			1.99			0.07			105
	8.31		(48.70	)		3,359		2.30			(0.29	)		2.50			(0.49	)		105
	8.29		(47.17	)		436		2.35	(b)		(0.26	)(b)		2.55	(b)		(0.46	)(b)		105
	8.44		(48.19	)		874		1.11			0.87			1.31			0.67			105
	16.31		(1.01	)		263,014		1.67			0.20			1.87			—			48
	16.24		(6.02	)		3,354		2.21	(b)		(0.56	)(b)		2.37	(b)		(0.72	)(b)		48
	16.33		(1.09	)		13,322		1.10	(b)		0.54	(b)		1.26	(b)		0.38	(b)		48

83

 GOLDMAN SACHS INTERNATIONAL EQUITY FUNDS

Report of Independent Accountants

To the Shareholders and Board of Trustees of
Goldman Sachs Trust — International Equity Funds:

In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Goldman Sachs European Equity Fund, International Equity Fund, Japanese Equity Fund, International Growth Opportunities Fund (formerly Goldman Sachs International Small Cap Fund), Emerging Markets Equity Fund and Asia Growth Fund (collectively “the International Equity Funds”), portfolios of Goldman Sachs Trust at August 31, 2001, the results of their operations for the year then ended, and the changes in each of their net assets and the financial highlights for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the International Equity Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the International Equity Funds for the periods ended prior to August 31, 2000 were audited by other independent accountants whose reports dated October 8, 1999 expressed unqualified opinions thereon.

PricewaterhouseCoopers LLP

Boston, Massachusetts

October 19, 2001

FUNDS PROFILE

Goldman Sachs Funds

Goldman Sachs is a premier financial services firm, known since 1869 for creating thoughtful and customized investment solutions in complex global markets.

Today, the Investment Management Division of Goldman Sachs serves a diverse set of clients worldwide, including private institutions, public entities and individuals. With portfolio management teams located around the world — and more than $295 billion in assets under management, our investment professionals bring firsthand knowledge of local markets to every investment decision, making us one of the few truly global asset managers.

1	An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
	CORESM is a service mark of Goldman, Sachs & Co.
	Goldman Sachs Research Select FundSM is a service mark of Goldman, Sachs & Co.
	Goldman Sachs Internet Tollkeeper FundSM and Goldman Sachs Research Select FundSM are service marks of Goldman, Sachs & Co.
*	Goldman Sachs International Growth Opportunities Fund was formerly Goldman Sachs International Small Cap Fund.

GOLDMAN SACHS ASSET MANAGEMENT  32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005

TRUSTEES Ashok N. Bakhru, Chairman David B. Ford Patrick T. Harker John P. McNulty Mary P. McPherson Alan A. Shuch Wilma J. Smelcer Richard P. Strubel Kaysie P. Uniacke

OFFICERS Gary Black, President Jesse H. Cole, Vice President Kerry Daniels, Vice President James A. Fitzpatrick, Vice President Mary Hoppa, Vice President Christopher Keller, Vice President John M. Perlowski, Treasurer Kenneth Curran, Assistant Treasurer Peter W. Fortner, Assistant Treasurer Philip V. Giuca, Jr., Assistant Treasurer Howard B. Surloff, Secretary Amy E. Belanger, Assistant Secretary 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.

Stocks of smaller companies are often more volatile and present greater risks than stocks of larger companies. At times, the Funds may be unable to sell certain of their portfolio securities without a substantial drop in price, if at all.

The Funds’ investment in Japanese securities will be particularly subject to the risks of adverse social, political and economic events which occur in Japan or affect Japanese markets.

Emerging markets securities are volatile. They are subject to substantial currency fluctuations and sudden economic and political developments. At times, the Funds may be unable to sell certain of its portfolio securities without a substantial drop in price, if at all.

Concentration of the Funds’ assets in one or a few countries (or a particular geographic area) and currencies will subject a fund to greater risks than if a funds’ assets were not geographically concentrated.

The Funds may participate in the Initial Public Offering (IPO) market, and a portion of a Fund’s returns consequently may be attributable to its investment in IPOs, which may have a magnified impact due to a Fund’s small asset base. As a Fund’s assets grow, it is probable that the effect of a Fund’s investment in IPOs on its total returns may not be as significant.

Goldman, Sachs & Co. is the distributor of the Funds.

Copyright 2001 Goldman, Sachs & Co. All rights reserved. Date of first use: October 30, 2001 / 01-1675 INTLAR / 92.5K / 10-01

GOLDMAN SACHS CORE EQUITY FUNDS

Market Review

Dear Shareholder:

As we write to you today, the tragic national events of September 11th continue to dominate the nation’s thoughts. The people of Goldman Sachs are shocked and saddened by the horrible destruction and loss of life, and send our deepest sympathies to those who have been impacted in New York, Washington, D.C., Pennsylvania and across the country.

	In the aftermath of this tragedy, Goldman Sachs is offering assistance to others in the industry who have been more severely impacted than we were. Our people and firm are assisting the ongoing recovery and humanitarian efforts through donations of blood and volunteer work. Additionally, Goldman Sachs people are committed to contributing at least $10 million to provide humanitarian aid to victims and families impacted by the events of September 11th.
	Goldman Sachs also shares the strong determination of the entire securities industry to show solidarity in the face of terrorism. We are committed to sending the clearest possible message that terrorism will not close free markets, and we continue to serve as a force of stability in the global securities markets.
	We want to take this opportunity to provide continued assurance regarding your investment in Goldman Sachs Funds. Immediately after the attack on September 11, all emergency recovery plans were successfully implemented, critical functions were moved to alternate locations, and we were prepared to resume normal operations on September 17 with the reopening of the New York Stock Exchange.
	As we write this letter, there continues to be uncertainty in the global financial markets, and events are unfolding at a rapid pace. While the markets are expected to remain volatile in the short-term, in decades past the American people and our economy have proven to be tremendously resilient following significant global events. As such, we urge our shareholders to remain focused on their long-term goals, maintain diversified portfolios, and work closely with their financial advisers.
	Because the period covered by this report ended prior to September 11, we have included a brief recap of the economy and financial markets for the one-year reporting period ended August 31, 2001.
n	Market Review: Stocks Fall Sharply, While Bonds Rally — During the one-year reporting period ended August 31, 2001, the U.S. stock market, as measured by the Fund’s index, the S&P 500 Index, declined 24.39%, while the bond market, as measured by the Lehman Aggregate Bond Index, rose 12.35%. Factors underlying the stock market’s decline included the ongoing threat of economic recession, lower corporate profits, the bursting of the technology “bubble” and a weakening job market. As the period progressed, some areas of the stock market that had performed well during the latter stages of 2000 and the first half of 2001 could not avoid the downdraft — namely many value-oriented and more defensive issues. The sharpest decline occurred in the technology sector, as the tech-laden NASDAQ Composite Index plummeted 57.08% during the period. The NASDAQ has fallen 64% since its peak in March 2000.
	In contrast, the bond market fared well during the period. Virtually all bond market sectors generated positive results, largely as a result of declining interest rates and an increase in investor demand.

GOLDMAN SACHS CORE EQUITY FUNDS

n	A Faltering Economic Recovery — During the one-year reporting period ended August 31, 2001, the U.S. economy has come full circle. As the period began, we were in the midst of the longest economic expansion in U.S. history. However, since that time, economic activity has fallen sharply. By the fourth quarter of 2000, many economic indicators were pointing to a slowdown, which quickly intensified as the new year began. This reversal prompted the Federal Reserve Board (the “Fed”) to cut short-term interest rates seven times — for a total of 3.25 percentage points — in hopes of avoiding a recession. Under Chairman Alan Greenspan, the Fed has never lowered rates so significantly in such a short period of time. Despite this action, the GDP grew only an estimated 0.2% during the second quarter of 2001 — its slowest rate in eight years.
	On the following pages, you will find a review of your Fund’s activity during the period, including perspectives following the recent tragedy from your portfolio management team.
	In closing, we want to assure you that you have a strong and experienced team of portfolio managers who have experience managing assets through diverse market conditions and encourage you to maintain your long-term focus in the months ahead.
	As always, we appreciate your ongoing support.

Sincerely,
David B. Ford	David W. Blood
Co-Head, Goldman Sachs Asset Management	Co-Head, Goldman Sachs Asset Management
September 20, 2001

1

FUND BASICS

CORE ^SM U.S. Equity Fund
as of August 31, 2001

PERFORMANCE REVIEW

August 31, 2000–August 31, 2001	Fund Total Return (without sales charge) 1	S&P 500 Index 2
Class A	–25.96%	–24.39%
Class B	–26.49	–24.39
Class C	–26.53	–24.39
Institutional	–25.66	–24.39
Service	–26.02	–24.39

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged S&P 500 Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A	Class B	Class C	Institutional	Service
One Year	–19.61%	–19.79%	–16.44%	–14.60%	–15.03%
Five Years	11.44	11.59	N/A	13.27	12.70
Ten Years	12.85	N/A	N/A	N/A	13.494
Since Inception	12.29	11.90	6.62	15.55	12.924
	(5/24/91)	(5/1/96)	(8/15/97)	(6/15/95)	(5/24/91)

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 6/7/96 is that of Class A shares (excluding the impact of front-end sales charges applicable to Class A shares since Service shares are not subject to any sales charges). Performance of Class A shares of the CORE U.S. Equity Fund reflects the expenses applicable to the Fund’s Class A shares. The fees applicable to Services shares are different from those applicable to Class A shares which impact performance ratings and rankings for a class of shares.
	Total return figures represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance reflects fee waivers and expense limitations in effect. In their absence, performance would be reduced.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets	Line of Business
Exxon Mobil Corp.	3.5%	Energy Resources
General Electric Co.	3.4	Financial Services
Microsoft Corp.	3.4	Computer Software
Citigroup, Inc.	3.0	Banks
Pfizer, Inc.	2.8	Drugs
Verizon Communications, Inc.	2.0	Telephone
International Business Machines, Inc.	1.9	Computer Software
Johnson & Johnson	1.9	Medical Products
AOL Time Warner, Inc.	1.7	Internet
Bank of America Corp.	1.7	Banks

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

2

PORTFOLIO RESULTS

CORE U.S. Equity Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs CORE U.S. Equity Fund for the one-year period that ended August 31, 2001.

Performance Review

Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated total cumulative returns, without sales charges, of –25.96%, –26.49%, –26.53%, –25.66%, and –26.02%, respectively. These figures compare to the –24.39% total cumulative return of the Fund’s benchmark, the S&P 500 Index.

The CORE strategy is a well-defined investment process that has historically provided consistent risk-managed performance. We seek to buy stocks that are attractively valued and favored by fundamental research analysts, have experienced good momentum and are more stable. The diversification of our models typically adds value because, when one theme doesn’t work, others usually do. For example, when momentum stocks underperform, value stocks typically advance more than average. Portfolios are constructed taking into account stock risk characteristics as well as their expected returns.

Portfolio Positioning

The CORE investment process analyzes each stock based upon its Value and Momentum characteristics, Earnings Quality and Profitability, as well as a Fundamental Research assessment. Over the twelve-month reporting period, returns to the various themes were largely positive. Profitability, in the seven months since it was introduced into the process, contributed to excess returns over the benchmark, while the new Earnings Quality criterion was also slightly positive. Value had erratic results at the end of 2000, but was a strong positive contributor in 2001 through August. Momentum was hurt by the dramatic directional shifts in the market during the fourth quarter of 2000 and first quarter of 2001. However, it regained its footing through the second quarter of 2001 to become the largest contributor to excess returns over the benchmark 2001-year to date. Moreover, although Fundamental Research was a positive contributor at the end of 2000, it has had consistently generated negative results throughout 2001.

Portfolio Highlights

The Fund’s best relative performers were stocks in the Telecommunications and Energy sectors, while stock selection in Technology and Consumer Services was less successful. Examples of stocks that contributed most to our relative performance were underweighted positions in Lucent Technologies Co., Intel Corp. and Qwest Communications International, Inc. Among the Fund’s least successful holdings were Corning Inc., Apple Computer and CVS Corp.

3

PORTFOLIO RESULTS

Portfolio Outlook

Looking ahead, we continue to believe that cheaper stocks should outpace more expensive ones and good momentum stocks should do better than poor momentum stocks. We also prefer names favored by fundamental research analysts and companies that are profitable and have sustainable earnings. As such, we anticipate remaining fully invested and expect that the value we add over time will be due to stock selection as opposed to sector or size allocations. While we will continue to monitor the Fund closely during this volatile period, we do not anticipate any change in the management style of the Fund as a result of the terrorist attack.

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

Goldman Sachs Quantitative Equity Investment Team

New York, September 26, 2001

4

FUND BASICS

CORE ^SM Large Cap Growth Fund
as of August 31, 2001

PERFORMANCE REVIEW

August 31, 2000–August 31, 2001	Fund Total Return (without sales charge)1	Russell 1000 Growth Index 2
Class A	–45.97%	–45.32%
Class B	–46.37	–45.32
Class C	–46.35	–45.32
Institutional	–45.73	–45.32
Service	–46.05	–45.32

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged Russell 1000 Growth Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A	Class B	Class C	Institutional	Service
One Year	–38.96%	–39.05%	–36.49%	–35.09%	–35.46%
Five Years	10.68 4	N/A	N/A	12.28 4	11.82 4
Since Inception	14.07 4	7.77	4.28	14.94 4	14.70 4
	(11/11/91)	(5/1/97)	(8/15/97)	(11/11/91)	(11/11/91)

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 Institutional and Service shares prior to May 1, 1997 (commencement of operations) is that of Class A shares. Class A share performance for such period is that of a predecessor separate account (which converted into Class A shares) adjusted to reflect the higher fees and expenses applicable to the Fund’s Class A shares. Although the predecessor separate account was managed by Goldman Sachs Asset Management in a manner and pursuant to investment objectives in all material respects equivalent to management and investment objectives of the CORE Large Cap Growth Fund, the separate account was not registered under the Investment Company Act of 1940 (the “Act”) and was not subject to certain investment restrictions imposed by the Act. If it had registered under the Act, performance might have been adversely affected.
	Total return figures represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance reflects fee waivers and expense limitations in effect. In their absence, performance would be reduced.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets	Line of Business
General Electric Co.	7.2%	Financial Services
Pfizer, Inc.	5.2	Drugs
Microsoft Corp.	4.2	Computer Software
AOL Time Warner, Inc.	3.4	Internet
International Business Machines, Inc.	3.0	Computer Software
Intel Corp.	2.8	Semiconductors
The Home Depot, Inc.	2.2	Specialty Retail
Eli Lilly & Co.	2.2	Drugs
Merck & Co., Inc.	2.1	Drugs
American Home Products Corp.	2.0	Drugs

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

5

PORTFOLIO RESULTS

CORE Large Cap Growth Fund

Dear Shareholder,

We are pleased to report on the performance of the Goldman Sachs CORE Large Cap Growth Fund for the one-year period that ended August 31, 2001.

Performance Review

Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated total cumulative returns, without sales charges, of –45.97%, –46.37%, –46.35%, –45.73%, and –46.05%, respectively. These figures compare to the –45.32% total cumulative return of the Fund’s benchmark, the Russell 1000 Growth Index.

The CORE strategy is a well-defined investment process that has historically provided consistent risk-managed performance. We seek to buy stocks that are attractively valued and favored by fundamental research analysts, have experienced good momentum and are more stable. The diversification of our models typically adds value because, when one theme doesn’t work, others usually do. For example, when momentum stocks underperform, value stocks typically advance more than average. Portfolios are constructed taking into account stock risk characteristics as well as their expected returns.

Portfolio Positioning

The CORE investment process analyzes each stock based upon its Value and Momentum characteristics, Earnings Quality and Profitability, as well as a Fundamental Research assessment. Over the twelve-month reporting period, returns to the various themes were largely positive. Profitability, in the seven months since it was introduced into the process, contributed to excess returns over the benchmark, while the new Earnings Quality criterion was also slightly positive. Value had erratic results at the end of 2000, but was a strong positive contributor in 2001 through August. Momentum was hurt by the dramatic directional shifts in the market during the fourth quarter of 2000 and first quarter of 2001. However, it regained its footing through the second quarter of 2001 to become the largest contributor to excess returns over the benchmark 2001-year to date. Moreover, although Fundamental Research was a positive contributor at the end of 2000, it has generated consistently negative results throughout 2001.

Portfolio Highlights

The Fund’s best relative performers were stocks in the Telecommunications Energy sectors. Our stock selection in Technology and Consumer Cyclicals was less successful. Examples of stocks that contributed most to our relative performance were underweighted positions in Lucent Technologies, Inc., Dell Computer Corp., and General Electric Corp. Among the Fund’s least successful holdings were EMC Corp., Corning Inc., and Scientific Atlanta Inc.

6

PORTFOLIO RESULTS

Portfolio Outlook

Looking ahead, we continue to believe that cheaper stocks should outpace more expensive ones and good momentum stocks should do better than poor momentum stocks. We also prefer names favored by fundamental research analysts and companies that are profitable and have sustainable earnings. As such, we anticipate remaining fully invested and expect that the value we add over time will be due to stock selection as opposed to sector or size allocations. While we will continue to monitor the Fund closely during this volatile period, we do not anticipate any change in the management style of the Fund as a result of the terrorist attack.

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

Goldman Sachs Quantitative Equity Investment Team

New York, September 26, 2001

7

FUND BASICS

CORE ^SM Small Cap Equity Fund
as of August 31, 2001

PERFORMANCE REVIEW

August 31, 2000–August 31, 2001	Fund Total Return (without sales charge) 1	Russell 2000 Index 2
Class A	–8.64%	–11.63%
Class B	–9.35	–11.63
Class C	–9.32	–11.63
Institutional	–8.28	–11.63
Service	–8.75	–11.63

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged Russell 2000 Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A	Class B	Class C	Institutional	Service
One Year	–2.80%	–3.08%	1.08%	3.24%	2.67%
Since Inception	4.75	4.75	5.56	6.69	6.19
(8/15/97)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets	Line of Business
AmerisourceBergen Corp.	1.2%	Drugs
The John Nuveen Co.	0.8	Security/Asset Management
Polaris Industries, Inc.	0.7	Leisure
The Toro Co.	0.7	Consumer Durables
Independence Community Bank Corp.	0.7	Banks
Diagnostic Products Corp.	0.7	Drugs
Investors Financial Services Corp.	0.6	Banks
Anixter International, Inc.	0.6	Electrical Equipment
Commerce Bancorp, Inc.	0.6	Banks
Ashland, Inc.	0.6	Chemicals

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

8

PORTFOLIO RESULTS

CORE Small Cap Equity Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs CORE Small Cap Equity Fund for the one-year period that ended August 31, 2001.

Performance Review

Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated cumulative total returns, without sales charges, of –8.64%, –9.35%, –9.32%, –8.28%, and –8.75%, respectively. These figures compare favorably to the –11.63% cumulative total return of the Fund’s benchmark, the Russell 2000 Index.

The CORE strategy is a well-defined investment process that has historically provided consistent risk-managed performance. We seek to buy stocks that are attractively valued and favored by fundamental research analysts, have experienced good momentum and are more stable. These themes are considered relative to the Russell 2000 Index. The diversification of our models typically adds value because, when one theme doesn’t work, others usually do. For example, when momentum stocks underperform, value stocks typically advance more than average. Portfolios are constructed taking into account stocks’ risk characteristics as well as their expected returns.

Portfolio Positioning

The CORE investment process analyzes each stock based upon its Value and Momentum characteristics, Earnings Quality and Profitability, as well as a Fundamental Research assessment. Over the twelve-month reporting period, returns to the various themes were mixed. Profitability led positive performance by a wide margin since its introduction into the process in January 2001. Value had erratic results at the end of 2000, but was a strong positive contributor in 2001 through August. Momentum was hurt by the dramatic directional shifts in the market during the fourth quarter of 2000 and first quarter of 2001. However, it regained its footing through the second quarter of 2001 to become the largest contributor to excess returns over the benchmark 2001-year to date. Momentum is now largely flat 2001 year to date, as is Earnings Quality. Moreover, although Fundamental Research was a positive contributor at the end of 2000, it has generated consistently negative results throughout 2001.

Portfolio Highlights

The Fund’s best relative performers were stocks in the Healthcare, Consumer Cyclicals and Technology sectors. Our stock selection in Financials and Basic Materials were less successful. Examples of the stocks that contributed most to our relative performance were overweights in Richmond County Financial (which was subsequently sold) and RGS Energy. Among the Fund’s least successful holdings were Silicon Valley Bancshares and Maxim Pharmaceuticals — both of which have since been eliminated from the portfolio.

9

PORTFOLIO RESULTS

Portfolio Outlook

Looking ahead, we continue to believe that cheaper stocks should outpace more expensive ones and good momentum stocks should do better than poor momentum stocks. We also prefer names favored by fundamental research analysts and companies that are profitable and have sustainable earnings. As such, we anticipate remaining fully invested and expect that the value we add over time will be due to stock selection as opposed to sector or size allocations. While we will continue to monitor the Fund closely during this volatile period, we do not anticipate any change in the management style of the Fund as a result of the terrorist attack.

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

Goldman Sachs Quantitative Equity Investment Team

New York, September 26, 2001

10

FUND BASICS

CORE ^SM Large Cap Value Fund
as of August 31, 2001

PERFORMANCE REVIEW

August 31, 2000–August 31, 2001	Fund Total Return (without sales charge)1	Russell 1000 Value Index2
Class A	–3.32%	–1.12%
Class B	–4.08	–1.12
Class C	–4.07	–1.12
Institutional	–3.03	–1.12
Service	–3.43	–1.12

1	The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.
2	The unmanaged Russell 1000 Value Index (with dividends reinvested) figures do not reflect any fees or expenses. In addition, investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A	Class B	Class C	Institutional	Service
One Year	3.57%	3.64%	7.77%	10.01%	9.45%
Since Inception	2.47	2.82	4.05	5.20	4.69
(12/31/98)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets	Line of Business
Exxon Mobil Corp.	5.8%	Energy Resources
Citigroup, Inc.	4.6	Banks
Verizon Communications, Inc.	3.2	Telephone
Bank of America Corp.	2.6	Banks
SBC Communications, Inc.	2.0	Telecommunications-Cellular
Federal National Mortgage Association	1.7	Financial Services
The Procter & Gamble Co.	1.5	Home Products
Abbott Laboratories	1.3	Medical Products
The Walt Disney Co.	1.3	Entertainment
AT&T Corp.	1.3	Telephone

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

11

PORTFOLIO RESULTS

CORE Large Cap Value Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs CORE Large Cap Value Fund for the one-year period that ended August 31, 2001.

Performance Review

Over the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated cumulative total returns, without sales charges, of –3.32%, –4.08%, –4.07%, –3.03%, and –3.43%, respectively. These figures compare to the –1.12% cumulative total return of the Fund’s benchmark, the Russell 1000 Value Index.

The CORE strategy is a well-defined investment process that has historically provided consistent risk-managed performance. We seek to buy stocks that are attractively valued and favored by fundamental research analysts, have experienced good momentum and are more stable. These themes are considered relative to the Russell 1000 Value Index. The diversification of our models typically adds value because, when one theme doesn’t work, others usually do. For example, when momentum stocks underperform, value stocks typically advance more than average. Portfolios are constructed taking into account stock risk characteristics as well as their expected returns.

Portfolio Positioning

The CORE investment process analyzes each stock based upon its Value and Momentum characteristics, Earnings Quality and Profitability, as well as a Fundamental Research assessment. Over the twelve-month reporting period, returns to the various themes were largely positive. Profitability, in the seven months since it was introduced into the process, contributed the most to excess returns over the benchmark. Value had erratic results at the end of 2000, but was a strong positive contributor in 2001 through August. Momentum was hurt by the dramatic directional shifts in the market during the fourth quarter of 2000 and first quarter of 2001. However, it regained its footing through the second quarter of 2001 to become one of the largest contributor to excess returns over the benchmark 2001-year to date, along with Earnings Quality. Moreover, although Fundamental Research was a positive contributor at the end of 2000, it has generated consistently negative results throughout 2001.

Portfolio Highlights

The Fund’s best relative performers were stocks in the Energy and Telecommunications sectors, while our stock selection in Financials, Technology and Healthcare was less successful. Examples of stocks that contributed most to our relative performance were underweighted positions in Compaq Computer Corp. and Worldcom, Inc. Among the Fund’s least successful picks were underweights in Philip Morris Companies, Inc. and Eastman Kodak, and an overweight in CVS Corp.

12

PORTFOLIO RESULTS

Portfolio Outlook

Looking ahead, we continue to believe that cheaper stocks should outpace more expensive ones and good momentum stocks should do better than poor momentum stocks. We also prefer names favored by fundamental research analysts and companies that are profitable and have sustainable earnings. As such, we anticipate remaining fully invested and expect that the value we add over time will be due to stock selection as opposed to sector or size allocations. While we will continue to monitor the Fund closely during this volatile period, we do not anticipate any change in the management style of the Fund as a result of the terrorist attack.

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

Goldman Sachs Quantitative Equity Investment Team

New York, September 26, 2001

13

FUND BASICS

CORE ^SM International Equity Fund
as of August 31, 2001

PERFORMANCE REVIEW

August 31, 2000–August 31, 2001	Fund Total Return (without sales charge) 1	MSCI Gross EAFE Index 2
Class A	–21.50%	–24.08%
Class B	–21.93	–24.08
Class C	–21.91	–24.08
Institutional	–21.02	–24.08
Service	–21.37	–24.08

1

The net asset value represents the net assets of the Fund (ex-dividend) divided by the total number of shares. The Fund’s performance assumes the reinvestment of dividends and other distributions.

2

The unmanaged Morgan Stanley Capital International (MSCI) Gross Europe, Australasia, Far East (EAFE) Index (with dividends reinvested) is a market capitalization weighted composite of securities in 21 developed markets, including Australia, Austria, Belgium, Denmark, Finland, Germany, Hong Kong, Ireland, Italy, Japan and the United Kingdom. Total returns are calculated without dividends reinvested. Investors cannot invest directly in the Index. The Index figures do not reflect any fees or expenses.

STANDARDIZED TOTAL RETURNS ³

For the period ended 6/30/01	Class A	Class B	Class C	Institutional	Service
One Year	–26.12%	–26.07%	–22.94%	–21.30%	–21.72%
Since Inception	–2.86	–2.65	–1.86	–0.78	–1.25
(8/15/97)

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.

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.

TOP 10 HOLDINGS AS OF 8/31/01

Holding	% of Total Net Assets	Line of Business
Royal Dutch Petroleum Co.	3.1%	Energy Resources
BP PLC	1.9	Energy Resources
GlaxoSmithKline PLC	1.4	Health
Dexia	1.4	Banks
ING Groep NV	1.4	Financial Services
Nestle SA	1.3	Food & Beverage
Credit Suisse Group	1.3	Banks
Shell Transport & Trading Co. PLC	1.2	Energy Resources
Barclays PLC	1.2	Banks
Mizuho Holdings, Inc.	1.1	Banks

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

14

PORTFOLIO RESULTS

CORE International Equity Fund

Dear Shareholder:

We are pleased to report on the performance of the Goldman Sachs CORE International Equity Fund for the one-year period that ended August 31, 2001.

Performance Review

During the one-year period that ended August 31, 2001, the Fund’s Class A, B, C, Institutional and Service shares generated cumulative total returns, without sales charges, of –21.50%, –21.93%, –21.91%, –21.02%, and –21.37%, respectively. These figures compare to the –24.08% cumulative total return of the Fund’s benchmark, the Morgan Stanley Capital International (MSCI) Gross Europe, Australia, Far East (EAFE) Index.

The CORE strategy is designed to add value at both the country and security level by focusing on three categories of investment themes — Relative Value, Momentum and Low Risk. Each strategy is based on sound economic reasoning and then validated through rigorous empirical research. These strategies are combined to form views on the countries and stocks in our investment universe. Our approach seeks to identify attractive equity markets, and attractive stocks within those markets, while managing the amount of risk relative to a specified benchmark. The goal of our portfolio construction process is to maximize exposure to our model’s return forecasts while mitigating unintended active risks.

Regional Allocations

In general, the Fund benefited from our strategy’s country tilts, especially an underweight position in Finland, the weakest performer in absolute terms among countries during the reporting period. Also successful was the Fund’s relative weighting in Spain, although tilts in favor of Japan and against the UK hurt Fund returns somewhat.

Sector Allocations

Our strategy remains sector neutral within countries, so that sector tilts within the Fund are residual to country allocation decisions. Among the Fund’s strongest sectors relative to the benchmark were Information Technology and Telecommunications, although absolute returns for both the Fund and the benchmark in these sectors were significantly negative. Our holdings in the Consumer Discretionary sector generated the weakest results relative to the benchmark.

Stock Selection

Overall, stock selection was positive within countries, as well as across countries. Stock selection was most helpful to the Fund’s relative performance in Japan and Switzerland, where our holdings were not down as much as their benchmark peers. However, stock selection detracted from performance as compared to the index in other countries, including the Netherlands and Spain.

Portfolio Outlook

Although the world equity markets have been seriously affected by the tragic events of September 11, 2001, CORE portfolios have behaved as expected during this period. As always, the Fund remains substantially invested in stocks, and our general portfolio characteristics are

15

PORTFOLIO RESULTS

targeted to stay relatively close to that of the MSCI Gross EAFE index. Based on our investment strategy, we will continue to emphasize a diversified portfolio of stocks with strong value and momentum characteristics, as well as strong company fundamentals, while managing the overall risk profile. While we will continue to monitor the Fund closely during this volatile period, we do not anticipate any change in the management style of the Fund as a result of the terrorist attack.

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

Goldman Sachs Quantitative Equity Investment Team

New York, September 26, 2001

16

GOLDMAN SACHS CORE U.S. EQUITY FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on May 24, 1991 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs CORE U.S. Equity Fund. For comparative purposes, the performance of the Fund’s benchmark, (the Standard and Poor’s 500 Index with dividends reinvested (“S& P 500 Index”)), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 Shares due to differences in fees and loads.

CORE U.S. Equity Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested May 24, 1991 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		Ten Years		Five Years		One Year
Class A (commenced May 24, 1991)
Excluding sales charges		11.84%		11.71%		11.70%		-25.96%
Including sales charges		11.23%		11.08%		10.44%		-30.03%
Class B (commenced May 1, 1996)
Excluding contingent deferred sales charges		10.03%		n/a		10.95%		-26.49%
Including contingent deferred sales charges		9.85%		n/a		10.56%		-30.17%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		4.28%		n/a		n/a		-26.53%
Including contingent deferred sales charges		4.28%		n/a		n/a		-27.26%
Institutional Class (commenced June 15, 1995)		13.68%		n/a		12.25%		-25.66%
Service Class (commenced June 7, 1996)		10.39%		n/a		11.68%		-26.02%

17

 GOLDMAN SACHS CORE U.S. EQUITY FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 99.7%
Apparel – 0.2%
	34,700	Liz Claiborne, Inc.	$	1,820,015
Banks – 8.0%
	36,800	Associated Banc-Corp.		1,247,888
	271,662	Bank of America Corp.		16,707,213
	633,100	Citigroup, Inc.		28,964,325
	23,150	Fifth Third Bancorp		1,349,645
	70,000	FleetBoston Financial Corp.		2,578,100
	22,850	J.P. Morgan Chase & Co.		900,290
	18,300	M&T Bank Corp.		1,329,495
	75,900	PNC Financial Services Group		5,054,181
	19,400	State Street Corp.		942,064
	134,600	SunTrust Banks, Inc.		9,193,180
	24,400	The Bank of New York Co., Inc.		968,680
	103,800	U.S. Bancorp		2,516,112
	120,900	Wells Fargo & Co.		5,562,609
				77,313,782
Chemicals – 1.9%
	43,100	Cabot Corp.		1,739,947
	130,100	Sherwin-Williams Co.		2,946,765
	53,600	Sigma-Aldrich Corp.		2,444,696
	292,600	The Dow Chemical Co.		10,258,556
	27,100	The Lubrizol Corp.		974,082
				18,364,046
Clothing – 0.1%
	18,200	Payless ShoeSource, Inc.*		1,060,514
Computer Hardware – 2.2%
	240,000	Cisco Systems, Inc.*		3,919,200
	187,300	Compaq Computer Corp.		2,313,155
	153,800	Dell Computer Corp.*		3,288,244
	281,900	EMC Corp.		4,358,174
	152,900	Hewlett-Packard Co.		3,548,809
	308,600	Sun Microsystems, Inc.*		3,533,470
				20,961,052
Computer Software – 6.5%
	140,900	Adobe Systems, Inc.		4,735,649
	31,700	Electronic Arts, Inc.*		1,829,407
	179,900	International Business Machines, Inc.		17,990,000
	23,900	Intuit, Inc.*		902,942
	582,100	Microsoft Corp.*		33,208,805
	121,300	Oracle Corp.*		1,481,073
	44,000	PeopleSoft, Inc.*		1,517,120
	3,600	Sapient Corp.*		19,476
	21,000	Synopsys, Inc.*		968,940
				62,653,412
Construction – 0.1%
	24,300	Lennar Corp.		1,082,565
Consumer Durables – 0.2%
	35,900	Whirlpool Corp.		2,370,118
Defense/Aerospace – 0.7%
	41,100	Lockheed Martin Corp.		1,628,423
	24,800	Precision Castparts Corp.		851,632
	83,100	The Boeing Co.		4,254,720
				6,734,775
Department Stores – 3.3%
	54,100	Costco Wholesale Corp.*		2,023,881
	143,600	Federated Department Stores, Inc.*		5,214,116
	139,700	Sears, Roebuck & Co.		5,972,175
	157,200	Target Corp.		5,446,980
	270,700	Wal-Mart Stores, Inc.		13,007,135
				31,664,287
Drugs – 10.4%
	80,800	Allergan, Inc.		5,837,800
	222,500	American Home Products Corp.		12,460,000
	34,225	AmerisourceBergen Corp.*		2,205,459
	33,700	Amgen, Inc.*		2,166,910
	105,800	Bristol-Myers Squibb Co.		5,939,612
	141,250	Cardinal Health, Inc.		10,302,775
	104,600	Eli Lilly & Co.		8,120,098
	213,000	McKesson HBOC, Inc.		8,360,250
	209,800	Merck & Co., Inc.		13,657,980
	716,350	Pfizer, Inc.		27,443,368
	57,373	Pharmacia Corp.		2,271,971
	53,500	Schering-Plough Corp.		2,039,955
				100,806,178
Electrical Equipment – 3.0%
	44,000	Danaher Corp.		2,445,080
	110,000	General Dynamics Corp.		8,685,600
	40,000	Jabil Circuit, Inc.*		924,400
	27,900	L-3 Communications Holdings, Inc.*		1,872,090
	90,600	Lucent Technologies, Inc.		617,892
	10,020	McDATA Corp.*		143,086
	99,600	Motorola, Inc.		1,733,040
	72,981	Nortel Networks Corp.		456,861
	52,200	PerkinElmer, Inc.		1,674,576
	24,700	Plantronics, Inc.*		491,530
	109,600	Sanmina Corp.*		1,973,896
	278,100	Solectron Corp.*		3,782,160
	25,700	Terayon Communication Systems, Inc.*		107,169
	77,900	Thermo Electron Corp.*		1,688,093
	120,300	Vishay Intertechnology, Inc.*		2,806,599
				29,402,072
Electrical Utilities – 2.7%
	67,400	Calpine Corp.*		2,225,548
	43,500	Consolidated Edison, Inc.		1,779,150
	37,300	Duke Energy Corp.		1,466,263
	200,400	Dynegy, Inc.		8,450,868
	147,500	Entergy Corp.		5,681,700
	66,425	Exelon Corp.		3,626,805
	162,900	PG&E Corp.		2,671,560
				25,901,894

18     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE U.S. EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
Energy Resources – 5.6%
	27,300	Enron Corp.	$	955,227
	832,616	Exxon Mobil Corp.		33,429,532
	68,500	Kerr-McGee Corp.		4,001,085
	64,800	Phillips Petroleum Co.		3,726,000
	214,000	Royal Dutch Petroleum Co. ADR		12,118,820
				54,230,664
Entertainment – 2.1%
	277,700	The Walt Disney Co.		7,061,911
	320,406	Viacom, Inc. Class B*		13,585,214
				20,647,125
Environmental Services – 0.6%
	115,300	Allied Waste Industries, Inc.*		2,090,389
	110,400	Waste Management, Inc.		3,414,672
				5,505,061
Equity REIT – 0.1%
	19,000	AvalonBay Communities, Inc.		959,310
Financial Services – 5.9%
	182,400	Countrywide Credit Industries, Inc.		7,569,600
	30,800	Federal Home Loan Mortgage Corp.		1,936,704
	184,200	Federal National Mortgage Association		14,037,882
	810,800	General Electric Co.		33,226,584
				56,770,770
Food & Beverage – 3.6%
	186,602	Archer-Daniels-Midland Co.		2,506,062
	281,660	PepsiCo, Inc.		13,238,020
	56,300	Supervalu, Inc.		1,181,174
	177,100	SYSCO Corp.		4,962,342
	86,900	The Coca-Cola Co.		4,229,423
	71,800	The Pepsi Bottling Group, Inc.		3,169,970
	98,300	Unilever NV		6,005,147
				35,292,138
Forest – 0.4%
	68,900	Georgia-Pacific Group		2,517,606
	24,800	International Paper Co.		994,976
				3,512,582
Gold – 0.2%
	112,200	Barrick Gold Corp.		1,797,444
Grocery – 0.3%
	98,500	The Kroger Co.*		2,622,070
Heavy Electrical – 0.5%
	98,400	Emerson Electric Co.		5,274,240
Home Products – 2.5%
	99,400	Avon Products, Inc.		4,585,322
	186,300	Colgate-Palmolive Co.		10,088,145
	71,100	Fortune Brands, Inc.		2,719,575
	27,900	Ralston Purina Group		911,772
	33,900	The Estee Lauder Companies, Inc.		1,317,015
	58,300	The Procter & Gamble Co.		4,322,945
				23,944,774
Industrial Parts – 2.3%
	35,100	ITT Industries, Inc.		1,584,765
	7,046	Kadant, Inc.*		97,587
	262,707	Tyco International Ltd.		13,647,629
	96,900	United Technologies Corp.		6,627,960
				21,957,941
Information Services – 2.0%
	28,700	Affiliated Computer Services, Inc. Series A*		2,346,799
	91,300	Electronic Data Systems Corp.		5,384,874
	81,100	First Data Corp.		5,340,435
	42,200	Omnicom Group, Inc.		3,282,738
	26,000	Paychex, Inc.		963,820
	38,500	SEI Investments Co.		1,580,040
				18,898,706
Internet – 2.3%
	451,750	AOL Time Warner, Inc.*		16,872,863
	23,900	BroadVision, Inc.*		30,831
	88,300	QUALCOMM, Inc.*		5,196,455
				22,100,149
Leisure – 0.4%
	80,800	Cendant Corp.*		1,540,856
	26,600	Harley-Davidson, Inc.		1,292,494
	17,900	International Game Technology*		958,008
				3,791,358
Life Insurance – 0.7%
	60,600	CIGNA Corp.		5,454,000
	42,400	MetLife, Inc.		1,299,942
				6,753,942
Media – 1.6%
	95,700	Automatic Data Processing, Inc.		4,953,432
	35,400	Cox Communications, Inc.*		1,407,504
	113,400	Fox Entertainment Group, Inc.*		2,780,568
	202,300	General Motors Corp. Class H*		3,772,895
	171,300	Liberty Media Corp. Series A*		2,603,760
				15,518,159
Medical Products – 2.9%
	165,100	Abbott Laboratories		8,205,470
	29,300	Baxter International, Inc.		1,511,880
	340,300	Johnson & Johnson		17,937,213
				27,654,563
Medical Providers – 1.1%
	137,700	Beverly Enterprises, Inc.*		1,377,000
	135,300	UnitedHealth Group, Inc.		9,208,518
				10,585,518

The accompanying notes are an integral part of these financial statements.      19

 GOLDMAN SACHS CORE U.S. EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Motor Vehicle – 1.8%
	174,200	General Motors Corp.	$	9,537,450
	109,300	Johnson Controls, Inc.		8,006,225
				17,543,675
Oil Refining – 1.5%
	31,800	Chevron Corp.		2,885,850
	36,100	Conoco, Inc. Class B		1,069,282
	105,000	Sunoco, Inc.		3,972,150
	53,500	Texaco, Inc.		3,726,275
	44,200	Tosco Corp.		2,050,880
	34,800	USX-Marathon Group		1,096,548
				14,800,985
Oil Services – 0.1%
	63,500	BJ Services Co.*		1,424,305
Property Insurance – 2.9%
	66,512	Allstate Corp.		2,256,752
	155,589	American International Group, Inc.		12,167,060
	153,700	Loews Corp.		7,503,634
	35,300	The Hartford Financial Services Group, Inc.		2,287,440
	27,900	The Progressive Corp.		3,606,633
				27,821,519
Publishing – 0.2%
	55,800	R.R. Donnelley & Sons Co.		1,663,956
Railroads – 0.2%
	62,700	CSX Corp.		2,215,818
Restaurants – 0.1%
	55,500	Brinker International, Inc.*		1,476,300
Security/Asset Management – 2.2%
	143,500	John Hancock Financial Services, Inc.		5,732,825
	129,200	Lehman Brothers Holdings, Inc.		8,481,980
	48,500	Morgan Stanley Dean Witter & Co.		2,587,475
	51,400	The Bear Stearns Cos., Inc.		2,682,566
	124,250	The Charles Schwab Corp.		1,548,155
				21,033,001
Semiconductors – 3.7%
	65,200	Applied Materials, Inc.*		2,809,468
	117,800	Arrow Electronics, Inc.*		3,155,862
	167,000	Avnet, Inc.		4,021,360
	435,300	Intel Corp.		12,170,988
	27,100	International Rectifier Corp.*		1,002,158
	94,200	KLA-Tencor Corp.*		4,628,988
	66,600	Linear Technology Corp.		2,735,928
	81,200	Micron Technology, Inc.*		3,053,932
	24,400	NVIDIA Corp.*		2,066,924
	29,800	TranSwitch Corp.*		244,360
				35,889,968
Specialty Retail – 2.6%
	59,600	BJ’s Wholesale Club, Inc.*		2,920,400
	70,300	CVS Corp.		2,538,533
	215,800	Lowes Co., Inc.		8,027,760
	225,000	The Home Depot, Inc.		10,338,750
	66,000	Toys “R” Us, Inc.*		1,579,380
				25,404,823
Telecommunications – Cellular – 1.8%
	47,500	Qwest Communications International, Inc.		1,021,250
	399,822	SBC Communications, Inc.		16,356,718
				17,377,968
Telephone – 3.5%
	326,975	AT&T Corp.		6,225,604
	43,900	BCE, Inc.		1,089,598
	166,800	BellSouth Corp.		6,221,640
	386,118	Verizon Communications, Inc.		19,305,900
	53,400	WorldCom, Inc.-WorldCom Group*		686,724
				33,529,466
Thrifts – 1.5%
	80,100	Golden West Financial Corp.		4,635,387
	263,750	Washington Mutual, Inc.		9,874,800
				14,510,187
Tobacco – 1.6%
	209,000	Philip Morris Companies, Inc.		9,906,600
	89,900	R.J. Reynolds Tobacco Holdings, Inc.		5,191,725
				15,098,325
Truck Freight – 0.5%
	83,100	United Parcel Service, Inc. Class B		4,589,613
Wireless – 1.1%
	41,900	ALLTEL Corp.		2,430,200
	105,242	AT&T Wireless Services, Inc.*		1,631,251
	44,100	Telephone & Data Systems, Inc.		4,553,325
	30,900	United States Cellular Corp.*		1,599,075
				10,213,851
TOTAL COMMON STOCKS
(Cost $922,642,470)			$	962,544,984
TOTAL INVESTMENTS
(Cost $922,642,470)			$	962,544,984

 * 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

20     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE LARGE CAP GROWTH FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on May 1, 1997 (commencement of operations) in Class A Shares (maximum sales charge of 5.5%) of the Goldman Sachs CORE Large Cap Growth Fund. For comparative purposes, the performance of the Fund’s benchmark, (Russell 1000 Growth Index with dividends reinvested), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when 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 Shares due to differences in fees and loads.

CORE Large Cap Growth Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested May 1, 1997 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced May 1, 1997)
Excluding sales charges		5.70%		-45.97%
Including sales charges		4.33%		-48.95%
Class B (commenced May 1, 1997)
Excluding contingent deferred sales charges		4.95%		-46.37%
Including contingent deferred sales charges		4.52%		-49.05%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		1.13%		-46.35%
Including contingent deferred sales charges		1.13%		-46.88%
Institutional Class (commenced May 1, 1997)		6.07%		-45.73%
Service Class (commenced May 1, 1997)		5.55%		-46.05%

21

 GOLDMAN SACHS CORE LARGE CAP GROWTH FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 99.8%
Apparel – 0.2%
	7,650	Columbia Sportswear Co.*	$	249,849
	24,200	NIKE, Inc. Class B		1,210,000
				1,459,849
Banks – 1.5%
	115,200	Bank of America Corp.		7,084,800
	14,300	Investors Financial Services Corp.		915,915
	23,300	Marshall & Ilsley Corp.		1,295,946
	26,100	North Fork Bancorporation, Inc.		777,780
				10,074,441
Chemicals – 0.1%
	20,000	The Lubrizol Corp.		719,600
Clothing – 1.0%
	245,200	Intimate Brands, Inc.		3,373,952
	13,400	Payless ShoeSource, Inc.*		780,818
	22,600	The Neiman Marcus Group, Inc.*		718,906
	60,100	The Talbots, Inc.		2,230,912
				7,104,588
Computer Hardware – 4.5%
	50,200	3Com Corp.		206,322
	620,300	Cisco Systems, Inc.*		10,129,499
	110,600	Dell Computer Corp.*		2,364,628
	585,300	EMC Corp.		9,048,738
	29,300	Emulex Corp.*		466,163
	5,500	Extreme Networks, Inc.*		87,835
	102,408	Palm, Inc.*		366,621
	589,200	Sun Microsystems, Inc.*		6,746,340
	39,200	Tech Data Corp.*		1,603,280
				31,019,426
Computer Software – 11.1%
	228,800	Adobe Systems, Inc.		7,689,968
	17,700	Advent Software, Inc.*		940,047
	66,800	BEA Systems, Inc.*		1,080,156
	12,900	Electronic Arts, Inc.*		744,459
	30,000	i2 Technologies, Inc.*		199,800
	208,600	International Business Machines, Inc.		20,860,000
	30,600	Mentor Graphics Corp.*		504,900
	505,700	Microsoft Corp.*		28,850,185
	19,200	NCR Corp.*		726,720
	706,600	Oracle Corp.*		8,627,586
	136,700	PeopleSoft, Inc.*		4,713,416
	3,000	Sabre Holdings Corp.*		126,540
	17,200	Sapient Corp.*		93,052
	62,000	Siebel Systems, Inc.*		1,339,200
	48,700	The Titan Corp.*		903,385
				77,399,414
Construction – 0.5%
	62,300	Jacobs Engineering Group, Inc.*		3,652,026
Defense/Aerospace – 0.3%
	23,500	The Boeing Co.		1,203,200
	10,400	United Technologies Corp.		711,360
				1,914,560
Department Stores – 1.9%
	48,400	Target Corp.		1,677,060
	239,200	Wal-Mart Stores, Inc.		11,493,560
				13,170,620
Drugs – 19.0%
	84,400	Allergan, Inc.		6,097,900
	253,400	American Home Products Corp.		14,190,400
	190,900	Amgen, Inc.*		12,274,870
	14,700	Andrx Group*		1,033,263
	136,800	Applera Corp. – Applied Biosystems Group		3,421,368
	65,400	Bristol-Myers Squibb Co.		3,671,556
	155,200	Cardinal Health, Inc.		11,320,288
	194,600	Eli Lilly & Co.		15,106,798
	41,900	Genzyme Corp.*		2,373,216
	183,700	McKesson Corp.		7,210,225
	221,100	Merck & Co., Inc.		14,393,610
	952,175	Pfizer, Inc.		36,477,824
	16,400	Pharmacia Corp.		649,440
	94,700	Schering-Plough Corp.		3,610,911
				131,831,669
Electrical Equipment – 3.6%
	17,700	Amphenol Corp.*		715,611
	55,100	AVX Corp.		1,165,365
	80,300	Jabil Circuit, Inc.*		1,831,884
	135,300	KEMET Corp.*		2,462,460
	83,100	L-3 Communications Holdings, Inc.*		5,576,010
	25,500	Level 3 Communications, Inc.*		97,410
	69,500	Metromedia Fiber Network, Inc.*		52,125
	53,200	Molex, Inc.		1,679,524
	34,400	Motorola, Inc.		598,560
	13,500	Plantronics, Inc.*		268,650
	136,900	Sanmina Corp.*		2,465,569
	33,100	Scientific-Atlanta, Inc.		679,874
	200,700	Solectron Corp.*		2,729,520
	8,000	SPX Corp.*		930,000
	152,250	Vishay Intertechnology, Inc.*		3,551,992
				24,804,554
Electrical Utilities – 1.6%
	192,800	Dynegy, Inc.		8,130,376
	45,400	Enron Corp.		1,588,546
	30,500	Entergy Corp.		1,174,860
				10,893,782

22     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE LARGE CAP GROWTH FUND 

Shares		Description	Value
Common Stocks – (continued)
Energy Resources – 1.9%
	172,800	Exxon Mobil Corp.	$	6,937,920
	77,600	Kerr-McGee Corp.		4,532,616
	58,500	Occidental Petroleum Corp.		1,609,920
				13,080,456
Entertainment – 1.4%
	222,521	Viacom, Inc. Class B*		9,434,890
Environmental Services – 0.1%
	34,900	Republic Services, Inc.*		692,765
Equity REIT – 0.1%
	21,800	Equity Office Properties Trust		699,562
Financial Services – 9.4%
	71,500	AmeriCredit Corp.*		3,289,786
	1,800	Concord EFS, Inc.*		94,446
	166,100	Countrywide Credit Industries, Inc.		6,893,150
	70,400	Federal National Mortgage Association		5,365,184
	1,220,100	General Electric Co.		49,999,698
				65,642,264
Food & Beverage – 2.9%
	49,100	Hormel Foods Corp.		1,250,577
	140,760	PepsiCo, Inc.		6,615,720
	135,100	SYSCO Corp.		3,785,502
	85,800	The Coca-Cola Co.		4,175,886
	75,900	The Pepsi Bottling Group, Inc.		3,350,985
	14,400	Unilever NV		879,696
				20,058,366
Home Products – 2.6%
	149,000	Avon Products, Inc.		6,873,370
	31,900	Colgate-Palmolive Co.		1,727,385
	41,000	The Estee Lauder Cos., Inc.		1,592,850
	101,900	The Procter & Gamble Co.		7,555,885
				17,749,490
Industrial Parts – 1.1%
	17,000	ITT Industries, Inc.		767,550
	133,800	Tyco International Ltd.		6,950,910
				7,718,460
Information Services – 4.1%
	66,000	Affiliated Computer Services, Inc.*		5,396,820
	56,700	Automatic Data Processing, Inc.		2,934,792
	14,700	DST Systems, Inc.*		703,395
	174,600	Electronic Data Systems Corp.		10,297,908
	8,869	MarchFirst, Inc.*		20
	23,100	Moody’s Corp.		794,409
	84,800	Omnicom Group, Inc.		6,596,592
	54,600	Paychex, Inc.		2,024,022
	15,000	WebMD Corp.*		73,500
				28,821,458
Internet – 5.0%
	1,900	Ameritrade Holding Corp.*		11,324
	624,050	AOL Time Warner, Inc.*		23,308,267
	32,900	Ariba, Inc.*		75,012
	39,000	BroadVision, Inc.*		50,310
	12,300	CheckFree Corp.*		269,493
	18,900	E*TRADE Group, Inc.*		120,960
	600	EarthLink, Inc.*		8,106
	45,400	eBay, Inc.*		2,552,842
	83,100	Exodus Communications, Inc.*		73,128
	12,700	HomeStore.com, Inc.*		210,439
	105,800	QUALCOMM, Inc.*		6,226,330
	52,512	VeriSign, Inc.*		2,155,618
				35,061,829
Internet Software – 0.1%
	7,900	Symantec Corp.*		339,621
Life Insurance – 0.1%
	30,800	MetLife, Inc.		939,400
Media – 0.8%
	16,500	EchoStar Communications Corp. Series A*		464,640
	30,400	Fox Entertainment Group, Inc.*		745,408
	158,300	General Motors Corp. Class H*		2,952,295
	100,800	Liberty Media Corp. Series A*		1,532,160
				5,694,503
Medical Products – 4.1%
	263,800	Abbott Laboratories		13,110,860
	62,800	Biomet, Inc.		1,737,048
	189,100	Johnson & Johnson		9,967,461
	15,000	Medtronic, Inc.		683,250
	29,600	Stryker Corp.		1,622,968
	19,000	Varian Medical Systems, Inc.*		1,254,000
	5,480	Zimmer Holdings, Inc.*		149,056
				28,524,643
Medical Providers – 0.6%
	52,700	Caremark Rx, Inc.*		920,669
	19,800	Express Scripts, Inc.*		1,059,300
	32,000	UnitedHealth Group, Inc.		2,177,920
				4,157,889
Oil Services – 0.1%
	22,100	BJ Services Co.*		495,703
Pharmaceuticals & Biotechnology – 0.7%
	140,500	IVAX Corp.*		4,729,230
Property Insurance – 1.9%
	127,700	American International Group, Inc.		9,986,140
	25,900	Old Republic International Corp.		695,415
	18,700	The Progressive Corp.		2,417,349
				13,098,904
Railroads – 0.1%
	27,800	CSX Corp.		982,452

The accompanying notes are an integral part of these financial statements.      23

 GOLDMAN SACHS CORE LARGE CAP GROWTH FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Restaurants – 0.1%
	33,650	Brinker International, Inc.*	$	895,090
Security/Asset Management – 1.4%
	19,800	John Hancock Financial Services, Inc.		791,010
	103,300	Lehman Brothers Holdings, Inc.		6,781,645
	185,300	The Charles Schwab Corp.		2,308,838
				9,881,493
Semiconductors – 6.7%
	153,100	Advanced Micro Devices, Inc.*		2,074,505
	70,800	Applied Materials, Inc.*		3,050,772
	91,700	Avnet, Inc.		2,208,136
	702,700	Intel Corp.		19,647,492
	160,500	KLA-Tencor Corp.*		7,886,970
	60,600	Linear Technology Corp.		2,489,448
	45,600	NVIDIA Corp.*		3,862,776
	166,600	Texas Instruments, Inc.		5,514,460
				46,734,559
Specialty Retail – 4.7%
	62,500	BJ’s Wholesale Club, Inc.*		3,062,500
	135,500	CVS Corp.		4,892,905
	171,000	Krispy Kreme Doughnuts, Inc.*		5,275,350
	338,950	The Home Depot, Inc.		15,574,753
	56,700	Tiffany & Co.		1,766,205
	55,200	Walgreen Co.		1,896,120
				32,467,833
Telephone – 1.0%
	272,700	BCE, Inc.		6,768,414
	4,044	WorldCom, Inc.-MCI Group*		52,127
	1,111	WorldCom, Inc.-WorldCom Group		14,288
	32,700	XO Communications, Inc.*		37,278
				6,872,107
Thrifts – 0.9%
	175,100	Washington Mutual, Inc.		6,555,744
Tobacco – 1.8%
	269,700	Philip Morris Companies, Inc.		12,783,780
Truck Freight – 0.2%
	21,600	United Parcel Service, Inc. Class B		1,192,968
Wireless – 0.6%
	95,800	AT&T Wireless Services, Inc.*		1,484,900
	26,700	Telephone & Data Systems, Inc.		2,756,775
				4,241,675
TOTAL COMMON STOCKS
(Cost $772,197,581)			$	693,591,663
TOTAL INVESTMENTS
(Cost $772,197,581)			$	693,591,663

 * 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.

24     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE SMALL CAP EQUITY FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on August 15, 1997 (commencement of operations) in Institutional Shares at (NAV) of the Goldman Sachs CORE Small Cap Equity Fund. For comparative purposes, the performance of the Fund’s benchmark, (Russell 2000 Growth Index with dividends reinvested), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class A, Class B, Class C and Service Shares will vary from Institutional Shares due to differences in fees and loads.

CORE Small Cap Equity Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested August 15, 1997 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced August 15, 1997)
Excluding sales charges		4.28%		-8.64%
Including sales charges		2.83%		-13.66%
Class B (commenced August 15, 1997)
Excluding contingent deferred sales charges		3.51%		-9.35%
Including contingent deferred sales charges		3.01%		-13.88%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		3.58%		-9.32%
Including contingent deferred sales charges		3.58%		-10.23%
Institutional Class (commenced August 15, 1997)		4.69%		-8.28%
Service Class (commenced August 15, 1997)		4.19%		-8.75%

25

 GOLDMAN SACHS CORE SMALL CAP EQUITY FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 100.0%
Airlines – 0.9%
	14,500	AAR Corp.	$	247,370
	27,600	AirTran Holdings, Inc.*		180,228
	38,200	Frontier Airlines, Inc.*		476,736
	18,100	Mesa Air Group, Inc.*		266,432
				1,170,766
Alcohol – 0.2%
	8,000	The Robert Mondavi Corp.*		338,000
Apparel – 0.6%
	6,000	Columbia Sportswear Co.*		195,960
	18,700	Phillips-Van Heusen Corp.		276,199
	7,700	Quiksilver, Inc.*		177,254
	8,900	Skechers U.S.A., Inc.*		186,455
				835,868
Banks – 6.2%
	28,300	Brookline Bancorp, Inc.		427,330
	12,900	Commerce Bancorp, Inc.		871,395
	33,900	Commercial Federal Corp.		854,280
	12,400	Cullen/Frost Bankers, Inc.		443,300
	9,300	First Charter Corp.		160,239
	1,800	First Citizens BancShares, Inc.		183,978
	12,715	Fulton Financial Corp.		274,771
	11,100	GBC Bancorp		348,096
	16,000	Greater Bay Bancorp		424,640
	43,400	Independence Community Bank Corp.		943,082
	14,000	Investors Financial Services Corp.		896,700
	5,100	Net.B@nk, Inc.*		41,820
	11,000	Provident Financial Group, Inc.		339,350
	12,400	Southwest Bancorp of Texas, Inc.*		397,296
	22,800	The South Financial Group, Inc.		390,792
	27,195	Trustco Bank Corp.		372,572
	17,200	United Bankshares, Inc.		479,880
	23,400	United Community Financial Corp.		173,628
	10,500	Westamerica Bancorporation		410,340
	6,000	Wintrust Financial Corp.		189,000
				8,622,489
Chemicals – 2.9%
	25,500	Albemarle Corp.		539,070
	24,300	Arch Chemicals, Inc.		503,010
	20,500	Ashland, Inc.		869,200
	13,300	Brady Corp.		486,780
	4,900	Cytec Industries, Inc.*		161,798
	11,500	Ivex Packaging Corp.*		209,875
	9,200	Millennium Chemicals, Inc.		123,648
	9,000	Spartech Corp.		205,200
	6,700	The Lubrizol Corp.		241,066
	14,700	The Scotts Co.*		589,911
				3,929,558
Clothing – 0.4%
	20,400	The Cato Corp.		357,408
	4,200	The Neiman Marcus Group, Inc.*		133,602
				491,010
Computer Hardware – 2.1%
	12,800	Advanced Digital Information Corp.*		157,952
	16,200	Black Box Corp.*		758,322
	14,600	Daisytek International Corp.		202,356
	7,800	Digital Lightwave, Inc.*		115,050
	8,600	Electronics for Imaging, Inc.*		175,956
	6,500	Identix, Inc.*		28,600
	23,200	Imation Corp.*		578,840
	22,820	Maxtor Corp.*		137,605
	6,400	Mercury Computer Systems, Inc.*		174,080
	7,100	MIPS Technologies, Inc.*		65,249
	8,100	RadiSys Corp.*		134,622
	9,800	SBS Technologies, Inc.*		126,910
	8,700	Secure Computing Corp.*		130,065
	13,500	Sorrento Networks Corp.*		57,780
				2,843,387
Computer Software – 3.5%
	4,300	Activision, Inc.*		159,315
	20,400	Actuate Corp.*		140,760
	2,600	Advent Software, Inc.*		138,086
	12,366	AremisSoft Corp.*		10,882
	5,500	Aspen Technology, Inc.*		90,585
	50,800	Avant! Corp.*		299,720
	14,900	Avid Technology, Inc.*		149,745
	18,700	CACI International, Inc.*		742,203
	8,000	Carreker Corp.*		66,800
	6,100	Catapult Communications Corp.*		110,715
	6,900	Cerner Corp.*		334,581
	5,600	Eclipsys Corp.*		144,200
	27,000	Entrust, Inc.*		117,450
	12,700	HNC Software, Inc.		268,097
	8,800	Hyperion Solutions Corp.*		136,840
	13,500	Informatica Corp.*		103,410
	10,800	Intergraph Corp.*		111,456
	11,900	J.D. Edwards & Co.*		103,530
	11,600	Manhattan Associates, Inc.*		262,740
	7,200	MapInfo Corp.*		69,840
	14,600	MicroStrategy, Inc.*		36,062
	11,300	Midway Games, Inc.*		165,545
	7,700	Quest Software, Inc.*		160,160
	11,550	Radiant Systems, Inc.*		110,418
	8,900	Renaissance Learning, Inc.*		305,626
	7,000	SeaChange International, Inc.*		158,410
	8,400	SERENA Software, Inc.*		98,280
	10,600	The Titan Corp.*		196,630
	10,500	TIBCO Software, Inc.*		89,985
				4,882,071
Construction – 2.0%
	13,200	Champion Enterprises, Inc.*		138,600
	12,700	Corrections Corp. of America*		184,785
	7,600	EMCOR Group, Inc.*		296,324
	14,150	Granite Construction, Inc.		343,138
	8,600	NCI Building Systems, Inc.*		132,440
	3,300	NVR, Inc.*		531,300
	17,400	ResortQuest International, Inc.*		135,720
	10,600	Standard Pacific Corp.		248,782
	5,600	The Ryland Group, Inc.		301,280

26     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE SMALL CAP EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
Construction – (continued)
	18,200	URS Corp.*	$	388,570
	24,500	Washington Group International, Inc.*		6,125
				2,707,064
Consumer Durables – 1.4%
	11,800	Pier 1 Imports, Inc.		143,370
	15,200	Springs Industries, Inc.		697,528
	21,100	The Toro Co.		961,105
	8,700	Universal Electronics, Inc.*		127,542
				1,929,545
Defense/Aerospace – 0.6%
	26,800	Kaman Corp.		354,564
	8,200	Moog, Inc.*		293,560
	6,000	Precision Castparts Corp.		206,040
				854,164
Department Stores – 0.6%
	42,200	Dillard’s, Inc.		755,380
	24,500	Value City Department Stores, Inc.*		102,410
				857,790
Drugs – 6.8%
	5,400	Albany Molecular Research, Inc.*		138,531
	7,300	Alexion Pharmaceuticals, Inc.*		137,605
	27,900	Allscripts Heathcare Solutions, Inc.*		153,450
	25,456	AmerisourceBergen Corp.*		1,640,385
	11,200	Amylin Pharmaceuticals, Inc.*		80,864
	15,900	Bio-Technology General Corp.*		151,050
	5,200	Biosite, Inc.*		137,644
	34,300	Cell Genesys, Inc.*		653,415
	10,900	Corixa Corp.*		126,985
	23,400	Diagnostic Products Corp.		918,450
	7,600	Diversa Corp.*		92,340
	4,800	Emisphere Technologies, Inc.*		135,600
	6,600	Enzo Biochem, Inc.		171,534
	8,300	Gene Logic, Inc.*		144,835
	22,800	Genome Therapeutics Corp.*		174,420
	19,100	Herbalife International, Inc.		210,864
	9,100	IDEXX Laboratories, Inc.*		220,129
	12,200	ImmunoGen, Inc.*		165,676
	9,200	Immunomedics, Inc.*		134,596
	31,300	Interneuron Pharmaceuticals, Inc.*		156,500
	7,900	Inverness Medical Technology, Inc.*		297,040
	5,700	Martek Biosciences Corp.*		111,720
	11,200	Maxygen, Inc.*		167,888
	4,800	Medicis Pharmaceutical Corp.*		235,728
	15,100	NBTY, Inc.*		260,626
	5,400	Neose Technologies, Inc.*		230,310
	37,100	Perrigo Co.*		598,794
	13,100	Pharmaceutical Resources, Inc.*		458,500
	11,600	Pharmacopeia, Inc.*		201,260
	15,600	PRAECIS Pharmaceuticals, Inc.*		162,396
	5,500	Priority Healthcare Corp. Class B*		138,946
	13,000	SciClone Pharmaceuticals, Inc.*		50,700
	11,600	Serologicals Corp.*		220,978
	4,300	Syncor International Corp.*		157,122
	10,200	Tularik, Inc.*		235,620
	12,200	Vical, Inc.*		141,520
				9,414,021
Electrical Equipment – 7.7%
	5,900	ADTRAN, Inc.*		136,585
	16,400	Aeroflex, Inc.*		145,140
	24,300	Allen Telecom, Inc.*		296,946
	5,700	Anaren Microwave, Inc.*		109,041
	28,700	Anixter International, Inc.*		893,431
	7,900	BEI Technologies, Inc.		182,727
	13,800	Benchmark Electronics, Inc.*		342,240
	1,900	Cabot Microelectronics Corp.*		133,095
	13,500	Checkpoint Systems, Inc.*		166,725
	13,000	Coherent, Inc.*		460,200
	8,100	DDi Corp.*		113,481
	18,200	DMC Stratex Networks, Inc.*		173,264
	9,700	DSP Group, Inc.*		242,500
	6,600	Excel Technology, Inc.*		127,380
	11,200	FEI Co.*		390,096
	15,300	Fisher Scientific International, Inc.*		382,500
	15,000	Harvard Bioscience, Inc.*		213,000
	6,600	Helix Technology Corp.		151,800
	7,000	Keithley Instruments, Inc.		139,370
	24,400	Kimball International, Inc. Class B		369,416
	9,700	Littelfuse, Inc.*		261,900
	18,500	Methode Electronics, Inc.		159,840
	5,700	MKS Instruments, Inc.*		127,395
	6,400	Molecular Devices Corp.*		145,216
	27,800	MRV Communications, Inc.*		113,146
	6,700	Nanometrics, Inc.*		189,342
	35,900	Netro Corp.*		99,084
	10,000	NMS Communications Corp.*		28,200
	8,150	Park Electrochemical Corp.		204,157
	3,700	PC-Tel, Inc.*		28,934
	14,800	Pemstar, Inc.*		191,660
	32,500	Pioneer-Standard Electronics, Inc.		390,325
	10,100	Planar Systems, Inc.*		267,650
	6,500	Plantronics, Inc.*		129,350
	8,200	Plexus Corp.		285,524
	13,400	Proxim, Inc.*		151,822
	4,400	Rogers Corp.*		129,580
	3,400	Roper Industries, Inc.		139,400
	5,700	Rudolph Technologies, Inc.*		205,200
	11,800	Sage, Inc.*		212,164
	8,700	Sensormatic Electronics Corp.*		203,754
	12,600	SymmetriCom, Inc.*		89,460
	15,000	Therma-Wave, Inc.*		247,950
	5,600	Tollgrade Communications, Inc.*		121,520
	4,700	Trimble Navigation Ltd.*		77,550
	7,400	Ultratech Stepper, Inc.*		127,280
	20,200	UTStarcom, Inc.*		338,350
	15,800	Varian, Inc.*		469,102
	8,200	Vicor Corp.*		166,952
	7,900	Zygo Corp.*		86,505
				10,557,249

The accompanying notes are an integral part of these financial statements.      27

 GOLDMAN SACHS CORE SMALL CAP EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Electrical Utilities – 1.6%
	23,000	Avista Corp.	$	374,210
	21,300	Covanta Energy Corp.*		340,800
	13,800	Public Service Co. of New Mexico		391,920
	11,400	RGS Energy Group, Inc.		439,470
	37,000	The Montana Power Co.		260,850
	9,400	UIL Holdings Corp.		463,420
				2,270,670
Energy Resources – 1.0%
	29,700	KCS Energy, Inc.*		157,410
	20,500	Patterson-UTI Energy, Inc.*		288,025
	6,900	Pure Resources, Inc.*		130,065
	11,500	Quicksilver Resources, Inc.*		161,000
	23,500	Southwestern Energy Co.		293,750
	7,200	St. Mary Land & Exploration Co.		138,240
	10,900	Tom Brown, Inc.*		259,420
				1,427,910
Entertainment – 0.5%
	31,700	Handleman Co.*		490,082
	17,600	World Wrestling Federation Entertainment, Inc.		198,880
				688,962
Environmental Services – 0.3%
	19,700	Casella Waste Systems, Inc.*		229,308
	6,600	Waste Connections, Inc.*		213,048
				442,356
Equity REIT – 6.5%
	9,600	Alexandria Real Estate Equities, Inc.		383,904
	12,800	Arden Reality, Inc.		340,480
	5,600	AvalonBay Communities, Inc.		282,744
	26,600	Bedford Property Investors, Inc.		559,930
	24,300	Brandywine Realty Trust		545,535
	19,700	EastGroup Properties, Inc.		435,370
	11,600	FelCor Lodging Trust, Inc.		243,948
	31,200	Glenborough Reality Trust, Inc.		647,400
	14,200	JDN Realty Corp.		164,010
	17,600	Lexington Corporate Properties Trust		248,160
	21,700	MeriStar Hospitality Corp.		447,020
	20,500	Mid-America Apartment Communities, Inc.		528,900
	9,200	Parkway Properties, Inc.		294,584
	19,200	Prentiss Properties Trust		543,936
	19,300	Realty Income Corp.		553,910
	21,100	Shurgard Storage Centers, Inc.		638,486
	19,500	SL Green Realty Corp.		571,350
	13,200	Storage USA, Inc.		497,640
	21,200	Summit Properties, Inc.		555,652
	14,000	Sun Communities, Inc.		491,400
				8,974,359
Financial Services – 1.0%
	29,300	Advanta Corp.		399,066
	9,900	Capstead Mortage Corp.		238,689
	25,000	Credit Acceptance Corp.*		236,250
	4,200	Doral Financial Corp.		139,784
	8,600	Federal Agricultural Mortgage Corp.*		296,786
	6,900	NextCard, Inc.*		61,617
				1,372,192
Food & Beverage – 2.2%
	25,100	Corn Products International, Inc.		828,300
	13,400	Dole Food Co., Inc.		321,466
	26,200	Fleming Companies, Inc.		775,520
	29,600	Pilgrim’s Pride Corp.		430,680
	14,900	Smithfield Foods, Inc.*		659,325
				3,015,291
Forest – 1.1%
	33,400	Louisiana-Pacific Corp.		354,708
	10,000	Potlatch Corp.		330,000
	27,200	United Stationers, Inc.*		857,072
				1,541,780
Gas Utilities – 1.6%
	16,400	California Water Services Group		426,400
	37,000	Oneok, Inc.		599,400
	10,600	SEMCO Energy, Inc.		152,640
	22,100	UGI Corp.		618,800
	15,700	WGL Holdings, Inc.		424,057
				2,221,297
Heavy Electrical – 1.5%
	24,850	A.O. Smith Corp.		418,722
	18,900	Belden, Inc.		433,755
	6,300	C&D Technologies, Inc.		138,285
	16,150	Cable Design Technologies Corp.*		222,063
	27,900	General Cable Corp.		422,406
	5,500	Woodward Governor Co.		395,725
				2,030,956
Heavy Machinery – 1.0%
	15,500	AGCO Corp.		182,125
	26,900	JLG Industries, Inc.		317,958
	8,400	NACCO Industries, Inc.		540,204
	13,300	Terex Corp.*		294,728
				1,335,015
Home Products – 1.1%
	10,600	Alberto-Culver Co. Class B		456,542
	25,500	Church & Dwight Co., Inc.		694,620
	17,800	Playtex Products, Inc.*		183,696
	6,200	Tupperware Corp.		146,506
				1,481,364
Hotels – 0.9%
	17,900	Argosy Gaming Co.*		532,167
	34,500	Aztar Corp.*		556,830
	31,600	Boyd Gaming Corp.*		189,600
				1,278,597
Industrial Parts – 3.1%
	18,600	Clarcor, Inc.		497,736
	7,300	DRS Technologies, Inc.*		185,055

28     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE SMALL CAP EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
Industrial Parts – (continued)
	17,200	Flowserve Corp.*	$	429,140
	22,000	Hughes Supply, Inc.		601,700
	15,000	Kennametal, Inc.		585,000
	18,600	Lennox International, Inc.		186,744
	6,900	Mettler-Toledo International, Inc.*		315,813
	7,400	SPS Technologies, Inc.*		354,460
	14,600	The Timken Co.		219,000
	6,000	Thomas Industries, Inc.		156,900
	16,200	Watsco, Inc.		229,068
	25,700	Watts Industries, Inc.		380,360
	4,700	York International Corp.		178,600
				4,319,576
Industrial Services – 1.5%
	17,000	Aaron Rents, Inc. Class B		299,370
	8,900	Administaff, Inc.*		300,820
	5,200	Chemed Corp.		154,960
	15,100	Copart, Inc.*		371,913
	12,000	Dollar Thrifty Automotive Group, Inc.*		210,000
	5,600	Learning Tree International, Inc.*		133,728
	17,800	Rent-Way, Inc.*		133,500
	8,800	Rollins, Inc.		178,464
	18,800	The Wackenhut Corp.*		321,480
				2,104,235
Information Services – 4.8%
	12,500	ADVO, Inc.*		455,000
	2,900	BARRA, Inc.*		141,230
	16,500	Braun Consulting, Inc.*		119,625
	5,900	Cognizant Technology Solutions Corp.*		249,511
	8,200	DiamondCluster International, Inc.*		88,560
	7,900	Digital Insight Corp.*		134,853
	10,900	F.Y.I., Inc.*		419,650
	5,900	FactSet Research Systems, Inc.		149,565
	9,900	Fair Isaac & Co., Inc.		603,900
	6,300	Forrester Research, Inc.*		124,488
	9,000	FTI Consulting, Inc.*		225,450
	10,180	Global Payments, Inc.		361,899
	17,400	HotJobs.com, Ltd.*		166,692
	15,900	infoUSA, Inc.*		93,810
	22,600	Interactive Data Corp.*		268,940
	4,300	Keynote Systems, Inc.*		35,475
	13,400	Lexicon Genetics, Inc.*		122,610
	8,300	McAfee.com Corp.*		120,350
	3,700	Multex.com, Inc.*		11,729
	10,300	National Data Corp.		397,683
	8,100	PEC Solutions, Inc.*		145,800
	18,200	Pegasus Systems, Inc.*		236,600
	8,000	Pharmaceutical Product Development, Inc.*		241,280
	13,600	Quintiles Transnational Corp.*		238,136
	19,400	R.H. Donnelley Corp.*		582,000
	6,400	Sylvan Learning Systems, Inc.*		162,176
	9,100	Tetra Tech, Inc.*		218,218
	3,800	The Corporate Executive Board Co.*		134,615
	15,100	The TriZetto Group, Inc.*		171,083
	8,100	Travelocity.com, Inc.*		193,752
				6,614,680
Internet – 2.1%
	26,600	Akamai Technologies, Inc.*		111,986
	11,200	AsiaInfo Holdings, Inc.*		159,600
	2,700	Choice One Communications, Inc.		12,312
	5,300	Clarent Corp.*		28,461
	63,000	Commerce One, Inc.*		205,380
	22,700	E.piphany, Inc.*		146,188
	2,300	eSPEED, Inc.*		20,769
	4,100	F5 Networks, Inc.*		64,862
	12,900	FreeMarkets, Inc.*		183,954
	9,800	GoTo.com, Inc.*		193,550
	17,800	IDT Corp.		216,270
	20,100	Inktomi Corp.*		79,596
	1,300	Interactive Intelligence, Inc.*		8,060
	1,700	MatrixOne, Inc.*		18,207
	3,600	Net2Phone, Inc.*		14,796
	5,750	Netegrity, Inc.*		101,775
	12,500	Nuance Communications, Inc.*		130,500
	4,800	Packeteer, Inc.*		30,144
	59,900	Priceline.com, Inc.*		330,648
	5,300	Prodigy Communications Corp.*		29,998
	11,600	Saba Software, Inc.*		95,700
	38,300	Safeguard Scientifics, Inc.*		122,177
	15,000	SonicWall, Inc.*		280,650
	6,100	Stellent, Inc.*		132,980
	9,800	Verity, Inc.*		103,880
	6,500	WebEx Communications, Inc.*		112,255
				2,934,698
Leisure – 2.1%
	20,400	Alliance Gaming Corp.*		402,084
	7,900	Direct Focus, Inc.*		221,200
	10,000	Dover Downs Entertainment, Inc.		141,200
	6,800	JAKKS Pacific, Inc.*		119,340
	20,300	Polaris Industries, Inc.		1,022,105
	8,000	Russ Berrie & Company, Inc.		227,200
	14,750	SCP Pool Corp.*		559,320
	7,100	WMS Industries, Inc.*		151,088
				2,843,537
Life Insurance – 0.8%
	10,500	AmerUs Group Co.		325,290
	6,278	Delphi Financial Group, Inc.		225,506
	9,281	FBL Financial Group, Inc.		175,411
	13,200	Liberty Financial Companies, Inc.		431,640
				1,157,847
Media – 1.3%
	9,400	Gaylord Entertainment Co.		264,422
	16,900	Insight Communications, Inc.*		385,151
	4,300	Media General, Inc.		213,710
	16,000	Playboy Enterprises, Inc. Class B*		218,400
	26,500	Sinclair Broadcast Group, Inc.*		262,350
	20,800	Sirius Satellite Radio, Inc.*		138,320
	18,200	UnitedGlobalCom, Inc.*		84,994

The accompanying notes are an integral part of these financial statements.      29

 GOLDMAN SACHS CORE SMALL CAP EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Media – (continued)
	17,900	XM Satellite Radio Holdings, Inc.*	$	179,895
	9,100	Zomax, Inc.*		58,700
				1,805,942
Medical Products – 3.7%
	5,200	Bio-Rad Laboratories, Inc.*		289,900
	13,300	Edwards Lifesciences Corp.*		349,657
	20,500	Henry Schein, Inc.*		744,560
	13,200	Intuitive Surgical, Inc.*		120,252
	9,000	Invacare Corp.		359,550
	18,900	Magellan Health Services, Inc.*		250,425
	7,500	Novoste Corp.*		136,875
	7,500	Ocular Sciences, Inc.*		159,375
	41,500	Owens & Minor, Inc.		842,450
	19,700	PolyMedica Corp.*		249,205
	4,600	ResMed, Inc.*		252,770
	10,900	Respironics, Inc.*		365,259
	13,500	SangStat Medical Corp.*		207,225
	12,200	The Cooper Companies, Inc.		622,322
	10,400	VISX, Inc.*		181,792
				5,131,617
Medical Providers – 1.3%
	6,300	Apria Healthcare Group, Inc.*		171,108
	10,200	Coventry Health Care, Inc.*		238,170
	15,200	DaVita, Inc.*		313,880
	20,200	Health Net, Inc.*		381,174
	32,900	Humana, Inc.*		394,800
	5,200	Rightchoice Managed Care, Inc.*		240,188
				1,739,320
Mining – 2.6%
	6,600	Ball Corp.		347,490
	14,600	Commercial Metals Co.		458,440
	13,400	CONSOL Energy, Inc.		348,400
	5,300	Harsco Corp.		187,620
	6,600	Lone Star Technologies, Inc.		139,854
	14,700	Massey Energy Co.		288,855
	15,300	Mueller Industries, Inc.*		531,675
	27,200	Quanex Corp.		717,808
	12,400	Reliance Steel & Aluminum Corp.		334,800
	21,400	Titanium Metals Corp.*		222,346
				3,577,288
Motor Vehicle – 1.0%
	24,700	Circuit City Stores, Inc. — CarMax Group*		367,536
	9,100	Oshkosh Truck Corp.		338,975
	25,600	Tower Automotive, Inc.*		328,192
	13,700	Winnebago Industries, Inc.		395,930
				1,430,633
Oil Refining – 1.6%
	3,600	Black Hills Corp.		114,300
	6,800	Holly Corp.		143,820
	19,400	NorthWestern Corp.		429,710
	5,400	Plains Resources, Inc.*		146,610
	12,800	Sunoco, Inc.		484,224
	40,700	Tesoro Petroleum Corp.*		532,356
	13,500	Western Gas Resources, Inc.		415,125
				2,266,145
Oil Services – 0.8%
	8,400	Oceaneering International, Inc.*		163,800
	79,800	Parker Drilling Co.*		335,958
	14,600	Seitel, Inc.*		160,600
	17,600	TETRA Technologies, Inc.*		401,456
				1,061,814
Pharmaceuticals & Biotechnology – 0.3%
	5,300	Alkermes, Inc.*		136,555
	9,600	SICOR, Inc.*		230,179
				366,734
Property Insurance – 1.6%
	7,600	Argonaut Group, Inc.		133,684
	12,650	Fidelity National Financial, Inc.		306,636
	15,300	First American Financial Corp.		279,990
	9,900	LandAmerica Financial Group, Inc.		311,652
	6,400	PMA Capital Corp.		115,200
	9,700	SCPIE Holdings, Inc.		203,991
	11,000	Stewart Information Services Corp.		192,500
	18,500	The Commerce Group, Inc.		691,900
				2,235,553
Publishing – 1.1%
	10,400	Martha Stewart Living Omnimedia, Inc.*		191,984
	12,200	Pulitzer, Inc.		603,900
	15,700	The Standard Register Co.		295,945
	42,500	The Topps Co., Inc.*		488,750
				1,580,579
Railroads – 0.3%
	11,300	Wabtec Corp.		156,957
	14,800	Wisconsin Central Transportation Corp.*		251,748
				408,705
Restaurants – 1.1%
	8,200	AFC Enterprises, Inc.*		187,780
	12,500	Applebee’s International, Inc.		403,750
	14,300	Landry’s Restaurants, Inc.		247,390
	14,200	Lone Star Steakhouse & Saloon, Inc.*		176,790
	12,000	RARE Hospitality International, Inc.*		249,720
	14,500	Ruby Tuesday, Inc.		263,900
				1,529,330
Security/Asset Management – 2.1%
	9,400	Affiliated Managers Group, Inc.*		666,460
	15,700	BlackRock, Inc.*		597,385
	23,700	Friedman, Billings, Ramsey Group, Inc.*		156,420

30     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE SMALL CAP EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
Security/Asset Management – (continued)
	8,700	Jefferies Group, Inc.	$	289,710
	17,100	The John Nuveen Co.		1,118,511
				2,828,486
Semiconductors – 2.3%
	17,300	Alliance Semiconductor Corp.*		175,595
	7,700	Alpha Industries, Inc.*		244,552
	9,599	Avnet, Inc.		231,144
	8,600	AXT, Inc.		156,950
	7,000	Cirrus Logic, Inc.*		98,980
	9,100	Cohu, Inc.		180,999
	4,900	Elantec Semiconductor, Inc.*		186,200
	5,000	Electro Scientific Industries, Inc.*		140,000
	10,000	Exar Corp.*		202,500
	12,100	IXYS Corp.*		105,270
	13,400	JNI Corp.*		73,834
	13,000	Microsemi Corp.*		370,500
	9,700	Oak Technology, Inc.*		95,739
	18,800	Pixelworks, Inc.*		280,496
	11,400	Rainbow Technologies, Inc.*		51,870
	13,950	Remec, Inc.*		136,570
	8,200	Silicon Laboratories, Inc.*		163,918
	5,700	SIPEX Corp.*		65,151
	14,600	Xicor, Inc.*		155,052
				3,115,320
Specialty Retail – 3.0%
	12,800	Bandag, Inc.		379,264
	14,200	Blockbuster, Inc.		304,732
	8,600	Borders Group, Inc.*		200,036
	22,800	Brown Shoe Co.		344,280
	12,000	Group 1 Automotive, Inc.*		354,000
	10,300	Guitar Center, Inc.*		143,685
	17,600	Haverty Furniture Cos., Inc.		246,048
	6,700	Insight Enterprises, Inc.*		125,625
	14,650	InterTAN, Inc.*		131,118
	6,000	Krispy Kreme Doughnuts, Inc.*		185,100
	9,400	MCSi, Inc.*		122,576
	7,400	Movie Gallery, Inc.*		192,755
	5,800	School Specialty, Inc.*		176,604
	23,200	Sonic Automotive, Inc.*		408,320
	34,900	Spiegel, Inc.		352,490
	11,000	The Pep Boys-Manny, Moe & Jack		140,239
	7,500	Tweeter Home Entertainment Group, Inc.*		192,150
	8,100	ValueVision International, Inc.*		146,772
				4,145,794
Telephone – 1.4%
	14,500	Allegiance Telecom, Inc.*		180,235
	8,600	Commonwealth Telephone Enterprises, Inc.*		356,900
	26,900	Dycom Industries, Inc.*		389,781
	11,100	Illuminet Holdings, Inc.*		368,520
	5,900	Metro One Telecommunications, Inc.*		187,089
	13,200	NTELOS, Inc.*		219,384
	34,600	RCN Corp.*		117,986
	23,900	Turnstone Systems, Inc.*		86,040
				1,905,935
Thrifts – 1.2%
	12,100	FirstFed Financial Corp.*		350,900
	16,764	New York Community Bancorp, Inc.		622,447
	17,900	Staten Island Bancorp, Inc.		497,620
	8,000	UCBH Holdings, Inc.		218,480
				1,689,447
Tobacco – 0.5%
	14,600	DIMON, Inc.		108,040
	13,600	Universal Corp.		577,048
				685,088
Truck Freight – 1.7%
	5,300	Arkansas Best Corp.*		140,821
	19,200	Arnold Industries, Inc.		411,648
	14,400	Offshore Logistics, Inc.*		272,160
	15,100	Overseas Shipholding Group		411,626
	10,400	Pittston Brink’s Group		229,424
	10,200	Werner Enterprises, Inc.		228,480
	26,700	Yellow Corp.*		710,487
				2,404,646
Wireless – 0.5%
	20,400	Audiovox Corp.*		178,500
	10,200	Boston Communications Group, Inc.*		173,910
	4,100	Rural Celluar Corp.*		141,942
	22,000	US Unwired, Inc.*		246,620
				740,972
TOTAL COMMON STOCKS
(Cost $137,541,616)			$	138,137,652

Principal		Interest			Maturity
Amount		Rate			Date		Value
Repurchase Agreement – 0.1%
Joint Repurchase Agreement Account II^
$	100,000		3.69	%		09/04/2001	$	100,000
TOTAL REPURCHASE AGREEMENT
(Cost $100,000)							$	100,000
TOTAL INVESTMENTS
(Cost $137,641,616)							$	138,237,652

*Non-income producing security.

^Joint repurchase agreement was entered into on August 31, 2001.

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.      31

 GOLDMAN SACHS CORE LARGE CAP VALUE FUND

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on December 31, 1998 (commencement of operations) in Institutional Shares at (NAV) of the Goldman Sachs CORE Large Cap Value Fund. For comparative purposes, the performance of the Fund’s benchmark, (Russell 1000 Value Index with dividends reinvested), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class A, Class B, Class C and Service Shares will vary from Institutional Shares due to differences in fees and loads.

CORE Large Cap Value Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested December 31, 1998 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced December 31, 1998)
Excluding sales charges		2.62%		-3.32%
Including sales charges		0.48%		-8.65%
Class B (commenced December 31, 1998)
Excluding contingent deferred sales charges		1.82%		-4.08%
Including contingent deferred sales charges		0.69%		-8.88%
Class C (commenced December 31, 1998)
Excluding contingent deferred sales charges		1.85%		-4.07%
Including contingent deferred sales charges		1.85%		-5.02%
Institutional Class (commenced December 31, 1998)		2.98%		-3.03%
Service Class (commenced December 31, 1998)		2.51%		-3.43%

32

GOLDMAN SACHS CORE LARGE CAP VALUE FUND 

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 99.9%
Airlines – 0.1%
	9,000	UAL Corp.	$	294,120
Alcohol – 0.1%
	6,700	Anheuser-Busch Cos., Inc.		288,368
Apparel – 0.4%
	13,800	Liz Claiborne, Inc.		723,810
	14,100	Sara Lee Corp.		310,200
				1,034,010
Banks – 17.1%
	109,300	Bank of America Corp.		6,721,950
	39,200	Bank One Corp.		1,359,848
	31,900	BB&T Corp.		1,173,282
	258,700	Citigroup, Inc.		11,835,525
	29,600	Comerica, Inc.		1,768,600
	10,900	Compass Bancshares, Inc.		290,485
	18,750	Fifth Third Bancorp		1,093,125
	46,300	FleetBoston Financial Corp.		1,705,229
	9,000	Investors Financial Services Corp.		576,450
	55,000	J.P. Morgan Chase & Co.		2,167,000
	4,900	M&T Bank Corp.		355,985
	29,100	National City Corp.		898,317
	19,400	North Fork Bancorporation, Inc.		578,120
	17,600	Northern Trust Corp.		997,920
	22,100	PNC Financial Services Group		1,471,639
	11,100	Regions Financial Corp.		326,340
	33,200	SouthTrust Corp.		808,752
	16,000	State Street Corp.		776,960
	40,600	SunTrust Banks, Inc.		2,772,980
	13,200	TCF Financial Corp.		599,280
	65,500	The Bank of New York Co., Inc.		2,600,350
	24,237	U.S. Bancorp		587,505
	15,800	Union Planters Corp.		703,100
	40,800	Wells Fargo & Co.		1,877,208
	7,600	Zions Bancorp		435,176
				44,481,126
Chemicals – 2.2%
	25,400	Ashland, Inc.		1,076,960
	16,100	Cabot Corp.		649,957
	6,100	E.I. du Pont de Nemours & Co.		249,917
	11,200	Ecolab, Inc.		448,896
	13,700	Engelhard Corp.		357,981
	6,900	Praxair, Inc.		324,783
	11,800	Sherwin-Williams Co.		267,270
	18,200	Sigma-Aldrich Corp.		830,102
	10,600	The Dow Chemical Co.		371,636
	12,300	The Goodyear Tire & Rubber Co.		301,350
	12,500	The Lubrizol Corp.		449,750
	8,300	The Valspar Corp.		308,345
				5,636,947
Clothing – 0.2%
	14,400	The Limited, Inc.		203,040
	10,900	The Neiman Marcus Group, Inc.*		346,729
				549,769
Computer Hardware – 1.1%
	7,700	3Com Corp.		31,647
	33,000	Dell Computer Corp.*		705,540
	11,900	EMC Corp.		183,974
	19,300	Gateway, Inc.*		173,121
	41,900	Hewlett-Packard Co.		972,499
	35,300	Ingram Micro, Inc.*		529,500
	7,300	Tech Data Corp.*		298,570
				2,894,851
Computer Software – 0.7%
	15,700	International Business Machines, Inc.		1,570,000
	3,700	Intuit, Inc.*		139,786
				1,709,786
Construction – 1.0%
	4,600	Jacobs Engineering Group, Inc.*		269,652
	29,300	Lennar Corp.		1,305,315
	25,800	Pulte Corp.		976,530
				2,551,497
Defense/Aerospace – 1.2%
	49,000	Lockheed Martin Corp.		1,953,140
	23,100	The Boeing Co.		1,182,720
				3,135,860
Department Stores – 1.2%
	41,600	Sears, Roebuck & Co.		1,778,400
	39,000	Target Corp.		1,351,350
				3,129,750
Drugs – 3.4%
	12,500	Allergan, Inc.		903,125
	10,500	American Home Products Corp.		588,000
	12,802	AmerisourceBergen Corp.*		824,961
	27,450	Cardinal Health, Inc.		2,002,203
	12,400	Eli Lilly & Co.		962,612
	62,400	McKesson Corp.		2,449,200
	14,200	Merck & Co., Inc.		924,420
	18,000	Perrigo Co.*		290,520
				8,945,041
Electrical Equipment – 2.8%
	6,100	Amphenol Corp.*		246,623
	13,200	AVX Corp.		279,180
	9,600	Danaher Corp.		533,472
	23,200	General Dynamics Corp.		1,831,872
	17,100	Level 3 Communications Holdings, Inc.*		1,147,410
	77,400	Motorola, Inc.		1,346,760
	8,800	PerkinElmer, Inc.		282,304
	13,000	Sanmina Corp.*		234,130
	35,200	Solectron Corp.*		478,720
	4,400	SPX Corp.*		511,500
	21,800	Thermo Electron Corp.		472,406
				7,364,377

The accompanying notes are an integral part of these financial statements.      33

 GOLDMAN SACHS CORE LARGE CAP VALUE FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Electrical Utilities – 4.6%
	8,700	Allegheny Energy, Inc.	$	383,496
	8,200	Dominion Resources, Inc.		516,190
	43,500	Dynegy, Inc.		1,834,395
	16,200	Energy East Corp.		341,172
	6,200	Enron Corp.		216,938
	60,600	Entergy Corp.		2,334,312
	23,162	Exelon Corp.		1,264,645
	18,900	PG&E Corp.		309,960
	26,200	PPL Corp.		1,135,770
	7,800	Reliant Energy, Inc.		234,468
	1,729	Sempra Energy		46,839
	22,200	TXU Corp.		1,054,056
	69,700	UtiliCorp United, Inc.		2,241,552
				11,913,793
Energy Resources – 7.4%
	5,900	Amerada Hess Corp.		458,489
	376,060	Exxon Mobil Corp.		15,098,809
	10,000	Kerr-McGee Corp.		584,100
	79,300	Occidental Petroleum Corp.		2,182,336
	16,500	Phillips Petroleum Co.		948,750
				19,272,484
Entertainment – 2.4%
	131,500	The Walt Disney Co.		3,344,045
	69,300	Viacom, Inc. Class B*		2,938,320
				6,282,365
Environmental Services – 1.1%
	96,100	Waste Management, Inc.		2,972,373
Equity REIT – 1.4%
	67,400	Equity Office Properties Trust		2,162,866
	24,700	Equity Residential Properties Trust		1,455,077
				3,617,943
Financial Services – 3.5%
	8,400	American Express Co.		305,928
	50,400	Countrywide Credit Industries, Inc.		2,091,600
	59,300	Federal National Mortgage Association		4,519,253
	30,200	General Electric Co.		1,237,596
	8,100	TempleInland, Inc.		472,716
	7,300	The BISYS Group, Inc.*		422,670
				9,049,763
Food & Beverage – 2.7%
	1,719	IBP, Inc.		42,975
	10,200	McCormick & Co., Inc.		461,040
	55,300	PepsiCo, Inc.		2,599,100
	20,000	Smithfield Foods, Inc.*		885,000
	6,500	Supervalu, Inc.		136,370
	61,300	SYSCO Corp.		1,717,626
	23,700	The Pepsi Bottling Group, Inc.		1,046,355
				6,888,466
Forest – 0.9%
	14,200	Boise Cascade Corp.		521,140
	28,800	Georgia-Pacific Group		1,052,352
	11,800	International Paper Co.		473,416
	6,700	Weyerhaeuser Co.		380,225
				2,427,133
Gas Utilities – 0.4%
	8,100	NICOR, Inc.		313,956
	46,000	Oneok, Inc.		745,200
				1,059,156
Heavy Electrical – 0.5%
	23,500	Emerson Electric Co.		1,259,600
Heavy Machinery – 0.2%
	12,000	Caterpillar, Inc.		600,000
Home Products – 3.6%
	13,600	Alberto-Culver Co. Class B		585,752
	35,200	Avon Products, Inc.		1,623,776
	12,600	National Service Industries, Inc.		297,360
	66,500	Ralston Purina Group		2,173,220
	19,900	The Estee Lauder Companies, Inc.		773,115
	53,600	The Procter & Gamble Co.		3,974,440
				9,427,663
Hotels – 0.2%
	10,300	Marriott International, Inc.		451,655
Industrial Parts – 1.7%
	7,700	ITT Industries, Inc.		347,655
	1,334	Kadant, Inc.*		18,476
	26,681	Tyco International Ltd.		1,386,078
	33,300	United Technologies Corp.		2,277,720
	10,600	York International Corp.		402,800
				4,432,729
Industrial Services – 0.2%
	12,850	Apollo Group, Inc.*		505,905
Information Services – 1.2%
	22,700	Affiliated Computer Services, Inc.*		1,856,179
	9,800	Electronic Data Systems Corp.		578,004
	3,300	Omnicom Group, Inc.		256,707
	10,100	SEI Investments Co.		414,504
	2,800	WebMD Corp.*		13,720
				3,119,114
Internet – 0.2%
	800	E*TRADE Group, Inc.		5,120
	40,700	EarthLink, Inc.*		549,857
				554,977
Leisure – 0.8%
	30,900	Cendant Corp.*		589,263
	27,900	International Game Technology*		1,493,208
				2,082,471

34     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE LARGE CAP VALUE FUND 

Shares		Description	Value
Common Stocks – (continued)
Life Insurance – 1.7%
	60,500	MetLife, Inc.	$	1,845,250
	44,500	Nationwide Financial Services, Inc.		2,006,950
	12,000	The MONY Group, Inc.		420,000
				4,272,200
Media – 2.5%
	27,300	Comcast Corp.*		999,999
	14,200	Cox Communications, Inc.*		564,592
	70,700	Fox Entertainment Group, Inc.*		1,733,564
	20,300	General Motors Corp. Class H*		378,595
	178,000	Liberty Media Corp.*		2,705,600
				6,382,350
Medical Products – 1.5%
	67,800	Abbott Laboratories		3,369,660
	6,100	Medtronic, Inc.		277,794
	5,600	Stryker Corp.		307,048
	980	Zimmer Holdings, Inc.*		26,656
				3,981,158
Medical Providers – 0.2%
	5,000	Express Scripts, Inc.*		267,500
	13,600	PacifiCare Health Systems, Inc.*		199,920
				467,420
Mining – 1.7%
	7,400	Alcan Aluminium Ltd.		268,768
	24,504	Alcoa, Inc.		934,092
	18,900	Ball Corp.		995,085
	21,100	Inco Ltd.*		350,682
	93,400	Massey Energy Co.		1,835,310
				4,383,937
Motor Vehicle – 2.6%
	35,600	AutoNation, Inc.		383,056
	30,523	Delphi Automotive Systems Corp.		457,540
	11,396	Ford Motor Co.		226,438
	58,500	General Motors Corp.		3,202,875
	29,500	Johnson Controls, Inc.		2,160,875
	13,100	Visteon Corp.		224,010
				6,654,794
Oil Refining – 3.2%
	19,300	Chevron Corp.		1,751,475
	93,228	Conoco, Inc. Class B		2,761,413
	7,700	Sunoco, Inc.		291,291
	27,100	Texaco, Inc.		1,887,515
	2,900	Ultramar Diamond Shamrock Corp.		149,756
	45,100	USX-Marathon Group		1,421,101
				8,262,551
Property Insurance – 3.7%
	57,100	Allstate Corp.		1,937,403
	23,027	American International Group, Inc.		1,800,696
	53,600	CNA Financial Corp.*		1,488,472
	4,600	Everest Re Group, Ltd.		298,540
	42,300	Loews Corp.		2,065,086
	55,000	Old Republic International Corp.		1,476,750
	3,500	The Progressive Corp.		452,445
				9,519,392
Publishing – 0.1%
	7,300	The New York Times Co.		312,075
Railroads – 1.3%
	35,500	Burlington Northern Santa Fe Corp.		962,405
	40,200	Canadian National Railway Co.		1,748,700
	21,500	CSX Corp.		759,810
				3,470,915
Restaurants – 0.7%
	50,700	Brinker International, Inc.*		1,348,620
	18,200	Darden Restaurants, Inc.		520,884
				1,869,504
Security/Asset Management – 2.7%
	14,400	Eaton Vance Corp.		476,640
	32,500	John Hancock Financial Services, Inc.		1,298,375
	39,600	Lehman Brothers Holdings, Inc.		2,599,740
	5,100	Merrill Lynch & Co., Inc.		263,160
	21,700	Morgan Stanley Dean Witter & Co.		1,157,695
	9,600	T. Rowe Price Group, Inc.		358,944
	14,900	The Bear Stearns Cos., Inc.		777,631
				6,932,185
Semiconductors – 0.6%
	18,100	Advanced Micro Devices, Inc.*		245,255
	34,300	Avnet, Inc.		825,944
	6,500	KLA-Tencor Corp.*		319,410
	5,700	Linear Technology Corp.		234,156
				1,624,765
Specialty Retail – 0.6%
	26,700	CVS Corp.		964,137
	11,700	Krispy Kreme Doughnuts, Inc.*		360,945
	10,000	Longs Drug Stores Corp.		258,800
				1,583,882
Telecommunications-Cellular – 2.2%
	24,900	Qwest Communications International, Inc.		535,350
	126,964	SBC Communications, Inc.		5,194,097
				5,729,447
Telephone – 6.0%
	172,411	AT&T Corp.		3,282,705
	65,500	BCE, Inc.		1,625,710
	41,200	BellSouth Corp.		1,536,760
	2,400	Covad Communications Group, Inc.*		1,512
	165,378	Verizon Communications, Inc.		8,268,900
	394	WorldCom, Inc.-MCI Group*		5,079
	56,950	WorldCom, Inc.-WorldCom Group		732,377
	5,400	XO Communications, Inc.*		6,156
				15,459,199

The accompanying notes are an integral part of these financial statements.      35

 GOLDMAN SACHS CORE LARGE CAP VALUE FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Thrifts – 0.8%
	3,600	Dime Bancorp, Inc.	$	138,960
	7,500	Golden West Financial Corp.		434,025
	37,500	Washington Mutual, Inc.		1,404,000
				1,976,985
Tobacco – 1.5%
	61,600	Philip Morris Companies, Inc.		2,919,840
	11,700	R.J. Reynolds Tobacco Holdings, Inc.		675,675
	10,900	UST, Inc.		359,700
				3,955,215
Truck Freight – 0.6%
	29,100	United Parcel Service, Inc. Class B		1,607,193
Wireless – 1.2%
	4,700	ALLTEL Corp.		272,600
	110,387	AT&T Wireless Services, Inc.*		1,710,998
	9,000	Telephone & Data Systems, Inc.		929,250
	4,800	United States Cellular Corp.*		248,400
				3,161,248
TOTAL COMMON STOCKS
(Cost $255,998,067)			$	259,539,507

Units		Description	Value
Rights – 0.0%
	11,792	CNA Financial Corp.*	$	32,782
TOTAL RIGHTS
(Cost $0)			$	32,782
TOTAL INVESTMENTS
(Cost $255,998,067)			$	259,572,289
* 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.

36     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND 

Performance Summary

August 31, 2001

The following graph shows the value, as of August 31, 2001, of a $10,000 investment made on August 15, 1997 (commencement of operations) in Institutional Shares at (NAV) of the Goldman Sachs CORE International Equity Fund. For comparative purposes, the performance of the Fund’s benchmark, (Morgan Stanley Capital International Gross Europe, Australasia, Far East Index with dividends reinvested (“MSCI Gross EAFE Index”)), is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class A, Class B, Class C and Service Shares will vary from Institutional Shares due to differences in fees and loads.

CORE International Equity Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested August 15, 1997 to August 31, 2001.

Average Annual Total Return through August 31, 2001	Since Inception		One Year
Class A (commenced August 15, 1997)
Excluding sales charges		-2.17%		-21.50%
Including sales charges		-3.52%		-25.82%
Class B (commenced August 15, 1997)
Excluding contingent deferred sales charges		-2.63%		-21.93%
Including contingent deferred sales charges		-3.12%		-25.84%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		-2.61%		-21.91%
Including contingent deferred sales charges		-2.61%		-22.69%
Institutional Class (commenced August 15, 1997)		-1.54%		-21.02%
Service Class (commenced August 15, 1997)		-2.00%		-21.37%

      37

 GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND

Statement of Investments

August 31, 2001

Shares		Description	Value
Common Stocks – 94.9%
Australia – 3.5%
	99,800	Amcor Ltd. (Paper)	$	339,922
	115,300	AMP Diversified Property Trust (Real Estate)		155,627
	53,100	AMP Ltd. (Insurance)		550,812
	115,500	Australia & New Zealand Banking Group Ltd. (Banks)		1,028,556
	32,800	Australian Gas Light Co. Ltd. (Oil and Gas)		144,230
	155,295	BHP Ltd. (Mining)		763,115
	273,800	Boral Ltd. (Building Materials)		500,933
	99,915	Brambles Industries Ltd. (Multi-Industrial)		520,480
	281,000	Coca-Cola Amatil Ltd. (Food & Beverage)		784,492
	23,300	Coles Myer Ltd.* (Specialty Retail)		86,732
	80,900	Commonwealth Bank of Australia (Banks)		1,251,739
	71,700	CSR Ltd. (Building Materials)		243,835
	46,900	Fairfax (John) Holdings Ltd. (Publishing)		95,450
	88,000	FH Faulding & Co. Ltd. (Health)		662,563
	27,900	Foster’s Group Ltd. (Food & Beverage)		76,052
	53,300	General Property Trust (Real Estate)		77,282
	230,600	Goodman Fielder Ltd. (Food & Beverage)		150,764
	80,500	Leighton Holdings Ltd. (Construction)		424,012
	24,800	Lend Lease Corp. Ltd. (Real Estate)		138,604
	89,100	Mayne Nickless Ltd. (Business Services)		293,800
	112,100	Mirvac Group (Real Estate)		235,828
	125,700	National Australia Bank Ltd. (Banks)		2,200,340
	37,500	Orica Ltd. (Multi-Industrial)		92,216
	188,900	Pacific Dunlop Ltd. (Manufacturing)		69,718
	14,000	QBE Insurance Group Ltd. (Insurance)		78,982
	27,200	Rio Tinto Ltd. (Mining)		483,155
	170,300	Santos Ltd. (Oil and Gas)		574,121
	73,200	Suncorp-Metway Ltd. (Financial Services)		512,383
	50,600	TAB Ltd. (Leisure)		68,831
	262,800	Telstra Corp. Ltd. (Telecommunications)		666,480
	52,700	The News Corp. Ltd. (Media)		421,793
	5,000	Wesfarmers Ltd. (Multi-Industrial)		76,180
	77,300	Westfield Trust (Real Estate)		132,866
	40,400	Westpac Banking Corp. Ltd. (Banks)		296,210
	47,600	Woolworths Ltd. (Specialty Retail)		269,217
				14,467,320
Austria – 1.1%
	8,400	Austria Tabakwerke AG (Tobacco)		645,661
	10,650	Boehler-Uddeholm AG (Steel)		467,346
	13,950	Erste Bank der oesterreichischen Sparkassen AG (Banks)		741,513
	8,400	Flughafen Wien AG (Commercial Services & Supplies)		280,028
	1,750	Oesterreichische Elektrizitaetswirtschafts AG (Verbund) (Electrical Utilities)		156,245
	12,700	OMV AG (Energy Resources)		1,235,376
	132,300	Telekom Austria AG* (Telecommunications)		867,175
	5,150	Voest-Alpine Stahl AG (Steel)		154,502
				4,547,846
Belgium – 3.8%
	7,350	Colruyt NV* (Specialty Retail)		307,835
	4,000	Compagnie Maritime Belge SA (CMB) (Transportation)		210,911
	15,300	Delhaize Le Lion SA (Department Stores)		888,800
	356,450	Dexia (Banks)		5,664,371
	13,450	Electrabel SA (Electrical Utilities)		3,034,840
	55,400	Fortis (B) (Diversified Financials)		1,544,165
	19,100	Groupe Bruxelles Lambert SA (Conglomerates)		1,067,874
	13,800	Interbrew (Food & Beverage)		343,247
	41,400	KBC Bankverzekeringsholding (Banks)		1,528,804
	4,550	Omega Pharma SA (Health Care)		214,886
	4,950	Solvay SA (Chemicals)		283,503
	2,250	UCB SA (Health)		95,524
	16,050	Union Miniere SA (Nonferrous Metals)		671,626
				15,856,386
Finland – 0.2%
	44,200	Nokia Oyj (Telecommunications)		692,339
	35,350	Sampo Oyj Series A (Financial Services)		303,692
				996,031
France – 5.0%
	29,250	Air France (Airlines)		482,098
	32,100	Alcatel (Telecommunications)		496,388
	21,900	Aventis SA (Chemicals)		1,602,698
	34,080	BNP Paribas SA (Banks)		3,129,195
	2,750	Compagnie Generale des Etablissements Michelin Series B (Automotive Parts)		86,126
	10,200	France Telecom SA (Telecommunications)		327,702
	6,000	L’Air Liquide SA (Chemicals)		848,190
	25,200	Lagardere S.C.A. (Media)		1,182,121
	28,400	Pechiney SA (Nonferrous Metals)		1,401,941
	64,500	PSA Peugeot Citroen (Auto)		3,075,508
	4,550	Sanofi-Synthelabo SA (Health)		298,028

38     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
France – (continued)
	56,100	Societe Generale Series A (Banks)	$	3,304,833
	45,000	Suez SA* (Utilities)		1,534,106
	6,250	Technip (Construction)		925,009
	34,450	Vinci SA (Construction)		2,186,031
				20,879,974
Germany – 5.0%
	2,100	Adidas-Salomon AG (Specialty Retail)		142,343
	10,000	Allianz AG (Insurance)		2,802,755
	33,000	Altana AG (Drugs)		1,620,016
	23,300	BASF AG (Chemicals)		953,191
	38,200	Bayer AG (Chemicals)		1,227,621
	1,600	Beiersdorf AG (Health)		192,875
	7,150	Buderus AG (Diversified Industrial Manufacturing)		153,467
	12,300	DaimlerChrysler AG (Auto)		536,174
	22,150	Deutsche Bank AG (Banks)		1,528,365
	9,000	Deutsche Lufthansa AG (Airlines)		140,401
	57,150	Deutsche Telekom AG (Telecommunications)		880,638
	20,300	E.On AG (Energy Resources)		1,108,207
	2,800	Gehe AG (Drugs)		120,274
	7,950	Infineon Technologies AG (Semiconductors)		186,032
	24,800	Linde AG (Multi-Industrial)		1,060,098
	45,150	Merck KGAA (Health)		1,740,345
	4,900	Metro AG (Department Stores)		195,601
	3,850	Muenchener Rueckversicherungs-Gesellschaft AG (Property Insurance)		1,104,611
	11,450	RWE AG (Energy Resources)		481,946
	9,600	SAP AG (Computer Software)		1,301,075
	30,912	Siemens AG (Electrical Equipment)		1,575,404
	6,350	ThyssenKrupp AG (Multi-Industrial)		86,014
	32,200	Volkswagen AG (Auto)		1,424,132
				20,561,585
Greece – 1.6%
	12,000	Aluminum of Greece SA (Mining)		379,640
	23,900	Bank of Piraeus (Banks)		258,123
	55,200	Commercial Bank of Greece (Banks)		1,957,110
	11,800	EFG Eurobank Ergasias (Banks)		154,045
	6,400	Hellenic Telecommunications Organization SA (OTE) (Telecommunications)		105,310
	50,100	Intracom SA (Telecommunications)		742,398
	83,800	National Bank of Greece (Banks)		2,453,079
	8,700	Titan Cement Co. (Construction)		309,565
	16,700	Viohalco, Hellenic Copper & Aluminum Industry SA (Metals)		150,302
				6,509,572
Hong Kong – 0.7%
	132,000	Bank of East Asia Ltd. (Banks)		301,242
	72,000	Cathay Pacific Airways Ltd. (Airlines)		78,926
	31,000	Cheung Kong (Holdings) Ltd. (Real Estate)		286,165
	42,500	CLP Holdings Ltd. (Electrical Utilities)		172,186
	43,000	Esprit Holdings Ltd. (Multi-Industry)		47,964
	116,000	Giordano International Ltd. (Specialty Retail)		56,143
	3,500	Hang Seng Bank Ltd. (Banks)		39,152
	3,000	Henderson Land Development Co. Ltd. (Real Estate)		13,693
	28,000	Hong Kong Exchanges & Clearing Ltd. (Financial Services)		35,360
	109,000	Hongkong Electric Holdings Ltd. (Electrical Utilities)		412,958
	60,000	Hutchison Whampoa Ltd. (Multi-Industrial)		511,558
	76,000	Hysan Development Co. Ltd. (Real Estate)		76,977
	11,000	Johnson Electric Holdings Ltd. (Electrical Equipment)		13,116
	26,000	New World Development Co. Ltd. (Real Estate)		26,501
	251,000	Pacific Century CyberWorks Ltd.* (Telecommunications)		53,742
	42,000	Shangri-La Asia Ltd. (Leisure)		34,194
	60,000	Sun Hung Kai Properties Ltd. (Real Estate)		523,097
	12,500	Swire Pacific Ltd. Series A (Multi-Industrial)		60,579
	61,000	The Wharf (Holdings) Ltd. (Real Estate)		122,787
				2,866,340
Ireland – 3.0%
	192,400	Allied Irish Banks PLC (Banks)		2,174,142
	218,100	Bank of Ireland (Banks)		2,079,902
	112,800	CRH PLC (Building Materials)		1,884,804
	266,000	eircom PLC* (Telecommunications)		324,644
	69,600	Elan Corp. PLC ADR* (Drugs)		3,615,720
	42,200	Greencore Group PLC (Food & Beverage)		104,184
	85,100	Independent News & Media PLC (Publishing)		172,979
	3,900	IONA Technologies PLC* (Business Services)		62,712
	63,200	Irish Life & Permanent PLC (Financial Services)		778,235

The accompanying notes are an integral part of these financial statements.      39

 GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Ireland – (continued)
	214,600	Jefferson Smurfit Group PLC (Paper)	$	468,145
	51,500	Ryanair Holdings PLC* (Airlines)		515,035
	129,800	Waterford Wedgewood PLC (Specialty Retail)		121,404
				12,301,906
Italy – 3.5%
	6,800	Assicurazioni Generali SpA (Insurance)		215,439
	112,500	ENI SpA (Energy Resources)		1,493,197
	43,100	IntesaBci SpA (Banks)		92,274
	284,400	Mediobanca SpA (Financial Services)		3,469,715
	531,334	Parmalat Finanziaria SpA (Food & Beverage)		1,478,089
	1,411,500	Pirelli SpA (Manufacturing)		2,803,780
	239,180	Riunione Adriatica di Sicurta SpA (Insurance)		3,239,834
	115,400	Telecom Italia SpA (Telecommunications)		545,533
	133,025	Telecom Italia SpA (Telecommunications)		1,101,700
				14,439,561
Japan – 23.4%
	8,200	Acom Co. (Financial Services)		734,122
	25,250	Aiful Corp. (Financial Services)		2,283,952
	47,300	Aoyama Trading Co. Ltd. (Specialty Retail)		621,451
	5,600	Asatsu-DK, Inc. (Publishing)		111,778
	12,500	Autobacs Seven Co. Ltd. (Automotive Parts)		323,199
	15,400	Benesse Corp. (Business Services)		500,644
	178,000	Bridgestone Corp. (Automotive Parts)		1,503,634
	69,000	Canon, Inc. (Computer Hardware)		2,080,431
	53,300	Chubu Electric Power Co., Inc. (Electrical Utilities)		1,045,934
	120,000	Dai Nippon Printing Co. Ltd. (Business Services)		1,282,520
	325,000	Daicel Chemical Industries (Chemicals)		1,081,189
	63,000	Daiichi Pharmaceutical Co. (Health)		1,475,050
	40,000	Dainippon Ink & Chemicals, Inc. (Chemicals)		87,590
	9,300	Daito Trust Construction Co. Ltd. (Construction)		144,903
	134,000	Daiwa House Industry Co. Ltd. (Construction)		1,064,235
	376,000	Fuji Electric Co. Ltd. (Electrical Equipment)		1,149,518
	31,000	Fujitsu Ltd. (Computer Hardware)		310,431
	92,000	Hankyu Department Stores, Inc. (Department Stores)		511,391
	344,000	Hitachi Ltd. (Electrical Equipment)		2,821,881
	61,100	Honda Motor Co. Ltd. (Auto)		2,207,597
	106,000	Itochu Corp. (Multi-Industrial)		358,883
	1,900	Itochu Techno-Science Corp. (Computer Software)		132,017
	68,000	Japan Energy Corp. (Energy Resources)		132,867
	456	Japan Tobacco, Inc. (Tobacco)		3,233,688
	49,000	Kajima Corp. (Construction)		155,994
	142,000	Komatsu Ltd. (Machinery)		517,842
	4,100	Konami Corp. Ltd. (Entertainment)		129,490
	376,000	Konica Corp. (Multi-Industrial)		2,235,701
	514,000	KUBOTA Corp. (Machinery)		1,770,548
	55,700	Kyocera Corp. (Electronics Equipment)		3,766,968
	39,000	Kyowa Hakko Kogyo Co. Ltd. (Multi-Industrial)		240,435
	74,200	Kyushu Electric Power Co., Inc. (Electrical Utilities)		1,287,337
	149,000	Marubeni Corp. (Wholesale)		227,136
	128,000	Matsushita Electric Industrial Co. Ltd. (Electrical Equipment)		1,944,768
	121,000	Mitsubishi Corp. (Wholesale)		1,008,885
	835,000	Mitsubishi Electric (Electrical Equipment)		3,199,773
	60,000	Mitsubishi Logistics Corp. (Business Services)		613,467
	185	Mitsubishi Tokyo Financial Group, Inc. (Banks)		1,573,672
	198,000	Mitsui Co. (Wholesale)		1,365,747
	20,000	Mitsumi Electric Co. Ltd. (Electrical Equipment)		281,299
	1,121	Mizuho Holdings, Inc. (Banks)		4,645,067
	189,000	Nichirei Corp. (Food & Beverage)		764,054
	4,000	Nintendo Co. Ltd. (Entertainment)		638,396
	464,000	Nippon Express Co. Ltd. (Railroads)		2,043,812
	18,000	Nippon Meat Packers, Inc. (Food & Beverage)		227,094
	23,000	Nippon Mitsubishi Oil Corp. (Energy Resources)		137,727
	205	Nippon Telephone & Telegraph Corp. (Telecommunications)		932,328
	76,000	Nippon Yusen Kabushiki Kaisha (Transportation)		278,435
	609,000	Nissan Motor Co. Ltd. (Auto)		3,559,574
	1,978,000	NKK Corp. (Steel)		1,832,484
	45,000	NTN Corp. (Machinery)		112,183
	57	NTT Data Corp. (Commercial Services & Supplies)		211,227
	21	NTT DoCoMo, Inc. (Telecommunications)		258,222
	52,000	Oji Paper Co. Ltd. (Paper)		271,967
	13,400	ORIX Corp. (Financial Services)		1,335,091

40     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
Japan – (continued)
	13,400	Promise Co. Ltd. (Financial Services)	$	1,049,564
	59,000	Ricoh Co. Ltd. (Computer Hardware)		962,505
	35,000	Sankyo Co. Ltd. (Health)		722,197
	76,000	Sanyo Electric Co. Ltd. (Electrical Equipment)		342,443
	253,000	Sapporo Breweries Ltd. (Food & Beverage)		771,348
	3,500	Secom Co. Ltd. (Business Services)		180,697
	23,000	Shiseido Co. Ltd. (Consumer Products)		218,697
	70,000	Showa Shell Sekiyu K.K. (Oil and Gas)		505,832
	3,000	Skylark Co. Ltd. (Restaurants)		80,094
	11,500	Softbank Corp. (Business Services)		223,734
	9,600	Sony Corp. (Electrical Equipment)		427,709
	175,000	Sumitomo Corp. (Wholesale)		1,126,037
	10,000	Sumitomo Electric Industries Ltd. (Electrical Equipment)		92,138
	166,000	Sumitomo Mitsui Banking Corp. (Banks)		1,356,129
	341,000	Sumitomo Osaka Cement Co. Ltd. (Construction)		657,675
	100,000	Sumitomo Realty & Development Co. Ltd. (Real Estate)		708,300
	217,000	Taisai Corp. (Construction)		656,108
	5,000	Taiyo Yuden Co. Ltd. (Electronic Components)		84,642
	36,000	Takeda Chemical Industries Ltd. (Drugs)		1,482,629
	5,000	Takefuji Corp. (Financial Services)		430,370
	55,300	TDK Corp. (Computer Hardware)		2,887,607
	336,000	The Daiei, Inc.* (Department Stores)		667,840
	380,000	The Daiwa Bank Ltd. (Banks)		480,061
	23,000	The Furukawa Electric Co. Ltd. (Electrical Equipment)		173,563
	30,000	The Kansai Electric Power Co., Inc. (Electrical Utilities)		515,434
	86,000	The Nomura Securities Co. Ltd. (Financial Services)		1,463,090
	112,000	The Sumitomo Marine & Fire Insurance Co. Ltd. (Insurance)		753,678
	96,900	Tohoku Electric Power Co., Inc. (Electrical Utilities)		1,787,266
	82,900	Tokyo Electric Power (Electrical Utilities)		2,143,454
	334,000	Toppan Printing Co. Ltd. (Business Services)		3,175,862
	228,000	Toshiba Corp. (Electrical Equipment)		1,169,428
	55,000	Toyo Seikan Kaisha (Multi-Industrial)		744,852
	86,200	Toyota Motor Corp. (Auto)		2,620,811
	6,000	Trend Micro, Inc.* (Computer Software)		91,262
	92,000	Uny Co. Ltd. (Department Stores)		984,040
	261	West Japan Railway (Railroads)		1,431,010
	22,000	Yakult Honsha Co. Ltd. (Food & Beverage)		251,063
	4,000	Yamanouchi Pharmaceutical Co. Ltd. (Drugs)		95,507
	69,000	Yokogawa Electric Corp. (Electronics Equipment)		467,225
				96,747,529
Netherlands – 6.2%
	40,900	Elsevier NV (Publishing)		512,742
	37,318	Hagemeyer NV (Business Services)		637,805
	177,808	ING Groep NV (Financial Services)		5,618,789
	6,200	KLM Royal Dutch Airlines* (Airlines)		94,692
	135,576	Koninklijke Ahold NV (Merchandising)		4,050,065
	357,007	KPN NV (Telecommunications)		1,012,612
	50,300	Oce NV (Manufacturing)		505,292
	223,600	Royal Dutch Petroleum Co. (Energy Resources)		12,690,443
	24,700	Wolters Kluwer NV (Publishing)		527,687
				25,650,127
New Zealand – 0.4%
	40,900	Air New Zealand Ltd. Class B (Airlines)		20,599
	55,500	Auckland International Airport Ltd. (Commercial Services & Supplies)		94,794
	12,100	Baycorp Holdings Ltd.* (Business Services)		73,129
	191,700	Carter Holt Harvey Ltd. (Forest Products)		140,205
	76,300	Contact Energy Ltd. (Electrical Utilities)		113,947
	24,700	Fisher & Paykel Industries Ltd. (Appliance)		151,443
	76,000	Fletcher Building Ltd. (Construction)		89,868
	194,700	Fletcher Challenge Forests Ltd.* (Forest Products)		25,581
	34,200	Independent Newspapers Ltd. (Publishing)		53,321
	22,100	Sky City Ltd. (Leisure)		113,628
	326,900	Telecom Corp. of New Zealand Ltd. (Telecommunications)		722,988
	47,000	The Warehouse Group Ltd. (Specialty Retail)		123,502
	21,200	Tower Ltd. (Financial Services)		49,208
				1,772,213

The accompanying notes are an integral part of these financial statements.      41

 GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Shares		Description	Value
Common Stocks – (continued)
Norway – 0.2%
	9,800	Frontline Ltd. (Transportation)	$	135,510
	19,400	Norsk Hydro ASA (Diversified Industrial Manufacturing)		841,993
				977,503
Portugal – 0.1%
	14,600	Banco Espirito Santo SA (Banks)		179,847
	14,454	Portugal Telecom, SGPS, SA (Telecommunications)		92,244
	320,200	Sonae S.G.P.S. SA (Merchandising)		189,211
				461,302
Singapore – 3.2%
	238,000	Capitaland Ltd. (Real Estate)		248,800
	137,000	Chartered Semiconductor Manufacturing Ltd.* (Semiconductors)		363,550
	119,000	City Developments (Real Estate)		345,175
	12,750	Creative Technology Ltd. (Electrical Equipment)		94,472
	324,970	DBS Group Holdings Ltd. (Banks)		2,557,202
	143,000	Fraser & Neave Ltd. (Tobacco)		632,453
	428,000	Keppel Corp. Ltd. (Multi-Industrial)		786,674
	251,000	Keppel Land Ltd. (Real Estate)		272,481
	769,000	Neptune Orient Lines Ltd.* (Transportation)		439,492
	175,000	Omni Industries Ltd. (Electronics Equipment)		349,799
	215,250	Oversea-Chinese Banking Corp. Ltd. (Banks)		1,359,994
	194,000	Parkway Holdings Ltd. (Health)		110,873
	74,000	SembCorp Industries Ltd. (Multi-Industrial)		63,331
	203,400	Singapore Airlines Ltd. (Airlines)		1,401,953
	194,000	Singapore Exchange Ltd. (Finance Companies)		118,116
	70,000	Singapore Press Holdings Ltd. (Publishing)		796,094
	372,000	Singapore Technologies Engineering Ltd. (Machinery)		542,723
	984,700	Singapore Telecommunications Ltd. (Telecommunications)		1,142,501
	256,115	United Overseas Bank Ltd. (Banks)		1,647,609
				13,273,292
Spain – 4.9%
	34,300	Acerinox SA* (Steel)		982,237
	256,500	Banco Bilbao Vizcaya SA (Banks)		3,311,215
	48,300	Banco Santander Central Hispano SA (Banks)		440,412
	12,300	Corporacion Mapfre, Compania Internacional de Reaseguros SA (Insurance)		240,411
	44,400	Endesa SA (Electrical Utilities)		736,644
	14,700	Fomento de Construcciones y Contratas SA (Construction)		332,758
	241,300	Grupo Dragados SA (Construction)		3,378,234
	158,500	Iberdrola SA (Electrical Utilities)		2,172,913
	219,350	Repsol SA (Energy Resources)		3,699,076
	8,400	Sociedad General de Aguas de Barcelona SA (Multi-Industrial)		120,656
	357,453	Telefonica de Espana SA* (Telecommunications)		4,152,995
	22,500	Union Electric Fenosa (Utilities)		420,345
	23,600	Vallehermoso SA (Real Estate)		162,627
				20,150,523
Sweden – 2.8%
	82,700	AssiDoman AB (Forest Products)		1,852,002
	30,600	Electrolux AB Series B (Appliance)		413,799
	19,600	Holmen AB Series B (Paper)		404,151
	32,700	Skandinaviska Enskilda Banken Series A (Banks)		280,685
	131,300	Skanska AB Series B (Construction)		938,145
	69,500	SKF AB Series B (Metals)		1,133,138
	143,200	Svenska Cellulosa AB (SCA) Series B (Paper)		3,323,589
	89,600	Svenska Handelsbanken AB Series A (Banks)		1,284,689
	434,629	Telefonaktiebolaget LM Ericsson AB Series B (Telecommunications)		2,125,876
				11,756,074
Switzerland – 6.7%
	64,748	ABB Ltd. (Business Services)		671,306
	3,834	Adecco SA (Business Services)		187,725
	1,450	Ciba Specialty Chemicals AG (Chemicals)		93,634
	250	Compagnie Financiere Richemont AG Series A (Specialty Retail)		610,542
	126,160	Credit Suisse Group (Banks)		5,364,408
	350	Georg Fischer AG (Machinery)		79,393
	7,258	Givaudan* (Consumer Products)		2,227,074
	1,700	Kudelski SA* (Electrical Equipment)		91,439
	26,390	Nestle SA (Food & Beverage)		5,567,110
	55,580	Novartis AG (Pharmaceuticals & Biotechnology)		2,026,875
	2,142	PubliGroupe SA (Business Services)		474,973
	33,000	Swiss Re (Insurance)		3,282,992
	11,469	Swisscom AG (Telecommunications)		3,292,371
	250	Synthes-Stratec, Inc. (Health)		170,502
	1,760	The Swatch Group AG Series B (Specialty Retail)		142,395

42     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND 

Shares		Description	Value
Common Stocks – (continued)
Switzerland – (continued)
	6,320	The Swatch Group AG (Specialty Retail)	$	109,083
	72,228	UBS AG (Banks)		3,523,528
				27,915,350
United Kingdom – 19.6%
	58,400	Abbey National PLC (Financial Services)		949,658
	17,200	Associated British Ports Holdings PLC (Transportation)		110,130
	62,800	AstraZeneca PLC (Health)		3,033,535
	201,400	BAA PLC (Airlines)		1,875,826
	95,200	Balfour Beatty PLC (Construction)		269,531
	157,400	Barclays PLC (Banks)		4,776,255
	246,000	Barratt Developments PLC (Construction)		1,328,662
	283,600	BG Group PLC (Utilities)		1,177,630
	53,800	BHP Billiton PLC (Mining)		254,646
	45,200	Boots Co. PLC (Specialty Retail)		452,818
	5,216	BP PLC ADR (Energy Resources)		265,390
	928,500	BP PLC (Energy Resources)		7,879,577
	42,400	British Airways PLC (Airlines)		188,375
	401,500	British American Tobacco PLC (Tobacco)		3,433,502
	127,600	British Telecom PLC (Telecommunications)		781,807
	121,800	Cable & Wireless PLC (Telecommunications)		587,113
	171,600	Chubb PLC (Electronic Components)		423,548
	7,300	Close Brothers Group PLC (Financial Services)		85,268
	115,100	De La Rue PLC (Business Services)		873,553
	72,500	Firstgroup PLC (Transportation)		376,840
	501,700	George Wimpey PLC (Construction)		1,573,383
	31,600	GlaxoSmithKline PLC ADR (Health)		1,673,220
	215,578	GlaxoSmithKline PLC (Health)		5,721,595
	120,612	Granada Compass PLC (Business Services)		260,924
	33,800	Halifax Group PLC (Financial Services)		419,584
	384,377	HSBC Holdings PLC (Banks)		4,475,775
	28,400	J Sainsbury PLC (Merchandising)		156,174
	24,100	Land Securities PLC (Real Estate)		314,742
	476,700	Lattice Group PLC (Multi-Industrial)		1,058,944
	254,400	Lloyds TSB Group PLC (Banks)		2,624,325
	77,400	Man Group PLC (Financial Services)		1,045,106
	235,500	P & O Princess Cruises PLC (Leisure)		1,265,113
	348,900	Pilkington PLC (Multi-Industrial)		569,889
	22,100	Provident Financial PLC (Financial Services)		207,121
	169,100	Rank Group PLC (Leisure)		560,391
	8,900	Reed International PLC (Publishing)		78,436
	900,400	Rentokil Initial PLC (Business Services)		3,248,616
	54,200	Rio Tinto PLC (Mining)		975,793
	70,900	Royal & Sun Alliance Insurance Group PLC (Insurance)		493,081
	169,325	Royal Bank of Scotland Group PLC (Banks)		4,228,497
	638,400	Safeway PLC (Specialty Retail)		3,258,027
	97,283	Shell Transport & Trading Co. PLC ADR (Energy Resources)		4,810,644
	41,700	Shell Transport & Trading Co. PLC (Energy Resources)		343,891
	197,000	Signet Group PLC (Specialty Retail)		225,244
	52,000	Slough Estates PLC (Real Estate)		274,438
	154,200	The Great Universal Stores PLC (Specialty Retail)		1,351,133
	435,200	Unilever PLC (Food & Beverage)		3,715,376
	47,952	United Business Media PLC (Publishing)		381,526
	81,000	United Utilities PLC (Business Services)		740,904
	2,064,301	Vodafone Group PLC (Telecommunications)		4,121,091
	90,120	Vodafone Group PLC ADR (Telecommunications)		1,815,918
				81,112,565
TOTAL COMMON STOCKS
(Cost $418,567,507)			$	393,242,999
Preferred Stocks – 0.4%
Australia – 0.2%
	106,700	The News Corp. Ltd. (Media)	$	722,966
Germany – 0.2%
	6,850	Hugo Boss AG (Specialty Retail)		154,998
	24,150	Volkswagen AG (Auto)		695,966
				850,964
New Zealand – 0.0%
	327,900	Fletcher Challenge Forests Ltd.* (Forest Products)		44,517
TOTAL PREFERRED STOCKS
(Cost $1,873,033)			$	1,618,447

The accompanying notes are an integral part of these financial statements.      43

 GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND

Statement of Investments  (continued)

August 31, 2001

Principal		Interest			Maturity
Amount		Rate			Date		Value
U.S. Government Agency Obligation – 0.2%
Federal Home Loan Mortgage Corp.#
$	750,000		3.51	%		09/27/2001	$	748,102
TOTAL U.S. GOVERNMENT AGENCY OBLIGATION
(Cost $748,102)							$	748,102
Short-Term Obligation – 4.1%
State Street Bank & Trust Euro – Time Deposit
$	16,881,000		3.63	%		09/04/2001	$	16,881,000
TOTAL SHORT-TERM OBLIGATION
(Cost $16,881,000)							$	16,881,000
TOTAL INVESTMENTS
(Cost $438,069,642)							$	412,490,548
*  Non-income producing security.
# A portion of this security is segregated as collateral for initial margin requirements on Futures transactions.

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

44     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND 

	As a % of
	Total
	Net Assets
Common and Preferred Stock Industry Classifications†
Airlines		1.2	%
Appliance		0.1
Auto		3.4
Automotive Parts		0.5
Banks		17.9
Building Materials		0.6
Business Services		3.3
Chemicals		1.5
Commercial Services & Supplies		0.1
Computer Hardware		1.5
Computer Software		0.4
Conglomerates		0.3
Construction		3.5
Consumer Products		0.6
Department Stores		0.8
Diversified Financials		0.4
Diversified Industrial Manufacturing		0.2
Drugs		1.7
Electrical Equipment		3.2
Electrical Utilities		3.3
Electronic Components		0.1
Electronics Equipment		1.1
Energy Resources		8.3
Entertainment		0.2
Financial Services		5.0
Food & Beverage		3.4
Forest Products		0.5
Health		3.8
Insurance		2.8
Leisure		0.5
Machinery		0.7
Manufacturing		0.8
Media		0.6
Merchandising		1.1
Metals		0.3
Mining		0.7
Multi-Industrial		2.1
Nonferrous Metals		0.5
Oil and Gas		0.3
Paper		1.2
Pharmaceuticals & Biotechnology		0.5
Property Insurance		0.3
Publishing		0.7
Railroads		0.8
Real Estate		1.0
Semiconductors		0.1
Specialty Retail		1.9
Steel		0.8
Telecommunications		6.7
Tobacco		1.9
Transportation		0.4
Utilities		0.8
Wholesale		0.9
TOTAL COMMON AND PREFERRED STOCK		95.3	%

†    Industry concentrations greater than one tenth of one percent are disclosed.

The accompanying notes are an integral part of these financial statements.      45

 GOLDMAN SACHS CORE EQUITY FUNDS

Statements of Assets and Liabilities

August 31, 2001

		CORE U.S.
		Equity Fund
Assets:
Investment in securities, at value (identified cost $922,642,470, $772,197,581, $137,641,616, $255,998,067 and $438,069,642, respectively)		$	962,544,984
Cash, at value(a)			625,000
Receivables:
	Investment securities sold		24,130,953
	Dividends and interest, at value		1,519,854
	Fund shares sold		694,542
	Variation margin(b)		8,092
	Reimbursement from adviser		93,718
Other assets			—
Total assets			989,617,143
Liabilities:
Due to Bank			515,071
Payables:
	Investment securities purchased		19,458,847
	Fund shares repurchased		3,146,451
	Amounts owed to affiliates		1,058,902
Accrued expenses and other liabilities, at value			100,608
Total liabilities			24,279,879
Net Assets:
Paid-in capital			993,889,039
Accumulated undistributed (distributions in excess of) net investment income (loss)			(87	)
Accumulated net realized gain (loss) on investment, futures and foreign currency related transactions			(68,440,957	)
Net unrealized gain (loss) on investments, futures and translation of assets and liabilities denominated in foreign currencies			39,889,269
NET ASSETS		$	965,337,264
Net asset value, offering and redemption price per share:(c)
	Class A		$24.30
	Class B		$23.39
	Class C		$23.29
	Institutional		$24.68
	Service		$24.15
Shares outstanding:
	Class A		19,404,040
	Class B		7,881,698
	Class C		1,968,090
	Institutional		10,349,948
	Service		344,534
Total shares outstanding, $.001 par value (unlimited number of shares authorized)			39,948,310

(a)	Includes restricted cash of $625,000, $475,000, $350,000 and $550,000, respectively, for the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity and CORE Large Cap Value Funds relating to initial margin requirements on futures transactions.
(b)	Includes restricted cash of approximately $900,000 for the CORE International Equity Fund relating to initial margin requirements on futures transactions.
(c)	Maximum public offering price per share (NAV per share multiplied by 1.0582) for Class A Shares of the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds is $25.71, $12.18, $11.21, $10.91 and $8.87, respectively. 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.

46     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE EQUITY FUNDS 

CORE Large Cap			CORE Small Cap		CORE Large Cap			CORE International
Growth Fund			Equity Fund		Value Fund			Equity Fund
$	693,591,663		$	138,237,652	$	259,572,289		$	412,490,548
	475,000			384,162		550,000			397,676
	17,369,603			3,224,066		—			—
	578,678			208,739		426,131			1,230,730
	583,394			150,496		331,530			394,189
	3,255			450		—			807,565
	54,664			49,784		30,470			160,117
	—			—		—			1,163
	712,656,257			142,255,349		260,910,420			415,481,988
	4,451,896			—		523,270			—
	10,852,921			3,402,237		—			—
	1,552,151			529,699		187,539			737,092
	809,712			149,342		214,332			389,458
	86,343			76,139		73,553			94,716
	17,753,023			4,157,417		998,694			1,221,266
	932,891,499			133,213,379		259,487,695			477,394,408
	(425	)		197,142		364,318			166,227
	(159,385,177	)		4,101,110		(3,514,509	)		(36,896,087	)
	(78,602,663	)		586,301		3,574,222			(26,403,826	)
$	694,903,234		$	138,097,932	$	259,911,726		$	414,260,722
$	11.51		$	10.59	$	10.31		$	8.38
$	11.16		$	10.26	$	10.24		$	8.29
$	11.17		$	10.29	$	10.25		$	8.30
$	11.63		$	10.76	$	10.31		$	8.50
$	11.45		$	10.55	$	10.31		$	8.41
	21,436,278			4,729,779		8,715,801			13,009,478
	15,002,711			1,571,634		2,157,139			1,034,137
	6,931,378			863,696		1,484,580			616,355
	17,359,787			5,838,455		12,868,524			34,306,459
	114,854			19,030		5,431			2,494
	60,845,008			13,022,594		25,231,475			48,968,923

The accompanying notes are an integral part of these financial statements.      47

 GOLDMAN SACHS CORE EQUITY FUNDS

Statements of Operations

For the Year Ended August 31, 2001

		CORE U.S.
		Equity Fund
Investment income:
Dividends(a)		$	14,030,944
Interest			122,161
Total income			14,153,105
Expenses:
Management fees			8,915,287
Distribution and service fees(b)			4,191,084
Transfer Agent fees(b)			1,756,778
Custodian fees			201,154
Registration fees			114,259
Professional fees			51,675
Trustee fees			9,978
Service share fees			47,998
Other			189,532
Total expenses			15,477,745
Less — expense reductions			(1,113,403	)
Net expenses			14,364,342
NET INVESTMENT INCOME (LOSS)			(211,237	)
Realized and unrealized gain (loss) on investment, futures and foreign currency transactions:
Net realized gain (loss) from:
	Investment transactions		(66,030,198	)
	Futures transactions		(1,187,356	)
	Foreign currency related transactions		41
Net change in unrealized gain (loss) on:
	Investments		(302,439,949	)
	Futures		(88,025	)
	Translation of assets and liabilities denominated in foreign currencies		—
Net realized and unrealized loss on investment, futures and foreign currency transactions			(369,745,487	)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	(369,956,724	)

(a)	For the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds, foreign taxes withheld on dividends were $81,778, $39,862, $1,449, $13,648 and $953,889, respectively.
(b)	Class specific Distribution and Service and Transfer Agent fees were as follows:

	Distribution and Service Fees						Transfer Agent Fees
Fund	Class A		Class B		Class C		Class A		Class B		Class C		Institutional		Service
CORE U.S. Equity Fund	$	1,450,295	$	2,213,541	$	527,248	$	1,102,224	$	420,573	$	100,177	$	129,964	$	3,840
CORE Large Cap Growth Fund		897,013		2,335,528		1,079,564		681,731		443,750		205,117		93,362		860
CORE Small Cap Equity Fund		127,047		164,228		85,276		96,556		31,203		16,202		28,931		53
CORE Large Cap Value Fund		252,999		205,783		135,589		192,279		39,100		25,762		69,424		10
CORE International Equity Fund		605,720		100,872		59,158		230,174		19,166		11,240		108,848		9

48     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE EQUITY FUNDS 

CORE Large Cap			CORE Small Cap			CORE Large Cap			CORE International
Growth Fund			Equity Fund			Value Fund			Equity Fund
$	5,238,811		$	2,056,273		$	5,239,364		$	6,524,040
	341,652			49,831			145,918			434,752
	5,580,463			2,106,104			5,385,282			6,958,792
	7,019,028			1,259,946			1,853,552			3,478,973
	4,312,105			376,551			594,371			765,750
	1,424,820			172,945			326,575			369,437
	188,420			160,708			124,752			711,482
	112,025			65,013			64,734			72,610
	50,175			51,437			50,675			46,017
	9,978			9,978			9,978			9,793
	10,754			661			140			116
	173,728			161,678			162,199			128,643
	13,301,033			2,258,917			3,186,976			5,582,821
	(777,653	)		(383,593	)		(214,625	)		(461,024	)
	12,523,380			1,875,324			2,972,351			5,121,797
	(6,942,917	)		230,780			2,412,931			1,836,995
	(145,639,442	)		6,234,033			(2,981,057	)		(33,177,421	)
	(3,490,323	)		(641,319	)		(448,039	)		(3,032,241	)
	232			—			41			(143,861	)
	(468,562,076	)		(20,257,388	)		(6,046,859	)		(63,879,209	)
	(220,729	)		(19,345	)		(18,150	)		(839,114	)
	—			—			—			56,141
	(617,912,338	)		(14,684,019	)		(9,494,064	)		(101,015,705	)
$	(624,855,255	)	$	(14,453,239	)	$	(7,081,133	)	$	(99,178,710	)

The accompanying notes are an integral part of these financial statements.      49

 GOLDMAN SACHS CORE EQUITY FUNDS

Statements of Changes in Net Assets

For the Year Ended August 31, 2001

		CORE U.S.
		Equity Fund
From operations:
Net investment income (loss)		$	(211,237	)
Net realized gain (loss) on investment, futures and foreign currency related transactions			(67,217,513	)
Net change in unrealized gain (loss) on investments, futures and translation of assets and liabilities denominated in foreign currencies			(302,527,974	)
Net decrease in net assets resulting from operations			(369,956,724	)
Distributions to shareholders:
From net investment income
	Class A Shares		(1,113,535	)
	Class B Shares		—
	Class C Shares		—
	Institutional Shares		(1,925,676	)
	Service Shares		(3,279	)
In excess of net investment income
	Class A Shares		(76,075	)
	Class B Shares		—
	Class C Shares		—
	Institutional Shares		(131,559	)
	Service Shares		(224	)
From net realized gain on investment, futures and foreign currency transactions
	Class A Shares		(66,906,649	)
	Class B Shares		(26,205,915	)
	Class C Shares		(6,096,863	)
	Institutional Shares		(35,915,254	)
	Service Shares		(1,122,294	)
Total distributions to shareholders			(139,497,323	)
From share transactions:
Proceeds from sales of shares			176,654,109
Reinvestment of dividends and distributions			129,275,800
Cost of shares repurchased			(276,457,175	)
Net increase (decrease) in net assets resulting from share transactions			29,472,734
TOTAL DECREASE			(479,981,313	)
Net assets:
Beginning of year			1,445,318,577
End of year		$	965,337,264
Accumulated undistributed (distributions in excess of) net investment income (loss)		$	(87	)

50     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE EQUITY FUNDS 

CORE Large Cap			CORE Small Cap			CORE Large Cap			CORE International
Growth Fund			Equity Fund			Value Fund			Equity Fund
$	(6,942,917	)	$	230,780		$	2,412,931		$	1,836,995
	(149,129,533	)		5,592,714			(3,429,055	)		(36,353,523	)
	(468,782,805	)		(20,276,733	)		(6,065,009	)		(64,662,182	)
	(624,855,255	)		(14,453,239	)		(7,081,133	)		(99,178,710	)
	(545,412	)		—			(835,190	)		(552,825	)
	—			—			(30,001	)		—
	—			—			(19,260	)		—
	(1,292,644	)		—			(2,158,427	)		(2,837,630	)
	—			—			(146	)		(139	)
	—			—			—			—
	—			—			—			—
	—			—			—			—
	—			—			—			—
	—			—			—			—
	(26,130,217	)		(5,085,559	)		(535,869	)		(7,263,151	)
	(16,541,364	)		(1,705,367	)		(102,661	)		(582,564	)
	(7,629,399	)		(837,472	)		(66,827	)		(340,164	)
	(15,227,488	)		(7,900,372	)		(995,661	)		(14,338,865	)
	(172,313	)		(11,424	)		(65	)		(1,295	)
	(67,538,837	)		(15,540,194	)		(4,744,107	)		(25,916,633	)
	234,712,539			40,141,242			99,459,843			210,450,754
	61,855,191			14,651,815			3,957,082			25,491,762
	(274,906,638	)		(54,126,609	)		(138,403,738	)		(171,015,548	)
	21,661,092			666,448			(34,986,813	)		64,926,968
	(670,733,000	)		(29,326,985	)		(46,812,053	)		(60,168,375	)
	1,365,636,234			167,424,917			306,723,779			474,429,097
$	694,903,234		$	138,097,932		$	259,911,726		$	414,260,722
$	(425	)	$	197,142		$	364,318		$	166,227

The accompanying notes are an integral part of these financial statements.      51

 GOLDMAN SACHS CORE EQUITY FUNDS

Statements of Changes in Net Assets

For the Year Ended August 31, 2000

		CORE U.S.
		Equity Fund
From operations:
Net investment income (loss)		$	3,255,736
Net realized gain on investment, futures and foreign currency related transactions			142,148,017
Net change in unrealized gain (loss) on investments, futures and translation of assets and liabilities denominated in foreign currencies			83,251,978
Net increase in net assets resulting from operations			228,655,731
Distributions to shareholders:
From net investment income
	Class A Shares		(25,013	)
	Class B Shares		(1,197	)
	Class C Shares		—
	Institutional Shares		(780,127	)
	Service Shares		—
From net realized gain
	Class A Shares		(62,600,563	)
	Class B Shares		(24,209,721	)
	Class C Shares		(4,880,735	)
	Institutional Shares		(33,286,059	)
	Service Shares		(1,192,519	)
Total distributions to shareholders			(126,975,934	)
From share transactions:
Proceeds from sales of shares			316,072,192
Reinvestment of dividends and distributions			119,188,185
Cost of shares repurchased			(310,048,888	)
Net increase (decrease) in net assets resulting from share transactions			125,211,489
TOTAL INCREASE			226,891,286
Net assets:
Beginning of year			1,218,427,291
End of year		$	1,445,318,577
Accumulated undistributed net investment income		$	3,253,727

52     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE EQUITY FUNDS 

CORE Large Cap			CORE Small Cap			CORE Large Cap			CORE International
Growth Fund			Equity Fund			Value Fund			Equity Fund
$	1,843,607		$	(180,277	)	$	3,827,257		$	2,522,427
	55,832,619			21,397,613			1,718,209			28,322,093
	261,592,255			13,448,969			8,245,500			(3,255,819	)
	319,268,481			34,666,305			13,790,966			27,588,701
	—			—			(846,877	)		(486,145	)
	—			—			(66,845	)		(20,223	)
	—			—			(37,149	)		(9,872	)
	—			—			(2,359,400	)		(2,508,945	)
	—			—			(103	)		(182	)
	(1,696,633	)		—			(1,086,282	)		(2,715,591	)
	(1,073,168	)		—			(203,809	)		(240,852	)
	(451,184	)		—			(103,226	)		(124,888	)
	(1,514,956	)		—			(2,175,304	)		(6,459,250	)
	(13,169	)		—			(136	)		(559	)
	(4,749,110	)		—			(6,879,131	)		(12,566,507	)
	498,678,850			66,906,806			106,881,945			215,168,577
	3,616,384			—			2,716,441			4,464,163
	(322,204,172	)		(69,490,670	)		(112,907,365	)		(160,031,898	)
	180,091,062			(2,583,864	)		(3,308,979	)		59,600,842
	494,610,433			32,082,441			3,602,856			74,623,036
	871,025,801			135,342,476			303,120,923			399,806,061
$	1,365,636,234		$	167,424,917		$	306,723,779		$	474,429,097
$	1,843,333		$	—		$	994,281		$	1,860,540

The accompanying notes are an integral part of these financial statements.      53

 GOLDMAN SACHS CORE EQUITY FUNDS

Notes to Financial Statements

August 31, 2001

1.  ORGANIZATION

Goldman Sachs Trust (the “Trust”) is a Delaware business trust registered under the Investment Company Act of 1940 (as amended) as an open-end management investment company. The Trust includes the CORE U.S. Equity Fund, CORE Large Cap Growth Fund, CORE Small Cap Equity Fund, CORE Large Cap Value Fund and the CORE International Equity Fund, collectively the “Funds” or individually a “Fund”. Each Fund is a diversified portfolio offering five classes of shares — Class A, Class B, Class C, Institutional and Service.

2.  SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies consistently followed by the Funds. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the reported amounts. Actual results could differ from those estimates.

A.  Investment Valuation — Investments in securities traded on a U.S. or foreign securities exchange or the NASDAQ system are valued daily at their last sale price on the principal exchange on which they are traded. If no sale occurs, securities are valued at the last bid price. Debt securities are valued at prices supplied by independent pricing services, broker/dealer-supplied valuations or matrix pricing systems. Unlisted equity and debt securities for which market quotations are available are valued at the last sale price on valuation date, or if no sale occurs, at the last bid price. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Securities for which quotations are not readily available are valued at fair value using methods approved by the 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 portfolio securities are calculated using the identified-cost basis. Dividend income is recorded on the ex-dividend date, net of foreign taxes where applicable. Dividends for which the Funds have the choice to receive either cash or stock are recognized as investment income in an amount equal to the cash dividend. Interest income is recorded on the basis of interest accrued, premium amortized and discount earned.

     Net investment income (other than class-specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the Funds based upon the relative proportion of net assets of each class.

C.  Federal Taxes — It is each 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 provisions are required. Income distributions, if any, are declared and paid quarterly for CORE Large Cap Value Fund and annually for all other Funds. Capital gains distributions, if any, are declared and paid annually.

     The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of each Fund’s distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist.

     The Funds, at their most recent tax year-ends of August 31, 2001, had approximately the following amounts of capital loss carryforwards for U.S. federal tax purposes. This amount is available to be carried forward to offset future capital gains to the extent permitted by applicable laws or regulations.

			Year of
Fund	Amount		Expiration
CORE U.S. Equity	$	3,976,000		2009
CORE Large Cap Value		1,186,000		2009
CORE International Equity		1,646,000		2009

54

GOLDMAN SACHS CORE EQUITY FUNDS 

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

     In addition, CORE U.S. Equity, CORE Large Cap Growth and CORE International Equity will elect to treat net capital losses of approximately $62,299,000, $158,891,000 and $31,383,000, respectively, incurred in the ten month period ended August 31, 2001 as having been incurred in the following fiscal year.

     At August 31, 2001, the Funds’ aggregate unrealized gains and losses based on cost for federal income tax purposes were as follows:

							Net
			Gross		Gross		Unrealized
Fund	Tax Cost		Unrealized Gain		Unrealized Loss		Gain (Loss)
CORE U.S. Equity	$	924,821,934	$	132,731,414	$	95,008,364	$	37,723,050
CORE Large Cap Growth		774,740,993		49,734,875		130,884,205		(81,149,330	)
CORE Small Cap Equity		138,177,957		18,723,117		18,663,422		59,695
CORE Large Cap Value		256,492,779		23,304,188		20,224,678		3,079,510
CORE International Equity		442,116,093		18,602,740		48,228,285		(29,625,545	)

D.  Expenses — Expenses incurred by the Trust that do not specifically relate to an individual Fund of the Trust are allocated to the Funds on a straight-line or pro rata basis depending upon the nature of the expense.

     Class A, Class B and Class C shareholders of the Funds bear all expenses and fees relating to their respective Distribution and Service plans. Shareholders of Service shares bear all expenses and fees paid to service organizations. Each class of shares of the Funds separately bears its respective class-specific transfer agency fees.

E.  Foreign Currency Translations — The books and records of the Funds are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars on the following basis: (i) investment valuations, foreign currency and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates; and (ii) purchases and sales of foreign investments, income and expenses are converted into U.S. dollars based upon currency exchange rates prevailing on the respective dates of such transactions.

     Net realized and unrealized gain (loss) on foreign currency transactions will represent: (i) foreign exchange gains and losses from the sale and holdings of foreign currencies; (ii) 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.  Segregation Transactions — The Funds may enter into certain derivative transactions. Forward foreign currency exchange 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 Funds are required to segregate liquid assets on the accounting records equal to or greater than the market value of the corresponding transactions.

G.  Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase them at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities, including accrued interest, is required to equal or exceed the value of the repurchase agreement. The underlying securities for all repurchase agreements are held in safekeeping at each Fund’s custodian or designated subcustodians.

55

 GOLDMAN SACHS CORE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

3.  AGREEMENTS

Pursuant to Investment Management Agreements (the “Agreements”), Goldman Sachs Asset Management (“GSAM”), a business unit of the Investment Management Division of Goldman, Sachs & Co. (“Goldman Sachs”), serves as the investment adviser to CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds. Goldman Sachs Funds Management, L.P. (“GSFM”), an affiliate of Goldman Sachs, serves as the investment adviser to CORE U.S. Equity Fund. Under the Agreements, the respective adviser, subject to the general supervision of the Trust’s Board of Trustees, manages the Funds’ portfolios. As compensation for the services rendered pursuant to the Agreements, the assumption of the expenses related thereto and administering the Funds’ business affairs, including providing facilities, the respective adviser is entitled to a management fee, computed daily and payable monthly, at an annual rate equal to 0.75%, 0.75%, 0.85%, 0.60% and 0.85% of the average daily net assets of CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds, respectively. For the year ended August 31, 2001, the advisers for CORE U.S. Equity and CORE Large Cap Growth have voluntarily agreed to waive a portion of their management fee equal annually to 0.05% and 0.05%, respectively, of each Fund’s average daily net assets. The advisers may discontinue or modify these waivers in the future at their discretion.

     Each adviser has voluntarily agreed to limit certain “Other Expenses” for the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds (excluding management fees, distribution and service fees, transfer agent fees, taxes, interest, brokerage, litigation, Service Share fees, indemnification costs and extraordinary expenses), to the extent such expenses exceed, on an annual basis, 0.00%, 0.02%, 0.04%, 0.06%, and 0.12% of the average daily net assets of the Funds, respectively.

     The Trust, on behalf of each Fund, has adopted Distribution and Service Plans. Under the Distribution and Service Plans, Goldman Sachs and/or authorized dealers are entitled to a monthly fee from each Fund for distribution and shareholder maintenance services equal, on an annual basis, to 0.25% (0.50% for CORE International Equity Fund), 1.00% and 1.00% of the Funds’ 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 Funds pursuant to Distribution Agreements. Goldman Sachs may receive a portion of the Class A front end sales load and Class B and Class C contingent deferred sales charge and has advised the Funds that it retained approximately $152,000, $130,000, $41,000, $122,000 and $150,000 during the year ended August 31, 2001 for the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds, respectively.

     Goldman Sachs also serves as the transfer agent of the Funds for a fee. Fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate as follows: 0.19% of the average daily net assets for Class A, Class B and Class C Shares and 0.04% of the average daily net assets for Institutional and Service Shares.

     The Trust, on behalf of each Fund, has adopted a Service Plan. This plan allows for Service shares to compensate service organizations for providing varying levels of account administration and shareholder liaison services to their customers who are beneficial owners of such shares. The Service Plan provides for compensation to the service organizations in an amount up to 0.50% (on a annualized basis) of the average daily net asset value of the Service Shares.

56

GOLDMAN SACHS CORE EQUITY FUNDS 

3.  AGREEMENTS (continued)

     For the year ended August 31, 2001, the Funds’ advisers have voluntarily agreed to waive certain fees and reimburse other expenses. In addition, the Funds have entered into certain offset arrangements with the custodian resulting in a reduction in the Funds’ expenses. These expense reductions were as follows (in thousands):

	Management Fee				Custody		Total Expense
Fund	Waiver		Reimbursement		Credit		Reductions
CORE U.S. Equity	$	594	$	515	$	4	$	1,113
CORE Large Cap Growth		468		298		12		778
CORE Small Cap Equity		—		379		5		384
CORE Large Cap Value		—		212		3		215
CORE International Equity		—		458		3		461

     At August 31, 2001, the amounts owed to affiliates were as follows (in thousands):

	Management		Distribution and		Transfer
Fund	Fees		Service Fees		Agent Fees		Total
CORE U.S. Equity	$	620	$	310	$	129	$	1,059
CORE Large Cap Growth		440		278		92		810
CORE Small Cap Equity		101		33		15		149
CORE Large Cap Value		136		52		26		214
CORE International Equity		300		59		30		389

4.  PORTFOLIO SECURITIES TRANSACTIONS

The cost of purchases and proceeds of sales and maturities of securities (excluding short-term investments and futures transactions) for the year ended August 31, 2001, were as follows:

Fund	Purchases		Sales and Maturities
CORE U.S. Equity	$	637,711,495	$	747,297,237
CORE Large Cap Growth		633,367,119		670,928,043
CORE Small Cap Equity		125,530,572		140,164,901
CORE Large Cap Value		216,137,190		252,081,370
CORE International Equity		395,422,455		374,977,368

     For the year ended August 31, 2001, Goldman Sachs earned approximately $4,000, $6,000, $1,000, $2,000 and $37,000 of brokerage commissions from portfolio transactions, including futures transactions, executed on behalf of the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds, respectively.

Forward Foreign Currency Exchange Contracts — The CORE International Equity Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The CORE International Equity Fund may also purchase and sell forward contracts to seek to increase total return. All commitments are “marked-to-market” daily at the

57

 GOLDMAN SACHS CORE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

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 delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. As of August 31, 2001, there were no open forward currency contracts outstanding.

Option Accounting Principles — When the Funds write call or put options, an amount equal to the premium received is recorded as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When a written option expires on its stipulated expiration date or the Funds enter into a closing purchase transaction, the Funds realize a gain or loss without regard to any unrealized gain or loss on the underlying security and the liability related to such option is extinguished. When a written call option is exercised, the Funds realize a gain or loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. When a written put option is exercised, the amount of the premium originally received will reduce the cost of the security which the Funds purchase 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 Funds, the premium paid is recorded as an investment and subsequently marked-to-market to reflect the current market value of the option. If an option which the Funds have purchased expires on the stipulated expiration date, the Funds will realize a loss in the amount of the cost of the option. If the Funds enter into a closing sale transaction, the Funds will realize a gain or loss, depending on whether the sale proceeds for the closing sale transaction are greater or less than the cost of the option. If the Funds exercise a purchased put option, the Funds 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 Funds exercise a purchased call option, the cost of the security which the Funds purchase upon exercise will be increased by the premium originally paid. As of August 31, 2001, the Funds had no open written option contracts.

Futures Contracts — The Funds may enter into futures transactions to hedge against changes in interest rates, securities prices, currency exchange rates or (for CORE International Equity Fund only) to seek to increase total return. Upon entering into a futures contract, the Funds are required to deposit with a broker or the Funds’ custodian bank an amount of cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Funds, depending on the fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Funds realize a gain or loss which is reported in the Statement of Operations.

     The use of futures contracts involve, to varying degrees, elements of market risk which may exceed the amounts recognized in the Statements of Assets and Liabilities. Changes in the value of the futures contract may not directly correlate

58

GOLDMAN SACHS CORE EQUITY FUNDS 

4.  PORTFOLIO SECURITIES TRANSACTIONS (continued)

with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Funds’ hedging strategies and potentially result in a loss. As of August 31, 2001, open futures contracts were as follows:

		Number of
		Contracts		Settlement	Market		Unrealized
Fund	Type	Long		Month	Value		Gain (Loss)
CORE US Equity Fund	S&P 500 Index		14	September 2001		$3,972,850		$(13,245	)
CORE Large Cap Growth Fund	S&P 500 Index		9	September 2001		$2,553,975		$3,255
CORE Small Cap Equity Fund	Russell 2000 Index		2	September 2001		$469,150		$(9,735	)
CORE International Equity Fund	SPI 200 Index		26	September 2001		$1,119,640		$(27,654	)
	CAC 40-10EU Index		27	September 2001		1,153,157		(59,701	)
	HKFE Index		5	September 2001		355,398		(2,853	)
	EURX DAX Index		7	September 2001		826,804		(77,933	)
	MIB 30 Index		4	September 2001		631,061		(14,946	)
	TOPIX Index		50	September 2001		4,611,109		(317,556	)
	FTSE 100 Index		69	September 2001		5,351,672		(74,236	)
	DJ EUR ER STX 50 Index		150	September 2001		5,106,869		(249,375	)
	IBEX Index		4	September 2001		303,458		(5,127	)
						$19,459,168		$(829,381	)

5.  LINE OF CREDIT FACILITY

The Funds participate in a $350,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, each Fund must own securities having a market value in excess of 400% of the total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. This facility also requires a fee to be paid by the Funds based on the amount of the commitment which has not been utilized. During the year ended August 31, 2001, the Funds did not have any borrowings under this facility.

59

 GOLDMAN SACHS CORE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

6.  JOINT REPURCHASE AGREEMENT ACCOUNT

The Funds, together with other registered investment companies having management agreements with GSAM and GSFM or their affiliates, transfer uninvested cash into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements.

     At August 31, 2001, the CORE Small Cap Equity Fund had an undivided interest in the repurchase agreements in the joint account which equaled $100,000 in principal amount. At August 31, 2001, the following repurchase agreements held in this joint account were fully collateralized by Federal Agency obligations:

	Principal		Interest			Maturity	Amortized		Maturity
Repurchase Agreements	Amount		Rate			Date	Cost		Value
Bank of America	$	1,000,000,000		3.69	%	09/04/2001	$	1,000,000,000	$	1,000,410,000
Barclays Capital		400,000,000		3.69		09/04/2001		400,000,000		400,164,000
C.S. First Boston Corp.		300,000,000		3.69		09/04/2001		300,000,000		300,123,000
Deutsche Bank Securities, Inc.		3,000,000,000		3.70		09/04/2001		3,000,000,000		3,001,233,333
Greenwich Capital		400,000,000		3.69		09/04/2001		400,000,000		400,164,000
J.P. Morgan Chase & Co., Inc.		3,000,000,000		3.69		09/04/2001		3,000,000,000		3,001,230,000
Morgan Stanley		3,000,000,000		3.67		09/04/2001		3,000,000,000		3,001,223,333
UBS Warburg LLC		550,000,000		3.70		09/04/2001		550,000,000		550,226,111
UBS Warburg LLC		1,016,000,000		3.69		09/04/2001		1,016,000,000		1,016,416,560
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT II							$	12,666,000,000	$	12,671,190,337

7.  OTHER MATTERS

As of August 31, 2001, Goldman, Sachs & Co. Profit Sharing Master Trust was the beneficial owner of approximately 12% of the outstanding shares of the CORE U.S. Equity Fund. In addition, the following Goldman Sachs Asset Allocation Portfolios were beneficial owners of the Funds (as a percentage of outstanding shares):

	Goldman Sachs			Goldman Sachs			Goldman Sachs
	Growth and Income			Growth Strategy			Aggressive Growth
Fund	Strategy Portfolio			Portfolio			Strategy Portfolio
CORE Large Cap Growth		5	%		6	%		—	%
CORE Small Cap Equity		7			8			—
CORE Large Cap Value		15			17			9
CORE International Equity		22			22			12

60

GOLDMAN SACHS CORE EQUITY FUNDS 

8.  CERTAIN RECLASSIFICATIONS

       In accordance with AICPA Statement of Position 93-2, the CORE U.S. Equity Fund reclassified $206,765 from paid-in capital and $1,006 from accumulated net realized loss on investment, futures and foreign currency related transactions to accumulated undistributed (distributions in excess of) net investment loss. CORE Large Cap Growth reclassified $6,428,121 from paid-in capital and $509,094 from accumulated net realized loss on investment, futures and foreign currency related transactions to accumulated undistributed net investment loss. CORE Small Cap Equity reclassified $400 and $33,238 from net investment income to paid-in capital and accumulated net realized gain on investment, futures and foreign currency related transactions, respectively. CORE Large Cap Value reclassified $130 from accumulated net realized loss on investment, futures and foreign currency related transactions to accumulated undistributed net investment income. CORE International Equity reclassified $140,714 from accumulated undistributed net investment income and $61,235 from accumulated net realized loss on investment, futures and foreign currency related transactions to paid-in capital. Reclassifications result primarily from the difference in the tax treatment of foreign currency, net operating losses and organization costs.

Goldman Sachs Trust — CORE Funds Tax Information (Unaudited)

       For the year ended August 31, 2001, 36.26%, 17.98%, 34.70% and 100% of the dividends paid from net investment company taxable income by the CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity and CORE Large Cap Value Funds, respectively, qualify for the dividends received deduction available to corporations.

       Pursuant to Section 852 of the Internal Revenue Code, CORE U.S. Equity, CORE Large Cap Growth, CORE Small Cap Equity, CORE Large Cap Value and CORE International Equity Funds designate $100,851,812, $33,134,752, $10,177,384, $1,701,172 and $22,526,040, respectively, as capital gains dividends for the year ended August 31, 2001.

       From distributions paid during the year ended August 31, 2001, the total amount of income received by the CORE International Equity Fund from sources with foreign countries and possessions of the United States was $0.2035 per share of all of which is attributable to qualified passive income. The total amount of taxes paid by the Fund to such countries was $0.0345 per share. A separate notice containing the country by country components of these totals has been previously mailed to the shareholders.

61

 GOLDMAN SACHS CORE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

9.  SUMMARY OF SHARE TRANSACTIONS

Share activity for the year ended August 31, 2001, is as follows:

	CORE U.S. Equity Fund
	Shares			Dollars
Class A Shares
Shares sold		2,887,119		$	82,795,390
Reinvestment of dividends and distributions		2,235,052			65,375,287
Shares repurchased		(5,185,493	)		(143,357,869	)
		(63,322	)		4,812,808
Class B Shares
Shares sold		778,895			21,828,412
Reinvestment of dividends and distributions		839,287			23,760,217
Shares repurchased		(1,455,193	)		(39,837,044	)
		162,989			5,751,585
Class C Shares
Shares sold		514,013			13,982,502
Reinvestment of dividends and distributions		190,739			5,376,922
Shares repurchased		(501,724	)		(13,507,111	)
		203,028			5,852,313
Institutional Shares
Shares sold		1,916,303			55,803,280
Reinvestment of dividends and distributions		1,135,945			33,646,680
Shares repurchased		(2,868,580	)		(76,951,244	)
		183,668			12,498,716
Service Shares
Shares sold		79,748			2,244,525
Reinvestment of dividends and distributions		38,388			1,116,694
Shares repurchased		(98,651	)		(2,803,907	)
		19,485			557,312
NET INCREASE (DECREASE)		505,848		$	29,472,734

62

GOLDMAN SACHS CORE EQUITY FUNDS 

CORE Large Cap Growth Fund						CORE Small Cap Equity Fund						CORE Large Cap Value Fund						CORE International Equity Fund
Shares			Dollars			Shares			Dollars			Shares			Dollars			Shares			Dollars
	6,168,012		$	95,741,614			2,022,509		$	22,619,142			3,966,486		$	42,004,262			11,612,532		$	106,865,849
	1,488,521			25,452,620			432,025			4,583,789			125,811			1,350,040			764,938			7,511,678
	(10,302,421	)		(150,608,397	)		(1,983,323	)		(21,836,891	)		(4,714,321	)		(50,474,772	)		(12,389,869	)		(115,780,893	)
	(2,645,888	)		(29,414,163	)		471,211			5,366,040			(622,024	)		(7,120,470	)		(12,399	)		(1,403,366	)
	2,177,265			34,560,438			314,087			3,371,209			811,627			8,604,085			112,634			1,091,018
	855,157			14,255,459			143,980			1,487,328			10,975			117,975			55,008			536,325
	(3,301,113	)		(46,149,204	)		(305,623	)		(3,263,601	)		(439,443	)		(4,662,851	)		(205,726	)		(1,930,829	)
	(268,691	)		2,666,693			152,444			1,594,936			383,159			4,059,209			(38,084	)		(303,486	)
	1,542,954			24,343,162			304,428			3,271,879			624,309			6,632,318			405,666			3,658,422
	359,027			5,984,982			67,366			697,915			7,184			77,382			27,530			268,693
	(1,966,372	)		(27,832,566	)		(163,093	)		(1,729,912	)		(185,391	)		(1,962,780	)		(430,258	)		(3,952,759	)
	(64,391	)		2,495,578			208,701			2,239,882			446,102			4,746,920			2,938			(25,644	)
	5,435,807			79,812,699			941,751			10,710,914			3,954,815			42,173,728			10,930,437			98,835,465
	928,561			15,989,817			732,901			7,871,359			226,326			2,411,535			1,731,213			17,173,630
	(3,121,889	)		(49,075,630	)		(2,448,901	)		(27,280,273	)		(7,538,227	)		(81,303,335	)		(5,195,178	)		(49,351,067	)
	3,242,479			46,726,886			(774,249	)		(8,698,000	)		(3,357,086	)		(36,718,072	)		7,466,472			66,658,028
	17,980			254,626			14,531			168,098			4,301			45,450			—			—
	10,118			172,313			1,080			11,424			14			150			146			1,436
	(85,244	)		(1,240,841	)		(1,463	)		(15,932	)		—			—			—			—
	(57,146	)		(813,902	)		14,148			163,590			4,315			45,600			146			1,436
	206,363		$	21,661,092			72,255		$	666,448			(3,145,534	)	$	(34,986,813	)		7,419,073		$	64,926,968

63

 GOLDMAN SACHS CORE EQUITY FUNDS

Notes to Financial Statements  (continued)

August 31, 2001

9.  SUMMARY OF SHARE TRANSACTIONS (continued)

Share activity for the year ended August 31, 2000, is as follows:

	CORE U.S. Equity Fund
	Shares			Dollars
Class A Shares
Shares sold		4,299,636		$	147,748,472
Reinvestment of dividends and distributions		1,814,645			60,210,166
Shares repurchased		(4,601,391	)		(158,796,518	)
		1,512,890			49,162,120
Class B Shares
Shares sold		2,022,727			67,970,799
Reinvestment of dividends and distributions		679,601			22,025,886
Shares repurchased		(1,361,908	)		(45,688,038	)
		1,340,420			44,308,647
Class C Shares
Shares sold		761,123			25,417,131
Reinvestment of dividends and distributions		129,351			4,176,748
Shares repurchased		(421,409	)		(14,196,500	)
		469,065			15,397,379
Institutional Shares
Shares sold		2,043,937			71,350,795
Reinvestment of dividends and distributions		941,797			31,616,126
Shares repurchased		(2,511,099	)		(86,461,857	)
		474,635			16,505,064
Service Shares
Shares sold		104,405			3,584,995
Reinvestment of dividends and distributions		35,129			1,159,259
Shares repurchased		(143,474	)		(4,905,975	)
		(3,940	)		(161,721	)
NET INCREASE (DECREASE)		3,793,070		$	125,211,489

64

GOLDMAN SACHS CORE EQUITY FUNDS 

CORE Large Cap Growth Fund						CORE Small Cap Equity Fund						CORE Large Cap Value Fund						CORE International Equity Fund
Shares			Dollars			Shares			Dollars			Shares			Dollars			Shares			Dollars
	13,185,194		$	264,595,168			2,396,202		$	28,017,254			5,748,276		$	59,575,667			10,563,804		$	122,888,676
	82,214			1,599,043			—			—			181,124			1,877,202			264,086			3,079,248
	(6,856,684	)		(139,418,654	)		(3,283,915	)		(38,105,187	)		(5,225,016	)		(53,546,888	)		(8,336,349	)		(97,065,965	)
	6,410,724			126,775,557			(887,713	)		(10,087,933	)		704,384			7,905,981			2,491,541			28,901,959
	6,245,212			121,555,868			467,046			5,394,626			1,137,293			11,705,218			368,199			4,263,313
	48,352			924,021			—			—			20,707			214,186			20,441			237,117
	(1,864,186	)		(36,911,091	)		(406,335	)		(4,598,965	)		(761,301	)		(7,827,473	)		(164,712	)		(1,911,815	)
	4,429,378			85,568,798			60,711			795,661			396,699			4,091,931			223,928			2,588,615
	3,571,933			70,145,056			283,210			3,295,043			756,650			7,858,271			997,152			11,442,000
	17,989			343,770			—			—			11,936			123,567			9,233			107,195
	(1,101,162	)		(21,663,375	)		(249,135	)		(2,821,220	)		(494,316	)		(5,120,910	)		(847,176	)		(9,754,850	)
	2,488,760			48,855,451			34,075			473,823			274,270			2,860,928			159,209			1,794,345
	2,019,488			41,436,896			2,529,882			30,183,742			2,688,867			27,742,789			6,441,624			76,556,582
	37,627			736,381			—			—			48,421			501,247			88,349			1,039,862
	(6,106,529	)		(123,783,480	)		(1,999,404	)		(23,933,329	)		(4,477,133	)		(46,410,458	)		(4,341,229	)		(51,299,130	)
	(4,049,414	)		(81,610,203	)		530,478			6,250,413			(1,739,845	)		(18,166,422	)		2,188,744			26,297,314
	45,373			945,862			1,408			16,141			—			—			1,581			18,006
	680			13,169			—			—			23			239			63			741
	(22,151	)		(457,572	)		(2,769	)		(31,969	)		(160	)		(1,636	)		(11	)		(138	)
	23,902			501,459			(1,361	)		(15,828	)		(137	)		(1,397	)		1,633			18,609
	9,303,350		$	180,091,062			(263,810	)	$	(2,583,864	)		(364,629	)	$	(3,308,979	)		5,065,055		$	59,600,842

65

 GOLDMAN SACHS CORE U.S. EQUITY FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment									Distributions to shareholders
	Net asset		Net												In excess
	value,		investment			Net realized			Total from			From net			of net			From net
	beginning		income			and unrealized			investment			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	36.77	$	0.01	(c)	$	(8.96	)	$	(8.95	)	$	(0.06	)	$	—		$	(3.46	)	$	(3.52	)
2001 - Class B Shares		35.71		(0.19	) (c)		(8.67	)		(8.86	)		—			—			(3.46	)		(3.46	)
2001 - Class C Shares		35.59		(0.19	) (c)		(8.65	)		(8.84	)		—			—			(3.46	)		(3.46	)
2001 - Institutional Shares		37.30		0.13	(c)		(9.09	)		(8.96	)		(0.19	)		(0.01	)		(3.46	)		(3.66	)
2001 - Service Shares		36.54		(0.01	) (c)		(8.91	)		(8.92	)		(0.01	)		—			(3.46	)		(3.47	)
2000 - Class A Shares		34.21		0.10	(c)		6.00			6.10			—			—			(3.54	)		(3.54	)
2000 - Class B Shares		33.56		(0.14	) (c)		5.83			5.69			—			—			(3.54	)		(3.54	)
2000 - Class C Shares		33.46		(0.13	) (c)		5.80			5.67			—			—			(3.54	)		(3.54	)
2000 - Institutional Shares		34.61		0.24	(c)		6.07			6.31			(0.08	)		—			(3.54	)		(3.62	)
2000 - Service Shares		34.05		0.07	(c)		5.96			6.03			—			—			(3.54	)		(3.54	)
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares		32.98		0.03			1.20			1.23			—			—			—			—
1999 - Class B Shares		32.50		(0.11	)		1.17			1.06			—			—			—			—
1999 - Class C Shares		32.40		(0.10	)		1.16			1.06			—			—			—			—
1999 - Institutional Shares		33.29		0.11			1.21			1.32			—			—			—			—
1999 - Service Shares		32.85		0.01			1.19			1.20			—			—			—			—
FOR THE YEARS ENDED JANUARY 31,
1999 - Class A Shares		26.59		0.04			7.02			7.06			(0.03	)		(0.01	)		(0.63	)		(0.67	)
1999 - Class B Shares		26.32		(0.10	)		6.91			6.81			—			—			(0.63	)		(0.63	)
1999 - Class C Shares		26.24		(0.10	)		6.89			6.79			—			—			(0.63	)		(0.63	)
1999 - Institutional Shares		26.79		0.20			7.11			7.31			(0.15	)		(0.03	)		(0.63	)		(0.81	)
1999 - Service Shares		26.53		0.06			7.01			7.07			(0.10	)		(0.02	)		(0.63	)		(0.75	)
1998 - Class A Shares		23.32		0.11			5.63			5.74			(0.12	)		—			(2.35	)		(2.47	)
1998 - Class B Shares		23.18		0.11			5.44			5.55			—			(0.06	)		(2.35	)		(2.41	)
1998 - Class C Shares (commenced August 15, 1997)		27.48		0.03			1.22			1.25			—			(0.14	)		(2.35	)		(2.49	)
1998 - Institutional Shares		23.44		0.30			5.65			5.95			(0.24	)		(0.01	)		(2.35	)		(2.60	)
1998 - Service Shares		23.27		0.19			5.57			5.76			(0.07	)		(0.08	)		(2.35	)		(2.50	)
1997 - Class A Shares		19.66		0.16			4.46			4.62			(0.16	)		—			(0.80	)		(0.96	)
1997 - Class B Shares (commenced May 1, 1996)		20.44		0.04			3.70			3.74			(0.04	)		(0.16	)		(0.80	)		(1.00	)
1997 - Institutional Shares		19.71		0.30			4.51			4.81			(0.28	)		—			(0.80	)		(1.08	)
1997 - Service Shares (commenced June 7, 1996)		21.02		0.13			3.15			3.28			(0.13	)		(0.10	)		(0.80	)		(1.03	)

(a)

Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

(b)

Annualized.

        (c)  Calculated based on the average shares outstanding methodology.

66     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE U.S. EQUITY FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	24.30		(25.96	)%	$	471,445		1.14	%		0.04	%		1.23	%		(0.05	)%		54	%
	23.39		(26.49	)		184,332		1.89			(0.70	)		1.98			(0.79	)		54
	23.29		(26.53	)		45,841		1.89			(0.70	)		1.98			(0.79	)		54
	24.68		(25.66	)		255,400		0.74			0.45			0.83			0.36			54
	24.15		(26.02	)		8,319		1.24			(0.05	)		1.33			(0.14	)		54
	36.77		18.96			715,775		1.14			0.31			1.23			0.22			59
	35.71		18.03			275,673		1.89			(0.44	)		1.98			(0.53	)		59
	35.59		18.03			62,820		1.89			(0.43	)		1.98			(0.52	)		59
	37.30		19.41			379,172		0.74			0.71			0.83			0.62			59
	36.54		18.83			11,879		1.24			0.19			1.33			0.10			59
	34.21		3.73			614,310		1.14	(b)		0.15	(b)		1.24	(b)		0.05	(b)		42
	33.56		3.26			214,087		1.89	(b)		(0.60	)(b)		1.99	(b)		(0.70	)(b)		42
	33.46		3.27			43,361		1.89	(b)		(0.61	)(b)		1.99	(b)		(0.71	)(b)		42
	34.61		3.97			335,465		0.74	(b)		0.54	(b)		0.84	(b)		0.44	(b)		42
	34.05		3.65			11,204		1.24	(b)		0.06	(b)		1.34	(b)		(0.04	)(b)		42
	32.98		26.89			605,566		1.23			0.15			1.36			0.02			64
	32.50		26.19			152,347		1.85			(0.50	)		1.98			(0.63	)		64
	32.40		26.19			26,912		1.87			(0.53	)		2.00			(0.66	)		64
	33.29		27.65			307,200		0.69			0.69			0.82			0.56			64
	32.85		27.00			11,600		1.19			0.19			1.32			0.06			64
	26.59		24.96			398,393		1.28			0.51			1.47			0.32			66
	26.32		24.28			59,208		1.79			(0.05	)		1.96			(0.22	)		66
	26.24		4.85			6,267		1.78	(b)		(0.21	)(b)		1.95	(b)		(0.38	)(b)		66
	26.79		25.76			202,893		0.65			1.16			0.82			0.99			66
	26.53		25.11			7,841		1.15			0.62			1.32			0.45			66
	23.32		23.75			225,968		1.29			0.91			1.53			0.67			37
	23.18		18.59			17,258		1.83	(b)		0.06	(b)		2.00	(b)		(0.11	)(b)		37
	23.44		24.63			148,942		0.65			1.52			0.85			1.32			37
	23.27		15.92			3,666		1.15	(b)		0.69	(b)		1.35	(b)		0.49	(b)		37

      67

 GOLDMAN SACHS CORE LARGE CAP GROWTH FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment									Distributions to shareholders
	Net asset		Net												In excess
	value,		investment			Net realized			Total from			From net			of net			From net
	beginning		income			and unrealized			investment			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	22.66	$	(0.09	) (c)	$	(9.97	)	$	(10.06	)	$	(0.02	)	$	—		$	(1.07	)	$	(1.09	)
2001 - Class B Shares		22.14		(0.20	) (c)		(9.71	)		(9.91	)		—			—			(1.07	)		(1.07	)
2001 - Class C Shares		22.15		(0.20	) (c)		(9.71	)		(9.91	)		—			—			(1.07	)		(1.07	)
2001 - Institutional Shares		22.87		(0.02	) (c)		(10.06	)		(10.08	)		(0.09	)		—			(1.07	)		(1.16	)
2001 - Service Shares		22.55		(0.10	) (c)		(9.93	)		(10.03	)		—			—			(1.07	)		(1.07	)
2000 - Class A Shares		17.02		0.06	(c)		5.67			5.73			—			—			(0.09	)		(0.09	)
2000 - Class B Shares		16.75		(0.09	) (c)		5.57			5.48			—			—			(0.09	)		(0.09	)
2000 - Class C Shares		16.75		(0.08	) (c)		5.57			5.49			—			—			(0.09	)		(0.09	)
2000 - Institutional Shares		17.10		0.13	(c)		5.73			5.86			—			—			(0.09	)		(0.09	)
2000 - Service Shares		16.95		0.03	(c)		5.66			5.69			—			—			(0.09	)		(0.09	)
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares		16.17		(0.01	)		0.86			0.85			—			—			—			—
1999 - Class B Shares		15.98		(0.07	)		0.84			0.77			—			—			—			—
1999 - Class C Shares		15.99		(0.07	)		0.83			0.76			—			—			—			—
1999 - Institutional Shares		16.21		0.03			0.86			0.89			—			—			—			—
1999 - Service Shares		16.11		(0.02	)		0.86			0.84			—			—			—			—
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares		11.97		0.01			4.19			4.20			—			—			—			—
1999 - Class B Shares		11.92		(0.06	)		4.12			4.06			—			—			—			—
1999 - Class C Shares		11.93		(0.05	)		4.11			4.06			—			—			—			—
1999 - Institutional Shares		11.97		0.02			4.23			4.25			—			(0.01	)		—			(0.01	)
1999 - Service Shares		11.95		(0.01	)		4.17			4.16			—			—			—			—
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares (commenced May 1, 1997)		10.00		0.01			2.35			2.36			(0.01	)		—			(0.38	)		(0.39	)
1998 - Class B Shares (commenced May 1, 1997)		10.00		(0.03	)		2.33			2.30			—			—			(0.38	)		(0.38	)
1998 - Class C Shares (commenced August 15, 1997)		11.80		(0.02	)		0.54			0.52			—			(0.01	)		(0.38	)		(0.39	)
1998 - Institutional Shares (commenced May 1, 1997)		10.00		0.01			2.35			2.36			(0.01	)		—			(0.38	)		(0.39	)
1998 - Service Shares (commenced May 1, 1997)		10.00		(0.02	)		2.35			2.33			—			—			(0.38	)		(0.38	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

68     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE LARGE CAP GROWTH FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	11.51		(45.97	)%	$	246,785		1.16	%		(0.57	)%		1.24	%		(0.65	)%		68	%
	11.16		(46.37	)		167,469		1.91			(1.32	)		1.99			(1.40	)		68
	11.17		(46.35	)		77,398		1.91			(1.32	)		1.99			(1.40	)		68
	11.63		(45.73	)		201,935		0.76			(0.15	)		0.84			(0.23	)		68
	11.45		(46.05	)		1,316		1.26			(0.68	)		1.34			(0.76	)		68
	22.66		33.73			545,763		1.09			0.31			1.24			0.16			73
	22.14		32.78			338,128		1.84			(0.44	)		1.99			(0.59	)		73
	22.15		32.84			154,966		1.84			(0.43	)		1.99			(0.58	)		73
	22.87		34.34			322,900		0.69			0.65			0.84			0.50			73
	22.55		33.64			3,879		1.19			0.15			1.34			—			73
	17.02		5.26			300,684		1.04	(b)		(0.11	)(b)		1.26	(b)		(0.33	)(b)		33
	16.75		4.82			181,626		1.79	(b)		(0.87	)(b)		2.01	(b)		(1.09	)(b)		33
	16.75		4.75			75,502		1.79	(b)		(0.87	)(b)		2.01	(b)		(1.09	)(b)		33
	17.10		5.49			310,704		0.64	(b)		0.31	(b)		0.86	(b)		0.09	(b)		33
	16.95		5.21			2,510		1.14	(b)		(0.21	)(b)		1.36	(b)		(0.43	)(b)		33
	16.17		35.10			175,510		0.97			0.05			1.46			(0.44	)		63
	15.98		34.07			93,711		1.74			(0.73	)		2.11			(1.10	)		63
	15.99		34.04			37,081		1.74			(0.74	)		2.11			(1.11	)		63
	16.21		35.54			295,734		0.65			0.35			1.02			(0.02	)		63
	16.11		34.85			1,663		1.15			(0.16	)		1.52			(0.53	)		63
	11.97		23.79			53,786		0.91	(b)		0.12	(b)		2.40	(b)		(1.37	)(b)		75
	11.92		23.26			13,857		1.67	(b)		(0.72	)(b)		2.91	(b)		(1.96	)(b)		75
	11.93		4.56			4,132		1.68	(b)		(0.76	)(b)		2.92	(b)		(2.00	)(b)		75
	11.97		23.89			4,656		0.72	(b)		0.42	(b)		1.96	(b)		(0.82	)(b)		75
	11.95		23.56			115		1.17	(b)		(0.21	)(b)		2.41	(b)		(1.45	)(b)		75

      69

 GOLDMAN SACHS CORE SMALL CAP EQUITY FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment									Distributions to shareholders
	Net asset		Net
	value,		investment			Net realized			Total from			From net			From net
	beginning		income			and unrealized			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	12.90	$	0.01	(c)	$	(1.12	)	$	(1.11	)	$	—		$	(1.20	)	$	(1.20	)
2001 - Class B Shares		12.63		(0.07	) (c)		(1.10	)		(1.17	)		—			(1.20	)		(1.20	)
2001 - Class C Shares		12.66		(0.07	) (c)		(1.10	)		(1.17	)		—			(1.20	)		(1.20	)
2001 - Institutional Shares		13.03		0.05	(c)		(1.12	)		(1.07	)		—			(1.20	)		(1.20	)
2001 - Service Shares		12.87		—	(c)		(1.12	)		(1.12	)		—			(1.20	)		(1.20	)
2000 - Class A Shares		10.23		(0.03	) (c)		2.70			2.67			—			—			—
2000 - Class B Shares		10.09		(0.11	) (c)		2.65			2.54			—			—			—
2000 - Class C Shares		10.10		(0.10	) (c)		2.66			2.56			—			—			—
2000 - Institutional Shares		10.30		0.02	(c)		2.71			2.73			—			—			—
2000 - Service Shares		10.22		(0.04	) (c)		2.69			2.65			—			—			—
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares		10.16		(0.01	)		0.08			0.07			—			—			—
1999 - Class B Shares		10.07		(0.05	)		0.07			0.02			—			—			—
1999 - Class C Shares		10.08		(0.05	)		0.07			0.02			—			—			—
1999 - Institutional Shares		10.20		0.02			0.08			0.10			—			—			—
1999 - Service Shares		10.16		(0.01	)		0.07			0.06			—			—			—
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares		10.59		0.01			(0.43	)		(0.42	)		(0.01	)		—			(0.01	)
1999 - Class B Shares		10.56		(0.05	)		(0.44	)		(0.49	)		—			—			—
1999 - Class C Shares		10.57		(0.04	)		(0.45	)		(0.49	)		—			—			—
1999 - Institutional Shares		10.61		0.04			(0.43	)		(0.39	)		(0.02	)		—			(0.02	)
1999 - Service Shares		10.60		0.01			(0.44	)		(0.43	)		(0.01	)		—			(0.01	)
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares (commenced August 15, 1997)		10.00		(0.01	)		0.65			0.64			—			(0.05	)		(0.05	)
1998 - Class B Shares (commenced August 15, 1997)		10.00		(0.03	)		0.64			0.61			—			(0.05	)		(0.05	)
1998 - Class C Shares (commenced August 15, 1997)		10.00		(0.02	)		0.64			0.62			—			(0.05	)		(0.05	)
1998 - Institutional Shares (commenced August 15, 1997)		10.00		0.01			0.65			0.66			—			(0.05	)		(0.05	)
1998 - Service Shares (commenced August 15, 1997)		10.00		0.01			0.64			0.65			—			(0.05	)		(0.05	)

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

70     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE SMALL CAP EQUITY FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	10.59		(8.64	)%	$	50,093		1.33	%		0.09	%		1.59	%		(0.17	)%		85	%
	10.26		(9.35	)		16,125		2.08			(0.66	)		2.34			(0.92	)		85
	10.29		(9.32	)		8,885		2.08			(0.66	)		2.34			(0.92	)		85
	10.76		(8.28	)		62,794		0.93			0.48			1.19			0.22			85
	10.55		(8.75	)		201		1.43			0.03			1.69			(0.23	)		85
	12.90		26.10			54,954		1.33			(0.21	)		1.55			(0.43	)		135
	12.63		25.17			17,923		2.08			(0.96	)		2.30			(1.18	)		135
	12.66		25.35			8,289		2.08			(0.96	)		2.30			(1.18	)		135
	13.03		26.60			86,196		0.93			0.19			1.15			(0.03	)		135
	12.87		25.93			63		1.43			(0.30	)		1.65			(0.52	)		135
	10.23		0.69			52,660		1.33	(b)		(0.12	)(b)		1.67	(b)		(0.46	)(b)		52
	10.09		0.20			13,711		2.08	(b)		(0.86	)(b)		2.42	(b)		(1.20	)(b)		52
	10.10		0.20			6,274		2.08	(b)		(0.86	)(b)		2.42	(b)		(1.20	)(b)		52
	10.30		0.98			62,633		0.93	(b)		0.28	(b)		1.27	(b)		(0.06	)(b)		52
	10.22		0.59			64		1.43	(b)		(0.22	)(b)		1.77	(b)		(0.56	)(b)		52
	10.16		(3.97	)		64,087		1.31			0.08			2.00			(0.61	)		75
	10.07		(4.64	)		15,406		2.00			(0.55	)		2.62			(1.17	)		75
	10.08		(4.64	)		6,559		2.01			(0.56	)		2.63			(1.18	)		75
	10.20		(3.64	)		62,763		0.94			0.60			1.56			(0.02	)		75
	10.16		(4.07	)		54		1.44			0.01			2.06			(0.61	)		75
	10.59		6.37			11,118		1.25	(b)		(0.36	)(b)		3.92	(b)		(3.03	)(b)		38
	10.56		6.07			9,957		1.95	(b)		(1.04	)(b)		4.37	(b)		(3.46	)(b)		38
	10.57		6.17			2,557		1.95	(b)		(1.07	)(b)		4.37	(b)		(3.49	)(b)		38
	10.61		6.57			9,026		0.95	(b)		0.15	(b)		3.37	(b)		(2.27	)(b)		38
	10.60		6.47			2		1.45	(b)		0.40	(b)		3.87	(b)		(2.02	)(b)		38

      71

 GOLDMAN SACHS CORE LARGE CAP VALUE FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment									Distributions to shareholders
	Net asset
	value,		Net			Net realized			Total from			From net			From net
	beginning		investment			and unrealized			investment			investment			realized			Total
	of period		income (loss)			gain (loss)			operations			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	10.81	$	0.07	(c)	$	(0.42	)	$	(0.35	)	$	(0.09	)	$	(0.06	)	$	(0.15	)
2001 - Class B Shares		10.75		(0.01	)(c)		(0.42	)		(0.43	)		(0.02	)		(0.06	)		(0.08	)
2001 - Class C Shares		10.76		(0.01	)(c)		(0.42	)		(0.43	)		(0.02	)		(0.06	)		(0.08	)
2001 - Institutional Shares		10.82		0.11	(c)		(0.43	)		(0.32	)		(0.13	)		(0.06	)		(0.19	)
2001 - Service Shares		10.81		0.06	(c)		(0.42	)		(0.36	)		(0.08	)		(0.06	)		(0.14	)
2000 - Class A Shares		10.55		0.12	(c)		0.36			0.48			(0.10	)		(0.12	)		(0.22	)
2000 - Class B Shares		10.50		0.05	(c)		0.36			0.41			(0.04	)		(0.12	)		(0.16	)
2000 - Class C Shares		10.51		0.04	(c)		0.37			0.41			(0.04	)		(0.12	)		(0.16	)
2000 - Institutional Shares		10.55		0.16	(c)		0.37			0.53			(0.14	)		(0.12	)		(0.26	)
2000 - Service Shares		10.55		0.11	(c)		0.36			0.47			(0.09	)		(0.12	)		(0.21	)
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares		10.15		0.04			0.40			0.44			(0.04	)		—			(0.04	)
1999 - Class B Shares		10.15		0.01			0.36			0.37			(0.02	)		—			(0.02	)
1999 - Class C Shares		10.15		0.01			0.37			0.38			(0.02	)		—			(0.02	)
1999 - Institutional Shares		10.16		0.06			0.38			0.44			(0.05	)		—			(0.05	)
1999 - Service Shares		10.16		0.02			0.40			0.42			(0.03	)		—			(0.03	)
FOR THE PERIOD ENDED JANUARY 31,
1999 - Class A Shares (commenced December 31, 1998)		10.00		0.01			0.14			0.15			—			—			—
1999 - Class B Shares (commenced December 31, 1998)		10.00		—			0.15			0.15			—			—			—
1999 - Class C Shares (commenced December 31, 1998)		10.00		—			0.15			0.15			—			—			—
1999 - Institutional Shares (commenced December 31, 1998)		10.00		0.01			0.15			0.16			—			—			—
1999 - Service Shares (commenced December 31, 1998)		10.00		0.02			0.14			0.16			—			—			—

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

72     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE LARGE CAP VALUE FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	10.31		(3.32	)%	$	89,861		1.10	%		0.64	%		1.17	%		0.57	%		70	%
	10.24		(4.08	)		22,089		1.85			(0.11	)		1.92			(0.18	)		70
	10.25		(4.07	)		15,222		1.85			(0.11	)		1.92			(0.18	)		70
	10.31		(3.03	)		132,684		0.70			1.04			0.77			0.97			70
	10.31		(3.43	)		56		1.20			0.52			1.27			0.45			70
	10.81		4.68			100,972		1.06			1.14			1.17			1.03			83
	10.75		3.96			19,069		1.81			0.44			1.92			0.33			83
	10.76		3.97			11,178		1.81			0.45			1.92			0.34			83
	10.82		5.20			175,493		0.66			1.54			0.77			1.43			83
	10.81		4.60			12		1.16			1.07			1.27			0.96			83
	10.55		4.31			91,072		1.04	(b)		0.87	(b)		1.21	(b)		0.70	(b)		36
	10.50		3.68			14,464		1.79	(b)		0.05	(b)		1.96	(b)		(0.12	)(b)		36
	10.51		3.73			8,032		1.79	(b)		0.09	(b)		1.96	(b)		(0.08	)(b)		36
	10.55		4.35			189,540		0.64	(b)		1.29	(b)		0.81	(b)		1.12	(b)		36
	10.55		4.11			13		1.14	(b)		0.72	(b)		1.31	(b)		0.55	(b)		36
	10.15		1.50			6,665		1.08	(b)		1.45	(b)		8.03	(b)		(5.50	)(b)		0
	10.15		1.50			340		1.82	(b)		0.84	(b)		8.77	(b)		(6.11	)(b)		0
	10.15		1.50			268		1.83	(b)		0.70	(b)		8.78	(b)		(6.25	)(b)		0
	10.16		1.60			53,396		0.66	(b)		1.97	(b)		7.61	(b)		(4.98	)(b)		0
	10.16		1.60			2		1.16	(b)		2.17	(b)		8.11	(b)		(4.78	)(b)		0

      73

 GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Period

			Income from
			investment									Distributions to shareholders
	Net asset		Net
	value,		investment			Net realized			Total from			From net			From net
	beginning		income			and unrealized			investment			investment			realized			Total
	of period		(loss)			gain (loss)			operations			income			gains			distributions
FOR THE YEARS ENDED AUGUST 31,
2001 - Class A Shares	$	11.32	$	—	(c)	$	(2.35	)	$	(2.35	)	$	(0.04	)	$	(0.55	)	$	(0.59	)
2001 - Class B Shares		11.22		(0.04	) (c)		(2.34	)		(2.38	)		—			(0.55	)		(0.55	)
2001 - Class C Shares		11.23		(0.04	) (c)		(2.34	)		(2.38	)		—			(0.55	)		(0.55	)
2001 - Institutional Shares		11.48		0.07	(c)		(2.39	)		(2.32	)		(0.11	)		(0.55	)		(0.66	)
2001 - Service Shares		11.36		0.02	(c)		(2.36	)		(2.34	)		(0.06	)		(0.55	)		(0.61	)
2000 - Class A Shares		10.87		0.02	(c)		0.74			0.76			(0.05	)		(0.26	)		(0.31	)
2000 - Class B Shares		10.81		(0.04	) (c)		0.73			0.69			(0.02	)		(0.26	)		(0.28	)
2000 - Class C Shares		10.82		(0.03	) (c)		0.72			0.69			(0.02	)		(0.26	)		(0.28	)
2000 - Institutional Shares		11.00		0.09	(c)		0.75			0.84			(0.10	)		(0.26	)		(0.36	)
2000 - Service Shares		10.93		0.05	(c)		0.73			0.78			(0.09	)		(0.26	)		(0.35	)
FOR THE SEVEN-MONTH PERIOD ENDED AUGUST 31,
1999 - Class A Shares		9.98		0.05			0.84			0.89			—			—			—
1999 - Class B Shares		9.95		0.01			0.85			0.86			—			—			—
1999 - Class C Shares		9.96		0.01			0.85			0.86			—			—			—
1999 - Institutional Shares		10.06		0.09			0.85			0.94			—			—			—
1999 - Service Shares		10.02		0.01			0.90			0.91			—			—			—
FOR THE YEAR ENDED JANUARY 31,
1999 - Class A Shares		9.22		(0.01	)		0.79			0.78			(0.02	)		—			(0.02	)
1999 - Class B Shares		9.21		—			0.74			0.74			—			—			—
1999 - Class C Shares		9.22		—			0.74			0.74			—			—			—
1999 - Institutional Shares		9.24		0.05			0.80			0.85			(0.03	)		—			(0.03	)
1999 - Service Shares		9.23		—			0.81			0.81			(0.02	)		—			(0.02	)
FOR THE PERIOD ENDED JANUARY 31,
1998 - Class A Shares (commenced August 15, 1997)		10.00		—			(0.78	)		(0.78	)		—			—			—
1998 - Class B Shares (commenced August 15, 1997)		10.00		(0.02	)		(0.77	)		(0.79	)		—			—			—
1998 - Class C Shares (commenced August 15, 1997)		10.00		(0.02	)		(0.76	)		(0.78	)		—			—			—
1998 - Institutional Shares (commenced August 15, 1997)		10.00		0.02			(0.76	)		(0.74	)		(0.02	)		—			(0.02	)
1998 - Service Shares (commenced August 15, 1997)		10.00		0.01			(0.78	)		(0.77	)		—			—			—

(a)	Assumes investment at the net asset value at the beginning of the period, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the period and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Total returns for periods less than one full year are not annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
(b)	Annualized.
(c)	Calculated based on the average shares outstanding methodology.

74     The accompanying notes are an integral part of these financial statements.

GOLDMAN SACHS CORE INTERNATIONAL EQUITY FUND 

													Ratios assuming no
													expense reductions
										Ratio of						Ratio of
					Net assets,		Ratio of			net investment			Ratio of			net investment
Net asset					end of		net expenses			income (loss)			expenses			income (loss)			Portfolio
value, end		Total			period		to average			to average			to average			to average			turnover
of period		return(a)			(in 000s)		net assets			net assets			net assets			net assets			rate
$	8.38		(21.50	)%	$	108,955		1.66	%		—	%		1.77	%		(0.11	)%		93	%
	8.29		(21.93	)		8,575		2.16			(0.47	)		2.27			(0.58	)		93
	8.30		(21.91	)		5,114		2.16			(0.44	)		2.27			(0.55	)		93
	8.50		(21.02	)		291,596		1.01			0.70			1.12			0.59			93
	8.41		(21.37	)		21		1.51			0.21			1.62			0.10			93
	11.32		6.92			147,409		1.66			0.14			1.75			0.05			92
	11.22		6.36			12,032		2.16			(0.36	)		2.25			(0.45	)		92
	11.23		6.34			6,887		2.16			(0.34	)		2.25			(0.43	)		92
	11.48		7.62			308,074		1.01			0.78			1.10			0.69			92
	11.36		7.05			27		1.51			0.33			1.60			0.24			92
	10.87		8.92			114,502		1.66	(b)		0.78	(b)		1.76	(b)		0.68	(b)		65
	10.81		8.64			9,171		2.16	(b)		0.26	(b)		2.26	(b)		0.16	(b)		65
	10.82		8.63			4,913		2.16	(b)		0.23	(b)		2.26	(b)		0.13	(b)		65
	11.00		9.34			271,212		1.01	(b)		1.43	(b)		1.11	(b)		1.33	(b)		65
	10.93		9.08			8		1.51	(b)		0.07	(b)		1.61	(b)		(0.03	)(b)		65
	9.98		8.37			110,338		1.63			(0.11	)		1.94			(0.42	)		195
	9.95		8.03			7,401		2.08			(0.03	)		2.39			(0.34	)		195
	9.96		8.03			3,742		2.08			(0.04	)		2.39			(0.35	)		195
	10.06		9.20			280,731		1.01			0.84			1.32			0.53			195
	10.02		8.74			22		1.50			0.02			1.81			(0.29	)		195
	9.22		(7.66	)		7,087		1.50	(b)		(0.27	)(b)		4.87	(b)		(3.90	)(b)		25
	9.21		(7.90	)		2,721		2.00	(b)		(0.72	)(b)		5.12	(b)		(3.84	)(b)		25
	9.22		(7.80	)		1,608		2.00	(b)		(0.73	)(b)		5.12	(b)		(3.85	)(b)		25
	9.24		(7.45	)		17,719		1.00	(b)		0.59	(b)		4.12	(b)		(2.53	)(b)		25
	9.23		(7.70	)		1		1.50	(b)		0.26	(b)		4.62	(b)		(2.86	)(b)		25

      75

 GOLDMAN SACHS CORE EQUITY FUNDS

Report of Independent Accountants

To the Shareholders and Board of Trustees of
Goldman Sachs Trust — CORE Equity Funds:

In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Goldman Sachs CORE U.S. Equity Fund, CORE Large Cap Growth Fund, CORE Small Cap Equity Fund, CORE Large Cap Value Fund and CORE International Equity Fund (collectively, the “CORE Equity Funds”), portfolios of Goldman Sachs Trust at August 31, 2001, the results of their operations for the year then ended, and the changes in each of their net assets and the financial highlights for each of the two years then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the CORE Equity Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2001 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the CORE Equity Funds for the periods ended prior to August 31, 2000 were audited by other independent accountants whose report dated October 8, 1999 expressed an unqualified opinion thereon.

PricewaterhouseCoopers LLP

Boston, Massachusetts

October 19, 2001

76

FUNDS PROFILE

Goldman Sachs Funds

Goldman Sachs is a premier financial services firm, known since 1869 for creating thoughtful and customized investment solutions in complex global markets.

Today, the Investment Management Division of Goldman Sachs serves a diverse set of clients worldwide, including private institutions, public entities and individuals. With portfolio management teams located around the world — and more than $295 billion in assets under management, our investment professionals bring firsthand knowledge of local markets to every investment decision, making us one of the few truly global asset managers.

1	An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
	CORESMis a service mark of Goldman, Sachs & Co.
	Goldman Sachs Internet Tollkeeper FundSMand Goldman Sachs Research Select FundSMare service marks of Goldman,Sachs & Co.
*	Goldman Sachs International Growth Opportunities Fund was formerly Goldman Sachs International Small Cap Fund.

GOLDMAN SACHS ASSET MANAGEMENT	32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005
TRUSTEES	OFFICERS
Ashok N. Bakhru, Chairman	Gary Black, President
David B. Ford	Jesse H. Cole, Vice President
Patrick T. Harker	James A. Fitzpatrick, Vice President
John P. McNulty	Mary Hoppa, Vice President
Mary P. McPherson	John M. Perlowski, Treasurer
Alan A. Shuch	Kenneth G. Curran, Assistant Treasurer
Wilma J. Smelcer	Peter W. Fortner, Assistant Treasurer
Richard P. Strubel	Philip V. Giuca, Jr., Assistant Treasurer
Kaysie P. Uniacke	Howard B. Surloff, Secretary
	Amy E. Belanger, Assistant Secretary
	Valerie A. Zondorak, Assistant Secretary
GOLDMAN, SACHS & CO Distributor and Transfer Agent	GOLDMAN SACHS ASSET MANAGEMENT GOLDMAN SACHS FUNDS MANAGEMENT, L.P. Investment Adviser

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 developments. At times the Fund may be unable to sell certain of its portfolio securities without a substantial drop in price, if at all.

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 certain of its portfolio securities without a substantial drop in price, if at all.

CORE ^SM is a service mark of Goldman, Sachs & Co.

Goldman, Sachs & Co. is the distributor of the Fund.

Copyright 2001 Goldman, Sachs & Co. All rights reserved. Date of first use:October 30, 2001/01-1632 COREAR/99.5K/10-01