<PAGE>
Goldman Sachs Funds
================================================================================
HIGH YIELD FUND Semiannual Report April 30, 1998
================================================================================
A high level of current income
through a diversified portfolio
of high yield securities.
[GRAPHICS]
[LOGO]
Goldman
Sachs
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Fund Basics
as of April 30, 1998
Assets Under Management
-----------------------
$453.8 Million
-----------------------
Number of Holdings
-----------------------
173
-----------------------
NASDAQ SYMBOLS
Class A Shares
-----------------------
GSHAX
-----------------------
Class B Shares
-----------------------
GSHBX
-----------------------
Class C Shares
-----------------------
GSHCX
-----------------------
Institutional Shares
-----------------------
GSHIX
-----------------------
Service Shares
-----------------------
GSHSX
-----------------------
================================================================================
PERFORMANCE REVIEW
================================================================================
<TABLE>
<CAPTION>
October 31, 1997- Fund Total Return 30-Day Lehman High
April 30, 1998 (based on NAV)(1) SEC Yield(2) Yield Index(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 7.19% 7.34% 5.68%
Class B 6.80% 6.92% 5.68%
Class C 6.80% 6.91% 5.68%
Institutional 7.33% N/A 5.68%
Service 7.09% N/A 5.68%
</TABLE>
- --------------------------------------------------------------------------------
(1) The net asset value represents the net assets of the Fund (ex-dividend)
divided by the total number of shares.
(2) The 30-Day SEC Yield of the Fund is calculated by dividing the net
investment income per share (as defined by the Securities and Exchange
Commission) earned by the Fund over a 30-day period (ending on the stated
month-end date) by the maximum public offering price per share of the Fund
on the last day of the period. This number is compounded semiannually and
then annualized. This yield does not necessarily reflect income actually
earned and distributed by the Fund and, therefore, may not be correlated
with the dividends or other distributions paid to shareholders.
(3) The Lehman High Yield Bond Index figures do not reflect any fees or
expenses. In addition, investors cannot invest directly in the Index.
================================================================================
SEC RETURNS(4)
================================================================================
<TABLE>
<CAPTION>
For the period
ending 3/31/98 Class A Class B Class C Institutional Service
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Since Inception 3.88% 2.99% 7.34% 8.96% 8.63%
(8/1/97) (8/1/97) (8/15/97) (8/1/97) (8/1/97)
</TABLE>
- --------------------------------------------------------------------------------
(4) The SEC Cumulative Total Return is determined by computing the percentage
change in the value of $1,000 invested at the maximum public offering price
for specified periods, assuming reinvestment of all distributions at NAV.
The total return calculation reflects a maximum initial sales charge of
4.5% 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). The public offering price of the Class A shares on 3/31/98
was $10.83 and represents the NAV plus the maximum sales charge of 4.5%.
================================================================================
TOP 10 HOLDINGS AS OF 4/30/98(5)
================================================================================
<TABLE>
<CAPTION>
Company Line of Business % of Portfolio
- --------------------------------------------------------------------------------
<S> <C> <C>
Intertek Finance PLC Industrial Services 2.0%
Colt Telecom Telecommunications 1.8%
Viasystems Inc. Technology 1.7%
Geberit International S.A. Building Products 1.7%
CSC Holdings Inc. Cable TV 1.3%
Ineos PLC Chemicals 1.2%
Nextel Communications Inc. Telecommunications 1.2%
International Wire Group Capital Goods 1.2%
Newport News Shipbuilding Defense 1.2%
Southern Foods Group LP Food 1.2%
- --------------------------------------------------------------------------------
Credit Allocation: BBB 0.2% BB 5.3% B 88.1% CCC/NR 5.4% Cash 1.0%
</TABLE>
- --------------------------------------------------------------------------------
(5) The Fund is actively managed and, as such, its composition may differ over
time.
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 in effect. In their absence, performance would be
reduced.
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Market Overview
Dear Shareholders,
Investors placed approximately $38.9 billion into fixed income funds over the
six-month period ended April 30, 1998 alone -- slightly less than 1.4 times the
amount invested in all of 1997.* Yet despite a renewed interest in fixed income
securities in the wake of Asian market turbulence, performance for bond markets
across the globe was mixed.
o In the Dollar Bloc, the U.S. Bond Market Shines -- Late in 1997, U.S.
bond prices rose as fixed income securities became the investment of
choice in the aftermath of Asia's financial crisis. The rally
continued into 1998, helped along by, among other factors, a
strengthening U.S. dollar. By period-end, however, it was apparent
that Asia's impact was less severe than anticipated. Interest in U.S.
bonds waned as volatility in overseas markets subsided. Elsewhere in
the dollar bloc, Canadian bonds, after a period of good performance,
fared poorly as Canada's Central Bank increased interest rates to
support a declining dollar. Australian and New Zealand markets also
faltered, in part due to New Zealand's declining dollar and a
downgrade in Australia's foreign debt rating.
o European Market Performance Was Generally Strong -- Early in the
period, Europe's bond markets rallied following an announcement by
German officials that European Monetary Union (EMU) short-term
interest rates would converge at the lower level of the core markets.
The rallies continued into the new year, reinforced in part by
"softer" retail sales data and lower-than-expected gross domestic
product data. Italy was the exception, as ongoing concerns about its
suitability as a member of EMU adversely affected its bond market.
o Japan's Market Stumbled -- Continued troubles in the banking sector
were a significant factor behind Japan's poor bond market performance
early in the period. After a brief journey into positive territory in
December, the market would continue its poor showing in the wake of
the resignation of the Minister of Finance and amid assumptions that
measures of fiscal stimulus were in the offing. When the long-awaited
economic stimulus package was finally released, it was viewed
skeptically. Although the package was larger than anticipated,
significant doubt remained as to whether it could lead to Japan's
long-term recovery.
o Outlook -- Near-Term Prospects for Most Markets Are Good -- In the
U.S., the Federal Reserve Board has reassumed its pre-Asian financial
crisis bias to tighten. For now, though, we expect interest rates to
remain relatively stable. In Europe, inflationary pressures remain
muted, and it is likely that rates will remain on hold until such
pressures appear. Finally, in Japan, economic weakness will continue
to place downward pressure on Japanese government bond yields.
Short-term, however, these pressures should be alleviated somewhat by
the fiscal stimulus measures currently in place.
We encourage you to maintain your long-term investment program, and
look forward to serving your investment needs in the years ahead.
Sincerely,
/s/ David B. Ford /s/ John P. McNulty
David B. Ford John P. McNulty
Co-Head, Goldman Sachs Co-Head, Goldman Sachs
Asset Management Asset Management
/s/ Sharmin Mossavar-Rahmani
Sharmin Mossavar-Rahmani
CIO Fixed Income Investments,
Goldman Sachs Asset Management
May 29, 1998
* Source: The Investment Company Institute
1
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Performance Overview
Dear Shareholders,
We are pleased to report on the performance of the Goldman Sachs High Yield Fund
for the six-month period ended April 30, 1998.
Performance Review: Strong Performance Relative to Benchmark
Over the six-month period ended April 30, 1998, each of the Fund's
share classes significantly outperformed the 5.68% return of the
Fund's benchmark, the Lehman High Yield Index. Performance benefited
from the portfolio's concentration in B-rated issuers and limited
exposure to commodity sectors, such as steel, which were hardest hit
from the Asian crisis. Several factors supported the high yield
market's higher levels during this period. These included the
continuing strength of the U.S. stock market and the ample liquidity
available to companies from competing sources, such as banks and
private equity.
In April, bond market volatility increased on concerns that U.S.
short-term interest rates would rise. At first, traders were reluctant
to price their inventory at lower levels, despite signs of waning
investor interest amid a crowded new issue market. However, secondary
market prices started to drift lower once portfolio managers sought to
raise cash for higher yielding new deals. This impacted several of the
Fund's holdings, especially when existing issuers or companies in
related industries announced plans to issue high yield debt.
Investment Objective
The Fund seeks a high level of current income and, secondarily, may
also consider the potential for capital appreciation. The Fund invests
primarily in fixed income securities rated below investment grade.
Portfolio Composition
As of April 30, 1998, the Fund was fully invested and diversified
among 173 issues. We have maintained this relatively broad allocation
because of low credit differentials among sectors and individual
issues. In addition, until recently, demand has outstripped supply of
bonds issued by industrial companies. This scenario has made it
difficult to build up sizable positions at attractive levels. The Fund
reduced its exposure to emerging market debt from approximately 7% as
of October 31, 1997 to 4.9% at the end of April. Exposure is expected
to remain at the lower end of the 5% to 10% range due to the
continuing volatility in this sector.
Portfolio Highlights
o Colt Telecom -- This UK-based business telecommunications operator is
one of the Fund's top 10 holdings. Both the company's high yield bonds
and equity warrants have risen in response to excellent results and
merger speculation. Moreover, interest in the company has grown
following telecommunications deregulation in the European Union at the
start of 1998.
2
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
FIXED INCOME
INVESTMENT
PROCESS OVERVIEW
=============================
Security
Selection
=============================
1
In selecting securities for
each portfolio, our fixed
income teams have access
to the vast resources of
Goldman Sachs.
=============================
Sector
Allocation
=============================
2
Our sector specialists work
together to assess relative
value among sectors
and create investment
strategies to meet each
fund's objectives.
=============================
Yield Curve
Strategies
=============================
3
We adjust the term
structure of our portfolios
based on our expectations
of the relationship between
short- and long-term
interest rates, while keeping
each fund's duration
close to its benchmark.
o National Equipment Services (NES) -- NES is a growing equipment rental
company that struggled to capture investors' attention with a bond
offering that coincided with November 1997's difficult market
environment. Since then, NES's operating performance has met
expectations, and the company has recently announced plans to go
public. These two factors combined have caused NES's bonds to
outperform.
Key New Acquisitions
o Ineos -- Ineos, a Belgian intermediate chemicals producer, is a result
of our search for value in the growing European high yield market. The
company issued DM190 million (about $100 million) seven-year senior
secured notes to finance its buyout from Indspec, a UK specialty
chemicals company. The Deutschemark bonds were priced attractively
relative to U.S. comparables and were hedged back into U.S. dollars to
avoid currency risk.
Portfolio Outlook
Near term, we anticipate volatility in the high yield market, given
the uncertainty over interest rates and the sizable new issue forward
calendar. In the months ahead, we will seek to consolidate existing
holdings in the weaker secondary market and selectively purchase new
issues at attractive levels. Finally, our bias toward an increasing
allocation to Europe is expected to continue as that market expands
and offers investors terms that are preferential to comparable U.S.
issuers.
We thank you for your investment and look forward to your continued
confidence.
Sincerely,
/s/ Andrew R. Jessop /s/ Michael L. Pasternak
Andrew R. Jessop Michael L. Pasternak
Portfolio Manager, Portfolio Manager,
Goldman Sachs High Yield Fund Goldman Sachs High Yield Fund
/s/ Richard H. Buckholz
Richard H. Buckholz
Portfolio Manager,
Goldman Sachs High Yield Fund
May 29, 1998
3
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Risk Management Through
Fixed Income Investing
TODAY'S BOND
ADVANTAGE
The current economic picture
suggests a positive backdrop
against which bonds can thrive.
1
Low inflation rates--
Inflation rates are at historic
lows -- 1.7% at the end of 1997
versus 2.9% at the end of 1991.(2)
2
Moderate economic
growth--Despite historically
low inflation, the U.S. economy
continues to grow at a moderate
pace.
3
A strong dollar--Over
the past year, the U.S. dollar has
gained strength against many
other major currencies.
4
Budget deficit reductions--
Over the past several
years, the federal budget has
been significantly reduced and is
expected to generate a substantial
surplus in fiscal year 1998.
Bonds Can Balance Portfolio Volatility
Given the stock market's record climb over the past several years,
many investors may have substantially increased the percentage of
their assets allocated to equity investments --often at the expense of
their fixed income allocation. While benefiting from the market's
strong showing, these investors may also have increased their
portfolios' vulnerability to intensifying levels of stock market
volatility.
Fixed income investments can diversify risk in an equities-laden
portfolio for two reasons:
1. Stock and Bond Prices Are Not Highly Correlated. Prior to an
expected recession or when the economy is slowing, stock prices
usually fall. Conversely, bond prices rise as interest rates
decline. The tendency of these two investments to react
differently in a given market environment, as illustrated below,
can help offset the effect of equity market fluctuations on a
portfolio.
----------------------------------------------------------------------
S&P 500 Index vs. 10-Year U.S. Treasury Bonds (1977-1997)(1)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATTER]
DATE S & P 500 10-YEAR US TSY. BOND
---- --------- --------------------
12/31/77 -11.50% 11.30%
12/31/78 1.06 17.12
12/31/79 12.31 15.49
12/31/80 25.77 24.21
12/31/81 -9.73 5.80
12/31/82 14.76 -22.34
12/31/83 17.27 11.40
12/31/84 1.40 -2.76
12/31/85 26.33 -19.17
12/31/86 14.62 -23.50
12/31/87 2.03 26.99
12/31/88 12.40 1.11
12/31/89 27.25 -13.90
12/31/90 -6.56 3.52
12/31/91 26.31 -12.41
12/31/92 4.46 -4.57
12/31/93 7.06 -14.84
12/31/94 -1.54 35.40
12/31/95 34.11 -26.78
12/31/96 20.26 9.95
12/31/97 31.01 -7.78
2. Bonds Generate Interest Income. During a stock market downturn,
the compounding effect of bonds' interest income can offset
declines in the equity portion of an overall portfolio.
For More Information
A fixed income mutual fund is a convenient way to access the potential
income and risk management benefits of fixed income investing. Goldman
Sachs Asset Management offers a broad spectrum of fixed income mutual
funds designed to help you meet your long-term investment needs. For
more information on these and other Goldman Sachs Funds, contact your
investment professional.
(1) Source: McGraw Hill Data Resources. Data covers period from December
31, 1977 through December 31, 1997. Please note that U.S. government
bonds are backed by the full faith and credit of the U.S. government,
are less volatile than equity investments and provide a guaranteed
return of principal at maturity. The chart is for illustrative
purposes only and is not representative of any Goldman Sachs Fund.
Past performance is not indicative of future results. Investors cannot
invest directly in the Index.
(2) Source: The Bureau of Labor Statistics
8
2. Bonds Generate Interest Income. During a stock market downturn,
the compounding effect of bonds' interest income can offset
declines in the equity portion of an overall portfolio.
For More Information
A fixed income mutual fund is a convenient way to access the potential
income and risk management benefits of fixed income investing. Goldman
Sachs Asset Management offers a broad spectrum of fixed income mutual
funds designed to help you meet your long-term investment needs. For
more information on these and other Goldman Sachs Funds, contact your
investment professional.
(1) Source: McGraw Hill Data Resources. Data covers period from
December 31, 1977 through December 31, 1997. Please note that
U.S. government bonds are backed by the full faith and credit of
the U.S. government, are less volatile than equity investments
and provide a guaranteed return of principal at maturity. The
chart is for illustrative purposes only and is not representative
of any Goldman Sachs Fund. Past performance is not indicative of
future results. Investors cannot invest directly in the Index.
(2) Source: The Bureau of Labor Statistics
4
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Performance Summary
April 30, 1998 (Unaudited)
The following graph shows the value as of April 30, 1998, of a $10,000 in-
vestment made (with the maximum sales charge of 4.5%) in Class A shares on
August 1, 1997. For comparative purposes, the performance of the Fund's
benchmark (the Lehman High Yield Bond 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 dif-
ferences in fees and loads.
HIGH YIELD FUND'S LIFETIME PERFORMANCE
GROWTH OF A $10,000 INVESTMENT, DISTRIBUTIONS REINVESTED AUGUST 1, 1997 TO
APRIL 30, 1998.
LOGO
<TABLE>
<CAPTION>
SINCE INCEPTION FIVE YEARS ONE YEAR SIX MONTHS(A)
AGGREGATE TOTAL RETURN THROUGH APRIL 30, 1998
<S> <C> <C> <C> <C>
CLASS A (COMMENCED AUGUST
1, 1997)
Excluding sales charges 8.80% n/a n/a 7.19%
Including sales charges 3.91% n/a n/a 2.36%
------------------------------------------------------------------------------
CLASS B (COMMENCED AUGUST
1, 1997)
Excluding sales charges 8.20% n/a n/a 6.80%
Including sales charges 2.94% n/a n/a 1.62%
------------------------------------------------------------------------------
CLASS C (COMMENCED AUGUST
15, 1997)
Excluding sales charges 8.36% n/a n/a 6.80%
Including sales charges 7.31% n/a n/a 5.77%
------------------------------------------------------------------------------
INSTITUTIONAL CLASS
(COMMENCED AUGUST 1, 1997) 9.02% n/a n/a 7.33%
------------------------------------------------------------------------------
SERVICE CLASS (COMMENCED
AUGUST 1, 1997) 8.65% n/a n/a 7.09%
------------------------------------------------------------------------------
</TABLE>
(a) Not annualized.
5
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Investments
April 30, 1998 (Unaudited)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
CORPORATE BONDS - 81.7%
AEP Industries, Inc.(a) (B2/B)
$ 5,000,000 9.88% 11/15/2007 $ 5,200,000
APCOA, Inc.(a) (Caa1/B-)
3,500,000 9.25 03/15/2008 3,491,250
ATC Group Services Inc.(a) (B3/B-)
1,000,000 12.00 01/15/2008 990,000
Accuride Corp.(a) (B2/B-)
2,500,000 9.25 02/01/2008 2,500,000
Advance Holding Corp.(a)(b) (caa2/B-)
1,500,000 0.00/12.88 04/15/2009 847,500
Advanstar Communication (B2/B-)
2,500,000 9.25 05/01/2008 2,496,875
Allegiance Telecom, Inc.(b) (CCC)
1,500,000 0.00/11.75 02/15/2008 843,750
Alliance Imaging, Inc. (B3/B-)
2,500,000 9.63 12/15/2005 2,575,000
Allied Waste Industries, Inc.(b) (B3/B+)
7,000,000 0.00/11.30 06/01/2007 5,162,500
American Lawyer Media, Inc.(a)(B1/B)
2,500,000 9.75 12/15/2007 2,625,000
Ameriserv Food Distributors (B1/B+)
3,000,000 8.88 10/15/2006 3,071,250
Amtrol, Inc. (B3/B-)
3,000,000 10.63 12/31/2006 3,112,500
Anchor Lamina, Inc. (B3)
1,500,000 9.88 02/01/2008 1,492,500
Argo-Tech Corp. (B3/B-)
5,000,000 8.63 10/01/2007 5,050,000
Aurora Foods, Inc. (B3/B-)
3,750,000 9.88 02/15/2007 4,031,250
Axiohm Transaction Solutions (B3/B-)
3,000,000 9.75 10/01/2007 3,060,000
B&G Foods, Inc. (B3/B-)
4,000,000 9.63 08/01/2007 4,075,000
Benton Oil & Gas Co. (B2/B+)
4,000,000 9.38 11/01/2007 3,980,000
Burke Industries, Inc. (B2/B+)
2,000,000 10.00 08/15/2007 2,085,000
CHS Electronics, Inc. (B2/B-)
4,500,000 9.88 04/15/2005 4,443,750
Cabot Safety Acquisition Corp. (B3/B)
2,250,000 12.50 07/15/2005 2,553,750
Cellnet Data Systems, Inc.(b)
1,500,000 0.00/14.00 10/01/2007 840,000
Colt Telecom(b) (B3/B)
5,500,000 0.00/12.00 12/15/2006 4,950,000
Communications Instruments, Inc. (B3/B-)
3,500,000 10.00 09/15/2004 3,622,500
Corning Consumer Products (B3/B)
3,000,000 9.63 05/01/2008 2,991,390
Cross Timbers Oil Co. (B)
2,750,000 8.75 11/01/2009 2,805,000
----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
CORPORATE BONDS - (CONTINUED)
Crown Castle International Corp. (a)(b) (B3/B)
$ 4,000,000 0.00/10.63% 11/15/2007 $ 2,760,000
Day International Group, Inc.(a) (B3/B-)
3,250,000 9.50 03/15/2008 3,282,500
Decisionone Holdings Corp.(B3/B-)
3,000,000 9.75 08/01/2007 2,850,000
Del Monte Foods Co.(b) (aa2/B-)
4,250,000 0.00/12.50 12/15/2007 2,773,125
Delta Mills, Inc. (B3/B+)
3,000,000 9.63 09/01/2007 3,060,000
DESA International, Inc.(a) (B3/B-)
1,500,000 9.88 12/15/2007 1,530,000
Details, Inc. (B-)
4,250,000 10.00 11/15/2005 4,356,250
Doskocil Manufacturing Company, Inc.(a)(B3/B-)
2,000,000 10.13 09/15/2007 2,135,000
DTI Holdings, Inc.(b) (CCC)
750,000 0.00/12.50 03/01/2008 433,125
Eagle Family Foods, Inc.(a) (B3/B-)
2,500,000 8.75 01/15/2008 2,462,500
Eagle-Picher Industries, Inc.(a) (B3/B-)
4,000,000 9.38 03/01/2008 4,070,000
Econophone, Inc.(a) (CCC)
2,000,000 13.50 07/15/2007 2,260,000
500,000 0.00/11.00(b) 02/15/2008 297,500
E.M. Jorgensen Co.(a) (B3/B-)
3,000,000 9.50 04/01/2005 2,981,250
Facilicom International, Inc.(a) (CCC)
2,250,000 10.50 01/15/2008 2,311,875
Fisher Scientific International, Inc.(a) (B3/B-)
3,000,000 9.00 02/01/2008 3,030,000
Fleming Companies, Inc. (B3/B+)
3,000,000 10.50 12/01/2004 3,120,000
Frontiervision Holdings LP(b) (B)
2,500,000 0.00/11.88 09/15/2007 1,925,000
GST Telecommunications, Inc. (CCC)
1,000,000 12.75 11/15/2007 1,190,000
GST Equipment Funding, Inc. (CCC)
2,000,000 13.25 05/01/2007 2,320,000
Galey & Lord, Inc.(a) (B3/B)
2,000,000 9.13 03/01/2008 2,010,000
Globalstar LP (B3/B)
2,000,000 10.75 11/01/2004 2,020,000
Global Telesystems Group (Caa2/B-)
3,000,000 9.88 02/15/2005 3,060,000
Graham Packaging Co.(a) (B3/B-)
2,500,000 8.75 01/15/2008 2,500,000
1,000,000 0.00/10.75(b) 01/15/2009 615,000
Graphic Controls Corp. (B3/B-)
2,805,000 12.00 09/15/2005 3,113,550
Greyhound Lines, Inc. (B3/B-)
2,000,000 11.50 04/15/2007 2,215,000
------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
CORPORATE BONDS - (CONTINUED)
Hawk Corp. (B2/B+)
$ 4,000,000 10.25% 12/01/2003 $ 4,340,000
Hayes Wheels International, Inc. (B3/B)
3,000,000 9.13 07/15/2007 3,165,000
Hermes Europe Railtel B.V. (B3/B)
2,000,000 11.50 08/15/2007 2,260,000
Hudson Respiratory Care, Inc.(a) (b3/B-)
2,000,000 9.13 04/15/2008 2,000,000
ICN Pharmaceutical, Inc. (B1/BB)
2,000,000 9.25 08/15/2005 2,140,000
Imperial Home Decor Group(a) (B3/B-)
2,000,000 11.00 03/15/2008 2,075,000
Integrated Health Services, Inc. (B2/B-)
5,000,000 9.25 01/15/2008 5,187,500
Intermedia Communications, Inc. (B2/B)
2,000,000 0.00/11.25(a)(b) 07/15/2007 1,470,000
2,250,000 8.88 11/01/2007 2,323,125
International Wire Group(B3/B-)
5,000,000 11.75 06/01/2005 5,500,000
Intertek Finance PLC (B2/B)
8,500,000 10.25 11/01/2006 9,010,000
Iowa Select Farm LP(a) (B3/B-)
2,000,000 10.75 12/01/2005 1,975,000
ITC Deltacom, Inc. (B3/B)
1,250,000 11.00 06/01/2007 1,425,000
Iridium LLC(a) (B3/B-)
2,000,000 11.25 07/15/2005 2,065,000
IXC Communications, Inc. (B3/CCC+)
750,000 9.00 04/15/2008 751,875
Jitney-Jungle Stores of America, Inc. (B2/B+)
3,000,000 12.00 03/01/2006 3,360,000
Johnstown American Industries, Inc. (B)
2,000,000 11.75 08/15/2005 2,230,000
K&F Industries, Inc. (B3/B-)
4,000,000 9.25 10/15/2007 4,140,000
Kabelmedia Holdings(b) (B3/B-)
5,500,000 0.00/13.63 08/01/2006 4,262,500
Kinetic Concepts, Inc. (B3/B-)
4,250,000 9.63 11/01/2007 4,335,000
Knology Holdings, Inc.(b) (CCC)
1,750,000 0.00/11.88 10/15/2007 1,041,250
Level 3 Comm, Inc. (B3/B)
2,500,000 9.13 05/01/2008 2,468,750
MCMS, Inc.(a) (B3/B-)
2,000,000 9.75 03/01/2008 1,980,000
Medaphis Corp.(a) (B2/B+)
2,000,000 9.50 02/15/2005 1,975,000
Millicom International Cellular(b) (B-)
5,000,000 0.00/13.50 06/01/2006 3,912,500
MSX International, Inc.(a) (Caa1/B-)
1,000,000 11.38 01/15/2008 1,030,000
-----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
CORPORATE BONDS - (CONTINUED)
Multicare Companies, Inc. (B3/B-)
$ 2,000,000 9.00% 08/01/2007 $ 2,025,000
National Equipment Services, Inc.(a) (B3/B-)
3,000,000 10.00 11/30/2004 3,217,500
Nationwide Credit, Inc.(a) (B3/B-)
2,000,000 10.25 01/15/2008 2,040,000
Newport News Shipbuilding, Inc. (B1/B+)
5,000,000 9.25 12/01/2006 5,262,500
Nextel Communications, Inc.(b) (B2/CCC+)
3,750,000 0.00/9.75 08/15/2004 3,600,000
1,000,000 0.00/10.65 09/15/2007 672,500
2,000,000 0.00/9.95(a) 02/15/2008 1,285,000
Nextlink Communications, Inc. (B3/B)
2,000,000 9.63 10/01/2007 2,105,000
2,250,000 9.00(a) 03/15/2008 2,297,813
Nortek, Inc.(B3/B-)
2,000,000 9.88 03/01/2004 2,060,000
Nortek, Inc.(B+)
2,000,000 9.13 09/01/2007 2,040,000
Octel Developments PLC (B2/B+)
500,000 10.00 05/01/2006 500,000
Packard Bioscience, Inc. (B3/B-)
5,000,000 9.38 03/01/2007 4,812,500
Pathmark Stores, Inc. (B3/B-)
3,000,000 9.63 05/01/2003 3,045,000
Pathnet, Inc.(a) (CCC)
1,500,000 12.25 04/15/2008 1,522,500
PCI Chemicals Canada, Inc. (B2/B+)
4,000,000 9.25 10/15/2007 3,940,000
Pharmaceutical Fine Chemical(a) (B3/B-)
5,000,000 9.75 11/15/2007 5,050,000
Phase Metrics, Inc.(a) (B3)
2,500,000 10.75 02/01/2005 2,475,000
Polymer Group, Inc.(a) (B2/B)
2,500,000 8.75 03/01/2008 2,537,500
Premier Parks, Inc. (B3/B-)
1,250,000 9.25 04/01/2006 1,268,750
Prestolite Electric, Inc.(a) (B3/B+)
2,500,000 9.63 02/01/2008 2,562,500
Prime Medical Services, Inc.(a) (B3/B)
750,000 8.75 04/01/2008 742,500
Printpack, Inc. (B3/B+)
4,000,000 10.63 08/15/2006 4,310,000
Psinet, Inc.(a) (B3/B-)
1,500,000 10.00 02/15/2005 1,545,000
Purina Mills, Inc.(a) (B2/B)
1,000,000 9.00 03/15/2010 1,027,500
PX Escrow Corp.(a)(b) (B3/B-)
500,000 0.00/9.63 02/01/2006 355,000
Randalls Food Markets, Inc. (B2/B-)
2,000,000 9.38 07/01/2007 2,110,000
Red Roof Inns, Inc. (B2/B)
2,000,000 9.63 12/15/2003 2,050,000
-------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Investments
April 30, 1998 (Unaudited)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
CORPORATE BONDS - (CONTINUED)
Richmont Marketing Special(B3/B-)
$ 2,000,000 10.13% 12/15/2007 $ 2,060,000
RSL Communications Ltd. (B-)
2,257,000 12.25 11/15/2006 2,572,980
Sealy Mattress Co. (B3/B-)
2,000,000 9.88 12/15/2007 2,105,000
1,500,000 0.00/10.88(b) 12/15/2007 1,005,000
SFX Entertainment, Inc.(a) (B3/CCC+)
2,000,000 9.13 02/01/2008 1,940,000
Southern Foods Group LP (B2/B)
5,000,000 9.88 09/01/2007 5,250,000
Sovereign Speciality Chemicals(a) (B3/B-)
5,000,000 9.50 08/01/2007 5,200,000
Sparkling Spring Water Group(a) (Caa1/B-)
1,500,000 11.50 11/15/2007 1,567,500
Stanadyne Automotive Corp.(a) (Caa1/B)
4,000,000 10.25 12/15/2007 4,080,000
Sun World International, Inc.(B2/B)
2,000,000 11.25 04/15/2004 2,180,000
Tekni-Plex, Inc. (B3/B-)
3,000,000 11.25 04/01/2007 3,330,000
2,000,000 9.25(a) 03/01/2008 2,015,000
Telewest PLC(b) (B1/B+)
4,000,000 0.00/11.00 10/01/2007 3,250,000
Trans Resources, Inc.(a) (B3/B-)
2,000,000 10.75 03/15/2008 2,050,000
Transwestern Holdings (B3/B-)
1,216,000 11.88 11/15/2008 832,960
Transwestern Publishing Co.(a) (B2/B-)
1,500,000 9.63 11/15/2007 1,571,250
Trench Electric SA(a) (B3/B-)
5,000,000 10.25 12/15/2007 5,037,500
Trident Automotive PLC(a) (B2/B-)
4,000,000 10.00 12/15/2005 4,260,000
United Artists Theatre, Co.(a) (Caa/B-)
1,750,000 9.75 04/15/2008 1,750,000
Universal Hospital Services(a) (B3/B+)
1,000,000 10.25 03/01/2008 1,025,000
Vencor, Inc. (B3/B-)
2,500,000 9.88 05/01/2005 2,512,500
Venture Holdings Trust (B+)
4,000,000 9.50 07/01/2005 4,100,000
Viasystems, Inc.(a) (B3/B-)
7,500,000 9.75 06/01/2007 7,762,500
WAM Net, Inc.(b) (CCC)
1,250,000 0.00/13.25 03/01/2005 762,500
Werner Holdings(a) (B2/B-)
5,000,000 10.00 11/15/2007 5,218,750
WHX Corp.(a) (B3/B-)
2,500,000 10.50 04/15/2005 2,562,500
-------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
CORPORATE BONDS - (CONTINUED)
Williams Scotsman, Inc. (B-)
$ 3,000,000 9.88% 06/01/2007 $ 3,150,000
Young Broadcasting, Inc. (B2/B)
5,000,000 8.75 06/15/2007 5,075,000
-------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $370,140,668) $370,684,943
-------------------------------------------------------------------------------------------
EMERGING MARKET DEBT - 4.9%
Abril SA (BB)
$ 1,500,000 12.00% 10/25/2003 $ 1,572,435
Acindar Industries (B2/B+)
670,000 11.66 11/12/1998 678,375
Banco Nacional de Comercio (Ba2/BB)
500,000 8.00 07/18/2002 495,750
Banco Nacional de Obras (Ba2/BB)
860,000 9.63 11/15/2003 894,400
Banco Nacional Comercio Exterior (Ba2/BB)
1,000,000 7.25 02/02/2004 942,500
Financiera Energet (BBB-)
980,000 9.38 06/15/2006 1,013,663
Grupo Industrial Durango (B1/BB-)
1,640,000 12.63 08/01/2003 1,860,629
Grupo Televisa (Ba2/BB)
970,000 11.38 05/15/2003 1,061,684
4,250,000 0.00/13.25(b) 05/15/2008 3,364,063
Impsa Industrias Metal (B1/BB-)
2,000,000 9.50 05/31/2002 1,914,020
MRS Logistica S.A.(a) (B)
120,000 10.63 08/15/2005 116,400
National Power (Ba1/BB+)
500,000 7.63 11/15/2000 485,075
Poland Communications, Inc. (B2/BB-)
700,000 9.88 11/01/2003 693,000
Polysindo Eka Perkasa (Caa1/CCC+)
1,000,000 0.00 07/15/1998 470,000
Province of Tucuman
928,571 9.45 08/01/2004 905,255
Republic of Argentina (Ba3/BB)
2,450,000 8.75 05/09/2002 2,399,469
1,000,000 9.75 09/19/2027 950,000
Republic of Korea (Ba1/BB+)
1,500,000 8.75 04/15/2003 1,502,940
Voto-Votorantim Overseas Trading Operations N.V. (BB-)
800,000 8.50 06/27/2005 742,000
-------------------------------------------------------------------------------------------
TOTAL EMERGING MARKET DEBT
(COST $22,786,425) $ 22,061,658
-------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
FOREIGN BONDS(C) - 8.5%
BRITISH POUND STERLING - 0.7%
IPC Magazines(b) (B2/B)
BPS 3,250,000 0.00/10.75% 03/15/2008 $ 3,153,039
-------------------------------------------------------------------------------------------
DEUTSCHEMARK - 6.9%
Colt Telecom Group PLC (B3/B)
DEM 5,000,000 8.88 11/30/2007 3,036,973
Exide Holdings(a) (B1/B)
8,000,000 9.13 04/15/2004 4,547,101
Fresenius Medical Care Capital Trust III
5,000,000 7.38 02/01/2008 2,831,490
Geberit International S.A. (B2/B+)
11,600,000 10.13 04/16/2007 7,409,378
Impress Metal Pack
7,000,000 9.88 05/29/2007 4,134,741
Ineos PLC(a)(d) (B3/B+)
10,000,000 8.63 04/30/2005 5,649,049
Texon International PLC(a) (B3/B)
6,500,000 10.00 02/01/2008 3,703,575
------------
31,312,307
-------------------------------------------------------------------------------------------
FRENCH FRANC - 0.9%
Financiere Neopost(a) (BB)
FRF25,000,000 5.86 09/30/2007 4,169,439
-------------------------------------------------------------------------------------------
TOTAL FOREIGN BONDS
(COST $30,499,573) $ 38,634,785
-------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.8%
Joint Repurchase Agreement Account(f)
$ 8,200,000 5.55% 05/01/1998 $ 8,200,000
-------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(COST $8,200,000) $ 8,200,000
-------------------------------------------------------------------------------------------
<CAPTION>
DIVIDEND MATURITY
SHARES RATE DATE VALUE
<S> <C> <C> <C>
PREFERRED STOCKS - 1.9%
CSC Holdings, Inc.(e) (BB-)
48,827 11.75% 10/1/2007 $ 5,712,759
Eagle-Pitcher Holdings, Inc.(a)(b) (B-)
175 0.00/11.75 03/01/2008 1,015,000
Intermedia Communications, Inc.(e) (Caa/CCC+)
1,067 13.50 03/31/2009 1,307,075
River Holding Corp.(a)(e) (Ca)
3,750 11.50 4/15/2010 375,000
-------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $7,760,604) $ 8,409,834
-------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<S> <C> <C> <C>
WARRANTS(G) - 0.0%
Cellnet Data Systems, Inc., expiring October 1, 2007
3,000 $ 6,000
Econophone, Inc., expiring July 1, 2007
2,000 8,000
Knology Holdings, Inc., expiring October 15, 2007
1,750 875
RSL Communications Ltd., expiring November 15, 2006
725 72,500
---------------------------------------------------------------------------------------------------
TOTAL WARRANTS
(COST $36,250) $ 87,375
---------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $439,423,520)(H) $448,078,595
---------------------------------------------------------------------------------------------------
</TABLE>
FEDERAL INCOME TAX INFORMATION
<TABLE>
<S> <C>
Gross unrealized gain for investments in which value exceeds
cost $ 10,964,848
Gross unrealized loss for investments in which cost exceeds
value (2,309,773)
----------------------------------------------------------------------------
Net unrealized gain $ 8,655,075
----------------------------------------------------------------------------
</TABLE>
(a) 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 $154,742,752 as of April
30, 1998.
(b) These securities are issued with a zero coupon which increases to the
stated rate at a set date in the future.
(c) The principal amount of each security is stated in the currency in which
the bond is denominated. See below.
BPS = British Pound Sterling.
DEM = Deutschemark.
FRF = French Franc.
(d) When-issued security.
(e) Pay-in-kind securities.
(f) Portion of this security is being segregated for a when-issued security
and open forward contracts.
(g) Non-income producing security.
(h) The amount stated also represents aggregate cost for federal income tax
purposes.
The percentages shown for each investment category reflect the value of
investments in that category as a percentage of total net assets.
9
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Assets and Liabilities
April 30, 1998 (Unaudited)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
ASSETS:
<TABLE>
<S> <C>
Investments in securities, at value (cost $439,423,520) $448,078,595
Cash, at value 39,300
Receivables:
Investment securities sold 5,722,293
Interest 9,510,168
Forward foreign currency exchange contracts 342,464
Fund shares sold 1,460,185
Deferred organization expenses, net 27,519
Other assets 3,515
----------------------------------------------------------------------------
TOTAL ASSETS 465,184,039
----------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 9,383,413
Income distribution 813,088
Forward foreign currency exchange contracts 271,498
Fund shares repurchased 192,917
Management fees 256,832
Authorized dealer service fees 247,504
Distribution fees 45,473
Accrued expenses and other liabilities 139,388
----------------------------------------------------------------------------
TOTAL LIABILITIES 11,350,113
----------------------------------------------------------------------------
NET ASSETS:
Paid in capital 443,416,800
Accumulated distributions in excess of net investment income (47,554)
Accumulated net realized gain on investment transactions 1,793,510
Accumulated net realized foreign currency gain 57,542
Net unrealized gain on investments 8,655,075
Net unrealized loss on translation of assets and liabilities
denominated in foreign currencies (41,447)
----------------------------------------------------------------------------
NET ASSETS $453,833,926
----------------------------------------------------------------------------
Net asset value, offering and redemption price(a)
Class A $10.28
Class B $10.28
Class C $10.28
Institutional $10.28
Service $10.28
----------------------------------------------------------------------------
Shares Outstanding:
Class A 39,350,630
Class B 2,140,687
Class C 658,870
Institutional 1,992,796
Service 159
----------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number of
shares authorized) 44,143,142
----------------------------------------------------------------------------
</TABLE>
(a) Maximum public offering price per share (NAV per share X 1.0471) for
Class A shares is $10.76. 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.
10
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Operations
For the Six Months Ended April 30, 1998 (Unaudited)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $17,400,136
----------------------------------------------------------------------------
TOTAL INCOME 17,400,136
----------------------------------------------------------------------------
EXPENSES:
Management fees 1,365,430
Distribution fees 530,358
Authorized dealer service fees 481,368
Transfer agent fees 108,538
Custodian fees 73,739
Registration fees 42,335
Professional fees 30,149
Amortization of deferred organization fees 3,077
Trustee fees 2,400
Other 42,460
----------------------------------------------------------------------------
TOTAL EXPENSES 2,679,854
----------------------------------------------------------------------------
Less -- expenses reimbursable and waived by Goldman Sachs (529,452)
----------------------------------------------------------------------------
NET EXPENSES 2,150,402
----------------------------------------------------------------------------
NET INVESTMENT INCOME 15,249,734
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain from:
Investment transactions 861,550
Foreign currency related transactions 53,679
Net change in unrealized gain (loss) on:
Investments 10,079,518
Foreign currency related transactions (62,694)
----------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENT 10,932,053
----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS AND FOREIGN
CURRENCY TRANSACTIONS $26,181,787
----------------------------------------------------------------------------
</TABLE>
11
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statements of Changes in Net Assets
(Unaudited)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FOR THE
FOR THE SIX MONTHS PERIOD ENDED
ENDED APRIL 30, 1998 OCTOBER 31, 1997(A)
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 15,249,734 $ 4,414,904
Net realized gain from investment
transactions 861,550 931,960
Net realized gain from foreign
currency related transactions 53,679 62,153
Net change in unrealized
gain(loss) on investments 10,079,518 (1,424,443)
Net change in unrealized gain on
translation of assets and
liabilities denominated in
foreign currencies (62,694) 21,247
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 26,181,787 4,005,821
------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income
Class A (14,308,459) (4,377,263)
Class B (545,317) (85,036)
Class C (142,580) (10,842)
Institutional (169,429) (27)
Service (60) (26)
In excess of net investment
income
Class A -- (126,300)
Class B -- (4,386)
Class C -- (755)
Institutional Class -- (1)
Service Class -- (1)
------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (15,165,845) (4,604,637)
------------------------------------------------------------------------------
FROM SHARE TRANSACTIONS:
Net proceeds from sales of shares 126,469,330 344,880,814
Reinvestment of dividend and
distributions 10,713,940 3,439,274
Cost of shares repurchased (32,379,542) (9,707,016)
------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM SHARE TRANSACTIONS 104,803,728 338,613,072
------------------------------------------------------------------------------
TOTAL INCREASE 115,819,670 338,014,256
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 338,014,256 --
------------------------------------------------------------------------------
End of period $453,833,926 $338,014,256
------------------------------------------------------------------------------
ACCUMULATED DISTRIBUTIONS IN
EXCESS OF NET INVESTMENT INCOME $ (47,554) $ (131,443)
------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations was August 1, 1997 for all classes except
Class C which commenced operations August 15, 1997.
12
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Notes to Financial Statements
April 30, 1998 (Unaudited)
1. ORGANIZATION
Goldman Sachs Trust (the "Trust") is a Delaware business trust registered un-
der the Investment Company Act of 1940 (as amended) as an open-end, manage-
ment investment company. The Trust includes the Goldman Sachs High Yield Fund
(the "Fund"). The Fund is a diversified portfolio offering five classes of
shares -- Class A, Class B, Class C, Institutional and Service. The Fund in-
vests primarily in non-investment grade fixed-income securities which are
considered predominantly speculative by traditional investment standards. In
some cases, these obligations may be highly speculative and have poor pros-
pects for reaching investment grade standing. Non-investment grade fixed-in-
come securities and unrated securities of comparable credit quality (commonly
known as "junk bonds") are subject to the increased risk of an issuer's in-
ability to meet principal and interest obligations. These securities, also
referred to as high yield securities, may be subject to greater price vola-
tility due to such factors as specific corporate developments, interest rate
sensitivity, negative perceptions of the junk bond markets generally and less
secondary market liquidity.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make es-
timates and assumptions that may affect the reported amounts.
A. INVESTMENT VALUATION -- Portfolio securities for which accurate market
quotations are readily available are valued on the basis of quotations fur-
nished by a pricing service or provided by dealers in such securities. Port-
folio securities for which accurate market quotations are not readily
available are valued based on yield equivalents, pricing matrices or other
sources, under valuation procedures established by the Trust's Board of
Trustees. Short-term debt obligations maturing in sixty days or less are val-
ued at amortized cost.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
recorded on the trade date. Realized gains and losses on sales of portfolio
securities are calculated on the identified cost basis. Interest income is
recorded on the basis of interest accrued. Market discounts and market premi-
ums on debt securities, other than mortgage backed securities, are amortized
to interest income over the life of the security with a corresponding adjust-
ment in the cost basis of that security.
C. FOREIGN CURRENCY TRANSLATIONS -- The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in foreign currencies are
translated into U.S. dollars on the following basis (i) investment valua-
tions, foreign currency and other assets and liabilities initially expressed
in foreign currencies are converted each business day into U.S. dollars based
upon current exchange rates; (ii) purchases and sales of foreign investments,
income and expenses are converted into U.S. dollars based upon currency ex-
change rates prevailing on the respective dates of such transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent: (i) foreign exchange gains and losses from the sale and hold-
ings of foreign currencies and investments; (ii) gains and losses between
trade date and settlement date on investment securities transactions and for-
ward exchange contracts; and (iii) gains and losses from the difference be-
tween amounts of interest recorded and the amounts actually received.
D. 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 trans-
lation rates and any resulting unrealized gains or losses are recorded in the
Fund's financial statements. The Fund records realized gains or losses at the
time the 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.
13
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Notes to Financial Statements
April 30, 1998 (Unaudited)
E. 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 to its shareholders. Accordingly, no federal tax provision is re-
quired.
The characterization of distribution to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the portfolio'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, de-
pending on the type of books/tax differences that may exist.
F. DEFERRED ORGANIZATION EXPENSES -- Organization-related costs are being am-
ortized on a straight-line basis over a period of five years.
G. EXPENSES -- Expenses incurred by the Trust that do not specifically relate
to an individual portfolio of the Trust are generally allocated to the port-
folios based on each portfolio's relative average net assets for the period.
Class A, Class B and Class C shareholders of the Fund bear all expenses and
fees relating to their respective distribution and authorized dealer service
plans. Transfer agent fees are subject to separate arrangements for each
class. Shareholders of Service shares bear all expenses and fees paid to
service organizations for their services with respect to such shares.
3. AGREEMENTS
Goldman Sachs Asset Management ("GSAM"), a separate operating division of
Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Fund's investment ad-
viser pursuant to an Investment Management Agreement (the "Agreement"). Under
the Agreement, GSAM, 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, GSAM is entitled to a fee, computed daily and payable monthly at
an annual rate equal to .70% of average daily net assets of the Fund. For the
six months ended April 30, 1998, GSAM has voluntarily agreed to waive approx-
imately $73,000 of its Management Fee. This waiver was discontinued as of
March 16, 1998.
GSAM has voluntarily agreed to limit "Other Expenses" for the Fund (exclud-
ing management fees, Service share fees, distribution and authorized dealer
services fees, taxes, interest, brokerage, litigation, indemnification costs,
transfer agent fees and other extraordinary expenses) until further notice to
the extent such expenses exceed .09% of the average daily net assets of the
Fund.
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 Fund that it retained approximately $433,000 for the six months
ended April 30, 1998.
The Trust, on behalf of the Fund, has adopted Distribution Plans (the "Dis-
tribution Plans") pursuant to Rule 12b-1. Under the Distribution Plans,
Goldman Sachs is entitled to a quarterly fee from the Fund for distribution
services equal, on an annual basis, to .25%, .75% and .75% of the Fund's av-
erage daily net assets attributable to Class A, Class B and Class C shares,
respectively. For the six months ended April 30, 1998, the Distributor has
voluntarily agreed to waive approximately $456,900 of its distribution fee
attributable to the Class A shares. The Distributor may discontinue or modify
this waiver in the future at its discretion.
The Trust, on behalf of the Fund, has adopted Authorized Dealer Service
Plans (the "Dealer Service Plans") pursuant to which Goldman Sachs and Autho-
rized Dealers are compensated for providing personal and account maintenance
services. The Fund pays a fee under its Dealer Service Plans equal, on an an-
nual basis, up to .25% of the average daily net assets attributable to the
Class A, Class B and Class C shares. Goldman Sachs also serves as the Trans-
fer Agent of the Fund for a fee.
14
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchase and proceeds of sales or maturities of long-term securities for the
six months ended April 30, 1998, were $345,558,181 and $241,395,570, respec-
tively.
At April 30, 1998, the Fund had outstanding forward foreign currency ex-
change contracts, to sell foreign currencies as follows:
<TABLE>
<CAPTION>
FOREIGN CURRENCY VALUE ON CURRENT UNREALIZED
SALE CONTRACTS SETTLEMENT DATE VALUE GAIN/(LOSS)
----------------------------------------------------------------
<S> <C> <C> <C>
British Pound Sterling
expiring 09/15/99 $ 3,632,843 $ 3,709,004 $ (76,161)
Deutsche Mark
expiring 05/04/98 39,992 40,541 (549)
expiring 05/29/98 81,403 82,694 (1,291)
expiring 06/02/98 131,906 126,647 5,259
expiring 06/02/98 108,493 110,283 (1,790)
expiring 08/03/98 232,433 233,734 (1,301)
expiring 10/15/98 2,869,434 2,919,730 (50,296)
expiring 10/15/98 8,823,213 8,751,306 71,907
expiring 10/30/98 235,855 235,855 --
expiring 11/02/98 51,161 51,894 (733)
expiring 11/30/98 191,759 194,825 (3,066)
expiring 11/30/98 130,101 125,068 5,033
expiring 02/01/99 234,387 235,885 (1,498)
expiring 04/30/99 244,709 244,709 --
expiring 05/03/99 51,559 52,350 (791)
expiring 06/01/99 4,341,059 4,410,612 (69,553)
expiring 06/01/99 3,055,885 2,953,992 101,893
expiring 08/02/99 6,729,648 6,794,117 (64,469)
expiring 11/01/99 5,962,418 5,962,418 --
French Franc
expiring 05/04/98 4,362,210 4,321,686 40,524
----------------------------------------------------------------
TOTAL FOREIGN CURRENCY
SALE CONTRACTS $41,510,468 $41,557,350 ($46,882)
----------------------------------------------------------------
</TABLE>
The contractual amounts of forward foreign currency exchange contracts do
not necessarily represent the amounts potentially subject to risk. The mea-
surement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. At April 30,
1998, the Fund had sufficient cash and/or securities to cover any commitments
under these contracts.
The Fund has recorded a "Receivable for forward foreign currency exchange
contracts" and "Payable for forward foreign currency exchange contracts" re-
sulting from open and closed but not settled forward foreign currency ex-
change contracts of $342,464 and $271,498 respectively, in the accompanying
Statement of Assets and Liabilities. Included in the "Receivable for forward
foreign currency exchange contracts" is $117,848, related to forward con-
tracts closed but not settled as of April 30, 1998.
15
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Notes to Financial Statements
April 30, 1998 (Unaudited)
5. SERVICE PLAN
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on a annualized basis), of the average daily net asset value of the
Service shares.
6. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying secu-
rities, including accrued interest, is required to equal or exceed the value
of the repurchase agreement. The underlying securities for all repurchase
agreements are held in safekeeping at the Fund's custodian.
7. JOINT REPURCHASE AGREEMENT ACCOUNT
The Fund, together with other registered investment companies having manage-
ment agreements with GSAM, transfers uninvested cash into joint accounts, the
daily aggregate balance of which is invested in one or more repurchase agree-
ments. The underlying securities for the repurchase agreements are U.S. Trea-
sury and agency obligations. At April 30, 1998, the Fund had an undivided
interest in the repurchase agreement in the following joint account which
equaled $8,200,000 in principal amount. At April 30, 1998, the repurchase
agreements held in this joint account, along with the corresponding under-
lying securities (including the type of security, market value, interest rate
and maturity date) were as follows:
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY AMORTIZED
AMOUNT RATE DATE COST
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NOMURA SECURITIES INTERNATIONAL
INC. $100,000,000 5.57% 05/01/98 $ 100,000,000
dated 04/30/98, repurchase price $100,015,472 (total collateral value
$102,000,001 consisting of FNMA: 6.00%-8.50%, 02/01/25-05/01/28; FHLMC:
5.50%-8.50%, 04/01/03-05/01/28)
-------------------------------------------------------------------------------
NOMURA SECURITIES INTERNATIONAL
INC. 300,000,000 5.56 05/01/98 300,000,000
dated 04/30/98, repurchase price $300,046,333 (total collateral value
$306,000,620 consisting of FNMA: 5.82%-7.10%, 05/08/02-12/27/06; FHLMC:
0.00%-7.75%, 07/07/00--03/12/08; FHLB: 5.77%-6.58%, 01/18/99-03/24/03; FFCB:
5.70%, 03/27/01)
-------------------------------------------------------------------------------
LEHMAN BROTHERS INC. 250,000,000 5.52 05/01/98 250,000,000
dated 04/30/98, repurchase price $250,038,333 (total collateral value
$254,999,316 consisting of FHLMC: 6.50%-10.50%, 09/01/99-05/01/27; FNMA:
6.00%-11.00%, 03/01/99-03/01/28)
-------------------------------------------------------------------------------
SALOMON SMITH BARNEY 311,000,000 5.56 05/01/98 311,000,000
dated 04/30/98, repurchase price $311,048,032 (total collateral value
$317,222,200 consisting of FNMA: 7.00%, 09/01/27; FHLMC: 6.00%-8.50%,
04/01/13-12/01/27)
-------------------------------------------------------------------------------
NATIONSBANC MONTGOMERY
SECURITIES LLC 100,000,000 5.57 05/01/98 100,000,000
dated 04/30/98, repurchase price $100,015,472 (total collateral value
$103,014,167 consisting of FNMA: 7.50%, 06/01/12)
-------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE,
INC. 265,000,000 5.57 05/01/98 265,000,000
dated 04/30/98, repurchase price $265,041,001 (total collateral value
$271,826,957 consisting of FNMA: 6.50%-7.00%, 12/01/27-1/1/28; FHLMC: 6.50%-
7.00%, 05/01/26-12/01/27)
-------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $1,326,000,000
-------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
8. LINE OF CREDIT FACILITY
The Fund participates in a $250,000,000 uncommitted, unsecured revolving line
of credit facility. In addition, the Fund participates in a $50,000,000 com-
mitted, unsecured revolving line of credit facility. Both facilities are to
be used solely for temporary or emergency purposes. Under the most restric-
tive arrangement, the Fund must own securities having a market value in ex-
cess of 300% of the total bank borrowings. The interest rate on borrowings is
based on the federal funds rate. The committed facility also requires a fee
to be paid by the Fund based on the amount of the commitment which has not
been utilized. For the six months ended April 30, 1998, the Fund did not have
any borrowings under these facilities.
9. SUMMARY OF SHARES TRANSACTIONS
Share activity for the six months ended April 30, 1998 and the period ended
October 31, 1997 is as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED APRIL 30, 1998 FOR THE PERIOD ENDED OCTOBER 31, 1997(A)
-------------------------------------------------------------------------------
SHARES DOLLARS SHARES DOLLARS
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Sales 8,419,422 $ 85,902,777 33,312,862 $ 332,722,875
Reinvestment of
dividends and
distributions 1,012,231 10,346,609 337,850 3,381,418
Shares repurchased (2,767,189) (28,259,302) (964,546) (9,674,791)
-------------------------------------------------------------------------------
6,664,464 67,990,084 32,686,166 326,429,502
----------------------------------------------------------------------------------------------------------
CLASS B
Sales 1,393,324 14,245,261 1,031,591 10,350,661
Reinvestment of
dividends and
distributions 27,041 277,146 4,944 49,476
Shares repurchased (313,506) (3,190,520) (2,707) (27,285)
-------------------------------------------------------------------------------
1,106,859 11,331,887 1,033,828 10,372,852
----------------------------------------------------------------------------------------------------------
CLASS C
Sales 543,488 5,559,979 179,285 1,804,260
Reinvestment of
dividends and
distributions 8,773 89,950 834 8,342
Shares repurchased (73,016) (748,882) (494) (4,940)
-------------------------------------------------------------------------------
479,245 4,901,047 179,625 1,807,662
----------------------------------------------------------------------------------------------------------
INSTITUTIONAL
Sales 2,010,286 20,761,313 150 1,501
Reinvestment of
dividends and
distributions 17 175 3 28
Shares repurchased (17,660) (180,838) -- --
-------------------------------------------------------------------------------
1,992,643 20,580,650 153 1,529
----------------------------------------------------------------------------------------------------------
SERVICE
Sales -- -- 152 1,517
Reinvestment of
dividends and
distributions 6 60 1 10
Shares repurchased -- -- -- --
-------------------------------------------------------------------------------
6 60 153 1,527
----------------------------------------------------------------------------------------------------------
NET INCREASE 10,243,217 $ 104,803,728 33,899,925 $ 338,613,072
----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations was August 1, 1997 for all classes except
Class C which commenced operations August 15, 1997.
17
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
INCOME (LOSS) FROM INVESTMENT OPERATIONS(A) DISTRIBUTIONS TO SHAREHOLDERS
--------------------------------------------------- -----------------------------------------------
NET REALIZED
AND UNREALIZED TOTAL
NET REALIZED GAIN (LOSS) INCOME FROM IN EXCESS OF
NET ASSET AND UNREALIZED ON FOREIGN (LOSS) FROM NET REALIZED IN EXCESS NET REALIZED
VALUE, NET GAIN (LOSS) ON CURRENCY FROM NET GAIN ON OF NET GAIN ON
BEGINNING INVESTMENT INVESTMENT RELATED INVESTMENT INVESTMENT INVESTMENT INVESTMENT INVESTMENT
OF PERIOD INCOME TRANSACTIONS TRANSACTIONS OPERATIONS INCOME TRANSACTIONS INCOME TRANSACTIONS
FOR THE SIX MONTHS ENDED APRIL 30 (UNAUDITED),
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 - Class A
Shares $ 9.97 $0.40 $ 0.31 $ -- $0.71 $(0.40) -- $ -- --
1998 - Class B
Shares 9.97 0.36 0.31 -- 0.67 (0.36) -- -- --
1998 - Class C
Shares 9.97 0.36 0.31 -- 0.67 (0.36) -- -- --
1998 - Institu-
tional Shares 9.97 0.41 0.31 -- 0.72 (0.41) -- -- --
1998 - Service
Shares 9.97 0.39 0.31 -- 0.70 (0.39) -- -- --
FOR THE PERIOD ENDED OCTOBER 31,
1997 - Class A
Shares(e) 10.00 0.17 (0.03) 0.01 0.15 (0.17) -- (0.01) --
1997 - Class B
Shares(e) 10.00 0.15 (0.03) 0.01 0.13 (0.15) -- (0.01) --
1997 - Class C
Shares(e) 9.97 0.14 -- 0.01 0.15 (0.14) -- (0.01) --
1997 - Institu-
tional Shares(e) 10.00 0.18 (0.03) 0.01 0.16 (0.18) -- (0.01) --
1997 - Service
Shares(e) 10.00 0.17 (0.03) 0.01 0.15 (0.17) -- (0.01) --
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes the balancing effect of calculating per share amounts.
(b) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions, a complete redemption of the
investment at the net asset value at the end of period and no sales
charge. Total return would be reduced if a sales or redemption charge was
taken into account.
(c) Annualized.
(d) Not annualized.
(e) Class A, Class B, Class C, Institutional and Service share activity
commenced on August 1, 1997, August 1, 1997, August 15, 1997, August 1,
1997 and August 1, 1997, respectively.
18
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
<TABLE>
<CAPTION>
RATIO OF
TOTAL NET INCREASE RATIO OF NET INVESTMENT NET ASSETS
<CAPTION>DISTRIBUTIONS (DECREASE) NET ASSET NET EXPENSES INCOME PORTFOLIO AT END OF
TO IN RATIOSNASSUMINGET VALUE, END TOTAL TO AVERAGE TO AVERAGE TURNOVER PERIOD
SHAREHOLDERS NO VOLUNTARY WAIVER OF FEESASSET VALUE OF PERIOD RETURN(B) NET ASSETS NET ASSETS RATE (IN 000S)
OR EXPENSE LIMITATIONS
--------------------------------------------
RATIO OF
TOTAL RATIO OF NET INVESTMENT
DISTRIBUTIONS EXPENSES TO INCOME
TO AVERAGE TO AVERAGE
SHAREHOLDERS NET ASSETS NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
$(0.40) $ 0.31 $10.28 7.19%(d) 1.07%(c) 7.87%(c) 63.99%(d) $404,560
(0.36) 0.31 10.28 6.80(d) 1.82(c) 7.07(c) 63.99(d) 22,005
(0.36) 0.31 10.28 6.80(d) 1.82(c) 7.07(c) 63.99(d) 6,774
(0.41) 0.31 10.28 7.33(d) 0.80(c) 8.43(c) 63.99(d) 20,493
(0.39) 0.31 10.28 7.09(d) 1.30(c) 7.69(c) 63.99(d) 2
<S> <C> <C>
$(0.40) 1.36%(c) 7.58%(c)
(0.36) 1.86(c) 7.03(c)
(0.36) 1.86(c) 7.03(c)
(0.41) 0.84(c) 8.39(c)
(0.39) 1.34(c) 7.65(c)
(0.18) (0.03) 9.97 1.50(d) 0.95(c) 7.06(c) 44.80(d) 325,911
(0.16) (0.03) 9.97 1.31(d) 1.70(c) 6.28(c) 44.80(d) 10,308
(0.15) -- 9.97 1.46(d) 1.70(c) 6.17(c) 44.80(d) 1,791
(0.19) (0.03) 9.97 1.58(d) 0.70(c) 7.16(c) 44.80(d) 2
(0.18) (0.03) 9.97 1.46(d) 1.20(c) 6.69(c) 44.80(d) 2
- -------------------------------------------------------------------------------------------------------------------------------
(0.18) 1.57(c) 6.44(c)
(0.16) 2.07(c) 5.91(c)
(0.15) 2.07(c) 5.80(c)
(0.19) 1.07(c) 6.79(c)
(0.18) 1.57(c) 6.32(c)
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
GOLDMAN SACHS FUND PROFILE
Goldman Sachs High Yield Fund
THE GOLDMAN
SACHS ADVANTAGE
When you invest in the Goldman Sachs High Yield Fund, you can capitalize on
Goldman Sachs' 129-year history of excellence while benefiting from the firm's
leadership in three areas:
1
Global Resources
With professionals based throughout the Americas, Europe and Asia, Goldman Sachs
possesses first-hand knowledge of the world's markets and economies.
2
Fundamental Research
Goldman Sachs is recognized by the managements of corporations worldwide as a
leader in investment research. As a result, we obtain face-to-face meetings with
managers on a timely, regular basis.
3
Risk Management
Goldman, Sachs & Co. excels in understanding, monitoring and managing investment
risk -- a process that is integrated into all Goldman Sachs investment products.
Historically, the high yield bond sector has generated approximately
75% to 80% of the return of the S&P 500, while assuming only 30% to
47% of the volatility.(1)
Goldman Sachs High Yield Fund offers investors access to this
potentially attractive risk/return profile. The Fund seeks a high
level of current income and, secondarily, capital appreciation,
primarily through fixed income securities rated below investment
grade.
Target Your Needs
Goldman Sachs High Yield Fund has a distinct investment objective and
a defined place on the risk/return spectrum. As your investment
objectives change, you can exchange shares within Goldman Sachs Funds
without any additional charge.(2) (Please note: in general, greater
returns are associated with greater risk.)
----------------------------------------------------------------------
Goldman Sachs Fixed Income Funds
HIGH YIELD
Higher o High Yield Fund
Risk/Return
TAXABLE
o Global Income Fund
o Core Fixed Income Fund
o Government Income Fund
o Short Duration Government Fund
o Adjustable Rate Government Fund
TAX-FREE
Lower o Municipal Income Fund
Risk/Return o Short Duration Tax-Free Fund
For More Information
To learn more about the Goldman Sachs High Yield Fund and other
Goldman Sachs Funds, call your investment professional today.
(1) Source: Morningstar Principia
(2) The exchange privilege is subject to termination and its terms
are subject to change.
<PAGE>
================================================================================
GOLDMAN SACHS ASSET MANAGEMENT
ONE NEW YORK PLAZA, 42ND FLOOR, NEW YORK, NEW YORK 10004
================================================================================
TRUSTEES OFFICERS
Ashok N. Bakhru, Chairman Douglas C. Grip, President
David B. Ford James A. Fitzpatrick, Vice President
Douglas C. Grip John W. Mosior, Vice President
John P. McNulty Nancy L. Mucker, Vice President
Mary P. McPherson John M. Perlowski, Treasurer
Alan A. Shuch Michael J. Richman, Secretary
Jackson W. Smart, Jr. Howard B. Surloff, Assistant Secretary
William H. Springer Valerie A. Zondorak, Assistant Secretary
Richard P. Strubel
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.
Goldman, Sachs & Co., distributor of the Fund, is not a bank, and Fund shares
distributed by it are neither bank deposits nor obligations of, nor endorsed,
nor guaranteed by, any bank or other insured depository institution, nor are
they insured by the Federal Deposit Insurance Corporation (FDIC), the Federal
Reserve Board or any other government agency. Investment in the Fund involves
risks, including possible loss of the principal amount invested.
Goldman Sachs High Yield Fund invests primarily in high yield, fixed income
securities rated below investment grade that are considered speculative and
generally involve greater price volatility and greater risk of loss of principal
and interest than investments in higher rated fixed income securities.
Goldman Sachs Government Income Fund's, Goldman Sachs Short Duration Government
Fund's and Goldman Sachs Adjustable Rate Government Fund's net asset values and
yields are not guaranteed by the U.S. government or by its agencies,
instrumentalities or sponsored enterprises.
Goldman Sachs Municipal Income Fund and Goldman Sachs Short Duration Tax-Free
Fund can invest up to 100% and 20% respectively, in private activity bonds, the
interest from which is subject to the federal alternative minimum tax.
Goldman Sachs High Yield Fund's, Goldman Sachs Global Income Fund's and Goldman
Sachs Core Fixed Income Fund's foreign investments and active management
techniques entail risks in addition to those customarily associated with
investing in dollar-denominated securities of U.S. issuers. Compared with U.S.
securities markets, foreign markets may be less liquid, more volatile and less
subject to governmental regulation, and may make available less public
information about issuers. The Funds may incur losses because of changes in
securities prices expressed in local currencies, movements in exchange rates, or
both.
(C)Copyright 1998 Goldman, Sachs & Co. All rights reserved.
Date of first use: June 30, 1998
FI/HYSAR / 40K / 6-98
