<PAGE>
Goldman Sachs Funds
HIGH YIELD FUND Semi-Annual Report April 30, 1999
A high level of current income
[ART APPEARS HERE]
through a diversified portfolio
of high yield securites.
[LOGO OF GOLDMAN SACHS
APPEARS HERE]
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Market Overview
Dear Shareholder,
During the period under review, most overseas bond markets performed admirably
in response to weak economies and interest rate cuts.But domestic fixed income
securities underperformed, as signs pointed to a tightening credit policy.
Market Review
. The Dollar Bloc -- Over the last six months, the outlook for U.S.
Treasuries has come full circle. Early in the reporting period, the Federal
Reserve Board was still easing credit, as it focused on the weak global
economy and few signs of domestic inflation. Since that time, sentiment has
gradually changed. The Federal Reserve Board took a neutral stance for
several months, as benign inflation overshadowed higher-than-expected
growth rates. However, with few signs of growth abating, low unemployment
and an increase in some commodity prices, the consensus is now that the
Federal Reserve Board will be forced to raise rates later in the year.
Elsewhere in the dollar bloc, New Zealand, Canada and Australia have
all outperformed U.S. Treasuries, but with somewhat lackluster results.
While each country was dragged down by the weakness in the U.S. in
February, they have experienced a stronger turnaround, due to relatively
lower growth rates and few pricing pressures.
. Europe -- The classic "bad news is good news" for bonds was the overriding
theme in the European markets during much of the reporting period. Slowing
economies, declines in business and consumer confidence levels, and subdued
inflation set the stage for falling yields and rising bond prices.
Coordinated cuts in interest rates, sometimes by larger-than-expected
margins, helped all European markets to outperform U.S. Treasuries over the
last six months.
. Japan -- Despite an extremely weak economy and deflationary pressures, the
Japanese bond market fell sharply in November and December. The leading
culprit was the volume of supply required to finance an economic stimulus
package. However, the market has rallied strongly thus far in 1999. Falling
growth, confidence and prices led to a surprise cut in interest rates by
the Bank of Japan.
Outlook
. Pockets of Opportunity -- While there are still few signs of inflation, we
expect that the Federal Reserve Board will remain vigilant and act swiftly
if inflation trends upward. In Europe, we see a balance of moderate growth
with few signs of inflation. Within this region, we particularly favor
Denmark and U.K. bonds. Conversely, we have a negative outlook for Japanese
bonds, as the volume of new issuance is likely to increase as further
expected stimulus measures are announced by the government to try and
arrest the still depressed economy.
We encourage you to continue focusing on the longer term and we look
forward to serving your investment needs in the years to come.
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
April 30, 1999
- -------------------
NOT FDIC-INSURED
- -------------------
May Lose Value
- -------------------
No Bank Guarantee
- -------------------
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Fund Basics
as of April 30, 1999
Assets Under Management
$764.5 Million
Number of Holdings
194
NASDAQ SYMBOLS
Class A Shares
GSHAX
Class B Shares
GSHBX
Class C Shares
GSHCX
Institutional Shares
GSHIX
Service Shares
GSHSX
- --------------------------------------------------------------------------------
PERFORMANCE REVIEW
- --------------------------------------------------------------------------------
October 31,1998- Fund Total Return 30-Day Lehman High
April 30,1999 (based on NAV)/1/ Standardized Yield/2/ Yield Index/3/
- --------------------------------------------------------------------------------
Class A 12.64% 8.10% 8.24%
Class B 12.23% 7.74% 8.24%
Class C 12.12% 7.73% 8.24%
Institutional 12.74% N/A 8.24%
Service 12.58% N/A 8.24%
- --------------------------------------------------------------------------------
/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 Standardized Yield of the Fund is calculated by dividing the net
investment income per share (as defined by securities industry regulations)
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.
- --------------------------------------------------------------------------------
STANDARDIZED TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period ending 3/31/99 Class A Class B Class C Institutional Service
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One Year/4/ -2.14% -3.35% 0.61% 2.94% 2.43%
Since Inception/4/ 3.83% 3.38% 6.12% 7.13% 6.62%
(8/1/97) (8/1/97) (8/15/97) (8/1/97) (8/1/97)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
/4/ The Standardized Total Returns are average annual returns 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
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). Because Institutional and Service shares do not involve sales
charges, such charges have not been applied to their Standardized Total
Returns.
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 4/30/99/5/
- --------------------------------------------------------------------------------
Company Line of Business % of Portfolio
- --------------------------------------------------------------------------------
Telewest Communications PLC Media/Cable 4.2%
Nextel Communications, Inc. Telecommunications 2.8%
CSC Holdings, Inc. Media/Cable 1.7%
Riverwood International Corp. Paper 1.7%
Fischer Scientific International, Inc. Consumer Cyclical 1.5%
Viasystems, Inc. Technology 1.4%
Packaging Corp. of America Paper 1.3%
Intermedia Communications, Inc. Telecommunications 1.3%
Wesco Distribution, Inc. Consumer Cyclical 1.3%
Charter Communications Holdings Media/Cable 1.3%
- --------------------------------------------------------------------------------
Credit Allocation: AAA 1.4% BBB 0.8% BB 8.5% B 81.8% CCC/NR 7.5%
- --------------------------------------------------------------------------------
/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 expense limitations in effect. In their absence, performance would
be reduced.
1
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Performance Overview
Dear Shareholder,
We are pleased to report on the performance of the Goldman Sachs High Yield
Fund for the six-month period ended April 30, 1999.
Performance Review
Over the six-month period ended April 30, 1999, the Fund's A, B, C,
Institutional and Service shares generated cumulative total returns,
at net asset value, of 12.64%, 12.23%, 12.12%, 12.74% and 12.58%,
respectively. These figures handily outperformed the 8.24% total
return of the Fund's benchmark, the Lehman High Yield Bond Index.
Each of the Fund's share classes also ranked in the top 25% of the 258
funds in the Lipper High Yield category for total return during the
one-year period ended April 30, 1999. During that period the Fund's
Class A, B and C shares ranked 43, 54 and 57 (out of 258 funds),
respectively. Its Institutional and Service shares ranked 30 and 46,
respectively. Please note that Lipper rankings do not take sales
charges into account and that past performance is no guarantee of
future results.
After the fourth quarter of 1998 ended with some profit-taking, the
overall high yield market, and the Fund, have posted strong gains in
1999. Two factors that have driven performance are the strong domestic
economy, which is positive for the financial health of high yield
companies, and the solid demand for high yield securities. The year
began on a strong note, as a scarcity of new supply could not keep
pace with the demand for these securities. After a setback in
February, the high yield market came roaring back in March and April.
This rebound was partially fueled by an increase in rumored and actual
merger and acquisition activity -- most notably in the
telecommunications sector. Lower rated credits were the best
performers, as investors regained their appetite for risk.
Investment Objective
The Fund seeks a high level of current income and may also consider
the potential for capital appreciation. The Fund invests primarily in
high yield, fixed income securities rated, at the time of investment,
below investment grade.
Portfolio Composition
As of April 30, 1999, the Fund was diversified among 194 companies.
Holdings in the top 10 companies represented 18.5% of the portfolio.
During the reporting period, the Fund deployed much of its cash
position to build on certain existing holdings, and selectively
increased its exposure to the non-U.S. dollar corporate sector.
Domestically, limited new issue activity led us to focus on the
secondary market. The Fund added to its holding in wireless operator
Nextel Communications, Inc. (2.8% of the portfolio), as well as Fisher
Scientific International, Inc. (1.5% of the portfolio), a scientific
product distributor. Additionally, with the brighter outlook for many
cyclical companies, we have boosted our exposure in the paper goods
industry.
2
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
FIXED INCOME
INVESTMENT
PROCESS OVERVIEW
1 Sector Allocation
Our sector specialists work together to assess relative value among sectors
and create investment strategies to meet each fund's objectives.
2 Security Selection
In selecting securities for each portfolio, our fixed income teams have
access to the vast resources of Goldman Sachs.
3 Yield Curve Strategies
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.
Portfolio Highlights
. Telewest Communications PLC (4.2% of the portfolio) -- Telewest, the second
largest cable television company in the U.K., continues to be the Fund's
largest holding. It performed extremely well in recent months, due in part
to the pending acquisition of MediaOne by AT&T. As part of the transaction,
MediaOne has agreed to sell its 29.9% equity stake in Telewest to
Microsoft.
. NextelCommunications, Inc.(2.8% of the portfolio) -- The Fund continued to
increase its holding in Nextel, a major wireless operator in the U.S. We
have been impressed with the performance of the company's domestic business
model. And we believe the firm will generate significant cash flow going
forward, reflecting the rapid growth of its business.
. Charter Communications Holdings (1.3% of the portfolio) -- Charter
Communications, a cable company owned by Microsoft co-founder Paul Allen,
raised a record $3 billion with its high yield issuance in March. These
securities performed strongly in secondary trading and lifted investor
sentiment across the entire market. Charter's securities were aided by
merger activity in the cable television market.
New Acquisitions
. Packaging Corporation of America (1.3% of the portfolio) -- Packaging
Corporation (PCA), is a spin-off of Tenneco's cardboard container
operation. The firm is a low-cost producer of high-quality cardboard
containers. We expect to see rapid credit improvement with PCA, due to a
favorable industry outlook coupled with debt reduction from asset sales.
. Riverwood International Corp.(1.7% of the portfolio) -- Riverwood
manufactures coated cardboard used extensively by soft drink producers. The
firm has successfully reduced its cost base during the last 18 months, and
it should benefit from recent capacity expansion.
Portfolio Outlook
In the near term, the outlook for the high yield market may be somewhat choppy,
as interest rates continue to rise and there is a rapidly growing new issue
calendar (in excess of $15 billion). This should provide attractive medium-term
investment opportunities, as bond yields will likely have to rise to absorb the
bulge in supply. Additionally, we expect several high yield issuers to take
advantage of the soaring stock market by tapping into the equity markets to
strengthen their portfolios.
We thank you for your investment and look forward to your continued confidence.
Goldman Sachs High Yield Investment Management Team
May 28, 1999
3
<PAGE>
GOLDMAN SACHS HIGH YIELD 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 Asset Management Division provides individual investors
the opportunity to tap the resources of a global institutional powerhouse
-- and put this expertise to work in their individual portfolios.
What Sets Goldman Sachs Funds Apart?
1
Resources and Relationships
Our porfolio management teams are located on-site, around the
world, in New York, London, Tokyo and Singapore. Their
understanding of local economies, markets, industries and
cultures helps deliver what many investors want: access to global
investment opportunities and consistent, risk-adjusted
performance.
2
In-Depth Research
Our portfolio management teams make on-site visits to hundreds of
companies each month, then construct selective portfolios with an
emphasis on their best ideas. Our teams also have access to
Goldman, Sachs & Co.'s Global Investment Research Department.
3
Risk Management
In this, our institutional heritage is clear. Institutions, as
well as many individual investors, often look to us to manage the
risks of global investing over time in different market
environments.
To learn more about the Goldman Sachs Family of Funds, call your investment
professional today.
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Performance Summary
April 30, 1999 (Unaudited)
The following graph shows the value as of April 30, 1999, of a $10,000 in-
vestment made (with the maximum sales charge of 4.5% for Class A and redemp-
tion charges of 5.0% for Class B and at NAV for the Institutional and Service
Classes) on August 1, 1997 (commencement of operations) of the Goldman Sachs
High Yield Fund. 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 C shares
will vary from the classes depicted below due to differences in fees and
loads.
High Yield Fund's Lifetime Performance
Growth of a $10,000 Investment, Distributions Reinvested August 1, 1997 to
April 30, 1999.
[LINE GRAPH APPEARS HERE]
Monthly Rtns Lehman
Class A Class B Institutional Service High Yield Index
8/1/97 9,550 10,000 10,000 10,000 10,000
Aug-97 9,560 10,004 10,013 10,009 9,977
Sep-97 9,735 10,190 10,199 10,191 10,175
Oct-97 9,694 10,131 10,158 10,146 10,184
Nov-97 9,768 10,203 10,238 10,222 10,281
Dec-97 9,953 10,389 10,433 10,413 10,372
Jan-98 10,217 10,648 10,713 10,688 10,559
Feb-98 10,289 10,727 10,800 10,761 10,621
Mar-98 10,388 10,823 10,896 10,863 10,721
Apr-98 10,391 10,820 10,902 10,865 10,763
May-98 10,447 10,871 10,974 10,932 10,800
Jun-98 10,451 10,868 10,969 10,933 10,839
Jul-98 10,550 10,965 11,087 11,036 10,901
Aug-98 9,815 10,194 10,317 10,265 10,299
Sep-98 9,752 10,133 10,254 10,208 10,346
Oct-98 9,627 9,986 10,126 10,066 10,133
Nov-98 10,264 10,640 10,799 10,730 10,554
Dec-98 10,253 10,622 10,780 10,718 10,566
Jan-99 10,423 10,792 10,974 10,895 10,722
Feb-99 10,461 10,825 11,017 10,945 10,659
Mar-99 10,647 11,010 11,216 11,127 10,760
Apr-99 10,844 10,759 11,416 11,332 10,969
<TABLE>
<CAPTION>
Average Annual Total Return through
April 30, 1999 Since Inception One Year Six Months(a)
<S> <C> <C> <C>
Class A (commenced August 1, 1997)
Excluding sales charges 7.53% 4.35% 12.64%
Including sales charges 4.74% -0.30% 7.59%
-----------------------------------------------------------------------------
Class B (commenced August 1, 1997)
Excluding contingent deferred sales
charges 6.74% 3.58% 12.23%
Including contingent deferred sales
charges 4.27% -1.60% 7.03%
-----------------------------------------------------------------------------
Class C (commenced August 15, 1997)
Excluding contingent deferred sales
charges 6.92% 3.47% 12.12%
Including contingent deferred sales
charges 6.92% 2.44% 11.08%
-----------------------------------------------------------------------------
Institutional Class (commenced
August 1, 1997) 7.87% 4.71% 12.74%
-----------------------------------------------------------------------------
Service Class (commenced August 1,
1997) 7.42% 4.30% 12.58%
-----------------------------------------------------------------------------
</TABLE>
(a) Not annualized.
5
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - 78.2%
Accuride Corp. (B-/B2)
$ 3,000,000 9.25% 02/01/2008 $ 3,060,000
Advance Holding Corp. (B-/Caa2)
2,000,000 0.00/12.88(b) 04/15/2009 1,220,000
Advanstar Communications, Inc. (B-/B2)
3,000,000 9.25 05/01/2008 3,082,500
AEP Industries, Inc. (B/B2)
3,000,000 9.88 11/15/2007 3,135,000
Agrilink Foods, Inc. (B/B3)
1,500,000 11.88 11/01/2008 1,612,500
Ainsworth Lumber Ltd. (B/B3)
2,500,000 12.50 07/15/2007 2,775,000
Alaris Medical, Inc. (B-/Caa1)(b)
4,000,000 0.00/11.13 08/01/2008 2,400,000
Allegiance Telecom, Inc.
1,500,000 0.00/11.75(b) 02/15/2008 990,000
1,000,000 12.88 05/15/2008 1,120,000
Alliance Imaging, Inc. (B-/B3)
3,000,000 9.63 12/15/2005 3,000,000
Allied Waste North America, Inc. (BB/Ba3)
2,500,000 7.63 01/01/2006 2,462,500
4,750,000 7.88 01/01/2009 4,690,625
Amatek Industries, Inc. (B/B3)(a)
3,500,000 12.00 02/15/2008 3,342,500
American Axle & Manufacturing, Inc. (B/B2)(a)
3,500,000 9.75 03/01/2009 3,631,250
American Lawyer Media, Inc. (B/B1)
3,500,000 9.75 12/15/2007 3,631,250
American Media Operations, Inc. (B-/B2)(a)
1,500,000 10.25 05/01/2009 1,500,000
Anchor Lamina, Inc. (B-/B3)
1,500,000 9.88 02/01/2008 1,455,000
APCOA, Inc. (B-/Caa1)
5,000,000 9.25 03/15/2008 4,700,000
Argo-Tech Corp. (B-/B3)
5,000,000 8.63 10/01/2007 4,862,500
2,500,000 8.63(a) 10/01/2007 2,431,250
Aurora Foods, Inc. (B-/B3)
3,750,000 9.88 02/15/2007 4,064,063
Axiohm Transaction Solutions (B3)
3,000,000 9.75 10/01/2007 2,730,000
Benton Oil & Gas Co. (B+/B2)
2,250,000 9.38 11/01/2007 1,305,000
Birch Telecom, Inc.
1,000,000 14.00 06/15/2008 940,000
Brunner Mond Group PLC (CCC+/Caa1)
1,000,000 11.00 07/15/2008 610,000
Burke Industries, Inc. (B+/B2)
2,000,000 10.00 08/15/2007 1,600,000
Cabot Safety Acquisition Corp. (B/B3)
4,000,000 12.50 07/15/2005 4,320,000
-------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - (continued)
Capstar Broadcasting Corp. (B-/B3)
$ 2,000,000 10.75% 05/15/2006 $ 2,235,000
Carrier1 International S.A. (B-/B3)(a)
2,250,000 13.25 02/15/2009 2,340,000
Centennial Cellular Corp. (CCC+/Caa1)(a)
4,000,000 10.75 12/15/2008 4,340,000
Chancellor Media Corp. (B/B1)
2,000,000 8.13 12/15/2007 2,020,000
Charter Communications Holdings LLC (B+/B2)(a)
1,000,000 8.25 04/01/2007 1,025,000
2,000,000 8.63 04/01/2009 2,050,000
9,750,000 0.00/9.92(b) 04/01/2011 6,447,188
CHS Electronics, Inc. (B-/B2)
1,250,000 9.88 04/15/2005 875,000
Colt Telecom Group PLC (B/B3)(b)
5,500,000 0.00/12.00 12/15/2006 4,647,500
Communications Instruments, Inc. (B-/B3)
3,500,000 10.00 09/15/2004 3,395,000
Condor Systems, Inc. (B-/B3)(a)
2,000,000 11.88 05/01/2009 2,000,000
Corning Consumer Products Co. (B/B3)
7,000,000 9.63 05/01/2008 6,387,500
Covad Communications Group (B3)
500,000 0.00/13.50(b) 03/15/2008 295,000
2,500,000 12.50(a) 02/15/2009 2,525,000
Cross Timbers Oil Co. (B/B2)
2,750,000 8.75 11/01/2009 2,674,375
Crown Castle International Corp. (B+/B3)(b)
10,000,000 0.00/10.63 11/15/2007 7,200,000
D.R. Horton, Inc. (BB/Ba1)
1,000,000 8.00 02/01/2009 990,000
Day International Group, Inc. (B-/B3)
3,250,000 9.50 03/15/2008 3,120,000
Del Monte Foods Co. (B-/Caa2)(b)
5,400,000 0.00/12.50 12/15/2007 4,117,500
Delta Mills, Inc. (B+/B3)
3,000,000 9.63 09/01/2007 3,000,000
Details Inc. (B-/B3)
5,000,000 10.00 11/15/2005 4,762,500
Details Holdings Corp. (B+/Caa1)
1,000,000 0.00/12.50(b) 11/15/2007 510,000
Domino's, Inc. (B-/B3)(a)
6,500,000 10.38 01/15/2009 6,727,500
Eagle Family Foods Inc. (B-/B3)
5,250,000 8.75 01/15/2008 4,908,750
Eagle-Picher Industries, Inc. (B-/B3)
6,750,000 9.38 03/01/2008 6,539,063
Echostar DBS Corp. (B/B2)(a)
2,500,000 9.38 02/01/2009 2,593,750
Econophone, Inc.
2,000,000 13.50(a) 07/15/2007 2,180,000
500,000 0.00/11.00(b) 02/15/2008 270,000
------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - (continued)
Esat Telecom Group PLC (B+/Caa1)
$ 4,000,000 11.88% 12/01/2008 $ 4,320,000
Exodus Communications, Inc.
1,000,000 11.25 07/01/2008 1,080,000
Facilicom International, Inc.
2,250,000 10.50 01/15/2008 1,755,000
Federal-Mogul Corp. (BB+/Ba2)(a)
2,000,000 7.50 01/15/2009 1,944,160
Fisher Scientific International, Inc. (B-/B3)
11,000,000 9.00 02/01/2008 11,000,000
Frontiervision Holdings LP (B+/Caa1)(b)
4,000,000 0.00/11.88 09/15/2007 3,530,000
Galey & Lord, Inc. (B/B3)
2,000,000 9.13 03/01/2008 1,540,000
Generac Portable Products LLC (B-/B3)(a)
2,000,000 11.25 07/01/2006 2,110,000
General Chemical Industries (B+/B3)(a)
1,500,000 10.63 05/01/2009 1,533,750
Genesis Health Ventures (CCC+/B2)
500,000 9.25 10/01/2006 443,750
1,000,000 9.88(a) 01/15/2009 895,000
Global Crossing Holdings Ltd. (B/B1)
5,250,000 9.63 05/15/2008 5,853,750
Global Telesystems Group (B-/Caa2)
3,000,000 9.88 02/15/2005 3,000,000
Globe Manufacturing Corp. (B-/B2)
2,000,000 10.00 08/01/2008 1,540,000
Globo Comunicacoes e Participacoes S.A. (B+/B2)
1,000,000 10.50 12/20/2006 737,500
Graham Packaging Co. (B-/B3)
3,500,000 8.75 01/15/2008 3,543,750
Graham Packaging Co. (B-/Caa1)(b)
1,000,000 0.00/10.75 01/15/2009 700,000
GST Equipment Funding, Inc.
2,000,000 13.25 05/01/2007 2,200,000
GST Telecommunications, Inc.
1,000,000 12.75 11/15/2007 1,090,000
2,000,000 0.00/10.50(b) 05/01/2008 1,250,000
Hayes Wheels International, Inc. (B/B2)
3,500,000 9.13 07/15/2007 3,675,000
Haynes International Inc. (B-/B3)
1,500,000 11.63 09/01/2004 1,290,000
Hermes Europe Railtel B.V. (B/B3)
3,500,000 11.50 08/15/2007 3,797,500
2,500,000 10.38 01/15/2009 2,675,000
Hexcel Corp. (B+/B1)(a)
5,000,000 9.75 01/15/2009 5,050,000
HMV Media Group PLC (B/B3)
2,000,000 10.25 05/15/2008 2,080,000
Hudson Respiratory Care, Inc. (B-/B3)
3,000,000 9.13 04/15/2008 2,670,000
ICG Holdings, Inc.
4,000,000 0.00/11.63(b) 03/15/2007 3,009,200
-------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - (continued)
ICN Pharmaceutical, Inc. (BB/Ba3)
$ 2,000,000 9.25% 08/15/2005 $ 2,060,000
Imperial Home Decor Group (B-/B3)(a)
2,000,000 11.00 03/15/2008 1,660,000
Integrated Electrical Services, Inc. (B+/B2)
2,000,000 9.38 02/01/2009 2,035,000
Integrated Health Services, Inc. (CCC/B2)
3,750,000 9.25 01/15/2008 2,878,125
Intermedia Communications, Inc. (B/B2)
5,750,000 0.00/11.25(b) 07/15/2007 4,413,125
2,250,000 8.88 11/01/2007 2,272,500
1,000,000 9.50(a) 03/01/2009 1,040,000
1,000,000 0.00/12.25(a)(b) 03/01/2009 640,000
International Home Foods, Inc. (B-/B2)
2,750,000 10.38 11/01/2006 2,990,625
International Wire Group (B-/B3)
5,000,000 11.75 06/01/2005 5,287,500
Intertek Finance PLC (B-/B2)
7,000,000 10.25 11/01/2006 6,825,000
Iowa Select Farm LP (B-/B3)(a)
2,000,000 10.75 12/01/2005 1,560,000
IT Group, Inc (B+/B3)(a)
2,000,000 11.25 04/01/2009 2,030,000
Jazztel PLC (Caa2)(a)
750,000 14.00 04/01/2009 776,250
Johnstown American Industries, Inc. (B)
4,000,000 11.75 08/15/2005 4,340,000
Jorgensen Earle Co. (B-/B3)
3,500,000 9.50 04/01/2005 3,255,000
K&F Industries, Inc. (B-/B3)
5,000,000 9.25 10/15/2007 5,137,500
Kinetic Concepts, Inc. (B-/B3)
5,000,000 9.63 11/01/2007 4,900,000
Level 3 Communications, Inc. (B/B3)
5,000,000 9.13 05/01/2008 5,100,000
1,000,000 0.00/10.50(a)(b) 12/01/2008 647,500
Lin Holdings Corp. (B-/B3)(b)
4,000,000 0.00/10.00 03/01/2008 2,780,000
McLeod USA, Inc. (B+/B2)
2,000,000 9.50 11/01/2008 2,150,000
500,000 8.13(a) 02/15/2009 496,250
MCMS, Inc. (CCC+/B3)
2,000,000 9.75 03/01/2008 1,100,000
Metromedia Fiber Network, Inc. (B/B2)(a)
3,000,000 10.00 11/15/2008 3,240,000
Metronet Communications Co. (B/B3)
6,000,000 0.00/9.95(b) 06/15/2008 4,665,000
750,000 10.63(a) 11/01/2008 879,375
Millicom International Cellular S.A. (B-/Caa1)(b)
5,000,000 0.00/13.50 06/01/2006 3,875,000
MSX International, Inc. (B-/Caa1)
1,000,000 11.38 01/15/2008 990,000
-----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - (continued)
Multicare Companies, Inc. (B-/B3)
$ 2,000,000 9.00% 08/01/2007 $ 1,500,000
Musicland Group, Inc. (CCC+/Caa1)
3,500,000 9.00 06/15/2003 3,517,500
National Equipment Services, Inc. (B-/B3)(a)
4,000,000 10.00 11/30/2004 4,160,000
New Brunswick, Inc. (CCC+/Caa1)
1,500,000 10.63 04/15/2005 1,248,750
Newport News Shipbuilding, Inc. (B+/B1)
4,000,000 9.25 12/01/2006 4,260,000
New World Pasta (B-/B2)(a)
1,000,000 9.25 02/15/2009 1,022,500
Nextel Communications, Inc. (B-/B2)(b)
9,000,000 0.00/9.75 08/15/2004 9,369,270
1,000,000 0.00/10.65 09/15/2007 785,000
12,500,000 0.00/9.95 02/15/2008 9,531,250
Nextel Partners (CCC+/B3)(a)(b)
4,1,000,000 0.00/14.00 02/01/2009 630,000
Nextlink Communications, Inc. (B/B3)
2,000,000 9.63 10/01/2007 2,015,000
2,250,000 9.00 03/15/2008 2,227,500
Nortek, Inc. (B-/B3)
2,000,000 9.88 03/01/2004 2,085,000
Nortek, Inc. (B+/B1)
3,000,000 9.13 09/01/2007 3,127,500
2,500,000 8.88(a) 08/01/2008 2,587,500
Ono Finance PLC (CCC+/Caa1)(a)(i)
1,250,000 13.00 05/01/2009 1,250,000
Orange PLC (B+/Ba3)
500,000 8.00 08/01/2008 4,623,750
P&L Coal Holdings Corp. (B/B2)
3,750,000 9.63 05/15/2008 3,890,625
Packaging Corp. of America (B/B3)(a)
7,250,000 9.63 04/01/2009 7,540,000
Packard Bioscience, Inc. (B-/B3)
9,250,000 9.38 03/01/2007 9,041,875
Pathmark Stores, Inc. (CCC+/Caa1)
5,000,000 9.63 05/01/2003 5,143,750
Pathnet, Inc.
1,875,000 12.25 04/15/2008 984,375
Pinnacle Holdings, Inc. (b)
6,000,000 0.00/10.00 03/15/2008 3,720,000
Polaroid Corp. (BB-/Ba3)
2,000,000 11.50 02/15/2006 2,090,000
Polymer Group, Inc. (B/B2)
1,750,000 9.00 07/01/2007 1,785,000
3,000,000 8.75 03/01/2008 3,030,000
Premier Parks, Inc. (B-/B3)
2,250,000 9.25 04/01/2006 2,345,625
Prestolite Electric, Inc. (B+/B3)
4,000,000 9.63 02/01/2008 3,960,000
Printpack, Inc. (BB-/B3)
2,000,000 9.88(a) 08/15/2004 2,000,000
3,000,000 10.63 08/15/2006 2,880,000
-------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - (continued)
Psinet, Inc. (B-/B3)
$ 3,750,000 10.00% 02/15/2005 $ 3,956,250
1,000,000 11.50 11/01/2008 1,115,000
Purina Mills, Inc. (B/B2)
750,000 9.00 03/15/2010 656,250
PX Escrow Corp. (B-/B3)(b)
1,000,000 0.00/9.63 02/01/2006 610,000
R & B Falcon Corp. (B+/Ba3)
500,000 6.75 04/15/2005 420,000
Randalls Food Markets, Inc. (B-/B2)
3,500,000 9.38 07/01/2007 3,771,250
Red Roof Inns, Inc. (B/B2)
2,000,000 9.63 12/15/2003 2,030,000
Republic Group, Inc. (B/B2)
3,000,000 9.50 07/15/2008 3,075,000
Richmont Marketing Specialists (CCC/Caa1)(a)
1,000,000 10.13 12/15/2007 860,000
Riverwood International Corp. (CCC+/Caa1)
8,000,000 10.25 04/01/2006 8,200,000
4,500,000 10.88 04/01/2008 4,421,250
RSL Communications Ltd. (B-/B2)
2,257,000 12.25 11/15/2006 2,493,985
RSL Communications PLC (B-/B2)
1,250,000 9.13 03/01/2008 1,221,875
750,000 10.50 11/15/2008 787,500
Scotts Company (B+/B2)(a)
1,000,000 8.63 01/15/2009 1,036,250
Sealy Mattress Co. (B-/B3)
2,000,000 9.88 12/15/2007 2,010,000
1,500,000 0.00/10.88(b) 12/15/2007 975,000
SFX Entertainment, Inc. (CCC+/B3)
2,000,000 9.13 02/01/2008 2,065,000
Simonds Industries, Inc. (B-/B3)
750,000 10.25 07/01/2008 753,750
Southern Foods Group LP (B/B2)
5,000,000 9.88 09/01/2007 5,287,500
Sovereign Specialty Chemical (B-/B3)
5,500,000 9.50 08/01/2007 5,720,000
Spectrasite Holdings, Inc. (a)(b)
3,500,000 0.00/11.25 04/15/2009 2,047,500
Stanadyne Automotive Corp. (B/Caa1)
4,000,000 10.25 12/15/2007 3,850,000
Tekni-Plex, Inc. (B-/B3)
3,000,000 11.25 04/01/2007 3,270,000
3,000,000 9.25 03/01/2008 3,075,000
Telewest Communications PLC (B+/B1)
1,000,000 9.63 10/01/2006 1,060,000
13,500,000 0.00/11.00(b) 10/01/2007 12,048,750
5,000,000 11.25(a) 11/01/2008 5,912,500
Thermadyne Holdings Corp. (CCC+/Caa1)(b)
4,000,000 0.00/12.50 06/01/2008 2,040,000
Thermadyne Manufacturing LLC (CCC+/B3)
6,750,000 9.88 06/01/2008 6,446,250
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Bonds - (continued)
Transdigm, Inc. (B-/B3)(a)
$ 1,000,000 10.38% 12/01/2008 $ 1,010,000
Transwestern Publishing Co. (B-/B2)
3,000,000 9.63 11/15/2007 3,135,000
Trench Electric SA (B3)
5,000,000 10.25 12/15/2007 4,800,000
Trident Automotive PLC (B-/B2)
4,000,000 10.00 12/15/2005 4,140,000
Ucar Global Enterprises Inc. (B/B2)
3,000,000 12.00 01/15/2005 3,210,000
United Rentals, Inc. (BB-/B2)
5,000,000 9.50 06/01/2008 5,125,000
4,000,000 8.80 08/15/2008 3,960,000
Universal Hospital Services (B/B3)
1,000,000 10.25 03/01/2008 950,000
V2 Music Holdings PLC(a)(b)
1,750,000 0.00/14.00 04/15/2008 735,000
Venture Holdings Trust (B/B2)
4,000,000 9.50 07/01/2005 4,040,000
Verio, Inc. (B-/B3)(a)
1,500,000 11.25 12/01/2008 1,683,750
Viasystems, Inc. (B-/Caa1)
11,500,000 9.75 06/01/2007 10,695,000
Viatel, Inc (B-/Caa1)(a)
1,000,000 11.50 03/15/2009 1,065,000
Vintage Petroleum (B+/B1)(a)
1,500,000 9.75 06/30/2009 1,571,250
Volume Services (B-/B3)(a)
2,750,000 11.25 03/01/2009 2,915,000
WAM!Net, Inc. (CCC+)(b)
1,250,000 0.00/13.25 03/01/2005 625,000
Werner Holdings (B-/B2)
7,000,000 10.00 11/15/2007 7,157,500
Wesco Distribution, Inc. (B/B2)
9,250,000 9.13 06/01/2008 9,620,000
Wesco International, Inc. (B/B3)(b)
5,500,000 0.00/11.13 06/01/2008 3,795,000
WHX Corp. (B/B3)
2,500,000 10.50 04/15/2005 2,512,500
Williams Scotsman, Inc. (B-/B3)
3,000,000 9.88 06/01/2007 3,112,500
Willis Corroon Corp. (B+/Ba3)(a)
8,500,000 9.00 02/01/2009 8,606,250
Young Broadcasting, Inc. (B/B2)
5,000,000 8.75 06/15/2007 5,112,500
-------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $597,757,259) $ 598,327,554
-------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Emerging Market Debt - 3.5%
Cablevision S.A. (BB)(a)(j)
$ 1,000,000 13.75% 05/01/2009 $ 1,000,000
Republic of Brazil C-Bonds (B+/B2)(j)
2,689,380 8.00 04/15/2014 1,855,672
Financiera Energy Nacional (BBB-)
1,480,000 9.38 06/15/2006 1,346,800
Government of Poland (BBB-/Baa3)
380,000 3.00 10/27/2024 245,100
650,000 4.00 10/27/2024 448,500
MRS Logistica S.A. (B)(a)
120,000 10.63 08/15/2005 84,000
Multicanal S.A. (BB+/Ba3)(a)
1,000,000 13.13 04/15/2009 1,003,750
National Power Corp. (BB+)
500,000 7.63 11/15/2000 499,545
Petroleos Mexicanos (BB/Ba2)(d)
1,930,000 9.03 07/15/2005 1,847,975
Poland Communications, Inc. (B+/B2)
700,000 9.88 11/01/2003 658,000
Province of Tucuman (B1)(a)
982,143 9.45 08/01/2004 834,822
Republic of Argentina (BB/Ba3)
1,750,000 11.75 04/07/2009 1,811,250
Republic of Colombia (BBB-/Baa3)
930,000 7.25 02/15/2003 855,600
1,260,000 10.99(d) 08/13/2005 1,200,150
2,000,000 8.63 04/01/2008 1,815,000
Republic of Panama (BB+/Ba1)
4,400,000 9.38 04/01/2029 4,521,000
1,717,711 6.19(d) 05/14/2002 1,657,591
Republic of Philippines (BB+/Ba1)
1,570,000 8.88 04/15/2008 1,597,475
United Mexican States (BB/Ba2)(d)
4,680,000 6.25 12/31/2019 3,714,750
------------------------------------------------------------------------------------------
TOTAL EMERGING MARKET DEBT
(Cost $26,779,490) $ 26,996,980
------------------------------------------------------------------------------------------
Foreign Debt Obligations(c) - 11.4%
British Pound Sterling - 4.9%
Coral Group Holdings PLC (B-/B3)(a)
BPS 1,500,000 10.00% 02/15/2009 $ 2,476,392
Coral Group Holdings PLC(a)
2,000,000 13.50 09/30/2009 3,297,835
IPC Magazines Group PLC (B/B2)
7,000,000 9.63 03/15/2008 7,978,146
Luxfer Holdings PLC (B/B2)
1,750,000 10.13 05/01/2009 2,794,111
Polestar Corp PLC (B/B2)
3,000,000 10.50 05/30/2008 4,910,556
Telewest Communications PLC (B+/B1)
12,750,000 0.00/9.88(b) 04/15/2009 13,280,823
William Hill Finance PLC (B-/B3)
1,500,000 10.63 04/30/2008 2,606,094
------------
$ 37,343,957
------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Foreign Debt Obligations - (continued)
Euro Currency - 6.5%
Colt Telecom Group PLC (B/B1)
EUR 5,000,000 8.88% 11/30/2007 $ 2,903,192
Derby Cycle Corp. (B/B3)
6,500,000 9.38 05/15/2008 3,054,428
Dolphin Telecom PLC (Caa1)(b)
1,000,000 0.00/11.63 06/01/2008 586,302
Exide Holdings (B/B1)(a)
5,000,000 9.13 04/15/2004 2,727,651
Financiere Neopost S.A.(a)(d)
25,000,000 5.92 09/30/2007 3,965,786
Fresenius Medical Care Capital Trust III (B+/Ba3)
5,000,000 7.38 02/01/2008 2,869,434
Geberit International S.A. (B+/B2)
11,600,000 10.13 04/15/2007 7,205,318
Impress Metal Packaging Holdings (B/B2)
10,000,000 9.88 05/29/2007 6,049,443
Ineos PLC (B+/B3)
9,000,000 8.63 04/30/2005 4,824,701
Jazztel PLC (Caa2)(a)
2,000,000 14.00 04/01/2009 2,176,184
Ono Finance PLC (CCC+/Caa1)
4,000,000 13.00 05/01/2009 4,225,601
RSL Communications PLC (B-/B2)(b)
2,000,000 0.00/10.00 03/15/2008 699,467
Sirona Dental Systems (B/B2)
7,000,000 9.13 07/15/2008 3,988,851
Texon International PLC (B/B3)(a)
4,500,000 10.00 02/01/2008 2,266,516
Viatel, Inc. (B-/Caa1)(a)
2,000,000 11.50 03/15/2009 2,260,696
-----------
$49,803,570
----------------------------------------------------------------------------------------
TOTAL FOREIGN DEBT OBLIGATIONS
(Cost $89,089,749) $87,147,527
----------------------------------------------------------------------------------------
Repurchase Agreement(e) - 2.7%
Joint Repurchase Agreement Account
$20,700,000 4.95% 05/03/1999 $20,700,000
----------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $20,700,000) $20,700,000
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Dividend Maturity
Shares Rate Date Value
<S> <C> <C> <C>
Preferred Stocks - 2.8%
CSC Holdings, Inc. (B+)(f)
54,820 11.75% 10/01/2007 $ 6,359,120
56,534 11.13 04/01/2008 6,586,204
Eagle-Picher Holdings, Inc. (CCC+)(b)(f)(g)
200 0.00/11.75 03/01/2008 1,010,000
Global Crossing Holdings Ltd. (B)
12,500 10.50 12/01/2008 1,450,000
Intermedia Communications, Inc. (CCC)(f)
1,217 13.50 03/31/2009 1,314,360
Nextel Communications, Inc. (CCC)(f)
1,250 11.13 02/15/2010 1,401,563
Packaging Corp. of America (B-)(f)
25,000 12.38 04/01/2010 2,600,000
River Holding Corp.(f)
4,203 11.50 04/15/2010 313,649
--------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $19,114,620) $ 21,034,896
--------------------------------------------------------------------------------------
<CAPTION>
Shares Value
<S> <C> <C> <C>
Warrants(g) - 0.3%
Allegiance Telecom, Inc., expiring February 3, 2008
1,500 $ 7,500
Cellnet Data Systems, Inc., expiring October 1, 2007
3,000 15,000
Colt Telecom Group PLC, expiring December 31, 2006
3,500 1,955,695
Econophone, Inc., expiring July 15, 2007(a)
2,000 100,000
Knology Holdings, Inc., expiring October 15, 2007
1,750 8,750
Pathnet, Inc., expiring April 15, 2008
1,875 18,750
RSL Communications Ltd., expiring November 15, 2006
725 90,625
WAM!Net, Inc., expiring March 1, 2005
3,750 30,000
--------------------------------------------------------------------------------------
TOTAL WARRANTS
(Cost $40,000) $ 2,226,320
--------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $753,481,118)(h) $ 756,433,277
--------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
------------------------------------------------------------------------------
Federal Income Tax Information:
<TABLE>
<S> <C>
Gross unrealized gain for investments in which value exceeds
cost $ 22,180,965
Gross unrealized loss for investments in which cost exceeds
value (19,228,806)
----------------------------------------------------------------------------
Net unrealized gain $ 2,952,159
----------------------------------------------------------------------------
</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 $136,461,855 as of April
30, 1999.
(b) These securities are issued with a zero coupon or dividend rate 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.
EUR = Euro currency.
(d) Variable rate security. Coupon rate disclosed is that which is in effect
at April 30, 1999.
(e) A portion of this security is segregated for open trades and when-issued
securities.
(f) Pay-in-kind securities.
(g) Non-income producing security.
(h) The amount stated also represents aggregate cost for federal tax
purposes.
(i) When-issued security.
(j) Coupon consists of 5% cash payment and 3% paid-in-kind securities.
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.
11
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Assets and Liabilities
April 30, 1999 (Unaudited)
Assets:
<TABLE>
<S> <C>
Investment in securities, at value (identified cost
$753,481,118) $756,433,277
Receivables:
Investment securities sold 489,920
Interest, at value 16,300,046
Fund shares sold 828,334
Forward foreign currency exchange contracts 3,523,010
Reimbursement from investment adviser 25,217
Deferred organization expenses, net 20,938
Other assets 186,519
----------------------------------------------------------------------------
Total assets 777,807,261
----------------------------------------------------------------------------
Liabilities:
Due to bank 226,664
Payables:
Investment securities purchased 10,002,373
Income distribution 1,182,927
Fund shares repurchased 825,313
Amounts owed to affiliates 670,742
Forward foreign currency exchange contracts 294,305
Accrued expenses and other liabilities 102,522
----------------------------------------------------------------------------
Total liabilities 13,304,846
----------------------------------------------------------------------------
Net Assets:
Paid-in capital 762,752,703
Accumulated undistributed net investment income 3,886,758
Accumulated net realized loss on investment and foreign
currency related transactions (8,348,403)
Net unrealized gain on investments and translation of assets
and liabilities denominated in foreign currencies 6,211,357
----------------------------------------------------------------------------
NET ASSETS $764,502,415
----------------------------------------------------------------------------
Net asset value, offering and redemption price per share(a)
Class A $9.89
Class B $9.89
Class C $9.88
Institutional $9.89
Service $9.90
----------------------------------------------------------------------------
Shares outstanding:
Class A 52,743,208
Class B 4,005,678
Class C 1,210,003
Institutional 19,319,239
Service 36,494
----------------------------------------------------------------------------
Total shares outstanding, $.001 par value (unlimited number of
shares authorized) 77,314,622
----------------------------------------------------------------------------
</TABLE>
(a) Maximum public offering price per share (NAV per share multiplied by
1.0471) for Class A shares is $10.36. At redemption, Class B and Class C
shares may be subject to a contingent 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.
12
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statement of Operations
For the Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<S> <C>
Investment income:
Interest(a) $33,694,408
----------------------------------------------------------------------------
Total income 33,694,408
----------------------------------------------------------------------------
Expenses:
Management fees 2,316,685
Distribution and service fees(b) 812,760
Transfer agent fees(c) 521,859
Custodian fees 96,622
Registration fees 65,451
Professional fees 30,454
Trustee fees 5,334
Service share fees 1,292
Amortization of deferred organization expenses 3,189
Other 41,750
----------------------------------------------------------------------------
Total expenses 3,895,396
----------------------------------------------------------------------------
Less -- expenses reimbursed by Goldman Sachs (163,371)
----------------------------------------------------------------------------
Net Expenses 3,732,025
----------------------------------------------------------------------------
NET INVESTMENT INCOME 29,962,383
----------------------------------------------------------------------------
Realized and unrealized gain (loss) on investment and foreign
currency transactions:
Net realized gain (loss) from:
Investment transactions (4,025,754)
Foreign currency related transactions 1,419,230
Net change in unrealized loss on:
Investments 42,302,360
Translation of assets and liabilities denominated in foreign
currencies 5,769,819
----------------------------------------------------------------------------
Net realized and unrealized gain on investment and foreign
currency transactions: 45,465,655
----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $75,428,038
----------------------------------------------------------------------------
</TABLE>
(a) Taxes withheld on dividends were $9,910.
(b) Class A, Class B and Class C had distribution and service fees of
$594,585, $170,478 and $47,697, respectively.
(c) Class A, Class B, Class C, Institutional Class and Service Class had
transfer agent fees of $451,884, $32,391, $9,063, $28,418 and $103,
respectively.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31, 1998
1999
(Unaudited)
<S> <C> <C>
From operations:
Net investment income $ 29,962,383 $ 36,398,084
Net realized loss from investment and
foreign currency related transactions (2,606,524) (6,342,487)
Net change in unrealized gain (loss) on
investments and translation of assets and
liabilities denominated in foreign
currencies 48,072,179 (40,457,626)
-----------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 75,428,038 (10,402,029)
-----------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A shares (20,480,638) (29,778,924)
Class B shares (1,341,775) (1,501,311)
Class C shares (374,648) (441,110)
Institutional shares (6,450,116) (2,125,426)
Service shares (22,076) (9,368)
-----------------------------------------------------------------------------
Total distributions to shareholders (28,669,253) (33,856,139)
-----------------------------------------------------------------------------
From share transactions:
Net proceeds from sales of shares 267,642,867 362,403,672
Reinvestment of dividends and distributions 21,368,220 23,077,475
Cost of shares repurchased (108,675,288) (141,829,404)
-----------------------------------------------------------------------------
Net increase in net assets resulting from
share transactions 180,335,799 243,651,743
-----------------------------------------------------------------------------
TOTAL INCREASE 227,094,584 199,393,575
-----------------------------------------------------------------------------
Net assets:
Beginning of period 537,407,831 338,014,256
-----------------------------------------------------------------------------
End of period $764,502,415 $537,407,831
-----------------------------------------------------------------------------
Accumulated undistributed net investment
income $ 3,886,758 $ 2,593,628
-----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Notes to Financial Statements
April 30, 1999 (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 invests 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 prospects for reaching investment grade standing. Non-investment
grade fixed-income securities and unrated securities of comparable credit
quality (commonly known as "junk bonds") are subject to the increased risk of
an issuer's inability to meet principal and interest obligations. These secu-
rities, also referred to as high yield securities, may be subject to greater
price volatility due to such factors as specific corporate developments, in-
terest rate sensitivity, negative perceptions of the junk bond markets gener-
ally 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. Actual results
could differ from estimates and assumptions.
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 as of the trade date. Realized gains and losses on sales of portfo-
lio securities are calculated using the identified cost basis. Interest in-
come is recorded on the basis of interest accrued. Market discounts and
market premiums on debt securities, other than mortgage backed securities,
are amortized to interest income over the life of the security with a corre-
sponding adjustment in the cost basis of that security.
C. Federal Taxes -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute each year substantially all of its investment company taxable
income and capital gains to its shareholders. Accordingly, no federal tax
provision is required.
The characterization of distributions to shareholders for financial report-
ing purposes is determined in accordance with income tax rules. Therefore,
the source of the 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 book/tax differences that may exist.
The Fund, at its most recent tax year-end of October 31, 1998 had approxi-
mately $5,746,000 capital loss carryforwards expiring in 2006 for U.S. fed-
eral tax purposes. This amount is available to be carried forward to offset
future capital gains to the extent permitted by applicable laws or regula-
tions.
15
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Notes to Financial Statements (continued)
April 30, 1999 (Unaudited)
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 Fund bear all expenses and
fees relating to their respective Distribution and Service Plans. Sharehold-
ers of Service shares bear all expenses and fees paid to service organiza-
tions. Each class of shares 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 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) gains and losses from the sale and holdings of foreign
currencies and sale of investments; (ii) gains and losses between trade date
and settlement date on investment securities transactions and forward ex-
change contracts; and (iii) gains and losses from the difference between
amounts of interest and foreign withholding taxes recorded and the amounts
actually received.
G. 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.
H. 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 an amount of cash or securities equal to the minimum "initial mar-
gin" requirement of the associated futures exchange. Subsequent payments for
futures contracts ("variation margin") are paid or received by the Fund dai-
ly, dependent on the daily fluctuations in the value of the contracts, and
are recorded for financial reporting purposes as unrealized gains or losses.
When contracts are closed, the Fund realizes a gain or loss which is reported
in the Statement of Operations.
The use of futures contracts involve, to varying degrees, elements of mar-
ket and counterparty risk which may exceed the amounts recognized in the
Statement of Assets and Liabilities. Changes in the value of the futures con-
tract 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.
16
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
I. Option Accounting Principles -- Upon the purchase of a call option or a
protective put option by the Fund, the premium paid is recorded as an invest-
ment 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 stipu-
lated 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.
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.
GSAM has voluntarily agreed to limit "Other Expenses" for the Fund (exclud-
ing management fees, Service share fees, distribution and services fees, tax-
es, interest, brokerage, litigation, indemnification costs, transfer agent
fees and other extraordinary expenses) to the extent such expenses exceeded
.02% of the average daily net assets of the Fund. For the period ended April
30, 1999, Goldman Sachs reimbursed approximately $163,000.
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 Fund that it retained approximately $724,000 for the period ended
April 30, 1999.
The Trust, on behalf of the Fund, has adopted Distribution and Service
Plans. Under the Distribution and Service Plans, Goldman Sachs and or Autho-
rized Dealers are entitled to a monthly fee for distribution and shareholder
maintenance services equal, on an annual basis, to .25%, 1.00% and 1.00% of
the average daily net assets attributable to Class A, Class B and Class C
shares, respectively.
Goldman Sachs also serves as the Transfer Agent of the Fund for a fee. Fees
charged for such transfer agency services are calculated daily and payable
monthly at an annual rate as follows: .19% of average daily net assets for
Class A, Class B and Class C shares and .04% of average daily net assets for
Institutional and Service Class shares.
The Trust, on behalf of the Fund, has adopted a Service Plan. This plan al-
lows for Service shares to compensate service organizations for providing va-
rying levels of account administration and shareholder liaison services to
their customers who are beneficial owners of such shares. The Service Plan
provides for compensation to the service organizations in an amount up to
.50% (on an annualized basis), of the average daily net asset value of the
Service shares.
At April 30, 1999, the Fund owed approximately $430,000, $147,000 and
$94,000 for Management, Distribution and Service and Transfer Agent Fees, re-
spectively.
17
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Notes to Financial Statements (continued)
April 30, 1999 (Unaudited)
4. PORTFOLIO SECURITIES TRANSACTIONS
Purchase and proceeds of sales or maturities of long-term securities for the
six months ended April 30, 1999, were $407,880,269 and $207,665,262, respec-
tively.
At April 30, 1999, the Fund had outstanding forward foreign currency ex-
change contracts as follows:
<TABLE>
<CAPTION>
Open Foreign Currency Value on Unrealized Unrealized
Purchase Contracts Settlement Date Current Value Gain Loss
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Euro Currency
expiring 11/1/1999 $ 1,882,428 $ 1,711,107 $ -- $171,321
----------------------------------------------------------------------------
TOTAL OPEN FOREIGN CUR-
RENCY PURCHASE
CONTRACTS $ 1,882,428 $ 1,711,107 $ -- $171,321
----------------------------------------------------------------------------
<CAPTION>
Open Foreign Currency Value on Unrealized Unrealized
Sale Contracts Settlement Date Current Value Gain Loss
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
British Pound
expiring 6/1/1999 $ 5,175,143 $ 5,077,648 $ 97,495 $ --
expiring 8/16/1999 112,539 113,197 -- 658
expiring 9/15/1999 3,925,896 3,911,456 14,440 --
expiring 11/1/1999 42,795 42,698 97 --
expiring 11/1/1999 243,771 245,212 -- 1,441
expiring 2/15/2000 120,075 120,579 -- 504
expiring 3/15/2000 293,316 290,156 3,160 --
expiring 5/2/2000 892,305 889,376 2,929 --
expiring 5/2/2000 1,919,767 1,921,205 -- 1,438
expiring 6/30/2000 1,901,924 1,893,646 8,278 --
expiring 6/30/2000 1,880,786 1,893,648 -- 12,862
expiring 8/15/2000 2,527,088 2,532,912 -- 5,824
expiring 9/15/2000 5,174,941 5,115,095 59,846 --
expiring 10/18/2000 14,808,258 14,764,896 43,362 --
expiring 11/1/2000 2,937,154 2,957,222 -- 20,068
Euro Currency
expiring 9/15/1999 123,725 119,876 3,849 --
expiring 10/1/1999 146,598 143,608 2,990 --
expiring 3/15/2000 885,767 858,416 27,351 --
expiring 4/3/2000 154,441 151,370 3,071 --
expiring 6/1/2000 670,267 653,493 16,774 --
expiring 9/15/2000 2,445,799 2,375,654 70,145 --
expiring 10/2/2000 2,389,952 2,342,874 47,078 --
French Franc
expiring 5/4/1999 4,676,705 4,154,261 522,444 --
Deutsche Mark
expiring 5/3/1999 51,559 49,803 1,756 --
expiring 5/17/1999 181,208 164,755 16,453 --
expiring 6/1/1999 7,479,650 7,090,572 389,078 --
expiring 7/15/1999 179,365 173,369 5,996 --
expiring 8/2/1999 5,551,395 5,334,956 216,439 --
expiring 10/15/1999 10,596,656 9,388,005 1,208,651 --
expiring 11/1/1999 7,147,403 6,844,432 302,971 --
expiring 11/15/1999 3,543,714 3,250,977 292,737 --
expiring 11/29/1999 1,869,812 1,821,423 48,389 --
expiring 1/18/2000 4,141,603 4,024,372 117,231 --
----------------------------------------------------------------------------
TOTAL OPEN FOREIGN CUR-
RENCY SALE CONTRACTS $94,191,377 $90,711,162 $3,523,010 $ 42,795
----------------------------------------------------------------------------
</TABLE>
18
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
<TABLE>
<CAPTION>
Closed but Unsettled Realized Realized
Forward Currency Contracts Purchase Value Sale Value Gain Loss
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deutsche Mark
expiring 8/2/1999 $1,258,442 $1,178,253 $ -- $80,189
----------------------------------------------------------------------------
TOTAL CLOSED BUT UNSETTLED FOR-
WARD CURRENCY
CONTRACTS $1,258,442 $1,178,253 $ -- $80,189
----------------------------------------------------------------------------
</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,
1999, 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 unsettled" forward foreign currency ex-
change contracts of $3,523,010 and $294,305, respectively, in the
accompanying Statement of Assets and Liabilities.
5. 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.
6. 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. At April 30, 1999, the Fund had an undivided interest in the repur-
chase agreement in the following joint account which equaled $20,700,000 in
principal amount. At April 30, 1999, the following repurchase agreements held
in this joint account were fully collateralized by Federal Agency obliga-
tions.
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Repurchase Agreements Amount Rate Date Cost
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Morgan Stanley Dean Witter &
Co. $500,000,000 4.94% 05/03/1999 $ 500,000,000
------------------------------------------------------------------------------
NationsBanc Montgomery
Securities LLC 525,000,000 4.95 05/03/1999 525,000,000
------------------------------------------------------------------------------
Salomon Smith Barney
Holdings, Inc. 518,800,000 4.95 05/03/1999 518,800,000
------------------------------------------------------------------------------
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT $1,543,800,000
------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Notes to Financial Statements (continued)
April 30, 1999 (Unaudited)
8. LINE OF CREDIT FACILITY
The Fund participated in a $250,000,000 uncommitted and a $50,000,000 commit-
ted, unsecured revolving line of credit facility. Under the most restrictive
arrangement, the Fund must have owned securities having a market value in ex-
cess of 300% of the total bank borrowings. Effective April 30, 1999, the Fund
now participates in a $250,000,000 uncommitted and a $250,000,000 committed,
unsecured revolving line of credit facility. Under the most restrictive ar-
rangement, the Fund must own securities having a market value in excess of
400% of the total bank borrowings. These facilities are to be used solely for
temporary or emergency purposes. The interest rate on borrowings is based on
the federal funds rate. The committed facility also requires a fee to be paid
by the Fund based on the amount of the commitment which has not been uti-
lized. During the six months ended April 30, 1999, the Fund did not have any
borrowings under any of these facilities.
20
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
9. SUMMARY OF SHARE TRANSACTIONS
Share activity for the six months ended April 30, 1999 (unaudited) and the
year ended October 31, 1998 is as follows:
<TABLE>
<CAPTION>
For the Six Months For the Year Ended
Ended April 30, 1999 October 31, 1998
---------------------------------------------------
Shares Dollars Shares Dollars
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares
Shares sold 15,131,299 $145,762,817 20,547,277 $ 201,740,256
Reinvestment of
dividends and
distributions 1,613,656 15,708,165 2,130,085 21,255,656
Shares repurchased (7,835,004) (75,790,915) (11,530,271) (111,870,637)
---------------------------------------------------
8,909,951 85,680,067 11,147,091 111,125,275
------------------------------------------------------------------------------
Class B Shares
Shares sold 1,247,137 12,068,679 2,759,954 27,841,336
Reinvestment of
dividends and
distributions 77,372 753,452 81,407 806,446
Shares repurchased (511,255) (4,917,274) (682,765) (6,734,611)
---------------------------------------------------
813,254 7,904,857 2,158,596 21,913,171
------------------------------------------------------------------------------
Class C Shares
Shares sold 969,414 9,385,910 1,861,343 18,919,754
Reinvestment of
dividends and
distributions 25,151 244,710 29,086 287,624
Shares repurchased (716,179) (6,895,131) (1,138,437) (11,521,691)
---------------------------------------------------
278,386 2,735,489 751,992 7,685,687
------------------------------------------------------------------------------
Institutional Shares
Shares sold 10,353,414 100,285,588 11,706,944 113,387,326
Reinvestment of
dividends and
distributions 476,359 4,647,390 75,487 720,684
Shares repurchased (2,147,729) (20,794,659) (1,145,389) (11,673,396)
---------------------------------------------------
8,682,044 84,138,319 10,637,042 102,434,614
------------------------------------------------------------------------------
Service Shares
Shares sold 14,399 139,873 51,049 515,000
Reinvestment of
dividends and
distributions 1,489 14,503 743 7,065
Shares repurchased (28,130) (277,309) (3,209) (29,069)
---------------------------------------------------
(12,242) (122,933) 48,583 492,996
------------------------------------------------------------------------------
NET INCREASE 18,671,393 $180,335,799 24,743,304 $ 243,651,743
------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income (loss) from
investment operations(a) Distributions to shareholders
------------------------------- --------------------------------
Net realized
and unrealized
Net asset gain (loss) on Net increase
value, Net investment and From In excess of (decrease)
beginning investment foreign currency net investment net investment in net
of period income related transactions income income asset value
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
1999 - Class A Shares $ 9.16 $0.42 $0.72 $ (0.41) $ -- $ 0.73
1999 - Class B Shares 9.16 0.39 0.72 (0.38) -- 0.73
1999 - Class C Shares 9.16 0.38 0.72 (0.38) -- 0.72
1999 - Institutional
Shares 9.17 0.43 0.72 (0.43) -- 0.72
1999 - Service Shares 9.17 0.43 0.71 (0.41) -- 0.73
FOR THE YEAR ENDED OCTOBER 31,
1998 - Class A Shares 9.97 0.82 (0.85) (0.78) -- (0.81)
1998 - Class B Shares 9.97 0.75 (0.86) (0.70) -- (0.81)
1998 - Class C Shares 9.97 0.75 (0.86) (0.70) -- (0.81)
1998 - Institutional
Shares 9.97 0.84 (0.83) (0.81) -- (0.80)
1998 - Service Shares 9.97 0.80 (0.84) (0.76) -- (0.80)
FOR THE PERIOD ENDED OCTOBER 31,
1997 - Class A Shares
(commenced August 1) 10.00 0.17 (0.02) (0.17) (0.01) (0.03)
1997 - Class B Shares
(commenced August 1) 10.00 0.15 (0.02) (0.15) (0.01) (0.03)
1997 - Class C Shares
(commenced August 15) 9.97 0.14 0.01 (0.14) (0.01) --
1997 - Institutional
Shares (commenced Au-
gust 1) 10.00 0.18 (0.02) (0.18) (0.01) (0.03)
1997 - Service Shares
(commenced August 1) 10.00 0.17 (0.02) (0.17) (0.01) (0.03)
------------------------------------------------------------------------------------------------------------------
</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.
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
GOLDMAN SACHS HIGH YIELD FUND
<TABLE>
<CAPTION>
Ratios assuming
no voluntary waiver of fees
or expense limitations
-------------------------------------
Ratio of Ratio of
Net assets Ratio of net investment Ratio of net investment
Net asset at end of net expenses income expenses to income Portfolio
value, end Total period to average to average average to average turnover
of period return(b) (in 000s) net assets net assets net assets net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$9.89 12.64%(d) $521,425 1.16%(c) 9.01%(c) 1.21%(c) 8.96%(c) 33.33%(d)
9.89 12.23(d) 39,608 1.91(c) 8.25(c) 1.96(c) 8.20(c) 33.33(d)
9.88 12.12(d) 11,954 1.91(c) 8.17(c) 1.96(c) 8.12(c) 33.33(d)
9.89 12.74(d) 191,154 0.76(c) 9.44(c) 0.81(c) 9.39(c) 33.33(d)
9.90 12.58(d) 361 1.26(c) 8.90(c) 1.31(c) 8.85(c) 33.33(d)
9.16 (0.70) 401,626 1.09 8.25 1.36 7.98 113.44
9.16 (1.43) 29,256 1.84 7.61 1.88 7.57 113.44
9.16 (1.43) 8,532 1.84 7.61 1.88 7.57 113.44
9.17 (0.32) 97,547 0.84 9.47 0.88 9.43 113.44
9.17 (0.79) 447 1.34 9.17 1.38 9.13 113.44
9.97 1.50(d) 325,911 0.95(c) 7.06(c) 1.57(c) 6.44(c) 44.80(d)
9.97 1.31(d) 10,308 1.70(c) 6.28(c) 2.07(c) 5.91(c) 44.80(d)
9.97 1.46(d) 1,791 1.70(c) 6.17(c) 2.07(c) 5.80(c) 44.80(d)
9.97 1.58(d) 2 0.70(c) 7.16(c) 1.07(c) 6.79(c) 44.80(d)
9.97 1.46(d) 2 1.20(c) 6.69(c) 1.57(c) 6.32(c) 44.80(d)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<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' 130-year history of excellence while benefiting from the firm's
leadership in three areas:
Global Resources
With professionals based throughout the Americas, Europe and Asia, Goldman Sachs
possesses first-hand knowledge of the world's markets and economies.
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.
Risk Management
Goldman, Sachs & Co. excels in understanding, monitoring and managing investment
risk -- a process that is integrated into all Goldman Sachs investment products.
Goldman Sachs High Yield Fund offers investors access to a potentially
attractive risk/reward profile. The Fund seeks a high level of current income
and, secondarily, capital appreciation, primarily through fixed income
securities rated, at the time of investment, 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.*
(Please note: in general, greater returns are associated with greater risk.)
Goldman Sachs Fixed Income Funds
------------------
HIGHER RISK/RETURN
------------------
HIGH YIELD
. High Yield Fund
TAXABLE
. Global Income Fund
. Core Fixed Income Fund
. Government Income Fund
. Short Duration Government Fund
. Adjustable Rate Government Fund
TAX-FREE
. Municipal Income Fund
. Short Duration Tax-Free Fund
- -----------------
LOWER RISK/RETURN
- -----------------
For More Information
To learn more about the Goldman Sachs High Yield Fund and other Goldman Sachs
Funds, call your investment professional today.
*The exchange privilege is subject to termination and its terms are subject to
change.
<PAGE>
GOLDMAN SACHS ASSET MANAGEMENT 32 OLD SLIP, 17TH FLOOR, NEW YORK, NEW YORK 10005
TRUSTEES OFFICERS
Ashok N. Bakru, Chairman Douglas C. Grip, President
David B. Ford Jesse H. Cole, Vice President
Douglas H. Grip James A. Fitzpatrick, Vice President
John P. McNulty Anne E. Marcel, Vice President
Mary P. McPherson John M. Perlowski, Treasurer
Alan A. Shuch Adrien E. Deberghes, Jr., Assitant Treasurer
Jackson W. Smart, Jr. Philip V. Giuca, Jr., Assistant Treasurer
William H. Springer Michael J. Richman, Secretary
Richard P. Strubel Howard B. Surloff, 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.
Goldman, Sachs & Co. is the distributor of the Fund.
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 form 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.
Copyright 1999 Goldman, Sachs & Co. All rights reserved. Date of first use: June
30, 1999
FI/HYSAR/13.5K/6-99
