EX-99.17.P

EX-99.17.P 24 e27325exv99w17wp.htm EX-99.17.P: GOLDMAN SACHS ANNUAL REPORT EX-99.17.P

Goldman Sachs Funds


SHORT DURATION TAXABLE FIXED INCOME FUNDS	Annual Report October 31, 2006


		Current income potential from portfolios that invest in a variety of fixed income securities.

Goldman Sachs Short Duration Taxable Fixed Income Funds


n	GOLDMAN SACHS ENHANCED INCOME FUND

n	GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND

n	GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND

The Goldman Sachs Enhanced Income Fund is not a money market fund. Investors in this Fund should understand that the net asset value of the Fund will fluctuate, which may result in a loss of the principal amount invested. Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk. The Fund may make substantial investments in derivative instruments, including options, financial futures, Eurodollar futures contracts, swaps, options on swaps, structured securities and other derivative investments. Derivative instruments may involve a high degree of financial risk. These risks include the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument; risks of default by a counterparty; and the risks that transactions may not be liquid.

The Goldman Sachs Ultra-Short Duration Government Fund is not a money market fund. Investors in this Fund should understand that the net asset value of the Fund will fluctuate, which may result in a loss of the principal amount invested. The Fund’s net asset value and yield are not guaranteed by the U.S. government or by its agencies, instrumentalities or sponsored enterprises. Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk. The guarantee on U.S. government securities applies only to the underlying securities of the Fund if held to maturity and not to the value of the Fund’s shares. The Fund’s investments in mortgage-backed securities are subject to prepayment risks. These risks may result in greater share price volatility. The Fund may make substantial investments in derivative instruments, including options, financial futures, Eurodollar futures contracts, swaps, options on swaps, structured securities and other derivative investments. Derivative instruments may involve a high degree of financial risk. These risks include the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument; risks of default by a counterparty; and the risks that transactions may not be liquid.

The Goldman Sachs Short Duration Government Fund is not a money market fund. Investors in this Fund should understand that the net asset value of the Fund will fluctuate, which may result in a loss of the principal amount invested. The Fund’s net asset value and yield are not guaranteed by the U.S. government or by its agencies, instrumentalities or sponsored enterprises. Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk. The guarantee on U.S. government securities applies only to the underlying securities of the Fund if held to maturity and not to the value of the Fund’s shares. The Fund’s investments in mortgage-backed securities are subject to prepayment risks. These risks may result in greater share price volatility. The Fund may make substantial investments in derivative instruments, including options, financial futures, Eurodollar futures contracts, swaps, options on swaps, structured securities and other derivative investments. Derivative instruments may involve a high degree of financial risk. These risks include the risk that a small movement in the price of the underlying security or benchmark may result in a disproportionately large movement, unfavorable or favorable, in the price of the derivative instrument; risks of default by a counterparty; and the risks that transactions may not be liquid.



NOT FDIC-INSURED	May Lose Value	No Bank Guarantee

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

What Distinguishes Goldman Sachs’
Fixed Income Investment Process?

At Goldman Sachs Asset Management (“GSAM”), the goal of our fixed income investment process is to provide consistent, strong performance by actively managing our portfolios within a research-intensive, risk-managed framework.

A key element of our fixed income investment philosophy is to evaluate the broadest opportunity set to capture relative value across sectors and instruments. Our integrated investment process involves managing dynamically along the risk/return spectrum, as we continue to develop value-added strategies through:


	n	Assess relative value among sectors (such as mortgages and corporates) and sub-sectors
	n	Leverage the vast resources of Goldman Sachs in selecting securities for each portfolio


	n	Team approach to decision making
	n	Manage risk by avoiding significant sector and interest rate bets
	n	Careful management of yield curve strategies — while closely managing portfolio duration

Fixed Income portfolios that:


	n	Include domestic investment options, income opportunities, and access to areas of specialization
	n	Capitalize on GSAM’s industry-renowned credit research capabilities
	n	Use a risk-managed framework to seek total return, recognizing the importance of investors’ capital accumulation goals as well as their need for income

PORTFOLIO RESULTS

Enhanced Income Fund

Dear Shareholder,

This report provides an overview on the performance of the Goldman Sachs Enhanced Income Fund during the one-year reporting period that ended October 31, 2006.

Performance Review


	Over the one-year period that ended October 31, 2006, the Fund’s Class A, Institutional and Administration Shares generated cumulative total returns, without sales charges, of 4.26%, 4.66% and 4.29%, respectively. These returns compare to the 4.65% and 4.33% cumulative total returns of the Fund’s benchmarks, the Six-Month U.S. Treasury Bill Index and the One-Year U.S. Treasury Note Index, respectively, over the same time period.

	A combination of top-down and bottom-up strategies impacted the Fund’s performance relative to its benchmarks over the period. Top-down strategies included our duration positioning and cross-sector strategies. The Fund held a short duration position over the period in anticipation of higher interest rates. This strategy helped enhance relative results as interest rates rose meaningfully. Cross-sector strategies also lent support to the Fund’s performance versus its benchmarks. Within our cross-sector strategies, the Fund continued to emphasize shorter-term, higher credit quality securities. The Fund’s exposures were primarily to the agency, corporate and asset-backed sectors, which all performed well over the period, contributing to performance relative to the benchmarks. However, within our bottom-up strategies, selection of specific securities across the various sectors had a mixed impact on relative performance. Due to its focus on high quality, the Fund did not benefit from the rally of lower credit quality securities over the period. In addition, the Fund’s holdings of Treasury Inflation Protected Securities (“TIPS”) and select asset-backed auto securities modestly detracted from the Fund’s performance relative to its benchmarks. Offsetting this was the positive impact from our continued emphasis on short-dated agency securities.

Market Review

A number of continuing themes characterized the 12-month period that ended October 31, 2006. The Federal Reserve Board (the “Fed”) continued to raise interest rates in six more 25 basis point moves, bringing the targeted federal funds rate to 5.25%. Following the hike in rates, yields rose across the Treasury curve. However, short-term yields rose more dramatically than did long-term yields, leading to a further flattening of the yield curve. In the early part of the period, there was a rise in consumer confidence as well as strong manufacturing data. The latter half of the period was characterized by a slowdown in the housing market and moderating commodity prices which lessened inflationary concerns and prompted the Fed to pause its tightening policy. Credit spreads also continued to tighten over the reporting period, as the 10-year Treasury yield rose five basis points, ending the period at 4.60%. Investment grade sectors continued to post strong performance relative to Treasuries over the reporting period, with the mortgage sector generating the best results. Credit spreads also tightened, supported by strong fundamentals and continued corporate profit growth.

PORTFOLIO RESULTS

Investment Objective


	The Fund seeks to generate return in excess of traditional money market products while maintaining an emphasis on preservation of capital and liquidity.

	It is important to note that the Fund is not a money market fund and its net asset value will fluctuate.

Investment Strategies


	The Fund targets a duration of nine months, with diversified holdings in high credit quality sectors including U.S. Treasuries, agency, corporate, asset-backed and money market instruments. The Fund invests in securities with a minimum credit quality of “A” by a Nationally Recognized Statistical Rating Organization (“NRSRO”) at the time of purchase or, if unrated, determined by the investment adviser to be of comparable quality. Although securities held in this portfolio may have maturities greater than one year, the portfolio duration can be hedged to approximate the interest rate sensitivity of the 9-month Treasury bill by investing in floating rate debt and through the use of interest rate futures contracts. The Fund uses derivatives, including, but not limited to, Treasury futures, Eurodollar futures and swaps, primarily as a tool to manage interest rate exposure, volatility, term structure, convexity (the rate of change in the portfolio’s duration as yields change), and sector exposure. The Fund may also use derivatives to express our interest rate outlook.

	We believe that using derivatives, including both futures and swaps, in the portfolio has been an effective portfolio management tool. Futures have been efficiently employed to hedge duration (interest rate sensitivity) drift that may occur due to the passage of time, or changing interest rates. In addition, futures allowed us to optimize security selection by giving us the flexibility to select the most attractive securities for the portfolio, regardless of the securities’ maturity/duration. Finally, futures and swaps were important tools in implementing certain interest rate and spread views.

Portfolio Composition


	The Fund was defensively positioned for much of the reporting period, maintaining a short duration position, due to our belief that interest rates would move higher. The Fund continued to emphasize shorter-term, higher quality securities with the potential, we believed, to enhance results. The Fund’s largest exposure was to quasi-government securities, specifically agency debentures, where we have been finding value at the shorter end of the curve. Within governments, we implemented a position in TIPS, based on our outlook for inflation. The Fund’s exposure to the corporate sector was trimmed as we wait for more attractive security selection opportunities to emerge in that sector.

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

Goldman Sachs U.S. Fixed Income Management Team

November 21, 2006


	FUND BASICS

Enhanced Income Fund

as of October 31, 2006

PERFORMANCE REVIEW


				Six-Month			One-Year
November 1, 2005–	Fund Total Return			U.S. Treasury			U.S. Treasury			30-Day
October 31, 2006	(based on NAV)¹			Bill Index²			Note Index²			Standardized Yield³

Class A		4.26	%		4.65	%		4.33	%		4.43	%
Institutional		4.66			4.65			4.33			4.87
Administration		4.29			4.65			4.33			4.62


¹	The net asset value (NAV) represents the net assets of the class of the Fund (ex-dividend) divided by the total number of shares of the class outstanding. The Fund’s performance assumes the reinvestment of dividends and other distributions. The Fund’s performance does not reflect the deduction of any applicable sales charges.
²	The Six-Month U.S. Treasury Bill Index and One-Year U.S. Treasury Note Index, as reported by Merrill Lynch, do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an unmanaged index.
³	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 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.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS⁴


For the period ended 9/30/06	One Year			Five Years			Since Inception			Inception Date

Class A		2.46	%		1.91	%		3.04	%	8/2/00
Institutional		4.55			2.61			3.68		8/2/00
Administration		4.07			2.33			3.40		8/2/00


⁴	The Standardized Total Returns are average annual total returns as of the most recent calendar quarter-end. They assume reinvestment of all distributions at NAV. These returns reflect a maximum initial sales charge of 1.5% for Class A Shares. Because Institutional and Administration Shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns.

The returns represent past performance. Past performance does not guarantee future results. The Fund’s investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted above. Please visit our Web site at: www.goldmansachsfunds.com to obtain the most recent month-end returns. Performance reflects expense limitations in effect. In their absence, performance would be reduced. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

FUND BASICS

SECTOR ALLOCATION⁵

Percentage of Net Assets


⁵	The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. Short-term investments represent repurchase agreements. Figures in the above graph may not sum to 100% due to the exclusion of other assets and liabilities.

⁶	“Quasi-governments” include agency securities offered by companies such as Fannie Mae and Freddie Mac, which operate under a government charter. While they have to report to a government regulator, their assets are not explicitly guaranteed by the government and they otherwise operate like any other publicly traded company.

PORTFOLIO RESULTS

Ultra-Short Duration Government Fund

Dear Shareholder:

This report provides an overview on the performance of the Goldman Sachs Ultra-Short Duration Government Fund during the one-year reporting period that ended October 31, 2006.

Performance Review


	Over the one-year period that ended October 31, 2006, the Fund’s Class A, Institutional and Service Shares generated cumulative total returns, without sales charges, of 4.20%, 4.36% and 3.93%, respectively. These returns compare to the 4.65% and 4.33% cumulative total returns of the Fund’s benchmarks, the Six-Month U.S. Treasury Bill Index and the One-Year U.S. Treasury Note Index, respectively, over the same time period.
	A combination of top-down and bottom-up strategies impacted the Fund’s performance relative to its benchmarks over the period. Top-down strategies included our duration positioning and cross-sector strategies. The Fund held a short duration position over the period in anticipation of higher interest rates. This strategy helped enhance relative results as interest rates rose over the period. Cross-sector strategies also lent support to performance. In particular, the Fund’s exposures to the collateralized and government sectors contributed positively to the Fund’s performance relative to its benchmarks as investment grade sectors outperformed Treasuries over the period. Within our bottom-up strategies, security selection had a mixed impact on performance versus the Fund’s benchmarks. Within mortgages, we focused on securities with less sensitivity to changes in volatility. In particular, we favored seasoned 15-year pass-throughs, adjustable-rate mortgages (“ARMs”) and shorter duration collateralized mortgage obligations (“CMOs”). While these securities positively impacted performance, select commercial mortgage-backed securities (“CMBS”), as well as agency debentures underperformed. Treasury selection also detracted from the Fund’s performance relative to its benchmarks over the period. In particular, our selection of Treasury Inflation Protected Securities (“TIPS”) had an adverse impact on the Fund’s relative performance.

Market Review

A number of continuing themes characterized the 12-month period that ended October 31, 2006. The Federal Reserve Board (the “Fed”) continued to raise interest rates in six more 25 basis point moves, bringing the targeted federal funds rate to 5.25%. Following the hike in rates, yields sold off across the Treasury curve. However, short-term yields rose more dramatically than did long-term yields, leading to a further flattening of the yield curve. In the early part of the period, there was a rise in consumer confidence as well as strong manufacturing data. The latter half of the period was characterized by a slowdown in the housing market and moderating commodity prices which lessened inflationary concerns and prompted the Fed to pause its tightening policy. Credit spreads also continued to tighten over the reporting period, as the 10-year Treasury yield rose five basis points, ending the period at 4.60%. Investment grade sectors continued to post strong performance relative to Treasuries over the reporting period, with the mortgage sector generating the best results. Credit spreads also tightened, supported by strong fundamentals and continued corporate profit growth.

PORTFOLIO RESULTS

Investment Objective


	The Fund seeks a high level of current income, consistent with low volatility of principal.

Investment Strategies


	The Fund seeks to meet its objective by investing at least 80% of its net assets in U.S. government securities including securities representing an interest in or collateralized by adjustable rate and fixed rate mortgage loans. The Fund uses derivatives, including, but not limited to, Treasury futures, Eurodollar futures and swaps, primarily as a tool to manage interest rate exposure, volatility, term structure, convexity (the rate of change in the portfolio’s duration as yields change), and sector exposure. The Fund may also use derivatives to express our interest rate outlook.

	We believe that using derivatives, including both futures and swaps, in the portfolio has been an effective portfolio management tool. Futures have been efficiently employed to hedge duration (interest rate sensitivity) drift that may occur due to the passage of time, changing interest rates or changing mortgage durations. In addition, futures allowed us to optimize security selection by giving us the flexibility to select the most attractive securities for the portfolio, regardless of the securities’ maturity/duration. Finally, futures and swaps were important tools in implementing certain interest rate and spread views.

Portfolio Composition


	Over the period, the Fund continued to focus on security selection and sub-sector strategies across the collateralized and government sectors in an effort to enhance results. Within mortgages, the Fund’s primary exposures were to ARMs, CMOs, and pass-through sub-sectors. We tactically adjusted the Fund’s exposures to take advantage of changing relative opportunities within the market. For example, we eliminated the Fund’s allocation to quasi-government securities in favor of the mortgage sector as we found attractively priced securities within the pass-through and ARM subsectors. We also modestly decreased the Fund’s bias to home equity asset-backed securities, as valuations within the sector became less compelling. Within governments, we implemented a position in TIPS based on our outlook for inflation. We positioned the Fund defensively for much of the period and maintained a short duration position relative to the Index. This was due to our belief that interest rates would move higher.

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

	Goldman Sachs U.S. Fixed Income Investment Management Team
	November 21, 2006

FUND BASICS

Ultra-Short Duration Government Fund

as of October 31, 2006

PERFORMANCE REVIEW


				Six-Month			One-Year
November 1, 2005–	Fund Total Return			U.S. Treasury			U.S. Treasury			30-Day
October 31, 2006	(based on NAV)¹			Bill Index²			Note Index²			Standardized Yield³

Class A		4.20	%		4.65	%		4.33	%		3.67	%
Institutional		4.36			4.65			4.33			4.10
Service		3.93			4.65			4.33			3.60


¹	The net asset value (NAV) represents the net assets of the class of the Fund (ex-dividend) divided by the total number of shares of the class outstanding. The Fund’s performance assumes the reinvestment of dividends and other distributions. The Fund’s performance does not reflect the deduction of any applicable sales charges.
²	The Six-Month U.S. Treasury Bill Index and One-Year U.S. Treasury Note Index, as reported by Merrill Lynch, do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an unmanaged index.
³	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 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.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS⁴


For the period ended 9/30/06	One Year			Five Years			Ten Years			Since Inception			Inception Date

Class A		2.61	%		2.17	%		3.84	%		4.14	%	5/15/95
Institutional		4.43			2.86			4.38			4.68		7/17/91
Service		3.89			2.39			N/A			3.77		3/27/97


⁴	The Standardized Total Returns are average annual total returns as of the most recent calendar quarter-end. They assume reinvestment of all distributions at NAV. These returns reflect a maximum initial sales charge of 1.5% for Class A Shares. Because Institutional and Service Shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns.

FUND BASICS

SECTOR ALLOCATION⁵

Percentage of Net Assets


⁵	The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. Short-term investments represent repurchase agreements. Figures in the above graph may not sum to 100% due to the exclusion of other assets and liabilities.
⁶	“Quasi-governments” include agency securities offered by companies such as Fannie Mae and Freddie Mac, which operate under a government charter. While they have to report to a government regulator, their assets are not explicitly guaranteed by the government and they otherwise operate like any other publicly traded company.

PORTFOLIO RESULTS

Short Duration Government Fund

Dear Shareholder:

This report provides an overview on the performance of the Goldman Sachs Short Duration Government Fund during the one-year reporting period that ended October 31, 2006.

Performance Review


	Over the one-year period that ended October 31, 2006, the Fund’s Class A, B, C, Institutional and Service Shares generated cumulative total returns, without sales charges, of 3.84%, 3.24%, 3.09%, 4.13% and 3.72%, respectively. These returns compare to the 3.94% cumulative total return of the Fund’s benchmark, the Two-Year U.S. Treasury Note Index, over the same time period.

	A combination of top-down and bottom-up strategies impacted the Fund’s performance relative to its benchmark over the period. Top-down strategies included our duration positioning and cross-sector strategies. The Fund held a short duration position relative to its benchmark, the Two-Year U.S. Treasury Note Index, in anticipation of higher interest rates. This strategy helped enhance relative results as interest rates rose meaningfully over the period. Cross-sector strategies also lent support to performance. In particular, the Fund’s exposures to the collateralized and government sectors contributed positively to the Fund’s performance relative to its benchmark as investment grade sectors outperformed Treasuries over the period. Within our bottom-up strategies, security selection had a mixed impact on results. Within mortgages, we focused on securities with less sensitivity to changes in volatility. In particular, we favored seasoned 15-year pass-throughs, adjustable-rate mortgages (“ARMs”), and shorter duration collateralized mortgage obligations (“CMOs”). While these securities positively impacted the Fund’s performance versus its benchmark, select agency debentures detracted from relative results. Treasury selection was also a drag on performance over the period. In particular, our selection of Treasury Inflation Protected Securities (“TIPS”) had an adverse impact on the Fund’s performance relative to its benchmark.

Market Review

A number of continuing themes characterized the 12-month period that ended October 31, 2006. The Federal Reserve Board (the “Fed”) continued to raise interest rates in six more 25 basis point moves, bringing the targeted federal funds rate to 5.25%. Following the hike in rates, yields sold off across the Treasury curve. However, short-term yields rose more dramatically than did long-term yields, leading to a further flattening of the yield curve. In the early part of the period, there was a rise in consumer confidence as well as strong manufacturing data. The latter half of the period was characterized by a slowdown in the housing market and moderating commodity prices which lessened inflationary concerns and prompted the Fed to pause its tightening policy. Credit spreads also continued to tighten over the reporting period, as the 10-year Treasury yield rose five basis points, ending the period at 4.60%. Investment grade sectors continued to post strong performance relative to Treasuries over the reporting period, with the mortgage sector generating the best results. Credit spreads also tightened, supported by strong fundamentals and continued corporate profit growth.

PORTFOLIO RESULTS

Investment Objective


	The Fund seeks a high level of current income and may also consider the potential for capital appreciation.

Investment Strategies


	In seeking to meet its objective, the Fund invests in a diversified portfolio of U.S. government securities. The Fund uses derivatives, including, but not limited to, Treasury futures, Eurodollar futures and swaps, primarily as a tool to manage interest rate exposure, volatility, term structure, convexity (the rate of change in the portfolio’s duration as yields change) and sector exposure. The Fund may also use derivatives to express our interest rate outlook.

	We believe that using derivatives, including both futures and swaps, in the portfolio has been an effective portfolio management tool. Futures have been efficiently employed to hedge duration (interest rate sensitivity) drift that may occur due to the passage of time, changing interest rates or changing mortgage durations. In addition, futures allowed us to optimize security selection by giving us the flexibility to select the most attractive securities for the portfolio, regardless of the securities’ maturity/duration. Finally, futures and swaps were important tools in implementing certain interest rate and spread views.

Portfolio Composition


	Over the period, the Fund continued to focus on security selection and sub-sector strategies to enhance results. Within mortgages, the Fund’s primary exposures were to ARMs, CMOs, and pass-through sub-sectors. We tactically adjusted the Fund’s exposures to take advantage of changing relative opportunities within the market. For example, we decreased the Fund’s allocation to quasi-government securities in favor of the mortgage sector as we found attractively priced securities within the pass-through and ARMs subsectors. However, we continue to find value within short-dated agency paper and the Fund maintained a meaningful exposure to the quasi-government sector at the end of the period. Within governments, we implemented a position in TIPS based on our outlook for inflation. We positioned the Fund defensively for much of the period and maintained a short duration position relative to the Index. This was due to our belief that interest rates would move higher.

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


	Goldman Sachs U.S. Fixed Income Investment Management Team

	November 21, 2006

FUND BASICS

Short Duration Government Fund

as of October 31, 2006

PERFORMANCE REVIEW


November 1, 2005–	Fund Total Return			Two-Year U.S.			30-Day
October 31, 2006	(based on NAV)¹			Treasury Note Index²			Standardized Yield³

Class A		3.84	%		3.94	%		3.42	%

Class B		3.24			3.94			2.89

Class C		3.09			3.94			2.74

Institutional		4.13			3.94			3.86

Service		3.72			3.94			3.36


¹	The net asset value (NAV) represents the net assets of the class of the Fund (ex-dividend) divided by the total number of shares of the class outstanding. The Fund’s performance assumes the reinvestment of dividends and other distributions. The Fund’s performance does not reflect the deduction of any applicable sales charges.
²	The Two-Year U.S. Treasury Note Index, as reported by Merrill Lynch, does not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an unmanaged index.
³	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 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.

STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS⁴


For the period ended 9/30/06	One Year			Five Years			Ten Years			Since Inception			Inception Date

Class A		1.23	%		2.44	%		N/A			4.32	%	5/1/97
Class B		0.66			2.24			N/A			3.93		5/1/97
Class C		1.65			2.10			N/A			3.61		8/15/97
Institutional		3.82			3.26			5.04	%		5.99		8/15/88
Service		3.31			2.75			4.52			4.63		4/10/96

⁴

The Standardized Total Returns are average annual total returns as of the most recent calendar quarter-end. They assume reinvestment of all distributions at NAV. These returns reflect a maximum initial sales charge of 2% for Class A Shares, the assumed contingent deferred sales charge for Class B Shares (2% maximum declining to 0% after three years) and the assumed contingent deferred sales charge for Class C Shares (1% if redeemed within 12 months of purchase). Because Institutional and Service Shares do not involve a sales charge, such a charge is not applied to their Standardized Total Returns.

FUND BASICS

SECTOR ALLOCATION⁵

Percentage of Net Assets


⁵	The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets. Short-term investments represent repurchase agreements. Figures in the above graph may not sum to 100% due to the exclusion of other assets and liabilities.
⁶	“Quasi-governments” include agency securities offered by companies such as Fannie Mae and Freddie Mac, which operate under a government charter. While they have to report to a government regulator, their assets are not explicitly guaranteed by the government and they otherwise operate like any other publicly traded company.

GOLDMAN SACHS ENHANCED INCOME FUND

Performance Summary

October 31, 2006 (Unaudited)

The following graph shows the value, as of October 31, 2006, of a $10,000 investment made on August 2, 2000 (commencement of operations) in the Institutional Shares of the Goldman Sachs Enhanced Income Fund. For comparative purposes, the performance of the Fund’s benchmarks, the Six-Month U.S. Treasury Bill Index and One-Year U.S. Treasury Note Index (“Six-Month T-Bill Index/One-Year T-Note Index”), as well as the Lehman Brothers Mutual Fund Short (1-2) U.S. Government Index (“Lehman 1-2 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 reflects expense limitations in effect. In their absence, performance would be reduced. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of Class A and Administration Shares will vary from Institutional Shares due to differences in fees and loads. In addition to the investment adviser’s decisions regarding issuer/ industry investment selection and allocation, other factors may affect Fund performance. These factors include, but are not limited to, Fund operating fees and expenses, portfolio turnover and subscription and redemption cash flows affecting the Fund.

Enhanced Income Fund’s Lifetime Performance

Performance of a $10,000 Investment, Distributions Reinvested August 2, 2000 to October 31, 2006.


Average Annual Total Return through October 31, 2006	Since Inception		Five Years		One Year
Class A (commenced August 2, 2000)
Excluding sales charges		3.30%		2.20%		4.26%
Including sales charges		3.06%		1.88%		2.67%

Institutional Class (commenced August 2, 2000)		3.69%		2.58%		4.66%

Administration Class (commenced August 2, 2000)		3.41%		2.28%		4.29%

GOLDMAN SACHS ENHANCED INCOME FUND

Schedule of Investments

October 31, 2006


Principal		Interest			Maturity
Amount		Rate			Date		Value
Corporate Bonds – 28.8%

Banks – 6.0%
Credit Suisse First Boston New York^(a)
$	2,000,000		6.500	%		05/01/08	$	2,036,050
Credit Suisse First Boston USA, Inc.
	2,975,000		4.125			01/15/10		2,886,895
Huntington National Bank
	1,750,000		4.650			06/30/09		1,727,973
Keybank National Association
	1,100,000		7.300			05/01/11		1,193,588
Popular North America, Inc.
	1,200,000		5.200			12/12/07		1,195,389
Union Planters Corp.
	1,500,000		7.750			03/01/11		1,643,383
Washington Mutual, Inc.
	2,000,000		4.000			01/15/09		1,952,178

								12,635,456

Brokerage – 2.3%
Morgan Stanley
	5,000,000		4.000			01/15/10		4,832,244

Life Insurance – 5.2%
AXA Financial, Inc.
	2,125,000		7.750			08/01/10		2,303,209
ING Security Life Institutional Funding^(a)
	2,500,000		4.250			01/15/10		2,440,945
Jackson National Life Insurance Co.^(a)
	2,000,000		5.250			03/15/07		2,002,284
Monumental Global Funding^(a)
	4,390,000		5.200			01/30/07		4,387,252

								11,133,690

Noncaptive-Consumer – 4.9%
American General Finance Corp.
	1,500,000		4.875			05/15/10		1,479,800
HSBC Finance Corp.
	7,000,000		4.125			11/16/09		6,800,429
John Deere Capital Corp.
	2,000,000		5.400			04/07/10		2,013,614

								10,293,843

Property/Casualty Insurance – 3.1%
ACE Ltd.
	6,487,000		6.000			04/01/07		6,498,229

Wireless Telecommunications – 4.4%
Verizon Wireless Capital LLC
	9,250,000		5.375			12/15/06		9,248,020

Wirelines Telecommunications – 2.9%
Ameritech Capital Funding
	375,000		6.250			05/18/09		380,639
Deutsche Telekom International Finance BV
	1,500,000		8.000			06/15/10		1,637,342
GTE California, Inc.
	2,875,000		7.650			03/15/07		2,897,721
SBC Communications, Inc.
	1,375,000		4.125			09/15/09		1,334,221

								6,249,923

TOTAL CORPORATE BONDS
(Cost $61,348,758)							$	60,891,405

Agency Debentures – 48.5%

Federal Home Loan Bank
$	6,600,000		3.500	%		01/18/07	$	6,573,435
	5,100,000		3.625			02/16/07		5,074,143
	3,000,000		4.250			04/16/07		2,985,567
	6,730,000		4.500			08/24/07		6,692,218
	7,000,000		4.000	^(b)		12/03/07		6,855,114
	10,000,000		4.500	^(b)		03/07/08		9,983,482
Federal Home Loan Mortgage Corp.
	4,000,000		5.238	^(b)		12/27/06		3,999,872
	11,628,000		0.000	^(c)		01/15/07		11,504,545
	5,000,000		4.500			04/18/07		4,978,730
	15,000,000		4.250			06/23/08		14,840,340
Federal National Mortgage Association
	4,000,000		5.257	^(b)		12/22/06		4,000,000
	5,000,000		2.750			02/06/07		4,965,720
	7,750,000		3.740			06/14/07		7,679,188
	5,000,000		5.500			01/15/08		5,024,455
Government Loan Trust Series 1-Z^(c)
	7,644,000		0.000			04/01/07		7,482,842

TOTAL AGENCY DEBENTURES
(Cost $102,783,140)							$	102,639,651

Asset-Backed Securities – 5.6%

Autos – 5.6%
AmeriCredit Automobile Receivables Trust Series 2006-AF, Class A3
$	2,000,000		5.560	%		09/06/11	$	2,013,125
Capital One Auto Finance Trust Series 2006-A, Class A3
	3,500,000		5.330			11/15/10		3,508,687
Honda Auto Receivables Owner Trust Series 2005-4, Class A2
	3,790,153		4.320			01/21/08		3,782,530
Long Beach Auto Receivables Trust Series 2006-A, Class A4
	2,500,000		5.500			05/15/13		2,521,875

TOTAL ASSET-BACKED SECURITIES
(Cost $11,789,359)							$	11,826,217

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

GOLDMAN SACHS ENHANCED INCOME FUND

Schedule of Investments (continued)

October 31, 2006


Principal		Interest			Maturity
Amount		Rate			Date		Value
U.S. Treasury Obligations – 7.7%

United States Treasury Inflation Protected Bonds
$	5,154,424		3.500	%		01/15/11	$	5,361,606
United States Treasury Notes
	11,000,000		4.625			02/29/08		10,971,642

TOTAL U.S. TREASURY OBLIGATIONS
(Cost $16,309,360)							$	16,333,248


Repurchase Agreement^(d) – 5.3%

Joint Repurchase Agreement Account II
$	11,200,000		5.316	%		11/01/06	$	11,200,000
Maturity Value: $11,201,654
(Cost $11,200,000)

TOTAL INVESTMENTS – 95.9%
(Cost $203,430,617)							$	202,890,521

OTHER ASSETS IN EXCESS OF LIABILITIES – 4.1%								8,576,265

NET ASSETS – 100.0%							$	211,466,786


	The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.


(a)	Securities are exempt from registration under Rule 144A of the Securities Act of 1933. Under procedures approved by the Board of Trustees, such securities have been determined to be liquid by the Investment Adviser and may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounts to $10,866,531, which represents approximately 5.1% of net assets as of October 31, 2006.

(b)	Variable rate security. Interest rate disclosed is that which is in effect at October 31, 2006.

(c)	Security issued with a zero coupon. Income is recognized through the accretion of discount.

(d)	Joint repurchase agreement was entered into on October 31, 2006. Additional information appears on page 31.

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

GOLDMAN SACHS ENHANCED INCOME FUND

ADDITIONAL INVESTMENT INFORMATION

FUTURES CONTRACTS — At October 31, 2006, the following futures contracts were open:


	Number of
	Contracts			Settlement					Unrealized
Type	Long (Short)			Month		Market Value			Gain (Loss)

Eurodollars		(19	)		December 2006	$	(4,495,163	)	$	41,183
Eurodollars		100			March 2007		23,695,000			45,910
2 Year U.S. Treasury Notes		(138	)		December 2006		(28,208,062	)		(53,202	)
5 Year U.S. Treasury Notes		(55	)		December 2006		(5,805,938	)		(34,982	)

TOTAL						$	(14,814,163	)	$	(1,091	)

INTEREST RATE SWAP CONTRACT — At October 31, 2006, the Fund had an outstanding swap contract with the following terms:

Rates Exchanged

Notional

Payments

Amount

Termination

received by

made by

Unrealized

Swap Counterparty

(000s)

Date

the Fund

Loss

J.P. Morgan Securities, Inc.

20,000

02/17/11

3 month LIBOR

5.091

(30,468

)

LIBOR—London Interbank Offered Rate

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

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND

Performance Summary

October 31, 2006 (Unaudited)

The following graph shows the value, as of October 31, 2006, of a $10,000 investment made on November 1, 1996 in the Institutional Shares of the Goldman Sachs Ultra-Short Duration Government Fund. For comparative purposes, the performance of the Fund’s benchmarks, the Six-Month U.S. Treasury Bill Index and One-Year U.S. Treasury Note Index (“Six-Month T-Bill Index/ One-Year T-Note Index”), as well as the Lehman Brothers Mutual Fund Short (1-2) U.S. Government Index (“Lehman 1-2 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 reflects expense limitations in effect. In their absence, performance would be reduced. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of Class A and Service Shares will vary from Institutional Shares due to differences in fees and loads. In addition to the investment adviser’s decisions regarding issuer/industry investment selection and allocation, other factors may affect Fund performance. These factors include, but are not limited to, Fund operating fees and expenses, portfolio turnover and subscription and redemption cash flows affecting the Fund.

Ultra-Short Duration Government Fund’s 10 Year Performance

Performance of a $10,000 Investment, Distributions Reinvested November 1, 1996 to October 31, 2006.


Average Annual Total Return through October 31, 2006	Since Inception		Ten Years		Five Years		One Year
Class A (commenced May 15, 1995)
Excluding sales charges		4.27%		3.97%		2.35%		4.20%
Including sales charges		4.13%		3.81%		2.04%		2.65%

Institutional Class (commenced July 17, 1991)		4.68%		4.34%		2.70%		4.36%

Service Class (commenced March 27, 1997)		3.78%		n/a		2.25%		3.93%

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND

Schedule of Investments

October 31, 2006


Principal		Interest			Maturity
Amount		Rate			Date		Value
Mortgage-Backed Obligations – 90.1%

Adjustable Rate FHLMC^(a) – 8.7%
$	118,218		5.009	%		08/01/16	$	118,296
	163,846		5.016			08/01/18		163,769
	144,811		5.064			11/01/18		146,354
	766,601		5.864			11/01/18		771,466
	39,439		4.930			02/01/19		39,426
	36,132		7.041			02/01/19		36,464
	124,637		5.134			03/01/19		124,859
	75,482		5.366			03/01/19		75,874
	116,605		4.560			06/01/19		116,142
	150,049		5.615			07/01/19		150,637
	2,048,780		5.447			11/01/19		2,069,362
	1,482,179		6.911			11/01/19		1,527,197
	157,384		5.287			01/01/20		158,112
	174,303		5.134			05/01/21		174,673
	66,874		6.096			01/01/25		68,012
	125,773		5.134			10/01/26		125,902
	1,301,055		6.597			08/01/28		1,331,832
	818,033		7.260			01/01/29		826,552
	885,133		7.057			05/01/29		893,109
	237,768		7.233			05/01/29		237,414
	101,142		5.134			06/01/29		101,389
	91,499		5.450			09/01/29		92,936
	1,525,397		7.215			02/01/30		1,549,523
	235,290		6.782			03/01/30		237,506
	715,980		7.246			03/01/30		719,481
	131,860		4.874			04/01/30		132,607
	168,004		5.215			06/01/30		168,463
	550,518		6.864			12/01/30		552,515
	15,349		5.944			01/01/31		15,542
	190,740		4.880			02/01/31		190,693
	57,040		6.873			05/01/31		57,800
	49,754		5.281			06/01/31		50,009
	32,783		5.637			11/01/31		33,123
	5,079,425		7.403			12/01/31		5,241,897
	3,487,860		7.603			12/01/31		3,571,656
	35,095		5.677			10/01/32		35,317
	20,499		5.978			02/01/33		20,714
	2,375,313		3.940			07/01/33		2,313,216
	3,255,635		3.885			09/01/33		3,157,933
	141,179		4.400			11/01/33		140,265
	208,603		6.294			11/01/33		207,778
	1,157,633		5.601			05/01/35		1,169,030
	6,517,049		4.583			08/01/35		6,370,877
	1,871,616		0.000	^(d)		01/15/36		1,746,551
	2,891,616		0.000	^(d)		05/15/36		2,793,809

								39,826,082

Adjustable Rate FNMA^(a) – 27.6%
	198,569		6.445			03/01/17		198,902
	1,038,264		6.675			04/01/17		1,069,565
	142,380		5.340			08/01/17		142,337
	142,521		5.009			09/01/17		142,467
	239,652		5.134			09/01/17		239,541
	73,603		6.714			11/01/17		74,241
	148,842		4.875			12/01/17		148,914
	578,951		4.906			03/01/18		579,365
	195,296		5.376			03/01/18		195,189
	1,940,513		4.888			07/01/18		1,941,870
	378,017		6.686			08/01/18		386,584
	644,131		5.127			10/01/18		640,759
	189,056		5.134			10/01/18		188,874
	94,881		5.187			10/01/18		95,523
	213,166		5.293			10/01/18		212,304
	281,808		6.496			10/01/18		283,399
	60,246		5.340			11/01/18		60,599
	14,346		6.004			11/01/18		14,438
	79,136		5.125			12/01/18		79,672
	284,314		4.895			01/01/19		284,603
	844,506		5.290			04/01/19		853,446
	45,633		5.330			04/01/19		45,543
	2,168,768		4.879			05/01/19		2,180,502
	719,470		5.340			05/01/19		717,997
	402,348		4.966			06/01/19		404,376
	443,703		5.109			06/01/19		445,406
	337,588		7.319			07/01/19		348,024
	726,436		5.129			08/01/19		734,491
	705,917		5.262			08/01/19		713,372
	94,561		5.340			09/01/19		95,155
	33,511		6.570			09/01/19		33,760
	104,020		5.384			11/01/19		105,129
	3,009,910		6.924			11/01/19		3,099,242
	28,520		5.224			04/01/20		28,759
	884,661		6.834			05/01/20		911,275
	823,202		4.780			06/01/20		827,228
	252,805		5.122			06/01/20		251,469
	453,770		5.157			11/01/20		458,815
	882,988		5.553			12/25/20		881,723
	525,721		5.273			03/01/21		533,637
	207,635		6.848			09/01/21		210,382
	116,677		5.455			12/01/21		116,107
	1,964,720		5.466			01/01/22		1,986,435
	73,093		6.837			02/01/22		75,340
	200,821		5.219			05/20/22		203,506
	6,401,270		6.548			12/01/22		6,450,737
	427,837		6.761			02/01/23		430,314
	19,669		6.219			12/01/23		19,803
	1,153,324		6.988			01/01/24		1,173,760
	1,113,039		7.348			03/01/24		1,149,484
	10,469,300		5.102			04/01/24		10,425,203
	1,005,568		5.163			06/20/24		1,024,843

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

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND

Schedule of Investments (continued)

October 31, 2006


Principal		Interest			Maturity
Amount		Rate			Date		Value
Mortgage-Backed Obligations – (continued)

Adjustable Rate FNMA^(a) – (continued)
$	46,198		5.968	%		08/01/24	$	46,077
	418,604		6.630			01/01/25		430,738
	2,344,427		4.620			03/25/27		2,360,834
	81,299		5.340			06/01/27		81,707
	56,128		5.340			12/01/27		56,409
	111,642		5.340			01/01/28		111,653
	257		6.597			01/01/28		256
	352,924		6.783			05/01/28		359,725
	91,767		7.468			06/01/28		92,658
	44,185		6.881			09/01/28		44,463
	901,735		5.217			01/01/29		908,739
	44,980		4.799			06/01/29		45,195
	77,107		5.134			06/01/29		77,701
	45,497		6.912			06/01/29		46,485
	1,657,106		5.557			05/01/30		1,666,973
	5,447		7.525			02/01/31		5,511
	103,388		6.744			05/01/31		103,961
	523,753		7.000			06/01/31		535,289
	1,870,601		5.664			07/01/31		1,888,106
	335,040		6.125			08/01/31		334,430
	363,481		7.135			08/01/31		367,240
	79,165		7.152			08/01/31		79,444
	779,343		5.513			11/01/31		787,718
	463,719		5.609			12/01/31		469,262
	188,694		5.490			01/01/32		193,346
	304,958		6.863			01/01/32		316,270
	43,209		5.475			02/01/32		43,805
	492,412		6.340			02/01/32		492,341
	40,342		5.538			03/01/32		40,928
	186,887		5.608			03/01/32		186,843
	2,093,797		6.114			03/01/32		2,146,475
	1,054,009		5.536			04/01/32		1,055,123
	225,088		6.500			04/01/32		230,092
	356,964		5.258			05/01/32		367,555
	125,658		6.607			05/01/32		126,927
	325,707		6.367			07/01/32		328,735
	35,380		4.400			08/01/32		35,094
	602,494		4.786			09/01/32		607,106
	1,407,979		5.199			09/01/32		1,401,890
	76,097		6.680			09/01/32		76,517
	175,451		7.105			09/01/32		176,686
	176,208		5.358			10/01/32		179,472
	112,025		6.589			10/01/32		113,438
	211,819		4.884			12/01/32		211,319
	26,744		6.113			12/01/32		27,251
	1,425,200		4.652			01/01/33		1,427,706
	866,941		4.951			01/01/33		871,351
	2,190,869		4.891			02/01/33		2,176,530
	2,474,486		4.486			03/01/33		2,487,121
	10,574,360		4.719			03/01/33		10,571,255
	8,887,958		4.737			03/01/33		8,820,473
	159,798		4.040			04/01/33		158,023
	1,013,745		4.833			04/01/33		1,017,940
	1,841,365		4.702			05/01/33		1,835,071
	4,456,745		3.874			07/01/33		4,408,943
	1,060,839		3.958			07/01/33		1,039,882
	2,511,073		3.999			07/01/33		2,460,562
	140,766		5.291			08/01/33		142,282
	3,426,726		3.851			10/01/33		3,399,684
	9,099,395		3.959			12/01/33		8,965,873
	327,780		4.319			01/01/34		323,218
	84,713		6.352			02/01/34		86,265
	4,905,172		4.703			10/01/34		4,864,543
	2,710,467		4.360			04/01/35		2,645,636
	3,432,713		4.688			10/01/35		3,405,856
	55,625		5.380			05/01/36		56,027
	20,691		6.464			11/01/38		20,991
	354,031		5.963			06/01/40		357,644
	1,523,101		6.476			07/01/40		1,533,112
	42,988		5.763			02/01/41		43,328

								126,291,512

Adjustable Rate GNMA^(a) – 13.0%
	7,137,161		4.000			11/20/33		7,059,119
	9,688,487		3.750			02/20/34		9,534,518
	5,264,555		3.750			04/20/34		5,146,991
	25,496,258		4.500			08/20/34		25,265,616
	4,664,153		4.750			08/20/34		4,641,328
	7,884,820		4.500			12/20/34		7,857,205

								59,504,777

Adjustable Rate Non-Agency^(a) – 6.4%
Bank of America Mortgage Securities Series 2002-J, Class A2
	939,394		4.879			09/25/32		935,748
Bear Stearns Adjustable Rate Mortgage Trust Series 2003-5, Class 1A1
	232,723		5.979			08/25/33		235,856
Countrywide Home Loans Series 2003-37, Class 1A1
	148,854		5.876			08/25/33		148,610
CS First Boston Mortgage Securities Corp. Series 2003-AR9, Class 2A2
	2,896,619		5.100			03/25/33		2,883,393
Impac CMB Trust Series 2003-6, Class A
	2,086,815		5.960			07/25/33		2,087,416
Indy Mac Index Mortgage Loan Trust Series 2004-AR4, Class 1A
	2,180,595		4.505			08/25/34		2,185,682
Sequoia Mortgage Trust Series 2004-10, Class A3A
	3,932,877		5.737			11/20/34		3,937,842
Wells Fargo Mortgage Backed Securities Trust Series 2005-AR16, Class 1A1
	6,663,494		4.976			10/25/35		6,671,175
Wells Fargo Mortgage Backed Securities Trust Series 2006-AR2, Class 2A3
	10,196,594		5.092			03/25/36		10,137,273

								29,222,995

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

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND


Principal		Interest			Maturity
Amount		Rate			Date		Value
Mortgage-Backed Obligations – (continued)

CMBS – 1.6%
Interest Only^(a)(b)(c) – 1.6%
Bear Stearns Commercial Mortgage Securities, Inc. Series 2001-TOP2, Class X2
$	142,041,083		1.071	%		02/15/35	$	2,331,235
Salomon Brothers Mortgage Securities VII Series 2002-Key2, Class X2
	88,598,000		2.043			03/18/36		5,007,276

TOTAL CMBS							$	7,338,511

CMO – 11.3%
Interest Only^(c) – 0.1%
FHLMC Series 2586, Class NX
	3,010,739		4.500			08/15/16		307,798
FNMA REMIC Trust Series 1990-145, Class B
	2,170,100		4.961			12/25/20		43,050

								350,848

Inverse Floaters^(a) – 0.3%
FHLMC Series 1606, Class SC
	1,154,865		9.596			11/15/08		1,186,475

Inverse Floating Rate – Interest Only^(a)(c) – 0.0%
FNMA Series 1996-40, Class SG
	1,208,731		7.775			03/25/09		87,749
FNMA REMIC Trust Series 1996-20, Class SB
	988,786		9.367			10/25/08		68,427

								156,176

PAC – 1.2%
FHLMC Series 1377, Class H
	385,450		6.000			09/15/07		384,493
FHLMC Series 2113, Class TE
	3,009,526		6.000			01/15/14		3,053,396
FNMA REMIC Trust Series 1992-193, Class HD
	602,957		7.000			11/25/07		603,923
FNMA REMIC Trust Series 1993-225, Class WC
	1,294,390		6.500			12/25/13		1,328,428

								5,370,240

Regular Floater^(a) – 4.4%
Collateralized Mortgage Securities Corp. Series N, Class 2
	394,237		6.000			08/25/17		388,662
FHLMC Series 1509, Class F
	2,892,432		6.375			04/15/08		2,900,296
FHLMC Series 1606, Class FC
	4,239,770		5.177			11/15/08		4,224,651
FHLMC Series 1612, Class FD
	443,238		5.177			11/15/08		442,729
FHLMC Series 1661, Class FD
	3,268,055		6.875			01/15/09		3,294,573
FHLMC Series 1665, Class FA
	108,761		4.210			06/15/23		108,116
FHLMC Series 1826, Class F
	247,952		5.775			09/15/21		249,996
FNMA REMIC Trust Series 1993-190, Class F
	2,548,855		5.327			10/25/08		2,542,290
FNMA REMIC Trust Series 1993-196, Class FD
	214,958		5.177			10/25/08		213,971
FNMA REMIC Trust Series 1993-214, Class FA
	662,482		6.144			12/25/08		666,374
FNMA REMIC Trust Series 1993-233, Class FA
	537,381		5.177			12/25/08		536,715
FNMA Series 1993-231, Class FE
	1,934,461		6.244			12/25/08		1,946,523
FNMA Series 1998-66, Class FC
	442,306		5.820			11/17/28		445,644
FNMA Series 2001-70, Class OF
	2,187,087		6.270			10/25/31		2,233,359

								20,193,899

Sequential Fixed Rate – 4.8%
FHLMC Series 1216, Class GC
	202,250		7.000			03/15/07		202,191
FHLMC Series 1246, Class J
	52,070		7.500			05/15/07		52,039
FHLMC Series 1423, Class FF
	1,658,759		7.000			12/15/07		1,654,635
FHLMC Series 1720, Class PJ
	1,390,509		7.250			01/15/24		1,410,912
First Nationwide Trust Series 2001-4, Class 1A1
	1,819,703		6.750			09/21/31		1,813,187
FNMA REMIC Trust Series 1993-014, Class A
	1,002		6.000			02/25/08		1,000
FNMA REMIC Trust Series 1993-121, Class Z
	8,497,250		7.000			07/25/23		8,831,400
FNMA REMIC Trust Series 1993-135, Class PG
	443,208		6.250			07/25/08		442,186
FNMA REMIC Trust Series 1993-212, Class PC
	191,620		4.500			09/25/08		190,904
FNMA REMIC Trust Series 1996-14, Class J
	323,947		6.150			03/25/09		324,414
FNMA Series 1994-72, Class J
	7,271,800		6.000			06/25/23		7,293,091

								22,215,959

Support – 0.5%
FHLMC Series 1639, Class M
	2,198,921		6.000			12/15/08		2,204,467

TOTAL CMO							$	51,678,064

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

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND

Schedule of Investments (continued)

October 31, 2006


Principal		Interest			Maturity
Amount		Rate			Date		Value
Mortgage-Backed Obligations – (continued)

FHLMC – 5.5%
$	1,642,447		7.000	%		02/01/09	$	1,655,684
	940,836		7.000			03/01/09		950,354
	1,982,541		7.000			04/01/09		1,996,717
	961,986		7.000			05/01/09		972,857
	892,368		7.000			06/01/09		902,452
	664,905		7.500			06/01/09		671,864
	218,458		6.500			03/01/13		222,886
	436,283		6.500			04/01/13		445,126
	225,167		6.500			05/01/13		229,731
	460,342		6.500			06/01/13		469,672
	1,058,099		5.000			12/01/13		1,052,322
	1,147,858		4.000			01/01/14		1,110,146
	3,662,777		8.000			12/01/15		3,834,851
	574,166		6.000			05/01/17		582,390
	797,486		7.000			04/01/21		825,833
	437,119		7.000			08/01/21		452,656
	2,790,938		7.000			03/01/22		2,888,458
	1,200,332		7.000			05/01/22		1,242,274
	4,478,673		7.000			06/01/22		4,635,166
	65,270		7.000			12/01/25		67,596

								25,209,035

FNMA – 16.0%
	6,644,052		4.000			05/01/10		6,438,056
	7,422,555		4.000			06/01/10		7,192,422
	1,541,436		6.000			09/01/11		1,553,193
	1,960,859		6.500			04/01/12		2,000,012
	3,931,067		6.000			05/01/12		3,965,090
	965,962		6.500			05/01/12		985,249
	3,028,517		6.000			06/01/12		3,054,732
	857,523		6.500			06/01/12		874,645
	13,377,161		5.500			01/01/13		13,445,975
	3,035,042		4.500			08/01/13		2,971,451
	13,122,376		4.500			09/01/13		12,859,906
	1,439,588		8.000			01/01/16		1,508,219
	970,971		7.000			03/01/17		998,133
	397,513		7.000			05/01/17		408,633
	10,637,695		5.500			03/01/18		10,676,931
	1,330,141		5.500			04/01/18		1,335,047
	393,814		7.000			07/01/21		408,079
	624,209		7.000			11/01/21		646,820
	302,776		7.000			12/01/21		313,744
	515,936		7.000			01/01/22		534,626
	115,620		7.000			02/01/22		119,808
	351,852		7.000			01/01/28		364,477
	583,923		6.500			04/01/33		596,517

								73,251,765

GNMA – 0.0%
	49,699		7.000			12/15/25		51,686
	170,583		7.000			04/15/26		176,944

								228,630

TOTAL MORTGAGE-BACKED OBLIGATIONS
(Cost $419,342,617)							$	412,551,371

Asset-Backed Security^(a) – 0.6%

Home Equity – 0.6%
Countrywide Home Equity Loan Trust Series 2004-G, Class 2A
$	2,614,527		5.540	%		12/15/29	$	2,620,261
(Cost $2,609,216)

U.S. Treasury Obligations – 3.5%

United States Treasury Bonds
$	2,900,000		4.500	%		02/15/36	$	2,798,952
United States Treasury Inflation Protected Securities
	1,665,165		1.875			07/15/13		1,612,477
	1,324,128		2.000			01/15/14		1,290,559
	2,487,795		2.000			07/15/14		2,423,267
	4,088,019		1.875			07/15/15		3,936,967
	4,139,278		2.500			07/15/16		4,198,780

TOTAL U.S. TREASURY OBLIGATIONS
(Cost $16,063,734)							$	16,261,002

Repurchase Agreement^(e) – 4.6%

Joint Repurchase Agreement Account II
$	21,100,000		5.316	%		11/01/06	$	21,100,000
Maturity Value: $21,103,116
(Cost $21,100,000)

TOTAL INVESTMENTS – 98.8%
(Cost $459,115,567)							$	452,532,634

OTHER ASSETS IN EXCESS OF LIABILITIES – 1.2%								5,280,213

NET ASSETS – 100.0%							$	457,812,847

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

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND


	The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.


(a)	Variable rate security. Interest rate disclosed is that which is in effect at October 31, 2006.

(b)	Securities are exempt from registration under Rule 144A of the Securities Act of 1933. Under procedures approved by the Board of Trustees, such securities have been determined to be liquid by the Investment Adviser and may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounts to $7,338,511, which represents approximately 1.6% of net assets as of October 31, 2006.

(c)	Represents security with notional principal amount. The actual effective yield of this security is different than the stated interest rate.

(d)	Security issued with a zero coupon. Income is recognized through the accretion of discount.

(e)	Joint repurchase agreement was entered into on October 31, 2006. Additional information appears on page 31.



Investment Abbreviations:
CMBS	—	Commercial Mortgage-Backed Securities
CMO	—	Collateralized Mortgage Obligations
FHLMC	—	Federal Home Loan Mortgage Corp.
FNMA	—	Federal National Mortgage Association
GNMA	—	Government National Mortgage Association
PAC	—	Planned Amortization Class
REMIC	—	Real Estate Mortgage Investment Conduit

ADDITIONAL INVESTMENT INFORMATION

FUTURES CONTRACTS — At October 31, 2006, the following futures contracts were open:


	Number of
	Contracts			Settlement	Market			Unrealized
Type	Long (Short)			Month	Value			Gain (Loss)

Eurodollars		159		December 2006	$	37,617,412		$	18,285
Eurodollars		64		March 2007		15,164,800			25,782
Eurodollars		64		June 2007		15,192,000			36,583
Eurodollars		3		September 2007		713,437			1,002
Eurodollars		3		December 2007		714,338			1,415
Eurodollars		3		March 2008		714,638			1,602
Eurodollars		2		June 2008		476,325			1,018
U.S. Treasury Bonds		92		December 2006		10,364,375			216,178
2 Year U.S. Treasury Notes		(379	)	December 2006		(77,469,969	)		12,814
5 Year U.S. Treasury Notes		(691	)	December 2006		(72,943,688	)		(517,119	)
10 Year U.S. Treasury Notes		(73	)	December 2006		(7,899,968	)		(56,022	)

TOTAL					$	(77,356,300	)	$	(258,462	)

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

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND

Schedule of Investments (continued)

October 31, 2006

ADDITIONAL INVESTMENT INFORMATION (continued)

INTEREST RATE SWAP CONTRACTS — At October 31, 2006, the Fund had outstanding swap contracts with the following terms:


				Rates Exchanged
						Upfront
	Notional			Payments	Payments	Payments
Swap	Amount		Termination	received by	made by	made by		Unrealized
Counterparty	(000s)		Date	the Fund	the Fund	the Fund		Gain (Loss)

J.P. Morgan Securities, Inc.	$	30,000	02/17/11	3 month LIBOR	5.091%	$	—	$	(47,275	)
Banc of America Securities LLC ^(a)		24,000	12/20/11	5.600%	3 month LIBOR		443,611		154,268
Deutsche Bank Securities, Inc. ^(a)		28,400	12/20/13	5.650%	3 month LIBOR		753,165		196,457
Bank of America Securities LLC		41,000	11/12/19	3 month LIBOR	5.068%		—		(29,576	)

TOTAL						$	1,196,776	$	273,874

(a) Represents forward starting interest rate swaps whose effective dates of commencement of accruals and cash flows occur in December 2006.

LIBOR— London Interbank Offered Rate

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

GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND

Performance Summary

October 31, 2006 (Unaudited)

The following graph shows the value, as of October 31, 2006, of a $10,000 investment made on November 1, 1996 in the Institutional Shares of the Goldman Sachs Short Duration Government Fund. For comparative purposes, the performance of the Fund’s benchmark, the Two-Year U.S. Treasury Note Index (“Two-Year T-Note Index”), as well as the Lehman Brothers Mutual Fund Short (1-3) U.S. Government Index (“Lehman Short (1-3) Gov’t 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 reflects expense limitations in effect. In their absence, performance would be reduced. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance of Class A, Class B, Class C and Service Shares will vary from Institutional Shares due to differences in fees and loads. In addition to the investment adviser’s decisions regarding issuer/industry investment selection and allocation, other factors may affect Fund performance. These factors include, but are not limited to, Fund operating fees and expenses, portfolio turnover and subscription and redemption cash flows affecting the Fund.

Short Duration Government Fund’s 10 Year Performance

Performance of a $10,000 Investment, Distributions Reinvested November 1, 1996 to October 31, 2006.


Average Annual Total Return through October 31, 2006	Since Inception		Ten Years			Five Years		One Year
Class A (commenced May 1, 1997)
Excluding sales charges		4.55%		n/a			2.69%		3.84%
Including sales charges		4.32%		n/a			2.28%		1.74%

Class B (commenced May 1, 1997)
Excluding contingent deferred sales charges		3.93%		n/a			2.09%		3.24%
Including contingent deferred sales charges		3.93%		n/a			2.09%		1.18%

Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		3.60%		n/a			1.92%		3.09%
Including contingent deferred sales charges		3.60%		n/a			1.92%		2.07%

Institutional Class (commenced August 15, 1988)		5.98%		4.96	%		3.08%		4.13%

Service Class (commenced April 10, 1996)		4.62%		4.44	%		2.57%		3.72%

GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND

Schedule of Investments

October 31, 2006


Principal		Interest			Maturity
Amount		Rate			Date		Value
Mortgage-Backed Obligations – 56.7%

Adjustable Rate FHLMC^(a) – 7.1%
$	258,536		5.771	%^(b)		05/01/18	$	257,985
	180,453		5.841			10/01/25		181,831
	13,614,486		4.147			09/01/34		13,525,795
	6,964,437		4.819			11/01/34		6,951,679
	2,956,696		4.218			02/01/35		2,935,818
	5,599,981		4.123			03/01/35		5,551,020
	3,733,838		4.179			03/01/35		3,703,152
	2,123,930		4.229			03/01/35		2,112,780
	16,080,622		4.456			06/01/35		15,774,043
	6,925,719		4.880			08/01/35		6,884,991
	3,617,938		4.551			11/01/35		3,544,128

								61,423,222

Adjustable Rate FNMA^(a) – 19.4%
	412,506		6.474			11/01/17		412,651
	588,355		4.769			02/01/18		593,443
	291,360		2.588			02/25/18		268,325
	369,056		10.000			02/25/18		415,009
	292,943		6.614			06/01/18		300,929
	602,831		6.643			03/01/19		606,995
	438,748		6.834			05/01/20		451,947
	608,144		6.394			12/01/20		610,826
	233,018		5.844			01/01/23		236,895
	17,160,167		5.370			11/25/28		17,171,292
	12,483,661		5.930			08/01/29		12,661,038
	452,962		5.533			07/01/32		454,561
	677,328		5.637			07/01/32		681,696
	1,604,675		5.280			01/01/33		1,608,009
	11,326,043		4.228			05/01/33		11,224,242
	1,887,954		3.916			08/01/33		1,844,567
	6,548,464		5.340			08/01/33		6,640,725
	4,283,408		3.851			10/01/33		4,249,605
	7,367,031		4.420			02/01/34		7,290,923
	4,528,993		4.265			03/01/34		4,458,812
	5,214,534		2.945			05/01/34		5,198,579
	2,697,836		3.019			05/01/34		2,690,885
	6,556,737		4.218			06/01/34		6,586,197
	4,639,809		4.280			07/01/34		4,646,891
	7,946,069		4.703			10/01/34		7,880,253
	6,454,673		4.775			10/01/34		6,451,109
	3,954,843		4.559			12/01/34		3,933,526
	2,001,177		4.066			02/01/35		1,981,047
	4,538,566		4.112			02/01/35		4,495,519
	2,245,799		4.279			02/01/35		2,234,148
	3,114,306		4.212			03/01/35		3,091,528
	5,541,966		4.237			03/01/35		5,511,266
	6,572,634		5.034			03/01/35		6,505,003
	2,071,006		4.249			04/01/35		2,057,477
	8,649,835		4.360			04/01/35		8,442,942
	6,670,216		4.681			04/01/35		6,589,395
	2,061,120		4.324			05/01/35		2,025,992
	8,747,797		4.739			08/01/35		8,602,636
	6,234,092		4.725			10/01/35		6,172,607

								167,279,490

Adjustable Rate GNMA^(a) – 6.7%
	3,568,581		4.000			11/20/33		3,529,559
	4,513,133		3.750			02/20/34		4,441,411
	7,891,301		3.750			05/20/34		7,715,122
	2,165,979		4.500			05/20/34		2,148,044
	5,131,225		4.500			07/20/34		5,080,368
	4,083,720		4.750			08/20/34		4,063,735
	14,257,783		4.500			09/20/34		14,129,045
	8,731,053		4.750			09/20/34		8,735,729
	3,049,168		4.750			10/20/34		3,024,530
	4,668,900		4.750			12/20/34		4,648,964

								57,516,507

CMO – 8.1%
Interest Only^(c) – 0.1%
FHLMC Series 2575, Class IB
	2,530,606		5.500			08/15/30		251,116
FHLMC Series 2586, Class NX
	1,680,894		4.500			08/15/16		171,843

								422,959

Inverse Floaters^(a) – 0.0%
FNMA REMIC Trust Series 1990-134, Class SC
	65,858		13.584			11/25/20		78,460
GNMA Series 2001-59, Class SA
	23,792		9.035			11/16/24		26,999

								105,459

IOette^(c) – 0.0%
FHLMC Series 1161, Class U
	1,600		1,172.807			11/15/21		3,082

PAC – 3.0%
FHLMC Series 1327, Class HA
	176,550		7.500			07/15/07		176,146
FHLMC Series 1377, Class H
	907,393		6.000			09/15/07		905,139
FHLMC Series 1475, Class K
	360,484		7.000			02/15/08		359,614
FHLMC Series 1556, Class H
	1,511,904		6.500			08/15/13		1,539,388
FHLMC Series 1601, Class PL
	701,463		6.000			10/15/08		701,015
FHLMC Series 1606, Class H
	1,163,026		6.000			11/15/08		1,162,016
FHLMC Series 1703, Class GB
	1,481,838		6.500			02/15/09		1,479,610
FHLMC Series 1916, Class PC
	3,648,460		6.750			12/15/11		3,711,980
FHLMC Series 2812, Class OA
	1,122,144		5.000			08/15/20		1,117,411
FHLMC Series 3028, Class MB
	7,958,587		5.000			12/15/26		7,924,249
FNMA Series 1993-118, Class J
	75,777		6.500			06/25/08		75,470

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

GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND


Principal		Interest			Maturity
Amount		Rate			Date		Value
Mortgage-Backed Obligations – (continued)

PAC – (continued)
FNMA Series 1993-207, Class G
$	1,353,272		6.150	%		04/25/23	$	1,355,967
FNMA Series 2005-87, Class CL
	5,578,924		5.000			10/25/35		5,537,877

								26,045,882

Planned Amortization – Interest Only^(c) – 0.0%
FHLMC Series 1587, Class HA
	83,852		6.500			10/15/08		3,178

Principal Only^(d) – 0.0%
FNMA REMIC Trust Series G92-28, Class A
	572		0.000			05/25/07		566

Regular Floater^(a) – 1.3%
FHLMC
	2,807,424		0.000			01/15/36		2,619,827
FHLMC Series 3151, Class KY
	3,954,042		0.000			05/15/36		3,804,129
FNMA Series 2001-60, Class OF
	3,280,631		6.270			10/25/31		3,340,754
FNMA Series 2001-70, Class OF
	1,640,315		6.270			10/25/31		1,675,019

								11,439,729

Sequential Fixed Rate – 3.3%
FHLMC Series 108, Class G
	752,787		8.500			12/15/20		750,010
FHLMC Series 1429, Class G
	272,364		7.000			11/15/07		271,727
FHLMC Series 1564, Class H
	1,292,345		6.500			08/15/08		1,292,412
FHLMC Series 1655, Class K
	7,605,566		6.500			01/15/09		7,609,832
FHLMC Series 1980, Class Z
	2,674,507		7.000			07/01/27		2,766,259
FHLMC Series 2019, Class Z
	2,747,345		6.500			12/15/27		2,825,182
FNMA REMIC Trust Series 1989-66, Class J
	994,333		7.000			09/25/19		1,034,171
FNMA REMIC Trust Series 1990-16, Class E
	597,381		9.000			03/25/20		645,515
FNMA REMIC Trust Series 1992-142, Class K
	463,894		7.000			08/25/07		464,064
FNMA REMIC Trust Series 1992-33, Class K
	1,853,525		8.500			03/25/18		1,943,492
FNMA REMIC Trust Series 1993-028, Class PJ
	174,076		7.000			03/25/08		173,696
FNMA REMIC Trust Series 199 3-052, Class J
	1,300,626		6.500			04/25/08		1,299,992
FNMA REMIC Trust Series 1993-121, Class Z
	4,720,694		7.000			07/25/23		4,906,333
FNMA REMIC Trust Series 1993-126, Class PG
	1,364,425		6.500			07/25/08		1,368,170
FNMA REMIC Trust Series 1993-135, Class PG
	506,524		6.250			07/25/08		505,356
GNMA REMIC Trust Series 1995-3, Class DQ
	119,551		8.050			06/16/25		127,552

								27,983,763

TAC – 0.4%
FNMA REMIC Trust Series 1994-18, Class D
	3,327,482		6.750			02/25/24		3,344,986

TOTAL CMO							$	69,349,604

FHLMC – 6.1%
	5,409,253		4.500			05/01/08		5,204,524
	21,046		7.000			01/01/09		21,284
	22,718		7.000			02/01/09		22,974
	16,484		7.000			03/01/09		16,602
	29,576		7.000			04/01/09		29,887
	49,343		7.000			05/01/09		49,900
	3,791		6.500			05/01/10		3,860
	37,473		6.500			06/01/10		38,152
	506,888		6.500			07/01/10		516,088
	69,139		7.000			07/01/10		69,920
	878		6.500			08/01/10		894
	90,024		7.000			01/01/11		90,668
	47,224		7.000			12/01/12		48,387
	178,485		6.500			01/01/13		182,103
	134,233		6.500			04/01/13		136,954
	268,250		6.500			05/01/13		273,687
	117,558		6.500			06/01/13		119,941
	1,246,811		4.000			09/01/13		1,207,208
	90,761		6.500			10/01/13		92,601
	1,287,063		4.000			11/01/13		1,245,903
	1,587,149		5.000			12/01/13		1,578,483
	1,721,786		4.000			01/01/14		1,665,219
	1,451,617		4.000			05/01/14		1,402,162
	709,440		4.500			06/01/14		694,236
	7,575,153		5.000			10/01/14		7,534,053
	2,949,985		4.500			10/01/14		2,884,221
	1,655,112		4.000			11/01/14		1,595,857
	3,036,556		4.500			11/01/14		2,970,411
	15,704,526		4.500			03/01/15		15,351,827
	2,222,908		4.000			03/01/15		2,141,354
	1,163,368		4.500			08/01/15		1,123,799
	103,045		8.500			10/01/15		109,361
	1,267,397		8.000			12/01/15		1,326,938
	56,285		7.000			03/01/16		57,733
	2,161,503		7.000			04/01/22		2,237,029
	53,131		7.500			01/01/31		54,982

								52,099,202

FNMA – 9.3%
	1,477		7.000			11/01/07		1,479
	35,997		7.000			12/01/07		36,039
	1,005		7.000			05/01/08		1,013
	4,714		7.000			08/01/08		4,719
	319,889		7.000			09/01/08		322,129

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

GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND

Schedule of Investments (continued)

October 31, 2006


Principal		Interest			Maturity
Amount		Rate			Date		Value
Mortgage-Backed Obligations – (continued)

FNMA – (continued)
$	6,760		7.000	%		12/01/09	$	6,801
	8,067,777		4.000			05/01/10		7,817,639
	61,936		8.500			05/01/10		63,806
	8,412,230		4.000			06/01/10		8,151,412
	882		7.000			06/01/10		889
	4,288		7.000			08/01/10		4,389
	2,975		7.000			01/01/11		2,995
	52,409		7.000			07/01/11		53,637
	848		7.000			11/01/11		854
	5,448,493		5.500			01/01/13		5,476,488
	3,035,042		4.500			08/01/13		2,971,451
	15,851,785		4.500			09/01/13		15,534,663
	8,481,397		4.000			11/01/13		8,197,693
	71,528		6.000			01/01/14		72,707
	223,271		6.000			03/01/14		226,954
	27,493		5.500			04/01/14		27,441
	1,434,008		4.000			01/01/15		1,375,542
	720,857		4.500			01/01/15		703,185
	4,609		8.500			09/01/15		4,909
	278,583		8.500			10/01/15		296,773
	50,204		8.500			12/01/15		53,378
	1,564,493		5.500			01/01/17		1,570,443
	502,032		5.500			03/01/18		503,697
	1,337,257		5.500			07/01/18		1,342,190
	687,540		5.500			08/01/18		690,076
	949,670		5.500			09/01/18		953,172
	2,744,555		5.500			12/01/18		2,754,977
	5,606,604		5.500			01/01/19		5,627,924
	2,829,067		5.500			05/01/19		2,839,825
	201,780		7.000			11/01/19		209,734
	146,076		8.000			02/01/31		152,824
	4,361,828		6.000			03/01/33		4,397,014
	7,182,895		6.500			04/01/33		7,337,813

								79,788,674

GNMA – 0.0%
	56,569		6.500			06/15/08		56,785
	23,908		6.500			07/15/08		23,999
	88,350		6.500			08/15/08		88,687
	46,560		6.500			09/15/08		46,738
	11,023		6.500			10/15/08		11,065
	2,831		6.500			11/15/08		2,842
	9,594		9.000			12/15/08		9,890
	4,020		6.500			01/15/09		4,050
	18,245		9.000			01/15/09		19,043
	773		6.500			03/15/09		776
	3,509		6.500			04/15/09		3,535
	48,031		6.500			05/15/09		48,383
	6,066		6.500			07/15/09		6,110
	12,067		6.500			11/15/09		12,155
	5,549		9.000			01/15/10		5,847
	39,987		9.000			07/15/12		42,786

								382,691

TOTAL MORTGAGE-BACKED OBLIGATIONS
(Cost $493,370,306)							$	487,839,390

Agency Debentures – 28.8%

FHLB
$	10,000,000		2.900	%^(a)		06/11/07	$	9,859,950
	15,000,000		3.828	^(a)		09/07/07		14,862,490
	21,500,000		4.000	^(a)		12/03/07		21,054,994
	39,000,000		4.800			05/02/08		38,927,499
	7,000,000		3.790			11/28/08		6,844,908
FHLMC
	4,380,000		3.000			12/15/06		4,367,180
	10,000,000		2.415			04/12/07		9,872,580
	40,900,000		4.500			04/18/07		40,726,011
	9,500,000		2.550			04/19/07		9,380,120
	5,000,000		3.500			04/15/08		4,898,255
	19,000,000		4.480			09/19/08		18,838,093
FNMA
	12,000,000		3.550			01/12/07		11,956,500
	10,000,000		3.550			11/16/07		9,840,440
	9,700,000		3.650			11/30/07		9,551,221
	35,000,000		4.200			03/24/08		34,590,115
Small Business Administration
	394,566		7.200			06/01/17		410,687
	717,000		6.300			05/01/18		736,415
	890,061		6.300			06/01/18		914,432

TOTAL AGENCY DEBENTURES
(Cost $248,309,588)							$	247,631,890

U.S. Treasury Obligations – 6.5%

United States Treasury Inflation Protected Securities
$	2,331,231		1.875	%		07/15/13	$	2,257,468
	2,868,944		2.000			01/15/14		2,796,211
	3,677,610		2.000			07/15/14		3,582,220
	6,813,365		1.875			07/15/15		6,561,611
	924,534		2.000			01/15/16		898,170
	7,672,808		2.500			07/15/16		7,783,105
United States Treasury Notes
	23,100,000		4.875			08/15/09		23,229,035
	4,100,000		4.500			02/15/16		4,067,647
United States Treasury Principal-Only STRIPS^(d)
	10,500,000		0.000			11/15/21		5,077,506

TOTAL U.S. TREASURY OBLIGATIONS
(Cost $56,233,601)							$	56,252,973

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

GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND


Principal		Interest			Maturity
Amount		Rate			Date		Value
Repurchase Agreement^(e) – 7.8%

Joint Repurchase Agreement Account II
$	67,200,000		5.316	%		11/01/06	$	67,200,000
Maturity Value: $67,209,923
(Cost $67,200,000)

TOTAL INVESTMENTS – 99.8%
(Cost $865,113,495)							$	858,924,253

OTHER ASSETS IN EXCESS OF LIABILITIES – 0.2%								1,325,457

NET ASSETS – 100.0%							$	860,249,710


	The percentage shown for each investment category reflects the value of investments in that category as a percentage of net assets.


(a)	Variable rate security. Interest rate disclosed is that which is in effect at October 31, 2006.

(b)	A portion of this security is segregated as collateral for initial margin requirement on futures transactions.

(c)	Represents security with notional principal amount. The actual effective yield of this security is different than the stated interest rate.

(d)	Security issued with a zero coupon. Income is recognized through the accretion of discount.

(e)	Joint repurchase agreement was entered into on October 31, 2006. Additional information appears on page 31.



Investment Abbreviations:
CMO	—	Collateralized Mortgage Obligations
FHLB	—	Federal Home Loan Bank
FHLMC	—	Federal Home Loan Mortgage Corp.
FNMA	—	Federal National Mortgage Association
GNMA	—	Government National Mortgage Association
PAC	—	Planned Amortization Class
REMIC	—	Real Estate Mortgage Investment Conduit
STRIPS	—	Separate Trading of Registered Interest and Principal of Securities
TAC	—	Targeted Amortization Class

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

GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND

Schedule of Investments (continued)

October 31, 2006

ADDITIONAL INVESTMENT INFORMATION

FUTURES CONTRACTS — At October 31, 2006, the following futures contracts were open:


	Number of
	Contracts			Settlement	Market			Unrealized
Type	Long (Short)			Month	Value			Gain (Loss)

Eurodollars		(145	)	December 2006	$	(34,305,187	)	$	(16,805	)
Eurodollars		180		March 2007		42,651,000			37,138
Eurodollars		418		June 2007		99,222,750			(147,959	)
Eurodollars		798		September 2007		189,774,375			180,721
Eurodollars		588		December 2007		140,010,150			518,951
Eurodollars		406		March 2008		96,714,275			365,520
Eurodollars		162		June 2008		38,582,325			131,699
U.S. Treasury Bonds		48		December 2006		5,407,500			6,809
2 Year U.S. Treasury Notes		248		December 2006		50,692,750			93,390
5 Year U.S. Treasury Notes		(566	)	December 2006		(59,748,375	)		(407,144	)
10 Year U.S. Treasury Notes		(350	)	December 2006		(37,876,563	)		(268,599	)

TOTAL					$	531,125,000		$	493,721

INTEREST RATE SWAP CONTRACTS — At October 31, 2006, the Fund had outstanding swap contracts

with the following terms:


					Rates Exchanged
							Upfront
	Notional				Payments	Payments	Payments
Swap	Amount		Termination		Received by	Made by	made by		Unrealized
Counterparty	(000s)		Date		the Fund	the Fund	the Fund		Gain (Loss)

J.P. Morgan Securities, Inc.	$	55,000		02/17/11	3 month LIBOR	5.091%	$	—	$	(86,672	)
Banc of America Securities LLC ^(a)		10,000		12/20/11	5.600%	3 month LIBOR		184,838		64,278
Deutsche Bank Securities, Inc. ^(a)		43,500		12/20/13	5.650%	3 month LIBOR		1,153,616		300,911
J.P. Morgan Securities, Inc.		50,000		03/07/16	3 month LIBOR	5.182%		—		(207,445	)

TOTAL							$	1,338,454	$	71,072

(a) Represents forward settling interest rate swaps whose effective dates of commencement of accruals and cash flows occur in December 2006.

LIBOR—London Interbank Offered Rate

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

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

ADDITIONAL INVESTMENT INFORMATION

JOINT REPURCHASE AGREEMENT ACCOUNT II — At October 31, 2006, the Funds had undivided interests in the Joint Repurchase Agreement Account II, as follows:


Fund	Principal Amount

Enhanced Income	$	11,200,000

Ultra-Short Duration Government		21,100,000

Short Duration Government		67,200,000


	Principal		Interest			Maturity	Maturity
Repurchase Agreements	Amount		Rate			Date	Value

ABN Amro, Inc.	$	500,000,000		5.32	%	11/01/06	$	500,073,889

Banc of America Securities LLC		2,750,000,000		5.31		11/01/06		2,750,405,625

Barclays Capital PLC		200,000,000		5.31		11/01/06		200,029,500

Barclays Capital PLC		2,000,000,000		5.32		11/01/06		2,000,295,557

Bear Stearns		500,000,000		5.32		11/01/06		500,073,889

“Credit Suisse Securities (USA) LLC”		750,000,000		5.32		11/01/06		750,110,834

Greenwich Capital Markets		300,000,000		5.32		11/01/06		300,044,334

Merrill Lynch		500,000,000		5.31		11/01/06		500,073,750

Wachovia Bank		250,000,000		5.31		11/01/06		250,036,875

UBS Securities LLC		2,700,200,000		5.32		11/01/06		2,700,399,027

TOTAL	$	10,450,200,000					$	10,451,543,280

At October 31, 2006, the Joint Repurchase Agreement Account II was fully collateralized by Federal Home Loan Bank, 0.00% to 5.75%, due 12/14/06 to 09/22/15; Federal Home Loan Mortgage Association, 2.35% to 9.50%, due 11/17/06 to 09/01/36; Federal National Mortgage Association, 0.00% to 11.00%, due 11/1/06 to 11/01/36; Government National Mortgage Association, 4.50% to 9.00%, due 10/15/09 to 10/15/36 and U.S. Treasury Notes, 4.25% to 4.88% due 03/31/11 to 01/15/14. The aggregate market value of the collateral, including accrued interest, was $10,679,289,697.

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

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Statements of Assets and Liabilities

October 31, 2006


					Ultra-Short
		Enhanced Income			Duration			Short Duration
		Fund			Government Fund			Government Fund

Assets:

Investments in securities, at value (identified cost $203,430,617, $459,115,567 and $865,113,495, respectively)		$	202,890,521		$	452,532,634		$	858,924,253
Cash^(a)			1,154,419			1,969,580			3,013,612
Receivables:
	Investment securities sold		—			975,779			49,038,794
	Interest		1,876,806			2,355,100			4,633,543
	Swap contracts, at value (includes upfront payments made of $0, $1,196,776 and $1,338,454, respectively)		—			1,547,501			1,703,643
	Fund shares sold		7,509,157			513,442			5,981,863
	Reimbursement from investment adviser		—			—			45,963
	Due from broker		—			35,688			232,256
	Other assets		931			1,816			2,179

Total assets			213,431,834			459,931,540			923,576,106

Liabilities:

Payables:
	Investment securities purchased		—			—			59,500,895
	Fund shares repurchased		1,449,495			307,196			2,067,296
	Swap contracts, at value		30,468			76,851			294,117
	Income distribution		151,456			960,208			700,442
	Amounts owed to affiliates		86,022			252,508			538,991
	Due to broker		39,146			276,782			—
Accrued expenses			208,461			245,148			224,655

Total liabilities			1,965,048			2,118,693			63,326,396

Net Assets:

Paid-in capital			289,367,517			608,715,897			897,208,242
Accumulated undistributed net investment income			3,223,079			5,857,318			3,103,565
Accumulated net realized loss on investments, futures and swaps			(80,552,155	)		(150,192,849	)		(34,437,419	)
Net unrealized loss on investments, futures and swaps			(571,655	)		(6,567,519	)		(5,624,678	)

NET ASSETS		$	211,466,786		$	457,812,847		$	860,249,710

Net Assets:
	Class A	$	36,333,460		$	122,379,313		$	323,915,261
	Class B		—			—			14,433,183
	Class C		—			—			41,690,717
	Institutional		173,430,029			317,956,017			468,033,311
	Administration		1,703,297			—			—
	Service		—			17,477,517			12,177,238

Shares Outstanding:
	Class A		3,733,929			13,201,321			33,513,723
	Class B		—			—			1,497,962
	Class C		—			—			4,339,918
	Institutional		17,846,274			34,292,258			48,556,051
	Administration		175,330			—			—
	Service		—			1,877,977			1,264,894

Total shares outstanding, $0.001 par value (unlimited number of shares authorized)			21,755,533			49,371,556			89,172,548

Net asset value, offering and redemption price per share:^(b)
	Class A		$9.73		$	9.27		$	9.67
	Class B		—			—			9.64
	Class C		—			—			9.61
	Institutional		9.72			9.27			9.64
	Administration		9.71			—			—
	Service		—			9.31			9.63


(a)	Includes restricted cash of $1,100,000, $1,200,000 and $1,150,000, relating to initial margin requirements and collateral on futures transactions for the Enhanced Income, Ultra-Short Duration Government and Short Duration Government Funds, respectively, and includes restricted cash of $765,502, and $650,480 relating to swap contracts for the Ultra-Short Duration Government and Short Duration Government Funds, respectively.
(b)	Maximum public offering price per share for Class A shares of the Enhanced Income, Ultra-Short Duration Government (NAV per share multiplied by 1.0152), and Short Duration Government (NAV per share multiplied by 1.0204) is $9.88, $9.41 and $9.87, respectively. At redemption, Class B and Class C shares may be subject to a contingent deferred sales charge, assessed on the amount equal to the lesser of the current net asset value or the original purchase price of the shares.

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

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Statements of Operations

For the Year Ended October 31, 2006


					Ultra-Short
		Enhanced Income			Duration			Short Duration
		Fund			Government Fund			Government Fund

Investment income:

Interest		$	11,737,016		$	27,588,775		$	37,283,052

Total income			11,737,016			27,588,775			37,283,052


Expenses:

Management fees			666,924			2,556,486			4,378,386
Distribution and Service fees^(a)			120,096			394,114			1,480,041
Transfer Agent fees^(a)			164,354			444,824			821,004
Custody and accounting fees			115,297			229,043			250,262
Printing fees			73,323			105,997			114,677
Professional fees			77,395			77,348			78,045
Service share fees			—			149,895			63,435
Registration fees			30,000			61,858			95,565
Trustee fees			16,201			16,201			16,201
Administration share fees			5,230			—			—
Other			20,759			115,754			131,066

Total expenses			1,289,579			4,151,520			7,428,682

Less — expense reductions			(441,320	)		(288,331	)		(710,692	)

Net expenses			848,259			3,863,189			6,717,990

NET INVESTMENT INCOME			10,888,757			23,725,586			30,565,062


Realized and unrealized gain (loss) on investment, futures and swap contracts:

Net realized gain (loss) from:
	Investment transactions		(1,001,036	)		(1,318,591	)		(2,513,638	)
	Futures transactions		(64,921	)		338,010			(4,015,292	)
	Swap contracts		137,469			237,145			672,743
Net change in unrealized gain (loss) on:
	Investments		1,778,263			3,663,604			5,553,001
	Futures		173,281			(423,323	)		3,502,070
	Swap contracts		(193,200	)		665,522			63,959

Net realized and unrealized gain on investment, futures and swaps			829,856			3,162,367			3,262,843

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$	11,718,613		$	26,887,953		$	33,827,905


(a)	Class specific Distribution and Service and Transfer Agent fees were as follows:


	Distribution and Service Fees						Transfer Agent Fees

Fund	Class A		Class B		Class C		Class A		Class B		Class C		Institutional		Administration		Service

Enhanced Income	$	120,096		—		—	$	76,861		—		—	$	86,656	$	837		—
Ultra-Short Duration		394,114		—		—		252,233		—		—		180,599		—	$	11,992
Short Duration		814,244	$	186,331	$	479,466		521,116	$	29,813	$	76,715		188,285		—		5,075

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

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Statements of Changes in Net Assets


		Enhanced Income Fund

		For the			For the
		Year Ended			Year Ended
		October 31, 2006			October 31, 2005

From operations:

Net investment income		$	10,888,757		$	15,404,397
Net realized gain (loss) on investment, futures and swaps			(928,488	)		319,507
Net change in unrealized gain (loss) on investments, futures and swaps			1,758,344			(6,054,751	)

Net increase in net assets resulting from operations			11,718,613			9,669,153

Distributions to shareholders:

From net investment income
	Class A Shares		(1,725,816	)		(3,080,374	)
	Class B Shares		—			—
	Class C Shares		—			—
	Institutional Shares		(8,607,037	)		(11,243,434	)
	Service Shares		—			—
	Administration Shares		(78,128	)		(1,077,520	)

Total distributions to shareholders			(10,410,981	)		(15,401,328	)

From share transactions:

Proceeds from sales of shares			91,969,372			194,684,640
Reinvestment of dividends and distributions			8,268,469			11,851,596
Cost of shares repurchased			(259,653,464	)		(512,923,498	)

Net increase (decrease) in net assets resulting from share transactions			(159,415,623	)		(306,387,262	)

TOTAL INCREASE (DECREASE)			(158,107,991	)		(312,119,437	)

Net assets:

Beginning of year			369,574,777			681,694,214

End of year		$	211,466,786		$	369,574,777

Accumulated undistributed net investment income		$	3,223,079		$	3,382,149

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

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS


Ultra-Short Duration Government Fund						Short Duration Government Fund

For the			For the			For the			For the
Year Ended			Year Ended			Year Ended			Year Ended
October 31, 2006			October 31, 2005			October 31, 2006			October 31, 2005



$	23,725,586		$	27,491,068		$	30,565,062		$	21,936,398
	(743,436	)		(5,946,240	)		(5,856,187	)		(6,752,840	)
	3,905,803			6,756,839			9,119,030			(10,787,877	)

	26,887,953			28,301,667			33,827,905			4,395,681



	(6,223,589	)		(6,763,599	)		(11,610,473	)		(8,341,407	)
	—			—			(545,672	)		(622,550	)
	—			—			(1,349,261	)		(1,399,821	)
	(19,392,406	)		(24,901,988	)		(18,526,665	)		(12,590,303	)
	(1,107,707	)		(1,200,162	)		(437,876	)		(309,545	)
	—			—			—			—

	(26,723,702	)		(32,865,749	)		(32,469,947	)		(23,263,626	)



	162,254,987			304,348,452			469,962,243			551,955,365
	13,988,599			17,776,193			22,536,617			15,890,221
	(536,074,946	)		(1,085,815,792	)		(572,153,138	)		(454,192,933	)

	(359,831,360	)		(763,691,147	)		(79,654,278	)		113,652,653

	(359,667,109	)		(768,255,229	)		(78,296,320	)		94,784,708



	817,479,956			1,585,735,185			938,546,030			843,761,322

$	457,812,847		$	817,479,956		$	860,249,710		$	938,546,030

$	5,857,318		$	7,294,860		$	3,103,565		$	4,830,615

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

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Notes to Financial Statements

October 31, 2006

1. ORGANIZATION

Goldman Sachs Trust (the “Trust”) is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Trust includes Goldman Sachs Enhanced Income Fund (“Enhanced Income”), Goldman Sachs Ultra-Short Duration Government Fund (“Ultra-Short Duration Government”) and Goldman Sachs Short Duration Government Fund (“Short Duration Government”) (collectively, the “Funds” or individually a “Fund”). Each Fund is a diversified portfolio of the Trust. Enhanced Income offers three classes of shares — Class A, Institutional and Administration. Ultra-Short Duration Government offers three classes of shares — Class A, Institutional and Service. Short Duration Government offers five classes of shares — Class A, Class B, Class C, Institutional and Service. Class A shares charge a maximum initial sales charge of 1.50% for Enhanced Income and Ultra-Short Duration Government, and 2.00% for Short Duration Government. The contingent deferred sales charge for Class B shares is 2.00% maximum declining to zero after three years for Short Duration Government. The Class C shares of Short Duration Government have a contingent deferred sales charge of 1.00% during the first 12 months. Institutional, Administration and Service Class of the Funds are not subject to a sales charge. Goldman, Sachs & Co. (“Goldman Sachs”), as distributor of the Funds, receives such sales loads of which a certain portion may be retained.

2. SIGNIFICANT ACCOUNTING POLICIES

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

A. Investment Valuation — Portfolio securities for which market quotations are readily available are valued at market value on the basis of quotations furnished by a pricing service or provided by dealers in such securities. Short-term debt obligations maturing in sixty days or less are valued at amortized cost, which approximates market value. Portfolio securities for which market quotations are not readily available or are deemed not to reflect market value by the investment advisor are valued based on yield equivalents, pricing matrices or other sources, under valuation procedures established by the Trust’s Board of Trustees.

B. Security Transactions and Investment Income — Security transactions are reflected as of the trade date. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis. Interest income is recorded on the basis of interest accrued, premium amortized and discount accreted. Market discounts, original issue discount and market premiums on debt securities are accreted/ amortized to interest income over the life of the security with a corresponding adjustment in the cost basis of that security. Net investment income (other than class specific expenses) and unrealized and realized gains or losses are allocated daily to each class of shares of the respective Funds based upon the relative proportion of net assets of each class.

Certain mortgage security paydown gains and losses are recorded as interest income (loss) and included in interest income in the accompanying Statements of Operations. Original issue discounts (OID) on debt securities are accreted to interest income over the life of the security with a corresponding increase in the cost basis of that security.

Pursuant to applicable law and procedures adopted by the Trust’s Board of Trustees, securities transactions in portfolio securities (including futures transactions) may be effected from time to time through Goldman Sachs or an affiliate. In order for Goldman Sachs or an affiliate, acting as agent, to effect securities or futures transactions for a Fund, the commissions, fees or other remuneration received by Goldman Sachs or an affiliate must be reasonable and fair compared to the

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

commissions, fees or other remuneration received by other brokers in connection with comparable transactions involving similar securities or futures contracts.

C. 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 and/or “pro-rata” basis depending upon the nature of the expense.

Class A, Class B and Class C shareholders of the Funds bear all expenses and fees relating to their respective Distribution and Service Plans. Service Shares bear all expenses and fees relating to their Service and Shareholder Administration Plans. Administration Shares bear all expenses and fees relating to their Administration Plan. Each class of shares of the Funds separately bear its respective class-specific Transfer Agency fees.

D. Federal Taxes and Distribution to Shareholders — It is each Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended (the “Code”) applicable to regulated investment companies and to distribute each year substantially all of its investment company taxable and tax-exempt income and capital gains to its shareholders. Accordingly, no federal tax provisions are required. Dividends and distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared daily and paid monthly. Capital gain distributions, if any, are declared and paid annually. Net capital losses are carried forward to future years and may be used to the extent allowed by the Code to offset any future capital gains. Utilization of capital loss carryforwards will reduce the requirement of future capital gain distributions.

The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with Federal income tax rules, which may differ from generally accepted accounting principles. Therefore, the source of each Fund’s distributions may be shown in the accompanying financial statements as either from net investment income, net realized gains, or as a tax return of capital.

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

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Notes to Financial Statements (continued)

October 31, 2006

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

F. Futures Contracts — The Funds may enter into futures transactions to hedge against changes in interest rates, securities prices, currency exchange rates or to seek to increase total return. Futures contracts are valued at the last settlement price, or in the absence of a sale, the last bid price, at the end of each day on the board of trade or exchange upon which they are traded. Upon entering into a futures contract, the Funds are required to segregate cash or securities equal to the minimum “initial margin” requirement of the associated futures exchange. Subsequent payments for futures contracts (“variation margin”) are paid or received by the Funds, dependent on the fluctuations in the value of the contracts, and are recorded for financial reporting purposes as unrealized gains or losses. When contracts are closed, the Funds realize a gain or loss which is reported in the Statement of Operations.

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

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

During the settlement period between sale and repurchase, the Funds will not be entitled to accrued interest and/or receive principal payments on the securities sold. Dollar roll transactions involve the risk that the market value of the securities sold by the Funds may decline below the repurchase price of those securities. In the event the buyer of the securities under a dollar roll transaction files for bankruptcy or becomes insolvent, the Funds’ use of proceeds of the transaction may be restricted pending a determination by, or with respect to, the other party.

H. Repurchase Agreements — Repurchase agreements involve the purchase of securities subject to the seller’s agreement to repurchase the securities at a mutually agreed upon date and price. During the term of a repurchase agreement, the value of the underlying securities held as collateral on behalf of the Funds, including accrued interest, is required to exceed the value of the repurchase agreement, including accrued interest. If the seller defaults or becomes insolvent, realization of the collateral by the Funds may be delayed or limited and there may be a decline in the value of the collateral during the period while the Funds seek to assert their rights. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians under triparty repurchase agreements.

Pursuant to exemptive relief granted by the Securities and Exchange Commission (“SEC”) and terms and conditions contained therein, the Funds, together with other registered investment companies having management or investment advisory agreements with Goldman Sachs Asset Management, L.P. (“GSAM”), or its affiliates, may transfer uninvested cash into joint accounts, the daily aggregate balance of which is invested in one or more repurchase agreements.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

I. Segregation Transactions — As set forth in the prospectus, the Funds may enter into certain derivative transactions to seek to increase total return. Futures contracts, swap contracts, written options, mortgage dollar rolls, when-issued securities and forward commitments represent examples of such transactions. As a result of entering into these transactions, the Funds are required to segregate liquid assets with a current value equal to or greater than the market value of the corresponding transactions.

J. Swap Contracts — The Funds may enter into swap transactions for hedging purposes or to seek to increase total return. Risks may arise as a result of the failure of the counterparty to the swap contract to comply with the terms of the swap contract. The loss incurred by the failure of a counterparty is generally limited to the interest payment to be received by the Funds and/or the termination value at the end of the contract. Therefore, the Funds consider the creditworthiness of each counterparty to a contract in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying reference asset or index. Entering into these agreements involves, to varying degrees, market, liquidity, elements of credit, legal and documentation risk in excess of amounts recognized in the Statement of Assets and Liabilities.

An interest rate swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices, rates or indices for a specified amount of an underlying notional amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other.

Swaps are marked to market daily using either pricing vendor quotations, counterparty prices or models prices and the change in value, if any, is recorded as unrealized gain or loss in the Statement of Operations. An upfront payment made and/or received by the Funds, is recorded as an asset and/or liability on the Statement of Assets and Liabilities and is only recorded as a realized gain or loss when either the contract’s term ends. Periodic payments received or made on swap contracts are recorded as realized gain or loss in the Statement of Operations. Gains or losses are also realized upon early termination of the swap agreements.

K. Treasury Inflation-Protected Securities — The Funds may invest in Treasury Inflation-Protected Securities (“TIPS”), specially structured bonds in which the principal amount is adjusted daily to keep pace with inflation, as measured by the U.S. Consumer Pricing Index (“CPI”). The adjustments for interest income due to inflation are reflected in interest income in the statement of operations. The repayment of the original bond principal upon maturity is guaranteed by the full faith and credit of the U.S. Government.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Notes to Financial Statements (continued)

October 31, 2006

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

L. Securities purchased on a when-issued or delayed-delivery basis — The Funds may purchase securities on a when-issued or delayed-delivery basis. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled a month or more after trade date; interest income is not accrued until settlement date. At the time a Fund enters into such transactions, it is required to have segregated assets with a current value at least equal to the amount of its when-issued or delayed-delivery purchase commitments. Credit risks exist on these commitments to the extent of any unrealized gains on the underlying securities purchased and any unrealized losses on the underlying securities sold. Market risk exists on these commitments to the same extent as if the securities were owned on a settled basis and gains and losses are recorded and reported in the same manner. In addition to the normal credit and market risks, transactions with delayed settlement dates may expose the Funds to greater risk that such transactions may not be consummated.

3. AGREEMENTS

GSAM, an affiliate of Goldman Sachs, serves as investment adviser pursuant to an Investment Management Agreement (the “Agreement”) with the Trust on behalf of the Funds. Under the Agreement, GSAM manages the Funds, subject to the general supervision of the Trust’s Board of Trustees.

As compensation for the services rendered pursuant to the Agreement, the assumption of the expenses related thereto and administering the Funds’ business affairs, including providing facilities, GSAM is entitled to a fee (“Management fee”), computed daily and payable monthly, equal to an annual percentage rate of each Fund’s average daily net assets.

GSAM receives a Management fee on a contractual basis at the following rates:


				Ultra-Short			Short
	Enhanced			Duration			Duration
Average Daily Net Assets	Income			Government			Government

Up to $1 billion		0.25	%		0.40	%		0.50	%

Next $1 billion		0.23			0.36			0.45

Over $2 billion		0.22			0.34			0.43

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

3. AGREEMENTS (continued)

Prior to February 28, 2006, the contractual Management fees for Enhanced Income, Ultra-Short Duration Government and Short Duration Government Funds as an annual percentage rate of average daily net assets were 0.25%, 0.40% and 0.50%, respectively. Prior to February 28, 2006, GSAM entered into a voluntary fee reduction commitment for Enhanced Income, Ultra-Short Duration Government and Short Duration Government Funds in order to achieve the rates in the above table. In addition, GSAM voluntarily agreed to waive its management fee to 0.20% as an annual percentage rate of average daily net assets of Enhanced Income for the fiscal year ended October 31, 2006.

GSAM has voluntarily agreed to limit certain “Other Expenses” (excluding Management fees, Distribution and Service fees, Transfer Agency fees and expenses, Service Share fees, Account Service fees, taxes, interest, brokerage fees and litigation, indemnification, shareholder meeting and other extraordinary expenses exclusive of any expense offset arrangements) to the extent that such expenses exceed, on an annual basis, a percentage rate of the average daily net assets of each Fund. Such expense reimbursements, if any, are computed daily and paid monthly. In addition, the Funds are not obligated to reimburse GSAM for prior fiscal year expense reimbursements, if any. For the year ended October 31, 2006, the Other Expense limitations for the Enhanced Income, Ultra-Short Duration Government and Short Duration Government as an annual percentage rate of average daily net assets were 0.014%. 0.054% and 0.004%, respectively.

The Trust, on behalf of each Fund, has adopted Distribution and Service Plans. Under the Plans, Goldman Sachs and/or authorized dealers are entitled to a monthly fee for distribution services equal to, on an annual basis, 0.25% of the Enhanced Income and Ultra-Short Duration Government’s average daily net assets attributable to Class A shares and 0.25%, 0.75% and 0.75% for the Short-Duration Government’s average daily net assets attributable to Class A, Class B and Class C shares, respectively. Additionally, Goldman Sachs and/or authorized dealers are entitled to receive, under the Plans, a separate fee for personal and account maintenance services equal to, on an annual basis, 0.25% of Short Duration Government’s average daily net assets attributable to Class B and Class C Shares. For the year ended October 31, 2006, Goldman Sachs has voluntarily agreed to waive a portion of the Distribution and Service fees equal to 0.15% of the average daily net assets attributable to the Class B shares of Short Duration Government.

Goldman Sachs serves as Distributor of the shares of the Funds pursuant to a Distribution Agreement. Goldman Sachs may retain a portion of the Class A sales load and Class B and Class C contingent deferred sales charges. During the year ended October 31, 2006, Goldman Sachs advised the Funds that it retained approximately $3,800, $9,500 and $9,300 of Class A sales loads for Enhanced Income, Ultra-Short Duration Government and Short Duration Government, respectively. Goldman Sachs did not retain any portion of Class B or Class C contingent deferred sales charges for the year ended October 31, 2006.

Goldman Sachs serves as Transfer Agent of the Funds. The Fees charged for such transfer agency services are calculated daily and payable monthly at an annual rate as follows: 0.16% of the average daily net assets for Class A, Class B and Class C Shares, and 0.04% of the average daily net assets for Administration (Enhanced Income only), Institutional and Service shares.

The Trust, on behalf of the Ultra-Short Duration and Short Duration Government, has adopted a Service Plan and a Shareholder Administration Plan for the Service Shares. In addition, the Trust on behalf of Enhanced Income, has adopted an Administration Plan for Administration Shares. These plans allow for Service and Administration Shares to compensate service organizations for providing varying levels of personal and account administration and shareholder administration services to their customers who are beneficial owners of such shares. The Service Plan, Shareholder Administration Plan and Administration Plan provide for compensation to the service organizations in an amount equal to, on an annualized basis, 0.25%, 0.25% and 0.25% respectively, of the average daily net assets of each share class.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Notes to Financial Statements (continued)

October 31, 2006

3. AGREEMENTS (continued)

For the year ended October 31, 2006, GSAM and the Distributor have voluntarily agreed to waive certain fees and reimburse other expenses. In addition, the Funds have entered into certain offset arrangements with the custodian and transfer agent resulting in a reduction of the Funds’ expenses. For the year ended October 31, 2006, expense reductions were as follows (in thousands):


	Fee Waivers						Fee Credits

			Class B
			Distribution		Other						Total
	Management		and Service		Expense		Custody		Transfer		Expense
Fund	Fees		Fees		Reimbursement		Fees		Agent Fees		Reductions

Enhanced Income	$	133	$	—	$	296	$	7	$	5	$	441

Ultra-Short Duration Government		—		—		261		14		13		288

Short Duration Government		—		28		651		5		27		711

At October 31, 2006, the amounts owed to affiliates of the Trust were as follows (in thousands):


	Management		Distribution and		Over		Transfer
Fund	Fees		Service Fees		Reimbursement		Agent Fees		Total

Enhanced Income	$	35	$	8	$	33	$	10	$	86

Ultra-Short Duration Government		161		26		37		29		253

Short Duration Government		357		115		—		67		539

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

4. PORTFOLIO SECURITIES TRANSACTIONS

The cost of purchases and proceeds from sales and maturities of long-term securities for the year ended October 31, 2006, were as follows:


			Purchases		Sales and		Sales and Maturities
	Purchases of		(Excluding		Maturities of		(Excluding
	U.S. Government		U.S. Government		U.S. Government		U.S. Government
	and Agency		and Agency		and Agency		and Agency
Fund	Obligations		Obligations)		Obligations		Obligations)

Enhanced Income	$	135,836,771	$	31,032,601	$	186,487,894	$	110,469,330

Ultra-Short Duration Government		323,225,666		19,926,094		473,777,116		44,936,954

Short Duration Government		888,605,466		—		835,897,838		6,070,539

For the year ended October 31, 2006, Enhanced Income, Ultra-Short Duration Government and Short Duration Government paid commissions of approximately $14,500, $76,800 and $108,100, respectively, in connection with futures contracts entered into with Goldman Sachs.

5. LINE OF CREDIT FACILITY

The Funds participate in a $400,000,000 committed, unsecured revolving line of credit facility together with other registered investment companies having management or investment advisory agreements with GSAM. Under the most restrictive arrangement, the Funds must own securities having a market value in excess of 300% of each Fund’s total bank borrowings. This facility is to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the federal funds rate. The committed facility also requires a fee to be paid by the Funds based on the amount of the commitment that has not been utilized. For the year ended October 31, 2006, the Funds did not have any borrowings under this facility.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Notes to Financial Statements (continued)

October 31, 2006

6. TAX INFORMATION

The tax character of distributions paid during the fiscal year ended October 31, 2006 was as follows:


				Ultra-Short
		Enhanced		Duration		Short Duration
		Income		Government		Government

Distributions paid from:
Ordinary Income		$	10,410,981	$	26,723,702	$	32,469,947

	Total taxable distributions	$	10,410,981	$	26,723,702	$	32,469,947

The tax character of distributions paid during the fiscal year ended October 31, 2005 was as follows:


				Ultra-Short
		Enhanced		Duration		Short Duration
		Income		Government		Government

Distributions paid from:
Ordinary Income		$	15,401,328	$	32,865,749	$	23,263,626

	Total taxable distributions	$	15,401,328	$	32,865,749	$	23,263,626

As of October 31, 2006, the components of accumulated earnings (losses) on a tax basis were as follows:


					Ultra-Short
		Enhanced			Duration			Short Duration
		Income			Government			Government

Undistributed ordinary income — net		$	3,389,606		$	5,988,837		$	2,497,914
Capital loss carryforward:¹
	Expiring 2007		—			(1,739,320	)		(3,752,449	)
	Expiring 2008		—			(2,563,050	)		(2,289,664	)
	Expiring 2009		(7,623,028	)		—			—
	Expiring 2010		(65,331,932	)		(55,038,717	)		—
	Expiring 2011		—			(55,920,321	)		(2,403,563	)
	Expiring 2012		(7,471,508	)		(24,528,394	)		(9,994,195	)
	Expiring 2013		—			(7,818,636	)		(10,870,073	)
	Expiring 2014		(126,777	)		(2,842,873	)		(4,628,086	)

Total capital loss carryforward		$	(80,553,245	)	$	(150,451,311	)	$	(33,938,030	)

Timing differences (dividends payable and straddles)			(151,456	)		(960,208	)		(700,442	)
Unrealized losses — net			(585,636	)		(5,480,368	)		(4,817,974	)

Total accumulated earnings (losses) — net		$	(77,900,731	)	$	(150,903,050	)	$	(36,958,532	)


¹	Expiration occurs on October 31 of the year indicated.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

6. TAX INFORMATION (continued)

As of October 31, 2006, the Funds’ aggregate security unrealized gains and losses based on cost for U.S. federal income tax purposes was as follows:


				Ultra-Short
	Enhanced			Duration			Short Duration
	Income			Government			Government

Tax Cost	$	203,430,868		$	458,758,867		$	863,776,553

Gross unrealized gain		331,540			1,373,430			388,980
Gross unrealized loss		(871,887	)		(7,599,663	)		(5,241,280	)

Net unrealized security loss	$	(540,347	)	$	(6,226,233	)	$	(4,852,300	)

Net unrealized gain (loss) on other investments		(45,289	)		745,865			34,326

Net unrealized gain (loss)		(585,636	)		(5,480,368	)		(4,817,974	)

The difference between book-basis and tax-basis unrealized gains (losses) is attributable primarily to wash sales, differences related to the tax treatment of swap payments, amortization of swaps, market discount accretion and premium amortization and net mark-to-market gains (losses) on 1256 futures contracts.

In order to present certain components of each Fund’s capital accounts on a tax basis, certain reclassifications have been recorded to the Funds’ accounts. These reclassifications have no impact on the net asset value of the Funds. Reclassifications result primarily from the difference in the tax treatment of certain bonds, swap reclasses and expiring capital loss carryforwards.


							Accumulated
				Accumulated			Undistributed
				Net Realized			Net Investment
Fund	Paid-in-Capital			Gain (Loss)			Income

Enhanced Income	$	—		$	636,846		$	(636,846	)

Ultra-Short Duration Government		(189,105	)		(1,371,469	)		1,560,574

Short Duration Government		2,032,826			(2,210,661	)		177,835

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Notes to Financial Statements (continued)

October 31, 2006

7. OTHER MATTERS

Fund’s Concentration — The following Goldman Sachs Asset Allocation Portfolios were beneficial owners of the Funds with amounts greater than 5% as of October 31, 2006 (as a percentage of outstanding Institutional shares):


	Goldman Sachs
	Balanced Strategy
Fund	Portfolio

Short Duration Government		16	%

Legal Proceedings — Purported class and derivative action lawsuits were filed in April and May 2004 in the United States District Court for the Southern District of New York against Goldman Sachs Group, Inc. (“GSG”), GSAM and certain related parties, including certain Goldman Sachs Funds (including these Funds) and the Trustees and Officers of the Trust. In June 2004, these lawsuits were consolidated into one action and in November 2004 a consolidated and amended complaint was filed against GSG, GSAM, Goldman Sachs Asset Management International (“GSAMI”), Goldman Sachs and certain related parties including certain Goldman Sachs Funds and the Trustees and Officers of the Trust. These Funds, along with certain other investment portfolios of the Trust, were named as nominal defendants in the amended complaint. Plaintiffs filed a second amended consolidated complaint on April 15, 2005. The second amended consolidated complaint alleges violations of the Act and the Investment Advisers Act of 1940. The complaint also asserts claims involving common law breach of fiduciary duty and unjust enrichment. The complaint alleges, among other things, that between April 2, 1999 and January 9, 2004 (the “Class Period”), GSAM and other defendants made improper and excessive brokerage commission and other payments to brokers that sold shares of the Goldman Sachs Funds and omitted statements of fact in registration statements and reports filed pursuant to the Act which were necessary to prevent such registration statements and reports from being materially false and misleading. The complaint further alleges that the Goldman Sachs Funds paid excessive and improper advisory fees to Goldman Sachs. The complaint also alleges that GSAM and GSAMI used 12b-1 fees for improper purposes and made improper use of soft dollars. The complaint further alleges that the Trust’s Officers and Trustees breached their fiduciary duties in connection with the foregoing. On January 13, 2006, all claims against the defendants were dismissed by the U.S. District Court. On February 22, 2006, the plaintiffs appealed this decision. By agreement, the plaintiffs subsequently withdrew their appeal without prejudice but reserved their right to reactivate their appeal pending a decision by the circuit court of appeals in similar litigation.

Based on currently available information, GSAM and GSAMI believe that the likelihood that the pending purported class action and derivative action lawsuit will have a material adverse financial impact on the Funds is remote, and the pending action is not likely to materially affect their ability to provide investment management services to their clients, including the Goldman Sachs Funds.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

7. OTHER MATTERS (continued)

New Accounting Pronouncements — On July 13, 2006, the Financial Accounting Standards Board (“FASB”) released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. At this time, the advisor is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined.

On September 15, 2006, FASB released Statement Financial Accounting Standard No. 157 “Fair Value Measurement” (“FAS 157”) which provides enhanced guidance for using fair value to measure assets and liabilities. The standard requires companies to provide expanded information about the assets and liabilities measured at fair value and the potential effect of these fair valuations on an entity’s financial performance. The standard does not expand the use of fair value in any new circumstances, but provides clarification on acceptable fair valuation methods and applications. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The advisor does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Notes to Financial Statements (continued)

October 31, 2006

8. SUMMARY OF SHARE TRANSACTIONS

Share activity is as follows:


	Enhanced Income Fund

	For the Year Ended						For the Year Ended
	October 31, 2006						October 31, 2005

	Shares			Dollars			Shares			Dollars

Class A Shares
Shares sold		807,711		$	7,836,561			3,273,708		$	32,131,000
Reinvestment of dividends and distributions		157,073			1,524,361			255,998			2,487,587
Shares converted from Class B^(a)		—			—			—			—
Shares repurchased		(4,012,187	)		(38,907,129	)		(12,140,930	)		(118,108,073	)

		(3,047,403	)		(29,546,207	)		(8,611,224	)		(83,489,486	)

Class B Shares
Shares sold		—			—			—			—
Reinvestment of dividends and distributions		—			—			—			—
Shares converted to Class A^(a)		—			—			—			—
Shares repurchased		—			—			—			—

		—			—			—			—

Class C Shares
Shares sold		—			—			—			—
Reinvestment of dividends and distributions		—			—			—			—
Shares repurchased		—			—			—			—

		—			—			—			—

Institutional Shares
Shares sold		8,684,184			84,122,386			16,755,467			162,548,083
Reinvestment of dividends and distributions		688,347			6,671,147			956,147			9,279,095
Shares repurchased		(22,697,873	)		(219,788,611	)		(36,934,548	)		(358,792,517	)

		(13,325,342	)		(128,995,078	)		(19,222,934	)		(186,965,339	)

Administration Shares
Shares sold		1,076			10,425			571			5,557
Reinvestment of dividends and distributions		7,530			72,961			8,742			84,914
Shares repurchased		(98,919	)		(957,724	)		(3,719,906	)		(36,022,908	)

		(90,313	)		(874,338	)		(3,710,593	)		(35,932,437	)

Service Shares
Shares sold		—			—			—			—
Reinvestment of dividends and distributions		—			—			—			—
Shares repurchased		—			—			—			—

		—			—			—			—

NET INCREASE (DECREASE)		(16,463,058	)	$	(159,415,623	)		(31,544,751	)	$	(306,387,262	)


(a)	Class B Shares automatically convert into Class A Shares at the end of the calendar quarter that is eight years after the initial purchase date of either the Fund or another Goldman Sachs Fund.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS


Ultra-Short Duration Government Fund												Short Duration Government Fund

For the Year Ended						For the Year Ended						For the Year Ended						For the Year Ended
October 31, 2006						October 31, 2005						October 31, 2006						October 31, 2005

Shares			Dollars			Shares			Dollars			Shares			Dollars			Shares			Dollars


	9,154,321		$	84,913,632			7,090,046		$	65,947,984			17,086,232		$	164,614,524			16,119,801		$	157,145,812
	574,801			5,333,667			605,691			5,629,485			898,070			8,655,248			636,497			6,200,433
	—			—			—			—			54,921			529,346			76,808			749,858
	(17,057,784	)		(158,263,237	)		(27,221,342	)		(253,299,076	)		(18,450,188	)		(177,749,661	)		(15,539,948	)		(151,651,244	)

	(7,328,662	)		(68,015,938	)		(19,525,605	)		(181,721,607	)		(410,965	)		(3,950,543	)		1,293,158			12,444,859


	—			—			—			—			5,379			51,663			21,756			212,307
	—			—			—			—			42,154			405,091			45,365			440,791
	—			—			—			—			(55,081	)		(529,346	)		(77,081	)		(749,858	)
	—			—			—			—			(947,722	)		(9,104,071	)		(1,456,332	)		(14,154,775	)

	—			—			—			—			(955,270	)		(9,176,663	)		(1,466,292	)		(14,251,535	)


	—			—			—			—			673,735			6,453,281			740,225			7,181,679
	—			—			—			—			88,567			848,712			90,335			875,150
	—			—			—			—			(2,372,280	)		(22,728,566	)		(4,090,955	)		(39,666,616	)

	—			—			—			—			(1,609,978	)		(15,426,573	)		(3,260,395	)		(31,609,787	)


	8,296,310			77,049,254			25,001,463			230,212,155			30,851,098			296,373,070			39,169,692			380,331,180
	818,134			7,598,141			1,186,132			11,043,037			1,292,234			12,422,946			848,057			8,238,392
	(37,833,332	)		(351,285,511	)		(87,234,896	)		(812,931,349	)		(37,348,354	)		(359,048,174	)		(25,084,059	)		(243,720,363	)

	(28,718,888	)		(266,638,116	)		(61,047,301	)		(571,676,157	)		(5,205,022	)		(50,252,158	)		14,933,690			144,849,209


	—			—			—			—			—			—			—			—
	—			—			—			—			—			—			—			—
	—			—			—			—			—			—			—			—

	—			—			—			—			—			—			—			—


	31,362			292,101			874,933			8,188,313			257,280			2,469,705			729,615			7,084,387
	113,380			1,056,791			118,204			1,103,671			21,309			204,620			13,967			135,455
	(2,846,267	)		(26,526,198	)		(2,094,203	)		(19,585,367	)		(366,964	)		(3,522,666	)		(514,727	)		(4,999,935	)

	(2,701,525	)		(25,177,306	)		(1,101,066	)		(10,293,383	)		(88,375	)		(848,341	)		228,855			2,219,907

	(38,749,075	)	$	(359,831,360	)		(81,673,972	)	$	(763,691,147	)		(8,269,610	)	$	(79,654,278	)		11,729,016		$	113,652,653

GOLDMAN SACHS ENHANCED INCOME FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Year


			Income (loss) from
			investment operations
										Distributions
	Net asset									to shareholders
	value,		Net		Net realized			Total from		from net
	beginning		investment		and unrealized			investment		investment
Year - Share Class	of year		income^(a)		gain (loss)			operations		income

FOR THE YEARS ENDED OCTOBER 31,

2006 - A	$	9.68	$	0.37	$	0.04		$	0.41	$	(0.36	)
2006 - Institutional		9.67		0.40		0.04		$	0.44		(0.39	)
2006 - Administration		9.67		0.38		0.03		$	0.41		(0.37	)

2005 - A		9.78		0.28		(0.10	)		0.18		(0.28	)
2005 - Institutional		9.77		0.32		(0.10	)		0.22		(0.32	)
2005 - Administration		9.78		0.30		(0.12	)		0.18		(0.29	)

2004 - A		9.99		0.25		(0.19	)		0.06		(0.27	)
2004 - Institutional		9.98		0.30		(0.20	)		0.10		(0.31	)
2004 - Administration		9.99		0.27		(0.19	)		0.08		(0.29	)

2003 - A		10.13		0.33		(0.15	)		0.18		(0.32	)
2003 - Institutional		10.12		0.37		(0.15	)		0.22		(0.36	)
2003 - Administration		10.13		0.33		(0.14	)		0.19		(0.33	)

2002 - A		10.26		0.38		(0.13	)		0.25		(0.38	)
2002 - Institutional		10.26		0.42		(0.14	)		0.28		(0.42	)
2002 - Administration		10.27		0.40		(0.14	)		0.26		(0.40	)


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

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

GOLDMAN SACHS ENHANCED INCOME FUND


													Ratios assuming no
													expense reductions

										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end		net expenses			income			total expenses			income			Portfolio
value, end		Total			of year		to average			to average			to average			to average			turnover
of year		return^(b)			(in 000s)		net assets			net assets			net assets			net assets			rate



$	9.73		4.26	%	$	36,333		0.62	%		3.77	%		0.78	%		3.61	%		67	%
	9.72		4.66			173,430		0.25			4.15			0.41			3.99			67
	9.71		4.29			1,703		0.50			3.91			0.66			3.75			67

	9.68		1.88			65,645		0.64			2.94			0.79			2.80			49
	9.67		2.28			301,362		0.25			3.34			0.40			3.19			49
	9.67		1.92			2,568		0.50			3.09			0.65			2.94			49

	9.78		0.63			150,537		0.65			2.61			0.73			2.53			51
	9.77		1.04			492,276		0.25			3.02			0.33			2.94			51
	9.78		0.79			38,881		0.50			2.75			0.58			2.67			51

	9.99		1.77			378,378		0.65			3.28			0.71			3.22			41
	9.98		2.18			1,106,956		0.25			3.65			0.31			3.59			41
	9.99		1.93			50,463		0.50			3.34			0.56			3.28			41

	10.13		2.48			810,768		0.65			3.70			0.72			3.63			65
	10.12		2.79			2,071,378		0.25			4.17			0.32			4.10			65
	10.13		2.53			18,965		0.50			3.91			0.57			3.84			65

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Year


			Income (loss) from
			investment operations
											Distributions
	Net asset										to shareholders
	value,		Net			Net realized			Total from		from net
	beginning		investment			and unrealized			investment		investment
Year - Share Class	of year		income^(a)			gain (loss)			operations		income

FOR THE YEARS ENDED OCTOBER 31,

2006 - A	$	9.27	$	0.32		$	(0.05	)	$	0.37	$	(0.37	)
2006 - Institutional		9.28		0.35			(0.05	)		0.40		(0.41	)
2006 - Service		9.31		0.31			(0.05	)		0.36		(0.36	)

2005 - A		9.33		0.20			(0.01	)		0.19		(0.25	)
2005 - Institutional		9.34		0.23			—	^(e)		0.23		(0.29	)
2005 - Service		9.37		0.19			(0.01	)		0.18		(0.24	)

2004 - A		9.47		0.19			(0.04	)		0.15		(0.29	)
2004 - Institutional		9.48		0.23			(0.04	)		0.19		(0.33	)
2004 - Service		9.50		0.18			(0.03	)		0.15		(0.28	)

2003 - A		9.66		0.24			(0.11	)		0.13		(0.32	)
2003 - Institutional		9.68		0.28			(0.12	)		0.16		(0.36	)
2003 - Service		9.69		0.23			(0.11	)		0.12		(0.31	)

2002 - A		9.79		0.31	^(d)		(0.06	)^(d)		0.25		(0.38	)
2002 - Institutional		9.81		0.35	^(d)		(0.06	)^(d)		0.29		(0.42	)
2002 - Service		9.82		0.31	^(d)		(0.07	)^(d)		0.24		(0.37	)


(a)	Calculated based on the average shares outstanding methodology.
(b)	Assumes investment at the net asset value at the beginning of the year, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the year and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of Fund shares.
(c)	Includes the effect of mortgage dollar roll transactions.
(d)	As required, effective November 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing all premiums and discounts on debt securities. The effect of this change for the year ended October 31, 2002 was to decrease net investment income per share by $0.05, increase net realized and unrealized gains and losses per share by $0.05, and decrease the ratio of net investment income to average net assets with and without expense reductions by 0.48%.
(e)	Amount is less than $0.005 per share.

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

GOLDMAN SACHS ULTRA-SHORT DURATION GOVERNMENT FUND


													Ratios assuming no
													expense reductions

										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end		net expenses			income			total expenses			income			Portfolio
value, end		Total			of year		to average			to average			to average			to average			turnover
of year		return^(b)			(in 000s)		net assets			net assets			net assets			net assets			rate^(c)



$	9.27		4.20	%	$	122,379		0.86	%		3.46	%		0.91	%		3.41	%		57	%
	9.27		4.36			317,956		0.49			3.83			0.54			3.78			57
	9.31		3.93			17,478		0.99			3.32			1.04			3.27			57

	9.27		1.98			190,210		0.89			2.20			0.89			2.20			71
	9.28		2.49			584,628		0.49			2.59			0.50			2.58			71
	9.31		1.97			42,642		0.99			2.06			1.00			2.05			71

	9.33		1.61			373,650		0.88			2.12			0.88			2.12			103
	9.34		2.02			1,158,844		0.48			2.49			0.48			2.49			103
	9.37		1.61			53,241		0.98			1.95			0.98			1.95			103

	9.47		1.40			768,910		0.86			2.55			0.86			2.55			102
	9.48		1.69			1,967,845		0.46			2.95			0.46			2.95			102
	9.50		1.29			67,480		0.96			2.43			0.96			2.43			102

	9.66		2.57			1,000,977		0.88			3.21	^(d)		0.88			3.21	^(d)		144
	9.68		2.98			2,646,847		0.48			3.65	^(d)		0.48			3.65	^(d)		144
	9.69		2.46			35,883		0.98			3.20	^(d)		0.98			3.20	^(d)		144

GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND

Financial Highlights

Selected Data for a Share Outstanding Throughout Each Year


			Income (loss) from									Distributions
			investment operations									to shareholders

	Net asset
	value,		Net			Net realized			Total from			From net			From
	beginning		investment			and unrealized			investment			investment			paid-in			Total
Year - Share Class	of year		income^(a)			gains (loss)			operations			income			capital			distributions

FOR THE YEARS ENDED OCTOBER 31,

2006 - A	$	9.65	$	0.33		$	0.03		$	0.36		$	(0.34	)	$	—		$	(0.34	)
2006 - B		9.62		0.26			0.05			0.31			(0.29	)		—			(0.29	)
2006 - C		9.59		0.26			0.03			0.29			(0.27	)		—			(0.27	)
2006 - Institutional		9.63		0.37			0.02			0.39			(0.38	)		—			(0.38	)
2006 - Service		9.61		0.32			0.03			0.35			(0.33	)		—			(0.33	)

2005 - A		9.86		0.24			(0.19	)		0.05			(0.26	)		—			(0.26	)
2005 - B		9.83		0.19			(0.20	)		(0.01	)		(0.20	)		—			(0.20	)
2005 - C		9.81		0.17			(0.20	)		(0.03	)		(0.19	)		—			(0.19	)
2005 - Institutional		9.84		0.29			(0.20	)		0.09			(0.30	)		—			(0.30	)
2005 - Service		9.82		0.23			(0.19	)		0.04			(0.25	)		—			(0.25	)

2004 - A		9.99		0.24			(0.06	)		0.18			(0.30	)		(0.01	)		(0.31	)
2004 - B		9.95		0.19			(0.06	)		0.13			(0.24	)		(0.01	)		(0.25	)
2004 - C		9.93		0.17			(0.06	)		0.11			(0.22	)		(0.01	)		(0.23	)
2004 - Institutional		9.96		0.28			(0.05	)		0.23			(0.33	)		(0.02	)		(0.35	)
2004 - Service		9.95		0.22			(0.05	)		0.17			(0.29	)		(0.01	)		(0.30	)

2003 - A		10.12		0.35			(0.14	)		0.21			(0.34	)		—			(0.34	)
2003 - B		10.09		0.29			(0.15	)		0.14			(0.28	)		—			(0.28	)
2003 - C		10.07		0.27			(0.14	)		0.13			(0.27	)		—			(0.27	)
2003 - Institutional		10.10		0.39			(0.15	)		0.24			(0.38	)		—			(0.38	)
2003 - Service		10.09		0.34			(0.15	)		0.19			(0.33	)		—			(0.33	)

2002 - A		10.04		0.37	^(d)		0.14	^(d)		0.51			(0.43	)		—			(0.43	)
2002 - B		10.01		0.31	^(d)		0.14	^(d)		0.45			(0.37	)		—			(0.37	)
2002 - C		9.99		0.28	^(d)		0.16	^(d)		0.44			(0.36	)		—			(0.36	)
2002 - Institutional		10.02		0.42	^(d)		0.13	^(d)		0.55			(0.47	)		—			(0.47	)
2002 - Service		10.01		0.37	^(d)		0.13	^(d)		0.50			(0.42	)		—			(0.42	)


(a)	Calculated based on the average shares outstanding methodology.
(b)	Assumes investment at the net asset value at the beginning of the year, reinvestment of all dividends and distributions, a complete redemption of the investment at the net asset value at the end of the year and no sales or redemption charges. Total return would be reduced if a sales or redemption charge were taken into account. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of Fund shares.
(c)	Includes the effect of mortgage dollar roll transactions.
(d)	As required, effective November 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing all premiums and discounts on debt securities. The effect of this change for the year ended October 31, 2002 was to decrease net investment income per share by $0.06, increase net realized and unrealized gains and losses per share by $0.06, and decrease the ratio of net investment income to average net assets with and without expense reduction by 0.63%.

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

GOLDMAN SACHS SHORT DURATION GOVERNMENT FUND


													Ratios assuming no
													expense reductions

										Ratio of						Ratio of
					Net assets		Ratio of			net investment			Ratio of			net investment
Net asset					at end		net expenses			income			total expenses			income			Portfolio
value, end		Total			of year		to average			to average			to average			to average			turnover
of year		return^(b)			(in 000s)		net assets			net assets			net assets			net assets			rate^(c)



$	9.67		3.84	%	$	323,915		0.91	%		3.35	%		0.99	%		3.27	%		100	%
	9.64		3.24			14,433		1.51			2.73			1.74			2.50			100
	9.61		3.09			41,691		1.66			2.59			1.74			2.51			100
	9.64		4.13			468,033		0.54			3.72			0.62			3.64			100
	9.63		3.72			12,177		1.04			3.22			1.12			3.14			100

	9.65		0.50			327,365		0.93			2.50			0.99			2.44			98
	9.62		(0.10	)		23,602		1.54			1.95			1.74			1.75			98
	9.59		(0.35	)		57,078		1.69			1.80			1.74			1.75			98
	9.63		0.89			517,492		0.54			2.87			0.60			2.81			98
	9.61		0.39			13,009		1.04			2.38			1.10			2.32			98

	9.86		1.81			321,863		0.94			2.41			1.00			2.35			249
	9.83		1.31			38,526		1.54			1.85			1.75			1.64			249
	9.81		1.16			90,317		1.69			1.71			1.75			1.65			249
	9.84		2.33			382,008		0.54			2.79			0.60			2.73			249
	9.82		1.72			11,047		1.04			2.22			1.10			2.16			249

	9.99		2.11			317,379		0.95			3.46			1.01			3.40			184
	9.95		1.41			50,580		1.55			2.87			1.76			2.66			184
	9.93		1.26			130,087		1.70			2.71			1.76			2.65			184
	9.96		2.43			415,210		0.55			3.86			0.61			3.80			184
	9.95		1.92			6,156		1.05			3.36			1.11			3.30			184

	10.12		5.26			246,763		0.94			3.69	^(d)		1.04			3.59	^(d)		194
	10.09		4.65			49,874		1.54			3.09	^(d)		1.79			2.84	^(d)		194
	10.07		4.50			95,458		1.69			2.84	^(d)		1.79			2.74	^(d)		194
	10.10		5.69			280,452		0.54			4.20	^(d)		0.64			4.10	^(d)		194
	10.09		5.17			11,471		1.04			3.70	^(d)		1.14			3.60	^(d)		194

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees
Goldman Sachs Trust

We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Goldman Sachs Enhanced Income Fund, Goldman Sachs Ultra-Short Duration Government Fund, and Goldman Sachs Short Duration Government Fund (three of the funds comprising the Goldman Sachs Trust) (the “Funds”), as of October 31, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2006, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Goldman Sachs Enhanced Income Fund, Goldman Sachs Ultra-Short Duration Government Fund, and Goldman Sachs Short Duration Government Fund at October 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

New York, New York

December 21, 2006

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Fund Expenses (Unaudited) — Six Month Period Ended October 31, 2006

As a shareholder of Class A, Class B, Class C, Institutional, Service or Administration Shares of the Funds you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments (with respect to Class A Shares), contingent deferred sales charges (loads) on redemptions (with respect to Class B and C shares), and redemption fees (if any); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees (with respect to Class A, Class B and Class C Shares); and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in Class A, Class B, Class C, Institutional, Service and Administration Shares of the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2006 through October 31, 2006.

Actual Expenses — The first line under each share class in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid” to estimate the expenses you paid on your account for this period.

Hypothetical Example for Comparison Purposes — The second line under each share class in the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.



	Enhanced Income Fund							Ultra-Short Duration Government Fund							Short Duration Government Fund

						Expenses							Expense							Expenses
	Beginning		Ending			Paid for the		Beginning		Ending			Paid for the		Beginning		Ending			Paid for the
	Account Value		Account Value			6 months ended		Account Value		Account Value			6 months ended		Account Value		Account Value			6 months ended
Share Class	05/01/06		10/31/06			10/31/06*		05/01/06		10/31/06			10/31/06*		05/01/06		10/31/06			10/31/06*

Class A
Actual	$	1,000.00	$	1,022.80		$	3.16	$	1,000.00	$	1,019.70		$	4.38	$	1,000.00	$	1,024.10		$	4.66
Hypothetical 5% return		1,000.00		1,022.08	+		3.16		1,000.00		1,020.86	+		4.39		1,000.00		1,021.88	+		4.65

Class B
Actual		N/A		N/A			N/A		N/A		N/A			N/A		1,000.00		1,020.10			7.71
Hypothetical 5% return		N/A		N/A			N/A		N/A		N/A			N/A		1,000.00		1,017.57	+		7.70

Class C
Actual		N/A		N/A			N/A		N/A		N/A			N/A		1,000.00		1,019.40			8.47
Hypothetical 5% return		N/A		N/A			N/A		N/A		N/A			N/A		1,000.00		1,016.82	+		8.46

Institutional
Actual		1,000.00		1,025.80			1.27		1,000.00		1,020.50			2.50		1,000.00		1,025.00			2.78
Hypothetical 5% return		1,000.00		1,023.95	+		1.27		1,000.00		1,022.73	+		2.50		1,000.00		1,021.54	+		2.77

Administration
Actual		1,000.00		1,023.50			2.55		N/A		N/A			N/A		N/A		N/A			N/A
Hypothetical 5% return		1,000.00		1,022.69	+		2.55		N/A		N/A			N/A		N/A		N/A			N/A

Service
Actual		N/A		N/A			N/A		1,000.00		1,018.90			5.04		1,000.00		1,022.50			5.32
Hypothetical 5% return		N/A		N/A			N/A		1,000.00		1,020.21	+		5.04		1,000.00		1,019.94	+		5.31

Expenses for each share class are calculated using the Fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended 10/31/06. Expenses are calculated by multiplying the annualized expense ratio by the average account value for the period; then multiplying the result by the number of days in the most recent fiscal half year; and then dividing that result by the number of days in the fiscal year. The annualized expense ratios for the period were as follows:


Fund	Class A			Class B		Class C		Institutional			Service			Administration

Enhanced Income		0.62	%		N/A		N/A		0.25	%		N/A			0.50	%
Ultra-Short Duration Government		0.86			N/A		N/A		0.49			0.99	%		N/A
Short Duration Government		0.91			1.51		1.66		0.54			1.04			N/A


+	Hypothetical expenses are based on each Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Statement Regarding Basis for Approval of Management Agreements (Unaudited)

The Trustees oversee the management of Goldman Sachs Trust (the “Trust”), and review the investment performance and expenses of the investment funds covered by this Report (the “Funds”) at regularly scheduled meetings held during the Funds’ fiscal year. In addition, the Trustees determine annually whether to approve and continue the Trust’s investment management agreements (the “Management Agreements”) with Goldman Sachs Asset Management, L.P. (the “Investment Adviser”) for the Funds.

The Management Agreements were most recently approved by the Trustees, including all of the Trustees who are not parties to the Management Agreements or “interested persons” (as defined in the Investment Company Act of 1940, as amended) of any party thereto (the “Independent Trustees”), on June 15, 2006 (the “Annual Contract Meeting”).

To assist the Trustees in their deliberations at the Annual Contract Meeting, and in addition to the reviews of the Funds’ investment performance, expenses and other matters at other regularly scheduled meetings, the Trustees have a Contract Review Committee (the “Committee”) whose members include all of the Independent Trustees. The Committee held meetings on December 15, 2005, February 8, 2006 and May 10, 2006. At these Committee meetings, the Independent Trustees considered matters relating to the Management Agreements including: (a) the Funds’ investment performance; (b) the Funds’ management fee arrangements; (c) the Investment Adviser’s undertaking to reimburse certain expenses of the Funds that exceed specified levels; (d) the Investment Adviser’s potential economies of scale and the breakpoints implemented in 2005 for the fees payable by the Funds under the Management Agreements; (e) the relative expense levels of the Funds; (f) information on the advisory fees charged by the Investment Adviser to institutional accounts; (g) the Investment Adviser’s profitability with respect to the Trust and the Funds; (h) the quality of the non-advisory services provided to the Funds; (i) the statutory and regulatory requirements applicable to the approval and continuation of mutual fund investment management agreements; (j) an evaluation of the Trustees’ contract review process provided by an outside third party; and (k) information on the processes followed by the third party mutual fund data provider engaged as part of the Trustees’ contract review (the “Outside Data Provider”) in producing investment performance and expense comparisons for the Funds.

At the Annual Contract Meeting, the Trustees reviewed the matters that were considered at the Committee meetings and also considered additional matters including: (a) a summary of fee concessions by the Investment Adviser and its affiliates with respect to the Goldman Sachs mutual funds since 2003; (b) the quality of the Investment Adviser’s services; (c) the structure, staff and capabilities of the Investment Adviser and its portfolio management teams; (d) the groups within the Investment Adviser that support the portfolio management teams, including the legal and compliance departments, the credit department, the valuation oversight group, the risk and performance analytics group, the business planning team and the technology group; (e) the Investment Adviser’s business continuity and disaster recovery planning; (f) the Investment Adviser’s financial resources and its ability to hire and retain talented personnel; (g) the fees received by the Investment Adviser’s affiliates from the Funds for transfer agency, securities lending, distribution, portfolio brokerage and other services; (h) the terms of the Management Agreements; (i) the administrative services provided under the Management Agreements, including the nature and extent of the Investment Adviser’s oversight of the Funds’ other service providers including the custodian and fund accounting agent; and (j) the Investment Adviser’s policies addressing various types of potential conflicts of interest. At the Annual Contract Meeting, the Trustees also considered at further length the Funds’ investment performance, fees and expenses, including the Funds’ expense trends over time and the breakpoints in the contractual fee rates under the Management Agreements that were approved in 2005.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)

In connection with the Committee meetings and the Annual Contract Meeting, the Trustees received written materials and oral presentations on the topics covered, and were advised by their independent legal counsel regarding their responsibilities under applicable law. Also, in conjunction with these meetings, the Trustees attended other sessions at which the Trustees reviewed the payment of Rule 12b-1 distribution and service fees by the Funds. Information was also provided to the Trustees relating to the Funds’ portfolio turnover rates, revenue sharing by the Investment Adviser, portfolio manager compensation and the alignment of the interests of the Funds and the portfolio managers, the number and types of accounts managed by the portfolio managers, and other matters. During the course of their deliberations, the Independent Trustees met in executive sessions without employees of the Investment Adviser or its affiliates present.

The presentations made at the Contract Review Committee meetings and at the Annual Contract Meeting encompassed the Funds and other mutual fund portfolios for which the Board of Trustees has responsibility. While the Management Agreements for all of the Funds were approved at the same Annual Contract Meeting, the Trustees considered the applicable Management Agreement as it applied to each Fund separately.

In evaluating the Management Agreements at the Annual Contract Meeting, the Trustees relied upon their knowledge, resulting from their meetings and other interactions throughout the year, of the Investment Adviser, its services and the Funds. At those meetings the Trustees received materials relating to the Investment Adviser’s investment management and other services under the Management Agreements, including: (a) information on the investment performance of the Funds in comparison to other mutual funds and benchmark performance indices; (b) general investment outlooks in the markets in which the Funds invest; (c) compliance reports; and (d) expenses borne by the Funds. In addition, the Trustees were provided with disclosure materials regarding the Goldman Sachs mutual funds and their expenses that were provided to investors who had invested in the funds, as well as information on the Goldman Sachs mutual funds’ competitive universe and the broad range of other investment choices that are available to those investors.

In connection with their approval of the Management Agreements, the Trustees gave weight to various factors, but did not identify any particular factor as controlling their decision. As part of their review, the Trustees considered the nature, extent and quality of the services provided by the Investment Adviser. In this regard, the Trustees considered both the investment advisory services, and the other, non-advisory services, that are provided to the Funds by the Investment Adviser and its affiliates. These services include services as the Funds’ transfer agent, securities lending agent and distributor. In addition, affiliates of the Investment Adviser receive compensation in connection with the execution of the Funds’ portfolio securities transactions and sales loads on the sale of certain classes of shares offered by the Funds. The Trustees concluded that the Investment Adviser was both able to commit substantial financial and other resources to the operations of the Funds and had, in fact, continued to commit those resources in multiple areas including portfolio management, trading, technology, human resources, tax, treasury, legal, compliance, vendor oversight and risk management. The Trustees also believed that the Investment Adviser had made significant commitments to address regulatory compliance requirements applicable to the Funds and the Investment Adviser, including education and training initiatives.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)

The Trustees also considered the investment performance of the Funds and the Investment Adviser. In this regard, the Trustees compared the investment performance of the Funds to the performance of other SEC-registered funds and to rankings and ratings issued by the Outside Data Provider. The Trustees also reviewed the Funds’ investment performance relative to their respective performance benchmarks. For Funds that had been in existence for the respective periods, this information on the Funds’ investment performance was provided for one, three, five and ten (where applicable) year periods. In addition, the Trustees considered the investment performance trends of the Funds over time, and reviewed the investment performance of the Funds in light of their respective investment objectives, policies and credit and duration parameters, as well as in light of periodic analyses of their respective quality and risk profiles. In addition, the Trustees considered whether the Funds had operated within their investment policies, and their record of compliance with their investment limitations. The Trustees believed that the Funds were providing investment performance within a competitive range for long-term investors.

The Board of Trustees also considered the contractual fee rates payable by the Funds under the Management Agreements. In this regard, the Trustees considered information on the services rendered by the Investment Adviser to the Funds, which included both advisory and administrative services that were directed to the needs and operations of the Funds as registered mutual funds. They also considered information that indicated that these mutual fund services differed in various significant respects from the services provided to the Investment Adviser’s institutional accounts, which generally paid lower fees. In addition, the fees paid by the Funds and the Funds’ total operating expense ratios (before and after voluntary fee waivers and expense reimbursements) were compared to similar information for mutual funds advised by other, unaffiliated investment management firms. Most of the comparisons of the Funds’ fee rates and total operating expense ratios were prepared by the Outside Data Provider.

More particularly, the Trustees reviewed analyses prepared by the Outside Data Provider of the expense rankings of the Funds. The analyses provided a comparison of the Funds’ management fees to relevant peer groups and category universes; an expense analysis which compared each Fund’s expenses to a peer group and a category universe; and a five-year history comparing each Fund’s expenses to a category average. The analyses also compared the Funds’ transfer agency fees, custody and accounting fees and other expenses to peer groups and medians. The Trustees believed that the comparisons provided by the Outside Data Provider were useful in evaluating the reasonableness of the management fees paid by the Fund. In addition, the Trustees noted the Investment Adviser’s voluntary undertaking to limit the Funds’ total expense ratios (excluding certain expenses) to specified levels.

The Board of Trustees also considered the breakpoints in the contractual fee rates under the Management Agreements for each of the Funds that were approved in 2005, which had been implemented at the following annual percentages of the average daily net assets of the respective Funds:


	Management Fee			Average Daily
Fund	Annual Rate			Net Assets

Enhanced Income Fund		0.25	%	First $	1 Billion
		0.23	%	Next $	1 Billion
		0.22	%	Over $	2 Billion

Ultra-Short Duration Government Fund		0.40	%	First $	1 Billion
		0.36	%	Next $	1 Billion
		0.34	%	Over $	2 Billion

Short Duration Government Fund		0.50	%	First $	1 Billion
		0.45	%	Next $	1 Billion
		0.43	%	Over $	2 Billion

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Statement Regarding Basis for Approval of Management Agreements (Unaudited) (continued)

In approving these fee breakpoints, the Trustees had reviewed information regarding the Investment Adviser’s potential economies of scale, and whether the Funds and their shareholders were participating in the benefits of these economies. In this regard, the Trustees considered the amount of assets in the Funds; the information provided by the Investment Adviser relating to the costs of the services provided by the Investment Adviser and its affiliates and the profits realized by them; and information comparing fee rates charged by the Investment Adviser with fee rates charged by other, unaffiliated investment managers to other mutual funds. Upon reviewing these matters again at the Annual Contract Meeting in 2006, the Trustees continued to believe that the fee breakpoints were a way to ensure that benefits of scalability would be passed along to shareholders at the specified asset levels.

The Trustees also considered the other benefits derived by the Investment Adviser and its affiliates from the Funds as stated above, including the fees received by them for transfer agency, securities lending, distribution and brokerage services, and the brokerage and research services received by the Investment Adviser in connection with the placement of brokerage transactions for the Funds. The Trustees noted the reduction of the transfer agency fees on Class A, Class B and Class C Shares of the Funds in 2005. In addition, the Trustees reviewed the Investment Adviser’s pre-tax revenues and pre-tax margins with respect to the Trust and the Funds. In this regard the Trustees reviewed, among other things, profitability analyses and summaries, revenue and expense schedules and expense allocation methodologies, as well as a report of independent accountants regarding the results of certain agreed-upon procedures to verify expense allocation calculations that were designed to assist the Trustees in their evaluation of the Investment Adviser’s schedules of revenues and expenses. The Trustees considered the Investment Adviser’s revenues and margins both in absolute terms and in comparison to the information on the reported margins earned by other asset management firms.

After deliberation and consideration of the information provided, including the factors described above, the Trustees concluded that the management fees paid by the Funds were reasonable in light of the services provided by the Investment Adviser, its costs and the Funds’ current and reasonably anticipated asset levels, and that the Management Agreements should be approved and continued.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Trustees and Officers (Unaudited)

Independent Trustees


				Number of
		Term of		Portfolios in
	Position(s)	Office and		Fund Complex	Other
Name,	Held with	Length of	Principal Occupation(s)	Overseen by	Directorships
Address and Age¹	the Trust²	Time Served³	During Past 5 Years	Trustee⁴	Held by Trustee⁵

Ashok N. Bakhru Age: 64	Chairman of the Board of Trustees	Since 1991	President, ABN Associates (July 1994-March 1996 and November 1998-Present); Executive Vice President — Finance and Administration and Chief Financial Officer, Coty Inc. (manufacturer of fragrances and cosmetics) (April 1996-November 1998); Director of Arkwright Mutual Insurance Company (1984-1999); Trustee of International House of Philadelphia (program center and residential community for students and professional trainees from the United States and foreign countries) (1989-2004); Member of Cornell University Council (1992-2004); Trustee of the Walnut Street Theater (1992-2004); Trustee, Scholarship America (1998-2005); Trustee, Institute for Higher Education Policy (2003-Present); Director, Private Equity Investors — III and IV (November 1998-Present), and Equity-Limited Investors II (April 2002-Present); and Chairman, Lenders Service Inc. (provider of mortgage lending services) (2000-2003). Chairman of the Board of Trustees — Goldman Sachs Mutual Fund Complex (registered investment companies).	77	None

John P. Coblentz, Jr. Age: 65	Trustee	Since 2003	Partner, Deloitte & Touche LLP (June 1975-May 2003). Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies).	77	None

Patrick T. Harker Age: 48	Trustee	Since 2000	Dean and Reliance Professor of Operations and Information Management, The Wharton School, University of Pennsylvania (February 2000-Present); Interim and Deputy Dean, The Wharton School, University of Pennsylvania (July 1999-2000); and Professor and Chairman of Department of Operations and Information Management, The Wharton School, University of Pennsylvania (July 1997-August 2000). Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies).	77	None

Mary P. McPherson Age: 71	Trustee	Since 1997	Vice President, The Andrew W. Mellon Foundation (provider of grants for conservation, environmental and educational purposes) (October 1997-Present); Director, Smith College (1998-Present); Director, Josiah Macy, Jr. Foundation (health educational programs) (1977-Present); Director, Philadelphia Contributionship (insurance) (1985-Present); Director Emeritus, Amherst College (1986-1998); Director, The Spencer Foundation (educational research) (1993-February 2003); member of PNC Advisory Board (banking) (1993-1998); Director, American School of Classical Studies in Athens (1997-Present); and Trustee, Emeriti Retirement Health Solutions (post-retirement medical insurance program for non-profit institutions) (Since 2005). Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies).	77	None

Wilma J. Smelcer Age: 57	Trustee	Since 2001	Chairman, Bank of America, Illinois (banking) (1998-January 2001); and Governor, Board of Governors, Chicago Stock Exchange (national securities exchange) (April 2001-April 2004). Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies).	77	Lawson Products Inc. (distributor of industrial products).

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Trustees and Officers (Unaudited) (continued)

Independent Trustees


				Number of
		Term of		Portfolios in
	Position(s)	Office and		Fund Complex	Other
Name,	Held with	Length of	Principal Occupation(s)	Overseen by	Directorships
Address and Age¹	the Trust²	Time Served³	During Past 5 Years	Trustee⁴	Held by Trustee⁵

Richard P. Strubel Age: 67	Trustee	Since 1987	Vice Chairman and Director, Cardean Learning Group (provider of educational services via the internet) (2003-Present); President, COO and Director, Cardean Learning Group (1999-2003); Director, Cantilever Technologies, Inc. (a private software company) (1999-2005); Trustee, The University of Chicago (1987-Present); and Managing Director, Tandem Partners, Inc. (management services firm) (1990-1999). Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies).	77	Gildan Activewear Inc. (clothing marketing and manufacturing company); Cardean Learning Group (provider of educational services via the internet); Northern Mutual Fund Complex (58 Portfolios).

Interested Trustees


				Number of
		Term of		Portfolios in
	Position(s)	Office and		Fund Complex	Other
Name,	Held with	Length of	Principal Occupation(s)	Overseen by	Directorships
Address and Age¹	the Trust²	Time Served³	During Past 5 Years	Trustee⁴	Held by Trustee⁵

*Alan A. Shuch Age: 57	Trustee	Since 1990	Advisory Director — GSAM (May 1999-Present); Consultant to GSAM (December 1994-May 1999); and Limited Partner, Goldman Sachs (December 1994- May 1999). Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies).	77	None

*Kaysie P. Uniacke Age: 45	Trustee &	Since 2001	Managing Director, GSAM (1997-Present).	77	None
	President	Since 2002	Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies). President — Goldman Sachs Mutual Fund Complex (2002-Present) (registered investment companies). Assistant Secretary — Goldman Sachs Mutual Fund Complex (1997-2002) (registered investment companies). Trustee — Gettysburg College


*		These persons are considered to be “Interested Trustees” because they hold positions with Goldman Sachs and own securities issued by The Goldman Sachs Group, Inc. Each Interested Trustee holds comparable positions with certain other companies of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser, administrator and/or distributor.
¹		Each Trustee may be contacted by writing to the Trustee, c/o Goldman Sachs, One New York Plaza, 37th Floor, New York, New York, 10004, Attn: Peter V. Bonanno.
²		The Trust is a successor to a Massachusetts business trust that was combined with the Trust on April 30, 1997.
³		Each Trustee holds office for an indefinite term until the earliest of: (a) the election of his or her successor; (b) the date the Trustee resigns or is removed by the Board of Trustees or shareholders, in accordance with the Trust’s Declaration of Trust; (c) the date the Trustee attains the age of 72 years (in accordance with the current resolutions of the Board of Trustees, which may be changed by the Trustees without shareholder vote); or (d) the termination of the Trust.
⁴		The Goldman Sachs Mutual Fund Complex consists of the Trust and Goldman Sachs Variable Insurance Trust. As of October 31, 2006, the Trust consisted of 65 portfolios, including the Funds described in this Annual Report, and Goldman Sachs Variable Insurance Trust consisted of 12 portfolios.
⁵		This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e., “public companies”) or other investment companies registered under the Act.

Additional information about the Trustees is available in the Funds’ Statement of Additional Information which can be obtained from Goldman Sachs free of charge by calling this toll-free number (in the United States of America): 1-800-292-4726.

GOLDMAN SACHS SHORT DURATION TAXABLE FIXED INCOME FUNDS

Trustees and Officers (Unaudited) (continued)

Officers of the Trust*


		Term of
		Office and
	Position(s) Held	Length of
Name, Age And Address	With the Trust	Time Served¹	Principal Occupation(s) During Past 5 Years

Kaysie P. Uniacke 32 Old Slip New York, NY 10005 Age: 45	President & Trustee	Since 2002 Since 2001	Managing Director, Goldman Sachs (1997-Present). Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies). President — Goldman Sachs Mutual Fund Complex (registered investment companies). Assistant Secretary — Goldman Sachs Mutual Fund Complex (1997-2002) (registered investment companies). Trustee — Gettysburg College

James A. Fitzpatrick 71 South Wacker Drive Suite 500 Chicago, IL 60606 Age: 46	Vice President	Since 1997	Managing Director, Goldman Sachs (October 1999-Present); and Vice President of GSAM (April 1997-December 1999). Vice President — Goldman Sachs Mutual Fund Complex (registered investment companies).

James A. McNamara 32 Old Slip New York, NY 10005 Age: 44	Vice President	Since 2001	Managing Director, Goldman Sachs (December 1998-Present); Director of Institutional Fund Sales, GSAM (April 1998-December 2000); and Senior Vice President and Manager, Dreyfus Institutional Service Corporation (January 1993-April 1998). Vice President — Goldman Sachs Mutual Fund Complex (registered investment companies). Trustee — Goldman Sachs Mutual Fund Complex (registered investment companies) (December 2002-May 2004)

John M. Perlowski 32 Old Slip New York, NY 10005 Age: 42	Treasurer	Since 1997	Managing Director, Goldman Sachs (November 2003-Present) and Vice President, Goldman Sachs (July 1995-November 2003). Treasurer — Goldman Sachs Mutual Fund Complex (registered investment companies).

Peter V. Bonanno 32 Old Slip New York, NY 10005 Age: 37	Secretary	Since 2006	[Managing Director, Goldman Sachs (December 2006-Present)]; Associate General Counsel, Goldman Sachs (2002-Present); Vice President, Goldman Sachs (1999-2002). Secretary — Goldman Sachs Mutual Fund Complex (registered investment companies).


¹		Officers hold office at the pleasure of the Board of Trustees or until their successors are duly elected and qualified. Each officer holds comparable positions with certain other companies of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser, administrator and/or distributor.
*		Represents a partial list of officers of the Trust. Additional information about all the officers is available in the Fund’s Statement of Additional Information which can be obtained from Goldman Sachs free of charge by calling this toll-free number (in the United States): 1-800-292-4726.

FUNDS PROFILE

Goldman Sachs Funds

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

Today, The Investment Management Division of Goldman Sachs serves a diverse set of clients worldwide, including private institutions, public entities and individuals. With portfolio management teams located around the world — and $610.2 billion in assets under management as of September 30, 2006 — our investment professionals bring firsthand knowledge of local markets to every investment decision, making us one of the few truly global asset managers.

GOLDMAN SACHS FUNDS

In building a globally diversified portfolio, you can select from more than 50 Goldman Sachs Funds and gain access to investment opportunities across borders, investment styles, asset classes and security capitalizations.


Money Market Funds¹Fixed Income Funds ▪ Enhanced Income Fund ▪ Ultra-Short Duration Government Fund ▪ Short Duration Government Fund ▪ Short Duration Tax-Free Fund ▪ California Intermediate AMT-Free Municipal Fund ▪ New York Intermediate AMT-Free Municipal Fund ▪ Tennessee Municipal Fund ▪ Municipal Income Fund ▪ U.S. Mortgages Fund ▪ Government Income Fund ▪ Core Fixed Income Fund ▪ Core Plus Fixed Income Fund ▪ Investment Grade Credit Fund ▪ Global Income Fund ▪ High Yield Municipal Fund ▪ High Yield Fund ▪ Emerging Markets Debt Fund		Domestic Equity Funds ▪ Balanced Fund ▪ Growth and Income Fund ▪ Structured Large Cap Value²▪ Large Cap Value ▪ Structured U.S. Equity Fund²▪ Structured U.S. Equity Flex Fund ▪ Structured Large Cap Growth Fund²▪ Capital Growth Fund ▪ Strategic Growth Fund ▪ Concentrated Growth Fund ▪ Mid Cap Value Fund ▪ Growth Opportunities Fund ▪ Small/ Mid Cap Growth Fund ▪ Structured Small Cap Equity Fund²▪ Small Cap Value Fund		International Equity Funds ▪ Structured International Equity Fund²▪ Structured International Equity Flex Fund ▪ Concentrated International Equity Fund²▪ Japanese Equity Fund ▪ International Small Cap Fund²▪ Asia Equity Fund²▪ Emerging Markets Equity Fund ▪ BRIC Fund (Brazil, Russia, India, China) Asset Allocation Funds³Specialty Funds³▪ U.S. Equity Dividend and Premium Fund ▪ Structured Tax-Managed Equity Fund²▪ Real Estate Securities Fund ▪ International Real Estate Securities Fund ▪ Tollkeeper Fund^sm


¹	An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Funds.

²	Effective December 30, 2005, the Asia Growth Fund was renamed the Asia Equity Fund and the International Growth Opportunities Fund was renamed the International Small Cap Fund. Also effective December 30, 2005, the CORE International Equity, CORE Small Cap Equity, CORE Large Cap Growth, CORE Large Cap Value and CORE U.S. Equity Funds were renamed, respectively, the Structured International Equity, Structured Small Cap Equity, Structured Large Cap Growth, Structured Large Cap Value Funds and Structured U.S. Equity. Effective January 6, 2006, the CORE Tax-Managed Equity Fund was renamed the Structured Tax-Managed Equity Fund. Effective December 26, 2006, the International Equity Fund was renamed the Concentrated International Equity Fund.

³	Individual Funds within the Asset Allocation and Specialty categories will have various placement on the risk/return spectrum and may have greater or lesser risk than that indicated by the placement of the general Asset Allocation or Specialty category.

The Goldman Sachs Tollkeeper Fund^sm is a registered service mark of Goldman, Sachs & Co.

GOLDMAN SACHS ASSET MANAGEMENT, L.P. 32 OLD SLIP, 32ND FLOOR, NEW YORK, NEW YORK 10005


TRUSTEES Ashok N. Bakhru, Chairman John P. Coblentz, Jr. Patrick T. Harker Mary Patterson McPherson Alan A. Shuch Wilma J. Smelcer Richard P. Strubel Kaysie P. Uniacke		OFFICERS Kaysie P. Uniacke, President James A. Fitzpatrick, Vice President James A. McNamara, Vice President John M. Perlowski, Treasurer Peter V. Bonanno, Secretary


GOLDMAN, SACHS & CO. Distributor and Transfer Agent		GOLDMAN SACHS ASSET MANAGEMENT, L.P. Investment Adviser

Visit our Web site at www.goldmansachsfunds.com to obtain the most recent month-end returns.

The reports concerning the Funds included in this shareholder report may contain certain forward-looking statements about the factors that may affect the performance of the Funds in the future. These statements are based on Fund management’s predictions and expectations concerning certain future events and their expected impact on the Funds, such as performance of the economy as a whole and of specific industry sectors, changes in the levels of interest rates, the impact of developing world events, and other factors that may influence the future performance of the Funds. Management believes these forward-looking statements to be reasonable, although they are inherently uncertain and difficult to predict. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed.

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how a Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available (I) without charge, upon request by calling 1-800-526-7384 (for Retail Shareholders) or 1-800-621-2550 (for Institutional Shareholders); and (II) on the Securities and Exchange Commission Web site at http://www.sec.gov.

The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. Beginning the fiscal quarter ended January 31, 2005 and every first and third fiscal quarter thereafter, the Funds’ Form N-Q will become available on the SEC’s website at http://www.sec.gov within 60 days after the Funds’ first and third fiscal quarters. When available, the Funds’ Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. When available, Form N-Q may be obtained upon request and without charge by calling 1-800-526-7384 (for Retail Shareholders) or 1-800-621-2550 (for Institutional Shareholders).

Holdings and allocations shown may not be representative of current or future investments. Holdings and allocations may not include the Funds’ entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.

This material is not authorized for distribution to prospective investors unless preceded or accompanied by a current Prospectus. Please consider a Fund’s objectives, risks, and charges and expenses, and read the Prospectus carefully before investing. The Prospectus contains this and other information about the Funds.


Copyright 2006 Goldman, Sachs & Co. All rights reserved. 06-1986	SDTFIAR/ 19.5K/ 12-06