Goldman Sachs High Yield Instl (GSHIX) N-CSRSCertified semi-annual shareholder report (management investment company)

Overall, U.S. equities rallied during the Reporting Period. The Standard & Poor’s 500 Index (the “S&P 500 Index”) ended the Reporting Period with a return of 20.98%. The Russell 3000^® Index generated a return of 21.09%.

Despite ongoing geopolitical tensions and persistent volatility, the market posted solid returns during the Reporting Period amid a backdrop of shifting expectations around the Federal Reserve’s (“Fed”) policy path forward and generally broadening market leadership.

As the Reporting Period began in November 2023, the S&P 500 Index rose 9.13%, marking its best month of performance since July 2022 and breaking a streak of three consecutive monthly declines.

The month saw a broadening of market leadership following mega-cap dominance for most of 2023, as all sectors except energy were positive amid a pullback in crude oil prices, which fell to their lowest levels since July 2023.

November’s gains were chiefly driven by reinforcements to the peak federal funds rate, soft landing and disinflation traction themes and a rally in U.S. Treasuries, which had one of their best monthly performances on record. (A soft landing, in economics, is a cyclical downturn that avoids recession. It typically describes attempts by central banks to raise interest rates just enough to stop an economy from overheating and experiencing high inflation, without causing a significant increase in unemployment, or a hard landing.)

Further, November saw the most significant easing in financial conditions of any month in more than four decades.

In December 2023, the S&P 500 Index increased 4.54%, marking its second consecutive monthly gain and ending the calendar year recording its ninth consecutive weekly gain.

The breadth of market gains continued to expand beyond the Magnificent Seven. (The Magnificent Seven is the group of high-performing and influential companies that drove U.S. equity performance for much of 2023.)

December’s market rally was driven by a dovish pivot in the Federal Reserve’s (“Fed”) monetary policy campaign, a decline in U.S. Treasury yields across the yield curve (or spectrum of maturities), and economic data supporting the soft landing narrative. (Dovish tends to suggest lower interest rates; opposite of hawkish.)

The Fed held interest rates unchanged, as growth of the U.S. economy slowed, the unemployment rate remained low despite abating job gains, and inflationary pressures continued to trend downwards.

Near the end of the month, there was a major shift in the Fed’s policy path expectations, with the Summary of Economic Projections median dot plot signaling 75 basis points of rate cuts in 2024. (A basis point is 1/100th of a percentage point. The Fed’s dot plot shows the interest rate projections of the members of the Federal Open Market Committee.)

U.S. economic data provided further evidence of disinflation momentum, with November’s annualized Consumer Price Index (“CPI”) dropping to its lowest level since March 2021.

Market seasonality proved to be another tailwind to equities, as November and December historically represent the strongest two-month period for U.S. stocks.

The S&P 500 Index gained 10.56% in the first quarter of 2024, closing the quarter at a new all-time high and demonstrating an improvement in market breadth as the quarter progressed.

As strength broadened beyond technology, excitement around artificial intelligence (“AI”) capabilities served as a key tailwind to market performance.

U.S. equities began the quarter with a more cautionary tone, driven by concerns regarding overvalued conditions and the Fed’s ability to match aggressive interest rate cut expectations. U.S. Treasury yields across the curve steepened, a headwind to equity valuations as traders repriced expectations throughout the quarter regarding the path of monetary policy.

Despite this defensive start, stocks reversed course as economic releases and robust labor market data continued to underpin the prevailing soft landing narrative. Market participants initially had aggressive expectations of interest rate cuts as early as March 2024, though expectations were moderated as inflation data spiked with the January and February CPI reports rising more than widely anticipated—shifting consensus timing expectations back to June 2024 for the first interest rate cut.

On the earnings front, corporate earnings were better than consensus expected with stable 2024 outlooks and optimism from the reopening of corporate buybacks as well as both sales and earnings exceeding market forecasts based on improved profit margins across most sectors.

In April 2024, the S&P 500 Index fell 4.08%, notching its first monthly decline of 2024 as markets significantly repriced interest rate cut expectations for 2024, partially driven by decelerating U.S. economic growth in the first calendar quarter, a still strong labor market and persistent above-target inflation data.

The broader equity market had initially forecasted three interest rate cuts in 2024, though consensus expectations were moderated throughout the month as Fed Chair Powell cited that multiple inflation readings raised uncertainty regarding the Fed’s ability to cut rates in 2024.

Further, a slate of Fed officials stressed the risks of easing monetary policy prematurely and indicated the Fed would need to be patient given strength in then-recent economic data. They expressed the possibility of a no rate cut scenario—leaving the market pricing in just 25 basis points of rate cuts by the end of 2024.

S&P 500 constituents reported first quarter 2024 corporate earnings that were broadly better than consensus expected, with the number of reported companies exceeding analyst estimates trending above its historical 10-year average.

For the Reporting Period overall, all capitalization segments within the U.S. equity market posted double-digit absolute gains, led by mid-cap stocks, as measured by the Russell Midcap^® Index, followed by large-cap stocks, as measured by the Russell 1000^® Index, and then small-cap stocks, as measured by the Russell 2000^® Index. From a style perspective, growth stocks moderately outperformed value stocks across the capitalization spectrum. (All as measured by the FTSE Russell indices.)

All 11 sectors of the S&P 500 Index generated double-digit positive total returns during the Reporting Period. The best performing sectors within the S&P 500 Index during the Reporting Period were communication services, financials, information technology and industrials. The weakest performing sectors were real estate, energy, health care and consumer staples.

The U.S. fixed income market recorded a positive return for the Reporting Period.

The Bloomberg U.S. Aggregate Bond Index, representing U.S. bonds of investment grade quality or better, returned 4.97%.

U.S. high yield corporate bonds, as represented by the ICE BofAML BB to B US High Yield Constrained Index, returned 8.57%.

As the Reporting Period began in November 2023, the U.S. saw the greatest easing of financial conditions in any month during the previous 40 years. Factors behind the easing included ongoing disinflation, soft landing optimism and expectations of a dovish Fed pivot. (A soft landing, in economics, is a cyclical downturn that avoids recession. It typically describes attempts by central banks to raise interest rates just enough to stop an economy from overheating and experiencing high inflation, without causing a significant increase in unemployment, or a hard landing. Dovish suggests lower interest rates; opposite of hawkish.)

Government bond yields plunged, with the 10-year U.S. Treasury yield falling approximately 67 basis points. (A basis point is 1/100th of a percentage point.)

Spread, or non-government bond, sectors broadly advanced, with high yield corporate bonds delivering especially strong gains.

In December, the Fed signaled it might have reached the peak of its current monetary policy tightening cycle, and its median dot plot projection showed 75 basis points of rate cuts in 2024. (The dot plot shows interest rate projections of the members of the Federal Open Market Committee.)

Bond yields fell during the month, with the 10-year U.S. Treasury yield dropping below 4% for the first time since August 2023.

Market projections for Fed rate cuts bolstered spread sector performance, fueling additional gains by high yield corporate bonds.

During the first quarter of 2024, bond yields were, by turns, pushed up by hawkish Fed commentary and soft landing optimism and pushed down by progress on disinflation and changing investor expectations about potential Fed rate cuts.

High yield corporate bonds generated positive returns, supported by a mix of better than consensus expected corporate earnings and favorable supply/demand dynamics, including a surge of new issuance and positive investment flows into high yield corporate bond mutual funds.

In April 2024, strong U.S. economic data and resilient labor markets coincided with upside inflation surprises. The combination appeared to raise the bar for Fed monetary policy easing, increasing the prospect of a prolonged period of elevated interest rates.

Bond yields rose significantly, with the two-year U.S. Treasury yield climbing above 5% for the first time since November 2023.

As interest rates rose in April, high yield corporate bonds weakened, though they held up better than most other spread sectors.

During the Reporting Period overall, yields fell along the U.S. Treasury yield curve, with the yields on the longest maturities dropping the most.

The U.S. Treasury yield curve was inverted between two-year and 10-year maturities throughout the Reporting Period. (When the yield curve is inverted, two-year yields are higher than 10-year yields. Historically, an inverted U.S. Treasury yield curve often precedes an economic recession.)

Energy equities generally outperformed energy commodities during the Reporting Period. The S&P energy sector, as represented by the S&P 500^® Energy Select Sector Index (“IXE”)¹, returned 11.75% and the broad midstream² sector, as represented by the Alerian US Midstream Energy Index (“AMUS”)³, returned 18.87% during the Reporting Period. To compare, the S&P 500 Index, a measure of the broad U.S. equities market, finished the Reporting Period up 20.98%. The Bloomberg Commodity Index⁴ returned -0.18% for the Reporting Period, as West Texas Intermediate crude oil prices drifted solidly higher but natural gas prices were down significantly.

Despite ongoing macroeconomic uncertainty for much of 2023, energy-related equities remained resilient to begin the Reporting Period in the last two months of the calendar year amid a pullback in crude oil prices, driven by heightened geopolitical tensions with the outbreak of war in the Middle East.

As the Reporting Period progressed, strong midstream performance was underpinned by a supportive commodity price backdrop and a better appreciation from investors around the sector’s value proposition.

Midstream energy fundamentals were some of the most attractive they have been, with energy companies generating record amounts of free cash flow. This, in turn, gave energy companies the ability to de-lever significantly, creating less volatility in equity prices.

Management teams have been intently focused on maximizing shareholder value, i.e., they have been more disciplined on capital expenditures, stable and growing dividends, and share buyback programs. Such management focus helped drive equity price performance.

During the Reporting Period, there was a growing divergence in midstream equity performance, with Master Limited Partnerships (“MLPs”) outperforming C-Corps. As a reminder, the midstream opportunity set includes companies structured as MLPs and C-Corps, with C-Corps currently representing the majority of the midstream market capitalization. We believe MLP outperformance was largely attributed to two factors.

First, MLP valuation mean reversion for MLP multiples. (Mean reversion is a financial theory positing that asset prices and historical returns eventually revert to their long-term mean or average level. Multiples is a generic term for a class of different indicators that can be used to value a security. A multiple is simply a ratio that is calculated by dividing the market or estimated value of an asset by a specific item on the financial statements.)

Second, continued consolidation in the MLP market segment, with C-Corps buying MLPs for a premium, which has benefited MLPs’ performance and created a technical tailwind for many of the smaller MLPs. Notably, MLP-only indices have reallocated consolidation proceeds to a smaller MLP universe.

Overall, we believed at the end of the Reporting Period that the midstream sector presented a compelling investment opportunity amid a strong commodity price backdrop, healthy fundamentals and discounted valuations.

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.

The Russell 1000^® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000^® Index companies with lower price-to-book ratios and lower expected growth values. This index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. It is not possible to invest directly in an unmanaged index.

The ICE BofAML BB to B U.S. High Yield Constrained Index contains all securities in the ICE BofAML U.S. High Yield Index rated BB1 through B3, based on an average of Moody’s, S&P and Fitch, but caps issuer exposure at 2%. Index constituents are capitalization-weighted, based on their current amount outstanding, provided the total allocation to an individual issuer does not exceed 2%. Issuers that exceed the limit are reduced to 2% and the face value of each of their bonds is adjusted on a pro-rata basis. Similarly, the face values of bonds of all other issuers that fall below the 2% cap are increased on a pro-rata basis. It is not possible to invest directly in an unmanaged index.

The returns set forth in the table above 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.GSAMFUNDS.com to obtain the most recent month-end returns. Performance reflects applicable fee waivers and/or expense limitations in effect during the periods shown. 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.

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.

The S&P 500^® Index is the Standard & Poor’s 500 Composite Index of 500 stocks, an unmanaged index of common stock prices. The index figure does not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

The returns set forth in the table above 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.GSAMFUNDS.com to obtain the most recent month-end returns. Performance reflects applicable fee waivers and/or expense limitations in effect during the periods shown. 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.