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GOLDMAN SACHS TRUST
N-30D, 2001-01-10

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GOLDMAN SACHS HIGH YIELD FUND

Market Overview

Dear Shareholder:

During the period under review, U .S. bond markets generally posted solid returns. However, poor fundamentals led to lackluster results in the high yield market.

Market Review

• The Bond Market — During the first half of the reporting period, steadily rising short-term interest rates led to generally lackluster performance in many sectors of the U.S. fixed income market. Overall, spreads rose, and market -specific events also influenced performance. In addition, falling investor demand detracted from results in the high yield market. During the second half of the period the overall market rebounded, as spreads tightened in response to signs of slower economic growth. However, the high yield market did not participate in the rally. Poor market fundamentals, including weak demand and an increase in default rates continue to hamper results.

  The U.S. Bond market also continued to be affected by the U.S. Treasury Department’s repurchase of long maturity debt. The reduction in supply is aimed at reducing the average maturity and interest cost of Treasury debt. This led to a sharp increase in demand for 30-year bonds throughout the period, resulting in strong performance for longer maturity issues and an inverted yield curve.

• The Economy — Despite repeated attempts by the Federal Reserve Board (the “Fed”) to slow economic growth, the U.S. economy continued to grow at a rapid pace during the first six months of the reporting period. Then, after a series of six short-term interest rate hikes by the Fed, the economy finally began to show signs of moderating during the summer. As such, the Fed left rates unchanged during its June, August and October meetings.

  Outlook

  Given recent supportive data, we continue to believe that the U.S. is headed for a “soft landing” following a period of benign inflation. However, given strong consumer confidence, low unemployment, and continued pockets of solid economic growth, a soft landing is not assured. Conversely, in the short term, ongoing equity volatility coupled with recent negative earnings news could lead to continued credit spread widening and investor flight to the “safe haven” of U.S. Treasuries.

  As always, we appreciate your support and we look forward to serving your investment needs in the years to come.

Sincerely,

David B. Ford	David W. Blood	Sharmin Mossavar-Rahmani
Co-Head, Goldman Sachs	Co-Head, Goldman Sachs	CIO, Fixed Income Investments,
Asset Management	Asset Management	Goldman Sachs Asset Management
November 9, 2000

GOLDMAN SACHS HIGH YIELD FUND

Fund Basics

as of October 31, 2000

 

PERFORMANCE REVIEW
October 31, 1999–	Fund Total Return			30-Day		Lehman High
October 31, 2000	(based on NAV)1			Standardized Yield2		Yield Bond Index3
Class A		0.38	%	10.91	%	–1.61	%
Class B	–0.48		%	10.67	%	–1.61	%
Class C		–0.48	%	10.66	%	–1.61	%
Institutional		0.77	%	11.86	%	–1.61	%
Service		0.15	%	N/A		–1.61	%

¹  The net asset value represents the net assets of the Fund (ex- dividend) divided by the total number of net shares outstanding. The Fund’s performance reflects the reinvestment of dividends and other distributions.

²  The 30-Day Standardized Yield of the Fund is calculated by dividing the net investment income per share (as defined by securities industry regulations) earned by the Fund over a 30-day period (ending on the stated month-end date) by the maximum public offering price per share of the Fund on the last day of the period. This number is compounded semiannually and then annualized. This yield doesnot necessarily reflect income actually earned and distributed by the Fund and, therefore, may not be correlated with the dividends or other distributions paid to shareholders .

³  The Lehman Brothers High Yield Bond Index figures do not reflect any fees or expenses. Investors cannot invest directly in the Index.

STANDARDIZED TOTAL RETURNS4
For the period ending 9/30/00	Class A		Class B		Class C		Institutional		Service
One Year	–0.79	%	–1.92	%	2.20	%	4.28	%	3.76	%
Since Inception	2.44	%	2.22	%	3.26	%	4.34	%	3.83	%
	(8/1/97	)	(8/1/97	)	(8/15/97	)	(8/1/97	)	(8/1/97	)
4  The Standardized Total Returns are average annual returns as of the most recent calendar quarter-end. They assume reinvestment of all distributions at net asset value. These returns reflect a maximum initial sales charge of 4.5% for Class A shares, the assumed deferred sales charge for Class B shares (5% maximum declining to 0% after six years) and the assumed deferred sales charge for Class C shares (1% if redeemed within 12 months of purchase). Because Institutional and Service shares do not involve sales charges, such charges have not been applied to their Standardized Total Returns.
TOP 10 HOLDINGS AS OF 10/31/005
Company						Line of Business				% of Portfolio
Nextel Communications, Inc.						Telecommunications–Cellular				3.6	%
Telewest Communications PLC						Media–Cable				3.0	%
Crown Castle International Corp.						Media–Non-Cable				2.8	%
Riverwood International Corp.						Paper				2.4	%
Allied Waste North America, Inc.						Environmental				1.9	%
CSC Holdings, Inc.						Media–Cable				1.8	%
Fisher Scientific International, Inc.						Consumer Cyclicals				1.7	%
Avecia Group PLC						Chemicals				1.2	%
Charter Communications Holdings LLC						Media–Cable				1.4	%
NTL Communications Corp.						Telecommunications				1.4	%
Credit Allocation:     AAA 4.9%     A 1.1 %     BBB 2.2%     BB 10.2%     B 75 .8%     CCC/NR 5.8%
5  The Fund is actively managed and, as such, its composition may differ over time.
Total return figures represent past performance and do not indicate future results, which will vary. The investment return and principal value of an investment will fluctuate and, therefore, an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance reflects expense limitations in effect.
In their absence, performance would be reduced.

 

 

1

GOLDMAN SACHS HIGH YIELD FUND

Performance Overview

Dear Shareholder,

We are pleased to report on the performance of the Goldman Sachs High Yield Fund for the one-year period that ended October 31, 2000.

Performance Review

Over the one-year reporting period that ended October 31, 2000, the Fund’s A, B and C Institutional and Service share classes generated cumulative total returns, at net asset value, of 0 .38%, –0.48%, –0.48%, 0.77% and 0.15%, respectively. These figures handily outperformed the –1.61% total return of the Fund’s benchmark, the Lehman Brothers High Yield Bond Index.

As the returns of the Fund and its benchmark indicate, it has been a difficult period in the high yield market. The Fund’s relative outperformance versus its benchmark was largely due to sector allocation. In addition, careful credit selection helped to minimize losses from defaults during a period when default rates were on the rise.

High Yield Market Summary

The Fund’s fiscal year began on a positive note, as investor confidence improved on the heels of a rally in the stock market. However, this was short lived, as high yield bonds faltered after the traditional New Year rally failed to materialize. February was dominated by credit-specific problems. In March, market returns were hurt by a sharp sell-off. Rising short-term interest rates, an increase in defaults and accelerating outflows from U.S. mutual funds were the main culprits. The market briefly stabilized during the second quarter, as selling pressures abated and mutual fund redemptions slowed. However, as the reporting period progressed, steadily rising interest rates led to concerns that an economic slowdown could lead to a further increase in the default rate for high yield bonds.

Then, in October, the high yield market experienced one of its worst months since 1980, as investor jitters caused a dramatic widening in risk premiums. Technicals were poor, with continuing mutual fund outflows despite a mid-month Nasdaq recovery. The telecom sector was heavily pounded amidst heightening fears that many companies would run out of cash before completing their ambitious plans. Industrials were impacted by fears of a U.S. recession, with the building products and automotive sectors particularly affected.

Investment Objective

The Fund seeks a high level of current income and may also consider the potential for capital appreciation. The Fund invests primarily in high yield, fixed income securities rated, at the time of investment, below investment grade.

2

GOLDMAN SACHS HIGH YIELD FUND

FIXED INCOME INVESTMENT PROCESS OVERVIEW

 

Portfolio Composition

As of October 31, 2000, the Fund was diversified among 365 issues. Holdings in the top 10 companies represented 11.4% of the portfolio.

Throughout the reporting period, we remained focused on our credit-based investment philosophy which we believe offers compelling risk-adjusted returns potential. We have been actively involved in the European market and have scaled back our exposure to the emerging telecommunications sector. Both of these strategies served to enhance relative performance. In addition, corporate takeover activity bolstered the returns of several Fund holdings, which partially helped to mitigate the weakness in the overall high yield sector.

Portfolio Highlights

• Viasystems — Viasystems is a printed circuit board manufacturer. Through a series of acquisitions, it has evolved into a diversified electronic contract manufacturer. This enabled the company to go public in March 2000, and subsequently reduce debt on its balance sheet. The price of Viasystems bonds has responded favorably to the improvement in its credit quality.

• Allied Waste — Allied Waste is the second largest waste management company in the U.S. The industry had been dragged down by accounting problems from its largest competitor, Waste Management. However, Allied has delivered on all fronts and has been able to meet its forecasted results. This has served to restore investor confidence and has helped it to maintain its credit rating.

• Riverwood International — Riverwood is a large coated board producer that has demonstrated strong performance following a restructuring that began two years ago to lower its manufacturing costs. The company has also sold non-core assets, which has further improved its balance sheet. Recent consolidation in the forest products industry has suggested that there is substantial asset value in the Riverwood name. Based on the combination of these factors, we increased our exposure to Riverwood throughout the reporting period.

Portfolio Outlook

Despite the recent challenging market environment, we believe high yield bonds can play an important part of a well-diversified investment portfolio. In fact, we believe that continued market turbulence should provide further opportunities over the medium term to purchase attractive assets at historically wide levels.

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

Goldman Sachs High Yield Investment Management Team

November 9, 2000

3

GOLDMAN SACHS HIGH YIELD FUND

The Goldman Sachs Advantage

Founded in 1869, Goldman, Sachs & Co. is a premier financial services firm traditionally known on Wall Street and around the world for its institutional expertise.

Today, the firm’s Investment Management Division provides individual investors the opportunity to tap the resources of a global institutional powerhouse — and put this expertise to work in their individual portfolios.

What Sets Goldman Sachs Funds Apart?
    

To learn more about the Goldman Sachs Funds, call your investment professional today.

4

The following graph shows the value as of October 31, 2000, of a $10,000 investment made on August 1, 1997 (commencement of operations) in Class A shares (with the maximum sales charge of 4.5%) of the Goldman Sachs High Yield Fund. For comparative purposes, the performance of the Fund’s benchmark (the Lehman High Yield Bond Index) is shown. This performance data represents past performance and should not be considered indicative of future performance which will fluctuate with changes in market conditions. These performance fluctuations will cause an investor’s shares, when redeemed, to be worth more or less than their original cost. Performance of Class B, Class C, Institutional and Service shares will vary from Class A due to differences in fees and loads.

High Yield Fund’s Lifetime Performance

Growth of a $10,000 Investment, Distributions Reinvested August 1, 1997 to October 31, 2000.

Average Annual Total Return through October 31, 2000		Since Inception		One Year
Class A (commenced August 1, 1997)
Excluding sales charges		2.78%		0.38%
Including sales charges		1.34%		-4.17%
Class B (commenced August 1, 1997)
Excluding contingent deferred sales charges		2.02%		-0.48%
Including contingent deferred sales charges		1.07%		-5.45%
Class C (commenced August 15, 1997)
Excluding contingent deferred sales charges		2.05%		-0.48%
Including contingent deferred sales charges		2.05%		-1.47%
Institutional Class (commenced August 1, 1997)		3.17%		0.77%
Service Class (commenced August 1, 1997)		2.63%		0.15%

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – 73.9%
Aerospace – 2.3%
Argo-Tech Corp. (B-/B3)
$ 6,500,000		8.63	%		10/01/2007		$        5,265,000
Burke Industries, Inc. (B-/Caa1)
2,000,000		10.00			08/15/2007		640,000
Communications Instruments, Inc. (B-/B3)
2,500,000		10.00			09/15/2004		2,187,500
Dunlop Standard Aerospace Holdings (B-/B3)
3,000,000		11.88			05/15/2009		2,985,000
Hexcel Corp. (B/B2)
3,500,000		9.75			01/15/2009		3,220,000
K&F Industries, Inc. (B-/B3)
5,000,000		9.25			10/15/2007		4,775,000
Transdigm, Inc. (B-/B3)
1,000,000		10.38			12/01/2008		920,000
Worldwide Flight Services, Inc. (B/B3)†
750,000		12.25			08/15/2007		502,500
							20,495,000
Automotive Parts – 2.5%
Accuride Corp. (B-/B2)
3,000,000		9.25			02/01/2008		2,100,000
American Axle & Manufacturing, Inc. (B+/B1)
6,000,000		9.75			03/01/2009		5,310,000
Anchor Lamina, Inc. (B-/B3)
1,500,000		9.88			02/01/2008		675,000
Federal-Mogul Corp. (B+/Ba3)
2,000,000		7.50			01/15/2009		480,000
Hayes Lemmerz International, Inc. (B/B2)
3,500,000		9.13			07/15/2007		2,817,500
Hayes Wheels International, Inc. (B/B2)
1,000,000		11.00			07/15/2006		890,000
JL French Automotive Castings (B-/B3)
1,500,000		11.50			06/01/2009		885,000
Oxford Automotive, Inc. (B/Caa1)
2,500,000		10.13			06/15/2007		1,975,000
Prestolite Electric, Inc. (B-/B3)
2,074,000		9.63			02/01/2008		1,285,880
Stanadyne Automotive Corp. (B/Caa1)
3,250,000		10.25			12/15/2007		2,567,500
Venture Holdings Trust (B/B2)
4,000,000		9.50			07/01/2005		2,480,000
							21,465,880
Building Materials – 2.7%
Amatek Industries, Inc. (B/B3)
3,500,000		12.00			02/15/2008		2,362,500
Atrium Cos., Inc. (B-/B3)
2,000,000		10.50			05/01/2009		1,740,000
Better Minerals & Aggregates (B-/B3)†
2,500,000		13.00			09/15/2009		2,006,250

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Building Materials – (continued)
Nortek, Inc. (B+/B1)
$ 3,000,000		9.13	%		09/01/2007		$        2,670,000
2,125,000		8.88			08/01/2008		1,848,750
Nortek, Inc. (B-/B3)
3,250,000		9.88			03/01/2004		2,925,000
Republic Group, Inc. (B/B2)
3,000,000		9.50			07/15/2008		3,030,000
Werner Holdings Co., Inc. (B-/B2)
7,000,000		10.00			11/15/2007		6,667,500
							23,250,000
Capital Goods – 2.7%
Axiohm Transaction Solutions, Inc.V
3,000,000		9.75			10/01/2007		390,000
Flowserve Corp. (B/B3)†
3,000,000		12.25			08/15/2010		3,075,000
International Wire Group, Inc. (B-/B3)
3,500,000		11.75			06/01/2005		3,482,500
Packard BioScience Co. (B-/B3)
9,250,000		9.38			03/01/2007		8,140,000
Simonds Industries, Inc. (B-/B3)
750,000		10.25			07/01/2008		525,000
Thermadyne Holdings Corp. (CCC+/Caa1)§
4,000,000		0.00/12.50			06/01/2008		1,200,000
Thermadyne Manufacturing LLC (CCC+/B3)
6,750,000		9.88			06/01/2008		4,860,000
Trench Electric S.A. (CCC+/B3)
3,500,000		10.25			12/15/2007		2,170,000
							23,842,500
Chemicals – 3.5%
Avecia Group PLC (B/B2)
11,000,000		11.00			07/01/2009		10,450,000
Brunner Mond PLC (CCC/Caa2)
1,000,000		11.00			07/15/2008		270,000
Equistar Chemicals LP (BBB-/Baa3)
2,000,000		7.55			02/15/2026		1,573,600
General Chemicals Industries (B+/B3)
1,500,000		10.63			05/01/2009		991,875
Huntsman ICI Holdings LLC (B+/B2)†
2,500,000		10.13			07/01/2009		2,375,000
Huntsman ICI Holdings LLC (B+/B3) @†
7,125,000		12.27			12/31/2009		2,137,500
Lyondell Chemical Co. (BB/Ba3)
6,500,000		9.88			05/01/2007		6,370,000
Lyondell Chemical Co. (B+/B2)
2,000,000		10.88			05/01/2009		1,920,000
Polymer Group, Inc. (B/B3)
2,250,000		9.00			07/01/2007		1,597,500
3,000,000		8.75			03/01/2008		2,100,000

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Chemicals – (continued)
Sovereign Specialty Chemicals, Inc. (B-/B3)†
$  1,250,000		11.88	%		03/15/2010		$        1,212,500
							30,997,975
Conglomerates – 0.5%
Eagle-Picher Industries, Inc. (B-/B3)
6,500,000		9.38			03/01/2008		4,647,500
Consumer Cyclicals – 5.2%
APCOA, Inc. (CCC+/Caa1)
5,000,000		9.25			03/15/2008		1,750,000
Avis Group Holdings, Inc. (BB-/Ba3)
3,000,000		11.00			05/01/2009		3,195,000
Fisher Scientific International, Inc. (B-/B3)
16,000,000		9.00			02/01/2008		14,654,375
Intertek Finance PLC (B-/B2)
7,000,000		10.25			11/01/2006		3,150,000
MSX International, Inc. (B/B3)
1,000,000		11.38			01/15/2008		920,000
National Equipment Services, Inc. (B/B3)
4,000,000		10.00			11/30/2004		2,400,000
United Rentals, Inc. (BB-/B1)
4,750,000		9.50			06/01/2008		4,049,375
4,000,000		8.80			08/15/2008		3,200,000
Volume Services America, Inc. (B-/B3)
2,750,000		11.25			03/01/2009		2,516,250
Wesco Distribution, Inc. (B/B2)
10,000,000		9.13			06/01/2008		9,000,000
Williams Scotsman, Inc. (B-/B3)
1,000,000		9.88			06/01/2007		850,000
							45,685,000
Consumer Products – 1.8%
Cabot Safety Corp. (B/B3)
4,000,000		12.50			07/15/2005		3,980,000
Corning Consumer Products Co. (B/B3)
6,250,000		9.63			05/01/2008		2,203,125
Generac Portable Products LLC (CCC+/B3)
2,000,000		11.25			07/01/2006		760,000
Jostens, Inc. (B/B3)†
2,500,000		12.75			05/01/2010		2,412,500
Polaroid Corp. (BB-/Ba3)
2,000,000		11.50			02/15/2006		1,560,000
Sealy Mattress Co. (B-/B2)
1,500,000		0.00/10.88	§		12/15/2007		1,125,000
2,500,000		9.88			12/15/2007		2,375,000
The Scotts Co. (B+/B2)†
1,000,000		8.63			01/15/2009		955,000
United Industries Corp. (B-/B3)
1,750,000		9.88			04/01/2009		761,250
							16,131,875

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Defense – 0.6%
Condor Systems, Inc. (B-/B3)†
$ 2,000,000		11.88	%		05/01/2009		$        1,320,000
Newport News Shipbuilding, Inc. (B+/Ba3)
4,000,000		9.25			12/01/2006		4,040,000
							5,360,000
Energy – 1.7%
Benton Oil & Gas Co. (B/B3)
2,250,000		9.38			11/01/2007		1,350,000
Cross Timbers Oil Co. (B/B2)
2,750,000		8.75			11/01/2009		2,681,250
P&L Coal Holdings Corp. (B/B2)
4,250,000		9.63			05/15/2008		4,143,750
R&B Falcon Corp. (B+/Ba3)
2,000,000		6.75			04/15/2005		1,880,000
500,000		9.50			12/15/2008		535,000
RBF Finance Co. (BB-/Ba3)
1,000,000		11.00			03/15/2006		1,137,500
1,000,000		11.38			03/15/2009		1,142,500
Vintage Petroleum, Inc. (BB-/Ba3)
2,000,000		9.75			06/30/2009		2,100,000
							14,970,000
Entertainment – 1.6%
Advanstar Communications, Inc. (B-/B2)
7,250,000		9.25			05/01/2008		7,322,500
Premier Parks, Inc. (B-/B3)
3,250,000		9.25			04/01/2006		2,998,125
SFX Entertainment, Inc. (BB+/Ba3)
2,000,000		9.13			02/01/2008		2,180,000
1,000,000		9.13			12/01/2008		1,090,000
V2 Finance S.A.†
963,000		6.50			06/30/2012		221,490
							13,812,115
Environmental – 2.0%
Allied Waste North America, Inc. (BB-/Ba3)
2,500,000		7.63			01/01/2006		2,225,000
5,750,000		7.88			01/01/2009		4,945,000
Allied Waste North America, Inc. (B+/B2)
10,000,000		10.00			08/01/2009		8,650,000
The IT Group, Inc. (B+/B3)
2,000,000		11.25			04/01/2009		1,720,000
							17,540,000
Food – 2.0%
Agrilink Foods, Inc. (B-/B3)
1,500,000		11.88			11/01/2008		1,102,500
Aurora Foods, Inc. (CCC+/Caa1)
3,750,000		9.88			02/15/2007		2,887,500
1,000,000		8.75			07/01/2008		730,000
Del Monte Foods Co. (B-/Caa1)§
5,350,000		0.00/12.50			12/15/2007		4,012,500

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Food – (continued)
Domino’s, Inc. (B-/B3)
$  5,000,000		10.38	%		01/15/2009		$        4,562,500
Eagle Family Foods (CCC+/B3)
5,000,000		8.75			01/15/2008		2,550,000
New World Pasta Co. (CCC+/Caa1)
1,000,000		9.25			02/15/2009		490,000
Premier International Foods PLC (B-/B3)†
1,500,000		12.00			09/01/2009		1,162,500
							17,497,500
Gaming – 0.3%
Autotote Corp. (B-/B3)†
3,000,000		12.50			08/15/2010		2,955,000
Health Care – 1.6%
ALARIS Medical, Inc. (CCC+/Caa1)§
4,000,000		0.00/11.13			08/01/2008		480,000
Genesis Health Ventures, Inc. (C)V
500,000		9.25			10/01/2006		60,000
1,000,000		9.88			01/15/2009		90,000
HCA-The Healthcare Co. (BB+/Ba2)
1,500,000		8.75			09/01/2010		1,513,483
Hudson Respiratory Care, Inc. (B-/B3)
3,500,000		9.13			04/15/2008		2,104,375
Iasis Healthcare Corp. (B-/B3)†
3,500,000		13.00			10/15/2009		3,185,000
Kinetic Concepts, Inc. (CCC/B3)
5,000,000		9.63			11/01/2007		4,175,000
Triad Hospitals Holdings, Inc. (B-/B3)
2,000,000		11.00			05/15/2009		2,080,000
							13,687,858
Home Construction – 0.3%
D.R. Horton, Inc. (BB/Ba1)
1,000,000		8.00			02/01/2009		890,000
The Ryland Group, Inc. (BB/Ba2)
1,750,000		9.75			09/01/2010		1,680,000
							2,570,000
Insurance Companies – 0.8%
Willis Corroon Corp. (B+/Ba3)
7,500,000		9.00			02/01/2009		6,862,500
Media-Cable – 5.9%
Adelphia Communications Corp. (B+/B2)
1,000,000		9.25			10/01/2002		980,000
6,000,000		9.38			11/15/2009		5,160,000
1,000,000		10.88			10/01/2010		935,000
Callahan Nordrhein Westfalen (B-/B3)†
6,000,000		14.00			07/15/2010		5,790,000
Charter Communications Holdings LLC (B+/B2)
1,000,000		8.25			04/01/2007		905,000
2,000,000		8.63			04/01/2009		1,810,000
3,000,000		0.00/11.75	§		01/15/2010		1,725,000
13,250,000		0.00/9.92	§		04/01/2011		7,751,250

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Media-Cable – (continued)
Echostar DBS Corp. (B+/B1)
$  4,000,000		9.38	%		02/01/2009		$        3,940,000
Frontiervision Holdings LP (B+/B2)§
5,000,000		0.00/11.88			09/15/2007		4,250,000
Ono Finance PLC (CCC+)†
1,250,000		13.00			05/01/2009		962,500
Renaissance Media Group LLC (B-/B3)§
3,000,000		0.00/10.00			04/15/2008		1,995,000
Telewest Communications PLC (B+/B1)
9,500,000		0.00/11.00	§		10/01/2007		8,170,000
5,000,000		11.25			11/01/2008		4,350,000
2,000,000		0.00/9.78	§		04/15/2009		900,000
2,000,000		0.00/11.38	†		02/01/2010		870,000
1,000,000		9.88	†		02/01/2010		790,000
							51,283,750
Media-Non Cable – 4.4%
AMFM, Inc. (BBB-/Ba1)
750,000		8.00			11/01/2008		751,875
AMFM, Inc. (BB+/Ba3)
2,000,000		8.13			12/15/2007		2,010,000
Crown Castle International Corp. (B/B3)
13,500,000		0.00/10.63	§		11/15/2007		10,631,250
7,000,000		0.00/10.38	§		05/15/2011		4,410,000
5,500,000		0.00/11.25	§		08/01/2011		3,520,000
2,500,000		10.75			08/01/2011		2,562,500
Lin Holdings Corp. (B-/B3)§
5,500,000		0.00/10.00			03/01/2008		3,877,500
Pinnacle Holdings, Inc. (B/B3)§
5,000,000		0.00/10.00			03/15/2008		2,900,000
PX Escrow Corp. (B-/B3)§
1,000,000		0.00/9.63			02/01/2006		340,000
Spectrasite Holdings, Inc. (B-/B3)§
5,500,000		0.00/11.25			04/15/2009		2,839,375
Young Broadcasting, Inc. (B/B2)
5,000,000		8.75			06/15/2007		4,550,000
							38,392,500
Metals – 0.7%
Earle M. Jorgensen Co. (B-/B3)
3,500,000		9.50			04/01/2005		2,975,000
Haynes International, Inc. (B-/B3)
1,500,000		11.63			09/01/2004		1,050,000
Republic Technologies International (CC/Caa3)
2,000,000		13.75			07/15/2009		300,000
WHX Corp. (B-/B3)
2,500,000		10.50			04/15/2005		1,550,000
							5,875,000

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Packaging – 2.4%
AEP Industries, Inc. (B/B3)
$  3,000,000		9.88	%		11/15/2007		$        2,460,000
Graham Packaging Co. (B-/B3)
4,500,000		8.75			01/15/2008		2,925,000
Graham Packaging Co. (B-/Caa1)§
6,500,000		0.00/10.75			01/15/2009		2,470,000
Huntsman Packaging Corp. (B/B3)†
7,000,000		13.00			06/01/2010		5,600,000
Owens-Illinois, Inc. (BB/Ba1)
3,000,000		7.15			05/15/2005		2,160,000
Printpack, Inc. (B/Caa1)
3,000,000		10.63			08/15/2006		2,805,000
Printpack, Inc. (B+/B3)
3,000,000		9.88			08/15/2004		2,910,000
							21,330,000
Paper – 4.2%
Ainsworth Lumber Co. Ltd. (B/B2)
6,000,000		12.50			07/15/2007		5,400,000
Packaging Corp. of America (B+/B1)
9,000,000		9.63			04/01/2009		9,202,500
Repap New Brunswick, Inc (CCC+/Caa)
1,500,000		10.63			04/15/2005		1,545,000
Riverwood International Corp. (B-/B3)
8,250,000		10.25			04/01/2006		8,043,750
1,500,000		10.63			08/01/2007		1,470,000
Riverwood International Corp. (CCC+/Caa1)
12,000,000		10.88			04/01/2008		10,830,000
							36,491,250
Publishing – 1.5%
American Lawyer Media, Inc. (B/B2)
4,000,000		9.75			12/15/2007		3,560,000
Day International Group, Inc. (B-/B3)
3,250,000		9.50			03/15/2008		2,860,000
Merrill Corp. (B/B3)
1,500,000		12.00			05/01/2009		1,035,000
Transwestern Publishing Co. (B-/B2)
3,000,000		9.63			11/15/2007		2,970,000
WRC Media Corp. (B-/B3)
2,250,000		12.75			11/15/2009		1,935,000
Ziff Davis Media, Inc. (B-/B2)†
1,000,000		12.00			07/15/2010		915,000
							13,275,000
Retailers – 0.7%
Advance Holdings Corp. (B-/Caa2)§
2,000,000		0.00/12.88			04/15/2009		740,000
Duane Reade, Inc. (B-/B3)
1,750,000		9.25			02/15/2008		1,487,500

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Retailers – (continued)
Mattress Discounters Corp. (B+/B2)
$      750,000		12.63	%		07/15/2007		$            690,000
Musicland Stores Corp. (B/B2)
3,250,000		9.00			06/15/2003		2,957,500
							5,875,000
Technology – 5.3%
Amkor Technology, Inc. (B/B2)†
2,000,000		5.00			03/15/2007		1,430,000
Details, Inc. (B+/Caa1)§
2,000,000		0.00/12.50			11/15/2007		1,600,000
Details, Inc. (B-/B3)
5,000,000		10.00			11/15/2005		4,843,750
Exodus Communications, Inc. (B/B3)
3,000,000		11.25			07/01/2008		2,790,000
1,250,000		10.75			12/15/2009		1,112,500
1,000,000		11.63			07/15/2010		920,000
Flextronics International Ltd. (B+/Ba3)†
3,000,000		9.88			07/01/2010		3,000,000
Globix Corp. (B-)
1,750,000		12.50			02/01/2010		962,500
Intersil Corp. (B/B1)
3,500,000		13.25			08/15/2009		4,060,000
Intira Corp. (CCC)§
2,000,000		0.00/13.00			02/01/2010		1,000,000
MCMS, Inc. (CCC+/Caa3)
3,000,000		9.75			03/01/2008		2,040,000
NorthPoint Communications Group, Inc. (CCC/Caa1)
3,000,000		12.88			02/15/2010		2,790,000
SCG Holding & Semiconductor Corp. (B/B2)
7,030,000		12.00			08/01/2009		6,977,275
Unisys Corp. (BB+/Ba1)
2,000,000		11.75			10/15/2004		2,095,000
Viasystems Group, Inc. (B/B3)
12,250,000		9.75			06/01/2007		10,902,500
							46,523,525
Telecommunications – 10.8%
360networks, Inc. (B/B3)
3,000,000		12.50			12/15/2005		2,625,000
Allegiance Telecom, Inc. (B/B3)
3,000,000		0.00/11.75	§		02/15/2008		2,070,000
1,000,000		12.88			05/15/2008		1,000,000
Birch Telecom, Inc.
1,000,000		14.00			06/15/2008		600,000
CapRock Communications Corp. (B-/B3)
750,000		11.50			05/01/2009		721,875
Carrier1 International S.A. (B-/B3)†
2,250,000		13.25			02/15/2009		1,732,500

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Telecommunications – (continued)
Colt Telecom Group PLC (B+/B1)§
$  5,500,000		0.00/12.00	%		12/15/2006		$        5,011,875
Completel Europe N.V. (CCC+/Caa1)§
2,250,000		0.00/14.00			02/15/2009		1,080,000
Econophone Inc.†
2,000,000		13.50			07/15/2007		1,000,000
Energis PLC (B+/B1)†
4,500,000		9.75			06/15/2009		4,320,000
Global Crossing Holdings Ltd. (BB/Ba2)
1,500,000		9.13			11/15/2006		1,428,750
2,750,000		9.63			05/15/2008		2,633,125
2,500,000		9.50			11/15/2009		2,387,500
GST Network Funding, Inc.§
2,000,000		0.00/10.50			05/01/2008		900,000
Hermes Europe Railtel B.V. (B/B3)
2,500,000		11.50			08/15/2007		1,125,000
ICG Holdings, Inc. (CCC-/Caa1)§
3,000,000		0.00/11.63			03/15/2007		420,000
Intermedia Communications, Inc. (B/B2)
7,250,000		0.00/11.25	§		07/15/2007		6,017,500
1,000,000		9.50			03/01/2009		967,500
Intermedia Communications, Inc. (CCC+/B3)§
1,000,000		0.00/12.25			03/01/2009		640,000
Jazztel PLC (CCC+/Caa1)
750,000		14.00			04/01/2009		525,000
Leap Wireless International, Inc. (CCC/Caa2)
1,000,000		0.00/14.50	§		04/15/2010		280,000
500,000		12.50			04/15/2010		360,000
Level 3 Communications, Inc. (B/B3)
4,000,000		9.13			05/01/2008		3,240,000
McLeodUSA, Inc. (B+/B1)
2,000,000		0.00/10.50	§		03/01/2007		1,670,000
2,000,000		9.50			11/01/2008		1,830,000
750,000		8.13			02/15/2009		641,250
Metromedia Fiber Network, Inc. (B+/B2)
3,000,000		10.00			11/15/2008		2,670,000
2,000,000		10.00			12/15/2009		1,800,000
Metronet Communications Corp. (BBB/Baa3)
750,000		10.63			11/01/2008		828,750
Metronet Communications Corp. (BBB/Baa3)§
7,000,000		0.00/9.95			06/15/2008		5,740,000
Nextel Communications, Inc. (B/B1)
5,500,000		9.38			11/15/2009		5,335,000
Nextel Partners, Inc. (CCC+/B3)
650,000		0.00/14.00	§		02/01/2009		455,000
3,500,000		11.00			03/15/2010		3,482,500
NEXTLINK Communications, Inc. (B/B2)
2,000,000		9.63			10/01/2007		1,710,000
2,250,000		9.00			03/15/2008		1,845,000
1,500,000		10.75			06/01/2009		1,316,250
NTL Communications Corp. (B/B2)†
2,250,000		11.88			10/01/2010		2,081,250

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Telecommunications – (continued)
Pathnet, Inc.
$  1,500,000		12.25	%		04/15/2008		$            480,000
Price Communications Wireless, Inc. (B+/Ba2)
2,000,000		9.13			12/15/2006		1,990,000
PSINet, Inc. (B-/B3)
3,750,000		10.00			02/15/2005		1,875,000
1,500,000		11.50			11/01/2008		780,000
1,000,000		11.00			08/01/2009		500,000
RSL Communications PLC (B-/B3)
1,000,000		12.25			11/15/2006		132,500
2,000,000		0.00/10.13	§		03/01/2008		140,000
625,000		9.13			03/01/2008		100,000
2,000,000		10.50			11/15/2008		300,000
Tele1 Europe B.V. (B-/B3)
1,000,000		13.00			05/15/2009		860,000
TeleCorp PCS, Inc. (B3)†
2,000,000		10.63			07/15/2010		1,995,000
United Pan-Europe Communications N.V. (B/B2)
1,000,000		0.00/13.75	§		02/01/2010		390,000
2,000,000		11.25			02/01/2010		1,520,000
Viatel, Inc. (B-/B3)
2,343,000		11.50			03/15/2009		1,218,360
WAM!Net, Inc. (CCC+)§
1,250,000		0.00/13.25			03/01/2005		559,375
Williams Communications Group, Inc. (B+/B2)
2,000,000		10.70			10/01/2007		1,715,000
3,500,000		11.70	†		08/01/2008		3,080,000
2,000,000		10.88			10/01/2009		1,685,000
2,000,000		11.88			08/01/2010		1,740,000
World Access, Inc. (B-)
2,000,000		13.25			01/15/2008		1,480,000
							95,030,860
Telecommunications-Cellular – 5.8%
AirGate PCS, Inc. (CCC/Caa1)§
1,000,000		0.00/13.50			10/01/2009		570,000
Alamosa PCS Holdings, Inc. (CCC+/Caa1)§
2,500,000		0.00/12.75			02/15/2010		1,200,000
Centennial Cellular Corp. (B-/B3)
6,000,000		10.75			12/15/2008		5,640,000
Dobson Communications Corp. (B/B3)†
3,000,000		10.88			07/01/2010		2,880,000
Esat Telecom Group PLC (A/A2)
4,000,000		11.88			12/01/2008		4,720,000
Horizon PCS, Inc. (CCC/Caa1)§
2,500,000		0.00/14.00			10/01/2010		1,187,500
Millicom International Cellular S.A. (B-/B3)§
5,000,000		0.00/13.50			06/01/2006		4,200,000

Principal Amount		Interest Rate			Maturity Date		Value
Corporate Bonds – (continued)
Telecommunications-Cellular – (continued)
Nextel Communications, Inc. (B/B1)§
$  8,500,000		0.00/10.65	%		09/15/2007		$        6,842,500
4,250,000		0.00/9.75			10/31/2007		3,251,250
18,000,000		0.00/9.95			02/15/2008		13,635,000
Orange PLC (A/A1)
3,000,000		9.00			06/01/2009		3,090,000
Triton PCS Holdings, Inc. (CCC+/B3)§
4,250,000		0.00/11.00			05/01/2008		3,219,375
							50,435,625
Textiles – 0.1%
Galey & Lord, Inc. (B/Ca)
2,000,000		9.13			03/01/2008		1,080,000
Globe Manufacturing Corp. (D/Ca)V
2,000,000		10.00			08/01/2008		200,000
							1,280,000
TOTAL CORPORATE BONDS
(Cost $773,272,810)							$    647,563,213
Emerging Market Debt – 3.4%
APP China Group Ltd. (CCC+/B3)†
$      670,000		14.00	%		03/15/2010		$            281,400
Cellco Finance N.V. (B/B1)
4,000,000		12.75			08/01/2005		4,070,625
Federal Republic of Brazil (B+/B1)
420,000		12.25			03/06/2030		365,138
700,000		11.00			08/17/2040		535,062
Federal Republic of Brazil C-Bonds (B+/B2)
2,303,959		8.00			04/15/2014		1,715,010
Grupo Industrial Durango S.A. (BB-/B2)
2,400,000		12.63			08/01/2003		2,415,142
Grupo Iusacell S.A. de C.V. (B+/B1)
2,000,000		14.25			12/01/2006		2,015,000
Hanvit Bank (B/B1)†#
1,990,000		11.75			03/01/2010		1,902,750
Indah Kiat Finance Mauritius (CCC+/B3)
1,240,000		10.00			07/01/2007		496,000
MRS Logistica S.A. (B)†
120,000		10.63			08/15/2005		100,500
Multicanal S.A. (BB+/B1)†
2,000,000		13.13			04/15/2009		1,650,000
National Power Corp. (BB)
500,000		7.63			11/15/2000		499,541
National Republic of Bulgaria (B2)#
4,120,000		3.00			07/28/2012		2,945,800
Partner Communications Co., Ltd. (B-/B3) ADR
3,000,000		13.00			08/15/2010		2,460,000

Principal Amount		Interest Rate			Maturity Date		Value
Emerging Market Debt – (continued)
PTC International Finance B.V. (B+/B2)§
$          870,000		0.00/10.75	%		07/01/2007		$            578,550
Republic of Panama (BB+/Ba1)#
1,073,898		7.93			05/10/2002		1,057,790
300,000		10.75			05/15/2020		290,813
610,000		9.38			04/01/2029		584,837
Republic of Poland (BBB+/Baa1)#
1,050,000		3.50			10/27/2024		656,906
1,310,000		4.00			10/27/2024		890,800
Russian Federation (B-/B3)
2,900,000		10.00			06/26/2007		2,165,937
State of Qatar (BBB/Baa2)
900,000		9.75			06/15/2030		868,500
United Mexican States (BB+/Baa3)
700,000		10.38			02/17/2009		741,125
240,000		9.88			02/01/2010		249,450
TOTAL EMERGING MARKET DEBT
(Cost $29,712,171)							$     29,536,676
Foreign Debt ObligationsE  – 12.4%
British Pound Sterling – 3.1%
Coral Group Holdings PLC (B-/B3)†
GBP 1,500,000		10.00	%		02/15/2009		$        2,176,424
2,355,177		13.50			09/30/2009		3,383,070
Gala Group Holdings PLC (B-/B3)
1,750,000		12.00			06/01/2010		2,634,380
IPC Magazines Group PLC (B-/B3)
3,250,000		0.00/10.75§			03/15/2008		3,017,974
4,000,000		9.63			03/15/2008		5,049,303
Telewest Communications PLC (B+/B1)§
12,500,000		0.00/9.88			04/15/2009		8,161,589
William Hill Finance PLC (B-/B3)
1,500,000		10.63			04/30/2008		2,209,070
							26,631,810
Euro Currency – 8.1%
BSN Financing Co., S.A. (B/B1)
EUR 750,000		10.25			08/01/2009		588,716
Callahan Nordrhein Westfalen (B-/B3)†
500,000		14.00			07/15/2010		413,693
Clondalkin Industries PLC (B-/B3)
1,500,000		10.63			01/15/2010		1,241,078
Completel Europe N.V. (Caa1)
1,000,000		14.00			04/15/2010		678,880
CP Kelco (B/B3)†
8,750,000		11.88			09/15/2010		7,105,967
Enitel ASA (B-/B3)
2,500,000		12.50			04/15/2010		1,378,976
Esat Telecom Group PLC (B+/Aa1)
2,000,000		11.88			11/01/2009		2,092,750
Exodus Communications, Inc. (B/B3)
3,250,000		10.75			12/15/2009		2,385,628

Principal Amount		Interest Rate			Maturity Date		Value
Foreign Debt ObligationsE  – (continued)
Euro Currency – (continued)
FLAG Telecom Holdings Ltd. (B/B2)
EUR  3,500,000		11.63	%		03/30/2010		$        2,405,782
Flextronics International Ltd. (B+/Ba3)†
250,000		9.75			07/01/2010		216,393
Flowserve Finance B.V. (B/B3)†
1,500,000		12.25			08/15/2010		1,291,994
Huntsman ICI Chemicals (B+/B2)
8,000,000		10.13			07/01/2009		6,585,139
Ineos PLC (B+/B3)
5,250,000		10.25			05/15/2010		4,165,567
Jazztel PLC (CCC+/Caa1)
2,000,000		14.00			04/01/2009		1,238,957
Jones Lang Lasalle Financial B.V. (BBB-/Ba2)
750,000		9.00			06/15/2007		657,930
Kappa Beheer B.V. (B/B2)†§
6,500,000		0.00/12.50			07/15/2009		3,654,285
Kappa Beheer N.V. (B/B2)
8,000,000		10.63			07/15/2009		6,856,691
Metromedia Fiber Network, Inc. (B+/B2)
2,750,000		10.00			12/15/2009		2,088,618
Neste Chemicals International OYJ (B/B3)
2,896,000		12.25			08/15/2010		2,174,929
NTL Communications Corp. (B/B2)§
3,800,000		0.00/11.50			11/15/2009		1,596,217
NTL Communications Corp. (B-/B3)
11,750,000		9.88			11/15/2009		8,375,686
Ono Finance PLC (CCC+/Caa1)†
5,000,000		13.00			05/01/2009		3,182,251
2,500,000		14.00			07/15/2010		1,675,986
PTC International Finance II S.A. (B+/B2)
2,570,000		11.25			12/01/2009		1,941,004
Slovak Wireless Finance Co. (B/B2)
750,000		11.25			03/30/2007		572,805
Tele1 Europe B.V. (B-/B3)†
1,000,000		13.00			05/15/2009		767,984
1,000,000		11.88			12/01/2009		721,310
United Pan-Europe Communications N.V. (B/B2)
1,500,000		11.25			02/01/2010		980,133
Vantico Group S.A. (B-/B3)
6,000,000		12.00			08/01/2010		4,149,656
							71,185,005
German Mark – 1.2%
Colt Telecom Group PLC (B+/B1)
DEM 5,000,000		8.88			11/30/2007		2,060,942
Impress Metal Pack Holdings (B/B2)
10,000,000		9.88			05/29/2007		3,904,942
Ineos PLC (B+/B3)
5,000,000		8.63			04/30/2005		2,060,942
Sirona Dental Systems (B/B2)†
6,750,000		9.13			07/15/2008		1,727,937
Texon International PLC (B3)†
2,250,000		10.00			02/01/2008		877,636
							10,632,399

Principal Amount		Interest Rate			Maturity Date		Value
Foreign Debt ObligationsE  – (continued)
TOTAL FOREIGN DEBT OBLIGATIONS
(Cost $144,756,587)							$    108,449,214
Repurchase Agreement – 2.7%
Joint Repurchase Agreement Account_
$23,800,000		6.62	%		11/01/2000		$      23,800,000
TOTAL REPURCHASE AGREEMENT
(Cost $23,800,000)							$      23,800,000

Shares				Value
Common Stocks – 0.4%
59,200		Colt Telecom Group PLC *		$  1,889,716
62,500		Completel Europe N.V.		500,000
9,132		McleodUSA, Inc.		175,791
33,342		Pathmark Stores, Inc.		523,053
2,881		RSL Communications Ltd.		3,601
18,792		Tele1 Europe Holding AB ADR		147,987
7,069		World Access, Inc.		34,461
3,044		WRC Media Corp.		0
TOTAL COMMON STOCKS
(Cost $993,452)				$ 3,274,609

Shares		Interest Rate			Maturity Date		Value
Preferred Stocks‡ – 3.0%
Avecia Group PLC (B-/B3)
46,656		16.00	%		07/01/2010		$        1,259,712
Crown Castle International Corp. (CCC+/Caa)
2,579		12.75			12/15/2010		2,604,790
CSC Holdings, Inc. (B+/B1)
63,359		11.75			10/01/2007		6,874,452
79,970		11.13			04/01/2008		8,576,782
Eagle-Picher Holdings, Inc. (CCC+)
200		11.75			03/01/2008		450,000
Global Crossing Holdings Ltd. (B+/B1)
12,500		10.50			12/01/2008		1,237,500
Intermedia Communications, Inc. (CCC-/Caa)
1,482		13.50			03/31/2009		1,333,800
Nextel Communications, Inc. (CCC+/B3)
1,471		11.13			02/15/2010		1,441,580
River Holding Corp.
4,971		11.50			04/15/2010		320,649
Rural Cellular Corp. (CCC+/Caa)
2,189		12.25			05/15/2011		1,904,472
TOTAL PREFERRED STOCKS
(Cost $23,343,350)							$      26,003,737

Shares				Value
Warrants* – 0.3%
2,000		ASAT Finance LLC, expiring November 1, 2006		$160,000
670		Asia Pulp & Paper Ltd., expiring March 15, 2005		29,480
80,000		Avecia Group PLC, expiring July 1, 2010		900,000
1,000		Birch Telecom, Inc., expiring June 15, 2008		55,000
3,000		Cellnet Data Systems, Inc., expiring September 15, 2007		0
2,000		Coral Group Holdings PLC, expiring September 30, 2009		406,266
2,500		Enitel ASA, expiring April 15, 2010		0
7,000		Huntsman Packaging Corp., expiring June 1, 2010		0
44,618		Intira Corp., expiring February 2, 2025		0
10,000		Jazztel PLC, expiring April 1, 2009		441,272
2,500		Jostens, Inc., expiring May 1, 2010		0
1,750		Knology, Inc., expiring October 15, 2007		87,500
1,500		Leap Wireless International, Inc., expiring April 15, 2010		0
750		Mattress Discounters Holding Corp., expiring July 15, 2007		7,500
1,500		Merrill Corp., expiring May 1, 2009		0
6,250		Ono Finance PLC, expiring May 1, 2009		387,010
1,500		Pathnet, Inc., expiring April 15, 2008		15,000
2,000		Republic Technologies International LLC, expiring July 15, 2009		37,000
1,750		V2 Music Holdings PLC, expiring April 15, 2008		0

Shares				Value
Warrants* – continued
3,750		WAM!Net, Inc., expiring March 1, 2005		$          41,250
750		Worldwide Flight Services, Inc., expiring August 15, 2007		75
TOTAL WARRANTS
(Cost $407,823)				$    2,567,353
TOTAL INVESTMENTS
(Cost $996,286,193)				$841,194,802

_

Joint repurchase agreement was entered into on October 31, 2000.

†

Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such security may be resold, normally to qualified institutional buyers in transactions exempt from registration. The market value of 144A securities amounts to $90,316,070 as of October 31, 2000.

§

These securities are issued with a zero coupon or dividend rate which increases to the stated rate at a set date in the future.

E

The principal amount of each security is stated in the currency in which the bond is denominated. See below.

DEM = German Mark.

EUR = Euro currency.

GBP = Great Britain Pound.

#

Variable rate security. Coupon rate disclosed is that which is in effect at October 31, 2000.

‡

Pay-in-kind securities.

*

Non-income producing security.

V

Security currently in default.

@

Security is issued with a zero coupon. The interest rate disclosed for this security represents effective yield to maturity.

Security ratings are unaudited

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

Investment Abbreviations:

ADR—American Depositary Receipt

Assets:
Investment in securities, at value (identified cost $996,286,193)		$  841,194,802
Cash, at value		121,096
Receivables:
Investment securities sold, at value		7,626,486
Interest, at value		23,691,675
Fund shares sold		3,452,185
Forward foreign currency exchange contracts, at value		20,909,932
Reimbursement from investment adviser		116,251
Deferred organization expenses, net		11,246
Total assets		897,123,673
Liabilities:
Payables:
Fund shares repurchased		9,980,538
Investment securities purchased, at value		7,486,486
Income distribution		2,302,799
Amounts owed to affiliates		760,924
Forward foreign currency exchange contracts, at value		183,265
Accrued expenses and other liabilities, at value		487,629
Total liabilities		21,201,641
Net Assets:
Paid-in capital		1,032,911,978
Accumulated undistributed net investment income		1,239,409
Accumulated net realized loss on investment and foreign currency related transactions		(22,751,968	)
Net unrealized loss on investments and translation of assets and liabilities denominated in foreign currencies		(135,477,387	)
NET ASSETS		$  875,922,032
Net asset value, offering and redemption price per share: (a)
Class A		$8.18
Class B		$8.18
Class C		$8.17
Institutional		$8.19
Service		$8.19
Shares outstanding:
Class A		50,055,212
Class B		4,533,604
Class C		1,093,136
Institutional		51,345,876
Service		48,425
Total shares outstanding, $.001 par value (unlimited number of shares authorized)		107,076,253

(a)

Maximum public offering price per share (NAV per share multiplied by 1.0471) for Class A shares is $8.57. 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.

Investment income:
Interest		$90,480,134
Dividends		317,367
Total income		90,797,501
Expenses:
Management fees		5,927,364
Distribution and Service fees (a)		1,722,828
Transfer Agent fees (b)		1,149,112
Custodian fees		353,564
Registration fees		87,782
Professional fees		48,278
Trustee fees		7,879
Organization expenses		6,449
Service share fees		2,154
Other		139,050
Total expenses		9,444,460
Less — expense reductions		(439,778	)
Net expenses		9,004,682
NET INVESTMENT INCOME		81,792,819
Realized and unrealized gain (loss) on investment and foreign currency transactions:
Net realized gain (loss) from:
Investment transactions		(12,315,579	)
Foreign currency related transactions		3,872,184
Net change in unrealized gain (loss) on:
Investments		(91,089,320	)
Translation of assets and liabilities denominated in foreign currencies		18,572,302
Net realized and unrealized loss on investment and foreign currency transactions:		(80,960,413	)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		$            832,406

(a)

Class A, Class B and Class C had distribution and service fees of $1,226,618, $391,902 and $104,308, respectively.

(b)

Class A, Class B, Class C, Institutional Class and Service Class had Transfer Agent fees of $932,232, $74,461, $19,818, $122,429 and $172, respectively.

From operations:
Net investment income		$  81,792,819
Net realized loss on investment and foreign currency transactions		(8,443,395	)
Net change in unrealized gain (loss) on investments and foreign currency		(72,517,018	)
Net increase in net assets resulting from operations		832,406
Distributions to shareholders:
From net investment income
Class A shares		(51,619,818	)
Class B shares		(3,819,934	)
Class C shares		(1,022,081	)
Institutional shares		(32,870,243	)
Service shares		(44,000	)
In excess of net investment income
Class A shares		(1,135,142	)
Class B shares		(84,002	)
Class C shares		(22,476	)
Institutional shares		(722,831	)
Service shares		(968	)
Total distributions to shareholders		(91,341,495	)
From share transactions:
Proceeds from sales of shares		443,991,118
Reinvestment of dividends and distributions		63,743,194
Cost of shares repurchased		(373,740,054	)
Net increase in net assets resulting from share transactions		133,994,258
TOTAL INCREASE		43,485,169
Net assets:
Beginning of year		832,436,863
End of year		$875,922,032
Accumulated undistributed net investment income		$    1,239,409

From operations:
Net investment income		$  67,379,988
Net realized loss on investment and foreign currency transactions		(2,720,050	)
Net change in unrealized loss on investments and futures		(21,099,547	)
Net increase in net assets resulting from operations		43,560,391
Distributions to shareholders:
From net investment income
Class A shares		(43,632,406	)
Class B shares		(2,990,090	)
Class C shares		(846,589	)
Institutional shares		(17,700,298	)
Service shares		(34,695	)
Total distributions to shareholders		(65,204,078	)
From share transactions:
Proceeds from sales of shares		479,200,997
Reinvestment of dividends and distributions		47,672,946
Cost of shares repurchased		(210,201,224	)
Net increase in net assets resulting from share transactions		316,672,719
TOTAL INCREASE		295,029,032
Net assets:
Beginning of year		537,407,831
End of year		$832,436,863
Accumulated undistributed net investment income		$    7,583,257

1.  ORGANIZATION

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

The Fund invests primarily in non-investment grade fixed-income securities which are considered predominantly speculative by traditional investment standards. Non-investment grade fixed-income securities and unrated securities of comparable credit quality (commonly known as “junk bonds”) are subject to the increased risk of an issuer’s inability to meet principal and interest obligations. These securities, also referred to as high yield securities, may be subject to greater price volatility due to such factors as specific corporate developments, interest rate sensitivity, generally negative perceptions of the junk bond markets and less secondary market liquidity.

2.  SIGNIFICANT ACCOUNTING POLICIES

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

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

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

In November 2000 the American Institute of Certified Public Accountants (AICPA) issued a revised version of the AICPA Audit and Accounting Guide for Investment Companies (the “Guide”). The revised version of the Guide is effective November 1, 2001 for the Fund and will require the Fund to amortize/accrete all premiums and discounts on debt securities. The Fund currently does not amortize/accrete all such premiums and discounts. Upon adoption, the Fund will be required to record the cumulative effect of this change. The cumulative effect will impact net investment income and realized and unrealized gains and losses but will not impact net assets. At this time, the Fund has not completed their analysis of the impact of this accounting change.

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

The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of the portfolio’s distributions may be shown in the accompanying financial 2.  SIGNIFICANT ACCOUNTING POLICIES – (continued)

statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist.

The Fund, at its most recent tax year-end of October 31, 2000 had approximately $2,694,305 capital loss carryforwards expiring in 2006 and 2007 for U.S. federal tax purposes. This amount is available to be carried forward to offset future capital gains to the extent permitted by applicable laws or regulations.

At October 31, 2000, the aggregate cost of portfolio securities for federal income tax purposes is $996,559,597. Accordingly, the gross unrealized gain on investments was $11,879,423 and the gross unrealized loss on investments was $147,630,216 resulting in a net unrealized loss of $135,750,793.

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

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

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

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

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

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

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

3.  AGREEMENTS

Pursuant to the Investment Management Agreement (the “Agreement”), Goldman Sachs Asset Management (“GSAM”), a unit of the Investment Management Division of Goldman, Sachs & Co. (“Goldman Sachs”), serves as the investment adviser to the Fund. Under the Agreement, the adviser, subject to the general supervision of the Trust’s Board of Trustees, manages the Fund’s portfolio. As compensation for the services rendered pursuant to the Agreement, the assumption of the 3.  AGREEMENTS – continued

expenses related thereto and administering the Fund’s business affairs, including providing facilities, the adviser is entitled to a fee, computed daily and payable monthly, at an annual rate equal to 0.70% of the average daily net assets of the Fund.

The adviser has voluntarily agreed to limit certain “Other Expenses” of the Fund (excluding Management fees, Distribution and Service fees, Transfer Agent fees, taxes, interest, brokerage, litigation, Service Share fees, indemnification costs and other extraordinary expenses), to the extent that such expenses exceed, on an annual basis, 0.02% of the average daily net assets of the Fund. For the year ended October 31, 2000, the adviser reimbursed approximately $395,000. In addition, the Fund has entered into certain expense offset arrangements with the custodian resulting in a reduction of the Fund’s expenses. For the year ended October 31, 2000, custody fee reductions amounted to approximately $45,000.

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

Goldman Sachs serves as the distributor of shares of the Fund pursuant to a Distribution Agreement. Goldman Sachs may receive a portion of the Class A sales load and Class B and Class C contingent deferred sales charges and has advised the Fund that it retained approximately $496,000 during the year ended October 31, 2000.

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

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

As of October 31, 2000, the amounts owed to affiliates were approximately $537,000, $132,000 and $92,000 for Management, Distribution and Service, and Transfer Agent fees, respectively.

4.  PORTFOLIO SECURITIES TRANSACTIONS

Cost of purchases and proceeds of sales and maturities of securities (excluding short-term investments) for the year ended October 31, 2000, were $549,217,613 and $439,793,391, respectively.

Forward Foreign Currency Exchange Contracts — The Fund may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The Fund may also purchase and sell forward contracts to seek to increase total return. All commitments are “marked-to-market” daily at the applicable translation rates and any resulting unrealized gains or losses are recorded in the Fund’s financial statements. The Fund records realized gains or losses at the time the forward contract is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.

4.  PORTFOLIO SECURITIES TRANSACTIONS – continued

At October 31, 2000, the Fund had outstanding forward foreign currency exchange contracts as follows:

Open Foreign Currency Sale Contracts		Value on Settlement Date		Current Value		Unrealized
						Gain		Loss
British Pound
expiring 11/1/2000		$    1,476,969		$    1,341,500		$      135,469		$        —
expiring 11/30/2000		5,069,366		4,583,867		485,499		—
expiring 11/30/2001		5,539,040		5,313,930		225,110		—
expiring 1/30/2002		2,269,468		2,189,284		80,184		—
expiring 4/2/2002		17,599,705		17,770,040		—		170,335
Euro Currency
expiring 11/1/2000		4,686,000		3,615,208		1,070,792		—
expiring 11/15/2000		1,793,545		1,397,066		396,479		—
expiring 11/29/2000		5,962,297		4,711,344		1,250,953		—
expiring 11/30/2000		2,905,922		2,268,884		637,038		—
expiring 12/1/2000		152,492		122,855		29,637		—
expiring 12/15/2000		3,332,239		2,681,949		650,290		—
expiring 12/29/2000		5,395,695		4,246,691		1,149,004		—
expiring 1/16/2001		10,366,413		8,042,464		2,323,949		—
expiring 2/1/2001		7,021,510		5,410,295		1,611,215		—
expiring 4/2/2001		2,007,542		1,930,809		76,733		—
expiring 4/30/2001		5,155,277		4,103,343		1,051,934		—
expiring 5/1/2001		2,804,608		2,271,205		533,403		—
expiring 5/15/2001		15,344,084		12,281,038		3,063,046		—
expiring 6/1/2001		8,834,711		7,220,172		1,614,539		—
expiring 7/16/2001		6,622,286		5,568,531		1,053,755		—
expiring 11/30/2001		17,943,973		16,178,779		1,765,194		—
expiring 1/30/2002		6,677,466		6,206,945		470,521		—
expiring 4/2/2002		7,912,834		7,618,851		293,983		—
TOTAL OPEN FOREIGN CURRENCY SALE CONTRACTS		$146,873,442		$127,075,050		$19,968,727		$170,335
Closed but Unsettled Forward Currency Contracts		Purchase Value		Sale Value		Realized
						Gain		Loss
British Pound
expiring 11/1/2000		$    1,447,480		$    1,460,185		$        12,705		$        —
Euro Currency
expiring 11/1/2000		910,213		1,185,132		274,919		—
expiring 12/15/2000		1,976,304		1,995,880		19,576		—
expiring 2/1/2001		5,236,537		5,851,699		615,162		—
expiring 2/1/2001		873,904		860,974		—		12,930
expiring 6/1/2001		1,312,845		1,331,688		18,843		—
TOTAL CLOSED BUT UNSETTLED FORWARD CURRENCY CONTRACTS		$  11,757,283		$  12,685,558		$      941,205		$  12,930

4.  PORTFOLIO SECURITIES TRANSACTIONS – continued

The contractual amounts of forward foreign currency exchange contracts do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. At October 31, 2000, the Fund had sufficient cash and/or securities to cover any commitments under these contracts.

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

The use of futures contracts involves, to varying degrees, elements of market and counterparty risk which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contract may not directly correlate with changes in the value of the underlying securities. This risk may decrease the effectiveness of the Fund’s strategies and potentially result in a loss. At October 31, 2000, the Fund had no open futures contracts.

5.  LINE OF CREDIT FACILITY

Effective May 31, 2000, the Fund participates in a $350,000,000 committed, unsecured revolving line of credit facility. Prior thereto, the Fund participated in a $250,000,000 uncommitted and a $250,000,000 committed, unsecured revolving line of credit facility. Under the most restrictive arrangement, the Fund must own securities having a market value in excess of 400% of the total bank borrowings. These facilities are to be used solely for temporary or emergency purposes. The interest rate on borrowings is based on the Federal Funds rate. The committed facilities also require a fee to be paid by the Fund based on the amount of the commitment. During the year ended October 31, 2000, the Fund did not have any borrowings under any of these facilities.

6.  JOINT REPURCHASE AGREEMENT ACCOUNT

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

At October 31, 2000, the Fund had an undivided interest in the repurchase agreement in the joint account which equaled $23,800,000 in principal amount. At October 31, 2000, the following repurchase agreements held in this joint account were fully collateralized by Federal Agency obligations:

Repurchase Agreements		Principal Amounts		Interest Rate			Maturity Date		Amortized Cost		Maturity Value
ABN / AMRO, Inc.		$400,000,000		6.63	%		11/01/2000		$  400,000,000		$  400,073,611
ABN / AMRO, Inc.		150,000,000		6.56			11/01/2000		150,000,000		150,027,333
Banc of America Securities LLC		900,000,000		6.62			11/01/2000		900,000,000		900,165,500
Barclays Capital, Inc.		200,000,000		6.62			11/01/2000		200,000,000		200,036,778
Bear Stearns Companies, Inc.		500,000,000		6.62			11/01/2000		500,000,000		500,091,944
Chase Securities, Inc.		300,000,000		6.62			11/01/2000		300,000,000		300,055,167
Salomon Smith Barney Holdings, Inc.		809,100,000		6.62			11/01/2000		809,100,000		809,248,785
SG Cowen Securities		100,000,000		6.62			11/01/2000		100,000,000		100,018,389
TOTAL JOINT REPURCHASE AGREEMENT ACCOUNT									$3,359,100,000		$3,359,717,507

7.  CERTAIN RECLASSIFICATIONS

In accordance with Statement of Position 93-2, the Fund has reclassified $3,198,779 and $6,049 from accumulated net realized loss on investment and foreign currency related transactions and paid-in capital, respectively, to accumulated undistributed net investment income. These reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund’s capital accounts on a tax basis. Reclassifications result primarily from the difference in the tax treatment of net operating losses.

8.  CHANGE IN INDEPENDENT AUDITOR

On October 26, 1999, the Board of Trustees of the Fund, upon the recommendation of the Board’s audit committee, determined not to retain Arthur Andersen LLP and approved a change of the Fund’s independent auditors to Ernst & Young LLP. For the fiscal year ended October 31, 1999, Arthur Andersen LLP’s audit report contained no adverse opinion or disclaimer of opinion; nor was their report qualified or modified as to uncertainty, audit scope, or accounting principles. Further, there were no disagreements between the Fund and Arthur Andersen LLP on accounting principles or practices, financial statement disclosure or audit scope or procedure, which if not resolved to the satisfaction of Arthur Andersen LLP would have caused them to make reference to the disagreement in their report.

9.  SUMMARY OF SHARE TRANSACTIONS

Share activity is as follows:

		For the Year Ended October 31, 2000
		Shares			Dollars
Class A Shares
Shares sold		19,056,447			$169,054,727
Reinvestment of dividends and distributions		4,542,703			40,044,057
Shares repurchased		(31,366,746	)		(276,325,256	)
		(7,767,596	)		(67,226,472	)
Class B Shares
Shares sold		1,241,333			10,926,770
Reinvestment of dividends and distributions		222,778			1,995,647
Shares repurchased		(1,331,046	)		(11,730,966	)
		133,065			1,191,451
Class C Shares
Shares sold		660,391			5,863,650
Reinvestment of dividends and distributions		68,188			601,201
Shares repurchased		(746,805	)		(6,585,241	)
		(18,226	)		(120,390	)
Institutional Shares
Shares sold		29,546,300			257,772,971
Reinvestment of dividends and distributions		2,414,141			21,102,221
Shares repurchased		(8,969,936	)		(78,885,981	)
		22,990,505			199,989,211
Service Shares
Shares sold		41,484			373,000
Reinvestment of dividends and distributions		7			68
Shares repurchased		(23,927	)		(212,610	)
		17,564			160,458
NET INCREASE		15,355,312			$133,994,258

		For the Year Ended October 31, 1999
		Shares			Dollars
Class A Shares
Shares sold		25,318,440			$241,274,515
Reinvestment of dividends and distributions		3,487,785			33,178,138
Shares repurchased		(14,816,674	)		(141,291,530	)
		13,989,551			133,161,123
Class B Shares
Shares sold		2,175,067			20,848,416
Reinvestment of dividends and distributions		176,076			1,642,893
Shares repurchased		(1,143,028	)		(10,841,667	)
		1,208,115			11,649,642
Class C Shares
Shares sold		1,321,781			12,726,945
Reinvestment of dividends and distributions		54,662			520,094
Shares repurchased		(1,196,698	)		(11,389,250	)
		179,745			1,857,789
Institutional Shares
Shares sold		21,248,263			204,157,121
Reinvestment of dividends and distributions		1,299,004			12,317,045
Shares repurchased		(4,829,091	)		(46,289,669	)
		17,718,176			170,184,497
Service Shares
Shares sold		20,193			194,000
Reinvestment of dividends and distributions		1,518			14,776
Shares repurchased		(39,586	)		(389,108	)
		(17,875	)		(180,332	)
NET INCREASE		33,077,712			$316,672,719

				Income (loss) from investment operations									Distributions to shareholders
		Net asset value, beginning of period		Net investment income			Net realized and unrealized gain (loss)			Total income (loss) from investment operations			From net investment income			In excess of net investment income			Total Distributions
FOR THE YEARS ENDED OCTOBER 31,
2000 - Class A Shares		$  9.07		$0.84	(c)		$(0.78	)		$  0.06			$(0.93	)		$(0.02	)		$(0.95	)
2000 - Class B Shares		9.08		0.78	(c)		(0.80	)		(0.02	)		(0.86	)		(0.02	)		(0.88	)
2000 - Class C Shares		9.07		0.78	(c)		(0.80	)		(0.02	)		(0.86	)		(0.02	)		(0.88	)
2000 - Institutional Shares		9.08		0.88	(c)		(0.79	)		0.09			(0.96	)		(0.02	)		(0.98	)
2000 - Service Shares		9.08		0.83	(c)		(0.78	)		0.05			(0.92	)		(0.02	)		(0.94	)
1999 - Class A Shares		9.16		0.85			(0.10	)		0.75			(0.84	)		—			(0.84	)
1999 - Class B Shares		9.16		0.77			(0.09	)		0.68			(0.76	)		—			(0.76	)
1999 - Class C Shares		9.16		0.78			(0.11	)		0.67			(0.76	)		—			(0.76	)
1999 - Institutional Shares		9.17		0.90	(c)		(0.12	)		0.78			(0.87	)		—			(0.87	)
1999 - Service Shares		9.17		0.86	(c)		(0.12	)		0.74			(0.83	)		—			(0.83	)
1998 - Class A Shares		9.97		0.82			(0.85	)		(0.03	)		(0.78	)		—			(0.78	)
1998 - Class B Shares		9.97		0.75			(0.86	)		(0.11	)		(0.70	)		—			(0.70	)
1998 - Class C Shares		9.97		0.75			(0.86	)		(0.11	)		(0.70	)		—			(0.70	)
1998 - Institutional Shares		9.97		0.84			(0.83	)		0.01			(0.81	)		—			(0.81	)
1998 - Service Shares		9.97		0.80			(0.84	)		(0.04	)		(0.76	)		—			(0.76	)
FOR THE PERIOD ENDED OCTOBER 31,
1997 - Class A Shares (commenced August 1)		10.00		0.17			(0.02	)		0.15			(0.17	)		(0.01	)		(0.18	)
1997 - Class B Shares (commenced August 1)		10.00		0.15			(0.02	)		0.13			(0.15	)		(0.01	)		(0.16	)
1997 - Class C Shares (commenced August 15)		9.97		0.14			0.01			0.15			(0.14	)		(0.01	)		(0.15	)
1997 - Institutional Shares (commenced August 1)		10.00		0.18			(0.02	)		0.16			(0.18	)		(0.01	)		(0.19	)
1997 - Service Shares (commenced August 1)		10.00		0.17			(0.02	)		0.15			(0.17	)		(0.01	)		(0.18	)

(a)

Assumes investment at the net asset value at the beginning of the period, reinvestment of all distributions, a complete redemption of the investment at the net asset value at the end of period and no sales charge. Total return would be reduced if a sales or redemption charge was taken into account. Total returns for less than one full year are not annualized.

(b)

Annualized.

(c)

Calculated based on the average shares outstanding methodology.

													Ratios assuming no expense reductions
Net asset value, end of period		Total return (a)			Net assets at end of period (in 000s)		Ratio of net expenses to average net assets			Ratio of net investment income to average net assets			Ratio of expenses to average net assets			Ratio of net investment income to average net assets			Portfolio turnover rate
$8.18		0.38	%		$409,224		1.16	%		9.54	%		1.21	%		9.49	%		55.27	%
8.18		(0.48	)		37,085		1.91			8.79			1.96			8.74			55.27
8.17		(0.48	)		8,933		1.91			8.78			1.96			8.73			55.27
8.19		0.77			420,284		0.76			9.99			0.81			9.94			55.27
8.19		0.15			396		1.26			9.39			1.31			9.34			55.27
9.07		8.06			524,674		1.16			9.06			1.22			9.00			59.04
9.08		7.38			39,907		1.91			8.30			1.97			8.24			59.04
9.07		7.26			10,078		1.91			8.26			1.97			8.20			59.04
9.08		8.49			257,498		0.76			9.50			0.82			9.44			59.04
9.08		7.95			280		1.26			8.92			1.32			8.86			59.04
9.16		(0.70	)		401,626		1.09			8.25			1.36			7.98			113.44
9.16		(1.43	)		29,256		1.84			7.61			1.88			7.57			113.44
9.16		(1.43	)		8,532		1.84			7.61			1.88			7.57			113.44
9.17		(0.32	)		97,547		0.84			9.47			0.88			9.43			113.44
9.17		(0.79	)		447		1.34			9.17			1.38			9.13			113.44
9.97		1.50			325,911		0.95	(b)		7.06	(b)		1.57	(b)		6.44	(b)		44.80
9.97		1.31			10,308		1.70	(b)		6.28	(b)		2.07	(b)		5.91	(b)		44.80
9.97		1.46			1,791		1.70	(b)		6.17	(b)		2.07	(b)		5.80	(b)		44.80
9.97		1.58			2		0.70	(b)		7.16	(b)		1.07	(b)		6.79	(b)		44.80
9.97		1.46			2		1.20	(b)		6.69	(b)		1.57	(b)		6.32	(b)		44.80

To the Shareholders and Board of Trustees

Goldman Sachs Trust

We have audited the accompanying statement of assets and liabilities of Goldman Sachs High Yield Fund (one of the funds comprising the Goldman Sachs Trust) (the “Fund”), including the statement of investments, as of October 31, 2000, and the related statement of operations, the statement of changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit. The statement of changes in net assets for the year ended October 31, 1999 and the financial highlights for each of the three periods in the period then ended, were audited by other auditors whose report, dated December 10, 1999, expressed an unqualified opinion on the statement and financial highlights.

We conducted our audit in accordance with auditing standards generally accepted in the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights, audited by us, referred to above present fairly, in all material respects, the financial position of the Goldman Sachs High Yield Fund as of October 31, 2000, the results of its operations, the changes in its net assets, and the financial highlights for the year ended October 31, 2000 in conformity with accounting principles generally accepted in the United States.

New York, New York

December 11, 2000

GOLDMAN SACHS FUND PROFILE

Goldman Sachs High Yield Fund

The Goldman Sachs High Yield Fund offers investors access to a potentially attractive risk/reward profile. The Fund seeks a high level of current income and, secondarily, capital appreciation, primarily through fixed income securities rated, at the time of investment, below investment grade.

Target Your Needs

The Goldman Sachs High Yield Fund has a distinct investment objective and a defined place on the risk/return spectrum . As your investment objectives change, you can exchange shares within Goldman Sachs Funds without any additional charge.* Please note: in general, greater returns are associated with greater risk.

For More Information

To learn more about the Goldman Sachs High Yield Fund and other Goldman Sachs Funds, call your investment professional today.

* The exchange privilege is subject to termination and its terms are subject to change.