<PAGE>
As filed with the Securities and Exchange Commission on December 6, 1996.
1933 ACT REGISTRATION NO. 2-54809
1940 ACT REGISTRATION NO. 811-2598
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 57 ( X )
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 40 ( X )
GOLDMAN SACHS MONEY MARKET TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
4900 Sears Tower
Chicago, Illinois 60606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
800-621-2550
(REGISTRANT'S TELEPHONE NUMBER)
with a copy to:
Michael J. Richman Ernest V. Klein
Goldman Sachs Asset Management Hale and Dorr
85 Broad Street 60 State Street
New York, New York 10004 Boston, Massachusetts 02109
(name and address of agent for service)
<PAGE>
It is proposed that this filing will become effective
(check appropriate box)
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on (date) pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a)(i) of
Rule 485 or earlier upon acceleration of the effective
date by the Commission
( ) on (date) pursuant to paragraph (a)(i) of Rule 485
( x ) 75 days after filing pursuant to paragraph (a)(ii) of
Rule 485 or earlier upon acceleration of the effective
date by the Commission
( ) on (date) pursuant to paragraph (a)(ii) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
On February 28, 1996, Registrant filed a Rule 24f-2 Notice for the fiscal year
ended December 31, 1995. Registrant continues its election to register an
indefinite number of units of beneficial interest pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended.
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FST SHARES
OF FINANCIAL SQUARE FUNDS
(FINANCIAL SQUARE TREASURY INSTRUMENTS FUND)
(FINANCIAL SQUARE FEDERAL FUND)
CROSS REFERENCE SHEET
Items Required by Form N-1A
<TABLE>
<CAPTION>
ITEM NUMBER IN PART A PROSPECTUS CAPTION
- --------------------- ------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis An Introduction to the Fund;
Shareholder and Fund Expenses
3. Condensed Financial Not Applicable
Information
4. General Description An Introduction to the
of Registrant Fund; Investment Objective and
Policies; Description of Securities
and Investment Techniques;
Investment Limitations;
Organization and Shares of the
Trust
5. Management of the Fund Management; Organization and
Shares of the Trust
6. Capital Stock and Purchase of Shares; Reports to
Other Securities Shareholders; Distributions;
Organization and Shares of the
Trust
7. Purchase of Securities Purchase of Units; Exchanges;
Being Offered Net Asset Value
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings Not Applicable
<CAPTION>
STATEMENT OF ADDITIONAL
ITEM NUMBER IN PART B INFORMATION CAPTION
- --------------------- ----------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Organization and Capitalization
and History
</TABLE>
<PAGE>
<TABLE>
<S> <C>
13. Investment Objectives Investment Policies and
and Policies Practices of the Funds;
Investment Restrictions
14. Management of the Fund Management
15. Control Persons and Management;
Principal Holders Organization and Capitalization
of Securities
16. Investment Advisory The Adviser, Distributor and
and Other Services Transfer Agent; Portfolio
Transactions; Custodian and
Subcustodian; Independent
Accountants
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Organization and Capitalization
Other Securities
19. Purchase, Redemption and Net Asset Value;
Pricing of Securities Shareholder Investment Account;
Being Offered Redemptions
20. Tax Status Tax Information
21. Underwriters The Adviser, Administrator,
Distributor and Transfer Agent
22. Calculation of Calculation of Yield Quotations
Performance Data
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FST ADMINISTRATION SHARES
OF FINANCIAL SQUARE FUNDS
(FINANCIAL SQUARE TREASURY INSTRUMENTS FUND)
(FINANCIAL SQUARE FEDERAL FUND)
CROSS REFERENCE SHEET
Items Required by Form N-1A
<TABLE>
<CAPTION>
ITEM NUMBER IN PART A PROSPECTUS CAPTION
- --------------------- ------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis An Introduction to the Fund;
Shareholder and Fund Expenses
3. Condensed Financial Not Applicable
Information
4. General Description An Introduction to the
of Registrant Fund; Investment Objective and
Policies; Description of
Securities and Investment
Techniques; Investment
Limitations; Organization and
Shares of the Trust
5. Management of the Fund Fund Management; Organization and
Shares of the Trust
6. Capital Stock and Purchase of Shares; Reports to
Other Securities Shareholders; Distributions;
Organization and Shares of the
Trust
7. Purchase of Securities Purchase of Shares;
Exchanges; Net Asset Value
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings Not Applicable
<CAPTION>
STATEMENT OF ADDITIONAL
ITEM NUMBER IN PART B INFORMATION CAPTION
- --------------------- -----------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Organization and Capitalization
and History
</TABLE>
<PAGE>
<TABLE>
<S> <C>
13. Investment Objectives Investment Policies and
and Policies Practices of the Funds;
Investment Restrictions
14. Management of the Fund Management
15. Control Persons and Management;
Principal Holders Organization and Capitalization
of Securities
16. Investment Advisory The Adviser, Distributor and
Administrator and Transfer Agent;
Portfolio Transactions; Custodian
and Subcustodian; Independent
Accountants
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Organization and Capitalization
Other Securities
19. Purchase, Redemption and Net Asset Value;
Pricing of Securities Shareholder Investment Account;
Being Offered Redemptions
20. Tax Status Tax Information
21. Underwriters The Adviser, Administrator,
Distributor and Transfer Agent
22. Calculation of Calculation of Yield Quotations
Performance Data
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
--------------------------------
FST SERVICE SHARES
OF FINANCIAL SQUARE FUNDS
(FINANCIAL SQUARE TREASURY INSTRUMENTS FUND)
(FINANCIAL SQUARE FEDERAL FUND)
CROSS REFERENCE SHEET
Items Required by Form N-1A
<TABLE>
<CAPTION>
ITEM NUMBER IN PART A PROSPECTUS CAPTION
- --------------------- ------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis An Introduction to the Fund;
Shareholder and Fund Expenses
3. Condensed Financial Not Applicable
Information
4. General Description An Introduction to the
of Registrant Fund; Investment Policies;
Description of Securities and
Investment Techniques; Investment
Limitations; Organization and
Shares of the Trust
5. Management of the Fund Fund Management; Organization and
Shares of the Trust
6. Capital Stock and Purchase of Shares; Reports to
Other Securities Shareholders; Distributions;
Organization and Shares of the
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Trust
7. Purchase of Securities Purchase of Shares; Exchanges;
Being Offered Net Asset Value
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings Not Applicable
<CAPTION>
STATEMENT OF ADDITIONAL
ITEM NUMBER IN PART B INFORMATION CAPTION
- --------------------- -----------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Organization and Capitalization
and History
13. Investment Objectives Investment Policies and
and Policies Practices of the Funds;
Investment Restrictions
14. Management of the Fund Management
15. Control Persons and Management;
Principal Holders Organization and Capitalization
of Securities
16. Investment Advisory and The Adviser, Distributor and
Administrator and Transfer Agent;
Portfolio Transactions; Custodian
and Subcustodian; Independent
Accountants
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Organization and Capitalization
Other Securities
19. Purchase, Redemption and Net Asset Value;
Pricing of Securities Shareholder Investment Account;
Being Offered Redemptions
20. Tax Status Tax Information
21. Underwriters The Adviser, Administrator,
Distributor and Transfer Agent
22. Calculation of Calculation of Yield Quotations
Performance Data
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FST PREFERRED SHARES
OF FINANCIAL SQUARE FUNDS
(FINANCIAL SQUARE TREASURY INSTRUMENTS FUND)
(FINANCIAL SQUARE FEDERAL FUND)
CROSS REFERENCE SHEET
Items Required by Form N-1A
<TABLE>
<CAPTION>
ITEM NUMBER IN PART A PROSPECTUS CAPTION
- --------------------- ------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis An Introduction to the Fund;
Shareholder and Fund Expenses
3. Condensed Financial Not Applicable
Information
4. General Description An Introduction to the Fund;
of Registrant Investment Policies; Description
Securities and Investment
Techniques; Investment
Limitations; Organization and
Shares of the Trust
5. Management of the Fund Management; Organization and
Shares of the Trust
6. Capital Stock and Purchase of Shares; Reports to
Other Securities Shareholders; Distributions;
Taxes; Administration;
Organization and Shares of the
Trust
7. Purchase of Securities Purchase of Shares; Exchanges;
Being Offered Net Asset Value
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
ITEM NUMBER IN PART B INFORMATION CAPTION
- --------------------- ----------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Organization and Capitalization
and History
13. Investment Objectives Investment Policies and
and Policies Practices of the Fund;
Investment Limitations
14. Management of the Fund Trustees and Officers; the
Adviser, Administrator,
Distributor and Transfer Agent
15. Control Persons and Trustees and Officers; the
Principal Holders of Adviser, Administrator,
Securities Distributor and Transfer Agent
Organization and Capitalization
16. Investment Advisory The Adviser, Administrator,
Other Services Distributor and Transfer Agent;
Portfolio Transactions; Custodian
and Subcustodian; Independent
Accountants
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and Organization and Capitalization
Other Securities
19. Purchase, Redemption and Net Asset Value;
Pricing of Securities Redemptions
Being Offered
20. Tax Status Tax Information
21. Underwriters The Adviser, Administrator,
Distributor and Transfer Agent
22. Calculation of Calculation of Yield Quotations
Performance Data
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
(FINANCIAL SQUARE TREASURY INSTRUMENTS FUND)
(FINANCIAL SQUARE FEDERAL FUND)
FST SHARES
4900 Sears Tower
Chicago, Illinois 60606
Goldman Sachs Money Market Trust (the "Trust") is a no-load, open-end,
management investment company (a "mutual fund") which includes the Financial
Square Treasury Instruments and Federal Funds (the "Funds"). This Prospectus
relates only to the offering of FST Shares of beneficial interest ("FST
Shares") of the Funds. Goldman Sachs Asset Management, a separate operating
division of Goldman, Sachs & Co., serves as each Fund's investment adviser.
Goldman, Sachs & Co. serves as each Fund's distributor and transfer agent.
The Treasury Instruments and Federal Funds seek to maximize current income to
the extent consistent with the preservation of capital and the maintenance of
liquidity by investing exclusively in high quality money market instruments.
These Funds may invest in diversified portfolios of the following types of
instruments:
Financial Square Treasury Instruments Fund. Securities issued or guaranteed
by the U.S. Treasury.
Financial Square Federal Fund. Securities of the U.S. Government and certain
of its agencies, authorities and instrumentalities, the interest income from
which is generally exempt from state income taxation.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERN-
MENT AND THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A STA-
BLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION...... Goldman Sachs Mutual Funds--Toll Free: 800-621-2550
This Prospectus provides you with information about the Funds that you should
know before investing in FST Shares. It should be read and retained for future
reference. If you would like more detailed information, the Statement of
Additional Information dated February , 1997, as amended or supplemented from
time to time, is available upon request without charge by calling the telephone
number listed above or by writing Goldman, Sachs & Co., 4900 Sears Tower,
Chicago, Illinois 60606. The Statement of Additional Information, which is
incorporated by reference into this Prospectus, has been filed with the
Securities and Exchange Commission. Not all Funds are available in certain
states. Please call the phone number listed above to determine availability in
your state.
- --------------------------------------------------------------------------------
FST SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is February , 1997.
<PAGE>
SHAREHOLDER AND FUND EXPENSES (NOTE 1)
FST SHARES (NOTE 2)
<TABLE>
<CAPTION>
FINANCIAL
SQUARE FINANCIAL
TREASURY SQUARE
INSTRUMENTS FEDERAL
FUND FUND
----------- ---------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases................ None None
Sales Charge Imposed on Reinvested Distributions......... None None
Deferred Sales Load Imposed on Redemptions............... None None
Exchange Fee............................................. None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees (Note 3) (after adjustments)............. 0.17% 0.17%
Other Expenses (Note 3).................................. 0.01% 0.01%
---- ----
TOTAL OPERATING EXPENSES (Note 3)......................... 0.18% 0.18%
==== ====
</TABLE>
EXAMPLE OF EXPENSES
You would pay the following expenses on a hypothetical $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Financial Square Treasury Instruments Fund....................... $ $
Financial Square Federal Fund.................................... $ $
</TABLE>
- --------
Notes:
(1) The purpose of this table is to assist investors in understanding the
various costs and expenses that an investment in the Funds will bear
directly or indirectly. Operating expenses for the Funds are based on
estimates of expenses expected to be incurred during the fiscal year
ending December 31, 1997. The table and hypothetical example should not be
considered a representation of past or future expenses; actual expenses
may vary depending upon a variety of factors including the actual
performance of each Fund, which may be greater or less than 5%. See
"Management."
(2) The information set forth in the foregoing table and example relates only
to FST Shares of the Funds. The Funds also offer FST Administration
Shares, FST Service Shares and FST Preferred Shares which are subject to
different fees and expenses (which affect performance), have different
minimum investment requirements and are entitled to different services.
Information regarding any other class of the Funds may be obtained from
your sales representative or from Goldman Sachs by calling the number on
the cover page of this Prospectus. See "Organization and Shares of the
Funds."
(3) Goldman Sachs Asset Management (the "Adviser" or "GSAM") has agreed that a
portion of its fees will not be imposed, pursuant to applicable contracts.
In addition, the Adviser has agreed to reduce or otherwise limit certain
expenses of each Fund (excluding fees payable to Service Organizations, as
defined herein, taxes, interest, brokerage and litigation, indemnification
and other extraordinary expenses), on an annualized basis, to 0.18% of the
average daily net assets of such Fund. The Adviser has also agreed that a
portion of its fees will not be imposed for the Treasury Instruments Fund
and Federal Fund. Had the reduction of fees otherwise payable and expense
limitations not been reflected in the above table, the management fees
payable by each Fund would be 0.205% of average daily net assets and the
estimated annual operating expenses payable by the Treasury Instruments
Fund and Federal Fund would be 0. % and 0. %, respectively, of average
daily net assets. Had the reduction of fees otherwise payable and expense
limitations not been reflected in the above table, the estimated annual
operating expenses of the Treasury Instruments Fund and Federal Fund would
be and , respectively, of average daily net assets.
2
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
3
<PAGE>
AN INTRODUCTION TO THE FUNDS
THE TRUST: The Trust is a no-load, open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "Invest-
ment Company Act"). Each Fund is a separate pool of assets which pursues its
investment objective through separate investment policies, as described below.
THE ADVISER: Goldman Sachs Asset Management, a separate operating division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds' investment ad-
viser (the "Adviser" or "GSAM").
THE DISTRIBUTOR: Goldman Sachs, which serves as the Funds' distributor and
transfer agent, is one of the largest international investment banking and
brokerage firms in the United States.
THE INVESTOR: The Funds are designed for institutional investors seeking a
high rate of return, a stable net asset value and convenient liquidation priv-
ileges. The Funds are particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term funds for their own
accounts or for the accounts of their customers.
THE FUNDS: Each Fund's securities are valued by the amortized cost method as
permitted by a rule ("Rule 2a-7") of the Securities and Exchange Commission
("SEC"). Under such rule, each Fund may invest only in securities that are de-
termined to present minimal credit risk and meet certain other criteria.
INVESTMENT OBJECTIVES AND POLICIES FOR THE FUNDS: To maximize current in-
come to the extent consistent with the preservation of capital and the
maintenance of liquidity by investing exclusively in high quality money
market instruments. The Treasury Instruments and Federal Funds pursue their
objectives by limiting their investments to certain U.S. Treasury Obliga-
tions and U.S. Government Securities (each as defined herein), respective-
ly, the interest from which is generally exempt from state income taxation.
Each investor should consult his or her tax adviser to determine whether
distributions from the Treasury Instruments and Federal Funds derived from
interest on such obligations are exempt from state income taxation in the
investor's own state.
NET ASSET VALUE: Each Fund seeks to maintain a stable net asset value of
$1.00 per share.
MAXIMUM REMAINING MATURITY OF FUND INVESTMENTS: Thirteen months at the time
of purchase.
DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY: Not more than ninety days.
FIRST TIER SECURITIES: The Funds may purchase securities which are rated (or
that have been issued by an issuer that is rated with respect to a class of
short-term debt obligations, or any security within that class, comparable in
priority and quality with such securities) in the highest short-term rating
category by at least two NRSROs (as defined below), or if only one NRSRO has
assigned a rating, by that NRSRO. U.S. Government Securities as defined herein
are considered First Tier Securities.
UNRATED SECURITIES: Unrated securities may be purchased only if they are
deemed to be of comparable quality to First Tier Securities.
NRSROS: Nationally Recognized Statistical Rating Organizations include Stan-
dard & Poor's Ratings Group ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Services, Inc. Duff and Phelps, Inc., IBCA Lim-
ited and its affiliate IBCA Inc., and Thompson BankWatch, Inc. For a descrip-
tion of each NRSRO's rating categories, see Appendix A to the Statement of Ad-
ditional Information.
4
<PAGE>
INVESTMENT POLICIES
<TABLE>
<CAPTION>
FINANCIAL SQUARE
TREASURY FINANCIAL SQUARE
INSTRUMENTS FEDERAL
FUND FUND
- ------------------------------------------------------------------------
<S> <C> <C>
US Treasury Instruments [] []
- ------------------------------------------------------------------------
US Government Securities []
- ------------------------------------------------------------------------
[]
(Does not intend to
Repurchase Agreements invest)
- ------------------------------------------------------------------------
Credit Quality First Tier First Tier
- ------------------------------------------------------------------------
[] []
Up to 10% of total Up to 10% of total
assets in other assets in other
Investment Companies investment companies investment companies
- ------------------------------------------------------------------------
Taxable Federal and Taxable Federal and
generally exempt from generally exempt from
Summary of Taxation* state taxation state taxation
- ------------------------------------------------------------------------
Under extraordinary
circumstances, may
hold cash, U.S.
Government Securities
subject to state
taxation or cash
Miscellaneous equivalents
</TABLE>
Note: See "Description of Securities and Investment Techniques" for a descrip-
tion of, and certain criteria applicable to, each of these categories and in-
vestments.
* See "Taxes" below for an explanation of the tax consequences summarized in
the table above.
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
U.S. TREASURY OBLIGATIONS
"U.S. Treasury Obligations" are securities issued or guaranteed by the U.S.
Treasury, payments of principal, and interest on which are backed by the full
faith and credit of the U.S. Government.
U.S. GOVERNMENT SECURITIES
"U.S. Government Securities" are obligations issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities. Unlike U.S.
Treasury Obligations, obligations issued or guaranteed by U.S. Government
agencies, authorities or instrumentalities are supported either by (a) the
full faith and credit of the U.S. Government (such as securities of the Gov-
ernment National Mortgage Association), (b) the right of the issuer to borrow
from the Treasury (such as securities of the Student Loan Marketing Associa-
tion), (c) the discretionary authority of the U.S. Government to purchase the
agency's obligations (such as securities of the Federal National Mortgage As-
sociation and the Federal Home Loan Mortgage Corporation), or (d) only the
credit of the issuer. No assurance can be given that the U.S. Government will
provide financial support to U.S. Government agencies, authorities or instru-
mentalities in the future. U.S. Government Securities may include zero coupon
bonds. Such bonds may be purchased when yields are attractive.
5
<PAGE>
Securities guaranteed as to principal and interest by the U.S. Government,
its agencies, authorities or instrumentalities are deemed to include (a) secu-
rities for which the payment of principal and interest is backed by an irrevo-
cable letter of credit issued by the U.S. Government, its agencies, authori-
ties or instrumentalities and (b) participations in loans made to foreign gov-
ernments or their agencies that are so guaranteed. The secondary market for
certain of these participations is limited. Such participations may therefore
be regarded as illiquid.
Each Fund may also invest in separately traded principal and interest compo-
nents of securities guaranteed or issued by the U.S. Treasury if such compo-
nents are traded independently under the Separate Trading of Registered Inter-
est and Principal of Securities program ("STRIPS").
The Treasury Instruments and Federal Funds invest in Treasury Obligations
and certain U.S. Government Securities, respectively, the interest from which
is generally exempt from state income taxation. Securities generally eligible
for this exemption include those issued by the U.S. Treasury and those issued
by certain agencies, authorities or instrumentalities of the U.S. Government,
including the Federal Home Loan Banks, Federal Farm Credit Banks, Tennessee
Valley Authority and the Student Loan Marketing Association.
REPURCHASE AGREEMENTS
The Federal Fund may only enter into repurchase agreements with primary
dealers in U.S. Government Securities. A repurchase agreement is an agreement
under which a Fund purchases securities and the seller agrees to repurchase
the securities within a particular time at a specified price. Such price will
exceed the original purchase price, the difference being income to the Fund,
and will be unrelated to the interest rate on the purchased security. A Fund's
custodian or subcustodian will maintain custody of the purchased securities
for the duration of the agreement. The value of the purchased securities, in-
cluding accrued interest, will at all times equal or exceed the value of the
repurchase agreement. In the event of bankruptcy of the seller or failure of
the seller to repurchase the securities as agreed, a Fund could suffer losses,
including loss of interest on or principal of the security and costs associ-
ated with delay and enforcement of the repurchase agreement. In evaluating
whether to enter into a repurchase agreement, the Adviser will carefully con-
sider the creditworthiness of the seller pursuant to procedures reviewed and
approved by the Trustees. Distributions of the income from repurchase agree-
ments entered into by a Fund will be taxable to its shareholders. In addition,
the Federal Fund, together with other registered investment companies having
advisory agreements with the Adviser or any of its affiliates, may transfer
uninvested cash balances into a single joint account, the daily aggregate bal-
ance of which will be invested in one or more repurchase agreements.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES
Each Fund may purchase when-issued securities and make contracts to purchase
or sell securities for a fixed price at a future date beyond customary settle-
ment time. A Fund is required to hold and maintain in a segregated account
with the Fund's custodian or subcustodian until the settlement date, cash or
liquid, high quality debt obligations in an amount sufficient to meet the pur-
chase price. Alternatively, a Fund may enter into offsetting contracts for the
forward sale of other securities that it owns. Securities purchased or sold on
a when-issued or forward commitment basis involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date or if
the value of the security to be sold increases prior to the settlement date.
Although a Fund would generally purchase securities on a when-issued or for-
ward commitment basis with the intention of acquiring securities for its port-
folio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Adviser deems it appropriate to do so.
6
<PAGE>
OTHER INVESTMENT COMPANIES
The Adviser will determine, under guidelines established by the Trustees,
whether securities issued by other money market investment companies present
minimal credit risks. The amount of each Fund's investments in securities of
other investment companies will be subject to the limitations on such invest-
ments prescribed by the Investment Company Act. These limits include a prohi-
bition on any Fund acquiring more than 3% of the voting shares of any other
investment company, and a prohibition on investing more than 5% of a Fund's
assets in securities of any one investment company or more than 10% of its as-
sets in securities of all investment companies. Each Fund will indirectly bear
its proportionate share of any management fees and other expenses paid by such
other investment companies. Goldman Sachs will not impose a portion of the
management fees payable by a Fund (the "Acquiring Fund") with respect to as-
sets invested in another money market investment company (the "Acquired Fund")
as follows. The amount of the management fees otherwise payable by the Acquir-
ing Fund and not imposed by Goldman Sachs will be equal to the amount of man-
agement fees indirectly paid by the Acquiring Fund as a shareholder of the Ac-
quired Fund. Such other investment companies will have investment objectives,
policies and restrictions substantially similar to those of the Acquiring Fund
and will be subject to substantially the same risks.
INVESTMENT LIMITATIONS
Pursuant to SEC Rule 2a-7 under the Investment Company Act, each Fund may
not invest more than 5% of its assets (taken at amortized cost) in the securi-
ties of any one issuer (except U.S. Government Securities and repurchase
agreements collateralized by such securities). Each Fund may, however, invest
more than 5% of its assets in the First Tier Securities of a single issuer for
a period of up to three business days after the purchase thereof, although a
Fund may not make more than one such investment at any time. The Funds may not
invest in securities which are Second Tier Securities at the time of purchase.
Immediately after the acquisition of any put by a Fund, not more than 5% of
such Fund's total assets may be invested in securities issued by or subject to
puts from the same issuer. However, this limitation will not apply to the is-
suer of unconditional puts if the Fund does not have more than 10% of its to-
tal assets invested in securities issued by or subject to unconditional puts
from such issuer. The foregoing requirements of Rule 2a-7 are more restrictive
than the fundamental policy set forth in the Additional Statement. Purchases
of securities which are unrated or rated by only one NRSRO must be approved or
ratified by the Trustees.
INVESTMENT RESTRICTIONS. Each Fund is subject to certain investment restric-
tions that are described in detail under "Investment Restrictions" in the Ad-
ditional Statement. Fundamental investment restrictions of a Fund cannot be
changed without approval of a majority of the outstanding shares of that Fund.
All investment policies not specifically designated as fundamental are non-
fundamental and may be changed without shareholder approval.
RESTRICTED AND OTHER ILLIQUID SECURITIES. Each Fund may purchase securities
that are not registered ("restricted securities") under the Securities Act of
1933 ("1933 Act"), but can be offered and sold to "qualified institutional
buyers" under Rule 144A under the 1933 Act. However, a Fund will not invest
more than 10% of its net assets in illiquid investments, which include fixed
time deposits maturing in more than seven days and restricted securities. Re-
stricted securities (including commercial paper issued pursuant to Section
4(2) of the 1933 Act) which the Board of Trustees has determined are liquid,
based upon a continuing review of the trading markets for the specific re-
stricted security, will not be deemed to be illiquid investments for purposes
of this restriction. The Board of Trustees may adopt guidelines and delegate
to the Adviser the daily function of
7
<PAGE>
determining and monitoring the liquidity of restricted securities. The Board,
however, will retain sufficient oversight and be ultimately responsible for
the determinations. Since it is not possible to predict with assurance that
the market for restricted securities eligible for resale under Rule 144A will
continue to be liquid, the Adviser will carefully monitor each Fund's invest-
ments in these securities, focusing on such important factors, among others,
as valuation, liquidity and availability of information. This investment prac-
tice could have the effect of increasing the level of illiquidity in a Fund to
the extent that qualified institutional buyers become for a time uninterested
in purchasing these restricted securities.
In addition, each Fund may not invest in repurchase agreements maturing in
more than seven days and securities which are not readily marketable if, as a
result thereof, more than 10% of the net assets of that Fund (taken at market
value) would be invested in such investments. Certain repurchase agreements
which mature in more than seven days can be liquidated before the nominal
fixed term on seven days or less notice. Such repurchase agreements will be
regarded as liquid instruments.
MANAGEMENT
THE ADVISER
GSAM, One New York Plaza, New York, New York, a separate operating division
of Goldman Sachs, acts as investment adviser to the Funds. Goldman Sachs reg-
istered as an investment adviser in 1981. As of October 30, 1996, Goldman
Sachs, together with its affiliates, acted as investment adviser, administra-
tor or distributor for approximately $89 billion in assets.
As of November , 1996, Goldman Sachs and its consolidated subsidiaries had
assets of approximately $ billion and partners' capital of $ billion and
ranked as one of the largest international investment banking and brokerage
firms in the United States. Founded in 1869, Goldman Sachs is a major player
among investment banking and brokerage firms providing a broad range of fi-
nancing and investing services both in the United States and abroad.
Pursuant to an SEC order, each Fund, may enter into principal transactions
in certain taxable money market instruments, including repurchase agreements,
with Goldman Sachs.
Under its Investment Advisory Agreement with the Trust, GSAM continually
manages the portfolio of each Fund, including the purchase, retention and dis-
position of its securities and other assets. In addition, GSAM administers the
Funds' business affairs and performs various shareholder servicing functions
to the extent not provided by other organizations. The management of each Fund
is subject to the supervision of the Board of Trustees and each Fund's invest-
ment policies. For these services, the Trust, on behalf of each Fund, pays
GSAM a monthly fee at an annual rate of each Fund's average daily net assets
as follows:
<TABLE>
<CAPTION>
APPROXIMATE
ANNUAL RATE
-----------
<S> <C>
Financial Square Treasury Instruments Fund .205%
Financial Square Federal Fund .205%
</TABLE>
GSAM has agreed to reduce or otherwise limit the daily expenses of each Fund
(excluding fees payable to Service Organizations, as defined herein, manage-
ment fees, taxes, interest, brokerage and litigation, indemnification and
other extraordinary expenses) on an annualized basis to .01% of the average
daily net assets of the Fund. In addition, with respect to the Federal and
Treasury Instruments Funds, GSAM has voluntarily agreed not to impose all or a
portion of its advisory fee and/or to reduce or otherwise limit each Fund's
annual total operating expenses (excluding fees payable to Service Organiza-
tions, as defined herein) to .18% and .18%, respectively, of
8
<PAGE>
average daily net assets. GSAM has no current intention to but may in the fu-
ture discontinue or modify any of such limitations at its discretion.
THE DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606, serves as the Dis-
tributor of shares of each Fund pursuant to a Distribution Agreement with the
Trust. The Distributor will assist in the sale of shares of each Fund upon the
terms described herein. Goldman Sachs also serves as the Transfer Agent of
each Fund.
From time to time, Goldman Sachs or any of its affiliates may purchase and
hold shares of the Funds in order to increase the assets of the Funds. In-
creasing the Funds' assets may enhance investment flexibility and diversifica-
tion. Goldman Sachs reserves the right to redeem at any time some or all of
the Fund shares acquired for its own account. Goldman Sachs will consider the
effect of redemptions on the Funds and other shareholders in deciding whether
to redeem its shares.
TAXES
Each Fund is treated as a separate entity for federal income tax purposes
and intends to continue to qualify and be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986 (the "Code")
for each taxable year. To qualify as such, each Fund must satisfy certain re-
quirements relating to the sources of its income, diversification of its as-
sets and distribution of its income to shareholders. As a regulated investment
company, each Fund will not be subject to federal income or excise tax on any
net investment income and net realized capital gains that are distributed to
its shareholders in accordance with certain timing requirements of the Code.
Dividends paid by a Fund from net investment income, the excess of net
short-term capital gain over net long-term capital loss and taxable original
issue discount or market discount income will be taxable to shareholders as
ordinary income. Dividends paid by a Fund from the excess of net long-term
capital gain over net short-term capital loss will be taxable as long-term
capital gain regardless of how long the shareholders have held their shares.
These tax consequences will apply to taxable distributions of a Fund (includ-
ing a Fund that also pays exempt-interest dividends, as described below) re-
gardless of whether distributions are received in cash or reinvested in
shares. Certain distributions paid by the Funds in January of a given year
will be taxable to shareholders as if received on December 31 of the year in
which they are declared. Shareholders will be informed annually about the
amount and character of distributions received from the Funds for federal in-
come tax purposes, including any distributions that may constitute a return of
capital.
Individuals and certain other classes of shareholders may be subject to 31%
backup withholding of federal income tax on taxable distributions if they fail
to furnish their correct taxpayer identification number and certain certifica-
tions required by the Internal Revenue Service or if they are otherwise sub-
ject to backup withholding. Individuals, corporations and other shareholders
that are not U.S. persons under the Code are subject to different tax rules
and may be subject to nonresident alien withholding at the rate of 30% (or a
lower rate provided by an applicable tax treaty) on amounts treated as ordi-
nary dividends from the Funds.
9
<PAGE>
In addition to federal taxes, a shareholder may be subject to state, local
or foreign taxes on payments received from a Fund. A state income (and possi-
bly local income and/or intangible property) tax exemption is generally avail-
able to the extent a Fund's distributions are derived from interest on (or, in
the case of intangibles taxes, the value of its assets is attributable to)
certain U.S. Government obligations and/or tax-exempt municipal obligations
issued by or on behalf of the particular state or a political subdivision
thereof, provided in some states that certain thresholds for holdings of such
obligations and/or reporting requirements are satisfied. Shareholders should
consult their own tax advisers concerning these matters.
NET ASSET VALUE
The net asset value of each Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 P.M. New York time) on
each Business Day. Net asset value per share for each class of shares of each
Fund is calculated by determining the amount of net assets attributable to
each class of shares and dividing by the number of shares for such class.
On any Business Day, as defined herein, when the Public Securities Associa-
tion (PSA) recommends that the securities market close early, the Treasury In-
struments and Federal Funds will cease, and each other Fund reserves the right
to cease, accepting purchase and redemption orders for same Business Day
credit at the time the PSA recommends that the securities market close. On
days any Fund closes early, purchase and redemption orders received after the
PSA recommended closing time will be credited for the next Business Day. In
addition, each Fund reserves the right to advance the time by which purchase
and redemption orders must be received for same Business Day credit as permit-
ted by the SEC.
Each Fund's portfolio securities are valued at their amortized cost, which
does not take into account unrealized securities gains or losses. This method
involves initially valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any premium paid or discount received.
YIELD INFORMATION
From time to time, each Fund may advertise its yield and effective yield.
The yield of a Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the advertise-
ment). This income is then annualized; that is, the amount of income generated
by the investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The Funds may each also quote tax-equivalent yield. Each Fund's tax-equiva-
lent yield is calculated by determining the rate of return that would have to
be achieved on a fully taxable investment to produce the after-tax equivalent
of the Fund's yield, assuming certain tax brackets for a shareholder.
Investors should note that the investment results of a Fund are based on
historical performance and will fluctuate over time. Any presentation of a
Fund's yield or effective yield for any prior period should not be
10
<PAGE>
considered a representation of what an investment may earn or what a Fund's
yield or effective yield may be in any future period.
Yield, effective yield and tax-equivalent yield will be calculated sepa-
rately for each class of shares in existence. Because each such class of
shares is subject to different expenses, the net yield of such classes of a
Fund for the same period may differ. See "Organization and Shares of the
Funds" below.
ORGANIZATION AND SHARES OF THE FUNDS
The Trust was formed as a business trust under the laws of The Commonwealth
of Massachusetts on December 6, 1978. It is anticipated that each series of
the Trust, including the Federal and Treasury Instruments Funds, will be reor-
ganized on April 30, 1997, or as soon thereafter as practicable, into newly
established series of a Delaware Business Trust (the "Delaware Trust"). The
Trustees of the Trust will also serve as Trustees of the Delaware Trust and
the investment objectives, restrictions and policies and fees of the series of
the Delaware Trust will be identical to those of the corresponding Fund. The
initial shareholder of the Federal and Treasury Instruments Funds has approved
the reorganization of such Funds into series of the Delaware Trust. In the
event that the shareholders of the other series of the Trust do not approve
reorganizations into the Delaware Trust, the Federal and Treasury Instrument
Funds may not be reorganized into the Delaware Trust. The Trustees of the
Trust are responsible for the overall management and supervision of its af-
fairs. The Declaration of Trust of both the Trust and the Delaware Trust au-
thorizes the Trustees to classify or reclassify any series or portfolio of
shares into one or more classes. The Trustees have authorized the issuance of
four classes of shares of each of the Funds, which are: FST Shares, FST Admin-
istration Shares, FST Service Shares and FST Preferred Shares. (Institutions
that provide services to holders of FST Preferred Shares, FST Administration
Shares or FST Service Shares are referred to in this Prospectus as "Service
Organizations").
When issued, units are fully paid and nonassessable by the Trust or the Del-
aware Trust. In the event of liquidation, shareholders are entitled to share
pro rata in the net assets of the applicable Fund available for distribution
to such shareholders. Shares entitle their holders to one vote per share, are
freely transferable and have no preemptive, subscription or conversion rights.
Shares of a Fund will be voted separately by Fund with respect to matters
pertaining to that Fund except for the election of Trustees and ratification
of independent accountants. For example, shareholders of each Fund are re-
quired to approve the adoption of any investment advisory agreement relating
to that Fund and any changes in fundamental investment restrictions or poli-
cies of such Fund. Approval by the shareholders of one Fund is effective only
as to that Fund.
Neither the Trust nor the Delaware Trust intend to hold annual shareholder
meetings, although special meetings may be called for such purposes as elect-
ing or removing Trustees, complying with a requirement of the Investment Com-
pany Act, or such other purposes as are set forth above. Each of the Trust and
the Delaware Trust will facilitate shareholder communication as required and
in the manner prescribed by Section 16(c) of the Investment Company Act.
11
<PAGE>
PURCHASE OF SHARES
FST Shares of a Fund may be purchased on any Business Day at the net asset
value next determined after receipt of a purchase order in the manner set forth
below, and provided that The Northern Trust Company ("Northern"), Chicago, Il-
linois, the subcustodian for State Street Bank and Trust Company ("State
Street"), receives the purchase price in Federal Funds on the same Business
Day. Purchase orders may be made by telephoning Goldman Sachs at 800-621-2550
or by a written request addressed to Goldman Sachs, Attention: Shareholder
Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago, Illinois
60606. It is strongly recommended that payment be effected by wiring Federal
Funds to Northern.
Purchases of FST Shares may also be made by delivering a Federal Reserve
draft or check payable to the appropriate Fund and drawn on a U.S. bank to
Goldman Sachs, Attention: Shareholder Services, Goldman Sachs Money Market
Trust, 4900 Sears Tower, Chicago, Illinois 60606. It is expected that Federal
Reserve drafts will ordinarily be converted to Federal Funds on the day of re-
ceipt and that checks will be converted to Federal Funds within two Business
Days after receipt. FST Shares purchased by check may not be redeemed until the
check has cleared, as described under "Redemption of Shares."
Purchases of shares of any Fund may also be made through an Automated Clear-
ing House ("ACH") transfer to Goldman Sachs Money Market Trust c/o Northern, as
subcustodian for State Street. Purchase orders are effected at the net asset
value next determined after receipt of both the purchase order and the purchase
price in Federal Funds. It is expected that ACH transfers will ordinarily be
converted to Federal Funds on the Business Day following receipt of the ACH
transfer.
FST Shares of each Fund are deemed to have been purchased when an order
becomes effective and are entitled to dividends on FST Shares purchased as
follows:
<TABLE>
<CAPTION>
IF ORDER IS RECEIVED BY
GOLDMAN SACHS DIVIDENDS BEGIN
----------------------- ---------------
<S> <C> <C>
By: 3:00 p.m.-N.Y. time Same Business Day
- ---------------------------------------------------------------------------------------
After: 3:00 p.m.-N.Y. time Next Business Day
- ---------------------------------------------------------------------------------------
</TABLE>
A Business Day means any day on which the New York Stock Exchange is open,
except for days on which Chicago, Boston or New York banks are closed for local
holidays.
FST Shares of the Funds are purchased at the net asset value per share with-
out the imposition of a sales charge. However, banks, trust companies or other
institutions through which investors acquire FST Shares may impose charges in
connection with transactions in such Shares.
Goldman Sachs, as each Fund's transfer agent, will maintain a complete record
of transactions and FST Shares held in each shareholder's account. The Trust
and Goldman Sachs each reserves the right to reject any purchase order for any
reason.
Goldman Sachs may, at its own expense, provide compensation to certain deal-
ers whose customers purchase significant amounts of shares of a Fund. The
amount of such compensation may be made on a one-time and/or periodic basis,
and may be up to 25% of the annual fees that are earned by GSAM as investment
adviser to such Fund (after adjustments) and are attributable to shares held by
such customers. Such com-
12
<PAGE>
pensation will not represent an additional expense to the Fund or its share-
holders, since it will be paid from assets of Goldman Sachs or its affiliates.
INITIAL PURCHASES
The minimum requirement for investing in a Fund is $50 million ($10 million
if an investor satisfies the minimum initial investment in any other Fund). The
Trust and Goldman Sachs each reserves the right to waive the minimum investment
requirement. Before or immediately after placing an initial purchase order, in-
vestors should complete and send to Goldman Sachs the Account Information Form
included at the end of this Prospectus.
SUBSEQUENT INVESTMENTS
There is no minimum amount required for subsequent investments. Orders for
the purchase of additional FST Shares should be accompanied by information
identifying the account and the Fund in which FST Shares are to be purchased.
REPORTS TO SHAREHOLDERS
FST Shareholders of each Fund will receive an annual report containing au-
dited financial statements and a semiannual report. Each FST Shareholder will
also be furnished with an individual monthly statement. Upon request, a printed
confirmation for each transaction will be provided by Goldman Sachs. Any divi-
dends and distributions paid by the Funds are also reflected in regular state-
ments issued by Goldman Sachs. A year-to-date statement for any account will be
provided upon request made to Goldman Sachs. FST Shareholders with inquiries
regarding a Fund may call Goldman Sachs at 800-621-2550 (8:00 a.m. to 6:30 p.m.
New York time) or write Goldman Sachs at the address shown under "The Distribu-
tor and Transfer Agent."
SUB-ACCOUNTING SERVICES
The Trust has designed special procedures to assist banks and other institu-
tional investors desiring to establish multiple accounts (master accounts and
their sub-accounts). Sub-accounts may be established with registration by name
and/or number. Institutions will not normally be charged for this service un-
less otherwise agreed upon. Upon request, master accounts will be provided with
a monthly summary report which sets forth in order by account number (or name)
the share balance at month end and the monthly income together with the total
share balance and monthly income for the master account.
To assist banks and other institutional investors performing their own sub-
accounting, each Fund's daily income per share, calculated to nine decimal
places, and its annualized yield are normally available by 4:00 p.m. New York
time each day.
DISTRIBUTIONS
All or substantially all of each Fund's net investment income will be de-
clared daily (as of 4:00 p.m. New York time) as a dividend and distributed to
FST Shareholders monthly. Distributions will be made in additional FST Shares
of the same Fund or, at the election of FST Shareholders, in cash. The election
to reinvest dividends and distributions or receive them in cash may be changed
at any time upon written notice to Goldman Sachs. If no election is made, all
dividends and capital gain distributions will be reinvested.
13
<PAGE>
Dividends will be reinvested as of the last calendar day of each month. Cash
distributions will be paid on or about the first business day of each month.
Net short-term capital gains, if any, will be distributed in accordance with
the requirements of the Code and may be reflected in the Fund's daily distri-
butions. Each Fund may distribute at least annually its long-term capital
gains, if any, after reduction by available capital losses. In order to avoid
excessive fluctuations in the amount of monthly capital gains distributions, a
portion of any net capital gains realized on the disposition of securities
during the months of November and December may be distributed during the sub-
sequent calendar year. Although realized gains and losses on the assets of a
Fund are reflected in the net asset value of the Fund, they are not expected
to be of an amount which would affect the Fund's net asset value of $1.00 per
share.
A Fund's net investment income consists of the excess of (i) accrued inter-
est or discount (including both original issue and market discount on taxable
securities) on portfolio securities, and (ii) any income of the Fund from
sources other than capital gains over (iii) the amortization of market premium
on all portfolio securities and (iv) the estimated expenses of the Fund, in-
cluding a proportionate share of the general expenses of the Trust.
EXCHANGES
FST Shares of each Fund may be exchanged for shares of the corresponding
class of any Fund or Portfolio of Goldman Sachs Money Market Trust at the net
asset value next determined either by writing to Goldman Sachs, Attention:
Shareholder Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chi-
cago, Illinois 60606 or, if previously elected in the Account Information Form
included at the end of this Prospectus, by calling Goldman Sachs at 800-621-
2550. All telephone exchanges must be registered in the same name(s) and with
the same address as are registered in the Fund from which the exchange is be-
ing made. It may be difficult to implement the telephone exchange privilege in
times of drastic economic or market changes. In an effort to prevent unautho-
rized or fraudulent exchange requests by telephone, Goldman Sachs employs rea-
sonable procedures as set forth under "Redemption of Shares" to confirm that
such instructions are genuine. Exchanges are available only in states where
the exchange may legally be made. The exchange privilege may be modified or
withdrawn at any time on 60 days' written notice.
REDEMPTION OF SHARES
HOW TO REDEEM
FST Shareholders may redeem FST Shares of a Fund without charge upon request
on any Business Day at the net asset value next determined after receipt of
the redemption request. Redemption requests may be made by telephoning Goldman
Sachs at 800-621-2550 or by a written request addressed to Goldman Sachs, At-
tention: Shareholder Services, Goldman Sachs Money Market Trust, 4900 Sears
Tower, Chicago, Illinois 60606. The letter of instruction must specify the
number of FST Shares of the particular Fund to be redeemed, the account num-
ber, payment instructions and the exact registration on the account. Signa-
tures must be guaranteed in accordance with the procedures set forth below, if
the proceeds are to be paid to other than pre-established instructions on file
with the Fund. An FST Shareholder may request redemptions by telephone only if
the optional telephone redemption privilege has been elected on the Account
Information Form included at the end of this Prospectus. It may be difficult
to implement redemptions by telephone in times of drastic economic or market
changes.
14
<PAGE>
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, Goldman Sachs employs reasonable procedures specified by the Trust
to confirm that such instructions are genuine. Among other things, any redemp-
tion request that requires money to go to an account or address other than
that designated on the Account Information Form must be in writing and signed
by an authorized person designated on the Account Information Form. Any such
written request is also confirmed by telephone with both the requesting party
and the designated bank account to verify instructions. Other procedures may
be implemented from time to time. If reasonable procedures are not implement-
ed, the Trust may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither the Trust nor Goldman Sachs will be
responsible for the authenticity of redemption instructions received by tele-
phone.
Additional documentation may be required by Goldman Sachs in order to estab-
lish that a redemption request has been properly authorized. A redemption re-
quest will not be considered to have been received in proper form until such
additional documentation has been submitted to Goldman Sachs. The payment of
redemption proceeds for FST Shares recently purchased by check will be delayed
for up to 15 days until the check has cleared.
PAYMENT OF REDEMPTION PROCEEDS AND DIVIDENDS
In accordance with the following, redemption proceeds will be wired to the
bank account designated on the FST Shareholder's Account Information Form.
<TABLE>
- ----------------------------------------------------------------------------
<CAPTION>
REDEMPTION
REDEMPTION REQUEST PROCEEDS
RECEIVED BY GOLDMAN SACHS ORDINARILY DIVIDENDS
----------------------------- ---------- -------------------
<S> <C> <C> <C>
By: 3:00 p.m.-N.Y. time Wired Same Not earned on Day
Business request is received
Day
- ----------------------------------------------------------------------------
After: 3:00 p.m.-N.Y. time Wired Next Earned on Day
Business request is received
Day
- ----------------------------------------------------------------------------
</TABLE>
The Funds will arrange for the proceeds of redemptions effected by any means
to be wired as Federal Funds to the bank account designated in the Account In-
formation Form. Redemption proceeds will normally be wired as set forth above,
but may be paid up to three Business Days after receipt of a properly executed
redemption request. For example, payment may be delayed if the Federal Reserve
Bank is closed on the day redemption proceeds would ordinarily be wired. After
a wire has been initiated by Goldman Sachs, neither Goldman Sachs nor the
Trust assumes any further responsibility for the performance of intermediaries
or the FST Shareholder's bank in the transfer process. If a problem with such
performance arises, the FST Shareholder should deal directly with such inter-
mediaries or bank.
An FST Shareholder may change the bank designated to receive redemption pro-
ceeds by providing a written notice to Goldman Sachs which has been signed by
the FST Shareholder or its authorized representative. This signature must be
guaranteed by a bank, a securities broker or dealer, a credit union having au-
thority to issue signature guarantees, a savings and loan association, a
building and loan association, a cooperative bank, a federal savings bank or
association, a national securities exchange, a registered securities associa-
tion or a clearing agency, provided that such institution satisfies the stan-
dards established by Goldman Sachs. Goldman Sachs may also require additional
documentation in connection with a request to change the designated bank.
15
<PAGE>
OTHER REDEMPTION INFORMATION
A minimum account balance of $50 million in a Fund ($10 million if an in-
vestor satisfies the minimum initial investment in any other Fund) is required
to remain an FST Shareholder. A Fund may redeem all of the FST Shares of any
FST Shareholder whose account in that Fund has a net asset value which is less
than the minimum described above. The Trust will give sixty (60) days' prior
written notice to such shareholders whose FST Shares are being redeemed to al-
low them to purchase sufficient additional FST Shares of the Fund to avoid such
redemption.
----------------
16
<PAGE>
APPENDIX
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON ACCOUNT INFORMATION FORM
You are required by law to provide the Trust with your correct Social Secu-
rity or Taxpayer Identification Number (TIN), regardless of whether you file
tax returns. Failure to do so may subject you to penalties. Failure to provide
your correct TIN and to sign your name in the Certification Section of the Ac-
count Information Form could result in withholding of 31% by the Fund for the
federal backup withholding tax on distributions, redemptions, exchanges and
other payments relating to your account.
Any tax withheld may be credited against taxes owed on your federal income
tax return.
Special rules apply for certain entities. For example, for an account estab-
lished under a Uniform Gifts or Transfers to Minors Act, the TIN of the minor
should be furnished.
If you do not have a TIN, you should apply for one immediately by contacting
your local office of the Social Security Administration or the Internal Revenue
Service (IRS). Backup withholding could apply to payments relating to your ac-
count prior to the Trust's receipt of your TIN.
If you have been notified by the IRS that you are subject to backup withhold-
ing because you failed to report all your interest and/or dividend income on
your tax return and you have not been notified by the IRS that such withholding
should cease, you must cross out item (2) in the Certification section of the
Account Information Form.
If you are an exempt recipient, you should furnish your TIN and certify your
exemption by signing the Certification section and writing "exempt" after your
signature. Exempt recipients include: corporations, tax-exempt pension plans
and IRA's, governmental agencies, financial institutions, registered securities
and commodities dealers and others.
If you are a nonresident alien or foreign entity, you must provide a com-
pleted Form W-8 to the Fund in order to avoid backup withholding on certain
payments. Other payments to you may be subject to nonresident alien withholding
of up to 30%.
For further information regarding backup and nonresident alien withholding,
see Sections 3406, 1441 and 1442 of the Internal Revenue Code and consult your
tax adviser.
A-1
<PAGE>
GOLDMAN SACHS MUTUAL FUNDS -- ACCOUNT INFORMATION FORM
This Account Information Form Should be Forwarded Promptly to Goldman, Sachs &
Co.
No Redemption Can be Made Prior to Its Receipt
Send to:Goldman Sachs Mutual Funds Master No. _______________
Fund Use Only
4900 Sears Tower Date: ____________________
Chicago, IL 60606
1-800-621-2250
Institutional Liquid Assets Portfolios [_]GS -- Adjustable Rate Government
[_]Prime Obligations Portfolio Fund
[_]Money Market Portfolio [_]GS -- Short-Duration Government
[_]Treasury Obligations Portfolio Fund
[_]Treasury Instruments Portfolio [_]GS -- Short Duration Tax-Free Fund
[_]Government Portfolio [_]GS -- Core Fixed Income Fund
[_]Federal Portfolio [_]Other Goldman Sachs Portfolios
[_]Tax-Exempt Diversified Portfolio Fill in Fund(s): ______________________
[_]Tax-Exempt California Portfolio
[_]Tax-Exempt New York Portfolio
[_]Other
Fill in Fund(s): ______________________
A. ACCOUNT RECORD
- --------------------------------------------------------------------------------
- --------------------------------------- ---------------------------------------
Name of Account Telephone Number
- --------------------------------------- U.S. Citizen or
Street or P.O. Box Resident? Yes [_] No [_]
- --------------------------------------- If no is checked, fill in country of
City State Zip tax residence:
- --------------------------------------- ---------------------------------------
Attention
B. DIVIDENDS AND DISTRIBUTIONS -- Check appropriate box (see "Dividends" in
Prospectus)
- --------------------------------------------------------------------------------
Dividends (including net short-term [_] Cash [_] Units
capital gains) [_] Cash [_] Units
Net Long-Term Capital Gains [_] Units
Distributions
Dividends and capital gains reinvested
in another fund in the Goldman Sachs
Portfolios (see Prospectus for more
information)
Fill in Fund: _______________________
(If no box is checked, dividends and capital gains distributions will be
reinvested in the account.)
C. SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION NUMBER CERTIFICATION
- --------------------------------------------------------------------------------
Taxpayer Identification Number: _________________________
Under penalties of perjury, I certify that (1) The number shown on this form is
my correct Taxpayer Identification Number (or I am waiting for a number to be
issued to me), and (2) I am not subject to backup withholding because I am
exempt from backup withholding or I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or the IRS has notified me that I
am no longer subject to backup withholding. See the "Guidelines for
Certification of Taxpayer Identification Number on Account Information Form,"
contained in the Appendix to the accompanying Prospectus.
------------------------------- ---------------------------------------
SIGN Signature Name (print) and Title (if any)
HERE ------------------------------- ---------------------------------------
Date
D. OPTIONAL TELEPHONE EXCHANGE (see "Exchange Privilege" in Prospectus)
- --------------------------------------------------------------------------------
[_] Goldman, Sachs & Co. is hereby authorized to accept and act upon telephone
instructions from the undersigned or any other person for the exchange of
units of the Portfolio into any portfolio described in the accompanying
Prospectus. The undersigned understands and agrees that neither the
applicable Portfolio nor Goldman, Sachs & Co. will be liable for any loss,
expense, or cost arising out of any telephone request.
Continued on reverse side
<PAGE>
E. REDEMPTION PLANS -- check one box only (see "Redemption of Units" in
Prospectus)
- --------------------------------------------------------------------------------
[_] I authorize GOLDMAN, SACHS & CO. to honor telephone, telegraphic, or other
instructions WITHOUT SIGNATURE GUARANTEE, from any person for the redemption
of units for the above account provided that the proceeds are transferred to
the following bank account(s) only. I understand any changes to the
following information must be made in writing to GOLDMAN, SACHS & CO., must
contain the appropriate number of signatures listed below and all signatures
MUST BE SIGNATURE GUARANTEED. Absent its own gross negligence, neither the
applicable Fund nor GOLDMAN, SACHS & CO., shall be liable for such
redemption or for payments made to any unauthorized account.
[_] I have furnished GOLDMAN, SACHS & CO., WITH A SIGNATURE GUARANTEE (see
section F). I authorize GOLDMAN, SACHS & CO. to honor telephone,
telegraphic, or other instructions from any person for the redemption of
units for the above account provided that the proceeds are transmitted to
the following bank account(s) only. Any changes to the following information
must be made in writing to GOLDMAN, SACHS & CO., (but without signature
guarantee) and contain the appropriate number of signatures listed below.
Absent its own gross negligence, neither the applicable Fund nor GOLDMAN,
SACHS & CO. shall be liable for such redemptions or for payments made to any
unauthorized account.
Additional documentation may be required for certain accounts.
Please complete the following bank account information and place a line through
the unused portion.
Additional instructions may be added as separate pages, if necessary.
Number of Bank Account Destinations completed in Section E of this form: [_]
1) ____________________________________ 3) ____________________________________
Bank Name Bank Routing No. Bank Name Bank Routing No.
------------------------------------- -------------------------------------
Street Address Street Address
------------------------------------- -------------------------------------
City State Zip City State Zip
------------------------------------- -------------------------------------
Account Name Account No. Account Name Account
No.
2) ____________________________________ 4) ____________________________________
Bank Name Bank Routing No. Bank Name Bank Routing No.
------------------------------------- -------------------------------------
Street Address Street Address
------------------------------------- -------------------------------------
City State Zip City State Zip
------------------------------------- -------------------------------------
Account Name Account No. Account Name Account
No.
[_] Special Draft (Transfer Agent to Supply)
[_] By Mail
F. SIGNATURE AUTHORIZATION
- --------------------------------------------------------------------------------
By the execution of this Account Information Form, the undersigned represents
and warrants that it has full right, power and authority to make the investment
applied for pursuant to this application and is acting for itself or in some
fiduciary capacity in making such investments. THE UNDERSIGNED UNDERSTANDS THAT
NON-MONEY MARKET FUNDS DO NOT MAINTAIN A CONSTANT NET ASSET VALUE AND FURTHER
THAT A CONSTANT NET ASSET VALUE IN MONEY MARKET FUNDS IS NOT GUARANTEED. AS A
RESULT THE UNDERSIGNED MAY EXPERIENCE A LOSS OF PRINCIPAL ON ITS INVESTMENTS.
The undersigned affirms that it has received current prospectus for the
Portfolios and has renewed the same.
Number of Signatures required to make changes to this form: [_]
------------------------------- ---------------------------------------
SIGN
Name (print) and Title (if any)
Signature
HERE
------------------------------- ---------------------------------------
Signature Name (print) and Title (if any)
------------------------------- ---------------------------------------
Date
G. SIGNATURE GUARANTEE
- --------------------------------------------------------------------------------
- --------------------------------------- Affix Guarantee Stamp Here
Signature Guaranteed By
- ---------------------------------------
Authorized Signature
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOLDMAN SACHS MONEY MARKET TRUST
FST SHARES
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606
TOLL FREE:800-621-2550
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder and Fund Expenses.............................................. 2
An Introduction to the Funds............................................... 4
Investment Policies........................................................ 5
Description of Securities and Investment Techniques........................ 5
Investment Limitations..................................................... 7
Management................................................................. 8
Taxes...................................................................... 9
Net Asset Value............................................................ 10
Yield Information.......................................................... 10
Organization and Shares of the Funds....................................... 11
Purchase of Shares......................................................... 12
Reports to Shareholders.................................................... 13
Distributions.............................................................. 13
Exchanges.................................................................. 14
Redemption of Shares....................................................... 14
Appendix................................................................... A-1
Account Information Form
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
FINANCIAL SQUARE TREASURY INSTRUMENTS FUND
FINANCIAL SQUARE FEDERAL FUND
FST SHARES
------------
PROSPECTUS
------------
MANAGED BY
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
(FINANCIAL SQUARE TREASURY INSTRUMENTS FUND)
(FINANCIAL SQUARE FEDERAL FUND)
FST PREFERRED SHARES
4900 Sears Tower
Chicago, Illinois 60606
Goldman Sachs Money Market Trust (the "Trust") is a no-load, open-end,
management investment company (a "mutual fund") which includes the Financial
Square Treasury Instruments and Federal Funds (the "Funds"). This Prospectus
relates only to the offering of FST Preferred Shares of beneficial interest
("FST Preferred Shares") of the Funds. Goldman Sachs Asset Management, a
separate operating division of Goldman, Sachs & Co., serves as each Fund's
investment adviser. Goldman, Sachs & Co. serves as each Fund's distributor and
transfer agent.
The Treasury Instruments and Federal Funds seek to maximize current income
to the extent consistent with the preservation of capital and the maintenance
of liquidity by investing exclusively in high quality money market
instruments. These Funds may invest in diversified portfolios of the following
types of instruments:
Financial Square Treasury Instruments Fund. Securities issued or guaranteed
by the U.S. Treasury.
Financial Square Federal Fund. Securities of the U.S. Government and certain
of its agencies, authorities and instrumentalities, the interest income from
which is generally exempt from state income taxation.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOV-
ERNMENT AND THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION..... Goldman Sachs Mutual Funds--Toll Free: 800-621-2550
This Prospectus provides you with information about the Funds that you should
know before investing in FST Preferred Shares. It should be read and retained
for future reference. If you would like more detailed information, the
Statement of Additional Information dated February , 1997, as amended or
supplemented from time to time, is available upon request without charge from
institutions ("Service Organizations") that hold, directly or through an
agent, FST Preferred Shares for the benefit of their customers, by calling the
telephone number listed above or by writing Goldman, Sachs & Co., 4900 Sears
Tower, Chicago, Illinois 60606. The Statement of Additional Information, which
is incorporated by reference into this Prospectus, has been filed with the
Securities and Exchange Commission. Not all Funds are available in certain
states. Please call the phone number listed above to determine availability in
your state.
- -------------------------------------------------------------------------------
FST PREFERRED SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is February , 1997.
<PAGE>
SHAREHOLDER AND FUND EXPENSES (NOTE 1)
FST PREFERRED SHARES (NOTE 2)
<TABLE>
<CAPTION>
FINANCIAL SQUARE
TREASURY FINANCIAL SQUARE
INSTRUMENTS FEDERAL
FUND FUND
---------------- ----------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases... None None
Sales Charge Imposed on Reinvested
Distributions.............................. None None
Deferred Sales Load Imposed on Redemptions.. None None
Exchange Fee................................ None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net
assets)
Management Fees (Note 3) (after
adjustments)............................... 0.17% 0.17%
Other Expenses
Administration Fees (Note 4)............... 0.10% 0.10%
Other Expenses (Note 3) (after expense
limitation)............................... 0.01% 0.01%
---- ----
TOTAL OPERATING EXPENSES (Note 3)............ 0.28% 0.28%
==== ====
</TABLE>
EXAMPLE OF EXPENSES
You would pay the following expenses on a hypothetical $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Financial Square Treasury Instruments Fund.................. $ $
Financial Square Federal Fund............................... $ $
</TABLE>
2
<PAGE>
- --------
Notes:
(1) The purpose of this table is to assist investors in understanding the
various costs and expenses that an investment in the Funds will bear
directly or indirectly. Operating expenses for the Funds are based on
estimates of expenses expected to be incurred during the fiscal year
ending December 31, 1997. The table and hypothetical example should not be
considered a representation of past or future expenses; actual expenses
may vary depending upon a variety of factors including the actual
performance of each Fund, which may be greater or less than 5%. See
"Management."
(2) The information set forth in the foregoing table and example relates only
to FST Preferred Shares of the Funds. The Funds also offer FST Shares, FST
Administration Shares and FST Service Shares which are subject to
different fees and expenses (which affect performance), have different
minimum investment requirements and are entitled to different services.
Information regarding any other class of the Funds may be obtained from
your sales representative or from Goldman Sachs by calling the number on
the cover page of this Prospectus. See "Organization and Shares of the
Funds."
(3) Goldman Sachs Asset Management (the "Adviser" or "GSAM") has agreed that a
portion of its fees will not be imposed, pursuant to applicable contracts.
In addition, the Adviser has agreed to reduce or otherwise limit certain
expenses of each Fund (excluding fees payable to Service Organizations, as
defined herein, taxes, interest, brokerage and litigation, indemnification
and other extraordinary expenses), on an annualized basis, to 0.18% of the
average daily net assets of such Fund. Had the reduction of fees otherwise
payable and expense limitations not been reflected in the above table, the
management fees payable by each Fund would be 0.205% of average daily net
assets and the estimated amount of other expenses payable by the Treasury
Instruments Fund and Federal Fund would be 0. % and 0. %, respectively, of
average daily net assets. Had the reduction of fees otherwise payable and
expense limitations not been reflected in the above table, the estimated
annual operating expenses of the Treasury Instruments Fund and Federal
Fund would be 0. % and 0. %, respectively, of average daily net assets.
(4) Service Organizations (other than broker-dealers) may charge other fees to
their customers who are beneficial owners of FST Preferred Shares in
connection with their customers' accounts. See "Administration." Such
fees, if any, may affect the return such customers realize with respect to
their investments.
3
<PAGE>
AN INTRODUCTION TO THE FUNDS
THE TRUST: The Trust is a no-load, open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "Invest-
ment Company Act"). Each Fund is a separate pool of assets which pursues its
investment objective through separate investment policies, as described below.
THE ADVISER: Goldman Sachs Asset Management, a separate operating division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds' investment ad-
viser (the "Adviser" or "GSAM").
THE DISTRIBUTOR: Goldman Sachs, which serves as the Funds' distributor and
transfer agent, is one of the largest international investment banking and
brokerage firms in the United States.
THE INVESTOR: The Funds are designed for institutional investors seeking a
high rate of return, a stable net asset value and convenient liquidation priv-
ileges. The Funds are particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term funds for their own
accounts or for the accounts of their customers.
THE FUNDS: Each Fund's securities are valued by the amortized cost method as
permitted by a rule ("Rule 2a-7") of the Securities and Exchange Commission
("SEC"). Under such rule, each Fund may invest only in securities that are de-
termined to present minimal credit risk and meet certain other criteria.
INVESTMENT OBJECTIVES AND POLICIES FOR THE FUNDS: To maximize current in-
come to the extent consistent with the preservation of capital and the
maintenance of liquidity by investing exclusively in high quality money
market instruments. The Treasury Instruments and Federal Funds pursue their
objectives by limiting their investments to certain U.S. Treasury Obliga-
tions and U.S. Government Securities (each as defined herein), respective-
ly, the interest from which is generally exempt from state income taxation.
Each investor should consult his or her tax adviser to determine whether
distributions from the Treasury Instruments and Federal Funds derived from
interest on such obligations are exempt from state income taxation in the
investor's own state.
NET ASSET VALUE: Each Fund seeks to maintain a stable net asset value of
$1.00 per share.
MAXIMUM REMAINING MATURITY OF FUND INVESTMENTS: Thirteen months at the time
of purchase.
DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY: Not more than ninety days.
FIRST TIER SECURITIES: The Funds may purchase securities which are rated (or
that have been issued by an issuer that is rated with respect to a class of
short-term debt obligations, or any security within that class, comparable in
priority and quality with such securities) in the highest short-term rating
category by at least two NRSROs (as defined below), or if only one NRSRO has
assigned a rating, by that NRSRO. U.S. Government Securities as defined herein
are considered First Tier Securities.
UNRATED SECURITIES: Unrated securities may be purchased only if they are
deemed to be of comparable quality to First Tier Securities.
NRSROS: Nationally Recognized Statistical Rating Organizations include Stan-
dard & Poor's Ratings Group ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Services, Inc. Duff and Phelps, Inc., IBCA Lim-
ited and its affiliate IBCA Inc., and Thompson BankWatch, Inc. For a descrip-
tion of each NRSRO's rating categories, see Appendix A to the Statement of Ad-
ditional Information.
4
<PAGE>
INVESTMENT POLICIES
<TABLE>
<CAPTION>
FINANCIAL SQUARE
TREASURY FINANCIAL SQUARE
INSTRUMENTS FEDERAL
FUND FUND
- ------------------------------------------------------------------------
<S> <C> <C>
US Treasury Instruments [] []
- ------------------------------------------------------------------------
US Government Securities []
- ------------------------------------------------------------------------
[]
(Does not intend to
Repurchase Agreements invest)
- ------------------------------------------------------------------------
Credit Quality First Tier First Tier
- ------------------------------------------------------------------------
[] []
Up to 10% of total Up to 10% of total
assets in other assets in other
Investment Companies investment companies investment companies
- ------------------------------------------------------------------------
Taxable Federal and Taxable Federal and
generally exempt from generally exempt from
Summary of Taxation* state taxation state taxation
- ------------------------------------------------------------------------
Under extraordinary
circumstances, may
hold cash, U.S.
Government Securities
subject to state
taxation or cash
Miscellaneous equivalents
</TABLE>
Note: See "Description of Securities and Investment Techniques" for a descrip-
tion of, and certain criteria applicable to, each of these categories and in-
vestments.
* See "Taxes" below for an explanation of the tax consequences summarized in
the table above.
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
U.S. TREASURY OBLIGATIONS
"U.S. Treasury Obligations" are securities issued or guaranteed by the U.S.
Treasury, payments of principal, and interest on which are backed by the full
faith and credit of the U.S. Government.
U.S. GOVERNMENT SECURITIES
"U.S. Government Securities" are obligations issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities. Unlike U.S.
Treasury Obligations, obligations issued or guaranteed by U.S. Government
agencies, authorities or instrumentalities are supported either by (a) the
full faith and credit of the U.S. Government (such as securities of the Gov-
ernment National Mortgage Association), (b) the right of the issuer to borrow
from the Treasury (such as securities of the Student Loan Marketing Associa-
tion), (c) the discretionary authority of the U.S. Government to purchase the
agency's obligations (such as securities of the Federal National Mortgage As-
sociation and the Federal Home Loan Mortgage Corporation), or (d) only the
credit of the issuer. No assurance can be given that the U.S. Government will
provide financial support to U.S. Government agencies, authorities or instru-
mentalities in the future. U.S. Government Securities may include zero coupon
bonds. Such bonds may be purchased when yields are attractive.
5
<PAGE>
Securities guaranteed as to principal and interest by the U.S. Government,
its agencies, authorities or instrumentalities are deemed to include (a) secu-
rities for which the payment of principal and interest is backed by an irrevo-
cable letter of credit issued by the U.S. Government, its agencies, authori-
ties or instrumentalities and (b) participations in loans made to foreign gov-
ernments or their agencies that are so guaranteed. The secondary market for
certain of these participations is limited. Such participations may therefore
be regarded as illiquid.
Each Fund may also invest in separately traded principal and interest compo-
nents of securities guaranteed or issued by the U.S. Treasury if such compo-
nents are traded independently under the Separate Trading of Registered Inter-
est and Principal of Securities program ("STRIPS").
The Treasury Instruments and Federal Funds invest in Treasury Obligations
and certain U.S. Government Securities, respectively, the interest from which
is generally exempt from state income taxation. Securities generally eligible
for this exemption include those issued by the U.S. Treasury and those issued
by certain agencies, authorities or instrumentalities of the U.S. Government,
including the Federal Home Loan Banks, Federal Farm Credit Banks, Tennessee
Valley Authority and the Student Loan Marketing Association.
REPURCHASE AGREEMENTS
The Federal Fund may only enter into repurchase agreements with primary
dealers in U.S. Government Securities. A repurchase agreement is an agreement
under which a Fund purchases securities and the seller agrees to repurchase
the securities within a particular time at a specified price. Such price will
exceed the original purchase price, the difference being income to the Fund,
and will be unrelated to the interest rate on the purchased security. A Fund's
custodian or subcustodian will maintain custody of the purchased securities
for the duration of the agreement. The value of the purchased securities, in-
cluding accrued interest, will at all times equal or exceed the value of the
repurchase agreement. In the event of bankruptcy of the seller or failure of
the seller to repurchase the securities as agreed, a Fund could suffer losses,
including loss of interest on or principal of the security and costs associ-
ated with delay and enforcement of the repurchase agreement. In evaluating
whether to enter into a repurchase agreement, the Adviser will carefully con-
sider the creditworthiness of the seller pursuant to procedures reviewed and
approved by the Trustees. Distributions of the income from repurchase agree-
ments entered into by a Fund will be taxable to its shareholders. In addition,
the Federal Fund, together with other registered investment companies having
advisory agreements with the Adviser or any of its affiliates, may transfer
uninvested cash balances into a single joint account, the daily aggregate bal-
ance of which will be invested in one or more repurchase agreements.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES
Each Fund may purchase when-issued securities and make contracts to purchase
or sell securities for a fixed price at a future date beyond customary settle-
ment time. A Fund is required to hold and maintain in a segregated account
with the Fund's custodian or subcustodian until the settlement date, cash or
liquid, high quality debt obligations in an amount sufficient to meet the pur-
chase price. Alternatively, a Fund may enter into offsetting contracts for the
forward sale of other securities that it owns. Securities purchased or sold on
a when-issued or forward commitment basis involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date or if
the value of the security to be sold increases prior to the settlement date.
Although a Fund would generally purchase securities on a when-issued or for-
ward commitment basis with the intention of acquiring securities for its port-
folio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Adviser deems it appropriate to do so.
6
<PAGE>
OTHER INVESTMENT COMPANIES
The Adviser will determine, under guidelines established by the Trustees,
whether securities issued by other money market investment companies present
minimal credit risks. The amount of each Fund's investments in securities of
other investment companies will be subject to the limitations on such invest-
ments prescribed by the Investment Company Act. These limits include a prohi-
bition on any Fund acquiring more than 3% of the voting shares of any other
investment company, and a prohibition on investing more than 5% of a Fund's
assets in securities of any one investment company or more than 10% of its as-
sets in securities of all investment companies. Each Fund will indirectly bear
its proportionate share of any management fees and other expenses paid by such
other investment companies. Goldman Sachs will not impose a portion of the
management fees payable by a Fund (the "Acquiring Fund") with respect to as-
sets invested in another money market investment company (the "Acquired Fund")
as follows. The amount of the management fees otherwise payable by the Acquir-
ing Fund and not imposed by Goldman Sachs will be equal to the amount of man-
agement fees indirectly paid by the Acquiring Fund as a shareholder of the Ac-
quired Fund. Such other investment companies will have investment objectives,
policies and restrictions substantially similar to those of the Acquiring Fund
and will be subject to substantially the same risks.
INVESTMENT LIMITATIONS
Pursuant to SEC Rule 2a-7 under the Investment Company Act, each Fund may
not invest more than 5% of its assets (taken at amortized cost) in the securi-
ties of any one issuer (except U.S. Government Securities and repurchase
agreements collateralized by such securities). Each Fund may, however, invest
more than 5% of its assets in the First Tier Securities of a single issuer for
a period of up to three business days after the purchase thereof, although a
Fund may not make more than one such investment at any time. The Funds may not
invest in securities which are Second Tier Securities at the time of purchase.
Immediately after the acquisition of any put by a Fund, not more than 5% of
such Fund's total assets may be invested in securities issued by or subject to
puts from the same issuer. However, this limitation will not apply to the is-
suer of unconditional puts if the Fund does not have more than 10% of its to-
tal assets invested in securities issued by or subject to unconditional puts
from such issuer. The foregoing requirements of Rule 2a-7 are more restrictive
than the fundamental policy set forth in the Additional Statement. Purchases
of securities which are unrated or rated by only one NRSRO must be approved or
ratified by the Trustees.
INVESTMENT RESTRICTIONS. Each Fund is subject to certain investment restric-
tions that are described in detail under "Investment Restrictions" in the Ad-
ditional Statement. Fundamental investment restrictions of a Fund cannot be
changed without approval of a majority of the outstanding shares of that Fund.
All investment policies not specifically designated as fundamental are non-
fundamental and may be changed without shareholder approval.
RESTRICTED AND OTHER ILLIQUID SECURITIES. Each Fund may purchase securities
that are not registered ("restricted securities") under the Securities Act of
1933 ("1933 Act"), but can be offered and sold to "qualified institutional
buyers" under Rule 144A under the 1933 Act. However, a Fund will not invest
more than 10% of its net assets in illiquid investments, which include fixed
time deposits maturing in more than seven days and restricted securities. Re-
stricted securities (including commercial paper issued pursuant to Section
4(2) of the 1933 Act) which the Board of Trustees has determined are liquid,
based upon a continuing review of the trading markets for the specific re-
stricted security, will not be deemed to be illiquid investments for purposes
of this restriction. The Board of Trustees may adopt guidelines and delegate
to the Adviser the daily function of
7
<PAGE>
determining and monitoring the liquidity of restricted securities. The Board,
however, will retain sufficient oversight and be ultimately responsible for
the determinations. Since it is not possible to predict with assurance that
the market for restricted securities eligible for resale under Rule 144A will
continue to be liquid, the Adviser will carefully monitor each Fund's invest-
ments in these securities, focusing on such important factors, among others,
as valuation, liquidity and availability of information. This investment prac-
tice could have the effect of increasing the level of illiquidity in a Fund to
the extent that qualified institutional buyers become for a time uninterested
in purchasing these restricted securities.
In addition, each Fund may not invest in repurchase agreements maturing in
more than seven days and securities which are not readily marketable if, as a
result thereof, more than 10% of the net assets of that Fund (taken at market
value) would be invested in such investments. Certain repurchase agreements
which mature in more than seven days can be liquidated before the nominal
fixed term on seven days or less notice. Such repurchase agreements will be
regarded as liquid instruments.
MANAGEMENT
THE ADVISER
GSAM, One New York Plaza, New York, New York, a separate operating division
of Goldman Sachs, acts as investment adviser to the Funds. Goldman Sachs reg-
istered as an investment adviser in 1981. As of October 30, 1996, Goldman
Sachs, together with its affiliates, acted as investment adviser, administra-
tor or distributor for approximately $89 billion in assets.
As of November , 1996, Goldman Sachs and its consolidated subsidiaries had
assets of approximately $ billion and partners' capital of $ billion and
ranked as one of the largest international investment banking and brokerage
firms in the United States. Founded in 1869, Goldman Sachs is a major player
among investment banking and brokerage firms providing a broad range of fi-
nancing and investing services both in the United States and abroad.
Pursuant to an SEC order, each Fund, may enter into principal transactions
in certain taxable money market instruments, including repurchase agreements,
with Goldman Sachs.
Under its Investment Advisory Agreement with the Trust, GSAM continually
manages the portfolio of each Fund, including the purchase, retention and dis-
position of its securities and other assets. In addition, GSAM administers the
Funds' business affairs and performs various shareholder servicing functions
to the extent not provided by other organizations. The management of each Fund
is subject to the supervision of the Board of Trustees and each Fund's invest-
ment policies. For these services, the Trust, on behalf of each Fund, pays
GSAM a monthly fee at an annual rate of each Fund's average daily net assets
as follows:
<TABLE>
<CAPTION>
APPROXIMATE
ANNUAL RATE
-----------
<S> <C>
Financial Square Treasury Instruments Fund .205%
Financial Square Federal Fund .205%
</TABLE>
GSAM has agreed to reduce or otherwise limit the daily expenses of each Fund
(excluding fees payable to Service Organizations, as defined herein, manage-
ment fees, taxes, interest, brokerage and litigation, indemnification and
other extraordinary expenses) on an annualized basis to .01% of the average
daily net assets of the Fund. In addition, with respect to the Federal and
Treasury Instruments Funds, GSAM has voluntarily agreed not to impose all or a
portion of its advisory fee and/or to reduce or otherwise limit each Fund's
annual total operating expenses (excluding fees payable to Service Organiza-
tions, as defined herein) to .18% and .18%, respectively, of
8
<PAGE>
average daily net assets. GSAM has no current intention to but may in the fu-
ture discontinue or modify any of such limitations at its discretion.
THE DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606, serves as the Dis-
tributor of shares of each Fund pursuant to a Distribution Agreement with the
Trust. The Distributor will assist in the sale of shares of each Fund upon the
terms described herein. Goldman Sachs also serves as the Transfer Agent of
each Fund.
From time to time, Goldman Sachs or any of its affiliates may purchase and
hold shares of the Funds in order to increase the assets of the Funds. In-
creasing the Funds' assets may enhance investment flexibility and diversifica-
tion. Goldman Sachs reserves the right to redeem at any time some or all of
the Fund shares acquired for its own account. Goldman Sachs will consider the
effect of redemptions on the Funds and other shareholders in deciding whether
to redeem its shares.
TAXES
Each Fund is treated as a separate entity for federal income tax purposes
and intends to continue to qualify and be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986 (the "Code")
for each taxable year. To qualify as such, each Fund must satisfy certain re-
quirements relating to the sources of its income, diversification of its as-
sets and distribution of its income to shareholders. As a regulated investment
company, each Fund will not be subject to federal income or excise tax on any
net investment income and net realized capital gains that are distributed to
its shareholders in accordance with certain timing requirements of the Code.
Dividends paid by a Fund from net investment income, the excess of net
short-term capital gain over net long-term capital loss and taxable original
issue discount or market discount income will be taxable to shareholders as
ordinary income. Dividends paid by a Fund from the excess of net long-term
capital gain over net short-term capital loss will be taxable as long-term
capital gain regardless of how long the shareholders have held their shares.
These tax consequences will apply to taxable distributions of a Fund (includ-
ing a Fund that also pays exempt-interest dividends, as described below) re-
gardless of whether distributions are received in cash or reinvested in
shares. Certain distributions paid by the Funds in January of a given year
will be taxable to shareholders as if received on December 31 of the year in
which they are declared. Shareholders will be informed annually about the
amount and character of distributions received from the Funds for federal in-
come tax purposes, including any distributions that may constitute a return of
capital.
Individuals and certain other classes of shareholders may be subject to 31%
backup withholding of federal income tax on taxable distributions if they fail
to furnish their correct taxpayer identification number and certain certifica-
tions required by the Internal Revenue Service or if they are otherwise sub-
ject to backup withholding. Individuals, corporations and other shareholders
that are not U.S. persons under the Code are subject to different tax rules
and may be subject to nonresident alien withholding at the rate of 30% (or a
lower rate provided by an applicable tax treaty) on amounts treated as ordi-
nary dividends from the Funds.
9
<PAGE>
In addition to federal taxes, a shareholder may be subject to state, local
or foreign taxes on payments received from a Fund. A state income (and possi-
bly local income and/or intangible property) tax exemption is generally avail-
able to the extent a Fund's distributions are derived from interest on (or, in
the case of intangibles taxes, the value of its assets is attributable to)
certain U.S. Government obligations and/or tax-exempt municipal obligations
issued by or on behalf of the particular state or a political subdivision
thereof, provided in some states that certain thresholds for holdings of such
obligations and/or reporting requirements are satisfied. Shareholders should
consult their own tax advisers concerning these matters.
NET ASSET VALUE
The net asset value of each Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 P.M. New York time) on
each Business Day. Net asset value per share for each class of shares of each
Fund is calculated by determining the amount of net assets attributable to
each class of shares and dividing by the number of shares for such class.
On any Business Day, as defined herein, when the Public Securities Associa-
tion (PSA) recommends that the securities market close early, the Treasury In-
struments and Federal Funds will cease, and each other Fund reserves the right
to cease, accepting purchase and redemption orders for same Business Day
credit at the time the PSA recommends that the securities market close. On
days any Fund closes early, purchase and redemption orders received after the
PSA recommended closing time will be credited for the next Business Day. In
addition, each Fund reserves the right to advance the time by which purchase
and redemption orders must be received for same Business Day credit as permit-
ted by the SEC.
Each Fund's portfolio securities are valued at their amortized cost, which
does not take into account unrealized securities gains or losses. This method
involves initially valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any premium paid or discount received.
YIELD INFORMATION
From time to time, each Fund may advertise its yield and effective yield.
The yield of a Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the advertise-
ment). This income is then annualized; that is, the amount of income generated
by the investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The Funds may each also quote tax-equivalent yield. Each Fund's tax-equiva-
lent yield is calculated by determining the rate of return that would have to
be achieved on a fully taxable investment to produce the after-tax equivalent
of the Fund's yield, assuming certain tax brackets for a shareholder.
Investors should note that the investment results of a Fund are based on
historical performance and will fluctuate over time. Any presentation of a
Fund's yield or effective yield for any prior period should not be
10
<PAGE>
considered a representation of what an investment may earn or what a Fund's
yield or effective yield may be in any future period.
Yield, effective yield and tax-equivalent yield will be calculated sepa-
rately for each class of shares in existence. Because each such class of
shares is subject to different expenses, the net yield of such classes of a
Fund for the same period may differ. See "Organization and Shares of the
Funds" below.
ORGANIZATION AND SHARES OF THE FUNDS
The Trust was formed as a business trust under the laws of The Commonwealth
of Massachusetts on December 6, 1978. It is anticipated that each series of
the Trust, including the Federal and Treasury Instruments Funds, will be reor-
ganized on April 30, 1997, or as soon thereafter as practicable, into newly
established series of a Delaware Business Trust (the "Delaware Trust"). The
Trustees of the Trust will also serve as Trustees of the Delaware Trust and
the investment objectives, restrictions and policies and fees of the series of
the Delaware Trust will be identical to those of the corresponding Fund. The
initial shareholder of the Federal and Treasury Instruments Funds has approved
the reorganization of such Funds into series of the Delaware Trust. In the
event that the shareholders of the other series of the Trust do not approve
reorganizations into the Delaware Trust, the Federal and Treasury Instrument
Funds may not be reorganized into the Delaware Trust. The Trustees of the
Trust are responsible for the overall management and supervision of its af-
fairs. The Declaration of Trust of both the Trust and the Delaware Trust au-
thorizes the Trustees to classify or reclassify any series or portfolio of
shares into one or more classes. The Trustees have authorized the issuance of
four classes of shares of each of the Funds, which are: FST Shares, FST Admin-
istration Shares, FST Service Shares and FST Preferred Shares. (Institutions
that provide services to holders of FST Preferred Shares, FST Administration
Shares or FST Service Shares are referred to in this Prospectus as "Service
Organizations").
When issued, units are fully paid and nonassessable by the Trust or the Del-
aware Trust. In the event of liquidation, shareholders are entitled to share
pro rata in the net assets of the applicable Fund available for distribution
to such shareholders. Shares entitle their holders to one vote per share, are
freely transferable and have no preemptive, subscription or conversion rights.
Shares of a Fund will be voted separately by Fund with respect to matters
pertaining to that Fund except for the election of Trustees and ratification
of independent accountants. For example, shareholders of each Fund are re-
quired to approve the adoption of any investment advisory agreement relating
to that Fund and any changes in fundamental investment restrictions or poli-
cies of such Fund. Approval by the shareholders of one Fund is effective only
as to that Fund.
Neither the Trust nor the Delaware Trust intend to hold annual shareholder
meetings, although special meetings may be called for such purposes as elect-
ing or removing Trustees, complying with a requirement of the Investment Com-
pany Act, or such other purposes as are set forth above. Each of the Trust and
the Delaware Trust will facilitate shareholder communication as required and
in the manner prescribed by Section 16(c) of the Investment Company Act.
11
<PAGE>
ADMINISTRATION
Each Fund has adopted a Preferred Administration Plan with respect to the
FST Preferred Shares which authorizes it to compensate Service Organizations
for providing account administration services to their customers who are bene-
ficial owners of such Shares. Each Fund will enter into agreements with Serv-
ice Organizations which purchase FST Preferred Shares on behalf of their cus-
tomers ("Service Agreements"). The Service Agreements will provide for compen-
sation to the Service Organization in an amount up to .10 of 1% (on an
annualized basis) of the average daily net asset value of the FST Preferred
Shares of that Fund attributable to or held in the name of the Service Organi-
zation for its customers. The services provided by a Service Organization may
include acting, directly or through an agent, as the sole shareholder of rec-
ord, maintaining account records for its customers and processing orders to
purchase, redeem and exchange FST Preferred Shares for its customers.
Holders of FST Preferred Shares of a Fund will bear all expenses and fees
paid to Service Organizations with respect to such Shares as well as any other
expenses which are directly attributable to such Shares.
Service Organizations (other than broker-dealers) may charge other fees to
their customers who are the beneficial owners of FST Preferred Shares in con-
nection with their customer accounts. These fees would be in addition to any
amounts received by the Service Organization under a Service Agreement and may
affect an investor's return with respect to an investment in a Fund.
All inquiries of beneficial owners of FST Preferred Shares of the Funds
should be directed to such owners' Service Organization.
PURCHASE OF SHARES
It is expected that all direct purchasers of FST Preferred Shares will be
Service Organizations or their nominees, which may purchase FST Preferred
Shares of the Funds through Goldman Sachs. Customers of Service Organizations
may invest in such Shares only through their Service Organizations.
As set forth below, FST Preferred Shares of the Funds may be purchased on
any Business Day at the net asset value next determined after receipt from the
Service Organization of both the purchase order and the purchase price in Fed-
eral Funds. Purchase orders may be made by telephoning Goldman Sachs at 800-
621-2550 or by a written request addressed to Goldman Sachs, Attention: Share-
holder Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago,
Illinois 60606. It is strongly recommended that payment be effected by wiring
Federal Funds to The Northern Trust Company ("Northern"), Chicago, Illinois,
as subcustodian for State Street Bank and Trust Company ("State Street").
Purchases of FST Preferred Shares may also be made by a Service Organization
by delivering a Federal Reserve draft or check payable to the appropriate Fund
and drawn on a U.S. bank to Goldman Sachs, Attention: Shareholder Services,
Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago, Illinois 60606.
It is expected that Federal Reserve drafts will ordinarily be converted to
Federal Funds on the day of receipt and that checks will be converted to Fed-
eral Funds within two Business Days after receipt. FST Preferred Shares pur-
chased by check may not be redeemed until the check has cleared, as described
under "Redemption of Shares".
Purchases of shares of any Fund may also be made through an Automated Clear-
ing House ("ACH") transfer to Goldman Sachs Money Market Trust c/o North-
ern, as subcustodian for State Street. Purchase orders
12
<PAGE>
are effected at the net asset value next determined after receipt of both the
purchase order and the purchase price in Federal Funds. It is expected that
ACH transfers will ordinarily be converted to Federal Funds on the Business
Day following receipt of the ACH transfer.
- -------------------------------------------------------------------------------
FST Preferred Shares of each Fund are deemed to have been purchased when an
order becomes effective and are entitled to dividends on FST Preferred Shares
purchased as follows:
<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A
SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
----------------------------- -----------------
<S> <C> <C> <C> <C>
By: 3:00 p.m.-N.Y. time Same Business Day
- ---------------------------------------------------------------------------------------
After: 3:00 p.m.-N.Y. time Next Business Day
- ---------------------------------------------------------------------------------------
</TABLE>
The Service Organizations are responsible for timely transmittal of purchase
orders to Goldman Sachs and Federal Funds to Northern. In order to facilitate
timely transmittal, the Service Organizations have established times by which
purchase orders and Federal Funds must be received by them.
A Business Day means any day on which the New York Stock Exchange is open,
except for days on which Chicago, Boston or New York banks are closed for lo-
cal holidays.
FST Preferred Shares of the Funds are purchased at the net asset value per
share without the imposition of a sales charge. Goldman Sachs, as each Fund's
transfer agent, will maintain a complete record of transactions and FST Pre-
ferred Shares held in each record holder's account. The Trust and Goldman
Sachs each reserves the right to reject any purchase order for any reason.
Goldman Sachs may, at its own expense, provide compensation to certain deal-
ers whose customers purchase significant amounts of shares of a Fund. The
amount of such compensation may be made on a one-time and/or periodic basis,
and may be up to 25% of the annual fees that are earned by GSAM as investment
adviser to such Fund (after adjustments) and are attributable to shares held
by such customers. Such compensation will not represent an additional expense
to the Fund or its shareholders, since it will be paid from assets of Goldman
Sachs or its affiliates.
MINIMUM INVESTMENT AND OTHER INFORMATION
The minimum requirement for investing in a Fund is $50 million ($10 million
if an investor satisfies the minimum initial investment in any other Fund).
The Trust and Goldman Sachs each reserves the right to waive the minimum in-
vestment requirement. A Service Organization may impose a minimum amount for
initial and subsequent investments in FST Preferred Shares of the Funds, and
may establish other requirements such as a minimum account balance. A Service
Organization may effect redemptions of noncomplying accounts, and may impose a
charge for any special services rendered to its customers. Customers should
contact their Service Organization for further information concerning such re-
quirements and charges. A Service Organization may purchase FST Preferred
Shares in connection with sweep account programs.
SUBSEQUENT INVESTMENTS
There is no minimum amount required for subsequent investments. Orders for
the purchase of additional FST Preferred Shares should be accompanied by in-
formation identifying the account in which FST Preferred Shares are to be pur-
chased.
13
<PAGE>
REPORTS TO SHAREHOLDERS
The Trust will issue an annual report containing audited financial state-
ments and a semiannual report to record holders of FST Preferred Shares of
each Fund, including Service Organizations who hold such Shares for the bene-
fit of their customers. Upon request, a printed confirmation for each transac-
tion will be provided by Goldman Sachs. Any dividends and distributions paid
by the Funds are also reflected in regular statements issued by Goldman Sachs
to shareholders of record. The Service Organizations, as record holders of FST
Preferred Shares, will be responsible for providing similar services to their
own customers who are the beneficial owners of such Shares.
DISTRIBUTIONS
All or substantially all of each Fund's net investment income will be de-
clared daily (as of 4:00 p.m. New York time) as a dividend and distributed to
Service Organizations, as record owners of FST Preferred Shares, monthly. Dis-
tributions will be made in additional FST Preferred Shares of the same Fund
or, at the election of a Service Organization, in cash. The election to rein-
vest dividends and distributions or receive them in cash may be changed by a
Service Organization at any time upon written notice to Goldman Sachs. If no
election is made, all dividends and capital gain distributions will be rein-
vested. Dividends will be reinvested as of the last calendar day of each
month. Cash distributions will be paid on or about the first business day of
each month. Net short-term capital gains, if any, will be distributed in ac-
cordance with the requirements of the Code and may be reflected in the Fund's
daily distributions. Each Fund may distribute at least annually its long-term
capital gains, if any, after reduction by available capital losses. In order
to avoid excessive fluctuations in the amount of monthly capital gains distri-
butions, a portion of any net capital gains realized on the disposition of se-
curities during the months of November and December may be distributed during
the subsequent calendar year. Although realized gains and losses on the assets
of a Fund are reflected in the net asset value of the Fund, they are not ex-
pected to be of an amount which would affect the Fund's net asset value of
$1.00 per share.
A Fund's net investment income consists of the excess of (i) accrued inter-
est or discount (including both original issue and market discount on taxable
securities) on portfolio securities, and (ii) any income of the Fund from
sources other than capital gains over (iii) the amortization of market premium
on all portfolio securities and (iv) the estimated expenses of the Fund, in-
cluding a proportionate share of the general expenses of the Trust.
EXCHANGES
FST Preferred Shares of each Fund may be exchanged by Service Organizations
for FST Preferred Shares of any other Financial Square Fund at the net asset
value next determined either by writing to Goldman Sachs, Attention: Share-
holder Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago,
Illinois 60606 or, if previously elected in the Account Information Form, by
calling Goldman Sachs at 800-621-2550. All telephone exchanges must be regis-
tered in the same name(s) and with the same address as are registered in the
Fund from which the exchange is being made. It may be difficult to implement
the telephone exchange privilege in times of drastic economic or market
changes. In an effort to prevent unauthorized or fraudulent exchange requests
by telephone, Goldman Sachs employs reasonable procedures as set forth under
"Redemption of Shares" to confirm that such instructions are genuine. Ex-
changes are available only in states where the exchange may legally be made.
The exchange privilege may be modified or withdrawn at any time on 60 days'
written notice.
14
<PAGE>
REDEMPTION OF SHARES
HOW TO REDEEM
Customers of Service Organizations may redeem FST Preferred Shares of a Fund
through their respective Service Organizations. The Service Organizations are
responsible for the transmittal of redemption requests by their customers to
Goldman Sachs. In order to facilitate timely transmittal of redemption re-
quests, Service Organizations have established procedures by which redemption
requests must be made and times by which redemption requests must be received
by them. Additional documentation may be required when deemed appropriate by a
Service Organization.
A Service Organization as the record holder of FST Preferred Shares may then
redeem such Shares without charge upon request on any Business Day at the net
asset value next determined after receipt by Goldman Sachs of the redemption
request. Redemption requests may be made by telephoning Goldman Sachs at 800-
621-2550 or by a written request addressed to Goldman Sachs, Attention: Share-
holder Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago,
Illinois 60606. A Service Organization may request redemptions by telephone
only if the optional telephone redemption privilege has been elected on the
Account Information Form. It may be difficult to implement redemptions by tel-
ephone in times of drastic economic or market changes.
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, Goldman Sachs employs reasonable procedures specified by the Trust
to confirm that such instructions are genuine. Among other things, any redemp-
tion request that requires money to go to an account or address other than
that designated on the Account Information Form must be in writing and signed
by an authorized person designated on the Account Information Form. Any such
written request is also confirmed by telephone with both the requesting party
and the designated bank account to verify instructions. Other procedures may
be implemented from time to time. If reasonable procedures are not implement-
ed, the Trust may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither the Trust nor Goldman Sachs will be
responsible for the authenticity of redemption instructions received by tele-
phone.
Additional documentation may be required by Goldman Sachs in order to estab-
lish that a redemption request has been properly authorized. A redemption re-
quest will not be considered to have been received in proper form until such
additional documentation has been submitted to Goldman Sachs by the record
holder of FST Preferred Shares. The payment of redemption proceeds for FST
Preferred Shares recently purchased by check will be delayed for up to 15 days
until the check has cleared.
PAYMENT OF REDEMPTION PROCEEDS AND DIVIDENDS
In accordance with the following, redemption proceeds will be wired to the
record holder of FST Preferred Shares.
<TABLE>
<CAPTION>
REDEMPTION REQUEST REDEMPTION
RECEIVED FROM A SERVICE PROCEEDS
ORGANIZATION BY GOLDMAN SACHS ORDINARILY DIVIDENDS
------------------------------------ ---------- ---------------------
<S> <C> <C> <C>
By: 3:00 p.m.-N.Y. time Wired Same Not earned on Day
Business request is received
Day
- -------------------------------------------------------------------------------
After: 3:00 p.m.-N.Y. time Wired Next Earned on Day
Business request is received
Day
- -------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
The Funds will arrange for the proceeds of redemptions effected by any means
to be wired as Federal Funds to the Service Organization's bank account desig-
nated in the Account Information Form. Redemption proceeds will normally be
wired as set forth above, but may be paid up to three Business Days after re-
ceipt of the Service Organization's properly executed redemption request. For
example, payment may be delayed if the Federal Reserve Bank is closed on the
day redemption proceeds would ordinarily be wired. After a wire has been ini-
tiated by Goldman Sachs, neither Goldman Sachs nor the Trust assumes any fur-
ther responsibility for the performance of intermediaries or the FST Preferred
Shareholder's Service Organization in the transfer process. If a problem with
such performance arises, the FST Preferred Shareholder should deal directly
with such intermediaries or Service Organization.
OTHER REDEMPTION INFORMATION
A minimum account balance of $50 million in a Fund ($10 million if an in-
vestor satisfies the minimum initial investment in any other Fund) is required
to remain an FST Preferred Shareholder. A Fund may redeem all of the FST Pre-
ferred Shares of any FST Preferred Shareholder whose account in that Fund has
a net asset value which is less than the minimum described above. The Trust
will give sixty (60) days' prior written notice to such Shareholders whose FST
Preferred Shares are being redeemed to allow them to purchase sufficient addi-
tional FST Preferred Shares of the Fund to avoid such redemption.
----------------
16
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GOLDMAN SACHS MONEY MARKET TRUST
FST PREFERRED SHARES
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606
TOLL FREE: 800-621-2550
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder and Fund Expenses.............................................. 2
An Introduction to the Funds............................................... 4
Investment Policies........................................................ 5
Description of Securities and Investment Techniques........................ 5
Investment Limitations..................................................... 7
Management................................................................. 8
Taxes...................................................................... 9
Net Asset Value............................................................ 10
Yield Information.......................................................... 10
Organization and Shares of the Funds....................................... 11
Administration............................................................. 12
Purchase of Shares......................................................... 12
Reports to Shareholders.................................................... 14
Distributions.............................................................. 14
Exchanges.................................................................. 14
Redemption of Shares....................................................... 15
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
FINANCIAL SQUARE TREASURY INSTRUMENTS FUND
FINANCIAL SQUARE FEDERAL FUND
FST PREFERRED SHARES
-----------
PROSPECTUS
-----------
MANAGED BY
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
(FINANCIAL SQUARE TREASURY INSTRUMENTS FUND)
(FINANCIAL SQUARE FEDERAL FUND)
FST ADMINISTRATION SHARES
4900 Sears Tower
Chicago, Illinois 60606
Goldman Sachs Money Market Trust (the "Trust") is a no-load, open-end,
management investment company (a "mutual fund") which includes the Financial
Square Treasury Instruments and Federal Funds (the "Funds"). This Prospectus
relates only to the offering of FST Administration shares of beneficial
interest ("FST Administration Shares") of the Funds. Goldman Sachs Asset
Management, a separate operating division of Goldman, Sachs & Co., serves as
each Fund's investment adviser. Goldman, Sachs & Co. serves as each Fund's
distributor and transfer agent.
The Treasury Instruments and Federal Funds seek to maximize current income
to the extent consistent with the preservation of capital and the maintenance
of liquidity by investing exclusively in high quality money market
instruments. These Funds may invest in diversified portfolios of the following
types of instruments:
Financial Square Treasury Instruments Fund. Securities issued or guaranteed
by the U.S. Treasury.
Financial Square Federal Fund. Securities of the U.S. Government and certain
of its agencies, authorities and instrumentalities, the interest income from
which is generally exempt from state income taxation.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOV-
ERNMENT AND THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION
................................................................ Goldman Sachs
Mutual Funds--Toll Free: 800-621-2550
This Prospectus provides you with information about the Funds that you should
know before investing in FST Administration Shares. It should be read and
retained for future reference. If you would like more detailed information,
the Statement of Additional Information dated February , 1997, as amended or
supplemented from time to time, is available upon request without charge from
institutions ("Service Organizations") that hold, directly or through an
agent, FST Administration Shares for the benefit of their customers, by
calling the telephone number listed above or by writing Goldman, Sachs & Co.,
4900 Sears Tower, Chicago, Illinois 60606. The Statement of Additional
Information, which is incorporated by reference into this Prospectus, has been
filed with the Securities and Exchange Commission. Not all Funds are available
in certain states. Please call the phone number listed above to determine
availability in your state.
- -------------------------------------------------------------------------------
FST ADMINISTRATION SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is February , 1997.
<PAGE>
SHAREHOLDER AND FUND EXPENSES (NOTE 1)
FST ADMINISTRATION SHARES (NOTE 2)
<TABLE>
<CAPTION>
FINANCIAL SQUARE
TREASURY FINANCIAL SQUARE
INSTRUMENTS FUND FEDERAL FUND
---------------- ----------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases... None None
Sales Charge Imposed on Reinvested
Distributions.............................. None None
Deferred Sales Load Imposed on Redemptions.. None None
Exchange Fee................................ None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily
net assets)
Management Fees (Note 3) (after
adjustments)............................... 0.17% 0.17%
Other Expenses
Administration Fees (Note 4)............... 0.25% 0.25%
Other Expenses (Note 3) (after expense
limitation)............................... 0.01% 0.01%
---- ----
TOTAL OPERATING EXPENSES (Note 3)............ 0.43% 0.43%
==== ====
</TABLE>
EXAMPLE OF EXPENSES
You would pay the following expenses on a hypothetical $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Financial Square Treasury Instruments Fund....................... $ $
Financial Square Federal Fund.................................... $ $
</TABLE>
2
<PAGE>
- --------
Notes:
(1) The purpose of this table is to assist investors in understanding the
various costs and expenses that an investment in the Funds will bear
directly or indirectly. Operating expenses for the Funds are based on
estimates of expenses expected to be incurred during the fiscal year
ending December 31, 1997. The table and hypothetical example should not be
considered a representation of past or future expenses; actual expenses
may vary depending upon a variety of factors including the actual
performance of each Fund, which may be greater or less than 5%. See
"Management."
(2) The information set forth in the foregoing table and example relates only
to FST Administration Shares of the Funds. The Funds also offer FST
Shares, FST Service Shares and FST Preferred Shares which are subject to
different fees and expenses (which affect performance), have different
minimum investment requirements and are entitled to different services.
Information regarding any other class of the Funds may be obtained from
your sales representative or from Goldman Sachs by calling the number on
the cover page of this Prospectus. See "Organization and Shares of the
Funds."
(3) Goldman Sachs Asset Management (the "Adviser" or "GSAM") has agreed that a
portion of its fees will not be imposed, pursuant to applicable contracts.
In addition, the Advisor has agreed to reduce or otherwise limit certain
expenses of each Fund (excluding fees payable to Service Organizations, as
defined herein, taxes, interest, brokerage and litigation, indemnification
and other extraordinary expenses), on an annualized basis, to 0.18% of the
average daily net assets of such Fund. The Adviser has also agreed that a
portion of its fees will not be imposed for the Treasury Instruments Fund
and Federal Fund. Had the reduction of fees otherwise payable and expense
limitations not been reflected in the above table, the management fees
payable by each Fund would be .205% of average daily net assets and the
estimated amount of other expenses payable by the Treasury Instruments
Fund and Federal Fund would be % and 0. %, respectively, of average
daily net assets. Had the reduction of fees otherwise payable and expense
limitations not been reflected in the above table, the estimated annual
operating expenses of the Treasury Instruments Fund and Federal Fund,
would be 0. %, and 0. %, respectively, of average daily net assets.
(4) Service Organizations (other than broker-dealers) may charge other fees to
their customers who are the beneficial owners of FST Administration Shares
in connection with their customers' accounts. See "Administration." Such
fees, if any, may affect the return such customers realize with respect to
their investments.
3
<PAGE>
AN INTRODUCTION TO THE FUNDS
THE TRUST: The Trust is a no-load, open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "Invest-
ment Company Act"). Each Fund is a separate pool of assets which pursues its
investment objective through separate investment policies, as described below.
THE ADVISER: Goldman Sachs Asset Management, a separate operating division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds' investment ad-
viser (the "Adviser" or "GSAM").
THE DISTRIBUTOR: Goldman Sachs, which serves as the Funds' distributor and
transfer agent, is one of the largest international investment banking and
brokerage firms in the United States.
THE INVESTOR: The Funds are designed for institutional investors seeking a
high rate of return, a stable net asset value and convenient liquidation priv-
ileges. The Funds are particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term funds for their own
accounts or for the accounts of their customers.
THE FUNDS: Each Fund's securities are valued by the amortized cost method as
permitted by a rule ("Rule 2a-7") of the Securities and Exchange Commission
("SEC"). Under such rule, each Fund may invest only in securities that are de-
termined to present minimal credit risk and meet certain other criteria.
INVESTMENT OBJECTIVES AND POLICIES FOR THE FUNDS: To maximize current in-
come to the extent consistent with the preservation of capital and the
maintenance of liquidity by investing exclusively in high quality money
market instruments. The Treasury Instruments and Federal Funds pursue their
objectives by limiting their investments to certain U.S. Treasury Obliga-
tions and U.S. Government Securities (each as defined herein), respective-
ly, the interest from which is generally exempt from state income taxation.
Each investor should consult his or her tax adviser to determine whether
distributions from the Treasury Instruments and Federal Funds derived from
interest on such obligations are exempt from state income taxation in the
investor's own state.
NET ASSET VALUE: Each Fund seeks to maintain a stable net asset value of
$1.00 per share.
MAXIMUM REMAINING MATURITY OF FUND INVESTMENTS: Thirteen months at the time
of purchase.
DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY: Not more than ninety days.
FIRST TIER SECURITIES: The Funds may purchase securities which are rated (or
that have been issued by an issuer that is rated with respect to a class of
short-term debt obligations, or any security within that class, comparable in
priority and quality with such securities) in the highest short-term rating
category by at least two NRSROs (as defined below), or if only one NRSRO has
assigned a rating, by that NRSRO. U.S. Government Securities as defined herein
are considered First Tier Securities.
UNRATED SECURITIES: Unrated securities may be purchased only if they are
deemed to be of comparable quality to First Tier Securities.
NRSROS: Nationally Recognized Statistical Rating Organizations include Stan-
dard & Poor's Ratings Group ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Services, Inc. Duff and Phelps, Inc., IBCA Lim-
ited and its affiliate IBCA Inc., and Thompson BankWatch, Inc. For a descrip-
tion of each NRSRO's rating categories, see Appendix A to the Statement of Ad-
ditional Information.
4
<PAGE>
INVESTMENT POLICIES
<TABLE>
<CAPTION>
FINANCIAL SQUARE
TREASURY FINANCIAL SQUARE
INSTRUMENTS FEDERAL
FUND FUND
- ------------------------------------------------------------------------
<S> <C> <C>
US Treasury Instruments [] []
- ------------------------------------------------------------------------
US Government Securities []
- ------------------------------------------------------------------------
[]
(Does not intend to
Repurchase Agreements invest)
- ------------------------------------------------------------------------
Credit Quality First Tier First Tier
- ------------------------------------------------------------------------
[] []
Up to 10% of total Up to 10% of total
assets in other assets in other
Investment Companies investment companies investment companies
- ------------------------------------------------------------------------
Taxable Federal and Taxable Federal and
generally exempt from generally exempt from
Summary of Taxation* state taxation state taxation
- ------------------------------------------------------------------------
Under extraordinary
circumstances, may
hold cash, U.S.
Government Securities
subject to state
taxation or cash
Miscellaneous equivalents
</TABLE>
Note: See "Description of Securities and Investment Techniques" for a descrip-
tion of, and certain criteria applicable to, each of these categories and in-
vestments.
* See "Taxes" below for an explanation of the tax consequences summarized in
the table above.
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
U.S. TREASURY OBLIGATIONS
"U.S. Treasury Obligations" are securities issued or guaranteed by the U.S.
Treasury, payments of principal, and interest on which are backed by the full
faith and credit of the U.S. Government.
U.S. GOVERNMENT SECURITIES
"U.S. Government Securities" are obligations issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities. Unlike U.S.
Treasury Obligations, obligations issued or guaranteed by U.S. Government
agencies, authorities or instrumentalities are supported either by (a) the
full faith and credit of the U.S. Government (such as securities of the Gov-
ernment National Mortgage Association), (b) the right of the issuer to borrow
from the Treasury (such as securities of the Student Loan Marketing Associa-
tion), (c) the discretionary authority of the U.S. Government to purchase the
agency's obligations (such as securities of the Federal National Mortgage As-
sociation and the Federal Home Loan Mortgage Corporation), or (d) only the
credit of the issuer. No assurance can be given that the U.S. Government will
provide financial support to U.S. Government agencies, authorities or instru-
mentalities in the future. U.S. Government Securities may include zero coupon
bonds. Such bonds may be purchased when yields are attractive.
5
<PAGE>
Securities guaranteed as to principal and interest by the U.S. Government,
its agencies, authorities or instrumentalities are deemed to include (a) secu-
rities for which the payment of principal and interest is backed by an irrevo-
cable letter of credit issued by the U.S. Government, its agencies, authori-
ties or instrumentalities and (b) participations in loans made to foreign gov-
ernments or their agencies that are so guaranteed. The secondary market for
certain of these participations is limited. Such participations may therefore
be regarded as illiquid.
Each Fund may also invest in separately traded principal and interest compo-
nents of securities guaranteed or issued by the U.S. Treasury if such compo-
nents are traded independently under the Separate Trading of Registered Inter-
est and Principal of Securities program ("STRIPS").
The Treasury Instruments and Federal Funds invest in Treasury Obligations
and certain U.S. Government Securities, respectively, the interest from which
is generally exempt from state income taxation. Securities generally eligible
for this exemption include those issued by the U.S. Treasury and those issued
by certain agencies, authorities or instrumentalities of the U.S. Government,
including the Federal Home Loan Banks, Federal Farm Credit Banks, Tennessee
Valley Authority and the Student Loan Marketing Association.
REPURCHASE AGREEMENTS
The Federal Fund may only enter into repurchase agreements with primary
dealers in U.S. Government Securities. A repurchase agreement is an agreement
under which a Fund purchases securities and the seller agrees to repurchase
the securities within a particular time at a specified price. Such price will
exceed the original purchase price, the difference being income to the Fund,
and will be unrelated to the interest rate on the purchased security. A Fund's
custodian or subcustodian will maintain custody of the purchased securities
for the duration of the agreement. The value of the purchased securities, in-
cluding accrued interest, will at all times equal or exceed the value of the
repurchase agreement. In the event of bankruptcy of the seller or failure of
the seller to repurchase the securities as agreed, a Fund could suffer losses,
including loss of interest on or principal of the security and costs associ-
ated with delay and enforcement of the repurchase agreement. In evaluating
whether to enter into a repurchase agreement, the Adviser will carefully con-
sider the creditworthiness of the seller pursuant to procedures reviewed and
approved by the Trustees. Distributions of the income from repurchase agree-
ments entered into by a Fund will be taxable to its shareholders. In addition,
the Federal Fund, together with other registered investment companies having
advisory agreements with the Adviser or any of its affiliates, may transfer
uninvested cash balances into a single joint account, the daily aggregate bal-
ance of which will be invested in one or more repurchase agreements.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES
Each Fund may purchase when-issued securities and make contracts to purchase
or sell securities for a fixed price at a future date beyond customary settle-
ment time. A Fund is required to hold and maintain in a segregated account
with the Fund's custodian or subcustodian until the settlement date, cash or
liquid, high quality debt obligations in an amount sufficient to meet the pur-
chase price. Alternatively, a Fund may enter into offsetting contracts for the
forward sale of other securities that it owns. Securities purchased or sold on
a when-issued or forward commitment basis involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date or if
the value of the security to be sold increases prior to the settlement date.
Although a Fund would generally purchase securities on a when-issued or for-
ward commitment basis with the intention of acquiring securities for its port-
folio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Adviser deems it appropriate to do so.
6
<PAGE>
OTHER INVESTMENT COMPANIES
The Adviser will determine, under guidelines established by the Trustees,
whether securities issued by other money market investment companies present
minimal credit risks. The amount of each Fund's investments in securities of
other investment companies will be subject to the limitations on such invest-
ments prescribed by the Investment Company Act. These limits include a prohi-
bition on any Fund acquiring more than 3% of the voting shares of any other
investment company, and a prohibition on investing more than 5% of a Fund's
assets in securities of any one investment company or more than 10% of its as-
sets in securities of all investment companies. Each Fund will indirectly bear
its proportionate share of any management fees and other expenses paid by such
other investment companies. Goldman Sachs will not impose a portion of the
management fees payable by a Fund (the "Acquiring Fund") with respect to as-
sets invested in another money market investment company (the "Acquired Fund")
as follows. The amount of the management fees otherwise payable by the Acquir-
ing Fund and not imposed by Goldman Sachs will be equal to the amount of man-
agement fees indirectly paid by the Acquiring Fund as a shareholder of the Ac-
quired Fund. Such other investment companies will have investment objectives,
policies and restrictions substantially similar to those of the Acquiring Fund
and will be subject to substantially the same risks.
INVESTMENT LIMITATIONS
Pursuant to SEC Rule 2a-7 under the Investment Company Act, each Fund may
not invest more than 5% of its assets (taken at amortized cost) in the securi-
ties of any one issuer (except U.S. Government Securities and repurchase
agreements collateralized by such securities). Each Fund may, however, invest
more than 5% of its assets in the First Tier Securities of a single issuer for
a period of up to three business days after the purchase thereof, although a
Fund may not make more than one such investment at any time. The Funds may not
invest in securities which are Second Tier Securities at the time of purchase.
Immediately after the acquisition of any put by a Fund, not more than 5% of
such Fund's total assets may be invested in securities issued by or subject to
puts from the same issuer. However, this limitation will not apply to the is-
suer of unconditional puts if the Fund does not have more than 10% of its to-
tal assets invested in securities issued by or subject to unconditional puts
from such issuer. The foregoing requirements of Rule 2a-7 are more restrictive
than the fundamental policy set forth in the Additional Statement. Purchases
of securities which are unrated or rated by only one NRSRO must be approved or
ratified by the Trustees.
INVESTMENT RESTRICTIONS. Each Fund is subject to certain investment restric-
tions that are described in detail under "Investment Restrictions" in the Ad-
ditional Statement. Fundamental investment restrictions of a Fund cannot be
changed without approval of a majority of the outstanding shares of that Fund.
All investment policies not specifically designated as fundamental are non-
fundamental and may be changed without shareholder approval.
RESTRICTED AND OTHER ILLIQUID SECURITIES. Each Fund may purchase securities
that are not registered ("restricted securities") under the Securities Act of
1933 ("1933 Act"), but can be offered and sold to "qualified institutional
buyers" under Rule 144A under the 1933 Act. However, a Fund will not invest
more than 10% of its net assets in illiquid investments, which include fixed
time deposits maturing in more than seven days and restricted securities. Re-
stricted securities (including commercial paper issued pursuant to Section
4(2) of the 1933 Act) which the Board of Trustees has determined are liquid,
based upon a continuing review of the trading markets for the specific re-
stricted security, will not be deemed to be illiquid investments for purposes
of this restriction. The Board of Trustees may adopt guidelines and delegate
to the Adviser the daily function of
7
<PAGE>
determining and monitoring the liquidity of restricted securities. The Board,
however, will retain sufficient oversight and be ultimately responsible for
the determinations. Since it is not possible to predict with assurance that
the market for restricted securities eligible for resale under Rule 144A will
continue to be liquid, the Adviser will carefully monitor each Fund's invest-
ments in these securities, focusing on such important factors, among others,
as valuation, liquidity and availability of information. This investment prac-
tice could have the effect of increasing the level of illiquidity in a Fund to
the extent that qualified institutional buyers become for a time uninterested
in purchasing these restricted securities.
In addition, each Fund may not invest in repurchase agreements maturing in
more than seven days and securities which are not readily marketable if, as a
result thereof, more than 10% of the net assets of that Fund (taken at market
value) would be invested in such investments. Certain repurchase agreements
which mature in more than seven days can be liquidated before the nominal
fixed term on seven days or less notice. Such repurchase agreements will be
regarded as liquid instruments.
MANAGEMENT
THE ADVISER
GSAM, One New York Plaza, New York, New York, a separate operating division
of Goldman Sachs, acts as investment adviser to the Funds. Goldman Sachs reg-
istered as an investment adviser in 1981. As of October 30, 1996, Goldman
Sachs, together with its affiliates, acted as investment adviser, administra-
tor or distributor for approximately $89 billion in assets.
As of November , 1996, Goldman Sachs and its consolidated subsidiaries had
assets of approximately $ billion and partners' capital of $ billion and
ranked as one of the largest international investment banking and brokerage
firms in the United States. Founded in 1869, Goldman Sachs is a major player
among investment banking and brokerage firms providing a broad range of fi-
nancing and investing services both in the United States and abroad.
Pursuant to an SEC order, each Fund, may enter into principal transactions
in certain taxable money market instruments, including repurchase agreements,
with Goldman Sachs.
Under its Investment Advisory Agreement with the Trust, GSAM continually
manages the portfolio of each Fund, including the purchase, retention and dis-
position of its securities and other assets. In addition, GSAM administers the
Funds' business affairs and performs various shareholder servicing functions
to the extent not provided by other organizations. The management of each Fund
is subject to the supervision of the Board of Trustees and each Fund's invest-
ment policies. For these services, the Trust, on behalf of each Fund, pays
GSAM a monthly fee at an annual rate of each Fund's average daily net assets
as follows:
<TABLE>
<CAPTION>
APPROXIMATE
ANNUAL RATE
-----------
<S> <C>
Financial Square Treasury Instruments Fund .205%
Financial Square Federal Fund .205%
</TABLE>
GSAM has agreed to reduce or otherwise limit the daily expenses of each Fund
(excluding fees payable to Service Organizations, as defined herein, manage-
ment fees, taxes, interest, brokerage and litigation, indemnification and
other extraordinary expenses) on an annualized basis to .01% of the average
daily net assets of the Fund. In addition, with respect to the Federal and
Treasury Instruments Funds, GSAM has voluntarily agreed not to impose all or a
portion of its advisory fee and/or to reduce or otherwise limit each Fund's
annual total operating expenses (excluding fees payable to Service Organiza-
tions, as defined herein) to .18% and .18%, respectively, of
8
<PAGE>
average daily net assets. GSAM has no current intention to but may in the fu-
ture discontinue or modify any of such limitations at its discretion.
THE DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606, serves as the Dis-
tributor of shares of each Fund pursuant to a Distribution Agreement with the
Trust. The Distributor will assist in the sale of shares of each Fund upon the
terms described herein. Goldman Sachs also serves as the Transfer Agent of
each Fund.
From time to time, Goldman Sachs or any of its affiliates may purchase and
hold shares of the Funds in order to increase the assets of the Funds. In-
creasing the Funds' assets may enhance investment flexibility and diversifica-
tion. Goldman Sachs reserves the right to redeem at any time some or all of
the Fund shares acquired for its own account. Goldman Sachs will consider the
effect of redemptions on the Funds and other shareholders in deciding whether
to redeem its shares.
TAXES
Each Fund is treated as a separate entity for federal income tax purposes
and intends to continue to qualify and be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986 (the "Code")
for each taxable year. To qualify as such, each Fund must satisfy certain re-
quirements relating to the sources of its income, diversification of its as-
sets and distribution of its income to shareholders. As a regulated investment
company, each Fund will not be subject to federal income or excise tax on any
net investment income and net realized capital gains that are distributed to
its shareholders in accordance with certain timing requirements of the Code.
Dividends paid by a Fund from net investment income, the excess of net
short-term capital gain over net long-term capital loss and taxable original
issue discount or market discount income will be taxable to shareholders as
ordinary income. Dividends paid by a Fund from the excess of net long-term
capital gain over net short-term capital loss will be taxable as long-term
capital gain regardless of how long the shareholders have held their shares.
These tax consequences will apply to taxable distributions of a Fund (includ-
ing a Fund that also pays exempt-interest dividends, as described below) re-
gardless of whether distributions are received in cash or reinvested in
shares. Certain distributions paid by the Funds in January of a given year
will be taxable to shareholders as if received on December 31 of the year in
which they are declared. Shareholders will be informed annually about the
amount and character of distributions received from the Funds for federal in-
come tax purposes, including any distributions that may constitute a return of
capital.
Individuals and certain other classes of shareholders may be subject to 31%
backup withholding of federal income tax on taxable distributions if they fail
to furnish their correct taxpayer identification number and certain certifica-
tions required by the Internal Revenue Service or if they are otherwise sub-
ject to backup withholding. Individuals, corporations and other shareholders
that are not U.S. persons under the Code are subject to different tax rules
and may be subject to nonresident alien withholding at the rate of 30% (or a
lower rate provided by an applicable tax treaty) on amounts treated as ordi-
nary dividends from the Funds.
9
<PAGE>
In addition to federal taxes, a shareholder may be subject to state, local
or foreign taxes on payments received from a Fund. A state income (and possi-
bly local income and/or intangible property) tax exemption is generally avail-
able to the extent a Fund's distributions are derived from interest on (or, in
the case of intangibles taxes, the value of its assets is attributable to)
certain U.S. Government obligations and/or tax-exempt municipal obligations
issued by or on behalf of the particular state or a political subdivision
thereof, provided in some states that certain thresholds for holdings of such
obligations and/or reporting requirements are satisfied. Shareholders should
consult their own tax advisers concerning these matters.
NET ASSET VALUE
The net asset value of each Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 P.M. New York time) on
each Business Day. Net asset value per share for each class of shares of each
Fund is calculated by determining the amount of net assets attributable to
each class of shares and dividing by the number of shares for such class.
On any Business Day, as defined herein, when the Public Securities Associa-
tion (PSA) recommends that the securities market close early, the Treasury In-
struments and Federal Funds will cease, and each other Fund reserves the right
to cease, accepting purchase and redemption orders for same Business Day
credit at the time the PSA recommends that the securities market close. On
days any Fund closes early, purchase and redemption orders received after the
PSA recommended closing time will be credited for the next Business Day. In
addition, each Fund reserves the right to advance the time by which purchase
and redemption orders must be received for same Business Day credit as permit-
ted by the SEC.
Each Fund's portfolio securities are valued at their amortized cost, which
does not take into account unrealized securities gains or losses. This method
involves initially valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any premium paid or discount received.
YIELD INFORMATION
From time to time, each Fund may advertise its yield and effective yield.
The yield of a Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the advertise-
ment). This income is then annualized; that is, the amount of income generated
by the investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The Funds may each also quote tax-equivalent yield. Each Fund's tax-equiva-
lent yield is calculated by determining the rate of return that would have to
be achieved on a fully taxable investment to produce the after-tax equivalent
of the Fund's yield, assuming certain tax brackets for a shareholder.
Investors should note that the investment results of a Fund are based on
historical performance and will fluctuate over time. Any presentation of a
Fund's yield or effective yield for any prior period should not be
10
<PAGE>
considered a representation of what an investment may earn or what a Fund's
yield or effective yield may be in any future period.
Yield, effective yield and tax-equivalent yield will be calculated sepa-
rately for each class of shares in existence. Because each such class of
shares is subject to different expenses, the net yield of such classes of a
Fund for the same period may differ. See "Organization and Shares of the
Funds" below.
ORGANIZATION AND SHARES OF THE FUNDS
The Trust was formed as a business trust under the laws of The Commonwealth
of Massachusetts on December 6, 1978. It is anticipated that each series of
the Trust, including the Federal and Treasury Instruments Funds, will be reor-
ganized on April 30, 1997, or as soon thereafter as practicable, into newly
established series of a Delaware Business Trust (the "Delaware Trust"). The
Trustees of the Trust will also serve as Trustees of the Delaware Trust and
the investment objectives, restrictions and policies and fees of the series of
the Delaware Trust will be identical to those of the corresponding Fund. The
initial shareholder of the Federal and Treasury Instruments Funds has approved
the reorganization of such Funds into series of the Delaware Trust. In the
event that the shareholders of the other series of the Trust do not approve
reorganizations into the Delaware Trust, the Federal and Treasury Instrument
Funds may not be reorganized into the Delaware Trust. The Trustees of the
Trust are responsible for the overall management and supervision of its af-
fairs. The Declaration of Trust of both the Trust and the Delaware Trust au-
thorizes the Trustees to classify or reclassify any series or portfolio of
shares into one or more classes. The Trustees have authorized the issuance of
four classes of shares of each of the Funds, which are: FST Shares, FST Admin-
istration Shares, FST Service Shares and FST Preferred Shares. (Institutions
that provide services to holders of FST Preferred Shares, FST Administration
Shares or FST Service Shares are referred to in this Prospectus as "Service
Organizations").
When issued, units are fully paid and nonassessable by the Trust or the Del-
aware Trust. In the event of liquidation, shareholders are entitled to share
pro rata in the net assets of the applicable Fund available for distribution
to such shareholders. Shares entitle their holders to one vote per share, are
freely transferable and have no preemptive, subscription or conversion rights.
Shares of a Fund will be voted separately by Fund with respect to matters
pertaining to that Fund except for the election of Trustees and ratification
of independent accountants. For example, shareholders of each Fund are re-
quired to approve the adoption of any investment advisory agreement relating
to that Fund and any changes in fundamental investment restrictions or poli-
cies of such Fund. Approval by the shareholders of one Fund is effective only
as to that Fund.
Neither the Trust nor the Delaware Trust intend to hold annual shareholder
meetings, although special meetings may be called for such purposes as elect-
ing or removing Trustees, complying with a requirement of the Investment Com-
pany Act, or such other purposes as are set forth above. Each of the Trust and
the Delaware Trust will facilitate shareholder communication as required and
in the manner prescribed by Section 16(c) of the Investment Company Act.
11
<PAGE>
ADMINISTRATION
Each Fund has adopted an Administration Plan with respect to the FST Admin-
istration Shares which authorizes it to compensate Service Organizations for
providing account administration services to their customers who are benefi-
cial owners of such Shares. Each Fund will enter into agreements with Service
Organizations which purchase FST Administration Shares on behalf of their cus-
tomers ("Service Agreements"). The Service Agreements will provide for compen-
sation to the Service Organization in an amount up to .25 of 1% (on an
annualized basis) of the average daily net assets of the FST Administration
Shares of that Fund attributable to or held in the name of the Service Organi-
zation for its customers. The services provided by a Service Organization may
include acting, directly or through an agent, as the sole shareholder of rec-
ord, maintaining account records for its customers, and processing orders to
purchase, redeem and exchange FST Administration Shares for its customers.
Holders of FST Administration Shares of a Fund will bear all expenses and
fees paid to Service Organizations with respect to such Shares as well as any
other expenses which are directly attributable to such Shares.
Service Organizations (other than broker-dealers) may charge other fees to
their customers who are the beneficial owners of FST Administration Shares in
connection with their customer accounts. These fees would be in addition to
any amounts received by the Service Organization under a Service Agreement and
may affect an investor's return with respect to an investment in a Fund.
All inquiries of beneficial owners of FST Administration Shares of the Funds
should be directed to such owners' Service Organization.
PURCHASE OF SHARES
It is expected that all direct purchasers of FST Administration Shares will
be Service Organizations or their nominees, which may purchase FST Administra-
tion Shares of the Funds through Goldman Sachs. Customers of Service Organiza-
tions may invest in such Shares only through their Service Organizations.
As set forth below, FST Administration Shares of the Funds may be purchased
on any Business Day at the net asset value next determined after receipt from
the Service Organization of both the purchase order and the purchase price in
Federal Funds. Purchase orders may be made by telephoning Goldman Sachs at
800-621-2550 or by a written request addressed to Goldman Sachs, Attention:
Shareholder Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chi-
cago, Illinois 60606. It is strongly recommended that payment be effected by
wiring Federal Funds to The Northern Trust Company ("Northern"), Chicago, Il-
linois, as subcustodian for State Street Bank and Trust Company ("State
Street").
Purchases of FST Administration Shares may also be made by a Service Organi-
zation by delivering a Federal Reserve draft or check payable to the appropri-
ate Fund and drawn on a U.S. bank to Goldman Sachs, Attention: Shareholder
Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago, Illi-
nois 60606. It is expected that Federal Reserve drafts will ordinarily be con-
verted to Federal Funds on the day of receipt and that checks will be con-
verted to Federal Funds within two Business Days after receipt. FST Adminis-
tration Shares purchased by check may not be redeemed until the check has
cleared, as described under "Redemption of Shares".
12
<PAGE>
Purchases of shares of any Fund may also be made through an Automated Clear-
ing House ("ACH") transfer to Goldman Sachs Money Market Trust c/o Northern,
as subcustodian for State Street. Purchase orders are effected at the net as-
set value next determined after receipt of both the purchase order and the
purchase price in Federal Funds. It is expected that ACH transfers will ordi-
narily be converted to Federal Funds on the Business Day following receipt of
the ACH transfer.
FST Administration Shares of each Fund are deemed to have been purchased
when an order becomes effective and are entitled to dividends on FST Adminis-
tration Shares purchased as follows:
<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A
SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
-------------------------------- -----------------
<S> <C> <C> <C> <C>
By: 3:00 p.m.-N.Y. time Same Business Day
- ---------------------------------------------------------------------------------------
After: 3:00 p.m.-N.Y. time Next Business Day
- ---------------------------------------------------------------------------------------
</TABLE>
The Service Organizations are responsible for timely transmittal of purchase
orders to Goldman Sachs and Federal Funds to Northern. In order to facilitate
timely transmittal, the Service Organizations have established times by which
purchase orders and Federal Funds must be received by them.
A Business Day means any day on which the New York Stock Exchange is open,
except for days on which Chicago, Boston or New York banks are closed for lo-
cal holidays.
FST Administration Shares of the Funds are purchased at the net asset value
per share without the imposition of a sales charge. Goldman Sachs, as each
Funds's transfer agent, will maintain a complete record of transactions and
FST Administration Shares held in each record holder's account. The Trust and
Goldman Sachs each reserves the right to reject any purchase order for any
reason.
Goldman Sachs may, at its own expense, provide compensation to certain deal-
ers whose customers purchase significant amounts of shares of a Fund. The
amount of such compensation may be made on a one-time and/or periodic basis,
and may be up to 25% of the annual fees that are earned by GSAM as investment
adviser to such Fund (after adjustments) and are attributable to shares held
by such customers. Such compensation will not represent an additional expense
to the Fund or its shareholders, since it will be paid from assets of Goldman
Sachs or its affiliates.
MINIMUM INVESTMENT AND OTHER INFORMATION
The minimum requirement for investing in a Fund is $50 million ($10 million
if and investor satisfies the minimum initial investment in any other Fund).
The Trust and Goldman Sachs each reserves the right to waive the minimum in-
vestment requirement. A Service Organization may impose a minimum amount for
initial and subsequent investments in FST Administration Shares of the Funds,
and may establish other requirements such as a minimum account balance. A
Service Organization may effect redemptions of noncomplying accounts, and may
impose a charge for any special services rendered to its customers. Customers
should contact their Service Organization for further information concerning
such requirements and charges. A Service Organization may purchase FST Admin-
istration Shares in connection with sweep account programs.
SUBSEQUENT INVESTMENTS
There is no minimum amount required for subsequent investments. Orders for
the purchase of additional FST Administration Shares should be accompanied by
information identifying the account in which FST Administration Shares are to
be purchased.
13
<PAGE>
REPORTS TO SHAREHOLDERS
The Trust will issue an annual report containing audited financial state-
ments and a semiannual report to record holders of FST Administration Shares
of each Fund, including Service Organizations who hold such Shares for the
benefit of their customers. Upon request, a printed confirmation for each
transaction will be provided by Goldman Sachs. Any dividends and distributions
paid by the Funds are also reflected in regular statements issued by Goldman
Sachs to shareholders of record. The Service Organizations, as record holders
of FST Administration Shares, will be responsible for providing similar ser-
vices to their own customers who are the beneficial owners of such Shares.
DISTRIBUTIONS
All or substantially all of each Fund's net investment income will be de-
clared daily (as of 4:00 p.m. New York time) as a dividend and distributed to
Service Organizations, as record owners of FST Administration Shares, monthly.
Distributions will be made in additional FST Administration Shares of the same
Fund or, at the election of a Service Organization, in cash. The election to
reinvest dividends and distributions or receive them in cash may be changed by
a Service Organization at any time upon written notice to Goldman Sachs. If no
election is made, all dividends and capital gain distributions will be rein-
vested. Dividends will be reinvested as of the last calendar day of each
month. Cash distributions will be paid on or about the first business day of
each month. Net short-term capital gains, if any, will be distributed in ac-
cordance with the requirements of the Code and may be reflected in the Fund's
daily distributions. Each Fund may distribute at least annually its long-term
capital gains, if any, after reduction by available capital losses. In order
to avoid excessive fluctuations in the amount of monthly capital gains distri-
butions, a portion of any net capital gains realized on the disposition of
securities during the months of November and December may be distributed dur-
ing the subsequent calendar year. Although realized gains and losses on the
assets of a Fund are reflected in the net asset value of the Fund, they are
not expected to be of an amount which would affect the Fund's net asset value
of $1.00 per share.
A Fund's net investment income consists of the excess of (i) accrued inter-
est or discount (including both original issue and market discount on taxable
securities) on portfolio securities, and (ii) any income of the Fund from
sources other than capital gains over (iii) the amortization of market premium
on all portfolio securities and (iv) the estimated expenses of the Fund, in-
cluding a proportionate share of the general expenses of the Trust.
EXCHANGES
FST Administration Shares of each Fund may be exchanged by Service Organiza-
tions for shares of the corresponding class of any Fund or Portfolio of
Goldman Sachs Money Market Trust at the net asset value next determined either
by writing to Goldman Sachs, Attention: Shareholder Services, Goldman Sachs
Money Market Trust, 4900 Sears Tower, Chicago, Illinois 60606 or, if previ-
ously elected in the Account Information Form, by calling Goldman Sachs at
800-621-2550. All telephone exchanges must be registered in the same name(s)
and with the same address as are registered in the Fund from which the ex-
change is being made. It may be difficult to implement the telephone exchange
privilege in times of drastic economic or market changes. In an effort to pre-
vent unauthorized or fraudulent exchange requests by telephone, Goldman Sachs
employs reasonable procedures as set forth under "Redemption of Shares" to
confirm that such instructions are genuine. Exchanges are available only in
states where the exchange may legally be made. The exchange privilege may be
modified or withdrawn at any time on 60 days' written notice.
14
<PAGE>
REDEMPTION OF SHARES
HOW TO REDEEM
Customers of Service Organizations may redeem FST Administration Shares of a
Fund through their respective Service Organizations. The Service Organizations
are responsible for the transmittal of redemption requests by their customers
to Goldman Sachs. In order to facilitate timely transmittal of redemption re-
quests, Service Organizations have established procedures by which redemption
requests must be made and times by which redemption requests must be received
by them. Additional documentation may be required when deemed appropriate by a
Service Organization.
A Service Organization as the record holder of FST Administration Shares may
then redeem such Shares without charge upon request on any Business Day at the
net asset value next determined after receipt by Goldman Sachs of the redemp-
tion request. Redemption requests may be made by telephoning Goldman Sachs at
800-621-2550 or by a written request addressed to Goldman Sachs, Attention:
Shareholder Services, Goldman Sachs Money Market Trust, 4900 Sears Tower,
Chicago, Illinois 60606. A Service Organization may request redemptions by
telephone only if the telephone redemption privilege has been elected on the
Account Information Form. It may be difficult to implement redemptions by tel-
ephone in times of drastic economic or market changes.
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, Goldman Sachs employs reasonable procedures specified by the Trust
to confirm that such instructions are genuine. Among other things, any redemp-
tion request that requires money to go to an account or address other than
that designated on the Account Information Form must be in writing and signed
by an authorized person designated on the Account Information Form. Any such
written request is also confirmed by telephone with both the requesting party
and the designated bank account to verify instructions. Other procedures may
be implemented from time to time. If reasonable procedures are not implement-
ed, the Trust may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither the Trust nor Goldman Sachs will be
responsible for the authenticity of redemption instructions received by tele-
phone.
Additional documentation may be required by Goldman Sachs in order to estab-
lish that a redemption request has been properly authorized. A redemption re-
quest will not be considered to have been received in proper form until such
additional documentation has been submitted to Goldman Sachs by the record
holder of FST Administration Shares. The payment of redemption proceeds for
FST Administration Shares recently purchased by check will be delayed for up
to 15 days until the check has cleared.
PAYMENT OF REDEMPTION PROCEEDS AND DIVIDENDS
In accordance with the following, redemption proceeds will be wired to the
record holder of FST Administration Shares.
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
REDEMPTION REQUEST
RECEIVED FROM A REDEMPTION
SERVICE ORGANIZATION PROCEEDS
BY GOLDMAN SACHS ORDINARILY DIVIDENDS
------------------------------------ ---------- ---------------------
<S> <C> <C> <C>
By: 3:00 p.m.-N.Y. time Wired Same Not earned on Day
Business request is received
Day
- ------------------------------------------------------------------------------
After: 3:00 p.m.-N.Y. time Wired Next Earned on Day
Business request is received
Day
- ------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
The Funds will arrange for the proceeds of redemptions effected by any means
to be wired as Federal Funds to the Service Organization's bank account desig-
nated in the Account Information Form. Redemption proceeds will normally be
wired as set forth above, but may be paid up to three Business Days after re-
ceipt of the Service Organization's properly executed redemption request. For
example, payment may be delayed if the Federal Reserve Bank is closed on the
day redemption proceeds would ordinarily be wired. After a wire has been ini-
tiated by Goldman Sachs, neither Goldman Sachs nor the Trust assumes any fur-
ther responsibility for the performance of intermediaries or the FST Adminis-
tration Shareholder's Service Organization in the transfer process. If a prob-
lem with such performance arises, the FST Administration Shareholder should
deal directly with such intermediaries or Service Organization.
OTHER REDEMPTION INFORMATION
A minimum account balance of $50 million in a Fund ($10 million if an in-
vestor satisfies the minimum initial investment in any other Fund) is required
to remain an FST Administration Shareholder. A Fund may redeem all of the FST
Administration Shares of any FST Administration Shareholder whose account in
that Fund has a net asset value which is less than the minimum described
above. The Trust will give sixty (60) days' prior written notice to such
Shareholders whose FST Administration Shares are being redeemed to allow them
to purchase sufficient additional FST Administration Shares of the Fund to
avoid such redemption.
----------------
16
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GOLDMAN SACHS MONEY MARKET TRUST
FST ADMINISTRATION SHARES
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606
TOLL FREE: 800-621-2550
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder and Fund Expenses.............................................. 2
An Introduction to the Funds............................................... 4
Investment Policies........................................................ 5
Description of Securities and Investment Techniques........................ 5
Investment Limitations..................................................... 7
Management................................................................. 8
Taxes...................................................................... 9
Net Asset Value............................................................ 10
Yield Information.......................................................... 10
Organization and Shares of the Funds....................................... 11
Administration............................................................. 12
Purchase of Shares......................................................... 12
Reports to Shareholders.................................................... 14
Distributions.............................................................. 14
Exchanges.................................................................. 14
Redemption of Shares....................................................... 15
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
FINANCIAL SQUARE TREASURY INSTRUMENTS FUND
FINANCIAL SQUARE
FEDERAL FUND
FST ADMINISTRATION SHARES
-----------
PROSPECTUS
-----------
MANAGED BY
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
(FINANCIAL SQUARE TREASURY INSTRUMENTS FUND)
(FINANCIAL SQUARE FEDERAL FUND)
FST SERVICE SHARES
4900 Sears Tower
Chicago, Illinois 60606
Goldman Sachs Money Market Trust (the "Trust") is a no-load, open-end,
management investment company (a "mutual fund") which includes the Financial
Square Treasury Instruments and Federal Funds (the "Funds"). This Prospectus
relates only to the offering of FST Service shares of beneficial interest
("FST Service Shares") of the Funds. Goldman Sachs Asset Management, a
separate operating division of Goldman, Sachs & Co., serves as each Fund's
investment adviser. Goldman, Sachs & Co. serves as each Fund's distributor and
transfer agent.
The Treasury Instruments and Federal Funds seek to maximize current income
to the extent consistent with the preservation of capital and the maintenance
of liquidity by investing exclusively in high quality money market
instruments. These Funds may invest in diversified portfolios of the following
types of instruments:
Financial Square Treasury Instruments Fund. Securities issued or guaranteed
by the U.S. Treasury.
Financial Square Federal Fund. Securities of the U.S. Government and certain
of its agencies, authorities and instrumentalities, the interest income from
which is generally exempt from state income taxation.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOV-
ERNMENT AND THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION..... Goldman Sachs Mutual Funds--Toll Free: 800-621-2550
This Prospectus provides you with information about the Funds that you should
know before investing in FST Service Shares. It should be read and retained
for future reference. If you would like more detailed information, the
Statement of Additional Information dated February , 1997, as amended or
supplemented from time to time, is available upon request without charge from
institutions ("Service Organizations") that hold, directly or through an
agent, FST Service Shares for the benefit of their customers, by calling the
telephone number listed above or by writing Goldman, Sachs & Co., 4900 Sears
Tower, Chicago, Illinois 60606. The Statement of Additional Information, which
is incorporated by reference into this Prospectus, has been filed with the
Securities and Exchange Commission. Not all Funds are available in certain
states. Please call the phone number listed above to determine availability in
your state.
- -------------------------------------------------------------------------------
FST SERVICE SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is February , 1997.
<PAGE>
SHAREHOLDER AND FUND EXPENSES (NOTE 1)
FST SERVICE SHARES (NOTE 2)
<TABLE>
<CAPTION>
FINANCIAL SQUARE
TREASURY INSTRUMENTS FINANCIAL SQUARE
FUND FEDERAL FUND
-------------------- ----------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
Purchases.............................. None None
Sales Charge Imposed on Reinvested
Distributions.......................... None None
Deferred Sales Load Imposed on
Redemptions............................ None None
Exchange Fee............................ None None
ANNUAL OPERATING EXPENSES
(as a percentage of average daily net
assets)
Management Fees (Note 3) (after
adjustments)........................... 0.17% 0.17%
Other Expenses
Service Fees (Note 4).................. 0.50% 0.50%
Other Expenses (Note 3) (after expense
limitation)........................... 0.01% 0.01%
---- ----
TOTAL OPERATING EXPENSES (Note 3)........ 0.68% 0.68%
==== ====
</TABLE>
EXAMPLE OF EXPENSES
You would pay the following expenses on a hypothetical $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Financial Square Treasury Instruments Fund.................. $ -- $ --
Financial Square Federal Fund............................... $ -- $ --
</TABLE>
2
<PAGE>
- --------
Notes:
(1) The purpose of this table is to assist investors in understanding the
various costs and expenses that an investment in the Funds will bear
directly or indirectly. Operating expenses for the Funds are based on
estimates of expenses expected to be incurred during the fiscal year
ending December 31, 1997. The table and hypothetical example should not be
considered a representation of past or future expenses; actual expenses
may vary depending upon a variety of factors including the actual
performance of each Fund, which may be greater or less than 5%. See
"Management". Investors should be aware that, due to the service fees, a
long-term shareholder in a Fund may pay over time more than the economic
equivalent of the maximum front-end sales charge permitted under the rules
of the National Association of Securities Dealers, Inc.
(2) The information set forth in the foregoing table and example relates only
to FST Service Shares of the Funds. The Funds also offer FST Shares, FST
Administration Shares and FST Preferred Shares which are subject to
different fees and expenses (which affect performance), have different
minimum investment requirements and are entitled to different services.
Information regarding any other class of the Funds may be obtained from
your sales representative or from Goldman Sachs by calling the number on
the cover page of this Prospectus. See "Organization and Shares of the
Funds."
(3) Goldman Sachs Asset Management (the "Adviser" or "GSAM") has agreed that a
portion of its fees will not be imposed, pursuant to applicable contracts.
In addition, the Adviser has agreed to reduce or otherwise limit certain
expenses of each Fund (excluding fees payable to Service Organizations, as
defined herein, taxes, interest, brokerage and litigation, indemnification
and other extraordinary expenses), on an annualized basis, to 0.18% of the
average daily net assets of such Fund. The Adviser has also agreed that a
portion of its fees will not be imposed for the Treasury Instruments Fund
and Federal Fund. Had the reduction of fees otherwise payable and expense
limitations not been reflected in the above table, the management fees
payable by each Fund would be 0.205% of average daily net assets and the
estimated amount of other expenses payable by the Treasury Instruments
Fund and Federal Fund would be 0.--% and 0.--%, respectively, of average
daily net assets. Had the reduction of fees otherwise payable and expense
limitations not been reflected in the above table, the estimated annual
operating expenses of the Treasury Instruments Fund and Federal Fund would
be 0.--% and 0.--%, respectively, of average daily net assets.
(4) Service Organizations (other than broker-dealers) may charge other fees to
their customers who are beneficial owners of FST Service Shares in
connection with their customers' accounts. See "Additional Services." Such
fees, if any, may affect the return such customers realize with respect to
their investments.
3
<PAGE>
AN INTRODUCTION TO THE FUNDS
THE TRUST: The Trust is a no-load, open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "Invest-
ment Company Act"). Each Fund is a separate pool of assets which pursues its
investment objective through separate investment policies, as described below.
THE ADVISER: Goldman Sachs Asset Management, a separate operating division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds' investment ad-
viser (the "Adviser" or "GSAM").
THE DISTRIBUTOR: Goldman Sachs, which serves as the Funds' distributor and
transfer agent, is one of the largest international investment banking and
brokerage firms in the United States.
THE INVESTOR: The Funds are designed for institutional investors seeking a
high rate of return, a stable net asset value and convenient liquidation priv-
ileges. The Funds are particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term funds for their own
accounts or for the accounts of their customers.
THE FUNDS: Each Fund's securities are valued by the amortized cost method as
permitted by a rule ("Rule 2a-7") of the Securities and Exchange Commission
("SEC"). Under such rule, each Fund may invest only in securities that are de-
termined to present minimal credit risk and meet certain other criteria.
INVESTMENT OBJECTIVES AND POLICIES FOR THE FUNDS: To maximize current in-
come to the extent consistent with the preservation of capital and the
maintenance of liquidity by investing exclusively in high quality money
market instruments. The Treasury Instruments and Federal Funds pursue their
objectives by limiting their investments to certain U.S. Treasury Obliga-
tions and U.S. Government Securities (each as defined herein), respective-
ly, the interest from which is generally exempt from state income taxation.
Each investor should consult his or her tax adviser to determine whether
distributions from the Treasury Instruments and Federal Funds derived from
interest on such obligations are exempt from state income taxation in the
investor's own state.
NET ASSET VALUE: Each Fund seeks to maintain a stable net asset value of
$1.00 per share.
MAXIMUM REMAINING MATURITY OF FUND INVESTMENTS: Thirteen months at the time
of purchase.
DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY: Not more than ninety days.
FIRST TIER SECURITIES: The Funds may purchase securities which are rated (or
that have been issued by an issuer that is rated with respect to a class of
short-term debt obligations, or any security within that class, comparable in
priority and quality with such securities) in the highest short-term rating
category by at least two NRSROs (as defined below), or if only one NRSRO has
assigned a rating, by that NRSRO. U.S. Government Securities as defined herein
are considered First Tier Securities.
UNRATED SECURITIES: Unrated securities may be purchased only if they are
deemed to be of comparable quality to First Tier Securities.
NRSROS: Nationally Recognized Statistical Rating Organizations include Stan-
dard & Poor's Ratings Group ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Services, Inc. Duff and Phelps, Inc., IBCA Lim-
ited and its affiliate IBCA Inc., and Thompson BankWatch, Inc. For a descrip-
tion of each NRSRO's rating categories, see Appendix A to the Statement of Ad-
ditional Information.
4
<PAGE>
INVESTMENT POLICIES
<TABLE>
<CAPTION>
FINANCIAL SQUARE
TREASURY FINANCIAL SQUARE
INSTRUMENTS FEDERAL
FUND FUND
- ------------------------------------------------------------------------
<S> <C> <C>
US Treasury Instruments [] []
- ------------------------------------------------------------------------
US Government Securities []
- ------------------------------------------------------------------------
[]
(Does not intend to
Repurchase Agreements invest)
- ------------------------------------------------------------------------
Credit Quality First Tier First Tier
- ------------------------------------------------------------------------
[] []
Up to 10% of total Up to 10% of total
assets in other assets in other
Investment Companies investment companies investment companies
- ------------------------------------------------------------------------
Taxable Federal and Taxable Federal and
generally exempt from generally exempt from
Summary of Taxation* state taxation state taxation
- ------------------------------------------------------------------------
Under extraordinary
circumstances, may
hold cash, U.S.
Government Securities
subject to state
taxation or cash
Miscellaneous equivalents
</TABLE>
Note: See "Description of Securities and Investment Techniques" for a descrip-
tion of, and certain criteria applicable to, each of these categories and in-
vestments.
* See "Taxes" below for an explanation of the tax consequences summarized in
the table above.
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
U.S. TREASURY OBLIGATIONS
"U.S. Treasury Obligations" are securities issued or guaranteed by the U.S.
Treasury, payments of principal, and interest on which are backed by the full
faith and credit of the U.S. Government.
U.S. GOVERNMENT SECURITIES
"U.S. Government Securities" are obligations issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities. Unlike U.S.
Treasury Obligations, obligations issued or guaranteed by U.S. Government
agencies, authorities or instrumentalities are supported either by (a) the
full faith and credit of the U.S. Government (such as securities of the Gov-
ernment National Mortgage Association), (b) the right of the issuer to borrow
from the Treasury (such as securities of the Student Loan Marketing Associa-
tion), (c) the discretionary authority of the U.S. Government to purchase the
agency's obligations (such as securities of the Federal National Mortgage As-
sociation and the Federal Home Loan Mortgage Corporation), or (d) only the
credit of the issuer. No assurance can be given that the U.S. Government will
provide financial support to U.S. Government agencies, authorities or instru-
mentalities in the future. U.S. Government Securities may include zero coupon
bonds. Such bonds may be purchased when yields are attractive.
5
<PAGE>
Securities guaranteed as to principal and interest by the U.S. Government,
its agencies, authorities or instrumentalities are deemed to include (a) secu-
rities for which the payment of principal and interest is backed by an irrevo-
cable letter of credit issued by the U.S. Government, its agencies, authori-
ties or instrumentalities and (b) participations in loans made to foreign gov-
ernments or their agencies that are so guaranteed. The secondary market for
certain of these participations is limited. Such participations may therefore
be regarded as illiquid.
Each Fund may also invest in separately traded principal and interest compo-
nents of securities guaranteed or issued by the U.S. Treasury if such compo-
nents are traded independently under the Separate Trading of Registered Inter-
est and Principal of Securities program ("STRIPS").
The Treasury Instruments and Federal Funds invest in Treasury Obligations
and certain U.S. Government Securities, respectively, the interest from which
is generally exempt from state income taxation. Securities generally eligible
for this exemption include those issued by the U.S. Treasury and those issued
by certain agencies, authorities or instrumentalities of the U.S. Government,
including the Federal Home Loan Banks, Federal Farm Credit Banks, Tennessee
Valley Authority and the Student Loan Marketing Association.
REPURCHASE AGREEMENTS
The Federal Fund may only enter into repurchase agreements with primary
dealers in U.S. Government Securities. A repurchase agreement is an agreement
under which a Fund purchases securities and the seller agrees to repurchase
the securities within a particular time at a specified price. Such price will
exceed the original purchase price, the difference being income to the Fund,
and will be unrelated to the interest rate on the purchased security. A Fund's
custodian or subcustodian will maintain custody of the purchased securities
for the duration of the agreement. The value of the purchased securities, in-
cluding accrued interest, will at all times equal or exceed the value of the
repurchase agreement. In the event of bankruptcy of the seller or failure of
the seller to repurchase the securities as agreed, a Fund could suffer losses,
including loss of interest on or principal of the security and costs associ-
ated with delay and enforcement of the repurchase agreement. In evaluating
whether to enter into a repurchase agreement, the Adviser will carefully con-
sider the creditworthiness of the seller pursuant to procedures reviewed and
approved by the Trustees. Distributions of the income from repurchase agree-
ments entered into by a Fund will be taxable to its shareholders. In addition,
the Federal Fund, together with other registered investment companies having
advisory agreements with the Adviser or any of its affiliates, may transfer
uninvested cash balances into a single joint account, the daily aggregate bal-
ance of which will be invested in one or more repurchase agreements.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES
Each Fund may purchase when-issued securities and make contracts to purchase
or sell securities for a fixed price at a future date beyond customary settle-
ment time. A Fund is required to hold and maintain in a segregated account
with the Fund's custodian or subcustodian until the settlement date, cash or
liquid, high quality debt obligations in an amount sufficient to meet the pur-
chase price. Alternatively, a Fund may enter into offsetting contracts for the
forward sale of other securities that it owns. Securities purchased or sold on
a when-issued or forward commitment basis involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date or if
the value of the security to be sold increases prior to the settlement date.
Although a Fund would generally purchase securities on a when-issued or for-
ward commitment basis with the intention of acquiring securities for its port-
folio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Adviser deems it appropriate to do so.
6
<PAGE>
OTHER INVESTMENT COMPANIES
The Adviser will determine, under guidelines established by the Trustees,
whether securities issued by other money market investment companies present
minimal credit risks. The amount of each Fund's investments in securities of
other investment companies will be subject to the limitations on such invest-
ments prescribed by the Investment Company Act. These limits include a prohi-
bition on any Fund acquiring more than 3% of the voting shares of any other
investment company, and a prohibition on investing more than 5% of a Fund's
assets in securities of any one investment company or more than 10% of its as-
sets in securities of all investment companies. Each Fund will indirectly bear
its proportionate share of any management fees and other expenses paid by such
other investment companies. Goldman Sachs will not impose a portion of the
management fees payable by a Fund (the "Acquiring Fund") with respect to as-
sets invested in another money market investment company (the "Acquired Fund")
as follows. The amount of the management fees otherwise payable by the Acquir-
ing Fund and not imposed by Goldman Sachs will be equal to the amount of man-
agement fees indirectly paid by the Acquiring Fund as a shareholder of the Ac-
quired Fund. Such other investment companies will have investment objectives,
policies and restrictions substantially similar to those of the Acquiring Fund
and will be subject to substantially the same risks.
INVESTMENT LIMITATIONS
Pursuant to SEC Rule 2a-7 under the Investment Company Act, each Fund may
not invest more than 5% of its assets (taken at amortized cost) in the securi-
ties of any one issuer (except U.S. Government Securities and repurchase
agreements collateralized by such securities). Each Fund may, however, invest
more than 5% of its assets in the First Tier Securities of a single issuer for
a period of up to three business days after the purchase thereof, although a
Fund may not make more than one such investment at any time. The Funds may not
invest in securities which are Second Tier Securities at the time of purchase.
Immediately after the acquisition of any put by a Fund, not more than 5% of
such Fund's total assets may be invested in securities issued by or subject to
puts from the same issuer. However, this limitation will not apply to the is-
suer of unconditional puts if the Fund does not have more than 10% of its to-
tal assets invested in securities issued by or subject to unconditional puts
from such issuer. The foregoing requirements of Rule 2a-7 are more restrictive
than the fundamental policy set forth in the Additional Statement. Purchases
of securities which are unrated or rated by only one NRSRO must be approved or
ratified by the Trustees.
INVESTMENT RESTRICTIONS. Each Fund is subject to certain investment restric-
tions that are described in detail under "Investment Restrictions" in the Ad-
ditional Statement. Fundamental investment restrictions of a Fund cannot be
changed without approval of a majority of the outstanding shares of that Fund.
All investment policies not specifically designated as fundamental are non-
fundamental and may be changed without shareholder approval.
RESTRICTED AND OTHER ILLIQUID SECURITIES. Each Fund may purchase securities
that are not registered ("restricted securities") under the Securities Act of
1933 ("1933 Act"), but can be offered and sold to "qualified institutional
buyers" under Rule 144A under the 1933 Act. However, a Fund will not invest
more than 10% of its net assets in illiquid investments, which include fixed
time deposits maturing in more than seven days and restricted securities. Re-
stricted securities (including commercial paper issued pursuant to Section
4(2) of the 1933 Act) which the Board of Trustees has determined are liquid,
based upon a continuing review of the trading markets for the specific re-
stricted security, will not be deemed to be illiquid investments for purposes
of this restriction. The Board of Trustees may adopt guidelines and delegate
to the Adviser the daily function of
7
<PAGE>
determining and monitoring the liquidity of restricted securities. The Board,
however, will retain sufficient oversight and be ultimately responsible for
the determinations. Since it is not possible to predict with assurance that
the market for restricted securities eligible for resale under Rule 144A will
continue to be liquid, the Adviser will carefully monitor each Fund's invest-
ments in these securities, focusing on such important factors, among others,
as valuation, liquidity and availability of information. This investment prac-
tice could have the effect of increasing the level of illiquidity in a Fund to
the extent that qualified institutional buyers become for a time uninterested
in purchasing these restricted securities.
In addition, each Fund may not invest in repurchase agreements maturing in
more than seven days and securities which are not readily marketable if, as a
result thereof, more than 10% of the net assets of that Fund (taken at market
value) would be invested in such investments. Certain repurchase agreements
which mature in more than seven days can be liquidated before the nominal
fixed term on seven days or less notice. Such repurchase agreements will be
regarded as liquid instruments.
MANAGEMENT
THE ADVISER
GSAM, One New York Plaza, New York, New York, a separate operating division
of Goldman Sachs, acts as investment adviser to the Funds. Goldman Sachs reg-
istered as an investment adviser in 1981. As of October 30, 1996, Goldman
Sachs, together with its affiliates, acted as investment adviser, administra-
tor or distributor for approximately $89 billion in assets.
As of November , 1996, Goldman Sachs and its consolidated subsidiaries had
assets of approximately $ billion and partners' capital of $ billion and
ranked as one of the largest international investment banking and brokerage
firms in the United States. Founded in 1869, Goldman Sachs is a major player
among investment banking and brokerage firms providing a broad range of fi-
nancing and investing services both in the United States and abroad.
Pursuant to an SEC order, each Fund, may enter into principal transactions
in certain taxable money market instruments, including repurchase agreements,
with Goldman Sachs.
Under its Investment Advisory Agreement with the Trust, GSAM continually
manages the portfolio of each Fund, including the purchase, retention and dis-
position of its securities and other assets. In addition, GSAM administers the
Funds' business affairs and performs various shareholder servicing functions
to the extent not provided by other organizations. The management of each Fund
is subject to the supervision of the Board of Trustees and each Fund's invest-
ment policies. For these services, the Trust, on behalf of each Fund, pays
GSAM a monthly fee at an annual rate of each Fund's average daily net assets
as follows:
<TABLE>
<CAPTION>
APPROXIMATE
ANNUAL RATE
-----------
<S> <C>
Financial Square Treasury Instruments Fund .205%
Financial Square Federal Fund .205%
</TABLE>
GSAM has agreed to reduce or otherwise limit the daily expenses of each Fund
(excluding fees payable to Service Organizations, as defined herein, manage-
ment fees, taxes, interest, brokerage and litigation, indemnification and
other extraordinary expenses) on an annualized basis to .01% of the average
daily net assets of the Fund. In addition, with respect to the Federal and
Treasury Instruments Funds, GSAM has voluntarily agreed not to impose all or a
portion of its advisory fee and/or to reduce or otherwise limit each Fund's
annual total operating expenses (excluding fees payable to Service Organiza-
tions, as defined herein) to .18% and .18%, respectively, of
8
<PAGE>
average daily net assets. GSAM has no current intention to but may in the fu-
ture discontinue or modify any of such limitations at its discretion.
THE DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606, serves as the Dis-
tributor of shares of each Fund pursuant to a Distribution Agreement with the
Trust. The Distributor will assist in the sale of shares of each Fund upon the
terms described herein. Goldman Sachs also serves as the Transfer Agent of
each Fund.
From time to time, Goldman Sachs or any of its affiliates may purchase and
hold shares of the Funds in order to increase the assets of the Funds. In-
creasing the Funds' assets may enhance investment flexibility and diversifica-
tion. Goldman Sachs reserves the right to redeem at any time some or all of
the Fund shares acquired for its own account. Goldman Sachs will consider the
effect of redemptions on the Funds and other shareholders in deciding whether
to redeem its shares.
TAXES
Each Fund is treated as a separate entity for federal income tax purposes
and intends to continue to qualify and be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986 (the "Code")
for each taxable year. To qualify as such, each Fund must satisfy certain re-
quirements relating to the sources of its income, diversification of its as-
sets and distribution of its income to shareholders. As a regulated investment
company, each Fund will not be subject to federal income or excise tax on any
net investment income and net realized capital gains that are distributed to
its shareholders in accordance with certain timing requirements of the Code.
Dividends paid by a Fund from net investment income, the excess of net
short-term capital gain over net long-term capital loss and taxable original
issue discount or market discount income will be taxable to shareholders as
ordinary income. Dividends paid by a Fund from the excess of net long-term
capital gain over net short-term capital loss will be taxable as long-term
capital gain regardless of how long the shareholders have held their shares.
These tax consequences will apply to taxable distributions of a Fund (includ-
ing a Fund that also pays exempt-interest dividends, as described below) re-
gardless of whether distributions are received in cash or reinvested in
shares. Certain distributions paid by the Funds in January of a given year
will be taxable to shareholders as if received on December 31 of the year in
which they are declared. Shareholders will be informed annually about the
amount and character of distributions received from the Funds for federal in-
come tax purposes, including any distributions that may constitute a return of
capital.
Individuals and certain other classes of shareholders may be subject to 31%
backup withholding of federal income tax on taxable distributions if they fail
to furnish their correct taxpayer identification number and certain certifica-
tions required by the Internal Revenue Service or if they are otherwise sub-
ject to backup withholding. Individuals, corporations and other shareholders
that are not U.S. persons under the Code are subject to different tax rules
and may be subject to nonresident alien withholding at the rate of 30% (or a
lower rate provided by an applicable tax treaty) on amounts treated as ordi-
nary dividends from the Funds.
9
<PAGE>
In addition to federal taxes, a shareholder may be subject to state, local
or foreign taxes on payments received from a Fund. A state income (and possi-
bly local income and/or intangible property) tax exemption is generally avail-
able to the extent a Fund's distributions are derived from interest on (or, in
the case of intangibles taxes, the value of its assets is attributable to)
certain U.S. Government obligations and/or tax-exempt municipal obligations
issued by or on behalf of the particular state or a political subdivision
thereof, provided in some states that certain thresholds for holdings of such
obligations and/or reporting requirements are satisfied. Shareholders should
consult their own tax advisers concerning these matters.
NET ASSET VALUE
The net asset value of each Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 P.M. New York time) on
each Business Day. Net asset value per share for each class of shares of each
Fund is calculated by determining the amount of net assets attributable to
each class of shares and dividing by the number of shares for such class.
On any Business Day, as defined herein, when the Public Securities Associa-
tion (PSA) recommends that the securities market close early, the Treasury In-
struments and Federal Funds will cease, and each other Fund reserves the right
to cease, accepting purchase and redemption orders for same Business Day
credit at the time the PSA recommends that the securities market close. On
days any Fund closes early, purchase and redemption orders received after the
PSA recommended closing time will be credited for the next Business Day. In
addition, each Fund reserves the right to advance the time by which purchase
and redemption orders must be received for same Business Day credit as permit-
ted by the SEC.
Each Fund's portfolio securities are valued at their amortized cost, which
does not take into account unrealized securities gains or losses. This method
involves initially valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any premium paid or discount received.
YIELD INFORMATION
From time to time, each Fund may advertise its yield and effective yield.
The yield of a Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the advertise-
ment). This income is then annualized; that is, the amount of income generated
by the investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
The Funds may each also quote tax-equivalent yield. Each Fund's tax-equiva-
lent yield is calculated by determining the rate of return that would have to
be achieved on a fully taxable investment to produce the after-tax equivalent
of the Fund's yield, assuming certain tax brackets for a shareholder.
Investors should note that the investment results of a Fund are based on
historical performance and will fluctuate over time. Any presentation of a
Fund's yield or effective yield for any prior period should not be
10
<PAGE>
considered a representation of what an investment may earn or what a Fund's
yield or effective yield may be in any future period.
Yield, effective yield and tax-equivalent yield will be calculated sepa-
rately for each class of shares in existence. Because each such class of
shares is subject to different expenses, the net yield of such classes of a
Fund for the same period may differ. See "Organization and Shares of the
Funds" below.
ORGANIZATION AND SHARES OF THE FUNDS
The Trust was formed as a business trust under the laws of The Commonwealth
of Massachusetts on December 6, 1978. It is anticipated that each series of
the Trust, including the Federal and Treasury Instruments Funds, will be reor-
ganized on April 30, 1997, or as soon thereafter as practicable, into newly
established series of a Delaware Business Trust (the "Delaware Trust"). The
Trustees of the Trust will also serve as Trustees of the Delaware Trust and
the investment objectives, restrictions and policies and fees of the series of
the Delaware Trust will be identical to those of the corresponding Fund. The
initial shareholder of the Federal and Treasury Instruments Funds has approved
the reorganization of such Funds into series of the Delaware Trust. In the
event that the shareholders of the other series of the Trust do not approve
reorganizations into the Delaware Trust, the Federal and Treasury Instrument
Funds may not be reorganized into the Delaware Trust. The Trustees of the
Trust are responsible for the overall management and supervision of its af-
fairs. The Declaration of Trust of both the Trust and the Delaware Trust au-
thorizes the Trustees to classify or reclassify any series or portfolio of
shares into one or more classes. The Trustees have authorized the issuance of
four classes of shares of each of the Funds, which are: FST Shares, FST Admin-
istration Shares, FST Service Shares and FST Preferred Shares. (Institutions
that provide services to holders of FST Preferred Shares, FST Administration
Shares or FST Service Shares are referred to in this Prospectus as "Service
Organizations").
When issued, units are fully paid and nonassessable by the Trust or the Del-
aware Trust. In the event of liquidation, shareholders are entitled to share
pro rata in the net assets of the applicable Fund available for distribution
to such shareholders. Shares entitle their holders to one vote per share, are
freely transferable and have no preemptive, subscription or conversion rights.
Shares of a Fund will be voted separately by Fund with respect to matters
pertaining to that Fund except for the election of Trustees and ratification
of independent accountants. For example, shareholders of each Fund are re-
quired to approve the adoption of any investment advisory agreement relating
to that Fund and any changes in fundamental investment restrictions or poli-
cies of such Fund. Approval by the shareholders of one Fund is effective only
as to that Fund.
Neither the Trust nor the Delaware Trust intend to hold annual shareholder
meetings, although special meetings may be called for such purposes as elect-
ing or removing Trustees, complying with a requirement of the Investment Com-
pany Act, or such other purposes as are set forth above. Each of the Trust and
the Delaware Trust will facilitate shareholder communication as required and
in the manner prescribed by Section 16(c) of the Investment Company Act.
11
<PAGE>
ADDITIONAL SERVICES
Each Fund has adopted a Service Plan with respect to the FST Service Shares
which authorizes it to compensate Service Organizations for providing account
administration and personal and account maintenance services to their custom-
ers who are beneficial owners of such Shares. Each Fund will enter into agree-
ments with Service Organizations which purchase FST Service Shares, on behalf
of their customers ("Service Agreements"). The Service Agreements will provide
for compensation to the Service Organization in an amount up to .50 of 1% (on
an annualized basis) of the average daily net assets of the FST Service Shares
of that Fund attributable to or held in the name of the Service Organization
for its customers; provided, however, that the fee paid for personal and ac-
count maintenance services shall not exceed .25% of such average daily net as-
sets. The services provided by a Service Organization may include acting, di-
rectly or through an agent, as the sole shareholder of record, maintaining ac-
count records for its customers, processing orders to purchase, redeem and ex-
change FST Service Shares for its customers, responding to inquiries from pro-
spective and existing shareholders and assisting customers with investment
procedures.
Holders of FST Service Shares of a Fund will bear all expenses and fees paid
to Service Organizations with respect to such Shares as well as any other ex-
penses which are directly attributable to such Shares.
Service Organizations (other than broker-dealers) may charge other fees to
their customers who are the beneficial owners of FST Service Shares in connec-
tion with their customer accounts. These fees would be in addition to any
amounts received by the Service Organization under a Service Agreement and may
affect an investor's return with respect to an investment in a Fund.
All inquiries of beneficial owners of FST Service Shares of the Funds should
be directed to such owners' Service Organization.
PURCHASE OF SHARES
It is expected that all direct purchasers of FST Service Shares will be
Service Organizations or their nominees, which may purchase FST Service Shares
of the Funds through Goldman Sachs. Customers of Service Organizations may in-
vest in such Shares only through their Service Organizations.
As set forth below, FST Service Shares of the Funds may be purchased on any
Business Day at the net asset value next determined after receipt from the
Service Organization of both the purchase order and the purchase price in Fed-
eral Funds. Purchase orders may be made by telephoning Goldman Sachs at 800-
621-2550 or by a written request addressed to Goldman Sachs, Attention: Share-
holder Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago,
Illinois 60606. It is strongly recommended that payment be effected by wiring
Federal Funds to The Northern Trust Company ("Northern"), Chicago, Illinois,
as subcustodian for State Street Bank and Trust Company ("State Street").
Purchases of FST Service Shares may also be made by a Service Organization
by delivering a Federal Reserve draft or check payable to the appropriate Fund
and drawn on a U.S. bank to Goldman Sachs, Attention: Shareholder Services,
Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago, Illinois 60606.
It is expected that Federal Reserve drafts will ordinarily be converted to
Federal Funds on the day of receipt and that checks will be converted to Fed-
eral Funds within two Business Days after receipt. FST Service Shares pur-
chased by check may not be redeemed until the check has cleared, as described
under "Redemption of Shares".
Purchases of shares of any Fund may also be made through an Automated Clear-
ing House ("ACH") transfer to Goldman Sachs Money Market Trust c/o North-
ern, as subcustodian for State Street. Purchase orders
12
<PAGE>
are effected at the net asset value next determined after receipt of both the
purchase order and the purchase price in Federal Funds. It is expected that
ACH transfers will ordinarily be converted to Federal Funds on the Business
Day following receipt of the ACH transfer.
- -------------------------------------------------------------------------------
FST Service Shares of each Fund are deemed to have been purchased when an
order becomes effective and are entitled to dividends on FST Service Shares
purchased as follows:
<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A
SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
----------------------------- -----------------
<S> <C> <C> <C> <C>
By: 3:00 p.m.-N.Y. time Same Business Day
- ---------------------------------------------------------------------------------------
After: 3:00 p.m.-N.Y. time Next Business Day
- ---------------------------------------------------------------------------------------
</TABLE>
The Service Organizations are responsible for timely transmittal of purchase
orders to Goldman Sachs and Federal Funds to Northern. In order to facilitate
timely transmittal, the Service Organizations have established times by which
purchase orders and Federal Funds must be received by them.
A Business Day means any day on which the New York Stock Exchange is open,
except for days on which Chicago, Boston or New York banks are closed for lo-
cal holidays.
FST Service Shares of the Funds are purchased at the net asset value per
share without the imposition of a sales charge. Goldman Sachs, as each Fund's
transfer agent, will maintain a complete record of transactions and FST Serv-
ice Shares held in each record holder's account. The Trust and Goldman Sachs
each reserves the right to reject any purchase order for any reason.
Goldman Sachs may, at its own expense, provide compensation to certain deal-
ers whose customers purchase significant amounts of shares of a Fund. The
amount of such compensation may be made on a one-time and/or periodic basis,
and may be up to 25% of the annual fees that are earned by GSAM as investment
adviser to such Fund (after adjustments) and are attributable to shares held
by such customers. Such compensation will not represent an additional expense
to the Fund or its shareholders, since it will be paid from assets of Goldman
Sachs or its affiliates.
MINIMUM INVESTMENT AND OTHER INFORMATION
The minimum requirement for investing in a Fund is $50 million ($10 million
if an investor satisfies the minimum initial investment in any other Fund).
The Trust and Goldman Sachs each reserves the right to waive the minimum in-
vestment requirement. A Service Organization may impose a minimum amount for
initial and subsequent investments in FST Service Shares of the Funds, and may
establish other requirements such as a minimum account balance. A Service Or-
ganization may effect redemptions of noncomplying accounts, and may impose a
charge for any special services rendered to its customers. Customers should
contact their Service Organization for further information concerning such re-
quirements and charges. A Service Organization may purchase FST Service Shares
in connection with sweep account programs.
SUBSEQUENT INVESTMENTS
There is no minimum amount required for subsequent investments. Orders for
the purchase of additional FST Service Shares should be accompanied by infor-
mation identifying the account in which FST Service Shares are to be pur-
chased.
13
<PAGE>
REPORTS TO SHAREHOLDERS
The Trust will issue an annual report containing audited financial state-
ments and a semiannual report to record holders of FST Service Shares of each
Fund, including Service Organizations who hold such Shares for the benefit of
their customers. Upon request, a printed confirmation for each transaction
will be provided by Goldman Sachs. Any dividends and distributions paid by the
Funds are also reflected in regular statements issued by Goldman Sachs to
shareholders of record. The Service Organizations, as record holders of FST
Service Shares, will be responsible for providing similar services to their
own customers who are the beneficial owners of such Shares.
DISTRIBUTIONS
All or substantially all of each Fund's net investment income will be de-
clared daily (as of 4:00 p.m. New York time) as a dividend and distributed to
Service Organizations, as record owners of FST Service Shares, monthly. Dis-
tributions will be made in additional FST Service Shares of the same Fund or,
at the election of a Service Organization, in cash. The election to reinvest
dividends and distributions or receive them in cash may be changed by a Serv-
ice Organization at any time upon written notice to Goldman Sachs. If no elec-
tion is made, all dividends and capital gain distributions will be reinvested.
Dividends will be reinvested as of the last calendar day of each month. Cash
distributions will be paid on or about the first business day of each month.
Net short-term capital gains, if any, will be distributed in accordance with
the requirements of the Code and may be reflected in the Fund's daily distri-
butions. Each Fund may distribute at least annually its long-term capital
gains, if any, after reduction by available capital losses. In order to avoid
excessive fluctuations in the amount of monthly capital gains distributions, a
portion of any net capital gains realized on the disposition of securities
during the months of November and December may be distributed during the sub-
sequent calendar year. Although realized gains and losses on the assets of a
Fund are reflected in the net asset value of the Fund, they are not expected
to be of an amount which would affect the Fund's net asset value of $1.00 per
share.
A Fund's net investment income consists of the excess of (i) accrued inter-
est or discount (including both original issue and market discount on taxable
securities) on portfolio securities, and (ii) any income of the Fund from
sources other than capital gains over (iii) the amortization of market premium
on all portfolio securities and (iv) the estimated expenses of the Fund, in-
cluding a proportionate share of the general expenses of the Trust.
EXCHANGES
FST Service Shares of each Fund may be exchanged by Service Organizations
for shares of the corresponding class of any Fund or Portfolio of Goldman
Sachs Money Market Trust at the net asset value next determined either by
writing to Goldman Sachs, Attention: Shareholder Services, Goldman Sachs Money
Market Trust, 4900 Sears Tower, Chicago, Illinois 60606 or, if previously
elected in the Account Information Form, by calling Goldman Sachs at 800-621-
2550. All telephone exchanges must be registered in the same name(s) and with
the same address as are registered in the Fund from which the exchange is be-
ing made. It may be difficult to implement the telephone exchange privilege in
times of drastic economic or market changes. In an effort to prevent unautho-
rized or fraudulent exchange requests by telephone, Goldman Sachs employs rea-
sonable procedures as set forth under "Redemption of Shares" to confirm that
such instructions are genuine. Exchanges are available only in states where
the exchange may legally be made. The exchange privilege may be modified or
withdrawn at any time on 60 days' written notice.
14
<PAGE>
REDEMPTION OF SHARES
HOW TO REDEEM
Customers of Service Organizations may redeem FST Service Shares of a Fund
through their respective Service Organizations. The Service Organizations are
responsible for the transmittal of redemption requests by their customers to
Goldman Sachs. In order to facilitate timely transmittal of redemption re-
quests, Service Organizations have established procedures by which redemption
requests must be made and times by which redemption requests must be received
by them. Additional documentation may be required when deemed appropriate by a
Service Organization.
A Service Organization as the record holder of FST Service Shares may then
redeem such Shares without charge upon request on any Business Day at the net
asset value next determined after receipt by Goldman Sachs of the redemption
request. Redemption requests may be made by telephoning Goldman Sachs at 800-
621-2550 or by a written request addressed to Goldman Sachs, Attention: Share-
holder Services, Goldman Sachs Money Market Trust, 4900 Sears Tower, Chicago,
Illinois 60606. A Service Organization may request redemptions by telephone
only if the optional telephone redemption privilege has been elected on the
Account Information Form. It may be difficult to implement redemptions by tel-
ephone in times of drastic economic or market changes.
In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, Goldman Sachs employs reasonable procedures specified by the Trust
to confirm that such instructions are genuine. Among other things, any redemp-
tion request that requires money to go to an account or address other than
that designated on the Account Information Form must be in writing and signed
by an authorized person designated on the Account Information Form. Any such
written request is also confirmed by telephone with both the requesting party
and the designated bank account to verify instructions. Other procedures may
be implemented from time to time. If reasonable procedures are not implement-
ed, the Trust may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither the Trust nor Goldman Sachs will be
responsible for the authenticity of redemption instructions received by tele-
phone.
Additional documentation may be required by Goldman Sachs in order to estab-
lish that a redemption request has been properly authorized. A redemption re-
quest will not be considered to have been received in proper form until such
additional documentation has been submitted to Goldman Sachs by the record
holder of FST Service Shares. The payment of redemption proceeds for FST Serv-
ice Shares recently purchased by check will be delayed for up to 15 days until
the check has cleared.
PAYMENT OF REDEMPTION PROCEEDS AND DIVIDENDS
In accordance with the following, redemption proceeds will be wired to the
record holder of FST Service Shares.
<TABLE>
<CAPTION>
REDEMPTION REQUEST REDEMPTION
RECEIVED FROM A SERVICE PROCEEDS
ORGANIZATION BY GOLDMAN SACHS ORDINARILY DIVIDENDS
------------------------------------ ---------- ---------------------
<S> <C> <C> <C>
By: 3:00 p.m.-N.Y. time Wired Same Not earned on Day
Business request is received
Day
- --------------------------------------------------------------------------------
After: 3:00 p.m.-N.Y. time Wired Next Earned on Day
Business request is received
Day
- --------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
The Funds will arrange for the proceeds of redemptions effect by any means
to be wired as Federal Funds to the Service Organization's bank account desig-
nated in the Account Information Form. Redemption proceeds will normally be
wired as set forth above, but may be paid up to three Business Days after re-
ceipt of the Service Organization's properly executed redemption request. For
example, payment may be delayed if the Federal Reserve Bank is closed on the
day redemption proceeds would ordinarily be wired. After a wire has been ini-
tiated by Goldman Sachs, neither Goldman Sachs nor the Trust assumes any fur-
ther responsibility for the performance of intermediaries or the FST Service
Shareholder's Service Organization in the transfer process. If a problem with
such performance arises, the FST Service Shareholder should deal directly with
such intermediaries or Service Organization.
OTHER REDEMPTION INFORMATION
A minimum account balance of $50 million in a Fund ($10 million if an in-
vestor satisfies the minimum initial investment in any other Fund) is required
to remain an FST Service Shareholder. A Fund may redeem all of the FST Service
Shares of any FST Service Shareholder whose account in that Fund has a net as-
set value which is less than the minimum described above. The Trust will give
sixty (60) days' prior written notice to such Shareholders whose FST Service
Shares are being redeemed to allow them to purchase sufficient additional FST
Service Shares of the Fund to avoid such redemption.
----------------
16
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GOLDMAN SACHS MONEY MARKET TRUST
FST SERVICE SHARES
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606
TOLL FREE: 800-621-2550
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder and Fund Expenses.............................................. 2
An Introduction to the Funds............................................... 4
Investment Policies........................................................ 5
Description of Securities and Investment Techniques........................ 5
Investment Limitations..................................................... 7
Management................................................................. 8
Taxes...................................................................... 9
Net Asset Value............................................................ 10
Yield Information.......................................................... 10
Organization and Shares of the Funds....................................... 11
Additional Services........................................................ 12
Purchase of Shares......................................................... 12
Reports to Shareholders.................................................... 14
Distributions.............................................................. 14
Exchanges.................................................................. 14
Redemption of Shares....................................................... 15
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
FINANCIAL SQUARE TREASURY INSTRUMENTS FUND
FINANCIAL SQUARE FEDERAL FUND
FST SERVICE SHARES
-----------
PROSPECTUS
-----------
MANAGED BY
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
4900 Sears Tower
Chicago, Illinois 60606
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION -- FEBRUARY __, 1997
FST SHARES
- --------------------------------------------------------------------------------
Goldman Sachs Money Market Trust (the "Trust") is a no-load, open-end,
management investment company (or mutual fund) which includes the Financial
Square Funds. This Statement of Additional Information relates solely to the
offering of FST Shares of the Financial Square Treasury Instruments Fund
("Treasury Instruments Fund") and Financial Square Federal Fund ("Federal Fund")
(individually, a "Fund" and collectively the "Funds").
Goldman Sachs Asset Management ("GSAM" or the "Adviser"), a separate operating
division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds'
investment adviser. Goldman Sachs serves as distributor and transfer agent to
the Funds.
The Goldman Sachs Mutual Funds Group ("MFG") offers banks, corporate cash
managers, investment advisers and other institutional investors a family of
professionally-managed mutual funds, including money market, fixed income and
equity funds, and a range of related services. MFG is part of GSAM. All
products are designed to provide clients with the benefit of the expertise of
GSAM and its affiliates in security selection, asset allocation, portfolio
construction and day-to-day management.
The hallmark of MFG is personalized service, which reflects the priority that
Goldman Sachs places on serving clients' interests. As Goldman Sachs clients,
shareholders will be assigned an Account Administrator ("AA"), who is ready to
help with questions concerning their accounts. During business hours,
shareholders can call their AA through a toll-free number to place purchase or
redemption orders or to obtain Fund account information. The AA can also answer
inquiries about rates of return and portfolio composition/holdings, and guide
shareholders through operational details. A Goldman Sachs client can also
utilize the SMART/SM/ personal computer software system which allows
shareholders to purchase and redeem shares and also obtain Fund and account
information directly.
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus relating to FST Shares dated February __,
1997, as amended and supplemented from time to time. A copy of the Prospectus
may be obtained without charge by calling Goldman, Sachs & Co. at 800-621-2550
or by writing Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606.
<PAGE>
TABLE OF CONTENTS
Page in
Statement of
Additional
Information
--------------
Investment Policies and
Practices of the Funds
Investment Limitations
Trustees and Officers
The Adviser, Distributor and
Transfer Agent
Portfolio Transactions
Net Asset Value
Redemptions
Calculation of Yield Quotations
Tax Information
Organization and Capitalization
Custodian and Subcustodian
Independent Accountants
Appendix A (Description of
Securities Ratings). . . . . . . . A-1
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
4900 Sears Tower
Chicago, Illinois 60606
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION -- FEBRUARY __, 1997
FST ADMINISTRATION SHARES
- --------------------------------------------------------------------------------
Goldman Sachs Money Market Trust (the "Trust") is a no-load, open-end,
management investment company (or mutual fund) which includes the Financial
Square Funds. This Statement of Additional Information relates solely to the
offering of FST Administration Shares of the Financial Square Treasury
Instruments Fund ("Treasury Instruments Fund") and Financial Square Federal Fund
("Federal Fund") (individually, a "Fund" and collectively the "Funds").
Goldman Sachs Asset Management ("GSAM" or the "Adviser"), a separate operating
division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds'
investment adviser. Goldman Sachs serves as distributor and transfer agent to
the Funds.
The Goldman Sachs Mutual Funds Group ("MFG") offers banks, corporate cash
managers, investment advisers and other institutional investors a family of
professionally-managed mutual funds, including money market, fixed income and
equity funds, and a range of related services. MFG is part of GSAM. All
products are designed to provide clients with the benefit of the expertise of
GSAM and its affiliates in security selection, asset allocation, portfolio
construction and day-to-day management.
The hallmark of MFG is personalized service, which reflects the priority that
Goldman Sachs places on serving clients' interests. As Goldman Sachs clients,
Service Organizations, as defined below, will be assigned an Account
Administrator ("AA"), who is ready to help with questions concerning their
accounts. During business hours, Service Organizations can call their AA
through a toll-free number to place purchase or redemption orders or to obtain
Fund account information. The AA can also answer inquiries about rates of
return and portfolio composition/holdings, and guide Service Organizations
through operational details. A Goldman Sachs client can also utilize the
SMART/SM/ personal computer software system which allows Service Organizations
to purchase and redeem shares and also obtain Fund and account information
directly.
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus relating to FST Administration Shares dated
February __, 1997, as amended and supplemented from time to time. A copy of the
Prospectus may be obtained without charge from institutions ("Service
<PAGE>
Organizations") that hold, directly or through an agent, FST Administration
Shares for the benefit of their customers, or by calling Goldman, Sachs & Co. at
800-621-2550 or by writing Goldman, Sachs & Co., 4900 Sears Tower, Chicago,
Illinois 60606.
TABLE OF CONTENTS
Page in
Statement of
Additional
Information
--------------
Investment Policies and
Practices of the Funds
Investment Limitations
Trustees and Officers
The Adviser, Distributor and
Transfer Agent
Portfolio Transactions
Net Asset Value
Redemptions
Calculation of Yield Quotations
Tax Information
Organization and Capitalization
Custodian and Subcustodian
Independent Accountants
Administration Plan
Appendix A (Description of
Securities Ratings). . . . . . . . A-1
2
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
4900 Sears Tower
Chicago, Illinois 60606
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION -- FEBRUARY __, 1997
FST SERVICE SHARES
- --------------------------------------------------------------------------------
Goldman Sachs Money Market Trust (the "Trust") is a no-load, open-end,
management investment company (or mutual fund) which includes the Financial
Square Funds. This Statement of Additional Information relates solely to the
offering of FST Service Shares of the Financial Square Treasury Instruments Fund
("Treasury Instruments Fund") and Financial Square Federal Fund ("Federal Fund")
(individually, a "Fund" and collectively the "Funds").
Goldman Sachs Asset Management ("GSAM" or the "Adviser"), a separate operating
division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds'
investment adviser. Goldman Sachs serves as distributor and transfer agent to
the Funds.
The Goldman Sachs Mutual Funds Group ("MFG") offers banks, corporate cash
managers, investment advisers and other institutional investors a family of
professionally-managed mutual funds, including money market, fixed income and
equity funds, and a range of related services. MFG is part of GSAM. All
products are designed to provide clients with the benefit of the expertise of
GSAM and its affiliates in security selection, asset allocation, portfolio
construction and day-to-day management.
The hallmark of MFG is personalized service, which reflects the priority that
Goldman Sachs places on serving clients' interests. As Goldman Sachs clients,
Service Organizations, as defined below, will be assigned an Account
Administrator ("AA"), who is ready to help with questions concerning their
accounts. During business hours, Service Organizations can call their AA
through a toll-free number to place purchase or redemption orders or to obtain
Fund account information. The AA can also answer inquiries about rates of
return and portfolio composition/holdings, and guide Service Organizations
through operational details. A Goldman Sachs client can also utilize the
SMART/SM/ personal computer software system which allows Service Organizations
to purchase and redeem shares and also obtain Fund and account information
directly.
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus relating to FST Service Shares dated February
__, 1997, as amended and supplemented from time to time. A copy of the
Prospectus may be obtained without charge from institutions ("Service
<PAGE>
Organizations") that hold, directly or through an agent, FST Service Shares for
the benefit of their customers, or by calling Goldman, Sachs & Co. at 800-621-
2550 or by writing Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois
60606.
TABLE OF CONTENTS
Page in
Statement of
Additional
Information
--------------
Investment Policies and
Practices of the Funds
Investment Limitations
Trustees and Officers
The Adviser, Distributor and
Transfer Agent
Portfolio Transactions
Net Asset Value
Redemptions
Calculation of Yield Quotations
Tax Information
Organization and Capitalization
Custodian and Subcustodian
Independent Accountants
Service Plan
Appendix A (Description of
Securities Ratings). . . . . . . . A-1
2
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
FINANCIAL SQUARE FUNDS
4900 Sears Tower
Chicago, Illinois 60606
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION -- FEBRUARY __, 1997
FST PREFERRED SHARES
- --------------------------------------------------------------------------------
Goldman Sachs Money Market Trust (the "Trust") is a no-load, open-end,
management investment company (or mutual fund) which includes the Financial
Square Funds. This Statement of Additional Information relates solely to the
offering of FST Preferred Shares of the Financial Square Treasury Instruments
Fund ("Treasury Instruments Fund") and Financial Square Federal Fund ("Federal
Fund") (individually, a "Fund" and collectively the "Funds").
Goldman Sachs Asset Management ("GSAM" or the "Adviser"), a separate operating
division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds'
investment adviser. Goldman Sachs serves as distributor and transfer agent to
the Funds.
The Goldman Sachs Mutual Funds Group ("MFG") offers banks, corporate cash
managers, investment advisers and other institutional investors a family of
professionally-managed mutual funds, including money market, fixed income and
equity funds, and a range of related services. MFG is part of GSAM. All
products are designed to provide clients with the benefit of the expertise of
GSAM and its affiliates in security selection, asset allocation, portfolio
construction and day-to-day management.
The hallmark of MFG is personalized service, which reflects the priority that
Goldman Sachs places on serving clients' interests. As Goldman Sachs clients,
Service Organizations, as defined below, will be assigned an Account
Administrator ("AA"), who is ready to help with questions concerning their
accounts. During business hours, Service Organizations can call their AA
through a toll-free number to place purchase or redemption orders or to obtain
Fund account information. The AA can also answer inquiries about rates of
return and portfolio composition/holdings, and guide Service Organizations
through operational details. A Goldman Sachs client can also utilize the
SMART/SM/ personal computer software system which allows Service Organizations
to purchase and redeem shares and also obtain Fund and account information
directly.
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus relating to FST Preferred Shares dated
February __, 1997, as amended and supplemented from time to time. A copy of the
Prospectus may be obtained without charge from institutions ("Service
Organizations") that hold, directly or through an agent, FST Preferred Shares
for
<PAGE>
the benefit of their customers, or by calling Goldman, Sachs & Co. at 800-621-
2550 or by writing Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois
60606.
TABLE OF CONTENTS
Page in
Statement of
Additional
Information
--------------
Investment Policies and
Practices of the Funds
Investment Limitations
Trustees and Officers
The Adviser, Distributor and
Transfer Agent
Portfolio Transactions
Net Asset Value
Redemptions
Calculation of Yield Quotations
Tax Information
Organization and Capitalization
Custodian and Subcustodian
Independent Accountants
Preferred Administration Plan
Appendix A (Description of
Securities Ratings). . . . . . . . A-1
<PAGE>
INVESTMENT POLICIES AND PRACTICES
OF THE FUNDS
The following discussion elaborates on the description of each Fund's
investment policies and practices contained in the Prospectus:
U.S. GOVERNMENT SECURITIES
Each Fund may invest in separately traded principal and interest components
of securities issued or guaranteed by the U.S. Treasury. The principal and
interest components of selected securities are traded independently under the
Separate Trading of Registered Interest and Principal of Securities program
("STRIPS"). Under the STRIPS program, the principal and interest components are
individually numbered and separately issued by the U.S. Treasury at the request
of depository financial institutions, which then trade the component parts
independently.
REPURCHASE AGREEMENTS
The Federal Fund may only enter into repurchase agreements with primary
dealers in U.S. Government Securities. A repurchase agreement is an arrangement
under which the purchaser (i.e., the Fund) purchases a U.S. Government security
or other high quality short-term debt obligation (the "Obligation") and the
seller agrees, at the time of sale, to repurchase the Obligation at a specified
time and price.
Custody of the Obligation will be maintained by the Fund's custodian or
subcustodian. The repurchase price may be higher than the purchase price, the
difference being income to the Fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to the Fund together with the
repurchase price on repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the Obligation subject to the repurchase
agreement.
Repurchase agreements pose certain risks for all entities, including the
Fund, that utilizes them. Such risks are not unique to the Fund but are
inherent in repurchase agreements. The Fund seeks to minimize such risks by,
among others, the means indicated below, but because of the inherent legal
uncertainties involved in repurchase agreements, such risks cannot be
eliminated.
For purposes of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and for federal income tax purposes, a repurchase
agreement is deemed to be a loan from the Fund to the seller of the Obligation.
It is not clear whether for other purposes a court would consider the Obligation
purchased by the Fund subject to a repurchase agreement as being owned by the
Fund or as being collateral for a loan by the Fund to the seller.
If in the event of bankruptcy or insolvency proceedings
<PAGE>
against the seller of the Obligation, a court holds that the Fund does not have
a perfected security interest in the Obligation, the Fund may be required to
return the Obligation to the seller's estate and be treated as an unsecured
creditor of the seller. As an unsecured creditor, the Fund would be at risk of
losing some or all of the principal and income involved in the transaction. To
minimize this risk, the Fund utilizes custodians and subcustodians that the
Adviser believes follow customary securities industry practice with respect to
repurchase agreements, and the Adviser analyzes the creditworthiness of the
obligor, in this case the seller of the Obligation. But because of the legal
uncertainties, this risk, like others associated with repurchase agreements,
cannot be eliminated.
Also, in the event of commencement of bankruptcy or insolvency proceedings
with respect to the seller of the Obligation before repurchase of the Obligation
under a repurchase agreement, the Fundmay encounter delay and incur costs before
being able to sell the security. Such a delay may involve loss of interest or
a decline in price of the Obligation.
Apart from risks associated with bankruptcy or insolvency proceedings,
there is also the risk that the seller may fail to repurchase the security.
However, if the market value of the Obligation subject to the repurchase
agreement becomes less than the repurchase price (including accrued interest),
the Fund will direct the seller of the Obligation to deliver additional
securities so that the market value of all securities subject to the repurchase
agreement equals or exceeds the repurchase price.
Certain repurchase agreements which mature in more than seven days can be
liquidated before the nominal fixed term on seven days or less notice. Such
repurchase agreements will be regarded as liquid instruments.
In addition, the Fund, together with other registered investment companies
having advisory agreements with the Adviser or any of its affiliates, may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which will be invested in one or more repurchase
agreements.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES
Each Fund may purchase securities on a when-issued basis or purchase or
sell securities on a forward commitment basis. These transactions involve a
commitment by the Fund to purchase or sell securities at a future date. The
price of the underlying securities (usually expressed in terms of yield) and the
date when the securities will be delivered and paid for (the settlement date)
are fixed at the time the transaction is negotiated. When-issued purchases and
forward commitment transactions are negotiated directly with the other party,
and such commitments are not traded on exchanges, but may be traded over-the-
counter.
A Fund will purchase securities on a when-issued basis or purchase or sell
securities on a forward commitment basis only with the intention of completing
the transaction and actually purchasing
<PAGE>
or selling the securities. If deemed advisable as a matter of investment
strategy, however, a Fund may dispose of or renegotiate a commitment after
entering into it. A Fund also may sell securities it has committed to purchase
before those securities are delivered to the Fund on the settlement date. The
Fund may realize a capital gain or loss in connection with these transactions,
distributions from which would be taxable to its shareholders. For purposes of
determining a Fund's average dollar weighted maturity, the maturity of when-
issued or forward commitment securities will be calculated from the commitment
date.
When a Fund purchases securities on a when-issued or forward commitment
basis, the Fund's custodian or subcustodian will maintain in a segregated
account cash or liquid, high quality debt securities having a value (determined
daily) at least equal to the amount of the Fund's purchase commitments. In the
case of a forward commitment to sell portfolio securities subject to such
commitment, the custodian or subcustodian will hold the portfoliosecurities in a
segregated account while the commitment is outstanding. These procedures are
designed to ensure that the Fund will maintain sufficient assets at all times to
cover its obligations under when-issued purchases and forward commitments.
VARIABLE AMOUNT MASTER DEMAND NOTES
The Federal Fund may purchase variable amount master demand notes. These
obligations permit the investment of fluctuating amounts at varying rates of
interest pursuant to direct arrangements between the Fund, as lender, and the
borrower. Variable amount master demand notes are direct lending arrangements
between the lender and borrower and are not generally transferable, nor are they
ordinarily rated. The Fund may invest in them only if the Adviser believes that
the notes are of comparable quality to the other obligations in which the Fund
may invest.
VARIABLE RATE AND FLOATING RATE DEMAND INSTRUMENTS
The Federal Fund may purchase debt securities that possess a floating or
variable interest rate adjustment formula. These instruments permit the Fund to
demand payment of the principal balance plus unpaid accrued interest upon a
specified number of days' notice to the issuer or its agent. The demand feature
may be backed by a bank letter of credit or guarantee issued with respect to
such instrument.
The terms of the variable or floating rate demand instruments that the Fund
may purchase provide that interest rates are adjustable at intervals ranging
from daily up to six months, and the adjustments are based upon current market
levels, the prime rate of a bank or other appropriate interest rate adjustment
index as provided in the respective instruments. Some of these instruments are
payable on demand on a daily basis or on not more than seven days' notice.
Others, such as instruments with quarterly or semiannual interest rate
adjustments, may be put back to the issuer on designated days on not more than
thirty days' notice. Still others are automatically called by the issuer unless
the Fund instructs otherwise. The Trust, on behalf of the Fund,
<PAGE>
intends to exercise the demand only (1) upon a default under the terms of the
debt security, (2) as needed to provide liquidity to the Fund, (3) to maintain
the respective quality standards of the Fund's investment portfolio, or (4) to
attain a more optimal portfolio structure. The Fund will determine the variable
or floating rate demand instruments that it will purchase in accordance with
procedures approved by the Trustees to minimize credit risks. Accordingly, any
variable or floating rate demand instrument must satisfy the Fund's credit
criteria with respect to both its long-term and short-term ratings, except that
where credit support is provided, the Fund may rely solely on short-term ratings
of the variable or floating rate demand instrument, i.e., the right to sell. To
be eligible for purchase by the Fund, a variable or floating rate demand
instrument which is unrated must have high quality characteristics similar to
other obligations in which the Fund may invest. The Adviser may determine that
an unrated variable or floating rate demand instrument meets the Fund's quality
criteria by reason of being backed by a letter of credit or guarantee issued by
a bank that meets the quality criteria for the Fund. Thus, either the credit of
the issuer of the obligation or the guarantor bank or both will meet the quality
standards of the Fund.
The maturity of the variable or floating rate demand instruments held by
the Fund will ordinarily be deemed to be the longer of (1) the notice period
required before the Fund is entitled to receive payment of the principal amount
of the instrument or (2) the period remaining until the instrument's next
interest rate adjustment. The acquisition of variable or floating rate demand
notes for the Fund must also meet the requirements of rules issued by the SEC
applicable to the use of the amortized cost method of securities valuation. The
Funds will also consider the liquidity of the market for variable and floating
rate instruments, and in the event that such instruments are illiquid, the
Fund's investments in such instruments will be subject to the limitation on
illiquid investments.
RESTRICTED AND OTHER ILLIQUID SECURITIES
A Fund may purchase securities that are not registered ("restricted
securities") under the Securities Act of 1933 (the "1933 Act"), including
restricted securities offered and sold to "qualified institutional buyers" under
Rule 144A under the 1933 Act. However, a Fund will not invest more than 10% of
the value of its net assets in securities which are illiquid, which includes
fixed time deposits and repurchase agreements maturing in more than seven days
that cannot be traded on a secondary market and restricted securities, unless,
in the case of restricted securities, the Trust's Board of Trustees determines,
based upon a continuing review of the trading markets for the specific
restricted security, that such restricted securities are liquid. The Board of
Trustees may adopt guidelines and delegate to the Adviser the daily function of
determining and monitoring liquidity of restricted securities. The Board,
however, will retain sufficient oversight and be ultimately responsible for the
determinations.
<PAGE>
INVESTMENT LIMITATIONS
The following restrictions may not be changed with respect to any Fund
without the approval of the majority of outstanding voting securities of that
Fund (which, under the Investment Company Act and the rules thereunder and as
used in the Prospectus and this Statement of Additional Information, means the
lesser of (1) 67% of the shares of that Fund present at a meeting if the holders
of more than 50% of the outstanding shares of that Fund are present in person or
by proxy, or (2) more than 50% of the outstanding shares of that Fund).
Investment restrictions that involve a maximum percentage of securities or
assets shall not be considered to be violated unless an excess over the
percentage occurs immediately after, and is caused by, an acquisition or
encumbrance of securities or assets of, or borrowings by or on behalf of, a
Fund, with the exception of borrowings permitted by Investment Restriction (3).
Accordingly, the Trust may not on behalf of any Fund:
(1) make any investment inconsistent with the Fund's classification as a
diversified company under the Investment Company Act. This restriction
does not, however, apply to any Fund classified as a non-diversified
company under the Investment Company Act.
(2) purchase securities if such purchase would cause more than 25% in the
aggregate of the market value of the total assets of a Fund to be invested
in the securities of one or more issuers having their principal business
activities in the same industry, provided that there is no limitation with
respect to, and each Fund reserves freedom of action, when otherwise
consistent with its investment policies, to concentrate its investments in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, obligations (other than commercial paper) issued by U.S.
banks and U.S. branches of U.S. or foreign banks and repurchase agreements
and securities loans collateralized by such U.S. Government obligations or
such bank obligations. For the purposes of this restriction, state and
municipal governments and their agencies, authorities and instrumentalities
are not deemed to be industries; telephone companies are considered to be a
separate industry from water, gas or electric utilities; personal credit
finance companies and business credit finance companies are deemed to be
separate industries; and wholly owned finance companies are considered to
be in the industry of their parents if their activities are primarily
related to financing the activities of their parents.
(3) borrow money, except (a) the Fund may borrow from banks (as defined
in the Act) in amounts up to 331/3% of its total assets (including the
amount borrowed), (b) the Fund may, to the extent permitted by applicable
law, borrow up to an additional 5% of its total assets for temporary
purposes, (c) the Fund may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of portfolio
<PAGE>
securities, and (d) the Fund may purchase securities on margin to the
extent permitted by applicable law.
(4) mortgage, pledge or hypothecate any assets except to secure permitted
borrowings.
(5) make loans, except (a) through the purchase of debt obligations in
accordance with each Fund investment objective and policies, (b) through
repurchase agreements with banks, brokers, dealers and other financial
institutions, and (c) loans of securities as permitted by applicable law.
(6) act as underwriter of the securities issued by others, except to the
extent that the purchase of securities in accordance with a Fund investment
objective and policies directly from the issuer thereof and the later
disposition thereof may be deemed to be underwriting.
(7) purchase, hold or deal in real estate (including real estate limited
partnerships) or oil, gas or mineral leases, or commodities or commodity
contracts, although a Fund may purchase and sell securities that are
secured by real estate or interests therein and may purchase mortgage-
related securities and may hold and sell real estate acquired by a Fund as
a result of the ownership of securities.
(8) issue senior securities to the extent such issuance would violate
applicable law.
In addition to the fundamental policies mentioned above, the Funds have
also adopted certain non-fundamental investment restrictions, which may be
changed by the Funds' Investment Adviser without approval by the shareholders,
subject to the supervision of the Board of Trustees. Under the non-fundamental
investment restrictions, a Fund may not:
(a) make short sales of securities or maintain a short position, except to
the extent permitted by applicable law. The Fund currently do not intend
to engage in short sales, except short sales "against the box."
(b) purchase additional securities if the Fund's borrowings exceed 5% of
its total assets.
Pursuant to SEC Rule 2a-7, the Federal and Treasury Instruments Funds may
not invest more than 5% of their total assets in the securities of any one
issuer (except U.S. Government securities or repurchase agreements
collateralized by such securities). A Fund may, however, invest more than 5% of
its total assets in the First Tier Securities of a single issuer for a period of
up to three business days after the purchase thereof, although such Fund may not
make more than one such investment at any time. Each Fund may only purchase
"First Tier Securities" as defined below. Securities which are rated in the
highest short-term rating category by at least two Nationally Recognized
Statistical Rating Organizations ("NRSROs"), or, if only one NRSRO has assigned
a
<PAGE>
rating by that NRSRO, are "First Tier Securities". Securities rated in the top
two short-term rating categories by at least two major rating agencies, or if
only one NRSRO has assigned a rating, by that NRSRO, but which are not First
Tier Securities are "Second Tier Securities." Immediately after the acquisition
of any put by the Treasury Instruments or Federal Fund, not more than 5% of such
Fund's total assets may be invested in securities issued by or subject to puts
from the same issuer. However, this limitation will not apply to the issuer of
unconditional puts if the Fund does not have more than 10% of its total assets
invested in securities issued by or subject to unconditional puts from such
issuer. NRSROs include Standard & Poor's Ratings Group ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), Fitch Investors Services, Inc., Duff and
Phelps, Inc., IBCA Limited and its affiliate IBCA Inc., and Thomson BankWatch,
Inc. For a description of their rating categories, see Appendix A.
"Value" for the purposes of all investment restrictions shall mean the
value used in determining a Fund's net asset value. "U.S. Government
securities" shall mean securities issued or guaranteed by the U.S. Government or
any of its agencies, authorities or instrumentalities.
TRUSTEES AND OFFICERS
Information pertaining to the Trustees and officers of the Trust is set
forth below. Trustees and officers deemed to be "interested persons" of the
Trust for purposes of the Investment Company Act are indicated by an asterisk.
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE POSITIONS PRINCIPAL OCCUPATION(S)
AND ADDRESS WITH TRUST DURING PAST 5 YEARS
- ----------- ------------ ---------------------------
<S> <C> <C>
Ashok N. Bakhru, 54 Chariman Executive Vice President-
1325 Avenue of the and Trustee Finance & Administration &
Americas Chief Financial Officer,
New York, NY 10019 Coty, Inc. (since April
1996); President, ABN
Associates(since June
1994) Retired. Senior Vice
President of Scott Paper
Company; Director of
Arkwright-Mutual Insurance
Company; Trustee of
International House of
Philadelphia; Member of
Cornell University
Council; Trustee of the
Walnut Street Theater.
*David B. Ford, 51 Trustee General Partner, Goldman
One New York Plaza Sachs, since 1986;
New York, NY 10004 Chairman and Chief
Executive Officer, Goldman
Sachs Asset Management
(since December 1994).
*Alan A. Shuch, 47 Trustee Director and Vice
One New York Plaza President of Goldman Sachs
New York, NY 10004 Funds Management, Inc.
(from April 1990 to
November 1994); President
and Chief Operating
Officer, GSAM (from
September 1988 to November
1994); Limited Partner,
Goldman Sachs (since
December 1994).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE POSITIONS PRINCIPAL OCCUPATION(S)
AND ADDRESS WITH TRUST DURING PAST 5 YEARS
- ----------- ---------- ---------------------------
<S> <C> <C>
Jackson W. Smart, 66 Trustee Chairman and Chief
One Northfield Plaza Executive Officer, MSP
#218 Communications, Inc. (a
Chicago, IL 60093 company engaged in radio
broadcasting since
November 1988). Director,
Federal Express
Corporation and North
American Private Equity
Group (a venture capital
fund).
William H. Springer,67 Trustee Vice Chairman of Ameritech
701 Morningside Drive (a telecommunications
Lake Forest, IL 60045 holding company; February
1987 to retirement in
August 1992); Vice
Chairman, Chief Financial
and Administrative
Officer, prior thereto;
Director, American
Information Technologies
Corporation; Director,
Walgreen Co. (a retail
drug store business); and
Baker, Fentress & Co. (a
closed-end, non-
diversified management
investment company) (April
1992 to present).
Richard P. Strubel,57 Trustee Managing Director, Tandem
70 West Madison St. Partners, Inc. (since
Suite 1400 1990); President and Chief
Chicago, IL 60602 Executive Officer,
Microdot, Inc. (a
diversified manufacturer
of fastening systems and
connectors) (January 1984
to October 1994).
*Douglas Grip, 35 President Vice President, Goldman
One New York Plaza Sachs (since May 1996);
New York, NY 10004 formerly, President, MFS
Retirement Services Inc.,
of Massachusetts Financial
Services (prior thereto).
</TABLE>
<PAGE>
NAME, AGE POSITIONS PRINCIPAL OCCUPATION(S)
AND ADDRESS WITH TRUST DURING PAST 5 YEARS
- ----------- ---------- ---------------------------
*Scott Gilman, 37 Treasurer Director, Mutual Funds
One New York Plaza Administration, Goldman
New York, NY 10004 Sachs Asset Management
(since April 1994);
Assistant Treasurer,
Goldman Sachs Fund
Management, Inc. (since
March 1993); and Vice
President, Goldman Sachs
(since March 1990).
*John M. Perlowski, 32 Assistant Vice President, Goldman
One New York Plaza Treasurer Sachs (since July 1995);
New York, NY 10004 Director, Investors Bank
and Trust (November 1993
to July 1995); Audit
Manager of Arthur Andersen
LLP (prior thereto).
*Pauline Taylor, 50 Vice Vice President of Goldman
4900 Sears Tower President Sachs (since June 1992);
Chicago, IL 60606 Consultant (1989 to June
1992).
*John W. Mosior, 58 Vice Vice President, Goldman
4900 Sears Tower President Sachs and Manager of
Chicago, IL 60606 Shareholder Services for
GSAM Funds Group.
*Nancy L. Mucker, 47 Vice Vice President, Goldman
4900 Sears Tower President Sachs and Manager of
Chicago, IL 60606 Shareholder Services for
GSAM Funds Group.
*Michael J. Richman,36 Secretary Vice President and
85 Broad Street Assistant General Counsel
New York, NY 10004 of Goldman Sachs (since
June 1992); Associate
General Counsel, Goldman
Sachs Asset Management,
Counsel to the Funds
Group, GSAM (since June
1992); Partner, Hale and
Dorr (September 1991 to
June 1992).
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE POSITIONS PRINCIPAL OCCUPATION(S)
AND ADDRESS WITH TRUST DURING PAST 5 YEARS
- ----------- ---------- ---------------------------
<S> <C> <C>
*Howard B. Surloff, 31 Assistant Vice President and
85 Broad Street Secretary Assistant General Counsel,
New York, NY 10004 Goldman Sachs(since
November 1993 and May
1994, respectively);
Counsel to the Funds
Group, Goldman Sachs Asset
Management (since November
1993); Associate of
Shereff Friedman, Hoffman
& Goodman (prior thereto).
*Steven E. Assistant Legal Products Analyst,
Hartstein, 33 Secretary Goldman Sachs (June 1993
85 Broad Street to present); Funds
New York, NY 10004 Compliance Officer,
Citibank Global Asset
Management (August 1991 to
June 1993); Legal
Assistant, Brown & Wood
(prior thereto).
*Deborah Robinson,25 Assistant Administrative Assistant,
85 Broad Street Secretary Goldman Sachs since
New York, NY 10004 January 1994. Formerly at
Cleary, Gottlieb, Steen
and Hamilton.
*Kaysie P. Uniacke, 36 Assistant Vice President and
One New York Plaza Secretary Portfolio Manager, Goldman
New York, NY 10004 Sachs Asset Management
(since 1988).
*Elizabeth D. Assistant Junior Portfolio Manager,
Alexander, 27 Secretary Goldman Sachs Asset
One New York Plaza Management (since 1993);
New York, NY 10004 Formerly Compliance
Analyst, Prudential
Insurance (1991-1993).
</TABLE>
<PAGE>
Each interested Trustee and officer holds comparable positions with certain
other investment companies of which Goldman Sachs, GSAM or an affiliate thereof
is the investment adviser, administrator and/or distributor. As of November 15,
1996, the Trustees and officers of the Trust as a group owned less than 1% of
the outstanding shares of beneficial interest of each of the Funds.
The Trust pays each of its Trustees, other than those who are "interested
persons" of Goldman Sachs a fee for each Trustee meeting attended and an annual
fee. Such Trustees are also reimbursed for travel expenses incurred in
connection with attending such meetings.
The following table sets forth certain information with respect to the
compensation of each Trustee of the Trust for the one-year ended December 31,
1995:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits from Goldman
Aggregate Accrued as Sachs Mutual
Compensation Part of Funds
from the Trust's (including
Name of Trustee Trust Expenses the Trust)*
- --------------- ------- -------- ----------
<S> <C> <C> <C>
Paul C. Nagel, Jr.** $73,478 $0 $101,000
Ashok N. Bakhru $44,378 $0 $ 61,000
Marcia L. Beck $ 0 $0 $ 0
David B. Ford $ 0 $0 $ 0
Alan A. Shuch $ 0 $0 $ 0
Jackson W. Smart $44,378 $0 $ 61,000
William H. Springer $44,378 $0 $ 61,000
Richard P. Strubel $44,378 $0 $ 61,000
</TABLE>
______________
* The Goldman Sachs Mutual Funds consisted of 29 mutual funds, including
the fourteen series of the Trust, on December 31, 1995.
** Retired as of June 30, 1996.
<PAGE>
THE ADVISER, DISTRIBUTOR AND
TRANSFER AGENT
THE ADVISER
GSAM, a separate operating division of Goldman Sachs, acts as the
investment adviser to the Funds. Under the Advisory Agreement between Goldman
Sachs and the Trust on behalf of the Funds, GSAM, subject to the supervision of
the Board of Trustees of the Trust and in conformity with the stated policies of
each Fund, acts as investment adviser and directs the investments of the Funds.
In addition, GSAM administers the Funds' business affairs and, in connection
therewith, furnishes the Trust with office facilities and (to the extent not
provided by the Trust's custodian, transfer agent, or other organizations)
clerical recordkeeping and bookkeeping services and maintains the financial and
account records required to be maintained by the Trust. As compensation for
these services and for assuming expenses related thereto, the Trust pays GSAM a
fee, computed daily and paid monthly at an annual rate of .205% of each Fund's
average daily net assets. GSAM has agreed to reduce or otherwise limit the
daily expenses (excluding fees paid to Service Organizations, advisory fees,
taxes, interest, brokerage and litigation, indemnification and other
extraordinary expenses) of each Fund, on an annualized basis, to .01% of the
average daily net assets of that Fund. The amount of such reductions or limits,
if any, will be calculated monthly and will be based on the cumulative
difference between a Fund's estimated annualized expense ratio and the expense
limit for that Fund. This amount shall be reduced by any prior payments related
to the current fiscal year. GSAM has also voluntarily agreed not to impose all
or a portion of its advisory fee and/or to reduce or otherwise limit the Federal
and Treasury Instruments Funds' annual total operating expenses to (excluding
fees of Service Organizations) .18% and .18%, respectively of average daily net
assets.
The Trust, on behalf of each Fund, is responsible for all expenses other
than those expressly borne by GSAM under the Funds' Advisory Agreement. The
expenses borne by Shares of each Fund include, without limitation, the fees
payable to GSAM, the fees and expenses of the Trust's custodian, fees and
expenses of the Trust's transfer agent, filing fees for the registration or
qualification of Shares under federal or state securities laws, expenses of the
organization of the Trust, taxes (including income and excise taxes, if any),
interest, costs of liability insurance, fidelity bonds, indemnification or
contribution, any costs, expenses or losses arising out of any liability of, or
claim for damages or other relief asserted against, the Trust for violation of
any law, legal and auditing and tax fees and expenses (including the cost of
legal and certain accounting services rendered by employees of Goldman Sachs
with respect to the Trust), expenses of preparing and setting in type
prospectuses, statements of additional information, proxy material, reports and
notices, the printing and distribution of the same to Shareholders and
regulatory authorities, compensation and expenses of its "non-interested"
Trustees, and extraordinary expenses incurred by the Trust.
<PAGE>
The Advisory Agreement for each Fund was approved by the Board of Trustees,
including the "non-interested" Trustees, on January 28, 1997. Each Advisory
Agreement will remain in effect until June 30, 1998, and will continue in effect
thereafter only if such continuance is specifically approved at least annually
by the Trustees or by a vote of a majority of the outstanding voting securities
of the particular Fund, as defined in the Investment Company Act, and, in either
case, by a majority of "non-interested" Trustees.
Goldman Sachs has authorized any of its directors, partners, officers and
employees who have been elected or appointed as a Trustee or officer of the
Trust to serve in the capacities in which he or she has been elected and
appointed.
Each Fund may use any name derived from the name "Goldman Sachs" only so
long as its Advisory Agreement remains in effect. Each Advisory Agreement also
provides that it shall terminate automatically if assigned and that it may be
terminated with respect to any particular Fund without penalty by vote of a
majority of the Trustees or a majority of the outstanding voting securities of
that Fund on 60 days' written notice to GSAM or by GSAM without penalty at any
time on 60 days' written notice to the Trust.
THE DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs acts as principal underwriter and distributor of each Fund's
shares. The Distribution Agreement between Goldman Sachs and the Trust was most
recently approved by the Trustees on April 26, 1996. Goldman Sachs also serves
as the Funds' transfer agent. Goldman Sachs provides customary transfer agency
services to the Funds, including the handling of shareholder communications, the
processing of shareholder transactions, the maintenance of shareholder account
records, payment of dividends and distributions and related functions. Goldman
Sachs is not entitled to receive a transfer agency fee from each Fund.
Goldman Sachs is one of the largest international investment banking firms
in the United States. Founded in 1869, Goldman Sachs is a major investment
banking and brokerage firm providing a broad range of financing and investment
services both in the United States and abroad. As of November 30, 1995, Goldman
Sachs and its consolidated subsidiaries had assets of approximately $70.7
billion and partners' capital of $1.9 billion. Goldman Sachs became registered
as an investment adviser in 1981. As of October 30, 1996, Goldman Sachs,
together with its affiliates, acted as investment adviser, administrator or
distributor for approximately $89 billion in total assets.
PORTFOLIO TRANSACTIONS
GSAM places the portfolio transactions of the Funds and of all other
accounts managed by GSAM for execution with many firms. GSAM uses its best
efforts to obtain execution of portfolio transactions at prices which are
advantageous to each Fund and at reasonably competitive spreads or (when a
disclosed commission is being
<PAGE>
charged) at reasonably competitive commission rates. In seeking such execution,
GSAM will use its best judgment in evaluating the terms of a transaction, and
will give consideration to various relevant factors, including without
limitation the size and type of the transaction, the nature and character of the
market for the security, the confidentiality, speed and certainty of effective
execution required for the transaction, the general execution and operational
capabilities of the broker-dealer, the general execution and operational
capabilities of the firm, the reputation, reliability, experience and financial
condition of the firm, the value and quality of the services rendered by the
firm in this and other transactions, and the reasonableness of the spread or
commission, if any. Securities purchased and sold by the Funds are generally
traded in the over-the-counter market on a net basis (i.e., without commission)
through broker-dealers and banks acting for their own account rather than as
brokers, or otherwise involve transactions directly with the issuer of such
securities.
Goldman Sachs is active as an investor, dealer and/or underwriter in many
types of municipal and money market instruments. Its activities in this regard
could have some effect on the markets for those instruments which the Funds buy,
hold or sell. An order has been granted by the SEC under the Investment Company
Act which permits the Funds to deal with Goldman Sachs in transactions in
certain taxable securities in which Goldman Sachs acts as principal. As a
result, the Funds may trade with Goldman Sachs as principal subject to the terms
and conditions of such exemption.
Under the Investment Company Act, the Funds are prohibited from purchasing
any instrument of which Goldman Sachs is a principal underwriter during the
existence of an underwriting or selling syndicate relating to such instrument,
absent an exemptive order (the order referred to in the preceding paragraph will
not apply to such purchases) or the adoption of and compliance with certain
procedures under such Act. The Trust has adopted procedures which establish,
among other things, certain limitations on the amount of debt securities that
may be purchased in any single offering and on the amount of the Trust's assets
that may be invested in any single offering. Accordingly, in view of Goldman
Sachs' active role in the underwriting of debt securities, a Fund's ability to
purchase debt securities in the primary market may from time to time be limited.
In certain instances there may be securities which are suitable for more
than one Fund as well as for one or more of the other clients of GSAM.
Investment decisions for each Fund and for GSAM's other clients are made with a
view to achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though it might
be held by, or bought or sold for, other clients. Likewise, a particular
security may be bought for one or more clients when one or more other clients
are selling that same security. Some simultaneous transactions are inevitable
when several clients receive investment advice from the same investment adviser,
particularly when the same security is suitable for the investment objectives of
more than one client. When two or more clients are
<PAGE>
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could have a detrimental
effect on the price or volume of the security in a particular transaction as far
as a Fund is concerned. Each Fund believes that over time its ability to
participate in volume transactions will produce better executions for the Funds.
NET ASSET VALUE
The net asset value per share of each Fund is determined by the Funds'
custodian as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. New York time) on each Business Day. A Business Day means
any day on which the New York Stock Exchange is open, except for days on which
Chicago, Boston or New York banks are closed for local holidays. Such holidays
include: New Year's Day, Martin Luther King Day, President's Day, Good Friday,
Memorial Day, the Fourth of July, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving Day and Christmas Day.
Each Fund's securities are valued using the amortized cost method of
valuation in an effort to maintain a constant net asset value of $1.00 per
share, which the Board of Trustees has determined to be in the best interest of
the Funds and their shareholders. This method involves valuing a security at
cost on the date of acquisition and thereafter assuming a constant accretion of
a discount or amortization of a premium to maturity, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price a Fund
would receive if it sold the instrument. During such periods, the yield to an
investor in a Fund may differ somewhat from that obtained in a similar
investment company which uses available market quotations to value all of its
portfolio securities. During periods of declining interest rates, the quoted
yield on shares of a Fund may tend to be higher than a like computation made by
a fund with identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by a Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield if he or she purchased
shares of the Fund on that day, than would result from investment in a fund
utilizing solely market values, and existing investors in the Fund would receive
less investment income. The converse would apply in a period of rising interest
rates.
The Trustees have established procedures designed to stabilize, to the
extent reasonably possible, each Fund's price per share as computed for the
purpose of sales and redemptions at $1.00. Such procedures include review of
each Fund by the Trustees, at such intervals as they deem appropriate, to
determine whether the Fund's net asset value calculated by using available
market quotations (or an appropriate substitute which reflects market
conditions) deviates from $1.00 per share based on amortized
<PAGE>
cost, as well as review of methods used to calculate the deviation. If such
deviation exceeds 1/2 of 1%, the Trustees will promptly consider what action, if
any, will be initiated. In the event the Trustees determine that a deviation
exists which may result in material dilution or other unfair results to
investors or existing shareholders, they will take such corrective action as
they regard to be necessary and appropriate, including the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding part or all of dividends or payment of
distributions from capital or capital gains; redemptions of shares in kind; or
establishing a net asset value per share by using available market quotations or
equivalents. In addition, in order to stabilize the net asset value per share
at $1.00 the Trustees have the authority (1) to reduce or increase the number of
shares outstanding on a pro rata basis, and (2) to offset each shareholder's pro
rata portion of the deviation between the net asset value per share and $1.00
from the shareholder's accrued dividend account or from future dividends. Each
Fund may hold cash for the purpose of stabilizing its net asset value per share.
Holdings of cash, on which no return is earned, would tend to lower the yield on
such Fund's shares.
In order to continue to use the amortized cost method of valuation each
Fund's investments, including repurchase agreements, must be U.S. dollar-
denominated instruments which the Trustees determine present minimal credit
risks and which are at the time of acquisition rated by the requisite number of
nationally recognized statistical rating organizations in one of the two highest
short-term rating categories or, in the case of any instrument that is not so
rated, of comparable quality as determined by GSAM and confirmed by the
Trustees. Also, each Fund must maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to its objective of maintaining a
stable net asset value of $1.00 per share and, not purchase any instrument with
a remaining maturity of more than thirteen months. However, a Fund may also,
consistent with the provisions of the above-mentioned rule, invest in securities
with a maturity of more than thirteen months, if (i) the security is a variable
or floating security with certain demand and interest rate reset features and
(ii) the security is a First Tier security.
The proceeds received by each Fund for each issue or sale of its shares,
and all net investment income, realized and unrealized gain and proceeds
thereof, subject only to the rights of creditors, will be specifically allocated
to such Fund and constitute the underlying assets of that Fund. The underlying
assets of each Fund will be segregated on the books of account, and will be
charged with the liabilities in respect to such Fund and with a share of the
general liabilities of the Trust. Expenses with respect to the Funds are to be
allocated in proportion to the net asset values of the respective Funds except
where allocations of direct expenses can otherwise be fairly made. In addition,
within each Fund, FST Shares, FST Administration Shares, FST Service Shares and
FST Preferred Shares will be subject to different expense structures (see
"Organization and Capitalization").
REDEMPTIONS
<PAGE>
The Trust may suspend the right of redemption of shares of a Fund and may
postpone payment for any period: (i) during which the New York Stock Exchange is
closed for regular trading other than customary weekend and holiday closings or
during which trading on the New York Stock Exchange is restricted, (ii) when the
SEC determines that a state of emergency exists which may make payment or
transfer not reasonably practicable, (iii) as the SEC may by order permit for
the protection of the shareholders of the Trust or (iv) at any other time when
the Trust may, under applicable laws and regulations, suspend payment on the
redemption of the Fund's shares.
The Trust agrees to redeem shares of each Fund solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Fund during any 90-day
period for any one shareholder. The Trust reserves the right to pay other
redemptions, either total or partial, by a distribution in kind of securities
(instead of cash) from the applicable Fund's portfolio. The securities
distributed in such a distribution would be valued at the same value as that
assigned to them in calculating the net asset value of the shares being
redeemed. If a shareholder receives a distribution in kind, he or she should
expect to incur transaction costs when he or she converts the securities to
cash.
CALCULATION OF YIELD QUOTATIONS
Each Fund's yield quotations are calculated by a standard method prescribed
by the rules of the SEC. Under this method, the yield quotation is based on a
hypothetical account having a balance of exactly one share at the beginning of a
seven-day period.
Yield, effective yield and tax-equivalent yield are calculated separately
for each class of shares of a Fund. Each type of share is subject to different
fees and expenses and may have differing yields for the same period.
The yield quotation is computed as follows: the net change, exclusive of
capital changes (i.e., realized gains and losses from the sale of securities and
unrealized appreciation and depreciation), in the value of a hypothetical pre-
existing account having a balance of one share at the beginning of the base
period is determined by dividing the net change in account value by the value of
the account at the beginning of the base period. This base period return is
then multiplied by 365/7 (366/7 in the event of a leap year) with the resulting
yield figure carried to the nearest 100th of 1%. Such yield quotation shall
take into account all fees that are charged to a Fund.
Each Fund also may advertise a quotation of effective yield for a 7-
calendar day period. Effective yield is computed by compounding the
unannualized base period return determined as in the preceding paragraph by
adding 1 to that return, raising the sum to the 365/7 (366/7 in the event of a
leap year) power and subtracting one from the result, according to the following
formula:
<PAGE>
Effective Yield = [(base period return + 1)/(365/7)/] - 1
The Funds may also advertise a tax-equivalent yield which is computed
by dividing that portion of a Fund's yield (as computed above) which is tax-
exempt by one minus a stated income tax rate and adding the quotient to that
portion, if any, of the yield of the Fund that is not tax-exempt.
Unlike bank deposits or other investments which pay a fixed yield or
return for a stated period of time, the return for a Fund will fluctuate from
time to time and does not provide a basis for determining future returns.
Return is a function of portfolio quality, composition, maturity and market
conditions as well as of the expenses allocated to each Fund. The return of a
Fund may not be comparable to other investment alternatives because of
differences in the foregoing variables and differences in the methods used to
value portfolio securities, compute expenses and calculate return.
In addition, from time to time, advertisements or information may
include a discussion of asset allocation models developed by GSAM and/or its
affiliates, certain attributes or benefits to be derived from asset allocation
strategies and the Goldman Sachs mutual funds that may be offered as investment
options for the strategic asset allocations. Such advertisements and
information may also include GSAM's current economic outlook and domestic and
international market views to suggest periodic tactical modifications to current
asset allocation strategies. Such advertisements and information may include
other material which highlight or summarize the services provided in support of
an asset allocation program.
From time to time any Fund may publish an indication of its past
performance as measured by independent sources such as Lipper Analytical
Services, Incorporated, Weisenberger Investment Companies Service, Donoghue's
Money Fund Report, Barron's, Business Week, Changing Times, Financial World,
Forbes, Money, Personal Investor, Sylvia Porter's Personal Finance, and The Wall
Street Journal.
TAX INFORMATION
Each Fund intends to qualify and elects to be treated as a separate
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code"). Such qualification does not involve supervision
of management or investment practices or policies by any governmental agency or
bureau.
In order to qualify as a regulated investment company, each Fund must,
among other things, (a) derive at least 90% of its annual gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock or securities or certain other
investments (the "90% Test"); (b) derive less than 30% of its annual gross
income from the sale or other disposition of stock or securities or certain
other investments held less than three months; and
<PAGE>
(c) diversify its holdings so that, at the end of each quarter of its taxable
year, (i) at least 50% of the market value of the Fund's total gross assets is
represented by cash and cash items (including receivables), U.S. Government
securities, securities of other regulated investment companies and other
securities limited, in respect of any one issuer, to an amount not greater in
value than 5% of the value of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of the
Fund's total assets is invested in the securities (other than U.S. Government
securities and securities of other regulated investment companies) of any one
issuer or two or more issuers controlled by the Fund and engaged in the same,
similar or related trades or businesses. For purposes of these requirements,
participation interests will be treated as securities, and the issuer will be
identified on the basis of market risk and credit risk associated with any
particular interest. Certain payments received with respect to such interests,
such as commitment fees and certain facility fees, may not be treated as income
qualifying under the 90% test.
Each Fund, as a regulated investment company, will not be subject to
federal income tax on any of its net investment income and net realized capital
gains that are distributed to shareholders with respect to any taxable year in
accordance with the Code's timing requirements, provided that the
Funddistributes at least 90% of its investment company taxable income (generally
all of its net taxable income other than "net capital gain," which is the excess
of net long-term capital gain over net short-term capital loss) for such year
and, in the case of any Fund that earns tax-exempt interest, at least 90% of the
excess of the tax-exempt interest it earns over certain disallowed deductions.
A Fund will be subject to federal income tax at regular corporate rates on any
investment company taxable income or net capital gain that it does not
distribute for a taxable year. In order to avoid a non-deductible 4% federal
excise tax, each Fund must distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its taxable ordinary income
for such year, at least 98% of the excess of its capital gains over its capital
losses (generally computed on the basis of the one-year period ending on October
31 of such year), and all taxable ordinary income and the excess of capital
gains over capital losses for the previous year that were not distributed in
such year and on which the Fund paid no federal income tax.
Dividends paid by a Fund from taxable net investment income (including
income attributable to accrued market discount and a portion of the discount on
certain stripped tax-exempt obligations and their coupons) and the excess of net
short-term capital gain over net long-term capital loss will be treated as
ordinary income in the hands of shareholders. Such distributions will not
qualify for the corporate dividends-received deduction. Dividends paid a Fund
from the excess of net long-term capital gain over net short-term capital loss
are taxable to shareholders as long-term capital gain, regardless of the length
of time the shares of a Fund have been held by such shareholders, and also will
not qualify for the corporate dividends-received deduction.
<PAGE>
A Fund's net realized capital gains for a taxable year are computed by taking
into account realized capital losses, including any capital loss carryforward of
that Fund.
Distributions of net investment income and net realized capital gains
will be taxable as described above, whether received in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis in each share so received equal to the amount of cash
they would have received had they elected to receive cash.
Each Fund will be required to report to the Internal Revenue Service
all taxable distributions, except in the case of certain exempt shareholders.
Under the backup withholding provisions of Code Section 3406, all such
distributions may be subject to withholding of federal income tax at the rate of
31% in the case of nonexempt shareholders who fail to furnish the Fund with
their taxpayer identification number and with certain certifications required by
the Internal Revenue Service or if the Internal Revenue Service or a broker
notifies a Fund that the number furnished by the shareholder is incorrect or
that the shareholder is subject to backup withholding as a result of failure to
report interest or dividend income. The Funds may refuse to accept an
application that does not contain any required taxpayer identification number or
certification that the number provided is correct or that the investor is an
exempt recipient. If the withholding provisions are applicable, any such
distributions, whether taken in cash or reinvested in shares, will be reduced by
the amounts required to be withheld. Investors may wish to consult their tax
advisers about the applicability of the backup withholding provisions.
All distributions (including exempt-interest dividends) whether
received in shares or cash, must be reported by each shareholder on the
shareholder's federal income tax return. The Funds will inform shareholders of
the federal income tax status of their distributions after the end of each
calendar year. Shareholders who receive exempt-interest dividends and have not
held their shares of the applicable Fund for its entire taxable year may have
designated as tax-exempt or as a tax preference item a percentage of their
distributions which is not exactly equal to a proportionate share of the amount
of tax-exempt interest or tax preference income earned during the period of
their investment in such Fund. Each shareholder should consult his or her own
tax advisor to determine the tax consequences of an investment in a Fund in the
shareholder's own state and locality.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
The foregoing discussion relates solely to U.S. federal income tax law
as it applies to U.S. persons (i.e., U.S.
<PAGE>
citizens and residents and U.S. domestic corporations, partnerships, trusts and
estates) subject to tax under such law. The discussion does not address special
tax rules applicable to certain classes of investors, such as tax-exempt
entities, insurance companies and financial institutions. Each shareholder who
is not a U.S. person should consult his or her tax adviser regarding the U.S.
and non-U.S. tax consequences of ownership of shares of a Fund, including the
possibility that such a shareholder may be subject to a U.S. withholding tax at
a rate of 30% (or at a lower rate under an applicable U.S. income tax treaty) on
certain distributions from a Fund and, if a current IRS Form W-8 or acceptable
substitute is not on file with the Fund, may be subject to backup withholding on
certain payments.
STATE AND LOCAL
The Funds may be subject to state or local taxes in jurisdictions in
which the Funds may be deemed to be doing business. In addition, in those
states or localities which have income tax laws, the treatment of the Trust and
its shareholders under such laws may differ from their treatment under Federal
income tax laws, and investment in the Funds may have tax consequences for
shareholders, different from those of a direct investment in the Funds
securities. Shareholders should consult their own tax advisers concerning these
matters. For example, in such states or localities it may be appropriate for
shareholders to review with their tax advisers the state income and, if
applicable, intangibles tax consequences of investments by the Funds in
securities issued by the particular state or the U.S. Government or its various
agencies or instrumentalities, because many states exempt from personal income
tax distributions by regulated investment companies from interest on obligations
of the particular state or on direct U.S. Government obligations and/or exempt
from intangibles tax the value of the shares of such companies attributable to
such obligations, subject to certain state-specific requirements and/or
limitations.
This discussion of the tax treatment of the Funds and their
shareholders is based on the tax laws in effect as of the date of this Statement
of Additional Information.
ORGANIZATION AND CAPITALIZATION
The Trust is a Massachusetts business trust established under the laws
of The Commonwealth of Massachusetts by a Declaration of Trust dated December 6,
1978. It is anticipated that each series of the Trust, including the Federal and
Treasury Instruments Funds, will be reorganized on April 30, 1997, or as soon
thereafter as practicable, into newly established series of a Delaware Business
Trust (the "Delaware Trust"). The Trustees of the Trust will also serve as
Trustees of the Delaware Trust and the investment objectives, restrictions and
policies and fees of the series of the Delaware Trust will be identical to those
of the corresponding Fund. The initial shareholder of the Federal and Treasury
Instruments Funds has approved the reorganization of such Funds into series of
the Delaware Trust. In the event that the shareholders of the other series of
the Trust do not approve
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reorganizations into the Delaware Trust, the Federal and Treasury Instruments
Funds may not be reorganized into the Delaware Trust.
Each shareholder is deemed to have expressly assented and agreed to
the terms of the Declaration of Trust and is deemed to be party thereto. The
authorized capital of both the Trust and the Delaware Trust consists of an
unlimited number of shares of beneficial interest. The Trustees have authority
under the Declarations of Trust to create and classify shares of beneficial
interest in separate series or funds without further action by shareholders.
The Declarations of Trust further authorize the Trustees to classify or
reclassify any series or fund of shares into one or more classes. The Trustees
have authorized the issuance of four classes of shares of each of the funds: FST
Shares, FST Administration Shares, FST Service Shares and FST Preferred Shares.
Each FST Share, FST Administration Share, FST Service Share and FST
Preferred Share of a Fund represents an equal proportionate interest in the
assets belonging to that Fund. It is contemplated that most shares will be held
in accounts of which the record owner is a bank or other institution acting,
directly or through an agent, as nominee for its customers who are the
beneficial owners of the shares or another organization designated by such bank
or institution. FST Shares may be purchased for accounts held in the name of an
investor or institution that is not compensated by the Trust for services
provided to the institution's investors. FST Administration Shares may be
purchased for accounts held in the name of an institution that provides certain
account administration services to its customers, including maintenance of
account records and processing orders to purchase, redeem and exchange FST
Administration Shares. FST Administration Shares of each Fund bear the cost of
administration fees at the annual rate of up to .25 of 1% of the average daily
net assets of such Shares. FST Service Shares may be purchased for accounts
held in the name of an institution that provides certain account administration
and shareholder liaison services to its customers, including maintenance of
account records, processing orders to purchase, redeem and exchange FST Service
Shares, responding to customer inquiries and assisting customers with investment
procedures. FST Service Shares bear the cost of service fees at the annual rate
of up to .50 of 1% of the average daily net assets of such Shares. FST Preferred
Shares may be purchased for accounts held in the names of an institution that
provides certain account administration services to its customers, including
acting directly or through an agent, as the sole shareholder of record, maintain
account records of its customers and processing orders to purchase, redeem and
exchange FST Preferred Shares. FST Preferred Shares of a Fund bear the cost of
preferred administration fees at an annual rate of up to 0.10% of the average
daily net assets of such Shares.
It is possible that an institution or its affiliate may offer
different classes of shares to its customers and thus receive different
compensation with respect to different classes of shares of the same Fund. In
the event a Fund is distributed
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by salespersons or any other persons, they may receive different compensation
with respect to different classes of shares of the Fund. FST Administration
Shares, FST Service Shares and FST Preferred Shares each have certain exclusive
voting rights on matters relating to their respective plans. Shares of each
class may be exchanged only for Shares of the same class in another Fund.
Except as described above, the four classes of shares are identical. Certain
aspects of the Shares may be altered, after advance notice to shareholders, if
it is deemed necessary in order to satisfy certain tax regulatory requirements.
Each FST Share, FST Administration Share, FST Service Share and FST
Preferred Share of a Fund is entitled to one vote per share; however, separate
votes will be taken by each Fund or class (or by more than one Fund of the Trust
or the Delaware Trust or class voting as a single class if similarly affected)
on matters affecting only that individual Fund or class (or those affected Funds
of the Trust or the Delaware Trust or classes) or as otherwise required by law.
Fractional shares are entitled to proportionate fractional votes. Shares are
freely transferable and have no preemptive, subscription or conversion rights.
All shares issued and outstanding are fully paid and nonassessable by the Trust.
The Declarations of Trust provide for shareholder voting only for the election
or removal of one or more Trustees, if a meeting is called for that purpose, and
for certain other designated matters. Neither the Trust nor the Delaware Trust
intend to hold annual or other meetings of shareholders. The shares of the
Trust or the Delaware Trust have non-cumulative voting rights, which means that
the holders of more than 50% of the shares voting for the election of Trustees
can elect 100% of the Trustees if they choose to do so, and, in such event, the
holders of the remaining less than 50% of the shares voting for the election of
Trustees will not be able to elect any person or persons to the Board of
Trustees. Each Trustee serves until the next meeting of shareholders, if any,
called for the purpose of electing or reelecting such Trustee or successor to
such Trustee, and until the election and qualification of such successor, if
any, or until such Trustee sooner dies, resigns, retires or is removed by the
shareholders or two-thirds of the Trustees.
SHAREHOLDER AND TRUSTEE LIABILITY
THE TRUST
The Trust is an entity of the type commonly known as a "Massachusetts
business trust," which is the form in which many mutual funds are organized.
Under Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust. Notice of such disclaimer will
normally be given in each agreement, obligation or instrument entered into or
executed by the Trust or the Trustees. The Declaration of Trust provides for
indemnification by the relevant Fund for any loss suffered by a shareholder as a
result of an obligation of the Fund. The Declaration of Trust also provides
that the Trust shall, upon
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request, assume the defense of any claim made against any shareholder for any
act or obligation of the Trust and satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which a Fund is unable to meet its obligations. The
Trustees believe that, in view of the above, the risk of personal liability of
shareholders is not material.
The Declaration of Trust provides that the Trustees of the Trust shall
not be liable for any action taken by them in good faith, and that they shall be
fully protected in relying in good faith upon the records of the Trust and upon
reports made to the Trust by persons selected in good faith by the Trustees as
qualified to make such reports. The Declaration of Trust further provides that
the Trustees will not be liable for errors of judgment or mistakes of fact or
law. The Declaration of Trust provides that the Trust will indemnify Trustees
and officers of the Trust against liabilities and expenses reasonably incurred
in connection with litigation in which they may be involved because of their
positions with the Trust, unless it is determined in the manner provided in the
Declaration of Trust that they have not acted in good faith in the reasonable
belief that, in the case of conduct in their official capacity with the Trust,
such conduct was in the best interests of the Trust and, in all other cases,
that the conduct was at least not opposed to the best interests of the Trust
(and in the case of any criminal proceeding, they had no reasonable cause to
believe that the conduct was unlawful). However, nothing in the Declaration of
Trust or the By-Laws protects or indemnifies Trustees or officers against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.
THE DELAWARE TRUST
Under Delaware law, the shareholders of the Delaware Trust are not generally
subject to liability for the debts or obligations of the Delaware Trust.
Similarly, Delaware law provides that a Fund will not be liable for the debts or
obligations of any other series of the Delaware Trust. However, no similar
statutory or other authority limiting business trust shareholder liability
exists in many other states. As a result, to the extent that a Delaware business
trust or a shareholder is subject to the jurisdiction of courts of such other
states, the courts may not apply Delaware law and may thereby subject the
Delaware business trust shareholders to liability. To guard against this risk,
the Declaration of Trust of the Delaware Trust contains express disclaimer of
shareholder liability for acts or obligations of a Fund. Notice of such
disclaimer will normally be given in each agreement, obligation or instrument
entered into or executed by a Fund or the Trustees. The Declaration of Trust of
the Delaware Trust provides for indemnification by the relevant Fund for any
loss suffered by a shareholder as a result of an obligation of the Fund. The
Declaration of Trust of the Delaware Trust also provides that a Fund shall, upon
request, assume the defense of any claim made against any shareholder for any
act or obligation of the Fund and satisfy any judgment thereon. In view of the
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above, the risk of personal liability of shareholders is remote.
In addition to the requirement under Delaware law, the Declaration of
Trust of the Delaware Trust provides that shareholders of a Fund may bring a
derivative action on behalf of the Fund only if the following conditions are
met: (a) shareholders eligible to bring such derivative action under Delaware
law who hold at least 10% of the outstanding shares of the Fund, or 10% of the
outstanding shares of the series or class to which such action relates, shall
join in the request for the Trustees to commence such action; and (b) the
Trustees must be afforded a reasonable amount of time to consider such
shareholder request and to investigate the basis of other advisers in
considering the merits of the request and shall require an undertaking by the
shareholders making such request to reimburse the Fund for the expense of any
such advisers in the event that the Trustees determine not to bring such action.
The Declaration of Trust of the Delaware Trust further provides that
the Trustees will not be liable for errors of judgment or mistakes of fact or
law, but nothing in the Declaration of Trust protects a Trustee against
liability to which he or she would otherwise be subject by reason or willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office.
CUSTODIAN AND SUBCUSTODIAN
State Street Bank and Trust Company ("State Street") has been retained
to act as custodian of the Funds' assets. In that capacity, State Street
maintains the accounting records and calculates the daily net asset value per
share of the Funds. Its mailing address is P.O. Box 1713, Boston, MA 02105.
State Street has appointed The Northern Trust Company, 50 South LaSalle Street,
Chicago, Illinois 60675 as subcustodian to hold cash and certain securities
purchased by the Trust.
INDEPENDENT ACCOUNTANTS
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ADMINISTRATION PLAN
The Trust, on behalf of each Fund, has adopted an administration plan (the
"Plan") with respect to the FST Administration Shares which authorizes the Funds
to compensate Service Organizations for providing certain account administration
services to their customers who are beneficial owners of such shares. Pursuant
to the Plan, the Trust, on behalf of each Fund, enters into agreements with
Service Organizations which purchase FST Administration Shares on behalf of
their customers ("Service Agreements"). Under such Service Agreements, the
Service Organizations; (a) act, directly or through an agent, as the sole
shareholder of record and nominee for all customers, (b) maintain account
records for each customer who beneficially owns FST Administration Shares, (c)
answer questions and handle correspondence from customers regarding their
accounts, (d) process customer orders to purchase, redeem and exchange FST
Administration Shares, and handle the transmission of funds representing the
customers' purchase price or redemption proceeds, and (e) issue confirmations
for transactions in shares by customers. As compensation for such services, the
Trust on behalf of each Fund pays each Service Organization an administration
fee in an amount up to .25% (on an annualized basis) of the average daily net
assets of the FST Administration Shares of each Fund attributable to or held in
the name of such Service Organization for its customers.
Conflict of interest restrictions (including the Employee Retirement Income
Security Act of 1974) may apply to a Service Organization's receipt of
compensation paid by the Trust in connection with the investment of fiduciary
funds in FST Administration Shares. Service Organizations, including banks
regulated by the Comptroller of the Currency, the Federal Reserve Board or the
Federal Deposit Insurance Corporation, and investment advisers and other money
managers subject to the jurisdiction of the Securities and Exchange Commission,
the Department of Labor or State Securities Commissions, are urged to consult
legal advisers before investing fiduciary assets in FST Administration Shares.
In addition, under some state securities laws, banks and other financial
institutions purchasing FST Administration Shares on behalf of their customers
may be required to register as dealers.
The Plan was approved on December 27, 1994 by the Financial Square Trust as
the sole shareholder of FST Administration Shares of each Fund. The Trustees of
the Trust, including a majority of the Trustees who are not interested persons
of the Trust and who have no direct or indirect financial interest in the
operation of such Plans or the related Service Agreements, most recently voted
to approve the Plans and Service Agreements at a meeting called for the purpose
of voting on such Plan and Service Agreements on April 24, 1996. They will
remain in effect until April 30, 1997 and continue in effect thereafter only if
such continuance is specifically approved annually by a vote of the Trustees in
the
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manner described above. A Plan may not be amended to increase materially the
amount to be spent for the services described therein without approval of the
FST Administration shareholders of the affected Fund, and all material
amendments of the Plan must also be approved by the Trustees in the manner
described above. A Plan may be terminated at any time by a majority of the
Trustees as described above or by vote of a majority of the outstanding FST
Administration Shares of the affected Fund. The Service Agreements may be
terminated at any time, without payment of any penalty, by vote of a majority of
the Trustees as described above or by a vote of a majority of the outstanding
FST Administration Shares of the affected Fund on not more than 60 days' written
notice to any other party to the Service Agreements. The Service Agreements
shall terminate automatically if assigned. So long as the Plans are in effect,
the selection and nomination of those Trustees who are not interested persons
shall be committed to the discretion of the Trust's Nominating Committee, which
consists of all of the non-interested members of the Board of Trustees. The
Trustees have determined that, in their judgment, there is a reasonable
likelihood that the Plans will benefit the Funds and holders of FST
Administration Shares of such Funds. In the Trustees' quarterly review of the
Plans and Service Agreements, they will consider their continued appropriateness
and the level of compensation provided therein.
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SERVICE PLAN
The Trust, on behalf of each Fund, has adopted a service plan (the "Plan")
with respect to the FST Service Shares which authorizes the Funds to compensate
Service Organizations for providing certain account administration and personal
and account maintenance services to their customers who are beneficial owners of
such shares. Pursuant to the Plan, the Trust, on behalf of each Fund, enters
into agreements with Service Organizations which purchase FST Service Shares on
behalf of their customers ("Service Agreements"). Under such Service
Agreements, the Service Organizations; (a) act, directly or through an agent, as
the sole shareholder of record and nominee for all customers, (b) maintain
account records for each customer who beneficially owns FST Service Shares, (c)
answer questions and handle correspondence from customers regarding their
accounts, (d) process customer orders to purchase, redeem and exchange FST
Service Shares, and handle the transmission of funds representing the customers'
purchase price or redemption proceeds, (e) issue confirmations for transactions
in shares by customers, (f) provide facilities to answer questions from
prospective and existing investors about FST Service Shares, (g) receive and
answer investor correspondence, including requests for prospectuses and
statements of additional information, (h) display and make prospectuses
available on the Service Organization's premises, (i) assist customers in
completing application forms, selecting dividend and other account options and
opening custody accounts with the Service Organization and (j) act as liaison
between customers and the Funds, including obtaining information from the Funds,
working with the Funds to correct errors and resolve problems and providing
statistical and other information to the Funds. As compensation for such
services, the Trust on behalf of each Fund pays each Service Organization a
service fee in an amount up to .50% (on an annualized basis) of the average
daily net assets of the FST Service Shares of each Fund attributable to or held
in the name of such Service Organization for its customers; provided, however,
that the fee paid for personal and account maintenance services shall not exceed
.25% of such average daily net assets.
The Trust has adopted the Plan pursuant to Rule 12b-1 under the Investment
Company Act in order to avoid any possibility that payments to the Service
Organizations pursuant to the Service Agreements might violate the Investment
Company Act. Rule 12b-1, which was adopted by the SEC under the Investment
Company Act, regulates the circumstances under which an investment company or
series thereof may bear expenses associated with the distribution of its shares.
In particular, such an investment company or series thereof cannot engage
directly or indirectly in financing any activity which is primarily intended to
result in the sale of shares issued by the company unless it has adopted a plan
pursuant to, and complies with the other requirements of, such Rule. The Trust
believes that fees paid for the services provided in the Plan and described
above are not expenses incurred primarily for effecting the distribution of FST
Service Shares. However,
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should such payments be deemed by a court or the SEC to be distribution
expenses, such payments would be duly authorized by the Plan.
The Glass-Steagall Act prohibits all entities which receive deposits from
engaging to any extent in the business of issuing, underwriting, selling or
distributing securities, although institutions such as national banks are
permitted to purchase and sell securities upon the order and for the account of
their customers. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and other
financial institutions purchasing FST Service Shares on behalf of their
customers may be required to register as dealers pursuant to state law. Should
future legislative or administrative action or judicial or administrative
decisions or interpretations prohibit or restrict the activities of one or more
of the Service Organizations in connection with the Funds, such Service
Organizations might be required to alter materially or discontinue the services
performed under their Service Agreements. If one or more of the Service
Organizations were restricted from effecting purchases or sales of FST Service
Shares automatically pursuant to pre-authorized instructions, for example,
effecting such transactions on a manual basis might affect the size and/or
growth of a Fund. Any such alteration or discontinuance of services could
require the Board of Trustees to consider changing the Funds' method of
operations or providing alternative means of offering FST Service Shares to
customers of such Service Organizations, in which case the operation of a Fund,
its size and/or its growth might be significantly altered. It is not
anticipated, however, that any alteration of the Funds' operations would have
any effect on the net asset value per share or result in financial losses to any
shareholder.
Conflict of interest restrictions (including the Employee Retirement Income
Security Act of 1974) may apply to a Service Organization's receipt of
compensation paid by the Trust in connection with the investment of fiduciary
funds in FST Service Shares. Service Organizations, including banks regulated
by the Comptroller of the Currency, the Federal Reserve Board or the Federal
Deposit Insurance Corporation, and investment advisers and other money managers
subject to the jurisdiction of the Securities and Exchange Commission, the
Department of Labor or State Securities Commissions, are urged to consult legal
advisers before investing fiduciary assets in FST Service Shares.
The Plan was approved on December 27, 1994 by Financial Square Trust as the sole
shareholder of FST Service Shares of each Fund, other than Plus Fund. The Board
of Trustees, including a majority of the Trustees who are not interested persons
of the Trust and who have no direct or indirect financial interest in the
operation of such Plan or the related Service Agreements, most recently voted to
approve the Plan and Service Agreements for each Fund at a meeting called for
the purpose of voting on such Plan and Service Agreements on April 24, 1996. The
Plan and Service Agreements will remain in effect until April 30, 1997 and
<PAGE>
will continue in effect thereafter only if such continuance is specifically
approved annually by a vote of the Board of Trustees in the manner described
above.
The Plan may not be amended to increase materially the amount to be spent for
the services described therein without approval of the FST Service Shareholders
of each Fund, and all material amendments of the Plan must also be approved by
the Board of Trustees in the manner described above. The Plan may be terminated
at any time by a majority of the Board of Trustees as described above or by vote
of a majority of the outstanding FST Service Shares of each Fund. The Service
Agreements may be terminated at any time, without payment of any penalty, by
vote of a majority of the Board of Trustees as described above or by a vote of a
majority of the outstanding FST Service Shares of each Fund on not more than
sixty (60) days' written notice to any other party to the Service Agreements.
The Service Agreements shall terminate automatically if assigned. As long as
the Plan is in effect, the selection and nomination of those Trustees who are
not interested persons shall be committed to the discretion of the Trust's
Nominating Committee, which consists of all of the non-interested members of the
Board of Trustees. The Board of Trustees has determined that, in its judgment,
there is a reasonable likelihood that the Plan will benefit each Fund and
holders of FST Service Shares of such Fund. In the Board of Trustees' quarterly
review of the Plan and Service Agreements, the Board will consider their
continued appropriateness and the level of compensation provided therein.
<PAGE>
PREFERRED ADMINISTRATION PLAN
The Trust, on behalf of each Fund, has adopted a preferred administration
plan (the "Plan") with respect to the FST Preferred Shares which authorizes the
Funds to compensate Service Organizations for providing certain account
administration services to their customers who are beneficial owners of such
shares. Pursuant to the Plan, the Trust, on behalf of each Fund, enters into
agreements with Service Organizations which purchase FST Preferred Shares on
behalf of their customers ("Service Agreements"). Under such Service
Agreements, the Service Organizations may; (a) act, directly or through an
agent, as the sole shareholder of record and nominee for all customers, (b)
maintain account records for each customer who beneficially owns FST Preferred
Shares, and (c) process customer orders to purchase, redeem and exchange FST
Preferred Shares, and handle the transmission of funds representing the
customers' purchase price or redemption proceeds. As compensation for such
services, the Trust on behalf of each Fund pays each Service Organization a
service fee in an amount up to .10% (on an annualized basis) of the average
daily net assets of the FST Preferred Shares of each Fund attributable to or
held in the name of such Service Organization for its customers.
Conflict of interest restrictions (including the Employee Retirement Income
Security Act of 1974) may apply to a Service Organization's receipt of
compensation paid by the Trust in connection with the investment of fiduciary
funds in FST Preferred Shares. Service Organizations, including banks regulated
by the Comptroller of the Currency, the Federal Reserve Board or the Federal
Deposit Insurance Corporation, and investment advisers and other money managers
subject to the jurisdiction of the Securities and Exchange Commission, the
Department of Labor or State Securities Commissions, are urged to consult legal
advisers before investing fiduciary assets in FST Preferred Shares. In
addition, under some state securities laws, banks and other financial
institutions purchasing FST Preferred Shares on behalf of their customers may be
required to register as dealers.
The Plan was approved on May 1, 1996 by the Financial Square Trust as the
sole shareholder of FST Preferred Shares of each Fund. The Trustees of the
Trust, including a majority of the Trustees who are not interested persons of
the Trust and who have no direct or indirect financial interest in the operation
of such Plan or the related Service Agreements, initially voted to approve the
Plan and Service Agreements at a meeting called for the purpose of voting on
such Plan and Service Agreements on April 24, 1996. They will remain in effect
until April 30, 1997 and continue in effect thereafter only if such continuance
is specifically approved annually by a vote of the Trustees in the manner
described above. A Plan may not be amended to increase materially the amount to
be spent for the services described therein without approval of the FST
Preferred shareholders of the
<PAGE>
affected Fund, and all material amendments of the Plan must also be approved by
the Trustees in the manner described above. A Plan may be terminated at any time
by a majority of the Trustees as described above or by vote of a majority of the
outstanding FST Preferred Shares of the affected Fund. The Service Agreements
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Trustees as described above or by a vote of a majority of the
outstanding FST Preferred Shares of the affected Fund on not more than 60 days'
written notice to any other party to the Service Agreements. The Service
Agreements shall terminate automatically if assigned. So long as the Plans are
in effect, the selection and nomination of those Trustees who are not interested
persons shall be committed to the discretion of the Trust's Nominating
Committee, which consists of all of the non-interested members of the Board of
Trustees. The Trustees have determined that, in their judgment, there is a
reasonable likelihood that the Plans will benefit the Funds and holders of FST
Preferred Shares of such Funds. In the Trustees' quarterly review of the Plans
and Service Agreements, they will consider their continued appropriateness and
the level of compensation provided therein.
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APPENDIX A
DESCRIPTION OF SECURITIES RATINGS/1/
MOODY'S INVESTORS SERVICE, INC.
Bond Ratings
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Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than with Aaa
securities.
Moody's applies numerical modifiers, 1, 2, and 3 in the Aa category.
The modifier 1 indicates that the obligation ranks in the higher end of the Aa
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of the Aa category.
Short-Term Ratings
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P-1: Issuers have a superior ability for repayment of senior short-
term debt obligations. Prime-1 or P-1 repayment ability will normally be
evidenced by many of the following characteristics:
. Leading market positions in well established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
. Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
. Well established access to a range of financial markets and assured
sources of alternate liquidity.
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P-2: Issuers have a strong ability for repayment of senior short-term debt
obligations. This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
State and Municipal Obligations
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Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements are
critical in short-term ratings, while other factors of major importance in bond
risk, long-term secular trends for example, may be less important over the short
run. Symbols used will be as follows:
MIG 1 -- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG 2 -- This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
A short-term rating may also be assigned on an issue having a demand
feature. Such ratings will be designated as VMIG to reflect such
characteristics as payment upon periodic demand rather than fixed maturity dates
and payment relying on external liquidity. Additionally, investors should be
alert to the fact that the source of payment may be limited to the external
liquidity with no or limited legal recourse to the issuer in the event the
demand is not met VMIG-1, and VMIG-2 ratings carry the same definitions as MIG-
1, and MIG-2, respectively.
STANDARD & POOR'S RATINGS GROUP
Bond Ratings
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AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.
PLUS (+) OR MINUS (-): The AA rating may be modified by the addition of a
plus or minus sign to show relative standing within the AA category.
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Short-Term Ratings
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A-1: S&P's Commercial Paper ratings are current assessments of the
likelihood of timely payment of debt considered short-term in the relevant
market. The A-1 designation is the highest category and indicates that the
degree of safety regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with a plus ( + )
sign designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MUNICIPAL NOTES
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note
rating. Notes maturing beyond 3 years will most likely receive a long-term debt
rating. The following criteria will be used in making that assessment.
. Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
. Source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1 -- Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 -- Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the term of the
notes.
SP-3 -- Speculative capacity to pay principal and interest.
S&P assigns "dual" ratings to all debt issues that have a put option or
demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (for
example, "AAA/A-1+"). With short-term demand debt, S&P's note rating symbols
are used with the commercial paper rating symbols (for example, "SP-1+/A-1+").
<PAGE>
DUFF & PHELPS, INC.
Bond Ratings
- ------------
AAA: Long-term fixed income securities which are rated AAA are judged to
be of the highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA: Long-term fixed income securities which are rated AA are judged to be
of high credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
Duff & Phelps applies modifiers, AA+ and AA- in the AA category for long-
term fixed income securities. The modifier AA+ indicates that the security
ranks in the higher end of the AA category: the modifier AA indicates a mid-
range ranking; and the modifier AA- indicates that the issue ranks in the lower
end of the AA category.
Short-Term Ratings
- ------------------
D-1: Commercial paper and certificates of deposit rated Duff 1 are
considered to have a very high certainty of timely payment. Liquidity factors
are excellent and are supported by strong fundamental protection factors. Risk
factors are minor.
D-2: Commercial paper and certificates of deposit rated Duff 2 are
considered to have a good certainty of timely payment. Liquidity factors and
company fundamentals are considered sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good and risk
factors are small.
Duff & Phelps applies a plus and minus rating scale, D-1+ , D-1 and D-1- in
the Duff 1 top grade category for commercial paper and certificates of deposit.
The rating D-1+ indicates that the security has the highest certainty of timely
payment, short-term liquidity is clearly outstanding and safety is just below
risk-free U.S. Treasury short-term obligations; the rating D-1 indicates a very
high certainty of timely payment, liquidity factors are excellent and risk
factors are minimal; and the rating D-1- indicates a high certainty of timely
payment, liquidity factors are strong and risk factors are very small.
FITCH INVESTORS SERVICE CORP.
AAA: Bonds which are rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
its obligations, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds which are rated AA are considered to be investment grade and of very
high credit quality. The obligor's ability to
<PAGE>
pay interest and repay principal is very strong, although not quite as strong as
bonds rated AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated F-1+.
Fitch applies plus (" + ") and minus (" - ") modifiers in the AA category to
indicate the relative position of a credit within the rating category.
Eligible Fitch ratings for short-term debt obligations payable on demand or with
original maturities of up to three years, including commercial paper,
certificates of deposit, medium-term notes, and municipal and investment notes
may be rated F-1 or F-2.
F-1: Short-term debt obligations rated F-1 are considered to be of very
strong credit quality. Those issues determined to possess exceptionally strong
credit quality and having the strongest degree of assurance for timely payment
will be denoted with a plus ("+") sign designation.
F-2: Short-term debt obligations rated F-2 are considered to be of good
credit quality. Issues assigned this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as for
issues assigned F-1+ and F-1 ratings.
IBCA LIMITED AND IBCA INC.
A1: Short-term obligations rated A1 are supported by a very strong
capacity for timely repayment. A plus ("+") sign is added to those issues
determined to possess the highest capacity for timely payment.
A2: Short-term obligations rated A2 are supported by a strong capacity for
timely repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.
THOMSON BANKWATCH, INC.
AAA: The highest category; indicates a superior ability to repay principal
and interest on a timely basis.
AA: The second highest category; indicates a superior ability to repay
principal and interest on a timely basis with limited incremental risk
versus issues rated in the highest category.
Ratings in the AA Long-Term Debt category may include a plus (+) or minus (-)
designation which indicates where within the respective category the issue is
placed.
The TBW Short-Term Ratings apply only to unsecured instruments that have a
maturity of one year or less.
<PAGE>
The TBW Short-Term Ratings specifically assess the likelihood of an untimely
payment of principal and interest.
TBW-1: The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2: The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
1. The ratings indicated herein are believed to be the most recent ratings
available at the date of this Statement of Additional Information for the
securities listed. Ratings are generally given to securities at the time of
issuance. While the rating agencies may from time to time revise such
ratings, they undertake no obligation to do so, and the ratings indicated do
not necessarily represent ratings which will be given to these securities on
the date of the Funds' taxable year end.
<PAGE>
PART C. OTHER INFORMATION
ITEM 24 FINANCIAL STATEMENTS AND EXHIBITS.
---------------------------------
(a) Financial Statements --
Not Applicable
All other financial statements, schedules and historical financial information
have been omitted as the subject matter is not required, not present, or not
present in amounts sufficient to require submission.
(b) Exhibits
The following exhibits are incorporated herein by reference to Post-Effective
Amendment No. 15 to Registrant's Registration Statement on Form S-5 (Reference
A), to Post-Effective Amendment No. 17 to Registrant's Registration Statement on
Form S-5 (Reference B), to Registrant's Proxy Statement dated May 6, 1981
(Reference C), to Post-Effective Amendment No. 22 to Registrant's Registration
Statement on Form N-1 (Reference D), to Post-Effective Amendment No. 25 to
Registrant's Registration Statement on Form N-1 (Reference E), to Post-Effective
Amendment No. 26 to Registrant's Registration Statement on Form N-1 (Reference
F), to Post-Effective Amendment No. 29 to Registrant's Registration Statement on
Form N-1 (Reference G), to Post-Effective Amendment No. 30 to Registrant's
Registration Statement on Form N-1 (Reference H), to Post-Effective Amendment
No. 31 to Registrant's Registration Statement on Form N-1A (Reference I), to
Post-Effective Amendment No. 35 to Registrant's Registration Statement on Form
N-1A (Reference J), to Post-Effective Amendment No. 36 to Registrant's
Registration Statement on Form N-1A (Reference K), to Post-Effective Amendment
No. 37 to Registrant's Registration Statement on Form N-1A (Reference L), to
Post-Effective Amendment No. 38 to Registrant's Registration Statement on Form
N-1A (Reference M), to Post-Effective Amendment No. 39 to Registrant's
Registration Statement on Form N-1A (Reference N), to Post-Effective Amendment
No. 40 to Registrant's Registration Statement on Form N-1A (Reference O), to
Post-Effective Amendment No. 41 to Registrant's Registration Statement on Form
N-1A (Reference P), to Post-Effective Amendment No. 42 to Registrant's
Registration Statement on Form N-1A (Reference Q), to Post-Effective Amendment
No. 43 to Registrant's Registration Statement on Form N-1A (Reference R), to
Post-Effective Amendment No. 44 to Registrant's Registration Statement on Form
N-1A (Reference S), Post-Effective Amendment No. 45 to Registrant's Registration
Statement on Form N-1A (Reference T), Post-Effective Amendment No. 46 to
Registrant's Registration Statement on Form N-1A (Reference U), Post-Effective
Amendment No. 47 to Registrant's Registration Statement on Form N-1A (Reference
V), Post-Effective Amendment No. 48 to Registrant's Registration Statement on
Form N-1A
<PAGE>
(Reference W), Post-Effective Amendment No. 49 to Registrant's Registration
Statement on Form N-1A (Reference X), Post-Effective Amendment No. 50 to
Registrant's Registration Statement on Form N-1A (Reference Y), Post-Effective
Amendment No. 51 to Registrant's Registration Statement on Form N-1A (Reference
Z) and Post-Effective Amendment No. 54 to Registrant's Registration Statement on
Form N-1A (Reference AA).
1(a). Agreement and Declaration of Trust (Reference A).
1(b). Form of Amendment to Agreement and Declaration of Trust (Reference D).
1(c). Form of Amendment to Agreement and Declaration of Trust (Reference F).
1(d). Form of Amendment to Agreement and Declaration of Trust regarding the
Money Market Portfolio (Reference M).
1(e). Form of Amendment to Agreement and Declaration of Trust regarding the
Federal Portfolio (Reference P).
1(f). Form of Amendment to Agreement and Declaration of Trust regarding Tax-
Exempt Diversified Portfolio and Tax-Exempt California Portfolio
(Reference Q).
1(g). Form of Amendment to Agreement and Declaration of Trust regarding
Treasury Instruments, Tax-Exempt New Jersey and Tax-Exempt New York
Portfolios (Reference S).
1(h). Amendment to Agreement and Declaration of Trust regarding Financial
Square Prime Obligations, Financial Square Treasury Obligations,
Financial Square Government, Financial Square Tax-Free Money Market,
Financial Square Money Market, Financial Square Municipal Money Market
and Financial Square Federal Funds (Reference Y).
1(i) Amendment to Agreement and Declaration of Trust regarding
Financial Square Money Market Plus Fund (Reference AA).
2(a). By-Laws, filed as Exhibit 1(b) (Reference A).
2(b). Amendment to Section 3.5 of By-Laws (Reference E).
2(c). Amendment to Section 6.3 of By-Laws dated September 1, 1983 (Reference
H).
2(d). Amendment to Section 2.4 of By-Laws (Reference J).
2(e). Amendment to Section 3.7 of the By-Laws (Reference K).
2
<PAGE>
4(a). Specimen certificates for the Prime Obligations Units and Government
Units filed as Exhibit 2 (Reference B).
4(b). Specimen certificate for the Treasury Obligations Units (Reference F)
4(c) Specimen certificate for Goldman Sachs--Institutional Liquid Assets
(Reference U)
5(b). Form of Advisory Agreement between Registrant and Goldman, Sachs &
Co., filed as Exhibit A (Reference C).
5(c). Form of consent pursuant to paragraph 1 of the Advisory Agreement
between Registrant and Goldman, Sachs & Co. regarding the Treasury
Obligations Portfolio (Reference F).
5(d). Consent dated June 20, 1987 to change in duties under the Advisory
Agreement and Distribution Agreement between Registrant and Goldman,
Sachs & Co. (Reference M).
5(e). Form of consent pursuant to paragraph 1 of each of the Advisory
Agreement and Distribution Agreement between Registrant and Goldman,
Sachs & Co. regarding the Money Market Portfolio (Reference M).
5(f). Form of consent pursuant to paragraph 1 of each of the Advisory
Agreement and Distribution Agreement between Registrant and Goldman,
Sachs & Co. regarding the Federal Portfolio (Reference P).
5(g). Form of consent pursuant to paragraph 1 of each Advisory Agreement and
Distribution Agreement between Registrant and Goldman, Sachs & Co.
regarding the Tax-Exempt Diversified and Tax-Exempt California
Portfolios (formerly series of Goldman Sachs--Institutional Tax-Exempt
Assets). (Reference R).
5(h). Advisory Agreement between Registrant and Goldman, Sachs & Co.
(Reference S).
5(i). Form of consent pursuant to paragraph 1 of each Advisory Agreement and
Distribution Agreement regarding Treasury Instruments, Tax-Exempt New
Jersey and Tax-Exempt New York Portfolio (Reference S).
5(j). Investment Advisory Agreement between the Registrant on behalf of the
Financial Square Prime Obligations Fund and Goldman Sachs Asset
Management (Reference Y).
3
<PAGE>
5(k). Investment Advisory Agreement on behalf of the Financial Square
Treasury Obligations Fund and Goldman Sachs Asset Management
(Reference Y).
5(l). Investment Advisory Agreement between the Registrant on behalf of the
Financial Square Government Fund and Goldman Sachs Asset Management
(Reference Y).
5(m). Investment Advisory Agreement between the Registrant on behalf of
Financial Square Money Market Fund and Goldman Sachs Asset Management
(Reference Y).
5(n). Investment Advisory Agreement between the Registrant on behalf of the
Financial Square Tax-Free Money Market Fund and Goldman Sachs Asset
Management (Reference Y).
5(o). Form of Investment Advisory Agreement between the Registrant on behalf
of the Financial Square Municipal Money Market Fund and Goldman Sachs
Asset Management (Reference X).
5(p). Investment Advisory Agreement between the Registrant on behalf of the
Financial Square Federal Fund and Goldman Sachs Asset Management
(Reference Y).
5(q). Investment Advisory Agreement between the Registrant on behalf of
the Financial Square Money Market Plus Fund and Goldman Sachs Asset
Management (Reference AA).
6(b). Form of Distribution Agreement between Registrant and Goldman, Sachs &
Co., filed as Exhibit B (Reference C).
6(c). Distribution Agreement between Registrant and Goldman, Sachs & Co.
(Reference S).
6(d). Distribution Agreement between Registrant and Goldman, Sachs & Co.
(Reference Y).
8(a). Custodian Agreement between Registrant and State Street Bank and Trust
Company, filed as Exhibit 1(e) (Reference B).
8(b). Letter-agreement dated December 27, 1978 between Registrant and State
Street Bank and Trust Company pertaining to the fees payable by
Registrant pursuant to the Custodian Agreement, filed as Exhibit 8(c)
(Reference E).
8(c). Amendment dated May 28, 1981 to the Custodian Agreement referred to
above as Exhibit 8(a) (Reference F).
4
<PAGE>
8(d). Letter Agreement dated June 14, 1984 between Registrant and State
Street Bank and Trust Company pertaining to a change in wire charges
under the Custodian Agreement, filed as Exhibit 8(f) (Reference I).
8(e). Letter Agreement dated March 21, 1985 between Registrant and State
Street Bank and Trust Company pertaining to the creation of a joint
repurchase agreement account, filed as Exhibit 8(g) (Reference I).
8(f). Letter Agreement dated March 28, 1983 between Registrant and State
Street Bank and Trust Company pertaining to the latter's designation
of Bank of America, N.T. and S.A. as its subcustodian and certain
other matters, filed as Exhibit 8(d) (Reference F).
8(g). Letter Agreement dated November 7, 1985, with attachments, between
Registrant and State Street Bank and Trust Company authorizing State
Street Bank and Trust Company to permit redemption of units by check,
filed as Exhibit 8(h) (Reference J).
8(h). Money Transfer Services Agreement dated November 14, 1985, including
attachment, between Registrant and State Street Bank and Trust Company
pertaining to transfers of funds on deposit with State Street Bank and
Trust Company, filed as Exhibit 8(i) (Reference J).
8(i). Letter Agreement dated November 27, 1985 between Registrant and State
Street Bank and Trust Company amending the Custodian Agreement
(Reference J).
8(j). Letter Agreement dated July 22, 1986 between Registrant and State
Street Bank and Trust Company pertaining to a change in wire charges
(Reference K).
8(k). Wiring Agreement dated June 20, 1987 among Goldman, Sachs & Co., State
Street Bank and Trust Company and The Northern Trust Company
(Reference M).
8(l). Letter Agreement dated June 20, 1987 between Registrant and State
Street Bank and Trust Company amending the Custodian Agreement
(Reference M).
8(m). Letter Agreement dated June 20, 1987 regarding use of checking account
between Registrant and The Northern Trust Company (Reference M).
8(n). Letter Agreement dated May 1, 1988 between Registrant and State Street
Bank and Trust Company amending the Custodian Agreement (Reference N).
5
<PAGE>
8(p). Form of Letter Agreement between Registrant and State Street Bank and
Trust Company pertaining to the latter's designation of Security
Pacific National Bank as its sub-custodian and certain other matters
(Reference O).
8(q). Amendment dated July 19, 1988 to the Custodian Agreement between
Registrant and State Street Bank and Trust Company (Reference O).
8(r). Amendment dated September 15, 1988 to the Custodian Agreement between
Registrant and State Street Bank and Trust Company (Reference O).
9. Administration Agreement between the Registrant and Goldman Sachs
Asset Management (Reference Y).
15(a). Administration Plan Agreement (Reference Y).
15(b). Service Plan (Reference Y).
15(c). Form of Preferred Administration Plan (Reference Z).
15(d). Preferred Administration Plan Agreement (Reference AA).
16. Schedule for Computation of Performance Data (Reference V).
17(a). Powers of Attorney from Paul C. Nagel, Jr., Robert A. Friedman, and
Jackson W. Smart (Reference K).
17(b). Powers Of Attorney from James P. Gorter, Robert P. Mayo, and Stephen
H. Hopkins each dated January 24, 1989 (Reference O).
17(c). Form of Transfer Agency Agreement dated May 1, 1988 between Registrant
and Goldman, Sachs & Co. and schedule of fees pertaining thereto
(Reference N).
17(d). Power of Attorney from Messrs. Wells, Nagel, Springer, Strubel, Mayo,
Smart, Bakhru, Corzine, Hopkins, Gilman and Shuch dated February 11,
1992 (Reference T).
17(e). Power of Attorney from Messr. Surloff dated January 25, 1994
(Reference W).
The following exhibits are filed herewith electronically pursuant to EDGAR
rules:
1(j). Agreement and Declaration of Trust regarding Financial
Square Treasury Instruments and Financial Square Federal Funds.
6
<PAGE>
5(r). Form of Investment Advisory Agreement between the Registrant on behalf
of the Financial Square Treasury Instruments and Financial Square
Federal Funds and Goldman Sachs Asset Management.
17(f) Form of Transfer Agency Agreement between Registrant and Goldman,
Sachs & Co.
7
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
-------------------------------------------------------------
Not Applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES (AS OF OCTOBER 31, 1996)
--------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
- ---------------------------------------------- --------------
<S> <C>
Treasury Obligations Portfolio
ILA Units 2066
ILA Administration Units 297
ILA Service Units 27
Treasury Instruments Portfolio
ILA Units 1057
ILA Administration Units 189
ILA Service Units 27
Federal Portfolio
ILA Units 4277
ILA Administration Units 1299
ILA Service Units 255
Government Portfolio
ILA Units 3812
ILA Administration Units 376
ILA Service Units 36
Prime Obligations Portfolio
ILA Units 2945
ILA Administration Units 252
ILA Service Units 77
ILA Class B Units 0
Money Market Portfolio
ILA Units 2669
ILA Administration Units 1036
ILA Service Units 15
Tax-Exempt Diversified Portfolio
ILA Units 3907
ILA Administration Units 161
ILA Service Units 59
Tax-Exempt California Portfolio
ILA Units 1698
ILA Administration Units 19
ILA Service Units 6
Tax-Exempt New York Portfolio
ILA Units 347
ILA Administration Units 101
ILA Service Units 5
Financial Square Treasury Obligations Fund
FST Shares 679
FST Administration Shares 340
FST Service Shares 1029
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
FST Preferred Shares 15
Financial Square Prime Obligations Fund
FST Shares 1399
FST Administration Shares 176
FST Service Shares 739
FST Preferred Shares 8
Financial Square Government Fund
FST Shares 604
FST Administration Shares 234
FST Service Shares 105
FST Preferred Shares 9
Financial Square Money Market Fund
FST Shares 802
FST Administration Shares 345
FST Service Shares 121
FST Preferred Shares 12
Financial Square Tax-Free Money Market Fund
FST Shares 355
FST Administration Shares 89
FST Service Shares 117
FST Preferred Shares 11
Financial Square Municipal Money Market Fund
FST Shares 0
FST Administration Shares 0
FST Service Shares 0
Financial Square Money Market Plus Fund
FST Shares 0
FST Administration Shares 0
FST Service Shares 0
FST Preferred Shares 0
</TABLE>
ITEM 27. INDEMNIFICATION.
---------------
Article VI of the Registrant's Agreement and Declaration of Trust provides for
indemnification of the Registrant's trustees and officers under certain
circumstances. A copy of such Agreement and Declaration of Trust was filed with
the Commission as Exhibit 1(a) to Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form S-5.
Paragraph 7 of the Advisory Agreement between the Registrant on behalf of all
Portfolios other than the Financial Square Funds, and Goldman, Sachs & Co.
provides for indemnification of Goldman, Sachs & Co. by the Registrant under
certain circumstances. A copy of such Agreement was filed with the Commission as
Exhibit 5(h) to Post-Effective Amendment No. 44 to Registrant's Registration
Statement on Form N-1A.
Section 7 of the Transfer Agency Agreement between Registrant on behalf of all
Portfolios other than the Financial Square Funds, and Goldman, Sachs & Co.
provides for indemnification of Goldman, Sachs & Co. by the Registrant under
certain circumstances. A copy
9
<PAGE>
of such Agreement was filed as Exhibit 17(j) to Post-Effective Amendment No. 39
to Registrant's Registration Statement on Form N-1A.
Mutual fund and Trustees and officers liability policies purchased jointly by
the Registrant, Goldman Sachs Trust, Financial Square Trust, Goldman Sachs
Equity Portfolios, Inc., Paragon Portfolio, Trust for Credit Unions, The
Benchmark Funds and Goldman, Sachs & Co., insure such persons and their
respective trustees, partners, officers and employees, subject to the policies'
coverage limits and exclusions and varying deductibles, against loss resulting
from claims by reason of any act, error, omission misstatement, misleading
statement, neglect or breach of duty.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
----------------------------------------------------
The business and other connections of the officers and general partners who have
direct responsibility for the asset management division of Goldman, Sachs & Co.
are listed on the Uniform Application for Investment Adviser Registration ("Form
ADV") of Goldman, Sachs & Co. (No. 801-16048), Goldman Sachs Funds Management,
L.P. (No. 801-37591), and Goldman Sachs Assets Management International (No.
801-38157) as applicable. These Form ADVs, the texts of which are hereby
incorporated by reference, are currently on file with the Commission.
ITEM 29. PRINCIPAL UNDERWRITERS.
----------------------
(a) Goldman, Sachs & Co. or an affiliate of a division thereof currently serves
as investment adviser to and distributor of the units or shares of Goldman
Sachs Money Market Trust, Goldman Sachs Equity Portfolios, Inc., Goldman
Sachs Trust and Trust for Credit Unions. Goldman, Sachs & Co., or a
division thereof currently serves as administrator to and distributor of
the units or shares of The Benchmark Funds and The Commerce Funds.
(b) Set forth below is certain information pertaining to the general partners
of Goldman, Sachs & Co., Registrant's principal underwriter. Each of the
following persons is a general partner of Goldman, Sachs & Co. and, except
for Mr. Ford does not hold a position with Registrant. Mr. Ford is a
Trustee of Registrant.
10
<PAGE>
GOLDMAN SACHS GENERAL PARTNERS
Name and Principal Name and Principal
Business Address Business Address
---------------- ----------------
Jon S. Corzine, Chairman (1)(2) Frank L. Coulson, Jr. (2)
Henry M. Paulson, Jr., Chairman (1)(2) Connie Duckworth (8)
Roy J. Zuckerberg (5) Richard A. Friedman (2)
David M. Silfen (5) Alan R. Gillespie (7)
Richard M. Hayden (7) Joseph H. Gleberman (2)
Robert J. Hurst (2) Jacob D. Goldfield (2)
Howard C. Katz (2) Steven M. Heller (2)
Peter K. Barker (9) Ann F. Kaplan (2)
Eric S. Dobkin (5) Robert S. Kaplan (2)
Willard J. Overlock, Jr. (2) Peter D. Kiernan, III (2)
Jonathan L. Cohen (2) John P. McNulty (5)
Frederic B. Garonzik (7) T. Willem Mesdag (14)
Kevin W. Kennedy (2) Gaetano J. Muzio (11)
William C. Landreth (8) Robin Neustein (2)
Daniel M. Neidich (2) Timothy J. O'Neill (2)
Edward Spiegel (5) Scott M. Pinkus (2)
Robert F. Cummings, Jr. (2) John J. Powers (2)
Angelo De Caro (2) Stephen D. Quinn (2)
Steven G. Einhorn (5) Arthur J. Reimers, III (7)
David B. Ford (2) James P. Riley, Jr. (2)
David M. Leuschen (2) Richard A. Sapp (7)
Michael R. Lynch (2) Donald F. Textor (5)
Michael D. McCarthy (2) Thomas B. Walker, III (2)
Donald C. Opatrny, Jr. (2) Patrick J. Ward (7)
Thomas E. Tuft (5) Jeffrey M. Weingarten (7)
Robert J. Katz (1)(2) Jon Winkelried (2)
Michael P. Mortara (2) Richard E. Witten (2)
Lloyd C. Blankfein (2) Gregory K. Palm (2)(7)
John P. Curtin, Jr. (2) Carlos A. Cordeiro (7)
Gavyn Davies (7) John O. Downing (5)
Dexter D. Earle (5) Mark Evans (13)
John Ehara (10) Michael D. Fascitelli (2)
J. Christopher Flowers (2) Sylvain M. Hefes (7)
Gary Gensler (2) Reuben Jeffrey, III (7)
Charles T. Harris, III (2) Lawrence H. Linden (2)
Thomas J. Healey (2) Jun Makihara (10)
Stephen Hendel (2) Masanori Mochida (10)
Robert E. Higgins (2) Robert B. Morris III (11)(7)
Ernest S. Liu (5) Philip D. Murphy (14)
Eff W. Martin (11) Suzanne M. Nora Johnson (9)
Charles B. Mayer, Jr. (2) Terence M. O'Toole (2)
Michael J. O'Brien (7) Carl G.E. Palmstierna (7)
Mark Schwartz (2) Michael G. Rantz (7)
Stephen M. Semlitz (2) J. David Rogers (5)
Robert K. Steel (5) Joseph Sassoon (7)
John A. Thain (2)(7) Peter Savitz (7)(2)
John L. Thornton (7) Charles B. Seelig, Jr. (2)
Bracebridge H. Young, Jr. (7) Ralph F. Severson (11)
Joseph R. Zimmel (2) Gene T. Sykes (9)
Barry L. Zubrow (2) Gary A. Syman (10)
Gary L. Zwerling (2) Leslie C. Tortora (2)
Jon R. Aisbitt (7) John L. Townsend, III (2)
Andrew M. Alper (2) Lee G. Vance (7)
William J. Buckley (5) David A. Viniar (2)
John S. Weinberg (2)
11
<PAGE>
Name and Principal Name and Principal
Business Address Business Address
---------------- ----------------
Peter A. Weinberg (2) Danny O. Yee (13)
Laurence M. Weiss (2) Michael J. Zamkow (2)
George W. Wellde, Jr. (10) Mark A. Zurack (5)
Jaime E. Yordan (2)(16) Jim O'Neill (2)
Sharmin Mossavar-Rahmani (5) Peter D. Sutherland (7)
Hideo Ishihara (10)
Paul M. Achleitner (14) ______________________
Armen A. Avanessians (2)
Joel S. Beckman (2)
David W. Blood (7)
Zachariah Cobrinik (10)
Gary D. Cohn (7)
Christopher A. Cole (2)
Henry Cornell (13)
Robert V. Delaney (2)
Joseph Della Rosa (5)
J. Michael Evans (7)
Lawton W. Fitt (5)
Joseph D. Gatto (2)
Peter C. Gerhard (2)
Nomi P. Ghez (5)
David T. Hamamoto (2)
Walter H. Haydock (2)(15)
David L. Henle (5)
Francis J. Ingrassia (2)
Scott B. Kapnick (7)
Kevin M. Kelly (2)
John C. Kleinert (2)
Jonathan L. Kolatch (2)
Peter S. Kraus (2)
Robert Litterman (2)
Jonathan M. Lopatin (2)
Thomas J. Macirowski (2)
Peter G. Mallinson (13)
Oki Matsumoto (10)
E. Scott Mead (7)
Eric M. Mindich (5)
Steven T. Mnuchin (2)
Thomas K. Montag (2)
Edward A. Mule (2)
Kipp M. Nelson (7)
Christopher K. Norton (2)
Robert J. O'Shea (2)
Wiet H. Pot (7)
Jack L. Salzman (5)
Eric S. Schwartz (5)
Michael F. Schwerin (2)
Richard S. Sharp (7)
Richard G. Sherlund (5)
Michael S. Sherwood (7)
Cody J. Smith (2)
Daniel W. Stanton (5)
Esta E. Stecher (2)
Frederic E. Steck (2)
Byron D. Trott (8)
Barry S. Volpert (2)
Peter S. Wheeler (13)
Anthony G. Williams (7)
Gary W. Williams (5)
Tracy R. Wolstencroft (4)
12
<PAGE>
(1) Management Committee
(2) 85 Broad Street, New York, NY 10004
(3) Mellon Bank Center, 1735 Market Street, 26th Floor,
Philadelphia, PA 19103
(4) 100 Crescent Court, Suite 1000, Dallas, TX 75201
(5) One New York Plaza, New York, NY 10004
(6) 1000 Louisiana Street, Suite 550, Houston, TX 77002
(7) Peterborough Court, 133 Fleet Street, London EC4A 2BB,
England
(8) 4900 Sears Tower, Chicago, IL 60606
(9) 333 South Grand Avenue, Suite 1900, Los Angeles, CA 90071
(10) ARK Mori Bldg.,10th Floor, 12-32 Akasaka, 1-chome, Minato-
ku, Tokyo 107, Japan
(11) 555 California Street, 45th Floor, San Francisco, CA 94104
(12) Exchange Place, 53 State Street, 13th Floor, Boston, MA
02109
(13) Asia Pacific Finance Tower, 35th Floor, Citibank Plaza, 3
Garden Road, Hong Kong
(14) Finanz GmbH, MesseTurm, 60308 Frankfurt am Main, Germany
(15) Munsterhof 4, 8022, Zurich, Switzerland
(16) Casa de Bolsa, S.A. de C.V. Av. de las Palmas 405, Piso 18. Lomas de
Chapultepec Mexico 11000, D.F.
(c) Not Applicable.
13
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
--------------------------------
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940, as amended and the rules thereunder
will be maintained (1) at the offices of the Registrant at 4900 Sears Tower,
Chicago, Illinois 60606 and (2) at the offices of the Registrant's Custodian,
---
State Street Bank and Trust Company, at 225 Franklin Street, Boston, MA 02110.
ITEM 31. MANAGEMENT SERVICES.
-------------------
Not Applicable.
ITEM 32. UNDERTAKINGS.
------------
(a) Registrant undertakes to comply with Section 16(c) of the Investment
Company Act of 1940, as amended, which relates to the assistance to be rendered
to shareholders by the Directors of the Registrant in calling a meeting of
shareholders for the purpose of voting upon the question of the removal of a
Director.
(b) The Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of this Post-Effective Amendment.
(c) The Annual Report also contains performance information and is available to
any recipient of the Prospectus upon request and without charge by writing to
Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 57 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York on the 6th day of December, 1996.
GOLDMAN SACHS MONEY MARKET TRUST
By:/s/Michael J. Richman
--------------------------
Michael J. Richman, Secretary
Pursuant to the requirements of the Securities Act of 1933, the Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
Name Title Date
----
<S> <C> <C>
*DOUGLAS C. GRIP President December 6, 1996
- ------------------------
Douglas C. Grip
*SCOTT M. GILMAN Treasurer December 6, 1996
- ------------------------
Scott M. Gilman
*ASHOK N. BAKHRU Trustee December 6, 1996
- ------------------------
Ashok N. Bakhru
*DAVID B. FORD Trustee December 6, 1996
- ------------------------
David B. Ford
*JACKSON W. SMART, JR. Trustee December 6, 1996
- ------------------------
Jackson W. Smart, Jr.
*WILLIAM H. SPRINGER Trustee December 6, 1996
- ------------------------
William H. Springer
*RICHARD P. STRUBEL Trustee December 6, 1996
- ------------------------
Richard P. Strubel
</TABLE>
By:/s/Michael J. Richman
-----------------------
Michael J. Richman
* Attorney-in-fact
15
<PAGE>
Index to Exhibits
1(j). Agreement and Declaration of Trust regarding Financial Square Treasury
Instruments and Financial Square Federal Funds.
5(r). Form of Investment Advisory Agreement between the Registrant on behalf of
the Financial Square Treasury Instruments and Financial Square Federal
Funds and Goldman Sachs Asset Management.
17(f) Form of Transfer Agency Agreement between Registrant and Goldman, Sachs &
Co.
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST
-----------------------------------------------
WHEREAS, Section 7.3 of the Agreement and Declaration of Trust of Goldman
Sachs Money Market Trust (the "Trust") dated December 6, 1978, as amended (the
"Declaration"), provides that the Declaration may be amended from time to time
by an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to a vote of a majority of the then Trustees);
WHEREAS, Section 7.3 also provides that any such amendment having the
purpose of changing the name of the Trust or the name of any series of Units
theretofore established and designated, or establishing and designating new
series of Units of the Trust, shall not require authorization by Unitholder
vote;
RESOLVED, that the Declaration be further amended as contemplated in
Section 7.3 thereof by establishing and designating (1) two additional series of
Units of beneficial interest to be known as Financial Square Treasury
Instruments Fund and Financial Square Federal Fund and (2) four classes of each
series of such Units, to be known as "FST Shares," "FST Administration Shares,"
"FST Service Shares," and "FST Preferred Shares," such series to have the
relative rights and preferences set forth in Section 4.2 of the Declaration; and
FURTHER RESOLVED, that the President, any Vice President, the Treasurer and
the Secretary of this Trust be, and they each hereby are, severally authorized
to execute an instrument in writing effecting the aforesaid amendment and to
cause the same to be filed wherever in the discretion of such officer such
filing is appropriate.
NOW, THEREFORE, the undersigned, Michael J. Richman, being the duly
elected, appointed and serving Secretary of the Trust, hereby certifies that the
resolutions above have been duly adopted by the Trust's Trustees and submits
such amendment to the Commonwealth of Massachusetts for filing.
WITNESS my hand this 4th day of December, 1996.
GOLDMAN SACHS MONEY MARKET TRUST
/s/ Michael J. Richman
----------------------------------
Michael J. Richman
Secretary of the Trust
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
Then personally appeared the above-named Michael J. Richman and acknowledge
this instrument to be his free act and deed this 4th day of December, 1996.
_________________________________
Notary Public
My commission expires:
<PAGE>
FORM OF TRANSFER AGENCY AGREEMENT
AGREEMENT made as of the ______ day of April, 1997 by and between GOLDMAN
SACHS MONEY MARKET TRUST on behalf of the Financial Square Funds (the "Trust"),
a Delaware business trust, and GOLDMAN, SACHS & CO. ("Goldman Sachs"), a New
York limited partnership.
W I T N E S S E T H:
- - - - - - - - -
WHEREAS, the Trust is an open-end, management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust is empowered to issue shares of beneficial interest
("Shares") in separate series with each such series representing the interests
in a separate portfolio of securities and other assets (a "Fund" or collectively
the "Funds");
WHEREAS, the Trust presently offers Shares in nine Financial Square funds:
Financial Square Treasury Obligations Fund; Financial Square Treasury
Instruments Fund; Financial Square Tax-Free Money Market Fund; Financial Square
Government Fund; Financial Square Federal Fund; Financial Square Prime
Obligations Fund; Financial Square Money Market Fund; Financial Square Money
Market Plus Fund; and
WHEREAS, the Trust desires to appoint Goldman Sachs as Transfer Agent and
Dividend Disbursing Agent and to perform the other services contemplated hereby
with respect to the Trust and each Fund thereof; and
WHEREAS, Goldman Sachs is a registered transfer agent and is authorized to
enter into this agreement and desires to accept appointment as Transfer Agent
and Dividend Disbursing Agent; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. APPOINTMENT
-----------
1.01. Subject to the terms set forth in this Agreement, the Trust hereby
appoints Goldman Sachs as Transfer Agent and Dividend Disbursing Agent and to
perform the other services contemplated hereby with respect to the Trust and
each Fund thereof.
1.02. Goldman Sachs hereby accepts such appointment and agrees that it
will act as Transfer Agent and Dividend Disbursing Agent and perform the other
services described herein with respect to the Trust and each Fund thereof.
1.03. Goldman Sachs agrees to provide the necessary facilities, equipment
and executive, administrative and clerical personnel to perform its duties and
obligations hereunder in accordance with the terms hereof.
<PAGE>
2. TRANSFER AGENT
--------------
2.01. Goldman Sachs shall, subject to any Instructions (as defined in
Section 5 hereof), record the issuance, transfer and redemptions of Shares in
accordance with the following provisions of this Section 2.
2.02. After being notified by the Trust's custodian (the "Custodian") or,
if applicable, the Custodian's sub-custodian (the "Sub-Custodian") that the
purchase price in respect of orders to purchase Shares has been received in the
form of Federal funds, Goldman Sachs shall compute in accordance with the
Trust's Prospectus (the term "Prospectus," as used herein, shall be deemed to
mean the Trust's then current Prospectus, all supplements thereto, the Trust's
then current Statement of Additional Information and all supplements thereto
unless the context otherwise requires) the number of Shares to be purchased at
the net asset value of such Shares applicable to such order and shall (i) credit
the account of the purchaser with the number of Shares so purchased as of the
time contemplated by the Trust's Prospectus and (ii) subject to paragraph 2.05,
mail to the purchaser a confirmation of such purchase and notice of such credit.
2.03. Upon receipt of requests for transfer in proper form, Goldman Sachs
shall make appropriate entries to reflect the transfer of Shares on the records
of the Trust maintained by it.
2.04. Goldman Sachs shall make an adequate and accurate record of the date
and time of receipt of all requests for redemption of Shares transmitted or
delivered to it, and shall process such requests in accordance with the
following provisions. If such redemption requests comply with the standards for
redemption approved by the Trust (as evidenced by the Trust's Prospectus or by
Instructions), Goldman Sachs shall compute in accordance with the Trust's
Prospectus the amount of redemption proceeds payable to each Shareholder
requesting redemption. If any such request for redemption does not comply with
the standards for redemption approved by the Trust, Goldman Sachs shall take
such actions as it reasonably deems appropriate under the circumstances and
shall effect such redemption at the price applicable to the date and time of
receipt of a redemption request (including any necessary documents) complying
with such standards. At such times as may be agreed upon by Goldman Sachs and
the Custodian so as to provide for the timely payment of redemptions in
accordance with the Trust's Prospectus, Goldman Sachs shall advise the Custodian
of aggregate redemption requests for which the Custodian is authorized to effect
payment and shall advise the Custodian of the amount required to pay any portion
of such redemptions which is payable by wire and, if redemptions by check are
instituted in the future, the amount required to pay any portion of such
redemptions which is payable by check. Goldman Sachs shall, as applicable,
instruct the Custodian to wire transfer such redemptions to the Sub-Custodian or
to the Trust's checking account established and maintained at The Northern Trust
Company ("Northern") in accordance with Section 17(f) of the 1940 Act. At such
times as may be agreed upon by Goldman Sachs and the Sub-Custodian so as to
provide for the timely payment of redemptions in accordance with the provisions
of the Trust's Prospectus, Goldman Sachs shall give wiring instructions to the
Sub-Custodian so as to effect payment for redemptions to all Shareholders,
except for Shareholders who request redemption by check if such redemptions are
instituted in the future.
In accordance with the provisions of the resolutions of the Trust's Board
of Trustees and the Trust's Prospectus and with the terms of this Agreement and
if redemptions by check are instituted, Goldman Sachs shall prepare and mail
checks for redemptions to holders of Shares ("Shareholders") who requested that
redemption proceeds be remitted by check. Goldman Sachs shall mail to the
redeeming Shareholder a confirmation of the redemption.
2.05. In lieu of mailing the confirmation and notice to purchasers as
provided in paragraph 2.02 and the confirmation of redeeming Shareholders as
provided in paragraph 2.04, Goldman Sachs may instead, if the Trust's Prospectus
so provides, provide a monthly statement to Shareholders, provided such
statement complies with the requirements of paragraph (c) of Rule 10b-10 under
the Securities Exchange Act of 1934 (the "1934 Act").
<PAGE>
3. DIVIDENDS AND DISTRIBUTIONS
---------------------------
3.01. With respect to those Shareholders which have elected reinvestment
of dividends and distributions in additional Shares, Goldman Sachs shall credit
the account of such Shareholders with the requisite number of additional Shares
relative to each such dividend or distribution. With respect to those
Shareholders which have elected to receive such dividends and distributions in
cash, at such times as may be agreed upon by Goldman Sachs and the Custodian so
as to provide for the timely payment of dividends or distributions to
Shareholders in accordance with the provisions of the Trust's Prospectus,
Goldman Sachs shall advise the Custodian orally of and confirm to it in writing,
the aggregate amount of dividends or distributions payable to Shareholders and
shall advise the Custodian orally of and confirm to it in writing, the amount
required to pay any portion of any such dividend or distribution which is
payable by wire and, if dividends or distributions by check are instituted in
the future, the amount required to pay any portion of any such dividend or
distribution which is payable by check. Goldman Sachs shall, as applicable,
instruct the Custodian to wire transfer dividends or distributions to the Sub-
Custodian or to the Trust's checking account established and maintained at
Northern in accordance with Section 17(f) of the 1940 Act. At such times as may
be agreed upon by Goldman Sachs and the Sub-Custodian so as to provide for the
timely payment of dividends and distributions in accordance with the provisions
of the Trust's Prospectus, Goldman Sachs shall give wiring instructions to the
Sub-Custodian so as to effect payment for dividends and distributions to
Shareholders who requested such payment by wire. In accordance with the
provisions of the resolutions of the Trust's Board of Trustees and the Trust's
Prospectus and with the terms of this Agreement and if dividends or
distributions by check are instituted, Goldman Sachs shall prepare and mail
checks for dividends or distributions to Shareholders who requested payment
thereof by check.
4. ADDITIONAL DUTIES
-----------------
4.01. Goldman Sachs shall establish and maintain a separate account with
respect to each Shareholder. Goldman Sachs shall perform such "master" and
"subaccounting" services, if any, as are described in the Trust's Prospectus,
provided that the Trust shall not change the description of such services in the
Prospectus without obtaining the advance consent of Goldman Sachs. Goldman
Sachs shall maintain records showing for each Shareholder's account the
following: (a) name, address, tax identifying number and number of Shares held;
historical information regarding the account, including dividends and
distributions paid and date and price for all transactions; (c) any stop or
restraining order placed against the account; (d) information with respect to
withholdings; (e) any dividend or distribution reinvestment order, dividend or
distribution address and correspondence relating to the current maintenance of
the account; and (f) any information required in order for Goldman Sachs to
perform the calculations and make the determinations contemplated or required by
this Agreement. Goldman Sachs shall maintain all records relating to its
activities and obligations under this Agreement in such manner as will enable
the Trust and Goldman Sachs to meet their respective obligations under: (i) the
Trust's Prospectus; (ii) the required recordkeeping and reporting provisions of
the 1934 Act, particularly Section 17A thereof, and of the 1940 Act,
particularly Sections 30 and 31 thereof, and state securities or Blue Sky laws,
and the rules and regulations thereunder; and (iii) applicable Federal and State
tax laws and regulations thereunder. All records maintained by Goldman Sachs in
connection with the performance of its duties under this Agreement will remain
the property of the Trust, shall be returned to the Trust promptly upon request
and, in the event of termination of this Agreement, will be promptly returned to
or delivered as directed by the Trust. Such records may be inspected by the
Trust at reasonable times. In the event such records are returned to or
delivered as directed by the Trust, Goldman Sachs may at its option retain
copies of such records.
4.02. Goldman Sachs shall furnish to the Trust: (a) information as to the
Shares distributed or to be distributed in each State for "Blue Sky" purposes at
such times and in such degree of detail as is necessary for the Trust to verify
the satisfaction of or to satisfy its obligations to register such Shares under
applicable "Blue Sky" laws, and copies of Shareholder lists and such other
information and statistical data as may reasonably be requested in Instructions.
<PAGE>
4.03. Goldman Sachs shall prepare and file with the Internal Revenue
Service and with the appropriate State agencies, and, if required, mail to
Shareholders such returns for reporting (i) dividends and distributions paid,
credited or withheld as are required by the Trust's Prospectus or applicable law
or regulation to be so filed and mailed and (ii) expenses incurred by the Trust
as are required by applicable Federal law.
4.04. Goldman Sachs shall prepare and mail an individual monthly statement
for each Shareholder showing all activity in such Shareholder's account for the
month. Upon request from a Shareholder, Goldman Sachs shall prepare and mail a
year-to-date statement showing all activity in such Shareholder's account on a
year-to-date basis.
4.05. Goldman Sachs shall mail such Shareholder reports and such proxy
material, proxy cards and other material supplied to it by the Trust in
connection with Shareholder meetings of the Trust and shall receive, examine and
tabulate returned proxies and certify the vote to the Trust, all as and to the
extent requested by the Trust.
4.06. Goldman Sachs shall cooperate with the Trust and the Trust's
independent public accountants in connection with: (a) the preparation of
reports to Shareholders, to the Securities and Exchange Commission (including
all required periodic and other reports), to State securities commissioners, and
to others, annual and other audits of the books and records of the Trust, and
(c) other matters of a like nature.
4.07. Goldman Sachs shall maintain adequate procedures and systems to
safeguard from loss or damage attributable to fire, theft, misuse or any other
cause the Trust's records and other data and Goldman Sachs' records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder.
4.08. Goldman Sachs shall comply with the provisions of Investment Company
Act Release No. 6863 dated December 8, 1971 entitled "Guidelines Relating to
Checking Accounts Established Pursuant to Section 17(f) of The Investment
Company Act of 1940, as Amended, by Investment Companies Having Bank Custodians"
(the "Release") with regard to the establishment and maintenance of any checking
account for the Fund. Goldman Sachs shall establish and maintain procedures
reasonably designed to assure the safekeeping of checks delivered to Goldman
Sachs for signature by employees of Goldman Sachs and the security and integrity
of the signing of such checks. Goldman Sachs' employees are not permitted to
sign any such checks which are made payable to "Cash" or to the order of the
Fund or to any named petty cashier of the Fund or which are not made payable to
the order of designated payee.
4.09. Goldman Sachs shall maintain expedited redemption and dividend
instructions from Shareholders in the form of such records as are necessary to
honor telephone, telegraph or other redemption requests from Shareholders
without signature guarantee and to effect the payment of dividends and
distributions in accordance with the provisions of the Trust's Prospectus.
Goldman Sachs shall apply such instructions as necessary to effect dividends,
distributions, redemptions and other transactions in accordance with the
provisions of the Trust's Prospectus. Goldman Sachs shall establish and
maintain procedures reasonably designed to assure the accuracy, safekeeping and
proper application of records of expedited redemption and dividend instructions.
4.10. Goldman Sachs, in the performance of its duties hereunder:
(a) shall use the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims;
(b) shall act in conformity with the Trust's Declaration of Trust
dated___________, 1977 (such Declaration of Trust, as presently in effect and as
amended from time to time, is herein called the "Trust Agreement"), the Trust's
By-Laws (such By-laws, as presently in effect and as amended from time to time,
are herein called the
<PAGE>
"By-laws"), the Trust's Prospectus and any Instruction, and will, subject to the
standard set forth in paragraph 4.10(a) above, comply with and conform to the
requirements of the 1940 Act, the 1934 Act, particularly Section 17A thereof,
and all other applicable federal and state laws, regulations and rulings; and
(c) shall not be liable for any damages, including those resulting from its
failure to perform its obligations under the terms of this Agreement, provided
such damages or failure are due to an act of God, equipment or transmission
failure, strike or other cause reasonably beyond its control.
5. INSTRUCTIONS
------------
5.01. Goldman Sachs shall be deemed to have received Instructions (as that
term is used herein) upon receipt of written instructions (including receipt by
telecopier, telegram, cable or Telex), which may be continuing instructions,
signed by a majority of the Board of Trustees of the Trust or by a person that
the Trustees shall have from time to time authorized to give the particular
class of Instructions in question. Different persons may be authorized to give
Instructions for different purposes, and Instructions may be general or specific
in terms. A certified copy of a By-law, resolution or action of the Board of
Trustees of the Trust may be received and accepted by Goldman Sachs as
conclusive evidence of the authority of any such persons to act and may be
considered to be in full force and effect until receipt by Goldman Sachs of
written notice to the contrary.
5.02. The Trust may also authorize one or more designated persons to issue
oral (such term as used herein including, without limitation, telephoned)
instructions, specifying the type or types of instructions that may be so
issued, in which case the Trust shall deliver to Goldman Sachs resolutions of
the Board of Trustees to such effect. One or more of the persons designated by
the Board of Trustees to give oral instructions shall promptly confirm such oral
instructions in writing to Goldman Sachs. Such instructions when given in
accordance with the provisions hereof and with such resolutions shall be deemed
Instructions hereunder. In case of conflict between oral Instructions given by
a person designated in the resolution of the Board of Trustees referred to in
the first sentence of this paragraph 5.02 and any written Instructions given by
a person designated in the resolution of the Board of Trustees referred to in
the first sentence of this paragraph 5.01 and any written Instructions, the
Instructions most recently received by Goldman Sachs shall prevail, and in case
of conflict between oral Instructions given by a person designated in such
resolution and any written confirmation or purported confirmation of oral
Instructions, such written confirmation shall prevail; provided that any
transaction initiated by Goldman Sachs pursuant to such oral Instructions may,
but need not, be completed by Goldman Sachs notwithstanding Goldman Sachs'
receipt of conflicting written Instructions hereunder or written confirmation or
purported confirmation of oral Instructions hereunder subsequent to Goldman
Sachs' initiation of such transaction.
5.03. At any time Goldman Sachs may apply to any Trustee or officer of the
Trust or any person authorized to give instructions, and may consult with legal
counsel to the Trust with respect to any matter arising in connection with the
services to be performed by Goldman Sachs under this Agreement, and Goldman
Sachs and its agents or subcontractors shall not be liable and shall be
indemnified by the Trust for any action taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel.
6. COMPENSATION
------------
6.01. For the services provided and the expenses assumed by Goldman Sachs
pursuant to this Agreement, the Trust will pay to Goldman Sachs as full
compensation therefor the compensation set forth in the schedule of even date
herewith delivered by Goldman Sachs to the Trust until a different compensation
schedule shall be agreed upon in writing
<PAGE>
between the parties which schedule shall be preceded by approval of a majority
of the Trustees, including the Trustees who are not interested persons of the
Trust or Goldman Sachs.
6.02. Goldman Sachs shall be responsible for the cost of any and all forms
(excluding the cost of developing the format of such forms) prepared for use in
connection with its actions hereunder, as well as the cost of postage, telephone
and telegraph used in communicating with Shareholders of the Trust to the extent
such communications are required under the terms of this Agreement. Goldman
Sachs shall be entitled to all property rights to the format of all forms it has
prepared for use in connection with its actions hereunder. Goldman Sachs hereby
grants the Trust a perpetual, nonexclusive, royalty-free, assignable license to
use forms of identical or similar format to such forms. Goldman Sachs shall be
responsible for all microfiche, microfilm and other mediums for the permanent
storage of the Trust's records consumed by Goldman Sachs in the performance of
its obligations hereunder. Except as provided in this paragraph 6.02, Goldman
Sachs will pay all expenses incurred by it in connection with the performance of
its duties under this Agreement.
7. INDEMNIFICATION
---------------
7.01. The Trust hereby agrees to indemnify and hold harmless Goldman
Sachs, its officers, partners and employees and each person, if any, who
controls Goldman Sachs (collectively, the "Indemnified Parties") against any and
all losses, claims, damages or liabilities, joint or several, to which any such
Indemnified Party may become subject under the 1934 Act, the 1940 Act or other
Federal or State statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon Goldman Sachs' actions hereunder. The
Trust will reimburse each Indemnified Party for any legal or other expenses
incurred by such Indemnified Party in connection with investigating or defending
any such loss, claim, damages, liability or action.
7.02. It is understood, however, that nothing in this Section 7 shall protect
any Indemnified Party, or entitle any Indemnified Party to indemnification
against any liability to the Trust or its shareholders to which such party would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence, in the performance of his duties, or by reason of his reckless
disregard of his obligations and duties under this Agreement.
8. TERM OF AGREEMENT
-----------------
8.01. This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto, which agreement shall be preceded by approval
of the Trustees, including the Trustees who are not interested persons of the
Trust or Goldman Sachs, and may be terminated (except as to the second and third
sentences of paragraph 6.02 and as to paragraphs 7.01 and 7.02) by either party
by an instrument in writing delivered or mailed, postage prepaid, to the other
party, such termination to take effect no sooner than 120 days after the date of
such delivery or mailing.
8.02. Goldman Sachs and the Trust may agree from time to time, by written
instrument signed by both parties, on such provisions interpretative of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No interpretative or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
9. MISCELLANEOUS
-------------
<PAGE>
9.01. Without limiting the other provisions hereof, notice and other
writings delivered or mailed postage prepaid to the Trust in care of Goldman
Sachs Trust - Financial Square Funds, One New York Plaza, New York, NY 10004,
Attention: Michael Richman, or to Goldman Sachs at 4900 Sears Tower Chicago,
Illinois 60606, Attention: Nancy L. Mucker or to such other address as the Trust
or Goldman Sachs may hereafter specify by written notice to be the most recent
address specified by the party to whom such notice is addressed, shall be deemed
to have been properly delivered or given hereunder to the respective addressee.
9.02. This Agreement shall be binding on and shall inure to the benefit of
the Trust and Goldman Sachs and their respective successors, shall be construed
according to the laws of Illinois (except as to paragraph 9.03 hereof which
shall be construed in accordance with the laws of Delaware) and may be executed
in two or more counterparts, each of which shall be deemed an original. This
Agreement may not be assigned by Goldman Sachs nor may Goldman Sachs' duties
hereunder be performed by any other person without the prior written consent of
the Trust authorized and approved by a resolution of the Board of Trustees. The
term "assigned" shall be construed consistently with the term "assignment" as
defined in Section 2(a)(4) of the 1940 Act and Rule 2a-6 thereunder as if such
Rule applied to transfer and dividend disbursing agents. The headings in this
Agreement have been inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement. If any provision of
this Agreement shall be held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
Any provision in this Agreement requiring compliance with any statute or
regulation shall mean such statute or regulation as amended and in effect from
time to time.
9.03. This Agreement is executed by or on behalf of the Trust and the
obligations hereunder are not binding upon any of the Trustees, officers or
Shareholders of the Trust individually but are binding only upon the Trust and
its assets and property. The Trust's Trust Agreement, as amended, is on file
with the Secretary of the State of Delaware.
GOLDMAN SACHS TRUST
(FINANCIAL SQUARE FUNDS)
Attest:_____________________ By:____________________
Michael Richman Douglas C. Grip
Secretary President of the Trust
GOLDMAN, SACHS & CO.
Attest:_____________________ By:_____________________
Michael Richman David B. Ford
Counsel to the Funds Group General Partner
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
4900 Sears Tower
Chicago, Illinois 60606
April ______, 1997
Goldman Sachs Asset Management
a separate operating division of Goldman, Sachs & Co.
One New York Plaza
New York, NY 10004
Form of
INVESTMENT ADVISORY AGREEMENT
-----------------------------
Financial Square Federal Fund
Dear Sirs:
Goldman Sachs Trust (the "Company") has been organized as a Delaware business
trust under the laws of the State of Delaware to engage in the business of an
investment company. The shares of beneficial interest of the Company ("Shares")
may be divided into multiple series ("Series"), including the [Fund Name] (the
"Fund"). Each Series will represent the interests in a separate portfolio of
securities and other assets. Each Series may be terminated, and additional
Series established, from time to time by action of the Board of Trustees. The
Company on behalf of the Fund has selected you to act as the investment adviser
and administrator of the Fund and to provide certain services, as more fully set
forth below, and you are willing to act as such investment adviser and
administrator and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Company agrees with you as follows:
1. Name of Company. The Company may use any name including or derived
---------------
from the name "Goldman Sachs" in connection with the Fund only for so long as
this Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to your business as investment adviser or administrator. Upon the termination
of this Agreement, the Company (to the extent that it lawfully can) will cause
the Fund to cease to use such a name or any other name indicating that it is
advised by or otherwise connected with you or any organization which shall have
so succeeded to your business.
2. Sub-Advisers. You may engage one or more investment advisers which are
-------------
either registered as such or specifically exempt from registration under the
Investment Advisers Act of 1940, as amended, to act as sub-advisers to provide
with respect to the Fund certain services set forth in Paragraphs 3 and 6
hereof, all as shall be set forth in a written contract to which the Company, on
behalf of the Fund, and you shall be parties, which contract shall be subject to
approval by the vote of a majority of the Directors who are not interested
persons of you, the sub-adviser, or of the Company, cast in person at a meeting
called for the purpose of voting on such approval and by the vote of a majority
of the outstanding voting securities of the Fund and otherwise consistent with
the terms of the Investment Company Act of 1940 Act, as amended, (the "1940
Act").
<PAGE>
3. Advisory and Administrative Services.
------------------------------------
(a) You will regularly provide the Fund with investment research, advice and
supervision and will furnish continuously an investment program for the
Fund consistent with the investment objectives and policies of the Fund.
You will determine from time to time what securities shall be purchased for
the Fund, what securities shall be held or sold by the Fund, and what
portion of the Fund's assets shall be held uninvested as cash, subject
always to the provisions of the Company's Declaration of Trust and By-Laws
and of the 1940 Act, and to the investment objectives, policies and
restrictions of the Fund, as each of the same shall be from time to time in
effect, and subject, further, to such policies and instructions as the
Board of Trustees of the Company may from time to time establish.
(b) Subject to the general supervision of the Board of Trustees of the Company,
you will provide certain administrative services to the Fund. You will, to
the extent such services are not required to be performed by others
pursuant to the custodian agreement (or the transfer agency agreement to
the extent that a person other than you is serving thereunder as the
Company's transfer agent), (i) provide supervision of all aspects of the
Fund's operations not referred to in paragraph (a) above; (ii) provide the
Fund with personnel to perform such executive, administrative and clerical
services as are reasonably necessary to provide effective administration of
the Fund; (iii) arrange for, at the Company's expense, (a) the preparation
for the Fund of all required tax returns, (b) the preparation and
submission of reports to existing shareholders and (c) the periodic
updating of the Fund's prospectus and statement of additional information
and the preparation of reports filed with the Securities and Exchange
Commission and other regulatory authorities; (iv) maintain all of the
Fund's records' and (v) provide the Fund with adequate office space and all
necessary office equipment and services including telephone service, heat,
utilities, stationery supplies and similar items.
(c) You will also provide to the Company's Board of Trustees such periodic and
special reports as the Board may reasonably request. You shall for all
purposes herein be deemed to be an independent contractor and shall, except
as otherwise expressly provided or authorized, have no authority to act for
or represent the Company or the Fund in any way or otherwise be deemed an
agent of the Company or the Fund.
(d) You will maintain all books and records with respect to the Fund's
securities transactions required by sub-paragraphs (b)(5), (6), (9) and
(10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than those
records being maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by Rule 31a-2 of
the 1940 Act. You will also provide to the Company's Board of Trustees such
periodic and special reports as the Board may reasonably request.
(e) You will notify the Company of any change in your membership within a
reasonable time after such change.
(f) Your services hereunder are not deemed exclusive and you shall be free
to render similar services to others.
4. Allocation of Charges and Expenses. You will pay all costs incurred by
----------------------------------
you in connection with the performance of your duties under paragraph 3. You
will pay the compensation and expenses of all personnel of yours and will make
available, without expense to the Fund, the
2
<PAGE>
services of such of your partners, officers and employees as may duly be elected
officers or Trustees of the Company, subject to their individual consent to
serve and to any limitations imposed by law. You will not be required to pay
any expenses of the Fund other than those specifically allocated to you in this
paragraph 4. In particular, but without limiting the generality of the
foregoing, you will not be required to pay: (i) organization expenses of the
Fund; (ii) fees and expenses incurred by the Fund in connection with membership
in investment company organizations; (iii) brokers' commissions; (iv) payment
for portfolio pricing services to a pricing agent, if any; (v) legal, auditing
or accounting expenses (including an allocable portion of the cost of your
employees rendering legal and accounting services to the Fund); (vi) taxes or
governmental fees; (vii) the fees and expenses of the transfer agent of the
Company; (viii) the cost of preparing stock certificates or any other expenses,
including clerical expenses of issue, redemption or repurchase of Shares of the
Fund; (ix) the expenses of and fees for registering or qualifying Shares for
sale and of maintaining the registration of the Fund and registering the Company
as a broker or a dealer; (x) the fees and expenses of Trustees of the Company
who are not affiliated with you; (xi) the cost of preparing and distributing
reports and notices to shareholders, the Securities and Exchange Commission and
other regulatory authorities; (xii) the fees or disbursements of custodians of
the Fund's assets, including expenses incurred in the performance of any
obligations enumerated by the Declaration of Trust or By-Laws of the Company
insofar as they govern agreements with any such custodian; or (xiii) litigation
and indemnification expenses and other extraordinary expenses not incurred in
the ordinary course of the Fund's business. You shall not be required to pay
expenses of activities which are primarily intended to result in sales of Shares
of the Fund.
5. Compensation of the Adviser.
---------------------------
(a) For all services to be rendered and payments made as provided in
paragraphs 3 and 4 hereof, the Company on behalf of the Fund will pay
you each month a fee at an annual rate equal to .205% per annum of the
average daily net assets of the Fund. The "average daily net assets" of
the Fund shall be determined on the basis set forth in the Fund's
prospectus or otherwise consistent with the 1940 Act and the regulations
promulgated thereunder.
(b) In addition to the foregoing, you may from time to time agree not to
impose all or a portion of your fee otherwise payable hereunder (in
advance of the time such fee or portion thereof would otherwise accrue)
and/or undertake to pay or reimburse the Fund for all or a portion of
its expenses not otherwise required to be borne or reimbursed by you.
Any such fee reduction or undertaking may be discontinued or modified by
you at any time.
6. Avoidance of Inconsistent Position. In connection with purchases or sales
----------------------------------
of portfolio securities for the account of the Fund, neither you nor any of your
partners, officers or employees will act as a principal, except as otherwise
permitted by the 1940 Act. You or your agent shall arrange for the placing of
all orders for the purchase and sale of portfolio securities for the Fund's
account with brokers or dealers (including Goldman, Sachs & Co.) selected by
you. In the selection of such brokers or dealers (including Goldman, Sachs &
Co.) and the placing of such orders, you are directed at all times to seek for
the Fund the most favorable execution and net price available. It is also
understood that it is desirable for the Fund that you have access to
supplemental investment and market research and security and economic analyses
provided by brokers who may execute brokerage transactions at a higher cost to
the Fund than may result when allocating brokerage to other brokers on the basis
of seeking the most favorable price and efficient execution. Therefore, you are
authorized to place orders for the purchase and sale of securities for the Fund
with such
3
<PAGE>
brokers, subject to review by the Company's Board of Trustees from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to you in connection
with your services to other clients. If any occasion should arise in which you
give any advice to your clients concerning the Shares of the Fund, you will act
solely as investment counsel for such clients and not in any way on behalf of
the Fund. You may, on occasions when you deem the purchase or sale of a
security to be in the best interests of the Fund as well as your other customers
(including any other Series or any other investment company or advisory account
for which you or any of your affiliates acts as an investment adviser),
aggregate, to the extent permitted by applicable laws and regulations, the
securities to be sold or purchased in order to obtain the best net price and the
most favorable execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
made by you in the manner you consider to be the most equitable and consistent
with your fiduciary obligations to the Fund and to such other customers.
7. Limitation of Liability of Adviser and Fund. You shall not be liable for
-------------------------------------------
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Company or
the Fund shall be deemed, when acting within the scope of his employment by the
Fund, to be acting in such employment solely for the Fund and not as your
employee or agent. The Fund shall not be liable for any claims against any
other Series of the Company.
8. Duration and Termination of this Agreement. This Agreement shall remain in
------------------------------------------
force until June 30, 1998 and shall continue for periods of one year thereafter,
but only so long as such continuance is specifically approved at least annually
(a) by the vote of a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Company and have no financial interest in this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval and (b) by a vote of a majority of the Board of Trustees of the Company
or of a majority of the outstanding voting securities of the Fund. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with the
1940 Act and the rules and regulations thereunder. This Agreement may, on 60
days' written notice to the other party, be terminated at any time without the
payment of any penalty, by the Board of Trustees of the Company, by vote of a
majority of the outstanding voting securities of the Fund, or by you. This
Agreement shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Agreement, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of "interested
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission by any
rule, regulation or order.
9. Amendment of this Agreement. No provisions of this Agreement may be
---------------------------
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of the holders of a majority of the outstanding
voting securities of the Fund and by a majority of the Board of Trustees of the
Company, including a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Company and have no financial interest in this
Agreement, cast in person at a meeting called for the purpose of voting on such
amendment.
4
<PAGE>
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11. Miscellaneous. The captions in this Agreement are included for convenience
-------------
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
The name Goldman Sachs Trust is the designation of the Trustees for the
time being under[an Amended and Restated Agreement and Declaration of Trust
dated December 5, 1991], as amended from time to time, and all persons dealing
with the Trust or the Fund must look solely to the property of the Trust or the
Fund for the enforcement of any claims against the Trust as neither the
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust. The Fund shall not be liable
for any claims against any other Series of the Trust.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract.
Yours very truly,
GOLDMAN SACHS MONEY MARKET TRUST
(on behalf of the Financial Square Federal Fund)
Attest: _________________________ By: _________________________
Michael J. Richman Douglas C. Grip
Secretary of the Company President of the Company
The foregoing Agreement is hereby accepted as of the date thereof.
GOLDMAN SACHS ASSET MANAGEMENT
a separate operating division of Goldman, Sachs & Co.
Attest: _________________________ By: _________________________
Michael J. Richman [David B. Ford]
Counsel to the Funds Group Partner
5
<PAGE>
GOLDMAN SACHS MONEY MARKET TRUST
4900 Sears Tower
Chicago, Illinois 60606
April ______, 1997
Goldman Sachs Asset Management
a separate operating division of Goldman, Sachs & Co.
One New York Plaza
New York, NY 10004
Form of
INVESTMENT ADVISORY AGREEMENT
-----------------------------
Financial Square Treasury Instruments Fund
Dear Sirs:
Goldman Sachs Trust (the "Company") has been organized as a Delaware business
trust under the laws of the State of Delaware to engage in the business of an
investment company. The shares of beneficial interest of the Company ("Shares")
may be divided into multiple series ("Series"), including the [Fund Name] (the
"Fund"). Each Series will represent the interests in a separate portfolio of
securities and other assets. Each Series may be terminated, and additional
Series established, from time to time by action of the Board of Trustees. The
Company on behalf of the Fund has selected you to act as the investment adviser
and administrator of the Fund and to provide certain services, as more fully set
forth below, and you are willing to act as such investment adviser and
administrator and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Company agrees with you as follows:
1. Name of Company. The Company may use any name including or derived
---------------
from the name "Goldman Sachs" in connection with the Fund only for so long as
this Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to your business as investment adviser or administrator. Upon the termination
of this Agreement, the Company (to the extent that it lawfully can) will cause
the Fund to cease to use such a name or any other name indicating that it is
advised by or otherwise connected with you or any organization which shall have
so succeeded to your business.
2. Sub-Advisers. You may engage one or more investment advisers which are
-------------
either registered as such or specifically exempt from registration under the
Investment Advisers Act of 1940, as amended, to act as sub-advisers to provide
with respect to the Fund certain services set forth in Paragraphs 3 and 6
hereof, all as shall be set forth in a written contract to which the Company, on
behalf of the Fund, and you shall be parties, which contract shall be subject to
approval by the vote of a majority of the Directors who are not interested
persons of you, the sub-adviser, or of the Company, cast in person at a meeting
called for the purpose of voting on such approval and by the vote of a majority
of the outstanding voting securities of the Fund and otherwise consistent with
the terms of the Investment Company Act of 1940 Act, as amended, (the "1940
Act").
6
<PAGE>
3. Advisory and Administrative Services.
------------------------------------
(a) You will regularly provide the Fund with investment research, advice and
supervision and will furnish continuously an investment program for the
Fund consistent with the investment objectives and policies of the Fund.
You will determine from time to time what securities shall be purchased for
the Fund, what securities shall be held or sold by the Fund, and what
portion of the Fund's assets shall be held uninvested as cash, subject
always to the provisions of the Company's Declaration of Trust and By-Laws
and of the 1940 Act, and to the investment objectives, policies and
restrictions of the Fund, as each of the same shall be from time to time in
effect, and subject, further, to such policies and instructions as the
Board of Trustees of the Company may from time to time establish.
(b) Subject to the general supervision of the Board of Trustees of the Company,
you will provide certain administrative services to the Fund. You will, to
the extent such services are not required to be performed by others
pursuant to the custodian agreement (or the transfer agency agreement to
the extent that a person other than you is serving thereunder as the
Company's transfer agent), (i) provide supervision of all aspects of the
Fund's operations not referred to in paragraph (a) above; (ii) provide the
Fund with personnel to perform such executive, administrative and clerical
services as are reasonably necessary to provide effective administration of
the Fund; (iii) arrange for, at the Company's expense, (a) the preparation
for the Fund of all required tax returns, (b) the preparation and
submission of reports to existing shareholders and (c) the periodic
updating of the Fund's prospectus and statement of additional information
and the preparation of reports filed with the Securities and Exchange
Commission and other regulatory authorities; (iv) maintain all of the
Fund's records' and (v) provide the Fund with adequate office space and all
necessary office equipment and services including telephone service, heat,
utilities, stationery supplies and similar items.
(c) You will also provide to the Company's Board of Trustees such periodic and
special reports as the Board may reasonably request. You shall for all
purposes herein be deemed to be an independent contractor and shall, except
as otherwise expressly provided or authorized, have no authority to act for
or represent the Company or the Fund in any way or otherwise be deemed an
agent of the Company or the Fund.
(d) You will maintain all books and records with respect to the Fund's
securities transactions required by sub-paragraphs (b)(5), (6), (9) and
(10) and paragraph (f) of Rule 31a-1 under the 1940 Act (other than those
records being maintained by the Fund's custodian or transfer agent) and
preserve such records for the periods prescribed therefor by Rule 31a-2 of
the 1940 Act. You will also provide to the Company's Board of Trustees such
periodic and special reports as the Board may reasonably request.
(e) You will notify the Company of any change in your membership within a
reasonable time after such change.
(f) Your services hereunder are not deemed exclusive and you shall be free
to render similar services to others.
4. Allocation of Charges and Expenses. You will pay all costs incurred by
----------------------------------
you in connection with the performance of your duties under paragraph 3. You
will pay the compensation and expenses of all personnel of yours and will make
available, without expense to the Fund, the
7
<PAGE>
services of such of your partners, officers and employees as may duly be elected
officers or Trustees of the Company, subject to their individual consent to
serve and to any limitations imposed by law. You will not be required to pay
any expenses of the Fund other than those specifically allocated to you in this
paragraph 4. In particular, but without limiting the generality of the
foregoing, you will not be required to pay: (i) organization expenses of the
Fund; (ii) fees and expenses incurred by the Fund in connection with membership
in investment company organizations; (iii) brokers' commissions; (iv) payment
for portfolio pricing services to a pricing agent, if any; (v) legal, auditing
or accounting expenses (including an allocable portion of the cost of your
employees rendering legal and accounting services to the Fund); (vi) taxes or
governmental fees; (vii) the fees and expenses of the transfer agent of the
Company; (viii) the cost of preparing stock certificates or any other expenses,
including clerical expenses of issue, redemption or repurchase of Shares of the
Fund; (ix) the expenses of and fees for registering or qualifying Shares for
sale and of maintaining the registration of the Fund and registering the Company
as a broker or a dealer; (x) the fees and expenses of Trustees of the Company
who are not affiliated with you; (xi) the cost of preparing and distributing
reports and notices to shareholders, the Securities and Exchange Commission and
other regulatory authorities; (xii) the fees or disbursements of custodians of
the Fund's assets, including expenses incurred in the performance of any
obligations enumerated by the Declaration of Trust or By-Laws of the Company
insofar as they govern agreements with any such custodian; or (xiii) litigation
and indemnification expenses and other extraordinary expenses not incurred in
the ordinary course of the Fund's business. You shall not be required to pay
expenses of activities which are primarily intended to result in sales of Shares
of the Fund.
5. Compensation of the Adviser.
---------------------------
(a) For all services to be rendered and payments made as provided in
paragraphs 3 and 4 hereof, the Company on behalf of the Fund will pay
you each month a fee at an annual rate equal to .205% per annum of the
average daily net assets of the Fund. The "average daily net assets" of
the Fund shall be determined on the basis set forth in the Fund's
prospectus or otherwise consistent with the 1940 Act and the
regulations promulgated thereunder.
(b) In addition to the foregoing, you may from time to time agree not to
impose all or a portion of your fee otherwise payable hereunder (in
advance of the time such fee or portion thereof would otherwise accrue)
and/or undertake to pay or reimburse the Fund for all or a portion of
its expenses not otherwise required to be borne or reimbursed by you.
Any such fee reduction or undertaking may be discontinued or modified
by you at any time.
6. Avoidance of Inconsistent Position. In connection with purchases or sales
----------------------------------
of portfolio securities for the account of the Fund, neither you nor any of your
partners, officers or employees will act as a principal, except as otherwise
permitted by the 1940 Act. You or your agent shall arrange for the placing of
all orders for the purchase and sale of portfolio securities for the Fund's
account with brokers or dealers (including Goldman, Sachs & Co.) selected by
you. In the selection of such brokers or dealers (including Goldman, Sachs &
Co.) and the placing of such orders, you are directed at all times to seek for
the Fund the most favorable execution and net price available. It is also
understood that it is desirable for the Fund that you have access to
supplemental investment and market research and security and economic analyses
provided by brokers who may execute brokerage transactions at a higher cost to
the Fund than may result when allocating brokerage to other brokers on the basis
of seeking the most favorable price and efficient execution. Therefore, you are
authorized to place orders for the purchase and sale of securities for the Fund
with such
8
<PAGE>
brokers, subject to review by the Company's Board of Trustees from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to you in connection
with your services to other clients. If any occasion should arise in which you
give any advice to your clients concerning the Shares of the Fund, you will act
solely as investment counsel for such clients and not in any way on behalf of
the Fund. You may, on occasions when you deem the purchase or sale of a
security to be in the best interests of the Fund as well as your other customers
(including any other Series or any other investment company or advisory account
for which you or any of your affiliates acts as an investment adviser),
aggregate, to the extent permitted by applicable laws and regulations, the
securities to be sold or purchased in order to obtain the best net price and the
most favorable execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
made by you in the manner you consider to be the most equitable and consistent
with your fiduciary obligations to the Fund and to such other customers.
7. Limitation of Liability of Adviser and Fund. You shall not be liable for
-------------------------------------------
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Company or
the Fund shall be deemed, when acting within the scope of his employment by the
Fund, to be acting in such employment solely for the Fund and not as your
employee or agent. The Fund shall not be liable for any claims against any
other Series of the Company.
8. Duration and Termination of this Agreement. This Agreement shall remain in
------------------------------------------
force until June 30, 1998 and shall continue for periods of one year thereafter,
but only so long as such continuance is specifically approved at least annually
(a) by the vote of a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Company and have no financial interest in this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval and (b) by a vote of a majority of the Board of Trustees of the Company
or of a majority of the outstanding voting securities of the Fund. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with the
1940 Act and the rules and regulations thereunder. This Agreement may, on 60
days' written notice to the other party, be terminated at any time without the
payment of any penalty, by the Board of Trustees of the Company, by vote of a
majority of the outstanding voting securities of the Fund, or by you. This
Agreement shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Agreement, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of "interested
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission by any
rule, regulation or order.
9. Amendment of this Agreement. No provisions of this Agreement may be
---------------------------
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of the holders of a majority of the outstanding
voting securities of the Fund and by a majority of the Board of Trustees of the
Company, including a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Company and have no financial interest in this
Agreement, cast in person at a meeting called for the purpose of voting on such
amendment.
9
<PAGE>
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11. Miscellaneous. The captions in this Agreement are included for convenience
-------------
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
The name Goldman Sachs Trust is the designation of the Trustees for the
time being under[an Amended and Restated Agreement and Declaration of Trust
dated December 5, 1991], as amended from time to time, and all persons dealing
with the Trust or the Fund must look solely to the property of the Trust or the
Fund for the enforcement of any claims against the Trust as neither the
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust. The Fund shall not be liable
for any claims against any other Series of the Trust.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract.
Yours very truly,
GOLDMAN SACHS MONEY MARKET TRUST
(on behalf of the Financial Square Treasury Instruments Fund)
Attest: _________________________ By: _________________________
Michael J. Richman Douglas C. Grip
Secretary of the Company President of the Company
The foregoing Agreement is hereby accepted as of the date thereof.
GOLDMAN SACHS ASSET MANAGEMENT
a separate operating division of Goldman, Sachs & Co.
Attest: _________________________ By: _________________________
Michael J. Richman [David B. Ford]
Counsel to the Funds Group Partner
10
