<PAGE>
SUBJECT TO COMPLETION DATED DECEMBER 6, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
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>
SUBJECT TO COMPLETION DATED DECEMBER 6, 1996
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any State.
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, man-
agement 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 inter-
est ("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 in-
struments:
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 Administration Shares. It should be read and re-
tained for future reference. If you would like more detailed information, the
Statement of Additional Information dated February , 1997, as amended or sup-
plemented from time to time, is available upon request without charge from in-
stitutions ("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 Se-
curities 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 AC-
CURACY 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>
SUBJECT TO COMPLETION DATED DECEMBER 6, 1996
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any State.
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. 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 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.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
