GOLDMAN SACHS TRUST, 485APOS, 1995-03-31

GOLDMAN SACHS TRUST
485APOS, 1995-03-31

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<PAGE>

As filed with the Securities and Exchange Commission on
March 31, 1995.

1933 Act Registration No. 33-17619
1940 Act Registration No. 811-5349

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

____________

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 ( X )

Post-Effective Amendment No. 25 ( X )

and/or

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 ( X )

Amendment No. 27 ( X )
(Check appropriate box or boxes)
__________

GOLDMAN SACHS TRUST
(Exact name of registrant as specified in charter)

4900 Sears Tower
Chicago, Illinois 60606-6303
(Address of principal executive offices)

Registrant's Telephone Number,
including Area Code 312-993-4400
____________

Michael J. Richman, Esq. Copies to:
Goldman, Sachs & Co. Pamela J. Wilson, Esq.
85 Broad Street - 12th Floor Hale and Dorr
New York, New York 10004 60 State Street
Boston, MA 02109
(Name and address of agent for service)
<PAGE>

It is proposed that this filing will become effective (check appropriate box)

( ) immediately upon filing pursuant to paragraph (b)
( ) on (date) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(1)
(X) On May 31, 1995 pursuant to paragraph (a)(1)
( ) 75 days after filing pursuant to paragraph (a)(2)
( ) On (date) pursuant to paragraph (a)(2) of rule 485.

____________

Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2. On December 30, 1994, Registrant
filed a Rule 24f-2 notice for its fiscal year ended October 31, 1994.

THIS POST-EFFECTIVE AMENDMENT IS BEING FILED SOLELY TO REGISTER THE OFFERING OF
INSTITUTIONAL SHARES AND ADMINISTRATION SHARES OF GOLDMAN SACHS GLOBAL INCOME
FUND, AN EXISTING SERIES OF GOLDMAN SACHS TRUST. THE PROSPECTUSES AND THE
STATEMENT OF ADDITIONAL INFORMATION FOR THE OTHER SERIES OF GOLDMAN SACHS TRUST
ARE NOT AFFECTED HEREBY AND, THEREFORE, ARE NOT INCLUDED HEREIN.
<PAGE>

GOLDMAN SACHS TRUST

---------------

CROSS REFERENCE SHEET
(as required by Rule 495(a))

Part A CAPTION
------ -------

(Goldman Sachs Global Income Fund - Institutional Shares)
---------------------------------------------------------

1. Cover Page Cover Page

2. Synopsis Summary

3. Condensed Financial
Information Financial Highlights

4. General Description Cover Page; Summary; Invest-
of Registrant ment Objective and Policies;
Special Investment Methods;
Investment Limitations and
Special Risks; Reports to
Shareholders; Shares of the
Trust; Additional Information

5. Management of the Investment Adviser, Subadviser
Fund and Administrator; Management

6. Capital Stock and Dividends; Taxation; Shares of
Other Securities the Trust; Additional Infor-
mation

7. Purchase of Securities Purchase of Institutional
Being Offered Shares; Net Asset Value;
Additional Information

8. Redemption or Redemption of Institutional
Repurchase Shares; Additional Information

9. Pending Legal Not Applicable
Proceedings

(Goldman Sachs Global Income Fund - Administration Shares)
----------------------------------------------------------

1. Cover Page Cover Page

2. Synopsis Summary

3. Condensed Financial
Information Financial Highlights
<PAGE>

5. Management of the Investment Adviser, Subadviser
Fund and Administrator; Management

6. Capital Stock and Dividends; Taxation; Shares of
Other Securities the Trust; Additional Infor-
mation

7. Purchase of Securities Purchase of Administration
Being Offered Shares; Net Asset Value;
Additional Information

8. Redemption or Redemption of Administration
Repurchase Shares; Additional Information

9. Pending Legal Not Applicable
Proceedings

Part B

(Goldman Sachs Global Income Fund - Institutional and
-----------------------------------------------------
Administration Shares)
----------------------
10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information Not Applicable
and History

13. Investment Objectives Investment Objective and Poli-
and Policies cies; Investment Restrictions

14. Management of the Management
Fund

15. Control Persons and Shares of the Trust
Principal Holders of
Securities

16. Investment Advisory Management
and Other Services

17. Brokerage Allocation Portfolio Transactions
and Other Securities
<PAGE>

18. Capital Stock and Shares of the Trust
Other Securities

19. Purchase, Redemption Management; Net Asset Value
and Pricing of
Securities Being
Offered

20. Tax Status Taxation

21. Underwriters Management-Distributor;
Administration Plan
(Administration Shares only)

22. Calculation of Performance Information
Performance Data

23. Financial Statements Financial Statements

Part C
------
Information required to be included in Part C is set forth under
the appropriate Item, so numbered in Part C to this Registration
Statement.
<PAGE>

GOLDMAN SACHS GLOBAL INCOME FUND
INSTITUTIONAL SHARES

MANAGED BY
INVESTMENT ADVISER

GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
NEW YORK, NEW YORK

SUBADVISER

GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
AN AFFILIATE OF GOLDMAN, SACHS & CO.
LONDON, ENGLAND

-----------

Goldman Sachs Global Income Fund (the "Fund") is one fund in a family of
funds advised by Goldman Sachs Asset Management (the "Investment Adviser") or
its affiliates, Goldman Sachs Funds Management, L.P. and Goldman Sachs Asset
Management International (the "Subadviser"). The Fund is organized as a
separate non-diversified portfolio of Goldman Sachs Trust (the "Trust"), an
open-end management investment company.

The Fund will pursue a global investment program emphasizing intermediate-
duration fixed income securities.

The Fund seeks to provide investors with a high total return, emphasizing
current income and, to a lesser extent, providing opportunities for capital
appreciation, primarily through investment in a portfolio of high quality
fixed income securities of U.S. and foreign issuers and through transactions
in foreign currencies. High quality securities are defined as securities
rated, at the time of investment, at least AA by Standard & Poor's Ratings
Group or Aa by Moody's Investors Service, Inc. or, if unrated by such rating
organizations, determined by the Investment Adviser or Subadviser to be of
comparable credit quality. The
(continued on next page)
-----------

INSTITUTIONAL SHARES OF THE FUND 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 INSTITUTIONAL
SHARES OF THE 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.
-----------

GOLDMAN, SACHS & CO.

-----------

The date of this Prospectus is May 31, 1995
<PAGE>

Fund may also invest in obligations of a sovereign issuer rated at least A by
Moody's or S&P, or if not rated by such rating organizations determined by the
Investment Adviser or Subadviser to be of comparable credit quality, if the
obligations are denominated in the issuer's own currency. The Fund intends to
invest at least 50% of its net assets in securities having the highest
applicable credit quality rating, at the time of investment, or, if unrated by
such rating organizations, determined to be of comparable credit quality.
There can be no assurance that the Fund will achieve its investment objective.

INVESTMENTS IN SECURITIES OF FOREIGN ISSUERS AND INVESTMENTS IN FOREIGN
CURRENCIES, AS WELL AS THE CURRENCY MANAGEMENT TECHNIQUES DESCRIBED BELOW,
ENTAIL RISKS IN ADDITION TO THOSE THAT ARE CUSTOMARILY ASSOCIATED WITH
INVESTING IN DOLLAR-DENOMINATED FIXED INCOME SECURITIES OF U.S. ISSUERS. THE
FUND IS INTENDED FOR INVESTORS WHO CAN ACCEPT THE RISKS ASSOCIATED WITH ITS
INVESTMENTS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE "RISKS, SPECIAL
INVESTMENT METHODS AND INVESTMENT LIMITATIONS."

Goldman Sachs Asset Management, New York, New York, a separate operating
division of Goldman, Sachs & Co., serves as the Fund's investment adviser and
administrator. Goldman Sachs Asset Management International, London, England,
an affiliate of Goldman, Sachs & Co., serves as the Fund's subadviser.
Goldman, Sachs & Co. serves as the Fund's distributor and transfer agent. The
Fund's custodian is State Street Bank and Trust Company.

This Prospectus, which sets forth concisely the information about the Trust
and the Fund that a prospective investor ought to know before investing in
Institutional Shares, should be retained for future reference. A Statement of
Additional Information (the "Additional Statement"), dated May 31, 1995,
containing further information about the Trust and the Fund which may be of
interest to investors, has been filed with the Securities and Exchange
Commission, is incorporated herein by reference in its entirety, and may be
obtained without charge from Goldman, Sachs & Co. by calling the telephone
number, or writing to one of the addresses, listed below.

GOLDMAN SACHS TRUST GOLDMAN SACHS ASSET MANAGEMENT
4900 SEARS TOWER INVESTMENT ADVISER AND ADMINISTRATOR
CHICAGO, ILLINOIS 60606 ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004

GOLDMAN, SACHS & CO. GOLDMAN SACHS ASSET MANAGEMENT
DISTRIBUTOR INTERNATIONAL
85 BROAD STREET SUBADVISER
NEW YORK, NEW YORK 10004 140 FLEET STREET
LONDON, ENGLAND EC4A 2BJ

GOLDMAN, SACHS & CO.
TRANSFER AGENT
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606

TOLL FREE (IN U.S.)................... 800-621-2550
<PAGE>

SUMMARY

INTRODUCTION

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to provide investors with a high
total return, emphasizing current income and, to a lesser extent, providing
opportunities for capital appreciation, primarily through investment in a
portfolio of high quality fixed income securities of U.S. and foreign issuers
and through transactions in foreign currencies. High quality securities are
defined as securities rated at least AA by Standard & Poor's Ratings Group or
Aa by Moody's Investors Service, Inc. or, if unrated by such rating
organizations, determined by the Investment Adviser or Subadviser to be of
comparable credit quality. The Fund may also invest in obligations of a
sovereign issuer rated at least A by Moody's or S&P, or if not rated by such
rating organizations determined by the Investment Adviser or Subadviser to be
of comparable credit quality, if the obligations are denominated in the
issuer's own currency. The Fund intends to invest at least 50% of its net
assets in securities having the highest applicable credit quality rating, at
the time of investment, or, if unrated by such rating organizations, determined
by the Investment Adviser or Subadviser to be of comparable credit quality. A
security will be deemed to have met the Fund's credit criteria if it receives
the minimum required rating from at least one such rating organization even
though it has been rated below the minimum rating by one or more other rating
organizations. There can be no assurance that the Fund will achieve its
investment objective.

Under normal market conditions, the Fund will have at least 30% of its total
assets, adjusted to reflect the Fund's net exposure after giving effect to
currency transactions and positions, denominated in U.S. dollars. In addition,
the Fund will normally maintain a dollar weighted average portfolio duration of
not more than 7.5 years. Duration represents the weighted average maturity of
expected cash flows on a debt obligation, discounted to present value. The
longer the duration of a debt obligation, the more sensitive its value is to
changes in interest rates.

The Fund's Investment Adviser and Subadviser will use a proprietary model of
Goldman, Sachs & Co. ("Goldman Sachs") to develop a portfolio that, in their
view, produces the optimal expected return for a given level of risk. In
managing the Fund's portfolio, the Investment Adviser and Subadviser will have
access to the research of Goldman Sachs, and will also apply quantitative
analysis to provide guidance concerning appropriate country and currency
allocations.

It is expected that the Fund will employ certain currency and interest rate
management techniques. These techniques will be used both to hedge the foreign
currency and interest rate risks associated with the Fund's portfolio
securities and, in the case of certain techniques, to seek to increase the
total return of the Fund. Such techniques include forward foreign currency
exchange contracts, options on securities, indices and foreign currencies,
futures contracts, options on futures contracts, interest rate and currency
swaps and interest rate floors, caps and collars.

3
<PAGE>

The Fund may enter into forward foreign currency exchange contracts, currency
futures contracts and options on such contracts, currency options and currency
swaps to seek to increase total return when the Fund's Investment Adviser or
Subadviser anticipates that a foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities or are not included in the Fund's portfolio. To the
extent that the Fund is fully invested in foreign securities while also
maintaining currency positions, it may be exposed to greater combined risk. The
Fund's net currency positions may expose it to risks independent of its
securities positions. See "Investment Objective and Policies" and "Risks,
Special Investment Methods and Investment Limitations."

The Fund is intended for investors who can accept the risks involved in
investments in domestic and foreign fixed income securities and foreign
currencies. The net asset value of the Fund's shares of beneficial interest
("shares") will change in response to changes in interest rates and currency
exchange rates. Changes in interest rates and exchange rates for foreign
currencies in which the Fund's investments are denominated may adversely affect
the value of such investments and the value of the Fund's shares. In addition,
while investments in securities issued by foreign governments and corporations
offer potential benefits not available from investments solely in securities of
domestic issuers, they also involve certain significant risks that are not
typically associated with investing in obligations of U.S. issuers. See "Risks,
Special Investment Methods and Investment Limitations."

INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR

Goldman Sachs Asset Management, a separate operating division of Goldman
Sachs, serves as the Fund's investment adviser pursuant to an Investment
Advisory Agreement. For its advisory services, the Investment Adviser receives
from the Fund a monthly fee which is currently being charged at a rate equal on
an annual basis to 0.10% of the Fund's average daily net assets. Goldman Sachs
Asset Management International ("GSAM International"), an affiliate of Goldman
Sachs, serves as subadviser to the Fund pursuant to a Subadvisory Agreement.
The Subadviser receives from the Fund a monthly fee which is currently being
charged at a rate equal on an annual basis to 0.30% of the Fund's average daily
net assets. The Subadviser's fee is in addition to the fee paid to the
Investment Adviser. Goldman Sachs and GSAM International are each registered
with the Securities and Exchange Commission ("SEC") as investment advisers. In
performing their investment advisory and subadvisory services, the Investment
Adviser and Subadviser, while remaining ultimately responsible for the
management of the Fund, are able to draw upon the research and expertise of
their affiliate offices for portfolio decisions and management with respect to
certain portfolio securities.

Goldman Sachs Asset Management also serves as the administrator of the Fund
pursuant to an Administration Agreement, for which it receives from the Fund a
monthly fee equal on an annual basis to 0.15% of the Fund's average daily net
assets. See "Management--Investment Adviser, Subadviser and Administrator."

4
<PAGE>

PURCHASE AND REDEMPTION OF INSTITUTIONAL SHARES

The minimum initial investment is [$250,000] in Institutional Shares of the
Fund alone or in combination with Institutional Shares of any other mutual fund
sponsored by Goldman Sachs and designated an eligible fund for this purpose and
the relevant class of any portfolio of Goldman Sachs Money Market Trust.
Institutional Shares of the Fund may be purchased through Goldman Sachs at the
current net asset value per share without the imposition of a sales load. See
"Purchase of Institutional Shares." The Fund will redeem its Institutional
Shares upon request of a shareholder on any Business Day at the net asset value
next determined after receipt of such request in proper form. See "Redemption
of Institutional Shares."

DISTRIBUTOR AND TRANSFER AGENT

Goldman Sachs serves as the distributor for the Fund in the sale of its
shares. Under the Transfer Agency Agreement with the Fund, Goldman Sachs
provides transfer agency services and responds to shareholder inquiries. See
"Management--Distributor and Transfer Agent."

DIVIDEND POLICY

The Fund intends that all or substantially all of the Fund's net investment
income will be declared as a dividend and paid monthly. From time to time a
portion of such dividends may constitute a return of capital. The Fund also
intends that all or substantially all net realized long-term and short-term
capital gains will be declared as a dividend and paid at least annually.
Shareholders will receive dividends in additional Institutional Shares of the
Fund or may elect to receive cash as described under "Dividends."

RISK FACTORS

The Fund is intended for long-term investors who can accept the risks
involved in investing in domestic and foreign fixed income securities as well
as the risks associated with transactions in foreign currencies. See "Shares of
the Trust" and "Investment Objectives and Policies."

It is expected that the Fund will employ investment techniques involving
risks different from those associated with investing solely in dollar-
denominated fixed income securities of U.S. issuers. Such techniques include
transactions in options, futures contracts, options on futures, forward foreign
currency exchange contracts, currency options and futures, currency and
interest rate swaps and interest rate floors, caps and collars. See "Risks,
Special Investment Methods and Investment Limitations."

5
<PAGE>

affected by currency exchange rate fluctuations, when interest rates decline,
the value of fixed income securities in which the Fund will invest and,
therefore, the Fund's net asset value generally can be expected to rise.
Conversely, when interest rates rise, the value of fixed income securities in
which the Fund will invest and, therefore, the Fund's net asset value generally
can be expected to decline. The performance of investments in fixed income
securities denominated in a foreign currency ("Non-Dollar Securities") will
also depend on the strength of the foreign currency against the dollar and the
interest rate environment in the country issuing the currency. Absent other
events which could otherwise affect the value of Non-Dollar Securities (such as
a change in the political climate or an issuer's credit quality), appreciation
in the value of the foreign currency generally can be expected to increase the
value of the Fund's Non-Dollar Securities in terms of U.S. dollars. A rise in
foreign interest rates or a decline in the value of foreign currencies relative
to the U.S. dollar generally can be expected to depress the value of the Fund's
Non-Dollar Securities.

FOREIGN CURRENCY TRANSACTIONS. The Fund may enter into forward foreign
currency exchange contracts, currency futures contracts and options on such
contracts, currency options and currency swaps to seek to increase total return
when the Investment Adviser or the Subadviser anticipates that a foreign
currency will appreciate or depreciate in value, but securities denominated in
that currency do not present attractive investment opportunities or are not
included in the Fund's portfolio. In addition, the Fund may enter into forward
foreign currency exchange contracts, options on currency, futures contracts on
currency, options on such futures, and currency swaps in order to hedge its
positions against potential adverse changes in future foreign currency exchange
rates and for risk management and other purposes incidental to the management
of the Fund's portfolio. Forward contracts, over-the-counter options and swaps
are subject to the risk that the other party to the contract will default on
its obligations. Since a forward contract, over-the-counter option or swap is
not guaranteed by an exchange or clearinghouse, a default on the contract would
deprive the Fund of unrealized profits, transaction costs and the hedging
benefits of the contract or force the Fund to cover its purchase or sale
commitments, if any, at the current market price. The Fund will not enter into
such transactions unless the credit quality of the unsecured senior debt or the
claims-paying ability of the other party thereto is considered to be investment
grade by the Investment Adviser or the Subadviser. The Fund will incur expenses
in connection with currency transactions.

STRUCTURED SECURITIES. The Fund may invest in structured notes, bonds or
debentures, the value of the principal of and/or interest on which is
determined by reference to changes in the value of specific currencies,
interest rates, commodities, indices or other financial indicators (the
"Reference") or the relative change in two or more References. The change in
interest rate or the value of the security at maturity may be a multiple of the
change in the value of the Reference. Consequently, structured securities
entail a greater degree of market risk than other types of debt obligations.
Structured securities may also be more volatile, less liquid and more difficult
to accurately price than less complex securities.

INVESTMENT IN SECURITIES OF FOREIGN ISSUERS. Investing in the securities of
foreign issuers involves considerations and potential risks not typically
associated with investing in the securities of U.S. issuers. For example,
foreign securities markets may be less liquid, more volatile and less subject
to governmental regulation than U.S. securities markets. There also may be less
publicly available

6
<PAGE>

information about foreign issuers than about domestic issuers. In addition, the
value of securities of foreign issuers held in the Fund's portfolio will be
affected by changes in currency exchange rates, which may be volatile, as well
as political and economic developments related to the investment.

NON-DIVERSIFICATION. Since the Fund is "non-diversified" under the Act, it is
subject only to certain federal tax diversification requirements in addition to
the policies adopted by the Investment Adviser and Subadviser. The Fund may,
with respect to 50% of its total assets at the end of any tax quarter, invest
up to 25% of its total assets in the securities of an issuer (except that this
limitation does not apply to U.S. Government securities). With respect to the
remaining 50% of its total assets, the Fund may not, at the end of any tax
quarter, invest more than 5% of its total assets in the securities of any one
issuer (except the U.S. Government) nor acquire more than 10% of the
outstanding voting securities of any issuer. To the extent that the Fund is not
diversified under the Act, it will be more susceptible to adverse developments
affecting any single issuer of portfolio securities.

CONCENTRATION. The Fund may invest more than 25% of its total assets in the
securities of corporate and governmental issuers located in each of Canada,
Germany, Japan and the United Kingdom as well as the securities of U.S.
issuers. However, not more than 25% of the Fund's total assets will be invested
in securities of any one foreign government. For purposes of these percentage
limitations, the term "securities" does not include foreign currencies, which
means that the Fund could have more than 25% of its total assets denominated in
any currency listed in Appendix A. Concentration of the Fund's investments in
such issuers or currencies will subject the Fund, to a greater extent than if
investment were more limited, to the risks of adverse securities markets,
exchange rates and social, political or economic events which may occur in
those countries.

CONFLICTS OF INTEREST. The involvement of Goldman Sachs, its divisions and
affiliates (including the Investment Adviser and the Subadviser), partners and
officers, in the investment activities and business operations of the Fund may
present certain conflicts of interest, as described under "Management--
Investment Adviser, Subadviser and Administrator."

7
<PAGE>

FEES AND EXPENSES (INSTITUTIONAL SHARES)*

<TABLE>
<CAPTION>
GOLDMAN SACHS
GLOBAL
INCOME FUND
-------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases................ None
Maximum Sales Charge Imposed on Reinvested Dividends..... None
Redemption Fees.......................................... None
Exchange Fees............................................ None
ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS AFTER FEE AD-
JUSTMENTS)
Management Fees (include advisory and subadvisory fees of
0.10% and 0.30%, respectively, and administration fees
of 0.15%)............................................... 0.55%**
Distribution (Rule 12b-1) Fees .......................... None
OTHER EXPENSES (AFTER EXPENSE LIMITATION):
Transfer Agency Fees..................................... 0.04%
Other Expenses........................................... 0.06%
0.10%
----
TOTAL FUND OPERATING EXPENSES (after expense limita-
tion)............................................... 0.65%***
====
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE: ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a hy-
pothetical $1,000 investment, assuming (1) a
5% annual return and (2) redemption at the end
of each time period........................... $ $ $ $
</TABLE>
--------
* The information set forth in the foregoing table and hypothetical example
relates only to Institutional Shares. The Fund also offers Administration
Shares and Class A Shares which are subject to different fees and expenses
(which may affect performance), have different minimum investment
requirements and are entitled to different services. Information regarding
Administration and Class A Shares may be obtained from an investor's sales
representative or from Goldman Sachs by calling the number on the inside
cover page of this Prospectus.
** The Investment Adviser and Subadviser voluntarily have agreed to limit
their advisory and subadvisory fees to the amounts shown in the table.
Without such limitation, the advisory and subadvisory fees would be 0.25%
and 0.50%, respectively, of the Fund's average daily net assets and
Management Fees would be 0.90% of the Fund's average daily net assets. The
Investment Adviser and Subadviser have no current intention of modifying or
discontinuing such limitation but may do so in the future at their
discretion.
*** The Investment Adviser and Subadviser voluntarily have agreed to reduce or
limit certain "Other Expenses" of the Fund (excluding advisory,
administration, and transfer agency fees, fees payable under
administration, distribution and authorized dealer service plans, taxes,
interest and brokerage and litigation, indemnification and other
extraordinary expenses) to the extent such expenses exceed 0.06% per annum
of the Fund's average daily net assets. The Investment Adviser and
Subadviser may discontinue or modify such expense limitations at any time.
If the Investment Adviser and Subadviser did not agree to limit a portion
of their advisory and subadvisory fees and to reduce or otherwise limit
certain "Other Expenses" of the Fund, the Other Expenses and Total
Operating Expenses attributable to Institutional Shares of the Fund would
be % and %, respectively. The foregoing table and example reflect
current operating expenses that will be applicable on an ongoing basis. See
"Management--Investment Adviser, Subadviser and Administrator."

The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses of the Fund that an investor in Institutional
Shares of the Fund will bear directly or indirectly. The costs and expenses
included in the table and hypothetical example above are based upon estimates
for the current fiscal year and should not be considered as representative of
past or future expenses. Actual fees and expenses may be greater or less than
those indicated. Moreover, while the example assumes a 5% annual return, the
Fund's actual performance will vary and may result in an actual return greater
or less than 5%. See "Management--Investment Adviser, Subadviser and
Administrator."

8
<PAGE>

FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

The following data with respect to Class A Shares of the Fund outstanding
during the periods indicated has been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report incorporated by
reference and attached to the Additional Statement, from the Fund's annual
report to shareholders for the period ended October 31, 1994 (the "Annual
Report"). This information should be read in conjunction with the financial
statements and related notes incorporated by reference and attached to the
Additional Statement. The Annual Report also contains performance information
and is available upon request and without charge by calling the telephone
number or writing to one of the addresses on the inside cover of this
Prospectus. No Institutional Shares or Administration Shares were outstanding
at October 31, 1994. The Investment Adviser and Subadviser currently are
limiting their fees and reducing certain other expenses, which limitations and
reductions are not reflected in the following historical financial data.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31, FOR THE PERIOD
----------------------------------------- ENDED
1994 1993 1992 OCTOBER 31, 1991(a)
------------ ------------ ------------ -------------------
<S> <C> <C> <C> <C>
Net asset value, begin-
ning of period $15.07 $14.69 $14.60 $14.55
----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.84 0.85 1.14 0.25
Net realized and
unrealized gain (loss)
on investments, options
and futures (1.37) 1.07 0.45 0.23
Net realized and
unrealized loss on
foreign currency related
transactions (0.12) (0.42) (0.36) (0.19)
----------------------------------------------------------------------------------------
Total income (loss) from
investment operations (0.65) 1.50 1.23 0.29
----------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.22) (0.85) (1.14) (0.24)
Net realized gain on
investment, option and
futures transactions (0.16) (0.27) -- --
Paid in capital (0.61) -- -- --
----------------------------------------------------------------------------------------
Total distributions to
shareholders (0.99) (1.12) (1.14) (0.24)
----------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value (1.64) 0.38 0.09 0.05
----------------------------------------------------------------------------------------
Net asset value, end of
period $13.43 $15.07 $14.69 $14.60
----------------------------------------------------------------------------------------
Total return(b) (4.49)% 10.75% 8.77% 2.00%(c)
Ratio of net expenses to
average net assets 1.28 % 1.30% 1.37% 0.38%(c)
Ratio of net investment
income to average net
assets 5.73 % 5.78% 7.85% 1.72%(c)
Portfolio turnover rate 343.74 % 313.88% 270.75% 34.22%(c)
Net assets at end of
period $396,584,133 $675,661,804 $588,892,642 $388,744,486
Ratio information
assuming no voluntary
waiver of distribution
fees:
Ratio of expenses to
average net assets 1.53 % 1.55% 1.62% 0.44%(c)
Ratio of net investment
income to average net
assets 5.48 % 5.53% 7.60% 1.66%(c)
</TABLE>
-------------------------------------------------------------------------------

(a) For the period from August 2, 1991 (commencement of operations) to October
31, 1991.
(b) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of the
investment at the net asset value at the end of the period and no sales
charges. Total return would be reduced if a sales charge were taken into
account.
(c) Not annualized.

9
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to provide investors with a high total
return, emphasizing current income and, to a lesser extent, providing
opportunities for capital appreciation, primarily through investment in a
portfolio of high quality fixed income securities of U.S. and foreign issuers
and through transactions in foreign currencies. High quality securities are
defined as securities which have ratings of at least AA by Standard & Poor's
Ratings Group ("S&P") or Aa by Moody's Investors Service, Inc. ("Moody's")
("High Quality Ratings") or, if unrated by such rating organizations, are
determined by the Fund's Investment Adviser or Subadviser to be of comparable
credit quality. The Fund may also invest in obligations of a sovereign issuer
rated at least A by Moody's or S&P, or if not rated by such rating
organizations determined by the Investment Adviser or Subadviser to be of
comparable credit quality, if the obligations are denominated in the issuer's
own currency. A security will be deemed to have met the Fund's credit criteria
if it receives the minimum required rating from at least one such rating
organization, at the time of investment, even though it has been rated below
the minimum rating by one or more other rating organizations. There can be no
assurance that the Fund will be successful in achieving its investment
objective.

SELECTION OF PORTFOLIO INVESTMENTS

Under normal circumstances, the Fund will seek to meet its investment
objective by pursuing investment opportunities in foreign and domestic fixed
income securities markets and by engaging in currency transactions to enhance
returns and for the purpose of hedging its portfolio. In determining the
countries and currencies in which the Fund will invest, the Fund's portfolio
managers will form an opinion based primarily on the views of Goldman Sachs'
economists as well as information provided by securities dealers, including
information relating to factors such as interest rates, inflation, monetary
and fiscal policies, taxation, and political climate. The portfolio managers
will apply the Black-Litterman Model (the "Model") to their views to develop a
portfolio that produces, in the view of the Investment Adviser and Subadviser,
the optimal expected return for a given level of risk. The Model factors in
the opinions of the portfolio managers, adjusting for their level of
confidence in such opinions, with the views implied by an international
capital asset pricing formula. The Model is also used to maintain the level of
portfolio risk within the guidelines established by the Investment Adviser.

In selecting securities for the Fund's portfolio, the portfolio managers
consider such factors as the security's duration, sector and credit quality
rating as well as the security's yield and prospects for capital appreciation.
The Fund will, under normal market conditions, have at least 30% of its total
assets, adjusted to reflect the Fund's net exposure after giving effect to
currency transactions and positions, denominated in U.S. dollars. It is
expected that the Fund will use currency transactions both to enhance returns
for a given level of risk and to hedge its exposure to foreign currencies.
While the Fund will have both long and short currency positions, its net long
and short foreign currency exposure will not exceed the value of the Fund's
total assets. The Fund may, for temporary defensive purposes, invest up to
100% of its total assets in dollar-denominated securities or securities of
U.S. issuers. See "Risks, Special Investment Methods and Investment
Limitations."

PORTFOLIO DURATION

The Fund will maintain a dollar weighted average portfolio duration of not
more than 7.5 years. Duration represents the weighted average maturity of
expected cash flows on a debt obligation, discounted to present value. The
longer the duration of a debt obligation, the more sensitive its value

10
<PAGE>

is to changes in interest rates. Maturity measures only the time until final
payment is due on a bond or other debt security; it takes no account of the
pattern of a security's cash flows over time. In computing the duration of its
portfolio, the Fund will have to estimate the duration of debt obligations
that are subject to prepayment or redemption by the issuer. The Fund may use
various techniques to shorten or lengthen the dollar weighted average duration
of its portfolio, including the acquisition of debt obligations at a premium
or discount, transactions in options, futures contracts and options on futures
and interest rate swaps. The Fund is not subject to any limitation with
respect to the average maturity of its portfolio or the individual securities
in which the Fund may invest.

CURRENCY AND INTEREST RATE TECHNIQUES

It is expected that the Fund will employ certain currency and interest rate
management techniques involving risks different from those associated with
investing solely in dollar-denominated fixed income securities of U.S.
issuers. Such management techniques include transactions in options (including
yield curve options), futures, options on futures, forward foreign currency
exchange contracts, currency options and futures, currency and interest rate
swaps and interest rate floors, caps and collars. To the extent that the Fund
is fully invested in foreign securities while also maintaining currency
positions, it may be exposed to greater combined risk. The Fund's net currency
positions may expose it to risks independent of its securities positions. See
"Risks, Special Investment Methods and Investment Limitations."

OTHER INVESTMENT POLICIES

Since the Fund is "non-diversified" under the Act, the only statutory or
regulatory diversification requirements to which it is subject arise under
federal tax law. The Fund may, with respect to 50% of its total assets, invest
up to 25% of its total assets in the securities of an issuer (except that this
limitation does not apply to U.S. Government securities). With respect to the
remaining 50% of the Fund's total assets, (1) the Fund may not invest more
than 5% of its total assets in the securities of any one issuer (other than
the U.S. Government), and (2) the Fund may not acquire more than 10% of the
outstanding voting securities of any issuer. These tests apply at the end of
each quarter of its taxable year and are subject to certain conditions and
limitations under the Internal Revenue Code of 1986, as amended (the "Code").
Since the Fund is not diversified under the Act, it may be more susceptible to
adverse developments affecting any single issuer in which its investments are
concentrated. Not more than 25% of the Fund's total assets will be invested in
the securities of any one foreign government or any other issuer (except that
this limitation does not apply to the U.S. Government). However, this 25%
restriction does not prohibit the Fund from concentrating more than 25% of its
total assets in the securities of issuers located in Canada, Germany, Japan
and the United Kingdom as well as in the United States. In addition, for
purposes of these percentage limitations, the term "securities" does not
include foreign currencies, which means that the Fund could have more than 25%
of its total assets denominated in any particular currency described in
Appendix A.

Except as otherwise stated under "Investment Restrictions," the Fund's
investment objective and policies are not fundamental and may be changed
without a vote of the shareholders. If there is a change in the Fund's
investment objective, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial positions and
needs.

11
<PAGE>

Market risks are inherent in all securities in varying degrees. Therefore,
there can be no assurance that the Fund will be successful in meeting its
investment objective. The Fund is intended for investors who can accept the
risks involved in investments in domestic and foreign fixed income securities,
in foreign currencies and in the currency and interest rate management
techniques that are expected to be employed by the Fund. An investment in
shares of the Fund does not constitute a complete investment program.
Investors may wish to complement an investment in the Fund with other types of
investments.

FIXED INCOME SECURITIES

The fixed income securities in which the Fund may invest include: (i)
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government securities") and custodial receipts
therefor; (ii) securities issued or guaranteed by a foreign government or any
of its political subdivisions, authorities, agencies, instrumentalities or
sponsored enterprises or by supranational entities (i.e., international
organizations designated or supported by governmental entities to promote
economic reconstruction or development, such as the World Bank); (iii)
corporate debt securities; (iv) certificates of deposit and bankers'
acceptances issued or guaranteed by, or time deposits maintained at, banks
(including U.S. or foreign branches of U.S. banks or U.S. or foreign branches
of foreign banks) having total assets of more than $1 billion; (v) commercial
paper rated A-1 or better by S&P, Prime-1 or better by Moody's, Fitch-1 or
better by Fitch Investors Service, Inc., or Duff 1 or better by Duff & Phelps
Inc. or, if not rated by such rating organizations, issued by U.S. or foreign
companies having outstanding debt securities with a High Quality Rating and
determined by the Investment Adviser or Subadviser to be of comparable credit
quality to securities with a High Quality Rating; and (vi) mortgage and asset
backed securities.

Although the Fund may invest in securities satisfying the minimum credit
quality criteria prescribed above, the Fund generally intends to invest at
least 50% of its net assets in securities having the highest applicable credit
quality rating, at the time of investment, and unrated securities determined
by the Investment Adviser or Subadviser to be of comparable credit quality to
securities with the highest applicable credit quality rating. If a security
that at the time of purchase satisfies the Fund's minimum rating criteria is
subsequently downgraded below such rating criteria, the Fund will not be
required to dispose of such security. If a downgrading occurs, the Investment
Adviser or Subadviser will consider what action, including the sale of such
security, is in the best interest of the Fund. Currently, most of the foreign
securities that meet the Fund's credit quality standards are securities issued
by foreign governments. The debt securities in which the Fund will invest may
have fixed, variable or floating interest rates.

FOREIGN INVESTMENTS AND CURRENCIES

The Fund will, under normal market conditions, have at least 30% of its
total assets, adjusted to reflect the Fund's net exposure after giving effect
to currency transactions and positions, denominated in U.S. dollars. The
performance of investments in Non-Dollar Securities will depend on, among
other things, the strength of the foreign currency against the dollar and the
interest rate environment in the country issuing the foreign currency. Absent
other events which could otherwise affect the value of Non-Dollar Securities
(such as a change in the political climate or an issuer's credit quality),
appreciation in the value of the foreign currency generally can be expected to
increase the value of the Fund's Non-Dollar Securities in terms of U.S.
dollars. A rise in foreign interest rates or decline in the

12
<PAGE>

value of foreign currencies relative to the U.S. dollar generally can be
expected to depress the value of the Fund's Non-Dollar Securities in terms of
U.S. dollars. The Investment Adviser and the Subadviser evaluate investments
on the basis of fundamental economic criteria (e.g., relative inflation levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data.

Under normal circumstances, the Fund will invest in securities of issuers in
at least three countries. No more than 25% of the Fund's total assets will be
invested in securities of issuers located in any country other than Canada,
Germany, Japan, the United Kingdom and the United States. Investing the Fund's
assets in securities of issuers located outside the United States will subject
the Fund to the risks of adverse social, political or economic events which
may occur in such foreign countries. See "Risks, Special Investment Methods
and Investment Limitations--Foreign Currency Transactions" below. The Fund
may, for temporary defensive purposes (such as when instability or unfavorable
conditions exist in foreign countries), invest 100% of its total assets in
dollar-denominated securities or securities of U.S. issuers. See "Risks,
Special Investment Methods and Investment Limitations."

INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR

The Fund's investment adviser is Goldman Sachs Asset Management, a separate
operating division of Goldman Sachs. The Fund's subadviser is GSAM
International, an affiliate of Goldman Sachs. The management services provided
by the Investment Adviser and Subadviser are subject to the general
supervision of the Trust's Board of Trustees. Goldman Sachs Asset Management
also serves as the administrator of the Fund.

Goldman Sachs Asset Management and its affiliates serve a wide range of
clients including private and public pension funds, endowments, foundations,
banks, thrifts, insurance companies, corporations, and private investors and
family groups.

Founded in 1869, Goldman Sachs is among the oldest and largest investment
banking firms in the United States. Goldman Sachs is a leader in virtually
every field of investing and financing, participating in financial markets
worldwide and serving individuals, institutions, corporations and governments.
Goldman Sachs is headquartered in New York and has offices throughout the
United States and in Beijing, Frankfurt, George Town, Hong Kong, London,
Madrid, Milan, Montreal, Osaka, Paris, Seoul, Shanghai, Singapore, Sydney,
Taipei, Tokyo, Toronto, Vancouver and Zurich.

GSAM International was organized in 1990. As a company with unlimited
liability under the laws of England, it is authorized to conduct investment
advisory business in the United Kingdom as a member of the Investment
Management Regulatory Organisation Limited, a United Kingdom self-regulatory
organization.

The Investment Adviser and Subadviser are able to draw on the research and
expertise of Goldman Sachs in making investment decisions for the Fund. The
day-to-day supervision of the Investment Adviser and Subadviser may be
effected by partners, officers and directors of Goldman Sachs, Goldman Sachs
International ("GSI") and their affiliates who may be involved in the global
bond trading activities of Goldman Sachs and its affiliates. However, neither
Goldman Sachs, GSI nor any of their affiliates is expected or obligated to
make available to the Fund any information concerning their

13
<PAGE>

proprietary trading activities or strategies, or the trading activities or
strategies used for other accounts managed by them, and the Fund's investment
results may differ from those achieved by other clients or proprietary
accounts of Goldman Sachs or its affiliates. For a discussion of certain
potential conflicts of interest involving Goldman Sachs and its affiliates,
see "Management--Investment Adviser, Subadviser and Administrator."

RISKS, SPECIAL INVESTMENT METHODS AND INVESTMENT LIMITATIONS

FOREIGN TRANSACTIONS

FOREIGN SECURITIES. Investments in securities of foreign issuers and Non-
Dollar Securities offer potential benefits, but also involve certain
significant risks that are not typically associated with investing in domestic
securities.

Among the risks involved in investments in securities of foreign issuers and
Non-Dollar Securities are fluctuations in currency exchange rates and the
possible imposition of exchange control regulations (e.g., currency blockage)
or other foreign or U.S. laws or restrictions applicable to such investments.
A decline in the exchange rate would reduce the value of certain portfolio
securities. In addition, if the exchange rate for the currency in which the
Fund receives interest payments declines against the U.S. dollar before such
interest is paid as dividends to shareholders, the Fund may have to sell
portfolio securities to obtain sufficient cash to pay such dividends. As
discussed below, the Fund may employ certain investment techniques to hedge
its foreign currency exposure; however, such techniques also entail certain
risks.

There may be less publicly available information about a foreign issuer than
about a domestic issuer. Foreign issuers are not generally subject to
accounting, auditing and financial reporting standards comparable to those
applicable to domestic issuers. Most foreign securities markets may have
substantially less volume and are subject to less government supervision than
U.S. securities markets, and securities of many foreign issuers may be less
liquid and more volatile than securities of comparable domestic issuers. In
addition, there is generally less government regulation of securities
exchanges, securities dealers, and listed and unlisted companies in foreign
countries than in the United States.

Foreign markets also have different clearance and settlement procedures, and
in certain markets there have been times when settlements have been unable to
keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in temporary
periods when a portion of the assets of the Fund is uninvested and no return
is earned thereon. The inability of the Fund to make intended security
purchases due to settlement problems could cause the Fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities due to
settlement problems could result either in losses to the Fund due to
subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell the security, could result in possible
liability to the purchaser. Costs associated with transactions in securities
traded on foreign markets or of foreign issuers are generally higher than
costs associated with transactions in U.S. securities on U.S. markets.

14
<PAGE>

In addition, with respect to certain foreign countries, there is a
possibility of expropriation or confiscatory taxation, imposition of
withholding or other taxes on dividend or interest payments or capital gains,
limitations on the removal of funds or other assets of the Fund, political or
social instability or diplomatic developments which could affect investments
in those countries. Individual foreign economies may differ favorably or
unfavorably from the United States economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resources, self-
sufficiency and balance of payments position. The securities markets, values
of securities, yields and risks associated with securities markets in
different countries may change independently of each other.

CONCENTRATION IN CANADA, GERMANY, JAPAN AND THE UNITED KINGDOM. The Fund may
invest more than 25% of its total assets in the securities of corporate and
governmental issuers located in each of Canada, Germany, Japan and the United
Kingdom as well as the securities of U.S. issuers. Concentration of the Fund's
investments in such issuers or currencies will subject the Fund, to a greater
extent than if investment was more limited, to the risks of adverse securities
markets, exchange rates and social, political or economic events which may
occur in those countries. See Appendix A to this Prospectus for further
information about the foregoing countries. In addition, for purposes of these
percentage limitations, the term "securities" does not include foreign
currencies, which means that the Fund could have more than 25% of its total
assets denominated in any particular currency described in Appendix A.

FOREIGN CURRENCY TRANSACTIONS. Because investment in foreign issuers will
usually involve currencies of foreign countries, the value of the assets of
the Fund as measured in U.S. dollars will be affected by changes in foreign
currency exchange rates. Currencies in which the Fund's portfolio securities
may be denominated include, but are not limited to, those listed in Appendix A
as well as the U.S. dollar.

An issuer of fixed income securities purchased by the Fund may be domiciled
in a country other than the country in whose currency the instrument is
denominated. The Fund may also invest in debt securities denominated in the
European Currency Unit ("ECU"), which is a "basket" consisting of specified
amounts in the currencies of certain of the twelve member states of the
European Community. The specific amounts of currencies comprising the ECU may
be adjusted by the Council of Ministers of the European Community from time to
time to reflect changes in relative values of the underlying currencies. In
addition, the Fund may invest in securities denominated in other currency
"baskets."

Currency exchange rates may fluctuate significantly over short periods of
time causing, together with other factors, the Fund's net asset value to
fluctuate as well. Currency exchange rates generally are determined by the
forces of supply and demand in the foreign exchange markets and the relative
merits of investments in different countries, actual or anticipated changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably by
intervention or failure to intervene by U.S. or foreign governments or central
banks or by currency controls or political developments in the U.S. or abroad.
To the extent that a substantial portion of the Fund's total assets, adjusted
to reflect the Fund's net position after giving effect to currency
transactions, is denominated in the currencies of foreign countries, the Fund
will be more susceptible to the risk of adverse economic and political
developments within those countries.

15
<PAGE>

In addition to investing in Non-Dollar Securities, the Fund may engage in a
variety of foreign currency techniques. The Fund may hold foreign currency
received in connection with investments in foreign securities when, in the
judgment of the Investment Adviser or Subadviser, it would be beneficial to
convert such currency into U.S. dollars at a later date, based on anticipated
changes in the relevant exchange rate. The Fund will incur costs in connection
with conversions between various currencies.

The Fund may purchase or sell forward foreign currency exchange contracts to
seek to increase total return when the Investment Adviser or Subadviser
anticipates that the foreign currency will appreciate or depreciate in value,
but securities denominated in that currency do not in the Adviser's or
Subadviser's view present attractive investment opportunities and are not held
in the Fund's portfolio. In addition, the Fund may enter into forward foreign
currency exchange contracts in order to protect against adverse changes in
future foreign currency exchange rates. The Fund may engage in cross-hedging
by using forward contracts in one currency to hedge against fluctuations in
the value of securities denominated in a different currency if the Investment
Adviser or Subadviser believes that there is a pattern of correlation between
the two currencies.

The Fund may enter into contracts to purchase foreign currencies to protect
against an anticipated rise in the U.S. dollar price of securities it intends
to purchase. The Fund may enter into contracts to sell foreign currencies to
protect against the decline in value of its Non-Dollar Securities due to a
decline in the value of foreign currencies against the U.S. dollar. Contracts
to sell foreign currency could limit any potential gain which might be
realized by the Fund if the value of the underlying currency increased.

If the Fund enters into a forward foreign currency exchange contract to sell
foreign currency to increase total return or to buy foreign currency for any
purpose, the Fund will be required to place cash or high grade liquid debt
securities in a segregated account of the Fund in an amount equal to the value
of the Fund's total assets committed to the consummation of the forward
contract. If the value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the account so that
the value of the account will equal the amount of the Fund's commitment with
respect to the contract.

Forward contracts are subject to the risk that the counterparty to such
contract will default on its obligations. Since a forward foreign currency
exchange contract is not guaranteed by an exchange or clearinghouse, a default
on the contract would deprive the Fund of unrealized profits, transaction
costs or the benefits of a currency hedge or force the Fund to cover its
purchase or sale commitments, if any, at the current market price. The Fund
will not enter into such transactions unless the credit quality of the
unsecured senior debt or the claims-paying ability of the counterparty is
considered to be investment grade by the Investment Adviser or the Subadviser.

OPTIONS ON CURRENCIES. The Fund may purchase and write put and call options
on currencies for the purpose of protecting against declines in the U.S.
dollar value of foreign portfolio securities and against increases in the U.S.
dollar cost of foreign securities to be acquired. The Fund may use options on
currency to cross-hedge, which involves writing or purchasing options on one
currency to hedge against changes in exchange rates for a different currency
with a pattern of correlation. As with other kinds of option transactions,
however, the writing of an option on currency will constitute only a partial
hedge, up to the amount of the premium received. The Fund could be required to
purchase or sell

16
<PAGE>

currencies at disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on currency may constitute an effective hedge against
exchange rate fluctuations; however, in the event of exchange rate movements
adverse to the Fund's position, the Fund may forfeit the entire amount of the
premium plus related transaction costs. In addition, the Fund may purchase
call or put options on currency to seek to increase total return when the
Investment Adviser or Subadviser anticipates that the currency will appreciate
or depreciate in value, but the securities denominated in that currency do not
present attractive investment opportunities and are not held in the Fund's
portfolio. Options on currencies to be written or purchased by the Fund will
be traded on U.S. and foreign exchanges or over-the-counter. See "Risks
Associated with Options Transactions" below for a discussion of the liquidity
risks associated with options transactions.

INTEREST RATE SWAPS, CURRENCY SWAPS, AND INTEREST RATE CAPS, FLOORS AND
COLLARS

The Fund may enter into interest rate swaps and currency swaps for both
hedging and to seek to increase total return. The Fund may also enter into
other types of interest rate swap arrangements such as caps, floors and
collars. The Fund will typically use interest rate swaps to shorten the
effective duration of its portfolio. Interest rate swaps involve the exchange
by the Fund with another party of their respective commitments to pay or
receive interest, such as an exchange of fixed rate payments for floating rate
payments. Currency swaps involve the exchange of their respective rights to
make or receive payments in specified currencies. The purchase of an interest
rate cap entitles the purchaser, to the extent that a specified index exceeds
a predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate cap. The purchase
of an interest rate floor entitles the purchaser, to the extent that a
specified index falls below a predetermined interest rate, to receive payments
of interest on a notional principal amount from the party selling the interest
rate floor. An interest rate collar is the combination of a cap and a floor
that preserves a certain return within a predetermined range of interest
rates. Since interest rate swaps, currency swaps, and interest rate caps,
floors and collars are individually negotiated, the Fund expects to achieve an
acceptable degree of correlation between its portfolio investments and its
swap, cap, floor and collar positions entered into for hedging purposes.

The Fund will enter into interest rate swaps only on a net basis, which
means that the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments. Interest
rate swaps do not involve the delivery of securities, other underlying assets
or principal. Accordingly, the risk of loss with respect to interest rate
swaps is limited to the net amount of interest payments that the Fund is
contractually obligated to make. If the other party to an interest rate swap
defaults, the Fund's risk of loss consists of the net amount of interest
payments that the Fund is contractually entitled to receive, if any. In
contrast, currency swaps usually involve the delivery of the entire principal
value of one designated currency in exchange for the other designated
currency. Therefore, the entire principal value of a currency swap is subject
to the risk that the other party to the swap will default on its contractual
delivery obligations. The Fund will maintain in a segregated account with the
Fund's custodian cash and liquid, high grade debt securities equal to the net
amount, if any, of the excess of the Fund's obligations over its entitlements
with respect to swap transactions. To the extent that the net amount of a swap
is held in a segregated account consisting of cash and liquid, high grade debt
securities, the Fund, the Investment Adviser and the Subadviser believe that
interest rate and currency swaps do not constitute senior securities under the
Act and, accordingly, will not treat them as being subject to the Fund's
borrowing restriction.

17
<PAGE>

The Fund will not enter into interest rate or currency swap, or interest
rate cap, floor or collar transactions unless the unsecured commercial paper,
senior debt or claims paying ability of the other party is rated either AA or
A-1 or better by S&P or Aa or P-1 or better by Moody's or, if unrated by such
rating organizations, determined to be of comparable quality by the Investment
Adviser or Subadviser.

The use of interest rate swaps, currency swaps, and interest rate floors,
caps and collars is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. If the Investment Adviser or Subadviser is incorrect
in its forecasts of market values, interest rates and currency exchange rates,
the investment performance of the Fund would be less favorable than it would
have been if this investment technique were not used. The staff of the SEC
currently takes the position that swaps, caps, floors and collars are illiquid
and thus subject to the Fund's 15% limitation on illiquid securities.

STRUCTURED SECURITIES

The Fund may invest in structured notes, bonds or debentures, the value of
the principal of and/or interest on which is determined by reference to
changes in the value of specific currencies, interest rates, commodities,
indices or other financial indicators (the "Reference") or the relative change
in two or more References. The interest rate or the principal amount payable
upon maturity or redemption may be increased or decreased depending upon
changes in the applicable Reference. The terms of the structured securities
may provide that in certain circumstances no principal is due at maturity and,
therefore, may result in the loss of the Fund's investment. Structured
securities may be positively or negatively indexed, so that appreciation of
the Reference may produce an increase or decrease in the interest rate or
value of the security at maturity. In addition, the change in interest rate or
the value of the security at maturity may be a multiple of the change in the
value of the Reference. Consequently, structured securities entail a greater
degree of market risk than other types of debt obligations. Structured
securities may also be more volatile, less liquid and more difficult to
accurately price than less complex securities.

INVERSE FLOATING RATE SECURITIES

The Fund may invest in inverse floating rate securities. The interest rate
on an inverse floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher the degree of leverage of an inverse floater, the greater
the volatility of its market value.

U.S. GOVERNMENT SECURITIES

U.S. Government securities are obligations issued or guaranteed by the U.S.
Government, its agencies, authorities or instrumentalities. Some U.S.
Government securities, such as Treasury bills, notes and bonds, which differ
only in their interest rates, maturities and times of issuance, are supported
by the full faith and credit of the United States of America. Others, such as
obligations issued or guaranteed by U.S. Government agencies, authorities,
instrumentalities or sponsored enterprises, are supported either by (a) the
full faith and credit of the U.S. Government (such as securities of the
Government National Mortgage Association), (b) the right of the issuer to
borrow from the Treasury (such as securities of the Student Loan Marketing
Association), (c) the discretionary authority of the

18
<PAGE>

U.S. Government to purchase the agency's obligations (such as securities of
the Federal National Mortgage Association 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 continue to provide financial support to U.S.
Government agencies, authorities, instrumentalities or sponsored enterprises
in the future.

Securities guaranteed as to principal and interest by the U.S. Government,
its agencies, authorities or instrumentalities are deemed to include (a)
securities for which the payment of principal and interest is backed by a
guaranty of the U.S. Government, its agencies, authorities or
instrumentalities and (b) participations in loans made to foreign governments
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.

The Fund may also invest in separately traded principal and interest
components of securities guaranteed or issued by the U.S. Government or its
agencies or instrumentalities if such components are traded independently
under the Separate Trading of Registered Interest and Principal of Securities
program ("STRIPS") or any similar program sponsored by the U.S. Government.

CUSTODIAL RECEIPTS. The Fund may acquire custodial receipts in respect of
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies, authorities or instrumentalities. Such custodial
receipts evidence ownership of future interest payments, principal payments or
both on certain notes or bonds issued by the U.S. Government, its agencies or
instrumentalities. For certain securities law purposes, custodial receipts are
not considered obligations of the U.S. Government.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

The Fund may invest in mortgage-backed securities, which represent direct or
indirect participations in, or are collateralized by and payable from,
mortgage loans secured by real property. The Fund may also invest in asset-
backed securities, which represent participations in, or are secured by and
payable from, assets such as motor vehicle installment sales contracts,
installment loan contracts, leases of various types of real and personal
property and receivables from revolving credit (credit card) agreements and
other categories of receivables. Such securities are generally issued by
trusts and special purpose corporations.

Mortgage-backed and asset-backed securities are often subject to more rapid
repayment than their stated maturity date would indicate as a result of the
pass-through of prepayments of principal on the underlying loans. During
periods of declining interest rates, prepayment of loans underlying mortgage-
backed and asset-backed securities can be expected to accelerate, and thus
impair the Fund's ability to reinvest the returns of principal at comparable
yields. Conversely, in a rising interest rate environment, a declining
prepayment rate will extend the average life of many mortgage-backed and
asset-backed securities. This possibility is often referred to as extension
risk. Extending the average life of a mortgage-backed or asset-backed security
increases the risk of depreciation due to future increases in market interest
rates. Accordingly, the market values of such securities will vary with
changes in market interest rates generally and in yield differentials among
various kinds of U.S. Government securities and other mortgage-backed and
asset-backed securities. Asset-backed securities present certain risks that
are not presented by mortgage-backed securities because asset-backed
securities generally do not have the benefit of a security interest in
collateral that is comparable

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<PAGE>

to mortgage assets. There is the possibility that, in some cases, recoveries
on repossessed collateral may not be available to support payments on these
securities.

OPTIONS ON SECURITIES AND SECURITIES INDICES

The Fund may write (sell) covered call and put options on any securities in
which it may invest. The Fund may also write call and put options on any
securities index composed of securities in which it may invest. The Fund may
write and purchase options, referred to as "yield curve options," on the yield
differential between two securities. In addition, the Fund may purchase put
and call options on any securities in which it may invest or options on any
securities index composed of securities in which it may invest.

The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The use of options to increase
total return involves the risk of loss if the Investment Adviser or Subadviser
is incorrect in its expectations of fluctuations in securities prices or
interest rates. The successful use of puts for hedging purposes depends in
part on the ability of the Investment Adviser or Subadviser to predict future
price fluctuations and the degree of correlation between the options and
securities markets. If the Investment Adviser or Subadviser is incorrect in
its determination of the correlation between the securities indices on which
options are written or purchased and the securities in the Fund's investment
portfolio or, with respect to yield curve options, of the direction or the
extent of the movement of the yield differential, the investment performance
of the Fund will be less favorable than it would have been in the absence of
such option transactions. The writing of options could significantly increase
the Fund's portfolio turnover rate and, therefore, associated brokerage
commissions or spreads.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

To hedge against changes in interest rates, securities prices or currency
exchange rates or to seek to increase total return, the Fund may purchase and
sell various kinds of futures contracts, and purchase and write call and put
options on any of such futures contracts. The Fund may also enter into closing
purchase and sale transactions with respect to any of such contracts and
options. The futures contracts may be based on various securities (such as
U.S. Government securities), securities indices, foreign currencies and other
financial instruments and indices. The Fund will engage in futures and related
options transactions only for bona fide hedging purposes as defined in
regulations of the Commodity Futures Trading Commission or to seek to increase
total return to the extent permitted by such regulations.

The Fund may not purchase or sell futures contracts or purchase or sell
related options to increase total return, except for closing purchase or sale
transactions, if immediately thereafter the sum of the amount of margin
deposits and premiums paid on the Fund's outstanding positions in futures and
related options entered into for the purpose of seeking to increase total
return would exceed 5% of the market value of the Fund's net assets.
Transactions in futures contracts and options on futures involve brokerage
costs, require margin deposits and, in the case of contracts and options
obligating the Fund to purchase securities or currencies, require the Fund to
segregate cash or liquid, high grade debt securities with a value equal to the
amount of the Fund's obligations.

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<PAGE>

While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. See
"Investment Objectives and Policies--Futures Contracts and Options on Futures
Contracts" in the Additional Statement. Thus, while the Fund may benefit from
the use of futures and options on futures, unanticipated changes in interest
rates, securities prices or currency exchange rates may result in a poorer
overall performance for the Fund than if it had not entered into any futures
contracts or options transactions. The loss incurred by the Fund in writing
options on futures is potentially unlimited and may exceed the amount of the
premium received.

The use of futures may increase the volatility of the Fund's net asset
value. The profitability of the Fund's trading in futures to increase total
return will depend on the ability of the Investment Adviser and Subadviser to
correctly analyze the futures markets. In addition, because of the low margin
deposits normally required in futures trading, a relatively small price
movement in a futures contract may result in substantial losses to the Fund.
Further, futures contracts and options on futures may be illiquid, and
exchanges may limit fluctuations in futures contract prices during a single
day.

In the event of an imperfect correlation between a futures position and a
portfolio position which is intended to be protected, the desired protection
may not be obtained and the Fund may be exposed to risk of loss. In addition,
it is not possible to hedge fully or perfectly against currency fluctuations
affecting the value of securities denominated in foreign currencies because
the value of such securities is also likely to fluctuate as a result of
independent factors not related to currency fluctuations. Therefore, perfect
correlation between the Fund's futures positions and portfolio positions will
be impossible to achieve.

The Fund's transactions in foreign currency, forward foreign currency
exchange contracts, options, futures contracts, and certain other derivative
transactions may be limited by the requirements of the Code for qualification
as a regulated investment company.

RISKS OF DERIVATIVE TRANSACTIONS. The Fund's transactions in interest rate
and currency swaps, interest rate caps, floors and collars, inverse floating
rate securities, structured securities, options, futures, options on futures
and currency forward contracts involve certain risks, including a possible
lack of correlation between changes in the value of hedging instruments and
the portfolio assets being hedged, the potential illiquidity of the markets
for derivative instruments, the risks arising from the margin requirements and
related leverage factors associated with such transactions. The use of these
management techniques to seek to increase total return also involves the risk
of loss if the Investment Adviser or Subadviser is incorrect in its
expectation of fluctuations in currency exchange rates securities prices or
interest rates.

RESTRICTED AND ILLIQUID SECURITIES

The Fund may purchase securities that are not registered or are offered in
an exempt non-public offering ("restricted securities") under the Securities
Act of 1933, as amended ("1933 Act"), including securities offered and sold to
"qualified institutional buyers" in reliance on Rule 144A under the 1933 Act.
However, the Fund will not invest more than 15% of its assets in illiquid
investments, which includes repurchase agreements maturing in more than seven
days, time deposits with a notice or demand period of more than seven days,
interest rate and currency swaps, and interest rate caps,

21
<PAGE>

floors and collars, securities that are not readily marketable and restricted
securities, unless the Board of Trustees of the Trust determines, based upon a
continuing review of the trading markets for the specific restricted security,
that such restricted security eligible for sale under Rule 144A is liquid. The
Board of Trustees may adopt guidelines and delegate to the Investment Adviser
the daily function of determining and monitoring the liquidity of restricted
securities. The Board of Trustees, however, will retain sufficient oversight
and be ultimately responsible for the determinations. Since it is not possible
to predict with assurance exactly how this market for restricted securities
sold and offered under Rule 144A will develop, the Board of Trustees will
carefully monitor the Fund's investments in these securities, focusing on such
important factors, among others, as valuation, liquidity and availability of
information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted
securities.

The purchase price and subsequent valuation of restricted securities
normally reflect a discount from the price at which such securities trade when
they are not restricted, since the restriction makes them less liquid. The
amount of the discount from the prevailing market price is expected to vary
depending upon the type of security, the character of the issuer, the party
who will bear the expenses of registering the restricted securities and
prevailing supply and demand conditions.

ZERO COUPON, DEFERRED INTEREST AND CAPITAL APPRECIATION BONDS

The Fund may invest in zero coupon, deferred interest and capital
appreciation bonds. Zero coupon, deferred interest and capital appreciation
bonds are debt obligations which are issued at a significant discount from
face value that do not entitle the holder to any payment of interest prior to
maturity or a specified commencement or redemption date (or cash payment
date). The amount of the discount varies depending on the time remaining until
maturity or cash payment date, prevailing interest rates, the liquidity of the
security and the perceived credit quality of the issuer. These securities also
may take the form of debt securities that have been stripped of their
unmatured interest coupons, the coupons themselves or receipts or certificates
representing interests in such stripped debt obligations or coupons. The
market prices of zero coupon, deferred interest and capital appreciation bonds
generally are more volatile than the market prices of interest-bearing
securities and are likely to respond to a greater degree to changes in
interest rates than interest-bearing securities having similar maturities and
credit quality. The Fund's investments in zero coupon, deferred interest and
capital appreciation bonds or stripped securities may require the Fund to sell
certain of its portfolio securities to generate sufficient cash to satisfy
certain income distribution requirements. See "Taxation" in the Additional
Statement.

OTHER INVESTMENT COMPANIES

The Fund reserves the right to invest up to 10% of its total assets,
calculated at the time of purchase, in the securities of other investment
companies including business development companies and small business
investment companies. The Fund may not invest more than 5% of its total assets
in the securities of any one investment company or in more than 3% of the
voting securities of any other investment company. Pursuant to an exemptive
order obtained from the SEC, other investment companies in which the Fund may
invest include money market funds for which the Investment Adviser, the
Subadviser or any of their affiliates serves as investment adviser. The Fund
will indirectly bear its proportionate share of any management fees and other
expenses paid by investment

22
<PAGE>

companies in which it invests in addition to the advisory and administration
fees paid by the Fund. However, to the extent that the Fund invests in a money
market fund for which the Investment Adviser or any of its affiliates acts as
adviser, the advisory and administration fees payable by the Fund to the
Investment Adviser will be reduced by an amount equal to the Fund's
proportionate share of the advisory and administration fees paid by such money
market fund to the Investment Adviser or any of its affiliates.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with dealers in U.S.
Government securities and member banks of the Federal Reserve System which
furnish collateral at least equal in value or market price to the amount of
their repurchase obligation. In a repurchase agreement, the Fund purchases a
debt security from a seller which undertakes to repurchase the security at a
specified resale price on an agreed future date (ordinarily a week or less).
The resale price generally exceeds the purchase price by an amount which
reflects an agreed-upon market interest rate for the term of the repurchase
agreement. The primary risk is that, if the seller defaults, the Fund might
suffer a loss to the extent that the proceeds from the sale of the underlying
securities and other collateral held by the Fund in connection with the
related repurchase agreement are less than the repurchase price. Repurchase
agreements maturing in more than seven days are considered by the Fund to be
illiquid. In addition, the Fund, together with other registered investment
companies having advisory agreements with the Investment Adviser or any of its
affiliates, may transfer uninvested cash balances into a single joint account,
the daily aggregate balance of which will be invested in one or more
repurchase agreements.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

The Fund may purchase securities on a when-issued basis. When-issued
transactions arise when securities are purchased by the Fund with payment and
delivery taking place in the future in order to secure what is considered to
be an advantageous price and yield to the Fund at the time of entering into
the transaction. The Fund may also purchase securities on a forward commitment
basis. In a forward commitment transaction, the Fund contracts to purchase
securities for a fixed price at a future date beyond customary settlement
time. The Fund is required to hold and maintain in a segregated account until
the settlement date cash or liquid, high grade debt obligations in an amount
sufficient to meet the purchase price. Alternatively, the Fund may enter into
offsetting contracts for the forward sale of other securities that it owns.
The purchase of securities on a when-issued or forward commitment basis
involves a risk of loss if the value of the security to be purchased declines
prior to the settlement date. Although the Fund would generally purchase
securities on a when-issued or forward commitment basis with the intention of
actually acquiring securities for its portfolio, the Fund may dispose of a
when-issued security or forward commitment prior to settlement if the
Investment Adviser or Subadviser deems it appropriate to do so.

LENDING OF PORTFOLIO SECURITIES

The Fund may also seek to increase its income by lending portfolio
securities. Under present regulatory policies, such loans may be made to
institutions, such as certain broker-dealers, and are required to be secured
continuously by collateral in cash, cash equivalents, or U.S. Government
securities maintained on a current basis in an amount at least equal to the
market value of the securities

23
<PAGE>

loaned. Cash collateral may be invested in cash equivalents. If the Investment
Adviser or Subadviser determines to make securities loans, the value of the
securities loaned may not exceed 33 1/3% of the value of the total assets of
the Fund. See "Investment Restrictions" in the Additional Statement. The Fund
may experience loss or delay in the recovery of its securities if the
institution with which it has engaged in a portfolio loan transaction breaches
its agreement with the Fund.

INVESTMENT RESTRICTIONS

The Fund is subject to certain investment restrictions which, as described
in more detail in the Additional Statement, are fundamental policies that
cannot be changed without the approval of a majority of the outstanding shares
of the Fund. Among other restrictions, the Fund may not invest more than 25%
of its total assets in the securities of issuers (including any one foreign
government, but excluding the U.S. Government) in any one industry. For
purposes of this percentage limitation, the term "securities" does not include
foreign currencies, which means that the Fund could have more than 25% of its
total assets denominated in a particular currency. The Fund may not borrow
money, except from banks for temporary or short-term purposes, in connection
with clearance of portfolio transactions, redemptions and failed settlements
and to finance certain additional purchases of securities, provided that the
Fund maintains asset coverage of at least 300% for all such borrowings. As a
matter of non-fundamental policy, the Fund may not purchase securities while
such borrowings exceed 5% of the value of the Fund's assets.

PORTFOLIO TURNOVER

The Fund may engage in active short-term trading to benefit from yield
disparities among different issues of securities or among the markets for
fixed income securities of different countries, to seek short- term profits
during periods of fluctuating interest rates, or for other reasons. Such
trading will increase the Fund's portfolio turnover rate and may increase the
incidence of short-term capital gains (distributions of which are taxable to
shareholders as ordinary income). A high rate of portfolio turnover (100% or
higher) involves correspondingly greater expenses which must be borne by the
Fund and its shareholders and may under certain circumstances make it more
difficult for the Fund to qualify as a regulated investment company under the
Code. The portfolio turnover rate is calculated by dividing the lesser of the
dollar amount of sales or purchases of portfolio securities by the average
monthly value of the Fund's portfolio securities, excluding securities having
a maturity at the date of purchase of one year or less.

MANAGEMENT

TRUSTEES AND OFFICERS

The Trust's Board of Trustees is responsible for deciding matters of general
policy and reviewing the actions of the Investment Adviser, Subadviser,
administrator, distributor and transfer agent. The officers of the Trust
conduct and supervise the Fund's daily business operations. The Additional
Statement contains information as to the identity of, and other information
about, the Trustees and officers of the Trust.

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<PAGE>

INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR

INVESTMENT ADVISER AND SUBADVISER. Goldman Sachs Asset Management, One New
York Plaza, New York, New York 10004, a separate operating division of Goldman
Sachs, acts as the investment adviser and administrator of the Fund. GSAM
International, 140 Fleet Street, London EC4A 2BJ England, an affiliate of
Goldman Sachs, acts as subadviser of the Fund. Goldman Sachs registered as an
investment adviser in 1981. As of January 31, 1995, Goldman Sachs Asset
Management, together with its affiliates, acted as investment adviser,
administrator or distributor for approximately $48.7 billion in assets. GSAM
International became a member of the Investment Management Regulatory
Organisation Limited in 1990 and registered with the SEC as an investment
adviser in 1991.

Under its Investment Advisory Agreement with the Fund, Goldman Sachs Asset
Management, with input from GSAM International and subject to the general
supervision of the Trust's Board of Trustees, oversees the investment of the
Fund's assets. Under its Subadvisory Agreement with the Fund, GSAM
International, subject to the general supervision of the Trust's Board of
Trustees and the Investment Adviser, provides day-to-day management of the
Fund's portfolio. Goldman Sachs has agreed to permit the Fund to use the name
"Goldman Sachs" or a derivative thereof as part of the Fund's name for as long
as the Investment Advisory and Subadvisory Agreements are in effect.

In performing their investment advisory and subadvisory services, the
Investment Adviser and Subadviser, while remaining ultimately responsible for
the management of the Fund, are able to draw upon the research and expertise
of their affiliate offices for portfolio decisions and management with respect
to certain portfolio securities.

The Fund's portfolio manager is Stephen Fitzgerald. Mr. Fitzgerald joined
GSAM International in 1992 and is a Vice President. Prior to 1992, he spent
two years managing multi-currency fixed income and balanced portfolios at
Invesco MIM Limited, where he was a senior member of the derivative products
group. Prior to his employment at Invesco, Mr. Fitzgerald spent three years
with Foreign and Colonial Management Limited in London managing fixed income
and derivative funds and, prior to that, in the treasury department of NRMA
Insurance Limited in Sydney.

It is the responsibility of the Investment Adviser and Subadviser to make
investment decisions for the Fund and to place purchase and sale orders for
the Fund's portfolio transactions in U.S. and foreign securities and currency
transactions. Such orders may be directed to any broker including, to the
extent and in the manner permitted by applicable law, Goldman Sachs or its
affiliates in foreign countries.

As compensation for the services rendered to the Fund by Goldman Sachs Asset
Management and GSAM International pursuant to the Investment Advisory and
Subadvisory Agreements, respectively, and the assumption by Goldman Sachs
Asset Management and GSAM International of the related expenses, Goldman Sachs
Asset Management and GSAM International are entitled to a fee, computed daily
and payable monthly, at an annual rate equal to 0.25% and 0.50%, respectively,
of the Fund's average daily net assets. Goldman Sachs Asset Management and
GSAM International voluntarily have agreed to limit such fees to an annual
rate equal to 0.10% and 0.30%, respectively, of the Fund's average daily net
assets. Goldman Sachs Asset Management and GSAM International have voluntarily
agreed to reduce or otherwise limit certain expenses of the Fund (excluding
advisory, subadvisory, administration and transfer agency fees, fees payable
under administration, distribution

25
<PAGE>

and authorized dealer service plans, taxes, interest, brokerage and
litigation, indemnification and other extraordinary expenses) to the extent
that such expenses exceed 0.06% annually of the Fund's average daily net
assets. Such reductions or limits are calculated monthly on a cumulative
basis. Although the Investment Adviser and Subadviser have no current
intention of modifying or discontinuing such expense limitation or the
limitations on the advisory or subadvisory fees, they may do so in the future
at their discretion. For the fiscal year ended October 31, 1994, the Fund paid
Goldman Sachs Asset Management and GSAM International fees for investment
advisory services at the rate of 25% and 50%, respectively, and did not limit
the Fund's expenses. Goldman Sachs Asset Management and GSAM International
have each agreed to reduce the fees payable to them (to the extent of such
fees) by the amount the Fund's expenses would exceed the applicable expense
limitations imposed by state securities administrators. See "Management--
Expenses" in the Additional Statement.

ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS. The involvement of the Investment Adviser, the Subadviser and
Goldman Sachs and their affiliates in the management of, or their interest in,
other accounts and other activities of Goldman Sachs may present conflicts of
interest with respect to the Fund or limit its investment activities. Goldman
Sachs and its affiliates engage in proprietary trading and advise accounts and
funds which have investment objectives similar to those of the Fund and/or
which engage in and compete for transactions in the same types of securities,
currencies and instruments as the Fund. Goldman Sachs and its affiliates will
not have any obligation to make available any information regarding their
proprietary activities or strategies, or the activities or strategies used for
other accounts managed by them, for the benefit of the management of the Fund
and it is not anticipated that the Investment Adviser or the Subadviser will
have access to proprietary information for the purpose of managing the Fund.
The results of the Fund's investment activities, therefore, may differ from
those of Goldman Sachs and its affiliates and it is possible that the Fund
could sustain losses during periods in which Goldman Sachs and its affiliates
and other accounts achieve significant profits on their trading for
proprietary or other accounts. From time to time, the Fund's activities may be
limited because of regulatory restrictions applicable to Goldman Sachs and its
affiliates, and/or their internal policies designed to comply with such
restrictions. See "Activities of Goldman Sachs and its Affiliates and Other
Accounts Managed by Goldman Sachs" in the Additional Statement for further
information.

ADMINISTRATOR. As administrator, pursuant to an Administration Agreement
with the Fund, Goldman Sachs Asset Management provides personnel for
supervisory, administrative, and clerical functions; oversees the performance
of administrative and professional services to the Fund by others; provides
office facilities; and prepares, but does not pay for, reports to
shareholders, the SEC and other regulatory authorities. As compensation for
the services rendered to the Fund by Goldman Sachs Asset Management pursuant
to the Administration Agreement, the Fund pays Goldman Sachs Asset Management
a fee, computed daily and payable monthly, at an annual rate equal to 0.15% of
the Fund's average daily net assets. Goldman Sachs Asset Management has agreed
to reduce its fees payable (to the extent of its fees) by the amount (if any)
that the Fund's expenses would exceed the applicable expense limitations
imposed by state securities administrators. See "Management--Expenses" in the
Additional Statement. For the fiscal year ended October 31, 1994, the Fund
paid Goldman Sachs Asset Management a fee for administrative services at the
foregoing rate.

DISTRIBUTOR AND TRANSFER AGENT

Goldman Sachs, 85 Broad Street, New York, New York, serves as the exclusive
distributor of the Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago,
Illinois, also serves as the Fund's transfer

26
<PAGE>

agent (the "Transfer Agent") and as such performs various shareholder
servicing functions. Shareholders of record with inquiries regarding the Fund
should contact Goldman Sachs (as Transfer Agent) at the address or the
telephone number set forth on the inside front cover page of this Prospectus.

NET ASSET VALUE

The net asset value per share of the Fund is calculated by the Fund's
custodian as of the close of regular trading on the New York Stock Exchange
(normally 3:00 p.m. Chicago time, 4:00 p.m. New York time), on each Business
Day (as such term is defined under "Additional Information"). Net asset value
per share of each class is calculated by determining the net assets
attributable to each class and dividing by the number of outstanding shares of
that class.

Investments in debt obligations are valued at fair value, based on yield
equivalents, a pricing matrix or other sources, under valuation procedures
established by the Trust's Board of Trustees. Other portfolio securities for
which accurate market quotations are readily available are valued on the basis
of quotations, which may be furnished by a pricing service or provided by
dealers in such securities. Portfolio securities for which accurate market
quotations are not readily available are valued in accordance with the Trust's
valuation procedures. Debt obligations with a remaining maturity of 60 days or
less are valued at amortized cost. The Board of Trustees has determined that
the amortized cost of such securities approximates fair market value.

PERFORMANCE INFORMATION

From time to time the Fund may publish average annual total return and yield
in advertisements and communications to shareholders or prospective investors.

Average annual total return is determined by computing the average annual
percentage change in value of $1,000 invested at the maximum public offering
price for specified periods ending with the most recent calendar quarter,
assuming reinvestment of all dividends and distributions at net asset value.
The total return calculation assumes a complete redemption of the investment
at the end of the relevant period. The Fund may also from time to time
advertise total return on a cumulative, average, year-by-year or other basis
for various specified periods by means of quotations, charts, graphs or
schedules. In addition, the Fund may furnish total return calculations based
on investments at various sales charge levels or at net asset value. In
addition to the above, the Fund may from time to time advertise its
performance relative to certain performance rankings and indices.

Yield is computed by dividing net investment income earned during a recent
thirty-day period by the product of the average daily number of shares
outstanding and entitled to receive dividends during the period and the
maximum offering price per share on the last day of the relevant period. The
results are compounded on a bond equivalent (semi-annual) basis and then
annualized. Net investment income per share is equal to the dividends and
interest earned during the period, reduced by accrued

27
<PAGE>

expenses for the period. The calculation of net investment income for these
purposes may differ from the net investment income determined for accounting
purposes.

Quotations of distribution rates are calculated by annualizing the most
recent distribution of net investment income for a monthly, quarterly or other
relevant period and dividing this amount by the net asset value per share or
maximum public offering price on the last day of the period for which the
distribution rates are being calculated.

The investment results of the Fund will fluctuate over time and any
presentation of investment results for any prior period should not be
considered a representation of what an investment may earn or what the Fund's
performance may be in any future period. In addition to information provided
in shareholder reports, the Fund may, in its discretion, from time to time
make a list of its holdings available to investors upon request.

SHARES OF THE TRUST

The Fund is a series of Goldman Sachs Trust, which was organized under the
laws of The Commonwealth of Massachusetts on September 24, 1987 as a
Massachusetts business trust under an Agreement and Declaration of Trust, as
amended (the "Trust Agreement"). Under the Trust Agreement, the Trustees are
authorized to issue an unlimited number of shares of beneficial interest,
$.001 par value per share. The Trustees of the Trust are responsible for the
overall management and supervision of its affairs. The Trustees of the Trust
have authority under the Trust Agreement to create and classify shares of
beneficial interest in separate series, without further action by
shareholders. As of the date of this Prospectus, the Trustees have authorized
shares of the Fund and six other series. Additional series may be added in the
future. The Trustees also have authority to classify and reclassify any series
or portfolio of shares into one or more classes. Pursuant thereto, the
Trustees have divided the shares of the Fund into three classes: Institutional
Shares, Administration Shares and Class A Shares. As of October 31, 1994, no
Institutional or Administration Shares were outstanding.

When issued, shares are fully paid and non-assessable. In the event of
liquidation, shareholders are entitled to share pro rata in the net assets of
the Fund available for distribution to such shareholders. All shares entitle
their holders to one vote per share, are freely transferable and have no
preemptive, subscription or conversion rights.

Under Massachusetts law, there is a remote possibility that shareholders of
a business trust could, under certain circumstances, be held personally liable
as partners for the obligations of such trust. The Trust Agreement contains
provisions intended to limit such liability and to provide indemnification out
of Trust property of any shareholder charged or held personally liable for
obligations or liabilities of the Trust solely by reason of being or having
been a shareholder of the Trust and not because of such shareholder's acts or
omissions or for some other reason. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its obligations.

Unless otherwise required by the Act, ordinarily it will not be necessary
for the Trust to hold annual meetings of shareholders. As a result,
shareholders may not consider each year the election of Trustees or the
appointment of independent accountants. Shareholders may remove a Trustee by
the

28
<PAGE>

affirmative vote of at least two-thirds of the Trust's outstanding shares and
the Trustees must promptly call a meeting for such purpose when requested to
do so in writing by the record holders of not less than 10% of the outstanding
shares. Shareholders may, under certain circumstances, communicate with other
shareholders in connection with requesting a special meeting of shareholders.
The Board of Trustees, however, will call a special meeting for the purpose of
electing Trustees if, at any time, less than a majority of Trustees holding
office at the time were elected by shareholders.

In the interest of economy and convenience, the Trust does not issue
certificates representing the Fund's shares. Instead, the Transfer Agent
maintains a record of each shareholder's ownership. Each shareholder receives
confirmation of purchase and redemption orders from the Transfer Agent. Fund
shares and any dividends and distributions paid by the Fund are reflected in
account statements from the Transfer Agent.

TAXATION

FEDERAL TAXES

The Fund is treated as a separate entity for tax purposes, has qualified and
elected to be treated as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code") and intends to
continue to qualify for such treatment. To qualify for treatment as a
regulated investment company, the Fund must satisfy certain requirements
relating to the sources of its income, diversification of its assets and
distribution of its income to shareholders. As a regulated investment company,
the 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 the Fund from net investment income, the excess of net
short-term capital gain over net long-term capital loss, original issue
discount or certain market discount income, or certain net foreign exchange
gains will be taxable to shareholders as ordinary income. Dividends paid by
the Fund from the excess of net long-term capital gain over net short-term
capital loss will be taxable as long-term capital gains regardless of how long
the shareholders have held their shares. These tax consequences will apply
regardless of whether distributions are received in cash or reinvested in
shares. Certain distributions paid by the Fund in January of a given year may
be taxable to shareholders as if received the prior December 31. Shareholders
will be informed annually about the amount and character of distributions
received from the Fund for federal income tax purposes.

Investors should consider the tax implications of buying shares immediately
prior to a distribution. Investors who purchase shares shortly before the
record date for a distribution will pay a per share price that includes the
value of the anticipated distribution and will be taxed on the distribution
even though the distribution represents a return of a portion of the purchase
price.

Redemptions and exchanges of shares are taxable events on which a
shareholder may recognize a gain or loss.

Individuals and certain other classes of shareholders may be subject to 31%
backup withholding of federal income tax on distributions, redemptions and
exchanges if they fail to furnish the Fund with their correct taxpayer
identification number and certain certifications or if they are otherwise
subject to

29
<PAGE>

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 ordinary dividends
from the Fund.

The Fund may be subject to foreign withholding or other foreign taxes on
income (possibly including, in some cases, capital gains) earned on foreign
securities. If more than 50% of the value of its total assets is comprised of
stock or securities of foreign corporations at the end of its taxable year and
the Fund so elects, shareholders will include in their gross incomes (in
addition to dividends they receive) their pro rata shares of qualified foreign
taxes paid by the Fund and may be entitled to take federal income tax credits
or deductions with respect to such taxes. If the Fund cannot or does not so
elect, it may deduct such taxes in computing its taxable income, if any.

OTHER TAXES

In addition to federal taxes, a shareholder may be subject to state, local
or foreign taxes on payments received from the Fund. A state income (and
possibly local income and/or intangible property) tax exemption is generally
available to the extent the 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, provided in some states that certain
thresholds for holdings of such obligations and/or reporting requirements are
satisfied.

For a further discussion of certain tax consequences of investing in shares
of the Fund, see "Taxation" in the Additional Statement. Shareholders are
urged to consult their own tax advisers regarding specific questions as to
federal, state and local taxes as well as to any foreign taxes.

ADDITIONAL INFORMATION

The term "a vote of the majority of the outstanding shares" of the Fund
means the vote of the lesser of (i) 67% or more of the shares present at a
meeting, if the holders of more than 50% of the outstanding shares of the Fund
are present or represented by proxy, or (ii) more than 50% of the outstanding
shares of the Fund.

As used in this Prospectus, the term "Business Day" means any day the New
York Stock Exchange is open for trading, which is Monday through Friday except
for holidays. The New York Stock Exchange is closed on the following holidays:
New Year's Day (observed), Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

30
<PAGE>

REPORTS TO SHAREHOLDERS

Institutional Shareholders will receive an annual report containing audited
financial statements and a semi-annual report. Each Institutional Shareholder
will also be provided with a printed confirmation for each transaction in the
shareholder's account and an individual monthly statement. A year-to-date
statement for any account will be provided upon request made to Goldman Sachs.

SUB-ACCOUNTING SERVICE

The Fund has designed special procedures to assist banks and other
institutional 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 unless 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 the month end and the income, if
any, together with the total share balance and income, if any, for the master
account.

DIVIDENDS

Payment of dividends from net investment income will be made on the last
Business Day of each month in additional Institutional Shares of the Fund at
net asset value on such day, unless cash distributions are elected, in which
case, cash payment will be made on or about the last calendar day of the
month. Payment of dividends with respect to capital gains, if any, when
declared will be made in additional Institutional Shares of the Fund at net
asset value on the payment date, unless cash distributions are elected. This
election to receive dividends in cash initially should be made on the Account
Information Form and may be changed upon written notice to the Transfer Agent
at any time prior to the record date for a particular dividend or
distribution. If cash dividends are elected with respect to the Fund's monthly
net investment income dividends, then cash dividends must also be elected with
respect to the short-term capital gains component, if any, of the Fund's
annual dividend.

The election to reinvest dividends and distributions paid by the Fund in
additional Institutional Shares of the Fund will not affect the tax treatment
of such dividends and distributions, which will be treated as received by the
shareholder and then used to purchase Institutional Shares of the Fund.

The Fund intends that all or substantially all of the Fund's net investment
income will be declared as a dividend and paid monthly, and all or
substantially all net realized long-term and short-term capital gains will be
declared as a dividend and paid at least annually. Net loss, if any, from
certain foreign currency transactions or instruments that is otherwise taken
into account calculating net investment income or net realized capital gains
for accounting purposes may not be taken into account in determining the
amount of dividends to be declared and paid, with the result that a portion of
the Fund's dividends may be treated as a return of capital, nontaxable to the
extent of a shareholder's tax basis in his shares. In determining amounts of
capital gains to be distributed, capital losses, including any available
capital loss carryovers from prior years, will be offset against capital gains
realized during the current year.

At the time of an investor's purchase of shares of the Fund a portion of the
net asset value per share may be represented by undistributed income of the
Fund or realized or unrealized appreciation of the Fund's portfolio
securities. Therefore, subsequent distributions (or portions thereof) of
taxable income or realized appreciation on such shares may be taxable to the
investor even if the net asset value of the investor's shares is, as a result
of the distributions, reduced below the cost of such shares and the
distributions (or portions thereof) represent a return of a portion of the
purchase price.

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<PAGE>

PURCHASE OF INSTITUTIONAL SHARES

Institutional Shares of the Fund may be purchased, without imposition of a
sales load, through Goldman Sachs. On any Business Day an order or payment is
received by Goldman Sachs prior to the close of regular trading on the New
York Stock Exchange (currently 4:00 p.m. New York time), the price per share
will be the net asset value computed that Business Day. See "Net Asset Value."

PURCHASE PROCEDURES

Purchases of Institutional Shares may be made by placing an order with
Goldman Sachs at 800-621-2550 and either wiring Federal Funds to The Northern
Trust Company ("Northern") as subcustodian for State Street Bank and Trust
Company ("State Street") or initiating an ACH transfer to Northern. Purchases
may also be made by check (except that a check drawn on a foreign bank will
not be accepted) or Federal Reserve draft made payable to "Goldman Sachs
Trust--Goldman Sachs Global Income Fund" and should be directed to "Goldman
Sachs Trust--Goldman Sachs Global Income Fund" c/o GSAM Shareholder Services,
4900 Sears Tower, Chicago, Illinois 60606. Payment must be received within
five Business Days of receipt of the purchase order by the Fund or Goldman
Sachs. Payment of the proceeds of redemption of shares purchased by check may
be delayed for a period of time as described under "Redemption of
Institutional Shares."

In order to make an initial investment in the Fund, an investor must
establish an account with the Fund by furnishing necessary information to the
Fund or Goldman Sachs. An Account Information Form, a copy of which is
attached to this Prospectus, should be used to establish such an account.
Subsequent purchases of shares may be made in the manner set forth in the
preceding paragraph.

The minimum initial investment for the Fund is [$250,000] in Institutional
Shares of the Fund alone or in combination with Institutional Shares of any
other mutual fund sponsored by Goldman Sachs and designated as an eligible
fund for this purpose and the relevant class of any portfolio of Goldman Sachs
Money Market Trust. The minimum investment requirement may be waived for
current and former officers, partners, directors or employees of Goldman Sachs
or any of its affiliates or for other investors at the discretion of the
Trust's officers. No minimum amount is required for subsequent investments.
The Fund reserves the right to redeem the Institutional Shares of any
Institutional Shareholder whose account balance is less than $50 as a result
of earlier redemptions. Such redemptions will not be implemented if the value
of an Institutional Shareholder's account falls below the minimum account
balance solely as a result of market conditions. The Trust will give sixty
(60) days' prior written notice to Institutional Shareholders whose
Institutional Shares are being redeemed to allow them to purchase sufficient
additional Institutional Shares of the Fund to avoid such redemption.

OTHER PURCHASE INFORMATION

Banks, trust companies or other institutions through which investors acquire
Institutional Shares may impose charges in connection with transactions in
Institutional Shares. Such institutions should be consulted for information
regarding such charges.

The Fund and Goldman Sachs each reserves the right to reject any specific
purchase order (including exchanges) or to restrict purchases or exchanges by
a particular purchaser or group of related purchasers). The Fund or Goldman
Sachs may reject or restrict purchases or exchanges of Institutional Shares by
a particular purchaser or group of related purchasers, for example, when a

32
<PAGE>

pattern of frequent purchases and sales or exchanges of Institutional Shares
of the Fund is evident, or if the purchase and sale or exchange orders are, or
a subsequent abrupt redemption might be, of a size that would disrupt
management of the Fund.

EXCHANGE PRIVILEGE

Institutional Shares of the Fund may be exchanged for (i) Institutional
Shares of any other mutual fund sponsored by Goldman Sachs and designated as
an eligible fund for this purpose and (ii) the relevant class of any portfolio
of Goldman Sachs Money Market Trust at the net asset value next determined
either by writing to Goldman Sachs, Attention: Goldman Sachs Trust--Goldman
Sachs Global Income Fund, c/o GSAM Shareholder Services, 4900 Sears Tower,
Chicago, Illinois 60606 or, if previously elected in the Fund's Account
Information Form, by telephone at 800-621-2550 (7:00 a.m. to 3:00 p.m. Chicago
time). A shareholder should obtain and read the prospectus relating to any
other fund and its shares or units and consider its investment objective,
policies and applicable fees before making an exchange. Under the telephone
exchange privilege, Institutional Shares may be exchanged among accounts with
different names, addresses and social security or other taxpayer
identification numbers only if the exchange request is in writing and is
received in accordance with the procedures set forth under "Redemptions of
Institutional Shares."

In times of drastic economic or market changes the telephone exchange
privilege may be difficult to implement. In an effort to prevent unauthorized
or fraudulent exchanges by telephone, Goldman Sachs employs reasonable
procedures as set forth under "Redemption of Institutional Shares" to confirm
that such instructions are genuine. For federal income tax purposes, an
exchange is treated as a sale of the shares surrendered in the exchange on
which an investor may realize a gain or loss, followed by a purchase of
Institutional Shares, or the relevant class of any portfolio of Goldman Sachs
Money Market Trust received in the exchange. Shareholders should consult their
own tax adviser concerning the tax consequences of an exchange.

All exchanges which represent an initial investment in a fund must satisfy
the minimum investment requirements of the fund into which the Institutional
Shares are being exchanged, except that this requirement may be waived at the
discretion of the officers of such fund. Exchanges are available only in
states where exchanges may legally be made. The exchange privilege may be
modified or withdrawn at any time on sixty (60) days' written notice to
Institutional Shareholders and is subject to certain limitations. See
"Purchase of Institutional Shares."

REDEMPTION OF INSTITUTIONAL SHARES

The Fund will redeem its Institutional Shares upon request of an
Institutional Shareholder on any Business Day at the net asset value next
determined after the receipt by the Transfer Agent of such request in proper
form. See "Net Asset Value." If Institutional Shares to be redeemed were
recently purchased by check, the Fund may delay transmittal of redemption
proceeds until such time as it has assured itself that good funds have been
collected for the purchase of such Institutional Shares. This may take up to
fifteen (15) days. Redemption requests may be made by writing to or calling
the Transfer Agent at the address or telephone number set forth on the inside
front cover page of this Prospectus. An Institutional Shareholder may request
redemptions by telephone if the optional telephone redemption privilege is
elected on the Account Information Form accompanying this Prospectus. It may
be difficult to implement redemptions by telephone in times of drastic
economic or market changes.

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<PAGE>

In an effort to prevent unauthorized or fraudulent redemption or exchange
requests by telephone, Goldman Sachs employs reasonable procedures specified
by the Trust to confirm that such instructions are genuine. Among other
things, any redemption 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. Exchanges among accounts with different names, addresses and
social security or other taxpayer identification numbers must be in writing
and signed by an authorized person designated on the Account Information Form.
Other procedures may be implemented from time to time. If reasonable
procedures are not implemented, the Trust may be liable for any loss due to
unauthorized or fraudulent transactions. In all other cases, neither the Fund,
the Trust nor Goldman Sachs will be responsible for the authenticity of
redemption or exchange instructions received by telephone.

Written requests for redemptions must be signed by each Institutional
Shareholder whose signature has been guaranteed by a bank, a securities broker
or dealer, a credit union having authority 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 association or a clearing agency, provided that such
institution satisfies the standards established by the Transfer Agent.

The Fund will arrange for the proceeds of redemptions effected by any means
to be wired as Federal Funds to the bank account designated on the
Institutional Shareholder's Account Information Form or, if the shareholder
elects in writing, by check. Redemption proceeds paid by wire transfer of
Federal Funds will normally be wired on the next Business Day in Federal Funds
(for a total one-day delay), but may be paid up to seven (7) days after
receipt of a properly executed redemption request. Wiring of redemption
proceeds may be delayed one additional Business Day if the Federal Reserve
Bank is closed on the day redemption proceeds would originally be wired. With
respect to redemption proceeds paid by check, a check for the redemption
proceeds will normally be mailed to the address of record within seven (7)
days of receipt of a properly executed redemption request. In order to change
the bank designated on the Account Information Form to receive redemption
proceeds or the address of record, a written request must be received by the
Transfer Agent. This request must be signature guaranteed as set forth above.
Further documentation may be required for executors, trustees or corporations.
Once wire transfer instructions have been given by Goldman Sachs, neither the
Fund, the Trust nor Goldman Sachs assumes any further responsibility for the
performance of intermediaries or the Institutional Shareholder's bank in the
transfer process. If a problem with such performance arises, the Institutional
Shareholder should deal directly with such intermediaries or bank.

Additional documentation regarding a redemption by any means may be required
to effect a redemption when deemed appropriate by Goldman Sachs. The request
for such redemption will not be considered to have been received in proper
form until such additional documentation has been received.

Except with respect to Institutional Shareholders whose account balances are
less than $50, Institutional Shares are not redeemable at the option of the
Fund unless the Board of Trustees determines in its sole discretion that
failure to so redeem may have material adverse consequences to the
shareholders of the Funds. The Fund, however, assumes no responsibility to
compel redemptions.

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<PAGE>

APPENDIX A

COUNTRY SUMMARIES

As stated in the Prospectus, the Fund may invest in securities issued by
foreign issuers and denominated in foreign currencies and engage in certain
foreign currency transactions. The following summaries are designed to provide
a brief general discussion of the economic and certain other conditions of
each of these countries. The summaries are presented in alphabetical order.
Because the Fund may invest more than 25% of its total assets in securities of
issuers located, in addition to the United States, in each of Canada, Germany,
Japan and the United Kingdom additional information is provided in their
respective summaries. In addition, more than 25% of the Fund's total assets,
adjusted to reflect currency transactions and positions, may be denominated in
any currency described in this Appendix. The information in these summaries
has been derived from sources that the Fund believes to be reliable, but has
not been independently verified. In some cases the data are seasonally
adjusted. Except as otherwise noted below, currency exchange rate is a period
average.

Although the countries for which summaries are provided below generally have
developed and industrialized economies, they are subject to periods of
economic or political instability. For example, efforts by the member
countries of the European Community to eliminate internal barriers to the free
movement of goods, persons, services and capital have encountered opposition
arising from the conflicting economic, political and cultural interests and
traditions of the member countries and their citizens. The reunification of
the former German Democratic Republic (East Germany) with the Federal
Democratic Republic of German (West Germany) has caused considerable economic
and social dislocations. The efforts of the German central bank to control
domestic inflation associated with reunification costs by raising interest
rates has adversely affected the economies of other European countries whose
currencies are linked to the German deutschemark. Such events can materially
affect securities markets and have also disrupted the relationship of such
currencies with each other and with the U.S. dollar. In Japan, a deflation in
the market values of Japanese real estate and equity securities and the
resulting instability in the Japanese banking system, have had adverse effects
on the economies of both Japan and its regular trading partners. Future
political and economic developments can be expected to produce continuing
effects on securities and currency markets.

AUSTRALIA. The currency is the Australian dollar (November 1994: AUD
1.3265 = $1 U.S.). Gross Domestic Product was AUD 418.1 billion ($284.3
billion) in 1993. The current account balance in foreign trade in 1993 was a
deficit of AUD 15.9 billion ($10.8 billion), which was 3.8% of GDP. The annual
rate of inflation was 1.8% in 1993. The average rate of inflation over the
three years ended in 1993 was 2.0%. Australia is a major power in the
Southeast Pacific with close ties to Japan and Southeast Asia. Iron, steel,
textiles, electrical equipment, chemicals, autos, aircraft, ships, machinery,
cattle and wool are chief industries.

AUSTRIA. The currency is the Austrian schilling (November 1994: ATS
10.850 = $1 U.S.). Gross Domestic Product was ATS 2,109.7 billion ($181.4
billion) in 1993. The 1993 current account balance in foreign trade was a
deficit of ATS 10.2 billion ($0.9 billion), which was 0.4% of GDP. The annual
rate of inflation in 1993 was 3.6%. The average rate of inflation over the
three years ended 1993 was 3.6%. Steel, machinery, autos, electrical and
optical equipment, glassware, sport goods, paper, textiles, chemicals and
cement are the chief industries. Austria produces most of its food as well as
an array of industrial products.

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BELGIUM. The currency is the Belgian franc (November 1994: BEF 31.713 = $1
U.S.). Gross Domestic Product was BEF 7,032 billion ($203.3 billion) in 1993.
The current account balance in foreign trade in 1993 was a surplus of BEF
435.5 billion ($12.6 billion), which was 6.2% of GDP. The annual rate of
inflation was 2.8% in 1992. The average rate of inflation over the three years
ended 1993 was 2.8%. Steel, glassware, diamond cutting, textiles and chemicals
are important industries.

CANADA. The currency is the Canadian dollar (November 1994: CAD 1.365 = $1
U.S.). Gross Domestic Product was CAD 711.7 billion ($551.7 billion) in 1993.
The current account balance in foreign trade in 1993 was a deficit of CAD 30.8
billion ($23.9 billion), which was 4.3% of the GDP. The annual rate of
inflation in 1993 was 1.8%. The average rate of inflation for the three years
ended 1993 was 3.0%.

Canadian Bond Markets. As of year end 1992, the Canadian Bond market had
640.3 billion Canadian dollars outstanding. The market has two major domestic
sectors. The largest of these is the provincial government market which has
261 billion Canadian dollars outstanding. The Federal debt market has 214
billion Canadian dollars outstanding. In 1992 total government debt
outstanding was 67% of GDP.

DENMARK. The currency is the Danish krone (November 1994: DKK 6.023 = $1
U.S.). Gross Domestic Product was DKK 881.8 billion ($136.0 billion) in 1993.
The current account balance in 1993 was a surplus of DKK 36.0 billion ($5.5
billion), which was 4.1% GDP. The annual rate of inflation was 1.3% in 1993.
The average rate of inflation over the three years ended 1993 was 1.9%.
Machinery, textiles, furniture, electronics and dairy are the chief
industries.

FINLAND. The currency is the Finnish markka (November 1994: FIM 4.717 = $1
U.S.). Gross Domestic Product was FIM 478.7 billion ($83.8 billion) in 1993.
The current account balance in foreign trade in 1993 was a deficit of FIM 5.6
billion ($1.0 billion), which was 1.2% of GDP. The annual rate of inflation
was 2.1% in 1993. The average rate of inflation over the three years ended
1993 was 2.9%. Machinery, metal, ship building, textiles and clothing are the
chief industries.

FRANCE. The currency is the French franc (November 1994: FRF 5.295 = $1
U.S.). Gross Domestic Product was FRF 7,093.5 billion ($1,252.6 billion) in
1993. The current account balance in foreign trade in 1993 was a surplus of
FRF 57.8 billion ($10.2 billion), which was 0.8% of GDP. The annual rate of
inflation was 2.1% in 1993. The average rate of inflation over the three years
ended 1993 was 2.6%. Steel, chemicals, autos, textiles, wine, perfume,
aircraft and electronic equipment are the chief industries.

GERMANY. The currency is the German deutschemark (November 1994: GDM
1.5387 = $1 U.S.). Gross National Product was GDM 2,820.0 billion ($1,705.7
billion) in 1993. The current account balance in foreign trade in 1993 was a
deficit of GDM 33.1 billion ($20.0 billion), which was 1.2% of the GDP. The
annual rate of inflation in 1993 was 4.1%. The average rate of inflation for
the three years ended 1993 was 3.9%.

German Bond Markets. The German public bond market has three primary
sectors: the federal government market; the bank bond market; and the
corporate bond market which includes domestically issued and Eurodeutschemark
issues. As of June 1993 the total amount of public debt outstanding was GDM
2,742 billion of which GDM 594 billion represents federal debt. The bank

A-2
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bond market is large, with approximately GDM 1,230 billion outstanding. The
GDM Eurobond market is the primary market for both domestic corporate
borrowers and supranational, sovereign, and foreign corporate borrowers. There
is approximately GDM 316 billion outstanding in International GDM bonds. There
are currently three exchanges listing futures on deutschemark financial
instruments.

GREECE. The currency is the Greek drachma (November 1994: GDR 237.11 = $1
U.S.). Gross Domestic Product was GDR 16,760 billion ($73.1 billion) in 1993.
The current account balance in foreign trade in 1993 was a deficit of GDR
171.2 billion ($0.7 billion), which was 1.0% of the GDP. The annual rate of
inflation in 1992 was 14.4%. The average rate of inflation for the three years
ended 1993 was 16.6%. Agriculture, tourism, textiles and shipping are the
chief industries.

IRELAND. The currency is the Irish pound (November 1994: IRP 0.6388 = $1
U.S.). Gross Domestic Product was IRP 32.3 billion ($47.4 billion) in 1993.
The trade balance in 1993 was a surplus of IRP 2.6 billion ($3.8 billion),
which was 8.0% of the GDP. The annual rate of inflation in 1993 was 1.4%. The
average rate of inflation for the three years ended 1993 was 2.6%.
Agriculture, paper, machinery and textiles are the chief industries.

ITALY. The currency is the Italian lira (November 1994: ITL 1,584.94 = $1
U.S.). Gross Domestic Product was ITL 1,507.2 trillion ($1,222.6 billion) in
1992. The current account balance in foreign trade in 1992 was a surplus of
ITL 17,588 billion ($11.2 billion). The annual rate of inflation was 4.5% in
1993. The average rate of inflation over the three years ended 1993 was 5.3%.
Steel, machinery, autos, textiles, shoes, machine tools and chemicals are the
chief industries.

JAPAN. The currency is the Japanese yen (November 1994: Yen 97.96 = $1
U.S.). Gross Domestic Product was Yen 468.8 trillion ($4,216 billion) in 1993.
The current account balance in foreign trade in 1992 was a surplus of Yen
14,622 billion ($131.5 billion), which was 3.1% of the GDP. The annual rate of
inflation in 1993 was 1.3%. The average rate of inflation for the three years
ended 1993 was 2.1%.

Japanese Bond Markets. The Japanese government bond market is the second
largest government bond market behind the United States. Over the last few
years both the government and private bond markets have been substantially
reformed and deregulated. While many of the market's new characteristics have
corollaries in other markets there are many more unique characteristics that
must be understood in order to effectively trade Japanese bonds. The Japanese
government bond market is divided into four sectors distinguished by the
maturity of the bonds being issued. As of March 1993, the total amount of
Japanese government bonds outstanding was 114,000 billion yen. There is a very
pronounced liquidity tiering in the secondary market for government bonds,
with the long-term sector of the market accounting for almost 95% of all
trades. The Euroyen market, established in 1977, allows highly rated
supranational, sovereign and corporate entities to issue yen-denominated debt
outside Japan.

LUXEMBOURG. The currency is the Luxembourg franc which is identical in value
to the Belgian franc (November 1994: LUF 31.713 = $1 U.S.). Gross Domestic
Product was LUF 339.2 billion ($10.6

A-3
<PAGE>

billion) in 1992. The annual rate of inflation was 3.6% in 1993. The average
rate of inflation over the three years ended 1993 was 3.3%. Steel, chemicals,
beer, tires, tobacco, metal products and cement are the chief industries.

NETHERLANDS. The currency is the Dutch guilder (November 1994: NLG
1.726 = $1 U.S.). Gross Domestic Product was NLG 573.9 billion ($309.0
billion) in 1993. The current account balance in foreign trade in 1993 was a
surplus of NLG 18.6 billion ($10.0 billion), which was 3.2% of GDP. The annual
rate of inflation was 2.6% in 1993. The average rate of inflation over the
three years ended 1993 was 3.0%. Metals, machinery, chemicals, oil refinery,
diamond cutting, electronics and tourism are the chief industries.

NEW ZEALAND. The currency is the New Zealand dollar (December 1993: NZD
1.849 = $1 U.S.). Gross Domestic Product was NZD $80.9 billion (U.S. $43.7
billion) in 1993. The current account balance in foreign trade in 1993 was a
deficit of NZD $1.7 billion (U.S. $0.9 billion), which was 2.1% of GDP. The
annual rate of inflation was 1.3% in 1993. The average rate of inflation over
the three years ended 1993 was 1.6%. Food processing, fishing, textiles
(especially wool-related), forest products and machinery are the chief
industries.

NORWAY. The currency is the Norwegian kronor (November 1994: NOK 6.727 = $1
U.S.). Gross Domestic Product was NOK 733.7 billion ($103.4 billion) in 1993.
The current account balance in foreign trade during 1993 was a surplus of NOK
17.4 billion ($2.5 billion), which was 2.4% of GDP. The annual rate of
inflation was 2.3% in 1993. The average rate of inflation over the three years
ended 1993 was 2.7%. Engineering, metals, chemicals food processing, fishing,
paper, shipbuilding and oil and gas are the chief industries.

PORTUGAL. The currency is the Portuguese escudo (November 1994: PES
157.30 = $1 U.S.). Gross Domestic Product was PES 11,343.0 billion ($84.0
billion) in 1992. The current account balance in foreign trade in 1993 was a
surplus of PES 152.3 billion ($0.9 billion). The annual rate of inflation in
1993 was 6.7%. The average rate of inflation for the three years ended 1993
was 9.0%. Fishing, agriculture, tourism and engineering are the chief
industries.

SPAIN. The currency is the Spanish peseta (November 1994: ESP 128.483 = $1
U.S.). Gross Domestic Product was ESP 60,880 billion ($478.4 billion) in 1993.
The current account balance in foreign trade in 1992 was a deficit of ESP
769.4 billion ($6.3 billion), which was 1.3% of GDP. The annual rate of
inflation was 4.6% in 1992. The average rate of inflation over the three years
ended 1993 was 5.5%. Machinery, steel textiles, shoes, autos and processed
foods are the chief industries.

SWEDEN. The currency is the Swedish krona (November 1994: SEK 7.351 = $1
U.S.). Gross Domestic Product was SEK 1,449.5 billion ($186.2 billion) in
1993. The current account balance in foreign trade in 1993 was a deficit of
SEK 14.3 billion ($1.8 billion), which was 1.0% of GDP. The annual rate of
inflation was 4.6% in 1993. The average rate of inflation over the three years
ended 1993 was 5.4%. Steel, machinery, instruments, autos, shipbuilding,
shipping and paper are the chief industries.

SWITZERLAND. The currency is the Swiss franc (November 1994: CHF 1.295 = $1
U.S.). Gross Domestic Product was CHF 343.0 billion ($232.1 billion) in 1993.
The current account balance in foreign trade in 1993 was a surplus of CHF 24.7
billion ($16.7 billion), which was 7.2% of GDP. The annual rate of inflation
was 3.3% in 1993. The average rate of inflation over the three years ended
1993

A-4
<PAGE>

was 4.4%. Machinery, machine tools, steel, instruments, watches, textiles,
foodstuffs (cheese, chocolate), chemicals, drugs, banking and tourism are the
chief industries.

UNITED KINGDOM. The currency is the British pound sterling (November 1994:
BPS 0.629 = $1 U.S.). Gross Domestic Product was BPS 630.0 billion ($946.3
billion) in 1993. The current account balance in foreign trade in 1993 was a
deficit of BPS 10.9 billion ($16.4 billion), which was 1.7% of the GDP. The
annual rate of inflation in 1993 was 1.6%. The average rate of inflation for
the three years ended 1993 was 3.7%.

British Bond Markets. The British public bond market has five primary
sectors: the government bond market; the short-term debt market; the
derivative bond market; the mortgage bond market; and the Eurosterling bond
market. The derivative bond market includes the London International Financial
Futures Exchange. The Eurosterling bond market allows highly rated
supranational, sovereign and corporate entities to issue sterling-denominated
debt outside the United Kingdom. As of 1993, the total amount of UK government
debt outstanding was 152 billion pounds, 60% of total national debt.

A-5
<PAGE>

SHORT-TERM INTEREST RATES*

<TABLE>
<CAPTION>
FEDERAL
UNITED REPUBLIC
CANADA JAPAN KINGDOM USA OF GERMANY
------ ----- ------- ----- ----------
<S> <C> <C> <C> <C> <C>
December, 1983............................ 9.81 6.44 9.44 10.06 6.38
December, 1984............................ 10.13 6.25 10.06 8.75 5.63
December, 1985............................ 9.25 6.69 11.94 8.00 4.88
December, 1986............................ 8.38 4.63 11.25 6.38 5.00
December, 1987............................ 8.50 4.38 8.94 7.44 3.50
December, 1988............................ 10.88 4.69 13.19 9.31 5.44
December, 1989............................ 12.12 6.81 15.19 8.38 8.38
January, 1990............................. 12.44 7.06 15.09 8.38 8.25
February, 1990............................ 13.38 7.44 15.19 8.38 8.56
March, 1990............................... 13.25 7.50 15.25 8.50 8.06
April, 1990............................... 13.50 7.38 15.38 8.69 8.38
May, 1990................................. 13.62 7.38 15.19 8.38 8.25
June, 1990................................ 13.44 7.69 14.97 8.38 8.25
July, 1990................................ 13.12 7.81 15.03 7.94 8.31
August, 1990.............................. 12.62 8.25 15.06 8.06 8.50
September, 1990........................... 12.19 8.50 14.97 8.31 8.69
October, 1990............................. 12.25 8.31 13.81 8.06 8.69
November, 1990............................ 12.06 8.44 13.69 8.38 9.31
December, 1990............................ 11.38 8.44 14.06 7.56 9.31
January, 1991............................. 10.69 8.25 13.94 7.06 9.25
February, 1991............................ 9.81 8.12 12.69 6.88 9.12
March, 1991............................... 9.62 7.88 12.41 6.38 9.31
April, 1991............................... 9.12 8.06 11.69 6.06 9.12
May, 1991................................. 8.69 7.75 11.38 6.06 9.06
June, 1991................................ 8.56 8.00 11.31 6.19 9.19
July, 1991................................ 8.75 7.44 11.12 6.06 9.38
August, 1991.............................. 8.44 7.25 10.88 5.69 9.25
September, 1991........................... 8.25 6.53 10.38 5.62 9.38
October, 1991............................. 7.75 6.25 10.50 5.25 9.50
November, 1991............................ 7.38 6.12 10.69 5.00 9.50
December, 1991............................ 7.00 5.69 11.00 4.25 9.62
January, 1992............................. 6.94 5.19 10.69 4.19 9.62
February, 1992............................ 7.19 5.19 10.19 4.19 9.56
March, 1992............................... 7.19 4.75 10.81 4.25 9.75
April, 1992............................... 6.63 4.69 10.50 4.00 9.75
May, 1992................................. 6.06 4.69 10.00 4.00 9.69
June, 1992................................ 5.50 4.44 10.06 3.88 9.75
July, 1992................................ 5.19 4.00 10.31 3.38 9.75
August, 1992.............................. 4.75 3.88 10.69 3.44 9.81
</TABLE>
(continued on following page)
--------
* Rates quoted are daily end-of-period offer rates on 3-month Eurocurrency
deposits.

A-6
<PAGE>

SHORT-TERM INTEREST RATES*--(CONTINUED)

<TABLE>
<CAPTION>
FEDERAL
UNITED REPUBLIC
CANADA JAPAN KINGDOM USA OF GERMANY
------ ----- ------- ---- ----------
<S> <C> <C> <C> <C> <C>
September, 1992............................ 7.88 3.88 9.00 3.06 9.06
October, 1992.............................. 6.13 3.69 7.56 3.50 9.00
November, 1992............................. 8.19 3.75 7.44 3.94 8.88
December, 1992............................. 6.88 3.75 7.06 3.38 8.69
January, 1993.............................. 6.38 3.50 6.32 3.25 8.50
February, 1993............................. 5.88 3.25 6.13 3.13 8.25
March, 1993................................ 5.13 3.25 5.94 3.19 7.88
April, 1993................................ 5.19 3.19 6.13 3.13 7.63
May, 1993.................................. 4.94 3.25 5.88 3.31 7.56
June, 1993................................. 4.56 3.25 6.00 3.25 7.50
July, 1993................................. 4.13 3.19 5.88 3.25 6.81
August, 1993............................... 4.81 2.69 5.94 3.19 6.63
September, 1993............................ 4.81 2.50 6.00 3.31 6.69
October, 1993.............................. 4.50 2.31 5.69 3.38 6.44
November, 1993............................. 4.13 2.13 5.38 3.44 6.19
December, 1993............................. 3.88 2.00 5.38 3.31 5.88
January, 1994.............................. 3.69 2.19 5.44 3.19 5.81
February, 1994............................. 3.88 2.38 5.19 3.75 5.94
March, 1994................................ 5.81 2.31 5.44 3.94 5.69
April, 1994................................ 6.06 2.31 5.25 4.31 5.38
May, 1994.................................. 6.19 2.19 5.25 4.63 5.13
June, 1994................................. 6.38 2.19 5.19 4.88 5.00
July, 1994................................. 5.75 2.25 N/A 4.88 5.06
August, 1994............................... 5.44 2.25 5.37 4.94 4.84
September, 1994............................ 5.13 2.25 5.75 5.31 5.03
October, 1994.............................. 5.31 2.28 5.84 5.57 5.13
November, 1994............................. 5.81 2.25 6.03 6.09 5.12
December, 1994............................. 6.88 2.25 6.56 6.38 5.06
</TABLE>
--------
* Rates quoted are daily end-of-period offer rates on 3-month Eurocurrency
deposits.

A-7
<PAGE>

MARKET EXCHANGE RATES**

<TABLE>
<CAPTION>
WEST BRITISH
CANADIAN GERMAN POUND JAPANESE
DOLLAR MARK STERLING YEN
CAD/US$ DM/US$ POUND/US$ YEN/US$
-------- ------ --------- --------
<S> <C> <C> <C> <C>
1978......................................... 1.1842 1.8205 0.4895 194.5526
1979......................................... 1.1688 1.7247 0.4527 239.2347
1980......................................... 1.1946 1.9743 0.4182 203.3554
1981......................................... 1.1857 2.2366 0.5248 219.6355
1982......................................... 1.2290 2.3742 0.6180 234.6318
1983......................................... 1.2446 2.7278 0.6899 231.7251
1984......................................... 1.3213 3.1565 0.8628 251.1752
1985......................................... 1.3977 2.4495 0.6922 200.3501
1986......................................... 1.3807 1.9390 0.6748 158.7500
1987......................................... 1.2997 1.5750 0.5323 121.3500
1988......................................... 1.1920 1.7755 0.5537 125.0500
1989......................................... 1.1580 1.6915 0.6215 143.6499
January, 1990................................ 1.1895 1.6832 0.5947 144.3250
February, 1990............................... 1.1905 1.6913 0.5931 148.7000
March, 1990.................................. 1.1720 1.6924 0.6079 157.4700
April, 1990.................................. 1.1645 1.6813 0.6119 159.1000
May, 1990.................................... 1.1760 1.6913 0.5945 152.2500
June, 1990................................... 1.1687 1.6713 0.5732 152.2500
July, 1990................................... 1.1532 1.5954 0.5392 146.5500
August, 1990................................. 1.1525 1.5680 0.5299 143.4000
September, 1990.............................. 1.1540 1.5640 0.5339 138.2300
October, 1990................................ 1.1663 1.5195 0.5133 129.2500
November, 1990............................... 1.1665 1.5035 0.5159 133.0500
December, 1990............................... 1.1605 1.4970 0.5181 135.7500
January, 1991................................ 1.1620 1.4833 0.5092 131.7000
February, 1991............................... 1.1505 1.5187 0.5215 132.4000
March, 1991.................................. 1.1586 1.7075 0.5762 141.3500
April, 1991.................................. 1.1502 1.7325 0.5850 137.1000
May, 1991.................................... 1.1444 1.7273 0.5845 138.0000
June, 1991................................... 1.1415 1.8123 0.6167 138.0500
July, 1991................................... 1.1530 1.7465 0.5936 137.7500
August, 1991................................. 1.1419 1.7455 0.5935 136.8000
September, 1991.............................. 1.1316 1.6618 0.5706 132.9500
October, 1991................................ 1.1225 1.6755 0.5752 131.2500
November, 1991............................... 1.1340 1.6325 0.5680 130.0500
December, 1991............................... 1.1563 1.5185 0.5349 124.9000
January, 1992................................ 1.1749 1.6125 0.5610 125.2000
February, 1992............................... 1.1830 1.6390 0.5696 129.4200
March, 1992.................................. 1.1892 1.6435 0.5760 132.7500
</TABLE>
(continued on following page)
--------
** All rates are end of period values.

A-8
<PAGE>

MARKET EXCHANGE RATES**--(CONTINUED)

<TABLE>
<CAPTION>
WEST BRITISH
CANADIAN GERMAN POUND JAPANESE
DOLLAR MARK STERLING YEN
CAD/US$ DM/US$ POUND/US$ YEN/US$
-------- ------ --------- --------
<S> <C> <C> <C> <C>
April, 1992.................................. 1.1923 1.6490 0.5629 133.2500
May, 1992.................................... 1.2027 1.6075 0.5466 127.6500
June, 1992................................... 1.1990 1.5241 0.5253 125.7700
July, 1992................................... 1.1823 1.4748 0.5191 127.1000
August, 1992................................. 1.1950 1.4020 0.5029 122.9500
September, 1992.............................. 1.2470 1.4145 0.5626 120.0000
October, 1992................................ 1.2407 1.5410 0.6423 123.3700
November, 1992............................... 1.2873 1.5917 0.6596 124.6800
December, 1992............................... 1.2714 1.6190 0.6603 124.8200
January, 1993................................ 1.2674 1.6109 0.6729 124.7300
February, 1993............................... 1.2491 1.6457 0.7015 118.2500
March, 1993.................................. 1.2593 1.6070 0.6603 114.8800
April, 1993.................................. 1.2711 1.5855 0.6353 111.0500
May, 1993.................................... 1.2713 1.5902 0.6398 107.0800
June, 1993................................... 1.2822 1.7085 0.6706 107.3000
July, 1993................................... 1.2861 1.7420 0.6745 105.1000
August, 1993................................. 1.3195 1.6763 0.6700 104.7500
September, 1993.............................. 1.3340 1.6345 0.6684 106.3000
October, 1993................................ 1.3207 1.6880 0.6757 108.6000
November, 1993............................... 1.3355 1.7165 0.6730 109.0800
December, 1993............................... 1.3254 1.7387 0.6768 111.8500
January, 1994................................ 1.3297 1.7345 0.6636 108.4900
February, 1994............................... 1.3500 1.7045 0.6732 104.5000
March, 1994.................................. 1.3836 1.6742 0.6739 102.7500
April, 1994.................................. 1.3823 1.6540 0.6585 101.7000
May, 1994.................................... 1.3833 1.6465 0.6617 104.7800
June, 1994................................... 1.3835 1.5881 0.6475 98.4400
July, 1994................................... 1.3866 1.5840 0.6477 100.1500
August, 1994................................. 1.3670 1.5816 0.6519 100.0500
September, 1994.............................. 1.3436 1.5503 0.6339 99.1500
October, 1994................................ 1.3533 1.5033 0.6115 96.9550
November, 1994............................... 1.3760 1.5692 0.6392 98.9750
December, 1994............................... 1.4019 1.5495 0.6391 99.5800
</TABLE>
--------
** All rates are end of period values.

A-9
<PAGE>

APPENDIX B

GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON ACCOUNT INFORMATION FORM

You are required by law to provide the Fund with your correct Social
Security or other 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, to check the appropriate boxes in, and to sign
your name in the Social Security Number or other Taxpayer Identification
Number Certification section (the "Certification Section") of the Account
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. The Fund reserves the right to refuse
to open an account for, or to close the account of, any investor who fails to
(1) provide a TIN, or (2) certify that such TIN is correct (if required to do
so under applicable law) in establishing an 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
established 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). If you do not have a TIN but have applied for or intend
to apply for one, you should check the first box in the Certification Section.
In this event, you should provide your TIN and required certifications within
60 days. Backup withholding could apply to payments relating to your account
prior to the Fund's receipt of your TIN and required certifications.

If you have been notified by the IRS that you are subject to backup
withholding 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.

If you are an exempt recipient, you should furnish your TIN and check the
second box in the Certification Section. 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, check the third box in the
Certification Section and provide a completed 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.

B-1
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UN-
LAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE TRUST OR THE FUND SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................... 3
Financial Highlights....................................................... 9
Investment Objective and Policies.......................................... 10
Investment Adviser, Subadviser and Administrator........................... 13
Risks, Special Investment Methods and Investment Limitations............... 14
Investment Restrictions.................................................... 24
Portfolio Turnover......................................................... 24
Management................................................................. 24
Net Asset Value............................................................ 27
Performance Information.................................................... 27
Shares of the Trust........................................................ 28
Taxation................................................................... 29
Additional Information..................................................... 30
Reports to Shareholders.................................................... 31
Dividends.................................................................. 31
Purchase of Institutional Shares........................................... 32
Exchange Privilege......................................................... 33
Redemption of Institutional Shares......................................... 33
Appendix A................................................................. A-1
Appendix B................................................................. B-1
Account Information Form
</TABLE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

GOLDMAN SACHS
GLOBAL INCOME FUND
INSTITUTIONAL SHARES

MANAGED BY
INVESTMENT ADVISER

GOLDMAN SACHS ASSET
MANAGEMENT,
A SEPARATE OPERATING DIVISION OF

GOLDMAN, SACHS & CO.

SUBADVISER

GOLDMAN SACHS ASSET
MANAGEMENT INTERNATIONAL
AN AFFILIATE OF

GOLDMAN, SACHS & CO.

-------------

PROSPECTUS
-------------
GOLDMAN, SACHS & CO.

GI1/40K/0395
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

GOLDMAN SACHS GLOBAL INCOME FUND
ADMINISTRATION SHARES

MANAGED BY
INVESTMENT ADVISER

GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.
NEW YORK, NEW YORK

SUBADVISER

GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
AN AFFILIATE OF GOLDMAN, SACHS & CO.
LONDON, ENGLAND

-----------

The Fund will pursue a global investment program emphasizing intermediate-
duration fixed income securities.

ADMINISTRATION SHARES OF THE FUND 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 ADMINISTRATION
SHARES OF THE FUND INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.

GOLDMAN, SACHS & CO.

-----------

The date of this Prospectus is May 31, 1995
<PAGE>

Ratings Group or Aa by Moody's Investors Service, Inc. or, if unrated by such
rating organizations, determined by the Investment Adviser or Subadviser to be
of comparable credit quality. The Fund may also invest in obligations of a
sovereign issuer rated at least A by Moody's or S&P, or if not rated by such
rating organizations determined by the Investment Adviser or Subadviser to be
of comparable credit quality, if the obligations are denominated in the
issuer's own currency. The Fund intends to invest at least 50% of its net
assets in securities having the highest applicable credit quality rating, at
the time of investment, or, if unrated by such rating organizations,
determined to be of comparable credit quality. There can be no assurance that
the Fund will achieve its investment objective.

This Prospectus, which sets forth concisely the information about the Trust
and the Fund that a prospective investor ought to know before investing in
Administration Shares, should be retained for future reference. A Statement of
Additional Information (the "Additional Statement"), dated May 31, 1995,
containing further information about the Trust and the Fund which may be of
interest to investors, has been filed with the Securities and Exchange
Commission, is incorporated herein by reference in its entirety, and may be
obtained without charge from institutions ("Service Organizations") that hold,
directly or through an agent, Administration Shares for the benefit of their
customers, or from Goldman, Sachs & Co. by calling the telephone number, or
writing to one of the addresses, listed below.

GOLDMAN SACHS TRUST GOLDMAN SACHS ASSET MANAGEMENT
4900 SEARS TOWER INVESTMENT ADVISER AND ADMINISTRATOR
CHICAGO, ILLINOIS 60606 ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004

GOLDMAN, SACHS & CO.
DISTRIBUTOR GOLDMAN SACHS ASSET MANAGEMENT
85 BROAD STREET INTERNATIONAL
NEW YORK, NEW YORK 10004 SUBADVISER
140 FLEET STREET

GOLDMAN, SACHS & CO. LONDON, ENGLAND EC4A 2BJ
TRANSFER AGENT
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606

TOLL FREE (IN U.S.)................... 800-621-2550
<PAGE>

SUMMARY

INTRODUCTION

INVESTMENT OBJECTIVE AND POLICIES

3
<PAGE>

INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR

4
<PAGE>

PURCHASE AND REDEMPTION OF ADMINISTRATION SHARES

It is expected that all purchasers of Administration Shares of the Fund will
be Service Organizations or their nominees. Customers of Service Organizations
may invest in Administration Shares only through their Service Organizations.
Administration Shares of the Fund may be purchased by Service Organizations
through Goldman Sachs at the current net asset value per share without the
imposition of a sales load. The Fund does not have any minimum purchase or
account requirements with respect to Administration Shares. A Service
Organization may, however, impose a minimum amount for initial and subsequent
investments in Administration Shares, and may establish other requirements such
as a minimum account balance. See "Purchase of Administration Shares." The Fund
will redeem its Administration Shares upon request of a shareholder on any
Business Day at the net asset value next determined after receipt of such
request in proper form. See "Redemption of Administration Shares."

DISTRIBUTOR AND TRANSFER AGENT

DIVIDEND POLICY

The Fund intends that all or substantially all of the Fund's net investment
income will be declared as a dividend and paid monthly. From time to time a
portion of such dividends may constitute a return of capital. The Fund also
intends that all or substantially all net realized long-term and short-term
capital gains will be declared as a dividend and paid at least annually.
Recordholders of Administration Shares will receive dividends in additional
Administration Shares of the Fund or may elect to receive cash as described
under "Dividends."

RISK FACTORS

5
<PAGE>

INVESTMENT IN FIXED INCOME SECURITIES--EFFECTS OF INTEREST AND EXCHANGE RATE
FLUCTUATIONS. The net asset value of the shares of the Fund will change in
response to fluctuations in interest rates and in currency exchange rates.
Except to the extent that values are independently affected by currency
exchange rate fluctuations, when interest rates decline, the value of fixed
income securities in which the Fund will invest and, therefore, the Fund's net
asset value generally can be expected to rise. Conversely, when interest rates
rise, the value of fixed income securities in which the Fund will invest and,
therefore, the Fund's net asset value generally can be expected to decline. The
performance of investments in fixed income securities denominated in a foreign
currency ("Non-Dollar Securities") will also depend on the strength of the
foreign currency against the dollar and the interest rate environment in the
country issuing the currency. Absent other events which could otherwise affect
the value of Non-Dollar Securities (such as a change in the political climate
or an issuer's credit quality), appreciation in the value of the foreign
currency generally can be expected to increase the value of the Fund's Non-
Dollar Securities in terms of U.S. dollars. A rise in foreign interest rates or
a decline in the value of foreign currencies relative to the U.S. dollar
generally can be expected to depress the value of the Fund's Non-Dollar
Securities.

INVESTMENT IN SECURITIES OF FOREIGN ISSUERS. Investing in the securities of
foreign issuers involves considerations and potential risks not typically
associated with investing in the securities of

6
<PAGE>

U.S. issuers. For example, foreign securities markets may be less liquid, more
volatile and less subject to governmental regulation than U.S. securities
markets. There also may be less publicly available information about foreign
issuers than about domestic issuers. In addition, the value of securities of
foreign issuers held in the Fund's portfolio will be affected by changes in
currency exchange rates, which may be volatile, as well as political and
economic developments related to the investment.

ADMINISTRATION PLAN

The Trust, on behalf of the Fund, has adopted an Administration Plan with
respect to the Administration Shares of the Fund which authorizes the Fund to
compensate Service Organizations for providing account administration services
to their customers who are the beneficial owners of such Shares. The Trust, on
behalf of the Fund, will enter into agreements with each Service Organization
which will provide for compensation to the Service Organization in an amount up
to 0.25% (on an annualized basis) of the average daily net assets of the
Administration Shares of the Fund attributable to or held in the name of the
Service Organization for its customers. See "Administration Plan."

7
<PAGE>

FEES AND EXPENSES
(ADMINISTRATION SHARES)*
<TABLE>
<CAPTION>
GOLDMAN SACHS
GLOBAL
INCOME FUND
-------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases............... None
Maximum Sales Charge Imposed on Reinvested Dividends.... None
Redemption Fees......................................... None
Exchange Fees........................................... None
ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS AFTER FEE AD-
JUSTMENTS)
Management Fees (include advisory and subadvisory fees
of 0.10% and 0.30%, respectively, and administration
fees of 0.15%)......................................... 0.55%**
Account Administration Fees............................. 0.25%***
OTHER EXPENSES (AFTER EXPENSE LIMITATION)
Transfer Agency Fees.................................... 0.04%
Other Expenses.......................................... 0.06%
0.10%
----
TOTAL FUND OPERATING EXPENSES (AFTER EXPENSE LIMITA-
TION).............................................. 0.90%****
====
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE: ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a hy-
pothetical $1,000 investment, assuming (1) a
5% annual return and (2) redemption at the end
of each time period........................... $ $ $ $
</TABLE>
--------
* The information set forth in the foregoing table and hypothetical example
relates only to Administration Shares. The Fund also offers Institutional
Shares and Class A Shares which are subject to different fees and expenses
(which may affect performance) have different minimum investment
requirements and are entitled to different services. Information regarding
Institutional and Class A Shares may be obtained from an investor's sales
representative or from Goldman Sachs by calling the number on the inside
cover page of this Prospectus.
** The Investment Adviser and Subadviser voluntarily have agreed to limit
their advisory and subadvisory fees to the amounts shown in the table.
Without such limitation, the advisory and subadvisory fees would be 0.25%
and 0.50%, respectively, of the Fund's average daily net assets and
Management Fees would be 0.90% of the Fund's average daily net assets. The
Investment Adviser and Subadviser have no current intention of modifying
or discontinuing such limitation but may do so in the future at their
discretion.
*** Service Organizations (other than broker-dealers) may charge other fees to
their customers who are beneficial owners of Administration Shares in
connection with their customer accounts. See "Administration Plan."
**** The Investment Adviser and Subadviser voluntarily have agreed to reduce or
limit certain "Other Expenses" of the Fund (excluding advisory,
administration, and transfer agency fees, fees payable under
administration, distribution and authorized dealer service plans, taxes,
interest and brokerage and litigation, indemnification and other
extraordinary expenses) to the extent such expenses exceed 0.06% per annum
of the Fund's average daily net assets. The Investment Adviser and
Subadviser may discontinue or modify such expense limitations at any time.
If the Investment Adviser and Subadviser did not agree to limit a portion
of their advisory and subadvisory fees and to reduce or otherwise limit
certain "Other Expenses" of the Fund, the Other Expenses and Total
Operating Expenses attributable to Administration Shares of the Fund would
be % and %, respectively. The foregoing table and example reflect
current operating expenses that will be applicable on an ongoing basis.
See "Management--Investment Adviser, Subadviser and Administrator."

The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses of the Fund that an investor in Administration
Shares of the Fund will bear directly or indirectly. The costs and expenses
included in the table and hypothetical example above are based on estimated
expenses for the current fiscal year, and should not be considered as
representative of past or future expenses. Actual fees and expenses may be
greater or less than those indicated. Moreover, while the example assumes a 5%
annual return, the Fund's actual performance will vary and may result in an
actual return greater or less than 5%. See "Management--Investment Adviser,
Subadviser and Administrator."

8
<PAGE>

FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

9
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

SELECTION OF PORTFOLIO INVESTMENTS

PORTFOLIO DURATION

10
<PAGE>

CURRENCY AND INTEREST RATE TECHNIQUES

OTHER INVESTMENT POLICIES

11
<PAGE>

FIXED INCOME SECURITIES

FOREIGN INVESTMENTS AND CURRENCIES

12
<PAGE>

INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR

13
<PAGE>

RISKS, SPECIAL INVESTMENT METHODS AND INVESTMENT LIMITATIONS

FOREIGN TRANSACTIONS

14
<PAGE>

15
<PAGE>

16
<PAGE>

INTEREST RATE SWAPS, CURRENCY SWAPS, AND INTEREST RATE CAPS, FLOORS AND
COLLARS

17
<PAGE>

STRUCTURED SECURITIES

INVERSE FLOATING RATE SECURITIES

U.S. GOVERNMENT SECURITIES

18
<PAGE>

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

19
<PAGE>

to mortgage assets. There is the possibility that, in some cases, recoveries
on repossessed collateral may not be available to support payments on these
securities.

OPTIONS ON SECURITIES AND SECURITIES INDICES

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

20
<PAGE>

RESTRICTED AND ILLIQUID SECURITIES

21
<PAGE>

ZERO COUPON, DEFERRED INTEREST AND CAPITAL APPRECIATION BONDS

OTHER INVESTMENT COMPANIES

22
<PAGE>

REPURCHASE AGREEMENTS

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES

LENDING OF PORTFOLIO SECURITIES

23
<PAGE>

INVESTMENT RESTRICTIONS

PORTFOLIO TURNOVER

MANAGEMENT

TRUSTEES AND OFFICERS

24
<PAGE>

INVESTMENT ADVISER, SUBADVISER AND ADMINISTRATOR

25
<PAGE>

DISTRIBUTOR AND TRANSFER AGENT

Goldman Sachs, 85 Broad Street, New York, New York, serves as the exclusive
distributor of the Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago,
Illinois, also serves as the Fund's transfer

26
<PAGE>

NET ASSET VALUE

PERFORMANCE INFORMATION

From time to time the Fund may publish average annual total return and yield
in advertisements and communications to shareholders or prospective investors.

27
<PAGE>

expenses for the period. The calculation of net investment income for these
purposes may differ from the net investment income determined for accounting
purposes.

SHARES OF THE TRUST

Under Massachusetts law, there is a remote possibility that shareholders of
a business trust could, under certain circumstances, be held personally liable
as partners for the obligations of such trust. The Trust Agreement contains
provisions intended to limit such liability and to provide indemnification out
of Trust property of any shareholder charged or held personally liable for
obligations or liabilities of the Trust solely by reason of being or having
been a shareholder of the Trust and not because of such shareholder's acts or
omissions or for some other reason. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its obligations.

28
<PAGE>

TAXATION

FEDERAL TAXES

Redemptions and exchanges of shares are taxable events on which a
shareholder may recognize a gain or loss.

29
<PAGE>

OTHER TAXES

ADDITIONAL INFORMATION

30
<PAGE>

ADMINISTRATION PLAN

The Trust, on behalf of the Fund, has adopted an Administration Plan with
respect to the Administration Shares which authorizes the Fund to compensate
Service Organizations for providing account administration services to their
customers who are beneficial owners of such Shares. The Trust, on behalf of
the Fund, will enter into agreements with Service Organizations which purchase
Administration Shares on behalf of their customers ("Service Agreements"). The
Service Agreements will provide for compensation to the Service Organizations
in an amount up to 0.25% (on an annualized basis) of the average daily net
assets of the Administration Shares of the Fund attributable to or held in the
name of the Service Organization for its customers. The services provided by
the Service Organizations may include acting, directly or through an agent, as
the sole shareholder of record, maintaining account records for customers and
processing orders to purchase, redeem or exchange Administration Shares for
customers.

Holders of Administration Shares of the 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.

Services Organizations (other than broker-dealers) may charge other fees to
their customers who are the beneficial owners of 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 the return earned on an investment in the Fund. The Trust, on
behalf of the Fund, will accrue payments made pursuant to a Service Agreement
daily. All inquiries of beneficial owners of Administration Shares should be
directed to such owners' Service Organization.

REPORTS TO ADMINISTRATION SHAREHOLDERS

Recordholders of Administration Shares of the Fund will receive an annual
report containing audited financial statements and a semiannual report. Each
recordholder of Administration Shares will also be provided with a printed
confirmation for each transaction in its account and a monthly account
statement. A year-to-date statement for any account will be provided to a
Service Organization upon request made to Goldman Sachs.

Service Organizations will be responsible for providing services similar to
those described above to their customers who are the beneficial owners of such
Shares. For example, Service Organizations are responsible for providing each
customer exercising investment discretion with monthly statements with respect
to such customer's account in lieu of an immediate confirmation of each
transaction.

DIVIDENDS

Payment of dividends from net investment income will be made on the last
Business Day of each month in additional Administration Shares of the Fund at
net asset value on such day, unless cash distributions are elected, in which
case, cash payment will be made on or about the last calendar day of the
month. Payment of dividends with respect to capital gains, if any, when
declared will be made in additional Administration Shares of the Fund at net
asset value on the payment date, unless cash distributions are elected. This
election to receive dividends in cash initially should be made on the

31
<PAGE>

Account Information Form and may be changed upon written notice to the
Transfer Agent at any time prior to the record date for a particular dividend
or distribution. If cash dividends are elected with respect to the Fund's
monthly net investment income dividends, then cash dividends must also be
elected with respect to the short-term capital gains component, if any, of the
Fund's annual dividend.

The election to reinvest dividends and distributions paid by the Fund in
additional Administration Shares of the Fund will not affect the tax treatment
of such dividends and distributions, which will be treated as received by the
shareholder and then used to purchase Administration Shares of the Fund.

PURCHASE OF ADMINISTRATION SHARES

It is expected that all direct purchasers of Administration Shares of the
Fund will be Service Organizations or their nominees. Customers of Service
Organizations may invest in Administration Shares only through Service
Organizations. Administration Shares of the Fund may be purchased, without
imposition of a sales load, through Goldman Sachs. On any Business Day an
order or payment is received by Goldman Sachs prior to the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m. New York time),
the price per share will be the net asset value computed that Business Day.
See "Net Asset Value."

PURCHASE PROCEDURES

Purchases of Administration Shares by a Service Organization may be made by
placing an order with Goldman Sachs at 800-621-2550 and either wiring Federal
Funds to The Northern Trust Company ("Northern") as subcustodian for State
Street Bank and Trust Company ("State Street") or initiating an ACH transfer
to Northern. Purchases may also be made by a Service Organization by check
(except that a check drawn on a foreign bank will not be accepted) or Federal
Reserve draft made payable to "Goldman Sachs Trust--Goldman Sachs Global
Income Fund" and should be directed to "Goldman

32
<PAGE>

Sachs Trust--Goldman Sachs Global Income Fund" c/o GSAM Shareholder Services,
4900 Sears Tower, Chicago, Illinois 60606. Payment must be received within
five Business Days of receipt of the purchase order by the Fund or Goldman
Sachs. Payment of the proceeds of redemption of shares purchased by check may
be delayed for a period of time as described under "Redemption of
Administration Shares."

The Service Organizations are responsible for the timely transmittal of
purchase orders to Goldman Sachs and payments to Northern or Goldman Sachs. In
order to facilitate timely transmittal, the Service Organizations have
established times by which purchase orders and payments must be received by
them.

OTHER PURCHASE INFORMATION

The Fund does not have any minimum purchase or account requirements with
respect to Administration Shares. A Service Organization may, however, impose
a minimum amount for initial and subsequent investments in Administration
Shares, and may establish other requirements such as a minimum required
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.

The Fund reserves the right to redeem Administration Shares of any Service
Organization whose account balance is less than $50 as a result of earlier
redemptions. Such redemptions will not be implemented if the value of such
shareholder's account falls below the minimum account balance solely as a
result of market conditions. The Trust will give sixty (60) days prior written
notice of Service Organizations whose Administration Shares are being redeemed
to allow them to purchase sufficient additional Administration Shares to avoid
such redemption.

The Fund and Goldman Sachs each reserves the right to reject any specific
purchase order (including exchanges) or to restrict purchases or exchanges by
a particular purchaser (or group of related purchasers). The Fund or Goldman
Sachs may reject or restrict purchases or exchanges of Administration Shares
by a particular purchaser or group of related purchasers, for example, when a
pattern of frequent purchases and sales or exchanges of Administration Shares
of the Fund is evident, or if the purchase and sale or exchange orders are, or
a subsequent abrupt redemption might be, of a size that would disrupt
management of the Fund.

EXCHANGE PRIVILEGE

Administration Shares of the Fund may be exchanged by a Service Organization
for (i) Administration Shares of any other mutual fund sponsored by Goldman
Sachs and designated as an eligible fund for this purpose and (ii) the
relevant class of any portfolio of Goldman Sachs Money Market Trust at the net
asset value next determined either by writing to Goldman Sachs, Attention:
Goldman Sachs Trust--Goldman Sachs Global Income Fund, c/o GSAM Shareholder
Services, 4900 Sears Tower, Chicago, Illinois 60606 or, if previously elected
in the Fund's Account Information Form, by telephone at 800-621-2550 (7:00
a.m. to 3:00 p.m. Chicago time). A Shareholder should obtain and read the
prospectus relating to any other fund and its shares or units and consider its
investment

33
<PAGE>

objective, policies and applicable fees before making an exchange.
Administration Shares acquired by telephone exchange must be registered in the
same name(s) and have the same address as Administration Shares of the fund
for which the exchange is being made.

In times of drastic economic or market changes the telephone exchange
privilege may be difficult to implement. In an effort to prevent unauthorized
or fraudulent exchanges by telephone, Goldman Sachs employs reasonable
procedures as set forth under "Redemption of Administration Shares" to confirm
that such instructions are genuine. For federal income tax purposes, an
exchange is treated as a sale of the Administration Shares surrendered in the
exchange on which an investor may realize a gain or loss, followed by a
purchase of Administration Shares or the relevant class of Goldman Sachs Money
Market Trust received in the exchange. Shareholders should consult their own
tax advisers concerning the tax consequences of an exchange. Exchanges are
available only in states where exchanges may legally be made. The exchange
privilege may be modified or withdrawn at any time on sixty (60) days' written
notice to Administration Shareholders and is subject to certain limitations.
See "Purchase of Administration Shares."

REDEMPTION OF ADMINISTRATION SHARES

The Fund will redeem its Administration Shares upon request of the
recordholder on any Business Day at the net asset value next determined after
the receipt by the Transfer Agent of such request in proper form. See "Net
Asset Value." If Administration Shares to be redeemed were recently purchased
by check, the Fund may delay transmittal of redemption proceeds until such
time as it has assured itself that good funds have been collected for the
purchase of such Administration Shares. This may take up to fifteen (15) days.
Redemption requests may be made by writing to or calling the Transfer Agent at
the address or telephone number set forth on the inside cover page of this
prospectus.

A Service Organization may request redemptions by telephone if the optional
telephone redemption privilege is elected on the Account Information Form. It
may be difficult to implement redemptions by telephone in times of drastic
economic or market changes. In an effort to prevent unauthorized or fraudulent
redemption or exchange requests by telephone, Goldman Sachs employs reasonable
procedures specified by the Trust to confirm that such instructions are
genuine. Among other things, any redemption request in excess of a certain
minimum size 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. Exchanges among
accounts with different names, addresses and social security or other taxpayer
identification numbers must be in writing and signed by an authorized person
designated on the Account Information Form. Other procedures may be
implemented from time to time. If reasonable procedures are not implemented,
the Trust may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither the Fund, the Trust nor Goldman
Sachs will be responsible for the authenticity of redemption or exchange
instructions received by telephone.

The Fund will arrange for the proceeds of redemptions effected by any means
to be wired to the recordholder of Administration Shares or if the
recordholder elects in writing, paid by check. Redemption proceeds will
normally be wired on the next Business Day in Federal Funds (for a total

34
<PAGE>

one-day delay), but may be paid up to seven (7) days after receipt of a
properly executed redemption request. Wiring of redemption proceeds may be
delayed one additional Business Day if the Federal
Reserve Bank is closed on the day redemption proceeds would ordinarily be
wired. Once wire transfer instructions have been given by Goldman Sachs,
neither the Fund, the Trust nor Goldman Sachs assumes any further
responsibility for the performance of intermediaries or the customer's Service
Organization in the transfer process. If a problem with such performance
arises, the customer should deal directly with such intermediaries or Service
Organization. With respect to redemption proceeds paid by check, a check for
the redemption proceeds will normally be mailed to the address of record
within seven (7) days of receipt of a properly executed redemption request.

Additional documentation regarding a redemption by any means may be required
to effect a redemption when deemed appropriate by the Transfer Agent. The
request for such redemption will not be considered to have been received in
proper form until such additional documentation has been submitted to the
Transfer Agent by the recordholder of Administration Shares.

The Service Organizations are responsible for the timely transmittal of
redemption requests by their customers to the Transfer Agent. In order to
facilitate timely transmittal of redemption requests, Service Organizations
have established times by which redemption requests must be received by them.
Additional documentation may be required when deemed appropriate by a Service
Organization.

Except with respect to Service Organizations whose account balances are less
than $50, Administration Shares of the Fund are not redeemable at the option
of the Fund unless the Board of Trustees of the Trust determines in its sole
discretion that failure to so redeem may have material adverse consequences to
the shareholders of the Fund. The Fund, however, assumes no responsibility to
compel redemptions.

35
<PAGE>

APPENDIX A

COUNTRY SUMMARIES

A-1
<PAGE>

A-2
<PAGE>

LUXEMBOURG. The currency is the Luxembourg franc which is identical in value
to the Belgian franc (November 1994: LUF 31.713 = $1 U.S.). Gross Domestic
Product was LUF 339.2 billion ($10.6

A-3
<PAGE>

A-4
<PAGE>

was 4.4%. Machinery, machine tools, steel, instruments, watches, textiles,
foodstuffs (cheese, chocolate), chemicals, drugs, banking and tourism are the
chief industries.

A-5
<PAGE>

SHORT-TERM INTEREST RATES*

A-6
<PAGE>

SHORT-TERM INTEREST RATES*--(CONTINUED)

A-7
<PAGE>

MARKET EXCHANGE RATES**

A-8
<PAGE>

MARKET EXCHANGE RATES**--(CONTINUED)

<TABLE>
<CAPTION>
WEST BRITISH
CANADIAN GERMAN POUND JAPANESE
DOLLAR MARK STERLING YEN
CAD/US$ DM/US$ POUND/US$ YEN/US$
-------- ------ --------- --------
<S> <C> <C> <C> <C>
April, 1992.................................. 1.1923 1.6490 0.5629 133.2500
May, 1992.................................... 1.2027 1.6075 0.5466 127.6500
June, 1992................................... 1.1990 1.5241 0.5253 125.7700
July, 1992................................... 1.1823 1.4748 0.5191 127.1000
August, 1992................................. 1.1950 1.4020 0.5029 122.9500
September, 1992.............................. 1.2470 1.4145 0.5626 120.0000
October, 1992................................ 1.2407 1.5410 0.6423 123.3700
November, 1992............................... 1.2873 1.5917 0.6596 124.6800
December, 1992............................... 1.2714 1.6190 0.6603 124.8200
January, 1993................................ 1.2674 1.6109 0.6729 124.7300
February, 1993............................... 1.2491 1.6457 0.7015 118.2500
March, 1993.................................. 1.2593 1.6070 0.6603 114.8800
April, 1993.................................. 1.2711 1.5855 0.6353 111.0500
May, 1993.................................... 1.2713 1.5902 0.6398 107.0800
June, 1993................................... 1.2822 1.7085 0.6706 107.3000
July, 1993................................... 1.2861 1.7420 0.6745 105.1000
August, 1993................................. 1.3195 1.6763 0.6700 104.7500
September, 1993.............................. 1.3340 1.6345 0.6684 106.3000
October, 1993................................ 1.3207 1.6880 0.6757 108.6000
November, 1993............................... 1.3355 1.7165 0.6730 109.0800
December, 1993............................... 1.3254 1.7387 0.6768 111.8500
January, 1994................................ 1.3297 1.7345 0.6636 108.4900
February, 1994............................... 1.3500 1.7045 0.6732 104.5000
March, 1994.................................. 1.3836 1.6742 0.6739 102.7500
April, 1994.................................. 1.3823 1.6540 0.6585 101.7000
May, 1994.................................... 1.3833 1.6465 0.6617 104.7800
June, 1994................................... 1.3835 1.5881 0.6475 98.4400
July, 1994................................... 1.3866 1.5840 0.6477 100.1500
August, 1994................................. 1.3670 1.5816 0.6519 100.0500
September, 1994.............................. 1.3436 1.5503 0.6339 99.1500
October, 1994................................ 1.3533 1.5033 0.6115 96.9550
November, 1994............................... 1.3760 1.5692 0.6392 98.9750
December, 1994............................... 1.4019 1.5495 0.6391 99.5800
</TABLE>
--------
** All rates are end of period values.

A-9
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................... 3
Financial Highlights....................................................... 9
Investment Objective and Policies.......................................... 10
Investment Adviser, Subadviser and Administrator........................... 13
Risks, Special Investment Methods and Investment Limitations............... 14
Investment Restrictions.................................................... 24
Portfolio Turnover......................................................... 24
Management................................................................. 24
Net Asset Value............................................................ 27
Performance Information.................................................... 27
Shares of the Trust........................................................ 28
Taxation................................................................... 29
Additional Information..................................................... 30
Administration Plan........................................................ 31
Report to Administration Shareholders...................................... 31
Dividends.................................................................. 31
Purchase of Administration Shares.......................................... 32
Exchange Privilege......................................................... 33
Redemption of Administration Shares........................................ 34
Appendix A................................................................. A-1
</TABLE>

GOLDMAN SACHS
GLOBAL INCOME FUND
ADMINISTRATION SHARES

MANAGED BY
INVESTMENT ADVISER

GOLDMAN SACHS ASSET
MANAGEMENT,
A SEPARATE OPERATING DIVISION OF

GOLDMAN, SACHS & CO.

SUBADVISER

GOLDMAN SACHS ASSET
MANAGEMENT INTERNATIONAL
AN AFFILIATE OF

GOLDMAN, SACHS & CO.

-------------

PROSPECTUS
-------------
GOLDMAN, SACHS & CO.

GI1/40K/0395
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

PART B

STATEMENT OF ADDITIONAL INFORMATION

GOLDMAN SACHS GLOBAL INCOME FUND

INSTITUTIONAL SHARES

(A PORTFOLIO OF GOLDMAN SACHS TRUST)

Goldman Sachs Trust
4900 Sears Tower
Chicago, Illinois 60606

This Statement of Additional Information (the "Additional Statement") is
not a prospectus. This Additional Statement should be read in conjunction with
the Prospectus for the Institutional Shares of Goldman Sachs Global Income Fund,
dated May 31, 1995, as revised or supplemented from time to time (the
"Prospectus"), which may be obtained without charge by calling Goldman, Sachs &
Co. at the telephone number, or writing to one of the addresses, listed below.

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Introduction............................................... B-3
Investment Objective and Policies.......................... B-4
Investment Restrictions.................................... B-15
Management................................................. B-17
Advisory and Administrative Services....................... B-19
Portfolio Transactions..................................... B-26
Shares of the Trust........................................ B-26
Net Asset Value............................................ B-27
Taxation................................................... B-28
Performance Information.................................... B-34
Other Information.......................................... B-38
Financial Statements....................................... B-39
Appendix A................................................. 1-A
Appendix B................................................. 1-B
Appendix C................................................. 1-C
</TABLE>

The date of this Additional Statement is May 31, 1995.

GOLDMAN SACHS TRUST GOLDMAN SACHS ASSET MANAGEMENT
4900 Sears Tower Investment Adviser and Administration
Chicago, Illinois 60606 One New York Plaza
New York, New York 10004
<PAGE>

GOLDMAN, SACHS & CO. GOLDMAN SACHS ASSET
Distributor MANAGEMENT INTERNATIONAL
85 Broad Street Subadviser
New York, New York 10004 140 Fleet Street
London EC4A 2BJ
ENGLAND

GOLDMAN, SACHS & CO.
Transfer Agent
4900 Sears Tower
Chicago, Illinois 60606

Toll free (in U.S.).....800-621-2550

B-2
<PAGE>

PART B

STATEMENT OF ADDITIONAL INFORMATION

GOLDMAN SACHS GLOBAL INCOME FUND

ADMINISTRATION SHARES

(A PORTFOLIO OF GOLDMAN SACHS TRUST)

Goldman Sachs Trust
4900 Sears Tower
Chicago, Illinois 60606

This Statement of Additional Information (the "Additional Statement") is
not a prospectus. This Additional Statement should be read in conjunction with
the Prospectus for the Administration Shares of Goldman Sachs Global Income
Fund, dated May 31, 1995, as revised or supplemented from time to time (the
"Prospectus"), which may be obtained without charge from Institutions ("Service
Organizations") that hold Administration Shares for the benefit of their
customers, or by calling Goldman, Sachs & Co. at the telephone number, or
writing to one of the addresses, listed below.

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Introduction............................................... B-3
Investment Objective and Policies.......................... B-4
Investment Restrictions.................................... B-15
Management................................................. B-17
Advisory and Administrative Services....................... B-19
Portfolio Transactions..................................... B-26
Shares of the Trust........................................ B-26
Net Asset Value............................................ B-27
Taxation................................................... B-28
Performance Information.................................... B-34
Other Information.......................................... B-38
Financial Statements....................................... B-39
Administration Plan........................................ B-40
Appendix A................................................. 1-A
Appendix B................................................. 1-B
Appendix C................................................. 1-C
</TABLE>

The date of this Additional Statement is May 31, 1995.

GOLDMAN SACHS TRUST GOLDMAN SACHS ASSET MANAGEMENT
4900 Sears Tower Investment Adviser and Administration
Chicago, Illinois 60606 One New York Plaza
New York, New York 10004
<PAGE>

GOLDMAN, SACHS & CO. GOLDMAN SACHS ASSET
Distributor MANAGEMENT INTERNATIONAL
85 Broad Street Subadviser
New York, New York 10004 140 Fleet Street
London EC4A 2BJ
ENGLAND

GOLDMAN, SACHS & CO.
Transfer Agent
4900 Sears Tower
Chicago, Illinois 60606

Toll free (in U.S.).....800-621-2550

B-2
<PAGE>

INTRODUCTION

Goldman Sachs Trust (the "Trust") was organized under the laws of The
Commonwealth of Massachusetts on September 24, 1987 as a Massachusetts business
trust. The Trust assumed its current name on March 22, 1991. The Trustees of
the Trust have authority under the Declaration of Trust to create and classify
shares into separate series and to classify and reclassify any series of shares
into one or more classes without further action by shareholders. Pursuant
thereto, the Trustees have created Goldman Sachs Global Income Fund (the "Fund")
and six other series of the Trust. Additional series of the Trust may be added
in the future. As of the date of this Additional Statement, the Board of
Trustees has authorized the issuance of three classes of shares of the Fund:
Institutional Shares, Administration Shares and Class A Shares. See "Shares of
the Trust."

Pursuant to an investment advisory agreement (the "Investment Advisory
Agreement") between the Fund and Goldman Sachs Asset Management ("GSAM"), a
separate operating division of Goldman, Sachs & Co. ("Goldman Sachs"), GSAM
serves as investment adviser to the Fund. In addition, GSAM serves as the
Fund's administrator. Goldman Sachs Asset Management International ("GSAM
International"), an affiliate of Goldman Sachs, serves as subadviser to the
Fund. GSAM and GSAM International are each sometimes referred to as an
Investment Adviser. The goal of the Fund's portfolio managers is to create the
most appropriate mix of global securities and currencies in order to generate
the highest returns consistent with the Fund's quality standards and risk
control guidelines.

The Goldman Sachs Mutual Funds Group ("IMG") offers banks, corporate cash
managers, investment advisers and other institutional investors a family of
professionally-managed mutual and money market funds, including fixed income and
equity funds, and a range of related services. IMG is part of GSAM, a separate
operating division of Goldman Sachs. All products are designed to provide
clients with the benefit of the expertise of GSAM and its affiliates in security
selection, asset allocation, portfolio construction and day-to-day management.

The hallmark of IMG is personalized service, which reflects the priority
that Goldman Sachs places on serving client interests. As IMG clients,
shareholders will be assigned an Account Administrator ("AA"), who is ready to
help shareholders with questions concerning their accounts. During business
hours, shareholders can call their AA through a toll-free number to place
purchase or redemption orders or obtain portfolio and account information. The
AA can also answer inquiries about rates of return, portfolio composition and
holdings and guide shareholders through operational details. An IMG client can
also utilize SMART/SM/ personal computer software system which allows holders to
purchase and redeem shares and also obtain portfolio and account information
directly.

The Fund is designed for investors seeking a combination of high income,
capital appreciation, stability of principal, experienced professional
management, flexibility and liquidity. However, investing in the Fund involves
certain risks and there is no assurance that the Fund will achieve its
investment objective.

High Income. The Fund's portfolio managers will seek out the highest
-----------
yielding bonds in the global fixed income market that meet the Fund's credit
quality standards and certain other criteria.

Capital Appreciation. Investing in the foreign bond markets offers the
--------------------
potential for capital appreciation due to both interest rate and currency
exchange rate fluctuations. The portfolio managers also attempt to identify
investments with appreciation potential by carefully evaluating

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trends affecting a country's currency as well as a country's fundamental
economic strength. However, there is a risk of capital depreciation as a result
of unanticipated interest rate and currency fluctuations.

Portfolio Management Flexibility. The Fund is designed to be actively
--------------------------------
managed. The Fund's portfolio managers invest in countries that, in their
judgment, meet the Fund's investment guidelines and often have strong currencies
and stable economies and in securities that they believe offer the best
performance prospects. Furthermore, because the Fund can purchase securities
with various maturities, the portfolio managers can adjust the Fund's holdings
in an effort to maximize returns in a variety of interest rate environments.
In addition, the Fund's ability to invest in securities of any maturity allows
its portfolio managers to adjust the Fund's portfolio as interest rates change
to take advantage of the most attractive segments of the yield curve.

Relative Stability of Principal. The Fund may be able to reduce principal
-------------------------------
fluctuation by investing in foreign countries with economic policies or business
cycles different from those of the United States and in foreign securities
markets that do not necessarily move in the same direction or magnitude as the
U.S. market. Investing in a broad range of U.S. and foreign fixed income
securities and currencies reduces the dependence of the Fund's performance on
developments in any particular market to the extent that adverse events in one
market are offset by favorable events in other markets. The Fund's policy of
investing primarily in high credit quality securities may also reduce principal
fluctuation. However, there is no assurance that these strategies will always
be successful.

Professional Management. Individual U.S. investors may prefer professional
-----------------------
management of their global bond and currency portfolios because a well-
diversified portfolio requires a large amount of capital and because the size of
the global market requires access to extensive resources and a substantial
commitment of time.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is a high total return, emphasizing
current income and, to a lesser extent, providing opportunities for capital
appreciation, primarily through investment in a portfolio of high credit
quality fixed income securities of U.S. and foreign issuers and through
transactions in foreign currencies. There is no assurance that this objective
will be achieved. The following information relates to and supplements the
description contained in the Fund's Prospectus of its investment policies.

FOREIGN INVESTMENTS

The Fund is expected to invest in securities of foreign issuers. Investing
in the securities of foreign issuers involves certain special considerations,
including those set forth below, which are not typically associated with
investing in U.S. issuers. Since investments in the securities of foreign
issuers may involve currencies of foreign countries, and since the Fund may
temporarily hold funds in bank deposits in foreign currencies during completion
of investment programs, the Fund may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations and may incur
costs in connection with conversions between various currencies.

Foreign companies are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. companies. In

B-4
<PAGE>

addition, there may be less publicly available information about a foreign
company than about a U.S. company. Volume and liquidity in most foreign bond
markets are less than in the United States and securities of many foreign
companies are less liquid and more volatile than securities of comparable U.S.
companies. Fixed commissions on foreign securities exchanges are generally
higher than negotiated commissions on U.S. exchanges, although the Fund
endeavors to achieve the most favorable net results on its portfolio
transactions. There is generally less government supervision and regulation of
securities exchanges, brokers, dealers and listed companies than in the United
States. Mail service between the United States and foreign countries may be
slower or less reliable than within the United States, thus increasing the risk
of delayed settlements of portfolio transactions or loss of certificates for
portfolio securities.

Foreign markets also have different clearance and settlement procedures, and
in certain markets there have been times when settlements have been unable to
keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Such delays in settlement could result in temporary
periods when a portion of the assets of the Fund is uninvested and no return is
earned thereon. The inability of the Fund to make intended security purchases
due to settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio securities, or, if the Fund has entered into a contract
to sell the securities, could result in possible liability to the purchaser. In
addition, with respect to certain foreign countries, there is the possibility of
expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect the Fund's investments in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may enter into
forward foreign currency exchange contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no commissions are
generally charged at any stage for trades.

At the maturity of a forward contract the Fund may either accept or make
delivery of the currency specified in the contract or, at or prior to maturity,
enter into a closing purchase transaction involving the purchase or sale of an
offsetting contract. Closing purchase transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract.

The Fund may enter into forward foreign currency exchange contracts in
several circumstances. First, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Fund anticipates the receipt in a foreign currency of dividend or interest
payments on such a security which it holds, the Fund may desire to "lock in" the
U.S. dollar price of the security or the U.S. dollar equivalent of such
dividend or interest payment, as the case may be. By entering into a forward
contract for the purchase or sale, for a fixed amount of U.S. dollars, of the
amount of foreign currency involved in the underlying transactions, the Fund
will attempt to protect itself against an adverse change in the relationship
between the U.S. dollar and the subject foreign currency during the period
between the date on

B-5
<PAGE>

which the security is purchased or sold, or on which the dividend or interest
payment is declared, and the date on which such payments are made or received.

Additionally, when management of the Fund believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the Fund's portfolio securities quoted or denominated in such foreign
currency. The precise matching of the forward contract amounts and the value of
the securities involved will not generally be possible because the future value
of such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. Using forward contracts to
protect the value of the Fund's portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the underlying prices of
the securities. It simply establishes a rate of exchange which the Fund can
achieve at some future point in time. The precise projection of short-term
currency market movements is not possible, and short-term hedging provides a
means of fixing the dollar value of only a portion of the Fund's foreign assets.

The Fund may engage in cross-hedging by using forward contracts in one
currency to hedge against fluctuations in the value of securities denominated in
a different currency if the Investment Adviser determines that there is a
pattern of correlation between the two currencies. The Fund may also purchase
and sell forward contracts to seek to increase total return when the Investment
Adviser anticipates that the foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities and are not held in the Fund's portfolio.

The Fund's custodian will place cash or liquid high grade debt securities
(i.e., securities rated in one of the top three rating categories by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group ("S&P")
or, if unrated by such rating organizations, deemed by the Investment Adviser to
be of comparable credit quality) into a segregated account of the Fund in an
amount equal to the value of the Fund's total assets committed to the
consummation of forward foreign currency exchange contracts requiring the Fund
to purchase foreign currencies or forward contracts entered into to increase
total return. If the value of the securities placed in the segregated account
declines, additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the Fund's
commitments with respect to such contracts. The segregated account will be
marked-to-market on a daily basis. Although the contracts are not presently
regulated by the Commodity Futures Trading Commission (the "CFTC"), the CFTC may
in the future assert authority to regulate these contracts. In such event, the
Fund's ability to utilize forward foreign currency exchange contracts may be
restricted. The Fund generally will not enter into a forward contract with a
term of greater than one year.

While the Fund will enter into forward contracts to reduce currency exchange
rate risks, transactions in such contracts involve certain other risks. Thus,
while the Fund may benefit from such transactions, unanticipated changes in
currency prices may result in a poorer overall performance for the Fund than if
it had not engaged in any such transactions. Moreover, there may be imperfect
correlation between the Fund's portfolio holdings of securities denominated in a
particular currency and forward contracts entered into by the Fund. Such
imperfect correlation may cause the Fund to sustain losses which will prevent
the Fund from achieving a complete hedge or expose the Fund to risk of foreign
exchange loss.

B-6
<PAGE>

WRITING AND PURCHASING CURRENCY CALL AND PUT OPTIONS. The Fund may write
covered put and call options and purchase put and call options on foreign
currencies for the purpose of protecting against declines in the dollar value of
portfolio securities and against increases in the dollar cost of securities to
be acquired. The Fund may use options on currency to cross-hedge, which
involves writing or purchasing options on one currency to hedge against changes
in exchange rates for a different currency with a pattern of correlation. In
addition, the Fund may purchase call options on currency to seek to increase
total return when the Investment Adviser or Subadviser anticipates that the
currency will appreciate in value, but the securities denominated in that
currency do not present attractive investment opportunities and are not included
in the Fund's portfolio.

A call option written by the Fund obligates the Fund to sell specified
currency to the holder of the option at a specified price at any time before
the expiration date. A put option written by the Fund would obligate the Fund
to purchase specified currency from the option holder at a specified price at
any time before the expiration date. The writing of currency options involves a
risk that the Fund will, upon exercise of the option, be required to sell
currency subject to a call at a price that is less than the currency's market
value or be required to purchase currency subject to a put at a price that
exceeds the currency's market value.

The Fund may terminate its obligations under a call or put option by
purchasing an option identical to the one it has written. Such purchases are
referred to as "closing purchase transactions." The Fund would also be able to
enter into closing sale transactions in order to realize gains or minimize
losses on options purchased by the Fund.

The Fund would normally purchase call options in anticipation of an increase
in the dollar value of currency in which securities to be acquired by the Fund
are denominated. The purchase of a call option would entitle the Fund, in
return for the premium paid, to purchase specified currency at a specified price
during the option period. The Fund would ordinarily realize a gain if, during
the option period, the value of such currency exceeded the sum of the exercise
price, the premium paid and transaction costs; otherwise the Fund would realize
either no gain or a loss on the purchase of the call option.

The Fund would normally purchase put options in anticipation of a decline in
the dollar value of currency in which securities in its portfolio are
denominated ("protective puts"). The purchase of a put option would entitle
the Fund, in exchange for the premium paid, to sell specified currency at a
specified price during the option period. The purchase of protective puts is
designed merely to offset or hedge against a decline in the dollar value of the
Fund's portfolio securities due to currency exchange rate fluctuations. The
Fund would ordinarily realize a gain if, during the option period, the value of
the underlying currency decreased below the exercise price sufficiently to more
than cover the premium and transaction costs; otherwise the Fund would realize
either no gain or a loss on the purchase of the put option. Gains and losses on
the purchase of protective put options would tend to be offset by countervailing
changes in the value of underlying currency.

In addition to using options for the hedging purposes described above, the
Fund may use options on currency to seek to increase total return. The Fund may
write (sell) covered put and call options on any currency in order to realize
greater income than would be realized on portfolio securities transactions
alone. However, in writing covered call options for additional income, the Fund
may forego the opportunity to profit from an increase in the market value of the
underlying currency. Also, when writing put options, the Fund accepts, in
return for the option premium, the risk that it may be required to purchase the
underlying currency at a price in excess of the currency's market value at the
time of purchase.

B-7
<PAGE>

The Fund would normally purchase call options to seek to increase total
return in anticipation of an increase in the market value of a currency. The
Fund would ordinarily realize a gain if, during the option period, the value of
such currency exceeded the sum of the exercise price, the premium paid and
transaction costs. Otherwise the Fund would realize either no gain or a loss on
the purchase of the call option. Put options may be purchased by the Fund for
the purpose of benefiting from a decline in the value of currencies which it
does not own. The Fund would ordinarily realize a gain if, during the option
period, the value of the underlying currency decreased below the exercise price
sufficiently to more than cover the premium and transaction costs. Otherwise
the Fund would realize either no gain or a loss on the purchase of the put
option.

SPECIAL RISKS ASSOCIATED WITH OPTIONS ON CURRENCY. An exchange traded
options position may be closed out only on an options exchange which provides a
secondary market for an option of the same series. Although the Fund will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option, or at any particular time.
For some options no secondary market on an exchange may exist. In such event,
it might not be possible to effect closing transactions in particular options,
with the result that the Fund would have to exercise its options in order to
realize any profit and would incur transaction costs upon the sale of underlying
securities pursuant to the exercise of put options. If the Fund as a covered
call option writer is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying currency (or
security denominated in that currency) until the option expires or it delivers
the underlying currency upon exercise.

There is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at times, render certain of the facilities of the
Options Clearing Corporation inadequate, and thereby result in the institution
by an exchange of special procedures which may interfere with the timely
execution of customers' orders.

The Fund may purchase and write over-the-counter options to the extent
consistent with its limitation on investments in illiquid securities, as
described in the Fund's Prospectus. Trading in over-the-counter options is
subject to the risk that the other party will be unable or unwilling to closeout
options purchased or written by the Fund.

The amount of the premiums which the Fund may pay or receive may be
adversely affected as new or existing institutions, including other investment
companies, engage in or increase their option purchasing and writing activities.

INTEREST RATE SWAPS, CURRENCY SWAPS, AND INTEREST RATE CAPS, FLOORS AND COLLARS

The Fund may enter into interest rate swaps and currency swaps for hedging
purposes and to seek to increase total return. The Fund may also enter into
other types of interest rate swap arrangements, such as caps, floors and
collars. Inasmuch as swaps are entered into for good faith hedging purposes or
are offset by a segregated account as described below, the Fund and the
Investment Adviser believe that swaps do not constitute senior securities as
defined in the Investment Company Act of 1940, as amended (the "Act") and,
accordingly, will not treat them as being subject to the Fund's borrowing
restrictions. The net amount of the excess, if any, of the Fund's obligations
over its entitlements with respect to each interest rate or currency swap will
be accrued on a daily basis and an amount of cash or liquid, high grade debt
securities (i.e., securities rated in one of the top three ratings categories by
Moody's or S&P, or, if unrated by such rating organizations, deemed by the
Investment Adviser or Subadviser to be of comparable credit quality)

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<PAGE>

having an aggregate net asset value at least equal to such accrued excess will
be maintained in a segregated account by the Fund's custodian.

The Fund will not enter into any interest rate swap, currency swap, and
interest rate cap, floor or collar unless the credit quality of the unsecured
senior debt or the claims-paying ability of the other party thereto is
considered to be investment grade by the Investment Adviser or Subadviser. If
there is a default by the other party to such a transaction, the Fund will have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid in comparison with the markets for other similar instruments
which are traded in the interbank market. However, the staff of the Securities
and Exchange Commission currently takes the position that swaps, caps, floors
and collars are illiquid for purposes of the Fund's 15% limitation on illiquid
investments.

CUSTODIAL RECEIPTS

The Fund may acquire custodial receipts in respect of securities issued or
guaranteed as to principal and interest by the U.S. Government, its agencies,
authorities or instrumentalities. Such custodial receipts evidence ownership of
future interest payments, principal payments or both on certain notes or bonds
issued by the U.S. Government, its agencies, authorities or instrumentalities.
These custodial receipts are known by various names, including "Treasury
Receipts," "Treasury Investors Growth Receipts" ("TIGRs"), and "Certificates of
Accrual on Treasury Securities" ("CATS"). For certain securities law purposes,
custodial receipts are not considered U.S. Government securities.

OPTIONS ON SECURITIES AND SECURITIES INDICES

WRITING COVERED OPTIONS. The Fund may write (sell) covered call and put
options on any securities in which it may invest. The Fund may purchase and
write such options on securities that are listed on national domestic or foreign
securities exchanges or traded in the over-the-counter market. A call option
written by the Fund obligates the Fund to sell specified securities to the
holder of the option at a specified price if the option is exercised at any time
before the expiration date. All call options written by the Fund are covered,
which means that the Fund will own the securities subject to the option so long
as the option is outstanding or using the other methods described below. The
Fund's purpose in writing covered call options is to realize greater income than
would be realized on portfolio securities transactions alone. However, in
writing covered call options for additional income, the Fund may forego the
opportunity to profit from an increase in the market price of the underlying
security.

A put option written by the Fund would obligate the Fund to purchase
specified securities from the option holder at a specified price if the option
is exercised at any time before the expiration date. All put options written by
the Fund would be covered, which means that the Fund would have deposited with
its custodian cash or liquid, high-grade debt securities (i.e., securities rated
in one of the top three categories by Moody's or S&P, or, if unrated by such
rating organizations, deemed by the Investment Adviser or Subadviser to be of
comparable credit quality) with a value at least equal to the exercise price of
the put option or using the other methods described below. The purpose of
writing such options is to generate additional income for the Fund. However, in
return for the option premium, the Fund accepts the risk that it may be required
to purchase the underlying securities at a price in excess of the securities'
market value at the time of purchase.

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<PAGE>

In addition, a written call option or put option may be covered by
maintaining cash or liquid, high grade debt securities (either of which may be
denominated in any currency) in a segregated account, by entering into an
offsetting forward contract and/or by purchasing an offsetting option or any
other option on the same or a related currency and/or by purchasing an
offsetting option or any other option which , by virtue of its exercise price or
otherwise, reduces the Fund's net exposure on its written option position.

The Fund may also write (sell) covered call and put options on any
securities index composed of securities in which it may invest. Options on
securities indices are similar to options on securities, except that the
exercise of securities index options requires cash payments and does not involve
the actual purchase or sale of securities. In addition, securities index
options are designed to reflect price fluctuations in a group of securities or
segment of the securities market rather than price fluctuations in a single
security.

The Fund may cover call options on a securities index by owning securities
whose price changes are expected to be similar to those of the underlying index,
or by having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional cash consideration held in a
segregated account by its custodian) upon conversion or exchange of other
securities in its portfolio. The Fund may cover call and put options on a
securities index by maintaining cash or liquid high grade debt securities with a
value equal to the exercise price in a segregated account with its custodian or
by using the other methods described above.

The Fund may terminate its obligations under an exchange traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated prior to the options expiration
date only by entering into an offsetting transaction with the counterparty to
such option. Such purchases are referred to as "closing purchase transactions."

PURCHASING OPTIONS

The Fund may purchase put and call options on any securities in which it may
invest or options on any securities index composed of securities in which it may
invest. The Fund would also be able to enter into closing sale transactions in
order to realize gains or minimize losses on options it has purchased.

The Fund would normally purchase call options in anticipation of an increase
in the market value of securities of the type in which it may invest. The
purchase of a call option would entitle the Fund, in return for the premium
paid, to purchase specified securities at a specified price during the option
period. The Fund would ordinarily realize a gain if, during the option period,
the value of such securities exceeded the sum of the exercise price, the premium
paid and transaction costs. Otherwise the Fund would realize either no gain or
a loss on the purchase of the call option.

The Fund would normally purchase put options in anticipation of a decline in
the market value of securities in its portfolio ("protective puts") or in
securities in which it may invest. The purchase of a put option would entitle
the Fund, in exchange for the premium paid, to sell specified securities at a
specified price during the option period. The purchase of protective puts is
designed to offset or hedge against a decline in the market value of the Fund's
securities. Put options may also be purchased by the Fund for the purpose of
affirmatively benefiting from a decline in the price of securities which it does
not own. The Fund would ordinarily realize a gain if, during the option period,
the value of the underlying securities decreased below the exercise price
sufficiently to more

B-10
<PAGE>

than cover the premium and transaction costs. Otherwise the Fund would realize
either no gain or a loss on the purchase of the put option. Gains and losses on
the purchase of protective put options would tend to be offset by countervailing
changes in the value of underlying portfolio securities.

The Fund would purchase put and call options on securities indices for the
same purposes as it would purchase options on securities. For a description of
options on securities indices, see "Writing Covered Options" above.

Transactions by the Fund in options on securities and securities indices
will be subject to limitations established by each of the exchanges, boards of
trade or other trading facilities governing the maximum number of options in
each class which may be written or purchased by a single investor or group of
investors acting in concert, regardless of whether the options are written or
purchased on the same or different exchanges, boards of trade or other trading
facilities or are held or written in one or more accounts or through one or more
brokers. Thus, the number of options which the Fund may write or purchase may
be affected by options written or purchased by other investment advisory clients
of the Investment Adviser. An exchange, board of trade or other trading
facility may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.

YIELD CURVE OPTIONS

The Fund may enter into options on the yield "spread," or yield differential
between two securities. Such options are referred to as "yield curve options".
In contrast to other types of options, a yield curve option is based on the
difference between the yields of designated securities, rather than the prices
of the individual securities, and is settled through cash payments.
Accordingly, a yield curve option is profitable to the holder if this
differential widens (in the case of a call) or narrows (in the case of a put),
regardless of whether the yields of the underlying securities increase or
decrease.

Yield curve options may be used for the same purposes as other options on
securities. Specifically, the Fund may purchase or write such options for
hedging purposes. For example, the Fund may purchase a call option on the yield
spread between two securities, if it owns one of the securities and anticipates
purchasing the other security and wants to hedge against an adverse change in
the yield spread between the two securities. The Fund may also purchase or
write yield curve options for other than hedging purposes (i.e., in an effort to
increase its current income) if, in the judgment of the Investment Adviser or
Subadviser, the Fund will be able to profit from movements in the spread between
the yields of the underlying securities. The trading of yield curve options is
subject to all of the risks associated with the trading of other types of
options. In addition, however, such options present risk of loss even if the
yield of one of the underlying securities remains constant, if the spread moves
in a direction or to an extent which was not anticipated.

Yield curve options written by the Fund will be "covered". A call (or put)
option is covered if the Fund holds another call (or put) option on the spread
between the same two securities and maintains in a segregated account with its
custodian cash or liquid high grade debt securities sufficient to cover the
Fund's net liability under the two options. Therefore, the Fund's liability for
such a covered option is generally limited to the difference between the amount
of the Fund's liability under the option written by the Fund less the value of
the option held by the Fund. Yield curve options may also be covered in such
other manner as may be in accordance with the requirements of the counterparty
with which the option is traded and applicable laws and

B-11
<PAGE>

regulations. Yield curve options are traded over-the-counter and because they
have been only recently introduced, established trading markets for these
securities have not yet developed.

RISKS ASSOCIATED WITH OPTIONS TRANSACTIONS

There is no assurance that a liquid secondary market on a domestic or
foreign options exchange will exist for any particular exchange-traded option or
at any particular time. If the Fund is unable to effect a closing purchase
transaction with respect to covered options it has written, the Fund will not be
able to sell the underlying securities or dispose of assets held in a segregated
account until the options expire or are exercised. Similarly, if the Fund is
unable to effect a closing sale transaction with respect to options it has
purchased, it would have to exercise the options in order to realize any profit
and will incur transaction costs upon the purchase or sale of underlying
securities.

Reasons for the absence of a liquid secondary market on an exchange include
the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or the Options
Clearing Corporation may not at all times be adequate to handle current trading
volume; or (vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that exchange (or in that class or series of options) would cease to
exist, although outstanding options on that exchange that had been issued by the
Options Clearing Corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms.

The Fund may purchase and sell both options that are traded on United States
and foreign exchanges and options traded over-the-counter with broker-dealers
who make markets in these options. The ability to terminate over-the-counter
options is more limited than with exchange-traded options and may involve the
risk that broker-dealers participating in such transactions will not fulfill
their obligations. Until such time as the staff of the Securities and Exchange
Commission changes it position, the Fund will treat purchased over-the-counter
options and all assets used to cover written over-the-counter options as
illiquid securities, except that with respect to options written with primary
dealers in U.S. Government securities pursuant to an agreement requiring a
closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to a formula approved by the staff
of the Commission.

The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The successful use of protective
puts for hedging purposes depends in part on the Investment Adviser's ability to
predict future price fluctuations and the degree of correlation between the
options and securities markets.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

B-12
<PAGE>

The futures contracts may be based on various securities (such as U.S.
Government securities), securities indices, foreign currencies and other
financial instruments and indices. The Fund will engage in futures and related
options transactions only for bona fide hedging purposes as defined below or for
purposes of seeking to increase total return to the extent permitted by
regulations of the CFTC. All futures contracts entered into by the Fund are
traded on U.S. exchanges or boards of trade that are licensed and regulated by
the CFTC or on foreign exchanges.

FUTURES CONTRACTS. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).

When interest rates are rising or securities prices are falling, the Fund
can seek through the sale of futures contracts to offset a decline in the value
of its current portfolio securities. When rates are falling or prices are
rising, the Fund, through the purchase of futures contracts, can attempt to
secure better rates or prices than might later be available in the market when
it effects anticipated purchases. Similarly, the Fund can sell futures
contracts on a specified currency to protect against a decline in the value of
such currency and its portfolio securities which are denominated in such
currency. The Fund can purchase futures contracts on foreign currency to fix
the price in U.S. dollars of a security denominated in such currency that the
Fund has acquired or expects to acquire.

Positions taken in the futures markets are not normally held to maturity,
but are instead liquidated through offsetting transactions which may result in a
profit or a loss. While the Fund's futures contracts on securities or currency
will usually be liquidated in this manner, it may instead make or take delivery
of the underlying securities or currency whenever it appears economically
advantageous for the Fund to do so. A clearing corporation associated with the
exchange on which futures on securities or currency are traded guarantees that,
if still open, the sale or purchase will be performed on the settlement date.

HEDGING STRATEGIES. Hedging by use of futures contracts seeks to establish
more certainty than would otherwise be possible with respect to the effective
price, rate of return or currency exchange rate on portfolio securities or
securities that the Fund owns or proposes to acquire. The Fund may, for
example, take a "short" position in the futures market by selling futures
contracts in order to hedge against an anticipated rise in interest rates or a
decline in market prices or foreign currency rates that would adversely affect
the dollar value of the Fund's portfolio securities. Such futures contracts may
include contracts for the future delivery of securities held by the Fund or
securities with characteristics similar to those of the Fund's portfolio
securities. Similarly, the Fund may sell futures contracts on currency in which
its portfolio securities are denominated or in one currency to hedge against
fluctuations in the value of securities denominated in a different currency if
there is an established historical pattern of correlation between the two
currencies. If, in the opinion of the Investment Adviser, there is a sufficient
degree of correlation between price trends for the Fund's portfolio securities
and futures contracts based on other financial instruments, securities indices
or other indices, the Fund may also enter into such futures contracts as part
of its hedging strategy. Although under some circumstances prices of
securities in the Fund's portfolio may be more or less volatile than prices of
such futures contracts, the Investment Adviser will attempt to estimate the
extent of this difference in volatility based on historical patterns and to
compensate for it by having the Fund enter into a greater or lesser number of
futures contracts or by attempting to achieve only a partial hedge against
price changes affecting the Fund's securities portfolio. When hedging of this
character is successful, any depreciation in the value of portfolio

B-13
<PAGE>

securities will substantially be offset by appreciation in the value of the
futures position. On the other hand, any unanticipated appreciation in the
value of the Fund's portfolio securities would be substantially offset by a
decline in the value of the futures position.

On other occasions, the Fund may take a "long" position by purchasing such
futures contracts. This would be done, for example, when the Fund anticipates
the subsequent purchase of particular securities when it has the necessary
cash, but expects the prices or currency exchange rates then available in the
applicable market to be less favorable than prices or rates that are currently
available.

OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options on
futures contracts will give the Fund the right (but not the obligation), for a
specified price, to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the Fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event of
an unfavorable price movement to the loss of the premium and transaction costs.

The writing of a call option on a futures contract generates a premium which
may partially offset a decline in the value of the Fund's assets. By writing a
call option, the Fund becomes obligated, in exchange for the premium, (upon
exercise of the option) to sell a futures contract, which may have a value
higher than the exercise price. Conversely, the writing of a put option on a
futures contract generates a premium, which may partially offset an increase in
the price of securities that the Fund intends to purchase. However, the Fund
becomes obligated (upon exercise of the option) to purchase a futures contract,
which may have a value lower than the exercise price. Thus, the loss incurred
by the Fund in writing options on futures is potentially unlimited and may
exceed the amount of the premium received. The Fund will incur transaction
costs in connection with the writing of options on futures.

The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. The
Fund's ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid market.

OTHER CONSIDERATIONS. The Fund will engage in futures and related options
transactions only for bona fide hedging or to seek to increase total return to
the extent permitted by CFTC regulations which permit principals of an
investment company registered under the Act to engage in such transactions
without registering as commodity pool operators. The Fund will determine that
the price fluctuations in the futures contracts and options on futures used for
hedging purposes are substantially related to price fluctuations in securities
held by the Fund or which it expects to purchase. Except as stated below, the
Fund's futures transactions will be entered into for traditional hedging
purposes -- i.e., futures contracts will be sold to protect against a decline in
the price of securities (or the currency in which they are quoted or
denominated) that the Fund owns, or futures contracts will be purchased to
protect the Fund against an increase in the price of securities (or the currency
in which they are quoted or denominated) it intends to purchase. As evidence of
this hedging intent, the Fund expects that on 75% or more of the occasions on
which it takes a long futures (or option) position (involving the purchase of
futures contracts), the Fund will have purchased, or will be in the process of
purchasing, equivalent amounts of related securities (or assets denominated in
the related currency) in the cash market at the time when the futures (or
option) position is closed out. However, in particular cases, when it is
economically advantageous

B-14
<PAGE>

for the Fund to do so, a long futures position may be terminated (or an option
may expire) without the corresponding purchase of securities or other assets.

As an alternative to compliance with the bona fide hedging definition, a
CFTC regulation permits the Fund to elect to comply with a different test, under
which the aggregate initial margin and premiums required to establish positions
to seek to increase total return in futures contracts and options on futures
will not exceed 5% of the net asset value of the Fund's portfolio, after taking
into account unrealized profits and losses on any such positions and excluding
the amount by which such options were in-the-money at the time of purchase. The
Fund will engage in transactions in futures contracts and related options only
to the extent such transactions are consistent with the requirements of the
Internal Revenue Code for maintaining its qualification as a regulated
investment company for Federal income tax purposes (see "Taxation").

Transactions in futures contracts and options on futures involve brokerage
costs, require margin deposits and, in the case of contracts and options
obligating the Fund to purchase securities or currencies, require the Fund to
segregate, with its custodian cash or liquid, high grade debt securities in an
amount equal to the underlying value of such contracts and options.

While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency exchange
rates may result in a poorer overall performance for the Fund than if it had not
entered into any futures contracts or options transactions. In the event of an
imperfect correlation between a futures position and a portfolio position which
is intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss.

Perfect correlation between the Fund's futures positions and portfolio
positions will be impossible to achieve because no futures contracts based on
corporate fixed-income securities are currently available. The only futures
contracts available to hedge the Fund's portfolio are various futures on U.S.
Government securities and foreign currencies, futures on a municipal securities
index and stock index futures. In addition, is not possible to hedge fully or
perfectly against currency fluctuations affecting the value of securities
denominated in foreign currencies because the value of such securities is likely
to fluctuate as a result of independent factors not related to currency
fluctuations.

INVESTMENT IN UNSEASONED COMPANIES

The Fund may invest up to 5% of its net assets, calculated at the time of
purchase, in companies (including predecessors) which have operated less than
three years, excluding issuers whose debt securities have been rated, at the
time of investment, investment grade or better by at least one nationally
recognized statistical rating organization. The securities of such companies
may have limited liquidity, which can result in their being priced higher or
lower than might otherwise be the case. In addition, investments in unseasoned
companies are more speculative and entail greater risk than do investments in
companies with an established operating record.

INVESTMENT RESTRICTIONS

The Trust has adopted the following investment restrictions, none of which
may be changed with respect to the Fund without the approval of the holders of a
majority of the outstanding voting

B-15
<PAGE>

securities of the Fund. As defined in the Act, "a majority of the outstanding
voting securities" of the Fund means the vote (a) of 67% or more of the shares
present at a meeting of shareholders of the Fund, if the holders of more than
50% of the Fund's outstanding shares are present or voting by proxy at the
meeting, or (b) of more than 50% of the outstanding shares of the Fund,
whichever is less.

For the purposes of the limitations, any limitation which involves a maximum
percentage shall not be considered violated unless an excess over the percentage
occurs immediately after, and is caused by, an acquisition or encumbrance of
securities or assets of, or borrowings by, the Fund.

The Fund may not:

(1) Borrow money, except from banks on a temporary basis, provided that the
Fund is required to maintain asset coverage of at least 300% for all borrowings.
For purposes of this investment restriction, short sales, transactions in
currency, forward contracts, options, futures contracts and options on futures
contracts, and forward commitment transactions shall not constitute borrowing.

(2) Invest more than 25% of the value of its total assets in the securities
of one or more issuers conducting their principal business activities in the
same industry. This limitation does not apply to investments in obligations of
the U.S. Government or any of its agencies or instrumentalities.

(3) Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
segregation of assets in connection with the writing of covered put and call
options and the purchase of securities or currencies on a forward commitment or
delayed-delivery basis and collateral and initial or variation margin
arrangements with respect to forward contracts, options, futures contracts and
options on futures contracts.

(4) Purchase securities on margin, except for such short-term credits as are
necessary for the clearance of transactions, but the Fund may make margin
deposits in connection with transactions in currencies, options, futures and
options on futures.

(5) Make short sales of securities, except short sales against-the-box, or
maintain a short position. (The Fund does not currently intend to make short
sales against-the-box.)

(6) Underwrite any issue of securities issued by others, except to the
extent that the sale of portfolio securities by the Fund may be deemed to be
underwriting.

(7) Purchase, hold or deal in real estate, including limited partnership
interests, or oil and gas interests, although the Fund may purchase and sell
securities that are secured by real estate or interests therein and may purchase
mortgage-related securities and may hold and sell real estate acquired by the
Fund as a result of the ownership of securities.

(8) Invest in commodities, except that the Fund may (a) purchase and sell
futures contracts, including those relating to securities, currencies and
indices, and options on any such futures contracts or currencies, and (b)
purchase and sell currencies or securities on a forward commitment or delayed-
delivery basis.

B-16
<PAGE>

(9) Lend any funds or other assets except through the purchase of all or a
portion of an issue of securities or obligations of the type in which it may
invest; however, the Fund may lend portfolio securities in an amount not to
exceed 33-1/3% of the value of its total assets.

(10) Issue any senior security (as such term is defined in Section 18(f) of
the Act), except as permitted in Investment Restriction Nos. (1), (4), (5) and
(9).

In addition, as non-fundamental policies, the Fund may not:

(1) Invest more than 10% of its total assets in securities of other
investment companies or more than 5% of its total assets in the securities of
any one investment company, in each case calculated at the time of purchase, or
acquire more than 3% of the voting securities of any other investment company.

(2) Purchase warrants of any issuer, except on a limited basis, if, as a
result, more than 2% of the value of its total assets would be invested in
warrants which are not listed on the New York Stock Exchange and more than 5% of
the value of its total assets would be invested in warrants, whether or not so
listed, such warrants in each case to be valued at the lesser of cost or market,
but assigning no value to warrants acquired by the Fund in shares or attached to
debt securities.

(3) Invest (a) more than 15% of the Fund's net assets in illiquid
investments, including repurchase agreements maturing in more than seven days,
securities that are not readily marketable and restricted securities not
eligible for resale pursuant to Rule 144A under the Securities Act of 1933; or
(b) more than 15% of its net assets in restricted securities (including those
eligible for resale under Rule 144A).

MANAGEMENT

Information pertaining to the Trustees and officers of the Trust is set
forth below together with their respective positions and a brief statement of
their principal occupations during the past five years. Trustees and officers
deemed to be "interested persons" of the Trust for purposes of the Act are
indicated by an asterisk.

Paul C. Nagel, Jr., Age 72, 19223 Riverside Drive, Tequesta, Florida 33469.
Chairman of the Board of Trustees. Retired. Director and Chairman of the Audit
---------------------------------
and Finance Committees of Great Atlantic & Pacific Tea Co., Inc. and Director of
United Conveyer Corporation.

Ashok N. Bakhru, Age 52, 1235 Westlakes Drive, Suite 385, Berwyn, PA 19312.
Trustee. President, ABN Associates, Inc. since June 1994. Retired, Senior Vice
-------
President of Scott Paper Company. Director of Arkwright Mutual Insurance
Company. Trustee of International House of Philadelphia, Member of Cornell
University Council and Trustee of Walnut Street Theater.

David B. Ford*, Age 49, One New York Plaza, New York, New York 10004. Trustee.
-------
General Partner, Goldman Sachs, since 1986. Chairman and Chief Executive
Officer to GSAM since December 1994.

Marcia L. Beck*, Age 39, One New York Plaza, New York, New York 10004.
President and Trustee. Director, Institutional Funds Group of GSAM since
---------------------
September 1992. Vice President and Senior Portfolio Manager, GSAM from June
1988 to present.

B-17
<PAGE>

Alan A. Shuch,* Age 45, One New York Plaza, New York, New York 10004. Trustee.
-------
Director and Vice President, Goldman Sachs Funds Management, Inc. from April
1990 to November 1994. President and Chief Operating Officer of GSAM from
September 1988 to November 1994 (overseeing GSAM's fixed income investment
management activities and financial, accounting, administrative and systems
functions). Limited Partner of Goldman Sachs since December 1994.

Jackson W. Smart, Jr., Age 64, One Northfield Plaza - #218, Northfield, Illinois
60093. Trustee. Chairman and Chief Executive Officer of MSP Communications,
-------
Inc. (a company engaged in radio broadcasting) since November, 1988. Consultant
from August 1987 to November 1988 of Thomas Industries, Inc. (a manufacturer of
lighting fixtures, home decorations and hardware items) and Chairman and member
of the Executive Committee prior thereto. Director of Federal Express
Corporation and North American Private Equity Group (a venture capital Fund).

William H. Springer, Age 65, 701 Morningside Drive, Lake Forest, Illinois 60045.
Trustee. Vice Chairman of Ameritech (a tele-communications holding company)
-------
(February 1987 to retirement in August 1992), and Vice Chairman and Chief
Financial and Administrative Officer of Ameritech prior thereto. Director of
Walgreen Co. (a retail drugstore business). Director, Baker, Fentress & Co. (a
closed-ended non-diversified management investment company) since April 1992.

Richard P. Strubel, Age 55, 70 West Madison Street, Suite 1400, Chicago,
Illinois 60602. Trustee. Managing Director, Tandem Partners, Inc. (since
-------
1990). President and Chief Executive Officer of Microdot, Inc. (a diversified
manufacturer of fastening systems and connectors) (January 1984 to October
1994).

Pauline Taylor,* Age 48, 4900 Sears Tower, Chicago, Illinois 60606. Vice
----
President. Vice President of Goldman Sachs since June, 1992. Consultant 1989
---------
to June 1992. Senior Vice President of Fidelity Investments prior to 1989.

Nancy L. Mucker,* Age 45, 4900 Sears Tower, Chicago, Illinois 60606. Vice
----
President. Vice President of Goldman Sachs and Co-Manager of Shareholder
---------
Services for GSAM.

John W. Mosior,* Age 56, 4900 Sears Tower, Chicago, Illinois 60606. Vice
----
President. Vice President of Goldman Sachs and Co-Manager of Shareholder
---------
Services for GSAM.

Scott M. Gilman,* Age 35, One New York Plaza, New York, New York 10004.
Treasurer. Director, Mutual Funds Administration, GSAM since April 1994.
---------
Assistant Treasurer of Goldman Sachs Funds Management, Inc. since March 1993.
Vice President of Goldman Sachs since March, 1990 and Assistant Treasurer of the
Trust from April, 1990 until October, 1991. Formerly Manager of Arthur Andersen
LLP.

Michael J. Richman,* Age 34, 85 Broad Street, New York, New York 10004.
Secretary. Vice President and Assistant General Counsel of Goldman Sachs since
---------
June, 1992, Associate General Counsel to GSAM since February 1994 and Counsel to
the Funds Group of GSAM since June, 1992. Formerly Partner of Hale and Dorr.

Howard B. Surloff, * Age 29, 85 Broad Street, New York, New York 10004.
Assistant Secretary. Counsel and Vice President of Goldman Sachs since
-------------------
November, 1993 and May 1994, respectively and Counsel to the Funds Group of GSAM
since November, 1993. Formerly Associate of Shereff, Friedman, Hoffman &
Goodman.

B-18
<PAGE>

Steven E. Hartstein*, Age 31, 85 Broad Street, New York, New York 10004.
Assistant Secretary. Legal Products Analyst, Goldman Sachs (June 1993 to
-------------------
present); Funds Compliance Officer, Citibank Global Asset Management (August
1991 to June 1993); Legal Assistant, Brown & Wood (prior thereto).

Gail M. Shanley*, Age 26, 85 Broad Street, New York, New York 10004. Assistant
---------
Secretary. Legal Products Analyst, Goldman Sachs since June 1994. Formerly
---------
Blue Sky Legal Assistant at Smith Barney Shearson.

The Trust's Trustees and officers hold comparable positions with certain
other investment companies of which Goldman Sachs, GSAM or an affiliate thereof
is the investment adviser, administrator or distributor. As of March 15, 1995,
the Trustees and officers as a group owned less than 1% of the outstanding
shares of beneficial interest of the Fund.

The following table sets forth certain information with respect to the
compensation of each Trustee of the Trust for the one-year period ended October
31, 1994:

<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits from Goldman Sachs
Aggregate Accrued as Mutual Funds
Compensation Part of (including the
Name of Trustee from the Trust Trust's Expenses Trust)*
--------------------- -------------- ---------------- ------------------
<S> <C> <C> <C>

Paul C. Nagel, Jr. $17,426 $0 $101,000
Ashok N. Bakhru $10,253 $0 $ 61,000
Marcia L. Beck $ 0 $0 $ 0
Robert P. Mayo $10,523 $0 $ 61,000
Alan A. Shuch $ 0 $0 $ 0
Jackson W. Smart $10,523 $0 $ 61,000
William H. Springer $10,523 $0 $ 61,000
Richard P. Strubel $10,523 $0 $ 61,000
</TABLE>
______________

* The Goldman Sachs Mutual Funds consisted of 32 mutual funds, including
the eleven series of the Trust, on October 31, 1994.

ADVISORY AND ADMINISTRATIVE SERVICES

INVESTMENT ADVISERS AND ADMINISTRATOR

As stated in the Fund's Prospectus, GSAM, One New York Plaza, New York, New
York, serves as investment adviser and administrator to the Fund and GSAM
International, 140 Fleet Street, London EC4A 2BJ, England, acts as the Fund's
subadviser. See "Management-Investment Adviser, Subadviser and Administrator"
in the Fund's Prospectus for a description of the duties of GSAM as investment
adviser and administrator and GSAM International as subadviser to the Fund.

B-19
<PAGE>

Founded in 1869, Goldman Sachs is among the oldest and largest investment
banking firms in the United States. Goldman Sachs is a leader in developing
portfolio strategies and in many fields of investing and financing,
participating in financial markets worldwide and serving individuals,
institutions, corporations and governments. Goldman Sachs is also among the
principal market sources for current and thorough information on companies,
industrial sectors, markets, economies and currencies and trades and makes
markets on a wide range of equity and debt securities 24 hours a day. The firm
is headquartered in New York and has offices throughout the U.S. and in Beijing,
Frankfurt, George Town, Hong Kong, London, Madrid, Milan, Montreal, Osaka,
Paris, Seoul, Shanghai, Singapore, Sydney, Taipei, Tokyo, Toronto, Vancouver and
Zurich. It has trading professionals throughout the United States, as well as
in London, Tokyo, Hong Kong and Singapore. The active participation of Goldman
Sachs in the world's financial markets enhances its ability to identify
attractive investments.

Each Investment Adviser is able to draw on the substantial research and
market expertise of Goldman Sachs whose investment research effort is one of
the largest in the industry. With an annual equity research budget approaching
$120 million, Goldman Sachs' Investment Research Department covers approximately
1,700 companies, including approximately 1,000 U.S. corporations in 60
industries. The in-depth information and analyses generated by Goldman Sachs'
research analysts are available to the Investment Advisers. For more than a
decade, Goldman Sachs has been among the top-ranked firms in Institutional
Investor's annual "All-America Research Team" survey. In addition, many of
Goldman Sachs' economists, securities analysts, portfolio strategists and credit
analysts have consistently been highly ranked in respected industry surveys
conducted in the U.S. and abroad. Goldman Sachs is also among the leading
investment firms using quantitative analytics (now used by a growing number of
investors) to structure and evaluate portfolios.

The fixed income research capabilities of Goldman Sachs available to each
Investment Adviser include the Goldman Sachs Fixed Income Research Department
and the Credit Department. The Fixed Income Research Department monitors
developments in U.S. and foreign fixed income markets, assesses the outlooks for
various sectors of the markets and provides relative value comparisons, as well
as analyzes trading opportunities within and across market sectors. The Fixed
Income Research Department is at the forefront in developing and using computer-
based tools for analyzing fixed income securities and markets, developing new
fixed income products and structuring portfolio strategies for investment policy
and tactical asset allocation decisions. The Credit Department tracks specific
governments, regions and industries and from time to time may review the credit
quality of the Fund's investments.

In addition to fixed income research and credit research, each Investment
Adviser is supported by Goldman Sachs' economics research. The Economics
Research Department, based in London, conducts economic, financial and currency
markets research which analyzes economic trends and interest and exchange rate
movements worldwide. The Economics Research Department tracks factors such as
inflation and money supply figures, balance of trade figures, economic growth,
commodity prices, monetary and fiscal policies, and political events that can
influence interest rates and currency trends. The success of Goldman Sachs'
international research team has brought wide recognition to its members. The
team has earned top rankings in the annual "Extel Financial Survey" of U.K.
investment managers in the following categories: U.K. Economy 1989-1994;
International Economies 1986, 1988-1994; and Currency Movements 1986-1993.

In allocating assets in the Fund's portfolio among currencies, the
Investment Advisers will have access to the Global Asset Allocation Model. The
model is based on the observation that the

B-20
<PAGE>

prices of all financial assets, including foreign currencies, will adjust until
investors globally are comfortable holding the pool of outstanding assets.
Using the model, the Investment Advisers will estimate the total returns from
each currency sector which are consistent with the average investor holding a
portfolio equal to the market capitalization of the financial assets among those
currency sectors. These estimated equilibrium returns are then combined with
Goldman Sachs' research professionals' expectations to produce an optimal
currency and asset allocation for the level of risk suitable for the Fund's
investment objective and criteria. In allocating the Fund's assets among
currencies, the Investment Advisers will also have access to Goldman Sachs'
economics team, which is internationally recognized for its skill in currency
forecasting and international economics.

The Advisory Agreement and Subadvisory Agreement each provide that the
Investment Advisers may render similar services to others so long as the
services under such Agreement are not impaired thereby.

The Advisory Agreement between GSAM and the Trust on behalf of the Fund and
the Subadvisory Agreement between GSAM, GSAM International and the Trust on
behalf of the Fund were each last approved by the Trustees of the Trust on April
26, 1995 and by shareholders of the Fund on December 5, 1991. The Fund's
Advisory Agreement and Subadvisory Agreement will continue in effect until June
30, 1995, and from year to year thereafter provided such continuance is
specifically approved at least annually (a) by the vote of a majority of the
outstanding voting securities of the Fund or by a majority of the Trustees of
the Trust, and (b) by the vote of a majority of the Trustees of the Trust who
are not parties to such Agreement or "interested persons" (as such term is
defined in the Act) of any party thereto cast in person at a meeting called for
the purpose of voting on such approval.

The Advisory Agreement and Subadvisory Agreement will terminated
automatically if assigned (as defined in the Act) and each such agreement is
terminable at any time without penalty by the Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Fund on 60 days'
written notice to the Investment Advisers and by the Investment days' written
notice to the Trust.

Pursuant to its Advisory Agreement, GSAM is entitled to receive monthly by
the Fund equal on an annual basis to 0.25% of the Fund's average daily net
assets. Pursuant to a separate Subadvisory Agreement with GSAM International
and GSAM, the Fund pays GSAM International a monthly subadvisory fee equal on an
annual basis to 0.50% of its average daily net assets. GSAM and GSAM
International voluntarily have agreed to limit such fees to an annual rate equal
to 0.10% and 0.30%, respectively, of the Fund's average daily net assets.
Although GSAM and GSAM International have no current intention to do so, they
may modify or discontinue such limitation in the future at their discretion.
The fee paid to GSAM International is in addition to the fee paid to GSAM. For
the fiscal years ended October 31, 1992, October 31, 1993 and October 31, 1994
(at which time the fee limitations discussed above were not in effect), the Fund
paid GSAM investment advisory fees of $1,241,875, $1,553,394 and $1,518,814,
respectively. For the same periods, the Fund paid GSAM International
subadvisory fees of $2,483,750, $3,106,787 and $3,037,627, respectively.

GSAM performs administrative services for the Fund under a separate
Administration Agreement. The administrative services provided by GSAM include,
subject to the general supervision of the Trustees of the Trust, (a) providing
supervision of all aspects of the Fund's non-investment operations (other than
certain operations performed by others pursuant to agreements with the Fund),
(b) providing the Fund, to the extent not provided pursuant to such

B-21
<PAGE>

agreements, the agreement with the Trust's custodian, transfer and dividend
disbursing agent or agreements with other institutions, with personnel to
perform such executive, administrative and clerical services as are reasonably
necessary to provide effective administration of the Fund, (c) arranging, to the
extent not provided pursuant to such agreements, for the preparation, at the
Fund's expense, of the Fund's tax returns, reports to shareholders, periodic
updating of the Prospectus and this Additional Statement, and reports filed with
the Securities and Exchange Commission and other regulatory authorities, (d)
providing the Fund, to the extent not provided pursuant to such agreements, with
adequate office space and certain related office equipment and services, and (e)
maintaining all of the Fund's records other than those maintained pursuant to
such agreements. For its services under its Administration Agreement, the Fund
pays GSAM a monthly fee equal to 0.15% of its average daily net assets on an
annual basis. For the fiscal years ended October 31, 1992, October 31, 1993 and
October 31, 1994, the Fund paid GSAM administration fees of $745,125, $932,036
and $911,288, respectively.

ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED
BY GOLDMAN SACHS. The involvement of the Investment Adviser, Subadviser and
Goldman Sachs and their affiliates in the management of, or their interests in,
other accounts and other activities of Goldman Sachs may present conflicts of
interest with respect to the Fund or impede its investment activities.

Goldman Sachs and its affiliates, including, without limitation, the
Investment Adviser, Subadviser and its advisory affiliates, Goldman Sachs
International ("GSI") and J. Aron & Co. ("Aron"), have proprietary interests in,
and may manage or advise with respect to, accounts or funds (including separate
accounts and other funds and collective investment vehicles) which have
investment objectives similar to those of the Fund and/or which engage in
transactions in the same types of securities, currencies and instruments as the
Fund. Goldman Sachs and its affiliates are major participants in the global
currency, equities, swap and fixed income markets, in each case on a
proprietary basis and for the accounts of customers. As such, Goldman Sachs and
its affiliates are actively engaged in transactions in the same securities,
currencies and instruments in which the Fund invests. Such activities could
affect the prices and availability of the securities, currencies and instruments
in which the Fund will invest, which could have an adverse impact on the Fund's
performance. Such transactions, particularly in respect of proprietary accounts
or customer accounts other than those included in the Investment Adviser's and
Subadviser's and its advisory affiliates' asset management activities, will be
executed independently of the Fund's transactions and thus at prices or rates
that may be more or less favorable. When the Investment Adviser, Subadviser and
its advisory affiliates seek to purchase or sell the same assets for their
managed accounts, including the Fund, the assets actually purchased or sold may
be allocated among the accounts on a basis determined in the good faith
discretion of such entities to be equitable. In some cases, this system may
adversely affect the size or the price of the assets purchased or sold for the
Fund.

From time to time, the Fund's activities may be restricted because of
regulatory restrictions applicable to Goldman Sachs and its affiliates, and/or
their internal policies designed to comply with such restrictions. As a result,
there may be periods, for example, when the Investment Adviser and Subadviser
will not initiate or recommend certain types of transactions in certain
securities or instruments with respect to which the Investment Adviser,
Subadviser and/or its affiliates are performing services or when position limits
have been reached.

In connection with its management of the Fund, the Investment Adviser and
Subadviser may have access to certain fundamental analysis and proprietary
technical models developed by Goldman Sachs, Aron and other affiliates. The
Investment Adviser and Subadviser will not be under any

B-22
<PAGE>

obligation, however, to effect transactions on behalf of the Fund in accordance
with such analysis and models. In addition, neither Goldman Sachs nor any of
its affiliates will have any obligation to make available any information
regarding their proprietary activities or strategies, or the activities or
strategies used for other accounts managed by them, for the benefit of the
management of the Fund and it is not anticipated that the Investment Adviser or
Subadviser will have access to such information for the purpose of managing the
Fund. The proprietary activities or portfolio strategies of Goldman Sachs and
its affiliates or the activities or strategies used for accounts managed by them
or other customer accounts, could conflict with the transactions and strategies
employed by the Investment Adviser or Subadviser in managing the Fund.

The results of the Fund's investment activities may differ significantly
from the results achieved by the Investment Adviser, Subadviser and its
affiliates for their proprietary accounts or accounts (including investment
companies or collective investment vehicles) managed or advised by them. It is
possible that Goldman Sachs and its affiliates and such other accounts will
achieve investment results which are substantially more or less favorable than
the results achieved by the Fund. Moreover, it is possible that the Fund will
sustain losses during periods in which Goldman Sachs and its affiliates achieve
significant profits on their trading for proprietary or other accounts. The
opposite result is also possible.

An investment policy committee which may include partners of Goldman Sachs
and its affiliates may develop general policies regarding the Fund's activities,
but will not be involved in the day-to-day management of the Fund. In such
instances, those individuals may, as a result, obtain information regarding the
Fund's proposed investment activities which is not generally available to the
public. In addition, by virtue of their affiliation with Goldman Sachs, any
such member of an investment policy committee will have direct or indirect
interests in the activities of Goldman Sachs and its affiliates in securities,
currencies and investments similar to those in which the Fund invests.

In addition, certain principals and certain of the employees of the
Investment Adviser and Subadviser are also principals or employees of Goldman
Sachs, Aron and/or their affiliated entities. As a result, the performance by
these principals and employees of their obligations to such other entities may
be a consideration of which investors in the Fund should be aware.

The Investment Adviser and Subadviser may enter into transactions and
invest in currencies or other instruments on behalf of the Fund in which
customers of Goldman Sachs serve as the counterparty, principal or issuer. In
such cases, such party's interests in the transaction will be adverse to the
interests of the Fund, and such party may have no incentive to assure that the
Fund obtains the best possible prices or terms in connection with the
transactions. Goldman Sachs and its affiliates may also create, write or issue
derivative instruments for customers of Goldman Sachs or its affiliates, the
underlying securities, currencies or instruments of which may be those in which
the Fund invests or which may be based on the performance of the Fund. The Fund
may, subject to applicable law, purchase investments which are the subject of
an underwriting or other distribution by Goldman Sachs or its affiliates and may
also enter into transactions with other clients of Goldman Sachs or its
affiliates where such other clients have interests adverse to those of the Fund.
The Fund will deal with Goldman Sachs and its affiliates on an arm's-length
basis.

The Fund will be required to establish business relationships with its
counterparties based on the Fund's own credit standing. Neither Goldman Sachs
nor its affiliates will have any obligation to allow their credit to be used in
connection with the Fund's establishment of its business relationships, nor is
it expected that the Fund's counterparties will rely on the credit of Goldman
Sachs or any of its affiliates in evaluating the Fund's creditworthiness.

B-23
<PAGE>

DISTRIBUTOR AND THE TRANSFER AGENT

Goldman Sachs serves as the distributor of shares of the Fund pursuant to a
"best efforts" arrangement as provided by a distribution agreement with the
Trust dated February 1, 1993. Pursuant to the distribution agreement, after the
Prospectus and periodic reports have been prepared, set in type and mailed to
shareholders, Goldman Sachs will pay for the printing and distribution of copies
thereof used in connection with offering the shares to prospective investors.
Goldman Sachs will also pay for other supplementary sales literature and
advertising costs. Goldman Sachs has entered into sales agreements with certain
investment dealers and financial service firms (the "Authorized Dealers") to
solicit subscriptions for shares of the Fund. Goldman Sachs received a portion
of the sales load imposed on the sale of Class A Shares of the Fund and has
advised the Fund that it retained approximately $2,317,000, $922,000 and
$350,000 during the fiscal years ended October 31, 1992, October 31, 1993 and
October 31, 1994, respectively.

Goldman Sachs serves as transfer and dividend disbursing agent for the
Fund. Goldman Sachs has undertaken with the Trust with respect to the Fund to
(i) record the issuance, transfer and redemption of shares, (ii) provide
confirmations of purchases and redemptions, and monthly statements, as well as
certain other statements, (iii) provide certain information to the Trust's
custodian in connection with redemptions, (iv) provide dividend crediting and
certain disbursing agent services, (v) maintain shareholder accounts, (vi)
provide certain state Blue Sky and other information, (vii) provide shareholders
and certain regulatory authorities with tax related information, (viii) respond
to shareholder inquiries and (ix) render certain other miscellaneous services.
As compensation for the services rendered to the Fund by Goldman Sachs as
transfer and dividend disbursing agent and the assumption by Goldman Sachs of
the expenses related thereto, Goldman Sachs is entitled to receive (i) a fee
with respect to Class A Shares equal to $12,000 per year plus $3.50 per account,
together with out-of-pocket and transaction-related expenses (including those
out-of-pocket expenses payable to servicing agents), and (ii) a fee with respect
to each of the Institutional and Administration Shares equal to .04% (on an
annualized basis) of the average daily net assets attributable to such class.
For the fiscal years ended October 31, 1992, October 31, 1993 and October 31,
1994, the Fund incurred transfer agency fees attributable to Class A Shares of
$126,698, $127,834 and $132,123, respectively.

The foregoing distribution and transfer agency agreements each provide that
Goldman Sachs may render similar services to others so long as the services
Goldman Sachs provides thereunder are not impaired thereby. Such agreements
also provide that the Trust will indemnify Goldman Sachs against certain
liabilities.

EXPENSES

Except as set forth in the Fund's Prospectus under "Management-Investment
Adviser, Subadviser and Administrator," the Trust, on behalf of the Fund, is
responsible for the payment of the Fund's expenses. The expenses borne by
Institutional, Administration and Class A Shares of the Fund include, without
limitation, the fees payable to GSAM, GSAM International and Goldman Sachs, the
fees and expenses to the Trust's custodian, transfer agent fees, brokerage fees
and commissions, filing fees for the registration or qualification of the
Trust's shares under Federal or state securities laws, expenses of the
organization of the Trust, fees and expenses incurred by the Trust in connection
with membership in investment company organizations, taxes, interest, costs of
liability insurance, fidelity bonds or indemnification, any costs, expenses or
losses arising out of any liability of, or claim for damages or other relief
asserted against, the Trust for violation of any law, legal, tax and auditing
fees and expenses (including the cost of legal and certain accounting

B-24
<PAGE>

services rendered by employees of GSAM or GSAM International with respect to the
Trust), expenses of preparing and setting in type prospectuses, statements of
additional information, proxy material, reports and notices and the printing and
distributing of the same to the Trust's shareholders and regulatory authorities,
any fees under administration, distribution or authorized dealer service plans,
any compensation and expenses of the Trust's "non-interested" Trustees and
extraordinary expenses, if any, incurred by the Trust. Except for any transfer
agency fees or fees under administration, distribution and authorized dealer
service plans, all Fund expenses are borne on a non-class specific basis.

Fees and expenses of legal counsel, registering shares of the Fund, holding
meetings and communicating with shareholders may include an allocable portion of
the cost of maintaining an internal allocable portion of GSAM's or GSAM
International's costs of performing certain accounting services not being
provided by the Trust's custodian.

GSAM and GSAM International voluntarily have agreed to reduce or otherwise
limit certain expenses of the Fund (excluding advisory, subadvisory,
administration and transfer agency fees, fees payable under administration,
distribution and authorized dealer service plans, taxes, interest, brokerage and
litigation, indemnification and other extraordinary expenses) to the extent that
such expenses exceed 0.06% annually of the Fund's average daily net assets.
Such reductions or limits are calculated monthly on a cumulative basis.
Although the Investment Adviser and Subadviser have no current intention of
modifying or discontinuing such expense limitation or the limitations on the
advisory or subadvisory fees, described above under "Advisory and Administrative
Services --Investment Advisers and Administrator," they may do so in the future
at their discretion.

GSAM and GSAM International have also each agreed that if, in any fiscal
year, the sum of the Fund's expenses (including the fee payable to each
Investment Adviser, but excluding taxes, interest, brokerage commissions,
distribution expenses and, where permitted, extraordinary expenses such as for
litigation) exceeds the expense limitations applicable to the Fund imposed by
state securities administrators, as such limitations may be lowered or raised
from time to time, it will reduce its fee (to the extent of its fees) or make
other arrangements to limit Fund expenses to the extent required by such expense
limitations. Currently, the most restrictive expense limitation imposed by
state securities administrators provides that annual expenses (as defined) may
not exceed 2-1/2% of the first $30 million of the average value of the Fund's
net assets, plus 2% of the next $70 million, plus 1-1/2% of such assets in
excess of $100 million.

CUSTODIAN AND SUB-CUSTODIANs

State Street Bank and Trust Company ("State Street"), P.O. Box 1713,
Boston, Massachusetts 02105, is the custodian of the Fund's portfolio securities
and cash. State Street also maintains the Fund's accounting records. State
Street may appoint sub-custodians from time to time to hold certain securities
purchased by the Fund in foreign countries and to hold cash and currencies for
the Fund.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP, independent public accountants, One International
Place, Boston, Massachusetts 02110, have been selected as auditors of the Trust.
In addition to audit services, Arthur Andersen LLP prepares the Fund's federal
and state tax returns and provides consultation and assistance on accounting,
internal control and related matters.

B-25
<PAGE>

PORTFOLIO TRANSACTIONS

The portfolio transactions for the Fund are generally effected at a net
price without a broker's commission (i.e., a dealer is dealing with the Fund as
principal and receives compensation equal to the spread between the dealer's
cost for a given security and the resale price of such security). In certain
foreign countries, debt securities in which the Fund may invest are traded on
exchanges at fixed commission rates. In connection with portfolio transactions,
the Fund's Advisory Agreement and the Fund's Subadvisory Agreement provide that
the Fund's Investment Advisers shall attempt to obtain the best net price and
the most favorable execution. The Advisory Agreement provides that, on
occasions when the Investment Adviser deems the purchase or sale of a security
to be in the best interests of the Fund as well as its other customers
(including any other fund or other investment company or advisory account for
which the Investment Adviser or an affiliate acts as investment adviser), the
Fund, to the extent permitted by applicable laws and regulations, may aggregate
the securities to be sold or purchased for the Fund with those to be sold or
purchased for such other customers in order to obtain the best net price and
most favorable execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
made by the Investment Adviser in the manner it considers to be most equitable
and consistent with its fiduciary obligations to the Fund and such other
customers. In some instances, this procedure may adversely affect the size of
the position obtainable for the Fund. To the extent that the execution and
price offered by more than one dealer are comparable, the Advisory Agreement and
Subadvisory Agreement of the Fund permit the Investment Advisers, in their
discretion, to purchase and sell portfolio securities to and from dealers who
provide the Trust with brokerage or research services. The fees received under
the Investment Advisory Agreement and Subadvisory Agreement are not reduced by
reason of the Investment Adviser receiving such brokerage and research services.
For the fiscal year ended October 31, 1994, the Fund paid no brokerage
commissions.

During the fiscal year ended October 31, 1994, the Fund acquired and sold
securities of its regular broker-dealers: Nomura Securities International,
Chemical Securities, UBS Securities, Inc., J.P. Morgan & Co. Inc., Bankers Trust
Company, Lehman Brothers, Inc., Nikko Securities, Inc., Morgan Stanley & Co.,
Smith Barney Shearson and Salomon Brothers, Inc. As of October 31, 1994, the
Fund held no securities of its regular broker/dealers, as defined in Rule 10b-1
under the Act, or their parents.

SHARES OF THE TRUST

The Trust's Agreement and Declaration of Trust dated September 24, 1987, as
amended (the "Trust Agreement"), permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest of one or more
separate series, provided each share has a par value of $.001 per share,
represents an equal proportionate interest in that series with each other share
and is entitled to such dividends out of the income belonging to such series as
are declared by the Trustees.

The Trustees have authority under the Trust Agreement to create and
classify shares of beneficial interest in separate series of the Trust without
further action by shareholders. As of the date of this Additional Statement,
the Trustees have authorized shares of the Fund and six other series. The Trust
Agreement further authorizes the Board of Trustees to classify or reclassify any
series or portfolio of shares into one or more classes. The Trustees have
authorized shares of three classes of the Fund: Institutional Shares,
Administration Shares and Class A Shares. Each class

B-26
<PAGE>

is subject to different fees and expenses, which will be borne exclusively by
that class, has different minimum investment requirements and is entitled to
different services. All Fund expenses are based on a percentage of the Fund's
average net assets. Information regarding each class may be obtained by calling
the number on the cover page of this Additional Statement. At October 31, 1994,
no Institutional or Administration Shares had been issued. Each share of the
Fund represents an equal proportionate interest in the assets belonging to the
Fund.

Fund shares when issued, are fully paid and non-assessable. In the event
of liquidation, shareholders are entitled to share pro rata in the net assets of
the Fund available for distribution to such shareholders. All shares entitle
their holders to one vote per share, are freely transferable and have no
preemptive, subscription or conversion rights.

SHAREHOLDER AND TRUSTEE LIABILITY

Under Massachusetts law, there is a remote possibility that shareholders of
a business trust could, under certain circumstances, be held personally liable
as partners for the obligations of such trust. The Trust Agreement contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or the Trustees.
The Trust Agreement provides for indemnification out of Trust property of any
shareholder charged or held personally liable for obligations or liabilities of
the Trust solely by reason of being or having been a shareholder of the Trust
and not because of such shareholder's acts or omissions or for some other
reason. The Trust Agreement also provides that the Trust shall, upon proper and
timely request, assume the defense of any charge made against any shareholder as
such for any obligation or liability of the Trust and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations.

As of December 31, 1994, Goldman Sachs Trust Company as Trustee for Goldman
Sachs Profit Sharing Master Trust, 85 Broad Street, 7th Floor, New York, New
York was the holder of 8% of the Fund's outstanding shares.

Rule 18f-2 under the Act provides that any matter required to be submitted
by the provisions of the Act, applicable state law or otherwise to the holders
of the outstanding voting securities of an investment company such as the Trust
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each class or series affected
by such matter. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless the interests of each class or series
in the matter are substantially identical or the matter does not affect any
interest of such class or series. However, Rule 18f-2 exempts the selection of
independent public accountants, the approval of principal distribution contracts
and the election of Trustees from the separate voting requirements of Rule 18f-
2.

NET ASSET VALUE

Under the Act, the Trustees of the Trust are responsible for determining in
good faith the fair value of securities of the Fund. In accordance with
procedures adopted by the Trustees of the Trust, the net asset value per share
of each class is calculated by determining the net assets attributable to each
class of the Fund (assets, including securities at value, minus liabilities)
divided by the number of outstanding shares of that class. The Fund will
compute its net asset value once

B-27
<PAGE>

daily at the close of regular trading on the New York Stock Exchange (normally
4:00 p.m. New York time) on each Business Day (as defined in the Prospectus).

For the purpose of calculating the net asset value of the Fund, debt
securities, other than money market instruments, are valued on the basis of
dealer-supplied quotations or by a pricing service approved by the Board of
Trustees if such prices are believed by the investment adviser to accurately
represent market value. The prices derived by a pricing agent reflect
broker/dealer-supplied valuations and electronic data processing techniques. If
those prices are not deemed by the Fund's Investment Adviser to be
representative of market values at the time the net asset value is calculated,
then such securities will be valued at fair value as described below. Options
and futures contracts are valued at the last sale price on the market where any
such option or futures contract is principally traded. Forward foreign currency
exchange contracts are valued at the mean between the last bid and asked
quotations supplied by a dealer in such contracts. All other securities and
other assets, including debt securities, for which prices are supplied by a
pricing agent but are not deemed by the Fund's Investment Adviser to be
representative of market values, restricted securities and securities for which
no market quotation is available, but excluding money market instruments with a
remaining maturity of sixty days or less, are valued at fair value as determined
in good faith pursuant to procedures established by the Board of Trustees.
Money market instruments held by the Fund with a remaining maturity of sixty
days or less will be valued by the amortized cost method, which approximates
market value.

The value of all assets and liabilities expressed in foreign currencies
will be converted into U.S. dollar values at current exchange rates of such
currencies against U.S. dollars last quoted by any major bank. If such
quotations are not available, the rate of exchange will be determined in good
faith by or under procedures established by the Board of Trustees.

Generally, trading in foreign securities is substantially completed each
day at various times prior to the time the Fund calculates its net asset value.
Occasionally, events affecting the values of such securities may occur between
the times at which they are determined and the calculation of net asset value
which will not be reflected in the computation of the Fund's net asset value
unless the Trustees deem that such event would materially affect the net asset
value, in which case an adjustment would be made.

TAXATION

The following is a summary of the principal U.S. federal income and certain
other tax considerations regarding the purchase, ownership and disposition of
shares in the Fund. This summary does not address special tax rules applicable
to certain classes of investors, such as tax-exempt entities, insurance
companies and financial institutions. Prospective investors are urged to
consult their own tax advisers with respect to the specific federal, state,
local and foreign tax consequences of investing in the Fund. The summary is
based on the laws in effect on the date of this Additional Statement, which are
subject to change.

GENERAL

The Fund is treated as a separate entity for tax and accounting purposes,
has qualified and elected to be treated as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the "Code"), and intends to
continue to qualify for such treatment for each taxable year. To so qualify,
the Fund must, among other things: (a) derive at least 90% of its gross income

B-28
<PAGE>

in each taxable year from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of stock,
securities or foreign currencies, or other income (including but not limited to
gains from options, futures or forward contracts) derived with respect to its
business of investing in such stock, securities or currencies (the "90% gross
income test"); (b) derive less than 30% of its gross income in each taxable
year from the sale or other disposition of any of the following which was held
for less than three months: (i) stock or securities, (ii) options, futures or
forward contracts (other than options, futures or forward contracts on foreign
currencies) and (iii) foreign currencies (or options, futures or forward
contracts on foreign currencies) but only if such currencies (or options,
futures or forward contracts) are not directly related to the Fund's principal
business of investing in stock or securities (or options and futures with
respect to stock or securities) (the "short-short test"); and (c) diversify its
holdings so that, at the end of each quarter of the Fund's taxable year, the
following two conditions are met: (i) at least 50% of the market value of the
Fund's total (gross) assets is represented by cash, cash items, U.S. Government
securities, securities of other regulated investment companies and other
securities, with such other securities limited, in respect of any one issuer, to
an amount not greater in market value than 5% of the market value of the Fund's
total (gross) assets and not greater than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its total
(gross) assets is invested in the securities of any one issuer (other than U.S.
Government securities or securities of other regulated investment companies) or
two or more issuers controlled by the Fund and engaged in the same, similar or
related trades or businesses. Gains from the sale or other disposition of
foreign currencies (or options, futures or forward contracts on foreign
currencies) that are not directly related to the Fund's principal business of
investing in stock or securities or options and futures with respect to stock or
securities will be treated as gains from the disposition of investments held for
less than three months under the short-short test (even though characterized as
ordinary income for some purposes) if such currencies or instruments were held
for less than three months. In addition, future Treasury regulations could
provide that qualifying income under the 90% gross income test will not include
gains from foreign currency transactions that are not directly related to the
Fund's principal business of investing in stock or securities or options and
futures with respect to stock or securities. Using foreign currency positions
or entering into foreign currency options, futures and forward or swap contracts
for purposes other than hedging currency risk with respect to securities in the
Fund's portfolio or anticipated to be acquired may not qualify as "directly-
related" under these tests.

As a regulated investment company, the Fund will not be subject to U.S.
federal income tax on the portion of its income and capital gains that it
distributes to its shareholders in any taxable year in which it distributes at
least 90% of its investment company taxable income (which includes all of the
Fund's income and gain , other than net capital gain (as defined below), and is
reduced by deductible expenses) and of any net tax-exempt interest. The Fund
may retain for investment its net capital gain (which consists of the excess of
its net long-term capital gain over its net short-term capital loss). However,
if the Fund retains any investment company taxable income or net capital gain,
it will be subject to federal income tax at regular corporate rates on the
amount retained. If the Fund retains any net capital gain, the Fund may
designate the retained amount as undistributed capital gains in a notice to its
shareholders who, if subject to U.S. federal income tax on long-term capital
gains, (i) will be required to include in income for federal income tax
purposes, as long-term capital gain, their shares of such undistributed amount,
and (ii) will be entitled to credit their proportionate shares of the tax paid
by the Fund against their U.S. federal income tax liabilities, if any, and to
claim refunds to the extent the credit exceeds such liabilities. For U.S.
federal income tax purposes, the tax basis of shares owned by a shareholder of
the Fund will be increased by an amount equal under current law to 65% of the
amount of undistributed net capital gain included in the shareholder's gross
income. The Fund intends to distribute at least annually to its shareholders

B-29
<PAGE>

an amount at least equal to its investment company taxable income and net
capital gain, as determined under the Code. If for any taxable year the Fund
fails to qualify for treatment as a regulated investment company, it will be
taxed on all of its investment company taxable income and net capital gain at
corporate rates, and its distributions to shareholders will be taxable as
ordinary dividends to the extent of its current and accumulated earnings and
profits.

In order to avoid a 4% federal excise tax, the Fund must distribute or be
deemed to have distributed by December 31 of each calendar year at least 98% of
its ordinary income for such year, at least 98% of the excess of its realized
capital gains over its realized capital losses (generally computed on the basis
of the one-year period ending on October 31 of such year) and all ordinary
income and the excess of realized capital gains over realized capital losses for
the previous year that were not distributed in such year and on which the Fund
paid no federal income tax. The Fund intends to make timely distributions of
its income and capital gains in compliance with these requirements. As a
result, it is anticipated that the Fund generally will not be required to pay
the excise tax.

For federal income tax purposes, dividends declared by the Fund in October,
November or December as of a record date in such a month which are actually paid
in January of the following year will be treated as if they were paid by the
Fund and received by shareholders on December 31 of the year declared.

The Fund's transactions in options, futures contracts and forward contracts
will be subject to special tax rules that may affect the amount, timing and
character of distributions to shareholders. For example, certain positions held
by the Fund on the last business day of each taxable year will be marked to
market (i.e., treated as if closed out on such day), and any resulting gain or
loss will be treated as 60% long-term and 40% short-term capital gain or loss.
These provisions may require the Fund to recognize income or gains without a
concurrent receipt of cash. Certain positions held by the Fund that
substantially diminish the Fund's risk of loss with respect to other positions
in its portfolio may constitute "straddles," which are subject to tax rules that
may cause deferral of Fund losses, adjustments in the holding periods of Fund
securities and conversion of short-term into long-term capital losses. The Fund
may have to limit its activities in options, futures contracts and forward
contracts in order to maintain its qualification as a regulated investment
company. Certain tax elections may be available to the Fund to mitigate some of
the unfavorable consequences described in this paragraph.

The Fund may be subject to foreign taxes on its income (possibly including,
in some cases, capital gains) derived from foreign securities. These taxes may
be reduced or eliminated under the terms of an applicable U.S. income tax
treaty. The Fund will be eligible to elect to pass qualified foreign taxes
through to shareholders, who may then be entitled to foreign tax credits or
deductions for their shares of qualified foreign taxes paid by the Fund, if more
than 50% of the value of the total assets of the Fund at the close of any
taxable year consists of stocks or securities issued by foreign corporations.

In the event such an election is made, shareholders will be required to
include their pro rata share of foreign taxes paid by the Fund that are treated
as income taxes under U.S. tax regulations (which excludes, for example, stamp
taxes, securities transaction taxes, and similar taxes) in gross income (in
addition to taxable dividends actually received) and treat such share as foreign
taxes paid by them, for which they may then be entitled to claim a foreign tax
credit or deduction subject to certain conditions and limitations under the
Code.

B-30
<PAGE>

If the Fund makes this election, its shareholders may then deduct such pro
rata portions of qualified foreign taxes in computing their taxable incomes, or,
alternatively, use them as foreign tax credits, subject to applicable
limitations, against their U.S. income taxes. Shareholders who do not itemize
deductions for federal income tax purposes will not, however, be able to deduct
their pro rata portion of foreign taxes paid by the Fund, although such
shareholders will be required to include their shares of such taxes in gross
income if the election is made.

If a shareholder chooses to take a credit for the foreign taxes deemed paid
by such shareholder as a result of any such election by the Fund, the amount of
the credit that may be claimed in any year may not exceed the same proportion of
the U.S. tax against which such credit is taken which the shareholder's taxable
income from foreign sources (but not in excess of the shareholder's entire
taxable income) bears to his entire taxable income. For this purpose,
distributions from long-term and short-term capital gains or foreign currency
gains by the Fund will generally not be treated as income from foreign sources.
This foreign tax credit limitation may also be applied separately to certain
specific categories of foreign-source income and the related foreign taxes. As
a result of these rules, which have different effects depending upon each
shareholder's particular tax situation, certain shareholders of the Fund may not
be able to claim a credit for the full amount of their proportionate share of
the foreign taxes paid by the Fund.

Shareholders who are not liable for U.S. income taxes, including tax-exempt
shareholders, will ordinarily not benefit from this election. Each year that
the Fund makes the election described above, its shareholders will be notified
of the amount of (i) each shareholder's pro rata share of qualified foreign
taxes paid by the Fund and (ii) the portion of Fund dividends which represents
income from each foreign country. If the Fund cannot or does not make this
election, it may deduct such taxes in computing its investment company taxable
income.

Section 988 of the Code contains special tax rules applicable to certain
foreign currency transactions and investments that may affect the amount, timing
and character of income, gain or loss recognized by the Fund. Under these
rules, foreign exchange gains and losses realized by the Fund with respect to
foreign currencies, foreign currency-denominated debt securities, certain
foreign currency options, futures or forward contracts, and payables or
receivables denominated in a foreign currency generally will be treated as
ordinary income and losses rather than capital gains and losses, although in
some cases elections may be available that would alter this treatment. Certain
uses of foreign currency and related options, futures or forward contracts that
are not directly-related to the Fund's investment in stocks or securities (or
options or futures with respect thereto), including the use of foreign currency
forwards, options or futures and the holding of foreign currency for speculative
rather than hedging purposes, will be limited in order to enable the Fund to
maintain its qualification as a regulated investment company. The Federal
income tax rules applicable to currency and interest rate swaps, floors, caps
and collars are unclear in certain respects, and the Fund may also be required
to limit its transactions in these instruments. The Fund may also limit its
equity investments in certain "passive foreign investment companies" and make a
tax election, if available, or adopt certain other strategies to avoid the
imposition of a tax on the Fund with respect to such investments.

The Fund's investment in zero coupon, deferred interest securities, payment
in kind securities, certain structured securities or other securities with
original issue discount or, if the Fund elects to include market discount in
income currently, market discount will generally cause it to realize income
prior to the receipt of cash payments with respect to these securities. The
mark to market rules described above may also require that income or gain be
recognized prior to the receipt of cash. In order to distribute this income or
gains, maintain its qualification as a regulated

B-31
<PAGE>

investment company, and avoid federal income or excise tax on the Fund, the Fund
may be required to liquidate portfolio securities that it might otherwise have
continued to hold.

U.S. SHAREHOLDER - DISTRIBUTIONS

Under the Code, distributions of net investment income, the excess of net
short-term capital gain over net long-term capital loss and certain net foreign
exchange gains are taxable to shareholders who are subject to tax as ordinary
income whether paid in cash or reinvested in additional shares. Net investment
income of the Fund (from the time of the immediately preceding determination
thereof) consists of the excess of (A) the sum of (i) accrued interest or
amortized discount on certain portfolio securities and (ii) any income of the
Fund from sources other than capital gains (including certain net foreign
currency gains) over (B) the sum of (i) amortized premium on certain portfolio
securities and (ii) the estimated expenses of the Fund applicable to the period.
Certain foreign currency losses, if any, that are taken into account in
determining net investment income for accounting purposes may not be taken into
account in determining the amount of income to be distributed, as described
above.

It is expected that no portion of such distributions of net investment
income made by the Fund will ordinarily qualify for the dividends-received
deduction for corporations because qualifying distributions may be made only
from the Fund's dividend income from stock in U.S. domestic corporations. The
dividends-received deduction is reduced to the extent the shares with respect to
which the dividends are received are treated as debt-financed under the federal
income tax law and is eliminated if the shares are deemed to have been held for
less than a minimum period, generally 46 days. Receipt of certain distributions
qualifying for the deduction may result in reduction of the tax basis of a
corporate shareholder's shares and may increase alternative minimum tax
liability.

Distributions of the excess of net long-term capital gain over net short-
term capital loss are taxable to shareholders as long-term capital gains,
whether received in cash or in additional shares and regardless of the length of
time their shares of the Fund have been held.

Shareholders receiving a distribution in the form of newly issued shares
will be treated for U.S. Federal income tax purposes as receiving a distribution
in an amount equal to the amount of cash they would have received had they
elected to receive cash and will have a cost basis in each share received equal
to such amount divided by the number of shares received.

In determining the amount to be distributed, the Fund may determine not to
take into account net currency losses, if any, with the result that its
distributions for a year may exceed the sum of its earnings and profits for such
year and its accumulated earnings and profits, if any. Consequently, a portion
of such distributions may be a return of capital, nontaxable to the extent of a
shareholder's tax basis in its shares and, to the extent such basis is exceeded,
generally being treated as a taxable capital gain.

Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.

B-32
<PAGE>

U.S. SHAREHOLDERS - SALE OF SHARES

Any gain or loss realized upon a sale, redemption or exchange of shares by
a shareholder who holds the shares as capital assets will be treated as a long-
term capital gain or loss if the shares have been held for more than one year,
and otherwise generally as short-term capital gain or loss. However, any loss
realized upon the exchange or redemption of shares with a tax holding period of
6 months or less will be treated as a long-term capital loss to the extent of
any distribution of net long-term capital gains with respect to such shares.
All or a portion of any sales load paid upon the purchase of shares of the Fund
will not be taken into account in determining gain or loss on the redemption or
exchange of such shares within 90 days after their purchase to the extent the
redemption proceeds are reinvested or the exchange is effected without payment
of an additional sales load pursuant to the reinvestment or exchange privilege.
The load not taken into account will be added to the tax basis of the newly-
acquired shares. All or a portion of any loss realized upon a taxable
disposition of Fund shares may be disallowed under "wash sale" rules if other
shares of the Fund are purchased (whether through the reinvestment of
distributions or otherwise) within a period of 61 days beginning 30 days before
and ending 30 days after such disposition.

BACKUP WITHHOLDING

The Fund will be required to report to the Internal Revenue Service all
distributions, as well as gross proceeds from the redemption or exchange of Fund
shares, except in the case of certain exempt recipients, i.e., corporations and
other investors distributions to which are exempt from the information reporting
provisions of the Code. Under the backup withholding provisions of Code Section
3406 and applicable Treasury regulations, all such reportable distributions and
proceeds may be subject to withholding of Federal income tax at the rate of 31%
in the case of nonexempt shareholders who fail to furnish the Fund with their
taxpayer identification number and with certain required certifications or if
the Internal Revenue Service or a broker notifies the Fund that the number
furnished by the shareholder is incorrect or that the shareholder is subject to
backup withholding as a result of failure to report interest or dividend income.
The Fund may refuse to accept an application that does not contain any required
taxpayer identification number or certification that the number provided is
correct. If the backup withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in shares, will
be reduced by the amounts required to be withheld. Any amounts withheld may be
credited against a shareholder's U.S. federal income tax liability. Investors
should consult their tax advisors about the applicability of the backup
withholding provisions.

All distributions, whether received in shares or cash, as well as
redemptions and exchanges, must be reported by each shareholder on the
shareholder's Federal income tax return.

NON-U.S. SHAREHOLDERS

The foregoing discussion relates solely to U.S. federal income tax law as
it applies to "U.S. persons" (i.e., U.S. citizens and residents and U.S.
domestic corporations, partnerships, trusts and estates) subject to tax under
such law. Dividends of investment company taxable income distributed to a
shareholder who is not a U.S. person will be subject to U.S. withholding tax at
the rate of 30% (or a lower rate provided by an applicable tax treaty) unless
the dividends are effectively connected with a U.S. trade or business of the
shareholder, in which case, the dividends will be subject to tax on a net income
basis at the graduated rates applicable to U.S. individuals or domestic
corporations. Distributions of net capital gain, including amounts retained by
the Fund which are designated as undistributed capital gains, to a shareholder
who is a non-U.S. person will not be

B-33
<PAGE>

subject to U.S. income or withholding tax unless the distributions are
effectively connected with the shareholder's trade or business in the United
States or, in the case of a shareholder who is a nonresident alien individual,
the shareholder is present in the United States for 183 days or more during the
taxable year and certain other conditions are met. Non-U.S. shareholders may
also be subject to U.S. withholding tax on deemed income resulting from any
election by the Fund to treat qualified foreign taxes it pays as passed through
to shareholders (as described above), but they may not be able to claim a U.S.
tax credit or deduction with respect to such taxes.

Any gain realized by a shareholder who is a non-U.S. person upon a sale or
redemption of shares of the Fund will not be subject to U.S. federal income or
nonresident alien withholding tax unless the gain is effectively connected with
the shareholder's trade or business in the United States, or in the case of a
shareholder who is a nonresident alien individual, the shareholder is present in
the United States for 183 days or more during the taxable year and certain other
conditions are met.

Non-U.S. persons who fail to furnish the Fund with an IRS Form W-8 or
acceptable substitute (and to renew such form when it expires) may be subject to
backup withholding at the rate of 31% on capital gain dividends and the proceeds
of redemptions and exchanges. See "Backup Withholding" herein. Each
shareholder who is not a U.S. person should consult his or her tax adviser
regarding the U.S. and non-U.S. tax consequences of ownership of shares of and
receipt of distributions from the Fund.

STATE AND LOCAL TAXES

The Fund may be subject to state or local taxes in jurisdictions in which
the Fund may be deemed to be doing business. In addition, in those states or
localities which have income tax laws, the treatment of the Fund and its
shareholders under such laws may differ from their treatment under federal
income tax laws, and investment in the Fund may have tax consequences for
shareholders different from those of a direct investment in the Fund's portfolio
securities. Shareholders should consult their own tax advisers concerning these
matters.

PERFORMANCE INFORMATION

The Fund may from time to time quote or otherwise use yield and total
return information in advertisements, shareholder reports or sales literature.
Thirty-day yield and average annual total return values are computed pursuant to
formulas specified by the Securities and Exchange Commission. The Fund may also
from time to time quote distribution rates in reports to shareholders and sales
literature.

Thirty-day yield is derived by dividing net investment income per share
earned during the period by the maximum public offering price per share on the
last day of such period. Yield is then annualized by assuming that yield is
realized each month for twelve months and is reinvested every six months. Net
investment income per share is equal to the dividends and interest earned during
the period reduced by accrued expenses for the period. The calculation of net
investment income for these purposes may differ from the net investment income
determined for accounting purposes.

B-34
<PAGE>

Distribution rate for a specified period is calculated by annualizing
distributions of net investment income for such period and dividing this amount
by the net asset value per share or maximum public offering price on the last
day of the period.

Average annual total return for a specified period is derived by
calculating the annual compounded rate of return required to make a $1,000
investment (made at the maximum public offering price with all distributions
reinvested) at the beginning of such period equal to the actual total value of
such investment at the end of such period. Year-by-year total return and
cumulative total return for a specified period are each derived by calculating
the percentage rate required to make a $1,000 investment (made at the maximum
public offering price with all distributions reinvested) at the beginning of
such period equal to the actual total value of such investment at the end of
such period.

The following tables present thirty-day yield, distribution rate,
cumulative total return and average annual total return (capital plus
reinvestment of all distributions) for Class A Shares for the periods indicated.
Thirty-day yield, distribution rate, cumulative total return and average annual
total return are calculated separately for each class of shares of the Fund.
Each class of shares of the Fund are subject to different fees and expenses and
may have different returns for the same period. There were no Institutional
Shares or Administration Shares outstanding during the periods presented below.
Institutional Shares and Administration Shares are sold at net asset value
without the imposition of a sales charge. The following tables represent
historical performance data for the Class A Shares of the Fund only and do not
give effect to GSAM's and GSAM International's agreements (which were not in
effect during the period shown in the following tables) to limit their advisory
and subadvisory fees and to reduce certain other expenses.

FUND'S YIELD

Investment Pro-Forma*
Period Yield Yield
------ ----- -----

30-Days
ended
10/31/94 Assumes 4.5% sales charge 6.20% 5.96%
--------

--------------------------------------------------------------------------------

DISTRIBUTION RATE
<TABLE>
<CAPTION>

Investment Distribution Pro-Forma*
Period Rate Distribution Rate
---------- ------------ -----------------
<S> <C> <C>

30-Days
ended
10/31/94 Assumes 4.5% sales charge 6.06% 5.82%
-------- Assumes no sales charge 6.34% 6.09%
</TABLE>

The above table should not be considered a representation of future
performance.

* Pro-forma yield and distribution rate are calculated as if the Distributor
had not voluntarily agreed to limit its fees pursuant to the Fund's Plan.

B-35
<PAGE>

VALUE OF $1,000 INVESTMENT IN CLASS A SHARES
(TOTAL RETURN)
<TABLE>
<CAPTION>

Ending Redeem-
able Value
Investment Investment Amount of Investment
Date Period Invested at Period End Cumulative Average Annual
------------ -------------- -------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C>

8/2/91* ended 10/31/94 $1,000

Assumes 4.5% Sales Charge $1,120.69 12.07% 3.57%
Assumes No Sales Charge $1,173.50 17.35% 5.04%
4.5% Sales Charge and No Fee Waivers $1,111.60 11.16% 3.31%
No Sales Charge or Fee Waivers $1,164.01 16.40% 4.78%

11/1/93 ended 10/31/94 $1,000

Assumes 4.5% Sales Charge $ 912.15 -8.79% -8.79%
Assumes No Sales Charge $ 955.05 -4.49% -4.49%
4.5% Sales Charge and No Fee Waivers $ 909.79 -9.02% -9.02%
No Sales Charge or Fee Waivers $ 952.66 -4.73% -4.73%
</TABLE>
________________________

* Commencement of investment operations.

The above table should not be considered a representation of future
performance. On November 27, 1992, the maximum sales charge was changed from 3%
to 4.5% of the offering price. All performance figures in this table
incorporate the sales charge currently in effect.

B-36
<PAGE>

Occasionally statistics may be used to specify Fund volatility or
risk. Measures of volatility or risk are generally used to compare a fund's net
asset value or performance relative to a market index. One measure of
volatility is beta. Beta is the volatility of a fund relative to the total
market. A beta of more than 1.00 indicates volatility greater than the market,
and a beta of less than 1.00 indicates volatility less than the market. Another
measure of volatility or risk is standard deviation. Standard deviation is used
to measure variability of net asset value or total return around an average,
over a specified period of time. The premise is that greater volatility
connotes greater risk undertaken in achieving performance.

From time to time the Fund may publish an indication of its past
performance as measured by independent sources, such as (but not limited to),
Barron's, The Wall Street Journal, Weisenberger Investment Companies Service,
-------- ----------------------- -----------------------------------------
Business Week, Changing Times, Financial World, Forbes, Fortune, Lipper
------------- -------------- --------------- ------ ------- ------
Analytical Services, Incorporated, Donoghue's Money Fund Report, The New York
--------------------------------- ---------------------------- ------------
Times, Personal Investor, Sylvia Porter's Personal Finance, and Money. The Fund
----- ----------------- --------------- ---------------- -----
may also advertise information which has been provided to the National
Association of Securities Dealers, Inc. for publication in regional and local
newspapers. In addition, the Fund may from time to time advertise its
performance relative to certain indices and benchmark investments, including:
(a) the Lipper Analytical Services, Inc. Mutual Fund Performance Analysis, Fixed
Income Analysis and Mutual Fund Indices (which measure total return and average
current yield for the mutual fund industry and rank mutual fund performance);
(b) the CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
(which analyzes price, risk and various measures of return for the mutual fund
industry); (c) the Consumer Price Index published by the U.S. Bureau of Labor
Statistics (which measures changes in the price of goods and services); (d)
Stocks, Bonds, Bills and Inflation published by Ibbotson Associates (which
provides historical performance figures for stocks, government securities and
inflation); (e) the Salomon Brothers' World Bond Index (which measures the total
return in U.S. dollar terms of government bonds, Eurobonds and foreign bonds of
ten countries, with all such bonds having a minimum maturity of five years); (f)
the Shearson Lehman Brothers Aggregate Bond Index or its component indices (the
Aggregate Bond Index measures the performance of Treasury, U.S. Government
agency, corporate, mortgage and Yankee bonds); (g) the Standard & Poor's Bond
Indices (which measure yield and price of corporate, municipal and U.S.
Government bonds); (h) the J.P. Morgan Global Government Bond Index; (i) other
taxable investments including certificates of deposit (CDs), money market
deposit accounts (MMDAs), checking accounts, savings accounts, money market
mutual funds and repurchase agreements; (j) historical investment data supplied
by the research departments of Goldman Sachs, Shearson Lehman Hutton, First
Boston Corporation, Morgan Stanley, Salomon Brothers, Merrill Lynch and
Donaldson Lufkin and Jenrette; and (k) Donoghues' Money Fund Report (which
provides industry averages for 7-day annualized and compounded yields of
taxable, tax-free and U.S. Government money funds). The composition of the
investments in such indices and the characteristics of such benchmark
investments are not identical to, and in some cases may be very different from,
those of the Fund's portfolio. These indices and averages, as well as the
averages set forth in Appendix B, are generally unmanaged and the items included
in the calculations of such indices and averages may not be identical to the
formulas used by the Fund to calculate its performance figures.

From time to time, advertisements or information may include a
discussion of certain attributes or benefits to be derived by an investment in
the Fund. Such advertisements or information may include symbols, headlines or
other material which highlight or summarize the information discussed in more
detail in the communication.

B-37
<PAGE>

The Fund may also from time to time summarize the substance of
discussions contained in shareholder reports in advertisements and publish the
Investment Adviser's views as to markets, the rationale for the Fund's
investments and discussions of the Fund's current asset allocation.

The Fund's performance data will be based on historical results and
will not be intended to indicate future performance. The Fund's total return,
thirty-day yield and distribution rate will vary based on market conditions,
portfolio expenses, portfolio investments and other factors. The value of the
Fund's shares will fluctuate and an investor's shares may be worth more or less
than their original cost upon redemption. The Trust may also, at its discretion
from time to time make a list of the Fund's holdings available to investors upon
request.

OTHER INFORMATION

The Trust assumed its current name on March 22, 1991. Prior thereto,
the Trust's name was "Goldman Sachs--Short-Intermediate Government Fund."
Goldman Sachs has licensed the name "Goldman Sachs" and derivatives thereof to
the Trust (and the Fund) on a royalty-free basis and Goldman Sachs has reserved
to itself the right to grant the non-exclusive right to use the name "Goldman
Sachs" to any other person. At such time as the Advisory Agreement with GSAM
and the Subadvisory Agreement with GSAM and GSAM International are no longer in
effect, the Trust has agreed that it will (to the extent it lawfully can) cease
using the name "Goldman Sachs."

The right of a shareholder to redeem shares and the date of payment by
the Fund may be suspended for more than seven days for any period during which
the New York Stock Exchange is closed, other than the customary weekends or
holidays, or when trading on such Exchange is restricted as determined by the
Securities and Exchange Commission; or during any emergency, as determined by
the Securities and Exchange Commission, as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it or
fairly to determine the value of its net assets; or for such other period as the
Securities and Exchange Commission may by order permit for the protection of
shareholders of the Fund.

The Fund will redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Fund during any 90-day period for
any one shareholder. The Fund, however, reserves the right to pay redemptions
exceeding $250,000 or 1% of the net asset value of the Fund at the time of
redemption by a distribution in kind of securities (instead of cash) from the
Fund. The securities distributed in kind would be readily marketable and would
be valued for this purpose using the same method employed in calculating the
Fund's net asset value per share. See "Net Asset Value." If a shareholder
receives redemption proceeds in kind, the shareholder should expect to incur
transaction costs upon the disposition of the securities received in the
redemption.

The Prospectus and this Additional Statement do not contain all the
information included in the Registration Statement filed with the Securities and
Exchange Commission under the Securities Act of 1933 with respect to the
securities offered thereby. Certain portions of the Registration Statement have
been omitted from the Prospectus and this Additional Statement pursuant to the
rules and regulations of the Securities and Exchange Commission. The
Registration Statement including the exhibits filed therewith may be examined at
the office of the Securities and Exchange Commission in Washington, D.C.

Statements contained in the Prospectus or in this Additional Statement
as to the contents of any contract or other document referred to are not
necessarily complete, and, in each instance,

B-38
<PAGE>

reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement of which the Prospectus and this
Additional Statement form a part, each such statement being qualified in all
respects by such reference.

FINANCIAL STATEMENTS

The audited financial statements and related report of Arthur Andersen
LLP contained in the Fund's Annual Report are hereby incorporated by reference
and attached hereto. A copy of this Annual Report may be obtained without
charge by writing Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois
60606 or by calling Goldman, Sachs & Co., at the telephone number on the inside
cover of the Fund's Prospectus.

B-39
<PAGE>

ADMINISTRATION PLAN

The Fund has adopted an administration plan (the "Plan") with respect to
its Administration Shares which will authorize it to compensate Service
Organizations for providing certain account administration services to their
customers who are beneficial owners of such Shares. Pursuant to the Plan, the
Fund will enter into agreements with Service Organizations which purchase
Administration Shares on behalf of their customers ("Service Agreements").
Under such Service Agreements the Service Organizations may perform some or all
of the following services: (a) act as the sole shareholder of record and
nominee for all customers, (b) maintain account records for each customer who
beneficially owns Administration Shares of the Fund, (c) answer questions and
handle correspondence from customers regarding their accounts, (d) process
customer orders to purchase, redeem and exchange Administration Shares of the
Fund and handle the transmission of funds representing the customers' purchase
price or redemption proceeds, and (e) issue confirmations for transactions in
shares by customers. As compensation for such services, the Fund will pay the
Service Organization an account administration fee in an amount up to 0.25% (on
an annualized basis) of the average daily net assets of the Administration
Shares of the Fund attributable to or held in the name of such Service
Organization.

Conflict of interest restrictions (including the Employee Retirement
Income Security Act of 1974) may apply to a Service Organization's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
assets in Administration Shares of the Fund. Service Organizations, including
banks regulated by the Comptroller of the Currency, the Federal Reserve Board or
the Federal Deposit Insurance Corporation, and investment advisers and other
money managers subject to the jurisdiction of the Commission, the Department of
Labor or state securities commissions, are urged to consult legal advisers
before investing fiduciary assets in Administration Shares of the Fund. In
addition, under some state securities laws, banks and other financial
institutions purchasing Administration Shares on behalf of their customers may
be required to register as dealers.

The Board of Trustees, including a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plans or the related Service Agreements, most
recently voted to approve each Plans and Service Agreements at a meeting called
for the purpose of voting on such Plans and Service Agreements on April 26,
1995. The Plan was approved by the sole shareholder of Administration Shares of
each Fund, on ______, 1995. The Plan and Service Agreements will remain in
effect until June 1, 1996 and will continue in effect thereafter only if such
continuance is specifically approved annually by a vote of the Board of Trustees
in the manner described above. The Plan may not be amended to increase
materially the amount to be spent for the services described therein without
approval of the Administration Shareholders of the Fund and all material
amendments of the Plan must also be approved by the Board of Trustees in the
manner described above. The Plan may be terminated at any time by a majority of
the Board of Trustees as described above or by vote of a majority of the
outstanding Administration Shares of the Fund. The Service Agreements may be
terminated at any time, without payment of any penalty, by a vote of a majority
of the Board of Trustees as described above or by a vote of a majority of the
outstanding Administration Shares of the Fund on not more than sixty (60) days'
written notice to any other party to the Service Agreements. The Service
Agreements will terminate automatically if assigned. So long as the Plan is in
effect, the selection and nomination of those Trustees who are not interested
persons will be committed to the discretion of the Trust's Nominating Committee,
which consists of all of the non-interested members of the Board of Trustees.
The Board of Trustees has determined that, in its judgment, there is a
reasonable

B-40
<PAGE>

likelihood that the Plan will benefit the Fund and the holders of Administration
Shares of the Fund. In the Board of Trustees' quarterly review of the Plans and
Service Agreements, the Board will consider continued appropriateness and the
level of compensation provided therein.

B-41
<PAGE>

Goldman Sachs
1 New York Plaza
New York, NY 10004

Board of Directors
Paul C. Nagel, Jr., Chairman
Ashok N. Bakhru
Marcia L. Beck
David B. Ford
Robert P. Mayo
Alan A. Shuch
Jackson W. Smart, Jr.
William H. Springer
Richard P. Strubel

Officers
Marcia L. Beck, President
Stephen H. Hopkins, Vice President
John W. Mosior, Vice President
Nancy L. Mucker, Vice President
Pauline Taylor, Vice President
Scott M. Gilman, Treasurer
Michael J. Richman, Secretary
Howard B. Surloff, Assistant Secretary

Goldman Sachs
Investment Adviser, Administrator,
Distributor and Transfer Agent

GIANN94/20K

Goldman Sachs
Global Income
Fund
Annual Report
October 31, 1994

<PAGE>

--------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS

----------------------------------- -------------------------------------------
DEAR SHAREHOLDERS:

On behalf of Goldman Sachs, we welcome this opportunity to review the
performance and activity of the Goldman Sachs Global Income Fund for the
12-month period ended October 31, 1994. In this letter, we will also discuss
the turbulence in the global bond markets this year and describe how it has
affected the fund.
To review briefly, the investment objective of the Goldman Sachs Global Income
Fund is to generate a high total return, composed of both current income and
capital appreciation. The fund may invest in government and other high-quality
(double-A or better), fixed income securities issued in the U.S. and in foreign
markets. The fund also engages in currency transactions to hedge exchange rate
risk and enhance return where possible.

HIGHER INTEREST RATES AFFECTED BOND MARKETS WORLDWIDE
The 12-month period starting November 1, 1993 began relatively well. With the
exception of U.S. bond prices, which had already shown signs of weakness, world
bond prices actually rose during November and December of 1993. However, 1994
marked a reversal of that trend, as short-term bond yields began to rise much
more rapidly than expected in Europe. The pace and severity of the short-term
increases affected long-term bond yields as well, causing bond prices to
decline rapidly. The dramatic rise in short-term bond yields did not logically
follow from the economic fundamentals. More specifically, the recovery in
Europe was driven by external demand while domestic demand remained weak and
unemployment levels remained high. This and other factors have kept inflation
levels in Europe low.
The economic picture was quite different in the U.S. A robust recovery, char-
acterized by healthy economic growth, strong corporate earnings, decreasing
unemployment, high plant capacity utilization and rising commodity prices,
coupled with a weakening dollar, caused the Federal Reserve to raise the federal
funds rate (the rate banks charge one another for overnight loans) five times by
a total of 1.75% to 4.75% during the period under review. Long-term interest
rates also rose, with the yields on 30-year U.S. Treasury bonds increasing from
5.79% to just over 8.00% by the end of October.
In Japan, the government stepped in with an aggressive fiscal stimulus program
that resulted in some patchy economic recovery; consumer demand remains weak in
Japan while export demand is relatively strong. During the 12 months ended
October 31, the yield on Japanese 10-year government bonds rose approximately
1% to 4.6%.

THE FUND'S PERFORMANCE
For the 12-month period ended October 31, the fund's total return was -4.49%
based on net asset value (NAV) (6.86% from monthly distributions and -11.35%
from share price depreciation) compared with a return of -3.66% for the fund's
benchmark, the J. P. Morgan Global Government Bond Index (hedged into U.S. dol-
lars).
The Index, which has a duration of approximately five years, covers 14 major
bond markets and reflects their currency exposures. Under normal market condi-
tions, we expect to hedge the majority of the fund back to U.S. dollars to best
serve the needs of U.S. shareholders.
The sharp decline in world bond prices described above affected the fund and
the benchmark's performance. The fund underperformed the Index
<PAGE>

Goldman Sachs Global Income Fund
-------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS (continued)

---------------------------------- -------------------------------------------
primarily because a greater percentage of its portfolio was invested in Euro-
pean bonds (43% versus 26.7% for the Index), which underperformed during the
first half of the period under review.

(ART - Pie chart depicting portfolio's bond allocation
as of October 31, 1994. See information below.)

. As of October 31, the fund's largest single-country position (28.9%) was in
U.S. bonds, about half the weight of the Index. This underweighting was
part of our defensive strategy in anticipation of further U.S. rate
increases.
. Just over 43% of the portfolio was invested in European bonds. We were sig-
nificantly overweighted in Italy (10.0% versus 4.6% for the Index), the
U.K. (16.2% versus 5.9% for the Index) and France (13.8% versus 7.2% for
the Index). But we were underweighted in Germany (3.1% versus 9.1% for the
Index).
. We added a new position of 5.9% in Australian bonds and maintained a
position of 10.0% in Canadian bonds based on our view that they offer
attractive potential based on their economy's subdued inflation and excess
capacity. We expect Canada and Australia to outperform the U.S. in the
coming months.
. In Japan, our portfolio weighting of 8.6% was approximately one-third lower
than that of the Index, reflecting our opinion that the 4.6% yield on 10-
year Japanese government bonds offers little protection against inflation
as the Japanese economy recovers.
. We maintained a cash position of 3.5% (in U.S. dollars) as a defensive po-
sition to protect the fund against further price declines in the world bond
markets.
. To help protect shareholder capital, we reduced the fund's duration from
3.20 years to 2.36 years compared with 4.62 years for the Index. (Duration
is a measurement of the fund's sensitivity to interest rate movements; the
lower the duration, the less the fund's NAV will move in relation to
interest rate fluctuations.)
. We have emphasized high credit quality: over 90% of the portfolio is in-
vested in securities with triple-A credit quality. With credit spreads
tight, we do not believe investors are being adequately compensated for
taking additional risk. In addition, higher quality securities generally
provide better liquidity in a rising rate environment.
. Currency Strategies: On the positive side, we correctly anticipated that
British pounds would appreciate relative to deutsche marks, which resulted
in profits for the fund. However, several other strategies were somewhat
less successful. Last October, based on our bullish view that the U.S.
dollar would appreciate

2
<PAGE>

--------------------------------------------------------------------------------

----------------------------------- -------------------------------------------
against European currencies, the portfolio was 10% overweighted in U.S.
dollars versus the Index. The U.S. dollar weakened significantly starting in
February. In addition, we were "long" in Italian lira and Swedish krona
versus the deutsche mark, believing both those currencies would appreciate
more. Instead, the central banks in Italy and Sweden unexpectedly raised
interest rates in June and July, stunning the market. Italy's government was
concerned about its inability to control its money supply and deficit, while
Sweden's actions were prompted by a much more robust economy than expected,
due to a sharp increase in exports to Europe and the Far East.
. Distribution Policy: During the period under review, the fund paid out
distributions of $0.99 per share, $0.61 of which was a return of capital as
a result of currency losses. The fund distributes substantially all of its
taxable income as is required for all investment companies.

OUR ECONOMIC OUTLOOK FOR THE GLOBAL MARKET
A strengthening worldwide economy and the need for capital to fuel growth are
likely to cause upward pressure on interest rates. As a result, the fund is
relatively defensively positioned. We are currently fully hedged back into U.S.
dollars. In the coming months, we will be looking for attractive opportunities
in France, the U.K. and Italy, while avoiding Sweden and Spain. In general, we
expect further volatility in 1995. In our opinion, the key to global bond mar-
kets lies in the U.S. If the Federal Reserve is successful in controlling in-
flationary pressures, the U.S. bond market will stabilize and other bond mar-
kets around the world, which are fundamentally more attractive, are likely to
rally.
In conclusion, we want to thank you for your support during this difficult pe-
riod. We will continue to do our best to find the most attractive relative
value in markets around the world.

Sincerely,
/s/ Stephen C. Fitzgerald
Stephen C. Fitzgerald
Portfolio Manager
Goldman Sachs Global Income Fund
London, December 15, 1994

3
<PAGE>

Goldman Sachs Global Income Fund
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
In accordance with the requirements of the Securities and Exchange Commission,
the following data is supplied for the periods ended October 31, 1994. The
performance for the Goldman Sachs Global Income Fund ("GS Global Income")
(assuming both the maximum sales charge of 4.5% and no sales charge), is
compared to the J.P. Morgan Global Government Bond Index (unhedged--"J.P.
Morgan GGB Index" and hedged to U.S. Dollars "J.P. Morgan GGB Index--$
Hedged"). All performance data shown represents past performance and should not
be considered indicative of future performance which will fluctuate as market
conditions change. The investment return and principal value of an investment
will fluctuate with changes in market conditions so that an investor's shares,
when redeemed, may be worth more or less than their original cost.

HYPOTHETICAL $10,000 INVESTMENT

[PERFORMANCE GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
GS GS J.P. J.P.
Global Income Global Income Morgan Morgan
(w/sales (no sales GGB GGB Index--
charge) charge) Index $ Hedged
------------- ------------- ------- -----------
<S> <C> <C> <C> <C>
9/1/91 (a) $ 9,700 $10,000 $10,000 $10,000
10/31/91 9,840 10,144 10,467 10,263
10/31/92 10,703 11,034 11,783 11,156
10/31/93 11,853 12,220 13,080 12,509
10/31/94 11,321 11,671 13,423 12,051
</TABLE>

Averge Annual Total Return
------------------------------
One Year Since Inception(b)
-------- ------------------
GS Global Income
excluding sales charge (4.49%) 5.04%

GS Global Income
including sales charge (8.79%) 3.57%

(a) For comparative purposes, initial investments are assumed to be made on the
first day of the month following the Fund's commencement of operations.

(b) Commenced operations August 2, 1991.

4
<PAGE>

--------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

--------------------------------------------------------------------------------
To the Shareholders and Trustees of Goldman Sachs Global Income Fund:

We have audited the accompanying statement of assets and liabilities of
Goldman Sachs Global Income Fund (a portfolio of Goldman Sachs Trust, a Massa-
chusetts business trust), including the statement of investments, as of October
31, 1994, and the related statement of operations, the statements of changes in
net assets and the financial highlights for the periods presented. These finan-
cial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these finan-
cial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of Oc-
tober 31, 1994 by correspondence with the custodian and brokers. As to securi-
ties purchased but not yet received, we requested confirmation from brokers
and, when replies were not received, we carried out alternative auditing proce-
dures. An audit also includes assessing the accounting principles used and sig-
nificant estimates made by management, as well as evaluating the overall finan-
cial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
the Goldman Sachs Global Income Fund of the Goldman Sachs Trust as of October
31, 1994, the results of its operations, the changes in its net assets and the
financial highlights for the periods presented, in conformity with generally
accepted accounting principles.

/s/ Arthur Andersen LLP

Arthur Andersen LLP

Boston, Massachusetts,
December 12, 1994

5
<PAGE>

Goldman Sachs Global Income Fund
--------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
October 31, 1994

----------------------------------- -------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount(a) Description Value
---------------------------------------------------------------------
<C> <C> <S> <C>
DEBT OBLIGATIONS--93.9%
AUSTRALIAN DOLLARS--5.7%
Australia Commonwealth
AUD 33,650,000 9.00%, 09/15/04 $ 22,711,188
---------------------------------------------------------------------
BRITISH POUND STERLING--15.8%
United Kingdom Gilt
BPS 11,120,000 9.00%, 03/03/00 18,412,101
12,000,000 8.00%, 12/07/00 19,052,821
17,700,000 6.75%, 11/26/04 25,164,248
---------------------------------------------------------------------
62,629,170
---------------------------------------------------------------------
CANADIAN DOLLARS--9.8%
General Electric Capital Corp.
CAD 2,000,000 12.25%, 07/04/95 1,532,234
Government of Canada
55,500,000 7.50%, 12/01/03 37,215,774
---------------------------------------------------------------------
38,748,008
---------------------------------------------------------------------
DEUTSCHEMARKS--3.0%
Bundesschatzanw
DEM 17,200,000 8.75%, 12/20/95 11,805,558
---------------------------------------------------------------------
FRENCH FRANCS--13.4%
Government of France
FRF 148,500,000 8.50%, 03/28/00 29,616,369
120,000,000 8.50%, 04/25/03 23,669,094
---------------------------------------------------------------------
53,285,463
---------------------------------------------------------------------
ITALIAN LIRE--9.8%
Republic of Italy
ITL 19,000,000,000 12.00%, 10/01/95 12,472,740
28,500,000,000 12.00%, 09/01/97 18,728,775
11,000,000,000 9.00%, 10/01/98 6,662,040
1,500,000,000 8.50%, 04/01/99 876,030
---------------------------------------------------------------------
38,739,585
---------------------------------------------------------------------
JAPANESE YEN--8.3%
Japanese Development Bank
JPY 1,820,000,000 6.50%, 09/20/01 20,625,241
Oestereichische Kontrollbank
1,200,000,000 4.50%, 06/20/00 12,391,632
---------------------------------------------------------------------
33,016,873
---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount(a) Description Value
-----------------------------------------------------------------------------------
<C> <S> <C> <C>
UNITED STATES DOLLARS--28.1%
United Kingdom
USD 19,000,000 5.00%(b), 09/30/96 $ 18,977,200
United States Treasury Notes
18,750,000 6.88%, 07/31/99 18,307,688
46,550,000 8.50%, 11/15/00 48,644,750
28,200,000 6.25%, 02/15/03 25,648,746
-----------------------------------------------------------------------------------
111,578,384
-----------------------------------------------------------------------------------
TOTAL DEBT OBLIGATIONS
(cost $370,074,345) $372,514,229
-----------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS--3.4%
EURO-TIME DEPOSITS--3.4%
USD 13,415,827 State Street Bank & Trust Co.
4.69%, 11/01/94 $ 13,415,827
-----------------------------------------------------------------------------------
TOTAL SHORT TERM OBLIGATIONS
(cost $13,415,827) $ 13,415,827
-----------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $383,490,172(c)) $385,930,056
-----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
FEDERAL INCOME TAX INFORMATION:
Gross unrealized gain for investments in which value exceeds cost $ 6,909,911
Gross unrealized loss for investments in which cost exceeds value (4,470,027)
-------------------------------------------------------------------------------
Net unrealized gain $ 2,439,884
-------------------------------------------------------------------------------
</TABLE>
(a) The principal amount of each security is stated in the currency in which
the bond is denominated. See below.

AUD=Australian Dollars FRF=French Francs
BPS=British Pound Sterling ITL=Italian Lire
CAD=Canadian Dollars JPY=Japanese Yen
DEM=Deutschemarks USD=United States Dollar

(b) Floating rate security. Coupon rate disclosed is that which is in effect on
October 31, 1994.
(c) The amount stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of invest-
ments in that category as a percentage of total net assets.

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

6
<PAGE>

--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1994
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(cost $383,490,172) $385,930,056
Receivables:
Investment securities sold 27,149,630
Interest 8,504,465
Forward foreign currency exchange contracts 2,322,619
Foreign tax withheld 290,273
Fund shares sold 87,695
Deferred organization expenses, net 107,650
Other assets 10,372
-------------------------------------------------------------------------------
TOTAL ASSETS 424,402,760
-------------------------------------------------------------------------------
LIABILITIES:
Payables:
Investment securities purchased 18,962,250
Forward foreign currency exchange contracts 5,557,825
Fund shares repurchased 2,671,824
Investment adviser fees 268,129
Administration fees 53,626
Distribution fees 88,473
Transfer agent fees 28,475
Accrued expenses and other liabilities 188,025
-------------------------------------------------------------------------------
TOTAL LIABILITIES 27,818,627
-------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital applicable to 29,518,871 outstanding shares, par
value $.001 per share (unlimited number of shares authorized) 414,558,869
Accumulated undistributed net investment income 1,318,755
Accumulated net realized loss on investment and option transac-
tions (18,599,348)
Accumulated net realized foreign currency gain 125,435
Net unrealized loss on investments (9,948,291)
Net unrealized gain on translation of assets and liabilities de-
nominated in foreign currencies 9,128,713
-------------------------------------------------------------------------------
NET ASSETS $396,584,133
-------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE (NET
ASSETS/SHARES OUTSTANDING) $13.43
-------------------------------------------------------------------------------
MAXIMUM PUBLIC OFFERING PRICE PER SHARE
(NAV PER SHARE X 1.0471) $14.06
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1994
INVESTMENT INCOME:
Interest income (net of $848,907 in foreign
withholding taxes) $ 42,597,424
---------------------------------------------------------------------------
TOTAL INCOME 42,597,424
---------------------------------------------------------------------------
EXPENSES(A):
Investment adviser fees 4,556,440
Administration fees 911,288
Distribution fees 1,518,814
Custodian fees 430,716
Transfer agent fees 132,123
Amortization of deferred organization expenses 61,394
Registration fees 41,967
Professional fees 41,590
Trustee fees 12,754
Other 57,886
---------------------------------------------------------------------------
TOTAL EXPENSES 7,764,972
---------------------------------------------------------------------------
NET INVESTMENT INCOME 34,832,452
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT,
OPTION AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investment transactions (30,985,479)
Option transactions 1,586,320
Foreign currency related transactions (12,649,508)
Net change in unrealized gain (loss) on:
Investments (29,611,804)
Options (1,542,789)
Translation of assets and liabilities denominated in foreign
currencies 7,363,987
---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENT, OPTION AND
FOREIGN CURRENCY TRANSACTIONS (65,839,273)
---------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(31,006,821)
---------------------------------------------------------------------------
</TABLE>
(a) For the year ended October 31, 1994, the Distributor waived fees of
$1,518,814.

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

7
<PAGE>

Goldman Sachs Global Income Fund
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS

----------------------------------- ------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended October 31,
----------------------------------------------------
1994 1993
------------------------- -------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $ 34,832,452 $ 35,884,199
Net realized gain (loss)
from investment, option
and futures
transactions (29,399,159) 33,770,478
Net realized loss from
foreign currency
related transactions (12,649,508) (19,132,993)
Net change in unrealized
gain (loss) on
investments and options (31,154,593) 11,941,756
Net change in unrealized
gain on translation of
assets and liabilities
denominated in foreign
currencies 7,363,987 1,162,726
-------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (31,006,821) 63,626,166
-------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (8,807,313) (35,815,474)
Net realized gain on in-
vestment, option and
futures transactions (7,198,898) (10,978,812)
Paid in capital (25,765,213) --
-------------------------------------------------------------------------------
Total distributions to
shareholders (41,771,424) (46,794,286)
-------------------------------------------------------------------------------
FROM SHARE TRANSACTIONS:
<CAPTION>
SHARES SHARES
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net proceeds from sale
of shares 9,067,823 133,966,890 11,896,541 174,639,617
Reinvestment of
distributions 1,870,918 26,726,504 1,953,762 28,394,744
Cost of shares
repurchased (26,266,551) (366,992,820) (9,089,025) (133,097,079)
-------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from share transactions (15,327,810) (206,299,426) 4,761,278 69,937,282
-------------------------------------------------------------------------------
Total increase
(decrease) (279,077,671) 86,769,162
NET ASSETS:
Beginning of year 675,661,804 588,892,642
-------------------------------------------------------------------------------
End of year $396,584,133 $ 675,661,804
-------------------------------------------------------------------------------
Accumulated
undistributed net
investment income $1,318,755 $227,711
-------------------------------------------------------------------------------
</TABLE>

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

8
<PAGE>

--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for a Share Outstanding
Throughout Each Period

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended October 31, For the Period
---------------------------------------- Ended
1994 1993 1992 October 31, 1991(a)
------------ ------------ ------------ -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $15.07 $14.69 $14.60 $14.55
--------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.84 0.85 1.14 0.25
Net realized and unrealized gain (loss) on
investments, options and futures (1.37) 1.07 0.45 0.23
Net realized and unrealized loss on foreign currency
related transactions (0.12) (0.42) (0.36) (0.19)
--------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations (0.65) 1.50 1.23 0.29
--------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.22) (0.85) (1.14) (0.24)
Net realized gain on investment, option and futures
transactions (0.16) (0.27) -- --
Paid in capital (0.61) -- -- --
--------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (0.99) (1.12) (1.14) (0.24)
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value (1.64) 0.38 0.09 0.05
--------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.43 $15.07 $14.69 $14.60
--------------------------------------------------------------------------------------------------------------------
Total return(b) (4.49)% 10.75% 8.77% 2.00%(c)
Ratio of net expenses to average net assets 1.28 % 1.30% 1.37% 0.38%(c)
Ratio of net investment income to average net assets 5.73 % 5.78% 7.85% 1.72%(c)
Portfolio turnover rate 343.74 % 313.88% 270.75% 34.22%(c)
Net assets at end of period $396,584,133 $675,661,804 $588,892,642 $388,744,486
Ratio information assuming no voluntary waiver of
distribution fees:
Ratio of expenses to average net assets 1.53 % 1.55% 1.62% 0.44%(c)
Ratio of net investment income to average net assets 5.48 % 5.53% 7.60% 1.66%(c)
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) For the period from August 2, 1991 (commencement of operations) to October
31, 1991.

(b) Assumes investment at net asset value at the beginning of the period, rein-
vestment of all dividends and distributions, a complete redemption of the in-
vestment at the net asset value at the end of the period and no sales charge.
Total return would be reduced if a sales charge were taken into account.

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

9
<PAGE>

Goldman Sachs Global Income Fund
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
October 31, 1994

-------------------------------------- ----------------------------------------
1. ORGANIZATION
Goldman Sachs Global Income Fund ("the Fund") is a separate, non-diversified
portfolio of Goldman Sachs Trust ("the Trust"), a Massachusetts business trust.
The Trust is registered under the Investment Company Act of 1940, as amended,
as an open-end, management investment company.

2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund which are in conformity with those generally accepted in
the investment company industry.

A. Investment Valuation--
-------------------------
Investments in portfolio securities for which accurate market quotations are
readily available are valued on the basis of quotations provided by dealers in
such securities or furnished by a pricing service. Portfolio securities for
which accurate quotations are not readily available are valued at fair value
using methods determined in good faith under procedures established by the
Trust's Board of Trustees and may include yield equivalents or a pricing
matrix. Short-term debt obligations maturing in sixty days or less are valued
at amortized cost.

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

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

C. Forward Foreign Currency Exchange Contracts--
------------------------------------------------
The Fund is authorized to enter into forward foreign exchange contracts for the
purchase of a specific foreign currency at a fixed price on a future date as a
hedge or cross-hedge against either specific transactions or portfolio
positions. The aggregate principal amounts of the contracts for which delivery
is anticipated are reflected in the Fund's accounts, while the aggregate
principal amounts are reflected net in the accompanying Statement of Assets and
Liabilities if the Fund intends to settle the contract prior to delivery. All
commitments are "marked-to-market" daily at the applicable translation rates
and any resulting unrealized gains or losses are recorded in the Fund's
financial statements. The Fund records realized gains or losses at the time the
forward contract is offset by entry into a closing transaction or extinguished
by delivery of the currency. Risks may arise upon entering into these contracts
from the potential inability of counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.

10
<PAGE>

--------------------------------------------------------------------------------
----------------------------------- -----------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (continued)

D. Security Transactions and Investment Income--
------------------------------------------------
Security transactions are recorded on the trade date. Realized gains and losses
on sales of portfolio securities are calculated on the identified cost basis.
Interest income is recorded on the basis of interest accrued and discounts
earned.

E. Federal Taxes--
------------------
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute each year
substantially all of its investment company taxable income to its shareholders.
Accordingly, no federal tax provisions are required.

The characterization of distributions to shareholders for financial reporting
purposes is determined in accordance with income tax rules. Therefore, the
source of a portfolio's distributions may be shown in the accompanying finan-
cial statements as either from or in excess of net investment income or net re-
alized gain on investment transactions, or from paid-in capital, depending on
the type of book/tax differences that may exist. During the year ended October
31, 1994, the Fund distributed $25,765,213 from paid-in capital resulting from
currency losses.

At October 31, 1994, the Fund had approximately $18,599,348 of capital loss
carryforward for U.S. Federal tax purposes. This amount is available to be
carried forward to offset future capital gains to the extent permitted by
applicable laws or regulations. The capital loss carryforward expires in 2002.

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

G. Expenses--
-------------
Expenses incurred by the Trust that do not specifically relate to an individual
portfolio of the Trust are allocated to the portfolios based on each
portfolio's relative average net assets for the period.

H. Option Accounting Principles--
---------------------------------
When the Fund writes call or put options, an amount equal to the premium
received is recorded as an asset and as an equivalent liability. The amount of
the liability is subsequently marked-to-market to reflect the current market
value of the option written. When a written option expires on its stipulated
expiration date, or the Fund enters into a closing purchase transaction, the
Fund realizes a gain or loss without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. When a written call option is exercised, the Fund realizes a gain
or loss from the sale of the underlying security, and the proceeds of the sale
are increased by the premium originally received. When a written put option is
exercised, the amount of the premium originally received will reduce the cost
of the security which the Fund purchases upon exercise.

Upon the purchase of a call option or a protective put option by the Fund, the
premium paid is recorded as an investment, and subsequently marked-to-market to
reflect the current market value of the option. If an option which the Fund has
purchased expires on the stipulated expiration date, the Fund will realize a
loss in the amount of the cost of the option. If the Fund enters into a closing
sale transaction, the Fund will realize a gain or loss, depending on whether
the sale proceeds from the closing sale transaction are greater or less than
the cost of the option. If the Fund exercises a purchased put option, the Fund
will realize a gain or loss from the sale of the underlying security, and the
proceeds from such sale will be decreased by the premium originally paid. If
the Fund exercises a purchased call option, the cost of the security which the
Fund purchases upon exercise will be increased by the premium originally paid.
In the case of index options, there is a risk of loss from a change in value of
such options which may exceed the related premiums received.

11
<PAGE>

Goldman Sachs Global Income Fund
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1994
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (continued)

I. Futures Contracts--
----------------------
Upon entering into a futures contract, the Fund is required to deposit with a
broker an amount of cash or securities equal to the minimum "initial margin"
requirement of the futures exchange on which the contract is traded. Subsequent
payments ("variation margin") are made or received by the Fund each day, depen-
dent on the daily fluctuations in the value of the underlying index, and are
recorded, for financial reporting purposes, as unrealized gains or losses by
the Fund. When entering into a closing transaction, the Fund will realize, for
book purposes, a gain or loss equal to the difference between the value of the
futures contract to sell and the futures contract to buy. Futures contracts are
valued at the most recent settlement price, unless such price does not reflect
the fair market value of the contract, in which case the position will be val-
ued using methods approved by the Board of Trustees of the Fund.

Certain risks may arise upon entering into futures contracts. These risks may
include changes in the value of the futures contract that may not directly
correlate with changes in the value of the underlying securities, or that the
counterparty to a contract may default on its obligations to perform.

3. AGREEMENTS

Goldman Sachs Asset Management ("GSAM"), a separate operating division of
Goldman, Sachs & Co. ("Goldman Sachs"), acts as the Fund's investment adviser
under an Investment Advisory Agreement. Goldman Sachs Asset Management
International ("GSAM International"), an affiliate of Goldman Sachs, acts as
subadviser under a Subadvisory Agreement. Under the Investment Advisory and
Subadvisory Agreements, GSAM and GSAM International, subject to the general
supervision of the Trust's Board of Trustees, manage the Fund's portfolio. As
compensation for the services rendered under the Investment Advisory and
Subadvisory Agreements and the assumption of the expenses related thereto, GSAM
and GSAM International receive fees, computed daily and payable monthly, at an
annual rate equal to .25% and .50%, respectively, of the Fund's average daily
net assets.

GSAM serves as the Fund's administrator pursuant to an Administration
Agreement. Under the Administration Agreement GSAM administers the Fund's
business affairs, including providing facilities. As compensation for the
services rendered under the Administration Agreement, the Fund pays GSAM a fee,
computed daily and payable monthly, at an annual rate equal to .15% of the
Fund's average daily net assets.

Goldman Sachs serves as the Distributor of shares of the Fund pursuant to a
Distribution Agreement. Goldman Sachs may receive a portion of the sales load
imposed on the sale of Fund shares and has advised the Fund that it retained
approximately $350,000 during the year ended October 31, 1994.

The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1.
Under the Plan, Goldman Sachs is entitled to receive a quarterly distribution
fee equal to, on an annual basis, .50% of the Fund's average daily net assets.
Currently, Goldman Sachs has voluntarily agreed to limit the amount of the
distribution fee to .25% of the Fund's average daily net assets. The effect of
this voluntary limitation amounted to $1,518,814 during the year ended October
31, 1994. Goldman Sachs also serves as the Transfer Agent of the Fund for a
fee.

12
<PAGE>

--------------------------------------------------------------------------------

----------------------------------- -----------------------------------

4. PORTFOLIO SECURITIES TRANSACTIONS

Purchases and proceeds of sales or maturities (excluding short-term investments
and options) for the year ended October 31, 1994 were $1,736,565,941 and
$1,835,357,177, respectively.

For the year ended October 31, 1994, option transactions in the Fund were as
follows:

<TABLE>
--------------------------------------------------------------------------------
<CAPTION>
Premiums
Options Written Received
--------------------------------------------------------------------------------
<S> <C>
Balance outstanding, beginning of year.............................. $ --
Options written..................................................... 1,148,191
Options expired..................................................... (555,691)
Options repurchased................................................. (592,500)
--------------------------------------------------------------------------------
Balance outstanding, end of year.................................... $ --
--------------------------------------------------------------------------------
</TABLE>

<TABLE>
-------------------------------------------------------------------------------
<CAPTION>
Options Purchased Cost
-------------------------------------------------------------------------------
<S> <C>
Balance outstanding, beginning of year............................ $ 1,437,703
Options purchased................................................. 6,982,761
Options expired................................................... (4,422,255)
Options sold...................................................... (3,998,209)
-------------------------------------------------------------------------------
Balance outstanding, end of year.................................. --
-------------------------------------------------------------------------------
</TABLE>
Certain risks related to written call or put options arise from the possible
inability of counterparties to meet the terms of their contracts and from
movement in currency values and interest rates.

At October 31, 1994, the Fund had outstanding forward foreign currency
exchange contracts, both to purchase and sell foreign currencies as follows:

<TABLE>
-------------------------------------------------------------------------------
<CAPTION>
VALUE ON
FOREIGN CURRENCY SETTLEMENT CURRENT UNREALIZED
PURCHASE CONTRACTS DATE VALUE GAIN/(LOSS)
-------------------------------------------------------------------------------
<S> <C> <C> <C>
BRITISH POUND STERLING
Expiring 11/14/94 $40,584,980 $41,957,539 $1,372,559
-------------------------------------------------------------------------------
Total Foreign Currency Purchase Contracts 40,584,980 $41,957,539 $1,372,559
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
------------------------------------------------------------------------------
<CAPTION>
VALUE ON
FOREIGN CURRENCY SETTLEMENT CURRENT UNREALIZED
SALE CONTRACTS DATE VALUE GAIN/(LOSS)
------------------------------------------------------------------------------
<S> <C> <C> <C>
AUSTRALIAN DOLLAR
Expiring 11/21/94 $ 23,329,626 $ 23,288,074 $ 41,552
BRITISH POUND STERLING
Expiring 11/07/94 43,467,581 44,830,794 (1,363,213)
CANADIAN DOLLAR
Expiring 12/28/94 1,272,939 1,264,078 8,861
Expiring 12/28/94 38,461,584 38,632,767 (171,183)
DEUTSCHEMARK
Expiring 11/14/94 40,627,207 41,686,736 (1,059,529)
Expiring 12/30/94 12,854,701 12,787,546 67,155
FRENCH FRANC
Expiring 11/28/94 29,707,624 30,683,341 (975,717)
Expiring 11/28/94 23,896,647 24,516,068 (619,421)
ITALIAN LIRA
Expiring 11/25/94 39,706,566 39,562,809 143,757
JAPANESE YEN
Expiring 11/07/94 34,180,719 35,116,502 (935,783)
NETHERLANDS GUILDER
Expiring 01/23/95 27,540,692 27,410,371 130,321
------------------------------------------------------------------------------
Total Foreign Currency Sale Contracts $315,045,886 $319,779,086 $(4,733,200)
------------------------------------------------------------------------------
</TABLE>

The contractual amounts of forward foreign currency exchange contracts do not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered.

At October 31, 1994, the Fund had sufficient cash and/or securities to cover
any commitments under these contracts.

The Fund has recorded a "Receivable for forward foreign currency exchange
contracts" and "Payable for forward foreign currency exchange contracts"
resulting from open and closed but not settled forward foreign currency
exchange contracts of $2,322,619 and $5,557,825, respectively, in the
accompanying Statement of Assets and Liabilities. Included in the "Receivable
and Payable for forward foreign currency exchange contracts" are $558,414 and
$432,979, respectively, related to forward contracts closed but not settled as
of October 31, 1994.

13
<PAGE>

5. CERTAIN RECLASSIFICATIONS
In accordance with Statement of
Position 93-2, the Fund has
reclassified $34,184,229 from
accumulated net realized foreign
currency losses to accumulated
undistributed net investment
income; $15,776,697 from
accumulated net realized foreign
currency losses to accumulated net
realized loss on investment and
option transactions; and
$35,015,347 from paid-in capital
to accumulated undistributed net
investment income. These
reclassifications have no impact
on the net asset value of the Fund
and are designed to present the
Fund's capital accounts on a tax
basis.

14
<PAGE>

--------------------------------------------------------------------------------

----------------------------------- -----------------------------------
This Annual Report is authorized for distribution to prospective investors only
when preceded or accompanied by a Goldman Sachs Global Income Fund Prospectus
which contains facts concerning the Fund's objectives and policies, management,
expenses and other information.
------------------------------------------------------------------------

15
<PAGE>

APPENDIX A

DESCRIPTION OF BOND RATINGS

Moody's Investors Service, Inc.
-------------------------------

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Moody's also provides credit ratings for commercial paper. These are
promissory obligations (1) not having an original maturity in excess of nine
months, and (2) backed by commercial banks. Notes bearing the designation P-1
have a superior capacity for repayment. Notes bearing the designation P-2 have
a strong capacity for repayment.

Standard & Poor's Ratings Group
-------------------------------

AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

A: Bonds rated A have a very strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.

Standard & Poor's top ratings for notes issued after July 29, 1984 are
SP-1 and SP-2. The designation SP-1 indicates a very strong capacity to pay
principal and interest. A "+" is added for those issues determined to possess
overwhelming safety characteristics. An "SP-2" designation indicates a
satisfactory capacity to pay principal and interest.

Commercial paper rated A by Standard & Poor's is regarded as having
the greatest capacity for timely payment. Commercial Paper rated A-1 is
described as having an overwhelming or very

1-A
<PAGE>

strong degree of safety regarding timely payment. Commercial Paper rated A-2 by
Standard & Poor's is described as having a strong degree of safety regarding
timely payment.

Fitch Investors Service, Inc.
-----------------------------

Investment Grade Short-Term Ratings

Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated "F-1+".

Duff & Phelps
-------------

Commercial Paper/Certificates of Deposits
Category 1: Top Grade

Duff 1 plus: Highest certainty of timely payment. Short-term liquidity
including internal operating factors and/or ready access to
alternative sources of funds, is clearly outstanding, and safety
is just below risk-free U.S. Treasury short-term obligations.

Duff 1: Very high certainty of timely payment. Liquidity factors are
excellent and supported by strong fundamental protection factors.
Risk factors are minor.

Notes: Bonds which are unrated may expose the investor to risks with respect to
capacity to pay interest or repay principal which are similar to the
risks of lower-rated bonds. The Fund is dependent on the Investment
Adviser's judgment, analysis and experience in the evaluation of such
bonds.

Investors should note that the assignment of a rating to a bond by a
rating service may not reflect the effect of recent developments on
the issuer's ability to make interest and principal payments.

2-A
<PAGE>

APPENDIX B

This Appendix provides certain information concerning the average
performance of various types of bonds over specified periods of time. However,
the composition of these bond averages and the characteristics of these bonds
are not identical to, and may be very different from, those of the Fund's
portfolio. These averages are unmanaged and the items included in these
averages may not be identical to those in the formulas used by the Fund to
calculate its performance figures. Past performance is not an indication of
future performance.

CREDIT RATINGS FOR GOVERNMENT BONDS
-----------------------------------

The following table shows the credit rating assigned by Moody's Investors
Service, Inc. and Standard & Poor's Ratings Group to the government bonds of
various countries.
<TABLE>
<CAPTION>

Country Moody's S & P
------------- ------- -----
<S> <C> <C>

USA Aaa AAA
Japan Aaa AAA
Germany Aaa AAA
Italy A1 AA
France Aaa AAA
UK Aaa AAA
Canada Aa1 AA+
Belgium Aa1 AA+
Denmark Aa1 AA+
Sweden Aa1 AA+
Switzerland Aaa AAA
Netherlands Aaa AAA
Spain Aa2 AA
Australia Aa2 AA
</TABLE>

Certain governments listed above carry an implied rating by Moody's and/or
S&P. Information is as of February, 1995 for Moody's and as of February, 1995
for S&P.

1-B
<PAGE>

APPENDIX B (CONTINUED)

BEST AND WORST PERFORMING MARKETS 1975-1994*
ANNUAL RETURNS ON 10-YEAR GOVERNMENT BONDS--US DOLLAR TERMS

The following table indicates that, during the period from 1975 to 1994,
investing in 10 year U.S. Government bonds produced the best U.S. dollar
returns, relative to the performance of the 10-year government bonds of seven
major foreign countries, in only three out of nineteen years. Returns in U.S.
dollar terms were derived by calculating the market value in U.S. dollars of
appropriate 10-year government bonds, using bond price and foreign exchange rate
data.
<TABLE>
<CAPTION>

Worst Performance Best Performance USA Performance
--------------------- ---------------- ---------------
<C> <S> <C> <C> <C>

1975 Canada 2.8% France 17.4% 9.3%
1976 UK -6.4% Germany 33.0% 14.8%
1977 Canada -1.2% UK 59.9% 2.4%
1978 Canada -4.6% France 33.9% 1.7%
1979 Japan -25.2% UK 16.9% 1.9%
1980 Germany -10.8% UK 29.0% 0.1%
1981 UK -17.4% USA 5.5% 5.5%
1982 France 2.2% USA 33.9% 33.9%
1983 Netherlands -11.6% Japan 12.6% 2.8%
1984 UK -12.6% USA 14.3% 14.3%
1985 Australia -11.8% France 56.5% 27.8%
1986 UK 14.3% Netherlands 41.7% 19.6%
1987 USA -3.3% UK 48.2% -3.3%
1988 Germany -7.0% Australia 33.4% 6.4%
1989 Japan -13.9% Canada 16.8% 16.3%
1990 Japan 4.7% UK 35.2% 6.8%
1991 Netherlands 10.4% Australia 24.2% 17.0%
1992 Italy -3.2% Japan 11.8% 6.6%
1993 Netherlands 9.3% Japan 27.9% 12.3%
1994 Canada -12.9% Japan 7.5% -7.12%
</TABLE>

---------------------
* Based on data for the United States and seven major countries.

Source: Salomon Brothers

2-B
<PAGE>

APPENDIX B (CONTINUED)

YIELD OF 5-YEAR GOVERNMENT BONDS AS OF SEPTEMBER 30, 1994
<TABLE>
<CAPTION>

Country Yield
--------------- ------
<S> <C>

Italy 11.70%
Spain 11.02
Australia 9.67
United Kingdom 8.64
Canada 8.35
France 7.68
United States 7.28
Germany 7.12
Japan 3.89
</TABLE>

Source: Bloomberg L.P., September 30, 1994. Yields are quoted in the currency
of the country of origin. The chart is not intended to represent the future
performance of any of the listed securities or the Goldman Sachs Global Income
Fund. This chart is for illustrative purposes only and does not represent
either the Fund's portfolio composition, the types of securities in the Fund or
the Fund's performance. Please note that the Fund may invest in government
securities as well as other high-quality, fixed-income securities.

COMPOSITION OF GLOBAL GOVERNMENT BOND MARKET BY COUNTRY
<TABLE>
<CAPTION>

Country Percentage
-------------- ----------
<S> <C>

United States 41.8%
Japan 17.0
Germany 10.2
Italy 6.5
France 5.7
United Kingdom 4.7
Canada 2.9
Netherlands 2.8
Belgium 2.8
Spain 1.9
Denmark 1.6
Sweden 1.2
Australia 0.9
</TABLE>

Source: J.P. Morgan Government Bond Index monitor, September 1994. Data
includes government bonds from countries indicated, excluding index-lined and
tax rebate bonds for Australia, provincial for Canada, index-linked perpetuals,
FELINs, FRNs and ORTs for France; Schuldscheine for Germany; CCTs and CTE for
Italy; private placements and five year discounts for Japan; perpetuals and
private placements for the Netherlands; irredeemables and index-linked for the
U.K. and flower bonds, STRIPS, and foreign targeted issues for the U.S. Past
performance is not indicative of future results. This chart is for illustrative
purposes only, and is not meant to represent the allocation of investments in
the Goldman Sachs Global Income Fund.

3-B
<PAGE>

APPENDIX C

BUSINESS PRINCIPLES OF GOLDMAN, SACHS & CO.

Goldman Sachs is noted for its Business Principles, which guide all of the
firm's activities and serve as the basis for its distinguished reputation among
investors worldwide.

OUR CLIENT'S INTERESTS ALWAYS COME FIRST. Our experience shows that if we serve
our clients well, our own success will follow.

OUR ASSETS ARE OUR PEOPLE, CAPITAL AND REPUTATION. If any of these is ever
diminished, the last is the most difficult to restore. We are dedicated to
complying fully with the letter and spirit of the laws, rules and ethical
principles that govern us. Our continued success depends upon unswerving
adherence to this standard.

WE TAKE GREAT PRIDE IN THE PROFESSIONAL QUALITY OF OUR WORK. We have an
uncompromising determination to achieve excellence in everything we undertake.
Though we may be involved in a wide variety and heavy volume of activity, we
would, if it came to a choice, rather be best than biggest.

WE STRESS CREATIVITY AND IMAGINATION IN EVERYTHING WE DO. While recognizing
that the old way may still be the best way, we constantly strive to find a
better solution to a client's problems. We pride ourselves on having pioneered
many of the practices and techniques that have become standard in the industry.

WE STRESS TEAMWORK IN EVERYTHING WE DO . While individual creativity is always
encouraged, we have found that team effort often produces the best results. We
have no room for those who put their personal interests ahead of the interests
of the firm and its clients.

INTEGRITY AND HONESTY ARE THE HEART OF OUR BUSINESS. We expect our people to
maintain high ethical standards in everything they do, both in their work for
the firm and in their personal lives.

1-C
<PAGE>

GOLDMAN, SACHS & CO.'S INVESTMENT BANKING AND SECURITIES ACTIVITIES

Goldman, Sachs & Co. is a leading global investment banking and securities firm
with a number of distinguishing characteristics.

. Privately owned and ranked among Wall Street's best capitalized firms, with
assets exceeding $74 billion and partners capital and subordinated
liabilities of close to $5 billion.

. Thirty offices worldwide where professionals focus on identifying financial
opportunities (includes a staff of 1,500 in London, 530 in Tokyo, 200 in
Hong Kong and 5,500 in 11 offices throughout the U.S.).

. Worldwide research coverage consistently top-ranked in surveys conducted by
Institutional Investor, Extel Financial Ltd. and Nihon Keizai Shinbum
(Japan's leading financial newspaper). The firm has a research budget of
$140 million for 1994.

. Premier lead manager of negotiated municipal bond offerings over the past
decade, aggregating $151 billion.

. The number one lead manager of U.S. common stock offerings for the past
five years, with 22 percent of the total volume -- almost double that of
any other firm.*

. Voted number one for overall service in Financial World's survey of chief
investment and financial officers more often than any other firm over the
15 year period through 1993.

* According to Securities Data Corporation.
----------------------------------------

2-C
<PAGE>

GOLDMAN, SACHS & CO.'S HISTORY OF EXCELLENCE

1865 End of Civil War

1869 Marcus Goldman opens Goldman Sachs for business

1890 Dow Jones Industrial Average first published

1896 Goldman Sachs joins New York Stock Exchange

1900 Regional office network founded

1906 Goldman Sachs takes Sears Roebuck public (oldest ongoing client)

Dow Jones Industrial Average tops 100

1925 Goldman Sachs finances Warner Brothers, producer of the first talking
film

1956 Goldman Sachs co-manages Ford's public offering, the largest to date

1970 London office of Goldman Sachs opens (staff of 1,500 in 1994)

1972 Dow Jones Industrial Average breaks 1000

1977 Goldman Sachs begins 10-year stint as number one underwriter of
negotiated municipal bonds

1984 Goldman Sachs joins Tokyo Stock Exchange as one of the first
non-Japanese firms (firm's Tokyo staff reaches 530 in 1994)

1987 Goldman Sachs leads in the privatization of Conrail in the largest
equity offering to date in the U.S.

Dow Jones Industrial Average breaks 2000

1991 Dow Jones Industrial Average breaks 3000

1993 Goldman Sachs is lead manager of Allstate's initial stock offering, the
industry's largest to date ($2.4 billion)

3-C
<PAGE>

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------

(a) Financial Statements

Included in the Goldman Sachs Global Income Fund Prospectus:

Financial Highlights for the period from August 2, 1991 (commencement of
operations) through October 31, 1991 and for the fiscal years ended October
31, 1992, October 31, 1993 and October 31, 1994.

Incorporated by Reference into the Additional Statement of Goldman Sachs Global
Income Fund.

Report of Independent Public Accountants.

Statement of Investments as of October 31 1994.

Statement of Assets and Liabilities as of October 31, 1994.

Statement of Operations for the fiscal year ended October 31, 1994.

Statements of Changes in Net Assets for the fiscal years ended October 31,
1993 and October 31, 1994.

Financial Highlights for the period from August 2, 1991 (commencement of
operations) through October 31, 1991 and for the fiscal years ended October
31, 1992, October 31, 1993 and October 31, 1994.

Notes to Financial Statements.

(b) Exhibits

The following exhibits are incorporated herein by reference to Registrant's
Registration Statement on form N-1A as initially filed (Reference A), to Pre-
Effective Amendment No. 1 (Reference B), to Post-Effective Amendment No. 1 to
such Registration Statement (Reference C), or to Post-Effective Amendment No. 2
to such Registration Statement (Reference D), or to Post-Effective Amendment No.
4 to such Registration Statement (Reference F), or to Post-Effective Amendment
No. 5 to such Registration Statement (Reference G), or to Post-Effective
Amendment No. 6 to such Registration Statement (Reference I), or to Post-
Effective Amendment No. 10 to such Registration Statement (Reference K), or to
Post-Effective Amendment No. 11 to such Registration Statement (Reference L),
or to Post-Effective Amendment No. 12 to such
<PAGE>

Registration Statement (Reference M), or to Post-Effective Amendment No. 13 to
such Registration Statement (Reference N), or to Post-Effective Amendment No. 14
to such Registration Statement (Reference O), or to Post-Effective Amendment No.
15 to such Registration Statement (Reference P) or to Post-Effective Amendment
No. 16 to such Registration Statement (Reference Q) or to Post-Effective
Amendment No. 17 to such Registration Statement (Reference R), or to Post-
Effective Amendment No. 18 to such Registration Statement (Reference S), or to
Post-Effective Amendment No. 19 to such Registration Statement (Reference T), or
to Post-Effective Amendment No. 20 to such Registration Statement (Reference U),
or to Post-Effective Amendment No. 21 to such Registration Statement (Reference
V), or to Post-Effective Amendment No. 22 to such Registration Statement
(Reference W), or to Post-Effective Amendment No. 23 to such Registration
Statement (Reference X), or to Post-Effective Amendment No. 24 to such
Registration Statement (Reference Y).

1(a). Amendment No. 2 to the Agreement and Declaration of Trust of the
Registrant. (Reference B)

1(b). Amendment to the Agreement and Declaration of Trust of the
Registrant. (Reference G)

1(c). Amended and Restated Agreement and Declaration of Trust.
(Reference I).

1(d). Amendment to the Amended and Restated Declaration of Trust of the
Registrant dated August 19, 1992. (Reference K)

1(e). Amendment to Amended and Restated Agreement and Declaration of
Trust. (Reference L)

1(f). Amendment to the Amended and Restated Agreement and Declaration
of Trust (Reference S)

2. By-law of the Registrant. (Reference B)

5(a). Advisory Agreement between Registrant on behalf of GS Short-Term
Government Agency Fund and Goldman, Sachs & Co. (Reference P)

5(b). Advisory Agreement between Registrant on behalf of Goldman Sachs
Global Income Fund and Goldman Sachs Asset Management.
(Reference P)

5(c). Subadvisory Agreement between Registrant on behalf of Goldman
Sachs Global Income Fund and Goldman Sachs Asset Management
International Limited. (Reference P)

2
<PAGE>

5(d). Advisory Agreement between Registrant on behalf of GS Adjustable
Rate Government Agency Fund and Goldman Sachs Asset Management.
(Reference P)

5(e). Advisory Agreement between Registrant on behalf of GS Short
Duration Tax Free Fund and Goldman, Sachs & Co. (Reference P)

5(f). Advisory Agreement between Registrant on behalf of GS Government
Agency Portfolio and Goldman, Sachs & Co. (Reference P)

5(g). Advisory Agreement between Registrant on behalf of Goldman Sachs
Government Income Fund and Goldman Sachs Asset Management.
(Reference P)

5(h). Advisory Agreement between Registrant on behalf of GS Adjustable
Rate Mortgage Fund and Goldman Sachs Asset Management.
(Reference P)

5(i). Advisory Agreement between Registrant on behalf of Goldman Sachs
Municipal Income Fund and Goldman Sachs Asset Management.
(Reference P)

5(j). Administration Agreement between the Registrant on behalf of
Goldman Sachs Municipal Income Fund and Goldman Sachs Asset
Management. (Reference P)

5(k). Administration Agreement between Registrant on behalf of Goldman
Sachs Global Income Fund and Goldman Sachs Asset Management.
(Reference P)

5(l). Administration Agreement between Registrant on behalf of GS
Adjustable Rate Mortgage Fund and Goldman Sachs Asset Management.
(Reference P)

5(m). Administration Agreement between Registrant on behalf of Goldman
Sachs Government Income Fund and Goldman Sachs Asset Management.
(Reference P)

5(n). Advisory Agreement between Registrant on behalf of GS Core Fixed
Income Fund and Goldman Sachs Asset Management. (Reference T)

5(o). Advisory Agreement between Registrant on behalf of Goldman Sachs
New York Municipal Income Fund and Goldman Sachs Asset
Management. (Reference T)

5(p). Advisory Agreement between Registrant on behalf of Goldman Sachs
California Municipal Income Fund and Goldman Sachs Asset
Management. (Reference T)

3
<PAGE>

5(q). Administration Agreement between Registrant on behalf of Goldman
Sachs New York Municipal Income Fund and Goldman Sachs Asset
Management. (Reference T)

5(r). Administration Agreement between Registrant on behalf of Goldman
Sachs California Municipal Income Fund and Goldman Sachs Asset
Management. (Reference T)

6(a). Distribution Agreement between Registrant and Goldman, Sachs &
Co. (Reference P)

8(a). Custodian Agreement between Registrant and State Street Bank and
Trust Company. (Reference P)

8(b). Form of Wiring Agreement among State Street Bank and Trust
Company, Goldman, Sachs & Co. and The Northern Trust Company.
(Reference B)

8(c). Fee schedule relating to the Custodian Agreement between
Registrant and State Street Bank and Trust Company. (Reference C)

8(d). Form of Letter Agreement between Registrant and State Street Bank
and Trust pertaining to the latter's designation of Security
Pacific National Bank as its sub-custodian and certain other
matters. (Reference C)

8(g). Form of Amendment dated August, 1989 to the Wiring Agreement
among State Street Bank and Trust Company, Goldman, Sachs & Co.
and The Northern Trust Company relating to the indemnification of
The Northern Trust Company. (Reference D)

10. Opinion of Counsel (filed with 24f-2)

13. Subscription Agreement with Goldman, Sachs & Co.
(Reference B)

15(a). Distribution Plan pursuant to Rule 12b-1 for Goldman Sachs
Municipal Income Fund. (Reference P)

15(b). Distribution Plan pursuant to Rule 12b-1 for GS Adjustable Rate
Mortgage Fund. (Reference O)

15(c). Distribution Plan pursuant to Rule 12b-1 for Goldman Sachs
Government Income Fund (Reference O)

15(d). Distribution Plan pursuant to Rule 12b-1 for Goldman Sachs Global
Income Fund. (Reference O)

4
<PAGE>

15(e). Service Plan. (Reference O)

15(f). Distribution Plan pursuant to Rule 12b-1 for Goldman Sachs New
York Municipal Income Fund. (Reference T)

15(g). Distribution Plan Pursuant to Rule 12b-1 for Goldman Sachs
California Municipal Income Fund. (Reference T)

15(h). Administration Plan and Service Plan of the Trust (Reference X).

15(i). Distribution Plan pursuant to Rule 12b-1 for GS Adjustable Rate
Government Agency Fund - Class A Shares (Reference Y).

17(a). Transfer Agency Agreement between Registrant and Goldman, Sachs &
Co. (Reference P)

17(b). Fee schedule relating to the Transfer Agency Agreement between
Registrant and Goldman, Sachs & Co. (Reference B)

17(c). Power of Attorney of Ms. Beck. (Reference N)

17(d). Powers of Attorney of Messrs. Armellino, Bakhru, Mayo, Nagel,
Shuch, Smart, Springer, Strubel, Gilman, Hopkins, Mosior,
Richman, Mmes. Mucker and Taylor. (Reference O)

17(e). Power of Attorney Messr. Ford. (Reference W)

The following exhibits are filed herewith electronically pursuant to EDGAR
rules:

11. Consent of Arthur Andersen LLP

18. Form of Plan entered into by Registrant pursuant to Rule 18f-3.

27. Financial Data Schedule - Institutional Shares and Administration
Shares

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
-------------------------------------------------------------

Not Applicable.

5
<PAGE>

Item 26. NUMBER OF HOLDERS OF SECURITIES.
-------------------------------
<TABLE>
<CAPTION>

Number of
Title of Class Record Holders
-------------- --------------
<S> <C>

GS Short-Term Government Agency Fund 538

GS Adjustable Rate Government Agency Fund 2,350

GS Short Duration Tax-Free Fund 435

GS Core Fixed Income Fund 14

GS Government Agency Portfolio
(For Financial Institutions) 32

Goldman Sachs Global Income Fund 2,893

Goldman Sachs Adjustable Rate Mortgage Fund 310

Goldman Sachs Government Income Fund 585

Goldman Sachs Municipal Income Fund 1,696

</TABLE>
(Information supplied as of March 17, 1995)

ITEM 27. INDEMNIFICATION
---------------

Article VI of the Registrant's Amended and Restated Agreement and Declaration of
Trust provides for indemnification of the Registrant's trustees and officers
under certain circumstances. A copy of each Amended and Restated Agreement and
Declaration of Trust is filed as Exhibit 1(f) in Post Effective Amendment No. 7
(Reference I).

Paragraph 7 of the Advisory Agreement dated March 28, 1988 between the
Registrant on behalf of GS Short-Term Government Agency Fund and Goldman, Sachs
& Co., paragraph 7 of the Advisory Agreement dated as of July 15, 1991 between
the Registrant on behalf of Goldman Sachs Global Income Fund and Goldman Sachs
Asset Management, paragraph 7 of the Advisory Agreement dated as of July 15,
1991 between GS Adjustable Rate Government Agency Fund and Goldman Sachs Asset
Management, and paragraph 7 of the Advisory Agreement dated September 25, 1992
between the Registrant on behalf of GS Short Duration Tax-Free Fund and Goldman
Sachs & Co., paragraph 7 of the Advisory Agreement dated November 23, 1993
between the Registrant on behalf of GS Government Agency Portfolio and Goldman,
Sachs & Co., paragraph 7 of the Advisory Agreement dated February 1, 1993
between the Registrant on behalf of each of GS Adjustable Rate Mortgage Fund and
Goldman Sachs Government Income Fund and Goldman Sachs Asset Management, and

6
<PAGE>

paragraph 7 of the Advisory Agreement dated July 16, 1993 between the Registrant
on behalf of Goldman Sachs Municipal Income Fund and Goldman Sachs Asset
Management and paragraph 7 of the Advisory Agreement between the Registrant on
behalf of GS Core Fixed Income Fund and Goldman Sachs Asset Management and
paragraph 7 of the Advisory Agreement dated October 27, 1993 between the
registrant on behalf of each of Goldman Sachs California Municipal Income Fund
and Goldman Sachs New York Municipal Income Fund and Goldman Sachs Asset
Management, provide for indemnification of Goldman, Sachs & Co., Goldman Sachs
Asset Management or, in lieu thereof, contribution by the Registrant under
certain circumstances. Copies of such Agreements were filed as Exhibits 5(a),
(b), (d), (e), (f), (g), (h), (i), (n), (o), and (p), respectively, to
Registrant's Registration Statement.

Section XI of the Distribution Agreement and Section 7 of the Transfer Agency
Agreement between the Registrant and Goldman, Sachs & Co. dated July 15, 1991
each provides that the Registrant will indemnify Goldman, Sachs & Co. against
certain liabilities. A copy of such Agreements were filed as Exhibits 6(a) and
17(a), respectively, to the Registrant's Registration Statement.

Mutual fund and Trustees and officers liability policies purchased jointly by
the Registrant, Goldman Sachs Money Market Trust, Goldman Sachs Equity
Portfolios, Inc., Paragon Portfolio, Trust for Credit Unions, The Benchmark
Funds and the Pilot Funds and Goldman, Sachs & Co. insure such persons and their
respective trustees, partners, officers and employees, subject to the policies'
coverage limits and exclusions and varying deductibles, against loss resulting
from claims by reason of any act, error, omission, misstatement, misleading
statement, neglect or breach of duty.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
----------------------------------------------------

The business and other connections of the officers and partners of Goldman,
Sachs & Co., Goldman Sachs Funds Management, L.P., and Goldman Sachs Asset
Management International are listed on their respective Forms ADV as currently
filed with the Commission (File Nos. 801-16048, 801-37591 and 801-38157,
respectively) the text of which are hereby incorporated by reference.

ITEM 29. PRINCIPAL UNDERWRITERS.
----------------------

(a). Goldman, Sachs & Co. or an affiliate or a division thereof currently
serves as investment adviser and distributor of the units of Goldman Money
Market Trust, Trust for Credit Unions and for shares of Paragon Treasury Money
Market Fund, Goldman Sachs Trust and Goldman Sachs Equity Portfolios, Inc.
Goldman Sachs & Co. or an affiliate or a division thereof, currently serves as
investment adviser of the shares of two portfolios (Pilot Short-Term Tax-Exempt
Portfolio and Pilot Short-Term Tax-Exempt Diver-

7
<PAGE>

sified Portfolio) of Pilot Funds, Goldman, Sachs & Co., or a division thereof
currently serves as administrator and distributor of the units of The Benchmark
Fund and for shares of Paragon Portfolio.

(b). Set forth below is certain information pertaining to the general partners
of Goldman, Sachs & Co., Registrant's principal underwriter. Each of the
following persons is a general partner of Goldman, Sachs & Co. and, except for
Messr. Shuch, does not hold a position with Registrant. Messrs. Shuch and Ford
are Trustees of Registrant.

Name and Principal Name and Principal
Business Address Business Address
---------------- ----------------

Jon Corzine, Chairman (1)(2) Hideo Ishihara (10)
Roy J. Zuckerberg (2) Oki Matsumoto Inc. (2)
David M. Silfen (2) Richard M. Hayden (2)
Eugene V. Fife (7) Armen A. Avanessians (2)
Robert J. Hurst (2) Howard C. Katz (2)
Paul M. Achleitner (7) Peter K. Barker (9)
Joel S. Beckman (2) David W. Blood (7)
Eric S. Dobkin (2) Henry M. Paulson, Jr.(8)
Willard J. Overlock, Jr. (2) Zachariah Cobrinik (7)
Jonathan L. Cohen (2) Kevin W. Kennedy (2)
Frederic B. Garonzik (7) Daniel M. Neidich (2)
William C. Landreth (11) Edward Spiegel (2)
Gary D. Cohn (7) Christopher A. Cole (2)
Fischer Black (5) Henry Cornell (13)
Robert F. Cummings, Jr. (2) Robert V. Delaney (2)
Angelo De Caro (7) Joseph DellaRosa (2)
Steven G. Einhorn (2) David B. Ford (2)
J. Michael Evans (7) Lawton W. Fitt (2)
David M. Leuschen (2) Michael D. McCarthy (2)
Michael R. Lynch (2) Joseph D. Gatto (2)
Donald C. Opatrny, Jr. (7) Thomas E. Tuft (2)
Peter C. Gerhard (2) Michael P. Mortara (2)
Robert J. Katz (1) (2) Lloyd C. Blankfein (2)
Nomi P. Ghez (2) John P. Curtin, Jr. (2)
David T. Hamamoto (2) Dexter D. Earle (2)
Gavyn Davies (7) Christopher Flowers (2)
John Ehara (10) Walter H. Haydock (15)
Gary Gensler (2) Thomas J. Healey (2)
Charles T. Harris, III (2) Robert E. Higgins (2)
Stephen Hendel (2) David L. Henle (2)
Ernest S. Liu (2) Charles B. Mayer, Jr. (2)
Eff W. Martin (11) Mark Schwartz (2)
Michael J. O'Brien (7) Robert K. Steel (7)
Stephen M. Semlitz (2) John A. Thain (2)
Francis J. Ingrassia (2) Scott B. Kapnick (7)
John L. Thornton (7) Joseph R. Zimmel (2)
Bracebridge H. Young, Jr. (10) Gary L. Zwerling (2)

8
<PAGE>

Name and Principal Name and Principal
Business Address Business Address
---------------- ----------------

Barry L. Zubrow (2) Andrew M. Alper (2)
Jon R. Aisbitt (7) Frank L. Coulson, Jr. (2)
William J. Buckley (2) Richard A. Friedman (2)
Connie Duckworth (8) John H. Gleberman (2)
Alan R. Gillespie (7) Steven M. Heller (2)
Jacob D. Goldfield (2) Robert S. Kaplan (10)
Ann F. Kaplan (2) Kevin M. Kelly (2)
Peter D. Kiernan, III (2) Gaetano J. Muzio (2)
T. Willem Mesdag (7) Timothy J. O'Neill (2)
Robin Neustein (2) John J. Powers (2)
Scott M. Pinkus (2) Arthur J. Reimers,III (7)
Stephen D. Quinn (2) Richard A. Sapp (7)
James P. Riley, Jr. (2) Donald F. Textor (2)
John C. Keinert (2) Patrick J. Ward (10)
Thomas B. Walker, III (2) Jon Winkelried (2)
Jeffrey M. Weingarten (7) Gregory K. Palm (7)
Richard E. Witten (2) John O. Downing (7)
Carlos A. Cordeiro (7) Michael D. Fascitelli (2)
W. Mark Evans (7) Reuben Jeffrey, III (2)
Sylvain M. Hefes (7) Jun Makihara (9)
Lawrence H. Linden (2) Robert B. Morris,III (11)
Masanori Mochida (10) Suzanne M. Johnson (9)
Philip D. Murphy (14) Carl G.E. Palmstierna (7)
Terence M. O'Toole (2) J. David Rogers (10)
Michael G. Rantz (2) Peter Savitz (10)
Joseph Sassoon (7) Ralph F. Severson (11)
Charles B. Seelig, Jr. (2) Gary A. Syman (10)
Gene T. Sykes (9) John L. Townsend, III (2)
Leslie C. Tortora (2) David A. Viniar (2)
Lee G. Vance (7) Peter A. Weinberg (2)
John S. Weinberg (2) George W. Wellde, Jr. (2)
Laurence M. Weiss (2) Sharmin Mossavar-
Jaime E. Yordan (2) Rahmani (5)
Jonathan L. Kolatch (2) Robert Litterman (2)
Peter S. Kraus (2) Thomas J. Macirowski (2)
Jonathan M. Lopatin (2) Oki Matsumoto (10)
Peter G. Mallinson (13) Eric M. Mindich (2)
E. Scott Mead (7) Thomas K. Montag (2)
Steven T. Mnuchin (2) Kipp M. Nelson (7)
Edward A. Mule (2) Robert J. O'Shea (2)
Christopher K. Norton (14) Jack L. Salzman (2)
Wiet H. Pot (7) Michael F. Schwerin (2)
Eric S. Schwartz (2) Richard G. Sherlund (2)
Richard S. Sharp (7) Cody J. Smith (2)
Michael S. Sherwood (7) Esta E. Stecher (2)
Daniel W. Stanton (2) Byron D. Trott (8)
Frederic E. Steck (11) Peter S. Wheeler (13)
Barry S. Volpert (2) Gary W. Williams (2)
Anthony G. Williams (7) Danny O. Yee (13)

9
<PAGE>

Name and Principal Name and Principal
Business Address Business Address
---------------- ----------------

Tracy R. Wolstencroft (4) Mark A. Zurack (2)
Michael J. Zamkow (2)

__________
(1) Management Committee
(2) 85 Broad Street, New York, NY 10004
(3) Mellon Bank Center, 1735 Market Street, 26th Floor,
Philadelphia, PA 19103
(4) 100 Crescent Court, Suite 1000, Dallas, TX 75201
(5) One New York Plaza, New York, NY 10004
(6) 1000 Louisiana Street, Suite 550, Houston, TX 77002
(7) Peterborough Court, 133 Fleet Street, London EC4A 2BB,
England
(8) 4900 Sears Tower, Chicago, IL 60606
(9) 333 South Grand Avenue, Suite 1900, Los Angeles, CA 90071
(10) ARK Mori Bldg.,10th Floor, 12-32 Akasaka, 1-chome, Minato-
ku, Tokyo 107, Japan
(11) 555 California Street, 31st Floor, San Francisco, CA 94104
(12) Exchange Place, 53 State Street, 13th Floor, Boston, MA
02109
(13) Asia Pacific Finance Tower, 35th Floor, Citibank Plaza, 3
Garden Road, Hong Kong
(14) Finanz GmbH, MesseTurm, 60308 Frankfurt am Main 1, Germany
(15) Munsterhof 4, 8022, Zurich, Switzerland

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
--------------------------------

The Amended and Restated Agreement and Declaration of Trust, By-laws and minute
books of the Registrant are in the physical possession of Goldman Sachs Asset
Management, One New York Plaza, New York, New York 10004. All other accounts,
books and other documents required to be maintained under Section 31(a) of the
Investment Company Act of 1940 and the Rule promulgated thereunder are in the
physical possession of State Street Bank and Trust Company, P.O. Box 1713,
Boston, Massachusetts 02105 except for certain transfer agency records which are
maintained by Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606.

ITEM 31. MANAGEMENT SERVICES
-------------------

The Custodian Agreement between State Street Bank and Trust Company and
Registrant provides for State Street Bank and Trust Company to act as custodian
and to maintain certain accounting records for Registrant. Remuneration is
based on a minimum fixed dollar charge per annum and the Funds' average daily
net assets (such remuneration being subject to adjustment on the basis of the
amount of the Funds' uninvested cash) and on the number of portfolio
transactions. Such Agreement together with the related letter and other
agreements and amendments pertaining thereto,

10
<PAGE>

referred to under Item 24(b) are hereby incorporated by reference.

ITEM 32.

(a) The Fund's Annual Report contains performance information and is available
to any recipient of the Prospectuses upon request and without charge by writing
to Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606.

11
<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 25 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City and State of New York on the
30th day of March, 1995.

GOLDMAN SACHS TRUST

By: Michael J. Richman
----------------------
Michael J. Richman
Secretary

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 25 to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.

NAME TITLE DATE
---- ----- ----

* President and March 30, 1995
----------------------- Trustee
Marcia L. Beck

* Principal Accounting March 30, 1995
----------------------- Officer And Principal
Scott M. Gilman Financial Officer

* Trustee March 30, 1995
-----------------------
David B. Ford

* Trustee March 30, 1995
-----------------------
Ashok N. Bakhru

* Trustee March 30, 1995
-----------------------
Paul C. Nagel, Jr.

* Trustee March 30, 1995
-----------------------
Alan A. Shuch

* Trustee March 30, 1995
-----------------------
Jackson W. Smart, Jr.

12
<PAGE>

* Trustee March 30, 1995
-------------------
William H. Springer

* Trustee March 30, 1995
-------------------
Richard P. Strubel

*By: Michael J. Richman March 30, 1995
-----------------------
Michael J. Richman
Attorney-In-Fact

* Pursuant to a power of attorney previously filed.

13
<PAGE>

INDEX TO EXHIBITS
-----------------

11. Consent of Arthur Andersen LLP

18. Form of Plan entered into by Registrant pursuant to Rule 18f-3.

27. Financial Data Schedule - Institutional Shares
and Administration Shares

<PAGE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GOLDMAN
SACHS TRUST'S OCTOBER 31, 1994 ANNUAL REPORT AND IS QUALIFIED REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> GOLDMAN SACHS GLOBAL INCOME FUND
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1993
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 383,490,172
<INVESTMENTS-AT-VALUE> 385,930,056
<RECEIVABLES> 38,354,682
<ASSETS-OTHER> 118,022
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 424,402,760
<PAYABLE-FOR-SECURITIES> 18,962,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,856,377
<TOTAL-LIABILITIES> 27,818,627
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 414,558,869
<SHARES-COMMON-STOCK> 29,518,871
<SHARES-COMMON-PRIOR> 44,846,681
<ACCUMULATED-NII-CURRENT> 1,318,755
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18,473,913)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (819,578)
<NET-ASSETS> 396,584,133
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 42,597,424
<OTHER-INCOME> 0
<EXPENSES-NET> 7,764,972
<NET-INVESTMENT-INCOME> 34,832,452
<REALIZED-GAINS-CURRENT> (42,048,667)
<APPREC-INCREASE-CURRENT> (23,790,606)
<NET-CHANGE-FROM-OPS> (31,006,821)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,807,313
<DISTRIBUTIONS-OF-GAINS> 7,198,898
<DISTRIBUTIONS-OTHER> 25,765,213
<NUMBER-OF-SHARES-SOLD> 9,067,823
<NUMBER-OF-SHARES-REDEEMED> 26,266,551
<SHARES-REINVESTED> 1,870,918
<NET-CHANGE-IN-ASSETS> (297,077,671)
<ACCUMULATED-NII-PRIOR> 227,711
<ACCUMULATED-GAINS-PRIOR> (3,410,577)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,556,440
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,283,786
<AVERAGE-NET-ASSETS> 607,525,450
<PER-SHARE-NAV-BEGIN> 15.07
<PER-SHARE-NII> 0.84
<PER-SHARE-GAIN-APPREC> (1.49)
<PER-SHARE-DIVIDEND> 0.22
<PER-SHARE-DISTRIBUTIONS> 0.16
<RETURNS-OF-CAPITAL> 0.61
<PER-SHARE-NAV-END> 13.43
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

EXHIBIT 99.11

[LETTERHEAD OF ARTHUR ANDERSEN LLP]

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Goldman Sachs Trust:

As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated December 12, 1994
for the Goldman Sachs Global Income Fund (portfolio of Goldman Sachs Trust) and
to all references to our firm included in or made a part of Post-Effective
Amendment No. 25 and Amendment No. 27 to Registration Statement File Nos. 33-
17619 and 811-5349, respectively.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
March 29, 1995

<PAGE>

EXHIBIT 99.18

GOLDMAN SACHS MONEY MARKET TRUST
GOLDMAN SACHS TRUST
GOLDMAN SACHS EQUITY PORTFOLIOS, INC.

PLAN IN ACCORDANCE WITH RULE 18f-3

Each class of shares of each Fund will have the same relative rights and
privilege and be subject to the same sales charges, fees and expenses except as
set forth below. The Board of Directors/Trustees may determine in the future
that other allocations of expenses or other services to be provide to a class of
shares are appropriate and amend this plan accordingly without the approval of
shareholders of any class. Unless a class of shares is otherwise designated,
it shall have the terms set forth below with respect to class A shares.

INSTITUTIONAL SHARES

Institutional Shares are sold at net asset value without a sales charge and
are subject to the minimum purchase requirements set forth in the relevant
Fund's prospectus. Institutional Shares are not subject to an Administration,
Service, Distribution or Authorized Dealer Service Plan. Transfer agency fees
are allocated to Institutional Shares on a class basis in accordance with the
terms of the Transfer Agency Agreement. Institutional Shares shall be entitled
to the shareholder services set forth from time to time in the Funds'
prospectuses with respect to Institutional Shares.

ADMINISTRATION SHARES

Administration Shares are sold at net asset value without a sales charge
and are subject to the minimum purchase requirements set forth in the relevant
Fund's prospectus. Service Shares are sold only to or through certain service
organizations that have entered into agreements with the Funds. Administration
Shares are subject to a fee under an Administration Plan adopted with respect to
the relevant Fund but are not subject to any Service, Distribution or Authorized
Dealer Service Plan. Transfer agency fees are allocated to Administration
Shares on a class basis in accordance with the terms of the Transfer Agency
Agreement. The Administration Shareholders have exclusive voting rights, if
any, with respect to a Fund's Administration Plan. Administration Shares shall
be entitled to the shareholder services set forth from time to time in the
Funds' prospectuses with respect to Administration Shares.
<PAGE>

SERVICE SHARES

Service Shares are sold at net asset value without a sales charge and are
subject to the minimum purchase requirements set forth in the relevant Funds'
prospectus. Service Shares are sold only to or through service organizations
that have entered into agreements with the Funds. Service Shares are subject to
a fee under the Service Plan adopted with respect to the relevant Fund but are
not subject to any Administration, Distribution or Authorized Dealer Service
Plan. Transfer agency fees are allocated to Service Shares on a class basis in
accordance with the terms of the Transfer Agency Agreement. The Service
Shareholders have exclusive voting rights, if any, with respect to a Fund's
Service Plan. Service Shares shall be entitled to the shareholder services set
forth from time to time in the Funds' prospectuses with respect to Service
Shares.

CLASS A SHARES

Class Shares are sold at net asset value per share plus the applicable
sales charge as set forth in a Fund's prospectus. Class A shares are sold
subject to the minimum purchase requirements set forth in the relevant Fund's
prospectus. Class A Shares are subject to fees under the Rule 12b-1
Distribution Plans and non Rule 12b-1 Authorized Dealer Service Plans, each on
the terms set forth in the relevant Fund's prospectus, but are not subject to
any Administration or Service Plan. Transfer agency fees are allocated to Class
A Shares on a class basis in accordance with the terms of the Transfer Agency
Agreement. A wire transfer fee may be imposed in connection with the payment of
redemption proceeds from class A shares that is not imposed in connection with
other classes of shares. The Class A Shareholders have exclusive voting rights,
if any, with respect to a Fund's Distribution and Authorized Dealer Service
Plan. Class A Shares shall be entitled to the shareholder services set forth
from time to time in the Fund's prospectuses with respect to Class A Shares.

-2-