GOLDMAN SACHS TRUST, DEFS14A, 1997-02-14

GOLDMAN SACHS TRUST
DEFS14A, 1997-02-14

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<PAGE>

GOLDMAN SACHS EQUITY PORTFOLIOS, INC.

GOLDMAN SACHS TRUST

February 13, 1997

Dear Shareholder:

You are cordially invited to attend Special Meetings of Shareholders of Goldman
Sachs Trust and Goldman Sachs Equity Portfolios, Inc. (collectively the "Funds")
to be held on Tuesday, April 1, 1997 at 9:00 a.m., Chicago time, at the offices
of Goldman, Sachs & Co. located at 4900 Sears Tower, Chicago, Illinois 60606.

At this important meeting, you will be asked to consider and take action on the
election of Trustees and the ratification of the selection of independent public
accountants, Arthur Andersen LLP. In addition, you will be asked to approve
changes to the investment restrictions and policies of the Funds, the
reorganization of the Funds and the management agreements. We believe that the
proposals are important and will allow us to improve the Funds' operations,
simplify disclosure and, hopefully, attract more investment dollars. You should
carefully read the Proxy Statement that discusses each proposal in detail. The
formal Notice of Special Meeting of Shareholders and the Proxy Statement setting
forth in detail the matters to come before the meeting are attached hereto, and
a form of Proxy is enclosed for your use.

First, the conversion of the Funds into series of a newly formed Delaware
business trust will be proposed. As discussed in the accompanying Proxy
Statement, such conversions will not result in any change to the assets, fees or
policies of the Funds; however, the Trustees believe that organizing the Funds
as series of a Delaware business trust offers certain advantages. These
advantages include a clear limitation on shareholder liability, greater
flexibility for the Trustees to take actions without the cost and delay of a
shareholders meeting and the potential for cost savings.

Second, you will be asked to authorize each Fund to invest substantially all of
its assets in another open-end investment company with the same investment
objectives and policies as the Fund. Again, the Trustees believe that the
ability to adopt such a structure, commonly referred to as a master-feeder
structure, offers the potential for greater efficiencies and flexibility. While
the Funds have no immediate plan to adopt such a structure, considering this
proposal now will eliminate the need for and expense of further shareholder
action.

Third, the Trustees propose amending and restating the Funds' investment
restrictions. Certain of the Funds' investment restrictions were required by
<PAGE>

state laws that no longer are applicable to the Funds or are more restrictive
than required by federal law. The amended restrictions will expand the range of
investment opportunities and techniques available to the Funds without changing
the Funds' investment objectives or risk profile. Also, by adopting a uniform
set of restrictions, compliance and disclosure relating to these restrictions
can be simplified.

Finally, amended and restated management agreements for certain Funds will be
proposed. These revised agreements combine the advisory, subadvisory and
administration services into a single contract but WILL NOT RESULT IN ANY
INCREASE IN FEES OR REDUCTION IN SERVICES TO THE FUNDS. Consolidating these
services in one agreement will simplify the fee structure of the Funds. Such
simplification assists shareholders and potential investors in understanding and
comparing the expenses of the Funds.

THE TRUSTEES HAVE UNANIMOUSLY RECOMMENDED THAT SHAREHOLDERS APPROVE EACH ITEM
TO BE ACTED UPON AT THE MEETING.

The continuing interest of the shareholders in the affairs of the Funds is
gratefully acknowledged. Whether or not you expect to attend the meeting, it is
important that your shares be represented. Therefore, I urge you to vote FOR the
nominees for election as Trustees and each of the other proposals contained in
the Proxy Statement.

Sincerely,

/s/ Douglas C. Grip
Douglas C. Grip
President

<PAGE>

GOLDMAN SACHS TRUST
(THE "TRUST")

GS ADJUSTABLE RATE GOVERNMENT FUND
GS SHORT DURATION GOVERNMENT FUND
GS SHORT DURATION TAX-FREE FUND
GS CORE FIXED INCOME FUND
GOLDMAN SACHS GLOBAL INCOME FUND
GOLDMAN SACHS GOVERNMENT INCOME FUND
GOLDMAN SACHS MUNICIPAL INCOME FUND

GOLDMAN SACHS EQUITY PORTFOLIOS, INC. (THE "CORPORATION")

GOLDMAN SACHS ASIA GROWTH FUND
GOLDMAN SACHS BALANCED FUND
GOLDMAN SACHS CAPITAL GROWTH FUND
GOLDMAN SACHS GROWTH AND INCOME FUND
GOLDMAN SACHS INTERNATIONAL EQUITY FUND
GOLDMAN SACHS MID-CAP EQUITY FUND
GOLDMAN SACHS SELECT EQUITY FUND
GOLDMAN SACHS SMALL CAP EQUITY FUND

4900 SEARS TOWER
CHICAGO, ILLINOIS 60606

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 1, 1997

A Special Meeting of Shareholders of each Fund (the "Meeting") referred to
above (the "Funds") will be held on April 1, 1997, at 9:00 a.m. (Chicago time)
at the offices of Goldman, Sachs & Co. located at 4900 Sears Tower, Chicago,
Illinois 60606, for the following purposes:

(1) WITH RESPECT TO EACH OF THE TRUST AND THE CORPORATION, to elect nine
Trustees or Directors;

(2) WITH RESPECT TO EACH OF THE TRUST AND THE CORPORATION, to ratify or reject
the selection of Arthur Andersen LLP as independent accountants of the Trust
and Corporation for the fiscal years ending October 31, 1997 and January 31,
1998, respectively;

(3) WITH RESPECT TO EACH FUND, to approve an Agreement and Plan of
Reorganization pursuant to which each Fund will be reorganized as a series
of the Goldman Sachs Trust, a Delaware business trust;

(4) WITH RESPECT TO EACH FUND, (a) to approve an amendment to the Fund's
fundamental investment restrictions to permit each Fund to

<PAGE>

invest substantially all of its assets in another open-end investment
company; and (b) in the case of the Trust, to amend the Trust's Declaration
of Trust to permit such an investment without shareholder approval;

(5) WITH RESPECT TO EACH FUND, to amend the Funds' investment restrictions;

(6) WITH RESPECT TO EACH FUND (except GS Core Fixed Income Fund, GS Short
Duration Tax-Free Fund, GS Short Duration Government Fund and GS Adjustable
Rate Government Fund), to approve an amended and restated management
agreement;

(7) WITH RESPECT TO GOLDMAN SACHS CAPITAL GROWTH FUND, to change the Fund's
investment objective from fundamental to non-fundamental; and

(8) To transact such other business as may properly come before the Meetings
and any adjournment or adjournments thereof.

YOUR TRUSTEES/DIRECTORS UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE
PROPOSALS RELATING TO YOUR FUND(S).

Shareholders of record of each Fund at the close of business on January 31,
1997 will be entitled to vote at the Meetings or at any adjournment or
adjournments thereof. The proxy statement and proxy card are being first mailed
to shareholders on or about February 13, 1997.

It is important that you return your signed and dated Proxy Card promptly,
regardless of the size of your holdings, so that a quorum may be assured.

By Order of the Board of Trustees of Goldman Sachs Trust and the
Board of Directors of Goldman Sachs Equity Portfolios, Inc.

Michael J. Richman, Secretary

February 13, 1997

PLEASE COMPLETE, DATE AND SIGN THE PROXY CARD FOR THE SHARES HELD BY YOU AND
RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED SO THAT YOUR VOTE CAN BE
RECORDED. NO POSTAGE IS REQUIRED IF THE ENVELOPE IS MAILED IN THE UNITED STATES.
YOUR PROMPT RETURN OF YOUR PROXY OR PROXIES MAY SAVE THE TRUST OR THE
CORPORATION THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS. IF YOU ATTEND
THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON.

<PAGE>

GOLDMAN SACHS TRUST (THE "TRUST")

GOLDMAN SACHS EQUITY PORTFOLIOS, INC. (THE "CORPORATION")

4900 SEARS TOWER CHICAGO, ILLINOIS 60606

PROXY STATEMENT

GENERAL

This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Trustees of Goldman Sachs Trust (the
"Trust") and the Board of Directors of Goldman Sachs Equity Portfolios, Inc.
(the "Corporation") (collectively, the "Trustees") to be used at Special
Meetings of shareholders of each series of the Trust and Corporation (the
"Funds") to be held at the offices of Goldman, Sachs & Co. ("Goldman Sachs"),
4900 Sears Tower, Chicago, Illinois 60606, on Tuesday, April 1, 1997, at 9:00
a.m. (Chicago time) for the purposes set forth in the accompanying Notice of
Meeting. Such meetings and any adjournment thereof are referred to as the
"Meetings."

The Trustees have fixed the close of business on January 31, 1997 as the record
date (the "Record Date") for determining the shareholders of each Fund entitled
to notice of and to vote at the Meetings. Shareholders of record
<PAGE>

of each Fund on the Record Date are entitled to one vote per share at the
Meetings or any adjournment of the Meetings relating to their Fund.

Appendix A hereto sets forth the number of shares of beneficial interest of
each Fund outstanding as of January 31, 1997. Appendix B hereto sets forth the
persons who owned beneficially or of record more than 5% of any Fund as of
January 31, 1997.

Proxies will be solicited by mail and may also be solicited in person or by
telephone by officers of Goldman Sachs or Goldman Sachs Asset Management
("GSAM") and by the Trustees. In addition, the Trust's and Corporation's
transfer agent, Goldman Sachs, will solicit proxies in person and/or by
telephone. The Funds will pay their pro-rata share of the out-of-pocket costs
associated with such solicitation which are currently estimated to be $200,000
in aggregate for the Goldman Sachs Group of Funds. The transfer agent may engage
an independent proxy solicitation firm to assist it in soliciting proxies.

<PAGE>

The following table summarizes the proposals to be voted on at the Meetings and
indicates those shareholders who are being solicited with respect to each
proposal. In connection with each of the matters set forth in the attached
Notice of Meeting, a Fund's classes of shares will vote together as a single
class.

<TABLE>

SUMMARY OF VOTING ON PROPOSALS
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
<S> <C>
1. Election of nine Trustees. Each of the Trust and Corporation
separately, with its series voting as one
class.
2. Ratification of the selection of Each of the Trust and Corporation
Arthur Andersen LLP as independent separately, with its series voting as one
accountants for the fiscal years class.
ending October 31, 1997 with
respect to the Trust and January
31, 1998 with respect to the
Corporation.
3. Approval of an Agreement and Plan Each Fund voting separately.
of Reorganization (the "Agreement")
pursuant to which each Fund will be
reorganized as a series of Goldman
Sachs Trust, a Delaware business
trust.
4. (a) Approval of an amendment to (a) Each Fund voting separately as to the
each Fund's investment restrictions investment restrictions; and (b) the
to permit the Fund to invest series of the Trust, voting as a single
substantially all of its assets in class, as to the amendment to the
another open-end investment Declaration of Trust.
company; and (b) approval, on
behalf of the Trust, of a
corresponding amendment to the
Trust's Declaration of Trust.
5. (a)-(k) Approval of amended and Each Fund voting separately.
restated investment restrictions.
6. Approval of an amended and Each Fund (other than GS Core Fixed
restated management agreement. Income Fund, GS Short Duration Tax-Free
Fund, GS Adjustable Rate Government Fund
and GS Short Duration Government Fund)
voting separately.
7. Approval of the reclassification Goldman Sachs Capital Growth Fund only.
of Goldman Sachs Capital Growth
Fund's investment objective from
fundamental to non-fundamental.
</TABLE>

<PAGE>

THE TRUST AND CORPORATION WILL FURNISH, WITHOUT CHARGE, COPIES OF ANY FUND'S
MOST RECENT ANNUAL SHAREHOLDERS REPORT AND COPIES OF ITS MOST RECENT SEMI-ANNUAL
SHAREHOLDERS REPORT TO ANY SHAREHOLDER UPON REQUEST ADDRESSED TO GOLDMAN, SACHS
& CO., 4900 SEARS TOWER, CHICAGO, ILLINOIS 60606 OR BY TELEPHONE AT
800-621-2550.

This Proxy Statement and the form of Proxy are being first mailed to
shareholders on or about February 13, 1997.

- -----------------------------------------------------
PROPOSAL 1: ELECTION OF TRUSTEES
- -----------------------------------------------------

At a meeting on January 28, 1997, the Trustees, including the Trustees who are
not "interested persons" (as defined by the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Funds (the "Independent Trustees") voted to
approve, and to recommend to the shareholders that they approve, a proposal to
elect nine (9) Trustees (the "Nominees") to the Board of Trustees of the Goldman
Sachs Trust and the Board of Directors of Goldman Sachs Equity Portfolios, Inc.
Information concerning the Nominees and other relevant factors is discussed
below.

Using the enclosed form of proxy, a shareholder may authorize the proxies to
vote his or her shares for the Nominees or may withhold from the proxies
authority to vote his or her shares for one or more of the Nominees. If no
contrary instructions are given, the proxies will vote FOR the Nominees. Each of
the Nominees has consented to his or her nomination and has agreed to serve if
elected. If, for any reason, any Nominee should not be available for election or
able to serve as a Trustee, the proxies will exercise their voting power in
favor of such substitute Nominee, if any, as the Trustees may designate. The
Trust and Corporation have no reason to believe that it will be necessary to
designate a substitute Nominee.

<PAGE>

INFORMATION CONCERNING NOMINEES

The following table sets forth certain information about each Nominee,
including each Nominee's principal occupation or employment during the past five
years.

<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION OR
POSITIONS WITH TRUST EMPLOYMENT DURING THE LAST FIRST BECAME
AND CORPORATION FIVE YEARS TRUSTEE
-------------------- --------------------------- ------------
<S> <C> <C>
Ashok N. Bakhru (53) Executive Vice President-Finance 1990-Corporation
Chairman and Trustee & Administration & Chief 1991-Trust
Financial Officer, Coty, Inc.
(since April 1996); President,
ABN Associates (since June 1994);
Senior Vice President of Scott
Paper Company (until June 1994);
Director of Arkwright-Mutual
Insurance Company; Trustee of
International House of
Philadelphia; Member of Cornell
University Council; and Trustee
of the Walnut Street Theater. Mr.
Bakhru has been a Trustee of
Goldman Sachs Money Market Trust
since November 1991.
David B. Ford (51)* Managing Director, Goldman Sachs 1994-Corporation
Trustee (since 1996); General Partner, 1994-Trust
Goldman Sachs (1986-1996);
Co-Head of GSAM (since December
1994). Mr. Ford has been a
Trustee of Goldman Sachs Money
Market Trust since 1994.
Douglas Grip (35)* Vice President, Goldman Sachs 1996-Corporation
Trustee and President (since May 1996); President, MFS and Trust
Retirement Services Inc. of
Massachusetts Financial Services
(prior thereto).
John P. McNulty (44)* Managing Director, Goldman Sachs To be elected in
Trustee (since 1996); General Partner of 1997
Goldman Sachs (1990 to 1994 and
1995-1996); Co-Head of GSAM
(since November 1995); Limited
Partner of Goldman Sachs (1994 to
November 1995).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION OR
POSITIONS WITH TRUST EMPLOYMENT DURING THE LAST FIRST BECAME
AND CORPORATION FIVE YEARS TRUSTEE
-------------------- --------------------------- ------------
<S> <C> <C>
Mary P. McPherson (60) President of Bryn Mawr College To be elected in
Trustee (since 1978); Director of Josiah 1997
Macy, Jr., Foundation (since 1977);
Director of the Philadelphia
Contributionship (since 1985);
Director of Amherst College (since
1986); Director of Dayton Hudson
Corporation (since 1988); Director
of the Spencer Foundation (since
1993); and member of PNC Advisory
Board (since 1993).
Alan A. Shuch (48)* Limited Partner, Goldman Sachs 1991-Corporation
Trustee (since 1994); Director and Vice and Trust
President of Goldman Sachs Funds
Management, Inc. (April 1990 to
November 1994); President and Chief
Operating Officer, GSAM (September
1988 to November 1994). Mr. Shuch
has been a Trustee of Goldman Sachs
Money Market Trust since 1990.

Jackson W. Smart (66) Chairman, Executive Committee, 1991-Corporation
Trustee First Commonwealth, Inc. (a managed 1987-Trust
dental care company, since January
1996); Chairman and Chief Executive
Officer, MSP Communications, Inc.
(a company engaged in radio
broadcasting; since November 1988);
Director, Federal Express
Corporation (since 1976), Evanston
Hospital Corporation (since 1980)
and First Commonwealth, Inc. (since
1988) and North American Private
Equity Group (a venture capital
fund). Mr. Smart has been a Trustee
of Goldman Sachs Money Market Trust
since 1984.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION OR
POSITIONS WITH TRUST EMPLOYMENT DURING THE LAST FIRST BECAME
AND CORPORATION FIVE YEARS TRUSTEE
-------------------- --------------------------- ------------
<S> <C>
William H. Springer Vice Chairman and Chief Financial 1991-Corporation
(67) and Administrative Officer 1991-Trust
Trustee (February 1987 to June 1991) of
Ameritech (a telecommunications
holding company); Director,
Walgreen Co. (a retail drug store
business) and Baker, Fentress &
Co. (a closed-end, management
investment company).
Mr. Springer has been Trustee and
Chairman of The Benchmark Funds
since April 1984 and a Trustee of
Goldman Sachs Money Market Trust
since 1989.
Richard P. Strubel (57) Managing Director, Tandem 1991-Corporation
Trustee Partners, Inc. (since 1990); 1987-Trust
President and Chief Executive
Officer, Microdot, Inc. (a
diversified manufacturer of
fastening systems and connectors;
January 1984 to October 1994).
Mr. Strubel has been a Trustee of
The Benchmark Funds since 1982
and Goldman Sachs Money Market
Trust since 1987.
</TABLE>

-----

* Messrs. Ford, McNulty, Shuch and Grip are deemed to be "interested persons" of
the Trust and the Corporation for purposes of the 1940 Act because Messrs. Ford
and McNulty are Managing Directors of Goldman Sachs, Mr. Shuch is a limited
partner of Goldman Sachs and Mr. Grip is a Vice President of Goldman Sachs.

<PAGE>

INFORMATION CONCERNING MEETINGS OF TRUSTEES AND COMMITTEES

The number of shares of beneficial interest of each Fund by class beneficially
owned by each of the Nominees, directly or indirectly, as of January 31, 1997,
is set forth in Appendix C hereto.

Five meetings of the Trustees were held during the fiscal years ended October
31, 1996 of the Trust and January 31, 1997 of the Corporation (the "most recent
fiscal years"). No Trustee attended fewer than seventy-five percent of all
meetings of the Board of Trustees and of any committee of which he was a member
held while he was a Trustee during such years.

Each of the Trust and Corporation has an Audit Committee comprised of all the
Independent Trustees. The Audit Committee of each of the Trust and Corporation
held two meetings during the most recent fiscal years. The functions performed
by the Audit Committee are to recommend annually to the entire Board of Trustees
a firm of independent certified public accountants to audit the books and
records of the Trust and Corporation for the ensuing year; to monitor that
firm's performance; and to review with the firm the scope and results of each
audit and determine the need, if any, to extend audit procedures.

Each of the Trust and Corporation has a Nominating Committee of the Trustees
comprised of all the Independent Trustees. The Nominating Committees held one
meeting on January 28, 1997. Included among the functions of the Nominating
Committees are the selection and nomination for appointment and election of
candidates to serve as Trustees who are not "interested persons," as defined in
the 1940 Act. The Committees also coordinate with Trustees who are interested
persons in the selection and election of the Trust's and Corporation's officers.
The Nominating Committees do not consider recommendations for Trustee from
shareholders.

REMUNERATION OF TRUSTEES

Since April 24, 1996, each of the Independent Trustees has been compensated at
the rate of $4,500 for each regular board meeting and $500 for each audit
committee meeting, plus an annual fee of $46,500 ($69,750 for the Chairman) and
reimbursement for each Trustee's out-of-pocket expenses. Because the Trustees
also serve as trustees of another trust within the Goldman Sachs Group of Funds,
the Trust and Corporation bear only their pro rata share of the foregoing
meeting fees and Trustee compensation.

<PAGE>

The following table sets forth certain information about the compensation of
each Trustee of the Trust and Corporation for the most recent fiscal years.

<TABLE>
<CAPTION>
PENSION OR AGGREGATE
AGGREGATE RETIREMENT COMPENSATION
AGGREGATE COMPENSATION BENEFITS ACCRUED FROM THE
COMPENSATION FROM THE AS PART OF FUND GOLDMAN SACHS
NAME OF TRUSTEE FROM THE TRUST CORPORATION EXPENSES GROUP OF FUNDS
- -------------------- -------------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Paul Nagel* . . . . $3,775 $12,475 $0 $62,450
Ashok N. Bakhru . . $3,969 $ 7,475 $0 $69,299
Marcia Beck** . . . $ 0 $ 0 $0 $ 0
David B. Ford . . . $ 0 $ 0 $0 $ 0
Douglas Grip . . . $ 0 $ 0 $0 $ 0
Alan A. Shuch . . . $ 0 $ 0 $0 $ 0
Jackson W. Smart . $3,388 $ 7,475 $0 $58,954
William H. Springer $3,388 $ 7,475 $0 $58,954
Richard P. Strubel $3,388 $ 7,475 $0 $58,954
</TABLE>

-----

* Mr. Nagel retired as Chairman and Trustee of the Trust and the Corporation on
June 30, 1996.

** Ms. Beck resigned as President and Trustee of the Trust and the Corporation
on May 1, 1996.

OFFICERS

The following table sets forth information with respect to the executive
officers of the Trust and Corporation. Each officer is elected by the Trustees.
Each of the President, Treasurer and Secretary serves until the next annual
meeting of the Trustees and until his or her successor is chosen and qualified
or until his or her death, resignation, removal or disqualification. Each of the
other officers holds office at the pleasure of the Trustees.

<PAGE>

<TABLE>
<CAPTION>
NAME, POSITION PRINCIPAL OCCUPATION(S)
AND AGE DURING PAST FIVE YEARS
-------------- -----------------------
<S> <C>

Douglas Grip (35) Vice President, Goldman Sachs (since May 1996);
Trustee and President President, MFS Retirement Services Inc. of
Massachusetts Financial Services (prior thereto).

Nancy L. Mucker (47) Vice President, Goldman Sachs; Manager, Shareholder
Vice President Servicing of GSAM (since November 1989).

John W. Mosior (58) Vice President, Goldman Sachs; Manager, Shareholder
Vice President Servicing of GSAM (since November 1989).

Pauline Taylor (50) Vice President, Goldman Sachs; Director, Shareholder
Vice President Servicing of GSAM (since June 1992).

Scott M. Gilman (37) Director, Mutual Fund Administration of GSAM (since
Treasurer April 1994; Assistant Treasurer of Goldman Sachs Funds
Management, Inc. (since March 1993); Vice President,
Goldman Sachs (since March 1990).

John M. Perlowski (32) Vice President, Goldman Sachs (since July 1995);
Assistant Treasurer Director, Investors Bank & Trust Company (November 1993
to July 1995); Audit Manager of Arthur Andersen LLP
(prior thereto).

Michael J. Richman Associate General Counsel of GSAM (since February
(36) 1994); Assistant General Counsel and Vice President of
Secretary Goldman Sachs; Counsel to the Funds Group of GSAM
(since June 1992); Partner of Hale and Dorr (September
1991 to June 1992).

Howard B. Surloff (31) Assistant General Counsel and Vice President of Goldman
Assistant Secretary Sachs (since November 1993 and May 1994, respectively);
Counsel to the Funds Group, GSAM (since November 1993);
Associate of Shereff, Friedman, Hoffman & Goodman
(prior thereto).

Kaysie Uniacke (35) Vice President and Senior Portfolio Manager, GSAM
Assistant Secretary (since 1988).

Elizabeth Anderson Portfolio Manager, GSAM (since April 1996); Junior
(27) Portfolio Manager, GSAM (1995-1996); Funds Trading
Assistant Secretary Assistant, GSAM (1993-1995); Compliance Analyst,
Prudential Insurance (1991-1993).

Steven Hartstein (33) Legal Products Analyst, Goldman Sachs (since June
Assistant Secretary 1993); Funds Compliance Officer, Citibank Global Asset
Management (August 1991 to June 1993).

Deborah Farrell (24) Administrative Assistant, Goldman Sachs (since January
Assistant Secretary 1994). Formerly at Cleary, Gottlieb, Steen and
Hamilton.
</TABLE>

<PAGE>

Each officer holds comparable positions with certain other investment companies
for which Goldman Sachs or an affiliate acts as the investment adviser or
distributor. As a result of the responsibilities assumed by Goldman Sachs and
the Trust's and Corporation's administrator, custodian and distributor, the
Trust and Corporation themselves require no employees. The Trust's and
Corporation's officers do not receive any compensation from the Trust or
Corporation for serving as such.

THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE IN FAVOR OF EACH NOMINEE
LISTED ABOVE.

REQUIRED VOTE

Because your Fund is a series of the Trust or Corporation, your vote will be
counted together with the votes of shareholders of the other series of the Trust
or Corporation, as the case may be, voting as a single class in the election of
Trustees. Election of each Nominee of the Trust or Corporation requires a
plurality of votes of the shareholders of the entire Trust or Corporation
present at the Meetings.

- -----------------------------------------------------
PROPOSAL 2: RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------

As directed by the Trustees and required by the 1940 Act, the ratification or
rejection of the selection of the independent accountants for the Trust's and
Corporation's fiscal years ending October 31, 1997 and January 31, 1998,
respectively, will be voted upon at the Meetings. It is intended that the
persons named in the accompanying Proxy will vote for Arthur Andersen LLP,
unless contrary instructions are given. If the selection of the Trust's and
Corporation's independent accountants is not ratified by the shareholders at the
Meetings, the Boards will reconsider such selection.

The Trust's and Corporation's financial statements for the fiscal year ended
October 31, 1996 and January 31, 1997, respectively, were or are being audited
by Arthur Andersen LLP. In connection with its audit, Arthur Andersen LLP
reviews the Trust's and Corporation's annual reports to shareholders and their
filings with the Securities and Exchange Commission ("SEC"). In addition to
audit services, Arthur Andersen LLP prepares the Trust's and Corporation's
federal and state tax returns and provides consultation and assistance on
accounting, internal control and related matters.

<PAGE>

At meetings held on October 22, 1996 and January 28, 1997, the Trustees
unanimously selected Arthur Andersen LLP as the Trust's and Corporation's
independent accountants for their fiscal years ending October 31, 1997 and
January 31, 1998, respectively. In addition, at meetings held on April 26, 1996
and October 22, 1996, the Audit Committees met with representatives of Arthur
Andersen LLP to review the services of the independent accountants. The Audit
Committees, in turn, reported on these matters at the meeting of the Trustees
held the same day. A representative of Arthur Andersen LLP is expected to be
available at the Meetings by telephone should any matter arise requiring
consultation with the accountants, and the accountants have been given the
opportunity to make a statement if they so desire.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS.

REQUIRED VOTE

Because your Fund is a series of the Trust or Corporation, your vote will be
counted together with the votes of shareholders of the other series of the Trust
or Corporation, as the case may be, voting as a single class on the ratification
of independent accountants. Ratification of the independent accountants of the
Trust or Corporation requires the approval of a majority of the outstanding
shares of the Trust or the Corporation, respectively, present at the Meeting. If
this proposal is not approved by a Fund, the Trustees will consider what further
action, if any, will be taken.

- -----------------------------------------------------
PROPOSAL 3: APPROVAL OF AGREEMENTS AND PLANS OF REORGANIZATION PURSUANT TO WHICH
EACH FUND WILL BE REORGANIZED INTO A SERIES OF A DELAWARE BUSINESS
TRUST
- -----------------------------------------------------

GENERAL

The Trustees have unanimously approved, subject to shareholder approval, a
proposal for the Trust and the Corporation on behalf of each Fund to enter into
Agreements and Plans of Reorganization, Conversion and Termination (the "Plans
of Reorganization") with a newly established Delaware business trust named
Goldman Sachs Trust (the "Delaware Trust"). Each Plan of Reorganization will be
in the form attached to this Proxy Statement as Appendix D. The Plans of
Reorganization provide for the conversion (the

<PAGE>

"Conversions") of each Fund from a separate series of the Trust, a Massachusetts
business trust (which is referred to in this Proposal 3 as the "Massachusetts
Trust"), or the Corporation, a Maryland corporation, into a corresponding
separate series of the Delaware Trust. Each series of the Massachusetts Trust
and the Corporation is referred to in this Proposal as a "current Fund." It is
also contemplated that the series of Goldman Sachs Money Market Trust (the
"Money Market Trust"), another open-end investment company for which Goldman
Sachs acts as investment adviser, administrator and distributor, will be
reorganized into other separate series of the Delaware Trust. Consequently, if
the Conversions are approved by shareholders of each of the Massachusetts Trust,
the Corporation and the Money Market Trust, all funds currently in the Goldman
Sachs Group of Funds will be series of the Delaware Trust.

The Trustees believe that a Delaware business trust as a form of organization
offers certain advantages for mutual funds over either a Massachusetts business
trust or a Maryland corporation. These advantages include granting the Trustees
greater power to take certain actions without shareholder approval and greater
flexibility in methods of voting and organization. In the case of a
Massachusetts business trust, a Delaware business trust also offers the
advantages of a clearer limitation upon the liability of shareholders and
Trustees. The Trustees also believe that the proposed Declaration of Trust of
the Delaware Trust (the "Delaware Trust Instrument") is clearer and more modern
than the current organizational documents. While these same improvements could
be achieved by amending the organization documents of each of the Massachusetts
Trust and, to a lesser extent, the Corporation, the Trustees have concluded
that, given the other advantages of a Delaware business trust, it is preferable
to enter into the Plans of Reorganization. For a summary comparison of the
Massachusetts Trust's Declaration of Trust (the "Massachusetts Declaration of
Trust") and the proposed Delaware Trust Instrument, see "Description of Certain
Provisions of the Delaware Trust Instrument" and "Certain Comparative
Information About Massachusetts Business Trusts and Delaware Business Trusts"
below. For a summary comparison of the Corporation's Articles of Incorporation
and the proposed Delaware Trust Instrument, see "Description of Certain
Provisions of the Delaware Trust Instrument" and "Certain Comparative
Information about Maryland Corporations and Massachusetts Business Trusts"
below.

The Conversions will entail organizing the Delaware Trust, which will initially
have 34 series, including seven series corresponding to the seven series of the
Massachusetts Trust and eight series corresponding to the eight series of the
Corporation. Each series of the Delaware Trust that corresponds

<PAGE>

to a current Fund is referred to in this Proposal as a "successor Fund." To
effect the Conversion, each current Fund will transfer all of its assets and
liabilities to the corresponding successor Fund. As consideration for the
transfer of such assets and liabilities (together, "net assets"), each successor
Fund will issue shares of beneficial interest ("successor Fund shares") to the
current Fund whose net assets it has acquired and such current Fund will
distribute such successor Fund shares pro rata to the current Fund shareholders
in exchange for their shares. Upon completion of the Conversion, each
shareholder will be the owner of full and fractional successor Fund shares equal
in number and aggregate net asset value and of the same class as his or her
shares of the corresponding current Fund as of the date of the Conversion.
Following the Conversion, each successor Fund will carry on the business of the
corresponding current Fund. The successor Fund will have the same investment
adviser, other service providers, fee and expense structure and investment
objectives, policies and restrictions as the corresponding current Fund. Any
change in the composition of the Board of Trustees, investment restrictions and
management agreements approved at the Meetings with respect to a current Fund
will also apply to the corresponding successor Fund. There may be deemed a
momentary technical inconsistency with certain of the policies and restrictions
of a Fund (such as restrictions on investments in any one issuer and investments
in other investment companies) during the Conversion. Approval of the Plans of
Reorganization will also constitute approval to terminate the current Funds, the
Massachusetts Trust and the Corporation.

REASONS FOR THE PROPOSED CONVERSIONS

The Massachusetts Trust is organized as a Massachusetts business trust and the
Corporation is organized as a Maryland corporation. As discussed above, the
Trustees unanimously recommend conversion of each Fund into a corresponding
separate series of the Delaware Trust. The Trustees believe that organizing the
Funds as series of the Delaware Trust offers certain advantages over maintaining
them as series of either a Massachusetts business trust or a Maryland
corporation.

The principal advantage of a Delaware business trust compared to a
Massachusetts business trust is a clearer limitation of liability of
shareholders and Trustees for the obligations of the trust. The Delaware
Business Trust Act (the "Delaware Act") expressly limits the liability of
Delaware business trust shareholders for the debts or obligations of the
business trust to the same extent as for stockholders of for-profit Delaware
corporations. Similarly, the Delaware Act provides that a series of a Delaware
business trust will not be

<PAGE>

liable for the debts or obligations of any other series of the business trust.
Under Massachusetts law, there are no comparable statutory provisions. Although
the possibility of incurring these types of liability may be remote under
Massachusetts law, the above provisions of the Delaware Act provide greater
protection against shareholder liability and the liability of one business trust
series for the debts or obligations of another series. However, it is possible
that, under certain circumstances, courts in some states may not enforce limited
liability for Delaware business trust shareholders. With respect to Trustee
liability, Delaware law more clearly protects a Trustee from liability for the
obligations of the business trust than does Massachusetts law. This may help the
Funds attract and retain qualified Trustees in the future. The clearer
limitation on shareholder and trustee liability is not a factor in comparing
Maryland corporations to the Delaware Trust because corporate law generally
provides that shareholders and directors will not be liable for the obligations
of a corporation.

Second, the Trustees believe that the Delaware business trust form of
organization will enable the successor Funds to adopt new methods of operation
and employ new technologies that are expected to reduce costs of operation when,
and if, implemented. For example, Delaware law authorizes electronic or
telephonic communications between shareholders and a Delaware business trust.
The Trustees hope to take advantage of this provision in the future to improve
shareholder voting procedures and reduce associated costs.

Third, the Conversions offer the potential for future cost savings, although no
immediate cost savings are expected to result from the Conversions. These cost
savings may result from either the differences between the Massachusetts Trust,
the Corporation and the Delaware Trust or from the combination of all of the
Funds in the Goldman Sachs Group of Funds into a single legal entity. For
example, since the Trustees of a Delaware business trust can take more actions
without shareholder approval than is currently permitted under the Massachusetts
Trust's or Corporation's organizational documents, the Delaware Trust may be
required to hold fewer shareholder meetings, potentially further reducing costs.
Although none of a Delaware business trust, a Massachusetts business trust or a
Maryland corporation is required to hold annual shareholder meetings, Delaware
law affords to the Trustees greater latitude to adapt the Delaware Trust to
future contingencies without the necessity of holding a special shareholder
meeting. Under the Delaware Trust Instrument, the Trustees have the power to
amend the Delaware Trust Instrument to dissolve the business trust; to
incorporate the Delaware Trust; to merge or consolidate with another entity; to
sell, lease, exchange, transfer, pledge or otherwise dispose of all or any part
of the

<PAGE>

Delaware Trust's assets; to cause any series to become a separate trust; and to
change the Delaware Trust's domicile--all without a shareholder vote.

Any exercise of authority by the Trustees will be subject to applicable state
and federal law. The flexibility of a Delaware business trust as a form of
organization should help to assure that the Delaware Trust always operates under
the most advantageous structure and is able to take advantage of opportunities
to reduce the expense and frequency of future shareholder meetings.

Finally, Delaware law expressly provides that separate boards of trustees may
be authorized for each series of a Delaware business trust. Whether separate
boards of trustees can be authorized for series of a Massachusetts business
trust is unclear under Massachusetts law, and separate boards are not permitted
in the case of a Maryland corporation. As always, the establishment of any board
of trustees of a registered investment company must comply with applicable
securities laws, including the provision of the 1940 Act regarding the election
of trustees by shareholders.

BOARD OF TRUSTEES' EVALUATION AND RECOMMENDATION

At their meeting held on January 28, 1997, after considering the matters
discussed above, the Trustees, including the Independent Trustees, unanimously
approved the adoption of the Plans of Reorganization and determined that the
Conversions (i) are in the best interest of the Funds and (ii) will not result
in dilution of the interests of the shareholders of any Fund. In addition, the
Trustees unanimously voted to recommend to the shareholders of each Fund that
they approve the Plans of Reorganization and the transactions contemplated
thereunder. In taking such action and making such recommendation, the Trustees
took into consideration the fact that the Conversions may provide operational
efficiencies and additional managerial flexibility to the Trustees. The Trustees
believe that the Conversions will be beneficial to present shareholders of the
Funds as well as to potential investors.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND APPROVE A
PLAN OF REORGANIZATION PROVIDING FOR THE CONVERSION OF EACH FUND FROM A SERIES
OF EITHER A MASSACHUSETTS BUSINESS TRUST OR A MARYLAND CORPORATION TO A SERIES
OF A DELAWARE BUSINESS TRUST.

<PAGE>

VOTE REQUIRED TO APPROVE PLANS OF REORGANIZATION

Approval of the Plans of Reorganization as to each Fund in the Massachusetts
Trust requires the affirmative vote of a majority of the shares of such Fund
outstanding and entitled to vote. For this purpose, a majority of the
outstanding shares of a Fund means the vote of the lesser of (a) 67% or more of
the shares present at the Meeting, if the holders of more than 50% of the shares
of the Fund, are present or represented by proxy, or (b) more than 50% of the
outstanding shares of the Fund, (a "1940 Act Majority"). Approval of the Plans
of Reorganization as to each Fund in the Corporation requires the approval of
the holders of a majority of the outstanding shares of such Fund. Shares of all
classes of a Fund will be voted together as one class. The Trustees have
determined that the Conversions will not proceed as described above with respect
to the Massachusetts Trust or the Corporation, as the case may be, unless
approved by shareholders of all of the Funds included in the Massachusetts Trust
or the Corporation. In the event that shareholders of one or more of the Funds
do not vote in favor of the Conversions, the Trustees will determine what
further action, if any, to take, including the possibility of resubmitting the
proposal at a later time to the shareholders of the one or more of the Funds
which have not voted in favor of the Conversions.

A vote FOR the Conversions will authorize each current Fund, as the sole
shareholder of its corresponding successor Fund (i) to elect as Trustees of the
Delaware Trust (if Proposal 1 is approved), Messrs. Bakhru, Ford, Grip, McNulty,
Shuch, Smart, Springer and Strubel and Ms. McPherson (see Proposal 1); (ii) to
ratify the selection of Arthur Andersen LLP as the Delaware Trust's independent
accountants (see Proposal 2); (iii) to approve a management agreement for each
successor Fund (see Proposal 6); (iv) to approve fundamental investment
restrictions for the successor Funds, which, if Proposal 4 and/or 5 are
approved, would be the same as those contained in such proposals and (v) to
approve distribution, authorized-dealer service, administration and service
plans, as applicable, for each of the Funds. If the Conversions are approved but
any of the other proposals is not approved by a Fund's shareholders, the Fund,
as sole shareholder of the successor Fund, will vote to approve the existing
forms of advisory contracts or fundamental restrictions, as the case may be.

<PAGE>

SUMMARY OF THE PLANS OF REORGANIZATION

The following discussion summarizes certain terms of the Plans of
Reorganization. This summary of the Plans of Reorganization is qualified in its
entirety by the provisions of the form of Plans of Reorganization, which is
attached to this Proxy Statement as Appendix D.

In order to accomplish the Conversions, a Delaware business trust will be
formed. On the closing date of the Conversions (the "Closing Date"), each
current Fund will transfer all of its assets to its corresponding successor Fund
in exchange for the assumption by the successor Fund of all the liabilities of
that current Fund and the issuance to that current Fund of shares of that
successor Fund ("successor Fund shares") equal to the value (as determined by
using the procedures in the current prospectuses) on the date of the exchange of
that current Fund's net assets. Immediately thereafter, each current Fund will
liquidate and distribute successor Fund shares to each current Fund
shareholder's account pro rata in proportion to such current Fund shareholder's
beneficial interest in his or her current Fund ("current Fund shares") in
exchange for his or her current Fund shares. In these exchanges, a successor
Fund will issue the appropriate number of successor Fund shares of each class of
shares that is currently outstanding, so that the current Fund will distribute,
and holders of a particular class of current Fund shares will receive successor
Fund shares of the same class. As soon as practicable after this distribution of
successor Fund shares, each current Fund will be wound up and terminated. A
confirmation will be mailed to each current Fund shareholder of the number of
successor Fund shares registered to the shareholder's account. Certificates
evidencing full or fractional successor Fund shares will not be mailed to
shareholders. UPON COMPLETION OF THE CONVERSION, EACH CURRENT FUND SHAREHOLDER
WILL BE THE OWNER OF FULL AND FRACTIONAL SUCCESSOR FUND SHARES EQUIVALENT IN
NUMBER, CLASS AND AGGREGATE NET ASSET VALUE TO HIS OR HER CURRENT FUND SHARES
IMMEDIATELY BEFORE THE CONVERSION.

The Trustees of the Delaware Trust will hold office indefinitely except that
(i) any Trustee may resign; (ii) any Trustee may be removed by written
instrument signed by a majority of the other Trustees; (iii) any Trustee who has
died, become physically or mentally incapacitated by reason of disease or
otherwise, or is otherwise unable to serve, may be retired by a written
instrument signed by a majority of the other Trustees; and (iv) any Trustee may
be removed at any special meeting of the shareholders by a vote of two- thirds
of the outstanding shares of the Delaware Trust. If a vacancy occurs for

<PAGE>

any reason, the remaining Trustees may fill such vacancy by appointing another
Trustee so long as, immediately after such appointment, at least two-thirds of
the Trustees have been elected by shareholders. If, at any time, less than a
majority of the Trustees holding office has been elected by shareholders, the
Trustees then in office will promptly call a shareholders' meeting for the
purpose of electing Trustees. Otherwise, there normally will be no meetings of
shareholders for the purpose of electing Trustees.

Assuming the Plans of Reorganization are approved, it is currently contemplated
that the Conversions will become effective at the close of business on April 30,
1997 or as soon thereafter as possible.

If, at any time before the Closing Date of the Conversions, the Trustees
determine that it would not be in the best interest of the Massachusetts Trust,
the Corporation or their respective shareholders to proceed with the
Conversions, the Conversions will not go forward, notwithstanding the approval
of the Conversions by the shareholders at the Meetings. The Massachusetts Trust,
the Corporation and the Delaware Trust may at any time waive compliance with any
of the covenants and conditions contained in, or may amend, the Plans of
Reorganization; provided that such waiver or amendment does not materially
adversely affect the interests of current Fund shareholders.

EXPENSES OF THE CONVERSIONS

Each Fund will bear its own expenses associated with the transactions
contemplated by the Plans of Reorganization, including expenses associated with
the solicitation of proxies. In the event that the Conversions are completed,
such expenses will be assumed by each successor Fund. It is currently estimated
that the aggregate expenses of the Conversions will be approximately $350,000,
which will be allocated among the Funds and the series of Money Market Trust.

TAX CONSEQUENCES OF THE CONVERSIONS

It is a condition to the consummation of the Conversions that the Massachusetts
Trust, the Corporation and the Delaware Trust receive on or before the Closing
Date an opinion from Hale and Dorr LLP, counsel to the Massachusetts Trust, the
Corporation and the Delaware Trust, substantially to the effect that, among
other things, for federal income tax purposes, each Conversion will constitute a
reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended, and that no gain or loss will be recog-

<PAGE>

nized for federal income tax purposes by each current Fund, each successor Fund
and the shareholders of each current Fund upon (1) the transfer of a current
Fund's assets to the corresponding successor Fund in exchange solely for such
successor Fund's shares and the assumption by such successor Fund of that
current Fund's liabilities or (2) the distribution in liquidation by the current
Fund of these successor Fund shares to the current Fund shareholders in exchange
for their current Fund shares. The opinion will further provide, among other
things, that (i) the tax basis of the successor Fund shares to be received by
each current Fund shareholder will be the same as that of his or her current
Fund shares surrendered in exchange therefor and (ii) each current Fund
shareholder's tax holding period for his or her successor Fund shares will
include such shareholder's tax holding period for the current Fund shares
surrendered in exchange therefor, provided that such current Fund shares were
held as capital assets on the date of the exchange.

CONTINUATION OF SHAREHOLDER ACCOUNTS AND PLANS

The Delaware Trust's transfer agent will establish accounts for all current
Fund shareholders containing the appropriate number and class of successor Fund
shares to be received by that shareholder under the Plans of Reorganization.
Such accounts will be identical in all material respects to the accounts
currently maintained by the Funds for each shareholder. Current Fund
shareholders who are receiving payments under a Systematic Withdrawal Plan with
respect to current Fund shares will retain the same rights and privileges as to
successor Fund shares under such Plan after the Conversion. Similarly, no action
will be necessary in order to continue any automatic exchange plans, rights of
accumulation, letters of intent, automatic investment plans or retirement plans
or other shareholder services currently maintained by a current Fund
shareholder.

TRANSFER AGENT AND CUSTODIAN

Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606, currently
serves as the transfer agent for the Massachusetts Trust and the Corporation and
will serve in the same capacity for the Delaware Trust.

State Street Bank and Trust Company, P.O. Box 1713, Boston, Massachusetts
02105, currently acts as the custodian for the Massachusetts Trust and the
Corporation and will serve in the same capacity for the Delaware Trust.

<PAGE>

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP, One International Place, Boston, Massachusetts 02110, are
presently the independent public accountants for the Massachusetts Trust and the
Corporation, and will continue to be the independent public accountants for the
Funds, subject to required approvals (see also Proposal 2).

DISTRIBUTION, AUTHORIZED DEALER SERVICE, SERVICE AND ADMINISTRATION PLANS

The Delaware Trust will adopt distribution and authorized dealer service plans
on behalf of Class A and Class B shares of each successor Fund. The Delaware
Trust will adopt service plans with respect to the service shares, if any, of
any successor Fund and administration plans with respect to the administration
shares, if any, of each successor Fund. Each plan will be identical, in all
material respects, including fees, to the Funds' existing plans. Pursuant to the
new plans, the Delaware Trust on behalf of each successor Fund will assume the
corresponding current Fund's obligations under the agreements with Service
Organizations and authorized dealers.

DESCRIPTION OF CERTAIN PROVISIONS OF THE DELAWARE TRUST INSTRUMENT

The following is a summary of certain provisions of the Delaware Trust
Instrument.

SERIES AND CLASSES. As discussed above, the Delaware Trust Instrument permits
the Delaware Trust to issue series of its shares which represent interests in
separate portfolios of investments, including the successor Funds. The Delaware
Trust is also authorized to issue multiple classes of such series. The
Massachusetts Declaration of Trust and the Corporation's Articles of
Incorporation also permit the issuance of separate series and classes of shares.
No series is entitled to share in the assets of any other series or is liable
for the expenses or liabilities of any other series. The Trustees are authorized
to divide each series of shares into separate classes, which represent a pro
rata interest in the same series and are entitled to the same rights, except as
provided by the Trustees. The successor Funds would initially have the same
classes of shares, which would be entitled to the same rights, as the classes of
the current Funds. The Trustees of the Delaware Trust are able to authorize the
issuance of additional series or classes of shares without prior shareholder
approval.

LIMITATIONS ON DERIVATIVE ACTIONS. In addition to the provisions of Delaware
law, the Delaware Trust Instrument provides that a shareholder of

<PAGE>

the Delaware Trust may bring a derivative action on behalf of the Delaware Trust
only if the following conditions are met: (a) shareholders eligible to bring
such derivative action under Delaware law who hold at least 10% of the
outstanding shares of the Delaware Trust, or 10% of the outstanding shares of
the series or class to which such action relates, must join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and to
investigate the basis of such claim. The Trustees will be entitled to retain
counsel or other advisers in considering the merits of the request and may
require an undertaking by the shareholders making such request to reimburse the
Delaware Trust for the expense of any such advisers in the event that the
Trustees determine not to bring such action. No similar provisions are
applicable to the Massachusetts Trust or the Corporation.

SHAREHOLDER MEETINGS AND VOTING RIGHTS. The Delaware Trust is not required to
hold annual meetings of shareholders and does not intend to hold such meetings.
In the event that a meeting of shareholders is held, each share of the Delaware
Trust will be entitled, as determined by the Trustees, either to one vote for
each share or to one vote for each dollar of net asset value represented by such
shares on all matters presented to shareholders including the election of
Trustees (this method of voting being referred to as "dollar based voting").
However, to the extent required by the 1940 Act or otherwise determined by the
Trustees, series and classes of the Delaware Trust will vote separately from
each other. Shareholders of the Delaware Trust do not have cumulative voting
rights in the election of Trustees. Meetings of shareholders of the Delaware
Trust, or any series or class thereof, may be called by the Trustees, certain
officers or, in accordance with a position taken by the staff of the Securities
and Exchange Commission, upon the written request of holders of 10% or more of
the shares entitled to vote at such meetings. The shareholders of the Delaware
Trust will have voting rights only with respect to the limited number of matters
specified in the Delaware Trust Instrument and such other matters as the
Trustees may determine or as may be required by law.

The voting provisions of the Delaware Trust Instrument differ from those of the
Massachusetts Declaration of Trust and the Corporation's Articles of
Incorporation in several important respects. Neither the Massachusetts Trust nor
the Corporation is authorized to use dollar based voting. Instead each
shareholder has one vote for each share held, regardless of its net asset value
per share. This can have the effect of providing series with a lower net asset
value per share, such as money market funds, with a voting interest that is
disproportionate to their economic interest. Also, a greater number of matters
require approval by the shareholders of the Massachusetts Trust and the Cor-

<PAGE>

poration. In the case of the Corporation, whether a matter requires shareholder
approval is an issue of Maryland corporate law and the Articles of Incorporation
cannot be amended without shareholder approval. The Massachusetts Declaration of
Trust, in addition to the matters requiring approval of shareholders of the
Delaware Trust, requires shareholder approval of the reorganization or
termination of the Massachusetts Trust or any of its series, certain legal
proceedings and certain amendments to the Declaration of Trust.

INDEMNIFICATION. The Delaware Trust Instrument provides for indemnification of
Trustees, officers and agents of the Delaware Trust unless the recipient is
adjudicated (i) to be liable by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office or (ii) not to have acted in good faith in the reasonable belief
that such person's actions were in the best interest of the Delaware Trust. The
Massachusetts Trust and Corporation provide a similar degree of indemnification
of Trustees.

The Delaware Trust Instrument provides that, if any shareholder or former
shareholder of any series is held personally liable solely by reason of being or
having been a shareholder and not because of the shareholder's acts or omissions
or for some other reason, the shareholder or former shareholder (or heirs,
executors, administrators, legal representatives or general successors) will be
entitled, out of the assets belonging to the applicable series, to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Delaware Trust, acting on behalf of any affected series, must,
upon request by such shareholder, assume the defense of any claim made against
such shareholder for any act or obligation of the series and satisfy any
judgment thereon from the assets of the series.

TERMINATION. The Delaware Trust Instrument permits the termination of the
Delaware Trust or of any series or class of the Delaware Trust (i) by a majority
of the affected shareholders at a meeting of shareholders of the Delaware Trust,
series or class; or (ii) by a majority of the Trustees without shareholder
approval if the Trustees determine that such action is in the best interest of
the Delaware Trust or its shareholders. The factors and events that the Trustees
may take into account in making such determination include (i) the inability of
the Delaware Trust or any successor series or class to maintain its assets at an
appropriate size; (ii) changes in laws or regulations governing the Trust,
series or class or affecting assets of the type in which it invests; or (iii)
economic developments or trends having a significant adverse impact on their
business or operations. The winding up of the Corporation would be governed by
Maryland corporate law but generally would require shareholder approval. The
Massachusetts Declaration of Trust permits the Trustees to terminate the
Massachusetts Trust or any series without shareholder approval

<PAGE>

upon a determination that such termination is in the best interest of
shareholders as a result of factors adversely affecting such series or the Trust
or the ability of the Massachusetts Trust to conduct its business in an
economically viable manner.

MERGER, CONSOLIDATION, SALE OF ASSETS, ETC. The Delaware Trust Instrument
authorizes the Trustees without shareholder approval to cause the Delaware
Trust, or any series thereof, to merge or consolidate with any corporation,
association, trust or other organization or sell or exchange all or
substantially all of the property belonging to the Delaware Trust or any series
thereof. In addition, the Trustees, without shareholder approval, may adopt a
master-feeder structure by investing all or a portion of the assets of a series
of the Delaware Trust in the securities of another open-end investment company
(see Proposal 4). The reorganization, including conversion to a master-feeder
structure (unless Proposal 4 is adopted), of either the Massachusetts Trust or
the Corporation would require shareholder approval.

AMENDMENTS. The Delaware Trust Instrument permits the Trustees to amend the
Delaware Trust Instrument without a shareholder vote. However, shareholders of
the Delaware Trust have the right to vote on any amendment (i) that would affect
the voting rights of shareholders, (ii) that is required by law to be approved
by shareholders; (iii) that would amend the voting provisions of the Delaware
Trust Instrument; or (iv) that the Trustees determine to submit to shareholders.
Amendments to the Corporation's Articles of Incorporation require shareholder
approval. Shareholders of the Trust are required to approve amendments to the
Massachusetts Declaration of Trust, except certain amendments, including any
amendment that the Trustees determine to be necessary or desirable to which does
not adversely affect the rights of shareholders.

SERIES OF TRUSTEES. The Trustees may appoint separate Trustees with respect to
one or more series or classes of the Delaware Trust's shares (the "Series
Trustees"). Series Trustees may, but are not required to, serve as Trustees of
the Trust or any other series or class of the Delaware Trust. The Series
Trustees have, to the exclusion of any other Trustee of the Delaware Trust, all
the powers and authorities of Trustees under the Delaware Trust Instrument with
respect to such series or class, but have no power or authority with respect to
any other series or class. Neither the Massachusetts Declaration of Trust nor
the Corporation's Articles of Incorporation permit the election of separate
Trustees for a series or class. The Trustees are not con sidering the
appointment of Series Trustees for the Delaware Trust.

<PAGE>

CERTAIN COMPARATIVE INFORMATION ABOUT MASSACHUSETTS BUSINESS TRUSTS AND DELAWARE
BUSINESS TRUSTS

SHAREHOLDER LIABILITY

Generally, Delaware business trust shareholders are not personally liable for
obligations of the Delaware business trust under Delaware law. The Delaware Act
entitles a shareholder of a Delaware business trust to the same limitation of
liability as is available to shareholders of private for-profit corporations.
However, no similar statutory or other authority limiting business trust
shareholder liability exists in many other states. As a result, to the extent
that a Delaware business trust or a shareholder is subject to the jurisdiction
of courts in such other states, those courts may not apply Delaware law and may
subject the Delaware Trust shareholders to liability. To offset this risk, the
Delaware Trust Instrument (i) contains an express disclaimer of shareholder
liability for acts or obligations of the Delaware Trust and provides for the
giving of notice of such disclaimer in each agreement, obligation and instrument
entered into or executed by the Delaware Trust or its Trustees and (ii) provides
for indemnification out of the property of the Delaware Trust of any shareholder
held personally liable for the obligations of the Delaware Trust. Thus, the risk
of a Delaware business trust shareholder incurring financial loss beyond his or
her investment because of shareholder liability is limited to circumstances in
which all of the following factors are present: (1) a court refuses to apply
Delaware law; (2) the liability arises under tort law or, if not, no contractual
limitation of liability is in effect; and (3) the Delaware Trust itself is
unable to meet its obligations. In the light of Delaware law, the nature of the
Delaware Trust's business and the nature of its assets, the risk of personal
liability to a Delaware Trust shareholder is extremely remote.

Unlike Delaware, in Massachusetts there is no statute relating to business
trusts that entitles shareholders of a Massachusetts business trust to the same
limitation of liability as is extended to shareholders of a Massachusetts
corporation. Shareholders of a Massachusetts business trust may, therefore,
under certain circumstances, be held personally liable under Massachusetts law
for the obligations of the Massachusetts business trust. The Massachusetts
Declaration of Trust, like the Delaware Trust Instrument, contains an express
disclaimer of shareholder liability and provides for the giving of notice of
such disclaimer in each agreement entered into or executed by the Massachusetts
business trust or its Trustees. The Massachusetts Declaration of Trust also
provides for indemnification out of the trust property. Thus, GSAM believes the
risk of shareholder liability is remote for shareholders of the Massachusetts
Trust (although not as remote as it would be for shareholders of the Delaware
Trust).

<PAGE>

LIABILITY OF TRUSTEES

The Delaware Trust Instrument provides that the Trustees will not be liable to
any person other than the Delaware Trust or a shareholder and that a Trustee
will not be liable for any act as a Trustee. However, nothing in the Delaware
Trust Instrument protects a Trustee against any liability to which he or she
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. The Massachusetts Declaration of Trust provides that its Trustees
will not be liable for errors of judgment or mistakes of fact or law, subject to
substantially the same provisions concerning bad faith, gross negligence and
reckless disregard as those described above.

CERTAIN COMPARATIVE INFORMATION ABOUT MARYLAND CORPORATIONS AND DELAWARE
BUSINESS TRUSTS

SHAREHOLDER LIABILITY

For a discussion of the potential for shareholders of a Delaware business trust
to be liable for the obligations of the trust, see the discussion above under
"Certain Comparative Information About Massachusetts Business Trusts and
Delaware Business Trusts Shareholder Liability." Shareholders of a Maryland
corporation currently have no personal liability for the corporation's acts or
obligations, except that a shareholder may be liable to the extent that he or
she knowingly receives a distribution (including a transfer of money or other
property and the incurrence or forgiveness of indebtedness by the corporation)
in excess of the amount which properly could have been paid under Maryland law.

LIABILITY OF TRUSTEES

For a discussion of the potential liability of trustees of a Delaware business
trust, see the discussion above under "Certain Comparative Information About
Massachusetts Business Trusts and Delaware Business Trusts-Liability of
Trustees." Maryland law provides that, in addition to any other liability
imposed by law, the directors of a Maryland Corporation may be liable to the
corporation: (1) for voting or assenting to the declaration of any dividend or
other distribution of assets to shareholders which is contrary to Maryland law,
(2) for voting or assenting to certain distributions of assets to shareholders
during liquidation of the corporation and (3) for voting or assenting to a
repurchase of the shares of a Maryland corporation in violation of Maryland law.
In the event of any litigation against its directors or officers, the Corpora
tion may indemnify the directors or officers, subject to certain limitations.

<PAGE>

VOTING RIGHTS OF MARYLAND CORPORATION AND DELAWARE TRUST SHAREHOLDERS

Neither Maryland corporations nor Delaware business trusts are required to hold
annual shareholders meetings. The Corporation's Articles of Incorporation and
Maryland law generally give shareholders greater voting rights than the Delaware
Trust Instrument. Shareholders of a Maryland corporation have the right to vote
on certain matters, including (i) the election or removal of directors, (ii) the
approval or termination of investment advisory agreements or distribution plans,
(iii) the termination, reorganization or merger of the corporation or any series
and (iv) amendments to the Articles of Incorporation.

RIGHT OF INSPECTION

Maryland law provides that persons who have been shareholders of record for six
months or more and who own at least five percent of the shares of a Maryland
corporation may inspect the books of account and stock ledger of the Maryland
corporation. Delaware Trust shareholders have the same rights to inspect the
records, accounts and books of the Delaware Trust as are accorded to
shareholders of a Delaware business corporation. Currently, each shareholder of
a Delaware business corporation is permitted to inspect records, accounts and
books of a business corporation for any legitimate business purpose.

- -----------------------------------------------------
PROPOSAL 4: APPROVAL OF AN INVESTMENT POLICY PERMITTING EACH SERIES OF THE TRUST
OR CORPORATION TO INVEST ALL ITS ASSETS IN A SINGLE OPEN-END MUTUAL
FUND; AND APPROVAL OF A CORRESPONDING AMENDMENT TO THE MASSACHUSETTS
DECLARATION OF TRUST
- -----------------------------------------------------

GENERAL

The Trustees have approved, subject to shareholder approval, the adoption of a
new fundamental investment policy that would permit each Fund to pool its assets
with other funds, in a single portfolio (the "Pooled Fund"). The Delaware Trust
Instrument permits investment of all of a Fund's assets in a Pooled Fund, but if
the proposal to adopt a new fundamental investment policy is not adopted, the
Funds would not be able to take advantage of such flexibility. If the proposal
is approved, each Fund will be authorized to invest substantially all of its
assets in a corresponding Pooled Fund that would invest in the same type of
securities (and have substantially the same objective, restrictions and
policies) as the Fund. The primary purpose of pooling would be to achieve
operational efficiencies. Approval of the

<PAGE>

fundamental investment policy would also constitute approval of an amendment to
the Massachusetts Declaration of Trust that would permit Funds that are now
series of the Trust to make such an investment without further shareholder
approval. If the Funds in the Corporation are not converted to series of the
Delaware Trust an additional shareholders meeting would be necessary to adopt a
master-feeder structure. However, if Conversion is approved, the Funds that are
series of the Corporation will be able to adopt a master-feeder structure
without further shareholder action.

BACKGROUND. Several mutual funds have developed so-called master-feeder
structures under which they invest all their assets in a single pooled
investment. For example, a fund offering its shares not subject to a sales load
to institutional investors might pool its investments with another fund that
offers its shares subject to an initial or contingent deferred sales load to
individual investors. This structure allows several funds with different
features, but the same investment objective, restrictions and policies, to
combine their investments instead of managing them separately. A Fund would
combine its investments with those of other funds by investing all of its assets
in the same Pooled Fund, which would be organized and registered as an open-end
management investment company (a mutual fund).

PURPOSE OF THE PROPOSAL. GSAM regularly reviews various options for structuring
mutual funds to take maximum advantage of potential efficiencies. The Funds
currently take advantage of the ability to issue multiple classes of shares,
which offer many of the same advantages as investing in a Pooled Fund. While
neither the Trustees nor GSAM have determined that any Fund should invest in a
Pooled Fund, the Trustees believe that it could be in the best interests of the
Funds to adopt such a structure to allow for investing by one or more of the
Funds in a Pooled Fund at a future date without the cost of again obtaining
shareholder approval.

At present, some of the Funds' fundamental investment restrictions and policies
prevent a Fund from investing all of its assets in another investment company,
and require a vote of shareholders of the Fund before such a master-feeder
structure could be adopted. Similarly, both the Massachusetts Declaration of
Trust and Maryland corporate law require shareholder approval of any transaction
involving the sale of substantially all of the assets of a Fund to the Pooled
Fund. To avoid the costs associated with a subsequent shareholder meeting, the
Trustees recommend that shareholders of each Fund vote to permit the assets of
such Fund to be invested in a Pooled Fund, without an additional vote of Fund
shareholders, if the Trustees determine the adoption of a master-feeder
structure to be in the best interest of the Fund and its shareholders. If
shareholders approve this Proposal, any fundamental

<PAGE>

and non-fundamental restrictions and policies of the Funds that currently
prohibit investment in shares of a single investment company would be
appropriately modified to permit investment in Pooled Funds. These policies
include, for example, a Fund's restrictions on investments in: the securities of
any one issuer; the securities of any issuer if more than 10% of such issuer's
voting securities are held by a Fund; companies for purposes of control; and
issuers in any one industry; as well as the restriction concerning acting as an
underwriter.

A Fund's methods of operation and shareholder services would not be materially
affected by its investment in a Pooled Fund, except that the assets of the Fund
would be managed as part of a larger pool. If a Fund invested all of its assets
in a Pooled Fund, it is currently anticipated that the Fund would hold only a
single investment security and the Pooled Fund would directly invest in
individual investment securities. The investment advisory and administrative
services provided to a Fund by GSAM or its affiliates would continue to be
provided at the same or lower aggregate cost, but the investment advisory
services would be provided to and paid for by the Pooled Fund rather than the
Fund. The Pooled Fund would be managed by GSAM or an affiliate. The Trustees
would retain the right to withdraw the Fund's investment from the respective
Pooled Fund at any time. The Fund would then resume investing directly in
securities as it does currently.

AT PRESENT, THE TRUSTEES ARE NOT CONSIDERING ANY PROPOSAL TO ADOPT A
MASTER-FEEDER STRUCTURE. The Trustees will authorize investing a Fund's assets
in a Pooled Fund only if they determine that pooling is in the best interests of
a Fund and its shareholders and if they determine that the investment will not
have material adverse tax or other consequences to the Fund or the shareholders.
In determining whether a Fund should invest in a Pooled Fund, the Trustees will
consider, among other things, the opportunity to reduce costs and to achieve
operational efficiencies. The Trustees will not authorize investment in a Pooled
Fund if doing so would increase costs to shareholders; unless, of course, they
perceive a corresponding increase in benefits to shareholders. There is no
assurance that cost reductions or increased efficiencies will be achieved.

GSAM or its affiliates may benefit from the use of a Pooled Fund if overall
assets are increased, since GSAM's fees under the existing investment advisory
agreements are based on assets under management. Also, GSAM's or its affiliates'
expenses of providing investment advisory and other services to a Fund may be
reduced. If a Fund's investment in a Pooled Fund were to reduce the expenses of
GSAM or its affiliates (as the case may be) materially,

<PAGE>

the Trustees would consider whether a reduction of the management fee paid to
GSAM or its affiliates (as the case may be) would be appropriate.

PROPOSED FUNDAMENTAL POLICY

In order to permit one or more of the Funds to invest in a Pooled Fund at a
future date, the Trustees recommend that the shareholders of each Fund adopt the
following fundamental policy:

Each Fund may, notwithstanding any other fundamental investment restriction or
policy, invest some or all of its assets in a single open-end investment company
or series thereof with substantially the same investment objectives,
restrictions and policies as the Fund.

PROPOSED AMENDMENT TO THE MASSACHUSETTS DECLARATION OF TRUST

In order to permit the Trust to invest in a Pooled Fund at a future date, the
Trustees recommend that the shareholders adopt the following amendment to the
Massachusetts Declaration of Trust:

Notwithstanding anything else herein, the Trustees may, without Shareholder
approval unless such approval is required by applicable law, invest all or a
portion of the Trust Property of any Series, or dispose of all or a portion of
the Trust Property of any Series, and invest the proceeds of such disposition in
interests issued by one or more other investment companies registered under the
1940 Act. Any such other investment company may (but need not) be a trust
(formed under the laws of any state or jurisdiction) (or subtrust thereof) which
is classified as a partnership for federal income tax purposes. Notwithstanding
anything else herein, the Trustees may, without Shareholder approval unless such
approval is required by applicable law, cause a Series that is organized in the
master/feeder fund structure to withdraw or redeem its Trust Property from the
master fund and cause such series to invest its Trust Property directly in
securities and other financial instruments or in another master fund.

BOARD OF TRUSTEES' EVALUATION AND RECOMMENDATION

At a meeting held on January 28, 1997, after considering the matters discussed
above and other matters deemed to be relevant, the Trustees of each of the
Corporation and Trust, including the Independent Trustees, unanimously adopted,
and voted to recommend to the shareholders that they adopt, (a) the proposed new
fundamental investment policy, and (b) the amendment to the Massachusetts
Declaration of Trust that would permit any Fund, subject to

<PAGE>

future review by the Trustees, as described above, to invest all of its assets
in an open-end investment company with substantially the same investment
objectives, restrictions and policies as the Fund. In taking such action and
making such recommendations, the Trustees took into consideration that the
proposed modifications may provide operational efficiencies and facilitate the
introduction of new Goldman Sachs mutual funds and thereby increase the
investment options available to shareholders. The Trustees believe that the
ability to use a master-feeder structure may be beneficial to present
shareholders of the Funds as well as potential investors.

Except as described in this Proxy Statement, approval of this Proposal 4 will
not change any of the Trustees, officers, investment programs and services or
operations of the Funds that are described in the Funds' current Prospectuses
and this Proxy Statement.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND ADOPT A
NEW FUNDAMENTAL INVESTMENT POLICY TO PERMIT THE FUND TO INVEST ALL OF ITS ASSETS
IN A SINGLE OPEN-END INVESTMENT COMPANY; AND APPROVE A CORRESPONDING AMENDMENT
TO THE MASSACHUSETTS DECLARATION OF TRUST.

REQUIRED VOTE

Approval of the proposal to adopt the new fundamental investment policy
requires the vote of a 1940 Act Majority of the shares (described in Proposal 3)
of each Fund voting separately. Approval of the amendment to the Massachusetts
Declaration of Trust requires the vote of a majority of the shares of the Trust
voting together as a single class. If the proposal is not approved by one or
more of the Funds, the Trustees will consider what further action, if any, will
be taken.

- -----------------------------------------------------
PROPOSALS 5(A)-(K): PROPOSED AMENDMENT AND RESTATEMENT OF THE FUNDS' INVESTMENT
RESTRICTIONS
- -----------------------------------------------------

GENERAL

The Trustees recommend to shareholders of each Fund that they approve proposals
to amend and restate each Fund's investment restrictions. These investment
restrictions are fundamental policies that may be changed by a Fund only with
the approval of a 1940 Act Majority of the outstanding shares of that Fund.

<PAGE>

The restated investment restrictions, assuming that each of the proposed
amendments is adopted, for the Funds in Goldman Sachs Equity Portfolios, Inc.
and Goldman Sachs Trust, are set forth in Appendix E and Appendix F,
respectively, to this Proxy Statement.

One reason for the proposals is to adopt insofar as possible a uniform
statement of investment restrictions for the mutual funds advised by Goldman
Sachs or an affiliate thereof, as well as for funds that may be created in the
future. Such uniformity would facilitate comparison of different funds'
investment restrictions as well as administration of the restrictions. The
proposals would also result in a clearer and simpler statement of these
restrictions.

Another reason for restating the Funds' investment restrictions is to delete
the policies adopted in response to state "Blue Sky" laws and regulations
restricting certain types of investment company practices and investments. The
states no longer have the power to enforce these restrictions, and the
elimination of the restrictions may expand the range of investment opportunities
and techniques available in connection with the management of the Funds'
portfolios.

The final reason for restating Funds' investment restrictions is to
recharacterize certain previously adopted fundamental policies as non-
fundamental. Certain of the investment restrictions are being liberalized to the
extent permitted under the 1940 Act. This recharacterization and liberalization
will grant the Trustees the ability to change these non-fundamental policies as
needed, without seeking approval from shareholders.

The following is a summary of the proposed changes to each of the investment
restrictions. The restrictions are summarized individually below and will be
voted upon separately. In order to fully achieve the benefits set forth above,
the Trustees recommend that shareholders approve each of the proposals.

- -----------------------------------------------------
PROPOSAL 5(A): INVESTMENT POLICY ON ISSUER DIVERSIFICATION
- -----------------------------------------------------

To be diversified under the 1940 Act, a Fund must not, with respect to 75% of
its total assets, invest more than 5% of its total assets in the securities of
any one issuer or acquire more than 10% of the outstanding voting securities of
any one issuer. These restrictions apply only at the time of investment. A Fund
may invest up to 25% of its total assets without regard to these restrictions.
In addition, these restrictions do not apply to holdings of or

<PAGE>

investments in cash, cash items, U.S. Government securities or securities of
other investment companies. The current investment restrictions of the Funds are
worded in various ways. Some Fund's restrictions apply the 5% and 10%
limitations discussed above to 100% of the Fund's total assets rather than 75%
and, consequently, are more restrictive than required by the 1940 Act. The
Trustees have proposed amending the investment restrictions of each Fund to be
uniform and to require diversification only to the extent that is required under
the 1940 Act. Additional diversification requirements are required for the Funds
to be treated as regulated investment companies for federal tax purposes. These
tax-based requirements are not required to be reflected in the proposed
investment restrictions and will not be affected by the proposal. The Trustees
propose that each Fund adopt the following investment restriction in lieu of its
current fundamental policy:

The Fund may not make any investment inconsistent with the Fund's
classification as a diversified company under the Investment Company Act of
1940, as amended (the "Act"). This restriction does not, however, apply to any
Fund classified as a non-diversified company under the Act.

- -----------------------------------------------------
PROPOSAL 5(B): INVESTMENT POLICY ON INDUSTRY CONCENTRATION
- -----------------------------------------------------

The 1940 Act requires that each investment company adopt a policy, which cannot
be changed without shareholder approval, stating whether 25% or more of the
investment company's assets can be invested (concentrated) in the securities of
issuers in any one industry. The limitation does not apply to investments in
U.S. Government securities. Each of the Funds has adopted a policy not to
concentrate in the securities of issuers in any one industry. While not
representing a change in investment policy, the Trustees have determined that it
would be in the best interest of the Funds to conform the wording of their
investment policies on industry concentration. As proposed, each Fund's policy
would be as follows:

The Fund may not invest 25% or more of its total assets in the securities of
one or more issuers conducting their principal business activities in the same
industry (excluding the U.S. Government or any of its agencies or
instrumentalities).

In the case of each Fund that is a series of the Trust, although non-
fundamental, the policy would also provide:

<PAGE>

(For purposes of this restriction, state and municipal governments and their
agencies, authorities and instrumentalities are not deemed to be industries;
telephone companies are considered to be a separate industry from water, gas or
electric utilities; personal credit finance companies and business credit
finance companies are deemed to be separate industries; and wholly-owned finance
companies are considered to be in the industry of their parents if their
activities are primarily related to financing the activities of their parents).
This restriction does not apply to investments in municipal securities which
have been pre-refunded by the use of obligations of the U.S. Government or any
of its agencies or instrumentalities. Each of the Municipal Income and Short
Duration Tax-Free Funds may invest 25% or more of the value of its total assets
in municipal securities which are related in such a way that an economic,
business or political development or change affecting one municipal security
would also affect the other municipal securities. These municipal securities
include (a) municipal securities the interest on which is paid solely from
revenues of similar projects such as hospitals, electric utility systems,
multi-family housing, nursing homes, commercial facilities (including hotels),
steel companies or life care facilities, (b) municipal securities whose issuers
are in the same state and (c) industrial development obligations.

- -----------------------------------------------------
PROPOSAL 5(C): INVESTMENT POLICIES ON BORROWING, MARGIN PURCHASES AND PLEDGING
ASSETS
- -----------------------------------------------------

The 1940 Act requires that each investment company adopt a policy, which cannot
be changed without shareholder approval, on borrowing. Each Fund currently has a
limitation upon borrowing, although the wording of the limitation and the
permitted amount of borrowing vary from Fund to Fund. The 1940 Act prohibits an
open-end investment company from issuing any senior security (including debt),
except that an open-end investment company may borrow from banks in an amount
not exceeding 33 1/3% of its total assets. The Trustees have recommended that
the Funds adopt a uniform borrowing policy (i) permitting borrowing up to the
maximum allowed by the 1940 Act, and (ii) permitting the Funds to enter into
mortgage dollar rolls accounted for as a financing. For purposes of the Funds'
policy on borrowing, the Funds do not consider certain investments and practices
to be borrowings, including short sales, currency transactions, mortgage dollar
rolls which are not accounted for as financing, forward contracts, swaps,
interest rate caps, floors and collars, options, futures contracts, options on
futures contracts and forward commitment transactions.

<PAGE>

Each Fund also has a fundamental investment policy limiting the purchase of
securities on margin. Margin purchases involve the purchase of securities with
money borrowed from a broker. "Margin" is the cash or eligible securities that
the borrower places with its broker as collateral for this loan. Each Fund's
current fundamental policy prohibits the Fund from purchasing securities on
margin, except for initial and variation margin payments made in connection with
the purchase and sale of futures contracts and options on futures contracts.
Mutual funds are also permitted to obtain such short-term credits as may be
necessary for the clearance of transactions. With these exceptions, mutual funds
are prohibited from entering into most types of margin purchases.

The fundamental policies on borrowing and margin purchases, if adopted, would
be the same for each Fund and would provide as follows:

The Fund may not borrow money, except that (a) the Fund may borrow from banks
(as defined in the Act) or through reverse repurchase agreements in amounts up
to 33 1/3% of its total assets (including the amount borrowed), (b) the Fund
may, to the extent permitted by applicable law, borrow up to an additional 5%
of its total assets for temporary purposes, (c) the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of portfolio securities, (d) the Fund may purchase securities on margin to the
extent permitted by applicable law and (e) the Fund may engage in transactions
in mortgage dollar rolls which are accounted for as financings.

The Funds' fundamental policy on pledging their assets was a requirement
imposed by state securities laws that no longer applies to the Funds.
Consequently, it is proposed that such restriction be eliminated.

- -----------------------------------------------------
PROPOSAL 5(D): INVESTMENT POLICY ON LOANS
- -----------------------------------------------------

The 1940 Act requires that each investment company adopt a policy, which cannot
be changed without shareholder approval, on loans. The proposed restatement of
the Funds' policy, which does not represent a material change in investment
policy, would prohibit the Funds from making loans except through the purchase
of securities. As restated, each Fund's investment restriction would provide as
follows:

The Fund may not make loans, except through (a) the purchase of debt
obligations in accordance with the Fund's investment objective and policies,
(b) repurchase agreements with banks, brokers, dealers and other financial
institutions, and (c) loans of securities as permitted by applicable law.

<PAGE>

- -----------------------------------------------------
PROPOSAL 5(E): INVESTMENT POLICY ON UNDERWRITING
- -----------------------------------------------------

The 1940 Act requires that each investment company adopt a policy, which cannot
be changed without shareholder approval, on underwriting securities issued by
others. The proposed restatement of the Funds' policy, which does not represent
a material change in investment policy, would prohibit the Fund from
underwriting the securities of others (which is not a part of the normal
activities of a mutual fund). As restated, each Fund's investment restriction
would provide as follows:

The Fund may not underwrite securities issued by others, except to the extent
that the sale of portfolio securities by the Fund may be deemed to be an
underwriting.

- -----------------------------------------------------
PROPOSAL 5(F): INVESTMENT POLICY ON REAL ESTATE AND OIL AND GAS
- -----------------------------------------------------

The 1940 Act requires that each investment company adopt a policy, which cannot
be changed without shareholder approval, on acquiring interests in real estate.
The existing restriction on investment in oil and gas interests was imposed by
state law and is no longer required. While the Fund does not intend to invest in
such interests, it is proposed that the restriction on oil and gas interests be
eliminated. The proposed policy does not represent a material change in
investment policy for any Fund and in most cases merely continues the current
policy unchanged. As restated, each Fund's investment restriction would provide
as follows:

The Fund may not purchase, hold or deal in real estate, although the Fund may
purchase and sell securities that are secured by real estate or interests
therein, securities of real estate investment trusts and mortgage-related
securities and may hold and sell real estate acquired by the Fund as a result
of the ownership of securities.

- -----------------------------------------------------
PROPOSAL 5(G): INVESTMENT POLICY ON COMMODITIES
- -----------------------------------------------------

The 1940 Act requires that the Funds have a fundamental investment policy
regarding investments in commodities. While the Funds do not invest in physical
commodities or commodity contracts, the Funds do enter into financial futures
contracts, options on futures and, in certain cases, currency contracts. Any
financial futures contract or related option is considered to be

<PAGE>

a commodity contract. Other types of financial instruments such as forward
commitments and swaps might also be deemed to be commodity contracts. The
amendment is being proposed to enable each Fund to continue to enter into
financial futures contracts and related options for hedging and other
permissible purposes and to clarify that certain practices in which a Fund
engages (such as forward foreign currency contracts) or might in the future
engage (such as swaps) are not subject to this restriction.

As amended, each Fund's investment restriction with respect to commodities
would be as follows:

The Fund may not invest in commodities or commodity contracts, except that the
Fund may invest in currency and financial instruments and contracts that are
commodities or commodity contracts.

- -----------------------------------------------------
PROPOSAL 5(H): INVESTMENT POLICY ON SENIOR SECURITIES
- -----------------------------------------------------

The 1940 Act restricts the ability of an open-end investment company to issue
"senior securities" as defined in the 1940 Act and requires that an investment
company adopt a fundamental policy with respect to the issuance of such
securities. The proposed amendment would make the investment restriction on
senior securities uniform among the Funds and clarify that the Funds are
permitted to issue senior securities to the extent permitted by applicable law.
As discussed above, under the 1940 Act an open-end fund is not permitted to
issue senior securities except for borrowings from banks. In addition to
permitting the borrowing contemplated above, the amendment clarifies that the
Funds do not consider certain investment practices, such as forward purchases of
securities and currencies, options and futures transactions, which may have a
leverage effect on the Funds to be senior securities if such practices are
conducted in a manner consistent with current law and the interpretive positions
of the SEC. As amended, the investment restriction of each Fund would provide as
follows:

The Fund may not issue senior securities to the extent such issuance would
violate applicable law.

- -----------------------------------------------------
PROPOSAL 5(I): INVESTMENT POLICY CONCERNING SHORT SALES OF SECURITIES
- -----------------------------------------------------

Each Fund investing in equity securities has a fundamental investment policy
limiting short sales. In a short sale, an investor sells a borrowed

<PAGE>

security and has a corresponding obligation to the lender to return the
identical security. The Funds' fundamental investment policy on short sales
provides that a Fund may not engage in short sale unless it owns, or, by virtue
of its ownership of other securities, has the right to obtain, securities
equivalent in kind and amount to the securities sold short. This investment
technique is known as a short sale "against the box." The Trustees recommend
that shareholders vote to eliminate this fundamental policy. If the proposal is
approved, the Trustees intend to adopt a non-fundamental policy limiting the
Funds to short sales against the box. This non-fundamental policy could be
changed without a vote of shareholders.

- -----------------------------------------------------
PROPOSAL 5(J): GS SHORT DURATION GOVERNMENT FUND'S POLICY ON OPTIONS
- -----------------------------------------------------

To comply with state securities laws in effect at the time of its organization,
GS Short Duration Government Fund adopted a fundamental restriction limiting the
Fund's ability to write, purchase or sell certain put and call options. This
restriction is no longer required, is obsolete and is inconsistent with the
investment restrictions of all of the other Funds.

- -----------------------------------------------------
PROPOSAL 5(K): GS SHORT DURATION GOVERNMENT FUND'S POLICY ON INVESTMENTS TO
EXERCISE CONTROL
- -----------------------------------------------------

GS Short Duration Government Fund has a fundamental policy not to invest in
companies for the purpose of exercising control or management. Although the Fund
has no intention of investing for such purpose, this restriction is not required
by the 1940 Act and is no longer required by state law. Consequently, the
Trustees recommend that it be eliminated.

TRUSTEES' RECOMMENDATION

The Trustees believe that each proposed amendment to the Funds' investment
restrictions will more clearly reflect current regulatory practice, will provide
a more complete range of investment opportunities and will clarify and simplify
the Funds' restrictions.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE "FOR"
THE ADOPTION OF EACH OF THE PROPOSED AMENDED INVESTMENT RESTRICTIONS.

<PAGE>

REQUIRED VOTE

Approval of each proposed amendment to a Fund's fundamental investment
restrictions requires the affirmative vote of a 1940 Act Majority of that Fund's
outstanding shares. If a proposed amendment is not approved with respect to a
Fund, the current investment restriction will continue in effect unchanged for
that Fund.

- -----------------------------------------------------
PROPOSAL 6: APPROVAL OF AMENDED AND RESTATED MANAGEMENT AGREEMENTS FOR THE FUNDS
(OTHER THAN GS SHORT DURATION TAX-FREE FUND, GS CORE FIXED INCOME
FUND, GS SHORT DURATION GOVERNMENT FUND AND GS ADJUSTABLE RATE
GOVERNMENT FUND)
- -----------------------------------------------------

GENERAL

At the meeting of the Trustees held on January 28, 1997, the Trustees,
including the Independent Trustees, voted to approve, and to recommend that the
shareholders of each Fund (other than those listed in the next sentence)
approve, the adoption of amended and restated investment advisory agreements
(the "Management Agreements"), each in the form attached to this Proxy Statement
as Appendix G. No proposal is being made to amend the existing investment
advisory agreements for GS Short Duration Tax-Free Fund, GS Core Fixed Income
Fund, GS Short Duration Government Fund and GS Adjustable Rate Government Fund,
each of which is substantially similar to the form attached as Appendix G.

The terms of the Management Agreements are substantially identical to those of
the Funds' existing investment advisory agreements (the "Existing Advisory
Agreements"), except that each Management Agreement provides for: (1) the
affected Fund's investment adviser to provide the Fund with administrative
services and (2) an increase in the Fund's investment advisory fee rate. This
increase is equal to the fee rate currently payable by the Fund pursuant to a
separate administration agreement between it and Goldman Sachs Asset Management
(each an "Administration Agreement"). If shareholders approve this proposal, the
Administration Agreements will be terminated. CONSEQUENTLY, THE OVERALL SERVICES
PROVIDED AND FEES PAID UNDER THE MANAGEMENT AGREEMENTS WILL BE IDENTICAL TO THE
SERVICES PROVIDED AND FEES PAID CURRENTLY UNDER THE EXISTING ADVISORY AGREEMENTS
AND ADMINISTRATION AGREEMENTS. Under the Management

<PAGE>

Agreements the Funds will be managed by GSAM, Goldman Sachs Asset Management
International ("GSAMI") and Goldman Sachs Fund Management L.P. ("GSFM") (the
"Advisers") as set forth below.

<TABLE>
<CAPTION>
GSAM GSAMI GSFM
---- ----- ----
<S> <C> <C>
Goldman Sachs Goldman Sachs Asia Goldman Sachs Capital
Government Income Growth Fund Growth Fund
Fund
Goldman Sachs Goldman Sachs Goldman Sachs
Municipal Income International Equity Select Equity Fund
Fund Fund
Goldman Sachs Goldman Sachs Global
Balanced Fund Income Fund
Goldman Sachs Growth
and Income Fund
Goldman Sachs
Mid-Cap Equity Fund
Goldman Sachs Small
Cap Equity Fund
</TABLE>

Replacing each Fund's Existing Advisory Agreement and Administration Agreement
with a Management Agreement that covers both advisory and administrative
services will bring the Funds' contractual arrangements into conformity with
those of the other funds in the Goldman Sachs Group of Funds. The Trustees
expect such conformity to benefit the Funds by facilitating legal compliance by
the Funds and the Advisers and eliminating the possibility that differences in
wording will cause contractual provisions to be interpreted differently, even
though they were intended to have the same meaning. The Trustees also expect
that combining advisory and administrative fees will improve investors' ability
to compare the Funds' expenses with those of other mutual funds that do not pay
separate advisory and administration fees. The Trustees have determined that
adopting the Management Agreements for these purposes is appropriate and
beneficial to the Funds.

Set forth below is a description of material similarities and differences
between (1) the Management Agreements and (2) the Existing Advisory Agreements
and the Administration Agreements, as well as certain additional information.
The description of the Management Agreements is qualified in ts entirety by
reference to Appendix G.

<PAGE>

MATERIAL SIMILARITIES AND DIFFERENCES BETWEEN THE MANAGEMENT AGREEMENTS AND THE
EXISTING ADVISORY AND ADMINISTRATION AGREEMENTS

SERVICES PROVIDED

Under the Existing Advisory Agreements and the Management Agreements, the
Advisers determine what securities are purchased, held and sold by the Funds,
subject to their respective investment objectives, policies and restrictions and
to such policies and instructions as the Funds' Trustees may establish. This
involves providing the Funds with investment research, advice and supervision.
The Advisers also are responsible for maintaining books and records with respect
to the Funds' securities transactions and for providing the Funds' Trustees with
periodic and special reports.

Under the Management Agreements, each Adviser will also: (i) supervise all
non-advisory operations of each Fund that it advises; (ii) provide the Fund with
personnel to perform such executive, administrative and clerical services as are
reasonably necessary to provide effective administration of the Fund; (iii)
arrange for at the Fund's expense (a) the preparation for the Fund of all
required tax returns, (b) the preparation and submission of reports to existing
shareholders and (c) the periodic updating of the Fund's prospectus and
statement of additional information and the preparation of reports, in each case
to be filed with the SEC and other regulatory authorities; (iv) maintain all of
the Fund's records; and (v) provide the Fund with office space and all necessary
office equipment and services.

Each Fund currently receives the administrative services described in the
preceding paragraph from GSAM pursuant to the Fund's Administration Agreement
with GSAM. If shareholders approve this proposal, each Fund will receive these
services pursuant to its Management Agreement with its Adviser. Because GSAM
does not serve as the Adviser to certain Funds, these Funds will no longer have
a direct contractual relationship with GSAM. However, GSAMI and GSFM may arrange
to have GSAM continue to provide administrative services to these Funds as an
agent for the applicable Adviser.

<PAGE>

FEES AND EXPENSES

The fee rate payable by each Fund under its Management Agreement is identical
to the aggregate advisory and administration fee rate payable by each Fund under
its Existing Advisory Agreement and Administration Agreement. THUS, SHAREHOLDER
APPROVAL OF THIS PROPOSAL WILL NOT RESULT IN ANY INCREASE IN A FUND'S EXPENSES.
Set forth below are the advisory and administration fees, expressed in dollars
and as a percentage of the Fund's average daily net assets, to which each Fund's
Adviser and GSAM, as administrator, was entitled for the fiscal year ended
October 30, 1996, in the case of the Trust, and January 31, 1996, in the case of
the Corporation.

<TABLE>
<CAPTION>
TOTAL
ADVISORY ADMINISTRATION MANAGEMENT
FUND FEE FEE FEES
- ---- --------------- --------------- ----------------
DOLLARS % DOLLARS % DOLLARS %
---------- ---- ---------- ---- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Global Income
Fund *** . . . . . . $1,965,605 .75% + $ 393,263 .15% = $2,358,868 .90%
Government Income
Fund*. . . . . . . . 148,120 .50 + 44,433 .15 = 192,553 .65
Municipal Income Fund 211,283 .40 + 79,231 .15 = 290,514 .55
Asia Growth Fund* . . 1,172,731 .75 + 390,910 .25 = 1,563,641 1.00
Balanced Fund . . . . 148,493 .50 + 44,548 .15 = 193,041 .65
Capital Growth Fund . 7,001,809 .75 + 2,333,936 .25 = 9,335,745 1.00
Growth & Income Fund. 1,748,649 .55 + 476,904 .15 = 2,225,553 .70
International Equity
Fund*** . . . . . . 2,096,154 .75 + 698,718 .25 = 2,794,872 1.00
Mid-Cap Equity Fund . 391,234 .60 + 97,809 .15 = 489,043 .75
Select Equity Fund* . 780,797 .50 + 440,918 .25 = 1,221,715 .75
Small Cap Equity Fund 2,181,629 .75 + 727,210 .25 = 2,908,839 1.00
</TABLE>

-----

* Due to voluntary fee reductions by the Advisers and GSAM, these Funds
currently are paying advisory and/or administration fees at rates lower than
the fee rates to which their Advisers and GSAM were contractually entitled for
the Funds' most recently completed fiscal years. These voluntary fee
reductions may be modified or terminated at any time, but will not be affected
by shareholder approval of this proposal.

** Global Income Fund and International Equity Fund each have advisory and
subadvisory fee rates of 0.25% and 0.50%, respectively, of average daily net
assets.

The Management Agreements require each Fund to pay the percentage of its
average daily net assets shown under the column "Total Advisory and
Administration Fees" to its Adviser for both advisory and administrative
services. See Appendix H for a list of other mutual funds that are advised by
the Advisers (including their advisory fees) and have investment objectives
similar to those of the Funds.

<PAGE>

Under the Existing Advisory Agreements and the Administration Agreements, the
Advisers and GSAM pay all costs that they incur in connection with the
performance of advisory and administrative services under the respective
agreements, except for the costs of preparing the Funds' tax returns, preparing
and transmitting reports to Fund shareholders, periodically updating the Funds'
prospectuses and statements of additional information and preparing reports to
be filed with the SEC and other regulatory authorities (collectively, the
"Additional Expenses"). Similarly, under the Management Agreements, the Advisers
will pay all costs that they incur in connection with the performance of
advisory and administrative services, except for the Additional Expenses. Under
the Existing Agreements and the Management Agreements, the Funds will pay all of
their own expenses.

Goldman Sachs serves as each Fund's transfer agent and principal underwriter
pursuant to separate transfer agency agreements and distribution agreements.
These agreements will not be affected by shareholder approval of this proposal.
See Appendix I for the amounts of compensation paid by the Funds to Goldman
Sachs pursuant to their transfer agency agreements and for distribution-related
services. See Appendix J for a statement of the amount and percentage of the
brokerage commissions for each Fund that were paid to affiliates of the
Advisers.

STANDARD OF LIABILITY

The contractual liability standard that currently applies to the Advisers' and
GSAM's performance of advisory and administrative services to the Funds will not
change if the Management Agreements are approved by shareholders. Under both the
Existing Advisory Agreements and Administration Agreements and the Management
Agreements, the parties providing services to a Fund will not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund, except
a loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the service provider in the performance of its duties or from reckless
disregard by the service provider of its duties and obligations under the
agreement.

ADDITIONAL INFORMATION RELATING TO THE EXISTING ADVISORY AGREEMENTS

The Boards of Trustees, including the Independent Trustees, most recently
approved all the Funds' Existing Advisory Agreements at a meeting held on April
25, 1996. The date of each Fund's Existing Advisory Agreement and

<PAGE>

the date on which each such agreement was most recently approved by the affected
Fund's shareholder(s) are set forth below.

<TABLE>
<CAPTION>
DATE AGREEMENT
DATE OF LAST APPROVED BY
FUND AGREEMENT SHAREHOLDERS
- ---- --------- ------------------
<S> <C> <C>
Global Income Fund. . . . . . 7/15/91 12/5/91
Government Income Fund. . . . 2/1/93 1/30/93
Municipal Income Fund . . . . 7/16/93 7/16/93
Asia Growth Fund. . . . . . . 6/1/94 6/1/94
Balanced Fund . . . . . . . . 10/10/94 10/4/94
Capital Growth Fund . . . . . 11/27/91 11/27/91
Growth & Income Fund. . . . . 2/1/93 1/29/93
International Equity Fund . . 9/30/92 10/23/92
Mid-Cap Equity Fund . . . . . 6/1/95 7/28/95
Select Equity Fund. . . . . . 11/27/91 11/27/91
Small Cap Equity Fund . . . . 8/10/92 9/10/92
</TABLE>

With the exception of Goldman Sachs Global Income Fund and Goldman Sachs Select
Equity Fund, each Fund's Existing Advisory Agreement was approved by its initial
shareholder on the applicable date shown above in order to comply with the 1940
Act's requirement that investment advisory agreements be approved by
shareholders. The Existing Advisory Agreements of Goldman Sachs Global Income
Fund and Goldman Sachs Select Equity Fund were last submitted for shareholder
approval on the applicable dates shown above, in each case in order to comply
with an undertaking to the SEC to obtain such approvals.

TRUSTEES' RECOMMENDATIONS

The Trustees believe that the replacement of the Funds' Existing Advisory
Agreements and Administration Agreements with the Management Agreements is
reasonable, fair and in the best interests of each Fund's shareholders.

THE TRUSTEES RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE "FOR" THE PROPOSAL TO
ADOPT THE APPLICABLE MANAGEMENT AGREEMENT.

REQUIRED VOTE

The Funds will vote separately on Proposal 6. Adoption of the proposal as to
any Fund requires the affirmative vote of a 1940 Act Majority of the shares of
such Fund. If the proposed Management Agreement is not approved with respect to
a Fund, the Fund will continue to operate under its Existing Advi sory and
Administration Agreements.

<PAGE>

THE INVESTMENT ADVISERS

Goldman Sachs Asset Management is a separate operating division of Goldman
Sachs and has its principal business address at One New York Plaza, New York,
New York 10004. Goldman Sachs Funds Management, L.P. is a Delaware limited
partnership and has its principal business address at One New York Plaza, New
York, New York 10004. Goldman Sachs Asset Management International is a wholly
owned subsidiary of Goldman Sachs and has its principal business address at 140
Fleet Street, London, England EC4A 2BJ.

Goldman Sachs is a worldwide investment banking firm and has its principal
business address at 85 Broad Street, New York, New York 10004. Goldman Sachs is
the general partner of GSFM. The principal executive officers of Goldman Sachs
are Jon S. Corzine and Henry M. Paulson. The principal occupation of Messrs.
Corzine and Paulson is the management of Goldman Sachs. The general partners of
Goldman Sachs are The Goldman Sachs Group, L.P. (a Delaware Limited Partnership)
("GSGLP") and The Goldman, Sachs & Co. L.L.C. (a Delaware limited liability
company) ("GSCLLC"). The principal business address of the executive officers
and general partners is 85 Broad Street, New York, New York 10004. The Goldman
Sachs Corporation ("GSC") is the parent company of both GSGLP and GSCLLC. GSGLP
is also a parent of GSCLLC. GSC is the sole general partner of GSGLP. David B.
Ford is chief executive officer of GSAMI and co-chief executive officer of GSFM.
John P. McNulty is co-chief executive officer of GSFM.

- -----------------------------------------------------
PROPOSAL 7: TO CHANGE GOLDMAN SACHS CAPITAL GROWTH FUND'S INVESTMENT OBJECTIVE
FROM FUNDAMENTAL TO NON-FUNDAMENTAL
- -----------------------------------------------------

The investment objective of Goldman Sachs Capital Growth Fund ("Capital Growth
Fund") is to seek long-term growth of capital. That investment objective is
"fundamental" which means that it cannot be changed by the Trustees without
shareholder approval. Neither the Trustees nor GSFM have any current intention
of changing the investment objective of Capital Growth Fund. However, the
Trustees believe that it is in the best interest of the Fund for the Trustees to
be able to do so in the future without the cost and delay of shareholder
approval. In the event that its investment objective is determined in the future
no longer to be appropriate for Goldman Sachs Capital Growth Fund, shareholders
would be advised by the Fund of the change in its investment objective.

<PAGE>

TRUSTEES' RECOMMENDATION

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF GOLDMAN SACHS
CAPITAL GROWTH FUND APPROVE CLASSIFYING THE FUND'S INVESTMENT OBJECTIVE AS
NON-FUNDAMENTAL.

REQUIRED VOTE

Approval of this proposal requires the approval of a 1940 Act Majority of
Capital Growth Fund's outstanding shares. If the proposed amendment is not
approved with respect to the Fund, the investment objective will continue to be
fundamental.

ADDITIONAL INFORMATION

OTHER BUSINESS

As of the date of this Proxy Statement, the Trustees are not aware of any
matters to be presented for action at the Meetings other than those described
above. Should other business properly be brought before any Meeting, it is
intended that the accompanying Proxy will be voted thereon in accordance with
the judgment of the persons named as proxies.

PROXIES AND VOTING AT THE MEETING

The enclosed Proxy is revocable by a shareholder at any time before it is
exercised by written notice to the Trust or Corporation (addressed to the
Secretary at the Trust's or Corporation's principal executive offices), by
executing a superseding proxy or by attending the applicable Meeting and voting
in person. All valid proxies received prior to a Meeting (including any
adjournment thereof) will be voted at the Meeting. Matters on which a choice has
been provided will be voted as indicated on the Proxy and, if no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the matters set forth in each proposal and will use their best judgment
in connection with the transaction of such other business as may properly come
before the Meetings.

In the event that at the time any session of a Meeting is called to order a
quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn the Meeting to a later
date. In the event that a quorum is present but sufficient votes in favor of any
of Proposals 1 through 7 have not been received, the persons named as proxies
may propose one or more adjournments of the applicable Meeting to permit further
solicitation of proxies with respect to such proposal. Any such

<PAGE>

adjournment will require the affirmative vote of a majority of the shares of the
Trust or Corporation (or the affected Fund) present in person or by proxy at the
session of the Meeting to be adjourned. The persons named as proxies will vote
those proxies which they are entitled to vote in favor of any such Proposal in
favor of such an adjournment, and will vote those proxies required to be voted
against any such proposal against any such adjournment. A shareholder vote may
be taken on one or more of the Proposals in this Proxy Statement prior to such
adjournment if sufficient votes for their approval have been received and it is
otherwise appropriate.

A majority, in the case of the Trust, and one-third, in the case of the
Corporation, of the shares entitled to vote shall be a quorum for the
transaction of business at a Meeting, but any lesser number shall be sufficient
for adjournments. Abstentions will be treated as shares that are present and
entitled to vote with respect to each proposal, but will not be counted as a
vote in favor of a proposal. Accordingly, an abstention from voting on a
proposal has the same effect as a vote against the proposal. If a broker or
nominee holding shares in "street name" indicates on the proxy that it does not
have discretionary authority to vote as to a particular proposal, Trust shares
will not be considered as present and entitled to vote with respect to the
proposal and in the case of the Corporation the inability to vote such shares
will be treated the same as abstentions. Accordingly, a "broker non-vote" has no
effect on the voting in determining whether a proposal has been adopted pursuant
to subsection (i) of the 1940 Act Majority definition. In addition, a "broker
non- vote" has no effect on the voting in determining whether a Nominee has been
elected a Trustee pursuant to Proposal 1. However, in determining whether a
proposal has been adopted pursuant to subsection (ii) of the 1940 Act Majority
definition, and Proposal 3 has been adopted by Corporation shareholders, a
"broker non-vote" will have the same effect as a vote against the proposal
because shares represented by a "broker non-vote" are considered outstanding
shares.

MANNER AND COST OF PROXY SOLICITATION

Each Fund will bear its allocable portion of proxy solicitation expenses,
including the cost of preparing, assembling and mailing materials used in
connection with the solicitation of proxies. The Funds will reimburse brokers,
nominees and similar record holders for their reasonable expenses incurred in
connection with forwarding proxy materials to beneficial holders. In addition to
the solicitation by use of the mails, certain officers and employees of Goldman
Sachs, none of whom will receive compensation for their services other than
their regular salaries, may solicit the return of proxies personally or by
telephone or fax.

<PAGE>

In addition to the solicitation of proxies by mail or in person, the
Corporation and the Trust may also arrange to have votes recorded by telephone
by officers and employees of the Corporation and the Trust, personnel of GSAM
and the transfer agent or agents hired by the transfer agent for such purpose.
The telephone voting procedure is designed to authenticate a shareholder's
identity, to allow a shareholder to authorize the voting of shares in accordance
with the shareholder's instructions and to confirm that the voting instructions
have been properly recorded. If these procedures were subject to a successful
legal challenge, such votes would not be counted at the Meeting. Neither the
Trust nor the Corporation has sought to obtain an opinion of counsel on this
matter or is aware of any such challenge. A shareholder will be called on a
recorded line at the telephone number shown in the transfer agent's records for
the account and could be asked for the shareholder's Social Security number or
other identifying information. The shareholder will then be given an opportunity
to authorize proxies to vote his shares at the Meetings in accordance with the
shareholder's instructions. To ensure that the shareholder's instructions have
been recorded correctly, the shareholder will also receive a confirmation of the
voting instructions in the mail. A special telephone number will be available in
case the voting information contained in the confirmation is incorrect. If the
shareholder decides after voting by telephone to attend the Meetings, the
shareholder can revoke the proxy at that time and vote the shares at the
Meetings. If you have any questions regarding the enclosed proxy or need any
assistance in voting your shares, please contact our proxy solicitor, D.F. King
& Co. at (800) 628-8509.

SHAREHOLDER PROPOSALS

None of the Trust, the Corporation or the Delaware Trust is required or intends
to hold a meeting of shareholders each year. Instead, meetings will be held only
when and if required. Any shareholders desiring to present a proposal for
consideration at the next meeting of shareholders of their respective Fund must
submit the proposal in writing, so that it is received by the appropriate Fund
within a reasonable time before any meeting.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.

February 13, 1997

<PAGE>

APPENDIX A

As of January 31, 1997, each Fund had the following number of shares
outstanding:

<TABLE>
<CAPTION>
OUTSTANDING
FUND SHARES
---- ---------------
<S> <C>
GS Adjustable Rate Government . . . . 59,609,034.07
GS Short Duration Government . . . . . 10,840,174.91
GS Short Duration Tax-Free . . . . . . 3,963,609.66
GS Core Fixed Income . . . . . . . . . 7,886,338.59
Goldman Sachs Global Income . . . . . . 16,774,600.30
Goldman Sachs Government Income . . . . 2,542,496.44
Goldman Sachs Municipal Income . . . . 3,800,690.59
Goldman Sachs Balanced . . . . . . . . 4,448,761.68
Goldman Sachs Select Equity . . . . . . 16,942,450.21
Goldman Sachs Growth and Income . . . . 27,430,654.15
Goldman Sachs Capital Growth . . . . . 55,214,966.85
Goldman Sachs Mid-Cap Equity . . . . . 7,755,773.82
Goldman Sachs Small Cap Equity . . . . 10,317,041.37
Goldman Sachs International Equity . . 32,322,448.51
Goldman Sachs Asia Growth . . . . . . . 17,144,007.83
</TABLE>

A-1
<PAGE>

APPENDIX B

As of January 31, 1997, the following persons or entities owned beneficially or
of record more than 5% of the outstanding shares, as applicable, of each Fund:

<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE
OF OUTSTANDING SHARES
------------------------
AMOUNT PERCENTAGE
SHAREHOLDER NAME AND ADDRESSES OF SHARES OF SHARES
------------------------------ ------------ ------------
<S> <C> <C>
GS ADJUSTABLE RATE GOVERNMENT
First Security Bank of Idaho . . . . . 3,716,440.07 6.23
P.O. Box 30007
Salt Lake City, UT 84130
First Trust of New York, N.A. . . . . 6,865,386.61 11.52
100 Wall Street
Suite 1600
New York, NY 10005
Foundation For New Era Philanthropy . 5,165,262.04 8.67
1600 Market Street 36th Fl.
Philadelphia, PA 19102
Fundex Corporation . . . . . . . . . . 5,246,937.17 8.80
1875 S. Grant Street
Suite 1000
San Mateo, CA 94402-2671
Regents of the University of Minnesota 3,016,406.82 5.06
100 Church Street S.E.
RM 311A
Minneapolis, MN 55455
St. Treasurer/Nebr. Invest. Coucil . . 3,979,328.43 6.68
941 "O" Street, Suite 500
Lincoln, NE 68508
GS SHORT DURATION GOVERNMENT
BERKO Accounts . . . . . . . . . . . . 740,943.64 6.84
150 E. 69th St.
New York, NY 10021-5704
Central Carolina Bank and Trust Co. . 797,945.85 7.36
PO Box 931
Durham, NC 27702
Norwest Bank Iowa NA . . . . . . . . . 768,525.30 7.09
PO Box 1450
Minneapolis, MN 55480-1450
</TABLE>

B-1
<PAGE>

<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE
OF OUTSTANDING SHARES
------------------------
AMOUNT PERCENTAGE
SHAREHOLDER NAME AND ADDRESSES OF SHARES OF SHARES
------------------------------ ------------ ------------
<S> <C> <C>
Richfield Bank & Trust Co. . . . . . 1,309,858.52 12.08
6625 Lyndale Ave. South
Richfield, MN 55423
State Street Bank and Trust Co. . . . 3,521,436.71 32.49
PO Box 1992
Boston, MA 02105-1992
GS CORE FIXED INCOME
Goldman Sachs Asset Management . . . 5,407,566.79 68.57
1 New York Plaza 42nd Fl.
New York, NY 10004-1901
Local 234 Elec. Workers Ret. Fund 579,271.78 7.35
10300 Merritt Street
Castroville, CA 95102
Norwest Bank Iowa NA . . . . . . . . 396,816.64 5.03
C/O Norwest Bank Minnesota NA
PO Box 1450
Minneapolis, MN 55480-1450
U.S. Naval Academy Alumni Association 395,498.61 5.01
247 King George Street
Annapolis, MD 21402-1323
GS SHORT DURATION TAX-FREE FUND
Donald R. Gant . . . . . . . . . . . 578,146.12 14.59
Goldman Sachs & Co.
85 Broad Street, 22nd Fl.
New York, NY 10004
First Interstate BK-Agent/ Amer NB . 301,204.82 7.60
3800 Howard Hughes Parkway
Las Vegas, NV 89193-8588
G-K-G, Inc. . . . . . . . . . . . . . 341,223.01 8.61
166 Oak Knoll Terrace
Highland Park, IL 60035
Indiana Trust & Investment Mgmt. Co . 426,846.59 10.77
3930 Edison Lakes Parkway
Suite 250
Mishawaka, IN 46545
</TABLE>

B-2
<PAGE>

<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE
OF OUTSTANDING SHARES
------------------------
AMOUNT PERCENTAGE
SHAREHOLDER NAME AND ADDRESSES OF SHARES OF SHARES
------------------------------ ------------ ------------
<S> <C> <C>
Lafayette American Bank . . . . . 242,221.13 6.11
C/O HUBCO
1000 Macarthur Blvd.
Mahwah, NJ 07430-2035
Nelda Stark . . . . . . . . . . . 251,668.98 6.35
PO Box 909
Orange, TX 77631-0909
Robert A. Cenci . . . . . . . . . 256,751.06 6.48
55 Burying Hill Rd.
Greenwich, CT 06831
GOLDMAN SACHS BALANCED
Trukan and Co. . . . . . . . . . 267,887.87 6.02
PO Box 3699
Wichita,KS 67201-3699
Frontier Trust Co., Inc. Tr. . . 323,695.10 7.28
1720 S. Gadsen Street
Tallahassee, FL 32301-5547
GOLDMAN SACHS SELECT EQUITY
State Street Bank & Trust TTEE . 2,356,153.85 13.91
PO Box 1992
Boston MA 02105-1992
Marine Midland Bank As Trustee . 1,443,924.40 8.52
PO Box 1329
Buffalo, NY 14240-1329
GOLDMAN SACHS MID-CAP EQUITY
State Street Bank & TR TTEE . . . 7,597,703.58 97.96
PO Box 1992
Boston, MA 02105
GOLDMAN SACHS INTERNATIONAL EQUITY
Georgia-Pacific Corporation . . . 1,677,356.17 5.19
133 Peachtree St. NE 18th Fl.
Atlanta, GA 30303-1847
</TABLE>

B-3
<PAGE>

APPENDIX C

The information as to beneficial ownership set forth in the chart below is
based on statements furnished to the Funds by the Trustees. Each has all voting
and investment powers with respect to the shares indicated. All of the
information is as of January 31, 1997 and has been rounded to the nearest whole
share.

None of the Trustees beneficially owned individually, nor did the Trustees
beneficially own as a group, in excess of one percent of the outstanding shares
of any of the Funds as of January 31, 1997.

<TABLE>
<CAPTION>
FUND BAKHRU SMART SPRINGER STRUBEL GRIP SHUCH FORD MCNULTY MCPHERSON
---- ------ ----- -------- ------- ---- ----- ---- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GS Adjustable Rate
Government Fund. . .
GS Short Duration
Government Fund. . .
GS Short Duration
Tax-Free Fund. . . .
GS Core Fixed Income
Fund . . . . . . . .
Goldman Sachs Global
Income Fund. . . . . 7,162 2,529
Goldman Sachs
Government Income
Fund . . . . . . . .
Goldman Sachs
Municipal Income Fund
Goldman Sachs Balanced
Fund . . . . . . . . 126
Goldman Sachs Select
Equity Fund. . . . . 3,211 2,133
Goldman Sachs Growth
and Income Fund. . . 117 65
Goldman Sachs Capital
Growth Fund. . . . . 9,853 7,794 6,169 19,840 231 344
Goldman Sachs Mid-Cap
Equity Fund. . . . . 23,524
Goldman Sachs Small
Cap Equity Fund. . . 3,832 6,088 9,100 72
Goldman Sachs
International Equity
Fund . . . . . . . . 803 16,579 78
Goldman Sachs Asia
Growth Fund. . . . . 919 11,376
</TABLE>

C-1
<PAGE>

APPENDIX D

AGREEMENT AND PLAN OF REORGANIZATION, CONVERSION AND TERMINATION

THIS AGREEMENT AND PLAN OF REORGANIZATION, CONVERSION AND TERMINATION is made
as of the 28th day of January, 1997, by and between [Goldman Sachs Equity
Portfolios, Inc., a Maryland corporation][Goldman Sachs Trust, a Massachusetts
business trust] (the "Registrant"), on behalf of each of its series (each a
"Fund" and collectively the "Funds"), and Goldman Sachs Trust (the "Trust"), a
Delaware business trust.

This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(a)(1) of the U.S. Internal Revenue Code of
1986, as amended (the "Code"), and is intended to effect the reorganization (a
"Reorganization") of each Fund as a new series of the Trust (each a "Successor
Fund" and collectively the "Successor Funds"). Each Reorganization will include
the transfer of all of the assets of a Fund to a corresponding Successor Fund of
the Trust solely in exchange for (1) the assumption by the Successor Fund of all
liabilities of the Fund and (2) the issuance by the Trust to the Fund of shares
of beneficial interest of the Successor Fund. The aggregate number of shares of
each class of the Successor Fund (the "Successor Fund Shares") issued to the
Fund will be equal to the number of shares of [common stock] [beneficial
interest] ("Shares") of the corresponding Fund class outstanding immediately
before the Reorganization. These transactions will be immediately followed by a
pro rata distribution by each Fund of the Successor Fund Shares it receives in
the exchange described above to the holders of corresponding Fund Shares in
exchange for those Fund Shares, in liquidation of each Fund, all upon the terms
and conditions hereinafter set forth in this Agreement.

In consideration of the promises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows.

1. TRANSFER OF ASSETS OF THE FUNDS IN EXCHANGE FOR ASSUMPTION OF LIABILITIES AND
ISSUANCE OF SUCCESSOR FUND SHARES

1.1 Subject to the terms and conditions set forth herein and on the basis of
the representations and warranties contained herein, each Fund agrees to
transfer all of its assets (as described in paragraph 1.2) and to assign and
transfer all of its liabilities to a corresponding Successor Fund organized
solely for the purpose of acquiring all of the assets and assuming all of the
liabilities of that Fund. The Trust, on behalf of each Successor Fund, agrees

D-1
<PAGE>

that in exchange for all of the assets of the corresponding Fund (1) the
Successor Fund shall assume all of the liabilities of such Fund, whether
contingent or otherwise, then existing and (2) the Trust shall issue Successor
Fund Shares to the Fund. The number of Successor Fund Shares of each class to be
issued by the Trust on behalf of each Successor Fund will be identical to the
number of Shares of the corresponding class and Fund outstanding on the Closing
Date provided for in paragraph 3.1. Such transactions shall take place at the
Closing provided for in paragraph 3.1.

1.2 The assets of each Fund to be acquired by the corresponding Successor Fund
shall include, without limitation, all cash, cash equivalents, securities,
receivables (including interest and dividends receivable), any claims or rights
of action or rights to register shares under applicable securities laws, any
books or records of the Fund and other property owned by the Fund and any
deferred or prepaid expenses shown as assets on the books of the Fund on the
Closing Date provided for in paragraph 3.1.

1.3 Immediately after delivery to each Fund of corresponding Successor Fund
Shares, a duly authorized officer of Registrant shall cause each Fund, as the
sole shareholder of the corresponding Successor Fund, to (i) elect the Trustees
of the Trust; (ii) ratify the selection of the Trust's independent accountants;
(iii) approve an investment advisory agreement and, if applicable, a subadvisory
agreement for the Successor Fund in substantially the same form as the
investment advisory agreement and, if applicable, a subadvisory agreement in
effect with respect to the Fund immediately prior to the closing of the
reorganization, including any changes thereto approved by the shareholders of
the Fund at the meeting of Shareholders to be held on April 1, 1997; (iv)
approve distribution and authorized dealer service plans for the Class A Shares,
if any, of the Successor Fund in substantially the same form as the distribution
and authorized dealer service plans currently in effect with respect to the
Class A Shares of the Fund; (v) approve distribution and authorized dealer
service plans for the Class B Shares, if any, of the Successor Fund in
substantially the same form as the distribution and authorized dealer service
plans currently in effect with respect to the Class B Shares of the Fund; (vi)
approve a preferred administration plan for the preferred administration shares,
if any, of the Successor Fund in substantially the same form as the preferred
administration plan currently in effect with respect to the Preferred
Administration Shares of the Fund; (vii) approve an administration plan with
respect to the Administration Shares, if any, of the Successor Fund in
substantially the same form as the administration plan currently in effect for
Administration Shares of the Fund; (viii) approve a service plan with respect to
the Service Shares, if any, of the Successor Fund in substantially the same form
as the service plan currently in effect for

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<PAGE>

Service Shares of the Fund; and (ix) adopt investment objectives, investment
policies and investment restrictions which are substantially identical to those
of the Fund immediately prior to the closing of the reorganization, including
any changes thereto approved by the shareholders of the Fund at the meeting of
shareholders to be held on April 1, 1997. On or prior to the Closing Date, the
Trust shall, on its own behalf or on behalf of the applicable Successor Fund,
either enter into transfer agency, subtransfer agency, custodian and
subcustodian agreements, agreement with broker-dealers and Service Organizations
and any other agreement pursuant to which services are rendered to the
Registrant with substantially the same terms as the agreements to which the
Registrant is a party as of the Closing Date or assume the Registrant's
obligations under such agreements. The Trust shall also adopt, on its own behalf
or on behalf of the applicable Successor Fund, on or prior to the Closing Date,
all policies and procedures, in effect with respect to the Registrant or any of
the Funds as of the Closing Date.

1.4 As provided in paragraph 3.4, on the Closing Date each Fund will
distribute in liquidation the Successor Fund Shares of each class to each
shareholder of record, determined as of the close of business on the Closing
Date, of the corresponding class of the Fund pro rata in proportion to such
shareholder's beneficial interest in that class and in exchange for that
shareholder's Shares. Such distribution will be accomplished by the transfer of
the Successor Fund Shares then credited to the account of each Fund on the share
records of the Trust to open accounts on those records in the names of such Fund
Shareholders and representing the respective pro rata number of each class of
the Successor Fund Shares received from the Successor Funds which is due to such
Fund Shareholders. Fractional Successor Fund Shares shall be rounded to the
third place after the decimal point.

1.5 Ownership of the Successor Fund Shares by each Successor Fund Shareholder
shall be recorded separately on the books of Goldman, Sachs & Co. ("Goldman
Sachs"), as the Trust's transfer agent.

1.6 Any transfer taxes payable upon the issuance of Successor Fund Shares in a
name other than the registered holder of the Fund Shares on the books of any
Fund shall be paid by the person to whom such Successor Fund Shares are to be
distributed as a condition of such transfer. Any deferred sales charge payable
with respect to any class of a Fund's shares will not be required to be paid as
a result of the exchange described in paragraph 1.4 but will continue to be
payable on the same basis with respect to the Shares of the Successor Fund.

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<PAGE>

1.7 Fund Shareholders holding certificates representing their ownership of any
class of Shares of a Fund shall surrender such certificates or deliver an
affidavit with respect to lost certificates, in such form and accompanied by
such surety bonds as Registrant may require (collectively, an "Affidavit"), to
Registrant prior to the Closing Date. Any Fund Share certificate which remains
outstanding on the Closing Date shall be deemed to be cancelled, shall no longer
evidence ownership of any Shares of the Fund and shall instead evidence
ownership of corresponding Successor Fund Shares. Unless and until any such
certificate shall be so surrendered or an Affidavit relating thereto shall be
delivered, dividends and other distributions payable by the applicable Successor
Fund subsequent to the Closing Date with respect to Successor Fund Shares shall
be paid to the holder of such certificate(s), but such shareholders may not
redeem or transfer Successor Fund Shares received in the Reorganization. The
Trust will not issue share certificates in the Reorganization.

1.8 The legal existence of each Fund and the Registrant shall be terminated as
promptly as reasonably practicable after the Closing Date.

2. VALUATION

2.1 The value of each Fund's net assets to be acquired by the Trust on behalf
of the Successor Funds hereunder shall be the net asset value computed as of the
valuation time provided in the Fund's prospectus(es) on the Closing Date using
the valuation procedures set forth in the Fund's current prospectus(es) and
statement of additional information.

2.2 The value of full and fractional Successor Fund Shares of each class to be
issued in exchange for each Fund's net assets shall be equal to the value of the
net assets of the corresponding class of such Fund on the Closing Date, and the
number of such Successor Fund Shares of each class shall equal the number of
full and fractional Fund Shares outstanding on the Closing Date.

2.3 All computations of value shall be made by State Street Bank and Trust
Company (the "Custodian"), as custodian for the Funds and the Trust, or the
Fund's investment advisor, in each case as required by the valuation procedures
adopted by the Registrant.

3. CLOSING AND CLOSING DATE

3.1 The transfer of each Fund's assets in exchange for the assumption by the
corresponding Successor Fund of the Fund's liabilities and the issuance of
Successor Fund Shares to the Fund, as described above, together with related

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<PAGE>

acts necessary to consummate such acts (the "Closing"), shall occur at the
offices of Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606 on
April 30, 1997 ("Closing Date"), or at such other place or date on or prior to
December 31, 1997 as the parties may agree in writing. All acts taking place at
the Closing shall be deemed to take place simultaneously as of the last daily
determination of the net asset value of the Funds or at such other time and or
place as the parties may agree.

3.2 In the event that on the Closing Date (a) the New York Stock Exchange is
closed to trading or trading thereon is restricted or (b) trading or reporting
of trading on said Exchange or in any market in which portfolio securities of a
Fund are traded is disrupted so that accurate appraisal of the value of the
total net assets of that Fund is impracticable, the Closing with respect to that
Fund shall be postponed until the first business day upon which trading shall
have been fully resumed and reporting shall have been restored.

3.3 Registrant shall deliver at the Closing a certificate or separate
certificates of an authorized officer stating that it has notified the
Custodian, as custodian for the Funds and the Trust, of the Funds'
reorganizations as series of the Trust.

3.4 Goldman Sachs, as transfer agent for the Funds, shall deliver at the
Closing a certificate evidencing the conversion on its books and records of each
Fund Shareholder account to a corresponding Successor Fund Shareholder account.
The Trust shall issue and deliver to each Fund a confirmation evidencing the
crediting of Successor Fund Shares to the appropriate shareholder accounts on
the Closing Date or provide other evidence satisfactory to the Fund that such
Successor Fund Shares have been credited to the Fund's account on the books of
the Trust. At the Closing each party shall deliver to the other such bills of
sale, checks, assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.

3.5 Portfolio securities that are not held in book-entry form in the name of
the Custodian as record holder for a Fund shall be presented by such Fund to the
Custodian for examination no later than five business days preceding the Closing
Date. Portfolio securities which are not held in book-entry form shall be
delivered by the Fund to the Custodian for the account of its respective
Successor Fund on the Closing Date, duly endorsed in proper form for transfer,
in such condition as to constitute good delivery thereof in accordance with the
custom of brokers, and shall be accompanied by all necessary federal and state
stock transfer stamps or a check for the

D-5
<PAGE>

appropriate purchase price thereof. Portfolio securities held of record by the
Custodian in book-entry form on behalf of each Fund shall be delivered to the
Successor Fund by the Custodian by recording the transfer of beneficial
ownership thereof on its records. The cash delivered shall be in the form of
currency or by the Custodian crediting the Successor Fund's account maintained
with the Custodian with immediately available funds.

4. REPRESENTATIONS AND WARRANTIES

4.1 Registrant represents and warrants, on behalf of itself and each Fund, as
follows:

4.1.A. Registrant is a [business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts] [a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland] and has the power to own all of its properties
and assets and, subject to approval by the shareholders of the Funds, to
perform its obligations under this Agreement. Registrant is not required to
qualify to do business in any jurisdiction in which it is not so qualified or
where failure to qualify would not subject it or the Funds to any material
liability or disability. Registrant has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on the
business of Registrant and the Funds as now being conducted. The Funds are duly
established and designated series of Registrant;

4.1.B. Registrant is a registered investment company classified as a
management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), is in
full force and effect;

4.1.C. Registrant is not, and the execution, delivery and performance of this
Agreement will not result, in violation of any provision of its [Declaration of
Trust] [Articles of Incorporation] or Bylaws, or any agreement, indenture,
instrument, contract, lease or other undertaking to which Registrant is a party
or by which Registrant is bound;

4.1.D. At the date hereof and at the Closing Date all federal, state and
other tax returns and reports, including information returns and payee
statements, of the Funds required by law to have been filed or furnished by
such dates shall have been filed or furnished and all federal, state and other
taxes, interest and penalties shall have been paid so far as due or provision

D-6
<PAGE>

shall have been made for the payment thereof and no such return is currently
under audit and no assessment has been asserted with respect to any of such
returns or reports;

4.1.E. Each Fund has elected to be treated as a regulated investment company
under Subchapter M of the Code, has qualified as such for each taxable year
since its inception, and will qualify as such as of the Closing Date;

4.1.F. All issued and outstanding shares of Registrant and each Fund are, and
at the Closing Date will be, duly and validly issued and outstanding, fully
paid and nonassessable by Registrant. Registrant does not have outstanding any
options, warrants or other rights to subscribe for or purchase any shares of
[common stock] [beneficial interest] of Registrant or any Fund, nor is there
outstanding any security convertible into any of such shares;

4.1.G. The information to be furnished by Registrant for use in applications
for orders, registration statements, proxy materials and other documents which
may be necessary in connection with the transactions contemplated hereby shall
be accurate and complete and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto;

4.1.H. At the Closing Date, Registrant, on behalf of the Funds, will have
good and marketable title to the assets to be transferred to the Trust, on
behalf of the Successor Funds, pursuant to paragraph 1.1, and will have full
right, power and authority to sell, assign, transfer and deliver such assets
hereunder. Upon delivery and in payment for such assets, the Trust on behalf of
the Successor Funds will acquire good and marketable title thereto subject to
no restrictions on the full transfer thereof, including such restrictions as
might arise under the Securities Act of 1933, as amended (the "1933 Act");

4.1.I. The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on the
part of Registrant. This Agreement constitutes a valid and binding obligation
of Registrant and each Fund enforceable in accordance with its terms, subject
to the approval of each Fund's shareholders;

4.1.J. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Registrant, on

D-7
<PAGE>

behalf of the Funds, of the transactions contemplated herein, except such as
shall have been obtained prior to the Closing Date.

4.2 The Trust represents and warrants, on behalf of itself and each Successor
Fund, as follows:

4.2.A. The Trust is a business trust duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the power to own
all of its properties and assets and to perform its obligations under this
Agreement. The Trust is not required to qualify to do business in any
jurisdiction in which it is not so qualified or where failure to qualify would
not subject it or the Successor Funds to any material liability or disability.
The Trust has all necessary federal, state and local authorizations to own all
of its properties and assets and to carry on the business of the Trust and the
Successor Funds as now being conducted. The Successor Funds are duly
established and designated series of the Trust;

4.2.B. The Trust is not, and the execution, delivery and performance of this
Agreement will not result, in violation of any provision of the Declaration of
Trust or Bylaws of the Trust or any agreement, indenture, instrument, contract,
lease or other undertaking to which the Trust is a party or by which the Trust
is bound;

4.2.C. The Trust will cause each Successor Fund to qualify as a regulated
investment company under Subsection M of the Code for the taxable year in which
the Closing occurs and to continue to qualify as such for each taxable year;

4.2.D. Prior to the Closing Date, there shall be no issued and outstanding
Successor Fund Shares or any other securities of the Successor Funds. Successor
Fund Shares issued in connection with the transactions contemplated herein will
be duly and validly issued and outstanding and fully paid and non-assessable by
the Trust;

4.2.E. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Trust, and this
Agreement constitutes a valid and binding obligation of the Trust and each
Successor Fund enforceable against the Trust and each Successor Fund in
accordance with its terms;

4.2.F. The information to be furnished by the Trust with respect to the
Successor Funds for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in

D-8
<PAGE>

connection with the transactions contemplated hereby shall be accurate and
complete and shall comply in all material respects with federal securities and
other laws and regulations applicable thereto;

4.2.G. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Trust or the
Successor Funds of the transactions contemplated herein, except such as shall
have been obtained prior to the Closing Date.

5. COVENANTS OF REGISTRANT AND THE TRUST

5.1 Registrant covenants that the Successor Fund Shares are not being acquired
for the purpose of making any distribution thereof, other than in accordance
with the terms of this Agreement.

5.2 Registrant covenants that it will assist the Trust in obtaining such
information as the Trust reasonably requests concerning the beneficial ownership
of Fund Shares.

5.3 Registrant will, on behalf of the Funds, from time to time as and when
requested by the Trust on behalf of the Successor Funds, execute and deliver, or
cause to be executed and delivered, all such assignments and other instruments,
and will take or cause to be taken such further action, as the Trust may deem
necessary or desirable in order to vest in, and confirm to, the Trust on behalf
of the Successor Funds, title to, and possession of, all the assets of each Fund
to be sold, assigned, transferred and delivered to its corresponding Successor
Fund hereunder and otherwise to carry out the intent and purpose of this
Agreement.

5.4 The Trust will, on behalf of the Successor Funds, from time to time as and
when requested by Registrant on behalf of the Funds, execute and deliver or
cause to be executed and delivered all such assignments and other instruments,
and will take or cause to be taken such further action, as Registrant may deem
necessary or desirable in order to vest in, and confirm to, Registrant, on
behalf of the Funds, title to, and possession of, the Successor Fund Shares
issued, sold, assigned, transferred and delivered hereunder and otherwise to
carry out the intent and purpose of this Agreement.

5.5 The Trust, on behalf of the Successor Funds, shall use all reasonable
efforts to obtain the approvals and authorizations required by the 1933 Act, the
1940 Act and such state securities laws as it may deem appropriate in order to
operate after the Closing Date;

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<PAGE>

5.6 Subject to the provisions of this Agreement, the Trust and Registrant each
will take, or cause to be taken, all action and will do or cause to be done all
things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.

5.7 As promptly as practicable, but in any event within 60 days after the
closing date, Registrant shall furnish to the Trust, in such form as is
reasonably satisfactory to the Trust, a statement of the earnings and profits of
each Funds for federal income tax purposes, and of any capital loss carryovers
and other items that will be carried over to each Successor Fund as a result of
Section 381 of the Code. Such statement shall be certified by the President or
Treasurer of Registrant.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF REGISTRANT AND THE FUNDS

The obligations of Registrant and each Fund to consummate the transactions
provided for herein shall be subject to the performance by the Trust, on behalf
of the Successor Funds, of all the obligations to be performed by the Trust and
the Successor Funds hereunder on or before the Closing Date and, in addition
thereto, to the following further conditions:

6.1 All representations and warranties of the Trust and each Successor Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date; and

6.2 The Trust shall have delivered on the Closing Date to Registrant a
certificate executed in the Trust's name by its President or Vice President, in
form and substance satisfactory to Registrant, dated as of the Closing Date, to
the effect that the representations and warranties of the Trust and each
Successor Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as Registrant shall reasonably
request.

Each of the foregoing conditions precedent may be waived by Registrant.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST AND THE SUCCESSOR FUNDS

The obligations of the Trust and each Successor Fund to consummate the
transactions provided for herein shall be subject to the performance by

D-10
<PAGE>

Registrant, on behalf of the Funds, of all the obligations to be performed by
Registrant and the Funds hereunder on or before the Closing Date and, in
addition thereto, to the following further conditions:

7.1 All representations and warranties of Registrant and each Fund contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date;

7.2 Registrant shall have delivered to the Trust on the Closing Date a
statement of the assets and liabilities of each Fund, prepared in accordance
with generally accepted accounting principles consistently applied, together
with a certificate of the Treasurer or Assistant Treasurer of Registrant as to
each Fund's portfolio securities and each Fund's federal income tax basis and
holding period for each such portfolio security as of the Closing Date; and

7.3 Registrant shall have delivered to the Trust on the Closing Date a
certificate executed in Registrant's name by its President or Vice President, in
form and substance satisfactory to the Trust, dated as of the Closing Date, to
the effect that the representations and warranties of Registrant and each Fund
made in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Trust shall reasonably request.

Each of the foregoing conditions precedent may be waived by the Trust.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF REGISTRANT, THE FUNDS, THE
TRUST AND THE SUCCESSOR FUNDS

The obligations of Registrant, the Funds, the Trust and the Successor Funds are
each subject to the further conditions that on or before the Closing Date:

8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of each Fund's Shareholders in accordance with
applicable law;

8.2 On the Closing Date no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with the
transactions contemplated hereby;

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<PAGE>

8.3 All consents of other parties and all other consents, orders and permits
of federal, state and local regulatory authorities (including those of the
Commission and of state securities authorities) deemed necessary by the Trust or
Registrant to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Trust, the Funds, Registrant or the
Successor Funds, provided that either party hereto may waive any of such
conditions for itself or its respective series;

8.4 Registrant and the Trust shall have received on or before the Closing Date
an opinion of Hale and Dorr LLP satisfactory to Registrant and the Trust,
substantially to the effect that for federal income tax purposes:

8.4.A. The acquisition of all of the assets of each Fund by its corresponding
Successor Fund solely in exchange for the issuance of Successor Fund Shares to
the Fund and the assumption by the Successor Fund of all of the liabilities of
the Fund, followed by the distribution in liquidation by the Fund of such
Successor Fund Shares to the Fund Shareholders in exchange for their Fund
Shares and the termination of the Fund, will constitute a reorganization within
the meaning of Section 368(a)(1) of the Code, and the Fund and the Successor
Fund will each be "a party to a reorganization" within the meaning of Section
368(b) of the Code;

8.4.B. No gain or loss will be recognized by any Fund upon (i) the transfer
of all of its assets to its corresponding Successor Fund solely in exchange for
the issuance of Successor Fund Shares to the Fund and the assumption by the
Successor Fund of the Fund's liabilities and (ii) the distribution by the Fund
of such Successor Fund Shares to the Fund Shareholders;

8.4.C. No gain or loss will be recognized by any Successor Fund upon its
receipt of all of the corresponding Fund's assets solely in exchange for the
issuance of the Successor Fund Shares to the Fund and the assumption by the
Successor Fund of all of the liabilities of the Fund;

8.4.D. The tax basis of the assets acquired by a Successor Fund from its
corresponding Fund will be, in each instance, the same as the tax basis of
those assets in the Fund's hands immediately prior to the transfer;

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<PAGE>

8.4.E. The tax holding period of the assets of each Fund in the hands of its
corresponding Successor Fund will, in each instance, include the Fund's tax
holding period for those assets;

8.4.F. Each Fund's Shareholders will not recognize gain or loss upon the
exchange of all of their shares of the Fund solely for Successor Fund Shares as
part of the transaction;

8.4.G. The tax basis of the Successor Fund Shares received by Fund
Shareholders in the transaction will be, for each shareholder, the same as the
tax basis of the Fund Shares surrendered in exchange therefor; and

8.4.H. The tax holding period of the Successor Fund Shares received by Fund
Shareholders will include, for each shareholder, the tax holding period for the
Fund Shares surrendered in exchange therefor, provided that such Fund Shares
were held as capital assets on the date of the exchange.

Registrant and the Trust each agree to make and provide representations with
respect to the Funds and the Successor Funds, respectively, which are reasonably
necessary to enable Hale and Dorr LLP to deliver an opinion substantially as set
forth in this paragraph 8.4, which opinion may address such other federal income
tax consequences, if any, that Hale and Dorr LLP believes to be material to the
Reorganization.

Each of the foregoing conditions precedent to the obligations of a party,
except for the receipt of the opinion of Hale and Dorr LLP set forth in
paragraph 8.4, may be waived by that party.

9. BROKERAGE FEES AND EXPENSES

9.1 The Trust, on behalf of the Successor Funds, and Registrant, on behalf of
the Funds, each represent and warrant to the other that there are no broker's or
finder's fees payable in connection with the transactions contemplated hereby.

9.2 Each Fund and each Successor Fund shall be liable for any expenses
incurred by them in connection with entering into and carrying out the
provisions of this Agreement whether or not the transactions contemplated hereby
are consummated.

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<PAGE>

10. ENTIRE AGREEMENT

The Trust, on behalf of the Successor Funds, and Registrant, on behalf of the
Funds, agree that neither party has made any representation, warranty or
covenant not set forth herein and that this Agreement constitutes the entire
agreement between the parties. The representations, warranties and covenants
contained herein or in any document delivered pursuant hereto or in connection
herewith shall survive the consummation of the transactions contemplated
hereunder.

11. TERMINATION

11.1 This Agreement may be terminated by the mutual agreement of the Trust and
Registrant. In addition, either the Trust or Registrant may at its option
terminate this Agreement at or prior to the Closing Date because:

11.1.A. There exists a material breach by the other party of any
representations, warranties or agreements contained herein to be performed at
or prior to the Closing Date; or

11.1.B. A condition expressed precedent to the obligations of the terminating
party has not been met and it reasonably appears that it will not or cannot be
met.

11.1.C. A majority of the members of the Board of [Trustees] [Directors] of
the Registrant determine that it is not in the best interest of the Funds or
their shareholders to proceed with the transactions contemplated by this
Agreement.

11.2 In the event of any such termination, there shall be no liability for
damages on the part of the Trust or Registrant, or their respective Trustees or
officers, to the other party or its Trustees or officers.

12. AMENDMENT

This Agreement may be amended, modified or supplemented in such manner as may
be mutually agreed upon in writing by the parties; provided, however, that
following the approval of this Agreement by any Fund's Shareholders, no such
amendment may have the effect of changing the provisions for determining the
number of Successor Fund Shares to be paid to that Fund's Shareholders under
this Agreement to the detriment of such Fund Shareholders without their further
approval.

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<PAGE>

13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT

13.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.

13.3 This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

13.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation other than the parties hereto and their respective
successors and assigns any rights or remedies under or by reason of this
Agreement.

13.5 All persons dealing with the Trust, the Funds, Registrant or the
Successor Funds must look solely to the property of the Trust, the Funds,
Registrant or the Successor Funds, respectively, for the enforcement of any
claims against the Trust, the Funds, Registrant or the Successor Funds, as
neither the Trustees, officers, agents nor shareholders of the Trust or
Registrant assume any personal liability for obligations entered into on behalf
of the Trust or Registrant, respectively. No series of Registrant or the Trust
shall be responsible for any obligations assumed by or on behalf of any other
series of Registrant or the Trust under this Agreement.

14. NOTICES

Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to Registrant or the Trust, each at 4900
Sears Tower, Chicago, Illinois 60606, Attention: Secretary.

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<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its duly authorized officer.

GOLDMAN SACHS TRUST, on behalf of the following series:

By: _____________________

Its: ____________________

[GOLDMAN SACHS TRUST]
[GOLDMAN SACHS EQUITY PORTFOLIOS, Inc.]
on behalf of the following series:

By: _____________________

Its: ____________________

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<PAGE>

APPENDIX E

GOLDMAN SACHS EQUITY PORTFOLIOS, INC. AMENDED AND RESTATED INVESTMENT
RESTRICTIONS

The Company may not on behalf of any Fund:

(1) make any investment inconsistent with the Fund's classification as a
diversified company under the Investment Company Act of 1940, as amended
(the "Act"). This restriction does not, however, apply to any Fund
classified as a non-diversified company under the Act.

(2) invest 25% or more of its total assets in the securities of one or more
issuers conducting their principal business activities in the same
industry (excluding the U.S. Government or any of its agencies or
instrumentalities).

(3) borrow money, except (a) the Fund may borrow from banks (as defined in the
Act) or through reverse repurchase agreements in amounts up to 33-1/3% of
its total assets (including the amount borrowed), (b) the Fund may, to the
extent permitted by applicable law, borrow up to an additional 5% of its
total assets for temporary purposes, (c) the Fund may obtain such short-
term credits as may be necessary for the clearance of purchases and sales
of portfolio securities, (d) the Fund may purchase securities on margin to
the extent permitted by applicable law and (e) the Fund may engage
transactions in mortgage dollar rolls which are accounted for as
financings.

(4) make loans, except through (a) the purchase of debt obligations in
accordance with the Fund's investment objective and policies, (b)
repurchase agreements with banks, brokers, dealers and other financial
institutions, and (c) loans of securities as permitted by applicable law.

(5) underwrite securities issued by others, except to the extent that the sale
of portfolio securities by the Fund may be deemed to be an underwriting.

(6) purchase, hold or deal in real estate, although a Fund may purchase and
sell securities that are secured by real estate or interests therein,
securities of real estate investment trusts and mortgage-related
securities and may hold and sell real estate acquired by a Fund as a
result of the ownership of securities.

(7) invest in commodities or commodity contracts, except that the Fund may
invest in currency and financial instruments and contracts that are
commodities or commodity contracts.

E-1
<PAGE>

(8) issue senior securities to the extent such issuance would violate
applicable law.

E-2
<PAGE>

APPENDIX F

GOLDMAN SACHS TRUST AMENDED AND RESTATED INVESTMENT RESTRICTIONS

The Trust may not on behalf of any Fund:

(2) invest more than 25% of its total assets in the securities of one or more
issuers conducting their principal business activities in the same
industry (excluding the U.S. Government or its agencies or
instrumentalities). (For the purposes of this restriction, state and
municipal governments and their agencies, authorities and
instrumentalities are not deemed to be industries; telephone companies are
considered to be a separate industry from water, gas or electric
utilities; personal credit finance companies and business credit finance
companies are deemed to be separate industries; and wholly-owned finance
companies are considered to be in the industry of their parents if their
activities are primarily related to financing the activities of their
parents). This restriction does not apply to investments in municipal
securities which have been pre-refunded by the use of obligations of the
U.S. Government or any of its agencies or instrumentalities. Each of the
Municipal Income and Short Duration Tax-Free Funds may invest 25% or more
of the value of its total assets in municipal securities which are related
in such away that an economic, business or political development or change
affecting one municipal security would also affect the other municipal
securities. These municipal securities include (a) municipal securities
the interest on which is paid solely from revenues of similar projects
such as hospitals, electric utility systems, multi-family housing, nursing
homes, commercial facilities (including hotels), steel companies or life
care facilities, (b) municipal securities whose issuers are in the same
state and (c) industrial development obligations.

(3) borrow money, except (a) the Fund may borrow from banks (as defined in the
Act) or through reverse repurchase agreements in amounts up to 33 1/3% of
its total assets (including the amount borrowed), (b) the Fund may, to the
extent permitted by applicable law, borrow up to an additional 5% of its
total assets for temporary

F-1
<PAGE>

purposes, (c) the Fund may obtain such short-term credits as may be
necessary for the clearance of purchases and sales of portfolio
securities, (d) the Fund may purchase securities on margin to the extent
permitted by applicable law and (e) the Fund may engage transactions in
mortgage dollar rolls which are accounted for as financings.

(5) underwrite securities issued by others, except to the extent that the sale
of portfolio securities by the Fund may be deemed to be an underwriting.

(7) invest in commodities or commodity contracts, except that the Fund may
invest in currency and financial instruments and contracts that are
commodities or commodity contracts.

(8) issue senior securities to the extent such issuance would violate
applicable law.

F-2
<PAGE>

APPENDIX G

FORM OF MANAGEMENT AGREEMENT

[GOLDMAN SACHS EQUITY PORTFOLIOS, INC.]

[GOLDMAN SACHS TRUST]

4900 SEARS TOWER
CHICAGO, ILLINOIS 60606

April 30, 1997

[GOLDMAN SACHS ASSET MANAGEMENT]

[GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL]

[GOLDMAN SACHS FUNDS MANAGEMENT L.P.]

[ADDRESS]

Dear Sirs:

[Goldman Sachs Trust] [Goldman Sachs Equity Portfolios, Inc.] (the
"Registrant") has been organized as a [business trust under the laws of the
State of Delaware] [business trust under the laws of the Commonwealth of
Massachusetts] [a corporation under the laws of the State of Maryland] to engage
in the business of an investment company. The shares of the Registrant
("Shares") may be divided into multiple series ("Series"), including the Series
listed on Annex A (including any Series added to Annex A in the future, each a
"Fund"). Each Series will represent the interests in a separate portfolio of
securities and other assets. Each Series may be terminated, and additional
Series established, from time to time by action of the Board of
[Trustees/Directors]. The Registrant on behalf of each Fund has selected you to
act as the investment adviser and administrator of the Funds and to provide
certain services, as more fully set forth below, and you are willing to act as
such investment adviser and administrator and to perform such services under the
terms and conditions hereinafter set forth. Accordingly, the Registrant agrees
with you as follows:

1. NAME OF REGISTRANT. The Registrant may use any name including or derived
from the name "Goldman Sachs" in connection with a Fund only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to your business as investment adviser or administrator. Upon the termination of
this Agreement, the Registrant (to the

G-1
<PAGE>

extent that it lawfully can) will cause the Funds to cease to use such a name or
any other name indicating that it is advised by or otherwise connected with you
or any organization which shall have so succeeded to your business.

2. SUB-ADVISERS. You may engage one or more investment advisers which are
either registered as such or specifically exempt from registration under the
Investment Advisers Act of 1940, as amended, to act as sub-advisers to provide
with respect to the Fund certain services set forth in Paragraphs 3 and 6
hereof, all as shall be set forth in a written contract to which the Registrant,
on behalf of the Fund, and you shall be parties, which contract shall be subject
to approval by the vote of a majority of the [Trustees/ Directors] who are not
interested persons of you, the sub-adviser, or of the Registrant, cast in person
at a meeting called for the purpose of voting on such approval and by the vote
of a majority of the outstanding voting securities of the Fund and otherwise
consistent with the terms of the Investment Company Act of 1940 Act, as amended
(the "1940 Act").

3. MANAGEMENT SERVICES.

(a) You will regularly provide each Fund with investment research, advice and
supervision and will furnish continuously an investment program for each Fund
consistent with the investment objectives and policies of the Fund. You will
determine from time to time what securities shall be purchased for a Fund, what
securities shall be held or sold by a Fund, and what portion of a Fund's assets
shall be held uninvested as cash, subject always to the provisions of the
Registrant's [Articles of Incorporation] [Declaration of Trust] and By-Laws and
of the 1940 Act, and to the investment objectives, policies and restrictions of
the Fund, as each of the same shall be from time to time in effect, and subject,
further, to such policies and instructions as the Board of [Trustees/Directors]
of the Registrant may from time to time establish.

(b) Subject to the general supervision of the Board of [Trustees/Directors] of
the Registrant, you will provide certain administrative services to each Fund.
You will, to the extent such services are not required to be performed by others
pursuant to the custodian agreement (or the transfer agency agreement to the
extent that a person other than you is serving thereunder as the Registrant's
transfer agent), (i) provide supervision of all aspects of each Fund's
operations not referred to in paragraph (a) above; (ii) provide each Fund with
personnel to perform such executive, administrative and clerical services as are
reasonably necessary to provide effective administration of the Fund; (iii)
arrange for, at the Registrant's expense, (a) the preparation for each Fund of
all required tax returns, (b) the preparation and submission of financial
reports to existing shareholders and (c) the periodic updating of the Fund's
prospectuses and statements of additional information and the preparation of
reports filed with the Securities and Exchange Commission

G-2
<PAGE>

and other regulatory authorities; (iv) maintain all of the Funds' records and
(v) provide the Funds with adequate office space and all necessary office
equipment and services including telephone service, heat, utilities, stationery
supplies and similar items.

(c) You will also provide to the Registrant's Board of [Trustees/Directors]
such periodic and special reports as the Board may reasonably request. You shall
for all purposes herein be deemed to be an independent contractor and shall,
except as otherwise expressly provided or authorized, have no authority to act
for or represent the Registrant or the Funds in any way or otherwise be deemed
an agent of the Registrant or the Funds.

(d) You will maintain all books and records with respect to the Funds'
securities transactions required by sub-paragraphs (b)(5), (6), (9) and (10) and
paragraph (f) of Rule 31a-1 under the 1940 Act (other than those records being
maintained by the Fund's custodian or transfer agent) and preserve such records
for the periods prescribed therefor by Rule 31a-2 of the 1940 Act. You will also
provide to the Registrant's Board of [Trustees/Directors] such periodic and
special reports as the Board may reasonably request.

(e) You will notify the Registrant of any change in your membership within a
reasonable time after such change.

(f) Your services hereunder are not deemed exclusive and you shall be free to
render similar services to others.

4. ALLOCATION OF CHARGES AND EXPENSES. You will pay all costs incurred by you
in connection with the performance of your duties under paragraph 3. You will
pay the compensation and expenses of all personnel of yours and will make
available, without expense to the Funds, the services of such of your partners,
officers and employees as may duly be elected officers or [Trustees/Directors]
of the Registrant, subject to their individual consent to serve and to any
limitations imposed by law. You will not be required to pay any expenses of any
Fund other than those specifically allocated to you in this paragraph 4. In
particular, but without limiting the generality of the foregoing, you will not
be required to pay: (i) organization expenses of the Funds; (ii) fees and
expenses incurred by the Funds in connection with membership in investment
company organizations; (iii) brokers' commissions; (iv) payment for portfolio
pricing services to a pricing agent, if any; (v) legal, auditing or accounting
expenses (including an allocable portion of the cost of your employees rendering
legal and accounting services to the Fund); (vi) taxes or governmental fees;
(vii) the fees and expenses of the transfer agent of the Registrant; (viii) the
cost of preparing stock certificates or any other expenses, including clerical
expenses of issue, redemption or

G-3
<PAGE>

repurchase of Shares of the Fund; (ix) the expenses of and fees for registering
or qualifying Shares for sale and of maintaining the registration of the Funds
and registering the Registrant as a broker or a dealer; (x) the fees and
expenses of [Trustees/Directors] of the Registrant who are not affiliated with
you; (xi) the cost of preparing and distributing reports and notices to
shareholders, the Securities and Exchange Commission and other regulatory
authorities; (xii) the fees or disbursements of custodians of each Fund's
assets, including expenses incurred in the performance of any obligations
enumerated by the [Declaration of Trust or] By-Laws of the Registrant insofar as
they govern agreements with any such custodian; or (xiii) litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Fund's business. You shall not be required to pay
expenses of activities which are primarily intended to result in sales of Shares
of the Funds.

5. COMPENSATION OF THE MANAGER.

(a) For all services to be rendered and payments made as provided in paragraphs
3 and 4 hereof, the Registrant on behalf of each Fund will pay you each month a
fee at an annual rate equal to the percentage of the average daily net assets of
the Fund set forth with respect to such Fund on Annex A. The "average daily net
assets" of a Fund shall be determined on the basis set forth in the Fund's
prospectus(es) or otherwise consistent with the 1940 Act and the regulations
promulgated thereunder.

(b) In addition to the foregoing, you may from time to time agree not to impose
all or a portion of your fee otherwise payable hereunder (in advance of the time
such fee or portion thereof would otherwise accrue) and/or undertake to pay or
reimburse a Fund for all or a portion of its expenses not otherwise required to
be borne or reimbursed by you. Any such fee reduction or undertaking may be
discontinued or modified by you at any time.

6. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or sales
of portfolio securities for the account of the Funds, neither you nor any of
your partners, officers or employees will act as a principal, except as
otherwise permitted by the 1940 Act. You or your agent shall arrange for the
placing of all orders for the purchase and sale of portfolio securities for each
Fund's account with brokers or dealers (including Goldman, Sachs & Co.) selected
by you. In the selection of such brokers or dealers (including Goldman, Sachs &
Co.) and the placing of such orders, you are directed at all times to seek for
the Funds the most favorable execution and net price available. It is also
understood that it is desirable for the Funds that you have access to
supplemental investment and market research and security and economic analyses
provided by brokers who may execute brokerage transactions at a higher cost to a
Fund than may result when allocating

G-4
<PAGE>

brokerage to other brokers on the basis of seeking the most favorable price and
efficient execution. Therefore, you are authorized to place orders for the
purchase and sale of securities for the Funds with such brokers, subject to
review by the Registrant's Board of [Trustees/Directors] from time to time with
respect to the extent and continuation of this practice. It is understood that
the services provided by such brokers may be useful to you in connection with
your services to other clients. If any occasion should arise in which you give
any advice to your clients concerning the Shares of the Funds, you will act
solely as investment counsel for such clients and not in any way on behalf of
any Fund. You may, on occasions when you deem the purchase or sale of a security
to be in the best interests of a Fund as well as your other customers (including
any other Series or any other investment company or advisory account for which
you or any of your affiliates acts as an investment adviser), aggregate, to the
extent permitted by applicable laws and regulations, the securities to be sold
or purchased in order to obtain the best net price and the most favorable
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by you in the
manner you consider to be the most equitable and consistent with your fiduciary
obligations to the Fund and to such other customers. In addition, you are
authorized to take into account the sale of shares of the Registrant in
allocating purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with you), provided
that you believe that the quality of the transaction and the commission is
comparable to what they would be with other qualified firms.

7. LIMITATION OF LIABILITY OF MANAGER AND FUND. You shall not be liable for
any error of judgment or mistake of law or for any loss suffered by a Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Registrant
or the Funds shall be deemed, when acting within the scope of his employment by
the Funds, to be acting in such employment solely for the Funds and not as your
employee or agent. The Fund shall not be liable for any claims against any other
Series of the Registrant.

8. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force as to each Fund until June 30, 1998 and shall continue for periods of one
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the [Trustees/Directors] who
are not interested persons (as defined in the 1940

G-5
<PAGE>

Act) of the Registrant and have no financial interest in this Agreement, cast in
person at a meeting called for the purpose of voting on such approval and (b) by
a vote of a majority of the Board of [Trustees/Directors] of the Registrant or
of a majority of the outstanding voting securities of such Fund. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder. This Agreement may, on 60 days written
notice to the other party, be terminated in its entirety or as to a particular
Fund at any time without the payment of any penalty, by the Board of
[Trustees/Directors] of the Registrant, by vote of a majority of the outstanding
voting securities of a Fund, or by you. This Agreement shall automatically
terminate in the event of its assignment. In interpreting the provisions of this
Agreement, the definitions contained in Section 2(a) of the 1940 Act
(particularly the definitions of "interested person," "assignment" and "majority
of the outstanding voting securities"), as from time to time amended, shall be
applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.

9. AMENDMENT OF THIS AGREEMENT. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective as to a Fund until approved by vote of the holders of a majority of
the outstanding voting securities of such Fund and by a majority of the Board of
[Trustees/Directors] of the Registrant, including a majority of the
[Trustees/Directors] who are not interested persons (as defined in the 1940 Act)
of the Registrant and have no financial interest in this Agreement, cast in
person at a meeting called for the purpose of voting on such amendment.
Notwithstanding the foregoing, this Agreement may be amended at any time to add
a new Fund to Annex A provided such amendment is approved by a majority of the
Board of [Trustees/Directors] of the Registrant, including a majority of the
[Trustees/Directors] who are not interested persons (as defined in the 1940 Act)
of the Registrant and have no financial interest in this Agreement. This
paragraph does not apply to any agreement described in paragraph 5(b) hereof,
which shall be effective during the period you specify in a prospectus, sticker,
or other document made available to current or prospective shareholders.

10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

11. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the

G-6
<PAGE>

provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

[The name Goldman Sachs Trust is the designation of the [Trustees] for the time
being under [an Amended and Restated Agreement and Declaration of Trust dated
December 5, 1991], [under a Declaration of Trust dated January 29, 1997] as
amended from time to time, and all persons dealing with the Trust or a Funds
must look solely to the property of the Trust or such Fund for the enforcement
of any claims as none of Trustees, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Trust. No Fund
shall be liable for any claims against any other Series.

If you are in agreement with the foregoing, please sign the form of acceptance
on the Registrant counterpart of this letter and return such counterpart to the
Registrant, whereupon this letter shall become a binding contract.

Yours very truly,

[GOLDMAN SACHS EQUITY PORTFOLIOS, INC.]

[GOLDMAN SACHS TRUST]

Attest:_________________________ By:_________________
Michael J. Richman Douglas C. Grip
Secretary of the Registrant President of the Registrant

The foregoing Agreement is hereby accepted as of the date thereof.

[GOLDMAN SACHS ASSET MANAGEMENT,
A DIVISION OF GOLDMAN, SACHS & CO.]

[GOLDMAN SACHS FUNDS MANAGEMENT L.P.]
[GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL]

[AN AFFILIATE OF GOLDMAN, SACHS & CO.]

Attest:________________________ By:_________________
Michael J. Richman David B. Ford
Counsel to the Funds Group [title]

G-7
<PAGE>

APPENDIX H

OTHER MUTUAL FUNDS ADVISED BY GOLDMAN SACHS ASSET MANAGEMENT, GOLDMAN SACHS
FUNDS MANAGEMENT, L.P. OR GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL

Goldman Sachs Asset Management ("GSAM"), Goldman Sachs Funds Management, L.P.
("GSFM") and Goldman Sachs Asset Management International ("GSAMI")
(collectively, the "Advisers") provide investment advisory services to the
following mutual funds with investment objectives similar to those of one or
more of the Funds covered by this Proxy Statement.

<TABLE>
<CAPTION>
FUND NET ASSET SIZE COMBINED ADVISORY
(AS OF 12/31/96) AND ADMINISTRATION
NAME OF FUND (ADVISER) --------------------- FEE RATE
---------------------- ------------------
<S> <C> <C>
GS Short-Duration Government Fund
(GSFM). . . . . . . $ 102,879,836 .40%
GS Adjustable Rate
Government Fund (GSFM) 581,682,420 .40
GS Short Duration
Tax-Free Fund (GSAM) 34,300,211 .50
GS Core Fixed
Income Fund (GSAM). 75,829,522 .40
</TABLE>

------

* The combined advisory and administration fee rates shown do not reflect the
fact that GSAM has voluntarily agreed not to impose all or a portion of its
advisory and administration fee and/or to reduce or otherwise limit the annual
total operating expenses of these funds.

H-1

<PAGE>

APPENDIX I

ADDITIONAL FEES PAID BY THE FUNDS TO THE ADVISERS AND/OR THEIR AFFILIATES

Goldman, Sachs & Co. provides transfer agency and distribution services to the
Funds and provides distribution services to the Class A and Class B shares of
certain of the Funds. It is expected that Goldman, Sachs & Co. will continue to
provide these services.

For the fiscal year ended October 31, 1996, in the case of the Trust, and the
fiscal year ended January 31, 1996, in the case of the Corporation, the
following Funds paid the following amounts of compensation to Goldman, Sachs &
Co. for transfer agency services pursuant to their transfer agency agreements
with Goldman, Sachs & Co.

<TABLE>
<CAPTION>
FUND TRANSFER AGENCY FEES
---- ----------------------
<S> <C>
GS Adjustable Rate Government . . $278,337
GS Short Duration Tax-Free . . . . 16,980
GS Core Fixed Income . . . . . . . 24,657
Goldman Sachs Government Income. . 72,237
Goldman Sachs Global Income. . . . 121,212
Goldman Sachs Municipal Income . . 90,284
Goldman Sachs Mid-Cap Equity . . . 26,082
Goldman Sachs Balanced . . . . . . 72,067
Goldman Sachs Select Equity . . . 115,253
Goldman Sachs Growth & Income. . . 524,671
Goldman Sachs Capital Growth . . . 549,844
Goldman Sachs Small Cap Equity . . 254,292
Goldman Sachs International Equity 129,313
Goldman Sachs Asia Growth . . . . 192,097
</TABLE>

I-1
<PAGE>

For such periods, the following Funds paid the following aggregate amounts of
compensation to Goldman, Sachs & Co. for distribution-related services pursuant
to their Rule 12b-1 Distribution and Authorized Dealer Service Plans and
distribution agreements with Goldman, Sachs & Co.

<TABLE>
<CAPTION>
FEES UNDER
FEES FOR 12B-1 AUTHORIZED
DISTRIBUTION DEALER SERVICE (SALES LOAD)
FUND RELATED SERVICES PLANS DISTRIBUTION
---- ---------------- -------------- ---------------
<S> <C> <C> <C>
GS Adjustable Rate
Government . . . . . . . . $ -- $ 18,303 $ 79,000
Goldman Sachs Global Income -- 499,831 52,600
Goldman Sachs Government -- 27,311 17,300
Income . . . . . . . . . .
Goldman Sachs Municipal -- 16,278 24,900
Income . . . . . . . . . .
Goldman Sachs Asia Growth 505,066 140,011 507,000
Goldman Sachs Balanced . . 84,350 25,069 28,000
Goldman Sachs Capital Growth 3,104,424 721,375 523,000
. . . . . . . . . . . . .
Goldman Sachs Growth & 986,255 81,909 771,000
Income . . . . . . . . . .
Goldman Sachs International 929,746 201,072 211,000
Equity . . . . . . . . . .
Goldman Sachs Select Equity 349,883 70,470 108,000
Goldman Sachs Small Cap 999,563 185,059 202,000
Equity . . . . . . . . . .
</TABLE>

I-2
<PAGE>

APPENDIX J

AFFILIATED BROKERS

During the fiscal year ended October 30, 1996, in the case of the Trust, and
the fiscal year ended January 31, 1996, in the case of the Corporation, the
Funds paid brokerage commissions to Affiliated Brokers:

<TABLE>
<CAPTION>
TOTAL
BROKERAGE PERCENTAGE OF
TOTAL COMMISSIONS COMMISSIONS
BROKERAGE PAID TO PAID TO
COMMISSIONS AFFILIATED AFFILIATED
FUND PAID BROKERS BROKERS
---- ----------- ----------- ---------------
<S> <C> <C> <C>
GS Adjustable Rate . . . . . . . . $ 108,000 $108,000 100%
GS Short Duration Govt . . . . . . 24,000 24,000 100
GS Short Duration Tax-Free . . . . 1,000 1,000 100
GS Core Fixed Income . . . . . . . 4,000 4,000 100
Goldman Sachs Government Income . 1,200 1,200 100
Goldman Sachs Municipal Income . . 2,750 2,750 100
Goldman Sachs Balanced . . . . . . 52,394 7,391 14
Goldman Sachs Select Equity . . . 121,424 -- 0
Goldman Sachs Growth & Income . . 754,318 71,218 9
Goldman Sachs Capital Growth . . . 1,703,905 284,660 17
Goldman Sachs Small Cap Equity . . 658,849 72,980 11
Goldman Sachs Mid-Cap Equity . . . 278,227 40,935 15
Goldman Sachs International Equity 830,544 14,000 2
Goldman Sachs Asia Growth . . . . 1,549,774 49,000 3
</TABLE>

J-1