GOLDMAN SACHS TRUST, 497, 1998-01-15

GOLDMAN SACHS TRUST
497, 1998-01-15

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<PAGE>

GOLDMAN SACHS MONEY MARKET FUNDS
FINANCIAL SQUARE FUNDS
FST SHARES
4900 Sears Tower
Chicago, Illinois 60606

The following Funds seek to maximize current income to the extent consistent
with the preservation of capital and the maintenance of liquidity by investing
exclusively in high quality money market instruments. The Funds may invest in
diversified portfolios of the following types of instruments:

Financial Square Prime Obligations Fund. Securities of the U.S. Government,
its agencies, authorities and instrumentalities, obligations of U.S. banks,
commercial paper and other short-term obligations of U.S. companies, states,
municipalities and other entities, and repurchase agreements.

Financial Square Money Market Fund. Securities of the U.S. Government, its
agencies, authorities and instrumentalities, U.S. dollar denominated obliga-
tions of U.S. and foreign banks, U.S. dollar denominated commercial paper and
other short-term obligations of U.S. and foreign companies, foreign govern-
ments, states, municipalities and other entities, and repurchase agreements.

Financial Square Premium Money Market Fund. Securities of the U.S. Govern-
ment, its agencies, authorities and instrumentalities, U.S. dollar denominated
obligations of U.S. and foreign banks, U.S. dollar denominated commercial pa-
per and other short-term obligations of U.S. and foreign companies, foreign
governments, states, municipalities and other entities, and repurchase agree-
ments. In order to obtain a rating from a rating organization, the Fund will
observe special investment restrictions.

Financial Square Treasury Obligations Fund. Securities issued or guaranteed
by the U.S. Treasury and repurchase agreements relating to such securities.

Financial Square Treasury Instruments Fund. Securities issued or guaranteed
by the U.S. Treasury, the interest income from which is generally exempt from
state income taxation.

Financial Square Government Fund. Securities of the U.S. Government, its
agencies, authorities, and instrumentalities, and repurchase agreements relat-
ing to such securities.

Financial Square Federal Fund. Securities of the U.S. Government and certain
of its agencies, authorities and instrumentalities, the interest income from
which is generally exempt from state income taxation.

Financial Square Tax-Free Money Market Fund. Securities issued by or on be-
half of states, territories and possessions of the United States and their po-
litical subdivisions, agencies, authorities and instrumentalities, and the
District of Columbia, the interest from which, if any, is, in the opinion of
bond counsel, excluded from gross income for federal income tax purposes and
not an item of tax preference under the federal alternative minimum tax.

Financial Square Municipal Money Market Fund. Securities issued by or on be-
half of states, territories and possessions of the United States and their po-
litical subdivisions, agencies, authorities and instrumentalities, and the
District of Columbia, the interest from which, if any, is, in the opinion of
bond counsel, excluded from gross income for federal income tax purposes (but
not necessarily exempt from federal alternative minimum tax or state and local
taxes).

AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOV-
ERNMENT AND THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.

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

ADDITIONAL INFORMATION........... Goldman Sachs Funds--Toll Free: 800-621-2550

This Prospectus provides you with information about the Funds that you should
know before investing in FST Shares. It should be read and retained for future
reference. If you would like more detailed information, the Statement of Addi-
tional Information dated September 5, 1997, as revised January 15, 1998, as
amended or supplemented from time to time, is available upon request without
charge by calling the telephone number listed above or by writing Goldman
Sachs, Attention: Shareholder Services, Goldman Sachs Trust, 4900 Sears Tower,
Chicago, Illinois 60606. The Statement of Additional Information, which is in-
corporated by reference into this Prospectus, has been filed with the Securi-
ties and Exchange Commission. Not all Funds are available in certain states.
Please call the phone number listed above to determine availability in your
state. The SEC maintains a Web site (http://www.sec.gov) that contains the
Statement of Additional Information and other information regarding the Trust.

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

FST SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT IN-
SURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is September 5, 1997,
as revised January 15, 1998.
<PAGE>

SHAREHOLDER AND FUND EXPENSES
FST SHARES

<TABLE>
<CAPTION>
FINANCIAL FINANCIAL FINANCIAL
FINANCIAL FINANCIAL SQUARE FINANCIAL FINANCIAL SQUARE SQUARE
SQUARE SQUARE PREMIUM SQUARE SQUARE FINANCIAL FINANCIAL TAX-FREE MUNICIPAL
PRIME MONEY MONEY TREASURY TREASURY SQUARE SQUARE MONEY MONEY
OBLIGATIONS MARKET MARKET OBLIGATIONS INSTRUMENTS GOVERNMENT FEDERAL MARKET MARKET
FUND FUND FUND FUND FUND FUND FUND FUND FUND
----------- --------- --------- ----------- ----------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases. None None None None None None None None None
Sales Charge Imposed
on Reinvested
Distributions....... None None None None None None None None None
Deferred Sales Load
Imposed on
Redemptions......... None None None None None None None None None
Exchange Fee......... None None None None None None None None None
ANNUAL OPERATING
EXPENSES (1)
(as a percentage of
average daily net
assets)
Management Fees
(after
limitations) (2).... 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17%
Other Expenses (after
expense limitations)
(3)................. 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01%
---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL OPERATING EX-
PENSES (4)........... 0.18% 0.18% 0.18% 0.18% 0.18% 0.18% 0.18% 0.18% 0.18%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>

EXAMPLE OF EXPENSES

You would pay the following expenses on a hypothetical $1,000 investment, as-
suming a 5% annual return and redemption at the end of each time period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Financial Square Prime Obligations Fund..... $2 $ 6 $10 $23
Financial Square Money Market Fund.......... $ 2 $ 6 $10 $23
Financial Square Premium Money Market Fund.. $ 2 $ 6 N/A N/A
Financial Square Treasury Obligations Fund.. $ 2 $ 6 $10 $23
Financial Square Treasury Instruments Fund.. $ 2 $ 6 N/A N/A
Financial Square Government Fund............ $ 2 $ 6 $10 $23
Financial Square Federal Fund............... $ 2 $ 6 N/A N/A
Financial Square Tax-Free Money Market Fund. $ 2 $ 6 $10 $23
Financial Square Municipal Money Market
Fund....................................... $ 2 $ 6 N/A N/A
</TABLE>

2
<PAGE>

(2) The Investment Adviser has voluntarily agreed not to impose 0.035% of its
management fee for each Fund. Without such limitation, management fees for
each Fund would be 0.205%.

(3) The Investment Adviser has voluntarily agreed to reduce or limit certain
other expenses (excluding management fees, taxes, interest and brokerage
and litigation, indemnification and other extraordinary expenses) to the
extent such expenses exceed 0.01% of a Fund's average daily net assets.

(4) Without the limitations described above, "Other Expenses" and "Total Oper-
ating Expenses" of the Financial Square Prime Obligations, Financial
Square Money Market, Financial Square Treasury Obligations, Financial
Square Government and Financial Square Tax-Free Money Market Funds for the
semiannual period ended June 30, 1997, would have been as follows:

<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING
EXPENSES EXPENSES
-------- ---------
<S> <C> <C>
Financial Square Prime Obligations Fund................... .025% .23%
Financial Square Money Market Fund........................ .025% .23%
Financial Square Treasury Obligations Fund................ .035% .24%
Financial Square Government Fund.......................... .015% .22%
Financial Square Tax-Free Money Market Fund............... .015% .22%
</TABLE>

<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING
EXPENSES EXPENSES
-------- ---------
<S> <C> <C>
Financial Square Premium Money Market Fund................ .035% .24%
Financial Square Treasury Instruments Fund................ .155% .36%
Financial Square Federal Fund............................. .155% .36%
Financial Square Municipal Money Market Fund.............. .285% .49%
</TABLE>

The information set forth in the foregoing table and hypothetical example
relates only to FST Shares of the Funds. The Funds also offer FST Preferred
Shares, FST Administration Shares and FST Service Shares. The other classes of
the Funds are subject to different fees and expenses (which affect perfor-
mance) and are entitled to different services. Information regarding any other
class of the Funds may be obtained from your sales representative or from
Goldman Sachs by calling the number on the front cover of this Prospectus.

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

3
<PAGE>

FINANCIAL HIGHLIGHTS

The following data with respect to a share (of the class specified) of the
Financial Square Prime Obligations, Financial Square Money Market, Financial
Square Treasury Obligations, Financial Square Government and Financial Square
Tax-Free Money Market Funds outstanding during the periods ended on or prior
to December 31, 1996 have been audited by Arthur Andersen LLP, independent
public accountants, whose report, which appears in the annual report to share-
holders of the Funds for the fiscal year ended December 31, 1996 (the "Annual
Report") is incorporated by reference into and attached to the Statement of
Additional Information. The following data for each of the above referenced
Funds along with the Financial Square Treasury Instruments and Financial
Square Federal Funds for the period ended June 30, 1997 is unaudited, and de-
rived from financial statements included in the semi-annual report to share-
holders of the Fund for the period ended June 30, 1997, (the "Semi-Annual Re-
port"). The Annual Report and the Semi-Annual Report should be read in con-
junction with the financial statements and related notes incorporated by ref-
erence and attached to the Statement of Additional Information.

Financial Square Municipal Money Market and Financial Square Premium Money
Market Funds had no operations during the periods shown. Accordingly, there
are no selected per share data and ratios presented for these Funds.

4
<PAGE>

Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for a Share Outstanding Throughout Each Period
Prime Obligations Fund

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

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
RATIO OF NET RATIO OF NET
NET ASSET NET REALIZED TOTAL NET ASSET EXPENSES TO INVESTMENT
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT AVERAGE INCOME TO
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL NET AVERAGE NET
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A) ASSETS ASSETS
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
- ---------------------------------------------
1997-FST
shares.......... $1.00 $0.0267 $ -- $0.0267 $(0.0267) $1.00 5.53%(b) 0.18%(b) 5.39%(b)
1997-FST Pre-
ferred Shares... 1.00 0.0262 -- 0.0262 (0.0262) 1.00 5.42(b) 0.28(b) 5.31(b)
1997-FST Admin-
istration
shares.......... 1.00 0.0255 -- 0.0255 (0.0255) 1.00 5.27(b) 0.43(b) 5.15(b)
1997-FST Service
shares.......... 1.00 0.0243 -- 0.0243 (0.0243) 1.00 5.00(b) 0.68(b) 4.90(b)
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1996-FST shares. 1.00 0.0529 -- 0.0529 (0.0529) 1.00 5.41 0.18 5.29
1996-FST Pre-
ferred
shares(c)....... 1.00 0.0346 -- 0.0346 (0.0346) 1.00 5.28(b) 0.28(b) 5.19(b)
1996-FST Admin-
istration
shares.......... 1.00 0.0506 -- 0.0506 (0.0506) 1.00 5.14 0.43 5.06
1996-FST Service
shares.......... 1.00 0.0478 -- 0.0478 (0.0478) 1.00 4.88 0.68 4.78
1995-FST shares. 1.00 0.0586 -- 0.0586 (0.0586) 1.00 6.02 0.18 5.86
1995-FST Admin-
istration
shares.......... 1.00 0.0559 -- 0.0559 (0.0559) 1.00 5.75 0.43 5.59
1995-FST Service
shares.......... 1.00 0.0533 -- 0.0533 (0.0533) 1.00 5.49 0.68 5.33
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares(d)....... 1.00 0.0401 -- 0.0401 (0.0401) 1.00 4.38(b) 0.18(b) 4.38(b)
1994-FST Admin-
istration
shares(d)....... 1.00 0.0383 -- 0.0383 (0.0383) 1.00 4.12(b) 0.43(b) 4.18(b)
1994-FST Service
shares(d)....... 1.00 0.0364 -- 0.0364 (0.0364) 1.00 3.86(b) 0.68(b) 3.98(b)
FOR THE YEARS ENDED JANUARY 31,
- -------------------------------
1994-FST shares. 1.00 0.0311 0.0002 0.0313 (0.0313) 1.00 3.18 0.17 3.11
1994-FST Admin-
istration
shares.......... 1.00 0.0286 0.0002 0.0288 (0.0288) 1.00 2.92 0.42 2.86
1994-FST Service
shares.......... 1.00 0.0261 0.0002 0.0263 (0.0263) 1.00 2.66 0.67 2.61
1993-FST shares. 1.00 0.0360 0.0007 0.0367 (0.0367) 1.00 3.75 0.18 3.60
1993-FST Admin-
istration
shares(e)....... 1.00 0.0068 0.0001 0.0069 (0.0069) 1.00 3.02(b) 0.44(b) 2.96(b)
1993-FST Service
shares.......... 1.00 0.0301 0.0007 0.0308 (0.0308) 1.00 3.23 0.68 3.01
1992-FST shares. 1.00 0.0572 0.0002 0.0574 (0.0574) 1.00 5.99 0.18 5.72
1992-FST Service
shares(e)....... 1.00 0.0027 -- 0.0027 (0.0027) 1.00 4.10(b) 0.66(b) 4.10(b)
FOR THE PERIOD MARCH 8, 1990(F) THROUGH JANUARY 31,
- ---------------------------------------------------
1991-FST shares. 1.00 0.0727 -- 0.0727 (0.0727) 1.00 8.27(b) 0.18(b) 8.04(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
-------------------------
NET RATIO OF NET
ASSETS AT RATIO OF INVESTMENT
END EXPENSES TO INCOME TO
OF PERIOD AVERAGE NET AVERAGE NET
(IN 000'S) ASSETS ASSETS
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
- ---------------------------------------------
1997-FST
shares.......... $3,813,081 0.23%(b) 5.34%(b)
1997-FST Pre-
ferred Shares... 240,047 0.33(b) 5.26(b)
1997-FST Admin-
istration
shares.......... 295,977 0.48(b) 5.10(b)
1997-FST Service
shares.......... 121,165 0.73(b) 4.85(b)
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1996-FST shares. 3,901,797 0.23 5.24
1996-FST Pre-
ferred
shares(c)....... 127,126 0.33(b) 5.14(b)
1996-FST Admin-
istration
shares.......... 215,898 0.48 5.01
1996-FST Service
shares.......... 115,154 0.73 4.73
1995-FST shares. 3,295,791 0.22 5.82
1995-FST Admin-
istration
shares.......... 147,894 0.47 5.55
1995-FST Service
shares.......... 65,278 0.72 5.29
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares(d)....... 2,774,849 0.24(b) 4.32(b)
1994-FST Admin-
istration
shares(d)....... 66,113 0.49(b) 4.12(b)
1994-FST Service
shares(d)....... 41,372 0.74(b) 3.92(b)
FOR THE YEARS ENDED JANUARY 31,
- -------------------------------
1994-FST shares. 1,831,413 0.25 3.03
1994-FST Admin-
istration
shares.......... 35,250 0.50 2.78
1994-FST Service
shares.......... 14,001 0.75 2.53
1993-FST shares. 813,126 0.25 3.53
1993-FST Admin-
istration
shares(e)....... 1,124 0.52(b) 2.88(b)
1993-FST Service
shares.......... 336 0.75 2.94
1992-FST shares. 917,073 0.27 5.63
1992-FST Service
shares(e)....... 118 0.74(b) 4.02(b)
FOR THE PERIOD MARCH 8, 1990(F) THROUGH JANUARY 31,
- ---------------------------------------------------
1991-FST shares. 578,495 0.28(b) 7.94(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the invest-
ment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Preferred share activity commenced on May 1, 1996.
(d) The information presented reflects eleven months of operations due to a
change in fiscal year end. This change was caused by the reorganization of
the funds as a series of Goldman Sachs Money Market Trust.
(e) FST Administration share and FST Service share activity commenced during
November of 1992 and January of 1992, respectively.
(f) Commencement of operations.

5
<PAGE>

Goldman Sachs Trust--Financial Square Funds
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Selected Data for a Share Outstanding Throughout Each Period
Money Market Fund

- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
RATIO OF NET
NET ASSET NET REALIZED TOTAL NET ASSET RATIO OF NET INVESTMENT
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT EXPENSES TO INCOME TO
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL AVERAGE NET AVERAGE NET
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A) ASSETS ASSETS
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
- ----------------------
1997-FST
shares.......... $1.00 $0.0269 $ -- $0.0269 $(0.0269) $1.00 5.57%(b) 0.18%(b) 5.44%(b)
1997-FST Pre-
ferred Shares... 1.00 0.0264 -- 0.0264 (0.0264) 1.00 5.46(b) 0.28(b) 5.36(b)
1997-FST Admin-
istration
shares.......... 1.00 0.0257 -- 0.0257 (0.0257) 1.00 5.30(b) 0.43(b) 5.18(b)
1997-FST Service
shares.......... 1.00 0.0244 -- 0.0244 (0.0244) 1.00 5.04(b) 0.68(b) 4.93(b)
FOR THE YEARS ENDED DECEMBER 31,
- ----------------
1996-FST shares. 1.00 0.0533 0.0001 0.0534 (0.0534) 1.00 5.45 0.18 5.33
1996-FST
Preferred
shares(c)....... 1.00 0.0348 -- 0.0348 (0.0348) 1.00 5.31(b) 0.28(b) 5.23(b)
1996-FST
Administration
shares.......... 1.00 0.0504 0.0001 0.0505 (0.0505) 1.00 5.19 0.43 5.04
1996-FST Service
shares.......... 1.00 0.0484 -- 0.0484 (0.0484) 1.00 4.93 0.68 4.84
1995-FST shares. 1.00 0.0589 -- 0.0589 (0.0589) 1.00 6.07 0.15 5.89
1995-FST
Administration
shares.......... 1.00 0.0561 -- 0.0561 (0.0561) 1.00 5.80 0.40 5.61
1995-FST Service
shares(d)....... 1.00 0.0231 -- 0.0231 (0.0231) 1.00 5.41(b) 0.65(b) 4.93(b)
FOR THE PERIOD ENDED
DECEMBER 31,
- --------------------
1994-FST
shares(d)....... 1.00 0.0305 -- 0.0305 (0.0305) 1.00 4.91(b) 0.11(b) 4.88(b)
1994-FST
Administration
shares(d)....... 1.00 0.0298 -- 0.0298 (0.0298) 1.00 4.65(b) 0.36(b) 4.82(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
-------------------------
NET RATIO OF NET
ASSETS AT RATIO OF INVESTMENT
END EXPENSES TO INCOME TO
OF PERIOD AVERAGE NET AVERAGE NET
(IN 000'S) ASSETS ASSETS
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
- ----------------------
1997-FST
shares.......... $3,992,002 0.23%(b) 5.39%(b)
1997-FST Pre-
ferred Shares... 43,759 0.33(b) 5.31(b)
1997-FST Admin-
istration
shares.......... 276,152 0.48(b) 5.13(b)
1997-FST Service
shares.......... 290,345 0.73(b) 4.88(b)
FOR THE YEARS ENDED DECEMBER 31,
- ----------------
1996-FST shares. 2,540,366 0.23 5.28
1996-FST
Preferred
shares(c)....... 17,510 0.33(b) 5.18(b)
1996-FST
Administration
shares.......... 165,766 0.48 4.99
1996-FST Service
shares.......... 234,376 0.73 4.79
1995-FST shares. 2,069,197 0.23 5.81
1995-FST
Administration
shares.......... 137,412 0.48 5.53
1995-FST Service
shares(d)....... 4,219 0.73(b) 4.85(b)
FOR THE PERIOD ENDED
DECEMBER 31,
- --------------------
1994-FST
shares(d)....... 862,971 0.25(b) 4.74(b)
1994-FST
Administration
shares(d)....... 66,560 0.50(b) 4.68(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the invest-
ment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Preferred share activity commenced on May 1, 1996.
(d) FST, FST Administration and FST Service share activity commenced May 18,
1994, May 20, 1994 and July 14, 1995, respectively.

6
<PAGE>

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

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
RATIO OF NET
NET ASSET NET REALIZED TOTAL RATIO OF NET INVESTMENT
VALUE AT NET GAIN (LOSS) INCOME FROM DISTRIBUTIONS NET ASSET EXPENSES TO INCOME TO
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO VALUE AT TOTAL AVERAGE NET AVERAGE NET
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS END OF PERIOD RETURN(A) ASSETS ASSETS
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
- ---------------------------------------------
1997-FST
shares.......... $1.00 $0.0262 $0.0001 $0.0263 $(0.0263) $1.00 5.43%(b) 0.18%(b) 5.28%(b)
1997-FST Pre-
ferred shares .. 1.00 0.0257 0.0001 0.0258 (0.0258) 1.00 5.32(b) 0.28(b) 5.18(b)
1997-FST Admin-
istration shares
................ 1.00 0.0249 0.0001 0.0250 (0.0250) 1.00 5.16(b) 0.43(b) 5.03(b)
1997-FST Service
shares ......... 1.00 0.0237 0.0001 0.0238 (0.0238) 1.00 4.90(b) 0.68(b) 4.78(b)
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1996-FST shares. 1.00 0.0522 0.0003 0.0525 (0.0524) 1.00 5.35 0.18 5.22
1996-FST
Preferred
shares(c)....... 1.00 0.0342 0.0001 0.0343 (0.0343) 1.00 5.24(b) 0.28(b) 5.11(b)
1996-FST
Administration
shares.......... 1.00 0.0497 0.0002 0.0499 (0.0498) 1.00 5.09 0.43 4.97
1996-FST Service
shares.......... 1.00 0.0472 0.0002 0.0474 (0.0474) 1.00 4.83 0.68 4.72
1995-FST shares. 1.00 0.0573 0.0005 0.0578 (0.0578) 1.00 5.96 0.18 5.73
1995-FST
Administration
shares.......... 1.00 0.0547 0.0005 0.0552 (0.0552) 1.00 5.69 0.43 5.47
1995-FST Service
shares.......... 1.00 0.0521 0.0005 0.0526 (0.0526) 1.00 5.43 0.68 5.21
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares(d)....... 1.00 0.0379 (0.0001) 0.0378 (0.0378) 1.00 4.23(b) 0.18(b) 4.13(b)
1994-FST
Administration
shares(d)....... 1.00 0.0388 (0.0001) 0.0387 (0.0387) 1.00 3.97(b) 0.43(b) 4.24(b)
1994-FST Service
shares(d)....... 1.00 0.0349 (0.0001) 0.0348 (0.0348) 1.00 3.71(b) 0.68(b) 3.82(b)
FOR THE YEARS ENDED JANUARY 31,
- -------------------------------
1994-FST shares. 1.00 0.0301 0.0007 0.0308 (0.0307) 1.00 3.11 0.17 3.01
1994-FST
Administration
shares.......... 1.00 0.0276 0.0006 0.0282 (0.0281) 1.00 2.85 0.42 2.76
1994-FST Service
shares.......... 1.00 0.0251 0.0008 0.0259 (0.0256) 1.00 2.60 0.67 2.51
1993-FST shares. 1.00 0.0342 0.0012 0.0354 (0.0355) 1.00 3.69 0.18 3.42
1993-FST
Administration
shares(e) ...... 1.00 0.0009 -- 0.0009 (0.0009) 1.00 2.83(b) 0.43(b) 2.83(b)
1993-FST Service
shares.......... 1.00 0.0296 0.0016 0.0312 (0.0309) 1.00 3.17 0.68 2.96
1992-FST shares. 1.00 0.0549 0.0015 0.0564 (0.0561) 1.00 5.84 0.18 5.49
1992-FST Service
shares(e)....... 1.00 0.0113 0.0006 0.0119 (0.0116) 1.00 4.47(b) 0.68(b) 3.77(b)
FOR THE PERIOD MARCH 8, 1990(F) THROUGH JANUARY 31,
- ---------------------------------------------------
1991-FST shares. 1.00 0.0600 0.0006 0.0606 (0.0605) 1.00 8.06(b) 0.21(b) 7.74(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
-------------------------
NET RATIO OF NET
ASSETS AT RATIO OF INVESTMENT
END EXPENSES TO INCOME TO
OF PERIOD AVERAGE NET AVERAGE NET
(IN 000'S) ASSETS ASSETS
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
- ---------------------------------------------
1997-FST
shares.......... $2,140,063 0.24%(b) 5.22%(b)
1997-FST Pre-
ferred shares .. 2,826 0.34(b) 5.12(b)
1997-FST Admin-
istration shares
................ 638,287 0.49(b) 4.97(b)
1997-FST Service
shares ......... 232,548 0.74(b) 4.72(b)
FOR THE YEARS ENDED DECEMBER 31,
- --------------------------------
1996-FST shares. 2,291,051 0.24 5.16
1996-FST
Preferred
shares(c)....... 46,637 0.34(b) 5.05(b)
1996-FST
Administration
shares.......... 536,895 0.49 4.91
1996-FST Service
shares.......... 220,560 0.74 4.66
1995-FST shares. 1,587,715 0.23 5.68
1995-FST
Administration
shares.......... 283,186 0.48 5.42
1995-FST Service
shares.......... 139,117 0.73 5.16
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST
shares(d)....... 958,196 0.25(b) 4.06(b)
1994-FST
Administration
shares(d)....... 82,124 0.50(b) 4.17(b)
1994-FST Service
shares(d)....... 81,162 0.75(b) 3.75(b)
FOR THE YEARS ENDED JANUARY 31,
- -------------------------------
1994-FST shares. 812,420 0.24 2.94
1994-FST
Administration
shares.......... 24,485 0.49 2.69
1994-FST Service
shares.......... 35,656 0.74 2.44
1993-FST shares. 776,181 0.26 3.34
1993-FST
Administration
shares(e) ...... 1 0.51(b) 2.75(b)
1993-FST Service
shares.......... 5,155 0.76 2.88
1992-FST shares. 413,171 0.28 5.39
1992-FST Service
shares(e)....... 3,634 0.78(b) 3.67(b)
FOR THE PERIOD MARCH 8, 1990(F) THROUGH JANUARY 31,
- ---------------------------------------------------
1991-FST shares. 229,988 0.34(b) 7.61(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the invest-
ment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Preferred share activity commenced on May 1, 1996.
(d) The information presented reflects eleven months of operations due to a
change in fiscal year end. This change was caused by the reorganization of
the funds as a series of Goldman Sachs Money Market Trust.
(e) FST Administration and FST Service share activity commenced during January
of 1993 and October of 1991, respectively.
(f) Commencement of operations.

7
<PAGE>

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
------------------------------------
RATIO OF NET
NET ASSET NET REALIZED TOTAL NET ASSET RATIO OF NET INVESTMENT
VALUE AT NET GAIN INCOME FROM DISTRIBUTIONS VALUE AT EXPENSES TO INCOME TO
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO END TOTAL AVERAGE NET AVERAGE NET
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A) ASSETS ASSETS
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED JUNE 30, (UNAUDITED)
- -----------------------
1997-FST
shares(c)....... $1.00 $ 0.0168 0.0002 $ 0.0170 $(0.0170) $1.00 5.29%(b) 0.18%(b) 5.12%(b)
1997-FST Pre-
ferred shares
(c)............. 1.00 0.0043 0.0002 0.0045 (0.0045) 1.00 5.19(b) 0.28(b) 5.04(b)
1997-FST Admin-
istration shares
(c)............. 1.00 0.0122 0.0002 0.0124 (0.0124) 1.00 5.06(b) 0.43(b) 4.89(b)
1997-FST Service
shares (c)...... 1.00 0.0150 0.0002 0.0152 (0.0152) 1.00 4.73(b) 0.68(b) 4.63(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
-------------------------
NET
ASSETS AT RATIO OF NET
END RATIO OF INVESTMENT
OF PERIOD EXPENSES TO INCOME TO
(IN AVERAGE NET AVERAGE NET
000'S) ASSETS ASSETS
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE PERIOD ENDED JUNE 30, (UNAUDITED)
- -----------------------
1997-FST
shares(c)....... $237,444 0.36%(b) 4.94%(b)
1997-FST Pre-
ferred shares
(c)............. 2 0.46(b) 4.86(b)
1997-FST Admin-
istration shares
(c)............. 1,132 0.61(b) 4.71(b)
1997-FST Service
shares (c)...... 35,901 0.86(b) 4.45(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Share, FST Preferred Share, FST Administration Share, and FST Service
Share activity commenced March 3, 1997, May 30, 1997, April 1, 1997, and
March 5, 1997, respectively.

8
<PAGE>

- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------

NET ASSET TOTAL
VALUE AT NET NET REALIZED GAIN INCOME FROM DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TO VALUE AT END TOTAL
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
- ---------------------------------------------
1997-FST shares...... $1.00 $ 0.0264 $0.0001 $ 0.0265 $(0.0265) $1.00 5.47%(b)
1997-FST Preferred
shares............... 1.00 0.0259 0.0001 0.0260 (0.0260) 1.00 5.37(b)
1997-FST Administra-
tion shares.......... 1.00 0.0251 0.0001 0.0252 (0.0252) 1.00 5.21(b)
1997-FST Service
shares............... 1.00 0.0239 0.0001 0.0240 (0.0240) 1.00 4.95(b)
FOR THE YEARS ENDED
DECEMBER 31,
- -------------------
1996-FST shares...... 1.00 0.0525 0.0001 0.0526 (0.0526) 1.00 5.38
1996-FST Preferred
shares(c)............ 1.00 0.0344 0.0001 0.0345 (0.0345) 1.00 5.26(b)
1996-FST Administra-
tion shares.......... 1.00 0.0501 0.0001 0.0502 (0.0502) 1.00 5.12
1996-FST Service
shares............... 1.00 0.0474 0.0001 0.0475 (0.0475) 1.00 4.86
1995-FST shares...... 1.00 0.0581 0.0001 0.0582 (0.0582) 1.00 6.00
1995-FST Administra-
tion shares.......... 1.00 0.0554 0.0001 0.0555 (0.0555) 1.00 5.74
1995-FST Service
shares(d)............ 1.00 0.0320 -- 0.0320 (0.0320) 1.00 5.40(b)
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST shares(e)... 1.00 0.0424 -- 0.0424 (0.0424) 1.00 4.36(b)
1994-FST Administra-
tion shares(e)....... 1.00 0.0426 -- 0.0426 (0.0426) 1.00 4.10(b)
FOR THE PERIOD ENDED
JANUARY 31,
- --------------------
1993-FST shares(d)... 1.00 0.0256 0.0001 0.0257 (0.0257) 1.00 3.14(b)
1993-FST Administra-
tion shares(d)....... 1.00 0.0120 0.0001 0.0121 (0.0121) 1.00 2.87(b)
- ----

WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
---------------------

RATIO OF NET RATIO OF NET
RATIO OF NET INVESTMENT NET RATIO OF INVESTMENT
EXPENSES TO INCOME TO ASSETS AT END EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET OF PERIOD AVERAGE NET AVERAGE NET
ASSETS ASSETS (IN 000'S) ASSETS ASSETS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)

1997-FST shares...... 0.18%(b) 5.33%(b) $1,222,437 0.22%(b) 5.29%(b)
1997-FST Preferred
shares............... 0.28(b) 5.32(b) 48,896 0.32(b) 5.28(b)
1997-FST Administra-
tion shares.......... 0.43(b) 5.07(b) 190,742 0.47(b) 5.03(b)
1997-FST Service
shares............... 0.68(b) 4.83(b) 603,520 0.72(b) 4.79(b)
FOR THE YEARS ENDED
DECEMBER 31,
- -------------------
1996-FST shares...... 0.18 5.25 858,769 0.24 5.19
1996-FST Preferred
shares(c)............ 0.28(b) 5.14(b) 112 0.34(b) 5.08(b)
1996-FST Administra-
tion shares.......... 0.43 5.01 145,108 0.49 4.95
1996-FST Service
shares............... 0.68 4.74 223,554 0.74 4.68
1995-FST shares...... 0.18 5.81 743,884 0.24 5.75
1995-FST Administra-
tion shares.......... 0.43 5.54 82,386 0.49 5.48
1995-FST Service
shares(d)............ 0.68(b) 5.08(b) 14,508 0.74(b) 5.02(b)
FOR THE PERIOD ENDED DECEMBER 31,
- ---------------------------------
1994-FST shares(e)... 0.15(b) 4.64(b) 258,350 0.25(b) 4.54(b)
1994-FST Administra-
tion shares(e)....... 0.40(b) 4.67(b) 54,253 0.50(b) 4.57(b)
FOR THE PERIOD ENDED
JANUARY 31,
- --------------------
1993-FST shares(d)... 0.08(b) 3.10(b) 44,697 0.59(b) 2.59(b)
1993-FST Administra-
tion shares(d)....... 0.35(b) 2.85(b) 14,126 0.76(b) 2.44(b)

</TABLE>
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the invest-
ment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Preferred share activity commenced on May 1, 1996.
(d) FST share, FST Administration share and FST Service share activity com-
menced April 6, 1993, September 1, 1993 and May 16, 1995, respectively.
(e) The information presented reflects eleven months of operations due to a
change in fiscal year end. This change was caused by the reorganization of
the funds as a series of Goldman Sachs Money Market Trust.

9
<PAGE>

<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
-----------------------------------
RATIO OF NET
NET ASSET NET REALIZED TOTAL NET ASSET RATIO OF NET INVESTMENT
VALUE AT NET GAIN ON INCOME FROM DISTRIBUTIONS VALUE AT EXPENSES TO INCOME TO
BEGINNING INVESTMENT INVESTMENT INVESTMENT TO END TOTAL AVERAGE NET AVERAGE NET
OF PERIOD INCOME TRANSACTIONS OPERATIONS SHAREHOLDERS OF PERIOD RETURN(A) ASSETS ASSETS
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD ENDED JUNE 30,
(UNAUDITED)
- -----------------------------
1997-FST
shares(c)....... $1.00 $ 0.0178 -- $ 0.0178 $ (0.0178) $1.00 5.47%(b) 0.18%(b) 5.36%(b)
1997-FST Pre-
ferred
shares(c)....... 1.00 0.0047 -- 0.0047 (0.0047) 1.00 5.46(b) 0.28(b) 5.28(b)
1997-FST Admin-
istration
shares(c)....... 1.00 0.0128 -- 0.0128 (0.0128) 1.00 5.25(b) 0.43(b) 5.17(b)
1997-FST Service
shares(c)....... 1.00 0.0131 -- 0.0131 (0.0131) 1.00 4.99(b) 0.68(b) 4.90(b)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
NET EXPENSE LIMITATIONS
ASSETS -------------------------
AT END RATIO OF NET
OF RATIO OF INVESTMENT
PERIOD EXPENSES TO INCOME TO
(IN AVERAGE NET AVERAGE NET
000'S) ASSETS ASSETS
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR THE PERIOD ENDED JUNE 30,
(UNAUDITED)
- -----------------------------
1997-FST
shares(c)....... $714,024 0.36%(b) 5.18%(b)
1997-FST Pre-
ferred
shares(c)....... 2 0.46(b) 5.10(b)
1997-FST Admin-
istration
shares(c)....... 137,933 0.61(b) 4.99(b)
1997-FST Service
shares(c)....... 122,323 0.86(b) 4.72(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(b) Annualized.
(c) FST share, FST Preferred share, FST Administration share, and FST Service
share activity commenced February 28, 1997, May 30, 1997, April 1, 1997
and March 25, 1997, respectively.

10
<PAGE>

<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
-------------------------
RATIO OF NET NET RATIO OF NET
INVESTMENT ASSETS AT RATIO OF INVESTMENT
INCOME TO END OF EXPENSES TO INCOME TO
AVERAGE NET PERIOD AVERAGE NET AVERAGE NET
ASSETS (IN 000'S) ASSETS ASSETS
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOR THE SIX MONTHS ENDED JUNE 30, (UNAUDITED)
- ---------------------------------------------
1997-FST
shares.......... 3.46%(b) $731,783 0.22%(b) 3.42%(b)
1997-FST Pre-
ferred shares... 3.24(b) 5,468 0.32(b) 3.20(b)
1997-FST Admin-
istration
shares.......... 3.25(b) 96,496 0.47(b) 3.21(b)
1997-FST Service
shares.......... 2.94(b) 27,597 0.72(b) 2.90(b)
FOR THE YEARS
ENDED DECEMBER
31,
- --------------
1996-FST shares. 3.35 440,838 0.23 3.30
1996-FST Pre-
ferred
shares(c)....... 3.26(b) 28,731 0.33(b) 3.21(b)
1996-FST Admin-
istration
shares.......... 3.10 51,661 0.48 3.05
1996-FST Service
shares.......... 2.85 19,855 0.73 2.80
1995-FST shares. 3.81 448,367 0.24 3.71
1995-FST Admin-
istration
shares.......... 3.54 20,939 0.49 3.44
1995-FST Service
shares.......... 3.32 19,860 0.74 3.22
FOR THE PERIOD
ENDED DECEMBER
31,
- --------------
1994-FST
shares(d)....... 3.42(b) 183,570 0.31(b) 3.18(b)
1994-FST
Administration shares(d) 3.25(b) 2,042 0.56(b) 3.01(b)
1994-FST Service
shares(d)....... 3.32(b) 2,267 0.81(b) 3.08(b)
- ----

</TABLE>

(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the invest-
ment at the net asset value at the end of the period.
(b) Annualized.
(c) FST Preferred share activity commenced on May 1, 1996.
(d) FST share, FST Administration share and FST Service share activity com-
menced July 19, 1994, August 1, 1994 and September 23, 1994, respectively.

11
<PAGE>

AN INTRODUCTION TO THE FUNDS

THE TRUST: The Trust is a no-load, open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "Invest-
ment Company Act"). Each Fund is a separate pool of assets which pursues its
investment objective through separate investment policies, as described below.

THE ADVISER: Goldman Sachs Asset Management, a separate operating division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds' investment ad-
viser (the "Adviser" or "GSAM").

THE DISTRIBUTOR: Goldman Sachs, which serves as the Funds' distributor and
transfer agent, is one of the largest international investment banking and
brokerage firms in the United States.

THE INVESTORS: The Funds are designed for institutional investors seeking a
high rate of return, a stable net asset value and convenient liquidation priv-
ileges. The Funds are particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term funds for their own
accounts or for the accounts of their customers. Shares of the Government Fund
are intended to qualify as eligible investments for Federally chartered credit
unions pursuant to Sections 107(7), 107(8) and 107(15) of the Federal Credit
Union Act, Part 703 of the National Credit Union Administration ("NCUA") Rules
and Regulations and NCUA Letter Number 155. The Fund intends to review changes
in the applicable laws, rules and regulations governing eligible investments
for federally chartered credit unions, and to take such action as may be nec-
essary so that the investments of the Fund qualify as eligible investments un-
der the Federal Credit Union Act and the regulations thereunder. Shares of the
Government Fund, however, may or may not qualify as eligible investments for
particular state chartered credit unions. State chartered credit unions should
consult qualified legal counsel to determine whether the Government Fund is a
permissible investment under the law applicable to it.

THE FUNDS: Each Fund's securities are valued by the amortized cost method as
permitted by a rule ("Rule 2a-7") of the Securities and Exchange Commission
("SEC"). Under such rule, each Fund may invest only in securities that are de-
termined to present minimal credit risk and meet certain other criteria.

TAXABLE FUNDS: Prime Obligations, Money Market, Premium Money Market,
Treasury Obligations and Government Funds.

TAX ADVANTAGED FUNDS: Treasury Instruments and Federal Funds.

TAX-EXEMPT FUNDS: Tax-Free Money Market and Municipal Money Market Funds.

INVESTMENT OBJECTIVES AND POLICIES FOR TAXABLE, TAX-ADVANTAGED AND TAX-
EXEMPT FUNDS: To maximize current income to the extent consistent with the
preservation of capital and the maintenance of liquidity by investing ex-
clusively in high quality money market instruments. In order to obtain a
rating from a rating organization, the Premium Money Market Fund will ob-
serve special investment restrictions. The Treasury Instruments and Federal
Funds pursue their objectives by limiting their investments to certain U.S.
Treasury Obligations and U.S. Government Securities (each as defined here-
in), respectively, the interest from which is generally exempt from state
income taxation. Each investor should consult his or her tax adviser to de-
termine whether distributions from the Treasury Instruments and Federal
Funds (and any other Fund that may hold such obligations) derived from in-
terest on such obligations are exempt from state income taxation in the in-
vestor's own state.

NET ASSET VALUE: Each Fund seeks to maintain a stable net asset value of
$1.00 per share.

MAXIMUM REMAINING MATURITY OF PORTFOLIO INVESTMENTS: Thirteen months at the
time of purchase.

12
<PAGE>

DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY ("WAM"): Not more than ninety
days as required by Rule 2a-7.

FIRST TIER SECURITIES: Each Fund may purchase securities which are rated (or
that have been issued by an issuer that is rated with respect to a class of
short-term debt obligations, or any security within that class, comparable in
priority and quality with such securities) in the highest short-term rating
category by at least two NRSROs (as defined below), or if only one NRSRO has
assigned a rating, by that NRSRO. U.S. Government Securities as defined herein
are considered First Tier Securities.

SECOND TIER SECURITIES: The Tax-Exempt Funds may purchase securities which
are not First Tier Securities but which are rated in the top two short-term
rating categories by at least two NRSROs, or if only one NRSRO has assigned a
rating, by that NRSRO. The Taxable Funds will not invest in a security which
is a Second Tier Security at the time of purchase.

UNRATED SECURITIES: To the extent permitted by Rule 2a-7, unrated securities
may be purchased if they are deemed to be of comparable quality to First Tier
Securities, or to the extent that a Fund may purchase Second Tier Securities,
comparable in quality to Second Tier Securities.

NRSROS: Nationally Recognized Statistical Rating Organizations include Stan-
dard & Poor's Ratings Group ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Services, Inc., Duff and Phelps, Inc., IBCA Lim-
ited and its affiliate IBCA Inc., and Thomson BankWatch, Inc. For a descrip-
tion of each NRSRO's rating categories, see Appendix A to the Statement of Ad-
ditional Information.

13
<PAGE>

INVESTMENT POLICIES MATRIX
<TABLE>
<CAPTION>
SHORT-TERM
OBLIGATIONS OF ASSET-BACKED & FOREIGN
US US CORPORATIONS RECEIVABLES- GOVERNMENT
TREASURY GOVERNMENT BANK COMMERCIAL AND OTHER REPURCHASE BACKED OBLIGATIONS
FUND OBLIGATIONS SECURITIES OBLIGATIONS PAPER ENTITIES AGREEMENTS SECURITIES+ (US$)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prime Obligations [_] [_] [_] [_] [_] [_] [_]
U.S. banks U.S. entities
only only
- ------------------------------------------------------------------------------------------------------------------------
Money Market [_] [_] [_] [_] [_] [_] [_] [_]
Over 25% of U.S. and U.S. and
total assets foreign foreign
must be (US$) (US$)
invested in commercial entities
US and paper
Foreign (US$)
Banks
- ------------------------------------------------------------------------------------------------------------------------
Premium Money [_] [_] [_] [_] [_] [_] [_] [_]
Market Over 25% of U.S. and U.S. and
total assets foreign foreign
must be (US$) (US$)
invested in commercial entities
US and paper
Foreign (US$)
Banks
- ------------------------------------------------------------------------------------------------------------------------
Treasury [_] [_]
Obligations
- ------------------------------------------------------------------------------------------------------------------------
Treasury [_]
Instruments
- ------------------------------------------------------------------------------------------------------------------------
Government [_] [_] [_]
- ------------------------------------------------------------------------------------------------------------------------
Federal [_] [_] (Does not
intend to
invest)
- ------------------------------------------------------------------------------------------------------------------------
Tax-Free Money [_]
Market Tax-exempt
only
- ------------------------------------------------------------------------------------------------------------------------
Municipal Money [_]
Market Tax-exempt
only
</TABLE>
Note: See "Description of Securities and Investment Techniques" for a de-
scription of, and certain criteria applicable to, each of these catego-
ries of investments.
+ To the extent required by Rule 2a-7, asset-backed and receivables-backed
securities will be rated by the requisite number of NRSROs.

14
<PAGE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
SUMMARY OF
TAXABLE TAX-EXEMPT CREDIT INVESTMENT UNRATED TAXATION FOR
MUNICIPALS MUNICIPALS QUALITY**** COMPANIES SECURITIES DISTRIBUTIONS* MISCELLANEOUS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
[_] First [_] [ ] Taxable
Tier Up to 10% of federal and
total assets state**
in other
investment
companies
- ---------------------------------------------------------------------------------------------------
[_] First [_] [_] Taxable May invest in
Tier Up to 10% of federal and obligations of
total assets state** the
in other International
investment Bank for
companies Reconstruction
and Development
- ---------------------------------------------------------------------------------------------------
[_]
First [_] [_] Taxable May invest in
Tier Up to 10% of federal and obligations of
total assets state** the
in other International
investment Bank for
companies Reconstruction
and Development
- ---------------------------------------------------------------------------------------------------

First [_] Taxable
Tier Up to 10% of federal and
total assets state**
in other
investment
companies
- ---------------------------------------------------------------------------------------------------
First [_] Taxable
Tier Up to 10% of federal and
total assets generally
in other exempt from
investment state taxation
companies
- ---------------------------------------------------------------------------------------------------
First [_]
Tier Up to 10% of Taxable
total assets federal and
in other state**
investment
companies
- ---------------------------------------------------------------------------------------------------
Under
First [_] Taxable extraordinary
Tier Up to 10% of federal and circumstances,
total assets generally may hold cash,
in other exempt from U.S. Government
investment state taxation Securities
companies subject to state
taxation or cash
equivalents
- ---------------------------------------------------------------------------------------------------

[_] First or [_] [_] Tax-exempt May (but does
At least 80% of Second Up to 10% of federal and not currently
net assets in Tier total assets taxable intend to)
Municipal in other state*** invest up to 20%
Instruments investment in AMT
(except in companies securities and
extraordinary may temporarily
circumstances) invest in the
taxable money
market
instruments
described herein
- ---------------------------------------------------------------------------------------------------

[_] First or [_] [_] Tax-exempt May invest up to
At least 80% of Second Up to 10% of federal and 100% in AMT
net assets in Tier total assets taxable securities and
Municipal in other state*** may temporarily
Instruments investment invest in the
(except in companies taxable money
extraordinary market
circumstances) instruments
described herein
- ---------------------------------------------------------------------------------------------------
</TABLE>
* See "Taxes" below for an explanation of the tax consequences summarized
in the table above.
** Taxable in many states except for distributions from U.S. Treasury obli-
gation interest income and certain U.S. Government securities interest
income.
*** Taxable except for distributions from interest on obligations of an in-
vestor's state of residence in certain states.
**** To the extent permitted by Rule 2a-7, a Fund holding a security fully
supported by a guarantee may substitute the credit quality of the guaran-
tee in determining the credit quality of the security.

15
<PAGE>

DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES

U.S. TREASURY OBLIGATIONS

"U.S. Treasury Obligations" are securities issued or guaranteed by the U.S.
Treasury, payments of principal and interest on which are backed by the full
faith and credit of the U.S. Government.

U.S. GOVERNMENT SECURITIES

"U.S. Government Securities" are obligations issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities. Unlike U.S.
Treasury Obligations, securities issued or guaranteed by U.S. Government agen-
cies, authorities or instrumentalities are supported either by (a) the full
faith and credit of the U.S. Government (such as securities of the Government
National Mortgage Association), (b) the right of the issuer to borrow from the
Treasury (such as securities of the Student Loan Marketing Association), (c)
the discretionary authority of the U.S. Government to purchase the agency's
obligations (such as securities of the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation), or (d) only the credit of the
issuer. No assurance can be given that the U.S. Government will provide finan-
cial support to U.S. Government agencies, authorities or instrumentalities in
the future. U.S. Government Securities may include zero coupon bonds. Such
bonds may be purchased when yields are attractive.

Securities guaranteed as to principal and interest by the U.S. Government,
its agencies, authorities or instrumentalities are deemed to include (a) secu-
rities for which the payment of principal and interest is backed by an irrevo-
cable letter of credit issued by the U.S. Government, its agencies, authori-
ties or instrumentalities and (b) participations in loans made to foreign gov-
ernments or their agencies that are so guaranteed. The secondary market for
certain of these participations is limited. Such participations may therefore
be regarded as illiquid.

Each Fund may also invest in separately traded principal and interest compo-
nents of securities guaranteed or issued by the U.S. Treasury if such compo-
nents are traded independently under the Separate Trading of Registered Inter-
est and Principal of Securities program ("STRIPS").

The Treasury Instruments and Federal Funds invest in U.S. Treasury Obliga-
tions and the Federal Fund may also invest in certain U.S. Government Securi-
ties the interest from which is generally exempt from state income taxation.
Securities generally eligible for this exemption include those issued by the
U.S. Treasury and those issued by certain agencies, authorities or instrumen-
talities of the U.S. Government, including the Federal Home Loan Banks, Fed-
eral Farm Credit Banks, Tennessee Valley Authority and the Student Loan Mar-
keting Association.

CUSTODIAL RECEIPTS

Each Fund (other than the Treasury Obligations, Treasury Instruments, Gov-
ernment and Federal Funds) may also acquire securities issued or guaranteed as
to principal and interest by the U.S. Government, its agencies, authorities or
instrumentalities in the form of custodial receipts that evidence ownership of
future interest payments, principal payments or both on certain notes or bonds
issued by the U.S. Government, its agencies, authorities or instrumentalities.
For certain securities law purposes, custodial receipts are not considered ob-
ligations of the U.S. Government.

U.S. AND FOREIGN BANK OBLIGATIONS

The Prime Obligations, Money Market and Premium Money Market Funds may in-
vest in "U.S. Bank Obligations" limited to securities issued or guaranteed by
U.S. banks (including certificates of deposit, commer-

16
<PAGE>

cial paper, unsecured bank promissory notes and bankers' acceptances) which
have more than $1 billion in total assets at the time of purchase. Such obli-
gations may also include debt obligations issued by U.S. subsidiaries of such
banks.

The Money Market and Premium Money Market Funds may also invest in "Foreign
Bank Obligations" limited to U.S. dollar-denominated obligations issued or
guaranteed (including fixed time deposits) by foreign banks which have more
than $1 billion in total assets at the time of purchase, U.S. branches of such
foreign banks (Yankee obligations), foreign branches of such foreign banks and
foreign branches of U.S. banks having more than $1 billion in total assets at
the time of purchase. Such bank obligations may be general obligations of the
parent bank or may be limited to the issuing branch by the terms of the spe-
cific obligations or by government regulation.

The Money Market and Premium Money Market Funds will invest more than 25% of
their total assets in bank obligations (whether foreign or domestic), includ-
ing bank commercial paper. However, if adverse economic conditions prevail in
the banking industry (such as substantial losses on loans, increases in non-
performing assets and charge-offs and declines in total deposits) the Funds
may, for defensive purposes, temporarily invest less than 25% of their total
assets in bank obligations. As a result, the Funds may be especially affected
by favorable and adverse developments in or related to the banking industry.
The activities of U.S. banks and most foreign banks are subject to comprehen-
sive regulations which, in the case of U.S. regulations, have undergone sub-
stantial changes in the past decade. The enactment of new legislation or regu-
lations, as well as changes in interpretation and enforcement of current laws,
may affect the manner of operations and profitability of domestic and foreign
banks. Significant developments in the U.S. banking industry have included de-
regulation of interest rates, increased competition from other types of finan-
cial institutions, increased acquisition activity, geographic expansion and,
during the late 1980's, an increased number of bank failures. Banks may be
particularly susceptible to certain economic factors, such as interest rate
changes and adverse developments in the market for real estate. Fiscal and
monetary policy and general economic cycles can affect the availability and
cost of funds, loan demand and asset quality and thereby impact the earnings
and financial conditions of banks. See "Foreign Government Obligations--For-
eign Risks" below.

COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS

The Prime Obligations, Money Market and Premium Money Market Funds may in-
vest in "Commercial Paper" (including variable amount master demand notes and
asset-backed commercial paper) which is payable in U.S. dollars and is issued
or guaranteed by U.S. corporations, U.S. commercial banks, foreign corpora-
tions (Money Market and Premium Money Market Funds only), foreign commercial
banks (Money Market and Premium Money Market Funds only) or other entities. In
addition, the Funds may invest in other short-term obligations (including
short-term funding agreements) payable in U.S. dollars and issued or guaran-
teed by U.S. corporations, foreign corporations (Money Market and Premium
Money Market Funds only) or other entities.

ASSET-BACKED AND RECEIVABLES-BACKED SECURITIES

The Prime Obligations, Money Market and Premium Money Market Funds may in-
vest in "Asset-Backed and Receivables-Backed Securities" which represent par-
ticipations in, or are secured by and payable from, pools of assets such as
motor vehicle installment sale contracts, installment loan contracts, leases
of various types of real and personal property, receivables from revolving
credit (credit card) agreements and other categories of receivables. Such as-
set pools are securitized through the use of privately-formed trusts or spe-
cial purpose corporations. Payments or distributions of principal and interest
may be guaranteed up to certain amounts and

17
<PAGE>

for a certain time period by a letter of credit or a pool insurance policy is-
sued by a financial institution, or other credit enhancements may be present.
To the extent consistent with its investment objectives and policies, each of
the Prime Obligations, Money Market and Premium Money Market Funds may invest
in new types of mortgage-related securities and in other asset-backed securi-
ties that may be developed in the future.

FOREIGN GOVERNMENT OBLIGATIONS

The Money Market and Premium Money Market Funds may invest in U.S. dollar-
denominated obligations (limited to commercial paper and other notes) issued
or guaranteed by a foreign government or any entity located or organized in a
foreign country that maintains a short-term foreign currency rating in the
highest short-term ratings category by the requisite number of NRSROs. The
Money Market and Premium Money Market Funds may not invest more than 25% of
their total assets in the securities of any one foreign government.

FOREIGN RISKS. Investments in foreign securities and bank obligations may
present a greater degree of risk than investments in securities of domestic
issuers because of less publicly-available financial and other information,
less securities regulation, potential imposition of foreign withholding and
other taxes, war, expropriation or other adverse governmental actions. Foreign
banks and their foreign branches are not regulated by U.S. banking authori-
ties, and generally are not bound by the accounting, auditing and financial
reporting standards applicable to U.S. banks.

MUNICIPAL OBLIGATIONS

MUNICIPAL INSTRUMENTS. Obligations issued by or on behalf of states, terri-
tories and possessions of the United States and their political subdivisions,
agencies, authorities and instrumentalities, and the District of Columbia, the
interest from which is, in the opinion of bond counsel, if any, excluded from
gross income for federal income tax purposes.

TYPES OF MUNICIPAL INSTRUMENTS:

<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET AND
MUNICIPAL MONEY MARKET FUNDS
-------------------------------------------------------------------------
<S> <C>
FIXED RATE NOTES AND SIMILAR In highest short-term or one of the
DEBT INSTRUMENTS two highest long-term rating
categories
-------------------------------------------------------------------------
VARIABLE AND FLOATING RATE In highest short-term or one of the
DEMAND INSTRUMENTS two highest long-term rating
categories
-------------------------------------------------------------------------
TAX-EXEMPT COMMERCIAL PAPER In highest rating category
-------------------------------------------------------------------------
MUNICIPAL BONDS In one of the two highest rating
categories
-------------------------------------------------------------------------
UNRATED NOTES, PAPER, BONDS AND Determined to be of comparable quality
OTHER INSTRUMENTS by Adviser pursuant to criteria
approved by the Trustees
</TABLE>

18
<PAGE>

As a matter of fundamental policy, at least 80% of each of the Tax-Free
Money Market and Municipal Money Market Fund's net assets will ordinarily be
invested in Municipal Instruments. Each Tax-Exempt Fund may temporarily invest
in taxable money market instruments when the Adviser believes that the market
conditions dictate a defensive posture. Investments in taxable money market
instruments will be limited to those meeting the quality standards of each
Tax-Exempt Fund. The Prime Obligations, Money Market and Premium Money Market
Funds may invest in short-term obligations issued or guaranteed by state and
municipal governments when yields on such securities are attractive compared
to other taxable investments.

MUNICIPAL NOTES AND BONDS. Municipal notes include tax anticipation notes
("TANs"), revenue anticipation notes ("RANs"), bond anticipation notes
("BANs"), tax and revenue anticipation notes ("TRANs") and construction loan
notes. Municipal bonds include general obligation bonds and revenue bonds.
General obligation bonds are backed by the taxing power of the issuing munici-
pality and are considered the safest type of bonds. Revenue bonds are backed
by the revenues of a project or facility such as the tolls from a toll bridge.
Revenue bonds also include lease rental revenue bonds which are issued by a
state or local authority for capital projects and are secured by annual lease
payments from the state or locality sufficient to cover debt service on the
authority's obligations. Industrial development bonds (generally referred to
under current tax law as "private activity bonds") are a specific type of rev-
enue bond backed by the credit and security of a private user and therefore
have more potential risk. Municipal bonds may be issued in a variety of forms,
including commercial paper, tender option bonds and variable and floating rate
securities.

TENDER OPTION BONDS. A tender option bond is a Municipal Instrument (gener-
ally held pursuant to a custodial arrangement) having a relatively long matu-
rity and bearing interest at a fixed rate substantially higher than prevailing
short-term, tax-exempt rates. The bond is typically issued in conjunction with
the agreement of a third party, such as a bank, broker-dealer or other finan-
cial institution, pursuant to which such institution grants the security
holder the option, at periodic intervals, to tender its securities to the in-
stitution and receive the face value thereof. As consideration for providing
the option, the financial institution receives periodic fees equal to the dif-
ference between the bond's fixed coupon rate and the rate, as determined by a
remarketing or similar agent at or near the commencement of such period, that
would cause the securities, coupled with the tender option, to trade at par on
the date of such determination. Thus, after payment of this fee, the security
holder effectively holds a demand obligation that bears interest at the pre-
vailing short-term, tax-exempt rate. However, an institution will not be obli-
gated to accept tendered bonds in the event of certain defaults or a signifi-
cant downgrading in the credit rating assigned to the issuer of the bond. The
tender option will be taken into account in determining the maturity of the
tender option bonds and a Fund's average portfolio maturity. There is a risk
that a Fund will not be considered the owner of a tender option bond for fed-
eral income tax purposes and thus will not be entitled to treat such interest
as exempt from federal income tax.

REVENUE ANTICIPATION WARRANTS. Revenue Anticipation Warrants ("RAWs") are
issued in anticipation of the issuer's receipt of revenues and present the
risk that such revenues will be insufficient to satisfy the issuer's payment
obligations. The entire amount of principal and interest on RAWs is due at ma-
turity. RAWs, including those with a maturity of more than 397 days, may also
be repackaged as instruments which include a demand feature that permits the
holder to sell the RAWs to a bank or other financial institution at a purchase
price equal to par plus accrued interest on each interest rate reset date.

FLOATING AND VARIABLE RATE OBLIGATIONS. The value of floating and variable
rate obligations generally is more stable than that of fixed rate obligations
in response to changes in interest rate levels. Variable and floating rate ob-
ligations usually have demand features that permit the Funds to sell them at
par value plus accrued interest

19
<PAGE>

upon short notice. The issuers or financial intermediaries providing demand
features may support their ability to purchase the obligations by obtaining
credit with liquidity supports. These may include lines of credit, which are
conditional commitments to lend and letters of credit, which will ordinarily
be irrevocable, both of which may be issued by domestic banks or foreign banks
which have a branch, agency or subsidiary in the United States. When consider-
ing whether an obligation meets a Fund's quality standards, the Fund will, to
the extent permitted by Rule 2a-7, look to the creditworthiness of the party
providing unconditional demand features or other unconditional obligations to
support the credit of the issuer of the security. A Fund may consider the ma-
turity of a variable or floating rate Municipal Instrument to be shorter than
its ultimate stated maturity if the Fund has the right to demand prepayment of
its principal at specified intervals prior to the security's ultimate stated
maturity, subject to the conditions for using amortized cost valuation under
the Investment Company Act. A Fund may purchase such variable or floating rate
obligations from the issuers or may purchase certificates of participation, a
type of floating or variable rate obligation, which are interests in a pool of
debt obligations held by a bank or other financial institution.

INDUSTRIAL DEVELOPMENT BONDS. The Funds (other than the Treasury Obliga-
tions, Treasury Instruments, Government and Federal Funds) may invest in in-
dustrial development bonds (generally referred to under current tax law as
"private activity bonds"), the interest from which would be an item of tax
preference when distributed as "exempt-interest dividends" to shareholders un-
der the federal alternative minimum tax. See "Taxes" and "Distributions." Mu-
nicipal Fund may invest up to 100% of its assets in private activity bonds.
Tax-Free Fund does not currently intend to invest in such bonds. If Tax-Free
Fund's policy not to invest in private activity bonds should change in the fu-
ture, shareholders would be notified and such investments would not exceed 20%
of Tax-Free Fund's net assets.

OTHER POLICIES. Ordinarily the Tax-Exempt Funds expect that 100% of their
portfolio securities will be Municipal Instruments. However, the Funds may
hold cash or invest in short-term taxable securities as set forth above. Such
Funds may invest 25% or more of the value of their respective total assets in
Municipal Instruments which are related in such a way that an economic, busi-
ness or political development or change affecting one Municipal Instrument
would also affect the other Municipal Instruments. For example, the Tax-Exempt
Funds may invest all of their respective assets in (a) Municipal Instruments
the interest on which is paid solely from revenues from similar projects such
as hospitals, electric utility systems, multi-family housing, nursing homes,
commercial facilities (including hotels), steel companies or life care facili-
ties, (b) Municipal Instruments whose issuers are in the same state or (c) in-
dustrial development obligations. Concentration of a Fund's investments in
these Municipal Instruments will subject the Fund, to a greater extent than if
such investment was more limited, to the risks of adverse economic, business
or political developments affecting any such state, industry or other area of
concentration.

Each Fund (other than the Treasury Obligations, Treasury Instruments, Gov-
ernment and Federal Funds) may purchase Municipal Instruments which are backed
by letters of credit, which will ordinarily be irrevocable, issued by domestic
banks or foreign banks (excluding Prime Obligations Fund) which have a branch,
agency or subsidiary in the United States. In addition, these Funds may ac-
quire securities in the form of custodial receipts which evidence ownership of
future interest payments, principal payments or both on obligations of certain
state and local governments and authorities.

In order to enhance the liquidity, stability, or quality of a Municipal In-
strument, each Fund (other than the Treasury Obligations, Treasury Instru-
ments, Government and Federal Funds) may acquire the right to sell the secu-
rity to another party at a guaranteed price and date.

20
<PAGE>

REPURCHASE AGREEMENTS

Each Fund (other than the Treasury Instruments Fund) may only enter into re-
purchase agreements with primary dealers in U.S. Government Securities. A re-
purchase agreement is an agreement under which a Fund purchases securities and
the seller agrees to repurchase the securities within a particular time at a
specified price. Such price will exceed the original purchase price, the dif-
ference being income to the Fund, and will be unrelated to the interest rate
on the purchased security. A Fund's custodian or sub-custodian will maintain
custody of the purchased securities for the duration of the agreement. The
value of the purchased securities, including accrued interest, will at all
times equal or exceed the value of the repurchase agreement. In the event of
bankruptcy of the seller or failure of the seller to repurchase the securities
as agreed, a Fund could suffer losses, including loss of interest on or prin-
cipal of the security and costs associated with delay and enforcement of the
repurchase agreement. In evaluating whether to enter into a repurchase agree-
ment, the Adviser will carefully consider the creditworthiness of the seller
pursuant to procedures reviewed and approved by the Trustees. Distributions of
the income from repurchase agreements entered into by a Fund will be taxable
to its shareholders. In addition, each Fund, together with other registered
investment companies having management agreements with the Adviser or any of
its affiliates, may transfer uninvested cash balances into a single joint ac-
count, the daily aggregate balance of which will be invested in one or more
repurchase agreements.

FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES

Each Fund may purchase when-issued securities and make contracts to purchase
or sell securities for a fixed price at a future date beyond customary settle-
ment time. A Fund is required to hold and maintain in a segregated account
with the Fund's custodian or sub-custodian until three days prior to settle-
ment date, cash or liquid assets in an amount sufficient to meet the purchase
price. Alternatively, a Fund may enter into offsetting contracts for the for-
ward sale of other securities that it owns. Securities purchased or sold on a
when-issued or forward commitment basis involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date or if the
value of the security to be sold increases prior to the settlement date. Al-
though a Fund would generally purchase securities on a when-issued or forward
commitment basis with the intention of acquiring securities for its portfolio,
the Fund may dispose of a when-issued security or forward commitment prior to
settlement if the Adviser deems it appropriate to do so.

OTHER INVESTMENT COMPANIES

The Adviser will determine, under guidelines established by the Trustees,
whether securities issued by other money market investment companies present
minimal credit risks. The amount of each Fund's investments in securities of
other investment companies will be subject to the limitations on such invest-
ments prescribed by the Investment Company Act. These limits include a prohi-
bition on any Fund acquiring more than 3% of the voting shares of any other
investment company and a prohibition on investing more than 5% of a Fund's to-
tal assets in securities of any one investment company or more than 10% of its
total assets in securities of all investment companies. Each Fund will indi-
rectly bear its proportionate share of any management fees and other expenses
paid by such other investment companies. Such other investment companies will
have investment objectives, policies and restrictions substantially similar to
those of the acquiring Fund and will be subject to substantially the same
risks.

INVESTMENT LIMITATIONS

TAXABLE AND TAX-EXEMPT FUNDS. Each Fund will comply with the conditions for
using amortized cost valuation set forth in Rule 2a-7 under the Investment
Company Act including, but not limited to, those condi-

21
<PAGE>

tions relating to maturity, diversification and credit quality. These operat-
ing policies may be more restrictive than the fundamental policies set forth
in the Statement of Additional Information.

INVESTMENT RESTRICTIONS. Each Fund is subject to certain investment restric-
tions that are described in detail under "Investment Restrictions" in the
Statement of Additional Information. Fundamental investment restrictions of a
Fund cannot be changed without approval of a majority of the outstanding
shares of that Fund. Treasury Obligations Fund's policy of limiting its in-
vestments to U.S. Treasury Obligations and related repurchase agreements is
also fundamental. All investment objectives and policies not specifically des-
ignated as fundamental are non-fundamental and may be changed without share-
holder approval.

RESTRICTED AND OTHER ILLIQUID SECURITIES. Each Fund may purchase securities
that are not registered ("restricted securities") under the Securities Act of
1933 ("1933 Act"), but can be offered and sold to "qualified institutional
buyers" under Rule 144A under the 1933 Act. However, a Fund will not invest
more than 10% of its net assets in illiquid investments, which include fixed
time deposits maturing in more than seven days and restricted securities.
Restricted securities (including commercial paper issued pursuant to Section
4(2) of the 1933 Act) which the Board of Trustees has determined are liquid,
based upon a continuing review of the trading markets for the specific re-
stricted security, will not be deemed to be illiquid investments for purposes
of this restriction. The Board of Trustees may adopt guidelines and delegate
to the Adviser the daily function of determining and monitoring the liquidity
of restricted securities. The Board, however, will retain sufficient oversight
and be ultimately responsible for the determinations. Since it is not possible
to predict with assurance that the market for restricted securities eligible
for resale under Rule 144A will continue to be liquid, the Adviser will care-
fully monitor each Fund's investments in these securities, focusing on such
important factors, among others, as valuation, liquidity and availability of
information. This investment practice could have the effect of increasing the
level of illiquidity in a Fund to the extent that qualified institutional buy-
ers become for a time uninterested in purchasing these restricted securities.

In addition, each Fund may not invest in repurchase agreements maturing in
more than seven days and securities which are not readily marketable if, as a
result thereof, more than 10% of the net assets of that Fund (taken at market
value) would be invested in such investments. Certain repurchase agreements
which mature in more than seven days can be liquidated before the nominal
fixed term on seven days or less notice. Such repurchase agreements will be
regarded as liquid instruments.

MANAGEMENT

THE ADVISER

GSAM, One New York Plaza, New York, New York 10004, a separate operating di-
vision of Goldman, Sachs & Co., acts as investment adviser to the Funds.
Goldman Sachs registered as an investment adviser in 1981. As of November 21,
1997, Goldman Sachs, together with its affiliates, acted as investment adviser
or distributor for approximately $133.6 billion in assets.

As of November 29, 1996, Goldman Sachs and its consolidated subsidiaries had
assets of approximately $152 billion and partners' capital of $5.3 billion and
ranked as one of the largest international investment banking and brokerage
firms in the United States. Founded in 1869, Goldman Sachs is a major invest-
ment banking and brokerage firm providing a broad range of financing and in-
vestment services both in the United States and abroad.

22
<PAGE>

Pursuant to an SEC order, each Taxable and Tax-Advantaged Fund may enter
into principal transactions in certain taxable money market instruments, in-
cluding repurchase agreements, with Goldman Sachs.

Under the Management Agreement, GSAM continually manages each Fund, includ-
ing the purchase, retention and disposition of its securities and other as-
sets. In addition, GSAM administers each Fund's business affairs and performs
various shareholder servicing functions to the extent not provided by other
organizations. The management of each Fund is subject to the supervision of
the Trustees and each Fund's investment policies. For these services, the
Trust, on behalf of each Fund, pays GSAM a monthly fee at an annual rate of
each Fund's average daily net assets as follows:

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
CONTRACTUAL DECEMBER 31,
RATE 1996
----------- ------------
<S> <C> <C>
Financial Square Prime Obligations Fund................ .205% .17%
Financial Square Money Market Fund..................... .205% .17%
Financial Square Premium Money Market Fund............. .205% N/A*
Financial Square Treasury Obligations Fund............. .205% .17%
Financial Square Treasury Instruments Fund............. .205% N/A*
Financial Square Government Fund....................... .205% .17%
Financial Square Federal Fund.......................... .205% N/A*
Financial Square Tax Free Money Market Fund............ .205% .17%
Financial Square Municipal Money Market Fund........... .205% N/A*
</TABLE>

* As of December 31, 1996, the Premium Money Market Fund, Treasury Instruments
Fund, Federal Fund and Municipal Money Market Fund had not commenced opera-
tions.

A Management Agreement combining both advisory and administrative services
was adopted effective April 30, 1997. The contractual rate set forth in the
table is the rate payable under the Management Agreement and is identical to
the aggregate advisory and administration fees payable by each Fund under the
previously separate investment advisory and administration agreements. For the
fiscal year ended December 31, 1996, the annual rate expressed is the combined
advisory and administration fees paid (after voluntary fee limitations). The
difference, if any, between the stated fees and the actual fees paid by the
Funds reflects the fact that the Investment Adviser did not charge the full
amount of the fees to which it would have been entitled.

GSAM has agreed not to impose a portion of its management fee and/or to re-
duce or otherwise limit the total operating expenses of each Fund (excluding
fees payable to Service Organizations, as defined herein, taxes, interest,
brokerage and litigation, indemnification and other extraordinary expenses).
GSAM has no current intention to but may in the future discontinue or modify
any of such reductions or limitations at its discretion.

THE DISTRIBUTOR AND TRANSFER AGENT

Goldman Sachs, 4900 Sears Tower, Chicago, Illinois 60606, serves as the Dis-
tributor of shares of each Fund pursuant to a Distribution Agreement with the
Trust. The Distributor will assist in the sale of shares of each Fund upon the
terms described herein. Goldman Sachs also serves as the Transfer Agent of
each Fund.

From time to time, Goldman Sachs or any of its affiliates may purchase and
hold shares of the Funds in order to increase the assets of the Funds. In-
creasing the Fund's assets may enhance investment flexibility and diversifica-
tion. Goldman Sachs reserves the right to redeem at any time some or all of
the Fund shares acquired for its own account. Goldman Sachs will consider the
effect of redemptions on the Funds and other shareholders in deciding whether
to redeem its shares.

23
<PAGE>

TAXES

Each Fund is treated as a separate entity for federal tax purposes. The
Treasury Instruments and Federal Funds intend to elect and each other Fund has
elected to be treated as a regulated investment company and each Fund intends
to continue to qualify for such treatment under Subchapter M of the Internal
Revenue Code of 1986 (the "Code") for each taxable year. To qualify as such,
each Fund must satisfy certain requirements relating to the sources of its in-
come, diversification of its assets and distribution of its income to share-
holders. As a regulated investment company, each Fund will not be subject to
federal income or excise tax on any net investment income and net realized
capital gains that are distributed to its shareholders in accordance with cer-
tain timing requirements of the Code.

Dividends paid by a Fund from net investment income, the excess of net
short-term capital gain over net long-term capital loss and taxable original
issue discount or market discount income will be taxable to shareholders as
ordinary income, except for any "exempt-interest dividends" paid by the Tax-
Exempt Funds, as described below. Dividends paid by a Fund from the excess of
net long-term capital gain over net short-term capital loss will be taxable as
long-term capital gain regardless of how long the shareholders have held their
shares. These tax consequences will apply to distributions of any Fund
regardless of whether distributions are received in cash or reinvested in
shares. Certain distributions paid by the Funds in January of a given year
will be taxable to shareholders as if received on December 31 of the year in
which they are declared. Shareholders will be informed annually about the
amount and character of distributions received from the Funds for federal
income tax purposes, including any distributions that may constitute a return
of capital or any distributions of Municipal Fund that may constitute a tax
preference item under the federal alternative minimum tax.

The Tax-Exempt Funds intend to satisfy certain requirements of the Code for
the payment of "exempt-interest dividends" not included in shareholders' fed-
eral gross income. Dividends paid by these Funds from interest on tax-exempt
obligations and properly designated by the Funds as exempt-interest dividends,
including dividends attributable to exempt-interest dividends received by a
Fund from other regulated investment companies, will generally be exempt from
federal income tax, although a portion of such dividends may be subject to the
federal alternative minimum tax. Exempt-interest dividends will be considered
in computing the corporate federal alternative minimum tax, and the extent, if
any, to which social security or railroad retirement benefits are taxable.
Persons who are "substantial users" of facilities financed by certain indus-
trial development or private activity bonds should consult their own tax ad-
visers before purchasing shares of these Funds. Interest incurred to purchase
or carry shares of these Funds will not be deductible for federal income tax
purposes to the extent related to exempt-interest dividends paid by the Funds.

Individuals and certain other classes of shareholders may be subject to 31%
backup withholding of federal income tax on taxable distributions if they fail
to furnish their correct taxpayer identification number and certain certifica-
tions required by the Internal Revenue Service or if they are otherwise sub-
ject to backup withholding. Individuals, corporations and other shareholders
that are not U.S. persons under the Code are subject to different tax rules
and may be subject to nonresident alien withholding at the rate of 30% (or a
lower rate provided by an applicable tax treaty) on amounts treated as ordi-
nary dividends from the Funds.

If a Fund invests in foreign securities, it may be subject to foreign with-
holding or other foreign taxes on income earned on such securities and is ex-
pected to be unable to pass such taxes through to shareholders, who therefore
are not expected to include such taxes in income or be entitled to claim for-
eign tax credits or deductions with respect to such taxes.

In addition to federal taxes, a shareholder may be subject to state, local
or foreign taxes on payments received from a Fund. A state income (and possi-
bly local income and/or intangible property) tax exemption is

24
<PAGE>

generally available to the extent a Fund's distributions are derived from in-
terest on (or, in the case of intangible property taxes, the value of its as-
sets is attributable to) certain U.S. Government obligations and/or tax-exempt
municipal obligations issued by or on behalf of the particular state or a po-
litical subdivision thereof, provided in some states that certain thresholds
for holdings of such obligations and/or reporting requirements are satisfied.
Shareholders should consult their own tax advisers concerning these matters.

NET ASSET VALUE

The net asset value of each Fund (other than the Government, Treasury Obli-
gations and Premium Money Market Funds) is determined as of the close of
regular trading on the New York Stock Exchange (normally 4:00 p.m. New York
time) on each Business Day. The net asset value of Government, Treasury Obli-
gations and Premium Money Market Funds is determined as of 5:00 p.m. New York
time on each Business Day. Net asset value per share for each class of shares
of each Fund is calculated by determining the amount of net assets attribut-
able to each class of shares and dividing by the number of shares for such
class.

On any Business Day, as defined herein, when The Bond Market Association
("BMA") recommends that the securities markets close early, the Treasury In-
struments, Federal and Premium Money Market Funds will cease, and each other
Fund reserves the right to cease, accepting purchase and redemption orders for
same Business Day credit at the time BMA recommends that the securities mar-
kets close. On days any Fund closes early, purchase and redemption orders re-
ceived after the BMA recommended closing time will be credited to the next
Business Day. In addition, each Fund reserves the right to advance the time by
which purchase and redemption orders must be received for same Business Day
credit as permitted by the SEC.

Each Fund seeks to maintain a net asset value of $1.00 per share. In this
connection, each Fund values its portfolio securities on the basis of amor-
tized cost. The amortized cost method values a security at its cost on the
date of purchase and thereafter assumes a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating interest
rates on the market value of the instrument. For a more complete description
of the amortized cost valuation method and its effect on existing and prospec-
tive shareholders, see the Statement of Additional Information. There can be
no assurance that a Fund will be able at all times to maintain a net asset
value per share of $1.00.

YIELD INFORMATION

From time to time, each Fund may advertise its yield, effective yield and
average annual total return. Average annual total return is determined by com-
puting the average annual percentage change in value of $1,000 invested at the
maximum public offering price for a specified period of at least one year, as-
suming reinvestment of all dividends and distributions at net asset value. The
total return calculation assumes a complete redemption of the investment at
the end of the relevant period. Each Fund may furnish total return calcula-
tions based on a cumulative, average, year-by-year or other basis for various
specified periods by means of quotations, charts, graphs or schedules. The
yield of a Fund refers to the income generated by an investment in that Fund
over a seven-day period (which period will be stated in the advertisement).
This income is then annualized; that is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-
week period and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.

The Tax-Exempt Funds and the Federal and Treasury Instruments Funds may each
also quote tax-equivalent yield. Each Fund's tax-equivalent yield is calcu-
lated by determining the rate of return that would have to be

25
<PAGE>

achieved on a fully taxable investment to produce the after-tax equivalent of
the Fund's yield, assuming certain tax brackets for a shareholder.

Investors should note that the investment results of a Fund are based on
historical performance and will fluctuate over time. Any presentation of a
Fund's total return, yield, effective yield or tax-equivalent yield for any
prior period should not be considered a representation of what an investment
may earn or what a Fund's total return, yield, effective yield or tax-equiva-
lent yield may be in any future period. In addition to the above, each Fund
may from time to time advertise its performance relative to certain averages,
performance rankings, indices, other information prepared by recognized mutual
fund statistical services and investments for which reliable performance data
is available.

Total return, yield, effective yield and tax-equivalent yield will be calcu-
lated separately for each class of shares in existence. Because each such
class of shares is subject to different expenses, the total return and net
yield of such classes of a Fund for the same period may differ. See "Organiza-
tion and Shares of the Trust" below.

ORGANIZATION AND SHARES OF THE TRUST

Each Fund is a series of the Goldman Sachs Trust, which was formed under the
laws of the State of Delaware on January 28, 1997. The Funds were formerly se-
ries of Goldman Sachs Money Market Trust, a Massachusetts business trust, and
were reorganized into the Trust as of April 30, 1997. The Trustees have au-
thority under the Trust's Declaration of Trust to create and classify shares
of beneficial interest in separate series, without further action by share-
holders. Additional series may be added in the future. The Trustees also have
authority to classify or reclassify any series or portfolio of shares into one
or more classes. (Institutions that provide services to holders of FST Pre-
ferred Shares, FST Administration Shares or FST Service Shares are referred to
in this Prospectus as "Service Organizations").

When issued, shares are fully paid and nonassessable. In the event of liqui-
dation, shareholders are entitled to share pro rata in the net assets of the
applicable Fund available for distribution to such shareholders. All shares
are freely transferable and have no preemptive, subscription or conversion
rights. Shareholders are entitled to one vote per share, provided that, at the
option of the Trustees, shareholders will be entitled to a number of votes
based upon the net asset values represented by their shares.

Shares of a Fund will be voted seperately by Fund with respect to matters
pertaining to that Fund except for the election of Trustees and ratification
of independent accountants. For example, shareholders of each Fund are re-
quired to approve the adoption of any management agreement relating to that
Fund and any changes in fundamental investment restrictions or policies of
such Fund. Approval by the shareholders of one Fund is effective only as to
that Fund.

As of August 8, 1997, Harris Trust & Savings Bank, 200 W. Monroe St. Fl 12,
Chicago, IL 60606, owned of record 35.04% of the outstanding shares of Trea-
sury Instruments Fund and National City Bank, P.O. Box 5756, Cleveland, OH
44101-0756, owned of record 32.86% of the outstanding shares of Premium Money
Market Fund.

The Trust does not intend to hold annual meetings of shareholders. However,
pursuant to the Trust's By-Laws, the recordholders of at least 10% of the
shares outstanding and entitled to vote at a special meeting may require the
Trust to hold such special meeting of shareholders for any purpose, and
recordholders may, under certain circumstances, as permitted by the Investment
Company Act, communicate with other shareholders in connection with requiring
a special meeting of shareholders. The Trustees will call a special meeting of
shareholders for the purpose of electing Trustees if, at any time, less than a
majority of Trustees holding office at the time were elected by shareholders.

26
<PAGE>

PURCHASE OF SHARES

FST Shares of a Fund may be purchased on any Business Day at the net asset
value next determined after receipt of a purchase order in the manner set
forth below, and provided that The Northern Trust Company ("Northern"), Chica-
go, Illinois, the sub-custodian for State Street Bank and Trust Company
("State Street"), receives the purchase amount in federal funds on the same
Business Day. Purchase orders may be made by telephoning Goldman Sachs at 800-
621-2550 or by a written request addressed to Goldman Sachs, Attention: Share-
holder Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago, Illinois
60606. It is strongly recommended that payment be effected by wiring federal
funds to Northern.

Purchases of FST Shares may also be made by delivering a Federal Reserve
draft or check (except that a third party check will not be accepted) payable
only to the appropriate Fund and drawn on a U.S. bank to Goldman Sachs, Atten-
tion: Shareholder Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago,
Illinois 60606. It is expected that Federal Reserve drafts will ordinarily be
converted to federal funds on the day of receipt and that checks will be con-
verted to federal funds within two Business Days after receipt. FST Shares
purchased by check may not be redeemed until the check has cleared, as de-
scribed under "Redemption of Shares."

Purchases of shares of any Fund may also be made through an Automated Clear-
ing House ("ACH") transfer to Goldman Sachs Trust c/o Northern, as
subcustodian for State Street. Purchase orders are effected at the net asset
value next determined after receipt of both the purchase order and the pur-
chase amount in federal funds. It is expected that ACH transfers will ordinar-
ily be converted to federal funds on the Business Day following receipt of the
ACH transfer.

FST Shares of each Fund are deemed to have been purchased when an order be-
comes effective and are entitled to dividends on FST Shares purchased as fol-
lows:

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

<TABLE>
<CAPTION>
IF ORDER IS RECEIVED BY GOLDMAN SACHS DIVIDENDS BEGIN
------------------------------------- ---------------
<S> <C>
(1) Taxable and Tax-Advantaged Funds (except
Government, Treasury Obligations and Premium
Money Market Funds)
By:3:00 p.m.--N.Y. time Same Business Day
- ---------------------------------------------------------------------------
After:3:00 p.m.--N.Y. time Next Business Day
- ---------------------------------------------------------------------------
(2) Government, Treasury Obligations and
Premium Money Market Funds
By:5:00 p.m.--N.Y. time Same Business Day
- ---------------------------------------------------------------------------
After:5:00 p.m.--N.Y. time Next Business Day
- ---------------------------------------------------------------------------
(3) Municipal Fund
By:1:00 p.m.- N.Y. time Same Business Day
- ---------------------------------------------------------------------------
After:1:00 p.m.- N.Y. time Next Business Day
- ---------------------------------------------------------------------------
(4) Tax-Free Money Market Fund
By:2:00 p.m.- N.Y. time Same Business Day
- ---------------------------------------------------------------------------
After:2:00 p.m.- N.Y. time Next Business Day
- ---------------------------------------------------------------------------
</TABLE>

27
<PAGE>

A Business Day means any day on which the New York Stock Exchange is open,
except for days on which Chicago, Boston or New York banks are closed for lo-
cal holidays.

FST Shares of the Funds are purchased at the net asset value per share with-
out the imposition of a sales charge. However, banks, trust companies or other
institutions through which investors acquire FST Shares may impose charges in
connection with transactions in such Shares.

Goldman Sachs, as each Fund's transfer agent, will maintain a complete rec-
ord of transactions and FST Shares held in each shareholder's account. The
Trust and Goldman Sachs each reserves the right to reject any purchase order
for any reason.

INITIAL PURCHASES

The minimum initial investment requirement is $10 million, which may be al-
located among the Funds. The Trust and Goldman Sachs each reserves the right
to waive the minimum investment requirement. Before or immediately after plac-
ing an initial purchase order, investors should complete and send to Goldman
Sachs the Account Information Form included at the end of this Prospectus.

SUBSEQUENT INVESTMENTS

There is no minimum amount required for subsequent investments. Orders for
the purchase of additional FST Shares should be accompanied by information
identifying the account and the Fund in which FST Shares are to be purchased.

ADDITIONAL INFORMATION

Normally purchase, exchange and redemption orders will not be effective un-
til received by Goldman Sachs. The Trust may, however, authorize certain in-
stitutions (including banks, trust companies, brokers and investment advisers)
that provide recordkeeping, reporting and processing services to their custom-
ers to accept on the Trust's behalf orders placed by or on behalf of such cus-
tomers and, if approved by the Trust, to designate other intermediaries to ac-
cept such orders. In these cases, a Fund will be deemed to have received an
order in proper form by or on behalf of a customer when the order is accepted
by the authorized institution or intermediary on a Business Day, and the order
will be priced at a Fund's net asset value per share next determined after
such acceptance. The institution or intermediary will be responsible for
transmitting accepted orders to the Trust within the period agreed upon by
them. A customer should contact its institution to learn whether it is autho-
rized to accept orders for the Trust. Such institutions may receive payments
from the Funds or Goldman Sachs for the services provided by them with respect
to the Funds' institutional shares. These payments may be in addition to other
servicing and/or sub-transfer agency payments borne by the Funds and their
share classes.

The Investment Adviser, Distributor, and/or their affiliates may pay compen-
sation, from time to time, out of their assets and not as an additional charge
to the Funds, to selected institutions (including banks, trust companies, bro-
kers and investment advisers) and other persons in connection with the sale
and/or servicing of Shares of the Funds and other investment portfolios of the
Trust (such as additional payments based on new sales, amounts exceeding pre-
established thresholds, or the length of time clients' assets have remained in
the Trust), and subject to applicable NASD regulations, contribute to various
non-cash and cash incentive arrangements to promote the sale of Shares, as
well as sponsor various educational programs, sales contests and/or promotions
in which participants may receive reimbursement of expenses, entertainment and
prizes such as travel awards, merchandise, cash, investment research and edu-
cational information and related support materials. This

28
<PAGE>

additional compensation can vary among institutions depending upon such fac-
tors as the amounts their clients have invested (or may invest) in particular
portfolios of the Trust, the particular program involved, or the amount of re-
imbursable expenses.

REPORTS TO SHAREHOLDERS

FST Shareholders of each Fund will receive an annual report containing au-
dited financial statements and a semiannual report. Each FST Shareholder will
also be furnished with an individual monthly statement. Upon request, a
printed confirmation for each transaction will be provided by Goldman Sachs.
Any dividends and distributions paid by a Fund are also reflected in regular
statements issued by Goldman Sachs. A year-to-date statement for any account
will be provided upon request made to Goldman Sachs. FST Shareholders with in-
quiries regarding a Fund may call Goldman Sachs at 800-621-2550 (8:00 a.m. to
6:30 p.m. New York time) or write Goldman Sachs at the address shown under
"The Distributor and Transfer Agent."

SUB-ACCOUNTING SERVICES

The Trust has designed special procedures to assist banks and other institu-
tional investors desiring to establish multiple accounts (master accounts and
their sub-accounts). Sub-accounts may be established with registration by name
and/or number. Institutions will not normally be charged for this service un-
less otherwise agreed upon. Upon request, master accounts will be provided
with a monthly summary report which sets forth in order by account number (or
name) the share balance at month-end and the monthly income together with the
total share balance and monthly income for the master account.

To assist banks and other institutional investors performing their own sub-
accounting, each Fund's daily income per share, calculated to nine decimal
places, and its annualized yield are normally available by 4:00 p.m. New York
time.

DISTRIBUTIONS

All or substantially all of each Fund's net investment income will be de-
clared daily (as of 4:00 p.m. New York time for each Fund other than the Gov-
ernment, Treasury Obligations and Premium Money Market Funds and as of 5:00
p.m. New York time for the Government, Treasury Obligations and Premium Money
Market Funds) as a dividend and distributed to FST Shareholders monthly. Dis-
tributions will be made in additional FST Shares of the same Fund or, at the
election of FST Shareholders, in cash. The election to reinvest dividends and
distributions or receive them in cash may be changed at any time upon written
notice to Goldman Sachs. If no election is made, all dividends and capital
gain distributions will be reinvested. Dividends will be reinvested as of the
last calendar day of each month. Cash distributions will be paid on or about
the first business day of each month. Net short-term capital gains, if any,
will be distributed in accordance with the requirements of the Code and may be
reflected in the Fund's daily distributions. Each Fund may distribute at least
annually its long-term capital gains, if any, after reduction by available
capital losses. In order to avoid excessive fluctuations in the amount of
monthly capital gains distributions, a portion of any net capital gains real-
ized on the disposition of securities during the months of November and Decem-
ber may be distributed during the subsequent calendar year. Although realized
gains and losses on the assets of a Fund are reflected in the net asset value
of the Fund, they are not expected to be of an amount which would affect the
Fund's net asset value of $1.00 per share.

The income declared as a dividend for the Treasury Obligations, Government
and Premium Money Market Funds is based on estimates of net investment income
for each Fund. Actual income may differ from estimates, and differences, if
any, will be included in the calculation of subsequent dividends.

29
<PAGE>

A Fund's net investment income consists of the excess of (i) accrued
interest or discount (including both original issue and market discount on
taxable securities) on portfolio securities, and (ii) any income of the Fund
from sources other than capital gains over (iii) the amortization of market
premium on all portfolio securities and (iv) the estimated expenses of the
Fund, including a proportionate share of the general expenses of the Trust.

EXCHANGES

FST Shares of each Fund may be exchanged for shares of the corresponding
class of any Fund or Portfolio of Goldman Sachs Trust at the net asset value
next determined either by writing to Goldman Sachs, Attention: Shareholder
Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago, Illinois 60606 or,
if previously elected in the Account Information Form included at the end of
this Prospectus, by calling Goldman Sachs at 800-621-2550. All telephone
exchanges must be registered in the same name(s) and with the same address as
are registered in the Fund from which the exchange is being made. It may be
difficult to implement the telephone exchange privilege in times of drastic
economic or market changes. In an effort to prevent unauthorized or fraudulent
exchange requests by telephone, Goldman Sachs employs reasonable procedures as
set forth under "Redemption of Shares" to confirm that such instructions are
genuine. Exchanges are available only in states where the exchange may legally
be made. The exchange privilege may be modified or withdrawn at any time on 60
days' written notice.

REDEMPTION OF SHARES

HOW TO REDEEM

FST Shareholders may redeem FST Shares of a Fund without charge upon request
on any Business Day at the net asset value next determined after receipt of
the redemption request. Redemption requests may be made by telephoning Goldman
Sachs at 800-621-2550 or by a written request addressed to Goldman Sachs,
Attention: Shareholder Services, Goldman Sachs Trust, 4900 Sears Tower,
Chicago, Illinois 60606. The letter of instruction must specify the number of
FST Shares of the particular Fund to be redeemed, the account number, payment
instructions and the exact registration on the account. Signatures must be
guaranteed in accordance with the procedures set forth below, if the proceeds
are to be paid to other than pre-established instructions on file with the
Fund. A FST Shareholder may request redemptions by telephone only if the
optional telephone redemption privilege has been elected on the Account
Information Form included at the end of this Prospectus. It may be difficult
to implement redemptions by telephone in times of drastic economic or market
changes.

In an effort to prevent unauthorized or fraudulent redemption requests by
telephone, Goldman Sachs employs reasonable procedures specified by the Trust
to confirm that such instructions are genuine. Among other things, any redemp-
tion request that requires money to go to an account or address other than
that designated on the Account Information Form must be in writing and signed
by an authorized person designated on the Account Information Form. Any such
written request is also confirmed by telephone with both the requesting party
and the designated bank account to verify instructions. Other procedures may
be implemented from time to time. If reasonable procedures are not implement-
ed, the Trust may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither the Trust nor Goldman Sachs will be
responsible for the authenticity of redemption instructions received by tele-
phone. A redemption may also be made with respect to certain Funds by means of
the check redemption privilege described in the Statement of Additional Infor-
mation. Goldman Sachs reserves the right to redeem accounts with balances be-
low $500.

30
<PAGE>

until such additional documentation has been submitted to Goldman Sachs. The
payment of redemption proceeds for FST Shares recently purchased by check will
be delayed for up to 15 days until the check has cleared.

PAYMENT OF REDEMPTION PROCEEDS AND DIVIDENDS

In accordance with the following, redemption proceeds will be wired to the
bank account designated on the FST Shareholder's Account Information Form, un-
less payment by check has been requested.

- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REDEMPTION REQUEST RECEIVED REDEMPTION PROCEEDS
BY GOLDMAN SACHS ORDINARILY DIVIDENDS
- --------------------------- ------------------- ---------

(1) Taxable and Tax-Advantaged Funds (except
Government, Treasury Obligations and Pre-
mium Money Market Funds)
<S> <C> <C>
By: 3:00 p.m.--N.Y. time Wired Same Business Day Not earned on Day request is
received
- --------------------------------------------------------------------------------------------
After: 3:00 p.m.--N.Y.
time Wired Next Business Day Earned on Day request is received
- --------------------------------------------------------------------------------------------
(2) Government and Treasury Obliga-
tions and Premium Money Market
Funds

By: 5:00 p.m.--N.Y. time Wired Same Business Day Not earned on Day request is
received
- --------------------------------------------------------------------------------------------
After: 5:00 p.m.--N.Y.
time Wired Next Business Day Earned on Day request is received
- --------------------------------------------------------------------------------------------
(3) Municipal Fund
By: 12:00 noon--N.Y.
time Wired Same Business Day Not earned on Day request is
received
- --------------------------------------------------------------------------------------------
After: 12:00 noon--N.Y.
time Wired Next Business Day Earned on Day request is
received
- --------------------------------------------------------------------------------------------
(4) Tax-Free Money Market Fund
By: 1:00 p.m.--N.Y. time Wired Same Business Day Not earned on Day request is
received
- --------------------------------------------------------------------------------------------
After: 1:00 p.m.--N.Y.
time Wired Next Business Day Earned on Day request is
received
- --------------------------------------------------------------------------------------------
</TABLE>

The Funds will arrange for the proceeds of redemptions effected by any means
to be wired as federal funds to the bank account designated in the Account In-
formation Form. Redemption proceeds will normally be wired as set forth above,
but may be paid up to three Business Days after receipt of a properly executed
redemption request. For example, payment may be delayed if the Federal Reserve
Bank is closed on the day redemption
proceeds would ordinarily be wired. After a wire has been initiated by Goldman
Sachs, neither Goldman Sachs nor the Trust assumes any further responsibility
for the performance of intermediaries or the FST Shareholder's bank in the
transfer process. If a problem with such performance arises, the FST Share-
holder should deal directly with such intermediaries or bank.

An FST Shareholder may change the bank designated to receive redemption pro-
ceeds by providing a written notice to Goldman Sachs which has been signed by
the FST Shareholder or its authorized representative. This signature must be
guaranteed by a bank, a securities broker or dealer, a credit union having au-
thority to issue

31
<PAGE>

signature guarantees, a savings and loan association, a building and loan as-
sociation, a cooperative bank, a federal savings bank or association, a na-
tional securities exchange, a registered securities association or a clearing
agency, provided that such institution satisfies the standards established by
Goldman Sachs. Goldman Sachs may also require additional documentation in con-
nection with a request to change the designated bank.

OTHER REDEMPTION INFORMATION

A minimum account balance of $10 million is required to remain a FST Share-
holder. The Trust and Goldman Sachs each reserves the right to waive the mini-
mum account balance. The Trust also reserves the right to redeem shares of a
shareholder account if the balance is less than the minimum described above.
The Trust will give sixty (60) days' prior written notice to such shareholders
whose FST Shares are to be redeemed to allow them to purchase sufficient addi-
tional FST Shares to avoid such redemption.

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

32
<PAGE>

APPENDIX

GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON ACCOUNT INFORMATION FORM

You are required by law to provide the Fund with your correct Social Secu-
rity or other Taxpayer Identification Number (TIN), regardless of whether you
file tax returns. Failure to do so may subject you to penalties. Failure to
provide your correct TIN and to sign your name in the certification section of
the Account Information Form could result in withholding of 31% by the Fund
for the federal backup withholding tax on distributions, redemptions, ex-
changes and other payments relating to your account.

Any tax withheld may be credited against taxes owed on your federal income
tax return.

If you do not have a TIN, you should apply for one immediately by contacting
your local office of the Social Security Administration or the Internal Reve-
nue Service (IRS). Backup withholding could apply to payments relating to your
account prior to the Fund's receipt of your TIN.

Special rules apply for certain entities. For example, for an account estab-
lished under a Uniform Gifts or Transfers to Minors Act, the TIN of the minor
should be furnished.

If you have been notified by the IRS that you are subject to backup with-
holding because you failed to report all your interest and/or dividend income
on your tax return and you have not been notified by the IRS that such with-
holding should cease, you must cross out item (2) in the certification section
of the Account Information Form.

If you are an exempt recipient, you should furnish your TIN and certify your
exemption by signing the Certification section and writing "exempt" after your
signature. Exempt recipients include: corporations, tax-exempt pension plans
and IRA's, governmental agencies, financial institutions, registered securi-
ties and commodities dealers and others.

If you are a nonresident alien or foreign entity, you must provide a com-
pleted Form W-8 to the Fund in order to avoid backup withholding on certain
payments. Other payments to you may be subject to non-resident alien withhold-
ing of up to 30%.

For further information regarding backup and nonresident alien withholding,
see Sections 3406, 1441 and 1442 of the Internal Revenue Code and consult your
tax adviser.

A-1
<PAGE>

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

GOLDMAN SACHS MONEY MARKET FUNDS
FST SHARES
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606

TOLL FREE: 800-621-2550

-----------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder and Fund Expenses.............................................. 2
Financial Highlights....................................................... 4
An Introduction to the Funds............................................... 12
Investment Policies Matrix................................................. 14
Description of Securities and Investment Techniques........................ 16
Investment Limitations..................................................... 21
Management................................................................. 22
Taxes...................................................................... 24
Net Asset Value............................................................ 25
Yield Information.......................................................... 25
Organization and Shares of the Trust....................................... 26
Purchase of Shares......................................................... 27
Reports to Shareholders.................................................... 29
Distributions.............................................................. 29
Exchanges.................................................................. 30
Redemption of Shares....................................................... 30
Appendix................................................................... A-1
Account Information Form
</TABLE>

FSPROINSTMM
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

GOLDMAN SACHS MONEY MARKET FUNDS

FINANCIAL SQUARE FUNDS

FST SHARES

-----------

PROSPECTUS

-----------

MANAGED BY
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

GOLDMAN SACHS MONEY MARKET FUNDS
FINANCIAL SQUARE FUNDS
FST PREFERRED SHARES
4900 Sears Tower
Chicago, Illinois 60606

Financial Square Treasury Obligations Fund. Securities issued or guaranteed
by the U.S. Treasury and repurchase agreements relating to such securities.

Financial Square Treasury Instruments Fund. Securities issued or guaranteed
by the U.S. Treasury, the interest income from which is generally exempt from
state income taxation.

Financial Square Government Fund. Securities of the U.S. Government, its
agencies, authorities, and instrumentalities, and repurchase agreements relat-
ing to such securities.

AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOV-
ERNMENT AND THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.

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

ADDITIONAL INFORMATION..............Goldman Sachs Funds-Toll Free: 800-621-2550

This Prospectus provides you with information about the Funds that you should
know before investing in FST Preferred Shares. It should be read and retained
for future reference. If you would like more detailed information, the State-
ment of Additional Information dated September 5, 1997, as revised January 15,
1998, as amended or supplemented from time to time, is available upon request
without charge from Service Organizations, as defined herein, or by calling
the telephone number listed above or by writing Goldman Sachs, Attention:
Shareholder Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago, Illinois
60606. The Statement of Additional Information, which is incorporated by ref-
erence into this Prospectus, has been filed with the Securities and Exchange
Commission. Not all Funds are available in certain states. Please call the
phone number listed above to determine availability in your state. The SEC
maintains a Web site (http://www.sec.gov) that contains the Statement of Addi-
tional Information and other information regarding the Trust.

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

FST PREFERRED SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUAR-
ANTEED OR ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RE-
SERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

The date of this Prospectus is September 5, 1997,
as revised January 15, 1998.
<PAGE>

SHAREHOLDER AND FUND EXPENSES
FST PREFERRED SHARES

<TABLE>
<CAPTION>
FINANCIAL FINANCIAL FINANCIAL
FINANCIAL FINANCIAL SQUARE FINANCIAL FINANCIAL SQUARE SQUARE
SQUARE SQUARE PREMIUM SQUARE SQUARE FINANCIAL FINANCIAL TAX-FREE MUNICIPAL
PRIME MONEY MONEY TREASURY TREASURY SQUARE SQUARE MONEY MONEY
OBLIGATIONS MARKET MARKET OBLIGATIONS INSTRUMENTS GOVERNMENT FEDERAL MARKET MARKET
FUND FUND FUND FUND FUND FUND FUND FUND FUND
----------- --------- --------- ----------- ----------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSAC-
TION EXPENSES
Maximum Sales Charge
Imposed on
Purchases........... None None None None None None None None None
Sales Charge Imposed
on Reinvested
Distributions....... None None None None None None None None None
Deferred Sales Load
Imposed on
Redemptions......... None None None None None None None None None
Exchange Fee......... None None None None None None None None None
ANNUAL OPERATING EXPENSES (1)
(as a percentage of
average daily net
assets)
Management Fees
(after
limitations) (2).... 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17%
Other Expenses
Preferred Adminis-
tration Fees....... 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
Other Expenses
(after expense
limitation) (3).... 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01%
---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL OPERATING
EXPENSES (4)......... 0.28% 0.28% 0.28% 0.28% 0.28% 0.28% 0.28% 0.28% 0.28%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>

EXAMPLE OF EXPENSES
You would pay the following expenses on a hypothetical $1,000 investment, as-
suming a 5% annual return and redemption at the end of each time period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Financial Square Prime Obligations Fund... $ 3 $9 $16 $36
Financial Square Money Market Fund........ $ 3 $ 9 $16 $36
Financial Square Premium Money Market
Fund..................................... $ 3 $ 9 N/A N/A
Financial Square Treasury Obligations
Fund..................................... $ 3 $ 9 $16 $36
Financial Square Treasury Instruments
Fund..................................... $ 3 $ 9 N/A N/A
Financial Square Government Fund.......... $ 3 $ 9 $16 $36
Financial Square Federal Fund............. $ 3 $ 9 N/A N/A
Financial Square Tax-Free Money Market
Fund..................................... $ 3 $ 9 $16 $36
Financial Square Municipal Money Market
Fund..................................... $ 3 $ 9 N/A N/A
</TABLE>

2
<PAGE>

(2) The Investment Adviser has voluntarily agreed not to impose 0.035% of its
management fee for each Fund. Without such limitation, management fees for
each Fund would be 0.205%.

(3) The Investment Adviser has voluntarily agreed to reduce or limit certain
other expenses (excluding management fees, fees payable to Service Organi-
zations, as defined herein, taxes, interest and brokerage and litigation,
indemnification and other extraordinary expenses) to the extent such ex-
penses exceed 0.01% of a Fund's average daily net assets.

<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING
EXPENSES EXPENSES
-------- ---------
<S> <C> <C>
Financial Square Prime Obligations Fund................... .025% .33%
Financial Square Money Market Fund........................ .025% .33%
Financial Square Treasury Obligations Fund................ .035% .34%
Financial Square Government Fund.......................... .015% .32%
Financial Square Tax-Free Money Market Fund............... .015% .32%
</TABLE>

<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING
EXPENSES EXPENSES
-------- ---------
<S> <C> <C>
Financial Square Premium Money Market Fund................ .035% .34%
Financial Square Treasury Instruments Fund................ .155% .46%
Financial Square Federal Fund............................. .155% .46%
Financial Square Municipal Money Market Fund.............. .285% .59%
</TABLE>

The information set forth in the foregoing table and hypothetical example
relates only to FST Preferred Shares of the Funds. The Funds also offer FST
Shares, FST Administration Shares and FST Service Shares. The other classes of
the Funds are subject to different fees and expenses (which affect perfor-
mance) and are entitled to different services. Information regarding any other
class of the Funds may be obtained from your sales representative or from
Goldman Sachs by calling the number on the front cover of this Prospectus.

Service Organizations may charge other fees to their customers who are the
beneficial owners of FST Preferred Shares in connection with their customers'
accounts. See "Administration." Such fees, if any, may affect the return such
customers realize with respect to their investments.

3
<PAGE>

FINANCIAL HIGHLIGHTS

4
<PAGE>

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

5
<PAGE>

6
<PAGE>

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

7
<PAGE>

8
<PAGE>

- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------

WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
---------------------

9
<PAGE>

10
<PAGE>

</TABLE>

11
<PAGE>

AN INTRODUCTION TO THE FUNDS

THE ADVISER: Goldman Sachs Asset Management, a separate operating division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds' investment ad-
viser (the "Adviser" or "GSAM").

THE DISTRIBUTOR: Goldman Sachs, which serves as the Funds' distributor and
transfer agent, is one of the largest international investment banking and
brokerage firms in the United States.

TAXABLE FUNDS: Prime Obligations, Money Market, Premium Money Market,
Treasury Obligations and Government Funds.

TAX ADVANTAGED FUNDS: Treasury Instruments and Federal Funds.

TAX-EXEMPT FUNDS: Tax-Free Money Market and Municipal Money Market Funds.

NET ASSET VALUE: Each Fund seeks to maintain a stable net asset value of
$1.00 per share.

MAXIMUM REMAINING MATURITY OF PORTFOLIO INVESTMENTS: Thirteen months at the
time of purchase.

12
<PAGE>

DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY ("WAM"): Not more than ninety
days as required by Rule 2a-7.

13
<PAGE>

14
<PAGE>

15
<PAGE>

DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES

U.S. TREASURY OBLIGATIONS

"U.S. Treasury Obligations" are securities issued or guaranteed by the U.S.
Treasury, payments of principal and interest on which are backed by the full
faith and credit of the U.S. Government.

U.S. GOVERNMENT SECURITIES

CUSTODIAL RECEIPTS

U.S. AND FOREIGN BANK OBLIGATIONS

16
<PAGE>

COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS

ASSET-BACKED AND RECEIVABLES-BACKED SECURITIES

17
<PAGE>

FOREIGN GOVERNMENT OBLIGATIONS

MUNICIPAL OBLIGATIONS

TYPES OF MUNICIPAL INSTRUMENTS:

18
<PAGE>

19
<PAGE>

20
<PAGE>

REPURCHASE AGREEMENTS

FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES

OTHER INVESTMENT COMPANIES

INVESTMENT LIMITATIONS

21
<PAGE>

tions relating to maturity, diversification and credit quality. These operat-
ing policies may be more restrictive than the fundamental policies set forth
in the Statement of Additional Information.

MANAGEMENT

THE ADVISER

22
<PAGE>

* As of December 31, 1996, the Premium Money Market Fund, Treasury Instruments
Fund, Federal Fund and Municipal Money Market Fund had not commenced opera-
tions.

THE DISTRIBUTOR AND TRANSFER AGENT

23
<PAGE>

TAXES

24
<PAGE>

NET ASSET VALUE

YIELD INFORMATION

25
<PAGE>

achieved on a fully taxable investment to produce the after-tax equivalent of
the Fund's yield, assuming certain tax brackets for a shareholder.

ORGANIZATION AND SHARES OF THE TRUST

26
<PAGE>

ADMINISTRATION

Each Fund has adopted a Preferred Administration Plan with respect to the
FST Preferred Shares which authorizes it to compensate certain institutions
for providing account administration services to their customers who are bene-
ficial owners of such Shares (each a "Service Organization"). Each Fund will
enter into agreements with Service Organizations which purchase FST Preferred
Shares on behalf of their customers ("Service Agreements"). The Service Agree-
ments will provide for compensation to the Service Organization in an amount
up to .10% (on an annualized basis) of the average daily net asset value of
the FST Preferred Shares of that Fund attributable to or held in the name of
the Service Organization for its customers. The services provided by a Service
Organization may include acting, directly or through an agent, as the sole
shareholder of record, maintaining account records for its customers, and
processing orders to purchase, redeem and exchange FST Preferred Shares for
its customers.

For the fiscal year ended December 31, 1996, the Trust, on behalf of Prime
Obligations Fund, Money Market Fund, Treasury Obligations Fund, Government
Fund and Tax-Free Fund paid Service Organizations fees at the annual rate of
.10% of each Fund's average daily net assets attributable to FST Preferred Ad-
ministration Shares. As of December 31, 1996, the Premium Money Market Fund,
Treasury Instruments Fund, Federal Fund and Municipal Money Market Fund had
not commenced operations.

Holders of FST Preferred Shares of a Fund will bear all expenses and fees
paid to Service Organizations with respect to such Shares as well as any other
expenses which are directly attributable to such Shares.

Service Organizations may charge other fees to their customers who are the
beneficial owners of FST Preferred Shares in connection with their customer
accounts. These fees would be in addition to any amounts received by the Serv-
ice Organization under a Service Agreement and may affect an investor's return
with respect to an investment in a Fund.

Normally, purchase, exchange and redemption orders will not be effective un-
til received by Goldman Sachs. The Trust may, however, authorize certain Serv-
ice Organizations and/or transfer agents that provide recordkeeping, reporting
and processing services to their customers to accept on the Trust's behalf or-
ders placed by or on behalf of such customers and, if approved by the Trust,
to designate other intermediaries to accept such orders. In these cases, a
Fund will be deemed to have received an order in proper form by or on behalf
of a customer when the order is accepted by the authorized Service Organiza-
tion or intermediary on a Business Day, and the order will be priced at a
Fund's net asset value per share next determined after such acceptance. The
Service Organization or intermediary will be responsible for transmitting ac-
cepted orders to the Trust within the period agreed upon by them. A customer
should contact its Service Organization to learn whether it is authorized to
accept orders for the Trust. The Service Organizations may receive payments
from the Funds or Goldman Sachs for the services provided by them with respect
to each of the Funds' respective share classes. These payments may be in addi-
tion to other servicing and/or sub-transfer agency payments borne by the Funds
and their share classes.

The Investment Adviser, Distributor, and/or their affiliates may also pay
other compensation, from time to time, out of their assets and not as an addi-
tional charge to the Funds, to selected Service Organizations and other per-
sons in connection with the sale and/or servicing of Shares of the Funds and
other investment portfolios of the Trust (such as additional payments based on
new sales, amounts exceeding pre-established thresholds, or the length of time
clients' assets have remained in the Trust), and subject to applicable NASD
regulations, contribute to various non-cash and cash incentive arrangements to
promote the sale of Shares, as well as sponsor various

27
<PAGE>

educational programs, sales contests and/or promotions in which participants
may receive reimbursement of expenses, entertainment and prizes such as travel
awards, merchandise, cash, investment research and educational information and
related support materials. This additional compensation can vary among Service
Organizations depending upon such factors as the amounts their clients have
invested (or may invest) in particular portfolios of the Trust, the particular
program involved, or the amount of reimbursable expenses.

All inquiries of beneficial owners of FST Preferred Shares of the Funds
should be directed to such owners' Service Organization.

PURCHASE OF SHARES

It is expected that all direct purchasers of FST Preferred Shares will be
Service Organizations or their nominees, which may purchase FST Preferred
Shares of the Funds through Goldman Sachs. Customers of Service Organizations
may invest in such shares only through their Service Organizations.

As set forth below, FST Preferred Shares of the Funds may be purchased on
any Business Day at the net asset value next determined after receipt from the
Service Organization of both the purchase order and the purchase amount in
federal funds. Purchase orders may be made by telephoning Goldman Sachs at
800-621-2550 or by a written request addressed to Goldman Sachs, Attention:
Shareholder Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago, Illinois
60606. It is strongly recommended that payment be effected by wiring federal
funds to The Northern Trust Company ("Northern"), Chicago, Illinois, as the
sub-custodian for State Street Bank and Trust Company ("State Street").

Purchases of FST Preferred Shares may also be made by a Service Organization
by delivering a Federal Reserve draft or check (except that a third party
check will not be accepted) payable only to the appropriate Fund and drawn on
a U.S. bank to Goldman Sachs, Attention: Shareholder Services, Goldman Sachs
Trust, 4900 Sears Tower, Chicago, Illinois 60606. It is expected that Federal
Reserve drafts will ordinarily be converted to federal funds on the day of re-
ceipt and that checks will be converted to federal funds within two Business
Days after receipt. FST Preferred Shares purchased by check may not be re-
deemed until the check has cleared, as described under "Redemption of Shares."

FST Preferred Shares of each Fund are deemed to have been purchased when an
order becomes effective and are entitled to dividends on FST Preferred Shares
purchased as follows:

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

<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
----------------------------------- ---------------
<C> <S> <C>
(1) Taxable and Tax-Advantaged Funds (except
Government, Treasury Obligations and
Premium Money Market Funds)
By: 3:00 p.m.--N.Y. time Same Business Day
- ---------------------------------------------------------------
</TABLE>

28
<PAGE>

<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
----------------------------------- ---------------
<C> <S> <C>
After: 3:00 p.m.--N.Y. time Next Business Day
- ----------------------------------------------------------------------
(2) Government, Treasury Obligations
and Premium Money Market Funds
By: 5:00 p.m.--N.Y. time Same Business Day
- ----------------------------------------------------------------------
After: 5:00 p.m.--N.Y. time Next Business Day
- ----------------------------------------------------------------------
(3) Municipal Fund
By: 1:00 p.m.--N.Y. time Same Business Day
- ----------------------------------------------------------------------
After: 1:00 p.m.--N.Y. time Next Business Day
- ----------------------------------------------------------------------
(4) Tax-Free Money Market Fund
By: 2:00 p.m.--N.Y. time Same Business Day
- ----------------------------------------------------------------------
After: 2:00 p.m.--N.Y. time Next Business Day
- ----------------------------------------------------------------------
</TABLE>

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

A Business Day means any day on which the New York Stock Exchange is open,
except for days on which Chicago, Boston or New York banks are closed for lo-
cal holidays.

FST Preferred Shares of a Fund are purchased at the net asset value per
share without the imposition of a sales charge. Goldman Sachs, as each Fund's
transfer agent, will maintain a complete record of transactions and FST Pre-
ferred Shares held in each record holder's account. The Trust and Goldman
Sachs each reserves the right to reject any purchase order for any reason.

MINIMUM INVESTMENT AND OTHER INFORMATION

The minimum initial investment requirement is $10 million, which may be al-
located among the Funds. The Trust and Goldman Sachs each reserves the right
to waive the minimum investment requirement. A Service Organization may impose
a minimum amount for initial and subsequent investments in FST Preferred
Shares of the Funds, and may establish other requirements such as a minimum
account balance. A Service Organization may effect redemptions of noncomplying
accounts, and may impose a charge for any special services rendered to its
customers. Customers should contact their Service Organizations for further
information concerning such requirements and charges. A Service Organization
may purchase FST Preferred Shares in connection with sweep account programs.

SUBSEQUENT INVESTMENTS

There is no minimum amount required for subsequent investments. Orders for
the purchase of additional FST Preferred Shares should be accompanied by in-
formation identifying the account and the Fund in which FST Preferred Shares
are to be purchased.

29
<PAGE>

REPORTS TO SHAREHOLDERS

The Trust will issue an annual report containing audited financial state-
ments and a semi-annual report to record holders of FST Preferred Shares of
each Fund, including Service Organizations who hold such Shares for the bene-
fit of their customers. Upon request, a printed confirmation for each transac-
tion will be provided by Goldman Sachs. Any dividends and distributions paid
by the Funds are also reflected in regular statements issued by Goldman Sachs
to shareholders of record. Service Organizations will be responsible for pro-
viding similar services to their own customers who are the beneficial owners
of such Shares.

DISTRIBUTIONS

All or substantially all of each Fund's net investment income will be de-
clared daily (as of 4:00 p.m. New York time for each Fund other than the Gov-
ernment, Treasury Obligations and Premium Money Market Funds and as of 5:00
p.m. New York time for the Government, Treasury Obligations and Premium Money
Market Funds) as a dividend and distributed to Service Organizations monthly.
Distributions will be made in additional FST Preferred Shares of the same Fund
or, at the election of a Service Organization, in cash. The election to rein-
vest dividends and distributions or receive them in cash may be changed by a
Service Organization at any time upon written notice to Goldman Sachs. If no
election is made, all dividends and capital gain distributions will be rein-
vested. Dividends will be reinvested as of the last calendar day of each
month. Cash distributions will be paid on or about the first business day of
each month. Net short-term capital gains, if any, will be distributed in ac-
cordance with the requirements of the Code and may be reflected in the Fund's
daily distributions. Each Fund may distribute at least annually its long-term
capital gains, if any, after reduction by available capital losses. In order
to avoid excessive fluctuations in the amount of monthly capital gains distri-
butions, a portion of any net capital gains realized on the disposition of se-
curities during the months of November and December may be distributed during
the subsequent calendar year. Although realized gains and losses on the assets
of a Fund are reflected in the net asset value of the Fund, they are not ex-
pected to be of an amount which would affect the Fund's net asset value of
$1.00 per share.

A Fund's net investment income consists of the excess of (i) accrued inter-
est or discount (including both original issue and market discount on taxable
securities) on portfolio securities, and (ii) any income of the Fund from
sources other than capital gains over (iii) the amortization of market premium
on all portfolio securities and (iv) the estimated expenses of the Fund, in-
cluding a proportionate share of the general expenses of the Trust.

EXCHANGES

FST Preferred Shares of each Fund may be exchanged by Service Organizations
for FST Preferred Shares of any other Financial Square Fund at the net asset
value next determined either by writing to Goldman Sachs, Attention: Share-
holder Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago, Illinois
60606, if previously elected in the Account Information Form, or by calling
Goldman Sachs at 800-621-2550. All telephone exchanges must be registered in
the same name(s) and with the same address as are registered in the Fund from
which the exchange is being made. It may be difficult to implement the tele-
phone exchange privilege in times of drastic economic or market changes. In an
effort to prevent unauthorized or fraudulent exchange requests by telephone,
Goldman Sachs employs reasonable procedures as set forth under "Redemption of
Shares" to confirm that such instructions are genuine. Exchanges are available
only in states where the exchange may legally be made. The exchange privilege
may be modified or withdrawn at any time on 60 days' written notice.

30
<PAGE>

REDEMPTION OF SHARES

HOW TO REDEEM

Customers of Service Organizations may redeem FST Preferred Shares of a Fund
through their respective Service Organizations. The Service Organizations are
responsible for the transmittal of redemption requests by their customers to
Goldman Sachs. In order to facilitate timely transmittal of redemption re-
quests, Service Organizations have established procedures by which redemption
requests must be made and times by which redemption requests must be received
by them. Additional documentation may be required when deemed appropriate by a
Service Organization.

A Service Organization may redeem such Shares without charge upon request on
any Business Day at the net asset value next determined after receipt by
Goldman Sachs of the redemption request. Redemption requests may be made by
telephoning Goldman Sachs at 800-621-2550 or by a written request addressed to
Goldman Sachs, Attention: Shareholder Services, Goldman Sachs Trust, 4900
Sears Tower, Chicago, Illinois 60606. A Service Organization may request re-
demptions by telephone only if the optional telephone redemption privilege has
been elected on the Account Information Form. It may be difficult to implement
redemptions by telephone in times of drastic economic or market changes.

Additional documentation may be required by Goldman Sachs in order to estab-
lish that a redemption request has been properly authorized. A redemption re-
quest will not be considered to have been received in proper form until such
additional documentation has been submitted to Goldman Sachs by the Service
Organization. The payment of redemption proceeds for FST Preferred Shares re-
cently purchased by check will be delayed for up to 15 days until the check
has cleared.

PAYMENT OF REDEMPTION PROCEEDS AND DIVIDENDS

In accordance with the following, redemption proceeds will be wired to the
record holder of FST Preferred Shares.
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
REDEMPTION REQUEST
RECEIVED FROM REDEMPTION
SERVICE ORGANIZATION PROCEEDS
BY GOLDMAN SACHS ORDINARILY DIVIDENDS
-------------------- ---------- ---------
<C> <S> <C> <C>
(1) Taxable and Tax-Advantaged Funds (except
Government,
Treasury Obligations and Premium Money
Market Funds)
By: 3:00 p.m.--N.Y. time Wired Same Business Day Not earned on Day
request is received
- -----------------------------------------------------------------------------
</TABLE>

31
<PAGE>

<TABLE>
<CAPTION>
REDEMPTION REQUEST
RECEIVED FROM REDEMPTION
SERVICE ORGANIZATION PROCEEDS
BY GOLDMAN SACHS ORDINARILY DIVIDENDS
-------------------- ---------- ---------
<C> <S> <C> <C>
After: 3:00 p.m.--N.Y. time Wired Next Business Day Earned on Day
request is received
- ---------------------------------------------------------------------------
(2) Government, Treasury Obligations and
Premium Money Market Funds
By: 5:00 p.m.--N.Y. time Wired Same Business Day Not earned on Day
request is received
- ---------------------------------------------------------------------------
After: 5:00 p.m.--N.Y. time Wired Next Business Day Earned on Day
request is received
- ---------------------------------------------------------------------------
(3) Municipal Fund
By: 12:00 noon--N.Y. time Wired Same Business Day Not earned on Day
request is received
- ---------------------------------------------------------------------------
After: 12:00 noon--N.Y. time Wired Next Business Day Earned on Day
request is received
- ---------------------------------------------------------------------------
(4) Tax-Free Money Market Fund
By: 1:00 p.m.--N.Y. time Wired Same Business Day Not earned on Day
request is received
- ---------------------------------------------------------------------------
After: 1:00 p.m.--N.Y. time Wired Next Business Day Earned on Day
request is received
- ---------------------------------------------------------------------------
</TABLE>
The Funds will arrange for the proceeds of redemptions effected by any means
to be wired as federal funds to the Service Organization's bank account desig-
nated in the Account Information Form. Redemption proceeds will normally be
wired as set forth above, but may be paid up to three Business Days after re-
ceipt of the Service Organization's properly executed redemption request. For
example, payment may be delayed if the Federal Reserve Bank is closed on the
day redemption proceeds would ordinarily be wired. After a wire has been ini-
tiated by Goldman Sachs, neither Goldman Sachs nor the Trust assumes any fur-
ther responsibility for the performance of intermediaries or the FST Preferred
Shareholder's Service Organization in the transfer process. If a problem with
such performance arises, the FST Preferred Shareholder should deal directly
with such intermediaries or Service Organization.

OTHER REDEMPTION INFORMATION

A minimum account balance of $10 million is required to remain a FST Pre-
ferred Shareholder. The Trust and Goldman Sachs each reserves the right to
waive the minimum account balance. The Trust reserves the right to redeem
shares of a shareholder account if the balance is less than the minimum de-
scribed above. The Trust will give sixty (60) days' prior written notice to
such shareholders whose FST Preferred Shares are to be redeemed to allow them
to purchase sufficient additional FST Preferred Shares to avoid such redemp-
tion.

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

32
<PAGE>

APPENDIX

GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON ACCOUNT INFORMATION FORM

Any tax withheld may be credited against taxes owed on your federal income
tax return.

Special rules apply for certain entities. For example, for an account estab-
lished under a Uniform Gifts or Transfers to Minors Act, the TIN of the minor
should be furnished.

For further information regarding backup and nonresident alien withholding,
see Sections 3406, 1441 and 1442 of the Internal Revenue Code and consult your
tax adviser.

A-1
<PAGE>

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

GOLDMAN SACHS MONEY MARKET FUNDS
FST PREFERRED SHARES
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606

TOLL FREE: 800-621-2550

-----------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder and Fund Expenses.............................................. 2
Financial Highlights....................................................... 4
An Introduction to the Funds............................................... 12
Investment Policies Matrix................................................. 14
Description of Securities and Investment Techniques........................ 16
Investment Limitations..................................................... 21
Management................................................................. 22
Taxes...................................................................... 24
Net Asset Value............................................................ 25
Yield Information.......................................................... 25
Organization and Shares of the Trust....................................... 26
Administration............................................................. 27
Purchase of Shares......................................................... 28
Reports to Shareholders.................................................... 30
Distributions.............................................................. 30
Exchanges.................................................................. 30
Redemption of Shares....................................................... 31
Appendix................................................................... A-1
</TABLE>

FSPROPRMM
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

GOLDMAN SACHS MONEY MARKET FUNDS

FINANCIAL SQUARE FUNDS

FST PREFERRED SHARES

-----------

PROSPECTUS

-----------

MANAGED BY
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.

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- -------------------------------------------------------------------------------
<PAGE>

GOLDMAN SACHS MONEY MARKET FUNDS
FINANCIAL SQUARE FUNDS
FST ADMINISTRATION SHARES
4900 Sears Tower
Chicago, Illinois 60606

Goldman Sachs Trust (the "Trust") is a no-load, open-end, management invest-
ment company (a "mutual fund") which includes the Financial Square Funds (the
"Funds"). This Prospectus relates only to the offering of FST Administration
shares of beneficial interest ("FST Administration Shares") of the Funds.
Goldman Sachs Asset Management, a separate operating division of Goldman,
Sachs & Co., serves as each Fund's investment adviser. Goldman, Sachs & Co.
serves as each Fund's distributor and transfer agent.
The following Funds seek to maximize current income to the extent consistent
with the preservation of capital and the maintenance of liquidity by investing
exclusively in high quality money market instruments. The Funds may invest in
diversified portfolios of the following types of instruments:
Financial Square Prime Obligations Fund. Securities of the U.S. Government,
its agencies, authorities and instrumentalities, obligations of U.S. banks,
commercial paper and other short-term obligations of U.S. companies, states,
municipalities and other entities, and repurchase agreements.
Financial Square Money Market Fund. Securities of the U.S. Government, its
agencies, authorities and instrumentalities, U.S. dollar denominated obliga-
tions of U.S. and foreign banks, U.S. dollar denominated commercial paper and
other short-term obligations of U.S. and foreign companies, foreign govern-
ments, states, municipalities and other entities, and repurchase agreements.
Financial Square Premium Money Market Fund. Securities of the U.S. Govern-
ment, its agencies, authorities and instrumentalities, U.S. dollar denominated
obligations of U.S. and foreign banks, U.S. dollar denominated commercial pa-
per and other short-term obligations of U.S. and foreign companies, foreign
governments, states, municipalities and other entities, and repurchase agree-
ments. In order to obtain a rating from a rating organization, the Fund will
observe special investment restrictions.
Financial Square Treasury Obligations Fund. Securities issued or guaranteed
by the U.S. Treasury and repurchase agreements relating to such securities.
Financial Square Treasury Instruments Fund. Securities issued or guaranteed
by the U.S. Treasury, the interest income from which is generally exempt from
state income taxation.
Financial Square Government Fund. Securities of the U.S. Government, its
agencies, authorities, and instrumentalities, and repurchase agreements relat-
ing to such securities.
Financial Square Federal Fund. Securities of the U.S. Government and certain
of its agencies, authorities and instrumentalities, the interest income from
which is generally exempt from state income taxation.
Financial Square Tax-Free Money Market Fund. Securities issued by or on be-
half of states, territories and possessions of the United States and their po-
litical subdivisions, agencies, authorities and instrumentalities, and the
District of Columbia, the interest from which, if any, is, in the opinion of
bond counsel, excluded from gross income for federal income tax purposes and
not an item of tax preference under the federal alternative minimum tax.
Financial Square Municipal Money Market Fund. Securities issued by or on be-
half of states, territories and possessions of the United States and their po-
litical subdivisions, agencies, authorities and instrumentalities, and the
District of Columbia, the interest from which, if any, is, in the opinion of
bond counsel, excluded from gross income for federal income tax purposes (but
not necessarily exempt from federal alternative minimum tax or state and local
taxes).
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOV-
ERNMENT AND THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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ADDITIONAL INFORMATION............. Goldman Sachs Funds-Toll Free: 800-621-2550

This Prospectus provides you with information about the Funds that you should
know before investing in FST Administration Shares. It should be read and re-
tained for future reference. If you would like more detailed information, the
Statement of Additional Information dated September 5, 1997, as revised Janu-
ary 15, 1998, as amended or supplemented from time to time, is available upon
request without charge from Service Organizations, as defined herein, or by
calling the telephone number listed above or by writing Goldman Sachs, Atten-
tion: Shareholder Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago,
Illinois 60606. The Statement of Additional Information, which is incorporated
by reference into this Prospectus, has been filed with the Securities and Ex-
change Commission. Not all Funds are available in certain states. Please call
the phone number listed above to determine availability in your state. The SEC
maintains a Web site (http://www.sec.gov) that contains the Statement of Addi-
tional Information and other information regarding the Trust.

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FST ADMINISTRATION SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

SHAREHOLDER AND FUND EXPENSES
FST ADMINISTRATION SHARES

<TABLE>
<CAPTION>
FINANCIAL FINANCIAL FINANCIAL
FINANCIAL FINANCIAL SQUARE FINANCIAL FINANCIAL SQUARE SQUARE
SQUARE SQUARE PREMIUM SQUARE SQUARE FINANCIAL FINANCIAL TAX-FREE MUNICIPAL
PRIME MONEY MONEY TREASURY TREASURY SQUARE SQUARE MONEY MONEY
OBLIGATIONS MARKET MARKET OBLIGATIONS INSTRUMENTS GOVERNMENT FEDERAL MARKET MARKET
FUND FUND FUND FUND FUND FUND FUND FUND FUND
----------- --------- --------- ----------- ----------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on
Purchases.......... None None None None None None None None None
Sales Charge Imposed
on Reinvested
Distributions...... None None None None None None None None None
Deferred Sales Load
Imposed on
Redemptions........ None None None None None None None None None
Exchange Fee........ None None None None None None None None None
ANNUAL OPERATING
EXPENSES (1)
(as a percentage of
average daily
net assets)
Management Fees
(after limitations)
(2)................ 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17%
Other Expenses
Administration
Fees.............. 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses
(after ex-
pense limitations)
(3).............. 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01%
---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL OPERATING
EXPENSES (4)......... 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>

EXAMPLE OF EXPENSES
You would pay the following expenses on a hypothetical $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Financial Square Prime Obligations Fund... $ 4 $14 $24 $54
Financial Square Money Market Fund........ $ 4 $14 $24 $54
Financial Square Premium Money Market
Fund..................................... $ 4 $14 N/A N/A
Financial Square Treasury Obligations
Fund..................................... $ 4 $14 $24 $54
Financial Square Treasury Instruments
Fund..................................... $ 4 $14 N/A N/A
Financial Square Government Fund.......... $ 4 $14 $24 $54
Financial Square Federal Fund............. $ 4 $14 N/A N/A
Financial Square Tax-Free Money Market
Fund..................................... $ 4 $14 $24 $54
Financial Square Municipal Money Market
Fund..................................... $ 4 $14 N/A N/A
</TABLE>

2
<PAGE>

- --------
(1) Based on estimated amounts for the current fiscal year for the Financial
Square Premium Money Market, Financial Square Treasury Instruments, Finan-
cial Square Federal and Financial Square Municipal Money Market Funds.
(2) The Investment Adviser has voluntarily agreed not to impose 0.035% of its
management fee for each Fund. Without such limitation, management fees for
each Fund would be 0.205%.
(3) The Investment Adviser has voluntarily agreed to reduce or limit certain
other expenses (excluding management fees, fees payable to Service Organi-
zations, as defined herein, taxes, interest and brokerage and litigation,
indemnification and other extraordinary expenses) to the extent such ex-
penses exceed 0.01% of a Fund's average daily net assets.
(4) Without the limitations described above, "Other Expenses" and "Total Oper-
ating Expenses" of the Financial Square Prime Obligations, Financial
Square Money Market, Financial Square Treasury Obligations, Financial
Square Government and Financial Square Tax-Free Money Market Funds for the
semiannual period ended June 30, 1997, would have been as follows:
<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING
EXPENSES EXPENSES
-------- ---------
<S> <C> <C>
Financial Square Prime Obligations Fund................... .025% .48%
Financial Square Money Market Fund........................ .025% .48%
Financial Square Treasury Obligations Fund................ .035% .49%
Financial Square Government Fund.......................... .015% .47%
Financial Square Tax-Free Money Market Fund............... .015% .47%
</TABLE>

In addition, without the limitations described above, "Other Expenses" and
"Total Operating Expenses" of the Financial Square Premium Money Market, Fi-
nancial Square Treasury Instruments, Financial Square Federal and Financial
Square Municipal Money Market Funds for the current fiscal year are estimated
to be as follows:
<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING
EXPENSES EXPENSES
-------- ---------
<S> <C> <C>
Financial Square Premium Money Market Fund................ .035% .49%
Financial Square Treasury Instruments Fund................ .155% .61%
Financial Square Federal Fund............................. .155% .61%
Financial Square Municipal Money Market Fund.............. .285% .74%
</TABLE>

The information set forth in the foregoing table and hypothetical example
relates only to FST Administration Shares of the Funds. The Funds also offer
FST Shares, FST Preferred Shares and FST Service Shares. The other classes of
the Funds are subject to different fees and expenses (which affect perfor-
mance) and are entitled to different services. Information regarding any other
class of the Funds may be obtained from your sales representative or from
Goldman Sachs by calling the number on the front cover of this Prospectus.

Service Organizations may charge other fees to their customers who are the
beneficial owners of FST Administration Shares in connection with their cus-
tomers' accounts. See "Administration." Such fees, if any, may affect the re-
turn such customers realize with respect to their investments.

3
<PAGE>

FINANCIAL HIGHLIGHTS

4
<PAGE>

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5
<PAGE>

6
<PAGE>

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7
<PAGE>

8
<PAGE>

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<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------

WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
---------------------

9
<PAGE>

10
<PAGE>

</TABLE>

11
<PAGE>

AN INTRODUCTION TO THE FUNDS

THE ADVISER: Goldman Sachs Asset Management, a separate operating division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds' investment ad-
viser (the "Adviser" or "GSAM").

THE DISTRIBUTOR: Goldman Sachs, which serves as the Funds' distributor and
transfer agent, is one of the largest international investment banking and
brokerage firms in the United States.

TAXABLE FUNDS: Prime Obligations, Money Market, Premium Money Market,
Treasury Obligations and Government Funds.

TAX ADVANTAGED FUNDS: Treasury Instruments and Federal Funds.

TAX-EXEMPT FUNDS: Tax-Free Money Market and Municipal Money Market Funds.

NET ASSET VALUE: Each Fund seeks to maintain a stable net asset value of
$1.00 per share.

MAXIMUM REMAINING MATURITY OF PORTFOLIO INVESTMENTS: Thirteen months at the
time of purchase.

12
<PAGE>

DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY ("WAM"): Not more than ninety
days as required by Rule 2a-7.

13
<PAGE>

14
<PAGE>

15
<PAGE>

DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES

U.S. TREASURY OBLIGATIONS

"U.S. Treasury Obligations" are securities issued or guaranteed by the U.S.
Treasury, payments of principal and interest on which are backed by the full
faith and credit of the U.S. Government.

U.S. GOVERNMENT SECURITIES

CUSTODIAL RECEIPTS

U.S. AND FOREIGN BANK OBLIGATIONS

16
<PAGE>

COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS

ASSET-BACKED AND RECEIVABLES-BACKED SECURITIES

17
<PAGE>

FOREIGN GOVERNMENT OBLIGATIONS

MUNICIPAL OBLIGATIONS

TYPES OF MUNICIPAL INSTRUMENTS:

18
<PAGE>

19
<PAGE>

20
<PAGE>

REPURCHASE AGREEMENTS

FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES

OTHER INVESTMENT COMPANIES

INVESTMENT LIMITATIONS

21
<PAGE>

tions relating to maturity, diversification and credit quality. These operat-
ing policies may be more restrictive than the fundamental policies set forth
in the Statement of Additional Information.

MANAGEMENT

THE ADVISER

22
<PAGE>

* As of December 31, 1996, the Premium Money Market Fund, Treasury Instruments
Fund, Federal Fund and Municipal Money Market Fund had not commenced opera-
tions.

THE DISTRIBUTOR AND TRANSFER AGENT

23
<PAGE>

TAXES

24
<PAGE>

NET ASSET VALUE

YIELD INFORMATION

25
<PAGE>

achieved on a fully taxable investment to produce the after-tax equivalent of
the Fund's yield, assuming certain tax brackets for a shareholder.

ORGANIZATION AND SHARES OF THE TRUST

26
<PAGE>

ADMINISTRATION

Each Fund has adopted an Administration Plan with respect to the FST Admin-
istration Shares which authorizes it to compensate certain institutions for
providing account administration services to their customers who are benefi-
cial owners of such Shares (each a "Service Organization"). Each Fund will en-
ter into agreements with Service Organizations which purchase FST Administra-
tion Shares on behalf of their customers ("Service Agreements"). The Service
Agreements will provide for compensation to the Service Organization in an
amount up to .25% (on an annualized basis) of the average daily net asset
value of the FST Administration Shares of that Fund attributable to or held in
the name of the Service Organization for its customers. The services provided
by a Service Organization may include acting, directly or through an agent, as
the sole shareholder of record, maintaining account records for its customers,
and processing orders to purchase, redeem and exchange FST Administration
Shares for its customers.

For the fiscal year ended December 31, 1996, the Trust, on behalf of the
Prime Obligations Fund, Money Market Fund, Treasury Obligations Fund, Govern-
ment Fund and Tax-Free Fund paid Service Organizations fees at the annual rate
of .25% of each Fund's average daily net assets attributable to FST Adminis-
tration Shares. As of December 31, 1996, the Premium Money Market Fund, Trea-
sury Instruments Fund, Federal Fund and Municipal Money Market Fund had not
commenced operations.

Holders of FST Administration Shares of a Fund will bear all expenses and
fees paid to Service Organizations with respect to such Shares as well as any
other expenses which are directly attributable to such Shares.

Service Organizations may charge other fees to their customers who are the
beneficial owners of FST Administration Shares in connection with their cus-
tomer accounts. These fees would be in addition to any amounts received by the
Service Organization under a Service Agreement and may affect an investor's
return with respect to an investment in a Fund.

27
<PAGE>

All inquiries of beneficial owners of FST Administration Shares of the Funds
should be directed to such owners' Service Organization.

PURCHASE OF SHARES

It is expected that all direct purchasers of FST Administration Shares will
be Service Organizations or their nominees, which may purchase FST Administra-
tion Shares of the Funds through Goldman Sachs. Customers of Service Organiza-
tions may invest in such shares only through their Service Organizations.

As set forth below, FST Administration Shares of the Funds may be purchased
on any Business Day at the net asset value next determined after receipt from
the Service Organization of both the purchase order and the purchase amount in
federal funds. Purchase orders may be made by telephoning Goldman Sachs at
800-621-2550 or by a written request addressed to Goldman Sachs, Attention:
Shareholder Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago, Illinois
60606. It is strongly recommended that payment be effected by wiring federal
funds to The Northern Trust Company ("Northern"), Chicago, Illinois, as the
sub-custodian for State Street Bank and Trust Company ("State Street").

Purchases of FST Administration Shares may also be made by a Service Organi-
zation by delivering a Federal Reserve draft or check (except that a third
party check will not be accepted) payable only to the appropriate Fund and
drawn on a U.S. bank to Goldman Sachs, Attention: Shareholder Services,
Goldman Sachs Trust, 4900 Sears Tower, Chicago, Illinois 60606. It is expected
that Federal Reserve drafts will ordinarily be converted to federal funds on
the day of receipt and that checks will be converted to federal funds within
two Business Days after receipt. FST Administration Shares purchased by check
may not be redeemed until the check has cleared, as described under "Redemp-
tion of Shares."

FST Administration Shares of each Fund are deemed to have been purchased
when an order becomes effective and are entitled to dividends on FST Adminis-
tration Shares purchased as follows:

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

<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
----------------------------------- ---------------
<C> <S> <C>
(1) Taxable and Tax-Advantaged Funds
(except Government, Treasury
Obligations and Premium
Money Market Funds)
By: 3:00 p.m.--N.Y. time Same Business Day
- ---------------------------------------------------------------
</TABLE>

28
<PAGE>

<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
----------------------------------- ---------------
<C> <S> <C>
After: 3:00 p.m.--N.Y. time Next Business Day
- ----------------------------------------------------------------------
(2) Government, Treasury Obligations and
Premium Money Market Funds
By: 5:00 p.m.--N.Y. time Same Business Day
- ----------------------------------------------------------------------
After: 5:00 p.m.--N.Y. time Next Business Day
- ----------------------------------------------------------------------
(3) Municipal Fund
By: 1:00 p.m.--N.Y. time Same Business Day
- ----------------------------------------------------------------------
After: 1:00 p.m.--N.Y. time Next Business Day
- ----------------------------------------------------------------------
(4) Tax-Free Money Market Fund
By: 2:00 p.m.--N.Y. time Same Business Day
- ----------------------------------------------------------------------
After: 2:00 p.m.--N.Y. time Next Business Day
- ----------------------------------------------------------------------
</TABLE>

The Service Organizations are responsible for timely transmittal of pur-
chase orders to Goldman Sachs and federal funds to Northern. In order to fa-
cilitate timely transmittal, the Service Organizations have established times
by which purchase orders and federal funds must be received by them.

A Business Day means any day on which the New York Stock Exchange is open,
except for days on which Chicago, Boston or New York banks are closed for lo-
cal holidays.

FST Administration Shares of a Fund are purchased at the net asset value per
share without the imposition of a sales charge. Goldman Sachs, as each Fund's
transfer agent, will maintain a complete record of transactions and FST Admin-
istration Shares held in each record holder's account. The Trust and Goldman
Sachs each reserves the right to reject any purchase order for any reason.

MINIMUM INVESTMENT AND OTHER INFORMATION

The minimum initial investment requirement is $10 million, which may be al-
located among the Funds. The Trust and Goldman Sachs each reserves the right
to waive the minimum investment requirement. A Service Organization may impose
a minimum amount for initial and subsequent investments in FST Administration
Shares of the Funds, and may establish other requirements such as a minimum
account balance. A Service Organization may effect redemptions of noncomplying
accounts, and may impose a charge for any special services rendered to its
customers. Customers should contact their Service Organizations for further
information concerning such requirements and charges. A Service Organization
may purchase FST Administration Shares in connection with sweep account pro-
grams.

SUBSEQUENT INVESTMENTS

There is no minimum amount required for subsequent investments. Orders for
the purchase of additional FST Administration Shares should be accompanied by
information identifying the account and the Fund in which FST Administration
Shares are to be purchased.

29
<PAGE>

REPORTS TO SHAREHOLDERS

The Trust will issue an annual report containing audited financial state-
ments and a semi-annual report to record holders of FST Administration Shares
of each Fund, including Service Organizations who hold such Shares for the
benefit of their customers. Upon request, a printed confirmation for each
transaction will be provided by Goldman Sachs. Any dividends and distributions
paid by the Funds are also reflected in regular statements issued by Goldman
Sachs to shareholders of record. Service Organizations will be responsible for
providing similar services to their own customers who are the beneficial own-
ers of such Shares.

DISTRIBUTIONS

All or substantially all of each Fund's net investment income will be de-
clared daily (as of 4:00 p.m. New York time for each Fund other than the Gov-
ernment, Treasury Obligations and Premium Money Market Funds and as of 5:00
p.m. New York time for the Government, Treasury Obligations and Premium Money
Market Funds) as a dividend and distributed to Service Organizations monthly.
Distributions will be made in additional FST Administration Shares of the same
Fund or, at the election of a Service Organization, in cash. The election to
reinvest dividends and distributions or receive them in cash may be changed by
a Service Organization at any time upon written notice to Goldman Sachs. If no
election is made, all dividends and capital gain distributions will be rein-
vested. Dividends will be reinvested as of the last calendar day of each
month. Cash distributions will be paid on or about the first business day of
each month. Net short-term capital gains, if any, will be distributed in ac-
cordance with the requirements of the Code and may be reflected in the Fund's
daily distributions. Each Fund may distribute at least annually its long-term
capital gains, if any, after reduction by available capital losses. In order
to avoid excessive fluctuations in the amount of monthly capital gains distri-
butions, a portion of any net capital gains realized on the disposition of se-
curities during the months of November and December may be distributed during
the subsequent calendar year. Although realized gains and losses on the assets
of a Fund are reflected in the net asset value of the Fund, they are not ex-
pected to be of an amount which would affect the Fund's net asset value of
$1.00 per share.

EXCHANGES

FST Administration Shares of each Fund may be exchanged by Service Organiza-
tions for shares of the corresponding class of any Fund or Portfolio of
Goldman Sachs Trust at the net asset value next determined either by writing
to Goldman Sachs, Attention: Shareholder Services, Goldman Sachs Trust, 4900
Sears Tower, Chicago, Illinois 60606 or, if previously elected in the Account
Information Form, by calling Goldman Sachs at 800-621-2550. All telephone ex-
changes must be registered in the same name(s) and with the same address as
are registered in the Fund from which the exchange is being made. It may be
difficult to implement the telephone exchange privilege in times of drastic
economic or market changes. In an effort to prevent unauthorized or fraudulent
exchange requests by telephone, Goldman Sachs employs reasonable procedures as
set forth under "Redemption of Shares" to confirm that such instructions are
genuine. Exchanges are available only in states where the exchange may legally
be made. The exchange privilege may be modified or withdrawn at any time on 60
days' written notice.

30
<PAGE>

REDEMPTION OF SHARES

HOW TO REDEEM

Customers of Service Organizations may redeem FST Administration Shares of a
Fund through their respective Service Organizations. The Service Organizations
are responsible for the transmittal of redemption requests by their customers
to Goldman Sachs. In order to facilitate timely transmittal of redemption re-
quests, Service Organizations have established procedures by which redemption
requests must be made and times by which redemption requests must be received
by them. Additional documentation may be required when deemed appropriate by a
Service Organization.

Additional documentation may be required by Goldman Sachs in order to estab-
lish that a redemption request has been properly authorized. A redemption re-
quest will not be considered to have been received in proper form until such
additional documentation has been submitted to Goldman Sachs by the Service
Organization. The payment of redemption proceeds for FST Administration Shares
recently purchased by check will be delayed for up to 15 days until the check
has cleared.

PAYMENT OF REDEMPTION PROCEEDS AND DIVIDENDS

In accordance with the following, redemption proceeds will be wired to the
record holder of FST Administration Shares.

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

<TABLE>
<CAPTION>
REDEMPTION REQUEST
RECEIVED FROM REDEMPTION
SERVICE ORGANIZATION PROCEEDS
BY GOLDMAN SACHS ORDINARILY DIVIDENDS
-------------------- ---------- ---------
<C> <S> <C>
(1) Taxable and Tax-Advantaged Funds (except Government,
Treasury Obligations and Premium Money Market Funds)
By:3:00 p.m.--N.Y. time Wired Same Business Day Not earned on Day
request is received
- -------------------------------------------------------------------------------
</TABLE>

31
<PAGE>

The Funds will arrange for the proceeds of redemptions effected by any means
to be wired as federal funds to the Service Organization's bank account desig-
nated in the Account Information Form. Redemption proceeds will normally be
wired as set forth above, but may be paid up to three Business Days after re-
ceipt of the Service Organization's properly executed redemption request. For
example, payment may be delayed if the Federal Reserve Bank is closed on the
day redemption proceeds would ordinarily be wired. After a wire has been ini-
tiated by Goldman Sachs, neither Goldman Sachs nor the Trust assumes any fur-
ther responsibility for the performance of intermediaries or the FST Adminis-
tration Shareholder's Service Organization in the transfer process. If a prob-
lem with such performance arises, the FST Administration Shareholder should
deal directly with such intermediaries or Service Organization.

OTHER REDEMPTION INFORMATION

A minimum account balance of $10 million is required to remain a FST
Administration Shareholder. The Trust and Goldman Sachs each reserves the
right to waive the minimum account balance. The Trust also reserves the right
to redeem shares of a shareholder account if the balance is less than the
minimum described above. The Trust will give sixty (60) days' prior written
notice to such Shareholders whose FST Administration Shares are to be redeemed
to allow them to purchase sufficient additional FST Administration Shares to
avoid such redemption.

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

32
<PAGE>

APPENDIX

GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON ACCOUNT INFORMATION FORM

Any tax withheld may be credited against taxes owed on your federal income
tax return.

Special rules apply for certain entities. For example, for an account estab-
lished under a Uniform Gifts or Transfers to Minors Act, the TIN of the minor
should be furnished.

For further information regarding backup and nonresident alien withholding,
see Sections 3406, 1441 and 1442 of the Internal Revenue Code and consult your
tax adviser.

A-1
<PAGE>

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

GOLDMAN SACHS MONEY MARKET FUNDS
FST ADMINISTRATION SHARES
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606

TOLL FREE: 800-621-2550

-----------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder and Fund Expenses.............................................. 2
Financial Highlights....................................................... 4
An Introduction to the Funds............................................... 12
Investment Policies Matrix................................................. 14
Description of Securities and Investment Techniques........................ 16
Investment Limitations..................................................... 21
Management................................................................. 22
Taxes...................................................................... 24
Net Asset Value............................................................ 25
Yield Information.......................................................... 25
Organization and Shares of the Trust....................................... 26
Administration............................................................. 27
Purchase of Shares......................................................... 28
Reports to Shareholders.................................................... 30
Distributions.............................................................. 30
Exchanges.................................................................. 30
Redemption of Shares....................................................... 31
Appendix................................................................... A-1
</TABLE>

FSPROADMM
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

GOLDMAN SACHS MONEY MARKET FUNDS

FINANCIAL SQUARE FUNDS

FST ADMINISTRATION SHARES

-----------

PROSPECTUS

-----------

MANAGED BY
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

GOLDMAN SACHS MONEY MARKET FUNDS
FINANCIAL SQUARE FUNDS
FST SERVICE SHARES
4900 Sears Tower
Chicago, Illinois 60606

Financial Square Treasury Obligations Fund. Securities issued or guaranteed
by the U.S. Treasury and repurchase agreements relating to such securities.

Financial Square Treasury Instruments Fund. Securities issued or guaranteed
by the U.S. Treasury, the interest income from which is generally exempt from
state income taxation.

Financial Square Government Fund. Securities of the U.S. Government, its
agencies, authorities, and instrumentalities, and repurchase agreements relat-
ing to such securities.

AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOV-
ERNMENT AND THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.

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ADDITIONAL INFORMATION............ Goldman Sachs Funds--Toll Free: 800-621-2550

This Prospectus provides you with information about the Funds that you should
know before investing in FST Service Shares. It should be read and retained
for future reference. If you would like more detailed information, the State-
ment of Additional Information dated September 5, 1997, as revised January 15,
1998, as amended, or supplemented from time to time, is available upon request
without charge from Service Organizations, as defined herein, or by calling
the telephone number listed above or by writing Goldman Sachs, Attention:
Shareholder Services, Goldman Sachs Trust, 4900 Sears Tower, Chicago, Illinois
60606. The Statement of Additional Information, which is incorporated by ref-
erence into this Prospectus, has been filed with the Securities and Exchange
Commission. Not all Funds are available in certain states. Please call the
phone number listed above to determine availability in your state. The SEC
maintains a Web site (http://www.sec.gov) that contains the Statement of Addi-
tional Information and other information regarding the Trust.

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FST SERVICE SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARAN-
TEED OR ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN A FUND INVOLVES INVEST-
MENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

The date of this Prospectus is September 5, 1997,
as revised January 15, 1998.
<PAGE>

SHAREHOLDER AND FUND EXPENSES
FST SERVICE SHARES

<TABLE>
<CAPTION>
FINANCIAL FINANCIAL FINANCIAL
FINANCIAL FINANCIAL SQUARE FINANCIAL FINANCIAL SQUARE SQUARE
SQUARE SQUARE PREMIUM SQUARE SQUARE FINANCIAL FINANCIAL TAX-FREE MUNICIPAL
PRIME MONEY MONEY TREASURY TREASURY SQUARE SQUARE MONEY MONEY
OBLIGATIONS MARKET MARKET OBLIGATIONS INSTRUMENTS GOVERNMENT FEDERAL MARKET MARKET
FUND FUND FUND FUND FUND FUND FUND FUND FUND
----------- --------- --------- ----------- ----------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on
Purchases........... None None None None None None None None None
Sales Charge Imposed
on Reinvested
Distributions....... None None None None None None None None None
Deferred Sales Load
Imposed
on Redemptions...... None None None None None None None None None
Exchange Fee......... None None None None None None None None None
ANNUAL OPERATING EXPENSES (1)
(as a percentage of average
daily net assets)
Management Fees
(after
limitations) (2) ... 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17% 0.17%
Other Expenses
Service Fees........ 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses
(after expense
limitations) (3)... 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% 0.01%
---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL OPERATING EXPENSES (4). 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>

EXAMPLE OF EXPENSES
You would pay the following expenses on a hypothetical $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Financial Square Prime Obligations Fund... $ 7 $22 $38 $85
Financial Square Money Market Fund........ $ 7 $22 $38 $85
Financial Square Premium Money Market
Fund..................................... $ 7 $22 N/A N/A
Financial Square Treasury Obligations
Fund..................................... $ 7 $22 $38 $85
Financial Square Treasury Instruments
Fund..................................... $ 7 $22 N/A N/A
Financial Square Government Fund.......... $ 7 $22 $38 $85
Financial Square Federal Fund............. $ 7 $22 N/A N/A
Financial Square Tax-Free Money Market
Fund..................................... $ 7 $22 $38 $85
Financial Square Municipal Money Market
Fund..................................... $ 7 $22 N/A N/A
</TABLE>

2
<PAGE>

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(1) Based on estimated amounts for the current fiscal year for the Financial
Square Premium Money Market, Financial Square Treasury Instruments, Finan-
cial Square Federal and Financial Square Municipal Money Market Funds.
(2) The Investment Adviser has voluntarily agreed not to impose 0.035% of its
management fee for each Fund. Without such limitation, management fees for
each Fund would be 0.205%.
(3) The Investment Adviser has voluntarily agreed to reduce or limit certain
other expenses (excluding management fees, fees payable to Service Organi-
zations, as defined herein, taxes, interest and brokerage and litigation,
indemnification and other extraordinary expenses) to the extent such ex-
penses exceed 0.01% of a Fund's average daily net assets.
(4) Without the limitations described above, "Other Expenses" and "Total Oper-
ating Expenses" of the Financial Square Prime Obligations, Financial
Square Money Market, Financial Square Treasury Obligations, Financial
Square Government and Financial Square Tax-Free Money Market Funds for the
semiannual period ended June 30, 1997, would have been as follows:
<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING
EXPENSES EXPENSES
-------- ---------
<S> <C> <C>
Financial Square Prime Obligations Fund................... .025% .73%
Financial Square Money Market Fund........................ .025% .73%
Financial Square Treasury Obligations Fund................ .035% .74%
Financial Square Government Fund.......................... .015% .72%
Financial Square Tax-Free Money Market Fund............... .015% .72%
</TABLE>

In addition, without the limitations described above, "Other Expenses" and
"Total Operating Expenses" of the Financial Square Premium Money Market, Fi-
nancial Square Treasury Instruments, Financial Square Federal and Financial
Square Municipal Money Market Funds for the current fiscal year are estimated
to be as follows:
<TABLE>
<CAPTION>
TOTAL
OTHER OPERATING
EXPENSES EXPENSES
-------- ---------
<S> <C> <C>
Financial Square Premium Money Market Fund................ .035% .74%
Financial Square Treasury Instruments Fund................ .155% .86%
Financial Square Federal Fund............................. .155% .86%
Financial Square Municipal Money Market Fund.............. .285% .99%
</TABLE>

The information set forth in the foregoing table and hypothetical example
relates only to FST Service Shares of the Funds. The Funds also offer FST
Shares, FST Preferred Shares and FST Administration Shares. The other classes
of the Funds are subject to different fees and expenses (which affect perfor-
mance) and are entitled to different services. Information regarding any other
class of the Funds may be obtained from your sales representative or from
Goldman Sachs by calling the number on the front cover of this Prospectus.

Service Organizations may charge other fees to their customers who are the
beneficial owners of FST Service Shares in connection with their customers'
accounts. See "Additional Services." Such fees, if any, may affect the return
such customers realize with respect to their investments.

3
<PAGE>

FINANCIAL HIGHLIGHTS

4
<PAGE>

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5
<PAGE>

6
<PAGE>

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7
<PAGE>

8
<PAGE>

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<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------------

WAIVER OF FEES AND NO
EXPENSE LIMITATIONS
---------------------

9
<PAGE>

10
<PAGE>

</TABLE>

11
<PAGE>

AN INTRODUCTION TO THE FUNDS

THE ADVISER: Goldman Sachs Asset Management, a separate operating division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as the Funds' investment ad-
viser (the "Adviser" or "GSAM").

THE DISTRIBUTOR: Goldman Sachs, which serves as the Funds' distributor and
transfer agent, is one of the largest international investment banking and
brokerage firms in the United States.

TAXABLE FUNDS: Prime Obligations, Money Market, Premium Money Market,
Treasury Obligations and Government Funds.

TAX ADVANTAGED FUNDS: Treasury Instruments and Federal Funds.

TAX-EXEMPT FUNDS: Tax-Free Money Market and Municipal Money Market Funds.

NET ASSET VALUE: Each Fund seeks to maintain a stable net asset value of
$1.00 per share.

MAXIMUM REMAINING MATURITY OF PORTFOLIO INVESTMENTS: Thirteen months at the
time of purchase.

12
<PAGE>

DOLLAR-WEIGHTED AVERAGE PORTFOLIO MATURITY ("WAM"): Not more than ninety
days as required by Rule 2a-7.

13
<PAGE>

14
<PAGE>

15
<PAGE>

DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES

U.S. TREASURY OBLIGATIONS

"U.S. Treasury Obligations" are securities issued or guaranteed by the U.S.
Treasury, payments of principal and interest on which are backed by the full
faith and credit of the U.S. Government.

U.S. GOVERNMENT SECURITIES

CUSTODIAL RECEIPTS

U.S. AND FOREIGN BANK OBLIGATIONS

16
<PAGE>

COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS

ASSET-BACKED AND RECEIVABLES-BACKED SECURITIES

17
<PAGE>

FOREIGN GOVERNMENT OBLIGATIONS

MUNICIPAL OBLIGATIONS

TYPES OF MUNICIPAL INSTRUMENTS:

18
<PAGE>

19
<PAGE>

20
<PAGE>

REPURCHASE AGREEMENTS

FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES

OTHER INVESTMENT COMPANIES

INVESTMENT LIMITATIONS

21
<PAGE>

tions relating to maturity, diversification and credit quality. These operat-
ing policies may be more restrictive than the fundamental policies set forth
in the Statement of Additional Information.

MANAGEMENT

THE ADVISER

22
<PAGE>

* As of December 31, 1996, the Premium Money Market Fund, Treasury Instruments
Fund, Federal Fund and Municipal Money Market Fund had not commenced opera-
tions.

THE DISTRIBUTOR AND TRANSFER AGENT

23
<PAGE>

TAXES

24
<PAGE>

NET ASSET VALUE

YIELD INFORMATION

25
<PAGE>

achieved on a fully taxable investment to produce the after-tax equivalent of
the Fund's yield, assuming certain tax brackets for a shareholder.

ORGANIZATION AND SHARES OF THE TRUST

26
<PAGE>

ADMINISTRATION

27
<PAGE>

All inquiries of beneficial owners of FST Administration Shares of the Funds
should be directed to such owners' Service Organization.

PURCHASE OF SHARES

FST Administration Shares of each Fund are deemed to have been purchased
when an order becomes effective and are entitled to dividends on FST Adminis-
tration Shares purchased as follows:

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<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
----------------------------------- ---------------
<C> <S> <C>
(1) Taxable and Tax-Advantaged Funds
(except Government, Treasury
Obligations and Premium
Money Market Funds)
By: 3:00 p.m.--N.Y. time Same Business Day
- ---------------------------------------------------------------
</TABLE>

28
<PAGE>

<TABLE>
<CAPTION>
IF ORDER IS RECEIVED FROM A SERVICE
ORGANIZATION BY GOLDMAN SACHS DIVIDENDS BEGIN
----------------------------------- ---------------
<C> <S> <C>
After: 3:00 p.m.--N.Y. time Next Business Day
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(2) Government, Treasury Obligations and
Premium Money Market Funds
By: 5:00 p.m.--N.Y. time Same Business Day
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After: 5:00 p.m.--N.Y. time Next Business Day
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(3) Municipal Fund
By: 1:00 p.m.--N.Y. time Same Business Day
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After: 1:00 p.m.--N.Y. time Next Business Day
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(4) Tax-Free Money Market Fund
By: 2:00 p.m.--N.Y. time Same Business Day
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After: 2:00 p.m.--N.Y. time Next Business Day
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</TABLE>

A Business Day means any day on which the New York Stock Exchange is open,
except for days on which Chicago, Boston or New York banks are closed for lo-
cal holidays.

MINIMUM INVESTMENT AND OTHER INFORMATION

The minimum initial investment requirement is $10 million, which may be al-
located among the Funds. The Trust and Goldman Sachs each reserves the right
to waive the minimum investment requirement. A Service Organization may impose
a minimum amount for initial and subsequent investments in FST Administration
Shares of the Funds, and may establish other requirements such as a minimum
account balance. A Service Organization may effect redemptions of noncomplying
accounts, and may impose a charge for any special services rendered to its
customers. Customers should contact their Service Organizations for further
information concerning such requirements and charges. A Service Organization
may purchase FST Administration Shares in connection with sweep account pro-
grams.

SUBSEQUENT INVESTMENTS

29
<PAGE>

REPORTS TO SHAREHOLDERS

DISTRIBUTIONS

All or substantially all of each Fund's net investment income will be de-
clared daily (as of 4:00 p.m. New York time for each Fund other than the Gov-
ernment, Treasury Obligations and Premium Money Market Funds and as of 5:00
p.m. New York time for the Government, Treasury Obligations and Premium Money
Market Funds) as a dividend and distributed to Service Organizations monthly.
Distributions will be made in additional FST Administration Shares of the same
Fund or, at the election of a Service Organization, in cash. The election to
reinvest dividends and distributions or receive them in cash may be changed by
a Service Organization at any time upon written notice to Goldman Sachs. If no
election is made, all dividends and capital gain distributions will be rein-
vested. Dividends will be reinvested as of the last calendar day of each
month. Cash distributions will be paid on or about the first business day of
each month. Net short-term capital gains, if any, will be distributed in ac-
cordance with the requirements of the Code and may be reflected in the Fund's
daily distributions. Each Fund may distribute at least annually its long-term
capital gains, if any, after reduction by available capital losses. In order
to avoid excessive fluctuations in the amount of monthly capital gains distri-
butions, a portion of any net capital gains realized on the disposition of se-
curities during the months of November and December may be distributed during
the subsequent calendar year. Although realized gains and losses on the assets
of a Fund are reflected in the net asset value of the Fund, they are not ex-
pected to be of an amount which would affect the Fund's net asset value of
$1.00 per share.

EXCHANGES

30
<PAGE>

REDEMPTION OF SHARES

HOW TO REDEEM

Additional documentation may be required by Goldman Sachs in order to estab-
lish that a redemption request has been properly authorized. A redemption re-
quest will not be considered to have been received in proper form until such
additional documentation has been submitted to Goldman Sachs by the Service
Organization. The payment of redemption proceeds for FST Administration Shares
recently purchased by check will be delayed for up to 15 days until the check
has cleared.

PAYMENT OF REDEMPTION PROCEEDS AND DIVIDENDS

In accordance with the following, redemption proceeds will be wired to the
record holder of FST Administration Shares.

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<TABLE>
<CAPTION>
REDEMPTION REQUEST
RECEIVED FROM REDEMPTION
SERVICE ORGANIZATION PROCEEDS
BY GOLDMAN SACHS ORDINARILY DIVIDENDS
-------------------- ---------- ---------
<C> <S> <C>
(1) Taxable and Tax-Advantaged Funds (except Government,
Treasury Obligations and Premium Money Market Funds)
By:3:00 p.m.--N.Y. time Wired Same Business Day Not earned on Day
request is received
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</TABLE>

31
<PAGE>

OTHER REDEMPTION INFORMATION

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32
<PAGE>

APPENDIX

GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON ACCOUNT INFORMATION FORM

Any tax withheld may be credited against taxes owed on your federal income
tax return.

Special rules apply for certain entities. For example, for an account estab-
lished under a Uniform Gifts or Transfers to Minors Act, the TIN of the minor
should be furnished.

For further information regarding backup and nonresident alien withholding,
see Sections 3406, 1441 and 1442 of the Internal Revenue Code and consult your
tax adviser.

A-1
<PAGE>

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GOLDMAN SACHS MONEY MARKET FUNDS
FST ADMINISTRATION SHARES
4900 SEARS TOWER
CHICAGO, ILLINOIS 60606

TOLL FREE: 800-621-2550

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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder and Fund Expenses.............................................. 2
Financial Highlights....................................................... 4
An Introduction to the Funds............................................... 12
Investment Policies Matrix................................................. 14
Description of Securities and Investment Techniques........................ 16
Investment Limitations..................................................... 21
Management................................................................. 22
Taxes...................................................................... 24
Net Asset Value............................................................ 25
Yield Information.......................................................... 25
Organization and Shares of the Trust....................................... 26
Administration............................................................. 27
Purchase of Shares......................................................... 28
Reports to Shareholders.................................................... 30
Distributions.............................................................. 30
Exchanges.................................................................. 30
Redemption of Shares....................................................... 31
Appendix................................................................... A-1
</TABLE>

GOLDMAN SACHS MONEY MARKET FUNDS

FINANCIAL SQUARE FUNDS

FST ADMINISTRATION SHARES

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PROSPECTUS

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MANAGED BY
GOLDMAN SACHS ASSET MANAGEMENT
A SEPARATE OPERATING DIVISION OF
GOLDMAN, SACHS & CO.

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