<PAGE>
As filed with the Securities and Exchange Commission on May 3, 2000
1933 Act Registration No. 33-17619
1940 Act Registration No. 811-5349
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
____________
Form N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 ( X )
Post-Effective Amendment No. 65( X )
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 ( X )
Amendment No. 67( X )
(Check appropriate box or boxes)
__________
GOLDMAN SACHS TRUST
(Exact name of registrant as specified in charter)
4900 Sears Tower
Chicago, Illinois 60606-6303
(Address of principal executive offices)
Registrant's Telephone Number,
including Area Code 312-655-4400
____________
Michael J. Richman, Esq. Copies to:
Goldman, Sachs & Co. Jeffrey A. Dalke, Esq.
32 Old Slip - 19th Floor Drinker Biddle & Reath LLP
New York, New York 10005 One Logan Square
18th and Cherry Streets
(Name and address of agent for service) Philadelphia, PA 19103
It is proposed that this filing will become effective (check appropriate box)
( ) Immediately upon filing pursuant to paragraph (b)
( ) On (date) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(1)
( ) On (date) pursuant to paragraph (a)(1)
(X) 75 days after filing pursuant to paragraph (a)(2)
( ) On (date) pursuant to paragraph (a)(2) of rule 485.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Preliminary Prospectus dated May 3, 2000
Subject to Completion
Prospectus
Institutional
Shares
July 17,
2000
GOLDMAN SACHS FIXED INCOME FUNDS
.Goldman
Sachs
Enhanced
Cash Fund
[ARTWORK TO BE INSERTED]
THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OF
THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE FUND IS
NOT A BANK DEPOSIT AND IS NOT
INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY. AN
INVESTMENT IN A FUND INVOLVES
INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
[LOGO OF GOLDMAN SACHS]
<PAGE>
NOT FDIC-INSURED May Lose Value No Bank Guarantee
<PAGE>
General Investment Management Approach
Goldman Sachs Asset Management ("GSAM"), a unit of the Investment Management
Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment
adviser to the Goldman Sachs Enhanced Cash Fund (the "Fund"). GSAM is
referred to in this Prospectus as the "Investment Adviser."
The Enhanced Cash Fund Is Not A Money Market Fund. Investors In This Fund
Should Understand That The Net Asset Value ("NAV") Of The Fund Will Fluctu-
ate Which May Result In A Loss Of A Portion Of The Principal Amount Invest-
ed.
Goldman Sachs' Fixed Income Investing Philosophy:
Active Management Within a Risk-Managed Framework
The Investment Adviser employs a disciplined, multi-step process to evaluate
potential investments:
1. Sector Allocation--The Investment Adviser assesses the relative value of
different investment sectors (such as U.S. government, U.S. and foreign cor-
porate and asset-backed securities) to create investment strategies that
meet the Fund's objective.
2. Security Selection--In selecting securities for the Fund, the Investment
Adviser draws on the extensive resources of Goldman Sachs, including fixed-
income research professionals.
3. Yield Curve Strategies--The Investment Adviser adjusts the term structure
of the Fund based on its expectations of changes in the shape of the yield
curve while closely controlling the overall duration of the Fund.
The Investment Adviser de-emphasizes interest rate predictions as a means of
generating incremental return. Instead, the Investment Adviser seeks to add
value through the selection of particular securities and investment sector
allocation as described above.
With every fixed-income portfolio, the Investment Adviser applies a team
approach that emphasizes risk management and capitalizes on Goldman Sachs'
extensive research capabilities.
- --------------------------------------------------------------------------------
A-1
<PAGE>
The Fund described in this Prospectus has a target duration. The Fund's
duration approximates its price sensitivity to changes in interest rates.
Maturity measures the time until final payment is due; it takes no account
of the pattern of a security's cash flows over time. In computing portfolio
duration, the Fund will estimate the duration of obligations that are sub-
ject to prepayment or redemption by the issuer, taking into account the
influence of interest rates on prepayments and coupon flows. This method of
computing duration is known as "option-adjusted" duration.
The Fund also has credit rating requirements for the securities it buys. The
Fund will deem a security to have met its minimum credit rating requirement
if the security has the required rating at the time of purchase from at
least one nationally recognized statistical rating organization ("NRSRO")
even though it has been rated below the minimum rating by one or more other
NRSROs. Unrated securities may be purchased by the Fund if determined by the
Investment Adviser to be of comparable quality. If a security satisfies the
Fund's minimum rating requirement at the time of purchase and is subse-
quently downgraded below such rating, the Fund will not be required to dis-
pose of such security. This is so even if the downgrade causes the average
credit quality of the Fund to be lower than that stated in the Prospectus.
Furthermore, during this period, the Investment Adviser will only buy secu-
rities at or above the Fund's average rating requirement. If a downgrade
occurs, the Investment Adviser will consider what action, including the sale
of such security, is in the best interests of the Fund and its shareholders.
A-2
<PAGE>
Fund Investment Objective and Strategies
Goldman Sachs Enhanced Cash Fund
FUND FACTS
- --------------------------------------------------------------------------------
Duration (under Target = 9 month U.S. Treasury Bill +/- 3 months
normal interest
rate conditions):
Expected Approxi- 9-month U.S. Treasury bill
mate Interest
Rate Sensitivity:
Credit Quality: Security Minimum = A
Portfolio Weighted Average = AA
Benchmarks: Six-Month and One-Year U.S. Treasury Security
INVESTMENT OBJECTIVE
The Fund seeks to generate return in excess of traditional money market
products while maintaining an emphasis on preservation of capital and
liquidity.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests, under normal circumstances, primarily in a portfolio of
fixed income securities, including non-mortgage U.S. Government Securities,
corporate notes and commercial paper and fixed and floating rate asset-
backed securities. The Fund will not invest in securities with remaining
maturities of more than 5 years (excluding Treasury Securities deliverable
into futures transactions). The Fund will invest across a broad range of
high-grade fixed income sectors with an emphasis on the preservation of cap-
ital and liquidity.
A-3
<PAGE>
Other Investment Practices and Securities
The table below identifies some of the investment techniques that may (but are
not required to) be used by the Fund in seeking to achieve its investment
objective. Numbers in this table show allowable usage only; for actual usage,
consult the Fund's annual and semi-annual reports. For more information see
Appendix A.
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage limitation on usage; limited only by the objectives
and strategies of the Fund
<TABLE>
<CAPTION>
Enhanced
Cash
Fund
- ---------------------------------------------------------
<S> <C>
Investment Practices
Borrowings 33 1/3
Credit and Interest Rate Swaps* .
Financial Futures Contracts .
Interest Rate Floors, Caps and Collars .
Options (including Options on Futures) .
Repurchase Agreements** .
Securities Lending 33 1/3
When-Issued Securities and Forward Committments .
- ---------------------------------------------------------
</TABLE>
* Limited to 15% of net assets (together with other illiquid securities) for
all structured securities which are not deemed to be liquid and all swap
transactions.
** The Fund may enter into repurchase agreements collateralized by securities
issued by foreign governments.
A-4
<PAGE>
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage limitation on usage; limited only by the objectives
and strategies of the Fund
<TABLE>
<CAPTION>
Enhanced
Cash
Fund
- ------------------------------------------------
<S> <C>
Investment Securities
Asset-Backed Securities .
Convertible Securities .
Corporate Debt Obligations .
Floating and Variable Rate Obligations .
Preferred Stock .
Foreign Securities*** .
Structured Securities* .
U.S. Government Securities .
- ------------------------------------------------
</TABLE>
***Non-Dollar securities not permitted.
A-5
<PAGE>
Principal Risks of the Fund
Loss of money is a risk of investing in the Fund. An investment in the Fund is
not a deposit of any bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency. The following
summarizes important risks that apply to the Fund and may result in a loss of
your investment. The Fund should not be relied upon as a complete investment
program. There can be no assurance that the Fund will achieve its investment
objective.
<TABLE>
<CAPTION>
.Applicable
- --Not Applicable
Enhanced
Cash
Fund
- ------------------------------------
<S> <C>
NAV .
Interest Rate .
Credit/Default .
Call .
Extension .
Derivatives .
U.S. Government Securities .
Market .
Management .
Liquidity .
Foreign .
- ------------------------------------
</TABLE>
A-6
<PAGE>
PRINCIPAL RISKS OF THE FUNDS
The Fund:
.NAV Risk--The risk that the NAV of the Fund and the value of your investment
will fluctuate.
.Interest Rate Risk--The risk that when interest rates increase, fixed-income
securities held by the Fund will decline in value. Long-term fixed-income
securities will normally have more price volatility because of this risk than
short-term securities.
.Credit/Default Risk--The risk that an issuer or guarantor of fixed-income
securities held by the Fund may default on its obligation to pay interest and
repay principal.
.Call Risk--The risk that an issuer will exercise its right to pay principal on
an obligation held by the Fund earlier than expected. This may happen when
there is a decline in interest rates. Under these circumstances, the Fund may
be unable to recoup all of its initial investment and will also suffer from
having to reinvest in lower yielding securities.
.Extension Risk--The risk that an issuer will exercise its right to pay
principal on an obligation held by the Fund later than expected. This may
happen when there is a rise in interest rates. Under these circumstances, the
value of the obligation will decrease, and the Fund will also suffer from the
inability to invest in higher yielding securities.
.Derivatives Risk--The risk that loss may result from the Fund's investments in
options, futures, swaps, structured securities and other derivative
investments. These instruments may be leveraged so that small changes may
produce disproportionate losses to the Fund.
.U.S. Government Securities Risk--The risk that the U.S. government will not
provide financial support to U.S. government agencies, instrumentalities or
sponsored enterprises if it is not obligated to do so by law.
.Market Risk--The risk that the value of the securities in which the Fund
invests may go up or down in response to the prospects of individual companies
and/or general economic conditions. Price changes may be temporary or last for
extended periods.
.Management Risk--The risk that a strategy used by the Investment Adviser may
fail to produce the intended results.
.Liquidity Risk--The risk that the Fund will not be able to pay redemption
proceeds within the time period stated in this Prospectus because of unusual
market conditions, an unusually high volume of redemption requests, or other
reasons. The Goldman Sachs Asset Allocation Portfolios (the "Asset Allocation
Portfolios") may invest a percentage of their assets in the Fund and other
funds for which Goldman Sachs now or in the future acts as investment adviser
or
A-7
<PAGE>
underwriter. Redemptions by an Asset Allocation Portfolio of its position in
the Fund may further increase liquidity risk and may impact the Fund's NAV.
.Foreign Risk--The Fund will be subject to risks of loss with respect to its
foreign investments that are not typically associated with domestic issuers.
Loss may result because of less foreign government regulation, less public
information and less economic, political and social stability. Loss may also
result from the imposition of exchange controls, confiscations and other gov-
ernment restrictions.
More information about the Fund's portfolio securities and investment tech-
niques, and their associated risks, is provided in Appendix A. You should con-
sider the investment risks discussed in this section and in Appendix A. Both
are important to your investment choice.
A-8
<PAGE>
Fund Performance
HOW THE FUND HAS PERFORMED
The Fund has not commenced operations as of the date of this Prospectus.
Therefore, no performance information is provided in this section.
3
<PAGE>
Fund Fees and Expenses (Institutional Shares)
This table describes the fees and expenses that you would pay if you buy and
hold Institutional Shares of the Fund.
<TABLE>
<CAPTION>
Enhanced
Cash
Fund
- ---------------------------------------------------------------------
<S> <C>
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fees None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/1/
Management Fees/2/ 0.25%
Distribution and Service Fees None
Other Expenses/3/ 0.20%
- ---------------------------------------------------------------------
Total Fund Operating Expenses* 0.45%
- ---------------------------------------------------------------------
</TABLE>
See page for all other footnotes.
* As a result of the current waivers and expense limi-
tations, "Other Expenses" and "Total Fund Operating
Expenses" of the Fund which are actually incurred are
as set forth below. The waivers and expense limita-
tions may be terminated at any time at the option of
the Investment Adviser. If this occurs, "Other
Expenses" and "Total Fund Operating Expenses" may
increase without shareholder approval.
<TABLE>
<CAPTION>
Enhanced
Cash
Fund
---------------------------------------------------------------------------
<S> <C>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/1/
Management Fees/2/ 0.20%
Distribution and Service Fees None
Other Expenses/3/ 0.05%
---------------------------------------------------------------------------
Total Fund Operating Expenses (after current waivers and expense
limitations) 0.25%
---------------------------------------------------------------------------
</TABLE>
4
<PAGE>
FUND FEES AND EXPENSES
/1/The operating expenses for the Fund are estimated for the current year.
/2/The Investment Adviser has voluntarily agreed not to impose a portion of
the management fee on the Fund equal to 0.05%, of such Fund's average daily
net assets. As a result of fee waivers, the current management fee of the
Fund is 0.20%, of such Fund's average daily net assets. The waivers may be
terminated at any time at the option of the Investment Adviser.
/3/Estimated "Other Expenses" include transfer agency fees equal to 0.04% of
the average daily net assets of the Fund's Institutional Shares, plus all
other ordinary expenses not detailed above. The Investment Adviser has vol-
untarily agreed to reduce or limit "Other Expenses" of the Fund (excluding
management fees, transfer agency fees, taxes, interest and brokerage fees
and litigation, indemnification and other extraordinary expenses) to the
following percentage of the Fund's average daily net assets:
<TABLE>
<CAPTION>
Other
Fund Expenses
------------------------
<S> <C>
Enhanced Cash 0.01%
</TABLE>
5
<PAGE>
Example
The following Example is intended to help you compare the cost of investing in
the Fund (without the waivers and expense limitations) with the cost of invest-
ing in other mutual funds. The Example assumes that you invest $10,000 in
Institutional Shares of the Fund for the time periods indicated and then redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years
- -----------------------------
<S> <C> <C>
Enhanced Cash $46 $144
- -----------------------------
</TABLE>
Institutions that invest in Institutional Shares on behalf of their customers
may charge other fees directly to their customer accounts in connection with
their investments. You should contact your institution for information regard-
ing such charges. Such fees, if any, may affect the return such customers real-
ize with respect to their investments.
Certain institutions that invest in Institutional Shares may receive other com-
pensation in connection with the sale and distribution of Institutional Shares
or for services to their customers' accounts and/or the Fund. For additional
information regarding such compensation, see "Shareholder Guide" in the Pro-
spectus and "Other Information" in the Statement of Additional Information
("Additional Statement").
6
<PAGE>
Service Providers
INVESTMENT ADVISER
<TABLE>
<CAPTION>
Investment Adviser Fund
-----------------------------------------------------
<S> <C>
Goldman Sachs Asset Management
("GSAM") Enhanced Cash
32 Old Slip
New York, New York 10005
-----------------------------------------------------
</TABLE>
As of September 1, 1999, the Investment Management Division ("IMD") was
established as a new operating division of Goldman Sachs. This newly created
entity includes GSAM. Goldman Sachs registered as an investment adviser in
1981. The Goldman Sachs Group, L.P., which controlled the Investment Advis-
er, merged into the Goldman Sachs Group, Inc. as a result of an initial pub-
lic offering. As of March 31, 2000, GSAM, along with other units of IMD, had
assets under management of $243.6 billion.
The Investment Adviser provides day-to-day advice regarding the Fund's port-
folio transactions. The Investment Adviser makes the investment decisions
for the Fund and places purchase and sale orders for the Fund's portfolio
transactions in U.S. and foreign markets. As permitted by applicable law,
these orders may be directed to any brokers, including Goldman Sachs and its
affiliates. While the Investment Adviser is ultimately responsible for the
management of the Fund, it is able to draw upon the research and expertise
of its asset management affiliates for portfolio decisions and management
with respect to certain portfolio securities. In addition, the Investment
Adviser has access to the research and certain proprietary technical models
developed by Goldman Sachs, and will apply quantitative and qualitative
analysis in determining the appropriate allocations among categories of
issuers and types of securities.
The Investment Adviser also performs the following additional services for
the Fund:
.Supervises all non-advisory operations of the Fund
.Provides personnel to perform necessary executive, administrative and
clerical services to the Fund
.Arranges for the preparation of all required tax returns, reports to
shareholders, prospectuses and statements of additional information and
other reports filed with the Securities and Exchange Commission (the "SEC")
and other regulatory authorities
.Maintains the records of the Fund
.Provides office space and all necessary office equipment and services
B-1
<PAGE>
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the
Investment Adviser is entitled to the following fee, computed daily and pay-
able monthly, at the annual rate listed below (as a percentage of the Fund's
average daily net assets):
<TABLE>
<CAPTION>
Contractual Rate
--------------------------------
<S> <C>
Enhanced Cash 0.25%
--------------------------------
</TABLE>
The Investment Adviser may voluntarily waive a portion of its advisory fee
from time to time, and may discontinue any voluntary waiver at any time at
its discretion.
FUND MANAGERS
Fixed Income Portfolio Management Team
.The fixed-income portfolio management team is comprised of a deep team of
sector specialists
.The team strives to maximize risk-adjusted returns by de-emphasizing
interest rate anticipation and focusing on security selection and sector
allocation
.The team manages approximately $50.5 billion in fixed-income assets for
retail, institutional and high net worth clients
U.S. Fixed Income-Investment Management Team
<TABLE>
<CAPTION>
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
- ----------------------------------------------------------------------------------
<C> <C> <C> <S>
Jonathan A. Senior Portfolio Since Mr. Beinner joined the
Beinner Manager-- 2000 Investment Adviser in 1990.
Managing Enhanced Cash He became a portfolio
Director and manager in 1992.
Co-Head U.S.
Fixed Income
- ----------------------------------------------------------------------------------
Peter A. Dion Portfolio Since Mr. Dion joined the
Vice President Manager-- 2000 Investment Adviser in 1992.
Enhanced Cash From 1994 to 1995 he was an
associate portfolio
manager. He became a
portfolio manager in 1995.
- ----------------------------------------------------------------------------------
C. Richard Lucy Senior Portfolio Since Mr. Lucy joined the
Managing Manager-- 2000 Investment Adviser in 1992
Director and Enhanced Cash as a portfolio manager.
Co-Head U.S.
Fixed Income
- ----------------------------------------------------------------------------------
James P. Portfolio Since Mr. McCarthy joined the
McCarthy Manager-- 2000 Investment Adviser in 1995
Vice President Enhanced Cash as a portfolio manager
after working four years at
Nomura Securities, where he
was an assistant vice
president and an adjustable
rate mortgage trader.
- ----------------------------------------------------------------------------------
</TABLE>
B-2
<PAGE>
SERVICE PROVIDERS
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the
exclusive distributor (the "Distributor") of the Fund's shares. Goldman
Sachs, 4900 Sears Tower, Chicago, Illinois 60606-6372, also serves as the
Fund's transfer agent (the "Transfer Agent") and, as such, performs various
shareholder servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and
hold shares of the Fund. Goldman Sachs reserves the right to redeem at any
time some or all of the shares acquired for its own account.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS
The involvement of the Investment Adviser, Goldman Sachs and their affili-
ates in the management of, or their interest in, other accounts and other
activities of Goldman Sachs may present conflicts of interest with respect
to the Fund or limit the Fund's investment activities. Goldman Sachs and its
affiliates engage in proprietary trading and advise accounts and funds which
have investment objectives similar to those of the Fund and/or which engage
in and compete for transactions in the same types of securities, currencies
and instruments as the Fund. Goldman Sachs and its affiliates will not have
any obligation to make available any information regarding their proprietary
activities or strategies, or the activities or strategies used for other
accounts managed by them, for the benefit of the management of the Fund. The
results of the Fund's investment activities, therefore, may differ from
those of Goldman Sachs and its affiliates, and it is possible that the Fund
could sustain losses during periods in which Goldman Sachs and its affili-
ates and other accounts achieve significant profits on their trading for
proprietary or other accounts. In addition, the Fund may, from time to time,
enter into transactions in which other clients of Goldman Sachs have an
adverse interest. The Fund's activities may be limited because of regulatory
restrictions applicable to Goldman Sachs and its affiliates, and/or their
internal policies designed to comply with such restrictions.
YEAR 2000
Goldman Sachs spent a total of approximately $185 million over the past sev-
eral years to address the potential hardware, software and other computer
and technology issues and related concerns associated with the transition to
Year 2000 and to confirm that its service providers did the same. As a
result of those efforts, Goldman Sachs has not experienced any material dis-
ruptions in its operations in connection with, or following, the transition
to the Year 2000.
B-3
<PAGE>
Dividends
The Fund pays dividends from net investment income and net capital gains. You
may choose to have dividends paid in:
.Cash
.Additional shares of the same class of the same Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund.
Special restrictions may apply for certain ILA Portfolios. See the Additional
Statement.
You may indicate your election on your Account Application. Any changes may be
submitted in writing to Goldman Sachs at any time before the record date for a
particular dividend. If you do not indicate any choice, your dividends will be
reinvested automatically in the Fund. If cash dividends are elected with
respect to the Fund's monthly net investment income dividends, then cash divi-
dends must also be elected with respect to the non-long-term capital gains com-
ponent, if any, of the Fund's annual dividend.
The election to reinvest dividends in additional shares will not affect the tax
treatment of such dividends, which will be treated as received by you and then
used to purchase the shares.
Dividends from net investment income and net capital gains are declared and
paid as follows:
<TABLE>
<CAPTION>
Investment Income Capital Gains
Dividends Distributions
------------------------------------
Fund Declared Paid Declared and Paid
- ---------------------------------------------------
<S> <C> <C> <C>
Enhanced Cash Daily Monthly Annually
</TABLE>
From time to time a portion of the Fund's dividends may constitute a return of
capital.
At the time of an investor's purchase of shares of the Fund, a portion of the
NAV per share may be represented by undistributed income or undistributed real-
ized appreciation of the Fund's portfolio securities. Therefore, subsequent
distributions on such shares from such income or realized appreciation may be
taxable to you even if the NAV of the shares is, as a result of the distribu-
tions, reduced below the cost of such shares and the distributions (or portions
thereof) represent a return of a portion of the purchase price.
B-4
<PAGE>
Shareholder Guide
The following section will provide you with answers to some of the most
often asked questions regarding buying and selling the Fund's Institutional
Shares.
HOW TO BUY SHARES
How Can I Purchase Institutional Shares Of The Fund?
You may purchase Institutional Shares on any business day at their NAV next
determined after receipt of an order. No sales load is charged. You should
place an order with Goldman Sachs at 1-800-621-2550 and either:
.Wire federal funds to The Northern Trust Company ("Northern"), as
subcustodian for State Street Bank and Trust Company ("State Street") (the
Fund's custodian) on the next business day; or
.Send a check or Federal Reserve draft payable to Goldman Sachs Funds--(Name
of Fund and Class of Shares), 4900 Sears Tower--60th Floor, Chicago, IL
60606-6372. The Fund will not accept a check drawn on a foreign bank or a
third-party check.
In order to make an initial investment in the Fund, you must furnish to the
Fund or Goldman Sachs the Account Application attached to this Prospectus.
Purchases of Institutional Shares must be settled within three business days
of receipt of a complete purchase order.
In certain instances, the Trust may require a signature guarantee in order
to effect purchase, redemption or exchange transactions. Signature guaran-
tees must be obtained from a bank, brokerage firm or other financial inter-
mediary that is a member of an approved Medallion Guarantee Program or that
is otherwise approved by the Trust. A notary public cannot provide a signa-
ture guarantee.
How Do I Purchase Shares Through A Financial Institution?
Certain institutions (including banks, trust companies, brokers and invest-
ment advisers) that provide recordkeeping, reporting and processing services
to their customers may be authorized to accept, on behalf of Goldman Sachs
Trust (the "Trust"), purchase, redemption and exchange orders placed by or
on behalf of their customers and may designate other intermediaries to
accept such orders, if approved by the Trust. In these cases:
.The Fund will be deemed to have received an order in proper form when the
order is accepted by the authorized institution or intermediary on a busi-
ness day, and the order will be priced at the Fund's NAV next determined
after such acceptance.
C-1
<PAGE>
.Authorized institutions or intermediaries will be responsible for transmit-
ting accepted orders and payments to the Trust within the time period
agreed upon by them.
You should contact your institution or intermediary directly to learn
whether it is authorized to accept orders for the Trust.
These institutions may receive payments from the Fund or Goldman Sachs for
the services provided by them with respect to the Fund's Institutional
Shares. These payments may be in addition to other payments borne by the
Fund.
The Investment Adviser, Distributor and/or their affiliates may pay addi-
tional compensation from time to time, out of their assets and not as an
additional charge to the Fund, to certain institutions and other persons in
connection with the sale, distribution and/or servicing of shares of the
Fund and other Goldman Sachs Funds. Additional compensation based on sales
may, but is currently not expected to, exceed 0.50% (annualized) of the
amount invested.
In addition to Institutional Shares, the Fund also offers another class of
shares to investors. The other share class is subject to different fees and
expenses (which affect performance), has different minimum investment
requirements and is entitled to different services than Institutional
Shares. Information regarding the other share class may be obtained from
your sales representative or from Goldman Sachs by calling the number on the
back cover of this Prospectus.
C-2
<PAGE>
SHAREHOLDER GUIDE
What is My Minimum Investment in the Fund?
<TABLE>
<CAPTION>
Type of Investor Minimum Investment
-----------------------------------------------------------
<S> <C>
.Individual investors $10,000,000
.Qualified non-profit
organizations, charitable
trusts, foundations and
endowments
.Accounts over which
GSAM or its advisory
affiliates have investment
discretion
-----------------------------------------------------------
.Banks, trust companies $1,000,000 in
or other depository institutions Institutional Shares
investing for their own account of the Fund alone or
or on behalf of their clients in combination with
.Pension and profit sharing other assets under
plans, pension funds and other the management of
company-sponsored benefit plans GSAM and its affiliates
.State, county, city or any
instrumentality, department,
authority or agency thereof
.Corporations with at least
$100 million in assets or in
outstanding publicly traded
securities
."Wrap" account sponsors
(provided they have an agreement
covering the arrangement with
GSAM)
.Registered investment advisers
investing for accounts for which
they receive asset-based fees
-----------------------------------------------------------
</TABLE>
The minimum investment requirement may be waived for current and former
officers, partners, directors or employees of Goldman Sachs or any of its
affiliates or for other investors at the discretion of the Trust's officers.
No minimum amount is required for subsequent investments.
C-3
<PAGE>
What Else Should I Know About Share Purchases?
The Trust reserves the right to:
.Modify or waive the minimum investment amounts.
.Reject or restrict any purchase or exchange orders by a particular pur-
chaser (or group of related purchasers). This may occur, for example, when
a pattern of frequent purchases, sales or exchanges of Institutional Shares
of the Fund is evident, or if purchases, sales or exchanges are, or a sub-
sequent abrupt redemption might be, of a size that would disrupt management
of the Fund.
.Close the Fund to new investors from time to time and reopen any such Fund
whenever it is deemed appropriate by the Fund's Investment Adviser.
The Fund may allow you to purchase shares with securities instead of cash if
consistent with the Fund's investment policies and operations and if
approved by the Fund's Investment Adviser.
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange Institutional
Shares is determined by the Fund's NAV. The Fund calculates NAV as follows:
(Value of Assets of the Class)
- (Liabilities of the Class)
NAV = _______________________________
Number of Outstanding Shares of the Class
The Fund's investments are valued based on market quotations, which may be
furnished by a pricing service or provided by securities dealers. If accu-
rate quotations are not readily available, the fair value of the Fund's
investments may be determined based on yield equivalents, a pricing matrix
or other sources, under valuation procedures established by the Trustees.
Debt obligations with a remaining maturity of 60 days or less are valued at
amortized cost.
.NAV per share of each class is calculated by State Street on each business
day as of the close of regular trading on the New York Stock Exchange (nor-
mally 4:00 p.m. New York time). This occurs after the determination, if
any, of income declared as a dividend. Fund shares will not be priced on
any day the New York Stock Exchange is closed.
.When you buy shares, you pay the NAV next calculated after the Fund
receives your order in proper form.
.When you sell shares, you receive the NAV next calculated after the Fund
receives your order in proper form.
Note: The time at which transactions and shares are priced and the time by
which orders must be received may be changed in case of an emergency or if
regular trading on the New York Stock Exchange is stopped at a time other
than 4:00 p.m. New York time.
C-4
<PAGE>
SHAREHOLDER GUIDE
Foreign securities may trade in their local markets on days the Fund is
closed. As a result, if the Fund holds foreign securities, its NAV may be
impacted on days when investors may not purchase or redeem Fund shares.
In addition, the impact of events that occur after the publication of market
quotations used by the Fund to price its securities (for example, in foreign
markets), but before the close of regular trading on the New York Stock
Exchange will normally not be reflected in the Fund's next determined NAV
unless the Trust, in its discretion, makes an adjustment in light of the
nature and materiality of the event, its effect on Fund operations and other
relevant factors.
When Will Shares Be Issued And Dividends Begin To Be Paid?
.Shares Purchased by Federal Funds Wire:
.If a purchase order in proper form specifies a settlement date and is
received before the Fund's NAV is determined that day, shares will be
issued and dividends will begin to accrue on the purchased shares on the
later of (i) the business day after the purchase order is received; or
(ii) the day that the federal funds wire is received by State Street.
.If a purchase order in proper form does not specify a settlement date,
shares will be issued and dividends will begin to accrue on the business
day after payment is received.
.Shares Purchased By Check or Federal Reserve Draft:
.If a purchase order in proper form specifies a settlement date and is
received before the Fund's NAV is determined that day, shares will be
issued and dividends will begin to accrue on the business day after pay-
ment is received.
.If a purchase order in proper form does not specify a settlement date,
shares will be issued and dividends will begin to accrue on the business
day after payment is received.
HOW TO SELL SHARES
How Can I Sell Institutional Shares Of The Fund?
You may arrange to take money out of your account by selling (redeeming)
some or all of your shares. Generally, the Fund will redeem its Institu-
tional Shares upon request on any business day at their NAV next determined
after receipt of such request in proper form. You may request that redemp-
tion proceeds be
C-5
<PAGE>
sent to you by check or by wire (if the wire instructions are on record).
Redemptions may be requested in writing or by telephone.
<TABLE>
<CAPTION>
Instructions For Redemptions:
-------------------------------------------------------------------
<S> <C> <C>
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund name and Class of Shares
.The dollar amount you want to sell
.How and where to send the proceeds
.Mail the request to:
Goldman Sachs Funds
4900 Sears Tower - 60th Floor
Chicago, IL 60606-6372
-------------------------------------------------------------------
By Telephone: If you have elected the telephone redemption
privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
-------------------------------------------------------------------
</TABLE>
Certain institutions and intermediaries are authorized to accept redemption
requests on behalf of the Fund as described under "How Do I Purchase Shares
Through A Financial Institution?"
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor and the Transfer Agent will not be liable for any
loss you may incur in the event that the Trust accepts unauthorized tele-
phone redemption requests that the Trust reasonably believes to be genuine.
In an effort to prevent unauthorized or fraudulent redemption and exchange
requests by telephone, Goldman Sachs employs reasonable procedures specified
by the Trust to confirm that such instructions are genuine. If reasonable
procedures are not employed, the Trust may be liable for any loss due to
unauthorized or fraudulent transactions. The following general policies are
currently in effect:
.All telephone requests are recorded.
.Any redemption request that requires money to go to an account or address
other than that designated on the Account Application must be in writing
and signed by an authorized person designated on the Account Application.
The written request may be confirmed by telephone with both the requesting
party and the designated bank account to verify instructions.
.The telephone redemption option may be modified or terminated at any time.
Note: It may be difficult to make telephone redemptions in times of drastic
economic or market conditions.
C-6
<PAGE>
SHAREHOLDER GUIDE
How Are Redemption Proceeds Paid?
By Wire: You may arrange for your redemption proceeds to be wired as federal
funds to the bank account designated in your Account Application. The fol-
lowing general policies govern wiring redemption proceeds:
.Redemption proceeds will normally be wired on the next business day in fed-
eral funds (for a total of one business day delay), but may be paid up to
three business days following receipt of a properly executed wire transfer
redemption request. If you are selling shares you recently paid for by
check, the Fund will pay you when your check has cleared, which may take up
to 15 days. If the Federal Reserve Bank is closed on the day that the
redemption proceeds would ordinarily be wired, wiring the redemption pro-
ceeds may be delayed one additional business day.
.To change the bank designated on your Account Application, you must send
written instructions signed by an authorized person designated on the
Account Application to the Transfer Agent.
.Neither the Trust, Goldman Sachs nor any other institution assumes any
responsibility for the performance of your bank or any intermediaries in
the transfer process. If a problem with such performance arises, you should
deal directly with your bank or any such intermediaries.
By Check: You may elect in writing to receive your redemption proceeds by
check. Redemption proceeds paid by check will normally be mailed to the
address of record within three business days of a properly executed redemp-
tion request. If you are selling shares you recently paid for by check, the
Fund will pay you when your check has cleared, which may take up to 15 days.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
.Institutional Shares of the Fund earn dividends declared on the day the
shares are redeemed.
.Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
.Institutions (including banks, trust companies, brokers and investment
advisers) are responsible for the timely transmittal of redemption requests
by their customers to the Transfer Agent. In order to facilitate the timely
transmittal of redemption requests, these institutions may set times by
which they must receive redemption requests. These institutions may also
require additional documentation from you.
C-7
<PAGE>
The Trust reserves the right to:
.Redeem your shares if your account balance falls below $50 as a result of a
redemption. The Fund will not redeem your shares on this basis if the value
of your account falls below the minimum account balance solely as a result
of market conditions. The Fund will give you 60 days' prior written notice
to allow you to purchase sufficient additional shares of the Fund in order
to avoid such redemption.
.Redeem your shares in other circumstances determined by the Board of Trust-
ees to be in the best interest of the Trust.
.Pay redemptions by a distribution in-kind of securities (instead of cash).
If you receive redemption proceeds in-kind, you should expect to incur
transaction costs upon the disposition of those securities.
.Reinvest any dividends or other distributions which you have elected to
receive in cash should your check for such dividends or other distributions
be returned to the Fund as undeliverable or remain uncashed for six months.
In addition, that distribution and all future distributions payable to you
will be reinvested at NAV in additional Fund shares. No interest will
accrue on amounts represented by uncashed distributions or redemption
checks.
Can I Exchange My Investment From One Fund To Another?
You may exchange Institutional Shares of the Fund at NAV for Institutional
Shares of any other Goldman Sachs Fund. The exchange privilege may be mate-
rially modified or withdrawn at any time upon 60 days' written notice to
you.
<TABLE>
<CAPTION>
Instructions For
Exchanging
Shares:
-----------------------------------------------------------------
<S> <C>
By Writing: .Write a letter of instruction that includes:
.Your name(s) and signature(s)
.Your account number
.The Fund names and Class of Shares
.The dollar amount to be exchanged
.Mail the request to:
Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
-----------------------------------------------------------------
By Telephone: If you have elected the telephone exchange
privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
-----------------------------------------------------------------
</TABLE>
You should keep in mind the following factors when making or considering an
exchange:
.You should obtain and carefully read the prospectus of the Fund you are
acquiring before making an exchange.
C-8
<PAGE>
SHAREHOLDER GUIDE
.All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirements of that Fund, except that this
requirement may be waived at the discretion of the Trust.
.Telephone exchanges normally will be made only to an identically registered
account.
.Shares may be exchanged among accounts with different names, addresses and
social security or other taxpayer identification numbers only if the
exchange instructions are in writing and are signed by an authorized person
designated on the Account Application.
.Exchanges are available only in states where exchanges may be legally made.
.It may be difficult to make telephone exchanges in times of drastic eco-
nomic or market conditions.
.Goldman Sachs may use reasonable procedures described under "What Do I Need
To Know About Telephone Redemption Requests?" in an effort to prevent unau-
thorized or fraudulent telephone exchange requests.
For federal income tax purposes, an exchange is treated as a redemption of
the shares surrendered in the exchange, on which you may be subject to tax,
followed by a purchase of shares received in the exchange. You should con-
sult your tax adviser concerning the tax consequences of an exchange.
What Types of Reports Will I Be Sent Regarding Investments in Institutional
Shares?
You will receive an annual report containing audited financial statements
and a semi-annual report. To eliminate unnecessary duplication, only one
copy of such reports will be sent to shareholders with the same mailing
address. If you would like a duplicate copy to be mailed to you, please con-
tact Goldman Sachs Funds at 1-800-621-2550. You will also be provided with a
printed confirmation for each transaction in your account and a monthly
account statement. The Fund does not generally provide sub-accounting serv-
ices.
C-9
<PAGE>
Taxation
TAXABILITY OF DISTRIBUTIONS
As with any investment, you should consider how your investment in the Fund
will be taxed. The tax information below is provided as general information.
More tax information is available in the Additional Statement. You should
consult your tax adviser about the federal, state, local or foreign tax con-
sequences of your investment in the Fund.
Unless your investment is an IRA or other tax-advantaged account, you should
consider the possible tax consequences of Fund distributions and the sale of
your Fund shares.
TAXES ON DISTRIBUTIONS
Distributions you receive from the Fund are generally subject to federal
income tax, and may also be subject to state or local taxes. This is true
whether you reinvest your distributions in additional Fund shares or receive
them in cash. For federal tax purposes, the Fund's income dividend distribu-
tions and short-term capital gain distributions are taxable to you as ordi-
nary income. Any long-term capital gain distributions are taxable as long-
term capital gains, no matter how long you have owned your Fund shares.
Although distributions are generally treated as taxable to you in the year
they are paid, distributions declared in October, November or December but
paid in January are taxable as if they were paid in December. The Fund will
inform shareholders of the character and tax status of all distributions
promptly after the close of each calendar year.
The Fund may be subject to foreign withholding or other foreign taxes on
income or gain from certain foreign securities. In general, the Fund may
deduct these taxes in computing its taxable income.
If you buy shares of the Fund before it makes a distribution, the distribu-
tion will be taxable to you even though it may actually be a return of a
portion of your investment. This is known as "buying a dividend."
D-1
<PAGE>
TAXABILITY OF SALES AND EXCHANGES
Your sale of Fund shares is a taxable transaction for federal income tax
purposes, and may also be subject to state and local taxes. For tax purpos-
es, the exchange of your Fund shares for shares of a different Goldman Sachs
Fund is the same as a sale. When you sell your shares, you will generally
recognize a capital gain or loss in an amount equal to the difference
between your adjusted tax basis in the shares and the amount received. Gen-
erally, this gain or loss is long-term or short-term depending on whether
your holding period exceeds twelve months, except that any loss realized on
shares held for six months or less will be treated as a long-term capital
loss to the extent of any long-term capital gain dividends that were
received on the shares.
OTHER INFORMATION
When you open your account, you should provide your social security or tax
identification number on your Account Application. By law, the Fund must
withhold 31% of your taxable distributions and any redemption proceeds if
you do not provide your correct taxpayer identification number, or certify
that it is correct, or if the IRS instructs the Fund to do so. Non-U.S.
investors may be subject to U.S. withholding and estate tax.
D-2
<PAGE>
Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks
The Fund will be subject to the risks associated with fixed-income securi-
ties. These risks include interest rate risk, credit risk and call/extension
risk. In general, interest rate risk involves the risk that when interest
rates decline, the market value of fixed-income securities tends to increase
(although some asset-backed securities will have less potential than other
debt securities for capital appreciation during periods of declining rates).
Conversely, when interest rates increase, the market value of fixed-income
securities tends to decline. Credit risk involves the risk that the issuer
could default on its obligations, and a Fund will not recover its invest-
ment. Call risk and extension risk are normally present in asset-backed
securities. For example, car owners have the option to prepay their car
loans. Therefore, the duration of a security backed by auto loans can either
shorten (call risk) or lengthen (extension risk). In general, if interest
rates on new auto loans fall sufficiently below the interest rates on exist-
ing outstanding auto loans, the rate of prepayment would be expected to
increase. Conversely, if auto loan interest rates rise above the interest
rates on existing outstanding auto loans, the rate of prepayment would be
expected to decrease. In either case, a change in the prepayment rate can
result in losses to investors.
The Investment Adviser will not consider the portfolio turnover rate a lim-
iting factor in making investment decisions for the Fund. A high rate of
portfolio turnover (100% or more) involves correspondingly greater expenses
which must be borne by the Fund and its shareholders, and is also likely to
result in higher short-term capital gains taxable to shareholders. The port-
folio turnover rate is calculated by dividing the lesser of the dollar
amount of sales or purchases of portfolio securities by the average monthly
value of the Fund's portfolio securities, excluding securities having a
maturity at the date of purchase of one year or less.
The following sections provide further information on certain types of secu-
rities and investment techniques that may be used by the Fund, including its
associated risks. Additional information is provided in the Additional
Statement, which is available upon request. Among other things, the Addi-
tional Statement describes certain fundamental investment restrictions that
cannot be changed without shareholder approval. You should note, however,
that the investment objective and all investment policies not specifically
designated as fundamental are non-fundamen-
D-3
<PAGE>
tal and may be changed without shareholder approval. If there is a change in
the Fund's investment objective, you should consider whether the Fund
remains an appropriate investment in light of your then current financial
positions and needs.
B. Other Portfolio Risks
Credit Risks. Debt securities purchased by the Fund may include securities
(including zero coupon bonds) issued by the U.S. government (and its agen-
cies, instrumentalities and sponsored enterprises), foreign governments,
domestic and foreign corporations, banks and other issuers. Some of these
fixed-income securities are described in the next section below. Further
information is provided in the Additional Statement.
Debt securities rated A or higher by Standard & Poor's or Moody's are con-
sidered "high grade." A security will be deemed to have met a rating
requirement if it receives the minimum required rating from at least one
such rating organization even though it has been rated below the minimum
rating by one or more other rating organizations, or if unrated by such rat-
ing organizations, is determined by the Investment Adviser to be of compara-
ble credit quality.
Risks of Derivative Investments. The Fund's transactions in options,
futures, options on futures, swaps, interest rate caps, floors and collars
and structured securities involve additional risk of loss. Loss can result
from a lack of correlation between changes in the value of derivative
instruments and the portfolio assets (if any) being hedged, the potential
illiquidity of the markets for derivative instruments, or the risks arising
from margin requirements and related leverage factors associated with such
transactions. The use of these management techniques also involves the risk
of loss if the Investment Adviser is incorrect in its expectation of fluctu-
ations in securities prices or interest rates. The Fund may also invest in
derivative investments for non-hedging purposes (that is, to seek to
increase total return), which is considered a speculative practice and pre-
sents even greater risk of loss.
Some floating-rate derivative debt securities can present more complex types
of derivative and interest rate risks. For example, range floaters are sub-
ject to the risk that the coupon will be reduced below market rates if a
designated interest rate floats outside of a specified interest rate band or
collar. Dual index or yield curve floaters are subject to lower prices in
the event of an unfavorable change in the spread between two designated
interest rates.
Risks of Foreign Investments. The Fund may invest in foreign investments.
Foreign investments involve special risks that are not typically associated
with domes-
D-4
<PAGE>
APPENDIX A
tic investments. Foreign investments may be affected by changes in foreign
or U.S. laws or restrictions applicable to such investments.
Brokerage commissions, custodial services and other costs relating to
investment in international securities markets generally are more expensive
than in the United States. In addition, clearance and settlement procedures
may be different in foreign countries and, in certain markets, such proce-
dures have been unable to keep pace with the volume of securities transac-
tions, thus making it difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards comparable to those applicable to U.S.
issuers. There may be less publicly available information about a foreign
issuer than a U.S. issuer. In addition, there is generally less government
regulation of foreign markets, companies and securities dealers than in the
United States. Foreign securities markets may have substantially less volume
than U.S. securities markets and securities of many foreign issuers are less
liquid and more volatile than securities of comparable domestic issuers.
Furthermore, with respect to certain foreign countries, there is a possibil-
ity of nationalization, expropriation or confiscatory taxation, imposition
of withholding or other taxes on dividend or interest payments (or, in some
cases, capital gains), limitations on the removal of funds or other assets
of the Fund, and political or social instability or diplomatic developments
which could affect investments in those countries.
Concentration of the Fund's assets in one or a few countries will subject
the Fund to greater risks than if the Fund's assets were not geographically
concentrated.
Investment in sovereign debt obligations by the Fund, involves risks not
present in debt obligations of corporate issuers. The issuer of the debt or
the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due in accordance
with the terms of such debt, and the Fund may have limited recourse to com-
pel payment in the event of a default. Periods of economic uncertainty may
result in the volatility of market prices of sovereign debt, and in turn a
Fund's NAV, to a greater extent than the volatility inherent in debt obliga-
tions of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign currency reserves, the avail-
ability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the sov-
ereign debtor's policy toward international lenders, and the political
constraints to which a sovereign debtor may be subject.
D-5
<PAGE>
Risks of Illiquid Securities. The Fund may invest up to 15% of its net
assets in illiquid securities which cannot be disposed of in seven days in
the ordinary course of business at fair value. Illiquid securities include:
.Both domestic and foreign securities that are not readily marketable
.Repurchase agreements and time deposits with a notice or demand period of
more than seven days
.Certain over-the-counter options
.Certain structured securities and all swap transactions
.Certain restricted securities, unless it is determined, based upon a review
of the trading markets for a specific restricted security, that such
restricted security is eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 ("144A Securities") and, therefore, is liquid.
Investing in 144A Securities may decrease the liquidity of the Fund's port-
folio to the extent that qualified institutional buyers become for a time
uninterested in purchasing these restricted securities. The purchase price
and subsequent valuation of restricted and illiquid securities normally
reflect a discount, which may be significant, from the market price of com-
parable securities for which a liquid market exists.
Temporary Investment Risks. The Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. Government Securities
.Repurchase agreements collateralized by U.S. Government Securities
When a Fund's assets are invested in such instruments, the Fund may not be
achieving its investment objective.
C. Portfolio Securities and Techniques
This section provides further information on certain types of securities and
investment techniques that may be used by the Fund, including its associated
risks. Further information is provided in the Additional Statement, which is
available upon request.
U.S. Government Securities. The Fund may invest in U.S. Government Securi-
ties. U.S. Government Securities include U.S. Treasury obligations and obli-
gations issued or guaranteed by U.S. government agencies, instrumentalities
or sponsored enterprises. U.S. Government Securities may be supported by (a)
the full faith and credit of the U.S. Treasury (such as the Government
National Mortgage Association ("Ginnie Mae")); (b) the right of the issuer
to borrow from the U.S. Treasury (such as securities of the Student Loan
Marketing Association); (c) the
D-6
<PAGE>
APPENDIX A
discretionary authority of the U.S. government to purchase certain obliga-
tions of the issuer (such as the Federal National Mortgage Association
("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac"));
or (d) only the credit of the issuer. U.S. Government Securities also
include Treasury receipts, zero coupon bonds and other stripped U.S. Govern-
ment Securities, where the interest and principal components of stripped
U.S. Government Securities are traded independently.
Custodial Receipts. The Fund may invest in custodial receipts. Interests in
U.S. Government Securities may be purchased in the form of custodial
receipts that evidence ownership of future interest payments, principal pay-
ments or both on certain notes or bonds issued or guaranteed as to principal
and interest by the U.S. government, its agencies, instrumentalities, polit-
ical subdivisions or authorities. For certain securities law purposes, cus-
todial receipts are not considered obligations of the U.S. government.
Asset-Backed Securities. The Fund may invest in asset-backed securities.
Asset-backed securities are securities whose principal and interest payments
are collateralized by pools of assets such as auto loans, credit card
receivables, leases, installment contracts and personal property. Asset-
backed securities are often subject to more rapid repayment than their
stated maturity date would indicate as a result of the pass-through of pre-
payments of principal on the underlying loans. During periods of declining
interest rates, prepayment of loans underlying asset-backed securities can
be expected to accelerate. Accordingly, the Fund's ability to maintain posi-
tions in such securities will be affected by reductions in the principal
amount of such securities resulting from prepayments, and its ability to
reinvest the returns of principal at comparable yields is subject to gener-
ally prevailing interest rates at that time. There is the possibility that,
in some cases, recoveries on repossessed collateral may not be available to
support payments on these securities. In the event of a default, the Fund
may suffer a loss if it cannot sell collateral quickly and receive the
amount it is owed.
Corporate Debt Obligations; Convertible Securities. The Fund may invest in
corporate debt obligations and convertible securities. Corporate debt obli-
gations include bonds, notes, debentures, commercial paper and other obliga-
tions of corporations to pay interest and repay principal, and include secu-
rities issued by banks, financial institutions and other entities. The Fund
may also invest in other short-term obligations payable in U.S. Dollars and
issued or guaranteed by U.S. corporations, non-U.S. corporations or other
entities.
Convertible securities are preferred stock or debt obligations that are con-
vertible into common stock. Convertible securities generally offer lower
interest or dividend yields than non-convertible securities of similar qual-
ity. Convertible securi-
D-7
<PAGE>
ties in which the Fund invests are subject to the same rating criteria as
its other investments in fixed-income securities. Convertible securities
have both equity and fixed-income risk characteristics. Like all fixed-
income securities, the value of convertible securities is susceptible to the
risk of market losses attributable to changes in interest rates. Generally,
the market value of convertible securities tends to decline as interest
rates increase and, conversely, to increase as interest rates decline. How-
ever, when the market price of the common stock underlying a convertible
security exceeds the conversion price of the convertible security, the con-
vertible security tends to reflect the market price of the underlying common
stock. As the market price of the underlying common stock declines, the con-
vertible security, like a fixed-income security, tends to trade increasingly
on a yield basis, and thus may not decline in price to the same extent as
the underlying common stock.
Structured Securities. The Fund may invest in structured securities. Struc-
tured securities are securities whose value is determined by reference to
changes in the value of specific currencies, interest rates, commodities,
indices or other financial indicators (the "Reference") or the relative
change in two or more References. The interest rate or the principal amount
payable upon maturity or redemption may be increased or decreased depending
upon changes in the applicable Reference. Structured securities may be posi-
tively or negatively indexed, so that appreciation of the Reference may pro-
duce an increase or decrease in the interest rate or value of the security
at maturity. In addition, changes in the interest rates or the value of the
security at maturity may be a multiple of changes in the value of the Refer-
ence. Consequently, structured securities may present a greater degree of
market risk than other types of fixed-income securities, and may be more
volatile, less liquid and more difficult to price accurately than less com-
plex securities.
Zero Coupon Bonds. The Fund may invest in zero coupon bonds. Such bonds are
issued at a discount from their face value because interest payments are
typically postponed until maturity. The market prices of these securities
generally are more volatile than the market prices of interest-bearing
securities and are likely to respond to a greater degree to changes in
interest rates than interest-bearing securities having similar maturities
and credit quality.
Options on Securities and Securities Indices. A put option gives the pur-
chaser of the option the right to sell, and the writer (seller) of the
option the obligation to buy, the underlying instrument during the option
period. A call option gives the purchaser of the option the right to buy,
and the writer (seller) of the option the obligation to sell, the underlying
instrument during the option period. The Fund
D-8
<PAGE>
APPENDIX A
may write (sell) covered call and put options and purchase put and call
options on any securities in which it may invest or on any securities index
comprised of securities in which it may invest.
The writing and purchase of options is a highly specialized activity which
involves special investment risks. Options may be used for either hedging or
to seek to increase total return (which is considered a speculative activi-
ty). The successful use of options depends in part on the ability of the
Investment Adviser to manage future price fluctuations and the degree of
correlation between the options and securities markets. If the Investment
Adviser is incorrect in its expectation of changes in market prices or
determination of the correlation between the instruments or indices on which
options are written and purchased and the instruments in the Fund's invest-
ment portfolio, the Fund may incur losses that it would not otherwise incur.
The use of options can also increase the Fund's transaction costs. Options
written or purchased by the Fund may be traded on either U.S. or foreign
exchanges or over-the- counter. Foreign and over-the-counter options will
present greater possibility of loss because of their greater illiquidity and
credit risks.
Futures Contracts and Options on Futures Contracts. Futures contracts are
standardized, exchange-traded contracts that provide for the sale or pur-
chase of a specified financial instrument or currency at a future time at a
specified price. An option on a futures contract gives the purchaser the
right (and the writer of the option the obligation) to assume a position in
a futures contract at a specified exercise price within a specified period
of time. A futures contract may be based on various securities (such as U.S.
Government Securities), securities indices and other financial instruments
and indices. The Fund may engage in futures transactions on U.S. exchanges.
The Fund may purchase and sell futures contracts, and purchase and write
call and put options on futures contracts, in order to seek to increase
total return or to hedge against changes in interest rates, securities
prices or to otherwise manage its term structure, sector selection and dura-
tion in accordance with its investment objective and policies. The Fund may
also enter into closing purchase and sale transactions with respect to such
contracts and options. The Fund will engage in futures and related options
transactions for bona fide hedging purposes as defined in regulations of the
Commodity Futures Trading Commission or to seek to increase total return to
the extent permitted by such regulations. The Fund may not purchase or sell
futures contracts or purchase or sell related options to seek to increase
total return, except for closing purchase or sale transactions, if immedi-
ately thereafter the sum of the amount of initial margin deposits and premi-
ums paid on the Fund's outstanding positions in futures and related options
entered
D-9
<PAGE>
into for the purpose of seeking to increase total return would exceed 5% of
the market value of the Fund's net assets.
Futures contracts and related options present the following risks:
.While the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency
exchange rates may result in poorer overall performance than if the Fund
had not entered into any futures contracts or options transactions.
.Because perfect correlation between a futures position and portfolio posi-
tion that is intended to be protected is impossible to achieve, the desired
protection may not be obtained and the Fund may be exposed to additional
risk of loss.
.The loss incurred by the Fund in entering into futures contracts and in
writing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
.Futures markets are highly volatile and the use of futures may increase the
volatility of the Fund's NAV.
.As a result of the low margin deposits normally required in futures trad-
ing, a relatively small price movement in a futures contract may result in
substantial losses to the Fund.
.Futures contracts and options on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
Floating and Variable Rate Obligations. The Fund may purchase floating and
variable rate obligations. The value of these obligations is generally more
stable than that of a fixed rate obligation in response to changes in inter-
est rate levels. 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 ordinar-
ily 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. The
Fund may purchase 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.
When-Issued Securities and Forward Commitments. The Fund may purchase when-
issued securities and enter into forward commitments. When-issued securities
are securities that have been authorized, but not yet issued. When-issued
securities are purchased in order to secure what is considered to be an
advantageous price and yield to the Fund at the time of entering into the
transaction. A forward commitment involves entering into a contract to pur-
chase or sell securities for a fixed price at a future date beyond the cus-
tomary settlement period.
D-10
<PAGE>
APPENDIX A
The purchase of securities on a when-issued or forward commitment basis
involves a risk of loss if the value of the security to be purchased
declines before the settlement date. Conversely, the sale of securities on a
forward commitment basis involves the risk that the value of the securities
sold may increase before the settlement date. Although the Fund will gener-
ally purchase securities on a when-issued or forward commitment basis with
the intention of acquiring the securities for its portfolio, the Fund may
dispose of when-issued securities or forward commitments prior to settlement
if the Investment Adviser deems it appropriate.
Lending of Portfolio Securities. The Fund may engage in securities lending.
Securities lending involves the lending of securities owned by the Fund to
financial institutions such as certain broker-dealers. The borrowers are
required to secure their loans continuously with cash, cash equivalents,
U.S. Government Securities or letters of credit in an amount at least equal
to the market value of the securities loaned. Cash collateral may be
invested in cash equivalents. To the extent that cash collateral is invested
in other investment securities, such collateral will be subject to market
depreciation or appreciation, and the Fund will be responsible for any loss
that might result from its investment of the borrowers' collateral. If the
Investment Adviser determines to make securities loans, the value of the
securities loaned may not exceed 33 1/3% of the value of the total assets of
the Fund (including the loan collateral).
The Fund may lend its securities to increase its income. The Fund may, how-
ever, experience delay in the recovery of its securities, or capital loss if
the institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.
Repurchase Agreements. Repurchase agreements involve the purchase of securi-
ties subject to the seller's agreement to repurchase them at a mutually
agreed upon date and price. The Fund may enter into repurchase agreements
with dealers in U.S. Government Securities and member banks of the Federal
Reserve System which furnish collateral at least equal in value or market
price to the amount of their repurchase obligation. The Fund may also enter
into repurchase agreements involving certain foreign government securities.
If the other party or "seller" defaults, the Fund might suffer a loss to the
extent that the proceeds from the sale of the underlying securities and
other collateral held by the Fund are less than the repurchase price and the
Fund's costs associated with delay and enforcement of the repurchase agree-
ment. In addition, in the event of bankruptcy of the seller, the Fund could
suffer additional losses if a court determines that the Fund's interest in
the collateral is not enforceable.
D-11
<PAGE>
In evaluating whether to enter into a repurchase agreement, the Investment
Adviser will carefully consider the creditworthiness of the seller. The
Fund, together with other registered investment companies having advisory
agreements with the Investment Adviser or any of its affiliates, may trans-
fer uninvested cash balances into a single joint account, the daily aggre-
gate balance of which will be invested in one or more repurchase agreements.
Borrowings. The Fund can borrow money from banks with banks in amounts not
exceeding one-third of its total assets. The Fund may not make additional
investments if borrowings exceed 5% of its total assets. Borrowings involve
leverage. If the securities held by the Fund decline in value while these
transactions are outstanding, the NAV of the Fund's outstanding shares will
decline in value by proportionately more than the decline in value of the
securities.
Interest Rate Swaps, Credit Swaps and Interest Rate Caps, Floors and Col-
lars. Interest rate swaps involve the exchange by the Fund with another
party of their respective commitments to pay or receive interest, such as an
exchange of fixed-rate payments for floating rate payments. Credit swaps
involve the receipt of floating or fixed rate payments in exchange for
assuming potential credit losses of an underlying security. Credit swaps
give one party to a transaction the right to dispose of or acquire an asset
(or group of assets), or the right to receive or make a payment from the
other party, upon the occurrence of specified credit events. The purchase of
an interest rate cap entitles the purchaser, to the extent that a specified
index exceeds a predetermined interest rate, to receive payment of interest
on a notional principal amount from the party selling such interest rate
cap. The purchase of an interest rate floor entitles the purchaser, to the
extent that a specified index falls below a predetermined interest rate, to
receive payments of interest on a notional principal amount from the party
selling the interest rate floor. An interest rate collar is the combination
of a cap and a floor that preserves a certain return within a predetermined
range of interest rates.
The Fund may enter into swap transactions for hedging purposes or to seek to
increase total return. The use of interest rate and credit swaps, as well as
interest rate caps, floors and collars, is a highly specialized activity
which involves investment techniques and risks different from those associ-
ated with ordinary portfolio securities transactions. If the Investment
Adviser is incorrect in its forecasts of market values or interest rates the
investment performance of the Fund would be less favorable than it would
have been if these investment techniques were not used.
Other Investment Companies. The Fund may invest in securities of other
investment companies subject to statutory limitations prescribed by the Act.
These limitations include a prohibition on the Fund acquiring more than 3%
of the voting
D-12
<PAGE>
APPENDIX A
shares of any other investment company, and a prohibition on investing more
than 5% of the Fund's total assets in securities of any one investment com-
pany or more than 10% of its total assets in securities of all investment
companies. The Fund will indirectly bear its proportionate share of any man-
agement fees and other expenses paid by such other investment companies.
Preferred Stock. The Fund may invest in preferred stocks. Preferred stocks
are securities that represent an ownership interest providing the holder
with claims on the issuer's earnings and assets before common stock owners
but after bond owners. Unlike debt securities, the obligations of an issuer
of preferred stock, including dividend and other payment obligations, may
not typically be accelerated by the holders of such preferred stock on the
occurrence of an event of default or other non-compliance by the issuer of
the preferred stock.
D-13
<PAGE>
Index
<TABLE>
<C> <C> <S>
x General Investment
Management Approach
x Fund Investment
Objectives and
Strategies
x Enhanced Cash Fund
</TABLE>
<TABLE>
<C> <C> <S>
x Other Investment
Practices and Securities
x Principal Risks of the
Fund
x Fund Performance
x Fund Fees and Expenses
x Service Providers
x Dividends
x Shareholder Guide
x How to Buy Shares
x How to Sell Shares
x Taxation
x Appendix A
Additional Information on
Portfolio Risks,
Securities and Techniques
</TABLE>
<PAGE>
Fixed Income Funds
Prospectus (Institutional Shares)
FOR MORE INFORMATION
Annual/Semi-annual Report
Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's annual
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the
last fiscal year. The annual report for the Enhanced Cash Fund for the
fiscal period ended October 31, 2000 will become available to shareholders
in December 2000.
Statement of Additional Information
Additional information about the Fund and its policies is also available in
the Fund's Additional Statement. The Additional Statement is incorporated by
reference into this Prospectus (is legally considered part of this
Prospectus).
The Fund's annual and semi-annual reports, and the Additional Statement, are
available free upon request by calling Goldman Sachs at 1-800-621-2550.
To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-621-2550
By mail - Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois
60606-6372
By e-mail - [email protected]
On the Internet - Text-only versions of the Fund's documents are located
online and may be downloaded from:
SEC EDGAR database - http://www.sec.gov
You may review and obtain copies of Fund documents by visiting the SEC's
Public Reference Room in Washington, D.C. You may also obtain copies of Fund
documents, after paying a duplicating fee, by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102 or by electronic request to:
[email protected]. Information on the operation of the public reference
room may be obtained by calling the SEC at (202) 942-8090.
[LOGO OF GOLDMAN SACHS]
The Fund's investment company registration number is 811-5349.
505630
FIPROINST
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Preliminary Prospectus dated May 3, 2000
Subject to Completion
Prospectus
Administration
Shares
July 17,
2000
GOLDMAN SACHS FIXED INCOME FUNDS
.Goldman
Sachs
Enhanced
Cash Fund
[ARTWORK TO BE INSERTED]
THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OF
THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE FUND IS
NOT A BANK DEPOSIT AND IS NOT
INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY. AN
INVESTMENT IN A FUND INVOLVES
INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
[LOGO OF GOLDMAN SACHS]
<PAGE>
NOT FDIC-INSURED May Lose Value No Bank Guarantee
<PAGE>
General Investment Management Approach
Goldman Sachs Asset Management ("GSAM"), a unit of the Investment Management
Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment
adviser to the Goldman Sachs Enhanced Cash Fund (the "Fund"). GSAM is
referred to in this Prospectus as the "Investment Adviser."
The Enhanced Cash Fund Is Not A Money Market Fund. Investors In This Fund
Should Understand That The Net Asset Value ("NAV") Of The Fund Will Fluctu-
ate Which May Result In A Loss Of A Portion Of The Principal Amount Invest-
ed.
Goldman Sachs' Fixed Income Investing Philosophy:
Active Management Within a Risk-Managed Framework
The Investment Adviser employs a disciplined, multi-step process to evaluate
potential investments:
1. Sector Allocation--The Investment Adviser assesses the relative value of
different investment sectors (such as U.S. government, U.S. and foreign cor-
porate and asset-backed securities) to create investment strategies that
meet the Fund's objective.
2. Security Selection--In selecting securities for the Fund, the Investment
Adviser draws on the extensive resources of Goldman Sachs, including fixed-
income research professionals.
3. Yield Curve Strategies--The Investment Adviser adjusts the term structure
of the Fund based on its expectations of changes in the shape of the yield
curve while closely controlling the overall duration of the Fund.
The Investment Adviser de-emphasizes interest rate predictions as a means of
generating incremental return. Instead, the Investment Adviser seeks to add
value through the selection of particular securities and investment sector
allocation as described above.
With every fixed-income portfolio, the Investment Adviser applies a team
approach that emphasizes risk management and capitalizes on Goldman Sachs'
extensive research capabilities.
- --------------------------------------------------------------------------------
A-1
<PAGE>
The Fund described in this Prospectus has a target duration. The Fund's
duration approximates its price sensitivity to changes in interest rates.
Maturity measures the time until final payment is due; it takes no account
of the pattern of a security's cash flows over time. In computing portfolio
duration, the Fund will estimate the duration of obligations that are sub-
ject to prepayment or redemption by the issuer, taking into account the
influence of interest rates on prepayments and coupon flows. This method of
computing duration is known as "option-adjusted" duration.
The Fund also has credit rating requirements for the securities it buys. The
Fund will deem a security to have met its minimum credit rating requirement
if the security has the required rating at the time of purchase from at
least one nationally recognized statistical rating organization ("NRSRO")
even though it has been rated below the minimum rating by one or more other
NRSROs. Unrated securities may be purchased by the Fund if determined by the
Investment Adviser to be of comparable quality. If a security satisfies the
Fund's minimum rating requirement at the time of purchase and is subse-
quently downgraded below such rating, the Fund will not be required to dis-
pose of such security. This is so even if the downgrade causes the average
credit quality of the Fund to be lower than that stated in the Prospectus.
Furthermore, during this period, the Investment Adviser will only buy secu-
rities at or above the Fund's average rating requirement. If a downgrade
occurs, the Investment Adviser will consider what action, including the sale
of such security, is in the best interests of the Fund and its shareholders.
A-2
<PAGE>
Fund Investment Objective and Strategies
Goldman Sachs Enhanced Cash Fund
FUND FACTS
- --------------------------------------------------------------------------------
Duration (under Target = 9 month U.S. Treasury Bill +/- 3 months
normal interest
rate conditions):
Expected Approxi- 9-month U.S. Treasury bill
mate Interest
Rate Sensitivity:
Credit Quality: Security Minimum = A
Portfolio Weighted Average = AA
Benchmarks: Six-Month and One-Year U.S. Treasury Security
INVESTMENT OBJECTIVE
The Fund seeks to generate return in excess of traditional money market
products while maintaining an emphasis on preservation of capital and
liquidity.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests, under normal circumstances, primarily in a portfolio of
fixed income securities, including non-mortgage U.S. Government Securities,
corporate notes and commercial paper and fixed and floating rate asset-
backed securities. The Fund will not invest in securities with remaining
maturities of more than 5 years (excluding Treasury Securities deliverable
into futures transactions). The Fund will invest across a broad range of
high-grade fixed income sectors with an emphasis on the preservation of cap-
ital and liquidity.
A-3
<PAGE>
Other Investment Practices and Securities
The table below identifies some of the investment techniques that may (but are
not required to) be used by the Fund in seeking to achieve its investment
objective. Numbers in this table show allowable usage only; for actual usage,
consult the Fund's annual and semi-annual reports. For more information see
Appendix A.
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage limitation on usage; limited only by the objectives
and strategies of the Fund
<TABLE>
<CAPTION>
Enhanced
Cash
Fund
- ---------------------------------------------------------
<S> <C>
Investment Practices
Borrowings 33 1/3
Credit and Interest Rate Swaps* .
Financial Futures Contracts .
Interest Rate Floors, Caps and Collars .
Options (including Options on Futures) .
Repurchase Agreements** .
Securities Lending 33 1/3
When-Issued Securities and Forward Committments .
- ---------------------------------------------------------
</TABLE>
* Limited to 15% of net assets (together with other illiquid securities) for
all structured securities which are not deemed to be liquid and all swap
transactions.
** The Fund may enter into repurchase agreements collateralized by securities
issued by foreign governments.
A-4
<PAGE>
10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage limitation on usage; limited only by the objectives
and strategies of the Fund
<TABLE>
<CAPTION>
Enhanced
Cash
Fund
- ------------------------------------------------
<S> <C>
Investment Securities
Asset-Backed Securities .
Convertible Securities .
Corporate Debt Obligations .
Floating and Variable Rate Obligations .
Preferred Stock .
Foreign Securities*** .
Structured Securities* .
U.S. Government Securities .
- ------------------------------------------------
</TABLE>
***Non-Dollar securities not permitted.
A-5
<PAGE>
Principal Risks of the Fund
Loss of money is a risk of investing in the Fund. An investment in the Fund is
not a deposit of any bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency. The following
summarizes important risks that apply to the Fund and may result in a loss of
your investment. The Fund should not be relied upon as a complete investment
program. There can be no assurance that the Fund will achieve its investment
objective.
<TABLE>
<CAPTION>
.Applicable
- --Not Applicable
Enhanced
Cash
Fund
- ------------------------------------
<S> <C>
NAV .
Interest Rate .
Credit/Default .
Call .
Extension .
Derivatives .
U.S. Government Securities .
Market .
Management .
Liquidity .
Foreign .
- ------------------------------------
</TABLE>
A-6
<PAGE>
PRINCIPAL RISKS OF THE FUNDS
The Fund:
.NAV Risk--The risk that the NAV of the Fund and the value of your investment
will fluctuate.
.Interest Rate Risk--The risk that when interest rates increase, fixed-income
securities held by the Fund will decline in value. Long-term fixed-income
securities will normally have more price volatility because of this risk than
short-term securities.
.Credit/Default Risk--The risk that an issuer or guarantor of fixed-income
securities held by the Fund may default on its obligation to pay interest and
repay principal.
.Call Risk--The risk that an issuer will exercise its right to pay principal on
an obligation held by the Fund earlier than expected. This may happen when
there is a decline in interest rates. Under these circumstances, the Fund may
be unable to recoup all of its initial investment and will also suffer from
having to reinvest in lower yielding securities.
.Extension Risk--The risk that an issuer will exercise its right to pay
principal on an obligation held by the Fund later than expected. This may
happen when there is a rise in interest rates. Under these circumstances, the
value of the obligation will decrease, and the Fund will also suffer from the
inability to invest in higher yielding securities.
.Derivatives Risk--The risk that loss may result from the Fund's investments in
options, futures, swaps, structured securities and other derivative
investments. These instruments may be leveraged so that small changes may
produce disproportionate losses to the Fund.
.U.S. Government Securities Risk--The risk that the U.S. government will not
provide financial support to U.S. government agencies, instrumentalities or
sponsored enterprises if it is not obligated to do so by law.
.Market Risk--The risk that the value of the securities in which the Fund
invests may go up or down in response to the prospects of individual companies
and/or general economic conditions. Price changes may be temporary or last for
extended periods.
.Management Risk--The risk that a strategy used by the Investment Adviser may
fail to produce the intended results.
.Liquidity Risk--The risk that the Fund will not be able to pay redemption
proceeds within the time period stated in this Prospectus because of unusual
market conditions, an unusually high volume of redemption requests, or other
reasons. The Goldman Sachs Asset Allocation Portfolios (the "Asset Allocation
Portfolios") may invest a percentage of their assets in the Fund and other
funds for which Goldman Sachs now or in the future acts as investment adviser
or
A-7
<PAGE>
underwriter. Redemptions by an Asset Allocation Portfolio of its position in
the Fund may further increase liquidity risk and may impact the Fund's NAV.
.Foreign Risk--The Fund will be subject to risks of loss with respect to its
foreign investments that are not typically associated with domestic issuers.
Loss may result because of less foreign government regulation, less public
information and less economic, political and social stability. Loss may also
result from the imposition of exchange controls, confiscations and other gov-
ernment restrictions.
More information about the Fund's portfolio securities and investment tech-
niques, and their associated risks, is provided in Appendix A. You should con-
sider the investment risks discussed in this section and in Appendix A. Both
are important to your investment choice.
A-8
<PAGE>
Fund Performance
HOW THE FUND HAS PERFORMED
The Fund has not commenced operations as of the date of this Prospectus.
Therefore, no performance information is provided in this section.
3
<PAGE>
Fund Fees and Expenses (Administration Shares)
This table describes the fees and expenses that you would pay if you buy and
hold Administration Shares of the Fund.
<TABLE>
<CAPTION>
Enhanced
Cash
Fund
- ---------------------------------------------------------------------
<S> <C>
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fees None
Exchange Fees None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/1/
Management Fees/2/ 0.25%
Administration Fees/3/ 0.25%
Other Expenses/4/ 0.20%
- ---------------------------------------------------------------------
Total Fund Operating Expenses* 0.70%
- ---------------------------------------------------------------------
</TABLE>
See page for all other footnotes.
* As a result of the current waivers and expense limi-
tations, "Other Expenses" and "Total Fund Operating
Expenses" of the Fund which are actually incurred are
as set forth below. The waivers and expense limita-
tions may be terminated at any time at the option of
the Investment Adviser. If this occurs, "Other
Expenses" and "Total Fund Operating Expenses" may
increase without shareholder approval.
<TABLE>
<CAPTION>
Enhanced
Cash
Fund
---------------------------------------------------------------------------
<S> <C>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):/1/
Management Fees/2/ 0.20%
Administration Fees/3/ 0.25%
Other Expenses/4/ 0.05%
---------------------------------------------------------------------------
Total Fund Operating Expenses (after current waivers and expense
limitations) 0.50%
---------------------------------------------------------------------------
</TABLE>
4
<PAGE>
FUND FEES AND EXPENSES
/1/The operating expenses for the Fund are estimated for the current year.
/2/The Investment Adviser has voluntarily agreed not to impose a portion of the
management fee on the Enhanced Cash Fund equal to 0.05% of such Fund's average
daily net assets. As a result of fee waivers, the current management fees of
the Fund is 0.20%, of such Fund's average daily net assets. The waivers may be
terminated at any time at the option of the Investment Adviser.
/3/Service Organizations may charge other fees to their customers who are bene-
ficial owners of Administration Shares in connection with their customers'
accounts. Such fees may affect the return customers realize with respect to
their investments.
/4/Estimated "Other Expenses" include transfer agency fees equal to 0.04% of
the average daily net assets of the Fund's Administration Shares, plus all
other ordinary expenses not detailed above. The Investment Adviser has volun-
tarily agreed to reduce or limit "Other Expenses" of the Fund (excluding man-
agement fees, transfer agency fees, Administration fees, taxes, interest and
brokerage fees and litigation, indemnification and other extraordinary
expenses) to the following percentage of the Fund's average daily net assets:
<TABLE>
<CAPTION>
Other
Fund Expenses
- -----------------------
<S> <C>
Enhanced Cash 0.01%
</TABLE>
5
<PAGE>
Example
The following Example is intended to help you compare the cost of investing in
the Fund (without the waivers and expense limitations) with the cost of invest-
ing in other mutual funds. The Example assumes that you invest $10,000 in
Administration Shares of the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Fund 1 Year 3 Years
- ------------------------------
<S> <C> <C>
Enhanced Cash $72 $224
- ------------------------------
</TABLE>
Service Organizations that invest in Administration Shares on behalf of their
customers may charge other fees directly to their customer accounts in connec-
tion with their investments. You should contact your Service Organization for
information regarding such charges. Such fees, if any, may affect the return
such customers realize with respect to their investments.
Certain Service Organizations that invest in Administration Shares may receive
other compensation in connection with the sale and distribution of Administra-
tion Shares or for services to their customers' accounts and/or the Fund. For
additional information regarding such compensation, see "Shareholder Guide" in
the Prospectus and "Other Information" in the Statement of Additional Informa-
tion ("Additional Statement").
6
<PAGE>
Service Providers
INVESTMENT ADVISER
<TABLE>
<CAPTION>
Investment Adviser Fund
-----------------------------------------------------
<S> <C>
Goldman Sachs Asset Management
("GSAM") Enhanced Cash
32 Old Slip
New York, New York 10005
-----------------------------------------------------
</TABLE>
As of September 1, 1999, the Investment Management Division ("IMD") was
established as a new operating division of Goldman Sachs. This newly created
entity includes GSAM. Goldman Sachs registered as an investment adviser in
1981. The Goldman Sachs Group, L.P., which controlled the Investment Advis-
er, merged into the Goldman Sachs Group, Inc. as a result of an initial pub-
lic offering. As of March 31, 2000, GSAM, along with other units of IMD, had
assets under management of $243.6 billion.
The Investment Adviser provides day-to-day advice regarding the Fund's port-
folio transactions. The Investment Adviser makes the investment decisions
for the Fund and places purchase and sale orders for the Fund's portfolio
transactions in U.S. and foreign markets. As permitted by applicable law,
these orders may be directed to any brokers, including Goldman Sachs and its
affiliates. While the Investment Adviser is ultimately responsible for the
management of the Fund, it is able to draw upon the research and expertise
of its asset management affiliates for portfolio decisions and management
with respect to certain portfolio securities. In addition, the Investment
Adviser has access to the research and certain proprietary technical models
developed by Goldman Sachs, and will apply quantitative and qualitative
analysis in determining the appropriate allocations among categories of
issuers and types of securities.
The Investment Adviser also performs the following additional services for
the Fund:
.Supervises all non-advisory operations of the Fund
.Provides personnel to perform necessary executive, administrative and
clerical services to the Fund
.Arranges for the preparation of all required tax returns, reports to
shareholders, prospectuses and statements of additional information and
other reports filed with the Securities and Exchange Commission (the "SEC")
and other regulatory authorities
.Maintains the records of the Fund
.Provides office space and all necessary office equipment and services
B-1
<PAGE>
MANAGEMENT FEES
As compensation for its services and its assumption of certain expenses, the
Investment Adviser is entitled to the following fee, computed daily and pay-
able monthly, at the annual rate listed below (as a percentage of the Fund's
average daily net assets):
<TABLE>
<CAPTION>
Contractual Rate
--------------------------------
<S> <C>
Enhanced Cash 0.25%
--------------------------------
</TABLE>
The Investment Adviser may voluntarily waive a portion of its advisory fee
from time to time, and may discontinue any voluntary waiver at any time at
its discretion.
FUND MANAGERS
Fixed Income Portfolio Management Team
.The fixed-income portfolio management team is comprised of a deep team of
sector specialists
.The team strives to maximize risk-adjusted returns by de-emphasizing
interest rate anticipation and focusing on security selection and sector
allocation
.The team manages approximately $50.5 billion in fixed-income assets for
retail, institutional and high net worth clients
U.S. Fixed Income-Investment Management Team
<TABLE>
<CAPTION>
Years Primarily
Name and Title Fund Responsibility Responsible Five Year Employment History
- ----------------------------------------------------------------------------------
<C> <C> <C> <S>
Jonathan A. Senior Portfolio Since Mr. Beinner joined the
Beinner Manager-- 2000 Investment Adviser in 1990.
Managing Enhanced Cash He became a portfolio
Director and manager in 1992.
Co-Head U.S.
Fixed Income
- ----------------------------------------------------------------------------------
Peter A. Dion Portfolio Since Mr. Dion joined the
Vice President Manager-- 2000 Investment Adviser in 1992.
Enhanced Cash From 1994 to 1995 he was an
associate portfolio
manager. He became a
portfolio manager in 1995.
- ----------------------------------------------------------------------------------
C. Richard Lucy Senior Portfolio Since Mr. Lucy joined the
Managing Manager-- 2000 Investment Adviser in 1992
Director and Enhanced Cash as a portfolio manager.
Co-Head U.S.
Fixed Income
- ----------------------------------------------------------------------------------
James P. Portfolio Since Mr. McCarthy joined the
McCarthy Manager-- 2000 Investment Adviser in 1995
Vice President Enhanced Cash as a portfolio manager
after working four years at
Nomura Securities, where he
was an assistant vice
president and an adjustable
rate mortgage trader.
- ----------------------------------------------------------------------------------
</TABLE>
B-2
<PAGE>
SERVICE PROVIDERS
DISTRIBUTOR AND TRANSFER AGENT
Goldman Sachs, 85 Broad Street, New York, New York 10004, serves as the
exclusive distributor (the "Distributor") of the Fund's shares. Goldman
Sachs, 4900 Sears Tower, Chicago, Illinois 60606-6372, also serves as the
Fund's transfer agent (the "Transfer Agent") and, as such, performs various
shareholder servicing functions.
From time to time, Goldman Sachs or any of its affiliates may purchase and
hold shares of the Fund. Goldman Sachs reserves the right to redeem at any
time some or all of the shares acquired for its own account.
ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS
The involvement of the Investment Adviser, Goldman Sachs and their affili-
ates in the management of, or their interest in, other accounts and other
activities of Goldman Sachs may present conflicts of interest with respect
to the Fund or limit the Fund's investment activities. Goldman Sachs and its
affiliates engage in proprietary trading and advise accounts and funds which
have investment objectives similar to those of the Fund and/or which engage
in and compete for transactions in the same types of securities, currencies
and instruments as the Fund. Goldman Sachs and its affiliates will not have
any obligation to make available any information regarding their proprietary
activities or strategies, or the activities or strategies used for other
accounts managed by them, for the benefit of the management of the Fund. The
results of the Fund's investment activities, therefore, may differ from
those of Goldman Sachs and its affiliates, and it is possible that the Fund
could sustain losses during periods in which Goldman Sachs and its affili-
ates and other accounts achieve significant profits on their trading for
proprietary or other accounts. In addition, the Fund may, from time to time,
enter into transactions in which other clients of Goldman Sachs have an
adverse interest. The Fund's activities may be limited because of regulatory
restrictions applicable to Goldman Sachs and its affiliates, and/or their
internal policies designed to comply with such restrictions.
YEAR 2000
Goldman Sachs spent a total of approximately $185 million over the past sev-
eral years to address the potential hardware, software and other computer
and technology issues and related concerns associated with the transition to
Year 2000 and to confirm that its service providers did the same. As a
result of those efforts, Goldman Sachs has not experienced any material dis-
ruptions in its operations in connection with, or following, the transition
to the Year 2000.
B-3
<PAGE>
Dividends
The Fund pays dividends from net investment income and net capital gains. You
may choose to have dividends paid in:
.Cash
.Additional shares of the same class of the same Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund.
Special restrictions may apply for certain ILA Portfolios. See the Additional
Statement.
You may indicate your election on your Account Application. Any changes may be
submitted in writing to Goldman Sachs at any time before the record date for a
particular dividend. If you do not indicate any choice, your dividends will be
reinvested automatically in the Fund. If cash dividends are elected with
respect to the Fund's monthly net investment income dividends, then cash divi-
dends must also be elected with respect to the non-long-term capital gains com-
ponent, if any, of the Fund's annual dividend.
The election to reinvest dividends in additional shares will not affect the tax
treatment of such dividends, which will be treated as received by you and then
used to purchase the shares.
Dividends from net investment income and net capital gains are declared and
paid as follows:
<TABLE>
<CAPTION>
Investment Income Capital Gains
Dividends Distributions
------------------------------------
Fund Declared Paid Declared and Paid
- ---------------------------------------------------
<S> <C> <C> <C>
Enhanced Cash Daily Monthly Annually
</TABLE>
From time to time a portion of the Fund's dividends may constitute a return of
capital.
At the time of an investor's purchase of shares of the Fund, a portion of the
NAV per share may be represented by undistributed income or undistributed real-
ized appreciation of the Fund's portfolio securities. Therefore, subsequent
distributions on such shares from such income or realized appreciation may be
taxable to you even if the NAV of the shares is, as a result of the distribu-
tions, reduced below the cost of such shares and the distributions (or portions
thereof) represent a return of a portion of the purchase price.
B-4
<PAGE>
Shareholder Guide
The following section will provide you with answers to some of the most
often asked questions regarding buying and selling the Fund's Administration
Shares.
HOW TO BUY SHARES
How Can I Purchase Administration Shares Of The Fund?
Generally, Administration Shares may be purchased only through institutions
that have agreed to provide account administration and personal and account
maintenance services to their customers who are the beneficial owners of
Administration Shares. These institutions are called "Service Organiza-
tions." Customers of a Service Organization will normally give their pur-
chase instructions to the Service Organization, and the Service Organization
will, in turn, place purchase orders with Goldman Sachs. Service Organiza-
tions will set times by which purchase orders and payments must be received
by them from their customers. Generally, Administration Shares may be pur-
chased from the Fund on any business day at their NAV next determined after
receipt of an order by Goldman Sachs from a Service Organization. No sales
load is charged. Purchases of Administration Shares must be settled within
three business days of receipt of a complete purchase order.
Service Organizations are responsible for transmitting purchase orders and
payments to Goldman Sachs in a timely fashion. Service Organizations should
place an order with Goldman Sachs at 1-800-621-2550 and either:
.Wire federal funds to The Northern Trust Company ("Northern"), as
subcustodian for State Street Bank and Trust Company ("State Street") (the
Fund's custodian) on the next business day; or
.Send a check or Federal Reserve draft payable to Goldman Sachs Funds--(Name
of Fund and Class of Shares), 4900 Sears Tower--60th Floor, Chicago, IL
60606-6372. The Fund will not accept a check drawn on a foreign bank or a
third-party check.
In certain instances, the Trust may require a signature guarantee in order
to effect purchase, redemption or exchange transactions. Signature guaran-
tees must be obtained from a bank, brokerage firm or other financial inter-
mediary that is a member of an approved Medallion Guarantee Program or that
is otherwise approved by the Trust. A notary public cannot provide a signa-
ture guarantee.
E-1
<PAGE>
What Do I Need To Know About Service Organizations?
Service Organizations may provide the following services in connection with
their customers' investments in Administration Shares:
.Acting, directly or through an agent, as the sole shareholder of record
.Maintaining account records for customers
.Processing orders to purchase, redeem or exchange shares for customers
In addition, some (but not all) Service Organizations are authorized to
accept, on behalf of Goldman Sachs Trust (the "Trust"), purchase, redemption
and exchange orders placed by or on behalf of their customers, and may des-
ignate other intermediaries to accept such orders, if approved by the Trust.
In these cases:
.The Fund will be deemed to have received an order in proper form when the
order is accepted by the authorized Service Organization or intermediary on
a business day, and the order will be priced at the Fund's NAV next deter-
mined after such acceptance.
.Service Organizations or intermediaries will be responsible for transmit-
ting accepted orders and payments to the Trust within the time period
agreed upon by them.
You should contact your Service Organization directly to learn whether it is
authorized to accept orders for the Trust.
Pursuant to an administration plan adopted by the Trust's Board of Trustees,
Service Organizations are entitled to receive payment for their services
from the Trust of up to 0.25% (on an annualized basis) of the average daily
net assets of the Administration Shares of the Fund, which are attributable
to or held in the name of the Service Organization for its customers.
The Investment Adviser, Distributor and/or their affiliates may pay addi-
tional compensation from time to time, out of their assets and not as an
additional charge to the Fund, to selected Service Organizations and other
persons in connection with the sale, distribution and/or servicing of shares
of the Fund and other Goldman Sachs Funds. Additional compensation based on
sales may, but is currently not expected to, exceed 0.50% (annualized) of
the amount invested.
In addition to Administration Shares, the Fund also offers another class of
shares to investors. The other share class is subject to different fees and
expenses (which affect performance), has different minimum investment
requirements and is entitled to different services than Administration
Shares. Information regarding the other share class may be obtained from
your sales representative or from Goldman Sachs by calling the number on the
back cover of this Prospectus.
E-2
<PAGE>
SHAREHOLDER GUIDE
What Is My Minimum Investment In The Fund?
The Fund does not have any minimum purchase or account requirements with
respect to Administration Shares. A Service Organization may, however,
impose a minimum amount for initial and subsequent investments in Adminis-
tration Shares, and may establish other requirements such as a minimum
account balance. A Service Organization may redeem Administration Shares
held by non-complying accounts, and may impose a charge for any special
services.
What Else Should I Know About Share Purchases?
The Trust reserves the right to:
.Reject or restrict any purchase or exchange orders by a particular pur-
chaser (or group of related purchasers). This may occur, for example, when
a pattern of frequent purchases, sales or exchanges of Administration
Shares of the Fund is evident, or if purchases, sales or exchanges are, or
a subsequent abrupt redemption might be, of a size that would disrupt the
management of the Fund.
.Close the Fund to new investors from time to time and reopen the Fund when-
ever it is deemed appropriate by the Fund's Investment Adviser.
The Fund may allow Service Organizations to purchase shares with securities
instead of cash if consistent with the Fund's investment policies and opera-
tions and if approved by the Fund's Investment Adviser.
How Are Shares Priced?
The price you pay or receive when you buy, sell or exchange Administration
Shares is determined by the Fund's NAV. The Fund calculates NAV as follows:
(Value of Assets of the Class)
- (Liabilities of the Class)
NAV = _______________________________
Number of Outstanding Shares of the Class
The Fund's investments are valued based on market quotations, which may be
furnished by a pricing service or provided by securities dealers. If accu-
rate quotations are not readily available, the fair value of the Fund's
investments may be determined based on yield equivalents, a pricing matrix
or other sources, under valuation procedures established by the Trustees.
Debt obligations with a remaining maturity of 60 days or less are valued at
amortized cost.
.NAV per share of each class is calculated by State Street on each business
day as of the close of regular trading on the New York Stock Exchange (nor-
mally 4:00 p.m. New York time). This occurs after the determination, if
any, of income declared as a dividend. Fund shares will not be priced on
any day the New York Stock Exchange is closed.
.When you buy shares, you pay the NAV next calculated after the Fund
receives your order in proper form.
E-3
<PAGE>
.When you sell shares, you receive the NAV next calculated after the Fund
receives your order in proper form.
Note: The time at which transactions and shares are priced and the time by
which orders must be received may be changed in case of an emergency or if
regular trading on the New York Stock Exchange is stopped at a time other
than 4:00 p.m. New York time.
Foreign securities may trade in their local markets on days the Fund is
closed. As a result, if the Fund holds foreign securities its NAV may be
impacted on days when investors may not purchase or redeem Fund shares.
In addition, the impact of events that occur after the publication of market
quotations used by the Fund to price its securities (for example, in foreign
markets), but before the close of regular trading on the New York Stock
Exchange will normally not be reflected in the Fund's next determined NAV
unless the Trust, in its discretion, makes an adjustment in light of the
nature and materiality of the event, its effect on Fund operations and other
relevant factors.
When Will Shares Be Issued And Dividends Begin To Be Paid?
.Shares Purchased by Federal Funds Wire:
.If a purchase order in proper form specifies a settlement date and is
received before the Fund's NAV is determined that day, shares will be
issued and dividends will begin to accrue on the purchased shares on the
later of (i) the business day after the purchase order is received; or
(ii) the day that the federal funds wire is received by State Street.
.If a purchase order in proper form does not specify a settlement date,
shares will be issued and dividends will begin to accrue on the business
day after payment is received.
.Shares Purchased by Check or Federal Reserve Draft:
.If a purchase order in proper form specifies a settlement date and is
received before the Fund's NAV is determined that day, shares will be
issued and dividends will begin to accrue on the business day after pay-
ment is received.
.If a purchase order in proper form does not specify a settlement date,
shares will be issued and dividends will begin to accrue on the business
day after payment is received.
E-4
<PAGE>
SHAREHOLDER GUIDE
HOW TO SELL SHARES
How Can I Sell Administration Shares Of The Fund?
Generally, Administration Shares may be sold (redeemed) only through Service
Organizations. Customers of a Service Organization will normally give their
redemption instructions to the Service Organization, and the Service Organi-
zation will, in turn, place redemption orders with the Fund. Generally, the
Fund will redeem its Administration Shares upon request on any business day
at their NAV next determined after receipt of such request in proper form.
Redemption proceeds may be sent to recordholders by check or by wire (if the
wire instructions are on record).
A Service Organization may request redemptions in writing or by telephone if
the optional telephone redemption privilege is elected on the Account Appli-
cation.
<TABLE>
--------------------------------------------------------------
<S> <C>
By Writing: Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
--------------------------------------------------------------
By Telephone: If you have elected the telephone redemption
privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
--------------------------------------------------------------
</TABLE>
What Do I Need To Know About Telephone Redemption Requests?
The Trust, the Distributor and the Transfer Agent will not be liable for any
loss you may incur in the event that the Trust accepts unauthorized tele-
phone redemption requests that the Trust reasonably believes to be genuine.
In an effort to prevent unauthorized or fraudulent redemption and exchange
requests by telephone, Goldman Sachs employs reasonable procedures specified
by the Trust to confirm that such instructions are genuine. If reasonable
procedures are not employed, the Trust may be liable for any loss due to
unauthorized or fraudulent transactions. The following general policies are
currently in effect:
.All telephone requests are recorded.
.Any redemption request that requires money to go to an account or address
other than that designated on the Account Application must be in writing
and signed by an authorized person designated on the Account Application.
The written request may be confirmed by telephone with both the requesting
party and the designated bank account to verify instructions.
.The telephone redemption option may be modified or terminated at any time.
Note: It may be difficult to make telephone redemptions in times of drastic
economic or market conditions.
E-5
<PAGE>
How Are Redemption Proceeds Paid?
By Wire: The Fund will arrange for redemption proceeds to be wired as fed-
eral funds to the bank account designated in the recordholder's Account
Application. The following general policies govern wiring redemption pro-
ceeds:
.Redemption proceeds will normally be wired on the next business day in fed-
eral funds (for a total of one business day delay), but may be paid up to
three business days following receipt of a properly executed wire transfer
redemption request. If the shares to be sold were recently paid for by
check, the Fund will pay the redemption proceeds when the check has
cleared, which may take up to 15 days. If the Federal Reserve Bank is
closed on the day that the redemption proceeds would ordinarily be wired,
wiring the redemption proceeds may be delayed one additional business day.
.To change the bank designated on your Account Application, you must send
written instructions signed by an authorized person designated on the
Account Application to the Transfer Agent.
.Neither the Trust nor Goldman Sachs assumes any responsibility for the per-
formance of intermediaries or your Service Organization in the transfer
process. If a problem with such performance arises, you should deal
directly with such intermediaries or Service Organizations.
By Check: A recordholder may elect in writing to receive redemption proceeds
by check. Redemption proceeds paid by check will normally be mailed to the
address of record within three business days of receipt of a properly exe-
cuted redemption request. If the shares to be sold were recently paid for by
check, the Fund will pay the redemption proceeds when the check has cleared,
which may take up to 15 days.
What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
.Administration Shares of the Fund earn dividends declared on the day the
shares are redeemed.
.Additional documentation may be required when deemed appropriate by the
Transfer Agent. A redemption request will not be in proper form until such
additional documentation has been received.
.Service Organizations are responsible for the timely transmittal of redemp-
tion requests by their customers to the Transfer Agent. In order to facili-
tate the timely transmittal of redemption requests, Service Organizations
may set times by which they must receive redemption requests. Service Orga-
nizations may also require additional documentation from you.
E-6
<PAGE>
SHAREHOLDER GUIDE
The Trust reserves the right to:
.Redeem the Administration Shares of any Service Organization whose account
balance falls below $50 as a result of a redemption. The Fund will not
redeem Administration Shares on this basis if the value of the account
falls below the minimum account balance solely as a result of market condi-
tions. The Fund will give 60 days' prior written notice to allow a Service
Organization to purchase sufficient additional shares of the Fund in order
to avoid such redemption.
.Redeem the shares in other circumstances determined by the Board of Trust-
ees to be in the best interest of the Trust.
.Pay redemptions by a distribution in-kind of securities (instead of cash).
If you receive redemption proceeds in-kind, you should expect to incur
transaction costs upon the disposition of those securities.
.Reinvest any dividends or other distributions which you have elected to
receive in cash should your check for such dividends or other distributions
be returned to the Fund as undeliverable or remain uncashed for six months.
In addition, that distribution and all future distributions payable to you
will be reinvested at NAV in additional Fund shares. No interest will
accrue on amounts represented by uncashed distributions or redemption
checks.
Can I Exchange My Investment From One Fund To Another?
A Service Organization may exchange Administration Shares of the Fund at NAV
for Administration Shares of any other Goldman Sachs Fund. The exchange
privilege may be materially modified or withdrawn at any time upon 60 days'
written notice.
<TABLE>
<CAPTION>
Instructions For Exchanging Shares:
---------------------------------------------------------------
<S> <C>
By Writing: .Write a letter of instruction that includes:
.The recordholder name(s) and signature(s)
.The account number
.The Fund names and Class of Shares
.The dollar amount to be exchanged
.Mail the request to:
Goldman Sachs Funds
4900 Sears Tower--60th Floor
Chicago, IL 60606-6372
---------------------------------------------------------------
By Telephone: If you have elected the telephone exchange
privilege on your Account Application:
.1-800-621-2550
(8:00 a.m. to 4:00 p.m. New York time)
---------------------------------------------------------------
</TABLE>
E-7
<PAGE>
You should keep in mind the following factors when making or considering an
exchange:
.You should obtain and carefully read the prospectus of the Fund you are
acquiring before making an exchange.
.All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirements of that Fund, except that this
requirement may be waived at the discretion of the Trust.
.Telephone exchanges normally will be made only to an identically registered
account.
.Shares may be exchanged among accounts with different names, addresses and
social security or other taxpayer identification numbers only if the
exchange instructions are in writing and are signed by an authorized person
designated on the Account Application.
.Exchanges are available only in states where exchanges may be legally made.
.It may be difficult to make telephone exchanges in times of drastic eco-
nomic or market conditions.
.Goldman Sachs may use reasonable procedures described under "What Do I Need
To Know About Telephone Redemption Requests?" in an effort to prevent unau-
thorized or fraudulent telephone exchange requests.
For federal income tax purposes, an exchange is treated as a redemption of
the shares surrendered in the exchange, on which you may be subject to tax,
followed by a purchase of shares received in the exchange. You should con-
sult your tax adviser concerning the tax consequences of an exchange.
What Types of Reports Will Be Sent Regarding Investments in Administration
Shares?
Service Organizations will receive from the Fund annual reports containing
audited financial statements and semi-annual reports. Service Organizations
will also be provided with a printed confirmation for each transaction in
their account and a monthly account statement. Service Organizations are
responsible for providing these or other reports to their customers who are
the beneficial owners of Administration Shares in accordance with the rules
that apply to their accounts with the Service Organizations.
E-8
<PAGE>
Taxation
TAXABILITY OF DISTRIBUTIONS
As with any investment, you should consider how your investment in the Fund
will be taxed. The tax information below is provided as general information.
More tax information is available in the Additional Statement. You should
consult your tax adviser about the federal, state, local or foreign tax con-
sequences of your investment in the Fund.
Unless your investment is an IRA or other tax-advantaged account, you should
consider the possible tax consequences of Fund distributions and the sale of
your Fund shares.
TAXES ON DISTRIBUTIONS
Distributions you receive from the Fund are generally subject to federal
income tax, and may also be subject to state or local taxes. This is true
whether you reinvest your distributions in additional Fund shares or receive
them in cash. For federal tax purposes, the Fund's income dividend distribu-
tions and short-term capital gain distributions are taxable to you as ordi-
nary income. Any long-term capital gain distributions are taxable as long-
term capital gains, no matter how long you have owned your Fund shares.
Although distributions are generally treated as taxable to you in the year
they are paid, distributions declared in October, November or December but
paid in January are taxable as if they were paid in December. The Fund will
inform shareholders of the character and tax status of all distributions
promptly after the close of each calendar year.
The Fund may be subject to foreign withholding or other foreign taxes on
income or gain from certain foreign securities. In general, the Fund may
deduct these taxes in computing its taxable income.
If you buy shares of the Fund before it makes a distribution, the distribu-
tion will be taxable to you even though it may actually be a return of a
portion of your investment. This is known as "buying a dividend."
D-1
<PAGE>
TAXABILITY OF SALES AND EXCHANGES
Your sale of Fund shares is a taxable transaction for federal income tax
purposes, and may also be subject to state and local taxes. For tax purpos-
es, the exchange of your Fund shares for shares of a different Goldman Sachs
Fund is the same as a sale. When you sell your shares, you will generally
recognize a capital gain or loss in an amount equal to the difference
between your adjusted tax basis in the shares and the amount received. Gen-
erally, this gain or loss is long-term or short-term depending on whether
your holding period exceeds twelve months, except that any loss realized on
shares held for six months or less will be treated as a long-term capital
loss to the extent of any long-term capital gain dividends that were
received on the shares.
OTHER INFORMATION
When you open your account, you should provide your social security or tax
identification number on your Account Application. By law, the Fund must
withhold 31% of your taxable distributions and any redemption proceeds if
you do not provide your correct taxpayer identification number, or certify
that it is correct, or if the IRS instructs the Fund to do so. Non-U.S.
investors may be subject to U.S. withholding and estate tax.
D-2
<PAGE>
Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks
The Fund will be subject to the risks associated with fixed-income securi-
ties. These risks include interest rate risk, credit risk and call/extension
risk. In general, interest rate risk involves the risk that when interest
rates decline, the market value of fixed-income securities tends to increase
(although some asset-backed securities will have less potential than other
debt securities for capital appreciation during periods of declining rates).
Conversely, when interest rates increase, the market value of fixed-income
securities tends to decline. Credit risk involves the risk that the issuer
could default on its obligations, and a Fund will not recover its invest-
ment. Call risk and extension risk are normally present in asset-backed
securities. For example, car owners have the option to prepay their car
loans. Therefore, the duration of a security backed by auto loans can either
shorten (call risk) or lengthen (extension risk). In general, if interest
rates on new auto loans fall sufficiently below the interest rates on exist-
ing outstanding auto loans, the rate of prepayment would be expected to
increase. Conversely, if auto loan interest rates rise above the interest
rates on existing outstanding auto loans, the rate of prepayment would be
expected to decrease. In either case, a change in the prepayment rate can
result in losses to investors.
The Investment Adviser will not consider the portfolio turnover rate a lim-
iting factor in making investment decisions for the Fund. A high rate of
portfolio turnover (100% or more) involves correspondingly greater expenses
which must be borne by the Fund and its shareholders, and is also likely to
result in higher short-term capital gains taxable to shareholders. The port-
folio turnover rate is calculated by dividing the lesser of the dollar
amount of sales or purchases of portfolio securities by the average monthly
value of the Fund's portfolio securities, excluding securities having a
maturity at the date of purchase of one year or less.
The following sections provide further information on certain types of secu-
rities and investment techniques that may be used by the Fund, including its
associated risks. Additional information is provided in the Additional
Statement, which is available upon request. Among other things, the Addi-
tional Statement describes certain fundamental investment restrictions that
cannot be changed without shareholder approval. You should note, however,
that the investment objective and all investment policies not specifically
designated as fundamental are non-fundamen-
D-3
<PAGE>
tal and may be changed without shareholder approval. If there is a change in
the Fund's investment objective, you should consider whether the Fund
remains an appropriate investment in light of your then current financial
positions and needs.
B. Other Portfolio Risks
Credit Risks. Debt securities purchased by the Fund may include securities
(including zero coupon bonds) issued by the U.S. government (and its agen-
cies, instrumentalities and sponsored enterprises), foreign governments,
domestic and foreign corporations, banks and other issuers. Some of these
fixed-income securities are described in the next section below. Further
information is provided in the Additional Statement.
Debt securities rated A or higher by Standard & Poor's or Moody's are con-
sidered "high grade." A security will be deemed to have met a rating
requirement if it receives the minimum required rating from at least one
such rating organization even though it has been rated below the minimum
rating by one or more other rating organizations, or if unrated by such rat-
ing organizations, is determined by the Investment Adviser to be of compara-
ble credit quality.
Risks of Derivative Investments. The Fund's transactions in options,
futures, options on futures, swaps, interest rate caps, floors and collars
and structured securities involve additional risk of loss. Loss can result
from a lack of correlation between changes in the value of derivative
instruments and the portfolio assets (if any) being hedged, the potential
illiquidity of the markets for derivative instruments, or the risks arising
from margin requirements and related leverage factors associated with such
transactions. The use of these management techniques also involves the risk
of loss if the Investment Adviser is incorrect in its expectation of fluctu-
ations in securities prices or interest rates. The Fund may also invest in
derivative investments for non-hedging purposes (that is, to seek to
increase total return), which is considered a speculative practice and pre-
sents even greater risk of loss.
Some floating-rate derivative debt securities can present more complex types
of derivative and interest rate risks. For example, range floaters are sub-
ject to the risk that the coupon will be reduced below market rates if a
designated interest rate floats outside of a specified interest rate band or
collar. Dual index or yield curve floaters are subject to lower prices in
the event of an unfavorable change in the spread between two designated
interest rates.
Risks of Foreign Investments. The Fund may invest in foreign investments.
Foreign investments involve special risks that are not typically associated
with domes-
D-4
<PAGE>
APPENDIX A
tic investments. Foreign investments may be affected by changes in foreign
or U.S. laws or restrictions applicable to such investments.
Brokerage commissions, custodial services and other costs relating to
investment in international securities markets generally are more expensive
than in the United States. In addition, clearance and settlement procedures
may be different in foreign countries and, in certain markets, such proce-
dures have been unable to keep pace with the volume of securities transac-
tions, thus making it difficult to conduct such transactions.
Foreign issuers are not generally subject to uniform accounting, auditing
and financial reporting standards comparable to those applicable to U.S.
issuers. There may be less publicly available information about a foreign
issuer than a U.S. issuer. In addition, there is generally less government
regulation of foreign markets, companies and securities dealers than in the
United States. Foreign securities markets may have substantially less volume
than U.S. securities markets and securities of many foreign issuers are less
liquid and more volatile than securities of comparable domestic issuers.
Furthermore, with respect to certain foreign countries, there is a possibil-
ity of nationalization, expropriation or confiscatory taxation, imposition
of withholding or other taxes on dividend or interest payments (or, in some
cases, capital gains), limitations on the removal of funds or other assets
of the Fund, and political or social instability or diplomatic developments
which could affect investments in those countries.
Concentration of the Fund's assets in one or a few countries will subject
the Fund to greater risks than if the Fund's assets were not geographically
concentrated.
Investment in sovereign debt obligations by the Fund, involves risks not
present in debt obligations of corporate issuers. The issuer of the debt or
the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal or interest when due in accordance
with the terms of such debt, and the Fund may have limited recourse to com-
pel payment in the event of a default. Periods of economic uncertainty may
result in the volatility of market prices of sovereign debt, and in turn a
Fund's NAV, to a greater extent than the volatility inherent in debt obliga-
tions of U.S. issuers.
A sovereign debtor's willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign currency reserves, the avail-
ability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the sov-
ereign debtor's policy toward international lenders, and the political
constraints to which a sovereign debtor may be subject.
D-5
<PAGE>
Risks of Illiquid Securities. The Fund may invest up to 15% of its net
assets in illiquid securities which cannot be disposed of in seven days in
the ordinary course of business at fair value. Illiquid securities include:
.Both domestic and foreign securities that are not readily marketable
.Repurchase agreements and time deposits with a notice or demand period of
more than seven days
.Certain over-the-counter options
.Certain structured securities and all swap transactions
.Certain restricted securities, unless it is determined, based upon a review
of the trading markets for a specific restricted security, that such
restricted security is eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 ("144A Securities") and, therefore, is liquid.
Investing in 144A Securities may decrease the liquidity of the Fund's port-
folio to the extent that qualified institutional buyers become for a time
uninterested in purchasing these restricted securities. The purchase price
and subsequent valuation of restricted and illiquid securities normally
reflect a discount, which may be significant, from the market price of com-
parable securities for which a liquid market exists.
Temporary Investment Risks. The Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. Government Securities
.Repurchase agreements collateralized by U.S. Government Securities
When a Fund's assets are invested in such instruments, the Fund may not be
achieving its investment objective.
C. Portfolio Securities and Techniques
This section provides further information on certain types of securities and
investment techniques that may be used by the Fund, including its associated
risks. Further information is provided in the Additional Statement, which is
available upon request.
U.S. Government Securities. The Fund may invest in U.S. Government Securi-
ties. U.S. Government Securities include U.S. Treasury obligations and obli-
gations issued or guaranteed by U.S. government agencies, instrumentalities
or sponsored enterprises. U.S. Government Securities may be supported by (a)
the full faith and credit of the U.S. Treasury (such as the Government
National Mortgage Association ("Ginnie Mae")); (b) the right of the issuer
to borrow from the U.S. Treasury (such as securities of the Student Loan
Marketing Association); (c) the
D-6
<PAGE>
APPENDIX A
discretionary authority of the U.S. government to purchase certain obliga-
tions of the issuer (such as the Federal National Mortgage Association
("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac"));
or (d) only the credit of the issuer. U.S. Government Securities also
include Treasury receipts, zero coupon bonds and other stripped U.S. Govern-
ment Securities, where the interest and principal components of stripped
U.S. Government Securities are traded independently.
Custodial Receipts. The Fund may invest in custodial receipts. Interests in
U.S. Government Securities may be purchased in the form of custodial
receipts that evidence ownership of future interest payments, principal pay-
ments or both on certain notes or bonds issued or guaranteed as to principal
and interest by the U.S. government, its agencies, instrumentalities, polit-
ical subdivisions or authorities. For certain securities law purposes, cus-
todial receipts are not considered obligations of the U.S. government.
Asset-Backed Securities. The Fund may invest in asset-backed securities.
Asset-backed securities are securities whose principal and interest payments
are collateralized by pools of assets such as auto loans, credit card
receivables, leases, installment contracts and personal property. Asset-
backed securities are often subject to more rapid repayment than their
stated maturity date would indicate as a result of the pass-through of pre-
payments of principal on the underlying loans. During periods of declining
interest rates, prepayment of loans underlying asset-backed securities can
be expected to accelerate. Accordingly, the Fund's ability to maintain posi-
tions in such securities will be affected by reductions in the principal
amount of such securities resulting from prepayments, and its ability to
reinvest the returns of principal at comparable yields is subject to gener-
ally prevailing interest rates at that time. There is the possibility that,
in some cases, recoveries on repossessed collateral may not be available to
support payments on these securities. In the event of a default, the Fund
may suffer a loss if it cannot sell collateral quickly and receive the
amount it is owed.
Corporate Debt Obligations; Convertible Securities. The Fund may invest in
corporate debt obligations and convertible securities. Corporate debt obli-
gations include bonds, notes, debentures, commercial paper and other obliga-
tions of corporations to pay interest and repay principal, and include secu-
rities issued by banks, financial institutions and other entities. The Fund
may also invest in other short-term obligations payable in U.S. Dollars and
issued or guaranteed by U.S. corporations, non-U.S. corporations or other
entities.
Convertible securities are preferred stock or debt obligations that are con-
vertible into common stock. Convertible securities generally offer lower
interest or dividend yields than non-convertible securities of similar qual-
ity. Convertible securi-
D-7
<PAGE>
ties in which the Fund invests are subject to the same rating criteria as
its other investments in fixed-income securities. Convertible securities
have both equity and fixed-income risk characteristics. Like all fixed-
income securities, the value of convertible securities is susceptible to the
risk of market losses attributable to changes in interest rates. Generally,
the market value of convertible securities tends to decline as interest
rates increase and, conversely, to increase as interest rates decline. How-
ever, when the market price of the common stock underlying a convertible
security exceeds the conversion price of the convertible security, the con-
vertible security tends to reflect the market price of the underlying common
stock. As the market price of the underlying common stock declines, the con-
vertible security, like a fixed-income security, tends to trade increasingly
on a yield basis, and thus may not decline in price to the same extent as
the underlying common stock.
Structured Securities. The Fund may invest in structured securities. Struc-
tured securities are securities whose value is determined by reference to
changes in the value of specific currencies, interest rates, commodities,
indices or other financial indicators (the "Reference") or the relative
change in two or more References. The interest rate or the principal amount
payable upon maturity or redemption may be increased or decreased depending
upon changes in the applicable Reference. Structured securities may be posi-
tively or negatively indexed, so that appreciation of the Reference may pro-
duce an increase or decrease in the interest rate or value of the security
at maturity. In addition, changes in the interest rates or the value of the
security at maturity may be a multiple of changes in the value of the Refer-
ence. Consequently, structured securities may present a greater degree of
market risk than other types of fixed-income securities, and may be more
volatile, less liquid and more difficult to price accurately than less com-
plex securities.
Zero Coupon Bonds. The Fund may invest in zero coupon bonds. Such bonds are
issued at a discount from their face value because interest payments are
typically postponed until maturity. The market prices of these securities
generally are more volatile than the market prices of interest-bearing
securities and are likely to respond to a greater degree to changes in
interest rates than interest-bearing securities having similar maturities
and credit quality.
Options on Securities and Securities Indices. A put option gives the pur-
chaser of the option the right to sell, and the writer (seller) of the
option the obligation to buy, the underlying instrument during the option
period. A call option gives the purchaser of the option the right to buy,
and the writer (seller) of the option the obligation to sell, the underlying
instrument during the option period. The Fund
D-8
<PAGE>
APPENDIX A
may write (sell) covered call and put options and purchase put and call
options on any securities in which it may invest or on any securities index
comprised of securities in which it may invest.
The writing and purchase of options is a highly specialized activity which
involves special investment risks. Options may be used for either hedging or
to seek to increase total return (which is considered a speculative activi-
ty). The successful use of options depends in part on the ability of the
Investment Adviser to manage future price fluctuations and the degree of
correlation between the options and securities markets. If the Investment
Adviser is incorrect in its expectation of changes in market prices or
determination of the correlation between the instruments or indices on which
options are written and purchased and the instruments in the Fund's invest-
ment portfolio, the Fund may incur losses that it would not otherwise incur.
The use of options can also increase the Fund's transaction costs. Options
written or purchased by the Fund may be traded on either U.S. or foreign
exchanges or over-the- counter. Foreign and over-the-counter options will
present greater possibility of loss because of their greater illiquidity and
credit risks.
Futures Contracts and Options on Futures Contracts. Futures contracts are
standardized, exchange-traded contracts that provide for the sale or pur-
chase of a specified financial instrument or currency at a future time at a
specified price. An option on a futures contract gives the purchaser the
right (and the writer of the option the obligation) to assume a position in
a futures contract at a specified exercise price within a specified period
of time. A futures contract may be based on various securities (such as U.S.
Government Securities), securities indices and other financial instruments
and indices. The Fund may engage in futures transactions on U.S. exchanges.
The Fund may purchase and sell futures contracts, and purchase and write
call and put options on futures contracts, in order to seek to increase
total return or to hedge against changes in interest rates, securities
prices or to otherwise manage its term structure, sector selection and dura-
tion in accordance with its investment objective and policies. The Fund may
also enter into closing purchase and sale transactions with respect to such
contracts and options. The Fund will engage in futures and related options
transactions for bona fide hedging purposes as defined in regulations of the
Commodity Futures Trading Commission or to seek to increase total return to
the extent permitted by such regulations. The Fund may not purchase or sell
futures contracts or purchase or sell related options to seek to increase
total return, except for closing purchase or sale transactions, if immedi-
ately thereafter the sum of the amount of initial margin deposits and premi-
ums paid on the Fund's outstanding positions in futures and related options
entered
D-9
<PAGE>
into for the purpose of seeking to increase total return would exceed 5% of
the market value of the Fund's net assets.
Futures contracts and related options present the following risks:
.While the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates, securities prices or currency
exchange rates may result in poorer overall performance than if the Fund
had not entered into any futures contracts or options transactions.
.Because perfect correlation between a futures position and portfolio posi-
tion that is intended to be protected is impossible to achieve, the desired
protection may not be obtained and the Fund may be exposed to additional
risk of loss.
.The loss incurred by the Fund in entering into futures contracts and in
writing call options on futures is potentially unlimited and may exceed the
amount of the premium received.
.Futures markets are highly volatile and the use of futures may increase the
volatility of the Fund's NAV.
.As a result of the low margin deposits normally required in futures trad-
ing, a relatively small price movement in a futures contract may result in
substantial losses to the Fund.
.Futures contracts and options on futures may be illiquid, and exchanges may
limit fluctuations in futures contract prices during a single day.
Floating and Variable Rate Obligations. The Fund may purchase floating and
variable rate obligations. The value of these obligations is generally more
stable than that of a fixed rate obligation in response to changes in inter-
est rate levels. 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 ordinar-
ily 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. The
Fund may purchase 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.
When-Issued Securities and Forward Commitments. The Fund may purchase when-
issued securities and enter into forward commitments. When-issued securities
are securities that have been authorized, but not yet issued. When-issued
securities are purchased in order to secure what is considered to be an
advantageous price and yield to the Fund at the time of entering into the
transaction. A forward commitment involves entering into a contract to pur-
chase or sell securities for a fixed price at a future date beyond the cus-
tomary settlement period.
D-10
<PAGE>
APPENDIX A
The purchase of securities on a when-issued or forward commitment basis
involves a risk of loss if the value of the security to be purchased
declines before the settlement date. Conversely, the sale of securities on a
forward commitment basis involves the risk that the value of the securities
sold may increase before the settlement date. Although the Fund will gener-
ally purchase securities on a when-issued or forward commitment basis with
the intention of acquiring the securities for its portfolio, the Fund may
dispose of when-issued securities or forward commitments prior to settlement
if the Investment Adviser deems it appropriate.
Lending of Portfolio Securities. The Fund may engage in securities lending.
Securities lending involves the lending of securities owned by the Fund to
financial institutions such as certain broker-dealers. The borrowers are
required to secure their loans continuously with cash, cash equivalents,
U.S. Government Securities or letters of credit in an amount at least equal
to the market value of the securities loaned. Cash collateral may be
invested in cash equivalents. To the extent that cash collateral is invested
in other investment securities, such collateral will be subject to market
depreciation or appreciation, and the Fund will be responsible for any loss
that might result from its investment of the borrowers' collateral. If the
Investment Adviser determines to make securities loans, the value of the
securities loaned may not exceed 33 1/3% of the value of the total assets of
the Fund (including the loan collateral).
The Fund may lend its securities to increase its income. The Fund may, how-
ever, experience delay in the recovery of its securities, or capital loss if
the institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.
Repurchase Agreements. Repurchase agreements involve the purchase of securi-
ties subject to the seller's agreement to repurchase them at a mutually
agreed upon date and price. The Fund may enter into repurchase agreements
with dealers in U.S. Government Securities and member banks of the Federal
Reserve System which furnish collateral at least equal in value or market
price to the amount of their repurchase obligation. The Fund may also enter
into repurchase agreements involving certain foreign government securities.
If the other party or "seller" defaults, the Fund might suffer a loss to the
extent that the proceeds from the sale of the underlying securities and
other collateral held by the Fund are less than the repurchase price and the
Fund's costs associated with delay and enforcement of the repurchase agree-
ment. In addition, in the event of bankruptcy of the seller, the Fund could
suffer additional losses if a court determines that the Fund's interest in
the collateral is not enforceable.
D-11
<PAGE>
In evaluating whether to enter into a repurchase agreement, the Investment
Adviser will carefully consider the creditworthiness of the seller. The
Fund, together with other registered investment companies having advisory
agreements with the Investment Adviser or any of its affiliates, may trans-
fer uninvested cash balances into a single joint account, the daily aggre-
gate balance of which will be invested in one or more repurchase agreements.
Borrowings. The Fund can borrow money from banks with banks in amounts not
exceeding one-third of its total assets. The Fund may not make additional
investments if borrowings exceed 5% of its total assets. Borrowings involve
leverage. If the securities held by the Fund decline in value while these
transactions are outstanding, the NAV of the Fund's outstanding shares will
decline in value by proportionately more than the decline in value of the
securities.
Interest Rate Swaps, Credit Swaps and Interest Rate Caps, Floors and Col-
lars. Interest rate swaps involve the exchange by the Fund with another
party of their respective commitments to pay or receive interest, such as an
exchange of fixed-rate payments for floating rate payments. Credit swaps
involve the receipt of floating or fixed rate payments in exchange for
assuming potential credit losses of an underlying security. Credit swaps
give one party to a transaction the right to dispose of or acquire an asset
(or group of assets), or the right to receive or make a payment from the
other party, upon the occurrence of specified credit events. The purchase of
an interest rate cap entitles the purchaser, to the extent that a specified
index exceeds a predetermined interest rate, to receive payment of interest
on a notional principal amount from the party selling such interest rate
cap. The purchase of an interest rate floor entitles the purchaser, to the
extent that a specified index falls below a predetermined interest rate, to
receive payments of interest on a notional principal amount from the party
selling the interest rate floor. An interest rate collar is the combination
of a cap and a floor that preserves a certain return within a predetermined
range of interest rates.
The Fund may enter into swap transactions for hedging purposes or to seek to
increase total return. The use of interest rate and credit swaps, as well as
interest rate caps, floors and collars, is a highly specialized activity
which involves investment techniques and risks different from those associ-
ated with ordinary portfolio securities transactions. If the Investment
Adviser is incorrect in its forecasts of market values or interest rates the
investment performance of the Fund would be less favorable than it would
have been if these investment techniques were not used.
Other Investment Companies. The Fund may invest in securities of other
investment companies subject to statutory limitations prescribed by the Act.
These limitations include a prohibition on the Fund acquiring more than 3%
of the voting
D-12
<PAGE>
APPENDIX A
shares of any other investment company, and a prohibition on investing more
than 5% of the Fund's total assets in securities of any one investment com-
pany or more than 10% of its total assets in securities of all investment
companies. The Fund will indirectly bear its proportionate share of any man-
agement fees and other expenses paid by such other investment companies.
Preferred Stock. The Fund may invest in preferred stocks. Preferred stocks
are securities that represent an ownership interest providing the holder
with claims on the issuer's earnings and assets before common stock owners
but after bond owners. Unlike debt securities, the obligations of an issuer
of preferred stock, including dividend and other payment obligations, may
not typically be accelerated by the holders of such preferred stock on the
occurrence of an event of default or other non-compliance by the issuer of
the preferred stock.
D-13
<PAGE>
Index
<TABLE>
<C> <C> <S>
x General Investment
Management Approach
x Fund Investment
Objectives and
Strategies
x Enhanced Cash Fund
x Other Investment
Practices and
Securities
x Principal Risks of the
Fund
x Fund Performance
x Fund Fees and Expenses
</TABLE>
<TABLE>
<C> <C> <S>
x Service Providers
x Dividends
x Shareholder Guide
x How to Buy Shares
x How to Sell Shares
x Taxation
x Appendix A
Additional Information on
Portfolio Risks,
Securities and Techniques
</TABLE>
<PAGE>
Fixed Income Funds
Prospectus (Administration Shares)
FOR MORE INFORMATION
Annual/Semi-annual Report
Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's annual
reports, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the
last fiscal year. The annual report for the Enhanced Cash Fund for the fis-
cal period ended October 31, 2000 will become available to shareholders in
December 2000.
Statement of Additional Information
Additional information about the Fund and its policies is also available in
the Fund's Additional Statement. The Additional Statement is incorporated by
reference into this Prospectus (is legally considered part of this Prospec-
tus).
The Fund's annual and semi-annual reports, and the Additional Statement, are
available free upon request by calling Goldman Sachs at 1-800-621-2550.
To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-621-2550
By mail - Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606-
6372
By e-mail - [email protected]
On the Internet - Text-only versions of the Fund's documents are located
online and may be downloaded from:
SEC EDGAR database - http://www.sec.gov
You may review and obtain copies of Fund documents by visiting the SEC's
Public Reference Room in Washington, D.C. You may also obtain copies of
Fund documents, after paying a duplicating fee, by writing to the SEC's
Public Reference Section, Washington, D.C. 20549-0102 or by electronic
request to: [email protected]. Information on the operation of the public
reference room may be obtained by calling the SEC at (202) 942-8090.
[LOGO OF GOLDMAN SACHS]
The Fund's investment company registration number is 811-5349.
<PAGE>
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 3, 2000
SUBJECT TO COMPLETION
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICIATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
PART B
STATEMENT OF ADDITIONAL INFORMATION
Institutional Shares
Administration Shares
GOLDMAN SACHS ENHANCED CASH FUND
(A portfolio of Goldman Sachs Trust)
Goldman Sachs Trust
4900 Sears Tower
Chicago, Illinois 60606
This Statement of Additional Information (the "Additional Statement") is not a
prospectus. This Additional Statement should be read in conjunction with the
prospectuses for the Institutional and Administration Shares of Goldman Sachs
Enhanced Cash Fund dated July 17, 2000, as may be further amended and/or
supplemented from time to time (the "Prospectuses"). The Prospectuses may be
obtained without charge from Goldman, Sachs & Co. by calling the telephone
number, or writing to one of the addresses, listed below or from institutions
("Service Organizations") for the benefit of their customers.
The date of this Additional Statement is July 17, 2000.
B-1
<PAGE>
TABLE OF CONTENTS
INTRODUCTION.................................................................B-4
INVESTMENT OBJECTIVES AND POLICIES...........................................B-5
DESCRIPTION OF INVESTMENT SECURITIES AND PRACTICES...........................B-6
INVESTMENT RESTRICTIONS.....................................................B-22
MANAGEMENT..................................................................B-24
PORTFOLIO TRANSACTIONS......................................................B-39
SHARES OF THE TRUST.........................................................B-40
NET ASSET VALUE.............................................................B-44
TAXATION....................................................................B-45
PERFORMANCE INFORMATION.....................................................B-51
OTHER INFORMATION...........................................................B-54
ADMINISTRATION PLAN.........................................................B-56
APPENDIX A...................................................................1-A
APPENDIX B...................................................................1-B
B-2
<PAGE>
GOLDMAN SACHS ASSET MANAGEMENT
Investment Adviser
32 Old Slip
New York, New York 10005
GOLDMAN, SACHS & CO.
Distributor
85 Broad Street
New York, NY 10004
GOLDMAN, SACHS & CO.
Transfer Agent
4900 Sears Tower
Chicago, Illinois 60606
Toll free (in U.S.).......800-621-2550
B-3
<PAGE>
INTRODUCTION
Goldman Sachs Trust (the "Trust") is an open-end, management investment
company. The Trust is organized as a Delaware business trust, and is a successor
to a Massachusetts business trust that was combined with the Trust on April 30,
1997. This Additional Statement describes the Trust's Goldman Sachs Enhanced
Cash Fund ("Fund"). The Trustees of the Trust have authority under the
Declaration of Trust to create and classify shares into separate series and to
classify and reclassify any series of shares into one or more classes without
further action by shareholders. Pursuant thereto, the Trustees have created the
Fund and other series. The Fund is authorized to issue two classes of shares:
Institutional Shares and Administration Shares. Additional series may be added
in the future from time to time. The Fund is a diversified, open-end management
investment company.
Goldman Sachs Asset Management ("GSAM" or the "Investment Adviser"), a unit
of the Investment Management Division of Goldman, Sachs & Co. ("Goldman Sachs"),
serves as the Investment Adviser to the Fund. In addition, Goldman Sachs serves
as the Fund's distributor and transfer agent. The Fund's custodian is State
Street Bank and Trust Company.
Because the Fund's shares may be redeemed upon request of a shareholder on
any business day at net asset value, the Fund offers greater liquidity than many
competing investments, such as certificates of deposit and direct investments in
certain securities in which the Fund may invest. However, unlike certificates of
deposits, shares of the Fund are not insured by the Federal Deposit Insurance
Corporation.
The following information relates to and supplements the description of the
Fund's investment policies contained in the Prospectuses. See the Prospectuses
for a fuller description of the Fund's investment objective and policies.
Investing in the Fund entails certain risks and there is no assurance that the
Fund will achieve its objective. Capitalized terms used but not defined herein
have the same meaning as in the prospectuses.
Experienced Management. Successfully creating and managing a portfolio of
----------------------
securities requires professionals with extensive experience. Goldman Sachs'
highly skilled portfolio management team brings together many years of
experience in the analysis, valuation and trading of U.S. and foreign fixed-
income securities.
B-4
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund is designed for investors who seek returns in excess of
traditional money market products while maintaining an emphasis on preservation
of capital and liquidity. The Fund invests, under normal circumstances,
primarily in a portfolio of fixed income securities, including non-mortgage-
backed U.S. Government Securities, corporate notes and commercial paper and
fixed and floating rate asset-backed securities rated, at the time of
investment, at least A by a nationally recognized statistical rating
organization ("NRSRO") or, if unrated, determined by the Investment Adviser to
be of comparable quality.
A number of investment strategies will be used to achieve the Fund's
investment objective, including market sector selection, determination of yield
curve exposure, and issuer selection. In addition, the Investment Adviser will
attempt to take advantage of pricing inefficiencies in the fixed-income markets.
Market sector selection is the underweighting or overweighting of one or more of
the four market sectors (i.e., U.S. Treasuries, U.S. government agencies,
corporate securities and asset-backed securities) in which the Fund primarily
invests. The decision to overweight or underweight a given market sector is
based on expectations of future yield spreads between different sectors. Yield
curve exposure strategy consists of overweighting or underweighting different
maturity sectors to take advantage of the shape of the yield curve. Issuer
selection is the purchase and sale of corporate securities based on a
corporation's current and expected credit standing. To take advantage of price
discrepancies between securities resulting from supply and demand imbalances or
other technical factors, the Fund may simultaneously purchase and sell
comparable, but not identical, securities. The Investment Adviser will usually
have access to the research of, and proprietary technical models developed by,
Goldman Sachs and will apply quantitative and qualitative analysis in
determining the appropriate allocations among the categories of issuers and
types of securities.
The Fund's overall returns are generally likely to move in the opposite
direction as interest rates. Therefore, when interest rates decline, the Fund's
return is likely to increase. Conversely, when interest rates increase, the
Fund's return is likely to decline. In exchange for accepting a higher degree of
share price fluctuation, investors have the potential to achieve a higher return
from the Fund than from shorter-term investments.
Preservation of Capital. The Fund seeks to reduce principal fluctuation by
-----------------------
maintaining a target duration equal to that of a nine-month U.S. Treasury Bill
(plus or minus three months) and an approximate interest rate sensitivity of a
nine-month U.S. Treasury Bill, as well as utilizing certain interest rate
hedging techniques. There is no assurance that these strategies will be
successful.
Liquidity. Because the Fund's shares may be redeemed upon request of a
---------
shareholder on any business day at net asset value, the Fund offers greater
liquidity than many competing investments such as certificates of deposit and
direct investments in certain securities in which the Fund may invest.
A Sophisticated Investment Process. The Fund will attempt to control its
----------------------------------
exposure to interest rate risk, including overall market exposure and the spread
risk of particular sectors and securities, through active portfolio management
techniques. The Fund's investment process starts with a review of trends for the
overall economy as well as for different sectors of the fixed-income securities
markets. Goldman Sachs' portfolio managers then analyze yield spreads, implied
volatility and the shape of the yield curve. In planning the Fund's portfolio
investment strategies, the Investment Adviser is able to
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draw upon the economic and fixed-income research resources of Goldman Sachs. The
Investment Adviser will use a sophisticated analytical process including Goldman
Sachs' option-adjusted spread model to assist in structuring and maintaining the
Fund's investment portfolio. In determining the Fund's investment strategy and
making market timing decisions, the Investment Adviser will have access to input
from Goldman Sachs' economists and fixed-income analysts.
DESCRIPTION OF INVESTMENT SECURITIES AND PRACTICES
U. S. Government Securities
The Fund may invest in U.S. Government Securities. Some U.S. Government
Securities (such as Treasury bills, notes and bonds, which differ only in their
interest rates, maturities and times of issuance) are supported by the full
faith and credit of the United States. Others, such as obligations issued or
guaranteed by U.S. government agencies, instrumentalities or sponsored
enterprises, are supported either by (a) the right of the issuer to borrow from
the U.S. Treasury (such as securities of the Student Loan Marketing
Association), (b) the discretionary authority of the U.S. government to purchase
certain obligations of the issuer (such as securities of Federal National
Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation
("Freddie Mac")) or (c) only the credit of the issuer (such as securities of the
Financing Corporation). The U.S. government is under no legal obligation, in
general, to purchase the obligations of its agencies, instrumentalities or
sponsored enterprises. No assurance can be given that the U.S. government will
provide financial support to the U.S. government agencies, instrumentalities or
sponsored enterprises in the future.
U.S. Government Securities include (to the extent consistent with the
Investment Company Act of 1940, as amended (the "Act")) securities for which the
payment of principal and interest is backed by an irrevocable letter of credit
issued by the U.S. government, or its agencies, instrumentalities or sponsored
enterprises. U.S. Government Securities also include (to the extent consistent
with the Act) participations in loans made to foreign governments or their
agencies that are guaranteed as to principal and interest by the U.S. government
or its agencies, instrumentalities or sponsored enterprises. The secondary
market for certain of these participations is extremely limited. In the absence
of a suitable secondary market, such participations are regarded as illiquid.
The Fund may also purchase U.S. Government Securities in private placements
and may invest in separately traded principal and interest components of
securities guaranteed or issued by the U.S. Treasury that are traded
independently under the separate trading of registered interest and principal of
securities program ("STRIPS").
Custodial Receipts
The Fund may invest in custodial receipts in respect of securities issued
or guaranteed as to principal and interest by the U.S. government, its agencies,
instrumentalities, political subdivisions or authorities. Such custodial
receipts evidence ownership of future interest payments, principal payments or
both on certain notes or bonds issued or guaranteed as to principal and interest
by the U.S. government, its agencies, instrumentalities, political subdivisions
or authorities. These custodial receipts are known by various names, including
"Treasury Receipts," "Treasury Investors Growth Receipts" ("TIGRs") and
"Certificates of Accrual on Treasury Securities" ("CATs"). For certain
securities law purposes, custodial receipts are not considered U.S. Government
Securities.
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Asset-Backed Securities
Asset-backed securities represent participation in, or are secured by and
payable from, assets such as motor vehicle installment sales, 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 assets are securitized through the use of trusts and special
purpose corporations. Payments or distributions of principal and interest may be
guaranteed up to certain amounts and for a certain time period by a letter of
credit or a pool insurance policy issued by a financial institution unaffiliated
with the trust or corporation, or other credit enhancements may be present.
Such securities are often subject to more rapid repayment than their stated
maturity date would indicate as a result of the pass-through of prepayments of
principal on the underlying loans. During periods of declining interest rates,
prepayment of loans underlying asset-backed securities can be expected to
accelerate. Accordingly, the Fund's ability to maintain positions in such
securities will be affected by reductions in the principal amount of such
securities resulting from prepayments, and its ability to reinvest the returns
of principal at comparable yields is subject to generally prevailing interest
rates at that time. To the extent that the Fund invests in asset-backed
securities, the values of its portfolio securities will vary with changes in
market interest rates generally and the differentials in yields among various
kinds of asset-backed securities.
Credit card receivables are generally unsecured and the debtors on such
receivables are entitled to the protection of a number of state and federal
consumer credit laws, many of which give such debtors the right to set-off
certain amounts owed on the credit cards, thereby reducing the balance due.
Automobile receivables generally are secured, but by automobiles rather than
residential real property. Most issuers of automobile receivables permit the
loan servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
asset-backed securities. In addition, because of the large number of vehicles
involved in a typical issuance and technical requirements under state laws, the
trustee for the holders of the automobile receivables may not have a proper
security interest in the underlying automobiles. Therefore, there is the
possibility that, in some cases, recoveries on repossessed collateral may not be
available to support payments on these securities.
Zero Coupon Bonds
The Fund may invest in zero coupon bonds. Zero coupon bonds are debt
securities issued or sold at a discount from their face value and which do not
entitle the holder to any periodic payment of interest prior to maturity or a
specified date. The original issue discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates, the
liquidity of the security and the perceived credit quality of the issuer. These
securities also may take the form of debt securities that have been stripped of
their unmatured interest coupons, the coupons themselves or receipts or
certificates representing interests in such stripped debt obligations or
coupons. The market prices of zero coupon bonds generally are more volatile than
the market prices of interest bearing securities and are likely to respond to a
greater degree to changes in interest rates than interest bearing securities
having similar maturities and credit quality.
Zero coupon bonds involve the additional risk that, unlike securities that
periodically pay interest to maturity, the Fund will realize no cash until a
specified future payment date unless a portion of such securities is sold and,
if the issuer of such securities defaults, the Fund may obtain no return at all
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on its investment. In addition, even though such securities do not provide for
the payment of current interest in cash, the Fund is nonetheless required to
accrue income on such investments for each taxable year and generally are
required to distribute such accrued amounts (net of deductible expenses, if any)
to avoid being subject to tax. Because no cash is generally received at the time
of the accrual, the Fund may be required to liquidate other portfolio securities
to obtain sufficient cash to satisfy federal tax distribution requirements
applicable to the Fund. A portion of the discount with respect to stripped
tax-exempt securities or their coupons may be taxable. See "Taxation."
Variable and Floating Rate Securities
The interest rates payable on certain securities in which the Fund may
invest are not fixed and may fluctuate based upon changes in market rates. A
variable rate obligation has an interest rate which is adjusted at pre-
designated periods in response to changes in the market rate of interest on
which the interest rate is based. Variable and floating rate obligations are
less effective than fixed rate instruments at locking in a particular yield.
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. Nevertheless, such obligations may fluctuate in value in response to
interest rate changes if there is a delay between changes in market interest
rates and the interest reset date for the obligations.
Preferred Stock
The Fund may invest in preferred stock. Preferred stocks are securities
that represent an ownership interest providing the holder with claims on the
issuer's earnings and assets before common stock owners but after bond owners.
Unlike debt securities, the obligations of an issuer of preferred stock,
including dividend and other payment obligations, may not typically be
accelerated by the holders of such preferred stock on the occurrence of an event
of default (such as a covenant default or filing of a bankruptcy petition) or
other non-compliance by the issuer with the terms of the preferred stock. Often,
however, on the occurrence of any such event of default or non-compliance by the
issuer, preferred stockholders will be entitled to gain representation on the
issuer's board of directors or increase their existing board representation. In
addition, preferred stockholders may be granted voting rights with respect to
certain issues on the occurrence of any event of default.
Corporate Debt Obligations
The Fund may invest in corporate debt obligations, including obligations of
industrial, utility and financial issuers. Corporate debt obligations include
bonds, notes, debentures and other obligations of corporations to pay interest
and repay principal. Corporate debt obligations are subject to the risk of an
issuer's inability to meet principal and interest payments on the obligations
and may also be subject to price volatility due to such factors as market
interest rates, market perception of the creditworthiness of the issuer and
general market liquidity.
Commercial Paper and Other Short-Term Corporate Obligations
The Fund may invest in commercial paper and other short-term obligations
payable in U.S. dollars and issued or guaranteed by U.S. corporations, non-U.S.
corporations or other entities.
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Commercial paper represents short-term unsecured promissory notes issued in
bearer form by banks or bank holding companies, corporations and finance
companies.
Bank Obligations
The Fund may invest in U.S. dollar denominated obligations issued or
guaranteed by U.S. and foreign banks. Bank obligations, including without
limitation time deposits, bankers' acceptances and certificates of deposit, may
be general obligations of the parent bank or may be obligations only of the
issuing branch pursuant to the terms of the specific obligations or government
regulation.
Banks are subject to extensive governmental regulations which may limit
both the amount and types of loans which may be made and interest rates which
may be charged. Foreign banks are subject to different regulations and are
generally permitted to engage in a wider variety of activities than U.S. banks.
In addition, the profitability of the banking industry is largely dependent upon
the availability and cost of funds for the purpose of financing lending
operations under prevailing money market conditions. General economic conditions
as well as exposure to credit losses arising from possible financial
difficulties of borrowers play an important part in the operations of this
industry.
Foreign Investments
The Fund may invest in U.S. dollar denominated fixed-income securities of
foreign issuers. Investment in foreign securities may offer potential benefits
that are not available from investing exclusively in domestic issues. Foreign
countries may have economic policies or business cycles different from those of
the U.S. and markets for foreign fixed-income securities do not necessarily move
in a manner parallel to U.S. markets. Investing in the securities of foreign
issuers also involves, however, certain special considerations, including those
set forth below, which are not typically associated with investing in U.S.
issuers.
Since foreign issuers generally are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies, there may be less publicly
available information about a foreign company than about a comparable U.S.
company. Volume and liquidity in most foreign bond markets are less than in the
United States markets and securities of many foreign companies are less liquid
and more volatile than securities of comparable U.S. companies. Fixed
commissions on foreign securities exchanges are generally higher than negotiated
commissions on U.S. exchanges, although the Fund endeavors to achieve the most
favorable net results on its portfolio transactions. There is generally less
government supervision and regulation of securities markets and exchanges,
brokers, dealers and listed and unlisted companies than in the United States.
For example, there may be no comparable provisions under certain foreign laws to
insider trading and similar investor protection securities laws that apply with
respect to securities transactions consummated in the United States. Mail
service between the United States and foreign countries may be slower or less
reliable than within the United States, thus increasing the risk of delayed
settlement of portfolio transactions or loss of certificates for portfolio
securities.
Foreign markets also have different clearance and settlement procedures,
and in certain markets there have been times when settlements have been unable
to keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Such delays in settlement could result in temporary
periods when a portion of the Fund's assets is uninvested and no return is
earned on such assets. The inability of the Fund to make intended security
purchases due to settlement problems could cause the Fund to miss attractive
investment opportunities. Inability to dispose of portfolio securities
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due to settlement problems could result either in losses to the Fund due to
subsequent declines in value of the portfolio securities, or, if the Fund has
entered into a contract to sell the securities, could result in possible
liability to the purchaser. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could
adversely affect the Fund's investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resources self-sufficiency and balance of payments position.
Sovereign Debt Obligations. Investments in sovereign debt obligations
--------------------------
involve special risks not present in corporate debt obligations. The issuer of
the sovereign debt or the governmental authorities that control the repayment of
the debt may be unable or unwilling to repay principal or interest when due, and
the Fund may have limited recourse in the event of a default. During periods of
economic uncertainty, the market prices of sovereign debt, and the Fund's net
asset value, may be more volatile than prices of debt obligations of U.S.
issuers. In the past, the governments of certain emerging countries have
encountered difficulties in servicing their debt obligations, withheld payments
of principal and interest and declared moratoria on the payment of principal and
interest on their sovereign debts.
A sovereign debtor's willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its foreign currency reserves, the availability of
sufficient foreign exchange, the relative size of the debt service burden, the
sovereign debtor's policy toward principal international lenders and local
political constraints. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multinational agencies and other
entities to reduce principal and interest arrearages on their debt. The failure
of a sovereign debtor to implement economic reforms, achieve specified levels of
economic performance or repay principal or interest when due may result in the
cancellation of the third parties' commitments to lend funds to the sovereign
debtor, which may further impair such debtor's ability or willingness to timely
service its debts.
Brady Bonds. Certain foreign debt obligations, customarily referred to as
-----------
"Brady Bonds," are created through the exchange of existing commercial bank
loans to foreign entities for new obligations in connection with debt
restructuring under a plan introduced by former U.S. Secretary of the Treasury,
Nicholas F. Brady (the "Brady Plan"). Brady Bonds may be fully or partially
collateralized or uncollateralized and issued in various currencies (although
most are U.S. dollar denominated). In the event of a default on collateralized
Brady Bonds for which obligations are accelerated, the collateral for the
payment of principal will not be distributed to investors, nor will such
obligations be sold and the proceeds distributed. The collateral will be held by
the collateral agent to the scheduled maturity of the defaulted Brady Bonds,
which will continue to be outstanding, at which time the face amount of the
collateral will equal the principal payments which would have then been due on
the Brady Bonds in the normal course. In light of the residual risk of the Brady
Bonds, and among other factors, the history of default with respect to
commercial bank loans by public and private entities of countries issuing Brady
Bonds, investments in Brady Bonds may be speculative.
Interest Rate Swaps, Credit Swaps and Interest Rate Caps, Floors and Collars
The Fund may enter into interest rate and credit swaps and may enter into
interest rate caps, floors and collars. The Fund may enter into swap
transactions for hedging purposes or to seek to increase total return. Interest
rate swaps involve the exchange by the Fund with another party of its
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commitment to pay or receive interest, such as an exchange of fixed-rate
payments for floating rate payments. Credit swaps involve the receipt of
floating or fixed rate payments in exchange for assuming potential credit losses
of an underlying security. Credit swaps give one party to a transaction the
right to dispose of or acquire an asset (or group of assets), or the right to
receive or make a payment from the other party, upon the occurrence of specified
credit events. The purchase of an interest rate cap entitles the purchaser, to
the extent that a specified index exceeds a predetermined interest rate, to
receive payment of interest on a notional principal amount from the party
selling such interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a notional principal amount
from the party selling the interest rate floor. An interest rate collar is the
combination of a cap and a floor that preserves a certain return within a
predetermined range of interest rates. Since interest rate and credit swaps and
interest rate caps, floors and collars are individually negotiated, the Fund
expects to achieve an acceptable degree of correlation between its portfolio
investments and its swap, cap, floor and collar positions.
The Fund will enter into interest rate swaps only on a net basis, which
means that the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments. Interest
rate swaps do not involve the delivery of securities, other underlying assets or
principal. Accordingly, the risk of loss with respect to interest rate swaps is
limited to the net amount of payments that the Fund is contractually obligated
to make. If the other party to an interest rate swap defaults, the Fund's risk
of loss consists of the net amount of payments that the Fund is contractually
entitled to receive, if any. To the extent that the Fund's potential exposure in
a transaction involving a swap or an interest rate floor, cap or collar is
covered by the segregation of cash or liquid assets, the Fund and its Investment
Adviser believe that transactions do not constitute senior securities under the
Act and, accordingly, will not treat them as being subject to the Fund's
borrowing restrictions.
The Fund will not enter into any interest rate or credit swap transactions
unless the unsecured commercial paper, senior debt or claims-paying ability of
the other party is rated either A or A-1 or better by Standard & Poor's or A or
P-1 or better by Moody's or their equivalent ratings. If there is a default by
the other party to such a transaction, the Fund will have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid in
comparison with the markets for other similar instruments which are traded in
the interbank market. The Investment Adviser, under the supervision of the Board
of Trustees, is responsible for determining and monitoring the liquidity of the
Fund's transactions in swaps, caps, floors and collars.
The use of interest rate and credit swaps, as well as interest rate caps,
floors and collars, is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. If the Investment Adviser is incorrect in its forecasts
of market values, credit quality and interest rates, the investment performance
of the Fund would be less favorable than it would have been if this investment
technique were not used.
Options on Securities and Securities Indices
Writing Covered Options. The Fund may write (sell) covered call and put
-----------------------
options on any securities in which it may invest or on any securities index
composed of securities in which it may invest. The Fund may purchase and write
such options on securities that are listed on national domestic securities
exchanges or foreign securities exchanges or traded in the over-the-counter
market. A call
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option written by the Fund obligates the Fund to sell specified securities to
the holder of the option at a specified price if the option is exercised at any
time before the expiration date. All call options written by the Fund are
covered, which means that the Fund will own the securities subject to the option
so long as the option is outstanding or the Fund will use the other methods
described below. The Fund's purpose in writing covered call options is to
realize greater income than would be realized on portfolio securities
transactions alone. However, the Fund may forego the opportunity to profit from
an increase in the market price of the underlying security.
A put option written by the Fund obligates the Fund to purchase specified
securities from the option holder at a specified price if the option is
exercised at any time before the expiration date. All put options written by the
Fund would be covered, which means that the Fund will segregate cash or liquid
assets with a value at least equal to the exercise price of the put option or
will use the other methods described below. The purpose of writing such options
is to generate additional income for the Fund. However, in return for the option
premium, the Fund accepts the risk that it may be required to purchase the
underlying securities at a price in excess of the securities' market value at
the time of purchase.
All call and put options written by the Fund are covered. A written call
option or put option may be covered by (i) segregating cash or liquid assets, as
permitted by applicable law with a value at least equal to the Fund's obligation
under the option, (ii) entering into an offsetting forward commitment, and/or
(iii) purchasing an offsetting option or any other option which, by virtue of
its exercise price or otherwise, reduces the Fund's net exposure on its written
option position.
The Fund may terminate its obligations under an exchange-traded call or put
option by purchasing an option identical to the one it has written. Obligations
under over-the-counter options may be terminated only by entering into an
offsetting transaction with the counterparty to such option. Such purchases are
referred to as "closing purchase transactions."
The Fund may also write (sell) covered call and put options on any
securities index composed of securities in which it may invest. Options on
securities indices are similar to options on securities, except that the
exercise of securities index options requires cash settlement payments and does
not involve the actual purchase or sale of securities. In addition, securities
index options are designed to reflect price fluctuations in a group of
securities or segment of the securities market rather than price fluctuations in
a single security.
The Fund may cover call options on a securities index by owning securities
whose price changes are expected to be similar to those of the underlying index
or by having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional cash consideration that is
segregated) upon conversion or exchange of other securities in its portfolio.
The Fund may also cover call and put options on a securities index by
segregating cash or liquid assets, as permitted by applicable law, with a value
equal to the exercise price or by using the other methods described above.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The use of options to seek to
increase total return involves the risk of loss if the Investment Adviser is
incorrect in its expectation of fluctuations in securities prices or interest
rates. The successful use of options for hedging purposes also depends in part
on the ability of the Investment Adviser to predict future price fluctuations
and the degree of correlation between the options and securities markets. If the
Investment Adviser is incorrect in its expectation of changes in securities
prices or determination of the correlation between the securities indices on
which options are written and purchased and the securities
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in the Fund's investment portfolio, the investment performance of the Fund will
be less favorable than it would have been in the absence of such options
transactions. The writing of options could increase the Fund's portfolio
turnover rate and, therefore, associated brokerage commissions or spreads.
Purchasing Options. The Fund may also purchase put and call options on any
------------------
securities in which it may invest or options on any securities index composed of
securities in which it may invest. The Fund would also be able to enter into
closing sale transactions in order to realize gains or minimize losses on
options it had purchased.
The Fund may purchase call options in anticipation of an increase, or put
options in anticipation of a decrease ("protective puts"), in the market value
of securities of the type in which it may invest. The purchase of a call option
would entitle the Fund, in return for the premium paid, to purchase specified
securities at a specified price during the option period. The Fund would
ordinarily realize a gain on the purchase of a call option if, during the option
period, the value of such securities exceeded the sum of the exercise price, the
premium paid and transaction costs; otherwise the Fund would realize either no
gain or a loss on the purchase of the call option. The purchase of a put option
would entitle the Fund, in exchange for the premium paid, to sell specified
securities at a specified price during the option period. The purchase of
protective puts is designed to offset or hedge against a decline in the market
value of the Fund's securities. Put options may also be purchased by the Fund
for the purpose of affirmatively benefiting from a decline in the price of
securities which it does not own. The Fund would ordinarily realize a gain if,
during the option period, the value of the underlying securities decreased below
the exercise price sufficiently to cover the premium and transaction costs;
otherwise the Fund would realize either no gain or a loss on the purchase of the
put option. Gains and losses on the purchase of put options may be offset by
countervailing changes in the value of the underlying portfolio securities.
The Fund may purchase put and call options on securities indices for the
same purposes as it may purchase options on securities. Options on securities
indices are similar to options on securities, except that the exercise of
securities index options requires cash payments and does not involve the actual
purchase or sale of securities. In addition, securities index options are
designed to reflect price fluctuations in a group of securities or segment of
the securities market rather than price fluctuations in a single security.
Risks Associated with Options Transactions. There is no assurance that a
------------------------------------------
liquid secondary market on a domestic or foreign options exchange will exist for
any particular exchange-traded option or at any particular time. If the Fund is
unable to effect a closing purchase transaction with respect to covered options
it has written, the Fund will not be able to sell the underlying securities or
dispose of assets held in a segregated account until the options expire or are
exercised. Similarly, if the Fund is unable to effect a closing sale transaction
with respect to options it has purchased, it will have to exercise the options
in order to realize any profit and will incur transaction costs upon the
purchase or sale of underlying securities.
Reasons for the absence of a liquid secondary market on an exchange
include, but are not limited to, the following: (a) there may be insufficient
trading interest in certain options; (b) restrictions may be imposed by an
exchange on opening or closing transactions or both; (c) trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options; (d) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (e) the facilities of an exchange or
the Options Clearing Corporation may not at all times be adequate to handle
current trading volume; or (f) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of
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options), in which event the secondary market on that exchange (or in that class
or series of options) would cease to exist although outstanding options on that
exchange that had been issued by the Options Clearing Corporation as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms.
The Fund may purchase and sell both options that are traded on U.S. and
foreign exchanges and options traded over-the-counter with broker-dealers who
make markets in these options. The ability to terminate over-the-counter options
is more limited than with exchange-traded options and may involve the risk that
broker-dealers participating in such transactions will not fulfill their
obligations.
Transactions by the Fund in options will be subject to limitations
established by each of the exchanges, boards of trade or other trading
facilities on which such options are traded governing the maximum number of
options in each class which may be written or purchased by a single investor or
group of investors acting in concert regardless of whether the options are
written or purchased on the same or different exchanges, boards of trade or
other trading facilities or are held or written in one or more accounts or
through one of more brokers. Thus, the number of options which the Fund may
write or purchase may be affected by options written or purchased by other
investment advisory clients or the Fund's Investment Adviser. An exchange, board
of trade or other trading facility may order the liquidation of positions found
to be in excess of these limits, and it may impose certain other sanctions.
Futures Contracts and Options on Futures Contracts
The Fund may purchase and sell various kinds of futures contracts, and
purchase and write call and put options on any of such futures contracts. The
Fund may also enter into closing purchase and sale transactions with respect to
any of such contracts and options. The futures contracts may be based on various
securities (such as U.S. Government Securities), securities indices and any
other financial instruments and indices. The Fund will engage in futures and
related options transactions for bona fide hedging purposes as defined below or
for purposes of seeking to increase total return to the extent permitted by
regulations of the CFTC. Futures contracts entered into by the Fund are traded
on U.S. exchanges or boards of trade that are licensed and regulated by the
CFTC.
Futures Contracts. A futures contract may generally be described as an
-----------------
agreement between two parties to buy and sell particular financial instruments
or currencies for an agreed price during a designated month (or to deliver the
final cash settlement price, in the case of a contract relating to an index or
otherwise not calling for physical delivery at the end of trading in the
contract).
When interest rates are rising or securities prices are falling, the Fund
can seek to offset a decline in the value of its current portfolio securities
through the sale of futures contracts. When interest rates are falling or
securities prices are rising, the Fund, through the purchase of futures
contracts, can attempt to secure better rates or prices than might later be
available in the market when it effects anticipated purchases.
Positions taken in the futures markets are not normally held to maturity
but are instead liquidated through offsetting transactions which may result in a
profit or a loss. While futures contracts on securities will usually be
liquidated in this manner, the Fund may instead make, or take, delivery of the
underlying securities whenever it appears economically advantageous to do so. A
clearing corporation associated with the exchange on which futures on securities
or currency are traded guarantees that, if still open, the sale or purchase will
be performed on the settlement date.
B-14
<PAGE>
Hedging Strategies. Hedging, by use of futures contracts, seeks to
------------------
establish with more certainty than would otherwise be possible the effective
price or rate of return on portfolio securities or securities that the Fund
proposes to acquire. The Fund may, for example, take a "short" position in the
futures market by selling futures contracts to seek to hedge against an
anticipated rise in interest rates or a decline in market prices that would
adversely affect the U.S. dollar value of the Fund's portfolio securities. Such
futures contracts may include contracts for the future delivery of securities
held by the Fund or securities with characteristics similar to those of the
Fund's portfolio securities. If, in the opinion of the Investment Adviser, there
is a sufficient degree of correlation between price trends for the Fund's
portfolio securities and futures contracts based on other financial instruments,
securities indices or other indices, the Fund may also enter into such futures
contracts as part of its hedging strategy. Although under some circumstances
prices of securities in the Fund's portfolio may be more or less volatile than
prices of such futures contracts, the Investment Adviser will attempt to
estimate the extent of this volatility difference based on historical patterns
and compensate for any such differential by having the Fund enter into a greater
or lesser number of futures contracts or by attempting to achieve only a partial
hedge against price changes affecting the Fund's portfolio securities. When
hedging of this character is successful, any depreciation in the value of
portfolio securities will be substantially offset by appreciation in the value
of the futures position. On the other hand, any unanticipated appreciation in
the value of the Fund's portfolio securities would be substantially offset by a
decline in the value of the futures position.
On other occasions, the Fund may take a "long" position by purchasing
futures contracts. This may be done, for example, when the Fund anticipates the
subsequent purchase of particular securities when it has the necessary cash, but
expects the prices then available in the applicable market to be less favorable
than prices that are currently available.
Options on Futures Contracts. The acquisition of put and call options on
----------------------------
futures contracts will give the Fund the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the Fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event of
an unfavorable price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of the Fund's assets. By
writing a call option, the Fund becomes obligated, in exchange for the premium,
to sell a futures contract if the option is exercised, which may have a value
higher than the exercise price. Conversely, the writing of a put option on a
futures contract generates a premium which may partially offset an increase in
the price of securities that the Fund intends to purchase. However, the Fund
becomes obligated (upon exercise of the option) to purchase a futures contract
if the option is exercised, which may have a value lower than the exercise
price. Thus, the loss incurred by the Fund in writing options on futures is
potentially unlimited and may exceed the amount of the premium received. The
Fund will incur transaction costs in connection with the writing of options on
futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same financial
instrument. There is no guarantee that such closing transactions can be
effected. The Fund's ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid market.
B-15
<PAGE>
Other Considerations. The Fund will engage in futures and related options
--------------------
transactions for bona fide hedging or to seek to increase total return as
permitted by CFTC regulations which permit principals of an investment company
registered under the Act to engage in such transactions without registering as
commodity pool operators.
In addition to bona fide hedging, a CFTC regulation permits the Fund to
engage in other futures transactions if the aggregate initial margin and
premiums required to establish such positions in futures contracts and options
on futures do not exceed 5% of the net asset value of the Fund's portfolio,
after taking into account unrealized profits and losses on any such positions
and excluding the amount by which such options were in-the-money at the time of
purchase. The Fund will engage in transactions in futures contracts and related
options only to the extent such transactions are consistent with the
requirements of the Code for maintaining their qualifications as regulated
investment companies for federal income tax purposes.
Transactions in futures contracts and options on futures involve brokerage
costs, require margin deposits and, in the case of contracts and options
obligating the Fund to purchase securities or currencies, require the Fund to
segregate cash or liquid assets, as permitted by applicable law, in an amount
equal to the underlying value of such contracts and options.
While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates or securities prices may result in a
poorer overall performance for the Fund than if it had not entered into any
futures contracts or options transactions. In the event of an imperfect
correlation between a futures position and a portfolio position which is
intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss.
Perfect correlation between the Fund's futures positions and portfolio
positions will be impossible to achieve. The profitability of the Fund's trading
in futures depends upon the ability of the Investment Adviser to analyze
correctly the futures markets.
Convertible Securities
The Fund may invest in convertible securities. Convertible securities
include corporate notes or preferred stock but are ordinarily long-term debt
obligations of the issuer convertible at a stated exchange rate into common
stock of the issuer. As with all debt securities, the market value of
convertible securities tends to decline as interest rates increase and,
conversely, to increase as interest rates decline. Convertible securities
generally offer lower interest or dividend yields than non-convertible
securities of similar quality. However, when the market price of the common
stock underlying a convertible security exceeds the conversion price, the price
of the convertible security tends to reflect the value of the underlying common
stock. As the market price of the underlying common stock declines, the
convertible security tends to trade increasingly on a yield basis, and thus may
not depreciate to the same extent as the underlying common stock. Convertible
securities rank senior to common stocks in an issuer's capital structure and
consequently entail less risk than the issuer's common stock.
Unlike debt securities, the obligations of an issuer of preferred stock,
including dividend and other payment obligations, may not typically be
accelerated by the holders of preferred stock on the occurrence of an event of
default (such as a covenant default or filing of a bankruptcy petition) or other
B-16
<PAGE>
non-compliance by the issuer with the terms of the preferred stock. Often,
however, on the occurrence of any such event of default or non-compliance by the
issuer, preferred stockholders will be entitled to gain representation on the
issuer's board of directors or increase their existing board representation. In
addition, preferred stockholders may be granted voting rights with respect to
certain issues on the occurrence of any event of default.
Lending of Portfolio Securities
The Fund may lend portfolio securities. Under present regulatory policies,
such loans may be made to institutions, such as brokers or dealers and would be
required to be secured continuously by collateral in cash, cash equivalents,
letters of credit or U.S. Government Securities maintained on a current basis at
an amount at least equal to the market value of the securities loaned. The Fund
would be required to have the right to call a loan and obtain the securities
loaned at any time on five days' notice. For the duration of a loan, the Fund
would continue to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned and would also receive compensation from
investment of the collateral. The Fund would not have the right to vote any
securities having voting rights during the existence of the loan, but the Fund
would call the loan in anticipation of an important vote to be taken among
holders of the securities or the giving or withholding of their consent on a
material matter affecting the investment. As with other extensions of credit
there are risks of delay in recovering, or even loss of rights in, the
collateral should the borrower of the securities fail financially. However, the
loans would be made only to firms deemed by the applicable Investment Adviser to
be of good standing, and when, in the judgment of the Investment Adviser, the
consideration which can be earned currently from securities loans of this type
justifies the attendant risk. If the Investment Adviser determines to make
securities loans, it is intended that the value of the securities loaned would
not exceed one-third of the value of the total assets of the Fund (including the
loan collateral).
Cash received as collateral for securities lending transactions may be
invested in other investment eligible securities. Investing the collateral
subjects it to market depreciation or appreciation, and the Fund is responsible
for any loss that may result from its investment of the borrowed collateral.
Restricted and Illiquid Securities
The Fund may purchase securities that are not registered or that are
offered in an exempt non-public offering ("Restricted Securities") under the
Securities Act of 1933, as amended ("1933 Act"), including securities eligible
for resale to "qualified institutional buyers" pursuant to Rule 144A under the
1933 Act. However, the Fund will not invest more than 15% of its net assets in
illiquid investments, which include repurchase agreements with a notice or
demand period of more than seven days, certain over-the-counter options,
securities that are not readily marketable and Restricted Securities, unless the
Board of Trustees determines, based upon a continuing review of the trading
markets for the specific Restricted Securities, that such Restricted Securities
are liquid. Certain commercial paper issued in reliance on Section 4(2) of the
1933 Act is treated like Rule 144A Securities. The Trustees have adopted
guidelines and delegated to the Investment Advisers the daily function of
determining and monitoring the liquidity of the Fund's portfolio securities.
This investment practice could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers become
for a time uninterested in purchasing these Restricted Securities.
The purchase price and subsequent valuation of Restricted Securities may
reflect a discount from the price at which such securities trade when they are
not restricted, since the restriction make them less liquid. The amount of the
discount from the prevailing market price is expected to vary depending
B-17
<PAGE>
upon the type of security, the character of the issuer, the party who will bear
the expenses of registering the Restricted Securities and prevailing supply and
demand conditions.
When-Issued and Forward Commitment Securities
The Fund may purchase securities on a when-issued basis or purchase or sell
securities on a forward commitment basis. These transactions involve a
commitment by the Fund to purchase or sell securities at a future date. The
price of the underlying securities (usually expressed in terms of yield) and the
date when the securities will be delivered and paid for (the settlement date)
are fixed at the time the transaction is negotiated. When-issued purchases and
forward commitment transactions are negotiated directly with the other party,
and such commitments are not traded on exchanges. The Fund will generally
purchase securities on a when-issued basis or purchase or sell securities on a
forward commitment basis only with the intention of completing the transaction
and actually purchasing or selling the securities. If deemed advisable as a
matter of investment strategy, however, the Fund may dispose of or negotiate a
commitment after entering into it. The Fund may also sell securities it has
committed to purchase before those securities are delivered to the Fund on the
settlement date. The Funds may realize a capital gain or loss in connection with
these transactions. For purposes of determining the Fund's duration, the
maturity of when-issued or forward commitment securities will be calculated from
the commitment date. The Fund is generally required to segregate, until three
days prior to settlement date, cash and liquid assets in an amount sufficient to
meet the purchase price unless the Fund's obligations are otherwise covered.
Alternatively, the Fund may enter into offsetting contracts for the forward sale
of other securities that it owns. Securities purchased or sold on a when-issued
or forward commitment basis involve a risk of loss if the value of the security
to be purchased declines prior to the settlement date or if the value of the
security to be sold increases prior to the settlement date.
Other Investment Companies
The Fund reserves the right to invest up to 10% of its total assets,
calculated at the time of purchase, in the securities of other investment
companies, but may not invest more than 5% of its total assets in the securities
of any one investment company or acquire more than 3% of the voting securities
of any other investment company. Pursuant to an exemptive order obtained from
the SEC, the Fund may invest in money market funds for which the Investment
Adviser or any of its affiliates serves as Investment Adviser. The Fund will
indirectly bear its proportionate share of any management fees and other
expenses paid by investment companies in which it invests in addition to the
advisory and other fees paid by the Fund. However, to the extent that the Fund
invests in a money market fund for which the Investment Adviser or any of its
affiliates acts as Investment Adviser, the management fees payable by the Fund
to the Investment Adviser will be reduced by an amount equal to the Fund's
proportionate share of the management fees paid by such money market fund to the
Investment Adviser or its affiliates.
Repurchase Agreements
The Fund may enter into repurchase agreements with selected broker-dealers,
banks or other financial institutions. These repurchase agreements may involve
foreign government securities. A repurchase agreement is an arrangement under
which the Fund purchases securities and the seller agrees to repurchase the
securities within a particular time and at a specified price. Custody of the
securities is maintained by the Fund's custodian. The repurchase price may be
higher than the purchase price, the difference being income to the Fund, or the
purchase and repurchase prices may be the same, with interest at a stated rate
due to the Fund together with the repurchase price on repurchase. In either
case,
B-18
<PAGE>
the income to the Fund is unrelated to the interest rate on the security subject
to the repurchase agreement.
For purposes of the Act, and generally for tax purposes, a repurchase
agreement is deemed to be a loan from the Fund to the seller of the security.
For other purposes, it is not always clear whether a court would consider the
security purchased by the Fund subject to a repurchase agreement as being owned
by the Fund or as being collateral for a loan by the Fund to the seller. In the
event of commencement of bankruptcy or insolvency proceedings with respect to
the seller of the security before repurchase of the security under a repurchase
agreement, the Fund may encounter delay and incur costs before being able to
sell the security. Such a delay may involve loss of interest or a decline in
value of the security. If the court characterizes the transaction as a loan and
the Fund has not perfected a security interest in the security, the Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
risk of losing some or all of the principal and interest involved in the
transaction.
The Investment Adviser seeks to minimize the risk of loss from repurchase
agreements by analyzing the creditworthiness of the obligor, in this case the
seller of the security. Apart from the risk of bankruptcy or insolvency
proceedings, there is also the risk that the seller may fail to repurchase the
security. However, if the market value of the security subject to the repurchase
agreement becomes less than the repurchase price (including accrued interest),
the Fund will direct the seller of the security to deliver additional securities
so that the market value of all securities subject to the repurchase agreement
equals or exceeds the repurchase price. Certain repurchase agreements which
provide for settlement in more than seven days can be liquidated before the
nominal fixed term on seven days or less notice. Such repurchase agreements will
be regarded as liquid instruments.
In addition, the Fund, together with other registered investment companies
having management agreements with the Investment Adviser or its affiliates, may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which will be invested in one or more repurchase
agreements.
Portfolio Turnover
The Fund may engage in active short-term trading to benefit from yield
disparities among different issues of securities or among the markets for fixed-
income securities, or for other reasons. It is anticipated that the portfolio
turnover rate of the Fund will vary from year to year. During the Fund's first
year of operations, its portfolio turnover rate is not expected to exceed 150%.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the Trust as
fundamental policies that cannot be changed without the affirmative vote of the
holders of a majority of the outstanding voting securities (as defined in the
Act) of the Fund. The investment objective of the Fund and all other investment
policies or practices of the Fund are considered by the Trust not to be
fundamental and accordingly may be changed without shareholder approval. As
defined in the Act, "a majority of the outstanding voting securities" of the
Fund means the vote (a) of 67% or more of the shares of the Trust or the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Trust or the Fund are present or represented by proxy, or (b) more than
50% of the shares of the Trust or the Fund.
B-19
<PAGE>
For the purposes of the limitations (except for the asset coverage
requirement with respect to borrowings), any limitation which involves a maximum
percentage shall not be considered violated unless an excess over the percentage
occurs immediately after, and is caused by, an acquisition or encumbrance of
securities or assets of, or borrowings by, the Fund.
As a matter of fundamental policy, the Fund may not:
(1) Make any investment inconsistent with the Fund's classification as a
diversified company under the Act;
(2) Invest more than 25% of its total assets in the securities of one or
more issuers conducting their principal business activities in the
same industry (excluding the U.S. government or its agencies or
instrumentalities). (For the purposes of this restriction, state and
municipal governments and their agencies, authorities and
instrumentalities are not deemed to be industries; telephone companies
are considered to be a separate industry from water, gas or electric
utilities; personal credit finance companies and business credit
finance companies are deemed to be separate industries; and
wholly-owned finance companies are considered to be in the industry of
their parents if their activities are primarily related to financing
the activities of their parents.) This restriction does not apply to
investments in Municipal Securities which have been pre-refunded by
the use of obligations of the U.S. government or any of its agencies
or instrumentalities;
(3) Borrow money, except (a) the Fund may borrow from banks (as defined in
the Act) or through reverse repurchase agreements in amounts up to 33
1/3% of its total assets (including the amount borrowed); (b) the Fund
may, to the extent permitted by applicable law, borrow up to an
additional 5% of its total assets for temporary purposes; (c) the Fund
may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities; (d) the Fund
may purchase securities on margin to the extent permitted by
applicable law; and (e) the Fund may engage in transactions in
mortgage dollar rolls which are accounted for as financings;
(4) Make loans, except through (a) the purchase of debt obligations in
accordance with the Fund's investment objective and policies; (b)
repurchase agreements with banks, brokers, dealers and other financial
institutions; and (c) loans of securities as permitted by applicable
law;
(5) Underwrite securities issued by others, except to the extent that the
sale of portfolio securities by the Fund may be deemed to be an
underwriting;
(6) Purchase, hold or deal in real estate, although the Fund may purchase
and sell securities that are secured by real estate or interests
therein, securities of real estate investment trusts and
mortgage-related securities and may hold and sell real estate acquired
by the Fund as a result of the ownership of securities;
(7) Invest in commodities or commodity contracts, except that the Fund may
invest in currency and financial instruments and contracts that are
commodities or commodity contracts; and
B-20
<PAGE>
(8) Issue senior securities to the extent such issuance would violate
applicable law.
Notwithstanding any other fundamental investment restriction or policy, the
Fund may invest some or all of its assets in a single open-end investment
company or series thereof with substantially the same fundamental investment
objective, restrictions and policies as the Fund.
In addition to the fundamental policies mentioned above, the Trustees have
adopted the following non-fundamental policies which can be changed or amended
by action of the Trustees without approval of shareholders.
The Fund may not:
(1) Invest in companies for the purpose of exercising control or
management;
(2) Invest more than 15% of the Fund's net assets in illiquid investments,
including repurchase agreements with a notice or demand period of more
than seven days, securities which are not readily marketable and
restricted securities not eligible for resale pursuant to Rule 144A
under the 1933 Act;
(3) Purchase additional securities if the Fund's borrowings (excluding
covered mortgage dollar rolls) exceed 5% of its net assets; or
(4) Make short sales of securities, except short sales against-the-box.
B-21
<PAGE>
MANAGEMENT
The Trustees of the Trust are responsible for deciding matters of general
policy and reviewing the actions of the Investment Adviser, distributor and
transfer agent. The officers of the Trust conduct and supervise the Fund's daily
business operations.
Information pertaining to the Trustees and officers of the Trust is set
forth below. Trustees and officers deemed to be "interested persons" of the
Trust for purposes of the Act are indicated by an asterisk.
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Ashok N. Bakhru, 58 Chairman Chairman of the Board and Trustee--Goldman
P.O. Box 143 & Trustee Sachs Variable Insurance Trust (registered
Lima, PA 19037 investment company) (since October 1997);
President, ABN Associates (July 1994-March
1996 and November 1998 to present); Executive
Vice President - Finance and Administration
and Chief Financial Officer, Coty Inc.
(manufacturer of fragrances and cosmetics)
(April 1996-November 1998); Senior Vice
President of Scott Paper Company (until June
1994); Director of Arkwright Mutual Insurance
Company (1984-1999); Trustee of International
House of Philadelphia (1989-Present); Member
of Cornell University Council (1992-Present);
Trustee of the Walnut Street Theater (1992-
Present); Director, Private Equity Investors -
III (since November 1998); Trustee, Citizens
Scholarship Foundation of America (since
1998).
</TABLE>
B-22
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
*David B. Ford, 54 Trustee Trustee--Goldman Sachs Variable Insurance
32 Old Slip Trust (registered investment company)
New York, NY 10005 (since October 1997); Director,
Commodities Corp. LLC (futures and
commodities traders) (since April 1997);
Managing Director, J. Aron & Company
(commodity dealer and risk management
adviser) (since November 1996); Managing
Director, Goldman Sachs & Co. Investment
Banking Division (since November 1996);
Chief Executive Officer and Director, CIN
Management (investment adviser) (since
August 1996); Chief Executive Officer &
Managing Director and Director, Goldman
Sachs Asset Management International
(since November 1995 and December 1994,
respectively); Co-Head, Goldman Sachs
Asset Management (since November 1995);
Co-Head and Director, Goldman Sachs Funds
Management, L.P. (since November 1995 and
December 1994, respectively); and
Chairman and Director, Goldman Sachs
Asset Management Japan Limited (since
November 1994).
*Douglas C. Grip, 37 Trustee Trustee and President--Goldman Sachs
32 Old Slip & President Variable Insurance Trust (registered
New York, NY 10005 investment company) (since October 1997);
Trustee, Trust for Credit Unions
(registered investment company) (since
March 1998); Managing Director, Goldman
Sachs Asset Management Group (since
November 1997); President, Goldman Sachs
Funds Group (since April 1996); and
President, MFS Retirement Services Inc.,
of Massachusetts Financial Services
(prior thereto).
</TABLE>
B-23
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
*John P. McNulty, 47 Trustee Trustee--Goldman Sachs Variable Insurance
32 Old Slip Trust (registered investment company)
New York, NY 10005 (since October 1997); Managing Director,
Goldman Sachs (since November 1996); Head
of Investment Management Division (since
September 1999); General Partner, J. Aron
& Company (commodity dealer and risk
management adviser) (since November
1995); Director and Co-Head, Goldman
Sachs Funds Management L.P. (since
November 1995); Director, Goldman Sachs
Asset Management International (since
January 1996); Co-Head, GSAM (November
1995-September 1999); Director, Global
Capital Reinsurance (insurance) (since
1989); Director, Commodities Corp. LLC
(since April 1997); Limited Partner of
Goldman Sachs (1994-November 1995); and
Trustee, Trust for Credit Unions
(registered investment company) (January
1996-March 1998).
</TABLE>
B-24
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Mary P. McPherson, 64 Trustee Trustee--Goldman Sachs Variable Insurance
The Andrew W. Mellon Foundation Trust (registered investment company)
140 East 62nd Street (since October 1997); Vice President, The
New York, NY 10021 Andrew W. Mellon Foundation (provider of
grants for conservation, environmental
and educational purposes) (since October
1997); President of Bryn Mawr College
(1978-1997); Director, Smith College
(since 1998); Director, Josiah Macy, Jr.
Foundation (health educational programs)
(since 1977); Director, the Philadelphia
Contributionship (insurance) (since
1985); Director Emeritus, Amherst College
(1986-1998); Director, Dayton Hudson
Corporation (general retailing
merchandising) (1988-1997); Director, The
Spencer Foundation (educational research)
(since 1993); member of PNC Advisory
Board (banking) (since 1993); and
Director, American School of Classical
Studies in Athens (since 1997).
*Alan A. Shuch, 50 Trustee Trustee--Goldman Sachs Variable Insurance
32 Old Slip Trust (registered investment company)
New York, NY 10005 (since October 1997); Limited Partner,
Goldman Sachs (since December 1994);
Consultant to GSAM (since December 1994.
</TABLE>
B-25
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Jackson W. Smart, Jr., 69 Trustee Trustee--Goldman Sachs Variable Insurance
One Northfield Plaza, Suite 218 Trust (registered investment company)
Northfield, IL 60093 (since October 1997); President, Board
Member and Senior Adviser, Smart
Properties, Inc. (since January 2000);
Chairman, Executive Committee and
Director, First Commonwealth, Inc. (a
managed dental care company) (January
1996-August 1999); Chairman and Chief
Executive Officer, MSP Communications
Inc. (a company engaged in radio
broadcasting) (October 1988- December
1997); Director, Federal Express
Corporation (NYSE) (since 1976); and
Director, Evanston Northwestern
Healthcare (since 1980).
William H. Springer, 70 Trustee Trustee--Goldman Sachs Variable Insurance
701 Morningside Drive Trust (registered investment company)
Lake Forest, IL 60045 (since October 1997); Director, The
Walgreen Co. (a retail drug store
business) (April 1988-January 2000);
Director of Baker, Fentress & Co. (a
closed-end, non-diversified management
investment company) (April 1992-present);
and Chairman and Trustee, Northern
Institutional Funds (since April 1984).
</TABLE>
B-26
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- ---------------------
<S> <C> <C>
Richard P. Strubel, 60 Trustee Trustee--Goldman Sachs Variable Insurance
500 Lake Cook Road Trust (registered investment company)
Suite 150 (since October 1997); President and COO,
Deerfield, IL 60015 UNext.com (provider of educational
services via the internet) (since 1999);
Director, Gildan Activewear Inc. (since
February 1999); Director of Kaynar
Technologies Inc. (since March 1997);
Managing Director, Tandem Partners, Inc.
(1990-1999); President and Chief
Executive Officer, Microdot, Inc. (a
diversified manufacturer of fastening
systems and connectors) (January
1984-October 1994); Trustee, Northern
Institutional Funds (since December 1982)
and Director, Cantilever Technologies,
Inc. (since 1999).
*Nancy L. Mucker, 50 Vice President Vice President--Goldman Sachs Variable
4900 Sears Tower Insurance Trust (registered investment
Chicago, IL 60606 company) (since 1997); Vice President and
Co-Manager of Funds Group Shareholder
Servicing, Goldman Sachs (since April
1985).
*John M. Perlowski, 35 Treasurer Treasurer--Goldman Sachs Variable
32 Old Slip Insurance Trust (registered investment
New York, NY 10005 company) (since 1997); Vice President,
Goldman Sachs (since July 1995); and
Banking Director, Investors Bank and
Trust (November 1993-July 1995).
*James A. Fitzpatrick, 39 Vice President Vice President--Goldman Sachs Variable
4900 Sears Tower Insurance Trust (registered investment
Chicago, IL 60606 company) (since October 1997); Managing
Director, Goldman Sachs (since October
1999); Vice President of GSAM (April
1997-December 1999); and Vice President
and General Manager, First Data
Corporation - Investor Services Group
(1994 to 1997).
</TABLE>
B-27
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- ---------------------
<S> <C> <C>
*Jesse Cole, 36 Vice President Vice President--Goldman Sachs Variable
4900 Sears Tower Insurance Trust (registered investment
Chicago, IL 60606 company) (since 1998); Vice President,
GSAM (June 1998 to present); Vice
President, AIM Management Group, Inc.
(investment adviser) (April 1996-June
1998); and Assistant Vice President, The
Northern Trust Company (June 1987-April
1996).
*Philip V. Giuca , Jr., 37 Assistant Treasurer Assistant Treasurer--Goldman Sachs
32 Old Slip Variable Insurance Trust (registered
New York, NY 10005 investment company) (since 1997); and
Vice President, Goldman Sachs (May
1992-Present).
*Michael J. Richman, 39 Secretary Secretary--Goldman Sachs Variable
32 Old Slip Insurance Trust (registered investment
New York, NY 10005 company) (since 1997); General Counsel of
the Funds Group of GSAM (since December
1997); Associate General Counsel of GSAM
(February 1994-December 1997); Counsel to
the Funds Group, GSAM (June 1992-December
1997); Associate General Counsel, Goldman
Sachs (since December 1998); Vice
President of Goldman Sachs (since June
1992); and Assistant General Counsel of
Goldman Sachs (June 1992 to December
1998).
*Howard B. Surloff, 34 Assistant Secretary Assistant Secretary--Goldman Sachs
32 Old Slip Variable Insurance Trust (registered
New York, NY 10005 investment company) (since 1997);
Assistant General Counsel, GSAM and
General Counsel to the U.S. Funds Group
(since December 1997); Assistant General
Counsel and Vice President, Goldman Sachs
(since November 1993 and May 1994,
respectively); and Counsel to the Funds
Group, GSAM (November 1993-December 1997).
</TABLE>
B-28
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- ---------------------
<S> <C> <C>
*Valerie A. Zondorak, 34 Assistant Secretary Assistant Secretary--Goldman Sachs
32 Old Slip Variable Insurance Trust (registered
New York, NY 10005 investment company) (since 1997);
Assistant General Counsel, GSAM and
Assistant General Counsel to the Funds
Group (since December 1997); Vice
President and Assistant General Counsel,
Goldman Sachs (since March 1997); Counsel
to the Funds Group, GSAM (March
1997-December 1997); and Associate of
Shereff, Friedman, Hoffman & Goodman
(September 1990 to February 1997).
*Deborah A. Farrell, 28 Assistant Secretary Assistant Secretary--Goldman Sachs
32 Old Slip Variable Insurance Trust (registered
New York, NY 10005 investment company) (since 1997); Legal
Products Analyst, Goldman Sachs (since
December 1998); Legal Assistant, Goldman
Sachs (January 1996-December 1998);
Assistant Secretary to the Funds Group
(1996 to present); and Executive Secretary,
Goldman Sachs (January 1994-January 1996).
*Kaysie P. Uniacke, 39 Assistant Secretary Assistant Secretary--Goldman Sachs
32 Old Slip Variable Insurance Trust (registered
New York, NY 10005 investment company) (since 1997);
Managing Director, GSAM (since 1997);
Vice President and Senior Portfolio
Manager, GSAM (1988 to 1997).
</TABLE>
B-29
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address With Trust During Past 5 Years
- ----------- ---------- ---------------------
<S> <C> <C>
*Elizabeth D. Anderson, 30 Assistant Secretary Assistant Secretary--Goldman Sachs
32 Old Slip Variable Insurance Trust (registered
New York, NY 10005 investment company) (since 1997);
Portfolio Manager, GSAM (since April
1996); Junior Portfolio Manager, GSAM
(1995-April 1996); and Funds Trading
Assistant, GSAM (1993-1995).
*Amy E. Belanger, 30 Assistant Secretary Assistant Secretary--Goldman Sachs
32 Old Slip Variable Insurance Trust (registered
New York, NY 10005 investment company) (since 1999); Vice
President, Goldman Sachs (since June
1999); Counsel, Goldman Sachs (since
1998); and Associate, Dechert Price &
Rhoads (September 1996-1998).
</TABLE>
The Trustees and officers of the Trust hold comparable positions with
certain other investment companies of which Goldman Sachs, GSAM or one of their
affiliates is the investment adviser, administrator and/or distributor. The
Trust pays each Trustee, other than those who are "interested persons" of
Goldman Sachs, a fee for each Trustee meeting attended and an annual fee. Such
Trustees are also reimbursed for travel expenses incurred in connection with
attending such meetings.
B-30
<PAGE>
The following table sets forth certain information with respect to the
compensation of each Trustee of the Trust for the one-year period ended October
31, 1999 with respect to each of the Trust's funds then in existence:
<TABLE>
<CAPTION>
Total Compensation
Aggregate Pension or Retirement From Goldman Sachs
Compensation from Benefits Accrued as Funds Complex
the Trust/2/ Part of Trust's Expenses (including the Trust)/3/
----------- ------------------------ -----------------------
Name of Trustee
- ---------------
<S> <C> <C> <C>
Ashok N. Bakhru/1/ $ 112,115.97 $ 0 $ 136,000
David B. Ford 0 0 0
Douglas C. Grip 0 0 0
John P. McNulty 0 0 0
Mary P. McPherson 83,283.91 0 101,000
Alan A. Shuch 0 0 0
Jackson W. Smart 83,283.91 0 101,000
William H. Springer 83,283.91 0 101,000
Richard P. Strubel 83,283.91 0 101,000
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Includes compensation as Chairman of the Board of Trustees.
/2/ Reflects amount paid by the Trust's funds during fiscal year ended
October 31, 1999. During this period, the Fund had not offered shares.
/3/ The Goldman Sachs Funds complex consists of Goldman Sachs Trust and
Goldman Sachs Variable Insurance Trust. Goldman Sachs Trust consisted of
50 mutual funds, including 8 fixed-income funds, on October 31, 1999.
Goldman Sachs Variable Insurance Trust consisted of 16 mutual funds on
October 31, 1999.
The Trust, its Investment Advisers and principal underwriter have
adopted codes of ethics under Rule 17j-1 of the Act that permit personnel
subject to their particular code of ethics to invest in securities, including
securities that may be purchased or held by the Fund.
INVESTMENT ADVISERS
-------------------
As of September 1, 1999, the Investment Management Division ("IMD") was
established as a new operating division of Goldman Sachs. This newly created
entity includes GSAM. GSAM, 32 Old Slip, New York, New York 10005, a unit of the
Investment Management Division of Goldman Sachs, serves as the Fund's Investment
Adviser pursuant to a Management Agreement. See "Service Providers" in the
Fund's Prospectuses for a description of the Investment Adviser's duties to the
Fund.
The Goldman Sachs Group, L.P., which controlled the Fund's Investment
Adviser, merged into The Goldman Sachs Group, Inc., as a result of an initial
public offering.
Founded in 1869, Goldman Sachs is among the oldest and largest
investment banking firms in the United States. Goldman Sachs is a leader in
developing portfolio strategies and in many fields of
B-31
<PAGE>
investing and financing, participating in financial markets worldwide and
serving individuals, institutions, corporations and governments. Goldman Sachs
also is among the principal market sources for current and thorough information
on companies, industrial sectors, markets, economies and currencies, and trades
and makes markets in a wide range of equity and debt securities 24 hours a day.
The firm is headquartered in New York and has offices throughout the United
States and in Beijing, Frankfurt, George Town, Hong Kong, London, Madrid, Mexico
City, Milan, Montreal, Paris, Sao Paulo, Seoul, Shanghai, Singapore, Sydney,
Taipei, Tokyo, Toronto, Vancouver and Zurich. It has trading professionals
throughout the United States, as well as in London, Tokyo, Hong Kong and
Singapore. The active participation of Goldman Sachs in the world's financial
markets enhances its ability to identify attractive investments. Goldman Sachs
has agreed to permit the Fund to use the name "Goldman Sachs" or a derivative
thereof as part of its name for as long as the Fund's Management Agreement is in
effect.
The Investment Advisers are able to draw on the substantial research
and market expertise of Goldman Sachs, whose investment research effort is one
of the largest in the industry. The Goldman Sachs Global Investment Research
Department covers approximately 2,200 companies, including approximately 1,000
U.S. corporations in 60 industries. The in-depth information and analyses
generated by Goldman Sachs' research analysts are available to the Investment
Adviser. The Investment Adviser manages money for some of the world's largest
institutional investors.
For more than a decade, Goldman Sachs has been among the top-ranked
firms in Institutional Investor's annual "All-America Research Team" survey. In
addition, many of Goldman Sachs' economists, securities analysts, portfolio
strategists and credit analysts have consistently been highly ranked in
respected industry surveys conducted in the United States and abroad. Goldman
Sachs is also among the leading investment firms using quantitative analytics
(now used by a growing number of investors) to structure and evaluate
portfolios. For example, Goldman Sachs' options evaluation model analyzes each
security's term, coupon and call option, providing an overall analysis of the
security's value relative to its interest risk.
In structuring the Fund's securities portfolio, the Investment Adviser
will review the existing overall economic trends. The Investment Adviser will
then study yield spreads, the implied volatility and the shape of the yield
curve. The Investment Adviser will then apply this analysis to a list of
eligible securities that meet the Fund's investment guidelines.
The Investment Adviser expects to utilize Goldman Sachs' sophisticated
option-adjusted analytics to help make strategic asset allocations within the
markets for U.S. Government and other securities and to employ this technology
periodically to re-evaluate the Fund's investments as market conditions change.
The fixed-income research capabilities of Goldman Sachs available to the
Investment Advisers include the Goldman Sachs Fixed Income Research Department
and the Credit Department. The Fixed Income Research Department monitors
developments in U.S. and foreign fixed-income markets, assesses the outlooks for
various sectors of the markets and provides relative value comparisons, as well
as analyzes trading opportunities within and across market sectors. The Fixed
Income Research Department is at the forefront in developing and using computer-
based tools for analyzing fixed-income securities and markets, developing new
fixed-income products and structuring portfolio strategies for investment policy
and tactical asset allocation decisions. The Credit Department tracks specific
governments, regions and industries and from time to time may review the credit
quality of the Fund's investments.
B-32
<PAGE>
The Management Agreement provides that GSAM, in its capacity as
Investment Adviser may render similar services to others so long as the services
under the Management Agreement are not impaired thereby. The Management
Agreement was initially approved with respect to the Fund by the Trustees of the
Trust, including a majority of the Trustees of the Trust who are not parties to
such agreements or "interested persons" (as such term is defined in the Act) of
any party thereto (the "non-interested Trustees"), on April 26, 2000. The Fund's
sole shareholder approved these arrangements on _________, 2000. The Management
Agreement will remain in effect until June 30, 2001 and will continue in effect
with respect to the Fund from year to year thereafter provided such continuance
is specifically approved at least annually by (a) the vote of a majority of the
Fund's outstanding voting securities or a majority of the Trustees of the Trust,
and (b) the vote of a majority of the non-interested Trustees of the Trust cast
in person at a meeting called for the purpose of voting on such approval.
The Management Agreement will terminate automatically if assigned (as
defined in the Act). The Management Agreement is also terminable at any time
without penalty by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund on 60 days' written notice to the
Investment Adviser or by the Investment Adviser on 60 days' written notice to
the Trust.
Pursuant to the Management Agreement, the Investment Adviser is entitled
to receive fees, payable monthly, at the annual rate of 0.25% of the Fund's
average daily net assets. Prior to the date of this Additional Statement, no
shares of the Fund had been offered and accordingly, no fees were paid by the
Fund to the Investment Adviser pursuant to the Management Agreement.
The Investment Adviser performs administrative services for the Funds
under the Management Agreement. Such administrative services include, subject to
the general supervision of the Trustees of the Trust, (a) providing supervision
of all aspects of the Fund's non-investment operations (other than certain
operations performed by others pursuant to agreements with the Fund); (b)
providing the Fund, to the extent not provided pursuant to the agreement with
the Trust's custodian, transfer and dividend disbursing agent or agreements with
other institutions, with personnel to perform such executive, administrative and
clerical services as are reasonably necessary to provide effective
administration of the Fund; (c) arranging, to the extent not provided pursuant
to such agreements, for the preparation, at the Fund's expense, of the Fund's
tax returns, reports to shareholders, periodic updating of the Fund's
prospectuses and statements of additional information, and reports filed with
the SEC and other regulatory authorities; (d) providing the Fund, to the extent
not provided pursuant to such agreements, with adequate office space and certain
related office equipment and services; and (e) maintaining all of the Fund's
records other than those maintained pursuant to such agreements.
Activities of Goldman Sachs and Its Affiliates and Other Accounts
-----------------------------------------------------------------
Managed by Goldman Sachs. The involvement of the Investment Adviser and Goldman
- ------------------------
Sachs and their affiliates in the management of, or their interest in, other
accounts and other activities of Goldman Sachs may present conflicts of interest
with respect to the Fund or impede its investment activities.
Goldman Sachs and its affiliates, including, without limitation, the
Investment Adviser and its advisory affiliates have proprietary interests in,
and may manage or advise with respect to, accounts or funds (including separate
accounts and other funds and collective investment vehicles) which have
investment objectives similar to those of the Fund and/or which engage in
transactions in the same types of securities, currencies and instruments as the
Fund. Goldman Sachs and its affiliates are major participants in the global
currency, equities, swap and fixed-income markets, in each case both on a
proprietary basis and for the accounts of customers. As such, Goldman Sachs and
its affiliates are
B-33
<PAGE>
actively engaged in transactions in the same securities, currencies, and
instruments in which the Fund invests. Such activities could affect the prices
and availability of the securities, currencies, and instruments in which the
Fund invests, which could have an adverse impact on the Fund's performance. Such
transactions, particularly in respect of proprietary accounts or customer
accounts other than those included in the Investment Adviser's and its advisory
affiliates' asset management activities, will be executed independently of the
Fund's transactions and thus at prices or rates that may be more or less
favorable. When the Investment Adviser and its advisory affiliates seek to
purchase or sell the same assets for their managed accounts, including the Fund,
the assets actually purchased or sold may be allocated among the accounts on a
basis determined in their good faith discretion to be equitable. In some cases,
this system may adversely affect the size or the price of the assets purchased
or sold for the Fund.
From time to time, the Fund's activities may be restricted because of
regulatory restrictions applicable to Goldman Sachs and its affiliates, and/or
their internal policies designed to comply with such restrictions. As a result,
there may be periods, for example, when the Investment Adviser, and/or its
affiliates, will not initiate or recommend certain types of transactions in
certain securities or instruments with respect to which the Investment Adviser
and/or its affiliates are performing services or when position limits have been
reached.
In connection with their management of the Fund, the Investment Adviser
may have access to certain fundamental analysis and proprietary technical models
developed by Goldman Sachs and other affiliates. The Investment Adviser will not
be under any obligation, however, to effect transactions on behalf of the Fund
in accordance with such analysis and models. In addition, neither Goldman Sachs
nor any of its affiliates will have any obligation to make available any
information regarding their proprietary activities or strategies, or the
activities or strategies used for other accounts managed by them, for the
benefit of the management of the Fund and it is not anticipated that the
Investment Adviser will have access to such information for the purpose of
managing the Fund. The proprietary activities or portfolio strategies of Goldman
Sachs and its affiliates or the activities or strategies used for accounts
managed by them or other customer accounts could conflict with the transactions
and strategies employed by the Investment Adviser in managing the Fund.
The results of the Fund's investment activities may differ significantly
from the results achieved by the Investment Adviser and its affiliates for their
proprietary accounts or accounts (including investment companies or collective
investment vehicles) managed or advised by them. It is possible that Goldman
Sachs and its affiliates and such other accounts will achieve investment results
which are substantially more or less favorable than the results achieved by the
Fund. Moreover, it is possible that the Fund will sustain losses during periods
in which Goldman Sachs and its affiliates achieve significant profits on their
trading for proprietary or other accounts. The opposite result is also possible.
An investment policy committee which may include partners of Goldman
Sachs and its affiliates may develop general policies regarding the Fund's
activities, but will not be involved in the day-to-day management of the Fund.
In such instances, those individuals may, as a result, obtain information
regarding the Fund's proposed investment activities which is not generally
available to the public. In addition, by virtue of their affiliation with
Goldman Sachs, any such member of an investment policy committee will have
direct or indirect interests in the activities of Goldman Sachs and its
affiliates in securities and investments similar to those in which the Fund
invests.
In addition, certain principals and certain employees of the Investment
Adviser are also principals or employees of Goldman Sachs or their affiliated
entities. As a result, the performance by
B-34
<PAGE>
these principals and employees of their obligations to such other entities may
be a consideration of which investors in the Fund should be aware.
The Investment Adviser may enter into transactions and invest in
instruments on behalf of the Fund in which customers of Goldman Sachs serve as
the counterparty, principal or issuer. In such cases, such party's interests in
the transaction will be adverse to the interests of the Fund, and such party may
have no incentive to assure that the Fund obtains the best possible prices or
terms in connection with the transactions. Goldman Sachs and its affiliates may
also create, write or issue derivative instruments for customers of Goldman
Sachs or its affiliates, the underlying securities or instruments of which may
be those in which the Fund invests or which may be based on the performance of
the Fund. The Fund may, subject to applicable law, purchase investments which
are the subject of an underwriting or other distribution by Goldman Sachs or its
affiliates and may also enter into transactions with other clients of Goldman
Sachs or its affiliates where such other clients have interests adverse to those
of the Fund. At times, these activities may cause departments of Goldman Sachs
or its affiliates to give advice to clients that may cause these clients to take
actions adverse to the interests of the client. To the extent affiliated
transactions are permitted, the Fund will deal with Goldman Sachs and its
affiliates on an arms-length basis.
The Fund will be required to establish business relationships with its
counterparties based on the Fund's own credit standing. Neither Goldman Sachs
nor its affiliates will have any obligation to allow their credit to be used in
connection with the Fund's establishment of its business relationships, nor is
it expected that the Fund's counterparties will rely on the credit of Goldman
Sachs or any of its affiliates in evaluating the Fund's creditworthiness.
From time to time, Goldman Sachs or any of its affiliates may, but is
not required to, purchase and hold shares of the Fund in order to increase the
assets of the Fund. Increasing the Fund's assets may enhance investment
flexibility and diversification and may contribute to economies of scale that
tend to reduce the Fund's expense ratio. Goldman Sachs reserves the right to
redeem at any time some or all of the shares of the Fund acquired for its own
account. A large redemption of shares of the Fund by Goldman Sachs could
significantly reduce the asset size of the Fund, which might have an adverse
effect on the Fund's investment flexibility, portfolio diversification and
expense ratio. Goldman Sachs will consider the effect of redemptions on the Fund
and other shareholders in deciding whether to redeem its shares.
It is possible that the Fund's holding will include securities of
entities for which Goldman Sachs performs investment banking services as well as
securities of entities in which Goldman Sachs makes a market. From time to time,
Goldman Sachs' activities may limit the Fund's flexibility in purchases and
sales of securities. When Goldman Sachs is engaged in and underwriting or other
distribution of securities of an entity, the Investment Adviser may be
prohibited from purchasing or recommending the purchase of certain securities of
that entity for the Fund.
Distributor and Transfer Agent
- ------------------------------
Goldman Sachs, 85 Broad Street, New York, New York 10004 serves as the
exclusive distributor of shares of the Fund pursuant to a "best efforts"
arrangement as provided by a distribution agreement with the Trust on behalf of
the Fund. Shares of the Fund are offered and sold on a continuous basis by
Goldman Sachs, acting as agent. Pursuant to the distribution agreement, after
the Fund's Prospectuses and periodic reports have been prepared, set in type and
mailed to shareholders, Goldman Sachs will pay for the printing and distribution
of copies thereof used in connection with the offering to
B-35
<PAGE>
prospective investors. Goldman Sachs will also pay for other supplementary sales
literature and advertising costs.
Goldman Sachs, 4900 Sears Tower, Chicago, IL 60606 serves as the Trust's
transfer and dividend disbursing agent. Under its transfer agency agreement with
the Trust, Goldman Sachs has undertaken with the Trust to: (a) record the
issuance, transfer and redemption of shares; (b) provide purchase and redemption
confirmations and quarterly statements, as well as certain other statements; (c)
provide certain information to the Trust's custodian and the relevant
subcustodian in connection with redemptions; (d) provide dividend crediting and
certain disbursing agent services; (e) maintain shareholder accounts; (f)
provide certain state Blue Sky and other information; (g) provide shareholders
and certain regulatory authorities with tax-related information; (h) respond to
shareholder inquiries; and (i) render certain other miscellaneous services. For
its transfer agency services, Goldman Sachs is entitled to receive a transfer
agency fee equal, on an annual basis, to 0.04% of average daily net assets with
respect to the Fund's Institutional and Administration Shares. Prior to the date
of this Additional Statement, no shares of the Fund had been offered and,
accordingly, no fees were paid by the Fund to Goldman Sachs as transfer agent.
The foregoing distribution and transfer agency agreements each provide
that Goldman Sachs may render similar services to others so long as the services
each provides thereunder to the Fund are not impaired thereby. Each such
agreement also provides that the Trust will indemnify Goldman Sachs against
certain liabilities.
Expenses
- --------
The Trust, on behalf of the Fund, is responsible for the payment of the
Fund's expenses. The expenses include, without limitation, the fees payable to
the Investment Adviser, fees paid to Service Organizations for providing certain
account administration services to their customers who are beneficial owners of
Administration Shares, the fees and expenses of the Trust's custodian and
subcustodians, transfer agent fees, brokerage fees and commissions, filing fees
for the registration or qualification of the Trust's shares under federal or
state securities laws, expenses of the organization of the Trust, fees and
expenses incurred by the Trust in connection with membership in investment
company organizations, taxes, interest, costs of liability insurance, fidelity
bonds or indemnification, any costs, expenses or losses arising out of any
liability of, or claim for damages or other relief asserted against, the Trust
for violation of any law, legal, tax and auditing fees and expenses (including
the cost of legal and certain accounting services rendered by employees of
Goldman Sachs, or its affiliates, with respect to the Trust), expenses of
preparing and setting in type Prospectuses, Additional Statements, proxy
material, reports and notices and the printing and distributing of the same to
the Trust's shareholders and regulatory authorities, any expenses assumed by the
Fund pursuant to its administration plan, any compensation and expenses of its
"non-interested" Trustees and extraordinary expenses, if any, incurred by the
Trust. Except for fees under the administration plan applicable to the Fund's
Administration Shares, all Fund expenses are borne on a non-class specific
basis.
The imposition of the Investment Adviser's fees, as well as other
operating expenses, will have the effect of reducing the total return to
investors. From time to time, the Investment Adviser may waive receipt of fees
and/or voluntarily assume certain expenses of the Fund, which would have the
effect of lowering the Fund's overall expense ratio and increasing total return
to investors at the time such amounts are waived or assumed, as the case may be.
B-36
<PAGE>
As of the date of this Additional Statement, the Investment Adviser has
agreed to reduce or limit certain "Other Expenses" (excluding management fees,
administration shares fees payable under the Administration Plan, transfer
agency fees, taxes, interest, brokerage fees and litigation, indemnification and
other extraordinary expenses) for the Fund to the extent such expenses exceed
.01% of average daily net assets.
Such reductions or limits are calculated monthly on a cumulative basis.
The Investment Adviser may modify or discontinue such expense limitations or the
limitations on the management fees, described above under "Management --
Investment Adviser," in the future at its discretion.
Fees and expenses of legal counsel, registering shares of the Fund,
holding meetings and communicating with shareholders may include an allocable
portion of the cost of maintaining an internal legal and compliance department.
The Fund may also bear an allocable portion of the costs incurred by the
Investment Adviser in performing certain accounting services not being provided
by the Trust's custodian.
Custodian and Sub-Custodians
- ----------------------------
State Street Bank and Trust Company ("State Street"), 1776 Heritage
Drive, North Quincy, Massachusetts 02110, is the custodian of the Trust's
portfolio securities and cash. State Street also maintains the Trust's
accounting records. State Street may appoint domestic and foreign sub-custodians
from time to time to hold certain securities purchased by the Trust in foreign
countries and to hold cash and currencies for the Trust.
Independent Public Accountants
- ------------------------------
Ernst & Young LLP, independent public accountants, 787 Seventh Avenue,
New York, New York 10019, have been selected as auditors of the Fund for the
fiscal year ending October 31, 2000. In addition to audit services, Ernst &
Young LLP will prepare the Fund's federal and state tax returns, and will
provide consultation and assistance on accounting, internal control and related
matters.
PORTFOLIO TRANSACTIONS
The portfolio transactions for the Fund are generally effected at a net
price without a broker's commission (i.e., a dealer is dealing with the Fund as
principal and receives compensation equal to the spread between the dealer's
cost for a given security and the resale price of such security). In certain
foreign countries, debt securities in which the Fund may invest are traded on
exchanges at fixed commission rates. In connection with portfolio transactions,
the Management Agreement provides that the Investment Adviser shall attempt to
obtain the most favorable execution and net price available. The Management
Agreement provides that, on occasions when the Investment Adviser deems the
purchase or sale of a security to be in the best interests of the Fund as well
as its other customers (including any other fund or other investment company or
advisory account for which the Investment Adviser or an affiliate acts as
Investment Adviser), the Fund, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased for the Fund
with those to be sold or purchased for such other customers in order to obtain
the best net price and most favorable execution. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Investment Adviser in the manner it considers
to be most equitable and consistent with its fiduciary obligations to the Fund
and such other customers. In some instances, this procedure may adversely affect
the size and price of the position obtainable for the Fund. The
B-37
<PAGE>
Management Agreement permits each Investment Adviser, in its discretion, to
purchase and sell portfolio securities to and from dealers who provide the Trust
with brokerage or research services in which dealers may execute brokerage
transactions at a higher cost to the Fund. Brokerage and research services
furnished by firms through which the Fund effects its securities transactions
may be used by the Investment Adviser in servicing other accounts and not all of
these services may be used by the Investment Adviser in connection with the
Fund. Such research or other services may include research reports on companies,
industries and securities; economic and financial data; financial publications;
computer data bases; quotation equipment and services; and research-oriented
computer hardware, software and other services. The fees received under the
Management Agreement are not reduced by reason of the Investment Adviser
receiving such brokerage and research services.
Such services are used by the Investment Adviser in connection with all
of its investment activities, and some of such services obtained in connection
with the execution of transactions of the Fund may be used in managing other
investment accounts. Conversely, brokers furnishing such services may be
selected for the execution of transactions of such other accounts, whose
aggregate assets are far larger than those of the Fund, and the services
furnished by such brokers may be used by the Investment Adviser in providing
management services for the Trust.
In circumstances where two or more broker-dealers offer comparable
prices and execution capability, preference may be given to a broker-dealer
which has sold shares of the Fund as well as shares of other investment
companies or accounts managed by the Investment Adviser. This policy does not
imply a commitment to execute all portfolio transactions through all broker-
dealers that sell shares of the Fund.
Subject to the above considerations, the Investment Adviser may use
Goldman Sachs as a broker for the Fund. In order for Goldman Sachs to effect any
portfolio transactions for the Fund, the commissions, fees or other remuneration
received by Goldman Sachs must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar instruments being purchased or sold on
an exchange during a comparable period of time. This standard would allow
Goldman Sachs to receive no more than the remuneration which would be expected
to be received by an unaffiliated broker in a commensurate arm's-length
transaction. Furthermore, the Trustees, including a majority of the Trustees who
are not "interested" Trustees, have adopted procedures which are reasonably
designed to provide that any commissions, fees, or other remuneration paid to
Goldman Sachs are consistent with the foregoing standard. Brokerage transactions
with Goldman Sachs are also subject to such fiduciary standards as may be
imposed upon Goldman Sachs by applicable law. As of the date of this Additional
Statement, no shares of the Fund had been offered and, accordingly, the Fund
paid no brokerage commissions.
SHARES OF THE TRUST
The Fund is a series of Goldman Sachs Trust, a Delaware business trust
established by an Agreement and Declaration of Trust dated January 28, 1997. The
Trustees have authority under the Trust's Declaration of Trust to create and
classify shares of beneficial interest in separate series, without further
action by shareholders. The Trustees also have authority to classify and
reclassify any series of shares into one or more classes of shares. The Act
requires that where more than one class or series of shares exists, each class
or series must be preferred over all other classes or series in respect of
assets specifically allocated to such class or series. As of the date of this
Additional Statement, the Trustees have authorized the issuance of two classes
of shares of the Fund: Institutional Shares and
B-38
<PAGE>
Administration Shares. Additional series may be added in the future. As of the
date of this Additional Statement, no Institutional Shares or Administration
Shares of the Fund were outstanding.
Each Institutional Share and Administration Share of the Fund represents
a proportionate interest in the assets belonging to the applicable class of the
Fund. All expenses of the Fund are borne at the same rate by each class of
shares, except that fees under the Administration Plan are borne exclusively by
Administration Shares. The Trustees may determine in the future that it is
appropriate to allocate other expenses differently among classes of shares and
may do so to the extent consistent with the rules of the SEC and positions of
the IRS. Each class of shares may have different minimum investment requirements
and be entitled to different shareholder services. With limited exceptions,
shares of a class may only be exchanged for shares of the same or an equivalent
class of another series. See "Shareholder Guide" in the Prospectus.
Institutional Shares may be purchased at net asset value without a sales
charge for accounts in the name of an investor or institution that is not
compensated by the Fund for services provided to the institution's customers.
Administration Shares may be purchased at net asset value without a
sales charge for accounts held in the name of an institution that provides
certain account administration services to its customers, including maintenance
of account records and processing orders to purchase, redeem and exchange
Administration Shares. Administration Shares bear the cost of account
administration fees at the annual rate of up to 0.25% of the average daily net
assets of such Administration Shares.
It is possible that an institution or its affiliate may offer different
classes of shares (i.e., Institutional and Administration Shares) to its
customers and thus receive different compensation with respect to different
classes of shares of the Fund. Dividends paid by the Fund, if any, with respect
to each class of shares will be calculated in the same manner, at the same time
on the same day and will be in the same amount, except for differences caused by
the fact that the respective account and administration fees relating to a
particular class will be borne exclusively by that class. Similarly, the net
asset value per share may differ depending upon the class of shares purchased.
Certain aspects of the shares may be altered, after advance notice to
shareholders, if it is deemed necessary in order to satisfy certain tax
regulatory requirements.
When issued, shares are fully paid and non-assessable. In the event of
liquidation, shareholders are entitled to share pro rata in the net assets of
the applicable class of the Fund available for distribution to such
shareholders. All shares are freely transferable and have no preemptive,
subscription or conversion rights.
In the interest of economy and convenience, the Trust does not issue
certificates representing the Fund's shares. Instead, the Transfer Agent
maintains a record of each shareholder's ownership. Each shareholder receives
confirmation of purchase and redemption orders from the Transfer Agent. Fund
shares and any dividends and distributions paid by the Fund are reflected in
account statements from the Transfer Agent.
The Act requires that where more than one class or series of shares
exists, each class or series must be preferred over all other classes or series
in respect of assets specifically allocated to such class or series. Rule 18f-2
under the Act provides that any matter required to be submitted by the
provisions of the Act or applicable state law, or otherwise, to the holders of
the outstanding voting securities of an
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investment company such as the Trust shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each class or series affected by such matter. Rule 18f-2
further provides that a class or series shall be deemed to be affected by a
matter unless the interests of each class or series in the matter are
substantially identical or the matter does not affect any interest of such class
or series. However, Rule 18f-2 exempts the selection of independent public
accountants, the approval of principal distribution contracts and the election
of trustees from the separate voting requirements of Rule 18f-2.
The Trust is not required to hold annual meetings of shareholders and
does not intend to hold such meetings. In the event that a meeting of
shareholders is held, each share of the Trust will be entitled, as determined by
the Trustees without the vote or consent of the shareholders, either to one vote
for each share or to one vote for each dollar of net asset value represented by
such shares on all matters presented to shareholders including the election of
Trustees (this method of voting being referred to as "dollar based voting").
However, to the extent required by the Act or otherwise determined by the
Trustees, series and classes of the Trust will vote separately from each other.
Shareholders of the Trust do not have cumulative voting rights in the election
of Trustees. Meetings of shareholders of the Trust, or any series or class
thereof, may be called by the Trustees, certain officers or upon the written
request of holders of 10% or more of the shares entitled to vote at such
meetings. 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. The shareholders of the
Trust will have voting rights only with respect to the limited number of matters
specified in the Declaration of Trust and such other matters as the Trustees may
determine or may be required by law.
The Declaration of Trust provides for indemnification of Trustees,
officers and agents of the Trust unless the recipient is adjudicated (i) to be
liable by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person's office; or (ii)
not to have acted in good faith in the reasonable belief that such person's
actions were in the best interest of the Trust. The Declaration of Trust
provides that, if any shareholder or former shareholder of any series is held
personally liable solely by reason of being or having been a shareholder and not
because of the shareholder's acts or omissions or for some other reason, the
shareholder or former shareholder (or heirs, executors, administrators, legal
representatives or general successors) shall be held harmless from and
indemnified against all loss and expense arising from such liability. The Trust,
acting on behalf of any affected series, must, upon request by such shareholder,
assume the defense of any claim made against such shareholder for any act or
obligation of the series and satisfy any judgment thereon from the assets of the
series.
The Declaration of Trust permits the termination of the Trust or of any
series or class of the Trust (i) by a majority of the affected shareholders at a
meeting of shareholders of the Trust, series or class; or (ii) by a majority of
the Trustees without shareholder approval if the Trustees determine that such
action is in the best interest of the Trust or its shareholders. The factors and
events that the Trustees may take into account in making such determination
include (i) the inability of the Trust or any successor series or class to
maintain its assets at an appropriate size; (ii) changes in laws or regulations
governing the Trust, series or class or affecting assets of the type in which it
invests; or (iii) economic developments or trends having a significant adverse
impact on their business or operations.
The Declaration of Trust authorizes the Trustees without shareholder
approval to cause the Trust, or any series thereof, to merge or consolidate with
any corporation, association, trust or other organization or sell or exchange
all or substantially all of the property belonging to the Trust or any series
thereof. In addition, the Trustees, without shareholder approval, may adopt a
master-feeder
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structure by investing all or a portion of the assets of a series of the Trust
in the securities of another open-end investment company with substantially the
same investment objective, restrictions and policies.
The Declaration of Trust permits the Trustees to amend the Declaration
of Trust without a shareholder vote. However, shareholders of the Trust have the
right to vote on any amendment (i) that would affect the voting rights of
shareholders; (ii) that is required by law to be approved by shareholders; (iii)
that would amend the voting provisions of the Declaration of Trust; or (iv) that
the Trustees determine to submit to shareholders.
The Trustees may appoint separate Trustees with respect to one or more
series or classes of the Trust's shares (the "Series Trustees"). Series Trustees
may, but are not required to, serve as Trustees of the Trust or any other series
or class of the Trust. The Series Trustees have, to the exclusion of any other
Trustees of the Trust, all the powers and authorities of Trustees under the
Declaration of Trust with respect to any other series or class.
Shareholder and Trustee Liability
Under Delaware law, the shareholders of the Fund are not generally
subject to liability for the debts or obligations of the Trust. Similarly,
Delaware law provides that a series of the Trust will not be liable for the
debts or obligations of any other series of the Trust. However, no similar
statutory or other authority limiting business trust shareholder liability
exists in other states. As a result, to the extent that a Delaware business
trust or a shareholder is subject to the jurisdiction of courts of such other
states, the courts may not apply Delaware law and may thereby subject the
Delaware business trust shareholders to liability. To guard against this risk,
the Declaration of Trust contains an express disclaimer of shareholder liability
for acts or obligations of the Fund. Notice of such disclaimer will normally be
given in each agreement, obligation or instrument entered into or executed by a
series or the Trustees. The Declaration of Trust provides for indemnification by
the Fund for all loss suffered by a shareholder as a result of an obligation of
the series. The Declaration of Trust also provides that a series shall, upon
request, assume the defense of any claim made against any shareholder for any
act or obligation of the series and satisfy any judgment thereon. In view of the
above, the risk of personal liability of shareholders of a Delaware business
trust is remote.
In addition to the requirement under Delaware law, the Declaration of
Trust provides that shareholders of a series may bring a derivative action on
behalf of the series only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the series, or 10% of the outstanding shares of
the class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and to
investigate the basis of such claim. The Trustees will be entitled to retain
counsel or other advisers in considering the merits of the request and may
require an undertaking by the shareholders making such request to reimburse the
Fund for the expense of any such advisers in the event that the Trustees
determine not to bring such action.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against liability to which he or she
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
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NET ASSET VALUE
Under the Act, the Trustees of the Trust are responsible for determining
in good faith the fair value of the Fund's securities. In accordance with
procedures adopted by the Trustees of the Trust, the net asset value per share
of each class of the Fund is calculated by determining the value of the net
assets attributable to each class and dividing by the number of outstanding
shares of that class. All securities are valued as of the close of regular
trading on the New York Stock Exchange (normally, but not always, 4:00 p.m. New
York time) on each Business Day. The term "Business Day" means any day the New
York Stock Exchange is open for trading, which is Monday through Friday except
for holidays. The New York Stock Exchange is closed on the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day (observed), Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
In the event that the New York Stock Exchange or the national securities
exchange on which stock options are traded adopt different trading hours on
either a permanent or temporary basis, the Trustees will reconsider the time at
which net asset value is computed. In addition, the Fund may compute its net
asset value as of any time permitted pursuant to any exemption, order or
statement of the SEC or its staff.
For the purpose of calculating the Fund's net asset value, investments
are valued under valuation procedures established by the Trustees. Portfolio
securities, for which accurate market quotations are readily available, other
than money market instruments, are valued via electronic feeds to the custodian
bank containing dealer-supplied bid quotations or bid quotations from a
recognized pricing service. Securities for which a pricing service either does
not supply a quotation or supplies a quotation that is believed by the
Investment Adviser to be in accurate, will be valued based on bid-side broker
quotations. Securities for which the custodian bank is unable to obtain an
external price as provided above or with respect to which the Investment Adviser
believes an external price does not reflect accurate market values, will be
valued by the Investment Adviser in good faith based on valuation models that
take into account spread and daily yield changes on government securities (i.e.,
matrix pricing). Other securities are valued as follows: (a) overnight
repurchase agreements will be valued at cost; (b) term repurchase agreements
(i.e., those whose maturity exceeds seven days) and swaps, caps, collars and
floors will be valued at the average of the bid quotations obtained daily from
at least one dealer; (c) debt securities with a remaining maturity of 60 days or
less are valued at amortized cost, which the Trustees have determined to
approximate fair value; (d) spot and forward foreign currency exchange contracts
will be valued using a pricing service such as Reuters (if quotations are
unavailable from a pricing service or, if the quotations by the Investment
Adviser are believed to be inaccurate, the contracts will be valued by
calculating the mean between the last bid and asked quotations supplied by at
least one independent dealers in such contracts); (e) exchange-traded options
and futures contracts will be valued by the custodian bank at the last sale
price on the exchange where such contracts and options are principally traded if
accurate quotations are readily available; and (f) over-the-counter options will
be valued by a broker identified by the portfolio manager/trader.
All other securities, including those for which a pricing service
supplies no exchange quotation or a quotation that is believed by the portfolio
manager/trader to be inaccurate, will be valued at fair value as stated in the
valuation procedures which were approved by the Board of Trustees.
Generally, trading in securities on European and Far Eastern securities
exchanges and on over-the-counter markets is substantially completed at various
times prior to the close of business on each Business Day in New York (i.e., a
day on which the New York Stock Exchange is open for trading). In
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addition, European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all Business Days in New
York. Furthermore, trading takes place in various foreign markets on days which
are not Business Days in New York and days on which the Fund's net asset values
are not calculated. Such calculation does not take place contemporaneously with
the determination of the prices of the majority of the portfolio securities used
in such calculation. The impact of events that occur after the publication of
market quotations used by the Fund to price its securities but before the close
of regular trading on the New York Stock Exchange will normally not be reflected
in the Fund's next determined net asset value unless the Trust, in its
discretion, makes an adjustment in light of the nature and materiality of the
event, its effect on Fund operations and other relevant factors.
The proceeds received by the Fund and each other series of the Trust
from the issue or sale of its shares, and all net investment income, realized
and unrealized gain and proceeds thereof, subject only to the rights of
creditors, will be specifically allocated to the Fund and constitute the
underlying assets of that Fund or series. The underlying assets of the Fund will
be segregated on the books of account, and will be charged with the liabilities
in respect of the Fund and with a share of the general liabilities of the Trust.
Expenses of the Trust with respect to the Fund and the other series of the Trust
are generally allocated in proportion to the net asset values of the respective
Funds or series except where allocations of direct expenses can otherwise be
fairly made.
TAXATION
The following is a summary of the principal U.S. federal income, and
certain state and local, tax considerations regarding the purchase, ownership
and disposition of Fund shares. This summary does not address special tax rules
applicable to certain classes of investors, such as tax-exempt entities,
insurance companies and financial institutions. Each prospective shareholder is
urged to consult his or her own tax adviser with respect to the specific
federal, state, local and foreign tax consequences of investing in the Fund.
This summary is based on the laws in effect on the date of this Additional
Statement, which are subject to change.
General
- -------
The Fund is treated as a separate entity for tax purposes, intends to
elect to be treated as a regulated investment company and intends to qualify
for such treatment for each taxable year under Subchapter M of the Code. To
qualify as such, the Fund must satisfy certain requirements relating to the
sources of its income, diversification of its assets and distribution of its
income to shareholders. As a regulated investment company, the Fund will not be
subject to federal income or excise tax on any net investment income and net
realized capital gains that are distributed to its shareholders in accordance
with certain timing requirements of the Code.
There are certain tax requirements that the Fund must follow in order
to avoid federal taxation. In its efforts to adhere to these requirements, the
Fund may have to limit its investment activities in some types of instruments.
Qualification as a regulated investment company under the Code requires, among
other things, that (a) the Fund derive at least 90% of its gross income
(including tax-exempt interest) for its taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of stocks or securities, or foreign currencies or other income
(including but not limited to gains from options, futures and forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "90% gross income test"); and (b) the Fund diversify its
holdings so that, at the close of each quarter of its taxable year, (i) at least
50% of the market value of
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its total (gross) assets is comprised of cash, cash items, U.S. Government
Securities, securities of other regulated investment companies and other
securities limited in respect of any one issuer to an amount not greater in
value than 5% of the value of the Fund's total assets and to not more than 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of its total (gross) assets is invested in the securities of any
one issuer (other than U.S. Government Securities and securities of other
regulated investment companies) or two or more issuers controlled by the Fund
and engaged in the same, similar or related trades or businesses.
As a regulated investment company, the Fund will not be subject to U.S.
federal income tax on the portion of its income and capital gains that it
distributes to its shareholders in any taxable year for which it distributes, in
compliance with the Code's timing and other requirements, at least 90% of its
"investment company taxable income" (which includes dividends, taxable interest,
taxable original issue discount income, market discount income, income from
securities lending, net short-term capital gain in excess of net long-term
capital loss, certain net realized foreign exchange gains, and any other taxable
income other than "net capital gain" as defined below and is reduced by
deductible expenses) and at least 90% of the excess of its gross tax-exempt
interest income, if any, over certain disallowed deductions ("net tax-exempt
interest"). The Fund may retain for investment its "net capital gain" (which
consists of the excess of its net long-term capital gain over its net short-term
capital loss). However, if the Fund retains any investment company taxable
income or net capital gain, it will be subject to tax at regular corporate rates
on the amount retained. If the Fund retains any net capital gain, it may
designate the retained amount as undistributed net capital gain in a notice to
its shareholders who, if subject to U.S. federal income tax on long-term capital
gains, (a) will be required to include in income for federal income tax
purposes, as long-term capital gain, their shares of such undistributed amount;
and (b) will be entitled to credit their proportionate shares of the tax paid by
the Fund against their U.S. federal income tax liabilities, if any, and to claim
refunds to the extent the credit exceeds such liabilities. For U.S. federal
income tax purposes, the tax basis of shares owned by a shareholder of the Fund
will be increased by an amount equal under current law to 65% of the amount of
undistributed net capital gain included in the shareholder's gross income. The
Fund intends to distribute for each taxable year to its shareholders all or
substantially all of its investment company taxable income (if any), net capital
gain and any net tax-exempt interest. Exchange control or other foreign laws,
regulations or practices may restrict repatriation of investment income, capital
or the proceeds of securities sales by foreign investors such as the Fund and
may therefore make it more difficult for the Fund to satisfy the distribution
requirements described above, as well as the excise tax distribution
requirements described below. However, the Fund generally expects to be able to
obtain sufficient cash to satisfy such requirements from new investors, the sale
of securities or other sources. If for any taxable year the Fund does not
qualify as a regulated investment company, it will be taxed on all of its
investment company taxable income and net capital gain at corporate rates, its
net tax-exempt interest (if any) may be subject to the alternative minimum tax,
and its distributions to shareholders will be taxable as ordinary dividends to
the extent of its current and accumulated earnings and profits.
For federal income tax purposes, the Fund is permitted to carry forward
a net capital loss in any year to offset its own capital gains, if any, during
the eight years following the year of the loss.
In order to avoid a 4% federal excise tax, the Fund must distribute or
be deemed to have distributed by December 31 of each calendar year at least 98%
of its taxable ordinary income for such year, at least 98% of the excess of its
capital gains over its capital losses (generally computed on the basis of the
one-year period ending on October 31 of such year) and 100% of any taxable
ordinary income and the excess of capital gains over capital losses for the
prior year that were not distributed during such year and on which the Fund did
not pay federal income tax. The Fund anticipates that it will
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generally make timely distributions of income and capital gains in compliance
with these requirements so that they will generally not be required to pay the
excise tax.
For federal income tax purposes, dividends declared by the Fund in
October, November or December as of a record date in such a month that are
actually paid in January of the following year will be treated as if they were
received by shareholders on December 31 of the year declared.
Gains and losses on the sale, lapse, or other termination of options
and futures contracts, options thereon and certain forward contracts (except
certain forward contracts and futures contracts) will generally be treated as
capital gain and losses. Certain of the futures contracts, forward contracts and
options held by the Fund will be required to be "marked-to-market" for federal
income tax purposes, that is, treated as having been sold at their fair market
value on the last day of the Fund's taxable year. These provisions may require
the Fund to recognize income or gains without a concurrent receipt of cash. Any
gain or loss recognized on actual or deemed sales of these futures contracts,
forward contracts or options will (except for certain foreign currency options,
forward contracts, and futures contracts) be treated as 60% long-term capital
gain or loss and 40% short-term capital gain or loss. As a result of certain
hedging transactions entered into by the Fund, the Fund may be required to defer
the recognition of losses on futures or forward contracts and options or
underlying securities or foreign currencies to the extent of any unrecognized
gains on related positions held by the Fund and the characterization of gains or
losses as long-term or short-term may be changed. The tax provisions described
above applicable to options, futures and forward contracts may affect the
amount, timing, and character of the Fund's distributions to shareholders.
Certain tax elections may be available to the Fund to mitigate some of the
unfavorable consequences described in this paragraph.
The Fund may be subject to foreign taxes on income (possibly including,
in some cases, capital gains) from foreign securities. Tax conventions between
certain countries and the United States may reduce or eliminate such taxes in
some cases.
If the Fund acquires stock (including, under proposed regulations, an
option to acquire stock such as is inherent in a convertible bond) in certain
foreign corporations ("passive foreign investment companies") that receive at
least 75% of their annual gross income from passive sources (such as interest,
dividends, rents, royalties or capital gain) or hold at least 50% of their
assets in investments producing such passive income, the Fund could be subject
to federal income tax and additional interest charges on "excess distributions"
received from such companies or gain from the sale of such stock in such
companies, even if all income or gain actually received by the Fund is timely
distributed to its shareholders. The Fund would not be able to pass through to
its shareholders any credit or deduction for such a tax. Certain elections may,
if available, ameliorate these adverse tax consequences, but any such election
would require the Fund to recognize taxable income or gain without the
concurrent receipt of cash. The Fund may limit and/or manage its holdings in
passive foreign investment companies to minimize their tax liability or maximize
their return from these investments.
A Fund's investment in zero coupon securities or other securities
bearing original issue discount or, if the Fund elects to include market
discount in income currently, market discount, as well as any "mark-to-market"
gain from certain options, futures or forward contracts, as described above,
will generally cause it to realize income or gain prior to the receipt of cash
payments with respect to these securities or contracts. In order to obtain cash
to enable it to distribute this income or gain, maintain its qualification as a
regulated investment company and avoid federal income or excise taxes, the Fund
may be required to liquidate portfolio securities that it might otherwise have
continued to hold.
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The federal income tax rules applicable to interest rate swaps, floors,
caps and collars are unclear in certain respects, and the Fund may also be
required to account for these instruments under tax rules in a manner that,
under certain circumstances, may limit its transactions in these instruments.
Taxable U.S. Shareholders - Distributions
Distributions from investment company taxable income, as defined above,
are taxable to shareholders who are subject to tax as ordinary income whether
paid in cash or reinvested in additional shares. Taxable distributions include
distributions from the Fund that are attributable to (a) taxable income,
including but not limited to dividends, taxable bond interest, recognized market
discount income, original issue discount income accrued with respect to taxable
bonds, income from repurchase agreements, income from securities lending, income
from interest rate swaps, caps, floors and collars; or (b) capital gains from
the sale of securities or other investments (including from the disposition of
rights to when-issued securities prior to issuance) or from options, futures or
certain forward contracts. Any portion of such taxable distributions that is
attributable to the Fund's net capital gain, as defined above, may be designated
by the Fund as a "capital gain dividend," taxable to shareholders as long-term
capital gain whether received in cash or additional shares and regardless of the
length of time their shares of the Fund have been held.
It is expected that distributions made by the Fund will ordinarily not
qualify for the dividends-received deduction for corporations because qualifying
distributions may be made only from the Fund's dividend income that it receives
from stock in U.S. domestic corporations. The Fund does not intend to purchase
stock of domestic corporations other than in limited instances, including
investments in investment companies, distributions from which may in rare cases
qualify as dividends for this purpose. The dividends-received deduction, if
available, is reduced to the extent the shares with respect to which the
dividends are received are treated as debt-financed under the federal income tax
law and is eliminated if the shares are deemed to have been held for less than a
minimum period, generally 46 days. Receipt of certain distributions qualifying
for the deduction may result in reduction of the tax basis of the corporate
shareholder's shares and may give rise to or increase its liability for federal
corporate alternative minimum tax.
Distributions in excess of the Fund's current and accumulated earnings
and profits, as computed for federal income tax purposes, will first reduce a
shareholder's basis in his or her shares and, after the shareholder's basis is
reduced to zero, will generally constitute capital gains to a shareholder who
holds his or her shares as capital assets.
Shareholders receiving a distribution in the form of newly issued shares
will be treated for U.S. federal income tax purposes as receiving a distribution
in an amount equal to the amount of cash that they would have received had they
elected to receive cash and will have a cost basis in the shares received equal
to such amount.
After the close of each calendar year, the Fund will inform shareholders
of the federal income tax status of its dividends and distributions for such
year, including the portion of such dividends, if any, that qualifies as tax-
exempt or as capital gain, the portion, if any, that should be treated as a tax
preference item for purposes of the federal alternative minimum tax and the
foreign tax credits, if any, associated with such dividends.
All distributions, whether received in shares or in cash, as well as
redemptions and exchanges, must be reported by each shareholder who is required
to file a U.S. federal income tax return.
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Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax
advisers for more information.
Taxable U.S. Shareholders -- Sale of Shares
When a shareholder's shares are sold, redeemed or otherwise disposed of
in a transaction that is treated as a sale for tax purposes, the shareholder
will generally recognize gain or loss equal to the difference between the
shareholder's adjusted tax basis in the shares and the cash, or fair market
value of any property, received. (To aid in computing your tax basis, a
shareholder should generally retain its account statements for the period that
it held shares.) Assuming the shareholder holds the shares as a capital asset at
the time of such sale, such gain or loss should be capital in character, and
long-term if the shareholder has a tax holding period for the shares of more
than one year, otherwise short-term, subject to the rules described below.
Shareholders should consult their own tax advisers with reference to their
particular circumstances to determine whether a redemption (including an
exchange) or other disposition of Fund shares is properly treated as a sale for
tax purposes, as is assumed in this discussion. If a shareholder received a
capital gain dividend with respect to shares and such shares have a tax holding
period of six months or less at the time of the sale or redemption, then any
loss the shareholder realizes on the sale or redemption will be treated as a
long-term capital loss to the extent of such capital gain dividend.
Additionally, any loss realized on a sale or redemption of shares of the Fund
may be disallowed under "wash sale" rules to the extent the shares disposed of
are replaced with other shares of the same Fund within a period of 61 days
beginning 30 days before and ending 30 days after the shares are disposed of,
such as pursuant to a dividend reinvestment in shares of the Fund. If
disallowed, the loss will be reflected in an adjustment to the basis of the
shares acquired.
Backup Withholding
The Fund will be required to report to the IRS all taxable
distributions, as well as gross proceeds from the redemption or exchange of Fund
shares, except in the case of certain exempt recipients, i.e., corporations and
certain other investors distributions to which are exempt from the information
reporting provisions of the Code. Under the backup withholding provisions of
Code Section 3406 and applicable Treasury regulations, all such reportable
distributions and proceeds may be subject to backup withholding of federal
income tax at the rate of 31% in the case of non-exempt shareholders who fail to
furnish the Fund with their correct taxpayer identification number ("TIN") and
with certain required certifications or if the IRS or a broker notifies the Fund
that the number furnished by the shareholder is incorrect or that the
shareholder is subject to backup withholding as a result of failure to report
interest or dividend income. The Fund may refuse to accept an application that
does not contain any required taxpayer identification number or certification
that the number provided is correct. If the backup withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in shares, will be reduced by the amounts required to be withheld.
Any amounts withheld may be credited against a shareholder's U.S. federal income
tax liability. If a shareholder does not have a TIN, it should apply for one
immediately by contacting the local office of the Social Security Administration
or the Internal revenue (IRS). Backup withholding could apply to payments
relating to a shareholder's account while it is waiting receipt of a TIN.
Special rules apply for certain entities. For example, for an account
established under a Uniform Gifts or Transfers to Minors Act, the TIN of the
minor should be furnished. Investors should consult their tax advisers about the
applicability of the backup withholding provisions.
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Non-U.S. Shareholders
The foregoing discussion relates solely to U.S. federal income tax
law as it applies to "U.S. persons" (i.e., U.S. citizens and residents and U.S.
domestic corporations, partnerships, trusts and estates) subject to tax under
such law. Dividends from investment company taxable income distributed by the
Fund to a shareholder who is not a U.S. person will be subject to U.S.
withholding tax at the rate of 30% (or a lower rate provided by an applicable
tax treaty) unless the dividends are effectively connected with a U.S. trade or
business of the shareholder, in which case the dividends will be subject to tax
on a net income basis at the graduated rates applicable to U.S. individuals or
domestic corporations. Distributions of net capital gain, including amounts
retained by the Fund which are designated as undistributed capital gains, to a
shareholder who is not a U.S. person will not be subject to U.S. federal income
or withholding tax unless the distributions are effectively connected with the
shareholder's trade or business in the United States or, in the case of a
shareholder who is a nonresident alien individual, the shareholder is present in
the United States for 183 days or more during the taxable year and certain other
conditions are met.
Any capital gain realized by a shareholder who is not a U.S. person upon
a sale or redemption of shares of the Fund will not be subject to U.S. federal
income or withholding tax unless the gain is effectively connected with the
shareholder's trade or business in the United States, or in the case of a
shareholder who is a nonresident alien individual, the shareholder is present in
the United States for 183 days or more during the taxable year and certain other
conditions are met.
Non-U.S. persons who fail to furnish the Fund with an IRS Form W-8 or
acceptable substitute may be subject to backup withholding at the rate of 31% on
capital gain dividends and the proceeds of redemptions and exchanges. Each
shareholder who is not a U.S. person should consult his or her tax adviser
regarding the U.S. and non-U.S. tax consequences of ownership of shares of and
receipt of distributions from the Fund.
State and Local Taxes
The Fund may be subject to state or local taxes in certain jurisdictions
in which the Fund may be deemed to be doing business. A state income (and
possibly local income and/or intangible property) tax exemption is generally
available to the extent (if any) the Fund's distributions are derived from
interest on (or, in the case of intangible property taxes, the value of its
assets is attributable to) certain U.S. Government obligations and/or tax-exempt
municipal obligations issued by or on behalf of the particular state or a
political subdivision thereof, provided in some states that certain thresholds
for holdings of such obligations and/or reporting requirements are satisfied. In
addition, in those states or localities which have income tax laws, the
treatment of the Fund and its shareholders under such laws may differ from their
treatment under federal income tax laws, and investment in the Fund may have tax
consequences for shareholders different from those of a direct investment in the
Fund's portfolio securities. Shareholders should consult their own tax advisers
concerning these matters.
B-48
<PAGE>
PERFORMANCE INFORMATION
The Fund may from time to time quote or otherwise use yield and total
return information in advertisements, shareholder reports or sales literature.
Thirty-day yield and average annual total return values are computed pursuant to
formulas specified by the SEC. The Fund may also from time to time quote
distribution rates in reports to shareholders and in sales literature.
Thirty-day yield is derived by dividing net investment income per share
earned during the period by the maximum public offering price (i.e., net asset
value) per share on the last day of such period. Yield is then annualized by
assuming that yield is realized each month for 12 months and is reinvested every
six months. Net investment income per share is equal to the dividends and
interest earned during the period, reduced by accrued expenses for the period.
The calculation of net investment income for these purposes may differ from the
net investment income determined for accounting purposes.
Distribution rate for a specified period is calculated by annualizing
distributions of net investment income for such period and dividing this amount
by the net asset value per share or maximum public offering price on the last
day of the period.
Average annual total return for a specified period is derived by
calculating the actual dollar amount of the investment return on a $1,000
investment made at the maximum public offering price applicable to the relevant
class (i.e., net asset value) at the beginning of the period, and then
calculating the annual compounded rate of return which would produce that
amount, assuming a redemption at the end of the period. This calculation assumes
a complete redemption of the investment. It also assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.
Year-by-year total return and cumulative total return for a specified
period are each derived by calculating the percentage rate required to make a
$1,000 investment (made at the maximum public offering price per share with all
distributions reinvested) at the beginning of such period equal to the actual
total value of such investment at the end of such period.
Institutional and Administration Shares of the Fund are offered at net
asset value without an initial sales charge or contingent deferred sales charge.
The Fund may also from time to time advertise total return on a cumulative,
average, year-by-year or other basis for various specified periods by means of
quotations, charts, graphs or schedules. In addition to the above, the 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
information is available. The Fund's performance quotations do not reflect any
fees charged by an Authorized Dealer, Service Organization or other financial
intermediary to its customer accounts in connection with investments in the
Fund.
Thirty-day yield, distribution rate and average annual total return are
calculated separately for each class of shares. Each class of shares is subject
to different fees and expenses and may have different returns for the same
period.
As of the date of this Additional Statement, the Fund had not commenced
operations. Accordingly, no performance information is provided for the Fund.
B-49
<PAGE>
Occasionally, statistics may be used to specify the Fund's volatility
or risk. Measures of volatility or risk are generally used to compare the Fund's
net asset value or performance relative to a market index. One measure of
volatility is beta. Beta is the volatility of the Fund relative to the total
market. A beta of more than 1.00 indicates volatility greater than the market,
and a beta of less than 1.00 indicates volatility less than the market. Another
measure of volatility or risk is standard deviation. Standard deviation is used
to measure variability of net asset value or total return around an average,
over a specified period of time. The premise is that greater volatility connotes
greater risk undertaken in achieving performance.
The Fund may from time to time advertise comparative performance as
measured by various independent sources, including, but not limited to, Lipper
------
Analytical Services, Inc., Donaghue's Money Fund Report, Barron's, The Wall
- ------------------------ ---------------------------- -------- --------
Street Journal, Weisenberger Investment Companies Service, Business Week,
- -------------- ----------------------------------------- -------------
Changing Times, Financial World, Forbes, Fortune, Morningstar Mutual Funds, The
- -------------- --------------- ------ ------- ------------------------ ---
New York Times, Personal Investor, Sylvia Porter's Personal Finance and Money.
- -------------- ----------------- -------------------------------- -----
In addition, the Fund may from time to time advertise its performance
relative to certain indices, any component of such indices and benchmark
investments, including but not limited to: (a) the Shearson Lehman
Government/Corporate (Total) Index; (b) Shearson Lehman Government Index; (c)
Merrill Lynch 1-3 Year Treasury Index; (d) Merrill Lynch 2-Year Treasury Curve
Index; (e) the Salomon Brothers Treasury Yield Curve Rate of Return Index; (f)
the Payden & Rygel 2-Year Treasury Note Index; (g) 1 through 3 year U.S.
Treasury Notes; (h) constant maturity U.S. Treasury yield indices; (i) the
Consumer Price Index; (j) the London Interbank Offered Rate; (k) other taxable
investments such as certificates of deposit, money market deposit accounts,
checking accounts, savings accounts, money market mutual funds, repurchase
agreements, commercial paper; (l) the Lipper Analytical Services, Inc. Mutual
Fund Performance Analysis, Fixed Income Analysis and Mutual Fund Indices (which
measure total return and average current yield for the mutual fund industry and
rank mutual fund performance); (m) the CDA Mutual Fund Report published by CDA
Investment Technologies, Inc. (which analyzes price, risk and various measures
of return for the mutual fund industry); (n) Stocks, Bonds, Bills and Inflation
published by Ibbotson Associates (which provides historical performance figures
for stocks, government securities and inflation); (o) the Salomon Brothers'
World Bond Index (which measures the total return in U.S. dollar terms of
government bonds, Eurobonds and foreign bonds of ten countries, with all such
bonds having a minimum maturity of five years); (p) the Lehman Brothers
Aggregate Bond Index or its component indices; (q) the Standard & Poor's Bond
Indices (which measure yield and price of corporate, municipal and U.S.
government bonds); (r) the J.P. Morgan Global Government Bond Index; (s)
historical investment data supplied by the research departments of Goldman
Sachs, Lehman Brothers Inc., First Boston Corporation, Morgan Stanley & Co.
Incorporated, Salomon Brothers, Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Donaldson Lufkin and Jenrette Securities Corporation; (t)
Donoghue's Money Fund Report (which provides industry averages for 7-day
annualized and compounded yields of taxable, tax-free and U.S. government money
funds); (u) the Lehman Brothers Municipal Bond Indices; (v) the Merrill Lynch
Municipal Bond Institutional Total Rate of Return Indices; (w) Bond Buyer
Indices; and (x) IBC/Donoghue's Money Fund Averages/Institutional Only Tax Free;
and constant maturity U.S. Treasury yield indices.
The composition of the investments in the above-referenced indices and
the characteristics of the Fund's benchmark investments are not identical to,
and in some cases may be very different from, those of the Fund's portfolio.
These indices and averages are generally unmanaged and the items included in the
calculations of such indices and averages may not be identical to the formulas
used by the Fund to calculate its performance figures.
B-50
<PAGE>
From time to time advertisements or communications to shareholders may
summarize the substance of information contained in shareholder reports
(including the investment composition of the Fund), as well as the views of
Goldman Sachs as to current market, economic, trade and interest rate trends,
legislative, regulatory and monetary developments, investment strategies and
regulated matters believed to be of relevance to the Fund.
Information used in advertisement and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
. cost associated with aging parents;
. funding a college education (including its actual and estimated cost);
. health care expenses (including actual and projected expenses);
. long-term disabilities (including the availability of, and coverage
provided by, disability insurance):
. retirement (including the availability of social security benefits,
the tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets);
. asset allocation strategies and the benefits of diversifying among asset
classes;
. the benefits of international and emerging market investments;
. the effects of inflation on investing and saving;
. the benefits of establishing and maintaining a regular pattern of
investing and the benefits of dollar-cost averaging; and
. measures of portfolio risk, including but not limited to, alpha, beta
and standard deviation.
The Trust may from time to time use comparisons, graphs or charts in
advertisements to depict the following types of information:
. The performance of various types of securities (taxable money market
funds, U.S. Treasury securities, adjustable rate mortgage securities,
government securities, municipal bonds) over time. However, the
characteristics of these securities are not identical to, and may be
very different from, those of the Fund's portfolio;
. Volatility of total return of various market indices (i.e., Lehman
Government Bond Index, Standard and Poor's 500, IBC/Donoghue's Money
Fund Average/All Taxable Index) over varying periods of time;
. Credit ratings of domestic government bonds in various countries;
B-51
<PAGE>
. Price volatility comparisons of types of securities over different
periods of time; or
. Price and yield comparisons of a particular security over different
periods of time.
In addition, the Trust may from time to time include rankings of Goldman
Sachs' research department by publications such as the Institutional Investor
and the Wall Street Journal in advertisements.
In addition, from time to time, advertisements or information may
include a discussion of asset allocation models developed by GSAM and/or its
affiliates, certain attributes or benefits to be derived from asset allocation
strategies and the Goldman Sachs mutual funds that may be offered as investment
options for the strategic asset allocations. Such advertisements and information
may also include GSAM's current economic outlook and domestic and international
market views to suggest periodic tactical modifications to current asset
allocation strategies. Such advertisements and information may include other
material which highlight or summarize the services provided in support of an
asset allocation program.
In addition, advertisements or shareholder communications may include a
discussion of certain attributes or benefits to be derived by an investment in
the Fund. Such advertisements or information may include symbols, headlines or
other material which highlight or summarize the information discussed in more
detail therein.
Performance data is based on historical results and is not intended to
indicate future performance. Total return, 30-day yield and distribution rate
will vary based on changes in market conditions, portfolio expenses, portfolio
investments and other factors. The value of the Fund's shares will fluctuate and
an investor's shares may be worth more or less than their original cost upon
redemption. The Trust may also, at its discretion, from time to time make a list
of the Fund's holdings available to investors upon request.
Performance quotations will be calculated separately for each class of
shares in existence. Because each class of shares is subject to different
expenses, the performance of each class of shares of the Fund will differ.
OTHER INFORMATION
As stated in the Prospectuses, the Trust may authorize Service
Organizations and other institutions that provide recordkeeping, reporting and
processing services to their customers to accept on the Trust's behalf purchase,
redemption and exchange orders placed by or on behalf of their customers and, if
approved by the Trust, to designate other intermediaries to accept such orders.
These institutions may receive payments from the Trust or Goldman Sachs for
their services. Certain Service Organizations or institutions may enter into
sub-transfer agency agreements with the Trust or Goldman Sachs with respect to
their services.
The Investment Adviser, Distributor and/or their affiliates may pay, out
of their own assets, compensation to Authorized Dealers, Service Organizations
and other financial intermediaries ("Intermediaries") in connection with the
sale and distribution of shares of the Fund and/or servicing of these shares.
These payments ("Additional Payments") would be in addition to the payments by
the
B-52
<PAGE>
Fund described in the Fund's Prospectuses and this Additional Statement for
distribution and shareholder servicing and processing. These Additional Payments
may take the form of "due diligence" payments for an Intermediary's examination
of the Fund and payments for providing extra employee training and information
relating to the Fund; "listing" fees for the placement of the Funds on a
dealer's list of mutual funds available for purchase by its customers; "finders"
or "referral" fees for directing investors to the Fund; "marketing support" fees
for providing assistance in promoting the sale of the Fund's shares; and
payments for the sale of shares and/or the maintenance of share balances. In
addition, the Investment Adviser, Distributor and/or their affiliates may make
Additional Payments for subaccounting, administrative and/or shareholder
processing services that are in addition to any shareholder servicing and
processing fees paid by the Fund. The Additional Payments made by the Investment
Adviser, Distributor and their affiliates may be a fixed dollar amount, may be
based on the number of customer accounts maintained by an Intermediary, or may
be based on a percentage of the value of shares sold to, or held by, customers
of the Intermediary involved, and may be different for different Intermediaries.
Furthermore, the Investment Adviser, Distributor and/or their affiliates may
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. The Investment Adviser, Distributor and their affiliates may
also pay for the travel expenses, meals, lodging and entertainment of
Intermediaries and their salespersons and guests in connection with educational,
sales and promotional programs, subject to applicable NASD regulations. The
Distributor currently expects that such additional bonuses or incentives will
not exceed 0.50% of the amount of any sales.
The Fund will redeem shares solely in cash up to the lesser of $250,000
or 1% of the net asset value of the Fund during any 90- day period for any one
shareholder. The Fund, however, reserves the right to pay redemptions exceeding
$250,000 or 1% of the net asset value of the Fund at the time of redemption by a
distribution in kind of securities (instead of cash) from the Fund. The
securities distributed in kind would be readily marketable and would be valued
for this purpose using the same method employed in calculating the Fund's net
asset value per share. See "Net Asset Value." If a shareholder receives
redemption proceeds in kind, the shareholder should expect to incur transaction
costs upon the disposition of the securities received in the redemption.
The right of a shareholder to redeem shares and the date of payment by
the Fund may be suspended for more than seven days for any period during which
the New York Stock Exchange is closed, other than the customary weekends or
holidays, or when trading on such Exchange is restricted as determined by the
SEC; or during any emergency, as determined by the SEC, as a result of which it
is not reasonably practicable for the Fund to dispose of securities owned by it
or fairly to determine the value of its net assets; or for such other period as
the SEC may by order permit for the protection of shareholders of the Fund. (The
Trust may also suspend or postpone the recommendation of the transfer of shares
upon the occurrence of any of the foregoing conditions).
The Prospectuses and this Additional Statement do not contain all the
information included in the Registration Statement filed with the SEC under the
1933 Act with respect to the securities offered by the Prospectuses. Certain
portions of the Registration Statement have been omitted from the Prospectuses
and this Additional Statement pursuant to the rules and regulations of the SEC.
The Registration Statement including the exhibits filed therewith may be
examined at the office of the SEC in Washington, D.C.
Statements contained in the Prospectuses or in this Additional Statement
as to the contents of any contract or other document referred to are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement
B-53
<PAGE>
of which the Prospectuses and this Additional Statement form a part, each such
statement being qualified in all respects by such reference.
ADMINISTRATION PLAN
(Administration Shares Only)
The Fund has adopted an administration plan (the "Plan") with respect to
its Administration Shares which authorizes it to compensate Service
Organizations for providing certain account administration services to their
customers who are beneficial owners of such Shares. Pursuant to the Plans, the
Fund enters into agreements with Service Organizations which purchase
Administration Shares on behalf of their customers ("Service Agreements"). Under
such Service Agreements the Service Organizations may perform some or all of the
following services: (a) act, directly or through an agent, as the sole
shareholder of record and nominee for all customers; (b) maintain account
records for each customer who beneficially owns Administration Shares of the
Fund; (c) answer questions and handle correspondence from customers regarding
their accounts; (d) process customer orders to purchase, redeem and exchange
Administration Shares of the Fund and handle the transmission of funds
representing the customers' purchase price or redemption proceeds; and (e) issue
confirmations for transactions in shares by customers. As compensation for such
services, the Fund will pay each Service Organization an account administration
fee in an amount up to 0.25% (on an annualized basis) of the average daily net
assets of the Administration Shares of the Fund attributable to or held in the
name of such Service Organization. As of the date of this Additional Statement,
no shares of the Fund were offered and accordingly, the Fund paid no fees to
Service Organizations pursuant to the Plan.
Conflict of interest restrictions (including the Employee Retirement
Income Security Act of 1974, as amended) may apply to a Service Organization's
receipt of compensation paid by a Fund in connection with the investment of
fiduciary assets in Administration Shares of the Fund. Service Organizations,
including banks regulated by the Comptroller of the Currency, the Federal
Reserve Board or the Federal Deposit Insurance Corporation, and investment
advisers and other money managers subject to the jurisdiction of the SEC, the
Department of Labor or state securities commissions, are urged to consult their
legal advisers before investing fiduciary assets in Administration Shares of the
Fund. In addition, under some state securities laws, banks and other financial
institutions purchasing Administration Shares on behalf of their customers may
be required to register as dealers.
B-54
<PAGE>
The Board of Trustees, including a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plans or the related Service Agreements,
initially voted to approve the Plan and Service Agreements with respect to the
Fund at a meeting called for the purpose of voting on such Plan and Service
Agreements on April 26, 2000. The Plan and Service Agreements will remain in
effect until May 1, 2001 and will continue in effect thereafter only if such
continuance is specifically approved annually by a vote of the Board of Trustees
in the manner described above. The Plan may not be amended to increase
materially the amount to be spent for the services described therein without
approval of the Fund's shareholders and all material amendments of the Plan must
also be approved by the Board of Trustees in the manner described above. The
Plan may be terminated at any time by a majority of the Board of Trustees as
described above or by vote of a majority of the Fund's outstanding
Administration Shares. The Service Agreements may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Board of Trustees
as described above or by a vote of a majority of the outstanding Administration
Shares of the Fund on not more than 60 days' written notice to any other party
to the Service Agreements. The Service Agreements will terminate automatically
if assigned. So long as the Plan is in effect, the selection and nomination of
those Trustees who are not interested persons will be committed to the
discretion of the Trust's Nominating Committee, which consists of all of the
non-interested members of the Board of Trustees. The Board of Trustees has
determined that, in its judgment, there is a reasonable likelihood that the Plan
will benefit the Fund and the holders of its Administration Shares.
[End of Page]
B-55
<PAGE>
APPENDIX A
Commercial Paper Ratings
- ------------------------
A Standard & Poor's commercial paper rating is a current opinion of the
creditworthiness of an obligor with respect to financial obligations having an
original maturity of no more than 365 days. The following summarizes the rating
categories used by Standard & Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category indicating that the
obligor's capacity to meet its financial commitment on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+).
This indicates that the obligor's capacity to meet its financial commitment on
these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
"B" - Obligations are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation.
"D" - Obligations are in payment default. The "D" rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard and Poor's believes
that such payments will be made during such grace period. The "D" rating will be
used upon the filing of a bankruptcy petition or the taking of a similar action
if payments on an obligation are jeopardized.
Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually senior debt obligations not having an original maturity in
excess of one year, unless explicitly noted. The following summarizes the rating
categories used by Moody's for commercial paper:
"Prime-1" - Issuers (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment ability
will often be evidenced by many of the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
1-A
<PAGE>
"Prime-2" - Issuers (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an acceptable ability
for repayment of senior short-term debt obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime rating
categories.
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:
"D-1+" - Debt possesses the highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors. Risk
factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity factors
are strong and supported by good fundamental protection factors. Risk factors
are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity factors
and company fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk factors
are small.
"D-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics. Liquidity is
not sufficient to insure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.
Fitch IBCA short-term ratings apply to debt obligations that have time
horizons of less than 12 months for most obligations, or up to three years for
U.S. public finance securities. The following summarizes the rating categories
used by Fitch IBCA for short-term obligations:
2-A
<PAGE>
"F1" - Securities possess the highest credit quality. This designation
indicates the best capacity for timely payment of financial commitments and may
have an added "+" to denote any exceptionally strong credit feature.
"F2" - Securities possess good credit quality. This designation indicates a
satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.
"F3" - Securities possess fair credit quality. This designation indicates
that the capacity for timely payment of financial commitments is adequate;
however, near-term adverse changes could result in a reduction to non-investment
grade.
"B" - Securities possess speculative credit quality. This designation
indicates uncertain capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.
"C" - Securities possess high default risk. This designation indicates a
capacity for meeting financial commitments which is highly uncertain and solely
reliant upon a sustained, favorable business and economic environment.
"D" - Securities are in actual or imminent payment default.
Thomson Financial BankWatch short-term ratings assess the likelihood of an
untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson Financial BankWatch:
"TBW-1" - This designation represents Thomson Financial BankWatch's highest
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.
"TBW-2" - This designation represents Thomson Financial BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents Thomson Financial BankWatch's lowest
investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.
"TBW-4" - This designation represents Thomson Financial BankWatch's lowest
rating category and indicates that the obligation is regarded as non-investment
grade and therefore speculative.
Corporate Long-Term Debt Ratings
- --------------------------------
The following summarizes the ratings used by Standard & Poor's for
corporate debt:
3-A
<PAGE>
"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
"BB" - An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
"B" - An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB", but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
"CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial and economic conditions for
the obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
"CC" - An obligation rated "CC" is currently highly vulnerable to
nonpayment.
"C" - The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on this
obligation are being continued.
"D" - An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard and Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition or the taking
of a similar action if payments on an obligation are jeopardized.
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PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
"c" - The "c" subscript is used to provide additional information to
investors that the bank may terminate its obligation to purchase tendered bonds
if the long-term credit rating of the issuer is below an investment-grade level
and/or the issuer's bonds are deemed taxable.
"p" - The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project financed by
the debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful, timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion of the project, makes no comment on the likelihood of or the risk of
default upon failure of such completion. The investor should exercise his own
judgment with respect to such likelihood and risk.
* - Continuance of the ratings is contingent upon Standard & Poor's receipt
of an executed copy of the escrow agreement or closing documentation confirming
investments and cash flows.
"r" - The "r" highlights derivative, hybrid and certain other obligations
that Standard & Poor's believes may experience high volatility or high
variability in expected returns as a result of noncredit risks. Examples of such
obligations are securities with principal or interest return indexed to equities
or currencies; certain swaps and options; and interest-only and principal-only
mortgage securities. The absence of an "r" symbol should not be taken as an
indication that an obligation will exhibit no volatility or variability in total
return.
N.R. Indicated that no rating has been requested, that there is
insufficient information on which to bast a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy. Debt obligations of
issuers outside the United States and its territories are rated on the same
basis as domestic corporate issues. The rating measure the creditworthiness of
the obligor but do not take into account currency exchange and related
uncertainties.
The following summarizes the ratings used by Moody's for corporate
long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edged."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards. Together
with the "Aaa" group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in "Aaa" securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than the "Aaa" securities.
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"A" - Bonds possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds are considered as medium-grade obligations, (i.e., they are
neither highly protected nor poorly secured), interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well,
"Ba," "B," "Caa," "Ca" and "C" - Bonds that possess one of these ratings
provide questionable protection of interest and principal ("Ba" indicates
speculative elements; "B" indicates a general lack of characteristics of
desirable investment; "Caa" are of poor standing; "Ca" represents obligations
which are speculative in a high degree; and "C" represents the lowest rated
class of bonds). "Caa," "Ca" and "C" bonds may be in default.
Con. (---) - Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction; (b) earnings of
projects unseasoned in operating experience; (c) rentals which begin when
facilities are completed; or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from "Aa" through "Caa". The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of its generic rating category.
The following summarizes the long-term debt ratings used by Duff & Phelps
for corporate long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered to be of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
"A" - Debt possesses protection factors which are average but adequate.
However, risk factors are more variable in periods of greater economic stress.
"BBB" - Debt possesses below-average protection factors but such protection
factors are still considered sufficient for prudent investment. Considerable
variability in risk is present during economic cycles. This is the lowest
investment grade category.
"BB," "B," "CCC,' "DD" and "DP" - Debt that possesses one of these ratings
is considered to be below investment grade. Although below investment grade,
debt rated "BB" is deemed likely to meet obligations when due. Debt rated "B"
possesses the risk that obligations will not be met when due. Debt rated "CCC"
is well below investment grade and has considerable
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uncertainty as to timely payment of principal, interest or preferred dividends.
Debt rated "DD" is a defaulted debt obligation, and the rating "DP" represents
preferred stock with dividend arrearages.
To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.
The following summarizes the ratings used by Fitch IBCA for corporate
bonds:
"AAA" - Bonds considered to be investment grade and of the highest credit
quality. These ratings denote the lowest expectation of credit risk and are
assigned only in case of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. These ratings denote a very low expectation of credit risk and indicate
very strong capacity for timely payment of financial commitments. This capacity
is not significantly vulnerable to foreseeable events.
"A" - Bonds considered to be investment grade and of high credit quality.
These ratings denote a low expectation of credit risk and indicate strong
capacity for timely payment of financial commitments. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in economic
conditions than is the case for higher ratings.
"BBB" - Bonds considered to be investment grade and of good credit quality.
These ratings denote that there is currently a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered adequate,
but adverse changes in circumstances and in economic conditions are more likely
to impair this capacity. This is the lowest investment grade category.
"BB" - Bonds considered to be speculative. These ratings indicate that
there is a possibility of credit risk developing, particularly as the result of
adverse economic changes over time; however, business or financial alternatives
may be available to allow financial commitments to be met. Securities rated in
this category are not investment grade.
"B" - Bonds are considered highly speculative. These ratings indicate that
significant credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.
"CCC", "CC", "C" Bonds have high default risk. Default is a real
possibility, and capacity for meeting financial commitments is solely reliant
upon sustained, favorable business or economic developments. "CC" ratings
indicate that default of some kind appears probable, and "C" ratings signal
imminent default.
"DDD," "DD" and "D" - Bonds are in default. The ratings of obligations in
this category are based on their prospects for achieving partial or full
recovery in a reorganization of the obligor. While expected recovery values are
highly speculative and cannot be estimated with any
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precision, the following serve as general guidelines: "DDD" obligations have the
highest potential for recovery, around 90% - 100% of outstanding amounts and
accrued interest. "DD" indicates potential recoveries in the range of 50% - 90%,
and "D" the lowest recovery potential, i.e. below 50%.
Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.
To provide more detailed indications of credit quality, the Fitch IBCA
ratings from and including "AA" to "CCC" may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major rating
categories.
"NR" indicates the Fitch IBCA does not rate the issuer or issue in
question.
"Withdrawn": A rating is withdrawn when Fitch IBCA deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.
RatingAlert: Ratings are placed on RatingAlert to notify investors that
there is a reasonable probability of a rating change and the likely direction
of such change. These are designated as "Positive," indicating a potential
upgrade, "Negative," for a potential downgrade, or "Evolving," if ratings may be
raised, lowered or maintained. RatingAlert is typically resolved over a
relatively short period.
Thomson Financial Bank Watch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson Financial Bank Watch for
long-term debt ratings:
"AAA" - This designation indicates that the ability to repay principal and
interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay principal
and interest on a timely basis, with limited incremental risk compared to issues
rated in the highest category.
"A" - This designation indicates that the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents the lowest investment-grade category
and indicates an acceptable capacity to repay principal and interest, issues
rated "BBB" are more vulnerable to adverse developments (both internal and
external) than obligations with higher ratings.
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"BB" - A rating of BB suggests that the likelihood of default is
considerable less than for lower-rated issues, although there are significant
uncertainties that could affect the ability to adequately service debt
obligations.
"B" - Issues rated B show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse developments
could negatively affect the payment of interest and principal on a timely basis.
"CCC" - Issues rated CCC clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial circumstances.
"CC" - This rating is applied to issues that are subordinate to other
obligations rated CCC and are afforded less protection in the event of
bankruptcy or reorganization.
"D" - This designation indicates that the long-term debt is in default.
PLUS (-+-) OR MINUS (-) - The ratings from "AAA" through "CC" may include a
plus or minus sign designation which indicates where within the respective
category the issue is placed.
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APPENDIX B
BUSINESS PRINCIPLES OF GOLDMAN, SACHS & CO.
Goldman Sachs is noted for its Business Principles, which guide all of the
firm's activities and serve as the basis for its distinguished reputation among
investors worldwide.
Our client's interests always come first. Our experience shows that if we
serve our clients well, our own success will follow.
Our assets are our people, capital and reputation. If any of these is ever
diminished, the last is the most difficult to restore. We are dedicated to
complying fully with the letter and spirit of the laws, rules and ethical
principles that govern us. Our continued success depends upon unswerving
adherence to this standard.
We take great pride in the professional quality of our work. We have an
uncompromising determination to achieve excellence in everything we undertake.
Though we may be involved in a wide variety and heavy volume of activity, we
would, if it came to a choice, rather be best than biggest.
We stress creativity and imagination in everything we do. While recognizing
that the old way may still be the best way, we constantly strive to find a
better solution to a client's problems. We pride ourselves on having pioneered
many of the practices and techniques that have become standard in the industry.
We make an unusual effort to identify and recruit the very best person for
every job. Although our activities are measured in billions of dollars, we
select our people one by one. In a service business, we know that without the
best people, we cannot be the best firm.
We offer our people the opportunity to move ahead more rapidly than is
possible at most other places. We have yet to find limits to the responsibility
that our best people are able to assume. Advancement depends solely on ability,
performance and contribution to the Firm's success, without regard to race,
color, religion, sex, age, national origin, disability, sexual orientation, or
any other impermissible criterion or circumstance.
We stress teamwork in everything we do. While individual creativity is
always encouraged, we have found that team effort often produces the best
results. We have no room for those who put their personal interests ahead of
the interests of the firm and its clients.
The dedication of our people to the Firm and the intense effort they give
their jobs are greater than one finds in most other organizations. We think
that this is an important part of our success.
Our profits are a key to our success. They replenish our capital and
attract and keep our best people. It is our practice to share our profits
generously with all who help create them. Profitability is crucial to our
future.
We consider our size an asset that we try hard to preserve. We want to be
big enough to undertake the largest project that any of our clients could
contemplate, yet small enough to maintain
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the loyalty, the intimacy and the esprit de corps that we all treasure and that
contribute greatly to our success.
We constantly strive to anticipate the rapidly changing needs of our
clients and to develop new services to meet those needs. We know that the world
of finance will not stand still and that complacency can lead to extinction.
We regularly receive confidential information as part of our normal client
relationships. To breach a confidence or to use confidential information
improperly or carelessly would be unthinkable.
Our business is highly competitive, and we aggressively seek to expand our
client relationships. However, we must always be fair to competitors and must
never denigrate other firms.
Integrity and honesty are the heart of our business. We expect our people
to maintain high ethical standards in everything they do, both in their work for
the firm and in their personal lives.
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GOLDMAN, SACHS & CO.'S INVESTMENT BANKING
AND SECURITIES ACTIVITIES
Goldman Sachs is a leading financial services firm traditionally known on Wall
Street and around the world for its institutional and private client service.
. With thirty-seven offices worldwide Goldman Sachs employs over 11,000
professionals focused on opportunities in major markets.
. The number one underwriter of all international equity issues from 1989-
1997.
. The number one lead manager of U.S. common stock offerings for the past
nine years (1989-1997).*
. The number one lead manager for initial public offerings (IPOs) worldwide
(1989-1997).
* Source: Securities Data Corporation. Common stock ranking excludes REITS,
-----------------------------------
Investment Trusts and Rights.
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GOLDMAN, SACHS & CO.'S HISTORY OF EXCELLENCE
1869 Marcus Goldman opens Goldman Sachs for business
1890 Dow Jones Industrial Average first published
1896 Goldman, Sachs & Co. joins New York Stock Exchange
1906 Goldman, Sachs & Co. takes Sears Roebuck & Co. public (at 93 years,
the firm's longest-standing client relationship)
Dow Jones Industrial Average tops 100
1925 Goldman, Sachs & Co. finances Warner Brothers, producer of the first
talking film
1956 Goldman, Sachs & Co. co-manages Ford's public offering, the largest to
date
1970 Goldman, Sachs & Co. opens London office
1972 Dow Jones Industrial Average breaks 1000
1986 Goldman, Sachs & Co. takes Microsoft public
1988 Goldman Sachs Asset Management is formally established
1991 Goldman, Sachs & Co. provides advisory services for the largest
privatization in the region of the sale of Telefonos de Mexico
1995 Goldman Sachs Asset Management introduces Global Tactical Asset
Allocation Program
Dow Jones Industrial Average breaks 5000
1996 Goldman, Sachs & Co. takes Deutsche Telekom public
Dow Jones Industrial Average breaks 6000
1997 Dow Jones Industrial Average breaks 7000
Goldman Sachs Asset Management increases assets under management by
100% over 1996
1998 Goldman Sachs Asset Management reaches $195.5 billion in assets under
management
Dow Jones Industrial Average breaks 9000
1999 Goldman Sachs becomes a public company
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PART C
OTHER INFORMATION
Item 23. Exhibits
--------
The following exhibits relating to Goldman Sachs Trust are incorporated
herein by reference to Post-Effective Amendment No. 26 to Goldman Sachs Trust's
Registration Statement on Form N-1A (Accession No. 000950130-95-002856); to
Post-Effective Amendment No. 27 to such Registration Statement (Accession No.
0000950130-96-004931); to Post-Effective Amendment No. 29 to such Registration
Statement (Accession No. 0000950130-97-000573); to Post-Effective Amendment No.
31 to such Registration Statement (Accession No. 0000950130-97-000805); to Post-
Effective Amendment No. 32 to such Registration Statement (Accession No.
0000950130-97-0001846); to Post-Effective Amendment No. 40 to such Registration
Statement (Accession No. 0000950130-97-004495); to Post-Effective Amendment No.
41 to such Registration Statement (Accession No 0000950130-98-000676); to Post-
Effective Amendment No. 43 to such Registration Statement (Accession No.
0000950130-98-000965); to Post-Effective Amendment No. 44 to such Registration
Statement (Accession No. 0000950130-98-002160); to Post-Effective Amendment No.
46 to such Registration Statement (Accession No. 0000950130-98-003563); to Post-
Effective Amendment No. 47 to such Registration Statement (Accession No.
0000950130-98-004845); to Post-Effective Amendment No. 48 to such Registration
Statement (Accession No. 0000950109-98-005275); to Post-Effective Amendment No.
50 to such Registration Statement (Accession No. 0000950130-98-006081); to Post-
Effective Amendment No. 51 to such Registration Statement (Accession No.
0000950130-99-000178); to Post-Effective Amendment No. 52 to such Registration
Statement (Accession No. 0000950130-99-000742); to Post-Effective Amendment No.
53 to such Registration Statement (Accession No. 0000950130-99-001069); to Post-
Effective Amendment No. 54 to such Registration Statement (Accession No.
0000950130-99-002212); to Post-Effective Amendment No. 55 to such Registration
Statement (Accession No. 0000950109-99-002544); to Post-Effective Amendment No.
56 to such Registration Statement (Accession No. 0000950130-99-005294); to Post-
Effective Amendment No. 57 to such Registration Statement (Accession No.
0000950109-99-003474); to Post-Effective Amendment No. 58 to such Registration
Statement (Accession No. 0000950109-99-004208); to Post-Effective Amendment No.
59 to such Registration Statement (Accession No. 0000950130-99-006810); to Post-
Effective Amendment No. 60 to such Registration Statement (Accession No.
0000950109-99-004538) (no exhibits filed as part of this Amendment), to Post-
Effective Amendment No. 61 to such Registration Statement (Accession No.
0000950130-00-000099) (no exhibits filed as part of this Amendment); to Post-
Effective Amendment No. 62 to such Registration Statement (Accession No.
0000950109-00-000585), to Post-
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Effective Amendment No. 63 to such Registration Statement (Accession No.
0000950109-00-001365) and to Post-Effective Amendment No. 64 to such
Registration Statement (Accession No. 0000950130-00-002072).
(a)(1). Agreement and Declaration of Trust dated January 28, 1997.
(Accession No. 0000950130-97-000573.)
(a)(2). Amendment No. 1 dated April 24, 1997 to Agreement and Declaration
of Trust January 28, 1997. (Accession No. 0000950130-97-004495.)
(a)(3). Amendment No. 2 dated July 21, 1997 to Agreement and Declaration
of Trust, as amended, dated January 28, 1997. (Accession No.
0000950130-97-004495.)
(a)(4). Amendment No. 3 dated October 21, 1997 to the Agreement and
Declaration of Trust, as amended, dated January 28, 1997.
(Accession No. 0000950130-98-000676.)
(a)(5). Amendment No. 4 dated January 28, 1998 to the Agreement and
Declaration of Trust, as amended, dated January 28, 1997.
(Accession No. 0000950130-98-000676.)
(a)(6). Amendment No. 5 dated April 23, 1998 to Agreement and Declaration
of Trust as amended, dated January 28, 1997. (Accession No.
0000950130-98-004845.)
(a)(7). Amendment No. 6 dated July 22, 1998 to Agreement and Declaration
of Trust as amended, dated January 28, 1997. (Accession No.
0000950130-98-004845.)
(a)(8). Amendment No. 7 dated November 3, 1998 to Agreement and
Declaration of Trust as amended, dated January 28, 1997.
(Accession No. 0000950130-98-006081.)
(a)(9). Amendment No. 8 dated January 22, 1999 to Agreement and
Declaration of Trust as amended, dated January 28, 1997.
(Accession No. 0000950130-99-000742.)
(a)(10). Amendment No. 9 dated April 28, 1999 to Agreement and Declaration
of Trust as amended, dated January 28, 1997. (Accession No.
0000950109-99-002544.)
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(a)(11). Amendment No. 10 dated July 27, 1999 to Agreement and Declaration
of Trust as amended, dated January 28, 1997. (Accession No.
0000950130-99-005294.)
(a)(12). Amendment No. 11 dated July 27, 1999 to Agreement and Declaration
of Trust as amended, dated January 28, 1997. (Accession No.
0000950130-99-005294.)
(a)(13). Amendment No. 12 dated October 26, 1999 to Agreement and
Declaration of Trust as amended, dated January 28, 1997.
(Accession No. 0000950130-99-004208.)
(a)(14). Amendment No. 13 dated February 3, 2000 to Agreement and
Declaration of Trust, as amended, dated January 28, 1997.
(Accession No. 0000950109-00-000585.)
(b). Amended and Restated By-laws of the Delaware business trust dated
January 28, 1997. (Accession No. 0000950130-97-000573.)
(b)(2). Amended and Restated By-laws of the Delaware business trust dated
January 28, 1997, as amended and restated July 27, 1999.
(Accession No. 0000950130-99-005294.)
(c). Not applicable.
(d)(1). Management Agreement dated April 30, 1997 between Registrant, on
behalf of Goldman Sachs Short Duration Government Fund, and
Goldman Sachs Funds Management, L.P. (Accession No. 0000950130-
98-000676.)
(d)(2). Management Agreement dated April 30, 1997 between Registrant, on
behalf of Goldman Sachs Adjustable Rate Government Fund, and
Goldman Sachs Funds Management, L.P. (Accession No. 0000950130-
98-000676.)
(d)(3). Management Agreement dated April 30, 1997 between Registrant, on
behalf of Goldman Sachs Short Duration Tax-Free Fund, and Goldman
Sachs Asset Management. (Accession No. 0000950130-98-000676.)
(d)(4). Management Agreement dated April 30, 1997 between Registrant, on
behalf of Goldman Sachs Core Fixed Income Fund, and Goldman
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<PAGE>
Sachs Asset Management. (Accession No. 0000950130-98-000676.)
(d)(5). Management Agreement dated April 30, 1997 between the Registrant,
on behalf of Goldman Sachs - Institutional Liquid Assets, and
Goldman Sachs Asset Management. (Accession No. 0000950130-98-
000676.)
(d)(6). Management Agreement dated April 30, 1997 between Registrant,
Goldman Sachs Asset Management, Goldman Sachs Fund Management
L.P. and Goldman, Sachs Asset Management International.
(Accession No. 0000950109-98-005275.)
(d)(7). Management Agreement dated January 1, 1998 on behalf of the
Goldman Sachs Asset Allocation Portfolios and Goldman Sachs Asset
Management. (Accession No. 0000950130-98-000676.)
(d)(8). Amended Annex A to Management Agreement dated January 1, 1998 on
behalf of the Goldman Sachs Asset Allocation Portfolios and
Goldman Sachs Asset Management (Conservative Strategy Portfolio)
(Accession No. 0000950130-99-000742.)
(d)(9). Amended Annex A dated April 28, 1999 to Management Agreement
dated April 30, 1997. (Accession No. 0000950109-99-002544.)
(d)(10). Amended Annex A dated July 27, 1999 to Management Agreement dated
April 30, 1997. (Accession No. 0000950130-99-005294.)
(d)(11). Amended Annex A dated October 26, 1999 to Management Agreement
dated April 30, 1997. (Accession No. 0000950130-99-004208.)
(d)(12). Amended Annex A dated February 3, 2000 to Management Agreement
dated April 30, 1997 (Accession No. 0000950109-00-001365).
(e). None.
(f). Not applicable.
(g)(1). Custodian Agreement dated July 15, 1991, between Registrant and
State Street Bank and Trust Company. (Accession No. 0000950130-
95-002856.)
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<PAGE>
(g)(2). Custodian Agreement dated December 27, 1978 between Registrant
and State Street Bank and Trust Company, on behalf of Goldman
Sachs - Institutional Liquid Assets, filed as Exhibit 8(a).
(Accession No. 0000950130-98-000965.)
(g)(3). Letter Agreement dated December 27, 1978 between Registrant and
State Street Bank and Trust Company, on behalf of Goldman Sachs -
Institutional Liquid Assets, pertaining to the fees payable by
Registrant pursuant to the Custodian Agreement, filed as Exhibit
8(b). (Accession No. 0000950130-98-000965.)
(g)(4). Amendment dated May 28, 1981 to the Custodian Agreement referred
to above as Exhibit (g)(2) (Accession No. 0000950130-98-000965.)
(g)(5). Fee schedule relating to the Custodian Agreement between
Registrant on behalf of the Goldman Sachs Asset Allocation
Portfolios and State Street Bank and Trust Company. (Accession
No. 0000950130-97-004495.)
(g)(6). Letter Agreement dated June 14, 1984 between Registrant and State
Street Bank and Trust Company, on behalf of Goldman Sachs -
Institutional Liquid Assets, pertaining to a change in wire
charges under the Custodian Agreement, filed as Exhibit 8(d).
(Accession No. 0000950130-98-000965.)
(g)(7). Letter Agreement dated March 29, 1983 between Registrant and
State Street Bank and Trust Company, on behalf of Goldman Sachs -
Institutional Liquid Assets, pertaining to the latter's
designation of Bank of America, N.T. and S.A. as its subcustodian
and certain other matters, filed as Exhibit 8(f). (Accession No.
0000950130-98-000965.)
(g)(8). Letter Agreement dated March 21, 1985 between Registrant and
State Street Bank and Trust Company, on behalf of Goldman Sachs -
Institutional Liquid Assets, pertaining to the creation of a
joint repurchase agreement account, filed as Exhibit 8(g).
(Accession No. 0000950130-98-000965.)
(g)(9). Letter Agreement dated November 7, 1985, with attachments,
between Registrant and State Street Bank and Trust Company, on
behalf of Goldman Sachs - Institutional Liquid Assets,
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<PAGE>
authorizing State Street Bank and Trust Company to permit
redemption of units by check, filed as Exhibit 8(h). (Accession
No. 0000950130-98-000965.)
(g)(10). Money Transfer Services Agreement dated November 14, 1985,
including attachment, between Registrant and State Street Bank
and Trust Company, on behalf of Goldman Sachs - Institutional
Liquid Assets, pertaining to transfers of funds on deposit with
State Street Bank and Trust Company, filed as Exhibit 8(i).
(Accession No. 0000950130-98-000965.)
(g)(11). Letter Agreement dated November 27, 1985 between Registrant and
State Street Bank and Trust Company, on behalf of Goldman Sachs -
Institutional Liquid Assets, amending the Custodian Agreement.
(Accession No. 0000950130-98-000965.)
(g)(12). Letter Agreement dated July 22, 1986 between Registrant and State
Street Bank and Trust Company, on behalf of Goldman Sachs -
Institutional Liquid Assets, pertaining to a change in wire
charges. (Accession No. 0000950130-98-000965.)
(g)(13). Letter Agreement dated June 20, 1987 between Registrant and State
Street Bank and Trust Company, on behalf of Goldman Sachs -
Institutional Liquid Assets, amending the Custodian Agreement.
(Accession No. 0000950130-98-000965.)
(g)(14). Letter Agreement between Registrant and State Street Bank and
Trust Company, on behalf of Goldman Sachs - Institutional Liquid
Assets, pertaining to the latter's designation of Security
Pacific National Bank as its subcustodian and certain other
matters. (Accession No. 0000950130-98-000965.)
(g)(15). Amendment dated July 19, 1988 to the Custodian Agreement between
Registrant and State Street Bank and Trust Company, on behalf of
Goldman Sachs - Institutional Liquid Assets. Accession No.
0000950130-98-000965.)
(g)(16). Amendment dated December 19, 1988 to the Custodian Agreement
between Registrant and State Street Bank and Trust Company, on
-6-
<PAGE>
behalf of Goldman Sachs - Institutional Liquid Assets. Accession
No. 0000950130-98-000965.)
(g)(17). Custodian Agreement dated April 6, 1990 between Registrant and
State Street Bank and Trust Company on behalf of Goldman Sachs
Capital Growth Fund. (Accession No. 0000950130-98-006081.)
(g)(18). Sub-Custodian Agreement dated March 29, 1983 between State Street
Bank and Trust Company and Bank of America, National Trust and
Savings Association on behalf of Goldman Sachs Institutional
Liquid Assets. (Accession No. 0000950130-98-006081.)
(g)(19). Fee schedule dated January 8, 1999 relating to Custodian
Agreement dated April 6, 1990 between Registrant and State Street
Bank and Trust Company (Conservative Strategy Portfolio).
(Accession No. 0000950130-99-000742.)
(g)(20). Fee schedule dated April 12, 1999 relating to Custodian Agreement
dated April 6, 1990 between Registrant and State Street Bank and
Trust Company (Strategic Growth and Growth Opportunities
Portfolios). (Accession No. 0000950109-99-002544.)
(g)(21). Fee schedule dated July 19, 1999 relating to Custodian Agreement
dated April 6, 1990 between Registrant and State Street Bank and
Trust Company (Internet Tollkeeper Fund). (Accession No.
0000950130-99-005294.)
(g)(22). Fee schedule dated October 1, 1999 relating to the Custodian
Agreement dated April 6, 1990 between Registrant and State Street
Bank and Trust Company (Large Cap Value Fund). (Accession No.
0000950130-99-006810.)
(g)(23). Fee schedule dated January 12, 2000 relating to Custodian
Agreement dated April 6, 1990 between Registrant and State Street
Bank and Trust Company (CORE Tax-Managed Equity Fund). (Accession
No. 0000950109-00-000585.)
(g)(24). Fee schedule dated January 6, 2000 relating to Custodian
Agreement dated July 15, 1991 between Registrant and State Street
Bank and Trust Company (High Yield Municipal Fund). (Accession
No. 0000950109-00-000585.)
-7-
<PAGE>
(g)(25). Additional Portfolio Agreement dated September 27, 1999 between
Registrant and State Street Bank and Trust Company. (Accession
No. 0000950109-00-000585.)
(g)(26). Letter Agreement dated September 27, 1999 between Registrant and
State Street Bank and Trust Company relating to Custodian
Agreement dated December 27, 1978. (Accession No. 0000950109-00-
000585.)
(g)(27). Letter Agreement dated September 27, 1999 between Registrant and
State Street Bank and Trust Company relating to Custodian
Agreement dated April 6, 1990. (Accession No. 0000950109-00-
000585.)
(g)(28). Letter Agreement dated September 27, 1999 between Registrant and
State Street Bank and Trust Company relating to Custodian
Agreement dated July 15, 1991. (Accession No. 0000950109-00-
000585.)
(h)(1). Wiring Agreement dated June 20, 1987 among Goldman, Sachs & Co.,
State Street Bank and Trust Company and The Northern Trust
Company. (Accession No. 0000950130-98-000965.)
(h)(2). Letter Agreement dated June 20, 1987 regarding use of checking
account between Registrant and The Northern Trust Company.
(Accession No. 0000950130-98-000965.)
(h)(3). Transfer Agency Agreement dated July 15, 1991 between Registrant
and Goldman, Sachs & Co. (Accession No. 0000950130-95-002856.)
(h)(4). Fee schedule relating to Transfer Agency Agreement between
Registrant on behalf of the Goldman Sachs Asset Allocation
Portfolios and Goldman, Sachs & Co. (Accession No. 0000950130-
97-004495.)
(h)(7). Fee schedule dated July 31, 1998 relating to Transfer Agency
Agreement between Registrant and Goldman, Sachs & Co. on behalf
of all Funds of Goldman Sachs Trust other than the Institutional
Liquid Assets and Financial Square Money Market Funds.
(Accession No. 0000950130-98-004845.)
(h)(8). Transfer Agency Agreement dated May 1, 1988 between Goldman Sachs
Institutional Liquid
-8-
<PAGE>
Assets and Goldman, Sachs & Co. (Accession No.
0000950130-98-006081.)
(h)(9). Fee Schedule dated July 31, 1998 relating to Transfer Agency
Agreement between Registrant and Goldman, Sachs & Co. on behalf
of ILA Money Market Funds. (Accession No. 0000950130-98-006081.)
(h)(10). Transfer Agency Agreement dated April 30, 1997 between Registrant
and Goldman, Sachs & Co. on behalf of the Financial Square Funds.
(Accession No. 0000950130-98-006081.)
(h)(11). Transfer Agency Agreement dated April 6, 1990 between GS-Capital
Growth Fund, Inc. and Goldman Sachs & Co. (Accession No.
0000950130-98-006081.)
(h)(12). Goldman Sachs - Institutional Liquid Assets Administration Class
Administration Plan dated April 22, 1998. (Accession No.
0000950130-98-006081.)
(h)(13). Goldman Sachs - Institutional Liquid Assets Service Class Service
Plan dated April 22, 1998. (Accession No. 0000950130-98-006081.)
(h)(14). Goldman Sachs Trust Administration Class Administration Plan
dated April 23, 1998. (Accession No. 0000950130-98-006081.)
(h)(15). Cash Management Shares Service Plan dated May 1, 1998.
(Accession No. 0000950130-98-006081.)
(h)(16). Form of Retail Service Agreement on behalf of Goldman Sachs Trust
relating to Class A Shares of Goldman Sachs Asset Allocation
Portfolios, Goldman Sachs Fixed Income Funds, Goldman Sachs
Domestic Equity Funds and Goldman Sachs International Equity
Funds. (Accession No. 0000950130-98-006081.)
(h)(17). Form of Supplemental Service Agreement on behalf of Goldman Sachs
Trust relating to the Administrative Class, Service Class and
Cash Management Class of Goldman Sachs -
-9-
<PAGE>
Institutional Liquid Assets Portfolios. (Accession No.
0000950130-98-006081.)
(h)(18). Form of Supplemental Service Agreement on behalf of Goldman Sachs
Trust relating to the FST Shares, FST Preferred Shares, FST
Administration Shares and FST Service Shares of Goldman Sachs
Financial Square Funds. (Accession No.
0000950130-98-006081.)
(h)(19). Fee Schedule dated July 31, 1998 relating to Transfer Agency
Agreement dated July 15, 1991 between the Registrant and Goldman,
Sachs & Co. (Internet Tollkeeper Fund). (Accession No.
0000950130-99-005294.)
(h)(20). FST Select Shares Plan dated October 26, 1999. (Accession No.
0000950130-99-006810.)
(i)(1). Opinion of Drinker, Biddle & Reath LLP. (With respect to the
Asset Allocation Portfolios). (Accession No. 0000950130-97-
004495.)
(i)(2). Opinion of Morris, Nichols, Arsht & Tunnell. (Accession No.
0000950130-97-001846.)
(i)(3). Opinion of Drinker Biddle & Reath LLP. (With respect to Japanese
Equity and International Small Cap). (Accession No. 0000950130-
98-003563.)
(i)(4). Opinion of Drinker Biddle & Reath LLP. (With respect to Cash
Management Shares). (Accession No. 0000950130-98-003563.)
(i)(5). Opinion of Drinker Biddle & Reath LLP. (With respect to the
European Equity Fund). (Accession No. 0000950130-98-006081.)
(i)(6). Opinion of Drinker Biddle & Reath LLP. (With respect to the CORE
Large Cap Value Fund). (Accession No. 0000950130-98-006081.)
(i)(7). Opinion of Drinker Biddle & Reath LLP (with respect to the
Conservative Strategy Portfolio). (Accession No. 0000950130-99-
001069.)
-10-
<PAGE>
(i)(8). Opinion of Drinker Biddle & Reath LLP (with respect to the
Strategic Growth and Growth Opportunities Portfolios).
(Accession No. 0000950109-99-002544.)
(i)(9). Opinion of Drinker Biddle & Reath LLP (with respect to the
Internet Tollkeeper Fund). Accession No. 0000950109-99-004208.)
(i)(10). Opinion of Drinker Biddle & Reath LLP (with respect to the Large
Cap Value Fund). (Accession No. 0000950130-99-006810.)
(i)(11). Opinion of Drinker Biddle & Reath LLP (with respect to FST Select
Shares). (Accession No. 0000950109-00-000585.)
(i)(12). Opinion of Drinker Biddle & Reath LLP (with respect to the High
Yield Municipal Fund). (Accession No. 0000950109-00-001365.)
(i)(13). Opinion of Drinker Biddle & Reath LLP (with respect to the CORE
Tax-Managed Equity Fund). (Accession No.
0000950109-00-001365.)
(j). None.
(k). Not applicable.
(l). Not applicable.
(m)(1). Class A Distribution and Service Plan amended and restated as of
September 1, 1998. (Accession No. 0000950130-98-004845.)
(m)(2). Class B Distribution and Service Plan amended and restated as of
September 1, 1998. (Accession No. 0000950130-98-004845.)
(m)(3). Class C Distribution and Service Plan amended and restated as of
September 1, 1998. (Accession No. 0000950130-98-004845.)
(m)(4). Cash Management Shares Plan of Distribution pursuant to Rule 12b-
1 dated May 1, 1998. (Accession No. 0000950130-98-006081.)
(n). None.
(o). Plan dated October 26, 1999 entered into by Registrant pursuant
to Rule 18f-3. (Accession No. 0000950130-99-006810.)
-11-
<PAGE>
(q)(1). Powers of Attorney of Messrs. Bakhru, Ford, Grip, Shuch, Smart,
Springer, Strubel, McNulty, Mosior, Gilman, Perlowski, Richman,
Surloff, Mmes. MacPherson, Mucker and Taylor. (Accession No.
0000950130-97-000805.)
(q)(2). Powers of Attorney dated October 21, 1997 on behalf of James A.
Fitzpatrick and Valerie A. Zondorak. (Accession No. 0000950130-
98-000676.)
The following exhibits relating to Goldman Sachs Trust are filed herewith
electronically pursuant to EDGAR rules:
(a)(15) Amendment No. 14 dated April 26, 2000 to Agreement and
Declaration of Trust, as amended, dated January 28, 1997.
(d)(13) Amended Annex A dated April 26, 2000 to Management Agreement
dated April 30, 1997.
(e) Distribution Agreement dated April 30, 1997 as amended April 26,
2000 between Registrant and Goldman, Sachs & Co.
(g)(29) Fee schedule dated April 14, 2000 relating to Custodian Agreement
dated April 6, 1990 between Registrant and State Street Bank and
Trust Company (Research Select Fund).
(g)(30) Fee schedule dated April 14, 2000 relating to Custodian Agreement
dated July 15, 1991 between Registrant and State Street Bank and
Trust Company (Enhanced Cash Fund).
(h)(21) FST Administration Class Administration Plan dated April 25,
2000.
(h)(22) FST Service Class Service Plan dated April 25, 2000.
(h)(23) FST Preferred Class Preferred Administration Plan dated April 25,
2000.
-12-
<PAGE>
(h)(24) Goldman Sachs Trust Service Class Service Plan dated April 25,
2000.
(h)(25) Form of Service Agreement on behalf of Goldman Sachs Trust
relating to the Select Class, the Preferred Class, the
Administration Class, the Service Class and the Cash Management
Class, as applicable, of Goldman Sachs Financial Square Funds,
Goldman Sachs - Institutional Liquid Assets Portfolios, Goldman
Sachs Fixed Income Funds, Goldman Sachs Domestic Equity Funds,
Goldman Sachs International Equity Funds and Goldman Sachs Asset
Allocation Portfolios.
(h)(26) Administration Class Administration Plan dated April 26, 2000.
(j)(1) Consent of Independent Auditors.
(p)(1) Code of Ethics - Goldman Sachs Trust and Goldman Sachs Variable
Insurance Trust, dated April 23, 1997, as amended October 21,
1997 and April 25, 2000.
(p)(2) Code of Ethics - Goldman Sachs Asset Management, Goldman Sachs
Funds Management L.P. and Goldman Sachs Asset Management
International, effective January 23, 1991 (as revised April 1,
2000).
Item 24. Persons Controlled by or Under Common Control with Registrant.
-------------------------------------------------------------
Not Applicable.
Item 25. Indemnification
---------------
Article IV of the Declaration of Trust of Goldman Sachs Trust, Delaware business
trust, provides for indemnification of the Trustees, officers and agents of the
Trust, subject to certain limitations. The Declaration of Trust is incorporated
by reference to Exhibit (a)(1).
The Management Agreement with each of the Funds (other than the ILA Portfolios)
provides that the applicable Investment Adviser will not be liable for any error
of judgment or mistake of law or for any loss suffered by a Fund, except a
-13-
<PAGE>
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Investment Adviser or from reckless disregard by the Investment
Adviser of its obligations or duties under the Management Agreement. Section 7
of the Management Agreement with respect to the ILA Portfolios provides that the
ILA Portfolios will indemnify the Adviser against certain liabilities; provided,
however, that such indemnification does not apply to any loss by reason of its
willful misfeasance, bad faith or gross negligence or the Adviser's reckless
disregard of its obligation under the Management Agreement. The Management
Agreements are incorporated by reference to Exhibits (d)(1) through (d)(7).
Section 9 of the Distribution Agreement between the Registrant and Goldman Sachs
dated April 30, 1997, as amended April 26, 2000 and Section 7 of the Transfer
Agency Agreements between the Registrant and Goldman, Sachs & Co. dated July 15,
1991, May 1, 1988, April 30, 1997 and April 6, 1990 each provide that the
Registrant will indemnify Goldman, Sachs & Co. against certain liabilities. A
copy of the Distribution Agreement is included herewith as Exhibit (e). The
Transfer Agency Agreements are incorporated by reference as Exhibits (h)(3),
(h)(8), (h)(10) and (h)(11), respectively, to the Registrant's Registration
Statement.
Mutual fund and Trustees and officers liability policies purchased jointly by
the Registrant, Trust for Credit Unions, Goldman Sachs Variable Insurance Trust
and The Commerce Funds insure such persons and their respective trustees,
partners, officers and employees, subject to the policies' coverage limits and
exclusions and varying deductibles, against loss resulting from claims by reason
of any act, error, omission, misstatement, misleading statement, neglect or
breach of duty.
Item 26. Business and Other Connections of Investment Adviser.
----------------------------------------------------
The business and other connections of the officers and Managing Directors of
Goldman, Sachs & Co., Goldman Sachs Funds Management, L.P., and Goldman Sachs
Asset Management International are listed on their respective Forms ADV as
currently filed with the Commission (File Nos. 801-16048, 801-37591 and 801-
38157, respectively) the texts of which are hereby incorporated by reference.
-14-
<PAGE>
Item 27. Principal Underwriters.
----------------------
(a) Goldman, Sachs & Co. or an affiliate or a division thereof currently serves
as investment adviser and distributor of the units of Trust for Credit Unions,
for shares of Goldman Sachs Trust and for shares of Goldman Sachs Variable
Insurance Trust. Goldman, Sachs & Co., or a division thereof currently serves as
administrator and distributor of the units or shares of The Commerce Funds.
(b) Set forth below is certain information pertaining to the Managing Directors
of Goldman, Sachs & Co., the Registrant's principal underwriter, who are members
of Goldman, Sachs & Co.'s Management Committee. None of the members of the
management committee holds a position or office with the Registrant, except John
P. McNulty who is a trustee of the Registrant.
GOLDMAN SACHS MANAGEMENT COMMITTEE
Name and Principal
Business Address Position
- ------------------ --------
Henry M. Paulson, Jr. (1) Chairman and Chief
Executive Officer
Robert J. Hurst (1) Vice Chairman
John A. Thain (1)(3) President and Co-Chief
Operating Officer
John L. Thornton (3) President and Co-Chief
Operating Officer
Lloyd C. Blankfein (1) Managing Director
Richard A. Friedman (1) Managing Director
Steven M. Heller (1) Managing Director
Robert S. Kaplan (1) Managing Director
Robert J. Katz (1) Managing Director
John P. McNulty (2) Managing Director
Michael P. Mortara (1) Managing Director
Daniel M. Neidich (1) Managing Director
-15-
<PAGE>
Name and Principal
Business Address Position
- ------------------ --------
Robin Neustein (2) Managing Director
Mark Schwartz (4) Managing Director
Robert K. Steel (2) Managing Director
Leslie C. Tortora (2) Managing Director
Patrick J. Ward (3) Managing Director
Gregory K. Palm (1) Counsel and Managing
Director
_______________________
(1) 85 Broad Street, New York, NY 10004
(2) One New York Plaza, New York, NY 10004
(3) Peterborough Court, 133 Fleet Street, London EC4A 2BB, England
(4) ARK Mori Building, 12-32 Akasaka I-Chome Minato-KY,
Tokyo 107-6019, Japan
(c) Not Applicable.
Item 28. Location of Accounts and Records.
--------------------------------
The Declaration of Trust, By-laws and minute books of the Registrant and certain
investment adviser records are in the physical possession of Goldman Sachs Asset
Management, 32 Old Slip, New York, New York 10005. All other accounts, books
and other documents required to be maintained under Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated thereunder are in the
physical possession of State Street Bank and Trust Company, P.O. Box 1713,
Boston, Massachusetts 02105 except for certain transfer agency records which are
maintained by Goldman, Sachs & Co., 4900 Sears Tower, Chicago, Illinois 60606.
Item 29. Management Services
-------------------
Not applicable.
Item 30. Undertakings
------------
Not applicable.
-16-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No. 65 to its Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City and State of New York on the 3rd day
of May, 2000.
GOLDMAN SACHS TRUST
(A Delaware business trust)
By: /s/Michael J. Richman
---------------------
Michael J. Richman
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to said Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
Name Title Date
- ---- ----- ----
*Douglas C. Grip President and
--------------- Trustee
Douglas C. Grip May 3, 2000
*John M. Perlowski Principal Accounting
----------------- Officer and Principal
John M. Perlowski Financial Officer May 3, 2000
*David B. Ford Trustee May 3, 2000
-------------
David B. Ford
*Mary Patterson McPherson Trustee May 3, 2000
------------------------
Mary Patterson McPherson
*Ashok N. Bakhru Chairman and Trustee May 3, 2000
---------------
Ashok N. Bakhru
*Alan A. Shuch Trustee May 3, 2000
-------------
Alan A. Shuch
*Jackson W. Smart Trustee May 3, 2000
----------------
Jackson W. Smart, Jr.
*John P. McNulty Trustee May 3, 2000
---------------
John P. McNulty
*William H. Springer Trustee May 3, 2000
-------------------
William H. Springer
*Richard P. Strubel Trustee May 3, 2000
------------------
Richard P. Strubel
</TABLE>
*By:/s/ Michael J. Richman
------------------------
Michael J. Richman,
Attorney-In-Fact
* Pursuant to a power of attorney previously filed.
-17-
<PAGE>
Exhibit Index
-------------
(a)(15) Amendment No. 14 dated April 26, 2000 to Agreement and
Declaration of Trust, as amended, dated January 28, 1997.
(d)(13) Amended Annex A dated April 26, 2000 to Management Agreement
dated April 30, 1997.
(e) Distribution Agreement dated April 30, 1997 as amended April 26,
2000 between Registrant and Goldman, Sachs & Co.
(g)(29) Fee schedule dated April 14, 2000 relating to Custodian Agreement
dated April 6, 1990 between Registrant and State Street Bank and
Trust Company (Research Select Fund).
(g)(30) Fee schedule dated April 14, 2000 relating to Custodian Agreement
dated July 15, 1991 between Registrant and State Street Bank and
Trust Company (Enhanced Cash Fund).
(h)(21) FST Administration Class Administration Plan dated April 25,
2000.
(h)(22) FST Service Class Service Plan dated April 25, 2000.
(h)(23) FST Preferred Class Preferred Administration Plan dated April 25,
2000.
(h)(24) Goldman Sachs Trust Service Class Service Plan dated April 25,
2000.
(h)(25) Form of Service Agreement on behalf of Goldman Sachs Trust
relating to the Select Class, the Preferred Class, the
Administration Class, the Service Class and the Cash Management
Class, as applicable, of Goldman Sachs Financial Square Funds,
Goldman Sachs - Institutional Liquid Assets Portfolios, Goldman
Sachs Fixed Income Funds, Goldman Sachs Domestic Equity Funds,
Goldman
<PAGE>
Sachs International Equity Funds and Goldman Sachs Asset
Allocation Portfolios.
(h)(26) Administration Class Administration Plan dated April 26, 2000.
(j)(1) Consent of Independent Auditors.
(p)(1) Code of Ethics - Goldman Sachs Trust and Goldman Sachs Variable
Insurance Trust dated April 23, 1997, as amended October 21, 1997
and April 25, 2000.
(p)(2) Code of Ethics - Goldman Sachs Asset Management, Goldman Sachs
Funds Management, L.P. and Goldman Sachs Asset Management
International, effective January 23, 1991 (as revised April 1,
2000).
<PAGE>
Exhibit (a)(15)
AMENDMENT NO. 14
TO THE
DECLARATION OF TRUST
OF
GOLDMAN SACHS TRUST
This AMENDMENT NO. 14 dated the 26th day of April, 2000 to the
AGREEMENT AND DECLARATION OF TRUST (the "Declaration"), as amended, dated the
28th day of January, 1997 is made by the Trustees name below;
WHEREAS, the Trustees have established a trust for the
investment and reinvestment of funds contributed thereto;
WHEREAS, the Trustees divided the beneficial interest in the
trust assets into transferable shares of beneficial interest and divided such
shares of beneficial interest into separate Series;
WHEREAS, the Trustees desire to create new Series and
designate new Classes of shares;
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements contained herein, the undersigned, being all of the Trustees of the
Trust and acting in accordance with Article V, Section 1 of the Declaration,
hereby amend the Declaration as follows:
The Trust shall consist of one or more Series. Without limiting the
authority of the Trustees to establish and designate any further
Series, the Trustees hereby establish the following 54 Series: Goldman
Sachs Adjustable Rate Government Fund, Goldman Sachs Short Duration
Government Fund, Goldman Sachs Short Duration Tax-Free Fund, Goldman
Sachs Core Fixed Income Fund, Goldman Sachs Global Income Fund, Goldman
Sachs Government Income Fund, Goldman Sachs Municipal Income Fund,
Goldman Sachs High Yield Fund, Goldman Sachs High Yield Municipal Fund,
Goldman Sachs Enhanced Cash Fund, Goldman Sachs Balanced Fund, Goldman
Sachs CORE Large Cap Growth Fund, Goldman Sachs CORE U.S. Equity Fund,
Goldman Sachs CORE Small Cap Equity Fund, Goldman Sachs CORE
International Equity Fund, Goldman Sachs Growth and Income Fund,
Goldman Sachs Capital Growth Fund, Goldman Sachs Mid Cap Value Fund,
Goldman Sachs Small Cap Value Fund, Goldman Sachs International Equity
Fund, Goldman Sachs Asia Growth Fund, Goldman Sachs Emerging Markets
Equity Fund, Goldman Sachs Real Estate Securities Fund, Goldman Sachs
International Small Cap Fund, Goldman Sachs Japanese Equity Fund,
Goldman Sachs European Equity Fund, Goldman Sachs CORE Large Cap Value
Fund, Goldman Sachs Strategic Growth Fund, Goldman Sachs Growth
Opportunities Fund, Goldman Sachs Internet Tollkeeper Fund, Goldman
Sachs Large Cap Value Fund, Goldman Sachs CORE Tax-Managed Equity Fund,
Goldman Sachs Research Select Fund, Goldman Sachs Growth Strategy
Portfolio, Goldman Sachs Aggressive Growth Strategy Portfolio, Goldman
Sachs Balanced Strategy Portfolio, Goldman Sachs Growth and Income
Strategy Portfolio, Goldman Sachs Conservative Strategy Portfolio,
Institutional Liquid Assets- Prime Obligations Portfolio, Institutional
Liquid Assets-Government Portfolio, Institutional Liquid
Assets-Treasury Obligations Portfolio, Institutional Liquid
Assets-Money Market Portfolio, Institutional Liquid Assets-Federal
Portfolio, Institutional Liquid Assets-Treasury Instruments Portfolio,
Institutional Liquid Assets-Tax-Exempt Diversified Portfolio,
Institutional Liquid Assets-Tax-Exempt New York Portfolio,
Institutional Liquid Assets-Tax-Exempt California Portfolio, Goldman
Sachs-Financial Square Prime Obligations Fund, Goldman Sachs-Financial
Square Government Fund, Goldman Sachs-Financial Square Treasury
Obligations Fund, Goldman Sachs-
<PAGE>
Financial Square Money Market Fund, Goldman Sachs-Financial Square Tax-
Free Money Market Fund, Goldman Sachs-Financial Square Federal Fund,
and Goldman Sachs-Financial Square Treasury Instruments Fund (the
"Existing Series"). Each additional Series shall be established and is
effective upon the adoption of a resolution of a majority of the
Trustees or any alternative date specified in such resolution. The
Trustees may designate the relative rights and preferences of the
Shares of each Series. The Trustees may divide the Shares of any Series
into Classes. Without limiting the authority of the Trustees to
establish and designate any further Classes, the Trustees hereby
establish the following classes of shares with respect to the series
set forth below:
Class A Shares: Goldman Sachs Adjustable Rate Government Fund, Goldman Sachs
Global Income Fund, Goldman Sachs Government Income Fund,
Goldman Sachs Municipal Income Fund, Goldman Sachs High
Yield Fund, Goldman Sachs Short Duration Government Fund,
Goldman Sachs Short Duration Tax-Free Fund, Goldman Sachs
Core Fixed Income Fund, Goldman Sachs High Yield Municipal
Fund, Goldman Sachs Balanced Fund, Goldman Sachs CORE U.S.
Equity Fund, Goldman Sachs CORE Small Cap Equity Fund,
Goldman Sachs CORE International Equity Fund, Goldman Sachs
CORE Large Cap Growth Fund, Goldman Sachs Growth and Income
Fund, Goldman Sachs Mid Cap Value Fund, Goldman Sachs
Capital Growth Fund, Goldman Sachs Small Cap Value Fund,
Goldman Sachs International Equity Fund, Goldman Sachs
Emerging Markets Equity Fund, Goldman Sachs Asia Growth
Fund, Goldman Sachs Real Estate Securities Fund, Goldman
Sachs International Small Cap Fund, Goldman Sachs Japanese
Equity Fund, Goldman Sachs European Equity Fund, Goldman
Sachs CORE Large Cap Value Fund, Goldman Sachs Strategic
Growth Fund, Goldman Sachs Growth Opportunities Fund,
Goldman Sachs Internet Tollkeeper Fund, Goldman Sachs Large
Cap Value Fund, Goldman Sachs CORE Tax-Managed Equity Fund,
Goldman Sachs Research Select Fund, Goldman Sachs Growth
Strategy Portfolio, Goldman Sachs Aggressive Growth Strategy
Portfolio, Goldman Sachs Balanced Strategy Portfolio,
Goldman Sachs Growth and Income Strategy Portfolio, Goldman
Sachs Conservative Strategy Portfolio.
Class B Shares Goldman Sachs Global Income Fund, Goldman Sachs Government
Income Fund, Goldman Sachs Municipal Income Fund, Goldman
Sachs High Yield Fund, Goldman Sachs Short Duration
Government Fund, Goldman Sachs Short Duration Tax-Free Fund,
Goldman Sachs Core Fixed Income Fund, Goldman Sachs High
Yield Municipal Fund, Goldman Sachs Balanced Fund, Goldman
Sachs CORE U.S. Equity Fund, Goldman Sachs CORE Small Cap
Equity Fund, Goldman Sachs CORE International Equity Fund,
Goldman Sachs CORE Large Cap Growth Fund, Goldman Sachs
Growth and Income Fund, Goldman Sachs Mid Cap Value Fund,
Goldman Sachs Capital Growth Fund, Goldman Sachs Small Cap
Value Fund, Goldman Sachs International Equity Fund, Goldman
Sachs Emerging Markets Equity Fund, Goldman Sachs Asia
Growth Fund, Goldman Sachs International Small Cap Fund,
Goldman Sachs Japanese Equity Fund, Goldman Sachs CORE Large
Cap Value Fund, Goldman Sachs Growth Opportunities Fund,
Goldman Sachs Strategic Growth Fund, Goldman Sachs Internet
Tollkeeper Fund, Goldman Sachs Large Cap Value Fund, Goldman
Sachs CORE Tax-Managed Equity Fund, Goldman Sachs Research
Select Fund, Institutional Liquid Assets Prime Obligations
Portfolio, Goldman Sachs Real Estate Securities Fund,
Goldman Sachs European Equity Fund, Goldman Sachs Growth
Strategy Portfolio, Goldman Sachs Aggressive Growth Strategy
Portfolio, Goldman Sachs Balanced Strategy Portfolio,
Goldman Sachs Growth and Income Strategy Portfolio, Goldman
Sachs Conservative Strategy Portfolio.
Class C Shares Goldman Sachs Global Income Fund, Goldman Sachs Government
Income Fund, Goldman Sachs Municipal Income Fund, Goldman
Sachs High Yield Fund, Goldman Sachs Short Duration
Government Fund, Goldman Sachs Short Duration Tax-Free Fund,
Goldman Sachs Core Fixed Income Fund, Goldman Sachs High
Yield Municipal Fund, Goldman Sachs Balanced Fund, Goldman
Sachs CORE U.S. Equity Fund, Goldman Sachs CORE Small Cap
Equity Fund, Goldman Sachs CORE International Equity Fund,
Goldman Sachs CORE
<PAGE>
Large Cap Growth Fund, Goldman Sachs Growth and Income Fund,
Goldman Sachs Mid Cap Value Fund, Goldman Sachs Capital
Growth Fund, Goldman Sachs Small Cap Value Fund, Goldman
Sachs International Equity Fund, Goldman Sachs Emerging
Markets Equity Fund, Goldman Sachs Asia Growth Fund, Goldman
Sachs International Small Cap Fund, Goldman Sachs Japanese
Equity Fund, Institutional Liquid Assets Prime Obligations
Portfolio, Goldman Sachs Real Estate Securities Fund,
Goldman Sachs European Equity Fund, Goldman Sachs CORE Large
Cap Value Fund, Goldman Sachs Strategic Growth Fund, Goldman
Sachs Growth Opportunities Fund, Goldman Sachs Internet
Tollkeeper Fund, Goldman Sachs Large Cap Value Fund, Goldman
Sachs CORE Tax-Managed Equity Fund, Goldman Sachs Research
Select Fund, Goldman Sachs Growth Strategy Portfolio,
Goldman Sachs Aggressive Growth Strategy Portfolio, Goldman
Sachs Balanced Strategy Portfolio, Goldman Sachs Growth and
Income Strategy Portfolio, Goldman Sachs Conservative
Strategy Portfolio.
Institutional Goldman Sachs Adjustable Rate Government Fund, Goldman Sachs
Shares: Short Duration Government Fund, Goldman Sachs Short Duration
Tax-Free Fund, Goldman Sachs Government Income Fund, Goldman
Sachs Municipal Income Fund, Goldman Sachs Core Fixed Income
Fund, Goldman Sachs High Yield Municipal Fund, Goldman Sachs
Global Income Fund, Goldman Sachs High Yield Fund, Goldman
Sachs Enhanced Cash Fund, Goldman Sachs Balanced Fund,
Goldman Sachs Small Cap Value Fund, Goldman Sachs Capital
Growth Fund, Goldman Sachs CORE Large Cap Growth Fund,
Goldman Sachs CORE U.S. Equity Fund, Goldman Sachs CORE
Small Cap Equity Fund, Goldman Sachs CORE International
Equity Fund, Goldman Sachs Growth and Income Fund, Goldman
Sachs Mid Cap Value Fund, Goldman Sachs International Equity
Fund, Goldman Sachs Emerging Markets Equity Fund, Goldman
Sachs Asia Growth Fund, Goldman Sachs International Small
Cap Fund, Goldman Sachs Japanese Equity Fund, Goldman Sachs
Real Estate Securities Fund, Goldman Sachs European Equity
Fund, Goldman Sachs CORE Large Cap Value Fund, Goldman Sachs
Growth Opportunities Fund, Goldman Sachs Strategic Growth
Fund, Goldman Sachs Internet Tollkeeper Fund, Goldman Sachs
Large Cap Value Fund, Goldman Sachs CORE Tax-Managed Equity
Fund, Goldman Sachs Research Select Fund, Goldman Sachs
Enhanced Cash Fund, Goldman Sachs-Financial Square Prime
Obligations Fund, Goldman Sachs-Financial Square Government
Fund, Goldman Sachs-Financial Square Treasury Obligations
Fund, Goldman Sachs-Financial Square Money Market Fund,
Goldman Sachs-Financial Square Premium Money Market Fund,
Goldman Sachs-Financial Square Municipal Money Market Fund,
Goldman Sachs-Financial Square Tax-Free Money Market Fund,
Goldman Sachs-Financial Square Federal Fund, Goldman
Sachs-Financial Square Treasury Instruments Fund,
Institutional Liquid Assets-Prime Obligations Portfolio,
Institutional Liquid Assets-Government Portfolio,
Institutional Liquid Assets-Treasury Obligations Portfolio,
Institutional Liquid Assets-Money Market Portfolio,
Institutional Liquid Assets-Federal Portfolio, Institutional
Liquid Assets-Treasury Instruments Portfolio, Institutional
Liquid Assets-Tax-Exempt Diversified Portfolio,
Institutional Liquid Assets-Tax-Exempt New York Portfolio,
Institutional Liquid Assets-Tax-Exempt California Portfolio,
Goldman Sachs Growth Strategy Portfolio, Goldman Sachs
Aggressive Growth Strategy Portfolio, Goldman Sachs Balanced
Strategy Portfolio, Goldman Sachs Growth and Income Strategy
Portfolio, Goldman Sachs Conservative Strategy Portfolio.
Service Shares: Goldman Sachs Adjustable Rate Government Fund, Goldman Sachs
Short Duration Government Fund, Goldman Sachs Short Duration
Tax-Free Fund, Goldman Sachs Government Income Fund, Goldman
Sachs Municipal Income Fund, Goldman Sachs Core Fixed Income
Fund, Goldman Sachs High Yield Municipal Fund, Goldman Sachs
Global Income Fund, Goldman Sachs High Yield Fund, Goldman
Sachs Balanced Fund, Goldman Sachs Small Cap Value Fund,
Goldman Sachs Capital Growth Fund, Goldman Sachs CORE U.S.
Equity Fund, Goldman Sachs CORE Large Cap Growth Fund,
Goldman Sachs CORE
<PAGE>
Small Cap Equity Fund, Goldman Sachs CORE International
Equity Fund, Goldman Sachs Growth and Income Fund, Goldman
Sachs Mid Cap Value Fund, Goldman Sachs International Equity
Fund, Goldman Sachs Emerging Markets Equity Fund, Goldman
Sachs Asia Growth Fund, Goldman Sachs International Small
Cap Fund, Goldman Sachs Japanese Equity Fund, Goldman Sachs
Real Estate Securities Fund, Goldman Sachs European Equity
Fund, Goldman Sachs CORE Large Cap Value Fund, Goldman Sachs
Strategic Growth Fund, Goldman Sachs Growth Opportunities
Fund, Goldman Sachs Internet Tollkeeper Fund, Goldman Sachs
Large Cap Value Fund, Goldman Sachs CORE Tax-Managed Equity
Fund, Goldman Sachs Research Select Fund, Goldman Sachs-
Financial Square Prime Obligations Fund, Goldman Sachs-
Financial Square Government Fund, Goldman Sachs-Financial
Square Treasury Obligations Fund, Goldman Sachs-Financial
Square Money Market Fund, Goldman Sachs-Financial Square
Tax-Free Money Market Fund, Goldman Sachs-Financial Square
Federal Fund, Goldman Sachs-Financial Square Treasury
Instruments Fund, Institutional Liquid Assets-Prime
Obligations Portfolio, Institutional Liquid Assets-
Government Portfolio, Institutional Liquid Assets- Treasury
Obligations Portfolio, Institutional Liquid Assets-Money
Market Portfolio, Institutional Liquid Assets-Federal
Portfolio, Institutional Liquid Assets-Treasury Instruments
Portfolio, Institutional Liquid Assets-Tax-Exempt
Diversified Portfolio, Institutional Liquid Assets-Tax-
Exempt New York Portfolio, Institutional Liquid Assets-Tax-
Exempt California Portfolio, Goldman Sachs Growth Strategy
Portfolio, Goldman Sachs Aggressive Growth Strategy
Portfolio, Goldman Sachs Balanced Strategy Portfolio,
Goldman Sachs Growth and Income Strategy Portfolio, Goldman
Sachs Conservative Strategy Portfolio.
Administration Goldman Sachs-Financial Square Prime Obligations Fund,
Shares: Goldman Sachs-Financial Square Government Fund, Goldman
Sachs-Financial Square Treasury Obligations Fund, Goldman
Sachs-Financial Square Money Market Fund, Goldman
Sachs-Financial Square Tax-Free Money Market Fund, Goldman
Sachs-Financial Square Federal Fund, Goldman Sachs-Financial
Square Treasury Instruments Fund, Institutional Liquid
Assets-Prime Obligations Portfolio, Institutional Liquid
Assets-Government Portfolio, Institutional Liquid
Assets-Treasury Obligations Portfolio, Institutional Liquid
Assets-Money Market Portfolio, Institutional Liquid
Assets-Federal Portfolio, Institutional Liquid
Assets-Treasury Instruments Portfolio, Institutional Liquid
Assets-Tax-Exempt Diversified Portfolio, Institutional
Liquid Assets-Tax- Exempt New York Portfolio and
Institutional Liquid Assets-Tax-Exempt California Portfolio,
Goldman Sachs Enhanced Cash Fund.
Preferred Goldman Sachs-Financial Square Prime Obligations Fund,
Administration Goldman Sachs-Financial Square Government Fund,
Shares: Goldman Sachs-Financial Square Treasury Obligations Fund,
Goldman Sachs-Financial Square Money Market Fund, Goldman
Sachs-Financial Square Tax-Free Money Market Fund, Goldman
Sachs-Financial Square Federal Fund and Goldman
Sachs-Financial Square Treasury Instruments Fund.
Cash Management Institutional Liquid Assets-Prime Obligations Portfolio,
Shares: Institutional Liquid Assets-Money Market Portfolio,
Institutional Liquid Assets-Government Portfolio,
Institutional Liquid Assets-Tax-Exempt Diversified
Portfolio, Institutional Liquid Assets-Tax-Exempt California
Portfolio, Institutional Liquid Assets-Tax-Exempt New York
Portfolio.
Select Shares: Goldman Sachs-Financial Square Prime Obligations Fund,
Goldman Sachs-Financial Square Government Fund, Goldman
Sachs-Financial Square Treasury Obligations Fund, Goldman
Sachs-Financial Square Money Market Fund, Goldman Sachs-
Financial Square Tax-Free Money Market Fund, Goldman Sachs-
Financial Square Federal Fund and
<PAGE>
Goldman Sachs-Financial Square Treasury Instruments Fund.
All capitalized terms which are not defined herein shall have the same
meanings as are assigned to those terms in the Declaration.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the date first written above.
/s/ Ashok N. Bakhru
-----------------------------------------
Ashok N. Bakhru,
as Trustee and not individually
/s/ David B. Ford
----------------------------------------
David B. Ford,
as Trustee and not individually
/s/ Douglas Grip
----------------------------------------
Douglas Grip,
as Trustee and not individually
/s/ John P. McNulty
----------------------------------------
John P. McNulty,
as Trustee and not individually,
/s/ Mary P. McPherson
----------------------------------------
Mary P. McPherson
as Trustee and not individually,
/s/ Alan A. Shuch
----------------------------------------
Alan A. Shuch
as Trustee and not individually,
<PAGE>
/s/ Jackson W. Smart, Jr.
----------------------------------------
Jackson W. Smart, Jr.
as Trustee and not individually,
/s/ William H. Springer
----------------------------------------
William H. Springer
as Trustee and not individually,
/s/ Richard P. Strubel
----------------------------------------
Richard P. Strubel
as Trustee and not individually,
<PAGE>
Amended Annex A
The compensation payable under Paragraph 5 of the Management Agreement between
Goldman Sachs Trust and each of the undersigned shall be as follows:
Goldman Sachs Asset Management
Annual Rate
-----------
Goldman Sachs Government Income Fund 0.65%
Goldman Sachs Municipal Income Fund 0.55%
Goldman Sachs High Yield Fund 0.70%
Goldman Sachs High Yield Municipal Fund8 0.55%
Goldman Sachs Enhanced Cash Fund9 0.25%
Goldman Sachs Balanced Fund 0.65%
Goldman Sachs Growth and Income Fund 0.70%
Goldman Sachs CORE Large Cap Value Fund4 0.60%
Goldman Sachs CORE Large Cap Growth Fund 0.75%
Goldman Sachs CORE Small Cap Equity Fund1 1.00%
Goldman Sachs CORE International Equity Fund1 1.00%
Goldman Sachs CORE Tax -Managed Equity Fund7 0.75%
Goldman Sachs Mid Cap Value Fund 0.75%
Goldman Sachs Small Cap Value Fund 1.00%
Goldman Sachs Real Estate Securities Fund1 1.00%
Goldman Sachs Strategic Growth Fund5 1.00%
Goldman Sachs Growth Opportunities Fund5 1.00%
Goldman Sachs Internet Tollkeeper Fund6 1.00%
Goldman Sachs Large Cap Value Fund8 0.75%
Goldman Sachs Research Select Fund9 1.00%
Goldman Sachs-Financial Square Prime Obligations Fund 0.205%
Goldman Sachs-Financial Square Money Market Fund 0.205%
Goldman Sachs-Financial Square Treasury Obligations Fund 0.205%
Goldman Sachs-Financial Square Treasury Instruments Fund 0.205%
Goldman Sachs-Financial Square Government Fund 0.205%
Goldman Sachs-Financial Square Federal Fund 0.205%
Goldman Sachs-Financial Square Tax-Free Money Market Fund 0.205%
Goldman Sachs Funds Management L.P.
Goldman Sachs CORE U.S. Equity Fund 0.75%
Goldman Sachs Capital Growth Fund 1.00%
Goldman Sachs Asset Management International
Goldman Sachs Global Income Fund 0.90%
Goldman Sachs International Equity Fund 1.00%
Goldman Sachs Emerging Markets Equity Fund 1.20%
Goldman Sachs Asia Growth Fund 1.00%
Goldman Sachs International Small Cap Fund2 1.20%
Goldman Sachs Japanese Equity Fund2 1.00%
Goldman Sachs European Equity Fund3 1.00%
- --------
9 Please not that the Goldman Sachs Research Select Fund and Goldman Sachs
Enhanced Cash Fund were approved at the April 26, 2000 Goldman Sachs Trust
Board Meeting
1 Please note that the CORE Small Cap Equity Fund, CORE International Equity
Fund and Real Estate Securities Fund were approved at the July 21, 1997
Goldman Sachs Trust Board Meeting.
2 Please note that the International Small Cap Fund and Japanese Equity Fund
were approved at the April 23, 1998 Goldman Sachs Trust Board Meeting.
3 Please note that the European Equity Fund was approved at the July 22, 1998
Goldman Sachs Trust Board Meeting.
4 Please note that the CORE Large Cap Value Fund was approved at the November
3, 1998 Goldman Sachs Trust Board Meeting.
5 Please note that the Strategic Growth Fund and Growth Opportunities Fund were
approved at the April 28, 1999 Goldman Sachs Trust Board Meeting.
6 Please note that the Internet Tollkeeper Fund was approved at the July 27,
1999 Goldman Sachs Trust Board Meeting.
7 Please note that the Large Cap Value Fund was approved at the October 26,
1999 Goldman Sachs Trust Board Meeting.
8 Please note that the High Yield Municipal Fund and the CORE Tax-Managed
Equity Fund were approved at the February 3, 2000 Goldman Sachs Trust Board
Meeting.
<PAGE>
Exhibit (e)
GOLDMAN SACHS TRUST
Distribution Agreement
April 30, 1997, as amended April 26, 2000
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Goldman Sachs Trust (the "Trust"), an open-end
-----
management investment company organized as a business trust under the laws of
the State of Delaware, and consisting of one or more separate series, has
appointed you, the "Distributor," and that you shall be the exclusive
-----------
distributor in connection with the offering and sale of the shares of beneficial
interest, par value $.001 per share (the "Shares"), corresponding to each of the
------
series of the Trust listed in Exhibit A, as the same may be supplemented from
---------
time to time (each such series, a "Fund"). Each Fund may offer one or more
----
classes of its shares (each a "Class") which Classes shall have such relative
-----
rights and conditions and shall be sold in the manner set forth from time to
time in the Trust's Registration Statements, as defined below. The organization,
administration and policies of each Fund are described in its respective
Prospectuses and SAIs (as those terms are defined below). (This letter, as
amended from time to time, shall be referred to hereinafter as the "Agreement".)
1. Definitions. (a) The terms which follow, when used in this Agreement, shall
-----------
have the meanings indicated.
"Effective Date" shall mean the date that any Registration Statement
--------------
or any post-effective amendment thereto becomes effective.
"Preliminary Prospectus" shall mean any preliminary prospectus
----------------------
relating to the Shares of a Fund or Funds or one or more Classes included
in any Registration Statement or filed with the Securities and Exchange
Commission (the "Commission") pursuant to Rule497(a).
"Prospectus" shall mean any prospectus relating to the Shares of a
----------
Fund or Funds or one or more Classes, filed with the Commission pursuant to
Rule497 or, if no filing pursuant to Rule497 is required, the form of final
prospectus relating thereto included in any Registration Statement, in each
case together with any amendments or supplements thereto.
"Registration Statement" shall mean any registration statement on
----------------------
FormN-1A relating to the Shares of a Fund, including all exhibits thereto,
as of the Effective Date of the most recent post-effective amendment
thereto. The registration statements of the Trust may be separately filed
with the Commission according to its fixed income, equity and money market
fund offerings.
"Rule 497" refers to such rule (or any successor rule or rules) under
--------
the Securities Act (as defined in Section 2 below).
"SAI" shall mean any statement of additional information relating to
---
the Shares of a Fund or Funds or one or more Classes, filed with the
Commission pursuant to Rule497 or, if no filing pursuant to Rule497 is
required, the final statement of additional information included in any
Registration Statement.
<PAGE>
The "Initial Acceptance Date" of any Fund shall mean the first date on
-----------------------
which the Trust sells Shares of such Fund pursuant to any Registration
Statement.
References in this Agreement to "Rules and Regulations" shall be
---------------------
deemed to be references to such rules and regulations as then in effect,
and references to this Agreement and the Fund Agreements (as defined in
Section 2 below), shall be deemed to be references to such agreements as
then in effect.
2. Representations and Warranties. The Trust represents and warrants to and
------------------------------
agrees with you, for your benefit and the benefit of each Authorized Dealer
(as defined in Section 3 below), as set forth below in this Section 2. Each
of the representations, warranties and agreements made in this Section 2
shall be deemed made on the date hereof, on the date of any filing of any
Prospectus pursuant to Rule 497 and any Effective Date after the date
hereof, with the same effect as if made on each such date.
(a) The Trust meets the requirements for use of Form N-1A under the Securities
Act of 1933, as amended (the "Securities Act"), the Investment Company Act
--------------
of 1940, as amended (the "Investment Company Act"), and the Rules and
----------------------
Regulations of the Commission under each such Act and in respect of said
form (or of such successor form as the Commission may adopt). The Trust has
filed with the Commission Registration Statements (File Number 33-17619) on
Form N-1A with respect to an indefinite number of Shares of the Funds and
is duly registered as an open-end management investment company. Prior to
the date hereof, the Trust has filed post-effective amendments to the
Registration Statements, including related Preliminary Prospectuses, for
the registration under the Securities Act and the Investment Company Act of
the offering and sale of the Shares of the Funds, each of which has
previously been furnished to you. Each such amendment has become effective
and no stop order suspending the effectiveness of any such amendment has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission.
(b) The Trust's notification of registration on Form N-8A (as amended) complies
with the applicable requirements of the Investment Company Act and the
Rules and Regulations thereunder.
(c) Each Registration Statement, Prospectus and SAI conform, and any further
amendments or supplements to any Registration Statement, Prospectus or SAI
will conform, in all material respects, with the Securities Act and
Investment Company Act and the Rules and Regulations thereunder; the
Prospectuses and the SAIs do not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and, on each Effective Date, the Registration
Statements did not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; provided,
---------
however, that the Trust makes no representations or warranties as to the
--------
information contained in or omitted from any Registration Statement,
Prospectus or SAI in reliance upon and in conformity with information
furnished in writing to the Trust by you (with respect to information
relating solely to your role as distributor of the Shares of the Funds)
expressly for use therein.
(d) No order preventing or suspending the use of any Preliminary Prospectus has
been issued by the Commission, and each Preliminary Prospectus, at the time
of filing thereof, conformed in all material respects to the requirements
of the Securities Act and the Rules and Regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this
-2-
<PAGE>
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Trust by you (with respect to information relating solely to
your role as the exclusive distributor of the Shares of the Funds)
expressly for use therein.
(e) The Trust has been duly created and is lawfully and validly existing as a
business trust under the laws of the State of Delaware, and has, on the
date hereof, and will have, on and after the date hereof, full power and
authority to own its properties and conduct its business as described in
each Registration Statement, Prospectus and SAI, and is duly qualified to
do business under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or conducts
material business.
(f) The Trust's authorized capitalization is as set forth in the Registration
Statements. Issuance of the Shares of the Funds as contemplated by this
Agreement and by each Prospectus and SAI has been duly and validly
authorized, and the Shares of the Funds, when issued and paid for as
contemplated hereby and thereby, will be fully-paid and, except as
contemplated by the Prospectus and SAI, nonassessable and will conform to
the description thereof contained in the corresponding Prospectus and SAI.
The holders of outstanding shares of each Fund are not entitled to
preemptive or other rights to subscribe for the Shares of any Fund, other
than as contemplated by the Prospectus and SAI relating to each Fund.
(g) This Agreement has been duly authorized, executed and delivered by the
Trust.
(h) On or prior to the Initial Acceptance Date, all of the agreements described
in each Prospectus and SAI relating to the Fund or Funds whose Shares are
first being sold on such date (collectively, the "Fund Agreements") will
---------------
have been duly authorized, executed and delivered by the Trust, and will
comply in all material respects with the Investment Company Act and the
Rules and Regulations thereunder.
(i) The Fund Agreements constitute or will constitute, on and after the Initial
Acceptance Date, assuming due authorization, execution and delivery by the
parties thereto other than the Trust, valid and legally binding
instruments, enforceable in accordance with their respective terms,
subject, as to enforceability, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(j) No consent, approval, authorization or order of any court or governmental
agency or body is or shall be required, as the case may be, for the
consummation from time to time of the transactions contemplated by this
Agreement and the Fund Agreements, except such as may be required (i) under
the Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Investment Company Act, the Rules and Regulations
------------
under each of the foregoing or the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD") (any of which that
----
were required before offers were made will have been obtained before such
offers were made and all of which will have been obtained, with respect to
each Fund, by the Effective Date of the post-effective amendment relating
to the Fund, except for those which become required under such acts or
rules or any other law or regulation after the Fund's Effective Date but
that were not required before such Effective Date, all of which shall be
obtained in a timely manner) or (ii) state securities laws of any
jurisdiction in connection with the issuance, offer or redemption of the
Shares of each Fund by the Trust.
(k) The operations and activities of the Trust and each Fund as contemplated by
the Prospectuses and the SAIs, the performance by the Trust and each Fund
of this Agreement and the Fund Agreements,
-3-
<PAGE>
the making of the offer or the sale of Shares of each Fund and consummation
from time to time of such sales, the redemption of Shares of each Fund, or
any other transactions contemplated herein, in the Fund Agreements, in the
Prospectuses or in the SAIs, will not conflict with, result in a breach of,
or constitute a default under, the declaration of trust or the Trust's
By-laws or, in any material respect, the terms of any other agreement or
instrument to which the Trust is a party or by which it is bound, or any
order or regulation applicable to the Trust of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction
over the Trust.
(l) There is not pending, or to the best knowledge of the Trust, threatened,
any action, suit or proceeding before any court or governmental agency,
authority or body or any arbitrator to which the Trust is (or, to the best
knowledge of the Trust, is threatened to be) a party, of a character
required to be described in any Registration Statement, Prospectus or SAI
which is not described as required.
(m) There is no contract or other document of a character required to be
described in any Registration Statement, Prospectus or SAI, or to be filed
as an exhibit, which is not described or filed as required.
(n) Except as stated or contemplated in the Registration Statements,
Prospectuses and SAIs, (i)the Trust has not incurred any liabilities or
obligations, direct or contingent, or entered into any transactions,
whether or not in the ordinary course of business, that are material to the
Trust, (ii)there has not been any material adverse change, or, any
development involving a prospective material adverse change, in the
condition (financial or other) of the Trust, (iii)there has been no
dividend or distribution paid or declared in respect of the Trust, and
(iv)the Trust has not incurred any indebtedness for borrowed money.
(o) Each Fund will elect or has elected to be treated as a regulated investment
company as defined in Section 851(a) of the Internal Revenue Code of 1986
for its first taxable year and will operate so as to qualify as such in its
current and all subsequent taxable years.
(p) Except as stated or contemplated in any Prospectus or SAI, the Trust owns
all of its assets free and clear in all material respects of all liens,
security interests, pledges, mortgages, charges and other encumbrances or
defects.
3. Selection of Authorized Dealers; Other Services as Distributor.
--------------------------------------------------------------
(a) With respect to each Class subject to a sales charge, the Distributor shall
have the right on the basis of the representations, warranties and
agreements herein contained and subject to the terms and conditions herein
set forth, to make arrangements for (i) securities dealers (including
bank-affiliated dealers) that are members in good standing of the NASD,
(ii) foreign securities dealers which are not eligible for membership in
the NASD who have agreed to comply as though they were NASD members with
the provisions of Sections 2730, IM-2730, 2740, IM-2740, 2750 and IM-2750of
the Conduct Rules of the NASD and with Section2420 thereof as that Section
applies to a non-NASD member broker or dealer in a foreign country, or
(iii) banks, as defined in Section 3(a)(6) of the Exchange Act, which are
duly organized and validly existing in good standing under the laws of the
jurisdiction in which they are organized, to solicit from the public orders
to purchase Shares of the Funds. Such securities dealers and banks
("Authorized Dealers") selected by you in accordance with dealer agreements
------------------
with you ("Dealer Agreements") shall solicit such orders pursuant to their
-----------------
respective Dealer Agreements. You will act only on your own behalf as
principal in entering into each such Dealer Agreement. With respect to each
Class that is not subject to a sales charge, you shall act as Principal
Underwriter of such shares.
(b) You acknowledge that the only information provided to you by the Trust is
that contained in each
-4-
<PAGE>
Registration Statement, Prospectus and SAI. Neither you nor any Authorized
Dealer nor any other person is authorized by the Trust to give any
information or to make any representations, other than those contained in
the relevant Registration Statement, Prospectus and SAI and any sales
literature approved by appropriate representatives of the Trust. You may
undertake or arrange for such advertising and promotion as you believe is
reasonable in connection with the solicitation of orders to purchase Shares
of a Fund; provided, however, that you will provide the Trust with and
-------- -------
obtain the Trust's approval of copies of any advertising and promotional
materials approved, produced or used by you prior to their use. You will
file such materials with the Commission and the NASD as may be required by
the Exchange Act and the Investment Company Act and the Rules and
Regulations thereunder and by the rules of the NASD.
(c) You agree to perform such services as are described in each Registration
Statement, Prospectus and SAI as to be performed by the Distributor
including, without limitation, distributing Account Information Forms.
(d) All of your activities as distributor of the Shares of the Funds shall
comply, in all material respects, with all applicable laws, Rules and
Regulations, including, without limitation, all rules and regulations made
or adopted by the Commission or by any securities association registered
under the Exchange Act, including the NASD, as in effect from time to time.
4. Offering by the Distributor.
---------------------------
(a) You will act as agent for the Trust in the distribution of Shares of the
Funds and you agree to use your best efforts to offer and sell Shares of
the Funds subject to a sales charge to the public at the public offering
price as set forth in the relevant Prospectus, subject to any waivers or
reductions of any applicable sales charges, dealer allowances and fees as
you and each of the Authorized Dealers, if any, shall have agreed to in
writing. You may also subscribe for Shares of a Fund as principals for
resale to the public or for resale to Authorized Dealers. You shall devote
reasonable time and effort to effect sales of Shares of the Funds, but you
shall not be obligated to sell any specific number of Shares. Nothing
contained herein shall prevent you from entering into like distribution
arrangements with other investment companies.
(b) The Distributor is authorized to purchase Shares of any Fund presented to
them by Authorized Dealers at the price determined in accordance with, and
in the manner set forth in, the Prospectus for such Fund.
(c) Unless you are otherwise notified by the Trust, any right granted to you to
accept orders for Shares of any Fund or to make sales on behalf of the
Trust or to purchase Shares of any Fund for resale will not apply to (i)
Shares issued in connection with the merger or consolidation of any other
investment company with the Trust or its acquisition, by purchase or
otherwise, of all or substantially all of the assets of any investment
company or substantially all the outstanding securities of any such
company, and (ii) Shares that may be offered by the Trust to shareholders
by virtue of their being such shareholders.
5. Compensation.
------------
(a) With respect to any Class which is sold to the public subject to a sales
charge, you will be entitled to receive that portion of the sales charges
applicable to sales of Shares of such Class and not reallocated to
Authorized Dealers as set forth in the relevant Prospectus, subject to any
waivers or
-5-
<PAGE>
reductions of such sales charges, if any, in accordance with Section4 of
this Agreement. In addition, you shall be entitled to receive the entire
--------------------------------------------------------
amount of any contingent deferred sales charge imposed and paid by
------------------------------------------------------------------
shareholders upon the redemption or repurchase of Shares of any Class
---------------------------------------------------------------------
subject to such charges as set forth in the relevant Prospectus, subject to
---------------------------------------------------------------------------
any waivers or reductions of such sales charges that may be disclosed in
------------------------------------------------------------------------
such Prospectus. With respect to any shares sold subject to a contingent
----------------
deferred sales charge, such charge shall be payable in such amounts as
disclosed in the applicable Prospectus as the same was in effect at the
time of sale. The right to receive any contingent deferred sales charge
granted hereunder shall apply to all shares sold during the term of this
Agreement, and to the extent permitted by the Investment Company Act and
other applicable laws, shall continue with respect to such shares
notwithstanding termination of this Agreement. In connection with each
transaction in which you are acting as an Authorized Dealer, you also will
be entitled to that portion of the sales charges, if any, payable to an
Authorized Dealer in such transaction.
(b) The Trust has entered into Plans of Distribution pursuant to Rule 12b-1
under the 1940 Act ("Rule 12b-1 Plans") with respect to certain classes of
certain Funds. The Trust shall pay to you as distributor of such Classes
the compensation pursuant to the Rule 12b-1 Plans as shall be set forth
from time to time in the Prospectuses and SAIs and provided for under the
Rule 12b-1 Plan.
(c) The amounts payable as compensation pursuant to this Section 5 shall be
subject to the limitations in Section 2830 of the Conduct Rules of the
NASD.
6. Undertakings. The Trust agrees with you, for your benefit, that:
------------
(a) The Trust shall sell Shares of the Funds so long as it has such Shares
available for sale and shall cause the transfer agent (the "Transfer
--------
Agent") to record on its books the ownership of such Shares registered in
-----
such names and amounts as you have requested in writing or other means, as
promptly as practicable after receipt by the Trust of the payment therefor.
The Trust will make such filings under the Investment Company Act with, and
pay such fees to, the Commission as are necessary to register Shares of any
Fund sold by you on behalf of the Trust. Prior to the termination of this
Agreement, the Trust will not file any amendment to any Registration
Statement or amendment or supplement to any Prospectus or SAI (whether
pursuant to the Securities Act, the Investment Company Act, or otherwise)
without prior notice to you; provided, however, that nothing contained in
-------- -------
this Agreement shall in any way limit the Trust's right to file such
amendments to any Registration Statement, or amendments or supplements to
any Prospectus or SAI as the Trust may deem advisable, such right being in
all respects absolute and unconditional, it being understood that this
proviso shall not relieve the Trust of its obligation to give prior notice
of any such amendment or supplement to you. Subject to the foregoing
sentence, if the filing of any Prospectus or SAI, as the case may be,
contained in any Registration Statement at the relevant Effective Date, or
any amendment or supplement thereto, is required under Rule497, the Trust
will cause such Prospectus or SAI, and any amendment or supplement thereto,
to be filed with the Commission pursuant to the applicable paragraph of
Rule497 within the time period prescribed and will, if requested, provide
evidence satisfactory to you of such timely filing. The Trust will promptly
advise you (i)when such Prospectus or SAI shall have been filed (if
required) with the Commission pursuant to Rule497, (ii)when, prior to
termination of this Agreement, any amendment to any Registration Statement
shall have been filed or become effective, (iii)of any request by the
Commission for any amendment of any Registration Statement or amendment or
supplement to any Prospectus or SAI or for any additional information
relating to or that could affect disclosure in any of the foregoing, (iv)of
the issuance by the Commission of any order suspending the effectiveness of
any Registration Statement, or suspending the registration of the Trust
under the Investment Company Act, or the institution or (to the best
knowledge of the Trust) threatening of any proceeding for that purpose, and
(v)of the receipt by the Trust of any notification with respect to the
suspension of the qualification of the offer or sale of Shares
-6-
<PAGE>
of a Fund in any jurisdiction or the initiation or (to the best knowledge
of the Trust) threatening of any proceeding for such purpose. The Trust
will use its best efforts to prevent the issuance of any such order or
suspension and, if issued, to obtain as soon as possible the withdrawal or
suspension thereof.
(b) If, at any time when a Prospectus or SAI is required to be delivered under
the Securities Act, any event occurs as a result of which such Prospectus
or SAI would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made not misleading, or if
it shall be necessary to amend any Registration Statement or amend or
supplement any Prospectus or SAI to comply with the Securities Act, the
Investment Company Act or the Rules and Regulations thereunder, the Trust
will notify you promptly of any such circumstance and promptly will prepare
and file with the Commission, subject to the third sentence of Section6(a),
an amendment or supplement which will correct such statement or omission or
effect such compliance.
(c) As soon as practicable (giving effect to the normal periodic reporting
requirements under the Investment Company Act and the Rules and Regulations
thereunder), the Trust will make generally available to its shareholders
and, subject to Section8 of this Agreement, to you (with sufficient copies
for the Authorized Dealers), a report containing the financial statements
required to be included in such reports under Section 30(d) of the
Investment Company Act and Rule 30d-1 thereunder.
(d) Subject to Section8 of this Agreement, the Trust will furnish to you as
many conformed copies of the Registration Statements including exhibits
thereto, on each Effective Date, as you may reasonably request for yourself
and for delivery to the Authorized Dealers and, so long as delivery of a
Prospectus or SAI by you or any Authorized Dealer may be required by law,
the number of copies of each Prospectus and each SAI as you may reasonably
request for yourself and for delivery to the Authorized Dealers.
(e) To the extent required by applicable state law, the Trust will use its best
efforts to arrange for the qualification of an appropriate number of the
Shares of the Funds for sale under the laws of such of the 50 states of the
United States, the District of Columbia, the Commonwealth of Puerto Rico,
the Territory of Guam, and such other jurisdiction as you and the Trust may
approve, and will maintain such qualifications in effect as long as may be
reasonably requested by you, provided that the Trust shall not be required
in connection herewith or as a condition hereto to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction. You shall furnish such information and other material
relating to your affairs and activities as may be required by the Trust in
connection with such qualifications.
(f) The Trust shall keep you fully informed with respect to its affairs and,
subject to Section8 of this Agreement, the Trust, if so requested, will
furnish to you, as soon as they are available (with sufficient copies for
the Authorized Dealers), copies of all reports, communications and
financial statements sent by the Trust to its shareholders or filed by, or
on behalf of, the Trust with the Commission.
(g) The Trust agrees that on each date the Trust is required to file with the
Commission a notice under paragraph (b)(1) of Rule 24f-2 under the
Investment Company Act, the Trust, if so requested, shall furnish to you a
copy of the opinion of counsel for the Trust required by such Rule to the
effect that the Shares covered by the notice were legally issued, fully
paid and nonassessable. The Trust further agrees that if, in connection
with the filing of any post-effective amendment to any Registration
Statement after the date of this Agreement:
(i) a change is made to the statements under the caption "Shares of the Fund"
in any Prospectus or SAI
-7-
<PAGE>
that is deemed material by you, the Trust, if so requested, shall furnish
to you an opinion of counsel for the Trust, dated the date of such
post-effective amendment, to the effect of paragraph 2 (to the extent it
relates to the description of the Shares);
(ii) the Fund Agreements are amended or modified in any manner, the Trust, if so
requested, shall furnish to you an opinion of counsel for the Trust, dated
the date of such post-effective amendment; or
(iii)any change is made to the statements under the caption "Taxation" in any
Prospectus or SAI, the Trust, if so requested, shall furnish to you an
opinion of counsel for the Trust, dated the date of such post-effective
amendment.
Any opinion or statement furnished pursuant to this Section 6(g) shall be
modified as necessary to relate to this Agreement and the Fund Agreements
and the Rules and Regulations as then in effect and shall state that the
Authorized Dealers may rely on it.
(h) The Trust, if so requested, shall furnish to you on each subsequent
Effective Date with respect to an amendment of a Registration Statement
which first includes certified financial statements for the preceding
fiscal year, in respect of a Fund, a copy of the report of the Trust's
independent public accountants with respect to the financial statements and
selected per share data and ratios relating to such Fund, addressed to you.
The Trust further agrees that the Trust, if so requested, shall furnish to
you (i) on each date on which the Trust, pursuant to the preceding
sentence, furnishes to you a report of its independent public accountants,
a certificate of its treasurer or assistant treasurer in a form reasonably
satisfactory to you describing in reasonable detail how the figures
included under the captions "Portfolio Transactions" and "Performance
Information" (or similar captions) in the Prospectus or SAI of such Fund
and the figures relating to the aggregate amounts of remuneration paid to
officers, trustees and members of the advisory board and affiliated persons
thereof (as required by Section 30(d)(5) of the Investment Company Act)
were calculated and confirming that such calculations are in conformity
with the Rules and Regulations under the Investment Company Act and (ii) on
each date the Trust files with the Commission the Trust's required
semi-annual financial statements, a certificate of its treasurer or
assistant treasurer in a form reasonably satisfactory to you, describing
the manner in which such financial statements were prepared and confirming
that such financial statements have been prepared in conformity with the
Rules and Regulations under the Investment Company Act.
7. Conditions to Your Obligations as Distributor and Principal Underwriter.
-----------------------------------------------------------------------
Your obligations as distributor of the Shares of the Funds shall be subject
to the accuracy of the representations and warranties on the part of the
Trust contained herein as of the dates when made or deemed to have been
made, to the accuracy in all material respects of the statements made in
any certificates, letters or opinions delivered pursuant to the provisions
of Sections6or7 of this Agreement, to the performance by the Trust of its
obligations hereunder and to the following additional conditions:
(a) If filing of any Prospectus or SAI, or any amendment or supplement to any
Prospectus or SAI, or any other document is required pursuant to any
applicable provision of Rule497, such Prospectus or SAI, or any such
amendment or supplement and other document will be filed in the manner and
within the time period required by the applicable provision of Rule497; and
no order suspending the effectiveness of the amendment shall have been
issued and no proceedings for that purpose shall have been instituted or,
to the best knowledge of the Trust, threatened and the Trust shall have
complied with any request of the Commission for additional information (to
be included in the relevant Registration Statement, Prospectus, SAI or as
the Commission otherwise shall have requested).
-8-
<PAGE>
(b) At the Initial Acceptance Date with respect to each Fund, you shall have
received from counsel to the Distributors, if so requested, such opinion or
opinions, dated the Initial Acceptance Date, with respect to the issuance
and sale of the Shares, the relevant Registration Statement, Prospectus and
SAI and other related matters as you may reasonably require, and the Trust
shall have furnished to such counsel such documents as they may request for
the purpose of enabling them to pass upon such matters. Each such opinion
shall state that the Authorized Dealers may rely on it.
(c) There shall not have been any change, or any development involving a
prospective change, in or affecting the Trust the effect of which in any
case is, in your good faith judgment, so material and adverse as to make it
impractical or inadvisable to proceed with the offering of Shares of the
Funds as contemplated by this Agreement.
(d) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a general moratorium on
commercial banking activities in New York declared by either Federal or New
York State authorities; (iii) the outbreak or escalation of hostilities
involving the United States or the declaration of a national emergency or
war if the effect of any such event specified in this Clause (iii) in your
judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares of a Fund on the terms and in the
manner contemplated in any Prospectus.
(e) The Trust shall have furnished to you such further information,
certificates and documents as you may have reasonably requested.
If any of the conditions specified in this Section7 shall not have been
fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions, certificates or letters mentioned above or
elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to you, this Agreement and
all your obligations hereunder may be cancelled by you. In the event of
such cancellation, the Trust shall remain liable for the expenses set forth
in Section 8.
8. Expenses.
--------
(a) The Trust will pay (or will enter into arrangements providing that parties
other than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and filing of the
Registration Statements (including Prospectuses and SAIs) under the
Securities Act or the Investment Company Act, or both, and any
amendments or supplements thereto that may be made from time to time;
(2) in connection with the registration and qualification of Shares of the
Funds for sale in the various jurisdictions in which it is determined
to be advisable to qualify such Shares of the Funds for sale
(including registering the Trust as a broker or dealer or any officer
of the Trust or other person as agent or salesman of the Trust in any
such jurisdictions);
(3) of preparing, setting in type, printing and mailing any notice, proxy
statement, report, Prospectus, SAI or other communication to
shareholders in their capacity as such;
(4) of preparing, setting in type, printing and mailing Prospectuses
annually, and any supplements thereto, to existing shareholders;
(5) in connection with the issue and transfer of Shares of the Funds
resulting from the
-9-
<PAGE>
acceptance by you of orders to purchase Shares of the Funds placed
with you by investors, including the expenses of printing and mailing
confirmations of such purchase orders and the expenses of printing and
mailing a Prospectus included with the confirmation of such orders
and, if requested by the purchaser, an SAI;
(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the portion
allocated to you in this Section 8;
(8) of wiring funds in payment of Share purchases or in satisfaction of
redemption or repurchase requests, unless such expenses are paid for
by the investor or shareholder who initiates the transaction;
(9) of the cost of printing and postage of business reply envelopes sent
to shareholders;
(10) of one of more CRT terminals connected with the computer facilities of
the Transfer Agent other than the portion allocated to you in this
Section 8;
(11) permitted to be paid or assumed by any Fund or Funds or any Class
thereof pursuant to (a) a Rule 12b-1 Plan adopted by such Fund or
Funds in conformity with the requirements of Rule 12b-1 under the
Investment Company Act ("Rule 12b-1") or any successor rule,
----------
notwithstanding any other provision to the contrary herein or (b) any
other plan adopted by a Fund providing for account administration or
shareholder liaison services (a "Service Plan");
(12) of the expense of setting in type, printing and postage of any
periodic newsletter to shareholders other than the portion allocated
to you in this Section 8; and
(13) of the salaries and overhead of persons employed by you as shareholder
representatives other than the portion allocated to you in this
Section 8.
(b) Except as provided in any Rule 12b-1 Plan or Service Plan, you shall pay or
arrange for the payment of all fees and expenses:
(1) of printing and distributing any Prospectuses or reports prepared for
your use in connection with the offering of Shares of the Funds to the
public;
(2) of preparing, setting in type, printing and mailing any other
literature used by you in connection with the offering of Shares of
the Funds to the public;
(3) of advertising in connection with the offering of Shares of the Funds
to the public;
(4) incurred in connection with your registration as a broker or dealer or
the registration or qualification of your officers, partners,
directors, agents or representatives under Federal and state laws;
(5) of that portion of WATS (or equivalent) telephone lines allocated to
you on the basis of use by investors (but not shareholders) who
request information or Prospectuses;
(6) of that portion of the expense of setting in type, printing and
postage of any periodic newsletter to shareholders attributable to
promotional material included in such newsletter at your
-10-
<PAGE>
request concerning investment companies other than the Trust or
concerning the Trust to the extent you are required to assume the
expense thereof pursuant to this Section 8, except such material which
is limited to information, such as listings of other investment
companies and their investment objectives, given in connection with
the exchange privilege as from time to time described in the
Prospectuses;
(7) of that portion of the salaries and overhead of persons employed by
you as shareholder representatives attributable to the time spent by
such persons in responding to requests from investors, but not
shareholders, for information about the Trust;
(8) of any activity which is primarily intended to result in the sale of
Shares of any Class of a Fund, unless a 12b-1 Plan shall be in effect
which provides that shares of such Classes shall bear some or all of
such expenses, in which case such Class shall bear such expenses in
accordance with such Plan; and
(9) of that portion of one or more CRT terminals connected with the
computer facilities of the Transfer Agent attributable to your use of
such terminal(s) to gain access to such of the Transfer Agent's
records as also serve as your records.
Expenses which are to be allocated between you and the Trust shall be
allocated pursuant to reasonable procedures or formulae mutually agreed
upon from time to time, which procedures or formulae shall to the extent
practicable reflect studies of relevant empirical data.
9. Indemnification and Contribution.
--------------------------------
(a) The Trust will indemnify you and hold you harmless against any losses,
claims, damages or liabilities, to which you may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, Registration Statement,
Prospectus, or SAI or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading, and will
reimburse you for any legal or other expenses reasonably incurred by you in
connection with investigating or defending any such action or claim;
provided, however, that the Trust shall not be liable in any such case to
-------- -------
the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any Registration Statement, any Preliminary
Prospectus, or any Prospectus or SAI in reliance upon and in conformity
with written information furnished to the Trust by you expressly for use
therein.
(b) You will indemnify and hold harmless the Trust against any losses, claims,
damages or liabilities to which the Trust may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof), arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, any Preliminary Prospectus, or any
Prospectus or SAI, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Registration Statement, any Preliminary Prospectus, or any Prospectus or
SAI in reliance upon and in conformity with written information furnished
to the Trust by you expressly for use therein; and will reimburse the Trust
for any legal or other expenses reasonably incurred by the Trust in
connection with investigating or defending any such action or claim.
-11-
<PAGE>
(c) Promptly after receipt by an indemnified party under subsection (a) or (b)
above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof the indemnifying party
shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs
of investigation.
(d) If the indemnification provided for in this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Trust on the one hand and you on the
other from the offering of the Shares of the Fund or Funds in respect of
which such losses, claims, damages or liabilities (or actions in respect
thereof) arose. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then
each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Trust on the
one hand and you on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relative equitable
considerations. The relative benefits received by the Trust on the one hand
and you on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Shares of the relevant Funds
(before deducting expenses) received by the Trust bear to the total
compensation received by you in selling Shares of such Funds under this
Agreement, including any sales charge as set forth in the Prospectus. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Trust on the one hand or you on the other and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Trust and
you agree that it would not be just and equitable if the contributions
pursuant to this subsection (d) were determined by pro rata allocation or
by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), you shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Shares of the relevant Funds sold by you and distributed to the public were
offered to the public exceeds the amount of any damages which you have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
<PAGE>
(e) The obligations of the Trust under this Section 9 shall be in addition to
any liability which the Trust may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls you within
the meaning of the Securities Act; and your obligations under this Section
9 shall be in addition to any liability which you may otherwise have and
shall extend, upon the same terms and conditions, to each trustee or
officer of the Trust (including any person who, with his consent, is named
in the relevant Registration Statement as about to become a trustee of the
Trust) and to each person, if any, who controls the Trust within the
meaning of the Securities Act.
(f) It is understood, however, that nothing in this paragraph 9 shall protect
any indemnified party against, or entitle any indemnified party to
indemnification against, or contribution with respect to, any liability to
the Trust or its shareholders to which such indemnified party is subject,
by reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of any reckless disregard of its
obligations and duties, under this Agreement, or otherwise to an extent or
in a manner that is inconsistent with Section 17(i) of the Investment
Company Act.
10. Term.
----
(a) This Agreement shall commence on the date first set forth above and
continue in effect until June 30, 1998 and then for successive annual
periods after June 30, 1998, provided such continuance is specifically
approved at least annually by (i) the Trustees of the Trust or (ii) a vote
of a majority (as defined in the Investment Company Act) of the Fund's
outstanding voting securities, provided that in either event the
continuance is also approved by a vote of a majority of the Trustees of the
Trust who are not interested persons (as defined in the Investment Company
Act) of the Trust or any party to this Agreement, by vote cast in person at
a meeting called for the purpose of voting on such approval. The Trust
authorizes, if and when you so determine, you to assign to a third party
any payments with respect to one or more Classes of Shares that you are
entitled to receive for your services hereunder, including any payments of
initial or deferred sales charges or payments in accordance with a Rule
12b-1 or Service Plan so long as such Plan is in effect, free and clear of
any offset, defense or counterclaim the Trust may have against you and
except to the extent that any change or modification after the date hereof
of (x) the provisions of the Investment Company Act, the Rules and
Regulations thereunder or other applicable law or (y) any interpretation of
the Investment Company Act, the Rules and Regulations thereunder or other
applicable law shall restrict your right to make such transfer free and
clear of any offset, defense or counterclaim.
(b) The sale of Shares of the Funds in accordance with the terms of this
Agreement shall be subject to termination or suspension in the absolute
discretion of the Trust, by notice given to you as set forth in Section 12
hereof.
(c) This Agreement will terminate automatically in the event of its assignment
(as defined in the Investment Company Act). In addition, this Agreement may
be terminated by the Trust at any time with respect to any Class of its
Shares, without the payment of any penalty, by vote of a majority of the
Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of the Trust or by a vote of a majority of the
outstanding voting securities of such Class on 60 days' written notice.
11. Representation and Indemnities to Survive. The respective agreements,
-----------------------------------------
representations, warranties, indemnities and other statements of the Trust
and you set forth in or made pursuant to this Agreement will, to the extent
permitted by applicable law, remain in full force and effect, regardless of
any investigation made by or on behalf of you, any Authorized Dealer or the
Trust, or any of the controlling persons referred to in Section 9 hereof,
and will survive the offer of the Shares of the
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<PAGE>
Funds. The provisions of Section 8, 9 and 11 hereof and your right to
receive any contingent deferred sale charges shall, to the extent permitted
by applicable law, survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and effective only
-------
on receipt, and, if sent to you, mailed, delivered or telegraphed and
confirmed to you at Goldman, Sachs & Co., 85 Broad Street, York, New York
10004, Attention: Registration Department (Distributors - Goldman Sachs
Funds) or, if sent to the Trust, mailed, delivered or telegraphed and
confirmed to it at Goldman Sachs Trust, 4900 Sears Tower, Chicago, Ill.
60606, Attention: Secretary.
13. Affiliates. The Trust recognizes that your partners, officers and employees
----------
may from time to time serve as directors, trustees, officers and employees
of corporations and business entities (including other investment
companies), and that you or your affiliates may enter into distribution or
other agreements with other corporations and business entities.
14. Successors. This Agreement will inure to the benefit of and be binding upon
----------
the parties hereto and their respective successors and, to the extent set
forth herein, each of the officers, trustees and controlling persons
referred to in Section 9 hereof, and no other person will have any right or
obligation hereunder.
15. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York.
16. Miscellaneous. The captions in this Agreement are included for convenience
-------------
of reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. This Agreement may
be executed simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and
the same instrument.
The name "Goldman Sachs Trust" is the designation of the Trustees for the
time being under a Declaration of Trust dated January 28, 1997, as amended
from time to time, and all persons dealing with the Trust must look solely
to the property of the Trust for the enforcement of any claims against the
Trust as neither the Trustees, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Trust. No
series of the Trust shall be liable for any claims against any other series
of the Trust.
-14-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between you and
the Trust, and, to the extent set forth herein, shall be for the benefit of each
Authorized Dealer.
Very truly yours,
GOLDMAN SACHS TRUST
/s/ Douglas C. Grip
By:__________________________
Name: Douglas C. Grip
Title: President of the Trust
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
/s/ David B. Ford
_____________________________
(Goldman, Sachs & Co.)
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<PAGE>
EXHIBIT A
---------
Series ("Funds") of GOLDMAN SACHS TRUST, a Delaware business trust (the "Trust")
- --------------------------------------------------------------------------------
GOLDMAN SACHS FIXED INCOME FUNDS:
- --------------------------------
Goldman Sachs Adjustable Rate Government Fund
Goldman Sachs Core Fixed Income Fund
Goldman Sachs Global Income Fund
Goldman Sachs Government Income Fund
Goldman Sachs Municipal Income Fund
Goldman Sachs Short Duration Tax-Free Fund
Goldman Sachs Short Duration Government Fund
Goldman Sachs High Yield Fund
Goldman Sachs High Yield Municipal Fund
GOLDMAN SACHS EQUITY FUNDS:
- --------------------------
Goldman Sachs Balanced Fund
Goldman Sachs CORE Large Cap Growth Fund
Goldman Sachs CORE U.S. Equity Fund
Goldman Sachs CORE Small Cap Equity Fund
Goldman Sachs CORE International Equity Fund
Goldman Sachs CORE Large Cap Value Fund
Goldman Sachs CORE Tax-Managed Equity Fund
Goldman Sachs Growth and Income Fund
Goldman Sachs Capital Growth Fund
Goldman Sachs International Equity Fund
Goldman Sachs Small Cap Value Fund
Goldman Sachs Asia Growth Fund
Goldman Sachs Emerging Markets Equity Fund
Goldman Sachs Mid Cap Value Fund
Goldman Sachs Real Estate Securities Fund
Goldman Sachs International Small Cap Fund
Goldman Sachs Japanese Equity Fund
Goldman Sachs European Equity Fund
Goldman Sachs Strategic Growth Fund
Goldman Sachs Growth Opportunities Fund
Goldman Sachs Internet Toll-Keeper Fund
Goldman Sachs Large Cap Value Fund
GOLDMAN SACHS ASSET ALLOCATION PORTFOLIOS
Goldman Sachs Growth Strategy Portfolio
Goldman Sachs Aggressive Growth Strategy Portfolio
Goldman Sachs Balanced Strategy Portfolio
Goldman Sachs Growth and Income Strategy Portfolio
Goldman Sachs Conservative Strategy Portfolio
-16-
<PAGE>
GOLDMAN SACHS MONEY MARKET FUNDS:
- --------------------------------
Goldman Sachs-Institutional Liquid Assets Portfolios:
----------------------------------------------------
Prime Obligations Portfolio
Government Portfolio
Treasury Obligations Portfolio
Federal Portfolio
Money Market Portfolio
Treasury Instruments Portfolio
Tax-Exempt Diversified Portfolio
Tax-Exempt California Portfolio
Tax-Exempt New York Portfolio
Financial Square Funds:
----------------------
Prime Obligations Fund
Government Fund
Treasury Obligations Fund
Money Market Fund
Tax-Free Money Market Fund
Federal Fund
Treasury Instruments Fund
Premium Money Market Fund
Municipal Money Market Fund
-17-
<PAGE>
Exhibit (g)(29)
[LETTERHEAD OF GOLDMAN SACHS]
April 14, 2000
State Street Bank and Trust Company
1776 Heritage Drive
Adams Building 2 North
North Quincy, MA 02171
Re: Goldman Sachs Trust; additional portfolio under the Goldman
Sachs Equity Portfolios, Inc. contract
Ladies and Gentlemen:
This is to advise you that Goldman Sachs Trust (the "Trust") has established a
new series of shares to be known as Goldman Sachs Research Select Fund (the
"Fund"). In accordance with the Additional Funds provision of Section 17 of the
Custodian Contract dated April 6, 1990, between Goldman Sachs Equity Portfolios,
Inc. and State Street Bank and Trust Company, as adopted by the Trust pursuant
to that certain letter agreement dated as of September 27, 1999 (the
"Contract"), the Trust hereby requests that you act as Custodian of the Fund
under the terms of the Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Trust and retaining one copy for your
records.
GOLDMAN SACHS TRUST
By: /s/ John Perlowski
--------------------------
Name: John Perlowski
Title: Treasurer
Agreed to this 14th day of April, 2000.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------
Name: Ronald E. Logue
Title: Vice Chairman
<PAGE>
Exhibit (g)(30)
[LETTERHEAD OF GOLDMAN SACHS]
April 14, 2000
State Street Bank and Trust Company
1776 Heritage Drive
Adams Building 2 North
North Quincy, MA 02171
Re: Goldman Sachs Trust; additional portfolio under the Goldman Sachs
Trust contract
Ladies and Gentlemen:
This is to advise you that Goldman Sachs Trust (the "Trust") has established a
new series of shares to be known as Goldman Sachs Enhanced Cash Fund (the
"Fund"). In accordance with the Additional Funds provision of Section 17 of the
Custodian Contract dated July 15, 1991, between Goldman Sachs Trust (the
predecessor to the Trust) and State Street Bank and Trust Company, as adopted by
the Trust pursuant to that certain letter agreement dated as of September 27,
1999 (the "Contract"), the Trust hereby requests that you act as Custodian of
the Fund under the terms of the Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Trust and retaining one copy for your
records.
GOLDMAN SACHS TRUST
By: /s/ John Perlowski
-------------------------
Name: John Perlowski
Title: Treasurer
Agreed to this 14th day of April, 2000.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------
Name: Ronald E. Logue
Title: Vice Chairman
<PAGE>
Exhibit (h)(21)
GOLDMAN SACHS TRUST
(FST ADMINISTRATION CLASS)
ADMINISTRATION PLAN
April 25, 2000
WHEREAS, Goldman Sachs Trust (the "Trust") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust has separate series or Funds, each of which is a
separate pool of assets with its own investment policies (the "Funds") and each
Fund investing in money market instruments may be divided into multiple separate
classes including, in the case of certain Funds: the FST Class, the FST Select
Class, the FST Administration Class, the FST Service Class and the FST Preferred
Class;
WHEREAS, the Trust, on behalf of the FST Administration Class of each Fund
that offers such shares, desires to adopt an Administration Plan and the Board
of Trustees of the Trust has determined that there is a reasonable likelihood
that adoption of this Administration Plan will benefit the Trust and its
shareholders; and
WHEREAS, institutions (including Goldman, Sachs & Co.) (the "Service
Organizations") may act directly or indirectly as nominees and recordholders of
shares of the FST Administration Class for their respective customers who are or
may become beneficial owners of such shares (the "Customers"), provide services
to other Service Organizations intended to facilitate or improve a Service
Organization's services to its Customers with respect to the Funds and/or
perform certain account administration services with respect to the Customers
pursuant to Agreements between the Trust, on behalf of the FST Administration
Class of each Fund, and such Service Organizations (the "Agreements").
NOW, THEREFORE, the Trust, on behalf of the FST Administration Class of
each Fund, hereby adopts this Administration Plan (the "Plan") on the following
terms and conditions:
1. (a) The Trust, on behalf of the FST Administration Class of each Fund,
is authorized to pay each Service Organization the monthly or quarterly
administration fee specified in the Agreement with such Service Organization,
which shall be equal on an annual basis to not more than .25 of 1% of the
average daily net asset value of the shares of the FST Administration Class of
such Fund which are owned beneficially by the Customers of such Service
Organization during such period.
(b) The types of administration services and expenses for which a Service
Organization may be compensated or reimbursed under this Plan include, without
limitation: (i) acting or arranging for another party to act, as recordholder
and nominee of all shares of the FST Administration Class beneficially owned by
Customers; (ii) establishing and maintaining individual accounts and records
with respect to shares of the FST Administration Class owned by each Customer;
(iii) processing and issuing confirmations concerning Customer orders to
purchase, redeem and exchange shares; (iv)
1
<PAGE>
receiving and transmitting funds representing the purchase price or redemption
proceeds of such shares; (v) providing services to Customers intended to
facilitate or improve their understanding of the benefits and risks of, a Fund
to Customers, including asset allocation and other industry services; (vi)
facilitating the inclusion of a Fund in investment, retirement, asset
allocation, cash management or sweep accounts or similar products or services
offered to Customers by or through Service Organizations; (vii) facilitating
electronic or computer trading and/or processing in a Fund or providing
electronic, computer or other database information regarding a Fund to
Customers; and (viii) performing any other services which do not constitute
"personal and account maintenance services" within the meaning of the National
Association of Securities Dealers, Inc.'s Conduct Rules. No Fund may compensate
a Service Organization for services provided with respect to another Fund.
2. This Plan shall not take effect as to any Fund until the Plan, together
with any related agreements, has been approved for such Fund by votes of a
majority of both (a) the Board of Trustees of the Trust and (b) those Trustees
of the Trust who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the "non-interested Trustees") cast in person at a
meeting (or meetings) called for the purpose of voting on the Plan and such
related agreements.
3. This Plan shall remain in effect until May 1, 2001 and shall continue in
effect thereafter so long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 2.
4. The President, Vice President, Treasurer or any Assistant Treasurer of
the Trust shall provide the Board of Trustees of the Trust and the Board shall
review, at least quarterly, a written report of services performed by and fees
paid to each Service Organization under the Agreements and this Plan.
5. This Plan may be terminated as to the FST Administration Class of any
Fund at any time by vote of a majority of the non-interested Trustees or by vote
of a majority of the outstanding voting securities of the FST Administration
Class of such Fund.
6. This Plan may not be amended to increase materially the amount of
compensation payable pursuant to paragraph 1 hereof, and other material
amendments to the Plan shall not be made, unless approved in the manner provided
in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of the
non-interested Trustees of the Trust shall be committed to the discretion of the
non-interested Trustees.
8. The Trust shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 4 hereof, for a period of not less
than six years from the date of the Plan, any such agreement or any such report,
as the case may be, the first two years in an easily accessible place.
9. In the case of a Fund that offers more than one class of Shares, this
Plan only relates to the Administration Class of Such Fund and the fee
determined in accordance with paragraph 1 shall be based upon the average daily
net assets of the Fund attributable to Administration Shares. The obligations of
the Trust and the Funds hereunder are not personally binding upon, nor shall
resort be had to the private property of any of the Trustees, shareholders,
officers, employees or agents of the
2
<PAGE>
Trust, but only the Trust's property allocable to Administration Shares shall be
bound. No series of the Trust shall be responsible for the obligations of any
other series of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of the FST Administration Class of
each Fund, has executed this Administration Plan as of the day and year first
written above.
Goldman Sachs Trust
(on behalf of the FST Administration Class of each
Fund)_____________________________________________
By /s/ Michael J. Richman
Michael J. Richman
Secretary of the Trust
3
<PAGE>
Exhibit (h)(22)
GOLDMAN SACHS TRUST
(FST SERVICE CLASS)
SERVICE PLAN
April 25,2000
WHEREAS, Goldman Sachs Trust (the "Trust") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust has separate series or Funds, each of which is a
separate pool of assets with its own investment policies (the "Funds") and each
Fund investing in money market instruments may be divided into multiple separate
classes including, in the case of certain Funds: the FST Class, the FST Select
Class, the FST Administration Class, the FST Service Class and the FST Preferred
Class;
WHEREAS, the Trust, on behalf of the FST Service Class of each Fund
that offers such shares, desires to adopt a Service Plan and the Board of
Trustees of the Trust has determined that there is a reasonable likelihood that
adoption of this Service Plan will benefit the Trust and its shareholders; and
WHEREAS, institutions (including Goldman, Sachs & Co.) ("Service
Organizations") may act directly or indirectly as nominees and recordholders of
shares of the FST Service Class for their respective customers who are or may
become beneficial owners of such shares (the "Customers"), provide service to
other service organizations intended to facilitate or improve a service
organization's services to its Customers with respect to the Funds and/or
perform certain account administration and shareholder liaison services with
respect to the Customers pursuant to Agreements between the Trust, on behalf of
the FST Service Class of each Fund, and such Service Organizations (the
"Agreements").
NOW, THEREFORE, the Trust, on behalf of the FST Service Class of each
Fund, hereby adopts this Service Plan (the "Plan") on the following terms and
conditions:
1. (a) The Trust, on behalf of the FST Service Class of each Fund, is
authorized to pay each Service Organization the monthly or quarterly service fee
specified in the Agreement with such Service Organization for (1) administration
services and (2) personal and account maintenance services performed and
expenses incurred by the Service Organization in connection with such Fund's FST
Service Class. The fee paid for such services during any one year shall not
exceed .50% of the average daily net asset value of the shares of the FST
Service Class of such Fund which are owned beneficially by the Customers of such
Service Organization during such period; provided, however, that the fee paid
for personal and account maintenance services and expenses shall not exceed .25%
of the average daily net asset value of the shares of the FST Service Class of
such Fund which are owned beneficially by the Customers of such Service
Organization during such period.
(b) Administration services and expenses for which a Service
Organization may be
1
<PAGE>
compensated or reimbursed under this Plan include, without limitation, (i)
acting or arranging for another party to act, as recordholder and nominee of all
shares of the FST Service Class beneficially owned by Customers; (ii)
establishing and maintaining individual accounts and records with respect to
shares of the FST Service Class owned by each Customer; (iii) processing and
issuing confirmations concerning Customer orders to purchase, redeem and
exchange shares of the FST Service Class; (iv) receiving and transmitting funds
representing the purchase price or redemption proceeds of such shares of the FST
Service Class; (v) providing services to Customers intended to facilitate, or
improve their understanding of the benefits and risks of, a Fund to Customers,
including asset allocation and other advisory services; (vi) facilitating the
inclusion of a Fund in investment, retirement, asset allocation, cash management
or sweep accounts or similar products or services offered to Customers by or
through Service Organizations; (vii) facilitating electronic or computer trading
and/or processing in a Fund or providing electronic, computer or other database
information regarding a Fund to Customers; and (viii) performing any other
services which do not constitute "personal and account maintenance services"
within the meaning of the National Association of Securities Dealers, Inc.'s
Conduct Rules.
(c) Personal and account maintenance services and expenses for
which a Service Organization may be compensated under this Plan include, without
limitation, (i) providing facilities to answer inquiries and respond to
correspondence with Customers and other investors about the status of their
accounts or about other aspects of the Trust or the applicable Fund; (ii) acting
as liaison between Customers and the Trust, including obtaining information from
the Trust and assisting the Trust in correcting errors and resolving problems;
(iii) providing such statistical and other information as may be reasonably
requested by the Trust or necessary for the Trust to comply with applicable
federal or state law; (iv) responding to investor requests for prospectuses; (v)
displaying and making prospectuses available on the Service Organization's
premises; and (vi) assisting Customers in completing application forms,
selecting dividend and other account options and opening custody accounts with
the Service Organization.
(d) Appropriate adjustments to payments made pursuant to clause
(a) of this paragraph 1 shall be made whenever necessary to ensure that no
payment is made by the Trust on behalf of a Fund in excess of the applicable
maximum cap imposed on asset based, front-end and deferred sales charges the
National Association of Securities Dealers, Inc.'s Conduct Rules. No Fund may
compensate a Service Organization for services provided with respect to another
Fund.
2. This Plan shall not take effect as to any Fund until the Plan,
together with any related agreements, has been approved for such Fund by votes
of a majority of both (a) the Board of Trustees of the Trust and (b) those
Trustees of the Trust who are not "interested persons" of the Trust and who have
no direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the "non-interested Trustees") cast in person at a
meeting (or meetings) called for the purpose of voting on the Plan and such
related agreements.
3. This Plan shall remain in effect until May 1, 2001 and shall
continue in effect thereafter so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
paragraph 2.
4. The President, Vice President, Treasurer or any Assistant Treasurer
of the Trust shall provide the Board of Trustees of the Trust and the Board
shall review, at least quarterly, a written report of services performed by and
fees paid to each Service Organization under the Agreements and
2
<PAGE>
this Plan.
5. This Plan may be terminated as to the FST Service Class of any Fund
at any time by vote of a majority of the non-interested Trustees or by vote of a
majority of the outstanding voting securities of the FST Service Class of such
Fund.
6. This Plan may not be amended to increase materially the amount of
compensation payable pursuant to paragraph 1 hereof unless such amendment is
approved by a vote of at least a majority (as defined in the Act) of the
outstanding voting securities of the FST Service Class of such Funds except to
the extent that the approval of another class of such Fund is required in
accordance with Rule 18f-3 under the Act, in which case the approval of a
majority (as defined in the Act) of the outstanding voting securities of such
class shall also be required. No material amendment to the Plan shall be made
unless approved in the manner provided in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of the
non-interested Trustees of the Trust shall be committed to the discretion of
the non-interested Trustees.
8. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 4 hereof, for a period of
not less than six years from the date of the Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
9. In the case of a Fund that offers more than one class of Shares,
this Plan only relates to the Service Class of such Fund and the fee determined
in accordance with paragraph 1 shall be based upon the average daily net assets
of the Fund attributable to Service Shares. The obligations of the Trust and the
Funds hereunder are not personally binding upon, nor shall resort be had to the
private property of any of the Trustees, shareholders, officers, employees or
agents of the Trust, but only the Trust's property allocable to Service Shares
shall be bound. No series of the Trust shall be responsible for the obligations
of any other series of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of the FST Service Class of
each Fund, has executed this Service Plan as of the day and year first written
above.
GOLDMAN SACHS TRUST
(on behalf of the FST Service Class of each Fund)
By /s/ Michael J. Richman
------------------------------------
Michael J. Richman
Secretary of the Trust
3
<PAGE>
Exhibit (h)(23)
GOLDMAN SACHS TRUST
(FST PREFERRED CLASS)
PREFERRED ADMINISTRATION PLAN
April 25, 2000
WHEREAS, Goldman Sachs Trust (the "Trust") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940. as amended (the "1940 Act");
WHEREAS, the Trust has separate series or Funds, each of which is a
separate pool of assets with its own investment policies (the "Funds") and each
Fund investing in money market instruments may be divided into multiple separate
classes including, in the case of certain Funds: the FST Class, the FST Select
Class, the FST Administration Class, the FST Service Class and the FST Preferred
Class;
WHEREAS, the Trust, on behalf of the FST Preferred Class of each Fund that
offers such shares, desires to adopt a Preferred Administration Plan and the
Board of Trustees of the Trust has determined that there is a reasonable
likelihood that adoption of this Preferred Administration Plan will benefit the
Trust and its shareholders; and
WHEREAS, institutions (including Goldman, Sachs & Co.) (the "Service
Organizations") may act directly or indirectly as nominees and recordholders of
shares of the FST Preferred Class for their respective customers who are or may
become beneficial owners of such shares (the "Customers"), provide services to
other Service Organizations intended to facilitate or improve a Service
Organization's services to its Customers with respect to the Funds and/or
perform certain account administration services with respect to the Customers
pursuant to Agreements between the Trust, on behalf of the FST Preferred Class
of each Fund, and such Service Organizations (the "Agreements").
NOW, THEREFORE, the Trust, on behalf of the FST Preferred Class of each
Fund, hereby adopts this Preferred Administration Plan (the "Plan") on the
following terms and conditions:
1. (a) The Trust, on behalf of the FST Preferred Class of each Fund, is
authorized to pay each Service Organization the monthly or quarterly
administration fee specified in the Agreement with such Service Organization,
which shall be equal on an annual basis to not more than .10 of 1% of the
average daily net asset value of the shares of the FST Preferred Class of each
Fund which are owned beneficially by the Customers of such Service Organization
during such period.
(b) The types of administration services and expenses for which a Service
Organization may be compensated or reimbursed under this Plan include, without
limitation: (i) acting or arranging for another party to act, as recordholder
and nominee of all shares of the FST Preferred Class beneficially owned by
Customers; (ii) establishing and maintaining individual accounts and records
with respect to shares of the FST Preferred Class owned by each Customer; (iii)
processing and issuing confirmations concerning Customer orders to purchase,
redeem and exchange shares; (iv) receiving and transmitting funds representing
the purchase price or redemption proceeds of such
1
<PAGE>
shares; (v) providing services to Customers intended to facilitate or improve
their understanding of the benefits and risks of, a Fund to Customers, including
asset allocation and other industry services; (vi) facilitating the inclusion of
a Fund in investment, retirement, asset allocation, cash management or sweep
accounts or similar products or services offered to Customers by or through
Service Organizations; (vii) facilitating electronic or computer trading and/or
processing in a Fund or providing electronic, computer or other database
information regarding a Fund to Customers; and (viii) performing any other
services which does not constitute "personal and account maintenance services'
within the meaning of the National Association of Securities Dealers, Inc.'s
Conduct Rules. No Fund may compensate a Service Organization for services
provided with respect to another Fund.
2. This Plan shall not take effect as to any Fund until the Plan, together
with any related agreements, has been approved for such Fund by votes of a
majority of both (a) the Board of Trustees of the Trust and (b) those Trustees
of the Trust who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the `non-interested Trustees') cast in person at a
meeting (or meetings) called for the purpose of voting on the Plan and such
related agreements.
3. This Plan shall remain in effect until May 1, 2001 and shall continue in
effect thereafter so long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 2.
4. The President, Vice President, Treasurer or any Assistant Treasurer of
the Trust shall provide the Board of Trustees of the Trust and the Board shall
review, at least quarterly, a written report of services performed by and fees
paid to each Service Organization under the Agreements and this Plan.
5. This Plan may be terminated as to the FST Preferred Class of any Fund at
any time by vote of a majority of the non-interested Trustees or by vote of a
majority of the outstanding voting securities of the FST Preferred Class of such
Fund.
6. This Plan may not be amended to increase materially the amount of
compensation payable pursuant to paragraph 1 hereof, and other material
amendments to the Plan shall not be made, unless approved in the manner provided
in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of the
non-interested Trustees of the Trust shall be committed to the discretion of the
non-interested Trustees.
8. The Trust shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 4 hereof, for a period of not less
than six years from the date of the Plan, any such agreement or any such report,
as the case may be, the first two years in an easily accessible place.
9. In the case of a Fund that offers more than one class of Shares, this
Plan only relates to the Preferred Shares of such Fund and the fee determined in
accordance with paragraph 1 shall be based upon the average daily net assets of
the Fund attributable to Preferred Shares. The obligations of the Trust and the
Funds hereunder are not personally binding upon, nor shall resort be had to the
private property of any of the Trustees, shareholders, officers, employees or
agents of the Trust, but only the Trust's property allocable to Preferred Shares
shall be bound. No series of the Trust shall be
2
<PAGE>
responsible for the obligations of any other series of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of the FST Preferred Class of each
Fund, has executed this Preferred Administration Plan as of the day and year
first written above.
Goldman Sachs Trust
(on behalf of the FST Preferred Class of each Fund)
By /s/ Michael J. Richman
------------------------------------------------
Michael J. Richman
Secretary of the Trust
3
<PAGE>
Exhibit (h)(24)
GOLDMAN SACHS TRUST
(SERVICE CLASS)
SERVICE PLAN
April 25, 2000
WHEREAS, Goldman Sachs Trust (the "Trust") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended;
WHEREAS, the Trust has separate series or Funds, each of which is a
separate pool of assets with its own investment policies (the "Funds") and each
Fund may be divided into multiple separate classes including, in the case of
certain Funds: Class A, Class B, Class C the Institutional Class and the Service
Class;
WHEREAS, the Trust, on behalf of the Service Class of each Fund that offers
such shares, desires to adopt a Service Plan and the Board of Trustees of the
Trust has determined that there is a reasonable likelihood that adoption of this
Service Plan will benefit each Fund and its shareholders; and
WHEREAS, institutions (including Goldman, Sachs & Co.) ("Service
Organizations") may act directly or indirectly as nominees and record holders of
shares of beneficial interest of the Service Class ("Service Shares") for their
respective customers who are or may become beneficial owners of such Service
Shares (the "Customers"), provide services to other Service Organizations
intended to facilitate or improve a Service Organization's services to its
Customers with respect to the Funds and/or perform certain account
administration and shareholder liaison services with respect to the Customers
pursuant to Agreements between the Trust, on behalf of the Service Class of each
Fund, and such Service Organizations (the "Agreements").
NOW, THEREFORE, the Trust, on behalf of the Service Class of each Fund,
hereby adopts this Service Plan (the "Plan") on the following terms and
conditions:
1. (a) The Trust, on behalf of each Service Class of each Fund, is
authorized to pay each Service Organization the monthly or quarterly service fee
specified in the Agreement with such Service Organization for (i) administration
services and (ii) personal and account maintenance services performed and
expenses incurred by the Service Organization in connection with such Fund's
Service Shares. The fee paid for such services during any one year shall not
exceed .50% of the average daily net asset value of the Service Shares of such
Fund which are owned beneficially by the Customers of such Service Organization
during the period; provided, however, that the fee paid for personal and account
maintenance services and expenses shall not exceed .25% of the average daily net
asset value of the Service Shares of such Fund which are owned beneficially by
the Customers of such Service Organization during such period.
(b) Administration services and expenses for which a Service Organization
may be compensated and reimbursed under this Plan include, without limitation,
(i) acting or arranging for another party to act, as recordholder and nominee of
all Service Shares beneficially owned by Customers; (ii) establishing and
maintaining individual accounts and records with respect to Service Shares owned
by each Customer; (iii) processing and issuing confirmations concerning Customer
<PAGE>
orders to purchase, redeem and exchange Service Shares; (iv) receiving and
transmitting funds representing the purchase price or redemption proceeds of
such Service Shares; (v) providing services to Customers intended to facilitate
or improve their understanding of the benefits and risks of, a Fund to
Customers, including asset allocation and other industry services; (vi)
facilitating the inclusion of a Fund in investment, retirement, asset
allocation, cash management or sweep accounts or similar products or services
offered to Customer by or through Service Organizations; (vii) facilitating
electronic or computer trading and/or processing in a Fund or providing
electronic, computer or other database information regarding a Fund to
Customers; and (viii) performing any other services which do not constitute
"personal and account maintenance services" within the meaning of the National
Association of Securities Dealer's Inc.'s Conduct Rules.
(c) Personal and account maintenance services and expenses for which a
Service Organization may be compensated under this Plan include, without
limitation, (i) providing facilities to answer inquiries and respond to
correspondence with Customers and other investors about the status of their
accounts or about other aspects of the Trust or the applicable Fund; (ii) acting
as liaison between Customers and the Trust, including obtaining information from
the Trust and assisting the Trust in correcting errors and resolving problems;
(iii) providing such statistical and other information as may be reasonably
requested by the Trust or necessary for the Trust to comply with applicable
federal or state law; (iv) responding to investor requests for prospectuses; (v)
displaying and making prospectuses available on the Service Organization's
premises; and (vi) assisting Customers in completing application forms,
selecting dividend and other account options and opening custody accounts with
the Service Organization.
(d) Appropriate adjustments to payments made pursuant to clause (a) of this
paragraph 1 shall be made whenever necessary to ensure that no payment is made
by the Trust on behalf of a Fund in excess of the applicable maximum cap imposed
on asset based, front-end and deferred sales charges by the National Association
of Securities Dealers, Inc.'s Conduct Rules. No Fund may compensate a Service
Organization for services provided with respect to another Fund.
2. This Plan shall not take effect as to any Fund until the Plan, together
with any related agreements, has been approved for such Fund by votes of a
majority of both (a) the Board of Trustees of the Trust and (b) those Trustees
of the Trust who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the "non-interested Trustees") cast in person at a
meeting (or meetings) called for the purpose of voting on the Plan and such
related agreements.
3. This Plan shall remain in effect until May 1, 2001 and shall continue in
effect thereafter so long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 2.
4. The President, Vice President, Treasurer or any Assistant Treasurer of
the Trust shall provide the Board of Trustees of the Trust and the Board shall
review, at least quarterly, a written report of services performed by and fees
paid to each Service Organization under the Agreements and this Plan.
5. This Plan may be terminated as to the Service Class of any Fund at any
time by vote of a majority of the non-interested Trustees or by vote of a
majority of the outstanding voting securities of the Service Class of such Fund.
6. This Plan may not be amended to increase materially the amount of
compensation payable pursuant to paragraph 1 hereof unless such amendment is
approved by a vote of at least a
<PAGE>
majority (as defined in the Act) of the outstanding voting securities of the
Service Class of such Funds except to the extent that the approval of another
class of such Fund is required in accordance with Rule 18f-3 under the Act, in
which case the approval of a majority (as defined in the Act) of the outstanding
voting securities of such class shall also be required. No material amendment to
the Plan shall be made unless approved in the manner provided in paragraph 2
hereof.
7. While this Plan is in effect, the selection and nomination of the
non-interested Trustees of the Trust shall be committed to the discretion of the
non-interested Trustees.
8. The Trust shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 4 hereof, for a period of not less
than six years from the date of the Plan, any such agreement or any such report,
as the case may be, the first two years in an easily accessible place.
9. In the case of a Fund that offers more than one class of Shares, this
Plan only relates to the Service Shares of such Fund and the fee determined in
accordance with paragraph 1 shall be based upon the average daily net assets of
the Fund attributable to Service Shares. The obligations of the Trust and the
Funds hereunder are not personally binding upon, nor shall resort be had to the
private property of any of the Trustees, shareholders, officers, employees or
agents of the Trust, but only the Trust's property allocable to Service Shares
shall be bound. No series of the Trust shall be responsible for the obligations
of any other series of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of the Service Class of each Fund,
has executed this Service Plan as of the day and year first written above.
GOLDMAN SACHS TRUST
(on behalf of the Service Class of each Fund)
By: /s/ Douglas C. Grip
-----------------------------------------
Douglas C. Grip
President of the Trust
<PAGE>
Exhibit (h)(25)
Goldman Sachs Trust Service Agreement
- --------------------------------------------------------------------------------
Date
Service Organization
Address
RE: Goldman Sachs Trust (the "Trust")
Ladies and Gentlemen:
This Agreement is entered into by the financial institution or service provider
executing this Agreement (the "Service Organization") and Goldman Sachs Trust
(the "Trust"), 4900 Sears Tower, Chicago, Illinois 60606. The Trust is an
open-end management investment company that includes the Goldman Sachs Financial
Square Funds, Goldman Sachs--Institutional Liquid Assets Portfolios, Goldman
Sachs Fixed Income Funds, Goldman Sachs Domestic Equity Funds, Goldman Sachs
International Equity Funds and Goldman Sachs Asset Allocation Portfolios (such
Funds and Portfolios now or hereafter offered by the Trust are individually
referred to herein as a "Fund" and, collectively, as the "Funds"). Shares or
units of beneficial interest (the "Shares") of each Fund may be divided into
separate classes, including the Select Class, the Preferred Class, the
Administration Class, the Service Class and the Cash Management Class
(individually referred to herein as a "Class" and, collectively, the "Classes").
The Classes currently offered by the Funds are listed on Schedule A hereto.
You are willing to perform, and the Trust wishes to compensate you for
performing, certain support services with respect to your customers investing in
the Classes of the Funds that you have selected on Schedule A attached hereto
(the "Services"). Accordingly, the Service Organization and the Trust agree as
follows:
1. Agreement to Provide Services. The Service Organization shall act
directly or through an agent as nominee and record holder of Shares of one or
more of the Classes for its customers, who are or may become the beneficial
owners of such Shares (the "Customers").
With respect to Customers holding Shares of the Select Class, the Trust
hereby engages the Service Organization, and the Service Organization hereby
agrees, to perform the following Services: (a) act directly or through an agent
as record holder and nominee of Shares of such Class beneficially owned by the
Customers; (b) establish and maintain, or assist in establishing and
maintaining, individual accounts and records with respect to Shares of such
Class owned by each Customer; and (c) receive and transmit, or assist in
receiving and transmitting, funds representing the purchase price or redemption
proceeds of such Shares.
With respect to Customers holding Shares of the Preferred Class, the
Trust hereby engages the Service Organization, and the Service Organization
hereby agrees, to perform the following Services: (a) act directly or through an
agent as record holder and nominee of Shares of such Class beneficially owned by
the Customers; (b) establish and
<PAGE>
maintain, or assist in establishing and maintaining, individual accounts and
records with respect to Shares of such Class owned by each Customer; and (c)
receive and transmit, or assist in receiving and transmitting, funds
representing the purchase price or redemption proceeds of such Shares.
With respect to Customers holding Shares of the Administration Class,
the Trust hereby engages the Service Organization, and the Service Organization
hereby agrees, to perform the Services outlined in clauses (a) through (c)
above, in addition to the following Services: (d) provide facilities to answer
inquiries and respond to correspondence with Customers and other investors about
the status of their accounts or about other aspects of the Trust or the Funds;
and (e) process and issue, or assist in processing and issuing, confirmations
concerning Customer orders to purchase, redeem and exchange Shares promptly and
in accordance with the then effective prospectus for Shares of such Class.
With respect to Customers holding Shares of the Service Class and Cash
Management Class, the Trust hereby engages the Service Organization, and the
Service Organization hereby agrees, to perform the Services outlined in clauses
(a) through (e) above, in addition to the following Services: (f) respond to
investor requests for prospectuses and statements of additional information; (g)
display and make prospectuses available on the Service Organization's premises;
(h) assist Customers in completing application forms, selecting dividend and
other account options and opening custody accounts with the Service
Organization; (i) act as liaison between Customers and the Trust, including
obtaining information from the Trust, assisting the Trust in correcting errors
and resolving problems; and (j) provide such statistical and other information
as may be reasonably requested by the Trust or necessary for the Trust to comply
with applicable federal or state laws.
2. Expenses of the Service Organization. The Service Organization shall
furnish such office space, equipment, facilities and personnel as is necessary
to perform its duties hereunder. The Service Organization shall bear all costs
incurred by it in performing such duties.
3. Service Fees Payable to the Service Organization. For the Services
provided and the expenses incurred by the Service Organization hereunder, the
Trust on behalf of the Fund(s) will pay to the Service Organization a monthly
fee equal on an annual basis to the percentage specified on Schedule A of the
average daily net asset value of the Shares of the Select Class, the Preferred
Class, the Administration Class, the Service Class and the Cash Management
Class, of such Funds of the Trust which are owned beneficially by Customers
through the Service Organization during such period. However, with respect to
the ILA Portfolios and the Financial Square Funds, if the total fees to be
accrued by any Fund on any day with respect to such Shares of the Fund exceed
the net income, exclusive of such fees, to be accrued by the Fund on such
Shares, the fee payable by the Fund to the Service Organization on such day will
be reduced by an amount equal to the Service Organization's proportionate share
of such excess with respect to such Class, in order to avoid adversely affecting
the net asset value per Share of that Class.
4. Representations and Warranties. The Service Organization hereby
represents, warrants and covenants to the Trust:
A. i. That it is an investment adviser as defined under Section
202(a)(11) of the Investment Advisers Act of 1940, as amended
(the "Advisers Act"); it is registered and in good standing,
and will during the term of this Agreement remain in good
standing, as an investment adviser with the United States
Securities and Exchange Commission (the "Commission") or with
the securities commission of any state, territory or
possession of the United States, and is in full compliance
2
<PAGE>
with the rules, regulations and policies of the aforesaid
commissions, particularly those rules, regulations and
policies governing capital requirements, financial reporting,
bonding, fiduciary standards and supervisory concerns; and its
entering into and performing its obligations under this
Agreement does not and will not violate any laws, rules or
regulations (including Rule 206(4)-2 under the Advisers Act
and rules or regulations of any self-regulatory organization);
or
ii. That it is a broker or dealer as defined in Section 3(a)(4) or
3(a)(5) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"); that it is registered and in good
standing, and will during the term of this Agreement remain in
good standing (a) as a broker-dealer with the Commission
pursuant to Section 15 of the Exchange Act and with the
securities commission of any state, territory or possession of
the United States and (b) as a member of the National
Association of Securities Dealers, Inc. (the "NASD") and/or
any stock exchange or other self-regulatory organization in
which the Service Organization's membership is necessary for
the conduct of its business under this Agreement, and is in
full compliance with the rules, regulations and policies of
the aforesaid commissions and organizations, particularly
those rules, regulations and policies governing capital
requirements, financial reporting, bonding, fiduciary
standards and supervisory concerns; and its entering into and
performing its obligations under this Agreement does not and
will not violate any laws, rules or regulations (including the
net capital and customer protection rules of the Commission
and the rules or regulations of the NASD or any
self-regulatory organization or any so-called "restriction"
letter with the NASD); or
iii. That it is a depository institution (a) organized, chartered
or holding an authorization certificate under the laws of a
state or of the United States, which authorizes the Service
Organization to receive deposits, including a savings, share,
certificate or deposit account, and which is regulated,
supervised and examined for the protection of depositors by an
official or agency of a state or the United States and is
insured by the Federal Deposit Insurance Corporation, the
Federal Savings and Loan Insurance Corporation or the National
Credit Union Share Insurance Fund, or (b) is a trust company
or other institution that is authorized by federal or state
law to exercise fiduciary powers of a type a national bank is
permitted to exercise under the authority of the United States
Office of the Comptroller of the Currency, and is regulated,
supervised and examined by an official or agency of a state or
the United States; and its entering into and performing its
obligations under this Agreement does not and will not violate
any laws, rules or regulations.
B. That it is a corporation, association or partnership duly organized,
validly existing, and in good standing under the laws of the state of
its organization;
C. That entering into and performing its obligations under this Agreement
does not and will not violate (i) its charter or by-laws; or (ii) any
agreements to which it is a party;
D. If the Service Organization is a depository institution or a broker or
dealer, in processing Customer orders to purchase, redeem and exchange
Shares, (i) it shall act solely as agent upon the order, and for the
account, of its Customer; (ii) the Customer will have full beneficial
ownership of any Shares purchased upon its authorization and order;
and (iii) under no circumstances will any transactions be for the
account of the Service Organization. Under no circumstances will the
Service Organization make any oral or
3
<PAGE>
written representations to the contrary;
E. With respect to the purchase, redemption or exchange of Fund Shares
for Customer accounts with respect to which the Service Organization
is a fiduciary under state or federal trust or comparable fiduciary
requirements, or, in the case of any such accounts which are subject
to the Employee Retirement Income Security Act of 1974, as amended,
the Service Organization is a fiduciary or party in interest, the
Service Organization represents that the purchase, redemption or
exchange of such Shares, and the Service Organization's receipt of the
relevant fee described in Section 4 hereof, is permissible under all
such applicable requirements and complies with any restrictions,
limitations or procedures under such requirements;
F. It will keep confidential any information acquired as a result of this
Agreement regarding the business and affairs of the Trust and Goldman,
Sachs & Co., which requirement shall survive the term of this
Agreement; and
G. It will not, without written consent of the Trust in each instance,
use in advertising, publicity, administering and servicing the Funds
or otherwise the name of the Trust, Goldman, Sachs & Co., or any of
their affiliates nor any trade name, trademark, trade device, service
mark, symbol or any abbreviation, contraction or simulation thereof
(the "Mark") of the Trust, Goldman, Sachs & Co. or their affiliates.
Service Organization acknowledges that Goldman Sachs owns all right,
title and interest in and to the Mark and the registration thereof.
Upon termination of this Agreement, the Service Organization or its
successor, (to the extent and as soon as it lawfully can), will cease
the use of the Mark.
5. Performance of Duties. In performing its duties hereunder, the
Service Organization will act in conformity with the Trust's instructions, the
terms of its Customer agreement, the then effective prospectuses and statements
of additional information for the relevant Classes of Funds selected on Schedule
A, the Investment Company Act of 1940, as amended (the "1940 Act") and all other
applicable federal and state laws, regulations and rulings and the constitution,
by-laws and rules of any applicable self-regulatory organization. The Service
Organization will assume sole responsibility for its compliance with applicable
federal and state laws and regulations, and shall rely exclusively upon its own
determination, or that of its legal advisers, that the performance of its duties
hereunder complies with such laws and regulations. Under no circumstances shall
the Trust, Goldman, Sachs & Co. or any of their affiliates be held responsible
or liable in any respect for any statements or representations made by them or
their legal advisers to the Service Organization or any Customer of the Service
Organization concerning the applicability of any federal or state laws or
regulations to the activities described herein. The Service Organization will
perform its duties hereunder in a manner consistent with the customs and
practices of other institutions that provide similar services.
6. Responsibilities of the Service Organization. The Service
Organization agrees that neither the Trust nor its agents shall have any
responsibility or liability to review any purchase, exchange or redemption
request which is presented by the Service Organization (i) to determine whether
such request is genuine or authorized by the Customer of the Service
Organization; or (ii) to determine the suitability of the selected Class or Fund
for such Customer. The Trust and its agents shall be entitled to rely
conclusively on any purchase, exchange or redemption request communicated to it
by the Service Organization, and shall have no liability whatsoever for any
losses, claims or damages to or against the Service Organization or any Customer
resulting from a failure of the Service Organization to transmit any such
request,
<PAGE>
or from any errors contained in any request. Any such failure or error shall be
the responsibility of the Service Organization. In addition, the Service
Organization shall have exclusive responsibility for the operation of any cash
sweep or other investment or cash management program established by it for its
Customers, including the provision of all electronic data processing facilities
as are necessary for any such program and the proper transmission of appropriate
instructions and funds to the Trust in connection therewith. The Trust and the
Service Organization agree that the procedures for the purchase, exchange and
redemption of Shares, including all relevant time and notification requirements,
specified in the then-effective prospectuses of the relevant Class, shall govern
the purchase, exchange and redemption of Shares for the accounts of the Service
Organization's Customers under the Agreement, including the purchase, exchange
and redemption of Shares pursuant to any such program.
7. Termination. This Agreement shall continue in effect until June 30
of the year following the date first set forth above, and shall continue in
effect from year to year thereafter only if it is approved annually by a vote of
a majority of the Trustees of the Trust, including a majority of those Trustees
who are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the relevant Preferred Administration
Plan, Administration Plan, Service Plan and/or Distribution Plan, this Agreement
or any related agreements (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Agreement. This Agreement may
be terminated at any time, on not less than 60 days' notice to the Service
Organization and without the payment of any penalty, by vote of a majority of
the Independent Trustees or, with respect to any Class of any Fund, by vote of a
majority of the outstanding voting securities of that Class of the Fund. This
Agreement may also be terminated by the Service Organization at any time on 60
days' notice to the Trust and will terminate automatically in the event of its
assignment. All material amendments to this Agreement must be in writing and
must be approved by the Independent Trustees in the manner described above for
continuing this Agreement. The terms "majority of the outstanding voting
securities" and "assignment" shall have the meanings given to them in the 1940
Act. Any notice furnished hereunder shall be in writing and shall be mailed or
delivered to the other party at its address set forth above.
8. Indemnification. The Trust agrees to indemnify the Service
Organization and each person who controls (as defined in Section 2(a)(9) of the
1940 Act) the Service Organization from and against any losses, claims, damages,
expenses (including reasonable fees and expenses of counsel) or liabilities
("Damages") to which the Service Organization or such person may become subject
in so far as such Damages arise out of the failure of the Trust or its employees
or agents to comply with the Trust's obligations under this Agreement or any
other agreement between the Trust and the Service Organization relating to the
performance of Services hereunder (a "Covered Agreement"). The Service
Organization agrees to indemnify the Trust, the Funds, their agents and each
person who controls (as defined in Section 2(a)(9) of the 1940 Act) any of them
from and against any Damages to which any of them may become subject in so far
as such Damages arise out of the purchase, redemption, transfer or registration
of Shares by the Service Organization's Customers, any request related thereto
communicated by the Service Organization or its employees or agents, or the
failure of the Service Organization or its employees, agents or Customers to
comply with the Service Organization's obligations under a Covered Agreement.
Notwithstanding the foregoing, neither the Trust nor the Service Organization
shall be entitled to be indemnified for Damages arising out of its or its
agent's or employee's gross negligence. The foregoing indemnity agreements shall
be in addition to any liability the Trust or the Service Organization may
otherwise have, and shall survive the termination of this Agreement.
9. No Association or Agency. The Service Organization shall be deemed
to be an independent contractor and not an agent of the Trust for all purposes
hereunder and shall have no authority to act for or represent the Trust. In
addition, no officer or employee of the Service Organization shall be deemed to
be an employee or agent of the Trust or
5
<PAGE>
Goldman Sachs Asset Management ("GSAM"), nor will be subject, in any respect, to
the supervision of GSAM or any affiliate thereof.
10. Obligations Not Binding on Trustees. The obligations of the Trust
under this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Trust individually but are binding only upon the Trust and
its assets. No Class or Fund of the Trust shall be liable for the obligations of
any other Class or Fund hereunder.
11. Applicable Law. If any provision of this Agreement shall be held or
made invalid by a decision in a judicial or administrative proceeding, statute,
rule or otherwise, the enforceability of the remainder of this Agreement will
not be impaired thereby. This Agreement shall be governed by the laws of the
State of New York (except with respect to Section 10, which will be governed by
the laws of the State of Delaware) and shall be binding upon and inure to the
benefit of the parties hereto and their respective successors.
Very truly yours,
GOLDMAN SACHS TRUST
By:
-----------------------------------
[Authorized Officer]
Accepted and agreed to as of the date first above written.
[SERVICE ORGANIZATION]
By:
----------------------------------
[Authorized Officer]
6
<PAGE>
SCHEDULE A
GOLDMAN SACHS TRUST FUNDS
-------------------------
Please indicate (|X|) the appropriate Classes of Funds for which this Agreement
applies:
ILA Portfolios:
- --------------
Administration Class: 0.15%
Service Class: 0.40%
Cash Management Class 0.50%
Financial Square Funds:
- ----------------------
Select Class: 0.03%
Preferred Class: 0.10%
Administration Class: 0.25%
Service Class: 0.50%
Fixed Income Funds:
- ------------------
Service Class: 0.50%
Domestic and International Equity Funds:
- ---------------------------------------
Service Class: 0.50%
Asset Allocation Portfolios:
- ---------------------------
Service Class: 0.50%
belana\serviceagmts\model
7
<PAGE>
Exhibit (h)(26)
GOLDMAN SACHS TRUST
(ADMINISTRATION CLASS)
ADMINISTRATION PLAN
April 26 ,2000
WHEREAS, Goldman Sachs Trust (the "Trust") has separate series or Funds,
each of which is a separate pool of assets with its own investment policies (the
"Funds") and the shares of beneficial interest of each Fund may be divided into
multiple separate classes including, in the case of certain Funds the
Institutional Class and the Administration Class;
WHEREAS, the Trust, on behalf of the Administration Class of each Fund that
offers such shares, desires to adopt an Administration Plan and the Board of
Trustees of the Trust has determined that there is a reasonable likelihood that
adoption of this Administration Plan will benefit each Fund and its
shareholders; and
WHEREAS, institutions (including Goldman, Sachs & Co.) (the "Service
Organizations") may act directly or indirectly as nominees and recordholders of
shares of the Administration Class ("Administration Shares") for their
respective customers who are or may become beneficial owners of such
Administration Shares (the "Customers"), provide services to other Service
Organizations intended to facilitate or improve a Service Organization's
services to its Customers with respect to the Funds and/or perform certain
account administration services with respect to the Customers pursuant to
Agreements between the Trust, on behalf of the Administration Class of each
Fund, and such Service Organizations (the "Agreements").
NOW, THEREFORE, the Trust, on behalf of the Administration Class of each
Fund, hereby adopts this Administration Plan (the "Plan") on the following terms
and conditions:
1. (a) The Trust, on behalf of the Administration Class of each Fund, is
authorized to pay each Service Organization the monthly or quarterly
administration fee specified in the Agreement with such Service Organization,
which shall be equal on an annual basis to not more than .25 of 1% of the
average daily net asset value of the Administration Shares of such Fund which
are owned beneficially by the Customers of such Service Organization during such
period.
(b) The types of administration services and expenses for which a Service
Organization may be compensated or reimbursed under this Plan include, without
limitation: (i) acting, or arranging for another party to act, as recordholder
and nominee of all Administration Shares beneficially owned by Customers; (ii)
establishing and maintaining individual accounts and records with respect to the
Administration Shares owned by each Customer; (iii) processing and issuing
confirmations concerning Customer orders to purchase, redeem and exchange
Administration Shares; (iv) receiving and transmitting funds representing the
purchase price or redemption proceeds of such Administration Shares; (v)
providing services to Customers intended to facilitate or improve their
understanding of the benefits and risks of, a Fund to Customers, including asset
allocation and other industry services; (vi) facilitating the inclusion of a
Fund in investment, retirement, asset allocation, cash management or sweep
accounts or similar products or services offered to Customers by or through
Service Organizations; (vii) facilitating electronic or computer trading and/or
processing in a Fund or providing electronic, computer or other database
information regarding a Fund to Customers; and (viii) performing any other
services which do not constitute "personal and account maintenance services"
<PAGE>
within the meaning of the National Association of Securities Dealers, Inc.'s
Conduct Rules. No Fund may compensate a Service Organization for services
provided with respect to another Fund.
2. This Plan shall not take effect as to any Fund until the Plan, together
with any related agreements, has been approved for such Fund by votes of a
majority of both (a) the Board of Trustees of the Trust and (b) those Trustees
of the Trust who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the "non-interested Trustees") cast in person at a
meeting (or meetings) called for the purpose of voting on the Plan and such
related agreements.
3. This Plan shall remain in effect until May 1, 2001 and shall continue in
effect thereafter so long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 2.
4. The President, Vice President, Treasurer or any Assistant Treasurer of
the Trust shall provide the Board of Trustees of the Trust and the Board shall
review, at least quarterly, a written report of services performed by and fees
paid to each Service Organization under the Agreements and this Plan.
5. This Plan may be terminated as to the Administration Class of any Fund
at any time by vote of a majority of the non-interested Trustees or by vote of a
majority of the outstanding voting securities of the Administration Class of
such Fund.
6. This Plan may not be amended to increase materially the amount of
compensation payable pursuant to paragraph 1 hereof, and other material
amendments to the Plan shall not be made, unless approved in the manner provided
in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of the
non-interested Trustees of the Trust shall be committed to the discretion of the
non-interested Trustees.
8. The Trust shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 4 hereof, for a period of not less
than six years from the date of the Plan, any such agreement or any such report,
as the case may be, the first two years in an easily accessible place.
9. In the case of a Fund that offers more than one class of Shares, this
Plan only relates to the Administration Shares of such Fund and the fee
determined in accordance with paragraph 1 shall be based upon the average daily
net assets of the Fund attributable to Administration Shares. The obligations of
the Trust and the Funds hereunder are not personally binding upon, nor shall
resort be had to the private property of any of the Trustees, shareholders,
officers, employees or agents of the Trust, but only the Trust's property
allocable to Administration Shares shall be bound. No series of the Trust shall
be responsible for the obligations of any other series of the Trust.
<PAGE>
IN WITNESS WHEREOF, the Trust, on behalf of the Administration Class
of each Fund, has executed this Administration Plan as of the day and year first
written above.
GOLDMAN SACHS TRUST
[on behalf of the Administration Class of each Fund]
/s/ Michael J. Richman
By _________________________________________________
Michael J. Richman
Secretary of the Trust
<PAGE>
Exhibit J.1
Enhanced Cash Consent 5-00
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Independent Public
Accountants" in this Registration Statement (Form N-1A 33-17619) of Goldman
Sachs Enhanced Cash Fund.
ERNST & YOUNG LLP
New York, New York
May 3, 2000
<PAGE>
Exhibit (P)(1)
GOLDMAN SACHS TRUST
GOLDMAN SACHS VARIABLE INSURANCE TRUST
CODE OF ETHICS
--------------
April 23, 1997
as amended October 21, 1997 and April 25, 2000
While affirming its confidence in the integrity and good faith of all of
its officers and trustees, each of Goldman Sachs Trust ("GST") and Goldman Sachs
Variable Insurance Trust ("VIT" -- each of GST and VIT are referred to herein
as the "Trust") recognizes that the knowledge of present or future portfolio
transactions and, in certain instances, the power to influence portfolio
transactions which may be possessed by certain of its officers and trustees
could place such individuals, if they engage in personal securities
transactions, in a position where their personal interest may conflict with that
of the Trust. In view of the foregoing and of the provisions of Rule 17j-
1(b)(1) under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), the Trust has adopted this Code of Ethics to specify and prohibit
certain types of personal securities transactions deemed to create conflicts of
interest and to establish reporting requirements and enforcement procedures.
This Code is divided into five parts. The first part contains
provisions applicable to Access Persons (as defined below) of the Trust who are
also Access Persons of Goldman Sachs Asset Management ("GSAM"), Goldman Sachs
Funds Management, L.P. ("GSFM") or Goldman Sachs Asset Management International
("GSAMI") (each of GSAM, GSFM and GSAMI referred to herein as the "Adviser");
the second contains certain general provisions; the third pertains to trustees
who are not "interested persons" of an Adviser or the Trust; the fourth pertains
to "interested trustees" who are Access Persons of the Trust but not Access
Persons of an Adviser; and the fifth contains record-keeping and other
provisions. Each Adviser imposes stringent reporting requirements and
restrictions on the personal securities transactions of its Access Persons. The
Trust has determined that the high standards of ethics in the area of personal
investing which have been established by each Adviser may, without change, be
appropriately applied by the Trust to those Access Persons of the Trust who are
also Access Persons of the Advisers. Such persons may have frequent
opportunities for knowledge of and, in some cases, influence over, Trust
portfolio transactions. In the experience of the Trust, interested trustees who
are not Access Persons of an Adviser and trustees who are not "interested
persons" have comparatively less current knowledge and considerably less
influence over specific purchases and sales of securities by the Trust.
Therefore, this Code contains separate provisions applicable to such trustees.
<PAGE>
Definitions.
- -----------
As used herein, the following terms shall have the following meanings:
(1) "Access Person" with respect to the Trust means any trustee,
officer or Advisory Person of the Trust. "Access Person"
with respect to GSAM means (because GSAM is a unit within
the Investment Management Division, a separate operating
division of Goldman, Sachs & Co. and Goldman, Sachs & Co. is
primarily engaged in a business other than advising
registered investment companies or other advisory clients)
only those officers, general partners or Advisory Persons
(as defined below) of GSAM who make recommendations or
participate in the determination of which recommendations
shall be made to the Trust, or whose principal function or
duties relate to the determination of which recommendations
shall be made to the Trust, or who, in connection with their
duties, obtain any information concerning such
recommendations on Covered Securities (as defined below)
which are being made to the Trust. "Access Person" with
respect to GSAMI and GSFM means any director, officer,
general partner or Advisory Person of GSAMI or GSFM, as the
case may be.
(2) "Advisory Person" means (i) any officer or employee of the
Trust or an Adviser (or any company in a control
relationship to the Trust or an Adviser), as the case may
be, who, in connection with his or her regular functions or
duties, makes, participates in, or obtains information
regarding, the purchase or sale of a Covered Security by the
Trust, or whose functions relate to the making of any
recommendations with respect to such purchases or sales and
(ii) any natural person in a control relationship to the
Trust or an Adviser, as the case may be, who obtains
information concerning recommendations made on behalf of the
Trust with regard to the purchase or sale of a Covered
Security.
(3) "Beneficial ownership" of a security shall be interpreted in
the same manner as it would be under Rule 16a-1(a)(2) of the
Securities Exchange Act of 1934, as amended ("Exchange
Act"), in determining whether a person is the beneficial
owner of a security for purposes of Section 16 of the
Exchange Act and the rules and regulations promulgated
thereunder.
(4) "Control" has the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act. Section 2(a)(9)
generally provides that "control" means the power to
exercise a controlling influence
-2-
<PAGE>
over the management or policies of a company, unless such
power is solely the result of an official position with such
company.
(5) "Covered Security" means a security as defined in Section
2(a) (36) of the Investment Company Act, except that it does
not include:
(i) direct obligations of the Government of the United
States; (ii) banker's acceptances, bank certificates of
deposit, commercial paper and high quality short-term debt
instruments (any instrument having a maturity at issuance of
less than 366 days and that is in one of the two highest
rating categories of a nationally recognized statistical
rating organization), including repurchase agreements; and
(iii) shares of registered open-end investment companies.
(6) "Disinterested Trustee" means a trustee of the Trust who is
not an "interested person" of the Trust within the meaning
of Section 2(a)(19) of the Investment Company Act.
(7) "Purchase or sale of a Covered Security" includes, among
other things, the writing of an option to purchase or sell a
Covered Security or any security that is exchangeable for or
convertible into another security.
(8) "Review Officer" means the officer of the Trust or an
Adviser designated from time to time to receive and review
reports of purchases and sales by Access Persons. The term
"Alternative Review Officer" means the officer of the Trust
or an Adviser designated from time to time to receive and
review reports of purchases and sales by the Review Officer,
and who shall act in all respects in the manner prescribed
herein for the Review Officer. It is recognized that a
different Review Officer and Alternative Review Officer may
be designated with respect to the Trust and each of the
Advisers.
(9) A security is "being considered for purchase or sale" by the
Trust when a recommendation to purchase or sell a security
has been made and communicated and, with respect to the
person making the recommendation, when such person seriously
considers making such a recommendation.
(10) A security is "held or to be acquired" if within the most
recent 15 days it (i) is or has been held by the Trust, or
(ii) is being or has been considered by an Adviser for
purchase by the Trust.
-3-
<PAGE>
I. RULES APPLICABLE TO ACCESS PERSONS OF THE TRUST WHO ARE ALSO ACCESS
PERSONS OF THE ADVISERS
A. Incorporation of Advisers' Codes of Ethics.
------------------------------------------
(1) The provisions of the Advisers' Code of Ethics, which is
attached as Appendix A hereto, are hereby incorporated
herein by reference as the Trust's Code of Ethics applicable
to Access Persons of the Trust who are also Access Persons
of an Adviser, except as provided in Section I-B hereof.
(2) A violation of the Advisers' Code of Ethics shall constitute
a violation of this Code.
B. Reports.
-------
(1) Access Persons of the Advisers shall file the initial
holdings report, annual holdings report and quarterly
transaction reports required under the Advisers' Code of
Ethics with the Review Officer, and the Review Officer shall
submit his or her initial holdings report, annual holdings
report and quarterly transaction reports with respect to
his/her personal securities holdings and transactions to the
Alternative Review Officer.
(2) With respect to Access Persons of an Adviser, quarterly
transaction reports shall be deemed made with respect to any
account where that person has made provision for transmittal
of all daily trading information regarding the account to be
delivered to the designated Review Officer for his or her
review.
(3) A report filed with the Review Officer (or, in the case of a
report of the Review Officer, with the Alternative Review
Officer) shall be deemed to be filed with the Trust.
II. GENERAL
A. Legal Requirements. Section 17(j) of the Investment Company Act
------------------
provides, among other things, that it is unlawful for any
affiliated person of the Trust, including interested and
Disinterested Trustees, among others, to engage in any act,
practice or course of business in connection with the purchase or
sale, directly or indirectly, by such affiliated person of any
security held or to be acquired by the Trust in contravention of
such rules and regulations as the Securities and Exchange
Commission (the "Commission") may adopt to define and prescribe
means reasonably necessary to prevent such acts, practices or
courses of business as are fraudulent, deceptive or manipulative.
-4-
<PAGE>
Pursuant to Section 17(j), the Commission has adopted Rule 17j-1
which provides, among other things, that it is unlawful for any
affiliated person of the Trust in connection with the purchase or
sale, directly or indirectly, by such person of a Covered Security
held or to be acquired by the Trust:
(1) To employ any device, scheme or artifice to defraud the
Trust;
(2) To make any untrue statement of a material fact to the Trust
or omit to state a material fact necessary in order to make
the statement made to the Trust, in light of the
circumstances under which they were made, not misleading;
(3) To engage in any act, practice or course of business that
operates or would operate as a fraud or deceit upon the
Trust; or
(4) To engage in any manipulative practice with respect to the
Trust.
B. Statement of Policy. It is the policy of the Trust that no Access
-------------------
Person shall engage in any act, practice or course of conduct that
would violate the provisions of Rule 17j-1. The fundamental
position of the Trust is, and has been, that each Access Person
shall place at all times the interests of the Trust and its
shareholders first in conducting personal securities transactions.
Accordingly, personal securities transactions by Access Persons of
the Trust must be conducted in a manner consistent with this Code
and so as to avoid any actual or potential conflict of interest or
any abuse of an Access Person's position of trust and
responsibility. Further, Access Persons should not take
inappropriate advantage of their positions with or relationship to
the Trust.
Without limiting in any manner the fiduciary duty owed by Access
Persons to the Trust or the provisions of this Code, it should be
noted that the Trust considers it proper that purchases and sales
be made by its Access Persons in the marketplace of securities
owned by the Trust; provided, however, that such personal
securities transactions comply with the spirit of, and the
specific restrictions and limitations set forth in, this Code. In
making personal investment decisions with respect to any security,
however, extreme care must be exercised by Access Persons to
ensure that the prohibitions of this Code are not violated. It
bears emphasis that technical compliance with the procedures,
prohibitions and limitations of this Code will not automatically
insulate from scrutiny personal securities transactions which show
a pattern of abuse by an Access Person of his or her fiduciary
duty to the Trust.
C. Exempted Transactions.
---------------------
The Statement of Policy set forth above shall be deemed not to be
violated by and the prohibitions of Section III-A or IV-A of this
Code shall not apply to:
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<PAGE>
(1) Purchases or sales of securities effected for, or held in,
any account over which the Access Person has no direct or
indirect influence or control;
(2) Purchases or sales of securities which are not eligible for
purchase or sale by the Trust.
(3) Purchases or sales of securities which are non-volitional on
the part of either the Access Person or the Trust;
(4) Purchases or sales of securities which are part of an
automatic dividend reinvestment, cash purchase or withdrawal
plan provided that no adjustment is made by the Access
Person to the rate at which securities are purchased or
sold, as the case may be, under such a plan during any
period in which the security is being considered for
purchase or sale by the Trust;
(5) Purchases of securities effected upon the exercise of rights
issued by an issuer pro rata to all holders of a class of
--------
its securities, to the extent such rights were acquired from
such issuer, and sales of such rights so acquired;
(6) Tenders of securities pursuant to tender offers which are
expressly conditioned on the tender offer's acquisition of
all of the securities of the same class;
(7) Purchases or sales of publicly-traded shares of companies
that have a market capitalization in excess of $10 billion;
(8) Other purchases or sales which do not cause the Access
Person to gain improperly a personal benefit through his or
her relationship with the Trust and are only remotely
potentially harmful to the Trust because the securities
transaction involves a small number of shares of an issuer
with a large market capitalization and high average daily
trading volume or would otherwise be very unlikely to affect
a highly institutional market; and
(9) Purchases or sales of securities previously approved by an
individual appointed from time to time by the President for
this purpose, which approval shall be confirmed in writing
and shall be based upon a determination that such
transaction did not violate the purpose or spirit of this
Code.
-6-
<PAGE>
III. RULES APPLICABLE TO DISINTERESTED TRUSTEES
A. Prohibited Purchases and Sales. While the scope of actions which
------------------------------
may violate the Statement of Policy set forth in Section II-B
cannot be exactly defined, such actions would always include at
least the following prohibited activities. No Disinterested
Trustee shall purchase or sell, directly or indirectly, any
Covered Security in which he or she has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership
if such trustee, at the time of the transaction, knows or, in the
ordinary course of fulfilling his official duties as a trustee of
the Trust, should known that, during the 15-day period immediately
preceding or after the date of the contemplated transaction by the
trustee:
(1) the Covered Security is being considered for purchase or
sale by the Trust;
(2) the Covered Security is being purchased or sold by the
Trust; or
(3) the Covered Security was purchased or sold by the Trust.
B. Reporting
---------
(1) Every Disinterested Trustee shall file with the Review
Officer or his or her designee a report containing the
information described below in Section III-B(2) of this Code
with respect to transactions in any Covered Security in
which such Disinterested Trustee has, or by reason of such
transaction acquires or disposes of, any direct or indirect
beneficial ownership, whether or not one of the exemptions
listed in Section II-C applies; provided, however, that a
-------- -------
Disinterested Trustee shall not be required to file a
report: (a) unless such trustee, at the time of the
transaction, knew or, in the ordinary course of fulfilling
his official duties as a trustee of the Trust, should have
known that, during the 15-day period immediately preceding
or after the date of the transaction by the trustee: (i)
such Covered Security is or was purchased or sold by the
Trust; or (ii) such Covered Security was being considered
for purchase or sale by the Trust or an Adviser for a
portfolio of the Trust; or (b) with respect to transactions
effected for any account over which such person does not
have any direct or indirect influence or control.
Notwithstanding the preceding sentence, any Disinterested
Trustee may, at his option, report the information described
in Section III-B(2) with respect to any one or more
transactions in any Covered Security in which such person
has, or by reason of the transaction acquires or disposes
of, any direct or indirect beneficial ownership.
-7-
<PAGE>
(2) Quarterly Transaction Reports. Every report shall be made
not later than 10 days after the end of the calendar quarter
in which the transaction to which the report related was
effected, and shall contain the following information:
(a) The date of the transaction, the title, the interest
rate and maturity date (if applicable), the class and
number of shares, and the principal amount of each
Covered Security involved;
(b) The nature of the transaction (i.e., purchase, sale or
----
any other type of acquisition or disposition);
(c) The price of the Covered Security at which the
transaction was effected;
(d) The name of the broker, dealer or bank with or through
whom the transaction was effected;
(e) The date that the report is submitted; and
(f) With respect to any account established by a
Disinterested Trustee in which any securities were
held during the quarter for the direct or indirect
benefit of the Disinterested Trustee:
(i) The name of the broker, dealer or bank with whom
the Disinterested Trustee established the
account;
(ii) The date the account was established; and
(iii) The date that the report was submitted by the
Disinterested Trustee.
(3) If no transactions in any securities required to be reported
under Section III-B(1) were effected during a quarterly
period by a Disinterested Trustee, such Disinterested
Trustee shall submit to the Review Officer a report not
later than ten (10) days after the end of such quarterly
period stating that no reportable securities transactions
were effected.
(4) Every report concerning a purchase or sale prohibited under
Section III-A hereof with respect to which the reporting
person relies upon
-8-
<PAGE>
one of the exemptions provided in Section II-C shall contain
a brief statement of the exemption relied upon and the
circumstances of the transaction.
(5) Any such report may contain a statement that the report
shall not be construed as an admission by the person making
such report that (a) he or she has any direct or indirect
beneficial ownership in the Covered Security to which the
report relates (a "Subject Security") or (b) he or she knew
or should have known that, within the 15-day time period
described in Section III-B(1) above, a Subject Security was
being purchased or sold, or considered for purchase or sale,
by the Trust.
IV. RULES APPLICABLE TO INTERESTED TRUSTEES WHO ARE NOT ACCESS PERSONS OF
THE ADVISERS
A. Prohibited Purchases and Sales.
------------------------------
While the scope of actions which may violate the Statement of Policy set
forth in Section II-B cannot be exactly defined, such actions would always
include at least the following prohibited activities.
(1) No interested trustee who is not an Access Person of the
Adviser ("Section IV Reporting Person") shall purchase or
sell, directly or indirectly, any Covered Security in which
he or she has, or by reason of such transaction acquires,
any direct or indirect beneficial ownership and which to his
or her actual knowledge at the time of such purchase or sale
the Covered Security:
(a) is being considered for purchase or sale by an
investment company; or
(b) is being purchased or sold by an investment company.
(2) No Section IV Reporting Person shall reveal to any other
person (except in the normal course of his or her duties on
behalf of an investment company) any information regarding
securities transactions by an investment company or
consideration by an investment company or the Adviser of any
such securities transaction.
(3) No Section IV Reporting Person shall engage in, or permit
anyone within his or her control to engage in, any act,
practice or course of conduct which would operate as a fraud
or deceit upon, or constitute a manipulative practice with
respect to, an investment company or
-9-
<PAGE>
any issuer of any Covered Security owned by an investment
company.
B. Reporting.
---------
(1) Every Section IV Reporting Person shall report to the Review
Officer the information (a) described in Section IV-B(3) of
this Code with respect to transactions in any Covered
Security in which such Section IV Reporting Person has, or
by reason of such transaction acquires or disposes of, any
direct or indirect beneficial ownership in the Covered
Security or (b) described in Section IV-B(4) and IV-B(5) of
the Code with respect to securities holdings beneficially
owned by each Section IV Reporting Person.
(2) Notwithstanding Section IV-B(1) of this Code, Section IV
Reporting Persons need not make a quarterly transaction
report where the report would duplicate information
contained in broker trade confirmations or account
statements received by the Trust or an Adviser in the time
period prescribed in Section IV-B(3).
(3) Quarterly Transaction Reports. Unless quarterly transaction
reports are deemed to have been made under Section IV-B(2)
of this Code, every quarterly transaction report shall be
made not later than 10 days after the end of the calendar
quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(a) The date of the transaction, the title, the interest
rate and maturity date (if applicable), the class and
number of shares, and the principal amount of each
Covered Security involved;
(b) The nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
(c) The price of the Covered Security at which the
transaction was effected;
(d) The name of the broker, dealer or bank with or through
whom the transaction was effected;
(e) The date that the report was submitted by a Section IV
Reporting Person; and
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<PAGE>
(f) With respect to any account established by the Section
IV Reporting Person in which any securities were held
during the quarter for the direct or indirect benefit
of the Section IV Reporting Person:
(i) The name of the broker, dealer or bank with whom
the Section IV Reporting Person established the
account;
(ii) The date the account was established; and
(iii) The date that the report was submitted by the
Section IV Reporting Person.
(4) Initial Holdings Reports. No later than 10 days after
becoming a Section IV Reporting Person, each Section IV
Reporting Person must submit a report containing the
following information:
(a) The title, number of shares and principal amount of
each Covered Security in which the Section IV
Reporting Person had any direct or indirect beneficial
ownership when the person became a Section IV
Reporting Person;
(b) The name of any broker, dealer or bank with whom the
Section IV Reporting Person maintained an account in
which any securities were held for the direct or
indirect benefit of the Section IV Reporting Person as
of the date the person became a Section IV Reporting
Person; and
(c) The date that the report is submitted by the Section
IV Reporting Person.
(5) Annual Holdings Reports. Between January 1st and January
30th of each calendar year, every Section IV Reporting
Person shall submit the following information (which
information must be current as of a date no more than 30
days before the report is submitted):
(a) The title, number of shares and principal amount of
each Covered Security in which the Section IV
Reporting Person had any direct or indirect beneficial
ownership;
(b) The name of any broker, dealer or bank with whom the
Section IV Reporting Person maintains an account in
which any Covered Securities are held for the direct
or indirect benefit of the Section IV Reporting
Person; and
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<PAGE>
(c) The date that the report is submitted by the Section
IV Reporting Person.
(6) If no transactions in any securities required to be reported
under Section IV-B(3) were effected during a quarterly
period by an Section IV Reporting Person, such Section IV
Reporting Person shall report to the Review Officer not
later than 10 days after the end of such quarterly period
stating that no reportable securities transactions were
effected.
(7) These reporting requirements shall apply whether or not one
of the exemptions listed in Section II-C applies except that
an Section IV Reporting Person shall not be required to make
a report with respect to securities transactions effected
for, and any Covered Securities held in, any account over
which such Section IV Reporting Person does not have any
direct or indirect influence or control. Every report
concerning a securities transaction with respect to which
the reporting person relies upon one of the exemptions
provided in Section II-C shall contain a brief statement of
the exemption relied upon and the circumstances of the
transaction.
(8) Any such report may contain a statement that the report
shall not be construed as an admission by the person making
such report that (a) he or she has or had any direct or
indirect beneficial ownership in the Covered Security to
which the report relates (a "Subject Security") or (b) he or
she knew or should have known that the Subject Security was
being purchased or sold, or considered for purchase or sale,
by an investment company on the same day.
V. MISCELLANEOUS
A. Approval of Code of Ethics and Amendments to the Code of Ethics.
---------------------------------------------------------------
The board of trustees, including a majority of the Disinterested
Trustees, shall approve this Code of Ethics, and any material
amendments to this Code of Ethics. Such approval must be based on
a determination that the Code of Ethics contains provisions
reasonably necessary to prevent Access Persons of the Trust from
engaging in any conduct prohibited under this Code of Ethics and
under Rule 17j-1 under the Investment Company Act.
B. Annual Certification of Compliance. Each Access Person shall
----------------------------------
certify to the Review Officer annually on the form annexed hereto
as Form A that he or she (i) has read and understands this Code of
Ethics and any procedures that are adopted by the Trust related to
this Code and recognizes that he or she is subject thereto, (ii)
has complied with the requirements of this Code of Ethics
-12-
<PAGE>
and such procedures and (iii) has disclosed or reported all
personal securities transactions and beneficial holdings in
Covered Securities required to be disclosed or reported pursuant
to the requirements of this Code of Ethics and any related
procedures.
C. Review of Reports.
-----------------
(1) The Review Officer or his or her designee shall compare the
reported personal securities transactions of each Access
Person with completed and contemplated portfolio
transactions of the Trust to determine whether any
transactions that violate this Code may have occurred (a
"Reviewable Transaction"). In the case of reports of
personal securities transactions of the Review Officer, the
Alternative Review Officer shall perform such comparison.
Before making any determination that a violation has been
committed by any Access Person, the Review Officer (or
Alternative Review Officer, as the case may be) shall
provide such Access Person an opportunity to supply
additional explanatory material for the purposes of
demonstrating that such transactions did not violate this
Code.
(2) With respect to Disinterested Trustees, if the Review
Officer determines that a Reviewable Transaction may have
occurred, he or she shall submit the report and pertinent
information concerning completed or contemplated portfolio
transactions of the Trust to counsel for the Disinterested
Trustees. Such counsel shall determine whether a violation
of this Code may have occurred, taking into account all the
exemptions provided under Section II-C. Before making any
determination that a violation has been committed by a
Disinterested Trustee, such counsel shall give the
Disinterested Trustee an opportunity to supply additional
information regarding the transaction in question.
(3) With respect to Access Persons who are not Disinterested
Trustees, if the Review Officer determines that a Reviewable
Transaction may have occurred, he or she shall submit his
written determination, together with the confidential
quarterly report and any additional explanatory material
provided by the Access Person, to the President of the Trust
(or any Vice President of the Trust if the actions of the
President are at issue), who shall make an independent
determination of whether a violation of this Code has
occurred.
D. Board Reports. On an annual basis, the Review Officer shall
-------------
prepare for the board of trustees and the board of trustees shall
consider:
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<PAGE>
(1) A report on the level of compliance during the previous year
by all Access Persons with this Code and any related
procedures adopted by the Trust, including without
limitation the percentage of reports timely filed and the
number and nature of all material violations and sanctions
imposed in response to material violations. An Alternative
Review Officer shall prepare reports with respect to
compliance by the Review Officer.
(2) A report identifying any recommended changes to existing
restrictions or procedures based upon the Trust's experience
under this Code, evolving industry practices and
developments in applicable laws or regulations; and
(3) A report certifying to the board of trustees that the Trust
has adopted procedures that are reasonably necessary to
prevent Access Persons from violating this Code of Ethics.
E. Sanctions.
---------
(1) With respect to Disinterested Trustees, if counsel for the
Disinterested Trustees determines that a violation of the
Code has occurred, they shall so advise the President of the
Trust and a committee consisting of the Disinterested
Trustees, other than the Disinterested Trustee whose
transaction is under consideration, and shall provide the
committee with the report, the record of pertinent actual or
contemplated portfolio transactions of the Trust and any
additional material supplied by such Disinterested Trustee.
The committee, at its option, shall either impose such
sanction(s) as it deems appropriate or refer the matter to
the board of trustees, which shall impose such sanction(s)
as are deemed appropriate.
(2) With respect to Access Persons who are not Disinterested
Trustees, if the President (or a Vice President, as the case
may be) finds that a violation of this Code has occurred, he
or she shall impose such sanctions as he or she deems
appropriate and shall report the violation and the
sanction(s) imposed to the Board of Trustees of the Trust.
(3) Sanctions for violation of this Code include, but are not
limited to, one or more of the following: removal or
suspension from office, termination of employment, a letter
of censure and/or restitution to the Trust of an amount
equal to the advantage that the offending person gained by
reason of such violation. In addition, as part of any
sanction, the Access Person may be required to reverse the
trade(s) at issue and forfeit any profit or absorb any loss
from the trade. It is
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<PAGE>
noted that violations of this Code by an Access Person may
also result in criminal prosecution or civil action.
F. Amendments to Advisers' Codes of Ethics. Any material amendment
---------------------------------------
to the Code of Ethics of any of the Advisers shall be deemed an
amendment to Section I-A of this Code and must be approved by the
board of trustees no later than six months after the adoption of
the material change. Before approving any material amendments to
the Advisers' Code of Ethics, the board must receive a
certification from the Advisers that they have adopted procedures
reasonably necessary to prevent Access Persons from violating the
Advisers' Code of Ethics.
G. Records. The Trust shall maintain records in the manner and to
-------
the extent set forth below, which records may be maintained on
microfilm under the conditions described in Rule 31a-2(f)(1) and
Rule 17j-1 under the Investment Company Act and shall be available
for examination by representatives of the Commission.
(1) A copy of this Code and any other code which is, or at any
time within the past five years has been, in effect shall be
preserved for a period of not less than five years in an
easily accessible place;
(2) A record of any violation of this Code and of any action
taken as a result of such violation shall be preserved in an
easily accessible place for a period of not less than five
years following the end of the fiscal year in which the
violation occurs;
(3) A copy of each initial holdings report, annual holdings
report and quarterly transaction report made by an Access
Person pursuant to this Code (including any information
provided under Section IV-B(2)) shall be preserved for a
period of not less than five years from the end of the
fiscal year in which it is made, the first two years in an
easily accessible place;
(4) A list of all persons who are, or within the past five years
have been, required to make initial holdings, annual
holdings or quarterly transaction reports pursuant to this
Code shall be maintained in an easily accessible place;
(5) A list of all persons, currently or within the past five
years who are or were responsible for reviewing initial
holdings, annual holdings or quarterly transaction reports
shall be maintained in an easily accessible place; and
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<PAGE>
(6) A copy of each report required by Section V-D of this Code
must be maintained for at least five years after the end of
the fiscal year in which it was made, the first two years in
an easily accessible plan.
H. Confidentiality. All reports of securities transactions, holdings
---------------
reports and any other information filed with the Trust pursuant to
this Code shall be treated as confidential, except that reports of
securities transactions hereunder will be made available to the
Commission or any other regulatory or self-regulatory organization
to the extent required by law or regulation or to the extent the
Trust considers necessary or advisable in cooperating with an
investigation or inquiry by the Commission or any other regulatory
or self-regulatory organization.
I. Interpretation of Provisions. The board of trustees may from time
----------------------------
to time adopt such interpretations of this Code as it deems
appropriate.
J. Exceptions to the Code. Although exceptions to the Code will
----------------------
rarely, if ever, be granted, a designated officer of the Trust,
after consultation with the Review Officer, may make exceptions on
a case by case basis, from any of the provisions of this Code upon
a determination that the conduct at issue involves a negligible
opportunity for abuse or otherwise merits an exception from the
Code. All such exceptions must be received in writing by the
person requesting the exception before becoming effective. The
Review Officer shall report any exception to the board of trustees
of the Trust at the next regularly scheduled board meeting.
K. Identification of Access Persons. The Review Officer shall
--------------------------------
identify all persons who are considered to be "Access Persons" and
shall inform such persons of their respective duties and provide
them with copies of this Code and any related procedures adopted
by the Trust.
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<PAGE>
Exhibit (P)(2)
GOLDMAN SACHS ASSET MANAGEMENT
GOLDMAN SACHS FUNDS MANAGEMENT, L.P.
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
CODE OF ETHICS
--------------
Effective January 23, 1991
(as revised April 1, 2000)
I. DEFINITIONS
A. "Access Person" with respect to Goldman Sachs Asset Management ("GSAM")
means (because GSAM is a unit within the Investment Management Division,
a separate operating division, of Goldman, Sachs & Co., and Goldman,
Sach & Co. is primarily engaged in a business other than advising
registered investment companies or other advisory clients) only those
officers, general partners or Advisory Persons (as defined below) of
GSAM who, with respect to any Investment Company (as defined below),
make recommendations or participate in the determination of which
recommendation shall be made to any Investment Company, or whose
principal function or duties relate to the determination of which
recommendation shall be made to any Investment Company, or who, in
connection with their duties, obtain any information concerning such
recommendations on Covered Securities (as defined below) which are being
made to the Investment Company. "Access Person" with respect to Goldman
Sachs Asset Management International ("GSAMI") and Goldman Sachs Funds
Management, L.P. ("GSFM") means any director, officer, general partner
or Advisory Person of GSAMI or GSFM, as the case may be.
B. "Adviser" means each of GSAM, GSAMI and GSFM.
C. "Advisory Person" means (i) any officer or employee of the Adviser or
any company in a control relationship to the Adviser who, in connection
with his or her regular functions or duties, makes, participates in or
obtains information regarding the purchase or sale of a Covered Security
by an Investment Company, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and (ii) any
natural person in a control relationship to the Adviser who obtains
information concerning the recommendations made to an Investment Company
with regard to the purchase or sale of a Covered Security.
D. "Beneficial ownership" of a security shall be interpreted in the same
manner as it would be under Rule 16a-1 (a) (2) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), in determining
whether a person is the beneficial
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owner of a security for purposes of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder.
E. "Board of Trustees" means the board of trustees or directors, including
a majority of the disinterested trustees/directors, of any Investment
Company for which an Adviser serves as an investment adviser,
sub-adviser or principal underwriter.
F. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"). Section 2(a)(9) generally provides that
"control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the
result of an official position with such company.
G. "Covered Security" means a security as defined in Section 2(a) (36) of
the Investment Company Act, except that it does not include: (i) direct
obligations of the Government of the United States; (ii) banker's
acceptances, bank certificates of deposit, commercial paper and high
quality short-term debt instruments (any instrument having a maturity at
issuance of less than 366 days and that is in one of the two highest
rating categories of a nationally recognized statistical rating
organization), including repurchase agreements; and (iii) shares of
registered open-end investment companies.
H. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Sections 13 or 15(d) of the Exchange Act.
I. "Investment Company" means a company registered as such under the
Investment Company Act, or any series thereof, for which the Adviser is
the investment adviser, sub-adviser or principal underwriter.
J. "Investment Personnel" of the Adviser means (i) any employee of the
Adviser (or of any company in a control relationship to the Adviser)
who, in connection with his or her regular functions or duties, makes or
participates in making recommendations regarding the purchase or sale of
securities by an Investment Company or (ii) any natural person who
controls the Adviser and who obtains information concerning
recommendations made to an Investment Company regarding the purchase or
sale of securities by an Investment Company.
K. A "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section
4(6) or pursuant to Rule 504, Rule 505 or Rule 506 under the Securities
Act of 1933.
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L. "Purchase or sale of Covered Security" includes, among other things, the
writing of an option to purchase or sell a Covered Security or any
security that is exchangeable for or convertible into another security.
M. "Review Officer" means the officer of the Adviser designated from time
to time by the Adviser to receive and review reports of purchases and
sales by Access Persons. The term "Alternative Review Officer" shall
mean the officer of the Adviser designated from time to time by the
Adviser to receive and review reports of purchases and sales by the
Review Officer, and who shall act in all respects in the manner
prescribed herein for the Review Officer. It is recognized that a
different Review Officer and Alternative Review Officer may be
designated with respect to each Adviser.
N. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation. With
respect to an analyst of the Adviser, the foregoing period shall
commence on the day that he or she decides to recommend the purchase or
sale of the security to the Adviser for an Investment Company.
O. A security is "held or to be acquired" if within the most recent 15 days
it (1) is or has been held by the Investment Company, or (2) is being or
has been considered by the Adviser for purchase by the Investment
Company.
II. LEGAL REQUIREMENTS
Section 17(j) of the Investment Company Act provides, among other
things, that it is unlawful for any affiliated person of the Adviser to engage
in any act, practice or course of business in connection with the purchase or
sale, directly or indirectly, by such affiliated person of any security held or
to be acquired by an Investment Company in contravention of such rules and
regulations as the Securities and Exchange Commission (the "Commission") may
adopt to define and prescribe means reasonably necessary to prevent such acts,
practices or courses of business as are fraudulent, deceptive or manipulative.
Pursuant to Section 17(j), the Commission has adopted Rule 17j-1 which provides,
among other things, that it is unlawful for any affiliated person of the Adviser
in connection with the purchase or sale, directly or indirectly, by such person
of a Covered Security held or to be acquired by an Investment Company:
(1) To employ any device, scheme or artifice to defraud such Investment
Company;
(2) To make any untrue statement of a material fact to such Investment
Company or omit to state a material fact necessary in order to make
the statements made to such Investment Company, in light of the
circumstances under which they are made, not misleading;
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(3) To engage in any act, practice, or course of business that operates
or would operate as a fraud or deceit upon any such Investment
Company; or
(4) To engage in any manipulative practice with respect to such
Investment Company.
III. STATEMENT OF POLICY
It is the policy of the Adviser that no Access Person shall engage in any
act, practice or course of conduct that would violate the provisions of Rule
17j-1. The fundamental position of the Adviser is, and has been, that each
Access Person shall place at all times the interests of each Investment Company
and its shareholders first in conducting personal securities transactions.
Accordingly, private securities transactions by Access Persons of the Adviser
must be conducted in a manner consistent with this Code and so as to avoid any
actual or potential conflict of interest or any abuse of an Access Person's
position of trust and responsibility. Further, Access Persons should not take
inappropriate advantage of their positions with, or relationship to, any
Investment Company, the Adviser or any affiliated company.
Without limiting in any manner the fiduciary duty owed by Access Persons to
the Investment Companies or the provisions of this Code, it should be noted that
the Adviser and the Investment Companies consider it proper that purchases and
sales be made by Access Persons in the marketplace of securities owned by the
Investment Companies; provided, however, that such securities transactions
comply with the spirit of, and the specific restrictions and limitations set
forth in, this Code. Such personal securities transactions should also be made
in amounts consistent with the normal investment practice of the person involved
and with an investment, rather than a trading, outlook. Not only does this
policy encourage investment freedom and result in investment experience, but it
also fosters a continuing personal interest in such investments by those
responsible for the continuous supervision of the Investment Companies'
portfolios. It is also evidence of confidence in the investments made. In
making personal investment decisions with respect to any security, however,
extreme care must be exercised by Access Persons to ensure that the prohibitions
of this Code are not violated. Further, personal investing by an Access Person
should be conducted in such a manner so as to eliminate the possibility that the
Access Person's time and attention is being devoted to his or her personal
investments at the expense of time and attention that should be devoted to
management of an Investment Company's portfolio. It bears emphasis that
technical compliance with the procedures, prohibitions and limitations of this
Code will not automatically insulate from scrutiny personal securities
transactions which show a pattern of abuse by an Access Person of his or her
fiduciary duty to any Investment Company.
IV. EXEMPTED TRANSACTIONS
The Statement of Policy set forth above shall be deemed not to be violated
by and the prohibitions of Section V of this Code shall not apply to:
A. Purchases or sales of securities effected for, or held in, any account
over which the Access Person has no direct or indirect influence or
control;
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B. Purchases or sales of securities which are not eligible for purchase
or sale by an Investment Company;
C. Purchases or sales of securities which are non-volitional on the part
of either the Access Person or an Investment Company;
D. Purchases or sales of securities which are part of an automatic
dividend reinvestment, cash purchase or withdrawal plan provided that
no adjustment is made by the Access Person to the rate at which
securities are purchased or sold, as the case may be, under such a
plan during any period in which the security is being considered for
purchase or sale by an Investment Company;
E. Purchases of securities effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its securities, to the
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extent such rights were acquired from such issuer, and sales of such
rights so acquired;
F. Tenders of securities pursuant to tender offers which are expressly
conditioned on the tender offer's acquisition of all of the securities
of the same class;
G. Purchases or sales of publicly-traded shares of companies that have a
market capitalization in excess of $10 billion; and
H. Other purchases or sales which, due to factors determined by the
Adviser, only remotely potentially impact the interests of an
Investment Company because the securities transaction involves a small
number of shares of an issuer with a large market capitalization and
high average daily trading volume or would otherwise be very unlikely
to affect a highly institutional market.
V. PROHIBITED PURCHASES AND SALES
A. While the scope of actions which may violate the Statement of Policy
set forth above cannot be exactly defined, such actions would always
include at least the following prohibited activities:
(1) No Access Person shall purchase or sell, directly or indirectly,
any Covered Security in which he or she has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership
and which to his or her actual knowledge at the time of such
purchase or sale the Covered Security:
(i) is being considered for purchase or sale by an Investment
Company; or
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(ii) is being purchased or sold by an Investment Company.
(2) No Access Person shall reveal to any other person (except in the
normal course of his or her duties on behalf of an Investment
Company) any information regarding securities transactions by an
Investment Company or consideration by an Investment Company or
the Adviser of any such securities transaction.
(3) No Access Person shall engage in, or permit anyone within his or
her control to engage in, any act, practice or course of conduct
which would operate as a fraud or deceit upon, or constitute a
manipulative practice with respect to, an Investment Company or
an issuer of a any security owned by an Investment Company.
(4) No Access Person shall enter an order for the purchase or sale of
a Covered Security which an Investment Company is purchasing or
selling or considering for purchase or sale until the later of
(1) the day after the Investment Company's transaction in that
Covered Security is completed or (2) after the Investment Company
is no longer considering the security for purchase or sale,
unless the Review Officer determines that it is clear that, in
view of the nature of the Covered Security and the market for
such Covered Security, the order of the Access Person will not
adversely affect the price paid or received by the Investment
Company. Any securities transactions by an Access Person in
violation of this Subsection D must be unwound, if possible, and
the profits, if any, will be subject to disgorgement based on the
assessment of the appropriate remedy as determined by the
Adviser.
(5) No Access Person shall, in the absence of prior approval by the
Review Officer, sell any Covered Security that was purchased, or
purchase a Covered Security that was sold, within the prior 30
calendar days (measured on a last-in first-out basis).
B. In addition to the foregoing, the following provision will apply to
Investment Personnel of the Adviser:
(1) Investment Personnel must, as a regulatory requirement and as a
requirement of this Code, obtain prior approval before directly
or indirectly acquiring beneficial ownership in any securities in
an Initial Public Offering or in a Limited Offering. In addition,
Investment Personnel must comply with any additional restrictions
or prohibitions that may be adopted by the Adviser from time to
time.
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(2) No Investment Personnel shall accept any gift or personal benefit
valued in excess of such de minimis amount established by the
Adviser from time to time in its discretion (currently this
amount is $100 annually) from any single person or entity that
does business with or on behalf of an Investment Company. Gifts
of a de minimis value (currently these gifts are limited to gifts
whose reasonable value is no more than $100 annually from any
single person or entity), and customary business lunches, dinners
and entertainment at which both the Investment Personnel and the
giver are present, and promotional items of de minimis value may
be accepted. Any solicitation of gifts or gratuities is
unprofessional and is strictly prohibited.
(3) No Investment Personnel shall serve on the board of directors of
any publicly traded company, absent prior written authorization
and determination by the Review Officer that the board service
would be consistent with the interests of the Investment
Companies and their shareholders. Such interested Investment
Personnel may not participate in the decision for any Investment
Company to purchase and sell securities of such company.
VI. BROKERAGE ACCOUNTS
Access Persons are required to direct their brokers to supply for the
Review Officer on a timely basis duplicate copies of confirmations of all
securities transactions in which the Access Person has a beneficial ownership
interest and related periodic statements, whether or not one of the exemptions
listed in Section IV applies. If an Access Person is unable to arrange for
duplicate copies of confirmations and periodic account statements to be sent to
the Review Officer, he or she must immediately notify the Review Officer.
VII. PRECLEARANCE PROCEDURE
With such exceptions and conditions as the Adviser deems to be appropriate
from time to time and consistent with the purposes of this Code (for example,
exceptions based on an issuer's market capitalization, the amount of public
trading activity in a security, the size of a particular transaction or other
factors), prior to effecting any securities transactions in which an Access
Person has a beneficial ownership interest, the Access Person must receive
approval by the Adviser. Any approval is valid only for such number of day(s)
as may be determined from time to time by the Adviser. If an Access Person is
unable to effect the securities transaction during such period, he or she must
re-obtain approval prior to effecting the securities transaction.
The Adviser will decide whether to approve a personal securities
transaction for an Access Person after considering the specific restrictions and
limitations set forth in, and the spirit of, this Code of Ethics, including
whether the security at issue is being considered for purchase or sale for an
Investment Company. The Adviser is not required to give any explanation for
refusing to approve a securities transaction.
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VIII. REPORTING
A. Every Access Person shall report to the Review Officer the information (1)
described in Section VIII-C of this Code with respect to transactions in
any Covered Security in which such Access Person has, or by reason of such
transaction acquires or disposes of, any direct or indirect beneficial
ownership in the Covered Security or (2) described in Sections VIII-D or
VIII-E of this Code with respect to securities holdings beneficially owned
by the Access Person.
B. Notwithstanding Section VIII-A of this Code, an Access Person need not make
a report where the report would duplicate information recorded pursuant to
Rules 204-2(a)(12) or 204-2(a)(13) under the Investment Advisers Act of
1940 or if the report would duplicate information contained in broker trade
confirmations or account statements received by the Review Officer and all
of the information required by Section VIII-C, D or E is contained in such
confirmations or account statements. The quarterly transaction reports
required under Section VIII-A(1) shall be deemed made with respect to (1)
any account where the Access Person has made provisions for transmittal of
all daily trading information regarding the account to be delivered to the
designated Review Officer for his or her review or (2) any account
maintained with the Adviser or an affiliate. With respect to Investment
Companies for which the Adviser does not act as investment adviser or
sub-adviser, reports required to be furnished by officers and trustees of
such Investment Companies who are Access Persons of the Adviser must be
made under Section VIII-C of this Code and furnished to the designated
review officer of the relevant investment adviser.
C. Quarterly Transaction Reports. Unless quarterly transaction reports are
deemed to have been made under Section VIII-B of this Code, every quarterly
transaction report shall be made not later than 10 days after the end of
the calendar quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(1) The date of the transaction, the title, the interest rate and maturity
date (if applicable), class and the number of shares, and the
principal amount of each Covered Security involved;
(2) The nature of the transaction (i.e., purchase, sale or any other type
of acquisition or disposition);
(3) The price of the Covered Security at which the transaction was
effected;
(4) The name of the broker, dealer or bank with or through whom the
transaction was effected;
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(5) The date that the report was submitted by the Access Person; and
(6) With respect to any account established by an Access Person in which
any securities were held during the quarter for the direct or indirect
benefit of the Access Person:
(1) The name of the broker, dealer or bank with whom the Access
Person established the account;
(2) The date the account was established; and
(3) The date that the report was submitted by the Access Person.
D. Initial Holdings Reports. No later than 10 days after becoming an Access
Person, each Access Person must submit a report containing the following
information:
(1) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership when the person became an Access Person;
(2) The name of any broker, dealer or bank with whom the Access
Person maintained an account in which any securities were held
for the direct or indirect benefit of the Access Person as of the
date the person became an Access Person; and
(3) The date that the report is submitted by the Access Person.
E. Annual Holdings Reports. Between January 1st and January 30th of each
calendar year, every Access Person shall submit the following information
(which information must be current as of a date no more than 30 days before
the report is submitted):
(1) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership;
(2) The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any Covered Securities are
held for the direct or indirect benefit of the Access Person; and
(3) The date that the report is submitted by the Access Person.
F. If no transactions in any securities required to be reported under Section
VIII-A(1) were effected during a quarterly period by an Access Person,
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such Access Person shall report to the Review Officer not later than 10
days after the end of such quarterly period stating that no reportable
securities transactions were effected.
G. These reporting requirements shall apply whether or not one of the
exemptions listed in Section IV applies except that an Access Person shall
not be required to make a report with respect to securities transactions
effected for, and any Covered Securities held in, any account over which
such Access Person does not have any direct or indirect influence or
control.
H. Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that (1) he or
she has or had any direct or indirect beneficial ownership in the Covered
Security to which the report relates (a "Subject Security") or (2) he or
she knew or should have known that the Subject Security was being purchased
or sold, or considered for purchase or sale, by an Investment Company on
the same day.
IX. APPROVAL OF CODE OF ETHICS AND AMENDMENTS TO THE CODE OF
ETHICS
The Board of Trustees of each Investment Company shall approve this Code of
Ethics. Any material amendments to this Code of Ethics must be approved by the
Board of Trustees of each Investment Company no later than six months after the
adoption of the material change. Before their approval of this Code of Ethics
and any material amendments hereto, the Adviser shall provide a certification to
the Board of Trustees of each such Investment Company that the Adviser has
adopted procedures reasonably necessary to prevent Access Persons from violating
the Code of Ethics.
X. ANNUAL CERTIFICATION OF COMPLIANCE
Each Access Person shall certify to the Review Officer annually on the form
annexed hereto as Form A that he or she (A) has read and understands this Code
of Ethics and any procedures that are adopted by the Adviser relating to this
Code, and recognizes that he or she is subject thereto; (B) has complied with
the requirements of this Code of Ethics and such procedures; (C) has disclosed
or reported all personal securities transactions and beneficial holdings in
Covered Securities required to be disclosed or reported pursuant to the
requirements of this Code of Ethics and any related procedures.
XI. CONFIDENTIALITY
All reports of securities transactions, holding reports and any other
information filed with the Adviser pursuant to this Code shall be treated as
confidential, except that reports of securities transactions and holdings
reports hereunder will be made available to the Investment Companies and to the
Commission or any other regulatory or self-regulatory organization to the extent
required by law or regulation or to the extent the Adviser considers necessary
or advisable in cooperating with an investigation or inquiry by the Commission
or any other regulatory or self-regulatory organization.
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XII. REVIEW OF REPORTS
A. The Review Officer shall be responsible for the review of the
quarterly transaction reports required under VIII-C and VIII-F, and
the initial and annual holdings reports required under Sections VIII-D
and VIII-E, respectively, of this Code of Ethics. In connection with
the review of these reports, the Review Officer or the Alternative
Review Officer shall take appropriate measures to determine whether
each reporting person has complied with the provisions of this Code of
Ethics and any related procedures adopted by the Adviser.
B. On an annual basis, the Review Officer shall prepare for the Board of
Trustees of each Investment Company and the Board of Trustees of each
Investment Company shall consider:
(1) A report on the level of compliance during the previous year by
all Access Persons with this Code and any related procedures
adopted by the Adviser, including without limitation the
percentage of reports timely filed and the number and nature of
all material violations and sanctions imposed in response to
material violations. An Alternative Review Officer shall prepare
reports with respect to compliance by the Review Officer;
(2) A report identifying any recommended changes to existing
restrictions or procedures based upon the Adviser's experience
under this Code, evolving industry practices and developments in
applicable laws or regulations; and
(3) A report certifying to the Board of Trustees that the Adviser has
adopted procedures that are reasonably necessary to prevent
Access Persons from violating this Code of Ethics.
XIII. SANCTIONS
Upon discovering a violation of this Code, the Adviser may impose such
sanction(s) as it deems appropriate, including, among other things, a letter of
censure, suspension or termination of the employment of the violator and/or
restitution to the affected Investment Company of an amount equal to the
advantage that the offending person gained by reason of such violation. In
addition, as part of any sanction, the Adviser may require the Access Person or
other individual involved to reverse the trade(s) at issue and forfeit any
profit or absorb any loss from the trade. It is noted that violations of this
Code may also result in criminal prosecution or civil action. All material
violations of this Code and any sanctions imposed with respect thereto shall be
reported periodically to the Board of Trustees of the Investment Company with
respect to whose securities the violation occurred.
XIV. INTERPRETATION OF PROVISIONS
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The Adviser may from time to time adopt such interpretations of this Code
as it deems appropriate.
XV. IDENTIFICATION OF ACCESS PERSONS AND INVESTMENT PERSONNEL
The Adviser shall identify all persons who are considered to be Access
Persons and Investment Personnel, and shall inform such persons of their
respective duties and provide them with copies of this Code and any related
procedures adopted by the Adviser.
XVI. EXCEPTIONS TO THE CODE
Although exceptions to the Code will rarely, if ever, be granted, a
designated Officer of the Adviser, after consultation with the Review Officer,
may make exceptions on a case by case basis, from any of the provisions of this
Code upon a determination that the conduct at issue involves a negligible
opportunity for abuse or otherwise merits an exception from the Code. All such
exceptions must be received in writing by the person requesting the exception
before becoming effective. The Review Officer shall report any exception to the
Board of Trustees of the Investment Company with respect to which the exception
applies at its next regularly scheduled Board meetings.
XVII. RECORDS
The Adviser shall maintain records in the manner and to the extent set
forth below, which records may be maintained on microfilm under the conditions
described in Rule 31a-2(f)(1) and Rule 17j-1 under the Investment Company Act
and shall be available for examination by representatives of the Commission.
A. A copy of this Code and any other code which is, or at any time within
the past five years has been, in effect shall be preserved for a
period of not less than five years in an easily accessible place;
B. A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible
place for a period of not less than five years following the end of
the fiscal year in which the violation occurs;
C. A copy of each initial holdings report, annual holdings report and
quarterly transaction report made by an Access Person pursuant to this
Code (including any brokerage confirmation or account statements
provided in lieu of the reports) shall be preserved for a period of
not less than five years from the end of the fiscal year in which it
is made, the first two years in an easily accessible place;
D. A list of all persons who are, or within the past five years have
been, required to make initial holdings, annual holdings or quarterly
transaction reports pursuant to this Code shall be maintained in an
easily accessible place;
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E. A list of all persons, currently or within the past five years who are
or were responsible for reviewing initial holdings, annual holdings or
quarterly transaction reports shall be maintained in an easily
accessible place;
F. A record of any decision and the reason supporting the decision to
approve the acquisition by Investment Personnel of Initial Public
Offerings and Limited Offerings shall be maintained for at least five
years after the end of the fiscal year in which the approval is
granted; and
G. A copy of each report required by Section XII-B of this Code must be
maintained for at least five years after the end of the fiscal year in
which it was made, the first two years in an easily accessible plan.
XVIII. SUPPLEMENTAL COMPLIANCE AND REVIEW PROCEDURES
The Adviser may establish, in its discretion, supplemented compliance and
review procedures (the "Procedures") that are in addition to those set forth in
this Code in order to provide additional assurance that the purposes of this
Code are fulfilled and/or assist the Adviser in the administration of this Code.
The Procedures may be more, but shall not be less, restrictive than the
provisions of this Code. The Procedures, and any amendments thereto, do not
require the approval of the Board of Trustees of an Investment Company.
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