GOLDMAN SACHS TRUST, 497, 2000-04-03

GOLDMAN SACHS TRUST
497, 2000-04-03

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<PAGE>

Prospectus CLASS A, B AND C
SHARES

April 3, 2000

- --------------------------------------------------------------------------------
GOLDMAN SACHS CORE/SM/ TAX-MANAGED EQUITY FUND
- --------------------------------------------------------------------------------

[GRAPHIC]

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 THE
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, a unit of the Investment Management Division
of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser to
the CORE Tax-Managed Equity Fund (the "Fund"). CORE is an acronym for "Com-
puter-Optimized, Research Enhanced," which reflects the Fund's investment
process. Goldman Sachs Asset Management is referred to in this Prospectus as
the "Investment Adviser."

QUANTITATIVE ("CORE") STYLE FUND

Goldman Sachs' CORE Tax-Managed Investment Philosophy:
Goldman Sachs' quantitative investment process--CORE--uses advanced quanti-
tative tools for both stock selection and portfolio construction. In an
effort to maximize after-tax returns, tax implications are considered in all
portfolio decisions.

I. CORE Stock Selection

Phase 1: Quantitative Analysis
. Comprehensive: The Goldman Sachs' proprietary multifactor model
("Multifactor Model"), a rigorous computerized rating system, performs
daily evaluation of more than 3,000 domestic stocks
. Rigorous: The Multifactor Model provides thorough statistical analysis of
common investment themes (e.g., value, momentum and risk)
. Objective: Quantitative analysis applied without bias across the board

Phase 2: Fundamental Research
. Extensive: Insights from Goldman Sachs analysts and more than 2,800 ana-
lysts at 200 brokerage firms
. Fundamental Insights: Analysis of buy/hold/sell opinions are systemati-
cally factored into how we rank each of the 3,000+ domestic stocks
. Insightful: Addresses issues such as new product introductions or manage-
ment changes that a purely quantitative model cannot readily evaluate

II. CORE Portfolio Construction
. Benchmark driven: Computer optimizer calculates numerous security combina-
tions at numerous weightings to identify an efficient risk/return portfo-
lio given the CORE Fund's benchmark

1
<PAGE>

. Sector and size neutral: Portfolio ultimately has similar style, risk,
sector and market capitalization characteristics to the benchmark
. Tax optimized: All investment decisions consider expected after-tax
returns including realizing capital losses to offset realized gains, cre-
ating loss carry-forwards, and identifying securities for in-kind distri-
bution

Goldman Sachs CORE Tax-Managed Fund is a fully invested portfolio that
offers broad access to a well-defined stock universe, seeks to outperform
its benchmark on an after-tax basis through consistent, disciplined stock
selection, and is intended to be an effective tool for implementing a tax-
managed strategy within an overall investment portfolio.

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

2
<PAGE>

Fund Investment Objective and Strategies
Goldman Sachs
CORE Tax-Managed Equity Fund

FUND FACTS
- --------------------------------------------------------------------------------

Objective: Long-term after-tax growth of capital

Benchmark: Russell 3000 Index

Investment Focus: A total market, broadly diversified portfolio of U.S.
equity securities

Investment Style: Tax-managed quantitative focus

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term after-tax growth of capital through tax-
sensitive participation in a broadly diversified portfolio of U.S. equity
securities.

PRINCIPAL INVESTMENT STRATEGIES

Equity Securities. The Fund invests, under normal circumstances, at least
90% of its total assets in equity securities of U.S. issuers including for-
eign issuers that are traded in the United States.

The Fund uses both a variety of quantitative techniques and fundamental
research when selecting investments which have the potential to maximize the
Fund's after-tax return, and minimize capital gains and income distribu-
tions. The Fund will seek to maintain risk, style, capitalization and indus-
try characteristics similar to the Russell 3000 Index.

Tax-Managed Investing. In managing the Fund, the Investment Adviser balances
investment considerations and tax considerations. The Fund seeks to achieve
returns primarily in the form of price appreciation (which is not subject to
current tax), and may use different strategies in seeking tax-efficiency.
These strategies include:

3
<PAGE>

.Offsetting long-term and short-term capital gains with long-term and short-
term capital losses and creating loss carry-forward positions
.Limiting portfolio turnover that may result in taxable gains
.Selling tax lots of securities that have a higher tax basis before selling
tax lots of securities that have a lower basis
.Maintaining a bias towards stocks with low dividend yields

In situations where the Fund would otherwise be required to sell portfolio
securities to meet shareholder redemption requests (and possibly realizing
taxable gains), the Fund may borrow money to make the necessary redemption
payments. In addition, Goldman Sachs may, but would not in any instance be
required to, make contemporaneous purchases of Fund shares for its own
account that would provide the Fund with cash to meet its redemption payment
obligations.

When the Fund borrows money, the Investment Adviser intends to hedge the
excess market exposure created by borrowing. There is no guarantee such
hedging will be completely effective.

The Fund may not achieve its investment objective of providing "after-tax"
growth of capital for various reasons. Implementation of tax-managed invest-
ment strategies may not materially reduce the amount of taxable income and
capital gains distributed by the Fund to shareholders.

Other. The Fund's investments in fixed-income securities are limited to
securities that are considered cash equivalents.

The Fund is not a suitable investment for IRAs, other tax-exempt or tax-
deferred accounts or for other investors who are not sensitive to the fed-
eral income tax consequences of their investments.

4
<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/semi-annual reports. For more information see Appen-
dix 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 objective and
strategies of the Fund
- -- Not permitted

<TABLE>
<CAPTION>
CORE
Tax-Managed
Equity
Fund
- ----------------------------------------------------------------------------
<S> <C>
Investment Practices
Borrowings 33 1/3
Custodial receipts .
Equity Swaps* 15
Foreign Currency Transactions --
Futures Contracts and Options on Futures Contracts . 1
Investment Company Securities (including exchange-traded funds) 10
Options on Securities and Securities Indices/2/ .
Repurchase Agreements .
Securities Lending 33 1/3
Short Sales Against the Box --
Unseasoned Companies .
Warrants and Stock Purchase Rights .
When-Issued Securities and Forward Commitments .
- ----------------------------------------------------------------------------
</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.
1 The Fund may enter into futures transactions only with respect to U.S.
equity indices.
2 The Fund may sell covered call and put options and purchase call and put
options.

5
<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
objective andstrategies
of the Fund
- -- Not permitted
<TABLE>
<CAPTION>
CORE
Tax-Managed
Equity
Fund
- ---------------------------------------------------------
<S> <C>
Investment Securities
American and Global Depository Receipts .
Asset-Backed and Mortgage-Backed Securities --
Bank Obligations/3/ .
Convertible Securities .
Corporate Debt Obligations/3/ .
Equity Securities 90+
Emerging Country Securities --
Fixed Income Securities/4/ 10
Foreign Securities/5/ .
Non-Investment Grade Fixed Income Securities --
Real Estate Investment Trusts ("REITs") .
Structured Securities* .
Temporary Investments 35
U.S. Government Securities/3/ .
- ---------------------------------------------------------
</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.
3 Limited by the amount the Fund invests in fixed-income securities.
4 Cash equivalents only.
5 Equity securities of foreign issuers must be traded in the United States.

6
<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 follow-
ing 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.

RISKS OF TAX-MANAGED INVESTING

Because the Investment Adviser balances investment considerations and tax
considerations, the Fund's pre-tax performance may be lower than the perfor-
mance of a similar CORE Fund that is not tax-managed. This is because the
Investment Adviser may choose not to make certain investments that may
result in taxable distributions. Even though tax-managed strategies are
being used, they may not reduce the amount of taxable income and capital
gains distributed by the Fund to shareholders. A high percentage of the
Fund's net asset value ("NAV") may consist of unrealized capital gains,
which represent a potential future tax liability to shareholders.

The Fund is not a suitable investment for IRAs, other tax-exempt or tax-
deferred accounts or for other investors who are not sensitive to the fed-
eral income tax consequences of their investments.

INVESTMENT RISKS

<TABLE>
<CAPTION>
CORE
Tax-Managed
Equity
.Applicable Fund
-----------------------------------------------------------------------------
<S> <C>
Stock .
Credit/Default .
Foreign .
Derivatives .
Interest Rate .
Management .
Market .
Liquidity .
Small Cap/REIT .
- ------------------------------------------------------------------------------
</TABLE>

.Stock Risk--The risk that stock prices have historically risen and fallen
in periodic cycles. As of the date of this Prospectus, U.S. stock markets
and certain foreign stock markets were trading at or close to record high
levels. There is no guarantee that such levels will continue.

7
<PAGE>

.Credit/Default Risk--The risk that an issuer or guarantor of fixed-income
securities held by the Fund (which may have low credit ratings) may default
on its obligation to pay interest and repay principal.
.Foreign Risk--The risk that when the Fund invests in foreign securities, it
will be subject to risk of loss 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, confisca-
tions and other government restrictions. The Fund will also be subject to
the risk of negative foreign currency rate fluctuations.
.Derivatives Risk--The risk that loss may result from the Fund's investments
in options, futures, swaps, structured securities and other derivative
instruments. These instruments may be leveraged so that small changes may
produce disproportionate losses to the Fund.
.Interest Rate Risk--The risk that when interest rates increase, fixed-
income securities held by the Fund will decline in value.
.Management Risk--The risk that a strategy used by the Investment Adviser
may fail to produce the intended results.
.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 compa-
nies and/or general economic conditions. Price changes may be temporary or
last for extended periods.
.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 unu-
sual market conditions, an unusually high volume of redemption requests, or
other reasons. Because the Fund may invest in small capitalization stocks
and REITs, the Fund will be especially subject to the risk that during cer-
tain periods the liquidity of particular issuers or industries, or all
securities within these investment categories, will shrink or disappear
suddenly and without warning as a result of adverse economic, market or
political events, or adverse investor perceptions whether or not accurate.
.Small Cap Stock and REIT Risk--The securities of small capitalization
stocks and REITs involve greater risks than those associated with larger,
more established companies and may be subject to more abrupt or erratic
price movements. Securities of such issuers may lack sufficient market
liquidity to enable the Fund to effect sales at an advantageous time or
without a substantial drop in price.

More information about the Fund's portfolio securities and investment tech-
niques, and their associated risks, is provided in Appendix A. You should
consider the investment risks discussed in this section and in Appendix A.
Both are important to your investment choice.

8
<PAGE>

Fund Performance

HOW THE FUND HAS PERFORMED

The Fund commenced operations as of the date of this Prospectus. Therefore,
no performance information is provided in this section.

9
<PAGE>

Fund Fees and Expenses (Class A, B and C Shares)

This table describes the fees and expenses that you would pay if you buy and
hold Class A, Class B, or Class C Shares of the Fund.

<TABLE>
<CAPTION>
CORE Tax-Managed Equity
Fund
-----------------------
Class A Class B Class C
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases 5.5%1 None None
Maximum Deferred Sales Charge (Load)2 None1 5.0%3 1.0%4
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends None None None
Redemption Fees5 None None None
Exchange Fees5 None None None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00%
Other Expenses/7/ 0.34% 0.34% 0.34%
- --------------------------------------------------------------------------
Total Fund Operating Expenses* 1.34% 2.09% 2.09%
- --------------------------------------------------------------------------
</TABLE>
See page 11 for all other footnotes.

* As a result of current expense limitations, the esti-
mated "Other Expenses" and "Total Fund Operating
Expenses" of the Fund which are actually incurred are
as set forth below. The expense limitations may be
terminated at any time at the option of the Invest-
ment Adviser. If this occurs, "Other Expenses" and
"Total Fund Operating Expenses" may increase without
shareholder approval.

<TABLE>
<CAPTION>
CORE Tax-Managed Equity
Fund
-----------------------
Class A Class B Class C
------------------------------------------------------------------------------
<S> <C> <C> <C>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets):6
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees 0.25% 1.00% 1.00%
Other Expenses7 0.24% 0.24% 0.24%
------------------------------------------------------------------------------
Total Fund Operating Expenses (after current expense
limitations) 1.24% 1.99% 1.99%
------------------------------------------------------------------------------
</TABLE>

10
<PAGE>

FUND FEES AND EXPENSES

/1/The maximum sales charge is a percentage of the offering price. A contingent
deferred sales charge ("CDSC") of 1% is imposed on certain redemptions
(within 18 months of purchase) of Class A Shares sold without an initial
sales charge as part of an investment of $1 million or more.
/2/The maximum CDSC is a percentage of the lesser of the NAV at the time of the
redemption or the NAV when the shares were originally purchased.
/3/A CDSC is imposed upon Class B Shares redeemed within six years of purchase
at a rate of 5% in the first year, declining to 1% in the sixth year, and
eliminated thereafter.
/4/A CDSC of 1% is imposed on Class C Shares redeemed within 12 months of pur-
chase.
/5/A transaction fee of $7.50 may be charged for redemption proceeds paid by
wire. In addition to free reinvestments of dividends and distributions in
shares of other Goldman Sachs Funds or shares of the Goldman Sachs Institu-
tional Liquid Assets Portfolios (the "ILA Portfolios") and free automatic
exchanges pursuant to the Automatic Exchange Program, six free exchanges are
permitted in each 12-month period. A fee of $12.50 may be charged for each
subsequent exchange during such period.
/6/The Fund's operating expenses for the current fiscal year have been estimat-
ed.
/7/Estimated "Other Expenses" include transfer agency fees equal to 0.19% of
the average daily net assets of the Fund's Class A, B and C Shares, plus all
other ordinary expenses not detailed above. The Investment Adviser has vol-
untarily agreed to reduce or limit "Other Expenses" (excluding management
fees, distribution and service 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>
CORE Tax-Managed
Equity 0.05%
</TABLE>

11
<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 Class
A, B or C 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>
CORE Tax-Managed Equity
Class A Shares $679 $951
Class B Shares
- Assuming complete redemption at end of period $712 $955
- Assuming no redemption $212 $655
Class C Shares
- Assuming complete redemption at end of period $312 $655
- Assuming no redemption $212 $655
- ---------------------------------------------------------------
</TABLE>

The hypothetical example assumes that a CDSC will not apply to redemptions of
Class A Shares within the first 18 months.

Certain institutions that sell Fund shares and/or their salespersons may
receive other compensation in connection with the sale and distribution of
Class A, Class B and Class C Shares for services to their customers' accounts
and/or the Funds. For additional information regarding such compensation, see
"What Should I Know When I Purchase Shares Through An Authorized Dealer?"

12
<PAGE>

Service Providers

INVESTMENT ADVISER

<TABLE>
<CAPTION>
Investment Adviser Fund
-----------------------------------------------------------------
<S> <C>
Goldman Sachs Asset Management ("GSAM") CORE Tax-Managed Equity
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 December 31, 1999, GSAM, along with other units of IMD,
had assets under management of $258.5 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. 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 securi-
ties.

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

13
<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>
CORE Tax-Managed Equity 0.75%
------------------------------------------
</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.

14
<PAGE>

SERVICE PROVIDERS

FUND MANAGERS

Robert B. Litterman, Ph.D., a Managing Director of Goldman Sachs, is the co-
developer, along with the late Fischer Black, of the Black-Litterman Global
Asset Allocation Model, a key tool in IMD's asset allocation process. As
Director of Quantitative Resources, Dr. Litterman oversees Quantitative
Equities, the Quantitative Strategies Group, the Investment Performance &
Valuation Oversight Group, and the Client Research Groups. In total, these
groups include over 120 professionals. Prior to moving to IMD, Dr. Litterman
was the head of the Firmwide Risk department since becoming a Partner in
1994. Preceding his time in the Operations, Technology & Finance Division,
Dr. Litterman spent eight years in the Fixed Income Division's research
department where he was co-director of the research and model development
group.

Quantitative Equity Team
.A stable and growing team supported by an extensive internal staff
.Access to the research ideas of Goldman Sachs' renowned Global Investment
Research Department
.More than $25 billion in equities currently under management
.Proprietary research on quantitative models and tax-advantaged strategies

- --------------------------------------------------------------------------------
Quantitative Equity Team

<TABLE>
<CAPTION>
Years
Primarily Five Year Employment
Name and Title Fund Responsibility Responsible History
- ----------------------------------------------------------------------------------------
<C> <C> <C> <S>
Melissa Brown Senior Portfolio Manager -- Since Ms. Brown joined the
Vice President CORE Tax-Managed Equity 2000 Investment Adviser as a
Product Manager portfolio manager in
for 1998. From
Quantitative 1984 to 1998, she was
Equities the
director of Quantitative
Equity Research and
served on the Investment
Policy Committee at
Prudential Securities.
- ----------------------------------------------------------------------------------------
Kent A. Clark Senior Portfolio Manager-- Since Mr. Clark joined the
Managing CORE Tax-Managed Equity 2000 Investment Adviser as a
Director portfolio manager in the
Director of quantitative equity
Quantitative management team in 1992.
Research
- ----------------------------------------------------------------------------------------
Robert C. Jones Senior Portfolio Manager-- Since Mr. Jones joined the
Managing CORE Tax-Managed Equity 2000 Investment Adviser as a
Director portfolio manager in
Head of 1989.
Quantitative
Equities
- ----------------------------------------------------------------------------------------
Victor H. Senior Portfolio Manager-- Since Mr. Pinter joined the
Pinter CORE Tax-Managed Equity 2000 Investment Adviser as a
Vice President research analyst in
Head of 1990. He became a
Portfolio portfolio manager in
Construction 1992.
- ----------------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

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 problems 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 did not experience any material disruptions in its
operations as a result of the transition to the Year 2000.

16
<PAGE>

Dividends

The Fund pays dividends from investment company taxable income and distribu-
tions from net realized capital gains (although the Fund attempts to minimize
capital gains and income distributions in seeking its investment objective).
You may choose to have dividends and distributions paid in:
.Cash
.Additional shares of the same class of the Fund
.Shares of the same or an equivalent class of another Goldman Sachs Fund. Spe-
cial 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 or distribution. If you do not indicate any choice, divi-
dends and distributions will be reinvested automatically in the Fund.

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

Dividends from investment company taxable income and distributions from net
capital gains are declared and paid as follows:

<TABLE>
<CAPTION>
Investment Capital Gains
Fund Income Dividends Distributions
- -------------------------------------------------------
<S> <C> <C>
CORE Tax-Managed Equity Annually 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.

17
<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 shares.

HOW TO BUY SHARES

How Can I Purchase Class A, Class B And Class C Shares Of The Fund?
You may purchase shares of the Fund through:
. Goldman Sachs;
. Authorized Dealers; or
. Directly from Goldman Sachs Trust (the "Trust").

In order to make an initial investment in the Fund, you must furnish to the
Fund, Goldman Sachs or your Authorized Dealer the information in the Account
Application attached to this Prospectus.

To Open an Account:
. Complete the enclosed Account Application
. Mail your payment and Account Application to:
Your Authorized Dealer
- Purchases by check or Federal Reserve draft should be made payable to
your Authorized Dealer
- Your Authorized Dealer is responsible for forwarding payment promptly
(within three business days) to the Fund

Goldman Sachs Funds c/o National Financial Data Services, Inc. ("NFDS"),
P.O. Box 219711, Kansas City, MO 64121-9711
- Purchases by check or Federal Reserve draft should be made payable to
Goldman Sachs Funds - (Name of Fund and Class of Shares)
- NFDS will not accept a check drawn on a foreign bank, a third-party
check, cash, money orders, travelers checques or credit card checks
- Federal funds wire, Automated Clearing House Network ("ACH") transfer or
bank wires should be sent to State Street Bank and Trust Company ("State
Street") (the Fund's custodian). Please call the Fund at 1-800-526-7384
to get detailed instructions on how to wire your money.

18
<PAGE>

SHAREHOLDER GUIDE

What Is My Minimum Investment In The Fund?

<TABLE>
<CAPTION>
Initial Additional
----------------------------------------------------------------------------
<S> <C> <C>
Regular Accounts $1,000 $50
----------------------------------------------------------------------------
Uniform Gift to Minors Act Accounts/Uniform Transfer to
Minors Act Accounts $250 $50
----------------------------------------------------------------------------
Automatic Investment Plan Accounts $50 $50
----------------------------------------------------------------------------
</TABLE>

What Alternative Sales Arrangements Are Available?
The Fund offers three classes of shares through this Prospectus.

<TABLE>
<S> <C> <C>
-------------------------------------------------------------
Maximum Amount You Can Class A No limit
-------------------------------------
Buy In The Aggregate Class B $250,000
-------------------------------------
Class C $1,000,000
-------------------------------------------------------------
Initial Sales Charge Class A Applies to purchases of less
than $1 million--varies by
size of investment with a
maximum of 5.5%
-------------------------------------
Class B None
-------------------------------------
Class C None
-------------------------------------------------------------
CDSC Class A 1.00% on certain investments
of $1 million or more if you
sell within 18 months
-------------------------------------
Class B 6 year declining CDSC with a
maximum of 5%
-------------------------------------
Class C 1% if shares are redeemed
within 12 months of purchase
-------------------------------------------------------------
Conversion Feature Class A None
-------------------------------------
Class B Class B Shares convert to
Class A Shares after 8 years
-------------------------------------
Class C None
-------------------------------------------------------------
</TABLE>

What Else Should I Know About Share Purchases?
The Trust reserves the right to:
. Refuse to open an account if you fail to (i) provide a social security
number or other taxpayer identification number; or (ii) certify that such
number is correct (if required to do so under applicable law).

19
<PAGE>

. Reject or restrict any purchase or exchange order 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 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 management of the
Fund.
. Close the Fund to new investors from time to time and reopen the Fund
whenever it is deemed appropriate by the Fund's Investment Adviser.
. Modify or waive the minimum investment amounts.
. Modify the manner in which shares are offered.
. Modify the sales charge rates applicable to future purchases of shares.

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 shares is deter-
mined by the Fund's NAV and share class. Each class calculates its 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 or, if accurate
quotations are not readily available, the fair value of the Fund's invest-
ments may be determined in good faith under procedures established by the
Trustees.
. NAV per share of each share class is calculated by the Fund's custodian on
each business day as of the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m. New York time). 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, plus any applicable sales charge.
. When you sell shares, you receive the NAV next calculated after the Fund
receives your order in proper form, less any applicable CDSC.

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.

20
<PAGE>

SHAREHOLDER GUIDE

mally 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 material-
ity of the event, its effect on Fund operations and other relevant factors.

COMMON QUESTIONS ABOUT THE PURCHASE OF CLASS A SHARES

What Is The Offering Price Of Class A Shares?
The offering price of Class A Shares of the Fund is the next determined NAV
per share plus an initial sales charge paid to Goldman Sachs at the time of
purchase of shares. The sales charge varies depending upon the amount you
purchase. In some cases, described below, the initial sales charge may be
eliminated altogether, and the offering price will be the NAV per share. The
current sales charges and commissions paid to Authorized Dealers are as fol-
lows:

<TABLE>
<CAPTION>
Sales Charge Maximum Dealer
Sales Charge as as Percentage Allowance as
Amount of Purchase Percentage of of Net Amount Percentage of
(including sales charge, if any) Offering Price Invested Offering Price*
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.50% 5.82% 5.00%
$50,000 up to (but less than)
$100,000 4.75 4.99 4.00
$100,000 up to (but less than)
$250,000 3.75 3.90 3.00
$250,000 up to (but less than)
$500,000 2.75 2.83 2.25
$500,000 up to (but less than)
$1 million 2.00 2.04 1.75
$1 million or more 0.00** 0.00** ***
---------------------------------------------------------------------------------
</TABLE>

* Dealer's allowance may be changed periodically. During special promo-
tions, the entire sales charge may be allowed to Authorized Dealers.
Authorized Dealers to whom substantially the entire sales charge is
allowed may be deemed to be "underwriters" under the Securities Act of
1933.
** No sales charge is payable at the time of purchase of Class A Shares of
$1 million or more, but a CDSC of 1% may be imposed in the event of
certain redemptions within 18 months of purchase.
*** The Distributor pays a one-time commission to Authorized Dealers who
initiate or are responsible for purchases of $1 million or more of
shares of the Fund equal to 1.00% of the amount under $3 million, 0.50%
of the next $2 million, and 0.25% thereafter. The Distributor may also
pay, with respect to all or a portion of the amount purchased, a com-
mission in accordance with the foregoing schedule to Authorized Dealers
who initiate or are responsible for purchases of $500,000 or more by
certain pension and profit sharing plans, pension funds and other com-
pany-sponsored benefit plans investing in the Fund which satisfy the
criteria set forth below in "When Are Class A Shares Not Subject To A
Sales Load?" or $1 million or more by certain "wrap" accounts. Pur-
chases by such plans will be made at NAV with no initial sales charge,
but if all of the shares held are redeemed within 18 months after the
end of the calendar month in which such purchase was made, a CDSC of 1%
may be imposed upon the plan sponsor or the third party administrator.
In addition, Authorized Dealers will remit to the Distributor such pay-
ments received in connection with "wrap" accounts in the event that
shares are redeemed within 18 months after the end of the calendar
month in which the purchase was made.

21
<PAGE>

What Else Do I Need To Know About Class A Shares' CDSC?
Purchases of $1 million or more of Class A Shares will be made at NAV with
no initial sales charge. However, if you redeem shares within 18 months
after the end of the calendar month in which the purchase was made, exclud-
ing any period of time in which the shares were exchanged into and remained
invested in an equivalent class of an ILA Portfolio, a CDSC of 1% may be
imposed. The CDSC may not be imposed if your Authorized Dealer enters into
an agreement with the Distributor to return all or an applicable prorated
portion of its commission to the Distributor. The CDSC is waived on redemp-
tions in certain circumstances. See "In What Situations May The CDSC On
Class A, B Or C Shares Be Waived Or Reduced?" below.

When Are Class A Shares Not Subject To A Sales Load?
Class A Shares of the Fund may be sold at NAV without payment of any sales
charge to the following individuals and entities:
. Goldman Sachs, its affiliates or their respective officers, partners,
directors or employees (including retired employees and former partners),
any partnership of which Goldman Sachs is a general partner, any Trustee
or officer of the Trust and designated family members of any of these
individuals;
. Qualified retirement plans of Goldman Sachs;
. Trustees or directors of investment companies for which Goldman Sachs or
an affiliate acts as sponsor;
. Any employee or registered representative of any Authorized Dealer or
their respective spouses, children and parents;
. Banks, trust companies or other types of depository institutions investing
for their own account or investing for discretionary or non-discretionary
accounts;
. Any state, county or city, or any instrumentality, department, authority
or agency thereof, which is prohibited by applicable investment laws from
paying a sales charge or commission in connection with the purchase of
shares of a Fund;
. Pension and profit sharing plans, pension funds and other company-spon-
sored benefit plans that:
. Buy shares of Goldman Sachs Funds worth $500,000 or more; or
. Have 100 or more eligible employees at the time of purchase; or
. Certify that they expect to have annual plan purchases of shares of
Goldman Sachs Funds of $200,000 or more; or
. Are provided administrative services by certain third-party administra-
tors that have entered into a special service arrangement with Goldman
Sachs relating to such plans; or
. Have at the time of purchase aggregate assets of at least $2,000,000;

22
<PAGE>

SHAREHOLDER GUIDE

. "Wrap" accounts for the benefit of clients of broker-dealers, financial
institutions or financial planners, provided they have entered into an
agreement with GSAM specifying aggregate minimums and certain operating
policies and standards;
. Registered investment advisers investing for accounts for which they
receive asset-based fees;
. Accounts over which GSAM or its advisory affiliates have investment dis-
cretion; or
. Shareholders receiving distributions from a qualified retirement plan
invested in the Goldman Sachs Funds and reinvesting such proceeds in a
Goldman Sachs IRA.

You must certify eligibility for any of the above exemptions on your Account
Application and notify the Fund if you no longer are eligible for the exemp-
tion. The Fund will grant you an exemption subject to confirmation of your
entitlement. You may be charged a fee if you effect your transactions
through a broker or agent.

How Can The Sales Charge On Class A Shares Be Reduced?
. Right of Accumulation: When buying Class A Shares in Goldman Sachs Funds,
your current aggregate investment determines the initial sales load you
pay. You may qualify for reduced sales charges when the current market
value of holdings (shares at current offering price), plus new purchases,
reaches $50,000 or more. Class A Shares of any of the Goldman Sachs Funds
may be combined under the Right of Accumulation. To qualify for a reduced
sales load, you or your Authorized Dealer must notify the Fund's Transfer
Agent at the time of investment that a quantity discount is applicable.
Use of this service is subject to a check of appropriate records. The
Additional Statement has more information about the Right of Accumulation.
. Statement of Intention: You may obtain a reduced sales charge by means of
a written Statement of Intention which expresses your non-binding commit-
ment to invest in the aggregate $50,000 or more (not counting reinvest-
ments of dividends and distributions) within a period of 13 months in
Class A Shares of one or more Goldman Sachs Funds. Any investments you
make during the period will receive the discounted sales load based on the
full amount of your investment commitment. If the investment commitment of
the Statement of Intention is not met prior to the expiration of the 13-
month period, the entire amount will be subject to the higher applicable
sales charge. By signing the Statement of Intention, you authorize the
Transfer Agent to escrow and redeem Class A Shares in your account to pay
this additional charge. The Additional Statement has more information
about the Statement of Intention, which you should read carefully.

23
<PAGE>

COMMON QUESTIONS ABOUT THE PURCHASE OF CLASS B SHARES

What Is The Offering Price Of Class B Shares?
You may purchase Class B Shares of the Fund at the next determined NAV with-
out an initial sales charge. However, Class B Shares redeemed within six
years of purchase will be subject to a CDSC at the rates shown in the table
below based on how long you held your shares.

The CDSC schedule is as follows:

<TABLE>
<CAPTION>
CDSC as a
Percentage of
Dollar Amount
Year Since Purchase Subject to CDSC
----------------------------------------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter None
----------------------------------------
</TABLE>

Proceeds from the CDSC are payable to the Distributor and may be used in
whole or in part to defray the Distributor's expenses related to providing
distribution-related services to the Fund in connection with the sale of
Class B Shares, including the payment of compensation to Authorized Dealers.
A commission equal to 4% of the amount invested is paid to Authorized Deal-
ers.

What Should I Know About The Automatic Conversion Of Class B Shares?
Class B Shares of the Fund will automatically convert into Class A Shares of
the Fund at the end of the calendar quarter that is eight years after the
purchase date.

If you acquire Class B Shares of the Fund by exchange from Class B Shares of
another Goldman Sachs Fund, your Class B Shares will convert into Class A
Shares of such Fund based on the date of the initial purchase and the CDSC
schedule of that purchase.

If you acquire Class B Shares through reinvestment of distributions, your
Class B Shares will convert into Class A Shares based on the date of the
initial purchase of the shares on which the distribution was paid.

The conversion of Class B Shares to Class A Shares will not occur at any
time the Fund is advised that such conversions may constitute taxable events
for federal tax purposes, which the Fund believes is unlikely. If conver-
sions do not occur as a

24
<PAGE>

SHAREHOLDER GUIDE

result of possible taxability, Class B Shares would continue to be subject
to higher expenses than Class A Shares for an indeterminate period.

A COMMON QUESTION ABOUT THE PURCHASE OF CLASS C SHARES

What Is The Offering Price Of Class C Shares?
You may purchase Class C Shares of the Fund at the next determined NAV with-
out paying an initial sales charge. However, if you redeem Class C Shares
within 12 months of purchase, a CDSC of 1% will normally be deducted from
the redemption proceeds; provided that in connection with purchases by pen-
sion and profit sharing plans, pension funds and other company-sponsored
benefit plans, where all of the Class C Shares are redeemed within 12 months
of purchase, a CDSC of 1% may be imposed upon the plan sponsor or third
party administrator.

Proceeds from the CDSC are payable to the Distributor and may be used in
whole or in part to defray the Distributor's expenses related to providing
distribution-related services to the Fund in connection with the sale of
Class C Shares, including the payment of compensation to Authorized Dealers.
An amount equal to 1% of the amount invested is normally paid by the Dis-
tributor to Authorized Dealers.

COMMON QUESTIONS APPLICABLE TO THE PURCHASE OF CLASS A, B
AND C SHARES

What Else Do I Need To Know About The CDSC On Class A, B Or C Shares?
. The CDSC is based on the lesser of the NAV of the shares at the time of
redemption or the original offering price (which is the original NAV).
. No CDSC is charged on shares acquired from reinvested dividends or capi-
tal gains distributions.
. No CDSC is charged on the per share appreciation of your account over
the initial purchase price.
. When counting the number of months since a purchase of Class B or Class
C Shares was made, all payments made during a month will be combined and
considered to have been made on the first day of that month.
. To keep your CDSC as low as possible, each time you place a request to
sell shares, the Fund will first sell any shares in your account that do
not carry a CDSC and then the shares in your account that have been held
the longest.

25
<PAGE>

In What Situations May The CDSC On Class A, B Or C Shares Be Waived Or
Reduced?
The CDSC on Class A, Class B and Class C Shares that are subject to a CDSC
may be waived or reduced if the redemption relates to:
. Retirement distributions or loans to participants or beneficiaries from
pension and profit sharing plans, pension funds and other company-spon-
sored benefit plans (each a "Retirement Plan");
. The death or disability (as defined in Section 72(m)(7) of the Internal
Revenue Code of 1986, as amended (the "Code")) of a participant or benefi-
ciary in a Retirement Plan;
. Hardship withdrawals by a participant or beneficiary in a Retirement Plan;
. Satisfying the minimum distribution requirements of the Code;
. Establishing "substantially equal periodic payments" as described under
Section 72(t)(2) of the Code;
. The separation from service by a participant or beneficiary in a Retire-
ment Plan;
. The death or disability (as defined in Section 72(m)(7) of the Code) of a
shareholder if the redemption is made within one year of the event;
. Excess contributions distributed from a Retirement Plan;
. Distributions from a qualified Retirement Plan invested in the Goldman
Sachs Funds which are being rolled over to a Goldman Sachs IRA; or
. Redemption proceeds which are to be reinvested in accounts or non-regis-
tered products over which GSAM or its advisory affiliates have investment
discretion.

In addition, Class A, B and C Shares subject to a systematic withdrawal plan
may be redeemed without a CDSC. The Fund reserves the right to limit such
redemptions, on an annual basis, to 12% each of the value of your Class B
and C Shares and 10% of the value of your Class A Shares.

How Do I Decide Whether To Buy Class A, B Or C Shares?
The decision as to which Class to purchase depends on the amount you invest,
the intended length of the investment and your personal situation.

. Class A Shares. If you are making an investment of $50,000 or more that
qualifies for a reduced sales charge, you should consider purchasing Class
A Shares.
. Class B Shares. If you plan to hold your investment for at least six years
and would prefer not to pay an initial sales charge, you might consider
purchasing Class B Shares. By not paying a front-end sales charge, your
entire investment in Class B Shares is available to work for you from the
time you make your initial investment. However, the distribution and serv-
ice fee paid by Class B

26
<PAGE>

SHAREHOLDER GUIDE

Shares will cause your Class B Shares (until conversion to Class A Shares)
to have a higher expense ratio, and thus lower performance and lower divi-
dend payments (to the extent dividends are paid) than Class A Shares. A
maximum purchase limitation of $250,000 in the aggregate normally applies
to Class B Shares.
. Class C Shares. If you are unsure of the length of your investment or plan
to hold your investment for less than six years and would prefer not to
pay an initial sales charge, you may prefer Class C Shares. By not paying
a front-end sales charge, your entire investment in Class C Shares is
available to work for you from the time you make your initial investment.
However, the distribution and service fee paid by Class C Shares will
cause your Class C Shares to have a higher expense ratio, and thus lower
performance and lower dividend payments (to the extent dividends are paid)
than Class A Shares (or Class B Shares after conversion to Class A
Shares).
Although Class C Shares are subject to a CDSC for only 12 months, Class C
Shares do not have the conversion feature applicable to Class B Shares and
your investment will therefore pay higher distribution fees indefinitely.
A maximum purchase limitation of $1,000,000 in the aggregate normally
applies to purchases of Class C Shares.

Note: Authorized Dealers may receive different compensation for selling
Class A, Class B or Class C Shares.

In addition to Class A, Class B and Class C Shares, the Fund also offers
other classes of shares to investors. These other share classes are subject
to different fees and expenses (which affect performance), have different
minimum investment requirements and are entitled to different services.
Information regarding these other share classes may be obtained from your
sales representative or from Goldman Sachs by calling the number on the back
cover of this Prospectus.

HOW TO SELL SHARES

How Can I Sell Class A, Class B And Class C Shares Of The Fund?
You may arrange to take money out of your account by selling (redeeming)
some or all of your shares. The Fund will redeem its shares upon request on
any business day at the NAV next determined after receipt of such request in
proper form, subject to any applicable CDSC. You may request that redemption
proceeds be sent to you by check or by wire (if the wire instructions are on
record). Redemptions may be requested in writing or by telephone.

27
<PAGE>

<TABLE>
<CAPTION>
Instructions For Redemptions:
--------------------------------------------------------------------
<S> <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
.Obtain a signature guarantee (see details below)
.Mail your request to:
Goldman Sachs Funds
c/o NFDS
P.O. Box 219711
Kansas City, MO 64121-9711
--------------------------------------------------------------------
By Telephone: If you have not declined the telephone redemption
privilege on your Account Application:
.1-800-526-7384
(8:00 a.m. to 4:00 p.m. New York time)
.You may redeem up to $50,000 of your shares
within any 7 calendar day period
.Proceeds which are sent directly to a Goldman
Sachs brokerage account are not subject to the
$50,000 limit
--------------------------------------------------------------------
</TABLE>

When Do I Need A Signature Guarantee To Redeem Shares?
A signature guarantee is required if:
. You are requesting in writing to redeem shares in an amount over $50,000;
. You would like the redemption proceeds sent to an address that is not your
address of record; or
. You would like to change the bank designated on your Account Application.

A signature guarantee must be obtained from a bank, brokerage firm or other
financial intermediary that is a member of an approved Medallion Guarantee
Program or that is otherwise approved by the Fund. A notary public cannot
provide a signature guarantee. Additional documentation may be required for
executors, trustees or corporations or when deemed appropriate by the Trans-
fer Agent.

28
<PAGE>

SHAREHOLDER GUIDE

In an effort to prevent unauthorized or fraudulent redemption and exchange
requests by telephone, Goldman Sachs and NFDS each employ reasonable proce-
dures 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.
. Proceeds of telephone redemption requests will be sent only to your
address of record or authorized bank account designated in the Account
Application (unless you provide written instructions and a signature guar-
antee, indicating another address or account) and exchanges of shares nor-
mally will be made only to an identically registered account.
. Telephone redemptions by check to your address of record will not be
accepted during the 30-day period following any change in your address of
record.
. The telephone redemption option does not apply to shares held in a "street
name" account. "Street name" accounts are accounts maintained and serviced
by your Authorized Dealer. If your account is held in "street name," you
should contact your registered representative of record, who may make tel-
ephone redemptions on your behalf.
. 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.

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
federal 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
proceeds may be delayed one additional business day.
. A transaction fee of $7.50 may be charged for payments of redemption pro-
ceeds by wire. Your bank may also charge wiring fees. You should contact
your bank directly to learn whether it charges such fees.
. To change the bank designated on your Account Application, you must send
written instructions (with your signature guaranteed) to the Transfer
Agent.

29
<PAGE>

. Neither the Trust, Goldman Sachs nor any Authorized Dealer 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 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 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.

The Trust reserves the right to:
. Redeem your shares if your account balance is less than $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
Trustees to be in the best interests 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. The Fund may,
in its discretion, pay redemption proceeds in-kind at any time or if
requested by a shareholder. The Fund anticipates that it will normally
grant shareholder requests for an in-kind distribution so long as the dis-
tribution is in the best interests of the Fund and its other shareholders.
.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
in additional Fund shares will be reinvested at NAV. No interest will
accrue on amounts represented by uncashed distribution or redemption
checks.

30
<PAGE>

SHAREHOLDER GUIDE

Can I Reinvest Redemption Proceeds In The Same Or Another Goldman Sachs
Fund?
You may redeem shares of the Fund and reinvest a portion or all of the
redemption proceeds (plus any additional amounts needed to round off pur-
chases to the nearest full share) at NAV. To be eligible for this privilege,
you must hold the shares you want to redeem for at least 30 days and you
must reinvest the share proceeds within 90 days after you redeem. You may
reinvest as follows:
. Class A or B Shares--Class A Shares of the Fund or any other Goldman Sachs
Fund
. Class C Shares--Class C Shares of the Fund or any other Goldman Sachs Fund
. You should obtain and read the applicable prospectuses before investing in
any other Funds.
. If you pay a CDSC upon redemption of Class A or Class C Shares and then
reinvest in Class A or Class C Shares as described above, your account
will be credited with the amount of the CDSC you paid. The reinvested
shares will, however, continue to be subject to a CDSC. The holding period
of the shares acquired through reinvestment will include the holding
period of the redeemed shares for purposes of computing the CDSC payable
upon a subsequent redemption. For Class B Shares, you may reinvest the
redemption proceeds in Class A Shares at NAV but the amount of the CDSC
paid upon redemption of the Class B Shares will not be credited to your
account.
. The reinvestment privilege may be exercised at any time in connection with
transactions in which the proceeds are reinvested at NAV in a tax-shel-
tered retirement plan. In other cases, the reinvestment privilege may be
exercised once per year upon receipt of a written request.
. You may be subject to capital gains tax as a result of a redemption. You
should consult your tax adviser concerning the tax consequences of a
redemption and reinvestment.

31
<PAGE>

Can I Exchange My Investment From One Fund To Another?
You may exchange shares of the Fund at NAV without the imposition of an ini-
tial sales charge or CDSC at the time of exchange for shares of the same
class or an equivalent class of any other Goldman Sachs Fund. The exchange
privilege may be materially 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 you want to exchange
.Obtain a signature guarantee (see details above)
.Mail the request to:
Goldman Sachs Funds
c/o NFDS
P.O. Box 219711
Kansas City, MO 64121-9711
or for overnight delivery -
Goldman Sachs Funds
c/o NFDS
330 West 9th St.
Poindexter Bldg., 1st Floor
Kansas City, MO 64105
-------------------------------------------------------------------
By Telephone: If you have not declined the telephone exchange
privilege on your Account Application:
.1-800-526-7384 (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.
. Six free exchanges are allowed in each 12 month period.
. A $12.50 fee may be charged for each subsequent exchange.
. There is no charge for exchanges made pursuant to the Automatic Exchange
Program.
. The exchanged shares may later be exchanged for shares of the same class
(or an equivalent class) of the original Fund at the next determined NAV
without the imposition of an initial sales charge or CDSC if the amount in
the Fund resulting from such exchanges is less than the largest amount on
which you have previously paid the applicable sales charge.
. When you exchange shares subject to a CDSC, no CDSC will be charged at
that time. The exchanged shares will be subject to the CDSC of the shares

32
<PAGE>

SHAREHOLDER GUIDE

originally held. For purposes of determining the amount of the applicable
CDSC, the length of time you have owned the shares will be measured from
the date you acquired the original shares subject to a CDSC and will not be
affected by a subsequent exchange.
. Eligible investors may exchange certain classes of shares for another
class of shares of the Fund. For further information, call Goldman Sachs
Funds at 1-800-526-7384.
. All exchanges which represent an initial investment in a Fund must satisfy
the minimum initial investment requirements of that Fund.
. 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 and NFDS may use reasonable procedures described under "What
Do I Need to Know About Telephone Redemption Requests?" in an effort to
prevent unauthorized or fraudulent telephone exchange requests.
. Telephone exchanges normally will be made only to an identically regis-
tered account. Shares may be exchanged among accounts with different
names, addresses and social security or other taxpayer identification num-
bers only if the exchange instructions are in writing and accompanied by a
signature guarantee.

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.

SHAREHOLDER SERVICES

Can I Arrange To Have Automatic Investments Made On A Regular Basis?
You may be able to make systematic cash investments through your bank via
ACH transfer or your checking account via bank draft each month. Forms for
this option are available from Goldman Sachs, your Authorized Dealer or you
may check the appropriate box on the Account Application.

Can My Dividends And Distributions From The Fund Be Invested In Other Funds?
You may elect to cross-reinvest dividends and capital gain distributions
paid by the Fund in shares of the same class or an equivalent class of any
other Goldman Sachs Fund.
. Shares will be purchased at NAV.
. No initial sales charge or CDSC will be imposed.

33
<PAGE>

. You may elect cross-reinvestment into an identically registered account or
an account registered in a different name or with a different address,
social security number or taxpayer identification number provided that the
account has been properly established, appropriate signature guarantees
obtained and the minimum initial investment has been satisfied.

Can I Arrange To Have Automatic Exchanges Made On A Regular Basis?
You may elect to exchange automatically a specified dollar amount of shares
of the Fund for shares of the same class or an equivalent class of any other
Goldman Sachs Fund.
. Shares will be purchased at NAV.
. No initial sales charge is imposed.
. Shares subject to a CDSC acquired under this program may be subject to a
CDSC at the time of redemption from the Fund into which the exchange is
made depending upon the date and value of your original purchase.
. Automatic exchanges are made monthly on the 15th day of each month or the
first business day thereafter.
. Minimum dollar amount: $50 per month.

What Else Should I Know About Cross-Reinvestments And Automatic Exchanges?
Cross-reinvestments and automatic exchanges are subject to the following
conditions:
. You must hold $5,000 or more in the Fund which is paying the dividend or
from which the exchange is being made.
. You must invest an amount in the Fund into which cross-reinvestments or
automatic exchanges are being made that is equal to that Fund's minimum
initial investment or continue to cross-reinvest or to make automatic
exchanges until such minimum initial investment is met.
. You should obtain and read the prospectus of the Fund into which dividends
are invested or automatic exchanges are made.

Can I Have Automatic Withdrawals Made On A Regular Basis?
You may draw on your account systematically via check or ACH transfer in any
amount of $50 or more.
. It is normally undesirable to maintain a systematic withdrawal plan at the
same time that you are purchasing additional Class A, Class B or Class C
Shares because of the sales charge imposed on your purchases of Class A
Shares or the imposition of a CDSC on your redemptions of Class A, Class B
or Class C Shares.

34
<PAGE>

SHAREHOLDER GUIDE

. You must have a minimum balance of $5,000 in the Fund.
. Checks are mailed on or about the 25th day of each month.
. Each systematic withdrawal is a redemption and therefore a taxable trans-
action.
. The CDSC applicable to Class A, Class B or Class C Shares redeemed under
the systematic withdrawal plan may be waived.

What Types of Reports Will I Be Sent Regarding My Investment?
You will be provided with a printed confirmation of each transaction in your
account and an individual quarterly account statement. A year-to-date state-
ment for your account will be provided upon request made to Goldman Sachs.
If your account is held in "street name" you may receive your statement and
confirmations on a different schedule.

You will also receive an annual shareholder report containing audited finan-
cial statements and a semi-annual shareholder report. If you have consented
to the delivery of a single copy of shareholder reports, prospectuses and
other information to all shareholders who share the same mailing address
with your account, you may revoke your consent at any time by contacting
Goldman Sachs Funds by phone at 1-800-526-7384 or by mail at Goldman Sachs
Funds, 4900 Sears Tower--60th Floor, Chicago, IL 60606-6372. The Fund will
begin sending individual copies to you within 30 days after receipt of your
revocation.

The Fund does not generally provide sub-accounting services.

What Should I Know When I Purchase Shares Through An Authorized Dealer?
Authorized Dealers and other financial intermediaries may provide varying
arrangements for their clients to purchase and redeem Fund shares. They may
charge additional fees not described in this Prospectus to their customers
for such services.

If shares of the Fund are held in a "street name" account with an Authorized
Dealer, all recordkeeping, transaction processing and payments of distribu-
tions relating to your account will be performed by the Authorized Dealer,
and not by the Fund and its Transfer Agent. Since the Fund will have no rec-
ord of your transactions, you should contact the Authorized Dealer to pur-
chase, redeem or exchange shares, to make changes in or give instructions
concerning the account or to obtain information about your account. The
transfer of shares in a "street name" account to an account with another
dealer or to an account directly with the Fund involves special procedures
and will require you to obtain historical purchase information about the
shares in the account from the Authorized Dealer.

Authorized Dealers and other financial intermediaries may be authorized to
accept, on behalf of the Trust, purchase, redemption and exchange orders
placed

35
<PAGE>

by or on behalf of their customers, and if approved by the Trust, to desig-
nate other intermediaries to accept such orders. In these cases:
. The Fund will be deemed to have received an order that is in proper form
when the order is accepted by an Authorized Dealer or intermediary on a
business day, and the order will be priced at the Fund's NAV per share
(adjusted for any applicable sales charge) next determined after such
acceptance.
. Authorized Dealers and intermediaries are responsible for transmitting
accepted orders to the Fund within the time period agreed upon by them.

You should contact your Authorized Dealer or intermediary to learn whether
it is authorized to accept orders for the Trust.

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 Authorized Dealers and other per-
sons 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.

DISTRIBUTION SERVICES AND FEES

What Are The Different Distribution And Service Fees Paid By Class A, B and
C Shares?
The Trust has adopted distribution and service plans (each a "Plan") under
which Class A, Class B and Class C Shares bear distribution and service fees
paid to Authorized Dealers and Goldman Sachs. If the fees received by
Goldman Sachs pursuant to the Plans exceed its expenses, Goldman Sachs may
realize a profit from their arrangements. Goldman Sachs pays the distribu-
tion and service fees on a quarterly basis.

Under the Plans, Goldman Sachs is entitled to a monthly fee from the Fund
for distribution services equal, on an annual basis, to 0.25%, 0.75% and
0.75%, respectively, of the Fund's average daily net assets attributed to
Class A, Class B and Class C Shares. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time, these fees will increase the
cost of your investment and may cost you more than paying other types of
such charges.

The distribution fees are subject to the requirements of Rule 12b-1 under
the Act, and may be used (among other things) for:
. Compensation paid to and expenses incurred by Authorized Dealers, Goldman
Sachs and their respective officers, employees and sales representatives;
. Commissions paid to Authorized Dealers;
. Allocable overhead;

36
<PAGE>

SHAREHOLDER GUIDE

. Telephone and travel expenses;
. Interest and other costs associated with the financing of such compensa-
tion and expenses;
. Printing of prospectuses for prospective shareholders;
. Preparation and distribution of sales literature or advertising of any
type; and
. All other expenses incurred in connection with activities primarily
intended to result in the sale of Class A, Class B and Class C Shares.

In connection with the sale of Class C Shares, Goldman Sachs normally begins
paying the 0.75% distribution fee as an ongoing commission to Authorized
Dealers after the shares have been held for one year.

PERSONAL ACCOUNT MAINTENANCE SERVICES AND FEES

Under the Plans, Goldman Sachs is also entitled to receive a separate fee
equal on an annual basis to 0.25% of the Fund's average daily net assets
attributed to Class B or Class C Shares. This fee is for personal and
account maintenance services, and may be used to make payments to Goldman
Sachs, Authorized Dealers and their officers, sales representatives and
employees for responding to inquiries of, and furnishing assistance to,
shareholders regarding ownership of their shares or their accounts or simi-
lar services not otherwise provided on behalf of the Fund. If the fees
received by Goldman Sachs pursuant to the Plans exceed its expenses, Goldman
Sachs may realize a profit from this arrangement.

In connection with the sale of Class C Shares, Goldman Sachs normally begins
paying the 0.25% ongoing service fee to Authorized Dealers after the shares
have been held for one year.

37
<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.

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 (although the
Fund attempts to minimize capital gains and income distributions in seeking
its investment objective). This is true whether you reinvest your distribu-
tions in additional Fund shares or receive them in cash. For federal tax
purposes, the Fund's income dividend distributions and short-term capital
gain distributions are taxable to you as ordinary income. Any long-term cap-
ital 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. A percentage
of the Fund's dividends paid to corporate shareholders may be eligible for
the corporate dividends-received deduction. The Fund will inform sharehold-
ers 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."

38
<PAGE>

TAXATION

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.

Investments in the Fund are subject to the tax risks described previously
under "Principal Risks of the Fund--Risks of Tax-Managed Investing."

39
<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 equity securities.
"Equity securities" include common stocks, preferred stocks, interests in
real estate investment trusts, convertible debt obligations, convertible
preferred stocks, equity interests in trusts, partnerships, joint ventures,
limited liability companies and similar enterprises, warrants, and stock
purchase rights. In general, stock values fluctuate in response to the
activities of individual companies and in response to general market and
economic conditions. Accordingly, the value of the stocks that the Fund
holds may decline over short or extended periods. The stock markets tend to
be cyclical, with periods when stock prices generally rise and periods when
prices generally decline. The volatility of equity securities means that the
value of your investment in the Fund may increase or decrease. As of the
date of this Prospectus, certain stock markets were trading at or close to
record high levels and there can be no guarantee that such levels will con-
tinue.

To the extent that the Fund invests in fixed-income securities, the Fund
will also be subject to the risks associated with its fixed-income securi-
ties. These risks include interest rate risk and credit risk. In general,
interest rate risk involves the risk that when interest rates decline, the
market value of fixed-income securities tends to increase. Conversely, when
interest rates increase, the market value of fixed-income securities tends
to decline. Credit risk involves the risk that an issuer could default on
its obligations, and the Fund will not recover its investment.

A high rate of portfolio turnover (100% or more) involves correspondingly
greater expenses which must be borne by the Fund and its shareholders. The
portfolio turnover rate is calculated by dividing the lesser of the dollar
amount of sales or purchases of portfolio securities by the average monthly
value of the Fund's portfolio securities, excluding securities having a
maturity at the date of purchase of one year or less.

The following sections provide further information on certain types of secu-
rities and investment techniques that may be used by the Fund, including
their 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

40
<PAGE>

APPENDIX A

policies not specifically designated as fundamental are non-fundamental 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 position and
needs.

B. Other Portfolio Risks

Risks of Investing in Small Capitalization Companies and REITs. The Fund may
invest in small capitalization companies and REITs. Investments in small
capitalization companies and REITs involve greater risk and portfolio price
volatility than investments in larger capitalization stocks. Among the rea-
sons for the greater price volatility of these investments are the less cer-
tain growth prospects of smaller firms and the lower degree of liquidity in
the markets for such securities. Small capitalization companies and REITs
may be thinly traded and may have to be sold at a discount from current mar-
ket prices or in small lots over an extended period of time. In addition,
these securities are subject to the risk that during certain periods the
liquidity of particular issuers or industries, or all securities in these
investment categories, will shrink or disappear suddenly and without warning
as a result of adverse economic or market conditions, or adverse investor
perceptions whether or not accurate. Because of the lack of sufficient mar-
ket liquidity, the Fund may incur losses because it will be required to
effect sales at a disadvantageous time and only then at a substantial drop
in price. Small capitalization companies and REITs include "unseasoned"
issuers that do not have an established financial history; often have lim-
ited product lines, markets or financial resources; may depend on or use a
few key personnel for management; and may be susceptible to losses and risks
of bankruptcy. Transaction costs for these investments are often higher than
those of larger capitalization companies. Investments in small capitaliza-
tion companies and REITs may be more difficult to price precisely than other
types of securities because of their characteristics and lower trading vol-
umes.

Risks of Foreign Investments. The Fund may invest in foreign issuers that
are traded in the United States. Foreign investments involve special risks
that are not typically associated with U.S. dollar denominated or quoted
securities of U.S. issuers. Foreign investments may be affected by changes
in currency rates, changes in foreign or U.S. laws or restrictions applica-
ble to such investments and changes in exchange control regulations (e.g.,
currency blockage). A decline in the exchange rate of the currency (i.e.,
weakening of the currency against the U.S. dollar) in which a portfolio
security is quoted or denominated relative to the U.S. dollar would reduce
the value of the portfolio security. In addition, if the currency in which
the Fund receives dividends, interest or other payments declines in value

41
<PAGE>

against the U.S. dollar before such income is distributed as dividends to
shareholders or converted to U.S. dollars, the Fund may have to sell portfo-
lio securities to obtain sufficient cash to pay such dividends.

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 about a U.S. issuer. In addition, there is generally less gov-
ernment 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 secu-
rities of many foreign issuers are less liquid and more volatile than secu-
rities of comparable domestic issuers.

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.

Investments in foreign securities may take the form of sponsored and
unsponsored American Depository Receipts ("ADRs") and Global Depository
Receipts ("GDRs"). ADRs represent the right to receive securities of foreign
issuers deposited in a domestic bank or a correspondent bank. Prices of ADRs
are quoted in U.S. dollars, and ADRs are traded in the United States. GDRs
are receipts evidencing an arrangement with a non-U.S. bank. GDRs are not
necessarily quoted in the same currency as the underlying security.

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). Investing for non-hedging purposes is considered a
speculative practice and presents even greater risk of loss.

42
<PAGE>

APPENDIX A

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.

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), domestic corporations,
banks and other issuers. Further information is provided in the Additional
Statement.

Debt securities rated BBB or higher by Standard & Poor's or Baa or higher by
Moody's are considered "investment grade." Securities rated BBB or Baa are
considered medium-grade obligations with speculative characteristics, and
adverse economic conditions or changing circumstances may weaken their
issuers' capacity to pay interest and repay principal. 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 rating organizations, determined by the Investment
Adviser to be of comparable credit quality.

Temporary Investment Risks. The Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. government securities
.Commercial paper rated at least A-2 by Standard & Poor's or P-2 by Moody's
.Certificates of deposit
.Bankers' acceptances
.Repurchase agreements

43
<PAGE>

.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year

When the 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 their associ-
ated risks. Further information is provided in the Additional Statement,
which is available upon request.

Convertible Securities. The Fund may invest in convertible securities. Con-
vertible 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 securities have both equity and fixed-income risk charac-
teristics. Like all fixed-income securities, the value of convertible secu-
rities 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. However, when the market price of the common stock
underlying a convertible security exceeds the conversion price of the con-
vertible security, the convertible security tends to reflect the market
price of the underlying common stock. As the market price of the underlying
common stock declines, the convertible security, like a fixed-income securi-
ty, 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 securities and may be more volatile, less
liquid and more difficult to price accurately than less complex securities.

44
<PAGE>

APPENDIX A

REITs. The Fund may invest in REITs. REITs are pooled investment vehicles
that invest primarily in either real estate or real estate related loans.
The value of a REIT is affected by changes in the value of the properties
owned by the REIT or securing mortgage loans held by the REIT. REITs are
dependent upon the ability of the REITs' managers, and are subject to heavy
cash flow dependency, default by borrowers and the qualification of the
REITs under applicable regulatory requirements for favorable income tax
treatment. REITs are also subject to risks generally associated with invest-
ments in real estate including possible declines in the value of real
estate, general and local economic conditions, environmental problems and
changes in interest rates. To the extent that assets underlying a REIT are
concentrated geographically, by property type or in certain other respects,
these risks may be heightened. The Fund will indirectly bear its proportion-
ate share of any expenses, including management fees, paid by a REIT in
which it invests.

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 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
cross-hedging purposes, or to seek to increase total return (which is con-
sidered a speculative activity). The successful use of options depends in
part on the ability of the Investment Adviser to manage future price fluctu-
ations and the degree of correlation between the options and securities mar-
kets. 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 investment 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 at a future time at a specified
price. An option on a

45
<PAGE>

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 only with respect to U.S. equity indices.

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 the extent the Fund invests in foreign securities, currency
exchange rates, or to otherwise manage its term structure, sector selection
and duration 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 regula-
tions 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 transac-
tions, if immediately thereafter the sum of the amount of initial margin
deposits and premiums paid on the Fund's outstanding positions in futures
and related options entered into for the purpose of seeking to increase
total return would exceed 5% of the market value of the Fund's net assets.

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.

46
<PAGE>

APPENDIX A

.Foreign exchanges may not provide the same protection as U.S. exchanges.

Equity Swaps. The Fund may invest in equity swaps. Equity swaps allow the
parties to a swap agreement to exchange the dividend income or other compo-
nents of return on an equity investment (for example, a group of equity
securities or an index) for a component of return on another non-equity or
equity investment.

An equity swap may be used by the Fund to invest in a market without owning
or taking physical custody of securities in circumstances in which direct
investment may be restricted for legal reasons or is otherwise impractical.
Equity swaps are derivatives and their value can be very volatile. To the
extent that the Investment Adviser does not accurately analyze and predict
the potential relative fluctuation of the components swapped with another
party, the Fund may suffer a loss. The value of some components of an equity
swap (such as the dividends on a common stock) may also be sensitive to
changes in interest rates. Furthermore, the Fund may suffer a loss if the
counterparty defaults.

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 the entering into a contract to
purchase or sell securities for a fixed price at a future date beyond the
customary settlement period.

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.

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.

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

47
<PAGE>

associated with delay and enforcement of the repurchase agreement. In addi-
tion, in the event of bankruptcy of the seller, the Fund could suffer addi-
tional losses if a court determines that the Fund's interest in the collat-
eral is not enforceable.

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.

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 loan 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 deprecia-
tion 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 a capital loss
if the institution with which it has engaged in a portfolio loan transaction
breaches its agreement with the Fund.

Preferred Stock, Warrants and Rights. The Fund may invest in preferred
stock, warrants and rights. Preferred stocks are securities that represent
an ownership interest providing the holder with claims on the issuer's earn-
ings 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.

Warrants and other rights are options to buy a stated number of shares of
common stock at a specified price at any time during the life of the warrant
or right. The holders of warrants and rights have no voting rights, receive
no dividends and have no rights with respect to the assets of the issuer.

48
<PAGE>

APPENDIX A

Other Investment Companies. The Fund may invest in securities of other
investment companies (including SPDRs and WEBS, as defined below and other
exchange-traded funds) subject to statutory limitations prescribed by the
Act. These limitations include a prohibition on the Fund acquiring more than
3% of the voting 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 company or more than 10% of its total assets in securities of
all investment companies. The Fund will indirectly bear its proportionate
share of any management fees and other expenses paid by such other invest-
ment companies. Exchange-traded funds such as SPDRs and WEBS are shares of
unaffiliated investment companies which are traded like traditional equity
securities on a national securities exchange or the NASDAQ National Market
System.

.Standard & Poor's Depository Receipts. The Fund may, consistent with its
investment policies, purchase Standard & Poor's Depository Receipts
("SPDRs"). SPDRs are securities traded on the American Stock Exchange
("AMEX") that represent ownership in the SPDR Trust, a trust which has been
established to accumulate and hold a portfolio of common stocks that is
intended to track the price performance and dividend yield of the S&P 500.
The SPDR Trust is sponsored by a subsidiary of the AMEX. SPDRs may be used
for several reasons, including, but not limited to, facilitating the han-
dling of cash flows or trading, or reducing transaction costs. The price
movement of SPDRs may not perfectly parallel the price action of the S&P
500.

.World Equity Benchmark Shares. World Equity Benchmark Shares ("WEBS") are
shares of an investment company that invests substantially all of its
assets in securities included in the MSCI indices for specified countries.
WEBS are listed on the AMEX and were initially offered to the public in
1996. The market prices of WEBS are expected to fluctuate in accordance
with both changes in the NAVs of their underlying indices and supply and
demand of WEBS on the AMEX. To date, WEBS have traded at relatively modest
discounts and premiums to their NAVs. However, WEBS have a limited operat-
ing history and information is lacking regarding the actual performance and
trading liquidity of WEBS for extended periods or over complete market
cycles. In addition, there is no assurance that the requirements of the
AMEX necessary to maintain the listing of WEBS will continue to be met or
will remain unchanged. In the event substantial market or other disruptions
affecting WEBS should occur in the future, the liquidity and value of the
Fund's shares could also be substantially and adversely affected. If such
disruptions were to occur, the Fund could be required to reconsider the use
of WEBS as part of its investment strategy.

49
<PAGE>

Unseasoned Companies. The Fund may invest in companies (including predeces-
sors) which have operated less than three years. The securities of such com-
panies may have limited liquidity, which can result in their being priced
higher or lower than might otherwise be the case. In addition, investments
in unseasoned companies are more speculative and entail greater risk than do
investments in companies with an established operating record.

Corporate Debt Obligations. Corporate debt obligations include bonds, notes,
debentures, commercial paper and other obligations of corporations to pay
interest and repay principal, and include securities issued by banks and
other financial institutions. The Fund may invest in corporate debt obliga-
tions issued by U.S. and certain non-U.S. issuers which issue securities
denominated in the U.S. dollar (including Yankee and Euro obligations). In
addition to obligations of corporations, corporate debt obligations include
securities issued by banks and other financial institutions and suprana-
tional entities (i.e., the World Bank, the International Monetary Fund,
etc.).

Bank Obligations. The Fund may invest in obligations issued or guaranteed by
U.S. or foreign banks. Bank obligations, including without limitations, time
deposits, bankers' acceptances and certificates of deposit, may be general
obligations of the parent bank or may be limited to the issuing branch by
the terms of the specific obligations or by government regulations. Banks
are subject to extensive but different governmental regulations which may
limit both the amount and types of loans which may be made and interest
rates which may be charged. 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 operation of this industry.

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 discretionary authority of the U.S. govern-
ment to purchase certain obligations 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.

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

50
<PAGE>

APPENDIX A

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 subdivi-
sions or authorities. For certain securities law purposes, custodial
receipts are not considered obligations of the U.S. government.

Borrowings. The Fund can borrow money from banks and other financial insti-
tutions in amounts not exceeding one-third of its total assets for temporary
or emergency purposes. The Fund may not make additional investments if
borrowings exceed 5% of its total assets.

51
<PAGE>

Index

<TABLE>
<C> <C> <S>
1 General Investment
Management Approach
3 Fund Investment Objective
and Strategies
3 Goldman Sachs CORE
Tax-Managed Equity Fund
5 Other Investment Practices
and Securities
7 Principal Risks of the Fund
9 Fund Performance
10 Fund Fees and Expenses
13 Service Providers
17 Dividends
18 Shareholder Guide
18 How To Buy Shares
27 How To Sell Shares
38 Taxation
40 Appendix A
Additional Information on
Portfolio Risks, Securities
and Techniques
</TABLE>
<PAGE>

CORE Tax-Managed Equity Fund
Prospectus (Class A, B and C 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 anual report for the CORE Tax-Managed Equity Fund for
the fiscal period ended December 31, 2000 will become available to share-
holders in February 2001.

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 1-800-526-7384.

To obtain other information and for shareholder inquiries:
By telephone - Call 1-800-526-7384
By mail - Goldman Sachs Funds, 4900 Sears Tower - 60th Floor, Chicago, IL
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
Goldman Sachs - http://www.gs.com (Prospectus Only)

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.
CORE/SM/ is a service mark of Goldman, Sachs & Co.

513219
CORTXPROABC
<PAGE>

Prospectus INSTITUTIONAL
SHARES

April 3, 2000

- -------------------------------------------------------------------------------
GOLDMAN SACHS CORE/SM/ TAX-MANAGED EQUITY FUND
- -------------------------------------------------------------------------------

[GRAPHIC]

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.

[LOGO OF GOLDMAN SACHS]
<PAGE>

NOT FDIC-INSURED May Lose Value No Bank Guarantee

<PAGE>

General Investment Management Approach

QUANTITATIVE ("CORE") STYLE FUND

I. CORE Stock Selection

1
<PAGE>

. Sector and size neutral: Portfolio ultimately has similar style, risk,
sector and market capitalization characteristics to the benchmark
. Tax optimized: All investment decisions consider expected after-tax
returns including realizing capital losses to offset realized gains, cre-
ating loss carry- forwards, and identifying securities for in-kind distri-
bution

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

2
<PAGE>

Fund Investment Objective and Strategies
Goldman Sachs
CORE Tax-Managed Equity Fund

FUND FACTS
- --------------------------------------------------------------------------------

Objective: Long-term after-tax growth of capital

Benchmark: Russell 3000 Index

Investment Focus: A total market, broadly diversified portfolio of U.S.
equity securities

Investment Style: Tax-managed quantitative focus

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term after-tax growth of capital through tax-
sensitive participation in a broadly diversified portfolio of U.S. equity
securities.

PRINCIPAL INVESTMENT STRATEGIES

3
<PAGE>

When the Fund borrows money, the Investment Adviser intends to hedge the
excess market exposure created by borrowing. There is no guarantee such
hedging will be completely effective.

Other. The Fund's investments in fixed-income securities are limited to
securities that are considered cash equivalents.

The Fund is not a suitable investment for IRAs, other tax-exempt or tax-
deferred accounts or for other investors who are not sensitive to the fed-
eral income tax consequences of their investments.

4
<PAGE>

Other Investment Practices and Securities

10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage
limitation on
usage;limited only by
the objective and
strategies of the Fund
- -- Not permitted

5
<PAGE>

10 Percent of total assets (italic type)

10 Percent of net assets (roman type)

6
<PAGE>

Principal Risks of the Fund

RISKS OF TAX-MANAGED INVESTING

The Fund is not a suitable investment for IRAs, other tax-exempt or tax-
deferred accounts or for other investors who are not sensitive to the fed-
eral income tax consequences of their investments.

INVESTMENT RISKS

7
<PAGE>

8
<PAGE>

Fund Performance

HOW THE FUND HAS PERFORMED

The Fund commenced operations as of the date of this Prospectus. Therefore,
no performance information is provided in this section.

9
<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>
CORE
Tax-Managed Equity
Fund
- -------------------------------------------------------------------------------
<S> <C>
Shareholder Fees
(fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on
Purchases 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 0.75%
Distribution and Service (12b-1) Fees None
Other Expenses2 0.19%
- -------------------------------------------------------------------------------
Total Fund Operating Expenses* 0.94%
- -------------------------------------------------------------------------------
</TABLE>
See page 11 for all other footnotes.

<TABLE>
<CAPTION>
CORE
Tax-Managed Equity
Fund
-----------------------------------------------------------------------------
<S> <C>
Annual Fund Operating Expenses
(expenses that are deducted from Fund
assets):1
Management Fees 0.75%
Distribution and Service (12b-1) Fees None
Other Expenses2 0.09%
-----------------------------------------------------------------------------
Total Fund Operating Expenses (after current
expense limitations) 0.84%
-----------------------------------------------------------------------------
</TABLE>

10
<PAGE>

FUND FEES AND EXPENSES

/1/The operating expenses for the Fund are estimated for the current year.
/2/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 voluntarily
agreed to reduce or limit "Other Expenses" (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>
CORE Tax-Managed
Equity 0.05%
</TABLE>

11
<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>
CORE Tax-Managed Equity $96 $300
- ---------------------------------------
</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").

12
<PAGE>

Service Providers

INVESTMENT ADVISER

13
<PAGE>

MANAGEMENT FEES

<TABLE>
<CAPTION>
Contractual Rate
------------------------------------------
<S> <C>
CORE Tax-Managed Equity 0.75%
------------------------------------------
</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.

14
<PAGE>

SERVICE PROVIDERS

FUND MANAGERS

- --------------------------------------------------------------------------------
Quantitative Equity Team

<TABLE>
<CAPTION>
Years
Primarily Five Year Employment
Name and Title Fund Responsibility Responsible History
- --------------------------------------------------------------------------------------
<C> <C> <C> <S>
Melissa Brown Senior Portfolio Manager-- Since Ms. Brown joined the
Vice President CORE Tax-Managed Equity 2000 Investment Adviser as a
Product Manager portfolio manager in
for 1998. From
Quantitative 1984 to 1998, she was
Equities the
director of Quantitative
Equity Research and
served on the Investment
Policy Committee at
Prudential Securities.
- --------------------------------------------------------------------------------------
Kent A. Clark Senior Portfolio Manager-- Since Mr. Clark joined the
Managing CORE Tax-Managed Equity 2000 Investment Adviser as a
Director portfolio manager in the
Director of quantitative equity
Quantitative management team in 1992.
Research
- --------------------------------------------------------------------------------------
Robert C. Jones Senior Portfolio Manager-- Since Mr. Jones joined the
Managing CORE Tax-Managed Equity 2000 Investment Adviser as a
Director portfolio manager in
Head of 1989.
Quantitative
Equities
- --------------------------------------------------------------------------------------
Victor H. Senior Portfolio Manager-- Since Mr. Pinter joined the
Pinter CORE Tax-Managed Equity 2000 Investment Adviser as a
Vice President research analyst in
Head of 1990. He became a
Portfolio portfolio manager in
Construction 1992.
- --------------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

DISTRIBUTOR AND TRANSFER AGENT

ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS

YEAR 2000

16
<PAGE>

Dividends

Dividends from investment company taxable income and distributions from net
capital gains are declared and paid as follows:

From time to time a portion of the Fund's dividends may constitute a return of
capital.

17
<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 Fund. 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.

18
<PAGE>

SHAREHOLDER GUIDE

. Authorized institutions and intermediaries will be responsible for trans-
mitting accepted orders and payments to the Trust within the time period
agreed upon by them.

You should contact your institution or intermediary 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 other classes of
shares to investors. These other share classes are subject to different fees
and expenses (which affect performance), have different minimum investment
requirements and are entitled to different services than Institutional
Shares. Information regarding these other share classes may be obtained from
your sales representative or from Goldman Sachs by calling the number on the
back cover of this Prospectus.

19
<PAGE>

What is My Minimum Investment in the Fund?

<TABLE>
<CAPTION>
Type of Investor Minimum Investment
-------------------------------------------------------------------------------
<S> <C>
. Banks, trust companies or $1,000,000 in Institutional Shares of the Fund
other depository alone or in combination with other assets
institutions investing for under the management of GSAM and its affiliates
their own account or on
behalf of clients
. Pension and profit sharing
plans, pension funds and
other company-sponsored
benefit plans
. 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
-------------------------------------------------------------------------------
. 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
-------------------------------------------------------------------------------
</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.

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 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
whenever it is deemed appropriate by the Fund's Investment Adviser.

20
<PAGE>

SHAREHOLDER GUIDE

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 or, if accurate
quotations are not readily available, the fair value of the Fund's invest-
ments may be determined in good faith under procedures established by the
Trustees.
. 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
(normally 4:00 p.m. New York time). 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.

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.

21
<PAGE>

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 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>
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 your 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

22
<PAGE>

SHAREHOLDER GUIDE

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.

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
federal 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
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, 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.

23
<PAGE>

What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
. 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.

The Trust reserves the right to:
. Redeem your shares if your account balance falls below $50 as a result of
earlier redemptions. 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
Trustees 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. The Fund may,
in its discretion, pay redemption proceeds in-kind at any time or if
requested by a shareholder. The Fund anticipates that it will normally
grant shareholder requests for an in-kind distribution so long as the dis-
tribution is in the best interests of the Fund and its other shareholders.
.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
in additional Fund shares will be reinvested at NAV. No interest will
accrue on amounts represented by uncashed distribution or redemption
checks.

24
<PAGE>

SHAREHOLDER GUIDE

Can I Exchange My Investment From One Fund To Another?
You may exchange Institutional Shares of a 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>

25
<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 regis-
tered 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 per-
son 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
unauthorized or fraudulent telephone exchange requests.

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.

26
<PAGE>

Taxation

TAXABILITY OF DISTRIBUTIONS

You should consider the possible tax consequences of Fund distributions and
the sale of your Fund shares.

TAXES ON DISTRIBUTIONS

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.

27
<PAGE>

TAXABILITY OF SALES AND EXCHANGES

OTHER INFORMATION

Investments in the Fund are subject to the tax risks described previously
under "Principal Risks of the Fund--Risks of Tax-Managed Investing."

28
<PAGE>

Appendix A
Additional Information on Portfolio Risks, Securities and Techniques
A. General Portfolio Risks

29
<PAGE>

B. Other Portfolio Risks

30
<PAGE>

APPENDIX A

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 about a U.S. issuer. In addition, there is generally less gov-
ernment 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 secu- rities of many foreign issuers
are less liquid and more volatile than securities of comparable domestic
issuers.

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.

31
<PAGE>

32
<PAGE>

APPENDIX A

.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year

When the Fund's assets are invested in such instruments, the Fund may not be
achieving its investment objective.

C. Portfolio Securities and Techniques

33
<PAGE>

34
<PAGE>

APPENDIX A

35
<PAGE>

.Foreign exchanges may not provide the same protection as U.S. exchanges.

36
<PAGE>

APPENDIX A

37
<PAGE>

38
<PAGE>

APPENDIX A

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

39
<PAGE>

40
<PAGE>

Index

<TABLE>
<C> <C> <S>
1 General Investment Management Approach
3 Fund Investment Objective and Strategies
3 Goldman Sachs CORE Tax-Managed Equity Fund
5 Other Investment Practices and Securities
7 Principal Risks of the Fund
9 Fund Performance
10 Fund Fees and Expenses
13 Service Providers
17 Dividends
18 Shareholder Guide
18 How To Buy Shares
22 How To Sell Shares
27 Taxation
29 Appendix A Additional Information on Portfolio
Risks, Securities and Techniques
</TABLE>
<PAGE>

CORE Tax-Managed Equity Fund
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 CORE Tax-Managed Equity Fund for
the fiscal period ended December 31, 2000 will become available in February
2001.

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 Funds, 4900 Sears Tower - 60th Floor, Chicago, IL
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

[LOGO OF GOLDMAN SACHS]

The Fund's investment company registration number is 811-5349.
CORE/SM/ is a service mark of Goldman, Sachs & Co.

CORTXPROINST
<PAGE>

Prospectus SERVICE
SHARES

April 3, 2000

- --------------------------------------------------------------------------------
GOLDMAN SACHS CORE /SM/ TAX-MANAGED EQUITY FUND
- --------------------------------------------------------------------------------

[GRAPHIC]

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.

[LOGO OF GOLDMAN SACHS]
<PAGE>

NOT FDIC-INSURED MAY LOSE VALUE NO BANK GUARANTEE

<PAGE>

General Investment Management Approach

QUANTITATIVE ("CORE") STYLE FUND

I. CORE Stock Selection

Phase 1: Quantitative Analysis
. COMPREHENSIVE: The Goldman Sachs' proprietary multifactor model
("Multifactor Model"), a rigorous computerized rating system, performs
daily evaluation of more than 3,000 domestic stocks
. RIGOROUS: The Multifactor Model provides thorough statistical analysis of
common investment themes (e.g., value, momentum and risk)
. OBJECTIVE: Quantitative analysis applied without bias across the board

Phase 2: Fundamental Research
. EXTENSIVE: Insights from Goldman Sachs analysts and more than 2,800 ana-
lysts at 200 brokerage firms
. FUNDAMENTAL INSIGHTS: Analysis of buy/hold/sell opinions are systemati-
cally factored into how we rank each of the 3,000+ domestic stocks
. INSIGHTFUL: Addresses issues such as new product introductions or manage-
ment changes that a purely quantitative model cannot readily evaluate

II. CORE Portfolio Construction
. BENCHMARK DRIVEN: Computer optimizer calculates numerous security combina-
tions at numerous weightings to identify an efficient risk/return portfo-
lio given the CORE Fund's benchmark

1
<PAGE>

. SECTOR AND SIZE NEUTRAL: Portfolio ultimately has similar style, risk,
sector and market capitalization characteristics to the benchmark
. TAX OPTIMIZED: All investment decisions consider expected after-tax
returns including realizing capital losses to offset realized gains, cre-
ating loss carry-forwards, and identifying securities for in-kind distri-
bution

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

2
<PAGE>

Fund Investment Objective and Strategies
Goldman Sachs
CORE Tax-Managed Equity Fund

FUND FACTS
- --------------------------------------------------------------------------------

Objective: Long-term after-tax growth of capital

Benchmark: Russell 3000 Index

Investment Focus: A total market, broadly diversified portfolio of U.S.
equity securities

Investment Style: Tax-managed quantitative focus

INVESTMENT OBJECTIVE

The Fund seeks to provide long-term after-tax growth of capital through tax-
sensitive participation in a broadly diversified portfolio of U.S. equity
securities.

PRINCIPAL INVESTMENT STRATEGIES

3
<PAGE>

When the Fund borrows money, the Investment Adviser intends to hedge the
excess market exposure created by borrowing. There is no guarantee such
hedging will be completely effective.

Other. The Fund's investments in fixed-income securities are limited to
securities that are considered cash equivalents.

The Fund is not a suitable investment for IRAs, other tax-exempt or tax-
deferred accounts or for other investors who are not sensitive to the fed-
eral income tax consequences of their investments.

4
<PAGE>

Other Investment Practices and Securities

10 Percent of total assets (italic type)
10 Percent of net assets (roman type)
. No specific percentage
limitation on
usage; limited only by
the objective and
strategies of the Fund
- -- Not permitted

<TABLE>
<CAPTION>
CORE
TAX-MANAGED
EQUITY
FUND
- ----------------------------------------------------------------------------
<S> <C>
Investment Practices
Borrowings 33 1/3
Custodial receipts .
Equity Swaps* 15
Foreign Currency Transactions --
Futures Contracts and Options on Futures Contracts . 1
Investment Company Securities (including exchange-traded funds) 10
Options on Securities and Securities Indices/2/ .
Repurchase Agreements .
Securities Lending 33 1/3
Short Sales Against the Box --
Unseasoned Companies .
Warrants and Stock Purchase Rights .
When-Issued Securities and Forward Commitments .
- ----------------------------------------------------------------------------
</TABLE>

5
<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
objective andstrategies
of the Fund
- -- Not permitted

<TABLE>
<CAPTION>
CORE
TAX-MANAGED
EQUITY
FUND
- ---------------------------------------------------------
<S> <C>
Investment Securities
American and Global Depository Receipts .
Asset-Backed and Mortgage-Backed Securities --
Bank Obligations/3/ .
Convertible Securities .
Corporate Debt Obligations/3/ .
Equity Securities 90+
Emerging Country Securities --
Fixed Income Securities/4/ 10
Foreign Securities5 .
Non-Investment Grade Fixed Income Securities --
Real Estate Investment Trusts ("REITs") .
Structured Securities* .
Temporary Investments 35
U.S. Government Securities/3/ .
- ---------------------------------------------------------
</TABLE>

6
<PAGE>

Principal Risks of the Fund

RISKS OF TAX-MANAGED INVESTING

The Fund is not a suitable investment for IRAs, other tax-exempt or tax-
deferred accounts or for other investors who are not sensitive to the fed-
eral income tax consequences of their investments.

INVESTMENT RISKS

<TABLE>
<CAPTION>
CORE
TAX-MANAGED
EQUITY
.APPLICABLE FUND
-----------------------------------------------------------------------------
<S> <C>
Stock .
Credit/Default .
Foreign .
Derivatives .
Interest Rate .
Management .
Market .
Liquidity .
Small Cap/REIT .
- ------------------------------------------------------------------------------
</TABLE>

.STOCK RISK--The risk that stock prices have historically risen and fallen
in periodic cycles. As of the date of this Prospectus, U.S. stock markets
and certain foreign stock markets were trading at or close to record high
levels. There is no guarantee that such levels will continue.

7
<PAGE>

.CREDIT/DEFAULT RISK--The risk that an issuer or guarantor of fixed-income
securities held by the Fund (which may have low credit ratings) may default
on its obligation to pay interest and repay principal.
.FOREIGN RISK--The risk that when the Fund invests in foreign securities, it
will be subject to risk of loss 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, confisca-
tions and other government restrictions. The Fund will also be subject to
the risk of negative foreign currency rate fluctuations.
.DERIVATIVES RISK--The risk that loss may result from the Fund's investments
in options, futures, swaps, structured securities and other derivative
instruments. These instruments may be leveraged so that small changes may
produce disproportionate losses to the Fund.
.INTEREST RATE RISK--The risk that when interest rates increase, fixed-
income securities held by the Fund will decline in value.
.MANAGEMENT RISK--The risk that a strategy used by the Investment Adviser
may fail to produce the intended results.
.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 compa-
nies and/or general economic conditions. Price changes may be temporary or
last for extended periods.
.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 unu-
sual market conditions, an unusually high volume of redemption requests, or
other reasons. Because the Fund may invest in small capitalization stocks
and REITs, the Fund will be especially subject to the risk that during cer-
tain periods the liquidity of particular issuers or industries, or all
securities within these investment categories, will shrink or disappear
suddenly and without warning as a result of adverse economic, market or
political events, or adverse investor perceptions whether or not accurate.
.SMALL CAP STOCK AND REIT RISK--The securities of small capitalization
stocks and REITs involve greater risks than those associated with larger,
more established companies and may be subject to more abrupt or erratic
price movements. Securities of such issuers may lack sufficient market
liquidity to enable the Fund to effect sales at an advantageous time or
without a substantial drop in price.

8
<PAGE>

Fund Performance

HOW THE FUND HAS PERFORMED

The Fund commenced operations as of the date of this Prospectus. Therefore,
no performance information is provided in this section.

9
<PAGE>

Fund Fees and Expenses (Service Shares)

This table describes the fees and expenses that you would pay if you buy and
hold Service Shares of the Fund.

<TABLE>
<CAPTION>
CORE
TAX-MANAGED
EQUITY
FUND
- ------------------------------------------------------------------------
<S> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT):
Maximum Sales Charge (Load) Imposed
on Purchases 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 0.75%
Service Fees2 0.50%
Other Expenses3 0.19%
- ------------------------------------------------------------------------
Total Fund Operating Expenses* 1.44%
- ------------------------------------------------------------------------
</TABLE>
See page 11 for all other footnotes.

* As a result of current expense limitations, the
estimated "Other Expenses" and "Total Fund Operating
Expenses" of the Fund which are actually incurred are
as set forth below. The expense limitations 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>
CORE
TAX-MANAGED
EQUITY
FUND
--------------------------------------
<S> <C>
Annual Fund Operating
Expenses
(expenses that are
deducted from Fund
assets):1
Management Fees 0.75%
Service Fees2 0.50%
Other Expenses3 0.09%
--------------------------------------
Total Fund Operating
Expenses (after current
expense limitations) 1.34%
--------------------------------------
</TABLE>

10
<PAGE>

FUND FEES AND EXPENSES

/1/The operating expenses for the Fund are estimated for the current year.
/2/Service Organizations may charge other fees to their customers who are bene-
ficial owners of Service Shares in connection with their customers'
accounts. Such fees may affect the return customers realize with respect to
their investments.
/3/Estimated "Other Expenses" include transfer agency fees equal to 0.04% of
the average daily net assets of the Fund's Service Shares, plus all other
ordinary expenses not detailed above. The Investment Adviser has voluntarily
agreed to reduce or limit "Other Expenses" (excluding management fees,
transfer agency fees, service fees, taxes, interest and brokerage fees and
litigation, indemnification and other extraordinary expenses) to the follow-
ing percentage of the Fund's average daily net assets:

<TABLE>
<CAPTION>
OTHER
FUND EXPENSES
<S> <C>
------------------------
CORE Tax-Managed
Equity 0.05%
</TABLE>

11
<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 Serv-
ice 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>
CORE TAX-MANAGED EQUITY $147 $456
- ---------------------------------------
</TABLE>

Service Organizations that invest in Service Shares on behalf of their custom-
ers may charge other fees directly to their customer accounts in connection
with their investments. You should contact your Service Organization for infor-
mation 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 Service Shares may receive other
compensation in connection with the sale and distribution of Service Shares or
for services to their customers' accounts and/or the Funds. For additional
information regarding such compensation, see "Shareholder Guide" in the Pro-
spectus and "Other Information" in the Statement of Additional Information
("Additional Statement").

12
<PAGE>

Service Providers

INVESTMENT ADVISER

<TABLE>
<CAPTION>
INVESTMENT ADVISER FUND
-----------------------------------------------------------------
<S> <C>
Goldman Sachs Asset Management ("GSAM") CORE Tax-Managed Equity
32 Old Slip
New York, New York 10005
-----------------------------------------------------------------
</TABLE>

13
<PAGE>

MANAGEMENT FEES

<TABLE>
<CAPTION>
CONTRACTUAL RATE
------------------------------------------
<S> <C>
CORE Tax-Managed Equity 0.75%
------------------------------------------
</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.

14
<PAGE>

SERVICE PROVIDERS

FUND MANAGERS

- --------------------------------------------------------------------------------
Quantitative Equity Team

<TABLE>
<CAPTION>
YEARS
FUND PRIMARILY
NAME AND TITLE RESPONSIBILITY RESPONSIBLE FIVE YEAR EMPLOYMENT HISTORY
- -------------------------------------------------------------------------------
<C> <C> <C> <S>
Melissa Brown SENIOR PORTFOLIO SINCE MS. BROWN JOINED THE
VICE PRESIDENT MANAGER-- 2000 INVESTMENT ADVISER AS A
PRODUCT MANAGER CORE TAX-MANAGED PORTFOLIO MANAGER IN 1998. FROM
FOR EQUITY 1984 TO 1998, SHE WAS THE
QUANTITATIVE DIRECTOR OF QUANTITATIVE EQUITY
EQUITIES RESEARCH AND SERVED ON THE
INVESTMENT POLICY COMMITTEE AT
PRUDENTIAL SECURITIES.
- -------------------------------------------------------------------------------
Kent A. Clark SENIOR PORTFOLIO SINCE MR. CLARK JOINED THE
MANAGING MANAGER-- CORE 2000 INVESTMENT ADVISER AS A
DIRECTOR TAX-MANAGED PORTFOLIO MANAGER IN THE
DIRECTOR OF EQUITY QUANTITATIVE EQUITY MANAGEMENT
QUANTITATIVE TEAM IN 1992.
RESEARCH
- -------------------------------------------------------------------------------
Robert C. Jones SENIOR PORTFOLIO SINCE MR. JONES JOINED THE
MANAGING MANAGER--CORE 2000 INVESTMENT ADVISER AS A
DIRECTOR TAX-MANAGED PORTFOLIO MANAGER IN 1989.
HEAD OF EQUITY
QUANTITATIVE
EQUITIES
- -------------------------------------------------------------------------------
Victor H. SENIOR PORTFOLIO SINCE MR. PINTER JOINED THE
Pinter MANAGER--CORE 2000 INVESTMENT ADVISER AS A RESEARCH
VICE PRESIDENT TAX-MANAGED ANALYST IN 1990. HE BECAME A
HEAD OF EQUITY PORTFOLIO MANAGER IN 1992.
PORTFOLIO
CONSTRUCTION
- -------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

DISTRIBUTOR AND TRANSFER AGENT

ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS

YEAR 2000

16
<PAGE>

Dividends

Dividends from investment company taxable income and distributions from net
capital gains are declared and paid as follows:

<TABLE>
<CAPTION>
INVESTMENT CAPITAL GAINS
FUND INCOME DIVIDENDS DISTRIBUTIONS
- -------------------------------------------------------
<S> <C> <C>
CORE Tax-Managed Equity ANNUALLY ANNUALLY
- -------------------------------------------------------
</TABLE>

From time to time a portion of the Fund's dividends may constitute a return of
capital.

17
<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 Service
Shares.

HOW TO BUY SHARES

How Can I Purchase Service Shares Of The Fund?
Generally, Service Shares may be purchased only through institutions that
have agreed to provide account administration and personal and account main-
tenance services to their customers who are the beneficial owners of Service
Shares. These institutions are called "Service Organizations." Customers of
a Service Organization will normally give their purchase instructions to the
Service Organization, and the Service Organization will, in turn, place pur-
chase orders with Goldman Sachs. Service Organizations will set times by
which purchase orders and payments must be received by them from their cus-
tomers. Generally, Service Shares may be purchased 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. Pur-
chases of Service 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.

18
<PAGE>

SHAREHOLDER GUIDE

What Do I Need To Know About Service Organizations?
Service Organizations may provide the following services in connection with
their customers' investments in Service 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
.Responding to inquiries from prospective and existing shareholders
.Assisting customers with investment procedures

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 a service 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 0.50% (on an annualized basis) of the average daily net
assets of the Service 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 Service Shares, the Fund also offers other classes of shares
to investors. These other share classes are subject to different fees and
expenses (which affect performance), have different minimum investment
requirements and
are entitled to different services than Service Shares. Information regard-
ing these

19
<PAGE>

other share classes may be obtained from your sales representative or from
Goldman Sachs by calling the number on the back cover of this Prospectus.

What Is My Minimum Investment In The Fund?
The Fund does not have any minimum purchase or account requirements with
respect to Service Shares. A Service Organization may, however, impose a
minimum amount for initial and subsequent investments in Service Shares, and
may establish other requirements such as a minimum account balance. A Serv-
ice Organization may redeem Service 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 Service Shares of
the Fund is evident, or if purchases, sales or exchanges are, or a subse-
quent abrupt redemption might be, of a size that would disrupt the manage-
ment 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 Service 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 or, if accurate
quotations are not readily available, the fair value of the Fund's invest-
ments may be determined in good faith under procedures established by the
Trustees.
.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). 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.

20
<PAGE>

SHAREHOLDER GUIDE

.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.

HOW TO SELL SHARES

How Can I Sell Service Shares Of The Fund?
Generally, Service Shares may be sold (redeemed) only through Service Orga-
nizations. 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 SERVICE 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
Application.

<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

21
<PAGE>

confirm that such instructions are genuine. If reasonable procedures are not
employed, the Trust may be liable for any loss due to unauthorized or fraud-
ulent 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.

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 Service Organization.
.Neither the Trust, Goldman Sachs nor any other institution assumes any
responsibility for the performance of intermediaries or your Service Organ-
ization in the transfer process. If a problem with such performance arises,
you should deal directly with such intermediaries or Service Organization.

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.

22
<PAGE>

SHAREHOLDER GUIDE

What Else Do I Need To Know About Redemptions?
The following generally applies to redemption requests:
. 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
redemption requests by their customers to the Transfer Agent. In order to
facilitate the timely transmittal of redemption requests, Service Organi-
zations may set times by which they must receive redemption requests.
Service Organizations may also require additional documentation from you.

The Trust reserves the right to:
. Redeem the Service Shares of any Service Organization whose account bal-
ance falls below $50 as a result of a redemption. The Fund will not redeem
Service Shares on this basis if the value of the account falls below the
minimum account balance solely as a result of market conditions. 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. The Fund may,
in its discretion, pay redemption proceeds in-kind at any time if
requested by a shareholder. The Fund anticipates that it will normally
grant shareholder requests for an in-kind distribution so long as the dis-
tribution is in the best interests of the Fund and its other shareholders.
. Reinvest any dividends or other distributions which you have elected to
receive in cash should your check for such dividends or other distribu-
tions be returned to the Fund as undeliverable or remain uncashed for six
months. In addition, that distribution and all future distributions pay-
able to you in additional Fund shares will be reinvested at NAV. No inter-
est will accrue on amounts represented by uncashed distribution or redemp-
tion checks.

Can I Exchange My Investment From One Fund To Another?
A Service Organization may exchange Service Shares of the Fund at NAV for
Service Shares of any other Goldman Sachs Fund. The exchange privilege may
be materially modified or withdrawn at any time upon 60 days' written
notice.

23
<PAGE>

<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>

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 requirement 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.

24
<PAGE>

SHAREHOLDER GUIDE

What Types Of Reports Will Be Sent Regarding Investments In Service 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 Service Shares in accordance with the rules that
apply to their accounts with the Service Organizations.

25
<PAGE>

Taxation

TAXABILITY OF DISTRIBUTIONS

You should consider the possible tax consequences of Fund distributions and
the sale of your Fund shares.

TAXES ON DISTRIBUTIONS

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.

26
<PAGE>

TAXATION

TAXABILITY OF SALES AND EXCHANGES

OTHER INFORMATION

Investments in the Fund are subject to the tax risks described previously
under "Principal Risks of the Fund--Risks of Tax-Managed Investing."

27
<PAGE>

Appendix A
Additional Information on Portfolio Risks, Securities and Techniques

A. General Portfolio Risks

28
<PAGE>

APPENDIX A

B. Other Portfolio Risks

RISKS OF INVESTING IN SMALL CAPITALIZATION COMPANIES AND REITS. The Fund may
invest in small capitalization companies and REITs. Investments in small
capitalization companies and REITs involve greater risk and portfolio price
volatility than investments in larger capitalization stocks. Among the rea-
sons for the greater price volatility of these investments are the less cer-
tain growth prospects of smaller firms and the lower degree of liquidity in
the markets for such securities. Small capitalization companies and REITs
may be thinly traded and may have to be sold at a discount from current mar-
ket prices or in small lots over an extended period of time. In addition,
these securities are subject to the risk that during certain periods the
liquidity of particular issuers or industries, or all securities in these
investment categories, will shrink or disappear suddenly and without warning
as a result of adverse economic or market conditions, or adverse investor
perceptions whether or not accurate. Because of the lack of sufficient mar-
ket liquidity, the Fund may incur losses because it will be required to
effect sales at a disadvantageous time and only then at a substantial drop
in price. Small capitalization companies and REITs include "unseasoned"
issuers that do not have an established financial history; often have lim-
ited product lines, markets or financial resources; may depend on or use a
few key personnel for management; and may be susceptible to losses and risks
of bankruptcy. Transaction costs for these investments are often higher than
those of larger capitalization companies. Investments in small capitaliza-
tion companies and REITs may be more difficult to price precisely than other
types of securities because of their characteristics and lower trading vol-
umes.

RISKS OF FOREIGN INVESTMENTS. The Fund may invest in foreign issuers that
are traded in the United States. Foreign investments involve special risks
that are not typically associated with U.S. dollar denominated or quoted
securities of U.S. issuers. Foreign investments may be affected by changes
in currency rates, changes in foreign or U.S. laws or restrictions applica-
ble to such investments and changes in exchange control regulations (e.g.,
currency blockage). A decline in the exchange rate of the currency (i.e.,
weakening of the currency against the U.S. dollar) in which a portfolio
security is quoted or denominated relative to the U.S. dollar would reduce
the value of the portfolio security. In addition, if the currency in which
the Fund receives dividends, interest or other payments declines in value

29
<PAGE>

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.

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). Investing for non-hedging purposes is considered a
speculative practice and presents even greater risk of loss.

30
<PAGE>

APPENDIX A

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.

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), domestic corporations,
banks and other issuers. Further information is provided in the Additional
Statement.

TEMPORARY INVESTMENT RISKS. The Fund may, for temporary defensive purposes,
invest a certain percentage of its total assets in:
.U.S. government securities
.Commercial paper rated at least A-2 by Standard & Poor's or P-2 by Moody's
.Certificates of deposit
.Bankers' acceptances
.Repurchase agreements

31
<PAGE>

.Non-convertible preferred stocks and non-convertible corporate bonds with a
remaining maturity of less than one year

When the Fund's assets are invested in such instruments, the Fund may not be
achieving its investment objective.

C. Portfolio Securities and Techniques

CONVERTIBLE SECURITIES. The Fund may invest in convertible securities. Con-
vertible 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 securities have both equity and fixed-income risk charac-
teristics. Like all fixed-income securities, the value of convertible secu-
rities 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. However, when the market price of the common stock
underlying a convertible security exceeds the conversion price of the con-
vertible security, the convertible security tends to reflect the market
price of the underlying common stock. As the market price of the underlying
common stock declines, the convertible security, like a fixed-income securi-
ty, 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 securities and may be more volatile, less
liquid and more difficult to price accurately than less complex securities.

32
<PAGE>

APPENDIX A

REITS. The Fund may invest in REITs. REITs are pooled investment vehicles
that invest primarily in either real estate or real estate related loans.
The value of a REIT is affected by changes in the value of the properties
owned by the REIT or securing mortgage loans held by the REIT. REITs are
dependent upon the ability of the REITs' managers, and are subject to heavy
cash flow dependency, default by borrowers and the qualification of the
REITs under applicable regulatory requirements for favorable income tax
treatment. REITs are also subject to risks generally associated with invest-
ments in real estate including possible declines in the value of real
estate, general and local economic conditions, environmental problems and
changes in interest rates. To the extent that assets underlying a REIT are
concentrated geographically, by property type or in certain other respects,
these risks may be heightened. The Fund will indirectly bear its proportion-
ate share of any expenses, including management fees, paid by a REIT in
which it invests.

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 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.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Futures contracts are
standardized, exchange-traded contracts that provide for the sale or purchase
of a specified financial instrument at a future time at a specified price. An

33
<PAGE>

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 con-
tract may be based on various securities (such as U.S. government securi-
ties), securities indices and other financial instruments and indices. The
Fund may engage in futures transactions only with respect to U.S. equity
indices.

34
<PAGE>

APPENDIX A

.Foreign exchanges may not provide the same protection as U.S. exchanges.

EQUITY SWAPS. The Fund may invest in equity swaps. Equity swaps allow the
parties to a swap agreement to exchange the dividend income or other compo-
nents of return on an equity investment (for example, a group of equity
securities or an index) for a component of return on another non-equity or
equity investment.

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 the entering into a contract to
purchase or sell securities for a fixed price at a future date beyond the
customary settlement period.

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.

35
<PAGE>

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 loan 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 deprecia-
tion 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).

PREFERRED STOCK, WARRANTS AND RIGHTS. The Fund may invest in preferred
stock, warrants and rights. Preferred stocks are securities that represent
an ownership interest providing the holder with claims on the issuer's earn-
ings 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.

36
<PAGE>

APPENDIX A

OTHER INVESTMENT COMPANIES. The Fund may invest in securities of other
investment companies (including SPDRs and WEBS, as defined below and other
exchange-traded funds) subject to statutory limitations prescribed by the
Act. These limitations include a prohibition on the Fund acquiring more than
3% of the voting 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 company or more than 10% of its total assets in securities of
all investment companies. The Fund will indirectly bear its proportionate
share of any management fees and other expenses paid by such other invest-
ment companies. Exchange-traded funds such as SPDRs and WEBS are shares of
unaffiliated investment companies which are traded like traditional equity
securities on a national securities exchange or the NASDAQ National Market
System.

.STANDARD & POOR'S DEPOSITORY RECEIPTS. The Fund may, consistent with its
investment policies, purchase Standard & Poor's Depository Receipts
("SPDRs"). SPDRs are securities traded on the American Stock Exchange
("AMEX") that represent ownership in the SPDR Trust, a trust which has been
established to accumulate and hold a portfolio of common stocks that is
intended to track the price performance and dividend yield of the S&P 500.
The SPDR Trust is sponsored by a subsidiary of the AMEX. SPDRs may be used
for several reasons, including, but not limited to, facilitating the han-
dling of cash flows or trading, or reducing transaction costs. The price
movement of SPDRs may not perfectly parallel the price action of the S&P
500.

.WORLD EQUITY BENCHMARK SHARES. World Equity Benchmark Shares ("WEBS") are
shares of an investment company that invests substantially all of its
assets in securities included in the MSCI indices for specified countries.
WEBS are listed on the AMEX and were initially offered to the public in
1996. The market prices of WEBS are expected to fluctuate in accordance
with both changes in the NAVs of their underlying indices and supply and
demand of WEBS on the AMEX. To date, WEBS have traded at relatively modest
discounts and premiums to their NAVs. However, WEBS have a limited operat-
ing history and information is lacking regarding the actual performance and
trading liquidity of WEBS for extended periods or over complete market
cycles. In addition, there is no assurance that the requirements of the
AMEX necessary to maintain the listing of WEBS will continue to be met or
will remain unchanged. In the event substantial market or other disruptions
affecting WEBS should occur in the future, the liquidity and value of the
Fund's shares could also be substantially and adversely affected. If such
disruptions were to occur, the Fund could be required to reconsider the use
of WEBS as part of its investment strategy.

37
<PAGE>

UNSEASONED COMPANIES. The Fund may invest in companies (including predeces-
sors) which have operated less than three years. The securities of such com-
panies may have limited liquidity, which can result in their being priced
higher or lower than might otherwise be the case. In addition, investments
in unseasoned companies are more speculative and entail greater risk than do
investments in companies with an established operating record.

CORPORATE DEBT OBLIGATIONS. Corporate debt obligations include bonds, notes,
debentures, commercial paper and other obligations of corporations to pay
interest and repay principal, and include securities issued by banks and
other financial institutions. The Fund may invest in corporate debt obliga-
tions issued by U.S. and certain non-U.S. issuers which issue securities
denominated in the U.S. dollar (including Yankee and Euro obligations). In
addition to obligations of corporations, corporate debt obligations include
securities issued by banks and other financial institutions and suprana-
tional entities (i.e., the World Bank, the International Monetary Fund,
etc.).

BANK OBLIGATIONS. The Fund may invest in obligations issued or guaranteed by
U.S. or foreign banks. Bank obligations, including without limitations, time
deposits, bankers' acceptances and certificates of deposit, may be general
obligations of the parent bank or may be limited to the issuing branch by
the terms of the specific obligations or by government regulations. Banks
are subject to extensive but different governmental regulations which may
limit both the amount and types of loans which may be made and interest
rates which may be charged. 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 operation of this industry.

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 discretionary authority of the U.S. govern-
ment to purchase certain obligations 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.

38
<PAGE>

APPENDIX A

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.

BORROWINGS. The Fund can borrow money from banks and other financial insti-
tutions in amounts not exceeding one-third of its total assets for temporary
or emergency purposes. The Fund may not make additional investments if
borrowings exceed 5% of its total assets.

39
<PAGE>

Index

<TABLE>
<C> <S>
1 General Investment
Management Approach
3 Fund Investment Objective
and Strategies
3 Goldman Sachs CORE Tax-Managed Equity Fund
5 Other Investment Practices
and Securities
7 Principal Risks of the Fund
9 Fund Performance
10 Fund Fees and Expenses
13 Service Providers
17 Dividends
18 Shareholder Guide
18 How To Buy Shares
21 How To Sell Shares
26 Taxation
28 Appendix A
Additional Information on Portfolio Risks,
Securities and Techniques
</TABLE>
<PAGE>

CORE Tax-Managed Equity Fund
Prospectus (Service 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 CORE Tax-Managed Equity Fund for
the fiscal period ended December 31, 2000 will become available to share-
holders in February 2001.

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:

[LOGO OF GOLDMAN SACHS]
The Fund's investment company registration number is 811-5349.
CORE/SM/ is a service mark of Goldman, Sachs & Co.
CORTXPROSVC
<PAGE>

PART B
STATEMENT OF ADDITIONAL INFORMATION
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
SERVICE SHARES
INSTITUTIONAL SHARES

GOLDMAN SACHS CORESM TAX-MANAGED EQUITY FUND

(An Equity Portfolio of Goldman Sachs Trust)

4900 Sears Tower
Chicago, Illinois 60606-6303

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 Class A Shares, Class B Shares, Class C Shares, Service
Shares and Institutional Shares of the Goldman Sachs CORE Tax-Managed Equity
Fund dated April 3, 2000 (the "Prospectuses"), which may be obtained without
charge from Goldman, Sachs & Co. by calling the telephone number, or writing to
one of the addresses, listed below.

CORE/SM/ is a service mark of Goldman, Sachs & Co.
<PAGE>

TABLE OF CONTENTS
Page
----
INTRODUCTION...............................................................B-1
INVESTMENT POLICIES........................................................B-1
INVESTMENT RESTRICTIONS...................................................B-16
MANAGEMENT................................................................B-19
PORTFOLIO TRANSACTIONS AND BROKERAGE......................................B-35
NET ASSET VALUE...........................................................B-37
PERFORMANCE INFORMATION...................................................B-39
SHARES OF THE TRUST.......................................................B-43
TAXATION..................................................................B-47
OTHER INFORMATION.........................................................B-53
DISTRIBUTION AND SERVICE PLANS............................................B-55
OTHER INFORMATION REGARDING MAXIMUM SALES CHARGE, PURCHASES,
REDEMPTIONS, EXCHANGES AND DIVIDENDS...................................B-56
SERVICE PLAN..............................................................B-59
Appendix A.................................................................1-A
Appendix B.................................................................1-B
Appendix C (Statement of Intention and Escrow Agreement)...................1-C

The date of this Additional Statement is April 3, 2000

- i -
<PAGE>

GOLDMAN SACHS ASSET MANAGEMENT
Investment Adviser
32 Old Slip
New York, New York 10005

GOLDMAN, SACHS & CO.
Distributor
85 Broad Street
New York, New York 10004

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

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

-ii-
<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 CORE
Tax-Managed Equity Fund ("Fund").

The Trustees have authority under the Trust's charter to create and
classify shares into separate series and to classify and reclassify any series
or portfolio of shares into one or more classes without further action by
shareholders. Pursuant thereto, the Trustees have created the Fund and other
series. Additional series may be added in the future from time to time. The Fund
currently offers five classes of shares: Class A Shares, Class B Shares, Class C
Shares, Institutional Shares and Service Shares. See "Shares of the Trust."

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 ("State Street").

The following information relates to and supplements the description of the
Fund's investment policies contained in the Prospectuses. See the Prospectuses
for a more complete description of the Fund's investment objective and policies.
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.

INVESTMENT POLICIES

The Fund has a distinct investment objective and policies. There can be no
assurance that the Fund's objective will be achieved. The Fund is a diversified
open-end management company as defined in the Investment Company Act of 1940, as
amended (the "Act").

The Fund's share price will fluctuate with market and economic conditions,
so that an investment in the Fund may be worth more or less when redeemed than
when purchased. The Fund should not be relied upon as a complete investment
program.

General Information Regarding the Fund.
- ---------------------------------------

The Investment Adviser may purchase for the Fund common stocks, preferred
stocks, interests in real estate investment trusts, convertible debt
obligations, convertible preferred stocks, equity interests in trusts,
partnerships, joint ventures, limited liability companies and similar
enterprises, warrants and stock purchase rights ("equity securities"). The
Investment Adviser utilizes advanced quantitative tools for both stock selection
and portfolio construction. The Investment Adviser may also use macro analysis
of numerous economic and valuation variables to anticipate changes in company
earnings and the overall investment climate. The Investment Adviser is able to
draw on the research and market expertise of the Goldman Sachs Global

B-1
<PAGE>

Investment Research Department and other affiliates of the Investment Adviser,
as well as information provided by other securities dealers. For rebalancings,
the computer optimizer calculates numerous security combinations at numerous
weightings to identify an efficient risk/return portfolio given the CORE Funds
benchmark.

Quantitative Style. The CORE Tax-Managed Equity Fund is managed using both
quantitative and fundamental techniques. CORE is an acronym for
"Computer-Optimized, Research-Enhanced," which reflects the Fund's investment
process. This investment process and the proprietary multifactor model used to
implement it are discussed below.

Investment Process. The Investment Adviser begins with a broad universe of
U.S. equity securities. As described more fully below, the Investment Adviser
uses a proprietary multifactor model (the "Multifactor Model") to forecast the
returns of individual securities. In the case of an equity security followed by
the Goldman Sachs Global Investment Research Department (the "Research
Department"), a rating is assigned based upon the Research Department's
evaluation. In the discretion of the Investment Adviser, ratings may also be
assigned to equity securities based on research ratings obtained from other
industry sources.

In building a diversified portfolio for the Fund, the Investment Adviser
utilizes optimization techniques to seek to maximize the Fund's after-tax
return, while maintaining a risk profile similar to the Fund's benchmark. The
portfolio is primarily composed of securities rated highest by the foregoing
investment process and has risk characteristics and industry weightings similar
to the Russell 3000 Index.

Multifactor Model. The Multifactor Model is a rigorous computerized rating
system for forecasting the returns of different equity markets, currencies and
individual equity securities according to fundamental investment
characteristics. The CORE Tax-Managed Equity Fund uses one Multifactor Model to
forecast the returns of securities held in its portfolio. The Multifactor Model
incorporates common variables covering measures of value, growth, momentum and
risk (e.g., book/price ratio, earnings/price ratio, price momentum, price
volatility, consensus growth forecasts, earnings estimate revisions and earnings
stability). All of the factors used in the Multifactor Model have been shown to
significantly impact the performance of the securities, currencies and markets
they were designed to forecast.

The weightings assigned to the factors in the Multifactor Model used by the
CORE Tax-Managed Equity Fund are derived using a statistical formulation that
considers each factor's historical performance in different market environments.
As such, the Multifactor Model is designed to evaluate each security using only
the factors that are statistically related to returns in the anticipated market
environment. Because they include many disparate factors, the Investment Adviser
believes that the Multifactor Model is broader in scope and provides a more
thorough evaluation than most conventional quantitative models. Securities and
markets ranked highest by the Multifactor Model do not have one dominant
investment characteristic; rather, they possess an attractive combination of
investment characteristics. By using a variety of relevant factors to select
securities or markets, the Investment Adviser believes that the Fund will be
better balanced

B-2
<PAGE>

and have more consistent performance than an investment portfolio that uses only
one or two factors to select such investments.

The Investment Adviser will monitor, and may occasionally suggest and make
changes to, the method by which securities are selected for or weighted in the
Fund. Such changes (which may be the result of changes in the Multifactor Model
or the method of applying the Multifactor Model) may include: (i) evolutionary
changes to the structure of the Multifactor Model (e.g., the addition of new
factors or a new means of weighting the factors); (ii) changes in trading
procedures (e.g., trading frequency or the manner in which the Fund uses
futures); or (iii) changes in the method by which securities or markets are
weighted in the Fund. Any such changes will preserve the Fund's basic investment
philosophy of combining qualitative and quantitative methods of selecting
securities using a disciplined investment process.

Research Department. In assigning ratings to equity securities, the
Research Department uses a four category rating system ranging from "recommended
for purchase" to "likely to under perform." The ratings reflect the analyst's
judgment as to the investment results of a specific security and incorporate
economic outlook, valuation, risk and a variety of other factors.

By employing both a quantitative (i.e., the Multifactor Model) and a
qualitative (i.e., research enhanced) method of selecting securities, the CORE
Tax-Managed Equity Fund seeks to capitalize on the strengths of each discipline.

Other Information. The Fund intends to be fully invested in portfolio
securities during normal market conditions. The Fund may invest any cash in
futures transactions with respect to U.S. equity indices in order to keep the
Fund's effective equity exposure close to 100%. As cash balances fluctuate based
on new contributions or withdrawals, the Fund may enter into additional
contracts or close out existing positions.

Corporate Debt Obligations
- --------------------------

The Fund may, under normal market conditions, invest in corporate debt
obligations, including obligations of industrial, utility and financial issuers.
The Fund may only invest in debt securities that are cash equivalents. 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.

Another factor which causes fluctuations in the prices of fixed-income
securities is the supply and demand for similarly rated securities. In addition,
the prices of fixed-income securities fluctuate in response to the general level
of interest rates. Fluctuations in the prices of portfolio securities subsequent
to their acquisition will not affect cash income from such securities but will
be reflected in the Fund's net asset value.

B-3
<PAGE>

The Investment Adviser employs its own credit research and analysis, which
includes a study of existing debt, capital structure, ability to service debt
and to pay dividends, the issuer's sensitivity to economic conditions, its
operating history and the current trend of earnings.

U.S. Government Securities
- --------------------------

The Fund may invest in U.S. government securities. Generally, these
securities include U.S. Treasury obligations and obligations issued or
guaranteed by U.S. government agencies, instrumentalities or sponsored
enterprises.

Bank Obligations
- ----------------

The Fund may invest in obligations issued or guaranteed by U.S. or 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 limited to the issuing branch by the terms of the specific
obligations or by government regulation. Banks are subject to extensive but
different governmental regulations which may limit both the amount and types of
loans which may be made and interest rates which may be charged. 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 operation of this industry.

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.

Futures Contracts and Options on Futures Contracts
- --------------------------------------------------

The Fund may purchase and sell futures contracts and may also purchase and
write call and put options on futures contracts. The Fund may engage in futures
transactions only with respect to U.S. equity 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 Commodity Futures Trading Commission ("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.

B-4
<PAGE>

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

When interest rates are rising or securities prices are falling, the Fund
can seek through the sale of futures contracts to offset a decline in the value
of its current portfolio securities. When rates are falling or prices are
rising, the Fund, through the purchase of futures contracts, can attempt to
secure better rates or prices than might later be available in the market when
it effects anticipated purchases.

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

Hedging Strategies. Hedging, by use of futures contracts, seeks to
establish with more certainty than would otherwise be possible the effective
price, rate of return on portfolio securities or securities that the Fund owns
or proposes to acquire. The Fund may, for example, take a "short" position in
the futures market by selling futures contracts to seek to hedge against an
anticipated rise in interest rates or a decline in market prices. 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 representative securities 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 securities portfolio.
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 such
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 or rates that are currently available.

Options on Futures Contracts. The acquisition of put and call options on
futures contracts will give the Fund the right (but not the obligation), for a
specified price, to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the Fund obtains the benefit of the futures position if

B-5
<PAGE>

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.

Other Considerations. The Fund will engage in futures transactions and
will engage in related options transactions only for bona fide hedging as
defined in the regulations of the CFTC or to seek to increase total return to
the extent permitted by such regulations.

In addition to bona fide hedging, a CFTC regulation permits the Fund to
engage in other future 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
transactions only to the extent such transactions are consistent with the
requirements of the Internal Revenue Code of 1986, as amended (the "Code") for
maintaining its qualification as a regulated investment company for federal
income tax purposes.

Transactions in futures contracts and options on futures involve brokerage
costs, require margin deposits and, in certain cases, require the Fund to
segregate with its custodian cash or liquid assets 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,
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.

B-6
<PAGE>

Perfect correlation between the Fund's futures positions and portfolio
positions will be difficult to achieve because no futures contracts based on
individual equity or corporate fixed-income securities are currently available.

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. A call option written by the
Fund obligates the Fund to sell specified securities to the holder of the option
at a specified price if the option is exercised at any time before the
expiration date. All call options written by the Fund are covered, which means
that the Fund will own the securities subject to the option as 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 would obligate the Fund to purchase
specified securities from the option holder at a specified price if the option
is exercised at any time before the expiration date. All put options written by
the Fund would be covered, which means that the Fund 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.

Call and put options written by the Fund will also be considered to be
covered to the extent that the Fund's liabilities under such options are wholly
or partially offset by its rights under call and put options purchased by the
Fund or by an offsetting forward contract which, by virtue of its exercise price
or otherwise, reduces the Fund's net exposure on its written option position.

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

The Fund may cover call options on a securities index by owning securities
whose price changes are expected to be similar to those of the underlying index,
or by having an absolute and immediate right to acquire such securities without
additional cash consideration (or for additional cash consideration which has
been segregated by the Fund) upon conversion or exchange of other securities in
its portfolio. The Fund may cover call and put options on a securities index by
segregating cash or liquid assets with a value equal to the exercise price.

B-7
<PAGE>

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."

Purchasing Options. The Fund may purchase put and call options on any
securities in which it may invest or options on any securities index comprised
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 in the
market value of securities of the type in which it may invest. The purchase of a
call option would entitle the Fund, in return for the premium paid, to purchase
specified securities at a specified price during the option period. The Fund
would ordinarily realize a gain if, during the option period, the value of such
securities exceeded the sum of the exercise price, the premium paid and
transaction costs; otherwise the Fund would realize either no gain or a loss on
the purchase of the call option.

The Fund may purchase put options in anticipation of a decline in the
market value of securities in its portfolio ("protective puts") or in securities
in which it may invest. The purchase of a put option would entitle the Fund, in
exchange for the premium paid, to sell specified securities at a specified price
during the option period. The purchase of protective puts is designed to offset
or hedge against a decline in the market value of the Fund's securities. Put
options may also be purchased by the Fund for the purpose of affirmatively
benefiting from a decline in the price of securities which it does not own. The
Fund would ordinarily realize a gain if, during the option period, the value of
the underlying securities decreased below the exercise price sufficiently to
more than cover the premium and transaction costs; otherwise the Fund would
realize either no gain or a loss on the purchase of the put option. Gains and
losses on the purchase of protective put options would tend to be offset by
countervailing changes in the value of the underlying portfolio securities.

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

Risks Associated with Options Transactions. There is no assurance that a
liquid secondary market on an 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 segregated assets 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 the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by

B-8
<PAGE>

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

The Fund may purchase and sell both options that are traded on 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.

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

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 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 securities
prices or determination of the correlation between the instruments or securities
indices on which options are written and purchased and the securities 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.

Real Estate Investment Trusts
- -----------------------------

The Fund may invest in shares of REITs. REITs are pooled investment
vehicles which invest primarily in income producing real estate or real estate
related loans or interest. REITs are generally classified as equity REITs,
mortgage REITs or a combination of equity and mortgage REITs. Equity REITs
invest the majority of their assets directly in real property and derive income

B-9
<PAGE>

primarily from the collection of rents. Equity REITs can also realize capital
gains by selling properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate mortgages and derive income
from the collection of interest payments. Like regulated investment companies
such as the Fund, REITs are not taxed on income distributed to shareholders
provided they comply with certain requirements under the Code. The Fund will
indirectly bear its proportionate share of any expenses paid by REITs in which
it invests in addition to the expenses paid by the Fund.

Investing in REITs involves certain unique risks. Equity REITs may be
affected by changes in the value of the underlying property owned by such REITs,
while mortgage REITs may be affected by the quality of any credit extended.
REITs are dependent upon management skills, are not diversified (except to the
extent the Code requires), and are subject to the risks of financing projects.
REITs are subject to heavy cash flow dependency, default by borrowers,
self-liquidation, and the possibilities of failing to qualify for the exemption
from tax for distributed income under the Code and failing to maintain their
exemptions from the Act. REITs (especially mortgage REITs) are also subject to
interest rate risks.

Warrants and Stock Purchase Rights
- ----------------------------------

The Fund may invest in warrants or rights (in addition to those acquired
in units or attached to other securities) which entitle the holder to buy equity
securities at a specific price for a specific period of time. The Fund will
invest in warrants and rights only if such equity securities are deemed
appropriate by the Investment Adviser for investment by the Fund. However, the
Fund has no present intention of acquiring warrants or rights. Warrants and
rights have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.

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. In evaluating a
convertible security, the Investment Adviser will give primary emphasis to the
attractiveness of the underlying common stock. Convertible debt securities are
equity investments for purposes of the Fund's investment policies.

B-10
<PAGE>

Foreign Securities
- ------------------

The Fund may invest in equity securities of foreign issuers which are
traded in the United States. Investments in foreign securities may offer
potential benefits not available from investments solely in quoted securities of
domestic issuers. Such benefits may include the opportunity to invest in foreign
issuers that appear, in the opinion of the Investment Adviser, to offer the
potential for long-term growth of capital and income, the opportunity to invest
in foreign countries with economic policies or business cycles different from
those of the United States and the opportunity to reduce fluctuations in
portfolio value by taking advantage of foreign stock markets that do not
necessarily move in a manner parallel to U.S. markets.

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 U.S. company.

The Fund may invest in foreign securities which take the form of sponsored
and unsponsored American Depository Receipts ("ADRs") and Global Depository
Receipts ("GDRs") or other similar instruments representing securities of
foreign issuers (together, "Depository Receipts").

ADRs represent the right to receive securities of foreign issuers
deposited in a domestic bank or a correspondent bank. ADRs are traded on
domestic exchanges or in the U.S. over-the-counter market and, generally, are in
registered form. GDRs are receipts evidencing an arrangement with a non-U.S.
bank similar to that for ADRs and are designed for use in the non-U.S.
securities markets. GDRs are not necessarily quoted in the same currency as the
underlying security.

To the extent the Fund acquires Depository Receipts through banks which do
not have a contractual relationship with the foreign issuer of the security
underlying the Depository Receipts to issue and service such Depository Receipts
(unsponsored), there may be an increased possibility that the Fund would not
become aware of and be able to respond to corporate actions such as stock splits
or rights offerings involving the foreign issuer in a timely manner. In
addition, the lack of information may result in inefficiencies in the valuation
of such instruments. Investment in Depository Receipts does not eliminate all
the risks inherent in investing in securities of non-U.S. issuers. The market
value of Depository Receipts is dependent upon the market value of the
underlying securities and fluctuations in the relative value of the currencies
in which the Depository Receipts and the underlying securities are quoted.
However, by investing in Depository Receipts, such as ADRs, that are quoted in
U.S. dollars, the Fund may avoid currency risks during the settlement period for
purchases and sales.

Preferred Securities
- --------------------

The Fund may invest in preferred securities. Unlike debt securities, the
obligations of an issuer of preferred stock, including dividend and other
payment obligations, may not typically be

B-11
<PAGE>

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
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.

Equity Swaps
- ------------

The Fund may enter into equity swap contracts to invest in a market
without owning or taking physical custody of securities in circumstances in
which direct investment is restricted for legal reasons or is otherwise
impracticable. Equity swaps may also be used for hedging purposes or to seek to
increase total return. The counterparty to an equity swap contract will
typically be a bank, investment banking firm or broker/dealer. Equity swap
contracts may be structured in different ways. For example, a counterparty may
agree to pay the Fund the amount, if any, by which the notional amount of the
equity swap contract would have increased in value had it been invested in the
particular stocks (or an index of stocks), plus the dividends that would have
been received on those stocks. In these cases, the Fund may agree to pay to the
counterparty a floating rate of interest on the notional amount of the equity
swap contract plus the amount, if any, by which that notional amount would have
decreased in value had it been invested in such stocks. Therefore, the return to
the Fund on the equity swap contract should be the gain or loss on the notional
amount plus dividends on the stocks less the interest paid by the Fund on the
notional amount. In other cases, the counterparty and the Fund may each agree to
pay the other the difference between the relative investment performances that
would have been achieved if the notional amount of the equity swap contract had
been invested in different stocks (or indices of stocks).

The Fund will enter into equity 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. Payments may be
made at the conclusion of an equity swap contract or periodically during its
term. Equity swaps do not involve the delivery of securities or other underlying
assets. Accordingly, the risk of loss with respect to equity swaps is limited to
the net amount of payments that the Fund is contractually obligated to make. If
the other party to an equity 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. Inasmuch as these transactions are entered into for hedging purposes or
are offset by segregated cash or liquid assets to cover the Fund's potential
exposure, the Fund and its Investment Adviser believes 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 swap transactions unless the unsecured
commercial paper, senior debt or claims paying ability of the other party
thereto is considered to be investment grade by the Investment Adviser.

B-12
<PAGE>

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 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.

When-Issued Securities and Forward Commitments
- ----------------------------------------------

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 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 the settlement date, cash and liquid assets in an
amount sufficient to meet the purchase price unless the Fund's obligations are
otherwise covered. 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

B-13
<PAGE>

declines prior to the settlement date or if the value of the security to be sold
increases prior to the settlement date.

Investment in Unseasoned Companies
- ----------------------------------

The Fund may invest in companies (including predecessors) which have
operated less than three years. The securities of such companies may have
limited liquidity, which can result in their being priced higher or lower than
might otherwise be the case. In addition, investments in unseasoned companies
are more speculative and entail greater risk than do investments in companies
with an established operating record.

Other Investment Companies
- --------------------------

The Fund reserves the right to invest up to 10% of its total assets in the
securities of all investment companies (including SPDRs, WEBS and other exchange
traded funds) but may neither invest more than 5% of its total assets in any one
investment company nor acquire more than 3% of the voting securities of any one
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 advisory and administration fees payable by the Fund to the
Investment Adviser will be reduced by an amount equal to the Fund's
proportionate share of the advisory and administration fees paid by such money
market fund to the investment adviser.

SPDRs are interests in a unit investment trust ("UIT") that may be
obtained from the UIT or purchased in the secondary market (SPDRs are listed on
the American Stock Exchange). The UIT was established to accumulate and hold a
portfolio of common stocks that is intended to track the price performance and
dividend yield of the S&P 500. The UIT is sponsored by a subsidiary of the AMEX.
SPDRs may be used for several reasons, including, but not limited to,
facilitating the handling of cash flows or trading or reducing transaction
costs. The price movement of SPDRs may not perfectly parallel the price activity
of the S&P 500. The UIT issues SPDRs in aggregations known as "Creation Units"
in exchange for a "Portfolio Deposit" consisting of (a) a portfolio of
securities substantially similar to the component securities ("Index
Securities") of the Standard & Poor's 500 Composite Stock Price Index (the "S&P
Index"); (b) a cash payment equal to a pro rata portion of the dividends accrued
on the UIT's portfolio securities since the last dividend payment by the UIT,
net of expenses and liabilities; and (c) a cash payment or credit ("Balancing
Amount") designed to equalize the net asset value of the S&P Index and the net
asset value of a Portfolio Deposit.

SPDRs are not individually redeemable, except upon termination of the UIT.
To redeem, the Fund must accumulate enough SPDRs to reconstitute a Creation
Unit. The liquidity of small holdings of SPDRs, therefore, will depend upon the
existence of a secondary market. Upon

B-14
<PAGE>

redemption of a Creation Unit, the Fund will receive Index Securities and cash
identical to the Portfolio Deposit required of an investor wishing to purchase a
Creation Unit that day.

The price of SPDRs is derived from and based upon the securities held by
the UIT. Accordingly, the level of risk involved in the purchase or sale of a
SPDR is similar to the risk involved in the purchase or sale of traditional
common stock, with the exception that the pricing mechanism for SPDRs is based
on a basket of stocks. Disruptions in the markets for the securities underlying
SPDRs purchased or sold by the Fund could result in losses on SPDRs.

The Fund may, subject to the limitations stated above, invest in World
Equity Benchmark Shares ("WEBS") and similar securities that invest in
securities included in foreign securities indices. WEBS are shares of an
investment company that invests substantially all of its assets in securities
included in the MSCI indices for specified countries. WEBS are listed on the
AMEX and were initially offered to the public in 1996. The market prices of WEBS
are expected to fluctuate in accordance with both changes in the NAVs of their
underlying indices and supply and demand of WEBS on the AMEX. To date, WEBS have
traded at relatively modest discounts and premiums to their NAVs. However, WEBS
have a limited operating history and information is lacking regarding the actual
performance and trading liquidity of WEBS for extended periods or over complete
market cycles. In addition, there is no assurance that the requirements of the
AMEX necessary to maintain the listing of WEBS will continue to be met or will
remain unchanged. In the event substantial market or other disruptions affecting
WEBS should occur in the future, the liquidity and value of the Fund's shares
could also be substantially and adversely affected. If such disruptions were to
occur, the Fund could be required to reconsider the use of WEBS as part of its
investment strategy.

The Fund may, subject to the limitations stated above, invest in other
types of unaffiliated investment companies issuing shares which are traded like
traditional equity securities on a national stock exchange or the NASDAQ
National Market System.

Repurchase Agreements
- ---------------------

The Fund may enter into repurchase agreements with dealers in U.S.
government securities and member banks of the Federal Reserve System which
furnish collateral at least equal in value or market price to the amount of
their repurchase obligation. 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 (or subcustodian). 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, 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

B-15
<PAGE>

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 advisory 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
- ------------------

It is anticipated that the portfolio turnover rate of the Fund will vary
from year to year. To the extent that the Fund sells securities to generate
capital losses, such sales will increase the Fund's portfolio turnover rate and
result in more commission expenses.

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 (as defined in the Act) of the outstanding voting
securities of the Fund. The investment objective of the Fund and all other
investment policies or practices are considered by the Trust not to be
fundamental and accordingly may be changed without shareholder approval. See
"Investment Objective and Policies" in the Prospectuses. For purposes of the
Act, "majority" means the lesser of (a) 67% or more of the shares of the Trust
or Fund present at a meeting, if the holders of more than 50% of the outstanding
shares of the Trust or Fund are present or represented by proxy; or (b) more
than 50% of the shares of the Trust or Fund. For purposes of the following
limitations, any limitation which involves a maximum percentage shall not be
considered violated unless an excess over the percentage occurs immediately
after, and is caused by, an acquisition or encumbrance of securities

B-16
<PAGE>

or assets of, or borrowings by, the Fund. With respect to the Fund's fundamental
investment restriction no. 3, asset coverage of at least 300% (as defined in the
Act), inclusive of any amounts borrowed, must be maintained at all times.

The Fund may not:

(1) Make any investment inconsistent with the Fund's
classification as a diversified company under the Act.

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

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

(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 REITs 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.

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

B-17
<PAGE>

The Fund may, notwithstanding any other fundamental investment restriction
or policy, invest some or all of its assets in a single open-end investment
company or series thereof with substantially the same investment 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:

(a) Invest in companies for the purpose of exercising control or
management;

(b) Invest more than 15% of its 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 Securities Act of 1933 (the "1933 Act");

(d) Make short sales of securities.

B-18
<PAGE>

MANAGEMENT

The Trustees 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.

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- ---------------------

Ashok N. Bakhru, 58 Chairman Chairman of the Board and
P.O. Box 143 & Trustee Trustee - Goldman Sachs Variable
Lima, PA 19037 Insurance Trust (registered
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); and
Trustee, Citizens Scholarship
Foundation of America (since
1998).

*David B. Ford, 54 Trustee Trustee - Goldman Sachs Variable
32 Old Slip Insurance Trust (registered
New York, NY 10005 investment company) (since
October 1997); Director,
Commodities Corp. LLC (futures
and commodities traders) (since
April 1997); Managing Director,
J. Aron

B-19
<PAGE>

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- ---------------------

& 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
32 Old Slip & President Sachs Variable Insurance Trust
New York, NY 10005 (registered 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).

B-20
<PAGE>

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- ---------------------

*John P. McNulty, 47 Trustee Trustee - Goldman Sachs Variable
32 Old Slip Insurance Trust (registered
New York, NY 10005 investment company) (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).

B-21
<PAGE>

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- ---------------------

Mary P. McPherson, 64 Trustee Trustee - Goldman Sachs Variable
The Andrew W. Mellon Insurance Trust (registered
Foundation investment company) (since
140 East 62nd Street October 1997); Vice President,
New York, NY 10021 The 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 of 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
32 Old Slip Insurance Trust (registered
New York, NY 10005 investment company) (since
October 1997); Limited Partner,
Goldman Sachs (since December
1994); Consultant to GSAM (since
December 1994).

B-22
<PAGE>

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -----------------------

Jackson W. Smart, Jr., 69 Trustee Trustee - Goldman Sachs Variable
One Northfield Plaza, Suite 218 Insurance Trust (registered
Northfield, IL 60093 investment company) (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
701 Morningside Drive Insurance Trust (registered
Lake Forest, IL 60045 investment company) (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).

Richard P. Strubel, 60 Trustee Trustee - Goldman Sachs Variable
500 Lake Cook Road Insurance Trust (registered
Suite 150 investment company) (since
Deerfield, IL 60015 October 1997); President and
COO, UNext.com (since 1999)
(provider of educational
services via the internet);
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

B-23
<PAGE>

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- ---------------------

manufacturer of fastening
systems and connectors) (January
1984-October 1994); Trustee,
Northern Institutional Funds
(since December 1982); Director
of Cantilever Technologies, Inc.
(since 1999).

*Nancy L. Mucker, 50 Vice President Vice President - Goldman Sachs
4900 Sears Tower Variable Insurance Trust
Chicago, IL 60606 (registered investment 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
32 Old Slip Variable Insurance Trust
New York, NY 10005 (registered investment 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
4900 Sears Tower Variable Insurance Trust
Chicago, IL 60606 (registered investment 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).

B-24
<PAGE>

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- ---------------------

*Jesse Cole, 36 Vice President Vice President - Goldman Sachs
4900 Sears Tower Variable Insurance Trust
Chicago, IL 60606 (registered investment company)
(since 1998); Vice President,
GSAM (since June 1998); Vice
President, AIM Management Group,
Inc. (investment advisor) (April
1996-June 1998); and Assistant
Vice President, The Northern
Trust Company (June 1987-April
1996).

*Philip V. Giuca, Jr., 37 Assistant Assistant Treasurer - Goldman
32 Old Slip Treasurer Sachs Variable Insurance Trust
New York, NY 10005 (registered investment company)
(since 1997); and Vice
President, Goldman Sachs (May
1992-Present).

*Michael J. Richman, 39 Secretary Secretary - Goldman Sachs
85 Broad Street Variable Insurance Trust
New York, NY 10004 (registered investment 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 to 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 Assistant Secretary - Goldman
85 Broad Street Secretary Sachs Variable Insurance Trust
New York, NY 10004 (registered 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); Counsel to the
Funds Group, GSAM (November
1993-December 1997); and
Associate of

B-25
<PAGE>

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- ---------------------

Shereff, Friedman,
Hoffman & Goodman (October 1990
to November 1993).

*Valerie A. Zondorak, 34 Assistant Assistant Secretary - Goldman
85 Broad Street Secretary Sachs Variable Insurance Trust
New York, NY 10004 (registered 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 Assistant Secretary - Goldman
85 Broad Street Secretary Sachs Variable Insurance Trust
New York, NY 10004 (registered 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); Executive
Secretary, Goldman Sachs
(January 1994-January 1996); and
Legal Secretary, Cleary,
Gottlieb, Steen and Hamilton
(September 1990 to January
1994).

*Kaysie P. Uniacke, 39 Assistant Assistant Secretary - Goldman
32 Old Slip Secretary Sachs Variable Insurance Trust
New York, NY 10005 (registered investment company)
(since 1997); Managing Director,
GSAM (since 1997); and Vice
President and Senior Portfolio
Manager, GSAM (1988 to 1997).

B-26
<PAGE>

Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- ---------------------

*Elizabeth D. Anderson, 30 Assistant Assistant Secretary - Goldman
32 Old Slip Secretary Sachs Variable Insurance Trust
New York, NY 10005 (registered investment company)
(since 1997); Portfolio Manager,
GSAM (since April 1996); Junior
Portfolio Manager, GSAM
(1995-April 1996); Funds Trading
Assistant, GSAM (1993-1995); and
Compliance Analyst, Prudential
Insurance (1991-1993).

*Amy E. Belanger, 30 Assistant Assistant Secretary - Goldman
85 Broad Street Secretary Sachs Variable Insurance Trust
New York, NY 10004 (registered investment company)
(since 1999); Vice President,
Goldman Sachs (since June 1999);
Counsel, Goldman Sachs (since
1998); Associate, Dechert Price
& Rhoads (September 1996-1998).

Each interested Trustee and officer holds comparable positions with certain
other companies of which Goldman Sachs, GSAM or an affiliate thereof 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-27
<PAGE>

The following table sets forth certain information with respect to the
compensation of each Trustee of the Trust for the fixed period from January 1,
1999 to December 31, 1999 with respect to each of the Trust's funds then in
existence:

<TABLE>
<CAPTION>
Pension or Retirement
Benefits
Aggregate Accrued as Part of Funds' Total Compensation from
Compensation ------------------------- Goldman Sachs Fund complex
Name of Trustee from the Trust/2/ Expenses (including the Trust)/3/
- --------------- ----------------- -------- -----------------------
<S> <C> <C> <C>
Ashok N. Bakhru1 $136,000 $0 $159,884
David B. Ford 0 0 0
Douglas C. Grip 0 0 0
John P. McNulty 0 0 0
Mary P. McPherson 101,000 0 118,716
Alan A. Shuch 0 0 0
Jackson W. Smart 101,000 0 118,716
William H. Springer 101,000 0 118,716
Richard P. Strubel 101,000 0 118,716
</TABLE>

/1/ Includes compensation as Chairman of the Board of Trustees.
/2/ Reflects amount paid by the Trust's funds during the period from January 1,
1999 to December 31, 1999. During this period, the CORE Tax-Managed Equity
Fund had not offered shares.
/3/ The Goldman Sachs Fund complex consists of the Goldman Sachs Trust and
Goldman Sachs Variable Insurance Trust. Goldman Sachs Trust consisted of 51
mutual funds, including 21 equity funds, as of December 31, 1999. Goldman
Sachs Variable Insurance Trust consisted of 16 mutual funds as of December
31, 1999.

B-28
<PAGE>

Class A Shares of the Fund may be sold at net asset value without payment of any
sales charge to Goldman Sachs, its affiliates or their respective officers,
partners, directors or employees (including rehired employees and former
partners), any partnership of which Goldman Sachs is a general partner, any
trustee or officer of the Trust and designated family members of any of the
above individuals. The sales load waivers are due to the nature of the investors
and the reduced sales effort that is needed to obtain such investments.

Management Services
- -------------------

GSAM, 32 Old Slip, New York, New York, a unit of the Investment Management
Division of Goldman Sachs, serves as Investment Adviser to the Fund. See
"Service Providers" in the Fund's Prospectus 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 investing and financing,
participating in financial markets worldwide and serving individuals,
institutions, corporations and governments. Goldman Sachs is also among the
principal market sources for current and thorough information on companies,
industrial sectors, markets, economies and currencies, and trades and makes
markets 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 Adviser is able to draw on the substantial research and
market expertise of Goldman Sachs, whose investment research effort is one of
the largest in the industry. 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.

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.

B-29
<PAGE>

In managing the Fund, the Investment Adviser has access to Goldman Sachs'
economics research. The Economics Research Department based in London, conducts
economic, financial and currency markets research which analyzes economic trends
and interest and exchange rate movements worldwide. The Economics Research
Department tracks factors such as inflation and money supply figures, balance of
trade figures, economic growth, commodity prices, monetary and fiscal policies,
and political events that can influence interest rates and currency trends. The
success of Goldman Sachs' international research team has brought wide
recognition to its members. The team has earned top rankings in various external
surveys such as Extel, Institutional Investor and Reuters. These rankings
acknowledge the achievements of the firm's economists, strategists and equity
analysts.

The Management Agreement provides that GSAM, in its capacity as Investment
Adviser, may render similar services to others as 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, including a
majority of the non-interested Trustees (as defined below) who are not parties
to the Management Agreement on February 3, 2000. The Fund's sole shareholder
approved these arrangements on April 3, 2000. The Management Agreement will
remain in effect until June 30, 2000 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 and 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 0.75% 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.

Under the Management Agreement, the Investment Adviser also: (i)
supervises all of the Fund's non-advisory operations; (ii) provides personnel to
perform such executive, administrative and clerical services as are reasonably
necessary to provide effective administration of the Fund; (iii) arranges for at
the Fund's expense: (a) the preparation of all required tax returns, (b) the
preparation and submission of reports to existing shareholders, (c) the periodic
updating of prospectuses and statements of additional information and (d) the
preparation of reports to be filed with the SEC and other regulatory
authorities; (iv) maintains the Fund's records; and (v) provides office space
and all necessary office equipment and services.

B-30
<PAGE>

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 actively engaged in transactions in the same 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.

B-31
<PAGE>

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

The Investment Adviser may enter into transactions and invest in
currencies or instruments on behalf of a 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.

B-32
<PAGE>

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 or for other reasons. 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.

It is possible that the Fund's holdings 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 an 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 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 prospective investors.
Goldman Sachs will also pay for other supplementary sales literature and
advertising costs. Goldman Sachs may enter into sales agreements with certain
investment dealers and other financial service firms (the "Authorized Dealers")
to solicit subscriptions for Class A, Class B and Class C shares of the Fund.
Goldman Sachs receives a portion of the sales charge imposed on the sale, in the
case of Class A Shares, or redemption in the case of Class B and Class C Shares
(and in certain cases, Class A Shares), of such Fund shares. Prior to the date
of this Additional Statement, no shares of the Fund had been offered and,
accordingly, Goldman Sachs retained no sales commissions.

Goldman Sachs, 4900 Sears Tower, Chicago, IL 60606 serves as the Trust's
transfer agent. Under its transfer agency agreement with the Trust, Goldman
Sachs has undertaken with the Trust to (i) record the issuance, transfer and
redemption of shares, (ii) provide purchase and redemption confirmations and
quarterly statements, as well as certain other statements, (iii) provide certain
information to the Trust's custodian and the relevant sub-custodian in
connection with redemptions, (iv) provide dividend crediting and certain
disbursing agent services, (v) maintain shareholder accounts, (vi) provide
certain state Blue Sky and other information, (vii) provide shareholders and
certain regulatory authorities with tax related information, (viii) respond to
shareholder inquiries, and (ix) render certain other miscellaneous services. For
its transfer agency services, Goldman Sachs is entitled to receive a transfer
agency fee equal, on an ongoing basis, to 0.04% of average daily net assets with
respect to the Fund's Institutional and Service Shares and 0.19% of average

B-33
<PAGE>

daily net assets with respect to the Fund's Class A, Class B and Class C 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 Trust's distribution and transfer agency agreements each provide that
Goldman Sachs may render similar services to others so long as the services
Goldman Sachs provides thereunder are not impaired thereby. Such agreements also
provide that the Trust will indemnify Goldman Sachs against certain liabilities.

Expenses
- --------

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, service fees paid to institutions that have agreed to
provide account administration and personal account maintenance services to
their customers who are the beneficial owners of Service Shares ("Service
Organizations"), 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 and auditing fees and expenses (including the
cost of legal and certain accounting services rendered by employees of GSAM and
Goldman Sachs with respect to the Trust), expenses of preparing and setting in
type prospectuses, statements of additional information, proxy material, reports
and notices and the printing and distributing of the same to the Trust's
shareholders and regulatory authorities, any expenses assumed by the Fund
pursuant to its distribution and service plans, compensation and expenses of its
"non-interested" Trustees and extraordinary expenses, if any, incurred by the
Trust. Except for fees under any service plan or distribution and service plan
applicable to a particular class and transfer agency fees, all Fund expenses are
borne on a non-class specific basis.

The imposition of the Investment Adviser's fee, 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 its 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.

The Investment Adviser voluntarily has agreed to reduce or limit certain
"Other Expenses" (excluding management fees, distribution and service fees,
transfer agency fees, taxes, interest, brokerage and litigation, indemnification
and other extraordinary expenses) for the Fund to the extent such expenses
exceed 0.05% of average daily net assets. Such reductions or limits, if any, are
calculated monthly on a cumulative basis and may be discontinued or modified by
the Investment Adviser in its discretion at any time.

B-34
<PAGE>

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 Investment Adviser's costs of
performing certain accounting services not being provided by the Fund's
Custodian.

Custodian and Sub-Custodians
- ----------------------------

State Street, P.O. Box 1713, Boston, Massachusetts 02105, 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 and to hold cash 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 December 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 AND BROKERAGE

The Investment Adviser is responsible for decisions to buy and sell
securities for the Fund, the selection of brokers and dealers to effect the
transactions and the negotiation of brokerage commissions, if any. Purchases and
sales of securities on a securities exchange are effected through brokers who
charge a commission for their services. Orders may be directed to any broker
including, to the extent and in the manner permitted by applicable law, Goldman
Sachs.

In the over-the-counter market, securities are generally traded on a "net"
basis with dealers acting as principal for their own accounts without a stated
commission, although the price of a security usually includes a profit to the
dealer. In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain money
market instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid.

In placing orders for portfolio securities of the Fund, the Investment
Adviser is generally required to give primary consideration to obtaining the
most favorable execution and net price available. This means that the Investment
Adviser will seek to execute each transaction at a price and commission, if any,
which provides the most favorable total cost or proceeds reasonably attainable
in the circumstances. As permitted by Section 28(e) of the Securities Exchange
Act of 1934, the Fund may pay a broker who provides brokerage and research
services to the Fund an amount of disclosed commission in excess of the
commission which another broker would have

B-35
<PAGE>

charged for effecting that transaction. Such practice is subject to a good faith
determination that such commission is reasonable in light of the services
provided and to such policies as the Trustees may adopt from time to time. While
the Investment Adviser generally seeks reasonably competitive spreads or
commissions, the Fund will not necessarily be paying the lowest spread or
commission available. Within the framework of this policy, the Investment
Adviser will consider research and investment services provided by brokers or
dealers who effect or are parties to portfolio transactions of the Fund, the
Investment Adviser and its affiliates, or their other clients. Such research and
investment services are those which brokerage houses customarily provide to
institutional investors and include research reports on particular industries
and companies, economic surveys and analyses, recommendations as to specific
securities and other products or services (e.g., quotation equipment and
computer related costs and expenses), advice concerning the value of securities,
the advisability of investing in, purchasing or selling securities, the
availability of securities or the purchasers or sellers of securities,
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of accounts,
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement) and providing lawful and appropriate
assistance to the Investment Adviser in the performance of its decision-making
responsibilities. 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 for 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.

On occasions when the Investment Adviser deems the purchase or sale of a
security to be in the best interest 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 acts as investment adviser or sub-investment
adviser), the Investment Adviser, 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 under the circumstances. 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 equitable and consistent with its fiduciary
obligations to the Fund and the other customers. In some instances, this
procedure may adversely affect the price and size of the position obtainable for
the Fund.

Commission rates in the United States are established pursuant to
negotiations with the broker based on the quality and quantity of execution
services provided by the broker in the light of

B-36
<PAGE>

generally prevailing rates. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Trustees.

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 securities being purchased or sold on
a securities 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.

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, 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, Washington's Birthday (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.

Portfolio securities of the Fund for which accurate market quotations are
available are valued as follows: (a) securities listed on any U.S. exchange or
on the National Association of Securities Dealers Automated Quotations System
("NASDAQ") will be valued at the last sale price on the exchange or system in
which they are principally traded on the valuation date. If there is no sale on
the valuation day, securities traded will be valued at the closing bid price, or
if a closing bid price is not available, at either the exchange or
system-defined close price on the exchange or system in which such securities
are principally traded. If the relevant exchange or system has not

B-37
<PAGE>

closed by the above-mentioned time for determining the Fund's net asset value,
the securities will be valued at the last sale price, or if not available at the
bid price at the time the net asset value is determined; (b) over-the-counter
securities not quoted on NASDAQ will be valued at the last sale price on the
valuation day or, if no sale occurs, at the last bid price at the time net asset
value is determined; (c) equity securities for which no prices are obtained
under section (a) or (b) 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 their fair value in
accordance with procedures approved by the Board of Trustees; (d) fixed-income
securities with a remaining maturity of 60 days or more for which accurate
market quotations are readily available will normally be valued according to
dealer-supplied bid quotations or bid quotations from a recognized pricing
service (e.g., Merrill Lynch, J.J. Kenny, Muller Data Corp., Bloomberg, EJV,
Reuters or Standard & Poor's); (e) fixed-income securities for which accurate
market quotations are not readily available are valued by the Investment Adviser
based on valuation models that take into account spread and daily yield changes
on government securities in the appropriate market (i.e., matrix pricing); (f)
debt securities with a remaining maturity of 60 days or less are valued by the
Investment Adviser at amortized cost, which the Trustees have determined to
approximate fair value; and (g) all other instruments, 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
in accordance with the valuation procedures approved by the Board of Trustees.

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

Generally, trading in securities 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). 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 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.

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 or series and constitute the
underlying assets of the 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 such 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.

B-38
<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.
Average annual total return and yield are computed pursuant to formulas
specified by the SEC.

Thirty-day yield is derived by dividing net investment income per share
earned during the period by the maximum public offering price per share on the
last day of such period. The results are compounded on a bond equivalent
(semi-annual) basis and then annualized. Net investment income per share is
equal to the dividends and interest earned during the period, reduced by accrued
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 in the case of each class other than Class A) at the
beginning of the period, and then calculating the annual compounded rate of
return which would produce that amount, assuming a redemption (and payment of
any contingent deferred sales charge) 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 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.

Total return calculations for Class A Shares reflect the effect of paying
the maximum initial sales charge. Investment at a lower sales charge would
result in higher performance figures. Total return calculations for Class B and
Class C Shares reflect deduction of the applicable contingent deferred sales
charge ("CDSC") imposed upon redemption of Class B and Class C Shares held for
the applicable period. The Fund may also from time to time advertise total
return on a cumulative, average, year-by-year or other basis for various
specified periods by means of quotations, charts graphs or schedules. In
addition, the Fund may furnish total return calculations based on investments at
various sales charge levels or at NAV. An after-tax total return for the Fund
may be calculated by taking its total return and subtracting applicable federal
taxes from the portions of the Fund's total return attributable to capital gain
and ordinary income distributions. This after-tax total return may be compared
to that of other mutual funds with similar investment objectives as reported by
independent sources. Any performance information which is based on the Fund's
NAV per share would be reduced if any applicable sales charge

B-39
<PAGE>

were taken into account. 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.

Occasionally, statistics may be used to specify Fund 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.

From time to time the Trust may publish an indication of the Fund's past
performance as measured by independent sources such as (but not limited to)
Lipper Analytical Services, Inc., Morningstar Mutual Funds, Weisenberger
Investment Companies Service, Donoghue's Money Fund Report, Micropal, Barron's,
Business Week, Consumer's Digest, Consumer's Report, Investors Business Daily,
The New York Times, Kiplinger's Personal Finance Magazine, Changing Times,
Financial World, Forbes, Fortune, Money, Personal Investor, Sylvia Porter's
Personal Finance and The Wall Street Journal. The Trust may also advertise
information which has been provided to the NASD for publication in regional and
local newspapers. In addition, the Trust may from time to time advertise the
Fund's performance relative to certain indices and benchmark investments,
including: (a) the Lipper Analytical Services, Inc. Mutual Fund Performance
Analysis, Fixed-Income Analysis and Mutual Fund Indices (which measure total
return and average current yield for the mutual fund industry and rank mutual
fund performance); (b) the CDA Mutual Fund Report published by CDA Investment
Technologies, Inc. (which analyzes price, risk and various measures of return
for the mutual fund industry); (c) the Consumer Price Index published by the
U.S. Bureau of Labor Statistics (which measures changes in the price of goods
and services); (d) Stocks, Bonds, Bills and Inflation published by Ibbotson
Associates (which provides historical performance figures for stocks, government
securities and inflation); (e) the Salomon Brothers' World Bond Index (which
measures the total return in U.S. dollar terms of government bonds, Eurobonds
and foreign bonds of ten countries, with all such bonds having a minimum
maturity of five years); (f) the Lehman Brothers Aggregate Bond Index or its
component indices; (g) the Standard & Poor's Bond Indices (which measure yield
and price of corporate, municipal and U.S. Government bonds); (h) the J.P.
Morgan Global Government Bond Index; (i) other taxable investments including
certificates of deposit (CDs), money market deposit accounts (MMDAs), checking
accounts, savings accounts, money market mutual funds and repurchase agreements;
(j) Donoghues' Money Fund Report (which provides industry averages for 7-day
annualized and compounded yields of taxable, tax-free and U.S. government money
funds); (k) the Hambrecht & Quist Growth Stock Index; (l) the NASDAQ OTC
Composite Prime Return; (m) the Russell Midcap Index; (n) the Russell 2000 Index
- - Total Return; (o) the Russell 1000 Value Index; (p) the

B-40
<PAGE>

Russell 1000 Growth Index-Total Return; (q) the Value-Line Composite-Price
Return; (r) the Wilshire 4500 Index; (s) the FT-Actuaries Europe and Pacific
Index; (t) historical investment data supplied by the research departments of
Goldman Sachs, Lehman Brothers, First Boston Corporation, Morgan Stanley
(including the EAFE Indices, the Morgan Stanley Capital International Combined
Asia ex Japan Free Index and the Morgan Stanley Capital International Emerging
Markets Free Index), Salomon Brothers, Merrill Lynch, Donaldson Lufkin and
Jenrette or other providers of such data; (u) CDA/Wiesenberger Investment
Companies Services or Wiesenberger Investment Companies Service; (v) The Goldman
Sachs Commodities Index; (w) information produced by Micropal, Inc.; (x) The
Tokyo Price Index; and (y) the Russell 3000 Index. The composition of the
investments in such indices and the characteristics of such benchmark
investments are not identical to, and in some cases are 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.

Information used in advertisements 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.

B-41
<PAGE>

The Trust may from time to time use comparisons, graphs or charts in
advertisements to depict the following types of information:

. the benefits of focusing on after-tax returns versus pre-tax returns
for taxable investors.

. the performance of various types of securities (common stocks, small
company stocks, long-term government bonds, treasury bills and
certificates of deposit) over time. However, the characteristics of
these securities are not identical to, and may be very different from,
those of the Fund's portfolio;

. the dollar and non-dollar based returns of various market indices
(i.e., Morgan Stanley Capital International EAFE Index, FT-Actuaries
Europe & Pacific Index and the Standard & Poor's Index of 500 Common
Stocks) over varying periods of time;

. total stock market capitalizations of specific countries and regions
on a global basis;

. performance of securities markets of specific countries and regions;
and

. value of a dollar amount invested in a particular market or type of
security over different periods of time.

In addition, the Trust may from time to time include rankings of Goldman,
Sachs & Co.'s research department by publications such as the Institutional
Investor and the Wall Street Journal in advertisements.

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

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

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

B-42
<PAGE>

and information may include other materials which highlight or summarize the
services provided in support of an asset allocation program.

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

Total return will be calculated separately for each class of shares in
existence. Because each class of shares is subject to different expenses, total
return with respect to each class of shares of the Fund will differ. As of the
date of this Additional Statement, no shares of the Fund had been offered and
accordingly, no performance information is available.

SHARES OF THE TRUST

Goldman Sachs Trust, a Delaware business trust, was established by a
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. As of the date of this Additional Statement,
the Trustees have classified the shares of the Fund into five classes:
Institutional Shares, Service Shares, Class A Shares, Class B Shares and Class C
Shares.

Each Institutional Share, Service Share, Class A Share, Class B Share and
Class C 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 Service
Plans are borne exclusively by Service Shares, fees under Distribution and
Service Plans are borne exclusively by Class A, Class B or Class C Shares and
transfer agency fees are borne at different rates by different share classes.
The Trustees may determine in the future that it is appropriate to allocate
other expenses differently between classes of shares and may do so to the extent
consistent with the rules of the SEC and positions of the Internal Revenue
Service. 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 fund. 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 under a Plan for services provided to the institution's
customers.

Service Shares may be purchased at net asset value without a sales charge
for accounts held in the name of an institution that, directly or indirectly,
provides certain account administration and shareholder liaison services to its
customers, including maintenance of account records and

B-43
<PAGE>

processing orders to purchase, redeem and exchange Service Shares. Service
Shares bear the cost of account administration fees at the annual rate of up to
0.50% of the average daily net assets of the Fund attributable to Service
Shares.

Class A Shares are sold, with an initial sales charge of up to 5.5%,
through brokers and dealers who are members of the National Association of
Securities Dealers, Inc. (the "NASD") and certain other financial service firms
that have sales agreements with Goldman Sachs. Class A Shares bear the cost of
distribution and service fees at the aggregate rate of up to 0.25% of the
average daily net assets of such Class A Shares. With respect to Class A Shares,
the Distributor at its discretion may use compensation for distribution services
paid under the Distribution and Services Plan for personal and account
maintenance services and expenses so long as such total compensation under the
Plan does not exceed the maximum cap on "service fees" imposed by the NASD.

Class B Shares of the Fund are sold subject to a contingent deferred sales
charge of up to 5.0% through brokers and dealers who are members of the NASD and
certain other financial services firms that have sales arrangements with Goldman
Sachs. Class B Shares bear the cost of distribution (Rule 12b-1) fees at the
aggregate rate of up to 0.75% of the average daily net assets attributable to
Class B Shares. Class B Shares also bear the cost of service fees at an annual
rate of up to 0.25% of the average daily net assets attributable to Class B
Shares.

Class C Shares of the Fund are sold subject to a contingent deferred sales
charge of up to 1.0% through brokers and dealers who are members of the NASD and
certain other financial services firms that have sales arrangements with Goldman
Sachs. Class C Shares bear the cost of distribution (Rule 12b-1) fees at the
aggregate rate of up to 0.75% of the average daily net assets attributable to
Class C Shares. Class C Shares also bear the cost of service fees at an annual
rate of up to 0.25% of the average daily net assets attributable to Class C
Shares.

It is possible that an institution or its affiliate may offer different
classes of shares (i.e., Institutional, Service, Class A Shares, Class B Shares
and Class C 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 the same amount,
except for differences caused by the differences in expenses discussed above.
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.

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<PAGE>

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. In
addition, 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 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 elections 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, employees 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

B-45
<PAGE>

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,
series or its respective 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 their 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 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.

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 adversely affect the voting rights
of shareholder; (ii) that is required by law to be approved by shareholders;
(iii) that would amend the provisions of the Declaration of Trust regarding
amendments and supplements thereto; 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 Delaware 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

B-46
<PAGE>

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 requirements 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
series 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 error 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.

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 shares in the Fund. This summary does not address special tax
rules applicable to certain classes of investors, such as tax-exempt entities,
insurance companies and financial institutions. Each prospective shareholder is
urged to consult his own tax adviser with respect to the specific federal,
state, local and foreign tax consequences of investing in the Fund. The summary
is based on the laws in effect on the date of this Additional Statement, which
are subject to change.

General
- -------

The Fund is a separate taxable entity. The Fund intends to elect to be
treated and intends to qualify for each taxable year as a regulated investment
company under Subchapter M 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 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

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<PAGE>

50% of the market value of the Fund's 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. For purposes of the 90% gross income test, income that the Fund
earns from equity interests in certain entities that are not treated as
corporations (e.g., partnerships or trusts) for U.S. tax purposes will generally
have the same character for the Fund as in the hands of such an entity;
consequently, the Fund may be required to limit its equity investments in such
entities that earn fee income, rental income, or other nonqualifying income. In
addition, future Treasury regulations could provide that qualifying income under
the 90% gross income test will not include gains from foreign currency
transactions that are not directly related to the Fund's principal business of
investing in stock or securities or options and futures with respect to stock or
securities. Using foreign currency positions or entering into foreign currency
options, futures and forward or swap contracts for purposes other than hedging
currency risk with respect to securities in the Fund's portfolio or anticipated
to be acquired may not qualify as "directly-related" under these tests.

If the Fund complies with such provisions, then in any taxable year in
which the Fund 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 accrued original issue discount
and market discount income, income from securities lending, any 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, the Fund (but not its shareholders) will be relieved of
federal income tax on any income of the Fund, including long-term capital gains,
distributed to shareholders. However, if the Fund retains any investment company
taxable income or "net capital gain" (the excess of net long-term capital gain
over net short-term capital loss), it will be subject to a tax at regular
corporate rates on the amount retained. If the Fund retains any net capital
gain, the Fund may designate the retained amount as undistributed capital gains
in a notice to its shareholders who, if subject to U.S. federal income tax on
long-term capital gains, (i) will be required to include in income for federal
income tax purposes, as long-term capital gain, their shares of such
undistributed amount, and (ii) will be entitled to credit their proportionate
shares of the tax paid by the Fund against their U.S. federal income tax
liabilities, if any, and to claim refunds to the extent the credit exceeds such
liabilities. For U.S. federal income tax purposes, the tax basis of shares owned
by a shareholder of the Fund will be increased by an amount equal under current
law to 65% of the amount of undistributed net capital gain included in the
shareholder's gross income. The Fund intends to distribute for each taxable year
to its shareholders all or substantially all of its investment company taxable
income, net capital gain and any net tax-exempt interest. 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

B-48
<PAGE>

and net capital gain at corporate rates, and its distributions to shareholders
will be taxable as ordinary dividends to the extent of its current and
accumulated earnings and profits.

In order to avoid a 4% federal excise tax, the Fund must distribute (or be
deemed to have distributed) by December 31 of each calendar year at least 98% of
its 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 all taxable ordinary
income and the excess of capital gains over capital losses for the previous year
that were not distributed for such year and on which the Fund paid no federal
income tax. For federal income tax purposes, dividends declared by the Fund in
October, November or December to shareholders of record on a specified date in
such a month and paid during January of the following year are taxable to such
shareholders as if received on December 31 of the year declared. The Fund
anticipates that it will generally make timely distributions of income and
capital gains in compliance with these requirements so that it will generally
not be required to pay the excise tax. 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.

Gains and losses on the sale, lapse, or other termination of options and
futures contracts, options thereon and certain forward contracts (except certain
foreign currency options, forward contracts and futures contracts) will
generally be treated as capital gains 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 contracts,
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.

Section 988 of the Code contains special tax rules applicable to certain
foreign currency transactions and instruments that may affect the amount, timing
and character of income, gain or loss recognized by the Fund. Under these rules,
foreign exchange gain or loss realized with respect to foreign currencies and
certain futures and options thereon, foreign currency-denominated debt
instruments, foreign currency forward contracts, and foreign
currency-denominated payables and receivables will generally be treated as
ordinary income or loss, although in some cases elections may be available that
would alter this treatment. If a net foreign exchange loss treated as ordinary
loss under Section 988 of the Code were to exceed the Fund's investment company
taxable income (computed without regard to such loss) for a taxable year, the
resulting loss would not be deductible

B-49
<PAGE>

by the Fund or its shareholders in future years. Net loss, if any, from certain
foreign currency transactions or instruments could exceed net investment income
otherwise calculated for accounting purposes with the result being either no
dividends being paid or a portion of the Fund's dividends being treated as a
return of capital for tax purposes, nontaxable to the extent of a shareholder's
tax basis in his shares and, once such basis is exhausted, generally giving rise
to capital gains.

The Fund's investment in deferred interest securities, certain structured
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.

Taxable U.S. Shareholders - Distributions
- -----------------------------------------

For U.S. federal income tax purposes, distributions by the Fund, whether
reinvested in additional shares or paid in cash, generally will be taxable to
shareholders who are subject to tax. Shareholders receiving a distribution in
the form of newly issued shares will be treated for U.S. federal income tax
purposes as receiving a distribution in an amount equal to the amount of cash
they would have received had they elected to receive cash and will have a cost
basis in each share received equal to such amount divided by the number of
shares received.

Distributions from investment company taxable income for the year will be
taxable as ordinary income. Distributions designated as derived from the Fund's
dividend income, if any, that would be eligible for the dividends- received
deduction if the Fund were not a regulated investment company may be eligible
for the dividends received deduction for corporate shareholders. 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 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. The entire
dividend, including the deducted amount, is considered in determining the
excess, if any, of a corporate shareholder's adjusted current earnings over its
alternative minimum taxable income, which may increase its liability for the
federal alternative minimum tax, and the dividend may, if it is treated as an
"extraordinary dividend" under the Code, reduce such shareholder's tax basis in
its shares of the Fund. Capital gain dividends (i.e., dividends from net capital
gain) if designated as such in a written notice to shareholders mailed not later
than 60 days after the Fund's taxable year closes, will be taxed to shareholders
as long-term capital gain regardless of how long shares have been held by
shareholders, but are not eligible for the dividends-received deduction for
corporations. Such long-term capital gain will be taxed at a maximum rate of
20%. Distributions, if any, that are in excess of the Fund's current and
accumulated earnings and profits will first reduce a shareholder's tax basis in
his shares and, after such basis is reduced to zero, will generally constitute
capital gains to a shareholder who holds his shares as capital assets.

B-50
<PAGE>

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). If the shareholder holds the shares as a capital asset at the
time of sale, the character of the gain or loss should be capital, and treated
as long-term if the shareholder's holding period is more than one year, and
short-term otherwise. In general, the maximum long-term capital gain rate for
non corporate shareholders will be 20% for capital gains on assets held more
than one year. 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 receives 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 a sale or redemption of such shares,
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. All or
a portion of any sales load paid upon the purchase of shares of the Fund will
not be taken into account in determining gain or loss on the redemption or
exchange of such shares within 90 days after their purchase to the extent the
redemption proceeds are reinvested, or the exchange is effected, without payment
of an additional sales load pursuant to the reinvestment or exchange privilege.
The load not taken into account will be added to the tax basis of the
newly-acquired shares. 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 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.

The Fund may be required to withhold, as "backup withholding," federal
income tax at a rate of 31% from dividends (including capital gain dividends)
and share redemption and exchange proceeds to individuals and other non-exempt
shareholders who fail to furnish the Fund with a correct taxpayer identification
number ("TIN") certified under penalties of perjury, or if the Internal Revenue
Service or a broker notifies the Fund that the payee is subject to backup
withholding as a result of failing to properly report interest or dividend
income to the Internal Revenue Service or that the TIN furnished by the payee to
the Fund is incorrect, or if (when required to do so) the payee fails to certify
under penalties of perjury that it is not subject to backup withholding. The
Fund may refuse to accept an application that does not contain any required TIN
or certification that the TIN provided is correct. If the backup withholding
provisions are applicable, any such dividends

B-51
<PAGE>

and proceeds, whether paid in cash or reinvested in additional 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 Service (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 Transfer to Minors Act, the TIN of the
minor should be furnished.

Non-U.S. Shareholders
- ---------------------

The discussion above relates solely to U.S. federal income tax law as it
applies to "U.S. persons" subject to tax under such law. Shareholders who, as to
the United States, are not "U.S. persons," (i.e., are nonresident aliens,
foreign corporations, fiduciaries of foreign trusts or estates, foreign
partnerships or other non-U.S. investors) generally will be subject to U.S.
federal withholding tax at the rate of 30% on distributions treated as ordinary
income unless the tax is reduced or eliminated pursuant to a tax treaty or the
dividends are effectively connected with a U.S. trade or business of the
shareholder. In the latter 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 non-U.S.
shareholder 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 non-U.S. shareholder 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 U.S., or in the case of a shareholder who is a
nonresident alien individual, the shareholder is present in the U.S. 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 an
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
- ---------------

The Fund may be subject to state or local taxes in jurisdictions in which
the Fund may be deemed to be doing business. In addition, in those states or
localities which have income tax laws, the treatment of the Fund and its
shareholders under such laws may differ from their treatment under federal
income tax laws, and investment in the Fund may have tax consequences for

B-52
<PAGE>

shareholders different from those of a direct investment in the Fund's portfolio
securities. Shareholders should consult their own tax advisers concerning these
matters.

OTHER INFORMATION

The Fund may pay redemptions, in part or in whole, by a distribution in
kind of securities (instead of cash) from the Fund. Unlike other funds of the
Goldman Sachs Trust, the Fund has not elected, pursuant to Rule 18f-1 under the
Act, to pay in cash all requests for redemptions 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 securities distributed in kind 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).

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") for the sale and
distribution of Shares of the Fund and/or for the servicing of those shares.
These payments ("Additional Payments") would be in addition to the payments by
the Fund described in the Fund's Prospectus and this Additional Statement for
distribution and shareholder servicing and processing, and would also be in
addition to the sales commissions payable to Intermediaries as set forth in the
Prospectus. 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 Fund on an Intermediary'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

B-53
<PAGE>

and/or their affiliates may make Additional Payments for subaccounting,
administrative and/or shareholder processing services that are in addition to
the 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, to the extent permitted by applicable
regulations, contribute to various non-cash and cash incentive arrangements to
promote the sale of shares, as well as sponsor various educational programs,
sales contests and/or promotions. 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.

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 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 of which the Prospectuses and this Additional Statement form a part,
each such statement being qualified in all respects by such reference.

B-54
<PAGE>

DISTRIBUTION AND SERVICE PLANS
(Class A Shares, Class B Shares and Class C Shares Only)

Distribution and Service Plans. As described in the Prospectus, the Trust
has adopted, on behalf of the Fund's Class A, Class B and Class C Shares,
distribution and service plans (each a "Plan") pursuant to Rule 12b-1 under the
Act. See "Shareholder Services" in the Prospectus.

The Plans were initially approved with respect to the Fund on February 3,
2000 by a majority vote of the Trustees of the Trust, including a majority of
the non-interested Trustees of the Trust who have no direct or indirect
financial interest in the Plans, cast in person at a meeting called for the
purpose of approving the Plans.

The compensation for distribution services payable under a Plan may not
exceed 0.25%, 0.75% and 0.75%, per annum of the Fund's average daily net assets
attributable to Class A, Class B and Class C Shares, respectively. Under the
Plans for Class B and Class C Shares, Goldman Sachs is also entitled to received
a separate fee for personal and account maintenance services equal to an annual
basis of 0.25% of the Fund's average daily net assets attributable to Class B or
Class C Shares. With respect to Class A Shares, the Distributor at its
discretion may use compensation for distribution services paid under the Plan
for personal and account maintenance services and expenses so long as such total
compensation under the Plan does not exceed the maximum cap on "service fees"
imposed by the NASD.

Each Plan is a compensation plan which provides for the payment of a
specified fee without regard to the expenses actually incurred by Goldman Sachs.
If such fee exceeds Goldman Sachs' expenses, Goldman Sachs may realize a profit
from these arrangements. The distribution fees received by Goldman Sachs under
the Plans and contingent deferred sales charge on Class A, Class B and Class C
Shares may be sold by Goldman Sachs as distributor to entities which provide
financing for payments to Authorized Dealers in respect of sales of Class A,
Class B and Class C Shares. To the extent such fees are not paid to such
dealers, Goldman Sachs may retain such fee as compensation for its services and
expenses of distributing the Fund's Class A, Class B and Class C Shares.

Under each Plan, Goldman Sachs, as distributor of the Fund's Class A,
Class B and Class C Shares, will provide to the Trustees of the Trust for their
review, and the Trustees of the Trust will review at least quarterly, a written
report of the services provided and amounts expended by Goldman Sachs under the
Plans and the purposes for which such services were performed and expenditures
were made.

The Plans will remain in effect until May 1, 2000 and from year to year
thereafter, provided that such continuance is approved annually by a majority
vote of the Trustees of the Trust, including a majority of the non-interested
Trustees of the Trust who have no direct or indirect financial interest in the
Plans. The Plans may not be amended to increase materially the amount of
distribution compensation without approval of a majority of the outstanding
Class A, Class B or Class C Shares, respectively, of the Fund. All material
amendments of a Plan must also be

B-55
<PAGE>

approved by the Trustees of the Trust in the manner described above. A Plan may
be terminated at any time without payment of any penalty by a vote of a majority
of the non-interested Trustees of the Trust or by vote of a majority of the
Class A, Class B or Class C Shares, respectively, of the Fund. If a Plan was
terminated by the Trustees of the Trust and no successor plan was adopted, the
Fund would cease to make payments to Goldman Sachs under the Plan and Goldman
Sachs would be unable to recover the amount of any of its unreimbursed
expenditures. So long as a Plan is in effect, the selection and nomination of
non-interested Trustees of the Trust will be committed to the discretion of the
non-interested Trustees of the Trust. The Trustees of the Trust have determined
that in their judgment there is a reasonable likelihood that the Plans will
benefit the Fund and its Class A, Class B and Class C Shareholders. As of the
date of this Additional Statement, no shares of the Fund had been offered and,
accordingly, the Fund paid no fees pursuant to the Plans. As of the date of this
Additional Statement, Goldman Sachs incurred no expenses in connection with
distribution under the Plans with respect to the Fund.

OTHER INFORMATION REGARDING MAXIMUM SALES CHARGE, PURCHASES,
REDEMPTIONS, EXCHANGES AND DIVIDENDS
(Class A Shares, Class B Shares and Class C Shares Only)

Maximum Sales Charges
- ---------------------

Class A Shares of the Fund are sold at a maximum sales charge of 5.5%.
Assuming a $10.00 initial offering price per share with respect to the Fund, the
maximum offering price of the Fund's Class A shares would be as follows: Net
Asset Value, $10.00; Maximum Sales Charge, 5.5%; Offering Price to Public,
$10.55.

The following information supplements the information in the Prospectus
under the captions "Shareholder Guide" and "Dividends." Please see the
Prospectus for more complete information.

Other Purchase Information
- --------------------------

If shares of the Fund are held in a "street name" account with an
Authorized Dealer, all recordkeeping, transaction processing and payments of
distributions relating to the beneficial owner's account will be performed by
the Authorized Dealer, and not by the Fund and its Transfer Agent. Since the
Fund will have no record of the beneficial owner's transactions, a beneficial
owner should contact the Authorized Dealer to purchase, redeem or exchange
shares, to make changes in or give instructions concerning the account or to
obtain information about the account. The transfer of shares in a "street name"
account to an account with another dealer or to an account directly with the
Fund involves special procedures and will require the beneficial owner to obtain
historical purchase information about the shares in the account from the
Authorized Dealer.

B-56
<PAGE>

Right of Accumulation (Class A)
- -------------------------------

A Class A shareholder qualifies for cumulative quantity discounts if the
current purchase price of the new investment plus the shareholder's current
holdings of existing Class A Shares (acquired by purchase or exchange) of the
Fund and Class A Shares of any other Goldman Sachs Fund (as defined in the
Prospectus) total the requisite amount for receiving a discount. For example, if
a shareholder owns shares with a current market value of $35,000 and purchases
additional Class A Shares of any Goldman Sachs Fund with a purchase price of
$25,000, the sales charge for the $25,000 purchase would be 4.75% (the rate
applicable to a single purchase of more than $50,000). Class A Shares purchased
without the imposition of a sales charge may not be aggregated with Class A
Shares purchased subject to a sales charge. Class A Shares of the Fund and any
other Goldman Sachs Fund purchased (i) by an individual, his spouse and his
children, and (ii) by a trustee, guardian or other fiduciary of a single trust
estate or a single fiduciary account, will be combined for the purpose of
determining whether a purchase will qualify for such right of accumulation and,
if qualifying, the applicable sales charge level. For purposes of applying the
right of accumulation, shares of the Fund and any other Goldman Sachs Fund
purchased by an existing client of the Private Client Services Division of
Goldman Sachs will be combined with Class A Shares held by any other Private
Client Services account. In addition, Class A Shares of the Fund and Class A
Shares of any other Goldman Sachs Fund purchased by partners, directors,
officers or employees of the same business organization, groups of individuals
represented by and investing on the recommendation of the same accounting firm,
certain affinity groups or other similar organizations (collectively, "eligible
persons") may be combined for the purpose of determining whether a purchase will
qualify for the right of accumulation and, if qualifying, the applicable sales
charge level. This right of accumulation is subject to the following conditions:
(i) the business organization's, group's or firm's agreement to cooperate in the
offering of the Fund's shares to eligible persons; and (ii) notification to the
Fund at the time of purchase that the investor is eligible for this right of
accumulation.

Statement of Intention (Class A)
- --------------------------------

If a shareholder anticipates purchasing at least $50,000 of Class A Shares
of the Fund alone or in combination with Class A Shares of any other Goldman
Sachs Fund within a 13-month period, the shareholder may purchase shares of the
Fund at a reduced sales charge by submitting a Statement of Intention (the
"Statement"). Shares purchased pursuant to a Statement will be eligible for the
same sales charge discount that would have been available if all of the
purchases had been made at the same time. The shareholder or his Authorized
Dealer must inform Goldman Sachs that the Statement is in effect each time
shares are purchased. There is no obligation to purchase the full amount of
shares indicated in the Statement. A shareholder may include the value of all
Class A Shares on which a sales charge has previously been paid as an
"accumulation credit" toward the completion of the Statement, but a price
readjustment will be made only on Class A Shares purchased within ninety (90)
days before submitting the Statement. The Statement authorizes the Transfer
Agent to hold in escrow a sufficient number of shares which can be redeemed to
make up any difference in the sales charge on the amount actually invested. For
purposes of satisfying the

B-57
<PAGE>

amount specified on the Statement, the gross amount of each investment,
exclusive of any appreciation on shares previously purchased, will be taken into
account.

The provisions applicable to the Statement, and the terms of the related
escrow agreement, are set forth in Appendix C to this Additional Statement.

Cross-Reinvestment of Dividends and Distributions
- -------------------------------------------------

Shareholders may receive dividends and distributions in additional shares
of the same class of the Fund or they may elect to receive them in cash or
shares of the same class of other Goldman Sachs Funds or ILA Service Units of
the Prime Obligations Portfolio or the Tax-Exempt Diversified Portfolio, if they
hold Class A Shares of the Fund, or ILA, Class B or Class C Units of the Prime
Obligations Portfolio, if they hold Class B or Class C Shares of the Fund (the
"ILA Portfolios").

A Fund shareholder should obtain and read the prospectus relating to any
other Goldman Sachs Fund or ILA Portfolio and its shares or units and consider
its investment objective, policies and applicable fees before electing
cross-reinvestment into that Fund or Portfolio. The election to cross-reinvest
dividends and capital gain distributions will not affect the tax treatment of
such dividends and distributions, which will be treated as received by the
shareholder and then used to purchase shares of the acquired fund. Such
reinvestment of dividends and distributions in shares of other Goldman Sachs
Funds or in units of ILA Portfolios is available only in states where such
reinvestment may legally be made.

Automatic Exchange Program
- --------------------------

A Fund shareholder may elect to exchange automatically a specified dollar
amount of shares of the Fund into an identical account of another Goldman Sachs
Fund or an account registered in a different name or with a different address,
social security or other TIN, provided that the account in the acquired fund has
been established, appropriate signatures have been obtained and the minimum
initial investment requirement has been satisfied. A Fund shareholder should
obtain and read the prospectus relating to any other Goldman Sachs Fund and its
shares and consider its investment objective, policies and applicable fees and
expenses before electing an automatic exchange into that Goldman Sachs Fund.

Systematic Withdrawal Plan
- --------------------------

A systematic withdrawal plan (the "Systematic Withdrawal Plan") is
available to shareholders of the Fund whose shares are worth at least $5,000.
The Systematic Withdrawal Plan provides for monthly payments to the
participating shareholder of any amount not less than $50.

Dividends and capital gain distributions on shares held under the
Systematic Withdrawal Plan are reinvested in additional full and fractional
shares of the Fund at net asset value. The Transfer Agent acts as agent for the
shareholder in redeeming sufficient full and fractional shares to

B-58
<PAGE>

provide the amount of the systematic withdrawal payment. The Systematic
Withdrawal Plan may be terminated at any time. Goldman Sachs reserves the right
to initiate a fee of up to $5 per withdrawal, upon thirty (30) days written
notice to the shareholder. Withdrawal payments should not be considered to be
dividends, yield or income. If periodic withdrawals continuously exceed new
purchases and reinvested dividends and capital gains distributions, the
shareholder's original investment will be correspondingly reduced and ultimately
exhausted. The maintenance of a withdrawal plan concurrently with purchases of
additional Class A, Class B or Class C Shares would be disadvantageous because
of the sales charge imposed on purchases of Class A Shares or the imposition of
a CDSC on redemptions of Class A, Class B or Class C Shares. The CDSC applicable
to Class A, Class B or Class C Shares redeemed under a systematic withdrawal
plan may be waived. See "Shareholder Guide" in the Prospectus. In addition, each
withdrawal constitutes a redemption of shares, and any gain or loss realized
must be reported for federal and state income tax purposes. A shareholder should
consult his or her own tax adviser with regard to the tax consequences of
participating in the Systematic Withdrawal Plan. For further information or to
request a Systematic Withdrawal Plan, please write or call the Transfer Agent.

SERVICE PLAN
(Service Shares Only)

The Fund has adopted a service plan (the "Plan") with respect to its
Service Shares which authorizes it to compensate Service Organizations for
providing certain administration services and personal and account maintenance
services to their customers who are or may become beneficial owners of such
shares. Pursuant to the Plan, the Fund enters into agreements with Service
Organizations which purchase Service Shares of the Fund 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 Service Shares of the Fund; (c) answer questions and handle correspondence
from customers regarding their accounts; (d) process customer orders to
purchase, redeem and exchange Service Shares of the Fund, and handle the
transmission of funds representing the customers' purchase price or redemption
proceeds; (e) issue confirmations for transactions in shares by customers; (f)
provide facilities to answer questions from prospective and existing investors
about Service Shares of the Fund; (g) receive and answer investor
correspondence, including requests for prospectuses and statements of additional
information; (h) display and make prospectuses available on the Service
Organization's premises; (i) assist customers in completing application forms,
selecting dividend and other account options and opening custody accounts with
the Service Organization; and (j) act as liaison between customers and the Fund,
including obtaining information from the Fund, working with the Fund to correct
errors and resolve problems and providing statistical and other information to
the Fund. As compensation for such services, the Fund will pay each Service
Organization a service fee in an amount up to 0.50% (on an annualized basis) of
the average daily net assets of the Service 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 had been offered and, accordingly,
no fees were paid to Service Organizations pursuant to the Plan.

B-59
<PAGE>

The Fund has adopted the Plan pursuant to Rule 12b-1 under the Act in
order to avoid any possibility that payments to the Service Organizations
pursuant to the Service Agreements might violate the Act. Rule 12b-1, which was
adopted by the SEC under the Act, regulates the circumstances under which an
investment company or series thereof may bear expenses associated with the
distribution of its shares. In particular, such an investment company or series
thereof cannot engage directly or indirectly in financing any activity which is
primarily intended to result in the sale of shares issued by the company unless
it has adopted a plan pursuant to, and complies with the other requirements of,
such Rule. The Trust believes that fees paid for the services provided in the
Plan and described above are not expenses incurred primarily for effecting the
distribution of Service Shares. However, should such payments be deemed by a
court or the SEC to be distribution expenses, such payments would be duly
authorized by the Plan.

Conflict of interest restrictions (including the Employee Retirement
Income Security Act of 1974) may apply to a Service Organization's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
assets in Service Shares. 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 Service Shares. In addition, under some state
securities laws, banks and other financial institutions purchasing Service
Shares on behalf of their customers may be required to register as dealers.

The 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 Plan or the related Service Agreements, initially voted to
approve the Plan and related Service Agreements with respect to the Fund at a
meeting called for the purpose of voting on such Plan and Service Agreements on
February 3, 2000. The Plan and related Service Agreements will remain in effect
until May 1, 2000 and will continue in effect thereafter only if such
continuance is specifically approved annually by a vote of the 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
Service Shareholders of the Fund and all material amendments of the Plan must
also be approved by the Trustees in the manner described above. The Plan may be
terminated at any time by a majority of the Trustees as described above or by a
vote of a majority of the Fund's outstanding Service Shares. The Service
Agreements may be terminated at any time, without payment of any penalty, by
vote of a majority of the Trustees as described above or by a vote of a majority
of the Fund's outstanding Service Shares on not more than sixty (60) days'
written notice to any other party to the Service Agreements. The Service
Agreements will terminate automatically if assigned. So long as the Plan is in
effect, the selection and nomination of those Trustees who are not interested
persons will be committed to the discretion of the non-interested Trustees. The
Trustees have determined that, in their judgment, there is a reasonable
likelihood that the Plan will benefit the Fund and the holders of Service
Shares.

B-60
<PAGE>

Appendix A

Commercial Paper Ratings
- ------------------------

A Standard & Poor's ("S&P") commercial paper rating is a current
opinion of the credit worthiness 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 and 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 S&P 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.

Local Currency and Foreign Currency Risks
Country risk considerations are a standard part of S&P's analysis
for credit ratings on any issuer or issue. Currency of repayment is a key
factor in this analysis. An obligor's capacity to repay foreign obligations may
be lower than its capacity to repay obligations in its local currency due to the
sovereign government's own relatively lower capacity to repay external versus
domestic debt. These sovereign risk considerations are incorporated in the debt
ratings assigned to specific issues. Foreign currency issuer ratings are also
distinguished from local currency issuer ratings to identify those instances
where sovereign risks make them different for the same issuer.

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:

1-A
<PAGE>

"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.

"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.

2-A
<PAGE>

"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:

"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.

3-A
<PAGE>

"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 and Municipal Long-Term Debt Ratings
- ----------------------------------------------

The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:

"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

4-A
<PAGE>

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 S&P 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.

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 S&P'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 S&P 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
commodities 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. Indicates that no rating has been requested, that there
is insufficient information on which to base a rating, or that S&P 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 and municipal issues. The ratings 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 and
municipal 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

5-A
<PAGE>

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.

"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 and municipal 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.

6-A
<PAGE>

"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 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 and municipal 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.

7-A
<PAGE>

"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" and "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 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 recovering 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 denote relative standing within these major
rating categories.

'NR' indicates that 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 BankWatch 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 BankWatch for
long-term debt ratings:

"AAA" - This designation indicates that the ability to repay
principal and interest on a timely basis is extremely high.

8-A
<PAGE>

"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.

"BB" - A rating of BB suggests that the likelihood of default is
considerably 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.

Municipal Note Ratings
- ----------------------

A Standard and Poor's rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's for municipal notes:

"SP-1" - The issuers of these municipal notes exhibit a strong
capacity to pay principal and interest. Those issues determined to possess a
very strong capacity to pay debt service are given a plus (+) designation.

"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest, with some vulnerability to adverse
financial and economic changes over the term of the notes.

"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.

9-A
<PAGE>

Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:

"MIG-1"/"VMIG-1" - This designation denotes best quality. There is
present strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.

"MIG-2"/"VMIG-2" - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

"MIG-3"/"VMIG-3" - This designation denotes favorable quality, with
all security elements accounted for but lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.

"MIG-4"/"VMIG-4" - This designation denotes adequate quality.
Protection commonly regarded as required of an investment security is present
and although not distinctly or predominantly speculative, there is specific
risk.

"SG" - This designation denotes speculative quality. Debt
instruments in this category lack of margins of protection.

Fitch IBCA and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.

10-A
<PAGE>

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.

1-B
<PAGE>

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 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.

2-B
<PAGE>

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 around the world 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 Trust and Rights.

3-B
<PAGE>

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 Goldman Sachs Asset Management increases assets under management
by 100% over 1996

Dow Jones Industrial Average breaks 7000

4-B
<PAGE>

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

5-B
<PAGE>

APPENDIX C

Statement of Intention
(applicable only to Class A shares)

If a shareholder anticipates purchasing $50,000 or more of Class A Shares
of the Fund alone or in combination with Class A Shares of another Goldman Sachs
Fund within a 13-month period, the shareholder may obtain shares of the Fund at
the same reduced sales charge as though the total quantity were invested in one
lump sum by checking and filing the Statement of Intention in the Account
Application. Income dividends and capital gain distributions taken in additional
shares will not apply toward the completion of the Statement of Intention.

To ensure that the reduced price will be received on future purchases, the
investor must inform Goldman Sachs that the Statement of Intention is in effect
each time shares are purchased. Subject to the conditions mentioned below, each
purchase will be made at the public offering price applicable to a single
transaction of the dollar amount specified on the Account Application. The
investor makes no commitment to purchase additional shares, but if the
investor's purchases within 13 months plus the value of shares credited toward
completion do not total the sum specified, the investor will pay the increased
amount of the sales charge prescribed in the Escrow Agreement.

Escrow Agreement

Out of the initial purchase (or subsequent purchases if necessary), 5% of
the dollar amount specified on the Account Application will be held in escrow by
the Transfer Agent in the form of shares registered in the investor's name. All
income dividends and capital gains distributions on escrowed shares will be paid
to the investor or to his or her order. When the minimum investment so specified
is completed (either prior to or by the end of the 13th month), the investor
will be notified and the escrowed shares will be released.

If the intended investment is not completed, the investor will be asked to
remit to Goldman Sachs any difference between the sales charge on the amount
specified and on the amount actually attained. If the investor does not within
20 days after written request by Goldman Sachs pay such difference in the sales
charge, the Transfer Agent will redeem, pursuant to the authority given by the
investor in the Account Application, an appropriate number of the escrowed
shares in order to realize such difference. Shares remaining after any such
redemption will be released by the Transfer Agent.

1-C