GOLDMAN SACHS EQUITY PORTFOLIOS INC, 485APOS, 1995-10-27

GOLDMAN SACHS EQUITY PORTFOLIOS INC
485APOS, 1995-10-27

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<PAGE>

1933 Act Registration No. 33-33316
1940 Act Registration No. 811-6036

As filed with the Securities and Exchange Commission on October 27, 1995

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________

FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

Post-Effective Amendment No. 18 ( X )

and

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940

Amendment No. 20 ( X )
(Check appropriate box or boxes)

____________

GOLDMAN SACHS EQUITY PORTFOLIOS, INC.
(Formerly GS Capital Growth Fund, Inc.)
(Exact name of registrant as specified in charter)

One New York Plaza
New York, New York 10004
(Address of principal executive offices)

Registrant's Telephone Number, including Area Code
212-902-0800

_____________

with a copy to:
Michael J. Richman Ernest V. Klein
Goldman Sachs Asset Management Hale and Dorr
85 Broad Street 60 State Street
New York, New York 10004 Boston, Massachusetts 02109

(name and address of agent for service)
<PAGE>

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

( ) immediately upon filing pursuant to paragraph (b)

( ) on (date) pursuant to paragraph (b)

( X ) 60 days after filing pursuant to paragraph (a)(i)
( ) on (date) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) on (date) pursuant to paragraph (a)(ii) of rule 485

REGISTRANT HAS REGISTERED AN UNLIMITED NUMBER OF ITS SHARES UNDER THE SECURITIES
ACT OF 1933 PURSUANT TO RULE 24F-2. ON MARCH 31, 1995, REGISTRANT FILED A RULE
24F-2 NOTICE FOR THE FISCAL YEAR ENDED JANUARY 31, 1995.
<PAGE>

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

N-1A ITEM NO. LOCATION
- ------------- --------

PART A CAPTION
- ------ -------

Goldman Sachs Select Equity Fund, Goldman Sachs Growth and Income Fund, Goldman
Sachs Mid-Cap Equity Fund, Goldman Sachs International Equity Fund and Goldman
Sachs Asia Growth Fund - Institutional Shares

<TABLE>
<S> <C> <C>
Item 1. Cover Page Cover Page

Item 2. Synopsis Summary

Item 3. Condensed Financial Not Applicable
Information

Item 4. General Description Cover Page; Summary;
of Registrant Investment Objectives and
Policies; Special Investment Methods and Risk
Factors; Reports to Shareholders;
Shares of the Company; Additional
Information

Item 5. Management of Fund Management

Item 6. Capital Stock and Dividends; Taxation; Shares of
Other Securities the Company; Additional Information

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

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

Item 9. Pending Legal Not Applicable
Proceedings
</TABLE>
<PAGE>

Goldman Sachs Select Equity Fund, Goldman Sachs Growth and Income Fund, Goldman
Sachs Mid-Cap Equity Fund, Goldman Sachs International Equity Fund and Goldman
Sachs Asia Growth Fund-Service Shares

<TABLE>
<S> <C> <C>
Item 1. Cover Page Cover Page

Item 2. Synopsis Summary

Item 3. Condensed Financial Not Aplicable
Information

Item 4. General Description Cover Page; Summary;
of Registrant Investment Objectives and Policies;
Special Investment
Methods and Risk Factors;
Reports to Shareholders;
Shares of the Company; Service
Plan; Additional Information

Item 5. Management of Fund Management

Item 6. Capital Stock and Dividends; Taxation; Shares of
Other Securities the Company; Additional
Information

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

Item 8. Redemption or Redemption of Service
Repurchase Shares; Additional Information

Item 9. Pending Legal Not Applicable
Proceedings
</TABLE>
<PAGE>

PART B

<TABLE>
<S> <C> <C>
Item 10. Cover Page Cover Page

Item 11. Table of Contents Table of Contents

Item 12. General Information Introduction
and History

Item 13. Investment Objectives Investment Objective and
and Policies Policies; Investment
Restrictions

Item 14. Management of the Management
Registrant

Item 15. Control Persons and Not Applicable
Principal Holders of
Securities

Item 16. Investment Advisory and Management
Other Services

Item 17. Brokerage Allocation Portfolio Transactions
and Other Practices

Item 18. Capital Stock and Shares of the Company
Other Securities

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

Item 20. Tax Status Taxation

Item 21. Underwriters Management -- Distributor and
Transfer Agent; Management --
Distribution Plan

Item 22. Calculation of Performance Information
Performance Data

Item 23. Financial Statements Not Applicable
</TABLE>
<PAGE>

PART C

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

*THIS POST-EFFECTIVE AMENDMENT IS BEING FILED SOLELY TO (i)REGISTER THE OFFERING
OF INSTITUTIONAL SHARES OF GOLDMAN SACHS GROWTH AND INCOME FUND, GOLDMAN SACHS
INTERNATIONAL EQUITY FUND, AND GOLDMAN SACHS ASIA GROWTH FUND, AND (ii) REGISTER
THE OFFERING OF SERVICE SHARES OF GOLDMAN SACHS SELECT EQUITY FUND, GOLDMAN
SACHS GROWTH AND INCOME FUND, GOLDMAN SACHS MID-CAP EQUITY FUND, GOLDMAN SACHS
INTERNATIONAL FUND AND GOLDMAN SACHS ASIA GROWTH FUND. EACH OF THE FUNDS ARE AN
EXISTING SERIES OF GOLDMAN SACHS EQUITY PORTFOLIOS, INC. THE PROSPECTUSES AND
STATEMENTS OF ADDITIONAL INFORMATION FOR THE OTHER SERIES OF GOLDMAN SACHS
EQUITY PORTFOLIOS, INC., INCLUDING THE CLASS A SHARES OF GOLDMAN SACHS SELECT
EQUITY FUND, GOLDMAN SACHS GROWTH AND INCOME FUND, GOLDMAN SACHS INTERNATIONAL
EQUITY FUND AND GOLDMAN SACHS ASIA GROWTH FUND, ARE NOT AFFECTED HEREBY, AND,
THEREFORE, ARE NOT INCLUDED HEREIN.
<PAGE>

GOLDMAN SACHS SELECT EQUITY FUND

GOLDMAN SACHS GROWTH AND INCOME FUND
GOLDMAN SACHS MID-CAP EQUITY FUND

GOLDMAN SACHS INTERNATIONAL EQUITY FUND

GOLDMAN SACHS ASIA GROWTH FUND
INSTITUTIONAL SHARES
------------

Goldman Sachs Select Equity Fund ("Select Equity Fund"), Goldman Sachs
Growth and Income Fund ("Growth and Income Fund"), Goldman Sachs Mid-Cap
Equity Fund ("Mid-Cap Equity Fund"), Goldman Sachs International Equity Fund
("International Equity Fund") and Goldman Sachs Asia Growth Fund ("Asia Growth
Fund") (individually, a "Fund," and collectively, the "Funds") are part of a
family of funds advised by Goldman Sachs Asset Management or its affiliates,
Goldman Sachs Funds Management, L.P. and Goldman Sachs Asset Management
International. Each Fund is organized as a separate diversified portfolio of
Goldman Sachs Equity Portfolios, Inc. (the "Company"), an open-end, management
investment company. Institutional Shares of the Funds are offered to certain
institutional investors.
Select Equity Fund seeks total return through investments in equity
securities consisting of capital appreciation plus dividend income that, net
of Fund expenses, exceeds the total return realized on the
Standard & Poor's Index of 500 Common Stocks.

Growth and Income Fund seeks long-term growth of capital and growth of
income through investments in equity securities that the Fund's Investment
Adviser considers to have favorable prospects for capital appreciation and/or
dividend paying ability.

Mid-Cap Equity Fund seeks long-term capital growth primarily through
investments in equity securities of companies with public stock market
capitalizations of between $500 million and $7 billion at the time of
investment.

International Equity Fund seeks long-term capital appreciation through
investments in equity securities of companies that are organized outside the
U.S. or whose securities are principally traded outside the U.S.

Asia Growth Fund seeks long-term capital appreciation through investments in
equity securities of companies related (in the manner described herein) to
Asian countries.

(continued on next page)
------------
INSTITUTIONAL SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN INSTITUTIONAL
SHARES OF THE FUNDS INVOLVES INVESTMENT RISKS INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------

The date of this Prospectus is February , 1996
<PAGE>

A FUND'S INVESTMENTS IN SECURITIES OF EMERGING MARKETS AND OTHER FOREIGN
ISSUERS AND OF COMPANIES WHOSE SECURITIES ARE PRINCIPALLY TRADED OUTSIDE THE
UNITED STATES, AND INVESTMENTS QUOTED OR DENOMINATED IN FOREIGN CURRENCIES, AS
WELL AS THE MANAGEMENT TECHNIQUES EMPLOYED BY THE FUNDS, ENTAIL CERTAIN RISKS
NOT CUSTOMARILY ASSOCIATED WITH INVESTING IN SECURITIES OF U.S. ISSUERS. IN
PARTICULAR, THE SECURITIES MARKETS OF ASIAN AND OTHER EMERGING MARKET
COUNTRIES IN WHICH THE ASIA GROWTH AND INTERNATIONAL EQUITY FUNDS WILL INVEST
ARE LESS LIQUID, SUBJECT TO GREATER PRICE VOLATILITY, HAVE SMALLER MARKET
CAPITALIZATIONS, HAVE LESS GOVERNMENT REGULATION AND ARE NOT SUBJECT TO AS
EXTENSIVE AND FREQUENT ACCOUNTING, FINANCIAL AND OTHER REPORTING REQUIREMENTS
AS THE SECURITIES MARKETS OF MORE DEVELOPED COUNTRIES. THE FUNDS ARE INTENDED
FOR INVESTORS WHO CAN ACCEPT THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND
MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE "SPECIAL INVESTMENT METHODS AND
RISK FACTORS."

Goldman Sachs Asset Management ("GSAM"), New York, New York, a separate
operating division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as
investment adviser to the Growth and Income, Mid-Cap Equity and International
Equity Funds. Goldman Sachs Funds Management, L.P. ("GSFM"), New York, New
York, an affiliate of Goldman Sachs, serves as investment adviser to the
Select Equity Fund. Goldman Sachs Asset Management International ("GSAMI"),
London, England, an affiliate of Goldman Sachs, serves as investment adviser
to the Asia Growth Fund and subadviser to the International Equity Fund. GSAM,
GSFM and GSAMI are referred to in this Prospectus as the "Investment Adviser."
GSAM serves as each Fund's administrator and Goldman Sachs serves as each
Fund's distributor and transfer agent.

This Prospectus, which sets forth concisely the information about the
Company and the Funds that a prospective investor ought to know before
investing in Institutional Shares of the Funds, should be retained for future
reference. A Statement of Additional Information (the "Additional Statement"),
dated February , 1996, containing further information about the Company and
the Funds which may be of interest to investors, has been filed with the
Securities and Exchange Commission, is incorporated herein by reference in its
entirety, and may be obtained without charge from Goldman Sachs by calling the
telephone number, or writing to one of the addresses, listed below.

GOLDMAN SACHS ASSET MANAGEMENT
GOLDMAN SACHS EQUITY
PORTFOLIOS, INC. ONE NEW YORK PLAZA INVESTMENT ADVISER TO GROWTH AND
NEW YORK, NEW YORK 10004 INCOME FUND, MID-CAP EQUITY FUND
AND INTERNATIONAL EQUITY FUND ONE
NEW YORK PLAZA NEW YORK, NEW YORK
10004

GOLDMAN, SACHS & CO.
DISTRIBUTOR 85 BROAD STREET NEW
YORK, NEW YORK 10004

GOLDMAN SACHS ASSET MANAGEMENT
INTERNATIONAL

GOLDMAN, SACHS & CO.
TRANSFER AGENT 4900 SEARS TOWER INVESTMENT ADVISER TO ASIA GROWTH
CHICAGO, ILLINOIS 60606 FUND AND SUBADVISER TO THE
INTERNATIONAL EQUITY FUND 140 FLEET
STREET LONDON, ENGLAND EC4A 2BJ

GOLDMAN SACHS FUNDS MANAGEMENT, L.P.
INVESTMENT ADVISER TO SELECT EQUITY FUND ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004

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

2
<PAGE>

SUMMARY

INTRODUCTION

GOLDMAN SACHS SELECT EQUITY FUND

The investment objective of the Fund is to provide investors with a total
return through investments in equity securities consisting of capital
appreciation plus dividend income that, net of Fund expenses, exceeds the total
return realized on the Standard & Poor's Index of 500 Common Stock (the "S&P
500 Index"). Under normal circumstances, the Fund will invest at least 90% of
its total assets in equity securities. The Fund seeks to achieve its investment
objective by investing in a portfolio of equity securities selected using both
fundamental research and a variety of quantitative techniques which seek to
maximize the Fund's risk to reward ratio. The Fund's portfolio is designed to
have risk, capitalization and industry characteristics similar to the S&P 500
Index.

GOLDMAN SACHS GROWTH AND INCOME FUND

The Fund's investment objectives are to provide its shareholders with long-
term growth of capital and growth of income. The Fund seeks to achieve its
investment objectives by investing, under normal market conditions, at least
65% of its total assets in equity securities that the Investment Adviser
considers to have favorable prospects for capital appreciation and/or dividend
paying ability. Equity securities in which the Fund may invest consist of
common stocks, preferred stocks, convertible securities, warrants and stock
purchase rights, and interests in real estate investment trusts. These
securities may or may not pay a current dividend. The Fund may invest up to 35%
of its total assets in fixed income securities.

GOLDMAN SACHS MID-CAP EQUITY FUND

The investment objective of the Fund is long-term capital growth. Dividend
income, if any, is an incidental consideration. The Fund seeks to meet its
investment objective by investing, under normal circumstances, substantially
all of its assets in equity securities and at least 65% of its total assets in
equity securities of companies ("Mid Cap Companies") with public stock market
capitalizations of between $500 million and $7 billion at the time of
investment. However, the Fund currently intends to emphasize investments in
companies with public stock market capitalizations under $5 billion at the time
of investment. The Fund may invest up to 35% of its total assets in the equity
securities of companies with public stock market capitalizations greater or
less than Mid Cap Companies and fixed income securities.

3
<PAGE>

GOLDMAN SACHS INTERNATIONAL EQUITY FUND

The Fund's investment objective is long-term capital appreciation. Under
normal market conditions, the Fund will invest substantially all, and at least
65%, of its total assets in equity securities of companies organized outside
the United States or whose securities are principally traded outside the United
States. Many of the countries in which the Fund may invest have emerging
economies or securities markets which involve certain risks. The Fund may
employ certain currency management techniques to seek to hedge against currency
exchange rate fluctuations or to seek to increase total return. When used to
enhance return, these management techniques are considered speculative. See
"Special Investment Methods and Risk Factors--Foreign Transactions." The Fund
may also invest up to 35% of its total assets in fixed income securities of
foreign and domestic corporations, mortgage- and asset-backed issuers and the
U.S. Government, foreign governments and their respective agencies,
instrumentalities, political subdivisions and authorities and fixed income
securities issued or guaranteed by international or supranational entities
that, in the opinion of the Investment Adviser, offer the potential to enhance
total return.

GOLDMAN SACHS ASIA GROWTH FUND

The Fund's investment objective is long-term capital appreciation. Under
normal market conditions, the Fund will invest substantially all, and at least
65%, of its total assets in equity securities of companies in China, Hong Kong,
India, Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South Korea,
Sri Lanka, Taiwan and Thailand which are considered by the Investment Adviser
to have long-term capital appreciation potential. Concentration of the Fund's
assets in one or a few of the Asian countries will subject the Fund, to a
greater extent than if the Fund's assets were less geographically concentrated,
to the risks of adverse changes in the securities and foreign exchange markets
of such countries and social, political or economic events which may occur in
those countries. The Fund may also invest up to 35% of its total assets in
equity securities of issuers in other countries, including Japan, and fixed
income securities. The Fund may employ certain currency techniques to hedge
against currency exchange rate fluctuations or to seek to increase total
return. When used to enhance return, these management techniques are considered
speculative. See "Special Investment Methods and Risk Factors--Foreign
Transactions."

INVESTMENT ADVISERS AND ADMINISTRATOR

Goldman Sachs Asset Management, a separate operating division of Goldman
Sachs, acts as administrator to each Fund and serves as the Investment Adviser
to the Mid-Cap Equity, Growth and Income and International Equity Funds.
Goldman Sachs Funds Management, L.P., an affiliate of Goldman Sachs, serves as
investment adviser to the Select Equity Fund. Goldman Sachs Asset Management
International, an affiliate of Goldman Sachs, serves as investment adviser to
the Asia Growth Fund and subadviser to the International Equity Fund. As of
, 1995, the Investment Advisers, together with their affiliates, acted as
investment adviser, administrator or distributor for assets in excess of
$ .

4
<PAGE>

PURCHASE AND REDEMPTION OF INSTITUTIONAL SHARES

The minimum initial investment is $1,000,000 in Institutional Shares of each
Fund alone or in combination with other assets under the management of GSAM and
its affiliates. Institutional Shares of the Funds are offered to certain
Institutional investors as described under "Purchase of Institutional Shares".
Institutional Shares of each Fund may be purchased through Goldman Sachs at the
current net asset value per share without the imposition of a sales load. Each
Fund will redeem its Institutional Shares upon request of a shareholder on any
Business Day at the net asset value next determined after receipt of such
request in proper form. See "Redemption of Institutional Shares."

DISTRIBUTOR AND TRANSFER AGENT

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

DIVIDEND POLICY

Each Fund intends that all or substantially all of its net investment income
and net realized long-term and short-term capital gains for each taxable year,
after reduction by available capital losses, including any capital losses
carried forward from prior years, will be declared as dividends. The Growth and
Income Fund will pay dividends in respect of net investment income quarterly.
Each other Fund will pay dividends in respect of net investment income at least
annually. All of the Funds will pay dividends in respect of net realized long-
term and short-term capital gains at least annually. Shareholders will receive
dividends in additional Institutional Shares of the Fund paying the dividend or
may elect to receive cash as described under "Dividends."

RISK FACTORS

Each Fund's share price will fluctuate with market, economic and, to the
extent applicable, foreign exchange conditions so that an investment in any of
the Funds may be worth more or less when redeemed than when purchased. None of
the Funds should be relied upon as a complete investment program. There can be
no assurance that a Fund's investment objective will be achieved.

There are certain risks associated with the investment policies of each of
the Funds. For instance, to the extent that a Fund invests in the securities
and related financial instruments of small to medium sized market
capitalization companies, a Fund may be exposed to a higher degree of risk and
price volatility because such securities may lack sufficient liquidity to
enable a Fund to effect sales at an advantageous time or without a substantial
drop in price. A Fund's use of certain investment techniques, including
derivatives, forward contracts and options and futures transactions, will
subject

5
<PAGE>

a Fund to greater risk than funds that do not employ such techniques. To the
extent that a Fund invests in securities of non-U.S. issuers and foreign
currencies, the Fund may face risks that are different from those associated
with investment in domestic securities. The risks of foreign investments and
currencies include changes in relative currency exchange rates, political and
economic developments and the imposition of exchange controls or other
governmental confiscation or restrictions. Generally, there is less
availability of data on foreign companies and securities markets as well as
less regulation of foreign stock exchanges, brokers and issuers. A Fund's
investments in emerging markets and countries will involve greater risks than
investments in the developed countries of Western Europe, the U.S. and Japan.
In addition, because the International Equity and Asia Growth Funds will invest
primarily outside the U.S., these Funds may involve greater risks, since the
securities markets of foreign countries are generally less liquid and subject
to greater price volatility. In particular, the securities markets of the
developing countries of Asia are marked by high concentration of market
capitalization and trading volume in a small number of issuers representing a
limited number of industries, as well as a high concentration of ownership of
such securities by a limited number of investors.

The International Equity and Asia Growth Funds are each "non-diversified"
funds as defined under the Investment Company Act of 1940 (the "Act") and are
therefore subject only to certain federal tax diversification requirements
(which also apply to the other Funds), in addition to the policies adopted by
the Investment Adviser. To the extent that a Fund is not diversified under the
Act, it will be more susceptible to adverse developments affecting any single
issuer of portfolio securities. See "Special Investment Methods and Risk
Factors--Non-Diversification Status."

6
<PAGE>

FEES AND EXPENSES
(INSTITUTIONAL SHARES)*

<TABLE>
<CAPTION>
GROWTH
SELECT AND MID-CAP INT'L ASIA
EQUITY INCOME EQUITY EQUITY GROWTH
FUND FUND FUND FUND FUND
------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Pur-
chases.................................. None None None None None
Maximum Sales Charge Imposed on Rein-
vested Dividends........................ None None None None None
Redemption Fees.......................... None None None None None
Exchange Fees............................ None None None None None
ANNUAL FUND OPERATING EXPENSES: (as a
percentage of average daily net assets)
Management Fees (including advisory and
administration fees)**.................. 0.55% 0.70% 0.75% 0.82% 0.81%
Distribution (Rule 12b-1) Fees........... None None None None None
Other Expenses (after expense limita-
tion)**................................. 0.10% 0.14% 0.10% 0.28% 0.29%
---- ---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER
EXPENSE LIMITATION)**.................. 0.65% 0.84% 0.85% 1.10% 1.10%
==== ==== ==== ==== ====
</TABLE>

* The information set forth in the foregoing table and hypothetical example
relates only to Institutional Shares of the Funds. Each Fund also offers
Service Shares and in the case of Select Equity and Mid-Cap Equity Funds,
Administration Shares and, in the case of Select Equity, Growth and Income,
International Equity and Asia Growth Funds, Class A Shares which are
subject to different fees and expenses (which affect performance), have
different minimum investment requirements and are entitled to different
services. Information regarding Administration, Service and Class A Shares,
may be obtained from an investor's sales representative or from Goldman
Sachs by calling the number on the inside cover of this prospectus.

** Based on estimated amounts for the current fiscal year. The Investment
Advisers and GSAM have voluntarily agreed to limit their advisory and
administration fees to the following, respectively, (as a percentage of
average daily net assets): Select Equity Fund--0.40% and 0.15%,
International

7
<PAGE>

Equity Fund--0.67% and 0.15% and Asia Growth Fund--0.66% and 0.15%. Without
such limitations, the Fund's advisory and administration fees would be:
Select Equity Fund--0.50% and 0.25%, International Equity Fund--0.75% and
0.25% and Asia Growth Fund--0.75% and 0.25%. The Investment Advisers and
GSAM have voluntarily agreed to reduce or limit certain "Other Expenses" of
the Funds (excluding transfer agency fees estimated to be 0.04% of average
daily net assets, advisory and administration fees, fees under
administration, taxes, interest and brokerage and litigation,
indemnification and other extraordinary expenses) to 0.06%, 0.10%, 0.06%,
0.24% and 0.25%, respectively, of the Select Equity, Growth and Income,
Mid-Cap Equity, International Equity and Asia Growth Fund's average daily
net assets. The Investment Advisers and GSAM have no current intention of
modifying or discontinuing such limitations but may do so in the future at
their discretion. If the Investment Advisers and GSAM did not agree to
limit certain "Other Expenses" of each Fund and to limit the fees of the
Select Equity, International Equity and Asia Growth Funds as described
above, the "Other Expenses" and "Total Operating Expenses" of the
Institutional Shares of the Funds would be as follows: Select Equity Fund--
0.27% and 1.02%; Growth and Income Fund--0.14% and 0.84%; Mid-Cap Equity
Fund--0.32% and 1.07%; International Equity Fund--0.38% and 1.38% and Asia
Growth Fund--0.39% and 1.39%, respectively. The annual "Management Fees,"
"Other Expenses," and "Total Operating Expenses," respectively, incurred by
the Class A Shares of the following funds during the fiscal year ended
January 31, 1995 (expressed as a percentage of average daily net assets
after fee adjustments) were: Select Equity Fund--0.75%, 0.38% and 1.38%,
Growth and Income Fund--0.70%, 0.30%, and 1.25%, International Equity
Fund--1.00%, 0.48%, and 1.73% and Asia Growth Fund--1.00%, 0.65% and 1.90%,
respectively.

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

8
<PAGE>

FINANCIAL HIGHLIGHTS

SELECTED DATA FOR A CLASS A SHARE OF SELECT EQUITY, GROWTH AND INCOME,
INTERNATIONAL EQUITY AND ASIA GROWTH FUNDS AND FOR AN INSTITUTIONAL SHARE OF
SELECT EQUITY AND MID-CAP EQUITY FUNDS OUTSTANDING THROUGHOUT EACH PERIOD

The following data with respect to a Class A Share of Select Equity, Growth
and Income, International Equity and Asia Growth Funds outstanding during the
periods indicated has been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report incorporated by reference into the
Additional Statement from the Annual Report to shareholders for the year ended
January 31, 1995. The following data with respect to a Class A Share of Select
Equity (and Institutional class which commenced operations on June 15, 1995),
Growth and Income, International Equity and Asia Growth Funds outstanding
during the semi-annual period ended July 31, 1995 has been derived from
unaudited financial statements prepared by the Company. The following data
with respect to an Institutional share of Mid-Cap Equity Funds outstanding
during the period from August 1, 1995 (commencement of operations) through
September 30, 1995 has also been derived from unaudited financial statements
prepared by the Company. This information should be read in conjunction with
the financial statements and related notes incorporated by reference and
attached to the Additional Statement. These reports also contain performance
information and are available upon request and without charge by writing to
one of the addresses on the inside cover of this Prospectus. No Service or
Administration Shares of the Funds were outstanding during the periods
indicated.

9
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Potential equity investments for each Fund (other than the Select Equity
Fund which evaluates securities using both fundamental research and a variety
of quantitative techniques as described below under "Select Equity Fund")
generally are evaluated using fundamental analysis, including criteria such as
earnings, cash flow, asset values and/or dividend-paying ability. In choosing
a Fund's securities, the Investment Advisers utilize first-hand fundamental
research, including visiting company facilities to assess operations and meet
decision-makers. The Investment Advisers may also use a macro analysis of
numerous economic and valuation variables to determine and anticipate changes
in company earnings and the overall investment climate. Each Investment
Adviser is able to draw on the research and market expertise of the Goldman
Sachs Research Department and other affiliates of the Investment Adviser as
well as information provided by other securities dealers.

The Investment Advisers intend to purchase equity securities of companies
that are, in their view, underpriced relative to a combination of such
companies' long-term earnings prospects, growth rate, free cash flow and/or
dividend-paying ability. The Funds may also purchase securities of companies
that have experienced difficulties and that, in the opinion of an Investment
Adviser, are available at attractive prices. Consideration will be given to
the business quality of the issuer. Factors positively affecting an Investment
Adviser's view of that quality include the competitiveness and degree of
regulation in the markets in which the company operates, the existence of a
management team with a record of success, the market position of the company
in the markets in which it operates, the level of the company's financial
leverage and the sustainable return on capital invested in the business.

Equity securities in a Fund's portfolio will generally be sold when the
Investment Adviser believes that the market price fully reflects or exceeds
the securities' fundamental valuation or when other more attractive
investments are identified.

The investment objectives and principal investment policies of each Fund are
described below. Certain other investment practices and management techniques,
which involve certain risks, as well as the minimum rating criteria with
respect to a Fund's investments in fixed income securities, are described
under "Special Investment Methods and Risk Factors."

SELECT EQUITY FUND

Select Equity Fund's investment objective is to provide its shareholders
with a total return through investments in equity securities consisting of
capital appreciation plus dividend income that, net of fund expenses, exceeds
the total return realized on the S&P 500 Index. Under normal circumstances,
the Fund will invest at least 90% of its total assets in equity securities.
The Fund may invest in equity securities of foreign issuers that are traded in
the United States and that comply with U.S. accounting standards. The Fund
seeks to achieve its investment objective by investing in a portfolio of
equity securities selected using both fundamental research and a variety of
quantitative techniques which seek to maximize the Fund's reward to risk
ratio. The Fund's portfolio is designed to have risk, capitalization and
industry characteristics similar to the S&P 500 Index. The Investment Adviser
begins with a universe primarily of large capitalization equity securities.
The Investment Adviser uses a proprietary multifactor model (the "Multifactor
Model") to assign each equity security a rating, and, if

10
<PAGE>

the security is followed by the Goldman Sachs Investment Research Department
(the "Research Department"), a second rating will be assigned based upon the
Research Department's evaluation. In selecting securities for the Fund, the
Investment Adviser utilizes optimization models to evaluate the ratings
assigned by the Multifactor Model and the Research Department to build a
diversified portfolio. This portfolio will be primarily comprised of
securities rated highest by the Investment Adviser's Multifactor Model and
research analysts and will have risk characteristics and industry weightings
similar to the S&P 500 Index. Under normal conditions, the securities of any
one issuer may not exceed 5% of the Fund's total assets.

The Multifactor Model is a sophisticated computerized rating system for
valuing equity securities according to fundamental investment characteristics.
The factors used by the Multifactor Model incorporate many variables studied
by traditional fundamental analysis, and cover measures of value, yield,
growth, momentum, risk and liquidity (e.g., price/earnings ratio, book/price
ratio, long and short-term growth estimates, earning estimates, price
momentum, volatility and liquidity). All of the factors used by the
Multifactor Model have been shown to significantly impact the performance of
equity securities. The weightings assigned to the factors 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 it includes many
disparate factors, the Investment Adviser believes that the Multifactor Model
is broader in scope and provides a more thorough evaluation than most
conventional, value-oriented quantitative models. As a result, the securities
ranked highest by the Multifactor Model do not have one dominant investment
characteristic (such as a low price/earnings ratio); rather, such securities
possess a number of attractive investment characteristics.

If the equity security is followed by the Research Department, the security
is also assigned a rating based upon the Research Department's evaluation. The
Research Department uses a four category rating system ranging from
"recommended for purchase" to "likely to underperform." With an annual budget
of more than $120 million, the Research Department has a staff of
approximately 150 senior professionals who follow over 1,700 issuers. By
employing both quantitative (i.e., the Multifactor Model) and qualitative
(i.e., the analysts' ratings) methods of selecting securities, Select Equity
Fund seeks to capitalize on the strengths of each discipline.

GROWTH AND INCOME FUND

The Growth and Income Fund's investment objectives are to provide its
shareholders with long-term growth of capital and growth of income. The Fund
seeks to achieve its investment objectives by investing, under normal market
conditions, at least 65% of its total assets in equity securities that the
Investment Adviser considers to have favorable prospects for capital
appreciation and/or dividend-paying ability. Equity securities in which the
Fund may invest consist of common stocks, preferred stocks, convertible
securities, warrants and stock purchase rights and interests in real estate
investment trusts. These securities may or may not pay a current dividend. The
Fund may invest up to 35% of its total assets in mortgage-backed, asset-backed
and fixed income securities issued by corporations or other entities or by the
U.S. Government or its agencies, instrumentalities or sponsored enterprises if
such securities, in the opinion of the Investment Adviser, offer the potential
to further the

11
<PAGE>

Fund's investment objectives. In addition, although the Fund will invest
primarily in publicly traded U.S. securities, it may invest up to 25% of its
total assets in foreign securities, including securities of issuers in
countries with emerging markets and economies.

MID-CAP EQUITY FUND

The investment objective of Mid-Cap Equity Fund is long-term capital growth.
Dividend income, if any, is an incidental consideration. Mid-Cap Equity Fund
will seek to achieve its investment objective by investing, under normal
circumstances, substantially all of its assets in equity securities and at
least 65% of its total assets in equity securities of companies ("Mid Cap
Companies") with public stock market capitalizations (based upon shares
available for trading on an unrestricted basis) of between $500 million and $7
billion at the time of investment. However, Mid-Cap Equity Fund currently
intends to emphasize investments in Mid Cap Companies with public stock market
capitalizations of below $5 billion at the time of investment. Equity
securities in which Mid-Cap Equity Fund may invest consist of common stocks,
preferred stocks, convertible securities, warrants and other stock purchase
rights, equity interests in trusts, limited partnerships, joint ventures and
similar enterprises and interests in real estate investment trusts. Mid-Cap
Equity Fund may invest up to 35% of its total assets in mortgage-backed,
asset-backed and fixed income securities issued by corporations or other
entities or by the U.S. Government or its agencies, instrumentalities or
sponsored enterprises if such securities, in the opinion of the Investment
Adviser, offer the potential to further the investment objectives of Mid-Cap
Equity Fund. In addition, although the Fund will invest primarily in publicly
traded U.S. securities, it may invest up to 25% of its total assets in foreign
securities, including securities of issuers in countries with emerging markets
and economies.

Equity securities in Mid-Cap Equity Fund's portfolio will generally be sold
when the Investment Adviser believes that the market price fully reflects or
exceeds the securities' fundamental valuation or when other more attractive
investments are identified.

INTERNATIONAL EQUITY FUND

The International Equity Fund's investment objective is to provide its
shareholders with long-term capital appreciation. Under normal market
conditions, the Fund will seek to achieve its objective by investing
substantially all, and at least 65%, of its total assets in equity securities
of companies that are organized outside the United States or whose securities
are principally traded outside the United States. The Fund may allocate its
assets among countries as determined by the Investment Adviser from time to
time provided that the Fund's assets are invested in at least three foreign
countries. The equity securities in which the Fund will primarily invest will
consist of common stock, preferred stock, convertible debt obligations,
convertible preferred stock and warrants or other rights to acquire stock that
the Investment Adviser believes offer the potential for long-term capital
appreciation. The Fund expects to invest a substantial portion of its assets
in the securities of companies located in the developed countries in Western
Europe and in Japan. However, the Fund may also invest in the securities of
issuers located in the following countries: Argentina, Australia, Bangladesh,
Brazil, Canada, Chile, China, Colombia, Czech Republic, Egypt, Hong Kong,
Hungary, India, Indonesia, Israel, Jamaica, Jordan, Kenya, Kuwait, Malaysia,
Mexico, Morocco, New Zealand, Nigeria, Pakistan, Philippines, Poland, The
Republic of Slovakia, Singapore, South Korea, Sri Lanka, South Africa,

12
<PAGE>

Taiwan, Thailand, Turkey, Venezuela and Zimbabwe. Many of the countries in
which the Fund may invest have emerging markets or economies which involve
certain risks as described below under "Special Investment Methods and Risk
Factors--Special Risks of Investments in the Asian and Other Emerging
Markets," which are not present in investments in more developed countries.
The number of stocks in which the Fund will typically invest is intended to
provide the Fund with a moderate level of diversification while at the same
time not diluting the impact of any one investment. However, the Fund is
considered "non-diversified" as defined in the Act. See "Special Investment
Methods and Risk Factors--Non-Diversification Status."

The Fund may employ certain currency techniques to seek to hedge against
currency exchange rate fluctuations or to seek to increase total return. When
used to enhance return, these management techniques are considered
speculative. Such currency management techniques involve risks different from
those associated with investing solely in dollar-denominated securities of
U.S. issuers. To the extent that the Fund is fully invested in foreign
securities while also maintaining currency positions, it may be exposed to
greater combined risk. The Fund's net currency positions may expose it to
risks independent of its securities positions. See "Special Investment Methods
and Risk Factors."

The Fund may invest in debt obligations (i) issued by foreign and U.S.
corporate, mortgage- and asset-backed issuers, (ii) issued or guaranteed by
the U.S. Government, foreign governments, or their respective agencies,
instrumentalities, political subdivisions and authorities and (iii) issued or
guaranteed by international or supranational organizations. The Fund will not,
under normal conditions, invest more than 35% of its total assets in such debt
obligations.

ASIA GROWTH FUND

The Asia Growth Fund's investment objective is to provide its shareholders
with long-term capital appreciation. The Fund seeks to achieve its objective
by investing primarily in equity securities of Asian companies which are
considered by the Investment Adviser to have long-term capital appreciation
potential. Under normal market conditions, the Fund will invest substantially
all, and at least 65%, of its total assets in equity securities of companies
that satisfy at least one of the following criteria: (i) their securities are
traded principally on stock exchanges in one or more of the Asian countries,
(ii) they derive 50% or more of their total revenue from goods produced, sales
made or services performed in one or more of the Asian countries, (iii) they
maintain 50% or more of their assets in one or more of the Asian countries, or
(iv) they are organized under the laws of one of the Asian countries. For
purposes of the Fund's investment policies, Asian countries are China, Hong
Kong, India, Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South
Korea, Sri Lanka, Taiwan and Thailand as well as any other country in the
Asian region (other than Japan) to the extent that foreign investors are
permitted by applicable law to make such investments. Many of the countries in
which the Fund may invest have emerging markets or economies which involve
certain risks as described below under "Special Investment Methods and Risk
Factors--Special Risks of Investments in the Asian and Other Emerging
Markets," which are not present in investments in more developed countries.
The equity securities in which the Fund will primarily invest will consist of
common stock, preferred stock, convertible debt obligations, convertible
preferred stock, equity interests in trusts, partnerships, joint ventures and
similar enterprises, warrants and stock purchase rights. The Fund may purchase
equity securities of issuers that have not paid dividends on a timely basis,
securities of companies that have experienced

13
<PAGE>

difficulties, and securities of companies without performance records. The
Investment Adviser expects that the Fund will typically invest in the
securities of approximately 25 to 40 companies. The Fund intends to purchase
that number of stocks which it believes will provide the Fund with a moderate
level of diversification while at the same time not diluting the impact of any
one investment. However, the Fund is considered "non-diversified" as defined
in the Act. See "Special Investment Method and Risk Factors--Non-
Diversification Status."

The Fund may employ certain currency management techniques to seek to hedge
against currency exchange rate fluctuations or to seek to increase total
return. When used to increase total return, these management techniques are
considered speculative. Such currency management techniques involve risks
different from those associated with investing solely in dollar-denominated
securities of U.S. issuers. To the extent that the Fund is fully invested in
foreign securities while also maintaining currency positions, it may be
exposed to greater combined risk. The Fund's net currency positions may expose
it to risks independent of its securities positions. See "Special Investment
Methods and Risk Factors."

The Fund may allocate its assets among the Asian countries as determined
from time to time by the Investment Adviser. Allocation of the Fund's
investments will depend upon the relative attractiveness of the Asian markets
and particular issuers. Concentration of the Fund's assets in one or a few of
the Asian countries and Asian currencies will subject the Fund to greater
risks than if the Fund's assets were not geographically concentrated. See
"Special Investment Methods and Risk Factors--Foreign Transactions." The Fund
may invest up to 35% of its total assets in equity securities of issuers in
other countries, including Japan, and fixed income securities. The Fund may
invest in fixed income securities (i) issued by foreign and U.S. corporate,
mortgage- and asset-backed issuers, (ii) issued or guaranteed by the U.S.
Government, foreign governments, or their respective agencies,
instrumentalities, political subdivisions and authorities and (iii) issued or
guaranteed by international or supranational organizations.

SPECIAL INVESTMENT METHODS AND RISK FACTORS

CONVERTIBLE SECURITIES

Each Fund may invest in convertible securities, including debt obligations
and preferred stock of the issuer convertible at a stated exchange rate into
common stock of the issuer. Convertible securities generally offer lower
interest or dividend yields than non-convertible securities of similar
quality. 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. However, when the market price of the
common stock underlying a convertible security exceeds the conversion price,
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 tends to trade increasingly on a yield basis, and thus
may not decline in price 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. The convertible
securities in which the Select Equity Fund invests are not subject to any
minimum rating criteria. The convertible debt securities in

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<PAGE>

which the other Funds may invest are subject to the same rating criteria as a
Fund's investments in non-convertible debt securities. Convertible debt
securities are equity investments for purposes of each Fund's investment
policies.

WARRANTS AND STOCK PURCHASE RIGHTS

Each Fund may purchase warrants and stock purchase rights which are
securities permitting, but not obligating, their holder to purchase the
underlying securities at a predetermined price. Generally, warrants and stock
purchase rights do not carry with them the right to receive dividends or
exercise voting rights with respect to the underlying securities, and they do
not represent any rights in the assets of the issuer. As a result, an
investment in warrants and stock purchase rights may be considered to entail
greater investment risk than certain other types of investments. In addition,
the value of warrants and stock purchase rights does not necessarily change
with the value of the underlying securities, and they cease to have value if
they are not exercised on or prior to their expiration date. Investment in
warrants and stock purchase rights increases the potential profit or loss to
be realized from the investment of a given amount of a Fund's assets as
compared with investing the same amount in the underlying stock.

FOREIGN TRANSACTIONS

FOREIGN SECURITIES. Investments in foreign securities may offer potential
benefits that are not available from investments exclusively in securities of
domestic issuers. Foreign issuers may offer better investment opportunities
than domestic securities. Foreign countries may have economic policies or
business cycles different from those of the United States and securities mar-
kets that do not necessarily move in a manner parallel to U.S. markets.

Investing in the securities of foreign issuers involves risks that are not
typically associated with investing in securities of domestic issuers. Such
investments may be affected by changes in currency rates, changes in foreign
or U.S. laws or restrictions applicable to such investments and in exchange
control regulations (e.g., currency blockage). Some foreign exchanges may have
substantially less volume than, for example, the New York Stock Exchange and
securities of some foreign companies may be less liquid than securities of
comparable domestic companies. Commissions on transactions in foreign securi-
ties may be higher than those for similar transactions on domestic stock mar-
kets. In addition, clearance and settlement procedures may be different in
foreign countries and, in certain markets, such procedures have on occasion
been unable to keep pace with the volume of securities transactions, thus mak-
ing it difficult to conduct such transactions.

Foreign companies are not generally subject to uniform accounting, auditing
and financial reporting standards comparable to those applicable to domestic
companies. There may be less publicly available information about a foreign
company than about a domestic company. In addition, there is generally less
government regulation of stock exchanges, brokers, and listed and unlisted
companies in foreign countries than in the United States. Furthermore, with
respect to certain foreign countries, there is a possibility of nationaliza-
tion, expropriation or confiscatory taxation, imposition of withholding taxes
on dividend or interest payments, limitations on the removal of funds or other
assets, political or social instability or diplomatic developments which could
affect investments in those countries.

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<PAGE>

INVESTMENTS IN ADRS, EDRS AND GDRS. Each Fund may invest in foreign securi-
ties which take the form of sponsored and unsponsored American Depository Re-
ceipts ("ADRs") and Global Depository Receipts ("GDRs") and each Fund, other
than Select Equity Fund, may also invest in European Depository Receipts
("EDRs") or other similar instruments representing securities of foreign is-
suers (together, "Depository Receipts"). 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 are traded in the United
States on exchanges or over-the-counter and are sponsored and issued by domes-
tic banks. EDRs and GDRs are receipts evidencing an arrangement with a non-
U.S. bank. EDRs and GDRs are not necessarily quoted in the same currency as
the underlying security. To the extent a 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 Depository Receipts), 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 involv-
ing the foreign issuer in a timely manner. In addition, the lack of informa-
tion may result in inefficiencies in the valuation of such instruments. In-
vestment 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
Receipt and the underlying securities are quoted. However, by investing in De-
pository Receipts, such as an ADR, that are quoted in U.S. dollars, a Fund
will avoid currency risks during the settlement period for purchases and
sales.

SPECIAL RISKS OF INVESTMENTS IN THE ASIAN AND OTHER EMERGING
MARKETS. Investing in the securities of issuers in emerging markets involves
risks in addition to those discussed above. The International Equity and Asia
Growth Funds may each invest without limit in the securities of issuers in
countries with emerging economies or securities markets. The Growth and Income
and Mid-Cap Equity Funds may invest up to 25% of their total assets in securi-
ties of issuers in countries with emerging economies or securities markets.
These emerging markets are generally located in the Asia-Pacific region, East-
ern Europe, Latin and South America and Africa. A Fund's purchase and sale of
portfolio securities in certain emerging markets may be constrained by limita-
tions as to daily changes in the prices of listed securities, periodic trading
or settlement volume and/or limitations on aggregate holdings of foreign in-
vestors. Such limitations may be computed based on the aggregate trading vol-
ume by or holdings of the Fund, the Investment Adviser and its affiliates and
their respective clients and other service providers. A Fund may not be able
to sell securities in circumstances where price, trading or settlement volume
limitations have been reached.

Foreign investment in the securities markets of certain emerging markets is
restricted or controlled to varying degrees which may limit investment in such
countries or increase the administrative costs of such investments. For
example, certain Asian countries require governmental approval prior to
investments by foreign persons or limit investment by foreign persons to only
a specified percentage of an issuer's outstanding securities or a specific
class of securities which may have less advantageous terms (including price)
than securities of such company available for purchase by nationals. In
addition, certain countries may restrict or prohibit investment opportunities
in issuers or industries deemed important to national interests. Such
restrictions may affect the market price, liquidity and rights of securities
that may be purchased by a Fund. Due to restrictions on direct investment in
equity securities

16
<PAGE>

in certain Asian countries, such as Taiwan, it is anticipated that a Fund may
invest in such countries only through other investment funds in such
countries. See "Other Investment Companies." Furthermore, the repatriation of
both investment income and capital from several of the Asian countries is
subject to restrictions such as the need for certain governmental consents.

Many of the emerging markets may be subject to a greater degree of economic,
political and social instability than is the case in Western Europe, the
United States and Japan. Many of the emerging markets do not have fully
democratic governments. For example, some governments of emerging market
countries are authoritarian in nature or have been installed or removed as a
result of military coups, while governments in other emerging markets have
periodically used force to suppress civil dissent. Disparities of wealth, the
pace and success of democratization, and ethnic, religious and racial
disaffection, among other factors, have also led to social unrest, violence
and/or labor unrest in some of the Asian and other countries. The economies of
most of the emerging markets are heavily dependent upon international trade
and are accordingly affected by protective trade barriers and the economic
conditions of their trading partners, principally, the United States, Japan,
China and the European Union. In addition, the economies of some of the
emerging markets are vulnerable to weakness in world prices for their
commodity exports.

Settlement procedures in emerging markets are frequently less developed and
reliable than those in the United States and may involve a Fund's delivery of
securities before receipt of payment for their sale. In addition, significant
delays are common in certain markets in registering transfer of securities.
Settlement or registration problems may make it more difficult for a Fund to
value its portfolio securities and could cause the Fund to miss attractive in-
vestment opportunities, to have a portion of its assets uninvested or to incur
losses due to the failure of a counterparty to pay for securities the Fund has
delivered or the Fund's inability to complete its contractual obligations.

Currently, there is no market or only a limited market for many of the
management techniques and instruments with respect to the currencies and
securities markets of the emerging market countries. Consequently, there can
be no assurance that suitable instruments for hedging currency and market-
related risks will be available at the times when a Fund wishes to use them.

FOREIGN CURRENCY TRANSACTIONS. A Fund may, to the extent it invests in for-
eign securities, purchase or sell forward foreign currency exchange contracts
for hedging purposes. A Fund may enter into forward foreign currency exchange
contracts to seek to protect against anticipated changes in future foreign
currency exchange rates. In addition, the International Equity and Asia Growth
Funds may enter into such contracts to seek to increase total return when the
Investment Adviser anticipates that the foreign currency will appreciate or
depreciate in value, but securities denominated or quoted in that currency do
not present attractive investment opportunities and are not held in the Fund's
portfolio. When entered into to seek to increase total return, forward foreign
currency exchange contracts are considered speculative. The International Eq-
uity and Asia Growth Funds may also engage in cross-hedging by using forward
contracts in a currency different from that in which the hedged security is
denominated or quoted if the Investment Adviser determines that there is a
pattern of correlation between the two currencies. If a Fund enters into a
forward foreign currency exchange contract to buy foreign currency, or the In-
ternational Equity or Asia Growth Funds enter into forward foreign currency
exchange contracts to sell foreign currency to seek to increase total return,
the Fund will be required

17
<PAGE>

to place and maintain cash or liquid, high grade debt securities in a segre-
gated account with the Fund's custodian in an amount equal to the value of the
Fund's total assets committed to the consummation of the forward contract. The
Fund will incur costs in connection with conversions between various curren-
cies.

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

The market in forward foreign currency exchange contracts used by each Fund
and currency swaps and other privately negotiated currency instruments
authorized for use by the International Equity and Asia Growth Funds, offers
less protection against defaults by the other party to such instruments than
is available for currency instruments traded on an exchange. Forward contracts
are subject to the risk that the counterparty to such contract will default on
its obligations. Since a forward foreign currency exchange contract is not
guaranteed by an exchange or clearinghouse, a default on the contract would
deprive the Fund of unrealized profits, transaction costs or the benefits of a
currency hedge or force the Fund to cover its purchase or sale commitments, if
any, at the current market price. A Fund will not enter into such transactions
unless the credit quality of the unsecured senior debt or the claims-paying
ability of the counterparty is considered to be investment grade by the
Investment Adviser.

In addition to investing in securities denominated or quoted in a foreign
currency, the International Equity and Asia Growth Funds may engage in a
variety of foreign currency management techniques. The Funds may hold foreign
currency received in connection with investments in foreign securities when,
in the judgment of the Investment Adviser, it would be beneficial to convert
such currency into U.S. dollars at a later date, based on anticipated changes
in the relevant exchange rate. However, due to the limited market for these
instruments with respect to the currencies of certain Asian countries, the
Investment Adviser does not currently anticipate that a significant portion of
Asia Growth Fund's currency exposure will be covered by such instruments. The
opportunity for hedging currency exposure to other emerging markets is also
generally limited. For a discussion of such instruments and the risks
associated with their use, see "Investment Objective and Policies" in the
Additional Statement.

Because investment in foreign issuers will usually involve currencies of
foreign countries, and because the International Equity and Asia Growth Funds
may have currency exposure independent of

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<PAGE>

their securities positions, the value of the assets of a Fund as measured in
U.S. dollars will be affected by changes in foreign currency exchange rates.

OPTIONS ON FOREIGN CURRENCIES. Each Fund (other than Select Equity Fund)
may, to the extent it invests in foreign securities, purchase and sell (write)
put and call options on foreign currencies for the purpose of protecting
against declines in the U.S. dollar value of foreign portfolio securities and
anticipated dividends on such securities and against increases in the U.S.
dollar cost of foreign securities to be acquired. In addition, the Interna-
tional Equity and Asia Growth Funds may use options on currency to cross-
hedge, which involves writing or purchasing options on one currency to hedge
against changes in exchange rates for a different currency, if there is a pat-
tern of correlation between the two currencies. As with other kinds of option
transactions, however, the writing of an option on foreign currency will con-
stitute only a partial hedge, up to the amount of the premium received. A Fund
could be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. The purchase of an option on foreign
currency may constitute an effective hedge against exchange rate fluctuations;
however, in the event of exchange rate movements adverse to a Fund's position,
the Fund may forfeit the entire amount of the premium plus related transaction
costs. In addition to purchasing put and call options for hedging purposes,
the International Equity and Asia Growth Funds may purchase call or put op-
tions on currency to seek to increase total return when the Investment Adviser
anticipates that the currency will appreciate or depreciate in value, but the
securities quoted or denominated in that currency do not present attractive
investment opportunities and are not held in the Fund's portfolio. When pur-
chased or sold to increase total return, options on currencies are considered
speculative. Options on foreign currencies to be written or purchased by the
Funds will be traded on U.S. and foreign exchanges or over-the-counter.

INVESTING IN SMALL CAPITALIZATION COMPANIES

The Funds may invest in smaller, lesser-known companies which the Investment
Adviser believes offer greater capital appreciation and/or growth potential
than larger, more mature, better known firms. Investing in the securities of
such companies, however, involves greater risk and the possibility of greater
portfolio price volatility. Historically, small capitalization stocks and
stocks of recently organized companies have been more volatile in price than
the larger capitalization stocks included in the S&P 500 Index. Among the
reasons for the greater price volatility of these small company and unseasoned
stocks are the less certain growth prospects of smaller firms and the lower
degree of liquidity in the markets for such stocks.

FIXED INCOME SECURITIES

Each Fund may invest in U.S. Government securities and corporate and certain
other fixed income securities. Select Equity Fund may only invest in debt
securities that are considered cash equivalents. Fixed income securities are
subject to the risk of the issuer's inability to meet principal and interest
payments on the obligations (credit risk) and may also be subject to price
volatility due to such factors as interest rate sensitivity, market perception
of the creditworthiness of the issuer and general market liquidity (market
risk). Except to the extent that values are independently affected by currency
exchange rate fluctuations, when interest rates decline, the value of fixed
income securities can generally be expected to rise. Conversely, when interest
rates rise, the value of fixed income securities

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<PAGE>

can be expected to decline. The interest rates payable on certain fixed income
securities in which the Funds may invest are not fixed and may fluctuate based
upon changes in market rates of interest.

RATING CRITERIA. The debt securities in which the Growth and Income, Mid-Cap
Equity, International Equity and Asia Growth Funds may invest will, except as
noted below, be rated investment grade at the time of investment. Investment
grade debt securities are securities rated BBB or higher by Standard & Poor's
Ratings Group ("Standard & Poor's) or Baa or higher by Moody's Investors
Service, Inc. ("Moody's"). 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. The Growth and Income Fund may invest up to 10% of its total assets
in debt securities which are unrated or rated in the lowest rating categories
by Standard & Poor's or Moody's (i.e., BB or lower by Standard & Poor's or Ba
or lower by Moody's), includes securities rated D by Moody's or Standard &
Poor's. Mid-Cap Equity Fund may invest up to 10% of its total assets in debt
securities rated B or higher by Standard & Poor's or B or higher by Moody's.
Fixed income securities rated in the BBB or Baa category 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. Also, to the extent that the
rating assigned to a security in a Fund's portfolio is downgraded by a rating
organization, the market price and liquidity of such security may be adversely
affected. Fixed income securities rated BB or Ba or below (or comparable
unrated securities) are commonly referred to as "junk bonds," are considered
predominately speculative and may be questionable as to principal and interest
payments. In some cases, such bonds may be highly speculative, have poor
prospects for reaching investment grade standing and be in default. As a
result, investment in such bonds will entail greater speculative risks than
those associated with investment in investment-grade bonds (i.e., bonds rated
AAA, AA, A or BBB by Standard & Poor's or Aaa, Aa, A or Baa by Moody's). Also,
to the extent that the rating assigned to a security in a Fund's portfolio is
downgraded by a rating organization, the market price and liquidity of such
security may be adversely affected. See Appendix A to the Additional Statement
for a description of the corporate bond ratings assigned by Standard & Poor's
and Moody's.

GOVERNMENT DEBT OBLIGATIONS. Each Fund may invest in U.S. Government
securities which include: obligations issued by the U.S. Government or by any
agency, instrumentality or sponsored enterprise thereof supported by the full
faith and credit of the U.S. Government, the authority of the issuer to borrow
from the U.S. Treasury, or the discretionary authority of the U.S. Government
to purchase the obligations of the agency, instrumentality or enterprise;
obligations fully guaranteed as to principal and interest by an agency,
instrumentality or sponsored enterprise of the U.S. Government; obligations of
U.S. Government agencies, instrumentalities or state government agencies or
instrumentalities, which may or may not be entitled to the full faith and
credit of the issuer. A Fund may also invest in zero coupon U.S. Treasury
securities and in zero coupon securities issued by financial institutions,
which represent a proportionate interest in underlying U.S. Treasury
securities. A zero coupon security pays no interest to its holder during its
life and its value consists of the difference between its face value at
maturity and its cost. The market prices of zero coupon securities generally
are more volatile than the market prices of securities that pay interest
periodically. A Fund's investments in zero coupon securities may require the
Fund to sell certain of its portfolio securities to

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<PAGE>

generate sufficient cash to satisfy certain income distribution requirements.
See "Taxation" in the Additional Statement.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Each Fund (other than the
Select Equity Fund) may invest in mortgage-backed securities, which represent
direct or indirect participations in, or are collateralized by and payable
from, mortgage loans secured by real property. Each Fund (other than the
Select Equity Fund) may also invest in asset-backed securities, which
represent participations in, or are secured by and payable from, assets such
as motor vehicle installment sale contracts, installment loan contracts,
leases of various types of real and personal property, receivables from
revolving credit (credit card) agreements and other categories of receivables.

Mortgage-backed and asset-backed securities are often subject to more rapid
repayment than their stated maturity dates would indicate as a result of the
pass-through of prepayments of principal on the underlying loans which may
increase the volatility of such investments relative to similarly rated debt
securities. During periods of declining interest rates, prepayment of loans
underlying mortgage-backed and asset-backed securities can be expected to
accelerate and thus impair the Fund's ability to reinvest the returns of
principal at comparable yields. During periods of rising interest rates,
reduced prepayment rates may extend the average life of mortgage-backed and
asset-backed securities and increase a Fund's exposure to rising interest
rates. Accordingly, the market values of such securities will vary with
changes in market interest rates generally and in yield differentials among
various kinds of U.S. Government securities and other mortgage-backed and
asset-backed securities. Asset-backed securities present certain additional
risks that are not presented by mortgage-backed securities because asset-
backed securities generally do not have the benefit of a security interest in
collateral that is comparable to mortgage assets. There is the possibility
that, in some cases, recoveries on repossessed collateral may not be available
to support payments on these securities.

OPTIONS ON SECURITIES AND SECURITIES INDICES

Each Fund (other than the Select Equity Fund) may purchase put and call op-
tions and write (sell) covered call and put options on any securities in which
it may invest or on any securities index composed of securities in which it
may invest. A Fund will purchase and write such options that are listed on na-
tional or foreign securities exchanges or traded in the over-the-counter mar-
ket. The writing and purchase of options is a highly specialized activity
which involves investment techniques and risks different from those associated
with direct investments in equity securities. The use of options 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 puts for hedging purposes also depends in part on the In-
vestment Adviser's ability to predict future price fluctuations and the degree
of correlation between the options and securities markets. If the Investment
Adviser is incorrect in its expectation of changes in securities prices or de-
termination of the correlation between the securities indices on which options
are written and purchased and the securities in a 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 significantly increase a Fund's portfolio turnover rate and, therefore,
associated brokerage commissions or spreads.

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<PAGE>

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

To hedge against changes in interest rates, securities prices or currency
exchange rates or to seek to increase total return, a Fund may purchase and
sell various kinds of future contracts, and purchase and write call and put
options on any of such futures contracts. The Select Equity Fund may enter
into such transactions only with respect to the S&P 500 Index. A Fund will en-
gage in futures and related options transactions only for bona fide hedging
purposes as defined in regulations of the Commodity Futures Trading Commission
or (except with respect to transactions by the Growth and Income, Mid-Cap Eq-
uity and Select Equity Funds in futures on foreign currencies) to seek to in-
crease total return to the extent permitted by such regulations. A 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 de-
posits and premiums paid on the Fund's outstanding positions in futures and
related options entered into for the purpose of seeking to increase total re-
turn would exceed 5% of the market value of the Fund's net assets. These
transactions involve brokerage costs, require margin deposits and, in the case
of contracts and options obligating a Fund to purchase securities or curren-
cies, require the Fund to segregate and maintain cash or liquid, high grade
debt securities with a value equal to the amount of the Fund's obligations.

While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. See
"Investment Objectives and Policies--Futures Contracts and Options on Future
Contracts" in the Additional Statement. Thus, while a Fund may benefit from
the use of futures and options on futures, unanticipated changes in interest
rates, securities prices or currency exchange rates may result in a poorer
overall performance of the Fund than if it had not entered into any futures
contracts or options transactions. The loss incurred by a Fund in writing op-
tions 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 a Fund's net asset value. The profitability of
a Fund's trading in futures to seek to increase total return depends upon the
ability of the Investment Adviser to correctly analyze the futures markets. In
addition, because of the low margin deposits normally required in futures
trading, a relatively small price movement in a futures contract may result in
substantial losses to a Fund. Further, futures contracts and options on
futures may be illiquid, and exchanges may limit fluctuations in futures con-
tract prices during a single day.

In the event of an imperfect correlation between a futures position and
portfolio position which is intended to be protected, the desired protection
may not be obtained and a Fund may be exposed to risk of loss. Perfect corre-
lation between a Fund's futures positions and its portfolio positions will be
impossible to achieve. A Fund's transactions in options and futures contracts
may be limited by the requirements of the Internal Revenue Code of 1986, as
amended (the "Code") for qualification as a regulated investment company.

CURRENCY SWAPS

The International Equity and Asia Growth Funds may enter into currency swaps
for both hedging purposes and to seek to increase total return. Currency swaps
involve the exchange by a Fund with another party of their respective rights
to make or receive payments in specified currencies.

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<PAGE>

Currency swaps usually involve the delivery of a gross payment stream in one
designated currency in exchange for the gross payment stream in another
designated currency. Therefore, the entire payment stream under a currency
swap is subject to the risk that the other party to the swap will default on
its contractual delivery obligations. To the extent that the entire amount of
the payment stream payable by a Fund under a currency swap is held in a
segregated account consisting of cash or liquid, high grade debt securities,
the Funds and the Investment Advisers believe that swaps do not constitute
senior securities under the Act and, accordingly, will not treat them as being
subject to a Fund's borrowing restriction.

A 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.

The use of currency swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. If an Investment Adviser is incorrect in
its forecasts of currency exchange rates, the investment performance of a Fund
would be less favorable than it would have been if this investment technique
were not used. The staff of the Securities and Exchange Commission ("SEC")
currently take the position that swaps are illiquid and thus subject to a
Fund's 15% limitation on investments in illiquid securities.

RISKS OF DERIVATIVE TRANSACTIONS

A Fund's transactions, if any, in options, futures, options on futures, swap
transactions and currency forward contracts involve certain risks, including a
possible lack of correlation between changes in the value of hedging instru-
ments and the portfolio assets being hedged, the potential illiquidity of the
markets for derivative instruments, the risks arising from the margin require-
ments and related leverage factors associated with such transactions. The use
of these management techniques to seek to increase total return may be re-
garded as a speculative practice, and involves the risk of loss if the Invest-
ment Adviser is incorrect in its expectation of fluctuations in securities
prices, interest rates or currency prices.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS

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

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<PAGE>

INVESTMENT IN UNSEASONED COMPANIES

Each Fund may invest up to 5% of its total assets, calculated at the time of
purchase, in companies (including predecessors) which have operated less than
three years, except that this limitation does not apply to debt securities
which have been rated investment grade or better by at least one nationally
recognized statistical rating organization. The securities of such companies
may have limited liquidity, which can result in their being priced higher or
lower than might otherwise be the case. In addition, investments in unseasoned
companies are more speculative and entail greater risk than do investments in
companies with an established operating record.

ILLIQUID AND RESTRICTED SECURITIES

A Fund may not invest more than 10% of its total assets in securities that
are subject to restrictions on resale ("restricted securities") under the Se-
curities Act of 1933, as amended ("1933 Act"), including securities eligible
for resale in reliance on Rule 144A under the 1933 Act. In addition, a Fund
will not invest more than 15% of its net assets in illiquid investments, which
includes securities (both foreign and domestic) that are not readily market-
able, swap transactions, repurchase agreements maturing in more than seven
days, time deposits with a notice or demand period of more than seven days,
certain over-the-counter options, and certain restricted securities, unless it
is determined, based upon the continuing review of the trading markets for the
specific restricted security, that such restricted security is eligible for
sale under Rule 144A and, therefore, is liquid. The Board of Directors has
adopted guidelines and delegated to the Investment Adviser the daily function
of determining and monitoring the liquidity of restricted securities. The
Board of Directors, however, retains oversight focusing on factors such as
valuation, liquidity and availability of information and is ultimately respon-
sible for each determination. Investing in restricted securities eligible for
resale pursuant to Rule 144A could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers be-
come 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 comparable securities for which a liquid market exists.

OTHER INVESTMENT COMPANIES

A Fund reserves the right to invest up to 10% of its total assets in the se-
curities of other investment companies, but may not invest more than 5% of its
total assets in the securities of any one investment company or acquire more
than 3% of the voting securities of any other investment company. Pursuant to
an exemptive order obtained from the SEC, the Funds may invest in money market
funds for which an Investment Adviser or any of its affiliates serves as in-
vestment adviser. A 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 administration fees paid by the Fund.
However, to the extent that the Fund invests in a money market fund for which
an Investment Adviser or any of its affiliates acts as adviser, the advisory
and administration fees payable by the Fund to an 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 Ad-
viser.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with dealers in U.S. Govern-
ment securities and member banks of the Federal Reserve System which furnish
collateral at least equal in value or market

24
<PAGE>

price to the amount of their repurchase obligation. The International Equity
and Asia Growth Funds may also enter into repurchase agreements involving cer-
tain foreign government securities. If the other party or "seller" defaults, a
Fund might suffer a loss to the extent that the proceeds from the sale of the
underlying securities and other collateral held by the Fund in connection with
the related repurchase agreement are less than the repurchase price. In addi-
tion, in the event of bankruptcy of the seller or failure of the seller to re-
purchase the securities as agreed, the Fund could suffer losses, including
loss of interest on or principal of the security and costs associated with de-
lay and enforcement of the repurchase agreement. The Directors of the Company
have reviewed and approved certain sellers whom they believe to be credit-
worthy and have authorized the Funds to enter into repurchase agreements with
such sellers. In addition, each Fund, together with other registered invest-
ment companies having advisory agreements with an Investment Adviser, may
transfer uninvested cash balances into a single joint account, the daily ag-
gregate balance of which will be invested in one or more repurchase agree-
ments.

LENDING OF PORTFOLIO SECURITIES

Each Fund may also seek to increase its income by lending portfolio securi-
ties. Under present regulatory policies, such loans may be made to institu-
tions, such as certain broker-dealers, and are required to be secured continu-
ously by collateral in cash, cash equivalents, or U.S. Government securities
maintained on a current basis in an amount at least equal to the market value
of the securities loaned. Cash collateral may be invested in cash equivalents.
If an 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 a
Fund. See "Investment Restrictions" in the Additional Statement. A Fund may
experience a loss or delay in the recovery of its securities if the institu-
tion with which it has engaged in a portfolio loan transaction breaches its
agreement with the Fund.

SHORT SALES AGAINST-THE-BOX

Each Fund (other than the Select Equity Fund) may make short sales of secu-
rities or maintain a short position, provided that at all times when a short
position is open the Fund owns an equal amount of such securities or securi-
ties convertible into or exchangeable, without payment of any further consid-
eration, for an equal amount of the securities of the same issuer as the secu-
rities sold short (a short sale against-the-box). Not more than 25% of a
Fund's net assets (determined at the time of the short sale) may be subject to
such short sales. Short sales will be made primarily to defer realization of
gain or loss for federal tax purposes; a gain or loss in a Fund's long posi-
tion will be offset by a gain or loss in its short position.

TEMPORARY INVESTMENTS

Notwithstanding a Fund's investment objective, each Fund may on occasion,
for temporary defensive purposes to preserve capital, hold part or all of its
assets (except that Select Equity Fund may only hold up to 35% of its total
assets) in cash, obligations issued or guaranteed by the U.S. Government, its
agencies, instrumentalities, political subdivisions or authorities, commercial
paper rated at least A-2 by Standard & Poor's or P-2 by Moody's, certificates
of deposit, bankers' acceptances, repurchase agreements, non-convertible
preferred stocks, non-convertible corporate

25
<PAGE>

bonds with a remaining maturity of less than one year or, subject to certain
tax restrictions, foreign currencies. When a Fund's assets are invested in
such instruments, the Fund may not be achieving its investment objective.

NON-DIVERSIFICATION STATUS

Since the International Equity and Asia Growth Funds are "non-diversified"
under the Act, they are subject only to certain federal tax diversification
requirements. Under federal tax laws, each of these Funds may, with respect to
50% of its total assets, invest up to 25% of its total assets in the
securities of any issuer (except that this limitation does not apply to U.S.
Government securities). With respect to the remaining 50% of a Fund's total
assets, (1) the Fund may not invest more than 5% of its total assets in the
securities of any one issuer (other than the U.S. Government), and (2) the
Fund may not acquire more than 10% of the outstanding voting securities of any
one issuer. These tests apply at the end of each quarter of its taxable year
and are subject to certain conditions and limitations under the Code. With
respect to 75% of each non-diversified Fund's total assets, the Fund, as a
matter of investment policy, may not acquire more than 10% of the outstanding
voting securities of any one issuer. Since the International Equity and Asia
Growth Funds are not diversified under the Act, they will be more susceptible
to adverse developments affecting any single issuer. The Mid-Cap Equity,
Select Equity and Growth and Income Funds are also subject to the same tax
diversification requirements in addition to the diversification requirements
arising out of their diversified status under the Act.

INVESTMENT RESTRICTIONS

Each Fund is subject to certain investment restrictions that are described
in detail under "Investment Restrictions" in the Additional Statement. These
investment restrictions are fundamental policies of a Fund that cannot be
changed without approval of a majority of the outstanding shares of that Fund.
For more information on a Fund's investment restrictions, an investor should
obtain the Additional Statement. All investment objectives and policies not
specifically designated as fundamental are non-fundamental and may be changed
without shareholder approval. If there is a change in a Fund's investment
objective, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial positions and
needs.

PORTFOLIO TURNOVER

A high rate of portfolio turnover (above 100%) involves correspondingly
greater expenses which must be borne by a Fund and its shareholders and may
under certain circumstances make it more difficult for a Fund to qualify as a
regulated investment company under the Code. See "Financial Highlights" for a
statement of each Fund's historical portfolio turnover ratio. 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 a
Fund's portfolio securities, excluding securities having a maturity at the
date of purchase of one year or less. Notwithstanding the foregoing, the In-
vestment Adviser may, from time to time, make short-term investments when it
believes such investments are in the best interest of a Fund.

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<PAGE>

MANAGEMENT

DIRECTORS AND OFFICERS

The Company's Board of Directors is responsible for deciding matters of gen-
eral policy and reviewing the actions of the Investment Advisers, subadviser,
administrator, distributor and transfer agent. The officers of the Company
conduct and supervise the Funds' daily business operations. The Additional
Statement contains information as to the identity of, and other information
about, the Directors and officers of the Company.

INVESTMENT ADVISERS, SUBADVISER AND ADMINISTRATOR

INVESTMENT ADVISERS AND SUBADVISER. GSAM, a separate operating division of
Goldman Sachs, serves as the investment adviser to the Mid-Cap Equity, Growth
and Income and International Equity Funds. Goldman Sachs registered as an in-
vestment adviser in 1981. GSFM, a Delaware limited partnership which is an af-
filiate of Goldman Sachs, serves as the investment adviser to the Select Eq-
uity Fund. GSFM registered as an investment adviser in 1990. GSAMI, an affili-
ate of Goldman Sachs, serves as the investment adviser to the Asia Growth Fund
and subadviser to the International Equity Fund. GSAMI became a member of the
Investment Management Regulatory Organisation Limited in 1990 and registered
as an investment adviser in 1991. GSAM serves as administrator to each Fund.
As of , 1995, GSAM, GSFM and GSAMI, together with their affiliates, acted
as investment adviser, administrator or distributor for assets in excess of
$ .

Under an Investment Advisory Agreement with each Fund, the applicable In-
vestment Adviser, and in the case of the International Equity Fund under a
Subadvisory Agreement, the Subadviser, subject to the general supervision of
the Company's Board of Directors, provides day-to-day advice as to the Fund's
portfolio transactions. Goldman Sachs has agreed to permit the Company to use
the name "Goldman Sachs" or a derivative thereof as part of each Fund's name
for as long as a Fund's Investment Advisory Agreement is in effect.

In performing its investment advisory services, each Investment Adviser,
while remaining ultimately responsible for the management of the Funds, may
rely upon the asset management division of its Asian affiliates for portfolio
decisions and management with respect to certain portfolio securities and is
able to draw upon the research and expertise of its other affiliate offices.

The Select Equity Fund's portfolio manager is Robert C. Jones. Mr. Jones is
a Vice President and brings 15 years of investment experience to his work in
developing and implementing the Investment Advisers' quantitative equity man-
agement services. Prior to joining the Investment Adviser in 1989, Mr. Jones
was the senior quantitative analyst in Goldman Sachs' Investment Research De-
partment and the author of the monthly Stock Selection publication.

The Growth and Income Fund's portfolio managers are Mitchell E. Cantor and
Ronald E. Gutfleish. Mr. Cantor joined the Investment Adviser in 1991 and is a
Vice President and Co-Chief Investment Officer of GSAM's Active Equity Team.
Prior to 1991, Mr. Cantor was a senior partner and served as research director
of the Institutional Division and as the investment management research
director for

27
<PAGE>

Sanford C. Bernstein & Co., Inc. Mr. Gutfleish joined the Investment Adviser
in 1993 and is a Vice President. Prior to 1993, he was a principal of Sanford
C. Bernstein & Co., Inc. in its Investment Management Research Department and
a member of the Research Review Committee.

The Mid-Cap Equity Fund's portfolio managers are Paul D. Farrell, Mitchell
E. Cantor and Ronald E. Gutfleish. Mr. Farrell is a Vice President and Co-
Chief Investment Officer of GSAM's Active Equity Team. Prior to joining the
Investment Adviser in 1991, Mr. Farrell served as a managing director at Plaza
Investments, the investment subsidiary of GEICO Corp., a major insurance com-
pany. He was previously a Vice President in the Goldman Sachs research depart-
ment and was responsible for the formation of the firm's Emerging Growth Re-
search Group.

The International Equity Fund's portfolio managers are Roderick D. Jack
(Executive Director), Marcel Jongen (Executive Director), Warwick Negus
(Executive Director) and Shogo Maeda (Vice President). Before joining the
Investment Adviser in 1992, Mr. Jack spent five years with the advisory and
financing group for S.G. Warburg in London. Before joining the Investment
Adviser in 1992, Mr. Jongen was with Philips pension fund in Eindhaven where
he was head of equities. Before joining Goldman Sachs Asset Management (Japan)
Ltd. in 1994, Mr. Maeda spent most of the last thirteen years at Nomura and a
period at Manufacturers Hanover Bank in New York. See below for information
about Mr. Negus.

The Asia Growth Fund's portfolio manager is Warwick Negus, who is based in
Asia. His responsibilities include Asian equities and emerging equities
markets. Mr. Negus joined the Investment Adviser in January 1994 after seven
years as Vice President of Bankers Trust Australia Ltd. where he was head of
its Southeast Asian equities group.

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

As compensation for its services rendered and assumption of certain expenses
pursuant to an Investment Advisory Agreement, GSAM is entitled to a fee from
the Growth and Income, Mid-Cap Equity and International Equity Funds, computed
daily and payable monthly, at the annual rates of 0.55%, 0.60% and 0.25%,
respectively, of average daily net assets; however, GSAM is currently only
imposing its advisory fee with respect to the International Equity Fund at the
annual rate of 0.21% of average daily net assets. GSAM may discontinue or
modify such limitation in the future at its discretion, although it has no
current intention to do so. As compensation for its services rendered and
assumption of certain expenses pursuant to an Investment Advisory Agreement,
GSFM is entitled to a fee from the Select Equity Fund, computed daily and
payable monthly, at the annual rate of 0.50% of average daily net assets;
however, GSFM is currently only imposing its advisory fee with respect to the
Select Equity Fund at the annual rate of 0.40% of average daily net assets.
GSFM may discontinue or modify such limitation in the future at its
discretion, although it has no current intention to do so. As compensation for
its services rendered and assumption of certain expenses pursuant to
Investment Advisory and Subadvisory Agreements, GSAMI is entitled to a fee
from the Asia Growth and International Equity Funds, computed daily and
payable monthly at the annual rates of 0.75% and

28
<PAGE>

0.50%, respectively, of average daily net assets; however, GSAMI is currently
only imposing its advisory and subadvisory fees with respect to the Asia
Growth and International Equity Funds at the annual rate of 0.66% and 0.46%,
respectively, of average daily net assets. GSAMI may discontinue or modify
such limitation in the future at its discretion, although it has no current
intention to do so. For the fiscal period ended January 31, 1995, each Fund
(other than the Mid-Cap Equity Fund), paid fees at the foregoing rates, except
that the Select Equity, International Equity and Asia Growth Funds paid
advisory fees equal to 0.50%, 0.25%, and 0.75%, respectively, of their average
daily net assets. For the fiscal period ended January 31, 1995 the
International Equity Fund paid subadvisory fees equal to 0.50%. The advisory
fee paid by the International Equity and Asia Growth Funds is higher than the
fees paid by most funds but the Investment Adviser believes such fees are
comparable to advisory fees paid by funds with similar investment strategies.
Each Investment Adviser has voluntarily agreed to reduce the fees payable to
it by a Fund (to the extent of its fees) by the amount (if any) that the
Fund's expenses would exceed the applicable expense limitations imposed by
state securities administrators. See "Management--Expenses" in the Additional
Statement. In addition, the Investment Adviser to the Select Equity, Growth
and Income, Mid-Cap Equity, International Equity and Asia Growth Funds has
voluntarily agreed to reduce or limit certain "Other Expenses" of such Funds
(excluding advisory, transfer agency and administration fees and fees under
administration, distribution and authorized dealer service plans, taxes,
interest and brokerage and litigation, indemnification and other extraordinary
expenses) to the extent such expenses exceed 0.06%, 0.10%, 0.06%, 0.24% and
0.25% per annum of such Funds' average daily net assets, respectively. 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.

ADMINISTRATOR. As administrator, pursuant to an Administration Agreement
with each Fund, GSAM provides personnel for supervisory, administrative, and
clerical functions; oversees the performance of administrative and profes-
sional services to each Fund by others; provides office facilities; and pre-
pares, but does not pay for, reports to shareholders, the SEC and other regu-
latory authorities. As compensation for the services rendered to the Funds,
GSAM is entitled to a fee from the Growth and Income and Mid-Cap Equity Funds,
computed daily and payable monthly, at an annual rate equal to 0.15% of a
Fund's average daily net assets and GSAM is entitled to a fee from each other
Fund, computed daily and payable monthly at an annual rate equal to 0.25% of
each such Fund's average daily net assets; however, GSAM is currently only im-
posing its administration fee with respect to Select Equity, International Eq-
uity and Asia Growth Funds at the annual rate of 0.15% of average daily net
assets. GSAM may discontinue or modify such limitation in the future at its
discretion, although it has no current intention to do so. For the period
ended January 31, 1995, each Fund (other than Growth and Income Fund, which
paid GSAM an administration fee equal to 0.15% of its average daily net as-
sets, and Mid-Cap Equity Fund) paid GSAM an administration fee equal to 0.25%
of its average daily net assets. GSAM has agreed to reduce its fees payable by
a Fund (to the extent of its fees) by the amount (if any) that a Fund's ex-
penses exceed the applicable expense limitations imposed by state securities
administrators. See "Management--Expenses" in the Additional Statement.

ACTIVITIES OF GOLDMAN SACHS AND ITS AFFILIATES AND OTHER ACCOUNTS MANAGED BY
GOLDMAN SACHS. The involvement of the Investment Advisers, Goldman Sachs and
their affiliates in the management of, or their interest in, other accounts
and other activities of Goldman Sachs may present

29
<PAGE>

conflicts of interest with respect to a Fund or limit a Fund's investment ac-
tivities. Goldman Sachs and its affiliates engage in proprietary trading and
advise accounts and funds which have investment objectives similar to those of
the Funds and/or which engage in and compete for transactions in the same type
of securities, currencies and instruments as the Funds. Goldman Sachs and its
affiliates will not have any obligation to make available any information re-
garding 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 Funds and in general it is not anticipated that the Invest-
ment Advisers will have access to proprietary information for the purpose of
managing a Fund. The results of a Fund's investment activities, therefore, may
differ from those of Goldman Sachs and its affiliates and it is possible that
a Fund could sustain losses during periods in which Goldman Sachs and its af-
filiates and other accounts achieve significant profits on their trading for
proprietary or other accounts. From time to time, a 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 re-
strictions. See "Activities of Goldman Sachs and its Affiliates and Other Ac-
counts Managed by Goldman Sachs" in the Additional Statement for further in-
formation.

DISTRIBUTOR AND TRANSFER AGENT

Goldman Sachs, 85 Broad Street, New York, New York, serves as the exclusive
distributor of each Fund's shares. Goldman Sachs, 4900 Sears Tower, Chicago,
Illinois, also serves as each Fund's transfer agent (the "Transfer Agent") and
as such performs various shareholder servicing functions. Shareholders of rec-
ord with inquiries regarding a Fund should contact Goldman Sachs (as Transfer
Agent) at the address or the telephone number set forth on the inside front
cover page of this Prospectus.

NET ASSET VALUE

The net asset value per share of each Fund is calculated by the Fund's cus-
todian as of the close of regular trading on the New York Stock Exchange (nor-
mally 3:00 p.m. Chicago time, 4:00 p.m. New York time), on each Business Day
(as such term is defined under "Additional Information"). Net asset value per
share of each class is calculated by determining the net assets attributable
to each class and dividing by the number of outstanding shares of that class.
Portfolio securities are valued based on market quotations or, if accurate
quotations are not readily available, at fair value as determined in good
faith under procedures established by the Company's Board of Directors.

PERFORMANCE INFORMATION

From time to time each Fund may publish average annual total return and the
Growth and Income Fund may publish its yield for a particular class of its
shares in advertisements and communications to shareholders or prospective in-
vestors. Average annual total return is determined by computing the average
annual percentage change in value of $1,000 invested at the maximum public of-
fering price for the relevant class for specified periods ending with the most
recent calendar quarter, assuming reinvestment of all dividends and distribu-
tions at net asset value. The total return calculation assumes a complete re-
demption of the investment at the end of the relevant period. Each Fund may
also from

30
<PAGE>

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, each Fund may furnish total return calcula-
tions based on investments at various sales charge levels or at net asset val-
ue. Any performance data which are based on the net asset value per share
would be reduced if a sales charge were taken into account. In addition to the
above, each Fund may from time to time advertise its performance relative to
certain performance rankings and indices.

The Growth and Income Fund computes its yield by dividing net investment
income earned during a recent thirty-day period by the product of the average
daily number of shares outstanding and entitled to receive dividends during
the period and the maximum offering price per share on the last day of the
relevant period. The results are compounded on a bond equivalent (semi-annual)
basis and then annualized. Net investment income per share is equal to the
dividends and interest earned during the period, reduced by accrued expenses
for the period. The calculation of net investment income for these purposes
may differ from the net investment income determined for accounting purposes.
The Growth and Income Fund's quotations of distribution rate are calculated by
annualizing the most recent distribution of net investment income for a
monthly, quarterly or other relevant period and dividing this amount by the
net asset value per share on the last day of the period for which the
distribution rates are being calculated.

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

SHARES OF THE COMPANY

Each Fund is a series of the Company, which was incorporated under the laws
of the State of Maryland on September 27, 1989. The authorized capital stock
of the Company consists of 2,000,000,000 shares of common stock, par value
$.001 per share. The Directors of the Company have authority under the
Company's Charter to create and classify shares of capital stock in separate
series, without further action by shareholders. Additional series may be added
in the future. The Directors also have authority to classify and reclassify
any series or portfolio of shares into one or more classes. The Select Equity
Fund offers four classes of shares: Institutional Shares, Administration
Shares, Service Shares and Class A Shares. The Mid-Cap Equity Fund offers
three classes of shares: Institutional Shares, Administration Shares and Serv-
ice Shares. The Growth and Income, International Equity and Asia Growth Funds
offer three classes of shares: Institutional Shares, Service Shares and Class
A Shares.

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

Unless otherwise required by the Act, ordinarily it will not be necessary
for the Company to hold annual meetings of shareholders. As a result, Fund
shareholders may not consider each year the

31
<PAGE>

election of Directors or the appointment of independent accountants. However,
pursuant to the Company's By-Laws, the recordholders of at least 10% of the
shares outstanding and entitled to vote at a special meeting may require the
Company to hold such special meeting of shareholders for any purpose and
recordholders may, under certain circumstances as permitted by the Act, commu-
nicate with other shareholders in connection with requiring a special meeting
of shareholders. Shareholders of the Company may remove a Director by the af-
firmative vote of a majority of the Company's outstanding voting shares. The
Board of Directors, however, will call a special meeting of shareholders for
the purpose of electing Directors if, at any time, less than a majority of Di-
rectors holding office at the time were elected by shareholders.

In the interest of economy and convenience, the Company does not issue cer-
tificates representing the Funds' shares. Instead, the Transfer Agent main-
tains a record of each shareholder's ownership. Each shareholder receives con-
firmation of purchase and redemption orders from the Transfer Agent. Fund
shares and any dividends and distributions paid by the Fund are reflected in
account statements from the Transfer Agent.

TAXATION

FEDERAL TAXES

Each Fund is treated as a separate entity for tax purposes. Each Fund has
elected or intends to elect to be treated as a regulated investment company
and to qualify for such treatment for each taxable year under Subchapter M of
the Code. To qualify as such, each Fund must satisfy certain requirements re-
lating to the sources of its income, diversification of its assets and distri-
bution of its income to shareholders. As a regulated investment company, each
Fund will not be subject to federal income or excise tax on any net investment
income and net realized capital gains that are distributed to its shareholders
in accordance with certain timing requirements of the Code.

Dividends paid by a Fund from net investment income, certain net realized
foreign exchange gains, the excess of net short-term capital gain over net
long-term capital loss and original issue discount or market discount income
will be taxable to its shareholders as ordinary income. Dividends paid by a
Fund from the excess of net long-term capital gain over net short-term capital
loss will be taxable as long-term capital gains regardless of how long the
shareholders have held their shares. These tax consequences will apply regard-
less of whether distributions are received in cash or reinvested in shares. A
Fund's dividends that are paid to its corporate shareholders and are attribut-
able to qualifying dividends such Fund receives from U.S. domestic corpora-
tions may be eligible, in the hands of such corporate shareholders, for the
corporate dividends-received deduction, subject to certain holding period re-
quirements and debt financing limitations under the Code. Dividends paid by
International Equity Fund and Asia Growth Fund are not generally expected to
qualify, in the hands of corporate shareholders, for the corporate dividends-
received deduction, but a portion of each other Fund's dividends may generally
so qualify. Certain distributions paid by a Fund in January of a given year
may be taxable to shareholders as if received the prior December 31. Share-
holders will be informed annually about the amount and character of distribu-
tions received from the Funds for federal income tax purposes.

Investors should consider the tax implications of buying shares immediately
prior to a distribution. Investors who purchase shares shortly before the rec-
ord date for a distribution will pay a per share

32
<PAGE>

price that includes the value of the anticipated distribution and will be
taxed on the distribution even though the distribution represents a return of
a portion of the purchase price.

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

Individuals and certain other classes of shareholders may be subject to 31%
backup withholding of federal income tax on distributions, redemptions and ex-
changes if they fail to furnish their correct taxpayer identification number
and certain certifications or if they are otherwise subject to backup with-
holding. Individuals, corporations and other shareholders that are not U.S.
persons under the Code are subject to different tax rules and may be subject
to non-resident alien withholding at the rate of 30% (or a lower rate provided
by an applicable tax treaty) on amounts treated as ordinary dividends from the
Funds.

Each Fund anticipates that it will be subject to foreign withholding or
other foreign taxes on income or gain from certain foreign securities. The
Funds do not anticipate that they will elect to pass such foreign taxes
through to their shareholders, who therefore will generally not take such
taxes into account on their own tax returns. The Funds will generally deduct
such taxes in determining the amounts available for a distribution to share-
holders.

OTHER TAXES

In addition to federal taxes, a shareholder may be subject to state, local
or foreign taxes on payments received from the Funds. A state income (and pos-
sibly local income and/or intangible property) tax exemption is generally
available to the extent (if any) a Fund's distributions are derived from in-
terest on (or, in the case of intangibles taxes, the value of its assets is
attributable to) certain U.S. Government obligations, provided in some states
that certain thresholds for holdings of such obligations and/or reporting re-
quirements are satisfied. For a further discussion of certain tax consequences
of investing in shares of the Funds, see "Taxation" in the Additional State-
ment. Shareholders are urged to consult their own tax advisers regarding spe-
cific questions as to federal, state and local taxes as well as to any foreign
taxes.

ADDITIONAL INFORMATION

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

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

33
<PAGE>

REPORTS TO INSTITUTIONAL SHAREHOLDERS

Institutional Shareholders will receive an annual report containing audited
financial statements and a semi-annual report. Each Institutional Shareholder
will also be provided with a printed confirmation for each transaction in the
shareholder's account and an individual quarterly statement. A year-to-date
statement for any account will be provided upon request made to Goldman Sachs.
The Funds do not generally provide subaccounting services.

DIVIDENDS

Each dividend from net investment income and capital gain distributions, if
any, declared by a Fund on its outstanding Institutional Shares will, at the
election of each shareholder, be paid (i) in cash or (ii) in additional Insti-
tutional Shares of such Fund. This election should initially be made on a
shareholder's Account Information Form and may be changed upon written notice
to Goldman Sachs at any time prior to the record date for a particular divi-
dend or distribution. If no election is made, all dividends from net invest-
ment income and capital gain distributions will be reinvested in Institutional
Shares of the applicable Fund. If cash dividends are elected with respect to a
Fund's net investment income dividends then cash dividends must also be
elected with respect to the short-term capital gains component, if any, of the
Fund's annual dividend.

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

Each Fund intends that all or substantially all its net investment income
and net realized long-term and short-term capital gains, after reduction by
available capital losses, including any capital losses carried forward from
prior years, will be declared as dividends for each taxable year. The Growth
and Income Fund will pay dividends from net investment income quarterly. Each
other Fund will pay dividends from net investment income at least annually.
All of the Funds will pay dividends from net realized long-term and short-term
capital gains, reduced by available capital losses, at least annually. From
time to time, a portion of a Fund's dividends may constitute a return of
capital.

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

PURCHASE OF INSTITUTIONAL SHARES

Institutional Shares of a Fund may be purchased, without the imposition of a
sales load, through Goldman Sachs at the net asset value per share next deter-
mined after receipt of an order. If, by the close of regular trading on the
New York Stock Exchange (currently 4:00 p.m. New York time), an order is re-
ceived by the Fund or Goldman Sachs, the price per share will be the net asset
value per share computed on the day the purchase order is received. See "Net
Asset Value."

34
<PAGE>

PURCHASE PROCEDURES

Purchases of Institutional Shares may be made by placing an order with
Goldman Sachs at 800-621-2550 and either wiring Federal Funds to State Street
Bank and Trust Company ("State Street") or initiating an ACH transfer. Pur-
chases may also be made by check (except that a check drawn on a foreign bank
will not be accepted) or Federal Reserve draft made payable to "Goldman Sachs
Equity Portfolios, Inc.--(Name of Fund)" and should be directed to "Goldman
Sachs Equity Portfolios, Inc.--(Name of Fund)", c/o National Financial Data
Services, Inc. ("NFDS"), P.O. Box 419711, Kansas City, MO 64141-6711. Payment
must be received within three Business Days of receipt of the purchase order
by the Fund or Goldman Sachs. Payment of the proceeds of redemption of shares
purchased by check may be delayed for a period of time as described under "Re-
demption of Institutional Shares."

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

The minimum initial investment is $1,000,000 in Institutional Shares of each
Fund alone or in combination with other assets under the management of GSAM
and its affiliates. Institutional Shares of the Fund are offered to (a) banks,
trust companies or other types of depository institutions investing for their
own account or on behalf of their clients; (b) pension and profit sharing
plans, pension funds and other company-sponsored benefit plans; (c) qualified
non-profit organizations, foundations and endowments; (d) any state, county,
city or any instrumentality, department, authority or agency thereof; (e) cor-
porations and other for-profit business organizations with assets of at least
$100 million or publicly traded securities outstanding; (f) "wrap" accounts
for the benefit of clients of broker-dealers, financial institutions or finan-
cial planners, provided that they have entered into an agreement with GSAM
specifying aggregate minimums and certain operating policies and standards;
and (g) registered investment advisers who have entered into an agreement with
GSAM specifying aggregate minimums and certain operating policies and stan-
dards. The minimum investment requirement may be waived at the discretion of
the Company's officers. No minimum amount is required for subsequent invest-
ments.

Each Fund reserves the right to redeem the Institutional Shares of any In-
stitutional Shareholder whose account balance is less than $50 as a result of
earlier redemptions. Such redemptions will not be implemented if the value of
an Institutional Shareholder's account falls below the minimum account balance
solely as a result of market conditions. The Company will give sixty (60)
days' prior written notice to Institutional Shareholders whose Institutional
Shares are being redeemed to allow them to purchase sufficient additional In-
stitutional Shares of a Fund to avoid such redemption.

OTHER PURCHASE INFORMATION

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

35
<PAGE>

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

EXCHANGE PRIVILEGE

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

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

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

REDEMPTION OF INSTITUTIONAL SHARES

Each Fund will redeem its Institutional Shares upon request of an Institu-
tional Shareholder on any Business Day at the net asset value next determined
after the receipt by the Transfer Agent of such request in proper form. See
"Net Asset Value." If Institutional Shares to be redeemed were recently

36
<PAGE>

purchased by check, a Fund may delay transmittal of redemption proceeds until
such time as it has assured itself that good funds have been collected for the
purchase of such Institutional Shares. This may take up to fifteen (15) days.
Redemption requests may be made by writing to or calling the Transfer Agent at
the address or telephone number set forth on the inside front cover page of
this Prospectus. An Institutional Shareholder may request redemptions by tele-
phone if the optional telephone redemption privilege is elected on the Account
Information Form accompanying this Prospectus. It may be difficult to imple-
ment redemptions by telephone in times of drastic economic or market changes.

In an effort to prevent unauthorized or fraudulent redemption or exchange
requests by telephone, Goldman Sachs employs reasonable procedures specified
by the Company to confirm that such instructions are genuine. Among other
things, any redemption request that requires money to go to an account or ad-
dress other than that designated on the Account Information Form must be in
writing and signed by an authorized person designated on the Account Informa-
tion Form. Any such written request is also confirmed by telephone with both
the requesting party and the designated bank account to verify instructions.
Exchanges among accounts with different names, addresses and social security
or other taxpayer identification numbers must be in writing and signed by an
authorized person designated on the Account Information Form. Other procedures
may be implemented from time to time. If reasonable procedures are not imple-
mented, the Company may be liable for any loss due to unauthorized or fraudu-
lent transactions. In all other cases, neither the Funds, the Company nor
Goldman Sachs will be responsible for the authenticity of redemption or ex-
change instructions received by telephone.

Written requests for redemptions must be signed by each Institutional Share-
holder whose signature has been guaranteed by a bank, a securities broker or
dealer, a credit union having authority to issue signature guarantees, a sav-
ings and loan association, a building and loan association, a cooperative
bank, a federal savings bank or association, a national securities exchange, a
registered securities association or a clearing agency, provided that such in-
stitution satisfies the standards established by the Transfer Agent.

Each Fund will arrange for the proceeds of redemptions effected by any means
to be wired as Federal Funds to the bank account designated in the Institu-
tional Shareholder's Account Information Form or, if the shareholder elects in
writing, by check. Redemption proceeds paid by wire transfer of Federal Funds
will normally be wired on the next Business Day in Federal Funds (for a total
one-day delay), but may be paid up to three (3) Business Days after receipt of
a properly executed redemption request. Wiring of redemption proceeds may be
delayed one additional Business Day if the Federal Reserve Bank is closed on
the day redemption proceeds would originally be wired. With respect to redemp-
tion proceeds paid by check, a check for the redemption proceeds will normally
be mailed to the address of record within three (3) Business Days of receipt
of a properly executed redemption request. In order to change the bank desig-
nated on the Account Information Form to receive redemption proceeds or the
record address, a written request must be received by the Transfer Agent. This
request must be signature guaranteed as set forth above. Further documentation
may be required for executors, trustees or corporations. Once wire transfer
instructions have been given by Goldman Sachs, neither the Funds, the Company
nor Goldman Sachs assumes any further responsibility for the performance of

37
<PAGE>

intermediaries or the Institutional Shareholder's bank in the transfer proc-
ess. If a problem with such performance arises, the Institutional Shareholder
should deal directly with such intermediaries or bank.

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

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

38
<PAGE>

APPENDIX A

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON ACCOUNT
INFORMATION FORM

You are required by law to provide the Fund with your correct Taxpayer
Identification Number (TIN), regardless of whether you file tax returns.
Failure to do so may subject you to penalties. Failure to provide your correct
TIN and to sign your name in the Certification section (the "Certification
Section") of the Account Information Form could result in withholding of 31%
by the Fund for the federal backup withholding tax on distributions,
redemptions, exchanges and other payments relating to your account. The Fund
reserves the right to refuse to open an account for, or to close the account
of, any investor who fails to (1) provide a TIN or (2) certify that such TIN
is correct (if required to do so under applicable law) in establishing an
account.

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

Special rules apply for determining the TIN that certain entities are
required to provide.

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

If you have been notified by the IRS that you are subject to backup
withholding because you failed to report all your interest and/or dividend
income on your tax return and you have not been notified by the IRS that such
withholding should cease, you must cross out item (2) in the Certification
Section.

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

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

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

A-1
<PAGE>

GOLDMAN SACHS

GOLDMAN SACHS PORTFOLIOS -- ACCOUNT INFORMATION FORM

This Account Information Form Should be Forwarded Promptly to Goldman, Sachs &
Co. No Redemption Can be Made Prior to Its Receipt

Send to: Goldman Sachs Portfolios Master No. ________________
4900 Sears Tower Fund Use Only
Chicago, IL
60606 1-800-621-2550 Date: _____________________

<TABLE>
<S> <C>
[_] GOLDMAN SACHS -- MONEY MARKET TRUST [_] GS -- SHORT-TERM GOVERNMENT AGENCY FUND
Fill in Portfolio(s):______________ [_] GS -- SHORT DURATION TAX-FREE FUND
[_] GS -- ADJUSTABLE RATE GOVERNMENT AGENCY FUND [_] GS -- CORE FIXED INCOME FUND
[_] OTHER [_] THE GOLDMAN SACHS EQUITY PORTFOLIOS
Class of Shares:_____________________ Fill in Fund(s):___________________
</TABLE>

A. ACCOUNT RECORD
- -------------------------------------------------------------------------------

- ------------------------------------- -------------------------------------
Name of Account Telephone Number

- ------------------------------------- U.S. Citizen or
Street or P.O. Box Resident? Yes [_] No [_]

- ------------------------------------- If no is checked, fill in country of
City State Zip tax residence:

- ------------------------------------- -------------------------------------
Attention

B. DIVIDENDS AND DISTRIBUTIONS -- Check appropriate box (see "Dividends" in
Prospectus)
- -------------------------------------------------------------------------------

Dividends (including net short-term capital gains) [_] Cash [_] Units/Shares
Net Long-Term Capital Gains Distributions [_] Cash [_] Units/Shares
Dividends and Capital Gains reinvested in another
fund in the Goldman Sachs Portfolios (see Prospectus
for more information) [_] Units/Shares
Fill in Fund(s): ____________________
(If no box is checked, dividends and capital gains
distributions will be reinvested in the account.)

C. SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION NUMBER CERTIFICATION
- -------------------------------------------------------------------------------
Taxpayer Identification Number: ______________
Under penalties of perjury, I certify that (1) The number shown on this form
is my correct Taxpayer Identification Number (or I am waiting for a number to
be issued to me), and (2) I am not subject to backup withholding because I am
exempt from backup withholding or I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or the IRS has notified me that I
am no longer subject to backup withholding. See the "Guidelines for
Certification of Taxpayer Identification Number on Account Information Form,"
contained in the Appendix to the accompanying Prospectus.

SIGN ------------------------------ -------------------------------------
HERE Signature Name (print) and Title (if any)

------------------------------ -------------------------------------
Date

D. OPTIONAL TELEPHONE EXCHANGE (see "Exchange Privilege" in Prospectus)
- -------------------------------------------------------------------------------
[_] Goldman, Sachs & Co. is hereby authorized to accept and act upon telephone
instructions from the undersigned or any other person for the exchange of
shares/units of the Fund into any fund described in the accompanying
Prospectus. The undersigned understands and agrees that neither the
applicable Fund nor Goldman, Sachs & Co. will be liable for any loss,
expense, or cost arising out of any telephone request affected hereunder.

Continued on reverse side
<PAGE>

E. REDEMPTION PLANS -- check one box only (see "Redemption of Units/Shares" in
Prospectus)
- -------------------------------------------------------------------------------
[_] I authorize GOLDMAN, SACHS & CO. to honor telephone, telegraphic or other
instructions WITHOUT SIGNATURE GUARANTEE, from any person for the redemption
of shares/units for the above account provided that the proceeds are
transmitted to the following bank account(s) only. I understand any changes
to the following information must be made in writing to GOLDMAN, SACHS &
CO., must contain the appropriate number of signatures listed below and all
signatures MUST BE SIGNATURE GUARANTEED. Absent its own gross negligence,
neither the applicable Fund nor GOLDMAN, SACHS & CO. shall be liable for
such redemptions or for payments made to any unauthorized account.

[_] I have furnished GOLDMAN, SACHS & CO., WITH A SIGNATURE GUARANTEE (See
section G). I authorize GOLDMAN, SACHS & CO. to honor telephone,
telegraphic, or other instructions from any person for the redemption of
shares/units for the above account provided that the proceeds are
transmitted to the following bank account(s) only. Any changes to the
following information must be made in writing to GOLDMAN, SACHS & CO., (but
without signature guarantee) and contain the appropriate number of
signatures listed below. Absent its own gross negligence, neither the
applicable Fund nor GOLDMAN, SACHS & CO. shall be liable for such
redemptions or for payments made to any unauthorized account.

Please complete the following bank account information and place a line
through the unused portion.

Additional instructions may be added on separate pages, if necessary

Number of Bank Account Destinations completed in Section E of this form: [_]

1)___________________________________ 3)___________________________________
Bank Name Bank Routing No. Bank Name Bank Routing No.

------------------------------------ ------------------------------------
Street Address Street Address

------------------------------------ ------------------------------------
City State Zip City State Zip

------------------------------------ ------------------------------------
Account Name Account No. Account Name Account No.

2)___________________________________ 4)___________________________________
Bank Name Bank Routing No. Bank Name Bank Routing No.

------------------------------------ ------------------------------------
Street Address Street Address

------------------------------------ ------------------------------------
City State Zip City State Zip

------------------------------------ ------------------------------------
Account Name Account No., Account Name Account No.,

[_] Special Draft (Transfer Agent to Supply)[_] By Mail

F. SIGNATURE AUTHORIZATION
- -------------------------------------------------------------------------------
By the execution of this Account Information Form, the undersigned represents
and warrants that it has full right, power and authority to make the
investment applied for pursuant to this application and is acting for itself
or in some fiduciary capacity in making such investment, and the individual(s)
signing on behalf of the undersigned represent and warrant that they are duly
authorized to sign this application and to purchase and redeem Fund
units/shares on behalf of the undersigned. THE UNDERSIGNED AFFIRMS THAT IT HAS
RECEIVED AND REVIEWED A CURRENT FUND PROSPECTUS.

The undersigned understands that non-money market funds, do not maintain a
constant net asset value and further that a constant net asset value in money
market funds is not guaranteed. As a result, the undersigned may experience a
loss of principal on its investments.

Number of Signatures required to make changes to this form: [_]

SIGN
HERE ------------------------------ -------------------------------------
Signature Name (print) and Title (if any) Date

------------------------------ -------------------------------------
Signature Date

G. SIGNATURE GUARANTEE
- -------------------------------------------------------------------------------

- ------------------------------------- Affix Guarantee Stamp Here
Signature Guaranteed By

- -------------------------------------
Authorized Signature
<PAGE>

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

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

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................... 3
Financial Highlights....................................................... 9
Investment Objectives and Policies......................................... 10
Special Investment Methods and Risk Factors................................ 14
Investment Restrictions.................................................... 26
Portfolio Turnover......................................................... 26
Management................................................................. 27
Net Asset Value............................................................ 30
Performance Information.................................................... 30
Shares of the Company...................................................... 31
Taxation................................................................... 32
Additional Information..................................................... 33
Reports to Institutional Shareholders...................................... 34
Dividends.................................................................. 34
Purchase of Institutional Shares........................................... 34
Exchange Privilege......................................................... 36
Redemption of Institutional Shares......................................... 36
Appendix A................................................................. A-1
Account Information Form
</TABLE>

MID1/6K/0695

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOLDMAN SACHS SELECT EQUITY FUND

INSTITUTIONAL SHARES

MANAGED BY

GOLDMAN SACHS FUNDS MANAGEMENT, L.P.,

AN AFFILIATE OF

GOLDMAN, SACHS & CO.

GOLDMAN SACHS GROWTH AND INCOME FUND
GOLDMAN SACHS MID-CAP EQUITY FUND

GOLDMAN SACHS INTERNATIONAL EQUITY FUND

INSTITUTIONAL SHARES

MANAGED BY

GOLDMAN SACHS ASSET MANAGEMENT

A SEPARATE OPERATING DIVISION OF

GOLDMAN, SACHS & CO.

GOLDMAN SACHS ASIA GROWTH FUND INSTITUTIONAL SHARES

MANAGED BY

GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL

AN AFFILIATE OF

GOLDMAN, SACHS & CO.

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

PROSPECTUS

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

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

GOLDMAN SACHS SELECT EQUITY FUND

GOLDMAN SACHS GROWTH AND INCOME FUND

GOLDMAN SACHS MID-CAP EQUITY FUND

GOLDMAN SACHS INTERNATIONAL EQUITY FUND

GOLDMAN SACHS ASIA GROWTH FUND

SERVICE SHARES

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

Goldman Sachs Select Equity Fund ("Select Equity Fund"), Goldman Sachs
Growth and Income Fund ("Growth and Income Fund"), Goldman Sachs Mid-Cap
Equity Fund ("Mid-Cap Equity Fund"), Goldman Sachs International Equity Fund
("International Equity Fund") and Goldman Sachs Asia Growth Fund ("Asia Growth
Fund") (individually, a "Fund," and collectively, the "Funds") are part of a
family of funds advised by Goldman Sachs Asset Management or its affiliates,
Goldman Sachs Funds Management, L.P. and Goldman Sachs Asset Management
International. Each Fund is organized as a separate diversified portfolio of
Goldman Sachs Equity Portfolios, Inc. (the "Company"), an open-end, management
investment company. Service Shares of the Funds are offered to certain
institutional investors.

Select Equity Fund seeks total return through investments in equity
securities consisting of capital appreciation plus dividend income that, net
of Fund expenses, exceeds the total return realized on the
Standard & Poor's Index of 500 Common Stocks.

(continued on next page)

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

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

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

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

The date of this Prospectus is February , 1996
<PAGE>

Asia Growth Fund seeks long-term capital appreciation through investments in
equity securities of companies related (in the manner described herein) to
Asian countries.

This Prospectus, which sets forth concisely the information about the
Company and the Funds that a prospective investor ought to know before
investing in Service Shares of the Funds, should be retained for future
reference. A Statement of Additional Information (the "Additional Statement"),
dated February , 1996, containing further information about the Company and
the Funds which may be of interest to investors, has been filed with the
Securities and Exchange Commission, is incorporated herein by reference in its
entirety, and may be obtained without charge from Goldman Sachs by calling the
telephone number, or writing to one of the addresses, listed below.

GOLDMAN SACHS ASSET MANAGEMENT
GOLDMAN SACHS EQUITY INVESTMENT ADVISER TO
PORTFOLIOS, INC. ONE NEW YORK PLAZA GROWTH AND INCOME FUND, MID-CAP
NEW YORK, NEW YORK 10004 EQUITY FUND AND INTERNATIONAL
EQUITY FUND ONE NEW YORK PLAZA NEW
YORK, NEW YORK 10004

GOLDMAN, SACHS & CO.
DISTRIBUTOR 85 BROAD STREET NEW
YORK, NEW YORK 10004

GOLDMAN SACHS ASSET MANAGEMENT
INTERNATIONAL

GOLDMAN, SACHS & CO. INVESTMENT ADVISER TO ASIA GROWTH
TRANSFER AGENT 4900 SEARS TOWER FUND AND SUBADVISER TO THE
CHICAGO, ILLINOIS 60606 INTERNATIONAL EQUITY FUND 140 FLEET
STREET LONDON, ENGLAND EC4A 2BJ

GOLDMAN SACHS FUNDS MANAGEMENT, L.P.
INVESTMENT ADVISER TO SELECT EQUITY
FUND ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004

TOLL FREE (IN U.S.).................. 800-621-2550
2
<PAGE>

SUMMARY

INTRODUCTION

GOLDMAN SACHS SELECT EQUITY FUND

GOLDMAN SACHS GROWTH AND INCOME FUND

GOLDMAN SACHS MID-CAP EQUITY FUND

3
<PAGE>

GOLDMAN SACHS INTERNATIONAL EQUITY FUND

GOLDMAN SACHS ASIA GROWTH FUND

The Fund's investment objective is long-term capital appreciation. Under
normal market conditions, the Fund will invest substantially all, and at least
65%, of its total assets in equity securities of companies in China, Hong Kong,
India, Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South Korea,
Sri Lanka, Taiwan and Thailand which are considered by the Investment Adviser
to have long-term capital appreciation potential. Concentration of the Fund's
assets in one or a few of the Asian countries will subject the Fund, to a
greater extent than if the Fund's assets were less geographically concentrated,
to the risks of adverse changes in the securities and foreign exchange markets
of such countries and social, political or economic events which may occur in
those countries. The Fund may also invest up to 35% of its total assets in
equity securities of issuers in other countries, including Japan, and fixed
income securities. The Fund may employ certain currency techniques to hedge
against currency exchange rate fluctuations or to seek to increase total
return. When used to enhance return, these management techniques are considered
speculative. See "Special Investment Methods and Risk Factors--Foreign
Transactions."

INVESTMENT ADVISERS AND ADMINISTRATOR

4
<PAGE>

PURCHASE AND REDEMPTION OF SERVICE SHARES

It is expected that all purchasers of Service Shares of the Fund will be
Service Organizations or their nominees. Customers of Service Organizations may
invest in Service Shares only through their Service Organizations. Service
Shares of the Fund may be purchased by Service Organizations through Goldman
Sachs at the current net asset value per share without the imposition of a
sales load. The Funds do 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. See
"Purchase of Service Shares." The Funds will redeem their Service Shares upon
request of a shareholder on any Business Day at the net asset value next
determined after receipt of such request in proper form. See "Redemption of
Service Shares."

DISTRIBUTOR AND TRANSFER AGENT

DIVIDEND POLICY

Each Fund intends that all or substantially all of its net investment income
and net realized long-term and short-term capital gains for each taxable year,
after reduction by available capital losses, including any capital losses
carried forward from prior years, will be declared as dividends. The Growth and
Income Fund will pay dividends in respect of net investment income quarterly.
Each other Fund will pay dividends in respect of net investment income at least
annually. All of the Funds will pay dividends in respect of net realized long-
term and short-term capital gains at least annually. Shareholders will receive
dividends in additional Service Shares of the Fund paying the dividend or may
elect to receive cash as described under "Dividends."

RISK FACTORS

5
<PAGE>

advantageous time or without a substantial drop in price. A Fund's use of
certain investment techniques, including derivatives, forward contracts and
options and futures transactions, will subject a Fund to greater risk than
funds that do not employ such techniques. To the extent that a Fund invests in
securities of non-U.S. issuers and foreign currencies, the Fund may face risks
that are different from those associated with investment in domestic
securities. The risks of foreign investments and currencies include changes in
relative currency exchange rates, political and economic developments and the
imposition of exchange controls or other governmental confiscation or
restrictions. Generally, there is less availability of data on foreign
companies and securities markets as well as less regulation of foreign stock
exchanges, brokers and issuers. A Fund's investments in emerging markets and
countries will involve greater risks than investments in the developed
countries of Western Europe, the U.S. and Japan. In addition, because the
International Equity and Asia Growth Funds will invest primarily outside the
U.S., these Funds may involve greater risks, since the securities markets of
foreign countries are generally less liquid and subject to greater price
volatility. In particular, the securities markets of the developing countries
of Asia are marked by high concentration of market capitalization and trading
volume in a small number of issuers representing a limited number of
industries, as well as a high concentration of ownership of such securities by
a limited number of investors.

SERVICE PLAN

The Company, on behalf of each Fund, has adopted a Service Plan with respect
to the Service Shares of each Fund which authorizes each Fund to compensate
Service Organizations for providing account administration services to their
customers who are the beneficial owners of such Shares. The Company, on behalf
of each Fund, will enter into agreements with each Service Organization which
will provide for compensation to the Service Organization in an amount up to
0.50% (on an annualized basis) of the average daily net assets of the Service
Shares of a Fund attributable to or held in the name of the Service
Organization for its customers. See "Service Plans."

6
<PAGE>

FEES AND EXPENSES
(SERVICE SHARES)*

<TABLE>
<CAPTION>
GROWTH
SELECT AND MID-CAP INT'L ASIA
EQUITY INCOME EQUITY EQUITY GROWTH
FUND FUND FUND FUND FUND
------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Pur-
chases.................................. None None None None None
Maximum Sales Charge Imposed on Rein-
vested Dividends........................ None None None None None
Redemption Fees.......................... None None None None None
Exchange Fees............................ None None None None None
ANNUAL FUND OPERATING EXPENSES: (as a
percentage of average daily net assets)
Management Fees (including advisory and
administration fees)**.................. 0.55% 0.70% 0.75% 0.82% 0.81%
Service Fees***.......................... 0.50% 0.50% 0.50% 0.50% 0.50%
Other Expenses (after expense limita-
tion)**................................. 0.10% 0.14% 0.10% 0.28% 0.29%
---- ---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER
EXPENSE LIMITATION)**.................. 1.10% 1.34% 1.35% 1.60% 1.60%
==== ==== ==== ==== ====
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a hy-
pothetical $1,000 investment, assuming (1) a
5% annual return and (2) redemption at the
end of each time period
Select Equity Fund............................ $ 7 $21 $36 $ 81
Growth and Income Fund........................ $ 9 $27 $47 $104
Mid-Cap Equity Fund........................... $ 9 $27 N/A N/A
International Equity Fund..................... $11 $35 $61 $134
Asia Growth Fund.............................. $11 $35 $61 $134
</TABLE>
- --------------------
* The information set forth in the foregoing table and hypothetical example
relates only to Service Shares of the Funds. Each Fund also offers
Institutional Shares and in the case of Select Equity and Mid-Cap Equity
Funds, Administration Shares and, in the case of Select Equity, Growth and
Income, International Equity and Asia Growth Funds, Class A Shares which
are subject to different fees and expenses (which affect performance),
have different minimum investment requirements and are entitled to
different services. Information regarding Administration, Institutional
and Class A Shares, may be obtained from an investor's sales
representative or from Goldman Sachs by calling the number on the inside
cover of this prospectus.
** Based on estimated amounts for the current fiscal year. The Investment
Advisers and GSAM have voluntarily agreed to limit their advisory and
administration fees to the following, respectively, (as a percentage of
average daily net assets): Select Equity Fund--0.40% and 0.15%,
International

7
<PAGE>

Equity Fund--0.67% and 0.15% and Asia Growth Fund--0.66% and 0.15%. Without
such limitations, the Fund's advisory and administration fees would be:
Select Equity Fund--0.50% and 0.25%, International Equity Fund--0.75% and
0.25% and Asia Growth Fund--0.75% and 0.25%. The Investment Advisers and
GSAM have voluntarily agreed to reduce or limit certain "Other Expenses" of
the Funds (excluding transfer agency fees estimated to be 0.04% of average
daily net assets, advisory and administration fees, fees under
administration, taxes, interest and brokerage and litigation,
indemnification and other extraordinary expenses) to 0.06%, 0.10%, 0.06%,
0.24% and 0.25%, respectively, of the Select Equity, Growth and Income,
Mid-Cap Equity, International Equity and Asia Growth Fund's average daily
net assets. The Investment Advisers and GSAM have no current intention of
modifying or discontinuing such limitations but may do so in the future at
their discretion. If the Investment Advisers and GSAM did not agree to
limit certain "Other Expenses" of each Fund and to limit the fees of the
Select Equity, International Equity and Asia Growth Funds as described
above, the "Other Expenses" and "Total Operating Expenses" of the Service
Shares of the Funds would be as follows: Select Equity Fund--0.27% and
1.02%; Growth and Income Fund--0.14% and 0.84%; Mid-Cap Equity Fund--0.32%
and 1.07%; International Equity Fund--0.38% and 1.38% and Asia Growth
Fund--0.39% and 1.39%, respectively. The annual "Management Fees," "Other
Expenses," and "Total Operating Expenses," respectively, incurred by the
Class A Shares of the following funds during the fiscal year ended January
31, 1995 (expressed as a percentage of average daily net assets after fee
adjustments) were: Select Equity Fund--0.75%, 0.38% and 1.38%, Growth and
Income Fund--0.70%, 0.30%, and 1.25%, International Equity Fund--1.00%,
0.48%, and 1.73% and Asia Growth Fund--1.00%, 0.65% and 1.90%,
respectively.
*** Service Organizations (other than broker-dealers) may charge other fees to
their customers who are beneficial owners of Service Shares in connection
with their customer accounts. See "Service Plans."

8
<PAGE>

FINANCIAL HIGHLIGHTS

9
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

SELECT EQUITY FUND

10
<PAGE>

GROWTH AND INCOME FUND

11
<PAGE>

MID-CAP EQUITY FUND

INTERNATIONAL EQUITY FUND

12
<PAGE>

ASIA GROWTH FUND

13
<PAGE>

SPECIAL INVESTMENT METHODS AND RISK FACTORS

CONVERTIBLE SECURITIES

14
<PAGE>

WARRANTS AND STOCK PURCHASE RIGHTS

FOREIGN TRANSACTIONS

15
<PAGE>

16
<PAGE>

17
<PAGE>

Because investment in foreign issuers will usually involve currencies of
foreign countries, and because the International Equity and Asia Growth Funds
may have currency exposure independent of

18
<PAGE>

their securities positions, the value of the assets of a Fund as measured in
U.S. dollars will be affected by changes in foreign currency exchange rates.

INVESTING IN SMALL CAPITALIZATION COMPANIES

FIXED INCOME SECURITIES

19
<PAGE>

can be expected to decline. The interest rates payable on certain fixed income
securities in which the Funds may invest are not fixed and may fluctuate based
upon changes in market rates of interest.

20
<PAGE>

generate sufficient cash to satisfy certain income distribution requirements.
See "Taxation" in the Additional Statement.

OPTIONS ON SECURITIES AND SECURITIES INDICES

21
<PAGE>

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

CURRENCY SWAPS

22
<PAGE>

RISKS OF DERIVATIVE TRANSACTIONS

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS

23
<PAGE>

INVESTMENT IN UNSEASONED COMPANIES

ILLIQUID AND RESTRICTED SECURITIES

OTHER INVESTMENT COMPANIES

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with dealers in U.S. Govern-
ment securities and member banks of the Federal Reserve System which furnish
collateral at least equal in value or market

24
<PAGE>

LENDING OF PORTFOLIO SECURITIES

SHORT SALES AGAINST-THE-BOX

TEMPORARY INVESTMENTS

25
<PAGE>

NON-DIVERSIFICATION STATUS

INVESTMENT RESTRICTIONS

PORTFOLIO TURNOVER

26
<PAGE>

MANAGEMENT

DIRECTORS AND OFFICERS

INVESTMENT ADVISERS, SUBADVISER AND ADMINISTRATOR

27
<PAGE>

28
<PAGE>

29
<PAGE>

DISTRIBUTOR AND TRANSFER AGENT

NET ASSET VALUE

PERFORMANCE INFORMATION

30
<PAGE>

SHARES OF THE COMPANY

Unless otherwise required by the Act, ordinarily it will not be necessary
for the Company to hold annual meetings of shareholders. As a result, Fund
shareholders may not consider each year the

31
<PAGE>

TAXATION

FEDERAL TAXES

32
<PAGE>

price that includes the value of the anticipated distribution and will be
taxed on the distribution even though the distribution represents a return of
a portion of the purchase price.

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

OTHER TAXES

ADDITIONAL INFORMATION

33
<PAGE>

SERVICE PLANS

The Company, on behalf of each Fund, has adopted a Service Plan with respect
to the Service Shares which authorizes each Fund to compensate Service Organi-
zations for providing administration services and account maintenance services
to their customers who are beneficial owners of such Shares. The Company, on
behalf of each Fund, will enter into agreements with Service Organizations
which purchase Service Shares on behalf of their customers ("Service Agree-
ments"). The Service Agreements will provide for compensation to the Service
Organizations in an amount up to 0.50% (on an annualized basis) of the average
daily net assets of the Service Shares of a Fund attributable to or held in
the name of the Service Organization for its customers. The services provided
by the Service Organizations may include acting, directly or through an agent,
as the sole shareholder of record, maintaining account records for customers
and processing orders to purchase, redeem or exchange Service Shares for cus-
tomers.

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

Services Organizations (other than broker-dealers) may charge other fees to
their customers who are the beneficial owners of Service Shares in connection
with their customer accounts. These fees would be in addition to any amounts
received by the Service Organization under a Service Agreement and may affect
the return earned on an investment in a Fund. The Company, on behalf of each
Fund, will accrue payments made pursuant to a Service Agreement daily. All in-
quiries of beneficial owners of Service Shares should be directed to such own-
ers' Service Organization.

REPORTS TO SHAREHOLDERS

Recordholders of Service Shares of a Fund will receive an annual report con-
taining audited financial statements and a semi-annual report. Each
recordholder of Service Shares will also be provided with a printed confirma-
tion for each transaction in its account and a monthly account statement. A
year-to-date statement for any account will be provided to a Service Organiza-
tion upon request made to Goldman Sachs.

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

DIVIDENDS

Each dividend from net investment income and capital gain distributions, if
any, declared by a Fund on its outstanding Service Shares will, at the elec-
tion of each shareholder, be paid (i) in cash or (ii) in additional Service
Shares of such Fund. This election should initially be made on a shareholder's
Account Information Form and may be changed upon written notice to Goldman
Sachs at any

34
<PAGE>

time prior to the record date for a particular dividend or distribution. If no
election is made, all dividends from net investment income and capital gain
distributions will be reinvested in Service Shares of the applicable Fund. If
cash dividends are elected with respect to a Fund's net investment income div-
idends then cash dividends must also be elected with respect to the short-term
capital gains component, if any, of the Fund's annual dividend.

The election to reinvest dividends and distributions paid by a Fund in addi-
tional Service Shares of the Fund will not affect the tax treatment of such
dividends and distributions, which will be treated as received by the share-
holder and then used to purchase Service Shares of a Fund.

PURCHASE OF SERVICE SHARES

It is expected that all direct purchasers of Service Shares of the Funds
will be Service Organizations or their nominees. Customers of Service Organi-
zations may invest in Service Shares only through Service Organizations. Serv-
ice Shares of a Fund may be purchased by a Service Organization through
Goldman Sachs at the net asset value per share next determined after receipt
from a Service Organization of an order without the imposition of a sales
load. If, by 3:00 p.m. Chicago time (4:00 p.m. New York), an order, a check or
a Federal Reserve draft is received from a Service Organization by Goldman
Sachs, the price per share will be the net asset value per share computed on
the day the purchase order or such form of payment is received. See "Net Asset
Value."

PURCHASE PROCEDURES

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

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Portfolios, Inc.--(Name of Fund)" and should be directed to "Goldman Sachs Eq-
uity Portfolios, Inc.--(Name of Fund)", c/o GSAM Shareholder Services, 4900
Sears Tower, Chicago, Illinois 60606. Payment of the proceeds of redemption of
shares purchased by check may be delayed for a period of time as described un-
der "Redemption of Service Shares."

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

OTHER PURCHASE INFORMATION

Neither Fund has 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 required account balance. A
Service Organization may effect redemptions of noncomplying accounts, and may
impose a charge for any special services rendered to its customers. Customers
should contact their Service Organization for further information concerning
such requirements and charges.

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

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

EXCHANGE PRIVILEGE

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

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fees before making an exchange. Under the telephone exchange privilege, Serv-
ice Shares may be exchanged among accounts with different names, addresses and
social security or other taxpayer identification numbers only if the exchange
request is in writing and is received in accordance with the procedures set
forth under "Redemptions of Service Shares."

In times of drastic economic or market changes the telephone exchange privi-
lege may be difficult to implement. In an effort to prevent unauthorized or
fraudulent exchanges by telephone, Goldman Sachs employs reasonable procedures
as set forth under "Redemption of Service Shares" to confirm that such in-
structions are genuine. For federal income tax purposes, an exchange is
treated as a sale of the shares surrendered in the exchange on which an in-
vestor may realize a gain or loss, followed by a purchase of Service Shares,
or units received in the exchange. The exchange privilege may be modified or
withdrawn at any time on sixty (60) days' written notice to Service Sharehold-
ers and is subject to certain limitations. See "Purchase of Service Shares."

REDEMPTION OF SERVICE SHARES

Each Fund will redeem its Service Shares upon request of a Service Share-
holder on any Business Day at the net asset value next determined after the
receipt by the Transfer Agent of such request in proper form. See "Net Asset
Value." If Service Shares to be redeemed were recently purchased by check, a
Fund may delay transmittal of redemption proceeds until such time as it has
assured itself that good funds have been collected for the purchase of such
Service Shares. This may take up to fifteen (15) days.

A Service Organization may request redemptions by telephone if the optional
telephone redemption privilege is elected on the Account Information Form. It
may be difficult to implement redemptions by telephone in times of drastic
economic or market changes. In an effort to prevent unauthorized or fraudulent
redemption or exchange requests by telephone, Goldman Sachs employs reasonable
procedures specified by the Company to confirm that such instructions are
genuine. Among other things, any redemption request in excess of a certain
minimum size that requires money to go to an account or address other than
that designated on the Account Information Form must be in writing and signed
by an authorized person designated on the Account Information Form. Any such
written request is also confirmed by telephone with both the requesting party
and the designated bank account to verify instructions. Exchanges among
accounts with different names, addresses and social security or other taxpayer
identification numbers must be in writing and signed by an authorized person
designated on the Account Information Form. Other procedures may be
implemented from time to time. If reasonable procedures are not implemented,
the Company may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither the Funds, the Company nor Goldman
Sachs will be responsible for the authenticity of redemption or exchange
instructions received by telephone. If Goldman Sachs receives a redemption
request by 3:00 p.m. Chicago time, the Service Shares to be redeemed earn
dividends with respect to the day the request is received.

Each Fund will arrange for the proceeds of redemptions effected by any means
to be wired to the recordholder of Service Shares or if the recordholder so
elects in writing, by check. Redemption proceeds will normally be wired on the
next Business Day in Federal Funds (for a total one-day delay),

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but may be paid up to seven (7) days after receipt of a properly executed
redemption request. Wiring of redemption proceeds may be delayed one
additional Business Day if the Federal Reserve Bank is closed on the day
redemption proceeds would ordinarily be wired. Once wire transfer instructions
have been given by Goldman Sachs, neither a Fund, the Company nor Goldman
Sachs assumes any further responsibility for the performance of intermediaries
or the customer's Service Organization in the transfer process. If a problem
with such performance arises, the customer should deal directly with such
intermediaries or Service Organization. With respect to redemption proceeds
paid by check, a check for the redemption proceeds will normally be mailed to
the address of record within 5 Business Days of receipt of a properly executed
redemption request.

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

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

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