Microsoft Word 11.0.6568;77E): Legal Proceedings

         On April 2, 2004, Lois Burke, a plaintiff identifying herself as a
shareholder of the Goldman Sachs Internet Tollkeeper Fund, filed a purported
class and derivative action lawsuit in the United States District Court for the
Southern District of New York against The Goldman Sachs Group, Inc. ("GSG"),
Goldman Sachs Asset Management, L.P. ("GSAM"), the Trustees and Officers of the
Goldman Sachs Trust (the "Trust"), and John Doe Defendants. In addition, the
Trust's Goldman Sachs Balanced Fund, Goldman Sachs Concentrated Growth Fund,
Goldman Sachs Small Cap Value Fund, Goldman Sachs Mid Cap Value Fund, Goldman
Sachs Growth Opportunities Fund, Goldman Sachs Strategic Growth Fund, Goldman
Sachs Capital Growth Fund, Goldman Sachs Research Select Fund, Goldman Sachs
Large Cap Value Fund, Goldman Sachs Growth and Income Fund, Goldman Sachs
Structured Small Cap Equity Fund (formerly, Goldman Sachs CORE Small Cap Equity
Fund), Goldman Sachs Structured Large Cap Growth Fund (formerly, Goldman Sachs
CORE Large Cap Growth Fund), Goldman Sachs Structured Large Cap Value Fund
(formerly, Goldman Sachs CORE Large Cap Value Fund), Goldman Sachs Structured
U.S. Equity Fund (formerly, Goldman Sachs CORE U.S. Equity Fund), Goldman Sachs
Asia Growth Fund, Goldman Sachs Emerging Markets Equity Fund, Goldman Sachs
International Growth Opportunities Fund, Goldman Sachs Japanese Equity Fund,
Goldman Sachs European Equity Fund, Goldman Sachs International Equity Fund,
Goldman Sachs Structured International Equity Fund (formerly, Goldman Sachs CORE
International Equity Fund), Goldman Sachs Balanced Strategy Portfolio, Goldman
Sachs Growth and Income Strategy Portfolio, Goldman Sachs Growth Strategy
Portfolio, Goldman Sachs Aggressive Growth Strategy Portfolio, Goldman Sachs
High Yield Fund, Goldman Sachs High Yield Municipal Fund, Goldman Sachs Global
Income Fund, Goldman Sachs Core Fixed Income Fund, Goldman Sachs Municipal
Income Fund, Goldman Sachs Government Income Fund, Goldman Sachs Short Duration
Tax-Free Fund, Goldman Sachs Short Duration Government Fund, Goldman Sachs
Ultra-Short Duration Government Fund, Goldman Sachs Enhanced Income Fund,
Goldman Sachs Internet Tollkeeper Fund, Goldman Sachs Structured Tax-Managed
Equity Fund (formerly, Goldman Sachs CORE Tax-Managed Equity Fund), Goldman
Sachs Real Estate Securities Fund, Goldman Sachs ILA Prime Obligations
Portfolio, Goldman Sachs ILA Tax-Exempt Diversified Portfolio (collectively, the
"Trust Funds") were named as nominal defendants.

On April 19 and May 6, 2004, two additional class and derivative action lawsuits
containing substantially similar allegations and requests for redress were filed
by plaintiffs Marianne Gooris, Henry C. Gross, Joseph P. Porkorny and Diana D.
Porkorny and Maurice and Arlene Rosenthal in the United States District Court
for the Southern District of New York against defendants GSC, GSAM, the Trustees
and Officers of the Trust and John Doe Defendants. The Trust Funds were also
named as nominal defendants.

On June 29, 2004, the three complaints were consolidated into one action, In re
Goldman Sachs Mutual Funds Fee Litigation. On November 17, 2004, the plaintiffs
filed a consolidated amended complaint against GSG, GSAM, Goldman Sachs Asset
Management International ("GSAMI"), Goldman, Sachs & Co., the Trust, Goldman
Sachs Variable Insurance Trust ("GSVIT"), the Trustees and Officers of the Trust
and GSVIT and John Doe Defendants (collectively, the Defendants") in the United
States District Court for the Southern District of New York. The Trust Funds and
the corresponding investment portfolios of GSVIT were also named as nominal
defendants in the amended complaint (collectively, the "Goldman Sachs Funds").
Plaintiffs filed a second amended consolidated complaint on April 15, 2005.

The second amended consolidated complaint, which is brought on behalf of all
persons or entities who held shares in the Goldman Sachs Funds between April 2,
1999 and January 9, 2004, inclusive (the "Class Period"), asserts claims
involving (i) violations of the Investment Company Act of 1940 (the "Investment
Company Act") and the Investment Advisers Act of 1940, (ii) common law breach of
fiduciary duty and (iii) unjust enrichment. The complaint alleges, among other
things, that during the Class Period, the Defendants made improper and excessive
brokerage commission and other payments to brokers that sold shares of the
Goldman Sachs Funds and omitted statements of fact in registration statements
and reports filed pursuant to the Investment Company Act which were necessary to
prevent such registration statements and reports from being materially false and
misleading. In addition, the complaint alleges that the Goldman Sachs Funds paid
excessive and improper investment advisory fees to GSAM and GSAMI. The complaint
further alleges that GSAM and GSAMI used Rule 12b-1 fees for improper purposes
and made improper use of soft dollars. The complaint further alleges that the
Trust's Officers and Trustees breached their fiduciary duties by, among other
things, permitting the payments to be made in connection with the foregoing. The
plaintiffs in the cases are seeking compensatory damages; rescission of GSAM's
and GSAMI's investment advisory agreement and return of fees paid; an accounting
of all Goldman Sachs Funds-related fees, commissions and soft dollar payments;
restitution of all unlawfully or discriminatorily obtained fees and charges; and
reasonable costs and expenses, including counsel fees and expert fees. On
January 13, 2006, the U.S. District Court dismissed all claims against the
Defendants. It is possible that the plaintiffs may appeal this decision.

Based on currently available information, GSAM and GSAMI believe that the
likelihood that the pending purported class and derivate action lawsuit will
have a material adverse financial impact on the Goldman Sachs Funds is remote,
and the pending action is not likely to materially affect their ability to
provide investment management services to its clients, including the Goldman
Sachs Funds.