Goldman Sachs Reports Record Earnings Per Common Share of $11.21 for 2005; Fourth Quarter Record Earnings Per Common Share Were $3.35

The Goldman Sachs Group, Inc. (NYSE: GS) today reportednet earnings of $5.63 billion for the year ended November 25, 2005.Diluted earnings per common share were $11.21, an increase of 26%compared with $8.92 for the year ended November 26, 2004. Return onaverage tangible common shareholders' equity (1) was 27.6% and returnon average common shareholders' equity was 21.8% for 2005.
Fourth quarter net earnings were $1.63 billion. Diluted earnings per
common share were $3.35 compared with $2.36 for the same 2004 quarter
and $3.25 for the third quarter of 2005. Annualized return on average
tangible common shareholders' equity (1) was 31.7% and annualized
return on average common shareholders' equity was 25.2% for the fourth
quarter.

Annual Business Highlights

-- Goldman Sachs achieved its best annual results in 2005,
generating record net revenues, net earnings and diluted
earnings per common share.

-- Investment Banking generated net revenues of $3.67 billion,
its best annual performance in four years.

-- The firm continued its leadership in global advisory and
equity underwriting for the calendar year-to-date, ranking
first in both worldwide announced and completed mergers and
acquisitions as well as worldwide equity and equity-related
offerings. (2)

-- Fixed Income, Currency and Commodities (FICC) generated record
net revenues of $8.48 billion, 16% higher than the previous
record set in 2004.

-- Equities generated record net revenues of $5.65 billion, 21%
higher than 2004.

-- Asset Management achieved record net revenues of $2.96
billion, 16% higher than the previous record set in 2004.
Assets under management increased 18% to a record $532
billion, with net asset inflows of $63 billion in 2005.

-- Securities Services achieved record net revenues of $1.79
billion, 38% higher than the previous record set in 2004.

______________

"We are very pleased to report another record year for the firm, with
virtually every area producing strong results," said Henry M. Paulson,
Jr., Chairman and Chief Executive Officer. "Looking forward, we are
optimistic that global growth will continue to create opportunities
for our clients, and we will remain intensely focused on serving their
needs."

Net Revenues

Investment Banking
------------------

Full Year
---------
Net revenues in Investment Banking were $3.67 billion for the year, 9%
higher than 2004. Net revenues in Financial Advisory were $1.91
billion, 10% higher than 2004, primarily reflecting an increase in
industry-wide completed mergers and acquisitions. Net revenues in the
firm's Underwriting business were $1.77 billion, 8% higher than 2004,
reflecting higher net revenues in debt underwriting, primarily due to
an increase in leveraged finance and mortgage activity, partially
offset by lower net revenues in equity underwriting. The firm's
investment banking backlog was significantly higher at year end than
at the end of 2004.

Fourth Quarter
--------------
Net revenues in Investment Banking were $948 million, 23% higher than
the fourth quarter of 2004 and 7% lower than the third quarter of
2005. Net revenues in Financial Advisory were $546 million, 32% higher
than the fourth quarter of 2004, primarily reflecting an increase in
industry-wide completed mergers and acquisitions. Net revenues in the
firm's Underwriting business were $402 million, 14% higher than the
fourth quarter of 2004, reflecting higher net revenues in equity
underwriting and, to a lesser extent, debt underwriting. The firm's
investment banking backlog increased significantly during the quarter.

Trading and Principal Investments
---------------------------------

Full Year
---------
Net revenues in Trading and Principal Investments were $16.36 billion
for the year, 23% higher than 2004.

Net revenues in FICC were $8.48 billion for the year, 16% higher than
2004, primarily reflecting significantly higher net revenues in credit
products (which includes distressed investing) and, to a lesser
extent, interest rate products and currencies. Net revenues in
commodities and mortgages were strong, but essentially unchanged
compared with 2004. During 2005, FICC operated in an environment
generally characterized by strong customer-driven activity, tight, but
volatile, credit spreads, higher energy prices and a flatter yield
curve.

Net revenues in Equities were $5.65 billion for the year, 21% higher
than 2004, reflecting significantly higher net revenues in the firm's
customer franchise and principal strategies businesses. The increase
in the firm's customer franchise businesses reflected improved results
in derivatives and shares, particularly in Europe and Asia, as well as
in convertibles. In addition, results in principal strategies
reflected strength across all regions. During 2005, Equities operated
in an environment characterized by generally higher equity prices,
improved customer-driven activity and continued low levels of market
volatility.

Principal Investments recorded net revenues of $2.23 billion, due to a
$1.48 billion gain related to the firm's investment in the convertible
preferred stock of Sumitomo Mitsui Financial Group, Inc. (SMFG) and
$753 million in gains and overrides from other corporate and, to a
lesser extent, real estate principal investments.

Fourth Quarter
--------------
Net revenues in Trading and Principal Investments were $4.10 billion,
43% higher than the fourth quarter of 2004 and 19% lower than the
third quarter of 2005.

Net revenues in FICC were $1.85 billion, 27% higher than the fourth
quarter of 2004, primarily due to higher net revenues in interest rate
products, credit products and, to a lesser extent, mortgages. Net
revenues in commodities and currencies were strong, but lower compared
with the fourth quarter of 2004. During the quarter, FICC operated in
an environment characterized by solid customer-driven activity,
generally narrow credit spreads, a flat yield curve and generally high
energy prices.

Net revenues in Equities were $1.40 billion, 37% higher than the
fourth quarter of 2004, due to higher net revenues in the firm's
customer franchise businesses, partially offset by lower net revenues
in principal strategies. The increase in the firm's customer franchise
businesses primarily reflected higher net revenues in derivatives,
shares and convertibles. During the quarter, Equities operated in an
environment characterized by strong customer-driven activity and
higher equity prices. In addition, market volatility levels increased,
but remained low.

Principal Investments recorded net revenues of $852 million,
reflecting a $723 million gain related to the firm's investment in
SMFG and $129 million in gains and overrides from other corporate and
real estate principal investments.

Asset Management and Securities Services
----------------------------------------

Full Year
---------
Net revenues in Asset Management and Securities Services were $4.75
billion for the year, 23% higher than 2004.

Asset Management net revenues were $2.96 billion for the year, 16%
higher than 2004, primarily due to higher management fees, driven by
growth in assets under management. During the year, assets under
management increased 18%, reflecting net asset inflows of $63 billion
across all asset classes as well as market appreciation of $17
billion, primarily in equity assets.

Securities Services net revenues were $1.79 billion for the year, 38%
higher than 2004, primarily reflecting significantly higher global
customer balances in securities lending and margin lending.

Fourth Quarter
--------------
Net revenues in Asset Management and Securities Services were $1.23
billion, 32% higher than the fourth quarter of 2004 and 2% higher than
the third quarter of 2005.

Asset Management net revenues were $787 million, 32% higher than the
fourth quarter of 2004, reflecting higher management fees, driven by
growth in assets under management, and higher incentive fees. During
the quarter, assets under management increased 2%, reflecting net
asset inflows of $8 billion, primarily in equity and money market
assets as well as market appreciation of $4 billion, primarily in
equity assets.

Securities Services net revenues were $447 million, 32% higher than
the fourth quarter of 2004, as the firm's prime brokerage business
continued to generate strong results, primarily reflecting
significantly higher global customer balances in securities lending
and margin lending.

Expenses

Operating expenses were $16.51 billion for 2005, 19% higher than 2004.

Compensation and Benefits
-------------------------

Compensation and benefits expenses were $11.69 billion for 2005, 21%
higher than 2004. The ratio of compensation and benefits to net
revenues for 2005 was 47.2% compared with 46.7% (3) for 2004.
Employment levels increased 8% compared with the end of 2004 and 2%
during the fourth quarter.

Non-Compensation Expenses
-------------------------

Full Year
---------
Non-compensation expenses were $4.82 billion for 2005, 14% higher than
2004. Excluding non-compensation expenses related to consolidated
entities held for investment purposes (4), non-compensation expenses
were 8% higher than 2004, primarily due to higher brokerage, clearing
and exchange fees, reflecting higher transaction volumes in FICC and
Equities, increased professional fees, reflecting higher legal and
consulting fees, and higher other expenses, primarily reflecting
increased levels of business activity and higher charitable
contributions.

Non-compensation expenses in 2005 included $37 million of net
provisions for litigation and regulatory proceedings (included in
other expenses) and $36 million of real estate costs associated with
the relocation of office space (included in occupancy).
Non-compensation expenses in 2004 included $103 million of net
provisions for litigation and regulatory proceedings, $62 million in
connection with the firm's establishment of a joint venture in China
(included in market development) and $41 million of real estate exit
costs associated with reductions in the firm's office space (included
in occupancy and depreciation and amortization).

Fourth Quarter
--------------
Non-compensation expenses were $1.37 billion, 9% higher than the
fourth quarter of 2004 and 10% higher than the third quarter of 2005.
Excluding non-compensation expenses related to consolidated entities
held for investment purposes (4), non-compensation expenses were 2%
higher than the same prior year period, primarily due to higher
brokerage, clearing and exchange fees, reflecting higher transaction
volumes in Equities and FICC, and increased professional fees,
reflecting higher consulting and legal fees.

Non-compensation expenses in the fourth quarter of 2005 included $6
million of net provisions for litigation and regulatory proceedings
(included in other expenses). Non-compensation expenses in the fourth
quarter of 2004 included $62 million in connection with the firm's
establishment of a joint venture in China (included in market
development), $40 million of net provisions for litigation and
regulatory proceedings and $4 million of real estate exit costs
associated with the relocation of office space (included in occupancy
and depreciation and amortization).

Provision For Taxes
-------------------

The effective income tax rate was 32.0% for 2005, up from 31.1% for
the first nine months of 2005. Excluding the impact of audit
settlements in 2005, the effective income tax rate for 2005 would have
been 33.3%, up from 32.9% for the first nine months of 2005 and 31.8%
for 2004. Excluding the impact of audit settlements, the change in the
effective income tax rate compared with 2004 was primarily due to a
lower benefit from tax credits in 2005.

Capital

As of November 25, 2005, total capital was $128.01 billion, consisting
of $28.00 billion in total shareholders' equity (common equity of
$26.25 billion and preferred equity of $1.75 billion) and $100.01
billion in long-term borrowings. (5) Book value per common share was
$57.02 based on common shares outstanding, including restricted stock
units granted to employees with no future service requirements, of
460.4 million at year end. Tangible book value per common share was
$45.72. (1)

On October 31, 2005, The Goldman Sachs Group, Inc. issued $800 million
of perpetual 6.20% Non-Cumulative Preferred Stock, Series B (Series B
Preferred Stock) and $200 million of perpetual Floating Rate
Non-Cumulative Preferred Stock, Series C (Series C Preferred Stock).

The firm repurchased 63.7 million shares of its common stock at an
average price of $111.57 per share during 2005, including 20.5 million
shares of its common stock at an average price of $120.45 per share in
the fourth quarter. The remaining share authorization under the firm's
existing common stock repurchase program is 42.7 million shares.

Dividends

The Board of Directors of The Goldman Sachs Group, Inc. (the Board)
declared a dividend of $0.25 per common share to be paid on February
23, 2006 to common shareholders of record on January 24, 2006. The
Board also declared dividends of $323.28, $430.56 and $353.68 per
share of Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock, respectively (represented by depositary shares,
each representing a 1/1000th interest in a share of preferred stock),
to be paid on February 10, 2006 to preferred shareholders of record on
January 26, 2006.

______________

Goldman Sachs is a leading global investment banking, securities and
investment management firm that provides a wide range of services
worldwide to a substantial and diversified client base that includes
corporations, financial institutions, governments and high net worth
individuals. Founded in 1869, it is one of the oldest and largest
investment banking firms. The firm is headquartered in New York and
maintains offices in London, Frankfurt, Tokyo, Hong Kong and other
major financial centers around the world.

Cautionary Note Regarding Forward-Looking Statements
----------------------------------------------------

This press release contains "forward-looking statements." These
statements are not historical facts but instead represent only the
firm's belief regarding future events, many of which, by their nature,
are inherently uncertain and outside of the firm's control. It is
possible that the firm's actual results and financial condition may
differ, possibly materially, from the anticipated results and
financial condition indicated in these forward-looking statements. For
a discussion of some of the risks and important factors that could
affect the firm's future results, see "Business - Certain Factors That
May Affect Our Business" in Part I, Item 1 of the firm's Annual Report
on Form 10-K for the fiscal year ended November 26, 2004.

Statements about the firm's investment banking transaction backlog
also may constitute forward-looking statements. Such statements are
subject to the risk that the terms of these transactions may be
modified or that they may not be completed at all; therefore, the net
revenues that the firm expects to earn from these transactions may
differ, possibly materially, from those currently expected. Important
factors that could result in a modification of the terms of a
transaction or a transaction not being completed include, in the case
of underwriting transactions, a decline in general economic
conditions, volatility in the securities markets generally or an
adverse development with respect to the issuer of the securities and,
in the case of financial advisory transactions, a decline in the
securities markets, an adverse development with respect to a party to
the transaction or a failure to obtain a required regulatory approval.
For a discussion of other important factors that could adversely
affect the firm's investment banking transactions, see "Business -
Certain Factors That May Affect Our Business" in Part I, Item 1 of the
firm's Annual Report on Form 10-K for the fiscal year ended November
26, 2004.

Conference Call
---------------

A conference call to discuss the firm's results, outlook and related
matters will be held at 11:00 am (ET). The call will be open to the
public. Members of the public who would like to listen to the
conference call should dial 1-888-281-7154 (U.S. domestic) and
1-706-679-5627 (international). The number should be dialed at least
10 minutes prior to the start of the conference call. The conference
call will also be accessible as an audio webcast through the Investor
Relations section of the firm's Web site,
http://www.gs.com/our_firm/investor_relations/. There is no charge to
access the call. For those unable to listen to the live broadcast, a
replay will be available on the firm's Web site or by dialing
1-800-642-1687 (U.S. domestic) or 1-706-645-9291 (international)
passcode number 2915286, beginning approximately two hours after the
event. Please direct any questions regarding obtaining access to the
conference call to Goldman Sachs Investor Relations, via e-mail, at
gs-investor-relations@gs.com.


THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SEGMENT NET REVENUES
(UNAUDITED)
$ in millions

Year Ended % Change From
------------------- -------------
Nov. 25, Nov. 26, Nov. 26,
2005 2004 2004
--------- --------- -------------

Investment Banking
------------------
Financial Advisory $ 1,905 $ 1,737 10 %

Equity underwriting 704 819 (14)
Debt underwriting 1,062 818 30
--------- --------- -------------
Total Underwriting 1,766 1,637 8

--------- --------- -------------
Total Investment Banking 3,671 3,374 9
--------- --------- -------------

Trading and Principal Investments
---------------------------------
FICC 8,484 7,322 16

Equities trading 2,675 1,969 36
Equities commissions 2,975 2,704 10
--------- --------- -------------
Total Equities 5,650 4,673 21

SMFG 1,475 771 91
Other corporate and real estate
gains and losses 569 456 25
Overrides 184 105 75
--------- --------- -------------
Total Principal Investments 2,228 1,332 67

--------- --------- -------------
Total Trading and Principal
Investments 16,362 13,327 23
--------- --------- -------------

Asset Management and
Securities Services
--------------------
Asset Management 2,956 2,553 16

Securities Services 1,793 1,296 38
--------- --------- -------------
Total Asset Management and
Securities Services 4,749 3,849 23
--------- --------- -------------

--------- --------- -------------
Total net revenues $24,782 $20,550 21
========= ========= =============


THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SEGMENT NET REVENUES
(UNAUDITED)
$ in millions

Three Months Ended % Change From
-------------------------- -----------------
Nov. 25, Aug. 26, Nov. 26, Aug. 26, Nov. 26,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------
Investment Banking
------------------
Financial Advisory $ 546 $ 559 $ 414 (2) % 32 %

Equity underwriting 205 199 169 3 21
Debt underwriting 197 257 185 (23) 6
-------- -------- -------- -------- --------
Total Underwriting 402 456 354 (12) 14

-------- -------- -------- -------- --------
Total Investment Banking 948 1,015 768 (7) 23
-------- -------- -------- -------- --------

Trading and Principal
Investments
---------------------
FICC 1,850 2,626 1,459 (30) 27

Equities trading 602 872 370 (31) 63
Equities commissions 800 721 655 11 22
-------- -------- -------- -------- --------
Total Equities 1,402 1,593 1,025 (12) 37

SMFG 723 498 254 45 185
Other corporate and real
estate gains and losses 109 205 126 (47) (13)
Overrides 20 140 15 (86) 33
-------- -------- -------- -------- --------
Total Principal
Investments 852 843 395 1 116

-------- -------- -------- -------- --------
Total Trading and
Principal Investments 4,104 5,062 2,879 (19) 43
-------- -------- -------- -------- --------


Asset Management and
Securities Services
--------------------
Asset Management 787 731 595 8 32

Securities Services 447 477 339 (6) 32
-------- -------- -------- -------- --------
Total Asset Management
and Securities Services 1,234 1,208 934 2 32
-------- -------- -------- -------- --------

-------- -------- -------- -------- --------
Total net revenues $6,286 $7,285 $4,581 (14) 37
======== ======== ======== ======== ========


THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
In millions, except per share amounts

Year Ended % Change From
------------------- -------------
Nov. 25, Nov. 26, Nov. 26,
2005 2004 2004
--------- --------- -------------

Revenues
Investment banking $ 3,599 $ 3,286 10 %
Trading and principal investments 15,452 11,984 29
Asset management and securities
services 3,090 2,655 16
Interest income 21,250 11,914 78
--------- --------- -------------
Total revenues 43,391 29,839 45

Interest expense 18,153 8,888 104
Cost of power generation (6) 456 401 14
--------- --------- -------------
Revenues, net of interest
expense and cost of power
generation 24,782 20,550 21
--------- --------- -------------

Operating expenses
Compensation and benefits (3) 11,688 9,652 21

Brokerage, clearing and exchange
fees 1,109 952 16
Market development 378 374 1
Communications and technology 490 461 6
Depreciation and amortization 501 499 -
Amortization of identifiable
intangible assets 124 125 (1)
Occupancy 728 646 13
Professional fees 475 338 41
Other expenses 1,016 827 23
--------- --------- -------------
Total non-compensation expenses 4,821 4,222 14

--------- --------- -------------
Total operating expenses 16,509 13,874 19
--------- --------- -------------

Pre-tax earnings 8,273 6,676 24
Provision for taxes 2,647 2,123 25
--------- --------- -------------
Net earnings 5,626 4,553 24

Preferred stock dividend 17 - N.M.
--------- --------- -------------
Net earnings applicable to common
shareholders $ 5,609 $ 4,553 23
========= ========= =============

Earnings per common share
Basic $ 11.73 $ 9.30 26
Diluted 11.21 8.92 26

Average common shares outstanding
Basic 478.1 489.5 (2)
Diluted 500.2 510.5 (2)

Selected Data
Ratio of compensation and benefits
to net revenues 47.2% 46.7% (3)


THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
In millions, except per share amounts and employees

Three Months Ended % Change From
-------------------------- -----------------
Nov. 25, Aug. 26, Nov. 26, Aug. 26, Nov. 26,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------

Revenues
Investment banking $ 932 $ 998 $ 750 (7) % 24 %
Trading and principal
investments 3,907 4,842 2,332 (19) 68
Asset management and
securities services 820 772 619 6 32
Interest income 6,486 5,721 3,754 13 73
-------- -------- -------- -------- --------
Total revenues 12,145 12,333 7,455 (2) 63

Interest expense 5,742 4,940 2,821 16 104
Cost of power
generation (6) 117 108 53 8 121
-------- -------- -------- -------- --------
Revenues, net of
interest expense and
cost of power generation 6,286 7,285 4,581 (14) 37
-------- -------- -------- -------- --------

Operating expenses
Compensation and
benefits (3) 2,440 3,642 1,617 (33) 51

Brokerage, clearing and
exchange fees 312 271 239 15 31
Market development 110 92 160 20 (31)
Communications and
technology 125 124 118 1 6
Depreciation and
amortization 130 125 126 4 3
Amortization of
identifiable
intangible assets 31 31 31 - -
Occupancy 194 200 163 (3) 19
Professional fees 153 117 101 31 51
Other expenses 312 278 312 12 -
-------- -------- -------- -------- --------
Total non-compensation
expenses 1,367 1,238 1,250 10 9

-------- -------- -------- -------- --------
Total operating expenses 3,807 4,880 2,867 (22) 33
-------- -------- -------- -------- --------

Pre-tax earnings 2,479 2,405 1,714 3 45
Provision for taxes 847 788 520 7 63
-------- -------- -------- -------- --------
Net earnings 1,632 1,617 1,194 1 37

Preferred stock dividend 8 9 - (1) N.M.
-------- -------- -------- -------- --------
Net earnings applicable
to common shareholders $ 1,624 $ 1,608 $ 1,194 1 36
======== ======== ======== ======== ========

Earnings per common share
Basic $ 3.53 $ 3.40 $ 2.44 4 45
Diluted 3.35 3.25 2.36 3 42

Average common shares
outstanding
Basic 459.4 473.3 488.6 (3) (6)
Diluted 485.2 494.2 506.2 (2) (4)

Selected Data
Employees at period
end (7) (8) 22,425 22,032 20,722 2 8
Ratio of compensation and
benefits to net revenues 38.8% 50.0% 35.1% (3)



NON-COMPENSATION EXPENSES
(UNAUDITED)
$ in millions

Year Ended % Change From
------------------- -------------
Nov. 25, Nov. 26, Nov. 26,
2005 2004 2004
--------- --------- -------------

Non-compensation expenses of
consolidated investments (4) $ 265 $ 21 N.M. %

Non-compensation expenses
excluding consolidated
investments
Brokerage, clearing and exchange
fees 1,109 952 16
Market development 361 374 (3)
Communications and technology 487 461 6
Depreciation and amortization 467 499 (6)
Amortization of identifiable
intangible assets 124 125 (1)
Occupancy 674 646 4
Professional fees 468 338 38
Other expenses 866 806 7
--------- --------- -------------
Subtotal 4,556 4,201 8
--------- --------- -------------
Total non-compensation
expenses, as reported $ 4,821 $ 4,222 14
========= ========= =============


Three Months Ended % Change From
-------------------------- -----------------
Nov. 25, Aug. 26, Nov. 26, Aug. 26, Nov. 26,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------

Non-compensation
expenses of
consolidated
investments (4) $ 101 $ 100 $ 7 1 % N.M. %


Non-compensation
expenses excluding
consolidated
investments
Brokerage, clearing and
exchange fees 312 271 239 15 31
Market development 103 86 160 20 (36)
Communications and
technology 124 122 118 2 5
Depreciation and
amortization 113 114 126 (1) (10)
Amortization of
identifiable
intangible assets 31 31 31 - -
Occupancy 166 186 163 (11) 2
Professional fees 150 114 101 32 49
Other expenses 267 214 305 25 (12)
-------- -------- -------- -------- --------
Subtotal 1,266 1,138 1,243 11 2

-------- -------- -------- -------- --------
Total non-compensation
expenses, as reported $1,367 $1,238 $1,250 10 9
======== ======== ======== ======== ========


THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(UNAUDITED)

Average Daily VaR (9)
$ in millions

Three Months Ended Twelve Months Ended
-------------------------- -------------------
Nov. 25, Aug. 26, Nov. 26, Nov. 25, Nov. 26,
2005 2005 2004 2005 2004
-------- -------- -------- -------- ----------
Risk Categories
Interest rates $ 45 $ 38 $ 30 $ 37 $ 36
Equity prices 44 40 24 34 32
Currency rates 15 19 16 17 20
Commodity prices 25 25 27 26 20
Diversification
effect (10) (49) (46) (40) (44) (41)
-------- -------- -------- -------- --------
Total $ 80 $ 76 $ 57 $ 70 $ 67
======== ======== ======== ======== ========


Assets Under Management (11)
$ in billions

As of % Change From
-------------------------- -----------------
Nov. 30, Aug. 31, Nov. 30, Aug. 31, Nov. 30,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------

Money markets $ 101 $ 98 $ 90 3 % 12 %
Fixed income and
currency 159 161 139 (1) 14
Equity 158 150 126 5 25
Alternative investments 114 111 97 3 18
-------- -------- -------- -------- --------
Total $ 532 $ 520 $ 452 2 18
======== ======== ======== ======== ========


Three Months Ended Year Ended
-------------------------- -----------------
Nov. 30, Aug. 31, Nov. 30, Nov. 30, Nov. 30,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------

Balance, beginning of
period $ 520 $ 490 $ 426 $ 452 $ 373

Net asset inflows /
(outflows)
Money markets 3 - (5) 11 1
Fixed income and
currency - 6 6 18 14
Equity 4 6 3 20 13
Alternative investments 1 6 5 14 24
-------- -------- -------- -------- --------
Total net asset
inflows / (outflows) 8 18 9 63 52

Net market appreciation
/ (depreciation) 4 12 17 17 27

-------- -------- -------- -------- --------
Balance, end of period $ 532 $ 520 $ 452 $ 532 $ 452
======== ======== ======== ======== ========


Principal Investments
$ in millions

As of November 25, 2005
-----------------------------------
Corporate Real Estate Total
----------- ----------- -----------

Private $ 1,538 $ 716 $ 2,254
Public 185 29 214
----------- ----------- -----------
Subtotal 1,723 745 2,468
SMFG convertible preferred
stock (12) 4,058 - 4,058
----------- ----------- -----------
Total $ 5,781 $ 745 $ 6,526
=========== =========== ===========


Footnotes

(1) Tangible common shareholders' equity equals total shareholders'
equity less preferred stock less goodwill and identifiable
intangible assets. Management believes that annualized return on
average tangible common shareholders' equity is a meaningful
measure of performance because it excludes the portion of the
firm's common shareholders' equity attributable to goodwill and
identifiable intangible assets. As a result, this calculation
measures corporate performance in a manner that treats underlying
businesses consistently, whether they were acquired or developed
internally. Annualized return on average tangible common
shareholders' equity is computed by dividing annualized net
earnings applicable to common shareholders by average monthly
tangible common shareholders' equity. Tangible book value per
common share is computed by dividing tangible common
shareholders' equity by the number of common shares outstanding,
including restricted stock units granted to employees with no
future service requirements. The following table sets forth a
reconciliation of total shareholders' equity to tangible common
shareholders' equity:

Average for the As of
------------------------------- ------------
Year Ended Three Months
November 25, Ended November 25, November 25,
2005 2005 2005
------------ ------------------ ------------
(unaudited, $ in millions)
Total shareholders'
equity $26,264 $26,762 $28,002
Deduct: Preferred
stock (538) (1,000) (1,750)
------------ ------------------ ------------
Common shareholders'
equity 25,726 25,762 26,252
Deduct: Goodwill and
identifiable
intangible assets (5,418) (5,271) (5,203)
------------ ------------------ ------------
Tangible common
shareholders' equity $20,308 $20,491 $21,049
============ ================== ============


(2) Thomson Financial - January 1, 2005 through November 25, 2005.

(3) Compensation and benefits includes the amortization of employee
initial public offering and acquisition awards of $3 million, $5
million and $10 million for the three months ended November 25,
2005, August 26, 2005 and November 26, 2004, and $19 million and
$61 million for the years ended November 2005 and November 2004,
respectively. For the three months and year ended November 26,
2004, the ratio of compensation and benefits to net revenues,
including the amortization of employee initial public offering
and acquisition awards, was 35.3% and 47.0%, respectively.

(4) Consolidated entities held for investment purposes includes
entities that are held strictly for capital appreciation, have a
defined exit strategy and are engaged in activities which are not
closely related to the firm's principal businesses. For example,
these investments include consolidated entities that hold real
estate assets such as golf courses and hotels in Asia, but
exclude investments in entities which primarily hold financial
assets. Management believes that it is meaningful to review
non-compensation expenses excluding expenses related to these
consolidated entities in order to evaluate trends in
non-compensation expenses for the firm's principal business
activities.

(5) Long-term borrowings includes nonrecourse debt of $13.63 billion,
consisting of $5.11 billion issued by William Street Funding
Corporation (a wholly owned subsidiary of The Goldman Sachs
Group, Inc. formed to raise funding to support loan commitments
made by another wholly owned William Street entity to
investment-grade clients) and $8.52 billion issued by
consolidated variable interest entities and other consolidated
entities. Nonrecourse debt is debt that The Goldman Sachs Group,
Inc. is not directly or indirectly obligated to repay through a
guarantee, general partnership interest or contractual
arrangement.

(6) Cost of power generation includes all of the direct costs of the
firm's consolidated power plants (e.g., fuel, operations and
maintenance) as well as the depreciation and amortization
associated with the plants and related contractual assets. Power
generation revenues are included in "Trading and principal
investments."

(7) Excludes 1,437, 1,377 and 1,206 employees as of November 2005,
August 2005 and November 2004, respectively, of Goldman Sachs'
consolidated property management and loan servicing subsidiaries.
Compensation and benefits includes $54 million, $45 million and
$42 million for the three months ended November 25, 2005, August
26, 2005 and November 26, 2004, respectively, attributable to
these subsidiaries, the majority of which is reimbursed to
Goldman Sachs by the investment funds for which these companies
manage properties and perform loan servicing. Such reimbursements
are recorded in net revenues.

(8) Excludes 7,143, 7,094 and 293 employees as of November 2005,
August 2005 and November 2004, respectively, of consolidated
entities held for investment purposes. Compensation and benefits
includes $57 million, $50 million and $3 million for the three
months ended November 25, 2005, August 26, 2005 and November 26,
2004, respectively, attributable to these consolidated entities.

(9) VaR is the potential loss in value of Goldman Sachs' trading
positions due to adverse market movements over a one-day time
horizon with a 95% confidence level. The modeling of the risk
characteristics of the firm's trading positions involves a number
of assumptions and approximations. While management believes that
these assumptions and approximations are reasonable, there is no
uniform industry methodology for estimating VaR, and different
assumptions and/or approximations could produce materially
different VaR estimates. For a further discussion of the
calculation of VaR, see Part II, Item 7A "Quantitative and
Qualitative Disclosures about Market Risk" in the firm's Annual
Report on Form 10-K for the fiscal year ended November 26, 2004.

(10) Equals the difference between total VaR and the sum of the VaRs
for the four risk categories. This effect arises because the four
market risk categories are not perfectly correlated.

(11) Substantially all assets under management are valued as of
calendar month end.

(12) Excludes an economic hedge on the unrestricted shares of common
stock underlying the investment. As of November 25, 2005, the
fair value of this hedge was $1.51 billion. Includes the impact
of foreign exchange revaluation on the investment, for which the
firm also maintains an economic hedge.