Goldman Sachs Reports Third Quarter Record Earnings Per Common Share of $3.25

The Goldman Sachs Group, Inc. (NYSE: GS) today reportednet earnings of $1.62 billion for its fiscal third quarter endedAugust 26, 2005. Diluted earnings per common share were $3.25 comparedwith $1.74 for the third quarter of 2004 and $1.71 for the secondquarter of 2005. Annualized return on average tangible commonshareholders' equity (1) was 32.0% for the third quarter of 2005 and26.2% for the first nine months of 2005. Annualized return on averagecommon shareholders' equity was 25.1% for the third quarter of 2005and 20.7% for the first nine months of 2005.

Business Highlights

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

-- The firm currently ranks first in worldwide announced mergers
and acquisitions, equity and equity-related offerings and
public common stock offerings for the calendar year-to-date.
(2)

-- Investment Banking generated net revenues of $1.02 billion,
its best quarterly performance in four years.

-- Fixed Income, Currency and Commodities (FICC) generated record
quarterly net revenues of $2.63 billion, reflecting strength
across the franchise.

-- Equities produced net revenues of $1.59 billion, 75% above
last year's third quarter, reflecting strong performance
across all major businesses.

-- Asset Management generated net revenues of $731 million, 23%
above last year's third quarter. Assets under management
increased 22% from a year ago to a record $520 billion, with
net asset inflows of $18 billion during the quarter.

-- Securities Services achieved its second best quarter,
producing net revenues of $477 million.

______________

"This quarter's record results reflect the increasing confidence
of our corporate and investor clients and the success our people have
had in serving their needs," said Henry M. Paulson, Jr., Chairman and
Chief Executive Officer. "During the third quarter, we saw increasing
activity levels across all of our major businesses and believe overall
market conditions support a generally optimistic outlook."

Net Revenues

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

Net revenues in Investment Banking were $1.02 billion, 14% higher
than the third quarter of 2004 and 25% higher than the second quarter
of 2005. Net revenues in Financial Advisory increased significantly to
$559 million, which was 24% higher than the third quarter of 2004,
primarily reflecting an increase in industry-wide completed mergers
and acquisitions. Net revenues in the firm's Underwriting business
were $456 million, 4% higher than the third quarter of 2004,
reflecting higher net revenues in debt underwriting, primarily due to
an increase in investment-grade issuances, partially offset by lower
net revenues in equity underwriting. The firm's investment banking
backlog decreased during the quarter, but was higher than at the end
of 2004.

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

Net revenues in Trading and Principal Investments were $5.06
billion, 88% higher than the third quarter of 2004 and 80% higher than
the second quarter of 2005.

Net revenues in FICC were $2.63 billion, 41% higher than the third
quarter of 2004. The business operated in a favorable environment as
credit markets strengthened and customer-driven activity was strong.
The increase in net revenues was driven by significantly higher net
revenues in credit products as well as currencies. Net revenues were
also higher in mortgages, while results in commodities and interest
rate products were strong, but lower than the third quarter of 2004.

Net revenues in Equities were $1.59 billion, 75% higher than the
third quarter of 2004, as the business operated in a favorable
environment, characterized by strong customer-driven activity and
generally higher equity prices. Net revenues were significantly higher
in the firm's principal strategies and customer franchise businesses.
Results in principal strategies reflected strong performance across
all regions and most sectors, while net revenues in the firm's
customer franchise businesses reflected improved results in shares,
derivatives and convertibles.

Principal Investments recorded net revenues of $843 million,
reflecting a $498 million gain (as compared with a loss of $245
million in the third quarter of 2004) related to the firm's investment
in the convertible preferred stock of Sumitomo Mitsui Financial Group,
Inc. (SMFG) and $345 million in gains and overrides from other
corporate and, to a lesser extent, real estate principal investments.

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

Net revenues in Asset Management and Securities Services were
$1.21 billion, 28% higher than the third quarter of 2004 and 3% higher
than the second quarter of 2005.

Asset Management net revenues were $731 million, 23% higher than the
third quarter of 2004, reflecting higher management fees, driven by
growth in assets under management, as well as higher incentive fees.
During the quarter, assets under management increased 6%, reflecting
net asset inflows of $18 billion in equity, alternative investment and
fixed income assets as well as market appreciation of $12 billion,
primarily in equity assets.

Securities Services net revenues were $477 million, 38% higher
than the third 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 $4.88 billion, 51% higher than the third
quarter of 2004 and 37% higher than the second quarter of 2005.

Compensation Expenses
---------------------

Compensation and benefits expenses were $3.64 billion, 61% higher
than the third quarter of 2004, commensurate with higher net revenues.
The ratio of compensation and benefits to net revenues was 50.0% for
the first nine months of 2005, consistent with the first nine months
of 2004. (3) Employment levels increased 5% during the quarter and 6%
compared with the end of 2004.

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

Non-compensation expenses were $1.24 billion, 28% higher than the
third quarter of 2004. Other expenses increased primarily due to
higher expenses from consolidated entities held for investment
purposes and higher levels of business activity. Brokerage, clearing
and exchange fees increased due to higher transaction volumes,
particularly in FICC. Occupancy expenses were higher primarily due to
$20 million of costs associated with the relocation of office space as
well as increased expenses related to consolidated entities held for
investment purposes. Professional fees increased primarily due to
higher legal fees. Market development costs increased primarily due to
higher levels of business activity. Excluding non-compensation
expenses related to consolidated entities held for investment purposes
(4), non-compensation expenses were 18% higher than the third quarter
of 2004 and 3% higher than the second quarter of 2005.

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

The effective income tax rate was 31.1% for the first nine months
of 2005, up from 29.9% for the first six months of 2005. Excluding the
impact of audit settlements in 2005, the effective income tax rate for
the first nine months of 2005 would have been 32.9%, essentially
unchanged from the first six months of 2005 and up from 31.8% for
fiscal year 2004. The increase in the effective tax rate for the first
nine months of 2005 compared with fiscal year 2004 was primarily due
to lower tax credits and increased state and local taxes in 2005.

Capital

As of August 26, 2005, total capital was $128.21 billion,
consisting of $26.61 billion in total shareholders' equity (common
equity of $25.86 billion and preferred equity of $750 million) and
$101.60 billion in long-term debt. (5) Book value per common share was
$55.39 based on common shares outstanding, including restricted stock
units granted to employees with no future service requirements, of
466.8 million at period end. Tangible book value per common share was
$43.67. (1)

The firm repurchased 16.3 million shares of its common stock during
the quarter at an average price of $106.76 per share. On September 16,
2005, the Board of Directors of The Goldman Sachs Group, Inc. (the
Board) authorized the repurchase of an additional 60.0 million shares
of common stock pursuant to the firm's existing share repurchase
program. The remaining share authorization under the firm's existing
common stock repurchase program, including the newly-authorized
amount, is 63.2 million shares.

Dividends

The Board declared a dividend of $0.25 per common share to be paid
on November 21, 2005 to common shareholders of record on October 24,
2005. The Board also declared a dividend of $288.14 per share of
Series A Preferred Stock (represented by depositary shares, each
representing a 1/1000th interest in a share of Series A Preferred
Stock) to be paid on November 10, 2005 to preferred shareholders of
record on October 26, 2005.

______________

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 9098839, 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


Three Months Ended % Change From
-------------------------- -----------------
Aug. 26, May 27, Aug. 27, May 27, Aug. 27,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------
Investment Banking
------------------
Financial Advisory $ 559 $ 386 $ 451 45 % 24 %

Equity underwriting 199 114 218 75 (9)
Debt underwriting 257 315 221 (18) 16
-------- -------- -------- -------- --------
Total Underwriting 456 429 439 6 4
-------- -------- -------- -------- --------
Total Investment Banking 1,015 815 890 25 14
-------- -------- -------- -------- --------

Trading and Principal
Investments
---------------------
FICC 2,626 1,519 1,868 73 41

Equities trading 872 372 302 134 189
Equities commissions 721 733 608 (2) 19
-------- -------- -------- -------- --------
Total Equities 1,593 1,105 910 44 75

SMFG 498 73 (245) N.M. N.M.
Other corporate and real
estate gains and losses 205 107 163 92 26
Overrides 140 9 3 N.M. N.M.
-------- -------- -------- -------- --------
Total Principal
Investments 843 189 (79) N.M. N.M.

-------- -------- -------- -------- --------
Total Trading and
Principal Investments 5,062 2,813 2,699 80 88
-------- -------- -------- -------- --------

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

Asset Management 731 689 596 6 23

Securities Services 477 489 345 (2) 38
-------- -------- -------- -------- --------
Total Asset Management and
Securities Services 1,208 1,178 941 3 28
-------- -------- -------- -------- --------
Total net revenues $ 7,285 $ 4,806 $ 4,530 52 61
======== ======== ======== ======== ========


Nine Months Ended % Change From
----------------------- -------------
Aug. 26, Aug. 27, Aug. 27,
2005 2004 2004
----------- ----------- -------------
Investment Banking
------------------
Financial Advisory $ 1,359 $ 1,323 3 %

Equity underwriting 499 650 (23)
Debt underwriting 865 633 37
----------- ----------- -------------
Total Underwriting 1,364 1,283 6

----------- ----------- -------------
Total Investment Banking 2,723 2,606 4
----------- ----------- -------------

Trading and Principal
Investments
---------------------
FICC 6,634 5,863 13

Equities trading 2,073 1,599 30
Equities commissions 2,175 2,049 6
----------- ----------- -------------
Total Equities 4,248 3,648 16

SMFG 752 517 45
Other corporate and real
estate gains and losses 460 330 39
Overrides 164 90 82
----------- ----------- -------------
Total Principal
Investments 1,376 937 47
----------- ----------- -------------
Total Trading and
Principal Investments 12,258 10,448 17
----------- ----------- -------------
Asset Management and
Securities Services
--------------------

Asset Management 2,169 1,958 11

Securities Services 1,346 957 41
----------- ----------- -------------
Total Asset Management and
Securities Services 3,515 2,915 21
----------- ----------- -------------

----------- ----------- -------------
Total net revenues $18,496 $15,969 16
=========== =========== =============


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
-------------------------- -----------------
Aug. 26, May 27, Aug. 27, May 27, Aug. 27,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------
Revenues
Investment banking $ 998 $ 796 $ 854 25 % 17 %
Trading and principal
investments 4,842 2,562 2,424 89 100
Asset management and
securities services 772 724 620 7 25
Interest income 5,721 4,867 2,905 18 97
-------- -------- -------- -------- --------
Total revenues 12,333 8,949 6,803 38 81

Interest expense 4,940 4,022 2,156 23 129
Cost of power
generation (6) 108 121 117 (11) (8)
-------- -------- -------- -------- --------
Revenues, net of
interest expense and
cost of power generation 7,285 4,806 4,530 52 61
-------- -------- -------- -------- --------

Operating expenses
Compensation and
benefits (3) 3,642 2,403 2,269 52 61

Brokerage, clearing and
exchange fees 271 274 228 (1) 19
Market development 92 94 76 (2) 21
Communications and
technology 124 123 111 1 12
Depreciation and
amortization 125 128 117 (2) 7
Amortization of
identifiable intangible
assets 31 31 31 - -
Occupancy 200 186 157 8 27
Professional fees 117 109 91 7 29
Other expenses 278 214 157 30 77
-------- -------- -------- -------- --------
Total non-compensation
expenses 1,238 1,159 968 7 28

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

Total operating expenses 4,880 3,562 3,237 37 51
-------- -------- -------- -------- --------

Pre-tax earnings 2,405 1,244 1,293 93 86
Provision for taxes 788 379 414 108 90
-------- -------- -------- -------- --------
Net earnings 1,617 865 879 87 84
-------- -------- -------- -------- --------
Preferred stock dividend 9 - - N.M. N.M.
-------- -------- -------- -------- --------
Net earnings applicable
to common shareholders $ 1,608 $ 865 $ 879 86 83
======== ======== ======== ======== ========

Earnings per common share
Basic $ 3.40 $ 1.78 $ 1.80 91 89
Diluted 3.25 1.71 1.74 90 87

Average common shares
outstanding
Basic 473.3 485.4 489.2 (2) (3)
Diluted 494.2 506.2 505.0 (2) (2)

Selected Data
Employees at period
end (7)(8) 22,032 20,888 20,347 5 8

Ratio of compensation and
benefits to net revenues 50.0% 50.0% 50.0% (3)


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


Nine Months Ended % Change From
----------------------- -------------
Aug. 26, Aug. 27, Aug. 27,
2005 2004 2004
----------- ----------- -------------

Revenues
Investment banking $ 2,667 $ 2,536 5 %
Trading and principal
investments 11,545 9,652 20
Asset management and
securities services 2,270 2,036 11
Interest income 14,764 8,160 81
----------- ----------- -------------
Total revenues 31,246 22,384 40

Interest expense 12,411 6,067 105
Cost of power
generation (6) 339 348 (3)
----------- ----------- -------------
Revenues, net of
interest expense and
cost of power generation 18,496 15,969 16
----------- ----------- -------------

Operating expenses
Compensation and
benefits (3) 9,248 8,035 15

Brokerage, clearing and
exchange fees 797 713 12
Market development 268 214 25
Communications and
technology 365 343 6
Depreciation and
amortization 371 373 (1)
Amortization of
identifiable intangible
assets 93 94 (1)
Occupancy 534 483 11
Professional fees 322 237 36
Other expenses 704 515 37
----------- ----------- -------------
Total non-compensation
expenses 3,454 2,972 16

----------- ----------- -------------
Total operating expenses 12,702 11,007 15
----------- ----------- -------------

Pre-tax earnings 5,794 4,962 17
Provision for taxes 1,800 1,603 12
----------- ----------- -------------
Net earnings 3,994 3,359 19
----------- ----------- -------------
Preferred stock dividend 9 - N.M.
----------- ----------- -------------
Net earnings applicable
to common shareholders $ 3,985 $ 3,359 19
=========== =========== =============

Earnings per common share
Basic $ 8.23 $ 6.86 20
Diluted 7.89 6.56 20

Average common shares
outstanding
Basic 484.3 489.7 (1)
Diluted 505.2 511.8 (1)

Selected Data
Ratio of compensation and
benefits to net revenues 50.0% 50.0% (3)


NON-COMPENSATION EXPENSES
(UNAUDITED)
$ in millions


Three Months Ended % Change From
-------------------------- -----------------
Aug. 26, May 27, Aug. 27, May 27, Aug. 27,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------

Non-compensation expenses
of consolidated
investments (4) $ 100 $ 49 $ 6 104 % N.M. %

Non-compensation expenses
excluding consolidated
investments
Brokerage, clearing and
exchange fees 271 274 228 (1) 19
Market development 86 90 76 (4) 13
Communications and
technology 122 123 111 (1) 10
Depreciation and
amortization 114 124 117 (8) (3)
Amortization of
identifiable intangible
assets 31 31 31 - -
Occupancy 186 174 157 7 18
Professional fees 114 108 91 6 25
Other expenses 214 186 151 15 42
-------- -------- -------- -------- --------
Subtotal 1,138 1,110 962 3 18

-------- -------- -------- -------- --------
Total non-compensation
expenses, as reported $ 1,238 $ 1,159 $ 968 7 28
======== ======== ======== ======== ========


Nine Months Ended % Change From
----------------------- -------------
Aug. 26, Aug. 27, Aug. 27,
2005 2004 2004
----------- ----------- -------------

Non-compensation expenses
of consolidated
investments (4) $ 164 $ 14 N.M. %

Non-compensation expenses
excluding consolidated
investments
Brokerage, clearing and
exchange fees 797 713 12
Market development 258 214 21
Communications and
technology 363 343 6
Depreciation and
amortization 354 373 (5)
Amortization of
identifiable intangible
assets 93 94 (1)
Occupancy 508 483 5
Professional fees 318 237 34
Other expenses 599 501 20
----------- ----------- -------------
Subtotal 3,290 2,958 11

----------- ----------- -------------
Total non-compensation
expenses, as reported $ 3,454 $ 2,972 16
=========== =========== =============


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

Average Daily VaR (9)
$ in millions

Three Months Ended
--------------------------
Aug. 26, May 27, Aug. 27,
2005 2005 2004
-------- -------- --------
Risk Categories
---------------
Interest rates $ 38 $ 33 $ 39
Equity prices 40 26 31
Currency rates 19 19 20
Commodity prices 25 24 23
Diversification
effect (10) (46) (42) (43)
-------- -------- --------
Total $ 76 $ 60 $ 70
======== ======== ========


Assets Under Management (11)
$ in billions

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

Money markets $ 98 $ 98 $ 95 - % 3 %
Fixed income and currency 161 153 130 5 24
Equity 150 135 113 11 33
Alternative investments 111 104 88 7 26
-------- -------- -------- -------- --------
Total $ 520 $ 490 $ 426 6 22
======== ======== ======== ======== ========


Three Months Ended
--------------------------
Aug. 31, May 31, Aug. 31,
2005 2005 2004
-------- -------- --------

Balance, beginning of
period $ 490 $ 482 $ 415

Net asset
inflows / (outflows)
Money markets - (1) 3
Fixed income and
currency 6 6 3
Equity 6 2 -
Alternative investments 6 3 4
-------- -------- --------
Total net asset
inflows / (outflows) 18 10 10
Net market appreciation /
(depreciation) 12 (2) 1
-------- -------- --------
Balance, end of period $ 520 $ 490 $ 426
======== ======== ========


Principal Investments
$ in millions

As of August 26, 2005
-----------------------------
Corporate Real Estate Total
--------- ----------- -------

Private $ 1,506 $ 772 $2,278
Public 322 31 353
--------- ----------- -------
Subtotal 1,828 803 2,631
SMFG convertible preferred
stock (12) 3,256 - 3,256
--------- ----------- -------
Total $ 5,084 $ 803 $5,887
========= =========== =======

Footnotes

(1) Tangible common shareholders' equity equals total shareholders'
equity less preferred shareholders' equity 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
------------------------------- ---------------
Nine Months Three Months
Ended Ended
August 26, 2005 August 26, 2005 August 26, 2005
--------------- --------------- ---------------
(unaudited, $ in millions)
Total shareholders'
equity $26,100 $26,405 $26,607
Deduct: Preferred
shareholders'
equity (375) (750) (750)
---------------- ---------------- -------------
Common shareholders'
equity 25,725 25,655 25,857
Deduct: Goodwill
and identifiable
intangible assets (5,483) (5,552) (5,472)
---------------- ---------------- -------------

Tangible common
shareholders'
equity $20,242 $20,103 $20,385
================ ================ =============

(2) Thomson Financial - January 1, 2005 through September 16, 2005.

(3) Compensation and benefits includes the amortization of employee
initial public offering and acquisition awards of $5 million for
each of the three month periods ended August 26, 2005, May 27,
2005 and August 27, 2004, and $16 million and $51 million for the
nine months ended August 2005 and August 2004, respectively. For
the three months and nine months ended August 27, 2004, the ratio
of compensation and benefits to net revenues, including the
amortization of employee initial public offering and acquisition
awards, was 50.1% and 50.3%, 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 debt includes nonrecourse debt of $13.97 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 $8.86 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 plant operations (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 1,377, 1,130 and 1,152 employees as of August 2005, May
2005 and August 2004, respectively, of Goldman Sachs'
consolidated property management and loan servicing subsidiaries.
Compensation and benefits includes $45 million, $41 million and
$35 million for the three months ended August 26, 2005, May 27,
2005 and August 27, 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 7,094, 6,626 and 298 employees as of August 2005, May
2005 and August 2004, respectively, of consolidated entities that
are held for investment purposes only. Compensation and benefits
includes $50 million, $17 million and $2 million for the three
months ended August 26, 2005, May 27, 2005 and August 27, 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 August 26, 2005, the fair
value of this hedge was $1.08 billion. Includes the impact of
foreign exchange revaluation on the investment, for which the
firm also maintains an economic hedge.