Goldman Sachs Reports Record
Earnings Per Common Share of $24.73 for 2007

NEW YORK--(BUSINESS WIRE)--The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $45.99 billion and net earnings of $11.60 billion for the year ended November 30, 2007. Diluted earnings per common share were $24.73, an increase of 26% compared with $19.69 for the year ended November 24, 2006. Return on average tangible common shareholders’ equity ⁽¹⁾ (ROTE) was 38.2% and return on average common shareholders’ equity (ROE) was 32.7% for 2007.

Fourth quarter net revenues were $10.74 billion and net earnings were $3.22 billion. Diluted earnings per common share were $7.01 compared with $6.59 for the same 2006 quarter and $6.13 for the third quarter of 2007. Annualized ROTE ⁽¹⁾ was 40.1% and annualized ROE was 34.6% for the fourth quarter of 2007.

Annual Business Highlights

• Goldman Sachs achieved record net revenues, net earnings and diluted earnings per common share in 2007.
• Book value per common share increased 25% to $90.43 in 2007. The firm repurchased 41.2 million shares of its common stock for a total cost of $8.96 billion.

• The firm produced record results in the Americas, Europe and Asia, and derived over one-half of its pre-tax earnings outside of the Americas.
• Investment Banking produced net revenues of $7.56 billion, 34% higher than the previous record set in 2006. The firm ranked first in worldwide announced mergers and acquisitions. ⁽²⁾
• Fixed Income, Currency and Commodities (FICC) generated net revenues of $16.17 billion, 13% higher than the previous record set in 2006, reflecting strong performance in all major businesses.
• Equities produced net revenues of $11.30 billion, 33% above the previous record set in 2006.
• Principal Investments achieved net revenues of $3.76 billion, reflecting records in both corporate and real estate investing.
• Asset Management generated record net revenues of $4.49 billion, as assets under management increased $192 billion, or 28%, to $868 billion. Net inflows were $161 billion in 2007.
• Securities Services achieved record net revenues of $2.72 billion.

______________

“The talent of our people and our focus on teamwork were at the core of our ability to support our clients while delivering strong returns for our shareholders,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “Inherent in our commitment to our clients is the need to help them execute their transactions in all market conditions and, as a result, we are ever mindful of the importance of effective risk management. Looking forward, we continue to see significant growth opportunities across the global economy.”

Net Revenues

Investment Banking

Full Year

Net revenues in Investment Banking were $7.56 billion for the year, 34% higher than 2006. Net revenues in Financial Advisory were $4.22 billion, 64% higher than 2006, primarily reflecting growth in industry-wide completed mergers and acquisitions. Net revenues in the firm’s Underwriting business were $3.33 billion, 9% higher than 2006, due to higher net revenues in debt underwriting, primarily reflecting strength in leveraged finance during the first half of the year. Net revenues in equity underwriting were also strong, but essentially unchanged from 2006.

Fourth Quarter

Net revenues in Investment Banking were $1.97 billion, 47% higher than the fourth quarter of 2006 and 8% lower than a particularly strong third quarter of 2007. Net revenues in Financial Advisory were $1.24 billion, 98% higher than the fourth quarter of 2006, reflecting increased client activity. Net revenues in the firm’s Underwriting business were $733 million, essentially unchanged from the fourth quarter of 2006. Net revenues in equity underwriting were higher, primarily reflecting an increase in initial public offerings. Results in debt underwriting were lower, primarily due to a decrease in leveraged finance and mortgage-related activity, reflecting challenging market conditions, partially offset by an increase in investment-grade activity.

The firm’s investment banking transaction backlog decreased during the quarter, but was higher than at the end of 2006. ⁽³⁾

Trading and Principal Investments

Full Year

Net revenues in Trading and Principal Investments were $31.23 billion for the year, 22% higher than 2006.

Net revenues in FICC were $16.17 billion for the year, 13% higher than 2006, reflecting significantly higher net revenues in currencies and interest rate products. In addition, net revenues in mortgages were higher despite a significant deterioration in the mortgage market throughout the year, while net revenues in credit products were strong, but slightly lower compared with the prior year. Credit products included substantial gains from equity investments, including a gain of approximately $900 million related to the disposition of Horizon Wind Energy L.L.C., as well as a loss of approximately $1 billion, net of hedges, related to non-investment-grade credit origination activities. Net revenues in commodities were also strong but lower compared with 2006. During 2007, FICC operated in an environment generally characterized by strong customer-driven activity and favorable market opportunities. However, during the year, the mortgage market experienced significant deterioration and, in the second half of the year, the broader credit markets were characterized by wider spreads and reduced levels of liquidity.

Net revenues in Equities were $11.30 billion for the year, 33% higher than 2006, reflecting significantly higher net revenues in both the firm’s customer franchise businesses and principal strategies. The customer franchise businesses benefited from significantly higher commission volumes. During 2007, Equities operated in an environment characterized by strong customer-driven activity, generally higher equity prices and higher levels of volatility, particularly during the second half of the year.

Principal Investments recorded net revenues of $3.76 billion for the year, reflecting gains and overrides from corporate and real estate principal investments. Results in Principal Investments included a $495 million gain related to the firm's investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC) and a $129 million loss related to the firm's investment in the convertible preferred stock of Sumitomo Mitsui Financial Group, Inc. (SMFG).

Fourth Quarter

Net revenues in Trading and Principal Investments were $6.93 billion, 4% higher than the fourth quarter of 2006 and 16% lower than the third quarter of 2007.

Net revenues in FICC were $3.30 billion, 6% higher than the fourth quarter of 2006, reflecting significantly higher net revenues in currencies and commodities. The increase in commodities reflected a gain of approximately $800 million from the sale of a majority interest in 14 power generation facilities held by Cogentrix Energy, Inc. In addition, net revenues in mortgages and interest rate products were higher. Net revenues in credit products declined significantly, reflecting lower results from equity investments, partially offset by a gain of approximately $500 million, net of hedges, related to non-investment-grade credit origination activities. Results from equity investments declined in part due to a gain of approximately $500 million on Accordia Golf Co., Ltd. during the fourth quarter of 2006. During the quarter, while customer-driven activity was generally solid, FICC operated in a challenging environment characterized by continued deterioration in the mortgage market and weakness in the corporate credit market.

Net revenues in Equities were $2.59 billion, 22% higher than the fourth quarter of 2006, primarily reflecting significantly higher net revenues in the firm’s customer franchise businesses. The customer franchise businesses benefited from significantly higher commission volumes. During the quarter, Equities operated in an environment characterized by strong customer-driven activity and volatile markets.

Principal Investments recorded net revenues of $1.04 billion for the fourth quarter of 2007, reflecting gains and overrides from corporate and real estate principal investments. Results in Principal Investments included a $163 million gain related to the firm’s investment in the ordinary shares of ICBC.

Asset Management and Securities Services

Full Year

Net revenues in Asset Management and Securities Services were $7.21 billion for the year, 11% higher than 2006.

Asset Management net revenues were $4.49 billion for the year, 5% higher than 2006, reflecting a 29% increase in management and other fees, partially offset by significantly lower incentive fees. Incentive fees were $187 million for 2007 compared with $962 million for 2006. During the year, assets under management increased $192 billion, or 28%, to $868 billion, reflecting non-money market net inflows of $73 billion ⁽⁴⁾, primarily in fixed income and equity assets, money market net inflows of $88 billion, and net market appreciation of $31 billion, reflecting appreciation in fixed income and equity assets, partially offset by depreciation in alternative investment assets.

Securities Services net revenues were $2.72 billion for the year, 25% higher than 2006, as the firm’s prime brokerage business continued to generate strong results, primarily reflecting significantly higher customer balances in securities lending and margin lending.

Fourth Quarter

Net revenues in Asset Management and Securities Services were $1.84 billion, 29% higher than the fourth quarter of 2006 and 6% lower than the third quarter of 2007.

Asset Management net revenues were $1.17 billion, 25% higher than the fourth quarter of 2006, reflecting higher management and other fees. During the quarter, assets under management increased $72 billion, or 9%, to $868 billion, reflecting non-money market net inflows of $16 billion ⁽⁴⁾, primarily in fixed income assets, money market net inflows of $42 billion and market appreciation of $14 billion in fixed income and equity assets.

Securities Services net revenues were $672 million, 35% higher than the fourth quarter of 2006, reflecting significantly higher customer balances in securities lending and margin lending.

Expenses

Operating expenses were $28.38 billion for 2007, 23% higher than 2006.

Compensation and Benefits

Compensation and benefits expenses were $20.19 billion for 2007, 23% higher than 2006, reflecting increased discretionary compensation and growth in employment levels. The ratio of compensation and benefits to net revenues for 2007 was 43.9% compared with 43.7% for 2006. Employment levels increased 15% compared with the end of 2006, including a 2% increase during the fourth quarter.

Non-Compensation Expenses

Full Year

Non-compensation expenses were $8.19 billion for 2007, 23% higher than 2006, primarily attributable to higher levels of business activity and continued geographic expansion. One-half of this increase was attributable to brokerage, clearing, exchange and distribution fees, principally reflecting higher transaction volumes in Equities. Other expenses, professional fees, and communications and technology expenses also increased, primarily due to higher levels of business activity. Occupancy and depreciation and amortization expenses included exit costs of $128 million related to the firm’s office space.

Fourth Quarter

Non-compensation expenses were $2.41 billion, 26% higher than the fourth quarter of 2006 and 12% higher than the third quarter of 2007. The increase compared with the fourth quarter of 2006 was primarily attributable to higher brokerage, clearing, exchange and distribution fees, principally due to higher transaction volumes in Equities, and an increase in occupancy and depreciation and amortization expenses, including exit costs of $128 million related to the firm’s office space.

Provision For Taxes

The effective income tax rate was 34.1% for 2007, up from 33.2% for the first nine months of 2007 and down from 34.5% for 2006. The increase in the effective income tax rate for 2007 compared with the first nine months of 2007 was primarily due to changes in the geographic earnings mix and a decrease in tax credits.

Capital

As of November 30, 2007, total capital was $206.97 billion, consisting of $42.80 billion in total shareholders’ equity (common shareholders’ equity of $39.70 billion and preferred stock of $3.10 billion) and $164.17 billion in unsecured long-term borrowings. Book value per common share was $90.43, an increase of 25% compared with the end of 2006 and an increase of 7% compared with the end of the third quarter of 2007. Tangible book value per common share was $78.88 ⁽¹⁾, an increase of 28% compared with the end of 2006 and an increase of 8% compared with the end of the third quarter of 2007. Book value and tangible book value per common share are based on common shares outstanding, including restricted stock units granted to employees with no future service requirements, of 439.0 million at period end.

The firm repurchased 41.2 million shares of its common stock during 2007 at an average cost per share of $217.29, for a total cost of $8.96 billion, including 11.6 million shares during the fourth quarter at an average cost per share of $230.65, for a total cost of $2.68 billion. On December 17, 2007, 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 share repurchase program, including the newly authorized amount, is 71.4 million shares.

Dividends

The Board declared a dividend of $0.35 per common share to be paid on February 28, 2008 to common shareholders of record on January 29, 2008. The Board also declared dividends of $351.84, $387.50, $351.84 and $346.84 per share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, respectively (represented by depositary shares, each representing a 1/1,000th interest in a share of preferred stock), to be paid on February 11, 2008 to preferred shareholders of record on January 27, 2008.

______________

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” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the firm’s beliefs 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 and financial condition, see "Risk Factors" in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the fiscal year ended November 24, 2006 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the firm’s Annual Report on Form 10-K for the fiscal year ended November 24, 2006.

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, if any, that the firm actually earns 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, outbreak of hostilities, 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 inability to obtain adequate financing, 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 "Risk Factors" in Part I, Item 1A of the firm’s Annual Report on Form 10-K for the fiscal year ended November 24, 2006.

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) or 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, 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 25388886, 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. 30,				Nov. 24,				Nov. 24,
		2007				2006				2006
Investment Banking
Financial Advisory		$	4,222			$	2,580			64		%
Equity underwriting			1,382				1,365			1
Debt underwriting			1,951				1,684			16
Total Underwriting			3,333				3,049			9
Total Investment Banking			7,555				5,629			34
Trading and Principal Investments
FICC			16,165				14,262			13
Equities trading			6,725				4,965			35
Equities commissions			4,579				3,518			30
Total Equities			11,304				8,483			33
SMFG			(129	)			527			N.M.
ICBC			495				937			(47	)
Other corporate and real estate gains and losses			2,914				949			207
Overrides			477				404			18
Total Principal Investments			3,757				2,817			33
Total Trading and Principal Investments			31,226				25,562			22
Asset Management and Securities Services
Management and other fees			4,303				3,332			29
Incentive fees			187				962			(81	)
Total Asset Management			4,490				4,294			5
Securities Services			2,716				2,180			25
Total Asset Management and Securities Services			7,206				6,474			11
Total net revenues		$	45,987			$	37,665			22

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SEGMENT NET REVENUES
(UNAUDITED)
$ in millions
		Three Months Ended												% Change From
		Nov. 30,				Aug. 31,				Nov. 24,				Aug. 31,			Nov. 24,
		2007				2007				2006				2007			2006
Investment Banking
Financial Advisory		$	1,240			$	1,412			$	627			(12	)	%	98		%
Equity underwriting			403				355				330			14			22
Debt underwriting			330				378				387			(13	)		(15	)
Total Underwriting			733				733				717			-			2
Total Investment Banking			1,973				2,145				1,344			(8	)		47
Trading and Principal Investments
FICC			3,304				4,889				3,104			(32	)		6
Equities trading			1,348				1,799				1,235			(25	)		9
Equities commissions			1,243				1,330				896			(7	)		39
Total Equities			2,591				3,129				2,131			(17	)		22
SMFG			35				(261	)			(78	)		N.M.			N.M.
ICBC			163				230				949			(29	)		(83	)
Other corporate and real estate gains and losses			734				148				323			N.M.			127
Overrides			104				94				205			11			(49	)
Total Principal Investments			1,036				211				1,399			N.M.			(26	)
Total Trading and Principal Investments			6,931				8,229				6,634			(16	)		4
Asset Management and Securities Services
Management and other fees			1,134				1,152				910			(2	)		25
Incentive fees			31				46				23			(33	)		35
Total Asset Management			1,165				1,198				933			(3	)		25
Securities Services			672				762				496			(12	)		35
Total Asset Management and Securities Services			1,837				1,960				1,429			(6	)		29
Total net revenues		$	10,741			$	12,334			$	9,407			(13	)		14

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
In millions, except per share amounts
		Year Ended						% Change From
		Nov. 30,			Nov. 24,			Nov. 24,
		2007			2006			2006
Revenues
Investment banking		$	7,555		$	5,613		35		%
Trading and principal investments			29,714			24,027		24
Asset management and securities services			4,731			4,527		5
Interest income			45,968			35,186		31
Total revenues			87,968			69,353		27
Interest expense			41,981			31,688		32
Revenues, net of interest expense			45,987			37,665		22
Operating expenses
Compensation and benefits			20,190			16,457		23
Brokerage, clearing, exchange and distribution fees			2,758			1,985		39
Market development			601			492		22
Communications and technology			665			544		22
Depreciation and amortization			624			521		20
Amortization of identifiable intangible assets			195			173		13
Occupancy			975			850		15
Professional fees			714			545		31
Cost of power generation			335			406		(17	)
Other expenses			1,326			1,132		17
Total non-compensation expenses			8,193			6,648		23
Total operating expenses			28,383			23,105		23
Pre-tax earnings			17,604			14,560		21
Provision for taxes			6,005			5,023		20
Net earnings			11,599			9,537		22
Preferred stock dividends			192			139		38
Net earnings applicable to common shareholders		$	11,407		$	9,398		21
Earnings per common share
Basic		$	26.34		$	20.93		26		%
Diluted			24.73			19.69		26
Average common shares outstanding
Basic			433.0			449.0		(4	)
Diluted			461.2			477.4		(3	)
Selected Data
Ratio of compensation and benefits to net revenues			43.9	%		43.7	%

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. 30,			Aug. 31,			Nov. 24,			Aug. 31,			Nov. 24,
		2007			2007			2006			2007			2006
Revenues
Investment banking		$	1,974		$	2,145		$	1,337		(8	)	%	48		%
Trading and principal investments			6,823			7,576			6,051		(10	)		13
Asset management and securities services			1,219			1,272			982		(4	)		24
Interest income			11,518			12,810			9,756		(10	)		18
Total revenues			21,534			23,803			18,126		(10	)		19
Interest expense			10,793			11,469			8,719		(6	)		24
Revenues, net of interest expense			10,741			12,334			9,407		(13	)		14
Operating expenses
Compensation and benefits			3,272			5,920			2,505		(45	)		31
Brokerage, clearing, exchange and distribution fees			774			795			571		(3	)		36
Market development			177			148			154		20			15
Communications and technology			184			169			148		9			24
Depreciation and amortization			207			145			143		43			45
Amortization of identifiable intangible assets			41			53			45		(23	)		(9	)
Occupancy			343			218			237		57			45
Professional fees			204			188			178		9			15
Cost of power generation			82			88			98		(7	)		(16	)
Other expenses			402			351			343		15			17
Total non-compensation expenses			2,414			2,155			1,917		12			26
Total operating expenses			5,686			8,075			4,422		(30	)		29
Pre-tax earnings			5,055			4,259			4,985		19			1
Provision for taxes			1,840			1,405			1,833		31			-
Net earnings			3,215			2,854			3,152		13			2
Preferred stock dividends			49			48			48		2			2
Net earnings applicable to common shareholders		$	3,166		$	2,806		$	3,104		13			2
Earnings per common share
Basic		$	7.49		$	6.54		$	7.06		15		%	6		%
Diluted			7.01			6.13			6.59		14			6
Average common shares outstanding
Basic			422.9			429.0			439.8		(1	)		(4	)
Diluted			451.7			457.4			470.7		(1	)		(4	)
Selected Data
Employees at period   end (5)			30,522			29,905			26,467		2			15
Ratio of compensation and benefits to net revenues			30.5	%		48.0	%		26.6	%

NON-COMPENSATION EXPENSES
(UNAUDITED)
$ in millions
		Year Ended						% Change From
		Nov. 30,			Nov. 24,			Nov. 24,
		2007			2006			2006
Non-compensation expenses of consolidated investments (6)		$	446		$	501		(11	)	%
Non-compensation expenses excluding consolidated investments
Brokerage, clearing, exchange and distribution fees			2,758			1,985		39
Market development			593			461		29
Communications and technology			661			537		23
Depreciation and amortization			509			444		15
Amortization of identifiable intangible assets			189			169		12
Occupancy			892			738		21
Professional fees			711			534		33
Cost of power generation			335			406		(17	)
Other expenses			1,099			873		26
Subtotal			7,747			6,147		26
Total non-compensation expenses, as reported		$	8,193		$	6,648		23

		Three Months Ended									% Change From
		Nov. 30,			Aug. 31,			Nov. 24,			Aug. 31,			Nov. 24,
		2007			2007			2006			2007			2006
Non-compensation expenses of consolidated investments (6)		$	157		$	101		$	130		55		%	21		%
Non-compensation expenses excluding consolidated investments
Brokerage, clearing, exchange and distribution fees			774			795			571		(3	)		36
Market development			175			146			148		20			18
Communications and technology			182			168			146		8			25
Depreciation and amortization			142			128			119		11			19
Amortization of identifiable intangible assets			39			52			43		(25	)		(9	)
Occupancy			311			200			210		56			48
Professional fees			203			188			176		8			15
Cost of power generation			82			88			98		(7	)		(16	)
Other expenses			349			289			276		21			26
Subtotal			2,257			2,054			1,787		10			26
Total non-compensation expenses, as reported		$	2,414		$	2,155		$	1,917		12			26

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(UNAUDITED)
Average Daily VaR (7)
$ in millions
	Three Months Ended												Twelve Months Ended
	Nov. 30,				Aug. 31,				Nov. 24,				Nov. 30,				Nov. 24,
	2007				2007				2006				2007				2006
Risk Categories
Interest rates	$	106			$	96			$	51			$	85			$	49
Equity prices		107				97				75				100				72
Currency rates		30				23				14				23				21
Commodity prices		26				24				29				26				30
Diversification effect (8)		(118	)			(101	)			(63	)			(96	)			(71	)
Total	$	151			$	139			$	106			$	138			$	101
Assets Under Management (9)
$ in billions
	As of												% Change From
	Nov. 30,				Aug. 31,				Nov. 30,				Aug. 31,				Nov. 30,
	2007				2007				2006				2007				2006
Asset Class
Alternative investments	$	151			$	151			$	145				-		%		4		%
Equity		255				251				215				2				19
Fixed income		256				230				198				11				29
Total non-money market assets		662				632				558				5				19
Money markets		206				164				118				26				75
Total assets under management	$	868			$	796			$	676				9				28

	Three Months Ended												Year Ended
	Nov. 30,				Aug. 31,				Nov. 30,				Nov. 30,				Nov. 30,
	2007				2007				2006				2007				2006
Balance, beginning of period	$	796			$	758			$	629			$	676			$	532
Net inflows / (outflows)
Alternative investments		-				7				6				9				32
Equity		1				7				4				26				16
Fixed income		15				5				7				38				29
Total non-money market net inflows / (outflows)		16		(4)		19				17				73		(4)		77
Money markets		42				31				7				88				17		(10)
Total net inflows / (outflows)		58				50				24				161				94		(11)
Net market appreciation / (depreciation)		14				(12	)			23				31				50
Balance, end of period	$	868			$	796			$	676			$	868			$	676

Principal Investments (12)
$ in millions
		As of November 30, 2007
		Corporate			Real Estate			Total
Private		$	7,297		$	2,361		$	9,658
Public			2,208			67			2,275
Subtotal			9,505			2,428			11,933
SMFG convertible preferred stock (13)			4,060			-			4,060
ICBC ordinary shares (14)			6,807			-			6,807
Total		$	20,372		$	2,428		$	22,800

Footnotes

(1)			Tangible common shareholders' equity equals total shareholders'
			equity less preferred stock, goodwill and identifiable intangible
			assets, excluding power contracts. Identifiable intangible assets
			associated with power contracts are not deducted from total
			shareholders' equity because, unlike other intangible assets,
			less than 50% of these assets are supported by common
			shareholders' equity. Management believes that return on average
			tangible common shareholders' equity (ROTE) is meaningful because
			it measures the performance of businesses consistently, whether
			they were acquired or developed internally. ROTE is computed by
			dividing net earnings (or annualized net earnings for annualized
			ROTE) 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
										Three Months
						Year Ended				Ended
						November 30,				November 30,				November 30,
						2007				2007				2007
						(unaudited, $ in millions)
					Total shareholders' equity	$	37,959			$	39,687			$	42,800
					Preferred stock		(3,100	)			(3,100	)			(3,100	)
					Common shareholders' equity		34,859				36,587				39,700
					Goodwill and identifiable intangible assets, excluding power contracts		(4,971	)			(4,996	)			(5,072	)
					Tangible common shareholders' equity	$	29,888			$	31,591			$	34,628

(2)

Thomson Financial - January 1, 2007 through November 30, 2007.

(3)			The firm's investment banking transaction backlog represents
			an estimate of the firm's future net revenues from investment
			banking transactions where management believes that future
			revenue realization is more likely than not.

(4)			Includes $7 billion of net asset inflows in connection with the
			firm's acquisition of Macquarie - IMM Investment Management.

(5)			Excludes 4,572, 4,904 and 3,868 employees as of November 2007,
			August 2007 and November 2006, respectively, of consolidated
			entities held for investment purposes. Compensation and
			benefits includes $43 million, $40 million and $64 million for
			the three months ended November 30, 2007, August 31, 2007 and
			November 24, 2006, respectively, attributable to these
			consolidated entities.

(6)			Consolidated entities held for investment purposes are entities
			that are held strictly for capital appreciation, have a defined
			exit strategy and are engaged in activities that are not closely
			related to the firm's principal businesses. For example, these
			investments include consolidated entities that hold real estate
			assets, such as hotels, but exclude investments in entities that
			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 related to the
			firm's principal business activities.

(7)			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 standard 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 year ended November 24, 2006.

(8)			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.

(9)			Substantially all assets under management are valued as of
			calendar month end. Assets under management do not include the
			firm's investments in funds that it manages.

(10)		Includes the transfer of $8 billion of money market assets under
		management to interest-bearing deposits at Goldman Sachs
		Bank USA, a wholly owned subsidiary of The Goldman Sachs
		Group, Inc. These deposits are not included in assets under
		management.

(11)		Includes $3 billion of net asset inflows in connection with the
		firm's acquisition of its variable annuity and life insurance
		business.

(12)		Represents investments included within the Principal Investments
		component of our Trading and Principal Investments segment.

(13)		Excludes an economic hedge on the shares of common stock
		underlying the investment. As of November 2007, the fair value
		of this hedge was $3.63 billion. Includes the effect of foreign
		exchange revaluation on the investment, for which Goldman Sachs
		also maintains an economic currency hedge.

(14)		Includes interests of $4.30 billion as of November 2007 held by
		investment funds managed by Goldman Sachs. The fair value of
		the investment in the ordinary shares of ICBC, which trade on
		The Stock Exchange of Hong Kong, includes the effect of foreign
		exchange revaluation, for which Goldman Sachs maintains an
		economic currency hedge.