Goldman Sachs will Implement its New Stock Rating System on November 4th

NEW YORK – Goldman Sachs Group, Inc. (NYSE: GS) announced today that its Global Investment Research Division will implement its new global stock rating system on November 4, 2002. The revised rating system is a component of a series of initiatives the firm announced earlier in the year to enhance the quality of its investment research.

"The new rating system offers investors greater simplicity and clarity and should better align our analysts' expertise and opinions with our clients' investment process," said co-Directors of Global Investment Research, Suzanne Nora Johnson and Andrew Melnick.

The system includes three ratings: (1) Outperform, (2) In-Line, and (3) Underperform. These ratings are to be assigned relatively to the stocks within each analyst's stock coverage universe. For purposes of the relative stock rating, stocks will be considered on an unweighted basis with regard to market capitalization. Each analyst will also publish a coverage view – Attractive, Neutral, or Cautious -- which represents such analyst's overall fundamental outlook on their coverage group of stocks. In addition, Goldman Sachs Investment Research will introduce a Current Investment List (CIL), focused on timely investment opportunities for its investor clients. We expect stocks on the CIL to provide an absolute total return of at least 20% over the next twelve months ( see appendix: the essentials of Goldman Sachs' new stock rating system).

All rating changes and all Current Investment List decisions require approval by one of four Regional Investment Review Committees. A Global Investment Policy Committee is responsible for setting overall ratings policies and monitoring the distribution of ratings.

In May, Goldman Sachs Global Investment Research announced a series of initiatives to underscore the firm's continuing commitment to providing investment research of the highest quality and integrity. The firm issued a Statement of Investment Research Principles; appointed an Ombudsman; expanded the responsibilities of the Board Audit Committee to review and monitor the adequacy of the structures, policies and procedures; and broadened the oversight of the Board Compensation Committee to include review of the compensation policies and process for investment research professionals.

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.

The essentials of Goldman Sachs' new stock rating system

Stock ratings

Our ratings reflect expected stock price performance relative to each analyst's coverage universe.

OP = Outperform. We expect this stock to outperform the median total return for the analyst's coverage universe over the next 12 months.

IL = In-Line. We expect this stock to perform in line with the median total return for the analyst's coverage universe over the next 12 months.

U = Underperform. We expect this stock to underperform the median total return for the analyst's coverage universe over the next 12 months.

Coverage view

The coverage view represents each analyst's overall fundamental outlook on his/her coverage universe. The coverage view will consist of one of the following designations:

A = Attractive N = Neutral C = Cautious

Current Investment List designation

CIL = Current Investment List. We expect this stock to provide an absolute total return of at least 20% over the next 12 months. We only assign this designation to stocks rated Outperform. We require a 12-month price target for stocks with this designation. Each stock on the CIL will automatically come off the list after 90 days unless renewed by the covering analyst and the relevant Regional Investment Review Committee.

Global Investment Policy and Regional Investment Review Committees

The Global Investment Policy Committee oversees ratings policy, monitors the distribution of ratings and the composition of the CIL, provides guidance to the Regional Investment Review Committees, and oversees the implementation of methodology for portfolio allocation by sectors.

A Regional Investment Review Committee in each of the Americas, Europe, Japan, and Asia-Pacific regions approves all rating changes and approves stocks for inclusion on the Current Investment List in its region.