Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-112367
PRICING SUPPLEMENT TO THE PROSPECTUS SUPPLEMENT NO. 371 DATED FEBRUARY 6, 2004
-- NO. 448
{GOLDMAN SACHS LOGO]
THE GOLDMAN SACHS GROUP, INC.
Medium-Term Notes, Series B
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$13,500,000
11.2% Mandatory Exchangeable Notes due April 2005
(Exchangeable for Common Stock of Marsh & McLennan Companies, Inc.)
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This pricing supplement and the accompanying prospectus supplement no.
371, relating to the mandatory exchangeable notes, should be read together.
Because the mandatory exchangeable notes are part of a series of our debt
securities called Medium-Term Notes, Series B, this pricing supplement and the
accompanying prospectus supplement no. 371 should also be read with the
accompanying prospectus dated February 6, 2004, as supplemented by the
accompanying prospectus supplement dated February 6, 2004. Terms used here have
the meanings given them in the accompanying prospectus supplement no. 371,
unless the context requires otherwise.
The mandatory exchangeable notes offered by this pricing supplement,
which we call the "offered notes" or the "notes", have the terms described in
the accompanying prospectus supplement no. 371, as supplemented or modified by
the following:
ISSUER: The Goldman Sachs Group, Inc. STATED MATURITY DATE: April 29, 2005,
unless extended for up to six business
FACE AMOUNT: each offered note will days
have a face amount equal to $27.00,
which is the initial index stock INTEREST RATE (COUPON): 11.2% per year
price; the aggregate face amount for
all the offered notes is $13,500,000 INTEREST PAYMENT DATES: November 29,
2004, December 29, 2004, January 29,
INITIAL INDEX STOCK PRICE: $27.00 2005, February 28, 2005, March 29, 2005
and the stated maturity date
ORIGINAL ISSUE PRICE: 100% of the face
amount REGULAR RECORD DATES: for the interest
payment dates specified above, five
NET PROCEEDS TO THE ISSUER: 99.95% of business days before each interest
the face amount payment date
TRADE DATE: October 22, 2004 INDEX STOCK AND INDEX STOCK ISSUER:
common stock of Marsh & McLennan
SETTLEMENT DATE (ORIGINAL ISSUE DATE): Companies, Inc.
October 29, 2004
CUSIP NO.: 38143Y301
Your investment in the notes involves certain risks. In particular,
assuming no changes in market conditions or any other relevant factors, the
value of your note on the date of this pricing supplement (as determined by
reference to pricing models used by Goldman, Sachs & Co.) is significantly less
than the original issue price. We encourage you to read "Additional Risk Factors
Specific to Your Note" beginning on page S-2 of this pricing supplement and on
page S-3 of the accompanying prospectus supplement no. 371 so that you may
better understand those risks. The offered notes are not principal-protected and
the payment amount is capped.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PRICING SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Goldman Sachs may use this pricing supplement in the initial sale of the
offered notes. In addition, Goldman, Sachs & Co. or any other affiliate of
Goldman Sachs may use this pricing supplement in a market-making transaction in
an offered note after its initial sale. UNLESS GOLDMAN SACHS OR ITS AGENT
INFORMS THE PURCHASER OTHERWISE IN THE CONFIRMATION OF SALE, THIS PRICING
SUPPLEMENT IS BEING USED IN A MARKET-MAKING TRANSACTION.
GOLDMAN, SACHS & CO.
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PRICING SUPPLEMENT DATED OCTOBER 22, 2004.
PRINCIPAL AMOUNT: On the stated maturity date, each
offered note will be exchanged for index
stock at the exchange rate or, at the
option of Goldman Sachs, for the cash
value of that stock based on the final
index stock price.
EXCHANGE RATE: If the final index stock price equals or
exceeds the threshold appreciation
price, then the exchange rate will equal
the threshold fraction times one share
of index stock for each $27.00 of the
outstanding face amount. Otherwise, the
exchange rate will equal one share of
the index stock for each $27.00 of the
outstanding face amount. The exchange
rate is subject to anti-dilution
adjustment as described in the
accompanying prospectus supplement no.
371.
Please note that the amount you receive
for each $27.00 of outstanding face
amount on the stated maturity date will
not exceed the threshold appreciation
price and that it could be substantially
less than $27.00. You could lose your
entire investment in the offered notes.
INITIAL INDEX STOCK PRICE: $27.00 per share.
FINAL INDEX STOCK PRICE: The closing price of one share of the
index stock on the determination date,
subject to anti-dilution adjustment.
THRESHOLD APPRECIATION PRICE: The initial index stock price times
1.20, which equals $32.40 per share.
THRESHOLD FRACTION: The threshold appreciation price divided
by the final index stock price.
DETERMINATION DATE: The fifth business day prior to April
29, 2005 unless extended for up to five
business days.
NO LISTING: The offered notes will not be listed on
any securities exchange or interdealer
market quotation system.
ADDITIONAL RISK FACTORS SPECIFIC TO ASSUMING NO CHANGES IN MARKET CONDITIONS
YOUR NOTE: OR ANY OTHER RELEVANT FACTORS, THE VALUE
OF YOUR NOTE ON THE DATE OF THIS PRICING
SUPPLEMENT (AS DETERMINED BY REFERENCE
TO PRICING MODELS USED BY GOLDMAN, SACHS
& CO.) IS SIGNIFICANTLY LESS THAN THE
ORIGINAL ISSUE PRICE
The value or quoted price of your note
at any time will reflect many factors
and cannot be predicted. If Goldman,
Sachs & Co. makes a market in the
offered notes, the price quoted by
Goldman, Sachs & Co. would reflect any
changes in market conditions and other
relevant factors, and the quoted price
could be higher or lower than the
original issue price, and may be higher
or lower than the value of your note as
determined by reference to pricing
models used by Goldman, Sachs & Co.
If at any time a third party dealer
quotes a price to purchase your note or
otherwise values your note, that price
may be significantly different (higher
or lower) than any price quoted
S-2
by Goldman, Sachs & Co. You should read
"Additional Risk Factors Specific to
Your Note -- The Market Price of Your
Note May Be Influenced by Many
Unpredictable Factors" in the
accompanying prospectus supplement no.
371.
Furthermore, if you sell your note, you
will likely be charged a commission for
secondary market transactions, or the
price will likely reflect a dealer
discount.
There is no assurance that Goldman,
Sachs & Co. or any other party will be
willing to purchase your note; and, in
this regard, Goldman, Sachs & Co. is not
obligated to make a market in the notes.
See "Additional Risk Factors Specific to
Your Note -- Your Note May Not Have an
Active Trading Market" in the
accompanying prospectus supplement no.
371.
MARSH & MCLENNAN COMPANIES, INC.: According to its publicly available
documents, Marsh & McLennan Companies,
Inc. is a global professional services
firm and is the parent company of
various subsidiaries and affiliates that
provide clients with analysis, advice
and transactional capabilities in the
fields of risk and insurance services,
investment management and consulting.
Information filed with the SEC by Marsh
& McLennan Companies, Inc. under the
Exchange Act can be located by
referencing its SEC file number:
001-05998.
HISTORICAL TRADING PRICE The index stock is traded on the New
INFORMATION: York Stock Exchange under the symbol
"MMC". The following table shows the
quarterly high and low trading prices
and the quarterly closing prices for the
index stock on the New York Stock
Exchange for the four calendar quarters
in each of 2002 and 2003 and the four
calendar quarters in 2004, through
October 22, 2004. We obtained the
trading price information shown below
from Bloomberg Financial Services,
without independent verification.
S-3
HIGH LOW CLOSE
-------- --------- -------
2002
Quarter ended March 31........... 56.485 48.75 56.37
Quarter ended June 30............ 56.85 46.025 48.30
Quarter ended September 30....... 48.75 38.98 41.64
Quarter ended December 31........ 49.85 35.53 46.21
2003
Quarter ended March 31........... 49.50 38.52 42.63
Quarter ended June 30............ 54.74 43.11 51.07
Quarter ended September 30....... 53.65 47.61 47.61
Quarter ended December 31........ 49.01 42.75 47.89
2004
Quarter ended March 31........... 49.30 45.89 46.30
Quarter ended June 30............ 47.00 42.59 45.38
Quarter ended September 30 ...... 46.61 42.43 45.76
Quarter ending December 31
(through October 22, 2004)..... 46.86 24.10 26.29
Closing price on October 22, 2004 26.29
As indicated above, the market price of
the index stock has been highly volatile
during recent periods. It is impossible
to predict whether the price of the
index stock will rise or fall, and you
should not view the historical prices of
the index stock as an indication of
future performance. See "Additional Risk
Factors Specific to Your Note -- The
Market Price of Your Note May Be
Influenced by Many Unpredictable
Factors" in the accompanying prospectus
supplement no. 371.
HYPOTHETICAL PAYMENT AMOUNT: The table below shows the hypothetical
payment amounts that we would deliver on
the stated maturity date in exchange for
each $27.00 of the outstanding face
amount of your note, if the final index
stock price were any of the hypothetical
prices shown in the left column. For
this purpose, we have assumed that there
will be no anti-dilution adjustments to
the exchange rate and no market
disruption events.
The prices in the left column represent
hypothetical closing prices for one
share of index stock on the
determination date and are expressed as
percentages of the initial index stock
price, which equals $27.00 per share.
The amounts in the right column
represent the hypothetical cash value of
the index stock to be exchanged, based
on the corresponding hypothetical final
index stock prices, and are expressed as
percentages of the initial index stock
price. Thus, a hypothetical payment
amount of 100% means that the cash value
of the index stock that we would deliver
in exchange for each $27.00 of the
outstanding face amount of your note on
the stated maturity date would equal
100% of the initial index stock price,
or $27.00, based on the corresponding
hypothetical final index stock price and
the assumptions noted above.
S-4
HYPOTHETICAL FINAL INDEX HYPOTHETICAL PAYMENT
STOCK PRICE AS % OF AMOUNTS AS % OF
INITIAL INDEX STOCK PRICE $27.00 FACE AMOUNT
------------------------- ------------------
150% 120%
125% 120%
120% 120%
110% 110%
100% 100%
75% 75%
50% 50%
0% 0%
The payment amounts shown above are
entirely hypothetical; they are based on
market prices for the index stock that
may not be achieved on the determination
date and on assumptions that may prove
to be erroneous. The actual market value
of your note on the stated maturity date
or at any other time, including any time
you may wish to sell your note, may bear
little relation to the hypothetical
payment amounts shown above, and those
amounts should not be viewed as an
indication of the financial return on an
investment in the offered notes or on an
investment in the index stock. Please
read "Additional Risk Factors Specific
to Your Note" and "Hypothetical Payment
Amounts on Your Note" in the
accompanying prospectus supplement no.
371.
Payments on your note are economically
equivalent to the amounts that would be
paid on a combination of other
instruments. For example, payments on
your note are economically equivalent to
the amounts that would be paid on a
combination of an interest-bearing bond
bought, and an option sold, by the
holder (with an implicit option premium
paid over time to the holder). The
discussion in this paragraph does not
modify or affect the terms of the
offered notes or the United States
income tax treatment of the offered
notes as described under "Supplemental
Discussion of Federal Income Tax
Consequences" in the accompanying
prospectus supplement no. 371.
HEDGING: In anticipation of the sale of the
offered notes, we and/or our affiliates
have entered into hedging transactions
involving purchases of the index stock
on the trade date. For a description of
how our hedging and other trading
activities may affect the value of your
note, see "Additional Risk Factors
Specific to Your Note -- Our Business
Activities May Create Conflicts of
Interest Between You and Us" and "Use of
Proceeds and Hedging" in the
accompanying prospectus supplement no.
371.
S-5