Goldman Sachs 2000 Annual Report Download - page 35

Our assets under supervision consist of assets under man-
agement and other client assets. Assets under management
typically generate fees based on a percentage of their value
and include our mutual funds, separate accounts managed
for institutional and individual investors, our merchant
banking funds and other alternative investment funds.
Other client assets consist of assets in brokerage accounts
of primarily high-net-worth individuals, on which we earn
commissions. Substantially all assets under supervision are
valued as of calendar month-end.
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The following table sets forth the net revenues of our Asset Management and Securities Services segment:
Asset Management and Securities Services Net Revenues
Year Ended November
(in millions) 2000 1999 1998
Asset Management $1,345 $ 919 $ 675
Securities Services 940 772 730
Commissions 2,307 1,522 1,368
Total $4,592 $3,213 $2,773
The following table sets forth our assets under supervision:
Assets Under Supervision
As of November 30
(in millions) 2000 1999 1998
Assets under management $293,842 $258,045 $194,821
Other client assets 197,876 227,424 142,018
Total $491,718 $485,469 $336,839
2000 versus 1999. Asset Management and Securities
Services net revenues were $4.59 billion, an increase of
43% compared with 1999. Operating expenses rose 26%
compared with 1999, primarily due to higher levels of com-
pensation commensurate with growth in net revenues, and
increased costs associated with global expansion, higher
employment levels and increased business activity. Pre-tax
earnings in Asset Management and Securities Services
increased to $1.58 billion in 2000 compared with $817 mil-
lion in 1999.
Asset Management net revenues were 46% higher than last
year, primarily reflecting a 31% increase in average assets
under management as well as favorable changes in the
composition of assets managed. Assets under management
grew 14% over 1999, with net inflows of $40 billion, par-
tially offset by market depreciation of $4 billion.
Performance fees also contributed to the increase in net
revenues. The decline in other client assets in 2000 princi-
pally reflects market depreciation in the value of our client
assets. Securities Services net revenues increased 22%
over 1999, primarily due to growth in our securities lending
and margin lending, partially offset by reduced spreads in
the fixed income matched book. Commissions increased
52% compared with 1999 due to record transaction volumes
in global equity markets and our increased share of income
and gains from our merchant banking funds.
1999 versus 1998. Net revenues in Asset Management
and Securities Services were $3.21 billion, an increase of
16% compared with 1998. All major components of the
business contributed to the net revenue growth in 1999.
Operating expenses increased, principally due to the inclu-
sion of compensation expense related to services rendered
by managing directors who, prior to our conversion to cor-
porate form, were profit participating limited partners and
increased costs associated with the continuing expansion of
the business. Pre-tax earnings in Asset Management and
Securities Services were $817 million in 1999 compared with
$1.15 billion in 1998.
Asset Management net revenues increased 36%, primarily
reflecting a 32% increase in average assets under manage-
ment as well as favorable changes in the composition of