Goldman Sachs 2001 Annual Report Download - page 33

page 31 GOLDMAN SACHS ANNUAL REPORT 2001
The following table sets forth the operating results of our Asset Management and Securities Services segment:
Asset Management and Securities Services Operating Results
YEAR ENDED NOVEMBER
(IN MILLIONS) 2001 2000 1999
Asset Management $1,473 $1,345 $ 919
Securities Services 1,133 940 772
Commissions 3,020 2,307 1,522
Total net revenues 5,626 4,592 3,213
Operating expenses 3,501 3,008 2,396
Pre-tax earnings $2,125 $1,584 $ 817
Our assets under supervision consist of assets under manage-
ment 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.
The following table sets forth our assets under supervision:
Assets Under Supervision
AS OF NOVEMBER 30
(IN MILLIONS) 2001 2000 1999
Assets under management $350,718 $293,842 $258,045
Other client assets 152,192 197,876 227,424
Total $502,910 $491,718 $485,469
2001 versus 2000–Net revenues in Asset Management and
Securities Services were $5.63 billion, an increase of 23%
compared with 2000. All major components of the business con-
tributed to the net revenue growth in 2001. Operating expenses
increased 16%, primarily due to the inclusion of SLK and the
growth in employment levels during 2000, partially offset by
lower discretionary compensation and the effect of expense
reduction initiatives implemented in 2001. Pre-tax earnings in
Asset Management and Securities Services were $2.13 billion in
2001 compared with $1.58 billion in 2000.
Asset Management net revenues of $1.47 billion increased 10%
compared with 2000, primarily reflecting an increase of 11% in
average assets under management. Net inflows of $67 billion,
principally in money market assets, were partially offset by
declines in equity asset values due to market depreciation.
Securities Services net revenues of $1.13 billion increased 21%
over 2000, primarily due to increased spreads in our fixed
income matched book and the contribution from SLK, partially
offset by lower net revenues in securities lending and margin
lending. Commissions increased 31% compared with 2000 to
$3.02 billion, principally reflecting the contribution from SLK’s
clearing and execution business.
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, pri-
marily due to higher levels of compensation commensurate with
growth in net revenues, and increased costs associated with
global expansion, higher employment levels and increased busi-
ness activity. Pre-tax earnings in Asset Management and
Securities Services increased to $1.58 billion in 2000 compared
with $817 million in 1999.
Asset Management net revenues were 46% higher than 1999,
primarily reflecting a 31% increase in average assets under man-
agement as well as favorable changes in the composition
of assets managed. Assets under management grew 14% over
1999, with net inflows of $40 billion, partially offset by market