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Management’s Discussion and Analysis
48 GOLDMAN SACHS 2003 ANNUAL REPORT
in 2001, reduced employment levels and lower levels of
business activity. Pre-tax earnings of $2.14 billion in
2002 decreased 5% compared with 2001.
asset management and securities services
Our Asset Management and Securities Services segment is
divided into two components:
• asset management – Asset Management pro-
vides investment advisory and financial planning
services to a diverse client base of institutions and
individuals and generates revenues in the form of
management and incentive fees.
• securities services – Securities Services includes
prime brokerage, financing services and securities
lending, all of which generate revenues primarily
in the form of interest rate spreads or fees.
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) 2003 2002 2001
Asset Management $1,853 $1,653 $1,473
Securities Services 1,005 856 932
Total net revenues 2,858 2,509 2,405
Operating expenses 1,890 1,562 1,325
Pre-tax earnings $ 968 $ 947 $1,080
individual investors, our merchant banking funds and
other alternative investment funds. Substantially all assets
under management are valued as of calendar month end.
Assets under management typically generate fees based
on a percentage of their value and include our mutual
funds, separate accounts managed for institutional and
The following table sets forth our assets under management by asset class:
ASSETS UNDER MANAGEMENT BY ASSET CLASS
AS OF NOVEMBER 30
(IN BILLIONS) 2003 2002 2001
Money markets $89 $108 $122
Fixed income and currency 115 96 71
Equity 98 86 96
Alternative investments(1) 71 58 62
Total $373 $348 $351
(1) Includes merchant banking funds, quantitatively driven investment funds and other funds with nontraditional investment strategies that we man-
age, as well as funds where we recommend one or more subadvisors for our clients.
The following table sets forth a summary of the changes in our assets under management:
ASSETS UNDER MANAGEMENT
YEAR ENDED NOVEMBER 30
(IN BILLIONS) 2003 2002 2001
Balance, beginning of year $348 $351 $294
Net asset (outflows)/inflows (4) 967
Net market appreciation/(depreciation) 29 (12) (10)
Balance, end of year $373 $348 $351