Goldman Sachs 2007 Annual Report Download - page 46

Download and view the complete annual report

Please find page 46 of the 2007 Goldman Sachs annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

Management’s Discussion and Analysis
In determining fair value, we separate our “Financial instruments, owned at fair value” and “Financial instruments sold, but not
yet purchased, at fair value” into two categories: cash instruments and derivative contracts, as set forth in the following table:
Financial Instruments by Category
As of November
2007 2006
Financial Financial
Financial Instruments Sold,
Financial Instruments Sold,
Instruments but not Yet
Instruments but not Yet
Owned, Purchased,
Owned, Purchased,
(in millions) at Fair Value at Fair Value at Fair Value at Fair Value
Cash trading instruments $324,181 $112,018 $253,056 $ 87,244
ICBC 6,807
(2) —
5,194
(2) —
SMFG
(1)
4,060 3,627
(5)
4,505 3,065
(5)
Other principal investments 11,933
(3) — 4,263
(3) —
Principal investments 22,800 3,627 13,962 3,065
Cash instruments 346,981 115,645 267,018 90,309
Exchange-traded 13,541 12,280 14,407 13,851
Over-the-counter 92,073 87,098 53,136 51,645
Derivative contracts 105,614
(4) 99,378
(6)
67,543
(4) 65,496
(6)
Total $452,595 $215,023 $334,561 $155,805
(1) The fair value of our Japanese yen-denominated investment in the convertible preferred stock of Sumitomo Mitsui Financial Group, Inc. (SMFG) includes the effect of
foreign exchange revaluation, for which we maintain an economic currency hedge.
(2) Includes interests of $4.30 billion and $3.28 billion as of November 2007 and November 2006, respectively, held by investment funds managed by Goldman Sachs. The
fair value of our investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC), which trade on The Stock Exchange of Hong Kong, includes
the effect of foreign exchange revaluation for which we maintain an economic currency hedge.
(3) The following table sets forth the principal investments (in addition to our investments in ICBC and SMFG) included within the Principal Investments component of our
Trading and Principal Investments segment:
As of November
2007 2006
(in millions) Corporate Real Estate Total Corporate Real Estate Total
Private $7,297 $2,361 $ 9,658 $2,741 $555 $3,296
Public 2,208 67 2,275 934 33 967
Total $9,505 $2,428 $11,933 $3,675 $588 $4,263
(4) Net of cash received pursuant to credit support agreements of $59.05 billion and $24.06 billion as of November 2007 and November 2006, respectively.
(5) Represents an economic hedge on the shares of common stock underlying our investment in the convertible preferred stock of SMFG.
(6) Net of cash paid pursuant to credit support agreements of $27.76 billion and $16.00 billion as of November 2007 and November 2006, respectively.
44 Goldman Sachs 2007 Annual Report