Goldman Sachs 2002 Annual Report Download - page 38

Assets under management typically generate fees based
on a percentage of their value and include our mutual
funds, separate accounts managed for institutional and
Managem ent’s D iscussion and A nalysis
36 G O L D M A N SA CH S 2002 AN N UA L R EPO RT
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) 2002 2001 2000
Asset Management $1,653 $1,473 $1,345
Securities Services 981 1,133 940
Commissions 3,273 3,020 2,307
Total net revenues 5,907 5,626 4,592
Operating expenses 3,794 3,501 3,008
Pre-tax earnings $2,113 $2,125 $1,584
individual investors, our merchant banking funds and
other alternative investment funds. Substantially all assets
under management are valued as of calendar month end.
The following table sets forth our assets under management by asset class:
ASSETS UNDER MANAGEMENT BY ASSET CLASS
AS OF NOVEMBER 30
(IN BILLIONS) 2002 2001 2000
Money markets $108 $122 $ 72
Fixed income and currency 96 71 57
Equity 86 96 107
Alternative investments(1) 58 62 58
Total $348 $351 $294
(1) Includes merchant banking, quantitative asset allocation and other similar funds that we manage, 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) 2002 2001 2000
Balance, beginning of year $351 $294 $258
Net assets inflows 967 40
Net market depreciation (12) (10) (4)
Balance, end of year $348 $351 $294
V E R S U S 2001
Net revenues in Asset Management and Securities
Services were $5.91 billion for the year, 5% higher than
2001. Asset Management net revenues of $1.65 billion
increased 12% compared with last year, primarily reflect-
ing an 8% increase in average assets under management
and increased incentive income. Assets under manage-
ment were $348 billion at the end of 2002, essentially flat
compared with the end of 2001. Market depreciation of
$12 billion, primarily in equity assets, was partially offset
by net asset inflows of $9 billion, primarily in fixed
income and equity assets. The decline in net asset inflows
compared with 2001 was primarily due to a reduction in
money market net inflows, which were particularly
strong in 2001. Securities Services net revenues were
$981 million compared with $1.13 billion for 2001, pri-
marily reflecting lower net revenues in our margin lend-
ing business and fixed income matched book.
Commissions were $3.27 billion, up 8% compared with
2001, primarily due to increased net revenues from
equity commissions, in part due to the transfer of the
Nasdaq fee-based business into Commissions, partially
offset by lower merchant banking overrides (i.e., an
increased share of a fund’s income and gains when the
return on the fund’s investments exceeds certain thresh-
old returns) and reduced clearing fees.