Prudential 2003 Annual Report Download - page 42

Revenues
The following tables set forth the Investment Management segment’s revenues, as shown in the table above under
“—Operating Results,” by source and assets under management for the periods indicated. In managing our business we
analyze assets under management, which do not correspond to GAAP assets, because our primary sources of revenues
are fees based on assets under management.
Year ended December 31,
2003 2002 2001
(in millions)
Revenues:
Retail customers(1) .......................................................................... $ 187 $ 184 $ 210
Institutional customers ........................................................................ 372 335 383
General account ............................................................................. 219 221 227
Sub-total ............................................................................... 778 740 820
Mutual fund revenues(2) ...................................................................... 481 495 537
Total revenues .......................................................................... $1,259 $1,235 $1,357
(1) Consists of individual mutual funds and both variable annuities and variable life insurance asset management revenues from our separate
accounts. This also includes funds invested in proprietary mutual funds through our defined contribution plan products. Revenues from fixed
annuities and the fixed rate options of both variable annuities and variable life insurance are included in the general account.
(2) Represents mutual fund revenues other than asset management fees paid to affiliates, which are included in the appropriate categories above.
December 31,
2003
December 31,
2002
(in billions)
Assets Under Management (at fair market value):
Investment Management Segment—Investment Management & Advisory Services
Retail customers(1) ........................................................................ $ 81.2 $ 79.9
Institutional customers(2) ................................................................... 94.8 85.2
General account .......................................................................... 127.8 122.9
Total Investment Management & Advisory Services ......................................... $303.8 $288.0
(1) Consists of individual mutual funds, including investments in our mutual funds through wrap-fee products, and both variable annuities and
variable life insurance assets in our separate accounts. Fixed annuities and the fixed rate options of both variable annuities and variable life
insurance are included in the general account.
(2) Consists of third-party institutional assets and group insurance contracts.
2003 to 2002 Annual Comparison. Revenues, as shown in the table above under “—Operating Results,”
increased $24 million, from $1.235 billion in 2002 to $1.259 billion in 2003. The increase came primarily from the
management of institutional customer assets inclusive of revenues associated with an international real estate asset
manager that we acquired at the end of 2002. A decline in mutual fund revenues from lower average account balances
on which our fees are based was partially offset by the inclusion of revenues of the mutual fund business of American
Skandia, commencing May 1, 2003.
2002 to 2001 Annual Comparison. Revenues decreased $122 million, from $1.357 billion in 2001 to $1.235
billion in 2002. The decrease came from a decline of $74 million in revenues from management of institutional and
retail customer assets as well as a decline of $42 million in our mutual fund revenue. The decrease in revenues from
management of institutional and retail customer assets came primarily from declines in market value of the underlying
equity assets under management on which our fees are based, as well as lower loan origination and servicing revenue.
The decline in mutual fund revenues was the result of lower average market values of customer accounts on which our
fees are based.
Expenses
2003 to 2002 Annual Comparison. Expenses, as shown in the table above under “—Operating Results,” were
essentially unchanged from 2002. Lower employee termination and facility consolidation costs in 2003, and lower
asset based and other expenses in our mutual fund operations were offset by the inclusion of expenses associated with
the mutual fund business of American Skandia commencing May 1, 2003 and an international real estate asset manager
which we acquired at the end of 2002.
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