Analysis of results by business

	Barclays Global Investors

	The following section analyses the Group’s performance within the businesses, showing selected income and expenditure information extracted from the Group’s profit and loss account. As inter-business activities are included within these figures, the total income and expenditure for the businesses do not equate to the amounts reported in the Group’s results.

	Financial performance
		2000	1999	1998
		£m	£m	£m
	Net fees and commissions	435	318	277
	Net interest income	10	6	9
	Other operating income	(1)	1	1
	Total income	444	325	287
	Total costs	(379)	(281)	(236)
	Loss from associated undertakings	–	(1)	–
	Operating profit	65	43	51

Operating profit grew 51% to £65m in a year of major investments and flat or declining markets in most parts of the business. This was mainly as a result of a 37% growth in fees and commissions. This revenue growth resulted from strong active product growth and performance, which generated significant incentive fees (active fees comprised almost 50% of total fees and commissions). There was also strong securities lending revenue growth, reflecting value chain extension strategies to enhance the profitability of indexing. Total assets under management grew 13% to £550bn from £486bn at 31st December 1999; £34bn of the increase was attributable to net new business and £30bn was attributable to market and exchange rate translation movements. Assets under management consist of £435bn of indexed funds and £115bn under advanced active management. Most geographical regions experienced good growth in assets. The strong profit performance was achieved notwithstanding a 21% increase in business as usual costs which largely reflected the growth in business volumes. Strategic investment expenditure increased to £51m (1999 £35m) with investments aimed at ensuring sustained growth and increased market share in one of the fastest growing sectors in the financial services industry. Revenue related costs grew £31m with a 53% increase in performance related remuneration reflecting the strong revenue and profit performance for the year. Notable accomplishments in 2000 include a successful and extensive launch of iShares (exchange-traded funds) in the US, UK and Canada; the introduction of several new Advanced Active products in the US, UK and Europe; and first-to-market internet-based product and service offerings that both open new markets to BGI and enhance client service. Operating Profit in 1999 declined by £8m and costs rose by £45m reflecting the doubling of strategic investments (£28m). Fees and commissions increased by 15% and assets under management by 31% because of growth in assets, favourable market conditions and new markets for securities lending.