American Express 2003 Annual Report Download - page 19

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(p.17_axp)
The foundations we have put in place at AEFA through new products and enhanced capabilities position us for
stronger results as market conditions continue to improve. While we still have more work to do, we generated
solid momentum in several key areas:
•making good progress toward our goal of improving investment results in both equity and fixed income;
•strengthening our asset management capabilities;
•broadening our product offerings; and
•growing and retaining our advisor force while many competitors are retrenching.
AEFA reported net income of $669 million in 2003, up 6 percent from $632 million a year ago. Revenues rose
10 percent due to higher investment income, increased management and distribution fees and greater insur-
ance premiums. Total assets owned, managed and administered were $365.3 billion, up 58 percent from last
year, or 22 percent excluding the Threadneedle acquisition. Our growth in total assets, even excluding assets
added through the Threadneedle acquisition, was among the strongest of our peer group.
Improving Investment Performance
Over the past several years, we have taken significant steps to attract and retain leading investment talent to help
strengthen our retail and institutional products and grow our global financial services business. We are seeing
results. Many of the equity funds where we have changed managers have improved track records. We are also
seeing good performance in new portfolios introduced to further enhance our product lines. Overall, despite
some weaker than targeted results in some of our equity funds last year, we have made substantial improve-
ments in investment performance over the past several years.
In fixed income, we are pleased with the progress we have seen since we implemented a new organizational
model in the first quarter of 2003. Our fixed income managers are now organized by sector and are focused on
outperforming specific benchmarks. Performance has improved since we introduced the new model.
We are also seeing improved performance in international and global equity funds, which are now managed by
Threadneedle staff.
Strengthening Our Asset Management Capabilities
During 2003, we significantly strengthened our asset management capabilities through the acquisition of
Threadneedle Asset Management, a premier asset management organization in the United Kingdom with approx-