related to the 2002 and 2001 year-end positions, respectively. Such gains, if any, would mitigate the negative effect of a stronger U.S. dollar on overseas earnings for the subsequent year. AMERICAN EXPRESS FINANCIAL ADVISORS Results of Operations STATEMENTS OF INCOME American Express Financial Advisors’ net income increased to $632 million in 2002 from $52 million in 2001, a 95 percent decline from 2000. Included in 2001 results are restructuring charges of $107 million ($70 million after-tax) and one-time costs of $11 million ($8 million after-tax) directly related to the September 11th terrorist attacks. In addition, 2001 investment income and results included $1.01 billion in charges ($669 million after-tax) from the write down and sale of high-yield securities and from reducing risk within its investment portfolio. 2002 results include a benefit of $7 million ($4 million after-tax) to reverse a portion of the 2001 September 11th related reserves as a result of lower than anticipated insured loss claims. Total revenues rose 17 percent in 2002 due to higher investment income, reflecting the impact of the high-yield losses noted previously and higher levels of invested assets, higher insurance premiums and advice services fees, and higher distribution fees partially offset by reduced management fees from lower average levels of managed assets. Total revenues fell 22 percent in 2001 due to lower yields on investment portfolio products, reduced management and distribution fees and the high-yield losses noted earlier. Investment income increased 77 percent reflecting the effect of the $1.01 billion in investment losses noted previously, higher average invested assets and the effect of depreciation in the S&P 500 this year on the value of options hedging outstanding stock market certificates and equity indexed annuities, which was offset in the related provisions for losses and benefits. Investment income decreased 49 percent in 2001 as the benefit from growth in average invested assets was more than offset by the high-yield losses mentioned earlier and from the decrease in the value of options hedging the outstanding stock market certificates, which was offset in the certificate provision for losses and benefits. Lower average yields, primarily due to the investment portfolio repositioning, also contributed to the decline in investment income during 2001. AEFA’s gross realized gains on sales of securities classified as Available-for-Sale, using the specific identification method, were $342 million, $157 million and $48 million for the years ended December 31, 2002, 2001 and 2000, respectively. Gross realized losses on sales were ($168 million), ($529 million) and ($35 million) for the same periods. AEFA also recognized losses of I 43 AXP I FINANCIAL REVIEW Years Ended December 31, (Millions) 2002 2001 2000 Revenues: Investment income $ 2,058 $ 1,162 $ 2,292 Management and distribution fees 2,292 2,458 2,812 Other revenues 1,267 1,171 1,026 Total revenues 5,617 4,791 6,130 Expenses: Provision for losses and benefits: Annuities 1,034 989 1,018 Insurance 737 648 556 Investment certificates 183 329 337 Total 1,954 1,966 1,911 Human resources 1,898 1,969 2,093 Other operating expenses 907 762 643 Restructuring charges — 107 — Disaster recovery charge (7) 11 — Total expenses 4,752 4,815 4,647 Pretax income (loss) 865 (24) 1,483 Income tax provision (benefit) 233 (76) 451 Net income $ 632 $ 52 $ 1,032