INVESTING IN BUSINESS-BUILDING ACTIVITIES Growing Our Global Payments Businesses New and Enhanced Rewards Products in the U.S. I 15 AXP I In one major move, we enhanced our classic charge card line-up by introducing the American Express Rewards Green and Rewards Gold cards for U.S. consumers. These cards offer automatic enrollment in  Membership Rewards and double points for everyday purchases  at supermarkets, gas stations, drugstores, home improvement stores and other locations. In addition to revitalizing our U.S. consumer charge card offerings, these new cards provide cardmembers with enhanced opportunities to earn rewards and support our efforts to drive spending at everyday locations. In the U.S. consumer market, we focused on offering customers more compelling products and value propositions. In particular, we expanded our industry- leading rewards-based products and programs, and added new partnerships to benefit cardmembers.  We know that rewards are an important driver of cardmember spending, loyalty and profitability. Because of the issues that we faced in 2001 with write- downs in our investment portfolio at AEFA, we took additional steps to make sure that the risks we take are appropriate not only for individual businesses but  for the company as a whole. Toward that end, we established a Corporate Risk Management Committee charged with monitoring overall risk levels across the company and recommending improvements to our practices and policies. The Committee includes repre- sentatives from each of our business units, along with Corporate Treasury, Compliance and Internal Audit. While we made good progress in lowering our overall risk profile, we did have several disappointments. In Hong Kong, a sharp rise in personal bankruptcies caused us to substantially increase write-offs in our card business and our personal lending portfolio. American Express is a world leader in providing charge and credit cards to consumers, small businesses and corporations. During 2002, we moved aggressively to expand our portfolio of proprietary, co-branded and affinity cards in the United States and internationally, as well as to grow our Global Network Services business in our international markets. Meanwhile, we continued to improve our risk profile at American Express Bank by lowering corporate lending balances while building a more diversified consumer and private banking portfolio. Corporate and other loans represented only 9 percent of AEB’s portfolio at the end of the year, which is about half the proportion they were at the end of 2001. We also made progress in improving the overall quality of our investment portfolio at AEFA. We reduced the percentage of high-yield holdings from approximately 12 percent to 6 percent as a result of our ongoing portfolio rebalancing. Continued declines in interest rates have increased the value of many of our bond holdings, to the point where we had approximately  $1 billion of unrealized net gains across our investment portfolio at the end of 2002. Despite the difficult economic and market conditions, we were able to invest heavily in the areas of our core businesses that can provide growth for the company over the short, moderate and long term. Here is a look at some of our progress in key areas of our business.