10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 1-13908

Invesco Ltd.

(Exact Name of Registrant as Specified in Its Charter)

Bermuda (State or Other Jurisdiction of Incorporation or Organization)	98-0557567 (I.R.S. Employer Identification No.)
1555 Peachtree Street, N.E., Suite 1800, Atlanta, GA (Address of Principal Executive Offices)	30309 (Zip Code)

Registrant’s telephone number, including area code: (404) 892-0896

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Common Shares, $0.20 par value per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

     Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No þ

     As of March 31, 2010, the most recent practicable date, 436,280,943 of the company’s common shares, par value $0.20 per share, were outstanding.

TABLE OF CONTENTS

     We include cross references to captions elsewhere in this Quarterly Report on Form 10-Q, which we refer to as this “Report,” where you can find related additional information. The following table of contents tells you where to find these captions.

	Page
PART I – Financial Information
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Income		4
Condensed Consolidated Statements of Cash Flows		5
Condensed Consolidated Statements of Changes in Equity		6
Notes to the Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 3. Quantitative and Qualitative Disclosures about Market Risk		65
Item 4. Controls and Procedures		66
PART II – Other Information
Item 1. Legal Proceedings		67
Item 1A. Risk Factors		67
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		67
Item 3. Defaults upon Senior Securities		68
Item 4. Submission of Matters to a Vote of Security Holders		68
Item 6. Exhibits		69
Signatures		70
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

2

Item 1. Financial Statements

Invesco Ltd.

Condensed Consolidated Balance Sheets

(Unaudited)

	As of
$ in millions	March 31, 2010			December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents		597.0			762.0
Cash and cash equivalents of consolidated investment products		331.8			28.0
Unsettled fund receivables		758.1			383.1
Accounts receivable		303.8			289.3
Accounts receivable of consolidated investment products		66.2			—
Investments		154.0			182.4
Prepaid assets		68.5			57.6
Other current assets		79.2			77.9
Deferred tax asset, net		65.7			57.7
Assets held for policyholders		1,221.0			1,283.0
Total current assets		3,645.3			3,121.0
Non-current assets:
Investments		141.8			157.4
Investments of consolidated investment products		6,105.7			685.0
Prepaid assets		11.1			16.2
Other non-current assets		18.5			13.0
Deferred sales commissions		28.3			23.8
Deferred tax asset, net		58.0			65.8
Property and equipment, net		221.1			220.7
Intangible assets, net		135.9			139.1
Goodwill		6,425.8			6,467.6
Total non-current assets		13,146.2			7,788.6
Total assets		16,791.5			10,909.6
LIABILITIES AND EQUITY
Current liabilities:
Unsettled fund payables		735.9			367.9
Income taxes payable		84.4			82.8
Other current liabilities		378.2			559.9
Other current liabilities of consolidated investment products		281.6			4.8
Policyholder payables		1,221.0			1,283.0
Total current liabilities		2,701.1			2,298.4
Non-current liabilities:
Long-term debt		745.7			745.7
Long-term debt of consolidated investment products		5,119.1			—
Other non-current liabilities		224.7			244.7
Total non-current liabilities		6,089.5			990.4
Total liabilities		8,790.6			3,288.8
Commitments and contingencies (See Note 12)
Equity:
Equity attributable to common shareholders:
Common shares ($0.20 par value; 1,050.0 million authorized; 459.5 million shares issued as of March 31, 2010, and December 31, 2009)		91.9			91.9
Additional paid-in-capital		5,652.5			5,688.4
Treasury shares		(852.5	)		(892.4	)
Retained earnings		1,686.8			1,631.4
Retained earnings appropriated for investors in consolidated investment products		383.8			—
Accumulated other comprehensive income/(loss), net of tax		340.5			393.6
Total equity attributable to common shareholders		7,303.0			6,912.9
Equity attributable to noncontrolling interests in consolidated entities		697.9			707.9
Total equity		8,000.9			7,620.8
Total liabilities and equity		16,791.5			10,909.6

See accompanying notes.

3

Invesco Ltd.

Condensed Consolidated Statements of Income

(Unaudited)

	Three Months Ended
	March 31,
$ in millions, except per share data	2010			2009
Operating revenues:
Investment management fees		593.5			436.5
Service and distribution fees		112.5			89.0
Performance fees		1.4			10.9
Other		11.7			12.2
Total operating revenues		719.1			548.6
Operating expenses:
Employee compensation		237.6			235.8
Third-party distribution, service and advisory		195.6			148.2
Marketing		28.3			26.9
Property, office and technology		53.5			45.9
General and administrative		50.0			30.0
Transaction and integration		17.2			—
Total operating expenses		582.2			486.8
Operating income		136.9			61.8
Other income/(expense):
Equity in earnings of unconsolidated affiliates		5.8			2.5
Interest income		1.6			4.8
Interest income of consolidated investment products		52.5			—
Gains/(losses) of consolidated investment products, net		103.1			(86.5	)
Interest expense		(12.4	)		(15.9	)
Interest expense of consolidated investment products		(20.8	)		—
Other gains and losses, net		(2.1	)		(4.2	)
Income/(loss) before income taxes, including gains and losses attributable to noncontrolling interests		264.6			(37.5	)
Income tax provision		(50.1	)		(20.3	)
Net income/(loss), including gains and losses attributable to noncontrolling interests		214.5			(57.8	)
(Gains)/losses attributable to noncontrolling interests in consolidated entities, net		(119.5	)		88.5
Net income attributable to common shareholders		95.0			30.7
Earnings per share:
— basic	$	0.22		$	0.08
— diluted	$	0.21		$	0.08
Dividends declared per share	$	0.1025		$	0.10

See accompanying notes.

4

Invesco Ltd.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended March 31,
$ in millions	2010			2009
Operating activities:
Net income/(loss), including gains attributable to noncontrolling interests of $119.5 million during the three months ended March 31, 2010 (losses of $88.5 million during the three months ended March 31, 2009)		214.5			(57.8	)
Adjustments to reconcile net income to net cash used in operating activities:
Amortization and depreciation		18.3			16.0
Share-based compensation expense		24.2			23.7
Gains on disposal of property, equipment, software, net		—			0.1
Purchase of trading investments		(7.0	)		(7.0	)
Proceeds from sale of trading investments		39.7			7.8
Other gains and losses, net		2.1			4.2
(Gains)/losses of consolidated investment products, net		(103.1	)		86.5
Tax benefit from share-based compensation		22.3			29.8
Excess tax benefits from share-based compensation		(6.8	)		—
Equity in earnings of unconsolidated affiliates		(5.8	)		(2.5	)
Dividends from unconsolidated affiliates		1.2			—
Changes in operating assets and liabilities:
Change in cash held by consolidated investment products		(116.1	)		14.0
(Increase)/decrease in receivables		(449.1	)		(61.7	)
Increase/(decrease) in payables		188.6			(233.1	)
Net cash used in operating activities		(177.0	)		(180.0	)
Investing activities:
Purchase of property and equipment		(15.5	)		(5.3	)
Disposal of property and equipment		—			0.3
Purchase of available-for-sale investments		(20.2	)		(5.8	)
Proceeds from sale of available-for-sale investments		16.2			12.4
Purchase of investments by consolidated investment products		(325.4	)		(26.2	)
Proceeds from sale of investments by consolidated investment products		453.1			16.1
Returns of capital in investments of consolidated investment products		23.2			4.7
Purchase of other investments		(11.6	)		(1.9	)
Proceeds from sale of other investments		14.3			3.1
Net cash provided by/(used in) investing activities		134.1			(2.6	)
Financing activities:
Proceeds from exercises of share options		3.7			1.7
Dividends paid		(44.8	)		(38.9	)
Excess tax benefits from share-based compensation		6.8			—
Capital invested into consolidated investment products		0.8			8.0
Capital distributed by consolidated investment products		(27.5	)		(14.6	)
Repayments of debt of consolidated investment products		(48.3	)		—
Net repayments under credit facility		—			(4.5	)
Repayments of senior notes		—			(3.0	)
Acquisition of remaining noncontrolling interest in subsidiary		—			(10.3	)
Net cash used in financing activities		(109.3	)		(61.6	)
Decrease in cash and cash equivalents		(152.2	)		(244.2	)
Foreign exchange movement on cash and cash equivalents		(12.8	)		(7.9	)
Cash and cash equivalents, beginning of period		762.0			585.2
Cash and cash equivalents, end of period		597.0			333.1
Supplemental Cash Flow Information:
Interest paid		(9.6	)		(9.7	)
Interest received		1.6			5.2
Taxes paid		(34.8	)		(15.5	)

See accompanying notes.

5

Invesco Ltd.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

	Equity Attributable to Common Shareholders
												Retained
												Earnings
												Appropriated					Non-
												for Investors in		Accumulated			Controlling
			Additional									Consolidated		Other			Interests in
	Common		Paid-in-			Treasury			Retained			Investment		Comprehensive			Consolidated			Total
$ in millions	Shares		Capital			Shares			Earnings			Products		Income			Entities			Equity
January 1, 2010		91.9		5,688.4			(892.4	)		1,631.4			—		393.6			707.9			7,620.8
Adoption of FASB Statement No. 167		—		—			—			5.2			274.3		(5.2	)		—			274.3
January 1, 2010, as adjusted		91.9		5,688.4			(892.4	)		1,636.6			274.3		388.4			707.9			7,895.1
Net income, including gains and losses attributable to noncontrolling interests		—		—			—			95.0			104.4					15.1			214.5
Other comprehensive income:
Currency translation differences on investments in overseas subsidiaries		—		—			—			—			5.1		(57.4	)		—			(52.3	)
Change in accumulated OCI related to employee benefit plans		—		—			—			—			—		5.3			—			5.3
Change in net unrealized gains on available-for-sale investments		—		—			—			—			—		6.0			—			6.0
Tax impacts of changes in accumulated other comprehensive income balances		—		—			—			—			—		(1.8	)		—			(1.8	)
Total comprehensive income		—		—			—			—			—		—			—			171.7
Change in noncontrolling interests in consolidated entities, net		—		—			—			—			—		—			(25.1	)		(25.1	)
Dividends		—		—			—			(44.8	)		—		—			—			(44.8	)
Employee share plans:		—		—			—			—			—		—			—			—
Share-based compensation		—		24.2			—			—			—		—			—			24.2
Vested shares		—		(56.9	)		56.9			—			—		—			—			—
Exercise of options		—		(10.0	)		13.9			—			—		—			—			3.9
Tax impact of share-based payment		—		6.8			—			—			—		—			—			6.8
Purchase of shares		—		—			(30.9	)		—			—		—			—			(30.9	)
March 31, 2010		91.9		5,652.5			(852.5	)		1,686.8			383.8		340.5			697.9			8,000.9

	Equity Attributable to Common Shareholders
															Non-
												Accumulated			Controlling
			Additional									Other			Interests in
	Common		Paid-in-			Treasury			Retained			Comprehensive			Consolidated			Total
$ in millions	Shares		Capital			Shares			Earnings			Loss			Entities			Equity
January 1, 2009		85.3		5,352.6			(1,128.9	)		1,476.3			(95.8	)		906.7			6,596.2
Net income/(loss), including gains and losses attributable to noncontrolling interests		—		—			—			30.7			—			(88.5	)		(57.8	)
Other comprehensive income:
Currency translation differences on investments in overseas subsidiaries		—		—			—			—			(72.1	)		—			(72.1	)
Change in accumulated OCI related to employee benefit plans		—		—			—			—			0.4			—			0.4
Change in net unrealized gains on available-for-sale investments		—		—			—			—			(4.0	)		—			(4.0	)
Tax impacts of changes in accumulated other comprehensive income balances		—		—			—			—			(0.9	)		—			(0.9	)
Total comprehensive income																			(134.4	)
Change in noncontrolling interests in consolidated entities, net		—		—			—			—			—			(58.5	)		(58.5	)
Dividends		—		—			—			(38.9	)		—			—			(38.9	)
Employee share plans:																—			—
Share-based compensation		—		23.7			—			—			—			—			23.7
Vested shares		—		(81.4	)		81.4			—			—			—			—
Exercise of options		—		(8.7	)		10.4			—			—			—			1.7
Tax impact of share-based payment		—		(5.0	)		—			—			—			—			(5.0	)
Purchase of shares		—		—			(11.5	)		—			—			—			(11.5	)
Acquisition of remaining noncontrolling interest in subsidiary		—		(8.9	)		—			—			—			(1.4	)		(10.3	)
March 31, 2009		85.3		5,272.3			(1,048.6	)		1,468.1			(172.4	)		758.3			6,363.0

See accompanying notes.

6

Invesco Ltd.

Notes to the Condensed Consolidated Financial Statements

1. ACCOUNTING POLICIES

  Corporate Information

     Invesco Ltd. (Parent) and all of its consolidated entities (collectively, the company or Invesco) provide retail, institutional and high-net-worth clients with an array of global investment management capabilities. The company’s sole business is investment management.

  Basis of Accounting and Consolidation

     The accompanying Condensed Consolidated Balance Sheets, Statements of Income, Statements of Cash Flows, and Statement of Changes in Equity (together, the Condensed Consolidated Financial Statements) have not been audited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2009. In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair presentation of the financial condition and results of operations for the interim periods presented. All significant intercompany transactions, balances, revenues and expenses are eliminated upon consolidation.

     The Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP and consolidate the financial statements of the Parent, all of its controlled subsidiaries, any variable interest entities (VIEs) required to be consolidated, and any non-VIE general partnership investments where the company is deemed to have control. Control is deemed to be present when the Parent holds a majority voting interest or otherwise has the power to govern the financial and operating policies of the subsidiary so as to obtain the benefits from its activities. The company provides investment management services to, and has transactions with, various private equity funds, real estate funds, fund-of-funds, collateralized loan obligations (CLOs), and other investment products sponsored by the company for the investment of client assets in the normal course of business. The company serves as the investment manager, making day-to-day investment decisions concerning the assets of these products. Certain of these entities are considered to be VIEs.

     The company follows the provisions of Accounting Standards Codification (ASC) Topic 810, “Consolidation,” when accounting for VIEs, including Accounting Standards Update (ASU) No. 2010-10, “Amendments for Certain Investment Funds” (ASU 2010-10), detailed in “Accounting Pronouncements Recently Adopted” below. VIEs, or entities in which the risks and rewards of ownership are not directly linked to voting interests, for which the company is the primary beneficiary are consolidated. For all investment products with the exception of CLOs, if the company is deemed to have a variable interest in, and to have the majority of rewards/risks of ownership associated with, these entities, then the company is deemed to be their primary beneficiary and is required to consolidate these entities. For CLOs, if the company is deemed to have the power to direct the activities of the CLO that most significantly impact the CLO’s economic performance, and the obligation to absorb losses/right to receive benefits from the CLO that could potentially be significant to the CLO, then the company is deemed to be the CLO’s primary beneficiary and is required to consolidate the CLO. Investment products that are consolidated are referred to as consolidated investment products in the accompanying Condensed Consolidated Financial Statements.

     A significant portion of consolidated investment products are CLOs. CLOs are investment vehicles created for the sole purpose of issuing collateralized loan instruments that offer investors the opportunity for returns that vary with the risk level of their investment. The notes issued by the CLOs are backed by diversified collateral asset portfolios consisting primarily of loans or structured debt. For managing the collateral for the CLO entities, the company earns investment management fees, including in some cases subordinated management fees, as well as contingent incentive fees. The company has invested in certain of the entities, generally taking a relatively small portion of the unrated, junior subordinated position. At March 31, 2010, the company held $19.0 million of investments in these CLOs (before consolidation), which represents its maximum risk of loss. The company’s investments in CLOs are generally subordinated to other interests in the entities and entitles the company and other subordinated tranche investors to receive the residual cash flows, if any, from the entities. Investors in the CLOs have no recourse against the company for any losses sustained in the CLO structure.

7

     All of the investments held and notes issued by consolidated investment products are presented at fair value in the company’s Condensed Consolidated Balance Sheet at March 31, 2010, and interest income and expense of consolidated CLOs is presented as other income/(expense) in the company’s Condensed Consolidated Income Statement for the three months ended March 31, 2010. The surplus of consolidated CLO assets over consolidated CLO liabilities is reflected in the company’s Condensed Consolidated Balance Sheet as retained earnings appropriated for investors in consolidated investment products. Current period gains/(losses) attributable to investors in consolidated CLOs are included in (gains)/losses attributable to noncontrolling interests in consolidated entities in the Condensed Consolidated Statement of Income and in the retained earnings appropriated for investors in consolidated investment products in the Condensed Consolidated Balance Sheet, as they are considered noncontrolling interests of the company. See Note 9, “Consolidated Investment Products,” for additional details.

     The company also consolidates certain private equity funds that are structured as partnerships in which the company is the general partner receiving a management and/or performance fee. Private equity investments made by the underlying funds consist of direct investments in, or fund investments in other private equity funds that hold direct investments in, equity or debt securities in operating companies that are generally not initially publicly traded. Private equity funds are considered investment companies and are therefore accounted for under the Accounting Standards Codification (ASC) Topic 946, “Financial Services – Investment Companies.” The company has retained the specialized industry accounting principles of these investment products in its Condensed Consolidated Financial Statements. See Note 9, “Consolidated Investment Products,” for additional details.

     Non-VIE general partnership investments are deemed to be controlled by the company and are consolidated under a voting interest entity (VOE) model, unless the limited partners have the substantive ability to remove the general partner without cause based upon a simple majority vote or can otherwise dissolve the partnership, or unless the limited partners have substantive participating rights over decision-making.

     If the company determines that it does not control the private equity partnership funds in which it has invested, the equity method of accounting is used to account for the company’s investment in these entities. The equity method of accounting is also used to account for investments in joint ventures and noncontrolled subsidiaries in which the company’s ownership is between 20 and 50 percent. Equity investments are carried initially at cost (subsequently adjusted to recognize the company’s share of the profit or loss of the investee after the date of acquisition) and are included in investments on the Condensed Consolidated Balance Sheets. The proportionate share of income or loss is included in equity in earnings of unconsolidated affiliates in the Condensed Consolidated Statements of Income. If the company determines that it does not control CLOs in which it has invested, the company accounts for its investments as available-for-sale investments.

     The financial statements have been prepared primarily on the historical cost basis; however, certain items are presented using other bases such as fair value, where such treatment is required or voluntarily elected. The financial statements of subsidiaries are prepared for the same reporting year as the Parent and use consistent accounting policies, which, where applicable, have been adjusted to U.S. GAAP from local generally accepted accounting principles or reporting regulations. Noncontrolling interests in consolidated entities represent the interests in certain entities consolidated by the company either because the company has control over the entity or has determined that it is the primary beneficiary, but of which the company does not own all of the entity’s equity.

     In preparing the financial statements, management is required to make estimates and assumptions that affect reported revenues, expenses, assets, liabilities and disclosure of contingent liabilities. The primary estimates relate to investment valuation, goodwill impairment and taxes. Use of available information and application of judgment are inherent in the formation of estimates. Actual results in the future could differ from such estimates and the differences may be material to the financial statements.

  Reclassifications

     The presentation of certain prior period reported amounts has been reclassified to be consistent with the current presentation. Such reclassifications had no impact on net income or equity attributable to common shareholders.

  Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements

     In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations (FASB Statement No. 141(R)),” and Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (FASB Statement No. 160).” Under FASB Statement No. 141(R), which is now encompassed in ASC Topic 805, “Business Combinations,” the acquirer must recognize, with certain exceptions, 100% of the fair values of assets acquired, liabilities assumed, and noncontrolling interests in acquisitions of less than 100% controlling interest when the acquisition constitutes a change in control of

8

the acquired entity. Additionally, when an acquirer obtains partial ownership in an acquiree, an acquirer recognizes and consolidates assets acquired, liabilities assumed and any noncontrolling interests at 100% of their fair values at that date regardless of the percentage ownership in the acquiree. As goodwill is calculated as a residual, all goodwill of the acquired business, not just the acquirer’s share, is recognized under this “full-goodwill” approach. Contingent consideration obligations that are elements of consideration transferred are recognized as of the acquisition date as part of the fair value transferred in exchange for the acquired business. Acquisition-related costs incurred in connection with a business combination shall be expensed. FASB Statement No. 160, which is now encompassed in ASC Topic 810, “Consolidation,” establishes new accounting and reporting standards for noncontrolling interests (formerly known as “minority interests”) in a subsidiary and for the deconsolidation of a subsidiary. FASB Statement No. 141(R) and FASB Statement No. 160 became effective for the company on January 1, 2009. FASB Statement No. 141(R) was applied prospectively, while FASB Statement No. 160 required retroactive adoption of the presentation and disclosure requirements for existing noncontrolling interests but prospective adoption of all of its other requirements. The adoption of FASB Statement No. 141(R) amended the definition of a business, which led to a change in the company’s basis, but not the company’s conclusion, of determining that it has one reporting unit for goodwill impairment purposes. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Policies and Estimates – Goodwill” for additional information.

     In February 2008, the FASB issued Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157 (FSP FAS 157-2).” FSP FAS 157-2, which is now encompassed in ASC Topic 820, amended FASB Statement No. 157 to delay the effective date for nonfinancial assets and nonfinancial liabilities except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). For items within its scope, FSP FAS 157-2 delayed the effective date of FASB Statement No. 157 to January 1, 2009. As of January 1, 2008, Invesco applied the fair value measurement and disclosure provisions of FASB Statement No. 157 to its financial assets and financial liabilities that are recognized or disclosed at fair value in the financial statements. As of January 1, 2009, Invesco applied the fair value measurement and disclosure provisions of FASB Statement No. 157 to nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. Those items include: (1) nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination or other new basis event, but not measured at fair value in subsequent periods; (2) nonfinancial long-lived assets measured at fair value for an impairment assessment under FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets;” (now encompassed in ASC Topic 360, “Property, Plant and Equipment”); (3) nonfinancial liabilities for exit or disposal activities initially measured at fair value under FASB Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities;” (now encompassed in ASC Topic 420, “Exit or Disposal Cost Obligations”) and (4) nonfinancial assets and nonfinancial liabilities measured at fair value in the second step of a goodwill impairment test. The adoption of FSP FAS 157-2 did not have a material impact on the company’s financial statements.

     In April 2008, the FASB issued Staff Position No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (FSP FAS 142-3). FSP FAS 142-3, which is now encompassed in ASC Topic 350, “Intangibles – Goodwill and Other” (ASC Topic 350), amended the factors that should be considered in developing renewal or extension assumptions used to determine the useful life over which to amortize the cost of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets,” also now encompassed in ASC Topic 350. FSP FAS 142-3 required an entity to consider its own assumptions about renewal or extension of the term of the arrangement, consistent with its expected use of the asset. FSP FAS 142-3 was intended to improve the consistency between the useful life of an intangible asset determined under FASB Statement No. 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141(R) (now encompassed in ASC Topic 805) and other U.S. GAAP. The guidance provided by FSP FAS 142-3 for determining the useful life of a recognized intangible asset was to be applied prospectively to intangible assets acquired after the effective date, which is January 1, 2009. FSP FAS 142-3 did not have a material impact on the company’s financial statements.

     During June 2008, the FASB issued Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (FSP EITF 03-6-1). FSP EITF 03-6-1, which is now encompassed in ASC Topic 260, “Earnings Per Share” (ASC Topic 260), addressed whether instruments granted in share-based payment transactions are participating securities prior to vesting and need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in FASB Statement No. 128, “Earnings Per Share,” also now encompassed in ASC Topic 260. The guidance in the FSP EITF 03-6-1 provided that only those unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities that should be included in the calculation of basic EPS under the two-class method. The FASB concluded that the holder of a share-based award receives a noncontingent transfer of value each time the entity declares a dividend, and therefore the share-based award meets the definition of a participating security. FSP EITF 03-6-1 was effective for financial statements issued for fiscal years beginning after December 15, 2008, with all prior period EPS data being adjusted retrospectively. The adoption of FSP EITF 03-6-1 on January 1, 2009, required the company to include unvested restricted

9

stock units (RSUs) that contain nonforfeitable dividend equivalents as outstanding common shares for purposes of calculating basic EPS. The adoption of FSP EITF 03-6-1 did not have a material impact on the company’s calculation of diluted EPS for periods prior to January 1, 2009.

     In December 2008, the FASB issued FASB Staff Position No. FAS 140-4 and FIN 46(R)-8, “Disclosures about Transfers of Financial Assets and Interests in Variable Interest Entities (FSP FAS 140-4 and FIN 46(R)-8),” which became effective for the company on March 31, 2009. FSP FAS 140-4 and FIN 46(R)-8, which is now encompassed in ASC Topic 860, “Transfers and Servicing,” required additional disclosures by public entities with a) continuing involvement in transfers of financial assets to a special purpose entity or b) a variable interest in a variable interest entity. The adoption of FSP FAS 140-4 and FIN 46(R)-8 did not have a material impact on the company’s financial statements. See Note 9, “Consolidated Investment Products,” for additional disclosures.

     In January 2009, the FASB issued Staff Position No. EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20 (FSP EITF 99-20-1),” which became effective for the company on March 31, 2009. FSP EITF 99-20-1, which is now encompassed in ASC Topic 325, revised the impairment guidance provided by EITF 99-20 for beneficial interests to make it consistent with the requirements of FASB Statement No. 115 (now encompassed in ASC Topic 320) for determining whether an impairment of other debt and equity securities is other-than-temporary. FSP EITF 99-20-1 eliminated the requirement to rely exclusively on market participant assumptions about future cash flows and permitted the use of reasonable management judgment of the probability that the holder will be unable to collect all amounts due. Instead, FSP 99-20-1 required that an other-than-temporary impairment be recognized when it is probable that there has been an adverse change in the holder’s estimated cash flows. FSP EITF 99-20-1 did not have a material impact on the company’s financial statements.

     On April 9, 2009, the FASB issued three Staff Positions (FSPs) intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions that Are Not Orderly (FSP FAS 157-4),” now encompassed in ASC Topic 820, provided guidelines for making fair value measurements more consistent with the principles presented in FASB Statement No. 157. FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1),” now encompassed in ASC Topic 825, enhanced consistency in financial reporting by increasing the frequency of fair value disclosures. FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2),” now encompassed in ASC Topic 320-10-65, provided additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities.

     FSP FAS 157-4 addressed the measurement of fair value of financial assets when there is no active market or where the price inputs being used could be indicative of distressed sales. FSP FAS 157-4 reaffirmed the definition of fair value already reflected in FASB Statement No. 157, which is the price that would be paid to sell an asset in an orderly transaction (as opposed to a distressed or forced transaction) at the measurement date under current market conditions. FSP FAS 157-4 also reaffirmed the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. FSP FAS 157-4 became effective for the company for the period ended June 30, 2009. The application of FSP FAS 157-4 did not have a material impact on the Consolidated Financial Statements. See Note 2, “Fair Value of Assets and Liabilities,” and Note 9, “Consolidated Investment Products,” for additional details.

     FSP FAS 107-1 was issued to improve the fair value disclosures for any financial instruments that are not currently reflected on the balance sheets of companies at fair value. Prior to issuing FSP FAS 107-1, fair values of these assets and liabilities were only disclosed on an annual basis. FSP FAS 107-1 required these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all financial instruments not measured on the balance sheet at fair value. FSP FAS 107-1 became effective for the company for the period ended June 30, 2009, which required the company to make annual disclosures in its interim financial statements, which are included in Note 2, “Fair Value of Assets and Liabilities,” Note 3, “Investments,” and Note 4, “Debt.”

     FSP FAS 115-2 was intended to improve the consistency in the timing of impairment recognition and provide greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. FSP FAS 115-2 required increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. The company adopted FSP FAS 115-2 on April 1, 2009. Upon adoption, the company recorded a cumulative effect adjustment of $1.5 million to the April 1, 2009, opening balance of retained earnings with a corresponding adjustment to accumulated other comprehensive income.

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     In May 2009, the FASB issued Statement No. 165, “Subsequent Events” (FASB Statement No. 165). FASB Statement No. 165, which is now encompassed in ASC Topic 855, “Subsequent Events,” established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, FASB Statement No. 165 provided clarity around the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosure that an entity should make about events or transactions that occurred after the balance sheet date. FASB Statement No. 165 was effective for interim and annual financial reporting periods ending after June 15, 2009, and was applied prospectively. On February 24, 2010, the FASB issued Accounting Standards Update 2010-09, “Amendments to Certain Recognition and Disclosure Requirements” (ASU 2010-09). ASU 2010-09 amended the guidance on subsequent events to remove the requirement for Securities and Exchange Commission filers to disclose the date through which an entity has evaluated subsequent events.

     In June 2009, the FASB issued Statement No. 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140,” (FASB Statement No. 166), which addresses the effects of eliminating the qualifying special-purpose entity concept from FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FASB Statement No. 140), and will generally subject those entities to the consolidation guidance applied to other VIEs as provided by FASB Statement No. 167, “Amendments to FASB Interpretation No. 46(R)” (FASB Statement No. 167). FASB Statement No. 166 is now encompassed in ASC Topic 860. FASB Statement No. 167 is now encompassed in ASC Topic 810. Specifically, FASB Statement No. 166 introduces the concept of a participating interest, which will limit the circumstances where the transfer of a portion of a financial asset will qualify as a sale, assuming all other derecogntion criteria are met, and clarifies and amends the derecogntion criteria for determining whether a transfer qualifies for sale accounting. FASB Statement No. 166 will be applied prospectively to new transfers of financial assets occurring on or after January 1, 2010. The adoption of FASB Statement No. 166 did not have a material impact on the company’s Consolidated Financial Statements.

     In June 2009, the FASB issued Statement No. 167, which amends certain provisions of FIN 46(R). Specifically, FASB Statement No. 167 amends certain provisions for determining whether an entity is a VIE, it requires a qualitative rather than a quantitative analysis to determine whether the company is the primary beneficiary of a VIE, it amends FIN 46(R)’s consideration of related party relationships in the determination of the primary beneficiary of a VIE by providing an exception regarding de facto agency relationships in certain circumstances, it requires continuous assessments of whether the company is a VIE’s primary beneficiary, and it requires enhanced disclosures about the company’s involvement with VIEs, which are generally consistent with those disclosures required by FSP FAS 140-4 and FIN 46(R)-8 discussed above. In February 2010, the FASB issued ASU 2010-10, a deferral of the effective date of FASB Statement No. 167 for a reporting entity’s interests in certain investment funds which have attributes of investment companies, for which the reporting entity does not have an obligation to fund losses, and which are not structured as securitization entities. In addition, the deferral applies to a reporting entity’s interest in money market fund-type products. The company has determined that all of its managed funds with the exception of certain collateralized loan obligation products (CLOs) qualify for the deferral.

     FASB Statement No. 167, which was effective January 1, 2010, had a significant impact on the presentation of the company’s financial statements, as its provisions required the company to consolidate certain CLOs that were not previously consolidated. The cumulative effect adjustment upon adoption of FASB Statement No. 167 at January 1, 2010, resulted in an appropriation of retained earnings and a reclassification of other comprehensive income into retained earnings of $274.3 million and $5.2 million, respectively. The company’s Consolidated Statement of Income for the three months ended March 31, 2010, reflect the elimination of $8.7 million in management fees earned from these CLOs, and the addition of $52.5 million in interest income, $20.8 million in interest expense, and $85.1 million in net other gains. The $105.8 million net income impact during the three months ended March 31, 2010, of consolidation of these CLOs is largely offset by gains/(losses) attributable to investors in noncontrolling interests of $104.4 million. Prior to the adoption of FASB Statement No. 167, the company accounted for its investments in these CLOs as available-for-sale investments, with changes in the value of the company’s interests being recorded through other comprehensive income. After the adoption of FASB Statement No. 167, the change in value of the company’s investments in these CLOs is reflected in the company’s net income. For the three months ended March 31, 2010, the net impact to the company of its investments in these CLOs was $1.4 million. The Condensed Consolidated Balance Sheet at March 31, 2010, reflects the consolidation of $5.8 billion in assets held and $5.1 billion in debt issued by these CLOs, despite the fact that the assets cannot be used by the company, nor is the company obligated for the debt. Retained earnings appropriated for investors of consolidated investment products of $383.8 million is presented as part of the company’s total equity, reflecting the excess of the consolidated CLOs’ assets over their liabilities, attributable to noncontrolling third-party investors in their consolidated CLOs at March 31, 2010. In addition, the company’s Condensed Consolidated Cash Flow Statement for the three months ended March 31, 2010, reflects the cash flows of these CLOs. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs.

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     Upon adoption of FASB Statement No. 167, the assets and liabilities of the consolidated CLOs were measured at fair value, as the determination of the carrying amounts was not practicable. The company has elected the fair value option under ASC Topic 825-10-25 to measure the assets and liabilities of all consolidated CLOs at fair value subsequent to the date of initial adoption of FASB Statement No. 167, as the company has determined that measurement of the notes issued by consolidated CLOs at fair value better correlates with the value of the assets held by consolidated CLOs, which are held to provide the cash flows for the note obligations. The financial information of the consolidated CLOs is included in the company’s consolidated financial statements on a one-month lag. See Note 9, “Consolidated Investment Products,” for a consolidating balance sheet at March 31, 2010.

     In July 2009, the FASB issued Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – A Replacement of FASB Statement No. 162,” (FASB Statement No. 168). FASB Statement No. 168 replaced the existing hierarchy of U.S. Generally Accepted Accounting Principles with the FASB ASC as the single source of authoritative U.S. accounting and reporting standards applicable for all nongovernmental entities, with the exception of guidance issued by the U.S. Securities and Exchange Commission and its staff. FASB Statement No. 168 is now encompassed in ASC Topic 105, “Generally Accepted Accounting Principles,” and was effective July 1, 2009. The company has replaced references to FASB accounting standards with ASC references, where applicable and relevant, in this Report.

     In August 2009, the FASB issued Accounting Standards Update 2009-05, “Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value” (ASU 2009-05). ASU 2009-05 amends Topic 820 by providing additional guidance (including illustrative examples) clarifying the measurement of liabilities at fair value. When a quoted price in an active market for the identical liability is not available, the amendments in ASU 2009-05 require that the fair value of a liability be measured using one or more of the listed valuation techniques that should maximize the use of relevant observable inputs and minimize the use of unobservable inputs. In addition, the amendments in ASU 2009-05 clarify that when estimating the fair value of a liability, an entity is not required to include a separate input or adjustment to the other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments also clarify how the price of a traded debt security (i.e., an asset value) should be considered in estimating the fair value of the issuer’s liability. The amendments in ASU 2009-05 became effective for the company on October 1, 2009. The company has made the required disclosures in Note 9, “Debt.”

     In September 2009, the FASB issued Accounting Standards Update 2009-12, “Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent)” (ASU 2009-12). ASU 2009-12 amends ASC Topic 820 to provide further guidance on how to measure the fair value of investments in alternative investments, such as hedge, private equity, real estate, venture capital, offshore and fund of funds. ASU 2009-12 permits, as a practical expedient, the measurement of fair value of an investment on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with ASC Topic 946, “Financial Services — Investment Companies,” including measurement of all or substantially all of the fund’s underlying investments at fair value in accordance with ASC Topic 820. ASU 2009-12 is effective for interim and annual periods ending after December 15, 2009. The adoption of ASU 2009-12 did not have a material impact on the Consolidated Financial Statements.

     In January 2010, the FASB issued Accounting Standards Update 2010-06, “Improving Disclosures about Fair Value Measurements” (ASU 2010-06). ASU 2010-06 amends Topic 820 to require a number of additional disclosures regarding fair value measurements. Specifically, ASU 2010-06 requires entities to disclose: (1) the amount of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers; (2) the reasons for any transfers in or out of Level 3; and (3) information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. ASU 2010-06 also clarifies existing fair value disclosures about the appropriate level of disaggregation and about inputs and valuation techniques for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the rollforward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The company has made the required disclosures in Note 9, “Consolidated Investment Products.”

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2. FAIR VALUE OF ASSETS AND LIABILITIES

     The carrying value and fair value of financial instruments is presented in the below summary table. The fair value of financial instruments held by consolidated investment products is presented in Note 9, “Consolidated Investment Products.”

	March 31, 2010								December 31, 2009
	Footnote		Carrying						Carrying
$ in millions	Reference		Value			Fair Value			Value			Fair Value
Cash and cash equivalents		2		597.0			597.0			762.0			762.0
Available for sale investments		2, 3		102.1			102.1			115.2			115.2
Assets held for policyholders				1,221.0			1,221.0			1,283.0			1,283.0
Trading investments		2, 3		51.8			51.8			84.6			84.6
Support agreements		9, 12		(2.5	)		(2.5	)		(2.5	)		(2.5	)
Policyholder payables				(1,221.0	)		(1,221.0	)		(1,283.0	)		(1,283.0	)
Long-term debt		4		(745.7	)		(778.0	)		(745.7	)		(765.5	)
				2.7			(29.6	)		213.6			193.8

     A three-level valuation hierarchy exists for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

     An asset or liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

     There are three types of valuation approaches: a market approach, which uses observable prices and other relevant information that is generated by market transactions involving identical or comparable assets or liabilities; an income approach, which uses valuation techniques to convert future amounts to a single, discounted present value amount; and a cost approach, which is based on the amount that currently would be required to replace the service capacity of an asset.

     The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Cash equivalents

     Cash equivalents include cash investments in money market funds and time deposits. Cash and cash equivalents invested in affiliated money market funds totaled $318.0 million at March 31, 2010 (December 31, 2009: $465.1 million). Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value of the underlying funds, and are classified within level 1 of the valuation hierarchy. Cash investments in time deposits of $102.0 million at March 31, 2010 (December 31, 2009: $90.5 million) are very short-term in nature and are accordingly valued at cost plus accrued interest, which approximates fair value, and are classified within level 2 of the valuation hierarchy.

Available-for-sale investments

     Available-for-sale investments include amounts seeded into affiliated investment products, and investments in foreign time deposits and in affiliated unconsolidated collateralized loan obligations (CLOs). Seed money is valued under the market approach through the use of quoted market prices available in an active market and is classified within level 1 of the valuation hierarchy. Seed money investments are investments held in Invesco managed funds with the purpose of providing capital to the funds during their development periods. These investments are recorded at fair value using quoted market prices in active markets; there is no modeling or additional information needed to arrive at the fair values of these investments. Foreign time deposits are valued at cost plus accrued

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interest, which approximates fair value, and are classified within level 2 of the valuation hierarchy. CLOs are valued using an income approach through the use of certain observable and unobservable inputs. Due to current liquidity constraints within the market for CLO products that require the use of unobservable inputs, these investments are classified as level 3 within the valuation hierarchy.

Trading investments

     Trading investments primarily include the investments of the deferred compensation plans that are offered to certain Invesco employees. These investments are primarily invested in affiliated funds that are held to economically hedge current and non-current deferred compensation liabilities. Trading securities are valued under the market approach through the use of quoted prices in an active market and are classified within level 1 of the valuation hierarchy.

Assets held for policyholders

     Assets held for policyholders represent investments held by one of the company’s subsidiaries, which is an insurance entity that was established to facilitate retirement savings plans in the U.K. The assets held for policyholders are accounted for at fair value pursuant to ASC Topic 944, “Financial Services — Insurance,” and are comprised primarily of affiliated unitized funds. The assets are measured at fair value under the market approach based on the quoted prices of the underlying funds in an active market and are classified within level 1 of the valuation hierarchy. The policyholder liabilities are indexed to the value of the assets held for policyholders.

     The following table presents, for each of the hierarchy levels described above, the carrying value of the company’s assets, including major security type for equity and debt securities, which are measured at fair value on the face of the statement of financial position as of March 31, 2010.

	As of March 31, 2010
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Fair Value		Identical Assets		Observable Inputs		Unobservable Inputs
$ in millions	Measurements		(Level 1)		(Level 2)		(Level 3)
Current assets:
Cash equivalents:
Money market funds		318.0		318.0		—		—
Time deposits		102.0		—		102.0		—
Investments:*
Available-for-sale:
Seed money		77.9		77.9		—		—
Foreign time deposits		23.8		—		23.8		—
Trading investments:
Investments related to deferred compensation plans		51.8		51.8		—		—
Other		—		—		—		—
Assets held for policyholders		1,221.0		1,221.0		—		—
Total current assets		1,794.5		1,668.7		125.8		—
Non-current assets:
Investments – available-for-sale*:
CLOs**		0.4		—		—		0.4
Total assets at fair value		1,794.9		1,668.7		125.8		0.4

*	Other current investments of $0.5 million are excluded from this table. Other non-current equity and cost method investments of $136.9 million and $4.5 million are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.
**	The company adopted FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, resulting in the consolidation of CLOs for which the company has an underlying investment of $18.6 million at March 31, 2010 (before consolidation). In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs.

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     The following table presents, for each of the hierarchy levels described above, the carrying value of the company’s assets that are measured at fair value as of December 31, 2009:

	As of December 31, 2009
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Fair Value		Identical Assets		Observable Inputs		Unobservable Inputs
$ in millions	Measurements		(Level 1)		(Level 2)		(Level 3)
Current assets:
Cash equivalents:
Money market funds		498.6		498.6		—		—
Time deposits		90.5		—		90.5		—
Investments:*
Available-for-sale:
Seed money		74.8		74.8		—		—
Foreign time deposits		22.5		—		22.5		—
Trading investments:
Investments related to deferred compensation plans		84.6		84.6		—		—
Assets held for policyholders		1,283.0		1,283.0		—		—
Total current assets		2,054.0		1,941.0		113.0		—
Non-current assets:
Investments – available-for-sale:
CLOs		17.9		—		—		17.9
Total assets at fair value		2,071.9		1,941.0		113.0		17.9

* Other current investments of $0.5 million are excluded from this table. Other non-current equity method and other investments of $134.7 million and $4.8 million are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.

     The following table shows a reconciliation of the beginning and ending fair value measurements for level 3 assets during the three month periods ending March 31, 2010 and 2009, which are comprised solely of CLOs, and are valued using significant unobservable inputs:

	Three Months			Three Months
	Ended March			Ended March
$ in millions	31, 2010			31, 2009
Beginning balance		17.9			17.5
Adoption of FASB Statement No. 167*		(17.4	)		—
Beginning balance, as adjusted		0.5			17.5
Net unrealized gains and losses included in accumulated other comprehensive income/(loss)**		(0.1	)		(0.1	)
Purchases and issuances		—			—
Other-than-temporary impairment included in other gains and losses, net		—			(3.6	)
Return of capital		—			(0.5	)
Ending balance		0.4			13.5

*

The company adopted FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, resulting in the consolidation of CLOs for which the company has an underlying investment of $18.6 million at March 31, 2010 (before consolidation). The adjustment of $17.4 million in the table above reflects the elimination of the company’s equity interest upon adoption. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs.

**

Of these net unrealized gains and losses included in accumulated other comprehensive income/(loss), $0.1million for the three months ended March 31, 2010, (three months ended March 31, 2009: $0.1 million) are attributed to the change in unrealized gains and losses related to assets still held at March 31, 2010.

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3. INVESTMENTS

     The disclosures below include details of the company’s investments. Investments held by consolidated investment products are detailed in Note 9, “Consolidated Investment Products.”

     Current Investments

	As of
	March 31,		December 31,
$ in millions	2010		2009
Available-for-sale investments:
Seed money		77.9		74.8
Foreign time deposits		23.8		22.5
Trading investments:
Investments related to deferred compensation plans		51.8		84.6
Other		0.5		0.5
Total current investments		154.0		182.4

     Non-current Investments

	As of
	March 31,		December 31,
$ in millions	2010		2009
Available-for-sale investments:
CLOs		0.4		17.9
Equity method investments		136.9		134.7
Other		4.5		4.8
Total non-current investments		141.8		157.4

     The portion of trading gains and losses for the three months ended March 31, 2010, that relates to trading securities still held at March 31, 2010, was $2.7 million net loss (three months ended March 31, 2009: $1.1 million net loss).

     Realized gains and losses recognized in the income statement during the year from investments classified as available-for-sale are as follows:

	For the Three Months Ended
	March 31, 2010
	Proceeds		Gross Realized		Gross Realized
$ in millions	from Sales		Gains		Losses
Current available-for-sale investments		16.0		0.4		(0.5	)
Non-current available-for-sale investments		0.2		—		—

     Upon the sale of available-for-sale securities, net realized losses of $0.1 million were transferred from accumulated other comprehensive income into the Condensed Consolidated Statements of Income during the three months ended March 31, 2010. The specific identification method is used to determine the realized gain or loss on securities sold or otherwise disposed.

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     Gross unrealized holding gains and losses recognized in other accumulated comprehensive income from available-for-sale investments are presented in the table below:

	March 31, 2010									December 31, 2009
			Gross		Gross							Gross		Gross
			Unrealized		Unrealized							Unrealized		Unrealized
			Holding		Holding			Fair				Holding		Holding			Fair
$ in millions	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Current:
Seed money		73.3		7.7		(3.1	)		77.9		74.7		5.9		(5.8	)		74.8
Foreign time deposits		23.8		—		—			23.8		22.5		—		—			22.5
Current available-for-sale investments		97.1		7.7		(3.1	)		101.7		97.2		5.9		(5.8	)		97.3
Non-current:
CLOs*		0.4		—		—			0.4		12.6		5.3		—			17.9
Non-current available-for-sale investments:		0.4		—		—			0.4		12.6		5.3		—			17.9
		97.5		7.7		(3.1	)		102.1		109.8		11.2		(5.8	)		115.2

* The company adopted FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, resulting in the consolidation of CLOs for which the company has an underlying investment of $18.6 million at March 31, 2010 (before consolidation). In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs.

     Available-for-sale debt securities as of March 31, 2010, by maturity, are set out below:

	Available-for-Sale
$ in millions	(Fair Value)
Less than one year		23.8
One to five years		—
Five to ten years		0.4
Greater than ten years		—
Total available-for-sale		24.2

     The following table provides the breakdown of available-for-sale investments with unrealized losses at March 31, 2010:

Less Than 12 Months

12 Months or Greater

Total

Gross

Gross

Gross

Unrealized

Unrealized

Unrealized

$ in millions

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

Seed money (39 funds)

9.3

(0.4

)

13.9

(2.7

)

23.2

(3.1

)

     The following table provides the breakdown of available-for-sale investments with unrealized losses at December 31, 2009:

Less Than 12 Months

12 Months or Greater

Total

Gross

Gross

Gross

Unrealized

Unrealized

Unrealized

$ in millions

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

Seed money (44 funds)

5.7

(0.3

)

25.1

(5.5

)

30.8

(5.8

)

     The company has reviewed investment securities for other-than-temporary impairment in accordance with its accounting policy and has recognized other-than-temporary impairment charges of $2.1million on seed money investments during the three months ended March 31, 2010, as discussed in Note 2.

     The gross unrealized losses from seed money investments during 2009 and the three months ended March 31, 2010, were primarily caused by declines in the market value of the underlying funds and foreign exchange movements. After conducting a review of the financial condition and near-term prospects of the underlying securities in the seeded funds as well as the severity and duration of the impairment, the company does not consider any material portion of its gross unrealized losses on these securities to be other-than-temporarily impaired. The securities are expected to recover their value over time and the company has the intent and ability to hold the securities until this recovery occurs.

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     As discussed in Note 1, “Accounting Policies,” the company adopted FSP FAS 115-2, now encompassed in ASC Topic 320, on April 1, 2009. Upon adoption, the company recorded a cumulative effect adjustment of $1.5 million to the April 1, 2009, opening balance of retained earnings with a corresponding adjustment to accumulated other comprehensive income, representing the non-credit component of previously-recognized other-than-temporary impairment (OTTI). During the three months ended March 31, 2010, there were no charges to other comprehensive income from other-than-temporary impairment related to non-credit related factors. A rollforward of the cumulative credit-related other-than-temporary impairment charges recognized in earnings for which some portion of the impairment was recorded in other comprehensive income is as follows:

	Three months ended
In millions	March 31, 2010
Beginning balance		18.8
Adoption of FASB Statement No. 167*		(18.0	)
Beginning balance, as adjusted		0.8
Additional credit losses recognized during the period related to securities for which:
No OTTI has been previously recognized		—
OTTI has been previously recognized		—
Ending balance		0.8

* The company adopted FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, resulting in the consolidation of CLOs for which the company has an underlying investment of $18.6 million at March 31, 2010 (before consolidation). Of the $18.8 million cumulative credit-related OTTI balance at January 1, 2010, $18.0 million relates to CLOs that were consolidated into the company’s Condensed Consolidated Balance Sheet, resulting in the elimination of our equity interest.

4. DEBT

     The disclosures below include details of the company’s investments. Debt of consolidated investment products is detailed in Note 9, “Consolidated Investment Products.”

	March 31, 2010				December 31, 2009
	Carrying				Carrying
$ in millions	Value		Fair Value		Value		Fair Value
Unsecured Senior Notes*:
5.625% — due April 17, 2012		215.1		228.7		215.1		227.0
5.375% — due February 27, 2013		333.5		351.7		333.5		343.4
5.375% — due December 15, 2014		197.1		197.6		197.1		195.1
Floating rate credit facility expiring June 9, 2012		—		—		—		—
Total debt		745.7		778.0		745.7		765.5
Less: current maturities of total debt		—		—		—		—
Long-term debt		745.7		778.0		745.7		765.5

* The company’s Senior Note indentures contain certain restrictions on mergers or consolidations. Beyond these items, there are no other restrictive covenants in the indentures.

     The fair market value of the company’s total debt was determined by market quotes provided by Bloomberg. In the absence of an active market, the company relies upon the average price quoted by brokers for determining the fair market value of the debt. The level of trading, both in number of trades and amount of Notes traded, has increased to a level that the company believes market quotes to be a reasonable representation of the current fair market value of the Notes.

Analysis of Borrowings by Maturity:

$ in millions	March 31, 2010
2010		—
2011		—
2012		215.1
2013		333.5
Thereafter		197.1
Total debt		745.7

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     Amounts borrowed under the credit facility are repayable at maturity on June 9, 2012, provided that such maturity date will automatically be accelerated to March 16, 2012, if 90% or more of the $300.0 million face amount of the company’s 5.625% senior notes due 2012, are not repaid, repurchased or defeased prior to March 16, 2012. Subject to certain conditions, the company has the right to increase the aggregate borrowings under the credit facility up to $750.0 million.

     At March 31, 2010, there was no outstanding balance on the credit facility expiring June 9, 2012. Borrowings under the credit facility will bear interest at (i) LIBOR for specified interest periods or (ii) a floating base rate (based upon the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) LIBOR for an interest period of one month plus 1.00%), plus, in either case, an applicable margin determined with reference to the company’s credit ratings and specified credit default spreads. Based on credit ratings as of March 31, 2010, of the company and such credit default spreads, the applicable margin for LIBOR-based loans was 1.50% and for base rate loans was 0.50%. In addition, the company is required to pay the lenders a facility fee on the aggregate commitments of the lenders (whether or not used) at a rate per annum which is based on the company’s credit ratings. Based on credit ratings as of March 31, 2010, the annual facility fee was equal to 0.50%. The weighted average interest rate on the prior credit facility expiring March 31, 2010, was 0.81% at March 31, 2009.

     The credit agreement governing the credit facility contains customary restrictive covenants on the company and its subsidiaries. Restrictive covenants in the credit agreement include, but are not limited to: prohibitions on creating, incurring or assuming any liens; making or holding external loans; entering into certain restrictive merger arrangements; selling, leasing, transferring or otherwise disposing of assets; making certain investments; making a material change in the nature of the business; making material amendments to organic documents; making a significant accounting policy change in certain situations; making or entering into restrictive agreements; becoming a general partner to certain investments; entering into transactions with affiliates; incurring certain indebtedness through the non-guarantor subsidiaries; and making certain restricted payments (with respect to equity and debt holders). Many of these restrictions are subject to certain minimum thresholds and exceptions. Financial covenants under the credit agreement include: (i) the quarterly maintenance of a debt/EBITDA ratio, as defined in the credit agreement, of not greater than 3.25:1.00 through December 31, 2010, and not greater than 3.00:1.00 thereafter, (ii) a coverage ratio (EBITDA, as defined in the credit agreement/interest payable for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00, and (iii) maintenance on a monthly basis of consolidated long-term assets under management (as defined in the credit agreement) of not less than $194.8 billion, which amount is subject to a one-time reset by the company under certain conditions.

     The credit agreement governing the credit facility also contains customary provisions regarding events of default which could result in an acceleration or increase in amounts due, including (subject to certain materiality thresholds and grace periods) payment default, failure to comply with covenants, material inaccuracy of representation or warranty, bankruptcy or insolvency proceedings, change of control, certain judgments, ERISA matters, cross-default to other debt agreements, governmental action prohibiting or restricting the company or its subsidiaries in a manner that has a material adverse effect and failure of certain guaranty obligations.

     The lenders (and their respective affiliates) may have provided, and may in the future provide, investment banking, cash management, underwriting, lending, commercial banking, leasing, foreign exchange, trust or other advisory services to the company and its subsidiaries and affiliates. These parties may have received, and may in the future receive, customary compensation for these services.

5. COMMON SHARES AND SHARES OUTSTANDING

     Movements in the number of common shares issued are represented in the table below:

	Three Months			Three Months
	Ended March 31,			Ended March 31,
In millions	2010			2009
Shares Issued – Beginning Balance		459.5			426.6
Issue of new shares		—			—
Shares Issued – Ending Balance		459.5			426.6
Less: Treasury shares for which dividend and voting rights do not apply		(23.2	)		(33.3	)
Shares outstanding		436.3			393.3

     Total treasury shares at March 31, 2010, were 35.8 million (March 31, 2009: 46.3 million), including 12.6 million unvested restricted stock awards (March 31, 2009: 13.0 million) for which dividend and voting rights apply.

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     Separately, an aggregate of 1.3 million shares were withheld on vesting events during the three months ended March 31, 2010, to meet employees’ withholding tax obligations (three months ended March 31, 2009: 1.0 shares). The value of these shares withheld was $30.9 million (three months ended March 31, 2009: $11.5 million). Approximately $1.4 billion remained authorized under the company’s share repurchase plan at March 31, 2010.

6. OTHER COMPREHENSIVE INCOME

     The components of accumulated other comprehensive income, which includes our proportionate share of equity method investees’ accumulated other comprehensive income, were as follows:

	March 31,			December 31,
$ in millions	2010			2009
Net unrealized gains/(losses) on available-for-sale investments		6.2			5.4
Tax on unrealized (losses)/gains on available-for-sale investments		(1.9	)		(1.6	)
Cumulative foreign currency translation adjustments		384.6			442.0
Tax on cumulative foreign currency translation adjustments		2.0			2.0
Employee benefit plan liability adjustments		(69.2	)		(74.5	)
Tax on employee benefit plan liability adjustments		18.8			20.3
Total accumulated other comprehensive income		340.5			393.6

     Total other comprehensive income details are presented below:

	Three Months Ended
	March 31,
$ in millions	2010			2009
Net income/(loss), including gains and losses attributable to noncontrolling interests		214.5			(57.8	)
Unrealized holding gains and losses on available-for-sale investments*		3.8			(8.9	)
Tax on net unrealized holding gains and losses on available-for-sale investments		(0.2	)		(1.0	)
Reclassification adjustments for net gains and losses on available-for-sale investments included in net income		2.2			4.9
Tax on reclassification adjustments for net gains and losses on available-for-sale investments included in net income		(0.1	)		0.4
Foreign currency translation adjustments		(52.3	)		(72.1	)
Tax on foreign currency translation adjustments		—			(0.1	)
Adjustments to employee benefit plan liability		5.3			0.4
Tax on adjustments to pension liability		(1.5	)		(0.2	)
Total other comprehensive income/(loss)		171.7			(134.4	)
Less: other comprehensive income attributable to consolidated investment products		(5.1	)		—
Total other comprehensive income/(loss) attributable to Invesco Ltd.		166.6			(134.4	)

* The company adopted FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, resulting in the consolidation of certain CLOs. Upon adoption, accumulated other comprehensive income was reduced by $5.2 million, as accumulated net unrealized gains at January 1, 2010, relating to the company’s equity interests in certain CLOs were reclassified into retained earnings upon their consolidation.

7. TAXATION

     At March 31, 2010, the total amount of gross unrecognized tax benefits was $39.6 million as compared to the December 31, 2009, total amount of $39.0 million.

     The company and its subsidiaries file annual income tax returns in the United States (“U.S.”) federal jurisdiction, various U.S. state and local jurisdictions, and in numerous foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which the company has unrecognized tax benefits, is finally resolved. To the extent that the company has favorable tax settlements, or determines that accrued amounts are no longer needed due to a lapse in the applicable statute of limitations or other reasons, such liabilities, as well as the related interest and penalty, would be reversed as a reduction of income tax expense (net of federal tax effects, if applicable) in the period such determination is made.

20

8. EARNINGS PER SHARE

     Basic earnings per share is calculated by dividing net income attributable to common shareholders by the weighted average number of shares outstanding during the periods, excluding treasury shares. Diluted earnings per share is computed using the treasury stock method, which requires computing share equivalents and dividing net income attributable to common shareholders by the total weighted average number of shares and share equivalents outstanding during the periods.

     The calculation of earnings per share is as follows:

	Net Income
	Attributable to
	Common		Weighted Average		Per Share
In millions, except per share data	Shareholders		Number of Shares		Amount
For the three months ended March 31, 2010
Basic earnings per share	$	95.0		439.0	$	0.22
Dilutive effect of share-based awards		—		3.4		—
Diluted earnings per share	$	95.0		442.4	$	0.21
For the three months ended March 31, 2009
Basic earnings per share	$	30.7		394.1	$	0.08
Dilutive effect of share-based awards		—		5.8		—
Diluted earnings per share	$	30.7		399.9	$	0.08

     See Note 10, “Share-based Compensation,” for a summary of share awards outstanding under the company’s share-based payment programs. These programs could result in the issuance of common shares that would affect the measurement of basic and diluted earnings per share.

     Options to purchase 9.3 million shares at a weighted average exercise price of 2,053 pence were outstanding for the three months ended March 31, 2010 (three months ended March 31, 2009: 13.5 million share options at a weighted average exercise price of 1,836 pence), but were not included in the computation of diluted earnings per share because the option’s exercise price was greater than the average market price of the shares and therefore their inclusion would have been anti-dilutive.

     The company excluded 0.0 million contingently issuable shares from the diluted earnings per share computation for the three months ended March 31, 2010 (three months ended March 31, 2009: 1.6 million contingently issuable shares), because the necessary performance conditions for the shares to be issuable had not yet been satisfied at the end of the respective period. There were no contingently issuable shares that were excluded from the computation of diluted earnings per share during the three months ended March 31, 2010 and 2009, due to their inclusion being anti-dilutive.

9. CONSOLIDATED INVESTMENT PRODUCTS

     The company provides investment management services to, and has transactions with, various private equity funds, real estate funds, fund-of-funds, CLOs and other investment entities sponsored by the company for the investment of client assets in the normal course of business. The company serves as the investment manager, making day-to-day investment decisions concerning the assets of the products and generally has a small investment in certain of these products to demonstrate “skin in the game” to other potential unaffiliated investors in these products. Certain of these investments are considered to be variable interest entities (VIEs). If the company is the primary beneficiary of the VIEs, then the investment products are consolidated into the company’s financial statements. Other partnership entities are consolidated under a voting interest entity (VOE) model where the company is the general partner and is presumed to have control, in the absence of simple majority kick-out rights to remove the general partner, simple majority liquidation rights to dissolve the partnership, or any substantive participating rights of the other limited partners.

     The company’s risk with respect to each investment is limited to its equity ownership and any uncollected management fees. Therefore, the gains or losses of consolidated investment products have not had a significant impact on the company’s results of operations, liquidity or capital resources. The company has no right to the benefits from, nor does it bear the risks associated with, these investments, beyond the company’s minimal direct investments in, and management fees generated from, the investment products. If the company were to liquidate, these investments would not be available to the general creditors of the company, and as a result, the company does not consider investments held by consolidated investment products to be company assets.

21

     CLOs

     For CLO entities, as discussed in Note 1, “Accounting Policies,” and Note 2, “Fair Value of Assets and Liabilities,” the company generally invests in only a relatively small portion of the unrated, junior subordinated positions. The company’s investments in CLOs are generally subordinated to other interests in the entities and entitle the company and other subordinated tranche investors to receive the residual cash flows, if any, from the entities. The company’s underlying equity interests in the CLOs of $19.0 million (before consolidation) at March 31, 2010 (December 31, 2009: $17.9 million) represent its maximum risk of loss.

     Prior to the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” and the issuance of ASU 2010-10, “Amendments for Certain Investment Funds” (discussed in Note 1, “Accounting Policies”), the company’s ownership interests, which were classified as available-for-sale investments on the company’s Consolidated Balance Sheets, combined with its other interests (management and incentive fees), were quantitatively assessed to determine if the company is the primary beneficiary of these entities. The company determined, for periods prior to the adoption of FASB Statement No. 167, that it did not absorb the majority of the expected gains or losses from the CLOs and therefore was not their primary beneficiary.

     Effective January 1, 2010, upon the adoption of FASB Statement No. 167, the company determined that it was the primary beneficiary of certain CLOs, as it has the power to direct the activities of the CLOs that most significantly impact the CLOs’ economic performance, and the obligation to absorb losses/right to receive benefits from the CLOs that could potentially be significant to the CLOs. The primary beneficiary assessment includes an analysis of the rights of the company in its capacity as investment manager. In certain CLOs, the company’s role as investment manager provides that the company contractually has the power, as defined in FASB Statement No. 167, to direct the activities of the CLOs that most significantly impact the CLOs’ economic performance, such as managing the collateral portfolio and its credit risk. In other CLOs, the company determined that it does not have this power in its role as investment manager due to certain restrictions that limit its ability to manage the collateral portfolio and its credit risk. Additionally, the primary beneficiary assessment includes an analysis of the company’s rights to receive benefits and obligation to absorb losses associated with its first loss position and management/incentive fees. As part of this analysis, the company uses a quantitative model to corroborate its qualitative assessments. The quantitative model includes an analysis of the expected performance of the CLOs and a comparison of the company’s absorption of this performance relative to the other investors in the CLOs. The company has determined that it could receive significant benefits and/or absorb significant losses from certain CLOs in which it holds a first loss position and has the right to significant fees. It was determined that the company’s benefits and losses from certain other CLOs could not be significant, particularly in situations where the company does not hold a first loss position and where the fee interests are based upon a fixed percentage of collateral asset value.

     The company generally invests in only a relatively small portion of the unrated, junior subordinated positions. This subordinated interest can take the form of (1) subordinated notes, (2) income notes or (3) preference/preferred shares. The company has determined that, although the junior tranches have certain characteristics of equity, they should be accounted for and disclosed as debt on the company’s Condensed Consolidated Balance Sheet, as the subordinated and income notes have a stated maturity indicating a date for which they are mandatorily redeemable. The preference shares are also classified as debt, as redemption is required only upon liquidation or termination of the CLO and not of the company.

     The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company’s minimal direct investments in, and management fees generated from, the CLOs. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Additionally, the investors in the CLOs have no recourse to the general credit of the company for the notes issued by the CLOs. The company therefore does not consider this debt to be a company liability.

     Private equity, real estate and fund-of-funds (partnerships)

     For investment products that are structured as partnerships and are determined to be VIEs, including private equity funds, real estate funds and fund-of-funds products, the company evaluates the structure of the partnership to determine if it is the primary beneficiary of the investment product. This evaluation includes assessing the rights of the limited partners to transfer their economic interests in the investment product. If the limited partners lack objective rights to transfer their economic interests, they are considered to be de facto agents of the company, resulting in the company determining that it is the primary beneficiary of the investment product. The company generally takes less than a 1% investment in these entities as the general partner. Interests in unconsolidated private equity funds, real estate funds and fund-of-funds products are classified as equity method investments in the company’s Consolidated Balance Sheets.

22

     On July 8, 2009, the U.S. Treasury announced the launch of the Public-Private Investment Program (PPIP), which was designed to support market functioning and facilitate price discovery in the asset-based securities markets, to allow banks and other financial institutions to re-deploy capital, and to extend new credit to households and businesses. Under this program, the U.S. Treasury will invest up to $30.0 billion of equity and debt into funds established with private sector investment managers and private investors for the purpose of purchasing legacy securities. The U.S. Treasury has partnered with eight investment management firms, including Invesco, in the PPIP. The company determined that certain feeder funds within the Invesco-sponsored PPIP partnership structure are VIEs; however, the company is not their primary beneficiary, as it does not absorb the majority of the expected gains or losses from these funds. Additionally, the company does not have any capital invested or committed into these funds. Other funds within the PPIP structure are VOEs; however, the company as general partner is not deemed to control these entities due to the presence of substantive kick-out or liquidation rights.

     Other investment products

     As discussed in Note 12, “Commitments and Contingencies,” the company has entered into contingent support agreements for two of its investment trusts to enable them to sustain a stable pricing structure, creating variable interests in these VIEs. The company earns management fees from the trusts and has a small investment in one of these trusts. The company was not deemed to be the primary beneficiary of these trusts after considering any explicit and implicit variable interests in relation to the total expected gains and losses of the trusts. The maximum committed amount under the support agreements, which represents the company’s maximum risk of loss, is equivalent to the amount of support that the trusts required as of March 31, 2010, to maintain the net asset value of the trusts at $1.00 per share. The recorded fair value of the guarantees related to these agreements at March 31, 2010, was estimated to be $2.5 million (December 31, 2009: $2.5 million), which was recorded as a guarantee obligation in other current liabilities in the Consolidated Balance Sheet. The fair value of these agreements is lower than the maximum support amount reflecting management’s estimation that the likelihood of funding under the support agreement is low, as significant investor redemptions out of the trusts before the scheduled maturity of the underlying securities or significant credit default issues of the securities held within the trusts’ portfolios would be required to trigger funding by the company.

     In June 2009, the company invested in the initial public offering of Invesco Mortgage Capital Inc. (NYSE: IVR), a real estate investment trust which is managed by the company. The company purchased 75,000 common shares of IVR at $20.00 per share and 1,425,000 limited partner units at $20.00 per unit through private placements for a total of $30.0 million. The company determined that IVR is a VIE and that its investment represents a variable interest. The company’s ownership interests, which are classified as equity method investments on the company’s Consolidated Balance Sheets, combined with its other interests (management fees), were quantitatively assessed to determine if the company is the primary beneficiary of IVR. The company determined that it did not absorb the majority of the expected gains or losses from IVR and therefore is not its primary beneficiary.

     At March 31, 2010, the company’s maximum risk of loss in significant VIEs in which the company is not the primary beneficiary is presented in the table below.

						Company’s Maximum
$ in millions	Footnote Reference		Carrying Value			Risk of Loss
CLO investments		2		0.4			0.4
Partnership and trust investments				16.8			16.8
Investments in Invesco Mortgage Capital Inc.				31.3			31.3
Support agreements*		12		(2.5	)		36.0
Total							84.5

* As of March 31, 2010, the committed support under these agreements was $36 million with an internal approval mechanism to increase the maximum possible support to $66 million at the option of the company.

     FASB Statement No. 167, which was effective January 1, 2010, had a significant impact on the presentation of the company’s financial statements, as its provisions required the company to consolidate certain CLOs that were not previously consolidated. The cumulative effect adjustment upon adoption of FASB Statement No. 167 at January 1, 2010, resulted in an appropriation of retained earnings and a reclassification of other comprehensive income into retained earnings of $274.3 million and $5.2 million, respectively. The company’s Consolidated Statement of Income for the three months ended March 31, 2010, reflect the elimination of $8.7 million in management fees earned from these CLOs, and the addition of $52.5 million in interest income, $20.8 million in interest expense, and $85.1 million in net other gains. The $105.8 million net income impact during the three months ended March 31, 2010, of consolidation of these CLOs is largely offset by gains/(losses) attributable to investors in noncontrolling interests of $104.4 million. Prior to the adoption of FASB Statement No. 167, the company accounted for its investments in these CLOs as available-for-sale investments, with changes in the value of the company’s interests being recorded through other comprehensive income. After the adoption of FASB

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Statement No. 167, the change in value of the company’s investments in these CLOs is reflected in the company’s net income. For the three months ended March 31, 2010, the net impact to the company of its investments in these CLOs was $1.4 million. The Condensed Consolidated Balance Sheet at March 31, 2010, reflects the consolidation of $5.8 billion in assets held and $5.1 billion in debt issued by these CLOs, despite the fact that the assets cannot be used by the company, nor is the company obligated for the debt. Retained earnings appropriated for investors of consolidated investment products of $383.8 million is presented as part of the company’s total equity, reflecting the excess of the consolidated CLOs’ assets over their liabilities, attributable to noncontrolling third-party investors in their consolidated CLOs at March 31, 2010. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs.

     During the three months ended March 31, 2010, entities with the following balance sheets were consolidated:

Balance Sheet

	VIEs
$ in millions	consolidated
During the three months ended March 31, 2010*
Current assets		238.5
Non-current assets		5,425.8
Total assets		5,664.3
Current liabilities		137.9
Non-current liabilities		5,252.1
Total liabilities		5,390.0
Total equity		274.3
Total liabilities and equity		5,664.3

* The amounts consolidated in this table reflect the initial consolidation of CLOs at the adoption of FASB Statement No. 167 on January 1, 2010.

     During the three months ended March 31, 2009, the company deconsolidated $53.3 million of investments held by consolidated investment products and related noncontrolling interests in consolidated entities as a result of determining that the company is no longer the primary beneficiary. The amounts deconsolidated from the Condensed Consolidated Balance Sheet are illustrated in the table below. There was no net impact to the Condensed Consolidated Statement of Income for the three months ended March 31, 2009, from the deconsolidation of these investment products.

Balance Sheet

	Amounts
	deconsolidated
$ in millions	under FIN 46(R)
During three months ended March 31, 2009
Current assets		—
Non-current assets		53.3
Total assets		53.3
Current liabilities		—
Non-current liabilities		—
Total liabilities		—
Equity attributable to common shareholders		—
Equity attributable to noncontrolling interests in consolidated entities		53.3
Total liabilities and equity		53.3

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     The following tables reflect the impact of consolidation of investment products into the Condensed Consolidated Balance Sheets as of March 31, 2010, and December 31, 2009, and the Condensed Consolidated Statements of Income for the three months ended March 31, 2010, and 2009.

Condensed Consolidating Balance Sheets

	Before				Other
$ in millions	Consolidation*		CLOs - VIEs **		VIEs		VOEs		Eliminations			Total
As of March 31, 2010
Current assets		3,245.9		397.5		3.1		18.5		(19.7	)		3,645.3
Non-current assets		7,067.7		5,420.9		65.4		619.4		(27.2	)		13,146.2
Total assets		10,313.6		5,818.4		68.5		637.9		(46.9	)		16,791.5
Current liabilities		2,419.5		296.9		0.6		3.8		(19.7	)		2,701.1
Long-term debt of consolidated investment products		—		5,136.3		—		—		(17.2	)		5,119.1
Other non-current liabilities		970.4		—		—		—		—			970.4
Total liabilities		3,389.9		5,433.2		0.6		3.8		(36.9	)		8,790.6
Retained earnings attributable to investors in consolidated investment products		—		385.2		—		—		(1.4	)		383.8
Other equity attributable to common shareholders		6,919.2		—		0.2		8.4		(8.6	)		6,919.2
Equity attributable to noncontrolling interests in consolidated entities		4.5		—		67.7		625.7		—			697.9
Total liabilities and equity		10,313.6		5,818.4		68.5		637.9		(46.9	)		16,791.5

	Before		Other
$ in millions	Consolidation*		VIEs		VOEs		Eliminations			Total
As of December 31, 2009
Current assets		3,089.8		4.2		27.0		—			3,121.0
Non-current assets		7,111.8		67.9		617.1		(8.2	)		7,788.6
Total assets		10,201.6		72.1		644.1		(8.2	)		10,909.6
Current liabilities		2,293.6		0.7		4.1		—			2,298.4
Non-current liabilities		990.4		—		—		—			990.4
Total liabilities		3,284.0		0.7		4.1		—			3,288.8
Total equity attributable to common shareholders		6,912.9		0.2		8.0		(8.2	)		6,912.9
Equity attributable to noncontrolling interests in consolidated entities		4.7		71.2		632.0		—			707.9
Total liabilities and equity		10,201.6		72.1		644.1		(8.2	)		10,909.6

*	The Before Consolidation column includes Invesco’s equity interest in the investment products subsequently consolidated, accounted for as equity method and available-for-sale investments.
**	The company adopted FASB Statement No. 167 on January 1, 2010, resulting in the consolidation of certain CLOs. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs. Prior to January 1, 2010, the company was not deemed to be the primary beneficiary of these CLOs.

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Condensed Consolidating Statements of Income

	Before						Other
$ in millions	Consolidation*			CLOs - VIEs **			VIEs			VOEs			Eliminations			Total
Three Months ended March 31, 2010
Total operating revenues		729.5			—			—			0.2			(10.6	)		719.1
Total operating expenses		(579.0	)		(11.0	)		(0.4	)		(2.4	)		10.6			(582.2	)
Operating income		150.5			(11.0	)		(0.4	)		(2.2	)		—			136.9
Equity in earnings of unconsolidated affiliates		6.0			—			—			—			(0.2	)		5.8
Interest income		1.6			53.1			—			—			(0.6	)		54.1
Other investment income/(losses)		(2.1	)		85.1			3.2			14.8			—			101.0
Interest expense		(12.4	)		(21.4	)		—			—			0.6			(33.2	)
Income before income taxes, including gains and losses attributable to noncontrolling interests		143.6			105.8			2.8			12.6			(0.2	)		264.6
Income tax provision		(50.1	)		—			—			—			—			(50.1	)
Net income, including gains and losses attributable to noncontrolling interests		93.5			105.8			2.8			12.6			(0.2	)		214.5
(Gains)/losses attributable to noncontrolling interests in consolidated entities, net		(0.1	)		(104.4	)		(2.8	)		(12.2	)		—			(119.5	)
Net income attributable to common shareholders		93.4			1.4			—			0.4			(0.2	)		95.0

	Before
$ in millions	Consolidation*			VIEs			VOEs			Eliminations			Total
Three Months ended March 31, 2009
Total operating revenues		550.2			0.2			1.2			(3.0	)		548.6
Total operating expenses		(485.1	)		(0.5	)		(4.2	)		3.0			(486.8	)
Operating income		65.1			(0.3	)		(3.0	)		—			61.8
Equity in earnings of unconsolidated affiliates		1.3			—			—			1.2			2.5
Interest income		4.8			—			—			—			4.8
Other investment income/(losses)		(4.2	)		(14.7	)		(71.8	)		—			(90.7	)
Interest expense		(15.9	)		—			—			—			(15.9	)
Income before income taxes, including gains and losses attributable to noncontrolling interests		51.1			(15.0	)		(74.8	)		1.2			(37.5	)
Income tax provision		(20.3	)		—			—			—			(20.3	)
Net income, including gains and losses attributable to noncontrolling interests		30.8			(15.0	)		(74.8	)		1.2			(57.8	)
(Gains)/losses attributable to noncontrolling interests in consolidated entities, net		(0.1	)		15.0			73.6			—			88.5
Net income attributable to common shareholders		30.7			—			(1.2	)		1.2			30.7

*	The Before Consolidation column includes Invesco’s equity interest in the investment products, accounted for as equity method and available-for-sale investments.
**	The company adopted FASB Statement No. 167 on January 1, 2010, resulting in the consolidation of certain CLOs In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs. Prior to January 1, 2010, the company was not deemed to be the primary beneficiary of these CLOs.

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     The carrying value of investments held and notes issued by consolidated investment products is also their fair value. The following table presents the fair value hierarchy levels of investments held and notes issued by consolidated investment products, which are measured at fair value as of March 31, 2010:

	As of March 31, 2010
				Quoted Prices in		Significant
				Active Markets		Other		Significant
	Fair Value			for Identical		Observable		Unobservable
$ in millions	Measurements			Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
Assets:
CLO collateral assets:
Bank loans		5,179.6			—		5,179.6		—
Bonds		217.5			217.5		—		—
Equity securities		23.8			23.8		—		—
Private equity fund assets:
Equity securities		117.9			8.9		—		109.0
Investments in other private equity funds		556.5			—		—		556.5
Debt securities issued by in U.S. Treasury		10.4			10.4		—		—
Liabilities:
CLO notes		(5,119.1	)		—		—		(5,119.1	)
The following table presents the fair value hierarchy levels of the carrying value of investments held by consolidated investment products, which are measured at fair value as of December 31, 2009:
	As of December 31, 2009
				Quoted Prices in		Significant
				Active Markets		Other		Significant
	Fair Value			for Identical		Observable		Unobservable
$ in millions	Measurements			Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
Private equity fund assets:
Equity securities		117.2			7.0		—		110.2
Investments in other private equity funds		556.9			—		—		556.9
Debt securities issued by U.S. Treasury		10.9			10.9		—		—

     The following table shows a reconciliation of the beginning and ending fair value measurements for level 3 assets using significant unobservable inputs:

	Three Months Ended			Three Months Ended
$ in millions	March 31, 2010			March 31, 2009
Beginning balance		667.1			761.0
Purchases, sales, issuances and settlements, net		(17.2	)		2.2
Gains and losses included in the Condensed Consolidated Statement of Income*		15.6			(88.5	)
Ending balance		665.5			674.7

* Included in gains and losses of consolidated investment products in the Condensed Consolidated Statement of Income for the three months ended March 31, 2010, are $18.6 million in net unrealized gains attributable to investments held at March 31, 2010, by consolidated investment products.

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     The following table shows a reconciliation of the beginning and ending fair value measurements for level 3 liabilities using significant unobservable inputs:

	Three Months Ended
$ in millions	March 31, 2010*
Beginning balance		(5,234.9	)
Purchases, sales, issuances and settlements/prepayments, net		47.4
Gains and losses included in the Condensed Consolidated Statement of Income		(63.1	)
Foreign exchange		131.5
Ending balance		(5,119.1	)

* The company adopted FASB Statement No. 167 on January 1, 2010, resulting in the consolidation of certain CLOs. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs. Prior to January 1, 2010, the company was not deemed to be the primary beneficiary of these CLOs.

     Fair value of consolidated CLOs

     The collateral assets held by consolidated CLOs are primarily invested in senior secured bank loans, bonds, and equity securities. Bank loan investments, which comprise the majority of consolidated CLO portfolio collateral, are senior secured corporate loans from a variety of industries, including but not limited to the aerospace and defense, broadcasting, technology, utilities, household products, healthcare, oil and gas, and finance industries. Bank loan investments mature at various dates between 2010 and 2027, pay interest at Libor or Euribor plus a spread of between 0.22% and 11%, and typically range in credit rating categories from BBB down to unrated. At March 31, 2010, the unpaid principal balance exceeded the fair value of the senior secured bank loans and bonds by approximately $480 million. Less than 5% of the collateral assets are in default as of March 31, 2010. CLO investments are valued based on price quotations provided by an independent third-party pricing source. For bank loan investments, in the event that the third-party pricing source is unable to price an investment, other relevant factors, data and information are considered, including: i) information relating to the market for the investment, including price quotations for and trading in the investment and interest in similar investments and the market environment and investor attitudes towards the investment and interests in similar investments; ii) the characteristics of and fundamental analytical data relating to the investment, including, for senior secured corporate loans, the cost, size, current interest rate, period until next interest rate reset, maturity and base lending rate, the terms and conditions of the senior secured corporate loan and any related agreements, and the position of the senior secured corporate loan in the borrower’s debt structure; iii) the nature, adequacy and value of the senior secured corporate loan’s collateral, including the CLO’s rights, remedies and interests with respect to the collateral; iv) for senior secured corporate loans, the creditworthiness of the borrower, based on an evaluation of its financial condition, financial statements and information about the business, cash flows, capital structure and future prospects; v) the reputation and financial condition of the agent and any intermediate participants in the senior secured corporate loan; and vi) general economic and market conditions affecting the fair value of the senior secured corporate loan.

     In a typical CLO structure, notes are issued in tranches and are categorized into varying degrees of subordination. Each tranche has a different level of credit protection or risk exposure than another. There is generally a senior (“A”) class of securities and one or more junior subordinated (“B,” “C,” etc.) classes that function as protective layers for the “A” class. The senior classes have first claim on the cash that the CLO receives, and the more junior classes receive repayment only after the more senior classes have repaid. Because of the cascading effect between classes, this arrangement is often referred to as a cash flow waterfall. In the event that the underlying collateral asset pool becomes insufficient to make payments on the notes, the loss is absorbed first by the subordinated tranches, and the upper-level tranches remain unaffected until the losses exceed the entire amount of the subordinated tranches. The senior securities are typically AAA-rated, signifying a lower risk, while the lower-credit quality subordinated classes receive a lower credit rating, signifying a higher risk. The most junior class (often called the equity class) is the most exposed to payment risk. In some cases the equity class receives no coupon (either fixed or floating), but only the residual cash flow (if any) after all the other classes have been paid.

     Notes issued by consolidated CLOs mature at various dates between 2014 and 2023 and have a weighted average maturity of 9.7 years. The notes are issued in various tranches with different risk profiles. The interest rates are generally variable rates based on Libor or Euribor plus a pre-defined spread, which varies from 0.21% for the more senior tranches to 7.50% for the more subordinated tranches. At March 31, 2010, the outstanding balance on the notes issued by consolidated CLOs exceeds their fair value by approximately $900 million. The investors in this debt are not affiliated with the company and have no recourse to the general credit of the company for this debt. Notes issued by CLOs are recorded at fair value using an income approach, driven by cash flows

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expected to be received from the portfolio collateral assets. Fair value is determined using current information, notably market yields and projected cash flows of collateral assets based on forecasted default and recovery rates that a market participant would use in determining the current fair value of the notes, taking into account the overall credit quality of the issuers and the company’s past experience in managing similar securities. Market yields, default rates and recovery rates used in the company’s estimate of fair value vary based on the nature of the investments in the underlying collateral pools. In periods of rising market yields, default rates and lower debt recovery rates, the fair value, and therefore the carrying value, of the notes may be adversely affected. The current liquidity constraints within the market for CLO products require the use of certain unobservable inputs for CLO valuation. Once the undiscounted cash flows of the collateral assets have been determined, the company applies appropriate discount rates that a market participant would use, to determine the discounted cash flow valuation of the notes.

     The significant inputs for the valuation model of the notes issued by consolidated CLOs include a cumulative average default rate of 9%, an average long-term recovery rate of 72.8%, and an average reinvestment rate of Libor plus 439 basis points. The discount rate applied to the undiscounted cash flows of the collateral assets were derived by utilizing the applicable forward rate curves and appropriate spreads.

     Fair value of consolidated private equity funds

     Consolidated private equity funds are generally structured as partnerships. Generally, the investment strategy of underlying holdings in these partnerships is to seek capital appreciation through direct investments in public or private companies with compelling business models or ideas or through investments in partnership investments that also invest in similar private or public companies. Various strategies may be used. Companies targeted could be distressed organizations, targets of leveraged buyouts or fledgling companies in need of venture capital. Investees of these consolidated investment products may not redeem their investment until the partnership liquidates. Generally, the partnerships have a life that range from seven to twelve years unless dissolved earlier. The general partner may extend the partnership term up to a specified period of time as stated in the Partnership Agreement. Some partnerships allow the limited partners to cause an earlier termination upon the occurrence of certain events as specified in the Partnership Agreement.

     For private equity partnerships, fair value is determined by reviewing each investment for the sale of additional securities of an issuer to sophisticated investors or for investee financial conditions and fundamentals. Publicly traded portfolio investments are carried at market value as determined by their most recent quoted sale, or if there is no recent sale, at their most recent bid price. For these investments held by consolidated investment products, level 1 classification indicates that fair values have been determined using unadjusted quoted prices in active markets for identical assets that the partnership has the ability to access. Level 2 classification may indicate that fair values have been determined using quoted prices in active markets but give effect to certain lock-up restrictions surrounding the holding period of the underlying investments.

     The fair value of level 3 investments held by consolidated investment products are derived from inputs that are unobservable and which reflect the limited partnerships’ own determinations about the assumptions that market participants would use in pricing the investments, including assumptions about risk. These inputs are developed based on the partnership’s own data, which is adjusted if information indicates that market participants would use different assumptions. The partnerships which invest directly into private equity portfolio companies (direct private equity funds) take into account various market conditions, subsequent rounds of financing, liquidity, financial condition, purchase multiples paid in other comparable third-party transactions, the price of securities of other companies comparable to the portfolio company, and operating results and other financial data of the portfolio company, as applicable.

     The partnerships which invest into other private equity funds (funds of funds) take into account information received from those underlying funds, including their reported net asset values and evidence as to their fair value approach, including consistency of their fair value application. These investments do not trade in active markets and represent illiquid long-term investments that generally require future capital commitments. While the partnerships’ reported share of the underlying net asset values of the underlying funds is usually the most significant input in arriving at fair value and is generally representative of fair value, other information may also be used to value such investments at a premium or discount to the net asset values as reported by the funds, including allocations of priority returns within the funds as well as any specific conditions and events affecting the funds.

     Unforeseen events might occur that would subsequently change the fair values of these investments, but such changes would be inconsequential to the company due to its minimal investments in these products (and the large offsetting noncontrolling interests resulting from their consolidation). Any gains or losses resulting from valuation changes in these investments are substantially offset by resulting changes in gains and losses attributable to noncontrolling interests in consolidated entities and therefore do not have a

29

material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company’s common shareholders.

10. SHARE-BASED COMPENSATION

     The company recognized total expenses of $24.2 million in the three months ended March 31, 2010 (March 31, 2009: $23.7 million) related to equity-settled share-based payment transactions. The total income tax benefit recognized in the Consolidated Statements of Income for share-based compensation arrangements was $8.3 million for the three months ended March 31, 2010 (March 31, 2009: $9.4 million).

     Cash received from the exercise of share options granted under share-based compensation arrangements was $3.7 million in the three months ended March 31, 2010 (March 31, 2009: $1.7 million). The total tax benefit realized from share based payment awards was $22.3 million in the three months ended March 31, 2010 (March 31, 2009: $29.8 million).

Share Awards

     Share awards are broadly classified into two categories: time-vested and performance-vested share awards. Share awards are measured at fair value at the date of grant and are expensed, based on the company’s estimate of shares that will eventually vest, on a straight-line or accelerated basis over the vesting period.

     Time-vested awards vest ratably over or cliff-vest at the end of a period of continued employee service. Performance-vested awards cliff-vest at the end of or vest ratably over a defined vesting period of continued employee service upon the company’s attainment of certain performance criteria, generally the attainment of cumulative earnings per share growth targets at the end of the vesting period reflecting a compound annual growth rate of between 10.0% and 15.0% per annum during a three-year period. Time-vested and performance-vested share awards are granted in the form of restricted share awards (RSAs) or restricted share units (RSUs). Dividends accrue directly to the employee holder of RSAs, and cash payments in lieu of dividends are made to employee holders of certain RSUs. There is therefore no discount to the fair value of these share awards at their grant date. Movements on share awards priced in Pounds Sterling prior to the company’s primary share listing moving to the New York Stock Exchange from the London Stock Exchange, which occurred on December 4, 2007, in connection with the redomicile of the company from the U.K. to Bermuda, are detailed below:

	Three months ended March 31, 2010								Three months ended March 31, 2009
							Weighted Average								Weighted Average
	Time-			Performance-			Grant Date		Time-			Performance-			Grant Date
Millions of shares, except fair values	Vested			Vested			Fair Value (pence)		Vested			Vested			Fair Value (pence)
Unvested at the beginning of period		5.4			2.0			11.24		10.2			6.0			9.62
Forfeited during the period		—			(1.4	)		12.02		(0.2	)		—			9.21
Vested and distributed during the period		(1.0	)		(0.5	)		8.89		(1.4	)		(2.2	)		8.30
Unvested at the end of the period		4.4			0.1			11.83		8.6			3.8			10.02

     Subsequent to the company’s primary share listing moving to the New York Stock Exchange, shares are now priced in U.S. dollars. Movements on share awards priced in U.S. dollars are detailed below:

	Three months ended March 31, 2010					Three months ended March 31, 2009
				Weighted Average					Weighted Average
	Time-			Grant Date		Time-			Grant Date
Millions of shares, except fair values	Vested			Fair Value ($)		Vested			Fair Value ($)
Unvested at the beginning of period		11.6			15.24		3.5			26.67
Granted during the period		6.7			19.61		8.8			11.43
Forfeited during the period		—			17.76		—			27.01
Vested and distributed during the period		(2.7	)		14.37		(0.6	)		26.93
Unvested at the end of the period		15.6			17.26		11.7			15.28

     Share awards outstanding at March 31, 2010, had a weighted average remaining contractual life of 1.78 years.

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Share Options

     The company has not granted awards of share options since 2005. The company maintains two historical option plans with outstanding share options: the 2000 Share Option Plan and the No. 3 Executive Share Option Scheme.

     The share option plans provided for a grant price equal to the quoted market price of the company’s shares on the date of grant. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are forfeited if the employee leaves the company before the options vest. The share option programs were valued using a stochastic model (a lattice model) at grant date.

     Changes in outstanding share option awards are as follows:

	Three months ended March 31, 2010					Three months ended March 31, 2009
				Weighted Average					Weighted Average
	Options			Exercise Price		Options			Exercise Price
	(millions of shares)			(£ Sterling)		(millions of shares)			(£ Sterling)
Outstanding at the beginning of the period		16.4			14.99		23.1			14.06
Forfeited during the period		(0.3	)		20.24		(0.6	)		17.83
Exercised during the period		(0.5	)		5.16		(0.1	)		6.68
Outstanding at the end of the period		15.6			15.26		22.4			14.00
Exercisable at the end of the period		15.6			15.26		22.4			14.05

     The share option exercise prices are denominated in Pounds Sterling. Upon exercise, the Pound Sterling exercise price will be converted to U.S. dollars using the foreign exchange rate in effect on the exercise date. The options outstanding at March 31, 2010, had a range of exercise prices from 50 pence to 3,360 pence, and a weighted average remaining contractual life of 2.55 years (for options exercisable at March 31, 2010, the weighted average remaining contractual life is 2.55 years). The total intrinsic value of options exercised during the three months ended March 31, 2010 and 2009, was $5.7 million and $0.9 million, respectively. At March 31, 2010, the aggregate intrinsic value of options outstanding and options exercisable was $66.7 million and $66.7 million, respectively. The market price of the company’s common stock at March 31, 2010, was $21.91.

11. RETIREMENT BENEFIT PLANS

Defined Contribution Plans

     The company operates defined contribution retirement benefit plans for all qualifying employees. The assets of the plans are held separately from those of the company in funds under the control of trustees. When employees leave the plans prior to vesting fully in the contributions, the contributions payable by the company are reduced by the amount of forfeited contributions.

     The total amounts charged to the Condensed Consolidated Statements of Income for the three months ended March 31, 2010 and 2009, of $12.4 million and $11.9 million, respectively, represent contributions paid or payable to these plans by the company at rates specified in the rules of the plans. As of March 31, 2010, accrued contributions of $5.1 million (December 31, 2009: $17.1 million) for the current year will be paid to the plans when due.

Defined Benefit Plans

     The company maintains legacy defined benefit pension plans for qualifying employees of its subsidiaries in the U.K., Ireland, Germany, Taiwan and the U.S. All defined benefit plans are closed to new participants, and the U.S. plan benefits have been frozen. Further, during the year ended December 31, 2009, the company terminated one of its U.S. defined benefit retirement plans. The company also maintains a postretirement medical plan in the U.S., which was closed to new participants in 2005. In 2006, the plan was amended to eliminate benefits for all participants who will not meet retirement eligibility by 2008. The assets of all defined benefit schemes are held in separate trustee-administered funds. Under the plans, the employees are generally entitled to retirement benefits based on final salary at retirement.

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     The components of net periodic benefit cost in respect of these defined benefit plans are as follows:

	Three Months Ended March 31,
	Retirement Plans						Medical Plan
$ in millions	2010			2009			2010			2009
Service cost		(1.0	)		(3.3	)		(0.1	)		(0.1	)
Interest cost		(3.9	)		(4.9	)		(0.7	)		(0.6	)
Expected return on plan assets		3.4			5.3			0.1			0.1
Amortization of prior service cost		—			—			0.5			0.5
Amortization of net actuarial (loss)/gain		(0.7	)		(0.3	)		(0.9	)		(1.1	)
Net periodic benefit cost		(2.2	)		(3.2	)		(1.1	)		(1.2	)

     The estimated amounts of contributions expected to be paid to the plans during 2010 is $7.9 million for retirement plans, with no expected contribution to the medical plan.

12. COMMITMENTS AND CONTINGENCIES

     Commitments and contingencies may arise in the ordinary course of business.

     The company has transactions with various private equity, real estate and other investment entities sponsored by the company for the investment of client assets in the normal course of business. Many of the company’s investment products are structured as limited partnerships. The company’s investment may take the form of the general partner or a limited partner, and the entities are structured such that each partner makes capital commitments that are to be drawn down over the life of the partnership as investment opportunities are identified. At March 31, 2010, the company’s undrawn capital commitments were $84.5 million (December 31, 2009: $77.6 million).

     The volatility and valuation dislocations that occurred from 2007 to the date of this Report in certain sectors of the fixed income market have generated pricing issues in many areas of the market. As a result of these valuation dislocations, during the fourth quarter of 2007, Invesco elected to enter into contingent support agreements for two of its investment trusts to enable them to sustain a stable pricing structure. These two trusts are unregistered trusts that invest in fixed income securities and are available only to accredited investors. In December 2009, the agreements were amended to extend the term through June 30, 2010. As of March 31, 2010, the committed support under these agreements was $36.0 million with an internal approval mechanism to increase the maximum possible support to $66.0 million at the option of the company. The recorded fair value of the guarantees related to these agreements at March 31, 2010, was estimated to be $2.5 million (December 31, 2009: $2.5 million), which was recorded in other current liabilities on the Condensed Consolidated Balance Sheet. No payments have been made under either agreement nor has Invesco realized any losses from the support agreements through the date of this Report. These trusts were not consolidated because the company was not deemed to be the primary beneficiary.

     A subsidiary of the company has received assessments from the Canada Revenue Agency (CRA) for goods and services tax (GST) related to various taxation periods from April 1999 to December 2006 in the amount of $21.2 million related to GST on sales charges collected from investors upon the redemption of certain mutual funds. The company has objected to the assessments and sought remedial action in the Ontario Superior Court of Justice. In November 2009, the company was successful in such remedial action and, as a result, anticipates successfully contesting the assessments. As a result of such actions, the CRA is currently considering its next steps and has not responded to the company in this regard. Management believes that the CRA’s claims are unfounded and that this assessment is unlikely to stand, and accordingly no provision has been recorded in the Consolidated Financial Statements.

Acquisition Contingencies

     Contingent consideration related to acquisitions includes the following:

• Earn-outs relating to the Invesco PowerShares acquisition. A contingent payment of up to $500.0 million could be due in October 2011, five years after the date of acquisition, based on compound annual growth in management fees (as defined and adjusted pursuant to the acquisition agreement) from an assumed base of $17.5 million at closing. The Year 5 management fees will be reduced by $50.0 million, for purposes of the calculation, since the second contingent payment was earned. For a compound annual growth rate (CAGR) in Year 5 below 15%, no additional payment will be made. For a CAGR in Year 5 between 15% and 75%, $5.0 million for each CAGR point above 15%, for a maximum payment of $300.0 million for a 75% CAGR. For a CAGR in Year 5 between 75% and 100%, $300.0 million, plus an additional $8.0 million for each CAGR point above 75%, for a maximum total payment of $500.0 million for a 100% CAGR.

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• Earn-outs relating to the WL Ross acquisition. Contingent payments of up to $55.0 million are due each year for the five years following the October 2006 date of acquisition based on the size and number of future fund launches in which W.L. Ross & Co. is integrally involved. The maximum remaining contingent payments of $110.0 million would require annual fund launches to total $4.0 billion.

     On October 19, 2009, the company announced that it had entered into a definitive agreement to acquire Morgan Stanley’s retail asset management business, including Van Kampen Investments. The transaction was valued at $1.5 billion (subject to adjustment), consisting of payments by Invesco of $500.0 million in cash and an aggregate of approximately 44.1 million Invesco common shares and non-voting common equivalent preferred shares, which will result in Morgan Stanley obtaining an approximately 9.2% equity interest in the company. The transaction has been approved by the boards of directors of both companies and is expected to close on June 1, 2010, subject to customary regulatory, client and fund shareholder approvals.

Legal Contingencies

     Following the industry-wide regulatory investigations in 2003 and 2004, multiple lawsuits based on market timing allegations were filed against various parties affiliated with Invesco. These lawsuits were consolidated in the United States District Court for the District of Maryland, together with market timing lawsuits brought against affiliates of other mutual fund companies, and on September 29, 2004, three amended complaints were filed against company-affiliated parties: (1) a putative shareholder class action complaint brought on behalf of shareholders of AIM funds formerly advised by Invesco Funds Group, Inc.; (2) a derivative complaint purportedly brought on behalf of certain AIM funds and the shareholders of such funds; and (3) an ERISA complaint purportedly brought on behalf of participants in the company’s 401(k) plan. The company and plaintiffs have reached settlements in principle of these lawsuits. The proposed settlements, which are subject to court approval, call for a payment by the company of $9.8 million, recorded in general and administrative expenses in the Consolidated Statement of Income in 2007, in exchange for dismissal with prejudice of all pending claims. In addition, under the terms of the proposed settlements, the company may incur certain costs in connection with providing notice of the proposed settlements to affected shareholders. Based on information currently available, it is not believed that any such incremental notice costs will have any material effect on the consolidated financial position or results of operations of the company.

     The asset management industry also is subject to extensive levels of ongoing regulatory oversight and examination. In the United States and other jurisdictions in which the company operates, governmental authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to compliance with applicable laws and regulations. Additional lawsuits or regulatory enforcement actions arising out of these inquiries may in the future be filed against the company and related entities and individuals in the U.S. and other jurisdictions in which the company and its affiliates operate. Any material loss of investor and/or client confidence as a result of such inquiries and/or litigation could result in a significant decline in assets under management, which would have an adverse effect on the company’s future financial results and its ability to grow its business.

     In the normal course of its business, the company is subject to various litigation matters. Although there can be no assurances, at this time management believes, based on information currently available to it, that it is not probable that the ultimate outcome of any of these actions will have a material adverse effect on the consolidated financial condition or results of operations of the company.

13. GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

     Prior to the December 4, 2007, redomicile of the company from the United Kingdom to Bermuda and the relisting of the company from the London Stock Exchange to the New York Stock Exchange, INVESCO PLC (now known as Invesco Holding Company Limited), the Issuer, issued 4.5% $300.0 million senior notes due 2009, 5.625% $300.0 million senior notes due 2012, 5.375% $350.0 million senior notes due 2013 and 5.375% $200.0 million senior notes due 2014. These senior notes, are fully and unconditionally guaranteed as to payment of principal, interest and any other amounts due thereon by Invesco Ltd. (the Parent), together with the following wholly owned subsidiaries: Invesco Aim Management Group, Inc., Invesco Aim Advisers, Inc., Invesco North American Holdings, Inc., and Invesco Institutional (N.A.), Inc. (the Guarantors). On June 9, 2009, IVZ, Inc. also became a guarantor of the senior notes. On December 31, 2009, Invesco Aim Advisors, Inc. merged with Invesco Institutional (N.A.), Inc., which was renamed Invesco Advisors, Inc. The company’s remaining consolidated subsidiaries do not guarantee this debt. The guarantees of each of the Guarantors are joint and several. Presented below are Condensed Consolidating Balance Sheets as of March 31, 2010, and December 31, 2009, Condensed Consolidating Statements of Income for the three months ended March 31, 2010 and 2009, and Condensed Consolidating Statements of Cash Flows for the three months ended March 31, 2010 and 2009.

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Condensed Consolidating Balance Sheets

			Non-
$ in millions	Guarantors		Guarantors			Issuer		Parent			Eliminations			Consolidated
As of March 31, 2010
Assets held for policyholders		—		1,221.0			—		—			—			1,221.0
Other current assets		195.9		2,178.6			3.0		46.8			—			2,424.3
Total current assets		195.9		3,399.6			3.0		46.8			—			3,645.3
Goodwill		2,302.8		3,687.0			436.0		—			—			6,425.8
Investments in subsidiaries		309.2		5.7			4,847.1		6,936.7			(12,098.7	)		—
Other non-current assets		260.0		6,452.2			4.9		3.3			—			6,720.4
Total assets		3,067.9		13,544.5			5,291.0		6,986.8			(12,098.7	)		16,791.5
Policyholder payables		—		1,221.0			—		—			—			1,221.0
Other current liabilities		26.6		1,448.1			4.7		0.7			—			1,480.1
Total current liabilities		26.6		2,669.1			4.7		0.7			—			2,701.1
Intercompany balances		834.4		(1,638.6	)		732.1		72.1			—			—
Non-current liabilities		29.8		5,314.0			745.7		—			—			6,089.5
Total liabilities		890.8		6,344.5			1,482.5		72.8			—			8,790.6
Total equity attributable to common shareholders		2,177.1		6,502.1			3,808.5		6,914.0			(12,098.7	)		7,303.0
Equity attributable to noncontrolling interests in consolidated entities		—		697.9			—		—			—			697.9
Total equity		2,177.1		7,200.0			3,808.5		6,914.0			(12,098.7	)		8,000.9
Total liabilities and equity		3,067.9		13,544.5			5,291.0		6,986.8			(12,098.7	)		16,791.5
			Non-
$ in millions	Guarantors		Guarantors			Issuer		Parent			Eliminations			Consolidated
As of December 31, 2009
Assets held for policyholders		—		1,283.0			—		—			—			1,283.0
Other current assets		211.5		1,591.7			3.1		31.7			—			1,838.0
Total current assets		211.5		2,874.7			3.1		31.7			—			3,121.0
Goodwill		2,302.8		3,709.4			455.4		—			—			6,467.6
Investments in subsidiaries		714.9		5.7			4,697.7		6,859.3			(12,277.6	)		—
Other non-current assets		147.5		1,165.2			4.9		3.4			—			1,321.0
Total assets		3,376.7		7,755.0			5,161.1		6,894.4			(12,277.6	)		10,909.6
Policyholder payables		—		1,283.0			—		—			—			1,283.0
Other current liabilities		35.7		972.2			7.1		0.4			—			1,015.4
Total current liabilities		35.7		2,255.2			7.1		0.4			—			2,298.4
Intercompany balances		956.8		(1,660.0	)		722.1		(18.9	)		—			—
Non-current liabilities		31.5		213.1			745.8		—			—			990.4
Total liabilities		1,024.0		808.3			1,475.0		(18.5	)		—			3,288.8
Total equity attributable to common shareholders		2,352.7		6,238.8			3,686.1		6,912.9			(12,277.6	)		6,912.9
Equity attributable to noncontrolling interests in consolidated entities		—		707.9			—		—			—			707.9
Total equity		2,352.7		6,946.7			3,686.1		6,912.9			(12,277.6	)		7,620.8
Total liabilities and equity		3,376.7		7,755.0			5,161.1		6,894.4			(12,277.6	)		10,909.6

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Condensed Consolidating Statements of Income

				Non-
$ in millions	Guarantors			Guarantors			Issuer			Parent			Eliminations			Consolidated
For the three months ended March 31, 2010
Total operating revenues		181.2			537.9			—			—			—			719.1
Total operating expenses		140.4			438.7			0.6			2.5			—			582.2
Operating income/(loss)		40.8			99.2			(0.6	)		(2.5	)		—			136.9
Equity in earnings of unconsolidated affiliates		(0.4	)		6.0			49.4			99.9			(149.1	)		5.8
Other income/(expense)		(18.0	)		156.9			(14.6	)		(2.4	)		—			121.9
Income/(loss) before income taxes, including gains and losses attributable to noncontrolling interests		22.4			262.1			34.2			95.0			(149.1	)		264.6
Income tax provision		(17.4	)		(36.8	)		4.1			—			—			(50.1	)
Net income, including gains and losses attributable to noncontrolling interests		5.0			225.3			38.3			95.0			(149.1	)		214.5
Losses attributable to noncontrolling interests in consolidated entities, net		—			(119.5	)		—			—			—			(119.5	)
Net income attributable to common shareholders		5.0			105.8			38.3			95.0			(149.1	)		95.0
				Non-
$ in millions	Guarantors			Guarantors			Issuer			Parent			Eliminations			Consolidated
For the three months ended March 31, 2009
Total operating revenues		117.5			431.1			—			—			—			548.6
Total operating expenses		91.8			390.1			0.9			4.0			—			486.8
Operating income/(losses)		25.7			41.0			(0.9	)		(4.0	)		—			61.8
Equity in earnings of unconsolidated affiliates		2.2			18.4			19.8			37.0			(74.9	)		2.5
Other income/(expense)		(0.7	)		(85.4	)		(13.4	)		(2.3	)		—			(101.8	)
Income/(losses) before income taxes and noncontrolling interest		27.2			(26.0	)		5.5			30.7			(74.9	)		(37.5	)
Income tax provision		(8.7	)		4.3			(15.9	)		—			—			(20.3	)
Net (loss)/ income, including losses attributable to noncontrolling interests		18.5			(21.7	)		(10.4	)		30.7			(74.9	)		(57.8	)
Losses attributable to the noncontrolling interests in consolidated entities, net of tax		—			88.5			—			—			—			88.5
Net income attributable to common shareholders		18.5			66.8			(10.4	)		30.7			(74.9	)		30.7

Condensed Consolidating Statements of Cash Flows

				Non-
$ in millions	Guarantors			Guarantors			Issuer			Parent			Eliminations			Consolidated
For the three months ended March 31, 2010
Net cash (used in)/provided by operating activities		(7.3	)		(291.4	)		59.4			78.6			(16.3	)		(177.0	)
Net cash (used in)/provided by investing activities		(26.9	)		283.0			(59.3	)		(62.7	)		—			134.1
Net cash (used in)/provided by financing activities		—			(124.3	)		—			(1.3	)		16.3			(109.3	)
(Decrease)/increase in cash and cash equivalents		(34.2	)		(132.7	)		0.1			14.6			—			(152.2	)
				Non-
$ in millions	Guarantors			Guarantors			Issuer			Parent			Eliminations			Consolidated
For the three months ended March 31, 2009
Net cash (used in)/provided by operating activities		(17.1	)		50.6			6.1			(15.7	)		(203.9	)		(180.0	)
Net cash (used in)/provided by investing activities		(1.0	)		(1.6	)		—			—			—			(2.6	)
Net cash (used in)/provided by financing activities		—			(273.7	)		(7.5	)		15.7			203.9			(61.6	)
(Decrease)/increase in cash and cash equivalents		(18.1	)		(224.7	)		(1.4	)		—			—			(244.2	)

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14. SUBSEQUENT EVENTS

     On April 27, 2010, the company declared a first quarter 2010 dividend of 11 cents per share, payable on June 9, 2010, to shareholders of record at the close of business on May 24, 2010.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

     The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes thereto, which appear elsewhere in this Report. Except for the historical financial information, this Report may include statements that constitute “forward-looking statements” under the United States securities laws. Forward-looking statements include information concerning possible or assumed future results of our operations, expenses, earnings, liquidity, cash flows and capital expenditures, industry or market conditions, assets under management, acquisition activities and the effect of completed acquisitions, debt levels and our ability to obtain additional financing or make payments on our debt, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, when used in this Report, the documents incorporated by reference herein or such other documents or statements, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would,” and any other statement that necessarily depends on future events, are intended to identify forward-looking statements.

     Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission.

References

     In this Report, unless otherwise specified, the terms “we,” “our,” “us,” “company,” “Invesco,” and “Invesco Ltd.” refer to Invesco Ltd., a company incorporated in Bermuda, and its subsidiaries.

Executive Overview

     The following executive overview summarizes the significant trends affecting our results of operations and financial condition for the periods presented. This overview and the remainder of this management’s discussion and analysis supplements, and should be read in conjunction with, the Condensed Consolidated Financial Statements of Invesco Ltd. and its subsidiaries and the notes thereto contained elsewhere in this Report.

     Invesco is a leading independent global investment manager with offices in 20 countries. As of March 31, 2010, we managed $419.6 billion in assets for retail, institutional and high-net-worth investors around the world. By delivering the combined power of our distinctive worldwide investment management capabilities, Invesco provides a comprehensive array of enduring solutions for our clients. We have a significant presence in the institutional and retail segments of the investment management industry in North America, Europe and Asia-Pacific, with clients in more than 100 countries.

     Most global equity markets experienced solid gains in the three months ended March 31, 2010, with the exception being the MSCI Europe and the China Shanghai Composite indices. The table below summarizes the first quarter returns of several market indices:

	Three months ended			Three months ended
Index	March 31, 2010			March 31, 2009
S&P 500		4.9	%		(11.7	)%
FTSE 100		4.9	%		(11.5	)%
Nikkei 225		5.2	%		(8.5	)%
MSCI Emerging Market Index		2.1	%		0.5	%

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     U.S. equity indices extended their rally during the first quarter of 2010 despite a sell off in February triggered by continued global economic and political uncertainty. The trends that bolstered share prices in 2009 remained prevalent in the first quarter as corporate earnings again came in stronger than expectations and leading economic indicators suggested the troubled U.S. economy was recovering. Share prices in Europe were pressured by sluggish economic data and the heightened risk of sovereign default, notably in Greece. As a result, the MSCI Europe index declined 1.7% in the quarter. Chinese equities also declined with the Shanghai Composite Index declining 5.1% as the government began to unwind the fiscal and monetary stimulus that was introduced in 2009 to counter the global financial crisis.

     Despite the fear of rising interest rates and uncertainty over the credit worthiness of some European governments, credit markets performed well in the first quarter of 2010. The combination of record low interest rates, which pushed investors to seek higher yields, credit spreads tightening to two year lows, resulted in a large demand for corporate bonds. High yield bonds were especially in favor as total issuance for the quarter was a record.

     A significant portion of our business and assets under management (AUM) is based outside of the U.S. The strengthening or weakening of the U.S. dollar against other currencies, primarily the Pound Sterling and the Canadian dollar, will impact our reported revenues and expenses from period to period. Additionally, our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net new business inflows (or outflows) and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period. The returns from most global capital markets increased in the three months ended March 31, 2010, which resulted in market gains for our AUM of $7.8 billion during the period; however the change in foreign exchange rates reduced AUM by $4.4 billion. AUM at March 31, 2010, was $419.6 billion.

     Summary operating information is presented in the table below:

	Three months ended March 31,
U.S. GAAP Financial Measures Summary	2010			2009
Operating revenues	$	719.1	m	$	548.6	m
Operating margin		19.0	%		11.3	%
Net income attributable to common shareholders	$	95.0	m	$	30.7	m
Diluted EPS	$	0.21		$	0.08
Average assets under management (in billions)	$	417.6		$	351.0

	Three months ended March 31,
Non-GAAP Financial Measures Summary	2010			2009
Net revenues(1)	$	544.4	m	$	411.6	m
Adjusted cash operating margin(2)		33.6	%		19.2	%
Adjusted cash net income(3)	$	120.0	m	$	42.4	m
Adjusted cash EPS(3)	$	0.27		$	0.11
Average assets under management (in billions)	$	417.6		$	351.0

(1)	Net revenues are operating revenues less third-party distribution, service and advisory expenses, plus our proportional share of the net revenues of our joint venture investments, plus management fees earned from, less other revenue recorded by, consolidated investment products. See “Schedule of Non-GAAP Information” for the reconciliation of operating revenues to net revenues.
(2)	Adjusted cash operating margin is adjusted cash operating income divided by net revenues. Adjusted cash operating income includes operating income plus our proportional share of the operating income of our joint venture investments, transaction and integration charges, amortization of acquisition-related prepaid compensation and other intangibles, and the operating income impact of the consolidation of investment products. See “Schedule of Non-GAAP Information” for the reconciliation of operating income to adjusted cash operating income.
(3)	Adjusted cash net income is net income attributable to common shareholders adjusted to add back transaction and integration charges, amortization of acquisition-related prepaid compensation and other intangibles, and the tax cash flow benefits resulting from tax amortization of goodwill and indefinite-lived intangible assets. Adjusted cash net income excludes the net income of consolidated investment products, and the net income impact of deferred compensation plans. By calculation, adjusted cash EPS is adjusted cash net income divided by the weighted average number of shares outstanding (for diluted EPS). See “Schedule of Non-GAAP Information” for the reconciliation of net income to adjusted net income.

37

     On October 19, 2009, the company announced that it entered into a definitive agreement to acquire Morgan Stanley’s retail asset management business, including Van Kampen Investments. The transaction was valued at $1.5 billion (subject to adjustment), consisting of payments by Invesco of $500.0 million in cash and an aggregate of approximately 44.1 million Invesco common shares and non-voting common equivalent preferred shares, which will result in Morgan Stanley obtaining an approximately 9.2% equity interest in our company. The transaction has been approved by the boards of directors of both companies and is expected to close on June 1, 2010, subject to customary regulatory, client and fund shareholder approvals.

     Investment Capabilities Performance Overview

     Invesco’s first strategic priority is to achieve strong investment performance over the long-term for our clients. Performance in our equities capabilities, as measured by the percentage of AUM ahead of benchmark and ahead of peer median, has generally been strong with some pockets of outstanding performance and some areas where we have been challenged. Within our equity asset class, U.S. Core, Continental European, and Global ex-U.S. and Emerging Markets have generally had strong relative performance versus competitors and versus benchmark over three- and five-year periods. Investment performance in our U.S. Growth and Canadian equities has lagged, while U.S. Value Equity has had strong performance against the benchmark on a one- and three- year basis. On a one-year basis, U.K. equity performance has lagged against both competitors and benchmarks; however long-term performance remains strong. Within our fixed income asset class, the global fixed income products have had at least 68% of AUM ahead of benchmark and peers over one-, three-, and five-year periods. Our money market capability had at least 95% of AUM ahead of peers on a one-, three-, and five-year basis.

		Benchmark Comparison									Peer Group Comparison
		% of AUM Ahead of									% of AUM In Top Half of
		Benchmark									Peer Group
		1yr			3yr			5yr			1yr			3yr			5yr
Equities	U.S. Core		15	%		90	%		96	%		13	%		60	%		87	%
	U.S. Growth		9	%		21	%		57	%		9	%		21	%		33	%
	U.S. Value		93	%		93	%		24	%		83	%		9	%		9	%
	Sector		78	%		75	%		75	%		43	%		61	%		43	%
	U.K.		1	%		91	%		92	%		3	%		90	%		94	%
	Canadian		38	%		3	%		3	%		38	%		2	%		23	%
	Asian		62	%		62	%		66	%		58	%		57	%		60	%
	Continental European		54	%		72	%		94	%		56	%		85	%		87	%
	Global		52	%		44	%		80	%		45	%		40	%		37	%
	Global Ex U.S. and Emerging Markets		52	%		95	%		97	%		56	%		98	%		98	%
Balanced	Balanced		75	%		47	%		53	%		57	%		41	%		53	%
Fixed Income	Money Market		73	%		74	%		71	%		95	%		95	%		95	%
	U.S. Fixed Income		77	%		60	%		68	%		42	%		78	%		78	%
	Global Fixed Income		86	%		68	%		86	%		91	%		78	%		75	%

Note:  AUM measured in the one-, three-, and five-year peer group rankings represents 67%, 66%, and 64% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one-, three-, and five-year basis represents 82%, 79%, and 73% of total Invesco AUM, respectively, as of 3/31/10. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar, Russell, Mercer, eVestment Alliance, SITCA) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties. Rankings for the most representative fund in each GIPS composite are applied to all products within each GIPS composite. Excludes Invesco PowerShares, W.L. Ross & Co., Invesco Private Capital, non-discretionary direct real estate products and CLOs. Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience.

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Results of Operations for the three months ended March 31, 2010, Compared with the three months ended March 31, 2009

Assets Under Management

     AUM at March 31, 2010, were $419.6 billion (December 31, 2009: $423.1 billion; March 31, 2009: $348.2 billion). The decline in AUM during the three months ended March 31, 2010, was due to the impact of less favorable foreign exchange rates and net outflows in institutional money market funds, partially offset by net inflows in long-term AUM and market gains. Average AUM during the three months ended March 31, 2010, were $417.6 billion, compared to $351.0 billion for the three months ended March 31, 2009. Foreign exchange rate movements led to a $4.4 billion decrease in AUM during the period compared to a $2.0 billion decrease in the comparative 2009 period. Institutional money market net outflows were $10.6 billion during the period compared to net inflows of $8.6 billion in the comparative 2009 period. Long-term net inflows during the period were $3.7 billion compared to long-term net inflows of $0.7 billion in the comparative 2009 period. Market gains led to a $7.8 billion increase in AUM during the period compared to a reduction of $16.3 billion in the comparative 2009 period.

     Net revenue yield on AUM increased 5.2 basis points to 52.1 basis points in the three months ended March 31, 2010, from the three months ended March 31, 2009, level of 46.9 basis points, resulting from a 32.3% increase in net revenues and a 19.0% increase in average AUM from the three months ended March 31, 2009. Market driven changes in our asset mix significantly impact our net revenue yield calculation. Our equity AUM generally earn a higher net revenue rate than money market AUM. At March 31, 2010, equity AUM comprised 42.2%, or $177.1 billion, of our total AUM, an increase of 54.8% from $114.4 billion at March 31, 2009. During the three months ended March 31, 2010, our equity AUM increased in line with the increases in equity markets globally from December 31, 2009, whereas our institutional money market AUM decreased from December 31, 2009, principally due to net outflows.

     Gross revenue yield on AUM increased 6.4 basis points to 69.5 basis points in the three months ended March 31, 2010, from the three months ended March 31, 2009, level of 63.1 basis points. Gross revenue yield, the most comparable U.S. GAAP-based measure to net revenue yield, is not considered a meaningful effective fee rate measure. The numerator of the gross revenue yield measure, operating revenues, excludes the management fees earned from consolidated investment products; however the denominator of the measure includes the AUM of these investment products. Therefore, the gross revenue yield measure is not considered representative of the company’s true effective fee rate from AUM. The company evaluates net revenue yield instead. See “Schedule of Non-GAAP Information” for a reconciliation of operating revenues (gross revenues) to net revenues.

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     Changes in AUM were as follows:

$ in billions	2010			2009
January 1		423.1			357.2
Long-term inflows		21.1			14.3
Long-term outflows		(17.4	)		(13.6	)
Long-term net flows		3.7			0.7
Net flows in money market funds		(10.6	)		8.6
Market gains and losses/reinvestment		7.8			(16.3	)
Foreign currency translation		(4.4	)		(2.0	)
March 31		419.6			348.2
Average long-term AUM		342.3			264.9
Average institutional money market AUM		75.3			86.1
Average AUM		417.6			351.0
Gross revenue yield on AUM(1)		69.5bps			63.1bps
Gross revenue yield on AUM before performance fees(1)	69.4bps			61.8bps
Net revenue yield on AUM(2)	52.1bps			46.9bps
Net revenue yield on AUM before performance fees(2)	52.0bps			45.7bps

(1)

Gross revenue yield on AUM is equal to annualized total operating revenues divided by average AUM, excluding joint venture (JV) AUM. Our share of the average AUM in the first quarter for our JVs in China was $3.8 billion (fourth quarter 2009: $3.9 billion; first quarter 2009: $3.2 billion). It is appropriate to exclude the average AUM of our JVs for purposes of computing gross revenue yield on AUM, because the revenues resulting from these AUM are not presented in our operating revenues. Under U.S. GAAP, our share of the pre-tax earnings of the JVs is recorded as equity in earnings of unconsolidated affiliates on our Condensed Consolidated Statements of Income. Gross revenue yield, the most comparable U.S. GAAP-based measure to net revenue yield, is not considered a meaningful effective fee rate measure. The numerator of the gross revenue yield measure, operating revenues, excludes the management fees earned from consolidated investment products; however the denominator of the measure includes the AUM of these investment products. Therefore, the gross revenue yield measure is not considered representative of the company’s true effective fee rate from AUM. The company evaluates net revenue yield instead. See “Schedule of Non-GAAP Information” for a reconciliation of operating revenues (gross revenues) to net revenues.

(2)

Net revenue yield on AUM is equal to annualized net revenues divided by average AUM. See the Schedule of Non-GAAP Information for a reconciliation of operating revenues to net revenues.

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     Our AUM by channel, by asset class, and by client domicile were as follows:

     AUM by Channel

										Private
										Wealth
$ in billions	Total			Retail			Institutional			Management
December 31, 2009 AUM		423.1			206.9			201.0			15.2
Long-term inflows		21.1			13.5			6.8			0.8
Long-term outflows		(17.4	)		(12.8	)		(4.1	)		(0.5	)
Long-term net flows		3.7			0.7			2.7			0.3
Net flows in money market funds		(10.6	)		—			(10.6	)		—
Market gains and losses/reinvestment		7.8			6.6			1.0			0.2
Foreign currency translation		(4.4	)		(3.6	)		(0.8	)		—
March 31, 2010 AUM		419.6			210.6			193.3			15.7
December 31, 2008 AUM(1)		357.2			149.3			194.6			13.3
Long-term inflows		14.3			9.6			3.2			1.5
Long-term outflows		(13.6	)		(8.5	)		(3.7	)		(1.4	)
Long-term net flows		0.7			1.1			(0.5	)		0.1
Net flows in money market funds		8.6			—			8.6			—
Market gains and losses/reinvestment		(16.3	)		(12.4	)		(3.5	)		(0.4	)
Foreign currency translation		(2.0	)		(1.2	)		(0.8	)		—
March 31, 2009 AUM		348.2			136.8			198.4			13.0

     AUM by Asset Class

							Fixed						Money
$ in billions	Total			Equity			Income			Balanced			Market			Alternatives(2)
December 31, 2009 AUM		423.1			173.4			75.2			41.5			83.5			49.5
Long-term inflows		21.1			10.7			6.5			1.8			0.3			1.8
Long-term outflows		(17.4	)		(9.4	)		(4.5	)		(1.7	)		(0.6	)		(1.2	)
Long-term net flows		3.7			1.3			2.0			0.1			(0.3	)		0.6
Net flows in money market funds		(10.6	)		—			—			—			(10.6	)		—
Market gains and losses/reinvestment		7.8			5.4			1.3			1.0			—			0.1
Foreign currency translation		(4.4	)		(3.0	)		(0.7	)		(0.4	)		—			(0.3	)
March 31, 2010 AUM		419.6			177.1			77.8			42.2			72.6	(3)		49.9
December 31, 2008 AUM(1)		357.2			127.3			61.8			32.8			84.1			51.2
Long-term inflows		14.3			6.2			4.1			2.1			1.0			0.9
Long-term outflows		(13.6	)		(6.4	)		(2.8	)		(2.2	)		(1.1	)		(1.1	)
Long-term net flows		0.7			(0.2	)		1.3			(0.1	)		(0.1	)		(0.2	)
Net flows in money market funds		8.6			—			—			—			8.6			—
Market gains and losses/reinvestment		(16.3	)		(11.7	)		0.3			(1.4	)		0.1			(3.6	)
Foreign currency translation		(2.0	)		(1.0	)		(0.3	)		(0.4	)		(0.1	)		(0.2	)
March 31, 2009 AUM		348.2			114.4			63.1			30.9			92.6			47.2

(1)	The beginning balances were adjusted to reflect certain asset reclassifications.
(2)	The alternatives asset class includes financial structures, absolute return, real estate, private equity, asset allocation, portable alpha and multiple asset strategies.
(3)	Ending Money Market AUM includes $69.0 billion in institutional money market AUM and $3.6 billion in retail money market AUM.

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     AUM by Client Domicile

													Continental
$ in billions	Total			U.S.			Canada			U.K.			Europe			Asia
December 31, 2009 AUM(1)		423.1			257.7			29.0			84.9			24.4			27.1
Long-term inflows		21.1			10.4			0.6			4.5			3.4			2.2
Long-term outflows		(17.4	)		(7.8	)		(1.7	)		(3.5	)		(2.4	)		(2.0	)
Long-term net flows		3.7			2.6			(1.1	)		1.0			1.0			0.2
Net flows in money market funds		(10.6	)		(11.7	)		—			(0.6	)		1.8			(0.1	)
Market gains and losses/reinvestment		7.8			3.7			0.4			3.1			0.6			—
Foreign currency translation		(4.4	)		—			0.9			(4.5	)		(0.8	)		—
March 31, 2010 AUM		419.6			252.3			29.2			83.9			27.0			27.2
December 31, 2008 AUM(1)		357.2			232.5			24.1			56.7			22.3			21.6
Long-term inflows		14.3			7.2			0.7			3.8			1.6			1.0
Long-term outflows		(13.6	)		(7.9	)		(1.2	)		(1.4	)		(1.9	)		(1.2	)
Long-term net flows		0.7			(0.7	)		(0.5	)		2.4			(0.3	)		(0.2	)
Net flows in money market funds		8.6			6.4			—			0.1			2.0			0.1
Market gains and losses/reinvestment		(16.3	)		(8.6	)		(1.5	)		(5.3	)		(1.1	)		0.2
Foreign currency translation		(2.0	)		—			(0.5	)		(0.5	)		(0.5	)		(0.5	)
March 31, 2009 AUM		348.2			229.6			21.6			53.4			22.4			21.2

(1) The beginning balances were adjusted to reflect certain asset reclassifications.

Results of Operations

     Results of Operations for the Three Months Ended March 31, 2010, Compared with the Three Months Ended March 31, 2009

Adoption of FASB Statement No. 167

     The company provides investment management services to, and has transactions with, various private equity, real estate, fund-of-funds, collateralized loan obligation products (CLOs), and other investment entities sponsored by the company for the investment of client assets in the normal course of business. The company serves as the investment manager, making day-to-day investment decisions concerning the assets of the products. Certain of these entities are consolidated under variable interest or voting interest entity consolidation guidance. See Part I, Item 1, Financial Statements – Note 9, “Consolidated Investment Products,” for additional details.

     FASB Statement No. 167, which was effective January 1, 2010, had a significant impact on the presentation of the company’s financial statements, as its provisions required the company to consolidate certain CLOs that were not previously consolidated. The cumulative effect adjustment upon adoption of FASB Statement No. 167 at January 1, 2010, resulted in an appropriation of retained earnings and a reclassification of other comprehensive income into retained earnings of $274.3 million and $5.2 million, respectively. The company’s Consolidated Statement of Income for the three months ended March 31, 2010, reflect the elimination of $8.7 million in management fees earned from these CLOs, and the addition of $52.5 million in interest income, $20.8 million in interest expense, and $85.1 million in net other gains. The $105.8 million net income impact during the three months ended March 31, 2010, of consolidation of these CLOs is largely offset by gains/(losses) attributable to investors in noncontrolling interests of $104.4 million. Prior to the adoption of FASB Statement No. 167, the company accounted for its investments in these CLOs as available-for-sale investments, with changes in the value of the company’s interests being recorded through other comprehensive income. After the adoption of FASB Statement No. 167, the change in value of the company’s investments in these CLOs is reflected in the company’s net income. For the three months ended March 31, 2010, the net impact to the company of its investments in these CLOs was $1.4 million. The Condensed Consolidated Balance Sheet at March 31, 2010, reflects the consolidation of $5.8 billion in assets held and $5.1 billion in debt issued by these CLOs, despite the fact that the assets cannot be used by the company, nor is the company obligated for the debt. Retained earnings appropriated for investors of consolidated investment products of $383.8 million is presented as part of the company’s total equity, reflecting the excess of the consolidated CLOs’ assets over their liabilities, attributable to noncontrolling third-party investors in their consolidated CLOs at March 31, 2010. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs.

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     The majority of the company’s consolidated investment products balances were CLO-related as of March 31, 2010. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company’s minimal direct investments in, and management fees generated from, the CLOs. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Additionally, the investors in the CLOs have no recourse to the general credit of the company for the notes issued by the CLOs. The company therefore does not consider this debt to be a company liability. The discussion that follows will separate consolidated investment product results of operations from the company’s investment management operations through the use of non-GAAP financial measures. See the Schedule of Non-GAAP Information for additional details and reconciliations of the most directly comparable U.S. GAAP measures to the non-GAAP measures.

Condensed Consolidating Statements of Income

				Consolidated
	Before			Investment
$ in millions	Consolidation*			Products**			Eliminations			Total
Three Months ended March 31, 2010
Total operating revenues		729.5			0.2			(10.6	)		719.1
Total operating expenses		(579.0	)		(13.8	)		10.6			(582.2	)
Operating income		150.5			(13.6	)		—			136.9
Equity in earnings of unconsolidated affiliates		6.0			—			(0.2	)		5.8
Interest income		1.6			53.1			(0.6	)		54.1
Other investment income/(losses)		(2.1	)		103.1			—			101.0
Interest expense		(12.4	)		(21.4	)		0.6			(33.2	)
Income before income taxes, including gains and losses attributable to noncontrolling interests		143.6			121.2			(0.2	)		264.6
Income tax provision		(50.1	)		—			—			(50.1	)
Net income, including gains and losses attributable to noncontrolling interests		93.5			121.2			(0.2	)		214.5
(Gains)/losses attributable to noncontrolling interests in consolidated entities, net		(0.1	)		(119.4	)		—			(119.5	)
Net income attributable to common shareholders		93.4			1.8			(0.2	)		95.0

				Consolidated
	Before			Investment
$ in millions	Consolidation*			Products			Eliminations			Total
Three Months ended March 31, 2009
Total operating revenues		550.2			1.4			(3.0	)		548.6
Total operating expenses		(485.1	)		(4.7	)		3.0			(486.8	)
Operating income		65.1			(3.3	)		—			61.8
Equity in earnings of unconsolidated affiliates		1.3			—			1.2			2.5
Interest income		4.8			—			—			4.8
Other investment income/(losses)		(4.2	)		(86.5	)		—			(90.7	)
Interest expense		(15.9	)		—			—			(15.9	)
Income before income taxes, including gains and losses attributable to noncontrolling interests		51.1			(89.8	)		1.2			(37.5	)
Income tax provision		(20.3	)		—			—			(20.3	)
Net income, including gains and losses attributable to noncontrolling interests		30.8			(89.8	)		1.2			(57.8	)
(Gains)/losses attributable to noncontrolling interests in consolidated entities, net		(0.1	)		88.6			—			88.5
Net income attributable to common shareholders		30.7			(1.2	)		1.2			30.7

*	The Before Consolidation column includes Invesco’s equity interest in the investment products, accounted for as equity method and available-for-sale investments and does not include any other adjustments related to non-GAAP financial measure presentation.
**	The company adopted FASB Statement No. 167 on January 1, 2010, resulting in the consolidation of certain CLOs. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs. Prior to January 1, 2010, the company was not deemed to be the primary beneficiary of these CLOs.

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Operating Revenues and Net Revenues

     Operating revenues increased by $170.5 million (31.1%) in the three months ended March 31, 2010, to $719.1 million (March 31, 2009: $548.6 million). Net revenues increased by $132.8 million (32.3%) in the three months ended March 31, 2010, to $544.4 million (March 31, 2009: $411.6 million). Net revenues are operating revenues less third-party distribution, service and advisory expenses, plus our proportional share of net revenues from joint venture arrangements, plus management fees earned from, less other revenue recorded by, consolidated investment products. See “Schedule of Non-GAAP Information” for additional important disclosures regarding the use of net revenues. A significant portion of our business and managed AUM are based outside of the U.S. The income statements of foreign currency subsidiaries are translated into U.S. dollars, the reporting currency of the company, using average foreign exchange rates. Over the three month period, the average U.S. dollar foreign exchange rate was weaker when compared to other currencies, primarily the Pound Sterling, Canadian dollar and Euro, which impacted our reported revenues for the three months ended March 31, 2010, as compared to the three months ended March 31, 2009. The impact of foreign exchange rate movements resulted in $36.3 million (21.3%) of the increase in operating revenues during the three months ended March 31, 2010. Additionally, our revenues are directly influenced by the level and composition of our AUM as more fully discussed below. Movements in global capital market levels, net new business inflows (or outflows) and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period.

     The main categories of revenues, and the dollar and percentage change between the periods, were as follows:

	Three months ended
	March 31,
$ in millions	2010			2009			$ Change			% Change
Investment management fees		593.5			436.5			157.0			36.0	%
Service and distribution fees		112.5			89.0			23.5			26.4	%
Performance fees		1.4			10.9			(9.5	)		(87.2	)%
Other		11.7			12.2			(0.5	)		(4.1	)%
Total operating revenues		719.1			548.6			170.5			31.1	%
Third-party distribution, service and advisory expenses		(195.6	)		(148.2	)		47.4			32.0	%
Proportional share of revenues, net of third-party distribution expenses, from joint venture investments		10.5			9.6			0.9			9.4	%
Management fees earned from consolidated investment products		10.6			3.0			7.6			253.3	%
Operating revenues of consolidated investment products		(0.2	)		(1.4	)		1.2			(85.7	)%
Net revenues		544.4			411.6			132.8			32.3	%

     Investment management fees

     Investment management fees are derived from providing professional services to manage client accounts and include fees earned from retail mutual funds, unit trusts, investment companies with variable capital (ICVCs), exchange-traded funds, investment trusts and institutional and private wealth management advisory contracts. Investment management fees for products offered in the retail distribution channel are generally calculated as a percentage of the daily average asset balances and therefore vary as the levels of AUM change resulting from inflows, outflows and market movements. Investment management fees for products offered in the institutional and private wealth management distribution channels are calculated in accordance with the underlying investment management contracts and also vary in relation to the level of client assets managed.

     Investment management fees increased by $157.0 million (36%) in the three months ended March 31, 2010, to $593.5 million (March 31, 2009: $436.5 million) due to increases in average AUM, changes in the mix of AUM between asset classes and foreign exchange rate movement. Average AUM for the three months ended March 31, 2010, were $417.6 billion (March 31, 2009: $351.0 billion). Average long-term AUM, which generally earn higher fee rates than money market AUM, for the three months ended March 31, 2010, were $342.3 billion (March 31, 2009: $264.9 billion), while average institutional money market AUM decreased 12.5% to $75.3 billion at March 31, 2010, from $86.1 billion for the three months ended March 31, 2009.

     Additionally, the change in investment management fee revenues reflects the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, which resulted in the consolidation of certain CLOs with total assets of $5.7 billion at January 1, 2010. As part of the consolidation, management fees of $8.7 million were eliminated from the company’s operating revenues for the three months ended March 31, 2010. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs. The company uses a non-GAAP financial measure, net revenues, to add back these eliminated management fees as part of net revenues, as the company has earned them for providing investment management

44

services to the consolidated CLOs. See “Schedule of Non-GAAP Information” for the reconciliation of operating revenues to net revenues.

     Service and distribution fees

     Service fees are generated through fees charged to cover several types of expenses, including fund accounting fees and other maintenance costs for mutual funds, unit trusts and ICVCs, and administrative fees earned from closed-ended funds. Service fees also include transfer agent fees, which are fees charged to cover the expense of processing client share purchases and redemptions, call center support and client reporting. U.S. distribution fees can include 12b-1 fees earned from certain mutual funds to cover allowable sales and marketing expenses for those funds and also include asset-based sales charges paid by certain mutual funds for a period of time after the sale of those funds. Distribution fees typically vary in relation to the amount of client assets managed. Generally, retail products offered outside of the U.S. do not generate a separate distribution fee, as the quoted management fee rate is inclusive of these services.

     In the three months ended March 31, 2010, service and distribution fees increased by $23.5 million (26.4%) to $112.5 million (March 31, 2009: $89.0 million) due to increases in average AUM during the period.

     Performance fees

     Performance fee revenues are generated on certain management contracts when performance hurdles are achieved. Such fee revenues are recorded in operating revenues as of the performance measurement date, when the contractual performance criteria have been met and when the outcome of the transaction can be measured reliably in accordance with Method 1 of ASC Topic 605-20-S99, “Revenue Recognition – Services – SEC Materials.” Cash receipt of earned performance fees occurs after the measurement date. The performance measurement date is defined in each contract in which incentive and performance fee revenue agreements are in effect, and therefore we have performance fee arrangements that include monthly, quarterly and annual measurement dates. Given the uniqueness of each transaction, performance fee contracts are evaluated on an individual basis to determine if revenues can and should be recognized. Performance fees are not recorded if there are any future performance contingencies. If performance arrangements require repayment of the performance fee for failure to perform during the contractual period, then performance fee revenues are recognized no earlier than the expiration date of these terms. Performance fees will fluctuate from period to period and may not correlate with general market changes, since most of the fees are driven by relative performance to the respective benchmark rather than by absolute performance. Additionally, of our $419.6 billion in AUM at March 31, 2010, only approximately $26.5 billion, or 6.3%, could potentially earn performance fees.

     In the three months ended March 31, 2010, performance fees decreased by $9.5 million (87.2%) to $1.4 million (March 31, 2009: $10.9 million). The performance fees generated in the three months ended March 31, 2009, arose primarily due to products managed in the UK and Asia.

Other revenues

     Other revenues include fees derived primarily from transaction commissions earned upon the sale of new investments into certain of our funds and fees earned upon the completion of transactions in our direct real estate and private equity asset groups. Real estate transaction fees are derived from commissions earned through the buying and selling of properties. Private equity transaction fees include commissions associated with the restructuring of, and fees from providing advice to, portfolio companies held by the funds. These transaction fees are recorded in our financial statements on the date when the transactions are legally closed.

     In the three months ended March 31, 2010, other revenues decreased by $0.5 million (4.1%) to $11.7 million (March 31, 2009: $12.2 million) driven by decreases in revenues of consolidated investment products, offset partially by increases in transaction fees within our real estate operations.

     Third-party distribution, service and advisory expenses

     Third-party distribution, service and advisory expenses include periodic “renewal” commissions paid to brokers and independent financial advisors for their continuing oversight of their clients’ assets, over the time they are invested, and are payments for the servicing of client accounts. Renewal commissions are calculated based upon a percentage of the AUM value. Third-party distribution expenses also include the amortization of upfront commissions paid to broker-dealers for sales of fund shares with a contingent deferred sales charge (a charge levied to the investor for client redemption of AUM within a certain contracted period of time). The

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distribution commissions are amortized over the redemption period. Also included in third-party distribution, service and advisory expenses are sub-transfer agency fees that are paid to third parties for processing client share purchases and redemptions, call center support and client reporting. Third-party distribution, service and advisory expenses may increase or decrease at a rate different from the rate of change in service and distribution fee revenues due to the inclusion of distribution, service and advisory expenses for the U.K. and Canada, where the related revenues are recorded as investment management fee revenues, as noted above.

     Third-party distribution, service and advisory expenses increased by $47.4 million (32.0%) in the three months ended March 31, 2010, to $195.6 million (March 31, 2009: $148.2 million), consistent with the increases in investment management and service and distribution fee revenues.

     Proportional share of revenues, net of third-party distribution expenses, from joint venture investments

     Management believes that the addition of our proportional share of revenues, net of third-party distribution expenses, from joint venture arrangements should be added to operating revenues to arrive at net revenues, as it is important to evaluate the contribution to the business that our joint venture arrangements are making. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of net revenues. The company’s most significant joint venture arrangement is our 49.0% investment in Invesco Great Wall Fund Management Company Limited (the “Invesco Great Wall” joint venture).

     Our proportional share of revenues, net of third-party distribution expenses increased by $0.9 million (9.4%) to $10.5 million in the three months ended March 31, 2010 (March 31, 2009: $9.6 million), driven by increases in average AUM during the period in the Invesco Great Wall joint venture. Our share of the Invesco Great Wall joint venture’s average AUM in the three months ended March 31, 2010, was $3.8 billion (March 31, 2009: $3.2 billion).

     Management fees earned from consolidated investment products

     Management believes that the consolidation of investment products may impact a reader’s analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company. Accordingly, management believes that it is appropriate to adjust operating revenues for the impact of consolidated investment products in calculating net revenues. As management and performance fees earned by Invesco from the consolidated products are eliminated upon consolidation of the investment products, management believes that it is appropriate to add these operating revenues back in the calculation of net revenues. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of net revenues.

     Management fees earned from consolidated investment products increased by $7.6 million (253.3%) to $10.6 million in the three months ended March 31, 2010 (March 31, 2009: $3.0 million). The increase reflects the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, which resulted in the consolidation of certain CLOs with total assets of $5.7 billion at January 1, 2010. As part of the CLO consolidation, management fees of $8.7 million were eliminated from the company’s operating revenues. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs.

Operating revenues of consolidated investment products

     Operating revenues of consolidated investment products are included in U.S. GAAP operating revenues resulting from the consolidation of investment products into the company’s results of operations. Management believes that this consolidation could impact a reader’s analysis of our underlying results of operations. Therefore, management believes that it is appropriate to deduct operating revenues of consolidated investment products in calculating net revenues. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of net revenues. The change in operating revenues of consolidated investment products is discussed above.

Operating Expenses

     During the three months ended March 31, 2010, operating expenses increased by $95.4 million (19.6%) to $582.2 million (March 31, 2009: $486.8 million). As discussed above, a significant portion of our business and managed AUM are based outside of the U.S. The income statements of foreign currency subsidiaries are translated into U.S. dollars, the reporting currency of the company, using average foreign exchange rates. Over the three months, the average U.S. dollar foreign exchange rate was weaker when compared to other currencies, primarily the Pound Sterling, Canadian dollar and Euro, which impacted our reported expenses for the three months

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ended March 31, 2010, as compared to the three months ended March 31, 2009. The impact of foreign exchange rate movements resulted in $27.0 million (28.3%) of the increase in operating expenses during the three months ended March 31, 2010.

     The main categories of operating expenses, and the dollar and percentage changes between periods, are as follows:

	Three months ended
	March 31,
$ in millions	2010		2009		$ Change		% Change
Employee compensation		237.6		235.8		1.8		0.8	%
Third-party distribution, service and advisory		195.6		148.2		47.4		32.0	%
Marketing		28.3		26.9		1.4		5.2	%
Property, office and technology		53.5		45.9		7.6		16.6	%
General and administrative		50.0		30.0		20.0		66.7	%
Transaction and integration		17.2		—		17.2		N/A
Total operating expenses		582.2		486.8		95.4		19.6	%

     The table below sets forth these cost categories as a percentage of total operating expenses and operating revenues, which we believe provides useful information as to the relative significance of each type of expense:

Three months ended:

			% of Total			% of					% of Total			% of
	March 31,		Operating			Operating			March 31,		Operating			Operating
$ in millions	2010		Expenses			Revenues			2009		Expenses			Revenues
Employee compensation		237.6		40.8	%		33.0	%		235.8		48.4	%		43.0	%
Third-party distribution, service and advisory		195.6		33.6	%		27.2	%		148.2		30.5	%		27.0	%
Marketing		28.3		4.9	%		3.9	%		26.9		5.5	%		4.9	%
Property, office and technology		53.5		9.2	%		7.4	%		45.9		9.4	%		8.4	%
General and administrative		50.0		8.6	%		7.0	%		30.0		6.2	%		5.5	%
Transaction and integration		17.2		2.9	%		2.4	%		—		N/A			N/A
Total operating expenses		582.2		100.0	%		80.9	%		486.8		100.0	%		88.8	%

Employee Compensation

     Employee compensation includes salary, cash bonuses and share-based payment plans designed to attract and retain the highest caliber employees. Employee staff benefit plan costs and payroll taxes are also included in employee compensation.

     Employee compensation increased $1.8 million (0.8%) to $237.6 million in the three months ended March 31, 2010, (March 31, 2009: $235.8 million) due to foreign exchange rate changes, offset by decreases in base salaries and staff bonuses. Headcount at March 31, 2010, was 4,902 (March 31, 2009: 5,122). Included in compensation expenses during the three months ended March 31, 2010, are share-based payment costs of $24.2 million, compared to $23.7 million during the three months ended March 31, 2009. Additionally, employee compensation costs for the three months ended March 31, 2010 and 2009, included $5.0 million of prepaid compensation amortization expenses related to the 2006 acquisition of W.L. Ross & Co. This expense amortization will continue through 2010, and the acquisition-related asset will be fully amortized by the third quarter of 2011.

Third-Party Distribution, Service and Advisory Expenses

     Third-party distribution, service and advisory expenses are discussed above in the operating and net revenues section.

Marketing

     Marketing expenses include marketing support payments, which are payments made to distributors of certain of our retail products over and above the 12b-1 distribution payments. These fees are contracted separately with each distributor. Marketing expenses also include the cost of direct advertising of our products through trade publications, television and other media, and public relations costs, such as the marketing of the company’s products through conferences or other sponsorships, and the cost of marketing-related employee travel.

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     Marketing expenses increased by $1.4 million (5.2%) in the three months ended March 31, 2010, to $28.3 million (March 31, 2009: $26.9 million) primarily due to increases in marketing support payments as compared to the three months ended March 31, 2009.

     Property, Office and Technology

     Property, office and technology expenses include rent and utilities for our various leased facilities, depreciation of company-owned property and capitalized computer equipment costs, minor non-capitalized computer equipment and software purchases and related maintenance payments, and costs related to externally provided operations, technology, and other back office management services.

     Property, office and technology expenses increased by $7.6 million (16.6%) to $53.5 million in the three months ended March 31, 2010 (March 31, 2009: $45.9 million), due primarily to foreign exchange rate changes and increased costs associated with the Hyderabad facility.

     General and Administrative

     General and administrative expenses include professional services costs, such as information service subscriptions, consulting fees, professional insurance costs, audit, tax and legal fees, non-marketing related employee travel expenditures, recruitment and training costs, and the amortization of certain intangible assets.

     General and administrative expenses increased by $20.0 million (66.7%) to $50.0 million in the three months ended March 31, 2010 (March 31, 2009: $30.0 million). General and administrative expenses in the three months ended March 31, 2009, included an insurance recovery of $9.5 million related to legal costs associated with the market-timing regulatory settlement. The increases in general and administrative expenses reflects the inclusion of operating expenses of consolidated investment products resulting from the adoption of FASB Statement No. 167 on January 1, 2010. Additionally, travel costs have increased in the three months ended March 31, 2010, from the three months ended March 31, 2009.

     Transaction and integration

     Transaction and integration expenses include acquisition-related charges incurred during the period to effect a business combination, including legal, regulatory, advisory, valuation, and other professional or consulting fees, general and administrative costs, including travel costs related to the transaction and the costs of temporary staff involved in executing the transaction, and post-closing costs of integrating the acquired business into the company’s existing operations including incremental costs associated with achieving synergy savings.

     Transaction and integration charges were $17.2 million in the three months ended March 31, 2010 (three months ended March 31, 2009: none) and relate to the pending acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments. The acquisition was announced in October 2009 and is expected to close on June 1, 2010. These aggregate costs are currently expected to be less than $175 million, including those costs incurred in 2009 of $10.8 million, and are expected to continue to be incurred during 2010-2011. One of the largest anticipated post-closing expenses of integrating the acquired business into the company’s existing operations relates to the costs of proxy solicitation of fund shareholders. Our estimates of these charges could continue to increase as additional resources are devoted to obtaining the required votes as early as practicable before the end of the second quarter of 2010, as desired.

     Operating Income, Net Operating Income, Operating Margin and Net Operating Margin

     Operating income increased by $75.1 million (121.5%) to $136.9 million in the three months ended March 31, 2010 (March 31, 2009: $61.8 million). As a result of the increase in our operating revenues, the following measures have also improved during the three months ended March 31, 2010: operating margin, adjusted cash operating income, and adjusted cash operating margin. Operating margin (operating income divided by operating revenues) was 19.0% in the three months ended March 31, 2010, improving from 11.3% in the three months ended March 31, 2009. Adjusted cash operating income (operating income plus our proportional share of the operating income from joint venture arrangements, transaction and integration charges, amortization of acquisition-related prepaid compensation and other intangibles, and the operating income impact of the consolidation of investment products) increased by $104.0 million (131.6%) to $183.0 million in the three months ended March 31, 2010, from $79.0 million in the three months ended March 31, 2009. Adjusted cash operating margin is equal to adjusted cash operating income divided by net revenues. Net revenues are equal to operating revenues less third-party distribution, service and advisory expenses, plus our proportional share of the net revenues from our joint venture arrangements, plus management fees earned from, less other revenue recorded by, consolidated

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investment products. Adjusted cash operating margin increased to 33.6% in the three months ended March 31, 2010, from 19.2% in the three months ended March 31, 2009. See “Schedule of Non-GAAP Information” for a reconciliation of operating revenues to net revenues, a reconciliation of operating income to adjusted cash operating income and additional important disclosures regarding net revenues, adjusted cash operating income and adjusted cash operating margin.

     Other Income and Expenses

     The main categories of other income and expenses, and the dollar and percentage changes between periods are as follows:

	Three months ended
	March 31,
$ in millions	2010			2009			$ Change			% Change
Equity in earnings of unconsolidated affiliates		5.8			2.5			3.3			132.0	%
Interest income		1.6			4.8			(3.2	)		(66.7	)%
Interest income of consolidated investment products		52.5			—			52.5			N/A
Gains/(losses) of consolidated investment products, net		103.1			(86.5	)		189.6			N/A
Interest expense		(12.4	)		(15.9	)		3.5			(22.0	)%
Interest expense of consolidated investment products		(20.8	)		—			(20.8	)		N/A
Other gains and losses, net		(2.1	)		(4.2	)		2.1			(50.0	)%
Total other income and expenses		127.7			(99.3	)		227.0			(228.6	)%

     Equity in earnings of unconsolidated affiliates

     Equity in earnings of unconsolidated affiliates increased by $3.3 million (132.0%) to $5.8 million in the three months ended March 31, 2010 (March 31, 2009: $2.5 million), resulting primarily from increases in our share of the pre-tax losses of our partnership investments.

     Interest income and interest expense

     Interest income decreased by $3.2 million (66.7%) to $1.6 million in the three months ended March 31, 2010 (March 31, 2009: $4.8 million), as a result of significantly lower interest rates during the period. The decrease in yields was consistent with market direction during the period. Interest expense decreased by $3.5 million (22.0%) to $12.4 million in the three months ended March 31, 2010 (March 31, 2009: $15.9 million), resulting from a lower average debt balance during the three months ended March 31, 2010, versus the comparative period.

     Interest income and interest expense of consolidated investment products

     Interest income of consolidated investment products results from interest generated by the collateral assets held by consolidated CLOs, which is used to satisfy the interest expenses of the notes issued by the consolidated CLOs and other operating expense requirements, including the payment of the management and performance fees to the company as investment manager. See Part I, Item 1, Financial Statements – Note 9, “Consolidated Investment Products,” for additional details.

     In the three months ended March 31, 2010, interest income and interest expense of consolidated investment products were $52.5 million and $20.8 million, respectively. The increases reflect the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, which resulted in the consolidation of certain CLOs with total assets of $5.7 billion at January 1, 2010. In accordance with the standard, prior periods have not been restated to reflect the consolidation.

     Gains and losses of consolidated investment products

     Included in other income and expenses are gains and losses of consolidated investment products, net, which are driven by realized and unrealized gains and losses of underlying investments held by consolidated investment products. The consolidation of investment products during the three months ended March 31, 2010, resulted in non-operating gains of $103.1 million. Invesco invests in only a small equity portion of these products, and as a result these losses are offset by noncontrolling interests of $119.4 million, resulting in a net impact to the company of $16.3 million. Net losses of consolidated investment products for the three months ended March 31, 2009, were $86.5 million, and are largely offset by noncontrolling interests of consolidated entities, net of tax, of $88.6 million.

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     In the three months ended March 31, 2010, gains and losses of consolidated investment products were a net gain of $103.1 million, as compared to a net loss of $86.5 million in the three months ended March 31, 2009. The increase primarily reflects the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, which resulted in the consolidation of certain CLOs with total assets of $5.7 billion at January 1, 2010. Collateral assets and notes issued by consolidated CLOs are held at fair value, and the unrealized and realized gains and losses of the collateral assets and notes are reflected in this line item. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs.

     Other gains and losses, net

     Other gains and losses, net were a net loss of $2.1 million in the three months ended March 31, 2010, as compared to a net loss of $4.2 million in the three months ended March 31, 2009. Included in other gains and losses is a net gain of $2.2 million as a result of the appreciation of assets held for our deferred compensation plans (2009: $1.4 million net gain). In the three months ended March 31, 2010, we incurred $2.1 million in net foreign exchange losses (2009: $0.7 million in net foreign exchange losses). Included in other losses are $2.1 million of other-than-temporary impairment charges related to the company’s seed money investments (2009: $6.6 million).

     Income Tax Expense

     Our subsidiaries operate in several taxing jurisdictions around the world, each with its own statutory income tax rate. As a result, our effective tax rate will vary from year to year depending on the mix of the profits and losses of our subsidiaries. The majority of our profits are earned in the U.S., Canada and the U.K. The current U.K. statutory tax rate is 28%, the Canadian statutory tax rate is 31% and the U.S. Federal statutory tax rate is 35%.

     Our effective tax rate, excluding noncontrolling interests in consolidated entities, for the three months ended March 31, 2010, was 34.5%, down from 39.8% for the three months ended March 31, 2009. The effective tax rate for the three months ended March 31, 2009, included the impact of investment write-downs and partnership losses that occurred in zero or low tax rate jurisdictions.

Schedule of Non-GAAP Information

     Beginning with the presentation of the company’s results for the three months ended March 31, 2010, the company has expanded its use of non-GAAP measures to include reconciling items primarily relating to Financial Accounting Standards Board (FASB) Statement No. 167, “Amendments to FASB Interpretation No. 46(R)” (FASB Statement No. 167), now encompassed in the Accounting Standards Codification Topic 810 (discussed in Part I, Item I, “Financial Statements – Note 1, Accounting Policies”), and the acquisition of Morgan Stanley’s retail asset management business. We are presenting the following non-GAAP measures: net revenue (and by calculation, net revenue yield on AUM), adjusted cash operating income (and by calculation, adjusted cash operating margin), adjusted cash net income (and by calculation, adjusted cash earnings per share (EPS)). The most directly comparable U.S. GAAP measures are operating revenues (and by calculation, gross revenue yield on AUM), operating income (and by calculation, operating margin), net income (and by calculation, diluted EPS). Each of these measures is discussed more fully below. The net revenue measure has been redefined from that previously used to now adjust for the impact of consolidating certain investment products. The presentation of net revenue in this Report for the three months ended March 31, 2009, has been restated to conform the calculation to the current period’s methodology. These non-GAAP measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies. Additional reconciling items may be added in the future to these non-GAAP measures if deemed appropriate.

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     The following are reconciliations of operating revenues, operating income (and by calculation, operating margin), and net income (and by calculation, diluted EPS) on a U.S. GAAP basis to net revenues, adjusted cash operating income (and by calculation, adjusted cash operating margin), and adjusted cash net income (and by calculation, adjusted cash EPS):

	Three months ended March 31,
$ in millions	2010			2009
Operating revenues, U.S. GAAP basis		719.1			548.6
Third-party distribution, service and advisory expenses(1)		(195.6	)		(148.2	)
Proportional share of net revenues from joint venture arrangements(2)		10.5			9.6
Management fees earned from consolidated investment products eliminated upon consolidation(3)		10.6			3.0
Operating revenues of consolidated investment products(3)		(0.2	)		(1.4	)
Net revenues		544.4			411.6
Operating income, U.S. GAAP basis		136.9			61.8
Proportional share of operating income from joint venture investments(2)		5.3			5.8
Transaction and integration charges(4)		17.2			—
Amortization of acquisition-related prepaid compensation(4)		5.0			5.0
Amortization of other intangibles(4)		3.1			3.1
Compensation expense related to appreciation in deferred compensation plans		1.9			—
Consolidation of investment products(3)		13.6			3.3
Adjusted cash operating income		183.0			79.0
Operating margin*		19.0	%		11.3	%
Adjusted cash operating margin**		33.6	%		19.2	%
Net income attributable to common shareholders, U.S. GAAP basis		95.0			30.7
Transaction and integration charges, net of tax(4)		15.3			—
Amortization of acquisition-related prepaid compensation(4)		5.0			5.0
Amortization of other intangibles, net of tax(4)		3.0			3.1
Deferred compensation plan appreciation less compensation expense, net of tax		(0.3	)		—
Deferred income taxes on intangible assets(4)		3.6			3.6
Consolidation of investment products(3)		(1.6	)		—
Adjusted cash net income		120.0			42.4
Average shares outstanding — diluted		442.4			399.9
Diluted EPS	$	0.21		$	0.08
Adjusted cash EPS***	$	0.27		$	0.11

*	Operating margin is equal to operating income divided by operating revenues.
**	Adjusted cash operating margin is equal to net operating income divided by net revenues.
***	Adjusted cash EPS is equal to adjusted cash net income divided by the weighted average shares outstanding amount used in the calculation of diluted EPS.

The reconciling items from the related U.S. GAAP-based measures to our non-GAAP measures are detailed below:

(1)	Third-party distribution, service and advisory expenses
	Third-party distribution, service and advisory expenses include renewal commissions, management fee rebates and distribution costs (12b-1) paid to brokers and independent financial advisors. While the terms used for these types of expense vary by geography, they are all expense items that are closely linked to the value of AUM and the revenue earned by Invesco from AUM.
	Renewal commissions are paid to independent financial advisors for as long as the clients’ assets remain invested and are payments for the servicing of client accounts. These commissions, similar to our management fee revenues, are based upon a percentage of the AUM value and apply to much of our non-US retail business. They can also take the form of management fee rebates, particularly outside of the U.S.
	The revenues of our U.S. business include distribution fees earned from mutual funds, principally 12b-1 fees. Distribution costs are expenses paid to third-party brokers of our U.S. business. These include the amortization over the redemption period of upfront commissions paid to brokers for sales of fund shares with a contingent deferred sales charge (a charge levied on investors

51

	for redemptions within a certain contracted period of time). Both the revenues and the costs are dependent on the underlying AUM of the brokers’ clients.
	Also included in third-party distribution, service and advisory expenses are sub-transfer agency fees that are paid to third parties for processing client share purchases and redemptions, call center support and client reporting. These costs are reimbursed by the related funds.
	Since the company has been deemed to be the principal in the third-party arrangements, the company must reflect these expenses gross of operating revenues under U.S. GAAP. Management believes that the deduction of third-party distribution, service and advisory expenses from operating revenues in the computation of net revenues (and by calculation, net revenue yield on AUM) and the related computation of adjusted cash operating income (and by calculation, adjusted cash operating margin), is useful information for investors and other users of the company’s financial statements because such presentation appropriately reflects the nature of these expenses as revenue-sharing activities, as these costs are passed through to external parties who perform functions on behalf of the company’s managed funds. Further, these expenses vary extensively by geography due to the differences in distribution channels. The net presentation assists in identifying the revenue contribution generated by the business, removing distortions caused by the differing distribution channel fees and allowing for a fair comparison with U.S. peer investment managers and within Invesco’s own investment units. Additionally, management evaluates net revenue yield on AUM, which is equal to net revenues divided by average AUM during the reporting period. This financial measure is an indicator of the basis point net revenues we receive for each dollar of AUM we manage and is useful when evaluating the company’s performance relative to industry competitors and within the company for capital allocation purposes.
(2)	Proportional share of net revenues and operating income from joint venture investments
	The company has two joint venture investments in China. The Invesco Great Wall joint venture was one of the largest Sino-foreign managers of equity products in China, with AUM of approximately $3.8 billion as of March 31, 2010. The company has a 49.0% interest in Invesco Great Wall. The company also has a 50% joint venture with Huaneng Capital Services to assess private equity investment opportunities in power generation in China through Huaneng Invesco WLR Investment Consulting Company Ltd. Enhancing our operations in China is one effort that we believe could improve our competitive position over time. Accordingly, we believe that it is appropriate to evaluate the contribution of our joint venture investments to the operations of the business.
	Management believes that the addition of our proportional share of revenues, net of distribution expenses, from joint venture investments in the computation of net revenues and the addition of our proportional share of operating income in the related computations of adjusted cash operating income and adjusted cash operating margin also provide useful information to investors and other users of the company’s financial statements, as management considers it appropriate to evaluate the contribution of its joint ventures to the operations of the business. It is also consistent with the presentation of AUM and net flows (where our proportional share of the ending balances and related activity are reflected) and therefore provides a more meaningful calculation of net revenue yield on AUM.
(3)	Consolidated investment products
	In June 2009, the U.S. FASB issued Statement No. 167, which was effective January 1, 2010. It has had a significant impact on the presentation of the company’s financial statements. The provisions of FASB Statement No. 167 required us to consolidate into our financial statements certain CLOs with approximately $5.8 billion in assets and $5.1 billion in debt at March 31, 2010. The company’s Consolidated Statements of Income reflect the elimination of management and performance fees earned from these CLOs of $8.7 million during the three months ended March 31, 2010, and the addition of $52.5 million in interest income, $20.8 million in interest expense, and $85.1 million in net other gains. The $105.8 million net income impact during the three months ended March 31, 2010, of consolidation is largely offset by gains/(losses) attributable to noncontrolling interests of $104.4 million. See Part I, Item I, “Financial Statements– Note 9, Consolidated Investment Products” for a detailed analysis of the impact to the company’s Condensed Consolidated Financial Statements from the consolidation of investment products.
	Management believes that the consolidation of investment products may impact a reader’s analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company. Accordingly, management believes that it is appropriate to adjust operating revenues, operating income and operating margin for the impact of consolidated investment products in calculating the respective net revenues, adjusted cash operating income and adjusted cash operating margin. The reconciling items add back the management and performance fees earned by Invesco from

52

	the consolidated products and remove the revenues and expenses recorded by the consolidated products that have been included in the U.S. GAAP Condensed Consolidated Statements of Income.
	These amounts have been relatively small in recent years, as the company has been consolidating other investment products, primarily private equity funds, under other U.S. GAAP consolidation accounting guidance. Net revenues and adjusted cash operating income reflect these reconciling items for the three months ended March 31, 2008.
(4)	Acquisition-related reconciling items
	Acquisition-related adjustments include transaction and integration expenses and intangible asset amortization related to acquired assets, amortization of prepaid compensation related to the 2006 acquisition of W.L. Ross & Co., and tax cash flow benefits resulting from tax amortization of goodwill and indefinite-lived intangible assets.
	Transaction and integration charges were $17.2 million during the three months ended March 31, 2010 (three months ended March 31, 2009: none), and relate to the pending acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments. Taxation on this amount, calculated at the applicable tax rate for the tax deductible portion of the charges, is $1.9 million for the three months ended March 31, 2010 (three months ended March 31, 2009: none) giving a net adjustment of $15.3 million for the three months ended March 31, 2010 (three months ended March 31, 2009: none). The acquisition was announced in October 2009 and is expected to close in on June 1, 2010. These aggregate costs are currently expected to be less than $175 million, including those costs incurred in 2009, and are expected to continue to be incurred during 2010-2011. These charges reflect the legal, regulatory, advisory, valuation and other professional or consulting fees, general and administrative costs, including travel costs related to the transaction and the costs of temporary staff involved in executing the transaction, and the post closing costs of integrating the acquired business into the company’s existing operations including incremental costs associated with achieving synergy savings.
	The pending acquisition is also expected to result in additional future amortization expenses in the range $25 — $35 million per year for approximately 8 years related to the finite-lived intangible assets that will be recorded at the closing date. The U.S. GAAP to non-GAAP reconciling items includes acquisition-related amortization charges related to previous business combinations. These reconciling items are intangible amortization of $3.1 million for the three months ended March 31, 2010 (three months ended March 31, 2009: $3.1 million) and the amortization of prepaid compensation of $5.0 million (three months ended March 31, 2009: $5.0 million) related to the October 2006 acquisition of W.L. Ross & Co. Taxation of $0.1 million for the three months ended March 31, 2010 (three months ended March 31, 2009: none) is recorded on a small portion of the intangible amortization expense that does not generate a cash tax benefit, giving a net adjustment of $3.0 million for the three months ended March 31, 2010 (three months ended March 31, 2009: $3.1 million). The W.L. Ross & Co. prepaid compensation expense will continue through 2010, and the acquisition-related asset will be fully amortized by the third quarter of 2011.
	Management believes it is useful to investors and other users of our financial statements to adjust for the transaction and integration charges and the amortization expenses in arriving at adjusted cash operating income, adjusted cash operating margin and adjusted cash EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar acquisition-related charges.
	While finite-lived intangible assets are amortized under U.S. GAAP, there is no amortization charge on goodwill and indefinite-lived intangibles. In certain qualifying situations, these can be amortized for tax purposes, generally over a 15-year period, as is the case in the U.S. These cash flows represent tax benefits that are not included in the Condensed Consolidated Statements of Income absent an impairment charge or the disposal of the related business. We believe it is useful to include these tax cash flow benefits in arriving at the adjusted cash EPS measure. The company receives these cash flow benefits but does not anticipate a sale or impairment of these assets in the foreseeable future, and therefore the deferred tax liability recognized under U.S. GAAP is not expected to be used either through a credit in the Condensed Consolidated Statements of Income or through settlement of tax obligations. Adjustments for deferred income taxes on goodwill and indefinite-lived intangibles that are amortized for tax purposes were $3.6 million in both quarters presented.
(5)	Market movement on deferred compensation plan liabilities
	In 2009, Invesco introduced an incentive plan whereby certain of our investment team members can receive deferred cash compensation linked in value to the investment products being managed by the team. This is in lieu of share-based awards which were largely the only prior form of deferred compensation used by Invesco.

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These new awards involve a return to the employee linked to the appreciation (depreciation) of specified investments, typically the funds managed by the employee. Invesco intends to economically hedge the exposure to market movements by holding these investments on its balance sheet. U.S. GAAP requires the appreciation (depreciation) in the compensation liability to be expensed over the award vesting period in proportion to the vested amount of the award as part of compensation expense. The full value of the investment appreciation (depreciation) is immediately recorded below operating income in other gains and losses. This creates a timing difference between the recognition of the compensation expense and the investment gain or loss impacting net income attributable to common shareholders and diluted EPS which will reverse over the life of the award and net to zero at the end of the multi-year vesting period. During periods of high market volatility these timing differences impact compensation expense, operating income and operating margin that, over the life of the award, will ultimately be offset by gains and losses recorded below operating income on the Consolidated Statements of Income.

Since these plans are economically hedged, management believes it is useful to reflect the offset ultimately achieved from hedging the investment market exposure in the calculation of adjusted cash operating income (and by calculation, adjusted cash operating margin) and adjusted net income (and by calculation, adjusted cash EPS), to produce results that will be more comparable period to period. The related fund shares will have been purchased on or around the date of grant, eliminating any ultimate cash impact from market movements that occur over the vesting period. The non-GAAP measures therefore excludes the mismatch created by differing U.S. GAAP treatments of the market movement on the liability and the investments.

The appreciation of the compensation liability was $1.9 million in the three months ended March 31, 2010 with an investment gain of $2.4 million on the assets held to economically hedge the compensation liability. This additional compensation expense and the investment gain are adjusted in arriving at the Non-GAAP information and, net of applicable taxation of $0.2 million, result in a net income adjustment of $0.3 million. No adjustments are being made for the 2009 comparative non-GAAP measures presented above due to the relative insignificance of the amounts in that period.

Balance Sheet Discussion

     Condensed Consolidating Balance Sheets are presented below and reflect the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” at January 1, 2010. The majority of the company’s consolidated investment products were CLOs as of March 31, 2010. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company’s minimal direct investments in, and management fees generated from, CLOs. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Additionally, the investors in the CLOs have no recourse to the general credit of the company for the notes issued by the CLOs. The company therefore does not consider this debt to be a company liability.

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Condensed Consolidating Balance Sheets

			Consolidated
	Before		Investment
$ in millions	Consolidation*		Products**		Eliminations			Total
As of March 31, 2010
Current assets		3,245.9		419.1		(19.7	)		3,645.3
Non-current assets		7,067.7		6,105.7		(27.2	)		13,146.2
Total assets		10,313.6		6,524.8		(46.9	)		16,791.5
Current liabilities		2,419.5		301.3		(19.7	)		2,701.1
Long-term debt of consolidated investment products		—		5,136.3		(17.2	)		5,119.1
Other non-current liabilities		970.4		—		—			970.4
Total liabilities		3,389.9		5,437.6		(36.9	)		8,790.6
Retained earnings attributable to investors in consolidated investment products		—		385.2		(1.4	)		383.8
Other equity attributable to common shareholders		6,919.2		8.6		(8.6	)		6,919.2
Equity attributable to noncontrolling interests in consolidated entities		4.5		693.4		—			697.9
Total liabilities and equity		10,313.6		6,524.8		(46.9	)		16,791.5

			Consolidated
	Before		Investment
$ in millions	Consolidation*		Products		Eliminations			Total
As of December 31, 2009
Current assets		3,089.8		31.2		—			3,121.0
Non-current assets		7,111.8		685.0		(8.2	)		7,788.6
Total assets		10,201.6		716.2		(8.2	)		10,909.6
Current liabilities		2,293.6		4.8		—			2,298.4
Non-current liabilities		990.4		—		—			990.4
Total liabilities		3,284.0		4.8		—			3,288.8
Total equity attributable to common shareholders		6,912.9		8.2		(8.2	)		6,912.9
Equity attributable to noncontrolling interests in consolidated entities		4.7		703.2		—			707.9
Total liabilities and equity		10,201.6		716.2		(8.2	)		10,909.6

*	The Before Consolidation column includes Invesco’s equity interest in the investment products, accounted for as equity method and available-for-sale investments and does not include any other adjustments related to non-GAAP financial measure presentation.
**	The company adopted FASB Statement No. 167 on January 1, 2010, resulting in the consolidation of certain CLOs In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs. Prior to January 1, 2010, the company was not deemed to be the primary beneficiary of these CLOs.

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     The following table presents a comparative analysis of significant detailed balance sheet line items:

	March 31,			December 31,
$ in millions	2010			2009			$ Change			% Change
Cash and cash equivalents		597.0			762.0			(165.0	)		(21.7	)%
Unsettled fund receivables		758.1			383.1			375.0			97.9	%
Current investments		154.0			182.4			(28.4	)		(15.6	)%
Assets held for policyholders		1,221.0			1,283.0			(62.0	)		(4.8	)%
Non-current investments		141.8			157.4			(15.6	)		(9.9	)%
Investments of consolidated investment products		6,105.7			685.0			5,420.7			791.3	%
Goodwill		6,425.8			6,467.6			(41.8	)		(0.6	)%
Policyholder payables		(1,221.0	)		(1,283.0	)		(62.0	)		(4.8	)%
Long-term debt		(745.7	)		(745.7	)		—			0	%
Long-term debt of consolidated investment products		(5,119.1	)		—			5,119.1			N/A
Retained earnings appropriated for investors in consolidated investment products		(383.8	)		—			383.8			N/A
Equity attributable to common shareholders		(7,303.0	)		(6,912.9	)		390.1			5.6	%
Equity attributable to noncontrolling interests in consolidated entities		(697.9	)		(707.9	)		(10.0	)		(1.4	)%

     Cash and Cash Equivalents

     Cash and cash equivalents decreased by $165.0 million from $762.0 million at December 31, 2009, to $597.0 million at March 31, 2010, primarily due to the payout of the annual bonus awards.

     Invesco has local capital requirements in several jurisdictions, as well as regional requirements for entities that are part of the European sub-group. These requirements mandate the retention of liquid resources in those jurisdictions, which we meet in part by holding cash and cash equivalents. This retained cash can be used for general business purposes in the European sub-group or in the countries where it is located. Due to the capital restrictions, the ability to transfer cash between certain jurisdictions may be limited. In addition, transfers of cash between international jurisdictions may have adverse tax consequences that may substantially limit such activity. At March 31, 2010, the European sub-group had cash and cash equivalent balances of $326.8 million, much of which is used to satisfy these regulatory requirements. We are in compliance with all regulatory minimum net capital requirements.

Unsettled Fund Receivables

     Unsettled fund receivables increased by $375.0 million from $383.1 million at December 31, 2009, to $758.1 million at March 31, 2010, due to higher transaction activity between funds and investors in late March 2010 when compared to late December 2009. Unsettled fund receivables are created by the normal settlement periods on transactions initiated by certain clients of our U.K. and offshore funds. The presentation of the receivable and substantially offsetting payable ($735.9 million) at trade date with both the investor and the fund for normal purchases and sales reflects the legal relationship between the underlying investor and the company.

     Investments (current and non-current)

     As of March 31, 2010, we had $295.8 million in investments, of which $154.0 million were current investments and $141.8 million were non-current investments. Included in current investments are $77.9 million of seed money investments in affiliated funds used to seed funds as we launch new products, and $51.8 million of investments related to assets held for deferred compensation plans, which are also held primarily in affiliated funds, and which decreased during the three months ended March 31, 2010, due to the sale of investments that were used to hedge deferred compensation awards that have now vested to employees of the company. Included in non-current investments are $136.9 million in equity method investments in our Chinese joint ventures and in certain of the company’s private equity, real estate and other investments.

Assets Held for Policyholders and Policyholder Payables

     One of our subsidiaries, Invesco Perpetual Life Limited, is an insurance company that was established to facilitate retirement savings plans in the U.K. The entity holds assets that are managed for its clients on its balance sheet with an equal and offsetting liability. The increasing balance in these accounts from $1,283.0 million at December 31, 2009, to $1,221.0 million at March 31, 2010, was the result of foreign exchange movements, the increase in the market values of these assets, and net flows into the funds.

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Investments of consolidated investment products

     The company provides investment management services to, and has transactions with, various private equity funds, real estate funds, fund-of-funds, CLOs and other investment entities sponsored by the company for the investment of client assets in the normal course of business. The company serves as the investment manager, making day-to-day investment decisions concerning the assets of the products and may have a small investment in certain of these products to demonstrate “skin in the game” to other potential unaffiliated investors in these products. Certain of these investments are considered to be variable interest entities (VIEs). If the company is the primary beneficiary of the VIEs, then the investment products are consolidated into the company’s financial statements. Other partnership entities are consolidated under a voting interest entity (VOE) model where the company is the general partner and is presumed to have control, in the absence of simple majority kick-out rights to remove the general partner, simple majority liquidation rights to dissolve the partnership, or any substantive participating rights of the other limited partners. See Part I, Item 1, Financial Statements – Note 9, “Consolidated Investment Products,” for additional details.

     Effective January 1, 2010, upon the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, the company determined that it was the primary beneficiary of certain CLO VIEs, as it has the power to direct the activities of the CLOs that most significantly impact the CLOs’ economic performance, and the obligation to absorb losses/rights to receive benefits from the CLOs that could potentially be significant to the CLOs. Generally, private equity and fund of funds limited partnership entities where the general partner does not have substantive equity investment at risk and where the other limited partners do not have substantive (greater than 50%) rights to remove the general partner or to dissolve the limited partnership are also VIEs. The primary beneficiary of non-CLO investment products is the party to the VIE who absorbs a majority of the losses or absorbs the majority of the rewards generated by the VIE. Additionally, under the voting interest entity (VOE) consolidation model, the general partner in a partnership that is not a VIE consolidates the partnership because the general partner is deemed to control the partnership where the other limited partner do not have substantive kick-out, liquidation or participation rights. The company has no right to the benefits from, nor does it bear the risks associated with, investments held by consolidated investment products, beyond the company’s minimal direct investments in, and management fees generated from, these products, which are eliminated upon consolidation. If the company were to liquidate, the assets held by consolidated investment products would not be available to the general creditors of the company. Investments of consolidated investment products include the investments of both consolidated VIEs and VOEs.

     As of March 31, 2010, investments of consolidated investment products totaled $6,105.7 million (December 31, 2009: $685.0 million). These investments are offset primarily in noncontrolling interests in consolidated entities on the Condensed Consolidated Balance Sheets, as the company’s equity investment in these structures is very small. The increase from December 31, 2009, reflects adoption of FASB Statement No. 167 on January 1, 2010. In accordance with the standard, prior periods have not been restated.

Goodwill

     Goodwill decreased by $41.8 million from $6,467.6 million at December 31, 2009, to $6,425.8 million at March 31, 2010, due to the impact of foreign currency translation for certain subsidiaries whose functional currency differs from that of the parent.

     Long-term debt

     There was no change in the balance of the non-current portion of our total long-term debt of $745.7 million from December 31, 2009.

Long-term debt of consolidated investment products

     Long-term debt of consolidated investment products relates to notes issued by consolidated CLOs. Collateral assets of the CLOs, which are included in investments of consolidated investment products, are held solely to satisfy the obligations of the CLOs. The investors in the CLOs debt tranches have no recourse to the general credit of the company for the notes issued by the CLOs.

     Long-term debt of consolidated investment products was $5,119.1 million at March 31, 2010, reflecting the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010. In accordance with the standard, prior periods have not been restated to reflect the consolidation.

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Retained earnings appropriated for investors in consolidated investment products

     The retained earnings appropriated for investors in consolidated investment products relates primarily to the difference in value between the collateral assets held by (which are included in investments of consolidated investment products) and the debt issued by consolidated CLOs. The collateral assets held, and notes issued, by consolidated CLOs are measured at fair value in the Condensed Consolidated Balance Sheet.

     The retained earnings appropriated for investors in consolidated investment products was $383.8 million at March 31, 2010, reflecting the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010, which resulted in the consolidation of certain CLOs with outstanding note issuances of $5.4 billion at January 1, 2010. In accordance with the standard, prior periods have not been restated to reflect the consolidation.

Equity attributable to noncontrolling interests in consolidated entities

     Equity attributable to noncontrolling interests in consolidated entities decreased by $10.0 million from $707.9 million at December 31, 2009, to $697.9 million at March 31, 2010. Net gains of $15.1 million were offset by $25.1 million of net changes in the partners’ capital of these entities during the period.

     The noncontrolling interests in consolidated entities are generally offset by the net assets of consolidated investment products, as the company’s equity investment in the investment products is not significant.

Equity attributable to common shareholders

     Equity attributable to common shareholders increased from $6,912.9 million at December 31, 2009, to $7,303.0 million at March 31, 2010, an increase of $390.1 million. Increases to equity included net income attributable to common shareholders of $95.0 million, share issuances upon employee option exercises of $3.9 million, share based payment credit to capital of $24.2 million, and retained earnings appropriated for investors in consolidated investment products of $383.8 million arising from the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation.” The increases to equity were partially offset by $44.8 million in dividend payments, $52.3 million of changes in foreign currency rates, and $30.9 million in shares acquired from staff to meet withholding tax obligations on share award vestings.

Liquidity and Capital Resources

     The adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidations,” on January 1, 2010, which resulted in the consolidation of $5.7 billion and $5.4 billion of total assets and liabilities of certain CLO products at that date, respectively, did not impact the company’s liquidity and capital resources. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company’s minimal direct investments in, and management fees generated from, these products, which are eliminated upon consolidation. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Additionally, the investors in the CLOs debt tranches have no recourse to the general credit of the company for the notes issued by the CLOs. The company therefore does not consider this debt to be an obligation of the company. See Part I, Item 1, Financial Statements – Note 9, “Consolidated Investment Products,” for additional details.

     On May 26, 2009, we issued 32.9 million common shares in a public offering that produced gross proceeds of $460.5 million ($441.8 million net of related expenses). On June 9, 2009, we replaced our $900.0 million credit facility, which was never fully utilized, with a $500.0 million credit facility, the amount of which was based upon our past and projected working capital needs; however, we are able to increase the credit facility to $750.0 million, subject to certain conditions. At March 31, 2010, the company had no balance drawn on the credit facility. These two transactions confirmed our ability to access the capital markets in a timely manner. On June 30, 2009, we completed a $100.0 million tender offer to purchase publicly traded debt with a principal value of $104.3 million. On December 15, 2009, we repaid the $294.2 million 4.5% senior notes that matured on that date, utilizing existing cash balances, having repurchased $3.0 million of these notes earlier in the year.

     We believe that our capital structure, together with available cash balances, cash flows generated from operations, existing capacity under our credit facility, proceeds from the public offering of our shares and further capital market activities, if necessary, should provide us with sufficient resources to meet present and future cash needs, including operating, debt and other obligations as they

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come due and anticipated future capital requirements. Additionally, we expect to use available cash balances and borrowings under our credit facility to satisfy the $500.0 million cash consideration related to acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments. New equity, in the form of common and non-voting common equivalent preferred shares (with economic rights identical to common stock, other than no right to vote such shares) is expected to be issued to Morgan Stanley, without holding restrictions, in conjunction with the close. The ultimate purchase price for the business may be higher or lower than the $1.5 billion announced purchase price, due to contractual price adjustments that will made depending on certain conditions being met at the closing date and changes in the company’s share price. For example, a price adjustment may be made based on the degree to which clients of the business being acquired provide their consent for the transaction at the time of closing the deal.

     Our ability to access the capital markets in a timely manner depends on a number of factors including our credit rating, the condition of the global economy, investors’ willingness to purchase our securities, interest rates, credit spreads and the valuation levels of equity markets. If we are unable to access capital markets in a timely manner, our business could be adversely impacted.

     Certain of our subsidiaries are required to maintain minimum levels of capital. These and other similar provisions of applicable law may have the effect of limiting withdrawals of capital, repayment of intercompany loans and payment of dividends by such entities. After redomicile and after consultation with the U.K. FSA, it has been determined that, for the purposes of prudential supervision, Invesco Ltd. is not subject to regulatory consolidated capital requirements under current European Union (EU) Directives. A sub-group, however, including all of our regulated EU subsidiaries, is subject to these consolidated capital requirements, and capital is maintained within this sub-group to satisfy these regulations. These requirements mandate the retention of liquid resources in those jurisdictions, which we meet in part by holding cash and cash equivalents. This retained cash can be used for general business purposes in the European sub-group or in the countries where it is located. Due to the capital restrictions, the ability to transfer cash between certain jurisdictions may be limited. In addition, transfers of cash between international jurisdictions may have adverse tax consequences that may substantially limit such activity. At March 31, 2010, the European sub-group had cash and cash equivalent balances of $326.8 million, much of which is used to satisfy these regulatory requirements. We are in compliance with all regulatory minimum net capital requirements.

Cash Flows

     The ability to consistently generate cash from operations in excess of capital expenditures and dividend payments is one of our company’s fundamental financial strengths. Operations continue to be financed from current earnings and borrowings. Our principal uses of cash, other than for operating expenses, include dividend payments, capital expenditures, acquisitions, purchase of our shares in the open market and investments in certain new investment products.

     Cash flows of consolidated investment products (discussed in Item 1, Financial Statements — Note 9, “Consolidated Investment Products”) are reflected in Invesco’s cash used in operating activities, provided by investing activities and provided by financing activities. Cash held by consolidated investment products is not available for general use by Invesco, nor is Invesco cash available for general use by its consolidated investment products.

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     Condensed Consolidating Statements of Cash Flows

				Consolidated
	Before			Investment
$ in millions	Consolidation			Products *			Eliminations			Total
For the three months ended March 31, 2010
Net income		93.5			121.2			(0.2	)		214.5
Adjustments to reconcile net income to net cash provided by operating activities		88.0			(103.1	)		0.2			(14.9	)
Changes in cash held by consolidated investment products		—			(116.1	)		—			(116.1	)
Other changes in operating assets and liabilities		(282.6	)		22.1			—			(260.5	)
Net cash used in operating activities		(101.1	)		(75.9	)		—			(177.0	)
Net purchases of investments by consolidated investment products		—			150.9			—			150.9
Other investing activities		(16.8	)		—			—			(16.8	)
Net cash (used in)/provided by investing activities		(16.8	)		150.9			—			134.1
Net capital invested into/(distributed by) consolidated investment products		—			(75.0	)		—			(75.0	)
Other financing activities		(34.3	)		—			—			(34.3	)
Net cash used in financing activities		(34.3	)		(75.0	)					(109.3	)
Decrease in cash and cash equivalents		(152.2	)		—			—			(152.2	)
Foreign exchange movement on cash and cash equivalents		(12.8	)		—			—			(12.8	)
Cash and cash equivalents, beginning of period		762.0			—			—			762.0
Cash and cash equivalents, end of period		597.0			—			—			597.0

				Consolidated
	Before			Investment
$ in millions	Consolidation			Products			Total
For the three months ended March 31, 2009
Net income		30.8			(88.6	)		(57.8	)
Adjustments to reconcile net income to net cash provided by operating activities		73.3			85.3			158.6
Changes in cash held by consolidated investment products		—			14.0			14.0
Other changes in operating assets and liabilities		(296.1	)		1.3			(294.8	)
Net cash (used in)/provided by operating activities		(192.0	)		12.0			(180.0	)
Net purchases of investments by consolidated investment products		—			(5.4	)		(5.4	)
Other investing activities		2.8			—			2.8
Net cash (used in)/provided by investing activities		2.8			(5.4	)		(2.6	)
Net capital invested into/(distributed by) consolidated investment products		—			(6.6	)		(6.6	)
Other financing activities		(55.0	)		—			(55.0	)
Net cash used in financing activities		(55.0	)		(6.6	)		(61.6	)
Decrease in cash and cash equivalents		(244.2	)		—			(244.2	)
Foreign exchange movement on cash and cash equivalents		(7.9	)		—			(7.9	)
Cash and cash equivalents, beginning of period		585.2			—			585.2
Cash and cash equivalents, end of period		333.1			—			333.1

* The company adopted FASB Statement No. 167 on January 1, 2010, resulting in the consolidation of certain CLOs. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs. Prior to January 1, 2010, the company was not deemed to be the primary beneficiary of these CLOs.

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Operating Activities

     Net cash used in operating activities is generated by the receipt of investment management and other fees generated from AUM, offset by operating expenses and changes in operating assets and liabilities. Although some receipts and payments are seasonal, particularly bonus payments, in general, after allowing for the change in cash held by consolidated investment products, our operating cash flows move in the same direction as our operating income.

     Net cash used in operating activities for the three months ended March 31, 2010, was $177.0 million (three months ended March 31, 2009: $180.0 million). This includes the increase of $116.1 million in the cash held by consolidated investment products (three months ended March 31, 2009: decrease of $14.0 million). After removing the impact of the change in the cash held by consolidated investment products, net cash used in operating activities was $60.9 million for the three months ended March 31, 2010 (three months ended March 31, 2009: $194.0 million). The remaining changes in operating assets and liabilities used $260.5 million of cash (three months ended March 31, 2009: $294.8 million) while the combined cash generated from other operating items was $199.6 million ((three months ended March 31, 2009: $100.8 million). This remaining change in operating assets and liabilities in the three months ended March 31, 2010 was driven by the funding of annual bonuses, related payroll taxes and annual pension contributions together with higher trade receivables. The company funded the annual bonus payments in the first quarter from cash balances rather than through increased debt levels. In the three months ended March 31, 2009, the change in operating assets and liabilities was driven by the funding of annual bonuses and related payroll taxes.

Investing Activities

     Net cash provided in financing activities totaled $134.1 million for the three months ended March 31, 2010, (three months ended March 31, 2009: net cash used of $2.6 million) which was driven by investment purchases, sales and returns of capital of our consolidated investment products that, in total, contributed $150.9 million (2009: $5.4 million utilized). After allowing for these consolidated investment product cash flows, net cash used in financing was $16.8 million (three months ended March 31, 2009: net cash generated of $2.8 million) and included the purchase of available-for-sale investments and other investments of $31.8 million (three months ended March 31, 2009: $7.7 million) and capital expenditures of $15.5 million (three months ended March 31, 2009: $5.3 million). These cash outflows were partly offset from collected proceeds of $30.5 million from sales of investments in the three months ended March 31, 2010 (three months ended March 31, 2009: $15.5 million).

     Our capital expenditures related principally in each year to technology initiatives, including new platforms from which we maintain our portfolio management systems and fund accounting systems, improvements in computer hardware and software desktop products for employees, new telecommunications products to enhance our internal information flow, and back-up disaster recovery systems. Also, in each year, a portion of these costs related to leasehold improvements made to the various buildings and workspaces used in our offices. These projects have been funded with proceeds from our operating cash flows. During the three months ended March 31, 2010 and 2009, our capital divestitures were not significant relative to our total fixed assets.

     There were no payments made in the three months ended March 31, 2010, related to acquisition earn-out arrangements.

Financing Activities

     Net cash used in financing activities totaled $109.3 million for the three months ended March 31, 2010, (three months ended March 31, 2009: $61.6 million) which included capital activity of our consolidated investment products that used cash of $75.0 million (three months ended March 31, 2009: $6.6 million). Excluding the impact of consolidated investment products, financing activities used $34.3 million (three months ended March 31, 2009: $55.0 million) and included the $44.8 million payment of dividends declared in January 2010 (three months ended March 31, 2009: dividends paid of $38.9 million). These outflows were offset with proceeds from the exercise of options of $3.7 million (three months ended March 31, 2009: $1.7 million) and excess tax benefits from share-based compensation of $6.8 million (three months ended March 31, 2009: none). Net cash used in financing activities for the three months ended March 31, 2009, also included repayments of our credit facility and early repurchase of our loan notes that matured in December 2009 utilized $4.5 million and $3.0 million in cash respectively. Financing cash flows also include a payment of $10.3 million to purchase of the remaining 24.9% of Invesco Real Estate GmbH not already held by the company, the controlling interest having been acquired in December 2003.

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Dividends

     Invesco declares and pays dividends on a quarterly basis. On January 27, 2010, the company declared a fourth quarter 2009 cash dividend, which was paid on March 10, 2010, to shareholders of record as of February 23, 2010. On April 27, 2010, the company declared a first quarter 2010 cash dividend of $0.11 per Invesco Ltd. common share, which is payable on June 9, 2010, to shareholders of record at the close of business on May 24 , 2010.

Share Repurchase Plan

     An aggregate of 1.3 million shares were withheld on vesting events during the three months ended March 31, 2010, to meet employees’ withholding tax obligations. The value of these shares withheld was $30.9 million (three months ended March 31, 2009: $11.5 million). At March 31, 2010, approximately $1.4 billion remained authorized for repurchase under the company’s share repurchase plan.

Debt

     Our total indebtedness at March 31, 2010, was $745.7 million (December 31, 2009 is $745.7 million) and was comprised of the following:

	March 31,		December 31,
$ in millions	2010		2009
Unsecured Senior Notes:
5.625% — due April 17, 2012		215.1		215.1
5.375% — due February 27, 2013		333.5		333.5
5.375% — due December 15, 2014		197.1		197.1
Floating rate credit facility expiring June 9, 2012		—		—
Total debt		745.7		745.7
Less: current maturities of total debt		—		—
Long-term debt		745.7		745.7

     For the three months ended March 31, 2010, the company’s weighted average cost of debt was 5.45% (three months ended March 31, 2009: 4.91%). Long-term debt was $745.7 million at March 31, 2010, and December 31, 2009.

     Financial covenants under the credit facility include: (i) the quarterly maintenance of a debt/EBITDA ratio, as defined in the credit agreement, of not greater than 3.25:1.00 through December 31, 2010, and not greater than 3.00:1.00 thereafter, (ii) a coverage ratio (EBITDA, as defined in the credit agreement/interest payable for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00, and (iii) maintenance on a monthly basis of consolidated long term assets under management (as defined in the credit agreement) of not less than $194.8 billion, which amount is subject to a one-time reset by the company under certain conditions. As of March 31, 2010, we were in compliance with our debt covenants. At March 31, 2010, our leverage ratio was 0.99:1.00 (December 31, 2009: 1.11:1.00), and our interest coverage ratio was 13.06:1.00 (December 31, 2009: 11.01:1.00), and our long-term AUM were $350.6 billion.

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The March 31, 2010, coverage ratio calculations are as follows:

$ millions	Total			Q1 2010			Q4 2009		Q3 2009			Q2 2009
Net income attributable to common shareholders		386.8			95.0			110.9		105.2			75.7
Net income attributable to Consolidated Investment Products		(1.6	)		(1.6	)		—		—			—
Tax expense		178.0			50.1			48.2		43.7			36.0
Amortization/depreciation		79.9			18.3			24.9		20.0			16.7
Interest expense		61.0			12.4			15.2		16.9			16.5
Share-based compensation expense		91.3			24.2			22.6		24.3			20.2
Unrealized gains and losses from investments, net*		1.5			1.6			0.3		(1.4	)		1.0
EBITDA**		796.9			200.0			222.1		208.7			166.1
Adjusted debt**	$	788.1
Leverage ratio (Debt/EBITDA – maximum 3.25:1.00)		0.99
Interest coverage (EBITDA/Interest Expense – minimum 4.00:1.00)		13.06
March 31, 2010, long-term AUM (in billions – minimum $194.8 billion)	$	350.6

*

Adjustments for unrealized gains and losses from investments, as defined in our credit facility, include non-cash gains and losses on investments to the extent that they do not represent anticipated future cash receipts or expenditures.

**

EBITDA and Adjusted debt are non-GAAP financial measures; however management does not use these measures for anything other than these debt covenant calculations. The calculation of EBTIDA above (a reconciliation from net income attributable to common shareholders) is defined by our credit agreement, and therefore net income attributable to common shareholders is the most appropriate GAAP measure from which to reconcile to EBITDA. The calculation of adjusted debt is defined in our credit facility and equals total long-term debt of $745.7 million plus $42.3 million in letters of credit and $0.1 million in capital leases.

Off Balance Sheet Commitments

     The company has transactions with various private equity, real estate and other investment entities sponsored by the company for the investment of client assets in the normal course of business. Many of the company’s investment products are structured as limited partnerships. The company’s investment may take the form of the general partner or a limited partner, and the entities are structured such that each partner makes capital commitments that are to be drawn down over the life of the partnership as investment opportunities are identified. At March 31, 2010, the company’s undrawn capital commitments were $84.5 million (December 31, 2009: $77.6 million).

     The volatility and valuation dislocations that occurred from 2007 to the date of this Report in certain sectors of the fixed income market have generated pricing issues in many areas of the market. As a result of these valuation dislocations, during the fourth quarter of 2007, Invesco elected to enter into contingent support agreements for two of its investment trusts to enable them to sustain a stable pricing structure. These two trusts are unregistered trusts that invest in fixed income securities and are available only to accredited investors. In December 2009, the agreements were amended to extend the term through June 30, 2010. As of March 31, 2010, the committed support under these agreements was $36.0 million with an internal approval mechanism to increase the maximum possible support to $66.0 million at the option of the company. The recorded fair value of the guarantees related to these agreements at March 31, 2010, was estimated to be $2.5 million (December 31, 2009: $2.5 million), which was recorded in other current liabilities on the Condensed Consolidated Balance Sheets. No payments have been made under either agreement nor has Invesco realized any losses from the support agreements through the date of this Report. These trusts were not consolidated because the company was not deemed to be the primary beneficiary. As of the date of this Report, the committed support under these agreements was $36.0 million.

Contractual Obligations

     We have future obligations under various contracts relating to debt and interest payments, financing and operating leases, long-term defined benefit pension and post-retirement medical plans, and acquisition contracts. During the three months ended March 31, 2010, there were no significant changes to these obligations from those reported in our Annual Report on Form 10-K for the year ended December 31, 2009.

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Critical Accounting Policies and Estimates

     Our significant accounting policies are disclosed in our most recent Form 10-K for the year ended December 31, 2009. The accounting policies and estimates that we believe are the most critical to an understanding of our results of operations and financial condition are those that require complex management judgment regarding matters that are highly uncertain at the time policies were applied and estimates were made. Different estimates could have been used in the current period that would have had a material effect on these financial statements, and changes in these estimates are likely to occur from period-to-period in the future. Our accounting policies and estimates regarding investments and consolidated investment products are discussed below, as there have been changes to these policies after the adoption of FASB Statement No. 167, now encompassed in ASC Topic 810, “Consolidation,” on January 1, 2010.

     Investments. Most of our investments are carried at fair value on our balance sheet with the periodic mark-to-market recorded either in accumulated other comprehensive income in the case of available-for-sale investments or directly to earnings in the case of trading assets. Fair value is generally determined by reference to an active trading market, using quoted close or bid prices as of each reporting period end. When a readily ascertainable market value does not exist for an investment the fair value is calculated based on the expected cash flows of its underlying net asset base, taking into account applicable discount rates and other factors. Since assumptions are made in determining the fair values of investments for which active markets do not exist, the actual value that may be realized upon the sale or other disposition of these investments could differ from the current carrying values. Fair value calculations are also required in association with our quarterly impairment testing of investments. The accuracy of our other-than-temporary impairment assessments is dependent upon the extent to which we are able to accurately determine fair values. Of our $295.8 million total investments at March 31, 2010, those most susceptible to impairment include $77.9 million seed money investments in our affiliated funds. Seed money investments are investments held in Invesco managed funds with the purpose of providing capital to the funds during their development periods. These investments are recorded at fair value using quoted market prices in active markets; there is no modeling or additional information needed to arrive at the fair values of these investments.

     The value of investments may decline for various reasons. The market price may be affected by general market conditions which reflect prospects for the economy as a whole or by specific information pertaining to an industry or individual company. Such declines require further investigation by management, which considers all available evidence to evaluate the realizable value of the investment, including, but not limited to, the following factors:

• The probability that the company will be unable to collect all amounts due according to the contractual terms of a debt security not impaired at acquisition;

• The length of time and the extent to which the market value has been less than cost;

• The financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a component of the business that may affect the future earnings potential;

• The intent and ability of the company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value;

• The decline in the security’s value due to an increase in market interest rates or a change in foreign exchange rates since acquisition;

• Determination that the security is not realizable; or

• An adverse change in estimated cash flows of a beneficial interest.

     Our other-than-temporary impairment analysis of seed money holdings includes a review of the market returns required for each fund portfolio to enable us to recover our original investment. As part of the review, we analyze several scenarios to project the anticipated recovery period of our original investments based on one-, three-, and five-year historical index returns and historical trends in the equity markets. We also analyze the absolute amount of any loss to date, the trend of the losses, and percent declines in values of the seed money investments. Along with intent and ability to hold, all of these scenarios are considered as part of our other-than-temporary impairment analysis of seed money holdings.

     Consolidated Investment Products. The primary beneficiary of VIEs consolidate the VIEs. A VIE is an entity that does not have sufficient equity to finance its operations without additional subordinated financial support, or an entity for which the risks and rewards of ownership are not directly linked to voting interests. The company provides investment management services to, and has transactions with, various private equity funds, real estate funds, fund-of-funds, CLOs, and other investment entities sponsored by the

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company for the investment of client assets in the normal course of business. The company serves as the investment manager, making day-to-day investment decisions concerning the assets of the products. Certain of these entities are considered to be VIEs.

     For all investment funds with the exception of CLOs, if the company is deemed to have a variable interest in these entities, the company is deemed to be the fund’s primary beneficiary if the company has the majority of rewards/risks of ownership. For CLOs, if the company is deemed to have a variable interest in these entities, the company is deemed to be the fund’s primary beneficiary if it has the power to direct the activities of the CLO that most significantly impact the CLO’s economic performance, and the obligation to absorb losses/right to receive benefits from the CLO that could potentially be significant to the CLO.

     Assessing if an entity is a VIE or VOE involves judgment and analysis on a structure-by-structure basis. Factors included in this assessment include the legal organization of the entity, the company’s contractual involvement with the entity and any related party or de facto agent implications of the company’s involvement with the entity. Generally, limited partnership entities where the general partner does not have substantive equity investment at risk and where the other limited partners do not have substantive (greater than 50%) rights to remove the general partner or to dissolve the limited partnership are VIEs. Additionally, certain investment products are voting interest entities (VOEs) and are structured as limited partnerships of which the company is the general partner and is deemed to have control with the lack of substantive kick-out, liquidation or participation rights of the other limited partners. These investment products are also consolidated into the company’s financial statements.

     Determining if the company is the primary beneficiary of a VIE also requires significant judgment, as the calculation of expected losses and residual returns (for investment products other than CLOs) involves estimation and probability assumptions. For CLOs, there is judgment involved to assess if the company has the power to direct the activities that most significantly effect the CLOs economic results and to assess if the company’s interests could be deemed significant. If current financial statements are not available for consolidated VIEs or VOEs, estimation of investment valuation is required, which includes assessing available quantitative and qualitative data. Significant changes in these estimates could impact the reported value of the investments held by consolidated investment products and the related offsetting equity attributable to noncontrolling interests in consolidated entities on the Condensed Consolidated Balance Sheets and the other gains and losses of consolidated investment products, net, and related offsetting gains and losses attributable to noncontrolling interests in consolidated entities, net, amounts on the Condensed Consolidated Statements of Income.

     As of March 31, 2010, the company consolidated VIEs that held investments of $5,486.3 million (December 31, 2009: $67.9 million) and VOE partnership investments of $619.4 million (December 31, 2009: $617.1 million). As circumstances supporting estimates and factors change, the determination of VIE and primary beneficiary status may change, as could the determination of the necessity of consolidation of VOEs.

Recent Accounting Standards

     See Part I, Item 1, “Financial Statements — Note 1, Accounting Policies — Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements.”

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     In the normal course of its business, the company is primarily exposed to market risk in the form of securities market risk, interest rate risk, and foreign exchange rate risk.

AUM Market Price Risk

     The company’s investment management revenues are comprised of fees based on a percentage of the value of AUM. Declines in equity or fixed income security market prices could cause revenues to decline because of lower investment management fees by:

• Causing the value of AUM to decrease.

• Causing the returns realized on AUM to decrease (impacting performance fees).

• Causing clients to withdraw funds in favor of investments in markets that they perceive to offer greater opportunity and that the company does not serve.

• Causing clients to rebalance assets away from investments that the company manages into investments that the company does not manage.

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• Causing clients to reallocate assets away from products that earn higher revenues into products that earn lower revenues.

Underperformance of client accounts relative to competing products could exacerbate these factors.

Securities Market Risk

     The company has investments in sponsored investment products that invest in a variety of asset classes. Investments are generally made to establish a track record or to hedge exposure to certain deferred compensation plans. The company’s exposure to market risk arises from its investments. A 20% increase or decrease in the fair value of investments exposed to market risk is not material to the operating results of the company.

Interest Rate Risk

     Interest rate risk relates to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The company is exposed to interest rate risk primarily through its external debt and cash and cash equivalent investments. On March 31, 2010, the interest rates on 100.0% of the company’s borrowings were fixed for an average period of 3.3 years. Borrowings under the credit facility will have floating interest rates. A 1% change in the level of interest rates would not have a material impact on the ability of the company to continue to service its indebtedness.

Foreign Exchange Rate Risk

     The company has transactional currency exposures that occur when any of the company’s subsidiaries receives or pays cash in a currency different from its functional currency. Such exposure arises from sales or purchases by an operating unit in currencies other than the unit’s functional currency. These exposures are not actively managed.

     The company also has certain investments in foreign operations, whose net assets and results of operations are exposed to foreign currency translation risk when translated into U.S. dollars upon consolidation into Invesco Ltd. The company does not hedge these exposures.

     The company is exposed to foreign exchange revaluation into the income statement on monetary assets and liabilities that are held by subsidiaries in different functional currencies than the subsidiaries’ functional currencies. Net foreign exchange revaluation losses were $2.5 million for the three months ended March 31, 2010, and $0.3 million in losses in the comparable prior year period, and are included in general and administrative and other gains and losses, net on the Condensed Consolidated Statements of Income. We continue to monitor our exposure to foreign exchange revaluation.

Item 4. Controls and Procedures

     Our management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information the company is required to disclose in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

     We have evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of March 31, 2010. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

     We have evaluated any change in our internal control over financial reporting that occurred during the three months ended March 31, 2010, and have concluded that there was no change that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     Following the industry-wide regulatory investigations in 2003 and 2004, multiple lawsuits based on market timing allegations were filed against various parties affiliated with Invesco. These lawsuits were consolidated in the United States District Court for the District of Maryland, together with market timing lawsuits brought against affiliates of other mutual fund companies, and on September 29, 2004, three amended complaints were filed against company-affiliated parties: (1) a putative shareholder class action complaint brought on behalf of shareholders of AIM funds formerly advised by Invesco Funds Group, Inc.; (2) a derivative complaint purportedly brought on behalf of certain AIM funds and the shareholders of such funds; and (3) an ERISA complaint purportedly brought on behalf of participants in the company’s 401(k) plan. The company and plaintiffs have reached settlements in principle of these lawsuits. The proposed settlements, which are subject to court approval, call for a payment by the company of $9.8 million, recorded in general and administrative expenses in the Consolidated Statement of Income in 2007, in exchange for dismissal with prejudice of all pending claims. In addition, under the terms of the proposed settlements, the company may incur certain costs in connection with providing notice of the proposed settlements to affected shareholders. Based on information currently available, it is not believed that any such incremental notice costs will have any material effect on the consolidated financial position or results of operations of the company.

     The asset management industry also is subject to extensive levels of ongoing regulatory oversight and examination. In the United States and other jurisdictions in which the company operates, governmental authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to compliance with applicable laws and regulations. Additional lawsuits or regulatory enforcement actions arising out of these inquiries may in the future be filed against the company and related entities and individuals in the U.S. and other jurisdictions in which the company and its affiliates operate. Any material loss of investor and/or client confidence as a result of such inquiries and/or litigation could result in a significant decline in assets under management, which would have an adverse effect on the company’s future financial results and its ability to grow its business.

     In the normal course of its business, the company is subject to various litigation matters. Although there can be no assurances, at this time management believes, based on information currently available to it, that it is not probable that the ultimate outcome of any of these actions will have a material adverse effect on the consolidated financial condition or results of operations of the company.

Item 1A. Risk Factors

     The company has had no significant changes in its risk factors from those previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2009.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

     The following table sets forth information regarding purchases of our common shares by us and any affiliated purchases during the three months ended March 31, 2010:

							Maximum Number at end of
					Total Number of		period (or Approximate
					Shares Purchased as		Dollar Value) of Shares that
					Part of Publicly		May Yet Be Purchased
	Total Number of		Average Price		Announced Plans		Under the Plans
Month	Shares Purchased(1)		Paid Per Share		or Programs(2)		or Programs(2)
January 1-31, 2010		13,774	$	22.55		—	$	1,360,608,682
February 1-28, 2010		584,303	$	19.60		—	$	1,360,608,682
March 1-31, 2010		3,202	$	20.18		—	$	1,360,608,682

(1)	An aggregate of 601,279 restricted share awards were surrendered to us by Invesco employees to satisfy tax withholding obligations or loan repayments in connection with the vesting of equity awards.
(2)	On April 23, 2008, our board of directors authorized a new share repurchase authorization of up to $1.5 billion of our common shares with no stated expiration date.

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Item 3. Defaults upon Senior Securities

     None.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

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Item 6. Exhibits

Exhibit Index

3.1	Memorandum of Association of Invesco Ltd., incorporating amendments up to and including December 4, 2007, incorporated by reference to exhibit 3.1 to Invesco’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 12, 2007
3.2	Amended and Restated Bye-Laws of Invesco Ltd., incorporating amendments up to and including December 4, 2007, incorporated by reference to exhibit 3.2 to Invesco’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 12, 2007
31.1	Certification of Martin L. Flanagan pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Loren M. Starr pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Martin L. Flanagan pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Loren M. Starr pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	INVESCO LTD.
May 4, 2010	By:	/s/ MARTIN L. FLANAGAN
		Martin L. Flanagan
		President and Chief Executive Officer
May 4, 2010	By:	/s/ LOREN M. STARR
		Loren M. Starr
		Senior Managing Director and Chief Financial Officer

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EX-31.1

Exhibit 31.1

Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Martin L. Flanagan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Invesco Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 4, 2010
	/s/ MARTIN L. FLANAGAN
	Martin L. Flanagan
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Loren M. Starr, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Invesco Ltd.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 4, 2010
	/s/ LOREN M. STARR
	Loren M. Starr
	Senior Managing Director and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF MARTIN L. FLANAGAN
PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with Invesco Ltd.’s (the “Company”) Quarterly Report on Form 10-Q for the period ended March 31, 2010 (the “Report”), I, Martin L. Flanagan, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 4, 2010
	/s/ MARTIN L. FLANAGAN
	Martin L. Flanagan
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF LOREN M. STARR
PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with Invesco Ltd.’s (the “Company”) Quarterly Report on Form 10-Q for the period ended March 31, 2010 (the “Report”), I, Loren M. Starr, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 4, 2010
	/s/ LOREN M. STARR
	Loren M. Starr
	Senior Managing Director and Chief Financial Officer