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

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

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)

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

     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

Item 1. Financial Statements

Invesco Ltd.

		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.

Invesco Ltd.

		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.

Invesco Ltd.

		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.

Invesco Ltd.

		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.

Invesco Ltd.

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.

     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

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

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.

     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.

     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.”

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

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

     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

     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

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.

     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

     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.

     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

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 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

     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.

     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