UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

þ		ANNUAL 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.

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

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

     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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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

     At June 30, 2010, the aggregate market value of the voting stock held by non-affiliates was $6.3 billion, based on the closing price of the registrant’s Common Shares, par value U.S. $0.20 per share, on the New York Stock Exchange. At January 31, 2011, the most recent practicable date, the number of Common Shares outstanding was 460,382,514.

     The registrant will incorporate by reference information required in response to Part III, Items 10-14 in its definitive Proxy Statement for its annual meeting of shareholders, to be filed with the Securities and Exchange Commission within 120 days after December 31, 2010.

 

 

TABLE OF CONTENTS

     We include cross references to captions elsewhere in this Annual Report on Form 10-K, 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
Special Cautionary Note Regarding Forward-Looking Statements			3
PART I
Item 1. Business			4
Item 1A. Risk Factors			10
Item 1B. Unresolved Staff Comments			19
Item 2. Properties			19
Item 3. Legal Proceedings			19
Item 4. Submission of Matters to a Vote of Security Holders			19
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			20
Item 6. Selected Financial Data			22
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			75
Item 8. Financial Statements and Supplementary Data			79
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			143
Item 9A. Controls and Procedures			143
Item 9B. Other Information			144
PART III
Item 10. Directors, Executive Officers and Corporate Governance			145
Item 11. Executive Compensation			146
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			146
Item 13. Certain Relationships and Related Transactions, and Director Independence			147
Item 14. Principal Accountant Fees and Services			147
PART IV
Item 15. Exhibits and Financial Statement Schedules			148
EX-10.11
EX-10.12
EX-21
EX-23.1
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

SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This Report, the documents incorporated by reference herein, other public filings and oral and written statements by us and our management, may include statements that constitute “forward-looking statements” within the meaning of the United States securities laws. These statements are based on the beliefs and assumptions of our management and on information available to us at the time such statements are made. 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, legal and 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 or other outcomes. 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.

     The following important factors, and other factors described elsewhere in this Report or incorporated by reference into this Report or contained in our other filings with the U.S. Securities and Exchange Commission (SEC), among others, could cause our results to differ materially from any results described in any forward-looking statements:

	•		variations in demand for our investment products or services, including termination or non-renewal of our investment advisory agreements;
	•		significant changes in net asset flows into or out of the accounts we manage or declines in market value of the assets in, or redemptions or other withdrawals from, those accounts;
	•		enactment of adverse state, federal or foreign legislation or changes in government policy or regulation (including accounting standards) affecting our operations, our capital requirements or the way in which our profits are taxed;
	•		significant fluctuations in the performance of debt and equity markets worldwide;
	•		exchange rate fluctuations, especially as against the U.S. Dollar;
	•		the effect of economic conditions and interest rates in the U.S. or globally;
	•		our ability to compete in the investment management business;
	•		the effect of consolidation in the investment management business;
	•		limitations or restrictions on access to distribution channels for our products;
	•		our ability to attract and retain key personnel, including investment management professionals;
	•		the investment performance of our investment products;
	•		our ability to acquire and integrate other companies into our operations successfully and the extent to which we can realize anticipated cost savings and synergies from such acquisitions;
	•		changes in regulatory capital requirements;
	•		our debt and the limitations imposed by our credit facility;
	•		the effect of failures or delays in support systems or customer service functions, and other interruptions of our operations;
	•		the occurrence of breaches and errors in the conduct of our business, including any failure to properly safeguard confidential and sensitive information;
	•		the execution risk inherent in our ongoing company-wide transformational initiatives;
	•		the effect of political or social instability in the countries in which we invest or do business;

	•		the effect of terrorist attacks in the countries in which we invest or do business and the escalation of hostilities that could result therefrom;
	•		war and other hostilities in or involving countries in which we invest or do business; and
	•		adverse results in litigation, including private civil litigation related to mutual fund fees and any similar potential regulatory or other proceedings.

     Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements, and the failure of such other assumptions to be realized may also cause actual results to differ materially from those projected. For more discussion of the risks affecting us, please refer to Part I, Item 1A, “Risk Factors.”

     You should consider the areas of risk described above in connection with any forward-looking statements that may be made by us and our businesses generally. We expressly disclaim any obligation to update any of the information in this or any other public report if any forward-looking statement later turns out to be inaccurate, whether as a result of new information, future events or otherwise. For all forward-looking statements, we claim the “safe harbor” provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

PART I

     In this Annual Report on Form 10-K, 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.

Item 1. Business

Introduction

     Invesco is a leading independent global investment manager, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a comprehensive range of investment strategies and vehicles to our retail, institutional and high-net-worth clients around the world. Operating in more than 20 countries, Invesco had $616.5 billion in assets under management (AUM) as of December 31, 2010.

     The key drivers of success for Invesco are long-term investment performance, effective distribution relationships, and high-quality client service delivered across a diverse spectrum of investment management capabilities, distribution channels, geographic areas and market exposures. By achieving success in these areas, we seek to generate competitive investment results, positive net flows, increased AUM and associated revenues. We are affected significantly by market movements, which are beyond our control; however, we endeavor to mitigate the impact of market movement by maintaining broad diversification across asset classes, client domiciles and geographies. We measure relative investment performance by comparing our investment capabilities to competitors’ products, industry benchmarks and client investment objectives. Generally, distributors, investment advisors and consultants take into consideration longer-term investment performance (e.g., three-year and five-year performance) in their selection of investment product and manager recommendations to their clients, although shorter-term performance may also be an important consideration. Third-party ratings may also influence client investment decisions. Quality of client service is monitored in a variety of ways, including periodic client satisfaction surveys, analysis of response times and redemption rates, competitive benchmarking of services and feedback from investment consultants.

     Invesco Ltd. is organized under the laws of Bermuda, and our common shares are listed and traded on the New York Stock Exchange under the symbol “IVZ.” We maintain a Web site at www.invesco.com. (Information contained on our Web site shall not be deemed to be part of, or be incorporated into, this document).

Strategy

     The company focuses on four key strategic priorities that are designed to strengthen our business over time and help ensure our long-term success:

	•		Achieve strong investment performance over the long term for our clients;
	•		Deliver our investment capabilities anywhere in the world to meet our clients’ needs;

	•		Harness the power of our global operating platform by continuously improving our processes and procedures and further integrating the support structures of our business globally; and
	•		Perpetuate a high-performance organization by driving greater transparency, accountability and execution at all levels.

     Since 2005 Invesco has taken a number of steps to further unify our business and present the organization as a single firm to our clients around the world. We believe these changes have strengthened Invesco’s ability to operate more efficiently and effectively as an integrated, global organization.

     Since we take a unified approach to our business, we present our financial statements and other disclosures under the single operating segment “investment management.”

Recent Developments

     On June 1, 2010, Invesco acquired Morgan Stanley’s retail asset management business, including Van Kampen Investments. The addition of this diversified business brought $114.6 billion in AUM across equity, fixed income and alternative asset classes (including mutual funds, variable insurance funds, separate accounts and unit investment trusts (UITs)). Furthermore, Invesco gained the experience, knowledge and expertise of nearly 600 investment, distribution and operations support professionals globally. This transformational combination:

	•		Expanded the depth and breadth of our investment strategies, enabling us to offer an even more comprehensive range of investment capabilities and vehicles to our clients around the world;
	•		Enhanced our ability to serve U.S. clients by positioning Invesco among the leading U.S. investment managers by AUM, diversity of investment teams and client profiles;
	•		Deepened Invesco’s relationships with clients and strengthened our overall distribution capabilities; and
	•		Further strengthened our position in the Japanese investment management market.

     Our goal from the day we announced the transaction was to complete the preparatory integration work prior to close. With a focused effort across Invesco, we accomplished our goal and were able to deliver the value of the combined organization to clients from Day 1. Throughout the second half of 2010, we saw strong momentum in the combined business.

     In addition to our acquisition of Morgan Stanley’s retail asset management business, Invesco’s commitment to a multi-year strategy set a firm foundation for the company’s many achievements throughout the year. During 2010:

	•		Relative investment performance remained strong across the enterprise, with 68% of ranked assets* performing ahead of peers on a 3-year basis at year end;
	•		We focused on strengthening and deepening relationships with clients in key markets. For example, we maintained a market share ranking in the top three on all major platforms in the U.K. retail market and strengthened relationships with leading financial institutions in all U.S. retail channels, where 70% of AUM is with top 20 distributors;
	•		We expanded our presence and improved our competitive advantage as a global investment manager in fast-growing, high-priority markets and segments;
	•		We resumed our share repurchase program, purchasing 9.4 million shares for $192.2 million; and
	•		We maintained strong inflows at Invesco PowerShares, and expanded our offering of intelligent exchange-traded funds (ETFs) within the Canadian marketplace through an innovative suite of mutual funds.

     Together, these efforts resulted in positive net flows for our business in 2010. Adjusted operating margin improved to 34.5% in 2010 from 28.5% in 2009. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Schedule of Non-GAAP Information” for a reconciliation of operating income to net operating income, and by calculation, a reconciliation of operating margin to adjusted operating margin, and important additional disclosures.

     Throughout 2010, we continued to execute our long-term strategy, making disciplined capital and resource allocation decisions, which we believe further improved our ability to serve our clients, reinforced our reputation as a premier global investment manager, and helped to deliver competitive levels of operating income and margins as we progressed through the year. In addition, we took steps to further strengthen our financial position and augment our capital flexibility through the execution of a new credit facility and the maintenance of a balanced approach to capital management. We have received credit ratings of A3/Stable and A-/Stable from Moody’s and Standard & Poor’s credit rating agencies, respectively, as of the date of this Annual Report on Form 10-K. In the fourth quarter, Standard & Poor’s increased Invesco’s enterprise risk management (ERM) rating from “adequate” to “strong,” making Invesco one of only four publicly rated investment managers with a “strong” ERM designation.

Certain Demographic and Industry Trends

     Demographic and economic trends around the world continue to transform the investment management industry and our business and underscore the need to be well-diversified with broad capabilities globally and across asset classes:

	•		There is an increasing number of investors who seek external professional advice and investment managers to help them reach their financial goals.
	•		As the “baby boomer” generation continues to mature, there is an increasingly large segment of the world population that is reaching retirement age. Economic growth in emerging market countries has created a large and rapidly expanding middle class and high net worth population with accelerating levels of wealth. As a result, globally, there is a high degree of demand for an array of investment solutions that span the breadth of investment capabilities, with a particular emphasis on savings vehicles for retirement. We believe Invesco, as one of the few truly global, independent investment managers, is very well-positioned to attract these retirement assets through its enduring products that are focused on long-term investment performance.
	•		We have seen increasing demand from clients for alpha and beta to be separated as investment strategies in the investment management industry. (“Alpha” is defined as excess return attributable to a manager, and “beta” refers to the volatility in returns versus an underlying benchmark.) This trend reflects how clients are differentiating between low-cost beta solutions such as passive, index and ETF products and higher-priced alpha strategies such as those offered by many alternative products.
	•		Investors are increasingly seeking to invest outside their domestic markets. They seek firms that operate globally and have investment expertise in markets around the world.
	•		Although the U.S. and Europe are currently the two largest markets for financial assets by a wide margin, other markets in the world, such as China and India, are rapidly growing. As these population-heavy markets mature, investment managers that are truly global will be in the best position to capture this growth. Additionally, population age differences between emerging and developed markets will result in differing investment needs and horizons among countries. Asset allocation and pension type also differ substantially among countries. Invesco has a meaningful and expanding market presence in many of the world’s fastest growing and wealthiest regions, including the U.S., Canada, Western Europe and the UK, the Middle East and Asia-Pacific. Our strong U.S. presence and growing global presence represent significant long-term growth prospects for our business.
	•		The global trend towards the provision of defined contribution retirement plans continues, although significant opportunity remains for managers to increase defined benefit market share.

     Invesco is well positioned to capture the opportunities created by global demographic and industry trends. Through a variety of economic and market environments, our progress over the past five years has significantly strengthened our competitive position. Our multi-year strategy is designed to leverage our global presence, our distinctive worldwide investment management capabilities and our talented people to further grow our business and ensure our long-term success.

Investment Management Capabilities

     Supported by a global operating platform, Invesco delivers a comprehensive array of investment capabilities and services to retail, institutional and high-net-worth investors on a global basis. We have a significant presence in the institutional and retail segments of the investment management industry in North America, Europe and Asia-Pacific, serving clients in more than 150 countries.

     We believe that the proven strength of our distinct and globally located investment centers and their well-defined investment disciplines provide us with a competitive advantage. There are few independent investment managers with teams as globally diverse as Invesco’s and with the same breadth and depth of investment capabilities and vehicles. We offer multiple investment objectives within the various asset classes and products that we manage. Our asset classes, broadly defined, include money market, fixed income, balanced, equity and alternatives. Approximately 48% of our AUM as of December 31, 2010, were invested in equity securities (December 31, 2009: 41%), and approximately 52% was invested in fixed income and other investments (December 31, 2009: 59%).

     The following table sets forth the investment objectives, sorted by asset class, which we manage:

Investment Objectives by Asset Class

Money Market		Fixed Income		Balanced		Equity		Alternatives
Cash Plus Government/Treasury Prime Taxable Tax-Free		Bank Loans Convertibles Core/Core Plus Emerging Markets Enhanced Cash Government Bonds High-Yield Bonds Intermediate Term International/Global Investment Grade Credit Municipal Bonds Passive/Enhanced Short Term Stable Value Structured Securities    (ABS, MBS, CMBS)		Asset Allocation Global Single Country Target Date Target Risk		Enhanced Index/Quantitative Global International Large Cap Core Large Cap Growth Large Cap Value Mid Cap Core Mid Cap Growth Mid Cap Value Regional/Single Country Sector Funds Small Cap Core Small Cap Growth Small Cap Value		Absolute Return Asian Direct Real Estate Commodities Currencies European Direct Real Estate Financial Structures Global Macro Global REITS Private Capital - Direct Private Capital - Fund of Funds Risk Premia Capture U.S. Direct Real Estate U.S. REITS

     The following table sets forth the categories of investment vehicles sold through our three principal distribution channels:

Investment Vehicles by Distribution Channel

Retail		Institutional		Private Wealth Management
Closed-end Mutual Funds Exchange-Traded Funds Individual Savings Accounts Investment Companies with Variable Capital Investment Trusts Open-end Mutual Funds Separately Managed Accounts Unit Investment Trusts Variable Insurance Funds		Collective Trust Funds Exchange-Traded Funds Institutional Separate Accounts Private Capital Funds		Exchange-Traded Funds Managed Accounts Mutual Funds Private Capital Funds Separate Accounts

     One of Invesco’s greatest competitive strengths is the diversification in its AUM by client domicile, distribution channel and asset class. Our distribution network has gathered assets of 61% retail, 36% institutional, and 3% Private Wealth Management clients as of December 31, 2010. 32.6% of client assets under management are outside the U.S., and we serve clients in more than 150 countries. The following tables present a breakdown of AUM by client domicile, distribution channel and asset class as of December 31, 2010. Additionally, the fourth table below illustrates the split of our higher-fee non-passive AUM as compared to our lower-fee ETF, UIT, and passive AUM.

AUM Diversification

See Part II, Item 8, “Financial Statements and Supplementary Data — Note 18, Geographic Information,” for a geographic breakdown of our consolidated operating revenues for the years ended December 31, 2010, 2009 and 2008.

Distribution Channels

     Channel refers to the distribution channel from which the AUM originated. Retail AUM arose from client investments into funds available to the public with shares or units. Institutional AUM originated from individual corporate clients, endowments, foundations, government authorities, universities, or charities. Private Wealth Management AUM arose from high net worth client investments.

Retail

     Invesco is a significant provider of retail investment solutions to clients in all major markets: Invesco in the U.S., Invesco Trimark in Canada, Invesco Perpetual in the U.K., Invesco in Europe and Asia, and Invesco PowerShares (for our ETF products). Additionally, Invesco is now also a market leading sponsor of UIT products as a result of the acquisition of Morgan Stanley’s retail asset management business. Collectively, the retail investment management teams managed assets of $378.4 billion as of December 31, 2010. We offer retail products within all of the major asset classes (money market, fixed income, balanced, equity and alternatives). Our retail products are primarily distributed through third-party financial intermediaries, including traditional broker-dealers, fund “supermarkets,” retirement platforms, financial advisors, banks, insurance companies and trust companies.

     The U.K., U.S. and Canadian retail operations rank among the largest by AUM in their respective markets. As of December 31, 2010, Invesco Perpetual was the No. 1 retail fund provider in the U.K.; Invesco’s U.S. retail business was the 9th largest non-proprietary fund complex in the U.S. by long-term assets, including the Invesco Powershares franchise; and Invesco Trimark was the 9th largest retail fund manager in Canada by long-term assets. Invesco Great Wall, our joint venture in China, was one of the largest Sino-foreign managers of equity products in China, with AUM of approximately $7.2 billion as of December 31, 2010. Invesco PowerShares adds a leading set of ETF products (with $55.7 billion in AUM and 176 exchange-traded funds as of December 31, 2010) to the extensive choices we make available to our retail investors. We provide our retail clients with one of the industry’s most robust and comprehensive product lines.

Institutional

     We provide investment solutions to institutional investors globally, with a major presence in the U.S., U.K., Continental Europe and Asia-Pacific with $221.1 billion in AUM as of December 31, 2010. We offer a broad suite of domestic and global products, including traditional equities, structured equities, fixed income (including money market funds for institutional clients), real estate, private equity, distressed equities, financial structures and absolute return strategies. Regional sales forces distribute our products and provide services to clients and intermediaries around the world. We have a diversified client base that includes major public entities, corporations, unions, non-profit organizations, endowments, foundations, pension funds and financial institutions. Invesco’s institutional money market funds serve some of the largest financial institutions and corporations in the world.

Private Wealth Management

     Through Atlantic Trust, Invesco provides high-net-worth individuals and their families with a broad range of personalized and sophisticated wealth management services, including financial counseling, estate planning, asset allocation, investment management (including use of third-party managed investment products), private equity, trust, custody and family office services. Atlantic Trust also provides investment management services to foundations and endowments. Atlantic Trust obtains new clients through referrals from existing clients, recommendations from other professionals serving the high-net-worth market, such as attorneys and accountants, and from financial intermediaries, such as brokers. Atlantic Trust has offices in 11 U.S. cities and managed $17.0 billion as of December 31, 2010.

Employees

     As of December 31, 2010, we had 5,617 employees across the globe. As of December 31, 2009 and 2008, we had 4,890 and 5,325 employees, respectively. None of our employees is covered under collective bargaining agreements. Formal hiring of staff in our Hyderabad, India, facility commenced with 83 individuals becoming our employees in late 2010. An additional 474 individuals became our employees by the date of this Report.

Competition

     The investment management business is highly competitive, with points of differentiation including investment performance, the range of products offered, brand recognition, business reputation, financial strength, the depth and continuity of relationships, quality of service and the level of fees charged for services. We compete with a large number of investment management firms, commercial banks, investment banks, broker dealers, hedge funds, insurance companies and other financial institutions. We believe that the quality and diversity of our investment styles, product types and channels of distribution enable us to compete effectively in the investment management business. We also believe being an independent investment manager is a competitive advantage, as our business model avoids conflicts that are inherent within institutions that both distribute and/or serve investment products and manage investment products. Lastly, we believe continued execution against our multi-year strategy will further strengthen our long-term competitive position.

Management Contracts

     We derive substantially all of our revenues from investment management contracts with funds and other clients. Fees vary with the type of assets being managed, with higher fees earned on actively managed equity and balanced accounts, along with real estate and alternative asset products, and lower fees earned on fixed income, money market and stable value accounts, as well as certain ETFs. Investment management contracts are generally terminable upon thirty or fewer days’ notice. Typically, retail investors may withdraw their funds at any time without prior notice. Institutional and private wealth management clients may elect to terminate their relationship with us or reduce the aggregate amount of assets under management with very short notice periods.

Available Information

     We file current and periodic reports, proxy statements and other information with the SEC, copies of which can be obtained from the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

     The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, at www.sec.gov. We make available free of charge on our Web site, www.invesco.com, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Item 1A. Risk Factors

Volatility and disruption in world capital and credit markets, as well as adverse changes in the global economy, can negatively affect Invesco’s revenues and may continue to do so.

     The capital and credit markets have been experiencing substantial volatility and disruption since 2007. While these disruptions moderated to some extent following the March 2009 lows in equity markets, historical norms have not returned and the potential for extreme disruptions remains. These market events have materially impacted our results of operations, and may continue to do so, and could materially impact our financial condition and liquidity. In this regard:

	•		The volatility of global market conditions around the world has resulted, and may continue to result, in significant volatility in our assets under management and in our revenues, driven by market value fluctuations on our managed portfolios.
	•		In addition to the impact of the market values on client portfolios, the illiquidity and volatility of both the global fixed income and equity markets could negatively affect our ability to manage client inflows and outflows from pooled investment vehicles or to timely meet client redemption requests.
	•		Our money market funds have always maintained a $1.00 net asset value (NAV); however, we do not guarantee such level. Market conditions could lead to severe liquidity issues in money market products, which could affect their NAVs. If the NAV of one of our money market funds were to decline below $1.00 per share, such funds could experience significant redemptions in assets under management, loss of shareholder confidence and reputational harm. In 2010 the SEC adopted new rules governing U.S. registered money market funds. These rules are designed to significantly strengthen the regulatory requirements governing money market funds, increase the resilience of such funds to economic stresses, and

			reduce the risk of runs on these funds. Regulators in the U.S. continue to evaluate whether to propose mandating a variable (“floating”) NAV for money market funds. The company believes such a change would have significant adverse consequences on the money market funds industry and the short-term credit markets.
	•		Even if legislative or regulatory initiatives or other efforts successfully stabilize and add liquidity to the financial markets, we may need to modify our strategies, businesses or operations, and we may incur increased capital requirements and constraints or additional costs in order to satisfy new regulatory requirements or to compete in a changed business environment.
	•		In the event of extreme circumstances, including economic, political, or business crises, such as a widespread systemic failure in the global financial system or additional failures of firms that have significant obligations as counterparties on financial instruments, we may suffer significant declines in assets under management and severe liquidity or valuation issues in the short-term sponsored investment products in which client and company assets are invested, all of which would adversely affect our operating results, financial condition, liquidity, credit ratings, ability to access capital markets, and retention and ability to attract key employees. Additionally, these factors could impact our ability to realize the carrying value of our goodwill and other intangible assets.

We may not adjust our expenses quickly enough to match significant deterioration in global financial markets.

     If we are unable to effect appropriate expense reductions in a timely manner in response to declines in our revenues, or if we are otherwise unable to adapt to rapid changes in the global marketplace, our profitability, financial condition and results of operations would be adversely affected.

Our revenues would be adversely affected by any reduction in assets under our management as a result of either a decline in market value of such assets or net outflows, which would reduce the investment management fees we earn.

     We derive substantially all of our revenues from investment management contracts with clients. Under these contracts, the investment management fees paid to us are typically based on the market value of assets under management. Assets under management may decline for various reasons. For any period in which revenues decline, our income and operating margin may decline by a greater proportion because certain expenses remain fixed. Factors that could decrease assets under management (and therefore revenues) include the following:

     Declines in the market value of the assets in the funds and accounts managed. These could be caused by price declines in the securities markets generally or by price declines in the market segments in which those assets are concentrated. Approximately 48% of our total assets under management were invested in equity securities and approximately 52% were invested in fixed income and other investments at December 31, 2010. Our AUM as of January 31, 2011, was $624.3 billion. We cannot predict whether volatility in the markets will result in substantial or sustained declines in the securities markets generally or result in price declines in market segments in which our assets under management are concentrated. Any of the foregoing could negatively impact our revenues, income and operating margin.

     Redemptions and other withdrawals from, or shifting among, the funds and accounts managed. These could be caused by investors (in response to adverse market conditions or pursuit of other investment opportunities) reducing their investments in funds and accounts in general or in the market segments on which Invesco focuses; investors taking profits from their investments; poor investment performance of the funds and accounts managed by Invesco; and portfolio risk characteristics, which could cause investors to move assets to other investment managers. Poor performance relative to other investment management firms tends to result in decreased sales, increased redemptions of fund shares, and the loss of private institutional or individual accounts, with corresponding decreases in our revenues. Failure of our funds and accounts to perform well could, therefore, have a material adverse effect on us. Furthermore, the fees we earn vary with the types of assets being managed, with higher fees earned on actively managed equity and balanced accounts, along with real estate and alternative asset products, and lower fees earned on fixed income and stable return accounts. Therefore, our revenues may decline if clients shift their investments to lower fee accounts.

     Declines in the value of seed capital and partnership investments. The company has investments in sponsored investment products that invest in a variety of asset classes, including, but not limited to equities, fixed income products, private equity, and real estate. Investments in these products are generally made to establish a track record, meet purchase size requirements for trading blocks, or demonstrate economic alignment with other investors in our funds. Adverse market conditions may result in the need to write down the value of these seed capital and partnership investments. As of December 31, 2010, the company had $198.0 million in seed capital and partnership investments.

Our investment advisory agreements are subject to termination or non-renewal, and our fund and other investors may withdraw their assets at any time.

     Substantially all of our revenues are derived from investment advisory agreements. Investment advisory agreements are generally terminable upon 30 or fewer days’ notice. Agreements with U.S. mutual funds may be terminated with notice, or terminated in the event of an “assignment” (as defined in the Investment Company Act), and must be renewed annually by the disinterested members of each fund’s board of directors or trustees, as required by law. In addition, the board of trustees or directors of certain other fund accounts of Invesco or our subsidiaries generally may terminate these investment advisory agreements upon written notice for any reason. Mutual fund and unit trust investors may generally withdraw their funds at any time without prior notice. Institutional clients may elect to terminate their relationships with us or reduce the aggregate amount of assets under our management, and individual clients may elect to close their accounts, redeem their shares in our funds, or shift their funds to other types of accounts with different fee structures. Any termination of or failure to renew a significant number of these agreements, or any other loss of a significant number of our clients or assets under management, would adversely affect our revenues and profitability.

Our revenues and profitability from money market and other fixed income assets may be harmed by interest rate, liquidity and credit volatility.

     Certain institutional investors using money market products and other short-term duration fixed income products for cash management purposes may shift these investments to direct investments in comparable instruments in order to realize higher yields than those available in money market and other fund products holding lower yielding instruments. These redemptions would reduce managed assets, thereby reducing our revenues. In addition, rising interest rates will tend to reduce the market value of bonds held in various investment portfolios and other products. Thus, increases in interest rates could have an adverse effect on our revenues from money market portfolios and from other fixed income products. If securities within a money market portfolio default, or investor redemptions force the portfolio to realize losses, there could be negative pressure on its net asset value. Although money market investments are not guaranteed instruments, the company might decide, under such a scenario, that it is in its best interest to provide support in the form of a support agreement, capital infusion, or other methods to help stabilize a declining net asset value. Some of these methods could have an adverse impact on our profitability. Additionally, we have $32.9 million invested in Invesco Mortgage Capital, Inc., $23.3 million of equity at risk invested in our collateralized loan obligation products, and $7.1 million invested in fixed income seed money at December 31, 2010, the valuation of which could change with changes in interest and default rates.

We operate in an industry that is highly regulated in many countries, and any adverse changes in the laws or regulations governing our business could decrease our revenues and profitability.

     As with all investment management companies, our activities are highly regulated in almost all countries in which we conduct business. Laws and regulations applied at the national, state or provincial and local level generally grant governmental agencies and industry self-regulatory authorities broad administrative discretion over our activities, including the power to limit or restrict business activities. Subsidiaries operating in the European Union (EU) also are subject to various EU Directives, which are implemented by member state national legislation. Possible sanctions include the revocation of licenses to operate certain businesses, the suspension or expulsion from a particular jurisdiction or market of any of our business organizations or their key personnel, the imposition of fines and censures on us or our employees and the imposition of additional capital requirements. It is also possible that laws and regulations governing our operations or particular investment products could be amended or interpreted in a manner that is adverse to us.

     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. A sub-group of Invesco subsidiaries, including all of our regulated EU subsidiaries, is subject to consolidated capital requirements under EU Directives, and capital is maintained within this sub-group to satisfy these regulations. At December 31, 2010, the European sub-group had cash and cash equivalent balances of $456.2 million, much of which is used to satisfy these regulatory requirements. Complying with our regulatory commitments may result in an increase in the capital requirements applicable to the European sub-group. As a result of corporate restructuring and the regulatory undertakings that we have given, certain of these EU subsidiaries may be required to limit their dividends to the parent company, Invesco Ltd. We cannot guarantee that further corporate restructuring will not be required to comply with applicable legislation.

     The regulatory environment in which we operate frequently changes and has seen significant increased regulation in recent years. We may be adversely affected as a result of new or revised legislation or regulations or by changes in the interpretation or enforcement of existing laws and regulations. To the extent that existing regulations are amended or future regulations are adopted that reduce the sale, or increase the redemptions, of our products and services, or that negatively affect the investment performance of our products, our aggregate assets under management and our revenues could be adversely affected. In addition, regulatory changes could impose additional costs, which could negatively impact our profitability.

     Various changes in law and regulation have been enacted or adopted and are beginning to be implemented or otherwise developed in multiple jurisdictions globally in response to the crisis in the financial markets that began in 2007. Various other proposals remain under consideration by various legislators, regulators, other government officials and other public policy commentators. Certain enacted provisions and certain other proposals are potentially far reaching and, depending upon their implementation, could have a material impact on Invesco’s business. While many of these provisions appear designed to address perceived problems in the banking sector, certain of the provisions will or may be applied to other financial services companies, including investment managers.

     In the United States, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law on July 21, 2010. While Invesco does not at this time believe that the Dodd-Frank Act will fundamentally change the investment management industry or cause Invesco to reconsider its fundamental strategy, it does appear that certain provisions will, and other provisions may, increase regulatory burdens and related compliance costs. In addition, the scope of many provisions of the Dodd-Frank Act will be determined by implementing regulations, some of which will require lengthy proposal and promulgation periods. Moreover, the Dodd-Frank Act mandates many regulatory studies, some of which pertain directly to the investment management industry, which could lead to additional legislation or regulation. As a result of these uncertainties regarding implementation of the Dodd-Frank Act and such other future potential legislative or regulatory changes, the impact of the Dodd-Frank Act on the investment management industry and Invesco cannot be predicted at this time.

     The European Union has promulgated or is considering various new or revised Directives pertaining to financial services, including investment managers. Such Directives are progressing at various stages, and are being or will or would be implemented by national legislation in member states. As with the Dodd-Frank Act, Invesco does not believe implementation of these Directives will fundamentally change our industry or cause us to reconsider our fundamental strategy, but it does appear certain provisions will, and other provisions may, increase regulatory burdens and compliance costs. Similar developments are being implemented or considered in other jurisdictions where we do business; such developments could have similar effects.

     Potential developments under enacted and proposed legal and regulatory changes, and related matters, include:

	•		Expanded prudential regulation over investment management firms.
	•		New or increased capital requirements and related regulation (including new capital requirements pertaining to money market funds).
	•		Additional change to the regulation of money market funds in the U.S. The SEC has adopted changes to Rule 2a-7, the primary securities regulation governing U.S. registered money market funds. These new rules are designed to significantly strengthen the regulatory requirements governing money market funds, increase the resilience of such funds to economic stresses, and reduce the risk of runs on these funds. Regulators in the U.S. continue to evaluate whether to propose mandating a variable (“floating”) NAV for money market funds. Invesco believes such a change would have significant adverse consequences on the money market funds industry and the short-term credit markets, and is encouraged by the recognition of these concerns in the Report of the President’s Working Group on Financial Markets on Money Market Fund Reform Options issued October 21, 2010.
	•		Changes to the distribution of investment funds and other investment products. In the U.S., the SEC has proposed significant changes to Rule 12b-1. Invesco believes these proposals would increase operational and compliance costs. The U.K. Financial Services Authority continues to develop its Retail Distribution Review, which is expected to reshape the manner in which retail investment funds are sold in the U.K. The EU adopted the Alternative Investment Fund Manager Directive; implementing legislation in member states could, among other elements, impose restrictions on the marketing and sale within the EU of private equity and other alternative investment funds sponsored by non-EU managers. Various regulators have promulgated or are considering other new disclosure and suitability requirements pertaining to the distribution of investment funds and other investment products, including enhanced standards and requirements pertaining to disclosures made to retail investors at the point of sale.
	•		Guidelines regarding the structure and components of compensation, including under the Dodd-Frank Act and various EU Directives.
	•		Additional resourcing for regulatory examinations and inspections, including enforcement reviews, and a more aggressive posture regarding commencing enforcement proceedings.
	•		Changes impacting certain other products or markets (e.g., retirement savings).
	•		Enhanced licensing and qualification requirements for key personnel.

	•		Other additional rules and regulations and disclosure requirements. Certain provisions impose additional disclosure burdens on public companies, including Invesco. Certain proposals could impose requirements for more widespread disclosures of compensation to highly-paid individuals. Depending upon the scope of any such requirements, Invesco could be disadvantaged in retaining key employees vis-à-vis private companies, including hedge fund sponsors.
	•		Strengthening standards regarding various ethical matters, including enhanced focus of U.S. regulators and law enforcement agencies on compliance with the Foreign Corrupt Practices Act and the enactment of the U.K. Bribery Act.
	•		Other changes impacting the identity or the organizational structure of regulators with supervisory authority over Invesco.

     Invesco cannot at this time predict the full impact of potential legal and regulatory changes on its business. It is possible such changes could impose new compliance costs or capital requirements or impact Invesco in other ways that could have a material adverse impact on Invesco’s results of operations, financial condition or liquidity. Moreover, certain legal or regulatory changes could require us to modify our strategies, businesses or operations, and we may incur other new constraints or costs in order to satisfy new regulatory requirements or to compete in a changed business environment.

     To the extent that existing or future regulations affecting the sale of our products and services or our investment strategies cause or contribute to reduced sales or increased redemptions of our products or impair the investment performance of our products, our aggregate assets under management and results of operations might be adversely affected.

Civil litigation and governmental enforcement actions and investigations could adversely affect our assets under management and future financial results, and increase our costs of doing business.

     Invesco and certain related entities have in recent years been subject to various legal proceedings arising from normal business operations and/or matters that have been the subject of previous regulatory actions. See Part I, Item 3, “Legal Proceedings,” for additional information.

Our investment management professionals and other key employees are a vital part of our ability to attract and retain clients, and the loss of key individuals or a significant portion of those professionals could result in a reduction of our revenues and profitability.

     Retaining highly skilled technical and management personnel is important to our ability to attract and retain clients and retail shareholder accounts. The market for investment management professionals is competitive and has grown more so in recent periods as the investment management industry has experienced growth. The market for investment managers is also increasingly characterized by the movement of investment managers among different firms. Our policy has been to provide our investment management professionals with a supportive professional working environment and compensation and benefits that we believe are competitive with other leading investment management firms. However, we may not be successful in retaining our key personnel, and the loss of key individuals or significant investment management personnel could reduce the attractiveness of our products to potential and current clients and could, therefore, adversely affect our revenues and profitability.

If our reputation is harmed, we could suffer losses in our business, revenues and net income.

     Our business depends on earning and maintaining the trust and confidence of clients, regulators and other market participants, and our good reputation is critical to our business. Our reputation is vulnerable to many threats that can be difficult or impossible to control, and costly or impossible to remediate. Regulatory inquiries, material errors in public reports, employee dishonesty or other misconduct and rumors, among other things, can substantially damage our reputation, even if they are baseless or satisfactorily addressed. Further, our business requires us to continuously manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived to conflict, with the interests of another client or those of Invesco. We have procedures and controls that are designed to address and manage conflicts of interest, but this task can be complex and difficult, and our reputation could be damaged, and the willingness of clients to enter into transactions in which such a conflict might arise may be affected, if we fail — or appear to fail — to deal appropriately with conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions. Any damage to our reputation could impede our ability to attract and retain clients and key personnel, and lead to a reduction in the amount of our assets under management, any of which could have a material adverse effect on our revenues and net income.

Failure to comply with client contractual requirements and/or guidelines could result in damage awards against us and loss of revenues due to client terminations.

     Many of the investment management agreements under which we manage assets or provide products or services specify guidelines or contractual requirements that Invesco is required to observe in the provision of its services. A failure to comply with these guidelines or contractual requirements could result in damage to our reputation or in our clients seeking to recover losses, withdrawing their assets or terminating their contracts, any of which could cause our revenues and net income to decline. We maintain various compliance procedures and other controls to prevent, detect and correct such errors. When an error is detected, we typically will make a payment into the applicable client account to correct it. Significant errors could impact our results of operations.

     Competitive pressures may force us to reduce the fees we charge to clients, increase commissions paid to our financial intermediaries or provide more support to those intermediaries, all of which could reduce our profitability.

     The investment management business is highly competitive, and we compete based on a variety of factors, including investment performance, the range of products offered, brand recognition, business reputation, financial strength, stability and continuity of client and intermediary relationships, quality of service, level of fees charged for services and the level of compensation paid and distribution support offered to financial intermediaries. We continue to face market pressures regarding fee levels in certain products.

     We face strong competition in every market in which we operate. Our competitors include a large number of investment management firms, commercial banks, investment banks, broker-dealers, hedge funds, insurance companies and other financial institutions. Some of these institutions have greater capital and other resources, and offer more comprehensive lines of products and services, than we do. Our competitors seek to expand their market share in many of the products and services we offer. If these competitors are successful, our revenues and profitability could be adversely affected. In addition, there are relatively few barriers to entry by new investment management firms, and the successful efforts of new entrants into our various distribution channels around the world have also resulted in increased competition.

     In recent years there have been several instances of industry consolidation, both in the area of distributors and manufacturers of investment products. Further consolidation may occur in these areas in the future. The increasing size and market influence of certain distributors of our products and of certain direct competitors may have a negative impact on our ability to compete at the same levels of profitability in the future, should we find ourselves unable to maintain relevance in the markets in which we compete.

We may engage in strategic transactions that could create risks.

     As part of our business strategy, we regularly review, and from time to time have discussions with respect to, potential strategic transactions, including potential acquisitions, dispositions, consolidations, joint ventures or similar transactions, some of which may be material. There can be no assurance that we will find suitable candidates for strategic transactions at acceptable prices, have sufficient capital resources to pursue such transactions, be successful in negotiating the required agreements, or successfully close transactions after signing such agreements.

     Acquisitions also pose the risk that any business we acquire may lose customers or employees or could underperform relative to expectations. We could also experience financial or other setbacks if pending transactions encounter unanticipated problems, including problems related to closing or integration. Following the completion of an acquisition, we may have to rely on the seller to provide administrative and other support, including financial reporting and internal controls, to the acquired business for a period of time. There can be no assurance that such sellers will do so in a manner that is acceptable to us.

Our ability to access the capital markets in a timely manner should we seek to do so depends on a number of factors.

     Our access to the capital markets, including for purposes of financing potential acquisitions, depends significantly on our credit ratings. We have received credit ratings of A3/Stable and A-/Stable from Moody’s and Standard & Poor’s credit rating agencies, respectively, as of the date of this Annual Report on Form 10-K. According to Moody’s, obligations rated ‘A’ are considered upper medium grade and are subject to low credit risk. Invesco’s rating of A3 is at the low end of the A range (A1, A2, A3), but three notches above the lowest investment grade rating of Baa3. Standard and Poor’s rating of A- is at the lower end of the A rating, with BBB- representing Standard and Poor’s lowest investment grade rating. According to Standard and Poor’s, A obligations exhibit a strong capacity to meet financial commitments, but are somewhat susceptible to adverse economic conditions or changing circumstances. We believe that rating agency concerns include but are not limited to: our revenues are somewhat exposed to equity market volatility, negative tangible equity, potential impact from regulatory changes to the industry, and integration risk related to the acquisition of Morgan Stanley’s retail asset management business. Additionally, the rating agencies could decide to downgrade the entire investment management industry, based on their perspective of future growth and solvency. Material deterioration of these

factors, and others defined by each rating agency, could result in downgrades to our credit ratings, thereby limiting our ability to generate additional financing. Our credit facility borrowing rates are tied to our credit ratings. Management believes that solid investment grade ratings are an important factor in winning and maintaining institutional business and strives to manage the company to maintain such ratings.

     A reduction in our long- or short-term credit ratings could increase our borrowing costs, limit our access to the capital markets, and may result in outflows thereby reducing AUM and revenues. Continued volatility in global finance markets may also affect our ability to access the capital markets should we seek to do so. If we are unable to access capital markets in a timely manner, our business could be adversely affected.

Our indebtedness could adversely affect our financial position.

     As of December 31, 2010, we had outstanding total debt of $1,315.7 million and total equity attributable to common shareholders of $7,769.1 million, excluding retained earnings appropriated for investors in consolidated investment products. The amount of indebtedness we carry could limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or other purposes, increase our vulnerability to adverse economic and industry conditions, limit our flexibility in planning for, or reacting to, changes in our business or industry, and place us at a disadvantage in relation to our competitors. Any or all of the above factors could materially adversely affect our financial position or results of operations.

Our credit facility imposes restrictions on our ability to conduct business and, if amounts borrowed under it were subject to accelerated repayment, we might not have sufficient assets to repay such amounts in full.

     Our credit facility requires us to maintain specified financial ratios, including maximum debt-to-earnings and minimum interest coverage ratios. This credit facility also contains customary affirmative operating covenants and negative covenants that, among other things, restrict certain of our subsidiaries’ ability to incur debt and restrict our ability to transfer assets, merge, make loans and other investments and create liens. The breach of any covenant (either due to our actions or due to a significant and prolonged market-driven decline in our operating results) would result in a default under the credit facility. In the event of any such default, lenders that are party to the credit facility could refuse to make further extensions of credit to us and require all amounts borrowed under the credit facility, together with accrued interest and other fees, to be immediately due and payable. If any indebtedness under the credit facility were subject to accelerated repayment, we might not have sufficient liquid assets to repay such indebtedness in full.

Changes in the distribution channels on which we depend could reduce our revenues and hinder our growth.

     We sell a significant portion of our investment products through a variety of financial intermediaries, including major wire houses, regional broker-dealers, banks and financial planners in North America, and independent brokers and financial advisors, banks and financial organizations in Europe and Asia. Increasing competition for these distribution channels could cause our distribution costs to rise, which would lower our net revenues. Following the financial crisis, there has been consolidation of banks and broker-dealers, particularly in the U.S., and a limited amount of migration of brokers and financial advisors away from major banks to independent firms focused largely on providing advice. If these trends continue, our distribution costs could increase as a percentage of our revenues generated. Additionally, particularly outside of the U.S., certain of the intermediaries upon whom we rely to distribute our investment products also sell their own competing proprietary funds and investment products, which could limit the distribution of our products. Increasingly, investors, particularly in the institutional market, rely on external consultants and other unconflicted third parties for advice on the choice of investment manager. These consultants and third parties tend to exert a significant degree of influence and they may favor a competitor of Invesco as better meeting their particular client’s needs. There is no assurance that our investment products will be among their recommended choices in the future. If one of our major distributors were to cease operations, it could have a significant adverse effect on our revenues and profitability. Any failure to maintain strong business relationships with these distribution sources and the consultant community would impair our ability to sell our products, which in turn could have a negative effect on our revenues and profitability.

We could be subject to losses if we fail to properly safeguard confidential and sensitive information.

     We maintain and transmit confidential information about our clients as well as proprietary information relating to our business operations as part of our regular operations. Our systems could be attacked by unauthorized users or corrupted by computer viruses or other malicious software code, or authorized persons could inadvertently or intentionally release confidential or proprietary information.

     Such disclosure could, among other things, damage our reputation, allow competitors to access our proprietary business information, result in liability for failure to safeguard our clients’ data, result in the termination of contracts by our existing customers, subject us to regulatory action, or require material capital and operating expenditures to investigate and remediate the breach.

Our business is vulnerable to deficiencies and failures in support systems and customer service functions that could lead to breaches and errors, resulting in loss of customers or claims against us or our subsidiaries.

     The ability to consistently and reliably obtain accurate securities pricing information, process client portfolio and fund shareholder transactions and provide reports and other customer service to fund shareholders and clients in other accounts managed by us is essential to our continuing success. In recent periods, illiquid markets for certain types of securities have required increased use of fair value pricing, which is dependent on certain subjective judgments that have the potential to be challenged. Any delays or inaccuracies in obtaining pricing information, processing such transactions or such reports, other breaches and errors, and any inadequacies in other customer service, could result in reimbursement obligations or other liabilities, or alienate customers and potentially give rise to claims against us. Our customer service capability, as well as our ability to obtain prompt and accurate securities pricing information and to process transactions and reports, is highly dependent on communications and information systems and on third-party vendors. These systems or vendors could suffer deficiencies, failures or interruptions due to various natural or man-made causes, and our back-up procedures and capabilities may not be adequate to avoid extended interruptions in operations. Certain of these processes involve a degree of manual input, and thus similar problems could occur from time to time due to human error.

If we are unable to successfully recover from a disaster or other business continuity problem, we could suffer material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.

     If we were to experience a local or regional disaster or other business continuity problem, such as a pandemic or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel, our office facilities and the proper functioning of our computer, telecommunication and other related systems and operations. In such an event, our operational size, the multiple locations from which we operate, and our existing back-up systems would provide us with an important advantage. Nevertheless, we could still experience near-term operational challenges with regard to particular areas of our operations, such as key executive officers or technology personnel. Further, as we strive to achieve cost savings by shifting certain business processes to lower-cost geographic locations such as India, the potential for particular types of natural or man-made disasters, political, economic or infrastructure instabilities, or other country- or region-specific business continuity risks increases. Although we seek to regularly assess and improve our existing business continuity plans, a major disaster, or one that affected certain important operating areas, or our inability to successfully recover should we experience a disaster or other business continuity problem, could materially interrupt our business operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.

Since many of our subsidiary operations are located outside of the United States and have functional currencies other than the U.S. dollar, changes in the exchange rates to the U.S. dollar affect our reported financial results from one period to the next.

     The largest component of our net assets, revenues and expenses, as well as our assets under management, is presently derived from the United States. However, we have a large number of subsidiaries outside of the United States whose functional currencies are not the U.S. dollar. As a result, fluctuations in the exchange rates to the U.S. dollar affect our reported financial results from one period to the next. We do not actively manage our exposure to such effects. Consequently, significant strengthening of the U.S. dollar relative to the U.K. Pound Sterling, Euro, or Canadian dollar, among other currencies, could have a material negative impact on our reported financial results.

The carrying value of goodwill and other intangible assets on our balance sheet could become impaired, which would adversely affect our results of operations.

     We have goodwill and indefinite-lived intangible assets on our balance sheet that are subject to annual impairment reviews. Goodwill and indefinite-lived intangible assets totaled $6,980.2 million and $1,161.7 million, respectively, at December 31, 2010 (2009: $6,467.6 million and $110.6 million, respectively). We may not realize the value of such assets. We perform impairment reviews of the book values of these assets on an annual basis or more frequently if impairment indicators are present. A variety of factors could cause such book values to become impaired. Should valuations be deemed to be impaired, a write-down of the related assets would occur, adversely affecting our results of operations for the period. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Goodwill” and “— Intangibles” for additional details of the company’s goodwill impairment analysis process.

Bermuda law differs from the laws in effect in the United States and may afford less protection to shareholders.

     Our shareholders may have more difficulty protecting their interests than shareholders of a corporation incorporated in a jurisdiction of the United States. As a Bermuda company, we are governed by the Companies Act 1981 of Bermuda (“Companies Act”). The Companies Act differs in some material respects from laws generally applicable to United States corporations and shareholders, including provisions relating to interested directors, mergers, amalgamations and acquisitions, takeovers, shareholder lawsuits and indemnification of directors.

     Under Bermuda law, the duties of directors and officers of a company are generally owed to the company only. Shareholders of Bermuda companies do not generally have rights to take action against directors or officers of the company, and may only do so in limited circumstances. Directors and officers may owe duties to a company’s creditors in cases of impending insolvency. Directors and officers of a Bermuda company must, in exercising their powers and performing their duties, act honestly and in good faith with a view to the best interests of the company and must exercise the care and skill that a reasonably prudent person would exercise in comparable circumstances. Directors have a duty not to put themselves in a position in which their duties to the company and their personal interests may conflict and also are under a duty to disclose any personal interest in any material contract or proposed material contract with the company or any of its subsidiaries. If a director or officer of a Bermuda company is found to have breached his duties to that company, he may be held personally liable to the company in respect of that breach of duty.

     Our Bye-Laws provide for indemnification of our directors and officers in respect of any loss arising or liability attaching to them in respect of any negligence, default, breach of duty or breach of trust of which a director or officer may be guilty in relation to us other than in respect of his own fraud or dishonesty, which is the maximum extent of indemnification permitted under the Companies Act. Under our Bye-Laws, each of our shareholders agrees to waive any claim or right of action, both individually and on our behalf, other than those involving fraud or dishonesty, against us or any of our officers, directors or employees. The waiver applies to any action taken by a director, officer or employee, or the failure of such person to take any action, in the performance of his duties, except with respect to any matter involving any fraud or dishonesty on the part of the director, officer or employee. This waiver limits the right of shareholders to assert claims against our directors, officers and employees unless the act or failure to act involves fraud or dishonesty.

Legislative and other measures that may be taken by U.S. and/or other governmental authorities could materially increase our tax burden or otherwise adversely affect our financial conditions, results of operations or cash flows.

     Under current laws, as the company is domiciled and tax resident in Bermuda, taxation in other jurisdictions is dependent upon the types and the extent of the activities of the company undertaken in those jurisdictions. There is a risk that changes in either the types of activities undertaken by the company or changes in tax rules relating to tax residency could subject the company and its shareholders to additional taxation.

     We continue to assess the impact of various U.S. federal and state legislative proposals, and modifications to existing tax treaties between the United States and foreign countries, that could result in a material increase in our U.S. federal and state taxes. Proposals have been introduced in the U.S. Congress that, if ultimately enacted, could either limit treaty benefits on certain payments made by our U.S. subsidiaries to non-U.S. affiliates, treat the company as a U.S. corporation and thereby subject the earnings from non-U.S. subsidiaries of the company to U.S. taxation, or both. We cannot predict the outcome of any specific legislative proposals. However, if such proposals were to be enacted, or if modifications were to be made to certain existing tax treaties, the consequences could have a materially adverse impact on the company, including increasing our tax burden, increasing costs of our tax compliance or otherwise adversely affecting our financial condition, results of operations or cash flows.

Examinations and audits by tax authorities could result in additional tax payments for prior periods.

     The company and its subsidiaries’ income tax returns periodically are examined by various tax authorities. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional income taxes will be due. We adjust these liabilities in light of changing facts and circumstances. Due to the complexity of some of these uncertainties, however, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities.

We have anti-takeover provisions in our Bye-Laws that may discourage a change of control.

     Our Bye-Laws contain provisions that could make it more difficult for a third-party to acquire us or to obtain majority representation on our board of directors without the consent of our board. As a result, shareholders may be limited in their ability to obtain a premium for their shares under such circumstances.

Item 1B.		Unresolved Staff Comments

     N/A

Item 2.		Properties

     Our registered office is located in Hamilton, Bermuda, and our principal executive offices are in leased office space at 1555 Peachtree Street N.E., Suite 1800, Atlanta, Georgia, 30309, U.S.A. We own office facilities at Perpetual Park, Henley-on-Thames, Oxfordshire, RG9 1HH, United Kingdom, and at 301 W. Roosevelt, Wheaton, Illinois, 60187, and we lease our additional principal offices located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom; 11 Greenway Plaza, Houston, Texas 77046; 1166 Avenue of the Americas, New York, New York 10036; 17W110 22^nd Street, Oakbrook Terrace, Illinois 60181, and in Canada at 5140 Yonge Street, Toronto, Ontario M2N 6X7. We lease office space in 18 other countries.

Item 3.		Legal Proceedings

     In July 2010, various closed-end funds formerly advised by Van Kampen Investments or Morgan Stanley Investment Management included in the acquired business had complaints filed against them in New York State Court commencing derivative lawsuits purportedly brought on behalf of the common shareholders of those funds. The funds are nominal defendants in these derivative lawsuits and the defendants also include Van Kampen Investments (acquired by Invesco on June 1, 2010), Morgan Stanley Investment Management and certain officers and trustees of the funds who are or were employees of those firms. Invesco has certain obligations under the applicable acquisition agreement regarding the defense costs and any damages associated with this litigation. The plaintiffs allege breaches of fiduciary duties owed by the non-fund defendants to the funds’ common shareholders related to the funds’ redemption in prior periods of Auction Rate Preferred Securities (“ARPS”) theretofore issued by the funds. The complaints are similar to other complaints recently filed against investment advisers, officers and trustees of closed-end funds in other fund complexes which issued and redeemed ARPS. The complaints allege that the advisers, distributors and certain officers and trustees of those funds breached their fiduciary duty by redeeming ARPS at their liquidation value when there was no obligation to do so and when the value of ARPS in the secondary marketplace were significantly below their liquidation value. The complaints also allege that the ARPS redemptions were principally motivated by the fund sponsors’ interests to preserve distribution relationships with brokers and other financial intermediaries who held ARPS after having repurchased them from their own clients. Certain other funds included in the acquired business have received demand letters expressing similar allegations. Such demand letters could be precursors to additional similar lawsuits being commenced against those other funds. The Boards of Trustees of the funds are evaluating the complaints and demand letters and have established special committees of independent trustees to conduct an inquiry regarding the allegations. Invesco believes the cases should be dismissed following completion of such review period, although there can be no assurance of that result. Invesco intends to defend vigorously any cases which may survive beyond initial motions to dismiss.

     The investment 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 4.		Submission of Matters to a Vote of Security Holders

     None.

PART II

Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

     Invesco Ltd. is organized under the laws of Bermuda, and our common shares are listed and traded on the New York Stock Exchange under the symbol “IVZ.” At January 31, 2011, there were approximately 6,777 holders of record of our common shares.

     The following table sets forth, for the periods indicated, the high and low reported share prices on the New York Stock Exchange, based on data reported by Bloomberg.

		Invesco Ltd.
		Common Shares
										Dividends
		High				Low				Declared*
2010
Fourth Quarter		$	24.24			$	21.06			$	0.1100
Third Quarter		$	21.90			$	16.63			$	0.1100
Second Quarter		$	23.66			$	16.83			$	0.1100
First Quarter		$	23.63			$	18.32			$	0.1025
2009
Fourth Quarter		$	23.97			$	20.04			$	0.1025
Third Quarter		$	23.00			$	15.72			$	0.1025
Second Quarter		$	18.73			$	13.60			$	0.1025
First Quarter		$	15.00			$	9.51			$	0.1000

     The following graph illustrates the cumulative total shareholder return of our common shares (ordinary shares prior to December 4, 2007) over the five-year period ending December 31, 2010, and compares it to the cumulative total return of the Standard and Poor’s (S&P) 500 Index and to a group of peer investment management companies. This table is not intended to forecast future performance of our common shares.

Note:

The above chart is the average annual total return for the period from December 31, 2005 through December 31, 2010. Asset Manager Index includes Affiliated Managers Group, Alliance Bernstein, BlackRock, Eaton Vance, Federated Investors, Franklin Resources, Gamco Investors, Invesco Ltd., Janus, Legg Mason, Schroders Plc, T. Rowe Price, and Waddell & Reed.

Important Information Regarding Dividend Payments

     Invesco declares and pays dividends on a quarterly basis in arrears. On October 25, 2010, the company declared a third quarter cash dividend of $0.11 per Invesco Ltd. common share which was paid on December 8, 2010 to shareholders of record as of November 19, 2010. On January 27, 2011, the company declared a fourth quarter 2010 cash dividend of $0.11 per Invesco Ltd. common share which will be paid on March 9, 2011 to shareholders of record as of February 23, 2011.

     The total dividend attributable to the 2010 fiscal year of $0.44 per share represented a 7.3% increase over the total dividend attributable to the 2009 fiscal year of $0.41 per share. The declaration, payment and amount of any future dividends will be determined by our board of directors and will depend upon, among other factors, our earnings, financial condition and capital requirements at the time such declaration and payment are considered. The board has a policy of managing dividends in a prudent fashion, with due consideration given to profit levels, overall debt levels and historical dividend payouts. See also Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Dividends,” for additional details regarding dividends.

Repurchases of Equity Securities

     The following table shows share repurchase activity during the three months ended December 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) (millions)
October 1-31, 2010			160,181			$	21.38				—			$	1,232.9
November 1-30, 2010			2,934,853			$	21.99				2,934,853			$	1,168.4
December 1-31, 2010			33			$	23.23				—			$	1,168.4
			3,095,067								2,934,853

Item 6.		Selected Financial Data

     The following tables present selected consolidated financial information for the company as of and for each of the five fiscal years in the period ended December 31, 2010. Except as otherwise noted below, the consolidated financial information has been prepared in accordance with U.S. generally accepted accounting principles.

		As of and For The Years Ended December 31,
$ in millions, except per share and other data		2010				2009				2008				2007				2006
Operating Data:
Operating revenues			3,487.7				2,627.3				3,307.6				3,878.9				3,246.7
Net revenues(1)			2,602.2				1,984.6				2,490.2				2,881.9				2,412.8
Operating income			589.9				484.3				747.8				994.3				759.2
Adjusted operating income(2)			897.7				565.6				826.1				1,078.6				766.2
Operating margin			16.9	%			18.4	%			22.6	%			25.6	%			23.4	%
Adjusted operating margin(2)			34.5	%			28.5	%			33.2	%			37.4	%			31.8	%
Net income attributable to common shareholders			465.7				322.5				481.7				673.6				482.7
Adjusted net income(3)			639.7				378.1				527.1				718.2				499.7
Per Share Data:
Earnings per share:
-basic			1.01				0.77				1.24				1.68				1.22
-diluted			1.01				0.76				1.21				1.64				1.19
Adjusted EPS(3)			1.38				0.89				1.32				1.74				1.23
Dividends declared per share			0.4325				0.4075				0.5200				0.3720				0.3570
Balance Sheet Data:
Total assets			20,444.1				10,909.6				9,756.9				12,925.2				12,228.5
Long-term debt			1,315.7				745.7				1,159.2				1,276.4				1,279.0
Long-term debt of consolidated investment products			5,865.4				—				—				116.6				37.0
Total equity attributable to common shareholders			8,264.6				6,912.9				5,689.5				6,590.6				6,164.0
Total equity			9,360.9				7,620.8				6,596.2				7,711.8				7,668.6
Other Data:
Ending AUM (in billions)		$	616.5			$	459.5			$	377.1			$	529.3			$	482.0
Average AUM (in billions)		$	532.3			$	415.8			$	468.9			$	511.7			$	430.7
Headcount			5,617				4,890				5,325				5,475				5,574

Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 Consolidated Financial Statements of Invesco Ltd. and its subsidiaries (collectively, the “company” or “Invesco”) and the notes thereto contained elsewhere in this Annual Report on Form 10-K.

     Invesco is a leading independent global investment manager with offices in more than 20 countries. As of December 31, 2010, we managed $616.5 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, UK, Europe and Asia-Pacific, serving clients in more than 150 countries.

     Despite a number of challenges during the year, including the U.S. equity market flash crash in May, the heightened risk of European sovereign default, and continued uncertainty about the strength of the economic recovery, most global equity markets achieved positive returns in 2010 marking the second year of recovery from the financial crisis as illustrated in the chart below:

     The response to these challenges by governments and central banks around the world of providing additional fiscal and monetary stimulus led to an investor environment that favored riskier assets as yields on less risky government bonds reached record lows. As a result, most global equity markets achieved positive returns in 2010 with the S&P 500 climbing almost 13%, the FTSE 100 rising 9%, and the MSCI EAFE index gaining nearly 5%. The exception was the equity market in Japan which declined 3% as the strength in the Japanese Yen, up almost 15% against the U.S. Dollar in 2010, negatively impacted the profits of Japanese exporters and multinational corporations. The table below summarizes the year ended December 31 returns of several major market indices for 2010, 2009, and 2008:

		Year ended December 31,
Index		2010				2009				2008
S&P 500			12.8	%			23.5	%			(37.0	%)
FTSE 100			9.0	%			22.1	%			(28.0	%)
Nikkei 225			(3.0	%)			19.0	%			(41.1	%)
MSCI EAFE			4.9	%			27.8	%			(45.1	%)

     Both Treasury markets and corporate credit markets achieved positive returns in 2010 as well. Treasury securities benefited from the combination of the “flight to quality” trade in the first half of the year, coinciding with the U.S. equity market flash crash and increased risk of default by some European governments, as well as the Federal Reserve beginning the second round of quantitative easing, a process whereby the Federal Reserve creates new money to purchase Treasury securities. For the year, 10-year Treasury notes gained 8% while shorter dated 3- and 5-year notes gained 5% and 7% respectively. Corporate credit markets benefited from improved fundamentals as earnings improved and corporations stockpiled cash. Further, the stimulus efforts from central bankers around the globe provided support as yields on government securities reached record lows, and fixed income investors moved out the credit risk curve in search of higher yields. For the year, investment grade credit gained 9.0% while high-yield bonds returned 14.6%.

     Invesco continued to make progress in a number of areas that better positioned our company as the markets continue their measured return to pre-financial crisis levels. Throughout the course of 2010, the company’s financial performance strengthened. In addition, during this period, Invesco continued to strengthen its competitive position with respect to investment performance, maintained its focus on its clients, and enhanced its profile in the industry.

     A critical factor in Invesco’s ability to weather the economic storms of the past three years was our integrated approach to risk management. Our risk management framework provides the basis for consistent and meaningful risk dialogue up, down and across the company. Our Global Performance Measurement and Risk group provides senior management and the Board with insight into core investment risks, while our Corporate Risk Management Committee facilitates a focus on strategic, operational and all other business risks. Further, business component, functional, and geographic risk management committees maintain an ongoing risk assessment process that provides a bottom-up perspective on the specific risk areas existing in various domains of our business. Through this regular and consistent risk communication, the Board has reasonable assurance that all material risks of the company are being addressed and that the company is propagating a risk-aware culture in which effective risk management is built into the fabric of the business.

     In addition, we benefited from having a diversified asset base. One of Invesco’s core strengths, and a key differentiator for the company within the industry, is our broad diversification across client domiciles, asset classes and distribution channels. Our geographical diversification recognizes growth opportunities in different parts of the world. Invesco is also diversified by asset class, with approximately 48% of our assets under management in equities and the remaining 52% invested in fixed income and other investments. This broad diversification enables Invesco to withstand different market cycles and take advantage of growth opportunities in various markets and channels.

     On June 1, 2010, the company acquired Morgan Stanley’s retail asset management business, including Van Kampen Investments (the “acquired business” or the “acquisition”) in exchange for a combination of $770.0 million in cash paid and 30.9 million common shares and common share equivalents, which were subsequently sold, as converted, to unrelated third parties. The acquisition added assets under management across equity, fixed income and alternative asset classes (including mutual funds, variable insurance funds, separate accounts and UITs). More specifically, this acquisition:

	•		Expanded the depth and breadth of the company’s investment strategies, enabling the company to offer an even more comprehensive range of investment capabilities and vehicles to its clients around the world;
	•		Enhanced the company’s ability to serve U.S. clients by positioning Invesco among the leading U.S. investment managers by assets under management (AUM), diversity of investment teams and client profiles;
	•		Deepened Invesco’s relationships with clients and strengthen its overall distribution capabilities; and
	•		Further strengthened its position in the Japanese investment management market.

Presentation of Management’s Discussion and Analysis of Financial Condition and Results of Operations

     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 II, Item 8, Financial Statements and Supplementary Data — Note 1, “Accounting Policies” and Note 20, “Consolidated Investment Products,” for additional details.

     Effective January 1, 2010, the company adopted guidance now encompassed in Accounting Standards Codification Topic 810, “Consolidation.” The adoption of this new guidance had a significant impact on the presentation of the company’s financial statements in 2010, as its provisions required the company to consolidate certain CLOs that were not previously consolidated. In accordance with the standard, prior periods have not been restated to reflect the consolidation of these CLOs. The majority of the company’s consolidated investment products balances were CLO-related as of December 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 impact of consolidation of investment products is so significant to the presentation of company’s financial statements (but not to the underlying financial condition or results of operations of the company) that, combined with the presentation of newly-incurred transaction and integration costs and additional intangible asset amortization resulting from the acquired business, the company expanded its use of non-GAAP measures beginning with the presentation of the company’s results for the three months ended March 31, 2010. The discussion that follows therefore combines results presented under U.S. generally accepted accounting principles (GAAP) with the company’s non-GAAP presentation. There are four distinct sections within this Management’s Discussion and Analysis of Financial Condition and Results of Operations after the Assets Under Management discussion:

	•		Results of Operations (for the year ended December 31, 2010, compared with the year ended December 31, 2009, and for the year ended December 31, 2009, compared with the year ended December 31, 2008);
	•		Schedule of Non-GAAP Information;
	•		Balance Sheet Discussion; and
	•		Liquidity and Capital Resources.

Each of the financial statement summary sections (Results of Operations, Balance Sheet Discussion, and Liquidity and Capital Resources) begins with a table illustrating the impact of the consolidation of investment products. The narrative that follows each of these sections separately provides discussion of the underlying financial statement activity for the company, before consolidation of investment products, as well as of the financial statement activity of consolidated investment products. Additionally, wherever a non-GAAP measure is referenced, a disclosure will follow in the narrative or in the note referring the reader to the Schedule of Non-GAAP Information, where additional details regarding the use of the non-GAAP measure by the company are disclosed, along with reconciliations of the most directly comparable U.S. GAAP measures to the non-GAAP measures. To further enhance the readability of the Results of Operations section, separate tables for each of the revenue, expense, and non-operating income/expense sections of the income statement introduce the narrative that follows, providing a section-by-section review of the company’s income statements for the periods presented.

Summary Operating Information

     Summary operating information for 2010, 2009 and 2008 is presented in the table below.

		Year ended December 31,
U.S. GAAP Financial Measures Summary		2010				2009				2008
Operating revenues		$	3,487.7	m		$	2,627.3	m		$	3,307.6	m
Operating margin			16.9	%			18.4	%			22.6	%
Net income attributable to common shareholders		$	465.7	m		$	322.5	m		$	481.7	m
Diluted EPS		$	1.01			$	0.76			$	1.21
Average assets under management (in billions)		$	532.3			$	415.8			$	468.9

		Year ended December 31,
Non-GAAP Financial Measures Summary		2010				2009				2008
Net revenues(1)		$	2,602.2	m		$	1,984.6	m		$	2,490.2	m
Adjusted operating margin(2)			34.5	%			28.5	%			33.2	%
Adjusted net income(3)		$	639.7	m		$	378.1	m		$	527.1	m
Adjusted EPS(3)		$	1.38			$	0.89			$	1.32
Average assets under management (in billions)		$	532.3			$	415.8			$	468.9

     A significant portion of our business and 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 year ended December 31, 2010, which also contributed to net increases in AUM of $35.7 billion (excluding acquisitions) during the year. AUM at January 31, 2011, was $624.3 billion.

Investment Capabilities Performance Overview

     Invesco’s first strategic priority is to achieve strong investment performance over the long-term for our clients. Long-term performance in our equities capabilities, as measured by the percentage of AUM ahead of benchmark and ahead of peer median, is generally strong with some pockets of outstanding performance. Within our equity asset class, Asian, Continental European, and U.S. Core have had strong relative performance versus competitors and versus benchmark over three- and five-year periods. Our U.S. Value and Global Ex-U.S. and Emerging Markets have exceptional long-term performance with over 92% of assets ahead of benchmarks and peer group medians. Within our fixed income asset class, Global fixed income products have achieved strong long-term performance with at least 80% of AUM ahead of benchmarks and 77% of AUM ahead of peers on a 3-year and 5-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			20	%			72	%			95	%			24	%			62	%			78	%
				U.S. Growth			43	%			31	%			69	%			59	%			46	%			53	%
				U.S. Value			59	%			95	%			94	%			61	%			92	%			94	%
				Sector			56	%			74	%			71	%			22	%			42	%			63	%
				U.K.			9	%			44	%			92	%			1	%			1	%			90	%
				Canadian			49	%			77	%			30	%			42	%			93	%			25	%
				Asian			55	%			76	%			95	%			37	%			73	%			72	%
				Continental European			63	%			84	%			93	%			53	%			76	%			77	%
				Global			56	%			77	%			78	%			19	%			49	%			44	%
				Global Ex U.S. and Emerging Markets			69	%			94	%			98	%			26	%			93	%			94	%
Balanced				Balanced			27	%			87	%			76	%			27	%			78	%			71	%
Money Market				Money Market			37	%			77	%			74	%			96	%			93	%			93	%
Fixed Income				U.S. Fixed Income			71	%			38	%			43	%			69	%			60	%			60	%
				Global Fixed Income			48	%			80	%			83	%			40	%			77	%			77	%

Note:

AUM measured in the one-, three-, and five-year peer group rankings represents 62%, 61%, and 59% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one-, three-, and five-year basis represents 73%, 72%, and 68% of total Invesco AUM, respectively, as of 12/31/10. 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 other 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.

     Assets Under Management

     The company’s rolling presentation of AUM from period to period (on the following pages) illustrates long-term inflows and outflows separately from the net flows into institutional money market funds. Long-term inflows and the underlying reasons for the movements in this line item include investments from new clients, existing clients adding new accounts/funds or contributions/subscriptions into existing accounts/funds, and new funding commitments into private equity funds. We present net flows into institutional money market funds separately, because shareholders of those funds typically utilize them as short-term funding vehicles and because their flows are particularly sensitive to short-term interest rate movements.

     There are numerous drivers of AUM inflows and outflows, including individual investor decisions to change their investment preferences, fiduciaries making broad asset allocation decisions on behalf of advised clients and reallocation of investments within portfolios. We are not a party to these asset allocation decisions, as the company does not generally have access to the underlying investor’s decision-making process, including their risk appetite or liquidity needs. Therefore, the company is not in a position to provide meaningful information regarding the drivers of inflows and outflows.

     To align our external reporting of AUM with how Invesco is portrayed in the industry and to reflect more fully the company’s revenue drivers, in the three months ended June 30, 2010, the company changed its definition of AUM to include assets with which the company is also associated: the PowerShares QQQQ ETF, PowerShares DB ETFs, and other passive assets. These products previously were not included in the company’s reported AUM because the company does not receive investment management fees from these assets. These assets are marketed as Invesco products, and to include them as part of our AUM more accurately reflects the full size and capabilities of Invesco. Additionally, the company may receive meaningful performance service, distribution, or transaction revenues from these assets. The inclusion of these assets as AUM changed the following data points from those previously disclosed:

		Previously				Post-Reporting
$ in billions		Disclosed				Alignment
Ending AUM:
December 31, 2006			462.6				482.0
December 31, 2007			500.1				529.3
December 31, 2008			357.2				377.1
December 31, 2009			423.1				459.5
Average AUM:
Year ended December 31, 2006			424.2				430.7
Year ended December 31, 2007			489.1				511.7
Year ended December 31, 2008			440.6				468.9
Year ended December 31, 2009			388.7				415.8
Net revenue yield on AUM*:
Year ended December 31, 2006		56.9		bps		55.9		bps
Year ended December 31, 2007		59.1		bps		56.5		bps
Year ended December 31, 2008		56.5		bps		53.1		bps
Year ended December 31, 2009		50.9		bps		47.7		bps
Net revenue yield on AUM before performance fees*:
Year ended December 31, 2006		55.0		bps		54.0		bps
Year ended December 31, 2007		57.7		bps		55.2		bps
Year ended December 31, 2008		54.8		bps		51.5		bps
Year ended December 31, 2009		50.1		bps		47.0		bps
Gross revenue yield on AUM*:
Year ended December 31, 2006			N/A			75.6		bps
Year ended December 31, 2007		80.0		bps		76.5		bps
Year ended December 31, 2008		75.8		bps		71.2		bps
Year ended December 31, 2009		68.2		bps		63.8		bps
Gross revenue yield on AUM before performance fees*:
Year ended December 31, 2006			N/A			73.6		bps
Year ended December 31, 2007		78.5		bps		75.1		bps
Year ended December 31, 2008		74.1		bps		69.6		bps
Year ended December 31, 2009		67.5		bps		63.0		bps

     Additionally, as a result of the acquisition, the company now manages unit investment trust (UIT) products, which are categorized in this passive asset group, and for which we earn revenues related to transactional sales charges from the sale of these products and trading income arising from securities temporarily held to form new UIT products.

     AUM at December 31, 2010 were $616.5 billion (December 31, 2009: $459.5 billion; December 31, 2008: $377.1 billion). The acquisition added $114.6 billion in AUM at June 1, 2010. Additionally, during the year ended December 31, 2010, other acquisitions added $6.9 billion of AUM, net of dispositions. During the year ended December 31, 2010, net inflows increased AUM by $5.5 billion, while positive market movements increased AUM by $43.9 billion. We experienced net outflows in institutional money market funds of $15.5 billion and increases in AUM of $1.6 billion due to changes in foreign exchange rates during the year ended December 31, 2010. During the year ended December 31, 2009, net inflows increased AUM by $16.6 billion and positive market movements increased AUM by $54.7 billion. We experienced net outflows in institutional money market funds of $0.1 billion and increases in AUM of $11.2 billion due to changes in foreign exchange rates during the year ended December 31, 2009. During the year ended December 31, 2008, net outflows decreased AUM by $20.3 billion and negative market movements decreased AUM by $113.0 billion. We experienced net inflows in institutional money market funds of $8.4 billion and decreases in AUM of $27.3 billion due to changes in foreign exchange rates during the year ended December 31, 2008. Average AUM during the year ended December 31, 2010 included the impact of the acquired business and were $532.3 billion, compared to $415.8 billion for the year ended December 31, 2009 and $468.9 billion for the year ended December 31, 2008.

     Net inflows during the year ended December 31, 2010 included net long-term inflows of ETF, UIT and passive AUM of $4.3 billion and other net long-term inflows of $1.2 billion. Net flows were driven by net inflows into our institutional and high net worth distribution channels of $5.6 billion and $1.1 billion, respectively, primarily in the fixed income asset class, while our Retail distribution channel experienced net outflows of $1.2 billion.

     Market gains and losses/reinvestment of AUM includes the net change in AUM resulting from changes in market values of the underlying investments from period to period and reinvestment of client dividends. Of the total increase in AUM resulting from market gains during the year ended December 31, 2010, $33.4 billion of this increase was due to the change in value of our equity asset class across all of our business components. Our balanced and alternatives asset classes were also positively impacted by the change in market valuations during the period. During the year ended December 31, 2010, our equity AUM increased in line with equity markets globally. As discussed in the “Executive Overview” section of this Management’s Discussion and Analysis, the S&P 500 and the FTSE 100 indices increased 12.8% and 9.0%, respectively, during the year ended December 31, 2010. Of the $54.7 billion increase in AUM resulting from market increases during the year ended December 31, 2009, $42.1 billion of this increase was due to the change in value of our equity asset class, in line with increases in the S&P 500 and the FTSE 100 indices of 23.5% and 22.1%, respectively, during that period. Of the $113.0 billion decrease in AUM resulting from market declines during the year ended December 31, 2008, $94.7 billion of this decrease was due to the change in value of our equity asset class, in line with decreases in the S&P 500 and the FTSE 100 indices of 37.0% and 28.0%, respectively, during that period.

     Foreign exchange rate movements in our AUM result from the effect of changes in foreign exchange rates from period to period as non-U.S. Dollar denominated AUM is translated into U.S. Dollars, the reporting currency of the company. The impact of the change in foreign exchange rates at December 31, 2010 was driven primarily by the weakening of the Pound Sterling relative to the U.S. Dollar, which was reflected in the translation of our Pound Sterling-based AUM into U.S. Dollars, the strengthening of the Canadian Dollar relative to the U.S. Dollar, which was reflected in the translation of our Canadian Dollar-based AUM into U.S. Dollars, and to the weakening of the Euro relative to the U.S. Dollar, which was reflected in the translation of our Euro-based AUM into U.S. Dollars. The impact of the change in foreign exchange rates at December 31, 2009 was driven by the strengthening of the Pound Sterling, Canadian Dollar and Euro relative to the U.S. Dollar. The impact of the change in foreign exchange rates at December 31, 2008 was driven by the weakening of the Pound Sterling, Canadian Dollar and Euro relative to the U.S. Dollar.

     The table below illustrates the spot foreign exchange rates for translation into the U.S. Dollar, the reporting currency of the company, at December 31, 2010, 2009, and 2008:

		December 31, 2010				December 31, 2009				December 31, 2008
Pound Sterling ($  per £)			1.56				1.61				1.45
Canadian Dollar (CAD per $)			0.99				1.05				1.23
Euro ($  per Euro)			1.34				1.43				1.39

     Net revenue yield increased slightly to 48.9 basis points in the year ended December 31, 2010 from the year ended December 31, 2009 level of 47.7 basis points. The acquired business added $114.6 billion in AUM at June 1, 2010 with an approximate effective fee rate of 47 basis points. 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 December 31, 2010, equity AUM were $294.1 billion, representing 48% of our total AUM at that date; whereas at December 31, 2009, equity AUM were $192.7 billion, representing 42% of our total AUM at that date. In addition, ETF, UIT and Passive AUM generally earn a lower effective fee rate than AUM excluding ETF, UIT and Passive asset classes. At December 31, 2010, ETF, UIT and Passive AUM were $80.8 billion, representing 13.1% of total AUM at that date; whereas at December 31, 2009, ETF, UIT and Passive AUM were $53.0 billion, representing 11.5% of our total AUM at that date.

     Gross revenue yield on AUM increased 2.2 basis points to 66.0 basis points in the year ended December 31, 2010 from the year ended December 31, 2009 level of 63.8 basis points. Management does not consider gross revenue yield, the most comparable U.S. GAAP-based measure to net revenue yield, to be 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. See “Schedule of Non-GAAP Information” for a reconciliation of operating revenues (gross revenues) to net revenues.

     Changes in AUM were as follows:

																		AUM ex												AUM ex
						AUM ex ETF,				ETF, UIT &								ETF, UIT &				ETF, UIT &								ETF, UIT &				ETF, UIT &
		Total AUM				UIT & Passive				Passive				Total AUM				Passive				Passive				Total AUM				Passive				Passive
$ in billions		2010				2010				2010				2009				2009				2009				2008				2008				2008
January 1			459.5				406.5				53.0				377.1				346.6				30.5				529.3				484.0				45.3
Long-term inflows			154.7				84.6				70.1				106.1				65.7				40.4				136.5				66.0				70.5
Long-term outflows			(149.2	)			(83.4	)			(65.8	)			(89.5	)			(59.9	)			(29.6	)			(156.8	)			(89.9	)			(66.9	)
Long-term net flows			5.5				1.2				4.3				16.6				5.8				10.8				(20.3	)			(23.9	)			3.6
Net flows in institutional money market funds			(15.5	)			(15.5	)			—				(0.1	)			(0.1	)			—				8.4				8.4				—
Market gains and losses/reinvestment			43.9				36.3				7.6				54.7				43.3				11.4				(113.0	)			(95.2	)			(17.8	)
Acquisitions/dispositions, net			121.5				107.1				14.4				—				—				—				—				—				—
Foreign currency translation			1.6				0.1				1.5				11.2				10.9				0.3				(27.3	)			(26.7	)			(0.6	)
December 31			616.5				535.7				80.8				459.5				406.5				53.0				377.1				346.6				30.5
Average long-term AUM			463.5				393.8				69.7				328.8				291.2				37.6				389.1				363.9				25.2
Average institutional money market AUM			68.8				68.8				—				87.0				87.0				—				79.8				79.8				—
Average AUM			532.3				462.6				69.7				415.8				378.2				37.6				468.9				443.7				25.2
Gross revenue yield on AUM(1)		66.0		bps		74.3		bps		10.8		bps		63.8		bps		68.8		bps		13.4		bps		71.2		bps		74.1		bps		20.1		bps
Gross revenue yield on AUM before performance fees(1)		65.5		bps		73.8		bps		10.8		bps		63.0		bps		68.0		bps		13.4		bps		69.6		bps		72.2		bps		20.1		bps
Net revenue yield on AUM(2)		48.9		bps		54.6		bps		10.8		bps		47.7		bps		51.1		bps		13.4		bps		53.1		bps		55.0		bps		20.1		bps
Net revenue yield on AUM before performance fees(2)		48.4		bps		54.1		bps		10.8		bps		47.0		bps		50.4		bps		13.4		bps		51.5		bps		53.3		bps		20.1		bps

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

     Total AUM by Channel⁽¹⁾

														Private
														Wealth
$ in billions		Total				Retail				Institutional				Management
January 1, 2010 AUM			459.5				239.4				204.9				15.2
Long-term inflows			154.7				106.2				45.2				3.3
Long-term outflows			(149.2	)			(107.4	)			(39.6	)			(2.2	)
Long-term net flows			5.5				(1.2	)			5.6				1.1
Net flows in institutional money market funds			(15.5	)			—				(15.5	)			—
Market gains and losses/reinvestment			43.9				36.8				6.4				0.7
Acquisitions/dispositions, net			121.5				104.0				17.5				—
Foreign currency translation			1.6				(0.6	)			2.2				—
December 31, 2010 AUM			616.5				378.4				221.1				17.0
January 1, 2009 AUM (2)			377.1				165.9				197.8				13.4
Long-term inflows			106.1				85.1				16.1				4.9
Long-term outflows			(89.5	)			(67.0	)			(18.0	)			(4.5	)
Long-term net flows			16.6				18.1				(1.9	)			0.4
Net flows in institutional money market funds			(0.1	)			—				(0.1	)			—
Market gains and losses/reinvestment			54.7				45.7				7.6				1.4
Foreign currency translation			11.2				9.7				1.5				—
December 31, 2009 AUM			459.5				239.4				204.9				15.2
January 1, 2008 AUM (2)			529.3				287.9				224.0				17.4
Long-term inflows			136.5				111.6				20.1				4.8
Long-term outflows			(156.8	)			(121.1	)			(31.1	)			(4.6	)
Long-term net flows			(20.3	)			(9.5	)			(11.0	)			0.2
Net flows in institutional money market funds			8.4				0.6				7.8				—
Market gains and losses/reinvestment			(113.0	)			(87.5	)			(21.3	)			(4.2	)
Foreign currency translation			(27.3	)			(25.6	)			(1.7	)			—
December 31, 2008 AUM			377.1				165.9				197.8				13.4

    ETF, UIT & Passive AUM by Channel⁽¹⁾

														Private
														Wealth
$ in billions		Total				Retail				Institutional				Management
January 1, 2010 AUM			53.0				48.0				5.0				—
Long-term inflows			70.1				51.2				18.9				—
Long-term outflows			(65.8	)			(47.2	)			(18.6	)			—
Long-term net flows			4.3				4.0				0.3				—
Net flows in institutional money market funds			—				—				—				—
Market gains and losses/reinvestment			7.6				4.8				2.8				—
Acquisitions/dispositions, net			14.4				13.7				0.7				—
Foreign currency translation			1.5				—				1.5				—
December 31, 2010 AUM			80.8				70.5				10.3				—
January 1, 2009 AUM (2)			30.5				27.1				3.4				—
Long-term inflows			40.4				40.1				0.3				—
Long-term outflows			(29.6	)			(29.6	)			—				—
Long-term net flows			10.8				10.5				0.3				—
Net flows in institutional money market funds			—				—				—				—
Market gains and losses/reinvestment			11.4				10.3				1.1				—
Foreign currency translation			0.3				0.1				0.2				—
December 31, 2009 AUM			53.0				48.0				5.0				—
January 1, 2008 AUM (2)			45.3				41.1				4.2				—
Long-term inflows			70.5				70.3				0.2				—
Long-term outflows			(66.9	)			(66.9	)			—				—
Long-term net flows			3.6				3.4				0.2				—
Net flows in institutional money market funds			—				—				—				—
Market gains and losses/reinvestment			(17.8	)			(17.4	)			(0.4	)			—
Foreign currency translation			(0.6	)			—				(0.6	)			—
December 31, 2008 AUM			30.5				27.1				3.4				—

    Total AUM by Asset Class⁽³⁾

										Fixed								Money
$ in billions		Total				Equity				Income				Balanced				Market				Alternatives(4)
January 1, 2010 AUM			459.5				192.7				76.1				39.9				83.5				67.3
Long-term inflows			154.7				95.8				32.7				8.2				1.5				16.5
Long-term outflows			(149.2	)			(104.4	)			(19.1	)			(7.4	)			(1.9	)			(16.4	)
Long-term net flows			5.5				(8.6	)			13.6				0.8				(0.4	)			0.1
Net flows in institutional money market funds			(15.5	)			—				—				—				(15.5	)			—
Market gains and losses/reinvestment			43.9				33.4				4.2				2.5				0.1				3.7
Acquisitions/dispositions, net			121.5				75.1				37.9				0.3				0.6				7.6
Foreign currency translation			1.6				1.5				0.1				—				—				—
December 31, 2010 AUM			616.5				294.1				131.9				43.5				68.3	(5)			78.7
January 1, 2009 AUM(2)			377.1				140.7				61.4				31.7				84.2				59.1
Long-term inflows			106.1				58.4				19.4				8.2				2.2				17.9
Long-term outflows			(89.5	)			(55.2	)			(12.6	)			(8.0	)			(3.1	)			(10.6	)
Long-term net flows			16.6				3.2				6.8				0.2				(0.9	)			7.3
Net flows in institutional money market funds			(0.1	)			—				—				—				(0.1	)			—
Market gains and losses/reinvestment			54.7				42.1				6.5				6.0				—				0.1
Foreign currency translation			11.2				6.7				1.4				2.0				0.3				0.8
December 31, 2009 AUM			459.5				192.7				76.1				39.9				83.5				67.3
January 1, 2008 AUM(2)			529.3				269.6				69.1				45.9				75.3				69.4
Long-term inflows			136.5				93.2				14.8				8.9				3.9				15.7
Long-term outflows			(156.8	)			(109.4	)			(17.5	)			(10.2	)			(3.6	)			(16.1	)
Long-term net flows			(20.3	)			(16.2	)			(2.7	)			(1.3	)			0.3				(0.4	)
Net flows in institutional money market funds			8.4				—				—				—				8.4				—
Market gains and losses/reinvestment			(113.0	)			(94.7	)			(2.5	)			(8.5	)			0.7				(8.0	)
Foreign currency translation			(27.3	)			(18.0	)			(2.5	)			(4.4	)			(0.5	)			(1.9	)
December 31, 2008 AUM			377.1				140.7				61.4				31.7				84.2				59.1