Executive Overview

The following executive overview summarizes the significant trends affecting 
our results of operations and financial condition for the periods presented. 
This overview and the remainder of this management’s discussion and analysis 
supplements and should be read in conjunction with the Condensed Consolidated 
Financial Statements of Invesco Ltd. and its subsidiaries (collectively, the 
“company” or “Invesco”) and the notes thereto contained elsewhere in this 
Report. The three months ended March 31, 2020 saw extreme volatility in global 
equity markets, reacting quickly from highs early in the quarter to extreme 
lows in the month of March as global markets reacted to the COVID-19 pandemic, 
governments and populations enacting social containment measures, restricting 
business and related activities, closing borders, and restricting travel. 
Central banks globally initiated monetary easing efforts, and governments in 
major developed countries enacted relief measures, to support and stimulate 
economies. Despite these efforts, significant uncertainty as to the market 
outlook and fears of a global recession stemming from the virus-related 
containment efforts remained at the end of the quarter (which persists as of 
the date of this report).

In the US, the first quarter was marked by two extreme shifts - equities rose 
to all-time highs in the middle of the quarter despite a backdrop of continued 
geopolitical tensions, domestic political tensions, and concerns about a 
slowing economy. COVID-19 then emerged as a global pandemic, leading the S&P to 
drop more than 35% from its February 19 record high through March 23, before 
rising slightly again through the end of the quarter in reaction to monetary, 
fiscal and public health policy efforts. The US Federal Reserve Bank acted 
quickly and decisively in the month of March, announcing essentially an 
unlimited quantitative easing plan that included purchases of securities as 
well as loans to US businesses. Additionally, the US Congress enacted the 
largest ever economic stimulus package (the CARES Act), which included a focus 
on virus vaccine research, state/local aid, sick leave, the Paycheck Protection 
Program to incentivize small businesses to keep workers on payroll and direct 
payments to households in efforts to curtail the economic impact of a 
population in lockdown. The S&P 500 index finished the quarter down 20.0%.

European markets reacted significantly in the quarter to the economic impacts 
of the virus, with Europe being the largest area affected by the virus outside 
of China at the end of the first quarter. The UK entered 2020 with the Brexit 
uncertainty continuing and challenges to work out a deal with the European 
Union prior to the end of the year. The COVID-19 pandemic challenged markets 
considerably. The Bank of England acted quickly to cut interest rates to near 
zero and implement fiscal easing efforts. The FTSE 100 ended the quarter down 
24.8%.

Japanese markets were challenged entering 2020 following a fourth quarter 2019 
valued added tax increase and the typhoon that impacted the country. The Nikkei 
225 finished the period down 20.0%. China was the first country to experience 
the pandemic. By the end of the quarter, its economy was showing signs of 
recovery.

At one point during the quarter, bonds were being sold as quickly as equities 
in a flight to liquidity caused by virus-induced economic uncertainty. US 
Treasury yields fell to all-time lows. The U.S. Aggregate Bond Index moved 3.2% 
for the quarter.

The company’s financial results are impacted by the fluctuations in exchange 
rates against the US Dollar, as discussed in the “Foreign Exchange Impact on 
Balance Sheet, Assets Under Management and Results of Operations” section and 
the “Results of Operations” section below. Our revenues are directly influenced 
by the level and composition of our AUM. As a significant proportion of our AUM 
is based outside of the U.S., changes in foreign exchange rates result in a 
change to the mix of U.S. Dollar denominated AUM with AUM denominated in other 
currencies. As fee rates differ across geographic locations, changes to 
exchange rates have an impact on the net revenue yields. 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. Invesco benefits from 
our long-term efforts to ensure a diversified base of AUM. 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 geographic diversification recognizes growth 
opportunities in different parts of the world. This broad diversification 
mitigates the impact on Invesco of different market cycles and enables the 
company to take advantage of growth opportunities in various markets and 
channels.

On May 24, 2019, the company completed the acquisition of OppenheimerFunds, an 
investment management subsidiary of MassMutual. As part of the acquisition, the 
company acquired the management contracts of the SteelPath-branded MLP funds 
and became the Adviser to the funds. In the fourth quarter 2019, the company 
identified an accounting matter related to the funds’ financial statements and 
concluded that it was reasonably possible, but not probable, that the company 
would incur at least some costs associated with the matter. Accordingly, no 
accrual was made at December 31, 2019.

Following a regulatory consultation on the matter that concluded after the 
company filed its 2019 Annual Report on Form 10-K, the company changed the 
assessment of the likelihood of a loss to probable. Based on this new 
information about the facts and circumstances, the company adjusted the initial 
accounting for the acquisition by recording a liability of an estimated amount 
of $380.5 million and a deferred tax asset of $93.5 million (for expected 
future tax benefits) during the first quarter of 2020 for pre-acquisition 
activity related to the matter. The liability and associated deferred tax asset 
recorded represents management’s current best estimate based on its current 
understanding of the facts and circumstances. As this accounting adjustment was 
recorded during the measurement period of one year after the acquisition date, 
a corresponding adjustment of $287.0 million ($380.5 million net of $93.5 
million of deferred tax asset) was made to goodwill. As additional information 
about the matter is finalized, the estimate may change. In accordance with ASC 
805 Business Combinations, any further adjustments made during the measurement 
period, will be recorded as an adjustment to goodwill. See Note 15 -- 
"Commitments and Contingencies" for additional details regarding the accounting 
matter.


During the first quarter of 2020, the company did not purchase any of its 
shares in the open market. As the company’s focus is on increasing financial 
strength and building liquidity, the company does not foresee additional share 
repurchases in 2020 assuming a continuation of the current unfavorable market 
environment. The company withheld 2.3 million shares ($31.5 million) related to 
the settlement of taxes on employee share vestings. In regard to its previously 
completed forward contracts, the company prepaid $190.6 million against the 
forward payable, resulting in a remaining forward contract liability of $307.8 
million as of March 31, 2020. See Note 8, "Share Capital" for additional 
details.

Managing our business and meeting client needs through COVID-19 Invesco is 
committed to helping our employees, our clients and our communities navigate 
the challenges presented by the spread of COVID-19. The primary focus of our 
efforts is to ensure the health and safety of our employees while preserving 
our ability to serve clients and manage assets in a highly dynamic market 
environment.

As always, we are committed to helping our clients achieve their investment 
objectives through disciplined long-term investing. To this end, we have 
intensified our efforts to support clients by proactively engaging with them 
and providing thought leadership and other value-added services to help them 
navigate the volatile markets. We believe our client-centric approach in this 
time of stress will have a lasting impact and allow us and our clients to 
emerge from this crisis stronger.

As a global firm, we’ve been responding to the coronavirus since December, when 
it was first reported in Asia Pacific. Our response in the region included the 
relocation of a regional trading center, restrictions on employee travel and 
remote working for the vast majority of our Asia-Pac based employees.

As the virus spread to other parts of the globe, cross-functional teams in each 
region (Americas, Asia Pacific and EMEA) have monitored the situation closely, 
leveraging our early experience in Asia Pacific to enhance our business 
continuity planning and execution. These teams - which include representatives 
from Distribution, Portfolio Management, Trading, Technology, Operations, Human 
Resources, Business Continuity, Compliance and other areas - with guidance from 
the Centers for Disease Control, World Health Organization and local health 
officials - have been taking the necessary steps to ensure our preparedness 
during a highly fluid situation

We understand the importance of managing our clients’ assets, particularly 
during times of market volatility. To help ensure we can continue to meet 
client needs, nearly all our global employees are working remotely, with small 
select teams working at alternate sites or operating in split shifts to 
mitigate the risks associated with the virus. Our portfolio managers, research 
analysts and traders are successfully working remotely or in secure locations 
with access to all systems necessary to do their jobs and an ability to connect 
with their teams in managing client assets. Additionally, the client reporting 
and operational teams that provide information on client portfolios are 
operating effectively in a work from home status, as are other necessary 
control and support groups, including our compliance teams. Our teams are in 
constant communication to ensure timely coordination and early identification 
of issues. This thoughtful, coordinated approach helps ensure our ability to 
continue meeting client needs and running our business.

As a result of the recent market reaction to the COVID-19 crisis, AUM declined 
during the first quarter, but remain above $1 trillion. The decline in AUM 
adversely impacted our revenues in the first quarter, and we expect it will 
continue pressuring revenues in the near term.

During this period of market turbulence and uncertainty, we believe it is 
imperative to maintain financial flexibility. We continue to manage our expense 
base to align with the current lower revenue environment through reduced 
variable compensation and discretionary spend. We also plan to redeem up to 
$200 million of seed capital investments where appropriate from certain of our 
investment products in the near term. And we will reduce our common dividend to 
$0.155 per share beginning with the dividend that will be paid in the second 
quarter. These actions, and others focused on the preservation of capital, seek 
to help us build liquidity through the present uncertain environment. Combined, 
these steps will enable us to further strengthen our balance sheet while 
preserving our ability to invest in future growth for the benefit of our 
business and our shareholders.

Other External Factors Impacting Invesco Invesco has a larger global presence 
in key markets than many of our peers. As one of the leading investment 
managers in the UK and Europe, we were more impacted by continuing 
uncertainties surrounding Brexit. Additionally, our strong position in Asia 
Pacific meant that Invesco was more affected than others by market 
uncertainties over the trade issues between China and the U.S.

Although negotiations between the UK and EU resulted in the UK leaving the EU 
under the terms of the Withdrawal Agreement on January 31, 2020, the longer 
term relationship between the UK and the EU is still uncertain. This may affect 
the levels and composition of our AUM and also negatively influence investor 
sentiment, which could result in reduced or negative flows. In addition, 
because the UK Pound Sterling is the functional currency for certain of our 
subsidiaries, any weakening of the UK Pound Sterling relative to the U.S. 
Dollar could negatively impact our reported financial results.

Investment exposure to LIBOR based interest rates could also impact our client 
portfolios. The U.K. Financial Conduct Authority, has made it clear that the 
publication of LIBOR is not guaranteed beyond 2021. As a result, firms must 
transition away from LIBOR to alternative risk-free rates by the end of 2021. 
The discontinuance of LIBOR may adversely affect the amount of interest payable 
or interest receivable on certain portfolio investments. These changes may also 
impact the market liquidity and market value of these portfolio investments. 
Invesco is finalizing its global assessment of exposure in relation to funds 
utilizing LIBOR based instruments and benchmarks and is prioritizing the 
mitigation of risks associated with the forecast changes to financial 
instruments and performance benchmarks referencing existing LIBOR rates, and 
concurrently any impact on Invesco portfolios and investment strategies.


Presentation of Management’s Discussion and Analysis of Financial Condition and 
Results of Operations - Impact of Consolidated Investment Products The company 
provides investment management services to, and has transactions with, various 
retail mutual funds and similar entities, 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. Investment products that are consolidated are referred to in this 
Form 10-Q (Report) as consolidated investment products (CIP). The company’s 
economic risk with respect to each investment in CIP is limited to its equity 
ownership and any uncollected management and performance fees. See also Note 
16, "Consolidated Investment Products", for additional information regarding 
the impact of the consolidation of managed funds. The majority of the company’s 
CIP balances are CLO-related. 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 direct investments in, and 
management and performance 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. Likewise, 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 
CIP is so significant to the presentation of the company’s Condensed 
Consolidated Financial Statements that the company has elected to deconsolidate 
these products in its non-GAAP disclosures among other adjustments. See 
Schedule of Non-GAAP Information for additional information regarding these 
adjustments. The following discussion therefore combines the results presented 
under U.S. generally accepted accounting principles (U.S. GAAP) with the 
company’s non-GAAP presentation. This Management’s Discussion and Analysis of 
Financial Condition and Results of Operations contains four distinct sections, 
which follow the AUM discussion:

•

Results of Operations (three months ended March 31, 2020 compared to three 
months ended March 31, 2019);

•

Schedule of Non-GAAP Information;

•

Balance Sheet Discussion; and

•

Liquidity and Capital Resources. 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 other 
income and expenses (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

$ in millions, other than per common share amounts, operating margins and AUM

Three months ended March 31, U.S. GAAP Financial Measures Summary

Net revenues is a non-GAAP financial measure. Net revenues are operating 
revenues plus the net revenues of our Great Wall joint venture; less 
pass-through revenue adjustments to investment management fees, service and 
distribution fees and other; plus management and performance fees earned from 
CIP. See "Schedule of Non-GAAP Information" for the reconciliation of operating 
revenues to net revenues.

Adjusted operating income and adjusted operating margin are non-GAAP financial 
measures. Adjusted operating margin is adjusted operating income divided by net 
revenues. Adjusted operating income includes operating income plus the net 
operating income of our joint venture investments, the operating income impact 
of the consolidation of investment products, transaction, integration and 
restructuring adjustments, compensation expense related to market valuation 
changes in deferred compensation plans and other reconciling items. See 
"Schedule of Non-GAAP Information," for the reconciliation of operating income 
to adjusted operating income.

Adjusted net income attributable to Invesco Ltd. and adjusted diluted EPS are 
non-GAAP financial measures. Adjusted net income attributable to Invesco Ltd. 
is net income attributable to Invesco Ltd. adjusted to exclude the net income 
of CIP, transaction, integration and restructuring adjustments, the net income 
impact of deferred compensation plans and other reconciling items. Adjustments 
made to net income attributable to Invesco Ltd. are tax-affected in arriving at 
adjusted net income attributable to Invesco Ltd. By calculation, adjusted 
diluted EPS is adjusted net income attributable to Invesco Ltd. divided by the 
weighted average number of common shares outstanding (for diluted EPS). See 
"Schedule of Non-GAAP Information," for the reconciliation of net income 
attributable to Invesco Ltd. to adjusted net income attributable to Invesco 
Ltd.

Investment Capabilities Performance Overview Invesco’s first strategic priority 
is to achieve strong investment performance over the long-term for our clients. 
The table below presents the one-, three-, five-, and ten-year performance of 
our actively managed investment products measured by the percentage of AUM 
ahead of benchmark and AUM in the top half of peer group.(1)

Foreign Exchange Impact on Balance Sheet, Assets Under Management and Results 
of Operations A significant portion of our business is based outside of the 
U.S. The strengthening or weakening of the U.S. Dollar against other 
currencies, primarily the Pound Sterling, Euro and Japanese Yen will impact our 
assets, liabilities, AUM and reported revenues and expenses from period to 
period. The assets, liabilities and AUM of foreign subsidiaries are translated 
at period end spot foreign currency exchange rates. The income statements of 
foreign currency subsidiaries are translated into U.S. Dollars, the reporting 
currency of the company, using average foreign exchange rates.

Spot Foreign Exchange Rates

A comparison of period end spot rates between March 31, 2020 and December 31, 
2019 shows a weakening of the Pound Sterling and the Euro relative to the U.S. 
Dollar, while the Japanese Yen strengthened, which is reflected in the 
translation of our Pound Sterling-based, Euro-based, and Japanese Yen-based 
assets, liabilities and AUM into U.S. Dollars, respectively. A comparison of 
the average foreign exchange rates used for the three months ended March 31, 
2020 when compared to the three months ended March 31, 2019 shows a weakening 
of the Pound Sterling and the Euro relative to the U.S. Dollar, while the 
Japanese Yen strengthened, which is reflected in the translation of our Pound 
Sterling-based, Euro-based, and Japanese Yen-based revenue and expenses into 
U.S. Dollars.

Assets Under Management movements for the three months ended March 31, 2020 
compared with the three months ended March 31, 2019 The following presentation 
and discussion of AUM includes Passive and Active AUM. Passive AUM include 
index-based ETFs, unit investment trusts (UITs), non-management fee earning AUM 
and other passive mandates. Active AUM is total AUM less Passive AUM. 
Non-management fee earning AUM includes non-management fee earning ETFs, UIT 
and product leverage. The net flows in non-management fee earning AUM can be 
relatively short-term in nature and, due to the relatively low revenue yield, 
these can have a significant impact on overall net revenue yield. The AUM 
tables and the discussion below refer to certain AUM as long-term. 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. Long-term outflows 
reflect client redemptions from accounts/funds and include the return of 
invested capital on the maturity. We present net flows into money market funds 
separately because shareholders of those funds typically use them as short-term 
funding vehicles and because their flows are particularly sensitive to 
short-term interest rate movements.

In the second quarter of 2019, the company changed the presentation of its AUM. 
The new presentation reflects the combination of the U.S and Canada to form 
Americas and Continental Europe to now be EMEA ex UK. As part of the change in 
the presentation of AUM, the company made certain reclassifications between 
geographies, asset classes and active and passive classifications to better 
reflect the underlying AUM. In the AUM tables below, all periods have been 
reclassified to conform to the new presentation and reclassifications.


For the three months ended March 31,


2020

Gross revenue yield on AUM is equal to annualized total operating revenues 
divided by average AUM, excluding Invesco Great Wall AUM. The average AUM for 
Invesco Great Wall in the three months ended March 31, 2020 was $43.3 billion 
(three months ended March 31, 2019: $31.5 billion). It is appropriate to 
exclude the average AUM of Invesco Great Wall for purposes of computing gross 
revenue yield on AUM, because the revenues resulting from these AUM are not 
presented in our operating revenues. Under U.S. GAAP, our share of the net 
income of Invesco Great Wall Fund Management Company (“Invesco Great Wall”) is 
recorded as equity in earnings of unconsolidated affiliates on our Condensed 
Consolidated Statements of Income. Gross revenue yield, the most comparable 
U.S. GAAP-based measure to net revenue yield, is not considered a meaningful 
effective fee rate measure. Additionally, the numerator of the gross revenue 
yield measure, operating revenues, excludes the management fees earned from 
CIP; 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 effective fee rate from AUM.

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

Flows There are numerous drivers of AUM inflows and outflows, including 
individual investor decisions to change investment preferences, fiduciaries and 
other gatekeepers making broad asset allocation decisions on behalf of their 
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. Average AUM during the three months ended March 31, 2020 were 
$1,176.3 billion, compared to $932.8 billion for the three months ended March 
31, 2019. The acquisition of OppenheimerFunds business on May 24, 2019 added 
$224.4 billion in AUM at that date.

Market Returns Market gains and losses include the net change in AUM resulting 
from changes in market values of the underlying securities from period to 
period. As discussed in the “Executive Overview” section of this Management’s 
Discussion and Analysis, global equity markets saw volatility and declines due 
to the COVID-19 pandemic in March 2020. The resulting decline in AUM adversely 
impacted our revenues in the first quarter, and we expect it will continue 
pressuring revenues in the near term.

Foreign Exchange Rates During the three months ended March 31, 2020, we 
experienced decrease in AUM of $9.1 billion due to changes in foreign exchange 
rates. In the three months ended March 31, 2019, AUM increased by $1.5 billion 
due to foreign exchange rate changes.

Revenue Yield As a significant proportion of our AUM is based outside of the 
U.S., changes in foreign exchange rates result in a change to the mix of U.S. 
Dollar denominated AUM with AUM denominated in other currencies. As fee rates 
differ across geographic locations, changes to exchange rates have an impact on 
the net revenue yields. See the company’s disclosures regarding the changes in 
foreign exchange rates in the “Foreign Exchange Impact on Balance Sheet, Assets 
Under Management and Results of Operations” section above for additional 
information regarding the movement of foreign exchange rates. In the three 
months ended March 31, 2020, the net revenue yield was 39.0 basis points 
compared to 38.0 basis points in the three months ended March 31, 2019, an 
increase of 1.0 basis point. As a result of the acquisition of 
OppenheimerFunds, AUM increased $224.4 billion during the second quarter of 
2019, which was comprised of $219.9 billion of active and $4.5 billion of 
passive AUM, increasing the proportion of active AUM and positively impacting 
net revenue yield. However, the first quarter of 2020 was also impacted by 
shifts in the mix of AUM, resulting from flows into lower fee products and from 
the market impact of the COVID-19 pandemic, both of which increased the 
proportion of lower-risk, lower fee AUM. This change has adversely impacted our 
revenue and resulting revenue yields in the first quarter, and we expect it 
will continue to pressure revenues in the near term.

At March 31, 2020, active AUM were $807.3 billion, representing 76.6% of total 
AUM at that date; whereas at March 31, 2019, active AUM were $704.3 billion, 
representing 73.8% of our total AUM at that date. In the three months ended 
March 31, 2020, the net revenue yield on active AUM was 47.2 basis points 
compared to 46.1 basis points in the three months ended March 31, 2019, an 
increase of 1.1 basis points.

At March 31, 2020, passive AUM were $246.1 billion, representing 23.4% of total 
AUM at that date; whereas at March 31, 2019, passive AUM were $250.5 billion, 
representing 26.2% of our total AUM at that date. In the three months ended 
March 31, 2020, the net revenue yield on passive AUM was 13.3 basis points 
compared to 14.6 basis points in the three months ended March 31, 2019, a 
decrease of 1.3 basis points.


Channel refers to the internal distribution channel from which the AUM 
originated. Retail AUM represents AUM distributed by the company’s retail sales 
team. Institutional AUM represents AUM distributed by our institutional sales 
team. This aggregation is viewed as a proxy for presenting AUM in the retail 
and institutional markets in which the company operates.

Results of Operations for the three months ended March 31, 2020 compared to the 
three months ended March 31, 2019 The discussion below includes the use of 
non-GAAP financial measures. See “Schedule of Non-GAAP Information” for 
additional details and reconciliations of the most directly comparable U.S. 
GAAP measures to the non-GAAP measures. Operating Revenues and Net Revenues The 
main categories of revenues, and the dollar and percentage change between the 
periods, are as follows:

Total revenue adjustments includes passed through investment management, 
service and distribution, and other revenues and equal the same amount as the 
third party distribution, service and advisory expenses.

Net revenues are operating revenues less third-party distribution, service and 
advisory expenses, plus net revenues from Invesco Great Wall, plus management 
and performance fees earned from CIP. See “Schedule of Non-GAAP Information” 
for additional important disclosures regarding the use of net revenues. The 
impact of foreign exchange rate movements decreased operating revenues by $5.5 
million, equivalent to 0.3% of total operating revenues, during the three 
months ended March 31, 2020 when compared to the three months ended March 31, 
2019. 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), changes in the mix of investment 
products between asset classes and geographies and acquisitions may materially 
affect our revenues from period to period. The results of the OppenheimerFunds 
acquisition are included from May 24, 2019 (date of acquisition), which causes 
a large fluctuation between the periods presented here. As discussed in the 
“Executive Overview” section above, equity markets showed extreme volatility as 
global markets reacted to the COVID-19 pandemic during in the three months 
ended March 31, 2020, which impacted our results in the first quarter of 2020. 
This market downturn offsets some of the acquisition-related increase when 
comparing between 2020 and 2019. The first quarter of 2020 was also impacted by 
shifts in the mix of AUM, resulting both from flows and from the market impact 
of the COVID-19 pandemic, which has adversely impacted our revenue and 
resulting revenue yields in the first quarter, and we expect it will continue 
to pressure revenues in the near term. Investment Management Fees Investment 
management fees increased by $244.6 million (26.5%) in the three months ended 
March 31, 2020 to $1,168.3 million (three months ended March 31, 2019: $923.7 
million). This compares to a 26.1% increase in average AUM. The impact of 
foreign exchange rate movements decreased investment management fees by $4.9 
million during the three months ended March 31, 2020 as compared to the three 
months ended March 31, 2019. After allowing for foreign exchange movements, 
investment management fees increased by $249.5 million (27.0%), which is 
consistent with the increased average AUM. However, as discussed above, average 
AUM in first quarter 2020 was impacted negatively by the market reaction to the 
COVID-19 crisis, which partially offsets the increases driven by the acquired 
OppenheimerFunds business (acquired May 24, 2019).

Service and Distribution Fees In the three months ended March 31, 2020, service 
and distribution fees increased by $146.5 million (66.8%) to $365.8 million 
when compared to three months ended March 31, 2019 of $219.3 million. The 
impact of foreign exchange rate movements decreased service and distribution 
fees by $0.4 million during the three months ended March 31, 2020 as compared 
to the first quarter of 2019. The total increase is made up of higher 
distribution fees of $80.4 million, transfer agency fees of $48.5 million, and 
administrative fees of $13.6 million. The increase is primarily a result of 
revenues earned from the acquired OppenheimerFunds business (acquired May 24, 
2019).

Performance Fees Of our $1,053.4 billion in AUM at March 31, 2020, 
approximately $45.7 billion (4.3%) could potentially earn performance fees, 
including carried interests and performance fees related to partnership 
investments and separate accounts. In the three months ended March 31, 2020, 
performance fees decreased by $17.0 million (78.0%) to $4.8 million when 
compared to the performance fees in the three months ended March 31, 2019 of 
$21.8 million. Performance fees during the first quarter of 2020 were primarily 
generated from real estate products.

Other Revenues In the three months ended March 31, 2020, other revenues 
increased by $10.2 million (20.5%) to $60.0 million (three months ended March 
31, 2019: $49.8 million). There was no impact of foreign exchange rate 
movements during the three months ended March 31, 2020 as compared to the three 
months ended March 31, 2019. The increase in other revenues was primarily 
driven by an increase in commissions of $15.1 million as a result of the 
acquired OppenheimerFunds business (acquired May 24, 2019), partially offset by 
decreases in UIT revenues of $3.6 million and real estate transaction fees of 
$2.1 million.

Invesco Great Wall The company’s most significant joint venture arrangement is 
our 49% investment in Invesco Great Wall Fund Management Company Limited (the 
“Invesco Great Wall” joint venture). Management believes that the revenues from 
Invesco Great Wall should be added to operating revenues to arrive at net 
revenues, as it is important to evaluate the contribution to the business that 
Invesco Great Wall is making. See “Schedule of Non-GAAP Information” for 
additional disclosures regarding the use of net revenues. Net revenue from 
Invesco Great Wall were $53.1 million and average AUM was $43.3 billion, 
reflecting 100% of the flows and AUM for the three months ended March 31, 2020 
(net revenues were $31.8 million and average AUM was $31.5 billion in the three 
months ended March 31, 2019). The AUM experienced growth in long-term AUM in 
the period and started the period with diversified long-term AUM from the net 
sales in balanced and fixed income funds in 2019 Revenues increased as a result 
of higher AUM, and the first quarter of 2020 also includes increased 
performance fees and front-end fees.

Management, performance and other fees earned from CIP Management believes that 
the consolidation of investment products may impact a reader’s analysis of our 
underlying results of operations and could result in investor confusion or the 
production of information about the company by analysts or external credit 
rating agencies that is not reflective of the underlying results of operations 
and financial condition of the company. Accordingly, management believes that 
it is appropriate to adjust operating revenues for the impact of CIP in 
calculating net revenues. As management and performance fees earned by Invesco 
from the consolidated products are eliminated upon consolidation of the 
investment products, management believes that it is appropriate to add these 
operating revenues back in the calculation of net revenues. See “Schedule of 
Non-GAAP Information” for additional disclosures regarding the use of net 
revenues. The elimination of management fees earned from CIP was $8.9 million 
in the three months ended March 31, 2020 (three months ended March 31, 2019: 
$8.7 million). The increase is due to the increase in management fees earned 
from CLOs.

Operating Expenses During the three months ended March 31, 2020, operating 
expenses increased by $267.5 million (26.4%) to $1,281.9 million (three months 
ended March 31, 2019: $1,014.4 million). The impact of foreign exchange rate 
movements decreased operating expenses by $4.8 million, or 0.4% of total 
operating expenses, during the three months ended March 31, 2020 as compared to 
the three months ended March 31, 2019. Third-Party Distribution, Service and 
Advisory Third party distribution service and advisory expenses increased 
$147.1 million 40.0% to $515.1 million in the three months ended March 31, 2020 
(three months ended March 31, 2019: $368.0 million). The impact of foreign 
exchange rate movements decreased third party costs by $0.7 million during the 
three months ended March 31, 2020 as compared to the three months ended March 
31, 2019. After allowing for foreign exchange rate changes, the increase in 
costs was $147.8 million. Included is an increase of $109.1 million in service 
fees (primarily 12b-1 fees), $16.5 million in commissions, $12.0 million in 
asset and sales based fees, $9.6 million in fund expenses, $1.2 million in 
transaction fees, and $1.0 million in unitary fees, partially offset by a 
decrease of $1.9 million in renewal commissions. The increase is primarily a 
result of costs from the acquired OppenheimerFunds business (acquired May 24, 
2019). See "Schedule of Non-GAAP Information" for additional disclosures.

Employee Compensation Employee compensation increased $40.6 million (10.6%) to 
$421.9 million in the three months ended March 31, 2020 (three months ended 
March 31, 2019: $381.3 million). The impact of foreign exchange rate movements 
decreased employee compensation by $2.6 million during the three months ended 
March 31, 2020 as compared to the three months ended March 31, 2019. After 
allowing for foreign exchange rate changes, there was an increase in employee 
compensation of $43.2 million. The increase was driven by increased headcount 
as a result of the OppenheimerFunds acquisition (acquired May 24, 2019). This 
increase was primarily related to increases in commissions and bonuses of $41.5 
million, base salaries of $30.9 million, and staff benefits of $9.0 million, 
partially offset by a decrease of $49.2 million related to the mark-to-market 
on the deferred compensation liability. Headcount at March 31, 2020 was 8,757 
(March 31, 2019: 7,663), with the increase primarily attributable to 
acquisitions. Marketing Marketing expenses increased $4.7 million (16.8%) to 
$32.7 million in the three months ended March 31, 2020 (three months ended 
March 31, 2019: $28.0 million). The impact of foreign exchange rate movements 
decreased marketing expenses by $0.3 million during the three months ended 
March 31, 2020 as compared to the three months ended March 31, 2019. After 
allowing for foreign exchange rate changes, the increase in marketing expenses 
was $5.0 million. Property, Office and Technology Property, office and 
technology costs increased by $23.2 million (21.6%) to $130.4 million in the 
three months ended March 31, 2020 (three months ended March 31, 2019: $107.2 
million). The impact of foreign exchange rate movements decreased property, 
office and technology expenses by $0.7 million during the three months ended 
March 31, 2020 as compared to the three months ended March 31, 2019. After 
allowing for foreign exchange rate movements, the increase was $23.9 million. 
This increase was primarily comprised of lease expenses of $8.7 million, 
software maintenance of $5.9 million outsourced administration costs of $5.1 
million, and depreciation of $3.9 million. The increase is primarily a result 
of the acquired OppenheimerFunds business (acquired May 24, 2019). General and 
Administrative General and administrative expenses increased by $22.5 million 
(26.8%) to $106.3 million in the three months ended March 31, 2020 (three 
months ended March 31, 2019: $83.8 million). The impact of foreign exchange 
rate movements decreased general and administrative expenses by $0.5 million 
during the three months ended March 31, 2020 as compared to the three months 
ended March 31, 2019. After allowing for foreign exchange rate movements, the 
increase was $23.0 million. The increase was comprised of $14.2 million in fund 
expenses incurred by CIP, $4.5 million in market data services costs, $3.7 
million of irrecoverable taxes, $3.3 million in professional services and 
regulatory costs and $2.4 million in fund expenses, partially offset by $5.4 
million on foreign currency revaluation. Transaction, Integration, and 
Restructuring Transaction, integration, and restructuring charges were $75.5 
million for the three months ended March 31, 2020 (three months ended March 31, 
2019: $46.1 million). Within the transaction, integration, and restructuring 
related costs, $71.1 million resulted from the OppenheimerFunds acquisition, 
which included severance and other personnel-related charges of $48.2 million, 
share-based compensation expenses of $6.1 million, legal, consulting and other 
professional fees of $13.8 million, property and equipment expenses of $2.0 
million, marketing expenses of $1.2 million, and amortization of intangible 
assets of $9.5 million. The first quarter 2020 transaction, integration and 
restructuring costs include $7.3 million related to the previously disclosed 
liability related to the SteelPath-branded MLP funds, which were part of the 
OppenheimerFunds acquisition. See Note 15. "Commitments and Contingencies" for 
additional details. Transaction, integration, and restructuring costs from 
other acquisitions included amortization of management contracts and other 
intangible assets of $6.4 million.


Equity in earnings of unconsolidated affiliates Equity in earnings of 
unconsolidated affiliates increased by $1.9 million to $16.9 million in the 
three months ended March 31, 2020 (three months ended March 31, 2019: $15.0 
million). The increase in equity in earnings is driven by an increase of $6.5 
million in Great Wall Funds and $1.1 million in real estate investments, 
partially offset by decreases of $3.9 million in private equity investments and 
$1.5 million in other investments. However, certain of these investments are 
accounted for on a one-month or three-month lag based on the availability of 
fund financial information; therefore, the equity in earnings may not fully 
reflect the market disruption that occurred during the three months ended March 
31, 2020. Other gains and losses, net Other gains and losses, net was a loss of 
$106.5 million in the three months ended March 31, 2020 (three months ended 
March 31, 2019: $31.1 million gain). Included in the loss were $67.7 million on 
investments and instruments held for our deferred compensation plans and $45.6 
million of net losses related to the mark-to-market on seed money investments. 
These losses were partially offset by a gain of $8.8 million on the 
mark-to-market of an acquisition-related contingent consideration liability. 
Other income/(expense) of CIP Other income/(expense) of CIP includes interest 
and dividend income, interest expense, and other gains/(losses) of CIP. In the 
three months ended March 31, 2020, interest and dividend income of CIP 
increased by $0.5 million (0.6%) to $85.2 million (three months ended March 31, 
2019: $84.7 million). Interest expense of CIP decreased by $1.1 million (1.9%) 
to $56.9 million (three months ended March 31, 2019: $58.0 million). Included 
in other gains/(losses) of CIP, net, are realized and unrealized gains and 
losses on the underlying investments and debt of CIP. In the three months ended 
March 31, 2020, other gains and losses of CIP were net losses of $48.4 million 
as compared to net gains of $12.2 million in the three months ended March 31, 
2019. Net impact of CIP and related noncontrolling interests in consolidated 
entities The net impact to net income attributable to Invesco Ltd. in each 
period primarily represents the changes in the value of the company’s holding 
in its consolidated CLOs, which is reclassified into other gains/(losses) from 
accumulated other comprehensive income upon consolidation. The consolidation of 
investment products during the three months ended March 31, 2020 resulted in a 
net decrease in net income attributable to Invesco Ltd. of $0.1 million (three 
months ended March 31, 2019: $1.0 million decrease). CIP are taxed at the 
investor level and not at the product level; therefore, there is no tax 
provision reflected in the net impact of CIP. Noncontrolling interests in 
consolidated entities represent the profit or loss amounts attributed to 
third-party investors in CIP. The impact of any gains or losses resulting from 
valuation changes in the investments of non-CLO CIP attributable to the 
interests of third-parties are offset by resulting changes in gains and losses 
attributable to noncontrolling interests in consolidated entities and therefore 
do not have a material effect on the financial condition, operating results 
(including earnings per common share), liquidity or capital resources of the 
company’s common shareholders. Similarly, any gains or losses resulting from 
valuation changes in the investments of CLOs attributable to the interests of 
third-parties are offset by the calculated value of the notes issued by the 
CLOs (offsetting in other gains/(losses) of CIP) and therefore also do not have 
a material effect on the financial condition, operating results (including 
earnings per common share), liquidity or capital resources of the company’s 
common shareholders. Additionally, CIP represent less than 1% of the company’s 
AUM. Therefore, the net gains or losses of CIP are not indicative of the 
performance of the company’s aggregate AUM. Income Tax Expense The company's 
subsidiaries operate in several taxing jurisdictions around the world, each 
with its own statutory income tax rate. As a result, the blended average 
statutory tax rate will vary from year to year depending on the mix of the 
profits and losses of the company's subsidiaries.

Our effective tax rate increased to 32.4% for the three months ended March 31, 
2020 (three months ended March 31, 2019: 25.8%). The three months ended March 
31, 2020 includes a 5.2% rate increase related to the vestings of our annual 
common share-based compensation awards partially offset by a 4.8% rate decrease 
related to the reversal of an uncertain tax position due to the expiration of 
the statute of limitations. The inclusion of non-controlling interests in 
consolidated entities increased our effective tax rate by 3.4% for the three 
months ended March 31, 2020 (three months ended March 31, 2019: decreased 
1.3%). The remainder of the rate movement for the quarter was primarily due to 
changes in the mix of pre-tax income. Schedule of Non-GAAP Information We 
utilize the following non-GAAP performance measures: net revenue (and by 
calculation, net revenue yield on AUM), adjusted operating income, adjusted 
operating margin, adjusted net income attributable to Invesco Ltd. and adjusted 
diluted earnings per common share (EPS). The company believes the adjusted 
measures provide valuable insight into the company’s ongoing operational 
performance and assist in comparisons to its competitors. These measures also 
assist the company’s management with the establishment of operational budgets 
and forecasts and assist the Board of Directors and management of the company 
in determining incentive compensation decisions. The most directly comparable 
U.S. GAAP measures are operating revenues (and by calculation, gross revenue 
yield on AUM), operating income, operating margin, net income attributable to 
Invesco Ltd. and diluted EPS. Each of these measures is discussed more fully 
below. The following are reconciliations of operating revenues, operating 
income (and by calculation, operating margin), and net income attributable to 
Invesco Ltd. (and by calculation, diluted EPS) on a U.S. GAAP basis to a 
non-GAAP basis of net revenues, adjusted operating income (and by calculation, 
adjusted operating margin) and adjusted net income attributable to Invesco Ltd. 
(and by calculation, adjusted diluted EPS). These non-GAAP measures should not 
be considered as substitutes for any U.S. GAAP measures and may not be 
comparable to other similarly titled measures of other companies. Additional 
reconciling items may be added in the future to these non-GAAP measures if 
deemed appropriate. The tax effects related to the reconciling items have been 
calculated based on the tax rate attributable to the jurisdiction to which the 
transaction relates. Notes to the reconciliations follow the tables. 
Reconciliation of Operating revenues to Net revenues:

Adjusted diluted EPS is equal to adjusted net income attributable to Invesco 
Ltd. divided by the weighted average number of common and restricted common 
shares outstanding. There is no difference between the calculated EPS amounts 
presented above and the calculated EPS amounts under the two class method.

Invesco Great Wall Management reflects 100% of Invesco Great Wall in its net 
revenues and adjusted operating expenses. The company’s non-GAAP operating 
results reflect the economics of these holdings on a basis consistent with the 
underlying AUM and flows. Adjusted net income is reduced by the amount of 
earnings attributable to non-controlling interests.

(2)

Revenue Adjustments In the fourth quarter of 2019, the company changed its 
presentation of the reconciliation between operating revenues and net revenues. 
All periods have been conformed to the new presentation. Neither operating 
revenues nor net revenues totals have changed for any historic periods.


Management believes that adjustments to investment management fees, service and 
distribution fees and other revenues from operating revenues appropriately 
reflect these revenues as being passed through to external parties who perform 
functions on behalf of, and distribute, the company’s managed funds. Further, 
these adjustments vary extensively by geography due to the differences in 
distribution channels. The net revenue presentation assists in identifying the 
revenue contribution generated by the business, removing distortions caused by 
the differing distribution channel fees and allowing for a fair comparison with 
U.S. peer investment managers and within Invesco’s own investment units. 
Additionally, management evaluates net revenue yield on AUM, which is equal to 
net revenues divided by average AUM during the reporting period. This financial 
measure is an indicator of the basis point net revenues we receive for each 
dollar of AUM we manage and is useful when evaluating the company’s performance 
relative to industry competitors and within the company for capital allocation 
purposes.

Investment management fees are adjusted by renewal commissions and certain 
administrative fees. Service and distribution fees are primarily adjusted by 
distribution fees passed through to broker dealers for certain share classes 
and pass through fund-related costs. Other is primarily adjusted by transaction 
fees passed through to third parties. While the terms used for these types of 
adjustments vary by geography, they are all costs that are closely linked to 
the value of AUM and the revenue earned by Invesco from AUM. Since the company 
has been deemed to be the principal in the third-party arrangements, the 
company must reflect these revenues and expenses gross under U.S. GAAP on the 
consolidated statements of income.

The reconciling items add back the management and performance fees earned by 
Invesco from the consolidated products and remove the revenues and expenses 
recorded by the consolidated products that have been included in the U.S. GAAP 
Condensed Consolidated Statements of Income. Management believes that the 
consolidation of investment products may impact a reader’s analysis of our 
underlying results of operations and could result in investor confusion or the 
production of information about the company by analysts or external credit 
rating agencies that is not reflective of the underlying results of operations 
and financial condition of the company. Accordingly, management believes that 
it is appropriate to adjust operating revenues, operating income and net income 
for the impact of CIP in calculating the respective net revenues, adjusted 
operating income and adjusted net income.

Transaction, integration, and restructuring related adjustments Management 
believes it is useful to investors and other users of our Condensed 
Consolidated Financial Statements to adjust for the transaction, integration, 
and restructuring charges in arriving at adjusted operating income, adjusted 
operating margin and adjusted diluted EPS, as this will aid comparability of 
our results period to period, and aid comparability with peer companies that 
may not have similar acquisition and disposition related income or charges.

Market movement on deferred compensation plan liabilities Certain deferred 
compensation plan awards involve a return to the employee linked to the 
appreciation (depreciation) of specified investments, typically the funds 
managed by the employee. Invesco hedges economically the exposure to market 
movements. Since these plans are hedged economically, management believes it is 
useful to reflect the offset ultimately achieved from hedging the investment 
market exposure in the calculation of adjusted operating income (and by 
calculation, adjusted operating margin) and adjusted net income attributable to 
Invesco Ltd. (and by calculation, adjusted diluted EPS), to produce results 
that will be more comparable period to period.

Included within other gains and losses, net is the mark-to-market of foreign 
exchange put option contracts intended to provide protection against the impact 
of a significant decline in the Pound Sterling/U.S. Dollar foreign exchange 
rates. The Pound Sterling contracts provide coverage through June 30, 2020. The 
adjustment from U.S. GAAP to non-GAAP earnings removes the impact of market 
volatility; therefore, the company’s non-GAAP results include only the 
amortization of the cost of the contracts during the contract period.

The income tax provision for the three months ended March 31, 2020 includes a 
tax benefit of $9.0 million resulting from the reversal of an uncertain tax 
position due to the expiration of statute of limitations. This benefit has been 
removed from the company’s non–GAAP results to be consistent with the exclusion 
of the original provision in a prior period.

Investments As of March 31, 2020, we had $744.5 million in total investments 
(December 31, 2019: $829.5 million). Included in investments are $175.7 million 
of seed money investments in affiliated funds used to seed funds as we launch 
new products, and $155.8 million of investments related to assets held for 
deferred compensation plans, which are also held primarily in affiliated funds. 
Seed investments decreased by a net $59.8 million during the three months ended 
March 31, 2020. The decreases in the period were redemptions of $102.2 million 
and $46.5 million driven by market valuation changes and foreign exchange 
movements. The decrease in the period was partially offset by purchases of 5.5 
million, a non-cash increase of $83.6 million due to the deconsolidation of 
certain CIP in the period (restoring the company’s formerly eliminated 
investment balances). Investments related to deferred compensation awards 
decreased by a net $36.6 million during the period due to the $37.4 million 
driven by market valuation changes and foreign exchange movements and 
dispositions of $0.3 million. These decreases were partially offset by net 
purchases of $1.1 million. Included in investments are $373.0 million in equity 
method investments in Invesco Great Wall and in certain of the company’s 
private equity partnerships, real estate partnerships and other co-investments 
(December 31, 2019: $350.8 million). The increase of $22.2 million in equity 
method investments was driven by an increase from partnership contributions of 
$14.2 million and $16.8 million in current period earnings. This increase was 
partially offset by a decrease of $5.5 million due to distributions from 
partnership investments and $3.4 million in foreign exchange rates. Also 
included in investments are foreign time deposits of $25.8 million, a decrease 
of $6.2 million from the December 31, 2019 balance of $32.0 million. Assets 
held for policyholders and policyholder payables One of our subsidiaries, 
Invesco Pensions Limited, is an insurance company that was established to 
facilitate retirement savings plans in the UK. The entity holds assets that are 
managed for its clients on its balance sheet with an equal and offsetting 
liability. The decrease in the balance of these accounts from $10,835.6 million 
at December 31, 2019 to $9,137.3 million at March 31, 2020 was the result of 
decreases of net business outflows of $1,040.1 million and $658.1 million in 
foreign exchange rate movements. Intangible Assets, net Intangible assets 
decreased from $7,358.3 million at December 31, 2019, to $7,325.1 million at 
March 31, 2020. This decrease includes amortization of $15.9 million, foreign 
exchange movements of $11.8 million, and digital wealth acquisition adjustments 
of $5.5 million. See Note 5,-- "Intangible Assets" for an analysis of the 
change in intangible balances between periods. Given the decline in assets 
under management in the first quarter of 2020, management determined that an 
interim impairment test was necessary on certain indefinite-lived management 
contract assets. The analyses resulted in no impairment; however, to the extent 
that market conditions or business performance worsens, subsequent impairment 
tests could result in an impairment of these assets. See Note 5. "Intangible 
Assets" for additional information regarding the impairment analyses performed 
in the first quarter. Goodwill Goodwill increased from $8,509.4 million at 
December 31, 2019, to $8,544.1 million at March 31, 2020. The increase includes 
$287.0 million primarily related to the acquisition adjustment related to the 
SteelPath-branded MLP funds, $1.1 million related to the preliminary purchase 
price allocation to intangible assets from the OppenheimerFunds acquisition, 
partially offset by foreign exchange movements of $253.3 million. See Note 2. 
"Business Combinations" for additional information regarding Intangible Assets, 
net and Goodwill. The company’s annual goodwill impairment review is performed 
as of October 1 of each year; however, given the decline in assets under 
management in the first quarter of 2020, management determined that an interim 
impairment test was necessary. The analysis resulted in no impairment; however, 
to the extent that market conditions or business performance worsens, 
subsequent impairment tests could result in an impairment of goodwill. See Note 
6 -- "Goodwill" for additional information regarding the Goodwill impairment 
analysis performed in the first quarter. Other assets

Other assets decreased from $2,042.7 million at December 31, 2019 to $1,893.3 
million at March 31, 2020. The decrease includes the decline in account 
receivable of $154.6 million.

Long-term debt

Long-term debt increased from $2,080.3 million at December 31, 2019, to 
$2,588.8 million at March 31, 2020, an increase of $508.5 million. As of March 
31, 2020, there was $508.0 million balance outstanding on the credit facility 
(at December 31, 2019: none). The increased balance on the credit facility 
reflects the seasonal cash requirements of the annual compensation payments.

Other liabilities

Other liabilities decreased from $4,464.2 million at December 31, 2019 to 
$3,915.4 million at March 31, 2020. The decreases includes $190.6 million of 
collateral applied against the forward payable. See Note 8. "Share Capital" for 
additional information regarding the forward contracts. Also included in the 
decreases was $549.6 million in accrued compensation and benefits primarily 
driven by the seasonal cash requirements of the annual compensation payout. 
These decreases were offset by the establishment of a $380.5 million liability 
related to the SteelPath-branded MLP funds. See Note 15. "Commitments and 
Contingencies" for additional details.

Liquidity and Capital Resources During this period of market turbulence and 
uncertainty, we believe it is imperative to maintain financial flexibility. We 
therefore have taken actions to improve our capital strength which includes 
reducing our common dividend to $0.155 per common share beginning with the 
dividend that will be paid in the second quarter. We also plan to redeem up to 
$200 million of seed capital investments where appropriate from certain of our 
investment products this year. As the company’s focus is on increasing 
financial strength and building liquidity, the company does not foresee 
additional share repurchases in 2020 assuming a continuation of the current 
unfavorable market environment. We continue to manage our expense base to align 
with the current lower revenue environment through reduced variable 
compensation and discretionary spend. These actions, and others focused on 
preservation of capital, seek to help us build liquidity through the present 
environment. Combined, these steps will enable us to further strengthen our 
balance sheet while preserving our ability to invest in future growth for the 
benefit of our business and our shareholders. Notwithstanding these actions, 
our capital management priorities will continue to emphasize maintaining a 
sustainable dividend and returning capital to shareholders. Our capital 
structure, together with available cash balances, cash flows generated from 
operations, existing capacity under our credit facility and further capital 
market activities, if necessary, should provide us with sufficient resources to 
meet present and future cash needs, including operating, debt and other 
obligations as they come due and anticipated future capital requirements. Our 
capital management process is executed in a manner consistent with our desire 
to maintain strong, investment grade credit ratings. As of the filing of the 
Report, Invesco held credit ratings of BBB+/Stable, A2/Stable and A-/Stable 
from Standard & Poor’s Ratings Service (“S&P”), Moody’s Investor Services 
(“Moody’s”) and Fitch Ratings (“Fitch”), respectively. Our ability to continue 
to access the capital markets in a timely manner depends on several factors, 
including our credit ratings, the condition of the global economy, investors’ 
willingness to purchase our securities, interest rates, credit spreads and the 
valuation levels of equity markets. If we are unable to access capital markets 
in a timely manner, our business could be adversely impacted. During the first 
quarter, 2.3 million common shares were withheld in the amount of $31.5 million 
related to tax withholding requirements on employee share vestings. In regard 
to its previously completed forward contracts, the company prepaid $190.6 
million against the forward payable, resulting in a remaining forward contract 
liability of $307.8 million as of March 31, 2020. The net collateral paid 
balance at March 31, 2020 was $87.9 million. Refer to Note 8. "Share Capital" 
for additional details.

As of March 31, 2020, the outstanding balance on the $1.5 billion capacity 
credit facility was $508 million. The increased balance on the credit facility 
reflects the seasonal cash requirements of the annual compensation payments. 
Other items Certain of our subsidiaries are required to maintain minimum levels 
of capital. Such requirements may change from time-to-time as additional 
guidance is released based on a variety of factors, including balance sheet 
composition, assessment of risk exposures and governance, and review from 
regulators. These and other similar provisions of applicable laws and 
regulations may have the effect of limiting withdrawals of capital, repayment 
of intercompany loans and payment of dividends by such entities. All of our 
regulated EU subsidiaries (the European sub-group) are subject to consolidated 
capital requirements under EU Directives, including those arising from the EU’s 
Capital Requirements Directive and the UK’s Internal Capital Adequacy 
Assessment Process (ICAAP), and capital is maintained within this sub-group to 
satisfy these regulations. We meet these requirements in part by holding cash 
and cash equivalents. This retained cash can be used for general business 
purposes in the European sub-group in the countries where it is located. Due to 
the capital restrictions, the ability to transfer cash between certain 
jurisdictions may be limited. In addition, transfers of cash between 
international jurisdictions may have adverse tax consequences. We are in 
compliance with all regulatory minimum net capital requirements. As of March 
31, 2020, the company’s minimum regulatory capital requirement was $716.5 
million (December 31, 2019: $753.6 million). The total amount of non-U.S. cash 
and cash equivalents was $733.1 million at March 31, 2020 (December 31, 2019: 
$847.0 million). The consolidation of $8.2 billion and $6.2 billion of assets 
and long-term debt of CIP as of March 31, 2020, respectively, did not impact 
the company’s liquidity and capital resources. The company’s risk with respect 
to each investment in CIP is limited to its equity ownership and any 
uncollected management and performance fees. The majority of CIP balances 
related to consolidated CLOs. 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 and performance fees generated from, these products, which are 
eliminated upon consolidation. If the company were to liquidate, the collateral 
assets would not be available to the general creditors of the company, and as a 
result, the company does not consider them to be company assets. Likewise, if 
the CLOs were to liquidate, their investors would have no recourse to the 
general credit of the company. The company therefore does not consider this 
debt to be an obligation of the company. See Part I, Item 1, Financial 
Statements - Note 16, “"Consolidated Investment Products",” for additional 
details. Cash Flows Discussion The ability to consistently generate cash flow 
from operations in excess of dividend payments, common share repurchases, 
capital expenditures, and ongoing operating expenses is one of our company’s 
fundamental financial strengths. Operations continue to be financed from 
current earnings and borrowings. Our principal uses of cash, other than for 
operating expenses, include dividend payments, capital expenditures, 
acquisitions, purchase of our common shares in the open market, and investments 
in certain new investment products.


Cash flow information

Three months ended March 31, 2020

Operating Activities Operating cash flows include the receipt of investment 
management and other fees generated from AUM, offset by operating expenses and 
changes in operating assets and liabilities. Although some receipts and 
payments are seasonal, particularly bonus payments which are paid out during 
the first quarter, in general, after allowing for the change in cash held by 
CIP, and investment activities, our operating cash flows move in the same 
direction as our operating income. During the three months ended March 31, 
2020, cash used in operating activities was $77.0 million compared to $120.4 
million used in during the three months ended March 31, 2019. As shown in the 
tables above, the impact of CIP to cash used in operating activities was $1.3 
million of cash provided by during the three months ended March 31, 2020 
compared to $61.3 million of cash used during the three months ended March 31, 
2019. Excluding the impact of CIP, cash used in operations was $78.3 million 
during the three months ended March 31, 2020 compared to $59.1 million of cash 
used in operating activities during the three months ended March 31, 2019. 
There were no significant non-cash items that impacted the comparison between 
the periods of operating income to net cash provided by operations. Investing 
Activities Net cash used in investing activities totaled $452.0 million for the 
three months ended March 31, 2020 (three months ended March 31, 2019: net cash 
used of $333.4 million). As shown in the tables above, the impact of CIP on 
investing activities, including investment purchases, sales and returns of 
capital, was $382.6 million used (three months ended March 31, 2019: $349.5 
million used). Excluding the impact of CIP cash flows, net cash used in 
investing activities was $69.4 million (three months ended March 31, 2019: net 
cash provided of $16.1 million). Cash outflows for the three months ended March 
31, 2020, excluding the impact of CIP, included $50.1 million of net collateral 
paid on the forward contracts (three months ended March 31, 2019: $42.4 million 
collateral received) and purchases of investments of $42.8 million (three 
months ended March 31, 2019: $76.6 million). These outflows were partially 
offset by proceeds of $42.7 million from sales and returns of capital of 
investments (three months ended March 31, 2019: $71.4 million).

During the three months ended March 31, 2020, the company had capital 
expenditures of $19.2 million (three months ended March 31, 2019: $21.1 
million). Our capital expenditures related principally in each period to 
technology initiatives, including enhancements to platforms from which we 
maintain our portfolio management systems and fund accounting systems, 
improvements in computer hardware and software desktop products for employees, 
new telecommunications products to enhance our internal information flow, and 
back-up disaster recovery systems. Also, in each period, a portion of these 
costs related to leasehold improvements made to the various buildings and 
workspaces used in our offices. These projects have been funded with proceeds 
from our operating cash flows. Financing Activities Net cash provided by 
financing activities totaled $96.3 million for the three months ended March 31, 
2020 (three months ended March 31, 2019: net cash used of $87.0 million). As 
shown in the tables above, the impact of CIP on financing activities provided 
cash of $23.4 million (three months ended March 31, 2019: cash provided of $9.4 
million). Excluding the impact of CIP, financing activities provided net cash 
of $72.9 million in the three months ended March 31, 2020 (three months ended 
March 31, 2019: net cash used of $96.4 million). Financing cash inflows during 
the three months ended March 31, 2020 included a borrowing of $508.0 million on 
the credit facility primarily driven by the seasonal cash requirements of the 
annual compensation payout (three months ended March 31, 2019: borrowing of 
$106.3 million). These inflows were offset by a $190.6 million pre-payment on 
the forward contracts, $140.9 million of common dividend payments for the 
dividends declared in January (three months ended March 31, 2019: common 
dividends paid of $120.1 million), $59.2 million of preferred dividend payments 
for dividends declared in January (three months ended March 31, 2019: none), 
the payment of $31.5 million to meet employees’ withholding tax obligations on 
common share vestings (three months ended March 31, 2019: $28.6 million) and a 
payment of $12.9 million of contingent consideration (three months ended March 
31, 2019: $4.0 million). Financing cash outflows during the three months ended 
March 31, 2019 also included the purchase of common shares through market 
transactions totaling $50.0 million. Dividends When declared, Invesco pays 
dividends on a quarterly basis in arrears. Holders of our preferred shares are 
eligible to receive dividends at an annual rate of 5.9% of the liquidation 
preference of $1,000 per share, or $59 per share per annum. The preferred stock 
dividend is payable quarterly on a non-cumulative basis when, if and as 
declared by our board of directors. However, if we have not declared and paid 
or set aside for payment full quarterly dividends on the preferred stock for a 
particular dividend period, we may not declare or pay dividends on, or redeem, 
purchase or acquire, our common stock or other junior securities in the next 
succeeding dividend period. During this period of market turbulence and 
uncertainty, we believe it is imperative to maintain financial flexibility. We 
therefore reduced our common dividend to $0.155 per common share beginning with 
the dividend that will be paid in the second quarter. This action, and others 
focused on preservation of capital, seek to help us build liquidity through the 
present uncertain environment. Longer term, the reduction in common dividends 
will enable us to further strengthen our balance sheet for the benefit of our 
business and our shareholders.

On April 23, 2020, the company announced a first quarter 2020 cash dividend of 
$0.155 per share to holders of common shares, payable on June 3, 2020, to 
shareholders of record at the close of business on May 11, 2020 with an 
ex-dividend date of May 8, 2020. On April 23, 2020 the company announced a 
preferred dividend of $14.75 per share to the holders of preferred shares, 
representing the period from March 1, 2020 through May 31, 2020. The preferred 
dividend is payable on June 3, 2020 to shareholders of record at close of 
business on May 15, 2020.

The declaration, payment and amount of any future dividends will be declared 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. Common Share Repurchase Plan The 
company did not purchase shares in the open market during the three months 
ended March 31, 2020, (three months ended March 31, 2019: the company 
repurchased 2.6 million shares in the market at a cost on $50 million).The 
company did withhold an aggregate of 2.3 million common shares on vesting 
events during the three months ended March 31, 2020 to meet employees’ 
withholding tax obligations (three months ended March 31, 2019: 1.4 million 
shares). The fair value of these common shares withheld at the respective 
withholding dates was $31.5 million during the three months ended March 31, 
2020 (three months ended March 31, 2019: $28.6 million). At March 31, 2020, 
approximately $732.2 million remains available under the share repurchase 
authorizations approved by the Board on July 22, 2016. As the company’s focus 
is on increasing financial strength and building liquidity, the company does 
not foresee additional share repurchases in 2020 assuming a continuation of the 
current unfavorable market environment. Long-term debt Our long-term debt at 
March 31, 2020 was $2,588.8 million (December 31, 2019: $2,080.3 million).

For the three months ended March 31, 2020, the company’s weighted average cost 
of debt was 3.94% (three months ended March 31, 2019: 3.93%). Financial 
covenants under the credit agreement include: (i) the quarterly maintenance of 
a debt/EBITDA leverage ratio, as defined in the credit agreement, of not 
greater than 3.25:1.00, (ii) a coverage ratio (EBITDA, as defined in the credit 
agreement/interest payable for the four consecutive fiscal quarters ended 
before the date of determination) of not less than 4.00:1.00. As of March 31, 
2020, we were in compliance with our financial covenants. At March 31, 2020, 
our leverage ratio was 1.68:1.00 (December 31, 2019: 1.31:1.00), and our 
interest coverage ratio was 11.13:1.00 (December 31, 2019: 11.76:1.00).


EBITDA and Adjusted debt are non-GAAP financial measures; however, management 
does not use these measures for anything other than these debt covenant 
calculations. The calculation of EBITDA above (a reconciliation from net income 
attributable to Invesco Ltd.) is defined by our credit agreement, and therefore 
net income attributable to Invesco Ltd. is the most appropriate GAAP measure 
from which to reconcile to EBITDA. The calculation of Adjusted debt is defined 
in our credit facility and equals total debt of $2,588.8 million plus $10.3 
million in letters of credit.

Credit and Liquidity Risk Capital management involves the management of the 
company’s liquidity and cash flows. The company manages its capital by 
reviewing annual and projected cash flow forecasts and by monitoring credit, 
liquidity and market risks, such as interest rate and foreign currency risks 
(as discussed in Part I, Item 3, Quantitative and Qualitative Disclosures About 
Market Risk), through measurement and analysis. The company is primarily 
exposed to credit risk through its cash and cash equivalent deposits, which are 
held by external firms. The company invests its cash balances in its own 
institutional money market products, as well as with external high 
credit-quality financial institutions. These arrangements create exposure to 
concentrations of credit risk.

Credit Risk Credit risk is the risk that one party to a financial instrument 
will cause a financial loss for the other party by failing to meet an 
obligation. All cash and cash equivalent balances are subject to credit risk, 
as they represent deposits made by the company with external banks and other 
institutions. As of March 31, 2020, our maximum exposure to credit risk related 
to our cash and cash equivalent balances is $940.5 million. See Part I, Item 1, 
Financial Statements - Note 17, “"Related Parties",” for information regarding 
cash and cash equivalents invested in affiliated money market funds. The 
company does not utilize credit derivatives or similar instruments to mitigate 
the maximum exposure to credit risk. The company does not expect any 
counterparties to its financial instruments to fail to meet their obligations.

Liquidity Risk Liquidity risk is the risk that the company will encounter 
difficulty in meeting obligations associated with its financial liabilities as 
the same become due. The company is exposed to liquidity risk through its 
$2,588.8 million in total debt. The company actively manages liquidity risk by 
preparing cash flow forecasts for future periods, reviewing them regularly with 
senior management, maintaining a committed credit facility, scheduling 
significant gaps between major debt maturities, and engaging external financing 
sources in regular dialogue.

Effects of Inflation Inflation can impact our organization primarily in two 
ways. First, inflationary pressures can result in increases in our cost 
structure, especially to the extent that large expense components such as 
compensation are impacted. To the degree that these expense increases are not 
recoverable or cannot be counterbalanced through pricing increases due to the 
competitive environment, our profitability could be negatively impacted. 
Secondly, the value of the assets that we manage may be negatively impacted 
when inflationary expectations result in a rising interest rate environment. 
Declines in the values of these AUM could lead to reduced revenues as 
management fees are generally calculated based upon the size of AUM.

Contractual Obligations We have future obligations under various contracts 
relating to debt and interest payments, financing and operating leases, 
long-term defined benefit pension, and acquisition contracts. During the three 
months ended March 31, 2020, there were no material changes to the company’s 
contractual obligations.

Critical Accounting Policies and Estimates There have been no significant 
changes to the critical accounting policies disclosed in our most recent Form 
10-K for the year ended December 31, 2019. Critical accounting policies are 
those that require management’s most difficult, subjective or complex judgments 
and would therefore be deemed the most critical to an understanding of our 
results of operations and financial condition.


Quantitative and Qualitative Disclosures About Market Risk In the normal course 
of its business, the company is primarily exposed to market risk in the form of 
AUM market price risk, securities market risk, interest rate risk, and foreign 
exchange rate risk. There have not been any material changes to the company’s 
exposures to market risks during the period ended March 31, 2020 that would 
require an update to the disclosures provided in the most recent Form 10-K. AUM 
Market Price Risk The company’s investment management revenues are comprised of 
fees based on the value of AUM. Declines in the market prices of equity and 
fixed income securities, commodities and derivatives, or other similar 
financial instruments held in client portfolios could cause revenues to decline 
because of lower investment management fees by:

•

Causing the value of AUM to decrease.

•

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

•

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

•

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

•

Causing clients to reallocate assets away from products that earn higher 
revenues into products that earn lower revenues. Underperformance of client 
accounts relative to competing products could exacerbate these factors. 
Securities Market Risk The company has investments in managed investment 
products that invest in a variety of asset classes. Investments are generally 
made to establish a track record for a new fund or investment vehicle or to 
hedge economically exposure to certain deferred compensation plans. The 
company’s exposure to market risk from financial instruments measured at fair 
value arises from its investments. Interest Rate Risk Interest rate risk 
relates to the risk that the fair value of future cash flows of a financial 
instrument will fluctuate because of changes in market interest rates. The 
company is exposed to interest rate risk primarily through its external debt 
and cash and cash equivalent investments. See Part I, Item 1, Financial 
Statements - Note 7, "Long-Term Debt" for details of the company’s long-term 
debt arrangements. As of March 31, 2020, the interest rates on 80.4% of the 
company’s borrowings were fixed for a weighted average period of 7.7 years, and 
the company had a $508.0 million balance on its floating rate credit facility. 
Foreign Exchange Rate Risk The company has certain investments in foreign 
operations, whose net assets and results of operations are exposed to foreign 
currency translation risk when translated into U.S. Dollars upon consolidation 
into Invesco Ltd. The company has in place a put option contract to hedge its 
Pound-Sterling-based operating income through June 30, 2020. The contract is 
set at a strike level of $1.250 based on the average daily foreign exchange 
rates for the applicable time period. The company is exposed to foreign 
exchange revaluation into the Condensed Consolidated Statements of Income on 
monetary assets and liabilities that are held by subsidiaries in different 
functional currencies than the subsidiaries’ functional currencies. Net foreign 
exchange revaluation losses were $1.9 million in the three months ended March 
31, 2020 (three months ended March 31, 2019: $0.5 million gains), and are 
included in general and administrative expenses and other gains and losses, net 
on the Condensed Consolidated Statements of Income.