Invesco Bank of America Merrill Lynch Banking and Financial Services Conference

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1 Invesco Bank of America Merrill Lynch Banking and Financial Services Conference Colin D. Meadows Senior Managing Director, CAO Loren M. Starr Senior Managing Director, CFO November 11, 2009

2 Forward-looking statements This presentation, and comments made in the associated conference call today, may include forward-looking statements. Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as believes, expects, anticipates, intends, plans, estimates, projects, forecasts, and future or conditional verbs such as will, may, could, should, and would as well as any other statement that necessarily depends on future events, are intended to identify forwardlooking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission. You may obtain these reports from the SEC s website at We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate. 2

3 Our Business Today A global leader in investment management Leadership One of the world s leading independent global investment management firms. Strength We draw on the strength of many resources: $416.9 billion in assets under management Publicly traded on NYSE with $9.8 billion in market capitalization Client support in 20 countries serving clients in more than 100 countries 11 specialized investment centers More than 4,900 employees worldwide More than 500 investment professionals Focus We deliver on a single focus: Investment Management Experience Long history of managing assets for clients globally All data as of September 30,

4 Invesco Strategic Priorities Remain Consistent The markets are global and so is our company 1 Achieve strong investment performance Long-Term Goals Ensure clearly articulated investment disciplines aligned with client expectations underpinned by diligent oversight and rigorous quality control processes Create truly enduring investment solutions Foster a culture of investment excellence that attracts, retains and motivates top talent 2 Deliver our investment capabilities anywhere in the world to meet client needs 4 Build a high- performance organization Long-Term Goals Commit to continuous improvement and performance excellence throughout the organization Foster a true meritocracy where performance is rewarded Drive greater transparency, accountability and execution at all levels Our Aspiration: Take advantage of our world of opportunity to become the premier global investment management firm Long-Term Goals Delivering the combined power of our distinctive worldwide investment management capabilities globally Strengthen our position in prioritized developed and emerging markets Innovate to capitalize on new opportunities 3 Unlock the power of our global operating platform Long-Term Goals Act as one firm, not a collection of many Simplify our global operating model Prioritize for profitable growth Continue the diversification of our investment objectives, clients and channels 4

5 Invesco is Committed to Investment Excellence Disciplined repeatable investment process Each of the distinct investment teams has a clearly articulated investment strategy and philosophy, aligned with client expectations Tested strategies through experience of deep investment teams through multiple market cycles CIOs have clearly defined accountability to manage investment disciplines and develop talent Performance measurement and risk assessment Independent risk management controls and processes within our investment teams and across Invesco Reporting of investment performance and risk management to drive transparency across the organization Institutionalized oversight to ensure success: Invesco Ltd. Board Fund Boards Executive Management Investment Team CIOs Investment centric culture Competitive rewards system aligns pay with long term investment performance and promote talent Mechanisms for more than 500 investment professionals to share ideas and develop new concepts in 20 countries Access to the latest investment technology proprietary tools and platforms Client support and administrative platforms provide scale, best practices and minimize noninvestment distractions 5

6 Performance Benefits of Strong ERM Practices Invesco s Enterprise Risk Management (ERM) capabilities are serving the firm well through the challenging environment Registered Money Market Funds: Avoided credit blow-ups No holdings of defaulted securities Maintained $1.00 NAVs throughout the crisis Redemption requests processed without interruption No capital injections or capital support No exposure to AIG, Lehman, WaMu No securities purchased out of MMFs by IVZ No securities downgraded below Tier 1 while held in MMFs throughout the crisis No involuntary fund closures No exposure to high profile fraud events (Madoff, Stanford) No securities lending losses for clients Did not issue or sponsor auction rate preferred securities 6

7 Investment Performance Overview Aggregate Performance Analysis Asset Weighted Strong overall peer group performance (asset-weighted) 66%, 71%, and 75% of assets are in the top half of peer groups for the 1, 3, and 5-year time periods as of September 30, % Assets in Top Half of Peer Group* 1-Year 3-Year 5-Year 34% 29% 25% 66% 71% 75% % Assets top half of peer group % Assets bottom half of peer group * Includes AUM of $282.6 billion (68% of total IVZ) for 1 year, $279.2 billion (67% of total IVZ) for 3 year, and billion (65% of total IVZ) for 5 year as of 9/30/09. Peer group rankings are as of prior quarter-end for institutional products and prior month month-end for Australian retail. Excludes Invesco PowerShares, WL Ross, Invesco Private Capital, non-discretionary direct real estate, bank loans and CDOs. Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have 7been 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.

Invesco s solutions are delivered by specialized investment teams around the globe Invesco Aim Investment focus: U.S., international and global equities AUM: $47.

8 Invesco s solutions are delivered by specialized investment teams around the globe Invesco Aim Investment focus: U.S., international and global equities AUM: $47.9 billion Invesco Asia- Pacific Investment focus: Asian Ex-Japanese, Greater Chinese, Japanese and Australian equities AUM: $19.2 billion Atlantic Trust Investment focus: High-net-worth multimanagement AUM: $14.9 billion Invesco Global Strategies Investment focus: Global Equity (Global, non-u.s., and Emerging Market equities) Quantitative Equity (quantitative active, enhanced and long/short strategies) Global Asset Allocation (tactical asset allocation, alternative beta, and multi-asset class solutions) AUM: $33.1 billion Invesco Perpetual Investment focus: U.K. and international equity and fixed income AUM: $73.3 billion Invesco PowerShares Investment focus: ETFs AUM: $14.1 billion Invesco Private Capital Investment focus: Fund of funds and venture capital private equities AUM: $1.6 billion Invesco Real Estate Investment focus: Global direct real estate investing and public real estate investing AUM: $24.1 billion Invesco Trimark Investment focus: Canadian equities, fixed income and global value AUM: $20.7 billion WL Ross Investment focus: Distressed and restructuring private equities AUM: $7.2 billion Invesco Worldwide Fixed Income Investment focus: Money market, stable value, global fixed income and alternatives/ financial structures AUM: $160.8 billion As of September 30, The listed investment centers do not all provide products or services that are available in the U.S., nor are their products and services available on all platforms. Please consult Invesco for more information. 8

9 The Value We Deliver to Our Clients Delivering investment strategies that meet diverse needs Diversified Investment Strategies Fixed Income Asset Allocation Equities Alternatives Customized Solutions Duration Quality Sector Global/ regional/ single country Developed/ emerging Taxability Traditional balanced Target maturity Target risk Market cap Investment style Global/ regional/ single country Developed/ emerging Sector Quantitative Directional long/short (130/30) Absolute Return Market neutral GTAA Multi-Strategy Private Equity Direct (Distressed) Fund of Funds Buyout, VC, Emerging Alternative Beta Risk premia capture Real Estate Public real Estate securities Private direct US, Asian, European, Global Financial Structures CLO/CDO/CSO Opportunistic Portable Alpha Liability- Driven Investing Strategic Partnerships Delivered the Way Our Clients Want Institutional Separate Accounts Collective Trusts Mutual Funds (On/Offshore) Exchange Traded Funds (ETFs) Private Placements Sub- Advised SMA/UMA Variable Insurance Funds 9

10 Unlocking The Power of Our Global Operating Platform Global Investment Operations and Information Technology Platform Rationalized platforms and reduced the number of systems and streamlined processes around the globe (e.g. Single Security Master and Accounting Platforms). Global Client Communication Platform Developed a common platform to provide consistent messaging across the globe leveraging management commentary, work flow and data integration to efficiently and effectively produce quarterly reports, meeting presentations, fund fact sheets and other marketing materials. Global Equity Trading Platform Implemented a single platform that allows us to source liquidity in the various regions in which we invest real-time with local traders linked by common technologies, policies, and procedures. Functionalized Support Roles Established a single global organization to allow the sharing of best practices, creation of standards and policies, and centralization of common processes. Includes IT/Operations, Finance, Legal, HR, Compliance, among others. Global Procurement and Contract Management Improved pricing through leveraging larger global relationships. 10

11 Building a High Performance Organization People development & communication Global performance reviews for all employees. Formal talent management process for senior leaders (3-4 layers deep) that enables the identification, development, and retention of key talent. Constant stream of communications with employees including regular employee town halls with senior leaders across locations. Consistent compensation philosophy throughout the organization. Clearly articulated plans for investment teams based on investment performance. Plans include retention component of deferred compensation in IVZ stock and investments in funds. Firm operating performance largely dictates discretionary compensation for non-investment personnel. Defined capital planning strategy Capital allocation is guided by four priorities: reinvestment in the business, acquisitions that make strategic and financial sense, steadily increasing dividends, and share repurchase. Disciplined planning process Achieves balance between reinvestment in the business and operating efficiency with clear linkage between strategic planning and the operating budget, including disciplined approach to new product launches, technology investment, and marketing initiatives. 11

12 Improving Financial Trends Continuation of positive long-term flows since 4Q08 Equities increased from 33.2% of AUM in 1Q09 to 39.2% of AUM in 3Q09 driving up the net revenue yield from 46.7bps to 52.6bps over the same period. Expense management combined with a rebound in global financial markets resulted in a sharp improvement in net operating margin since 1Q09. $40 Quarterly Long-Term Flows ($ billions) Gross sales Gross redemptions Net long-term flows Net Revenue Yield (basis points)* bps 60 % 40 Net Operating Margin (%)* $20 $0 -$20 -$ Q08 4Q08 1Q09 2Q09 3Q Q08 4Q08 1Q09 2Q09 3Q Q08 4Q08 1Q09 2Q09 3Q09 12 *Net Revenue and Net Operating Margin are Non-GAAP financial measures. Please see the appendix for a reconciliation to the most directly comparable GAAP measures

13 Net Operating & Incremental Margin Trend Historically, Invesco has operated with an incremental margin of 60% - 65%. From 1Q09 3Q09, Invesco has allowed incremental margins to exceed past levels. 50% 45% Incremental Margin 40% Net Operating Margin 35% 30% 36.0% 34.7% 25% 31.4% 31.6% 20% 24.4% 15% 60% 63% 59% Annual/YTD 10% 5% 0% QYTD-08 3QYTD-09 Quarterly 40% 35% 30% 25% 20% 25.1% 29.9% 15% 19.0% 16.5% 10% 33% 84% 64% 5% 0% 4Q08 1Q09 2Q09 3Q09 ** Incremental margin is equal to the change from the prior period Net Operating Income divided by the change from the prior period Net Operating Revenue. Both Net Operating Income and Net Revenue are Non-GAAP financial measures. Please see the appendix for a reconciliation to the most directly comparable GAAP measures. 13

14 Introduction to Morgan Stanley retail business including Van Kampen Morgan Stanley retail business including Van Kampen* Includes associated investment teams, funds, mandates and assets under management. Diversified business with $119bn in AUM across equity, fixed income, alternatives, and UITs ~650 investment, distribution, and operations support professionals Complementary investment teams managing primarily retail assets (89% of AUM) across a largely U.S. footprint (89% of total AUM) Diversified client base with significant presence on key platforms Van Kampen was founded in 1968 and acquired by Morgan Stanley in AUM as of September 30, 2009 * Includes select MSIM retail and institutional assets

15 This combination is highly consistent with Invesco's focus on investment excellence Combined Business % Assets in Top Half of Peer Group* - All assets % Assets top half of peer group % Assets bottom half of peer group 1-Year 3-Year 5-Year 31% 28% 27% 69% 72% 73% Invesco Van Kampen / MS retail business*** 66% 71% 75% 79% 77% 63% 55% of combined business AUM will be in 4- or 5-star U.S. Mutual Funds (51% of current Invesco AUM, 59% of current Van Kampen / MS retail business*** AUM)** 15 * Includes AUM of US$282.6 billion (68% of total IVZ) for 1 year, US$279.2 billion (67% of total IVZ) for 3 year, and billion (65% of total IVZ) for 5 year as of 9/30/09. Van Kampen/Morgan Stanley AUM of US$74.6 billion for 1 year, US$74.1 billion for 3 year and US$71.6 billion for 5 year as of 9/30/09. Peer group rankings are as of prior quarter-end for institutional products and prior month month-end for Australian retail. Excludes Invesco PowerShares, W.L. Ross and Co., Invesco Private Capital, direct real estate products and CDOs/CLOs. Peer groups are supplied by the predominant third party ranking agency in the market of the fund. For select funds, the peer group assigned to the fund is combined with a second third party peer group to create a more representative peer group. Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. **Includes AUM of US$41.1 billion for Invesco Aim, US$59.2 billion for Van Kampen/Morgan Stanley. % AUM rated 4 or 5 stars only represents open-end US retail mutual funds. 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. ***Includes select MSIM retail and institutional assets

16 Together, we expect to be better positioned to meet our client and shareholder needs Van Kampen / MS retail business 1 Invesco Combined Total AUM: US$118.7B Total AUM: US$416.9B Total AUM: US$535.6B $30 US Value $5 US Value $35 $20 Municipals $4 Municipals $24 $15 US Balanced $17 US Balanced $31 $12 UITs $0 UITs $12 $9 Global/Int l Equity $47 Global/Int l Equity $55 $8 Bank Loans $11 Bank Loans $18 $7 US Growth $21 US Growth $29 $6 Japan Equity $2 Japan Equity $8 $3 US Core $18 US Core $21 $3 Quantitative $15 Quantitative $17 $1 HY & Convertibles $3 HY & Convertibles $5 $6 Other 2 $274 Other 2 $ Source: Invesco and Van Kampen Investments. All data as of September 30, Not all of the strategies listed are available in every country, nor are they available on all platforms. Please consult with your Invesco representative for more information on any of our strategies mentioned. 1 Includes select MSIM retail and institutional assets. 2 For Invesco Other includes stable value, money market, enhanced cash, core/core plus, intermediate fixed income, emerging market debt, global/regional fixed income, single country equity and fixed income mandates outside the U.S., global, regional, and single country balanced mandates outside the U.S., real estate, private equity, market neutral, GTAA, and other absolute return strategies. For Van Kampen / MS Retail business Other includes money market, LT investment grade fixed income, REITs, global asset allocation, and quantitative structured solutions. $0

17 Better positioned to meet client needs A comprehensive set of investment vehicles for our clients Investment Vehicles Invesco MS retail business including Van Kampen Combined Collective Trust Funds ETFs Private Equity Relative strength Mutual Funds Managed Accounts VI Funds Sub-Advised Separate Accounts SICAVs Closed-end funds UITs 17

18 Complementary and deeper relationships, strengthened overall distribution capabilities Share of combined U.S. AUM mix by distribution Channel 1 (%) Invesco Van Kampen / MS retail business 4 Broker-Dealers and Banks 27% 73% Independent Financial Dealers 55% Insurance (Variable Annuities) 44% 56% 45% Defined Contribution 2 82% 18% Defined Benefit 3 98% 2% Highly complementary relationships with top platforms between Invesco and Van Kampen Strengthened distribution capabilities, talent and value-added services to our partners 18 1 Includes Invesco s US retail and institutional business and excludes Invesco PowerShares. Includes VK/MS s Retail Products for the US (open- and closed-end funds) and Institutional Products for the US (SMA, VA subadvised, separate accounts) and excludes UITs. 2 Direct to plan sponsors, recordkeepers, advisors and consultants. Includes retail and institutional AUM 3 Traditional institutional defined benefit plans, endowments/ foundations, etc. 4 Includes select MSIM retail and institutional assets

19 Strong returns to shareholders Highlights Considerations and sources of cash Considerations to Morgan Stanley Cash $500 million Invesco equity $1 billion 44.1 million shares* (fixed) Approval and expected closing Customary regulatory and fund shareholder approvals Expected closing mid 2010 Van Kampen/Morgan Stanley acquired AUM run rate operating results summary ($ millions) Run Rate as of September 30, 2009 Operating Results Summary 9/30/09 AUM Net Revenue Yield $119bn 40bps Total Operating Revenues $615 Third-Party Distribution, Service and Advisory Expenses $140 Net Revenues $476 Operating Expenses $324 Operating Income $152 Net Operating Margin 32% Net Income $93 EBITDA Reconciliation Operating Income $152 + Depreciation and amortization $42 EBITDA run rate $194 Transaction consideration $1.5bn Price/2009 EBITDA (run rate) 7.7x Note: The 2009 run rate EBITDA reflects the impact of immediate synergies resulting from carving out the retail business from the rest of the Morgan Stanley asset management segment 19 *21 million non voting shares

20 Strong returns to shareholders Financial impact Immediately accretive ~11% accretive (~$0.13) in first 12 months after close Cash payback in approximately 7 years IRR of ~30% Other financial notes: Estimated outflows: ~$10bn Synergies: ~$70mn Integration charges: $100 - $125mn (largely in 2010) Non cash intangible amortization: $25-$35mn per year for 8 years Assumptions Accretion estimate: Excludes the impact of integration charges of $100 - $125mn: ($ $0.16) EPS impact Excludes incremental intangible amortization $25-$35mn): ($ $0.05) EPS impact Cash payback and IRR estimates: Include integration charges of $100- $125mn 20

21 Well Positioned for Growth Invesco is a strong global firm We are building real momentum in terms of: Investment performance Assets and flows Business performance Delivering the combined power of our distinctive worldwide investment management capabilities adds substantial value for our clients Van Kampen/MSIM acquisition will further strengthen our ability to serve clients and grow our business. We are committed to achieving investment excellence Led by a powerful strategy that delivers on our aspiration to become the premier global investment management organization 21

22 Questions & Answers

23 Appendix

24 Schedule of Non-GAAP Information For the three months ended Dec 31, 2008 March 31, 2009 June 30, 2009 September 30, 2009 Operating revenues, GAAP basis $634.4 $548.6 $625.1 $705.8 Third-party distribution, service and advisory expenses (162.6) (148.2) (166.3) (183.5) Proportional share of net revenues from joint venture arrangements Net revenues (1) $481.9 $410.0 $469.9 $534.8 Operating income, GAAP basis $84.5 $61.8 $110.4 $151.6 Proportional share of operating income from joint venture investments Net operating income (1) $91.5 $67.6 $118.1 $159.8 Operating margin* 13.3% 11.3% 17.7% 21.5% Net operating margin** (1) 19.0% 16.5% 25.1% 29.9% * Operating margin is equal to operating income divided by operating revenues. ** Net operating margin is equal to net operating income divided by net revenues. 24

25 Schedule of Non-GAAP Information ($ Millions) Operating revenues, GAAP basis $3,307.6 $3,878.9 $3,246.7 Third-party distribution, service and advisory costs (875.5) (1,051.1) (826.8) Proportional share of revenues, net of third-party distribution fees, from joint venture investments Net revenues (1) $2,489.4 $2,888.4 $2,428.0 Operating income, GAAP basis $747.8 $994.3 $759.2 Proportional share of operating income from joint venture investments Net operating income (1) $787.5 $1,039.8 $762.1 Operating margin* 22.6% 25.6% 23.4% Net operating margin** (1) 31.6% 36.0% 31.4% * Operating margin is equal to operating income divided by operating revenues. ** Net operating margin is equal to net operating income divided by net revenues. 25

Commitment to investment excellence

Bank of America/Merrill Lynch Banking and Financial Services Conference Commitment to investment excellence Martin L. Flanagan President and Chief Executive Officer Invesco Ltd. November 15, 2011 All information