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Welcome to the Invesco first quarter results conference call. (Operator Instructions). Today's conference is being recorded. If anyone has any objections you may disconnect at this time. Now I would like to turn the call over to the speaker for today, Mr. Martin L. Flanagan, President and CEO of Invesco. Mr. Flanagan, you may now begin.

Thank you very much. And thank you everybody for joining us for our first quarter briefing for 2008. I'm joined today by Loren Starr, our CFO; Phil Taylor, who heads the North American retail business for us; and Bruce Bond, President and CEO of Invesco PowerShares. And I will be speaking to a presentation. We all will be speaking to a presentation as available on our website, and we will do the best we can to keep you up to pace with us on the different slides. And if you take a look at the discussion topics for today, but you are recognizing we're still relatively new to the US market, I will start by giving a brief look at our focus over the past 2.5 years and give the business overviews. Phil and Bruce will highlight some of the successes and focuses and opportunities that they are seeing. Phil is going to focus on the US and of course Bruce will focus on ETF and Loren will go into more detail on financials and then open it up to Q&A for everybody. So if you take a look at the next slide and take a look at our priorities, and if you go back, late 2005 we began this journey internally that is sort of building success from the inside out. We developed this strategic framework as a way to focus us to make sure that we could build momentum back in the business, and really as a way to lay the foundation for success going forward. Over the past 2.5 years we have been very focused on executing against these our four strategic priorities and obviously first and foremost, very focused on achieving strong investment performance and strong deep investment teams. The other focus then is to deliver…

Thank you, Marty. I'm on page 17 and what I am going to do is share with you our strategy for Invesco AIM, a retail US business, and highlight some of the progress we're making here. So let me start with the strategic framework and review our strategic priorities on slide 17. And that really shows what we're focused on in North American retail, including Invesco AIM, and how these priorities are inline with the four Invesco strategic priorities that Marty described earlier that are shown on slide number 4. Number one, of course, is being known for having a strong investment reputation. And the elements to this are having a well-defined and repeatable investment processes underpinned by oversight within a strong investment culture. And this is a significant priority because this is the foundation upon which our business rests. We are in a maturing industry where investment reputation really is a key differentiator. Our second priority is to have a broad and compelling product lineup that's all-weather and beyond conventional mutual funds. This is an important priority, because while conventional mutual funds are and will remain a core business, significant growth opportunities exist in other products and investment areas. This is a real competitive advantage that we have in packaging Invesco AIM's and Invesco's management capabilities within our own propriety products or the solutions of our distributor clients. The fourth priority is having strong relationships with our clients. We strive for strong and coordinated relationships really from the home offices all the way through to the financial advisers in the field. I think this is important because no longer does every salesperson have unfettered access to every financial adviser to sell the entire product line. Now it is much more of an institutional type sales process, where a high…

Thank you, Phil. Just to get started here, I wanted to maybe give a little perspective on the ETF industry to kind of give you a sense of where we are and then we can talk about where it's going. Currently the assets worldwide are approaching $800 billion and I think that we saw last year $230 billion in new AUM within the worldwide industry, and 457 new ETF listings on exchanges. So the industry continues to expand rapidly. Within the US alone first quarter of '08, we still saw $17.25 billion in net new flows into the industry and I think of the about $800 billion globally, 70% of those assets are within the US Many of you may have seen there has been several estimates out there that expect the industry to achieve a $2 trillion by the end of 2011. And I think we still believe that is reasonable to expect that by the end of 2011 the industry will hit $2 trillion, and that there is a likelihood that we could pass $1 trillion in 2009. Some of the reasons that the industry continues to do well is that the adoption rate among financial advisers are accelerating at this point. You may have read many of the articles about this, but one example of this is Investment News, you may be familiar with, does an annual poll. And advisers or investment professionals have rated ETFs now as the second most important product to have in their arsenal to invest their client's money buying only mutual funds. Another reason for this adoption rate is that the major wire houses continue to move swiftly and purposely toward UMA platforms, or these unified platforms where you can own multiple types of products. And ETFs fare very well in those…

Thanks, Bruce, very much, and Phil, Bruce thanks both of you. As I said at the outset, one of our key strategies for Invesco is to deliver investment capabilities anywhere in the world to meet our client's needs. And I think both Phil, by the investment capabilities coming to the US and at the same time Bruce is showing you of taking the active capabilities we have through active ETFs in the market. So, we think it is early days for us. We think it's core strength of ours. We think it offers a lot of potential for our clients and for us as an organization. So hopefully everybody found that helpful. And let me turn it over to Loren now.

Thank you, Marty. Let me start with a quick review of our asset roll forward for the quarter. Marty had mentioned earlier we added $1.2 billion of AUM to total net inflows. By far and away the biggest impact on our assets under management was essentially outside of our control, declining markets in the quarter. That took away $33.5 billion or about 6.7% of our beginning AUM. So as a result we ended the quarter with $470.3 billion in assets under management, with average AUM decreasing 6.5% quarter over quarter. Moving on to the bottom of the page here, you will see the net revenue -- net revenue yield, excuse me, excluding performance fees, decreased 2.6 basis points to 56.5 basis points in the first quarter. This was a result of the change in our asset mix. Again, as the markets declined globally, we saw our higher fee equity assets decrease. And we also saw growth in our institutional money market product increase, and this product carries a lower fee. Let's move to the next page and review our operating results. You can see that investment management fees were down 9.7% versus the prior quarter. Again this decline is readily explained by our lower average AUM, but also the shift in our asset mix, as I just mentioned, due to the market impact on our equity AUM. At the end of 2007 our equity assets under management represented about 50% of total AUM and at the end of March this number had dropped to 46%. Performance fees in Q1 came in slightly below the Q4 level at $11 million. And similar to the prior quarter most of these fees were generated from our UK business. Service and distribution fees were down in the quarter, in line with lower AUM levels.…

Thanks, Loren very much. Invesco's results during the first quarter, we think were quite strong kind of considering the market environment we are in and again, as you compare to the prior year quarter, we think very, very much in line with that period of time. Based on our efforts to strengthen the business over the past two years, we do think we're well positioned to improve our competitive advantage in this current market environment. And we remain very committed to our multiyear strategy to continue to focus on creating capacity within the business so we can continue to move forward with key initiatives that will continue the future growth in the business. So, with that, we'll open it up to Q&A for Loren, Phil, Bruce or I.

(Operator Instructions). Our first question comes from Craig Siegenthaler.

Good morning and thanks for my question. On the compensation margin, I noticed that while revenues are down 11% sequentially, compensation was only down about 5%. Is there an opportunity to more closely align these two metrics in the future? And maybe on expenses as a whole, is there still a high level of expense overlaps between Invesco's subsidiaries where expense reductions can be made?

Again, Craig, hi this is Loren. I guess in terms of compensation, obviously compensation includes salaries and benefits, and obviously payroll taxes are generally higher in the first quarter. I think it was probably about $9 million higher versus the prior quarter. So again there some noise that rolls through the quarter. We don't target a particular ratio of compensation to revenue. We have a variety of investments planned for our investment teams, and they reflect the results, the performance of the various investment teams. So, I don't think -- that's not the way we're managing compensation, although there is a reality check to our ultimate cash bonus accrual and how much stock we generate or provide our employees at the end of year that reflects the overall investment or the overall performance of the firm.

And then on the expense overlaps?

Yes, we continue to work on the opportunity to move to global operating platforms, remove to the extent there is any redundancies that may still exist, where we have separate teams doing largely the same activities. Over the last two years we've done a lot of work there. We have removed; I'd say the easy low hanging fruit elements. There are still probably elements of opportunity within the organization, but they're not as large as -- certainly as large as the ones we have seen over the last two years. But we continue to look at every area is focused on creating efficiencies and looking at ways to do things better, and doing things together as one organization. So, I would expect to see continued successes in that area, but they may not be nearly as visible as the prior ones.

Got it. And then just a quick question on your $1.5 billion announced buyback. Is Invesco going to roughly use free cash flow as the lever to buy that stock here, which is I'm estimating maybe a little under $500 million per year, or is there -- and that's excluding the dividend, or is there an opportunity to lever up the balance sheet here, or reduce cash levels currently on the balance sheet?

Hey Craig, great question. Thank you for asking that. Our current policy capital management approach is exactly the same it has been before. Obviously we generate a fair amount of cash as an organization, and we will use that cash flow first to invest back in our businesses to the extent that we can help support our business. The next opportunity would be acquisitions, if and only if they make strategic sense, and if and only they pass financial hurdles that we have set internally. And the next two opportunities are going to be dividends, using the cash to pay dividends, and then an ever-increasing dividend, and then doing buybacks. So this is really the concept is to use free cash flow. We have no intention of levering up the balance sheet and accelerating the buyback. Really you should think of this $1.5 billion as just a continuation of our existing approach to thinking about buybacks. And so we are just going to -- since we used up our capacity, we needed to authorize something new and so again this has no stated maturity or expiration, you should think of it as a multiyear capability.

Great, thanks a lot Loren

Our next question comes from Robert Lee. Robert Lee - Keefe, Bruyette & Woods : Hi, good morning everyone.

Hey Rob. Robert Lee - Keefe, Bruyette & Woods : A couple of questions, some modeling, some strategic. First one, the 32% tax rate, should we think of that is being fully loaded? I guess my understanding is that I guess the UK or Canada; they were first going to be dropping their tax rate I think starting around now.

Right, Rob yeah, you should assume that's the general rate for the full year, and that is sort of a full year, fully loaded impact. Robert Lee - Keefe, Bruyette & Woods : Okay, great. And the $4 million credit, is that a sort of a onetime event?

It is. On the property that is a onetime credit. Robert Lee - Keefe, Bruyette & Woods : Okay, and I had a question on how we should be thinking of flows in Asia-Pacific and I guess the joint venture in particular. I mean obviously, markets in China got hit pretty hard in the first quarter. And I'm assuming sales slowed, but is it possible to just get some color if -- did they -- did you have outflows there? Do you think that has been actually relatively stable or just maybe some color around that would be helpful?

Obviously, this is a topic -- we were just talking obviously internally, and Andrew Lo who runs the area. You should see the market pullback obviously in a strong way, not to anybody surprise. I think it has stabilized right now. There is a sense that on balance the focus in China is for growth, and with that again cautiously we think that it is at least a stable environment going forward. And again, I sort of predict the world, but we have put it tentatively more in the positive outlooks considering the environment we are in, that's helpful. Robert Lee - Keefe, Bruyette & Woods : Okay, and One of the things I noticed, if I looked at the data correctly, is that it seems like your performance in the equities business, I believe it is, at least in Europe -- I mean, outside the UK seems like it has held up pretty well. Yet I know that's been a geographic region that's been challenging for the Company for awhile. Can you maybe update us on, are there some changes that are taking place there, or if you just think that's not a front burner priority. It is more important to get the US and Asia right, or how are you thinking about that?

Oh, it is an absolute priority and I think if you look at industry flows, dissect them some in Europe, it has been challenging generally. On the equity side of the business it has been more of a fixed-income region that has been up-and-down because there was lot of flows into those short duration type fixed-income portfolios and the like and but what is an absolute focus of ours is having sort of a core equity product that does well in that marketplace. And we have three equity products there managed by the quantitative team, the Invesco AIM, the (inaudible) product, but importantly the Invesco Perpetual was an equity portfolio that I think is going to be really a core product for us in that market also. But its focus it's not where, we have not had the flow success that we wanted, but it is really also getting the lineup right, which we think is now right. Robert Lee - Keefe, Bruyette & Woods : Okay, and maybe lastly, Marty, you mentioned at the beginning of the call that I guess the institutional pipeline, I think it was, seemed pretty decent. Is it possible to just get some more color around that? I don't know if you can quantify it or give us a sense of what products or --?

The products -- and probably not a huge surprise, the alternative areas, obviously there is the distressed areas and interesting, there's been much of it from WL Ross. Obviously it is very topical real estate is actually getting a lot of focus again. The quantitative business is getting focus again also. Fixed-income type things, not just cash but also looking at distressed opportunities in fixed-income are the other areas that are also of focus right now. And also the other is then fund-to-funds. Invesco had a fund-to-funds product for the past 15 years, and it is really just been the focus in the last six months that focused again in the marketplace and it had some nice wins. So, again, what our -- like for all of us in the industry, what our pipeline looks as strong as it has been. Does that turn into reality? That is where we just want to not to get too far out on our (inaudible) but there is definitely interest on the institutional side of the business right now. Robert Lee - Keefe, Bruyette & Woods : If I could maybe just follow-up, you mentioned that you are seeing obviously fixed-income distressed, and I guess current opportunity should, are you actually outside of WL Ross contemplating or actually rolling out other kind of specialized products to take advantage of the opportunity, whether it is in the real estate or somewhere else sort of fixed income?

I can't speak specifically about product launches, but what I can say is where the activity and interest is, and we have the skill set is real estate and then within fixed-income beyond cash, it is really in sort of these beat up opportunities that I think have a proven track record, and we are hopeful that we will participate in that. Robert Lee - Keefe, Bruyette & Woods : Alright, great, thank you.

Our next question comes from Michael Kim. Michael Kim - Sandler O'Neill & Partners: Hey guys, good morning.

Hey, Michael Michael Kim - Sandler O'Neill & Partners: The first question I had just kind of deals with retail fund flows more generally. We see volumes obviously remain pretty volatile on a monthly basis thus far this year. How do you think about, how quickly sales could reaccelerate I guess, both here in the US and particularly outside of the US just given kind of more favorable equity markets going forward and particularly considering the fact where money market fund yields are currently sitting?

Hi, it's Phil here. Retail, if I just take a look at retail sales in Canada, as Marty said, it is clearly tied to the discipline that's very valuation oriented. And if you look at where the frothiness is in the market, it is areas that the Trimark discipline avoids because of the valuation, so commodities, energy and that sort of thing right now a little more heavy weighting in the financial services and consumer discretionary. And this is actually how you would expect the discipline to perform. And so it will -- once the performance turns back then we will see the flows. Not a bad first quarter in terms of performance going back, but again we need something for the long-term. In the U.S. there has certainly been a slowdown over the last quarter in terms of gross sales into the market. And if you look at our cash management business, it has really bloomed, so I think is a bit of a flight to safety right now. For us international growth is still very strong for us. And if you look at our core business, it is a very defensively positioned discipline and its come back to kind of top (inaudible) performance, so we expect to see some traction there. And with the rework of the growth team, we would expect over the medium term that we will gain market confidence in that discipline.

I think Michael, if you just -- the context of speed and your estimation is probably as good as ours. You saw it just drop off dramatically and if you go across the categories in the US, the vast majority of the equity ones are in net redemptions and I think the speed of change it always a little slower coming back. But our main focus, because we can't change the industry activity, but our main focus is just making sure that we are improving ourselves in the meantime. Michael Kim - Sandler O'Neill & Partners: Okay, and then in terms of the revenue yield, obviously the broader equity market declines played a big part in kind of the sequential decline of the overall yield. But were there any kind of other drivers, as I think about it from a distribution channel or perhaps a geographic standpoint that led to the sequential decline?

Michael no, this is Loren. It really was mostly driven -- you could tap into it almost entirely just through what was going on with the mix. Michael Kim - Sandler O'Neill & Partners: Okay, and then just finally on expenses, maybe to follow-up on a prior question, just with the recent market volatility, have you found yourselves kind of paying even more attention to costs more generally or is it just basically kind of continuing to make progress on streamlining the business? I guess has there been a step up and kind of really taking a look at some of the discretionary spending or perhaps some longer-term investment spending plans going forward?

Yeah, Michael, its Marty and the answer is of course. And again, I think what you're trying to -- the context is we have been on -- the broader effort that I tied to outline at the beginning is streamline the organization, more efficient, more effective, etcetera, etcetera. But also, like us, like all hopefully all organizations during difficult times, you have to pay attention to discretionary spending too. It doesn't make you a better company, but you've got to pay attention to that and we absolutely are. Michael Kim - Sandler O'Neill & Partners: Okay, that's helpful. Thanks.

Our next question comes from William Katz.

Okay, thank you and couple of questions. I think there is a couple left. Just coming back to capital management for a second, the dividend increase was relatively nominal in the scheme of either if you think about yield or to your cash flow. I am just sort of curious, as you think about the priorities for cash flow what are the major uses as you look forward over the next several years? I guess, it does seem like most of it would go to buyback and given, you think you will buy back I guess 75% as fast as you said you were going to do your first one, could we see an expedited buyback of this $1.5 billion? It is a sizable number relative to your market cap.

We can't get into the business of predicting. I think we have tried very hard to lay out our capital management priorities, and we're going to stay intact with them. I think what we have shown is that we will reinvest in the business. If there is an opportunity acquisition-wise, we will take advantage of it. And we'll pay an ever-increasing dividend and the excess we will use for capital buybacks beyond that. So it is just hard to predict each one of these. I don't think we could have predicted the opportunities of a PowerShares or for WL Ross, so that's why it just gets very, very hard.

The one point I might just actually add is we do have about -- we borrowed about $387 million under our credit facility right now, due to the things PowerShares and we paid bonuses out. Probably one of the priorities is to take that down to going flat. It has never been our intention to maintain a balance on our credit facility. So that is just another thing to keep in people's models that we're going to paying that down.

Okay, and then maybe a question for Bruce. It is provocative presentation once again. Just curious, a two-part question. One is how do the margins look on the active ETF relative to a passive ETF? And then relative to sort of a growth curve, if you will, how do think the adoption plays out compared to some of the passive mandates today?

Well, I think as far as the margins go, I think they're going to be fairly consistent with where you see PowerShares today. So we think that they're going to be -- the equity funds that we introduce have a total expense ratio of 75 basis points, and so we would expect about 50 of that to be available as management fee. So, we expect it to be about where we are and as far as the growth curve, we see that there is going to be an education period here where we get people comfortable with the concept and help them understand the benefits and then we would expect it to pick up well after that. So a little bit of a slower period here at the beginning as we get products in the market, educate the marketplace, and then picking up here in the next six, twelve months and then thereafter.

Okay, and then maybe just one final question. Again, a little bit narrow scope, but the stable value had another $2 billion of outflow. I presume that may have related to outflow in '07 that was already announced but it took to '08 to sort of work its way through. But is that fair assessment or is there still risk to those assets?

Hey, Bill, this is Loren. No, that was always expected. That was part of the original $16 billion roughly and so right now going forward, any redemptions coming out of stable value are really just business as usual type of activity. And so we sort of had been through that entire pipeline. So, its fair to say that what you are seeing going forward is just business as usual.

And again, I can't speak in numbers and also I think be careful about what you read in the papers too. There's no question there is investment opportunities and WL Ross has been taking great advantage of it. I would not -- the papers could have gotten ahead of themselves on this fund -- on a fund. But, as I was trying to say earlier, where we are seeing it is, again I can't speak to the numbers, but we're clearly getting as good of interest that we see in the institutional business and strong areas. Yes, in cash but outside of cash, it is -- the quantitative part of the business, the real estate part of the business, fund-to-funds with some nice wins there. And even within fixed-income some of these other -- the more distressed fixed-income areas that we are seeing opportunities for ourselves. So again, what looks like attention in pipeline is not in the bank, but we're getting a lot of activity there.

Okay, thanks very much.

Our next question comes from [A.G. Edwards]. your line is open you may ask your question. Sir please check your mute button. We'll move on to the next question. Mr. Jeff Hopson, you may ask your questions.

Okay, thanks. I may have missed this. Did you talk about flows in the UK? And the rest of Europe, any thoughts on the environment there?

Hey, Jeff, hi it's Loren. We actually have continued to see strong inflows in the UK. Obviously a little bit more moderated than in the fourth quarter, but our business there is doing very well. And in fact, it is not just in the core types of products that people know our business Invesco Perpetual buy, but also in fixed-income products, which I think is probably about 30% of the flows in Q1, maybe compared to something below 20% in the prior quarter. So, it is a very good story. It is one that I think Invesco Perpetual is known as being conservative and certainly a safe place to put one's money and so it is a perfect sort of opportunity for them to continue to grow. So we feel pretty good about where that business is going into '08.

Okay. And any sense of kind of the industry flows in the UK, to put that in perspective?

I think it is a little hard because the data is not as clear. But we think we are actually getting a fair amount, I don't want to be overly overstating it, but a significant portion of the flows are coming to our business.

Okay. Great, thank you.

This concludes today's presentation. Thank you for your participation.