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, acquisition, 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 forward-looking 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 www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.

Welcome to the Invesco's first quarter results conference call. All participants will be on listen-only mode until the question-and-answer session. (Operator Instructions). Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now, I would like to turn the call over to your speakers for today, Mr. Martin L. Flanagan, President and CEO of Invesco; and Mr. Loren Starr, Chief Financial Officer. Mr. Flanagan, you may begin.

Great, thank you very much. This is Marty Flanagan and I'm here with Loren and we will be speaking to the presentation that's available on the website if you are so inclined to follow. We'll do a review of the business, give an update on the Morgan Stanley/Van Kampen combination, Loren will go into the financial results, and then we will open up to Q&A. So just to start with, if you take a quick overview look at the quarter, it was a strong quarter, continued strength in investment results, further improvement in net flows, it was the strongest quarter of net flows we've had since the fourth quarter of the year 2000. So quite a period. Strong operating results, offset by foreign exchange and also in industry trends away from money market funds, and the high level update of Van Kampen, we expect – Van Kampen and Morgan Stanley, we expect to close on June 1st, and we will get into some details of revised synergies, which are meaningful – meaningfully better than our initial thoughts. So with that, if you take a look, I'd like to do a quick summary of the results. We ended March 31st with $419 billion in assets under management. That was down from $423 billion in the prior quarter. What that resulted in, obviously, was a slight decrease in operating income first quarter versus fourth quarter, down 2.6%. The – during the quarter, we were very disciplined on the expense side of the business; with the decrease in revenue, what we were able to do was have a margin of 33.6% versus 33.2% in the fourth quarter last year. Also during the first quarter, the dividend will be $0.11 per share, which is a 7.3% increase versus the fourth quarter of last year.…

Thanks very much, Marty. During the quarter, you will see that we saw a continued momentum as Marty mentioned in our long-term net flows, also market gains, but offset by net outflows in our money market funds. And notably, some unfavorable foreign exchange resulting in $3.5 billion of decline in our AUM. We ended the quarter with $419.6 billion in AUM. That's down 28% since the end of December and the average AUM also declined marginally by 0.6% to $417.6 billion. Primarily, as a result of the quarter-over-quarter declines in performance fees and transaction fees, which we'll talk about a little bit later, you will see that our net revenue yields in Q1 declined by 1.7 basis points and ultimately had a small impact to day count in the first quarter versus the fourth quarter. So now let's turn to the operating results. As we indicated previously in our March 12th 8-K filing, we have expanded our non-GAAP financial measures, hopefully to improve the transparency of our core business. Given the required adoption of FAS 167, which we've talked about in the past and we had to adopt it in Q1, but also to reflect the impact of the pending Morgan Stanley/Van Kampen combination. And so the operating results that were shown here reflect this new non-GAAP presentation. You will see that net revenues declined $21.4 million, about 3.8% quarter-over-quarter. Unfavorable movements in the foreign exchange rates resulted in of about $7 million of this decrease. And drilling down on to this aggregate number, you will see that investment management fees fell by 1.7% or about $10.8 million and that was, again, primarily due to the negative impact of foreign exchange, largely the depreciation of British pound against the U.S. dollar and also fewer revenue earning days in Q1 versus…

Great. Yes, from our point of view, we feel that we are really positioning Invesco for some real good long-term growth and success, led by continued strong investment results from our investment teams, continuing improvement in net flows as we had highlighted, and as Loren just discussed, strong underwriting operating performance, really offset in the quarter by some headwinds, foreign exchange in particular, and again, very, very importantly, the Van Kampen/Morgan Stanley combination on track to be closed on June 1st and we really think that we are going to be up and running quite quickly with all the efforts that everybody has put into it. So we will stop there and Loren and I will answer any questions that anybody might have.

Thank you. (Operator Instructions). One moment for the first question, please. Our first question does come from Dan Fannon of Jefferies. Your line is open. Dan Fannon – Jefferies: Good morning. Thanks for taking my questions. Marty, I mean, it seems as if we are getting closer to the closing of the Van Kampen deal, things are certainly moving in the right direction. Can you give us some background as to what's behind some of the changes, particularly with regards to the outflow assumption or the attrition assumption?

Yes. Let me take a crack at it and I'll let Loren. Really what it is, is the more – on the attrition assumption in particular, the more that we understand the business, the more that we've gotten around talking to clients and distributors, we just have a greater confidence in our ability to do that. Do understand, it is an estimate from our point of view and I think you're really on the topic. What will likely happen during this is always – I think we put ourselves in a position to be up and running and as effective as we can at least from my historical experience, has probably been the best that I can associate it with. That said, what's going to happen and as you get too close and then in the next couple of quarters afterwards, on the sales distribution side, it will probably slow down a little bit because what happens is realignment of the territories for the wholesalers, the big distribution partners are making sure that they go through and do all their diligence again and making sure that we've not done anything that they are not happy with and the like. And then it literally starts to pick up, probably the second quarter or the third quarter as we start moving forward. But we are just gaining greater confidence and insight into the combination is the key factor. Dan Fannon – Jefferies: Great. And then on the expense side, has anything changed with regards to – I think your comment originally was that no investment professionals were going to be impacted. This is more with regards to kind of the back office and whatnot. Can you just give us an update there with regards to the increase in expense synergies and potentially any new areas that you've found that potentially are additive?

Yes, these – the – what I did say was the broad categories that we talked about originally have not changed and it is holistically around sort of product lineups and the like, property and the operating platform. So it's really more of the same and again, it's greater knowledge as we get into it and greater opportunity. So not anything more than that. Dan Fannon – Jefferies: Great. And then lastly, I think you mentioned something about a second year assumption for flows at Van Kampen. I believe I missed that. Could you please – ?

So our second year assumption is that the punch ratio goes to about 3.4%. So again, we are in outflows right now. And again, you just look at that relative performance and you go to a normal market, we think a 3.4% punch ratio is very doable. Dan Fannon – Jefferies: Great. Thank you very much.

Bill Katz of Citigroup, your line is open. Bill Katz – Citigroup: Okay, thank you and good morning, good afternoon, everyone. Could you talk a little bit about in light of sort of your revised guidance, the timing of the cost saves in year one? Previously, I think it was more back-end loaded. I'm sort of curious with sort of hitting the ground running on day one, does that change the pace of the saves?

Hey, Bill. It's Loren. I think the idea of thinking a little bit more back-end loaded is right. I mean, obviously, it progressively becomes – kind of gets factored in, but if you assume that 65% of the savings are in the last six months and 35% in the first three months, it's first half of the 12 months after close is probably the right way to think about it. Bill Katz – Citigroup: Okay. And then just as a follow-up on that, for year two, the incremental $10 million or so, would that also be front-end loaded, just given the timing or more ratable as well?

I think that one is more ratable, because it's really just the annualization of the benefits in your – in the first 12 months. Bill Katz – Citigroup: Okay. And Marty, sort of a quick question for you. I certainly appreciate the very strong long-term performance, but if you look at some of your sequential changes or talk a little bit about March, March-to-March time frame, do you feel that the short-term performance is a hindrance in any way in terms of the business and – or how should we be thinking about sort of trying to balance the short-term versus the long-term performance and thinking about implications for flows?

Yes. Look, it's the right question to ask. I think we and obviously the investment teams are very cognizant of it. What they've done is stayed very disciplined, stayed very much on their investment philosophy, fees, and process and when you had that rally and some people had referred to it as junk rally off the bottom, we just didn’t participate in it. And so not to get too micro, but it's really responsive to your question, if you look at our relative performance in January and February, it was really quite strong. And it was really just this rally that kicked in March and sort of first part April really has quite an impact on those short-term numbers. That said, you have to – you look at the strong teams, the strong long-term performance. If we are in a period where you are going to get another 20% up market, I suspect the relative performance would suffer some. I – but it's just hard to respond to that in a very specific way other than what I would say is the long-term numbers are strong, the teams are very consistent with how they've been managing the money and I think the – holistically, I think decisions are made on the – really the three-year number is probably the key driver. Bill Katz – Citigroup: Okay. Just one last one and thanks for taking all my questions. You mentioned sort of well positioned for the shift to equities. Based on your disclosure, it seems reasonable. Are you seeing in your conversations with your wholesalers or institutional sales people, are they seeing any kind of temporal shift in demand for greater equity appetite at this point?

Yes. I would say you are not seen in the flows yet, it's not markedly changed. The – there is much greater awareness of the topic on our – you just pick it up everywhere. Our fixed income over valued at the moment, it is a more prudent way to move back into equities, yes or no. So you've not seen the dramatic movement, but I'd say very different than maybe a year ago, six months ago, people seem much more inclined to start to pay attention, but you've not seen that dramatic shift yet. Bill Katz – Citigroup: Okay. Thank you very much.

Michael Kim of Sandler O'Neill, your line is open. Michael Kim – Sandler O'Neill: Hi, guys, good morning. First, thanks for all the incremental disclosures, it's very helpful. Just in terms of the expense synergies, does the new guidance include any potential savings related to fund mergers or is that something that you are still kind of working through at this point?

I think you can assume that it includes it in the second year, that's really the annualization of the benefit of the product streamlining that's going to take place. Michael Kim – Sandler O'Neill: Okay. And then in terms of flows in the institutional channel, can you just give us a bit more color in terms of what really drove the step-up in gross and net sales during the quarter?

I think that we had – some of the things that Marty had mentioned, the PPIP, we had some funding that took place in the quarter, I think they might have been somewhere around $300 million of assets that were invested within the PPIP. I think we had some strong interest in some of the stable value products as well. And I think real estate, some of the alternative capabilities as well we are factoring into the numbers. Michael Kim – Sandler O'Neill: Okay. And then just more broadly in terms of kind of your thinking about incremental margins, I think historically they've been in kind of the 60%, 65% range. Does that change following the deal? It seems like maybe you are bringing on board a higher-margin business, but at a lower blended fee rate. So do those two things effectively offset each other?

I mean, that's probably the right way to think about it, Michael. That – we are pulling those businesses together and are going to be operating kind of in the same way we've operated Invesco traditionally. You are right about the blended rate, but I think because of our sort of being able to leverage our operating platform, we should ultimately be able to provide similar incremental margins. It may be difficult to achieve sort of day one, but ultimately I think that's certainly where we would get to. Michael Kim – Sandler O'Neill: Okay. Thanks for taking my questions.

Mike Carrier of Deutsche Bank, your line is open. Mike Carrier – Deutsche Bank: Thanks, guys. First question, I think it relates to flows, but really on the distribution side. It seems like with the Morgan Stanley/Van Kampen transaction, your strength in the U.S. retail market is significantly expanded. When we look at the different distribution platforms, I think when you guys give the organic growth rate or what you think they can do based on performance, that would be roughly in line with the industry, but I think when you look at it from a distribution standpoint, like as of now, like today where you stand, are you on the platforms across the U.S. and especially the big players, and are you on some of the key distribution lists in terms of partners on those platforms? Just because when you look at the flows on those platforms, it tends to be the top-10 firms are generating like 90% of the flows.

Right. So the combined firm, basically, going back to, some of the – where Van Kampen/Morgan Stanley had been strong, we had been weak and it is really just almost incredible the trade-off in the different areas. By the time that we are done, we are – we will be one of the – and that's the point that we are trying to make on that slide 15, which is talking about the distribution, we are going to be a leading partner really in most every one of the top distributors in the United States. Mike Carrier – Deutsche Bank: Okay. That makes sense. And then, Loren, just two things on the expenses. Obviously, the FX impact depressed the expense base sequentially, but it still seems like across really every bucket there was some decrease. So I just wanted to make sure there was no noise there. And then when you start looking at 2011, I know it's a ways away and a lot could change between now and then, but when you look at just the cash flow generation and once you pass the deal and you use the cash, just what are the priorities when you look at buybacks, dividends, any increased transactions or deals that you think you guys could still bulk-up or add (inaudible)?

Yes. Well, on expenses, I mean, other than the impact on FX, no – I mean, in the first quarter, it was pretty straightforward. There wasn't any noise, so to speak. Obviously, you had the seasonal payroll taxes, but as I mentioned, that was offset by lower variable compensation. So I mean, if there was anything that was worth noting, those were the two things that were happening in the quarter. The other expenses, I think, were pretty much in line with where we thought they would be. In terms of cash flow guidance 2011, I mean, our priorities have not changed in terms of using our cash for funding capital needs for the business is the first call. The next would be acquisitions if they make sense strategically. And if they also have the financial merit that we require and then we'd be into somewhat increasing dividend and pay – and then stock buyback. The only other thing I would note on top of that we overlay, still a strong desire and a continued focus on maintaining a strong financial position on our balance sheet that there is value to the organization to have a certain amount of cash sitting on the balance sheet, which would make us less vulnerable if there were disruptions in the market as we saw obviously in 2009 and 2008. So our goal is to certainly run with enough cash, excess cash. That would allow us to have that flexibility and you can say somewhere around $500 million in excess cash above what's needed in the European subgroup. And so that would be kind of a – just a stake put in the ground right now, but I think to the extent they were generating a lot of cash flow, which we should post this deal and we've got those metrics in place in terms of the cash, we are probably back into certainly either whether it's an acquisition or a stock buyback. I mean, one of the two would be the next logical place where the cash would be used. Mike Carrier – Deutsche Bank: Okay. And then just – I know that these two items tend to be very lumpy and it's very difficult to gauge, but both performance fees, transaction fees or the other revenues – when you look historically, particularly at transaction fees, they are both very low in terms of like a historical run rate. Just in performance fees, obviously, we can try to figure out the performance cross price and have those fees, but on the other revenues, on those transaction fees, like what type of an environment would you expect to get back to even just like a normal level?

Again, it's a good question. And obviously, you probably would want to have commercial real estate in a somewhat different spot than it is right now. I mean, I think there is still obviously issues that are being addressed in that market. I think we are hopeful that we are going to begin to see some healing there, sort of the first leg was the residential and now the commercial. So hopefully within – I mean, again, I'm not an economist, so I couldn’t really tell you, but maybe within a year. I mean, who knows. I – right now, when we plan, certainly we continue to plan ourselves assuming no performance fees and no levels of the minimal levels of transaction fees and that way, we are not fooling ourselves. Mike Carrier – Deutsche Bank: Okay. Thanks a lot, guys.

Craig Siegenthaler of Credit Suisse, your line is open. Craig Siegenthaler – Credit Suisse: Thanks. Good morning, everyone. Just two questions here. Marty, can you provide us with an update on how Powershares is positioned now, both in the European market, in Asia and also in the U.S., the DC channel? Maybe provide us a little bit more of your kind of near-term outlook here and also, is there any current product within the Invesco family or Van Kampen that you think you can leverage the ETF platform for?

Yes. So just on the U.S. side, we are the fourth largest ETF provider. You know who are the big ones, the ones that have been around for so long. We are positioned very differently, we – the strategy of Powershares was not to try to go compete with the very passive businesses that have been in place and our growth has been really complementary to that. We continue to get great interest and I suspect the momentum will increase in that business for us in the United States. We've launched Powershares ETFs in Canada in January and some very, very strong initial success, so we are in the Canadian marketplace right now. Europe, it's been there probably about two years right now on the continent and again, we think that we should make some reasonable traction there. We've not done much in Asia. It is an area that we looked at as probably others have too, but that's really the landscape for us right now. And I'm sorry, what was the other part of the question? Craig Siegenthaler – Credit Suisse: The other part was with your existing product in the consolidation of Van Kampen, do you see any kind of new ways to put product on the ETF platform that you haven't been doing before?

Yes, I can't think of anything specifically that way, but what I would say is that interestingly, the UIT expertise, obviously very different products, but much – you can look to the ETF business probably (inaudible) the UIT business, so there's some real strong expertise and we have been having some real deep conversations about how can we do just exactly the question that you've asked and I don't have a specific answer to it right now other than I'm sure good opportunities will come from it. Craig Siegenthaler – Credit Suisse: And just to clarify, is that the unit investment trust business within Van Kampen that you see opportunities of being able to leverage on the Invesco side or is it vice versa?

On the Invesco side of the business. Craig Siegenthaler – Credit Suisse: Okay, perfect. And to just my follow-up question here. We saw a real nice improvement and strong flows coming on the fixed income side. It seems to be lagging a little bit some of your peers here. I'm just wondering, what's really driving that, maybe a specific geography or product and with your kind of expectations for equity demand product to improve, do you expect that momentum to slow a little bit?

Yes, so you are asking the right questions. So I think that's one of the things misunderstood about our fixed income business and how we are participating. The fundamental fact is if you look where we are strong, it's a big – liquidity business is big and strong and also, it's bank loans, CDOs, high yield, those are strengths where we have good teams and (inaudible) middle of that spectrum and some good performance. Largely, as I talked earlier, just about if you look at the results from IVR and net participation in the PPIP, very, very strong teams. But when you look at where all the flows are going, will it be global fixed income, in the retail market or some of the core fixed income mandate, that has just not been territory that has been an area we have penetrated on the retail business historically. So that's really what that gap is and I think that's probably most misunderstood in the market. Institutionally, the global fixed income product is getting some real traction and we had some good core numbers, but again it's different than what's happened on the retail side of the business. So a point – so to answer your question, what I really think is going to continue the fixed income business is going to be stronger when we talked about it a couple of calls ago, was there is a strong muni capability that we have, we have more of a – sort of the national muni presence. Van Kampen has a long history in muni bonds, largely state-specific, they also have a good high yield product too, which complements ours. So we are going to be very, very strong in muni market. So I think if we think we are going into a rising cost environment, we are going to be positioned very well there. So I think we will see some good strong growth in the muni part of the market for us on fixed income, regardless of a movement to equities. But to me, what we are trying to highlight on page 15, the key trends, so if you believe that flows into U.S. and international equities that's 17% of industry flows is too low, we are going to be a strong beneficiary of a movement away from equities into fixed income. And I don't think we'll be cannibalized that much on the fixed income side just because of the way that we are positioned in fixed income. Craig Siegenthaler – Credit Suisse: And, Marty, were you looking for any ways to upgrade the global fixed income and also your investment-grade business given that's kind of one area that you are going to be maybe underweight after the deal closes?

Yes – no, what I was trying to communicate is we feel very good about the team and their performance. It's been in the institutional market, it's really literally trying to get traction in the retail market and it's really been over the last three years with Karen Dunn Kelley running the fixed income business that has become a single platform and it's really working through some legacy performance on the retail side of the business is why prior teams that we've just not had that traction. Craig Siegenthaler – Credit Suisse: Got it. Thanks a lot for taking my questions.

Absolutely.

Roger Freeman of Barclays Capital, your line is open. Roger Freeman – Barclays Capital: Hi, good morning. Just coming back to the – sort of the distribution footprint post acquisition, do you have or can you say maybe how many distribution agreements you may have, sort of when you hit the ground running that – where you are going to be selling both Van Kampen and Aim, whereas prior to the acquisition, you only have one or the other on the platform?

Yes, I don't have the specific numbers, but let me try to answer that. I mean, practically what's going to happen is, as I said, it would be – the fact would be it will probably slow down for a quarter, because all of the partners will be doing what they should do and do due diligence to make sure that they are understanding exactly what we look like after the transaction. And that's – and then going forward from that point, we will just continue to pick up. I don't have the specific numbers of the agreement that we have, but what I can tell you is that, as I said earlier, we will be a top partner at those largest distribution – distributors in the country. Roger Freeman – Barclays Capital: Okay. But is it fair to say – because I thought maybe from last quarter, maybe I misunderstood, that there – that you thought you were going to be able to sort of pick up, be able to basically put both products through some channels where you didn't have both.

No, you are exactly right. Now, that is what's happening and what we are doing literally right now, the various distribution salespeople right now are literally going through training. Roger Freeman – Barclays Capital: Got it.

It's – Roger Freeman – Barclays Capital: Okay.

Over this past – it's been going on for two weeks, should go on for another two weeks. So our goal is to be as effective as we can, as quickly as we can serving our client. Roger Freeman – Barclays Capital: And just on that due diligence comment you made, I mean, it's fair to say that these distributors had – they are not starting due diligence when you close the merger, right? I'm assuming that you've been – you've had plenty of discussions with them already, right?

Absolutely, yes. Roger Freeman – Barclays Capital: Okay.

But that – let's understand it right, they are pulling the trigger. So they will decide when they decide. Roger Freeman – Barclays Capital: Absolutely. Okay. And then just on the synergies – the operating synergies, if you take kind of the numbers that you gave last fall and you – now you add as much as $95 million in cost synergies, you get up to a margin of some 50% or more. Now, you probably have to add the, at a minimum, the Aim revenues and costs in to look at that on a combined basis, but I guess the question is how would you look at the operating margin of those two businesses combined relative to your company total, because it looks like it could be considerably higher?

So Roger, I think we obviously – there was a similar question about incremental operating margin and is it going to converge to what we've done in the past and I think the answer is yes. That's kind of the definite goal. Clearly, having more assets under management allows one to improve one's margins. And so I think it is clearly going to help our margin in terms of bringing on the business. So the firm will benefit significantly. I wouldn't say we are going to be at a 50% margin, but I do think we feel very confident that we can get back to margins that were sort of in high to the numbers that you've seen historically in 2007, with this acquisition and also with some equity markets behind us. Roger Freeman – Barclays Capital: Okay. And just then lastly, quickly, the sequential decline in the AUM yield, is that mainly day count and then stronger institutional flows versus retail, is that fair?

It – day count is actually the secondary impact. I'd say the first and most important impact has to do with performance fees and other revenues. Roger Freeman – Barclays Capital: I was looking at even prior to performance fees, if you just look at just the management fees?

Right. So some of that has to do with the mix of assets. Obviously with the pound depreciating, some of the higher yielding fees in the U.K. become less impactful. So there is that aspect as well. Roger Freeman – Barclays Capital: So even though you are marking down the AUM, the fee offset is greater basically because of their higher yielding? Is that – ?

It's just a smaller part of our overall pie. Roger Freeman – Barclays Capital: Got it. Okay, great. Thanks.

Yes.

Ken Worthington of J.P. Morgan, your line is open. Ken Worthington – J.P. Morgan: Hello. First performance fees, long-term track record is graded perpetual. I think you guys failed the benchmark test this quarter. Loren, any idea based on what's rolling off in the June quarter from last year? Do the odds look good that those performance fees bounce back this next quarter?

Okay. There is really two places where we typically have realized performance fees in the year, the first quarter and the fourth quarter and that's just the way that these contracts have been set up and just to remind people, it's really a small part of the U.K. business, some investment trusts that have these triggers. I ask that very same question all the time, kind of are we going to get the performance fees or not and the reality, it's very hard to predict as to whether we will or not. I think the idea that it is within the realm of possibility that we could see it in the fourth quarter, but the fourth quarter is still pretty far away relative to where we are today. So certainly in the second quarter on the U.K. side, we wouldn't traditionally see any performance fees. The other place where we've been able to generate performance fees on a quarterly basis, second quarter and third quarter had been in our quantitative group, quantitative equities. Right now, I think where they are relative to the benchmark, that's probably not a realistic assumption for us to be looking for. So again, I would say it's hard for me to guide people on performance fees, because it's a tough one to predict and – but I'd say where we are right now in the first quarter is probably not a reasonable – I mean, it's probably a reasonable point to think about going forward and we will continue to update you if we see any change. Ken Worthington – J.P. Morgan: Okay. Great, thank you. Then on the tax rate, it kind of had a little pop this quarter. Are you accruing anything for the higher tax rate at Van Kampen or is this really the rate for the core business or the business ex Van Kampen for the year based on mix?

It – I mean, there is some impact to the rate due to the integration charges, but because it's obviously a U.S.-focused thing and there are some things that are – we are going to get the tax benefit for and others not. But what we – the difference is largely due to the mix. If you think about the U.K., as I mentioned, becoming the smaller part of the overall mix, it has a 28% tax rate relative to some other parts of the U.S. at sort of a higher rate. It's really, I'd say, driven more by the mix of where we are earning our profit. Ken Worthington – J.P. Morgan: Okay. And then lastly on comp, ex all the kind of unusual items, even FX, comp was more or less flat. You mentioned that you reduced the variable compensation this quarter and the other, I guess, component sales were up. How do we think about compensation, again, ex Van Kampen for the rest of the year? Because it actually beat our expectations and I'd love to hone in on the reasons why.

Well, again, so excluding the impact of FX, there are really two elements in the first quarter. One was obviously, we have seasonal payroll taxes, usually $8 million to $10 million, kind of – you can look at the history, that's kind of where it's been in the past. It was offset by lower variable comp, which again was sales commission and bonus. Sales commissions generally move in line with sales, but the reality is there are some sales commissions get paid out at a higher rate than others and so it's a little hard to compare quarter-over-quarter. But I'd say, a good portion of the variable comp was related to sales commissions relative to the fourth quarter. Ken Worthington – J.P. Morgan: But sales were up for the quarter. So that's –?

Right, but I guess the point is because sales are up – I'm saying sales commissions can generally move in line with gross sales, but not always, because depending on what gets sold and when, there are different rates on what a salesperson might make and depending on what's been sold. An alternative product might pay out at a higher rate than a stable value product for example. So just – you can't just look at sales to know if sales commissions are going up and down. Ken Worthington – J.P. Morgan: Okay. But the conclusion here is the comp was down due to the variable comp – or comp was flat as variable comp reductions offset – were offset by the payroll tax, but as we look forward, any help to the kind of – should we just think of it bounces back as revenues – as revenues increase, the comp goes up from here?

Two pieces. One, yes to that last point. So I mean, as we earn more, obviously variable compensation comes back and so that will generally move in line as operating income grows and hopefully that's where it's going. I think the other bit, as we have done in the past, we do have some degree of merit increase and stocks that are granted, deferred compensation at February – end of February. So you will see a little bit of sort of the full-quarter impact into the future quarters relative to the first quarter. So there is some amount of pickup through that bit. Ken Worthington – J.P. Morgan: Okay, great. Thank you.

Robert Lee of KBW, your line is open. Robert Lee – KBW: Great. Good morning, everyone.

Hey, Rob.

Hey, Rob. Robert Lee – KBW: First question at the risk of being, I guess, a little thickheaded, the $0.19 accretion in year two, I'm assuming that's not an additional – is that an additional $0.19 on top of the $0.17 in year one or is that just kind of the run rate in year two?

Yes, it's just the run rate for year two. As much as we'd love to give you the combination, it's really just $0.17 going to $0.19. Robert Lee – KBW: Okay. I just wanted to clarify that. And also just as a refresher, your accretion guidance, since – clearly, you are going to be focusing on adjusted cash earnings. Is that guidance an adjusted cash earnings accretion?

It is, yes. So it doesn't reflect any intangible or any of those elements. We pulled that out. Robert Lee – KBW: Oh, it's – so it's – okay. So you've added that – or added them back in, how you want to define it?

Yes, basically, we are not – we are – Robert Lee – KBW: Right.

Yes, exactly. Robert Lee – KBW: Okay. The – I've got a question, actually kind of a strategic question on the money fund business, which, you guys weathered the storms the past couple of years very well and I know it's a key part of your business, but when you look at your kind of institutional focus and you look at a lot of your competitors, where their asset bases are four or five times as large, some maybe even more, I mean, are you at all concerned that as that business evolves that that business is at risk of becoming sub-scale or in some way needs to be scaled up more?

Look, I think it's even with sort of the runoff of – currently, if you look at where it had been historically, you are still at historical levels, right? We were just a big beneficiary of big inflows during the crisis as being one of the managers that was doing a good job. And so it's a very high-quality team, I'd say one of the industry-leading teams if you just look at what they've done and it is part a part of the whole fixed income complex. So it's not sitting by itself. So that credit discipline and expertise literally goes across the spectrum. And so when we think it's – we do it very, very well, we think we have good scale now. I think at the end of the day, quality wins and I think we are going to be one of the winners in that business. And again, it is just complementary to all of our fixed income capabilities and what we do. But – yes, as you look at it right now, I mean, that asset class is under pressure for all the obvious reasons, people seeking higher yields, et cetera, et cetera, et cetera. But that said, I think we are going to be fine. Robert Lee – KBW: Okay. And one last quick question, just in looking at the Morgan Stanley business and on the improvement in their flow trends, can you just give some color on where you see that? Was that really more just kind of what you are seeing in the industry, pick up in their fixed income flows or I mean, any color around kind of sales redemption rates, and if there is anything that's really driving that improvement?

We don't have great insight into that yet for – until we get so close. But obviously, I think it's a combination of the fixed income business and really the improved performance. But I'd say it's probably more fixed income-based than it is equity-based. Robert Lee – KBW: Okay. And one last question and I apologize if you probably mentioned this at the top of the call, but could you give us maybe a little bit of additional color on the institutional businesses? I know you talked about the fixed income starting more traction institutionally, but now as we look around the globe, where you are seeing kind of the real – where you see the real opportunity, not just fixed income – where, in equities or alternatives do you think we should see the – a continuation of the improving trends over the coming quarters?

Yes. So I think a handful of things. One, again, I just think what Mark Armour has done and the leadership, I think they first started by a range of investment disciplines and they are quite strong and performing quite strongly. You match that up against really the improving talent on the sales servicing side, I think that's going to be a very important factor for us going forward. It is also what is the appetite. So where we continue to see the appetite, it is – stable value continues to be an appetite, real estate continues to be very, very attractive to people, bank loans, CLOs, CDOs, those types of things are very attractive to people. This is the things that we are seeing. On the equity side – actually global fixed income is another area that we are seeing quite a bit of interest. On the equity side, the global equity capability is getting more interest. So it's pretty broad. But again, it's very reflective of what clients are looking for and it's different in different parts of the world, where if you go to U.K. and Europe, part of the quantitative team is based there. So there is a global equity quantitative product that's been doing very, very well in the U.K. So it literally is different region by region. But I would say the trend that we are on is as strong as it's been since I've been here. Robert Lee – KBW: Great. Thanks for taking my questions.

This concludes the question-and-answer session. I would now like to turn the call back over to Mr. Flanagan.

Yes, I'd just like to thank everybody for their time and the questions and we will be in touch and we'll talk to you next quarter. Take care. Have a good day.

Today's conference has ended. All participants may disconnect at this time.