UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2016~~2017



o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-13908

Invesco Ltd.

(Exact Name of Registrant as Specified in Its Charter)



Bermuda (State or Other Jurisdiction of Incorporation or Organization)		98-0557567 (I.R.S. Employer Identification No.)

1555 Peachtree Street, N.E., Suite 1800, Atlanta, GA (Address of Principal Executive Offices)		30309 (Zip Code)

(404) 892-0896

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No þ

As of ~~September~~June 30, ~~2016,~~2017, the most recent practicable date, the number of Common Shares outstanding was ~~408,535,481.~~406,891,732.

Table of Contents

TABLE OF CONTENTS

We include cross references to captions elsewhere in this Quarterly Report on Form 10-Q, which we refer to as this “Report,” where you can find related additional information. The following table of contents tells you where to find these captions.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Invesco Ltd.

Condensed Consolidated Balance Sheets

(Unaudited)


	As of				As of
$ in millions, except per share data	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
ASSETS
Cash and cash equivalents	1,581.3		1,851.4		1,646.1		1,328.0
Unsettled fund receivables	688.1		566.3		1,017.9		672.9
Accounts receivable	511.9		528.1		533.3		544.2
Investments	877.7		1,019.1		642.6		795.3
Assets of consolidated sponsored investment products (CSIP)	—		319.1
Assets of consolidated investment products (CIP):
Cash and cash equivalents of CIP	315.0		363.3		328.1		742.2
Accounts receivable and other assets of CIP	63.3		173.5		104.1		106.2
Investments of CIP	4,403.5		6,016.1		4,917.0		5,116.1
Assets held for policyholders	7,387.5		6,051.5		10,716.7		8,224.2
Prepaid assets	130.8		121.2		118.3		116.9
Other assets	83.5		107.0		75.7		95.0
Property, equipment and software, net	444.6		426.9		482.2		464.7
Intangible assets, net	1,407.9		1,354.0		1,397.0		1,399.4
Goodwill	6,242.6		6,175.7		6,269.5		6,129.2
Total assets	24,137.7		25,073.2		28,248.5		25,734.3
LIABILITIES
Accrued compensation and benefits	505.7		661.3		475.1		654.3
Accounts payable and accrued expenses	868.3		863.1		788.3		812.4
Liabilities of CIP:
Debt of CIP	3,860.0		5,437.0		3,929.5		4,403.1
Other liabilities of CIP	268.1		273.7		393.2		673.4
Policyholder payables	7,387.5		6,051.5		10,716.7		8,224.2
Unsettled fund payables	662.6		561.9		1,002.1		659.3
Long-term debt	2,073.2		2,072.8		2,074.8		2,102.4
Deferred tax liabilities, net	341.0		288.9		366.5		309.7
Total liabilities	15,966.4		16,210.2		19,746.2		17,838.8
Commitments and contingencies (See Note 11)
TEMPORARY EQUITY
Redeemable noncontrolling interests in consolidated entities	347.0		167.3		328.3		283.7
PERMANENT EQUITY
Equity attributable to Invesco Ltd.:
Common shares ($0.20 par value; 1,050.0 million authorized; 490.4 million shares issued as of September 30, 2016 and December 31, 2015)	98.1		98.1
Common shares ($0.20 par value; 1,050.0 million authorized; 490.4 million shares issued as of June 30, 2017 and December 31, 2016)					98.1		98.1
Additional paid-in-capital	6,206.5		6,197.7		6,206.2		6,227.4
Treasury shares	(2,715.2	)	(2,404.1	)	(2,788.9	)	(2,845.8	)
Retained earnings	4,721.0		4,439.6		5,051.3		4,833.4
Accumulated other comprehensive income/(loss), net of tax	(573.7	)	(446.0	)	(594.2	)	(809.3	)
Total equity attributable to Invesco Ltd.	7,736.7		7,885.3		7,972.5		7,503.8
Equity attributable to nonredeemable noncontrolling interests in consolidated entities	87.6		810.4		201.5		108.0
Total permanent equity	7,824.3		8,695.7		8,174.0		7,611.8
Total liabilities, temporary and permanent equity	24,137.7		25,073.2		28,248.5		25,734.3

See accompanying notes.

Table of Contents

Invesco Ltd.

Condensed Consolidated Statements of Income

(Unaudited)


	Three months ended September 30,						Nine months ended September 30,						Three months ended June 30,						Six months ended June 30,
$ in millions, except per share data	2016			2015			2016			2015			2017			2016			2017			2016
Operating revenues:
Investment management fees	965.9			1,016.9			2,826.2			3,074.0			1,010.4			946.7			1,965.6			1,860.3
Service and distribution fees	213.4			214.8			614.5			647.8			211.3			203.4			417.7			401.1
Performance fees	3.4			15.6			26.8			69.1			16.7			8.9			28.0			23.4
Other	18.9			26.2			72.2			92.3			16.0			30.4			35.7			53.3
Total operating revenues	1,201.6			1,273.5			3,539.7			3,883.2			1,254.4			1,189.4			2,447.0			2,338.1
Operating expenses:
Third-party distribution, service and advisory	362.1			392.3			1,057.7			1,204.7			365.9			348.4			715.2			695.6
Employee compensation	345.1			337.6			1,039.8			1,045.7			365.6			350.3			762.4			694.7
Marketing	26.4			24.9			79.6			81.3			29.1			28.3			53.5			53.2
Property, office and technology	78.2			79.0			240.4			230.7			89.0			82.3			174.5			162.2
General and administrative	83.5			87.0			240.0			266.0			85.9			78.6			163.9			156.5
Total operating expenses	895.3			920.8			2,657.5			2,828.4			935.5			887.9			1,869.5			1,762.2
Operating income	306.3			352.7			882.2			1,054.8			318.9			301.5			577.5			575.9
Other income/(expense):
Equity in earnings of unconsolidated affiliates	5.5			8.2			(2.1		)	32.0			10.5			4.6			28.2			(7.6		)
Interest and dividend income	2.6			2.4			8.7			7.5			1.6			2.5			4.5			6.1
Interest expense	(23.9		)	(20.4		)	(69.9		)	(58.7		)	(23.6		)	(22.1		)	(47.6		)	(46.0		)
Other gains and losses, net	16.2			0.9			7.3			(5.2		)	2.5			(4.2		)	8.7			(8.9		)
Other income/(expense) of CIP, net	39.0			1.5			69.4			39.1			32.3			37.9			60.8			30.4
Other income/(expense) of CSIP, net	—			(3.6		)	—			10.9
Income before income taxes	345.7			341.7			895.6			1,080.4			342.2			320.2			632.1			549.9
Income tax provision	(89.8		)	(100.4		)	(245.4		)	(311.1		)	(92.6		)	(83.7		)	(168.3		)	(155.6		)
Net income	255.9			241.3			650.2			769.3			249.6			236.5			463.8			394.3
Net (income)/loss attributable to noncontrolling interests in consolidated entities	(14.7		)	8.0			(22.5		)	(3.1		)	(10.0		)	(11.0		)	(12.2		)	(7.8		)
Net income attributable to Invesco Ltd.	241.2			249.3			627.7			766.2			239.6			225.5			451.6			386.5
Earnings per share:
-basic		$0.58			$0.58			$1.51			$1.78			$0.58			$0.54			$1.10			$0.92
-diluted		$0.58			$0.58			$1.51			$1.78			$0.58			$0.54			$1.10			$0.92
Dividends declared per share		$0.28			$0.27			$0.83			$0.79			$0.29			$0.28			$0.57			$0.55

See accompanying notes.

Table of Contents

Invesco Ltd.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

Three months ended September 30, Nine months ended September 30,
$ in millions 2016 2015 2016 2015
Net income 255.9
241.3
650.2
769.3
Other comprehensive income/(loss), net of tax:
Currency translation differences on investments in foreign subsidiaries, net of tax (63.4 ) (223.9 ) (132.8 ) (364.2 )
Actuarial (loss)/gain related to employee benefit plans, net of tax —
—
(0.4 ) —
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax (1.8 ) (1.8 ) (5.2 ) (4.8 )
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax 0.4
0.6
1.2
1.7
Share of other comprehensive income/(loss) of equity method investments, net of tax 2.4
(1.9 ) 3.0
(0.6 )
Unrealized gains/(losses) on available-for-sale investments, net of tax 2.3
(5.8 ) 4.0
(7.6 )
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax (0.2 ) (0.7 ) (0.5 ) (1.6 )
Other comprehensive income/(loss), net of tax (60.3 ) (233.5 ) (130.7 ) (377.1 )
Total comprehensive income/(loss) 195.6
7.8
519.5
392.2
Comprehensive loss/(income) attributable to noncontrolling interests in consolidated entities (14.2 ) 8.0
(19.5 ) (3.1 )
Comprehensive income/(loss) attributable to Invesco Ltd. 181.4
15.8
500.0
389.1



	Three months ended June 30,				Six months ended June 30,
$ in millions	2017		2016		2017		2016
Net income	249.6		236.5		463.8		394.3
Other comprehensive income/(loss), net of tax:
Currency translation differences on investments in foreign subsidiaries	147.4		(166.6	)	210.0		(69.4	)
Actuarial (loss)/gain related to employee benefit plans	—		—		(0.4	)	(0.4	)
Reclassification of prior service cost/(credit) into employee compensation expense	—		(1.8	)	—		(3.4	)
Reclassification of actuarial (gain)/loss into employee compensation expense	0.5		0.5		1.1		0.8
Share of other comprehensive income/(loss) of equity method investments	0.9		0.9		1.2		0.6
Unrealized gains/(losses) on available-for-sale investments	0.9		(0.6	)	4.0		1.7
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net	(0.2	)	(0.1	)	(0.8	)	(0.3	)
Other comprehensive income/(loss)	149.5		(167.7	)	215.1		(70.4	)
Total comprehensive income/(loss)	399.1		68.8		678.9		323.9
Comprehensive loss/(income) attributable to noncontrolling interests in consolidated entities	(10.0	)	(8.5	)	(12.2	)	(5.3	)
Comprehensive income/(loss) attributable to Invesco Ltd.	389.1		60.3		666.7		318.6

See accompanying notes.

Table of Contents

Invesco Ltd.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine months ended September 30,				Six months ended June 30,
$ in millions	2016		2015		2017		2016
Operating activities:
Net income	650.2		769.3		463.8		394.3
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Amortization and depreciation	75.5		68.6		52.5		49.9
Share-based compensation expense	118.4		112.9		92.5		79.1
Other (gains)/losses, net	(7.3	)	5.2		(8.7	)	8.9
Other (gains)/losses of CSIP, net	—		(1.6	)
Other (gains)/losses of CIP, net	(18.1	)	12.6		(38.1	)	(0.4	)
Equity in earnings of unconsolidated affiliates	2.1		(32.0	)	(28.2	)	7.6
Dividends from unconsolidated affiliates	16.3		17.9		1.2		0.9
Changes in operating assets and liabilities:
(Increase)/decrease in cash held by CIP	(66.2	)	(184.3	)	407.0		(8.9	)
(Increase)/decrease in cash held by CSIP	—		(3.1	)
(Purchase)/sale of investments by CIP, net	(131.9	)	—		(245.8	)	(118.5	)
(Purchase)/sale of trading investments, net	(13.4	)	(106.7	)	174.5		(14.7	)
(Increase)/decrease in receivables	(2,257.5	)	(4,168.4	)	(2,324.5	)	(1,823.9	)
Increase/(decrease) in payables	2,174.0		4,065.2		2,235.4		1,639.3
Net cash provided by/(used in) operating activities	542.1		555.6		781.6		213.6
Investing activities:
Purchase of property, equipment and software	(101.3	)	(88.1	)	(59.9	)	(65.3	)
Purchase of available-for-sale investments	(4.3	)	(41.5	)	(7.7	)	(4.1	)
Sale of available-for-sale investments	38.4		48.5		57.6		5.7
Purchase of investments by CIP	(2,398.0	)	(3,226.4	)	(3,080.5	)	(1,220.1	)
Sale of investments by CIP	1,835.9		2,827.8		3,145.8		908.4
Purchase of investments by CSIP	—		(397.5	)
Sale of investments by CSIP	—		384.0
Purchase of other investments	(98.3	)	(115.2	)	(87.6	)	(61.6	)
Sale of other investments	67.7		73.8		63.3		53.3
Returns of capital and distributions from unconsolidated partnership investments	30.0		45.1		37.3		22.8
Purchase of business	(121.9	)	—		—		(121.9	)
Net cash provided by/(used in) investing activities	(751.8	)	(489.5	)	68.3		(482.8	)
Financing activities:
Proceeds from exercises of share options	—		2.1
Purchases of treasury shares	(385.0	)	(334.0	)	(57.3	)	(244.0	)
Dividends paid	(346.3	)	(340.8	)	(233.7	)	(230.6	)
Excess tax benefits from share-based compensation	(2.4	)	19.1		—		(3.1	)
Third-party capital invested into CIP	193.9		63.3		299.7		141.1
Third-party capital distributed by CIP	(64.1	)	(99.0	)	(62.9	)	(44.8	)
Third-party capital invested into CSIP	—		13.5
Borrowings of debt by CIP	760.1		2,091.8		1,459.3		387.3
Repayments of debt by CIP	(130.2	)	(1,457.5	)	(1,957.1	)	(75.9	)
Net borrowings/(repayments) under credit facility	—		99.5		(28.7	)	—
Payment of contingent consideration	(9.5	)	(4.6	)	(7.2	)	(6.2	)
Net cash provided by/(used in) financing activities	16.5		53.4		(587.9	)	(76.2	)
Increase/(decrease) in cash and cash equivalents	(193.2	)	119.5		262.0		(345.4	)
Foreign exchange movement on cash and cash equivalents	(76.9	)	(43.0	)	56.1		(59.8	)
Cash and cash equivalents, beginning of period	1,851.4		1,514.2		1,328.0		1,851.4
Cash and cash equivalents, end of period	1,581.3		1,590.7		1,646.1		1,446.2
Supplemental Cash Flow Information:
Interest paid	(60.4	)	(49.0	)	(43.1	)	(33.3	)
Interest received	4.0		6.8		2.0		3.3
Taxes paid	(148.1	)	(232.7	)	(126.3	)	(98.6	)

See accompanying notes.

Table of Contents

Invesco Ltd.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Equity Attributable to Invesco Ltd.																	Equity Attributable to Invesco Ltd.
$ in millions	Common Shares	Additional Paid-in-Capital		Treasury Shares		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total Equity Attributable to Invesco Ltd.		Nonredeemable Noncontrolling Interests in Consolidated Entities		Total Permanent Equity		Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity		Common Shares	Additional Paid-in-Capital		Treasury Shares		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total Equity Attributable to Invesco Ltd.		Nonredeemable Noncontrolling Interests in Consolidated Entities		Total Permanent Equity		Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity
January 1, 2016	98.1	6,197.7		(2,404.1	)	4,439.6		(446.0	)	7,885.3		810.4		8,695.7		167.3
Adjustment for adoption of ASU 2015-02	—	—		—		—		—		—		(733.5	)	(733.5	)	226.6
January 1, 2016, as adjusted	98.1	6,197.7		(2,404.1	)	4,439.6		(446.0	)	7,885.3		76.9		7,962.2		393.9
January 1, 2017																		98.1	6,227.4		(2,845.8	)	4,833.4		(809.3	)	7,503.8		108.0		7,611.8		283.7
Net income	—	—		—		627.7		—		627.7		(2.0	)	625.7		24.5		—	—		—		451.6		—		451.6		(4.4	)	447.2		16.6
Other comprehensive income/(loss)	—	—		—		—		(127.7	)	(127.7	)	—		(127.7	)	(3.0	)
Other comprehensive income																		—	—		—		—		215.1		215.1		—		215.1		—
Change in noncontrolling interests in consolidated entities, net	—	—		—		—		—		—		12.7		12.7		(68.4	)	—	—		—		—		—		—		97.9		97.9		28.0
Dividends	—	—		—		(346.3	)	—		(346.3	)	—		(346.3	)	—		—	—		—		(233.7	)	—		(233.7	)	—		(233.7	)	—
Employee share plans:
Share-based compensation	—	118.4		—		—		—		118.4		—		118.4		—		—	92.5		—		—		—		92.5		—		92.5		—
Vested shares	—	(96.4	)	96.4		—		—		—		—		—		—		—	(113.8	)	113.8		—		—		—		—		—		—
Other share awards	—	0.6		6.0		—		—		6.6		—		6.6		—		—	0.1		0.4		—		—		0.5		—		0.5		—
Tax impact of share-based payment	—	(2.4	)	—		—		—		(2.4	)	—		(2.4	)	—
Purchase of shares	—	(11.4	)	(413.5	)	—		—		(424.9	)	—		(424.9	)	—		—	—		(57.3	)	—		—		(57.3	)	—		(57.3	)	—
September 30, 2016	98.1	6,206.5		(2,715.2	)	4,721.0		(573.7	)	7,736.7		87.6		7,824.3		347.0
June 30, 2017																		98.1	6,206.2		(2,788.9	)	5,051.3		(594.2	)	7,972.5		201.5		8,174.0		328.3

See accompanying notes.

Table of Contents

Invesco Ltd.

Consolidated Statements of Changes in Equity (continued)

(Unaudited)


	Equity Attributable to Invesco Ltd.																			Equity Attributable to Invesco Ltd.
$ in millions	Common Shares	Additional Paid-in-Capital		Treasury Shares		Retained Earnings		Retained Earnings Appropriated for Investors in CIP		Accumulated Other Comprehensive Income		Total Equity Attributable to Invesco Ltd.		Nonredeemable Noncontrolling Interests in Consolidated Entities		Total Permanent Equity		Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity		Common Shares	Additional Paid-in-Capital		Treasury Shares		Retained Earnings		Accumulated Other Comprehensive Income		Total Equity Attributable to Invesco Ltd.		Nonredeemable Noncontrolling Interests in Consolidated Entities		Total Permanent Equity		Redeemable Noncontrolling Interests in Consolidated Entities Temporary Equity
January 1, 2015	98.1	6,133.6		(1,898.1	)	3,926.0		17.6		48.8		8,326.0		793.8		9,119.8		165.5
Adjustment for adoption of ASU 2014-13	—	—		—		—		(17.6	)	—		(17.6	)	—		(17.6	)	—
January 1, 2015, as adjusted	98.1	6,133.6		(1,898.1	)	3,926.0		—		48.8		8,308.4		793.8		9,102.2		165.5
January 1, 2016																				98.1	6,197.7		(2,404.1	)	4,439.6		(446.0	)	7,885.3		810.4		8,695.7		167.3
Adjustment for adoption of ASU 2015-02																				—	—		—		—		—		—		(733.5	)	(733.5	)	226.6
January 1, 2016, as adjusted																				98.1	6,197.7		(2,404.1	)	4,439.6		(446.0	)	7,885.3		76.9		7,962.2		393.9
Net income	—	—		—		766.2		—		—		766.2		3.7		769.9		(0.6	)	—	—		—		386.5		—		386.5		(2.3	)	384.2		10.1
Other comprehensive income/(loss)	—	—		—		—		—		(377.1	)	(377.1	)	—		(377.1	)	—
Other comprehensive income																				—	—		—		—		(67.9	)	(67.9	)	—		(67.9	)	(2.5	)
Change in noncontrolling interests in consolidated entities, net	—	—		—		—		—		—		—		(34.4	)	(34.4	)	11.5		—	—		—		—		—		—		(0.4	)	(0.4	)	(88.9	)
Dividends	—	—		—		(340.8	)	—		—		(340.8	)	—		(340.8	)	—		—	—		—		(230.6	)	—		(230.6	)	—		(230.6	)	—
Employee share plans:
Share-based compensation	—	112.9		—		—		—		—		112.9		—		112.9		—		—	79.1		—		—		—		79.1		—		79.1		—
Vested shares	—	(101.2	)	101.2		—		—		—		—		—		—		—		—	(94.5	)	94.5		—		—		—		—		—		—
Exercise of options	—	(0.5	)	2.6		—		—		—		2.1		—		2.1		—
Other share awards	—	2.3		3.2		—		—		—		5.5		—		5.5		—		—	0.2		0.4		—		—		0.6		—		0.6		—
Tax impact of share-based payment	—	19.1		—		—		—		—		19.1		—		19.1		—		—	(3.1	)	—		—		—		(3.1	)	—		(3.1	)	—
Purchase of shares	—	—		(403.6	)	—		—		—		(403.6	)	—		(403.6	)	—		—	(30.0	)	(364.0	)	—		—		(394.0	)	—		(394.0	)	—
September 30, 2015	98.1	6,166.2		(2,194.7	)	4,351.4		—		(328.3	)	8,092.7		763.1		8,855.8		176.4
June 30, 2016																				98.1	6,149.4		(2,673.2	)	4,595.5		(513.9	)	7,655.9		74.2		7,730.1		312.6

See accompanying notes.

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Invesco Ltd.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. ACCOUNTING POLICIES

Corporate Information

Invesco Ltd. (Parent) and all of its consolidated entities (collectively, the company or Invesco) provide retail and institutional clients with an array of global investment management capabilities. The company operates globally and its sole business is investment management.

Certain disclosures included in the company's annual report on Form 10-K for the year ended December 31, 2016 (annual report or Form 10-K) are not required to be included on an interim basis in the company's quarterly reports on Forms ~~10-Q.~~10-Q (Report). The company has condensed or omitted these disclosures. Therefore, this ~~Form 10-Q (Report)~~Report should be read in conjunction with the company's annual ~~report on Form 10-K for the year ended December 31, 2015.~~report.

Basis of Accounting and Consolidation

The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with rules and regulations of the Securities and Exchange Commission and consolidate the financial statements of the Parent and all of its controlled subsidiaries. In the opinion of management, the financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair statement of the financial condition and results of operations for the periods presented. All significant intercompany transactions, balances, revenues and expenses are eliminated upon consolidation.

The company provides investment management services to, and has transactions with, various private equity funds, real estate funds, fund-of-funds, CLOs, and other investment products sponsored by the company in the normal course of business for the investment of client assets. The company serves as the investment manager, making day-to-day investment decisions concerning the assets of these products.

In addition to consolidating the financial statements of the Parent and all of its controlled subsidiaries, the Condensed Consolidated Financial Statements include the consolidation of certain investment products (“Consolidated Investment Products” or "CIP") that meet the definition of either a voting rights entity (“VOE”), if the company is deemed to have a controlling financial interest in the fund, or a variable interest entity (“VIE”) if the company has been deemed to be the primary beneficiary of the fund. At September 30, 2016, all CIP were VIEs.

Certain of these investment products, typically CLOs, funds that are structured as partnership entities (such as private equity funds, real estate funds, and fund-of-funds), and certain non-U.S. mutual funds, are considered, for accounting and consolidation analysis purposes, to be VIEs if the VIE criteria are met. A VIE, in the context of the company and its managed funds, is a fund that does not have sufficient equity to finance its operations without additional subordinated financial support, or a fund for which the risks and rewards of ownership are not directly linked to voting interests. If the company is deemed to have the power to direct the activities of the fund that most significantly impact the fund's economic performance, and the obligation to absorb losses/right to receive benefits from the fund that could potentially be significant to the fund, then the company is deemed to be the fund's primary beneficiary and is required to consolidate the fund.

The company's economic risk with respect to each investment in a CIP is limited to its equity ownership and any uncollected management and performance fees. See Note 13, "Consolidated Investment Products," for additional information regarding the impact of CIP.

~~Consolidation Analysis~~

The company inventories its funds by vehicle type on a quarterly basis. The company assesses modifications to existing funds on an ongoing basis to determine if a significant reconsideration event has occurred. The consolidation analysis includes a detailed review of the terms of the fund's governing documents and a comparison of the significant terms against the consolidation criteria in ASC Topic 810, including a determination of whether the fund is a VIE or a VOE. Seed money and co-investments in managed funds in which the company has determined that it is the primary beneficiary or in which the company has a controlling financial interest are consolidated if the impact of doing so is deemed material. Otherwise, these investments are accounted for as described in the “Investments” accounting policy in the Form 10-K for the year-ended December 31, 2015.

Upon consolidation of CLOs, the company's and the funds' accounting policies are effectively aligned, resulting in the reclassification of the company's gain or loss (representing the changes in the market value of the company's holding in the

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consolidated fund) from other comprehensive income into other gains/losses. The company's gain or loss on its investment (before consolidation) eliminates with the company's share of the offsetting loss or gain on the fund. The net impact from consolidation of funds previously carried as available-for-sale investments to net income attributable to Invesco Ltd. in each period primarily represents the changes in the value of the company's holding in its consolidated CLOs.

~~Consolidation of CLOs~~

A significant portion of VIEs are CLOs. CLOs are investment vehicles created for the sole purpose of issuing collateralized loan instruments that offer investors the opportunity for returns that vary with the risk level of their investment. The notes issued by the CLOs are backed by diversified collateral asset portfolios consisting primarily of loans or structured debt. For managing the collateral of the CLO entities, the company earns investment management fees, including in some cases subordinated management fees, as well as contingent performance fees. The company has invested in certain of the entities, generally taking a portion of the unrated, junior subordinated position. The company's investments in CLOs are generally subordinated to other interests in the entities and entitle the company and other subordinated tranche investors to receive the residual cash flows, if any, from the entities. The company's subordinated interest can take the form of (1) subordinated notes, (2) income notes or (3) preference/preferred shares. The company has determined that, although the junior tranches have certain characteristics of equity, they should be accounted for and disclosed as debt on the company's Condensed Consolidated Balance Sheets, as the subordinated and income notes have a stated maturity indicating a date for which they are mandatorily redeemable. The preference shares are also classified as debt, as redemption is required only upon liquidation or termination of the CLO and not of the company.

The company determined that it was the primary beneficiary of certain CLOs, as it has the power to direct the activities of the CLOs that most significantly impact the CLOs' economic performance, and the obligation to absorb losses/right to receive benefits from the CLOs that could potentially be significant to the CLOs. The primary beneficiary assessment includes an analysis of the rights of the company in its capacity as investment manager. In some CLOs, the company's role as investment manager provides that the company contractually has the power, as defined in ASC Topic 810, to direct the activities of the CLOs that most significantly impact the CLOs' economic performance, such as managing the collateral portfolio and the CLO's credit risk. In other CLOs, the company determined that it does not have this power in its role as investment manager due to certain rights held by other investors in the products or restrictions that limit the company's ability to manage the collateral portfolio and its credit risk. Additionally, the primary beneficiary assessment includes an analysis of the company's rights to receive benefits and obligations to absorb losses associated with its first loss position and management/performance fees.

The company has elected the fair value option under ASC Topic 825-10-25 to measure the assets of all consolidated CLOs at fair value. All of the investments held by VIEs are presented at fair value in the company's Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015. The company adopted ASU 2014-13 on January 1, 2015, and accordingly the notes issued by consolidated CLOs are no longer carried at fair value but are now measured under the measurement alternative discussed in Accounting Standard Update 2014-13, "Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity" (ASU 2014-13). The measurement alternative requires that the reporting entity measure both the financial assets and the financial liabilities of the CFE by using the more observable of the fair value of the financial assets and the fair value of the financial liabilities, removing any measurement difference previously recorded as net income (loss) attributable to noncontrolling interests in consolidated entities and as an adjustment to retained earnings appropriated for investors in CIP. The company’s subsequent earnings from consolidated CLOs reflect changes in fair value of its own economic interests in the CLOs. Gains or losses on assets and liabilities of the CLOs are not attributed to noncontrolling interests but are offset in other gains/(losses) of CIP.

~~Consolidation of Private Equity, Real Estate, and Fund-of-Funds~~

The company also consolidates certain private equity funds and from time to time real estate funds that are structured as partnerships in which the company is the general partner receiving a management and/or performance fee. Private equity investments made by the underlying funds consist of direct investments in, or fund investments in other private equity funds that hold direct investments in, equity or debt securities of operating companies that are generally not initially publicly traded. Private equity funds are considered investment companies and are therefore accounted for under ASC Topic 946, “Financial Services - Investment Companies.” The company has retained the specialized industry accounting principles of these investment products in its Condensed Consolidated Financial Statements. See Note 13, “Consolidated Investment Products,” for additional details.

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~~Consolidation basis~~

The Condensed Consolidated Financial Statements have been prepared primarily on the historical cost basis; however, certain items are presented using other bases such as fair value, where such treatment is required or voluntarily elected, as discussed above. The financial statements of subsidiaries, with the exception of certain CIP, are prepared for the same reporting period as the Parent and use consistent accounting policies, which, where applicable, have been adjusted to U.S. GAAP from local generally accepted accounting principles or reporting regulations. The financial information of certain CIP is included in the company's Condensed Consolidated Financial Statements on a one-month or a three-month lag based upon the availability of fund financial information. Noncontrolling interests in consolidated entities represents the interests in certain entities consolidated by the company either because the company has control over the entity or has determined that it is the primary beneficiary, but of which the company does not own all of the entity's equity. To the extent that noncontrolling interests represent equity which is redeemable or convertible for cash or other assets at the option of the equity holder, these are deemed to represent temporary equity, and are classified as equity attributable to redeemable noncontrolling interests in the Condensed Consolidated Balance Sheets. Nonredeemable noncontrolling interests are classified as a component of permanent equity.

Money Market Fee Waivers

The company is currently voluntarily providing yield support waivers of its management fees on certain money market funds to ensure that they maintain a minimum level of daily net investment income. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, yield support waivers resulted in a reduction of investment management and service and distribution fees of approximately ~~$3.3~~$1.1 million and ~~$12.3~~$3.0 million, respectively. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, approximately ~~67%~~72% and ~~55%~~66%, respectively, of yield support waivers are offset by a reduction in third party distribution, service and advisory expenses, resulting in a net waiver of ~~$1.1~~$0.3 million and ~~$5.5~~$1.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017, respectively. The company has provided yield support waivers in prior periods and may increase or decrease the level of fee waivers in future periods.

Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements

In May 2014, the ~~FASB~~Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, ~~"Revenue~~“Revenue from Contracts with ~~Customers"~~Customers” (ASU 2014-09), which ~~outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current~~revises revenue recognition criteria and expands disclosure requirements. This new guidance ~~including industry-specific guidance. ASU 2014-09 was originally~~will be effective for ~~fiscal years~~interim and ~~interim periods within those years beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 by one year for~~annual reporting periods beginning after December 15, 2017. ~~Early~~The company will implement this new accounting standard on January 1, 2018. However, a decision on the adoption ~~is permitted~~method has not been made as of the ~~original effective~~ date of this Report. There are certain elements of this new accounting guidance that are still being interpreted. For example, the AICPA Asset Management Task Force is assessing ten implementation topics and, as of this reporting date, only four of the ten topics have been finalized. The underlying premise of the new guidance requires ~~either~~the employment of a ~~retrospective or~~five step model to determine the amount of revenue that reflects the consideration to which the company expects to be entitled for the transfer of services to customers and the timing of recognition. In addition, ASU 2014-09 also requires certain costs to obtain and fulfill contracts with customers to be capitalized, if they meet certain criteria. Capitalized contract costs are subject to amortization and periodic impairment testing. A key part of management’s implementation efforts is the detailed review of the terms and conditions of a ~~modified retrospective approach~~sample of revenue contracts covering a broad range of products across geographic locations. This review is complete. The company does not anticipate a significant change in the timing of revenue recognition for management and service fee revenues. Performance fees (including carried interest) are under evaluation; the timing of recognition will be driven by the terms of each performance fee arrangement. We continue to ~~adoption. In March 2016,~~assess the ~~FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Gross versus Net)” (ASU 2016-08). ASU 2016-08 clarified implementation guidance~~impact of the rule changes on ~~determining if~~required disclosures, the entity acts as a principal or agent to the customer when another party is involved in providing goods or services. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (ASU 2016-10). ASU 2016-10 clarifies guidance relating to identifying performance obligations and accounting for ~~an entity’s promise to grant a license. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts~~costs associated with ~~Customers: Narrow-Scope Improvements~~revenue contracts, and Practical Expedients” (ASU 2016-12). ASU 2016-12 provides narrow-scope improvements relating to collectibility of consideration, presentation of sales and other similar taxes, noncash consideration, and the definition of completed contracts at transition. ASU 2016-12 also provides a practical expedient for dealing with contract modifications at transition and other technical corrections in applying the retrospective transition method. The company is currently evaluating the potential impact on its Consolidated Financial Statements, as well as the available transition methods.

In February 2015, the FASB issued Accounting Standard Update 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The company adopted ASU 2015-02 on January 1, 2016 using the modified retrospective approach, which did not require the restatement of prior periods to conform to the post-adoptiongross versus net revenue presentation. The above findings are based on our work performed to date. Further impacts ~~of the adoption of ASU 2015-02 on January 1, 2016 were~~may be identified as ~~follows:~~

•~~The company consolidated CIP with total assets~~we continue our assessment and ~~liabilities/equity of $458.5 million. The company deconsolidated CIP with total assets and total liabilities and equity of $3,170.6 million, including CLOs of $2,366.5 million.~~

•~~VOE partnership entities (consolidated private equity and fund-of-fund entities) became VIEs upon the adoption and were deconsolidated, along with certain VIE partnership entities.~~

•~~The adoption resulted in the consolidation of certain investment products which became VIEs upon adoption and which were not previously consolidated.~~

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•~~The funds consolidated in prior periods~~ as ~~Consolidated Sponsored Investment Products, "CSIP," became VIEs. Accordingly, with effect from January 1, 2016, the consolidation of all VIEs~~additional guidance (including interpretive guidance) is ~~presented in the aggregate as part of CIP. See Notes 12, “Consolidated Sponsored Investment Products,” and 13, “Consolidated Investment Products.”~~

In May 2015, the FASB issued Accounting Standards Update 2015-07, "Fair Value Measurement - Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)" (ASU 2015-07). ASU 2015-07 removes the requirement to categorize investments within the fair value hierarchy for which fair value is measured using the net asset value (NAV) practical expedient. The company adopted ASU 2015-07 on January 1, 2016; it required retrospective application for each prior period presented. The adoption did not impact the company's financial condition, results of operations or cash flows, as the update relates to financial statement disclosures. See Notes 12, "Consolidated Sponsored Investment Products," and 13, "Consolidated Investment Products."

In January 2016, the FASB issued Accounting Standards Update 2016-01, “Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01). The standard amends certain aspects of recognition, measurement, presentation, and disclosure of financial assets and liabilities. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and, in general, requires a modified retrospective approach to adoption. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments” (ASU 2016-13). ASU 2016-13 amends guidance on reporting credit losses for assets measured at amortized cost and available for sale securities. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 and requires a modified retrospective approach to adoption. Early adoption in fiscal years, and interim periods within those years, beginning after December 15, 2018 is permitted. The company is currently evaluating the potential impacts of these standards as well as available transition methods.

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases” (ASU 2016-02). The standard requires that lessees recognize lease assets and lease liabilities on the balance sheet for all leases with a lease term greater than 12 months. ASU 2016-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2018 and requires a modified retrospective approach to adoption. Early adoption is permitted. The company is currently evaluating the potential impact of this standard.issued.

In March 2016, the FASB issued Accounting Standards Update 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). The standard is intended to simplify aspects of the accounting for share-based payment transactions, including income tax impacts, classification on the statement of cash

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flows, and forfeitures. The company adopted ASU 2016-09 on January 1, 2017. One of the impacts of the new rules is that excess tax benefits and tax deficiencies related to vested awards are no longer recorded in additional paid-in-capital but rather as an income tax expense or benefit. This provision requires a prospective approach to adoption. In the three and six months ended June 30, 2017, the recognition of excess tax benefits reduced our income tax provision by $0.9 million and $2.2 million, respectively.

Another change resulting from the adoption of ASU 2016-09 relates to the presentation of excess tax benefits and tax deficiencies in the Condensed Consolidated Statements of Cash Flows. The standard requires that excess tax benefits and tax deficiencies be shown as operating cash flows within the Condensed Consolidated Statements of Cash Flows; previously, the company reported these cash flow activities as financing cash flows. The company elected to use a prospective approach to adoption related to this provision and in the six months ended June 30, 2017, $2.2 million cash inflows were included within the increase/(decrease) in payables as an operating cash flow in the Condensed Consolidated Statements of Cash Flows. ASU 2016-09 requires that employee taxes paid when shares are withheld for tax withholding purposes be reported as a financing activity in the Condensed Consolidated Statements of Cash Flows. The company has retrospectively adopted this change and included $57.3 million in financing activities for the six months ended June 30, 2017 (six months ended June 30, 2016: $39.0 million). Additionally, the new rules allow companies to elect to continue to account for forfeitures using an estimate or instead to elect to account for forfeitures as they occur. The company elected to continue to account for forfeitures using an estimate. The company anticipates fluctuations in its effective tax rate as a result of the excess tax benefits or tax deficiencies being recorded to the income tax provision, particularly in the first quarter of each year when annual share awards vest.

In October 2016, the FASB issued Accounting Standards Update 2016-17, “Consolidation: Interests Held through Related Parties That Are under Common Control” (ASU 2016-17). The standard addresses how a reporting entity determines if it satisfies the characteristics of a primary beneficiary of a variable interest entity (VIE) and which party within a group is considered the primary beneficiary. The company adopted ASU 2016-17 on January 1, 2017 and determined that this guidance did not materially change the company's consolidation conclusions.

In February 2017, the FASB issued Accounting Standards Update 2017-05, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets: Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” (ASU 2017-05). The standard clarifies the scope of accounting for gains and losses from the derecognition of nonfinancial assets and adds guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective for fiscal years and interim periods within those years beginning after December 15, ~~2016.~~2017 and must be adopted at the same time as ASU 2014-09. The ~~various~~ amendments ~~within the standard require different approaches~~allow either a retrospective or modified retrospective approach to adoption, ~~of either retrospective, modified retrospective or prospective. Early~~and early adoption is permitted. The company is currently evaluating the ~~potential~~ impact of this ~~standard as well as the available transition methods.~~standard.

In ~~August 2016,~~March 2017, the FASB issued Accounting ~~Standards Updated 2016-15, “Statement~~Standard Update 2017-07, “Compensation-Retirement Benefits: Improving the Presentation of ~~Cash Flows - Classification of Certain Cash Receipts~~Net Periodic Pension Cost and ~~Cash Payments”~~Net Periodic Postretirement Benefit Cost” (ASU ~~2016-15)~~2017-07). The ~~standard addresses eight specific cash flow issues~~amendments require that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide guidance on how to ~~reduce diversity~~present the service cost component and the other components of net benefit cost in ~~practice in how certain cash receipts~~the income statement and ~~cash payments are presented on~~allow that only the ~~Statements~~service cost component of ~~Cash Flows.~~net benefit cost is eligible for capitalization. ASU ~~2016-15~~2017-07 is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The amendments require primarily a retrospective approach to ~~adoption~~adoption. The application of the new rules will result in the reclassification of pension related costs within the Consolidated Statements of Income and ~~early adoption is permitted, including in an interim period. The company is currently evaluating~~no impact to the ~~potential impact~~results of ~~this standard.~~operations.

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2. FAIR VALUE OF ASSETS AND LIABILITIES

The carrying value and fair value of financial instruments are presented in the below summary table. The fair value of financial instruments held by ~~CSIP (for the prior period) and~~ CIP ~~are~~is presented in ~~Notes~~Note 12, "Consolidated ~~Sponsored~~ Investment ~~Products" and 13, "Consolidated Investment Products,~~Products." ~~respectively.~~


		September 30, 2016				December 31, 2015					June 30, 2017				December 31, 2016
$ in millions	Footnote Reference	Carrying Value		Fair Value		Carrying Value		Fair Value		Footnote Reference	Carrying Value		Fair Value		Carrying Value		Fair Value
Cash and cash equivalents		1,581.3		1,581.3		1,851.4		1,851.4			1,646.1		1,646.1		1,328.0		1,328.0
Available-for-sale investments	3	161.2		161.2		233.2		233.2		3	108.3		108.3		154.0		154.0
Trading investments	3	411.1		411.1		402.7		402.7		3	228.5		228.5		329.6		329.6
Foreign time deposits *	3	27.0		27.0		24.7		24.7		3	22.3		22.3		26.9		26.9
Assets held for policyholders		7,387.5		7,387.5		6,051.5		6,051.5			10,716.7		10,716.7		8,224.2		8,224.2
Policyholder payables *		(7,387.5	)	(7,387.5	)	(6,051.5	)	(6,051.5	)		(10,716.7	)	(10,716.7	)	(8,224.2	)	(8,224.2	)
Put option contracts		17.6		17.6		1.4		1.4			4.3		4.3		21.8		21.8
UIT-related financial instruments sold, not yet purchased		(0.2	)	(0.2	)	(2.5	)	(2.5	)		(1.1	)	(1.1	)	(6.0	)	(6.0	)
Contingent consideration liability		(80.7	)	(80.7	)	(83.9	)	(83.9	)		(69.2	)	(69.2	)	(78.2	)	(78.2	)
Long-term debt *	4	(2,073.2	)	(2,279.5	)	(2,072.8	)	(2,161.3	)	4	(2,074.8	)	(2,265.3	)	(2,102.4	)	(2,206.5	)

____________


*	These financial instruments are not measured at fair value on a recurring basis. See the indicated footnotes or most recently filed Form 10-K for additional information about the carrying and fair values of these financial instruments. Foreign time deposits are measured at cost plus accrued interest, which approximates fair value, and are accordingly classified as Level 2 securities.

A three-level valuation hierarchy exists for disclosure of fair value measurements based upon the transparency of inputs tointo the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

An asset or liability's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

There are three types of valuation approaches: a market approach, which uses observable prices and other relevant information that is generated by market transactions involving identical or comparable assets or liabilities; an income approach, which uses valuation techniques to convert future amounts to a single, discounted present value amount; and a cost approach, which is based on the amount that currently would be required to replace the service capacity of an asset.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Cash equivalents

Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value (NAV) of the underlying funds, and are classified within level 1 of the valuation hierarchy.

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Available-for-sale investments

Seed money is valued under the market approach through the use of quoted market prices available in an active market and is classified within level 1 of the valuation hierarchy; there is no modeling or additional information needed to arrive at the fair values of these investments. At ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, investments in ~~CLOs~~collateralized loan obligations (CLOs) were valued using pricing information obtained by an independent third-party pricing source. ~~Due to liquidity constraints within the market for CLO products that require the use of unobservable inputs, these investments are classified within level 3 of the valuation hierarchy.~~ Other debt securities are valued using a cost valuation technique due to the lack of available cash flow and market data and are accordingly ~~also~~ classified within level 3 of the valuation hierarchy.

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Trading investments

•Investments related to deferred compensation plans

Investments related to deferred compensation plans are valued under the market approach through the use of quoted prices in an active market and are classified within level 1 of the valuation hierarchy.

•Seed money

•Other equity securities

Other equity securities consist of investments in publicly-traded equity securities. These securities are valued under the market approach through the use of quoted prices on an exchange. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.

•UIT-related equity and debt securities

The company invests in ~~UIT-related~~Unit Investment Trust (UIT)-related equity and debt securities consisting of investments in corporate equities, UITs, and municipal securities. Each is discussed more fully below.

Corporate equities

The company temporarily holds investments in corporate equities for purposes of creating a UIT. Corporate equities are valued under the market approach through use of quoted prices on an exchange. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.

UITs

The company may hold units of its sponsored UITs at period-end for sale in the primary market or secondary market. Equity UITs are valued under the market approach through use of quoted prices on an exchange. Fixed income UITs are valued using recently executed transaction prices, market price quotations (where observable), bond spreads, or credit default swap spreads. The spread data used is for the same maturities as the underlying bonds. If the spread data does not reference the issuers, then data that references comparable issuers is used. When observable price quotations are not available, fair value is determined based on cash flow models with yield curves, bond or single name credit default spreads, and recovery rates based on collateral value as key inputs. Depending on the nature of the inputs, these investments are categorized as level 1, 2, or 3.

~~Municipal securities~~

Municipal securities are valued using recently executed transaction prices, market price quotations (where observable), bond spreads, or credit default swap spreads. The spread data used is for the same maturities as the underlying bonds. If the spread data does not reference the issuers, then data that references comparable issuers is used. When observable price quotations are not available, fair value is determined based on cash flow models with yield curves, bond or single name credit default spreads, and recovery rates based on collateral value as key inputs. Depending on the nature of the inputs, these investments are categorized as level 1, 2, or 3.

Put option contracts

The company has purchased put option contracts to hedge economically foreign currency risk on the translation of a portion of its

Pound Sterling-denominated earnings and Euro-denominated earnings into U.S. Dollars (purchases of ~~$7.5~~$3.9 million and ~~$14.5~~$8.1 million

~~Table of Contents~~

in the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively; three and six months ended June 30, 2016: zero and $7.0 million, respectively). These were the only contracts entered into during the period to hedge economically foreign currency risk on the translation of a portion of the Pound Sterling-denominated earnings and provide coverage through December 31, 2018. The contracts entered into during 2016 to hedge economically foreign currency risk on the translation of a portion of the Euro-denominated earnings provide coverage through December 27, 2017.

The economic hedge is predominantly triggered upon the impact of a significant decline in the respective Pound Sterling/U.S. Dollar foreign exchange rate or Euro/U.S. Dollar foreign exchange rate. Open put option contracts are marked-to-market through earnings, which are recorded in the company's Condensed Consolidated Statements of Income in other gains and losses, net. These derivative contracts are valued using option valuation models and are included in other assets in the company's Condensed Consolidated Balance Sheets. The significant inputs in these models (volatility, forward points and swap curves) are readily available in public markets or can be derived from observable market transactions for substantially the full terms of the contracts and are classified within level 2 of the valuation hierarchy. The company recognized a ~~$0.9~~net loss of $9.2 million and ~~$10.0~~$17.4 million ~~net gain~~ in the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectively (three and ~~nine~~six months ended ~~September~~June 30, ~~2015: $0.2~~2016: $6.6 million and $9.1 million net gain, ~~and $7.6 million net loss,~~ respectively) related to the change in market value of these put option contracts.

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Deferred compensation-related total return swap

In addition to holding trading investments, in 2017 the company purchased a total return swap (TRS) to hedge economically certain of these deferred compensation liabilities. The notional value of the total return swap at June 30, 2017 was $106.2 million and its market value was $0.1 million. The market value of the TRS was determined under the market approach using quoted prices of the underlying investments. The TRS is classified as level 2 of the valuation hierarchy. During the three months ended June 30, 2017, market valuation gains of $2.5 million were recognized in other gains and losses, net.

Assets held for policyholders

Assets held for policyholders are measured at fair value under the market approach based on the quoted prices of the underlying funds in an active market and are classified within level 1 of the valuation hierarchy. The policyholder payables are indexed to the value of the assets held for policyholders and are therefore not included in the tables below.

~~UIT-related financial instruments sold, not yet purchased, and derivative instruments~~

The company uses U.S. Treasury futures, which are types of derivative financial instruments, to hedge economically fixed income UIT inventory and securities in order to mitigate market risk. Open futures contracts are marked-to-market daily through earnings, which are recorded in the company’s Condensed Consolidated Statements of Income in other revenue, along with the mark-to-market on the underlying trading securities held. Fair values of derivative contracts in an asset position are included in other assets in the company’s Condensed Consolidated Balance Sheets. Fair values of derivative contracts in a liability position are included in other liabilities in the company’s Condensed Consolidated Balance Sheets. These derivative contracts are valued under the market approach through use of quoted prices in an active market and are classified within level 1 of the valuation hierarchy. At September 30, 2016 there were 2 futures contracts with a notional value of $0.3 million (December 31, 2015: 15 open futures contracts with a notional value of $1.9 million). Additionally, to hedge economically the market risk associated with equity and debt securities and UITs temporarily held as trading investments, the company will hold short positions in corporate equities, exchange-traded funds, or U.S. treasury security positions. These transactions are recorded as financial instruments sold, not yet purchased and are included in accounts payable and accrued expenses in the company’s Condensed Consolidated Balance Sheets. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.

Contingent Consideration Liability

During 2015, the company acquired certain investment management contracts from Deutsche Bank. Indefinite-lived intangible assets were valued at $119.3 ~~million.~~million. This transaction was a non-cash investing activity during that period. The purchase price was comprised solely of contingent consideration payable in future periods, and is linked to future revenues generated from the contracts. The contingent consideration liability was recorded at fair value as of the date of acquisition using a discounted cash flow model, and is categorized within level 3 of the valuation hierarchy. Anticipated future cash flows were determined using ~~forecast AUM~~forecasted assets under management (AUM) levels and discounted back to the valuation date. The company reassesses significant unobservable inputs during each reporting period. At ~~September~~June 30, ~~2016~~2017 inputs used in the model included assumed growth rates in AUM ranging from 0.69% to ~~4.6%~~4.4% (weighted average growth rate of ~~2.89%~~2.19%) and a discount rate of ~~3.27%~~3.69%. Changes in fair value are recorded in other gains and losses, net in the Condensed Consolidated Statements of Income in the period incurred. An increase in AUM levels and a decrease in the discount rate would increase the fair value of the contingent consideration liability while a decrease in forecasted AUM and an increase in the discount rate would decrease the liability.

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The following table presents, for each of the hierarchy levels described above, the carrying value of the company's assets and liabilities, including major security type for equity and debt securities, which are measured at fair value on the company's Condensed Consolidated Balance Sheet as of ~~September~~June 30, ~~2016~~2017:


	As of September 30, 2016							As of June 30, 2017
$ in millions	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents:
Money market funds	489.2		489.2		—	—		795.1		795.1		—	—
Investments:*
Available-for-sale:
Seed money	145.9		145.9		—	—		88.1		88.1		—	—
CLOs	12.0		—		—	12.0		10.4		—		10.4	—
Other debt securities	3.3		—		—	3.3		9.8		—		—	9.8
Trading investments:
Investments related to deferred compensation plans	172.5		172.5		—	—		86.3		86.3		—	—
Seed money	208.1		208.1		—	—		121.5		121.5		—	—
Other equity securities	29.1		29.1		—	—		19.5		19.5		—	—
UIT-related equity and debt securities:
Corporate equities	1.0		1.0		—	—
UITs	0.4		0.4		—	—		1.2		1.2		—	—
Municipal securities	—		—		—	—
Assets held for policyholders	7,387.5		7,387.5		—	—		10,716.7		10,716.7		—	—
Put option contracts	17.6		—		17.6	—		4.3		—		4.3	—
Total	8,466.6		8,433.7		17.6	15.3		11,852.9		11,828.4		14.7	9.8
Liabilities:
UIT-related financial instruments sold, not yet purchased:
Corporate equities	(0.2	)	(0.2	)	—	—
Exchange traded funds								(1.1	)	(1.1	)	—	—
Contingent consideration liability	(80.7	)	—		—	(80.7	)	(69.2	)	—		—	(69.2	)
Total	(80.9	)	(0.2	)	—	(80.7	)	(70.3	)	(1.1	)	—	(69.2	)

____________


*	Foreign time deposits of ~~$27.0~~$22.3 million are excluded from this table. Equity method and other investments of ~~$272.7~~$277.4 million and ~~$5.7~~$6.1 million, respectively, are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.

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	As of December 31, 2015							As of December 31, 2016
$ in millions	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents:
Money market funds	383.3		383.3		—	—		476.2		476.2		—	—
Investments:*
Available-for-sale:
Seed money	225.9		225.9		—	—		127.9		127.9		—	—
CLOs	1.4		—		—	1.4		12.9		—		—	12.9
Other debt securities	5.9		—		—	5.9		13.2		—		—	13.2
Trading investments:
Investments related to deferred compensation plans	158.8		158.8		—	—		170.5		170.5		—	—
Seed Money	191.2		191.2		—	—		121.9		121.9		—	—
Other equity securities	48.1		48.1		—	—		30.4		30.4		—	—
UIT-related equity and debt securities:
Corporate equities	1.8		1.8		—	—		1.2		1.2		—	—
UITs	1.5		1.5		—	—		5.6		5.6		—	—
Municipal securities	1.3		—		1.3	—
Assets held for policyholders	6,051.5		6,051.5		—	—		8,224.2		8,224.2		—	—
Put option contracts	1.4		—		1.4	—		21.8		—		21.8	—
Total	7,072.1		7,062.1		2.7	7.3		9,205.8		9,157.9		21.8	26.1
Liabilities:
UIT-related financial instruments sold, not yet purchased:
Corporate equities	(2.5	)	(2.5	)	—	—
Exchange traded funds								(5.2	)	(5.2	)	—	—
US treasury securities								(0.8	)	(0.8	)	—	—
Contingent consideration liability	(83.9	)	—		—	(83.9	)	(78.2	)	—		—	(78.2	)
Total	(86.4	)	(2.5	)	—	(83.9	)	(84.2	)	(6.0	)	—	(78.2	)

____________


*	Foreign time deposits of ~~$24.7~~$26.9 million are excluded from this table. Equity method and other investments of ~~$352.8~~$279.0 million and ~~$5.7~~$5.8 million, respectively, are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.

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The following table shows a reconciliation of the beginning and ending fair value measurements for level 3 assets and liabilities during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~September~~June 30, ~~2015~~2016, which are valued using significant unobservable inputs:


	Three months ended September 30, 2016					Nine months ended September 30, 2016						Three months ended June 30, 2017				Six months ended June 30, 2017
$ in millions	Contingent Consideration Liability		CLOs		Other Debt Securities	Contingent Consideration Liability		CLOs		Other Debt Securities		Contingent Consideration Liability		Other Debt Securities		Contingent Consideration Liability		CLOs		Other Debt Securities
Beginning balance	(89.3	)	11.5		3.3	(83.9	)	1.4		5.9		(74.1	)	12.9		(78.2	)	12.9		13.2
Adjustment for adoption of ASU 2015-02	—		—		—	—		11.5		—
Beginning balance, as adjusted	(89.3	)	11.5		3.3	(83.9	)	12.9		5.9
Returns of capital	—		(0.9	)	—	—		(2.3	)	(2.6	)
Purchases/acquisitions												—		—		—		—		7.3
Net unrealized gains and losses included in other gains and losses, net*	5.3		—		—	(6.3	)	—		—		1.3		(2.2	)	1.8		—		(2.2	)
Net unrealized gains and losses included in accumulated other comprehensive income/(loss)*	—		1.4		—	—		1.4		—
Disposition/settlements	3.3		—		—	9.5		—		—		3.6		(0.9	)	7.2		—		(8.5	)
Transfer from level 3 to level 2												—		—		—		(12.9	)	—
Ending balance	(80.7	)	12.0		3.3	(80.7	)	12.0		3.3		(69.2	)	9.8		(69.2	)	—		9.8


	Three months ended September 30, 2015						Nine months ended September 30, 2015						Three months ended June 30, 2016						Six months ended June 30, 2016
$ in millions	Contingent Consideration Liability		CLOs		Other Debt Securities		Contingent Consideration Liability		CLOs		Other Debt Securities		Contingent Consideration Liability		CLOs		Other Debt Securities		Contingent Consideration Liability		CLOs		Other Debt Securities
Beginning balance	(118.7	)	1.3		6.3		—		3.4		6.3		(77.2	)	11.8		4.3		(83.9	)	1.4		5.9
Acquisition	—		—		—		(119.3	)	—		—
Adjustment for adoption of ASU 2015-02													—		—		—		—		11.5		—
Beginning balance, as adjusted													(77.2	)	11.8		4.3		(83.9	)	12.9		5.9
Returns of capital	—		—		(0.4	)	—		(0.1	)	(0.4	)	—		(0.8	)	(1.0	)	—		(1.3	)	(2.6	)
Net unrealized gains and losses included in other gains and losses*	18.4		—		—		18.4		—		—
Net unrealized gains and losses included in other gains and losses, net*													(15.1	)	—		—		(11.6	)	—		—
Net unrealized gains and losses included in accumulated other comprehensive income/(loss)*	—		(0.2	)	—		—		(0.2	)	—		—		0.5		—		—		(0.1	)	—
Disposition/settlements	4.0		—		—		4.6		(2.0	)	—		3.0		—		—		6.2		—		—
Ending balance	(96.3	)	1.1		5.9		(96.3	)	1.1		5.9		(89.3	)	11.5		3.3		(89.3	)	11.5		3.3

_______________


*	These unrealized gains and losses are attributable to balances still held at the respective period ends.

3. INVESTMENTS

The disclosures below include details of the company's investments. Investments held by ~~CSIP (for the prior period) and~~ CIP are detailed in ~~Notes~~Note 12, ~~"Consolidated Sponsored Investment Products, and 13,~~ "Consolidated Investment Products."


$ in millions	September 30, 2016	December 31, 2015	June 30, 2017	December 31, 2016
Available-for-sale investments:
Seed money	145.9	225.9	88.1	127.9
CLOs	12.0	1.4	10.4	12.9
Other debt securities	3.3	5.9	9.8	13.2
Trading investments:
Investments related to deferred compensation plans	172.5	158.8	86.3	170.5
Seed money	208.1	191.2	121.5	121.9
Other equity securities	29.1	48.1	19.5	30.4
UIT-related equity and debt securities	1.4	4.6	1.2	6.8
Equity method investments	272.7	352.8	277.4	279.0
Foreign time deposits	27.0	24.7	22.3	26.9
Other	5.7	5.7	6.1	5.8
Total investments	877.7	1,019.1	642.6	795.3

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Available for sale investments

Realized gains and losses recognized in the Condensed Consolidated Statements of Income during the period from investments classified as available-for-sale are as follows:


	For the three months ended September 30, 2016				For the nine months ended September 30, 2016				For the three months ended June 30, 2017				For the six months ended June 30, 2017
$ in millions	Proceeds from Sales	Gross Realized Gains	Gross Realized Losses		Proceeds from Sales	Gross Realized Gains	Gross Realized Losses		Proceeds from Sales	Gross Realized Gains	Gross Realized Losses		Proceeds from Sales	Gross Realized Gains	Gross Realized Losses
Seed money	31.7	0.8	(0.7	)	33.5	1.2	(0.7	)	12.3	—	(0.7	)	46.5	0.9	(1.3	)
CLOs	1.0	—	—		2.3	—	—		0.6	0.1	—		2.6	0.4	—
Other debt securities	—	—	—		2.6	—	—		0.9	0.8	—		8.5	0.8	—
	32.7	0.8	(0.7	)	38.4	1.2	(0.7	)	13.8	0.9	(0.7	)	57.6	2.1	(1.3	)


	For the three months ended September 30, 2015				For the nine months ended September 30, 2015				For the three months ended June 30, 2016			For the six months ended June 30, 2016
$ in millions	Proceeds from Sales	Gross Realized Gains	Gross Realized Losses		Proceeds from Sales	Gross Realized Gains	Gross Realized Losses		Proceeds from Sales	Gross Realized Gains	Gross Realized Losses	Proceeds from Sales	Gross Realized Gains	Gross Realized Losses
Seed money	29.8	1.0	(0.2	)	45.5	2.0	(0.2	)	0.6	0.1	—	1.8	0.4	—
CLOs	0.3	0.3	—		2.6	0.5	—		0.8	—	—	1.3	—	—
Other debt securities	0.4	—	—		0.4	—	—		1.0	—	—	2.6	—	—
	30.5	1.3	(0.2	)	48.5	2.5	(0.2	)	2.4	0.1	—	5.7	0.4	—

Upon the sale of available-for-sale securities, net realized gains of ~~$0.1~~$0.2 million and ~~$0.5~~$0.8 million were transferred from accumulated other comprehensive ~~income~~income/(loss) into the Condensed Consolidated Statements of Income during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, respectvely (three and ~~nine~~six months ended ~~September~~June 30, ~~2015: $1.1~~2016: $0.1 million and ~~$2.3 million)~~$0.4 million, respectively). The specific identification method is used to determine the realized gain or loss on securities sold or otherwise disposed.

Gross unrealized holding gains and losses recognized in other accumulated other comprehensive ~~income~~income/(loss) from available-for-sale investments are presented in the table below:


	September 30, 2016					December 31, 2015					June 30, 2017					December 31, 2016
$ in millions	Cost	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Fair Value	Cost	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Fair Value	Cost	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Fair Value	Cost	Gross Unrealized Holding Gains	Gross Unrealized Holding Losses		Fair Value
Seed money	144.0	7.3	(5.4	)	145.9	227.6	7.6	(9.3	)	225.9	82.7	7.2	(1.8	)	88.1	127.2	6.8	(6.1	)	127.9
CLOs	9.9	2.4	(0.3	)	12.0	1.3	0.1	—		1.4	7.3	3.1	—		10.4	9.2	3.7	—		12.9
Other debt securities	3.1	0.2	—		3.3	5.9	—	—		5.9	9.8	—	—		9.8	13.2	—	—		13.2
	157.0	9.9	(5.7	)	161.2	234.8	7.7	(9.3	)	233.2	99.8	10.3	(1.8	)	108.3	149.6	10.5	(6.1	)	154.0

At ~~September~~June 30, ~~2016~~2017, 9587 seed money funds (December 31, ~~2015: 192~~2016: 103 seed money funds) had incurred gross unrealized holding losses. The following table provides a breakdown of the unrealized losses.


	September 30, 2016			December 31, 2015			June 30, 2017			December 31, 2016
$ in millions	Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses		Fair Value	Gross Unrealized Losses
Less than 12 months	17.5	(0.5	)	93.0	(3.0	)	17.4	(0.4	)	1.9	(0.2	)
12 months or greater	71.9	(4.9	)	65.5	(6.3	)	37.9	(1.4	)	56.4	(5.9	)
Total	89.4	(5.4	)	158.5	(9.3	)	55.3	(1.8	)	58.3	(6.1	)

The company has reviewed investment securities for other-than-temporary impairment (OTTI) in accordance with its accounting policy and has recognized no$3.2 million of other-than-temporary impairment charges on available-for-sale investments during the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015~~:2016: none). ~~The~~In contemplation of OTTI, the company ~~reviewed~~conducts a review of the financial condition and near-term prospects of the underlying securities ~~in the seeded funds~~ as well as the severity and duration of ~~the impairment and concluded that the gross unrealized losses on these securities did not represent other-than-temporary impairments. The securities~~any declines in fair value. No OTTI is recorded for seeded funds which are expected to recover their value over time and for which the company has the intent and ability to hold the securities until this recovery occurs. For CLO ~~investments, the company reviewed the estimated future cashflows of each CLO.~~

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investments, the company reviewed the estimated future cashflows of each CLO. If the present value of the estimated future cashflows is lower than the carrying value of the investment and there is an adverse change in estimated cashflows, the impairment is considered to be other than temporary. During the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016, no other-than-temporary impairment related to credit related factors was recognized.

Available-for-sale debt securities as of ~~September~~June 30, ~~2016~~2017 by maturity, are set out below:



	Available-for-Sale (Fair Value)
Less than one year	~~1.7~~10.1
One to five years	~~1.7~~0.2
Five to ten years	~~9.1~~9.9
Greater than ten years	~~2.8~~—
Total available-for-sale	~~15.3~~20.2

Trading investments

The portion of trading gains and losses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, that relates to trading securities still held at ~~September~~June 30, ~~2016,~~2017, was a ~~$11.3~~$5.4 million net gain and ~~$12.9~~$10.2 million net gain, respectively (three and ~~nine~~six months ended ~~September~~June 30, ~~2015: $17.0~~2016: $3.3 million net ~~loss~~gain and ~~$18.9~~$1.6 million net ~~loss,~~gain, respectively).

~~Equity method investments~~

On April 5, 2016, the company purchased the remaining 51% of Invesco Asset Management (India) Private Limited (formerly our joint venture, Religare Invesco Asset Management Company), increasing our interest to 100%, replacing the equity method investment with a fully consolidated subsidiary. At March 31, 2016, Invesco was committed to its plan of acquisition, which under U.S. GAAP requires the company to include any cumulative translation adjustments as part of the carrying value of the investment for the purpose of other-than-temporary impairment testing. As a result, during the three months ended March 31, 2016, the company recorded a non-cash impairment charge of $17.8 million related to its 49% investment in the joint venture. The charge relates entirely to the devaluation of the Indian Rupee against the U.S. Dollar over the period since the 2013 purchase and is included in equity in earnings of unconsolidated affiliates.

4. LONG-TERM DEBT

The disclosures below include details of the company's debt. Debt of CIP is detailed in Note 1312, “Consolidated Investment Products.”


	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
$ in millions	Carrying Value**	Fair Value	Carrying Value**	Fair Value	Carrying Value**	Fair Value	Carrying Value**	Fair Value
Floating rate credit facility expiring August 7, 2020	—	—	—	—	—	—	28.7	28.7
Unsecured Senior Notes*:
$600 million 3.125% - due November 30, 2022	596.2	622.6	596.1	601.4	596.6	618.1	596.3	604.7
$600 million 4.000% - due January 30, 2024	593.0	651.2	592.7	628.3	593.6	637.9	593.2	625.3
$500 million 3.750% - due January 15, 2026	494.4	531.4	494.2	503.0	494.8	523.7	494.5	506.4
$400 million 5.375% - due November 30, 2043	389.6	474.3	389.8	428.6	389.8	485.6	389.7	441.4
Long-term debt	2,073.2	2,279.5	2,072.8	2,161.3	2,074.8	2,265.3	2,102.4	2,206.5

____________


*	The company's senior note indentures contain certain restrictions on mergers or consolidations. Beyond these items, there are no other restrictive covenants in the indentures.


**	The difference between the principal amounts and the carrying values of the senior notes in the table above reflect the unamortized debt issuance costs and discounts.

The issuer of the senior notes is an indirect 100% owned finance subsidiary of ~~Invesco Ltd. (the Parent),~~the Parent, and the Parent fully and unconditionally ~~guaranteed~~guarantees the securities. The requirement of certain subsidiaries of the Parent to maintain minimum levels of capital and other similar provisions of applicable law may have the effect of limiting withdrawals of capital, repayment of intercompany loans and payment of dividends by such entities.

~~Table of Contents~~

The fair market value of the company's senior notes was determined by market quotes provided by Bloomberg, which is considered a ~~Level~~level 2 valuation input. In the absence of an active market, the company relies upon the average price quoted by brokers for determining the fair market value of the debt.

At ~~September~~June 30, ~~2016~~2017, the company's outstanding senior notes of ~~$2,073.2~~$2,074.8 million mature in periods greater than five years from the balance sheet date. The floating rate credit facility will expire in less than five years.

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At ~~September~~June 30, ~~2016,~~2017, the outstanding balance on the $1.25 billion credit facility was zero (December 31, ~~2015: zero)~~2016: $28.7 million). ~~Borrowings under the~~The credit facility will bear interest at (i) LIBOR for specified ~~interest~~borrowing periods or (ii) a floating base rate (based upon the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) LIBOR for an interest period of one month plus 1.00%), plus, in either case, an applicable incremental margin determined with reference to the higher of the available credit ratings of the company or its indirect subsidiary Invesco Finance PLC. Based on credit ratings as of ~~September~~June 30, ~~2016~~2017 of the company, the applicable incremental margin for LIBOR-based loans was 0.875% and for base rate loans was 0.00%. In addition, the company is required to pay the lenders a facility fee on the aggregate commitments of the lenders (whether or not used) at a rate per annum which is based on the higher of the available credit ratings of the company or its indirect subsidiary Invesco Finance PLC. Based on credit ratings as of ~~September~~June 30, ~~2016,~~2017, the annual facility fee was equal to 0.125%.

The credit agreement governing the credit facility contains customary restrictive covenants on the company and its subsidiaries. Restrictive covenants in the credit agreement include, but are not limited to: prohibitions on creating, incurring or assuming any liens; entering into merger arrangements; selling, leasing, transferring or otherwise disposing of assets; making a material change in the nature of the business; making a significant accounting policy change in certain situations; entering into transactions with affiliates; and incurring indebtedness through the subsidiaries (other than the borrower, Invesco Finance PLC). Many of these restrictions are subject to certain minimum thresholds and exceptions. Financial covenants under the credit agreement include: (i) the quarterly maintenance of a debt/EBITDA leverage ratio, as defined in the credit agreement, of not greater than 3.25:1.00, (ii) a coverage ratio (EBITDA, as defined in the credit agreement/interest payable for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00.

The credit agreement governing the credit facility also contains customary provisions regarding events of default which could result in an acceleration or increase in amounts due, including (subject to certain materiality thresholds and grace periods) payment default, failure to comply with covenants, material inaccuracy of representation or warranty, bankruptcy or insolvency proceedings, change of control, certain judgments, ERISA matters, cross-default to other debt agreements, governmental action prohibiting or restricting the company or its subsidiaries in a manner that has a material adverse effect and failure of certain guaranty obligations. The company is in compliance with all regulatory minimum net capital requirements.

The lenders (and their respective affiliates) may have provided, and may in the future provide, investment banking, cash management, underwriting, lending, commercial banking, leasing, foreign exchange, trust or other advisory services to the company and its subsidiaries and affiliates. These parties may have received, and may in the future receive, customary compensation for these services.

The company maintains approximately ~~$18.5~~$10.3 million in letters of credit from a variety of banks. The letters of credit are generally one-year automatically-renewable facilities and are maintained for various commercial reasons.

5. SHARE CAPITAL

The number of common shares and common share equivalents issued are represented in the table below:


	As of				As of
In millions	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
Common shares issued	490.4		490.4		490.4		490.4
Less: Treasury shares for which dividend and voting rights do not apply	(81.9	)	(72.9	)	(83.5	)	(86.6	)
Common shares outstanding	408.5		417.5		406.9		403.8

Total treasury shares at ~~September~~June 30, ~~2016~~2017 were ~~91.3~~92.8 million (December 31, ~~2015: 81.3~~2016: 95.9 million), including ~~9.4~~9.3 million unvested restricted stock awards (December 31, ~~2015: 8.4~~2016: 9.3 million) for which dividend and voting rights apply. The market price of common shares at ~~September~~June 30, ~~2016~~2017 was ~~$31.27.~~$35.19 per share. The total market value of the company's ~~91.3~~92.8 million treasury shares was ~~$2.9~~$3.3 billion at ~~September~~June 30, ~~2016.~~2017.

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6. OTHER COMPREHENSIVE INCOME/(LOSS)

The components of accumulated other comprehensive income/(loss) were as follows:


	For the three months ended September 30, 2016									For the three months ended June 30, 2017
$ in millions	Foreign currency translation		Employee benefit plans		Equity method investments	Available-for-sale investments		Total		Foreign currency translation		Employee benefit plans		Equity method investments	Available-for-sale investments		Total
Other comprehensive income/(loss) net of tax:
Currency translation differences on investments in foreign subsidiaries, net of tax	(63.4	)	—		—	—		(63.4	)
Actuarial (loss)/gain related to employee benefit plans, net of tax	—		—		—	—		—
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax	—		(1.8	)	—	—		(1.8	)
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax	—		0.4		—	—		0.4
Share of other comprehensive income/(loss) of equity method investments, net of tax	—		—		2.4	—		2.4
Currency translation differences on investments in foreign subsidiaries										147.4		—		—	—		147.4
Reclassification of actuarial (gain)/loss into employee compensation expense										—		0.5		—	—		0.5
Share of other comprehensive income/(loss) of equity method investments										—		—		0.9	—		0.9
Unrealized gains/(losses) on available-for-sale investments, net of tax	—		—		—	2.3		2.3		—		—		—	0.9		0.9
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax	—		—		—	(0.2	)	(0.2	)
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net										—		—		—	(0.2	)	(0.2	)
Other comprehensive income/(loss), net of tax	(63.4	)	(1.4	)	2.4	2.1		(60.3	)	147.4		0.5		0.9	0.7		149.5

Beginning balance	(432.7	)	(88.6	)	6.5	0.9		(513.9	)	(617.3	)	(139.0	)	5.1	7.5		(743.7	)
Other comprehensive income/(loss), net of tax	(63.4	)	(1.4	)	2.4	2.1		(60.3	)	147.4		0.5		0.9	0.7		149.5
Other comprehensive (income)/loss attributable to noncontrolling interests	0.5		—		—	—		0.5
Ending balance	(495.6	)	(90.0	)	8.9	3.0		(573.7	)	(469.9	)	(138.5	)	6.0	8.2		(594.2	)


	For the nine months ended September 30, 2016									For the six months ended June 30, 2017
$ in millions	Foreign currency translation		Employee benefit plans		Equity method investments	Available-for-sale investments		Total		Foreign currency translation		Employee benefit plans		Equity method investments	Available-for-sale investments		Total
Other comprehensive income/(loss) net of tax:
Currency translation differences on investments in foreign subsidiaries, net of tax	(132.8	)	—		—	—		(132.8	)
Currency translation differences on investments in foreign subsidiaries										210.0		—		—	—		210.0
Actuarial (loss)/gain related to employee benefit plans, net of tax	—		(0.4	)	—	—		(0.4	)	—		(0.4	)	—	—		(0.4	)
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax	—		(5.2	)	—	—		(5.2	)
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax	—		1.2		—	—		1.2
Share of other comprehensive income/(loss) of equity method investments, net of tax	—		—		3.0	—		3.0
Unrealized gains/(losses) on available-for-sale investments, net of tax	—		—		—	4.0		4.0
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax	—		—		—	(0.5	)	(0.5	)
Reclassification of actuarial (gain)/loss into employee compensation expense										—		1.1		—	—		1.1
Share of other comprehensive income/(loss) of equity method investments										—		—		1.2	—		1.2
Unrealized gains/(losses) on available-for-sale investments										—		—		—	4.0		4.0
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net										—		—		—	(0.8	)	(0.8	)
Other comprehensive income/(loss), net of tax	(132.8	)	(4.4	)	3.0	3.5		(130.7	)	210.0		0.7		1.2	3.2		215.1

Beginning balance	(365.8	)	(85.6	)	5.9	(0.5	)	(446.0	)	(679.9	)	(139.2	)	4.8	5.0		(809.3	)
Other comprehensive income/(loss), net of tax	(132.8	)	(4.4	)	3.0	3.5		(130.7	)	210.0		0.7		1.2	3.2		215.1
Other comprehensive (income)/loss attributable to noncontrolling interests	3.0		—		—	—		3.0
Ending balance	(495.6	)	(90.0	)	8.9	3.0		(573.7	)	(469.9	)	(138.5	)	6.0	8.2		(594.2	)

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For the three months ended September 30, 2015
$ in millions Foreign currency translation Employee benefit plans Equity method investments Available-for-sale investments Total
Other comprehensive income/(loss) net of tax:
Currency translation differences on investments in foreign subsidiaries, net of tax (223.9 ) —
—
—
(223.9 )
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax —
(1.8 ) —
—
(1.8 )
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax —
0.6
—
—
0.6
Share of other comprehensive income/(loss) of equity method investments, net of tax —
—
(1.9 ) —
(1.9 )
Unrealized gains/(losses) on available-for-sale investments, net of tax —
—
—
(5.8 ) (5.8 )
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax —
—
—
(0.7 ) (0.7 )
Other comprehensive income/(loss), net of tax (223.9 ) (1.2 ) (1.9 ) (6.5 ) (233.5 )

Beginning balance (12.2 ) (93.6 ) 7.8
3.2
(94.8 )
Other comprehensive income/(loss), net of tax (223.9 ) (1.2 ) (1.9 ) (6.5 ) (233.5 )
Ending balance (236.1 ) (94.8 ) 5.9
(3.3 ) (328.3 )



	For the three months ended June 30, 2016
$ in millions	Foreign currency translation		Employee benefit plans		Equity method investments	Available-for-sale investments		Total
Other comprehensive income/(loss) net of tax:
Currency translation differences on investments in foreign subsidiaries	(166.6	)	—		—	—		(166.6	)
Reclassification of prior service cost/(credit) into employee compensation expense	—		(1.8	)	—	—		(1.8	)
Reclassification of actuarial (gain)/loss into employee compensation expense	—		0.5		—	—		0.5
Share of other comprehensive income/(loss) of equity method investments	—		—		0.9	—		0.9
Unrealized gains/(losses) on available-for-sale investments	—		—		—	(0.6	)	(0.6	)
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net	—		—		—	(0.1	)	(0.1	)
Other comprehensive income/(loss)	(166.6	)	(1.3	)	0.9	(0.7	)	(167.7	)

Beginning balance	(268.6	)	(87.3	)	5.6	1.6		(348.7	)
Other comprehensive income/(loss)	(166.6	)	(1.3	)	0.9	(0.7	)	(167.7	)
Other comprehensive (income)/loss attributable to noncontrolling interests	2.5		—		—	—		2.5
Ending balance	(432.7	)	(88.6	)	6.5	0.9		(513.9	)

For the nine months ended September 30, 2015
$ in millions Foreign currency translation Employee benefit plans Equity method investments Available-for-sale investments Total
Other comprehensive income/(loss) net of tax:
Currency translation differences on investments in foreign subsidiaries, net of tax (364.2 ) —
—
—
(364.2 )
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax —
(4.8 ) —
—
(4.8 )
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax —
1.7
—
—
1.7
Share of other comprehensive income/(loss) of equity method investments, net of tax —
—
(0.6 ) —
(0.6 )
Unrealized gains/(losses) on available-for-sale investments, net of tax —
—
—
(7.6 ) (7.6 )
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax —
—
—
(1.6 ) (1.6 )
Other comprehensive income/(loss), net of tax (364.2 ) (3.1 ) (0.6 ) (9.2 ) (377.1 )

Beginning balance 128.1
(91.7 ) 6.5
5.9
48.8
Other comprehensive income/(loss), net of tax (364.2 ) (3.1 ) (0.6 ) (9.2 ) (377.1 )
Ending balance (236.1 ) (94.8 ) 5.9
(3.3 ) (328.3 )



	For the six months ended June 30, 2016
$ in millions	Foreign currency translation		Employee benefit plans		Equity method investments	Available-for-sale investments		Total
Other comprehensive income/(loss) net of tax:
Currency translation differences on investments in foreign subsidiaries	(69.4	)	—		—	—		(69.4	)
Actuarial (loss)/gain related to employee benefit plans	—		(0.4	)	—	—		(0.4	)
Reclassification of prior service cost/(credit) into employee compensation expense	—		(3.4	)	—	—		(3.4	)
Reclassification of actuarial (gain)/loss into employee compensation expense	—		0.8		—	—		0.8
Share of other comprehensive income/(loss) of equity method investments	—		—		0.6	—		0.6
Unrealized gains/(losses) on available-for-sale investments	—		—		—	1.7		1.7
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net	—		—		—	(0.3	)	(0.3	)
Other comprehensive income/(loss)	(69.4	)	(3.0	)	0.6	1.4		(70.4	)

Beginning balance	(365.8	)	(85.6	)	5.9	(0.5	)	(446.0	)
Other comprehensive income/(loss)	(69.4	)	(3.0	)	0.6	1.4		(70.4	)
Other comprehensive (income)/loss attributable to noncontrolling interests	2.5		—		—	—		2.5
Ending balance	(432.7	)	(88.6	)	6.5	0.9		(513.9	)

Net Investment Hedge

During the second quarter of 2016, the Company designated certain intercompany debt as a non-derivative net investment hedging instrument against foreign currency exposure related to its net investment in foreign operations. At ~~September~~June 30, ~~2016, £130~~2017, £130.0 million ($168.9 million) of intercompany debt was designated as a net investment hedge. For the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the Company recognized foreign currency ~~gains~~losses of ~~$18.3~~$8.3 million resulting from the net investment hedge within currency translation differences on investments in foreign subsidiaries in other comprehensive income. No hedge ineffectiveness was recognized in income.

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7. SHARE-BASED COMPENSATION

The company recognized total expenses of ~~$118.4~~$92.5 million and ~~$112.9~~$79.1 million related to equity-settled share-based payment transactions in the ~~nine~~six months ended ~~September~~June 30, 2017 and 2016, ~~and September 30, 2015,~~ respectively.

The company has not granted share option awards under share-based compensation arrangements since 2005. The awards had a ten-year life; all share options expired at December 31, 2015. Cash received from exercise of share options in the nine months ended September 30, 2015 was $2.1 million.

Share Awards

Movements on share awards during the periods ended ~~September~~June 30, are detailed below:


	For the nine months ended September 30, 2016					For the nine months ended September 30, 2015				For the six months ended June 30, 2017					For the six months ended June 30, 2016
Millions of shares, except fair values	Time- Vested		Performance- Vested		Weighted Average Grant Date Fair Value ($)	Time- Vested		Performance- Vested		Time- Vested		Performance- Vested		Weighted Average Grant Date Fair Value ($)	Time- Vested		Performance- Vested
Unvested at the beginning of period	10.4		0.6		33.62	11.5		0.5		12.1		0.8		31.22	10.4		0.6
Granted during the period	6.4		0.4		27.40	4.0		0.3		5.1		0.3		32.18	6.3		0.4
Forfeited during the period	(0.2	)	—		31.61	(0.1	)	—		(0.3	)	—		31.50	(0.1	)	—
Vested and distributed during the period	(4.2	)	(0.2	)	31.38	(4.6	)	(0.2	)	(4.7	)	(0.2	)	31.34	(4.1	)	(0.2	)
Unvested at the end of the period	12.4		0.8		31.20	10.8		0.6		12.2		0.9		31.57	12.5		0.8

~~Share awards outstanding at September 30, 2016, had a weighted average remaining contractual life of 1.49 years.~~ The total fair value of shares that vested during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 was ~~$120.4~~$155.1 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $190.6~~2016: $118.1 million). The weighted average grant date fair value of the U.S. Dollar share awards that were granted during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 was ~~$27.40 (nine~~$32.18 (six months ended ~~September~~June 30, ~~2015: $40.21)~~2016: $27.39).

At ~~September~~June 30, ~~2016,~~2017, there was ~~$312.5~~$343.1 million of total unrecognized compensation cost related to non-vested share awards; that cost is expected to be recognized over a weighted average period of ~~2.57~~2.73 years.

8. RETIREMENT BENEFIT PLANS

Defined Contribution Plans

The total amounts charged to the Condensed Consolidated Statements of Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 of ~~$13.9~~$15.8 million and ~~$44.3~~$32.7 million, respectively (three and ~~nine~~six months ended ~~September~~June 30, ~~2015: $13.8~~2016: $15.2 million and ~~$44.5~~$30.4 million, respectively) represent contributions paid or payable to ~~these~~the defined contribution plans by the company at rates specified in the rules of the plans. As of ~~September~~June 30, ~~2016,~~2017, accrued contributions of ~~$18.7~~$15.9 million (December 31, ~~2015: $24.5~~2016: $23.1 million) for the current year will be paid to the plans.

~~Table of Contents~~

Defined Benefit Plans

The company maintains legacy defined benefit pension plans for qualifying employees of its subsidiaries in the U.K., Ireland, Germany and Taiwan. The postretirement medical plan was terminated effective December 31, 2016. The components of net periodic benefit cost in respect of these defined benefit plans are as follows:


	Retirement Plans								Medical Plan
	For the three months ended September 30,				For the nine months ended September 30,				For the three months ended September 30,				For the nine months ended September 30,				For the three months ended June 30,				For the six months ended June 30,
$ in millions	2016		2015		2016		2015		2016		2015		2016		2015		2017		2016		2017		2016
Service cost	1.4		1.1		4.2		3.6		—		—		—		—		1.2		1.4		2.4		2.8
Interest cost	4.4		5.4		13.2		15.9		—		—		—		—		4.1		4.4		8.2		8.8
Expected return on plan assets	(5.7	)	(6.3	)	(17.1	)	(18.6	)	—		(0.1	)	—		(0.3	)	(5.4	)	(5.7	)	(10.8	)	(11.4	)
Amortization of prior service cost/(credit)	—		—		—		0.1		(2.8	)	(2.9	)	(7.7	)	(7.6	)
Amortization of net actuarial (gain)/loss	0.4		0.7		1.4		2.0		—		—		—		—		0.7		0.5		1.3		1.0
Net periodic benefit cost/(benefit)	0.5		0.9		1.7		3.0		(2.8	)	(3.0	)	(7.7	)	(7.9	)	0.6		0.6		1.1		1.2

The estimated ~~amounts of~~ contributions expected to be paid to the plans during ~~2016~~2017 are ~~$15.5 million for retirement plans and none for the medical plan.~~$11.2 million. Payments made to the plans during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 were ~~$11.6 million to the retirement plan and zero to the medical plan.~~$5.6 million.

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9. TAXATION

At ~~September~~June 30, ~~2016,~~2017, the total amount of gross unrecognized tax benefits was ~~$10.0~~$10.8 million as compared to the December 31, ~~2015~~2016 total of ~~$9.6~~$10.5 million.

10. EARNINGS PER SHARE

The calculation of earnings per share is as follows:


	For the three months ended September 30,						For the nine months ended September 30,						For the three months ended June 30,						For the six months ended June 30,
In millions, except per share data	2016			2015			2016			2015			2017			2016			2017			2016
Net income		$255.9			$241.3			$650.2			$769.3			$249.6			$236.5			$463.8			$394.3
Net (income)/loss attributable to noncontrolling interests in consolidated entities	(14.7		)	8.0			(22.5		)	(3.1		)	(10.0		)	(11.0		)	(12.2		)	(7.8		)
Net income attributable to Invesco Ltd.	241.2			249.3			627.7			766.2			239.6			225.5			451.6			386.5
Less: Allocation of earnings to restricted shares	(7.3		)	(6.3		)	(18.1		)	(19.6		)	(7.2		)	(6.7		)	(13.6		)	(10.9		)
Net income attributable to common shareholders		$233.9			$243.0			$609.6			$746.6			$232.4			$218.8			$438.0			$375.6

Invesco Ltd:
Weighted average shares outstanding - basic	412.6			428.8			416.7			430.9			409.9			418.9			408.8			418.8
Dilutive effect of non-participating share-based awards	0.3			0.3			0.3			0.4			0.4			0.2			0.4			0.3
Weighted average shares outstanding - diluted	412.9			429.1			417.0			431.3			410.3			419.1			409.2			419.1

Common shareholders:
Weighted average shares outstanding - basic	412.6			428.8			416.7			430.9			409.9			418.9			408.8			418.8
Less: Weighted average restricted shares	(12.4		)	(10.8		)	(12.0		)	(11.0		)	(12.4		)	(12.5		)	(12.3		)	(11.8		)
Weighted average common shares outstanding - basic	400.2			418.0			404.7			419.9			397.5			406.4			396.5			407.0
Dilutive effect of non-participating share-based awards	0.3			0.3			0.3			0.4			0.4			0.2			0.4			0.3
Weighted average common shares outstanding - diluted	400.5			418.3			405.0			420.3			397.9			406.6			396.9			407.3

Earnings per share:
Basic earnings per share		$0.58			$0.58			$1.51			$1.78			$0.58			$0.54			$1.10			$0.92
Diluted earnings per share		$0.58			$0.58			$1.51			$1.78			$0.58			$0.54			$1.10			$0.92

See Note 7, “Share-Based Compensation,” for a summary of share awards outstanding under the company's share-based compensation programs. These programs could result in the issuance of common shares from time to time that would affect the measurement of basic and diluted earnings per share.

~~Table of Contents~~

There were zero and 0.3 million shares of performance-vested awards and no time-vested ~~based~~ awards ~~that were~~ excluded from the computation of diluted earnings per share during the ~~nine~~three and six months ended ~~September~~June 30, ~~2016 and 2015,~~2017, respectively, due to their inclusion being ~~anti-dilutive.~~anti-dilutive (three and six months ended June 30, 2016: none). There were ~~0.2~~0.1 million contingently issuable shares excluded from the diluted earnings per share computation during the ~~nine~~three and six months ended ~~September~~June 30, ~~2016 (nine~~2017 (three and six months ended ~~September~~June 30, ~~2015: 0.4~~2016: 0.2 million), because the necessary performance conditions for the shares to be issuable had not yet been satisfied at the end of the respective period.

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11. COMMITMENTS AND CONTINGENCIES

Commitments and contingencies may arise in the ordinary course of business.

Off Balance Sheet Commitments

The company has transactions with various private equity, real estate and other investment entities sponsored by the company for the investment of client assets in the normal course of business. Many of the company's investment products are structured as limited partnerships. The company's investment may take the form of the general partner or a limited partner. The entities are structured such that each partner makes capital commitments that are to be drawn down over the life of the partnership as investment opportunities are identified. At ~~September~~June 30, ~~2016~~2017, the company's undrawn capital commitments were ~~$217.2~~$216.3 million (December 31, ~~2015: $185.6~~2016: $204.1 million).

The Parent and various company subsidiaries have entered into agreements with financial institutions to guarantee certain obligations of other company subsidiaries. The company would be required to perform under these guarantees in the event of certain defaults. The company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Legal Contingencies

The company is from time to time involved in litigation relating to claims arising in the ordinary course of its business. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit will have on the company. There are many reasons that the company cannot make these assessments, including, among others, one or more of the following: the proceeding is in its early stages; the damages sought are unspecified, unsupportable, unexplained or uncertain; the claimant is seeking relief other than compensatory damages; the matter presents novel legal claims or other meaningful legal uncertainties; discovery has not started or is not complete; there are significant facts in dispute; and there are other parties who may share in any ultimate liability.

In management’s opinion, adequate accrual has been made as of ~~September~~June 30, ~~2016~~2017 to provide for any such losses that may arise from matters for which the company could reasonably estimate an amount. Management is of the opinion that the ultimate resolution of such claims will not materially affect the company’s business, financial position, results of operation or liquidity. Furthermore, in management’s opinion, it is not possible to estimate a range of reasonably possible losses with respect to other litigation contingencies.

The investment management industry also is subject to extensive levels of ongoing regulatory oversight and examination. In the United States, United Kingdom, and other jurisdictions in which the company operates, governmental authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to the company's compliance with applicable laws and regulations. Additional lawsuits or regulatory enforcement actions arising out of these inquiries may in the future be filed against the company and related entities and individuals in the United States, United Kingdom, and other jurisdictions in which the company and its affiliates operate. Any material loss of investor and/or client confidence as a result of such inquiries and/or litigation could result in a significant decline in ~~assets under management,~~AUM, which would have an adverse effect on the company’s future financial results and its ability to grow its business.

In a separate matter, a Canadian subsidiary of the company had previously received assessments related to prior taxation periods up to and including the year ended December 31, 2012 for goods and services tax that the Canada Revenue Agency (CRA) believes should be levied on certain fees payable. The assessments, including applicable interest, are approximately $6.6 million. The company has secured a letter of credit in the same amount, which has been posted with the CRA as security for payment. The company objected to and appealed the assessments, and in May 2017, the Tax Court of Canada ruled in favor of the CRA. The company filed an appeal with the Federal Court of Appeal in June 2017. Management, with advice from advisors and counsel, believes it is more likely than not that its position will prevail upon appeal, and accordingly no provision has been recorded in the Condensed Consolidated Financial Statements. However, in the event the company were not to prevail, additional taxes and interest payable in relation to taxation periods after December 31, 2012 are estimated in the amount of $6.5 million.

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12. ~~CONSOLIDATED SPONSORED INVESTMENT PRODUCTS~~

Upon the adoption of ASU 2015-02, the funds consolidated in prior periods as CSIP became VIEs. Accordingly, with effect from January 1, 2016, the consolidation of all VIEs is presented in the aggregate as part of CIP. See Note 13, "Consolidated Investment Products." The following table presents the balances related to CSIP that were included on the Condensed Consolidated Balance Sheet at December 31, 2015.



~~$ in millions~~	~~December 31, 2015~~
~~Investments of CSIP~~	~~290.3~~
~~Cash and cash equivalents of CSIP~~	~~21.9~~
~~Accounts receivable and other assets of CSIP~~	~~6.9~~
~~Assets of CSIP~~	~~319.1~~
~~Other liabilities of CSIP~~	~~(4.4~~	)
~~Equity attributable to redeemable noncontrolling interests~~	~~(167.3~~	)
~~Equity attributable to nonredeemable noncontrolling interests~~	~~(40.8~~	)
~~Invesco's net interests in CSIP~~	~~106.6~~

The carrying value of investments held by CSIP is also their fair value. The following table presents the fair value hierarchy levels of investments held by CSIP, which are measured at fair value as of December 31, 2015:

As of December 31, 2015
$ in millions
Fair
Value
Measurements

Quoted Prices
in Active Markets
for Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level2)

Significant
Unobservable
Inputs
(Level 3)
Investments Measured at NAV as a practical expedient
Investments:
Fixed income securities 204.2
—
204.2
—
—
Equity securities 0.7
0.7
—
—
—
Investments in fixed income funds 35.0
—
—
—
35.0
Investments in other private equity funds 50.4
—
—
—
50.4
Total investments at fair value 290.3
0.7
204.2
—
85.4

The tables below summarizes as of December 31, 2015 the nature of investments that are valued using the NAV as a practical expedient and any related liquidation restrictions or other factors which may impact the ultimate value realized:

As of December 31, 2015

Fair Value
($ in millions)
Total Unfunded Commitments ($ in millions)
Weighted Average Remaining Term ⁽¹⁾
Redemption Frequency Redemption Notice Period
Fixed income funds 35.0
—
n/a Monthly 10 days
Private equity fund of funds 50.4
33.2
7.9 years
n/a ⁽²⁾

n/a ⁽²⁾

~~__________________~~

~~(1) These investments are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over the weighted average periods indicated.~~

(2) These investments are not subject to redemption; however, for certain funds, the investors may sell or transfer their interest, which may require approval by the general partner of the underlying funds.

Equity securities are valued under the market approach through use of quoted prices on an exchange. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.

Fixed income securities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect

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appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Depending on the nature of the inputs, these investments are categorized as level 1, 2, or 3.

~~Refer to Note 13, "Consolidated Investment Products," for additional discussion regarding the fair value of private equity funds.~~

13. CONSOLIDATED INVESTMENT PRODUCTS

Upon the adoption of ASU 2015-02, the funds consolidated in prior periods as CSIP and certain VOEs became VIEs. Additionally, certain VIEs were deconsolidated on the date of adoption (see Note 1, “Accounting Policies,” and the transition date impact table below). The following table presents the balances related to CIP ~~consolidated as defined in each period,~~ that are included on the Condensed Consolidated Balance ~~Sheets.~~Sheets as well as Invesco's net interest in the CIP for each period presented. At ~~September~~June 30, ~~2016,~~2017 all CIP ~~were~~are VIEs.


	As of				As of
$ in millions	September 30, 2016		December 31, 2015		June 30, 2017		December 31, 2016
Cash and cash equivalents of CIP	315.0		363.3		328.1		742.2
Accounts receivable and other assets of CIP	63.3		173.5		104.1		106.2
Investments of CIP	4,403.5		6,016.1		4,917.0		5,116.1
Less: Debt of CIP	(3,860.0	)	(5,437.0	)	(3,929.5	)	(4,403.1	)
Less: Other liabilities of CIP	(268.1	)	(273.7	)	(393.2	)	(673.4	)
Less: Retained earnings	19.2		20.1		16.2		19.0
Less: Accumulated other comprehensive income, net of tax	(18.3	)	(20.1	)	(15.0	)	(18.0	)
Less: Equity attributable to redeemable noncontrolling interests	(347.0	)	—		(328.3	)	(283.7	)
Less: Equity attributable to nonredeemable noncontrolling interests	(86.7	)	(768.8	)	(200.6	)	(107.2	)
Invesco's net interests in CIP	220.9		73.4		498.8		498.1

The following tables reflect the impact of consolidation of investment products into the Condensed Consolidated Statements of Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2015~~2016:


	Three months ended September 30,				Three months ended June 30,
$ in millions	2016		2015		2017		2016
Total operating revenues	(5.7	)	(9.5	)	(6.3	)	(5.1	)
Total operating expenses	7.4		8.7		2.2		7.9
Operating income	(13.1	)	(18.2	)	(8.5	)	(13.0	)
Equity in earnings of unconsolidated affiliates	(5.2	)	0.2		(4.2	)	(5.1	)
Interest and dividend income	—		(1.5	)	—		—
Other gains and losses, net	(2.8	)	—		(12.5	)	(0.8	)
Interest and dividend income of CIP	50.1		64.7		49.9		46.2
Interest expense of CIP	(28.8	)	(45.9	)	(44.8	)	(33.3	)
Other gains/(losses) of CIP, net	17.7		(17.3	)	27.2		25.0
Income before income taxes	17.9		(18.0	)	7.1		19.0
Income tax provision	—		—		—		—
Net income	17.9		(18.0	)	7.1		19.0
Net (income)/loss attributable to noncontrolling interests in consolidated entities	(14.7	)	4.8		(10.0	)	(11.0	)
Net income attributable to Invesco Ltd.	3.2		(13.2	)	(2.9	)	8.0

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	Nine months ended September 30,				Six months ended June 30,
$ in millions	2016		2015		2017		2016
Total operating revenues	(16.3	)	(29.2	)	(19.5	)	(10.6	)
Total operating expenses	17.1		22.4		1.0		9.7
Operating income	(33.4	)	(51.6	)	(20.5	)	(20.3	)
Equity in earnings of unconsolidated affiliates	(6.8	)	(1.0	)	(2.7	)	(1.6	)
Interest and dividend income	(0.2	)	(3.7	)	—		(0.2	)
Other gains and losses, net	(3.7	)	(3.9	)	(22.6	)	(0.9	)
Interest and dividend income of CIP	140.7		190.0		103.7		90.6
Interest expense of CIP	(89.4	)	(138.3	)	(81.0	)	(60.6	)
Other gains/(losses) of CIP, net	18.1		(12.6	)	38.1		0.4
Income before income taxes	25.3		(21.1	)	15.0		7.4
Income tax provision	—		—		—		—
Net income	25.3		(21.1	)	15.0		7.4
Net (income)/loss attributable to noncontrolling interests in consolidated entities	(22.5	)	0.1		(12.2	)	(7.8	)
Net income attributable to Invesco Ltd.	2.8		(21.0	)	2.8		(0.4	)

The company's risk with respect to each investment in CIP is limited to its equity ownership and any uncollected management and performance fees. The company has no right to the benefits from, nor does it bear the risks associated with, these investments, beyond the company's direct investments in, and management and performance fees generated from, the investment products. If the company were to liquidate, these investments would not be available to the general creditors of the company, and as a result, the company does not consider investments held by CIP to be company assets. Additionally, the collateral assets of consolidated ~~collateralized loan obligations (CLOs)~~CLOs are held solely to satisfy the obligations of the CLOs, and the investors in the consolidated CLOs have no recourse to the general credit of the company for the notes issued by the CLOs.

~~Transition date~~ CIP are taxed at the investor level and not at the product level; therefore, there is no tax provision reflected in the net impact of ~~adoption of ASU 2015-02~~

Transition date impact
$ in millions Consolidated Deconsolidated
Cash and cash equivalents of CIP 33.8
163.8
Accounts receivable and other assets of CIP 105.4
68.8
Investments of CIP 319.3
2,938.0
Total assets 458.5
3,170.6

Debt of CIP —
2,259.2
Other liabilities of CIP 102.4
110.4
Total liabilities 102.4
2,369.6
Total equity 356.1
801.0
Total liabilities and equity 458.5
3,170.6
CIP.

Non-consolidated VIEs

At ~~September~~June 30, ~~2016~~2017, the company's carrying value and maximum risk of loss with respect to VIEs in which the company is not the primary beneficiary was ~~$276.2 million.~~$237.4 million (December 31, 2016 $234.4 million).

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Balance Sheet information - newly consolidated VIEs/VOEs

During the ~~nine~~six months ended ~~September~~June 30, ~~2016~~,2017, the company consolidated fourteen new VIEs (June 30, 2016: the company consolidated five new ~~VIEs (September 30, 2015: the company invested in and consolidated two new VIEs and three new VOEs.~~VIEs.) The table below illustrates the summary balance sheet amounts related to these products before consolidation into the company. The balances below are reflective of the balances existing at the consolidation date after the initial funding of the investments by the company and unrelated third-party investors. The current period activity for the consolidated funds, including the initial funding and subsequent investment of initial cash balances into underlying investments of CIP, is reflected in the company’s Condensed Consolidated Financial Statements.


	For the nine months ended September 30, 2016	For the nine months ended September 30, 2015		For the six months ended June 30, 2017	For the six months ended June 30, 2016
$ in millions	VIEs	VIEs	VOEs	VIEs	VIEs
Cash and cash equivalents of CIP	151.0	449.8	10.0	14.6	151.0
Accounts receivable and other assets of CIP	3.6	5.6	—	8.5	3.6
Investments of CIP	311.0	1,009.5	49.9	316.6	311.0
Total assets	465.6	1,464.9	59.9	339.7	465.6

Debt of CIP	414.4	1,100.4	—	15.1	414.4
Other liabilities of CIP	17.4	364.5	—	105.0	17.4
Total liabilities	431.8	1,464.9	—	120.1	431.8
Total equity	33.8	—	59.9	219.6	33.8
Total liabilities and equity	465.6	1,464.9	59.9	339.7	465.6

During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the company determined that it was no longer the primary beneficiary of four ~~VIEs.~~VIEs and one voting rights entity (VOE) (June 30, 2016: the company determined that it was no longer the primary beneficiary of four VIEs). The amounts deconsolidated from the Condensed Consolidated Balance ~~Sheet~~Sheets are illustrated in the table below. There was no net impact to the Condensed Consolidated ~~Statement~~Statements of Income for the ~~nine~~six months ended ~~September~~June 30, 2017 and 2016 from the deconsolidation of ~~the~~these investment products.



	~~For the nine months ended September 30, 2016~~
~~$ in millions~~	~~VIEs~~
~~Cash and cash equivalents of CIP~~	~~23.6~~
~~Accounts receivable and other assets of CIP~~	~~12.2~~
~~Investments of CIP~~	~~196.1~~
~~Total assets~~	~~231.9~~

~~Debt of CIP~~	—
~~Other liabilities of CIP~~	~~13.1~~
~~Total liabilities~~	~~13.1~~
~~Total equity~~	~~218.8~~
~~Total liabilities and equity~~	~~231.9~~



	For the six months ended June 30, 2017		For the six months ended June 30, 2016
$ in millions	VIEs	VOEs	VIEs
Cash and cash equivalents of CIP	14.5	—	23.6
Accounts receivable and other assets of CIP	3.8	0.2	12.2
Investments of CIP	139.9	49.8	196.1
Total assets	158.2	50.0	231.9

Debt of CIP	4.2	—	—
Other liabilities of CIP	1.9	—	13.1
Total liabilities	6.1	—	13.1
Total equity	152.1	50.0	218.8
Total liabilities and equity	158.2	50.0	231.9

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The following tables present the fair value hierarchy levels of certain CIP balances which are measured at fair value as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015:~~2016:


	As of September 30, 2016					As of June 30, 2017
$ in millions	Fair Value Measurements	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Investments Measured at NAV as a practical expedient	Fair Value Measurements	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Investments Measured at NAV as a practical expedient
Assets:
Bank loans	3,832.5	—	3,832.5	—	—	3,997.7	—	3,997.7	—	—
Bonds	346.2	—	346.2	—	—	289.3	—	289.3	—	—
Equity securities	76.6	74.8	1.8	—	—	176.1	175.0	1.1	—	—
Equity and fixed income mutual funds	61.9	61.9	—	—	—	116.0	116.0	—	—	—
Investments in other private equity funds	62.6	—	—	—	62.6	218.4	—	—	—	218.4
Real estate investments	23.7	—	—	23.7	—	59.9	—	—	59.9	—
Investments in fixed income fund of funds						59.6	—	—	—	59.6
Total assets at fair value	4,403.5	136.7	4,180.5	23.7	62.6	4,917.0	291.0	4,288.1	59.9	278.0


	As of December 31, 2015					As of December 31, 2016
$ in millions	Fair Value Measurements	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Investments Measured at NAV as a practical expedient	Fair Value Measurements	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Investments Measured at NAV as a practical expedient
Assets:
CLO collateral assets:
Bank loans	5,179.6	—	5,179.6	—	—	4,397.8	—	4,397.8	—	—
Bonds	71.1	—	71.1	—	—	370.9	—	370.9	—	—
Equity securities	0.9	—	0.9	—	—	167.4	166.0	1.4	—	—
Private equity fund assets:
Equity securities	364.6	7.7	—	356.9	—
Debt Securities	31.7	—	—	31.7	—
Equity and fixed income mutual funds						13.0	13.0	—	—	—
Investments in other private equity funds	368.2	—	—		368.2	68.6	—	—		68.6
Real estate investments						40.7	—	—	40.7	—
Investments in fixed income fund of funds						57.7	—	—	—	57.7
Total assets at fair value	6,016.1	7.7	5,251.6	388.6	368.2	5,116.1	179.0	4,770.1	40.7	126.3

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The following tables show a reconciliation of the beginning and ending fair value measurements for level 3 assets and liabilities using significant unobservable inputs:


	Three months ended September 30, 2016			Nine months ended September 30, 2016			Three months ended June 30, 2017		Six months ended June 30, 2017
$ in millions	Level 3 Assets		Level 3 Liabilities	Level 3 Assets		Level 3 Liabilities	Level 3 Assets		Level 3 Assets
Beginning balance	23.9		—	388.6		—	54.8		40.7
Adjustment for adoption of ASU 2015-02	—		—	(388.6	)	—
Purchases	—		—	23.9		—	—		15.1
Sales	—		—	—		—	(5.1	)	(5.1	)
Gains and losses included in the Condensed Consolidated Statements of Income*	(0.2	)	—	(0.2	)	—	10.2		9.2
Ending balance	23.7		—	23.7		—	59.9		59.9


	Three months ended September 30, 2015			Nine months ended September 30, 2015				Three months ended June 30, 2016	Six months ended June 30, 2016
$ in millions	Level 3 Assets		Level 3 Liabilities	Level 3 Assets		Level 3 Liabilities		Level 3 Assets	Level 3 Assets
Beginning balance	308.1		—	363.9		(5,149.6	)	—	388.6
Adjustment for adoption of ASU 2014-13	—		—	—		5,149.6
Adjustment for adoption of ASU 2015-02								—	(388.6	)
Purchases	30.3		—	49.5		—		23.9	23.9
Sales	(0.4	)	—	(41.6	)	—
Gains and losses included in the Condensed Consolidated Statements of Income*	(5.1	)	—	(30.5	)	—		—	—
Transfers to Levels 1 and 2**	—		—	(8.4	)	—
Ending balance	332.9		—	332.9		—		23.9	23.9

____________

Included in gains/(losses) of CIP, net in the Condensed Consolidated Statements of Income for the ~~three and nine~~six months ended ~~September~~June 30, ~~2016~~2017 are ~~$0.2~~$8.8 million in net unrealized ~~losses~~gains attributable to investments still held at ~~September~~June 30, ~~2016~~2017 by CIP. ~~Included in gains/(losses) of CIP, net in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2015 are $5.1 million and $30.5 million respectively,in net unrealized losses attributable to investments still held at September 30, 2015 by CIP.~~

During the nine months ended September 30, 2015, $7.8 million of equity securities held by consolidated private equity funds were transferred from Level 3 to Level 2 due to the legal lock up requirements of of securities following the public offering of the underlying companies. During the nine months ended September 30, 2015, $0.6 million of equity securities held by consolidated private equity funds were transferred from level 3 to level 1 following the public offering of the underlying companies. For transfers due to public offerings, the company's policy is to use the fair value of the transferred security at the end of the period.

Unforeseen events might occur that would subsequently change the fair values of the investments (and therefore the debt of CLOs, since it is measured as a calculated value based upon the fair value of the assets of CLOs, but the impact of such changes would be limited to the change in the fair values of the company's investments in these products. The impact of any gains or losses resulting from valuation changes in the investments of non-CLO CIP attributable to the interests of third parties are offset by resulting changes in gains and losses attributable to noncontrolling interests in consolidated entities and therefore do not have a material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company's common shareholders. Similarly, any gains or losses resulting from valuation changes in the investments of CLOs attributable to the interests of third parties are offset by the calculated value of the notes issued by the CLOs (offsetting in other gains/(losses) of CIP) and therefore also do not have a material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company's common shareholders.

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Value of consolidated CLOs

The company elected the fair value option for collateral assets held and notes issued by its consolidated CLOs to eliminate the measurement and recognition inconsistency that would otherwise arise from measuring assets and liabilities and recognizing the related gains and losses on different accounting bases. On January 1, 2015 the company adopted ASU 2014-13 and has elected the measurement alternative for the consolidated CLOs under which the notes issued by the CLOs are measured based on the fair value of the assets of the CLOs.

The collateral assets held by consolidated CLOs are primarily invested in senior secured bank loans, bonds, and equity securities. Bank loan investments of ~~$3,832.5~~$3,973.2 million, which comprise the majority of consolidated CLO portfolio collateral, are senior secured corporate loans from a variety of industries, including but not limited to the aerospace and defense, broadcasting, technology, utilities, household products, healthcare, oil and gas, and finance industries. Bank loan investments mature at various dates between ~~2016~~2017 and ~~2024,~~2025, pay interest at ~~Libor~~LIBOR plus a spread of up to ~~9.0%~~12.5%, and typically range in S&P credit rating categories from BBB down to unrated. Interest income on bank loans and bonds is recognized based on the unpaid principal balance and stated interest rate of these investments on an accrual basis. At ~~September~~June 30, ~~2016,~~2017, the unpaid principal balance exceeds the fair value of the senior secured bank loans and bonds by approximately ~~$120.0~~$56.5 million (December 31, ~~2015:~~ 2016:

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the unpaid principal balance exceeded the fair value of the senior secured bank loans and bonds by approximately ~~$319.9~~$96.6 million). Approximately ~~0.7%~~0.79% of the collateral assets are in default as of ~~September~~June 30, ~~2016~~2017 (December 31, ~~2015: less than0.1%~~2016: approximately 0.3% of the collateral assets were in default). CLO investments are valued based on price quotations provided by third party pricing sources. These third party sources aggregate indicative price quotations daily to provide the company with a price for the CLO investments. The company has developed internal controls to review the reasonableness and completeness of these price quotations on a daily basis. If necessary, price quotations are challenged through the third-party pricing source price challenge process. ~~For the nine months ended~~ ~~September 30, 2016~~ ~~and the year ended December 31, 2015, there were no price quotation challenges by the company.~~

In addition, the company's internal valuation committee conducts an annual due diligence review of all independent third-party pricing sources to review the provider's valuation methodology as well as ensure internal controls exist over the valuation of the CLO investments. In the event that the third-party pricing source is unable to price an investment, other relevant factors, data and information are considered, including: i) information relating to the market for the investment, including price quotations for and trading in the investment and interests in similar investments, the market environment, and investor attitudes towards the investment and interests in similar investments; ii) the characteristics of and fundamental analytical data relating to the investment, including, for senior secured corporate loans, the cost, size, current interest rate, period until next interest rate reset, maturity and base lending rate, the terms and conditions of the senior secured corporate loan and any related agreements, and the position of the senior secured corporate loan in the borrower's debt structure; iii) the nature, adequacy and value of the senior secured corporate loan's collateral, including the CLO's rights, remedies and interests with respect to the collateral; iv) for senior secured corporate loans, the creditworthiness of the borrower, based on an evaluation of its financial condition, financial statements and information about the business, cash flows, capital structure and future prospects; v) the reputation and financial condition of the agent and any intermediate participants in the senior secured corporate loan; and vi) general economic and market conditions affecting the fair value of the senior secured corporate loan.

Notes issued by consolidated CLOs mature at various dates between ~~2023~~2025 and 2028 and have a weighted average maturity of ~~9.7~~9.8 years. The notes are issued in various tranches with different risk profiles. The interest rates are generally variable rates based on ~~Libor~~LIBOR plus a pre-defined spread, which varies from ~~0.21%~~1.15% for the more senior tranches to 8.25% for the more subordinated tranches. The investors in this debt are not affiliated with the company and have no recourse to the general credit of the company for this debt.

Fair value of consolidated real estate funds

The real estate investment vehicles use one or more valuation techniques (e.g. the market approach, the income approach, or the recent transaction "cost" approach) for which sufficient and reliable data is available to value investments classified within level 3. The use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.

The inputs used by the real estate funds in estimating the value of level 3 investments include the original transaction price, recent transactions in the same or similar instruments, as well as completed or pending third-party transactions in the underlying investment or comparable investments. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability. Other inputs used include discount rates, cap rates, and income and expense assumptions. The fair value measurement of level 3 investments does not include transaction costs and acquisition fees that may be capitalized as part of the investment's cost basis.

~~Table of Contents~~

Fair value of consolidated partnership entities

Consolidated private equity funds are generally structured as partnerships. Generally, the investment strategy of underlying holdings in these partnerships is to seek capital appreciation through direct investments in public or private companies with compelling business models or ideas or through investments in partnership investments that also invest in similar private or public companies. Various strategies may be used. Companies targeted could be distressed organizations, targets of leveraged buyouts or fledgling companies in need of venture capital. Investors generally may not redeem their investment until the partnership liquidates. Generally, the partnerships have a life that ranges from seven to twelve years unless dissolved earlier. The general partner may extend the partnership term up to a specified period of time as stated in the Partnership Agreement. Some partnerships allow the limited partners to cause an earlier termination upon the occurrence of certain events as specified in the Partnership Agreement.

For private equity partnerships, fair value is determined by reviewing each investment for the sale of additional securities of an issuer to sophisticated investors or for investee financial conditions and fundamentals. Publicly traded portfolio investments are carried at market value as determined by their most recent quoted sale, or if there is no recent sale, at their most recent bid price. For these investments held by CIP, level 1 classification indicates that fair values have been determined using unadjusted quoted prices in active markets for identical assets that the partnership has the ability to access. Level 2 classification may

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indicate that fair values have been determined using quoted prices in active markets but give effect to certain lock-up restrictions surrounding the holding period of the underlying investments.

The fair value of level 3 investments held are derived from inputs that are unobservable and which reflect the limited partnerships' own determinations about the assumptions that market participants would use in pricing the investments, including assumptions about risk. These inputs are developed based on the partnership's own data, which is adjusted if information indicates that market participants would use different assumptions. The partnerships which invest directly into private equity portfolio companies (direct private equity funds) take into account various market conditions, subsequent rounds of financing, liquidity, financial condition, purchase multiples paid in other comparable third-party transactions, the price of securities of other companies comparable to the portfolio company, and operating results and other financial data of the portfolio company, as applicable.

The partnerships which invest into other private equity funds take into account information received from those underlying funds, including their reported net asset values and evidence as to their fair value approach, including consistency of their fair value application. These investments do not trade in active markets and represent illiquid long-term investments that generally require future capital commitments. The partnerships' reported share of the underlying net asset values of the underlying funds is used as a practical expedient, as allowed by ASC Topic 820, in arriving at fair value.

Quantitative Information about Level 3 Fair Value Measurements

The following table shows significant unobservable inputs used in the fair value measurement of level 3 assets at June 30, 2017:



Assets and Liabilities	Fair Value at June 30, 2017 ($ in millions)	Valuation Technique	Unobservable Inputs	Range		Weighted Average (by fair value)
Real Estate Investments	$59.9	Discounted Cash Flow	Discount rate	7% - 33%		18.0	%
			Terminal capitalization rate	5.3	%	5.3	%
			Average rent growth rate	2% - 3%		2.5	%

At ~~September 30,~~December 31, 2016, ~~$23.7~~$40.7 million of investments held by consolidated real estate funds were valued using recent private market transactions.

The following ~~table shows~~narrative will indicate the sensitivity of inputs illustrating the impact of significant ~~unobservable inputs used~~increases to the inputs. A directionally opposite impact would apply for significant decreases in these inputs:

For real estate investments, a change in the average rent growth rate would result in a directionally-opposite change in the assumptions for discount rate and terminal capitalization rate. Significant increases in the average growth rate would result in significantly higher fair values. Significant increases in the assumptions for discount rate and terminal capitalization rate in isolation would result in significantly lower fair value ~~measurement of level 3 assets at December 31, 2015:~~measurements.



Assets and Liabilities *	~~Fair Value at~~ ~~December 31, 2015~~ ~~($ in millions)~~	~~Valuation Technique~~	~~Unobservable Inputs~~	~~Range~~	~~Weighted Average (by fair value)~~
~~Private Equity Funds --Equity Securities~~	~~320.0~~	~~Market Comparable~~	~~Revenue Multiple~~	NA	~~3.2x~~
			~~Discount~~	~~25% - 50%~~	~~25.0%~~
			~~Published valuation and/or broker quotes for similar types of assets~~	~~$25-101 million~~	~~$44.4 million~~

~~____________~~


*	Excluded from the table above are certain equity and debt securities held by consolidated private equity funds valued using recent private market transactions (December 31, 2015: $61.2 million) and third party appraisals (December 31, 2015: $7.3 million).

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The table below summarizes as of ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015,~~2016, the nature of investments that are valued using the NAV as a practical expedient and any related liquidation restrictions or other factors which may impact the ultimate value realized.

September 30, 2016

December 31, 2015

June 30, 2017

December 31, 2016

in millions, except term data

Fair Value

Total Unfunded Commitments

Weighted Average Remaining Term ⁽²⁾

Fair Value

Total Unfunded Commitments

Weighted Average Remaining Term ⁽²⁾

Fair Value

Total Unfunded Commitments

Weighted Average Remaining Term ⁽²⁾

Fair Value

Total Unfunded Commitments

Weighted Average Remaining Term ⁽²⁾

Private equity funds ⁽¹⁾

$62.6

$45.6

6.9 years

$368.2

$218.1

2.8 years

$218.4

$57.4

4.0 years

$68.6

$41.9

7.0 years

Investments in fixed income fund of funds ⁽³⁾

$59.6

—

n/a

$57.7

—

n/a

____________


(1)	These investments are not subject to redemption; however, for certain funds, the investors may sell or transfer their interest, which may require approval by the general partner of the underlying funds.


(2)	These investments are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over the weighted average periods indicated.


(3)	Investment may be redeemed on a monthly basis.

For investments held by consolidated private equity funds, significant increases in discounts in isolation would result in significantly lower fair value measurements, while significant increases in revenue multiple assumptions in isolation would result in significantly higher fair value measurements. An increase in discount assumptions would result in a directionally opposite change in the assumptions for revenue multiple, resulting in lower fair value measurements.

Fair Value of Equity Securities, Bonds, and Equity/Fixed Income Mutual Funds

Bonds are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Depending on the nature of the inputs, these investments are categorized as level 1, 2, or 3.

Equity and fixed income mutual funds are valued under the market approach through the use of quoted market prices available in an active market and isare classified within level 1 of the valuation hierarchy; there is no modeling or additional information needed to arrive at the fair values of these investments.

1413. RELATED PARTIES

Certain managed funds are deemed to be affiliated entities under the related party definition in ASC 850, "Related Party Disclosures." Additionally, related parties include those defined in the company's proxy statement.


	Three months ended September 30,		Nine months ended September 30,		Three months ended June 30,		Six months ended June 30,
$ in millions	2016	2015	2016	2015	2017	2016	2017	2016
Affiliated operating revenues:
Investment management fees	835.5	892.7	2,452.5	2,701.8	885.4	820.1	1,717.5	1,617.0
Service and distribution fees	213.1	214.8	613.7	646.4	210.8	203.1	416.9	400.6
Performance fees	2.9	7.4	19.7	19.7	3.4	6.4	11.7	16.8
Other	18.0	25.3	64.5	83.3	14.2	24.7	31.0	46.5
Total affiliated operating revenues	1,069.5	1,140.2	3,150.4	3,451.2	1,113.8	1,054.3	2,177.1	2,080.9

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$ in millions	September 30, 2016	December 31, 2015	June 30, 2017	December 31, 2016
Affiliated asset balances:
Cash and cash equivalents	489.2	383.3	795.1	476.2
Unsettled fund receivables	325.9	166.7	225.2	253.2
Accounts receivable	308.0	317.7	306.3	344.4
Investments	823.9	982.7	547.5	728.3
Assets held for policyholders	7,387.5	6,051.2	10,716.4	8,224.2
Other assets	2.1	3.4	3.4	2.9
Total affiliated asset balances	9,336.6	7,905.0	12,593.9	10,029.2

Affiliated liability balances:
Accrued compensation and benefits	82.9	105.0	119.9	76.5
Accounts payable and accrued expenses	96.6	82.9	102.0	94.7
Unsettled fund payables	326.5	248.2	425.0	318.7
Total affiliated liability balances	506.0	436.1	646.9	489.9

14. BUSINESS OPTIMIZATION

Business optimization charges of $12.0 million and $36.7 million were recorded during the three and six months ended June 30, 2017, respectively (three and six months ended June 30, 2016: $10.3 million and $17.1 million, respectively). Business optimization charges for the three and six months ended June 30, 2017 includes staff severance costs recorded in employee compensation of $3.9 million and $19.6 million, respectively (three and six months ended June 30, 2016: $4.4 million and $8.4 million, respectively), consulting and temporary labor costs of $6.9 million and $15.1 million, respectively (three and six months ended June 30, 2016: $5.5 million and $8.6 million, respectively) and office and technology expenses associated with a business transformation initiative of $1.2 million and $2.0 million, respectively (three and six months ended June 30, 2016: $0.4 million and $0.1 million, respectively). This is a continuation of efforts to transform several key business support functions to become more effective and efficient by leveraging shared service centers, outsourcing, automation of key processes and optimization of the company's office footprint. The total costs of these initiatives at completion are estimated to be $133 million, of which $31 million remains to be incurred through 2018. There were no material liabilities related to business optimization efforts outstanding at June 30, 2017.

15. SUBSEQUENT EVENTS

On ~~October~~July 27, ~~2016,~~2017, the company announced a ~~third~~second quarter ~~2016~~2017 dividend of ~~28.0~~29.0 cents per share, payable on ~~December 5, 2016,~~September 1, 2017, to shareholders of record at the close of business on ~~November 15, 2016~~August 17, 2017 with an ex-dividend date of ~~November 11, 2016.~~August 15, 2017.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes thereto, which appear elsewhere in this Report. Except for the historical financial information, this Report may include statements that constitute “forward-looking statements” under the United States securities laws. Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, assets under management, geopolitical events and their potential impact on the company, acquisitions and divestitures, 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. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in this Report and our most recent Form 10-K filed with the Securities and Exchange Commission ("SEC").

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.

References

In this Report, unless otherwise specified, the terms “we,” “our,” “us,” “company,” "firm," “Invesco,” and “Invesco Ltd.” refer to Invesco Ltd., a company incorporated in Bermuda, and its subsidiaries.

Executive Overview

The following executive overview summarizes the significant trends affecting our results of operations and financial condition for the periods presented. This overview and the remainder of this management's discussion and analysis supplements and should be read in conjunction with the Condensed Consolidated Financial Statements of Invesco Ltd. and its subsidiaries ~~(collectively, the “company” or “Invesco”)~~ and the notes thereto contained elsewhere in this Report.

During the three months ended ~~September~~June 30, ~~2016,~~2017, returns from global equity markets ~~saw decreased volatility and favorable returns continuing~~were broadly positive resulting from positive macroeconomic indicators muted by global geopolitical uncertainty. In the ~~trend that began in the days following the U.K. referendum. Encouraging statements from~~U.S., equities advanced as the U.S. Federal ~~Reserve strengthened expectations for additional~~reserve raised interest ~~rate increases late in the year as investors became less concerned~~rates 0.25% despite mixed economic growth indicators. While political uncertainty introduced doubts about the ~~long-term impact of~~outlook for fiscal expansion and tax reform, the ~~U.K.’s separation from the EU ("Brexit"). The U.S. markets hit~~S&P 500 Index set new all-time highs ~~intra-quarter with~~and ended the ~~S&P 500 index finishing~~period up ~~3.3% overall.~~2.6%. European markets ~~likewise experienced gains during~~were similarly helped by strong economic data and an improving economic outlook while investors weighed the ~~period as economic sentiment after~~impact of election results in the U.K. ~~referendum improved~~ and ~~the~~France. The European Central Bank ~~left monetary policy unchanged. Relatively strong earnings~~indicated the potential for ~~the second quarter drove~~a gradual slowing to economic stimulus helping to drive markets higher ~~with~~early in the quarter while the surprise result in the June U.K. election reversed the quarter’s gains and led the FTSE 100 ~~finishing~~to finish down 0.1% for the ~~quarter up 6.1%. A continuation~~period. In Japan, the Bank of Japan provided a positive outlook on the state of the ~~accommodative monetary policy~~economy and potential for further economic growth. This language, along with improving economic data in ~~Japan~~China and ~~expectations for additional fiscal stimulus packages drove the equity~~broad investor optimism, helped to lead markets higher with the Nikkei 225 finishing the quarter up ~~5.6%~~6.0%.

Bond returns for the ~~quarter. The continued~~quarter were positive as continuing accommodative monetary ~~policies~~policy and low inflation helped to drive bonds higher globally. While prices fell at the end of the quarter on a change in tone from global central banks, ~~and outlook for near -term interest rate increases resulted in decreased volatility during~~ the ~~quarter and increase for in bond levels for across all categories with the Barclay’s~~ U.S. Aggregate Bond Index still saw gains for the period finishing up ~~0.5%~~1.5%.

Subsequent to the quarter end, in early October the U.K. Government announced its intention to invoke Article 50 of the E.U. treaty by the end of March 2017, triggering a two-year countdown that should see separation in early 2019. The announcement included comments suggesting the U.K. is unlikely to remain part of Europe's single market, referred to as the "hard" Brexit. This, in turn, drove a fall in the British Pound to a new 31-year low against the U.S. Dollar.

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The table below summarizes returns based on price appreciation/(depreciation) of several major market indices for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:


	Index expressed in currency	Three months ended September 30,				Nine months ended September 30,				Index expressed in currency	Three months ended June 30,				Six months ended June 30,
Equity Index	Index expressed in currency	2016		2015		2016		2015		Index expressed in currency	2017		2016		2017		2016
S&P 500	U.S. Dollar	3.3	%	(6.9	)%	6.1	%	(6.7	)%	U.S. Dollar	2.6	%	1.9	%	8.2	%	2.7	%
FTSE 100	British Pound	6.1	%	(7.0	)%	10.5	%	(7.7	)%	British Pound	(0.1	)%	5.3	%	2.4	%	4.2	%
FTSE 100	U.S. Dollar	3.7	%	(10.6	)%	(2.7	)%	(10.3	)%	U.S. Dollar	3.6	%	(2.9	)%	7.9	%	(6.2	)%
Nikkei 225	Japanese Yen	5.6	%	(14.1	)%	(13.6	)%	(0.4	)%	Japanese Yen	6.0	%	(7.1	)%	4.8	%	(18.2	)%
Nikkei 225	U.S. Dollar	7.4	%	(12.3	)%	2.8	%	(0.5	)%	U.S. Dollar	5.0	%	1.3	%	8.8	%	(4.3	)%
MSCI Emerging Markets	U.S. Dollar	8.3	%	(18.5	)%	13.8	%	(17.2	)%	U.S. Dollar	5.5	%	(0.3	)%	17.2	%	5.0	%
Bond Index
Barclays U.S. Aggregate Bond	U.S. Dollar	0.5	%	1.2	%	5.8	%	1.1	%	U.S. Dollar	1.5	%	2.2	%	2.3	%	5.3	%

~~A significant portion of our business and assets under management (AUM) is based outside of~~The company's financial results are impacted by the ~~U.S. The~~ strengthening or weakening of the U.S. Dollar against other currencies, ~~primarily~~as discussed in the ~~Pound Sterling, Canadian Dollar, Yen~~"Foreign Exchange Impact on Balance Sheet, Assets Under Management and ~~Euro, will impact our reported revenues~~Results of Operations" section and ~~expenses from period to period.~~the "Results of Operations" section below. The ongoing uncertainty associated with the Brexit negotiations are likely to continue to keep the Pound Sterling at a low level against the U.S. Dollar when compared to the average exchange rates of recent years, negatively impacting our reported AUM and results in U.S. Dollars. The negotiations may also have a similar ongoing impact to the Euro. As further detailed in the Results of Operations section, foreign exchange rate movements decreased operating revenues by ~~$84.6~~$72.4 million, equivalent to ~~2.4%~~3.0% of total operating revenues, during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 when compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015. During the first and third quarters of 2016, the~~2016. The company has entered into a series of put option contracts to provide Pound Sterling/U.S. Dollar ~~exchange rate coverage~~ and Euro/U.S. Dollar exchange rate coverage through December ~~2017.~~2017 (Euro) and December 2018 (Pound Sterling). Any gains derived from these hedges will help offset the impact on earnings per share resulting from declines in Sterling and Euro exchange ~~rates, covering approximately 75% of our Sterling-based and Euro-based operating incomes for each quarter.~~rates.

~~Additionally, our~~Our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net new business inflows (or outflows) and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period. ~~In particular,~~As fee rates differ across geographic locations, changes to exchange rates have an impact on the net revenue yields. The strengthening of the U.S. Dollar against the Pound Sterling during the ~~last 3 years our fixed income and alternatives asset classes have consistently experienced positive~~six months ended June 30, 2017 when compared to the respective prior periods resulted in a reduction in the net ~~long-term flows while~~revenue yield as it reduced the ~~equity asset class has, in general, experienced net outflows.~~weighting of higher fee earning AUM attributable to the U.K. products. This gradual change in the product mix combined with changes in foreign exchange rates results in changes in the average revenue yield derived from AUM due to differing fee rates structures and ~~structures. The continuing shift to passive and smart beta strategies is also resulting in changes in average revenue yields.~~currencies.

Invesco benefits from ~~the~~our long-term efforts to ensure a diversified base of AUM. One of Invesco's core strengths, and a key differentiator for the company within the industry, is our broad diversification across client domiciles, asset classes and distribution channels. Our geographical diversification recognizes growth opportunities in different parts of the world. This broad diversification mitigates the impact on Invesco of different market cycles and enables the company to take advantage of growth opportunities in various markets and channels. During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, while the company experienced long-term net outflows in the ~~Canadian~~U.S. and ~~European~~U.K. operations, our ~~U.S.~~Continental Europe and Asia Pacific operations contributed strong positive long-term net flows. In addition, during the ~~third~~second quarter of ~~2016:~~2017:

~~Powershares celebrated the tenth anniversary of joining Invesco. Over the ten year period, Powershares' AUM has risen from $3.5 billion (38 products) to $110 billion (136 products).~~

~~In an analysis~~Jemstep announced a partnership with Advisor Group, one of the ~~mainland European equities sector, Citywire Germany named~~ nation's largest networks of independent financial advisory firms, to launch a comprehensive digital onboarding, advice and data aggregation platform, using Jemstep technologies.

Invesco was featured in the German publication Institutional Money magazine as ~~one~~the U.S. asset manager that has managed to rise from niche provider to a globally significant investment company over the course of ~~three~~10 years.

Invesco International Growth Funds in the U.S. celebrated 25 years, a lifetime of out-performance. The fund ~~managers who achieved~~has consistently outperformed its benchmark 100% of the time over all 80 quarterly five-year rolling periods since inception.

Invesco introduced an ~~increase in value of~~annual report on investment stewardship and proxy voting. Invesco has been incorporating environmental, social and governance (ESG) practices for more than ~~100% over~~15 years and believes that sound ESG practices can positively impact the ~~past 10 years.~~

~~Invesco's Asia Pacific region continued~~value we provide to ~~deliver strong~~clients as well as our long-term performance with, as an example, the US onshore Invesco Greater China Fund being ranked the best performing fund among 47 US listed global funds. Similarly, its sister Luxembourg-domiciled Greater China Equity Fund ranked first quartile across YTD, one-, three-, five- and ten-year periods based on Morningstar's offshore Greater China Equity peer group.shareholder value.

During the fourth quarter of 2015, the company initiated a broad based initiative to transform several key business support functions to become more effective and efficient. The program includes the leveraging of shared service centers, outsourcing, automation of key processes and optimization of the company's office footprint. Business optimization charges of $11.7 million were recorded in the third quarter of 2016, bringing the 2016 year-to-date charge to $28.8 million and $45.0 million since

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~~inception.~~Two investment trusts managed by Invesco Perpetual's Mark Barnett have topped the tables of Kepler Partners' new ratings system, which is designed to identify investment trusts that generate a real and dependable income without sacrificing capital.

Invesco Poland was named Investor of the Year for the first time at the 2017 CEEQA Industry Awards and received the award for overall Company of the Year. The CEEQA awards are the sector’s most respected industry recognition, organized each year in association with the Financial Times to reward excellence and to showcase the achievements and opportunities of the New Europe real estate sector to the international investment arena.

The Invesco Perpetual UK Smaller Companies Trust was awarded the "Best UK Growth Trust" in the Money Observer Trust Awards 2017.

The Invesco Real Estate team in Spain was recognized with an Inmofondos 2017 Award. This prestigious award has been granted for Invesco's intense activity in Spain during the last year, when the team has increased the assets under management to over €700 million.

Invesco Global Targeted Returns Fund (GTR) won the prestigious Money Management Fund Manager of the Year Awards in Australia.

At Asia Asset Management's 2017 Best of the Best Awards, Invesco was recognized for its leadership in the market as well as for the outstanding long-term performance of its European Equity capabilities. Andrew Lo, SMD and Head of Asia Pacific, was named CEO of the Year in Asia in the Best of the Best Regional Awards category.

Invesco Taiwan won 20 awards from the 2017 Lipper Taiwan Fund Awards, TFF-Bloomberg Best Fund Award and 2016 Benchmark Fund of the Year Awards in Taiwan.

One of the company's strategic objectives is to harness the power of our global platform by improving effectiveness and efficiency by allocating our resources to the opportunities that will best benefit clients and our business. During 2017, the company has continued our efforts to transform several key business support functions to become more effective and efficient by leveraging shared service centers, outsourcing, automation of key processes and optimization of the company's office footprint. Consistent with this objective, business optimization charges of $36.7 million were recorded during the six months ended June 30, 2017. Total costs of these initiatives at completion are estimated to be approximately $133 million, of which $31 million remains to be incurred through 2018. As at the end of the ~~third~~second quarter ~~2016,~~2017, this initiative has produced annualized run-rate expense savings of ~~$13.9~~approximately $31 million, and by completion in 2018, the annualized run-rate savings is expected to be up to $50 million.

As previously announced, the company has entered into a definitive agreement to acquire Source, a leading independent specialist provider of exchange-traded funds (ETFs) based in Europe. The transaction is expected to close in the third quarter and includes approximately $18 billion in Source-managed AUM, plus approximately $7 billion of externally managed AUM (as of June 30, 2017). The acquisition brings additional talent and a broad array of funds that further expand the depth and breadth of Invesco’s active, passive and alternative capabilities and expertise, enhancing the firm’s ability to help clients achieve their investment objectives.

Presentation of Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of Consolidated Investment Products

The company provides investment management services to, and has transactions with, various private equity, real estate, fund-of-funds, collateralized loan obligation products (CLOs), and other investment entities sponsored by the company for the investment of client assets in the normal course of business. The company serves as the investment manager, making day-to-day investment decisions concerning the assets of the products.

Investment products that are consolidated are referred to in this ~~Report~~Form 10-Q (Report) as ~~either Consolidated Sponsored Investment Products (CSIP) or Consolidated Investment Products~~consolidated investments products (CIP). CSIP is presented in periods prior to the adoption of ASU 2015-02 on January 1, 2016 and generally included consolidated sponsored investment products in which Invesco held the majority of the voting rights or partnerships in which the company had substantive equity at risk but in which the other investors lack removal or liquidation rights. CIP ~~included consolidated nominally-held investment products in periods prior to the adoption of ASU 2015-02 but now~~ includes all variable and voting interest entities, as applicable, with effect from the adoption of ASU ~~2015-02, as discussed in Item 8, Financial Statements and Supplementary Data - Note 1, “Accounting Policies.”~~2015-02. The company's economic risk with respect to each investment in ~~a CSIP and a~~ CIP is limited to its equity ownership and any uncollected management and performance fees. See also Note 12, ~~"Consolidated Sponsored Investment Products," and Note 13,~~ "Consolidated Investment Products," for additional information regarding the impact of the consolidation of managed funds.

The majority of the company's CIP balances are CLO-related. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company's direct investments in, and management and performance fees generated from, the CLOs. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Likewise, the investors in the CLOs have no recourse to the general credit of the company for the notes issued by the CLOs. The company therefore does not consider this debt to be a company liability.

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The impact of CIP is so significant to the presentation of the company’s Condensed Consolidated Financial Statements ~~(but not to the underlying financial condition or results of operations of the company)~~ that the company has elected to deconsolidate these products in its non-GAAP disclosures. The following discussion therefore combines the results presented under U.S. generally accepted accounting principles (U.S. GAAP) with the company’s non-GAAP presentation. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains four distinct sections, which ~~follow after~~follows the ~~Assets Under Management~~AUM discussion:

Results of Operations (three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to three and ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016);

Schedule of Non-GAAP Information;

Balance Sheet Discussion; and

Liquidity and Capital Resources.

To assess the impact of CIP on the company's ~~Results~~results of ~~Operations~~operations and ~~Balance Sheet Discussion,~~balance sheet, refer to Part I, Item 1, Financial Statements, Note 1312 - “Consolidated Investment Products.” The impact on the company's results of operations is illustrated by a column which shows the dollar-value change in the consolidated figures, as caused by the consolidation of CIP. For example, the impact of CIP on operating revenues for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 was a reduction of ~~$5.7~~$6.3 million and a reduction of ~~$16.3~~$19.5 million, respectively. This indicates that their consolidation reduced consolidated revenues by this amount, reflecting the elimination upon their consolidation of the operating revenues earned by Invesco for managing these investment products.

Wherever a non-GAAP measure is referenced, a disclosure will follow in the narrative or in the note referring the reader to the Schedule of Non-GAAP Information, where additional details regarding the use of the non-GAAP measure by the company are disclosed, along with reconciliations of the most directly comparable U.S. GAAP measures to the non-GAAP measures. To further enhance the readability of the Results of Operations section, separate tables for each of the revenue, expense, and other income and expenses (non-operating income/expense) sections of the income statement introduce the narrative that follows, providing a section-by-section review of the company’s income statements for the periods presented.

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Summary Operating Information

Summary operating information is presented in the table below:


$ in millions, other than per share amounts, operating margins, ratios and AUM	Three months ended September 30,				Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
U.S. GAAP Financial Measures Summary	2016		2015		2016		2015		2017		2016		2017		2016
Operating revenues	1,201.6		1,273.5		3,539.7		3,883.2		1,254.4		1,189.4		2,447.0		2,338.1
Operating income	306.3		352.7		882.2		1,054.8		318.9		301.5		577.5		575.9
Operating margin	25.5	%	27.7	%	24.9	%	27.2	%	25.4	%	25.3	%	23.6	%	24.6	%
Net income attributable to Invesco Ltd.	241.2		249.3		627.7		766.2		239.6		225.5		451.6		386.5
Diluted EPS	0.58		0.58		1.51		1.78
Diluted Earnings Per Share (EPS)									0.58		0.54		1.10		0.92

Non-GAAP Financial Measures Summary
Net revenues ⁽¹⁾	854.7		903.0		2,529.4		2,757.1		906.3		856.6		1,773.4		1,674.7
Adjusted operating income ⁽²⁾	339.3		373.4		976.8		1,138.0		356.5		330.4		683.6		637.5
Adjusted operating margin ⁽²⁾	39.7	%	41.4	%	38.6	%	41.3	%	39.3	%	38.6	%	38.5	%	38.1	%
Adjusted net income attributable to Invesco Ltd. ⁽³⁾	246.2		261.4		684.0		804.9		264.5		233.0		515.0		437.8
Adjusted diluted EPS ⁽³⁾	0.60		0.61		1.64		1.87		0.64		0.56		1.26		1.04

Assets Under Management
Ending AUM (billions)	820.2		755.8		820.2		755.8		858.3		779.6		858.3		779.6
Average AUM (billions)	814.1		788.9		782.0		798.4		849.2		784.5		839.5		766.0

_________

(1)

Net revenues is a non-GAAP financial measure. Net revenues are operating revenues plus our proportional share of the net revenues of our joint venture investments, less third-party distribution, service and advisory expenses, plus management and performance fees earned from CIP, less other revenue recorded by CIP. See "Schedule of Non-GAAP Information," for the reconciliation of operating revenues to net revenues.

(2)

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

(3)

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

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Investment Capabilities Performance Overview

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


	Benchmark Comparison						Peer Group Comparison						Benchmark Comparison						Peer Group Comparison
	% of AUM Ahead of Benchmark						% of AUM In Top Half of Peer Group						% of AUM Ahead of Benchmark						% of AUM In Top Half of Peer Group
	1yr		3yr		5yr		1yr		3yr		5yr		1yr		3yr		5yr		1yr		3yr		5yr
Equities
U.S. Core	5	%	0	%	4	%	5	%	0	%	5	%	29	%	—	%	5	%	32	%	—	%	5	%
U.S. Growth	54	%	37	%	37	%	82	%	96	%	36	%	72	%	41	%	87	%	58	%	37	%	87	%
U.S. Value	0	%	36	%	37	%	22	%	54	%	86	%	58	%	58	%	87	%	51	%	57	%	87	%
Sector Funds	11	%	2	%	56	%	11	%	7	%	16	%	80	%	13	%	13	%	81	%	9	%	17	%
U.K.	3	%	93	%	100	%	3	%	92	%	100	%	11	%	100	%	100	%	12	%	85	%	71	%
Canadian	13	%	21	%	48	%	13	%	21	%	46	%	88	%	33	%	39	%	65	%	10	%	33	%
Asian	82	%	88	%	91	%	76	%	69	%	76	%	49	%	85	%	90	%	45	%	72	%	89	%
European	48	%	78	%	100	%	54	%	74	%	77	%
Continental European													65	%	99	%	100	%	54	%	71	%	89	%
Global	43	%	53	%	56	%	58	%	66	%	80	%	51	%	53	%	73	%	52	%	72	%	84	%
Global Ex U.S. and Emerging Markets	21	%	98	%	99	%	93	%	89	%	98	%	5	%	25	%	91	%	4	%	3	%	9	%
Fixed Income
Money Market	98	%	64	%	64	%	98	%	98	%	98	%	99	%	99	%	68	%	98	%	98	%	98	%
U.S. Fixed Income	90	%	90	%	95	%	82	%	86	%	85	%	66	%	90	%	90	%	72	%	87	%	83	%
Global Fixed Income	44	%	45	%	94	%	15	%	15	%	89	%	85	%	51	%	80	%	74	%	39	%	85	%
Stable Value	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%
Other
Alternatives	62	%	48	%	53	%	64	%	11	%	30	%	83	%	76	%	64	%	74	%	86	%	49	%
Balanced	56	%	56	%	44	%	95	%	89	%	92	%	81	%	45	%	48	%	68	%	92	%	89	%

_____________________________

(1)

AUM measured in the one-, three-, and five-year peer group rankings represents ~~57%~~59%, ~~55%~~58%, and ~~55%~~56% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one-, three-, and five-year basis represents 71%, 68%, and ~~65%~~64% of total Invesco AUM, respectively, as of ~~September~~June 30, ~~2016.~~2017. Peer group rankings are sourced from a widely-used third party ranking agency in each fund's market (Lipper, Morningstar, IA, Russell, Mercer, eVestment Alliance, SITCA, Value Research) and are asset-weighted in ~~USD.~~U.S. Dollars. Rankings are as of prior quarter-end for most institutional products and preceding month-end for Australian retail funds due to their late release by third parties. Rankings for the most representative fund in each Global Investment Performance Standard (GIPS) composite are applied to all products within each GIPS composite. Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary direct real estate, unit investment trusts, fund-of-funds with component funds managed by Invesco, stable value building block funds, and ~~CDOs.~~Collateralized Debt Obligations (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 been different. These results are preliminary and subject to revision. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor's experience.

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Foreign Exchange Impact on Balance Sheet, Assets Under Management and Results of Operations

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

The table below illustrates the spot foreign exchange rates used for translation of non-U.S. Dollar denominated ~~asset,~~assets, liabilities and AUM into U.S. Dollars:


Spot Foreign Exchange Rates	September 30, 2016	June 30, 2016	December 31, 2015	September 30, 2015	June 30, 2015	December 31, 2014	June 30, 2017	March 31, 2017	December 31, 2016	June 30, 2016	March 31, 2016	December 31, 2015
Pound Sterling ($ per £)	1.299	1.337	1.474	1.515	1.572	1.559	1.299	1.250	1.236	1.337	1.438	1.474
Canadian Dollar (CAD per $)	1.314	1.300	1.389	1.341	1.247	1.158	1.299	1.333	1.341	1.300	1.293	1.389
Japan (¥ per $)	101.275	102.533	120.275	119.775	122.145	119.880	112.375	111.405	116.600	102.533	112.355	120.275
Euro ($ per Euro)	1.124	1.111	1.086	1.116	1.115	1.210	1.140	1.069	1.054	1.111	1.139	1.086

The table below illustrates the average foreign exchange rates used for translation of non-U.S. Dollar denominated income, including revenues and expenses, into U.S. Dollars:


	Three months ended September 30,		Nine months ended September 30,		Three months ended June 30,		Six months ended June 30,
Average Foreign Exchange Rates	2016	2015	2016	2015	2017	2016	2017	2016
Pound Sterling ($ per £)	1.314	1.549	1.393	1.532	1.278	1.435	1.258	1.433
Canadian Dollar (CAD per $)	1.304	1.307	1.321	1.258	1.345	1.289	1.334	1.330
Japan (¥ per $)	102.380	122.187	108.328	120.875	111.039	108.014	112.386	111.569
Euro ($ per Euro)	1.116	1.112	1.116	1.115	1.099	1.129	1.082	1.116

A comparison of period end spot rates between ~~September~~June 30, ~~2016~~2017 and December 31, ~~2015~~2016 shows a ~~weakening~~strengthening of the Pound Sterling, the Euro, Canadian Dollar and Japanese Yen relative to the U.S. Dollar, which is reflected in the translation of our Pound Sterling-based, assets, liabilities and AUM into U.S. Dollars. Over the same period, the Euro, Canadian Dollar and Japanese Yen have strengthened relative to the U.S. Dollar, which is reflected in the translation of our Euro-based, Canadian Dollar-based and Japanese Yen-based assets, liabilities and AUM into U.S. Dollars, respectively.

A comparison of the average foreign exchange rates used for the three and six months ended ~~September~~June 30, ~~2016~~2017 when compared to the three and six months ended ~~September~~June 30, ~~2015~~2016 shows a ~~significant~~ weakening of the Pound Sterling, the Euro, Canadian Dollar and Japanese Yen relative to the U.S. Dollar, which is reflected in the translation of our Pound Sterling-based, ~~revenue~~Euro-based, Canadian Dollar-based and ~~expenses into U.S. Dollars. Over the same period, the Japanese Yen strengthened significantly relative to the U.S. Dollar, which was reflected in the translation of our~~ Japanese Yen-based revenue and expenses into U.S. ~~Dollars, respectively. The Euro and Canadian Dollar exchange rates were very similar across the two periods.~~Dollars.

A comparison of the average foreign exchange rates used for the nine months ended September 30, 2016 when compared to the nine months ended September 30, 2015 shows a significant weakening of the Pound Sterling relative to the U.S. Dollar, together with a weakening of the Canadian Dollar relative to the U.S. Dollar which is reflected in the translation of our Pound Sterling-based and Canadian Dollar-based revenue and expenses into U.S. Dollars. Over the same period, the Japanese Yen strengthened significantly relative to the U.S. Dollar, which was reflected in the translation of our Japanese Yen-based revenue and expenses into U.S. Dollars, respectively. The Euro exchange rate was very similar across the two periods.

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Assets Under Management movements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared with the three and ~~nine~~six months ended~~September~~ June 30, ~~2015~~2016

The following presentation and discussion of AUM includes Passive and Active AUM. Passive AUM include ETFs, UITs, leveraged fund balances upon which we do not earn a fee, and other passive mandates. Active AUM are total AUM less Passive AUM.

The AUM tables and the discussion below refer to AUM as long-term. Long-term AUM excludes institutional money market and Invesco PowerShares QQQ AUM.

Changes in AUM were as follows:


	For the three months ended September 30,												For the three months ended June 30,
	2016						2015						2017						2016
$ in billions	Total AUM		Active		Passive		Total AUM		Active		Passive		Total AUM		Active		Passive		Total AUM		Active		Passive
December 31	779.6		646.1		133.5		803.6		662.0		141.6
March 31													834.8		680.5		154.3		771.5		640.4		131.1
Long-term inflows	51.7		39.9		11.8		43.5		36.7		6.8		42.3		33.7		8.6		45.8		33.5		12.3
Long-term outflows	(39.5	)	(31.6	)	(7.9	)	(47.4	)	(38.3	)	(9.1	)	(42.9	)	(33.9	)	(9.0	)	(41.3	)	(33.5	)	(7.8	)
Long-term net flows	12.2		8.3		3.9		(3.9	)	(1.6	)	(2.3	)	(0.6	)	(0.2	)	(0.4	)	4.5		—		4.5
Net flows in Invesco PowerShares QQQ fund	1.1		—		1.1		(0.9	)	—		(0.9	)	0.2		—		0.2		(3.8	)	—		(3.8	)
Net flows in institutional money market funds	5.9		6.0		(0.1	)	(1.5	)	(1.6	)	0.1		2.8		2.8		—		2.0		1.9		0.1
Total net flows	19.2		14.3		4.9		(6.3	)	(3.2	)	(3.1	)	2.4		2.6		(0.2	)	2.7		1.9		0.8
Market gains and losses/reinvestment	23.6		18.7		4.9		(35.6	)	(28.8	)	(6.8	)	13.0		10.5		2.5		10.7		9.2		1.5
Acquisitions/dispositions, net	—		—		—		—		—		—		—		—		—		2.4		2.4		—
Foreign currency translation	(2.2	)	(2.2	)	—		(5.9	)	(5.9	)	—		8.1		8.1		—		(7.7	)	(7.8	)	0.1
September 30	820.2		676.9		143.3		755.8		624.1		131.7
June 30													858.3		701.7		156.6		779.6		646.1		133.5
Average AUM
Average long-term AUM	705.9		603.7		102.2		685.5		585.9		99.6		730.9		624.1		106.8		681.8		586.7		95.1
Average AUM	814.1		673.1		141.0		788.9		650.5		138.4		849.2		692.4		156.8		784.5		652.8		131.7
Revenue yield
Gross revenue yield on AUM ⁽¹⁾	59.8		69.3		15.3		65.1		75.8		14.9		59.7		69.5		16.6		61.3		70.9		14.6
Gross revenue yield on AUM before performance fees ⁽¹⁾	59.6		69.1		15.3		64.3		74.9		14.9		58.9		68.5		16.6		60.9		70.3		14.6
Net revenue yield on AUM ⁽²⁾	42.0		47.6		15.3		45.8		52.4		14.9		42.7		48.6		16.6		43.7		49.5		14.6
Net revenue yield on AUM before performance fees ⁽²⁾	41.8		47.4		15.3		44.9		51.3		14.9		41.8		47.6		16.6		43.2		49.0		14.6

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	For the nine months ended September 30,												For the six months ended June 30,
	2016						2015						2017						2016
$ in billions	Total AUM		Active		Passive		Total AUM		Active		Passive		Total AUM		Active		Passive		Total AUM		Active		Passive
December 31	775.6		636.5		139.1		792.4		651.0		141.4		812.9		668.5		144.4		775.6		636.5		139.1
Long-term inflows	140.3		106.3		34.0		146.1		120.4		25.7		91.4		71.0		20.4		88.6		66.4		22.2
Long-term outflows	(124.9	)	(97.5	)	(27.4	)	(133.8	)	(109.8	)	(24.0	)	(90.2	)	(71.7	)	(18.5	)	(85.4	)	(65.9	)	(19.5	)
Long-term net flows	15.4		8.8		6.6		12.3		10.6		1.7		1.2		(0.7	)	1.9		3.2		0.5		2.7
Net flows in Invesco PowerShares QQQ fund	(5.3	)	—		(5.3	)	(3.8	)	—		(3.8	)	1.2		—		1.2		(6.4	)	—		(6.4	)
Net flows in institutional money market funds	11.7		12.0		(0.3	)	(10.1	)	(10.2	)	0.1		(5.3	)	(5.3	)	—		5.8		6.0		(0.2	)
Total net flows	21.8		20.8		1.0		(1.6	)	0.4		(2.0	)	(2.9	)	(6.0	)	3.1		2.6		6.5		(3.9	)
Market gains and losses/reinvestment	31.3		25.1		6.2		(26.0	)	(19.0	)	(7.0	)	36.1		27.1		9.0		7.7		6.4		1.3
Acquisitions/dispositions, net	(1.2	)	2.0		(3.2	)	(0.7	)	—		(0.7	)	—		—		—		(1.2	)	2.0		(3.2	)
Foreign currency translation	(7.3	)	(7.5	)	0.2		(8.3	)	(8.3	)	—		12.2		12.1		0.1		(5.1	)	(5.3	)	0.2
September 30	820.2		676.9		143.3		755.8		624.1		131.7
June 30													858.3		701.7		156.6		779.6		646.1		133.5
Average AUM
Average long-term AUM	678.9		583.3		95.6		692.2		589.6		102.6		723.6		616.8		106.8		665.5		573.3		92.2
Average AUM	782.0		648.8		133.2		798.4		656.7		141.7		839.5		685.4		154.1		766.0		636.7		129.3
Revenue yield
Gross revenue yield on AUM ⁽¹⁾	61.0		70.7		14.6		65.3		76.4		14.5		58.9		68.5		16.6		61.7		71.5		14.2
Gross revenue yield on AUM before performance fees ⁽¹⁾	60.6		70.1		14.6		64.2		75.0		14.5		58.2		67.7		16.6		61.1		70.7		14.2
Net revenue yield on AUM ⁽²⁾	43.1		49.0		14.6		46.0		52.9		14.5		42.2		48.0		16.6		43.7		49.7		14.2
Net revenue yield on AUM before performance fees ⁽²⁾	42.6		48.4		14.6		44.7		51.2		14.5		41.4		47.0		16.6		43.1		48.9		14.2

_____________________________

(1)

Gross revenue yield on AUM is equal to annualized total operating revenues divided by average AUM, excluding joint venture (JV) AUM. Our share of the average AUM in the three months ended ~~September~~June 30, ~~2016~~2017 for our JVs in China was ~~$10.4~~$8.1 billion (three months ended ~~September~~June 30, ~~2015: $6.0 billion). Our share of the average AUM in the nine months ended September 30, 2016 for our JVs in China was $8.9 billion (nine months ended September 30, 2015: $6.0~~2016: $8.6 billion). It is appropriate to exclude the average AUM of our JVs for purposes of computing gross revenue yield on AUM because the revenues resulting from these AUM are not presented in our operating revenues. Under U.S. GAAP, our share of the net income of the JVs is recorded as equity in earnings of unconsolidated affiliates on our Condensed Consolidated Statements of Income. Additionally, the numerator of the gross revenue yield measure, operating revenues, excludes the management fees earned from CIP; however, the denominator of the measure includes the AUM of these investment products. Therefore, the gross revenue yield measure is not considered representative of the company's true effective fee rate from AUM.


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

Flows

AUM at ~~September~~June 30, ~~2016~~2017 were ~~$820.2~~$858.3 billion ~~(September~~ (June 30, ~~2015: $755.8~~2016: $779.6 billion). During the three months ended ~~September~~June 30, ~~2016,~~2017, we experienced long-term net ~~inflows~~outflows of ~~$12.2 billion. We also experienced~~$0.6 billion. These outflows were offset by net inflows ~~in Invesco PowerShares QQQ and~~of institutional money market funds of ~~$1.1~~$2.8 billion and ~~$5.9~~Invesco PowerShares QQQ of $0.2 billion ~~respectively,~~ during ~~this~~the period. ~~Of the total long-term~~Long-term net ~~inflows~~outflows during the three months ended ~~September~~June 30, ~~2016, $8.3~~2017, were split between outflows from passive AUM products of $0.4 billion ~~were in~~and from actively managed AUM products ~~and $3.9 billion were in passive AUM products. Net long-term inflows~~of $0.2 billion. Long-term net outflows for the period were ~~comprised of inflows in~~from our institutional distribution channel of ~~$3.4~~$2.0 billion, ~~and~~offset by net inflows infrom our retail distribution channel of ~~$8.8~~$1.4 billion. On a client domicile basis, long-term net ~~inflows~~outflows were ~~primarily in~~from the U.S., ~~Asia and~~ the U.K. and Asia with ~~inflows~~outflows of ~~$8.0~~$2.8 billion, ~~$4.2~~$1.1 billion and ~~$0.5~~$0.8 billion, respectively. These were partially offset by ~~outflows~~inflows of ~~$0.3~~$4.0 billion and ~~$0.2~~$0.1 billion for Continental Europe and Canada, respectively, during the three months ended ~~September~~June 30, ~~2016. Long-term net flows during the three months ended September 30, 2016 included a $6.5 billion inflow from the State of Rhode Island 529 mandate.~~2017.

During the three months ended ~~September~~June 30, ~~2015,~~2016, we experienced long-term net ~~outflows~~inflows of ~~$3.9~~$4.5 billion. We also experienced net outflows in Invesco PowerShares QQQ fund of ~~$0.9~~$3.8 billion, ~~along with~~offset by net ~~outflows~~inflows in institutional money market funds of ~~$1.5~~$2.0 billion during this period. Long-term net inflows during the three months ended ~~September~~June 30, ~~2015.~~2016 of $4.5 billion were entirely in passive AUM products. Net long-term inflows from our institutional channel of $5.0 billion were partially offset by outflows ~~during the three months ended September 30, 2015 included~~in our retail distribution channel of $0.5 billion. On a client domicile basis, long-term net ~~long-term outflows~~inflows of ~~active AUM of $1.6~~$4.1 billion and ~~passive AUM of $2.3 billion. Net long-~~$2.1 billion

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~~term~~for Asia and the U.S., respectively, were partially offset by long-term net outflows of $0.9 billion, $0.6 billion, and $0.2 billion for Continental Europe, the U.K. and Canada, respectively.

Average AUM during the three months ended June 30, 2017 were $849.2 billion, compared to $784.5 billion for the three months ended June 30, 2016.

During the six months ended June 30, 2017, we experienced long-term net inflows of $1.2 billion. We also experienced net inflows in Invesco PowerShares QQQ fund of $1.2 billion, offset by net outflows in institutional money market funds of $5.3 billion during this period. Long-term net inflows during the six months ended June 30, 2017 included inflows of passive AUM of $1.9 billion, partially offset by outflows of active AUM of $0.7 billion. Net long-term inflows were comprised of ~~outflows~~inflows in our retail distribution channel of ~~$4.2~~$3.2 billion, partially offset by ~~inflows~~outflows from our institutional channel of ~~$0.3~~$2.0 billion. On a client domicile basis, long-term net ~~outflows~~inflows of ~~$5.0~~$5.7 billion and ~~$0.2~~$0.4 billion ~~for the U.S.~~in Continental Europe and ~~U.K.,~~Asia, respectively, were partially offset by long-term net ~~inflows~~outflows of ~~$1.0~~$2.9 billion, $1.9 billion and ~~$0.3~~$0.1 billion ~~for Continental Europe~~in the U.S., U.K. and ~~Asia respectively,~~Canada during the ~~three~~six months ended ~~September~~June 30, ~~2015.~~

~~Average AUM during the three months ended September 30, 2016 were $814.1 billion, compared to $788.9 billion for the three months ended September 30, 2015.~~2017.

During the ~~nine~~six months ended ~~September~~June 30, 2016, we experienced long-term net inflows of ~~$15.4~~$3.2 billion. We also experienced net inflows in institutional money market funds of ~~$11.7~~$5.8 billion, offset by net outflows in Invesco PowerShares QQQ fund of ~~$5.3~~$6.4 billion during the ~~nine~~six months ended ~~September~~June 30, 2016. Net inflows during the ~~nine~~six months ended ~~September~~June 30, 2016 included net long-term inflows of active AUM of ~~$8.8~~$0.5 billion and net long-term inflows of passive AUM of ~~$6.6~~$2.7 billion. Net long-term inflows for the period were comprised of inflows in our institutional channel of ~~$9.8~~$6.4 billion ~~and~~partially offset by outflows in our retail distribution channel of ~~$5.6~~$3.2 billion. On a client domicile basis, long-term net inflows of ~~$11.9 billion and $7.8~~$7.7 billion were experienced in Asia ~~and the U.S., respectively,~~ offset by long-term net outflows of ~~$2.8~~$2.5 billion, ~~$0.9~~$1.4 billion, $0.4 billion and ~~$0.6~~$0.2 billion in Continental Europe, the U.K., Canada and ~~Canada,~~the U.S., respectively during the ~~nine~~six months ended ~~September~~June 30, 2016.

During the nine months ended September 30, 2015, we experienced long-term net inflows of $12.3 billion. These inflows were offset by net outflows in Invesco PowerShares QQQ fund of $3.8 billion, along with net outflows in institutional money market funds of $10.1 billion during the nine months ended September 30, 2015. Long-term net inflows during the nine months ended September 30, 2015 included inflows of active AUM of $10.6 billion and passive AUM of $1.7 billion. Net long-term inflows were split between our retail distribution channel of $2.8 billion and our institutional channel of $9.5 billion. On a client domicile basis, long-term net inflows of $2.0 billion, $7.6 billion, $2.2 billion and $0.6 billion,were experienced in the U.S., Continental Europe, Asia and the U.K., respectively, and were partially offset by long-term net outflows of $0.1 billion in Canada during the nine months ended September 30, 2015.

Average AUM during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 were ~~$782.0~~$839.5 billion, compared to ~~$798.4~~$766.0 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016.

Market Returns

During the three months ended ~~September~~June 30, ~~2016,~~2017, positive market movement led to a ~~$23.6~~$13.0 billion increase in AUM, with gains in our equity asset class of ~~$20.0~~$10.9 billion, fixed income class of ~~$1.9~~$2.0 billion and balanced asset class of ~~$1.5 billion.~~$0.2 billion. During the three months ended September 30, 2015, negative market movement led to a $35.6 billion decrease in AUM, with losses in the equity asset class of $31.6 billion, alternatives asset class of $2.3 billion, balanced asset class of $1.4 billion and fixed income class of $0.4 billion.

~~During the nine months ended September~~June 30, 2016, positive market movement led to a ~~$31.3~~$10.7 billion increase in AUM, with gains in the equity asset class of $3.5 billion, fixed income class of $3.4 billion, alternatives asset class of $2.2 billion and balanced asset class of $1.6 billion.

During the six months ended June 30, 2017, positive market movement led to a $36.1 billionincrease in AUM, with gains in our equity asset class of ~~$18.0~~$31.1 billion, fixed income class of $7.3 billion, alternatives class of $3.2 billion, balanced asset class of $2.5 billion and money market asset class of $0.3 billion. During the nine months ended September 30, 2015, negative market movement decreased AUM by $26.0 billion with losses in our equity class of $17.8 billion, alternatives asset class of $4.5 billion, fixed income asset class of $2.5$3.7 billion and balanced asset class of ~~$1.5~~$1.5 billion. ~~These losses were partly offset by an~~ During the six months ended June 30, 2016, positive market movement led to a $7.7 billion increase in AUM, with gains in the ~~value~~fixed income class of ~~our money market~~$5.4 billion, alternatives asset class of ~~$0.3~~$3.1 billion and balanced asset class of $1.0 billion, partially offset by market losses in the equity asset class of $2.0 billion.

Foreign Exchange Rates

During the three months ended ~~September~~June 30, ~~2016,~~2017, we experienced ~~decreases~~increases in AUM of ~~$2.2~~$8.1 billion due to changes in foreign exchange rates. In the three months ended ~~September~~June 30, ~~2015,~~2016, AUM decreased by $5.9 billion due to foreign exchange rate changes. During the nine months ended September 30, 2016, we experienced decreases in AUM of $7.3 billion due to changes in foreign exchange rates. In the nine months ended September 30, 2015, AUM decreased by $8.3$7.7 billion due to foreign exchange rate changes. See the company's disclosures regarding the changes in foreign exchange ~~rages~~rates during the three ~~and nine~~ months ended ~~September~~June 30, ~~2016~~2017 in the “Foreign Exchange Impact on Balance Sheet, Assets Under Management and Results of Operations” section above for additional information regarding the movement of foreign exchange rates.

~~Table~~During the six months ended June 30, 2017, we experienced increases in AUM of ~~Contents~~

~~Acquisitions and Dispositions~~

~~The acquisition of~~$12.2 billion due to changes in foreign exchange rates. In the ~~controlling interest~~six months ended June 30, 2016, AUM decreased by $5.1 billion due to foreign exchange rate changes. See the company's disclosures regarding the changes in ~~our Indian asset management joint venture added $2.4 billion to AUM~~foreign exchange rates during the ~~nine~~six months ended ~~September~~June 30, ~~2016 (three months ended September 30, 2016; zero acquisitions). During~~2017 in the ~~nine months ended September 30, 2016, this acquisition was offset by dispositions~~“Foreign Exchange Impact on Balance Sheet, Assets Under Management and Results of ~~$3.6 billion related to~~Operations” section above for additional information regarding the ~~deconsolidation~~movement of certain securitization trusts by Invesco Mortgage Capital Inc. (IVR) and other AUM dispositions (three months ended September 30, 2016; zero dispositions). For the nine months ended September 30, 2015, dispositions resulted in a $0.7 billion decrease in AUM representingforeign exchange traded notes that did not transfer over as part of the agreement with Deutsche Bank to transition the investment management of the PowerShares DB suite of commodity exchange traded funds to Invesco (three months ended September 30, 2015: zero dispositions).rates.

Revenue Yield

Gross revenue yield on AUM decreased ~~5.3~~ 1.6basis points to ~~59.8~~59.7 basis points in the three months ended ~~September~~June 30, ~~2016~~2017 from the three months ended ~~September~~June 30, ~~2015~~2016 level of ~~65.1~~61.3 basis points. Management does not consider gross revenue yield, the most comparable U.S. GAAP-based measure to net revenue yield, to be a meaningful effective fee rate measure for the reasons outlined in footnote 1 to the Changes in AUM table above.

Table of Contents

Net revenue yield on AUM decreased ~~3.8~~ 1.0basis ~~points~~point to ~~42.0~~42.7 basis points in the three months ended ~~September~~June 30, ~~2016~~2017 when compared to the three months ended ~~September~~June 30, ~~2015~~2016 yield of ~~45.8~~43.7 basis points. Excluding performance fees, the net revenue yield decreased ~~3.1~~1.4 basis points to 41.8 basis points in the three months ended ~~September~~June 30, ~~2016~~2017 (three months ended ~~September~~June 30, ~~2015: 44.9~~2016: 43.2 basis points).

Changes in our AUM mix significantly impact our net revenue yield. For example, on an asset class basis, our equity and balanced AUM generally earn a higher net revenue rate than money market and fixed income AUM.

The combination of average equity and average balanced AUM decreased to 50.7% in the three months ended September 30, 2016 from 54.7% of total average AUM in the three months ended September 30, 2015. Similarly, the combination of average equity and average balanced AUM decreased to 51.4% in the nine months ended September 30, 2016 from 55.4% of total average AUM in the nine months ended September 30, 2015. This resulted in a higher proportion of average assets in money market and fixed income AUM in the three and nine months ended ~~September 30, 2016~~ ~~when compared to respective prior periods. This change in asset class mix contributed to the decrease in net~~ Net revenue yield on AUM decreased 1.5 basis point to42.2 basis points in the ~~three and nine~~six months ended ~~September~~June 30, ~~2016~~2017 when compared to the ~~respective prior periods.~~six months ended June 30, 2016 yield of 43.7 basis points. Excluding performance fees, the net revenue yield decreased 1.7 basis points to 41.4 basis points in the six months ended June 30, 2017 (six months ended June 30, 2016: 43.1 basis points).

As a significant proportion of our AUM is based outside of the U.S., changes in foreign exchange rates result in a change to the mix of U.S. Dollar denominated AUM with AUM denominated in other currencies. As fee rates differ across geographic locations, changes to exchange rates have an impact on the net revenue yields. The strengthening of the U.S. Dollar against the Pound Sterling during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 when compared to the respective prior periods resulted in a reduction in the net revenue yield as it reduced the weighting of higher fee earning AUM attributable to the U.K. products.

~~The tables that follow analyze~~Additionally, changes in our AUM ~~into active~~mix significantly impact our net revenue yield. For example, on an asset class basis, our equity and ~~passive styles.~~balanced AUM generally earn a higher net revenue rate than money market and fixed income AUM. Passive AUM generally earn a lower effective fee rate than active asset classes.

At ~~September~~June 30, ~~2016~~,2017, passive AUM were ~~$143.3~~$156.6 billion, representing ~~17.5%~~18.2% of total AUM at that date; whereas at ~~September~~June 30, ~~2015~~,2016, passive AUM were ~~$131.7~~$133.5 billion, representing ~~17.4%~~17.1% of our total AUM at that date. In the three months ended ~~September~~June 30, ~~2016~~,2017, the net revenue yield on passive AUM was ~~15.3~~16.6 basis points compared to ~~14.9~~14.6 basis points in the three months ended ~~September~~June 30, ~~2015,~~2016, an increase of ~~0.4~~2.0 basis points. In the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the net revenue yield on passive AUM was ~~14.6~~16.6 basis points compared to ~~14.5~~14.2 basis points in the ~~nine~~six months ended ~~September~~June 30, ~~2015, a~~2016, an increase of ~~0.1~~2.4 basis points. The combination of average equity and average balanced AUM decreased to 51.5% in the six months ended June 30, 2017 from 51.9% of total average AUM in the six months ended June 30, 2016. These changes in asset class mix contributed to the decrease in net revenue yield on AUM in the three and six months ended June 30, 2017 when compared to the respective prior period.

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Changes in our AUM by channel, asset class, and client domicile, and average AUM by asset class, are presented below:

Total AUM by Channel⁽¹⁾

As of and for the Three Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:


$ in billions	Total		Retail		Institutional		Total		Retail		Institutional
June 30, 2016	779.6		504.3		275.3
March 31, 2017							834.8		552.1		282.7
Long-term inflows							42.3		34.4		7.9
Long-term outflows							(42.9	)	(33.0	)	(9.9	)
Long-term net flows							(0.6	)	1.4		(2.0	)
Net flows in Invesco PowerShares QQQ fund							0.2		0.2		—
Net flows in institutional money market funds							2.8		—		2.8
Total net flows							2.4		1.6		0.8
Market gains and losses/reinvestment							13.0		12.0		1.0
Foreign currency translation							8.1		6.7		1.4
June 30, 2017							858.3		572.4		285.9

March 31, 2016							771.5		507.7		263.8
Long-term inflows	51.7		40.3		11.4		45.8		34.8		11.0
Long-term outflows	(39.5	)	(31.5	)	(8.0	)	(41.3	)	(35.3	)	(6.0	)
Long-term net flows	12.2		8.8		3.4		4.5		(0.5	)	5.0
Net flows in Invesco PowerShares QQQ fund	1.1		1.1		—		(3.8	)	(3.8	)	—
Net flows in institutional money market funds	5.9		—		5.9		2.0		—		2.0
Total net flows	19.2		9.9		9.3		2.7		(4.3	)	7.0
Market gains and losses/reinvestment	23.6		20.2		3.4		10.7		7.8		2.9
Acquisitions/dispositions, net	—		—		—		2.4		0.4		2.0
Foreign currency translation	(2.2	)	(2.3	)	0.1		(7.7	)	(7.3	)	(0.4	)
September 30, 2016	820.2		532.1		288.1

June 30, 2015	803.6		541.3		262.3
Long-term inflows	43.5		32.0		11.5
Long-term outflows	(47.4	)	(36.2	)	(11.2	)
Long-term net flows	(3.9	)	(4.2	)	0.3
Net flows in Invesco PowerShares QQQ fund	(0.9	)	(0.9	)	—
Net flows in institutional money market funds	(1.5	)	—		(1.5	)
Total net flows	(6.3	)	(5.1	)	(1.2	)
Market gains and losses/reinvestment	(35.6	)	(31.4	)	(4.2	)
Acquisitions/dispositions, net	—		—		—
Foreign currency translation	(5.9	)	(5.4	)	(0.5	)
September 30, 2015	755.8		499.4		256.4
June 30, 2016							779.6		504.3		275.3

As of and for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:

$ in billions Total Retail Institutional
December 31, 2015 775.6
514.8
260.8
Long-term inflows 140.3
108.2
32.1
Long-term outflows (124.9 ) (102.6 ) (22.3 )
Long-term net flows 15.4
5.6
9.8
Net flows in Invesco PowerShares QQQ fund (5.3 ) (5.3 ) —
Net flows in institutional money market funds 11.7
—
11.7
Total net flows 21.8
0.3
21.5
Market gains and losses/reinvestment 31.3
24.9
6.4
Acquisitions/dispositions, net (1.2 ) 0.4
(1.6 )
Foreign currency translation (7.3 ) (8.3 ) 1.0
September 30, 2016 820.2
532.1
288.1

December 31, 2014 792.4
532.5
259.9
Long-term inflows 146.1
106.5
39.6
Long-term outflows (133.8 ) (103.7 ) (30.1 )
Long-term net flows 12.3
2.8
9.5
Net flows in Invesco PowerShares QQQ fund (3.8 ) (3.8 ) —
Net flows in institutional money market funds (10.1 ) —
(10.1 )
Total net flows (1.6 ) (1.0 ) (0.6 )
Market gains and losses/reinvestment (26.0 ) (25.0 ) (1.0 )
Acquisitions/dispositions, net (0.7 ) (0.7 ) —
Foreign currency translation (8.3 ) (6.4 ) (1.9 )
September 30, 2015 755.8
499.4
256.4



$ in billions	Total		Retail		Institutional
December 31, 2016	812.9		526.5		286.4
Long-term inflows	91.4		74.0		17.4
Long-term outflows	(90.2	)	(70.8	)	(19.4	)
Long-term net flows	1.2		3.2		(2.0	)
Net flows in Invesco PowerShares QQQ fund	1.2		1.2		—
Net flows in institutional money market funds	(5.3	)	—		(5.3	)
Total net flows	(2.9	)	4.4		(7.3	)
Market gains and losses/reinvestment	36.1		32.4		3.7
Acquisitions/dispositions, net	—		—		—
Foreign currency translation	12.2		9.1		3.1
June 30, 2017	858.3		572.4		285.9

December 31, 2015	775.6		514.8		260.8
Long-term inflows	88.6		67.9		20.7
Long-term outflows	(85.4	)	(71.1	)	(14.3	)
Long-term net flows	3.2		(3.2	)	6.4
Net flows in Invesco PowerShares QQQ fund	(6.4	)	(6.4	)	—
Net flows in institutional money market funds	5.8		—		5.8
Total net flows	2.6		(9.6	)	12.2
Market gains and losses/reinvestment	7.7		4.7		3.0
Acquisitions/dispositions, net	(1.2	)	0.4		(1.6	)
Foreign currency translation	(5.1	)	(6.0	)	0.9
June 30, 2016	779.6		504.3		275.3

____________

See accompanying notes immediately following these AUM tables.

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Passive AUM by Channel⁽¹⁾

As of and for the Three Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:


$ in billions	Total		Retail		Institutional		Total		Retail		Institutional
June 30, 2016	133.5		117.0		16.5
March 31, 2017							154.3		138.5		15.8
Long-term inflows							8.6		8.5		0.1
Long-term outflows							(9.0	)	(8.4	)	(0.6	)
Long-term net flows							(0.4	)	0.1		(0.5	)
Net flows in Invesco PowerShares QQQ fund							0.2		0.2		—
Net flows in institutional money market funds							—		—		—
Total net flows							(0.2	)	0.3		(0.5	)
Market gains and losses/reinvestment							2.5		2.7		(0.2	)
Foreign currency translation							—		—		—
June 30, 2017							156.6		141.5		15.1

March 31, 2016							131.1		115.7		15.4
Long-term inflows	11.8		10.9		0.9		12.3		11.3		1.0
Long-term outflows	(7.9	)	(7.7	)	(0.2	)	(7.8	)	(7.7	)	(0.1	)
Long-term net flows	3.9		3.2		0.7		4.5		3.6		0.9
Net flows in Invesco PowerShares QQQ fund	1.1		1.1		—		(3.8	)	(3.8	)	—
Net flows in institutional money market funds	(0.1	)	—		(0.1	)	0.1		—		0.1
Total net flows	4.9		4.3		0.6		0.8		(0.2	)	1.0
Market gains and losses/reinvestment	4.9		4.9		—		1.5		1.5		—
Acquisitions/dispositions, net	—		—		—		—		—		—
Foreign currency translation	—		—		—		0.1		—		0.1
September 30, 2016	143.3		126.2		17.1

June 30, 2015	141.6		119.7		21.9
Long-term inflows	6.8		6.0		0.8
Long-term outflows	(9.1	)	(7.8	)	(1.3	)
Long-term net flows	(2.3	)	(1.8	)	(0.5	)
Net flows in Invesco PowerShares QQQ fund	(0.9	)	(0.9	)	—
Net flows in institutional money market funds	0.1		—		0.1
Total net flows	(3.1	)	(2.7	)	(0.4	)
Market gains and losses/reinvestment	(6.8	)	(6.4	)	(0.4	)
Acquisitions/dispositions, net	—		—		—
Foreign currency translation	—		—		—
September 30, 2015	131.7		110.6		21.1
June 30, 2016							133.5		117.0		16.5

As of and for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:

$ in billions Total Retail Institutional
December 31, 2015 139.1
118.7
20.4
Long-term inflows 34.0
32.1
1.9
Long-term outflows (27.4 ) (25.6 ) (1.8 )
Long-term net flows 6.6
6.5
0.1
Net flows in Invesco PowerShares QQQ fund (5.3 ) (5.3 ) —
Net flows in institutional money market funds (0.3 ) —
(0.3 )
Total net flows 1.0
1.2
(0.2 )
Market gains and losses/reinvestment 6.2
6.3
(0.1 )
Acquisitions/dispositions, net (3.2 ) —
(3.2 )
Foreign currency translation 0.2
—
0.2
September 30, 2016 143.3
126.2
17.1

December 31, 2014 141.4
119.7
21.7
Long-term inflows 25.7
22.5
3.2
Long-term outflows (24.0 ) (21.2 ) (2.8 )
Long-term net flows 1.7
1.3
0.4
Net flows in Invesco PowerShares QQQ fund (3.8 ) (3.8 ) —
Net flows in institutional money market funds 0.1
—
0.1
Total net flows (2.0 ) (2.5 ) 0.5
Market gains and losses/reinvestment (7.0 ) (5.9 ) (1.1 )
Acquisitions/dispositions, net (0.7 ) (0.7 ) —
September 30, 2015 131.7
110.6
21.1

~~________________________~~



$ in billions	Total		Retail		Institutional
December 31, 2016	144.4		128.8		15.6
Long-term inflows	20.4		18.9		1.5
Long-term outflows	(18.5	)	(16.8	)	(1.7	)
Long-term net flows	1.9		2.1		(0.2	)
Net flows in Invesco PowerShares QQQ fund	1.2		1.2		—
Net flows in institutional money market funds	—		—		—
Total net flows	3.1		3.3		(0.2	)
Market gains and losses/reinvestment	9.0		9.4		(0.4	)
Acquisitions/dispositions, net	—		—		—
Foreign currency translation	0.1		—		0.1
June 30, 2017	156.6		141.5		15.1

December 31, 2015	139.1		118.7		20.4
Long-term inflows	22.2		21.2		1.0
Long-term outflows	(19.5	)	(17.9	)	(1.6	)
Long-term net flows	2.7		3.3		(0.6	)
Net flows in Invesco PowerShares QQQ fund	(6.4	)	(6.4	)	—
Net flows in institutional money market funds	(0.2	)	—		(0.2	)
Total net flows	(3.9	)	(3.1	)	(0.8	)
Market gains and losses/reinvestment	1.3		1.4		(0.1	)
Acquisitions/dispositions, net	(3.2	)	—		(3.2	)
Foreign currency translation	0.2		—		0.2
June 30, 2016	133.5		117.0		16.5

____________

See accompanying notes immediately following these AUM tables.

Table of Contents

Total AUM by Asset Class⁽²⁾

As of and for the Three Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:

$ in billions Total Equity Fixed Income Balanced Money Market
Alternatives⁽³⁾
June 30, 2016 779.6
348.8
196.3
47.4
71.1
116.0
Long-term inflows 51.7
19.9
17.1
2.6
1.2
10.9
Long-term outflows (39.5 ) (23.1 ) (7.9 ) (2.4 ) (1.1 ) (5.0 )
Long-term net flows 12.2
(3.2 ) 9.2
0.2
0.1
5.9
Net flows in Invesco PowerShares QQQ fund 1.1
1.1
—
—
—
—
Net flows in institutional money market funds 5.9
—
—
—
5.9
—
Total net flows 19.2
(2.1 ) 9.2
0.2
6.0
5.9
Market gains and losses/reinvestment 23.6
20.0
1.9
1.5
0.1
0.1
Acquisitions/dispositions, net —
—
—
—
—
—
Foreign currency translation (2.2 ) (1.4 ) (0.4 ) (0.2 ) —
(0.2 )
September 30, 2016 820.2
365.3
207.0
48.9
77.2
121.8
Average AUM 814.1
364.4
203.8
48.4
78.1
119.4
% of total average AUM 100.0 % 44.8 % 25.0 % 5.9 % 9.6 % 14.7 %

June 30, 2015 803.6
394.7
187.5
53.6
67.9
99.9
Long-term inflows 43.5
19.6
10.5
3.2
1.3
8.9
Long-term outflows (47.4 ) (25.6 ) (11.3 ) (4.3 ) (1.0 ) (5.2 )
Long-term net flows (3.9 ) (6.0 ) (0.8 ) (1.1 ) 0.3
3.7
Net flows in Invesco PowerShares QQQ fund (0.9 ) (0.9 ) —
—
—
—
Net flows in institutional money market funds (1.5 ) —
—
—
(1.5 ) —
Total net flows (6.3 ) (6.9 ) (0.8 ) (1.1 ) (1.2 ) 3.7
Market gains and losses/reinvestment (35.6 ) (31.6 ) (0.4 ) (1.4 ) 0.1
(2.3 )
Acquisitions/dispositions, net —
—
—
—
—
—
Foreign currency translation (5.9 ) (3.8 ) (0.8 ) (1.0 ) —
(0.3 )
September 30, 2015 755.8
352.4
185.5
50.1
66.8
101.0
Average AUM 788.9
379.7
187.1
52.4
69.6
100.1
% of total average AUM 100.0 % 48.1 % 23.7 % 6.6 % 8.8 % 12.7 %

~~____________~~

~~See accompanying notes immediately following these AUM tables.~~



$ in billions	Total		Equity		Fixed Income⁽³⁾		Balanced		Money Market⁽³⁾⁽⁵⁾		Alternatives⁽⁴⁾
March 31, 2017	834.8		381.8		203.8		48.9		73.1		127.2
Long-term inflows	42.3		19.0		10.9		3.6		1.0		7.8
Long-term outflows	(42.9	)	(24.6	)	(8.8	)	(2.1	)	(0.9	)	(6.5	)
Long-term net flows	(0.6	)	(5.6	)	2.1		1.5		0.1		1.3
Net flows in Invesco PowerShares QQQ fund	0.2		0.2		—		—		—		—
Net flows in institutional money market funds	2.8		—		—		—		2.8		—
Total net flows	2.4		(5.4	)	2.1		1.5		2.9		1.3
Market gains and losses/reinvestment	13.0		10.9		2.0		0.2		—		(0.1	)
Transfers/reclassifications	—		—		—		—		—		—
Foreign currency translation	8.1		3.9		1.0		1.6		0.1		1.5
June 30, 2017	858.3		391.2		208.9		52.2		76.1		129.9
Average AUM	849.2		388.8		207.2		50.8		73.8		128.6
% of total average AUM	100.0	%	45.8	%	24.4	%	6.0	%	8.7	%	15.1	%

March 31, 2016	771.5		359.5		187.1		46.8		68.6		109.5
Long-term inflows	45.8		20.5		12.0		3.2		1.0		9.1
Long-term outflows	(41.3	)	(27.0	)	(6.4	)	(3.0	)	(0.8	)	(4.1	)
Long-term net flows	4.5		(6.5	)	5.6		0.2		0.2		5.0
Net flows in Invesco PowerShares QQQ fund	(3.8	)	(3.8	)	—		—		—		—
Net flows in institutional money market funds	2.0		—		—		—		2.0		—
Total net flows	2.7		(10.3	)	5.6		0.2		2.2		5.0
Market gains and losses/reinvestment	10.7		3.5		3.4		1.6		—		2.2
Acquisitions/dispositions, net	2.4		0.4		1.6		—		0.4		—
Foreign currency translation	(7.7	)	(4.3	)	(1.4	)	(1.2	)	(0.1	)	(0.7	)
June 30, 2016	779.6		348.8		196.3		47.4		71.1		116.0
Average AUM	784.5		357.0		193.7		47.7		72.8		113.3
% of total average AUM	100.0	%	45.5	%	24.7	%	6.1	%	9.3	%	14.4	%

4947

Table of Contents

~~Total AUM by Asset Class~~⁽²⁾

As of and for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:

$ in billions Total Equity Fixed Income Balanced Money Market
Alternatives⁽³⁾
December 31, 2015 775.6
370.9
187.9
48.1
64.6
104.1
Long-term inflows 140.3
60.8
38.8
7.8
3.2
29.7
Long-term outflows (124.9 ) (74.7 ) (24.4 ) (9.0 ) (2.9 ) (13.9 )
Long-term net flows 15.4
(13.9 ) 14.4
(1.2 ) 0.3
15.8
Net flows in Invesco PowerShares QQQ fund (5.3 ) (5.3 ) —
—
—
—
Net flows in institutional money market funds 11.7
—
—
—
11.7
—
Total net flows 21.8
(19.2 ) 14.4
(1.2 ) 12.0
15.8
Market gains and losses/reinvestment 31.3
18.0
7.3
2.5
0.3
3.2
Acquisitions/dispositions, net (1.2 ) 0.4
(1.1 ) —
0.4
(0.9 )
Foreign currency translation (7.3 ) (4.8 ) (1.5 ) (0.5 ) (0.1 ) (0.4 )
September 30, 2016 820.2
365.3
207.0
48.9
77.2
121.8
Average AUM 782.0
355.3
194.3
47.3
72.6
112.5
% of total average AUM 100.0 % 45.4 % 24.8 % 6.0 % 9.3 % 14.4 %

December 31, 2014 792.4
384.4
181.6
50.6
76.5
99.3
Long-term inflows 146.1
67.9
34.5
13.3
3.0
27.4
Long-term outflows (133.8 ) (73.5 ) (27.2 ) (10.6 ) (2.9 ) (19.6 )
Long-term net flows 12.3
(5.6 ) 7.3
2.7
0.1
7.8
Net flows in Invesco PowerShares QQQ fund (3.8 ) (3.8 ) —
—
—
—
Net flows in institutional money market funds (10.1 ) —
—
—
(10.1 ) —
Total net flows (1.6 ) (9.4 ) 7.3
2.7
(10.0 ) 7.8
Market gains and losses/reinvestment (26.0 ) (17.8 ) (2.5 ) (1.5 ) 0.3
(4.5 )
Acquisitions/dispositions, net (0.7 ) —
—
—
—
(0.7 )
Foreign currency translation (8.3 ) (4.8 ) (0.9 ) (1.7 ) —
(0.9 )
September 30, 2015 755.8
352.4
185.5
50.1
66.8
101.0
Average AUM 798.4
390.5
184.9
51.8
71.4
99.8
% of total average AUM 100.0 % 48.9 % 23.2 % 6.5 % 8.9 % 12.5 %



$ in billions	Total		Equity		Fixed Income⁽³⁾		Balanced		Money Market⁽³⁾⁽⁵⁾		Alternatives⁽⁴⁾
December 31, 2016	812.9		364.1		201.7		46.8		78.3		122.0
Long-term inflows	91.4		40.5		23.6		6.3		1.8		19.2
Long-term outflows	(90.2	)	(51.1	)	(19.0	)	(4.3	)	(1.8	)	(14.0	)
Long-term net flows	1.2		(10.6	)	4.6		2.0		—		5.2
Net flows in Invesco PowerShares QQQ fund	1.2		1.2		—		—		—		—
Net flows in institutional money market funds	(5.3	)	—		—		—		(5.3	)	—
Total net flows	(2.9	)	(9.4	)	4.6		2.0		(5.3	)	5.2
Market gains and losses/reinvestment	36.1		31.1		3.7		1.5		—		(0.2	)
Transfers/reclassifications	—		—		(3.0	)	—		3.0		—
Foreign currency translation	12.2		5.4		1.9		1.9		0.1		2.9
June 30, 2017	858.3		391.2		208.9		52.2		76.1		129.9
Average AUM	839.5		382.8		204.7		49.5		75.6		126.9
% of total average AUM	100.0	%	45.6	%	24.4	%	5.9	%	9.0	%	15.1	%

December 31, 2015	775.6		370.9		187.9		48.1		64.6		104.1
Long-term inflows	88.6		40.9		21.7		5.2		2.0		18.8
Long-term outflows	(85.4	)	(51.6	)	(16.5	)	(6.6	)	(1.8	)	(8.9	)
Long-term net flows	3.2		(10.7	)	5.2		(1.4	)	0.2		9.9
Net flows in Invesco PowerShares QQQ fund	(6.4	)	(6.4	)	—		—		—		—
Net flows in institutional money market funds	5.8		—		—		—		5.8		—
Total net flows	2.6		(17.1	)	5.2		(1.4	)	6.0		9.9
Market gains and losses/reinvestment	7.7		(2.0	)	5.4		1.0		0.2		3.1
Acquisitions/dispositions, net	(1.2	)	0.4		(1.1	)	—		0.4		(0.9	)
Foreign currency translation	(5.1	)	(3.4	)	(1.1	)	(0.3	)	(0.1	)	(0.2	)
June 30, 2016	779.6		348.8		196.3		47.4		71.1		116.0
Average AUM	766.0		350.7		189.5		46.7		70.0		109.1
% of total average AUM	100.0	%	45.8	%	24.7	%	6.1	%	9.1	%	14.2	%

____________

See accompanying notes immediately following these AUM tables.

5048

Table of Contents

Passive AUM by Asset Class⁽²⁾

As of and for the Three Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:

$ in billions Total Equity Fixed Income Balanced Money Market
Alternatives⁽³⁾
June 30, 2016 133.5
84.9
38.9
—
0.2
9.5
Long-term inflows 11.8
6.9
4.1
—
—
0.8
Long-term outflows (7.9 ) (6.2 ) (0.7 ) —
—
(1.0 )
Long-term net flows 3.9
0.7
3.4
—
—
(0.2 )
Net flows in Invesco PowerShares QQQ fund 1.1
1.1
—
—
—
—
Net flows in institutional money market funds (0.1 ) —
—
—
(0.1 ) —
Total net flows 4.9
1.8
3.4
—
(0.1 ) (0.2 )
Market gains and losses/reinvestment 4.9
4.9
0.1
—
—
(0.1 )
Acquisitions/dispositions, net —
—
—
—
—
—
Foreign currency translation —
—
—
—
—
—
September 30, 2016 143.3
91.6
42.4
—
0.1
9.2
Average AUM 141.0
90.8
40.7
—
0.1
9.4
% of total average AUM 100.0 % 64.4 % 28.9 % — % 0.1 % 6.7 %

June 30, 2015 141.6
89.4
41.2
—
—
11.0
Long-term inflows 6.8
5.3
0.9
—
—
0.6
Long-term outflows (9.1 ) (6.2 ) (1.8 ) —
—
(1.1 )
Long-term net flows (2.3 ) (0.9 ) (0.9 ) —
—
(0.5 )
Net flows in Invesco PowerShares QQQ fund (0.9 ) (0.9 ) —
—
—
—
Net flows in institutional money market funds 0.1
—
—
—
0.1
—
Total net flows (3.1 ) (1.8 ) (0.9 ) —
0.1
(0.5 )
Market gains and losses/reinvestment (6.8 ) (5.3 ) (0.6 ) —
—
(0.9 )
Acquisitions/dispositions, net —
—
—
—
—
—
Foreign currency translation —
—
—
—
—
—
September 30, 2015 131.7
82.3
39.7
—
0.1
9.6
Average AUM 138.4
87.8
40.6
—
—
10.0
% of total average AUM 100.0 % 63.4 % 29.3 % — % — % 7.2 %



$ in billions	Total		Equity		Fixed Income		Balanced		Money Market		Alternatives⁽⁴⁾
March 31, 2017	154.3		101.2		45.1		—		—		8.0
Long-term inflows	8.6		5.7		2.5		—		—		0.4
Long-term outflows	(9.0	)	(6.4	)	(1.1	)	—		—		(1.5	)
Long-term net flows	(0.4	)	(0.7	)	1.4		—		—		(1.1	)
Net flows in Invesco PowerShares QQQ fund	0.2		0.2		—		—		—		—
Net flows in institutional money market funds	—		—		—		—		—		—
Total net flows	(0.2	)	(0.5	)	1.4		—		—		(1.1	)
Market gains and losses/reinvestment	2.5		2.8		—		—		—		(0.3	)
Foreign currency translation	—		—		—		—		—		—
June 30, 2017	156.6		103.5		46.5		—		—		6.6
Average AUM	156.8		103.5		46.2		—		—		7.1
% of total average AUM	100.0	%	66.0	%	29.5	%	—	%	—	%	4.5	%

March 31, 2016	131.1		87.1		35.6		—		0.1		8.3
Long-term inflows	12.3		7.7		3.5		—		—		1.1
Long-term outflows	(7.8	)	(6.5	)	(0.7	)	—		—		(0.6	)
Long-term net flows	4.5		1.2		2.8		—		—		0.5
Net flows in Invesco PowerShares QQQ fund	(3.8	)	(3.8	)	—		—		—		—
Net flows in institutional money market funds	0.1		—		—		—		0.1		—
Total net flows	0.8		(2.6	)	2.8		—		0.1		0.5
Market gains and losses/reinvestment	1.5		0.4		0.5		—		—		0.6
Acquisitions/dispositions, net	—		—		—		—		—		—
Foreign currency translation	0.1		—		—		—		—		0.1
June 30, 2016	133.5		84.9		38.9		—		0.2		9.5
Average AUM	131.7		85.4		37.4		—		0.1		8.8
% of total average AUM	100.0	%	64.8	%	28.4	%	—	%	0.1	%	6.7	%

Table of Contents

As of and for the Six Months Ended June 30, 2017 and 2016:



$ in billions	Total		Equity		Fixed Income		Balanced		Money Market		Alternatives⁽⁴⁾
December 31, 2016	144.4		93.5		41.7		—		—		9.2
Long-term inflows	20.4		12.5		6.8		—		—		1.1
Long-term outflows	(18.5	)	(13.1	)	(2.3	)	—		—		(3.1	)
Long-term net flows	1.9		(0.6	)	4.5		—		—		(2.0	)
Net flows in Invesco PowerShares QQQ fund	1.2		1.2		—		—		—		—
Net flows in institutional money market funds	—		—		—		—		—		—
Total net flows	3.1		0.6		4.5		—		—		(2.0	)
Market gains and losses/reinvestment	9.0		9.4		0.3		—		—		(0.8	)
Acquisitions/dispositions, net	—		—		—		—		—		—
Foreign currency translation	0.1		—		—		—		—		0.1
June 30, 2017	156.6		103.5		46.5		—		—		6.6
Average AUM	154.1		100.7		45.3		—		—		8.1
% of total average AUM	100.0	%	65.3	%	29.4	%	—	%	—	%	5.3	%

December 31, 2015	139.1		91.0		38.6		—		0.4		9.1
Long-term inflows	22.2		14.8		5.6		—		—		1.8
Long-term outflows	(19.5	)	(14.8	)	(3.3	)	—		—		(1.4	)
Long-term net flows	2.7		—		2.3		—		—		0.4
Net flows in Invesco PowerShares QQQ fund	(6.4	)	(6.4	)	—		—		—		—
Net flows in institutional money market funds	(0.2	)	—		—		—		(0.2	)	—
Total net flows	(3.9	)	(6.4	)	2.3		—		(0.2	)	0.4
Market gains and losses/reinvestment	1.3		0.3		0.7		—		—		0.3
Acquisitions/dispositions, net	(3.2	)	—		(2.7	)	—		—		(0.5	)
Foreign currency translation	0.2		—		—		—		—		0.2
June 30, 2016	133.5		84.9		38.9		—		0.2		9.5
Average AUM	129.3		84.1		36.4		—		0.2		8.6
% of total average AUM	100.0	%	65.0	%	28.2	%	—	%	0.2	%	6.7	%

____________

See accompanying notes immediately following these AUM tables.

Table of Contents

Total AUM by Client Domicile⁽⁶⁾

As of and for the Three Months Ended June 30, 2017 and 2016:



$ in billions	Total		U.S.		Canada		U.K.		Continental Europe		Asia
March 31, 2017	834.8		550.0		23.9		101.0		77.6		82.3
Long-term inflows	42.3		22.5		1.1		4.0		9.8		4.9
Long-term outflows	(42.9	)	(25.3	)	(1.0	)	(5.1	)	(5.8	)	(5.7	)
Long-term net flows	(0.6	)	(2.8	)	0.1		(1.1	)	4.0		(0.8	)
Net flows in Invesco PowerShares QQQ fund	0.2		0.2		—		—		—		—
Net flows in institutional money market funds	2.8		3.6		—		(1.8	)	(0.1	)	1.1
Total net flows	2.4		1.0		0.1		(2.9	)	3.9		0.3
Market gains and losses/reinvestment	13.0		8.1		0.1		2.2		1.5		1.1
Foreign currency translation	8.1		0.1		0.7		3.5		3.6		0.2
June 30, 2017	858.3		559.2		24.8		103.8		86.6		83.9

March 31, 2016	771.5		507.5		22.9		99.2		74.9		67.0
Long-term inflows	45.8		27.7		0.8		3.2		6.1		8.0
Long-term outflows	(41.3	)	(25.6	)	(1.0	)	(3.8	)	(7.0	)	(3.9	)
Long-term net flows	4.5		2.1		(0.2	)	(0.6	)	(0.9	)	4.1
Net flows in Invesco PowerShares QQQ fund	(3.8	)	(3.8	)	—		—		—		—
Net flows in institutional money market funds	2.0		(1.1	)	0.4		—		—		2.7
Total net flows	2.7		(2.8	)	0.2		(0.6	)	(0.9	)	6.8
Market gains and losses/reinvestment	10.7		7.9		0.1		1.7		0.3		0.7
Acquisitions/dispositions, net	2.4		—		—		—		—		2.4
Foreign currency translation	(7.7	)	(0.1	)	(0.1	)	(6.5	)	(1.5	)	0.5
June 30, 2016	779.6		512.5		23.1		93.8		72.8		77.4

As of and for the Six Months Ended June 30, 2017 and 2016:



$ in billions	Total		U.S.		Canada		U.K.		Continental Europe		Asia
December 31, 2016	812.9		539.5		23.1		98.2		72.1		80.0
Long-term inflows	91.4		50.3		2.2		8.1		18.1		12.7
Long-term outflows	(90.2	)	(52.2	)	(2.3	)	(11.0	)	(12.4	)	(12.3	)
Long-term net flows	1.2		(1.9	)	(0.1	)	(2.9	)	5.7		0.4
Net flows in Invesco PowerShares QQQ fund	1.2		1.2		—		—		—		—
Net flows in institutional money market funds	(5.3	)	(3.6	)	—		(1.5	)	0.5		(0.7	)
Total net flows	(2.9	)	(4.3	)	(0.1	)	(4.4	)	6.2		(0.3	)
Market gains and losses/reinvestment	36.1		23.9		1.0		5.5		3.8		1.9
Acquisitions/dispositions, net	—		—		—		—		—		—
Foreign currency translation	12.2		0.1		0.8		4.5		4.5		2.3
June 30, 2017	858.3		559.2		24.8		103.8		86.6		83.9

December 31, 2015	775.6		510.7		21.7		104.2		75.4		63.6
Long-term inflows	88.6		52.1		1.8		7.4		12.7		14.6
Long-term outflows	(85.4	)	(52.3	)	(2.2	)	(8.8	)	(15.2	)	(6.9	)
Long-term net flows	3.2		(0.2	)	(0.4	)	(1.4	)	(2.5	)	7.7
Net flows in Invesco PowerShares QQQ fund	(6.4	)	(6.4	)	—		—		—		—
Net flows in institutional money market funds	5.8		3.9		0.4		(0.8	)	—		2.3
Total net flows	2.6		(2.7	)	—		(2.2	)	(2.5	)	10.0
Market gains and losses/reinvestment	7.7		8.2		(0.1	)	0.7		(1.0	)	(0.1	)
Acquisitions/dispositions, net	(1.2	)	(3.6	)	—		—		—		2.4
Foreign currency translation	(5.1	)	(0.1	)	1.5		(8.9	)	0.9		1.5
June 30, 2016	779.6		512.5		23.1		93.8		72.8		77.4

____________

See accompanying notes immediately following these AUM tables.

Table of Contents

Passive AUM by ~~Asset Class~~Client Domicile⁽²⁾⁽⁶⁾

As of and for the ~~Nine~~Three Months Ended ~~September~~June 30, ~~2016~~2017 and ~~2015:~~2016:

$ in billions Total Equity Fixed Income Balanced Money Market
Alternatives⁽³⁾
December 31, 2015 139.1
91.0
38.6
—
0.4
9.1
Long-term inflows 34.0
21.7
9.7
—
—
2.6
Long-term outflows (27.4 ) (21.0 ) (4.0 ) —
—
(2.4 )
Long-term net flows 6.6
0.7
5.7
—
—
0.2
Net flows in Invesco PowerShares QQQ fund (5.3 ) (5.3 ) —
—
—
—
Net flows in institutional money market funds (0.3 ) —
—
—
(0.3 ) —
Total net flows 1.0
(4.6 ) 5.7
—
(0.3 ) 0.2
Market gains and losses/reinvestment 6.2
5.2
0.8
—
—
0.2
Acquisitions/dispositions, net (3.2 ) —
(2.7 ) —
—
(0.5 )
Foreign currency translation 0.2
—
—
—
—
0.2
September 30, 2016 143.3
91.6
42.4
—
0.1
9.2
Average AUM 133.2
86.3
37.9
—
0.1
8.9
% of total average AUM 100.0 % 64.8 % 28.5 % — % 0.1 % 6.7 %

December 31, 2014 141.4
88.2
41.1
—
—
12.1
Long-term inflows 25.7
18.1
4.5
—
—
3.1
Long-term outflows (24.0 ) (15.9 ) (4.0 ) —
—
(4.1 )
Long-term net flows 1.7
2.2
0.5
—
—
(1.0 )
Net flows in Invesco PowerShares QQQ fund (3.8 ) (3.8 ) —
—
—
—
Net flows in institutional money market funds 0.1
—
—
—
0.1
—
Total net flows (2.0 ) (1.6 ) 0.5
—
0.1
(1.0 )
Market gains and losses/reinvestment (7.0 ) (4.3 ) (1.9 ) —
—
(0.8 )
Acquisitions/dispositions, net (0.7 ) —
—
—
—
(0.7 )
Foreign currency translation —
—
—
—
—
—
September 30, 2015 131.7
82.3
39.7
—
0.1
9.6
Average AUM 141.7
89.2
41.6
—
—
10.9
% of total average AUM 100.0 % 62.9 % 29.4 % — % — % 7.7 %

~~____________~~

~~See accompanying notes immediately following these AUM tables.~~



$ in billions	Total		U.S.		Canada	U.K.	Continental Europe		Asia
March 31, 2017	154.3		150.2		0.5	—	2.0		1.6
Long-term inflows	8.6		8.2		0.1	—	0.3		—
Long-term outflows	(9.0	)	(8.2	)	—	—	(0.3	)	(0.5	)
Long-term net flows	(0.4	)	—		0.1	—	—		(0.5	)
Net flows in Invesco PowerShares QQQ fund	0.2		0.2		—	—	—		—
Net flows in institutional money market funds	—		—		—	—	—		—
Total net flows	(0.2	)	0.2		0.1	—	—		(0.5	)
Market gains and losses/reinvestment	2.5		2.4		—	—	0.1		—
Foreign currency translation	—		—		—	—	—		—
June 30, 2017	156.6		152.8		0.6	—	2.1		1.1

March 31, 2016	131.1		126.7		0.4	—	1.8		2.2
Long-term inflows	12.3		12.1		0.1	—	0.1		—
Long-term outflows	(7.8	)	(7.6	)	—	—	(0.2	)	—
Long-term net flows	4.5		4.5		0.1	—	(0.1	)	—
Net flows in Invesco PowerShares QQQ fund	(3.8	)	(3.8	)	—	—	—		—
Net flows in institutional money market funds	0.1		—		—	—	—		0.1
Total net flows	0.8		0.7		0.1	—	(0.1	)	0.1
Market gains and losses/reinvestment	1.5		1.5		—	—	—		—
Acquisitions/dispositions, net	—		—		—	—	—		—
Foreign currency translation	0.1		—		—	—	—		0.1
June 30, 2016	133.5		128.9		0.5	—	1.7		2.4

As of and for the Six Months Ended June 30, 2017 and 2016:



$ in billions	Total		U.S.		Canada		U.K.	Continental Europe		Asia
December 31, 2016	144.4		139.9		0.5		—	1.9		2.1
Long-term inflows	20.4		19.9		0.1		—	0.4		—
Long-term outflows	(18.5	)	(16.9	)	—		—	(0.4	)	(1.2	)
Long-term net flows	1.9		3.0		0.1		—	—		(1.2	)
Net flows in Invesco PowerShares QQQ fund	1.2		1.2		—		—	—		—
Net flows in institutional money market funds	—		—		—		—	—		—
Total net flows	3.1		4.2		0.1		—	—		(1.2	)
Market gains and losses/reinvestment	9.0		8.7		—		—	0.2		0.1
Acquisitions/dispositions, net	—		—		—		—	—		—
Foreign currency translation	0.1		—		—		—	—		0.1
June 30, 2017	156.6		152.8		0.6		—	2.1		1.1

December 31, 2015	139.1		134.4		0.4		—	1.9		2.4
Long-term inflows	22.2		21.8		0.2		—	0.2		—
Long-term outflows	(19.5	)	(19.0	)	(0.1	)	—	(0.4	)	—
Long-term net flows	2.7		2.8		0.1		—	(0.2	)	—
Net flows in Invesco PowerShares QQQ fund	(6.4	)	(6.4	)	—		—	—		—
Net flows in institutional money market funds	(0.2	)	—		—		—	—		(0.2	)
Total net flows	(3.9	)	(3.6	)	0.1		—	(0.2	)	(0.2	)
Market gains and losses/reinvestment	1.3		1.3		—		—	—		—
Acquisitions/dispositions, net	(3.2	)	(3.2	)	—		—	—		—
Foreign currency translation	0.2		—		—		—	—		0.2
June 30, 2016	133.5		128.9		0.5		—	1.7		2.4

Table of Contents

~~Total AUM by Client Domicile~~⁽⁵⁾

~~As of and for the Three Months Ended September 30, 2016 and 2015:~~

$ in billions Total U.S. Canada U.K. Continental Europe Asia
June 30, 2016 779.6
512.5
23.1
93.8
72.8
77.4
Long-term inflows 51.7
32.5
0.8
4.1
6.0
8.3
Long-term outflows (39.5 ) (24.5 ) (1.0 ) (3.6 ) (6.3 ) (4.1 )
Long-term net flows 12.2
8.0
(0.2 ) 0.5
(0.3 ) 4.2
Net flows in Invesco PowerShares QQQ fund 1.1
1.1
—
—
—
—
Net flows in institutional money market funds 5.9
1.7
—
4.1
—
0.1
Total net flows 19.2
10.8
(0.2 ) 4.6
(0.3 ) 4.3
Market gains and losses/reinvestment 23.6
13.9
1.3
4.9
2.5
1.0
Acquisitions/dispositions, net —
—
—
—
—
—
Foreign currency translation (2.2 ) —
(0.3 ) (2.6 ) 0.5
0.2
September 30, 2016 820.2
537.2
23.9
100.7
75.5
82.9

June 30, 2015 803.6
530.8
24.9
110.7
77.0
60.2
Long-term inflows 43.5
20.6
0.9
5.7
8.3
8.0
Long-term outflows (47.4 ) (25.6 ) (0.9 ) (5.9 ) (7.3 ) (7.7 )
Long-term net flows (3.9 ) (5.0 ) —
(0.2 ) 1.0
0.3
Net flows in Invesco PowerShares QQQ fund (0.9 ) (0.9 ) —
—
—
—
Net flows in institutional money market funds (1.5 ) (2.1 ) —
—
(0.1 ) 0.7
Total net flows (6.3 ) (8.0 ) —
(0.2 ) 0.9
1.0
Market gains and losses/reinvestment (35.6 ) (23.1 ) (1.3 ) (3.7 ) (3.7 ) (3.8 )
Acquisitions/dispositions, net —
—
—
—
—
—
Foreign currency translation (5.9 ) —
(1.8 ) (3.7 ) (0.1 ) (0.3 )
September 30, 2015 755.8
499.7
21.8
103.1
74.1
57.1

~~As of and for the Nine Months Ended September 30, 2016 and 2015:~~

$ in billions Total U.S. Canada U.K. Continental Europe Asia
December 31, 2015 775.6
510.7
21.7
104.2
75.4
63.6
Long-term inflows 140.3
84.6
2.6
11.5
18.7
22.9
Long-term outflows (124.9 ) (76.8 ) (3.2 ) (12.4 ) (21.5 ) (11.0 )
Long-term net flows 15.4
7.8
(0.6 ) (0.9 ) (2.8 ) 11.9
Net flows in Invesco PowerShares QQQ fund (5.3 ) (5.3 ) —
—
—
—
Net flows in institutional money market funds 11.7
5.6
0.4
3.3
—
2.4
Total net flows 21.8
8.1
(0.2 ) 2.4
(2.8 ) 14.3
Market gains and losses/reinvestment 31.3
22.1
1.2
5.6
1.5
0.9
Acquisitions/dispositions, net (1.2 ) (3.6 ) —
—
—
2.4
Foreign currency translation (7.3 ) (0.1 ) 1.2
(11.5 ) 1.4
1.7
September 30, 2016 820.2
537.2
23.9
100.7
75.5
82.9

December 31, 2014 792.4
532.1
25.8
105.1
71.1
58.3
Long-term inflows 146.1
74.1
2.9
15.1
30.2
23.8
Long-term outflows (133.8 ) (72.1 ) (3.0 ) (14.5 ) (22.6 ) (21.6 )
Long-term net flows 12.3
2.0
(0.1 ) 0.6
7.6
2.2
Net flows in Invesco PowerShares QQQ fund (3.8 ) (3.8 ) —
—
—
—
Net flows in institutional money market funds (10.1 ) (11.1 ) (0.1 ) 0.8
(0.3 ) 0.6
Total net flows (1.6 ) (12.9 ) (0.2 ) 1.4
7.3
2.8
Market gains and losses/reinvestment (26.0 ) (18.8 ) (0.1 ) (0.8 ) (2.9 ) (3.4 )
Acquisitions/dispositions, net (0.7 ) (0.7 ) —
—
—
—
Foreign currency translation (8.3 ) —
(3.7 ) (2.6 ) (1.4 ) (0.6 )
September 30, 2015 755.8
499.7
21.8
103.1
74.1
57.1

~~____________~~

~~See accompanying notes immediately following these AUM tables.~~

~~Table of Contents~~

~~Passive AUM by Client Domicile~~⁽⁵⁾

~~As of and for the Three Months Ended September 30, 2016 and 2015:~~

$ in billions Total U.S. Canada U.K. Continental Europe Asia
June 30, 2016 133.5
128.9
0.5
—
1.7
2.4
Long-term inflows 11.8
11.6
0.1
—
0.1
—
Long-term outflows (7.9 ) (7.7 ) (0.1 ) —
(0.1 ) —
Long-term net flows 3.9
3.9
—
—
—
—
Net flows in Invesco PowerShares QQQ fund 1.1
1.1
—
—
—
—
Net flows in institutional money market funds (0.1 ) —
—
—
—
(0.1 )
Total net flows 4.9
5.0
—
—
—
(0.1 )
Market gains and losses/reinvestment 4.9
4.7
—
—
0.2
—
Acquisitions/dispositions, net —
—
—
—
—
—
Foreign currency translation —
—
—
—
—
—
September 30, 2016 143.3
138.6
0.5
—
1.9
2.3

June 30, 2015 141.6
137.4
0.4
—
1.8
2.0
Long-term inflows 6.8
5.9
—
—
0.2
0.7
Long-term outflows (9.1 ) (8.3 ) —
—
(0.1 ) (0.7 )
Long-term net flows (2.3 ) (2.4 ) —
—
0.1
—
Net flows in Invesco PowerShares QQQ fund (0.9 ) (0.9 ) —
—
—
—
Net flows in institutional money market funds 0.1
—
—
—
—
0.1
Total net flows (3.1 ) (3.3 ) —
—
0.1
0.1
Market gains and losses/reinvestment (6.8 ) (6.6 ) —
—
(0.1 ) (0.1 )
Acquisitions/dispositions, net —
—
—
—
—
—
Foreign currency translation —
—
—
—
—
—
September 30, 2015 131.7
127.5
0.4
—
1.8
2.0

~~As of and for the Nine Months Ended September 30, 2016 and 2015:~~

$ in billions Total U.S. Canada U.K. Continental Europe Asia
December 31, 2015 139.1
134.4
0.4
—
1.9
2.4
Long-term inflows 34.0
33.4
0.3
—
0.3
—
Long-term outflows (27.4 ) (26.7 ) (0.2 ) —
(0.5 ) —
Long-term net flows 6.6
6.7
0.1
—
(0.2 ) —
Net flows in Invesco PowerShares QQQ fund (5.3 ) (5.3 ) —
—
—
—
Net flows in institutional money market funds (0.3 ) —
—
—
—
(0.3 )
Total net flows 1.0
1.4
0.1
—
(0.2 ) (0.3 )
Market gains and losses/reinvestment 6.2
6.0
—
—
0.2
—
Acquisitions/dispositions, net (3.2 ) (3.2 ) —
—
—
—
Foreign currency translation 0.2
—
—
—
—
0.2
September 30, 2016 143.3
138.6
0.5
—
1.9
2.3

December 31, 2014 141.4
137.6
0.2
—
1.8
1.8
Long-term inflows 25.7
23.6
0.1
—
0.5
1.5
Long-term outflows (24.0 ) (22.1 ) —
—
(0.4 ) (1.5 )
Long-term net flows 1.7
1.5
0.1
—
0.1
—
Net flows in Invesco PowerShares QQQ fund (3.8 ) (3.8 ) —
—
—
—
Net flows in institutional money market funds 0.1
—
—
—
—
0.1
Total net flows (2.0 ) (2.3 ) 0.1
—
0.1
0.1
Market gains and losses/reinvestment (7.0 ) (7.1 ) 0.1
—
(0.1 ) 0.1
Acquisitions/dispositions, net (0.7 ) (0.7 ) —
—
—
—
Foreign currency translation —
—
—
—
—
—
September 30, 2015 131.7
127.5
0.4
—
1.8
2.0

~~Table of Contents~~

____________


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


(2)	Asset classes are descriptive groupings of AUM by common type of underlying investments.


(3)	During January 2017, the company reclassified certain AUM previously classified in fixed income to money market totaling $3.0 billion.


(4)	There have been no significant changes to the managed objectives under the Alternatives asset class, which are disclosed in our most recent Form 10-K for the year ended December 31, ~~2015~~.2016.

(5) Ending Money Market AUM includes $71.7 billion in institutional money market AUM.


~~(4)~~	~~Ending Money Market AUM includes $69.2 billion in institutional money market AUM and $8.0 billion in retail money market AUM.~~


~~(5)~~(6)	Client domicile disclosure groups AUM by the domicile of the underlying clients.

5553

Table of Contents

Results of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016

The discussion below includes the use of non-GAAP financial measures. See “Schedule of Non-GAAP Information” for additional details and reconciliations of the most directly comparable U.S. GAAP measures to the non-GAAP measures.

Operating Revenues and Net Revenues

The main categories of revenues, and the dollar and percentage change between the periods, are as follows:


					Variance								Variance								Variance								Variance
	Three months ended September 30,				2016 vs 2015				Nine months ended September 30,				2016 vs 2015				Three months ended June 30,				2017 vs 2016				Six months ended June 30,				2017 vs 2016
$ in millions	2016		2015		$ Change		% Change		2016		2015		$ Change		% Change		2017		2016		$ Change		% Change		2017		2016		$ Change		% Change
Investment management fees	965.9		1,016.9		(51.0	)	(5.0	)%	2,826.2		3,074.0		(247.8	)	(8.1	)%	1,010.4		946.7		63.7		6.7	%	1,965.6		1,860.3		105.3		5.7	%
Service and distribution fees	213.4		214.8		(1.4	)	(0.7	)%	614.5		647.8		(33.3	)	(5.1	)%	211.3		203.4		7.9		3.9	%	417.7		401.1		16.6		4.1	%
Performance fees	3.4		15.6		(12.2	)	(78.2	)%	26.8		69.1		(42.3	)	(61.2	)%	16.7		8.9		7.8		87.6	%	28.0		23.4		4.6		19.7	%
Other	18.9		26.2		(7.3	)	(27.9	)%	72.2		92.3		(20.1	)	(21.8	)%	16.0		30.4		(14.4	)	(47.4	)%	35.7		53.3		(17.6	)	(33.0	)%
Total operating revenues	1,201.6		1,273.5		(71.9	)	(5.6	)%	3,539.7		3,883.2		(343.5	)	(8.8	)%	1,254.4		1,189.4		65.0		5.5	%	2,447.0		2,338.1		108.9		4.7	%
Third-party distribution, service and advisory expenses	(362.1	)	(392.3	)	30.2		(7.7	)%	(1,057.7	)	(1,204.7	)	147.0		(12.2	)%	(365.9	)	(348.4	)	(17.5	)	5.0	%	(715.2	)	(695.6	)	(19.6	)	2.8	%
Proportional share of revenues, net of third-party distribution expenses, from joint venture investments	9.5		12.3		(2.8	)	(22.8	)%	31.1		49.4		(18.3	)	(37.0	)%	11.5		10.5		1.0		9.5	%	22.1		21.6		0.5		2.3	%
CIP	5.7		9.5		(3.8	)	(40.0	)%	16.3		29.2		(12.9	)	(44.2	)%	6.3		5.1		1.2		23.5	%	19.5		10.6		8.9		84.0	%
Net revenues	854.7		903.0		(48.3	)	(5.3	)%	2,529.4		2,757.1		(227.7	)	(8.3	)%	906.3		856.6		49.7		5.8	%	1,773.4		1,674.7		98.7		5.9	%

Net revenues are operating revenues less third-party distribution, service and advisory expenses, plus our proportional share of net revenues from joint venture arrangements, plus management and performance fees earned from, less other revenues recorded by, CIP. See "Schedule of Non-GAAP Information" for additional important disclosures regarding the use of net revenues.

The impact of foreign exchange rate movements decreased operating revenues by ~~$40.9~~$36.4 million, equivalent to ~~3.4%~~2.9% of total operating revenues, during the three months ended ~~September~~June 30, ~~2016~~2017 when compared to the three months ended ~~September~~June 30, ~~2015.~~2016. The impact of foreign exchange rate movements decreased operating revenues by ~~$84.6~~$72.4 million, equivalent to ~~2.4%~~3.0% of total operating revenues, during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 when compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016.

Additionally, our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net new business inflows (or outflows) and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period. As discussed in the Executive Overview, returns from most capital markets were positive in the three and ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017.

Investment Management Fees

Investment management fees ~~decreased~~increased by ~~$51.0~~$63.7 million ~~(5.0%~~(6.7%) in the three months ended ~~September~~June 30, ~~2016,~~2017, to ~~$965.9~~$1,010.4 million (three months ended ~~September~~June 30, ~~2015: $1,016.9~~2016: $946.7 million) ~~despite a 3.2%~~. This compares to an 8.2% increase in average AUM. The impact of foreign exchange rate movements decreased investment management fees by ~~$40.6~~$35.2 million during the three months ended ~~September~~June 30, ~~2016~~2017 as compared to the three months ended ~~September~~June 30, ~~2015. Over time, fixed income and alternatives asset classes have experienced positive net long-term flows while~~2016. After allowing for foreign exchange movements, investment management fees increased by $98.9 million (10.4%).

Investment management fees increased by $105.3 million (5.7%) in the ~~equity asset class has,~~six months ended June 30, 2017, to $1,965.6 million (six months ended June 30, 2016: $1,860.3 million). This compares to a 9.6% increase in ~~general, experienced net outflows. This gradual~~average AUM. The impact of foreign exchange rate movements decreased investment management fees by $70.9 million during the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. After allowing for foreign exchange movements, investment management fees increased by $176.2 million (9.5%).

In addition to foreign exchange movements, the change in ~~the~~ product ~~mix, as well as the currency~~ mix of AUM results in changes in the average revenue yield derived from AUM due to differing fee rates and structures, which impacts our management fees. See the company's disclosures regarding the changes in AUM and revenue yields during the three and six months ended ~~September~~June 30, ~~2016~~2017 in the ~~“Assets~~

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“Assets Under Management” section above for additional information regarding the impact of changes in AUM on management fee yields.

~~Investment management fees decreased by $247.8 million (8.1%) in the nine months ended~~ September 30, 2016, to $2,826.2 million (nine months ended September 30, 2015: $3,074.0 million). This compares with a 2.1% decrease in average AUM. The impact of foreign exchange rate movements decreased investment management fees by $83.2 million during the nine months

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ended September 30, 2016 as compared to the nine months ended September 30, 2015. As discussed for the three month period above and in the "Assets Under Management" section, shifts in flows into lower fee rate products as well as the currency mix of AUM have changed the overall product mix and negatively impacted revenue yields in the 2016 period as compared to the 2015 period, which is reflected in lower investment management fees. See the company's disclosures regarding the changes in AUM and revenue yields during the nine months ended September 30, 2016 in the “Assets Under Management” section above for additional information regarding the impact of changes in AUM on management fee yields.

Service and Distribution Fees

In the three months ended ~~September~~June 30, ~~2016,~~2017, service and distribution fees ~~decreased~~increased by ~~$1.4~~$7.9 million ~~(0.7%~~(3.9%) to ~~$213.4~~$211.3 million (three months ended ~~September~~June 30, 2015: $214.8 million). Foreign exchange rate movements did not significantly impact service and distribution fees during the three months ended September 30, 2016 as compared to the three months ended September 30, 2015. In the nine months ended September 30, 2016, service and distribution fees decreased by $33.3 million (5.1%) to $614.5 million (nine months ended September 30, 2015: $647.82016: $203.4 million). The impact of foreign exchange rate movements decreased service and distribution fees by ~~$1.0~~$0.3 million during the ~~nine~~three months ended ~~September~~June 30, ~~2016~~2017 as compared to the ~~nine~~three months ended ~~September~~June 30, ~~2015. For~~2016. In the six months ended June 30, 2017, service and distribution fees increased by $16.6 million (4.1%) to $417.7 million (six months ended June 30, 2016: $401.1 million). Foreign exchange rate movements decreased service and distribution fees by $0.1 million during the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. In both periods, the ~~decrease~~increase results from ~~reductions~~increases in AUM to which these fees apply.

Performance Fees

Of our ~~$820.2~~$858.3 billion in AUM at ~~September~~June 30, ~~2016,~~2017, approximately ~~$42.7~~$45.3 billion or ~~5.2%~~5.3%, could potentially earn performance fees, including carried interests and performance fees related to partnership investments and separate accounts.

In the three months ended ~~September~~June 30, ~~2016,~~2017, performance fees ~~decreased~~increased by ~~$12.2~~$7.8 million ~~(78.2%~~(87.6%) to ~~$3.4~~$16.7 million when compared to the performance fees in the three months ended ~~September 30, 2015 of $15.6 million. The impact of foreign exchange rate movements decreased performance fees by $0.2 million during the three months ended September~~June 30, 2016 ~~as compared to the three months ended September 30, 2015. Performance fees during the third quarter~~ of ~~2016 included $2.3 million from bank loan products and $0.8 million from fixed income products.~~

In the nine months ended September 30, 2016, performance fees decreased by $42.3 million (61.2%) to $26.8 million when compared to the performance fees in the nine months ended September 30, 2015 of $69.1$8.9 million. Performance fees earned during the nine months ended September 30, 2016 were generated from a variety of investment capabilities including $9.7 million from U.K. equities and $9.5 million from bank loan products. Performance fees earned during the nine months ended September 30, 2015 included $41.1 million generated from real estate and $20.9 million generated by the U.K. investment teams. The impact of foreign exchange rate movements decreased performance fees by $0.7 million during the ~~nine~~three months ended ~~September~~June 30, ~~2016~~2017 as compared to the ~~nine~~three months ended ~~September~~June 30, ~~2015.~~2016. Performance fees during the second quarter of 2017 primarily included $7.4 million from U.K. investment teams, $5.8 million from private equity investment teams, $2.2 million from Asian-Pacific investment teams.

In the six months ended June 30, 2017, performance fees decreased by $4.6 million (19.7%) to $28.0 million when compared to the performance fees in the six months ended June 30, 2016 of $23.4 million. The impact of foreign exchange rate movements decreased performance fees by $1.0 million during the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. Performance fees during the six months ended June 30, 2017 primarily included $6.4 million from private equity investment teams, $6.4 million from bank loan products, $8.6 million from U.K. investment teams, $3.9 million from real estate and $2.2 million from Asian-Pacific investment teams.

Other Revenues

In the three months ended ~~September~~June 30, ~~2016,~~2017, other revenues decreased by ~~$7.3~~$14.4 million ~~(27.9%~~(47.4%) to ~~$18.9~~$16.0 million (three months ended ~~September~~June 30, ~~2015: $26.2~~2016: $30.4 million). The impact of foreign exchange rate movements decreased other revenues by ~~$0.1~~$0.2 million during the three months ended ~~September~~June 30, ~~2016~~2017 as compared to the three months ended ~~September~~June 30, ~~2015.~~2016. After allowing for foreign exchange rate changes, the decrease in other revenues was ~~$7.2~~$14.2 million. The decrease in other revenues during the three months ended ~~September~~June 30, ~~2016~~2017 compared to the three months ended ~~September~~June 30, ~~2015~~2016 relates primarily to ~~a decrease~~decreases in real estate transaction fees of in$6.7 million and UIT front end fees ~~and real estate transaction fees.~~of $6.3 million.

In the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, other revenues decreased by ~~$20.1~~$17.6 million ~~(21.8%~~(33.0%) to ~~$72.2~~$35.7 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $92.3~~2016: $53.3 million). The impact of foreign exchange rate movements ~~increased~~decreased other revenues by ~~$0.3~~$0.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. After allowing for foreign exchange rate changes, the decrease in other revenues was ~~$20.4~~$17.2 million. The decrease in other revenues during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015~~2016 relates primarily to ~~a decrease~~decreases in UIT front end ~~fees.~~fees of $10.4 million and real estate transaction fees of $5.2 million.

Third-Party Distribution, Service and Advisory Expenses

Third-party distribution, service and advisory expenses ~~decreased~~increased by ~~$30.2~~$17.5 million ~~(7.7%~~(5.0%) in the three months ended ~~September~~June 30, ~~2016~~2017 to ~~$362.1~~$365.9 million (three months ended ~~September~~June 30, ~~2015: $392.3~~2016: $348.4 million). The impact of foreign exchange rate movements decreased third-party distribution, service and advisory expenses by ~~$8.1~~$7.3 million during the three months ended ~~September~~June 30, ~~2016~~2017 as compared to the three months ended ~~September~~June 30, ~~2015.~~2016. After allowing for foreign exchange rate changes, the ~~decrease~~increase in third-party distribution, service and advisory expenses was ~~$22.1~~$24.8 million. Increases in third-party distribution, service and advisory expenses in the three months ended June 30, 2017 included renewal commission increases of $11.6 million, asset and sales based fee increases of $7.0 million, service fees increases of $5.4 million, increases in rebates of $3.4 million offset by a decrease in other transaction fees of $2.4 million. These increases in third-party distribution, service and advisory expenses are in line with the increases in related AUM.

Third-party distribution, service and advisory expenses increased by $19.6 million (2.8%) in the six months ended June 30, 2017 to $715.2 million (six months ended June 30, 2016: $695.6 million). The impact of foreign exchange rate movements

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Third-party distribution, service and advisory expenses decreased by $147.0 million (12.2%) in the nine months ended September 30, 2016 to $1,057.7 million (nine months ended September 30, 2015: $1,204.7 million). The impact of foreign exchange rate movements decreased third-party distribution, service and advisory expenses by ~~$19.7~~$13.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. After allowing for foreign exchange rate changes, the ~~decrease~~increase in third-party distribution, service and advisory expenses was ~~$127.3~~$32.9 million.

~~Decreases~~ Increases in third-party distribution, service and advisory expenses in the ~~three and nine~~six months ended ~~September~~June 30, ~~2016~~2017 as compared to the same periods in 2015 include the following: rebates of $24.2 million ($82.1 million nine months), renewal commissions of $9.1 million ($26.3 million nine months), and front-end fees of $1.5 million ($6.6 million nine months). The decrease in third-party distribution, service and advisory expenses2016 reflects the ~~reduction~~changes in ~~the~~ related ~~retail AUM that records these expenses reflecting a gradual move to products that do not pay these expenses. Offsetting these decreases were~~AUM. Increases in asset and sales based ~~fee increases~~fees of ~~$10.2~~$18.5 million, ~~in the three months ended September 30, 2016 ($7.1 million increase nine months), and~~ service fees increases of ~~$2.8~~$15.1 million and renewal commission increases of $6.7 million were partially offset by decreases in ~~the three months ended September 30, 2016 ($19.4~~rebates of $4.5 million ~~decrease nine months).~~and other transaction fees of $3.4 million.

Proportional share of revenues, net of third-party distribution expenses, from joint venture investments

Management believes that the addition of our proportional share of revenues, net of third-party distribution expenses, from joint venture arrangements should be added to operating revenues to arrive at net revenues, as it is important to evaluate the contribution to the business that our joint venture arrangements are making. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of net revenues. The company's most significant joint venture arrangement is our 49% investment in Invesco Great Wall Fund Management Company Limited (the “Invesco Great Wall” joint venture).

Our proportional share of revenues, net of third-party distribution expenses, from joint venture investments ~~decreased~~increased by ~~$2.8~~$1.0 million ~~(22.8%~~(9.5%) to ~~$9.5~~$11.5 million for the three months ended ~~September~~June 30, ~~2016~~2017 (three months ended ~~September~~June 30, ~~2015: $12.3~~2016: $10.5 million). The increase relates primarily to increased performance fees in 2017. Our share of the Invesco Great Wall joint venture's average AUM for the three months ended ~~September~~June 30, ~~2016~~2017 was ~~$10.4~~$8.1 billion compared to ~~$6.0~~$8.6 billion for the three months ended ~~September~~June 30, ~~2015.~~2016.

Our proportional share of revenues, net of third-party distribution expenses, from joint venture investments ~~decreased~~increased by ~~$18.3~~$0.5 million ~~(37.0%~~(2.3%) to ~~$31.1~~$22.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015: $49.4~~2016: $21.6 million). Our share of the Invesco Great Wall joint venture's average AUM for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 was ~~$8.9~~$8.2 billion compared to ~~$6.0~~$8.1 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~

For both the three and nine months ended September 30, 2016, net revenues have decreased as a result of changes in product mix over the past year, as assets under management have shifted out of equity products and into lower rate fixed income products, lowering the average fee rates for 2016. In addition, there were higher performance fees in the nine months ended September 30, 2015 as compared to the same period in 2016.

Management, performance and other fees earned from CIP

Management believes that the consolidation of investment products may impact a reader's analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company. Accordingly, management believes that it is appropriate to adjust operating revenues for the impact of CIP in calculating net revenues. As management and performance fees earned by Invesco from the consolidated products are eliminated upon consolidation of the investment products, management believes that it is appropriate to add these operating revenues back in the calculation of net revenues. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of net revenues.

The elimination of management and performance fees earned from CIP was ~~$5.7~~$6.3 million in the three months ended ~~September~~June 30, ~~2016~~2017 (three months ended ~~September~~June 30, ~~2015: $9.5~~2016: $5.1 million). The ~~decrease~~increase is primarily due to the ~~adoption of ASU 2015-02, which resulted~~increase in ~~the deconsolidation of certain VIEs (see Note 1, “Accounting Policies,” for the impact upon adoption), partially offset by the impact of newly consolidated funds.~~performance fees earned from CLOs.

The elimination of management and performance fees earned from CIP was ~~$16.3~~$19.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015: $29.2~~2016: $10.6 million). The ~~decrease~~increase is primarily due to the ~~adoption of ASU 2015-02, which resulted~~increase in ~~the deconsolidation of certain VIEs (see Note 1, “Accounting Policies,” for the impact upon adoption), partially offset by the impact of newly consolidated funds.~~performance fees earned from CLOs.

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Operating Expenses

The main categories of operating expenses, and the dollar and percentage changes between periods, are as follows:


			Variance						Variance						Variance					Variance
	Three months ended September 30,		2016 vs 2015				Nine months ended September 30,		2016 vs 2015				Three months ended June 30,		2017 vs 2016			Six months ended June 30, 2016		2017 vs 2016
$ in millions	2016	2015	$ Change		% Change		2016	2015	$ Change		% Change		2017	2016	$ Change	% Change		2017	2016	$ Change	% Change
Third-party distribution, service and advisory	362.1	392.3	(30.2	)	(7.7	)%	1,057.7	1,204.7	(147.0	)	(12.2	)%	365.9	348.4	17.5	5.0	%	715.2	695.6	19.6	2.8	%
Employee compensation	345.1	337.6	7.5		2.2	%	1,039.8	1,045.7	(5.9	)	(0.6	)%	365.6	350.3	15.3	4.4	%	762.4	694.7	67.7	9.7	%
Marketing	26.4	24.9	1.5		6.0	%	79.6	81.3	(1.7	)	(2.1	)%	29.1	28.3	0.8	2.8	%	53.5	53.2	0.3	0.6	%
Property, office and technology	78.2	79.0	(0.8	)	(1.0	)%	240.4	230.7	9.7		4.2	%	89.0	82.3	6.7	8.1	%	174.5	162.2	12.3	7.6	%
General and administrative	83.5	87.0	(3.5	)	(4.0	)%	240.0	266.0	(26.0	)	(9.8	)%	85.9	78.6	7.3	9.3	%	163.9	156.5	7.4	4.7	%
Total operating expenses	895.3	920.8	(25.5	)	(2.8	)%	2,657.5	2,828.4	(170.9	)	(6.0	)%	935.5	887.9	47.6	5.4	%	1,869.5	1,762.2	107.3	6.1	%

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The tables below set forth these expense categories as a percentage of total operating expenses and operating revenues, which we believe provides useful information as to the relative significance of each type of expense.


$ in millions	Three months ended September 30, 2016	% of Total Operating Expenses		% of Operating Revenues		Three months ended September 30, 2015	% of Total Operating Expenses		% of Operating Revenues		Three months ended June 30, 2017	% of Total Operating Expenses		% of Operating Revenues		Three months ended June 30, 2016	% of Total Operating Expenses		% of Operating Revenues
Third-party distribution, service and advisory	362.1	40.5	%	30.1	%	392.3	42.6	%	30.8	%	365.9	39.1	%	29.2	%	348.4	39.2	%	29.3	%
Employee compensation	345.1	38.6	%	28.7	%	337.6	36.7	%	26.5	%	365.6	39.1	%	29.1	%	350.3	39.5	%	29.5	%
Marketing	26.4	2.9	%	2.2	%	24.9	2.7	%	2.0	%	29.1	3.1	%	2.3	%	28.3	3.2	%	2.4	%
Property, office and technology	78.2	8.7	%	6.5	%	79.0	8.6	%	6.2	%	89.0	9.5	%	7.1	%	82.3	9.3	%	6.9	%
General and administrative	83.5	9.3	%	7.0	%	87.0	9.4	%	6.8	%	85.9	9.2	%	6.8	%	78.6	8.9	%	6.6	%
Total operating expenses	895.3	100.0	%	74.5	%	920.8	100.0	%	72.3	%	935.5	100.0	%	74.6	%	887.9	100.0	%	74.7	%


$ in millions	Nine months ended September 30, 2016	% of Total Operating Expenses		% of Operating Revenues		Nine months ended September 30, 2015	% of Total Operating Expenses		% of Operating Revenues		Six months ended June 30, 2017	% of Total Operating Expenses		% of Operating Revenues		Six months ended June 30, 2016	% of Total Operating Expenses		% of Operating Revenues
Third-party distribution, service and advisory	1,057.7	39.8	%	29.9	%	1,204.7	42.6	%	31.0	%	715.2	38.3	%	29.2	%	695.6	39.5	%	29.8	%
Employee compensation	1,039.8	39.1	%	29.4	%	1,045.7	37.0	%	26.9	%	762.4	40.8	%	31.2	%	694.7	39.4	%	29.7	%
Marketing	79.6	3.0	%	2.2	%	81.3	2.9	%	2.1	%	53.5	2.9	%	2.2	%	53.2	3.0	%	2.3	%
Property, office and technology	240.4	9.1	%	6.8	%	230.7	8.1	%	5.9	%	174.5	9.3	%	7.1	%	162.2	9.2	%	6.9	%
General and administrative	240.0	9.0	%	6.8	%	266.0	9.4	%	6.9	%	163.9	8.8	%	6.7	%	156.5	8.9	%	6.7	%
Total operating expenses	2,657.5	100.0	%	75.1	%	2,828.4	100.0	%	72.8	%	1,869.5	100.0	%	76.4	%	1,762.2	100.0	%	75.4	%

During the three months ended ~~September~~June 30, ~~2016,~~2017, operating expenses ~~decreased~~increased by ~~$25.5~~$47.6 million ~~(2.8%~~(5.4%) to ~~$895.3~~$935.5 million (three months ended ~~September~~June 30, ~~2015: $920.8~~2016: $887.9 million). The impact of foreign exchange rate movements decreased operating expenses by ~~$22.1~~$21.7 million, or ~~2.5%~~2.3% of total operating expenses, during the three months ended ~~September~~June 30, ~~2016~~2017 as compared to the three months ended ~~September~~June 30, ~~2015.~~2016.

During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, operating expenses ~~decreased~~increased by ~~$170.9~~$107.3 million ~~(6.0%~~(6.1%) to ~~$2,657.5~~$1,869.5 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $2,828.4~~2016: $1,762.2 million). The impact of foreign exchange rate movements decreased operating expenses by ~~$51.7~~$43.5 million, or ~~1.9%~~2.3% of total operating expenses, during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016.

Third-Party Distribution, Service and Advisory Expenses

Third-party distribution, service and advisory expenses are discussed above in the operating and net revenues section.

Employee Compensation

Employee compensation increased ~~$7.5~~$15.3 million ~~(2.2%~~(4.4%) to ~~$345.1~~$365.6 million in the three months ended ~~September~~June 30, ~~2016~~2017 (three months ended ~~September~~June 30, ~~2015: $337.6~~2016: $350.3 million). The impact of foreign exchange rate movements decreased employee compensation by $8.5 million during the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. After allowing for foreign exchange rate changes, the increase in employee compensation was $23.8 million.

Increases in compensation expense during the three months ended June 30, 2017 were primarily driven by an increase of $12.3 million in staff severance costs, of which $3.9 million was associated with the business optimization initiative. Increases in base salaries of $5.2 million and variable compensation of $7.1 million were partially offset by decreases of $1.1 million in sales incentives and commissions.

Employee compensation increased $67.7 million (9.7%) to $762.4 million in the six months ended June 30, 2017 (six months ended June 30, 2016: $694.7 million). The impact of foreign exchange rate movements decreased employee compensation by $18.4 million during the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. After allowing for foreign exchange rate changes, the increase in employee compensation was $86.1 million.

Increases in compensation expense during the six months ended June 30, 2017 were primarily driven by an increase of $28.0 million in staff severance costs, of which $19.6 million was associated with the business optimization initiative and also an increase of $18.3 million in deferred compensation costs related to accelerated vesting for multiple senior executive retirements. Increases in compensation expense as compared to the six months ended June 30, 2016 also included increases of

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employee compensation by $8.8 million during the three months ended September 30, 2016 as compared to the three months ended September 30, 2015. After allowing for foreign exchange rate changes, the increase in employee compensation was $16.3 million.

Deferred compensation and base salaries increased compensation expense by $13.8 million and $8.2 million, respectively, in the third quarter of 2016 as compared to 2015. The increases were driven by higher headcount and annual pay raises. Severance and other staff costs associated with the business optimization initiative were $5.8 million in the third quarter of 2016, with no similar costs in the third quarter of 2015. These increases were partially offset by a decrease of $11.3$14.6 million in variable ~~bonus~~ compensation, ~~between the periods.~~

~~Employee compensation decreased $5.9~~$11.6 million (0.6%) to $1,039.8 million in the nine months ended September 30, 2016 (nine months ended September 30, 2015: $1,045.7 million). The impact of foreign exchange rate movements decreased employee compensation by $21.1 million during the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. After allowing for foreign exchange rate changes, the increase in employee compensation was $15.2 million.

~~Increases in compensation expense during the nine months ended September 30, 2016 were driven by a $26.1 million increase~~ in base salaries driven by increased headcount ~~an increase of $18.3~~and annual raises, $9.4 million in ~~deferred compensation~~benefit costs and ~~$14.2~~$4.2 million ~~of severance~~in sales incentives and other staff costs associated with the business optimization initiative. These increases were partially offset by decreases in variable compensation of $41.4 million, as compared to the nine months ended September 30, 2015.commissions.

Headcount at ~~September~~June 30, ~~2016~~2017 was ~~6,812 (September~~6,888 (June 30, ~~2015: 6,430)~~2016: 6,796). The increase in headcount is primarily attributable to ~~the increase~~growth in our ~~ownership of our Indian asset management joint venture, from 49% to 100%.~~shared service centers.

Marketing

Marketing expenses increased by ~~$1.5~~$0.8 million ~~(6.0%~~(2.8%) in the three months ended ~~September~~June 30, ~~2016~~2017 to ~~$26.4~~$29.1 million (three months ended ~~September~~June 30, ~~2015: $24.9~~2016: $28.3 million). The impact of foreign exchange rate movements decreased marketing expenses by ~~$0.5~~$1.0 million during the three months ended ~~September~~June 30, ~~2016~~2017 as compared to the three months ended ~~September~~June 30, ~~2015.~~2016. After allowing for foreign exchange rate changes, the increase in marketing expenses was ~~$2.0~~$1.8 million. ~~The increase during the three months ended September 30, 2016 is primarily related to increased advertising costs.~~

Marketing expenses ~~decreased~~increased by ~~$1.7~~$0.3 million ~~(2.1%~~(0.6%) in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 to ~~$79.6~~$53.5 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $81.3~~2016: $53.2 million). The impact of foreign exchange rate movements decreased marketing expenses by ~~$1.5~~$1.6 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. After allowing for foreign exchange rate changes, the ~~decrease~~increase in marketing expenses was ~~$0.2~~$1.9 million.

Property, Office and Technology

Property, office and technology costs ~~decreased~~increased by ~~$0.8~~$6.7 million ~~(1.0%~~(8.1%) to ~~$78.2~~$89.0 million in the three months ended ~~September~~June 30, ~~2016~~2017 (three months ended ~~September~~June 30, ~~2015: $79.0~~2016: $82.3 million). The impact of foreign exchange rate movements decreased property, office and technology expenses by ~~$1.7~~$2.1 million during the three months ended ~~September~~June 30, ~~2016~~2017 as compared to the three months ended ~~September~~June 30, ~~2015.~~2016. After allowing for foreign exchange rate movements, the increase was ~~$0.9~~$8.8 million. This increase was comprised of a ~~$2.7~~$6.4 million increase in technology and communications expenses ~~offset by a $1.8~~primarily due to increases in outsourced administration costs of $4.7 million ~~decrease~~and increases in ~~property~~depreciation and ~~office costs.~~maintenance of $2.0 million. Property and office costs ~~decreased in the three months ended September 30, 2016 due to a $3.4 million credit recorded in the third quarter of 2016 related to a vacated leased property.~~

~~Technology and communications expenses~~ increased ~~$2.7~~$2.5 million over the comparable ~~2015~~2016 period, primarily due to increases in ~~depreciation~~property taxes and ~~maintenance~~office expenses of ~~$1.8~~$1.6 million and ~~outsourced administration costs~~rent expense of ~~$1.3 million, offset by reductions in other technology costs.~~$0.8 million.

Property, office and technology costs increased by ~~$9.7~~$12.3 million ~~(4.2%~~(7.6%) to ~~$240.4~~$174.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015: $230.7~~2016: $162.2 million). The impact of foreign exchange rate movements decreased property, office and technology expenses by ~~$4.0~~$4.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. After allowing for foreign exchange rate movements, the increase was ~~$13.7~~$16.7 million. This increase was comprised of a ~~$9.3~~$11.9 million increase in technology and communications expenses ~~and a $4.4 million increase in property and office costs.~~

~~Technology and communications expenses increased $9.3 million over the comparable 2015 period~~ primarily due to increases in outsourced administration costs of $8.4 million and increases in depreciation and maintenance ~~of $5.1 million and outsourced administration~~ of $3.9 million. Property and office costs increased $4.8 million over the comparable 2016 period, primarily due to increases in property taxes and office expenses of $2.0 million, depreciation expense of $1.1 million and rent expenses of $1.7 million.

General and Administrative

General and administrative expenses increased by $7.3 million (9.3%) to $85.9 million in the three months ended June 30, 2017 (three months ended June 30, 2016: $78.6 million). The impact of foreign exchange rate movements decreased general and administrative expenses by $2.8 million during the three months ended June 30, 2017 as compared to the three months ended June 30, 2016. After allowing for foreign exchange rate movements, general and administrative costs increased $10.1 million compared to the same period ~~due~~in 2016.

Increases in general and administrative expenses for the three months ended June 30, 2017 were driven by increases in consulting, audit, legal and professional services costs of $11.1 million, which were primarily associated with the business optimization initiative and Source acquisition-related costs. Also impacting general and administrative expenses was an increase in legal settlement expenses of $4.9 million related to a ~~rent~~ credit on a previous regulatory charge that was recorded during the three months ended June 30, 2016, and a 2017 increase in fund expenses of ~~$6.4~~$1.2 million. These increases were partially offset by a decrease of $5.5 million in ~~connection with~~fund launch costs incurred by CIP and a ~~reduction~~decrease of $2.2 million related to foreign currency transaction cost compared to the three months ended June 30, 2016.

General and administrative expenses increased by $7.4 million (4.7%) to $163.9 million in the six months ended June 30, 2017 (three months ended June 30, 2016: $156.5 million). The impact of foreign exchange rate movements decreased general and administrative expenses by $5.8 million during the six months ended June 30, 2017 as compared to the six months ended June 30, 2016. After allowing for foreign exchange rate movements, general and administrative costs increased $13.2 million compared to the same period in 2016.

General and administrative expenses for the six months ended June 30, 2017 included an ~~onerous lease~~increase of $18.6 million in consulting, audit, legal and professional services costs, primarily related to the business optimization initiative and acquisition-

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~~provision in the U.K. in 2015 exceeding a similar $3.4 million credit taken in 2016. This reduction in property costs was partly offset by an increase in depreciation and property management~~related costs.

~~General and Administrative~~

General and administrative expenses ~~decreased by $3.5 million (4.0%) to $83.5~~also included an increase of $3.1 million in ~~the three months ended September 30, 2016 (three months ended September 30, 2015: $87.0 million). The impact~~irrecoverable taxes and an increase of ~~foreign exchange rate movements decreased general and administrative~~$1.3 million in fund expenses ~~by $3.0 million during the three months ended September 30, 2016 as~~ compared to the ~~three~~six months ended ~~September~~June 30, ~~2015. After allowing for foreign exchange rate movements, general and administrative costs decreased $0.5 million compared to the same period in 2015.~~

General and administrative expenses for the three months ended September 30, 2016 included $5.4 million of consultancy and temporary labor costs associated with the business transformation initiative that commenced in the fourth quarter of 2015. This increased expenditure was2016. These increases were partially offset by a decrease of ~~$7.2~~$7.1 million in other consulting, legal and professional services costs, $2.7 million in travel costs, partially offset by an increase of $2.1 million in market data service costs and a $2.9 million increase in irrecoverable taxes, as compared to the three months ended September 30, 2015.

General and administrative expenses decreased by $26.0 million (9.8%) to $240.0 million in the nine months ended September 30, 2016 (nine months ended September 30, 2015: $266.0 million). The impact of foreign exchange rate movements decreased general and administrative expenses by $5.4 million during the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015. After allowing for foreign exchange rate movements, general and administrative costs decreased $20.6 million compared to the same period in 2015.

General and administrative expenses for the nine months ended September 30, 2016 included $14.0 million of consultancy and temporary labor costs associated with the business transformation initiative that commenced in the fourth quarter of 2015. This increased expense was offset by decreases in general and administrative expenses resulting from focused expense control particularly during the first half of 2016. In particular, expenditures on non-essential professional services ceased and other items of a non-essential discretionary nature were postponed. This resulted in a decreases of $23.7 million in consulting, legal and professional service costs and $11.4 million in travel costs. These cost reductions were partially offset by an increase of $4.4 million in market data service costs and a $6.4 million increase in irrecoverable taxes, as compared to the nine months ended September 30, 2015. On a year-to-date basis, fund launch costs incurred by ~~consolidated investment products decreased~~CIPs and a decrease of $1.1 million in ~~2016 by $7.0 million, as compared~~legal settlement expense related to regulatory investigations which incurred in the ~~same period in 2015. Also included within general and administrative expenses for the nine~~six months ended ~~September~~June 30, ~~2015 was a charge of $4.7 million in respect of a multi-year fund reimbursement expense.~~2016 .

Other Income and Expenses

The main categories of other income and expenses, and the dollar and percentage changes between periods are as follows:


					Variance								Variance									Variance								Variance
	Three months ended September 30,				2016 vs 2015				Nine months ended September 30,				2016 vs 2015				Three months ended June 30,					2017 vs 2016				Six months ended June 30,				2017 vs 2016
$ in millions	2016		2015		$ Change		% Change		2016		2015		$ Change		% Change		2017		2016			$ Change		% Change		2017		2016		$ Change		% Change
Equity in earnings of unconsolidated affiliates	5.5		8.2		(2.7	)	(32.9	)%	(2.1	)	32.0		(34.1	)	N/A		10.5		4.6		��	5.9		128.3	%	28.2		(7.6	)	35.8		N/A
Interest and dividend income	2.6		2.4		0.2		8.3	%	8.7		7.5		1.2		16.0	%	1.6		2.5			(0.9	)	(36.0	)%	4.5		6.1		(1.6	)	(26.2	)%
Interest expense	(23.9	)	(20.4	)	(3.5	)	17.2	%	(69.9	)	(58.7	)	(11.2	)	19.1	%	(23.6	)	(22.1	)		(1.5	)	6.8	%	(47.6	)	(46.0	)	(1.6	)	3.5	%
Other gains and losses, net	16.2		0.9		15.3		N/A		7.3		(5.2	)	12.5		N/A		2.5		(4.2	)		6.7		N/A		8.7		(8.9	)	17.6		N/A
Other income/(expense) of CIP, net	39.0		1.5		37.5		N/A		69.4		39.1		30.3		77.5	%	32.3		37.9			(5.6	)	(14.8	)%	60.8		30.4		30.4		100.0	%
Other income/(expense) of CSIP, net	—		(3.6	)	3.6		N/A		—		10.9		(10.9	)	N/A
Total other income and expenses	39.4		(11.0	)	50.4		N/A		13.4		25.6		(12.2	)	(47.7	)%	23.3		18.7			4.6		24.6	%	54.6		(26.0	)	80.6		N/A

Equity in earnings of unconsolidated affiliates

Equity in earnings of unconsolidated affiliates ~~decreased~~increased by ~~$2.7~~$5.9 million to ~~$5.5~~$10.5 million in the three months ended ~~September~~June 30, ~~2016~~2017 (three months ended ~~September~~June 30, ~~2015: $8.2~~2016: $4.6 million). The ~~decrease includes a $0.9~~increase in equity in earnings is driven by increases of $4.1 million ~~decrease~~in earnings from our private equity investments and increases of $1.6 million in earnings from our joint venture investments in China, a $2.0 million decrease from our private equity partnerships and a $0.5 million decrease in our earnings from our real estate partnerships investment and investment trusts. On April 5, 2016, the company purchased the remaining 51% of Invesco Asset Management (India) Private Limited (formerly our joint venture, Religare Invesco Asset Management Company), increasing our interest to 100%.

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China.

Equity in earnings of unconsolidated affiliates ~~decreased~~increased by ~~$34.1~~$35.8 million to ~~a loss of $2.1~~$28.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015: income of $32.0 million)~~2016: $7.6 million loss). On April 5, 2016, the company purchased the remaining 51% of Invesco Asset Management (India) Private Limited (formerly our joint venture, Religare Invesco Asset Management Company), increasing our interestThe increase is primarily due to 100%. At March 31, 2016, Invesco was committed to its plan of acquisition, which under U.S. GAAP requires the company to include any cumulative translation adjustments as part of the carrying value of the investment for the purpose of impairment testing. As a result, during the first quarter of 2016, the company recorded a non-cash impairment charge of $17.8 million related to ~~its~~the company's former 49% investment in its Indian joint ~~venture.~~venture taken in the first quarter of 2016. The ~~charge relates entirely to the devaluation of the Indian Rupee against the U.S. Dollar over the period since the 2013 purchase and is reflected in this line item. The decrease~~increase also ~~includes~~results from a ~~$9.7~~$13.2 million ~~decrease~~increase in earnings from our ~~joint venture~~ investments in ~~China~~real estate products and ~~a decrease~~an increase of ~~$7.5~~$5.9 million from our private equity ~~and real estate partnerships and investment trusts.~~

investments.

Other gains and losses, net

Other gains and losses, net were a gain of ~~$16.2~~$2.5 million in the three months ended ~~September~~June 30, ~~2016~~2017 as compared to a net ~~gain~~loss of ~~$0.9~~$4.2 million in the three months ended ~~September~~June 30, ~~2015.~~2016. The ~~2016~~2017 period included realized investment gains of $5.8 million (three months ended June 30, 2016: $0.4 million net loss), net trading gains of ~~$7.2~~$4.9 million on the appreciation of investments and the total return swap held for our deferred compensation plans (three months ended ~~September~~June 30, ~~2015: $12.0~~2016: $3.6 million net ~~loss) and $5.2~~gain), $3.8 million gains related to the mark-to-market on our trading seed money (three months ended ~~September~~June 30, ~~2015: $4.0~~2016: $2.3 million net ~~loss). Other gains during the period included a $5.3~~gain) and $0.2 million ~~gain~~ related to ~~a business combination-related~~an acquisition-related change in the fair value of the contingent consideration liability ~~and a $0.9~~(three months ended June 30, 2016: $15.1 million net ~~gain~~loss). These gains were partially offset by net losses during the period of $9.2 million related to the mark-to-market of foreign exchange put option contracts intended to provide protection against the impact of a significant decline in the Pound Sterling/U.S. Dollar and Euro/U.S. Dollar foreign exchange ~~rate~~rates (three months ended ~~September~~June 30, ~~2015: $18.4~~2016: $6.6 million ~~net gain~~gain) and ~~$0.2 million net gain, respectively). These gains were partially offset by other~~an investment ~~losses~~impairment charge of $1.8m (three months ended September 30, 2015: $1.6 million net loss) and a net loss of $0.6 million resulting from the revaluation of intercompany foreign currency denominated loans into the various functional currencies of our subsidiaries (three months ended September 30, 2015: $2.4 million loss).$3.2 million.

Other gains and losses, net were a gain of ~~$7.3~~$8.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 as compared to a net loss of ~~$5.2~~$8.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. The ~~2016~~2017 period included ~~a $10.0~~net trading gains of $14.9 million on the appreciation of investments and instruments held for our deferred compensation plans (six months ended June 30, 2016: $1.9 million net gain), $9.2 million related to the mark-to-market on our trading seed money (six months ended June 30, 2016: $0.5 million net ~~gain~~gain), realized investment gains of $5.4 million (six months ended June 30, 2016: $0.2 million net loss) and $1.0 million related to an acquisition-related change in the fair value of the contingent consideration liability (six months ended June 30, 2016: $11.6 million net loss). These gains were partially offset by net losses during the period of $17.4 million related to the mark-to-market of foreign exchange put option contracts intended to provide protection against the impact of a significant decline in the Pound Sterling/U.S. Dollar and Euro/U.S. Dollar foreign exchange rate (nine months ended September 30, 2015: $7.6 million net loss), a net gain of $9.1million on the appreciation of investments held for our deferred compensation plans (nine months ended September 30, 2015: $10.6 million net loss)rates and a net gain from other trading investments of $2.0 million (nine months ended September 30, 2015: $6.9 million net loss) . These gains were partially offset by a net loss of $6.3 million related to a business combination-related change in the fair value of contingent consideration liability (nine months ended September 30, 2015: $18.4 million gain) and a net loss of $7.5$0.5 million resulting from the revaluation of intercompany foreign currency denominated loans into the various functional currencies of our subsidiaries ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $2.3~~2016: $9.1 million ~~loss)~~net gain and $6.9 million net loss, respectively). Other gains and losses in the six months ended June 30, 2017 also included an investment impairment charge of $3.2 million.

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Other income/(expense) of CIP ~~and CSIP~~

Upon adoption of ASU 2015-02, the funds previously consolidated as CSIP became VIEs and are now consolidated as CIP. See Item 1, Financial Statements - Notes 1, "Accounting Policies" and 12, “Consolidated Sponsored Investment Products,” for additional details.

In the three months ended ~~September~~June 30, ~~2016,~~2017, interest and dividend income of CIP ~~decreased~~increased by ~~$14.6~~$3.7 million ~~(22.6%~~(8.0%) to ~~$50.1~~$49.9 million (three months ended ~~September~~June 30, ~~2015: $64.7~~2016: $46.2 million). Interest expense of CIP ~~decreased~~increased by ~~$17.1~~$11.5 million ~~(37.3%~~(34.5%) to ~~$28.8~~$44.8 million (three months ended ~~September~~June 30, ~~2015: $45.9~~2016: $33.3 million).

In the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, interest and dividend income of CIP ~~decreased~~increased by ~~$49.3~~$13.1 million ~~(25.9%~~(14.5%) to ~~$140.7~~$103.7 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $190.0~~2016: $90.6 million). Interest expense of CIP ~~decreased~~increased by ~~$48.9~~$20.4 million ~~(35.4%~~(33.7%) to ~~$89.4~~$81.0 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $138.3~~2016: $60.6 million).

The ~~decrease~~increase in interest income and interest expense of CIP in ~~the 2016 periods~~2017 is primarily due to ~~the impact of deconsolidation of CLOs upon adoption of ASU 2015-02, partially offset by~~ the impact of newly consolidated CLOs and other funds during ~~2016.~~2016 and the six months ended 2017.

Included in other gains/(losses) of CIP, net, are realized and unrealized gains and losses on the underlying investments and debt of CIP. In the three months ended ~~September~~June 30, ~~2016,~~2017, other gains and losses of CIP were a net gain of ~~$17.7~~$27.2 million, as compared to a net ~~loss~~gain of ~~$17.3~~$25.0 million in the three months ended ~~September~~June 30, ~~2015.~~2016. The net gain during the three months ended ~~September~~June 30, ~~2016~~2017 was attributable to market-driven gains of investments held by consolidated funds.

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Included in other gains/(losses) of CIP, net, are realized and unrealized gains and losses on the underlying investments and debt of CIP. In the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, other gains and losses of CIP were a net gain of ~~$18.1~~$38.1 million, as compared to a net ~~loss~~gain of ~~$12.6~~$0.4 million in the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. The ~~lower~~ net ~~gains~~gain during the ~~nine~~six months ended ~~September~~June 30, ~~2016 were~~2017 was attributable to market-driven ~~changes in valuation~~gains of investments held by consolidated funds.

Net impact of CIP and related noncontrolling interests in consolidated entities

The net impact to net income attributable to Invesco ~~Ltd~~Ltd. in each period primarily represents the changes in the value of the company's holding in its consolidated CLOs, which is reclassified into other gains/(losses) from accumulated other comprehensive income upon consolidation. The consolidation of investment products during the three months ended ~~September~~June 30, ~~2016~~2017 resulted in a net ~~increase~~decrease in net income attributable to Invesco Ltd. of ~~$3.2~~$2.9 million (three months ended ~~September~~June 30, ~~2015: $13.2~~2016: $8.0 million ~~decrease)~~increase). The consolidation of investment products during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 resulted in a net increase in net income attributable to Invesco Ltd. of $2.8 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $21.0~~2016; $0.4 million ~~net~~ decrease).

Noncontrolling interests in consolidated entities represent the profit or loss amounts attributed to third party investors in CIP. The impact of any gains or losses resulting from valuation changes in the investments of non-CLO CIP attributable to the interests of third parties are offset by resulting changes in gains and losses attributable to noncontrolling interests in consolidated entities and therefore do not have a material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company's common shareholders. Similarly, any gains or losses resulting from valuation changes in the investments of CLOs attributable to the interests of third parties are offset by the calculated value of the notes issued by the CLOs (offsetting in other gains/(losses) of CIP) and therefore also do not have a material effect on the financial condition, operating results (including earnings per share), liquidity or capital resources of the company's common shareholders.

Additionally, CIP represent less than 1% of the company's AUM. Therefore, the net gains or losses of CIP are not indicative of the performance of the company's aggregate ~~assets under management.~~AUM.

~~CIP are taxed at the investor level and not at the product level; therefore, there is no tax provision reflected in the net impact of CIP.~~

Income Tax Expense

The company's subsidiaries operate in several taxing jurisdictions around the world, each with its own statutory income tax rate. As a result, the blended average statutory tax rate will vary from year to year depending on the mix of the profits and losses of the company's subsidiaries.

Our effective tax rate ~~decreased~~increased to ~~26.0%~~27.1% for the three months ended ~~September~~June 30, ~~2016~~2017 (three months ended ~~September~~June 30, ~~2015: 29.4%~~2016: 26.1%). The inclusion of income from non-controlling interests in consolidated entities decreased our effective tax rate by ~~1.1%~~0.8% in ~~2016~~2017 and ~~increased~~decreased our rate by ~~0.7%~~1.0% in ~~2015.~~2016. 2017 included a 0.3% rate decrease related to excess tax benefits on share based compensation for vestings of our annual share awards. Included in the rate for 2017 were changes in our profit mix and movement from our foreign currency hedge contracts. 2016 included a ~~0.2%~~0.5% rate ~~increase~~decrease as a result of adjustments related to changes in the fair value of contingent consideration discussed above. ~~The remainder~~

Table of ~~the rate movement for 2016 was primarily due to changes in the mix of pre-tax income.~~Contents

Our effective tax rate decreased to ~~27.4%~~26.6% for the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015: 28.8%~~2016: 28.3%). The inclusion of income from non-controlling interests in consolidated entities decreased our effective tax rate by ~~0.7%~~0.5% in ~~2016~~2017 and ~~0.1%~~decreased our rate by 0.4% in ~~2015.~~2016. 2017 included a 0.4% rate decrease related to excess tax benefits on share based compensation for vestings of our annual share awards. Included in the rate decrease for 2017 were expenses related to the retirement costs and business optimization costs discussed above, changes in our profit mix and movement from our foreign currency hedge contracts. 2016 included a ~~0.1%~~0.3% rate decrease as a result of adjustments related to changes in the fair value of contingent consideration discussed above and a ~~0.5%~~0.9% rate increase as a result of the non-cash impairment charge related to the company's former 49% investment in ~~the company's~~its Indian joint venture. ~~2015 included a 0.8% rate increase as result of tax legislation changes in New York City.~~

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Schedule of Non-GAAP Information

We are presenting the following non-GAAP performance measures: net revenues (and by calculation, net revenue yield on AUM), adjusted operating income, adjusted operating margin, adjusted net income attributable to Invesco Ltd., and adjusted diluted ~~earnings per share (EPS).~~EPS. We believe these non-GAAP measures provide greater transparency into our business on an ongoing operations basis and allow more appropriate comparisons with industry peers. Management uses these performance measures to evaluate the business and for internal management reporting. The most directly comparable U.S. GAAP measures are operating revenues (and by calculation, gross revenue yield on AUM), operating income, operating margin, net income attributable to Invesco Ltd., and diluted EPS. Each of these measures is discussed more fully below.

These non-GAAP measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies. Additional reconciling items may be added in the future to these non-GAAP measures if deemed appropriate. The tax effect related to reconciling items have been calculated based on the tax rate attributable to the jurisdiction to which the transaction relates.

The following are reconciliations of operating revenues, operating income (and by calculation, operating margin), and net income attributable to Invesco Ltd. (and by calculation, diluted EPS) on a U.S. GAAP basis to net revenues, adjusted operating income (and by calculation, adjusted operating margin), and adjusted net income attributable to Invesco Ltd. (and by calculation, adjusted diluted EPS). Notes to the reconciliations follow the tables.

Reconciliation of Operating revenues to Net revenues:


	Three months ended September 30,				Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
$ in millions	2016		2015		2016		2015		2017		2016		2017		2016
Operating revenues, U.S. GAAP basis	1,201.6		1,273.5		3,539.7		3,883.2		1,254.4		1,189.4		2,447.0		2,338.1
Proportional share of revenues, net of third-party distribution expenses, from joint venture investments ⁽¹⁾	9.5		12.3		31.1		49.4		11.5		10.5		22.1		21.6
Third party distribution, service and advisory expenses⁽²⁾	(362.1	)	(392.3	)	(1,057.7	)	(1,204.7	)	(365.9	)	(348.4	)	(715.2	)	(695.6	)
CIP ⁽³⁾	5.7		9.5		16.3		29.2		6.3		5.1		19.5		10.6
Net revenues	854.7		903.0		2,529.4		2,757.1		906.3		856.6		1,773.4		1,674.7

Reconciliation of Operating income to Adjusted operating income:


	Three months ended September 30,				Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
$ in millions	2016		2015		2016		2015		2017		2016		2017		2016
Operating income, U.S. GAAP basis	306.3		352.7		882.2		1,054.8		318.9		301.5		577.5		575.9
Proportional share of net operating income from joint venture investments ⁽¹⁾	3.0		4.2		10.5		23.3		5.3		4.2		6.6		7.5
CIP ⁽³⁾	13.1		18.2		33.4		51.6		8.5		13.0		20.5		20.3
Business combinations ⁽⁴⁾	4.5		2.7		18.5		9.2		8.4		4.5		13.5		14.0
Compensation expense related to market valuation changes in deferred compensation plans ⁽⁵⁾	4.1		(4.4	)	5.7		0.8		3.4		1.8		9.1		1.6
Other reconciling items ⁽⁶⁾	8.3		—		26.5		(1.7	)	12.0		5.4		56.4		18.2
Adjusted operating income	339.3		373.4		976.8		1,138.0		356.5		330.4		683.6		637.5

Operating margin*	25.5	%	27.7	%	24.9	%	27.2	%	25.4	%	25.3	%	23.6	%	24.6	%
Adjusted operating margin**	39.7	%	41.4	%	38.6	%	41.3	%	39.3	%	38.6	%	38.5	%	38.1	%

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Reconciliation of Net income attributable to Invesco Ltd. to Adjusted net income attributable to Invesco Ltd.:


	Three months ended September 30,						Nine months ended September 30,						Three months ended June 30,						Six months ended June 30,
$ in millions, except per share data	2016			2015			2016			2015			2017			2016			2017			2016
Net income attributable to Invesco Ltd., U.S. GAAP basis	241.2			249.3			627.7			766.2			239.6			225.5			451.6			386.5
CIP, eliminated upon consolidation ⁽³⁾	(3.2		)	13.2			(2.8		)	21.0
CIP ⁽³⁾													2.9			(8.0		)	(2.8		)	0.4
Business combinations, net of tax ⁽⁴⁾	5.4			(4.3		)	50.6			11.4			10.9			17.9			19.6			45.2
Deferred compensation plan market valuation changes and dividend income less compensation expense, net of tax ⁽⁵⁾	(2.4		)	4.8			(2.6		)	7.0			(1.1		)	(1.3		)	(4.0		)	(0.2		)
Other reconciling items, net of tax ⁽⁶⁾	5.2			(1.6		)	11.1			(0.7		)	12.2			(1.1		)	50.6			5.9
Adjusted net income attributable to Invesco Ltd.	246.2			261.4			684.0			804.9			264.5			233.0			515.0			437.8

Average shares outstanding - diluted	412.9			429.1			417.0			431.3			410.3			419.1			409.2			419.1
Diluted EPS		$0.58			$0.58			$1.51			$1.78			$0.58			$0.54			$1.10			$0.92
Adjusted diluted EPS***		$0.60			$0.61			$1.64			$1.87			$0.64			$0.56			$1.26			$1.04

____________


*	Operating margin is equal to operating income divided by operating revenues.


**	Adjusted operating margin is equal to adjusted operating income divided by net revenues.


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


(1)	Proportional share of net revenues and operating income from joint venture investments

The company's two joint venture investments in China are proportionately consolidated in the company's non-GAAP measures. Enhancing our operations in China is one effort that we believe could improve our competitive position over time. Accordingly, we believe that it is appropriate to evaluate the contribution of our joint venture investments to the operations of the business.


(2)	Third-party distribution, service and advisory expenses

Third-party distribution, service and advisory expenses include renewal commissions, management fee rebates and distribution costs (12b-1 and marketing support) paid to brokers and independent financial advisors, and other service and administrative fees paid to third parties. While the terms used for these types of expenses vary by geography, they are all expense items that are closely linked to the value of AUM and the revenue earned by Invesco from AUM. Since the company has been deemed to be the principal in the third-party arrangements, the company must reflect these expenses gross of operating revenues under U.S. GAAP.

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

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(3)	CIP

See Part I, Item 1, Financial Statements, Note 1312 - “Consolidated Investment Products” for a detailed analysis of the impact to the company’s Condensed Consolidated Financial Statements from the consolidation of CIP. The reconciling items add back the management and performance fees earned by Invesco from the consolidated products and remove the revenues and expenses recorded by the consolidated products that have been included in the U.S. GAAP Condensed Consolidated Statements of Income.

CIP Revenue:


	Three months ended September 30,		Nine months ended September 30,		Three months ended June 30,		Six months ended June 30,
$ in millions, except per share data	2016	2015	2016	2015	2017	2016	2017	2016
Management fees earned from CIP, eliminated upon consolidation	5.3	7.5	15.0	22.4	5.6	4.7	12.7	9.7
Performance fees earned from CIP, eliminated upon consolidation	0.4	2.0	1.3	6.8	0.7	0.4	6.8	0.9
CIP related adjustments in arriving at net revenues	5.7	9.5	16.3	29.2	6.3	5.1	19.5	10.6


(4)	Business combinations

Adjustments ~~related to business combinations~~ are comprised of amounts incurred by the company in connection with business combinations, including intangible asset amortization, changes in the fair value of the contingent consideration liability payable in future periods, business combination-related transaction costs, impairments, employee compensation expenses associated with business combinations and all related tax effects, as well as the reversal of deferred tax ~~cash flow benefits~~liabilities recorded under U.S. GAAP resulting from tax amortization of goodwill and indefinite-lived intangible assets.

While finite-lived intangible assets are amortized under U.S. GAAP, there is no amortization charge on goodwill and indefinite-lived intangibles. In certain qualifying situations, these can be amortized for tax purposes, generally over a 15-year period, as is the case in the U.S. These ~~cash flows (in the form of reduced taxes payable)~~deferred tax liabilities represent tax benefits that are not included in the Condensed Consolidated Statements of Income absent an impairment charge or the disposal of the related business. The company receives these ~~cash flow~~tax benefits but does not anticipate a sale or impairment of these assets in the foreseeable future, and therefore the deferred tax ~~liability~~liabilities recognized under U.S. GAAP isare not expected to be used either through a credit in the Condensed Consolidated Statements of Income or through settlement of tax obligations.

Management believes it is useful to investors and other users of our Condensed Consolidated Financial Statements to adjust for these business combination-related items in arriving at adjusted operating income, adjusted operating margin and adjusted diluted EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar business combination-related charges.

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See table below for a reconciliation of business combination-related items:


	Three months ended September 30,				Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
$ in millions	2016		2015		2016		2015		2017		2016		2017		2016
Business combinations:
Intangible amortization expense	3.7		2.7		10.5		8.0		3.5		3.4		6.9		6.9
Employee compensation expense	0.8		—		6.5		—		1.6		0.3		2.7		5.7
Other business combination-related items	—		—		1.5		1.2		3.3		0.8		3.9		1.4
Adjustments to operating income	4.5		2.7		18.5		9.2		8.4		4.5		13.5		14.0
Changes in the fair value of contingent consideration	(5.3	)	(18.4	)	6.3		(18.4	)	(1.2	)	15.1		(1.7	)	11.6
Other-than-temporary impairment	—		—		17.8		—		—		—		—		17.8
Taxation:
Taxation on amortization	(0.3	)	(0.4	)	(1.0	)	(1.1	)	(0.4	)	(0.3	)	(0.8	)	(0.7	)
Taxation on employee compensation expense	(0.2	)	—		(2.4	)	—		(0.6	)	(0.1	)	(1.0	)	(2.1	)
Deferred taxation	4.7		4.8		14.3		15.2		4.9		4.7		9.8		9.6
Taxation on other business combination-related items	—		—		(0.5	)	(0.5	)	(0.7	)	(0.3	)	(0.9	)	(0.6	)
Taxation on changes in the fair value of contingent consideration	2.0		7.0		(2.4	)	7.0		0.5		(5.7	)	0.7		(4.4	)
Adjustments to net income attributable to Invesco Ltd.	5.4		(4.3	)	50.6		11.4		10.9		17.9		19.6		45.2


(5)	Market movement on deferred compensation plan liabilities

Certain deferred compensation plan awards involve a return to the employee linked to the appreciation (depreciation) of specified investments, typically the funds managed by the employee. Invesco hedges economically the exposure to market movements by holding these investments on its balance sheet. U.S. GAAP requires the appreciation (depreciation) in the compensation liability to be expensed over the award vesting period in proportion to the vested amount of the award as part of compensation expense. The full value of the investment appreciation (depreciation) is immediately recorded below operating income in other gains and losses. This creates a timing difference between the recognition of the compensation expense and the investment gain or loss impacting net income attributable to Invesco Ltd. and diluted EPS which will reverse over the life of the award and net to zero at the end of the multi-year vesting period. During periods of high market volatility these timing differences impact compensation expense, operating income and operating margin in a manner which, over the life of the award, will ultimately be offset by gains and losses recorded below operating income on the Condensed Consolidated Statements of Income. The non-GAAP measures exclude the mismatch created by differing U.S. GAAP treatments of the market movement on the liability and the investments. This mismatch resulted in a net credit to income before income taxes of $3.5 million in the three months ended September 30, 2016 with a corresponding income tax charge of $1.1 million (three months ended September 30, 2015: income before income taxes charge of $7.4 million ; income tax credit of $2.6 million). For the nine months ended September 30, 2016 the mismatch resulted in a net credit to income before income taxes of $4.1 million with a corresponding income tax charge of $1.5 million (nine months ended September 30, 2015: income before income taxes charge of $10.7 million; income tax credit of $3.7 million).movements.

Since these plans are hedged economically, management believes it is useful to reflect the offset ultimately achieved from hedging the investment market exposure in the calculation of adjusted operating income (and by calculation, adjusted operating margin) and adjusted net income attributable to Invesco Ltd. (and by calculation, adjusted diluted EPS), to produce results that will be more comparable period to period. ~~The related fund shares will have been purchased on or around the date~~

See below for a reconciliation of ~~grant, eliminating any ultimate cash impact from market movements that occur over the vesting period.~~

~~Additionally, dividend income from investments held to hedge economically~~ deferred compensation plans is recorded as dividend income and as compensation expense on the company’s Condensed Consolidated Statements of Income on the record dates. This dividend income is passed through to the employee participants in the plan and is not retained by the company. The non-GAAP measures exclude this dividend income and related ~~compensation expense.~~items:



	Three months ended June 30,				Six months ended June 30,
$ in millions	2017		2016		2017		2016
Market movement on deferred compensation plan liabilities:
Compensation expense related to market valuation changes in deferred compensation liability	3.4		1.8		9.1		1.6
Adjustments to operating income	3.4		1.8		9.1		1.6
Market valuation changes and dividend income from investments and instruments held related to deferred compensation plans in other income/(expense)	(5.1	)	(3.8	)	(15.3	)	(2.2	)
Taxation:
Taxation on deferred compensation plan market valuation changes and dividend income less compensation expense	0.6		0.7		2.2		0.4
Adjustments to net income attributable to Invesco Ltd.	(1.1	)	(1.3	)	(4.0	)	(0.2	)

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(6)	Other reconciling items

Each of these other reconciling items has been adjusted from U.S. GAAP to arrive at the company's non-GAAP financial measures for the reasons either outlined in the paragraphs above, due to the unique character and magnitude of the reconciling item, or because the item represents a continuation of a reconciling item adjusted from U.S. GAAP in a prior period.


	Three months ended September 30,				Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
$ in millions	2016		2015		2016		2015		2017		2016		2017		2016
Other non-GAAP adjustments:
Business optimization charges: ^(a)
Employee compensation	5.8		—		14.2		—		3.9		4.4		19.6		8.4
Consulting and temporary labor	5.4		—		14.1		—		6.9		5.5		15.1		8.6
Property, office and technology	0.5		—		0.6		(6.4	)	1.2		0.4		2.0		0.1
Vacated property lease credit ^(b)	(3.4	)	—		(3.4	)	—
Regulatory charge ^(c)	—		—		1.0		—
Fund reimbursement expense ^(d)	—		—		—		4.7
Regulatory charge ^(b)									—		(4.9	)	—		1.1
Senior executive retirement and related costs ^(c)									—		—		19.7		—
Adjustments to operating income	8.3		—		26.5		(1.7	)	12.0		5.4		56.4		18.2
Foreign exchange hedge (gain)/loss ^(e)	2.2		(1.6	)	(7.6	)	1.5
Foreign exchange hedge (gain)/loss ^(d)									7.1		(8.4	)	21.0		(9.8	)
Taxation:
Taxation on business optimization charges ^(a)	(3.7	)	—		(9.2	)	1.3		(4.2	)	(3.2	)	(12.9	)	(5.5	)
Taxation on vacated property lease credit ^(b)	0.7		—		0.7		—
Taxation on regulatory-related charges ^(c)	(1.4	)	—		(1.8	)	—
Taxation on fund reimbursement expense ^(d)	—		—		—		(1.8	)
Taxation on foreign exchange hedge amortization ^(e)	(0.9	)	—		2.5		—
Taxation on regulatory-related charges ^(b)									—		1.9		—		(0.4	)
Taxation on foreign exchange hedge amortization ^(d)									(2.7	)	3.2		(8.0	)	3.4
Taxation on senior executive retirement and related costs ^(c)									—		—		(5.9	)	—
Adjustments to net income attributable to Invesco Ltd.	5.2		(1.6	)	11.1		(0.7	)	12.2		(1.1	)	50.6		5.9

(a)

Business optimization: Operating ~~expense~~expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 include costs associated with a business transformation initiative that include severance costs of $5.8 million and $14.2 million, respectively (three and nine months ended September 30, 2015: zero), consulting and temporary labor costs of $5.4 million and $14.1 million, respectively (three and nine months ended September 30, 2015: zero) and a property related charges of $0.5 million and $0.6 million, respectively, (three and nine months ended September 30, 2015: zero and credit of $6.4 million, respectively) associated with vacating leased properties.discussed in Part I, Item 1, Financial Statements - Note 14, "Business Optimization."


(b)	General and administrative expense for the three and ~~nine~~six months ended ~~September 30, 2016 include a credit of $3.4 million related to the provision associated with a vacated European leased property. This credit relates to a charge recorded in a prior year.~~


~~(c)~~	~~General and administrative expense for the nine months ended September~~June 30, 2016 include a net settlement credit of $4.9 million and a net settlement charge of ~~$1.0~~$1.1 million ~~(nine months ended September 30, 2015: zero)~~ pertaining to regulatory actions.

~~(d)~~(c)

~~General and administrative~~

Operating expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2015 included a charge~~2017 reflect the cost of ~~$4.7~~multiple senior executive retirements, including, among others, the former Senior Managing Director of EMEA and the Chairman of our Private Equity business, which resulted in expenses of $19.7 million ~~multi-year fund reimbursement expense associated with historical private equity management fees~~related to accelerated vesting of deferred compensation and ~~related professional services fees.~~other separation costs. The ~~charge resulted primarily~~number of senior executive retirements and magnitude of their retirement costs incurred in one quarter was unprecedented for Invesco. The company deemed it appropriate to adjust these costs from ~~using a~~U.S. GAAP total compensation expenses in an effort to isolate and evaluate our level of ongoing compensation expenses and to allow for more appropriate ~~methodology regarding~~comparisons to internal metrics and with the ~~calculation~~level of ~~offsets to management fees.~~compensation expenses incurred by industry peers.

~~(e)~~(d)

Included within other gains and losses, net is the mark-to-market of foreign exchange put option contracts intended to provide protection against the impact of a significant decline in the Pound Sterling/U.S. Dollar and the Euro/U.S. Dollar foreign exchange ~~rate. These~~rates. The Pound Sterling contracts provide coverage through December 31, 2018 and the Euro contracts provide coverage through December 27, 2017. The adjustment from U.S. GAAP to non-GAAP earnings removes the impact of market volatility; therefore, the company's non-GAAP results include only the amortization of the cost of the contracts during the contract period.

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Balance Sheet Discussion

Cash and cash equivalents

Cash and cash equivalents ~~decreased~~increased by ~~$270.1~~$318.1 million from ~~$1,851.4~~$1,328.0 million at December 31, ~~2015~~2016 to ~~$1,581.3~~$1,646.1 million at ~~September~~June 30, ~~2016~~2017. See “Cash ~~Flows”~~Flows Discussion” in the following section within this Management's Discussion and Analysis for additional discussion regarding the movements in cash flows during the period.

Unsettled fund receivables and payables

Unsettled fund receivables increased by ~~$121.8~~$345.0 million from ~~$566.3~~$672.9 million at December 31, ~~2015~~2016 to ~~$688.1~~$1,017.9 million at ~~September~~June 30, ~~2016,~~2017, due primarily to higher transaction activity between funds and investors in late ~~September~~June ~~2016~~2017 when compared to late December ~~2015~~2016 in our ~~UITs, together with~~ U.K. and cross-border ~~funds.~~funds, together with UITs. In our U.K. and cross-border operations, unsettled fund receivables are created by the normal settlement periods on transactions initiated by certain clients. In the company's capacity as sponsor of UITs, the company records receivables from brokers, dealers, and clearing organizations for unsettled sell trades of securities and UITs in addition to receivables from customers for unsettled sell trades of UITs. ~~In our U.K. and cross-border operations, unsettled fund receivables are created by the normal settlement periods on transactions initiated by certain clients.~~ The presentation of the unsettled fund receivables and substantially offsetting payables ($~~662.6~~1,002.1 million at ~~September~~June 30, ~~2016~~2017 up from ~~$561.9~~$659.3 million at December 31, ~~2015)~~2016) at trade date reflects the legal relationship between the underlying investor and the company.

Investments

As of ~~September~~June 30, ~~2016~~2017 we had ~~$877.7~~$642.6 million in total investments (December 31, ~~2015: $1,019.1 million)~~2016: $795.3 million). Included in investments are ~~$354.0~~$209.6 million of seed money investments in affiliated funds used to seed funds as we launch new products, and ~~$172.5~~$86.3 million of investments related to assets held for deferred compensation plans, which are also held primarily in affiliated funds. Seed investments decreased by ~~$63.1~~a net $40.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017~~, primarily~~. The decrease in the period reflects redemptions of $115.2 million of seed investments. The redemptions were offset by a non-cash increase of $52.2 million due to the ~~adoption~~deconsolidation of ~~ASU 2015-02 (see Note 1, "Accounting Policies," for impact upon adoption) along with seed redemptions~~certain CIP in the period (restoring the company's formerly eliminated investment balances) as well as an increase of $22.8 million driven by market valuation changes, purchases, and ~~the negative impact of changes in~~ foreign exchange ~~rate movement, partially offset by seed money funding and positive market activity.~~movements. Investments related to deferred compensation awards ~~increased~~decreased by ~~$13.7~~a net $84.2 million during the period, primarily ~~due~~related to ~~additional~~the disposition of certain investments ~~in affiliated funds~~held to hedge economically ~~new employee plan awards and positive market activity, partially offset~~one of the company's deferred compensation plans. Such disposition occurred in conjunction with the entrance by ~~redemptions of investments and~~the company into a ~~decrease due~~one-year renewable total return swap to more efficiently hedge this deferred compensation plan. This transaction did not have a material impact to the ~~impact of foreign exchange rate movement.~~company's operations or financial position.

Included in investments are ~~$272.7~~$277.4 million in equity method investments in our Chinese joint venture and in certain of the company’s private equity partnerships, real estate partnerships and other co-investments (December 31, ~~2015: $352.8 million)~~2016: $279.0 million). The decrease of ~~$80.1~~$1.6 million in equity method investments was driven by a decrease ~~of $84.1 million~~ in ~~our joint venture~~partnership investments ~~primarily~~ resulting from capital returns and the ~~company increasing its ownership~~consolidation of Invesco Asset Management (India) Private Limited, previously a joint venture investment in India, from 49% to 100% on April 5, 2016 along with dividend distributions and negative foreign exchange movement. The decrease is partially offset by $9.9 million of current period earnings. The remaining change in equity methodcertain investments is due to an increase in our partnership investments of $4.0 million resulting from the impact of adoption of ASU 2015-02 mentioned above, capital calls in co-investments and earnings and valuation adjustments of during the current period. ~~The increases in partnership investments~~These decreases were partially offset by ~~distributions~~current period earnings of equity method investments, capital calls into certain partnership investments and ~~capital returns of during~~increases due to the ~~period.~~

~~Assets of CSIP~~

~~Upon adoption of ASU 2015-02 (see Note 1, "Accounting Policies"), the funds consolidated~~changes in ~~prior periods as CSIP became VIEs and are now consolidated as CIP. See Part I, Item 1, Financial Statements, Note~~ 12~~, "Consolidated Sponsored Investment Products," for additional information.~~foreign exchange rates.

Assets held for policyholders and policyholder payables

One of our subsidiaries, Invesco Perpetual Life Limited, is an insurance company that was established to facilitate retirement savings plans in the U.K. The entity holds assets that are managed for its clients on its balance sheet with an equal and offsetting liability. The increase in the balance of these accounts from ~~$6,051.5~~$8,224.2 million at December 31, ~~2015~~2016 to ~~$7,387.5~~$10,716.7 million at ~~September~~June 30, ~~2016~~2017 was the result of new business net inflows and market movement of ~~$1,963.5~~$2,014.7 million ~~increase in the market values of these assets~~ and ~~liabilities of $202.0 million, offset by~~ exchange rate movements of ~~$829.5~~$477.8 million.

Goodwill

~~Table of Contents~~

~~Intangible assets, net~~

~~Intangible assets reflect a net increase of $53.9~~Goodwill increased from $6,129.2 million ~~from $1,354.0 million~~ at December 31, ~~2015,~~2016, to ~~$1,407.9~~$6,269.5 million at ~~September~~June 30, ~~2016.~~2017. The increase is ~~principally~~ due to the preliminary valuations related to the acquisitions of management contracts and technology related intangible assets acquired through the acquisitions of our Indian asset management operations and Jemstep of $63.4 million and foreign exchange movements during the period. The increase is partially offset by amortization.

~~Goodwill~~

Goodwill increased from $6,175.7 million at December 31, 2015, to $6,242.6 million at September 30, 2016. The increase includes $137.6 million related to the preliminary valuations of the acquisitions of our Indian asset management company and Jemstep. The increase is offset by foreign exchange movements of ~~$70.7~~$140.3 million. The company's annual goodwill impairment review is performed as of October 1 of each year.

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Liquidity and Capital Resources

Our capital structure, together with available cash balances, cash flows generated from operations, existing capacity under our credit facility and further capital market activities, if necessary, should provide us with sufficient resources to meet present and future cash needs, including operating, debt and other obligations as they come due and anticipated future capital requirements.

Our capital management priorities have evolved with the growth and success of our business and include:

•reinvestment in the business;

•moderate annual growth of dividends (as further discussed in the "Dividends" section below);

•share repurchase; and

•establishment of an approximate $1 billion cash buffer in excess of European regulatory and liquidity requirements.

These priorities are executed in a manner consistent with our desire to maintain strong, investment grade credit ratings. As of the filing of the Report, Invesco held credit ratings of A/Stable, A2/Stable and A-/~~Positive~~Stable from Standard & Poor’s Ratings Service (“S&P”), Moody’s Investor Services (“Moody’s”) and Fitch Ratings (“Fitch”). During 2015, Fitch raised their outlook from Stable to Positive and stated the outlook revision reflected continued strong operating and investment performance, leveling of seed capital investments and an increased focus on organic growth over debt-funded acquisitions. Furthermore, S&P considers our risk management to be strong. S&P rates companies' enterprise risk management capabilities on a scale of Fair, Adequate, Strong, and Excellent., respectively. Our ability to continue to access the capital markets in a timely manner depends on a number of factors, including our credit ratings, the condition of the global economy, investors’ willingness to purchase our securities, interest rates, credit spreads and the valuation levels of equity markets. If we are unable to access capital markets in a timely manner, our business could be adversely impacted.

Certain of our subsidiaries are required to maintain minimum levels of capital. Such requirements may change from ~~time to time~~time-to-time as additional guidance is released based on a variety of factors, including balance sheet composition, assessment of risk exposures and governance, and review from regulators. These and other similar provisions of applicable law may have the effect of limiting withdrawals of capital, repayment of intercompany loans and payment of dividends by such entities. All of our regulated EU subsidiaries are subject to consolidated capital requirements under EU Directives, including those arising from the Capital Requirements Directive ~~IV (CRD IV)~~ and the United Kingdom's Internal Capital Adequacy Assessment Process, ~~(ICAAP),~~ and capital is maintained within this sub-group to satisfy these regulations. We meet these requirements in part by holding cash and cash equivalents. This retained cash can be used for general business purposes in the European sub-group in the countries where it is located. Due to the capital restrictions, the ability to transfer cash between certain jurisdictions may be limited. In addition, transfers of cash between international jurisdictions may have adverse tax consequences. We are in compliance with all regulatory minimum net capital requirements. As of ~~September~~June 30, ~~2016,~~2017, the company's minimum regulatory capital requirement was ~~$591.7~~$731.4 million (December 31, ~~2015: $534.7 million).~~2016: $590.8 million); the increase was driven primarily by the foreign exchange market risk capital requirement arising from holding foreign currency cash balances for the closure of the pending Source acquisition, increased business activity and strengthening of the Pound Sterling against the U.S. Dollar. The total amount of non-U.S. cash and cash equivalents was ~~$1,285.2~~$1,393.4 million at ~~September~~June 30, ~~2016~~2017 (December 31, ~~2015: $1,612.7 million)~~2016: $1,168.4 million).

In addition, the company is required to hold cash deposits with clearing organizations or to otherwise segregate cash to maintain compliance with federal and other regulations in connection with its UIT broker dealer entity. At ~~September~~June 30, ~~2016,~~2017, these cash deposits totaled $11.4 million (December 31, ~~2015: $11.4 million)~~2016: $11.4 million).

The consolidation of ~~$4.8~~$5.3 billion and $3.9 billion of total assets and long-term debt of CIP as of ~~September~~June 30, ~~2016~~2017, respectively, did not impact the company’s liquidity and capital resources. The majority of CIP balances related to consolidated CLOs. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the

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benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company’s minimal direct investments in, and management and performance fees generated from, these products, which are eliminated upon consolidation. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Likewise, if the CLOs were to liquidate, their investors would have no recourse to the general credit of the company. The company therefore does not consider this debt to be an obligation of the company. See Part I, Item 1, Financial Statements - Note ~~13,~~12, “Consolidated Investment Products,” for additional details.

Cash Flows Discussion

The ability to consistently generate cash flow from operations in excess of dividend payments, share repurchases, capital expenditures, and ongoing operating expenses is one of our company's fundamental financial strengths. Operations continue to be financed from current earnings and borrowings. Our principal uses of cash, other than for operating expenses, include dividend payments, capital expenditures, acquisitions, purchase of our shares in the open market and investments in certain new investment products.

~~Upon adoption~~

Table of ~~ASU 2015-02 (see Note 1, "Accounting Policies"), the funds consolidated in prior periods as CSIP became VIEs and are now consolidated as CIP. See Part I, Item 1, Financial Statements, Note~~ 12~~, "Consolidated Sponsored Investment Products," for additional information.~~Contents

Cash flows of CIP (discussed in Item 1, Financial Statements - Note ~~13,~~12, “Consolidated Investment Products”) are reflected in Invesco's cash provided by or used in operating activities, investing activities and financing activities. Cash held by CIP is not available for general use by Invesco, nor is Invesco cash available for general use by its CIP. Accordingly, the table below presents the consolidated total cash flows of the company and separately presents the impact to the cash flows from CIP. The impact is illustrated in the tables immediately below by a column which shows the dollar-value change in the consolidated figures, as caused by the consolidation of CIP. For example, the impact of CIP on net cash provided by/(used in) operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 reflects cash ~~used~~provided of ~~$180.1~~$212.5 million; however, this was not ~~used~~provided as part of the company's corporate cash balances. Excluding the impact of CIP, cash provided by operations was ~~$722.2~~$569.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~ 2017.

Also as illustrated in the table below, the sum of the operating, investing and financing cash flows of CIP offsets to a zero impact to the company's change in cash and cash equivalent balances from period to period. The cash flows of CIP do not form part of the company’s cash flow management processes, nor do they form part of the company’s significant liquidity evaluations and decisions for the reasons noted. The discussion that follows the table focuses on the company’s cash flows.

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Summary of Cash Flow Statement Impact of CIP


	Nine months ended September 30, 2016				Nine months ended September 30, 2015				Six months ended June 30, 2017				Six months ended June 30, 2016
$ in millions	Impact of CIP		Invesco Ltd. Consolidated		Impact of CIP		Invesco Ltd. Consolidated		Impact of CIP		Invesco Ltd. Consolidated		Impact of CIP		Invesco Ltd. Consolidated
Operating activities:
Net income	25.3		650.2		(21.0	)	769.3		15.0		463.8		7.4		394.3
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Amortization and depreciation	—		75.5		—		68.6		—		52.5		—		49.9
Share-based compensation expense	—		118.4		—		112.9		—		92.5		—		79.1
Other (gains)/losses, net	3.7		(7.3	)	3.9		5.2		22.6		(8.7	)	0.9		8.9
Other (gains)/losses of CSIP, net	—		—		—		(1.6	)
Other (gains)/losses of CIP, net	(18.1	)	(18.1	)	12.6		12.6		(38.1	)	(38.1	)	(0.4	)	(0.4	)
Equity in earnings of unconsolidated affiliates	6.8		2.1		1.0		(32.0	)	2.7		(28.2	)	1.6		7.6
Dividends from unconsolidated affiliates	—		16.3		—		17.9		—		1.2		—		0.9
Changes in operating assets and liabilities:
(Increase)/decrease in cash held by CIP	(66.2	)	(66.2	)	(184.3	)	(184.3	)	407.0		407.0		(8.9	)	(8.9	)
(Increase)/decrease in cash held by CSIP	—		—		—		(3.1	)
(Purchase)/sale of investments by CIP, net	(131.9	)	(131.9	)	—		—		(245.8	)	(245.8	)	(118.5	)	(118.5	)
(Purchase)/sale of trading investments, net	(12.8	)	(13.4	)	—		(106.7	)	13.5		174.5		(3.5	)	(14.7	)
(Increase)/decrease in receivables	14.7		(2,257.5	)	(18.0	)	(4,168.4	)	(10.7	)	(2,324.5	)	(7.8	)	(1,823.9	)
Increase/(decrease) in payables	(1.6	)	2,174.0		3.8		4,065.2		46.3		2,235.4		19.4		1,639.3
Net cash provided by/(used in) operating activities	(180.1	)	542.1		(202.0	)	555.6		212.5		781.6		(109.8	)	213.6
Investing activities:
Purchase of property, equipment and software	—		(101.3	)	—		(88.1	)	—		(59.9	)	—		(65.3	)
Purchase of available-for-sale investments	7.5		(4.3	)	60.8		(41.5	)	4.9		(7.7	)	5.0		(4.1	)
Sale of available-for-sale investments	(5.3	)	38.4		(59.7	)	48.5		(14.1	)	57.6		(4.6	)	5.7
Purchase of investments by CIP	(2,398.0	)	(2,398.0	)	(3,226.4	)	(3,226.4	)	(3,080.5	)	(3,080.5	)	(1,220.1	)	(1,220.1	)
Sale of investments by CIP	1,835.9		1,835.9		2,827.8		2,827.8		3,145.8		3,145.8		908.4		908.4
Purchase of investments by CSIP	—		—		—		(397.5	)
Sale of investments by CSIP	—		—		—		384.0
Purchase of other investments	36.8		(98.3	)	1.4		(115.2	)	49.2		(87.6	)	16.8		(61.6	)
Sale of other investments	(50.0	)	67.7		—		73.8		—		63.3		—		53.3
Returns of capital and distributions from unconsolidated partnership investments	(6.5	)	30.0		(0.5	)	45.1		(56.8	)	37.3		(3.4	)	22.8
Purchase of business	—		(121.9	)	—		—		—		—		—		(121.9	)
Net cash provided by/(used in) investing activities	(579.6	)	(751.8	)	(396.6	)	(489.5	)	48.5		68.3		(297.9	)	(482.8	)
Financing activities:
Proceeds from exercises of share options	—		—		—		2.1
Purchases of treasury shares	—		(385.0	)	—		(334.0	)	—		(57.3	)	—		(244.0	)
Dividends paid	—		(346.3	)	—		(340.8	)	—		(233.7	)	—		(230.6	)
Excess tax benefits from share-based compensation	—		(2.4	)	—		19.1		—		—		—		(3.1	)
Third-party capital invested into CIP	193.9		193.9		63.3		63.3		299.7		299.7		141.1		141.1
Third-party capital distributed by CIP	(64.1	)	(64.1	)	(99.0	)	(99.0	)	(62.9	)	(62.9	)	(44.8	)	(44.8	)
Third-party capital invested into CSIP	—		—		—		13.5
Borrowings of debt by CIP	760.1		760.1		2,091.8		2,091.8		1,459.3		1,459.3		387.3		387.3
Repayments of debt by CIP	(130.2	)	(130.2	)	(1,457.5	)	(1,457.5	)	(1,957.1	)	(1,957.1	)	(75.9	)	(75.9	)
Net borrowings/(repayments) under credit facility	—		—		—		99.5		—		(28.7	)	—		—
Payment of contingent consideration	—		(9.5	)	—		(4.6	)	—		(7.2	)	—		(6.2	)
Net cash provided by/(used in) financing activities	759.7		16.5		598.6		53.4		(261.0	)	(587.9	)	407.7		(76.2	)
Increase/(decrease) in cash and cash equivalents	—		(193.2	)	—		119.5		—		262.0		—		(345.4	)
Foreign exchange movement on cash and cash equivalents	—		(76.9	)	—		(43.0	)	—		56.1		—		(59.8	)
Cash and cash equivalents, beginning of period	—		1,851.4		—		1,514.2		—		1,328.0		—		1,851.4
Cash and cash equivalents, end of period	—		1,581.3		—		1,590.7		—		1,646.1		—		1,446.2

Operating Activities

Operating cash flows include the receipt of investment management and other fees generated from AUM, offset by operating expenses and changes in operating assets and liabilities. Although some receipts and payments are seasonal, particularly bonus payments, in general, after allowing for the change in cash held by CIP, and trading investment activities, our operating cash flows move in the same direction as our operating income.

During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, cash provided by operating activities ~~decreased $13.5~~increased $568.0 million to ~~$542.1~~$781.6 million from ~~$555.6~~$213.6 million used during the ~~nine~~six months ended ~~September~~June 30, ~~2015.~~2016. As shown in the tables above, the impact of CIP to cash provided by operating activities was $212.5 million of cash provided during the six months ended June 30, 2017 compared to $109.8 million of cash used during the six months ended June 30, 2016. Excluding the impact of CIP, cash provided by operations was $569.1 million during the six months ended June 30, 2017 compared to $323.4 million of cash provided by operating activities during the six months ended June 30, 2016.

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CIP to cash provided by operating activities was $180.1 million of cash used during the nine months ended September 30, 2016 compared to $202.0 million of cash used during the nine months ended September 30, 2015. Excluding the impact of CIP, cash provided by operations was $722.2 million during the nine months ended September 30, 2016 compared to $757.6 million of cash provided by operating activities during the nine months ended September 30, 2015.

The changes in operating assets and liabilities also impact the link between cash provided by operations and net income. Excluding the impact of CIP, the changes in operating assets and liabilities ~~utilized $97.2~~generated $36.3 million of cash in the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, as compared to utilizing ~~$198.8~~$207.4 million in the same period in ~~2015,~~2016, increasing cash provided by operating activities by a net ~~$101.6~~$243.7 million. The increase in cash included a ~~$106.1~~$172.2 million increase in cash related to net ~~purchases/~~purchases and sales of trading investments, ~~offset by $27.8~~and $50.3 million reduction in ~~additional~~ payroll payments related to annual staff bonuses, related payroll taxes, payroll taxes on annual share award vestings, and annual retirement plan contributions. The company pays the annual cash bonuses and vests deferred compensation awards in the first quarter of each year. Net income during the nine months ended September 30, 2015 includes gains from CSIP investments of $1.6 million. Changes in operating assets and liabilities during nine months ended September 30, 2015 also includes a decrease of $3.1 million in cash held by CSIP investments. As discussed above, these CSIP items do not recur in 2016. There were no significant non-cash items that impacted the comparison between the periods of operating income to net cash provided by operations.

Investing Activities

Net cash ~~used in~~provided by investing activities totaled ~~$751.8~~$68.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015:~~2016: net cash used of ~~$489.5 million)~~$482.8 million). As shown in the tables above, the impact of CIP on investing activities, including investment purchases, sales and returns of capital, was ~~$579.6~~$48.5 million ~~used (nine~~provided (six months ended ~~September~~June 30, ~~2015: $396.6~~2016: $297.9 million used). Excluding the impact of CIP cash flows, net cash ~~used in~~provided by investing activities was ~~$172.2~~$19.8 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015:~~2016: net cash used of ~~$92.9 million)~~$184.9 million).

For the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, excluding the impact of CIP, cash outflows include purchases of investments of available-for-sale and other investments of ~~$146.9~~$149.4 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $218.9 million) as well as $121.9~~2016: $87.5 million ~~related to business purchases.~~). These outflows were partially offset by collected proceeds of ~~$197.9~~$229.1 million from sales and returns of capital of available-for-sale and other investments ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $227.6 million)~~2016: $89.8 million). ~~The nine~~Cash outflows from the six months ended ~~September~~June 30, ~~2015~~2016 also included ~~purchases of investments by CSIP of $397.5~~$121.9 million ~~offset by collected proceeds of $384.0 million from sales of investments by CSIP.~~related to a business purchase.

During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, the company had capital expenditures of ~~$101.3~~$59.9 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015: $88.1 million)~~2016: $65.3 million). Our capital expenditures related principally in each period to technology initiatives, including enhancements to platforms from which we maintain our portfolio management systems, ~~and fund accounting systems,~~ improvements in computer hardware and software desktop products for employees, new telecommunications products to enhance our internal information flow, and back-up ~~disaster~~business recovery systems. Also, in each period, a portion of these costs related to ~~leasehold~~ improvements made to the various buildings and workspaces used in our offices. These projects have been funded with proceeds from our operating cash flows.

Financing Activities

Net cash ~~provided by~~used in financing activities totaled ~~$16.5~~$587.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015:~~2016: net cash ~~provided~~used of ~~$53.4 million)~~$76.2 million). As shown in the tables above, the impact of CIP on financing activities ~~provided~~used cash of ~~$759.7~~$261.0 million ~~(nine~~(six months ended ~~September~~June 30, ~~2015:~~2016: cash provided of ~~$598.6 million)~~$407.7 million). Excluding the impact of CIP, financing activities used cash of ~~$743.2~~$326.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015:~~2016: cash used of ~~$545.2 million)~~$483.9 million).

Financing cash outflows during the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 included ~~$346.3~~$233.7 million of dividend payments for the dividends declared in January and April ~~and July (nine~~(six months ended ~~September~~June 30, ~~2015:~~2016: dividends paid of ~~$340.8 million)~~$230.6 million), the payment of $57.3 million to meet employees' withholding tax obligations on share vestings (six months ended June 30, 2016: $39.0 million), a repayment of the credit facility of $28.7 million and a payment of $7.2 million of contingent consideration (six months ended June 30, 2016: $6.2 million). Financing cash outflows during the six months ended June 30, 2016 also included the purchase of ~~treasury~~ shares through market transactions totaling ~~$385.0~~$205.0 million ~~(nine months ended September 30, 2015: $334.0 million), payment of $9.5 million of contingent consideration (nine months ended September 30, 2015: $4.6 million)~~ and excess tax benefits from share-based compensation of ~~$2.4 million (nine months ended September 30, 2015: inflow of $19.1 million).~~$3.1 million.

There were no non-CIP related financing cash inflows for the ~~nine~~six months ended ~~September~~June 30, ~~2016. Financing cash inflows for the nine months ended September 30, 2015 include a credit facility borrowing of $99.5 million, net cash of $13.5 million invested into CSIP by third-party investors~~2017 and ~~cash received from the exercise of options of $2.1 million.~~2016.

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Dividends

Invesco declares and pays dividends on a quarterly basis in arrears. On ~~October~~July 27, ~~2016,~~2017, the company announced a ~~third~~second quarter ~~2016~~2017 cash dividend of ~~28.0~~29.0 cents per share to holders of common shares, which will be paid on ~~December 5, 2016,~~September 1, 2017, to shareholders of record as of ~~November 15, 2016~~August 17, 2017 with an ex-dividend date of ~~November 11, 2016.~~August 15, 2017.

The declaration, payment and amount of any future dividends will be declared by our board of directors and will depend upon, among other factors, our earnings, financial condition and capital requirements at the time such declaration and payment are considered. The board has a policy of managing dividends in a prudent fashion, with due consideration given to profit levels, overall debt levels, and historical dividend payouts.

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Share Repurchase Plan

~~During~~The company did not purchase shares in the open market during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, the company repurchased 1.6 million and 13.3 million shares in the market at a cost of $46.8 million and $385.0 million, respectively~~2017, (three and ~~nine~~six months ended ~~September~~June 30, ~~2015: 5.0~~2016: 7.4 million and ~~9.0~~11.7 million shares at a cost of ~~$175.9~~$200.0 million and ~~$334.0~~$325.0 million, respectively). ~~Market share repurchases during the nine month ended September 30, 2016 included 5.3 million shares at cost of $150 million under an Accelerated Share Repurchase program. Separately,~~The company did withhold an aggregate of ~~1.4~~0.1 million and 1.7 million shares ~~were withheld~~ on vesting events during the three and six months ended June 30, 2017, respectively to meet employees' withholding tax obligations ~~(nine~~(three and six months ended ~~September~~June 30, ~~2015: 1.8~~2016: 0.1 million ~~shares)~~and 1.4 million shares, respectively). The fair value of these shares withheld at the respective withholding dates was ~~$39.7~~$3.1 million ~~(nine~~and $57.3 million during the three and six months ended ~~September~~June 30, ~~2015: $69.6~~2017 (three and six months ended June 30, 2016: $1.3 million and $39.0 million). At ~~September~~June 30, ~~2016,~~2017, approximately ~~$1,793.0~~$1,643.0 million remains available under the share repurchase authorizations approved by the Board on October 11, 2013 and July 22, 2016.

Long-term debt

Our long-term debt at ~~September~~June 30, ~~2016~~2017 was ~~$2,073.2~~$2,074.8 million (December 31, ~~2015: $2,072.8 million)~~2016: $2,102.4 million) and was comprised of the following:


$ in millions	September 30, 2016	December 31, 2015	June 30, 2017	December 31, 2016
Floating rate credit facility expiring August 7, 2020	—	—	—	28.7
Unsecured Senior Notes:
$600 million 3.125% - due November 30, 2022	596.2	596.1	596.6	596.3
$600 million 4.000% - due January 30, 2024	593.0	592.7	593.6	593.2
$500 million 3.750% - due January 15, 2026	494.4	494.2	494.8	494.5
$400 million 5.375% - due November 30, 2043	389.6	389.8	389.8	389.7
Long-term debt	2,073.2	2,072.8	2,074.8	2,102.4

For the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017, the company's weighted average cost of debt was ~~3.95% (nine~~3.93% (six months ended ~~September~~June 30, ~~2015: 4.00%~~2016: 3.95%).

The company's $1.25 billion unsecured credit facility is scheduled to expire on August 7, 2020. Financial covenants under the credit agreement include: (i) the quarterly maintenance of a debt/EBITDA leverage ratio, as defined in the credit agreement, of not greater than 3.25:1.00, (ii) a coverage ratio (EBITDA, as defined in the credit agreement/interest payable for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00. As of ~~September~~June 30, ~~2016~~,2017, we were in compliance with our financial covenants. At ~~September~~June 30, ~~2016~~,2017, our leverage ratio was ~~1.36:~~1.29:1.00 (December 31, ~~2015: 1.21:~~2016: 1.35:1.00), and our interest coverage ratio was ~~16.60:~~17.02:1.00 (December 31, ~~2015: 21.11:~~2016: 16.69:1.00).

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The ~~September~~June 30, ~~2016~~2017 coverage ratio calculations are as follows:


$ millions	Total		Q3 2016		Q2 2016		Q1 2016	Q4 2015		Total			Q2 2017	Q1 2017		Q4 2016		Q3 2016
Net income attributable to Invesco Ltd.	829.6		241.2		225.5		161.0	201.9		919.3			239.6	212.0		226.5		241.2
Impact of CIP on net income attributable to Invesco Ltd.	16.6		(3.2	)	(8.0	)	8.4	19.4		(6.2		)	2.9	(5.7	)	(0.2	)	(3.2	)
Tax expense	332.3		89.8		83.7		71.9	86.9		351.0			92.6	75.7		92.9		89.8
Amortization/depreciation/impairment	100.5		25.6		25.2		24.7	25.0		103.8			26.2	26.3		25.7		25.6
Interest expense	92.9		23.9		22.1		23.9	23.0		95.0			23.6	24.0		23.5		23.9
Share-based compensation expense	155.8		39.3		40.4		38.7	37.4		173.1			43.3	49.2		41.3		39.3
Unrealized gains and losses from investments, net*	14.3		(11.8	)	12.1		16.4	(2.4	)	(18.7		)	1.8	(7.1	)	(1.6	)	(11.8	)
EBITDA**	1,542.0		404.8		401.0		345.0	391.2		1,617.3			430.0	374.4		408.1		404.8
Adjusted debt**		$2,091.7									$2,085.1
Leverage ratio (Debt/EBITDA - maximum 3.25:1.00)	1.36									1.29
Interest coverage (EBITDA/Interest Expense - minimum 4.00:1.00)	16.60									17.02

____________


*	Adjustments for unrealized gains and losses from investments, as defined in our credit facility, may also include non-cash gains and losses on investments to the extent that they do not represent anticipated future cash receipts or expenditures.

EBITDA and Adjusted debt are non-GAAP financial measures; however management does not use these measures for anything other than these debt covenant calculations. The calculation of EBITDA above (a reconciliation from net income attributable to Invesco Ltd.) is defined by our credit agreement, and therefore net income attributable to Invesco Ltd. is the ~~most appropriate GAAP measure from which to reconcile to EBITDA. The calculation of Adjusted debt is defined in our credit facility and equals total debt of $2,073.2 million plus $18.5~~

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most appropriate GAAP measure from which to reconcile to EBITDA. The calculation of Adjusted debt is defined in our credit facility and equals total debt of $2,074.8 million plus $10.3 million in letters of credit.

Credit and Liquidity Risk

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

Credit Risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. All cash and cash equivalent balances are subject to credit risk, as they represent deposits made by the company with external banks and other institutions. As of ~~September~~June 30, ~~2016~~2017, our maximum exposure to credit risk related to our cash and cash equivalent balances is ~~$1,581.3~~$1,646.1 million. See Item 1, Financial Statements - Note ~~14,~~13, “Related Parties,” for information regarding cash and cash equivalents invested in affiliated money market funds.

The company does not utilize credit derivatives or similar instruments to mitigate the maximum exposure to credit risk. The company does not expect any counterparties to its financial instruments to fail to meet their obligations.

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Liquidity Risk

Liquidity risk is the risk that the company will encounter difficulty in meeting obligations associated with its financial liabilities. The company is exposed to liquidity risk through its ~~$2,073.2~~$2,074.8 million in long-term debt. The company actively manages liquidity risk by preparing cash flow forecasts for future periods, reviewing them regularly with senior management, maintaining a committed credit facility, scheduling significant gaps between major debt maturities and engaging external financing sources in regular dialog.

Effects of Inflation

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

Off Balance Sheet Commitments

See Part I, Item 1, Financial Statements - Note 11, “Commitments and Contingencies - Off Balance Sheet Commitments,” for more information regarding undrawn capital commitments.

Contractual Obligations

We have future obligations under various contracts relating to debt and interest payments, financing and operating leases, long-term defined benefit pension and ~~post-retirement medical plans, and~~ acquisition contracts. During the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017, there were no material changes to the company's contractual obligations.

Critical Accounting Policies and Estimates

There have been no significant changes to the accounting policies that we believe are the most critical to an understanding of our results of operations and financial condition, which are disclosed in our most recent Form 10-K for the year ended December 31, ~~2015~~2016.

Recent Accounting Standards

See Part I, Item 1, Financial Statements - Note 1, “Accounting Policies - Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements.”

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of its business, the company is primarily exposed to market risk in the form of AUM market price risk, securities market risk, interest rate risk, and foreign exchange rate risk. There have not been any material changes to the company's exposures to market risks during the period ended ~~September~~June 30, ~~2016~~2017 that would require an update to the disclosures provided in the most recent Form 10-K.

AUM Market Price Risk

The company's investment management revenues are comprised of fees based on the value of AUM. Declines in the market prices of equity and fixed income securities, commodities and derivatives, or other similar financial instruments held in client portfolios could cause revenues to decline because of lower investment management fees by:

Causing the value of AUM to decrease.

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

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

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

Causing clients to reallocate assets away from products that earn higher revenues into products that earn lower revenues.

Underperformance of client accounts relative to competing products could exacerbate these factors.

Securities Market Risk

The company has investments in managed investment products that invest in a variety of asset classes. Investments are generally made to establish a track record for a new fund or investment vehicle or to hedge economically exposure to certain deferred compensation plans. The company's exposure to market risk from financial instruments measured at fair value arises from its investments.

Interest Rate Risk

Interest rate risk relates to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The company is exposed to interest rate risk primarily through its external debt and cash and cash equivalent investments. On ~~September~~June 30, ~~2016,~~2017, the interest rates on 100.0% of the company's borrowings were fixed for a weighted average period of ~~11.2~~10.5 years, and the company had a zero balance on its floating rate credit facility.

Foreign Exchange Rate Risk

The company has certain investments in foreign operations, whose net assets and results of operations are exposed to foreign currency translation risk when translated into U.S. Dollars upon consolidation into Invesco Ltd. During the ~~third~~second quarter the company ~~entered into additional put option contracts to~~extended its hedge of approximately 75% of the Pound Sterling-based operating income ~~and 75% of the Euro-based operating income~~ through ~~the end of 2017.~~December 31, 2018. These new put option contracts are set at a strike level of ~~$1.2496 (Pound Sterling) and $1.0719 (Euro).~~$1.250 based on the average daily foreign exchange rates for the applicable time period. See Part I, Item 1, Financial Statements - Note 2, “Fair Value of Assets and Liabilities,” for additional details.

The company is exposed to foreign exchange revaluation into the Condensed Consolidated Statements of Income on monetary assets and liabilities that are held by subsidiaries in different functional currencies than the subsidiaries' functional currencies. Net foreign exchange revaluation ~~losses~~gains were ~~$6.9~~$0.3 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016 (nine~~2017 (six months ended ~~September~~June 30, ~~2015: $1.0 million)~~2016: $6.5 million loss), and are included in general and administrative expenses and other gains and losses, net on the Condensed Consolidated Statements of Income. We continue to monitor our exposure to foreign exchange revaluation and have put in place net investment hedge structures discussed in Part I, Item 1, Financial Statements, Note 6 -- "Other Comprehensive Income/(Loss)."

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Item 4. Controls and Procedures

Our management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that information the company is required to disclose in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in the reports that the company files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

We have evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2016.~~2017. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

We have evaluated any change in our internal control over financial reporting that occurred during the three months ended ~~September~~June 30, ~~2016~~2017 and have concluded that there was no change that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Item I, Note 11, "Commitments and Contingencies - Legal Proceedings," for information regarding legal proceedings.

Item 1A. Risk Factors

The company has had no significant changes in its risk factors from those previously disclosed in its Annual Report on Form 10-K for the year ended December 31, ~~2015 and Quarterly Report on Form 10-Q for the quarter ended June 30,~~ 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

The following table sets forth information regarding purchases of our common shares by us and any affiliated purchases during the three months ended ~~September~~June 30, ~~2016:~~2017:

Month
Total Number of Shares Purchased⁽¹⁾
Average Price Paid Per Share
Total Number of Shares
Purchased as Part of
Publicly Announced Plans or Programs⁽²⁾

Maximum Number at end of period (or Approximate
Dollar Value) of Shares
that May Yet Be Purchased
Under the Plans
or Programs⁽²⁾ (millions)
July1-31, 2016 3,304
$ 26.08
—

$1,853.0
August 1-31, 2016 5,059
$ 30.01
—

$1,853.0
September 1-30, 2016⁽³⁾
1,582,873
$ 29.98
1,561,612

$1,793.0
Total 1,591,236
1,561,612



Month	Total Number of Shares Purchased⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽²⁾	Maximum Number at end of period (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs⁽²⁾ (millions)
April 1-30, 2017	34,104	$	30.94	—		$1,643.0
May 1-31, 2017	5,295	$	31.90	—		$1,643.0
June 1-30, 2017	56,222	$	32.92	—		$1,643.0
Total	95,621			—


(1)	An aggregate of ~~29,624~~95,621 shares were surrendered to us by Invesco employees to satisfy tax withholding obligations ~~or loan repayments~~ in connection with the vesting of equity awards.


(2)	At ~~September~~June 30, ~~2016,~~2017, a balance of ~~$1,793.0~~$1,643.0 million remains available under the share repurchase authorizations approved by the Board on October 11, 2013 and July 22, 2016.


~~(3)~~	The number of shares purchased during September 2016 includes 592,717 shares delivered on finalization of an accelerated share repurchase agreement entered into in June 2016. In total, the agreement purchased 5,291,229 shares at weighted average price of $28.35. This average share price has been used in this table for the shares delivered in September 2016.

~~Table of Contents~~

Item 6. Exhibits

Exhibit Index



3.1	Memorandum of Association of Invesco Ltd., incorporating amendments up to and including December 4, 2007, incorporated by reference to exhibit 3.1 to Invesco’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 12, 2007
3.2	~~Second~~Third Amended and Restated Bye-Laws of Invesco Ltd., incorporating amendments up to and including May ~~15, 2014,~~11, 2017
4.1	Specimen Certificate for Common Shares of Invesco Ltd., incorporated by reference to ~~Exhibit 3.2~~exhibit 4.1 to Invesco’s ~~Quarterly~~Current Report ofon Form ~~10-Q,~~8-K, filed with the Securities and Exchange Commission on ~~July~~December 12, 2007
4.2	Indenture, dated as of November 8, 2012, among Invesco Finance PLC, the Guarantors and The Bank of New York Mellon, as trustee, incorporated by reference to exhibit 4.1 to Invesco’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 9, 2012
4.3	Supplemental Indenture, dated November 8, 2012, for Invesco Finance PLC’s 3.125% Senior Notes due 2022, among Invesco Finance PLC, the Guarantors and The Bank of New York Mellon, as trustee, incorporated by reference to exhibit 4.2 to Invesco’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 9, 2012
4.4	Form of 3.125% Senior Notes due 2022 (included in Exhibit 4.3 hereto)
4.5	Second Supplemental Indenture, dated November 12, 2013, for Invesco Finance PLC’s 4.000% Senior Notes due 2024, among Invesco Finance PLC, the company and The Bank of New York Mellon, as trustee, incorporated by reference to exhibit 4.2 to Invesco’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 12, 2013

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4.6	Third Supplemental Indenture, dated November 12, 2013, for Invesco Finance PLC’s 5.375% Senior Notes due 2043, among Invesco Finance PLC, the company and The Bank of New York Mellon, as trustee, incorporated by reference to exhibit 4.3 to Invesco’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 12, 2013
4.7	Fourth Supplemental Indenture, dated October 14, 2015, for Invesco Finance PLC’s 3.750% Senior Notes due 2026, among Invesco Finance PLC, the company and The Bank of New York Mellon, as trustee, incorporated by reference to exhibit 4.2 to Invesco’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 14, 2015
4.8	Form of 4.000% Senior Notes due 2024 (included in Exhibit 4.5)
4.9	Form of 5.375% Senior Notes due 2043 (included in Exhibit 4.6)
4.10	Form of 3.750% Senior Notes due 2026 (included in Exhibit 4.7)
10.1	Third Amended and Restated Credit Agreement, dated as of August 7, 2015, among Invesco Finance PLC, the company, the banks, financial institutions and other institutional lenders from time to time a party thereto and Bank of America, N.A., as administrative agent, incorporated by reference to exhibit 10.1 to Invesco’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, filed with the Securities and Exchange Commission on October 29, 2015
10.2	Invesco Ltd. 2011 Global Equity Incentive Plan, as amended and restated effective February 12, 2015, incorporated by reference to exhibit 10.5 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.3	Invesco Ltd. 2016 Global Equity Plan, incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 24, 2016
10.4	Form of Restricted Stock Award Agreement - Time Vesting - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.16 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.5	Form of Restricted Stock Unit Award Agreement - Time Vesting - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.17 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.6	Form of Restricted Stock Award Agreement - Performance Vesting - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.18 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.7	Form of Restricted Stock Unit Award Agreement - Performance Vesting - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.19 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.8	Form of Restricted Stock Award Agreement - Time Vesting - with respect to Martin L. Flanagan - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.20 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.9	Form of Restricted Stock Award Agreement - Performance Vesting - with respect to Martin L. Flanagan - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.21 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.10	Form of Restricted Stock Unit Award Agreement - Time Vesting - Canada (Tranches 1-3) - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.22 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.11	Form of Restricted Stock Unit Award Agreement - Time Vesting - Canada (Tranche 4) - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.23 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.12	Form of Restricted Stock Unit Award Agreement - Performance Vesting - Canada (Tranches 1-3) - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.24 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015
10.13	Form of Restricted Stock Unit Award Agreement - Performance Vesting - Canada (Tranche 4) - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.25 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission on February 20, 2015

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10.14	Form of Restricted Stock Unit Award Agreement (Feb 2016) - Performance Vesting - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.24 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on February 19, 2016
10.15	Form of Restricted Stock Unit Award Agreement (Feb 2016) - Performance Vesting - with respect to Martin L. Flanagan - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.15 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.16	Form of Restricted Stock Unit Award Agreement (Feb 2016) - Performance Vesting - Canada - under the Invesco Ltd. 2011 Global Equity Incentive Plan, incorporated by reference to exhibit 10.26 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on February 19, 2016
10.17	Form of Restricted Stock Award Agreement - Time Vesting - under the Invesco Ltd. 2016 Global Equity Incentive Plan, , incorporated by reference to exhibit 10.17 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.18	Form of Restricted Stock Award Agreement - Time Vesting - with respect to Martin L. Flanagan - under the Invesco Ltd. 2016 Global Equity Incentive Plan, incorporated by reference to exhibit 10.18 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.19	Form of Restricted Stock Unit Award Agreement - Time Vesting - under the Invesco Ltd. 2016 Global Equity Incentive Plan, incorporated by reference to exhibit 10.19 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.20	Form of Restricted Stock Unit Award Agreement - Time Vesting - Canada (Tranches 1-3) - under the Invesco Ltd. 2016 Global Equity Incentive Plan, incorporated by reference to exhibit 10.20 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.21	Form of Restricted Stock Unit Award Agreement - Time Vesting - Canada (Tranche 4) - under the Invesco Ltd. 2016 Global Equity Incentive Plan, incorporated by reference to exhibit 10.21 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.22	Form of Restricted Stock Unit Award Agreement -Performance Vesting - under the Invesco Ltd. 2016 Global Equity Incentive Plan, incorporated by reference to exhibit 10.22 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.23	Form of Restricted Stock Unit Award Agreement -Performance Vesting - with respect to Martin L. Flanagan - under the Invesco Ltd. 2016 Global Equity Incentive Plan, incorporated by reference to exhibit 10.23 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.24	Form of Restricted Stock Unit Award Agreement -Performance Vesting - Canada - under the Invesco Ltd. 2016 Global Equity Incentive Plan, incorporated by reference to exhibit 10.24 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.25	Form of Award Agreement for Non-Executive Directors under the Invesco Ltd. 2016 Global Equity Incentive Plan, incorporated by reference to exhibit 10.25 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.26	Form of Aircraft Time Sharing Agreement incorporated by reference to exhibit 10.19 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission on February 21, 2014
10.27	Invesco Ltd. Executive Incentive Bonus Plan, as amended and restated effective January 1, 2013, incorporated by reference to Appendix A to Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 1, 2013
10.28	Invesco Ltd. Amended and Restated 2005 Non-Qualified Deferred Compensation Plan, effective as of January 1, 2009, incorporated by reference to exhibit 10.8 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on February 27, 2009
10.29	Deferred Fees Share Plan, as amended and restated effective December 10, 2008, incorporated by reference to exhibit 10.13 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on February 27, 2009
10.30	Second Amended and Restated Master Employment Agreement, dated April 1, 2011, between the company and Martin L. Flanagan, incorporated by reference to exhibit 10.1 to Invesco’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed with the Securities and Exchange Commission on April 29, 2011
10.31	Global Partner Agreement, dated November 10, 2005, between AMVESCAP PLC and Loren M. Starr, incorporated by reference to exhibit 10.14 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on February 29, 2008

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10.32	Global Partner Agreement, dated January 1, 2001, between AIM Funds Management Inc. and Philip A. Taylor, incorporated by reference to exhibit 10.15 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on February 29, 2008
10.33	Global Partners Employment Contract, dated April 1, 2000, between INVESCO Pacific Holdings Limited and Andrew Lo, incorporated by reference to exhibit 10.17 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on February 29, 2008
10.34	Senior Managing Director Agreement, between Andrew Lo and Invesco Group Services, Inc., effective as of January 1, 2010, incorporated by reference to exhibit 10.32 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 24, 2012
10.35	Global Partner Agreement, dated June 7, 2006, between AMVESCAP PLC and Colin D. Meadows, incorporated by reference to exhibit 10.35 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on February 23, 2017
10.36	Employment Agreement, dated October 10, 2011, between G. Mark Armour and Invesco Asset Management Australia (Holdings) Limited, incorporated by reference to exhibit 10.34 to Invesco’s Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 24, 2012
10.37	Letter of Assignment between G. Mark Armour and Invesco Perpetual dated March 12, 2013, incorporated by reference to exhibit 10.1 to Invesco's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed with the Securities and Exchange Commission on April 30, 2013
10.38	Amendment to Letter of Assignment between G. Mark Armour and Invesco Perpetual, dated April 14, 2016, incorporated by reference to exhibit 10.1 to Invesco’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the Securities and Exchange Commission on April 28, 2016
10.39	Acceleration of G. Mark Armour Equity Awards, incorporated by reference to description in Invesco’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 15, 2017
31.1	Certification of Martin L. Flanagan pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Loren M. Starr pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Martin L. Flanagan pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Loren M. Starr pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Definition Linkbase Document
101.PRE	XBRL Taxonomy Extension Labels Linkbase Document
101.DEF	XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.



	INVESCO LTD.
~~October~~July 27, ~~2016~~2017	/s/ MARTIN L. FLANAGAN
	Martin L. Flanagan
	President and Chief Executive Officer

~~October~~July 27, ~~2016~~2017	/s/ LOREN M. STARR
	Loren M. Starr
	Senior Managing Director and Chief Financial Officer

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TABLE OF CONTENTS

PART I. Financial Information
Item 1. Financial Statements (unaudited)	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Income	4
Condensed Consolidated Statements of Comprehensive Income	5
Condensed Consolidated Statements of Cash Flows	6
Condensed Consolidated Statements of Changes in Equity	7
Notes to the Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3734
Item 3. Quantitative and Qualitative Disclosures About Market Risk	7773
Item 4. Controls and Procedures	7874

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	7975
Item 1A. Risk Factors	7975
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	7975
Item 6. Exhibits	8075
Signatures	8179



	As of December 31, 2015
$ in millions	Fair Value Measurements	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level2)	Significant Unobservable Inputs (Level 3)	Investments Measured at NAV as a practical expedient
Investments:
Fixed income securities	204.2	—	204.2	—	—
Equity securities	0.7	0.7	—	—	—
Investments in fixed income funds	35.0	—	—	—	35.0
Investments in other private equity funds	50.4	—	—	—	50.4
Total investments at fair value	290.3	0.7	204.2	—	85.4



	Transition date impact
$ in millions	Consolidated	Deconsolidated
Cash and cash equivalents of CIP	33.8	163.8
Accounts receivable and other assets of CIP	105.4	68.8
Investments of CIP	319.3	2,938.0
Total assets	458.5	3,170.6

Debt of CIP	—	2,259.2
Other liabilities of CIP	102.4	110.4
Total liabilities	102.4	2,369.6
Total equity	356.1	801.0
Total liabilities and equity	458.5	3,170.6

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