Welcome to the AB First Quarter 2015 Earnings Review. At this time, all participants are in a listen-only mode. After the remarks, there will be a question-and-answer session, and I will give you instructions on how to ask questions at that time. As a reminder, this conference is being recorded, and will be available for replay for one week. I would now like to turn the conference over to the host for this call, the Director of Investor Relations for AB, Ms. Andrea Prochniak. Please go ahead.

Thank you, Chris. Welcome to our first quarter 2015 earnings review. This conference call is being webcast and accompanied by a slide presentation that's posted in the Investor Relations section of our website, www.abglobal.com. Peter Kraus, our Chairman and CEO; John Weisenseel, our CFO; and Jim Gingrich, our COO, will present our financial results and take questions after our prepared remarks. Some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So I'd like to point out the Safe Harbor language on Slide 1 of the presentation. You can also find our Safe Harbor language in the MD&A of our first quarter 2015 Form 10-Q, which we filed this morning. Under Regulation FD, management may only address questions of a material nature from the investment community in a public forum. So please ask all such questions during this call. We're also live tweeting today's earnings call. You can follow us on Twitter using our handle @AB_insights. Now, I'll turn the call over to Peter.

Good morning everybody, and thanks for joining us today. Let's get right into it with a firm-wide overview on Slide 3. I'm pleased to be reporting on another quarter of progress and our long term strategy to deliver for clients. The quality of our investment performance to global breadth of our business, the innovation of our offerings, and the strength of our financials. Looking at this Slide, you can see that we have improved both sequentially and year-over-year in the first quarter in every area represented grow sales, net flows, period and average AUM. Our first quarter gross sales of $19.5 billion were up 31% from the same prior year period, net inflows of $6 billion improved by $10 billion plus. Quarter end AUM of $486 billion was up nearly $32 billion or 7% year-on-year and an average AUM of $481 billion was up 6%. Slide 4 demonstrates our quarterly flow trends across channels. We had organic growth of 5% on an annualized basis in the first quarter were flow positive across all three of our client channels with a line share coming from Institutional clients. Institutional net inflows of $5.4 billion improved by nearly $6 billion sequentially and with $9 billion year-on-year, this is due to broad-based sales strength in that business and I’ll get to that in a little bit. Retail and private wealth net flows returned to positive territory in the first quarter and in fact this is our third net flow positive quarter for private wealth out of box. I’m pleased to report that our investment performance trends have been strong as well. Let's begin with fixed income, and that's on Slide 5. Our strategies continue to outperform benchmarks across most if not all time periods. At quarter end, 87% of our qualifying fixed income assets…

Thanks you, Peter. As always our remarks today will focus primarily on our adjusted results. You can find our standard GAAP reporting, as well as the reconciliation of GAAP to adjusted results and this presentation appendix, our press release and our 10-Q. Let's start with the highlights on Slide 13. By every measure, our adjusted first quarter results improved meaningfully versus the same prior year period. That's clear from the right side of the slide. First quarter revenues of $634 million were up 7%. Operating income of $152 million was up 16%, our margin increase $190 basis points to 23.9% and we earned and we’ll distribute to our unitholders $0.45 per unit compared to last year's first quarter adjusted EPU of $0.39. As expected, our results declined from the fourth quarter of 2014, the result of typical seasonal patterns. I’ll get into these in more detail as I note the key items from adjusted income statement on Slide 14. I'll start with the talk with base fees which increased 8% year-on-year as a result of higher average AUM across all three of our distribution channels, institutional, retail and private wealth. As expected, our performance fees of $4 million were down for the prior quarter's $28 million, that’s because we recognize performance fees on services as revenues at the inclusion of their calculation periods which were most of our strategies is the fourth quarter. Bernstein Research service revenues were up 2% versus the first quarter of 2014 as a result of higher client activity in both the U.S. and Asia which offset declines in Europe and declined 2% sequentially due to lower activity in the U.S. and Asia. Investment gains and losses were essentially flat in the first quarter but included seed capital gains versus seed capital losses in both the…

[Operator Instructions] Your first question is from Bill Katz with Citi. Your line is open.

Okay, thanks so much and good morning. So bouncing around, its been a couple of calls here, so I apologize if you covered this already. You mentioned in your prepared remarks Peter that it was incremental margins look 50%. As you look about the business and continues to gain some momentum, how you're thinking about the dynamic between growth of the business to reinvest, so it's doing so well versus laying some of that job to the bottom-line?

Well, I think that we’ve been active as investors over the last five years in building lot of new services. And I think we may have said in the previous call at the end of the year last year that our investment activities would probably tailor off overtime. And so we don’t see the need to make the size investments that we have made in the past. And so I can't – to mention that to you with numbers but directionally I think - our feeling is that we've got lots going on right now, lots of good options, lots of good performance and an opportunity to create that operating leverage is really what we are looking for.

Okay. And then second question is, just you would - I think [indiscernible] perhaps talking about the opportunity in terms of the and so forth. What's your sense in terms of the Department of Labor, how that might accelerate your penetration into the retired market?

Ye, good question Bill. So the DOL as everybody knows is put out actually rather extensive proposed regulations. I think yesterday they indicated they were not going to increase the 75-day common period. We'll see what actually occurs but I think if the trend of what the DOL is proposing does in fact take place, there will be a significantly heightened light on fiduciary activities and whether that light is shown just on the rollover market or a broader part of the market, I think ultimately that's the trend. What we have been hard at work trying to build over the last five year's, is the set of services that actually show well in a - more heightened fiduciary environment. So examples, certainly the product that we’ve talked about most recently the Morningstar AB product where Morningstar is picking managers, AB is effecting the glide path, those managers are both internal and external or non-open architecture if you will, that's a pretty highly evolved fiduciary product for that marketplace. The lifetime income strategy is also a highly evolved product for the fiduciary marketplace because it could include all the things that previously said, plus it also provides effectively a synthetic fine benefit plan as it provides for longevity risk and effectively provides annuity for life. So I think that we have been thinking about the world evolving into one where fiduciary issues become more significant, and I think that we've tried to position ourselves as a frontier thinking organization in that basis.

Okay. Thanks so much.

Your next question is from Michael Kim with Sandler O'Neill. Your line is open.

Hi, guys good morning. Just first in terms of the institutional channel, I know number of your newer strategies had a lot of success in terms of generating growth more recently but was just wondering if you’re starting to see some more interest in some of your core growth and value equity strategies particularly given the investment performance track records across some of those services.

Michael, this is Jim. The answer is yes. In some of our biggest selling services this quarter, we are in fact are more traditional services. You mentioned institutional but for example in retail our large cap growth service was our largest seller in the quarter. So we are seeing increased engagement - for exactly reasons you mentioned that performance really across both our growth platform, as well as our value platform is quite strong.

Mike, I'm just going to take two services that are services that we've been focused on for many years, U.S. Large Cap Growth and Global Strategic Value. So if you just look at percentile ranking on investment. U.S. Large Cap Growth is 9 percentile for the quarter, 1 percentile up for the year, 10 percentile for the three year and 33 percentile for the five. And Global Strategic Value which certainly had its challenges is 7 percentile for the one quarter, 11 percentile for the one year, 12 percentile for the three year, and 68 percentile for the five reflecting some of the longer term challenges we had in '08 to ’09. Those are pretty strong track records for the services that we have been standingby for many, many years and I suspect that clients are going to notice that and come back to those services.

Got it, okay. And then second question, just may be one for John, just wondering how you’re thinking about expense growth at a high level and then any thoughts on sort of the near term trajectory in light of some of the seasonality exiting the first quarter.

Sure Michael, its John. And I think if you look at the non-comp expenses whether you look sequentially a year-over-year, they just fluctuated very in immaterial type of ways. So I think, we’ve done a great job that focusing on those expenses, keeping them under control and I expect that same pattern to continue into the future. And then on the comp side, obviously as we said we expect to have leverage not just on the non-comp side of our expense based plus on the comp side as well if revenues go up and continue to go up the markets continues to do as well. So I think in the future, I think it's although right now its premature to look for that type of leverage because this is still early in the year but as you go through the year, and we see revenues crystallize, if we see revenue growth, there could be some possible leverage there as well.

Okay. Thanks for taking my questions.

Your next question is from Robert Lee with KBW. Your line is open.

Great. Good morning, guys. Real quickly my two questions are on private client business. I guess the first I’m just curious with - and I guess it's also institutional channel, but for lot of the alternative strategies or you've raised commitments, I’m just curious how much of that maybe all of that has - is already in assets under management and kind of any sense of kind of like the pipeline of dry pattern more or less that could flow into AUM as drawn down?

Most of the reason may Robert, is still in commitments and so the private lending money and the second real estate fund are mostly committed funds and there is a minority of money that’s been drawn down - so much has been drawn down. The older funds are almost entirely funded. And so as we ramp up those services and we’ve been accelerating the amount of money that we’re raising, we’re basically building a pipeline in the future for fundings to increase AUM over time.

Okay, great. And then maybe sticking at the private client business, clearly past year gone back to on average some positive flows, but can you maybe just update us on kind of the plan the growth plans there in addition to having introduced some of the new services. Where you stand with increase in the number of financial advisors or and no office footprint that type of thing?

I think that we say several opportunities to grow the business. As you mentioned, our plans are to continue to expand the number of advisors, that can only happen in our experience at a moderate pace. So you're probably looking at something in the single-digits. We don't really have any plans to expand the number of offices at present. But we also think that there is a big opportunity to expand the productivity of our current advisors both in terms of production and AUM, which we think will be as important if not more important than the increase in the number of advisors.

Is it possible maybe get some sense of kind of what productivity maybe now and where you think is over time kind of a level that would be in attractive target for you guys?

I think it's tough to put targets on something like that but if you were to look at what our productivity is at present versus what it was for example pre-TSC, we are well below what that business has delivered in the past on both metrics of production and AUM. So, and if you look what the trends have been of late both of those have been moving in a very positive direction, which has contributed to some of the positive flow transit we've seen over the last 12 to 18 month.

Maybe a more conceptual way to think about this is that, businesses had significantly higher productivity in the past with a much smaller product range, it's not going to much lighter product range and therefore it should have a improved opportunity of reaching that historical productivities.

Okay, great. Thanks for taking my questions.

[Operator Instructions] Your next question is from Michael Carrier with Bank of America. Your line is open.

Thanks guys. First question just on the flow outlook you guys have been doing along the fixed income side, I think in equities just given the performance and then some of the new product strategies that you guys have launched, just wanted to get a sense on how much momentum you see on that side of the business when you look at a performance, yet certain strategies as an industry are still like out of favor. So when you kind of net that or you combine it, where do you see the momentum going forward? And I guess mostly in the institutional channel but if you see it more in some of the other areas you can pick up there?

That's a good question. Look the industry has struggled with net positive flows in active management. It ends from zero to negative to slightly positive, but it certainly hasn't been a consistent positive flow for a number of years now. I think also the industry is asking a question between more diversified managers and higher conviction managers. And how do you mix those two vis-à-vis a much bigger passive portfolio - set of passive portfolios. And that’s true for institutional versus individual i.e. retail. So we try to position our equity business philosophically as a spectrum of opportunities, but many of them that we think that are attractive are in what we'll call the higher conviction services where we have lower name counts or number of shares, more conviction i.e. higher risk in tracking area if you will in some of those services. And we've also created a platform that is much broader than just value and growth, they are style agnostic services, there’s more stable services, higher quality services, lot of different kinds of things than we’ve had in the past. Now we’ve been doing that for the better part of four years and now we've got three plus years of track record that shows that the investing activity has been very successful. So you can imagine that the velocity of conversation with consultants has continued to increase including consultants in some cases actually recommending us broadly, as opposed to a client going to consultant and saying what do you think about this service, and the consultant saying fine now the consultant is actually saying yes, but I like this service more broadly speaking, and so clients without coming to the consultants are actually getting self recommendations for some of our products that actually put those into broader products. Same thing happens in the retail world as we populate platforms and go from getting on a platform to recommended, to focus, that continues to accelerate. This all takes time, you all understand that but I think that we’re well down the path of having that broader acceptance and having consultants and retail distributors starting to appreciate and have interest in this higher conviction strategy that we've talked about.

Okay, that’s helpful. And John I think you guys mentioned this quarter the incremental operating leverage around 50% or above 30%. If we think about the outlook you look at the pipeline, you look at the flow trends and I guess do what we can in terms of just assuming a normal market backdrop and maybe not as much FX movements going forward. But is that like a good way to think about the kind of the revenue opportunity that you guys are seeing versus the investment spend that's needed. I mean you can deliver something in that range obviously not every quarter but over time?

Yes, I think over the long haul, that would be our aspiration. Again you may see some quarters where we're below that, but over the long haul that's what would aspire too. And again just going back, and I think if you look at the non-comp expenses I mentioned earlier, they have been fairly flat and so we've shown that they’ve been very much leveragable and then it's just on the non-comp side. And again over time we would hope as revenues rise or continue to rise that we could leverage that part of the P&L as well.

Okay. Thanks a lot.

There are no further questions at this time. We’ll turn the call back over to Ms. Prochniak.