Good morning. My name is Shannon and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners’ quarterly conference call. The slide presentation for this call is available in the Investor Relations section of the Virtus Web site, www.virtus.com. This call is also being recorded and will be available for replay on the Virtus Web site. At this time all participants are in a listen-only mode. After the speakers’ remarks there will be a question-and-answer period and instructions will follow at that time. I will now turn the conference to your host, Jeanne Hess.

Thank you and good morning everyone. On behalf of Virtus Investment Partners, I would like to welcome you to the discussion of our operating and financial results for the first quarter of 2015. Before we begin, I direct your attention to the important disclosures on Page 2 of the slide presentation that accompanies this webcast. Certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not statements of facts or guarantees of future performance and are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those discussed in the statements. These statements may be identified by such words as expect, anticipate, believe, outlook, may and similar terms. For a discussion of these risks and uncertainties, please see the Risk Factors and Management Discussion and Analysis sections of our periodic reports that are filed with the SEC as well as our other recent filings, which are available in the Investor Relations section of our Web site, virtus.com. We do not undertake any obligation to update forward-looking statements. In addition to results presented on a GAAP basis, Virtus uses certain non-GAAP measures to evaluate its financial results. Our non-GAAP financial measures are not substitutes for GAAP financial results and should be read in conjunction with GAAP results. Reconciliations of these non-GAAP financial measures to the applicable GAAP measures are included in our earnings press release which is available on our Web site. For this call we have a presentation, including an appendix that is accessible with the webcast through the Investor Relations section of virtus.com. Now I would like to turn the call over to our President and CEO, George Aylward. George?

Thank you, Jeanne and good morning everyone. I will start by providing any overview of the quarter reviewing some of the items that contributed to the results including sales and flows, where we saw the impact of continued elevated net outflows followed by a high level discussion on capital as well as changes we made to the former AlphaSector funds that were announced earlier today. Mike will provide more detail on the financial results and the balance sheet. Also we would remind you that in April we introduced a series of new non-GAAP financial metrics. Today's commentary and our financial results presentations going forward will be on the new basis. Now let's begin with assets under management. We ended the quarter with assets under management of $54.8 billion which represents decline from year-end and the first quarter of 2014 due to net outflows that more than offset market appreciation. Total assets remained diversified by asset class with domestic equity at 37%, fixed income at 30%, international equity at 24% and alternatives at 9%. Total sales were $3.7 billion in the quarter representing a sequential 8% increase, reflecting higher sales of international equity strategies and institutional products that offset the decline in domestic equity and alternatives. Total net outflows were $2.2 billion in the quarter due to $2.9 billion of net outflows in domestic equity and alternative strategies, primarily the AlphaSector strategies which was consistent with the fourth quarter. Excluding the AlphaSector funds, open-end mutual funds sales increased 33% sequentially and open-end net flows moved from negative $200 million in fourth quarter to a positive $500 million in the first quarter. Flows into international equity were strong as our emerging markets opportunity funds continue to be attractive to investors. The fund continues to have strong relative performance on both the short…

Thank you, George. Good morning, everyone. Let's start today on Slide 7, assets under management. We ended the quarter with assets of $54.8 billion, which represented a decrease of 3% from the prior year excluding money market assets and a 3% decline from the prior quarter. On a sequential basis, the $1.9 billion decrease in assets is primarily attributable to open-end funds which decreased 6% due to the net outflows which more than offset market appreciation. The $1.7 billion year-over-year decrease in assets under management is attributable to $2.9 billion of net outflows and a total of $1 billion from dividends distributed net of reinvestments and the impact of changes in leverage, partially offset by $2.2 billion of market appreciation. However, we had growth in closed-end funds, institutional and high net worth assets of 9%, 11% and 22% respectively over the prior year. Closed-end fund assets increased to $7.3 billion over the prior year quarter due to the $500 million Duff & Phelps closed-end fund launched in June 2014. Closed end fund assets were 13% of ending assets compared to 12% in the prior year and represented 17% of run rate investment management fees at March 31, up from 15% in the prior year. Turning to Slide 8, asset flows. In the first quarter we had total net outflows of $2.2 billion as a result of continued elevated redemptions in certain mutual funds. Gross sales in open-end mutual funds were $3 billion which represented an increase of 6% compared to the fourth quarter. The current quarter sales rate was 33.5%, up from 28.3% sequentially. The increase in sales was due to increased demand for international equity strategies, partially offset by lower sales in the AlphaSector funds. As mentioned earlier, the AlphaSector funds continued to experience elevated redemptions in the quarter,…

Thanks, Mike. Before taking your questions, I will discuss several important changes to the former AlphaSector funds, including the use of Dorsey, Wright's technical analysis to the [five] [ph] funds that have been renamed the Virtus Trend funds. Dorsey, Wright has more than 25 years of experience providing technical analysis and quantitative research and we are very pleased to partner with the team at Dorsey. They are a preeminent company in the field of price momentum analysis and are well known by many financial advisors for their data analytics and model portfolios. The funds will maintain their rules based approach to investing and will continue to have the ability to move to cash equivalents for downside protection. The strategies of the funds will employ Dorsey, Wright's relative strength in price momentum rankings to identify eligible investments which with certain products will be expanded to include sub-industry groups rather than broad market indices. By moving to investing in a more granular level, the intention is to allow the portfolios to have the opportunity for more exposure to stronger sub-sectors and less exposure to weaker sub-sectors. The strategies of the funds will have several additional rule changes including the use of a risk indicator to determine whether the market is in a lower or higher risk based on those rules. Depending upon the risk environment, portfolio changes can be made as slowly as monthly or as quickly as daily. The funds will also utilize absolute price momentum to determine when to move to cash for defensive purposes. In addition to utilizing the strategies for the funds, we will also be offering a related SMA product for those financial advisors who find it advantageous to use an SMA instead of a fund. We have announced these changes to our distribution partners and we are working closely with them and Dorsey, Wright to inform FAs and their clients about these changes. That concludes our prepared remarks. Now let's take some questions. Shannon, can you open up the lines please?

[Operator Instructions] Our first question is from Michael Kim with Sandler O'Neill. You may begin.

First, can you maybe just talk a bit about, sort of the decision making process in terms of the transition to Dorsey. And then any details or potential timeline for the transition in terms of reaching out to shareholders communicating with them and trying to maybe retain some of those assets.

I will do the second part first. So in terms of timing, as we indicated in the announcements this morning it's effective immediately. A sticker has been filed, which is a mechanism to make available to the fund shareholders the firms that we -- our funds are available in. We are obviously in on notifying them of the changes and making sure they are aware of all that. And there will be information that will be made available to them on Dorsey, Wright, the changes in the fund and all of that. So it is effective. The funds have been renamed and the changes are being implemented today. So that in terms of timing is what it is and our sales force will work with our distribution partners to the extent of whatever support they need to help communicate with individual FAs etcetera, that will all be ongoing. In terms of the first question, really what I would say is we have concluded that. It's in the best interest of the fund shareholders at this time to make the change that we did to the funds and including the use of the Dorsey, Wright relative strength capabilities as well as some of the additional rule changes that we made based upon some of our observations over the last few years.

Okay. That’s helpful. And then you mentioned in the release, lower management fees on a few the impacted funds. So any color there in terms of the magnitude. And then more broadly, any sense of the impact to your economics, whether it's related to a potential shift in the sub-advisory split or any maybe upfront cost related to the transition.

Yes. My view is -- I wouldn’t over analyze it. What I would basically say is one of the things we did change and we have mentioned it. What we did on three of the funds, make a reduction in the management fee and again it's something that we just thought was an appropriate thing to do and that we wanted to do for the shareholders. And I think as it relates to these funds, remember this quarter you are going to have a lot of turmoil in terms of the transition from one to another and I think you will get more clarity once you see things emerging in the second quarter and Mike will provide more transparency as you sort of start seeing how it all settles in. I hope that’s helpful.

Okay. And then final question. Just given your affiliate model, just wondering if it might make sense to potentially partner with a bigger more global franchise that could maybe leverage your investment capabilities more fully from a distribution standpoint.

Again, we will always consider things that are in the long-term interest of what we want to do. I think we are very comfortable with our retail distribution and our affiliate model with sub-advisors. So there is nothing at this point really for us to be discussing related to anything along those lines.

Thank you. Our next question is from Steven Schwartz with Raymond James and Associates. You may begin.

George, you referenced turmoil, I just want to make sure that something is clear at least as I understand it. These are your assets. These are not F-Squared's assets, right?

Yes.

Okay. So it's not a question of retaining them. I guess then the turmoil question is what I really wanted to get to. I would guess there are, whether it's Morningstar or Lipper or something like [indiscernible], there are changes that are made when a management team is changed like this.

Well, in hindsight I don’t know why I used the word turmoil. What I was really referring to, is because we are in the middle of a quarter and because there will be a period where we have put in the 30-day notice to terminate but we have already implemented the changes. Again I apologize for the word turmoil, it will just be a little transitional and unclean in terms of the way you will see emerge in the second quarter. So again that’s because it's in the middle of a quarter effectively there will be an overlap with the ending of the old contracts and the implementation of everything new. So I am sorry, that is really what I meant. But to the other part, no, there are assets. They are Virtus funds. You know funds have changes in sub-advisors and managers somewhat frequently in the industry. So there is nothing unusual from that perspective and I think we are doing everything we can to make sure we put out a lot of information and clarity. Financial advisors will be well equipped with what we hope they need to understand the changes and the introduction of the Dorsey, Wright relative strength.

Okay. You have given outflows so it's kind of silly to ask about potential outflows but I just wanted to make sure I was clear on all this. And then one of the things, Mike -- I was taking notes, maybe you were going too fast, maybe I just missed it. But when you discussed the decline in the mutual fund fee rate, it wasn’t clear to me what the reason for that was. If you went there or if I just missed it.

Yes. We talked about the sequential change. Overall the fee rate was consistent from the prior quarter at 51.5. But the decline in long-term open end fund fee rate was primarily attributable to some of our domestic equity and alternative funds that were in -- had elevated redemptions. Those are some of the higher fee rate products that had an impact on the overall long-term open end fund fee rate for the quarter.

Our next question is from Michael Carrier with Bank of America. You may begin.

Just on the growth outlook. Ex the AlphaSector sector strategies, you have seen some good traction. Just one comment that you made on the international, I think the emerging markets, you mentioned the capacity constraints there can be in that products. So just wanted to get a sense on, where things stand there. And then when you look at the momentum that you are seeing in the international equity and fixed income versus some of the newer things that you are working on on the ETFIS or the liquid alternatives. Just wanted to get a sense on where you are seeing the demand in the channels on either the current products or probably more importantly over the next couple of years on some of the newer strategies that you are working on.

Great question. And one of the things we sort of indicated in the earnings release is, we did have the elevated outflows but in many ways they sort of overshadowed some of the areas of continued strength as well as growth. And really at a gross level we actually had an increased sequential, over sequential in terms of sales. Obviously not net flows because of the outflows. And I think we have highlighted areas including obviously the non-AlphaSector funds, institutional, high net worth, etcetera. So there are a lot of other areas that again we continue to have strength and they are seeing growth. In terms of the funds, we did highlight emerging markets which has been a very strong performing fund for us and continues to have great attraction to individuals. Acknowledging that it's capacity constrained, there is no comments to made at this point in terms of that capacity but I always do like to remind people that there is capacity constraint there. And we have seen other areas and funds that clearly we have mentioned in the past that have had some more acceptance in the market. The Herzfeld Fund, while still small has certainly got some attention and we are seeing activity in several other areas and we are very excited about some of our newer and emerging stuff. One of the fixed income funds from Newfleet, a strategic income fund, a very new fund, but again it's already put up very compelling performance and I hope it's something that financial advisors will consider given the incredible record that Newfleet has had over many years. So we have seen a lot there. Institutional, which Mike sort of referred to, you may recall over the years we have made comments about having made some investments in the…

Okay. That’s helpful. And I think -- this has been asked in a few different ways and I just want to make sure there is, from your guys perspective it's just tough to predict or get a sense of the flows. But when you do make a change on funds, within your sub-advisor, do you have any, you know your experience when you look across the industry, on what you generally expect in terms of assets that you can retain versus assets that move or is each situation is different because every fund is going to be different, every investor and channel is going to be a new odds.

Yes. And absolutely we will not make any predictions or any guidance around that. In terms of what is it that people generally see, I think you sort of hit it near the end, which is every situation is very different, right. So our view is that the equity funds and the strategies we are now employing have the same general approach objective to how they participate or protect in certain types of market environments. So these are philosophically the same value proposition. We do believe the introduction of Dorsey, Wright's relative strength and some of the rule changes which really have evolved over learnings over the six or seven years that we have had these funds, we think they would be very compelling. We will make as much information as available to those financial advisors who previously liked and have stayed in the old strategy as well as maybe some of the those who over the last few months have decided to redeem out of those funds. So absolutely we will not make any predictions. We are very excited about what the offering is. We are very comfortable that we have a lot of information and transparency to financial advisors and how these will work and how they will be different than what we previously did and we look forward to the opportunity to discussing that with them

Okay. And then last one. Mike, just on the expenses, you mentioned just I think both had ratios on the comp and the non-comp, just coming up a bit. Just getting the lower revenues and the seasonal items on comp. Just going forward, anything besides the seasonality in the comp that we should expect in terms of the outlook. And then I know you guys mentioned the $0.39 or so on the regulatory reserve. Related to F-Squared and those types of matters, ex that I know because you can't talk about it, but are there any other things that are on the radar that we should be thinking about or once you deal with that aspect of it, then is it kind of moving on from there.

Yes, on the ratios and the employment expense and other operating, we have talked certainly about the variable nature of our compensation plans. So you saw the absolute employment expense go down slightly excluding for the payroll taxes on a sequential basis. So you see some of that. And it's important to note on employment expenses, variability will be impacted depending on -- each of the variability is driven by a different factor. So as sales change you could have variability based on sales levels. And then in terms of profit base, it's important to recall that each of our affiliates has discreet P&Ls and discreet profitability. So they are certainly not impacted by certain items of revenues. So I think as you model, it's just important to recall some of the elements of variability in our incentive compensation plans. And other operating, again I think you have seen a pretty tight range on an absolute basis and I think that’s continues to be the best way to think about the other operating expense line item. With respect to the contingency, certainly we can't comment on regulatory matters so there is not much I can add other than what's been disclosed in the 10-Q.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Aylward for closing remarks.

I just want to thank everyone for joining us today and we certainly encourage you to call us if you have any other further questions. Thank you.