Macquarie Investment Management / Foresters Investment Management Overview

Macquarie Investment Management announced it has entered into a definitive agreement to purchase the assets related to the mutual fund management business of Foresters Investment Management Company, Inc., the investment advisor of the First Investors funds, with approximately $US12.3 billion in assets under management. The acquired assets will become part of the Delaware Funds® by Macquarie family of funds. In addition, Macquarie Investment Management has been chosen by Foresters to manage a portion of Foresters’ general account supporting its life insurance business. The transaction is expected to close in the fourth quarter of calendar year 2019.

When is the deal expected to close?

Early October 2019.

Will the new funds be branded Delaware Funds by Macquarie? If so, when?

Yes. Upon close of the transaction, a significant number of new funds will join the Delaware Funds by Macquarie platform.

Will accounts coded with NAV privilege transfer to Delaware Funds with that NAV privilege?

Yes.

Does Delaware Funds code an account with an NAV privilege and, once there, it is always there?

Yes.

If so, will former representatives and employees retain the NAV privilege on their accounts, for subsequent purchases to those accounts?

Yes.

What will the loads on Class A shares look like?

It is our intent to utilize the current Delaware Funds Class A share load policy for the new funds. The policy is contained in the registration statements recently filed with the SEC. However, it is subject to approvals and it is possible that the contents of the registration statements could change.

How often do we pay out our 12b-1 fees?

Monthly.

What will happen to the existing Class B shares?

Foresters filed a sticker and converted all outstanding Class B shares to Class A shares on June 14.

Will end-clients receive a quarterly performance report for Q2?

For second-quarter reporting, Foresters (through Pershing) will issue a statement through June 21, and Cetera will issue a statement for June 22–30. There will not be a Quarterly Performance Report issued for this period.

Will any of the current sub-advisors be retained by Macquarie to sub-advise Delaware Funds?

A number of new Delaware Funds corresponding to the First Investors funds are currently in the registration process. Information on the sub-advisors to those new Delaware Funds will be available in early July when the registration process is completed.

Does Delaware Funds maintain accounts that are either associated to Delaware Distributors as a limited purpose broker/dealer and/or have no broker/dealer listed? For those accounts, can a client continue to purchase shares or are they hold and redeem only?

Delaware Distributors is not listed as the dealer on accounts. For accounts that do not have a dealer, the dealer name is “No Broker of Record.” Shareholders can continue to make purchases into accounts with No Broker of Record.

What will the Foresters 403(b) / 457 businesses look like moving forward?

As of now, it is business as usual – the only anticipated change will be that as of late June, Cetera’s company name will appear on advisors’ business cards. 403(b) and 457 plan contributions, redemptions, loans, and so on will continue to be submitted to the First Investors funds and be serviced by Foresters Investors Services in the same manner as they were previously. Foresters will continue to provide additional information on the 403(b) / 457 business throughout the summer and leading up to the transition to Delaware Funds® by Macquarie scheduled for October.

For clients who have accounts, are they able to call in via phone and request distributions from accounts, or is a distribution form always required?

For non-retirement accounts, please call the Service Desk at 1-800-362-7500* and ask for phone redemption privileges for the specific account. Once this happens, requests for distributions can occur via phone. For retirement accounts, requests for phone redemption privileges for the account must be provided in writing. If you call the Service Desk, instructions on where to fax the written request for phone redemption privileges will be provided. Once the request is received in good order, phone redemption privileges will be granted within 1-2 business days. This phone number does not apply to existing First Investors funds and will not apply to the new Delaware Funds until the funds convert to the BNY Mellon Transfer Agent. The phone number that will be used at that time will be 800-423-4026.

What is the minimum investment monthly for Delaware Funds?

The Delaware Funds SAI and/or prospectus states that subsequent investments must be for $25 or more for electronic fund transfers, direct deposit purchase plans, automatic investment plans, IRAs, Uniform Gifts/Transfers to Minors Act accounts, and Coverdell Education Savings Accounts. Otherwise, for Class A and Class C shares, subsequent investments can be made for as little as $100 (for example, by check).

If a client uses Foresters’ current Cash Management Fund, which is then instructed to forward premiums to FLIAC for payment of life policies, or for payment toward outstanding loans, does the same standard still apply once merged with Delaware Funds?

No, we are not able to forward payments for life insurance policies from our mutual fund accounts.

If a client has $100,000 in a First Investors fund, and an additional $150,000 to put into a Delaware Fund, would the client then get the $250,000 breakpoint?

As of right now, First Investors funds are not eligible for rights of accumulation (ROA) or letters of intent (LOI) with Delaware Funds. However, once the First Investors funds become part of the Delaware Funds® by Macquarie family of funds, then they would be eligible for ROA.

What is the process for mutual fund conversions / allocations?

All First Investors funds (including the Life Series Funds) will become new Delaware Funds upon the closing of the transaction and will be added to the Delaware Funds by Macquarie platform. The funds will be managed by Macquarie portfolio managers or sub-advisors.

Will cost basis continue to be provided?

Following the closing of the transaction, cost basis information will continue to be made available in a similar manner to how it was provided by First Investors funds and Delaware Funds by Macquarie, respectively, prior to the transaction.

When the First Investors funds merge into Delaware Funds, will there be a taxable event?

No, the merger of the First Investors funds into the Delaware Funds will not be a taxable event to shareholders. While the mergers themselves are nontaxable, there will likely be significant portfolio turnover within the portfolios, which could trigger realization of capital gains for fund shareholders.

If a money-line client currently invests on a biweekly basis to line up with their payroll frequencies at work, will this same process transition once the merger occurs?

Currently, the Delaware Funds by Macquarie form lists the 1st, 5th, 10th, 15th, 20th, and 25th of the month as dates available for a systematic purchase. A shareholder can select multiple days. The funds do accept days of the month other than those stated, and we can accommodate up to four systematic transactions a month per fund.

Does Delaware Funds have a money market fund?  If not, what should a client do if they use one?

No, we do not have a money market fund, but we anticipate acquiring the First Investors money market fund – the Government Cash Management Fund – upon closing.

What will happen with scheduled RMDs and systematic investments?

These will be carried over as part of the conversion. It is our intention to maintain previously established required minimum distributions (RMDs) and systematic investments. However, there may be certain systematic investment processes unique to First Investors that will need to be handled in an alternative manner going forward. Account owners will be advised accordingly if an alternative investment method is required for their account.

Does Delaware Funds have “e-signature” capabilities for transactional business?

We do not offer e-signature capabilities.

Does Delaware Funds have DST Vision? If not, will it be available at some point?

No. Existing Delaware Funds are not on DST Vision and we do not anticipate making Delaware Funds available on DST Vision. Our transfer agent is BNY Mellon. BNY Mellon offers a web-based service called Advisor Central, where our fund and account information is available to financial advisors. First Investors funds currently make information available to advisors using DST Vision. Once the First Investors funds merge into the new Delaware Funds, at the closing these new Delaware Funds will continue to be available on the DST Vision platform until such time that the funds convert to the BNY Mellon platform.

Are there any substantial issues that we know of that BNY cannot do that DST can?

First Investors funds are on an in-house proprietary transfer agent system. First Investors funds currently provide limited data to DST Vision. Existing Delaware Funds are on the BNY transfer agent system and BNY offers a similar online service called Advisor Central. From a transfer agent servicing point of view for direct accounts, there are no substantial differences between DST and BNY.

What is happening to Foresters’ current Premier Program?

Is there a track record for the new solution?

Our models will be starting a new track record; however, our Global Multi Asset Allocation team has a 20-plus year track record of building model portfolios for clients and has approximately €3.2 billion in AUM.

Can clients continue to cross-invest from bond funds (municipal and taxable) into equity funds, taking the income from the monthly bond funds and reinvesting into an equity fund as a strategy?

Yes.