SEC Info - Forward Funds - ‘N-CSR’ for 12/31/14

Forward Credit Analysis Long/Short Fund

Forward Dynamic Income Fund

Forward EM Corporate Debt Fund

Forward Emerging Markets Fund

Forward Equity Long/Short Fund

Forward Global Dividend Fund

Forward International Dividend Fund

Forward International Small Companies Fund

Forward Select EM Dividend Fund

Forward Small Cap Equity Fund

Forward Tactical Enhanced Fund

Forward Tactical Growth Fund

Forward Commodity Long/Short Strategy Fund


FORWARD FUNDS:		Table of Contents



Shareholder Update			2

Fund Commentaries and Performance			7

Investment Glossary			46

Disclosure of Fund Expenses			53

Portfolio of Investments			58

Statement of Assets and Liabilities			96

Statement of Operations			106

Statement of Changes in Net Assets			111

Statement of Cash Flows			134

Financial Highlights			135

Notes to Financial Statements			184

Report of Independent Registered Public Accounting Firm			217

Tax Information			218

Approval of the Investment Management Agreement and Investment Sub-Advisory Agreements			219

Additional Company Information			224

Forward Funds Privacy Policy			228

Forward Funds are distributed by Forward Securities, LLC,

101 California Street, 16th Floor, San Francisco, California 94111

The report has been prepared for the general information of Forward Funds’ shareholders. It is not authorized for distribution to prospective investors unless accompanied or proceeded by a current Forward Funds’ Prospectus, which contains more complete information about Forward Funds’ investment policies, management fees and expenses. Investors are reminded to read the Prospectus before investing or sending money.


		1


Shareholder Update		December 31, 2014

A MESSAGE FROM:

J. Alan Reid, Jr.

Chief Executive Officer

LOGO @JAlanReid

LOGO

Dear Shareholder:

At the close of 2014, another year punctuated by the unexpected, investors were left wondering: What will happen next? And how well is my portfolio positioned in light of the possibilities?

Question marks loom especially large for those seeking investment income. Many forecasters warn that interest rates are bound to rise in 2015. At the same time, actions by the European Central Bank, China and Japan over the last few months support the view that this low-rate environment may persist for some time to come.

The dilemma isn’t just that it’s impossible to predict what the U.S. Federal Reserve will do or predict how the actions of other nations will impact the global rate environment. It’s that almost any scenario puts investors at greater risk than they may realize. As discussed in our white paper, The 5% Problem: Double Jeopardy for Traditional Bond Investors, even modest upward rate movements could spell significant losses for traditional bondholders. It’s also true that other income-producing asset classes pose their own interest-rate, liquidity and credit risks. Meanwhile, this continued low-rate environment is compounding investors’ income shortfalls, tempting them to reach for potential sources of yield despite the risks that may entail.

Smarter strategies

As we see it, these conditions call for new and different kinds of income solutions—ideas rooted in a different way of thinking. Asset class risks, returns and correlations are never static. Rather than struggle against the fluidity and uncertainty of global markets, we believe it makes far more sense to embrace these realities and design our approaches around them.

We have acted on this conviction in two ways. First, we have drawn on the capabilities of our various portfolio teams to create intelligent income strategies with built-in adaptability and resilience. Unique to Forward are two prime examples:

^Ÿ

Forward Income Builder Fund (AIAAX) invests dynamically across a diverse range of actively managed traditional, alternative and global income-producing strategies. Aiming to achieve high current income while keeping volatility at a targeted level, the investment team systematically adjusts the fund’s allocation in response to changing global market conditions.

^Ÿ

Forward Dynamic Income Fund (FDYTX) seeks a predictable income stream by blending a dividend capture strategy with a proprietary tactical allocation strategy that hedges the portfolio’s dividend stock exposure.

Exploding the style box

Secondly, we are proud of our range of income-producing strategies. With a diverse array of portfolio building blocks, investors can choose those that best fit their existing portfolios, risk profiles and overall investment goals. Our offerings extend beyond traditional fixed-income strategies to include a set of global and international dividend stock funds, a corporate debt fund focused on emerging markets and a long/short credit strategy centered on municipal bonds.

Real estate is another one of our strengths, and one highly relevant to income-seeking investors. All of our real estate funds target high income or total return with a substantial income component. Moreover, all invest in commercial properties via real estate investment trusts (REITs), an asset class with a track record of delivering stable yields. Our real estate funds include such out-of-the-box products as Forward Select Income Fund (KIFAX), which focuses on preferred and senior REIT securities, and Forward Real Estate Long/Short Fund (KSRAX), which is one of the very few true long/short real estate mutual funds available. With the dollar so strong, I should also mention Forward International Real Estate Fund (KIRYX), which takes advantage of the currently strong position of the U.S. dollar to build positions in real assets around the globe.

Results-focused

Our goal is to bring value to investors and advisors not only with our strategies, but also with our thinking. The philosophy we apply to investors’ needs for growth, diversification and risk management is the same one we use to address their income goals. That is, we strive to be champions of more intelligent, adaptable investment strategies and more resilient portfolios—a stance that often involves challenging the status quo.


December 31, 2014		2

In short, we believe in a pragmatic, results-focused approach that helps real people fulfill their real-life goals and dreams. We’re convinced this is the way of the future, and we will continue to push ourselves and the industry in that direction.

I want to thank you wholeheartedly for your confidence and trust in us. We are privileged to be your investment partners and will strive to keep earning that trust every day.

Sincerely,

LOGO

J. Alan Reid, Jr.

Chief Executive Officer

Forward

RISKS

There are risks involved with investing, including loss of principal. Past performance does not guarantee future results, share prices will fluctuate and you may have a gain or loss when you redeem shares.

Each allocation fund is a fund of funds, which invest in a mix of underlying Forward Funds. Shareholders of an allocation fund indirectly bear the expenses of the underlying funds. An allocation fund’s allocations may be changed at any time. Asset allocation does not assure profit or protect against risk. (Forward Income Builder Fund)

Borrowing for investment purposes creates leverage, which can increase the risk and volatility of a fund. (Forward Dynamic Income Fund, Forward Income Builder Fund, Forward International Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select Income Fund)

Concentration in a particular industry will involve a greater degree of risk than a more diversified portfolio. (Forward International Real Estate Fund, Forward Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select Income Fund)

Debt securities are subject to interest rate risk. If interest rates increase, the value of debt securities generally declines. Debt securities with longer durations tend to be more sensitive to changes in interest rates and more volatile than securities with shorter durations. (Forward Dynamic Income Fund, Forward Income Builder Fund, Forward International Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select Income Fund)

Derivative instruments involve risks different from those associated with investing directly in securities and may cause, among other things, increased volatility and transaction costs or a fund to lose more than the amount invested. (Forward Dynamic Income Fund, Forward Income Builder Fund, Forward International Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select Income Fund)

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs. (Forward Dynamic Income Fund, Forward Income Builder Fund)

Foreign securities, especially emerging or frontier markets, will involve additional risks including exchange rate fluctuations, social and political instability, less liquidity, greater volatility and less regulation. (Forward Dynamic Income Fund, Forward Income Builder Fund, Forward International Real Estate Fund, Forward Real Estate Long/Short Fund)

Investing in lower-rated (“high yield”) debt securities involves special risks in addition to those associated with investments in higher-rated debt securities, including a high degree of credit risk. (Forward Income Builder Fund)

Investing in a non-diversified fund involves the risk of greater price fluctuation than a more diversified portfolio. (Forward Dynamic Income Fund, Forward International Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select Income Fund)

Investing in the real estate industry or in real estate-related securities involves the risks associated with direct ownership of real estate which include, among other things, changes in economic conditions (e.g., interest rates), the macro real estate development market, government intervention (e.g., property taxes) or environmental disasters. These risks may also affect the value of equities that service the real estate sector. (Forward Dynamic Income Fund, Forward Income Builder Fund, Forward International Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select Income Fund)


		3		December 31, 2014

Short selling involves additional investment risks and transaction costs, and creates leverage, which can increase the risk and volatility of a fund. (Forward Dynamic Income Fund, Forward Income Builder Fund, Forward Real Estate Long/Short Fund)

Investing in smaller companies generally will present greater investment risks, including greater price volatility, greater sensitivity to changing economic conditions and less liquidity than investing in larger, more mature companies. (Forward Dynamic Income Fund)

Alternative strategies typically are subject to increased risk and loss of principal. Consequently, investments such as mutual funds which focus on alternative strategies are not suitable for all investors. (Forward Real Estate Long/Short Fund)

There is no guarantee the companies in our portfolio will continue to pay dividends. (Forward Dynamic Income Fund)

Diversification does not assure profit or protect against risk.

Forward Dynamic Income Fund seeks total return, with dividend and interest income being an important component of that return, while exhibiting less downside volatility than the S&P 500 Index.

Forward Income Builder Fund seeks high current income and some stability of principal.

Forward International Real Estate Fund seeks total return from both capital appreciation and current income.

Forward Real Estate Long/Short Fund seeks total return through a combination of high current income relative to equity investment alternatives, plus long-term growth of capital.

Forward Select Income Fund seeks high current income and potential for modest long-term growth of capital.

Correlation is a statistical measure of how two securities, funds or asset classes move in relation to each other.

Credit risk is the risk of loss of principal or loss of a financial reward stemming from a borrower’s failure to repay a loan or otherwise meet a contractual obligation.

Dividend capture is an income-producing strategy in which a particular security about to pay a dividend is purchased, held until its dividend is captured and then sold in order to purchase another security about to pay a dividend.

Interest rate risk is the risk that an investment’s value will change due to a change in interest rates.

Liquidity risk refers to the risk stemming from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss.

Volatility is a statistical measure of the dispersion of returns for a given security or market index.

J. Alan Reid, Jr. is a registered representative of Forward Securities, LLC.


December 31, 2014		4


Shareholder Update		December 31, 2014

A MESSAGE FROM:

Jim O’Donnell, CFA

Chief Investment Officer

LOGO @JimODonnll

LOGO

Dear Shareholder:

According to a less-than-scientific search of the internet, the saying, “Who’d have thunk it?” was first popularized by comedian/ventriloquist Edgar Bergen in the 1930s. His loveable but slow-witted dummy character Mortimer Snerd used to utter this colloquial phrase to express astonishment at the unexpected. In looking at the performance of a number of asset classes in 2014, one may be compelled to channel one’s inner Mortimer and repeat the phrase, “Who’d have thunk it?”

As we entered 2014, it seemed as if everyone expected higher interest rates and weakness in interest-sensitive asset classes. As 2014 drew to a close, market participants could only be astonished at the unforeseen decline in interest rates and the impressive rally in long Treasurys and real estate investment trusts. At the beginning of 2014, virtually no one could have anticipated the explosive rally in Chinese equities, nor could one have predicted the harrowing decline in crude oil prices and the freefall in Russian equities.

As we leave 2014 in the rearview mirror and look forward to 2015, the one clear takeaway is to expect the unexpected. Many strategists and pundits are embracing a dour and cautionary view as the capital markets march headlong into the prospect of a U.S. Federal Reserve interest rate hike sometime in 2015. Some of this advice is prudent, given the spring-loaded nature of the geopolitical risks we face. We are of the belief that the many crosscurrents we face in the capital markets will introduce a level of volatility that will be greater than we have experienced in the recent past. We also suspect that many positive economic and geopolitical developments may unfold in the second half of 2015.

That said, one of the greatest risks in the capital markets today may be related to the slope of the U.S. Treasury yield curve. A simple way of looking at this slope is to take the yield on a 10-year Treasury and subtract the yield of a 2-year Treasury. Historically, a large difference between the 10-year and the 2-year (or a steep slope) was the harbinger of improving economic strength over a future 12 to 18 month time horizon. Conversely, a narrower amount (or a flatter yield curve) has been a cautionary early warning sign of future economic slowing. Unfortunately, this metric is beginning to raise a cautionary flag by narrowing at the end of 2014.

One of the side effects of this curve flattening may be increased market sensitivity to credit risk (the notion that a dollar loaned may be less likely to be repaid if the economy is weakening). This sensitivity can manifest itself in both the debt and equity markets. Frequently, the market’s appetite for quality increases appreciably. Quality can be defined as the sustainability and predictability of a firm’s cash flows as well as the complexion of a firm’s capital structure, including the very prudent and limited use of debt. Coming out of the post-Lehman Brothers financial crisis, investors were rewarded more for accepting credit risk and having an aversion to quality. Going forward, that may all change with quality taking on increased importance in portfolio holdings.

As part of Forward’s culture, we have sought to challenge the status quo whether it is through our product offerings or through the way we look at the capital markets. Indeed, the practice of following the herd can be fraught with peril when everyone is leaning the same way with respect to market exposures and investment postures. At certain parts of a market cycle, one is best served to avoid being anchored to the consensus view in order to allow one to see opportunities that others cannot. As an investor, one of the most liberating questions one can ask oneself is, “What if everything I believe is wrong?” This frame of mind is vital to a robust investment culture and process in order to avoid the pitfalls of what behavioral finance academics call cognitive dissonance.

As we walk through 2015, it will be important to be nimble and not get mired in a consensus view. We suspect that having a healthy respect for the nonconsensus view will serve one well in 2015, as will expecting the unexpected. Try to keep an even-keel and avoid getting too dour or too ebullient.

If we are correct in our assessment that volatility will increase, it will be important to make sure that you are equipped with the right hedges and tools to withstand the challenges investors will face. Hedges can act as shock absorbers, making a bumpy ride more tolerable. In addition, we have developed tools that are forged in the notion that correlations and market volatility do not remain constant. This combination of hedges and tools should help investors navigate the challenges of 2015.


		5		December 31, 2014

As always, we remain committed to helping our shareholders attain true portfolio diversification and achieve their long-term financial goals. We also believe that transparent practices give our investors access to the information they need to make important investment decisions. I invite you to review the information in this report and the performance of the Forward Funds in 2014, and I thank you for the continued confidence that you place in our funds.

Sincerely,

LOGO

Jim O’Donnell, CFA

Chief Investment Officer

Forward

RISKS

Diversification does not assure profit or protect against risk.

2-year U.S. Treasury is a debt obligation issued by the U.S. Treasury that has a term of two years.

10-year U.S. Treasury is a debt obligation issued by the U.S. Treasury that has a term of more than one year, but not more than 10 years.

Cash flow is a revenue or expense stream that changes a cash account over a given period.

Correlation is a statistical measure of how two securities, funds or asset classes move in relation to each other.

Credit risk is the risk of loss of principal or loss of a financial reward stemming from a borrower’s failure to repay a loan or otherwise meet a contractual obligation.

Volatility is a statistical measure of the dispersion of returns for a given security or market index.

Yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates.

One cannot invest directly in an index.

Jim O’Donnell has earned the right to use the Chartered Financial Analyst designation. CFA Institute marks are trademarks owned by the CFA Institute.

Forward Funds are distributed by Forward Securities, LLC.

Not FDIC Insured | No Bank Guarantee | May Lose Value

The discussions concerning the funds included in this shareholder report may contain certain forward-looking statements about the factors that may affect performance of the funds in the future, including the portfolio managers’ outlook regarding economic, market, political and other factors relevant to investment performance. These statements are based on the portfolio managers’ expectations concerning certain future events and their expected impact on the funds and are current only through the date on the cover of this report. Forward-looking statements are inherently uncertain and are not intended to predict the future performance of the funds. Actual events may cause adjustments in the portfolio managers’ strategies from those currently expected to be employed, and the outlook of the portfolio managers is subject to change.


December 31, 2014		6

Fund Commentary and Performance (Unaudited)

Forward Credit Analysis Long/Short Fund

For the year ended December 31, 2014, Forward Credit Analysis Long/Short Fund’s Institutional Class shares returned 9.47%, outperforming its benchmarks, the Barclays U.S. Municipal Bond Index and Barclays U.S. Corporate High-Yield Bond Index, which returned 9.05% and 2.45%, respectively.

Global financial markets were relatively volatile in 2014. While the global economy grew overall, the expansion was defined by diverging growth and monetary policy paths.

An uncharacteristically cold winter took a toll on economic data in the U.S. early in the year, with most major indicators showing signs of weakness. Bond markets rallied due to the somewhat uncertain pace of economic expansion and mostly held on to gains as the crisis in Ukraine led to a general flight to quality.

U.S. gross domestic product growth strengthened in the second quarter, more than reversing the weather-induced weakness from the first quarter. Bond markets rallied as central banks remained accommodative—emerging market bonds led gains and developed market yields fell to 12-month lows.

Contrary to the Federal Reserve’s (Fed) status-quo policies, the European Central Bank announced new easing measures in the second quarter, including a historic negative rate on deposits, a policy rate cut and targeted long-term refinancing operations to spur business lending. Japan implemented its consumption tax hike in April 2014, causing household spending and retail sales to fall as expected. China, also facing a more challenging growth outlook, launched a mini-stimulus program and continued to finely tune its monetary policies amid lingering concerns regarding shadow banking-related defaults.

In October, the 10-year U.S. Treasury yield plunged to a new 2014 low as global equity markets sank. Still, nearly every asset class retraced its steps in the following weeks. What caused the sudden turn remains uncertain, but it was likely a confluence of events that sustained the rebound: a swath of U.S. data was stronger than expected, third quarter earnings generally outperformed and global policies were actively adjusted. Just as markets were impressed by signs of broadening growth, so too was the Fed as it ended its quantitative easing program on schedule.

Following a weak 2013 when municipal bonds struggled and assets flowed out of the class, municipal market yields fell across most maturities in 2014, leading to strong returns. Positive market sentiment has persisted throughout the year despite isolated negative credit headlines as strong technicals and lower Treasury yields helped to buoy municipals. Some municipalities began the road to recovery, with Detroit receiving approval for its plan of adjustment, authorizing the city’s exit from bankruptcy. The bankrupt city of San Bernardino, California, which had previously suspended payments to its pension system, agreed to pay the California Public Employees’ Retirement System (CalPERS) in full and keep its pension plan intact.

Within the fund, outperformance was driven by an overweight allocation to revenue-backed bonds, as they outperformed the general municipal bond market. This was somewhat offset by the negative effect of an underweight to U.S. duration as yields fell across most of the municipal bond curve. Within taxable municipals, an overweight allocation to industrial revenue bonds and security selection within tobacco revenue bonds were key drivers of outperformance. However, an underweight to transportation revenue bonds and, to a lesser extent, leased-backed revenue bonds, hurt performance as both sectors outperformed the general municipals market.

Government futures were used to tactically manage the fund’s duration position and swaps were used to gain exposure to a basket of revenue, general fund obligation, and full faith and credit reference obligations. The fund’s overall use of these derivatives detracted from performance year to date as U.S. interest rates fell, particularly on the long end.


		7		December 31, 2014

Forward Credit Analysis Long/Short Fund

Asset Allocation as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Growth of $100,000 Investment in the Fund

The chart above shows how a hypothetical investment of $100,000 in the fund at its inception would have performed versus an investment in the fund’s benchmark index. The values indicate what $100,000 would have grown to over the time period indicated. The hypothetical example does not represent the returns of any particular investment.


December 31, 2014		8

Forward Credit Analysis Long/Short Fund^(b)


	1 Year		5 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		8.97%		3.22%		5.53%		05/01/08
Institutional Class		9.47%		3.60%		5.93%		05/01/08
Class A (with sales load)^(c)(d)		2.58%		1.85%		0.68%		12/29/06
Class A (without sales load)^(d)(e)		8.85%		3.06%		1.43%		12/29/06
Class C (with CDSC)^(f)		7.46%		2.59%		5.14%		06/03/09
Class C (without CDSC)^(g)		8.46%		2.59%		5.14%		06/03/09
Advisor Class^(h)		9.41%		N/A		3.28%		02/01/10

(a) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(b) Effective November 1, 2013, Cedar Ridge Partners, LLC (“Cedar Ridge”) resigned as sub-advisor of Forward Credit Analysis Long/Short Fund and terminated its sub-advisory agreement with Forward Management. From November 1, 2013, to November 12, 2013, Forward Management was the sole advisor of the fund. Effective November 13, 2013, the fund is sub-advised solely by Pacific Investment Management Company LLC (“PIMCO”). Performance figures shown for periods before November 1, 2013, represent performance of Cedar Ridge under the previous investment strategy for the fund. Prior to May 1, 2011, Forward Credit Analysis Long/Short Fund was known as Forward Long/Short Credit Analysis Fund.

(c) Includes the effect of the maximum 5.75% sales charge.

(d) Class A shares of the fund originally commenced operations on December 29, 2006, were liquidated on November 21, 2008, and were launched again on September 1, 2010. The performance shown for any period beginning on or after November 24, 2008, and lasting through August 31, 2010, is that of the fund’s Investor Class shares adjusted to reflect the specific operating expenses applicable to Class A shares. The performance shown for any period beginning on or after September 1, 2010, is that of the fund’s Class A shares.

(e) Excludes sales charge.

(f) Includes the 1.00% contingent deferred sales charge.

(g) Excludes the 1.00% contingent deferred sales charge.

(h) Prior to May 1, 2013, the Advisor Class was known as Class M.

The performance quoted represents past performance, does not guarantee future results and current performance may be lower or higher than the data quoted. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Performance data current to the most recent month-end may be obtained at www.forwardinvesting.com. Investment performance may reflect fee waivers in effect. In the absence of fee waivers, total return would be lower. Total return is based on NAV, assuming reinvestment of all distributions. Performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.


		9		December 31, 2014

Fund Commentary and Performance (Unaudited)

Forward Dynamic Income Fund

For the year ended December 31, 2014, Forward Dynamic Income Fund’s Institutional Class shares returned 16.75%, outperforming its benchmark, which is comprised of 70% Barclays U.S. Intermediate Corporate Index and 30% Russell U.S. Large Cap High Dividend Yield Index. The blended benchmark returned 7.66%.

Interest rates remained at historic lows in 2014, causing investors to continue their search for yield. This drove the returns on real estate investment trusts (REITS) upwards of 30% in 2014 and the return for utilities stocks above 25% for the year.

The fund significantly outperformed its blended benchmark in 2014. Forward Dynamic Income Fund seeks to achieve its investment objective via two distinct strategies: tactical allocation and dividend capture. While capturing dividends in the dividend capture sleeve of the portfolio, the fund used REITs, consumer stocks and utilities to capture total return in its tactical sleeve.

Financials stocks, particularly REITs and REIT preferred stocks, made the largest contribution to returns. The outperformance was mainly due to declining bond yields throughout the year, which led investors looking for yield to other areas of the market that in turn drove up the prices of high-yielding stocks in 2014. The consumer staples sector was the second highest contributor to returns as the group outperformed the S&P 500 Index for the year. The sector had a strong year-end finish as data showed that the U.S. economy was expanding faster than forecasted and that the expanding economy, stable job growth and lower gas prices would likely encourage consumers to spend more. The consumer discretionary sector also contributed positively to performance results, led mainly by retail stocks. The fund also benefited from an underweight allocation to the energy sector, which lagged in the S&P 500 Index.

In 2014, information technology was the largest detractor from performance and was the only sector to produce a negative contribution to return during the year. Within the sector, the software and services group was the largest contributor to underperformance. The industrial sector as a whole underperformed, trailing the S&P 500 Index for the year.

The fund participated in more than 30 initial public offerings in 2014, which collectively made a positive contribution to the fund’s performance.

The fund used E-mini S&P 500 Index futures to equitize between 0% and 25% of the total value of the fund. The timing of the purchase and sale of E-mini futures is dictated by Forward’s proprietary volatility breadth model. When volatility is low, long positions are established to add to total return. When volatility is high, positions are taken to hedge market risk. The fund used futures to decrease the transaction costs associated with equitization. The fund’s use of derivatives had a negligible impact on performance in 2014 since volatility remained low throughout the year.


December 31, 2014		10

Forward Dynamic Income Fund

Weightings by Sector as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Growth of $100,000 Investment in the Fund


		11		December 31, 2014

Forward Dynamic Income Fund

1 Year

Since
Inception

Inception
Date

Average Annual Total Return for the period ended December 31, 2014

Institutional Class

16.75%

14.07%

07/31/13

Class A (with sales load)^(b)

9.51%

8.88%

07/31/13

Class A (without sales load)^(c)

16.19%

13.53%

07/31/13

(a) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(b) Includes the effect of the maximum 5.75% sales charge.

(c) Excludes sales charge.


December 31, 2014		12

Fund Commentary and Performance (Unaudited)

Forward EM Corporate Debt Fund

For the year ended December 31, 2014, Forward EM Corporate Debt Fund’s Institutional Class shares returned -0.42%, underperforming its benchmark, the Credit Suisse Emerging Market Corporate Bond Index, which returned 3.55%.

In 2014, emerging market (EM) corporate debt prices were largely affected by movements in Treasury interest rates, the shape of the yield curve, the strong U.S. dollar and the late-year collapse in oil prices. In a reversal from 2013, longer-term U.S. interest rates fell during the year while short-term rates rose. This flattening in U.S. interest rates led to outperformance of higher-quality, longer-duration dollar-denominated corporate debt and underperformance of both lower-quality and shorter-maturity issues. Largely based on non-U.S. growth concerns, most EM currencies were weakened versus the U.S. dollar. Some currencies, including the Russian ruble, fell sharply against the U.S. dollar, with most of the depreciation occurring during the last part of the year when global crude oil prices fell significantly. In general, non-energy companies with primarily dollar-based revenues and local-revenue costs saw benefits from this trend. Notwithstanding their U.S. dollar-denominated revenues, companies operating in the oil and gas sector saw their bond prices fall sharply in price after OPEC (Organization of the Petroleum Exporting Countries) announced in late November that the oil cartel would not cut production to prop up prices.

Most of the fund’s relative underperformance was attributable to energy holdings and general credit selection in Brazil, Indonesia and Kazakhstan. Certain high-yield corporate holdings in Argentina, China and Mexico, as well as longer duration investment-grade bonds in Indonesia, Mexico and Saudi Arabia, added to relative performance.

From a sector standpoint, defensive sectors such as noncyclical consumer, conglomerates and utilities were the best performers within the benchmark index in 2014. The fund collectively was underweight these sectors, especially utilities, which detracted from performance. Energy, industrials and technology were laggards, with energy bonds in the index posting negative results for the year. While the fund maintained a neutral oil and gas exposure for most of the year, unfavorable security selection weighed on returns. The non-U.S. dollar currency exposure of the fund, while small, slightly detracted from performance during the fourth quarter as the dollar generally appreciated versus EM currencies, especially against the fund’s largest currency holdings, the Nigerian naira and Russian ruble.

Country performance varied significantly during the year. Many Asian countries, such as Indonesia, Thailand and Vietnam, gained more than 10%, whereas Russia, Ukraine and Venezuela each fell more than 20%, as measured by the Credit Suisse Emerging Market Corporate Bond Index. Both an underweight allocation to Russia and security selection within Russia added to the fund’s relative performance. A small overweight to Ukraine detracted from results, although overall fund exposure remains small. As with Russia, both an underweight allocation to Venezuela and security selection within Venezuela, primarily a significant underweight to state-owned oil company Petróleos de Venezuela, S.A., added to the fund’s relative performance.

Derivatives, primarily in the form of interest rate futures and currency swaps that are used to manage overall fund exposures, detracted slightly from performance.


		13		December 31, 2014

Forward EM Corporate Debt Fund

Weightings by Region as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Growth of $100,000 Investment in the Fund


December 31, 2014		14

Forward EM Corporate Debt Fund^(b)


	1 Year		5 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		-0.76%		3.43%		4.44%		10/05/07
Institutional Class		-0.42%		3.83%		4.81%		10/05/07
Class C (with CDSC)^(c)		-2.37%		2.83%		3.95%		10/05/07
Class C (without CDSC)^(d)		-1.44%		2.83%		3.95%		10/05/07
Advisor Class^(e)		N/A		N/A		-1.43%		05/01/14

(a) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(b) As of February 14, 2011, Forward EM Corporate Debt Fund replaced the sub-advisor, Pictet Asset Management SA, with SW Asset Management, LLC. Prior to May 1, 2011, Forward EM Corporate Debt Fund was known as Forward International Fixed-Income Fund.

(c) Includes the 1.00% contingent deferred sales charge.

(d) Excludes the 1.00% contingent deferred sales charge.

(e) “Since inception” performance is not annualized for a “since inception” period that is less than 1 year.


		15		December 31, 2014

Fund Commentary and Performance (Unaudited)

Forward Emerging Markets Fund

For the year ended December 31, 2014, Forward Emerging Markets Fund’s Institutional Class shares returned -1.12%, slightly outperforming its benchmark, the MSCI Emerging Markets Index, which returned -1.82%.

Emerging equity markets lost ground in 2014. Heightened geopolitical tensions, particularly those concerning Russia’s involvement with Ukraine, damaged business and consumer confidence not just in Europe but also throughout the world via the trade mechanism. This proved to be a significant headwind for Europe’s already fragile recovery. China’s growth decelerated in 2014, weighed down by a large housing supply problem, industrial overcapacity and high provincial debt. Selective easing moves by China’s central bank lifted investor expectations, however, and shares available to local investors rallied. Equities in India also rallied due to a new government and anticipated reforms. Most emerging markets dependent on natural resource commodity exports, including Russia, South Africa and Brazil, struggled under the declining oil and commodity price environment.

Pervasive U.S. dollar strength proved to be the most significant performance factor for non-U.S. equities in 2014. All of the major currencies weakened against the U.S. dollar, with most losing more than 10% in value. Emerging market currencies fared worse, with currencies from Brazil, Mexico, Bulgaria, Romania, Czech Republic, Chile, Poland, Hungary, Colombia, Argentina and Russia declining between 10% and 45%, with the ruble experiencing the greatest drop. In this challenging environment, the fund delivered modestly negative results.

From a sector perspective, the leading detractor was the industrials sector. Not surprisingly, the worst performing industrials were Russian. Shares of HMS Hydraulic Machines, an oil and gas pump manufacturer, collapsed as the market worried about a potential liquidity crunch in early 2015. We believe the investment has merit since the company is still profitable and will benefit from the future Russia/China gas pipeline. Shares of the Russian airline Aeroflot fell on sanction-related concerns.

The consumer discretionary sector was also a source of underperformance. Singapore’s OSIM International, a massage chair and premium tea company, missed earnings guidance, impacted not only by the Hong Kong protests but mostly by aggressive spending to develop distribution for its high-end tea business in China.

The fund’s materials sector positions benefited relative performance. D&L Industries, a Philippines food and consumer goods company, and Formosan Rubber, a Taiwanese rubber producer, outpaced a general decline in emerging market materials stocks during the year. D&L Industries continues to post surprising earnings growth through its food ingredient division and consolidation of a biodiesel company. The fund was significantly underweight the energy sector, which experienced a sharp decline. The MSCI Emerging Markets Energy Index fell -26.43% during 2014 while the fund’s energy names declined on average -10.35%. The fund’s exposure to coal provided positive returns, with Coal India contributing the most.

From a country standpoint, India, Turkey and Malaysia detracted from results, while holdings in the Philippines, South Korea and Chile were positive contributors.

Although the U.S. Federal Reserve may be less accommodative in 2015, the People’s Bank of China and European Central Bank should provide additional stimulus. China’s growth will continue to moderate under the weight of excess housing supply, industrial overcapacity and high provincial government debt levels, but we believe the absolute growth rate will exceed 6.5%. Many other emerging markets will likely enjoy significant benefits from a sustained lower oil price. High commodity-producing emerging markets, including Brazil and Russia, will probably continue to struggle under the weight of falling commodity prices while commodity-importing countries, including the Philippines, Vietnam, Indonesia, Columbia and parts of Africa, may enjoy stronger performance.


December 31, 2014		16

Forward Emerging Markets Fund

Weightings by Sector as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Weightings by Region as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.


		17		December 31, 2014

Forward Emerging Markets Fund^(a)

Growth of $100,000 Investment in the Fund


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		-1.52%		1.35%		7.40%		13.14%		04/09/03
Institutional Class		-1.12%		1.74%		7.79%		6.30%		10/04/95
Advisor Class^(c)		-1.22%		N/A		N/A		3.05%		02/01/10

(a) Effective September 1, 2012, the Trust and Forward Management terminated their sub-advisory agreement with Pictet Asset Management Ltd, for investment sub-advisory services provided for Forward Emerging Markets Fund. The fund is now advised solely by Forward Management. Performance figures shown for periods before September 1, 2012, represent performance of Pictet Asset Management Ltd, under the previous investment strategy for the fund. The Retail Class and Institutional Class of Pictet Global Emerging Markets Fund were reorganized into the Investor Class and Institutional Class, respectively, of Forward Global Emerging Markets Fund on September 16, 2004. Performance figures shown for periods prior to September 16, 2004, represent performance of the Retail Class and Institutional Class of Pictet Global Emerging Markets Fund. Prior to May 1, 2008, Forward Emerging Markets Fund was known as Forward Global Emerging Markets Fund.

(b) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(c) Prior to May 1, 2013, the Advisor Class was known as Class M.


December 31, 2014		18

Fund Commentary and Performance (Unaudited)

Forward Equity Long/Short Fund

For the year ended December 31, 2014, Forward Equity Long/Short Fund’s Institutional Class shares returned -0.39%, underperforming its benchmarks, the MSCI ACWI and HFRX Equity Hedge Index, which returned 4.71% and 1.42%, respectively.

The market environment for equities was choppy and range-bound throughout 2014 due to concerns of excessive valuations. The mid-term election cycle played out during the course of the year, with political risk factors rising into the fall and then abating into year-end. Sector rotation was violent throughout the year with sharp pullbacks in technology and healthcare stocks in the first half of 2014, followed by a plunge in energy stocks in the second half of the year.

Given this environment, the fund finished the year relatively flat, trailing the performance of its benchmarks. Net exposure was far more modest in the second half of the year. This allocation reduced the volatility of the fund’s performance, but the short exposure acted as a drag on performance as the market rallied sharply into year-end.

From a sector standpoint, the technology sector was the largest detractor from fund performance. The fund’s overweight allocation to growth-oriented technology names in the first half of the year backfired as the group sold off sharply and valuations adjusted downward. The energy sector was also a source of underperformance. A sharp correction across the board in oil stocks beginning in the third quarter detracted from fund returns as supply and demand concerns contributed to a plunge in the price of crude oil. Energy-related industrials also came under pressure as the energy group sold off, dragging down performance in the sector. The fund’s short exposure to the Nasdaq Composite and semiconductor names acted as a drag on performance when a sharp rally unfolded in the fourth quarter.

The healthcare sector contributed to returns, as drug approvals and an improved operating outlook drove strong performance in select biotech and medical device names. In the telecommunications sector, the fund’s strong stock selection and allocation in the first half of the year aided returns, as did the sale and avoidance of specific sector names facing competitive threats in the second half of the year.

Options and futures were used as hedges throughout 2014. Call option hedges were a detractor, reducing portfolio returns between 1.00% and 2.00%. Put option positions were a positive contributor to returns, adding back roughly 0.50% to portfolio returns. Stock index futures were sold short and the short hedge contributed between 2.50% and 3.00% to portfolio performance.

The fund ended the year with a fairly defensive posture, with a net dollar exposure of just less than 20%. The fund’s net exposure on a beta-adjusted basis was approximately 25%. Although the market rallied to new highs as the year drew to a close, the prospect of an interest rate hike by the Federal Reserve in 2015 cautions against being too aggressive with respect to risk tolerance.


		19		December 31, 2014

Forward Equity Long/Short Fund

Weightings by Sector as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Growth of $100,000 Investment in the Fund


December 31, 2014		20

Forward Equity Long/Short Fund^(c)

1 Year

Since
Inception

Inception
Date

Average Annual Total Return for the period ended December 31, 2014

Investor Class

-0.74%

7.22%

12/31/11

Institutional Class

-0.39%

7.60%

12/31/11

(a) When sector categorization is broken down by industry, no industry exceeds the 25% maximum specified in the Statement of Additional Information.

(b) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(c) Prior to August 1, 2014, Forward Equity Long/Short Fund was known as Forward Endurance Long/Short Fund.


		21		December 31, 2014

Fund Commentary and Performance (Unaudited)

Forward Global Dividend Fund

For the year ended December 31, 2014, Forward Global Dividend Fund’s Class A shares (without sales load) returned -1.14%, underperforming its benchmark, the MSCI ACWI, which returned 4.71%.

Global equities delivered mixed results in 2014. U.S. equity markets continued to reach record levels amid recovery in employment, housing and consumer spending. Currency strength of the U.S. dollar provided a meaningful tailwind and margins increased to record levels for U.S. companies.

International equity markets, on the other hand, collectively lost ground in 2014 due to heightened geopolitical tensions, particularly those concerning Russia’s involvement with Ukraine. The erosion of business and consumer confidence, not just in Europe but also around the globe, proved to be a significant challenge for Europe’s economy, which was already fragile. Japan’s economy struggled after the consumption tax hike in April and investors largely questioned Prime Minister Shinzō Abe’s reform agenda. China’s growth decelerated in 2014, weighed down by a large housing supply problem, industrial overcapacity and high provincial debt. Most emerging markets dependent on natural resource commodity exports, including Russia, South Africa and Brazil, struggled under the declining oil and commodity price environment.

For the year, the fund declined modestly, trailing its benchmark. In terms of sector performance, consumer discretionary stocks detracted from the fund’s 2014 return. Macau-related Future Bright Holdings weakened through the course of the year. China’s crackdown on corruption and increased public scrutiny regarding methods of moving capital out of China negatively affected investor sentiment for Macau-exposed equities.

The fund’s technology investments benefited results. Key contributors included German-based RIB Software. The company, which helps businesses manage and control costs for major construction projects through its iTWO software, continued to gain contracts globally.

From a country standpoint, our meaningful underweight in U.S. equities detracted from the fund’s relative performance. U.S. equities continued to outperform with a stronger currency, improving economy and lower level of inherent risk than many international markets experienced. Relative yields and valuations continued to be unattractive in U.S. markets. Individual holdings in Sweden and Italy also detracted from performance.

Our underweight allocation to Australia helped performance results from both a portfolio allocation and currency perspective as ongoing weak commodities prices hampered Australian returns. Individual positions in the Philippines and Germany also contributed.

The robust U.S. economic conditions will likely soften in 2015 due to the fading of temporary factors, including increased defense spending, inventory accumulation and export gains likely to come under pressure from the strong U.S. dollar. With lower inflation supported by lower commodity prices, a rate increase in the U.S. is discounted as a late 2015 event. Although the U.S. Federal Reserve and Bank of England may be less accommodative, the Bank of Japan, People’s Bank of China and European Central Bank should provide additional stimulus, potentially offsetting the drag from high debt levels in developed countries and daunting worldwide geopolitical problems. China’s growth will continue to moderate under the weight of excess housing supply, industrial overcapacity and high provincial government debt levels, but we believe the absolute growth rate will exceed 6.5%. Many other emerging markets will enjoy significant benefits from a sustained lower oil price. High commodity-producing emerging markets, including Brazil and Russia, will likely continue to struggle under the weight of falling commodity prices and, in the case of Russia, ongoing stifling sanctions. Many commodity-importing countries in Asia, Latin America and Africa may enjoy stronger performance.


December 31, 2014		22

Forward Global Dividend Fund

Weightings by Sector as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Weightings by Country as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.


		23		December 31, 2014

Forward Global Dividend Fund^(a)

Growth of $10,000 Investment in the Fund

The chart above shows how a hypothetical investment of $10,000 in the fund at its inception would have performed versus an investment in the fund’s benchmark index. The values indicate what $10,000 would have grown to over the time period indicated. The hypothetical example does not represent the returns of any particular investment.


	1 Year		5 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		-1.00%		N/A		4.88%		05/02/11
Institutional Class		-0.75%		8.59%		3.88%		01/31/07
Class A (with sales load)^(c)		-6.84%		6.79%		3.24%		10/31/06
Class A (without sales load)^(b)		-1.14%		8.06%		3.99%		10/31/06

(a) Prior to February 20, 2013, Forward Global Dividend Fund was known as Forward Large Cap Dividend Fund. Prior to November 1, 2011, Forward Large Cap Dividend Fund was known as Forward Large Cap Equity Fund.

(b) Excludes sales charge.

(c) Includes the effect of the maximum 5.75% sales charge.

(d) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.


December 31, 2014		24

Fund Commentary and Performance (Unaudited)

Forward International Dividend Fund

For the year ended December 31, 2014, Forward International Dividend Fund’s Investor Class shares returned -4.96%, underperforming its benchmark, the MSCI ACWI ex-USA, which returned -3.44%.

International equity markets lost ground in 2014. Heightened geopolitical tensions, particularly those concerning Russia’s involvement with Ukraine, damaged business and consumer confidence, both within Europe and throughout the world in the form of international trade. This proved to be a significant headwind for Europe’s already fragile recovery. Japan’s economy struggled following the consumption tax hike in April. Investors largely questioned Prime Minister Shinzō Abe’s reform agenda, punctuated by the resignations of key ministers and the deferral of the next scheduled consumption tax hike. China’s growth decelerated in 2014, weighed down by a large housing supply problem, industrial overcapacity and high provincial debt. Selective easing moves by China’s central bank lifted investor expectations, however, and shares available to local investors rallied. Equities in India also rallied due to a new government and anticipated reforms. In an environment of declining oil prices, most emerging markets dependent on natural resource commodity exports struggled toward the end of the year, including Russia, South Africa and Brazil.

Pervasive U.S. dollar strength proved to be the most significant performance factor for non-U.S. equities in 2014. All of the major currencies weakened against the U.S. dollar with most losing more than 10% in value, including the Swiss franc, euro, Japanese yen, Danish krone, Norwegian krone, Swedish krona, Brazilian real and Mexican peso.

From a sector standpoint, consumer discretionary stocks detracted from the fund’s 2014 return. Casino-related names Future Bright Holdings and MGM China Holdings weakened due to Macau’s falling high-end gambling business. China’s corruption crackdown and increased public scrutiny regarding methods of moving capital out of China hurt investor sentiment. Sentiment also turned negative on Dynam Japan Holdings due to Japan’s deferral of casino legalization.

The fund’s technology investments registered a positive return. Key contributors included German-based RIB Software and Vietnamese company FPT Corporation. RIB Software, which helps companies manage and control costs for major construction projects through its iTWO software, continued to gain contracts globally. FPT specializes in key IT services, communications and mobile phone retail sales and has benefited from Vietnam’s growing communication industry. The position was removed from the fund, however, as the share price advance appeared to outstrip the company’s fundamental growth outlook.

From a country standpoint, Russia, Japan and the U.K. were key detractors from results while holdings in the Philippines, Germany and Egypt contributed positively.

Futures, used to equitize new cash flow and hedge currency risk, did not meaningfully affect fund performance.

Lower gasoline prices have boosted consumer confidence and spending in the U.S. and Europe, but the excellent recent U.S. economic performance will likely soften due to the fading of temporary factors, such as increased defense spending, inventory accumulation and export gains likely to come under pressure from the strong U.S. dollar. Although the U.S. Federal Reserve and Bank of England may be less accommodative, the Bank of Japan, People’s Bank of China and European Central Bank should provide additional stimulus. China’s growth will continue to moderate under the weight of excess housing supply, industrial overcapacity and high provincial government debt levels, but we believe the absolute growth rate will exceed 6.5%. Many other emerging markets will enjoy significant benefits from a sustained lower oil price. High commodity-producing emerging markets, including Brazil and Russia, will likely continue to struggle under the weight of falling commodity prices, while commodity-importing countries, including the Philippines, Vietnam, Indonesia, Columbia and parts of Africa, may enjoy stronger performance.


		25		December 31, 2014

Forward International Dividend Fund

Weightings by Sector as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Weightings by Region as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.


December 31, 2014		26

Forward International Dividend Fund^(a)

Growth of $10,000 Investment in the Fund

1 Year

5 Year

10 Year

Since
Inception

Inception
Date

Average Annual Total Return for the period ended December 31, 2014

Investor Class

-4.96%

6.00%

4.30%

4.29%

10/01/98

Institutional Class

-4.56%

6.37%

N/A

-1.39%

05/01/07

Class A (with sales load)^(c)

-10.59%

N/A

-5.67%

05/01/13

Class A (without sales load)^(d)

-5.09%

N/A

-2.24%

05/01/13

Class C (with CDSC)^(e)

-6.42%

N/A

7.28%

07/31/12

Class C (without CDSC)^(f)

-5.52%

N/A

7.28%

07/31/12

Advisor Class^(g)

-4.60%

N/A

2.36%

05/02/11

(a) Prior to May 1, 2010, Forward International Dividend Fund was known as Forward International Equity Fund. As of December 1, 2008, the fund is directly managed by Forward Management, LLC., the advisor to the Forward Funds. Performance figures and other portfolio data shown for periods prior to December 1, 2008, do not reflect Forward Management’s performance or strategy. From September 1, 2005, through November 30, 2008, Pictet Asset Management Limited was the fund’s sub-advisor and the fund’s investment strategy was different. Prior to September 1, 2005, Forward International Equity Fund was known as Forward Hansberger International Growth Fund. From March 6, 2000, through August 31, 2005, Hansberger Global Investors, Inc. was the fund’s sub-advisor and the fund’s investment strategy was different. Prior to March 6, 2000, the fund was managed by a different sub-advisor.

(b) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(c) Includes the effect of the maximum 5.75% sales charge.

(d) Excludes sales charge.

(e) Includes the 1.00% contingent deferred sales charge.

(f) Excludes the 1.00% contingent deferred sales charge.

(g) Prior to May 1, 2013, the Advisor Class was known as Class M.


		27		December 31, 2014

Fund Commentary and Performance (Unaudited)

Forward International Small Companies Fund

For the year ended December 31, 2014, Forward International Small Companies Fund’s Institutional Class shares returned -8.17%, underperforming its benchmark, the MSCI EAFE Small Cap Index, which returned -4.63%.

2014 was a volatile year for international equity markets, especially in the second half of the year. Japanese equity markets ended the year in positive territory, while markets in Europe and developed Asia ex-Japan finished flat or in negative territories. Three factors drove volatility among international equity markets: the decision of the U.S. Federal Reserve (Fed) to start tapering its quantitative easing program, the escalation of the conflict in Ukraine and the imposition of fresh sanctions on Russia. The U.S. dollar reached a four-year high against a basket of major currencies. This came amid expectations of U.S. economic growth being strong enough to prompt the Fed into hiking interest rates in the first half of 2015, decoupling its monetary policy from those of the eurozone and Japan.

Within our universe, Japan was one of the strongest markets in 2014 due to the Bank of Japan’s decision to unexpectedly increase the size of its monetary stimulus as well as strong corporate earnings and the government’s supplementary fiscal budget. In Europe, corporate earnings were weak and the European Central Bank announced it was considering stepping up asset purchases to revive the flagging eurozone economy. The escalation of the conflict in Ukraine and the deterioration of the relationship between Russia and Western economies weighed on European equity markets. In China, concerns grew about the cooling housing market and sluggish industrial activity. In this environment, the MSCI EAFE Small Cap Index declined in 2014.

For the year, the fund declined and lagged the MSCI EAFE Small Cap Index. Underperformance was largely attributable to weak stock picking in Europe. We were overly optimistic about the region’s growth prospects at the start of the year and earnings growth did not materialize as expected. We reduced our exposure to the region and added to Japan during the summer. The fund benefited from these changes.

From a country standpoint, our stock selection in Denmark, the U.K. and Italy were the main sources of underperformance in 2014. Within the U.K. in particular, some of our stocks were affected by the decline in oil prices and the slowdown in the London property market.

France was our largest contributor to performance in 2014 due to consistent stock picking throughout the year. Our stock picking in Japan also contributed positively to performance results. We increased our position from underweight to overweight as we became more confident about the growth prospects of some of our companies. The Netherlands also contributed to returns as we were not invested in some underperforming stocks contained in the benchmark.

At the sector level, our stock selection and underweight allocation to financials detracted the most from fund performance. Stock selection in the consumer discretionary sector also detracted. The healthcare sector was a negative due to both an underweight allocation and stock picking.

The information technology sector was the largest source of relative results from a sector standpoint. Our stock picking and overweight allocation to the sector contributed meaningfully to fund performance. The energy sector was a source of outperformance as we were rewarded for successful stock picking and avoided some underperforming stocks in the benchmark. An underweight allocation to the sector also benefited results as energy stocks have underperformed significantly throughout the year.


December 31, 2014		28

Forward International Small Companies Fund

Weightings by Sector as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Weightings by Region as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.


		29		December 31, 2014

Forward International Small Companies Fund^(a)

Growth of $100,000 Investment in the Fund


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		-8.51%		6.72%		4.95%		8.73%		03/05/02
Institutional Class		-8.17%		7.09%		5.30%		8.04%		02/07/96
Advisor Class^(c)		-8.19%		N/A		N/A		7.43%		02/01/10

(a) The Retail Class and Institutional Class of Pictet International Small Companies Fund were reorganized into the Investor Class and Institutional Class, respectively, of Forward International Small Companies Fund on December 23, 2003. Performance figures for periods prior to December 23, 2003, represent performance of the respective class of shares of Pictet International Small Companies Fund.

(b) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(c) Prior to May 1, 2013, the Advisor Class was known as Class M.


December 31, 2014		30

Fund Commentary and Performance (Unaudited)

Forward Select EM Dividend Fund

For the year ended December 31, 2014, Forward Select EM Dividend Fund’s Investor Class shares returned -6.78%, underperforming its benchmark, the MSCI Emerging Markets Index, which returned -1.82%.

Emerging equity markets declined in 2014 as geopolitical tensions, particularly those concerning Russia’s involvement with Ukraine, damaged business and consumer confidence. The deterioration, which proved to be a significant headwind for Europe’s already fragile recovery, spread not only through Europe but also throughout the world via the trade mechanism. China’s growth decelerated during the year, weighed down by a large housing supply problem, industrial overcapacity and high provincial debt. In response, China’s central bank enacted selective easing moves that improved investor expectations and shares available to local investors rallied. Equities in India also rallied due to a new government and anticipated reforms. As prices for crude oil sank, most emerging markets dependent on natural resource commodity exports, including Russia, South Africa and Brazil, struggled.

A key driver of performance among emerging market equities was the relative strength of the U.S. dollar. Emerging market currencies across the board declined versus the U.S. dollar, with currencies from Brazil, Mexico, Bulgaria, Romania, Czech Republic, Chile, Poland, Hungary, Colombia, Argentina and Russia declining between 10% and 45%, with the ruble experiencing the greatest drop.

Against this backdrop, the fund declined, trailing its benchmark. In terms of sector performance, the largest detractor for the year was the industrials sector. Not surprisingly, the worst performing holdings in the group were Russian. Shares of HMS Hydraulic Machines, an oil and gas pump manufacturer, collapsed amid concerns of a potential liquidity crunch in early 2015. We believe the investment has merit since the company is still profitable and will benefit from the future Russia/China gas pipeline. Shares of the Russian airline Aeroflot fell on sanction-related concerns.

The fund had an underweight allocation to the technology sector, which gained nearly 10% during 2014. The fund’s technology holdings lost ground on average. Leading the decline, Samsung Electronics disappointed the market with lackluster new product offerings and lost market share due to intense competition. A bright point was FPT Corporation, which specializes in IT services, communications and mobile phone retail sales in Vietnam. This position was sold in August.

The fund benefited from a significantly underweight allocation to the energy sector, which experienced a sharp decline. The fund’s exposure to coal provided positive returns, with Coal India contributing the most.

From a country standpoint, Russia, China and Turkey detracted from results while holdings in South Korea, the Philippines and Egypt were positive contributors.

Looking into 2015, we expect the People’s Bank of China and European Central Bank to provide additional stimulus to economic growth. China’s growth will continue to moderate under the weight of excess housing supply, industrial overcapacity and high provincial government debt levels, but we believe the absolute growth rate should exceed 6.5%. Many other emerging markets will likely enjoy significant benefits from a sustained lower oil price. High commodity-producing emerging markets, including Brazil and Russia, will likely continue to struggle under the weight of falling commodity prices, while commodity-importing countries, including the Philippines, Vietnam, Indonesia, Columbia and parts of Africa, may enjoy stronger performance.


		31		December 31, 2014

Forward Select EM Dividend Fund

Weightings by Sector as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Weightings by Region as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.


December 31, 2014		32

Forward Select EM Dividend Fund

Growth of $10,000 Investment in the Fund


	1 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		-6.78%		-1.42%		05/02/11
Institutional Class		-6.50%		-0.35%		05/03/11
Class C (with CDSC)^(b)		-8.22%		-2.01%		05/02/11
Class C (without CDSC)^(c)		-7.34%		-2.01%		05/02/11
Advisor Class^(d)		-6.50%		-1.06%		05/02/11

(a) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(b) Includes the 1.00% contingent deferred sales charge.

(c) Excludes the 1.00% contingent deferred sales charge.

(d) Prior to May 1, 2013, the Advisor Class was known as Class M.


		33		December 31, 2014

Fund Commentary and Performance (Unaudited)

Forward Small Cap Equity Fund

For the year ended December 31, 2014, Forward Small Cap Equity Fund’s Investor Class shares returned 1.50%, underperforming its benchmark, the Russell 2000 Index, which returned 4.89%.

The market environment for U.S. small cap equities was choppy and range-bound throughout 2014. Within the small cap universe, the prodigious advance in 2013 created excessive valuations that were worked off during much of 2014. Small caps experienced outflows as market participants moved money into more risk-averse large cap names. While broad stock market volatility remained somewhat subdued in 2014, small cap issues experienced greater volatility than did their large cap counterparts. In addition, sharp, violent sector rotations were more pronounced among small cap stocks than large cap stocks.

In this environment, the fund’s return was positive but fell short of its benchmark’s performance for the year. The fund outperformed the index for much of the year, but the steep sell-off in oil-related stocks and earnings disappointments in consumer stocks weighed greatly on the fund’s fourth quarter return, dragging it below the benchmark for the year.

From a sector standpoint, consumer discretionary stocks were the largest detractor from relative performance. Fourth quarter earnings disappointments among apparel retailers wiped out gains built up earlier in the year. An overweight allocation to the sector served to amplify the disappointing returns. An overweight allocation to financials and an underweight allocation to metals and mining companies also hindered relative results. Partially offsetting those losses, an overweight allocation to crude oil-related exploration and production names helped for the first three quarters of the year. A hasty retreat from energy names early in the downturn served to lock in a portion of the gains. Although the financials sector overall was a source of underperformance for the fund, strong performance by a number of small cap real estate investment trusts with a focus on healthcare, lodging and storage real estate contributed to a solid stock selection effect in the sector.

During the year, the fund used Russell 2000 Index futures to equitize between approximately 5% of the total value of the fund in an effort to avoid the transaction costs associated with mutual fund inflows and outflows. In aggregate, this position contributed less than 1.00% to total return.


December 31, 2014		34

Forward Small Cap Equity Fund

Weightings by Sector as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Growth of $10,000 Investment in the Fund


		35		December 31, 2014

Forward Small Cap Equity Fund^(b)


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		1.50%		9.10%		3.88%		6.99%		10/01/98
Institutional Class		1.81%		9.51%		4.26%		6.46%		06/06/02
Advisor Class^(c)		1.78%		N/A		N/A		10.61%		02/01/10

(a) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(b) Prior to May 1, 2008, Forward Small Cap Equity Fund was known as Forward Hoover Small Cap Equity Fund. As of February 1, 2011, the fund is directly managed by Forward Management, LLC., the advisor to the Forward Funds. Performance figures and other portfolio data shown for periods prior to February 1, 2011, do not reflect Forward Management’s performance or strategy. Hoover Investment Management Co., LLC was the fund’s sub-advisor prior to February 1, 2011.

(c) Prior to May 1, 2013, the Advisor Class was known as Class M.


December 31, 2014		36

Fund Commentary and Performance (Unaudited)

Forward Tactical Enhanced Fund

For the year ended December 31, 2014, Forward Tactical Enhanced Fund’s Institutional Class shares returned 0.75%, lagging its benchmark, the S&P 500 Index, which returned 13.69%.

Equity markets around the world were strongly affected by central banks’ monetary intervention during 2014. In the U.S., although the Federal Reserve (Fed) tapered its bond and mortgage-backed security purchases as the year unfolded, monetary policy remained highly accommodative. The federal funds rate finished 2014 hovering just above 0% and, while the Fed has stopped adding to its balance sheet, it is not selling any of its holdings. When a Treasury bond in its portfolio matures, the proceeds are rolled over into another Treasury bond. As a result, the Fed’s balance sheet is not shrinking.

Meanwhile, the European Central Bank (ECB) announced a number of easing steps during the course of 2014 and has strongly hinted that it will launch a quantitative easing (QE) program using sovereign bonds in early 2015 if the additional steps fail to lift inflation and economic activity. The Bank of Japan doubled down on its QE program on October 31, 2014, in an effort to revive the Japanese economy after an increase in the sales tax from 5% to 8% on April 1, 2014, led to two consecutive quarters of negative gross domestic product (GDP). The People’s Bank of China loosened reserve requirements and injected liquidity into its banking system in the fourth quarter of 2014 to counter a slowdown in the Chinese economy.

The U.S. stock market also benefited from stock buybacks totaling $567.2 billion in 2014. Not only do the buybacks lift the stocks being purchased, they also lower the number of shares outstanding, increasing earnings per share in the process. Economic conditions improved in 2014 after the polar vortex triggered extreme weather conditions early in the year, leading to a dismal first quarter contraction in GDP. However, the economy rebounded nicely and employment levels improved throughout the remainder of the year.

The collective impact of concerted central bank intervention has created an investment mentality that equity markets will continue to climb as long as central banks remain accommodative. Central bank intervention has also dampened volatility, a factor that has hurt the performance of Forward Tactical Enhanced Fund since it performs better when volatility is high.

Forward Tactical Enhanced Fund lagged the performance of the S&P 500 Index due to the lack of volatility and a dearth of even short-term corrections from which the fund’s quantitative process benefits. We patiently waited for a decline of 7% before implementing the fund’s core 50% long position. That decline did not occur until October. When the S&P 500 did finally decline 7.40% between mid-September and October 15, the market rebounded quickly amid prospects of central bank intervention. At the end of October 2014, after Federal Reserve Bank of St. Louis President James Bullard raised the potential of a fourth round of quantitative easing, market headlines reported that the ECB might consider buying corporate bonds as part of a QE program and the Bank of Japan announced an increase in its QE purchases.

Lastly, the implementation of the core 50% long position added 0.92% to performance returns, although that was not sufficient to outperform index results for the year.


		37		December 31, 2014

Forward Tactical Enhanced Fund

Asset Allocation as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Growth of $100,000 Investment in the Fund


December 31, 2014		38

Forward Tactical Enhanced Fund^(b)


	1 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		0.40%		2.16%		12/31/10
Institutional Class		0.75%		2.52%		12/31/10
Class A (with sales load)^(c)		-5.52%		0.48%		12/31/10
Class A (without sales load)^(d)		0.24%		1.98%		12/31/10
Class C (with CDSC)^(e)		-1.12%		1.53%		12/31/10
Class C (without CDSC)^(f)		-0.19%		1.53%		12/31/10
Advisor Class^(g)		0.67%		2.09%		04/15/11

(a) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(b) Effective November 1, 2012, the Trust and Forward Management terminated their sub-advisory agreement with Broadmark Asset Management, LLC, for investment sub-advisory services provided for Forward Tactical Enhanced Fund. The fund is now advised solely by Forward Management. Performance figures and other portfolio data shown for periods prior to November 1, 2012, represent performance of Broadmark Asset Management, LLC, under the previous investment strategy for the fund.

(c) Includes the effect of the maximum 5.75% sales charge.

(d) Excludes sales charge.

(e) Includes the 1.00% contingent deferred sales charge.

(f) Excludes the 1.00% contingent deferred sales charge.

(g) Prior to May 1, 2013, the Advisor Class was known as Class M.


		39		December 31, 2014

Fund Commentary and Performance (Unaudited)

Forward Tactical Growth Fund

For the year ended December 31, 2014, Forward Tactical Growth Fund’s Institutional Class shares returned 2.33%, underperforming its benchmark, the S&P 500 Index, which returned 13.69%.

U.S. equity markets experienced a rise in volatility in 2014, but they were able to hold on to positive returns. The S&P 500 Index reached numerous new all-time highs throughout the year. The yield on the 10-year Treasury note inched lower in 2014, hovering just above 2.00% in October, as equities experienced their first correction in excess of 10% since 2012.

Due to the rise in volatility levels, investor sentiment was skewed toward the negative side. This factor, along with momentum shifts and divergences, resulted in reduced exposure for the fund during the first two-thirds of the year. During October, the strategy was able to successfully navigate the 10% plus pullback. Increased volatility in December was a challenge to performance as our risk-averse process can inhibit performance at times by reducing the fund’s market exposure.

We are pleased with the fund’s positive absolute performance, despite the fund underperforming its benchmark and slightly trailing various long/short benchmarks as of year-end.

The fund was predominately exposed to the S&P 500 Index exchange-traded fund (ETF) during the year. This exposure was the key driver of the fund’s return. The fund also had periodic exposure to the NASDAQ 100 Index ETF in 2014, which contributed to positive performance.

The fund’s exposure to emerging markets had a negative impact on performance during the spring of 2014. This holding detracted from the fund’s overall performance results as it was purchased near the top of its range prior to declining.

The fund primarily used ETFs during 2014 but it also invested in derivative instruments, including index futures contracts and options. Therefore, a portion of the fund’s return is attributable to derivatives.


December 31, 2014		40

Forward Tactical Growth Fund

Asset Allocation as a Percentage of Net Assets

These allocations may not reflect the current or future position of the portfolio.

Growth of $100,000 Investment in the Fund


		41		December 31, 2014

Forward Tactical Growth Fund


	1 Year		5 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		1.98%		3.58%		3.91%		09/14/09
Institutional Class		2.33%		3.93%		4.26%		09/14/09
Class A (with sales load)^(b)		-4.00%		N/A		1.87%		03/12/10
Class A (without sales load)^(c)		1.84%		N/A		3.13%		03/12/10
Class C (with CDSC)^(d)		0.39%		2.96%		3.29%		09/14/09
Class C (without CDSC)^(e)		1.36%		2.96%		3.29%		09/14/09
Advisor Class^(f)		2.30%		N/A		4.11%		02/01/10

(a) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(b) Includes the effect of the maximum 5.75% sales charge.

(c) Excludes sales charge.

(d) Includes the 1.00% contingent deferred sales charge.

(e) Excludes the 1.00% contingent deferred sales charge.

(f) Prior to May 1, 2013, the Advisor Class was known as Class M.


December 31, 2014		42

Fund Commentary and Performance (Unaudited)

Forward Commodity Long/Short Strategy Fund

For the year ended December 31, 2014, Forward Commodity Long/Short Strategy Fund’s Institutional Class shares returned 0.57%. Its benchmark, the Credit Suisse Momentum and Volatility Enhanced Return Strategy (Credit Suisse MOVERS) Index, returned -0.31%.

The U.S. stock market led all major asset classes again in 2014 and continued to hit all-time highs. Large cap names overtook their small cap counterparts, a reversal from last year, although both outperformed foreign markets. The MSCI EAFE Index, an index measuring the performance of developed foreign markets, and the MSCI Emerging Markets Index, an index measuring the performance of developing foreign markets, both declined during the year.

In 2014, the European Union and the European Central Bank sought to achieve a similar process in Europe to that which the Federal Reserve had accomplished in the U.S. in an effort to stave off recession—namely, applying direct quantitative easing to stimulate lending and the economy. Although the impact of the low interest rate environment and European bond-buying program is yet to manifest, a clear result during the year was the stark reduction in the euro, falling from its peak of $1.39 in U.S. dollars to $1.22 U.S. dollars in December 2014. In conjunction with the declining euro, slowing emerging market economies such as China and political intrigue in Russia resulted in another challenging year for these engines of global growth. In this environment of a strengthening dollar and slowing growth in commodity-producing economies, commodity prices declined for the fourth consecutive year.

Forward Commodity Long/Short Strategy Fund uses a volatility-adjusted momentum indicator to systematically gain exposure to commodity returns. The strategy rebalances on a monthly basis and invests in 10 commodities out of a universe of 24 that exhibit medium- to long-term momentum. The strategy is agnostic to whether this momentum is on the long or short side, with the ability to be 100% long, 100% short or any combination in between.

The fund used a tactical allocation strategy in 2014, having as many as eight long contracts in some months and eight short contracts in others. The fund’s allocation to long contracts was beneficial as long commodities generally had strong performance at the start of the year. However, 2014 ended on a dramatic note, with six consecutive months of negative returns for long commodities.

The largest contributor to the fund’s performance was its sector allocation to energy, led by a position in gas oil. The fund also benefited from allocations to livestock as positions to live cattle, feeder cattle and lean hogs all contributed positively to performance in 2014. The fund’s average short position to silver was additive in the year, though was offset by a similar position in gold. The largest individual detractor in 2014 was a short position in coffee. This was consistent across the agricultural sector as six of eight contracts provided negative returns. Base metals delivered a similarly mixed set of returns.

The investment team utilizes a strategy that employs a curve carry component, which seeks to generate returns above and beyond buying futures on the short end of the futures curve. This component added 2.36% to performance for the year.

The fund attains commodity exposure through the use of total return swaps, which provided the vast majority of the fund’s performance for the year. Additionally, the fund typically maintains a cash position, with the remainder invested in short-duration, investment-grade bonds, as these holdings provide the potential for incremental low-risk return. The bonds added 0.87% to fund performance.


		43		December 31, 2014

Forward Commodity Long/Short Strategy Fund

Asset Allocation as a Percentage of Net Assets

as of December 31, 2014*

Weightings by asset reflect long positions and excludes securities sold short and derivative instruments.

These allocations may not reflect the current or future position of the portfolio.

Growth of $100,000 Investment in the Fund


December 31, 2014		44

Forward Commodity Long/Short Strategy Fund


	1 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2014
Investor Class		0.19%		-2.71%		12/31/10
Institutional Class		0.57%		-2.37%		12/31/10
Class C (with CDSC)^(b)		-1.43%		-6.96%		05/04/11
Class C (without CDSC)^(c)		-0.43%		-6.96%		05/04/11
Advisor Class^(d)		0.47%		-5.29%		12/07/11
Class Z		0.66%		-2.35%		12/31/10

(a) The index figures do not reflect any deduction for fees, expenses or taxes. It is not possible to invest directly in an index.

(b) Includes the 1.00% contingent deferred sales charge.

(c) Excludes the 1.00% contingent deferred sales charge.

(d) Prior to May 1, 2013, the Advisor Class was known as Class M.


		45		December 31, 2014

Investment Glossary

Fund Risk Disclosures

Forward Credit Analysis Long/Short Fund

Borrowing for investment purposes creates leverage, which can increase the risk and volatility of a fund.

Investing in a non-diversified fund involves the risk of greater price fluctuation than a more diversified portfolio.

Short selling involves additional investment risks and transaction costs, and creates leverage, which can increase the risk and volatility of a fund.

Forward Dynamic Income Fund

Borrowing for investment purposes creates leverage, which can increase the risk and volatility of a fund.

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.

Investing in a non-diversified fund involves the risk of greater price fluctuation than a more diversified portfolio.

Short selling involves additional investment risks and transaction costs, and creates leverage, which can increase the risk and volatility of a fund.


December 31, 2014		46

Investment Glossary

There is no guarantee the companies in our portfolio will continue to pay dividends.

Forward EM Corporate Debt Fund

Borrowing for investment purposes creates leverage, which can increase the risk and volatility of a fund.

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.

Investing in a non-diversified fund involves the risk of greater price fluctuation than a more diversified portfolio.

Forward Emerging Markets Fund

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.

There is no guarantee the companies in our portfolio will continue to pay dividends.

Forward Equity Long/Short Fund

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.

Short selling involves additional investment risks and transaction costs, and creates leverage, which can increase the risk and volatility of a fund.


		47		December 31, 2014

Investment Glossary

Forward Global Dividend Fund

There is no guarantee the companies in our portfolio will continue to pay dividends.

Forward International Dividend Fund

Borrowing for investment purposes creates leverage, which can increase the risk and volatility of a fund.

There is no guarantee the companies in our portfolio will continue to pay dividends.

Forward International Small Companies Fund

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.

Foreign securities, especially emerging or frontier markets, will involve additional risks including, exchange rate fluctuations, social and political instability, less liquidity, greater volatility and less regulation.

Forward Select EM Dividend Fund

Borrowing for investment purposes creates leverage, which can increase the risk and volatility of a fund.

Short selling involves additional investment risks and transaction costs, and creates leverage, which can increase the risk and volatility of a fund.


December 31, 2014		48

Investment Glossary

There is no guarantee the companies in our portfolio will continue to pay dividends.

Forward Small Cap Equity Fund

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.

Forward Tactical Enhanced Fund

Borrowing for investment purposes creates leverage, which can increase the risk and volatility of a fund.

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.

Higher portfolio turnover rates will involve greater transaction costs, and may increase the potential for taxable distributions being paid to shareholders.

Short selling involves additional investment risks and transaction costs, and creates leverage, which can increase the risk and volatility of a fund.

Forward Tactical Growth Fund

Borrowing for investment purposes creates leverage, which can increase the risk and volatility of a fund.

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.


		49		December 31, 2014

Investment Glossary

Short selling involves additional investment risks and transaction costs, and creates leverage, which can increase the risk and volatility of a fund.

Forward Commodity Long/Short Strategy Fund

Exposure to the commodities markets may subject a fund to greater volatility than investing in traditional securities. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as natural disasters and international economic, political and regulatory developments.

Investing in exchange-traded funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs.

Mortgage and asset-backed securities are debt instruments that are secured by interests in pools of mortgage loans or other financial instruments. Mortgage-backed securities are subject to, among other things, prepayment and extension risks.

Investing in a non-diversified fund involves the risk of greater price fluctuation than a more diversified portfolio.

Fund Benchmark Definitions

Barclays U.S. Corporate High-Yield Bond Index: Barclays U.S. Corporate High-Yield Bond Index covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch and S&P is Ba1/BB+/BB+ or below.

Barclays U.S. Intermediate Corporate Index: Barclays U.S. Intermediate Corporate Index covers the USD-denominated, investment grade, fixed-rate, taxable corporate bond market. The index includes debt from U.S. and non-U.S. industrial, utility and financial institution issuers with duration of 1-10 years.

Barclays U.S. Municipal Bond Index: Barclays U.S. Municipal Bond Index covers the USD-denominated, long-term tax-exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds and pre-refunded bonds.

Credit Suisse Emerging Market Corporate Bond Index: Credit Suisse Emerging Market Corporate Bond Index consists of U.S. dollar-denominated fixed-income issues from Latin America, Eastern Europe and Asia.

Credit Suisse Momentum and Volatility Enhanced Return Strategy Index (Credit Suisse MOVERS Index): Credit Suisse MOVERS Index seeks positive absolute returns at bullish and at bearish points in the commodity cycle for each of the S&P GSCI single commodity sub-indexes. Currently, 24 single commodity sub-indexes meet the eligibility requirements for the S&P GSCI.

Dynamic Income Blended Index: Dynamic Income Blended Index is a hypothetical index constructed by Forward Management, which consists of 70% Barclays U.S. Intermediate Corporate Index and 30% Russell U.S. Large Cap High Dividend Yield Index.


December 31, 2014		50

Investment Glossary

HFRX Equity Hedge Index: HFRX Equity Hedge Index is comprised of private funds with strategies that maintain both long and short positions primarily in equity securities and equity derivatives.

MSCI ACWI (All Country World Index): MSCI ACWI is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets.

MSCI ACWI (All Country World Index) ex-USA: MSCI ACWI ex-USA is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets, excluding the United States.

MSCI EAFE Small Cap Index: MSCI EAFE Small Cap Index is an unmanaged, market-weighted index of small companies in developed markets, excluding the U.S. and Canada.

MSCI Emerging Markets Index: MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.

Russell 2000 Index: Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index represents approximately 98% of the investable U.S. equity market.

Russell U.S. Large Cap High Dividend Yield Index: Russell U.S. Large Cap High Dividend Yield Index selects securities from the Russell 1000 Index exhibiting high dividend yields and quality characteristics such as dividend growth, earning stability and sustained profitability.

S&P 500 Index: S&P 500 Index is an unmanaged index of 500 common stocks chosen to reflect the industries in the U.S. economy.

One cannot invest directly in an index.

Definition of Terms

10-year U.S. Treasury is a debt obligation issued by the U.S. Treasury that has a term of more than one year, but not more than 10 years.

Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

Call option is an agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity or other instrument at a specified price within a specific time period.

California Public Employees’ Retirement System (CalPERS) is an organization that provides numerous benefits to its more than 1.6 million members, including health insurance, long-term care insurance, death benefits, mortgage program, and pension and retirement-related financial benefits.

Currency risk is a form of risk that arises from the change in price of one currency against another.

Currency swap is a swap that involves the exchange of principal and interest in one currency for the same in another currency.

Curve carry is a strategy that seeks to invest in commodity futures that will have the least amount of price deterioration or potential price appreciation from the time of the investment to the sale or maturity of the future due to the passage of time relative the spot price.

Duration is a measure of the sensitivity of the price of a fixed-income investment to a change in interest rates and is expressed as a number of years.

E-mini is an electronically-traded futures contract on the Chicago Mercantile Exchange that represents a portion of the normal futures contracts.

Federal funds rate is the interest rate at which a depository institution lends immediately available funds to another depository institution overnight.


		51		December 31, 2014

Investment Glossary

Future is a financial contract that obligates the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or financial instrument, at a predetermined future date and price.

A futures curve plots futures prices (y-axis) against contract maturities (i.e., terms to maturity).

General obligation bond is a municipal bond, backed by the full faith and credit of the issuer, which is repaid from either the issuer’s limited or unlimited ad valorem taxing power. These bonds represent a promise by the municipal issuer to levy enough taxes as necessary to make full and timely payments to investors.

Government future is a futures contract on a government security.

Index future is a futures contract on a stock or financial index.

Interest rate future is a financial contract between the buyer and seller agreeing to the future delivery of any interest-bearing asset.

Mortgage-backed security (MBS) is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans.

MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada.

MSCI Emerging Markets Energy Index measures equity market performance of the energy sector in the global emerging markets.

Nasdaq Composite is a capitalization-weighted index designed to measure the performance of 3,000 stocks listed on the Nasdaq exchange, which includes large technology and biotech companies.

Put option is an agreement that gives an investor the right (but not the obligation) to sell a specified amount of an underlying security at a specified price within a specified time.

Quantitative easing refers to a form of monetary policy used to stimulate an economy where interest rates are either at, or close to, zero.

Range-bound is when a market, or the value of a particular stock, bond, commodity or currency, moves within a relatively tight range for a certain period of time.

Revenue-backed bonds are municipal bonds that finance income-producing projects and are secured by a specified revenue source.

S&P 500 Index futures are futures contracts on the S&P 500 Index and are often used to hedge risk over a certain period of time.

Swap is the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds) or because investment objectives have changed.

Total return swap is a swap agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income it generates and any capital gains.

Valuation is the process of determining the value of an asset or company based on earnings and the market value of assets.

Volatility is a statistical measure of the dispersion of returns for a given security or market index.

Yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates.


December 31, 2014		52

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2014

As a shareholder of the Forward Funds, you incur two types of costs: (1) transaction costs, including applicable sales charges (loads); and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, shareholder services fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the (six-month) period and held for the entire period July 1, 2014 through December 31, 2014.

Actual Expenses

The first line for each share class of each Fund in the table provides information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the applicable line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example For Comparison Purposes

The second line for each share class of each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the second line for each share class of each Fund within the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.


Forward Credit Analysis Long/Short Fund	Beginning Account Value 07/01/14		Ending Account Value 12/31/14		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/14-12/31/14
Investor Class
Actual	$	1,000.00	$	1,019.80		1.79%	$	9.11

Hypothetical	$	1,000.00	$	1,016.18		1.79%	$	9.10
Institutional Class
Actual	$	1,000.00	$	1,021.80		1.44%	$	7.37

Hypothetical	$	1,000.00	$	1,017.90		1.44%	$	7.35
Class A
Actual	$	1,000.00	$	1,019.10		1.94%	$	9.87

Hypothetical	$	1,000.00	$	1,015.43		1.94%	$	9.86
Class C
Actual	$	1,000.00	$	1,017.80		2.39%	$	12.16

Hypothetical	$	1,000.00	$	1,013.16		2.39%	$	12.13
Advisor Class
Actual	$	1,000.00	$	1,021.70		1.49%	$	7.59

Hypothetical	$	1,000.00	$	1,017.69		1.49%	$	7.58
Forward Dynamic Income Fund
Institutional Class
Actual	$	1,000.00	$	1,041.00		1.17%	$	6.02

Hypothetical	$	1,000.00	$	1,019.31		1.17%	$	5.96


		53		December 31, 2014

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2014


Forward Dynamic Income Fund (continued)	Beginning Account Value 07/01/14		Ending Account Value 12/31/14		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/14-12/31/14
Class A
Actual	$	1,000.00	$	1,038.50		1.64%	$	8.43

Hypothetical	$	1,000.00	$	1,016.94		1.64%	$	8.34
Forward EM Corporate Debt Fund
Investor Class
Actual	$	1,000.00	$	949.20		1.49%	$	7.32

Hypothetical	$	1,000.00	$	1,017.69		1.49%	$	7.58
Institutional Class
Actual	$	1,000.00	$	950.60		1.14%	$	5.60

Hypothetical	$	1,000.00	$	1,019.46		1.14%	$	5.80
Class C
Actual	$	1,000.00	$	946.30		2.09%	$	10.25

Hypothetical	$	1,000.00	$	1,014.67		2.09%	$	10.61
Advisor Class
Actual	$	1,000.00	$	951.30		1.21%	$	5.95

Hypothetical	$	1,000.00	$	1,019.11		1.21%	$	6.16
Forward Emerging Markets Fund
Investor Class
Actual	$	1,000.00	$	914.80		1.74%	$	8.40

Hypothetical	$	1,000.00	$	1,016.43		1.74%	$	8.84
Institutional Class
Actual	$	1,000.00	$	917.00		1.39%	$	6.72

Hypothetical	$	1,000.00	$	1,018.20		1.39%	$	7.07
Advisor Class
Actual	$	1,000.00	$	917.10		1.44%	$	6.96

Hypothetical	$	1,000.00	$	1,017.95		1.44%	$	7.32
Forward Equity Long/Short Fund^(c)
Investor Class
Actual	$	1,000.00	$	1,025.20		2.47%	$	12.61

Hypothetical	$	1,000.00	$	1,012.75		2.47%	$	12.53
Institutional Class
Actual	$	1,000.00	$	1,027.50		1.87%	$	9.56

Hypothetical	$	1,000.00	$	1,015.78		1.87%	$	9.50
Forward Global Dividend Fund
Investor Class
Actual	$	1,000.00	$	936.80		1.34%	$	6.54

Hypothetical	$	1,000.00	$	1,018.45		1.34%	$	6.82


December 31, 2014		54

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2014


Forward Global Dividend Fund (continued)	Beginning Account Value 07/01/14		Ending Account Value 12/31/14		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/14-12/31/14
Institutional Class
Actual	$	1,000.00	$	938.10		0.99%	$	4.84

Hypothetical	$	1,000.00	$	1,020.21		0.99%	$	5.04
Class A
Actual	$	1,000.00	$	936.20		1.49%	$	7.27

Hypothetical	$	1,000.00	$	1,017.69		1.49%	$	7.58
Forward International Dividend Fund
Investor Class
Actual	$	1,000.00	$	903.20		1.38%	$	6.62

Hypothetical	$	1,000.00	$	1,018.25		1.38%	$	7.02
Institutional Class
Actual	$	1,000.00	$	904.90		1.02%	$	4.90

Hypothetical	$	1,000.00	$	1,020.06		1.02%	$	5.19
Class A
Actual	$	1,000.00	$	902.50		1.54%	$	7.38

Hypothetical	$	1,000.00	$	1,017.44		1.54%	$	7.83
Class C
Actual	$	1,000.00	$	900.20		1.98%	$	9.48

Hypothetical	$	1,000.00	$	1,015.22		1.98%	$	10.06
Advisor Class
Actual	$	1,000.00	$	904.60		1.08%	$	5.18

Hypothetical	$	1,000.00	$	1,019.76		1.08%	$	5.50
Forward International Small Companies Fund
Investor Class
Actual	$	1,000.00	$	892.80		1.64%	$	7.82

Hypothetical	$	1,000.00	$	1,016.94		1.64%	$	8.34
Institutional Class
Actual	$	1,000.00	$	894.60		1.29%	$	6.16

Hypothetical	$	1,000.00	$	1,018.70		1.29%	$	6.56
Advisor Class
Actual	$	1,000.00	$	894.50		1.34%	$	6.40

Hypothetical	$	1,000.00	$	1,018.45		1.34%	$	6.82
Forward Select EM Dividend Fund
Investor Class
Actual	$	1,000.00	$	865.00		1.84%	$	8.65

Hypothetical	$	1,000.00	$	1,015.93		1.84%	$	9.35


		55		December 31, 2014

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2014


Forward Select EM Dividend Fund (continued)	Beginning Account Value 07/01/14		Ending Account Value 12/31/14		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/14-12/31/14
Institutional Class
Actual	$	1,000.00	$	866.30		1.49%	$	7.01

Hypothetical	$	1,000.00	$	1,017.69		1.49%	$	7.58
Class C
Actual	$	1,000.00	$	862.30		2.45%	$	11.50

Hypothetical	$	1,000.00	$	1,012.85		2.45%	$	12.43
Advisor Class
Actual	$	1,000.00	$	866.50		1.54%	$	7.25

Hypothetical	$	1,000.00	$	1,017.44		1.54%	$	7.83
Forward Small Cap Equity Fund
Investor Class
Actual	$	1,000.00	$	991.60		1.49%	$	7.48

Hypothetical	$	1,000.00	$	1,017.69		1.49%	$	7.58
Institutional Class
Actual	$	1,000.00	$	993.30		1.14%	$	5.73

Hypothetical	$	1,000.00	$	1,019.46		1.14%	$	5.80
Advisor Class
Actual	$	1,000.00	$	992.80		1.19%	$	5.98

Hypothetical	$	1,000.00	$	1,019.21		1.19%	$	6.06
Forward Tactical Enhanced Fund
Investor Class
Actual	$	1,000.00	$	957.70		1.75%	$	8.64

Hypothetical	$	1,000.00	$	1,016.38		1.75%	$	8.89
Institutional Class
Actual	$	1,000.00	$	959.30		1.39%	$	6.86

Hypothetical	$	1,000.00	$	1,018.20		1.39%	$	7.07
Class A
Actual	$	1,000.00	$	956.80		1.90%	$	9.37

Hypothetical	$	1,000.00	$	1,015.63		1.90%	$	9.65
Class C
Actual	$	1,000.00	$	954.70		2.35%	$	11.58

Hypothetical	$	1,000.00	$	1,013.36		2.35%	$	11.93
Advisor Class
Actual	$	1,000.00	$	958.50		1.45%	$	7.16

Hypothetical	$	1,000.00	$	1,017.90		1.45%	$	7.38


December 31, 2014		56

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2014


Forward Tactical Growth Fund	Beginning Account Value 07/01/14		Ending Account Value 12/31/14		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/14-12/31/14
Investor Class
Actual	$	1,000.00	$	1,012.10		1.73%	$	8.77

Hypothetical	$	1,000.00	$	1,016.48		1.73%	$	8.79
Institutional Class
Actual	$	1,000.00	$	1,013.80		1.38%	$	7.00

Hypothetical	$	1,000.00	$	1,018.25		1.38%	$	7.02
Class A
Actual	$	1,000.00	$	1,011.40		1.88%	$	9.53

Hypothetical	$	1,000.00	$	1,015.73		1.88%	$	9.55
Class C
Actual	$	1,000.00	$	1,008.90		2.33%	$	11.80

Hypothetical	$	1,000.00	$	1,013.46		2.33%	$	11.82
Advisor Class
Actual	$	1,000.00	$	1,013.80		1.43%	$	7.26

Hypothetical	$	1,000.00	$	1,018.00		1.43%	$	7.27
Forward Commodity Long/Short Strategy Fund
Investor Class
Actual	$	1,000.00	$	1,021.30		1.85%	$	9.43

Hypothetical	$	1,000.00	$	1,015.88		1.85%	$	9.40
Institutional Class
Actual	$	1,000.00	$	1,023.50		1.50%	$	7.65

Hypothetical	$	1,000.00	$	1,017.64		1.50%	$	7.63
Class C
Actual	$	1,000.00	$	1,018.10		2.45%	$	12.46

Hypothetical	$	1,000.00	$	1,012.85		2.45%	$	12.43
Advisor Class
Actual	$	1,000.00	$	1,022.70		1.55%	$	7.90

Hypothetical	$	1,000.00	$	1,017.39		1.55%	$	7.88
Class Z
Actual	$	1,000.00	$	1,023.50		1.46%	$	7.45

Hypothetical	$	1,000.00	$	1,017.85		1.46%	$	7.43

(a) Annualized, based on the Fund’s most recent fiscal half year expenses.

(b) Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account values over the period, multiplied by the number of days in the most recent fiscal half year (184), then divided by 365.


		57		December 31, 2014

Portfolio of Investments (Note 9)

Forward Credit Analysis Long/Short Fund


Principal Amount			Value (Note 2)

	Municipal Bonds: 89.08%
	Alabama: 1.83%

$	3,000,000	County of Jefferson, Alabama Sewer Convertible Revenue Warrants (Capital Appreciation), Sub-Lien, Series F 7.900%, 10/01/50^(a)	$	1,865,100

	California: 22.12%

	4,600,000	California County Tobacco Securitization Agency, Convertible Asset-Backed Revenue Bonds (Los Angeles County) 5.450%, 06/01/28		4,484,540

	4,000,000	California Earthquake Authority, Taxable Revenue Bonds 2.805%, 07/01/19		4,006,120

	1,800,000	California State Public Works Board, Revenue Bonds (Build America Bonds), Series G-2 8.361%, 10/01/34		2,653,542

	2,820,000	California State Public Works Board, Revenue Bonds (Capital Projects), Series E 5.786%, 12/01/21		3,220,666

	1,000,000	California Statewide Communities Development Authority, Loma Linda University Medical Center Revenue Bonds, Series A 5.500%, 12/01/54		1,090,840

	2,000,000	Golden State Tobacco Securitization Corp., Asset-Backed Sr. Revenue Bonds (California Tobacco Settlement), Series A-1 5.750%, 06/01/47		1,652,740

	1,000,000	Long Beach, California Bond Finance Authority, Revenue Bonds, Series A 5.000%, 11/15/15		1,034,790

	1,000,000	Stockton Public Financing Authority, Revenue Bonds (Delta Water Supply Project), Series A 6.125%, 10/01/35		1,183,650

	2,750,000	6.250%, 10/01/40		3,253,442

				22,580,330

	Georgia: 1.08%

	1,000,000	Savannah College of Art & Design Projects, Revenue Bonds, (Private Colleges & Universities Authroity) 5.000%, 04/01/33		1,097,580


Principal Amount			Value (Note 2)


	Hawaii: 1.30%

$	1,100,000	Honolulu City & County Board of Water Supply & Water Systems, Revenue Bonds, Series A 5.000%, 07/01/27	$	1,331,990

	Iowa: 5.52%

	1,000,000	Iowa Finance Authority, Midwestern Disaster Area Revenue Bonds (Iowa Fertilizer Co., Project) 5.000%, 12/01/19		1,057,310

	4,580,000	Iowa Tobacco Settlement Authority, Asset-Backed Revenue Bonds, Series A 6.500%, 06/01/23		4,580,412

				5,637,722

	Louisiana: 4.39%

	4,000,000	Tobacco Settlement Financing Corp., Asset-Backed Revenue Bonds, Series 1 5.500%, 05/15/29		4,481,920

	New Jersey: 7.71%

	2,675,000	New Jersey Health Care Facilities Financing Authority, Revenue Bonds (Barnabas Health), Series A 5.000%, 07/01/24		3,109,153

	4,000,000	New Jersey Tobacco Settlement Financing Corp., Revenue Bonds, Series 1A 5.000%, 06/01/41		3,019,480

	1,500,000	South Jersey Transportation Authority Llc, Revenue Bonds, (Build America Taxable Bonds), Series A-5 7.000%, 11/01/38		1,744,950

				7,873,583

	New York: 30.18%

	5,000,000	New York City, Industrial Development Agency, Special Facilities Revenue Bonds (American Airlines, Inc. - JFK International Airport), VRDN 7.750%, 08/01/31^(b)		5,496,950

	6,000,000	8.000%, 08/01/28^(b)		6,621,420

	3,000,000	New York City Transitional Finance Authority, Future Tax Secured Subordinate Revenue Bonds, Subseries B-1 5.000%, 08/01/31		3,570,060

	5,000,000	5.000%, 08/01/39		5,794,800


December 31, 2014		58		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Credit Analysis Long/Short Fund


Principal Amount			Value (Note 2)


	New York (continued): 30.18%

$	1,000,000	New York Liberty Development Corp., Refunding Revenue Bonds (World Trade Center Project), Class 1-3 5.000%, 11/15/44^(c)	$	1,036,980

	2,000,000	New York Metropolitan Transportation Authority, Refunding Revenue Bonds, Subseries G-1 5.000%, 11/15/28		2,380,480

	5,000,000	New York State Dormitory Authority, General Purpose Refunding Revenue Bonds (Personal Income Tax Revenue), Series A 5.000%, 12/15/30		5,903,150

				30,803,840

	Ohio: 5.12%

	4,790,000	Buckeye, Ohio Tobacco Settlement Financing Authority, Revenue Bonds (Asset Backed Sr. Turbo), Series A-2 6.500%, 06/01/47		4,209,644

	1,000,000	Ohio State Water Development Authority Pollution Control Facilities, Revenue Bonds (First Energy Nuclear), Series A, VRDN 3.375%, 07/01/33^(b)		1,012,810

				5,222,454

	Texas: 9.83%

	10,000,000	Texas State Public Finance Authority, Taxable Revenue Bonds, (Texas Windstorm Insurance Association) 8.250%, 07/01/24		10,031,900

		Total Municipal Bonds (Cost $87,779,361)		90,926,419


Par Value			Value (Note 2)

	Short-Term Securities: 6.97%

$	19,000	U.S. Treasury Bills, Discount Notes 0.046%, due 01/02/15^(d)	$	19,000

	2,800,000	0.064%, due 05/14/15^(d)		2,799,563

	4,300,000	0.070%, due 05/07/15^(d)		4,299,329

		Total Short-Term Securities (Cost $7,117,299)		7,117,892

		Total Investments: 96.05% (Cost $94,896,660)		98,044,311

		Net Other Assets and Liabilities: 3.95%		4,036,698	^(e)

		Net Assets: 100.00%	$	102,081,009

Percentages are stated as a percent of net assets.

(a) Represents a step-up bond. Rate disclosed is as of December 31, 2014.

(b) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at December 31, 2014.

(c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate market value of those securities was $1,036,980, representing 1.02% of net assets.

(d) Rate shown represents the bond equivalent yield to maturity at date of purchase.

(e) Includes cash which is being held as collateral for futures contracts.

Futures Contracts

Description

Position

Contracts

Expiration
Date

Value

Unrealized
Loss

U.S. Treasury Long Bond Futures

Short

(76)

03/23/15

(10,986,750)

(298,722)

Total Futures Contracts

(10,986,750)

(298,722)

Investment Abbreviations:

Sr. — Senior

VRDN — Variable Rate Demand Notes


See Notes to Financial Statements		59		December 31, 2014

Portfolio of Investments (Note 9)

Forward Dynamic Income Fund


Shares			Value (Note 2)

	Common Stocks: 40.97%
	Consumer Discretionary: 4.26%

	6,700	Buckle, Inc.	$	351,884

	20,000	Ford Motor Co.		310,000

	4,300	Hasbro, Inc.		236,457

	3,500	Home Depot, Inc.		367,395

	5,000	Target Corp.		379,550

				1,645,286

	Consumer Staples: 11.90%

	6,000	Clorox Co.		625,260

	5,650	Colgate-Palmolive Co.		390,924

	5,400	ConAgra Foods, Inc.		195,912

	4,500	Costco Wholesale Corp.		637,875

	5,100	CVS Health Corp.		491,181

	3,600	Dr. Pepper Snapple Group, Inc.		258,048

	10,400	Kroger Co.		667,784

	5,900	Procter & Gamble Co.		537,431

	4,600	Walgreens Boots Alliance, Inc.		350,520

	5,200	Wal-Mart Stores, Inc.		446,576

				4,601,511

	Financials: 12.58%

	21,100	Acadia Realty Trust		675,833

	21,000	Associated Estates Realty Corp.		487,410

	40,000	Bank of America Corp.		715,600

	10,000	BioMed Realty Trust, Inc.		215,400

	4,083	CareTrust REIT, Inc.		50,347

	14,000	Franklin Street Properties Corp.		171,780

	12,000	Mack-Cali Realty Corp.		228,720

	23,200	NorthStar Realty Finance Corp.		407,856

	2,900	State Street Corp.		227,650

	16,900	Sunstone Hotel Investors, Inc.		279,019

	21,500	Terreno Realty Corp.		443,545

	8,800	Urstadt Biddle Properties, Inc., Class A		192,544

	49,235	Winthrop Realty Trust		767,574

				4,863,278


Shares			Value (Note 2)


	Healthcare: 1.66%

	3,000	Eli Lilly & Co.	$	206,970

	6,900	GlaxoSmithKline Plc		147,980

	9,200	Pfizer, Inc.		286,580

				641,530

	Industrials: 3.47%

	2,620,000	ASR Logistics Holdings, Ltd.		266,911

	122,422	Bradken, Ltd.		472,741

	3,600	Siemens AG		408,392

	2,000	Stanley Black & Decker, Inc.		192,160

				1,340,204

	Information Technology: 3.13%

	10,400	Intel Corp.		377,416

	17,900	Microsoft Corp.		831,455

				1,208,871

	Materials: 1.19%

	13,000	Freeport-McMoRan, Inc.		303,680

	2,000	LyondellBasell Industries NV, Class A		158,780

				462,460

	Telecommunication Services: 2.78%

	13,000	Verizon Communications, Inc.		608,140

	56,500	Windstream Holdings, Inc.		465,560

				1,073,700

		Total Common Stocks (Cost $15,651,750)		15,836,840

	Exchange-Traded Funds: 2.66%
	Exchange-Traded Funds: 2.66%

	5,000	SPDR^® S&P 500^® ETF Trust		1,027,500

		Total Exchange-Traded Funds (Cost $1,023,978)		1,027,500

	Limited Partnerships: 2.03%
	Energy: 2.03%

	35,000	Calumet Specialty Products Partners LP		784,350

		Total Limited Partnerships (Cost $772,709)		784,350


December 31, 2014		60		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Dynamic Income Fund


Shares			Value (Note 2)

	Preferred Stocks: 6.45%
	Financials: 5.55%

	1,850	AmTrust Financial Services, Inc. Series B, 7.250%	$	45,011

	16,570	Campus Crest Communities, Inc. Series A, 8.000%		420,712

	3,000	Excel Trust, Inc. Series B, 8.125%		79,620

	1,059	Gladstone Investment Corp. Series A, 7.125%		27,629

	169	Highwoods Properties, Inc. Series A, 8.625%		206,275

	5,000	Invesco Mortgage Capital, Inc. Series B, 7.750%^(a)		113,850

	1,195	iStar Financial, Inc. Series D, 8.000%		29,875

	5,000	Northern Trust Corp. Series C, 5.850%		125,250

	6,800	NorthStar Realty Finance Corp. Series E, 8.750%		171,564

	1,250	Prologis, Inc. Series Q, 8.540%		77,500

	12,000	RAIT Financial Trust Series A, 7.750%		279,840


Shares			Value (Note 2)



	10,000	State Street Corp. 6.000%	$	252,400

	12,500	Strategic Hotels & Resorts, Inc. Series B, 8.250%		316,938

				2,146,464

	Telecommunication Services: 0.90%

	10,000	United States Cellular Corp. 7.250%		249,700

	3,700	Verizon Communications, Inc. 5.900%		96,866

				346,566

		Total Preferred Stocks (Cost $2,476,964)		2,493,030

		Total Investments: 52.11% (Cost $19,925,401)		20,141,720

		Net Other Assets and Liabilities: 47.89%		18,507,980	^(b)

		Net Assets: 100.00%	$	38,649,700

Percentages are stated as a percent of net assets.

(a) Dividend rate will change at a future date. Dividend rate shown reflects the rate in effect at December 31, 2014.

(b) Includes cash which is being held as collateral for futures contracts.

Futures Contracts

Description

Position

Contracts

Expiration
Date

Value

Unrealized
Loss

E-Mini S&P 500^® Futures

Long

03/23/15

4,823,140

(3,297)

Total Futures Contracts

4,823,140

(3,297)

Investment Abbreviations:

ETF — Exchange-Traded Fund

REIT — Real Estate Investment Trust

S&P — Standard & Poor’s

SPDR — Standard & Poor’s Depositary Receipts


See Notes to Financial Statements		61		December 31, 2014

Portfolio of Investments (Note 9)

Forward EM Corporate Debt Fund

Shares

Value
(Note 2)

Common Stocks: 0.39%

Nigeria: 0.39%

675,938

SEPLAT Petroleum Development Co., Plc

1,517,066

Total Common Stocks
(Cost $2,383,580)

1,517,066

Principal
Amount

Currency

Foreign Government Obligations: 4.02%

Argentina: 2.04%

8,000,000

Provincia de Buenos Aires, Sr. Unsec. Notes
11.750%, 10/05/15^(a)

USD

8,020,000

Brazil: 1.02%

4,000,000

Banco Nacional de Desenvolvimento Economico e Social, Sr. Unsec. Notes
3.375%, 09/26/16^(b)(c)

USD

4,023,600

Ivory Coast: 0.96%

3,900,000

Ivory Coast Government International Bond, Sr. Unsec. Notes 7.774%, 12/31/32^(a)(d)

USD

3,763,500

Total Foreign Government Obligations
(Cost $15,345,036)

15,807,100

Asset-Backed Securities: 4.35%

China: 4.35%

12,050,000

Sealane Trade Finance, Ltd., Series 2011-1X, Class A 14.233%, 02/12/16^(e)

USD

12,019,875

3,700,000

Start CLO, Ltd., Series 2011-7A, Class A
15.236%, 06/09/15^(c)(e)

USD

3,760,236

1,300,000

Start CLO, Ltd., Series 2011-7X, Class A
15.236%, 06/09/15^(e)

USD

1,321,164

17,101,275

Total Asset-Backed Securities
(Cost $17,516,035)

17,101,275

Principal
Amount

Currency

Value
(Note 2)

Contingent Convertible Securities: 1.42%

Brazil: 0.95%

4,000,000

Banco do Brasil SA/Cayman, Jr. Sub. Notes
9.000%, Perpetual Maturity^(c)(e)(f)

USD

3,740,000

South Korea: 0.47%

1,800,000

Woori Bank, Sub. Notes 4.750%, 04/30/24^(c)

USD

1,864,344

Total Contingent Convertible Securities
(Cost $5,765,550)

5,604,344

Convertible Corporate Bonds: 0.36%

Indonesia: 0.36%

7,000,000

Enercoal Resources Pte, Ltd. 6.000%, 04/07/18^(g)

USD

1,435,000

Total Convertible Corporate Bonds

(Cost $6,999,998)

1,435,000

Corporate Bonds: 90.72%

Argentina: 2.89%

7,831,000

Cia de Transporte de Energia Electrica en Alta Tension Transener SA,
Sr. Unsec. Notes
9.750%, 08/15/21^(c)

USD

6,147,335

950,000

Empresa Distribuidora Y Comercializadora Norte, Sr. Unsec. Notes
9.750%, 10/25/22^(c)

USD

673,550

5,022,604

MetroGas SA, Sr. Unsec. Notes, A-L
8.875%, 12/31/18^(c)

USD

4,476,396

91,670

PIK Notes 8.875% (or 8.875% PIK), 12/31/18^(c)

USD

72,763

11,370,044

Azerbaijan: 0.50%

2,000,000

International Bank of Azerbaijan OJSC Via Rubrika Finance Co., Ltd., Sr. Unsec. Notes, EMTN
7.750%, 09/26/18

USD

1,950,000

Bangledesh: 1.22%

4,800,000

Banglalink Digital Communications, Ltd., Sr. Unsec. Notes
8.625%, 05/06/19^(c)

USD

4,788,000


December 31, 2014		62		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward EM Corporate Debt Fund


Principal Amount			Currency		Value (Note 2)


	Bolivia: 1.26%

	4,930,000	Trilogy International Partners Llc/Trilogy International Finance, Inc., First Lien Notes 10.250%, 08/15/16^(c)		USD		4,948,487


	Brazil: 5.43%

	2,400,000	Atlantica Tender Drilling, Ltd., Second Lien Notes 8.000%, 09/23/19		USD		2,172,000

	4,000,000	BRF SA, Sr. Unsec. Notes 4.750%, 05/22/24^(b)(c)		USD		3,895,000

	7,000,000	General Shopping Investments, Ltd., Sub. Notes 12.000%, Perpetual Maturity^(a)(e)(f)		USD		6,370,000

	5,000,000	Odebrecht Finance, Ltd., Sr, Unsec. Notes 5.250%, 06/27/29^(c)		USD		4,422,500

	4,785,000	World Wide Supply AS, First Lien Notes 7.750%, 05/26/17^(c)		USD		4,521,825

						21,381,325

	Chile: 5.04%

	2,300,000	Empresa Electrica Angamos SA, First Lien Notes 4.875%, 05/25/29^(c)		USD		2,268,375

	3,300,000	GNL Quintero SA, Sr. Unsec. Notes 4.634%, 07/31/29^(b)(c)		USD		3,348,731

	9,293,007	Inversiones Alsacia SA, First Lien Notes 8.000%, 12/31/18^(c)		USD		6,783,895

	2,300,000	SACI Falabella, Sr. Unsec. Notes 4.375%, 01/27/25^(c)		USD		2,258,899

	1,800,000	Transelec SA, Sr. Unsec. Notes 4.250%, 01/14/25^(c)		USD		1,799,365

	3,300,000	VTR Finance BV, Sec. Notes 6.875%, 01/15/24^(c)		USD		3,374,250

						19,833,515

	China: 7.22%

	3,800,000	Baidu, Inc., Sr. Unsec. Notes 2.750%, 06/09/19^(b)		USD		3,791,123


Principal Amount			Currency		Value (Note 2)



	1,750,000	CNOOC Curtis Funding No. 1, Ltd., Sr. Unsec. Notes 4.500%, 10/03/23^(c)		USD		1,843,354

	3,000,000	CNOOC Finance 2013, Ltd., Sr. Unsec. Notes 3.000%, 05/09/23^(b)		USD		2,844,390

	7,000,000	Sinopec Group Overseas Development 2014, Ltd., Sr. Unsec. Notes 4.375%, 04/10/24^(b)(c)		USD		7,370,608

	6,800,000	State Grid Overseas Investment 2013, Ltd., Sr. Unsec. Notes 3.125%, 05/22/23^(b)(c)		USD		6,670,787

	1,600,000	State Grid Overseas Investment 2014, Ltd., Sr. Unsec. Notes 4.850%, 05/07/44^(c)		USD		1,782,862

	4,000,000	Tencent Holdings, Ltd., Sr. Unsec. Notes 3.375%, 03/05/18^(b)(c)		USD		4,105,164

						28,408,288

	Colombia: 8.57%

	5,655,000	Avianca Holdings SA, Sr. Unsec. Notes 8.375%, 05/10/20^(b)(c)		USD		5,852,925

	5,117,000	Bancolombia SA, Sub. Notes 5.125%, 09/11/22^(b)		USD		5,097,811

	5,273,000	Colombia Telecomunicaciones SA ESP, Sr. Unsec. Notes 5.375%, 09/27/22^(b)(c)		USD		5,154,357

	2,005,000	Gruposura Finance, Sr. Unsec. Notes 5.700%, 05/18/21^(a)		USD		2,125,300

	4,000,000	Millicom International Cellular SA, Sr. Unsec. Notes 6.625%, 10/15/21^(c)		USD		4,180,000

	850,000	Pacific Rubiales Energy Corp., Sr. Unsec. Notes 7.250%, 12/12/21^(c)		USD		743,750

	1,150,000	7.250%, 12/12/21^(a)(b)		USD		1,006,250

	2,800,000	SUAM Finance BV, Sr. Unsec. Notes 4.875%, 04/17/24^(c)		USD		2,807,000

	6,385,000	Transportadora de Gas Internacional SA ESP, Sr. Unsec. Notes 5.700%, 03/20/22^(a)(b)		USD		6,735,537

						33,702,930


See Notes to Financial Statements		63		December 31, 2014

Portfolio of Investments (Note 9)

Forward EM Corporate Debt Fund


Principal Amount			Currency		Value (Note 2)


	Costa Rica: 0.76%

	3,000,000	Banco Nacional de Costa Rica, Sr. Unsec. Notes 4.875%, 11/01/18^(b)(c)		USD		2,977,500

	Guatemala: 1.34%

	5,000,000	Bantrab Senior Trust, Sr. Unsec. Notes 9.000%, 11/14/20^(b)(c)		USD		5,290,750


	Hong Kong: 2.98%

	3,500,000	AIA Group, Ltd., Sr. Unsec. Notes 4.875%, 03/11/44^(b)(c)		USD		3,994,424

	3,300,000	Hutchison Whampoa International 12, II, Ltd., Sr. Unsec. Notes 2.000%, 11/08/17^(b)(c)		USD		3,314,886

	1,200,000	Hutchison Whampoa International 14, Ltd., Unsec. Notes 3.625%, 10/31/24^(c)		USD		1,207,971

	4,250,000	MIE Holdings Corp., Sr. Unsec. Notes 7.500%, 04/25/19^(c)		USD		3,219,375

						11,736,656

	India: 3.52%

	2,800,000	Bharti Airtel International Netherlands BV, Sr. Unsec. Notes 5.350%, 05/20/24^(a)		USD		3,043,376

	4,850,000	Rolta Americas Llc, Sr. Unsec. Notes 8.875%, 07/24/19^(c)		USD		4,201,313

	6,200,000	State Bank of India, Sr. Unsec. Notes 4.875%, 04/17/24^(b)(c)		USD		6,609,795

						13,854,484

	Indonesia: 1.28%

	5,500,000	PT Perusahaan Listrik Negara, Sr. Unsec. Notes 5.250%, 10/24/42^(b)(c)		USD		5,039,375

	Kazakhstan: 1.03%

	10,500,000	Tristan Oil, Ltd., Sec. Notes 0.000%, 01/01/16^(a)		USD		4,042,500

	Latvia: 0.68%

	2,700,000	Four Finance SA, Sr. Unsec. Notes 11.750%, 08/14/19^(c)		USD		2,661,187


Principal Amount			Currency		Value (Note 2)


	Malaysia: 0.35%

	5,000,000	Special Port Vehicle Bhd, Series 9 5.550%, 07/30/15^(h)		MYR		1,379,079

	Mexico: 13.80%

	2,800,000	Alfa SAB de CV, Sr. Unsec. Notes 5.250%, 03/25/24^(c)		USD		2,919,000

	4,700,000	Banco Santander SA, Sub. Notes 5.950%, 01/30/24^(c)(e)		USD		4,899,750

	7,000,000	BBVA Bancomer SA, Sub. Notes 6.750%, 09/30/22^(b)(c)		USD		7,717,500

	6,000,000	Cemex SAB de CV, Sec. Notes 6.500%, 12/10/19^(b)(c)		USD		6,162,000

	750,000	Comision Federal de Electricidad, Sr. Unsec. Notes 4.875%, 01/15/24^(c)		USD		785,625

	1,800,000	El Puerto de Liverpool SAB de CV, Sr. Unsec. Notes 3.950%, 10/02/24^(c)		USD		1,776,600

	3,000,000	Grupo Bimbo SAB de CV, Sr. Unsec. Notes 3.875%, 06/27/24^(c)		USD		3,019,290

	11,890,651	Maxcom Telecomunicaciones SAB de CV, First Lien Notes 6.000%, 06/15/20^(d)		USD		10,237,851

	3,800,000	Neptuno Finance, Ltd., First Lien Notes 9.750%, 11/07/19^(c)		USD		3,667,000

	7,000,000	Petroleos Mexicanos, Sr. Unsec. Notes 4.250%, 01/15/25^(c)		USD		6,972,000

	6,400,000	Santa Maria Offshore, Ltd., First Lien Notes 8.875%, 07/03/18^(c)		USD		6,128,000

						54,284,616

	Morocco: 1.29%

	4,800,000	Office Cherifien des Phosphates SA, Sr. Unsec. Notes 5.625%, 04/25/24^(c)		USD		5,058,000

	Nigeria: 3.13%

	4,800,000	FBN Finance Co., BV, Sub. Notes 8.000%, 07/23/21^(c)(e)		USD		4,284,000

	4,900,000	Sea Trucks Group, Ltd., First Lien Notes 9.000%, 03/26/18^(c)		USD		3,552,500


December 31, 2014		64		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward EM Corporate Debt Fund

Principal
Amount

Currency

Value
(Note 2)

Nigeria (continued): 3.13%

4,800,000

Seven Energy, Ltd., Sec. Notes
10.250%, 10/11/21^(c)

USD

4,476,000

12,312,500

Norway: 2.26%

5,200,000

Harkand Finance, Inc., Sec. Notes
7.500%, 03/28/19^(c)

USD

4,342,000

4,800,000

Marine Accurate Well ASA, Second Lien Notes
9.500%, 04/03/18

USD

4,560,000

8,902,000

Peru: 1.04%

1,000,000

Corp. Financiera de Desarrollo SA, Sub. Notes
5.250%, 07/15/29^(c)(e)

USD

1,017,700

2,870,000

SAN Miguel Industrias Pet SA, Sr. Unsec. Notes
7.750%, 11/06/20^(c)

USD

3,056,550

4,074,250

Poland: 1.01%

3,800,000

PKO Finance AB, Sr. Unsec. Notes
4.630%, 09/26/22^(b)(c)

USD

3,994,750

Qatar: 2.11%

4,000,000

QNB Finance, Ltd., Sr. Unsec. Notes
2.875%, 04/29/20^(b)

USD

3,980,000

4,026,100

Ras Laffan Liquefied Natural Gas Co., Ltd. II, Sec. Notes
5.298%, 09/30/20^(a)(b)

USD

4,338,123

8,318,123

Russia: 5.63%

2,500,000

Alfa Bank OJSC Via Alfa Bond Issuance Plc, Sr. Unsec. Notes
7.750%, 04/28/21^(a)(b)

USD

2,134,490

4,100,000

Borets Finance, Ltd., Unsec. Notes
7.625%, 09/26/18^(c)

USD

2,952,000

5,300,000

EDC Finance, Ltd., Sr. Unsec. Notes
4.875%, 04/17/20^(c)

USD

3,484,750

2,800,000

Eurasian Development Bank, Sr. Unsec. Notes
5.000%, 09/26/20^(b)(c)

USD

2,411,416


Principal Amount			Currency		Value (Note 2)



	4,500,000	Evraz Group SA, Sr. Unsec. Notes 6.500%, 04/22/20^(a)		USD		3,468,510

	80,500,000	Federal Grid Co., OJSC via Federal Grid Finance, Ltd., Unsec Notes, Euro-Medium-Term Notes 8.446%, 03/13/19		RUB		920,946

	47,000,000	RusHydro Finance, Ltd., Sec. Notes, Euro-Medium-Term Notes 7.875%, 10/28/15		RUB		704,420

	2,000,000	Russian Agricultural Bank OJSC Via RSHB Capital SA, Sub. Notes 8.500%, 10/16/23^(c)		USD		1,360,000

	1,050,000	Sberbank of Russia Via SB Capital SA, Sub. Notes 5.125%, 10/29/22^(a)		USD		819,693

	4,700,000	Sibur Securities, Ltd., Sr. Unsec. Notes 3.914%, 01/31/18^(a)		USD		3,877,500

						22,133,725

	Saudi Arabia: 1.47%

	5,650,000	Saudi Electricity Global Sukuk Co. 2, Unsec. Notes 5.060%, 04/08/43^(b)(c)		USD		5,770,062

	Serbia: 1.13%

	3,450,000	Adria Bidco BV, Sec. Notes 7.875%, 11/15/20^(c)		EUR		4,462,726

	South Korea: 5.30%

	5,350,000	Doosan Infracore Co., Ltd., Sr. Unsec. Notes 3.250%, 10/05/42^(b)(d)(e)		USD		5,380,597

	1,500,000	Korea East-West Power Co., Ltd., Sr. Unsec. Notes 2.500%, 07/16/17^(b)(c)		USD		1,524,258

	5,000,000	Korea Exchange Bank, Sr. Unsec. Notes 2.500%, 06/12/19^(c)		USD		4,996,230

	4,000,000	Korea Finance Corp., Sr. Unsec. Notes 2.250%, 08/07/17^(b)		USD		4,050,920

	1,800,000	Korea Gas Corp., Sr. Unsec. Notes 3.875%, 02/12/24^(b)(c)		USD		1,897,680

	2,000,000	Korea Resources Corp., Sr. Unsec. Notes 2.125%, 05/02/18^(b)(c)		USD		2,001,314


See Notes to Financial Statements		65		December 31, 2014

Portfolio of Investments (Note 9)

Forward EM Corporate Debt Fund


Principal Amount			Currency		Value (Note 2)


	South Korea (continued): 5.30%

	1,000,000	SK Telecom Co., Ltd., Sr. Unsec. Notes 2.125%, 05/01/18^(b)(c)		USD		1,000,228

						20,851,227


	Tanzania: 0.67%

	3,000,000	Golden Close Maritime Corp., Ltd., Sec. Notes 9.000%, 10/24/19^(c)		USD		2,640,000

	Turkey: 2.90%

	3,000,000	Anadolu Efes Biracilik Ve Malt Sanayii AS, Sr. Unsec. Notes 3.375%, 11/01/22^(a)(b)		USD		2,767,500

	3,000,000	KOC Holding AS, Sr. Unsec. Notes 3.500%, 04/24/20^(a)(b)		USD		2,914,500

	2,800,000	Turk Telekomunikasyon AS, Sr. Unsec. Notes 4.875%, 06/19/24^(b)(c)		USD		2,821,717

	1,500,000	Turkiye Is Bankasi AS, Sr. Unsec. Notes 5.000%, 04/30/20^(c)		USD		1,535,625

	1,300,000	Yasar Holdings AS, Sr. Unsec. Notes 8.875%, 05/06/20^(c)		USD		1,378,000

						11,417,342

	Ukraine: 1.02%

	1,000,000	DTEK Finance Plc, Sr. Unsec. Notes 7.875%, 04/04/18^(a)		USD		465,000

	1,950,000	Metinvest BV, Sr. Unsec. Notes 8.750%, 02/14/18^(a)		USD		1,101,750

	2,000,000	MHP SA, Sr. Unsec. Notes 8.250%, 04/02/20^(a)		USD		1,380,000

	2,000,000	Ukraine Railways via Shortline Plc, Sr. Unsec. Notes 9.500%, 05/21/18^(a)		USD		1,060,000

						4,006,750

	United Arab Emirates: 2.17%

	4,567,094	Doric Nimrod Air, First Lien Notes 5.125%, 11/30/24^(c)		USD		4,727,888

	3,800,000	Millennium Offshore Services Superholdings Llc, Sec. Notes 9.500%, 02/15/18^(b)(c)		USD		3,800,000

						8,527,888

Principal
Amount

Currency

Value
(Note 2)

Venezuela: 1.72%

7,300,000

Petroleos de Venezuela SA, Unsec. Notes
6.000%, 05/16/24^(a)

USD

2,774,000

4,201,000

PSOS Finance, Ltd., First Lien Notes
11.750%, 04/23/18^(c)

USD

3,465,825

2,507,500

Sidetur Finance BV, Sr. Unsec. Notes
10.000%, 04/20/16^(a)(g)

USD

526,575

6,766,400

Total Corporate Bonds
(Cost $376,454,754)

356,884,479

Total Investments: 101.26%
(Cost $424,464,953)

398,349,264

Net Other Assets and Liabilities: (1.26)%

(4,955,945

)⁽ⁱ⁾

Net Assets: 100.00%

393,393,319

Percentages are stated as a percent of net assets.

(a) Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such securities cannot be sold by the issuer in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At period end, the aggregate market value of those securities was $62,734,104, representing 15.95% of net assets.

(b) Security, or portion of security, is being held as collateral for the line of credit. At period end, the aggregate market value of those securities was $146,076,620, representing 37.13% of net assets.

(d) Represents a step-up bond. Rate disclosed is as of December 31, 2014.

(e) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at December 31, 2014.

(f) This security has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest.

(g) Security in default on interest payments.

(h) Security determined to be illiquid under the procedures approved by the Fund’s Board of Trustees.

(i) Includes cash which is being held as collateral for credit default swap contracts.


December 31, 2014		66		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward EM Corporate Debt Fund

Credit Default Swap Contracts - Sell Protection^(j)


Reference Entity	Counterparty	Fixed Deal Receive Rate		Maturity Date		Implied Credit Spread at December 31, 2014^(k)		Notional Amount^(l)		Value		Upfront Premiums Received		Unrealized Loss
Petrobras International Finance Company	Credit Suisse First Boston		100 Bps		12/20/15		5.19%	$	10,000,000	$	(396,341)	$	(118,193)	$	(278,148)
Total of Credit Default Swap Contracts										$	(396,341)	$	(118,193)	$	(278,148)

(j) If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

(k) Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, sovereign issues of an emerging country, U.S. municipal issues, and U.S. Treasury obligation issues as

of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.

(l) The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.

Security determined to be illiquid under the procedures approved by the Fund’s Board of Trustees is as follows:


Date(s) of Purchase	Security	Cost		Value		% of Net Assets
11/20/2014	Special Port Vehicle Bhd, Series 9 5.550%, 07/30/15^(h)	$	1,395,582	$	1,379,079		0.35%

Investment Abbreviations:

Bps — Basis Points

EMTN — Euro Medium Term Note

Jr. — Junior

PIK — Payment in-kind

Sec. — Secured

Sr. — Senior

Sub. — Subordinated

Unsec. — Unsecured

Currency Abbreviations:

EUR — Euro

MYR — Malaysian Ringgit

RUB — Russian Ruble

USD — U.S. Dollar


See Notes to Financial Statements		67		December 31, 2014

Portfolio of Investments (Note 9)

Forward Emerging Markets Fund


Shares			Value (Note 2)

	Common Stocks: 100.72%
	Bangladesh: 0.06%

	21,747	Beximco Pharmaceuticals, Ltd., GDR^(a)	$	6,237

	Brazil: 1.67%

	50,600	BM&F Bovespa SA		187,499

	Cambodia: 1.64%

	226,000	NagaCorp, Ltd.		184,772

	China: 6.83%

	200,000	China Galaxy Securities Co., Ltd., Class H		250,946

	354,000	China Machinery Engineering Corp., Class H		271,161

	311,021	China Pioneer Pharma Holdings, Ltd.		244,657

				766,764

	Czech Republic: 1.02%

	4,100	Pegas Nonwovens SA		114,623

	Egypt: 2.78%

	9,466	Arabian Cement Co.^(b)		22,440

	9,460	Eastern Tobacco^(b)		289,699

				312,139

	Greece: 1.59%

	26,800	Plaisio Computers SA		178,361

	Hong Kong: 7.57%

	113,000	China Gas Holdings, Ltd.		178,069

	510,000	China South City Holdings, Ltd.		232,815

	6,700	Guangdong Investment, Ltd., Unsponsored ADR		439,654

				850,538

	Indonesia: 13.38%

	520,000	PT AKR Corporindo Tbk		172,984

	1,250,000	PT Arwana Citramulia Tbk		87,808

	1,545,240	PT Astra Graphia Tbk		236,434

	3,348,525	PT Bank Tabungan Negara Persero Tbk		325,795

	2,800,000	PT Kalbe Farma Tbk		413,726

	1,299,500	PT Media Nusantara Citra Tbk		266,510

				1,503,257

	Malaysia: 4.05%

	115,000	Globetronics Technology Bhd		141,427

	578,621	Oldtown Bhd		248,229


Shares			Value (Note 2)



	150,000	Power Root Bhd	$	64,779

				454,435

	Mexico: 3.33%

	123,399	Compartamos SAB de CV		247,990

	60,525	PLA Administradora Industrial S de RL de CV		126,639

				374,629

	Peru: 4.03%

	106,000	Alicorp SA		252,948

	6,570	Intercorp Financial Services, Inc.^(a)		199,728

				452,676

	Philippines: 13.16%

	80,000	Concepcion Industrial Corp.		76,902

	1,500,000	D&L Industries, Inc.		558,654

	796,000	First Gen Corp.		453,764

	230,000	Robinsons Retail Holdings, Inc.		389,225

				1,478,545

	Russia: 0.59%

	80,000	Aeroflot - Russian Airlines OJSC		42,443

	93,700	Hydraulic Machines and Systems Group Plc, GDR^(a)(b)		24,362

				66,805

	Singapore: 4.53%

	10,000	China Yuchai International, Ltd.		190,000

	193,000	OSIM International, Ltd.		288,484

	32,000	Silverlake Axis, Ltd.		30,317

				508,801

	South Korea: 3.33%

	19,209	Samjin Pharmaceutical Co., Ltd.		373,991

	Sri Lanka: 5.47%

	223,711	Commercial Bank of Ceylon Plc, Non-Voting Depository Receipt		213,310

	190,924	Hatton National Bank Plc, Non-Voting Depository Receipt		222,502

	1,791,963	Piramal Glass Ceylon Plc		66,925

	710,002	Textured Jersey Lanka, Ltd.		111,479

				614,216


December 31, 2014		68		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Emerging Markets Fund


Shares			Value (Note 2)


	Taiwan: 8.77%

	266,900	Formosan Rubber Group, Inc.	$	278,707

	154,000	Kinik Co.		319,189

	1,584	Mega Financial Holding Co., Ltd.		1,225

	222,000	Wah Lee Industrial Corp.		386,368

				985,489

	Thailand: 6.39%

	150,000	Bangkok Aviation Fuel Services Pcl		142,477

	318,100	Jasmine International Pcl		71,065

	237,000	RS Pcl		121,022

	1,087,601	Thai Tap Water Supply Pcl		383,470

				718,034

	Turkey: 5.04%

	250,000	Albaraka Turk Katilim Bankasi AS		186,331

	122,070	Anadolu Hayat Emeklilik AS		269,287

	16,500	Koza Altin Isletmeleri AS		110,257

				565,875

	Ukraine: 0.78%

	9,500	MHP SA, GDR^(a)		87,400

	United Kingdom: 4.71%

	9,300	Bank of Georgia Holdings Plc		300,916

	35,000	ITE Group Plc		87,281

	41,100	Stock Spirits Group Plc		140,929

				529,126

		Total Common Stocks (Cost $11,131,974)		11,314,212


Shares			Value (Note 2)

	Preferred Stocks: 1.31%
	Colombia: 1.31%

	12,404	Banco Davivienda SA	$	146,666

		Total Preferred Stocks (Cost $192,892)		146,666

	Loan Participation Notes: 1.15%
	Bangladesh: 1.15%

	126,500	Titas Gas Transmission & Distribution Co., Ltd., (Loan Participation Notes issued by Deutsche Bank AG, London), expiring 01/27/21		129,382

		Total Loan Participation Notes (Cost $137,360)		129,382

		Total Investments: 103.18% (Cost $11,462,226)		11,590,260

		Net Other Assets and Liabilities: (3.18)%		(357,366	)

		Net Assets: 100.00%	$	11,232,894

Percentages are stated as a percent of net assets.

(b) Security determined to be illiquid under the procedures approved by the Fund’s Board of Trustees.

Securities determined to be illiquid under the procedures approved by the Fund’s Board of Trustees are as follows:


Date(s) of Purchase	Security	Cost		Value		% of Net Assets
05/14/14	Arabian Cement Co.^(b)	$	12,039	$	22,440		0.20%
10/04/12 - 05/09/13	Eastern Tobacco^(b)		135,136		289,699		2.58%
05/02/13 - 06/06/14	Hydraulic Machines and Systems Group Plc, GDR^(a)(b)		265,071		24,362		0.22%
		$	412,246	$	336,501		3.00%

Investment Abbreviations:

ADR — American Depositary Receipt

GDR — Global Depositary Receipt


See Notes to Financial Statements		69		December 31, 2014

Portfolio of Investments (Note 9)

Forward Equity Long/Short Fund


Shares			Value (Note 2)

	Common Stocks: 78.47%
	Consumer Staples: 8.14%

	625	Altria Group, Inc.	$	30,794

	220	Costco Wholesale Corp.		31,185

	325	CVS Health Corp.		31,300

	425	Dr. Pepper Snapple Group, Inc.		30,464

	225	Keurig Green Mountain, Inc.		29,789

	475	Kroger Co.		30,500

	275	Monster Beverage Corp.^(a)		29,796

				213,828

	Energy: 2.39%

	2,600	Canadian Solar, Inc.^(a)		62,894

	Healthcare: 16.27%

	625	AmerisourceBergen Corp.		56,350

	475	Edwards Lifesciences Corp.^(a)		60,505

	3,000	HMS Holdings Corp.^(a)		63,420

	275	Illumina, Inc.^(a)		50,760

	300	Jazz Pharmaceuticals Plc^(a)		49,119

	240	Perrigo Co., Plc		40,118

	575	Stryker Corp.		54,240

	925	Teva Pharmaceutical Industries, Ltd., Sponsored ADR		53,197

				427,709

	Industrials: 3.68%

	210	Air Products & Chemicals, Inc.		30,288

	450	Northrop Grumman Corp.		66,326

				96,614

	Information Technology: 25.61%^(b)

	200	Alibaba Group Holding, Ltd., Sponsored ADR^(a)		20,788

	700	American Tower Corp.		69,195

	1,400	Broadcom Corp., Class A		60,662

	180	Equinix, Inc.		40,811

	300	Google, Inc., Class A^(a)		159,198

	1,050	Intel Corp.		38,105

	380	Lam Research Corp.		30,149

	1,000	Microsoft Corp.		46,450


Shares			Value (Note 2)


	500	Palo Alto Networks, Inc.^(a)	$	61,285

	350	Seagate Technology Plc		23,275

	750	Ubiquiti Networks, Inc.		22,230

	2,000	Yahoo!, Inc.^(a)		101,020

				673,168

	Materials: 4.48%

	1,800	Alcoa, Inc.		28,422

	540	Dow Chemical Co.		24,630

	300	International Flavors & Fragrances, Inc.		30,408

	130	Sherwin-Williams Co.		34,195

				117,655

	Utilities: 17.90%

	2,900	Aqua America, Inc.		77,430

	425	Duke Energy Corp.		35,504

	1,175	Edison International		76,939

	875	Entergy Corp.		76,545

	1,750	NiSource, Inc.		74,235

	1,025	PG&E Corp.		54,571

	1,100	Pinnacle West Capital Corp.		75,141

				470,365

		Total Common Stocks (Cost $1,883,745)		2,062,233

		Total Investments: 78.47% (Cost $1,883,745)		2,062,233

		Net Other Assets and Liabilities: 21.53%		565,752	^(c)

		Net Assets: 100.00%	$	2,627,985

Percentages are stated as a percent of net assets.

(a) Non-income producing security.

(b) When sector categorization is categorized by industry, no industry exceeds the 25% maximum specified in the Statement of Additional Information.

(c) Includes cash which is being held as collateral for futures contracts.


December 31, 2014		70		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Equity Long/Short Fund

Futures Contracts

Description

Position

Contracts

Expiration
Date

Value

Unrealized
Loss

E-Mini S&P 500^® Futures

Short

(15)

03/23/15

(1,539,300)

(24,788)

Total Futures Contracts

(1,539,300)

(24,788)

Investment Abbreviations:

ADR — American Depositary Receipt

S&P — Standard & Poor’s


See Notes to Financial Statements		71		December 31, 2014

Portfolio of Investments (Note 9)

Forward Global Dividend Fund


Shares			Value (Note 2)

	Common Stocks: 95.15%
	China: 1.43%

	258,000	China Machinery Engineering Corp., Class H	$	197,065

	France: 5.19%

	4,900	Danone SA		320,353

	62	Hermes International		22,077

	1,300	LVMH Moet Hennessy Louis Vuitton SA		205,922

	2,700	Orpea		169,001

				717,353

	Germany: 4.21%

	2,600	Bayer AG, Sponsored ADR		355,784

	6,050	RIB Software AG		79,398

	6,000	Software AG		145,806

				580,988

	Hong Kong: 2.94%

	300,000	China South City Holdings, Ltd.		135,712

	208,000	Guangdong Investment, Ltd.		270,909

				406,621

	Indonesia: 2.56%

	1,094,683	PT Astra Graphia Tbk		167,788

	912,000	PT Media Nusantara Citra Tbk		186,417

				354,205

	Italy: 1.35%

	11,188	Danieli & Co. Officine Meccaniche SpA		185,881

	Japan: 9.48%

	30,000	Astellas Pharma, Inc.		417,663

	11,000	Fujitec Co., Ltd.		116,753

	17,500	Kuraray Co., Ltd.		198,831

	5,000	Santen Pharmaceutical Co., Ltd.		269,174

	10,800	Zenkoku Hosho Co., Ltd.		306,477

				1,308,898

	Malaysia: 0.58%

	187,500	Oldtown Bhd		80,053

	Netherlands: 0.76%

	3,500	Arcadis NV		104,974


Shares			Value (Note 2)


	Norway: 3.62%

	10,608	Gjensidige Forsikring ASA	$	173,095

	23,800	Marine Harvest ASA		326,784

				499,879

	Pakistan: 1.38%

	6,000	Suncor Energy, Inc.		190,566

	Peru: 1.74%

	1,500	Credicorp, Ltd.		240,270

	Philippines: 4.08%

	483,124	D&L Industries, Inc.		179,019

	350,000	First Gen Corp.		198,968

	110,000	Robinsons Retail Holdings, Inc.		186,151

				564,138

	Singapore: 2.14%

	7,000	China Yuchai International, Ltd.		133,000

	109,000	OSIM International, Ltd.		162,145

				295,145

	Sweden: 5.53%

	7,500	Investor AB, Class B		272,684

	28,000	Nordea Bank AB		324,122

	26,000	TeliaSonera AB		167,163

				763,969

	Switzerland: 9.47%

	4,200	Novartis AG, Sponsored ADR		389,172

	600	Partners Group Holding AG		174,562

	13,200	Roche Holdings, Ltd., Sponsored ADR		448,668

	4,600	Syngenta AG, ADR		295,504

				1,307,906

	Taiwan: 1.93%

	70,000	Kinik Co.		143,754

	71,000	Wah Lee Industrial Corp.		122,833

				266,587

	Thailand: 2.36%

	837,200	Jasmine International Pcl		185,682

	400,000	Thai Tap Water Supply Pcl		140,720

				326,402


December 31, 2014		72		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Global Dividend Fund


Shares			Value (Note 2)


	Turkey: 0.65%

	13,400	Koza Altin Isletmeleri AS	$	89,593

	United Kingdom: 5.53%

	18,000	Dunelm Group Plc		259,334

	2,500	HSBC Holdings Plc, Sponsored ADR		118,075

	57,900	Stock Spirits Group Plc		198,535

	1,800	WPP Group Plc, Sponsored ADR		187,380

				763,324

	United States: 28.22%

	1,900	3M Co.		312,208

	1,085	AvalonBay Communities, Inc.		177,278

	6,230	BankUnited, Inc.		180,483

	1,135	BlackRock, Inc.		405,831

	3,470	Cardinal Health, Inc.		280,133

	6,300	Comcast Corp., Class A		365,463

	4,130	ConocoPhillips Corp.		285,218

	6,030	JPMorgan Chase & Co.		377,357

	4,100	KLA-Tencor Corp.		288,312

	2,947	McDonald’s Corp.		276,134

	9,680	Pfizer, Inc.		301,532

	5,000	Qualcomm, Inc.		371,650

	17,690	Silvercrest Asset Management Group, Inc., Class A		276,849

				3,898,448

		Total Common Stocks (Cost $11,460,577)		13,142,265

	Limited Partnerships: 1.15%
	United States: 1.15%

	6,850	KKR & Co., LP		158,988

		Total Limited Partnerships (Cost $150,448)		158,988

	Preferred Stocks: 0.78%
	Germany: 0.78%

	3,488	Sixt SE		107,927

		Total Preferred Stocks (Cost $107,860)		107,927


Principal Amount			Value (Note 2)

	Collateralized Mortgage Obligations: 0.72%
	United States: 0.72%

	$583,829	FHLMC, REMICS 3.000%, 06/15/27^(a)	$	66,254

	191,751	FNMA, REMICS 3.500%, 11/25/20^(a)		12,644

	92,357	4.000%, 09/25/20^(a)		5,484

	216,144	4.000%, 10/25/20^(a)		15,226

				99,608

		Total Collateralized Mortgage Obligations (Cost $146,905)		99,608

		Total Investments: 97.80% (Cost $11,865,790)		13,508,788

		Net Other Assets and Liabilities: 2.20%		303,367

		Net Assets: 100.00%	$	13,812,155

Percentages are stated as a percent of net assets.

(a) Interest only security.

Investment Abbreviations:

ADR — American Depositary Receipt

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

REMICS — Real Estate Mortgage Investment Conduits


See Notes to Financial Statements		73		December 31, 2014

Portfolio of Investments (Note 9)

Forward International Dividend Fund


Shares			Value (Note 2)

	Closed-End Funds: 0.01%
	United States: 0.01%

	2,002	Royce Micro-Cap Trust, Inc.	$	20,181

		Total Closed-End Funds (Cost $20,148)		20,181

	Common Stocks: 88.49%
	Australia: 0.72%

	3,200,000	GDI Property Group		2,246,734

	Austria: 0.07%

	4,500	Semperit AG Holding		218,585

	Brazil: 2.21%

	474,000	AMBEV SA, ADR		2,948,280

	850,500	BM&F Bovespa SA		3,151,541

	283,509	Restoque Comercio e Confeccoes de Roupas SA		808,441

				6,908,262

	Canada: 3.45%

	58,200	Bank of Nova Scotia		3,322,056

	100,000	Dream Industrial REIT^(a)		724,738

	212,600	Suncor Energy, Inc.^(a)		6,752,401

				10,799,195

	China: 2.42%

	3,758,000	China Machinery Engineering Corp., Class H^(a)		2,870,427

	5,800,000	China Petroleum & Chemical Corp., Class H^(a)		4,697,067

				7,567,494

	Egypt: 1.23%

	125,100	Eastern Tobacco^(b)		3,831,008

	France: 4.71%

	61,700	Danone SA^(a)		4,033,826

	756	Hermes International		269,198

	15,500	LVMH Moet Hennessy Louis Vuitton SA^(a)		2,455,227

	595,000	Natixis SA^(a)		3,926,179

	64,600	Orpea^(a)		4,043,505

				14,727,935

	Germany: 6.18%

	43,500	Bayer AG, Sponsored ADR		5,952,540

	180,815	FinTech Group AG^(c)		1,979,896


Shares			Value (Note 2)


	188,000	MagForce AG^(c)	$	1,119,502

	124,398	RIB Software AG^(a)		1,632,551

	174,300	Software AG^(a)		4,235,655

	274,831	TUI AG^(c)		4,416,311

				19,336,455

	Hong Kong: 5.60%

	1,503,050	BOC Hong Kong Holdings, Ltd.^(a)		5,008,374

	8,834,000	China South City Holdings, Ltd.		3,996,271

	74,445,500	CSI Properties, Ltd.^(a)		2,949,202

	4,276,000	Guangdong Investment, Ltd.^(a)		5,569,252

				17,523,099

	Indonesia: 3.95%

	13,466,707	PT Astra Graphia Tbk		2,064,118

	5,855,650	PT Bank Mandiri Persero Tbk		5,092,297

	18,681,505	PT Kalbe Farma Tbk		2,754,183

	11,877,500	PT Media Nusantara Citra Tbk		2,427,817

				12,338,415

	Italy: 1.29%

	242,179	Danieli & Co. Officine Meccaniche SpA^(a)		4,023,634

	Japan: 7.66%

	367,000	Astellas Pharma, Inc.^(a)		5,109,412

	880,400	Dynam Japan Holdings Co., Ltd.^(a)		1,727,095

	253,400	Fujitec Co., Ltd.^(a)		2,689,561

	267,800	Kuraray Co., Ltd.^(a)		3,042,688

	54,000	Santen Pharmaceutical Co., Ltd.^(a)		2,907,078

	299,400	Zenkoku Hosho Co., Ltd.^(a)		8,496,218

				23,972,052

	Macau: 0.89%

	1,107,200	MGM China Holdings, Ltd.^(a)		2,795,585

	Malaysia: 1.04%

	1,625,000	Globetronics Technology Bhd^(a)		1,983,616

	865,569	JobStreet Corp. Bhd		116,350

	2,684,300	Oldtown Bhd		1,146,060

				3,246,026


December 31, 2014		74		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward International Dividend Fund


Shares			Value (Note 2)


	Mexico: 0.36%

	12,900	Fomento Economico Mexicano SAB de CV, Sponsored ADR^(c)	$	1,135,587

	Netherlands: 1.31%

	88,000	Arcadis NV^(a)		2,639,351

	22,000	Royal Dutch Shell Plc, Sponsored ADR, Class A		1,472,900

				4,112,251

	Norway: 2.96%

	152,499	Gjensidige Forsikring ASA^(a)		2,488,387

	492,100	Marine Harvest ASA^(a)		6,756,741

				9,245,128

	Peru: 1.69%

	33,000	Credicorp, Ltd.		5,285,940

	Philippines: 5.75%

	22,630,776	D&L Industries, Inc.		8,385,725

	10,468,600	First Gen Corp.		5,951,182

	2,147,400	Robinsons Retail Holdings, Inc.		3,634,006

				17,970,913

	Russia: 1.35%

	850,000	Aeroflot-Russian Airlines OJSC		436,476

	334,783	Hydraulic Machines and Systems Group Plc, GDR^(b)(d)		87,044

	52,735	LUKOIL OAO, Sponsored ADR		2,022,387

	73,000	MMC Norilsk Nickel OJSC, ADR		1,043,891

	90,000	Mobile Telesystems OJSC, Sponsored ADR		646,200

				4,235,998

	Singapore: 2.71%

	153,500	China Yuchai International, Ltd.		2,916,500

	2,790,100	OSIM International, Ltd.^(a)		4,150,464

	1,500,000	Silverlake Axis, Ltd.		1,416,170

				8,483,134

	Spain: 1.26%

	473,245	Banco Santander SA, Sponsored ADR		3,942,131

	Sri Lanka: 1.38%

	1,926,649	Commercial Bank of Ceylon Plc, Non-Voting Depository Receipt		1,837,072


Shares			Value (Note 2)



	1,542,944	Hatton National Bank Plc, Non-Voting Depository Receipt	$	1,796,673

	17,918,874	Piramal Glass Ceylon Plc		669,226

				4,302,971

	Sweden: 5.10%

	199,000	Investor AB, Class B^(a)		7,235,209

	444,000	Nordea Bank AB^(a)		5,139,649

	558,000	TeliaSonera AB^(a)		3,587,587

				15,962,445

	Switzerland: 8.70%

	48,400	Novartis AG, Sponsored ADR		4,484,744

	16,300	Partners Group Holding AG		4,742,278

	168,500	Roche Holdings, Ltd., Sponsored ADR		5,727,315

	105,950	Syngenta AG, ADR		6,806,228

	330,500	UBS Group AG		5,453,767

				27,214,332

	Taiwan: 1.59%

	1,067,300	Kinik Co.^(a)		2,191,828

	1,610,600	Wah Lee Industrial Corp.^(a)		2,786,412

				4,978,240

	Thailand: 1.95%

	7,117,826	Jasmine International Pcl		1,578,654

	12,859,270	Thai Tap Water Supply Pcl		4,523,908

				6,102,562

	Turkey: 1.83%

	1,494,471	Anadolu Hayat Emeklilik AS		3,276,969

	364,700	Koza Altin Isletmeleri AS		2,438,412

				5,715,381

	Ukraine: 0.28%

	96,600	MHP SA, GDR^(d)		888,720

	United Kingdom: 6.91%

	171,800	Dunelm Group Plc^(a)		2,475,199

	100,000	HSBC Holdings Plc, Sponsored ADR		4,723,000

	350,000	Inchcape Plc^(a)		3,932,276

	644,200	ITE Group Plc^(a)		1,606,481

	751,600	Stock Spirits Group Plc^(a)		2,577,178


See Notes to Financial Statements		75		December 31, 2014

Portfolio of Investments (Note 9)

Forward International Dividend Fund


Shares			Value (Note 2)


	United Kingdom (continued): 6.91%

	40,497	WPP Group Plc, Sponsored ADR	$	4,215,738

	100,000	WPP Plc^(a)		2,079,167

				21,609,039

	United States: 0.34%

	28,854	Acadia Realty Trust		924,194

	1	CareTrust REIT, Inc.		12

	9,300	Winthrop Realty Trust		144,987

				1,069,193

	Vietnam: 1.60%

	848,000	PetroVietnam Gas JSC		2,790,374

	495,240	Vietnam Dairy Products JSC		2,211,358

				5,001,732

		Total Common Stocks (Cost $277,302,253)		276,790,176

	Loan Participation Notes: 4.82%
	Bangladesh: 1.50%

	346,800	Grameenphone, Ltd. (Loan Participation Notes issued by Deutsche Bank AG, London), expiring 07/08/21		1,610,612

	3,017,300	Titas Gas Transmission & Distribution Co., Ltd., (Loan Participation Notes issued by Deutsche Bank AG, London), expiring 01/27/21		3,086,029

				4,696,641

	India: 2.13%

	95,000	Bajaj Auto, Ltd., (Loan Participation Notes issued by Macquarie Bank, Ltd.), expiring 11/07/16		3,660,862

	495,000	Coal India, Ltd., (Loan Participation Notes issued by Macquarie Bank, Ltd.), expiring 01/09/15		3,010,111

				6,670,973

	United Arab Emirates: 1.19%

	800,000	First Gulf Bank PJSC (Loan Participation Notes issued by HSBC Bank Plc), expiring 12/11/2017		3,702,695

		Total Loan Participation Notes (Cost $14,631,478)		15,070,309


Shares			Value (Note 2)

	Preferred Stocks: 1.62%
	Germany: 1.49%

	151,323	Sixt SE^(a)	$	4,682,285

	United States: 0.13%

	17,100	RAIT Financial Trust Series A, 7.750%		398,772

		Total Preferred Stocks (Cost $4,870,210)		5,081,057

Principal Amount

	Collateralized Mortgage Obligations: 1.09%
	United States: 1.09%

	$7,520,403	FHLMC, REMICS 2.500%, 04/15/28^(e)		722,094

	2,409,053	3.000%, 06/15/26^(e)		227,234

	2,025,158	3.000%, 06/15/27^(e)		229,819

	1,239,549	3.000%, 09/15/31^(e)		160,821

	1,316,427	3.500%, 04/15/30^(e)		111,166

	289,438	4.000%, 07/15/23^(e)		5,708

	1,087,655	4.000%, 12/15/23^(e)		57,592

	317,796	5.000%, 02/15/24^(e)		23,599

	477,240	7.039%, 09/15/26^(e)(f)		76,253

	2,379,877	FHLMC, STRIP 6.500%, 02/01/28^(e)		437,795

	3,837,042	FNMA, REMICS 3.000%, 06/25/27^(e)		425,812

	319,708	3.000%, 09/25/27^(e)		37,470

	502,486	4.500%, 12/25/20^(e)		30,088

	2,279,333	6.311%, 04/25/42^(e)(f)		456,523

	431,700	6.511%, 07/25/41^(e)(f)		79,383

	604,326	7.631%, 04/25/32^(e)(f)		149,680

	884,847	GNMA, REMICS 6.439%, 09/16/33^(e)(f)		173,694

				3,404,731

		Total Collateralized Mortgage Obligations (Cost $4,637,883)		3,404,731


December 31, 2014		76		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward International Dividend Fund


Principal Amount			Value (Note 2)

	Corporate Bonds: 3.31%
	Canada: 0.65%

	$1,000,000	Air Canada, First Lien Notes 6.750%, 10/01/19^(g)	$	1,042,500

	1,000,000	Royal Bank of Canada, Sr. Unsec. Medium-Term Notes 9.000%, 08/28/34^(f)		1,002,914

				2,045,414

	United States: 2.66%

	1,500,000	Arch Coal, Inc., Sr. Unsec. Notes 7.250%, 10/01/20		495,000

	1,000,000	Citigroup, Inc., Sr. Unsec. Medium-Term Notes 10.000%, 09/29/34^(f)		927,250

	750,000	Claire’s Stores, Inc., Second Lien Notes 8.875%, 03/15/19		611,250

	1,000,000	Hecla Mining Co., Sr. Unsec. Notes 6.875%, 05/01/21		885,000

	1,000,000	JC Penney Corp., Inc., Sr. Unsec. Notes 7.400%, 04/01/37		697,500

	750,000	8.125%, 10/01/19		663,750

	978,000	JPMorgan Chase Bank NA, Sr. Unsec. Notes, Series CD 10.000%, 09/29/34^(f)		958,440

	984,000	Morgan Stanley, Unsec. Medium-Term Notes 11.000%, 08/29/34^(f)		944,640

	2,000,000	NRG REMA Llc, Series C, Sec. Notes 9.681%, 07/02/26		2,120,000

				8,302,830

		Total Corporate Bonds (Cost $11,153,701)		10,348,244

		Total Investments: 99.34% (Cost $312,615,673)		310,714,698

		Net Other Assets and Liabilities: 0.66%		2,057,699	^(h)

		Net Assets: 100.00%	$	312,772,397

Percentages are stated as a percent of net assets.

(a) Security, or portion of security, is being held as collateral for the line of credit. At period end, the aggregate market value of those securities was $56,561,508, representing 18.08% of net assets.

(b) Security determined to be illiquid under the procedures approved by the Fund’s Board of Trustees.

(c) Non-income producing security.

(d) Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such securities cannot be sold by the issuer in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At period end, the aggregate market value of those securities was $975,764, representing 0.31% of net assets.

(e) Interest only security.

(f) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at December 31, 2014.

(g) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate market value of those securities was $1,042,500, representing 0.33% of net assets.

(h) Includes cash which is being held as collateral for futures contracts.


See Notes to Financial Statements		77		December 31, 2014

Portfolio of Investments (Note 9)

Forward International Dividend Fund

Futures Contracts

Description

Position

Contracts

Expiration
Date

Value

Unrealized
Loss

E-Mini MSCI EAFE^® Futures

Long

145

03/23/15

12,744,775

(36,934)

Total Futures Contracts

12,744,775

(36,934)

Securities determined to be illiquid under the procedures approved by the Fund’s Board of Trustees are as follows:


Date(s) of Purchase	Security	Cost		Value		% of Net Assets
10/17/12 – 05/22/14	Eastern Tobacco^(b)	$	1,933,047	$	3,831,008		1.23%
05/03/13 – 10/09/13	Hydraulic Machines and Systems Group Plc, GDR^(b)(d)		1,131,928		87,044		0.03%
		$	3,064,975	$	3,918,052		1.26%

Investment Abbreviations:

ADR — American Depositary Receipt

EAFE — Europe, Australasia, Far East

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

GDR — Global Depositary Receipt

GNMA — Government National Mortgage Association

MSCI — Morgan Stanley Capital International

REIT — Real Estate Investment Trust

REMICS — Real Estate Mortgage Investment Conduits

Sec. — Secured

Sr. — Senior

STRIP — Separate Trading of Registered Interest and Principal of Securities

Unsec. — Unsecured


December 31, 2014		78		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward International Small Companies Fund


Shares			Value (Note 2)

	Common Stocks: 96.15%
	Australia: 6.69%

	219,215	carsales.com, Ltd.	$	1,854,333

	297,792	Estia Health, Ltd.^(a)		1,152,377

	830,775	Healthscope, Ltd.^(a)		1,835,390

	531,153	OzForex Group, Ltd.		1,219,209

	177,185	SAI Global, Ltd.		577,116

	809,575	Spotless Group Holdings, Ltd.^(a)		1,254,060

	240,461	Super Retail Group, Ltd.		1,397,406

	259,199	Virtus Health, Ltd.		1,653,827

				10,943,718

	Belgium: 2.55%

	102,720	bpost SA		2,580,381

	15,486	Compagnie d’Entreprises CFE		1,586,735

				4,167,116

	Denmark: 2.39%

	41,299	D/S Norden A/S		876,266

	39,981	FLSmidth & Co., A/S		1,752,817

	48,735	SimCorp A/S		1,286,733

				3,915,816

	Finland: 1.50%

	199,307	Valmet Oyj		2,458,927

	France: 7.14%

	233,278	Altran Technologies SA		2,207,299

	20,217	Groupe FNAC SA^(a)		1,008,184

	20,501	Ingenico SA		2,159,543

	61,556	Societe Television Francaise 1		946,323

	43,177	Teleperformance SA		2,939,062

	132,987	UBISOFT Entertainment^(a)		2,424,415

				11,684,826

	Germany: 8.84%

	43,913	Aareal Bank AG		1,754,053

	127,695	Aixtron SE^(a)		1,435,429

	77,839	Dialog Semiconductor Plc^(a)		2,717,805

	26,907	Gerresheimer AG		1,465,699

	12,999	MorphoSys AG^(a)		1,210,947


Shares			Value (Note 2)


	23,879	MTU Aero Engines AG	$	2,075,221

	15,767	Pfeiffer Vacuum Technology AG		1,305,984

	42,856	Rhoen-Klinikum AG		1,201,112

	20,092	Vossloh AG		1,298,792

				14,465,042

	Hong Kong: 3.32%

	2,323,000	Goodbaby International Holdings, Ltd.		807,921

	416,100	Samsonite International SA		1,233,090

	771,000	Techtronic Industries Co., Ltd.		2,473,434

	1,816,000	Xinyi Glass Holdings, Ltd.		912,119

				5,426,564

	Ireland: 1.03%

	74,596	Smurfit Kappa Group Plc		1,677,547

	Italy: 2.82%

	2,116,021	Banca Popolare di Milano Scarl^(a)		1,378,446

	213,307	Credito Emiliano SpA		1,609,148

	125,352	Safilo Group SpA^(a)		1,626,366

				4,613,960

	Japan: 31.40%

	412,000	77 Bank, Ltd.		2,165,266

	73,800	Ain Pharmaciez, Inc.		2,116,168

	32,300	CyberAgent, Inc.		1,210,942

	69,259	Daiseki Co., Ltd.		1,196,572

	12,900	Disco Corp.		1,031,775

	28,200	Don Quijote Co., Ltd.		1,938,665

	257,000	Dowa Holdings Co., Ltd.		2,041,870

	80,800	Glory, Ltd.		2,176,841

	67,400	Goldcrest Co., Ltd.		1,246,409

	102,000	Hitachi Capital Corp.		2,244,962

	31,407	Hoshizaki Electric Co., Ltd.		1,513,439

	21,700	Itochu Techno-Solutions Corp.		765,670

	2,202	Japan Hotel REIT Investment Corp.		1,412,651

	33,000	Japan Petroleum Exploration Co., Ltd.		1,036,768

	116,188	JSR Corp.		1,994,285

	107,700	JTEKT Corp.		1,812,569


See Notes to Financial Statements		79		December 31, 2014

Portfolio of Investments (Note 9)

Forward International Small Companies Fund


Shares			Value (Note 2)


	Japan (continued): 31.40%

	188,000	Kamigumi Co., Ltd.	$	1,674,671

	54,500	Kanamoto Co., Ltd.		1,473,673

	50,400	Miraca Holdings, Inc.		2,168,152

	84,700	Musashi Seimitsu Industry Co., Ltd.		1,602,115

	68,100	Nabtesco Corp.		1,645,885

	545	Nippon Prologis REIT, Inc.		1,183,334

	58,900	OTSUKA Corp.		1,867,628

	46,400	Pola Orbis Holdings, Inc.		1,854,518

	385,300	Sapporo Holdings, Ltd.		1,628,260

	87,800	SBI Holdings, Inc.		959,272

	150,000	Screen Holdings Co., Ltd.		881,455

	46,200	Sundrug Co., Ltd.		1,888,569

	72,200	Temp Holdings Co., Ltd.		2,265,582

	258,700	Tokyo Steel Manufacturing Co., Ltd.		1,591,160

	269,400	Tokyo Tatemono Co., Ltd.		1,960,592

	73,900	Yokogawa Electric Corp.		810,908

				51,360,626

	Netherlands: 1.18%

	60,615	TKH Group NV		1,928,186

	New Zealand: 1.47%

	481,661	Spark New Zealand, Ltd.		1,167,625

	437,724	Trade Me Group, Ltd.		1,243,270

				2,410,895

	Portugal: 1.10%

	285,968	NOS SGPS		1,801,858

	Singapore: 2.32%

	1,041,000	ComfortDelGro Corp., Ltd.		2,037,154

	713,000	Keppel DC REIT^(a)		524,799

	831,000	Suntec REIT		1,229,311

				3,791,264

	Spain: 0.91%

	164,130	Gamesa Corporation Tecnologica SA^(a)		1,481,580

	Sweden: 0.63%

	64,339	Boliden AB		1,028,446


Shares			Value (Note 2)


	Switzerland: 1.69%

	33,191	BKW AG	$	983,178

	5,909	Kuoni Reisen Holding AG, Class B		1,778,260

				2,761,438

	United Kingdom: 19.17%

	36,014	Aveva Group Plc		737,567

	248,333	Barratt Developments Plc		1,807,399

	406,191	BBA Aviation Plc		2,270,039

	611,561	Card Factory Plc^(a)		2,684,129

	109,410	Daily Mail & General Trust Plc NV, Class A		1,398,746

	42,997	Derwent London REIT Plc		2,007,262

	299,287	Halfords Group Plc		2,183,986

	296,436	Henderson Group Plc		980,104

	74,773	Hunting Plc		615,275

	185,901	IG Group Holdings Plc		2,077,362

	258,716	Informa Plc		1,889,484

	213,342	International Personal Finance Plc		1,482,357

	520,000	Melrose Plc		2,152,516

	288,342	Mitchells & Butlers Plc^(a)		1,717,609

	672,151	Moneysupermarket.com Group Plc		2,431,206

	526,187	Polypipe Group Plc		2,013,316

	193,738	Premier Oil Plc		501,094

	303,844	RPS Group Plc		990,238

	32,008	Spirax-Sarco Engineering Plc		1,424,895

				31,364,584

		Total Common Stocks (Cost $134,331,699)		157,282,393

	Preferred Stocks: 1.73%
	Germany: 1.13%

	18,106	Draegerwerk AG & Co. KGaA		1,844,128


December 31, 2014		80		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward International Small Companies Fund


Shares			Value (Note 2)


	Italy: 0.60%

	200,065	Unipol Gruppo Finanziario SpA	$	980,088

		Total Preferred Stocks (Cost $3,075,978)		2,824,216

		Total Investments: 97.88% (Cost $137,407,677)		160,106,609

		Net Other Assets and Liabilities: 2.12%		3,466,081

		Net Assets: 100.00%	$	163,572,690

Percentages are stated as a percent of net assets.

(a) Non-income producing security.

Investment Abbreviations:

REIT — Real Estate Investment Trust


See Notes to Financial Statements		81		December 31, 2014

Portfolio of Investments (Note 9)

Forward Select EM Dividend Fund


Shares			Value (Note 2)

	Closed-End Funds: 0.00%^(a)
	United States: 0.00%^(a)

	173	Royce Micro-Cap Trust, Inc.	$	1,744

		Total Closed-End Funds (Cost $1,741)		1,744

	Common Stocks: 94.15%
	Austria: 0.05%

	500	Semperit AG Holding		24,310

	Bangladesh: 0.09%

	163,528	Beximco Pharmaceuticals, Ltd., GDR^(b)(c)		46,897

	Brazil: 4.03%

	140,875	AMBEV SA, ADR		876,242

	236,400	BM&F Bovespa SA		875,984

	91,591	Restoque Comercio e Confeccoes de Roupas SA		261,177

				2,013,403

	Cambodia: 1.58%

	963,200	NagaCorp, Ltd.^(c)		787,487

	China: 4.83%

	552,000	China Galaxy Securities Co., Ltd., Class H^(c)		692,611

	1,126,475	China Machinery Engineering Corp., Class H^(c)		862,871

	1,091,604	China Pioneer Pharma Holdings, Ltd.^(c)		858,683

				2,414,165

	Czech Republic: 0.93%

	16,700	Pegas Nonwovens SA		466,879

	Egypt: 1.86%

	43,404	Arabian Cement Co.^(d)		102,894

	26,912	Eastern Tobacco^(d)		824,141

				927,035

	Hong Kong: 5.74%

	389,850	China Gas Holdings, Ltd.^(c)		614,337

	2,041,050	China South City Holdings, Ltd.^(c)		931,740

	1,014,550	Guangdong Investment, Ltd.^(c)		1,321,395

				2,867,472

	Indonesia: 9.60%

	2,568,500	PT AKR Corporindo Tbk		854,438

	12,800,000	PT Arwana Citramulia Tbk		899,152


Shares			Value (Note 2)


	7,926,270	PT Astra Graphia Tbk	$	1,212,780

	671,300	PT Bank Mandiri Tbk		584,034

	3,503,100	PT Kalbe Farma Tbk		517,616

	3,556,000	PT Media Nusantara Citra Tbk		729,289

				4,797,309

	Italy: 1.10%

	32,933	Danieli & Co. Officine Meccaniche SpA		547,149

	Japan: 1.55%

	72,000	Fujitec Co., Ltd.^(c)		773,017

	Malaysia: 3.59%

	1,010,000	Globetronics Technology Bhd^(c)		1,242,099

	121,631	JobStreet Corp. Bhd		16,350

	1,250,878	Oldtown Bhd		536,627

				1,795,076

	Mexico: 3.13%

	9,000	Fomento Economico Mexicano SAB de CV, Sponsored ADR^(e)		792,270

	369,775	PLA Administradora Industrial S de RL de CV		773,699

				1,565,969

	Peru: 3.68%

	266,025	Alicorp SA		634,817

	7,510	Credicorp, Ltd.		1,202,952

				1,837,769

	Philippines: 6.96%

	3,937,276	D&L Industries, Inc.		1,466,384

	1,809,700	First Gen Corp.		1,031,629

	580,000	Robinsons Retail Holdings, Inc.		981,524

				3,479,537

	Russia: 3.64%

	775,000	Aeroflot-Russian Airlines OJSC		411,165

	659,213	Hydraulic Machines and Systems Group Plc, GDR^(b)(d)		171,395

	13,173	Lukoil OAO, Sponsored ADR		505,185

	33,000	MMC Norilsk Nickel OJSC, ADR^(c)		469,260

	36,700	Mobile Telesystems OJSC, Sponsored ADR		263,506

				1,820,511


December 31, 2014		82		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Select EM Dividend Fund


Shares			Value (Note 2)


	Singapore: 3.71%

	47,050	China Yuchai International, Ltd.	$	893,950

	555,600	OSIM International, Ltd.^(c)		830,474

	137,600	Silverlake Axis, Ltd.		130,365

				1,854,789

	South Africa: 1.76%

	45,875	MTN Group, Ltd.		878,060

	South Korea: 2.04%

	52,291	Samjin Pharmaceutical Co., Ltd.		1,018,084

	Spain: 2.14%

	128,406	Banco Santander SA, Sponsored ADR		1,069,622

	Sri Lanka: 5.05%

	1,016,446	Commercial Bank of Ceylon Plc, Non-Voting Depository Receipt		969,188

	739,625	Hatton National Bank Plc, Non-Voting Depository Receipt		861,956

	4,925,624	Piramal Glass Ceylon Plc		183,960

	3,224,998	Textured Jersey Lanka, Ltd.		506,364

				2,521,468

	Taiwan: 7.96%

	651,750	Formosan Rubber Group, Inc.^(c)		680,582

	467,825	Kinik Co.^(c)		969,639

	1,311,775	Mega Financial Holding Co., Ltd.^(c)		1,014,901

	754,000	Wah Lee Industrial Corp.^(c)		1,312,259

				3,977,381

	Thailand: 5.91%

	1,238,375	Bangkok Aviation Fuel Services Pcl		1,176,274

	1,453,576	Jasmine International Pcl		324,735

	1,931,000	RS Pcl		986,042

	1,321,473	Thai Tap Water Supply Pcl		465,930

				2,952,981

	Turkey: 2.81%

	358,231	Anadolu Hayat Emeklilik AS		790,256

	91,725	Koza Altin Isletmeleri AS		612,927

				1,403,183


Shares			Value (Note 2)


	Ukraine: 1.37%

	74,105	MHP SA, GDR^(b)	$	681,766

	United Kingdom: 5.22%

	30,000	Bank of Georgia Holdings Plc^(c)		970,697

	275,200	ITE Group Plc^(c)		686,283

	276,942	Stock Spirits Group Plc^(c)		949,613

				2,606,593

	United States: 0.88%

	12,413	Acadia Realty Trust		397,588

	2,700	Winthrop Realty Trust		42,093

				439,681

	Vietnam: 2.94%

	211,000	PetroVietnam Gas JSC		695,523

	173,400	Vietnam Dairy Products JSC		774,270

				1,469,793

		Total Common Stocks (Cost $49,232,016)		47,037,386

	Loan Participation Notes: 10.42%
	Bangladesh: 3.23%

	108,200	Grameenphone, Ltd. (Loan Participation Notes issued by Deutsche Bank AG, London), expiring 07/08/21		502,504

	1,087,500	Titas Gas Transmission & Distribution Co., Ltd., (Loan Participation Notes issued by Deutsche Bank AG, London), expiring 01/27/21		1,112,271

				1,614,775

	India: 5.71%

	34,500	Bajaj Auto, Ltd., (Loan Participation Notes issued by Macquarie Bank, Ltd.), expiring 11/07/16		1,329,471

	250,000	Coal India, Ltd., (Loan Participation Notes issued by Macquarie Bank, Ltd.), expiring 01/09/15		1,520,258

				2,849,729

	United Arab Emirates: 1.48%

	160,000	First Gulf Bank PJSC (Loan Participation Notes issued by HSBC Bank Plc), expiring 12/11/2017		740,539

		Total Loan Participation Notes (Cost $5,115,508)		5,205,043


See Notes to Financial Statements		83		December 31, 2014

Portfolio of Investments (Note 9)

Forward Select EM Dividend Fund


Shares			Value (Note 2)

	Preferred Stocks: 1.30%
	Brazil: 1.17%

	108,250	Bradespar SA	$	582,340

	United States: 0.13%

	2,900	RAIT Financial Trust Series A, 7.750%		67,628

		Total Preferred Stocks (Cost $863,401)		649,968

Principal Amount

	Collateralized Mortgage Obligations: 2.37%
	United States: 2.37%

$	583,829	FHLMC, REMICS 3.000%, 06/15/27^(f)		66,254

	302,329	3.000%, 09/15/31^(f)		39,225

	472,943	4.000%, 05/15/26^(f)		50,099

	1,279,037	FNMA, REMICS 3.000%, 06/25/27^(f)		141,940

	59,059	5.000%, 03/25/23^(f)		3,737

	36,636	5.000%, 03/25/24^(f)		2,699

	1,225,726	6.241%, 06/25/37^(f)(g)		226,732

	11,290	6.331%, 08/25/36^(f)(g)		2,401

	1,217,605	GNMA, REMICS 5.865%, 05/20/41^(f)(g)		203,261

	294,949	6.439%, 09/16/33^(f)(g)		57,898

	364,000	Morgan Stanley Capital I Trust, Series 2003-IQ4, Class J 5.500%, 05/15/40^(g)(h)		387,609

				1,181,855

		Total Collateralized Mortgage Obligations (Cost $1,434,514)		1,181,855

	Corporate Bonds: 1.93%
	United States: 1.93%

	500,000	Arch Coal, Inc., Sr. Unsec. Notes 7.250%, 10/01/20		165,000

	140,000	Citigroup, Inc., Sr. Unsec. Medium-Term Notes 2.932%, 05/30/33^(g)		97,202

	250,000	Claire’s Stores, Inc., Second Lien Notes 8.875%, 03/15/19		203,750


Principal Amount			Value (Note 2)



	$ 300,000	Hecla Mining Co., Sr. Unsec. Notes 6.875%, 05/01/21	$	265,500

	261,000	International Bank for Reconstruction & Development, Sr. Unsec. Medium-Term Notes, Class 1 10.000%, 08/28/34^(g)		232,355

				963,807

		Total Corporate Bonds (Cost $1,258,846)		963,807

		Total Investments: 110.17% (Cost $57,906,026)		55,039,803

		Net Other Assets and Liabilities: (10.17)%		(5,079,292	)

		Net Assets: 100.00%	$	49,960,511

Percentages are stated as a percent of net assets.

(a) Amount represents less than 0.01%.

(b) Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such securities cannot be sold by the issuer in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At period end, the aggregate market value of those securities was $900,064, representing 1.80% of net assets.

(c) Security, or portion of security, is being held as collateral for the line of credit. At period end, the aggregate market value of those securities was $16,014,845, representing 32.06% of net assets.

(d) Security determined to be illiquid under the procedures approved by the Fund’s Board of Trustees.

(e) Non-income producing security.

(f) Interest only security.

(g) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at December 31, 2014.

(h) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate market value of those securities was $387,609, representing 0.78% of net assets.


December 31, 2014		84		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Select EM Dividend Fund

Securities determined to be illiquid under the procedures approved by the Fund’s Board of Trustees are as follows:


Date(s) of Purchase	Security	Cost		Value		% of Net Assets
05/14/14	Arabian Cement Co.^(d)	$	55,201	$	102,894		0.21%
10/04/12 – 09/10/13	Eastern Tobacco^(d)		382,867		824,141		1.65%
05/02/13 – 05/06/14	Hydraulic Machines and Systems Group Plc, GDR^(b)(d)		1,526,739		171,395		0.34%
		$	1,964,807	$	1,098,430		2.20%

Investment Abbreviations:

ADR — American Depositary Receipt

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

GDR — Global Depositary Receipt

GNMA — Government National Mortgage Association

REMICS — Real Estate Mortgage Investment Conduits

Sr. — Senior

Unsec. — Unsecured


See Notes to Financial Statements		85		December 31, 2014

Portfolio of Investments (Note 9)

Forward Small Cap Equity Fund


Shares			Value (Note 2)

	Common Stocks: 92.74%
	Consumer Discretionary: 16.22%

	15,000	American Axle & Manufacturing Holdings, Inc.^(a)	$	338,850

	2,900	Big Lots, Inc.		116,058

	100,000	Christopher & Banks Corp.^(a)		571,000

	3,500	Columbia Sportswear Co.		155,890

	5,000	Deckers Outdoor Corp.^(a)		455,200

	49,000	Diversified Restaurant Holdings, Inc.^(a)		252,840

	13,000	IMAX Corp.^(a)		401,700

	5,000	Jack in the Box, Inc.		399,800

	5,000	Life Time Fitness, Inc.^(a)		283,100

	10,000	Popeyes Louisiana Kitchen, Inc.^(a)		562,700

	10,000	Sotheby’s		431,800

	10,000	Texas Roadhouse, Inc.		337,600

	15,000	Vince Holding Corp.^(a)		392,100

				4,698,638

	Consumer Staples: 2.07%

	15,000	Limoneira Co.		374,700

	10,000	National Beverage Corp.^(a)		226,200

				600,900

	Energy: 1.21%

	5,000	Bonanza Creek Energy, Inc.^(a)		120,000

	7,000	Laredo Petroleum, Inc.^(a)		72,450

	125,000	Rentech, Inc.^(a)		157,500

				349,950

	Financials: 14.97%

	10,000	BioMed Realty Trust, Inc.		215,400

	10,000	Community Bank System, Inc.		381,300

	5,000	CoreSite Realty Corp.		195,250

	13,900	DuPont Fabros Technology, Inc.		462,036

	10,000	Evercore Partners, Inc., Class A		523,700

	10,000	Glacier Bancorp, Inc.		277,700

	3,400	Green Dot Corp., Class A^(a)		69,666

	13,400	Moelis & Co., Class A		468,062

	6,400	Sovran Self Storage, Inc.		558,208

	10,000	Strategic Hotels & Resorts, Inc.^(a)		132,300


Shares			Value (Note 2)


	25,000	TCF Financial Corp.	$	397,250

	15,000	Umpqua Holdings Corp.		255,150

	12,500	United Community Banks, Inc.		236,750

	5,000	Webster Financial Corp.		162,650

				4,335,422

	Healthcare: 13.86%

	4,600	Aegerion Pharmaceuticals, Inc.^(a)		96,324

	12,000	Clovis Oncology, Inc.^(a)		672,000

	6,000	HeartWare International, Inc.^(a)		440,580

	37,600	HMS Holdings Corp.^(a)		794,864

	7,500	Impax Laboratories, Inc.^(a)		237,600

	25,000	Ironwood Pharmaceuticals, Inc.^(a)		383,000

	20,000	KYTHERA Biopharmaceuticals, Inc.^(a)		693,600

	50,000	OraSure Technologies, Inc.^(a)		507,000

	25,000	Progenics Pharmaceuticals, Inc.^(a)		189,000

				4,013,968

	Industrials: 11.67%

	3,300	Atlas Air Worldwide Holdings, Inc.^(a)		162,690

	4,000	Curtiss-Wright Corp.		282,360

	28,318	Enphase Energy, Inc.^(a)		404,664

	2,000	GATX Corp.		115,080

	3,500	GEO Group, Inc.		141,260

	20,000	Great Lakes Dredge & Dock Corp.^(a)		171,200

	30,000	JetBlue Airways Corp.^(a)		475,800

	7,500	Kaman Corp.		300,675

	4,200	Matson, Inc.		144,984

	20,000	Meritor, Inc.^(a)		303,000

	5,000	Multi-Color Corp.		277,100

	10,000	NN, Inc.		205,600

	15,000	TASER International, Inc.^(a)		397,200

				3,381,613

	Information Technology: 23.02%

	7,100	ACI Worldwide, Inc.^(a)		143,207

	25,000	AVX Corp.		350,000

	1,700	CACI International, Inc., Class A^(a)		146,506


December 31, 2014		86		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Small Cap Equity Fund


Shares			Value (Note 2)


	Information Technology (continued): 23.02%

	4,300	CoreLogic, Inc.^(a)	$	135,837

	20,000	CUI Global, Inc.^(a)		149,000

	15,000	Cypress Semiconductor Corp.		214,200

	10,000	Entegris, Inc.^(a)		132,100

	5,000	Envestnet, Inc.^(a)		245,700

	3,000	ePlus, Inc.^(a)		227,070

	20,000	GSI Group, Inc.^(a)		294,400

	17,500	Hackett Group, Inc.		153,825

	5,000	Heartland Payment Systems, Inc.		269,750

	20,000	Infoblox, Inc.^(a)		404,200

	2,800	InterDigital, Inc.		148,120

	20,000	InvenSense, Inc.^(a)		325,200

	2,500	j2 Global, Inc.		155,000

	7,500	Methode Electronics, Inc.		273,825

	12,500	MKS Instruments, Inc.		457,500

	10,000	Proofpoint, Inc.^(a)		482,300

	5,000	Science Applications International Corp.		247,650

	3,000	SPS Commerce, Inc.^(a)		169,890

	2,500	SYNNEX Corp.		195,400

	10,000	Take-Two Interactive Software, Inc.^(a)		280,300

	20,300	TrueCar, Inc.^(a)		464,870

	35,000	Ultra Clean Holdings, Inc.^(a)		324,800

	7,500	VeriFone Systems, Inc.^(a)		279,000

				6,669,650

	Materials: 7.17%

	15,000	Boise Cascade Co.^(a)		557,250

	20,000	Cliffs Natural Resources, Inc.		142,800


Shares			Value (Note 2)



	250,000	Hecla Mining Co.	$	697,500

	15,000	Horsehead Holding Corp.^(a)		237,450

	30,000	Stillwater Mining Co.^(a)		442,200

				2,077,200

	Utilities: 2.55%

	10,000	Connecticut Water Service, Inc.		362,900
	8,100	SJW Corp.		260,172

	5,000	York Water Co.		116,050

				739,122

		Total Common Stocks (Cost $23,865,327)		26,866,463

	Affiliated Investment Companies: 1.21%


	350,051	Forward U.S. Government Money Fund Institutional Class, 0.010% 7-day yield		350,051

		Total Affiliated Investment Companies (Cost $350,051)		350,051

		Total Investments: 93.95% (Cost $24,215,378)		27,216,514

		Net Other Assets and Liabilities: 6.05%		1,751,535	^(b)

		Net Assets: 100.00%	$	28,968,049

Percentages are stated as a percent of net assets.

(a) Non-income producing security.

(b) Includes cash which is being held as collateral for futures contracts.

Futures Contracts

Description

Position

Contracts

Expiration
Date

Value

Unrealized
Gain

E-Mini Russell 2000^® Index Futures

Long

03/23/15

1,200,700

20,074

Total Futures Contracts

1,200,700

20,074


See Notes to Financial Statements		87		December 31, 2014

Portfolio of Investments (Note 9)

Forward Tactical Enhanced Fund


Shares			Value (Note 2)

	Exchange-Traded Funds: 52.55%
	78,200	SPDR^® S&P 500^® ETF Trust	$	16,070,100

		Total Exchange-Traded Funds (Cost $15,555,411)		16,070,100

		Total Investments: 52.55% (Cost $15,555,411)		16,070,100

		Net Other Assets and Liabilities: 47.45%		14,508,814

		Net Assets: 100.00%	$	30,578,914

Percentages are stated as a percent of net assets.

Investment Abbreviations:

ETF — Exchange-Traded Fund

S&P — Standard & Poor’s

SPDR — Standard & Poor’s Depository Receipts


December 31, 2014		88		See Notes to Financial Statements

Portfolio of Investments (Note 9)

Forward Tactical Growth Fund


Shares			Value (Note 2)

	Exchange-Traded Funds: 76.28%

	3,191,485	SPDR^® S&P 500^® ETF Trust	$	655,850,168

		Total Exchange-Traded Funds (Cost $637,250,600)		655,850,168

Contracts

	Options Purchased: 0.53%


	2,500	CBOE S&P 500^® ETF, Expires January 2015 at $2,075.00 Put		4,537,500

		Total Options Purchased (Cost $1,331,250)		4,537,500

		Total Investments: 76.81% (Cost $638,581,850)		660,387,668

		Net Other Assets and Liabilities: 23.19%		199,343,481

		Net Assets: 100.00%	$	859,731,149

Percentages are stated as a percent of net assets.



Contracts

	Schedule Of Options Written


	(2,500)	CBOE S&P 500^® ETF, Expires January 2015 at $2,055.00 Put	$	(1,687,500	)

		Total Options Written (Premiums $493,750)	$	(1,687,500	)

Investment Abbreviations:

CBOE — Chicago Board Option Exchange

ETF — Exchange-Traded Fund

S&P — Standard & Poor’s

SPDR — Standard & Poor’s Depository Receipts


See Notes to Financial Statements		89		December 31, 2014

Consolidated Portfolio of Investments (Note 9)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)

	Agency Pass-Through Securities: 16.11%
	Federal Home Loan Mortgage Corporation (FHLMC): 1.93%

		FHLMC
$	193,000	0.415%, 09/01/37^(a)	$	197,669

	212,693	0.415%, 09/01/37^(a)		217,858

	47,050	1.868%, 07/01/19^(a)		47,170

	8,037	1.875%, 07/01/18^(a)		8,277

	11,424	1.913%, 04/01/16^(a)		11,451

	4,821	1.918%, 12/01/30^(a)		5,027

	1,897	1.941%, 01/01/26^(a)		2,012

	10,420	2.000%, 01/01/23^(a)		11,096

	20,347	2.064%, 08/01/19^(a)		20,980

	8,554	2.180%, 06/01/36^(a)		9,085

	510	2.185%, 03/01/17^(a)		512

	9,660	2.368%, 12/01/18^(a)		9,929

	8,590	2.375%, 02/01/25^(a)		8,633

	38,337	2.410%, 08/01/36^(a)		41,132

	40,229	2.434%, 07/01/24^(a)		42,054

	68,327	2.496%, 10/01/30^(a)		70,763

	9,001	2.740%, 03/01/19^(a)		9,026

	2,271	2.820%, 05/01/20^(a)		2,278

	5,425	2.833%, 11/01/19^(a)		5,488

	11,021	3.136%, 10/01/35^(a)		11,775

	15,214	3.348%, 12/01/17^(a)		15,296

	134,254	3.490%, 08/01/23^(a)		138,144

	13,307	3.490%, 10/01/19^(a)		13,355

	27,863	3.490%, 01/01/22^(a)		27,970

	30,166	3.490%, 05/01/25^(a)		30,337

	41,084	3.490%, 06/01/24^(a)		41,390

	90,228	3.631%, 08/01/24^(a)		91,181

	63,257	6.045%, 10/01/37^(a)		67,094

				1,156,982

	Federal National Mortgage Association (FNMA): 13.31%

		FNMA
	5,593	1.045%, 01/01/21^(a)		5,584

	25,421	1.316%, 10/01/44^(a)		26,095

	199,744	1.375%, 01/01/21^(a)		209,613


Principal Amount			Value (Note 2)



$	1,000,000	1.375%, 11/15/16	$	1,013,873

	1,625	1.515%, 09/01/33^(a)		1,704

	81,111	1.516%, 06/01/40^(a)		84,855

	48,110	1.516%, 06/01/40^(a)		50,344

	21,422	1.516%, 10/01/40^(a)		22,435

	7,302	1.611%, 03/01/28^(a)		7,584

	2,264	1.633%, 11/01/33^(a)		2,389

	5,542	1.648%, 11/01/33^(a)		5,787

	135,450	1.675%, 03/01/34^(a)		142,104

	340,085	1.688%, 07/01/34^(a)		362,137

	8,517	1.800%, 12/01/24^(a)		8,875

	1,961	1.820%, 01/01/17^(a)		1,978

	48,563	1.850%, 10/01/32^(a)		51,517

	90,271	1.885%, 02/01/33^(a)		94,807

	8,984	1.910%, 03/01/35^(a)		9,560

	348	1.910%, 10/01/16^(a)		355

	185	1.910%, 07/01/17^(a)		191

	63,625	1.917%, 01/01/31^(a)		64,907

	78,757	1.917%, 06/01/32^(a)		80,727

	8,890	1.920%, 04/01/33^(a)		9,293

	126,993	1.925%, 05/01/33^(a)		133,644

	22,419	1.926%, 05/01/19^(a)		22,912

	42,807	1.926%, 08/01/33^(a)		45,108

	20,069	1.938%, 08/01/35^(a)		21,220

	3,426	1.943%, 04/01/18^(a)		3,559

	21,725	1.972%, 07/01/34^(a)		23,246

	149,471	1.990%, 05/01/34^(a)		157,022

	18,432	2.000%, 06/01/19^(a)		19,269

	6,540	2.003%, 11/01/22^(a)		6,579

	84,958	2.019%, 03/01/37^(a)		90,020

	54,987	2.042%, 11/01/35^(a)		58,071

	4,047	2.051%, 08/01/29^(a)		4,283

	40,795	2.073%, 08/01/33^(a)		43,386

	476,314	2.082%, 01/01/35^(a)		503,775

	37,485	2.085%, 02/01/25^(a)		39,883


December 31, 2014		90		See Notes to Financial Statements

Consolidated Portfolio of Investments (Note 9)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)


	Federal National Mortgage Association (FNMA) (continued): 13.31%

$	22,943	2.096%, 01/01/36^(a)	$	24,329

	197,428	2.096%, 11/01/35^(a)		209,316

	269,392	2.109%, 11/01/35^(a)		286,152

	28,361	2.121%, 11/01/35^(a)		30,025

	53,841	2.125%, 11/01/17^(a)		56,366

	9,114	2.130%, 04/01/23^(a)		9,482

	178,606	2.148%, 03/01/34^(a)		190,321

	17,208	2.169%, 12/01/26^(a)		18,025

	145,312	2.186%, 07/01/33^(a)		154,777

	18,140	2.186%, 12/01/37^(a)		18,613

	25,357	2.187%, 11/01/35^(a)		27,061

	6,189	2.202%, 04/01/18^(a)		6,503

	24,014	2.209%, 01/01/33^(a)		25,599

	12,932	2.279%, 08/01/36^(a)		13,735

	40,585	2.283%, 07/01/36^(a)		42,995

	1,102	2.296%, 07/01/25^(a)		1,145

	9,583	2.306%, 06/01/32^(a)		10,117

	8,040	2.308%, 08/01/36^(a)		8,575

	696	2.313%, 03/01/30^(a)		742

	18,072	2.330%, 12/01/29^(a)		18,859

	18,643	2.330%, 09/01/33^(a)		19,455

	27,027	2.340%, 02/01/34^(a)		28,242

	400,619	2.340%, 09/01/31^(a)		428,357

	15,320	2.346%, 01/01/21^(a)		16,358

	1,839	2.359%, 05/01/33^(a)		1,948

	88,054	2.365%, 11/01/33^(a)		90,256

	17,867	2.365%, 11/01/29^(a)		19,117

	32,591	2.366%, 01/01/33^(a)		33,718

	35,586	2.367%, 04/01/37^(a)		37,809

	28,233	2.402%, 08/01/34^(a)		29,385

	506,789	2.409%, 12/01/39^(a)		540,178

	23,902	2.411%, 08/01/25^(a)		25,450

	3,216	2.450%, 01/01/19^(a)		3,224

	50,019	2.495%, 11/01/29^(a)		53,061

	8,409	2.495%, 04/01/36^(a)		9,018


Principal Amount			Value (Note 2)



$	6,726	2.497%, 09/01/33^(a)	$	7,063

	5,325	2.500%, 07/01/28^(a)		5,598

	39,587	2.500%, 11/01/26^(a)		39,804

	36,402	2.610%, 02/01/26^(a)		38,078

	30,779	2.622%, 09/01/30^(a)		33,044

	70,972	2.626%, 05/01/34^(a)		75,651

	2,035	2.690%, 06/01/19^(a)		2,038

	16,012	2.758%, 01/01/18^(a)		16,078

	1,112	2.841%, 10/01/19^(a)		1,115

	47,599	2.948%, 11/01/36^(a)		50,067

	404,463	3.000%, 03/01/27		421,500

	3,666	3.180%, 03/01/25^(a)		3,686

	25	3.518%, 05/01/18^(a)		26

	1,080	3.542%, 08/01/26^(a)		1,149

	8,052	3.757%, 07/01/17^(a)		8,569

	94,860	3.908%, 05/01/36^(a)		99,377

	614,603	4.500%, 12/01/40		668,150

	3,516	4.586%, 04/01/29^(a)		3,628

	360	4.732%, 12/01/26^(a)		381

	4,199	4.864%, 03/01/27^(a)		4,432

	523,602	5.000%, 01/01/40		580,991

	204	6.500%, 07/01/17		206

	9,291	6.750%, 12/01/16^(a)		9,396

	894	7.365%, 08/01/20^(a)		899

				7,987,930

	Government National Mortgage Association (GNMA): 0.87%

		GNMA
	489,551	3.500%, 09/20/28		522,548

		Total Agency Pass-Through Securities (Cost $9,514,242)		9,667,460

	Asset-Backed Securities: 2.17%
	250,000	American Express Credit Account Master Trust, Series 2014-2, Class A 1.260%, 01/15/20		249,595

	250,000	Cabela’s Master Credit Card Trust, Series 2013-2A, Class A2 0.811%, 08/16/21^(a)(b)		251,873


See Notes to Financial Statements		91		December 31, 2014

Consolidated Portfolio of Investments (Note 9)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)

	Asset-Backed Securities (continued): 2.17%

$	500,000	Nissan Auto Receivables 2013-B Owner Trust, Series 2013-B, Class A3 0.840%, 11/15/17	$	500,577

	300,000	Volkswagen Auto Loan Enhanced Trust, Series 2014-1, Class A4 1.450%, 09/21/20		298,304

		Total Asset-Backed Securities (Cost $1,299,863)		1,300,349

	Collateralized Mortgage Obligations: 7.88%
	Collateralized Mortgage Obligations-Other: 2.03%

	250,000	Citigroup Commercial Mortgage Trust, Series 2010-RR3, Class MLSR 5.743%, 05/14/17^(a)(b)		268,190

	251,499	Deutsche Mortgage Securities, Inc., Series 2004-1, Class 1A1 5.500%, 09/25/33		264,120

	398,717	JP Morgan Chase Commercial Mortgage Securities Trust, Series 2014-C20, Class A1 1.268%, 03/15/19		397,439
	283,284	JP Morgan Chase Mortgage Trust, Series 2004, Class A5 2.288%, 12/25/34^(a)		285,572

				1,215,321

	Federal Home Loan Mortgage Corporation (FHLMC): 2.65%

		FHLMC, REMICS
	443,044	3.000%, 08/15/40		456,584

	600,010	3.500%, 04/15/40		628,534

	182,594	4.500%, 08/15/20		192,930

		FHLMC, STRIP
	304,490	3.500%, 07/15/42		313,576

				1,591,624

	Federal National Mortgage Association (FNMA): 1.89%

		FNMA, REMICS
	916,966	2.000%, 05/25/43		892,758

	226,377	4.500%, 10/25/39		242,731

				1,135,489

	Government National Mortgage Association (GNMA): 1.31%

		GNMA, REMICS
	384,648	3.500%, 11/20/39		398,827


Principal Amount			Value (Note 2)



$	365,452	4.000%, 11/16/39	$	383,763

				782,590

		Total Collateralized Mortgage Obligations (Cost $4,693,448)		4,725,024

	Corporate Bonds: 17.65%
	Basic Materials: 0.55%

	300,000	BHP Billiton Finance USA, Ltd., Sr. Unsec. Notes 5.400%, 03/29/17		326,857

	Consumer Cyclical: 1.27%

		Daimler Finance North America Llc, Sr. Unsec. Notes
	750,000	1.092%, 08/01/18^(a)(b)		760,180

	Consumer Noncyclical: 2.50%

		Amgen, Inc., Sr. Unsec. Notes
	500,000	2.500%, 11/15/16		511,988

	500,000	Bottling Group Llc, Sr. Unsec. Notes 5.500%, 04/01/16		529,280

	445,000	Colgate-Palmolive Co., Sr. Unsec. Medium-Term Notes 2.625%, 05/01/17		460,765

				1,502,033

	Energy: 0.91%

	500,000	Copano Energy Llc/Copano Energy Finance Corp., Sr. Unsec. Notes 7.125%, 04/01/21		543,215

	Financials: 11.02%

	360,000	American Express Credit Corp., Sr. Unsec. Notes 0.793%, 03/18/19^(a)		358,869

	320,000	Berkshire Hathaway Finance Corp., Sr. Unsec. Notes 2.450%, 12/15/15		325,880

	521,000	Branch Banking & Trust Co., Sub. Notes 0.533%, 05/23/17^(a)		518,085

	1,250,000	0.561%, 09/13/16^(a)		1,246,250

	500,000	General Electric Capital Corp., Sr. Unsec. Notes 1.231%, 04/15/23^(a)		500,986

	382,000	Macquarie Group, Ltd., Sr. Unsec. Notes 1.233%, 01/31/17^(a)(b)		385,796


December 31, 2014		92		See Notes to Financial Statements

Consolidated Portfolio of Investments (Note 9)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)


	Financials (continued): 11.02%

$	1,554,000	National City Bank, Sub. Notes 0.605%, 06/07/17^(a)	$	1,547,605

	500,000	Skyway Concession Co., Llc, Sec. Notes 0.537%, 06/30/17^(a)(b)		480,313

	1,250,000	Wachovia Bank NA, Sub. Medium-Term Notes 0.571%, 03/15/16^(a)		1,248,495

				6,612,279

	Industrials: 0.57%

	325,000	Honeywell International, Inc., Sr. Unsec. Notes 5.400%, 03/15/16		343,641

	Telecommunication Services: 0.83%

	500,000	AT&T, Inc., Sr. Unsec. Notes 0.618%, 02/12/16^(a)		500,130

		Total Corporate Bonds (Cost $10,521,488)		10,588,335

	Municipal Bonds: 13.36%
	275,000	Arizona State Power Authority Power Resources, Taxable Revenue Bonds, Hoover Prepayment Project 2.199%, 10/01/19		276,991

	500,000	City of Houston, Texas, General Obligation Taxable Refunding Bonds, Public Improvement, Series B 1.140%, 03/01/16		502,925

	50,000	City of Houston, Texas, Utility System, Taxable Revenue Bonds, First Lien, Series B 1.086%, 05/15/17		49,995

	500,000	City of Montgomery, Alabama, General Obligation Taxable Unlimited Warrants, Series B 1.070%, 04/01/16		499,110

	155,000	City of Newport News, Virginia, Taxable Refunding General Obligation Unlimited Bonds, Series A 5.020%, 01/15/20		158,277

	750,000	County of Loudoun Virginia, General Obligation Taxable Refunding Bonds, Series B 0.895%, 12/01/16		751,042


Principal Amount			Value (Note 2)



$	250,000	County of Milwaukee Wisconsin, General Obligation Taxable Unlimited Pension Refunding Bonds, Series B 1.282%, 12/01/16	$	250,547

	550,000	Maine State Housing Authority, Taxable Revenue Bonds, Series A 1.190%, 11/15/16		548,438

	600,000	Minnesota State General Appropriation Fund, Taxable Revenue Bonds, Series B 1.053%, 06/01/17		600,324

	250,000	New Jersey Building Authority, Taxable Refinancing Revenue Bonds, Series B 1.233%, 06/15/16		249,600

	500,000	New York State Urban Development Corp., State Personal Income Taxable Revenue Bonds, Series F 1.650%, 03/15/18		502,560

	250,000	North Texas Tollway Authority, First Tier Variable Revenue Refuding Bonds, Series A 0.840%, 01/01/50^(a)		250,823

	500,000	Ohio State Water Development Authority Water Pollution Control, Taxable Refunding Revenue Bonds, (Water Quality), Series A 0.814%, 06/01/15		500,470

	750,000	Pasadena, California, Unified School District, General Obligation Taxable Unlimited Refunding Bonds, Series B 1.861%, 11/01/18		754,163

	300,000	Pearland Independent School District, General Obligation Taxable Unlimited Refunding Bonds, Series B 3.000%, 02/15/17		310,698

	250,000	Pequea Valley School District, Taxable General Obligation Unlimited Bonds, Series B 0.948%, 02/01/16		249,160

	430,000	Rhode Island State Housing & Mortgage Finance Corp., Taxable Revenue Bonds, Series 64-T 2.080%, 10/01/17		434,231

	400,000	State of Connecticut, Special Tax Obligation Build America Revenue Bonds(Transportation Infrastructure Purposes—Direct Pay), Series B 4.376%, 11/01/21		438,612


See Notes to Financial Statements		93		December 31, 2014

Consolidated Portfolio of Investments (Note 9)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)

	Municipal Bonds (continued): 13.36%

$	190,000	Texas State Department of Housing & Community Affairs, Taxable Revenue Bonds, Series A 2.800%, 03/01/36	$	190,317

	500,000	Wise County, Virginia, Industrial Development Authority Facilities Lease, Taxable Revenue Bonds 1.700%, 02/01/17		500,195

		Total Municipal Bonds (Cost $8,009,391)		8,018,478

	U.S. Treasury Bonds & Notes: 13.36%
	2,500,000	U.S. Treasury Notes 0.750%, 03/15/17		2,499,220

	5,000,000	0.875%, 05/15/17		5,001,560

	500,000	2.375%, 07/31/17		518,144

		Total U.S. Treasury Bonds & Notes (Cost $8,023,508)		8,018,924

		Total Investments: 70.53% (Cost $42,061,940)		42,318,570

		Net Other Assets and Liabilities: 29.47%		17,684,808	^(c)

		Net Assets: 100.00%	$	60,003,378

Percentages are stated as a percent of net assets.

(a) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at December 31, 2014.

(b) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate market value of those securities was $2,146,352, representing 3.58% of net assets.

(c) Includes cash which is being held as collateral for swap contracts.

Total Return Swap Contracts

Counter Party

Reference Entry/Obligation

Fund
(Pays)/Receives

Termination
Date

Notional
Amount

Net Unrealized
Gain/(Loss)

Credit Suisse

CS Momentum & Volatility Enhanced Return Strategy Custom 15- Total Return

(105 Bps)

Total Return

01/02/15

80,645,323

5,042,114

Credit Suisse

CS Momentum & Volatility Enhanced Return Strategy Custom 15- Total Return

105 Bps

(Total Return)

01/02/15

(1,200,000)

(62,751)

Credit Suisse

CS Momentum & Volatility Enhanced Return Strategy Custom 15- Total Return

105 Bps

(Total Return)

01/02/15

(1,800,000)

(78,956)

Credit Suisse

CS Momentum & Volatility Enhanced Return Strategy Custom 15- Total Return

105 Bps

(Total Return)

01/02/15

(5,200,000)

(123,595)

Credit Suisse

CS Momentum & Volatility Enhanced Return Strategy Custom 15- Total Return

105 Bps

(Total Return)

01/02/15

(14,000,000)

(475,881)

Credit Suisse

CS Momentum & Volatility Enhanced Return Strategy Custom 15- Total Return

105 Bps

(Total Return)

01/02/15

(1,700,000)

(20,909)

Total of Total Return Swap Contracts

56,745,323

4,280,022


December 31, 2014		94		See Notes to Financial Statements

Consolidated Portfolio of Investments (Note 9)

Forward Commodity Long/Short Strategy Fund

Investment Abbreviations:

Bps — Basis Points

REMICS — Real Estate Mortgage Investment Conduits

Sec. — Secured

Sr. — Senior

STRIP — Separate Trading of Registered Interest and Principal of Securities

Sub. — Subordinated

Unsec. — Unsecured


See Notes to Financial Statements		95		December 31, 2014

Statement of Assets and Liabilities


	Forward Credit Analysis Long/Short Fund			Forward Dynamic Income Fund			Forward EM Corporate Debt Fund
Assets:
Investments, at value	$	98,044,311		$	20,141,720		$	398,349,264
Cash		1,306,827			18,831,655			10,523,870
Deposit with broker for futures contracts		205,000			479,066			—
Deposit with broker for swap contracts		—			—			300,001
Receivable for swap contract payments		—			—			2,778
Receivable for investments sold		—			2,252,495			—
Receivable for shares sold		1,639,281			2,270			786,515
Interest and dividends receivable		1,319,004			274,832			6,471,345
Other assets		17,281			10,920			17,630

Total Assets		102,531,704			41,992,958			416,451,403

Liabilities:
Payable on loan (Note 2)		—			—			20,852,164
Payable for interest due on loan (Note 2)		—			—			793
Variation margin payable		21,375			3,297			—
Unrealized loss on swap contracts		—			—			278,148
Swap premiums received		—			—			118,193
Payable for investments purchased		—			3,298,481			—
Payable for shares redeemed		198,162			—			1,286,713
Payable to advisor		109,298			12,798			237,208
Payable for distribution and service fees		33,704			2,613			123,109
Payable to trustees		4,895			543			14,851
Payable for chief compliance officer fee		698			78			2,104
Payable for legal and audit fees		43,798			19,810			52,589
Accrued expenses and other liabilities		38,765			5,638			92,212

Total Liabilities		450,695			3,343,258			23,058,084

Net Assets	$	102,081,009		$	38,649,700		$	393,393,319

Net Assets Consist of:
Paid-in capital	$	193,206,993		$	38,641,875		$	438,235,020
Accumulated net investment income/(loss)		53,079			24,706			(193,544	)
Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions		(94,027,992	)		(229,279	)		(18,237,999	)
Net unrealized appreciation/(depreciation) on investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currencies		2,848,929			212,398			(26,410,158	)

Total Net Assets	$	102,081,009		$	38,649,700		$	393,393,319

Investments, At Cost	$	94,896,660		$	19,925,401		$	424,464,953

Pricing of Shares
Investor Class:
Net Asset Value, offering and redemption price per share		$7.50			—			$8.76
Net Assets	$	58,907,149			—		$	346,732,664
Shares of beneficial interest outstanding		7,853,500			—			39,600,093
Institutional Class:
Net Asset Value, offering and redemption price per share		$7.44			$26.56			$8.69
Net Assets	$	19,366,210		$	30,165,150		$	41,554,711
Shares of beneficial interest outstanding		2,602,685			1,135,717			4,779,294


December 31, 2014		96		See Notes to Financial Statements

Statement of Assets and Liabilities


	Forward Credit Analysis Long/Short Fund (continued)		Forward Dynamic Income Fund (continued)		Forward EM Corporate Debt Fund (continued)
Class A:
Net Asset Value, offering and redemption price per share		$7.47		$26.53		—
Net Assets	$	4,227,949	$	8,484,550		—
Shares of beneficial interest outstanding		565,981		319,857		—
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		$7.93		$28.15		—
Class C:
Net Asset Value, offering and redemption price per share		$7.51		—		$8.79
Net Assets	$	9,465,916		—	$	2,162,477
Shares of beneficial interest outstanding		1,260,673		—		246,028
Advisor Class:
Net Asset Value, offering and redemption price per share		$7.44		—		$8.68
Net Assets	$	10,113,785		—	$	2,943,467
Shares of beneficial interest outstanding		1,358,721		—		338,950


See Notes to Financial Statements		97		December 31, 2014

Statement of Assets and Liabilities


	Forward Emerging Markets Fund			Forward Equity Long/Short Fund			Forward Global Dividend Fund
Assets:
Investments, at value	$	11,590,260		$	2,062,233		$	13,508,788
Cash		—			119,153			334,675
Deposit with broker for futures contracts		—			337,332			—
Receivable for investments sold		530,264			368,337			3,349
Receivable for shares sold		49			38			—
Receivable due from advisor		910			9,755			—
Receivable due from custodian		—			—			891
Interest and dividends receivable		13,848			3,296			34,675
Other assets		11,573			5,068			14,905

Total Assets		12,146,904			2,905,212			13,897,283

Liabilities:
Variation margin payable		—			24,788			—
Payable to custodian		869,868			—			—
Payable for investments purchased		—			217,742			21,009
Payable for shares redeemed		3,587			—			23,011
Payable to advisor		—			—			860
Payable for distribution and service fees		1,740			188			5,831
Payable to trustees		447			103			536
Payable for chief compliance officer fee		63			14			76
Payable to ReFlow (Note 2)		344			—			—
Payable for legal and audit fees		27,686			31,163			26,078
Accrued expenses and other liabilities		10,275			3,229			7,727

Total Liabilities		914,010			277,227			85,128

Net Assets	$	11,232,894		$	2,627,985		$	13,812,155

Net Assets Consist of:
Paid-in capital	$	12,388,834		$	2,502,803		$	12,167,382
Accumulated net investment loss		(71,773	)		—			(33,464	)
Accumulated net realized gain/(loss) on investments, securities sold short, written option contracts, futures contracts and foreign currency transactions		(1,210,921	)		(28,518	)		36,040
Net unrealized appreciation on investments, futures contracts and translation of assets and liabilities in foreign currencies		126,754			153,700			1,642,197

Total Net Assets	$	11,232,894		$	2,627,985		$	13,812,155

Investments, At Cost	$	11,462,226		$	1,883,745		$	11,865,790

Pricing of Shares
Investor Class:
Net Asset Value, offering and redemption price per share		$10.24			$25.35			$11.24
Net Assets	$	3,818,673		$	246,050		$	427,515
Shares of beneficial interest outstanding		372,837			9,705			38,029
Institutional Class:
Net Asset Value, offering and redemption price per share		$10.38			$25.63			$11.07
Net Assets	$	5,861,995		$	2,381,935		$	1,908,361
Shares of beneficial interest outstanding		564,923			92,936			172,362


December 31, 2014		98		See Notes to Financial Statements

Statement of Assets and Liabilities


	Forward Emerging Markets Fund (continued)		Forward Equity Long/Short Fund (continued)		Forward Global Dividend Fund (continued)
Class A:
Net Asset Value, offering and redemption price per share		—		—		$11.25
Net Assets		—		—	$	11,476,279
Shares of beneficial interest outstanding		—		—		1,020,337
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		—		—		$11.94
Advisor Class:
Net Asset Value, offering and redemption price per share		$10.68		—		—
Net Assets	$	1,552,226		—		—
Shares of beneficial interest outstanding		145,382		—		—


See Notes to Financial Statements		99		December 31, 2014

Statement of Assets and Liabilities


	Forward International Dividend Fund			Forward International Small Companies Fund			Forward Select EM Dividend Fund
Assets:
Investments, at value	$	310,714,698		$	160,106,609		$	55,039,803
Cash		10,426,435			715,748			1,407,441
Foreign currency, at value (Cost $4,996,456, $— and $249,974, respectively)		4,951,749			—			250,098
Deposit with broker for futures contracts		945,353			—			—
Receivable for investments sold		6,928,760			2,422,060			741,018
Receivable for shares sold		1,153,495			476,556			41,791
Receivable due from broker		—			—			1,391
Receivable due from custodian		11,155			4,755			1,119
Interest and dividends receivable		1,408,616			333,835			237,717
Other assets		32,848			19,122			12,204

Total Assets		336,573,109			164,078,685			57,732,582

Liabilities:
Payable on loan (Note 2)		20,061,149			—			7,555,269
Payable for interest due on loan (Note 2)		763			—			287
Variation margin payable		36,934			—			—
Payable for investments purchased		1,005,541			—			78,823
Payable for shares redeemed		2,321,426			253,489			34,614
Payable to advisor		199,450			137,214			35,249
Payable for distribution and service fees		69,432			15,322			12,129
Payable to trustees		11,148			6,355			1,966
Payable for chief compliance officer fee		1,575			898			270
Payable for legal and audit fees		33,815			43,461			27,335
Accrued expenses and other liabilities		59,479			49,256			26,129

Total Liabilities		23,800,712			505,995			7,772,071

Net Assets	$	312,772,397		$	163,572,690		$	49,960,511

Net Assets Consist of:
Paid-in capital	$	335,285,092		$	346,048,734		$	63,236,069
Accumulated net investment loss		(3,565,307	)		(1,921,077	)		(155,017	)
Accumulated net realized loss on investments, futures contracts and foreign currency transactions		(16,948,148	)		(203,248,573	)		(10,249,083	)
Net unrealized appreciation/(depreciation) on investments, futures contracts and translation of assets and liabilities in foreign currencies		(1,999,240	)		22,693,606			(2,871,458	)

Total Net Assets	$	312,772,397		$	163,572,690		$	49,960,511

Investments, At Cost	$	312,615,673		$	137,407,677		$	57,906,026

Pricing of Shares
Investor Class:
Net Asset Value, offering and redemption price per share		$8.78			$15.86			$19.73
Net Assets	$	140,809,682		$	26,760,332		$	28,180,499
Shares of beneficial interest outstanding		16,033,324			1,687,057			1,428,336
Institutional Class:
Net Asset Value, offering and redemption price per share		$7.27			$15.83			$19.72
Net Assets		$84,982,417			$134,290,055			$19,143,750
Shares of beneficial interest outstanding		11,690,429			8,480,605			970,571


December 31, 2014		100		See Notes to Financial Statements

Statement of Assets and Liabilities


	Forward International Dividend Fund (continued)		Forward International Small Companies Fund (continued)		Forward Select EM Dividend Fund (continued)
Class A:
Net Asset Value, offering and redemption price per share		$8.78		—		—
Net Assets	$	4,045,985		—		—
Shares of beneficial interest outstanding		460,765		—		—
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		$9.32		—		—
Class C:
Net Asset Value, offering and redemption price per share		$8.76		—		$19.70
Net Assets	$	10,293,107		—	$	1,487,164
Shares of beneficial interest outstanding		1,174,541		—		75,488
Advisor Class:
Net Asset Value, offering and redemption price per share		$7.27		$15.85		$19.72
Net Assets	$	72,641,206	$	2,522,303	$	1,149,098
Shares of beneficial interest outstanding		9,992,968		159,136		58,283


See Notes to Financial Statements		101		December 31, 2014

Statement of Assets and Liabilities


	Forward Small Cap Equity Fund			Forward Tactical Enhanced Fund			Forward Tactical Growth Fund
Assets:
Investments in affiliates, at value	$	350,051		$	—		$	—
Investments, at value		26,866,463			16,070,100			660,387,668
Cash		1,175,245			12,066,923			201,279,991
Deposit with broker for futures contracts		593,004			—			—
Variation margin receivable		20,074			—			—
Receivable for shares sold		—			—			575,934
Receivable due from broker		—			2,390,443			—
Interest and dividends receivable		23,019			88,751			2,410,333
Other assets		12,953			30,254			49,534

Total Assets		29,040,809			30,646,471			864,703,460

Liabilities:
Options written, at value (Premiums received $—, $— and $493,750, respectively)		—			—			1,687,500
Payable for shares redeemed		12,363			13			1,975,363
Payable to advisor		10,725			25,891			866,464
Payable for distribution and service fees		7,862			7,455			201,434
Payable to trustees		1,038			1,739			33,023
Payable for chief compliance officer fee		147			239			4,674
Payable for legal and audit fees		25,866			20,869			55,118
Accrued expenses and other liabilities		14,759			11,351			148,735

Total Liabilities		72,760			67,557			4,972,311

Net Assets	$	28,968,049		$	30,578,914		$	859,731,149

Net Assets Consist of:
Paid-in capital	$	53,351,858		$	32,120,047		$	839,110,253
Accumulated net investment income		—			—			—
Accumulated net realized gain/(loss) on investments and futures contracts		(27,405,019	)		(2,055,822	)		8,828
Net unrealized appreciation on investments, written option contracts and futures contracts		3,021,210			514,689			20,612,068

Total Net Assets	$	28,968,049		$	30,578,914		$	859,731,149

Investments in Affiliates, At Cost	$	350,051			—			—

Investments, At Cost	$	23,865,327		$	15,555,411		$	638,581,850

Pricing of Shares
Investor Class:
Net Asset Value, offering and redemption price per share		$22.34			$23.93			$25.55
Net Assets	$	22,004,007		$	13,651,477		$	138,945,518
Shares of beneficial interest outstanding		985,005			570,427			5,438,279
Institutional Class:
Net Asset Value, offering and redemption price per share		$23.59			$24.23			$26.04
Net Assets	$	4,213,020		$	11,542,881		$	53,957,283
Shares of beneficial interest outstanding		178,625			476,450			2,071,910


December 31, 2014		102		See Notes to Financial Statements

Statement of Assets and Liabilities


	Forward Small Cap Equity Fund (continued)		Forward Tactical Enhanced Fund (continued)		Forward Tactical Growth Fund (continued)
Class A:
Net Asset Value, offering and redemption price per share		—		$23.79		$25.30
Net Assets		—	$	758,557	$	59,768,880
Shares of beneficial interest outstanding		—		31,883		2,362,412
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		—		$25.24		$26.84
Class C:
Net Asset Value, offering and redemption price per share		—		$23.42		$24.63
Net Assets		—	$	1,609,396	$	85,792,131
Shares of beneficial interest outstanding		—		68,705		3,483,005
Advisor Class:
Net Asset Value, offering and redemption price per share		$23.47		$24.18		$26.04
Net Assets	$	2,751,022	$	3,016,603	$	521,267,337
Shares of beneficial interest outstanding		117,204		124,763		20,019,694


See Notes to Financial Statements		103		December 31, 2014

Consolidated Statement of Assets and Liabilities


	Forward Commodity Long/Short Strategy Fund
Assets:
Investments, at value	$	42,318,570
Cash		5,545,783
Deposit with broker for swap contracts		8,864,080
Unrealized gain on swap contracts		5,042,114
Receivable for investments sold		1,121,513
Receivable for shares sold		237,246
Interest and dividends receivable		117,286
Other assets		26,074

Total Assets		63,272,666

Liabilities:
Unrealized loss on swap contracts		762,092
Payable for swap contract payments		62,054
Payable for shares redeemed		2,265,014
Payable to advisor		63,929
Payable for distribution and service fees		12,503
Payable to trustees		3,108
Payable for chief compliance officer fee		439
Payable for legal and audit fees		59,721
Accrued expenses and other liabilities		40,428

Total Liabilities		3,269,288

Net Assets	$	60,003,378

Net Assets Consist of:
Paid-in capital	$	56,033,041
Accumulated net investment income		—
Accumulated net realized loss on investments and swap contracts		(566,315	)
Net unrealized appreciation on investments and swap contracts		4,536,652

Total Net Assets	$	60,003,378

Investments, At Cost	$	42,061,940

Pricing of Shares
Investor Class:
Net Asset Value, offering and redemption price per share		$21.11
Net Assets	$	18,417,793
Shares of beneficial interest outstanding		872,549
Institutional Class:
Net Asset Value, offering and redemption price per share		$21.32
Net Assets	$	19,800,713
Shares of beneficial interest outstanding		928,829
Class C:
Net Asset Value, offering and redemption price per share		$20.80
Net Assets	$	3,521,357
Shares of beneficial interest outstanding		169,279


December 31, 2014		104		See Notes to Financial Statements

Consolidated Statement of Assets and Liabilities


	Forward Commodity Long/Short Strategy Fund (continued)
Advisor Class:
Net Asset Value, offering and redemption price per share		$21.22
Net Assets	$	14,343,428
Shares of beneficial interest outstanding		675,800
Class Z:
Net Asset Value, offering and redemption price per share		$21.31
Net Assets	$	3,920,087
Shares of beneficial interest outstanding		183,952


See Notes to Financial Statements		105		December 31, 2014

Statement of Operations

For the Year Ended December 31, 2014


	Forward Credit Analysis Long/Short Fund			Forward Dynamic Income Fund			Forward EM Corporate Debt Fund
Investment Income:
Interest	$	4,648,138		$	681		$	33,179,545
Dividends		—			900,609			127,175
Foreign taxes withheld		—			(21,010	)		(17,018	)

Total Investment Income		4,648,138			880,280			33,289,702

Expenses:
Investment advisory fee		1,077,864			76,397			2,597,719
Administration fee		64,796			11,842			205,861
Custodian fee		5,422			8,235			60,352
Legal and audit fees		71,544			24,267			148,683
Transfer agent fee		148,731			2,122			346,601
Trustees’ fees and expenses		17,718			1,313			62,119
Registration/filing fees		77,347			24,094			55,826
Reports to shareholder and printing fees		—			4,594			50,235
Distribution and service fees
Investor Class		240,383			—			1,312,520
Institutional Class		11,586			3,724			19,401
Class A		24,441			3,783			—
Class C		104,760			—			21,418
Advisor Class		9,599			—			2,054
Chief compliance officer fee		6,823			429			23,053
ReFlow fees (Note 2)		32,604			—			1,700
Interest on loan		—			—			602,018
Other		22,764			1,315			22,973

Total expenses before waiver		1,916,382			162,115			5,532,533
Less fees waived/reimbursed by investment advisor (Note 3)		(28,652	)		(61,165	)		(25,830	)

Total Net Expenses		1,887,730			100,950			5,506,703

Net Investment Income:		2,760,408			779,330			27,782,999

Net realized gain/(loss) on investments		2,851,219			110,860			(12,627,165	)
Net realized loss on futures contracts		(1,024,852	)		(123,738	)		(579,594	)
Net realized gain on swap contracts		16,947			—			411,591
Net realized loss on foreign currency		—			(34,270	)		(4,158,665	)
Net change in unrealized appreciation/(depreciation) on investments		5,887,542			187,895			(15,963,159	)
Net change in unrealized depreciation on futures contracts		(298,722	)		(3,508	)		(301,071	)
Net change in unrealized depreciation on swap contracts		—			—			(278,148	)
Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currency transactions		—			(624	)		5,749

Net Realized and Unrealized Gain/(Loss) on Investments, Futures Contracts, Swap Contracts and Foreign Currency Translations		7,432,134			136,615			(33,490,462	)

Net Increase/(Decrease) in Net Assets Resulting From Operations	$	10,192,542		$	915,945		$	(5,707,463	)


December 31, 2014		106		See Notes to Financial Statements

Statement of Operations

For the Year Ended December 31, 2014


	Forward Emerging Markets Fund			Forward Equity Long/Short Fund^(a)			Forward Global Dividend Fund
Investment Income:
Interest	$	490		$	288		$	36,343
Dividends		431,526			33,149			920,563
Foreign taxes withheld		(41,400	)		(53	)		(66,027	)

Total Investment Income		390,616			33,384			890,879

Expenses:
Dividend expense on short sales		—			7,427			—
Investment advisory fee		150,835			61,043			135,805
Interest on short sales		—			10,588			—
Administration fee		20,155			9,277			22,864
Custodian fee		13,733			4,554			12,036
Legal and audit fees		37,598			45,556			34,724
Transfer agent fee		10,885			1,670			8,117
Trustees’ fees and expenses		1,524			608			2,659
Registration/filing fees		35,147			28,419			35,007
Reports to shareholder and printing fees		9,431			6,771			6,494
Distribution and service fees
Investor Class		21,097			974			1,776
Institutional Class		3,496			2,013			2,291
Class A		—			—			65,729
Advisor Class		1,540			—			—
Chief compliance officer fee		856			269			1,060
ReFlow fees (Note 2)		641			—			5,120
Other		6,023			4,643			6,554

Total expenses before waiver		312,961			183,812			340,236
Less fees waived/reimbursed by investment advisor (Note 3)		(101,820	)		(81,394	)		(110,870	)

Total Net Expenses		211,141			102,418			229,366

Net Investment Income/(Loss):		179,475			(69,034	)		661,513

Net realized gain on investments		419,628			401,510			1,054,576
Net realized gain on securities sold short		—			30,440			—
Net realized loss on written option contracts		—			(13,403	)		—
Net realized gain on futures contracts		17,658			37,332			—
Net realized loss on foreign currency		(254,950	)		(975	)		(58,928	)
Net change in unrealized depreciation on investments		(548,623	)		(638,550	)		(1,671,699	)
Net change in unrealized appreciation on securities sold short		—			31,721			—
Net change in unrealized depreciation on written option contracts		—			(2,139	)		—
Net change in unrealized depreciation on futures contracts		(2,796	)		(24,788	)		—
Net change in unrealized depreciation on translation of assets and liabilities in foreign currency transactions		(187	)		—			(1,243	)

Net Realized and Unrealized Loss on Investments, Securities Sold Short, Written Option Contracts, Futures Contracts and Foreign Currency Translations		(369,270	)		(178,852	)		(677,294	)

Net Decrease in Net Assets Resulting From Operations	$	(189,795	)	$	(247,886	)	$	(15,781	)

(a) Prior to August 1, 2014, the Forward Equity Long/Short Fund was known as the Forward Endurance Long/Short Fund.


See Notes to Financial Statements		107		December 31, 2014

Statement of Operations

For the Year Ended December 31, 2014


	Forward International Dividend Fund			Forward International Small Companies Fund			Forward Select EM Dividend Fund
Investment Income:
Interest	$	1,614,748		$	4,827		$	430,051
Dividends		20,785,563			4,751,866			5,923,767
Foreign taxes withheld		(1,910,833	)		(433,350	)		(500,644	)

Total Investment Income		20,489,478			4,323,343			5,853,174

Expenses:
Investment advisory fee		2,569,144			1,979,297			955,619
Administration fee		178,684			143,923			64,682
Custodian fee		97,807			33,431			78,992
Legal and audit fees		93,571			87,808			48,334
Transfer agent fee		87,489			120,461			30,928
Trustees’ fees and expenses		51,260			32,219			14,554
Registration/filing fees		74,901			39,969			55,686
Reports to shareholder and printing fees		26,857			38,518			10,212
Distribution and service fees
Investor Class		484,051			130,486			236,476
Institutional Class		45,798			79,755			12,580
Class A		19,345			—			—
Class C		92,529			—			14,874
Advisor Class		83,840			5,799			1,109
Chief compliance officer fee		19,096			12,320			5,346
ReFlow fees (Note 2)		—			4,605			—
Interest and commitment fees on loan		271,626			—			88,586
Other		34,108			21,540			15,158

Total expenses before waiver		4,230,106			2,730,131			1,633,136
Less fees waived/reimbursed by investment advisor (Note 3)		(326,256	)		(46,301	)		(115,393	)

Total Net Expenses		3,903,850			2,683,830			1,517,743

Net Investment Income:		16,585,628			1,639,513			4,335,431

Net realized gain/(loss) on investments		2,315,877			20,125,057			(6,065,904	)
Net realized gain/(loss) on futures contracts		(267,134	)		—			1,534,726
Net realized loss on foreign currency		(3,528,901	)		(4,341,018	)		(3,199,607	)
Long-term capital gains from other investment companies		32,499			—			4,075
Net change in unrealized depreciation on investments		(33,727,482	)		(33,682,704	)		(4,925,386	)
Net change in unrealized depreciation on futures contracts		(36,934	)		—			—
Net change in unrealized depreciation on translation of assets and liabilities in foreign currency transactions		(62,912	)		(5,938	)		(5,378	)

Net Realized and Unrealized Loss on Investments, Futures Contracts and Foreign Currency Translations		(35,274,987	)		(17,904,603	)		(12,657,474	)

Net Decrease in Net Assets Resulting From Operations	$	(18,689,359	)	$	(16,265,090	)	$	(8,322,043	)


December 31, 2014		108		See Notes to Financial Statements

Statement of Operations

For the Year Ended December 31, 2014


	Forward Small Cap Equity Fund			Forward Tactical Enhanced Fund			Forward Tactical Growth Fund
Investment Income:
Interest	$	1,604		$	33,481		$	397,190
Dividends		254,277			920,146			4,995,039
Dividends from affiliated investment company shares		34			—			—

Total Investment Income		255,915			953,627			5,392,229

Expenses:
Investment advisory fee		266,206			1,116,760			10,754,340
Administration fee		28,268			55,852			454,244
Custodian fee		1,878			2,532			14,651
Legal and audit fees		38,754			49,013			235,149
Transfer agent fee		47,142			62,814			552,218
Trustees’ fees and expenses		5,098			15,545			153,800
Registration/filing fees		35,496			47,515			97,990
Reports to shareholder and printing fees		20,772			8,127			116,688
Distribution and service fees
Investor Class		91,302			50,859			635,236
Institutional Class		2,334			10,002			31,056
Class A		—			10,258			457,843
Class C		—			16,557			924,768
Advisor Class		2,774			60,870			538,518
Chief compliance officer fee		1,946			6,082			58,413
Other		4,366			7,626			60,704

Total expenses before waiver		546,336			1,520,412			15,085,618
Less fees waived/reimbursed by investment advisor (Note 3)		(108,565	)		(41,024	)		—
Affiliated management fee waiver (Note 2)		(280	)		—			—

Total Net Expenses		437,491			1,479,388			15,085,618

Net Investment Loss:		(181,576	)		(525,761	)		(9,693,389	)

Net realized gain/(loss) on investments		4,238,152			1,470,964			(6,792,787	)
Net realized gain/(loss) on futures contracts		251,867			(409,557	)		37,392,307
Net change in unrealized appreciation/(depreciation) on investments		(3,853,405	)		377,576			12,661,961
Net change in unrealized depreciation on written option contracts		—			—			(1,193,750	)
Net change in unrealized depreciation on futures contracts		(40,975	)		—			(12,540,059	)

Net Realized and Unrealized Gain on Investments, Written Option Contracts and Futures Contracts		595,639			1,438,983			29,527,672

Net Increase in Net Assets Resulting From Operations	$	414,063		$	913,222		$	19,834,283


See Notes to Financial Statements		109		December 31, 2014

Consolidated Statement of Operations

For the Year Ended December 31, 2014


	Forward Commodity Long/Short Strategy Fund
Investment Income:
Interest	$	975,952

Total Investment Income		975,952

Expenses:
Investment advisory fee		1,054,234
Administration fee		159,088
Custodian fee		2,521
Legal and audit fees		98,947
Transfer agent fee		64,173
Trustees’ fees and expenses		17,004
Registration/filing fees		48,266
Reports to shareholder and printing fees		29,981
Distribution and service fees
Investor Class		88,081
Institutional Class		13,886
Class C		42,881
Advisor Class		46,375
Chief compliance officer fee		6,601
Other		9,095

Total Expenses		1,681,133

Net Investment Loss:		(705,181	)

Net realized gain on investments		80,499
Net realized loss on swap contracts		(4,590,433	)
Net change in unrealized appreciation on investments		138,571
Net change in unrealized appreciation on swap contracts		2,849,949

Net Realized and Unrealized Loss on Investments and Swap Contracts		(1,521,414	)

Net Decrease in Net Assets Resulting From Operations	$	(2,226,595	)


December 31, 2014		110		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Credit Analysis Long/Short Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment income	$	2,760,408		$	21,559,570
Net realized gain/(loss) on investments		2,851,219			(103,820,555	)
Net realized gain on securities sold short		—			8,456,624
Net realized loss on futures contracts		(1,024,852	)		—
Net realized gain on swap contracts		16,947			—
Net change in unrealized appreciation/(depreciation) on investments, securities sold short and futures contracts		5,588,820			(25,759,035	)

Net increase/(decrease) in net assets resulting from operations		10,192,542			(99,563,396	)

Distributions to Shareholders:
From net investment income
Investor Class		(1,557,458	)		(10,664,545	)
Institutional Class		(605,208	)		(6,627,851	)
Class A		(110,214	)		(601,800	)
Class C		(214,352	)		(838,927	)
Advisor Class		(293,274	)		(3,117,408	)
From net realized gains on investments
Investor Class		—			(1,773,856	)
Institutional Class		—			(1,377,208	)
Class A		—			(146,423	)
Class C		—			(339,605	)
Advisor Class		—			(415,008	)

Total distributions		(2,780,506	)		(25,902,631	)

Share Transactions:
Investor Class
Proceeds from sale of shares		86,061,020			268,133,272
Issued to shareholders in reinvestment of distributions		1,115,804			10,571,640
Cost of shares redeemed		(87,770,451	)		(497,227,717	)

Net decrease from share transactions		(593,627	)		(218,522,805	)

Institutional Class
Proceeds from sale of shares		39,336,855			150,897,820
Issued to shareholders in reinvestment of distributions		474,598			7,142,915
Cost of shares redeemed		(65,881,004	)		(294,096,087	)

Net decrease from share transactions		(26,069,551	)		(136,055,352	)

Class A
Proceeds from sale of shares		2,054,487			7,443,356
Issued to shareholders in reinvestment of distributions		64,227			356,428
Cost of shares redeemed		(2,743,250	)		(18,153,576	)

Net decrease from share transactions		(624,536	)		(10,353,792	)

Class C
Proceeds from sale of shares		3,843,320			6,873,999
Issued to shareholders in reinvestment of distributions		141,844			837,571
Cost of shares redeemed		(5,898,377	)		(20,577,094	)

Net decrease from share transactions		(1,913,213	)		(12,865,524	)

Advisor Class
Proceeds from sale of shares		11,050,560			82,924,845
Issued to shareholders in reinvestment of distributions		116,841			1,709,825
Cost of shares redeemed		(13,434,525	)		(156,879,686	)

Net decrease from share transactions		(2,267,124	)		(72,245,016	)

Net decrease in net assets	$	(24,056,015	)	$	(575,508,516	)

Net Assets:
Beginning of period		126,137,024			701,645,540

End of period (including accumulated net investment income of $53,079 and $61,315, respectively)	$	102,081,009		$	126,137,024


See Notes to Financial Statements		111		December 31, 2014

Statement of Changes in Net Assets


	Forward Credit Analysis Long/Short Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Changes in Shares Outstanding:
Investor Class
Sold		11,622,870			30,799,531
Distributions reinvested		150,754			1,334,251
Redeemed		(11,804,674	)		(62,155,904	)

Net decrease in shares outstanding		(31,050	)		(30,022,122	)

Institutional Class
Sold		5,402,538			17,883,808
Distributions reinvested		64,806			914,396
Redeemed		(9,041,668	)		(36,751,346	)

Net decrease in shares outstanding		(3,574,324	)		(17,953,142	)

Class A
Sold		279,881			843,460
Distributions reinvested		8,689			45,907
Redeemed		(372,909	)		(2,315,909	)

Net decrease in shares outstanding		(84,339	)		(1,426,542	)

Class C
Sold		517,770			783,833
Distributions reinvested		19,184			109,271
Redeemed		(795,490	)		(2,621,253	)

Net decrease in shares outstanding		(258,536	)		(1,728,149	)

Advisor Class
Sold		1,501,516			9,525,404
Distributions reinvested		15,859			213,707
Redeemed		(1,840,966	)		(19,460,927	)

Net decrease in shares outstanding		(323,591	)		(9,721,816	)

(a) Prior to May 1, 2013, the Forward Credit Analysis Long/Short Fund Advisor Class was known as the Forward Credit Analysis Long/Short Fund Class M.


December 31, 2014		112		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Dynamic Income Fund
	Year Ended December 31, 2014			Period Ended December 31, 2013^(a)
Operations:
Net investment income	$	779,330		$	71,578
Net realized gain/(loss) on investments		110,860			(25,099	)
Net realized gain/(loss) on futures contracts		(123,738	)		14,792
Net realized loss on foreign currency transactions		(34,270	)		(468	)
Long-term capital gain distributions from other investment companies		—			3,480
Net change in unrealized appreciation on investments, futures contracts and translation of assets and liabilities in foreign currencies		183,763			28,635

Net increase in net assets resulting from operations		915,945			92,918

Distributions to Shareholders:
From net investment income
Institutional Class		(652,508	)		(81,366	)
Class A		(82,250	)		(6,525	)
From net realized gains on investments
Institutional Class		(170,152	)		(1,181	)
Class A		(9,847	)		(95	)
From return of capital
Institutional Class		—			(3,673	)
Class A		—			(295	)

Total distributions		(914,757	)		(93,135	)

Share Transactions:
Institutional Class
Proceeds from sale of shares		27,218,053			2,960,001
Issued to shareholders in reinvestment of distributions		642,296			26,900
Cost of shares redeemed		(673,140	)		—

Net increase from share transactions		27,187,209			2,986,901

Class A
Proceeds from sale of shares		8,267,473			217,242
Issued to shareholders in reinvestment of distributions		70,854			6,915
Cost of shares redeemed		(87,865	)		—

Net increase from share transactions		8,250,462			224,157

Net increase in net assets	$	35,438,859		$	3,210,841

Net Assets:
Beginning of period		3,210,841			—

End of period (including accumulated net investment income/(loss) of $24,706 and $(3,552))	$	38,649,700		$	3,210,841

Changes in Shares Outstanding:
Institutional Class
Sold		1,016,932			118,732
Distributions reinvested		24,192			1,082
Redeemed		(25,221	)		—

Net increase in shares outstanding		1,015,903			119,814

Class A
Sold		311,536			8,696
Distributions reinvested		2,681			278
Redeemed		(3,334	)		—

Net increase in shares outstanding		310,883			8,974

(a) The Forward Dynamic Income Fund commenced operations on August 1, 2013.


See Notes to Financial Statements		113		December 31, 2014

Statement of Changes in Net Assets


	Forward EM Corporate Debt Fund
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013
Operations:
Net investment income	$	27,782,999		$	19,652,635
Net realized loss on investments		(12,627,165	)		(1,475,711	)
Net realized loss on futures contracts		(579,594	)		(327,372	)
Net realized gain/(loss) on swap contracts		411,591			(690,542	)
Net realized loss on foreign currency transactions		(4,158,665	)		(1,681,644	)
Net change in unrealized depreciation on investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currencies		(16,536,629	)		(13,512,075	)

Net increase/(decrease) in net assets resulting from operations		(5,707,463	)		1,965,291

Distributions to Shareholders:
From net investment income
Investor Class		(21,436,611	)		(17,399,347	)
Institutional Class		(2,696,292	)		(2,117,285	)
Class C		(126,541	)		(108,774	)
Advisor Class		(154,381	)		—

Total distributions		(24,413,825	)		(19,625,406	)

Share Transactions:
Investor Class
Proceeds from sale of shares		163,039,100			210,423,916
Issued to shareholders in reinvestment of distributions		15,415,530			11,561,962
Cost of shares redeemed		(109,577,152	)		(70,112,973	)

Net increase from share transactions		68,877,478			151,872,905

Institutional Class
Proceeds from sale of shares		39,659,809			30,725,793
Issued to shareholders in reinvestment of distributions		1,450,759			671,469
Cost of shares redeemed		(31,095,431	)		(28,348,889	)

Net increase from share transactions		10,015,137			3,048,373

Class C
Proceeds from sale of shares		677,485			433,831
Issued to shareholders in reinvestment of distributions		94,021			40,035
Cost of shares redeemed		(360,415	)		(140,431	)

Net increase from share transactions		411,091			333,435

Advisor Class
Proceeds from sale of shares		3,154,481			—
Issued to shareholders in reinvestment of distributions		103,667			—
Cost of shares redeemed		(113,565	)		—

Net increase from share transactions		3,144,583			—

Net increase in net assets	$	52,327,001		$	137,594,598

Net Assets:
Beginning of period		341,066,318			203,471,720

End of period (including accumulated net investment income/(loss) of $(193,544) and $70,081, respectively)	$	393,393,319		$	341,066,318


December 31, 2014		114		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward EM Corporate Debt Fund (continued)
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013
Changes in Shares Outstanding:
Investor Class
Sold		17,345,249			21,563,106
Distributions reinvested		1,676,957			1,221,019
Redeemed		(11,737,050	)		(7,309,079	)

Net increase in shares outstanding		7,285,156			15,475,046

Institutional Class
Sold		4,221,193			3,170,523
Distributions reinvested		159,235			71,188
Redeemed		(3,345,224	)		(2,905,393	)

Net increase in shares outstanding		1,035,204			336,318

Class C
Sold		71,638			43,893
Distributions reinvested		10,241			4,209
Redeemed		(38,558	)		(14,729	)

Net increase in shares outstanding		43,321			33,373

Advisor Class
Sold		340,131			—
Distributions reinvested		11,585			—
Redeemed		(12,766	)		—

Net increase in shares outstanding		338,950			—

(a) The Forward EM Corporate Debt Fund began offering Advisor Class shares on May 1, 2014.


See Notes to Financial Statements		115		December 31, 2014

Statement of Changes in Net Assets


	Forward Emerging Markets Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment income	$	179,475		$	206,119
Net realized gain on investments		419,628			623,151
Net realized gain/(loss) on futures contracts		17,658			(14,349	)
Net realized loss on foreign currency transactions		(254,950	)		(168,983	)
Net change in unrealized depreciation on investments, futures contracts and translation of assets and liabilities in foreign currencies		(551,606	)		(477,922	)

Net increase/(decrease) in net assets resulting from operations		(189,795	)		168,016

Distributions to Shareholders:
From net investment income
Investor Class		(69,487	)		(69,187	)
Institutional Class		(140,997	)		(103,296	)
Advisor Class		(29,516	)		(17,507	)

Total distributions		(240,000	)		(189,990	)

Share Transactions:
Investor Class
Proceeds from sale of shares		3,917,145			6,092,620
Issued to shareholders in reinvestment of distributions		65,114			65,054
Cost of shares redeemed		(4,960,467	)		(7,153,946	)

Net decrease from share transactions		(978,208	)		(996,272	)

Institutional Class
Proceeds from sale of shares		2,971,690			11,177,274
Issued to shareholders in reinvestment of distributions		74,273			42,315
Cost of shares redeemed		(3,939,851	)		(8,740,881	)

Net increase/(decrease) from share transactions		(893,888	)		2,478,708

Advisor Class
Proceeds from sale of shares		953,209			859,678
Issued to shareholders in reinvestment of distributions		28,724			16,850
Cost of shares redeemed		(629,960	)		(302,627	)

Net increase from share transactions		351,973			573,901

Net increase/(decrease) in net assets	$	(1,949,918	)	$	2,034,363

Net Assets:
Beginning of period		13,182,812			11,148,449

End of period (including accumulated net investment income/(loss) of $(71,773) and $5,632, respectively)	$	11,232,894		$	13,182,812


December 31, 2014		116		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Emerging Markets Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Changes in Shares Outstanding:
Investor Class
Sold		351,561			560,386
Distributions reinvested		6,409			6,225
Redeemed		(447,612	)		(665,186	)

Net decrease in shares outstanding		(89,642	)		(98,575	)

Institutional Class
Sold		263,124			1,002,240
Distributions reinvested		7,218			4,000
Redeemed		(361,387	)		(773,601	)

Net increase/(decrease) in shares outstanding		(91,045	)		232,639

Advisor Class
Sold		84,098			75,511
Distributions reinvested		2,712			1,549
Redeemed		(55,025	)		(27,012	)

Net increase in shares outstanding		31,785			50,048

(a) Prior to May 1, 2013, the Forward Emerging Markets Fund Advisor Class was known as the Forward Emerging Markets Fund Class M.


See Notes to Financial Statements		117		December 31, 2014

Statement of Changes in Net Assets


	Forward Equity Long/Short Fund
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013
Operations:
Net investment loss	$	(69,034	)	$	(101,274	)
Net realized gain on investments		401,510			910,164
Net realized gain/(loss) on securities sold short		30,440			(374,589	)
Net realized gain/(loss) on written options contracts		(13,403	)		18,513
Net realized gain on futures contracts		37,332			—
Net realized loss on foreign currency transactions		(975	)		(2,215	)
Net change in unrealized appreciation/(depreciation) on investments, securities sold short, written options contracts and futures contracts		(633,756	)		581,224

Net increase/(decrease) in net assets resulting from operations		(247,886	)		1,031,823

Distributions to Shareholders:
From net realized gains on investments
Investor Class		(32,976	)		(12,651	)
Institutional Class		(321,884	)		(354,754	)

Total distributions		(354,860	)		(367,405	)

Share Transactions:
Investor Class
Proceeds from sale of shares		42,297			—
Issued to shareholders in reinvestment of distributions		31,816			12,651
Cost of shares redeemed		(22,870	)		(16,226	)

Net increase/(decrease) from share transactions		51,243			(3,575	)

Institutional Class
Proceeds from sale of shares		208,684			1,227,894
Issued to shareholders in reinvestment of distributions		178,167			190,191
Cost of shares redeemed		(3,746,690	)		(397,888	)

Net increase/(decrease) from share transactions		(3,359,839	)		1,020,197

Net increase/(decrease) in net assets	$	(3,911,342	)	$	1,681,040

Net Assets:
Beginning of period		6,539,327			4,858,287

End of period (including accumulated net investment income of $0 and $0, respectively)	$	2,627,985		$	6,539,327

Changes in Shares Outstanding:
Investor Class
Sold		1,446			—
Distributions reinvested		1,252			444
Redeemed		(850	)		(581	)

Net increase/(decrease) in shares outstanding		1,848			(137	)

Institutional Class
Sold		7,190			42,558
Distributions reinvested		6,938			6,632
Redeemed		(135,278	)		(14,667	)

Net increase/(decrease) in shares outstanding		(121,150	)		34,523

(a) Prior to August 1, 2014, the Forward Equity Long/Short Fund was known as the Forward Endurance Long/Short Fund.


December 31, 2014		118		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Global Dividend Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment income	$	661,513		$	843,075
Net realized gain on investments		1,054,576			2,141,227
Net realized loss on foreign currency transactions		(58,928	)		(108,871	)
Net change in unrealized appreciation/(depreciation) on investments and translation of assets and liabilities in foreign currencies		(1,672,942	)		452,709

Net increase/(decrease) in net assets resulting from operations		(15,781	)		3,328,140

Distributions to Shareholders:
From net investment income
Investor Class		(17,291	)		(30,908	)
Institutional Class		(208,470	)		(379,549	)
Class A		(450,179	)		(392,906	)
From net realized gains on investments
Investor Class		(9,462	)		—
Institutional Class		(47,557	)		—
Class A		(261,321	)		—

Total distributions		(994,280	)		(803,363	)

Share Transactions:
Investor Class
Proceeds from sale of shares		27,130			386,336
Issued to shareholders in reinvestment of distributions		25,353			30,614
Cost of shares redeemed		(51,458	)		(3,474,988	)

Net increase/(decrease) from share transactions		1,025			(3,058,038	)

Institutional Class
Proceeds from sale of shares		2,887,819			5,184,237
Issued to shareholders in reinvestment of distributions		75,956			192,182
Cost of shares redeemed		(10,289,003	)		(6,795,748	)

Net decrease from share transactions		(7,325,228	)		(1,419,329	)

Class A
Proceeds from sale of shares		1,447,016			2,901,402
Issued to shareholders in reinvestment of distributions		700,594			266,120
Cost of shares redeemed		(1,482,824	)		(3,206,046	)

Net increase/(decrease) from share transactions		664,786			(38,524	)

Net decrease in net assets	$	(7,669,478	)	$	(1,991,114	)

Net Assets:
Beginning of period		21,481,633			23,472,747

End of period (including accumulated net investment loss of $(33,464) and $(3,037), respectively)	$	13,812,155		$	21,481,633


See Notes to Financial Statements		119		December 31, 2014

Statement of Changes in Net Assets


	Forward Global Dividend Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Changes in Shares Outstanding:
Investor Class
Sold		2,280			32,920
Distributions reinvested		2,166			2,650
Redeemed		(4,377	)		(300,919	)

Net increase/(decrease) in shares outstanding		69			(265,349	)

Institutional Class
Sold		242,930			451,119
Distributions reinvested		6,490			16,712
Redeemed		(865,978	)		(597,292	)

Net decrease in shares outstanding		(616,558	)		(129,461	)

Class A
Sold		123,310			249,485
Distributions reinvested		59,796			22,763
Redeemed		(125,668	)		(279,635	)

Net increase/(decrease) in shares outstanding		57,438			(7,387	)

(a) Prior to February 20, 2013 the Forward Global Dividend Fund was known as the Forward Large Cap Dividend Fund.


December 31, 2014		120		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward International Dividend Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)(b)
Operations:
Net investment income	$	16,585,628		$	12,066,356
Net realized gain/(loss) on investments		2,315,877			(6,078,436	)
Net realized loss on futures contracts		(267,134	)		(871,955	)
Net realized loss on foreign currency transactions		(3,528,901	)		(2,397,357	)
Long-term capital gain distributions from other investment companies		32,499			—
Net change in unrealized appreciation/(depreciation) on investments, futures contracts and translation of assets and liabilities in foreign currencies		(33,827,328	)		21,404,315

Net increase/(decrease) in net assets resulting from operations		(18,689,359	)		24,122,923

Distributions to Shareholders:
From net investment income
Investor Class		(6,652,695	)		(4,766,594	)
Institutional Class		(6,383,837	)		(5,314,989	)
Class A		(185,016	)		(71,834	)
Class C		(457,480	)		(187,947	)
Advisor Class		(5,550,878	)		(2,601,974	)

Total distributions		(19,229,906	)		(12,943,338	)

Share Transactions:
Investor Class
Proceeds from sale of shares		130,715,014			158,560,047
Issued to shareholders in reinvestment of distributions		2,406,622			1,625,180
Cost of shares redeemed		(87,147,909	)		(103,212,068	)

Net increase from share transactions		45,973,727			56,973,159

Institutional Class
Proceeds from sale of shares		63,362,256			72,389,827
Issued to shareholders in reinvestment of distributions		2,452,661			1,445,098
Cost of shares redeemed		(62,752,048	)		(68,918,628	)

Net increase from share transactions		3,062,869			4,916,297

Class A
Proceeds from sale of shares		3,416,746			2,756,238
Issued to shareholders in reinvestment of distributions		143,403			27,253
Cost of shares redeemed		(1,760,635	)		(92,476	)

Net increase from share transactions		1,799,514			2,691,015

Class C
Proceeds from sale of shares		5,791,018			7,081,632
Issued to shareholders in reinvestment of distributions		416,401			177,107
Cost of shares redeemed		(2,471,639	)		(707,146	)

Net increase from share transactions		3,735,780			6,551,593

Advisor Class
Proceeds from sale of shares		61,631,272			50,703,002
Issued to shareholders in reinvestment of distributions		4,976,976			2,576,489
Cost of shares redeemed		(48,522,210	)		(9,299,320	)

Net increase from share transactions		18,086,038			43,980,171

Net increase in net assets	$	34,738,663		$	126,291,820

Net Assets:
Beginning of period		278,033,734			151,741,914

End of period (including accumulated net investment loss of $(3,565,307) and $(1,797,384), respectively)	$	312,772,397		$	278,033,734


See Notes to Financial Statements		121		December 31, 2014

Statement of Changes in Net Assets


	Forward International Dividend Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)(b)
Changes in Shares Outstanding:
Investor Class
Sold		13,724,759			16,714,218
Distributions reinvested		255,825			170,234
Redeemed		(9,233,398	)		(10,958,739	)

Net increase in shares outstanding		4,747,186			5,925,713

Institutional Class
Sold		7,906,679			9,025,177
Distributions reinvested		314,434			180,352
Redeemed		(7,866,317	)		(8,606,776	)

Net increase in shares outstanding		354,796			598,753

Class A
Sold		357,050			283,537
Distributions reinvested		15,451			2,855
Redeemed		(188,316	)		(9,812	)

Net increase in shares outstanding		184,185			276,580

Class C
Sold		608,675			742,631
Distributions reinvested		44,488			18,566
Redeemed		(261,891	)		(74,434	)

Net increase in shares outstanding		391,272			686,763

Advisor Class
Sold		7,718,524			6,292,387
Distributions reinvested		634,196			321,485
Redeemed		(6,311,992	)		(1,162,791	)

Net increase in shares outstanding		2,040,728			5,451,081

(a) Prior to May 1, 2013, the Forward International Dividend Fund Advisor Class was known as the Forward International Dividend Fund Class M.

(b) The Forward International Dividend Fund began offering Class A shares on May 1, 2013.


December 31, 2014		122		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward International Small Companies Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment income	$	1,639,513		$	1,324,415
Net realized gain on investments		20,125,057			23,533,695
Net realized loss on foreign currency transactions		(4,341,018	)		(3,154,377	)
Net change in unrealized appreciation/(depreciation) on investments and translation of assets and liabilities in foreign currencies		(33,688,642	)		24,665,884

Net increase/(decrease) in net assets resulting from operations		(16,265,090	)		46,369,617

Distributions to Shareholders:
From net investment income
Investor Class		(82,341	)		(719,807	)
Institutional Class		(1,020,164	)		(3,667,892	)
Advisor Class		(47,499	)		(68,615	)

Total distributions		(1,150,004	)		(4,456,314	)

Share Transactions:
Investor Class
Proceeds from sale of shares		4,624,066			12,488,739
Issued to shareholders in reinvestment of distributions		80,474			694,371
Cost of shares redeemed		(13,914,899	)		(20,992,293	)

Net decrease from share transactions		(9,210,359	)		(7,809,183	)

Institutional Class
Proceeds from sale of shares		43,921,914			67,832,097
Issued to shareholders in reinvestment of distributions		870,756			2,717,358
Cost of shares redeemed		(63,000,266	)		(43,597,743	)

Net increase/(decrease) from share transactions		(18,207,596	)		26,951,712

Advisor Class
Proceeds from sale of shares		6,089,500			903,376
Issued to shareholders in reinvestment of distributions		47,496			68,615
Cost of shares redeemed		(6,154,601	)		(8,723,853	)

Net decrease from share transactions		(17,605	)		(7,751,862	)

Net increase/(decrease) in net assets	$	(44,850,654	)	$	53,303,970

Net Assets:
Beginning of period		208,423,344			155,119,374

End of period (including accumulated net investment loss of $(1,921,077) and $(4,088,777), respectively)	$	163,572,690		$	208,423,344


See Notes to Financial Statements		123		December 31, 2014

Statement of Changes in Net Assets


	Forward International Small Companies Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Changes in Shares Outstanding:
Investor Class
Sold		275,203			834,062
Distributions reinvested		5,026			40,512
Redeemed		(808,499	)		(1,391,815	)

Net decrease in shares outstanding		(528,270	)		(517,241	)

Institutional Class
Sold		2,615,148			4,458,306
Distributions reinvested		54,490			158,632
Redeemed		(3,776,730	)		(2,802,327	)

Net increase/(decrease) in shares outstanding		(1,107,092	)		1,814,611

Advisor Class
Sold		346,274			59,689
Distributions reinvested		2,971			4,003
Redeemed		(379,800	)		(574,635	)

Net decrease in shares outstanding		(30,555	)		(510,943	)

(a) Prior to May 1, 2013, the Forward International Small Companies Fund Advisor Class was known as the Forward International Small Companies Fund Class M.


December 31, 2014		124		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Select EM Dividend Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment income	$	4,335,431		$	2,701,458
Net realized gain/(loss) on investments		(6,065,904	)		285,603
Net realized gain/(loss) on futures contracts		1,534,726			(211,311	)
Net realized loss on foreign currency transactions		(3,199,607	)		(861,492	)
Long-term capital gain distributions from other investment companies		4,075			—
Net change in unrealized depreciation on investments and translation of assets and liabilities in foreign currencies		(4,930,764	)		(232,345	)

Net increase/(decrease) in net assets resulting from operations		(8,322,043	)		1,681,913

Distributions to Shareholders:
From net investment income
Investor Class		(2,471,980	)		(1,209,595	)
Institutional Class		(1,386,139	)		(1,008,375	)
Class C		(76,859	)		(55,238	)
Advisor Class		(66,885	)		(56,310	)

Total distributions		(4,001,863	)		(2,329,518	)

Share Transactions:
Investor Class
Proceeds from sale of shares		127,525,283			70,280,125
Issued to shareholders in reinvestment of distributions		855,176			577,558
Cost of shares redeemed		(115,315,409	)		(60,852,035	)

Net increase from share transactions		13,065,050			10,005,648

Institutional Class
Proceeds from sale of shares		32,355,337			26,551,296
Issued to shareholders in reinvestment of distributions		457,394			195,181
Cost of shares redeemed		(32,402,420	)		(36,123,444	)

Net increase/(decrease) from share transactions		410,311			(9,376,967	)

Class C
Proceeds from sale of shares		567,300			1,275,706
Issued to shareholders in reinvestment of distributions		54,666			27,747
Cost of shares redeemed		(310,758	)		(526,858	)

Net increase from share transactions		311,208			776,595

Advisor Class
Proceeds from sale of shares		436,901			408,327
Issued to shareholders in reinvestment of distributions		46,185			22,828
Cost of shares redeemed		(217,841	)		(539,529	)

Net increase/(decrease) from share transactions		265,245			(108,374	)

Net increase in net assets	$	1,727,908		$	649,297

Net Assets:
Beginning of period		48,232,603			47,583,306

End of period (including accumulated net investment income/(loss) of $(155,017) and $60,306, respectively)	$	49,960,511		$	48,232,603


See Notes to Financial Statements		125		December 31, 2014

Statement of Changes in Net Assets


	Forward Select EM Dividend Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Changes in Shares Outstanding:
Investor Class
Sold		5,535,017			3,058,820
Distributions reinvested		38,872			24,744
Redeemed		(5,186,162	)		(2,616,414	)

Net increase in shares outstanding		387,727			467,150

Institutional Class
Sold		1,410,621			1,147,709
Distributions reinvested		20,868			8,614
Redeemed		(1,461,484	)		(1,509,999	)

Net decrease in shares outstanding		(29,995	)		(353,676	)

Class C
Sold		25,465			54,237
Distributions reinvested		2,541			1,208
Redeemed		(14,536	)		(23,349	)

Net increase in shares outstanding		13,470			32,096

Advisor Class
Sold		19,419			17,062
Distributions reinvested		2,148			976
Redeemed		(9,714	)		(22,842	)

Net increase/(decrease) in shares outstanding		11,853			(4,804	)

(a) Prior to May 1, 2013, the Forward Select EM Dividend Fund Advisor Class was known as the Forward Select EM Dividend Fund Class M.


December 31, 2014		126		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Small Cap Equity Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment loss	$	(181,576	)	$	(249,627	)
Net realized gain on investments		4,238,152			5,906,931
Net realized gain on futures contracts		251,867			367,077
Net change in unrealized appreciation/(depreciation) on investments and futures contracts		(3,894,380	)		5,186,231

Net increase in net assets resulting from operations		414,063			11,210,612

Share Transactions:
Investor Class
Proceeds from sale of shares		862,137			1,863,633
Cost of shares redeemed		(5,430,649	)		(6,911,007	)

Net decrease from share transactions		(4,568,512	)		(5,047,374	)

Institutional Class
Proceeds from sale of shares		739,186			975,802
Cost of shares redeemed		(3,327,739	)		(3,944,305	)

Net decrease from share transactions		(2,588,553	)		(2,968,503	)

Advisor Class
Proceeds from sale of shares		370,971			480,706
Cost of shares redeemed		(759,516	)		(1,032,594	)

Net decrease from share transactions		(388,545	)		(551,888	)

Net increase/(decrease) in net assets	$	(7,131,547	)	$	2,642,847

Net Assets:
Beginning of period		36,099,596			33,456,749

End of period (including accumulated net investment loss of $0 and $(1,988), respectively)	$	28,968,049		$	36,099,596

Changes in Shares Outstanding:
Investor Class
Sold		38,662			94,350
Redeemed		(247,826	)		(362,471	)

Net decrease in shares outstanding		(209,164	)		(268,121	)

Institutional Class
Sold		31,477			48,197
Redeemed		(143,112	)		(198,998	)

Net decrease in shares outstanding		(111,635	)		(150,801	)

Advisor Class
Sold		16,281			25,025
Redeemed		(32,983	)		(51,897	)

Net decrease in shares outstanding		(16,702	)		(26,872	)

(a) Prior to May 1, 2013, the Forward Small Cap Equity Fund Advisor Class was known as the Forward Small Cap Equity Fund Class M.


See Notes to Financial Statements		127		December 31, 2014

Statement of Changes in Net Assets


	Forward Tactical Enhanced Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment loss	$	(525,761	)	$	(1,437,383	)
Net realized gain on investments		1,470,964			764,099
Net realized loss on futures contracts		(409,557	)		—
Net change in unrealized appreciation/(depreciation) on investments		377,576			(487,049	)

Net increase/(decrease) in net assets resulting from operations		913,222			(1,160,333	)

Distributions to Shareholders:
From net realized gains on investments
Investor Class		(992,106	)		(36,284	)
Institutional Class		(1,898,632	)		(89,057	)
Class A		(63,719	)		(11,016	)
Class C		(121,909	)		(6,312	)
Advisor Class		(223,639	)		(230,333	)

Total distributions		(3,300,005	)		(373,002	)

Share Transactions:
Investor Class
Proceeds from sale of shares		8,020,343			16,824,170
Issued to shareholders in reinvestment of distributions		989,233			36,104
Cost of shares redeemed		(5,521,593	)		(22,411,730	)

Net increase/(decrease) from share transactions		3,487,983			(5,551,456	)

Institutional Class
Proceeds from sale of shares		31,217,654			23,180,410
Issued to shareholders in reinvestment of distributions		1,743,438			81,640
Cost of shares redeemed		(48,041,197	)		(12,493,269	)

Net increase/(decrease) from share transactions		(15,080,105	)		10,768,781

Class A
Proceeds from sale of shares		109,252			665,192
Issued to shareholders in reinvestment of distributions		54,906			10,560
Cost of shares redeemed		(2,767,076	)		(905,932	)

Net decrease from share transactions		(2,602,918	)		(230,180	)

Class C
Proceeds from sale of shares		503,578			740,161
Issued to shareholders in reinvestment of distributions		100,206			5,686
Cost of shares redeemed		(824,875	)		(2,044,035	)

Net decrease from share transactions		(221,091	)		(1,298,188	)

Advisor Class
Proceeds from sale of shares		8,859,784			88,795,793
Issued to shareholders in reinvestment of distributions		209,261			10,708
Cost of shares redeemed		(80,636,869	)		(13,704,889	)

Net increase/(decrease) from share transactions		(71,567,824	)		75,101,612

Net increase/(decrease) in net assets	$	(88,370,738	)	$	77,257,234

Net Assets:
Beginning of period		118,949,652			41,692,418

End of period (including accumulated net investment income of $0 and $0, respectively)	$	30,578,914		$	118,949,652


December 31, 2014		128		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Tactical Enhanced Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Changes in Shares Outstanding:
Investor Class
Sold		306,856			639,299
Distributions reinvested		40,426			1,421
Redeemed		(213,110	)		(863,576	)

Net increase/(decrease) in shares outstanding		134,172			(222,856	)

Institutional Class
Sold		1,187,808			882,310
Distributions reinvested		70,385			3,188
Redeemed		(1,879,479	)		(477,013	)

Net increase/(decrease) in shares outstanding		(621,286	)		408,485

Class A
Sold		4,093			25,363
Distributions reinvested		2,257			417
Redeemed		(105,494	)		(35,140	)

Net decrease in shares outstanding		(99,144	)		(9,360	)

Class C
Sold		19,440			28,454
Distributions reinvested		4,182			227
Redeemed		(32,175	)		(78,673	)

Net decrease in shares outstanding		(8,553	)		(49,992	)

Advisor Class
Sold		334,549			3,393,469
Distributions reinvested		8,468			419
Redeemed		(3,082,498	)		(533,161	)

Net increase/(decrease) in shares outstanding		(2,739,481	)		2,860,727

(a) Prior to May 1, 2013, the Forward Tactical Enhanced Fund Advisor Class was known as the Forward Tactical Enhanced Fund Class M.


See Notes to Financial Statements		129		December 31, 2014

Statement of Changes in Net Assets


	Forward Tactical Growth Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment loss	$	(9,693,389	)	$	(12,491,408	)
Net realized gain/(loss) on investments		(6,792,787	)		30,233,882
Net realized loss on written option contracts		—			(1,902,400	)
Net realized gain on futures contracts		37,392,307			100,236,175
Net change in unrealized appreciation/(depreciation) on investments, written option contracts and futures contracts		(1,071,848	)		15,492,021

Net increase in net assets resulting from operations		19,834,283			131,568,270

Distributions to Shareholders:
From net realized gains on investments
Investor Class		(6,854,921	)		(15,422,444	)
Institutional Class		(2,652,915	)		(5,940,966	)
Class A		(3,030,806	)		(10,701,030	)
Class C		(4,111,234	)		(9,401,452	)
Advisor Class		(23,742,958	)		(47,884,623	)

Total distributions		(40,392,834	)		(89,350,515	)

Share Transactions:
Investor Class
Proceeds from sale of shares		30,427,211			34,831,732
Issued to shareholders in reinvestment of distributions		6,823,088			15,357,174
Cost of shares redeemed		(59,068,444	)		(81,539,616	)

Net decrease from share transactions		(21,818,145	)		(31,350,710	)

Institutional Class
Proceeds from sale of shares		15,325,981			14,087,346
Issued to shareholders in reinvestment of distributions		2,625,559			5,885,011
Cost of shares redeemed		(25,678,071	)		(22,178,286	)

Net decrease from share transactions		(7,726,531	)		(2,205,929	)

Class A
Proceeds from sale of shares		23,250,500			42,329,021
Issued to shareholders in reinvestment of distributions		2,917,842			10,618,127
Cost of shares redeemed		(73,560,363	)		(61,091,242	)

Net decrease from share transactions		(47,392,021	)		(8,144,094	)

Class C
Proceeds from sale of shares		13,870,190			16,893,580
Issued to shareholders in reinvestment of distributions		3,958,946			9,086,049
Cost of shares redeemed		(25,371,410	)		(49,588,091	)

Net decrease from share transactions		(7,542,274	)		(23,608,462	)

Advisor Class
Proceeds from sale of shares		165,368,701			187,512,746
Issued to shareholders in reinvestment of distributions		23,097,180			46,422,997
Cost of shares redeemed		(165,775,124	)		(193,538,318	)

Net increase from share transactions		22,690,757			40,397,425

Net increase/(decrease) in net assets	$	(82,346,765	)	$	17,305,985

Net Assets:
Beginning of period		942,077,914			924,771,929

End of period (including accumulated net investment income of $0 and $0, respectively)	$	859,731,149		$	942,077,914


December 31, 2014		130		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Tactical Growth Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Changes in Shares Outstanding:
Investor Class
Sold		1,178,614			1,310,221
Distributions reinvested		266,049			594,548
Redeemed		(2,285,295	)		(3,090,894	)

Net decrease in shares outstanding		(840,632	)		(1,186,125	)

Institutional Class
Sold		585,693			520,498
Distributions reinvested		100,596			224,155
Redeemed		(977,236	)		(812,455	)

Net decrease in shares outstanding		(290,947	)		(67,802	)

Class A
Sold		908,778			1,599,744
Distributions reinvested		114,825			414,285
Redeemed		(2,874,913	)		(2,324,829	)

Net decrease in shares outstanding		(1,851,310	)		(310,800	)

Class C
Sold		555,595			642,839
Distributions reinvested		159,635			361,994
Redeemed		(1,016,500	)		(1,922,246	)

Net decrease in shares outstanding		(301,270	)		(917,413	)

Advisor Class
Sold		6,308,461			6,938,722
Distributions reinvested		884,775			1,768,262
Redeemed		(6,345,868	)		(7,202,327	)

Net increase in shares outstanding		847,368			1,504,657

(a) Prior to May 1, 2013, the Forward Tactical Growth Fund Advisor Class was known as the Forward Tactical Growth Fund Class M.


See Notes to Financial Statements		131		December 31, 2014

Consolidated Statement of Changes in Net Assets


	Forward Commodity Long/Short Strategy Fund
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Operations:
Net investment loss	$	(705,181	)	$	(948,732	)
Net realized gain on investments		80,499			149,803
Net realized gain/(loss) on swap contracts		(4,590,433	)		6,350,736
Net change in unrealized appreciation on investments and swap contracts		2,988,520			5,102,773

Net increase/(decrease) in net assets resulting from operations		(2,226,595	)		10,654,580

Distributions to Shareholders:
From net investment income
Investor Class		—			(1,068,090	)
Institutional Class		—			(1,556,649	)
Class C		—			(179,163	)
Advisor Class		—			(2,438,479	)
Class Z		—			(302,778	)
From return of capital		—
Investor Class					(8,486	)
Institutional Class		—			(12,367	)
Class C		—			(1,423	)
Advisor Class		—			(19,373	)
Class Z		—			(2,406	)

Total distributions		—			(5,589,214	)

Share Transactions:
Investor Class
Proceeds from sale of shares		5,408,702			9,095,336
Issued to shareholders in reinvestment of distributions		—			1,038,926
Cost of shares redeemed		(11,346,181	)		(8,480,995	)

Net increase/(decrease) from share transactions		(5,937,479	)		1,653,267

Institutional Class
Proceeds from sale of shares		9,692,030			34,528,631
Issued to shareholders in reinvestment of distributions		—			1,380,782
Cost of shares redeemed		(18,876,763	)		(59,014,094	)

Net decrease from share transactions		(9,184,733	)		(23,104,681	)

Class C
Proceeds from sale of shares		591,319			1,471,017
Issued to shareholders in reinvestment of distributions		—			173,841
Cost of shares redeemed		(1,791,858	)		(2,577,259	)

Net decrease from share transactions		(1,200,539	)		(932,401	)

Advisor Class
Proceeds from sale of shares		22,283,937			31,539,177
Issued to shareholders in reinvestment of distributions		—			2,390,565
Cost of shares redeemed		(56,326,762	)		(19,024,024	)

Net increase/(decrease) from share transactions		(34,042,825	)		14,905,718

Class Z
Proceeds from sale of shares		950,174			4,072,000
Issued to shareholders in reinvestment of distributions		—			305,184
Cost of shares redeemed		(3,633,000	)		(3,839,000	)

Net increase/(decrease) from share transactions		(2,682,826	)		538,184

Net decrease in net assets	$	(55,274,997	)	$	(1,874,547	)

Net Assets:
Beginning of period		115,278,375			117,152,922

End of period (including accumulated net investment income of $0 and $0, respectively)	$	60,003,378		$	115,278,375


December 31, 2014		132		See Notes to Financial Statements

Consolidated Statement of Changes in Net Assets


	Forward Commodity Long/Short Strategy Fund (continued)
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)
Changes in Shares Outstanding:
Investor Class
Sold		262,069			430,188
Distributions reinvested		—			49,853
Redeemed		(559,541	)		(402,932	)

Net increase/(decrease) in shares outstanding		(297,472	)		77,109

Institutional Class
Sold		468,209			1,660,196
Distributions reinvested		—			65,846
Redeemed		(916,635	)		(2,782,487	)

Net decrease in shares outstanding		(448,426	)		(1,056,445	)

Class C
Sold		29,034			69,754
Distributions reinvested		—			8,414
Redeemed		(89,465	)		(124,896	)

Net decrease in shares outstanding		(60,431	)		(46,728	)

Advisor Class
Sold		1,074,816			1,468,852
Distributions reinvested		—			114,381
Redeemed		(2,766,469	)		(908,089	)

Net increase/(decrease) in shares outstanding		(1,691,653	)		675,144

Class Z
Sold		46,583			195,180
Distributions reinvested		—			14,568
Redeemed		(175,563	)		(180,241	)

Net increase/(decrease) in shares outstanding		(128,980	)		29,507

(a) Prior to May 1, 2013, the Forward Commodity Long/Short Strategy Fund Advisor Class was known as the Forward Commodity Long/Short Strategy Fund Class M.


See Notes to Financial Statements		133		December 31, 2014

Statement of Cash Flows

For the Year Ended December 31, 2014


	Forward EM Corporate Debt			Forward International Dividend Fund			Forward Select EM Dividend Fund
Cash Flow from Operating Activities:
Net decrease in net assets resulting from operations	$	(5,707,463	)	$	(18,689,359	)	$	(8,322,043	)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by/(used in) operating activities:
Purchases of investment securities		(323,960,878	)		(343,777,807	)		(169,641,608	)
Proceeds from sale of investment securities		272,042,152			291,066,140			151,555,514
Net proceeds to cover credit default swap contacts		937,373			—			—
Net proceeds from short-term investments		11,423,031			—			—
Discounts and premiums amortized		(5,291,839	)		291,129			79,982
Net realized (gain)/loss on investments		12,627,165			(2,315,877	)		6,065,904
Net realized gain on swap contracts		(411,591	)		—			—
Net realized loss on foreign currency		4,026,873			3,528,901			3,199,607
Long-term capital gain distributions from other investment companies		—			(32,499	)		(4,075	)
Net change in unrealized appreciation on investments, swap contracts and translation of assets and liabilities in foreign currency transactions		16,235,558			33,827,328			4,930,764
Changes in assets and liabilities:
(Increase)/Decrease in deposit with broker for futures contracts and swap contracts		3,330			(945,353	)		—
Decrease in variation margin receivable		301,071			—			—
Increase in receivable due from broker		—			—			(1,391	)
Increase in receivable due from custodian		—			(1,248	)		(1,119	)
(Increase)/Decrease in interest and dividends receivable		888,406			(74,829	)		175,977
Increase in receivable for swap contract payments		(2,778	)		—			—
Increase in other assets		(5,031	)		(8,555	)		(1,713	)
Decrease in payable for interest due on loan		(3,789	)		(38,751	)		(6,668	)
Increase in swap premiums received		118,193			—			—
Increase/(Decrease) in payable to advisor		1,711			38,050			(3,565	)
Increase in payable for distribution and service fees		15,271			15,102			685
Increase in payable to trustees		14,711			11,029			1,946
Increase in payable for chief compliance officer fee		265			143			12
Increase in payable for legal and audit fees		25,414			12,739			8,423
Increase/(Decrease) in accrued expenses and other liabilities		6,396			(31,275	)		(10,951	)

Net cash used in operating activities		(16,716,449	)		(37,124,992	)		(11,974,319	)

Cash Flows from Financing Activities:
Cash provided by loan		70,605,807			20,061,149			15,055,269
Cash repayment of loan		(110,000,000	)		(35,000,000	)		(14,000,000	)
Proceeds from sale of shares		206,329,540			264,790,573			160,908,060
Cost of shares redeemed		(140,363,349	)		(201,159,326	)		(148,286,005	)
Cash distributions paid		(7,349,848	)		(8,833,843	)		(2,588,442	)

Net cash provided by financing activities		19,222,150			39,858,553			11,088,882

Effect of Exchange Rates On Cash & Foreign Currency		5,749			(62,912	)		(5,378	)
Net Change in Cash & Foreign Currency for the Period		2,511,450			2,670,649			(890,815	)

Cash & Foreign Currency, Beginning of Period		8,012,420			12,707,535			2,548,354

Cash & Foreign Currency, End of Period	$	10,523,870		$	15,378,184		$	1,657,539

Non-cash financing activities not included herein consist of reinvestment of distributions of $17,063,977, $10,396,063 and $1,413,421, respectively.

Cash paid for interest on loan during the period was $605,807, $310,377 and $95,254, respectively.


December 31, 2014		134		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	7.07		$	8.93		$	8.09		$	7.96		$	8.08
Income/(Loss) from Operations:
Net investment income		0.18	^(b)		0.30	^(b)		0.24	^(b)		0.32	^(b)		0.41
Net realized and unrealized gain/(loss) on investments		0.45			(1.56	)		0.88			0.14			(0.07	)

Total from Investment Operations		0.63			(1.26	)		1.12			0.46			0.34

Less Distributions:
From investment income		(0.20	)		(0.41	)		(0.22	)		(0.31	)		(0.39	)
From capital gains		—			(0.19	)		(0.06	)		(0.02	)		(0.07	)

Total Distributions		(0.20	)		(0.60	)		(0.28	)		(0.33	)		(0.46	)

Net Increase/(Decrease) in Net Asset Value		0.43			(1.86	)		0.84			0.13			(0.12	)

Net Asset Value, End of Period	$	7.50		$	7.07		$	8.93		$	8.09		$	7.96

Total Return		8.97	%		(14.42	)%		13.96	%		5.83	%		4.17	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	58,907		$	55,719		$	338,662		$	156,238		$	136,654
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		2.50	%		4.05	%		3.24	%		6.13	%		6.39	%
Operating expenses including reimbursement/waiver		1.79	%		1.97	%^(c)		1.99	%		1.99	%		1.98	%^(d)
Operating expenses excluding reimbursement/waiver		1.80	%		2.08	%		2.08	%		2.14	%		2.14	%
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		2.50	%		3.45	%		2.78	%		3.95	%		5.15	%
Operating expenses including reimbursement/waiver		1.79	%		2.57	%^(c)		2.46	%		4.17	%		3.22	%^(d)
Operating expenses excluding reimbursement/waiver		1.80	%		2.68	%		2.55	%		4.32	%		3.39	%
Portfolio Turnover Rate		168	%		125	%		63	%		133	%		89	%

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) Per share amounts are based upon average shares outstanding.

(c) Effective October 1, 2013, the annual expense limitation rate changed from 1.99% to 1.79%.

(d) Effective May 1, 2010, the annual expense limitation rate changed from 1.95% to 1.99%.


See Notes to Financial Statements		135		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	7.01		$	8.88		$	8.04		$	7.91		$	8.03
Income/(Loss) from Operations:
Net investment income		0.22	^(b)		0.32	^(b)		0.27	^(b)		0.34	^(b)		0.48
Net realized and unrealized gain/(loss) on investments		0.44			(1.56	)		0.88			0.15			(0.11	)

Total from Investment Operations		0.66			(1.24	)		1.15			0.49			0.37

Less Distributions:
From investment income		(0.23	)		(0.44	)		(0.25	)		(0.34	)		(0.42	)
From capital gains		—			(0.19	)		(0.06	)		(0.02	)		(0.07	)

Total Distributions		(0.23	)		(0.63	)		(0.31	)		(0.36	)		(0.49	)

Net Increase/(Decrease) in Net Asset Value		0.43			(1.87	)		0.84			0.13			(0.12	)

Net Asset Value, End of Period	$	7.44		$	7.01		$	8.88		$	8.04		$	7.91

Total Return		9.47	%		(14.20	)%		14.43	%		6.23	%		4.54	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	19,366		$	43,298		$	214,229		$	38,790		$	16,994
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		2.97	%		4.41	%		3.51	%		6.39	%		6.82	%
Operating expenses including reimbursement/waiver		1.44	%		1.61	%^(c)		1.64	%		1.64	%		1.63	%^(d)
Operating expenses excluding reimbursement/waiver		1.50	%		1.74	%		1.74	%		1.79	%		1.80	%
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		2.97	%		3.81	%		3.05	%		4.21	%		5.57	%
Operating expenses including reimbursement/waiver		1.44	%		2.21	%^(c)		2.11	%		3.82	%		2.88	%^(d)
Operating expenses excluding reimbursement/waiver		1.50	%		2.34	%		2.21	%		3.97	%		3.06	%
Portfolio Turnover Rate		168	%		125	%		63	%		133	%		89	%

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) Per share amounts are based upon average shares outstanding.

(c) Effective October 1, 2013, the annual expense limitation rate changed from 1.64% to 1.44%.

(d) Effective May 1, 2010, the annual expense limitation rate changed from 1.60% to 1.64%.


December 31, 2014		136		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	Class A
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)			Period Ended December 31, 2010^(b)
Net Asset Value, Beginning of Period	$	7.04		$	8.90		$	8.08		$	7.95		$	8.70
Income/(Loss) from Operations:
Net investment income		0.17	^(c)		0.28	^(c)		0.22	^(c)		0.31	^(c)		0.14
Net realized and unrealized gain/(loss) on investments		0.45			(1.56	)		0.88			0.14			(0.63	)

Total from Investment Operations		0.62			(1.28	)		1.10			0.45			(0.49	)

Less Distributions:
From investment income		(0.19	)		(0.39	)		(0.22	)		(0.30	)		(0.19	)
From capital gains		—			(0.19	)		(0.06	)		(0.02	)		(0.07	)

Total Distributions		(0.19	)		(0.58	)		(0.28	)		(0.32	)		(0.26	)

Net Increase/(Decrease) in Net Asset Value		0.43			(1.86	)		0.82			0.13			(0.75	)

Net Asset Value, End of Period	$	7.47		$	7.04		$	8.90		$	8.08		$	7.95

Total Return^(d)		8.85	%		(14.60	)%		13.69	%		5.68	%		(5.69	)%^(e)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	4,228		$	4,576		$	18,480		$	1,621		$	2,360
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		2.35	%		3.93	%		2.96	%		6.06	%		5.63	%^(f)
Operating expenses including reimbursement/waiver		1.94	%		2.11	%^(g)		2.14	%		2.14	%		2.14	%^(f)
Operating expenses excluding reimbursement/waiver		1.96	%		2.24	%		2.24	%		2.29	%		2.36	%^(f)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		2.35	%		3.33	%		2.49	%		3.88	%		4.46	%^(f)
Operating expenses including reimbursement/waiver		1.94	%		2.71	%^(g)		2.61	%		4.32	%		3.31	%^(f)
Operating expenses excluding reimbursement/waiver		1.96	%		2.84	%		2.71	%		4.47	%		3.53	%^(f)
Portfolio Turnover Rate		168	%		125	%		63	%		133	%		89	%^(h)

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) The Fund began offering Class A shares on September 1, 2010.

(c) Per share amounts are based upon average shares outstanding.

(d) Total return does not reflect the effect of sales charges.

(e) Not Annualized.

(f) Annualized.

(g) Effective October 1, 2013, the annual expense limitation rate changed from 2.14% to 1.94%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


See Notes to Financial Statements		137		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	Class C
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	7.07		$	8.93		$	8.09		$	7.97		$	8.10
Income/(Loss) from Operations:
Net investment income		0.14	^(b)		0.24	^(b)		0.19	^(b)		0.27	^(b)		0.39
Net realized and unrealized gain/(loss) on investments		0.45			(1.56	)		0.88			0.13			(0.10	)

Total from Investment Operations		0.59			(1.32	)		1.07			0.40			0.29

Less Distributions:
From investment income		(0.15	)		(0.35	)		(0.17	)		(0.26	)		(0.35	)
From capital gains		—			(0.19	)		(0.06	)		(0.02	)		(0.07	)

Total Distributions		(0.15	)		(0.54	)		(0.23	)		(0.28	)		(0.42	)

Net Increase/(Decrease) in Net Asset Value		0.44			(1.86	)		0.84			0.12			(0.13	)

Net Asset Value, End of Period	$	7.51		$	7.07		$	8.93		$	8.09		$	7.97

Total Return^(c)		8.46	%		(14.98	)%		13.33	%		5.07	%		3.50	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	9,466		$	10,744		$	29,013		$	15,550		$	15,357
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		1.89	%		3.48	%		2.67	%		5.51	%		5.75	%
Operating expenses including reimbursement/waiver		2.39	%		2.56	%^(d)		2.59	%		2.59	%		2.58	%^(e)
Operating expenses excluding reimbursement/waiver		2.41	%		2.69	%		2.68	%		2.74	%		2.76	%
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		1.89	%		2.88	%		2.21	%		3.33	%		4.51	%
Operating expenses including reimbursement/waiver		2.39	%		3.16	%^(d)		3.06	%		4.77	%		3.82	%^(e)
Operating expenses excluding reimbursement/waiver		2.41	%		3.29	%		3.15	%		4.92	%		4.00	%
Portfolio Turnover Rate		168	%		125	%		63	%		133	%		89	%

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Effective October 1, 2013, the annual expense limitation rate changed from 2.59% to 2.39%.

(e) Effective May 1, 2010, the annual expense limitation rate changed from 2.55% to 2.59%.


December 31, 2014		138		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	Advisor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Year Ended December 31, 2011^(b)			Period Ended December 31, 2010^(c)
Net Asset Value, Beginning of Period	$	7.01		$	8.88		$	8.04		$	7.91		$	8.17
Income/(Loss) from Operations:
Net investment income		0.21	^(d)		0.32	^(d)		0.26	^(d)		0.35	^(d)		0.40
Net realized and unrealized gain/(loss) on investments		0.44			(1.56	)		0.89			0.14			(0.17	)

Total from Investment Operations		0.65			(1.24	)		1.15			0.49			0.23

Less Distributions:
From investment income		(0.22	)		(0.44	)		(0.25	)		(0.34	)		(0.42	)
From capital gains		—			(0.19	)		(0.06	)		(0.02	)		(0.07	)

Total Distributions		(0.22	)		(0.63	)		(0.31	)		(0.36	)		(0.49	)

Net Increase/(Decrease) in Net Asset Value		0.43			(1.87	)		0.84			0.13			(0.26	)

Net Asset Value, End of Period	$	7.44		$	7.01		$	8.88		$	8.04		$	7.91

Total Return		9.41	%		(14.24	)%		14.43	%		6.24	%		2.73	%^(e)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	10,114		$	11,800		$	101,263		$	4,120		$	4,930
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		2.81	%		4.34	%		3.44	%		6.54	%		6.85	%^(f)
Operating expenses including reimbursement/waiver		1.49	%		1.65	%^(g)		1.64	%		1.64	%		1.63	%^(f)(h)
Operating expenses excluding reimbursement/waiver		1.51	%		1.75	%		1.74	%		1.79	%		1.85	%^(f)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		2.81	%		3.74	%		2.97	%		4.36	%		5.50	%^(f)
Operating expenses including reimbursement/waiver		1.49	%		2.25	%^(g)		2.11	%		3.82	%		2.98	%^(f)(h)
Operating expenses excluding reimbursement/waiver		1.51	%		2.36	%		2.20	%		3.97	%		3.20	%^(f)
Portfolio Turnover Rate		168	%		125	%		63	%		133	%		89	%⁽ⁱ⁾

(a) Prior to May 1, 2013, the Forward Credit Analysis Long/Short Fund Advisor Class was known as the Forward Credit Analysis Long/Short Fund Class M.

(b) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(c) The Fund began offering Advisor Class shares on February 1, 2010.

(d) Per share amounts are based upon average shares outstanding.

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2013, the annual expense limitation rate changed from 1.64% to 1.69%. Effective October 1, 2013, the annual expense limitation rate changed from 1.69% to 1.49%.

(h) Effective May 1, 2010, the annual expense limitation rate changed from 1.60% to 1.64%.

(i) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


See Notes to Financial Statements		139		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Dynamic Income Fund


	Institutional Class
	Year Ended December 31, 2014			Period Ended December 31, 2013^(a)
Net Asset Value, Beginning of Period	$	24.93		$	25.00
Income/(Loss) from Operations:
Net investment income^(b)		2.45			0.77
Net realized and unrealized gain on investments		1.57			0.03

Total from Investment Operations		4.02			0.80

Less Distributions:
From investment income		(2.15	)		(0.82	)
From capital gains		(0.24	)		(0.01	)
Tax return of capital		—			(0.04	)

Total Distributions		(2.39	)		(0.87	)

Net Increase/(Decrease) in Net Asset Value		1.63			(0.07	)

Net Asset Value, End of Period	$	26.56		$	24.93

Total Return		16.75	%		3.25	%^(c)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	30,165		$	2,987
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		9.40	%		7.43	%^(d)
Operating expenses including reimbursement/waiver		1.20	%^(e)		1.29	%^(d)
Operating expenses excluding reimbursement/waiver		1.96	%		5.67	%^(d)
Portfolio Turnover Rate		739	%		755	%^(c)

(a) The Fund began offering Institutional Class shares on August 1, 2013.

(b) Per share amounts are based upon average shares outstanding.

(c) Not Annualized.

(d) Annualized.

(e) Effective December 1, 2014, the annual expense limitation rate changed from 1.29% to 0.99%.


December 31, 2014		140		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Dynamic Income Fund


	Class A
	Year Ended December 31, 2014			Period Ended December 31, 2013^(a)
Net Asset Value, Beginning of Period	$	24.91		$	25.00
Income/(Loss) from Operations:
Net investment income^(b)		2.92			0.68
Net realized and unrealized gain on investments		0.97			0.07

Total from Investment Operations		3.89			0.75

Less Distributions:
From investment income		(2.03	)		(0.79	)
From capital gains		(0.24	)		(0.01	)
Tax return of capital		—			(0.04	)

Total Distributions		(2.27	)		(0.84	)

Net Increase/(Decrease) in Net Asset Value		1.62			(0.09	)

Net Asset Value, End of Period	$	26.53		$	24.91

Total Return^(c)		16.19	%		3.05	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	8,485		$	224
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		11.50	%		6.58	%^(e)
Operating expenses including reimbursement/waiver		1.67	%^(f)		1.79	%^(e)
Operating expenses excluding reimbursement/waiver		2.35	%		6.10	%^(e)
Portfolio Turnover Rate		739	%		755	%^(d)

(a) The Fund began offering Class A shares on August 1, 2013.

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Not Annualized.

(e) Annualized.

(f) Effective December 1, 2014, the annual expense limitation rate changed from 1.79% to 1.49%.


See Notes to Financial Statements		141		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward EM Corporate Debt Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	9.41		$	9.98		$	9.10		$	11.05		$	10.60
Income/(Loss) from Operations:
Net investment income		0.70	^(b)		0.65	^(b)		0.62	^(b)		0.61	^(b)		0.42
Net realized and unrealized gain/(loss) on investments		(0.76	)		(0.62	)		0.70			(0.89	)		0.25

Total from Investment Operations		(0.06	)		0.03			1.32			(0.28	)		0.67

Less Distributions:
From investment income		(0.59	)		(0.60	)		(0.44	)		(1.67	)		(0.22	)

Total Distributions		(0.59	)		(0.60	)		(0.44	)		(1.67	)		(0.22	)

Net Increase/(Decrease) in Net Asset Value		(0.65	)		(0.57	)		0.88			(1.95	)		0.45

Net Asset Value, End of Period	$	8.76		$	9.41		$	9.98		$	9.10		$	11.05

Total Return		(0.76	)%		0.48	%		14.63	%		(2.73	)%		6.47	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	346,733		$	304,150		$	168,003		$	4,702		$	5,924
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver/recoupment of past waived fees by advisor		7.62	%		6.78	%		6.37	%		5.35	%		3.80	%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.36	%^(c)		1.34	%^(d)		1.35	%		1.39	%		1.39	%
Operating expenses excluding reimbursement/waiver		1.36	%		1.35	%		1.36	%		1.89	%		1.90	%
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver/recoupment of past waived fees by advisor		7.46	%		6.69	%		n/a			n/a			n/a
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.52	%^(c)		1.42	%^(d)		n/a			n/a			n/a
Operating expenses excluding reimbursement/waiver		1.52	%		1.44	%		n/a			n/a			n/a
Portfolio Turnover Rate		70	%		85	%		91	%		357	%		74	%

(a) Prior to May 1, 2011, the Forward EM Corporate Debt Fund was known as the Forward International Fixed Income Fund.

(b) Per share amounts are based upon average shares outstanding.

(c) Effective May 1, 2014, the expense limitation agreement expired.

(d) Effective May 1, 2013, the annual expense limitation rate changed from 1.39% to 1.34%.


December 31, 2014		142		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward EM Corporate Debt Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	9.35		$	9.91		$	9.04		$	11.02		$	10.55
Income/(Loss) from Operations:
Net investment income		0.72	^(b)		0.67	^(b)		0.65	^(b)		0.68	^(b)		0.48
Net realized and unrealized gain/(loss) on investments		(0.75	)		(0.60	)		0.70			(0.92	)		0.23

Total from Investment Operations		(0.03	)		0.07			1.35			(0.24	)		0.71

Less Distributions:
From investment income		(0.63	)		(0.63	)		(0.48	)		(1.74	)		(0.24	)

Total Distributions		(0.63	)		(0.63	)		(0.48	)		(1.74	)		(0.24	)

Net Increase/(Decrease) in Net Asset Value		(0.66	)		(0.56	)		0.87			(1.98	)		0.47

Net Asset Value, End of Period	$	8.69		$	9.35		$	9.91		$	9.04		$	11.02

Total Return		(0.42	)%		0.92	%		15.06	%		(2.40	)%		6.91	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	41,555		$	35,001		$	33,773		$	7,613		$	17,469
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver/recoupment of past waived fees by advisor		7.92	%		6.99	%		6.67	%		6.10	%		4.22	%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.01	%^(c)		0.98	%		0.99	%		0.99	%		0.99	%
Operating expenses excluding reimbursement/waiver		1.01	%		0.98	%		1.01	%		1.49	%		1.45	%
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver/recoupment of past waived fees by advisor		7.76	%		6.90	%		n/a			n/a			n/a
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.17	%^(c)		1.06	%		n/a			n/a			n/a
Operating expenses excluding reimbursement/waiver		1.17	%		1.06	%		n/a			n/a			n/a
Portfolio Turnover Rate		70	%		85	%		91	%		357	%		74	%

(a) Prior to May 1, 2011, the Forward EM Corporate Debt Fund was known as the Forward International Fixed Income Fund.

(b) Per share amounts are based upon average shares outstanding.

(c) Effective May 1, 2014, the expense limitation agreement expired.


See Notes to Financial Statements		143		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward EM Corporate Debt Fund


	Class C
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	9.45		$	10.01		$	9.13		$	11.08		$	10.66
Income/(Loss) from Operations:
Net investment income		0.64	^(b)		0.58	^(b)		0.54	^(b)		0.52	^(b)		0.44
Net realized and unrealized gain/(loss) on investments		(0.76	)		(0.60	)		0.73			(0.87	)		0.17

Total from Investment Operations		(0.12	)		(0.02	)		1.27			(0.35	)		0.61

Less Distributions:
From investment income		(0.54	)		(0.54	)		(0.39	)		(1.60	)		(0.19	)

Total Distributions		(0.54	)		(0.54	)		(0.39	)		(1.60	)		(0.19	)

Net Increase/(Decrease) in Net Asset Value		(0.66	)		(0.56	)		0.88			(1.95	)		0.42

Net Asset Value, End of Period	$	8.79		$	9.45		$	10.01		$	9.13		$	11.08

Total Return^(c)		(1.44	)%		(0.03	)%		13.99	%		(3.31	)%		5.87	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,162		$	1,915		$	1,695		$	1,142		$	2,345
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver/recoupment of past waived fees by advisor		7.00	%		6.04	%		5.56	%		4.54	%		3.24	%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.96	%^(d)		1.93	%		1.94	%		1.94	%		1.94	%
Operating expenses excluding reimbursement/waiver		1.96	%		1.93	%		2.03	%		2.48	%		2.38	%
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver/recoupment of past waived fees by advisor		6.84	%		5.95	%		n/a			n/a			n/a
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		2.12	%^(d)		2.02	%		n/a			n/a			n/a
Operating expenses excluding reimbursement/waiver		2.12	%		2.02	%		n/a			n/a			n/a
Portfolio Turnover Rate		70	%		85	%		91	%		357	%		74	%

(a) Prior to May 1, 2011, the Forward EM Corporate Debt Fund was known as the Forward International Fixed Income Fund.

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Effective May 1, 2014, the expense limitation agreement expired.


December 31, 2014		144		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the period presented.

Forward EM Corporate Debt Fund


	Advisor Class
	Period Ended December 31, 2014^(a)
Net Asset Value, Beginning of Period	$	9.28
Income/(Loss) from Operations:
Net investment income^(b)		0.67
Net realized and unrealized loss on investments		(0.80	)

Total from Investment Operations		(0.13	)

Less Distributions:
From investment income		(0.47	)

Total Distributions		(0.47	)

Net Decrease in Net Asset Value		(0.60	)

Net Asset Value, End of Period	$	8.68

Total Return		(1.43	)%^(c)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,943
Ratios to Average Net Assets (excluding interest expense):
Net investment income		7.34	%^(d)
Operating expenses		1.05	%^(d)
Ratios to Average Net Assets (including interest expense):
Net investment income		7.18	%^(d)
Operating expenses		1.21	%^(d)
Portfolio Turnover Rate		70	%^(e)

(a) The Fund began offering Advisor Class shares on May 1, 2014.

(b) Per share amounts are based upon average shares outstanding.

(c) Not Annualized.

(d) Annualized.

(e) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2014.


See Notes to Financial Statements		145		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Emerging Markets Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	10.59		$	10.58		$	9.55		$	20.97		$	21.47
Income/(Loss) from Operations:
Net investment income		0.13	^(a)		0.16	^(a)		0.07	^(a)		0.11	^(a)		0.00	^(b)
Net realized and unrealized gain/(loss) on investments		(0.29	)		0.00	^(b)		1.64			(4.61	)		3.43

Total from Investment Operations		(0.16	)		0.16			1.71			(4.50	)		3.43

Less Distributions:
From investment income		(0.19	)		(0.15	)		(0.01	)		(0.57	)		(0.25	)
From capital gains		—			—			(0.67	)		(6.35	)		(3.68	)

Total Distributions		(0.19	)		(0.15	)		(0.68	)		(6.92	)		(3.93	)

Net Increase/(Decrease) in Net Asset Value		(0.35	)		0.01			1.03			(11.42	)		(0.50	)

Net Asset Value, End of Period	$	10.24		$	10.59		$	10.58		$	9.55		$	20.97

Total Return		(1.52	)%		1.54	%		18.14	%		(22.33	)%		16.56	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	3,819		$	4,898		$	5,934		$	23,498		$	49,997
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		1.20	%		1.45	%		0.65	%		0.55	%		0.01	%
Operating expenses including reimbursement/waiver		1.74	%		1.76	%^(c)		1.80	%^(d)		1.79	%		1.79	%
Operating expenses excluding reimbursement/waiver		2.46	%		2.55	%		2.78	%		2.15	%		2.02	%
Portfolio Turnover Rate		72	%		88	%		150	%		102	%		129	%

(a) Per share amounts are based upon average shares outstanding.

(b) Amount represents less than $0.01 per share.

(c) Effective May 1, 2013, the annual expense limitation rate changed from 1.79% to 1.74%.

(d) Effective May 1, 2012, the annual expense limitation rate changed from 1.79% to 1.89%. Effective September 1, 2012, the annual expense limitation rate changed from 1.89% to 1.79%.


December 31, 2014		146		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Emerging Markets Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	10.72		$	10.67		$	9.76		$	21.31		$	21.76
Income/(Loss) from Operations:
Net investment income^(a)		0.15			0.18			0.13			0.15			0.12
Net realized and unrealized gain/(loss) on investments		(0.27	)		0.03			1.67			(4.70	)		3.45

Total from Investment Operations		(0.12	)		0.21			1.80			(4.55	)		3.57

Less Distributions:
From investment income		(0.22	)		(0.16	)		(0.22	)		(0.65	)		(0.34	)
From capital gains		—			—			(0.67	)		(6.35	)		(3.68	)

Total Distributions		(0.22	)		(0.16	)		(0.89	)		(7.00	)		(4.02	)

Net Increase/(Decrease) in Net Asset Value		(0.34	)		0.05			0.91			(11.55	)		(0.45	)

Net Asset Value, End of Period	$	10.38		$	10.72		$	10.67		$	9.76		$	21.31

Total Return		(1.12	)%		1.97	%		18.65	%		(22.21	)%		17.12	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	5,862		$	7,033		$	4,517		$	31,484		$	157,970
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		1.35	%		1.64	%		1.25	%		0.76	%		0.62	%
Operating expenses including reimbursement/waiver		1.39	%		1.39	%		1.41	%^(b)		1.39	%		1.39	%
Operating expenses excluding reimbursement/waiver		2.14	%		2.04	%		2.22	%		1.76	%		1.59	%
Portfolio Turnover Rate		72	%		88	%		150	%		102	%		129	%

(a) Per share amounts are based upon average shares outstanding.

(b) Effective May 1, 2012, the annual expense limitation rate changed from 1.39% to 1.49%. Effective September 1, 2012, the annual expense limitation rate changed from 1.49% to 1.39%.


See Notes to Financial Statements		147		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Emerging Markets Fund


	Advisor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Year Ended December 31, 2011			Period Ended December 31, 2010^(b)
Net Asset Value, Beginning of Period	$	11.03		$	10.98		$	9.86		$	21.34		$	20.49
Income/(Loss) from Operations:
Net investment income		0.16	^(c)		0.18	^(c)		0.15	^(c)		0.17	^(c)		0.06
Net realized and unrealized gain/(loss) on investments		(0.30	)		0.03			1.67			(4.67	)		4.78

Total from Investment Operations		(0.14	)		0.21			1.82			(4.50	)		4.84

Less Distributions:
From investment income		(0.21	)		(0.16	)		(0.03	)		(0.63	)		(0.31	)
From capital gains		—			—			(0.67	)		(6.35	)		(3.68	)

Total Distributions		(0.21	)		(0.16	)		(0.70	)		(6.98	)		(3.99	)

Net Increase/(Decrease) in Net Asset Value		(0.35	)		0.05			1.12			(11.48	)		0.85

Net Asset Value, End of Period	$	10.68		$	11.03		$	10.98		$	9.86		$	21.34

Total Return		(1.22	)%		1.90	%		18.71	%		(21.96	)%		24.30	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,552		$	1,253		$	697		$	180		$	340
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		1.40	%		1.60	%		1.42	%		0.86	%		0.35	%^(e)
Operating expenses including reimbursement/waiver		1.44	%		1.43	%^(f)		1.39	%^(g)		1.39	%		1.39	%^(e)
Operating expenses excluding reimbursement/waiver		2.18	%		2.08	%		2.72	%		1.74	%		1.64	%^(e)
Portfolio Turnover Rate		72	%		88	%		150	%		102	%		129	%^(h)

(a) Prior to May 1, 2013, the Forward Emerging Markets Fund Advisor Class was known as the Forward Emerging Markets Fund Class M.

(b) The Fund began offering Advisor Class shares on February 1, 2010.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2013, the annual expense limitation rate changed from 1.39% to 1.44%.

(g) Effective May 1, 2012, the annual expense limitation rate changed from 1.39% to 1.49%. Effective September 1, 2012, the annual expense limitation rate changed from 1.49% to 1.39%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


December 31, 2014		148		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Equity Long/Short Fund


	Investor Class
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)
Net Asset Value, Beginning of Period	$	29.29		$	25.82		$	25.00
Income/(Loss) from Operations:
Net investment loss^(c)		(0.47	)		(0.62	)		(0.50	)
Net realized and unrealized gain on investments		0.26			5.80			1.32

Total from Investment Operations		(0.21	)		5.18			0.82

Less Distributions:
From capital gains		(3.73	)		(1.71	)		—

Total Distributions		(3.73	)		(1.71	)		—

Net Increase/(Decrease) in Net Asset Value		(3.94	)		3.47			0.82

Net Asset Value, End of Period	$	25.35		$	29.29		$	25.82

Total Return		(0.74	)%		20.24	%		3.28	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	246		$	230		$	206
Ratios to Average Net Assets (excluding interest and dividends on short sales expense):
Net investment loss including reimbursement/waiver		(1.23	)%		(1.64	)%		(1.44	)%^(e)
Operating expenses including reimbursement/waiver		2.29	%^(f)		2.20	%		2.34	%^(e)
Operating expenses excluding reimbursement/waiver		4.85	%		3.03	%		3.98	%^(e)
Ratios to Average Net Assets (including interest and dividends on short sales expense):
Net investment loss including reimbursement/waiver		(1.65	)%		(2.27	)%		(1.96	)%^(e)
Operating expenses including reimbursement/waiver		2.71	%^(f)		2.82	%		2.85	%^(e)
Operating expenses excluding reimbursement/waiver		5.27	%		3.65	%		4.49	%^(e)
Portfolio Turnover Rate		299	%		283	%		283	%^(d)

(a) Prior to August 1, 2014, the Forward Equity Long/Short Fund was known as the Forward Endurance Long/Short Fund.

(b) The Fund began offering Investor Class shares on January 3, 2012.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Effective October 1, 2014, the annual expense limitation rate changed from 2.34% to 2.14%.


See Notes to Financial Statements		149		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Equity Long/Short Fund


	Institutional Class
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)
Net Asset Value, Beginning of Period	$	29.47		$	25.91		$	25.00
Income/(Loss) from Operations:
Net investment loss^(c)		(0.46	)		(0.53	)		(0.43	)
Net realized and unrealized gain on investments		0.35			5.84			1.34

Total from Investment Operations		(0.11	)		5.31			0.91

Less Distributions:
From capital gains		(3.73	)		(1.75	)		—

Total Distributions		(3.73	)		(1.75	)		—

Net Increase/(Decrease) in Net Asset Value		(3.84	)		3.56			0.91

Net Asset Value, End of Period	$	25.63		$	29.47		$	25.91

Total Return		(0.39	)%		20.66	%		3.64	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,382		$	6,309		$	4,652
Ratios to Average Net Assets (excluding interest and dividends on short sales expense):
Net investment loss including reimbursement/waiver		(1.19	)%		(1.28	)%		(1.16	)%^(e)
Operating expenses including reimbursement/waiver		1.96	%^(f)		1.83	%		1.98	%^(e)
Operating expenses excluding reimbursement/waiver		3.82	%		2.68	%		3.02	%^(e)
Ratios to Average Net Assets (including interest and dividends on short sales expense):
Net investment loss including reimbursement/waiver		(1.61	)%		(1.90	)%		(1.68	)%^(e)
Operating expenses including reimbursement/waiver		2.38	%^(f)		2.45	%		2.50	%^(e)
Operating expenses excluding reimbursement/waiver		4.24	%		3.31	%		3.53	%^(e)
Portfolio Turnover Rate		299	%		283	%		283	%^(d)

(a) Prior to August 1, 2014, the Forward Equity Long/Short Fund was known as the Forward Endurance Long/Short Fund.

(b) The Fund began offering Institutional Class shares on January 3, 2012.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Effective October 1, 2014, the annual expense limitation rate changed from 1.99% to 1.79%.


December 31, 2014		150		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Global Dividend Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Period Ended December 31, 2011^(b)
Net Asset Value, Beginning of Period	$	12.07		$	10.77		$	10.37		$	11.35
Income/(Loss) from Operations:
Net investment income^(c)		0.44			0.39			0.43			0.19
Net realized and unrealized gain/(loss) on investments		(0.55	)		1.32			0.49			(0.75	)

Total from Investment Operations		(0.11	)		1.71			0.92			(0.56	)

Less Distributions:
From investment income		(0.47	)		(0.41	)		(0.48	)		(0.42	)
From capital gains		(0.25	)		—			—			—
Tax return of capital		—			—			(0.04	)		—

Total Distributions		(0.72	)		(0.41	)		(0.52	)		(0.42	)

Net Increase/(Decrease) in Net Asset Value		(0.83	)		1.30			0.40			(0.98	)

Net Asset Value, End of Period	$	11.24		$	12.07		$	10.77		$	10.37

Total Return		(1.00	)%		16.10	%		9.02	%		(4.98	)%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	428		$	458		$	3,266		$	63
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		3.71	%		3.33	%		4.67	%		2.67	%^(e)
Operating expenses including reimbursement/waiver		1.34	%		1.28	%^(f)		1.26	%^(g)		1.34	%^(e)
Operating expenses excluding reimbursement/waiver		2.01	%		1.75	%		1.96	%		1.95	%^(e)
Portfolio Turnover Rate		72	%		142	%		53	%		101	%^(h)

(a) Prior to February 20, 2013 the Forward Global Dividend Fund was known as the Forward Large Cap Dividend Fund.

(b) The Fund began offering Investor Class shares on May 2, 2011. Prior to November 1, 2011, the Forward Large Cap Dividend Fund was known as the Forward Large Cap Equity Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2013, the annual expense limitation rate changed from 1.24% to 1.34%.

(g) Effective May 1, 2012, the annual expense limitation rate changed from 1.34% to 1.24%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2011.


See Notes to Financial Statements		151		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Global Dividend Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Year Ended December 31, 2011^(b)			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	11.91		$	10.62		$	10.24		$	10.21		$	9.04
Income/(Loss) from Operations:
Net investment income^(c)		0.57			0.47			0.60			0.35			0.11
Net realized and unrealized gain/(loss) on investments		(0.65	)		1.27			0.34			0.13			1.15

Total from Investment Operations		(0.08	)		1.74			0.94			0.48			1.26

Less Distributions:
From investment income		(0.51	)		(0.45	)		(0.52	)		(0.45	)		(0.09	)
From capital gains		(0.25	)		—			—			—			—
Tax return of capital		—			—			(0.04	)		—			—

Total Distributions		(0.76	)		(0.45	)		(0.56	)		(0.45	)		(0.09	)

Net Increase/(Decrease) in Net Asset Value		(0.84	)		1.29			0.38			0.03			1.17

Net Asset Value, End of Period	$	11.07		$	11.91		$	10.62		$	10.24		$	10.21

Total Return		(0.75	)%		16.65	%		9.35	%		4.64	%		13.98	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,908		$	9,394		$	9,756		$	4,895		$	2,898
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		4.76	%		4.05	%		5.65	%		3.33	%		1.22	%
Operating expenses including reimbursement/waiver		0.99	%		0.96	%^(d)		0.91	%^(e)		0.99	%		0.99	%
Operating expenses excluding reimbursement/waiver		1.58	%		1.44	%		1.44	%		1.40	%		1.35	%
Portfolio Turnover Rate		72	%		142	%		53	%		101	%		73	%

(a) Prior to February 20, 2013 the Forward Global Dividend Fund was known as the Forward Large Cap Dividend Fund.

(b) Prior to November 1, 2011, the Forward Large Cap Dividend Fund was known as the Forward Large Cap Equity Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Effective May 1, 2013, the annual expense limitation rate changed from 0.89% to 0.99%.

(e) Effective May 1, 2012, the annual expense limitation rate changed from 0.99% to 0.89%.


December 31, 2014		152		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Global Dividend Fund


	Class A
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Year Ended December 31, 2011^(b)			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	12.08		$	10.77		$	10.38		$	10.34		$	9.17
Income/(Loss) from Operations:
Net investment income		0.43	^(c)		0.42	^(c)		0.51	^(c)		0.30	^(c)		0.07
Net realized and unrealized gain/(loss) on investments		(0.56	)		1.29			0.39			0.12			1.16

Total from Investment Operations		(0.13	)		1.71			0.90			0.42			1.23

Less Distributions:
From investment income		(0.45	)		(0.40	)		(0.48	)		(0.38	)		(0.06	)
From capital gains		(0.25	)		—			—			—			—
Tax return of capital		—			—			(0.03	)		—			—

Total Distributions		(0.70	)		(0.40	)		(0.51	)		(0.38	)		(0.06	)

Net Increase/(Decrease) in Net Asset Value		(0.83	)		1.31			0.39			0.04			1.17

Net Asset Value, End of Period	$	11.25		$	12.08		$	10.77		$	10.38		$	10.34

Total Return^(d)		(1.14	)%		16.02	%		8.78	%		4.09	%		13.45	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	11,476		$	11,630		$	10,451		$	9,369		$	15,266
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		3.57	%		3.57	%		4.71	%		2.83	%		0.75	%
Operating expenses including reimbursement/waiver		1.49	%		1.46	%^(e)		1.42	%^(f)		1.49	%		1.49	%
Operating expenses excluding reimbursement/waiver		2.17	%		1.94	%		1.93	%		1.87	%		1.85	%
Portfolio Turnover Rate		72	%		142	%		53	%		101	%		73	%

(a) Prior to February 20, 2013 the Forward Global Dividend Fund was known as the Forward Large Cap Dividend Fund.

(b) Prior to November 1, 2011, the Forward Large Cap Dividend Fund was known as the Forward Large Cap Equity Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Total return does not reflect the effect of sales charges.

(e) Effective May 1, 2013, the annual expense limitation rate changed from 1.39% to 1.49%.

(f) Effective May 1, 2012, the annual expense limitation rate changed from 1.49% to 1.39%.


See Notes to Financial Statements		153		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Dividend Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010^(a)
Net Asset Value, Beginning of Period	$	9.76		$	9.12		$	7.86		$	9.49		$	8.48
Income/(Loss) from Operations:
Net investment income^(b)		0.50			0.49			0.60			0.47			0.20
Net realized and unrealized gain/(loss) on investments		(0.96	)		0.59			1.07			(1.61	)		1.32

Total from Investment Operations		(0.46	)		1.08			1.67			(1.14	)		1.52

Less Distributions:
From investment income		(0.52	)		(0.44	)		(0.41	)		(0.49	)		(0.51	)

Total Distributions		(0.52	)		(0.44	)		(0.41	)		(0.49	)		(0.51	)

Net Increase/(Decrease) in Net Asset Value		(0.98	)		0.64			1.26			(1.63	)		1.01

Net Asset Value, End of Period	$	8.78		$	9.76		$	9.12		$	7.86		$	9.49

Total Return		(4.96	)%		12.14	%		21.54	%		(12.45	)%		17.97	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	140,810		$	110,117		$	48,875		$	3,170		$	4,100
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		5.35	%		5.22	%		7.01	%		5.26	%		2.31	%
Operating expenses including reimbursement/waiver		1.34	%		1.34	%		1.36	%^(c)		1.49	%		1.51	%^(d)
Operating expenses excluding reimbursement/waiver		1.45	%		1.46	%		1.69	%		2.81	%		3.92	%
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		5.26	%		5.11	%		n/a			n/a			n/a
Operating expenses including reimbursement/waiver		1.43	%		1.45	%		n/a			n/a			n/a
Operating expenses excluding reimbursement/waiver		1.54	%		1.57	%		n/a			n/a			n/a
Portfolio Turnover Rate		95	%		115	%		92	%		93	%		113	%

(a) Prior to May 1, 2010, the Forward International Dividend Fund was known as the Forward International Equity Fund.

(b) Per share amounts are based upon average shares outstanding.

(c) Effective May 1, 2012, the annual expense limitation rate changed from 1.49% to 1.34%.

(d) Effective May 1, 2010, the annual expense limitation rate changed from 1.34% to 1.60%. Effective December 1, 2010, the annual expense limitation rate changed from 1.60% to 1.49%.


December 31, 2014		154		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Dividend Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010^(a)
Net Asset Value, Beginning of Period	$	8.17		$	7.70		$	6.70		$	8.12		$	7.23
Income/(Loss) from Operations:
Net investment income^(b)		0.45			0.42			0.57			0.44			0.21
Net realized and unrealized gain/(loss) on investments		(0.80	)		0.52			0.86			(1.37	)		1.11

Total from Investment Operations		(0.35	)		0.94			1.43			(0.93	)		1.32

Less Distributions:
From investment income		(0.55	)		(0.47	)		(0.43	)		(0.49	)		(0.43	)

Total Distributions		(0.55	)		(0.47	)		(0.43	)		(0.49	)		(0.43	)

Net Increase/(Decrease) in Net Asset Value		(0.90	)		0.47			1.00			(1.42	)		0.89

Net Asset Value, End of Period	$	7.27		$	8.17		$	7.70		$	6.70		$	8.12

Total Return		(4.56	)%		12.46	%		21.90	%		(12.01	)%		18.30	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	84,982		$	92,617		$	82,719		$	5,705		$	1,721
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		5.73	%		5.41	%		7.78	%		5.88	%		2.86	%
Operating expenses including reimbursement/waiver		0.99	%		0.99	%		1.01	%^(c)		1.14	%		1.16	%^(d)
Operating expenses excluding reimbursement/waiver		1.10	%		1.11	%		1.33	%		2.45	%		3.54	%
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		5.64	%		5.30	%		n/a			n/a			n/a
Operating expenses including reimbursement/waiver		1.08	%		1.10	%		n/a			n/a			n/a
Operating expenses excluding reimbursement/waiver		1.19	%		1.22	%		n/a			n/a			n/a
Portfolio Turnover Rate		95	%		115	%		92	%		93	%		113	%

(a) Prior to May 1, 2010, the Forward International Dividend Fund was known as the Forward International Equity Fund.

(b) Per share amounts are based upon average shares outstanding.

(c) Effective May 1, 2012, the annual expense limitation rate changed from 1.14% to 0.99%.

(d) Effective May 1, 2010, the annual expense limitation rate changed from 0.99% to 1.25%. Effective December 1, 2010, the annual expense limitation rate changed from 1.25% to 1.14%.


See Notes to Financial Statements		155		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Dividend Fund


	Class A
	Year Ended December 31, 2014			Period Ended December 31, 2013^(a)
Net Asset Value, Beginning of Period	$	9.76		$	9.95
Income/(Loss) from Operations:
Net investment income^(b)		0.48			0.32
Net realized and unrealized loss on investments		(0.95	)		(0.19	)

Total from Investment Operations		(0.47	)		0.13

Less Distributions:
From investment income		(0.51	)		(0.32	)

Total Distributions		(0.51	)		(0.32	)

Net Decrease in Net Asset Value		(0.98	)		(0.19	)

Net Asset Value, End of Period	$	8.78		$	9.76

Total Return^(c)		(5.09	)%		1.45	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	4,046		$	2,699
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		5.16	%		5.16	%^(e)
Operating expenses including reimbursement/waiver		1.49	%		1.49	%^(e)
Operating expenses excluding reimbursement/waiver		1.60	%		1.61	%^(e)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		5.07	%		5.05	%^(e)
Operating expenses including reimbursement/waiver		1.58	%		1.60	%^(e)
Operating expenses excluding reimbursement/waiver		1.69	%		1.72	%^(e)
Portfolio Turnover Rate		95	%		115	%^(f)

(a) The Fund began offering Class A shares on May 1, 2013.

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Not Annualized.

(e) Annualized.

(f) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2013.


December 31, 2014		156		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Dividend Fund


	Class C
	Year Ended December 31, 2014			Year Ended December 31, 2013			Period Ended December 31, 2012^(a)
Net Asset Value, Beginning of Period	$	9.74		$	9.11		$	8.31
Income/(Loss) from Operations:
Net investment income^(b)		0.44			0.45			0.21
Net realized and unrealized gain/(loss) on investments		(0.95	)		0.57			0.83

Total from Investment Operations		(0.51	)		1.02			1.04

Less Distributions:
From investment income		(0.47	)		(0.39	)		(0.24	)

Total Distributions		(0.47	)		(0.39	)		(0.24	)

Net Increase/(Decrease) in Net Asset Value		(0.98	)		0.63			0.80

Net Asset Value, End of Period	$	8.76		$	9.74		$	9.11

Total Return^(c)		(5.52	)%		11.45	%		12.56	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	10,293		$	7,629		$	879
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		4.74	%		4.84	%		5.90	%^(e)
Operating expenses including reimbursement/waiver		1.94	%		1.94	%		1.94	%^(e)
Operating expenses excluding reimbursement/waiver		2.05	%		2.07	%		2.30	%^(e)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		4.65	%		4.73	%		n/a
Operating expenses including reimbursement/waiver		2.03	%		2.05	%		n/a
Operating expenses excluding reimbursement/waiver		2.14	%		2.17	%		n/a
Portfolio Turnover Rate		95	%		115	%		92	%^(f)

(a) The Fund began offering Class C shares on July 31, 2012.

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Not Annualized.

(e) Annualized.

(f) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2012.


See Notes to Financial Statements		157		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Dividend Fund


	Advisor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Period Ended December 31, 2011^(b)
Net Asset Value, Beginning of Period	$	8.17		$	7.70		$	6.70		$	8.56
Income/(Loss) from Operations:
Net investment income^(c)		0.42			0.44			0.61			0.25
Net realized and unrealized gain/(loss) on investments		(0.77	)		0.50			0.82			(1.64	)

Total from Investment Operations		(0.35	)		0.94			1.43			(1.39	)

Less Distributions:
From investment income		(0.55	)		(0.47	)		(0.43	)		(0.47	)

Total Distributions		(0.55	)		(0.47	)		(0.43	)		(0.47	)

Net Increase/(Decrease) in Net Asset Value		(0.90	)		0.47			1.00			(1.86	)

Net Asset Value, End of Period	$	7.27		$	8.17		$	7.70		$	6.70

Total Return		(4.60	)%		12.42	%		21.90	%		(16.68	)%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	72,641		$	64,973		$	19,269		$	22
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		5.38	%		5.61	%		8.25	%		5.48	%^(e)
Operating expenses including reimbursement/waiver		1.04	%		1.03	%^(f)		0.99	%^(g)		1.14	%^(e)
Operating expenses excluding reimbursement/waiver		1.15	%		1.15	%		1.32	%		2.50	%^(e)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		5.29	%		5.50	%		n/a			n/a
Operating expenses including reimbursement/waiver		1.13	%		1.14	%^(f)		n/a			n/a
Operating expenses excluding reimbursement/waiver		1.24	%		1.26	%		n/a			n/a
Portfolio Turnover Rate		95	%		115	%		92	%		93	%^(h)

(a) Prior to May 1, 2013, the Forward International Dividend Fund Advisor Class was known as the Forward International Dividend Fund Class M.

(b) The Fund began offering Advisor Class shares on May 2, 2011.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2013, the annual expense limitation rate changed from 0.99% to 1.04%.

(g) Effective May 1, 2012, the annual expense limitation rate changed from 1.14% to 0.99%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2011.


December 31, 2014		158		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Small Companies Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	17.39		$	13.85		$	11.57		$	14.54		$	12.15
Income/(Loss) from Operations:
Net investment income		0.10	^(a)		0.07	^(a)		0.08	^(a)		0.09	^(a)		0.10
Net realized and unrealized gain/(loss) on investments		(1.58	)		3.80			2.43			(2.93	)		2.41

Total from Investment Operations		(1.48	)		3.87			2.51			(2.84	)		2.51

Less Distributions:
From investment income		(0.05	)		(0.33	)		(0.23	)		(0.13	)		(0.12	)

Total Distributions		(0.05	)		(0.33	)		(0.23	)		(0.13	)		(0.12	)

Net Increase/(Decrease) in Net Asset Value		(1.53	)		3.54			2.28			(2.97	)		2.39

Net Asset Value, End of Period	$	15.86		$	17.39		$	13.85		$	11.57		$	14.54

Total Return		(8.51	)%		27.95	%		21.70	%		(19.49	)%		20.69	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	26,760		$	38,523		$	37,843		$	51,814		$	95,936
Ratios to Average Net Assets:
Net Investment income including reimbursement/waiver		0.57	%		0.42	%		0.66	%		0.65	%		0.60	%
Operating expenses including reimbursement/waiver		1.65	%^(b)		1.69	%		1.70	%^(c)		1.62	%		1.64	%
Operating expenses excluding reimbursement/waiver		1.67	%		n/a			n/a			n/a			n/a
Portfolio Turnover Rate		65	%		86	%		109	%		79	%		82	%

(a) Per share amounts are based upon average shares outstanding.

(b) Effective May 1, 2014, the Advisor agreed to limit expenses at 1.64%.

(c) Affiliated management fee waiver represents less than 0.005%.


See Notes to Financial Statements		159		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Small Companies Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	17.38		$	13.84		$	11.57		$	14.55		$	12.16
Income/(Loss) from Operations:
Net investment income		0.15	^(a)		0.12	^(a)		0.15	^(a)		0.13	^(a)		0.12
Net realized and unrealized gain/(loss) on investments		(1.58	)		3.81			2.40			(2.92	)		2.44

Total from Investment Operations		(1.43	)		3.93			2.55			(2.79	)		2.56

Less Distributions:
From investment income		(0.12	)		(0.39	)		(0.28	)		(0.19	)		(0.17	)

Total Distributions		(0.12	)		(0.39	)		(0.28	)		(0.19	)		(0.17	)

Net Increase/(Decrease) in Net Asset Value		(1.55	)		3.54			2.27			(2.98	)		2.39

Net Asset Value, End of Period	$	15.83		$	17.38		$	13.84		$	11.57		$	14.55

Total Return		(8.17	)%		28.42	%		22.03	%		(19.18	)%		21.10	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	134,290		$	166,601		$	107,578		$	280,888		$	436,307
Ratios to Average Net Assets:
Net Investment income including reimbursement/waiver		0.89	%		0.78	%		1.14	%		0.94	%		0.94	%
Operating expenses including reimbursement/waiver		1.30	%^(b)		1.34	%		1.34	%^(c)		1.27	%		1.27	%
Operating expenses excluding reimbursement/waiver		1.32	%		n/a			n/a			n/a			n/a
Portfolio Turnover Rate		65	%		86	%		109	%		79	%		82	%

(a) Per share amounts are based upon average shares outstanding.

(b) Effective May 1, 2014, the Advisor agreed to limit expenses at 1.29%.

(c) Affiliated management fee waiver represents less than 0.005%.


December 31, 2014		160		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Small Companies Fund


	Advisor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Year Ended December 31, 2011			Period Ended December 31, 2010^(b)
Net Asset Value, Beginning of Period	$	17.39		$	13.84		$	11.57		$	14.55		$	12.04
Income/(Loss) from Operations:
Net investment income		0.11	^(c)		0.15	^(c)		0.17	^(c)		0.15	^(c)		0.13
Net realized and unrealized gain/(loss) on investments		(1.53	)		3.77			2.38			(2.94	)		2.55

Total from Investment Operations		(1.42	)		3.92			2.55			(2.79	)		2.68

Less Distributions:
From investment income		(0.12	)		(0.37	)		(0.28	)		(0.19	)		(0.17	)

Total Distributions		(0.12	)		(0.37	)		(0.28	)		(0.19	)		(0.17	)

Net Increase/(Decrease) in Net Asset Value		(1.54	)		3.55			2.27			(2.98	)		2.51

Net Asset Value, End of Period	$	15.85		$	17.39		$	13.84		$	11.57		$	14.55

Total Return		(8.19	)%		28.36	%		22.08	%		(19.18	)%		22.30	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,522		$	3,299		$	9,698		$	59		$	72
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		0.64	%		0.97	%		1.32	%		1.09	%		1.19	%^(e)
Operating expenses including reimbursement/waiver		1.34	%^(f)		1.37	%		1.37	%^(g)		1.27	%		1.29	%^(e)
Operating expenses excluding reimbursement/waiver		1.38	%		n/a			n/a			n/a			n/a
Portfolio Turnover Rate		65	%		86	%		109	%		79	%		82	%^(h)

(a) Prior to May 1, 2013, the Forward International Small Companies Fund Advisor Class was known as the Forward International Small Companies Fund Class M.

(b) The Fund began offering Advisor Class shares on February 1, 2010.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2014, the Advisor agreed to limit expenses at 1.34%.

(g) Affiliated management fee waiver represents less than 0.005%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


See Notes to Financial Statements		161		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Select EM Dividend Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Period Ended December 31, 2011^(a)
Net Asset Value, Beginning of Period	$	22.44		$	23.70		$	19.50		$	25.00
Income/(Loss) from Operations:
Net investment income^(b)		1.06			1.37			1.23			0.58
Net realized and unrealized gain/(loss) on investments		(2.49	)		(1.50	)		4.07			(5.52	)

Total from Investment Operations		(1.43	)		(0.13	)		5.30			(4.94	)

Less Distributions:
From investment income		(1.28	)		(1.13	)		(1.09	)		(0.56	)
Tax return of capital		—			—			(0.01	)		(0.00	)^(c)

Total Distributions		(1.28	)		(1.13	)		(1.10	)		(0.56	)

Net Increase/(Decrease) in Net Asset Value		(2.71	)		(1.26	)		4.20			(5.50	)

Net Asset Value, End of Period	$	19.73		$	22.44		$	23.70		$	19.50

Total Return		(6.78	)%		(0.62	)%		27.81	%		(19.87	)%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	28,180		$	23,348		$	13,591		$	1,026
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		4.77	%		6.01	%		5.58	%		4.12	%^(e)
Operating expenses including reimbursement/waiver		1.74	%		1.75	%^(f)		1.79	%		1.79	%^(e)
Operating expenses excluding reimbursement/waiver		1.85	%		1.97	%		2.52	%		2.96	%^(e)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		4.67	%		5.89	%		5.52	%		4.12	%^(e)
Operating expenses including reimbursement/waiver		1.84	%		1.88	%^(f)		1.85	%		1.79	%^(e)
Operating expenses excluding reimbursement/waiver		1.95	%		2.09	%		2.59	%		2.96	%^(e)
Portfolio Turnover Rate		185	%		210	%		103	%		147	%^(d)

(a) The Fund began offering Investor Class shares on May 2, 2011.

(b) Per share amounts are based upon average shares outstanding.

(c) Amount represents less than $0.01 per share.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2013, the annual expense limitation rate changed from 1.79% to 1.74%.


December 31, 2014		162		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Select EM Dividend Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Period Ended December 31, 2011^(a)
Net Asset Value, Beginning of Period	$	22.44		$	23.68		$	19.48		$	24.37
Income/(Loss) from Operations:
Net investment income^(b)		1.28			1.26			1.43			0.76
Net realized and unrealized gain/(loss) on investments		(2.64	)		(1.29	)		3.97			(5.03	)

Total from Investment Operations		(1.36	)		(0.03	)		5.40			(4.27	)

Less Distributions:
From investment income		(1.36	)		(1.21	)		(1.19	)		(0.62	)
Tax return of capital		—			—			(0.01	)		(0.00	)^(c)

Total Distributions		(1.36	)		(1.21	)		(1.20	)		(0.62	)

Net Increase/(Decrease) in Net Asset Value		(2.72	)		(1.24	)		4.20			(4.89	)

Net Asset Value, End of Period	$	19.72		$	22.44		$	23.68		$	19.48

Total Return		(6.50	)%		(0.19	)%		28.38	%		(17.60	)%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	19,144		$	22,453		$	32,070		$	4,244
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		5.80	%		5.50	%		6.45	%		5.23	%^(e)
Operating expenses including reimbursement/waiver		1.39	%		1.39	%		1.39	%		1.39	%^(e)
Operating expenses excluding reimbursement/waiver		1.56	%		1.61	%		1.99	%		2.19	%^(e)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		5.70	%		5.38	%		6.38	%		5.23	%^(e)
Operating expenses including reimbursement/waiver		1.49	%		1.51	%		1.45	%		1.39	%^(e)
Operating expenses excluding reimbursement/waiver		1.66	%		1.73	%		2.05	%		2.19	%^(e)
Portfolio Turnover Rate		185	%		210	%		103	%		147	%^(f)

(a) The Fund began offering Institutional Class shares on May 3, 2011.

(b) Per share amounts are based upon average shares outstanding.

(c) Amount represents less than $0.01 per share.

(d) Not Annualized.

(e) Annualized.

(f) Portfolio turnover rate is calculated at the Fund level and represents the period of May 2, 2011 (inception) through December 31, 2011.


See Notes to Financial Statements		163		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Select EM Dividend Fund


	Class C
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Period Ended December 31, 2011^(a)
Net Asset Value, Beginning of Period	$	22.41		$	23.69		$	19.49		$	25.00
Income/(Loss) from Operations:
Net investment income^(b)		1.15			1.18			1.18			0.53
Net realized and unrealized gain/(loss) on investments		(2.71	)		(1.46	)		4.00			(5.57	)

Total from Investment Operations		(1.56	)		(0.28	)		5.18			(5.04	)

Less Distributions:
From investment income		(1.15	)		(1.00	)		(0.97	)		(0.47	)
Tax return of capital		—			—			(0.01	)		(0.00	)^(c)

Total Distributions		(1.15	)		(1.00	)		(0.98	)		(0.47	)

Net Increase/(Decrease) in Net Asset Value		(2.71	)		(1.28	)		4.20			(5.51	)

Net Asset Value, End of Period	$	19.70		$	22.41		$	23.69		$	19.49

Total Return^(d)		(7.34	)%		(1.27	)%		27.14	%		(20.20	)%^(e)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,487		$	1,390		$	709		$	526
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		5.29	%		5.19	%		5.43	%		3.72	%^(f)
Operating expenses including reimbursement/waiver		2.34	%		2.35	%^(g)		2.39	%		2.39	%^(f)
Operating expenses excluding reimbursement/waiver		2.55	%		2.60	%		3.42	%		3.42	%^(f)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		5.19	%		5.07	%		5.36	%		3.72	%^(f)
Operating expenses including reimbursement/waiver		2.44	%		2.47	%^(g)		2.45	%		2.39	%^(f)
Operating expenses excluding reimbursement/waiver		2.65	%		2.72	%		3.48	%		3.42	%^(f)
Portfolio Turnover Rate		185	%		210	%		103	%		147	%^(e)

(a) The Fund began offering Class C shares on May 2, 2011.

(b) Per share amounts are based upon average shares outstanding.

(c) Amount represents less than $0.01 per share.

(d) Total return does not reflect the effect of sales charges.

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2013, the annual expense limitation rate changed from 2.39% to 2.34%.


December 31, 2014		164		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Select EM Dividend Fund


	Advisor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Period Ended December 31, 2011^(b)
Net Asset Value, Beginning of Period	$	22.43		$	23.69		$	19.48		$	25.00
Income/(Loss) from Operations:
Net investment income^(c)		1.34			1.34			1.40			0.66
Net realized and unrealized gain/(loss) on investments		(2.70	)		(1.40	)		4.01			(5.56	)

Total from Investment Operations		(1.36	)		(0.06	)		5.41			(4.90	)

Less Distributions:
From investment income		(1.35	)		(1.20	)		(1.19	)		(0.62	)
Tax return of capital		—			—			(0.01	)		(0.00	)^(d)

Total Distributions		(1.35	)		(1.20	)		(1.20	)		(0.62	)

Net Increase/(Decrease) in Net Asset Value		(2.71	)		(1.26	)		4.21			(5.52	)

Net Asset Value, End of Period	$	19.72		$	22.43		$	23.69		$	19.48

Total Return		(6.50	)%		(0.31	)%		28.41	%		(19.66	)%^(e)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,149		$	1,041		$	1,214		$	610
Ratios to Average Net Assets (excluding interest expense):
Net investment income including reimbursement/waiver		6.13	%		5.80	%		6.43	%		4.60	%^(f)
Operating expenses including reimbursement/waiver		1.44	%		1.42	%^(g)		1.39	%		1.39	%^(f)
Operating expenses excluding reimbursement/waiver		1.65	%		1.67	%		2.41	%		2.47	%^(f)
Ratios to Average Net Assets (including interest expense):
Net investment income including reimbursement/waiver		6.03	%		5.67	%		6.37	%		4.60	%^(f)
Operating expenses including reimbursement/waiver		1.54	%		1.54	%^(g)		1.45	%		1.39	%^(f)
Operating expenses excluding reimbursement/waiver		1.75	%		1.79	%		2.47	%		2.47	%^(f)
Portfolio Turnover Rate		185	%		210	%		103	%		147	%^(e)

(a) Prior to May 1, 2013, the Forward Select EM Dividend Fund Advisor Class was known as the Forward Select EM Dividend Fund Class M.

(b) The Fund began offering Advisor Class shares on May 2, 2011.

(c) Per share amounts are based upon average shares outstanding.

(d) Amount represents less than $0.01 per share.

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2013, the annual expense limitation rate changed from 1.39% to 1.44%.


See Notes to Financial Statements		165		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Small Cap Equity Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	22.01		$	15.98		$	14.40		$	16.71		$	14.45
Income/(Loss) from Operations:
Net investment loss		(0.14	)^(a)		(0.15	)^(a)		(0.04	)^(a)		(0.14	)^(a)		(0.41	)
Net realized and unrealized gain/(loss) on investments		0.47			6.18			1.62			(2.17	)		2.67

Total from Investment Operations		0.33			6.03			1.58			(2.31	)		2.26

Net Increase/(Decrease) in Net Asset Value		0.33			6.03			1.58			(2.31	)		2.26

Net Asset Value, End of Period	$	22.34		$	22.01		$	15.98		$	14.40		$	16.71

Total Return		1.50	%		37.73	%		10.97	%		(13.82	)%		15.64	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	22,004		$	26,287		$	23,374		$	29,976		$	110,293
Ratios to Average Net Assets:
Net Investment loss including reimbursement/waiver		(0.65	)%		(0.79	)%		(0.27	)%		(0.88	)%		(1.13	)%
Operating expenses including reimbursement/waiver		1.47	%^(b)(c)		1.42	%^(c)(d)		1.35	%^(c)(e)		1.34	%^(f)		1.69	%
Operating expenses excluding reimbursement/waiver		1.82	%		1.72	%		1.65	%		1.60	%		n/a
Portfolio Turnover Rate		72	%		115	%		136	%		234	%		162	%

(a) Per share amounts are based upon average shares outstanding.

(b) Effective May 1, 2014, the annual expense limitation rate changed from 1.44% to 1.49%

(c) Affiliated management fee waiver represents less than 0.005%.

(d) Effective May 1, 2013, the annual expense limitation rate changed from 1.39% to 1.44%.

(e) Effective May 1, 2012, the annual expense limitation rate changed from 1.29% to 1.39%.

(f) Effective February 1, 2011, the Advisor agreed to limit expenses at 1.29%.


December 31, 2014		166		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Small Cap Equity Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	23.17		$	16.77		$	15.07		$	17.37		$	14.98
Income/(Loss) from Operations:
Net investment loss		(0.08	)^(a)		(0.10	)^(a)		(0.02	)^(a)		(0.11	)^(a)		(0.11	)
Net realized and unrealized gain/(loss) on investments		0.50			6.50			1.72			(2.19	)		2.50

Total from Investment Operations		0.42			6.40			1.70			(2.30	)		2.39

Net Increase/(Decrease) in Net Asset Value		0.42			6.40			1.70			(2.30	)		2.39

Net Asset Value, End of Period	$	23.59		$	23.17		$	16.77		$	15.07		$	17.37

Total Return		1.81	%		38.08	%		11.35	%		(13.24	)%		15.96	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	4,213		$	6,724		$	7,397		$	17,812		$	229,643
Ratios to Average Net Assets:
Net Investment loss including reimbursement/waiver		(0.33	)%		(0.50	)%		(0.11	)%		(0.62	)%		(0.82	)%
Operating expenses including reimbursement/waiver		1.14	%^(b)		1.12	%^(b)(c)		1.04	%^(b)(d)		1.03	%^(e)		1.38	%
Operating expenses excluding reimbursement/waiver		1.48	%		1.42	%		1.35	%		1.32	%		n/a
Portfolio Turnover Rate		72	%		115	%		136	%		234	%		162	%

(a) Per share amounts are based upon average shares outstanding.

(b) Affiliated management fee waiver represents less than 0.005%.

(c) Effective May 1, 2013, the annual expense limitation rate changed from 1.09% to 1.14%.

(d) Effective May 1, 2012, the annual expense limitation rate changed from 0.99% to 1.09%.

(e) Effective February 1, 2011, the Advisor agreed to limit expenses at 0.99%.


See Notes to Financial Statements		167		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Small Cap Equity Fund


	Advisor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Year Ended December 31, 2011			Period Ended December 31, 2010^(b)
Net Asset Value, Beginning of Period	$	23.06		$	16.70		$	15.01		$	17.37		$	14.30
Income/(Loss) from Operations:
Net investment income/(loss)		(0.09	)^(c)		(0.11	)^(c)		0.03	^(c)		(0.09	)^(c)		(0.07	)
Net realized and unrealized gain/(loss) on investments		0.50			6.47			1.66			(2.27	)		3.14

Total from Investment Operations		0.41			6.36			1.69			(2.36	)		3.07

Net Increase/(Decrease) in Net Asset Value		0.41			6.36			1.69			(2.36	)		3.07

Net Asset Value, End of Period	$	23.47		$	23.06		$	16.70		$	15.01		$	17.37

Total Return		1.78	%		38.00	%		11.33	%		(13.59	)%		21.47	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,751		$	3,088		$	2,685		$	154		$	103
Ratios to Average Net Assets:
Net investment income/(loss) including reimbursement/waiver		(0.37	)%		(0.53	)%		0.21	%		(0.57	)%		(0.80	)%^(e)
Operating expenses including reimbursement/waiver		1.19	%^(f)		1.16	%^(f)(g)		1.05	%^(f)(h)		1.03	%⁽ⁱ⁾		1.41	%^(e)
Operating expenses excluding reimbursement/waiver		1.54	%		1.45	%		1.36	%		1.15	%		n/a
Portfolio Turnover Rate		72	%		115	%		136	%		234	%		162	%^(j)

(a) Prior to May 1, 2013, the Forward Small Cap Equity Fund Advisor Class was known as the Forward Small Cap Equity Fund Class M.

(b) The Fund began offering Advisor Class shares on February 1, 2010.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Affiliated management fee waiver represents less than 0.005%.

(g) Effective May 1, 2013, the annual expense limitation rate changed from 1.09% to 1.19%.

(h) Effective May 1, 2012, the annual expense limitation rate changed from 0.99% to 1.09%.

(i) Effective February 1, 2011, the Advisor agreed to limit expenses at 0.99%.

(j) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


December 31, 2014		168		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)
Net Asset Value, Beginning of Period	$	25.67		$	25.72		$	24.04		$	25.00
Income/(Loss) from Operations:
Net investment loss^(b)		(0.17	)		(0.46	)		(0.36	)		(0.66	)
Net realized and unrealized gain/(loss) on investments		0.31			0.49			3.33			(0.25	)

Total from Investment Operations		0.14			0.03			2.97			(0.91	)

Less Distributions:
From capital gains		(1.88	)		(0.08	)		(1.29	)		(0.05	)

Total Distributions		(1.88	)		(0.08	)		(1.29	)		(0.05	)

Net Increase/(Decrease) in Net Asset Value		(1.74	)		(0.05	)		1.68			(0.96	)

Net Asset Value, End of Period	$	23.93		$	25.67		$	25.72		$	24.04

Total Return		0.40	%		0.12	%		12.45	%		(3.65	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	13,651		$	11,197		$	16,949		$	12,098
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(0.65	)%		(1.77	)%		(1.41	)%		(2.69	)%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.77	%^(c)		1.84	%		2.25	%^(d)		2.71	%^(e)
Operating expenses excluding reimbursement/waiver		1.87	%		1.84	%		2.46	%		2.91	%
Portfolio Turnover Rate		9,956	%		11,621	%		6,025	%		0	%

(a) The Fund began offering Investor Class shares on January 3, 2011.

(b) Per share amounts are based upon average shares outstanding.

(c) Effective May 1, 2014, the expense limitation agreement expired and effective August 1, 2014, the Advisor agreed to limit expenses at 1.74%.

(d) Effective November 1, 2012, the annual expense limitation rate changed from 2.34% to 1.84%.

(e) Effective October 1, 2011, the annual expense limitation rate changed from 2.84% to 2.34%.


See Notes to Financial Statements		169		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)
Net Asset Value, Beginning of Period	$	25.88		$	25.83		$	24.12		$	25.00
Income/(Loss) from Operations:
Net investment loss^(b)		(0.12	)		(0.37	)		(0.23	)		(0.57	)
Net realized and unrealized gain/(loss) on investments		0.35			0.50			3.30			(0.26	)

Total from Investment Operations		0.23			0.13			3.07			(0.83	)

Less Distributions:
From capital gains		(1.88	)		(0.08	)		(1.36	)		(0.05	)

Total Distributions		(1.88	)		(0.08	)		(1.36	)		(0.05	)

Net Increase/(Decrease) in Net Asset Value		(1.65	)		0.05			1.71			(0.88	)

Net Asset Value, End of Period	$	24.23		$	25.88		$	25.83		$	24.12

Total Return		0.75	%		0.51	%		12.79	%		(3.29	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	11,543		$	28,406		$	17,804		$	11,816
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(0.45	)%		(1.42	)%		(0.89	)%		(2.33	)%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.41	%^(c)		1.49	%		1.88	%^(d)		2.36	%^(e)
Operating expenses excluding reimbursement/waiver		1.51	%		1.49	%		2.11	%		2.71	%
Portfolio Turnover Rate		9,956	%		11,621	%		6,025	%		0	%

(a) The Fund began offering Institutional Class shares on January 3, 2011.

(b) Per share amounts are based upon average shares outstanding.

(c) Effective May 1, 2014, the expense limitation agreement expired and effective August 1, 2014 the Advisor agreed to limit expenses at 1.39%.

(d) Effective November 1, 2012, the annual expense limitation rate changed from 1.99% to 1.49%.

(e) Effective October 1, 2011, the annual expense limitation rate changed from 2.49% to 1.99%.


December 31, 2014		170		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	Class A
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)
Net Asset Value, Beginning of Period	$	25.57		$	25.66		$	23.98		$	25.00
Income/(Loss) from Operations:
Net investment loss^(b)		(0.35	)		(0.50	)		(0.41	)		(0.69	)
Net realized and unrealized gain/(loss) on investments		0.45			0.49			3.34			(0.28	)

Total from Investment Operations		0.10			(0.01	)		2.93			(0.97	)

Less Distributions:
From capital gains		(1.88	)		(0.08	)		(1.25	)		(0.05	)

Total Distributions		(1.88	)		(0.08	)		(1.25	)		(0.05	)

Net Increase/(Decrease) in Net Asset Value		(1.78	)		(0.09	)		1.68			(1.02	)

Net Asset Value, End of Period	$	23.79		$	25.57		$	25.66		$	23.98

Total Return^(c)		0.24	%		(0.03	)%		12.31	%		(3.90	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	759		$	3,351		$	3,602		$	2,578
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(1.32	)%		(1.92	)%		(1.61	)%		(2.83	)%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.92	%^(d)		1.99	%		2.40	%^(e)		2.86	%^(f)
Operating expenses excluding reimbursement/waiver		1.96	%		1.99	%		2.61	%		3.10	%
Portfolio Turnover Rate		9,956	%		11,621	%		6,025	%		0	%

(a) The Fund began offering Class A shares on January 3, 2011.

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Effective May 1, 2014, the expense limitation agreement expired and effective August 1, 2014, the Advisor agreed to limit expenses at 1.89%.

(e) Effective November 1, 2012, the annual expense limitation rate changed from 2.49% to 1.99%.

(f) Effective October 1, 2011, the annual expense limitation rate changed from 2.99% to 2.49%.


See Notes to Financial Statements		171		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	Class C
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(a)
Net Asset Value, Beginning of Period	$	25.31		$	25.51		$	23.88		$	25.00
Income/(Loss) from Operations:
Net investment loss^(b)		(0.35	)		(0.61	)		(0.51	)		(0.81	)
Net realized and unrealized gain/(loss) on investments		0.34			0.49			3.30			(0.26	)

Total from Investment Operations		(0.01	)		(0.12	)		2.79			(1.07	)

Less Distributions:
From capital gains		(1.88	)		(0.08	)		(1.16	)		(0.05	)

Total Distributions		(1.88	)		(0.08	)		(1.16	)		(0.05	)

Net Increase/(Decrease) in Net Asset Value		(1.89	)		(0.20	)		1.63			(1.12	)

Net Asset Value, End of Period	$	23.42		$	25.31		$	25.51		$	23.88

Total Return^(c)		(0.19	)%		(0.47	)%		11.77	%		(4.29	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,609		$	1,955		$	3,247		$	2,163
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(1.35	)%		(2.37	)%		(2.00	)%		(3.29	)%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		2.37	%^(d)		2.44	%		2.84	%^(e)		3.31	%^(f)
Operating expenses excluding reimbursement/waiver		2.46	%		2.44	%		3.06	%		3.53	%
Portfolio Turnover Rate		9,956	%		11,621	%		6,025	%		0	%

(a) The Fund began offering Class C shares on January 3, 2011.

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Effective May 1, 2014, the expense limitation agreement expired and effective August 1, 2014, the Advisor agreed to limit expenses at 2.34%.

(e) Effective November 1, 2012, the annual expense limitation rate changed from 2.94% to 2.44%.

(f) Effective October 1, 2011, the annual expense limitation rate changed from 3.44% to 2.94%.


December 31, 2014		172		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	Advisor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Period Ended December 31, 2011^(b)
Net Asset Value, Beginning of Period	$	25.85		$	25.79		$	24.12		$	25.56
Income/(Loss) from Operations:
Net investment loss^(c)		(0.13	)		(0.36	)		(0.02	)		(0.40	)
Net realized and unrealized gain/(loss) on investments		0.34			0.50			3.09			(0.99	)

Total from Investment Operations		0.21			0.14			3.07			(1.39	)

Less Distributions:
From capital gains		(1.88	)		(0.08	)		(1.40	)		(0.05	)

Total Distributions		(1.88	)		(0.08	)		(1.40	)		(0.05	)

Net Increase/(Decrease) in Net Asset Value		(1.67	)		0.06			1.67			(1.44	)

Net Asset Value, End of Period	$	24.18		$	25.85		$	25.79		$	24.12

Total Return		0.67	%		0.55	%		12.78	%		(5.41	)%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	3,017		$	74,041		$	91		$	84
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(0.50	)%		(1.41	)%		(0.09	)%		(2.28	)%^(e)
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.47	%^(f)		1.47	%^(g)		1.79	%^(h)		2.31	%^(e)(i)
Operating expenses excluding reimbursement/waiver		1.48	%		1.47	%		1.98	%		2.38	%^(e)
Portfolio Turnover Rate		9,956	%		11,621	%		6,025	%		0	%^(j)

(a) Prior to May 1, 2013, the Forward Tactical Enhanced Fund Advisor Class was known as the Forward Tactical Enhanced Fund Class M.

(b) The Fund began offering Advisor Class shares on April 15, 2011.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2014, the expense limitation agreement expired and effective August 1, 2014, the Advisor agreed to limit expenses at 1.44%.

(g) Effective May 1, 2013, the annual expense limitation rate changed from 1.49% to 1.54%.

(h) Effective November 1, 2012, the annual expense limitation rate changed from 1.99% to 1.49%.

(i) Effective October 1, 2011, the annual expense limitation rate changed from 2.49% to 1.99%.

(j) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2011.


See Notes to Financial Statements		173		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	Investor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	26.17		$	25.06		$	24.73		$	26.26		$	25.69
Income/(Loss) from Operations:
Net investment loss		(0.30	)^(a)		(0.40	)^(a)		(0.39	)^(a)		(0.38	)^(a)		(0.24	)
Net realized and unrealized gain/(loss) on investments		0.81			4.20			1.57			(1.02	)		0.81

Total from Investment Operations		0.51			3.80			1.18			(1.40	)		0.57

Less Distributions:
From capital gains		(1.13	)		(2.69	)		(0.85	)		(0.13	)		—

Total Distributions		(1.13	)		(2.69	)		(0.85	)		(0.13	)		—

Net Increase/(Decrease) in Net Asset Value		(0.62	)		1.11			0.33			(1.53	)		0.57

Net Asset Value, End of Period	$	25.55		$	26.17		$	25.06		$	24.73		$	26.26

Total Return		1.98	%		15.31	%		4.81	%		(5.36	)%		2.22	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	138,946		$	164,319		$	187,066		$	251,617		$	313,875
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver		(1.17	)%		(1.48	)%		(1.49	)%		(1.44	)%		(1.05	)%
Operating expenses including reimbursement/waiver		1.74	%		1.74	%		1.72	%		1.80	%^(b)		1.80	%
Operating expenses excluding reimbursement/waiver		1.74	%		1.74	%		1.72	%		1.80	%		1.80	%
Portfolio Turnover Rate		607	%		1,797	%		574	%		387	%		762	%

(a) Per share amounts are based upon average shares outstanding.

(b) Effective May 1, 2011, the expense limitation agreement expired.


December 31, 2014		174		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	Institutional Class
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	26.56		$	25.34		$	24.91		$	26.37		$	25.71
Income/(Loss) from Operations:
Net investment loss		(0.22	)^(a)		(0.31	)^(a)		(0.30	)^(a)		(0.30	)^(a)		(0.17	)
Net realized and unrealized gain/(loss) on investments		0.83			4.26			1.58			(1.03	)		0.83

Total from Investment Operations		0.61			3.95			1.28			(1.33	)		0.66

Less Distributions:
From capital gains		(1.13	)		(2.73	)		(0.85	)		(0.13	)		—

Total Distributions		(1.13	)		(2.73	)		(0.85	)		(0.13	)		—

Net Increase/(Decrease) in Net Asset Value		(0.52	)		1.22			0.43			(1.46	)		0.66

Net Asset Value, End of Period	$	26.04		$	26.56		$	25.34		$	24.91		$	26.37

Total Return		2.33	%		15.74	%		5.14	%		(5.04	)%		2.57	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	53,957		$	62,760		$	61,602		$	70,110		$	151,485
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver		(0.82	)%		(1.13	)%		(1.14	)%		(1.14	)%		(0.70	)%
Operating expenses including reimbursement/waiver		1.39	%		1.39	%		1.38	%		1.45	%^(b)		1.44	%
Operating expenses excluding reimbursement/waiver		1.39	%		1.39	%		1.38	%		1.45	%		1.44	%
Portfolio Turnover Rate		607	%		1,797	%		574	%		387	%		762	%

(a) Per share amounts are based upon average shares outstanding.

(b) Effective May 1, 2011, the expense limitation agreement expired.


See Notes to Financial Statements		175		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	Class A
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Period Ended December 31, 2010^(a)
Net Asset Value, Beginning of Period	$	25.96		$	24.92		$	24.62		$	26.19		$	26.19
Income/(Loss) from Operations:
Net investment loss		(0.35	)^(b)		(0.43	)^(b)		(0.43	)^(b)		(0.41	)^(b)		(0.10	)
Net realized and unrealized gain/(loss) on investments		0.82			4.16			1.58			(1.03	)		0.10

Total from Investment Operations		0.47			3.73			1.15			(1.44	)		0.00

Less Distributions:
From capital gains		(1.13	)		(2.69	)		(0.85	)		(0.13	)		—

Total Distributions		(1.13	)		(2.69	)		(0.85	)		(0.13	)		—

Net Increase/(Decrease) in Net Asset Value		(0.66	)		1.04			0.30			(1.57	)		0.00

Net Asset Value, End of Period	$	25.30		$	25.96		$	24.92		$	24.62		$	26.19

Total Return^(c)		1.84	%		15.11	%		4.67	%		(5.49	)%		0.00	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	59,769		$	109,402		$	112,734		$	161,901		$	74,910
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver		(1.38	)%		(1.63	)%		(1.65	)%		(1.58	)%		(0.99	)%^(e)
Operating expenses including reimbursement/waiver		1.88	%		1.89	%		1.88	%		1.94	%^(f)		2.00	%^(e)
Operating expenses excluding reimbursement/waiver		1.88	%		1.89	%		1.88	%		1.94	%		2.00	%^(e)
Portfolio Turnover Rate		607	%		1,797	%		574	%		387	%		762	%^(g)

(a) The Fund began offering Class A shares on March 12, 2010.

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2011, the expense limitation agreement expired.

(g) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


December 31, 2014		176		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	Class C
	Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011			Year Ended December 31, 2010
Net Asset Value, Beginning of Period	$	25.42		$	24.55		$	24.39		$	26.06		$	25.65
Income/(Loss) from Operations:
Net investment loss		(0.44	)^(a)		(0.54	)^(a)		(0.53	)^(a)		(0.53	)^(a)		(0.22	)
Net realized and unrealized gain/(loss) on investments		0.78			4.10			1.54			(1.01	)		0.63

Total from Investment Operations		0.34			3.56			1.01			(1.54	)		0.41

Less Distributions:
From capital gains		(1.13	)		(2.69	)		(0.85	)		(0.13	)		—

Total Distributions		(1.13	)		(2.69	)		(0.85	)		(0.13	)		—

Net Increase/(Decrease) in Net Asset Value		(0.79	)		0.87			0.16			(1.67	)		0.41

Net Asset Value, End of Period	$	24.63		$	25.42		$	24.55		$	24.39		$	26.06

Total Return^(b)		1.36	%		14.65	%		4.14	%		(5.90	)%		1.60	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	85,792		$	96,193		$	115,442		$	139,604		$	119,659
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver		(1.76	)%		(2.09	)%		(2.09	)%		(2.04	)%		(1.57	)%
Operating expenses including reimbursement/waiver		2.34	%		2.34	%		2.32	%		2.39	%^(c)		2.41	%
Operating expenses excluding reimbursement/waiver		2.34	%		2.34	%		2.32	%		2.39	%		2.41	%
Portfolio Turnover Rate		607	%		1,797	%		574	%		387	%		762	%

(a) Per share amounts are based upon average shares outstanding.

(b) Total return does not reflect the effect of sales charges.

(c) Effective May 1, 2011, the expense limitation agreement expired.


See Notes to Financial Statements		177		December 31, 2014

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	Advisor Class
	Year Ended December 31, 2014			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012			Year Ended December 31, 2011			Period Ended December 31, 2010^(b)
Net Asset Value, Beginning of Period	$	26.57		$	25.35		$	24.92		$	26.37		$	25.58
Income/(Loss) from Operations:
Net investment loss		(0.22	)^(c)		(0.31	)^(c)		(0.29	)^(c)		(0.28	)^(c)		(0.07	)
Net realized and unrealized gain/(loss) on investments		0.82			4.25			1.57			(1.04	)		0.86

Total from Investment Operations		0.60			3.94			1.28			(1.32	)		0.79

Less Distributions:
From capital gains		(1.13	)		(2.72	)		(0.85	)		(0.13	)		—

Total Distributions		(1.13	)		(2.72	)		(0.85	)		(0.13	)		—

Net Increase/(Decrease) in Net Asset Value		(0.53	)		1.22			0.43			(1.45	)		0.79

Net Asset Value, End of Period	$	26.04		$	26.57		$	25.35		$	24.92		$	26.37

Total Return		2.30	%		15.70	%		5.13	%		(5.00	)%		3.09	%^(d)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	521,267		$	509,404		$	447,928		$	288,948		$	197,655
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver		(0.85	)%		(1.16	)%		(1.11	)%		(1.08	)%		(0.57	)%^(e)
Operating expenses including reimbursement/waiver		1.44	%		1.43	%		1.37	%		1.44	%^(f)		1.49	%^(e)
Operating expenses excluding reimbursement/waiver		1.44	%		1.43	%		1.37	%		1.44	%		1.49	%^(e)
Portfolio Turnover Rate		607	%		1,797	%		574	%		387	%		762	%^(g)

(a) Prior to May 1, 2013, the Forward Tactical Growth Fund Advisor Class was known as the Forward Tactical Growth Fund Class M.

(b) The Fund began offering Advisor Class shares on February 1, 2010.

(c) Per share amounts are based upon average shares outstanding.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2011, the expense limitation agreement expired.

(g) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


December 31, 2014		178		See Notes to Financial Statements

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	Investor Class
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012^(a)			Year Ended December 31, 2011^(a)(b)
Net Asset Value, Beginning of Period	$	21.07		$	20.21		$	27.02		$	25.00
Income/(Loss) from Operations:
Net investment loss^(c)		(0.18	)		(0.22	)		(0.23	)		(0.20	)
Net realized and unrealized gain/(loss) on investments		0.22			2.04			(6.58	)		2.61

Total from Investment Operations		0.04			1.82			(6.81	)		2.41

Less Distributions:
From investment income		—			(0.95	)		—			(0.39	)
Tax return of capital		—			(0.01	)		—			(0.00	)^(d)

Total Distributions		—			(0.96	)		—			(0.39	)

Net Increase/(Decrease) in Net Asset Value		0.04			0.86			(6.81	)		2.02

Net Asset Value, End of Period	$	21.11		$	21.07		$	20.21		$	27.02

Total Return		0.19	%		9.04	%		(25.20	)%		9.66	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	18,418		$	24,649		$	22,093		$	48,141
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(0.89	)%		(1.03	)%		(0.93	)%		(0.74	)%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.82	%		1.77	%		1.70	%^(e)		1.87	%
Operating expenses excluding reimbursement/waiver		1.82	%		1.77	%		1.70	%		1.90	%
Portfolio Turnover Rate		41	%		59	%		90	%		39	%

(a) Per share amounts and ratios to average net assets include income and expenses of the Forward Commodity Long/Short Strategy (Cayman) Fund Ltd., a wholly-owned Cayman subsidiary, exclusive of the subsidiary’s management fee.

(b) The Fund began offering Investor Class shares on January 3, 2011.

(c) Per share amounts are based upon average shares outstanding.

(d) Amount represents less than $0.01 per share.

(e) Effective May 1, 2012, the expense limitation agreement expired.


See Notes to Financial Statements		179		December 31, 2014

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	Institutional Class
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012^(a)			Year Ended December 31, 2011^(a)(b)
Net Asset Value, Beginning of Period	$	21.20		$	20.33		$	27.06		$	25.00
Income/(Loss) from Operations:
Net investment loss^(c)		(0.11	)		(0.14	)		(0.14	)		(0.12	)
Net realized and unrealized gain/(loss) on investments		0.23			2.03			(6.59	)		2.61

Total from Investment Operations		0.12			1.89			(6.73	)		2.49

Less Distributions:
From investment income		—			(1.01	)		—			(0.43	)
Tax return of capital		—			(0.01	)		—			(0.00	)^(d)

Total Distributions		—			(1.02	)		—			(0.43	)

Net Increase/(Decrease) in Net Asset Value		0.12			0.87			(6.73	)		2.06

Net Asset Value, End of Period	$	21.32		$	21.20		$	20.33		$	27.06

Total Return		0.57	%		9.36	%		(24.87	)%		9.97	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	19,801		$	29,198		$	49,467		$	66,255
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(0.54	)%		(0.68	)%		(0.57	)%		(0.46	)%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.46	%		1.41	%		1.35	%^(e)		1.52	%
Operating expenses excluding reimbursement/waiver		1.46	%		1.41	%		1.35	%		1.55	%
Portfolio Turnover Rate		41	%		59	%		90	%		39	%

(b) The Fund began offering Institutional Class shares on January 3, 2011.

(c) Per share amounts are based upon average shares outstanding.

(d) Amount represents less than $0.01 per share.

(e) Effective May 1, 2012, the expense limitation agreement expired.


December 31, 2014		180		See Notes to Financial Statements

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	Class C
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012^(a)			Period Ended December 31, 2011^(a)(b)
Net Asset Value, Beginning of Period	$	20.89		$	20.04		$	26.95		$	28.49
Income/(Loss) from Operations:
Net investment loss^(c)		(0.30	)		(0.34	)		(0.36	)		(0.25	)
Net realized and unrealized gain/(loss) on investments		0.21			2.01			(6.55	)		(0.97	)

Total from Investment Operations		(0.09	)		1.67			(6.91	)		(1.22	)

Less Distributions:
From investment income		—			(0.81	)		—			(0.32	)
Tax return of capital		—			(0.01	)		—			(0.00	)^(d)

Total Distributions		—			(0.82	)		—			(0.32	)

Net Increase/(Decrease) in Net Asset Value		(0.09	)		0.85			(6.91	)		(1.54	)

Net Asset Value, End of Period	$	20.80		$	20.89		$	20.04		$	26.95

Total Return^(e)		(0.43	)%		8.38	%		(25.61	)%		(4.32	)%^(f)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	3,521		$	4,798		$	5,540		$	5,180
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(1.49	)%		(1.62	)%		(1.52	)%		(1.40	)%^(g)
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		2.41	%		2.36	%		2.31	%^(h)		2.47	%^(g)
Operating expenses excluding reimbursement/waiver		2.41	%		2.36	%		2.31	%		2.49	%^(g)
Portfolio Turnover Rate		41	%		59	%		90	%		39	%⁽ⁱ⁾

(b) The Fund began offering Class C shares on May 4, 2011.

(c) Per share amounts are based upon average shares outstanding.

(d) Amount represents less than $0.01 per share.

(e) Total return does not reflect the effect of sales charges.

(f) Not Annualized.

(g) Annualized.

(h) Effective May 1, 2012, the expense limitation agreement expired.

(i) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2011.


See Notes to Financial Statements		181		December 31, 2014

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	Advisor Class
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013^(a)(b)			Year Ended December 31, 2012^(a)			Period Ended December 31, 2011^(a)(c)
Net Asset Value, Beginning of Period	$	21.12		$	20.27		$	26.99		$	26.66
Income/(Loss) from Operations:
Net investment loss^(d)		(0.12	)		(0.15	)		(0.13	)		(0.01	)
Net realized and unrealized gain/(loss) on investments		0.22			2.03			(6.59	)		0.70

Total from Investment Operations		0.10			1.88			(6.72	)		0.69

Less Distributions:
From investment income		—			(1.02	)		—			(0.36	)
Tax return of capital		—			(0.01	)		—			(0.00	)^(e)

Total Distributions		—			(1.03	)		—			(0.36	)

Net Increase/(Decrease) in Net Asset Value		0.10			0.85			(6.72	)		0.33

Net Asset Value, End of Period	$	21.22		$	21.12		$	20.27		$	26.99

Total Return		0.47	%		9.32	%		(25.12	)%		2.91	%^(f)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	14,343		$	50,007		$	34,297		$	1,728
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver		(0.59	)%		(0.70	)%		(0.56	)%		(0.27	)%^(g)
Operating expenses including reimbursement/waiver		1.51	%		1.44	%		1.37	%^(h)		1.52	%^(g)
Operating expenses excluding reimbursement/waiver		1.51	%		1.44	%		1.37	%		3.19	%^(g)
Portfolio Turnover Rate		41	%		59	%		90	%		39	%⁽ⁱ⁾

(b) Prior to May 1, 2013, the Forward Commodity Long/Short Strategy Fund Advisor Class was known as the Forward Commodity Long/Short Strategy Fund Class M.

(c) The Fund began offering Advisor Class shares on December 7, 2011.

(d) Per share amounts are based upon average shares outstanding.

(e) Amount represents less than $0.01 per share.

(f) Not Annualized.

(g) Annualized.

(h) Effective May 1, 2012, the expense limitation agreement expired.

(i) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2011.


December 31, 2014		182		See Notes to Financial Statements

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	Class Z
	Year Ended December 31, 2014^(a)			Year Ended December 31, 2013^(a)			Year Ended December 31, 2012^(a)			Year Ended December 31, 2011^(a)(b)
Net Asset Value, Beginning of Period	$	21.17		$	20.31		$	27.03		$	25.00
Income/(Loss) from Operations:
Net investment loss^(c)		(0.10	)		(0.13	)		(0.14	)		(0.02	)
Net realized and unrealized gain/(loss) on investments		0.24			2.03			(6.58	)		2.49

Total from Investment Operations		0.14			1.90			(6.72	)		2.47

Less Distributions:
From investment income		—			(1.03	)		—			(0.44	)
Tax return of capital		—			(0.01	)		—			(0.00	)^(d)

Total Distributions		—			(1.04	)		—			(0.44	)

Net Increase/(Decrease) in Net Asset Value		0.14			0.86			(6.72	)		2.03

Net Asset Value, End of Period	$	21.31		$	21.17		$	20.31		$	27.03

Total Return		0.66	%		9.41	%		(24.86	)%		9.89	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	3,920		$	6,626		$	5,756		$	10,798
Ratios to Average Net Assets:
Net investment loss including reimbursement/waiver/recoupment of past waived fees by advisor		(0.49	)%		(0.63	)%		(0.56	)%		(0.06	)%
Operating expenses including reimbursement/waiver/recoupment of past waived fees by advisor		1.41	%		1.36	%		1.33	%^(e)		1.44	%
Operating expenses excluding reimbursement/waiver		1.41	%		1.36	%		1.33	%		1.45	%
Portfolio Turnover Rate		41	%		59	%		90	%		39	%

(b) The Fund began offering Class Z shares on January 3, 2011.

(c) Per share amounts are based upon average shares outstanding.

(d) Amount represents less than $0.01 per share.

(e) Effective May 1, 2012, the expense limitation agreement expired.


See Notes to Financial Statements		183		December 31, 2014

Notes to Financial Statements

1. Organization

Forward Funds (the “Trust”), a Delaware statutory trust, is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). As of December 31, 2014, the Trust has 32 registered funds. This annual report describes 13 funds offered by the Trust (each a “Fund” and collectively, the “Funds”). The accompanying financial statements and financial highlights include the Forward Credit Analysis Long/Short Fund (“Credit Analysis Long/Short Fund”), the Forward Dynamic Income Fund (“Dynamic Income Fund”), the Forward EM Corporate Debt Fund (“EM Corporate Debt Fund”), the Forward Emerging Markets Fund (“Emerging Markets Fund”), the Forward Equity Long/Short Fund (“Equity Long/Short Fund”) (prior to August 1, 2014, known as the Forward Endurance Long/Short Fund), the Forward Global Dividend Fund (“Global Dividend Fund”), the Forward International Dividend Fund (“International Dividend Fund”), the Forward International Small Companies Fund (“International Small Companies Fund”), the Forward Select EM Dividend Fund (“Select EM Dividend Fund”), the Forward Small Cap Equity Fund (“Small Cap Equity Fund”), the Forward Tactical Enhanced Fund (“Tactical Enhanced Fund”), the Forward Tactical Growth Fund (“Tactical Growth Fund”), and the Forward Commodity Long/Short Strategy Fund (“Commodity Long/Short Strategy Fund”).

The Credit Analysis Long/Short Fund seeks to maximize total return (capital appreciation and income) by investing primarily in a portfolio of municipal bonds, corporate bonds, notes and other debentures, U.S. Treasury and Agency securities, sovereign debt, emerging markets debt, variable rate demand notes including tender option bonds, floating rate or zero coupon securities and nonconvertible preferred securities that are actively traded in the public markets. The Dynamic Income Fund seeks total return, with dividend and interest income being an important component of that return, while exhibiting less downside volatility than the S&P 500 Index through the use of a dividend-capture strategy and a tactical allocation strategy. The EM Corporate Debt Fund seeks to achieve high total return (capital appreciation and income) by investing primarily in a portfolio of fixed income securities of companies located in emerging market countries. The Emerging Markets Fund seeks to achieve long-term growth of capital and invests primarily in the equity securities of emerging market companies. The Equity Long/Short Fund seeks to provide long-term growth of capital by investing both long and short primarily in equity securities of U.S. and non-U.S. issuers, including issuers located in emerging and frontier markets. The Global Dividend Fund seeks to achieve high total return (capital appreciation and income) and invests primarily in equity securities of dividend paying companies. The International Dividend Fund seeks to achieve high total return (capital appreciation and income) and invests primarily in the equity

securities of dividend paying companies located outside of the U.S. The International Small Companies Fund seeks to achieve long-term growth of capital and invests in equity securities of companies with small market capitalizations located outside the U.S. The Select EM Dividend Fund seeks to achieve high total return through capital appreciation and current income and invests primarily in equity securities of dividend paying companies located in emerging market countries. The Small Cap Equity Fund seeks to achieve high total return and invests primarily in equity securities of small capitalization companies. The Tactical Enhanced Fund seeks to produce above-average, risk-adjusted returns, in any market environment, while exhibiting less downside volatility than the S&P 500 Index and invests primarily in a portfolio of instruments providing exposure, both long and short, to the U.S. and non-U.S. equity markets, including exchange-traded funds (“ETFs”), futures and options on securities, securities indices and shares of ETFs. The Tactical Growth Fund seeks to produce above-average, risk-adjusted returns, in any market environment, while exhibiting less downside volatility than the S&P 500 Index and invests primarily in a portfolio of ETFs and instruments providing exposure to U.S and non-U.S. equity securities (comprised of futures and options on securities, securities indices and shares of ETFs), which represent general asset classes, including both U.S. and overseas equity markets. The Commodity Long/Short Strategy Fund seeks long term total return and seeks exposure to the commodity markets and returns that correspond to the Credit Suisse Momentum and Volatility Enhanced Return Strategy Index.

Information presented in the accompanying Funds’ financial statements pertains to the Investor Class, Institutional Class, Class A, Class C, Advisor Class and Class Z shares offered by the Trust.

All classes of shares have identical rights to earnings, assets and voting privileges, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes.

Certain Funds invest a high percentage of their assets in specific sectors of the market. As a result, the economic and regulatory developments in a particular sector of the market, positive or negative, can have a greater impact on the relevant Fund’s net asset value and may cause its shares to fluctuate more than if the Fund did not concentrate its investments in a particular sector.

2. Significant Accounting Policies


December 31, 2014		184

Notes to Financial Statements

assumptions that affect the reported amounts and disclosures in the financial statements during the reporting period. Management believes the estimates and security valuations are appropriate; however, actual results may differ from those estimates, and the security valuations reflected in the financial statements may differ from the value the Funds ultimately realize upon sale of the securities. Each Fund is considered an investment company for financial reporting purposes under GAAP. The financial statements have been prepared as of the close of the New York Stock Exchange (“NYSE”) on December 31, 2014.

Portfolio Valuation: Portfolio securities or contracts that are listed or traded on a national securities exchange, contract market or over-the-counter market and that are freely transferable are valued at the last reported sale price or a market’s official closing price on the valuation day. If there have been no sales that day, such securities or contracts are valued at the average of the last reported bid and ask price for long positions or ask prices for short positions. If no bid or ask prices are quoted before closing, such securities or contracts are valued either at the last available sale price or at fair value in accordance with procedures established by, and under the general supervision of, the Board of Trustees.

Debt securities that have an original maturity of more than 365 days or that are credit impaired are valued on the basis of the average of the latest bid and ask price. Debt securities that have an original maturity of less than 365 days and that are not credit impaired are valued as follows: (a) maturity of 61 to 365 days, on the basis of the average of the latest bid and ask price; and (b) maturity of 60 days or less, at amortized cost.

Investments held by the Forward U.S. Government Money Fund are valued using the amortized cost method of valuation permitted in accordance with meeting certain conditions and regulations set forth under Rule 2a-7 of the 1940 Act. Under the amortized cost method, an investment is valued at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuations in general market rates of interest on the value of the investment.

The Funds’ independent pricing vendors (approved by the Board of Trustees) use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing vendors may utilize a market-based approach through which quotes from market makers are used to determine value. In instances where sufficient market activity may not exist or is limited, the pricing vendors may also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, option-adjusted spreads, credit spreads, estimated default rates, coupon rates, anticipated timing of principal repayments, underlying

collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the value.

In the event valuation information is not available from the Funds’ independent pricing vendors for a security held by a Fund, such security may be valued by alternate pricing methods, including the use of quotations obtained from dealers that make markets in such securities, or otherwise determined based on the fair value of such securities. To the extent that such securities do not trade on a valuation day and the last bid and ask prices are not available, the securities may be valued using matrix pricing or similar valuation methods from the Funds’ independent pricing vendors. Bonds that do not trade regularly tend to be less liquid, and their values may be determined based on alternate or fair valuation methods (approved by the Board of Trustees) more frequently than portfolio holdings that are more frequently traded.

If the Funds’ independent pricing vendors do not provide valuation information for swap contracts or structured notes held by a Fund, such swap contracts and structured notes may be valued by Forward Management, LLC, the Investment Advisor of the Funds (the “Advisor” or “Forward Management”) based on information from the structuring firm or issuer.

Futures, options on futures, and swap contracts that are listed or traded on a national securities exchange, commodities exchange, contract market or comparable over-the-counter market and that are freely transferable are valued at their closing settlement price on the exchange on which they are primarily traded or based upon the current settlement price for a like instrument acquired on the day on which the instrument is being valued. A settlement price may not be used if the market makes a limit move with respect to a particular commodity. Over-the-counter futures, options on futures, and swap contracts for which market quotations are readily available are valued based on quotes received from independent pricing vendors or one or more dealers that make markets in such securities. If quotes are not available from an independent pricing vendor or dealers, over-the-counter futures and options on futures contracts are valued using fair valuation methodologies.

Options on securities and options on indices are valued using the last quoted sale price as of the close of the securities or commodities exchange on which they are traded. If there has been no sale that day, such securities are valued at the average of the last reported bid and ask prices on the valuation day for long positions or ask prices for short positions. Certain investments including options may trade in the over-the-counter market and generally are valued based on quotes received from independent pricing vendors or one or more dealers that make markets in such securities.


		185		December 31, 2014

Notes to Financial Statements

Portfolio securities that are traded on foreign securities exchanges are generally valued at the last reported sale or closing price of such securities on their respective exchanges, except when an occurrence subsequent to the time a value was so established is likely to have changed such value. In such an event, the fair value of those securities is determined in good faith through consideration of other factors in accordance with procedures established by, and under the general supervision of, the Board of Trustees. Certain Funds will use a fair valuation model provided by independent pricing vendors, which is intended to reflect fair value when a security’s value is believed to have been materially affected by a valuation event that has occurred between the close of the exchange or market on which the security is traded and the close of the normal trading day of the NYSE, 4:00 p.m. Eastern Time. The Funds’ procedures set forth certain triggers that instruct when to use the fair valuation model. The value assigned to a security by the fair valuation model is a determination of fair value made under the Funds’ valuation procedures and under the supervision of the Board of Trustees. In such a case, a Fund’s value for a security may be different from the last sales price (or the latest closing price) and there is no guarantee that a fair valued security will be sold at the price at which a Fund is valuing the security.

Forward currency contracts have a market value determined by the prevailing daily foreign currency exchange rates and current foreign currency exchange forward rates. The foreign currency exchange forward rates are calculated using an automated system that estimates rates on the basis of the current day foreign currency exchange rates and forward foreign currency exchange rates supplied by a pricing vendor. Foreign exchange rates and forward foreign currency exchange rates may generally be obtained at the close of the NYSE, normally 4:00 p.m. Eastern Time.

Redeemable securities issued by open-end registered investment companies and offshore affiliated subsidiaries are valued at the investment company’s or subsidiary’s applicable net asset value, with the exception of exchange-traded open-end investment companies, which are priced as equity securities.

All other securities and other assets are carried at their fair value as determined in good faith using methodologies approved by the Board of Trustees. The valuation methodologies include: analysis of recent public transactions in securities or assets of the same class or that are highly similar; analysis of recent private transactions in securities or assets of the same class or that are highly similar; analysis of information that provides a reasonable basis for valuation, such as appraisals, analysts’ reports, and valuation models; and cost, if other valuation methods are not available.

Securities Transactions and Investment Income: Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales of

securities are determined by the identified cost method. Interest income, adjusted for accretion of discounts and amortization of premiums, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as a Fund is informed of such dividends in the exercise of reasonable diligence. If applicable, any foreign capital gains taxes are accrued, net of unrealized gains, and are payable upon the sale of such investments.

Foreign Currency Translation: The books and records of the Funds are maintained in U.S. dollars. Investment valuations and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates. Prevailing foreign exchange rates may generally be obtained at the close of the NYSE, normally 4:00 p.m. Eastern Time. The portion of realized and unrealized gains or losses on investments due to fluctuations in foreign currency exchange rates is not separately disclosed.

Debt Securities: Debt securities are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Lower rated debt securities, such as high-yield/high-risk bonds, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher rated debt securities. Debt securities with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt securities with shorter durations. The value of debt securities may fall when interest rates rise. Given the current historically low interest rate environment, the risks associated with rising interest rates are heightened and future increases in interest rates may result in periods of dramatic volatility and may negatively impact the value of debt securities. The liquidity of the market for debt securities may decrease during periods of increased volatility. Additionally, new regulations applicable to and changing business practices of broker-dealers that make markets in debt securities may result in those broker-dealers restricting their market making activities for certain debt securities, which may reduce the liquidity and increase the volatility of such debt securities.


December 31, 2014		186

Notes to Financial Statements

which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. CDOs may charge management fees and administrative expenses. For CDOs, the cash flows from the trust are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the “equity” tranche which bears the bulk of defaults from the bonds or loans in the trust and serves to protect the other, more senior tranches from default in all but the most severe circumstances. Since it is partially protected from defaults, a senior tranche from a CDO trust typically has a higher rating and lower yield than its underlying securities and can be rated investment grade. Despite the protection from the equity tranche, CDO senior tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults, as well as aversion to CDO securities as a class. The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which a Fund invests. Normally, CLOs and other CDOs are privately offered and sold, and thus, are not registered under the securities laws. As a result, investments in CDOs may be characterized by the Funds as illiquid securities; however, an active dealer market may exist for CDOs allowing a CDO to qualify for Rule 144A transactions under the Securities Act of 1933. In addition to the normal risks associated with fixed income securities (e.g., interest rate risk and default risk), CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the Funds may invest in tranches of CDOs that are subordinate to other classes; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

Commodity-Linked Notes: Certain Funds may invest in commodity-linked notes, which are derivative debt instruments whose principal and/or interest payments are linked to the price movement of a commodity, commodity index or commodity futures or option contract. The value of these notes will rise and fall in response to changes in the underlying commodity, related index or reference asset. These notes are often leveraged, increasing the volatility of each note’s value relative to the change in the underlying linked index. Commodity index-linked investments may be more volatile and less liquid than the underlying index, and their value may be affected by the performance of the commodities as well as other factors, including liquidity, quality, maturity and other economic variables. Commodity-linked notes are typically issued by a bank or other financial institution and are sometimes referred to as structured notes because the terms of the notes may be structured by the issuer and the

purchaser of the notes to accommodate the specific investment requirements of the purchaser.

Exchange-Traded Funds (“ETFs”): Certain Funds may invest in ETFs, which are funds whose shares are traded on a national securities exchange. ETFs may be based on underlying equity or fixed income securities, as well as commodities or currencies. ETFs do not sell individual shares directly to investors and only issue their shares in large blocks known as “creation units.” The investor purchasing a creation unit then sells the individual shares on a secondary market. Although similar diversification benefits may be achieved through an investment in another investment company, ETFs generally offer greater liquidity and lower expenses. Because an ETF incurs its own fees and expenses, shareholders of a Fund investing in an ETF will indirectly bear those costs. Such Funds will also incur brokerage commissions and related charges when purchasing or selling shares of an ETF. Unlike typical investment company shares, which are valued once daily, shares in an ETF may be purchased or sold on a securities exchange throughout the trading day at market prices that are generally close to the net asset value of the ETF.

Foreign Securities: Certain Funds may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. These risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers.

Government-Sponsored Enterprises (“GSEs”): Certain Funds may invest in GSEs, which are privately-owned corporations created by the U.S. Congress to provide funding and help to reduce the cost of capital for certain borrowing sectors of the economy, such as homeowners, students, and farmers. Certain GSEs (such as Freddie Mac, Fannie Mae, and FHLB), although sponsored or chartered by the U.S. Government, are not funded by the U.S. Government, and the securities they issue are not guaranteed by the U.S. Government. GSE debt is generally considered to be of high credit quality due to the implied backing of the U.S. Government, but ultimately it is the sole obligation of its issuer. For that reason, securities issued by GSEs are considered to carry somewhat greater credit risk than securities issued by the U.S. Treasury or government agencies that carry the full faith and credit of the U.S. Government.

Master Limited Partnerships (“MLPs”): Certain Funds may invest in MLPs, which are limited partnerships in which ownership units are publicly traded.


		187		December 31, 2014

Notes to Financial Statements

MLPs often own interests in properties or businesses that are related to the oil and gas industries, although MLPs may invest in other types of investments. Generally, a MLP is operated under the supervision of one or more managing general partners. Limited partners (such as a Fund investing in a MLP) are not involved in the day-to-day management of the partnership.

Investments in MLPs are generally subject to many of the risks that apply to partnerships. For example, holders of units of a MLP may have limited control and limited voting rights on matters affecting the partnership. There may be fewer corporate protections afforded investors in a MLP than investors in a corporation, and conflicts of interest may exist among unit holders and the general partner of a MLP. MLPs that concentrate in a particular industry or region are subject to risk associated with such industry or region. Investments held by MLPs may be illiquid. MLP unit prices may be more volatile than securities of larger or more broadly based companies.

Unlike most corporations, MLPs do not pay income tax but instead pass through their taxable income to unit holders who are required to report their allocable share of a MLP’s taxable income. A MLP’s distribution to unit holders may exceed the unit holder’s share of the MLP’s taxable income, and a portion of the distribution may represent a return of capital. If a Fund invests in a MLP that makes a return of capital, a portion of the Fund’s distribution to shareholders may also represent a return of capital.

Mortgage-Related and Other Asset-Backed Securities: Certain Funds may invest in mortgage-related and other asset-backed securities. A mortgage-backed security, which represents an interest in a pool of assets such as mortgage loans, will mature when all the mortgages in the pool mature or are paid. Therefore, mortgage-backed securities do not have a fixed maturity, and their expected maturities may vary when interest rates rise or fall.

Mortgage-backed securities are subject to extension risk, which is the risk that a Fund that holds mortgage-backed securities may exhibit additional volatility during periods of rising interest rates. Rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. In addition, mortgage-backed securities are subject to prepayment risk. When interest rates decline, borrowers may pay off their mortgages sooner than expected. This can reduce the returns of the Fund because a Fund will have to reinvest that money at the lower prevailing interest rates.

not have the benefit of a security interest in collateral that is comparable in quality to mortgage assets. If the issuer of an asset-backed security defaults on its payment obligations, there is the possibility that, in some cases, a Fund will be unable to possess and sell the underlying collateral and that a Fund’s recoveries on repossessed collateral may not be available to support payments on the security. In the event of a default, a Fund may suffer a loss if it cannot sell collateral quickly and receive the amount it is owed.

Real Estate Investment Trusts (“REITs”): Certain Funds may invest a portion of their assets in REITs and are subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time. There is no guarantee that the REITs held by the Funds will continue to pay dividends. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code of 1986, as amended (the “Code”), or its failure to maintain exemption from registration under the 1940 Act.

Repurchase Agreements: Certain Funds may enter into repurchase agreements (agreements to purchase securities—generally securities of the U.S. Government, its agencies or instrumentalities—subject to the seller’s agreement to repurchase them at a specified time and price) with well-established dealers or institutions that Forward Management, or the appropriate sub-advisor, has determined to be creditworthy. Repurchase agreements subject the Fund to counterparty risk, meaning that a fund could lose money if the other party fails to perform under the terms of the agreement. The Fund mitigates this risk by ensuring that the Fund’s repurchase agreements are fully collateralized by cash or U.S. government and agency securities. It is the Funds’ policy to take possession of the underlying securities, held in safekeeping at the Fund’s custodian or designated sub-custodians for tri-party repurchase agreements, as collateral and, on a daily basis, mark-to-market such securities to ensure that the market value including accrued interest is at least equal to the amount owed to the Funds under each repurchase agreement. The Funds held no repurchase agreements as of December 31, 2014.


December 31, 2014		188

Notes to Financial Statements

price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund will realize a gain if the security declines in value between those dates. There can be no assurance that securities necessary to cover a short position will be available for purchase. All short sales must be fully collateralized. The Fund maintains collateral consisting of cash, U.S. Government securities or other liquid assets in an amount at least equal to the market value of their respective short positions. The Fund is liable for any dividends or interest payable on securities while those securities are in a short position. The Fund typically intends to hold securities sold short for the short term; therefore, they are excluded from the purchases and sales of investments in Note 7 and the Fund’s Portfolio Turnover Calculation in the Financial Highlights. The Funds held no securities sold short as of December 31, 2014.

Structured Notes: Certain Funds may invest in structured notes, which are debt obligations that also contain an embedded derivative component with characteristics that adjust the obligation’s risk/return profile. Generally, the performance of a structured note will track that of the underlying debt obligation and the derivative embedded within it. The Fund has the right to receive periodic interest payments from the issuer of the structured notes at an agreed-upon interest rate and a return of the principal at the maturity date.

Structured notes are typically privately negotiated transactions between two or more parties. The Fund bears the risk that the issuer of the structured note will default or become bankrupt. The Fund also bears the risk of the loss of its principal investment and periodic interest payments expected to be received for the duration of its investment in the structured notes.

In the case of structured notes on credit default swaps, the Fund is also subject to the credit risk of the corporate credits underlying the credit default swaps. If one of the underlying corporate credits defaults, the Fund may receive the security that has defaulted, or alternatively a cash settlement may occur, and the Fund’s principal investment in the structured note would be reduced by the corresponding face value of the defaulted security.

A highly liquid secondary market may not exist for the structured notes a Fund may invest in, and there can be no assurance that a highly liquid secondary market will develop. The lack of a highly liquid secondary market may make it difficult for a Fund to sell the structured notes it holds at an acceptable price or accurately value such notes. The market for structured notes may be, or suddenly can become, illiquid. The other parties to the transaction may be the only investors with sufficient understanding of the derivative to be interested in bidding for it. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for structured

notes. In certain cases, a market price for a credit-linked security may not be available.

Fair Value Measurements: A three-tier hierarchy has been established to classify fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.

Various inputs are used in determining the value of each Fund’s investments as of the reporting period end. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:

Level 1—Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that a Fund has the ability to access at the measurement date.

Level 2—Quoted prices in markets which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability. The Board of Trustees has approved independent pricing vendors that calculate fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets.

Level 3—Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.


		189		December 31, 2014

Notes to Financial Statements

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of December 31, 2014:


Investments in Securities	Level 1		Level 2		Level 3		Total
Credit Analysis Long/Short Fund
Municipal Bonds^(a)		—	$	90,926,419		—	$	90,926,419
Short-Term Securities		—		7,117,892		—		7,117,892

Total		—	$	98,044,311		—	$	98,044,311


Dynamic Income Fund
Common Stocks^(a)	$	15,836,840		—		—	$	15,836,840
Exchange-Traded Funds		1,027,500		—		—		1,027,500
Limited Partnerships^(a)		784,350		—		—		784,350
Preferred Stocks^(a)		2,493,030		—		—		2,493,030

Total	$	20,141,720		—		—	$	20,141,720


EM Corporate Debt Fund
Common Stocks^(a)	$	1,517,066		—		—	$	1,517,066
Foreign Government Obligations^(a)		—	$	15,807,100		—		15,807,100
Asset-Backed Securities^(a)		—		17,101,275		—		17,101,275
Contingent Convertible Securities^(a)		—		5,604,344		—		5,604,344
Convertible Corporate Bonds^(a)		—		1,435,000		—		1,435,000
Corporate Bonds^(a)		—		356,884,479		—		356,884,479

Total	$	1,517,066	$	396,832,198		—	$	398,349,264


Emerging Markets Fund
Common Stocks^(a)	$	11,314,212		—		—	$	11,314,212
Preferred Stocks^(a)		146,666		—		—		146,666
Loan Participation Notes^(a)		—	$	129,382		—		129,382

Total	$	11,460,878	$	129,382		—	$	11,590,260


Equity Long/Short Fund
Common Stocks^(a)	$	2,062,233		—		—	$	2,062,233

Total	$	2,062,233		—		—	$	2,062,233


Global Dividend Fund
Common Stocks
China		—	$	197,065		—	$	197,065
France		—		717,353		—		717,353
Germany	$	355,784		225,204		—		580,988
Hong Kong		270,909		135,712		—		406,621
Indonesia		—		354,205		—		354,205
Italy		—		185,881		—		185,881
Japan		—		1,308,898		—		1,308,898
Malaysia		—		80,053		—		80,053
Netherlands		—		104,974		—		104,974
Norway		—		499,879		—		499,879
Philippines		186,151		377,987		—		564,138
Singapore		133,000		162,145		—		295,145


December 31, 2014		190

Notes to Financial Statements


Investments in Securities	Level 1		Level 2		Level 3		Total
Global Dividend Fund (continued)
Sweden		—	$	763,969		—	$	763,969
Switzerland	$	1,133,344		174,562		—		1,307,906
Taiwan		—		266,587		—		266,587
Thailand		—		326,402		—		326,402
Turkey		—		89,593		—		89,593
United Kingdom		503,990		259,334		—		763,324
Other^(a)		4,329,284		—		—		4,329,284
Limited Partnerships^(a)		158,988		—		—		158,988
Preferred Stocks^(a)		—		107,927		—		107,927
Collateralized Mortgage Obligations^(a)		—		99,608		—		99,608

Total	$	7,071,450	$	6,437,338		—	$	13,508,788


International Dividend Fund
Closed-End Funds^(a)	$	20,181		—		—	$	20,181
Common Stocks
Austria		—	$	218,585		—		218,585
China		—		7,567,494		—		7,567,494
France		—		14,727,935		—		14,727,935
Germany		10,368,851		8,967,604		—		19,336,455
Hong Kong		5,569,252		11,953,847		—		17,523,099
Indonesia		—		12,338,415		—		12,338,415
Italy		—		4,023,634		—		4,023,634
Japan		—		23,972,052		—		23,972,052
Macau		—		2,795,585		—		2,795,585
Malaysia		116,350		3,129,676		—		3,246,026
Netherlands		1,472,900		2,639,351		—		4,112,251
Norway		—		9,245,128		—		9,245,128
Philippines		3,634,006		14,336,907		—		17,970,913
Russia		2,755,631		1,480,367		—		4,235,998
Singapore		2,916,500		5,566,634		—		8,483,134
Sri Lanka		2,506,298		1,796,673		—		4,302,971
Sweden		—		15,962,445		—		15,962,445
Switzerland		17,018,287		10,196,045		—		27,214,332
Taiwan		—		4,978,240		—		4,978,240
Thailand		—		6,102,562		—		6,102,562
Turkey		—		5,715,381		—		5,715,381
United Kingdom		13,122,397		8,486,642		—		21,609,039
Vietnam		2,211,358		2,790,374		—		5,001,732
Other^(a)		36,106,770		—		—		36,106,770
Loan Participation Notes^(a)		—		15,070,309		—		15,070,309
Preferred Stocks
Germany		—		4,682,285		—		4,682,285
United States		398,772		—		—		398,772
Collateralized Mortgage Obligations^(a)		—		3,404,731		—		3,404,731
Corporate Bonds^(a)		—		10,348,244		—		10,348,244

Total	$	98,217,553	$	212,497,145		—	$	310,714,698


		191		December 31, 2014

Notes to Financial Statements


Investments in Securities	Level 1		Level 2		Level 3		Total
International Small Companies Fund
Common Stocks
Australia	$	1,152,377	$	9,791,341		—	$	10,943,718
Belgium		—		4,167,116		—		4,167,116
Denmark		—		3,915,816		—		3,915,816
Finland		—		2,458,927		—		2,458,927
France		—		11,684,826		—		11,684,826
Germany		—		14,465,042		—		14,465,042
Hong Kong		—		5,426,564		—		5,426,564
Ireland		—		1,677,547		—		1,677,547
Italy		—		4,613,960		—		4,613,960
Japan		—		51,360,626		—		51,360,626
Netherlands		—		1,928,186		—		1,928,186
New Zealand		—		2,410,895		—		2,410,895
Portugal		—		1,801,858		—		1,801,858
Singapore		524,799		3,266,465		—		3,791,264
Spain		—		1,481,580		—		1,481,580
Sweden		—		1,028,446		—		1,028,446
Switzerland		983,178		1,778,260		—		2,761,438
United Kingdom		1,727,805		29,636,779		—		31,364,584
Preferred Stocks^(a)		—		2,824,216		—		2,824,216

Total	$	4,388,159	$	155,718,450		—	$	160,106,609


Select EM Dividend Fund
Closed-End Funds^(a)	$	1,744		—		—	$	1,744
Common Stocks^(a)		47,037,386		—		—		47,037,386
Loan Participation Notes^(a)		—	$	5,205,043		—		5,205,043
Preferred Stocks^(a)		649,968		—		—		649,968
Collateralized Mortgage Obligations^(a)		—		1,181,855		—		1,181,855
Corporate Bonds^(a)		—		963,807		—		963,807

Total	$	47,689,098	$	7,350,705		—	$	55,039,803


Small Cap Equity Fund
Common Stocks^(a)	$	26,866,463		—		—	$	26,866,463
Affiliated Investment Companies		350,051		—		—		350,051

Total	$	27,216,514		—		—	$	27,216,514


Tactical Enhanced Fund
Exchange-Traded Funds	$	16,070,100		—		—	$	16,070,100

Total	$	16,070,100		—		—	$	16,070,100


Tactical Growth Fund
Exchange-Traded Funds	$	655,850,168		—		—	$	655,850,168
Options Purchased		4,537,500		—		—		4,537,500

Total	$	660,387,668		—		—	$	660,387,668


December 31, 2014		192

Notes to Financial Statements


Investments in Securities	Level 1		Level 2		Level 3		Total
Commodity Long/Short Strategy Fund
Agency Pass-Through Securities^(a)		—	$	9,667,460		—	$	9,667,460
Asset-Backed Securities		—		1,300,349		—		1,300,349
Collateralized Mortgage Obligations^(a)		—		4,725,024		—		4,725,024
Corporate Bonds^(a)		—		10,588,335		—		10,588,335
Municipal Bonds		—		8,018,478		—		8,018,478
U.S. Treasury Bonds & Notes		—		8,018,924		—		8,018,924

Total		—	$	42,318,570		—	$	42,318,570

(a) For detailed descriptions of sector, industry, country or state, see the accompanying Portfolio of Investments.


Other Financial Instruments^(a)	Level 1			Level 2			Level 3		Total
Credit Analysis Long/Short Fund
Liabilities
Futures Contracts	$	(298,722	)		—			—	$	(298,722	)

Total	$	(298,722	)		—			—	$	(298,722	)

Dynamic Income Fund
Liabilities
Futures Contracts	$	(3,297	)		—			—	$	(3,297	)

Total	$	(3,297	)		—			—	$	(3,297	)

EM Corporate Debt Fund
Liabilities
Credit Default Swap Contracts		—		$	(278,148	)		—	$	(278,148	)

Total		—		$	(278,148	)		—	$	(278,148	)

Equity Long/Short Fund
Liabilities
Futures Contracts	$	(24,788	)		—			—	$	(24,788	)

Total	$	(24,788	)		—			—	$	(24,788	)

International Dividend Fund
Liabilities
Futures Contracts	$	(36,934	)		—			—	$	(36,934	)

Total	$	(36,934	)		—			—	$	(36,934	)

Small Cap Equity Fund
Assets
Futures Contracts	$	20,074			—			—	$	20,074

Total	$	20,074			—			—	$	20,074

Tactical Growth Fund
Liabilities
Options Written	$	(1,687,500	)		—			—	$	(1,687,500	)

Total	$	(1,687,500	)		—			—	$	(1,687,500	)

Commodity Long/Short Strategy Fund
Assets
Total Return Swap Contracts		—		$	5,042,114			—	$	5,042,114
Liabilities
Total Return Swap Contracts		—			(762,092	)		—		(762,092	)

Total		—		$	4,280,022			—	$	4,280,022

(a) Other financial instruments are derivative instruments reflected in the schedules to the Portfolio of Investments, such as swap contracts, options written and futures contracts.


		193		December 31, 2014

Notes to Financial Statements

The Funds recognize transfers between levels as of the beginning of the annual period in which the transfer occurred. As of December 31, 2014 the only transfers of securities from Level 1 to Level 2 were for the Global Dividend Fund, the International Dividend Fund, and the International Small Companies Fund due to the utilization of a fair valuation model provided by the Funds’ independent pricing vendor. The Funds’ procedures set forth certain triggers which instruct when to use the fair valuation model, and the value assigned to a security by the fair valuation model is a determination of fair value made under the Funds’ valuation procedures and under the supervision of the Board of Trustees. No other Funds had transfers from Level and Level 2 securities.

As of December 31, 2014, the Funds did not have transfers between the fair value levels designated in the preceding table and unobservable inputs (Level 3) used in determining fair value. Therefore, a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value is not applicable.

Derivative Instruments and Hedging Activities: The following discloses the Funds’ use of derivative instruments and hedging activities.

The Funds’ investment objectives not only permit the Funds to purchase investment securities but also allow certain Funds to enter into various types of derivative contracts, including, but not limited to, futures contracts, swap contracts, forward currency contracts, and purchased and written options. In doing so, the Funds will employ strategies in differing combinations to permit them to increase, decrease, or change the level or types of exposure to market factors. Central to those strategies are features inherent to derivatives that make them more attractive for this purpose than equity or debt securities: they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Funds to pursue their objectives more quickly and efficiently than if they were to make direct purchases or sales of securities capable of affecting a similar response to market factors.

Market Risk Factors: In pursuit of their investment objectives, certain Funds may use derivatives that increase or decrease a Fund’s exposure to the following market risk factors:

Credit Risk: Credit risk is the risk an issuer will be unable to make principal and interest payments when due, or will default on its obligations.

Equity Risk: Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Foreign Exchange Rate Risk: Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the value of the foreign currency denominated security will increase as the dollar depreciates against the currency.

Interest Rate Risk: Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the market value of already issued fixed-income investments, and a decline in general interest rates will tend to increase the value of such investments. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

Risk of Investing in Derivatives: The Funds’ use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Funds are using derivatives to decrease or hedge exposures to market risk factors for securities held by the Funds, there are also risks that those derivatives may not perform as expected, resulting in losses for the combined or hedged positions.

Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Funds to increase their market value exposure relative to their net assets and can substantially increase the volatility of the Funds’ performance.

Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Funds. Typically, the associated risks are not the risks that the Funds are attempting to increase or decrease exposure to, per their investment objectives, but are the additional risks from investing in derivatives.

Examples of these associated risks are liquidity risk, which is the risk that the Funds will not be able to settle the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Funds. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Forward Currency Contracts: Certain Funds invest in forward currency contracts to reduce the risks of fluctuating exchange rates and to generate returns uncorrelated to the other strategies employed. A forward currency


December 31, 2014		194

Notes to Financial Statements

contract involves an obligation to purchase or sell a specific currency at a future date, which may be a fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. By entering into a forward currency contract, the Fund “locks in” the exchange rate between the currency it will deliver and the currency it will receive for the duration of the contract. As a result, the Fund reduces its exposure to changes in the value of the currency it will deliver and increases its exposure to changes in the value of the currency it will exchange into. The Fund may enter into these contracts for the purpose of hedging against foreign exchange risk arising from the Fund’s investment or anticipated investment in securities denominated in foreign currencies. The Fund also may enter into these contracts for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. The Fund may use one currency (or a basket of currencies) to hedge against adverse changes in the value of another currency (or a basket of currencies) when exchange rates between the two currencies are positively correlated. The unrealized appreciation/(depreciation) is reported in the Statement of Assets and Liabilities as receivable or payable and in the Statement of Operations within the change in unrealized appreciation/ (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain/ (loss) in the Statement of Operations. As of December 31, 2014, the Funds held no forward currency contracts.

Futures: Certain Funds may invest in futures contracts in accordance with their investment objectives. Each Fund does so for a variety of reasons, including for cash management, hedging or non-hedging purposes in an attempt to achieve investment returns consistent with the Fund’s investment objective. A futures contract provides for the future sale by one party and purchase by another party of a specified quantity of the security or other financial instrument at a specified price and time. A futures contract on an index is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract was originally written. Futures transactions may result in losses in excess of the amount invested in the futures contract. There can be no guarantee that there will be a correlation between price movements in the hedging vehicle and in the portfolio securities being hedged. An incorrect correlation could result in a loss on both the hedged securities in a Fund and the hedging vehicle so that the portfolio return might have been greater had hedging not been attempted. There can be no assurance that a liquid market will exist at a time when a Fund seeks to close out a futures contract or a futures option position. Lack of a liquid market for any reason may prevent a Fund from liquidating an unfavorable

position, and the Fund would remain obligated to meet margin requirements until the position is closed. In addition, a Fund could be exposed to risk if the counterparties to the contracts are unable to meet the terms of their contracts. With exchange-traded futures, there is minimal counterparty credit risk to the Funds since futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default.

When a purchase or sale of a futures contract is made by a Fund, the Fund is required to deposit with its custodian (or broker, if legally permitted) a specified amount of liquid assets (“initial margin”). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract that is returned to a Fund upon termination of the contract, assuming all contractual obligations have been satisfied. Each day a Fund may pay or receive cash, called “variation margin,” equal to the daily change in value of the futures contract. Such payments or receipts are recorded for financial statement purposes as unrealized gains or losses by a Fund. Variation margin does not represent a borrowing or loan by a Fund but is instead a settlement between a Fund and the broker of the amount one would owe the other if the futures contract expired. When the contract is closed, a Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

As of December 31, 2014, the Funds had outstanding unrealized gain/(loss) on futures contracts as follows:


Fund	Unrealized Gain/(Loss) on Futures Contracts at 12/31/14
Credit Analysis Long/Short Fund	$	(298,722	)
Dynamic Income Fund		(3,297	)
Equity Long/Short Fund		(24,788	)
International Dividend Fund		(36,934	)
Small Cap Equity Fund		20,074

No other Funds held futures contracts as of December 31, 2014.


		195		December 31, 2014

Notes to Financial Statements

that expire unexercised are treated by the Fund on the expiration date as realized gains or losses. The difference between the premium and the amount paid or received on affecting a closing purchase or sale transaction, including brokerage commissions, is also treated as a realized gain or loss. If an option is exercised, the premium paid or received is added to the cost of the purchase, or proceeds from the sale, in determining whether the Fund has realized a gain or loss on investment transactions. Risks from entering into option transactions arise from the potential inability of counterparties to meet the terms of the contracts, the potential inability to enter into closing transactions because of an illiquid secondary market and unexpected movements in security values. As of December 31, 2014, the Tactical Growth Fund held purchased options with a market value of $4,537,500 and written options with a market value of $(1,687,500). No other Funds held purchased or written options as of December 31, 2014.

Written option activity for the year ended December 31, 2014 was as follows:


	Written Call Options						Written Put Options
Equity Long/Short Fund	Number of Contracts			Contract Premium			Number of Contracts			Contract Premium
Outstanding, at beginning of year December 31, 2013		(570	)	$	(53,759	)		—		$	—

Options written		(397	)		(84,175	)		(172	)		(12,971	)
Options exercised or closed		887			124,256			12			10,337
Options expired		80			13,678			160			2,634

Outstanding, December 31, 2014		—		$	—			—		$	—


	Written Put Options
Tactical Growth Fund	Number of Contracts			Contract Premium
Outstanding, at beginning of year December 31, 2013		—		$	—

Options written		(2,500	)		(493,750	)
Options exercised or closed		—			—
Options expired		—			—

Outstanding, December 31, 2014		(2,500	)	$	(493,750	)

Swaps: Certain Funds may enter into interest rate, index, equity, currency exchange rate, total return and credit default swap agreements, as well as purchase and sell options to enter into such swap agreements, for hedging and non-hedging purposes. These transactions would be entered into in an attempt to obtain a particular return when it is considered desirable to do so, possibly at a lower cost to a Fund than if the Fund had invested directly in the asset that yielded the desired return. Swap agreements may be executed in a multilateral or other trade facility program, such as a registered exchange (“centrally cleared swaps”) or may be privately negotiated in the over-the-counter market. The duration of a swap agreement typically ranges from a few weeks to more than one year. In a standard swap transaction, two parties

agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount” (i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities representing a particular index). In a centrally cleared swap, immediately following execution of the swap agreement, the swap agreement is novated to a central counterparty (the “CCP”) and the Fund’s counterparty on the swap agreement becomes the CCP.

Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or “floor”; and interest rate collars, under which a party sells a cap and purchases a floor, or vice versa, in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.

Credit default swaps are a type of swap agreement in which the protection “buyer” is generally obligated to pay the protection “seller” an upfront and/ or a periodic stream of payments over the term of the contract provided that no credit event, such as a default, on a reference obligation has occurred. The credit default swap agreement may have as reference obligations one or more securities that are not currently held by a Fund. If a credit event occurs, the seller generally must pay the buyer the “par value” (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount if the swap is cash settled. A Fund may be either the buyer or seller in the transaction. If a Fund is a buyer and no credit event occurs, the Fund may recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer generally may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. As a seller, a Fund generally receives an upfront payment and/or a fixed rate of income throughout the term of the swap provided that there is no credit event. As the seller, a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. Credit default swap agreements involve greater risks than if a Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risk. A Fund


December 31, 2014		196

Notes to Financial Statements

will enter into credit default swap agreements only with counterparties that meet certain standards of creditworthiness or that are centrally cleared.

Total return swap agreements are contracts in which one party agrees to make periodic payments based on the change in market value of underlying assets, which may include a specified security, basket of securities, defined portfolios of bonds, loans and mortgages, or securities indexes during the specified period in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets or indices. Total return swap agreements may be used to obtain exposure to a security or market index without owning or taking physical custody of such security or component securities of a market index. Total return swap agreements may effectively add leverage to a Fund’s portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap. Total return swaps are a mechanism for the user to accept the economic benefits of asset ownership without utilizing the balance sheet. The other leg of the swap, usually the London Interbank Offered Rate (LIBOR), is spread to reflect the non-balance sheet nature of the product. Total return swaps can be designed with any underlying asset agreed upon between two parties. Typically no notional amounts are exchanged with total return swaps. Total return swap agreements entail the risk that a party will default on its payment obligations to a Fund thereunder. Swap agreements also entail the risk that a Fund will not be able to meet its obligation to the counterparty. Generally, a Fund will enter into total return swaps on a net basis (i.e., the two payment streams are netted out with the Fund receiving or paying, as the case may be, only the net amount of the two payments).

Most swap agreements entered into by a Fund calculate the obligations of the parties to the agreement on a “net basis.” Consequently, a Fund’s current obligations (or rights) under a swap agreement will generally be equal only to the net present value of amounts to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). A Fund’s current obligations under a swap agreement will be accrued daily (offset against amounts owed to the Fund), and any accrued but unpaid net amounts owed to a swap counterparty will be covered in accordance with applicable regulatory requirements to limit any potential leveraging of a Fund’s portfolio. Any net amount accrued but not yet paid to a Fund by the counterparty under a swap agreement (i.e., the Fund’s current rights under the swap agreement) is recorded as unrealized appreciation until the amount is paid to the Fund. The Fund’s maximum risk of loss from counterparty credit risk is generally limited to the net payment to be received by the Fund and/or the termination value at the end of the contract. Obligations under swap agreements

so covered will not be construed to be “senior securities” for purposes of the Funds’ investment restriction concerning senior securities.

Whether a Fund’s use of swap agreements will be successful in furthering its investment objective will depend on Forward Management’s ability to correctly predict whether certain types of investments are likely to produce greater returns than other investments. Swap agreements that cannot be terminated or sold within seven days may be considered to be illiquid investments. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. Although centrally cleared swaps typically present less counterparty risk than non-centrally cleared swaps, a Fund that has entered into centrally cleared swaps is subject to the risk of the failure of the CCP. A Fund will enter into swap agreements only with counterparties that meet certain standards for creditworthiness (generally, such counterparties would have to be eligible counterparties under the terms of the Fund’s repurchase agreement guidelines) or that are centrally cleared. Certain restrictions imposed on the Funds by the Code may limit a Fund’s ability to use swap agreements. It is possible that developments in the swap market, including additional government regulation, could adversely affect a Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreements”) govern over-the-counter financial derivative transactions entered into by a Fund and those counterparties. The ISDA Master Agreements maintain provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements.

During the year ended December 31, 2014, the Credit Analysis Long/Short Fund, the EM Corporate Debt Fund, and the Commodity Long/Short Strategy Fund invested in swap agreements consistent with the Funds’ investment strategies to gain exposure to certain markets or indices. As of December 31, 2014, the EM Corporate Debt Fund and the Commodity Long/Short Strategy Fund held swap agreements and have disclosed the details in the Portfolio of Investments. No other Funds held swap agreements as of December 31, 2014.

The values in the following tables exclude the effects of cash collateral received or posted pursuant to these derivative contracts, and therefore are not necessarily representative of the Funds’ net exposure. Cash held as collateral is in a segregated account with the Funds’ custodian and is reflected in the Statement of Assets and Liabilities.


		197		December 31, 2014

Notes to Financial Statements

Balance Sheet – Fair Value of Derivative Instruments as of December 31, 2014^(a):


Derivatives not Accounted for as Hedging Instruments	Asset Derivatives Balance Sheet Location	Fair Value		Liabilities Derivatives Balance Sheet Location	Fair Value
Credit Analysis Long/Short Fund
Interest Rate Contracts (Futures Contracts)			—	Variation margin payable	$	298,722	^(b)

Total			—		$	298,722

Dynamic Income Fund
Equity Contracts (Futures Contracts)			—	Variation margin payable	$	3,297

Total			—		$	3,297

EM Corporate Debt Fund
Credit Contracts (Credit Default Swaps)			—	Swap premiums received	$	118,193
Credit Contracts (Credit Default Swaps)			—	Unrealized loss on swap contracts		278,148

Total			—		$	396,341

Equity Long/Short Fund
Equity Contracts (Futures Contracts)			—	Variation margin payable	$	24,788

Total			—		$	24,788

International Dividend Fund
Equity Contracts (Futures Contracts)			—	Variation margin payable	$	36,934

Total			—		$	36,934

Small Cap Equity Fund
Equity Contracts (Futures Contracts)	Variation margin receivable	$	20,074			—

Total		$	20,074			—

Tactical Growth Fund
Equity Contracts (Options Purchased)	Investments, at value	$	4,537,500			—
Equity Contracts (Options Written)			—	Options written, at value	$	1,687,500

Total		$	4,537,500		$	1,687,500

Commodity Long/Short Strategy Fund
Equity Contracts (Total Return Swaps)	Unrealized gain on swap contracts	$	5,042,114	Unrealized loss on swap contracts	$	762,092

Total		$	5,042,114		$	762,092

(a) For open derivative instruments as of December 31, 2014, see the Portfolio of Investments. At December 31, 2014, the percentage of the fair value of derivatives to net assets (“derivative activity”) for EM Corporate Debt Fund and Commodity Long/Short Strategy Fund was 2.72% less and 4.93% higher, respectively, than the Funds’ average month end derivative activity during the year. The Portfolio of Investments is representative of the derivative activity for the year ended December 31, 2014 for the other Funds.

(b) Includes the cumulative appreciation/depreciation of futures contracts as reported in the Portfolio of Investments. Only the current day’s net variation margin is reported within the Statement of Assets and Liabilities.

The gains/(losses) in the following table are included in “Net realized gain/(loss)” or “Net change in unrealized gain/(loss)” on the Statement of Operations.


December 31, 2014		198

Notes to Financial Statements

The Effect of Derivative Instruments on the Statement of Operations for the year ended December 31, 2014:


Derivatives not Accounted for as Hedging Instruments	Location of Gains/(Loss) on Derivatives Recognized in Income	Realized Gain/(Loss) on Derivatives Recognized in Income			Change in Unrealized Gain/(Loss) on Derivatives Recognized in Income
Credit Analysis Long/Short Fund
Interest Rate Contracts (Futures Contracts)	Net realized loss on futures contracts/Net change in unrealized depreciation on futures contracts	$	(1,024,852	)	$	(298,722	)
Credit Contracts (Credit Default Swaps)	Net realized gain on swap contracts		16,947			—

Total		$	(1,007,905	)	$	(298,722	)

Dynamic Income Fund
Equity Contracts (Futures Contracts)	Net realized loss on futures contracts/Net change in unrealized depreciation on futures contracts	$	(123,738	)	$	(3,508	)

Total		$	(123,738	)	$	(3,508	)

EM Corporate Debt Fund
Credit Contracts (Credit Default Swaps)	Net realized gain on swap contracts/Net change in unrealized depreciation on swap contracts	$	411,591		$	(278,148	)
Foreign Exchange Contracts (Forward Currency Contracts)	Net realized loss on foreign currency		(409,647	)		—
Interest Rate Contracts (Futures Contracts)	Net realized loss on futures contracts/ Net change in unrealized depreciation on futures contracts		(579,594	)		(301,071	)

Total		$	(577,650	)	$	(579,219	)

Emerging Markets Fund
Equity Contracts (Futures Contracts)	Net realized gain on futures contracts/Net change in unrealized depreciation on futures contracts	$	17,658		$	(2,796	)

Total		$	17,658		$	(2,796	)

Equity Long/Short Fund
Equity Contracts (Options Purchased)	Net realized gain on investments/Net change in unrealized depreciation on investments	$	(37,344	)	$	(19,629	)
Equity Contracts (Options Written)	Net realized loss on written option contracts/Net change in unrealized depreciation on written option contracts		(13,403	)		(2,139	)
Equity Contracts (Futures Contracts)	Net realized gain on futures contracts/Net change in unrealized depreciation on futures contracts		37,332			(24,788	)

Total		$	(13,415	)	$	(46,556	)

International Dividend Fund
Equity Contracts (Futures Contracts)	Net realized gain/(loss) on futures contracts/Net change in unrealized depreciation on futures contracts	$	(267,134	)	$	(36,934	)

Total		$	(267,134	)	$	(36,934	)

Select EM Dividend Fund
Equity Contracts (Futures Contracts)	Net realized gain/(loss) on futures contracts	$	1,534,726			—

Total		$	1,534,726			—


		199		December 31, 2014

Notes to Financial Statements


Derivatives not Accounted for as Hedging Instruments	Location of Gains/(Loss) on Derivatives Recognized in Income	Realized Gain/(Loss) on Derivatives Recognized in Income			Change in Unrealized Gain/(Loss) on Derivatives Recognized in Income
Small Cap Equity Fund
Equity Contracts (Futures Contracts)	Net realized gain/(loss) on futures contracts/Net change in unrealized depreciation on futures contracts	$	251,867		$	(40,975	)

Total		$	251,867		$	(40,975	)

Tactical Enhanced Fund
Equity Contracts (Futures Contracts)	Net realized gain/(loss) on futures contracts	$	(409,557	)		—

Total		$	(409,557	)		—

Tactical Growth Fund
Equity Contracts (Options Purchased)	Net realized gain/(loss) on investments/Net change in unrealized appreciation/(depreciation) on investments	$	(5,706,865	)	$	3,206,250
Equity Contracts (Options Written)	Net change in unrealized depreciation on written options contracts		—			(1,193,750	)
Equity Contracts (Futures Contracts)	Net realized gain/(loss) on futures contracts/Net change in unrealized depreciation on futures contracts		37,392,307			(12,540,059	)

Total		$	31,685,442		$	(10,527,559	)

Commodity Long/Short Strategy Fund
Equity Contracts (Total Return Swaps)	Net realized loss on swap contracts/Net change in unrealized appreciation on swap contracts	$	(4,590,433	)	$	2,849,949

Total		$	(4,590,433	)	$	2,849,949

Certain derivative contracts and repurchase agreements are executed under either standardized netting agreements or, for exchange-traded derivatives, the relevant contracts for a particular exchange which contain enforceable netting provisions. A derivative netting arrangement creates an enforceable right of set-off that becomes effective, and affects the realization of settlement on individual assets, liabilities and collateral amounts, only following a specified event of default or early termination. Default events may include the failure to make payments or deliver securities timely, material adverse changes in financial condition or insolvency, the breach of minimum regulatory capital requirements, or loss of license, charter or other legal authorization necessary to perform under the contract.


December 31, 2014		200

Notes to Financial Statements

The following table presents financial instruments that are subject to enforceable netting arrangements or other similar agreements as of December 31, 2014:

Offsetting of Financial Assets and Derivative Assets^(a)


	Gross Amounts of Recognized Assets		Gross Amounts Offset In the Statement of Assets and Liabilities		Net Amounts Presented in the Statement of Assets and Liabilities		Gross Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Recognized Assets						Financial Instruments^(b)		Cash Collateral Received^(b)			Net Amount
Commodity Long/Short Strategy Fund
Equity Contracts (Total Return Swaps)	$	5,042,114	$	—	$	5,042,114	$	—	$	—		$	5,042,114

Total	$	5,042,114	$	—	$	5,042,114	$	—	$	—		$	5,042,114


Offsetting of Financial Liabilities and Derivative Liabilities
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset In the Statement of Assets and Liabilities		Net Amounts Presented in the Statement of Assets and Liabilities		Gross Amounts Not Offset in the Statement of Assets and Liabilities
	Gross Amounts of Recognized Liabilities						Financial Instruments^(b)		Cash Collateral Pledged^(b)			Net Amount
EM Corporate Debt Fund
Credit Contracts (Credit Default Swaps)	$	278,148	$	—	$	278,148	$	—	$	(278,148	)	$	—

Total	$	278,148	$	—	$	278,148	$	—	$	(278,148	)	$	—

Commodity Long/Short Strategy Fund
Equity Contracts (Total Return Swaps)	$	762,092	$	—	$	762,092	$	—	$	(762,092	)	$	—

Total	$	762,092	$	—	$	762,092	$	—	$	(762,092	)	$	—

(a) For additional information about enforceable netting arrangements or similar agreements and associated collateral, see disclosures presented in Note 2 of the Notes to the Financial Statements.

(b) These amounts are limited to the derivative asset/liability balance and, accordingly, do not include excess collateral received/pledged which is disclosed in the Portfolio of Investments for financial instruments and in the Statement of Assets and Liabilities for cash collateral.

Warrants: Certain Funds may invest in warrants. A Fund may purchase warrants issued by domestic and foreign companies to purchase newly created equity securities consisting of common and preferred stock. Warrants are securities that give the holder the right, but not the obligation, to purchase equity issues of the company issuing the warrants, or a related company, at a fixed price either on a certain date or during a set period. The equity security underlying a warrant is authorized at the time the warrant is issued or is issued together with the warrant.

Investing in warrants can provide a greater potential for profit or loss than an equivalent investment in the underlying security; and, thus, can be a speculative investment. At the time of issue, the cost of a warrant is substantially less than the cost of the underlying security itself, and price movements in the underlying security are generally magnified in the price movements of the warrant.

in the dividend or other policies of the company whose equity underlies the warrant, a change in the perception as to the future price of the underlying security, or any combination thereof. Warrants generally pay no dividends and confer no voting or other rights other than to purchase the underlying security. As of December 31, 2014, the Funds held no warrants.


		201		December 31, 2014

Notes to Financial Statements

Cash Management Transactions: The Funds may hold cash balances in bank demand deposit accounts with the Funds’ custodian, Citibank, N.A. (“Citibank”). Such amounts are readily accessible to purchase investments or pay Fund expenses. The Funds consider liquid assets deposited in a bank demand deposit account to be cash equivalents. Cash and cash equivalents are valued at cost plus any accrued interest. The Funds may maintain demand deposit accounts that have an aggregate value in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits. As a result, the Funds may be exposed to credit risk in the event of insolvency or other failure of Citibank to meet its obligations.

Commodity Futures Trading Commission Regulation: The Commodity Long/Short Fund and the Fund’s wholly-owned subsidiary, the Forward Commodity Long/Short (Cayman) Fund Ltd., is subject to regulation as a commodity pool under the Commodity Exchange Act pursuant to recent rule changes by the Commodity Futures Trading Commission (the “CFTC”). The Advisor has registered with the CFTC as a Commodity Pool Operator and is a member of the National Futures Association. As a result, additional CFTC-mandated disclosure, reporting and recordkeeping obligations have begun to apply with respect to this Fund. Compliance with the CFTC’s ongoing regulatory compliance requirements could increase the Fund’s expenses, adversely affecting its total return.

Leverage: The Dynamic Income Fund, the EM Corporate Debt Fund, the International Dividend Fund and the Select EM Dividend Fund may purchase securities with borrowed money, including bank overdrafts (a form of leverage). The Funds may borrow amounts up to one-third of the value of its assets. Leverage exaggerates the effect on the net asset value of any increase or decrease in the market value of the Funds’ portfolio securities. These borrowings will be subject to interest costs, which may or may not be recovered by appreciation of the securities purchased. In certain cases, interest costs may exceed the return received on the securities purchased.

The Dynamic Income Fund, the EM Corporate Debt Fund, the International Dividend Fund and the Select EM Dividend Fund maintain separate lines of credit with BNP Paribas (acting through its New York Branch). The Funds are charged interest of 1.20% above the one-month LIBOR rate for borrowing under these agreements.

The International Dividend Fund and the Select EM Dividend Fund maintained separate lines of credit with Bank of America Merrill Lynch which were terminated on June 27, 2014. The Funds were charged interest of 1.00% above the one-month LIBOR rate for borrowing under the agreements and were charged a commitment fee on the average daily undrawn balance of the line of credit at the rate of 0.45% per annum. The

International Dividend Fund and Select EM Dividend Fund may seek to establish lines of credit with other lenders.

The Dynamic Income Fund did not borrow under its line of credit agreement during the year ended December 31, 2014. The EM Corporate Debt Fund, the International Dividend Fund and the Select EM Dividend Fund have each pledged a portion of its investment securities as the collateral for their lines of credit. As of December 31, 2014, the value of the investment securities pledged as collateral and the borrowed amounts on the lines of credit were as follows:


Fund	Collateral Pledged		Borrowed Amounts
EM Corporate Debt Fund	$	146,076,620	$	20,852,164
International Dividend Fund		56,561,508		20,061,149
Select EM Dividend Fund		16,014,845		7,555,269

The average interest rate charged and the average outstanding loan payable for the year ended December 31, 2014 were as follows:


Fund	Average Interest Rate			Average Outstanding Loan Payable
EM Corporate Debt Fund		1.355	%	$	43,885,730
International Dividend Fund		1.219	%		30,218,198
Select EM Dividend Fund		1.235	%		8,238,702

Investment in the Forward U.S. Government Money Fund: The Funds are permitted to invest daily available cash balances in an affiliated money market fund. The Funds may invest the available cash in Institutional Class shares of the Forward U.S. Government Money Fund (“U.S. Government Money Fund”) to seek current income while preserving liquidity. The U.S. Government Money Fund is a registered open-end management investment company, regulated as a money market fund under the 1940 Act. When applicable, the Funds’ investment in the U.S. Government Money Fund is included in the Portfolio of Investments. Shares of the U.S. Government Money Fund are valued at their net asset value per share. As a shareholder, the Funds are indirectly subject to the proportional share of the U.S. Government Money Fund Institutional Class expenses, including its management fee. The Advisor will waive fees and/or reimburse expenses in an amount equal to the indirect management fees incurred through the Funds’ investment in the U.S. Government Money Fund.


December 31, 2014		202

Notes to Financial Statements

The Small Cap Equity Fund invested in Institutional Class shares of the U.S. Government Money Fund during the year ended December 31, 2014, as follows:


Fund	Beginning Shares		Gross Purchases		Gross Sales		Ending Shares		Value 12/31/14		Income
Small Cap Equity Fund^(a)		350,051		—		—		350,051	$	350,051	$	34

(a) Effective December 15, 2014, Class Z shares of the U.S. Government Money Fund were converted into Institutional Class shares of the Fund.

During the year ended December 31, 2014, the Advisor waived fees and/or reimbursed the Small Cap Equity Fund for the U.S. Government Money Fund management fees in the amount of $280.

The U.S. Government Money Fund’s December 31, 2014 Annual Report may be obtained at www.forwardinvesting.com.

Investments in a Wholly-Owned Subsidiary: The Commodity Long/Short Strategy Fund seeks exposure to the commodity markets primarily through investments in commodity-linked derivative instruments, including commodity index-linked notes (sometimes referred to as “structured notes”), swap agreements, commodity options, futures and options on futures, and through investments in the Forward Commodity Long/Short Strategy (Cayman) Fund Ltd., a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the “Subsidiary”). Forward Management acts as Investment Advisor to the Fund and to the Subsidiary. The Fund is the sole shareholder of the Subsidiary, and it is intended that the Fund will remain the sole shareholder and will continue to control the Subsidiary.

Investments in the Subsidiary are expected to provide the Fund with exposure to the commodity markets within the limitations of Subchapter M of the Code, and recent IRS rulings. If the IRS were to change its position or otherwise determine that income derived from certain commodity-linked notes or from a Fund’s investment in its Subsidiary does not constitute qualifying income, and if such positions were upheld, or if future legislation or Treasury regulations were to adversely affect the tax treatment of such investments, a Fund might cease to qualify as a regulated investment company and would be required to reduce its exposure to such investments, which might result in difficulty in implementing its investment strategy.

Basis for Consolidation for the Commodity Long/Short Strategy Fund: The Subsidiary, a Cayman Islands exempted company, was incorporated on October 12, 2010 as a wholly-owned subsidiary acting as an investment vehicle for the Fund in order to effect certain investments for the Fund consistent with the Fund’s investment objectives. As a wholly-owned subsidiary of the Fund, all assets, liabilities, income and expenses of the portfolio are consolidated in the financial statements and financial highlights of the Fund. As of December 31, 2014, net assets of the Commodity Long/Short Strategy Fund were $60,003,378 of which $13,861,084 or 23.10% repre-

sented the Fund’s ownership of all issued shares and voting rights of the Fund’s Subsidiary.

In addition, the Advisor has filed for and received no-action relief from the CFTC that permits consolidation of the financial statements for the Commodity Long/Short Strategy Fund and its Subsidiary.

Distributions to Shareholders: Dividends from net investment income, if any, are declared and paid annually for the Commodity Long/Short Strategy Fund, the Emerging Markets Fund, the Equity Long/Short Strategy Fund, the International Small Companies Fund, the Small Cap Equity Fund, the Tactical Enhanced Fund and the Tactical Growth Fund; quarterly for the Credit Analysis Long/Short Fund and the EM Corporate Debt Fund; and monthly for the Dynamic Income Fund, the Global Dividend Fund, the International Dividend Fund, and the Select EM Dividend Fund. For all Funds, net realized capital gains, if any, are normally distributed annually in December, and a spillover capital gain distribution, if any, may be distributed annually in June. There is no guarantee that the Funds will continue paying dividends.

Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from GAAP. Therefore, the source of the Funds’ distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain or from paid-in-capital depending upon the type of book/ tax differences that may exist.

Based on information provided by the REITs, the Funds recharacterize distributions received from REIT investments into the following categories: ordinary income, long-term capital gains, and return of capital. If information is not available on a timely basis from the REITs, the recharacterization will be estimated based on available information that may include the previous year’s allocation. If new or additional information becomes available from the REITs at a later date, a recharacterization will be made in the following annual financial reporting period. There is no guarantee that the REITs held by the Funds will continue to pay dividends. The Funds record as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as long-term capital gain in the Statement of Operations, and the amount recharacterized as a return of capital as a reduction to the cost of investments in the Statement of Assets


		203		December 31, 2014

Notes to Financial Statements

and Liabilities and in the Portfolio of Investments. These recharacterizations are reflected in the accompanying financial statements.

Federal Income Taxes: The Trust treats each Fund as a separate entity for Federal income tax purposes. Each Fund intends to continue to qualify each year as a “regulated investment company” under Subchapter M of the Code. By so qualifying, each Fund will not be subject to Federal income taxes to the extent that it distributes substantially all of its taxable or tax-exempt income, if any, for its tax year ending December 31. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, each Fund will not be subject to a Federal excise tax. Therefore, no provision is made by the Funds for Federal income or excise taxes. Withholding taxes on foreign dividends are paid (a portion of which may be reclaimable) or provided for in accordance with the applicable country’s tax rules and rates and are disclosed in the Statement of Operations. Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses, short-term capital gains and losses, capital losses related to wash sales, unrealized appreciation of certain investments in non-U.S. securities, and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the Funds for financial reporting purposes. The Funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.

The Forward Commodity Long/Short Strategy (Cayman) Fund Ltd. is classified as a controlled foreign corporation under the Code. Therefore, the Commodity Long/Short Strategy Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.

not incur any interest or penalties. Open tax years are those that remain subject to examination and are based on each tax jurisdiction statute of limitation. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.

Expenses: Expenses that are specific to a Fund or class of shares of a Fund are charged directly to that Fund or share class. Expenses that are common to all Funds generally are allocated among the Funds in proportion to their average daily net assets. For Funds offering multiple share classes, all of the realized and unrealized gains and losses and net investment income, other than class specific expenses, are allocated daily to each class in proportion to its average daily net assets. Fees provided under the distribution (Rule 12b-1 of the 1940 Act) and/or shareholder services plans for a particular class of a Fund are charged to the operations of such class.

ReFlow Transactions: Certain Funds may participate in ReFlow, a program designed to provide an alternative liquidity source for mutual funds experiencing redemptions of their shares. In order to pay cash to shareholders who redeem their shares on a given day, a mutual fund typically must hold cash in its portfolio, liquidate portfolio securities, or borrow money, all of which impose certain costs on the fund. ReFlow provides participating mutual funds with another source of cash by standing ready to purchase shares from a fund equal to the amount of the fund’s net redemptions on a given day. ReFlow then generally redeems those shares when the fund experiences net sales. In return for this service, the fund will pay a fee to ReFlow at a rate determined by a daily auction with other participating mutual funds. The costs to a Fund for participating in ReFlow are generally expected to be influenced by and comparable to the cost of other sources of liquidity, such as the Fund’s short-term lending arrangements or the costs of selling portfolio securities to meet redemptions. ReFlow is prohibited from acquiring more than 3% of the outstanding voting securities of any Fund, but in no case will ReFlow’s position in any Fund exceed $15 million.

ReFlow Services, LLC (“ReFlow Services”), the entity which facilitates the day-to-day operations of ReFlow, is under common control with Forward Management. In light of this, the Board of Trustees has adopted certain procedures to govern the Funds’ participation in ReFlow. ReFlow fees that were incurred by the Funds during the year ended December 31, 2014 are recorded in the Statement of Operations.


December 31, 2014		204

Notes to Financial Statements

3. Investment Management Services

The Trust has entered into an investment management agreement with Forward Management pursuant to which Forward Management provides investment management services to the Funds and is entitled to receive a fee calculated daily and payable monthly at the following annual rates, as of December 31, 2014, based on each Fund’s average daily net assets:


Fund		Advisory Fee
Credit Analysis Long/Short Fund		1.00%

Dynamic Income Fund		0.80%^(a)

EM Corporate Debt Fund		0.70% up to and including $500 million
		0.64% over $500 million up to and including $1 billion
		0.58% over $1 billion up to and including $5 billion
		0.52% over $5 billion

Emerging Markets Fund		1.05%^(b)

Equity Long/Short Fund		1.25%^(c)

Global Dividend Fund		0.80% up to and including $500 million
		0.725% over $500 million up to and including $1 billion
		0.675% over $1 billion

International Dividend Fund		0.85% up to and including $250 million
		0.75% over $250 million up to and including $1 billion
		0.65% over $1 billion

International Small Companies Fund		1.00% up to and including $500 million
		0.975% over $500 million up to and including $1 billion
		0.95% over $1 billion

Select EM Dividend Fund		1.10%

Small Cap Equity Fund		0.85%

Tactical Enhanced Fund		1.15%

Tactical Growth Fund		1.15% up to and including $1 billion
		1.05% over $1 billion

Commodity Long/Short Strategy Fund		1.00%^(d)

(a) Prior to December 1, 2014, the advisory fee rate for the Dynamic Income Fund was an annual rate of 1.00% of the Fund’s average daily net assets.

(b) Prior to November 1, 2014, the advisory fee rate for the Emerging Markets Fund was an annual rate of 1.10% of the Fund’s average daily net assets.

(c) Prior to August 1, 2014, the advisory fee rate for the Equity Long/Short Fund was an annual rate of 1.50% of the Fund’s average daily net assets.

(d) The Commodity Long/Short Strategy Fund may invest a portion of its assets in a separate wholly-owned Cayman subsidiary. The Subsidiary has entered into a separate advisory agreement with Forward Management for the management of the Subsidiary’s portfolio pursuant to which the Subsidiary is obligated to pay Forward Management a management fee at the same rate that the Fund pays Forward Management for services provided to the Fund. Forward Management is contractually obligated to waive the management fee it receives from the Fund in an amount equal to the management fee paid to Forward Management by the Subsidiary. This waiver arrangement may not be terminated by Forward Management as long as its advisory agreement with the Subsidiary is effective.

The Trust and Forward Management have entered into investment sub-advisory agreements with Pacific Investment Management Company LLC (“PIMCO”) for the Credit Analysis Long/Short Fund; SW Asset Management, LLC for the EM Corporate Debt Fund; Pictet Asset Management Limited (“PAM Ltd”) for the


		205		December 31, 2014

Notes to Financial Statements

International Small Companies Fund and Broadmark Asset Management, LLC for the Tactical Growth Fund (each a “Sub-Advisor” and, collectively, the “Sub-Advisors”). Pursuant to these agreements, the Sub-Advisors provide investment sub-advisory services to the Funds and are entitled to receive a fee from Forward Management calculated daily and payable monthly at the following annual rates, as of December 31, 2014, based on each Fund’s average daily net assets:


Fund		Sub-Advisory Fee
Credit Analysis Long/Short Fund		0.50%

EM Corporate Debt Fund		0.35%

International Small Companies Fund		0.60% up to and including $250 million
		0.575% over $250 million up to and including $500 million
		0.55% over $500 million up to and including $1 billion
		0.525% over $1 billion

Tactical Growth Fund		0.60% up to and including $1 billion
		0.55% over $1 billion

Expense Limitations: Forward Management has entered into Expense Limitation Agreements with certain Funds, which limits the total expenses (exclusive of brokerage costs, interest, taxes, dividends, acquired fund fees and expenses, expenses of a subsidiary and extraordinary expenses) of certain classes of certain Funds, through a specified date. In addition, Forward Management may voluntarily reimburse additional expenses of certain classes of certain Funds. Following are the annual expense limitation rates and expiration dates for the Funds with an Expense Limitation Agreement:


Fund	Investor Class			Institutional Class			Class A			Class C			Advisor Class			End Date
Credit Analysis Long/Short Fund		1.79	%		1.44	%		1.94	%		2.39	%		1.49	%		April 30, 2015
Dynamic Income Fund^(a)		N/A			0.99	%		1.49	%		N/A			N/A			April 30, 2015
Emerging Markets Fund		1.74	%		1.39	%		N/A			N/A			1.44	%		April 30, 2015
Equity Long/Short Fund^(b)		2.14	%		1.79	%		N/A			N/A			N/A			April 30, 2015
Global Dividend Fund		1.34	%		0.99	%		1.49	%		N/A			N/A			April 30, 2015
International Dividend Fund		1.34	%		0.99	%		1.49	%		1.94	%		1.04	%		April 30, 2015
International Small Companies Fund^(c)		1.64	%		1.29	%		N/A			N/A			1.34	%		April 30, 2015
Select EM Dividend Fund		1.74	%		1.39	%		N/A			2.34	%		1.44	%		April 30, 2015
Small Cap Equity Fund^(d)		1.49	%		1.14	%		N/A			N/A			1.19	%		April 30, 2015
Tactical Enhanced Fund^(e)		1.74	%		1.39	%		1.89	%		2.34	%		1.44	%		April 30, 2015

(a) From January 1, 2014 to November 30, 2014, the annual expense limitation rates for the Dynamic Income Fund’s Institutional Class and Class A shares were 1.29% and 1.79%, respectively.

(b) From January 1, 2014 to September 30, 2014, the annual expense limitation rates for the Equity Long/Short Fund’s Investor Class and Institutional Class shares were 2.34% and 1.99%, respectively.

(c) Prior to May 1, 2014, the International Small Companies Fund did not have an Expense Limitation Agreement with Forward Management.

(d) From January 1, 2014 to April 30, 2014, the annual expense limitation rate for the Small Cap Equity Fund’s Investor Class shares was 1.44%.

(e) From January 1, 2014 to April 30, 2014, the annual expense limitation rates for the Tactical Enhanced Fund’s Investor Class, Institutional Class, Class A, Class C and Advisor Class shares were 1.84%, 1.49%, 1.99%, 2.44% and 1.54%, respectively. From to May 1, 2014 to July 31, 2014, the Fund did not have an Expense Limitation Agreement with Forward Management.

Pursuant to the Expense Limitation Agreements, each Fund will reimburse Forward Management for any fee waivers and expense reimbursements made by

Forward Management, provided that any such reimbursements made by a Fund to Forward Management will not cause the Fund’s expense limitation to exceed the expense limitation in existence at the time the expenses were incurred or at the time of the reimbursement, whichever is lower, and the reimbursement is made within three years following the year in which the expenses were incurred.


December 31, 2014		206

Notes to Financial Statements

For the year ended December 31, 2014, the fee waivers and/or reimbursements were as follows:


Fund	Fees Waived/ Reimbursed By Advisor		Recoupment Of Past Waived Fees By Advisor		Total
Credit Analysis Long/Short Fund
Investor Class	$	8,683	$	—	$	8,683
Institutional Class		14,437		—		14,437
Class A		933		—		933
Class C		2,245		—		2,245
Advisor Class		2,354		—		2,354
Dynamic Income Fund
Institutional Class		56,508		—		56,508
Class A		4,657		—		4,657
EM Corporate Debt Fund^(a)
Investor Class		23,536		—		23,536
Institutional Class		2,142		—		2,142
Class C		152		—		152
Advisor Class		—		—		—
Emerging Markets Fund
Investor Class		37,897		—		37,897
Institutional Class		52,485		—		52,485
Advisor Class		11,438		—		11,438
Equity Long/Short Fund
Investor Class		6,228		—		6,228
Institutional Class		75,166		—		75,166
Global Dividend Fund
Investor Class		2,995		—		2,995
Institutional Class		27,195		—		27,195
Class A		80,680		—		80,680
International Dividend Fund
Investor Class		127,872		—		127,872
Institutional Class		96,320		—		96,320
Class A		3,759		—		3,759
Class C		9,852		—		9,852
Advisor Class		88,453		—		88,453
International Small Companies Fund
Investor Class		6,763		—		6,763
Institutional Class		37,473		—		37,473
Advisor Class		2,065		—		2,065
Select EM Dividend Fund
Investor Class		66,356		—		66,356
Institutional Class		43,657		—		43,657
Class C		3,086		—		3,086
Advisor Class		2,294		—		2,294
Small Cap Equity Fund
Investor Class		82,822		—		82,822
Institutional Class		16,082		—		16,082
Advisor Class		9,661		—		9,661


		207		December 31, 2014

Notes to Financial Statements


Fund	Fees Waived/ Reimbursed By Advisor		Recoupment Of Past Waived Fees By Advisor		Total
Tactical Enhanced Fund
Investor Class	$	13,087	$	—	$	13,087
Institutional Class		19,552		—		19,552
Class A		798		—		798
Class C		1,542		—		1,542
Advisor Class		6,045		—		6,045

(a) Prior to May 1, 2014, Forward Management had an Expense Limitation Agreement with the EM Corporate Debt Fund.

As of December 31, 2014, the balances of recoupable expenses for each Fund were as follows:


Fund	2012		2013		2014		Total
Credit Analysis Long/Short Fund
Investor Class	$	228,708	$	301,374	$	8,683	$	538,765
Institutional Class		95,394		175,905		14,437		285,736
Class A		7,544		17,632		933		26,109
Class C		19,320		28,340		2,245		49,905
Advisor Class		45,632		78,496		2,354		126,482
Dynamic Income Fund
Institutional Class		—		38,986		56,508		95,494
Class A		—		3,564		4,657		8,221
EM Corporate Debt Fund
Investor Class		11,751		37,188		23,536		72,475
Institutional Class		4,642		—		2,142		6,784
Class C		1,187		—		152		1,339
Advisor Class		—		—		—		—
Emerging Markets Fund
Investor Class		129,144		47,816		37,897		214,857
Institutional Class		141,303		40,248		52,485		234,036
Advisor Class		9,870		7,156		11,438		28,464
Equity Long/Short Fund
Investor Class		3,194		1,479		6,228		10,901
Institutional Class		35,482		35,009		75,166		145,657
Global Dividend Fund
Investor Class		906		5,191		2,995		9,092
Institutional Class		31,985		46,559		27,195		105,739
Class A		51,396		55,430		80,680		187,506
International Dividend Fund
Investor Class		43,987		116,683		127,872		288,542
Institutional Class		142,684		109,960		96,320		348,964
Class A		—		1,569		3,759		5,328
Class C		438		4,613		9,852		14,903
Advisor Class		13,851		48,182		88,453		150,486
International Small Companies Fund
Investor Class		—		—		6,763		6,763
Institutional Class		—		—		37,473		37,473
Advisor Class		—		—		2,065		2,065


December 31, 2014		208

Notes to Financial Statements


Fund	2012		2013		2014		Total
Select EM Dividend Fund
Investor Class	$	25,105	$	51,768	$	66,356	$	143,229
Institutional Class		60,143		47,553		43,657		151,353
Class C		6,314		3,034		3,086		12,434
Advisor Class		8,873		2,764		2,294		13,931
Small Cap Equity Fund
Investor Class		80,190		73,485		82,822		236,497
Institutional Class		36,194		20,895		16,082		73,171
Advisor Class		8,254		8,633		9,661		26,548
Tactical Enhanced Fund
Investor Class		31,432		—		13,087		44,519
Institutional Class		28,004		—		19,552		47,556
Class A		6,916		—		798		7,714
Class C		5,849		—		1,542		7,391
Advisor Class		—		—		6,045		6,045

4. Distribution and Shareholder Services Plans

The Funds have adopted Distribution Plans (the “Distribution Plans”) pursuant to Rule 12b-1 of the 1940 Act that allow each of the Funds to pay for the sale and distribution of its shares at an annual rate of up to the following amounts based on each Fund’s daily average net assets:


Fund	Investor Class			Class A			Class C
Credit Analysis Long/Short Fund		0.25	%		0.35	%		0.75	%
Dynamic Income Fund		N/A			0.35	%		N/A
EM Corporate Debt Fund		0.25	%		N/A			0.75	%
Emerging Markets Fund		0.25	%		N/A			N/A
Equity Long/Short Fund		0.25	%		N/A			N/A
Global Dividend Fund		0.25	%		0.35	%		N/A
International Dividend Fund		0.25	%		0.35	%		0.75	%
International Small Companies Fund		0.25	%		N/A			N/A
Select EM Dividend Fund		0.25	%		N/A			0.75	%
Small Cap Equity Fund		0.25	%		N/A			N/A
Tactical Enhanced Fund		0.25	%		0.35	%		0.75	%
Tactical Growth Fund		0.25	%		0.35	%		0.75	%
Commodity Long/Short Strategy Fund		0.25	%		N/A			0.75	%

The Funds have adopted a shareholder services plan (the “Shareholder Services Plan”) with respect to certain Funds. Under the Shareholder Services Plan, a Fund is authorized to pay third party service providers for non-distribution related services to shareholders. Payments under the Shareholder Services Plan are calculated daily and paid monthly, and are not to exceed the following annual rates:


Fund	Investor Class			Institutional Class			Class A			Class C			Advisor Class
Credit Analysis Long/Short Fund		0.15	%		0.05	%		0.20	%		0.25	%		0.10	%
Dynamic Income Fund		N/A			0.05	%		0.20	%		N/A			N/A
EM Corporate Debt Fund		0.15	%		0.05	%		N/A			0.25	%		0.10	%
Emerging Markets Fund		0.15	%		0.05	%		N/A			N/A			0.10	%
Equity Long/Short Fund		0.15	%		0.05	%		N/A			N/A			N/A
Global Dividend Fund		0.15	%		0.05	%		0.20	%		N/A			N/A
International Dividend Fund		0.15	%		0.05	%		0.20	%		0.25	%		0.10	%


		209		December 31, 2014

Notes to Financial Statements


Fund	Investor Class			Institutional Class			Class A			Class C			Advisor Class
International Small Companies Fund		0.15	%		0.05	%		N/A			N/A			0.10	%
Select EM Dividend Fund		0.15	%		0.05	%		N/A			0.25	%		0.10	%
Small Cap Equity Fund		0.15	%		0.05	%		N/A			N/A			0.10	%
Tactical Enhanced Fund		0.15	%		0.05	%		0.20	%		0.25	%		0.10	%
Tactical Growth Fund		0.15	%		0.05	%		0.20	%		0.25	%		0.10	%
Commodity Long/Short Strategy Fund		0.15	%		0.05	%		N/A			0.25	%		0.10	%

The expenses of the Distribution Plans and the Shareholder Services Plan are reflected as distribution and service fees in the Statement of Operations.

Administrator, Custodian, Distributor, Dividend Paying Agent & Transfer Agent

ALPS Fund Services, Inc. (“AFS”) serves as the Funds’ administrator, transfer agent and dividend paying agent.

Citibank is the Funds’ custodian.

Forward Securities, LLC (the “Distributor”) serves as the Funds’ distributor. The Distributor acts as an agent for the Funds and the distributor of their shares.

5. Trustee and Officer Fees

The Funds do not pay any compensation directly to the officers or trustees who are also trustees, officers or employees of Forward Management or its affiliates, except as noted below. As of December 31, 2014, there were seven Trustees, six of whom are not “interested persons” of the Trust within the meaning of that term under the 1940 Act (each, an “Independent Trustee”). The Funds pay each Independent Trustee a retainer fee in the amount of $35,000 per year. The Funds pay each Independent Trustee the amount of: $12,500 for attendance in person at a regular meeting and $9,000 for attendance by telephone at a regular meeting; $5,000 for attendance in person or by video conference at a special meeting that is not held in conjunction with a regular meeting (prior to April 1, 2014 the fee was $3,000) and $3,000 for attendance by telephone at a special meeting that is not held in conjunction with a regular meeting (prior to April 1, 2014 the fee was

$2,250); and $1,500 per day for participation in Trust-related meetings not held in conjunction with a meeting (prior to April 1, 2014 the fee was $1,000). The Chairman of the Board of Trustees, the Chairman of the Audit Committee and the Chairman of the Nominating Committee each receive a special retainer fee in the amount of $15,000, $12,500 and $7,500, respectively per year (prior to April 1, 2014, the Chairman of the Board of Trustees and the Chairman of the Audit Committee each received a special retainer fee in the amount of $10,000 and $10,000, respectively). The interested Trustee receives no compensation from the Funds. In addition, Independent Trustees receive reimbursements for reasonable out-of-pocket expenses incurred for their services as a Trustee.

The Funds’ Chief Compliance Officer is employed by Forward Management. The Funds pay an allocated portion of the Chief Compliance Officer’s compensation and other related expenses, subject to approval by the Board of Trustees.

6. Indemnifications

Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liability arising out of the performance of their duties with respect to the Funds. In addition, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with vendors and others that provide general indemnification. Each Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust and/or the Funds. Based on experience, however, the Funds expect the risk of loss to be remote.


December 31, 2014		210

Notes to Financial Statements

7. Purchases and Sales of Investments

Investment transactions for the year ended December 31, 2014, excluding U.S. Government Obligations, short-term investments and short sales, were as follows:


Fund	Cost of Investments Purchased		Proceeds From Investments Sold
Credit Analysis Long/Short Fund	$	127,770,726	$	163,982,022	^(a)
Dynamic Income Fund		55,203,181		37,266,400
EM Corporate Debt Fund		305,715,972		259,746,035
Emerging Markets Fund		8,848,401		9,317,753
Equity Long/Short Fund		9,756,166		12,400,738
Global Dividend Fund		11,992,727		18,638,772
International Dividend Fund		344,203,292		290,983,548
International Small Companies Fund		125,200,085		149,314,883
Select EM Dividend Fund		169,346,000		151,052,993
Small Cap Equity Fund		20,883,829		28,060,088
Tactical Enhanced Fund		5,191,199,243		5,236,626,093
Tactical Growth Fund		2,224,504,870		1,892,498,103
Commodity Long/Short Strategy Fund		11,901,325		27,964,588

(a) Includes $16,854,446 in proceeds from securities sold to other accounts managed by PIMCO pursuant to Rule 17a-7 under the 1940 Act.

Investment transactions in U.S. Government Obligations for the year ended December 31, 2014 were as follows:


Fund	Cost of Investments Purchased		Proceeds From Investments Sold
Credit Analysis Long/Short Fund	$	31,832,313	$	31,833,977
EM Corporate Debt Fund		14,084,000		13,893,781
International Dividend Fund		503,766		—
Commodity Long/Short Strategy Fund		19,268,089		47,512,062

8. Tax Basis Information

Reclassifications: At December 31, 2014, permanent differences in book and tax accounting were reclassified. These differences had no effect on net assets and were primarily attributed to differences in the treatment of foreign currency, the treatment of net investment loss, and the treatment of certain other investments. These reclassifications were as follows:


Fund	Increase/(Decrease) Paid-in Capital			Increase/(Decrease) Accumulated Net Investment Income/(Loss)			Increase/(Decrease) Accumulated Net Realized Gain/(Loss)
Credit Analysis Long/Short Fund		–		$	11,862		$	(11,862	)
Dynamic Income Fund	$	267			(16,314	)		16,047
EM Corporate Debt Fund		–			(3,632,799	)		3,632,799
Emerging Markets Fund		–			(16,880	)		16,880
Equity Long/Short Fund		–			69,034			(69,034	)
Global Dividend Fund		(4	)		(16,000	)		16,004
International Dividend Fund		(86	)		876,355			(876,269	)
International Small Companies Fund		8,278			1,678,191			(1,686,469	)
Select EM Dividend Fund		(2,546	)		(548,891	)		551,437


		211		December 31, 2014

Notes to Financial Statements


Fund	Increase/(Decrease) Paid-in Capital			Increase/ (Decrease) Accumulated Net Investment Income/(Loss)		Increase/(Decrease) Accumulated Net Realized Gain/(Loss)
Small Cap Equity Fund		(183,563	)		183,564		(1	)
Tactical Enhanced Fund		(1,350,964	)		525,761		825,203
Tactical Growth Fund		(1,626,942	)		9,693,389		(8,066,447	)
Commodity Long/Short Strategy Fund		(5,173,054	)		705,181		4,467,873

Included in the amounts reclassified were net operating losses offset to Paid In-Capital.


Fund	Amount
Small Cap Equity Fund	$	183,564
Tactical Growth Fund		1,626,942
Commodity Long/Short Strategy Fund		268,500

Tax Basis of Investments: As of December 31, 2014, the aggregate cost of investments, gross unrealized appreciation/(depreciation) and net unrealized appreciation/( depreciation) for Federal tax purposes was as follows:


Fund	Cost of Investments		Gross Unrealized Appreciation		Gross Unrealized (Depreciation)			Net Unrealized Appreciation/ (Depreciation)
Credit Analysis Long/Short Fund	$	94,908,230	$	3,396,854	$	(260,773	)	$	3,136,081
Dynamic Income Fund		20,047,024		360,435		(265,739	)		94,696
EM Corporate Debt Fund		424,845,258		7,820,766		(34,316,760	)		(26,495,994	)
Emerging Markets Fund		11,505,174		1,645,889		(1,560,803	)		85,086
Equity Long/Short Fund		1,885,917		186,293		(9,977	)		176,316
Global Dividend Fund		11,924,451		2,503,030		(918,693	)		1,584,337
International Dividend Fund		315,743,787		27,838,892		(32,867,981	)		(5,029,089	)
International Small Companies Fund		141,235,180		28,583,074		(9,711,645	)		18,871,429
Select EM Dividend Fund		58,077,334		5,943,232		(8,980,763	)		(3,037,531	)
Small Cap Equity Fund		24,305,289		4,777,547		(1,866,322	)		2,911,225
Tactical Enhanced Fund		16,721,208		—		(651,108	)		(651,108	)
Tactical Growth Fund		639,565,537		22,285,512		(1,463,381	)		20,822,131
Commodity Long/Short Strategy Fund		42,061,940		322,362		(65,732	)		256,630

Capital Losses: As of December 31, 2014, the following Funds had available for Federal income tax purposes unused capital losses as follows:

Pre-Enactment Capital Losses


Fund	Expiring in 2016		Expiring in 2017
EM Corporate Debt Fund		—	$	51,786
International Dividend Fund^(a)		—		2,145,728
International Small Companies Fund	$	21,339,116		179,253,577
Small Cap Equity Fund^(a)		2,614,131		23,741,047

Capital loss carryovers used during the year ended December 31, 2014, were:


Fund	Amount
Global Dividend Fund	$	(355,708	)
International Small Companies Fund		(14,826,839	)
Small Cap Equity Fund		(4,993,812	)

(a) Subject to limitations under §382 of the Code.


December 31, 2014		212

Notes to Financial Statements

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (“the Act”) was enacted. Certain of the enacted provisions include:

Post-enactment losses may now be carried forward indefinitely, but must retain the character of the original loss. However, such losses must be utilized prior to the pre-enactment capital loss, which increases the likelihood that the pre-enactment capital losses will expire unused. Under the pre-enactment law, capital losses could be carried forward for eight years and carried forward as short-term capital losses irrespective of the character of the original loss. The Act contains simplification provisions, which are aimed at preventing disqualification of a Regulated Investment Company (“RIC”) for “inadvertent” failures of the asset diversification and/or qualifying income tests. Additionally, the Act exempts RICs from the preferential dividend rule and repeals the 60-day designation requirement for certain types of pay-through income and gains.

Finally, the Act contains several provisions aimed at preserving the character of distributions made by a fiscal year RIC during the portion of its taxable year ending after October 31 or December 31, reducing the circumstances under which a RIC might be required to file amended Forms 1099 to restate previously reported distributions.

Post-Enactment Capital Losses^(a)

Capital losses as of December 31, 2014 deferred to the next tax year were as follows:


Fund	Short-Term		Long-Term
Credit Analysis Long/Short Fund	$	66,050,124	$	28,265,020
EM Corporate Debt Fund		9,033,478		8,579,156
Emerging Markets Fund		1,174,976		—
International Dividend Fund		12,559,462		—
Select EM Dividend Fund		7,260,625		—
Commodity Long/Short Strategy Fund		301,290		265,025

The Funds elect to defer to the period ending December 31, 2015 capital losses and late year ordinary losses recognized during the period November 1, 2014 to December 31, 2014 in the amount of:


Fund	Capital Losses Total		Ordinary Losses Total
Dynamic Income Fund	$	110,953		—
EM Corporate Debt Fund		193,270	$	768,260
Emerging Markets Fund		32,712		38,131
Equity Long/Short Fund		51,134		—
Global Dividend Fund		3,566		18,817
International Dividend Fund		2,218,788		917,314
International Small Companies Fund		591,346		167,695
Select EM Dividend Fund		2,817,150		213,848
Small Cap Equity Fund		939,856		—
Tactical Enhanced Fund		890,025		—

(a) Post-Enactment Capital Losses arose in fiscal years beginning after December 22, 2010 and exclude any elective late-year capital losses (during the period November 1 to December 31) deferred for the current fiscal year. As a result of the enactment of the Act, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term losses rather than being considered all short-term as under previous law.


		213		December 31, 2014

Notes to Financial Statements

Tax Basis of Distributable Earnings: At December 31, 2014, the following components of accumulated earnings on a tax basis were as follows:


	Credit Analysis Long/Short Fund			Dynamic Income Fund			EM Corporate Debt Fund			Emerging Markets Fund
Post-October losses		—		$	(110,953	)	$	(193,270	)	$	(32,712	)
Late year ordinary losses		—			—			(768,260	)		(38,131	)
Accumulated capital loss carryforwards	$	(94,315,144	)		—			(17,664,420	)		(1,174,976	)
Undistributed ordinary income		53,079			24,103			402,762			6,073
Net unrealized depreciation on foreign currency, swap contracts and futures contracts		(298,722	)		(3,921	)		(294,469	)		(1,279	)
Net unrealized appreciation/(depreciation) on investments		3,136,081			94,696			(26,495,994	)		85,085
Other cumulative effect of timing differences		298,722			3,900			171,950			–

Total distributable earnings	$	(91,125,984	)	$	7,825		$	(44,841,701	)	$	(1,155,940	)


	Equity Long/Short Fund			Global Dividend Fund			International Dividend Fund			International Small Companies Fund
Post-October losses	$	(51,134	)	$	(3,566	)	$	(2,218,788	)	$	(591,346	)
Late year ordinary losses		—			(18,817	)		(917,314	)		(167,695	)
Accumulated capital loss carryforwards		—			—			(14,705,190	)		(200,592,693	)
Undistributed ordinary income		—			28,902			419,017			13,521
Undistributed capital gains		—			54,718			—			—
Net unrealized depreciation on foreign currency and futures contracts		(24,788	)		(801	)		(98,265	)		(5,326	)
Net unrealized appreciation/(depreciation) on investments		176,316			1,584,337			(5,029,089	)		18,871,429
Other cumulative effect of timing differences		24,788			—			36,934			(3,934	)

Total distributable earnings	$	125,182		$	1,644,773		$	(22,512,695	)	$	(182,476,044	)


	Select EM Dividend Fund			Small Cap Equity Fund			Tactical Enhanced Fund			Tactical Growth Fund
Post-October losses	$	(2,817,150	)	$	(939,856	)	$	(890,025	)		—
Late year ordinary losses		(213,848	)		—			—			—
Accumulated capital loss carryforwards		(7,260,625	)		(26,355,178	)		—			—
Undistributed ordinary income		58,831			—			—			—
Undistributed capital gains		—			—			—		$	3,005,015
Net unrealized appreciation/(depreciation) on foreign currency, written options and futures contracts		(5,235	)		20,074			—			(1,193,750	)
Net unrealized appreciation/(depreciation) on investments		(3,037,531	)		2,911,225			(651,108	)		20,822,131
Other cumulative effect of timing differences		—			(20,074	)		—			(2,012,500	)

Total distributable earnings	$	(13,275,558	)	$	(24,383,809	)	$	(1,541,133	)	$	20,620,896


	Commodity Long/Short Strategy Fund
Accumulated capital loss carryforwards	$	(566,315	)
Net unrealized appreciation on swap contracts		4,280,022
Net unrealized appreciation on investments		256,630

Total distributable earnings	$	3,970,337


December 31, 2014		214

Notes to Financial Statements

Tax Character of Distributions to Shareholders: Income and long-term capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from GAAP.

The tax character of distributions paid for the year ended December 31, 2014 were as follows:


Fund	Ordinary Income Total		Long-Term Capital Gain Total		Return of Capital Total
Credit Analysis Long/Short Fund	$	2,780,506		—		—
Dynamic Income Fund		914,757		—		—
EM Corporate Debt Fund		24,413,825		—		—
Emerging Markets Fund		240,000		—		—
Equity Long/Short Fund		220,000	$	134,860		—
Global Dividend Fund		675,940		318,340		—
International Dividend Fund		19,229,906		—		—
International Small Companies Fund		1,150,004		—		—
Select EM Dividend Fund		4,001,863		—		—
Tactical Enhanced Fund		3,300,005		—		—
Tactical Growth Fund		19,810,123		20,582,711		—

The tax character of distributions paid for the year ended December 31, 2013 were as follows:


Fund	Ordinary Income Total		Long-Term Capital Total		Return Of Capital Total
Credit Analysis Long/Short Fund	$	23,734,571	$	2,168,060		—
Dynamic Income Fund		87,891		1,276	$	3,968
EM Corporate Debt Fund		19,625,406		—		—
Emerging Markets Fund		189,990		—		—
Equity Long/Short Fund		313,000		54,405		—
Global Dividend Fund		803,363		—		—
International Dividend Fund		12,943,338		—		—
International Small Companies Fund		4,456,314		—		—
Select EM Dividend Fund		2,329,518		—		—
Tactical Enhanced Fund		373,002		—		—
Tactical Growth Fund		31,192,502		58,158,013		—
Commodity Long/Short Strategy Fund		5,545,159		—		44,055


		215		December 31, 2014

Notes to Financial Statements

9. Portfolio of Investments

The investment categories used in this report may differ from the industry classification categories used for determining compliance with industry concentration restrictions and requirements applicable to each of the Funds.

10. Subsequent Events

The Funds have evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued. Based on this evaluation, no adjustments were required to the financial statements as of December 31, 2014. However, the following are details relating to the subsequent events through the date the financial statements were issued.

across a broad spectrum of traditional and alternative investments (the “Transaction”). The Transaction is expected to be completed during the second quarter of 2015.

If completed, the Transaction will cause a change of control of Forward Management, which will result in the termination of the existing investment advisory agreement between Forward Management and the Funds. The Funds’ Board of Trustees has considered and approved a new investment advisory agreement between Forward Management and the Funds, as well as the submission of a proposal to the Funds’ shareholders to approve the new investment advisory agreement and other proposals related to the Transaction. Forward Management expects that, subject to obtaining the necessary approvals, Forward Management will continue to act as the investment advisor of the Funds as a subsidiary of Salient.

The Funds file a complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Q was filed for the quarter ended September 30, 2014. The Funds’ Form N-Q is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

A description of the Funds’ proxy voting policies and procedures and how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2014 are available (i) without charge, upon request, by calling 1-800-999-6809 and (ii) on the SEC’s website at www.sec.gov.


December 31, 2014		216

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Forward Funds

In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations, of changes in net assets, of cash flows where presented, and the financial highlights present fairly, in all material respects, the financial position of Forward Credit Analysis Long/Short Fund, Forward Dynamic Income Fund, Forward EM Corporate Debt Fund, Forward Emerging Markets Fund, Forward Equity Long/Short Fund (formerly known as Forward Endurance Long/Short Fund), Forward Global Dividend Fund, Forward International Dividend Fund, Forward International Small Companies Fund, Forward Select EM Dividend Fund, Forward Small Cap Equity Fund, Forward Tactical Enhanced Fund, Forward Tactical Growth Fund and Forward Commodity Long/Short Strategy Fund (the “Funds”) at December 31, 2014, and the results of each of their operations, the changes in each of their net assets, the cash flows, where presented, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (consolidated financial statements and consolidated financial highlights for Forward Commodity Long/Short Strategy Fund) (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Francisco, California

February 24, 2015


		217		December 31, 2014

Tax Information (Unaudited)

Pursuant to Section 852(b)(3) of the Internal Revenue Code the following Funds designate the amounts listed below as long-term capital gain dividends:


Equity Long/Short Fund	$	134,860
Global Dividend Fund		318,340
Tactical Growth Fund		20,582,711

The following Funds designate the percentages listed below of the income dividends distributed between January 1, 2014 and December 31, 2014, as qualified dividend income (QDI) as defined in Section 1(h)(11) of the Internal Revenue Code:


Dynamic Income Fund	7.15	%
Emerging Markets Fund	100.00	%
Equity Long/Short Fund	11.52	%
Global Dividend Fund	73.69	%
International Dividend Fund	36.02	%
International Small Companies Fund	100.00	%
Select EM Dividend Fund	48.36	%

The following Funds designate the percentages listed below of the income dividends distributed between January 1, 2014 and December 31, 2014, as qualifying for the corporate dividends received deduction (DRD) as defined in Section 854(b)(2) of the Internal Revenue Code:


Dynamic Income Fund	6.87	%
Equity Long/Short Fund	12.43	%
Global Dividend Fund	26.50	%
Select EM Dividend Fund	0.11	%

Pursuant to Section 853(c) of the Internal Revenue Code, the following Funds designate the amounts listed below as foreign taxes paid and foreign source income earned between January 1, 2014 and December 31, 2014, respectively.


	Foreign Taxes Paid		Foreign Source Income
Emerging Markets Fund	$	38,086	$	436,382
Global Dividend Fund		56,986		556,289
International Dividend Fund		1,242,131		14,314,034
International Small Companies Fund		301,497		4,624,828
Select EM Dividend Fund		346,776		4,482,964

During the year ended December 31, 2014, 79.42% of the dividend paid by the Credit Analysis Long/Short Fund from net investment income should be treated as tax-exempt dividends.


December 31, 2014		218

Approval of the Investment Management Agreement and

Investment Sub-Advisory Agreements (Unaudited)

The Board of Trustees (the “Board”) of the Trust oversees the management of each series of the Trust and, as required by law, initially approves, and determines annually whether to renew, the investment advisory and sub-advisory agreements for management of each series of the Trust.

At an in-person meeting of the Board held on December 10, 2014, the Board, including all of the Independent Trustees, approved the renewal of the Amended and Restated Investment Management Agreement (the “Advisory Agreement”) between Forward Management, LLC (“Forward Management” or the “Advisor”) and the Trust on behalf of the Funds.

Also at the September 15-16, 2014 meeting, the Board, including all of the Independent Trustees, approved the renewal of the sub-advisory agreements, among the Trust, Forward Management and the following sub-advisors (each a “Sub-Advisor” and collectively, the “Sub-Advisors”) (each, a “Sub-Advisory Agreement”, collectively, the “Sub-Advisory Agreements” and together with the Advisory Agreement, the “Agreements”) on behalf of the Fund(s) listed next to each Sub-Advisor’s name:


Sub-Advisor		Fund
Broadmark Capital Management, LLC		Forward Tactical Growth Fund
Pictet Asset Management Limited		Forward International Small Companies Fund (non-cash portion)
Pacific Investment Management Company LLC		Forward Credit Analysis Long/ Short Fund
SW Asset Management, LLC		Forward EM Corporate Debt Fund

operations, including the Trust’s compliance program, shareholder services, valuation, custody, distribution, and other information relating to the nature, extent and quality of services provided by Forward Management and Sub-Advisors to the Funds. The Board also noted that the Funds’ Chief Compliance Officer reviewed the compliance procedures and systems in place with respect to compliance by Forward Management and each Sub-Advisor with the federal securities laws as prescribed under Rule 38a-1 of the 1940 Act and noted to the Board that they are reasonably designed to prevent violations by Forward Management and the Sub-Advisors of the federal securities laws.

Discussed below are the factors the Board considered in renewing the Agreements. This discussion is not intended to be all-inclusive. The Board reviewed a variety of factors and considered a significant amount of information, including information received on an ongoing basis at Board and committee meetings. The approval determinations were made on the basis of each Board member’s business judgment after consideration of all of the information taken as a whole. Individual Board members may have given different weights to certain factors and assigned various degrees of materiality to information in connection with the approval process.

Forward Management employs Sub-Advisors pursuant to Sub-Advisory Agreements for the day-to-day management of the Forward Credit Analysis Long/Short Fund, Forward EM Corporate Debt Fund, Forward International Small Companies Fund and Forward Tactical Growth Fund. Forward Management directly manages the other Funds and the cash portion of the Forward International Small Companies Fund without employing a sub-advisor.

In evaluating each of the Agreements, the Board, including the Independent Trustees, principally considered the following factors, among others: (i) the nature, extent and quality of the services to be provided by Forward Management and each Sub-Advisor; (ii) the investment performance of each Fund and Forward Management or the Fund’s Sub-Advisor, where applicable; (iii) the reasonableness of investment advisory compensation to be paid and a comparative analysis of expense ratios of, and advisory fees paid by, similar funds; (iv) the profits to be realized by Forward Management and each Sub-Advisor from their relationships with the Funds; (v) the extent to which the fees to be paid to Forward Management reflect economies of scale; and (vi) if applicable, any benefits derived or to be derived by Forward Management or a Sub-Advisor from its relationship with the Funds, such as soft dollar arrangements. The Board also considered the ability of Forward Management and each Sub-Advisor to provide an appropriate level of support and resources to the Funds and whether Forward Management and each Sub-Advisor have sufficiently qualified personnel. The Board also


		219		December 31, 2014

Approval of the Investment Management Agreement and

Investment Sub-Advisory Agreements (Unaudited)

considered the overall financial soundness of Forward Management and each Sub-Advisor as it relates to their ability to provide services to the Funds.

Additional discussion of certain of these factors follows:

Nature, extent, and quality of the services

Advisory Agreement. The Board considered the nature of the services to be provided under the Advisory Agreement. The Board considered the ability of Forward Management to provide an appropriate level of support and resources to the Funds and whether Forward Management has sufficiently qualified personnel. The Board noted the background and experience of Forward Management’s senior management and investment personnel. The Board also noted that, because the series of the Trust are Forward Management’s principal investment advisory clients, the expertise of, and amount of attention expected to be given to the Funds by Forward Management’s management team is substantial. The Board considered Forward Management’s ability to attract and retain qualified business professionals. The Board also determined that Forward Management has made a commitment to the recruitment and retention of high quality personnel, and maintains the financial and operational resources reasonably necessary to manage the Funds. The Board also favorably considered Forward Management’s entrepreneurial commitment to the management and success of the Funds, which entails a substantial financial and professional commitment.

The Board also considered Forward Management’s compliance operations with respect to the Trust, including the measures taken by Forward Management to assist the Trust in complying with Rule 38a-1 under the 1940 Act. The Board noted that personnel at Forward Management represented that the firm had no significant compliance or administrative problems over the past year and that no material deficiencies were found by any independent audit or material compliance issues found by the SEC in its recent routine examination of Forward Management or the series of the Trust. The Board also considered the services provided by Forward Management as a “manager of managers” and noted that Forward Management has been active in monitoring the performance of the Sub-Advisors to the Funds, and has taken measures to attempt to remedy relative underperformance by a Fund when Forward Management and the Board believe it to be appropriate.

significant compliance or administrative problems over the past year and that no material deficiencies were found by any independent audit. The Board considered the quality of the management services provided to the Funds over both the short and long term and the organizational depth and stability of each Sub-Advisor, including the background and experience of each Sub-Advisor’s senior management and the expertise of and amount of attention expected to be given to the Funds by the respective portfolio management teams. The Board noted that it has received presentations from portfolio management personnel from each of the Sub-Advisors, and has discussed investment results with such personnel. The Board also considered each Sub-Advisor’s compliance operations with respect to the Funds, including the assessment of each Sub-Advisor’s compliance program by the Trust’s Chief Compliance Officer pursuant to Rule 38a-1 under the 1940 Act. In conducting its review, the Board was aided by assessments of personnel at Forward Management and the various presentation materials (including presentations made by representatives of the Sub-Advisors to the Board) during the course of the year.

The Board concluded that it was satisfied with the nature, extent, and quality of the services provided by Forward Management and each of the Sub-Advisors under the Agreements.

Investment Performance

In considering information about the Funds’ historical performance, unless otherwise noted below, the Board was provided with information by Forward Management using data from Morningstar and other sources about each Fund’s historical performance, noting whether there were periods of underperformance and outperformance relative to each Fund’s peer group as well as its respective benchmark indices over time. The Board was provided with a comparative analysis of the performance of each Fund relative to certain comparable funds and relevant market indices for certain periods, including annual performance information and cumulative performance information. In assessing the performance of Forward Management and the Sub-Advisors, as applicable, the Board also considered the length of time the Sub-Advisor had served as a Sub-Advisor or Forward Management had served as investment advisor to the respective Fund. The Board also noted the need for Forward Management or the Sub-Advisor to adhere to its investment mandates, which could at times have an impact on a Fund’s performance.

The Board noted that, as a general matter, the Funds had periods of both underperformance and outperformance relative to the comparable funds


December 31, 2014		220

Approval of the Investment Management Agreement and

Investment Sub-Advisory Agreements (Unaudited)

within their respective Morningstar Category over time. Specifically, the Board noted:

^Ÿ

The Commodity Long/Short Strategy Fund underperformed in relation to the average performance of the comparable funds within its Morningstar Category during the one- and three-year periods ended September 30, 2014;

^Ÿ

The Credit Analysis Long/Short Fund underperformed in relation to the average performance of the comparable funds within its Morningstar Category for the one- and three-year periods ended June 30, 2014; however, it outperformed the comparable funds within its Morningstar Category for the five-year period ended June 30, 2014;

^Ÿ

The Dynamic Income Fund outperformed in relation to the average performance of comparable funds within its Morningstar Category for the one-year period ended September 30, 2014;

^Ÿ

The EM Corporate Debt Fund outperformed in relation to the average performance of the comparable funds within its Morningstar Category for the one-year period ended June 30, 2014; however, it underperformed the comparable funds within its Morningstar Category during the three- and five-year periods ended June 30, 2014;

^Ÿ

The Emerging Markets Fund outperformed in relation to the average performance of the comparable funds within its Morningstar Category during the one-, three-, and five-year periods ended September 30, 2014. It was noted that Forward Management took over the day-to-day management of this Fund in September 2012;

^Ÿ

The Equity Long/Short Fund outperformed in relation to the average performance of the comparable funds within its Morningstar Category during the one-year period ended September 30, 2014;

^Ÿ

The Global Dividend Fund underperformed in relation to the average performance of the comparable funds within its Morningstar Category for the one-, three-, and five-year periods ended September 30, 2014;

^Ÿ

The International Dividend Fund outperformed in relation to the average performance of the comparable funds within its Morningstar Category during the one-, and five-year periods ended September 30, 2014; however, it underperformed the

comparable funds within its Morningstar Category during the three-year period ended September 30, 2014. It was noted that Forward Management took over the day-to-day management of this Fund in December 2008;

^Ÿ

The International Small Companies Fund underperformed in relation to the average performance of the comparable funds within its Morningstar Category during the one-, three-, five-, and ten-year periods ended June 30, 2014;

^Ÿ

The Select EM Dividend Fund underperformed in relation to the average performance of the comparable funds within its Morningstar Category for the one-year period ended September 30, 2014; however, it outperformed the comparable funds within its Morningstar Category for the three-year period ended September 30, 2014;

^Ÿ

The Small Cap Equity Fund outperformed in relation to the average performance of the comparable funds within its Morningstar Category during the one-year period ended September 30, 2014; however, underperformed the comparable funds within its Morningstar Category during the three- and five-year periods ended September 30, 2014;

^Ÿ

The Tactical Enhanced Fund underperformed in relation to the average performance of the comparable funds within its Morningstar Category during the one- and three-year periods ended September 30, 2014. It was noted that Forward Management took over the day-to-day management of this Fund in November 2012; and

^Ÿ

The Tactical Growth Fund outperformed in relation to the average performance of the comparable funds within its Morningstar Category during the one-year period ended June 30, 2014; however, it underperformed the comparable funds within its Morningstar Category for the three-year period ended June 30, 2014.

Performance information for each class of shares of the Funds, including performance relative to each Fund’s benchmark index, is contained in this Report under the heading “Fund Performance.”


		221		December 31, 2014

Approval of the Investment Management Agreement and

Investment Sub-Advisory Agreements (Unaudited)

performance. The Board also noted the difficulties of constructing appropriate benchmarks for certain Funds. The Board discussed the possible reasons for the underperformance of certain Funds with Forward Management and took note of Forward Management’s plans to continue to monitor and address performance. The Board also noted recent portfolio management and/or strategy changes implemented by Forward Management.

The Board determined to continue to monitor the performance of the Funds and concluded, after consideration of the performance and strategy for each of the Funds, that each Sub-Advisor should continue to serve under the respective Sub-Advisory Agreement subject to the supervision of the Board and Forward Management, and that Forward Management should continue to serve under the Advisory Agreement subject to the supervision of the Board.

Profitability and Reasonableness of Advisory Compensation

Advisory Agreement. The Board considered Forward Management’s profitability and the methodology used to calculate profitability. The Board reviewed Forward Management’s audited financial statements, expense allocations and profitability analysis before marketing expenses, included in the 15(c) Materials. The Board considered Forward Management’s presentation of these materials at its meeting held on September 16, 2014, and well as the Board’s discussion of Forward Management’s profitability with Mr. Reid in executive session.

The Board considered the costs of services to be provided and profits to be realized by Forward Management from its relationship with the Funds, including the overall financial soundness of Forward Management. The Board considered financial information previously provided by Forward Management. The Board noted that Forward Management has been responsive to inquiries over time regarding the firm’s financial resources and ability to serve as the investment advisor to the Funds, and that the Board has been satisfied with this information. The Board also considered information about the profitability of each Fund to Forward Management. The Board also considered that Forward Management has historically waived fees or reimbursed the various series of the Trust for certain operating expenses that exceeded stated expense limits, and that amounts waived or reimbursed by Forward Management have been substantial.

of the Funds were within the range of the gross investment management fees charged to the group of similar investment companies presented to the Board.

The Board noted that Forward Management’s business currently consists primarily of managing the series of the Trust, and that, except as noted below, Forward Management does not currently manage other investment accounts for clients using strategies similar to the Funds so it is not possible to meaningfully compare the fees charged to the Funds with fees charged to other non-investment company clients of Forward Management. With respect to the International Dividend Fund, Forward Management manages retail separate accounts where the lowest fee is 38 basis points. With respect to the Global Dividend Fund, Forward Management manages retail separate accounts where the lowest fee is 35 basis points. However, it was noted that the retail separate accounts that are similar to the International Dividend Fund and Global Dividend Fund invest in a more limited range of investments than the Funds. With respect to the Tactical Growth Fund, Forward Management manages retail separate accounts where the lowest fee is 50 basis points. The Board considered that there were differences between these accounts and the Funds, including, differences in the management style, level of services provided, compliance responsibilities, and the frequency and amount of inflows and outflows. The Board noted that, with respect to certain Funds, the potential for additional meaningful comparisons will be revisited as Forward Management’s separate account business grows. The Board noted that, with respect to certain Funds, Forward Management is responsible for compensation of the Funds’ Sub-Advisors, whereas with respect to certain other Funds, the sub-advisory fees paid to the Sub-Advisors are paid directly by the Trust on behalf of each respective Fund and that overall expense ratios of certain of the Funds are currently limited by Forward Management pursuant to contractual expense limitation and/or reimbursement agreements.

The Board concluded that Forward Management’s profitability with respect to the Funds was not excessive and that the advisory fees charged to each Fund were reasonable in light of the services provided to each Fund.

Sub-Advisory Agreements. With respect to the fees paid to the Sub-Advisors, the Board considered information regarding the sub-advisory fees charged by the Sub-Advisors to their other clients (if applicable), and sub-advisory fees charged by other investment advisors to registered investment companies with similar investment objectives and strategies.


December 31, 2014		222

Approval of the Investment Management Agreement and

Investment Sub-Advisory Agreements (Unaudited)

evaluate the profitability of a particular Sub-Advisory Agreement because each of the Sub-Advisors managed assets other than the Funds or has multiple business lines and, further, that any such assessment would involve assumptions regarding each Sub-Advisor’s allocation policies, capital structure, cost of capital, business mix, and other factors.

Based on the prior information provided and the nature of the negotiation underlying each Sub-Advisory Agreement, the Board concluded that it was reasonable to infer that each Sub-Advisors’ profitability with respect to the relevant Funds was not excessive and that the sub-advisory fees charged to each Fund were reasonable in light of the services provided to each Fund.

Economies of scale

The Board considered the potential of Forward Management and the Sub-Advisors and the Funds to experience economies of scale as the Funds grow in size, but recognized that the current asset levels of certain of the Funds do not provide significant economies of scale. The Board noted that Forward Management has typically subsidized series of the Trust at smaller asset levels. The Board concluded that, considering the size and operating history of the Funds and the fee and financial information considered by the Board, the current fee structures reflected in the Agreements are appropriate. The Board also noted that it would have the opportunity to periodically re-examine whether the Funds had achieved economies of scale and the appropriateness of advisory and sub-advisory fees payable to Forward Management and the Sub-Advisors in the future.

Any additional benefits and other considerations

company that is affiliated with Forward Management, for the Funds’ participation in ReFlow, a program designed to provide an alternative liquidity source for mutual funds experiencing redemptions of their shares. The Board also considered Forward Management’s ownership interest in certain of the Sub-Advisors, noting the financial benefits that may be realized by Forward Management from its ownership arrangements with those Sub-Advisors. In addition, the Board also took into consideration the potential benefits that may be derived by Forward Management as a result of the establishment of Forward Securities, LLC, an affiliated broker-dealer that serves as distributor for the Funds. The Board also considered any benefits to be derived by Forward Management from soft dollar arrangements, and noted that the Board receives regular reports from Forward Management and the Sub-Advisors regarding their soft dollar policies and usage. The Board also noted that potential benefits to be derived by Forward Management or each Sub-Advisor from its relationship with the Funds include the potential for larger assets under management and reputational benefits, which are consistent with those benefits generally derived by investment advisors or sub-advisors to mutual funds.

Based on the Trustees’ deliberations and their evaluation of the information described above, the Board, including all of the Independent Trustees, found that: (i) the compensation payable under each of the Agreements is fair and bears a reasonable relationship to the services to be rendered; and (ii) the renewal of the Agreements is in the best interests of each respective Fund and its shareholders. Based on the Trustees’ deliberations and their evaluation of the information described above, the Trustees, including all of the Independent Trustees, unanimously approved, with respect to the Funds, the renewal of the Advisory Agreement and each Sub-Advisory Agreement.


		223		December 31, 2014

Additional Company Information (Unaudited)

Board of Trustees

The Trust’s Board of Trustees oversees the management and business of the Funds. The Trustees are elected by shareholders of the Trust, or, in certain circumstances, may be appointed by the other Trustees. There are currently seven Trustees, six of whom are not “interested persons” of the Trust as that term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (each an “Independent Trustee” and together, the “Independent Trustees”). The Trustees and Officers of the Trust, along with their affiliations over the last five years, are set forth below. The Trust’s Statement of Additional Information includes additional information about the Trustees and is available at forwardinvesting.com or upon request, without charge, by calling 800-999-6809.

Independent Trustees:


Name, Address, and Year of Birth*	Position(s) Held with the Trust	Term of Office and Length of Time Served**	Principal Occupation(s) During Past Five Years	Number of Funds in Fund Complex Overseen by Trustee	Other Directorships Held by Trustee***
Haig G. Mardikian Year of Birth: 1947	Chairman	Since 1998+	Owner of Haig G. Mardikian Enterprises, a real estate investment business (since 1971); General Partner of M&B Development, a real estate investment business (since 1983); General Partner of George M. Mardikian Enterprises, a real estate investment business (1983 to 2002); President and Director of Adiuvana-Invest, Inc., a real estate investment business (since 1989); Director of PCG Asset Management, a private equity investment advisor (2001 to 2011); President of the William Saroyan Foundation (since 1992); Managing Director of the United Broadcasting Company, radio broadcasting (1983 to 2001); Trustee of the International House of UC Berkeley (2001 to 2007); Director of the Downtown Association of San Francisco (1982 to 2006); Director of the Market Street Association (1982 to 2006); Trustee of Trinity College (1998 to 2007); Trustee of the Herbert Hoover Presidential Library (since 1997); Trustee of the Herbert Hoover Foundation (since 2002); Trustee of the Advisor California Civil Liberties Public Education Fund (1997 to 2006); Director of The Walnut Management Co., a privately held family investment company (since 2008); President of the Foundation of City College (2006 to 2010); Director of Near East Foundation (since 2007).	32	Chairman and Director of SIFE Trust Fund (1978 to 2001).

Donald O’Connor Year of Birth:1936	Trustee	Since 2000+	Financial Consultant (since 1997); Retired Vice President of Operations, Investment Company Institute (“ICI”), a mutual fund trade association (1969 to 1993); Executive Vice President and Chief Operating Officer, ICI Mutual Insurance Company, an insurance company (1987 to 1997); Chief, Branch of Market Surveillance, Securities and Exchange Commission (1964 to 1969).	32	Trustee of the Advisors Series Trust (since 1997).

DeWitt F. Bowman Year of Birth: 1930	Trustee	Since 2006 (Director of Forward Funds, Inc. since 2000)+	Pension Investment Consulting, a consulting company (since 1994); Interim Treasurer and Vice President for Investments, University of California (2000 to 2001); Treasurer of Pacific Pension Institute, a non-profit education organization (1994 to 2002); Treasurer of Edgewood Center for Children and Families, a non-profit care center (1994 to 2004); Director, Episcopal Diocese of California, a non-profit religious organization (1964 to 2008); Trustee of the Pacific Gas and Electric Nuclear Decommissioning Trust Fund, a nuclear decommissioning trust (since 1994); Chief Investment Officer, California Public Employees Retirement System (1989 to 1994).	32	Trustee, Brandes Mutual Funds (1995 to 2012); Lead Director, RREEF America III REIT (2007 to 2012); Director, RREEF America I REIT (2004 to 2007); Trustee, PCG Private Equity Fund (since 1994).


December 31, 2014		224

Additional Company Information (Unaudited)


Name, Address, and Year of Birth*	Position(s) Held with the Trust	Term of Office and Length of Time Served**	Principal Occupation(s) During Past Five Years	Number of Funds in Fund Complex Overseen by Trustee	Other Directorships Held by Trustee***
Cecilia H. Herbert Year of Birth: 1949	Trustee, Nominating Committee Chairperson	Since 2009+	Director (2000 to 2013) and President (2007 to 2010) of the Board, Catholic Charities CYO; Member, Archdiocese Finance Committee, the advisory council to the San Francisco Catholic Archdiocese (since 1994); Trustee, The Thacher School (2002 to 2011); Trustee, WNET, the public media company of New York (since 2011); Managing Director and head of San Francisco Office, J.P. Morgan/Morgan Guaranty Trust Company, a commercial and investment banking institution (1973 to 1976 and 1978 to 1991).	32	Director, iShares Inc. (since 2005); Trustee, iShares Trust (since 2005); Trustee, Pacific Select Funds (2004 to 2005); Trustee, The Montgomery Funds (1992 to 2003).

Julie Allecta Year of Birth: 1946	Trustee, Audit Committee Chairperson	Since 2012+	Retired Partner, Paul Hastings, Janofsky & Walker LLP (1999 to 2009); Governing Council Member of the Independent Directors Council (since 2014); Vice President and Director, WildCare Bay Area (since 2007); Parliamentarian and Director, American Society of Botanical Artists, Northern California Chapter (since 2014).	32	Trustee, Litman Gregory Funds Trust (since 2013).

A. John Gambs Year of Birth: 1945	Trustee	Since 2012+	Director and Compensation Committee Chair, NMI Holdings, Inc. (2011 to 2012); Trustee and Audit Committee Chair, Barclays Global Investors Funds (2006 to 2010); Trustee and Audit Committee Chair, Master Investment Portfolio (2006 to 2010); Advisory Board Member, Fairview Capital Management (since 2009); Director, San Francisco Classical Voice (since 2011); Member, Board of Governors San Francisco Symphony (since 2001); Director, The New Century Chamber Orchestra (since 2010); Executive Vice President and Chief Financial Officer, The Charles Schwab Corporation (1988 to 1996); President and Director, Gambs Family Foundation (1997 to 2010).	32	None


		225		December 31, 2014

Additional Company Information (Unaudited)

Interested Trustee:

Name,
Address, and
Year of Birth*

Position(s)
Held with
the Trust

Term of
Office and
Length of
Time Served**

Principal Occupation(s) During Past Five Years

Number of
Funds in Fund
Complex
Overseen by
Trustee

Other
Directorships
Held by
Trustee***

J. Alan Reid, Jr. ****

Year of Birth: 1962

President, Trustee

Since 2001+

Chief Executive Officer and Director of Forward Management, LLC, an investment advisor (since 2001); President and Director, Forward Securities, LLC, a broker-dealer (since 2010); Chief Executive Officer and Director, ReFlow Management Co., LLC, an investment services company (2001 to 2010); Chief Executive Officer and Director, ReFlow Fund, LLC, an investment services company (2001 to 2010); Chief Executive Officer, Sutton Place Management, an investment services company (since 2001); Vice President of Sutton Place Associates (since 2001); Chief Executive Officer, FISCOP, LLC (since 2001); Vice President, Broderick Management, LLC (since 2001); Member of ICI Board of Governors (since 2008); Director, Legato Capital Management, an investment services company (2004 to 2009); Director, FOLIOfn, Inc. (since 2002); Executive Director, Private Wealth Management, Morgan Stanley (2000 to 2001); Senior Vice President, Director of Business Delivery, Morgan Stanley Online, a financial services company (1999 to 2000); Executive Vice President and Treasurer, Webster Investment Management Co., LLC (1998 to 1999); Vice President, Regional Director, Investment Consulting Services, Morgan Stanley, Dean Witter, Discover & Co., a financial services company (1992 to 1998); Vice President of the Board of Trustees of Centerpoint, a public health and welfare organization (1997 to 2010); Director, Ring Mountain Day School (2010 to 2013); Director, Arista Maritime Group Inc. (since 2013).

None

*	Each Trustee may be contacted by writing to the Trustee, c/o Forward Management, LLC, 101 California Street, 16th Floor, San Francisco, CA 94111.

Each Trustee will hold office for an indefinite term until the earliest of (i) the next meeting of shareholders, if any, called for the purpose of considering the election or re-election of such Trustee and until the election and qualification of his successor, if any, elected at such meeting; or (ii) the date a Trustee resigns or retires, or a Trustee is removed by the Board of Trustees or shareholders, in accordance with the Trust’s Declaration of Trust.

***	This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e., public companies) or other investment companies registered under the 1940 Act.

****	Mr. Reid is considered an interested Trustee because he acts as Chief Executive Officer of Forward Management, LLC, the Funds’ investment advisor, and holds other positions with an affiliate of the Trust.

Messrs. Mardikian, Bowman, O’Connor and Reid have served as Trustee to the Trust since May 1, 2005. However, beginning on the date indicated in the chart, Messrs. Mardikian, Bowman, O’Connor and Reid served as a director for the nine series of Forward Funds, Inc., which were reorganized as series of the Trust effective July 1, 2005. Mr. Bowman was appointed as Trustee effective January 1, 2006 and served as a director for the nine series of Forward Funds, Inc. since 2000. Ms. Herbert was appointed as a Trustee effective November 9, 2009. Ms. Allecta was appointed as a Trustee effective January 1, 2012. Mr. Gambs was appointed as a Trustee effective December 31, 2012.


December 31, 2014		226

Additional Company Information (Unaudited)

Officers:


Name, Address, and Year of Birth*	Position(s) Held with the Trust	Term of Office and Length of Time Served	Principal Occupation(s) During Past Five Years
Barbara H. Tolle 101 California Street, 16th Floor San Francisco, CA 94111 Year of Birth: 1949	Treasurer	Since 2006	Vice President, Director of Fund Accounting and Operations, Forward Management (since 2006); Vice President and Director, Fund Accounting and Administration, PFPC Inc. (1998 to 2006).

Judith M. Rosenberg 101 California Street, 16th Floor San Francisco, CA 94111 Year of Birth: 1948	Chief Compliance Officer and Chief Legal Officer	Since 2005	Chief Compliance Officer, Forward Management (since 2005); Chief Compliance Officer, Secretary and Director, Forward Securities, LLC (since 2010); First Vice President and Senior Attorney, Morgan Stanley (1984 to 1997; 2002 to 2005); Director of Compliance, Morgan Stanley Online (1997 to 2002).

Robert S. Naka 101 California Street, 16th Floor San Francisco, CA 94111 Year of Birth: 1963	Vice President, Funds and Secretary	Vice President, Funds since 2009 and Secretary since 2012	Chief Operating Officer, Forward Management (since 2009); Principal & Chief Operating Officer, Anew Capital Management LLC (2007 to 2009); Executive Vice President & Chief Operating Officer, ING Funds & Predecessors (1989 to 2007).

Kathryn A. Burns 1290 Broadway, Suite 1100 Denver, CO 80203 Year of Birth: 1976	Assistant Treasurer	Since 2014	Assistant Vice President and Fund Controller, ALPS Fund Services, Inc. (since 2013); Vice President and Chief Compliance Officer, Old Mutual Capital (2010 to 2012); Vice President and Regulatory Reporting Manager, Old Mutual Capital (2006 to 2012); Manager, PricewaterhouseCoopers LLP (2004 to 2006)

*	Each officer shall hold office at the pleasure of the Board of Trustees until the next annual meeting of the Trust or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified.


		227		December 31, 2014

Forward Funds Privacy Policy (Unaudited)

Forward Funds appreciates the privacy concerns and expectations of our customers. We are committed to maintaining a high level of privacy and confidentiality when it comes to your personal information and we use that information only where permitted by law. We recognize that, as our customer, you not only entrust us with your money but with your personal information. Your trust is important to us and you can be sure we will continue our tradition of protecting your personal information. We provide this privacy notice to you so that you may understand our policy with regard to the collection and disclosure of nonpublic personal information (“Information”) pertaining to you.

We collect the following categories of information about you:

^Ÿ

Information we receive from you on applications or other forms; and

^Ÿ

Information about your transactions with us, our affiliates, or others.

We do not disclose any Information about you or any current or former customer to anyone, except as permitted by law. We may disclose Information about you and any former customer to our affiliates and to nonaffiliated third parties, as permitted by law. We do not disclose personal information that we collect about you to non-affiliated companies except to enable them to provide marketing services on our behalf, to perform joint marketing agreements with other financial institutions, or in other limited circumstances permitted by law. For example, some instances where we may disclose Information about you to third parties include: for servicing and processing transactions, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information about you with these companies, we require them to limit their use of the personal information to the particular purpose for which it was shared and we do not allow them to share your personal information with others except to fulfill that limited purpose. In addition, these companies are required to adhere to our privacy standards with respect to any personal information that we provide them.

Protecting the Security and Confidentiality of Your Information

We restrict access to Information about you to those employees who need to know that Information to provide products or services to you. We maintain physical, electronic, and procedural safeguards to ensure the confidentiality of your Information. Our privacy policies apply only to those individual investors who have a direct customer relationship with us. If you are an individual shareholder of record of any of the Funds, we consider you to be a customer of Forward Funds. Shareholders purchasing or owning shares of any of the Funds through their bank, broker, or other financial institution should consult that financial institution’s privacy policies. If you own shares or receive investment services through a relationship with a third-party broker, bank, investment advisor or other financial service provider, that third-party’s privacy policies will apply to you and ours will not.


December 31, 2014		228

Investment Advisor

Forward Management, LLC

Administrator

ALPS Fund Services, Inc.

Distributor

Forward Securities, LLC

Counsel

Dechert LLP

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP

Custodian

Citibank, N.A.

Transfer Agent

ALPS Fund Services, Inc.

LOGO

Forward Funds

P.O. Box 1345

Denver, CO 80201

(800) 999-6809

www.forwardinvesting.com

Forward Commodity Long/Short Strategy Fund

Forward Credit Analysis Long/Short Fund

Forward Dynamic Income Fund

Forward EM Corporate Debt Fund

Forward Emerging Markets Fund

Forward Equity Long/Short Fund

Forward Frontier Strategy Fund

Forward Global Dividend Fund

Forward Global Infrastructure Fund

Forward High Yield Bond Fund

Forward International Dividend Fund

Forward International Real Estate Fund

Forward International Small Companies Fund

Forward Investment Grade Fixed-Income Fund

Forward Real Estate Fund

Forward Real Estate Long/Short Fund

Forward Select EM Dividend Fund

Forward Select Income Fund

Forward Select Opportunity Fund

Forward Small Cap Equity Fund

Forward Tactical Enhanced Fund

Forward Tactical Growth Fund

Forward Total MarketPlus Fund

Forward U.S. Government Money Fund

Allocation Funds

Forward Balanced Allocation Fund

Forward Growth & Income Allocation Fund

Forward Growth Allocation Fund

Forward Income & Growth Allocation Fund

Forward Income Builder Fund

Forward Multi-Strategy Fund

LOGO


Printed on paper containing recycled content using soy-based inks.			FSD001253 031016

LOGO

Annual Report

Forward Frontier Strategy Fund

Forward High Yield Bond Fund

Forward Investment Grade Fixed-Income Fund

Forward Total MarketPlus Fund

Forward U.S. Government Money Fund

Forward Balanced Allocation Fund

Forward Growth & Income Allocation Fund

Forward Growth Allocation Fund

Forward Income & Growth Allocation Fund

Forward Income Builder Fund

Forward Multi-Strategy Fund


FORWARD FUNDS:		Table of Contents



Shareholder Update			2

Fund Commentaries and Performance			7

Investment Glossary			39

Disclosure of Fund Expenses			46

Portfolio of Investments			51

Statement of Assets and Liabilities			71

Statement of Operations			76

Statement of Changes in Net Assets			80

Financial Highlights			102

Notes to Financial Statements			142

Report of Independent Registered Public Accounting Firm			171

Tax Information			172

Approval of the Investment Management Agreement and Investment Sub-Advisory Agreements			173

Additional Company Information			178

Forward Funds Privacy Policy			182

Forward Funds are distributed by Forward Securities, LLC

101 California Street, 16th Floor, San Francisco, California 94111